N-CSR 1 primary-document.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 
FORM N-CSR
 
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
 
Investment Company Act file number 811-02781
 
Templeton Funds
(Exact name of registrant as specified in charter)
 
300 S.E. 2nd Street, Fort Lauderdale, FL 33301-1923

(Address of principal executive offices) (Zip code)
 
Alison Baur, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
 
Registrant's telephone number, including area code: 954 527-7500
 
Date of fiscal year end: 8/31
 
Date of reporting period: 8/31/22
 
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.)
 
Include a copy of each notice transmitted to stockholders in reliance on Rule 30e-3 under the Act (17 CFR 270.30e-3) that contains disclosures specified by paragraph (c)(3) of that rule.
Not Applicable
.
 
 
ANNUAL
REPORT
AND
SHAREHOLDER
LETTER
Templeton
Foreign
Fund
A
Series
of
Templeton
Funds
August
31,
2022
Sign
up
for
electronic
delivery
at
franklintempleton.com/edelivery
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
franklintempleton.com
Annual
Report
1
SHAREHOLDER
LETTER
Dear
Shareholder:
During
the
12
months
ended
August
31,
2022,
global
equities
benefited
earlier
in
the
period
from
ongoing
COVID-19
vaccination
programs
and
some
easing
of
restrictions.
However,
the
combination
of
resilient
consumer
demand
and
persistent
supply-chain
disruptions
contributed
to
higher
inflation
in
many
countries,
which
led
many
of
the
world’s
central
banks
to
adopt
less
accommodative
monetary
policies
in
2022,
hindering
stocks.
New
lockdowns
by
China
to
limit
the
spread
of
COVID-19
variants
also
pressured
emerging
market
stocks,
especially
in
Asia,
and
Russia’s
invasion
of
Ukraine
increased
investor
uncertainty
given
the
resulting
disruption
of
global
trade
and
commodity
markets.
In
this
environment,
stocks
in
global
developed
and
emerging
markets
excluding
the
U.S.,
as
measured
by
the
MSCI
All
Country
World
Index
ex
USA
Index-NR
(net
of
tax
withholding
when
dividends
are
paid),
posted
a
-19.52%
total
return
for
the
period.
1
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
annual
report
includes
more
detail
about
prevailing
conditions
and
a
discussion
about
investment
decisions
during
the
period.
Please
remember
all
securities
markets
fluctuate,
as
do
mutual
fund
share
prices.
We
thank
you
for
investing
with
Franklin
Templeton,
welcome
your
questions
and
comments,
and
look
forward
to
serving
your
investment
needs
in
the
years
ahead.
Sincerely,
Alan
Bartlett
Chief
Investment
Officer
Templeton
Global
Equity
Group
This
letter
reflects
our
analysis
and
opinions
as
of
August
31,
2022,
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.
1.
Source:
Morningstar.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
franklintempleton.com
Annual
Report
2
Contents
Annual
Report
Templeton
Foreign
Fund
3
Performance
Summary
7
Your
Fund’s
Expenses
10
Financial
Highlights
and
Schedule
of
Investments
11
Financial
Statements
19
Notes
to
Financial
Statements
23
Report
of
Independent
Registered
Public
Accounting
Firm
33
Tax
Information
34
Board
Members
and
Officers
35
Shareholder
Information
40
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
3
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Templeton
Foreign
Fund
This
annual
report
for
Templeton
Foreign
Fund
covers
the
fiscal
year
ended
August
31,
202
2
.
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
-15.25%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
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
-19.52%
cumulative
total
return.
1
Please
note
index
performance
information
is
provided
for
reference
and
we
do
not
attempt
to
track
the
index
but
rather
undertake
investments
on
the
basis
of
fundamental
research.
You
can
find
more
performance
data
in
the
Performance
Summary
beginning
on
page
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-NR,
posted
a
-15.88%
total
return
for
the
12
months
ended
August
31,
2022.
1
Although
global
equities
benefited
earlier
in
the
period
from
ongoing
COVID-19
vaccination
programs
and
some
easing
of
restrictions,
the
combination
of
resilient
consumer
demand
and
persistent
supply-chain
disruptions
contributed
to
higher
inflation
in
many
countries.
This
inflationary
pressure
led
many
of
the
world’s
central
banks
to
adopt
less
accommodative
stances
regarding
monetary
policy
in
2022,
hindering
stocks.
New
lockdowns
imposed
by
China’s
government
to
quell
the
spread
of
the
Omicron
variant
of
COVID-19
also
pressured
emerging
market
stocks,
especially
in
Asia.
Russia’s
invasion
of
Ukraine
also
increased
investor
uncertainty,
as
international
sanctions
on
Russia
disrupted
global
trade
and
commodity
markets.
In
the
U.S.,
after
robust
growth
earlier
in
the
period,
gross
domestic
product
(GDP)
slightly
contracted
in
the
first
two
quarters
of
2022
as
high
inflation,
supply
constraints
and
record
trade
deficits
weighed
on
economic
output.
Rising
prices
precipitated
a
notable
decline
in
consumer
confidence,
despite
high
spending
levels,
robust
job
growth
and
low
unemployment.
In
an
effort
to
control
inflation,
the
U.S.
Federal
Reserve
(Fed)
raised
the
federal
funds
target
rate
in
March
2022
for
the
first
time
since
2018.
The
Fed
raised
the
federal
funds
rate
again
at
its
subsequent
three
meetings
to
end
the
period
at
a
range
of
2.25%–2.50%.
Furthermore,
the
Fed
said
it
would
continue
to
reduce
its
bond
holdings
and
anticipated
additional
interest-rate
increases
at
future
meetings
to
curtail
inflation.
Economies
in
the
eurozone
decelerated
to
a
slightly
positive
growth
rate
during
the
year.
The
lifting
of
COVID-related
restrictions
in
some
European
countries
and
the
summer
tourism
season
strengthened
economies.
However,
the
war
in
Ukraine
disrupted
supply
chains,
weakened
the
economic
outlook
and
contributed
to
record
high
inflation
across
the
eurozone,
as
energy
prices
soared.
Electricity
prices
hit
record
highs
in
Germany
and
France
as
coal
futures
and
natural
gas
prices
climbed.
Consequently,
the
European
Central
Bank
raised
interest
rates
in
July
2022
for
the
first
time
in
11
years
to
curtail
growing
inflation.
In
this
environment,
European
developed
market
equities,
as
Geographic
Composition
8/31/22
%
of
Total
Net
Assets
Europe
53.2%
Asia
39.8%
North
America
5.4%
Short-Term
Investments
&
Other
Net
Assets
1.6%
1.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
16
.
Templeton
Foreign
Fund
4
franklintempleton.com
Annual
Report
measured
by
the
MSCI
Europe
Index-NR,
posted
a
-21.57%
total
return
for
the
12
months
under
review.
1
Asian
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
Asia
Index-NR,
posted
a
-20.73%
total
return
for
the
12-month
period.
1
Growth
in
Japan
remained
slow,
alternating
between
positive
quarterly
GDP
growth
and
contraction.
China’s
economy
contracted
sharply
in
2022’s
second
quarter
as
COVID-
related
restrictions
in
many
major
cities,
including
Shanghai,
weakened
consumer
demand.
Unexpected
regulatory
changes
by
China’s
government,
which
negatively
impacted
education-
and
technology-related
businesses,
and
investor
concerns
about
the
solvency
of
several
large
property
developers
in
China
further
pressured
stocks
in
that
country.
Global
emerging
market
stocks,
as
measured
by
the
MSCI
Emerging
Markets
Index-NR,
posted
a
-21.80%
total
return
for
the
12
months
under
review.
1
The
index
declined
for
four
straight
quarters,
the
longest
downturn
since
2008,
weakened
by
central
bank
tightening
and
the
threat
of
recession.
Following
Russia’s
invasion
of
Ukraine,
climbing
food
and
energy
prices
kindled
inflationary
pressures
and
raised
concerns
over
the
possibility
of
government
debt
defaults
in
some
countries.
However,
some
other
countries,
particularly
in
Latin
America,
as
well
as
South
Africa
and
Saudi
Arabia,
benefited
from
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.
We
also
consider
the
company’s
price/earnings
ratio,
price/cash
flow
ratio,
profit
margins
and
liquidation
value.
The
Fund
may,
from
time
to
time,
engage
in
currency-related
derivatives,
such
as
currency
and
cross-currency
forwards
and
currency
futures
contracts,
to
seek
to
hedge
(protect)
against
currency
risks.
Manager’s
Discussion
Templeton
Foreign
Fund
outperformed
its
benchmark
MSCI
ACWI
ex-USA
Index
during
the
12-month
period
due
to
a
combination
of
stock
selection
and
favorable
sector
allocations.
The
Fund’s
deeper
value
profile
created
favorable
positioning
during
a
period
when
the
Fed
began
to
take
rising
inflation
seriously
and
pivoted
toward
a
less
accommodative
monetary
policy.
Rising
interest
rates
favored
value
stocks
at
the
expense
of
growth
stocks
and
caused
investors
to
refocus
on
business
fundamentals
and
re-prioritize
the
importance
of
cash
flow
and
profitability.
This,
in
our
experience,
is
how
markets
traditionally
worked—as
discounting
mechanisms
for
future
earnings—
though
the
post-pandemic
era
of
ultra-stimulative
monetary
policy
saw
investors
shift
their
focus
to
more
speculative
bets
on
the
future.
As
conditions
reverted
to
a
more
normal
market
environment
during
the
period,
relative
performance
continued
to
improve,
and
the
Fund
finished
August
2022
ahead
of
its
benchmark
calendar
year-to-date
as
well
as
on
trailing
one-year
and
two-year
horizons.
Top
10
Industries
8/31/22
%
of
Total
Net
Assets
a
Banks
14.2%
Oil,
Gas
&
Consumable
Fuels
11.5%
Internet
&
Direct
Marketing
Retail
7.0%
Semiconductors
&
Semiconductor
Equipment
6.1%
Pharmaceuticals
5.4%
Auto
Components
5.1%
Industrial
Conglomerates
4.5%
Aerospace
&
Defense
4.4%
Automobiles
4.4%
Technology
Hardware,
Storage
&
Peripherals
3.7%
Top
10
Countries
8/31/22
a
%
of
Total
Net
Assets
a
a
United
Kingdom
21.5%
Japan
12.7%
Germany
11.7%
Netherlands
10.1%
China
9.5%
South
Korea
7.4%
United
States
5.4%
France
5.0%
Hong
Kong
3.6%
Taiwan
2.6%
Templeton
Foreign
Fund
5
franklintempleton.com
Annual
Report
From
a
sector
standpoint,
the
bulk
of
relative
strength
came
from
the
cyclical
industrials
and
energy
sectors.
The
Fund’s
overweighted
industrials
holdings
finished
with
a
slight
absolute
loss,
though
that
compared
favorably
to
the
more
than
20%
loss
among
the
index’s
industrials
stocks.
Array
Technologies,
a
specialist
in
ground-mounting
systems
for
solar
energy
projects,
was
the
industrials
sector’s
biggest
contributor.
Shares
rallied
after
the
firm
reported
better-than-
expected
revenues
and
continued
margin
expansion
and
U.S.
President
Joe
Biden
issued
policies
favorable
to
the
solar
sector,
including
blocking
new
tariffs
and
introducing
new
tax
incentives
as
part
of
the
Inflation
Reduction
Act
that
was
signed
into
law
late
in
the
period.
Other
notable
industrials
contributors
included
defense
contractors
like
BAE
Systems
(U.K.)
and
Dassault
Aviation
(France),
both
of
which
advanced
as
heightened
geopolitical
tensions
raised
demand
for
weapons
and
reconnaissance
systems.
An
overweighted
allocation
and
stock
selection
in
energy
also
outperformed,
with
the
sector
contributing
the
Fund’s
two
strongest
single-stock
holdings,
U.K.-based
integrated
oil
majors
BP
and
Shell.
The
stocks
rallied
on
a
combination
of
decade-high
energy
prices
and
record
earnings
results
(Shell
made
over
$9
billion
of
profit
and
BP
over
$6
billion
in
2022’s
first
quarter,
nearly
triple
what
they
made
in
the
same
period
in
2021).
Strong
supply-and-demand
fundamentals
have
persisted,
with
oil
demand
increasing
globally
as
travel
and
economic
activity
recovered
from
pandemic
restrictions
and
the
Russia-Ukraine
conflict
significantly
increased
the
risks
to
future
oil
supply.
Despite
the
strong
move
in
energy
prices
and
resilient
performance
of
energy-related
equities,
we
still
believe
many
integrated
oil
stocks
are
significantly
undervalued,
with
near-term
free
cash
flow
yields
approaching
20%
and
being
used
to
fund
solid
payouts
and
significant
share
repurchases.
We
view
elevated
oil
prices
in
many
cases
as
a
free
call
option
on
these
stocks,
which
in
our
view
represent
good
value
even
at
the
more
normalized
price
levels
of
$60-70
per
barrel
that
are
embedded
in
our
company
models.
The
Fund’s
information
technology
and
communication
services
sectors
also
outperformed,
benefiting
from
stock
selection
and
favorable
underweighted
allocations
to
higher-growth
sectors
that
fell
out
of
favor
during
the
period.
However,
neither
sector
had
a
top-10
single-stock
contributor.
Health
care,
real
estate
and
materials
also
all
outperformed
to
lesser
degrees.
Turning
to
detractors,
stock-specific
weakness
in
the
consumer
discretionary
sector
negatively
impacted
performance
during
the
period.
The
sector
was
responsible
for
the
Fund’s
two
biggest
individual
detractors:
European
food
delivery
service
Just
Eat
Takeaway.com,
and
French
automobile
parts
maker
Faurecia.
Just
Eat
declined
amid
ongoing
concerns
about
competition
and
profitability.
Nevertheless,
we
were
encouraged
by
a
constructive
earnings
call
during
the
period
and
believe
management
is
taking
appropriate
steps
to
unlock
value
for
shareholders.
Investors
will
want
to
see
the
strategic
divestiture
of
certain
assets
(which
management
is
exploring),
more
consistency
hitting
guidance
targets,
and
an
improving
competitive
environment
that
shifts
from
“growth
at
any
cost”
to
“profitable
growth.”
We
see
numerous
catalysts
that
should
help
Just
Eat
achieve
these
goals,
creating
what
we
believe
to
be
considerable
upside
potential
from
current
depressed
valuation
levels.
Meanwhile,
Faurecia
slumped
after
management
lowered
guidance,
citing
continued
bottlenecks
in
the
semiconductor
supply
chain
that
are
limiting
automobile
production
as
well
as
the
margin-
compressing
impact
of
rising
input
costs.
Price
weakness
was
exacerbated
by
a
rights
issue
in
June
2022
intended
to
shore
up
the
balance
sheet
following
the
large
acquisition
of
automotive
lighting
specialist
Hella
(not
a
Fund
holding
prior
to
acquisition),
though
the
stock
stabilized
somewhat
by
the
end
of
the
period
after
the
issuance
overhang
was
removed
and
management
reported
improved
earnings
and
progress
with
its
asset
disposal
plan.
Over
the
longer-term,
we
continue
to
see
significant
upside
potential
in
the
combined
Faurecia
and
Hella
from
current
valuation
levels.
Utilities
and
financials
holdings
also
underperformed,
albeit
to
lesser
extents.
While
there
were
no
utilities
holdings
among
the
10
biggest
detractors,
in
financials,
pan-Asian
life
insurer
Prudential
came
under
pressure
as
regulatory
Top
10
Holdings
8/31/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
BP
plc
5.3%
Oil,
Gas
&
Consumable
Fuels,
United
Kingdom
Shell
plc
4.9%
Oil,
Gas
&
Consumable
Fuels,
Netherlands
Samsung
Electronics
Co.
Ltd.
3.2%
Technology
Hardware,
Storage
&
Peripherals,
South
Korea
Standard
Chartered
plc
2.9%
Banks,
United
Kingdom
Hitachi
Ltd.
2.6%
Industrial
Conglomerates,
Japan
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
2.6%
Semiconductors
&
Semiconductor
Equipment,
Taiwan
Bayer
AG
2.5%
Pharmaceuticals,
Germany
Housing
Development
Finance
Corp.
Ltd.
2.4%
Diversified
Financial
Services,
India
Alibaba
Group
Holding
Ltd.
2.4%
Internet
&
Direct
Marketing
Retail,
China
SBM
Offshore
NV
2.4%
Energy
Equipment
&
Services,
Netherlands
Templeton
Foreign
Fund
6
franklintempleton.com
Annual
Report
tightening
and
slowing
growth
in
China
led
to
decelerating
new
business
in
this
key
end
market.
However,
we
believe
current
growth
headwinds
in
China
are
likely
to
be
transient
and
that
long-term
growth
opportunities
in
this
attractive
market
remain
robust
for
an
industry
leader
like
Prudential.
The
stock
currently
trades
near
the
lower
end
of
its
historical
valuation
range
and
at
a
significant
discount
to
peers.
In
our
view,
Prudential
is
a
core
holding
that
we
expect
will
benefit
from
Asia’s
rising
middle
class,
low
insurance
penetration
and
ageing
demographics.
From
a
regional
standpoint,
all
major
regions
outperformed,
led
by
stock
selection
in
Europe
(where
the
U.K.
was
the
Fund’s
biggest
country-level
contributor)
and
Asia
(where
stock
selection
in
Japan
and
China
notably
contributed).
The
Fund’s
limited
holdings
in
North
America
also
contributed
to
outperformance
during
the
period.
Thank
you
for
your
continued
participation
in
Templeton
Foreign
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Christopher
James
Peel,
CFA
Lead
Portfolio
Manager
Herbert
J.
Arnett,
Jr.
Peter
M.
Moeschter,
CFA
Warren
Pustam,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
August
31,
2022,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
CFA
®
is
a
trademark
owned
by
CFA
Institute
Performance
Summary
as
of
August
31,
2022
Templeton
Foreign
Fund
7
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/22
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A
:
5.50%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4
1-Year
-15.25%
-19.89%
5-Year
-8.07%
-2.76%
10-Year
+35.49%
+2.51%
Advisor
1-Year
-14.99%
-14.99%
5-Year
-6.88%
-1.41%
10-Year
+38.78%
+3.33%
See
page
9
for
Performance
Summary
footnotes.
Templeton
Foreign
Fund
Performance
Summary
8
franklintempleton.com
Annual
Report
See
page
9
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
A
(9/1/12–8/31/22)
Advisor
Class
(9/1/12–8/31/22)
Templeton
Foreign
Fund
Performance
Summary
9
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments;
investments
in
developing
markets
involve
heightened
risks
related
to
the
same
factors.
Currency
rates
may
fluctuate
significantly
over
short
periods
of
time,
and
can
reduce
returns.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
fund
that
is
more
broadly
diversified
geographically.
Current
political
uncertainty
concerning
the
economic
consequences
of
the
departure
of
the
U.K.
from
the
European
Union
may
increase
market
volatility.
Deriv-
atives,
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
antici-
pated
benefits,
and
may
realize
losses
when
a
counterparty
fails
to
perform
as
promised.
The
manager’s
portfolio
selection
strategy
is
not
solely
based
on
ESG
considerations,
and
therefore
the
issuers
in
which
the
Fund
invests
may
not
be
considered
ESG-focused
companies.
Integrating
ESG
considerations
into
the
investment
process
is
not
a
guarantee
that
better
performance
will
be
achieved.
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.
Russia’s
military
invasion
of
Ukraine
in
February
2022,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
im-
posed
broad-ranging
economic
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
invasion
of
Ukraine.
The
United
States
and
other
countries
have
also
imposed
economic
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
military
invasion.
These
sanctions,
as
well
as
any
other
economic
consequences
related
to
the
invasion,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
economic
sanctions
related
to
the
invasion.
1.
The
Fund
has
an
expense
reduction
contractually
guaranteed
through
12/31/22.
Fund
investment
results
reflect
the
expense
reduction;
without
this
reduction,
the
results
would
have
been
lower.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Prior
to
9/10/18
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
5.
Source:
Morningstar.
The
MSCI
ACWI
ex
USA
Index-NR
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
the
equity
market
performance
of
global
developed
and
emerging
markets,
excluding
the
U.S.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(9/1/21–8/31/22)
Share
Class
Net
Investment
Income
A
$0.2951
C
$0.2131
R
$0.2795
R6
$0.3281
Advisor
$0.3165
Total
Annual
Operating
Expenses
6
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
1.10%
1.15%
Advisor
0.85%
0.90%
Your
Fund’s
Expenses
Templeton
Foreign
Fund
10
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
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
3/1/22
Ending
Account
Value
8/31/22
Expenses
Paid
During
Period
3/1/22–8/31/22
1,2
Ending
Account
Value
8/31/22
Expenses
Paid
During
Period
3/1/22–8/31/22
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$870.50
$5.26
$1,019.58
$5.68
1.12%
C
$1,000
$866.40
$8.75
$1,015.83
$9.45
1.86%
R
$1,000
$868.80
$6.45
$1,018.30
$6.97
1.37%
R6
$1,000
$872.00
$3.76
$1,021.18
$4.06
0.80%
Advisor
$1,000
$872.20
$4.08
$1,020.85
$4.41
0.86%
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
11
a
Year
Ended
August
31,
2022
2021
2020
2019
2018
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$7.77
$6.22
$6.61
$7.69
$7.81
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.13
0.18
c
0.10
0.19
0.12
Net
realized
and
unrealized
gains
(losses)
...........
(1.28)
1.46
(0.25)
(1.09)
(0.13)
Total
from
investment
operations
....................
(1.15)
1.64
(0.15)
(0.90)
(0.01)
Less
distributions
from:
Net
investment
income
..........................
(0.30)
(0.09)
(0.24)
(0.18)
(0.11)
Net
asset
value,
end
of
year
.......................
$6.32
$7.77
$6.22
$6.61
$7.69
Total
return
d
...................................
(15.25)%
26.57%
(2.76)%
(11.73)%
(0.15)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.16%
1.15%
1.19%
1.15%
1.16%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.10%
1.07%
1.10%
1.08%
1.11%
e
Net
investment
income
...........................
1.80%
2.45%
c
1.55%
2.69%
1.54%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$1,418,293
$1,990,939
$1,766,365
$2,395,260
$2,929,181
Portfolio
turnover
rate
............................
29.07%
37.85%
f
42.37%
f
30.81%
23.01%
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
1.23%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
Year
Ended
August
31,
2022
2021
2020
2019
2018
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$7.70
$6.17
$6.54
$7.49
$7.60
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.07
0.13
c
0.05
0.12
0.06
Net
realized
and
unrealized
gains
(losses)
...........
(1.27)
1.43
(0.25)
(1.05)
(0.12)
Total
from
investment
operations
....................
(1.20)
1.56
(0.20)
(0.93)
(0.06)
Less
distributions
from:
Net
investment
income
..........................
(0.21)
(0.03)
(0.17)
(0.02)
(0.05)
Net
asset
value,
end
of
year
.......................
$6.29
$7.70
$6.17
$6.54
$7.49
Total
return
d
...................................
(15.95)%
25.55%
(3.42)%
(12.40)%
(0.79)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.91%
1.90%
1.94%
1.90%
1.91%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.85%
1.82%
1.85%
1.83%
1.86%
e
Net
investment
income
...........................
1.03%
1.81%
c
0.81%
1.94%
0.79%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$23,962
$39,083
$54,093
$87,160
$281,640
Portfolio
turnover
rate
............................
29.07%
37.85%
f
42.37%
f
30.81%
23.01%
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
0.58%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
13
a
Year
Ended
August
31,
2022
2021
2020
2019
2018
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$7.58
$6.08
$6.47
$7.53
$7.65
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.11
0.16
c
0.08
0.17
0.10
Net
realized
and
unrealized
gains
(losses)
...........
(1.25)
1.42
(0.24)
(1.07)
(0.12)
Total
from
investment
operations
....................
(1.14)
1.58
(0.16)
(0.90)
(0.02)
Less
distributions
from:
Net
investment
income
..........................
(0.28)
(0.08)
(0.23)
(0.16)
(0.10)
Net
asset
value,
end
of
year
.......................
$6.16
$7.58
$6.08
$6.47
$7.53
Total
return
....................................
(15.54)%
26.29%
(3.03)%
(11.96)%
(0.32)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.41%
1.40%
1.44%
1.40%
1.41%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.35%
1.32%
1.35%
1.33%
1.36%
d
Net
investment
income
...........................
1.57%
2.21%
c
1.33%
2.44%
1.29%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$103,984
$123,744
$109,187
$127,546
$148,638
Portfolio
turnover
rate
............................
29.07%
37.85%
e
42.37%
e
30.81%
23.01%
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
0.98%.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
a
Year
Ended
August
31,
2022
2021
2020
2019
2018
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$7.64
$6.12
$6.51
$7.58
$7.70
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.15
0.21
c
0.12
0.22
0.15
Net
realized
and
unrealized
gains
(losses)
...........
(1.26)
1.43
(0.24)
(1.08)
(0.12)
Total
from
investment
operations
....................
(1.11)
1.64
(0.12)
(0.86)
0.03
Less
distributions
from:
Net
investment
income
..........................
(0.33)
(0.12)
(0.27)
(0.21)
(0.15)
Net
asset
value,
end
of
year
.......................
$6.20
$7.64
$6.12
$6.51
$7.58
Total
return
....................................
(14.98)%
27.02%
(2.38)%
(11.34)%
0.24%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.81%
0.79%
0.79%
0.77%
0.73%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.73%
0.69%
0.70%
0.68%
0.68%
d
Net
investment
income
...........................
2.13%
2.86%
c
1.96%
3.09%
1.97%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$290,974
$531,344
$594,452
$906,474
$1,496,328
Portfolio
turnover
rate
............................
29.07%
37.85%
e
42.37%
e
30.81%
23.01%
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
1.63%.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
15
a
Year
Ended
August
31,
2022
2021
2020
2019
2018
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$7.64
$6.12
$6.51
$7.58
$7.70
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.15
0.20
c
0.11
0.20
0.14
Net
realized
and
unrealized
gains
(losses)
...........
(1.26)
1.43
(0.24)
(1.07)
(0.12)
Total
from
investment
operations
....................
(1.11)
1.63
(0.13)
(0.87)
0.02
Less
distributions
from:
Net
investment
income
..........................
(0.32)
(0.11)
(0.26)
(0.20)
(0.14)
Net
asset
value,
end
of
year
.......................
$6.21
$7.64
$6.12
$6.51
$7.58
Total
return
....................................
(14.99)%
26.88%
(2.57)%
(11.53)%
0.16%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.92%
0.90%
0.94%
0.90%
0.91%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.85%
0.82%
0.85%
0.83%
0.86%
d
Net
investment
income
...........................
2.06%
2.80%
c
1.79%
2.94%
1.79%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$602,921
$620,885
$857,179
$857,482
$1,627,827
Portfolio
turnover
rate
............................
29.07%
37.85%
e
42.37%
e
30.81%
23.01%
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
1.57%.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Templeton
Funds
Schedule
of
Investments,
August
31,
2022
Templeton
Foreign
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
a
Industry
Shares
a
Value
a
Common
Stocks
98.4%
China
9.5%
a
Alibaba
Group
Holding
Ltd.
.........
Internet
&
Direct
Marketing
Retail
4,853,470
$
57,904,185
a,b
Baidu,
Inc.,
ADR
.................
Interactive
Media
&
Services
148,719
21,411,074
Gree
Electric
Appliances,
Inc.
of
Zhuhai,
A
...........................
Household
Durables
3,965,000
18,304,255
NXP
Semiconductors
NV
..........
Semiconductors
&
Semiconductor
Equipment
235,943
38,831,499
a
Prosus
NV
.....................
Internet
&
Direct
Marketing
Retail
866,590
53,560,811
a
Vipshop
Holdings
Ltd.,
ADR
........
Internet
&
Direct
Marketing
Retail
3,507,652
40,723,840
230,735,664
France
5.0%
Dassault
Aviation
SA
..............
Aerospace
&
Defense
283,450
38,924,150
a
Faurecia
SE
....................
Auto
Components
3,058,519
43,859,564
Valeo
.........................
Auto
Components
2,086,923
39,861,796
122,645,510
Germany
11.7%
Bayer
AG
......................
Pharmaceuticals
1,161,127
61,406,621
Bayerische
Motoren
Werke
AG
......
Automobiles
675,347
49,756,176
b
Continental
AG
..................
Auto
Components
718,639
41,373,095
c
Covestro
AG,
144A,
Reg
S
.........
Chemicals
787,415
23,740,901
E.ON
SE
.......................
Multi-Utilities
3,713,367
31,671,923
Fresenius
Medical
Care
AG
&
Co.
KGaA
Health
Care
Providers
&
Services
864,099
29,584,742
Infineon
Technologies
AG
..........
Semiconductors
&
Semiconductor
Equipment
1,918,603
46,943,690
284,477,148
Hong
Kong
3.6%
AIA
Group
Ltd.
..................
Insurance
5,643,433
54,296,458
Prudential
plc,
(GBP
Traded)
........
Insurance
2,588,841
27,165,631
Prudential
plc,
(HKD
Traded)
........
Insurance
589,500
6,190,782
87,652,871
India
2.4%
Housing
Development
Finance
Corp.
Ltd.
.........................
Diversified
Financial
Services
1,952,237
59,072,955
Ireland
1.3%
CRH
plc
.......................
Construction
Materials
881,749
32,559,270
Japan
12.7%
Elecom
Co.
Ltd.
.................
Technology
Hardware,
Storage
&
Peripherals
1,078,000
13,118,319
Hitachi
Ltd.
.....................
Industrial
Conglomerates
1,285,829
64,242,692
Honda
Motor
Co.
Ltd.
.............
Automobiles
2,116,405
56,343,493
Seria
Co.
Ltd.
...................
Multiline
Retail
1,071,607
20,901,141
Sony
Group
Corp.
................
Household
Durables
328,794
26,140,210
Sumitomo
Metal
Mining
Co.
Ltd.
.....
Metals
&
Mining
1,252,643
39,416,463
Sumitomo
Mitsui
Financial
Group,
Inc.
.
Banks
1,531,623
46,198,748
Sundrug
Co.
Ltd.
.................
Food
&
Staples
Retailing
1,809,559
44,273,900
310,634,966
Netherlands
10.1%
EXOR
NV
......................
Diversified
Financial
Services
486,673
29,298,758
ING
Groep
NV
..................
Banks
4,353,748
38,156,260
SBM
Offshore
NV
................
Energy
Equipment
&
Services
4,110,944
57,405,960
Shell
plc
.......................
Oil,
Gas
&
Consumable
Fuels
4,535,447
120,023,685
244,884,663
Portugal
1.3%
Galp
Energia
SGPS
SA,
B
.........
Oil,
Gas
&
Consumable
Fuels
2,899,995
31,315,430
Templeton
Funds
Schedule
of
Investments
Templeton
Foreign
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
17
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
South
Korea
7.4%
KB
Financial
Group,
Inc.
...........
Banks
1,474,406
$
53,910,106
Samsung
Electronics
Co.
Ltd.
.......
Technology
Hardware,
Storage
&
Peripherals
1,764,751
77,870,983
Shinhan
Financial
Group
Co.
Ltd.
....
Banks
1,801,271
48,609,886
180,390,975
Spain
0.3%
a,b
Tecnicas
Reunidas
SA
............
Energy
Equipment
&
Services
1,305,222
8,086,154
Switzerland
2.0%
Adecco
Group
AG
................
Professional
Services
1,517,003
48,075,066
Taiwan
2.6%
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
......................
Semiconductors
&
Semiconductor
Equipment
3,876,044
63,499,077
Thailand
1.6%
Kasikornbank
PCL
...............
Banks
9,198,837
38,525,197
United
Kingdom
21.5%
AstraZeneca
plc
.................
Pharmaceuticals
352,568
43,602,451
BAE
Systems
plc
................
Aerospace
&
Defense
4,452,998
40,097,240
BP
plc
.........................
Oil,
Gas
&
Consumable
Fuels
25,294,132
129,228,835
CK
Hutchison
Holdings
Ltd.
.........
Industrial
Conglomerates
7,143,676
46,131,120
Imperial
Brands
plc
...............
Tobacco
2,340,066
51,453,491
Informa
plc
.....................
Media
4,416,503
27,936,835
a,b
International
Consolidated
Airlines
Group
SA
.....................
Airlines
15,068,034
18,847,671
a,c
Just
Eat
Takeaway.com
NV,
144A,
Reg
S
...........................
Internet
&
Direct
Marketing
Retail
1,063,480
17,690,591
Lloyds
Banking
Group
plc
..........
Banks
101,127,790
51,238,398
a
Rolls-Royce
Holdings
plc
..........
Aerospace
&
Defense
32,577,845
29,028,992
Standard
Chartered
plc
............
Banks
10,106,915
69,989,973
525,245,597
United
States
5.4%
a,b
Array
Technologies,
Inc.
...........
Electrical
Equipment
1,455,156
30,412,760
a
Booking
Holdings,
Inc.
............
Hotels,
Restaurants
&
Leisure
16,004
30,020,463
a
DXC
Technology
Co.
..............
IT
Services
1,832,600
45,411,828
Roche
Holding
AG
...............
Pharmaceuticals
82,763
26,661,503
132,506,554
Total
Common
Stocks
(Cost
$2,581,429,948)
....................................
2,400,307,097
Short
Term
Investments
3.2%
a
a
Industry
Principal
Amount
*
a
Value
a
a
a
a
a
a
Time
Deposits
2.3%
Canada
2.3%
National
Bank
of
Canada,
2.31%,
9/01/22
......................
50,000,000
50,000,000
Royal
Bank
of
Canada,
2.31%,
9/01/22
5,700,000
5,700,000
55,700,000
Total
Time
Deposits
(Cost
$55,700,000)
........................................
55,700,000
Templeton
Funds
Schedule
of
Investments
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
Short
Term
Investments
(continued)
a
a
Industry
Shares
a
Value
a
a
a
a
a
a
d
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.9%
Money
Market
Funds
0.9%
e,f
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
1.864%
.........
23,064,789
$
23,064,789
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$23,064,789)
................................................................
23,064,789
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$78,764,789
)
................................
78,764,789
a
a
a
Total
Investments
(Cost
$2,660,194,737)
101.6%
................................
$2,479,071,886
Other
Assets,
less
Liabilities
(1.6)%
...........................................
(38,938,656)
Net
Assets
100.0%
...........................................................
$2,440,133,230
a
a
a
See
Abbreviations
on
page
32.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Non-income
producing.
b
A
portion
or
all
of
the
security
is
on
loan
at
August
31,
2022.
See
Note
1(c).
c
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
August
31,
2022,
the
aggregate
value
of
these
securities
was
$41,431,492,
representing
1.7%
of
net
assets.
d
See
Note
1(c)
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
August
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
19
Templeton
Foreign
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$2,637,129,948
Cost
-
Non-controlled
affiliates
(Note
3
f
)
........................................................
23,064,789
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$36,093,637)
.................................
$2,456,007,097
Value
-
Non-controlled
affiliates
(Note
3
f
)
........................................................
23,064,789
Cash
....................................................................................
51,606
Receivables:
Capital
shares
sold
........................................................................
1,760,100
Dividends
and
interest
.....................................................................
10,293,249
European
Union
tax
reclaims
(Note
1
d
)
.........................................................
756,111
Total
assets
..........................................................................
2,491,932,952
Liabilities:
Payables:
Capital
shares
redeemed
...................................................................
2,038,767
Management
fees
.........................................................................
1,354,232
Distribution
fees
..........................................................................
380,646
Transfer
agent
fees
........................................................................
1,380,436
IRS
closing
agreement
payments
for
European
Union
tax
reclaims
(Note
1
d
)
.............................
20,957,095
Payable
upon
return
of
securities
loaned
(Note
1
c
)
..................................................
23,064,789
Deferred
tax
...............................................................................
1,572,830
Accrued
expenses
and
other
liabilities
...........................................................
1,050,927
Total
liabilities
.........................................................................
51,799,722
Net
assets,
at
value
.................................................................
$2,440,133,230
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$3,002,277,824
Total
distributable
earnings
(losses)
.............................................................
(562,144,594)
Net
assets,
at
value
.................................................................
$2,440,133,230
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
(continued)
August
31,
2022
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
Templeton
Foreign
Fund
Class
A:
Net
assets,
at
value
.......................................................................
$1,418,292,943
Shares
outstanding
........................................................................
224,458,333
Net
asset
value
per
share
a
..................................................................
$6.32
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%)
................................
$6.69
Class
C:
Net
assets,
at
value
.......................................................................
$23,961,774
Shares
outstanding
........................................................................
3,808,411
Net
asset
value
and
maximum
offering
price
per
share
a
.............................................
$6.29
Class
R:
Net
assets,
at
value
.......................................................................
$103,983,547
Shares
outstanding
........................................................................
16,870,014
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$6.16
Class
R6:
Net
assets,
at
value
.......................................................................
$290,974,412
Shares
outstanding
........................................................................
46,920,021
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$6.20
Advisor
Class:
Net
assets,
at
value
.......................................................................
$602,920,554
Shares
outstanding
........................................................................
97,137,287
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$6.21
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Templeton
Funds
Financial
Statements
Statement
of
Operations
for
the
year
ended
August
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
21
Templeton
Foreign
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$9,256,969)
Unaffiliated
issuers
........................................................................
$86,316,046
Interest:
Unaffiliated
issuers
........................................................................
287,317
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
.....................................................
229,133
Non-controlled
affiliates
(Note
3
f
)
.............................................................
83,923
Other
income
(Note
1
d
)
......................................................................
141,448
Less:
IRS
closing
agreement
payments
for
European
Union
tax
reclaims
(Note
1
d
)
..........................
(218,026)
Total
investment
income
...................................................................
86,839,841
Expenses:
Management
fees
(Note
3
a
)
...................................................................
20,821,430
Distribution
fees:
(Note
3c
)
    Class
A
................................................................................
4,211,329
    Class
C
................................................................................
320,326
    Class
R
................................................................................
586,175
Transfer
agent
fees:
(Note
3e
)
    Class
A
................................................................................
2,894,157
    Class
C
................................................................................
55,128
    Class
R
................................................................................
201,360
    Class
R6
...............................................................................
279,570
    Advisor
Class
............................................................................
1,284,977
Custodian
fees
.............................................................................
220,360
Reports
to
shareholders
fees
..................................................................
436,135
Registration
and
filing
fees
....................................................................
131,482
Professional
fees
...........................................................................
166,804
Trustees'
fees
and
expenses
..................................................................
263,999
Other
....................................................................................
203,193
Total
expenses
.........................................................................
32,076,425
Expenses
waived/paid
by
affiliates
(Note
3
f
and
3
g
)
..............................................
(1,978,718)
Net
expenses
.........................................................................
30,097,707
Net
investment
income
................................................................
56,742,134
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
160,214,778
Foreign
currency
transactions
................................................................
(1,478,732)
Net
realized
gain
(loss)
..................................................................
158,736,046
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
(681,673,498)
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
(1,139,090)
Change
in
deferred
taxes
on
unrealized
appreciation
...............................................
1,230,835
Net
change
in
unrealized
appreciation
(depreciation)
............................................
(681,581,753)
Net
realized
and
unrealized
gain
(loss)
............................................................
(522,845,707)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$(466,103,573)
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
22
Templeton
Foreign
Fund
Year
Ended
August
31,
2022
Year
Ended
August
31,
2021
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$56,742,134
$92,940,813
Net
realized
gain
(loss)
.................................................
158,736,046
337,726,333
Net
change
in
unrealized
appreciation
(depreciation)
...........................
(681,581,753)
398,219,453
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
(466,103,573)
828,886,599
Distributions
to
shareholders:
Class
A
.............................................................
(68,477,455)
(25,789,554)
Class
C
.............................................................
(999,549)
(254,786)
Class
R
.............................................................
(4,571,272)
(1,399,512)
Class
R6
............................................................
(20,850,055)
(9,135,018)
Advisor
Class
........................................................
(34,087,582)
(14,872,436)
Total
distributions
to
shareholders
..........................................
(128,985,913)
(51,451,306)
Capital
share
transactions:
(Note
2
)
Class
A
.............................................................
(240,351,269)
(197,236,237)
Class
C
.............................................................
(9,046,243)
(27,080,860)
Class
R
.............................................................
3,756,831
(11,727,543)
Class
R6
............................................................
(158,973,250)
(176,375,993)
Advisor
Class
........................................................
133,841,510
(440,296,554)
Total
capital
share
transactions
............................................
(270,772,421)
(852,717,187)
Net
increase
(decrease)
in
net
assets
...................................
(865,861,907)
(75,281,894)
Net
assets:
Beginning
of
year
.......................................................
3,305,995,137
3,381,277,031
End
of
year
...........................................................
$2,440,133,230
$3,305,995,137
Templeton
Funds
23
franklintempleton.com
Annual
Report
Notes
to
Financial
Statements
Templeton
Foreign
Fund
1.
Organization
and
Significant
Accounting
Policies
Templeton
Funds (Trust)
is
registered
under
the
Investment
Company
Act
of
1940
(1940
Act)
as
an
open-end
management
investment
company,
consisting
of three separate
funds
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP).
Templeton
Foreign
Fund
(Fund)
is
included
in
this
report.
The
Fund
offers five
classes
of
shares:
Class
A,
Class
C,
Class
R,
Class
R6
and
Advisor
Class.
Class
C
shares
automatically
convert
to
Class
A
shares
on
a
monthly
basis,
after
they
have
been
held
for
8
years. Each
class
of
shares
may
differ
by
its
initial
sales
load,
contingent
deferred
sales
charges,
voting
rights
on
matters
affecting
a
single
class,
its
exchange
privilege
and
fees
due
to
differing
arrangements
for
distribution
and
transfer
agent
fees. 
The
following
summarizes
the Fund's
significant
accounting
policies.
a.
Financial
Instrument
Valuation 
The
Fund's
investments
in
financial
instruments
are
carried
at
fair
value
daily.
Fair
value
is
the
price
that
would
be
received
to
sell
an
asset
or
paid
to
transfer
a
liability
in
an
orderly
transaction
between
market
participants
on
the
measurement
date.
The
Fund
calculates
the
net
asset
value
(NAV)
per
share
each business
day as
of
4
p.m.
Eastern
time
or
the
regularly
scheduled
close
of
the
New
York
Stock
Exchange
(NYSE),
whichever
is
earlier.
Under
compliance
policies
and
procedures
approved
by
the
Trust’s
Board
of
Trustees
(the
Board),
the Fund's
administrator
has
responsibility
for
oversight
of
valuation,
including
leading
the
cross-functional
Valuation
Committee
(VC).
The
Fund
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value. 
Equity
securities
listed
on
an
exchange
or
on
the
NASDAQ
National
Market
System
are
valued
at
the
last
quoted
sale
price
or
the
official
closing
price of
the
day,
respectively.
Foreign
equity
securities
are
valued
as
of
the
close
of
trading
on
the
foreign
stock
exchange
on
which
the
security
is
primarily
traded,
or
as
of
4
p.m.
Eastern
time.
The
value
is
then
converted
into
its
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
day
that
the
value
of
the
security
is
determined.
Over-the-
counter
(OTC)
securities
are
valued
within
the
range
of
the
most
recent
quoted
bid
and
ask
prices.
Securities
that
trade
in
multiple
markets
or
on
multiple
exchanges
are
valued
according
to
the
broadest
and
most
representative
market.
Certain
equity
securities
are
valued
based
upon
fundamental
characteristics
or
relationships
to
similar
securities. 
Investments
in
open-end
mutual
funds
are
valued
at
the
closing
NAV.
Investments
in
time
deposits
are
valued
at
cost,
which
approximates
fair
value.
The
Fund
has
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the Fund
primarily
employs
a
market-based
approach
which
may
use
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
book
values,
and
other
relevant
information
for
the
investment
to
determine
the
fair
value
of
the
investment.
An
income-based
valuation
approach
may
also
be
used
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
to
calculate
fair
value.
Discounts
may
also
be
applied
due
to
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
Due
to
the
inherent
uncertainty
of
valuations
of
such
investments,
the
fair
values
may
differ
significantly
from
the
values
that
would
have
been
used
had
an
active
market
existed.
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Fund's
business
day.
Events
can
occur
between
the
time
at
which
trading
in
a
foreign
security
is
completed
and
4
p.m.
Eastern
time
that
might
call
into
question
the
reliability
of
the
value
of
a
portfolio
security
held
by
the
Fund.
As
a
result,
differences
may
arise
between
the
value
of
the
Fund's
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
at
4
p.m.
Eastern
time.
In
order
to
minimize
the
potential
for
these
differences,
an
independent
pricing
service
may
be
used
to
adjust
the
value
of
the
Fund’s
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
August
31,
2022,
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
24
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
securities
on
the
last
business
day
and
the
last
calendar
day
of
the
reporting
period.
Any
security
valuation
changes
due
to
an
open
foreign
market
are
adjusted
and
reflected
by
the
Fund
for
financial
reporting
purposes.
b.
Foreign
Currency
Translation 
Portfolio
securities
and
other
assets
and
liabilities
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
based
on
the
exchange
rate
of
such
currencies
against
U.S.
dollars
on
the
date
of
valuation.
The
Fund
may
enter
into
foreign
currency
exchange
contracts
to
facilitate
transactions
denominated
in
a
foreign
currency.
Purchases
and
sales
of
securities,
income
and
expense
items
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
at
the
exchange
rate
in
effect
on
the
transaction
date.
Portfolio
securities
and
assets
and
liabilities
denominated
in
foreign
currencies
contain
risks
that
those
currencies
will
decline
in
value
relative
to
the
U.S.
dollar.
Occasionally,
events
may
impact
the
availability
or
reliability
of
foreign
exchange
rates
used
to
convert
the
U.S.
dollar
equivalent
value.
If
such
an
event
occurs,
the
foreign
exchange
rate
will
be
valued
at
fair
value
using
procedures
established
and
approved
by
the
Board.
The
Fund
does
not
separately
report
the
effect
of
changes
in
foreign
exchange
rates
from
changes
in
market
prices
on
securities
held.
Such
changes
are
included
in
net
realized
and
unrealized
gain
or
loss
from
investments
in
the
Statement of
Operations.
Realized
foreign
exchange
gains
or
losses
arise
from
sales
of
foreign
currencies,
currency
gains
or
losses
realized
between
the
trade
and
settlement
dates
on
securities
transactions
and
the
difference
between
the
recorded
amounts
of
dividends,
interest,
and
foreign
withholding
taxes
and
the
U.S.
dollar
equivalent
of
the
amounts
actually
received
or
paid.
Net
unrealized
foreign
exchange
gains
and
losses
arise
from
changes
in
foreign
exchange
rates
on
foreign
denominated
assets
and
liabilities
other
than
investments
in
securities
held
at
the
end
of
the
reporting
period.
c.
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.
Additionally, the
Fund
held $13,991,130
in
U.S.
Government
and
Agency
securities
as
collateral.
These
securities
are
held as
collateral
in
segregated
accounts
with
the
Fund’s
custodian.
The
Fund
cannot
repledge
or
resell
these
securities
held
as
collateral.
As
such,
the
non-cash
collateral
is
excluded
from
the
Statement
of
Assets
and
Liabilities.
The
Fund
may
receive
income
from
the
investment
of
cash
collateral,
in
addition
to
lending
fees
and
rebates
paid
by
the
borrower.
Income
from
securities
loaned,
net
of
fees
paid
to
the
securities
lending
agent
and/
or
third-party
vendor,
is
reported
separately
in
the
Statement
of
Operations.
The
Fund
bears
the
market
risk
with
respect
to any
cash collateral
investment,
securities
loaned,
and
the
risk
that
the
agent
may
default
on
its
obligations
to
the
Fund.
If
the
borrower
defaults
on
its
obligation
to
return
the
securities
loaned,
the
Fund
has
the
right
to
repurchase
the
securities
in
the
open
market
using
the
collateral
received.
The
securities
lending
agent
has
agreed
to
indemnify
the
Fund
in
the
event
of
default
by
a
third
party
borrower.
d.
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation 
(continued)
Templeton
Funds
Notes
to
Financial
Statements
25
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
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). 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.
Any
fees
associated
with
these
filings
are
reflected
in
other
expenses
in
the
Statement
of
Operations.
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
amount
of
foreign
taxes
Fund
shareholders
can
use
as
tax
deductions
or credits
on
their
income
tax
returns.
In
the
event
that
EU
reclaims
received
by
the Fund
during a
fiscal
year
exceed
foreign
withholding
taxes
paid
by
the
Fund,
and
the
Fund previously
passed
through to
its
shareholders
foreign
taxes
incurred
by
the
Fund
to
be
used
as
a
credit
or
deduction
on
a
shareholder’s
income
tax
return,
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.
During
the
fiscal
year
ended
August
31,
2022,
the
Fund
received
EU
reclaims
in
excess
of
the
foreign
taxes
paid
during
the
year.
The
Fund
determined
to
enter
into
a
closing
agreement
with
the
IRS
and
recorded
the
estimated payments
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
August
31,
2022,
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.
e.
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.
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.
f.
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.
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Income
and
Deferred
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
26
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
g.
Guarantees
and
Indemnifications
Under
the
Trust's
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust,
on
behalf
of
the
Fund,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust’s
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
August
31,
2022,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Fund’s
shares
were
as
follows:
Year
Ended
August
31,
2022
Year
Ended
August
31,
2021
Shares
Amount
Shares
Amount
Class
A
Shares:
Shares
sold
a
...................................
15,055,350
$108,801,684
28,785,548
$209,553,273
Shares
issued
in
reinvestment
of
distributions
..........
9,189,754
64,695,870
3,171,878
22,520,330
Shares
redeemed
...............................
(56,182,941)
(413,848,823)
(59,457,247)
(429,309,840)
Net
increase
(decrease)
..........................
(31,937,837)
$(240,351,269)
(27,499,821)
$(197,236,237)
Class
C
Shares:
Shares
sold
...................................
417,818
$3,009,157
641,829
$4,680,418
Shares
issued
in
reinvestment
of
distributions
..........
139,410
982,841
35,520
251,483
Shares
redeemed
a
..............................
(1,823,590)
(13,038,241)
(4,376,336)
(32,012,761)
Net
increase
(decrease)
..........................
(1,266,362)
$(9,046,243)
(3,698,987)
$(27,080,860)
Class
R
Shares:
Shares
sold
...................................
2,580,769
$18,083,292
2,527,401
$18,072,742
Shares
issued
in
reinvestment
of
distributions
..........
662,175
4,555,764
200,428
1,392,973
Shares
redeemed
...............................
(2,688,708)
(18,882,225)
(4,363,676)
(31,193,258)
Net
increase
(decrease)
..........................
554,236
$3,756,831
(1,635,847)
$(11,727,543)
Class
R6
Shares:
Shares
sold
...................................
10,791,025
$76,072,674
22,666,025
$167,068,991
Shares
issued
in
reinvestment
of
distributions
..........
2,743,028
18,899,459
1,210,174
8,422,812
Shares
redeemed
...............................
(36,204,674)
(253,945,383)
(51,442,655)
(351,867,796)
Net
increase
(decrease)
..........................
(22,670,621)
$(158,973,250)
(27,566,456)
$(176,375,993)
Advisor
Class
Shares:
Shares
sold
...................................
54,602,589
$402,173,464
29,013,447
$207,655,897
Shares
issued
in
reinvestment
of
distributions
..........
4,600,357
31,742,463
2,047,132
14,268,511
Shares
redeemed
in-kind
(Note
3h)
..................
—
—
(48,183,921)
(363,822,338)
Shares
redeemed
...............................
(43,367,478)
(300,074,417)
(41,534,758)
(298,398,624)
Net
increase
(decrease)
..........................
15,835,468
$133,841,510
(58,658,100)
$(440,296,554)
a
May
include
a
portion
of
Class
C
shares
that
were
automatically
converted
to
Class
A.
1.
Organization
and
Significant
Accounting
Policies
(continued)
Templeton
Funds
Notes
to
Financial
Statements
27
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Trust
are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
The
Fund
pays
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
Global
Advisors
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
For
the
year
ended
August
31,
2022,
the
gross
effective
investment
management
fee
rate
was
0.695%
of
the
Fund’s
average
daily
net
assets. 
b.
Administrative
Fees
Under
an
agreement
with
Global
Advisors,
FT
Services
provides
administrative
services
to
the
Fund.
The
fee
is
paid
by
Global
Advisors
based
on
the
Fund’s
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
c.
Distribution
Fees
The
Board
has
adopted
distribution
plans
for
each
share
class,
with
the
exception
of
Class
R6
and
Advisor
Class
shares,
pursuant
to
Rule
12b-1
under
the
1940
Act.
Under
the
Fund’s
Class A reimbursement
distribution
plan,
the
Fund
reimburses
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
the
Fund's
shares
up
to
the
maximum
annual
plan
rate.
Under
the
Class
A
reimbursement
distribution
plan,
costs
exceeding
the
maximum
for
the
current
plan
year
cannot
be
reimbursed
in
subsequent
periods.
In
addition,
under
the
Fund’s
Class C
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:
Subsidiary
Affiliation
Templeton
Global
Advisors
Limited
(Global
Advisors)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Distributors,
LLC
(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
Templeton
Funds
Notes
to
Financial
Statements
28
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
d.
Sales
Charges/Underwriting
Agreements
Front-end
sales
charges
and
contingent
deferred
sales
charges
(CDSC)
do
not
represent
expenses
of
the
Fund.
These
charges
are
deducted
from
the
proceeds
of
sales
of
Fund
shares
prior
to
investment
or
from
redemption
proceeds
prior
to
remittance,
as
applicable.
Distributors
has
advised
the
Fund
of
the
following
commission
transactions
related
to
the
sales
and
redemptions
of
the
Fund's
shares
for
the
year:
e.
Transfer
Agent
Fees
Each
class
of
shares pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
The
fees
are
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
In
addition,
each
class reimburses
Investor
Services
for
out
of
pocket
expenses
incurred
and,
except
for
Class
R6, reimburses
shareholder
servicing
fees
paid
to
third
parties.
These
fees
are
allocated
daily
based
upon
their
relative
proportion
of
such
classes'
aggregate
net
assets.
Class
R6
pays
Investor
Services
transfer
agent
fees
specific
to
that
class.
For
the
year
ended
August
31,
2022,
the
Fund
paid
transfer
agent
fees
of
$4,715,192, of
which
$1,623,441
was
retained
by
Investor
Services.
f.
Investments
in
Affiliated
Management
Investment
Companies
The
Fund
invests
in
one
or
more
affiliated
management
investment
companies.
As
defined
in
the
1940
Act,
an
investment
is
deemed
to
be
a
“Controlled
Affiliate”
of
a
fund
when
a
fund
owns,
either
directly
or
indirectly,
25%
or
more
of
the
affiliated
fund’s
outstanding
shares
or
has
the
power
to
exercise
control
over
management
or
policies
of
such
fund.
The
Fund
does
not
invest
for
purposes
of
exercising
a
controlling
influence
over
the
management
or
policies.
Management
fees
paid
by
the
Fund
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statement
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
year
ended
August
31,
2022,
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
..............................
$87,334
CDSC
retained
..............................................................................
$5,297
3.
Transactions
with
Affiliates
(continued)
c.
Distribution
Fees
(continued)
Templeton
Funds
Notes
to
Financial
Statements
29
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
g.
Waiver
and
Expense
Reimbursements
Global
Advisors
and
Investor
Services
have
contractually
agreed
in
advance
to
waive
or
limit
their
respective
fees
and
to
assume
as
their
own
expense
certain
expenses
otherwise
payable
by
the
Fund
so
that
the
operating
expenses
(excluding
interest
expense,
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,
2022.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund's
fiscal
year
end.
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,
2022.
h.
Other
Affiliated
Transactions
During
the
year
ended
August
31,
2021,
CollegeInvest
(Colorado
529
Plans),
an
affiliated
shareholder
of
the
Fund,
fully
redeemed
out
of
the
Fund.
As
a
result,
on
July
16,
2021,
the
Fund
delivered
portfolio
securities
and
cash
that
were
transferred
in-kind
to
the
Colorado
529
Plans,
which
included
$32,278,642
of
net
realized
gains.
As
such
gains
are
not
taxable
to
the
Fund
and
are
not
distributed
to
remaining
shareholders,
they
are
reclassified
from
accumulated
net
realized
gains
to
paid-in
capital.
4.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains.
At
August
31,
2022,
the
capital
loss
carryforwards
were
as
follows:
During
the
year
ended
August
31,
2022,
the
Fund
utilized
$155,601,688
of
capital
loss
carryforwards.
    aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
a      
a  
a  
a  
a  
a  
a  
a  
Templeton
Foreign
Fund
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
1.864%
$—
$113,146,332
$(90,081,543)
$—
$—
$23,064,789
23,064,789
$83,923
Total
Affiliated
Securities
...
$—
$113,146,332
$(90,081,543)
$—
$—
$23,064,789
$83,923
Capital
loss
carryforwards
not
subject
to
expiration:
Long
term
................................................................................
$
370,153,566
3.
Transactions
with
Affiliates
(continued)
f.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Templeton
Funds
Notes
to
Financial
Statements
30
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
The
tax
character
of
distributions
paid
during
the
years
ended
August
31,
2022
and
2021,
was
as
follows:
At
August
31,
2022,
the
cost
of
investments,
net
unrealized
appreciation
(depreciation)
and
undistributed
ordinary
income
for
income
tax
purposes
were
as
follows:
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatments
of
foreign
currency
transactions,
passive
foreign
investment
company
shares
and
wash
sales.
5.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
year
ended
August
31,
2022,
aggregated
$847,339,371
and
$1,134,879,481,
respectively.
At
August
31,
2022,
in
connection
with
securities
lending
transactions,
the
Fund
loaned
equity
investments
and
received
$23,064,789
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.
Political
and
financial
uncertainty
in
many
foreign
regions
may
increase
market
volatility
and
the
economic
risk
of
investing
in
foreign
securities.
In
addition,
certain
foreign
securities
may
not
be
as
liquid
as
U.S.
securities.
7.
Geopolitical
Risk 
On
February
24,
2022,
Russia
engaged
in
military
actions
in
the
sovereign
territory
of
Ukraine.
The
current
political
and
financial
uncertainty
surrounding
Russia
and
Ukraine
may
increase
market
volatility
and
the
economic
risk
of
investing
in
securities
in
these
countries
and
may
also
cause
uncertainty
for
the
global
economy
and
broader
financial
markets.
The
ultimate
fallout
and
long-term
impact
from
these
events
are
not
known.
The
Fund
will
continue
to
assess
the
impact
on
valuations
and
liquidity
and
will
take
any
potential
actions
needed
in
accordance
with
procedures
approved
by
the
Board.
2022
2021
Distributions
paid
from:
Ordinary
income
..........................................................
$128,985,913
$51,451,306
Cost
of
investments
..........................................................................
$2,693,096,300
Unrealized
appreciation
........................................................................
$347,092,546
Unrealized
depreciation
........................................................................
(561,116,960)
Net
unrealized
appreciation
(depreciation)
..........................................................
$(214,024,414)
Distributable
earnings:
Undistributed
ordinary
income
...................................................................
$25,190,848
4.
Income
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
31
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
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
3,
2023.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
Fund
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Fund
and
other
costs
incurred
by
the
Fund,
pay
its
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
its
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statement
of
Operations.
During
the
year
ended
August
31,
2022,
the Fund
did
not
use
the
Global
Credit
Facility.
10.
Fair
Value
Measurements
The
Fund
follows
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Fund's
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the
Fund's financial
instruments
and
are
summarized
in
the
following
fair
value
hierarchy:
Level
1
–
quoted
prices
in
active
markets
for
identical
financial
instruments
Level
2
–
other
significant
observable
inputs
(including
quoted
prices
for
similar
financial
instruments,
interest
rates,
prepayment
speed,
credit
risk,
etc.)
Level
3
–
significant
unobservable
inputs
(including
the
Fund's
own
assumptions
in
determining
the
fair
value
of
financial
instruments)
The
input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level.
A
summary
of
inputs
used
as
of
August
31,
2022,
in
valuing
the
Fund's
assets
carried
at
fair
value,
is
as
follows:
Level
1
Level
2
Level
3
Total
Templeton
Foreign
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Aerospace
&
Defense
...................
$
—
$
108,050,382
$
—
$
108,050,382
Airlines
..............................
—
18,847,671
—
18,847,671
Auto
Components
......................
—
125,094,455
—
125,094,455
Automobiles
..........................
—
106,099,669
—
106,099,669
Banks
...............................
—
346,628,568
—
346,628,568
Chemicals
...........................
—
23,740,901
—
23,740,901
Construction
Materials
..................
—
32,559,270
—
32,559,270
Diversified
Financial
Services
.............
—
88,371,713
—
88,371,713
Electrical
Equipment
....................
30,412,760
—
—
30,412,760
Energy
Equipment
&
Services
.............
—
65,492,114
—
65,492,114
Templeton
Funds
Notes
to
Financial
Statements
32
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
(continued)
11.
New
Accounting
Pronouncements
In June
2022,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standards
Update
(ASU)
No.
2022-03,
Fair
Value
Measurement
(Topic
820)
–
Fair
Value
Measurement
of
Equity
Securities
Subject
to
Contractual
Sale
Restrictions.
The
amendments
in
the
ASU
clarify
that
a
contractual
restriction
on
the
sale
of
an
equity
security
is
not
considered
part
of
the
unit
of
account
of
the
equity
security
and,
therefore,
should
not
be
considered
in
measuring
fair
value.
The
ASU
is
effective
for
interim
and
annual
reporting
periods
beginning
after
December
15,
2023,
with
the
option
of
early
adoption.
Management
is
currently
evaluating
the
impact,
if
any,
of
applying
this
ASU.
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
Level
1
Level
2
Level
3
Total
Templeton
Foreign
Fund
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Food
&
Staples
Retailing
.................
$
—
$
44,273,900
$
—
$
44,273,900
Health
Care
Providers
&
Services
..........
—
29,584,742
—
29,584,742
Hotels,
Restaurants
&
Leisure
.............
30,020,463
—
—
30,020,463
Household
Durables
....................
—
44,444,465
—
44,444,465
Industrial
Conglomerates
................
—
110,373,812
—
110,373,812
Insurance
............................
—
87,652,871
—
87,652,871
Interactive
Media
&
Services
..............
21,411,074
—
—
21,411,074
Internet
&
Direct
Marketing
Retail
..........
40,723,840
129,155,587
—
169,879,427
IT
Services
...........................
45,411,828
—
—
45,411,828
Media
...............................
—
27,936,835
—
27,936,835
Metals
&
Mining
.......................
—
39,416,463
—
39,416,463
Multiline
Retail
........................
—
20,901,141
—
20,901,141
Multi-Utilities
..........................
—
31,671,923
—
31,671,923
Oil,
Gas
&
Consumable
Fuels
.............
—
280,567,950
—
280,567,950
Pharmaceuticals
.......................
—
131,670,575
—
131,670,575
Professional
Services
...................
—
48,075,066
—
48,075,066
Semiconductors
&
Semiconductor
Equipment
.
38,831,499
110,442,767
—
149,274,266
Technology
Hardware,
Storage
&
Peripherals
.
—
90,989,302
—
90,989,302
Tobacco
.............................
—
51,453,491
—
51,453,491
Short
Term
Investments
...................
23,064,789
55,700,000
—
78,764,789
Total
Investments
in
Securities
...........
$229,876,253
$2,249,195,633
a
$—
$2,479,071,886
a
Includes
foreign
securities
valued
at
$2,193,495,633,
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
Currency
GBP
British
Pound
HKD
Hong
Kong
Dollar
10.
Fair
Value
Measurements
(continued)
Templeton
Funds
Report
of
Independent
Registered
Public
Accounting
Firm
33
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
of
Templeton
Funds
and
Shareholders
of
Templeton
Foreign
Fund
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statement
of
assets
and
liabilities,
including
the
schedule
of
investments,
of
Templeton
Foreign
Fund
(one
of
the
funds
constituting
Templeton
Funds,
referred
to
hereafter
as
the
“Fund”)
as
of
August
31,
2022,
the
related
statement
of
operations
for
the
year
ended
August
31,
2022,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2022,
including
the
related
notes,
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2022
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Fund
as
of
August
31,
2022,
the
results
of
its
operations
for
the
year
then
ended,
the
changes
in
its
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2022
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2022
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinion
These
financial
statements
are
the
responsibility
of
the
Fund’s
management.
Our
responsibility
is
to
express
an
opinion
on
the
Fund’s
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(PCAOB)
and
are
required
to
be
independent
with
respect
to
the
Fund
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
of
these
financial
statements
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
August
31,
2022
by
correspondence
with
the
custodian
and
transfer
agent.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinion.
PricewaterhouseCoopers
LLP
San
Francisco,
California
October
17,
2022
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Templeton
Funds
Tax
Information
(unaudited)
34
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
By
mid-February,
tax
information
related
to
a
shareholder's
proportionate
share
of
distributions
paid
during
the
preceding
calendar
year
will
be
received,
if
applicable.
Please
also
refer
to
www.franklintempleton.com
for
per
share
tax
information
related
to
any
distributions
paid
during
the
preceding
calendar
year.
Shareholders
are
advised
to
consult
with
their
tax
advisors
for
further
information
on
the
treatment
of
this
amount
on
their
tax
returns.
The
following
tax
information
for
the
Fund
is
required
to
be
furnished
to
shareholders
with
respect
to
income
earned
and
distributions
paid
during
its
fiscal
year.
The
Fund
hereby
reports
the
following
amount,
or
if
subsequently
determined
to
be
different,
the
maximum
allowable
amount,
for
the
fiscal
year
ended
August
31,
2022:
Under
Section
853
of
the
Internal
Revenue
Code,
the
Fund
intends
to
elect
to
pass
through
to
its
shareholders
the
following
amounts,
or
amounts
as
finally
determined,
of
foreign
taxes
paid
and
foreign
source
income
earned
by
the
fund
during
the
fiscal
year
ended
August
31,
2022:
Pursuant
to:
Amount
Reported
Income
Eligible
for
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$945,312
Qualified
Dividend
Income
Earned
(QDI)
§854(b)(1)(B)
$88,279,006
Section
163(j)
Interest
Earned
§163(j)
$204,786
Amount
Reported
Foreign
Taxes
Paid
$7,956,271
Foreign
Source
Income
Earned
$68,294,602
Templeton
Funds
Board
Members
and
Officers
35
franklintempleton.com
Annual
Report
The
name,
year
of
birth
and
address
of
the
officers
and
board
members,
as
well
as
their
affiliations,
positions
held
with
the
Trust,
principal
occupations
during
at
least
the
past
five
years
and
number
of
U.S.
registered
portfolios
overseen
in
the
Franklin
Templeton\Legg
Mason
fund
complex,
are
shown
below.
Generally,
each
board
member
serves
until
that
person’s
successor
is
elected
and
qualified.
Independent
Board
Members
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Harris
J.
Ashton
(1932)
Trustee
Since
1992
119
Bar-S
Foods
(meat
packing
company)
(1981-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Director,
RBC
Holdings,
Inc.
(bank
holding
company)
(until
2002);
and
President,
Chief
Executive
Officer
and
Chairman
of
the
Board,
General
Host
Corporation
(nursery
and
craft
centers)
(until
1998).
Ann
Torre
Bates
(1958)
Trustee
Since
2008
30
Ares
Capital
Corporation
(specialty
finance
company)
(2010-present),
United
Natural
Foods,
Inc.
(distributor
of
natural,
organic
and
specialty
foods)
(2013-present),
formerly
,
Allied
Capital
Corporation
(financial
services)
(2003-
2010),
SLM
Corporation
(Sallie
Mae)
(1997-2014)
and
Navient
Corporation
(loan
management,
servicing
and
asset
recovery)
(2014-2016).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Executive
Vice
President
and
Chief
Financial
Officer,
NHP
Incorporated
(manager
of
multifamily
housing)
(1995-1997);
and
Vice
President
and
Treasurer,
US
Airways,
Inc.
(until
1995).
Mary
C.
Choksi
(1950)
Trustee
Since
2016
120
Omnicom
Group
Inc.
(advertising
and
marketing
communications
services)
(2011-present)
and
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2017-present);
and
formerly
,
Avis
Budget
Group
Inc.
(car
rental)
(2007-2020).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Founder
and
Senior
Advisor,
Strategic
Investment
Group
(investment
management
group)
(2015-2017);
Founding
Partner
and
Senior
Managing
Director,
Strategic
Investment
Group
(1987-2015);
Founding
Partner
and
Managing
Director,
Emerging
Markets
Management
LLC
(investment
management
firm)
(1987-2011);
and
Loan
Officer/Senior
Loan
Officer/Senior
Pension
Investment
Officer,
World
Bank
Group
(international
financial
institution)
(1977-1987).
Templeton
Funds
36
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Edith
E.
Holiday
(1952)
Lead
Independent
Trustee
Trustee
since
2003
and
Lead
Independent
Trustee
since
2007
120
Hess
Corporation
(exploration
of
oil
and
gas)
(1993-present),
Santander
Consumer
USA
Holdings,
Inc.
(consumer
finance)
(2016-present);
Santander
Holdings
USA
(holding
company)
(2019-present);
and
formerly
,
Canadian
National
Railway
(railroad)
(2001-2021),
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2004-
2021),
RTI
International
Metals,
Inc.
(manufacture
and
distribution
of
titanium)
(1999-2015)
and
H.J.
Heinz
Company
(processed
foods
and
allied
products)
(1994-2013).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
or
Trustee
of
various
companies
and
trusts;
and
formerly
,
Assistant
to
the
President
of
the
United
States
and
Secretary
of
the
Cabinet
(1990-1993);
General
Counsel
to
the
United
States
Treasury
Department
(1989-1990);
and
Counselor
to
the
Secretary
and
Assistant
Secretary
for
Public
Affairs
and
Public
Liaison-United
States
Treasury
Department
(1988-1989).
J.
Michael
Luttig
(1954)
Trustee
Since
2009
120
Boeing
Capital
Corporation
(aircraft
financing)
(2006-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Counselor
and
Special
Advisor
to
the
CEO
and
Board
of
Directors
of
the
Coca-Cola
Company
(beverage
company)
(2021-present);
and
formerly
,
Counselor
and
Senior
Advisor
to
the
Chairman,
CEO,
and
Board
of
Directors,
of
The
Boeing
Company
(aerospace
company),
and
member
of
the
Executive
Council
(2019-2020);
Executive
Vice
President,
General
Counsel
and
member
of
the
Executive
Council,
The
Boeing
Company
(2006-2019);
and
Federal
Appeals
Court
Judge,
United
States
Court
of
Appeals
for
the
Fourth
Circuit
(1991-2006).
David
W.
Niemiec
(1949)
Trustee
Since
2005
30
Hess
Midstream
LP
(oil
and
gas
midstream
infrastructure)
(2017-present).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Advisor,
Saratoga
Partners
(private
equity
fund);
and
formerly
,
Managing
Director,
Saratoga
Partners
(1998-2001)
and
SBC
Warburg
Dillon
Read
(investment
banking)
(1997-1998);
Vice
Chairman,
Dillon,
Read
&
Co.
Inc.
(investment
banking)
(1991-1997);
and
Chief
Financial
Officer,
Dillon,
Read
&
Co.
Inc.
(1982-1997).
Larry
D.
Thompson
(1945)
Trustee
Since
2005
120
Graham
Holdings
Company
(education
and
media
organization)
(2011-2021);
The
Southern
Company
(energy
company)
(2014-2020;
previously
2010-
2012)
and
Cbeyond,
Inc.
(business
communications
provider)
(2010-
2012).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
Counsel,
Finch
McCranie,
LLP
(law
firm)
(2015-present);
John
A.
Sibley
Professor
of
Corporate
and
Business
Law,
University
of
Georgia
School
of
Law
(2015-present;
previously
2011-2012);
and
formerly
,
Independent
Compliance
Monitor
and
Auditor,
Volkswagen
AG
(manufacturer
of
automobiles
and
commercial
vehicles)
(2017-2020);
Executive
Vice
President
-
Government
Affairs,
General
Counsel
and
Corporate
Secretary,
PepsiCo,
Inc.
(consumer
products)
(2012-2014);
Senior
Vice
President
-
Government
Affairs,
General
Counsel
and
Secretary,
PepsiCo,
Inc.
(2004-2011);
Senior
Fellow
of
The
Brookings
Institution
(2003-2004);
Visiting
Professor,
University
of
Georgia
School
of
Law
(2004);
and
Deputy
Attorney
General,
U.S.
Department
of
Justice
(2001-2003).
Independent
Board
Members
(continued)
Templeton
Funds
37
franklintempleton.com
Annual
Report
Interested
Board
Members
and
Officers
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Constantine
D.
Tseretopoulos
(1954)
Trustee
Since
2003
20
None
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Physician,
Chief
of
Staff,
owner
and
operator
of
the
Lyford
Cay
Hospital
(1987-present);
director
of
various
nonprofit
organizations;
and
formerly
,
Cardiology
Fellow,
University
of
Maryland
(1985-1987);
and
Internal
Medicine
Resident,
Greater
Baltimore
Medical
Center
(1982-
1985).
Robert
E.
Wade
(1946)
Trustee
Since
2006
30
El
Oro
Ltd
(investments)
(2003-
2019).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Attorney
at
law
engaged
in
private
practice
as
a
sole
practitioner
(1972-2008)
and
member
of
various
boards.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
**Gregory
E.
Johnson
(1961)
Trustee
Since
2013
131
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Executive
Chairman,
Chairman
of
the
Board
and
Director,
Franklin
Resources,
Inc.;
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
Vice
Chairman,
Investment
Company
Institute;
and
formerly
,
Chief
Executive
Officer
(2013-2020)
and
President
(1994-2015)
Franklin
Resources,
Inc.
**Rupert
H.
Johnson,
Jr.
(1940)
Chairman
of
the
Board,
Trustee
and
Vice
President
Chairman
of
the
Board
since
2013,
Trustee
since
1992
and
Vice
President
since
1996
120
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
(Vice
Chairman),
Franklin
Resources,
Inc.;
Director,
Franklin
Advisers,
Inc.;
and
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Alan
T.
Bartlett
(1970)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
2019
Not
Applicable
Not
Applicable
Lyford
Cay
Nassau,
Bahamas
Principal
Occupation
During
at
Least
the
Past
5
Years:
President
and
Director,
Templeton
Global
Advisors
Limited;
Chief
Investment
Officer
of
Templeton
Global
Equity
Group;
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
Chairman
of
the
Board,
Goodhart
Partners;
and
formerly
,
Chief
Executive
Officer,
Goodhart
Partners
(2009-2019).
Independent
Board
Members
(continued)
Templeton
Funds
38
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Alison
E.
Baur
(1964)
Vice
President
Since
2012
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Deputy
General
Counsel,
Franklin
Templeton;
and
officer
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Breda
M.
Beckerle
(1958)
Chief
Compliance
Officer
Since
2020
Not
Applicable
Not
Applicable
280
Park
Avenue
New
York,
NY
10017
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Compliance
Officer,
Fiduciary
Investment
Management
International,
Inc.,
Franklin
Advisers,
Inc.,
Franklin
Mutual
Advisers,
LLC,
Franklin
Templeton
Institutional,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Steven
J.
Gray
(1955)
Vice
President
Since
2009
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Distributors,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Matthew
T.
Hinkle
(1971)
Chief
Executive
Officer
–
Finance
and
Administration
Since
2017
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Vice
President,
Franklin
Templeton
Services,
LLC;
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
and
formerly
,
Vice
President,
Global
Tax
(2012-April
2017)
and
Treasurer/Assistant
Treasurer,
Franklin
Templeton
(2009-2017).
Susan
Kerr
(1949)
Vice
President
–
AML
Compliance
Since
2021
Not
Applicable
Not
Applicable
620
Eighth
Avenue
New
York,
NY
10018
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Compliance
Analyst,
Franklin
Templeton;
Chief
Anti-Money
Laundering
Compliance
Officer,
Legg
Mason
&
Co.,
or
its
affiliates;
Anti
Money
Laundering
Compliance
Officer;
Senior
Compliance
Officer,
LMIS;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Christopher
Kings
(1974)
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
January
2022
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Treasurer,
U.S.
Fund
Administration
&
Reporting;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Navid
J.
Tofigh
(1972)
Vice
President
Since
2015
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
39
franklintempleton.com
Annual
Report
*We
base
the
number
of
portfolios
on
each
separate
series
of
the
U.S.
registered
investment
companies
within
the
Franklin
Templeton/Legg
Mason
fund
complex.
These
portfolios
have
a
common
investment
manager
or
affiliated
investment
managers.
**Gregory
E.
Johnson
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
of
Franklin
Resources,
Inc.
(Resources),
which
is
the
parent
company
of
the
Fund’s
investment
manager
and
distributor.
Rupert
H.
Johnson,
Jr.
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
and
major
shareholder
of
Resources.
Note
1:
Rupert
H.
Johnson,
Jr.
is
the
uncle
of
Gregory
E.
Johnson.
Note
2:
Officer
information
is
current
as
of
the
date
of
this
report.
It
is
possible
that
after
this
date,
information
about
officers
may
change.
The
Sarbanes-Oxley
Act
of
2002
and
Rules
adopted
by
the
U.S.
Securities
and
Exchange
Commission
require
the
Fund
to
disclose
whether
the
Fund’s
Audit
Committee
includes
at
least
one
member
who
is
an
audit
committee
financial
expert
within
the
meaning
of
such
Act
and
Rules.
The
Fund’s
Board
has
determined
that
there
is
at
least
one
such
financial
expert
on
the
Audit
Committee
and
has
designated
each
of
Ann
Torre
Bates
and
David
W.
Niemiec
as
an
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
qualify
as
such
an
expert
in
view
of
their
extensive
business
background
and
experience.
Ms.
Bates
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2008.
She
currently
serves
as
a
director
of
Ares
Capital
Corporation
(2010-present)
and
United
Natural
Foods,
Inc.
(2013-present)
and
was
formerly
a
director
of
Navient
Corporation
from
2014
to
2016,
SLM
Corporation
from
1997
to
2014
and
Allied
Capital
Corporation
from
2003
to
2010,
Executive
Vice
President
and
Chief
Financial
Officer
of
NHP
Incorporated
from
1995
to
1997
and
Vice
President
and
Treasurer
of
US
Airways,
Inc.
until
1995.
Mr.
Niemiec
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2005,
currently
serves
as
an
Advisor
to
Saratoga
Partners
and
was
formerly
its
Managing
Director
from
1998
to
2001
and
serves
as
a
director
of
Hess
Midstream
LP
(2017-present).
Mr.
Niemiec
was
formerly
a
director
of
Emeritus
Corporation
from
1999
to
2010
and
OSI
Pharmaceuticals,
Inc.
from
2006
to
2010,
Managing
Director
of
SBC
Warburg
Dillon
Read
from
1997
to
1998,
and
was
Vice
Chairman
from
1991
to
1997
and
Chief
Financial
Officer
from
1982
to
1997
of
Dillon,
Read
&
Co.
Inc.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
have
each
acquired
an
understanding
of
generally
accepted
accounting
principles
and
financial
statements,
the
general
application
of
such
principles
in
connection
with
the
accounting
estimates,
accruals
and
reserves,
and
analyzing
and
evaluating
financial
statements
that
present
a
breadth
and
level
of
complexity
of
accounting
issues
generally
comparable
to
those
of
the
Fund,
as
well
as
an
understanding
of
internal
controls
and
procedures
for
financial
reporting
and
an
understanding
of
audit
committee
functions.
Ms.
Bates
and
Mr.
Niemiec
are
independent
Board
members
as
that
term
is
defined
under
the
applicable
U.S.
Securities
and
Exchange
Commission
Rules
and
Releases.
The
Statement
of
Additional
Information
(SAI)
includes
additional
information
about
the
board
members
and
is
available,
without
charge,
upon
request.
Shareholders
may
call
(800)
DIAL
BEN/342-5236
to
request
the
SAI.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Lori
A.
Weber
(1964)
Vice
President
and
Secretary
Vice
President
since
2011
and
Secretary
since
2013
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Resources,
Inc.;
Vice
President
and
Secretary,
Templeton
Investment
Counsel,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
Shareholder
Information
40
franklintempleton.com
Annual
Report
Liquidity
Risk
Management
Program
Each
Fund
has
adopted
and
implemented
a
written
Liquidity
Risk
Management
Program
(the
“LRMP”)
as
required
by
Rule
22e-4
under
the
Investment
Company
Act
of
1940
(the
“Liquidity
Rule”).
The
LRMP
for
the
Franklin
Templeton
and
Legg
Mason
Funds
is
designed
to
assess
and
manage
each
Fund’s
liquidity
risk,
which
is
defined
as
the
risk
that
the
Fund
could
not
meet
requests
to
redeem
shares
issued
by
the
Fund
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
In
accordance
with
the
Liquidity
Rule,
the
LRMP
includes
policies
and
procedures
that
provide
for:
(1)
assessment,
management,
and
review
(no
less
frequently
than
annually)
of
each
Fund’s
liquidity
risk;
(2)
classification
of
each
Fund’s
portfolio
holdings
into
one
of
four
liquidity
categories
(Highly
Liquid,
Moderately
Liquid,
Less
Liquid,
and
Illiquid);
(3)
for
Funds
that
do
not
primarily
hold
assets
that
are
Highly
Liquid,
establishing
and
maintaining
a
minimum
percentage
of
the
Fund’s
net
assets
in
Highly
Liquid
investments
(called
a
“Highly
Liquid
Investment
Minimum”
or
“HLIM”);
and
(4)
prohibiting
the
Fund’s
acquisition
of
Illiquid
investments
that
would
result
in
the
Fund
holding
more
than
15%
of
its
net
assets
in
Illiquid
assets.
The
LRMP
also
requires
reporting
to
the
Securities
and
Exchange
Commission
(“SEC”)
(on
a
non-public
basis)
and
to
the
Board
if
the
Fund’s
holdings
of
Illiquid
assets
exceed
15%
of
the
Fund’s
net
assets.
Funds
with
HLIMs
must
have
procedures
for
addressing
HLIM
shortfalls,
including
reporting
to
the
Board
and,
with
respect
to
HLIM
shortfalls
lasting
more
than
seven
consecutive
calendar
days,
reporting
to
the
SEC
(on
a
non-public
basis).
The
Director
of
Liquidity
Risk
within
the
Investment
Risk
Management
Group
(the
“IRMG”)
is
the
appointed
Administrator
of
the
LRMP.
The
IRMG
maintains
the
Investment
Liquidity
Committee
(the
“ILC”)
to
provide
oversight
and
administration
of
policies
and
procedures
governing
liquidity
risk
management
for
Franklin
Templeton
and
Legg
Mason
products
and
portfolios.
The
ILC
includes
representatives
from
Franklin
Templeton’s
Risk,
Trading,
Global
Compliance,
Legal,
Investment
Compliance,
Investment
Operations,
Valuation
Committee,
Product
Management
and
Global
Product
Strategy.
In
assessing
and
managing
each
Fund’s
liquidity
risk,
the
ILC
considers,
as
relevant,
a
variety
of
factors,
including
the
Fund’s
investment
strategy
and
the
liquidity
of
its
portfolio
investments
during
both
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources
including
the
Funds’
interfund
lending
facility
and
line
of
credit.
Classification
of
the
Fund’s
portfolio
holdings
in
the
four
liquidity
categories
is
based
on
the
number
of
days
it
is
reasonably
expected
to
take
to
convert
the
investment
to
cash
(for
Highly
Liquid
and
Moderately
Liquid
holdings)
or
sell
or
dispose
of
the
investment
(for
Less
Liquid
and
Illiquid
investments),
in
current
market
conditions
without
significantly
changing
the
investment’s
market
value.
Each
Fund
primarily
holds
liquid
assets
that
are
defined
under
the
Liquidity
Rule
as
"Highly
Liquid
Investments,"
and
therefore
is
not
required
to
establish
an
HLIM.
Highly
Liquid
Investments
are
defined
as
cash
and
any
investment
reasonably
expected
to
be
convertible
to
cash
in
current
market
conditions
in
three
business
days
or
less
without
the
conversion
to
cash
significantly
changing
the
market
value
of
the
investment.
At
meetings
of
the
Funds’
Board
of
Trustees
held
in
May
2022,
the
Program
Administrator
provided
a
written
report
to
the
Board
addressing
the
adequacy
and
effectiveness
of
the
program
for
the
year
ended
December
31,
2021.
The
Program
Administrator
report
concluded
that
(i.)
the
LRMP,
as
adopted
and
implemented,
remains
reasonably
designed
to
assess
and
manage
each
Fund’s
liquidity
risk;
(ii.)
the
LRMP,
including
the
Highly
Liquid
Investment
Minimum
(“HLIM”)
where
applicable,
was
implemented
and
operated
effectively
to
achieve
the
goal
of
assessing
and
managing
each
Fund’s
liquidity
risk;
and
(iii.)
each
Fund
was
able
to
meet
requests
for
redemption
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
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.
Templeton
Funds
Shareholder
Information
41
franklintempleton.com
Annual
Report
Quarterly
Schedule
of
Investments
The
Trust,
on
behalf
of
the
Fund,
files
a
complete
schedule
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
by
visiting
the
Commission’s
website
at
sec.gov.
The
filed
form
may
also
be
viewed
and
copied
at
the
Commission’s
Public
Reference
Room
in
Washington,
DC.
Information
regarding
the
operations
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
Householding
of
Reports
and
Prospectuses
You
will
receive,
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
A
10/22
©
2022
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
and
Shareholder
Letter
Templeton
Foreign
Fund
Investment
Manager
Distributor
Shareholder
Services
Templeton
Global
Advisors
Limited
Franklin
Distributors,
LLC
(800)
DIAL
BEN
®
/
342-5236
franklintempleton.com
(800)
632-2301
ANNUAL
REPORT
AND
SHAREHOLDER
LETTER
Templeton
International
Climate
Change
Fund
A
Series
of
Templeton
Funds
August
31,
2022
Sign
up
for
electronic
delivery
at
franklintempleton.com/edelivery
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
franklintempleton.com
Annual
Report
1
SHAREHOLDER
LETTER
Dear
Shareholder:
During
the
12
months
ended
August
31,
2022,
global
equities
benefited
earlier
in
the
period
from
ongoing
COVID-19
vaccination
programs
and
some
easing
of
restrictions.
However,
the
combination
of
resilient
consumer
demand
and
persistent
supply-chain
disruptions
contributed
to
higher
inflation
in
many
countries,
which
led
many
of
the
world’s
central
banks
to
adopt
less
accommodative
monetary
policies
in
2022,
hindering
stocks.
New
lockdowns
by
China
to
limit
the
spread
of
COVID-19
variants
also
pressured
emerging
market
stocks,
especially
in
Asia,
and
Russia’s
invasion
of
Ukraine
increased
investor
uncertainty
given
the
resulting
disruption
of
global
trade
and
commodity
markets.
In
this
environment,
stocks
in
global
developed
and
emerging
markets
excluding
the
U.S.,
as
measured
by
the
MSCI
All
Country
World
Index
ex
USA
Index-NR
(net
of
tax
withholding
when
dividends
are
paid),
posted
a
-19.52%
total
return
for
the
period.
1
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
International
Climate
Change
Fund’s
annual
report
includes
more
detail
about
prevailing
conditions
and
a
discussion
about
investment
decisions
during
the
period.
Please
remember
all
securities
markets
fluctuate,
as
do
mutual
fund
share
prices.
We
thank
you
for
investing
with
Franklin
Templeton,
welcome
your
questions
and
comments,
and
look
forward
to
serving
your
investment
needs
in
the
years
ahead.
Sincerely,
Alan
Bartlett
Chief
Investment
Officer
Templeton
Global
Equity
Group
This
letter
reflects
our
analysis
and
opinions
as
of
August
31,
2022,
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.
1.
Source:
Morningstar.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
franklintempleton.com
Annual
Report
2
Contents
Annual
Report
Templeton
International
Climate
Change
Fund
3
Performance
Summary
7
Your
Fund’s
Expenses
10
Financial
Highlights
and
Schedule
of
Investments
11
Financial
Statements
17
Notes
to
Financial
Statements
21
Report
of
Independent
Registered
Public
Accounting
Firm
30
Tax
Information
31
Board
Members
and
Officers
32
Shareholder
Information
37
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
3
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Templeton
International
Climate
Change
Fund
This
annual
report
for
Templeton
International
Climate
Change
Fund
covers
the
fiscal
year
ended
August
31,
2022.
The
Fund
commenced
operations
on
June
1,
2018,
and
initiated
Advisor
Class
shares
for
non-public
use.
The
Fund
began
offering
Advisor
Class
shares
to
the
public
on
December
15,
2021,
and
began
offering
Class
A,
Class
C
and
Class
R6
shares
to
the
public
on
June
3,
2022.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
total
return
over
the
longer
term.
Under
normal
market
conditions,
the
Fund
invests
at
least
80%
of
its
net
assets
in
“non-U.S.
securities,”
as
defined
in
the
prospectus.
These
securities
are
predominantly
equity
securities
of
companies
located
outside
the
U.S.,
including
developing
markets.
Under
normal
market
conditions,
the
Fund
invests
predominantly
in
companies
that
we
determined
to
exhibit
superior
practices
in
identifying,
adapting
and
providing
solutions
to
the
consequences
of
climate
change
(i.e.,
companies
that,
based
on
our
fundamental
analysis
and
research,
are
able
to
successfully
transition
to
a
lower
carbon
economy).
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
-30.04%
cumulative
total
return
for
the
12
months
under
review.
1
In
comparison,
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
-19.52%
cumulative
total
return.
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-NR,
posted
a
-15.88%
total
return
for
the
12
months
ended
August
31,
2022.
2
Although
global
equities
benefited
earlier
in
the
period
from
ongoing
COVID-19
vaccination
programs
and
some
easing
of
restrictions,
the
combination
of
resilient
consumer
demand
and
persistent
supply-chain
disruptions
contributed
to
higher
inflation
in
many
countries.
This
inflationary
pressure
led
many
of
the
world’s
central
banks
to
adopt
less
accommodative
stances
regarding
monetary
policy
in
2022,
hindering
stocks.
New
lockdowns
imposed
by
China’s
government
to
quell
the
spread
of
the
Omicron
variant
of
COVID-19
also
pressured
emerging
market
stocks,
especially
in
Asia.
Russia’s
invasion
of
Ukraine
also
increased
investor
uncertainty,
as
international
sanctions
on
Russia
disrupted
global
trade
and
commodity
markets.
In
the
U.S.,
after
robust
growth
earlier
in
the
period,
gross
domestic
product
(GDP)
slightly
contracted
in
the
first
two
quarters
of
2022
as
high
inflation,
supply
constraints
and
record
trade
deficits
weighed
on
economic
output.
Rising
prices
precipitated
a
notable
decline
in
consumer
confidence,
despite
high
spending
levels,
robust
job
growth
Geographic
Composition
8/31/22
%
of
Total
Net
Assets
Europe
61.3%
Asia
28.1%
North
America
6.7%
Other
0.9%
Short-Term
Investments
&
Other
Net
Assets
3.0%
1.
Effective
6/3/22,
the
Fund
began
offering
Class
A
shares.
Class
A
performance
shown
has
been
calculated
as
follows:
(a)
for
periods
prior
to
6/3/22,
a
restated
figure
is
used
based
on
the
Fund’s
Advisor
Class
performance
that
includes
any
Rule
12b-1
rate
differential
that
exists
between
Class
A
and
Advisor
Class;
and
(b)
for
periods
after
6/3/22,
actual
Class
A
performance
is
used,
reflecting
all
charges
and
fees
applicable
to
that
class.
2.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
15
.
Templeton
International
Climate
Change
Fund
4
franklintempleton.com
Annual
Report
and
low
unemployment.
In
an
effort
to
control
inflation,
the
U.S.
Federal
Reserve
(Fed)
raised
the
federal
funds
target
rate
in
March
2022
for
the
first
time
since
2018.
The
Fed
raised
the
federal
funds
rate
again
at
its
subsequent
three
meetings
to
end
the
period
at
a
range
of
2.25%–2.50%.
Furthermore,
the
Fed
said
it
would
continue
to
reduce
its
bond
holdings
and
anticipated
additional
interest-rate
increases
at
future
meetings
to
curtail
inflation.
Economies
in
the
eurozone
decelerated
to
a
slightly
positive
growth
rate
during
the
year.
The
lifting
of
COVID-related
restrictions
in
some
European
countries
and
the
summer
tourism
season
strengthened
economies.
However,
the
war
in
Ukraine
disrupted
supply
chains,
weakened
the
economic
outlook
and
contributed
to
record
high
inflation
across
the
eurozone,
as
energy
prices
soared.
Electricity
prices
hit
record
highs
in
Germany
and
France
as
coal
futures
and
natural
gas
prices
climbed.
Consequently,
the
European
Central
Bank
raised
interest
rates
in
July
2022
for
the
first
time
in
11
years
to
curtail
growing
inflation.
In
this
environment,
European
developed
market
equities,
as
measured
by
the
MSCI
Europe
Index-NR,
posted
a
-21.57%
total
return
for
the
12
months
under
review.
2
Asian
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
Asia
Index-NR,
posted
a
-20.73%
total
return
for
the
12-month
period.
2
Growth
in
Japan
remained
slow,
alternating
between
positive
quarterly
GDP
growth
and
contraction.
China’s
economy
contracted
sharply
in
2022’s
second
quarter
as
COVID-
related
restrictions
in
many
major
cities,
including
Shanghai,
weakened
consumer
demand.
Unexpected
regulatory
changes
by
China’s
government,
which
negatively
impacted
education-
and
technology-related
businesses,
and
investor
concerns
about
the
solvency
of
several
large
property
developers
in
China
further
pressured
stocks
in
that
country.
Global
emerging
market
stocks,
as
measured
by
the
MSCI
Emerging
Markets
Index-NR,
posted
a
-21.80%
total
return
for
the
12
months
under
review.
2
The
index
declined
for
four
straight
quarters,
the
longest
downturn
since
2008,
weakened
by
central
bank
tightening
and
the
threat
of
recession.
Following
Russia’s
invasion
of
Ukraine,
climbing
food
and
energy
prices
kindled
inflationary
pressures
and
raised
concerns
over
the
possibility
of
government
debt
defaults
in
some
countries.
However,
some
other
countries,
particularly
in
Latin
America,
as
well
as
South
Africa
and
Saudi
Arabia,
benefited
from
rising
commodity
prices.
Investment
Strategy
When
choosing
equity
investments
for
the
Fund,
we
apply
a
bottom-up,
value-oriented,
long-term
approach
to
select
securities
of
companies
we
believe
are
both
undervalued
and
meet
our
standards
for
transitioning
to
a
lower
carbon
economy.
We
focus
on
the
market
price
of
the
company’s
securities
relative
to
our
evaluation
of
the
company’s
long-
term
earnings,
asset
value
and
cash
flow
potential.
Our
analysis
includes
an
assessment
of
the
potential
impacts
of
material
environmental,
social
and
governance
(ESG)
factors
on
the
long-term
risk
and
return
profile
of
a
company.
We
also
consider
a
company’s
price/earnings
ratio,
price/cash
flow
ratio,
profit
margins
and
liquidation
value.
Manager’s
Discussion
Templeton
International
Climate
Change
Fund
underperformed
its
benchmark
index
during
the
12-month
period
ending
August
31,
2022.
India-based
renewable
energy
operator
Azure
Power
Global
was
the
Fund’s
principal
relative
detractor
during
the
reporting
period.
Toward
the
end
of
the
period,
the
company
was
late
to
publish
its
annual
results,
and
its
CEO
resigned
after
concerns
were
raised
about
project
assumptions.
Another
significant
relative
detractor
was
Umicore
(not
held
at
period-end),
Europe’s
largest
battery
materials
company.
Umicore
weighed
on
performance
following
a
profit
warning
for
both
2022
and
2023,
driven
by
substantially
lower
volumes
in
its
cathode
materials
business,
dampening
earnings
growth
for
several
years.
While
this
business
has
experienced
operational
issues
in
the
past,
we
had
remained
constructive
given
the
long-term
opportunity
around
the
growth
of
electric
vehicles
(EVs).
Top
10
Industries
8/31/22
%
of
Total
Net
Assets
a
Electrical
Equipment
20.7%
Semiconductors
&
Semiconductor
Equipment
12.9%
Banks
10.6%
Automobiles
7.8%
Multi-Utilities
7.4%
Electric
Utilities
4.4%
Metals
&
Mining
4.3%
Auto
Components
4.2%
Containers
&
Packaging
4.1%
Building
Products
3.9%
Templeton
International
Climate
Change
Fund
5
franklintempleton.com
Annual
Report
Elsewhere
on
the
downside,
the
utilities
sector
hindered
relative
performance,
largely
due
to
increased
pressure
on
European
utility
companies.
While
these
companies
are
beneficiaries
of
higher
power
pricing,
near-term
concerns
around
gas
supply
and
potential
windfall
taxes
have
weighed
on
the
sector.
Much
of
the
reporting
period
was
characterized
by
market
volatility
shaped
by
an
uncertain
geopolitical
environment
and
the
accompanying
severe
reduction
in
gas
flows
from
Russia
to
Europe.
With
higher
energy
prices
affecting
businesses
and
consumers,
a
recession
appeared
to
be
the
base
case
during
the
latter
part
of
the
period,
with
market
debate
centering
around
its
length
and
severity.
This
had
an
outsized
impact
on
the
Fund,
which
is
overweighted
in
Europe
and
also
overweighted
to
industrials
and
materials,
given
that
many
decarbonization
technologies
are
clustered
in
these
sectors.
Significant
detractors
included
Dutch
LED-manufacturer
Signify
and
French
materials
company
Saint-Gobain.
Turning
to
contributors,
Standard
Chartered
was
the
Fund’s
top
relative
performer.
The
U.K.-based
bank
fared
well
on
the
expectation
that
rising
interest
rates
would
drive
improvements
in
net
interest
margins
and
shareholder
return.
Earnings
reports
during
the
period
were
positive,
with
Standard
Chartered
exceeding
first-quarter
2022
expectations
on
earnings
and
spare
capital
while
reiterating
guidance
for
a
10%
return
on
tangible
equity
by
2024.
India’s
NHPC
was
another
top
relative
contributor
as
coal
shortages
and
strong
power
demand
boosted
the
outlook
for
both
its
hydroelectric
and
future
renewable
power
facilities.
Japan’s
Sumitomo
Metal
Mining
also
helped
relative
performance
as
the
company
benefited
from
an
increase
in
the
price
of
nickel,
a
key
material
in
several
decarbonization
technologies.
At
a
sector
level,
relative
performance
was
helped
by
stock
selection
in
the
health
care
and
information
technology
sectors
along
with
stock
selection
and
an
underweighted
allocation
in
the
consumer
discretionary
sector.
Regionally,
Japan,
the
U.K.
and
South
Korea
all
contributed
to
relative
returns.
The
Fund’s
lack
of
exposure
to
China
also
helped
relative
performance.
In
contrast,
France,
India,
the
Netherlands
and
Germany
detracted.
Thank
you
for
your
continued
participation
in
Templeton
International
Climate
Change
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Craig
Cameron,
CFA
Tina
Sadler,
CFA
Herbert
J.
Arnett,
Jr.
Lauran
Halpin
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
August
31,
2022,
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
Top
10
Holdings
8/31/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Prysmian
SpA
6.0%
Electrical
Equipment,
Italy
Standard
Chartered
plc
5.8%
Banks,
United
Kingdom
STMicroelectronics
NV
5.0%
Semiconductors
&
Semiconductor
Equipment,
Singapore
Vestas
Wind
Systems
A/S
5.0%
Electrical
Equipment,
Denmark
ING
Groep
NV
4.8%
Banks,
Netherlands
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
4.6%
Semiconductors
&
Semiconductor
Equipment,
Taiwan
Honda
Motor
Co.
Ltd.
4.3%
Automobiles,
Japan
Valeo
4.2%
Auto
Components,
France
Signify
NV
4.1%
Electrical
Equipment,
United
States
Smurfit
Kappa
Group
plc
4.1%
Containers
&
Packaging,
Ireland
Top
10
Countries
8/31/22
a
%
of
Total
Net
Assets
a
a
France
14.0%
United
Kingdom
12.1%
Japan
11.2%
Germany
9.9%
Italy
7.0%
United
States
6.7%
Singapore
5.0%
Denmark
5.0%
Netherlands
4.8%
Taiwan
4.6%
CFA
®
is
a
trademark
owned
by
CFA
Institute.
Templeton
International
Climate
Change
Fund
6
franklintempleton.com
Annual
Report
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
Performance
Summary
as
of
August
31,
2022
Templeton
International
Climate
Change
Fund
7
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/22
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A:
5.50%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4
1-Year
-30.04%
-33.89%
3-Year
+18.72%
+3.91%
Since
Inception
(6/1/18)
+6.38%
+1.47%
Advisor
1-Year
-29.83%
-29.83%
3-Year
+19.69%
+6.17%
Since
Inception
(6/1/18)
+7.59%
+1.74%
See
page
9
for
Performance
Summary
footnotes.
Templeton
International
Climate
Change
Fund
Performance
Summary
8
franklintempleton.com
Annual
Report
See
page
9
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
A
(6/1/18
–
8/31/22)
Advisor
Class
(6/1/18
–
8/31/22)
Templeton
International
Climate
Change
Fund
Performance
Summary
9
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Equity
securities
are
subject
to
price
fluctuation
and
possible
loss
of
principal.
Diversification
does
not
guarantee
a
profit
or
protect
against
loss.
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.
Investing
in
companies
in
a
specific
region,
including
Europe,
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
an
investment
vehicle
that
is
more
broadly
diversified
geographically.
Investments
in
developing
markets,
of
which
frontier
markets
are
a
subset,
involve
heightened
risks
related
to
the
same
factors,
in
addition
to
those
associated
with
these
markets'
smaller
size,
lesser
liquidity
and
lack
of
established
legal,
political,
business
and
social
frameworks
to
support
securities
markets.
Derivatives,
including
currency
management
strategies,
involve
costs
and
can
create
economic
leverage
in
the
portfolio,
which
may
result
in
significant
volatility
and
cause
losses
(as
well
as
enable
gains)
on
an
amount
that
exceeds
the
initial
investment.
The
managers’
environmental,
social
and
governance
(ESG)
strategies
may
limit
the
types
and
number
of
investments
available
and,
as
a
result,
may
forego
favorable
market
opportunities
or
underperform
strategies
that
are
not
subject
to
such
criteria.
ESG
factors
or
criteria
are
subjective
and
qualitative,
and
the
analysis
by
the
manager
may
not
always
accurately
assess
ESG
practices
of
a
security
or
issuer,
or
reflect
the
opinions
of
other
investors
or
advisors.
There
is
no
guarantee
that
the
strategy's
ESG
directives
will
be
successful
or
will
result
in
better
performance
and
may
not
work
as
intended.
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.
Russia’s
military
invasion
of
Ukraine
in
February
2022,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
im-
posed
broad-ranging
economic
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
invasion
of
Ukraine.
The
United
States
and
other
countries
have
also
imposed
economic
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
military
invasion.
These
sanctions,
as
well
as
any
other
economic
consequences
related
to
the
invasion,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
economic
sanctions
related
to
the
invasion.
1.
The
Fund
has
an
expense
reduction
contractually
guaranteed
through
12/31/22.
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.
Effective
6/3/22,
the
Fund
began
offering
Class
A
shares.
Class
A
performance
shown
has
been
calculated
as
follows:
(a)
for
periods
prior
to
6/3/22,
a
restated
figure
is
used
based
on
the
Fund’s
Advisor
Class
performance
that
includes
any
Rule
12b-1
rate
differential
that
exists
between
Class
A
and
Advisor
Class;
and
(b)
for
periods
after
6/3/22,
actual
Class
A
performance
is
used,
reflecting
all
charges
and
fees
applicable
to
that
class.
5.
The
MSCI
ACWI
ex
USA
Index-NR
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
the
equity
market
performance
of
global
developed
and
emerging
markets,
excluding
the
U.S.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(9/1/21–8/31/22)
Share
Class
Net
Investment
Income
Short-Term
Capital
Gain
Long-Term
Capital
Gain
Total
A
–
–
–
–
C
–
–
–
–
R6
–
–
–
–
Advisor
$0.1314
$0.1212
$0.4827
$0.7353
Total
Annual
Operating
Expenses
6
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
1.22%
8.41%
Advisor
0.97%
8.16%
Your
Fund’s
Expenses
Templeton
International
Climate
Change
Fund
10
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
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.
For
Classes
A,
C
and
R6,
6/3/22
for
Actual
and
3/1/22
for
Hypothetical.
For
Advisor
Class,
3/1/22
for
Actual
and
Hypothetical.
2.
For
Classes
A,
C
and
R6,
6/3/22-8/31/22.
For
Advisor
Class,
3/1/22-8/31/22.
3.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period
for
Hypothetical.
For
Actual
expenses,
for
Classes
A,
C
and
R6,
the
multiplier
is
87/365
to
reflect
the
number
of
days
since
the
effective
date.
4.
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
1
Ending
Account
Value
8/31/22
Expenses
Paid
During
Period
2,3,4
Ending
Account
Value
8/31/22
Expenses
Paid
During
Period
3/1/22–8/31/22
3,4
a
Net
Annualized
Expense
Ratio
4
A
$1,000
$849.70
$2.69
$1,022.30
$6.22
1.22%
C
$1,000
$848.80
$4.35
$1,020.51
$10.03
1.97%
R6
$1,000
$850.50
$2.14
$1,022.89
$4.95
0.97%
Advisor
$1,000
$796.20
$4.39
$1,020.32
$4.94
0.97%
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
11
a
Year
Ended
August
31,
2022
a
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
.....................................................................
$11.44
Income
from
investment
operations
b
:
Net
investment
income
c
...........................................................................
0.03
Net
realized
and
unrealized
gains
(losses)
.............................................................
(1.74)
Total
from
investment
operations
......................................................................
(1.71)
Net
asset
value,
end
of
year
.........................................................................
$9.73
Total
return
d
.....................................................................................
(15.03)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
and
expense
reduction
......................................
18.81%
Expenses
net
of
waiver
and
payments
by
affiliates
.........................................................
1.23%
Expenses
net
of
waiver
and
payments
by
affiliates
and
expense
reduction
.......................................
1.22%
Net
investment
income
.............................................................................
1.41%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.......................................................................
$4
Portfolio
turnover
rate
..............................................................................
35.15%
a
For
the
period
June
3,
2022
(effective
date)
to
August
31,
2022.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
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.
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
Year
Ended
August
31,
2022
a
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
.....................................................................
$11.44
Income
from
investment
operations
b
:
Net
investment
income
c
...........................................................................
0.01
Net
realized
and
unrealized
gains
(losses)
.............................................................
(1.74)
Total
from
investment
operations
......................................................................
(1.73)
Net
asset
value,
end
of
year
.........................................................................
$9.71
Total
return
d
.....................................................................................
(15.12)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
and
expense
reduction
......................................
18.95%
Expenses
net
of
waiver
and
payments
by
affiliates
.........................................................
1.98%
Expenses
net
of
waiver
and
payments
by
affiliates
and
expense
reduction
.......................................
1.97%
Net
investment
income
.............................................................................
0.57%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.......................................................................
$4
Portfolio
turnover
rate
..............................................................................
35.15%
a
For
the
period
June
3,
2022
(effective
date)
to
August
31,
2022.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
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.
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
13
a
Year
Ended
August
31,
2022
a
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
.....................................................................
$11.44
Income
from
investment
operations
b
:
Net
investment
income
c
...........................................................................
0.04
Net
realized
and
unrealized
gains
(losses)
.............................................................
(1.75)
Total
from
investment
operations
......................................................................
(1.71)
Net
asset
value,
end
of
year
.........................................................................
$9.73
Total
return
d
.....................................................................................
(14.95)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
and
expense
reduction
......................................
20.46%
Expenses
net
of
waiver
and
payments
by
affiliates
.........................................................
0.98%
Expenses
net
of
waiver
and
payments
by
affiliates
and
expense
reduction
.......................................
0.97%
Net
investment
income
.............................................................................
1.57%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.......................................................................
$4
Portfolio
turnover
rate
..............................................................................
35.15%
a
For
the
period
June
3,
2022
(effective
date)
to
August
31,
2022.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
a
Year
Ended
August
31,
Year
Ended
August
31,
2018
a
2022
2021
2020
2019
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$14.68
$10.71
$8.91
$9.64
$10.00
Income
from
investment
operations
b
:
Net
investment
income
c
.........................
0.18
0.10
0.07
0.27
0.04
Net
realized
and
unrealized
gains
(losses)
...........
(4.39)
3.96
2.03
(0.93)
(0.40)
Total
from
investment
operations
....................
(4.21)
4.06
2.10
(0.66)
(0.36)
Less
distributions
from:
Net
investment
income
..........................
(0.13)
(0.09)
(0.30)
(0.05)
—
Net
realized
gains
.............................
(0.60)
—
—
(0.02)
—
Total
distributions
...............................
(0.73)
(0.09)
(0.30)
(0.07)
—
Net
asset
value,
end
of
year
.......................
$9.74
$14.68
$10.71
$8.91
$9.64
Total
return
d
...................................
(29.83)%
37.89%
23.70%
(6.75)%
(3.60)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
and
expense
reduction
...............................
9.16%
8.16%
6.48%
9.65%
13.30%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.98%
0.97%
0.97%
0.97%
0.97%
Expenses
net
of
waiver
and
payments
by
affiliates
and
expense
reduction
...............................
0.97%
0.97%
f
0.97%
0.97%
0.97%
Net
investment
income
...........................
1.47%
0.80%
0.74%
2.94%
1.51%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$1,968
$2,935
$2,142
$1,783
$1,929
Portfolio
turnover
rate
............................
35.15%
53.37%
39.99%
9.55%
7.95%
a
For
the
period
June
1,
2018
(commencement
of
operations)
to
August
31,
2018.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year,
except
for
non-recurring
expenses,
if
any.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Schedule
of
Investments,
August
31,
2022
Templeton
International
Climate
Change
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
15
a
a
Industry
Shares
a
Value
a
Common
Stocks
97.0%
Chile
0.9%
Antofagasta
plc
..................
Metals
&
Mining
1,451
$
18,459
Denmark
5.0%
Vestas
Wind
Systems
A/S
..........
Electrical
Equipment
3,951
98,856
France
14.0%
Cie
de
Saint-Gobain
..............
Building
Products
1,892
76,202
Danone
SA
.....................
Food
Products
987
51,934
Valeo
.........................
Auto
Components
4,348
83,050
Veolia
Environnement
SA
..........
Multi-Utilities
2,960
65,967
277,153
Germany
10.0%
E.ON
SE
.......................
Multi-Utilities
9,346
79,714
Infineon
Technologies
AG
..........
Semiconductors
&
Semiconductor
Equipment
2,674
65,427
Siemens
AG
....................
Industrial
Conglomerates
510
51,657
196,798
Hong
Kong
0.9%
a
Cadeler
A/S
....................
Construction
&
Engineering
5,443
18,426
India
3.5%
a
Azure
Power
Global
Ltd.
...........
Independent
Power
and
Renewable
Electricity
Producers
2,500
8,975
Kaveri
Seed
Co.
Ltd.
..............
Food
Products
3,124
17,781
NHPC
Ltd.
.....................
Independent
Power
and
Renewable
Electricity
Producers
90,016
43,063
69,819
Ireland
4.1%
Smurfit
Kappa
Group
plc
...........
Containers
&
Packaging
2,427
81,372
Italy
7.0%
Danieli
&
C
Officine
Meccaniche
SpA
.
Machinery
1,563
19,861
Prysmian
SpA
...................
Electrical
Equipment
3,873
118,828
138,689
Japan
11.2%
Honda
Motor
Co.
Ltd.
.............
Automobiles
3,190
84,925
Sumitomo
Metal
Mining
Co.
Ltd.
.....
Metals
&
Mining
2,101
66,111
Toyota
Motor
Corp.
...............
Automobiles
4,700
70,336
221,372
Netherlands
4.8%
ING
Groep
NV
..................
Banks
10,926
95,756
Singapore
5.0%
STMicroelectronics
NV
............
Semiconductors
&
Semiconductor
Equipment
2,844
99,109
South
Korea
2.8%
Samsung
SDI
Co.
Ltd.
............
Electronic
Equipment,
Instruments
&
Components
125
55,044
Spain
4.4%
Red
Electrica
Corp.
SA
............
Electric
Utilities
1,371
25,065
a
Soltec
Power
Holdings
SA
..........
Electrical
Equipment
11,567
60,857
85,922
Templeton
Funds
Schedule
of
Investments
Templeton
International
Climate
Change
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
Taiwan
4.6%
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.,
ADR
..................
Semiconductors
&
Semiconductor
Equipment
1,100
$
91,685
United
Kingdom
12.1%
AstraZeneca
plc
.................
Pharmaceuticals
511
63,196
SSE
plc
.......................
Electric
Utilities
3,280
62,843
Standard
Chartered
plc
............
Banks
16,499
114,255
240,294
United
States
6.7%
Schneider
Electric
SE
.............
Electrical
Equipment
427
50,750
b
Signify
NV,
144A,
Reg
S
...........
Electrical
Equipment
2,868
81,521
132,271
Total
Common
Stocks
(Cost
$2,078,878)
.......................................
1,921,025
Short
Term
Investments
4.1%
a
a
Industry
Shares
a
Value
a
a
a
a
a
a
Money
Market
Funds
4.1%
United
States
4.1%
c,d
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
1.864%
.........
81,707
81,707
Total
Money
Market
Funds
(Cost
$81,707)
......................................
81,707
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$81,707
)
...................................
81,707
a
a
a
Total
Investments
(Cost
$2,160,585)
101.1%
....................................
$2,002,732
Other
Assets,
less
Liabilities
(1.1)%
...........................................
(22,412)
Net
Assets
100.0%
...........................................................
$1,980,320
a
a
a
See
Abbreviations
on
page
29
.
a
Non-income
producing.
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
August
31,
2022,
the
value
of
this
security
was
$81,521,
representing
4.1%
of
net
assets.
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
August
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
17
Templeton
International
Climate
Change
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$2,078,878
Cost
-
Non-controlled
affiliates
(Note
3
e
)
........................................................
81,707
Value
-
Unaffiliated
issuers
..................................................................
$1,921,025
Value
-
Non-controlled
affiliates
(Note
3
e
)
.......................................................
81,707
Receivables:
Investment
securities
sold
...................................................................
4,244
Dividends
...............................................................................
4,939
Affiliates
................................................................................
50,471
Total
assets
..........................................................................
2,062,386
Liabilities:
Payables:
Distribution
fees
..........................................................................
5
Reports
to
shareholders
fees
................................................................
4,414
Professional
fees
.........................................................................
65,797
Deferred
tax
...............................................................................
1,159
Accrued
expenses
and
other
liabilities
...........................................................
10,691
Total
liabilities
.........................................................................
82,066
Net
assets,
at
value
.................................................................
$1,980,320
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$2,031,732
Total
distributable
earnings
(losses)
.............................................................
(51,412)
Net
assets,
at
value
.................................................................
$1,980,320
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
(continued)
August
31,
2022
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
Templeton
International
Climate
Change
Fund
Class
A:
Net
assets,
at
value
.......................................................................
$4,251
Shares
outstanding
........................................................................
437
Net
asset
value
per
share
a
..................................................................
$9.73
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%)
................................
$10.30
Class
C:
Net
assets,
at
value
.......................................................................
$4,244
Shares
outstanding
........................................................................
437
Net
asset
value
and
maximum
offering
price
per
share
a
.............................................
$9.71
Class
R6:
Net
assets,
at
value
.......................................................................
$4,254
Shares
outstanding
........................................................................
437
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$9.73
Advisor
Class:
Net
assets,
at
value
.......................................................................
$1,967,571
Shares
outstanding
........................................................................
202,098
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$9.74
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Templeton
Funds
Financial
Statements
Statement
of
Operations
for
the
year
ended
August
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
19
Templeton
International
Climate
Change
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$9,401)
Unaffiliated
issuers
........................................................................
$60,023
Non-controlled
affiliates
(Note
3
e
)
.............................................................
275
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
.....................................................
35
Total
investment
income
...................................................................
60,333
Expenses:
Management
fees
(Note
3
a
)
...................................................................
17,418
Distribution
fees:
(Note
3c
)
    Class
A
................................................................................
3
    Class
C
................................................................................
11
Transfer
agent
fees:
(Note
3d
)
    Class
A
................................................................................
48
    Class
C
................................................................................
42
    Class
R6
...............................................................................
69
    Advisor
Class
............................................................................
512
Custodian
fees
(Note
4
)
......................................................................
1,819
Reports
to
shareholders
fees
..................................................................
2,507
Registration
and
filing
fees
....................................................................
96,880
Professional
fees
...........................................................................
100,454
Trustees'
fees
and
expenses
..................................................................
210
Other
....................................................................................
6,670
Total
expenses
.........................................................................
226,643
Expense
reductions
(Note
4
)
...............................................................
(148)
Expenses
waived/paid
by
affiliates
(Note
3
e
and
3
f
)
..............................................
(202,516)
Net
expenses
.........................................................................
23,979
Net
investment
income
................................................................
36,354
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
(net
of
foreign
taxes
of
$1,075)
Unaffiliated
issuers
......................................................................
93,791
Foreign
currency
transactions
................................................................
(705)
Net
realized
gain
(loss)
..................................................................
93,086
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
(978,518)
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
(285)
Change
in
deferred
taxes
on
unrealized
appreciation
...............................................
601
Net
change
in
unrealized
appreciation
(depreciation)
............................................
(978,202)
Net
realized
and
unrealized
gain
(loss)
............................................................
(885,116)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$(848,762)
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
Templeton
International
Climate
Change
Fund
Year
Ended
August
31,
2022
Year
Ended
August
31,
2021
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$36,354
$20,990
Net
realized
gain
(loss)
.................................................
93,086
336,629
Net
change
in
unrealized
appreciation
(depreciation)
...........................
(978,202)
453,276
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
(848,762)
810,895
Distributions
to
shareholders:
Advisor
Class
..........................................................
(147,060)
(17,160)
Total
distributions
to
shareholders
..........................................
(147,060)
(17,160)
Capital
share
transactions:
(Note
2
)
Class
A
.............................................................
5,009
—
Class
C
.............................................................
5,000
—
Class
R6
............................................................
5,000
—
Advisor
Class
..........................................................
25,871
—
Total
capital
share
transactions
............................................
40,880
—
Net
increase
(decrease)
in
net
assets
...................................
(954,942)
793,735
Net
assets:
Beginning
of
year
.......................................................
2,935,262
2,141,527
End
of
year
...........................................................
$1,980,320
$2,935,262
Templeton
Funds
21
franklintempleton.com
Annual
Report
Notes
to
Financial
Statements
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.
Class
C
shares
automatically
convert
to
Class
A
on
a
monthly
basis,
after
they
have
been
held
for
8
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
Fund
began
publicly
offering
Advisor
Class
shares
on
December
15,
2021,
and
Class
A,
Class
C
and
Class
R6
shares
on
June
3,
2022.
The
Fund
previously
only
operated
with
one
class
of
shares,
Advisor
Class.
The
following
summarizes
the Fund's
significant
accounting
policies.
a.
Financial
Instrument
Valuation 
The
Fund’s
investments
in
financial
instruments
are
carried
at
fair
value
daily.
Fair
value
is
the
price
that
would
be
received
to
sell
an
asset
or
paid
to
transfer
a
liability
in
an
orderly
transaction
between
market
participants
on
the
measurement
date.
The
Fund
calculates
the
net
asset
value
(NAV)
per
share
each business
day as
of
4
p.m.
Eastern
time
or
the
regularly
scheduled
close
of
the
New
York
Stock
Exchange
(NYSE),
whichever
is
earlier.
Under
compliance
policies
and
procedures
approved
by
the
Trust’s
Board
of
Trustees
(the
Board),
the
Fund’s
administrator
has
responsibility
for
oversight
of
valuation,
including
leading
the
cross-functional
Valuation
Committee
(VC).
The
Fund
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value. 
Equity
securities
listed
on
an
exchange
or
on
the
NASDAQ
National
Market
System
are
valued
at
the
last
quoted
sale
price
or
the
official
closing
price of
the
day,
respectively.
Foreign
equity
securities
are
valued
as
of
the
close
of
trading
on
the
foreign
stock
exchange
on
which
the
security
is
primarily
traded,
or
as
of
4
p.m.
Eastern
time.
The
value
is
then
converted
into
its
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
day
that
the
value
of
the
security
is
determined.
Over-the-counter
(OTC)
securities
are
valued
within
the
range
of
the
most
recent
quoted
bid
and
ask
prices.
Securities
that
trade
in
multiple
markets
or
on
multiple
exchanges
are
valued
according
to
the
broadest
and
most
representative
market.
Certain
equity
securities
are
valued
based
upon
fundamental
characteristics
or
relationships
to
similar
securities. 
Investments
in
open-end
mutual
funds
are
valued
at
the
closing
NAV.
The
Fund
has
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the Fund
primarily
employs
a
market-based
approach
which
may
use
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
book
values,
and
other
relevant
information
for
the
investment
to
determine
the
fair
value
of
the
investment.
An
income-based
valuation
approach
may
also
be
used
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
to
calculate
fair
value.
Discounts
may
also
be
applied
due
to
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
Due
to
the
inherent
uncertainty
of
valuations
of
such
investments,
the
fair
values
may
differ
significantly
from
the
values
that
would
have
been
used
had
an
active
market
existed.
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Fund's
business
day. Events
can occur
between
the
time
at
which
trading
in
a
foreign
security
is
completed
and
4
p.m.
Eastern
time
that
might
call
into
question
the
reliability
of
the
value
of
a
portfolio
security
held
by
the
Fund.
As
a
result,
differences
may
arise
between
the
value
of
the
Fund's
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
at
4
p.m.
Eastern
time. In
order
to
minimize
the
potential
for
these
differences,
an
independent
pricing
service
may
be
used
to
adjust
the
value
of
the
Fund's
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
August
31,
2022,
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.
Templeton
Funds
Notes
to
Financial
Statements
22
franklintempleton.com
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
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.
Income
and
Deferred
Taxes
It
is the Fund's
policy
to
qualify
as
a
regulated
investment
company
under
the
Internal
Revenue
Code. The Fund
intends
to
distribute
to
shareholders
substantially
all
of
its
taxable
income
and
net
realized
gains
to
relieve
it
from
federal
income
and excise
taxes.
As
a
result,
no
provision
for
U.S.
federal
income
taxes
is
required.
The Fund
may
be
subject
to
foreign
taxation
related
to
income
received,
capital
gains
on
the
sale
of
securities
and
certain
foreign
currency
transactions
in
the
foreign
jurisdictions
in
which
it
invests.
Foreign
taxes,
if
any,
are
recorded
based
on
the
tax
regulations
and
rates
that
exist
in
the
foreign
markets
in
which
the
Fund
invests.
When
a
capital
gain
tax
is
determined
to
apply,
the
Fund
records
an
estimated
deferred
tax
liability
in
an
amount
that
would
be
payable
if
the
securities
were
disposed
of
on
the
valuation
date.
The
Fund
may
recognize
an
income
tax
liability
related
to
its
uncertain
tax
positions
under
U.S.
GAAP
when
the
uncertain
tax
position
has
a
less
than
50%
probability
that
it
will
be
sustained
upon
examination
by
the
tax
authorities
based
on
its
technical
merits.
As
of
August
31,
2022,
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
23
franklintempleton.com
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
reclassifications
have
no
impact
on
net
assets
or
the
results
of
operations.
Temporary
differences
are
not
reclassified,
as
they
may
reverse
in
subsequent
periods. 
Common
expenses
incurred
by
the
Trust
are
allocated
among
the
Funds
based
on
the
ratio
of
net
assets
of
each
Fund
to
the
combined
net
assets
of
the
Trust
or
based
on
the
ratio
of
number
of
shareholders
of
each
Fund
to
the
combined
number
of
shareholders
of
the
Trust.
Fund
specific
expenses
are
charged
directly
to
the
Fund
that
incurred
the
expense.
Realized
and
unrealized
gains
and
losses
and
net
investment
income,
excluding
class
specific
expenses,
are
allocated
daily
to
each
class
of
shares
based
upon
the
relative
proportion
of
net
assets
of
each
class.
Differences
in
per
share
distributions
by
class
are
generally
due
to
differences
in
class
specific
expenses.
e.
Accounting
Estimates
The
preparation
of
financial
statements
in
accordance
with
U.S.
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
at
the
date
of
the
financial
statements
and
the
amounts
of
income
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
those
estimates.
f.
Guarantees
and
Indemnifications
Under
the
Trust's
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust, on
behalf
of
the
Fund,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust's
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
August
31,
2022,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Fund’s
shares
were
as
follows:
Year
Ended
August
31,
2022
a
Year
Ended
August
31,
2021
Shares
Amount
Shares
Amount
Class
A
Shares:
Shares
sold
...................................
630
$6,959
—
$—
Shares
redeemed
...............................
(193)
(1,950)
—
—
Net
increase
(decrease)
..........................
437
$5,009
—
$—
Class
C
Shares:
Shares
sold
...................................
437
$5,000
—
$—
Net
increase
(decrease)
..........................
437
$5,000
—
$—
Class
R6
Shares:
Shares
sold
...................................
437
$5,000
—
$—
Net
increase
(decrease)
..........................
437
$5,000
—
$—
Advisor
Class
Shares:
Shares
sold
...................................
2,098
$25,871
—
$—
Net
increase
(decrease)
..........................
2,098
$25,871
—
$—
a
For
the
period
June
3,
2022
(effective
date)
to
August
31,
2022
for
Classes
A,
C
and
R6.
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
(continued)
Templeton
Funds
Notes
to
Financial
Statements
24
franklintempleton.com
Annual
Report
Templeton
International
Climate
Change
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
Fund
are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
The
Fund
pays
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
FTIC
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
For
the
year
ended
August
31,
2022,
the
gross
effective
investment
management
fee
rate
was
0.705%
of
the
Fund’s
average
daily
net
assets. 
Under
a
subadvisory
agreement,
FTIML
and
Global
Advisors,
affiliates
of
FTIC,
provide
subadvisory
services
to
the
Fund.
The
subadvisory
fee
is
paid
by
FTIC
based
on
the
Fund’s
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
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.
Subsidiary
Affiliation
Franklin
Templeton
Investments
Corp.
(FTIC)
Investment
manager
Franklin
Templeton
Investment
Management
Ltd.
(FTIML)
Investment
manager
Templeton
Global
Advisors
Ltd.
(Global
Advisors)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Distributors,
LLC
(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
Templeton
Funds
Notes
to
Financial
Statements
25
franklintempleton.com
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
The
maximum
annual
plan
rates,
based
on
the
average
daily
net
assets,
for
each
class,
are
as
follows:
d.
Transfer
Agent
Fees
Each
class
of
shares pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
The
fees
are
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
In
addition,
each
class reimburses
Investor
Services
for
out
of
pocket
expenses
incurred
and,
except
for
Class
R6,
reimburses
shareholder
servicing
fees
paid
to
third
parties.
These
fees
are
allocated
daily
based
upon
their
relative
proportion
of
such
classes’
aggregate
net
assets.
Class
R6
pays
Investor
Services
transfer
agent
fees
specific
to
that
class.
For
the
year
ended
August
31,
2022,
the
Fund
paid
transfer
agent
fees
of
$671,
which
were
retained
by
Investor
Services.
e.
Investments
in
Affiliated
Management
Investment
Companies
The
Fund
invests
in
one
or
more
affiliated
management
investment
companies.
As
defined
in
the
1940
Act,
an
investment
is
deemed
to
be
a
“Controlled
Affiliate”
of
a
fund
when
a
fund
owns,
either
directly
or
indirectly,
25%
or
more
of
the
affiliated
fund’s
outstanding
shares
or
has
the
power
to
exercise
control
over
management
or
policies
of
such
fund.
The
Fund
does
not
invest
for
purposes
of
exercising
a
controlling
influence
over
the
management
or
policies.
Management
fees
paid
by
the
Fund
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statement
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
year
ended
August
31,
2022,
the
Fund
held
investments
in
affiliated
management
investment
companies
as
follows:
Class
A
....................................................................................
0.25%
Class
C
....................................................................................
1.00%
Class
R
....................................................................................
0.50%
    aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
a      
a  
a  
a  
a  
a  
a  
a  
Templeton
International
Climate
Change
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
1.864%
$
158,272
$
618,101
$
(694,666)
$
—
$
—
$
81,707
81,707
$
275
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
1.864%
$—
$174,280
$(174,280)
$—
$—
$—
—
$—
Total
Affiliated
Securities
...
$158,272
$792,381
$(868,946)
$—
$—
$81,707
$275
3.
Transactions
with
Affiliates
(continued)
c.
Distribution
Fees
(continued)
Templeton
Funds
Notes
to
Financial
Statements
26
franklintempleton.com
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
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,
2022.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund's
fiscal
year
end.
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,
2022.
g.
Other
Affiliated
Transactions
At
August
31,
2022,
Franklin
Resources,
Inc.
owned
98.3%
of
the
Fund's
outstanding
shares.
Investment
activities
of
this
shareholder
could
have
a
material
impact
on
the
Fund.
4.
Expense
Offset
Arrangement
The Fund has
entered
into
an
arrangement
with
its
custodian
whereby
credits
realized
as
a
result
of
uninvested
cash
balances
are
used
to
reduce
a
portion
of
the
Fund's
custodian
expenses.
During
the
year
ended
August
31,
2022,
the
custodian
fees
were
reduced
as
noted
in
the
Statement
of
Operations. 
5.
Income
Taxes
The
tax
character
of
distributions
paid
during
the
years
ended
August
31,
2022
and
2021,
was
as
follows:
At
August
31,
2022,
the
cost
of
investments,
net
unrealized
appreciation
(depreciation),
undistributed
ordinary
income
and
undistributed
long
term
capital
gains
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
treatments
of
foreign
currency
transactions,
wash
sales,
foreign
capital
gains
tax
and
corporate
actions.
2022
2021
Distributions
paid
from:
Ordinary
income
..........................................................
$50,520
$17,160
Long
term
capital
gain
......................................................
96,540
—
$147,060
$17,160
Cost
of
investments
..........................................................................
$2,172,382
Unrealized
appreciation
........................................................................
$136,358
Unrealized
depreciation
........................................................................
(306,008)
Net
unrealized
appreciation
(depreciation)
..........................................................
$(169,650)
Distributable
earnings:
Undistributed
ordinary
income
...................................................................
$32,535
Undistributed
long
term
capital
gains
..............................................................
87,444
Total
distributable
earnings
.....................................................................
$119,979
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
27
franklintempleton.com
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
6.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
year
ended
August
31,
2022,
aggregated
$855,573
and
$916,947,
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.
Political
and
financial
uncertainty
in
many
foreign
regions
may
increase
market
volatility
and
the
economic
risk
of
investing
in
foreign
securities.
In
addition,
certain
foreign
securities
may
not
be
as
liquid
as
U.S.
securities.
8.
Geopolitical
Risk 
On
February
24,
2022,
Russia
engaged
in
military
actions
in
the
sovereign
territory
of
Ukraine.
The
current
political
and
financial
uncertainty
surrounding
Russia
and
Ukraine
may
increase
market
volatility
and
the
economic
risk
of
investing
in
securities
in
these
countries
and
may
also
cause
uncertainty
for
the
global
economy
and
broader
financial
markets.
The
ultimate
fallout
and
long-term
impact
from
these
events
are
not
known.
The
Fund
will
continue
to
assess
the
impact
on
valuations
and
liquidity
and
will
take
any
potential
actions
needed
in
accordance
with
procedures
approved
by
the
Board.
9.
Novel
Coronavirus
Pandemic 
The
global
outbreak
of
the
novel
coronavirus
disease,
known
as
COVID-19, has
caused
adverse
effects
on
many
companies,
sectors,
nations,
regions
and
the
markets
in
general, and
may
continue for
an unpredictable duration.
The
effects
of
this
pandemic
may
materially
impact
the
value
and
performance
of
the Fund, its ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and its ability
to
achieve its investment
objectives.
10.
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
3,
2023.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
Fund
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Fund
and
other
costs
incurred
by
the
Fund,
pay
its
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
its
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statement
of
Operations.
During
the
year
ended
August
31,
2022,
the Fund
did
not
use
the
Global
Credit
Facility.
11.
Fair
Value
Measurements
The
Fund
follows
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Fund's
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the
Fund's financial
instruments
and
are
summarized
in
the
following
fair
value
hierarchy:
Level
1
–
quoted
prices
in
active
markets
for
identical
financial
instruments
Templeton
Funds
Notes
to
Financial
Statements
28
franklintempleton.com
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
Level
2
–
other
significant
observable
inputs
(including
quoted
prices
for
similar
financial
instruments,
interest
rates,
prepayment
speed,
credit
risk,
etc.)
Level
3
–
significant
unobservable
inputs
(including
the
Fund's
own
assumptions
in
determining
the
fair
value
of
financial
instruments)
The
input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level.
A
summary
of
inputs
used
as
of
August
31,
2022,
in
valuing
the
Fund's
assets
carried
at
fair
value,
is
as
follows:
12.
New
Accounting
Pronouncements
In June
2022,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standards
Update
(ASU)
No.
2022-03,
Fair
Value
Measurement
(Topic
820)
–
Fair
Value
Measurement
of
Equity
Securities
Subject
to
Contractual
Sale
Restrictions.
The
amendments
in
the
ASU
clarify
that
a
contractual
restriction
on
the
sale
of
an
equity
security
is
not
considered
part
of
the
unit
of
account
of
the
equity
security
and,
therefore,
should
not
be
considered
in
measuring
fair
value.
The
ASU
is
effective
for
interim
and
annual
reporting
periods
beginning
after
December
15,
2023,
with
the
option
of
early
adoption.
Management
is
currently
evaluating
the
impact,
if
any,
of
applying
this
ASU.
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.
Level
1
Level
2
Level
3
Total
Templeton
International
Climate
Change
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Chile
................................
$
—
$
18,459
$
—
$
18,459
Denmark
.............................
—
98,856
—
98,856
France
...............................
—
277,153
—
277,153
Germany
.............................
—
196,798
—
196,798
Hong
Kong
...........................
—
18,426
—
18,426
India
................................
8,975
60,844
—
69,819
Ireland
...............................
—
81,372
—
81,372
Italy
.................................
—
138,689
—
138,689
Japan
...............................
—
221,372
—
221,372
Netherlands
...........................
—
95,756
—
95,756
Singapore
............................
—
99,109
—
99,109
South
Korea
..........................
—
55,044
—
55,044
Spain
................................
—
85,922
—
85,922
Taiwan
...............................
91,685
—
—
91,685
United
Kingdom
........................
—
240,294
—
240,294
United
States
..........................
—
132,271
—
132,271
Short
Term
Investments
...................
81,707
—
—
81,707
Total
Investments
in
Securities
...........
$182,367
$1,820,365
a
$—
$2,002,732
a
Includes
foreign
securities
valued
at
$1,820,365,
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.
11.
Fair
Value
Measurements
(continued)
Templeton
Funds
Notes
to
Financial
Statements
29
franklintempleton.com
Annual
Report
Templeton
International
Climate
Change
Fund
(continued)
Abbreviations
Selected
Portfolio
ADR
American
Depositary
Receipt
Templeton
Funds
Report
of
Independent
Registered
Public
Accounting
Firm
30
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
of
Templeton
Funds
and
Shareholders
of
Templeton
International
Climate
Change
Fund
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statement
of
assets
and
liabilities,
including
the
schedule
of
investments,
of
Templeton
International
Climate
Change
Fund
(one
of
the
funds
constituting
Templeton
Funds,
referred
to
hereafter
as
the
“Fund”)
as
of
August
31,
2022,
the
related
statement
of
operations
for
the
year
ended
August
31,
2022,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2022,
including
the
related
notes,
and
the
financial
highlights
for
each
of
the
periods
indicated
therein
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Fund
as
of
August
31,
2022,
the
results
of
its
operations
for
the
year
then
ended,
the
changes
in
its
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2022
and
the
financial
highlights
for
each
of
the
periods
indicated
therein
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinion
These
financial
statements
are
the
responsibility
of
the
Fund’s
management.
Our
responsibility
is
to
express
an
opinion
on
the
Fund’s
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(PCAOB)
and
are
required
to
be
independent
with
respect
to
the
Fund
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
of
these
financial
statements
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
August
31,
2022
by
correspondence
with
the
custodian
and
transfer
agent.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinion.
PricewaterhouseCoopers
LLP
San
Francisco,
California
October
17,
2022
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Templeton
Funds
Tax
Information
(unaudited)
31
franklintempleton.com
Annual
Report
Templeton
International
Climate
Change
Fund
By
mid-February,
tax
information
related
to
a
shareholder's
proportionate
share
of
distributions
paid
during
the
preceding
calendar
year
will
be
received,
if
applicable.
Please
also
refer
to
www.franklintempleton.com
for
per
share
tax
information
related
to
any
distributions
paid
during
the
preceding
calendar
year.
Shareholders
are
advised
to
consult
with
their
tax
advisors
for
further
information
on
the
treatment
of
these
amounts
on
their
tax
returns.
The
following
tax
information
for
the
Fund
is
required
to
be
furnished
to
shareholders
with
respect
to
income
earned
and
distributions
paid
during
its
fiscal
year.
The
Fund
hereby
reports
the
following
amounts,
or
if
subsequently
determined
to
be
different,
the
maximum
allowable
amounts,
for
the
fiscal
year
ended
August
31,
2022:
Under
Section
853
of
the
Internal
Revenue
Code,
the
Fund
intends
to
elect
to
pass
through
to
its
shareholders
the
following
amounts,
or
amounts
as
finally
determined,
of
foreign
taxes
paid
and
foreign
source
income
earned
by
the
fund
during
the
fi
scal
year
ended
August
31
,
2022
:
Pursuant
to:
Amount
Reported
Long-Term
Capital
Gain
Dividends
Distributed
§852(b)(3)(C)
$96,540
Qualified
Dividend
Income
Earned
(QDI)
§854(b)(1)(B)
$69,424
Section
163(j)
Interest
Earned
§163(j)
$181
Amount
Reported
Foreign
Taxes
Paid
$8,572
Foreign
Source
Income
Earned
$43,675
Templeton
Funds
Board
Members
and
Officers
32
franklintempleton.com
Annual
Report
The
name,
year
of
birth
and
address
of
the
officers
and
board
members,
as
well
as
their
affiliations,
positions
held
with
the
Trust,
principal
occupations
during
at
least
the
past
five
years
and
number
of
U.S.
registered
portfolios
overseen
in
the
Franklin
Templeton\Legg
Mason
fund
complex,
are
shown
below.
Generally,
each
board
member
serves
until
that
person’s
successor
is
elected
and
qualified.
Independent
Board
Members
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Harris
J.
Ashton
(1932)
Trustee
Since
1992
119
Bar-S
Foods
(meat
packing
company)
(1981-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Director,
RBC
Holdings,
Inc.
(bank
holding
company)
(until
2002);
and
President,
Chief
Executive
Officer
and
Chairman
of
the
Board,
General
Host
Corporation
(nursery
and
craft
centers)
(until
1998).
Ann
Torre
Bates
(1958)
Trustee
Since
2008
30
Ares
Capital
Corporation
(specialty
finance
company)
(2010-present),
United
Natural
Foods,
Inc.
(distributor
of
natural,
organic
and
specialty
foods)
(2013-present),
formerly
,
Allied
Capital
Corporation
(financial
services)
(2003-
2010),
SLM
Corporation
(Sallie
Mae)
(1997-2014)
and
Navient
Corporation
(loan
management,
servicing
and
asset
recovery)
(2014-2016).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Executive
Vice
President
and
Chief
Financial
Officer,
NHP
Incorporated
(manager
of
multifamily
housing)
(1995-1997);
and
Vice
President
and
Treasurer,
US
Airways,
Inc.
(until
1995).
Mary
C.
Choksi
(1950)
Trustee
Since
2016
120
Omnicom
Group
Inc.
(advertising
and
marketing
communications
services)
(2011-present)
and
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2017-present);
and
formerly
,
Avis
Budget
Group
Inc.
(car
rental)
(2007-2020).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Founder
and
Senior
Advisor,
Strategic
Investment
Group
(investment
management
group)
(2015-2017);
Founding
Partner
and
Senior
Managing
Director,
Strategic
Investment
Group
(1987-2015);
Founding
Partner
and
Managing
Director,
Emerging
Markets
Management
LLC
(investment
management
firm)
(1987-2011);
and
Loan
Officer/Senior
Loan
Officer/Senior
Pension
Investment
Officer,
World
Bank
Group
(international
financial
institution)
(1977-1987).
Templeton
Funds
33
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Edith
E.
Holiday
(1952)
Lead
Independent
Trustee
Trustee
since
2003
and
Lead
Independent
Trustee
since
2007
120
Hess
Corporation
(exploration
of
oil
and
gas)
(1993-present),
Santander
Consumer
USA
Holdings,
Inc.
(consumer
finance)
(2016-present);
Santander
Holdings
USA
(holding
company)
(2019-present);
and
formerly
,
Canadian
National
Railway
(railroad)
(2001-2021),
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2004-
2021),
RTI
International
Metals,
Inc.
(manufacture
and
distribution
of
titanium)
(1999-2015)
and
H.J.
Heinz
Company
(processed
foods
and
allied
products)
(1994-2013).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
or
Trustee
of
various
companies
and
trusts;
and
formerly
,
Assistant
to
the
President
of
the
United
States
and
Secretary
of
the
Cabinet
(1990-1993);
General
Counsel
to
the
United
States
Treasury
Department
(1989-1990);
and
Counselor
to
the
Secretary
and
Assistant
Secretary
for
Public
Affairs
and
Public
Liaison-United
States
Treasury
Department
(1988-1989).
J.
Michael
Luttig
(1954)
Trustee
Since
2009
120
Boeing
Capital
Corporation
(aircraft
financing)
(2006-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Counselor
and
Special
Advisor
to
the
CEO
and
Board
of
Directors
of
the
Coca-Cola
Company
(beverage
company)
(2021-present);
and
formerly
,
Counselor
and
Senior
Advisor
to
the
Chairman,
CEO,
and
Board
of
Directors,
of
The
Boeing
Company
(aerospace
company),
and
member
of
the
Executive
Council
(2019-2020);
Executive
Vice
President,
General
Counsel
and
member
of
the
Executive
Council,
The
Boeing
Company
(2006-2019);
and
Federal
Appeals
Court
Judge,
United
States
Court
of
Appeals
for
the
Fourth
Circuit
(1991-2006).
David
W.
Niemiec
(1949)
Trustee
Since
2005
30
Hess
Midstream
LP
(oil
and
gas
midstream
infrastructure)
(2017-present).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Advisor,
Saratoga
Partners
(private
equity
fund);
and
formerly
,
Managing
Director,
Saratoga
Partners
(1998-2001)
and
SBC
Warburg
Dillon
Read
(investment
banking)
(1997-1998);
Vice
Chairman,
Dillon,
Read
&
Co.
Inc.
(investment
banking)
(1991-1997);
and
Chief
Financial
Officer,
Dillon,
Read
&
Co.
Inc.
(1982-1997).
Larry
D.
Thompson
(1945)
Trustee
Since
2005
120
Graham
Holdings
Company
(education
and
media
organization)
(2011-2021);
The
Southern
Company
(energy
company)
(2014-2020;
previously
2010-
2012)
and
Cbeyond,
Inc.
(business
communications
provider)
(2010-
2012).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
Counsel,
Finch
McCranie,
LLP
(law
firm)
(2015-present);
John
A.
Sibley
Professor
of
Corporate
and
Business
Law,
University
of
Georgia
School
of
Law
(2015-present;
previously
2011-2012);
and
formerly
,
Independent
Compliance
Monitor
and
Auditor,
Volkswagen
AG
(manufacturer
of
automobiles
and
commercial
vehicles)
(2017-2020);
Executive
Vice
President
-
Government
Affairs,
General
Counsel
and
Corporate
Secretary,
PepsiCo,
Inc.
(consumer
products)
(2012-2014);
Senior
Vice
President
-
Government
Affairs,
General
Counsel
and
Secretary,
PepsiCo,
Inc.
(2004-2011);
Senior
Fellow
of
The
Brookings
Institution
(2003-2004);
Visiting
Professor,
University
of
Georgia
School
of
Law
(2004);
and
Deputy
Attorney
General,
U.S.
Department
of
Justice
(2001-2003).
Independent
Board
Members
(continued)
Templeton
Funds
34
franklintempleton.com
Annual
Report
Interested
Board
Members
and
Officers
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Constantine
D.
Tseretopoulos
(1954)
Trustee
Since
2003
20
None
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Physician,
Chief
of
Staff,
owner
and
operator
of
the
Lyford
Cay
Hospital
(1987-present);
director
of
various
nonprofit
organizations;
and
formerly
,
Cardiology
Fellow,
University
of
Maryland
(1985-1987);
and
Internal
Medicine
Resident,
Greater
Baltimore
Medical
Center
(1982-
1985).
Robert
E.
Wade
(1946)
Trustee
Since
2006
30
El
Oro
Ltd
(investments)
(2003-
2019).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Attorney
at
law
engaged
in
private
practice
as
a
sole
practitioner
(1972-2008)
and
member
of
various
boards.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
**Gregory
E.
Johnson
(1961)
Trustee
Since
2013
131
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Executive
Chairman,
Chairman
of
the
Board
and
Director,
Franklin
Resources,
Inc.;
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
Vice
Chairman,
Investment
Company
Institute;
and
formerly
,
Chief
Executive
Officer
(2013-2020)
and
President
(1994-2015)
Franklin
Resources,
Inc.
**Rupert
H.
Johnson,
Jr.
(1940)
Chairman
of
the
Board,
Trustee
and
Vice
President
Chairman
of
the
Board
since
2013,
Trustee
since
1992
and
Vice
President
since
1996
120
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
(Vice
Chairman),
Franklin
Resources,
Inc.;
Director,
Franklin
Advisers,
Inc.;
and
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Alan
T.
Bartlett
(1970)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
2019
Not
Applicable
Not
Applicable
Lyford
Cay
Nassau,
Bahamas
Principal
Occupation
During
at
Least
the
Past
5
Years:
President
and
Director,
Templeton
Global
Advisors
Limited;
Chief
Investment
Officer
of
Templeton
Global
Equity
Group;
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
Chairman
of
the
Board,
Goodhart
Partners;
and
formerly
,
Chief
Executive
Officer,
Goodhart
Partners
(2009-2019).
Independent
Board
Members
(continued)
Templeton
Funds
35
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Alison
E.
Baur
(1964)
Vice
President
Since
2012
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Deputy
General
Counsel,
Franklin
Templeton;
and
officer
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Breda
M.
Beckerle
(1958)
Chief
Compliance
Officer
Since
2020
Not
Applicable
Not
Applicable
280
Park
Avenue
New
York,
NY
10017
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Compliance
Officer,
Fiduciary
Investment
Management
International,
Inc.,
Franklin
Advisers,
Inc.,
Franklin
Mutual
Advisers,
LLC,
Franklin
Templeton
Institutional,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Steven
J.
Gray
(1955)
Vice
President
Since
2009
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Distributors,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Matthew
T.
Hinkle
(1971)
Chief
Executive
Officer
–
Finance
and
Administration
Since
2017
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Vice
President,
Franklin
Templeton
Services,
LLC;
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
and
formerly
,
Vice
President,
Global
Tax
(2012-April
2017)
and
Treasurer/Assistant
Treasurer,
Franklin
Templeton
(2009-2017).
Susan
Kerr
(1949)
Vice
President
–
AML
Compliance
Since
2021
Not
Applicable
Not
Applicable
620
Eighth
Avenue
New
York,
NY
10018
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Compliance
Analyst,
Franklin
Templeton;
Chief
Anti-Money
Laundering
Compliance
Officer,
Legg
Mason
&
Co.,
or
its
affiliates;
Anti
Money
Laundering
Compliance
Officer;
Senior
Compliance
Officer,
LMIS;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Christopher
Kings
(1974)
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
January
2022
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Treasurer,
U.S.
Fund
Administration
&
Reporting;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Navid
J.
Tofigh
(1972)
Vice
President
Since
2015
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
36
franklintempleton.com
Annual
Report
*We
base
the
number
of
portfolios
on
each
separate
series
of
the
U.S.
registered
investment
companies
within
the
Franklin
Templeton/Legg
Mason
fund
complex.
These
portfolios
have
a
common
investment
manager
or
affiliated
investment
managers.
**Gregory
E.
Johnson
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
of
Franklin
Resources,
Inc.
(Resources),
which
is
the
parent
company
of
the
Fund’s
investment
manager
and
distributor.
Rupert
H.
Johnson,
Jr.
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
and
major
shareholder
of
Resources.
Note
1:
Rupert
H.
Johnson,
Jr.
is
the
uncle
of
Gregory
E.
Johnson.
Note
2:
Officer
information
is
current
as
of
the
date
of
this
report.
It
is
possible
that
after
this
date,
information
about
officers
may
change.
The
Sarbanes-Oxley
Act
of
2002
and
Rules
adopted
by
the
U.S.
Securities
and
Exchange
Commission
require
the
Fund
to
disclose
whether
the
Fund’s
Audit
Committee
includes
at
least
one
member
who
is
an
audit
committee
financial
expert
within
the
meaning
of
such
Act
and
Rules.
The
Fund’s
Board
has
determined
that
there
is
at
least
one
such
financial
expert
on
the
Audit
Committee
and
has
designated
each
of
Ann
Torre
Bates
and
David
W.
Niemiec
as
an
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
qualify
as
such
an
expert
in
view
of
their
extensive
business
background
and
experience.
Ms.
Bates
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2008.
She
currently
serves
as
a
director
of
Ares
Capital
Corporation
(2010-present)
and
United
Natural
Foods,
Inc.
(2013-present)
and
was
formerly
a
director
of
Navient
Corporation
from
2014
to
2016,
SLM
Corporation
from
1997
to
2014
and
Allied
Capital
Corporation
from
2003
to
2010,
Executive
Vice
President
and
Chief
Financial
Officer
of
NHP
Incorporated
from
1995
to
1997
and
Vice
President
and
Treasurer
of
US
Airways,
Inc.
until
1995.
Mr.
Niemiec
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2005,
currently
serves
as
an
Advisor
to
Saratoga
Partners
and
was
formerly
its
Managing
Director
from
1998
to
2001
and
serves
as
a
director
of
Hess
Midstream
LP
(2017-present).
Mr.
Niemiec
was
formerly
a
director
of
Emeritus
Corporation
from
1999
to
2010
and
OSI
Pharmaceuticals,
Inc.
from
2006
to
2010,
Managing
Director
of
SBC
Warburg
Dillon
Read
from
1997
to
1998,
and
was
Vice
Chairman
from
1991
to
1997
and
Chief
Financial
Officer
from
1982
to
1997
of
Dillon,
Read
&
Co.
Inc.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
have
each
acquired
an
understanding
of
generally
accepted
accounting
principles
and
financial
statements,
the
general
application
of
such
principles
in
connection
with
the
accounting
estimates,
accruals
and
reserves,
and
analyzing
and
evaluating
financial
statements
that
present
a
breadth
and
level
of
complexity
of
accounting
issues
generally
comparable
to
those
of
the
Fund,
as
well
as
an
understanding
of
internal
controls
and
procedures
for
financial
reporting
and
an
understanding
of
audit
committee
functions.
Ms.
Bates
and
Mr.
Niemiec
are
independent
Board
members
as
that
term
is
defined
under
the
applicable
U.S.
Securities
and
Exchange
Commission
Rules
and
Releases.
The
Statement
of
Additional
Information
(SAI)
includes
additional
information
about
the
board
members
and
is
available,
without
charge,
upon
request.
Shareholders
may
call
(800)
DIAL
BEN/342-5236
to
request
the
SAI.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Lori
A.
Weber
(1964)
Vice
President
and
Secretary
Vice
President
since
2011
and
Secretary
since
2013
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Resources,
Inc.;
Vice
President
and
Secretary,
Templeton
Investment
Counsel,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
Shareholder
Information
37
franklintempleton.com
Annual
Report
Liquidity
Risk
Management
Program
Each
Fund
has
adopted
and
implemented
a
written
Liquidity
Risk
Management
Program
(the
“LRMP”)
as
required
by
Rule
22e-4
under
the
Investment
Company
Act
of
1940
(the
“Liquidity
Rule”).
The
LRMP
for
the
Franklin
Templeton
and
Legg
Mason
Funds
is
designed
to
assess
and
manage
each
Fund’s
liquidity
risk,
which
is
defined
as
the
risk
that
the
Fund
could
not
meet
requests
to
redeem
shares
issued
by
the
Fund
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
In
accordance
with
the
Liquidity
Rule,
the
LRMP
includes
policies
and
procedures
that
provide
for:
(1)
assessment,
management,
and
review
(no
less
frequently
than
annually)
of
each
Fund’s
liquidity
risk;
(2)
classification
of
each
Fund’s
portfolio
holdings
into
one
of
four
liquidity
categories
(Highly
Liquid,
Moderately
Liquid,
Less
Liquid,
and
Illiquid);
(3)
for
Funds
that
do
not
primarily
hold
assets
that
are
Highly
Liquid,
establishing
and
maintaining
a
minimum
percentage
of
the
Fund’s
net
assets
in
Highly
Liquid
investments
(called
a
“Highly
Liquid
Investment
Minimum”
or
“HLIM”);
and
(4)
prohibiting
the
Fund’s
acquisition
of
Illiquid
investments
that
would
result
in
the
Fund
holding
more
than
15%
of
its
net
assets
in
Illiquid
assets.
The
LRMP
also
requires
reporting
to
the
Securities
and
Exchange
Commission
(“SEC”)
(on
a
non-public
basis)
and
to
the
Board
if
the
Fund’s
holdings
of
Illiquid
assets
exceed
15%
of
the
Fund’s
net
assets.
Funds
with
HLIMs
must
have
procedures
for
addressing
HLIM
shortfalls,
including
reporting
to
the
Board
and,
with
respect
to
HLIM
shortfalls
lasting
more
than
seven
consecutive
calendar
days,
reporting
to
the
SEC
(on
a
non-public
basis).
The
Director
of
Liquidity
Risk
within
the
Investment
Risk
Management
Group
(the
“IRMG”)
is
the
appointed
Administrator
of
the
LRMP.
The
IRMG
maintains
the
Investment
Liquidity
Committee
(the
“ILC”)
to
provide
oversight
and
administration
of
policies
and
procedures
governing
liquidity
risk
management
for
Franklin
Templeton
and
Legg
Mason
products
and
portfolios.
The
ILC
includes
representatives
from
Franklin
Templeton’s
Risk,
Trading,
Global
Compliance,
Legal,
Investment
Compliance,
Investment
Operations,
Valuation
Committee,
Product
Management
and
Global
Product
Strategy.
In
assessing
and
managing
each
Fund’s
liquidity
risk,
the
ILC
considers,
as
relevant,
a
variety
of
factors,
including
the
Fund’s
investment
strategy
and
the
liquidity
of
its
portfolio
investments
during
both
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources
including
the
Funds’
interfund
lending
facility
and
line
of
credit.
Classification
of
the
Fund’s
portfolio
holdings
in
the
four
liquidity
categories
is
based
on
the
number
of
days
it
is
reasonably
expected
to
take
to
convert
the
investment
to
cash
(for
Highly
Liquid
and
Moderately
Liquid
holdings)
or
sell
or
dispose
of
the
investment
(for
Less
Liquid
and
Illiquid
investments),
in
current
market
conditions
without
significantly
changing
the
investment’s
market
value.
Each
Fund
primarily
holds
liquid
assets
that
are
defined
under
the
Liquidity
Rule
as
"Highly
Liquid
Investments,"
and
therefore
is
not
required
to
establish
an
HLIM.
Highly
Liquid
Investments
are
defined
as
cash
and
any
investment
reasonably
expected
to
be
convertible
to
cash
in
current
market
conditions
in
three
business
days
or
less
without
the
conversion
to
cash
significantly
changing
the
market
value
of
the
investment.
At
meetings
of
the
Funds’
Board
of
Trustees
held
in
May
2022,
the
Program
Administrator
provided
a
written
report
to
the
Board
addressing
the
adequacy
and
effectiveness
of
the
program
for
the
year
ended
December
31,
2021.
The
Program
Administrator
report
concluded
that
(i.)
the
LRMP,
as
adopted
and
implemented,
remains
reasonably
designed
to
assess
and
manage
each
Fund’s
liquidity
risk;
(ii.)
the
LRMP,
including
the
Highly
Liquid
Investment
Minimum
(“HLIM”)
where
applicable,
was
implemented
and
operated
effectively
to
achieve
the
goal
of
assessing
and
managing
each
Fund’s
liquidity
risk;
and
(iii.)
each
Fund
was
able
to
meet
requests
for
redemption
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
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.
Templeton
Funds
Shareholder
Information
38
franklintempleton.com
Annual
Report
Quarterly
Schedule
of
Investments
The
Trust,
on
behalf
of
the
Fund,
files
a
complete
schedule
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
by
visiting
the
Commission’s
website
at
sec.gov.
The
filed
form
may
also
be
viewed
and
copied
at
the
Commission’s
Public
Reference
Room
in
Washington,
DC.
Information
regarding
the
operations
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
Householding
of
Reports
and
Prospectuses
You
will
receive,
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.
6316
A
10/22
©
2022
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
and
Shareholder
Letter
Templeton
International
Climate
Change
Fund
Investment
Manager
Distributor
Shareholder
Services
Franklin
Templeton
Investments
Corp.
Franklin
Distributors,
LLC
(800)
DIAL
BEN
®
/
342-5236
franklintempleton.com
(800)
632-2301
ANNUAL
REPORT
AND
SHAREHOLDER
LETTER
Templeton
World
Fund
A
Series
of
Templeton
Funds
August
31,
2022
Sign
up
for
electronic
delivery
at
franklintempleton.com/edelivery
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
franklintempleton.com
Annual
Report
1
SHAREHOLDER
LETTER
Dear
Shareholder:
During
the
12
months
ended
August
31,
2022,
global
equities
benefited
earlier
in
the
period
from
ongoing
COVID-19
vaccination
programs
and
some
easing
of
restrictions.
However,
the
combination
of
resilient
consumer
demand
and
persistent
supply-chain
disruptions
contributed
to
higher
inflation
in
many
countries,
which
led
many
of
the
world’s
central
banks
to
adopt
less
accommodative
monetary
policies
in
2022,
hindering
stocks.
New
lockdowns
by
China
to
limit
the
spread
of
COVID-19
variants
also
pressured
emerging
market
stocks,
especially
in
Asia,
and
Russia’s
invasion
of
Ukraine
increased
investor
uncertainty
given
the
resulting
disruption
of
global
trade
and
commodity
markets.
In
this
environment,
global
developed
and
emerging
market
stocks,
as
measured
by
the
MSCI
All
Country
World
Index-
NR
(net
of
tax
withholding
when
dividends
are
paid),
posted
a
-15.88%
total
return
for
the
period.
1
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
annual
report
includes
more
detail
about
prevailing
conditions
and
a
discussion
about
investment
decisions
during
the
period.
Please
remember
all
securities
markets
fluctuate,
as
do
mutual
fund
share
prices.
We
thank
you
for
investing
with
Franklin
Templeton,
welcome
your
questions
and
comments,
and
look
forward
to
serving
your
investment
needs
in
the
years
ahead.
Sincerely,
Alan
Bartlett
Chief
Investment
Officer
Templeton
Global
Equity
Group
This
letter
reflects
our
analysis
and
opinions
as
of
August
31,
2022,
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.
1.
Source:
Morningstar.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
franklintempleton.com
Annual
Report
2
Contents
Annual
Report
Templeton
World
Fund
3
Performance
Summary
7
Your
Fund’s
Expenses
10
Financial
Highlights
and
Schedule
of
Investments
11
Financial
Statements
17
Notes
to
Financial
Statements
21
Report
of
Independent
Registered
Public
Accounting
Firm
30
Tax
Information
31
Board
Members
and
Officers
32
Shareholder
Information
37
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
3
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Templeton
World
Fund
This
annual
report
for
Templeton
World
Fund
covers
the
fiscal
year
ended
August
31,
2022.
Effective
September
30,
2021,
Templeton
World
Fund
repositioned
to
implement
a
more
focused
global
equity
strategy
with
a
greater
emphasis
on
quality
companies.
The
Fund
remains
diversified
but
may
hold
a
smaller
number
of
issuers.
Additionally,
the
Fund’s
primary
benchmark
changed
to
the
MSCI
All
Country
World
Index
(net
of
dividend
tax
withholdings).
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.).
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
-22.39%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Fund’s
new
primary
benchmark,
the
MSCI
All
Country
World
Index
(ACWI)-NR,
which
measures
stock
performance
in
global
developed
and
emerging
markets,
posted
a
-15.88%
cumulative
total
return,
while
the
Fund’s
former
primary
benchmark,
the
MSCI
ACWI
100%
Hedged
to
USD-NR,
posted
a
-11.55%
cumulative
total
return.
1
The
MSCI
ACWI-NR
replaced
the
MSCI
ACWI
100%
Hedged
to
USD-NR
as
the
Fund’s
primary
benchmark
because
the
investment
manager
believes
the
MSCI
ACWI-NR
is
a
more
appropriate
index
of
the
Fund
due
to
the
fact
that,
as
of
September
30,
2021,
the
Fund
no
longer
regularly
engages
in
currency-related
derivatives
to
hedge
all
or
substantially
all
of
its
foreign
currency
exposure
to
the
U.S.
dollar.
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-NR,
posted
a
-15.88%
total
return
for
the
12
months
ended
August
31,
2022.
1
Although
global
equities
benefited
earlier
in
the
period
from
ongoing
COVID-19
vaccination
programs
and
some
easing
of
restrictions,
the
combination
of
resilient
consumer
demand
and
persistent
supply-chain
disruptions
contributed
to
higher
inflation
in
many
countries.
This
inflationary
pressure
led
many
of
the
world’s
central
banks
to
adopt
less
accommodative
stances
regarding
monetary
policy
in
2022,
hindering
stocks.
New
lockdowns
imposed
by
China’s
government
to
quell
the
spread
of
the
Omicron
variant
of
COVID-19
also
pressured
emerging
market
stocks,
especially
in
Asia.
Russia’s
invasion
of
Ukraine
also
increased
investor
uncertainty,
as
international
sanctions
on
Russia
disrupted
global
trade
and
commodity
markets.
In
the
U.S.,
after
robust
growth
earlier
in
the
period,
gross
domestic
product
(GDP)
slightly
contracted
in
the
first
two
quarters
of
2022
as
high
inflation,
supply
constraints
and
record
trade
deficits
weighed
on
economic
output.
Rising
prices
precipitated
a
notable
decline
in
consumer
confidence,
despite
high
spending
levels,
robust
job
growth
and
low
unemployment.
In
an
effort
to
control
inflation,
the
U.S.
Federal
Reserve
(Fed)
raised
the
federal
funds
target
rate
in
March
2022
for
the
first
time
since
2018.
The
Fed
Geographic
Composition
8/31/22
%
of
Total
Net
Assets
North
America
64.0%
Europe
20.4%
Asia
15.5%
Short-Term
Investments
&
Other
Net
Assets
0.1%
1.
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.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
15
.
Templeton
World
Fund
4
franklintempleton.com
Annual
Report
raised
the
federal
funds
rate
again
at
its
subsequent
three
meetings
to
end
the
period
at
a
range
of
2.25%–2.50%.
Furthermore,
the
Fed
said
it
would
continue
to
reduce
its
bond
holdings
and
anticipated
additional
interest-rate
increases
at
future
meetings
to
curtail
inflation.
Economies
in
the
eurozone
decelerated
to
a
slightly
positive
growth
rate
during
the
year.
The
lifting
of
COVID-related
restrictions
in
some
European
countries
and
the
summer
tourism
season
strengthened
economies.
However,
the
war
in
Ukraine
disrupted
supply
chains,
weakened
the
economic
outlook
and
contributed
to
record
high
inflation
across
the
eurozone,
as
energy
prices
soared.
Electricity
prices
hit
record
highs
in
Germany
and
France
as
coal
futures
and
natural
gas
prices
climbed.
Consequently,
the
European
Central
Bank
raised
interest
rates
in
July
2022
for
the
first
time
in
11
years
to
curtail
growing
inflation.
In
this
environment,
European
developed
market
equities,
as
measured
by
the
MSCI
Europe
Index-NR,
posted
a
-21.57%
total
return
for
the
12
months
under
review.
1
Asian
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
Asia
Index-NR,
posted
a
-20.73%
total
return
for
the
12-month
period.
1
Growth
in
Japan
remained
slow,
alternating
between
positive
quarterly
GDP
growth
and
contraction.
China’s
economy
contracted
sharply
in
2022’s
second
quarter
as
COVID-
related
restrictions
in
many
major
cities,
including
Shanghai,
weakened
consumer
demand.
Unexpected
regulatory
changes
by
China’s
government,
which
negatively
impacted
education-
and
technology-related
businesses,
and
investor
concerns
about
the
solvency
of
several
large
property
developers
in
China
further
pressured
stocks
in
that
country.
Global
emerging
market
stocks,
as
measured
by
the
MSCI
Emerging
Markets
Index-NR,
posted
a
-21.80%
total
return
for
the
12
months
under
review.
1
The
index
declined
for
four
straight
quarters,
the
longest
downturn
since
2008,
weakened
by
central
bank
tightening
and
the
threat
of
recession.
Following
Russia’s
invasion
of
Ukraine,
climbing
food
and
energy
prices
kindled
inflationary
pressures
and
raised
concerns
over
the
possibility
of
government
debt
defaults
in
some
countries.
However,
some
other
countries,
particularly
in
Latin
America,
as
well
as
South
Africa
and
Saudi
Arabia,
benefited
from
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.
We
also
consider
the
company’s
price/earnings
ratio,
price/cash
flow
ratio,
profit
margins
and
liquidation
value.
The
Fund
may
use
a
variety
of
equity-related
derivatives,
which
may
include
equity
futures
and
equity
index
futures,
for
various
purposes
including
enhancing
Fund
returns,
increasing
liquidity
and
gaining
exposure
to
particular
markets
in
more
efficient
or
less
expensive
ways.
The
Fund
also
may
from
time
to
time
engage
in
currency-related
derivatives,
such
as
currency
and
cross-currency
forwards
and
currency
futures
contracts,
to
hedge
some
of
its
foreign
currency
exposure.
Manager’s
Discussion
Templeton
World
Fund
underperformed
its
benchmark
MSCI
ACWI-NR
during
the
12-month
review
period.
While
the
Fund’s
price
discipline
and
value
orientation
aided
performance
during
a
period
when
interest
rates
rose
and
valuations
compressed,
our
core
strategy
underperformed
the
general
market.
The
12
months
under
review
represented
a
period
of
transition
for
the
Fund
that
saw
the
traditional
Templeton
long-term
value
strategy
enhanced
with
an
increased
focus
on
business
quality
metrics.
Our
research
indicates
that
focusing
on
quality
businesses—
which
we
define
as
financially
sound
companies
generating
high
returns
on
invested
capital—at
attractive
valuations
can
significantly
enhance
risk-adjusted
returns
over
time
and
through
a
variety
of
economic
environments.
We
found
it
appropriate
to
allocate
towards
some
unique
opportunities
that
were
previously
not
attractive
from
a
valuation
perspective.
These
opportunities
have
become
increasingly
attractive
over
the
past
12
months,
as
their
long-term
fundamentals
have
not
changed.
Top
10
Industries
8/31/22
%
of
Total
Net
Assets
a
Internet
&
Direct
Marketing
Retail
11.2%
Semiconductors
&
Semiconductor
Equipment
10.4%
Software
9.1%
Beverages
6.4%
Interactive
Media
&
Services
5.8%
Pharmaceuticals
5.1%
Health
Care
Providers
&
Services
4.6%
Wireless
Telecommunication
Services
4.5%
Machinery
3.4%
Entertainment
3.3%
Templeton
World
Fund
5
franklintempleton.com
Annual
Report
From
a
sector
standpoint,
the
bulk
of
relative
weakness
during
the
period
came
from
consumer
discretionary
and
information
technology
(IT).
From
consumer
discretionary,
European
food
delivery
service
Just
Eat
Takeaway.com
was
the
Fund’s
most
significant
relative
detractor,
pressured
by
concerns
about
competition
and
profitability.
Nevertheless,
we
were
encouraged
by
a
constructive
earnings
call
during
the
period
and
believe
management
is
taking
appropriate
steps
to
unlock
value
for
shareholders.
Investors
will
want
to
see
the
strategic
divestiture
of
certain
assets
(which
management
is
exploring),
more
consistency
hitting
guidance
targets,
and
an
improving
competitive
environment
that
shifts
from
“growth
at
any
cost”
to
“profitable
growth.”
We
see
numerous
catalysts
that
should
help
Just
Eat
achieve
these
goals,
creating
what
we
believe
to
be
considerable
upside
potential
from
current
depressed
valuation
levels.
From
the
IT
sector,
U.S.-based
cloud
communications
firm
Twilio
was
another
notable
detractor,
declining
amid
a
wider
selloff
in
growth-oriented
equities.
We
exited
the
position
at
the
end
of
the
period
to
make
room
for
what
we
view
to
be
more
attractive
opportunities.
While
Twilio’s
business
continues
to
grow,
the
nascent
growth
in
the
non-U.S.
market
is
coming
in
at
significantly
lower
gross
margins
than
the
U.S.
business,
a
negative
mix
shift
that
will
likely
continue
to
impact
the
business
in
the
intermediate
term.
Furthermore,
in
our
view,
management
has
yet
to
adjust
to
an
environment
where
investors
are
seeking
profitable
growth
instead
of
just
growth
at
any
cost.
In
sum,
the
combination
of
overspending
on
operating
expenses
to
deliver
unsustainably
high
growth
with
a
deteriorating
mix
shift
led
us
to
reallocate
capital
into
what
we
perceive
to
be
better
opportunities.
Turning
to
contributors,
stock
selection
and
a
favorable
overweighting
in
health
care
aided
relative
performance.
Shares
of
UnitedHealth
Group,
a
U.S.-based
managed
care
provider,
advanced
during
the
period
after
the
firm
issued
better-than-expected
earnings
and
raised
its
full-year
profit
outlook.
We
continue
to
believe
that
the
U.S.
managed
care
industry
is
well-positioned
as
a
beneficiary
of
higher
short-
term
interest
rates
with
a
defensive
growth
profile
and
high
earnings
visibility.
UnitedHealth
is
a
leader
in
this
industry,
with
most
competitors
now
trying
to
replicate
the
firm’s
business
model,
which
was
developed
methodically
over
the
past
decade.
For
a
mega-cap
company
growing
revenues
at
a
double-digit
annualized
rate,
we
believe
the
stock
looks
undervalued
at
current
valuation
multiples.
Stock
selection
in
financials
also
buoyed
relative
results,
led
by
German
exchange
operator
Deutsche
Boerse
(DB1),
which
was
a
new
position
initiated
during
the
period.
The
company
reported
strong
results
during
the
period,
with
revenues
coming
in
well
ahead
of
consensus
expectations.
In
our
view,
the
company
is
reaching
a
cyclical
“sweet
spot”
where
it
stands
to
benefit
from
both
rising
bond
yields
and
higher
volatility.
A
recent
acquisition
also
helped
the
company
make
inroads
into
the
digital
asset
space,
which
stands
to
be
another
source
of
long-term
growth
for
DB1,
in
our
view.
We
believe
our
thesis
on
the
stock
remains
intact:
DB1
is
a
high-quality
defensive
play
that
should
help
diversify
and
stabilize
the
Fund’s
portfolio
if
and
when
volatility
meaningfully
picks
up.
Top
10
Holdings
8/31/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Amazon.com,
Inc.
5.9%
Internet
&
Direct
Marketing
Retail,
United
States
T-Mobile
US,
Inc.
4.5%
Wireless
Telecommunication
Services,
United
States
Alphabet,
Inc.
4.4%
Interactive
Media
&
Services,
United
States
Microsoft
Corp.
4.3%
Software,
United
States
UnitedHealth
Group,
Inc.
3.5%
Health
Care
Providers
&
Services,
United
States
Walt
Disney
Co.
(The)
3.3%
Entertainment,
United
States
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
3.2%
Semiconductors
&
Semiconductor
Equipment,
Taiwan
Booking
Holdings,
Inc.
3.0%
Hotels,
Restaurants
&
Leisure,
United
States
AIA
Group
Ltd.
3.0%
Insurance,
Hong
Kong
ICON
plc
2.8%
Life
Sciences
Tools
&
Services,
United
States
Templeton
World
Fund
6
franklintempleton.com
Annual
Report
Though
the
communication
services
sector
detracted
from
overall
performance,
U.S.
mobile
operator
T-Mobile
US
finished
as
the
Fund’s
biggest
relative
contributor,
rallying
after
the
firm
reported
better-than-expected
earnings.
Following
the
merger
with
U.S.
carrier
Sprint
in
2020,
the
combined
company
now
has
a
strong
competitive
advantage
with
superior
spectrum
assets
and
greater
scale,
which
we
believe
will
allow
it
to
grow
market
share
and
outperform
revenue
growth
expectations.
As
synergies
are
realized
and
grow,
leverage
is
expected
to
fall,
compounding
free
cash
flow
growth
and
funding
share
repurchases.
To
this
end,
we
expect
T-Mobile
will
repurchase
close
to
one-
third
of
its
outstanding
shares
over
the
next
five
years.
The
firm’s
superior
network,
with
industry
low
prices
and
operating
costs,
gives
T-Mobile
a
strong
growth
platform
and
competitive
advantages
that
are
not
fully
discounted
in
the
stock
price,
in
our
view.
From
a
regional
standpoint,
stock-specific
weakness
in
the
U.S.
was
the
biggest
detractor,
followed
by
stock-specific
weakness
in
the
U.K.
In
Asia,
a
beneficial
underweighting
to
China
was
offset
by
stock-specific
weakness
in
Japan.
Thank
you
for
your
continued
participation
in
Templeton
World
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Peter
M.
Moeschter,
CFA
Lead
Portfolio
Manager
Herbert
J.
Arnett,
Jr.
Christopher
James
Peel,
CFA
Warren
Pustam,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
August
31,
2022,
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.
Top
10
Countries
8/31/22
a
%
of
Total
Net
Assets
a
a
United
States
63.9%
United
Kingdom
7.4%
Germany
6.8%
France
4.1%
Japan
4.0%
Taiwan
3.2%
China
3.1%
Hong
Kong
3.0%
South
Korea
2.3%
Belgium
2.2%
CFA
®
is
a
trademark
owned
by
CFA
Institute.
Performance
Summary
as
of
August
31,
2022
Templeton
World
Fund
7
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/22
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A
:
5.50%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
1
Average
Annual
Total
Return
2
–
A
3
1-Year
-22.39%
-26.65%
5-Year
-4.31%
-2.00%
10-Year
+47.79%
+3.39%
Advisor
1-Year
-22.22%
-22.22%
5-Year
-3.16%
-0.64%
10-Year
+51.45%
+4.24%
See
page
9
for
Performance
Summary
footnotes.
Templeton
World
Fund
Performance
Summary
8
franklintempleton.com
Annual
Report
See
page
9
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
indexes
include
reinvestment
of
any
income
or
distributions.
They
differ
from
the
Fund
in
composition
and
do
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
A
(9/1/12
–
8/31/22)
Advisor
Class
(9/1/12
–
8/31/22)
Templeton
World
Fund
Performance
Summary
9
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments;
investments
in
developing
markets
involve
heightened
risks
related
to
the
same
factors.
Currency
rates
may
fluctuate
significantly
over
short
periods
of
time,
and
can
reduce
returns.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
fund
that
is
more
broadly
diversified
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.
The
manager’s
portfolio
selection
strategy
is
not
solely
based
on
environmental,
social
and
governance
(ESG)
considerations,
and
therefore
the
issuers
in
which
the
Fund
invests
may
not
be
considered
ESG-focused
companies.
Integrating
ESG
considerations
into
the
investment
process
is
not
a
guarantee
that
better
performance
will
be
achieved.
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.
Russia’s
military
invasion
of
Ukraine
in
February
2022,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
im-
posed
broad-ranging
economic
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
invasion
of
Ukraine.
The
United
States
and
other
countries
have
also
imposed
economic
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
military
invasion.
These
sanctions,
as
well
as
any
other
economic
consequences
related
to
the
invasion,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
economic
sanctions
related
to
the
invasion.
1.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
2.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
3.
Prior
to
9/10/18
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
4.
Source:
Morningstar.
The
MSCI
ACWI-NR
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
the
equity
market
performance
of
global
de-
veloped
and
emerging
markets.
The
MSCI
ACWI
100%
Hedged
to
USD-NR
represents
a
close
estimation
of
the
performance
that
can
be
achieved
by
hedging
the
currency
exposures
of
its
parent
index,
the
MSCI
ACWI,
to
the
USD,
the
“home”
currency
for
the
hedged
index.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
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
(9/1/21–8/31/22)
Share
Class
Net
Investment
Income
A
$0.2303
C
$0.0702
R6
$0.2751
Advisor
$0.2690
Total
Annual
Operating
Expenses
5
Share
Class
A
1.05%
Advisor
0.80%
Your
Fund’s
Expenses
Templeton
World
Fund
10
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
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
3/1/22
Ending
Account
Value
8/31/22
Expenses
Paid
During
Period
3/1/22–8/31/22
1,2
Ending
Account
Value
8/31/22
Expenses
Paid
During
Period
3/1/22–8/31/22
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$835.70
$4.86
$1,019.91
$5.35
1.05%
C
$1,000
$832.10
$8.39
$1,016.05
$9.23
1.82%
R6
$1,000
$837.00
$3.52
$1,021.38
$3.87
0.76%
Advisor
$1,000
$836.40
$3.79
$1,021.08
$4.17
0.82%
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
11
a
Year
Ended
August
31,
2022
2021
2020
2019
2018
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$15.52
$12.71
$12.76
$17.24
$16.94
Income
from
investment
operations
a
:
Net
investment
income
(loss)
b
....................
(—)
c
0.20
d
0.16
0.29
0.28
Net
realized
and
unrealized
gains
(losses)
...........
(3.44)
2.61
0.45
(2.17)
1.03
Total
from
investment
operations
....................
(3.44)
2.81
0.61
(1.88)
1.31
Less
distributions
from:
Net
investment
income
..........................
(0.23)
—
(0.50)
(0.67)
(0.02)
Net
realized
gains
.............................
—
—
(0.16)
(1.93)
(0.99)
Total
distributions
...............................
(0.23)
—
(0.66)
(2.60)
(1.01)
Net
asset
value,
end
of
year
.......................
$11.85
$15.52
$12.71
$12.76
$17.24
Total
return
e
...................................
(22.39)%
22.11%
4.47%
(10.22)%
7.81%
Ratios
to
average
net
assets
Expenses
.....................................
1.04%
1.03%
f
1.05%
1.05%
f
1.04%
g
Net
investment
income
(loss)
......................
(—)%
h
1.42%
d
1.29%
2.06%
1.64%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,138,297
$3,060,714
$2,831,844
$3,150,057
$3,973,648
Portfolio
turnover
rate
............................
81.20%
41.83%
52.25%
25.16%
28.39%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Amount
rounds
to
less
than
$0.01
per
share.
d
Net
investment
income
per
share
includes
approximately
$0.13
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
0.48%.
e
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
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%.
h
Rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
12
a
Year
Ended
August
31,
2022
2021
2020
2019
2018
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$14.76
$12.18
$12.26
$16.35
$16.21
Income
from
investment
operations
a
:
Net
investment
income
(loss)
b
....................
(0.10)
0.10
c
0.07
0.13
0.14
Net
realized
and
unrealized
gains
(losses)
...........
(3.29)
2.48
0.42
(2.01)
0.99
Total
from
investment
operations
....................
(3.39)
2.58
0.49
(1.88)
1.13
Less
distributions
from:
Net
investment
income
..........................
(0.07)
—
(0.41)
(0.28)
—
Net
realized
gains
.............................
—
—
(0.16)
(1.93)
(0.99)
Total
distributions
...............................
(0.07)
—
(0.57)
(2.21)
(0.99)
Net
asset
value,
end
of
year
.......................
$11.30
$14.76
$12.18
$12.26
$16.35
Total
return
d
...................................
(23.01)%
21.18%
3.61%
(10.94)%
7.01%
Ratios
to
average
net
assets
Expenses
.....................................
1.81%
1.80%
e
1.82%
1.80%
e
1.80%
f
Net
investment
income
(loss)
......................
(0.77)%
0.70%
c
0.54%
1.31%
0.88%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$7,348
$12,585
$18,630
$28,850
$117,879
Portfolio
turnover
rate
............................
81.20%
41.83%
52.25%
25.16%
28.39%
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
$0.13
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
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
13
a
Year
Ended
August
31,
2022
2021
2020
2019
2018
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$15.53
$12.69
$12.73
$17.21
$16.92
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.04
0.24
c
0.20
0.34
0.33
Net
realized
and
unrealized
gains
(losses)
...........
(3.43)
2.60
0.45
(2.17)
1.03
Total
from
investment
operations
....................
(3.39)
2.84
0.65
(1.83)
1.36
Less
distributions
from:
Net
investment
income
..........................
(0.28)
—
(0.53)
(0.72)
(0.08)
Net
realized
gains
.............................
—
—
(0.16)
(1.93)
(0.99)
Total
distributions
...............................
(0.28)
—
(0.69)
(2.65)
(1.07)
Net
asset
value,
end
of
year
.......................
$11.86
$15.53
$12.69
$12.73
$17.21
Total
return
....................................
(22.14)%
22.38%
4.71%
(9.88)%
8.13%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.78%
0.78%
0.79%
0.77%
0.74%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.76%
0.76%
0.76%
0.75%
0.72%
d
Net
investment
income
...........................
0.29%
1.68%
c
1.59%
2.36%
1.96%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$34,238
$42,010
$38,885
$43,595
$51,431
Portfolio
turnover
rate
............................
81.20%
41.83%
52.25%
25.16%
28.39%
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
$0.13
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
0.74%.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Financial
Highlights
Templeton
World
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
14
a
Year
Ended
August
31,
2022
2021
2020
2019
2018
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$15.54
$12.70
$12.74
$17.23
$16.93
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.03
0.24
c
0.19
0.33
0.32
Net
realized
and
unrealized
gains
(losses)
...........
(3.44)
2.60
0.45
(2.17)
1.03
Total
from
investment
operations
....................
(3.41)
2.84
0.64
(1.84)
1.35
Less
distributions
from:
Net
investment
income
..........................
(0.27)
—
(0.52)
(0.72)
(0.06)
Net
realized
gains
.............................
—
—
(0.16)
(1.93)
(0.99)
Total
distributions
...............................
(0.27)
—
(0.68)
(2.65)
(1.05)
Net
asset
value,
end
of
year
.......................
$11.86
$15.54
$12.70
$12.74
$17.23
Total
return
....................................
(22.22)%
22.36%
4.66%
(9.99)%
8.09%
Ratios
to
average
net
assets
Expenses
.....................................
0.81%
0.80%
d
0.81%
0.80%
d
0.80%
e
Net
investment
income
...........................
0.24%
1.64%
c
1.53%
2.31%
1.88%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$86,424
$115,823
$99,546
$112,891
$146,883
Portfolio
turnover
rate
............................
81.20%
41.83%
52.25%
25.16%
28.39%
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
$0.13
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
0.70%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Schedule
of
Investments,
August
31,
2022
Templeton
World
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
15
a
a
Industry
Shares
a
Value
a
Common
Stocks
99.9%
Belgium
2.2%
Anheuser-Busch
InBev
SA/NV
......
Beverages
1,021,190
$
49,315,422
China
3.1%
JD.com,
Inc.,
A
..................
Internet
&
Direct
Marketing
Retail
898,420
28,439,440
a
Prosus
NV
.....................
Internet
&
Direct
Marketing
Retail
682,315
42,171,436
70,610,876
France
4.1%
LVMH
Moet
Hennessy
Louis
Vuitton
SE
Textiles,
Apparel
&
Luxury
Goods
87,430
56,412,878
Pernod
Ricard
SA
................
Beverages
198,916
36,496,945
92,909,823
Germany
6.8%
Deutsche
Boerse
AG
..............
Capital
Markets
353,360
59,741,194
Infineon
Technologies
AG
..........
Semiconductors
&
Semiconductor
Equipment
1,314,049
32,151,679
SAP
SE
.......................
Software
726,420
61,865,668
153,758,541
Hong
Kong
2.9%
AIA
Group
Ltd.
..................
Insurance
6,988,604
67,238,584
Japan
4.0%
Hitachi
Ltd.
.....................
Industrial
Conglomerates
766,810
38,311,423
Sony
Group
Corp.
................
Household
Durables
457,870
36,402,179
Toyota
Industries
Corp.
............
Machinery
283,500
15,845,624
90,559,226
South
Korea
2.3%
Samsung
Electronics
Co.
Ltd.
.......
Technology
Hardware,
Storage
&
Peripherals
1,166,051
51,452,889
Taiwan
3.2%
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
......................
Semiconductors
&
Semiconductor
Equipment
4,401,809
72,112,393
United
Kingdom
7.4%
AstraZeneca
plc
.................
Pharmaceuticals
431,989
53,424,529
BP
plc
.........................
Oil,
Gas
&
Consumable
Fuels
8,347,741
42,648,976
a,b
Farfetch
Ltd.,
A
..................
Internet
&
Direct
Marketing
Retail
1,985,870
19,918,276
a,b,c
Just
Eat
Takeaway.com
NV,
144A,
Reg
S
...........................
Internet
&
Direct
Marketing
Retail
1,764,332
29,349,001
a
Rolls-Royce
Holdings
plc
..........
Aerospace
&
Defense
24,488,285
21,820,665
167,161,447
United
States
63.9%
a
Alphabet,
Inc.,
A
.................
Interactive
Media
&
Services
919,320
99,488,810
a
Amazon.com,
Inc.
................
Internet
&
Direct
Marketing
Retail
1,049,320
133,022,296
American
Express
Co.
............
Consumer
Finance
140,651
21,378,952
Applied
Materials,
Inc.
.............
Semiconductors
&
Semiconductor
Equipment
359,900
33,855,793
a
Booking
Holdings,
Inc.
............
Hotels,
Restaurants
&
Leisure
36,295
68,082,524
Comcast
Corp.,
A
................
Media
1,526,109
55,229,885
Crown
Holdings,
Inc.
..............
Containers
&
Packaging
141,905
12,855,174
a
Dollar
Tree,
Inc.
.................
Multiline
Retail
253,674
34,418,488
a
DXC
Technology
Co.
..............
IT
Services
1,548,782
38,378,818
a
F5,
Inc.
........................
Communications
Equipment
166,680
26,178,761
Fidelity
National
Information
Services,
Inc.
.........................
IT
Services
290,140
26,510,092
Freeport-McMoRan,
Inc.
...........
Metals
&
Mining
674,627
19,968,959
HCA
Healthcare,
Inc.
..............
Health
Care
Providers
&
Services
131,110
25,942,736
a
ICON
plc
.......................
Life
Sciences
Tools
&
Services
304,610
63,916,316
Templeton
Funds
Schedule
of
Investments
Templeton
World
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
16
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
United
States
(continued)
Keurig
Dr
Pepper,
Inc.
.............
Beverages
1,572,920
$
59,959,710
a
Meta
Platforms,
Inc.,
A
............
Interactive
Media
&
Services
199,939
32,576,061
Microchip
Technology,
Inc.
.........
Semiconductors
&
Semiconductor
Equipment
895,398
58,424,720
Micron
Technology,
Inc.
............
Semiconductors
&
Semiconductor
Equipment
682,436
38,578,107
Microsoft
Corp.
..................
Software
373,901
97,763,894
Roche
Holding
AG
...............
Pharmaceuticals
190,361
61,323,422
a
Salesforce,
Inc.
..................
Software
304,960
47,610,355
Schneider
Electric
SE
.............
Electrical
Equipment
82,450
9,799,304
a
T-Mobile
US,
Inc.
................
Wireless
Telecommunication
Services
702,861
101,183,870
a
Uber
Technologies,
Inc.
............
Road
&
Rail
816,380
23,479,089
UnitedHealth
Group,
Inc.
...........
Health
Care
Providers
&
Services
151,042
78,440,642
a
Walt
Disney
Co.
(The)
.............
Entertainment
662,964
74,305,005
Westinghouse
Air
Brake
Technologies
Corp.
........................
Machinery
686,858
60,203,104
Zimmer
Biomet
Holdings,
Inc.
.......
Health
Care
Equipment
&
Supplies
440,817
46,867,663
1,449,742,550
Total
Common
Stocks
(Cost
$2,448,412,438)
....................................
2,264,861,751
Short
Term
Investments
1.4%
a
a
Industry
Principal
Amount
*
a
Value
a
a
a
a
a
a
Time
Deposits
1.4%
Canada
1.4%
National
Bank
of
Canada,
2.31%,
9/01/22
......................
20,000,000
20,000,000
Royal
Bank
of
Canada,
2.31%,
9/01/22
11,500,000
11,500,000
31,500,000
Total
Time
Deposits
(Cost
$31,500,000)
........................................
31,500,000
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$31,500,000
)
................................
31,500,000
a
a
a
Total
Investments
(Cost
$2,479,912,438)
101.3%
................................
$2,296,361,751
Other
Assets,
less
Liabilities
(1.3)%
...........................................
(30,054,041)
Net
Assets
100.0%
...........................................................
$2,266,307,710
a
a
a
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Non-income
producing.
b
A
portion
or
all
of
the
security
is
on
loan
at
August
31,
2022.
See
Note
1(d).
c
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
August
31,
2022,
the
value
of
this
security
was
$29,349,001,
representing
1.3%
of
net
assets.
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
August
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
17
Templeton
World
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$2,479,912,438
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$22,474,697)
.................................
$2,296,361,751
Cash
....................................................................................
45,357
Receivables:
Capital
shares
sold
........................................................................
51,844
Dividends
and
interest
.....................................................................
4,468,694
European
Union
tax
reclaims
(Note
1
e
)
.........................................................
592,799
Total
assets
..........................................................................
2,301,520,445
Liabilities:
Payables:
Investment
securities
purchased
..............................................................
17,124,347
Capital
shares
redeemed
...................................................................
1,492,330
Management
fees
.........................................................................
1,430,500
Distribution
fees
..........................................................................
491,529
Transfer
agent
fees
........................................................................
396,865
IRS
closing
agreement
payments
for
European
Union
tax
reclaims
(Note
1
e
)
.............................
13,736,449
Accrued
expenses
and
other
liabilities
...........................................................
540,715
Total
liabilities
.........................................................................
35,212,735
Net
assets,
at
value
.................................................................
$2,266,307,710
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$2,442,460,569
Total
distributable
earnings
(losses)
.............................................................
(176,152,859)
Net
assets,
at
value
.................................................................
$2,266,307,710
Templeton
Funds
Financial
Statements
Statement
of
Assets
and
Liabilities
(continued)
August
31,
2022
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
18
Templeton
World
Fund
Class
A:
Net
assets,
at
value
.......................................................................
$2,138,297,256
Shares
outstanding
........................................................................
180,405,046
Net
asset
value
per
share
a
..................................................................
$11.85
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%)
................................
$12.54
Class
C:
Net
assets,
at
value
.......................................................................
$7,347,973
Shares
outstanding
........................................................................
650,099
Net
asset
value
and
maximum
offering
price
per
share
a
.............................................
$11.30
Class
R6:
Net
assets,
at
value
.......................................................................
$34,238,120
Shares
outstanding
........................................................................
2,887,804
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$11.86
Advisor
Class:
Net
assets,
at
value
.......................................................................
$86,424,361
Shares
outstanding
........................................................................
7,285,546
Net
asset
value
and
maximum
offering
price
per
share
.............................................
$11.86
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Templeton
Funds
Financial
Statements
Statement
of
Operations
for
the
year
ended
August
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
19
Templeton
World
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$2,541,396)
Unaffiliated
issuers
........................................................................
$31,591,349
Interest:
Unaffiliated
issuers
........................................................................
371,066
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
.....................................................
3,597
Other
income
(Note
1
e
)
......................................................................
869,164
Less:
IRS
closing
agreement
payments
for
European
Union
tax
reclaims
(Note
1
e
)
..........................
(3,827,111)
Total
investment
income
...................................................................
29,008,065
Expenses:
Management
fees
(Note
3
a
)
...................................................................
19,392,468
Distribution
fees:
(Note
3c
)
    Class
A
................................................................................
6,260,718
    Class
C
................................................................................
100,232
Transfer
agent
fees:
(Note
3e
)
    Class
A
................................................................................
2,072,142
    Class
C
................................................................................
7,816
    Class
R6
...............................................................................
21,866
    Advisor
Class
............................................................................
81,401
Custodian
fees
.............................................................................
97,695
Reports
to
shareholders
fees
..................................................................
195,684
Registration
and
filing
fees
....................................................................
67,643
Professional
fees
...........................................................................
174,285
Trustees'
fees
and
expenses
..................................................................
245,328
Other
....................................................................................
134,360
Total
expenses
.........................................................................
28,851,638
Expenses
waived/paid
by
affiliates
(Note
3f)
....................................................
(9,992)
Net
expenses
.........................................................................
28,841,646
Net
investment
income
................................................................
166,419
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
204,756,027
Foreign
currency
transactions
................................................................
(717,414)
Forward
exchange
contracts
.................................................................
15,752,137
Net
realized
gain
(loss)
..................................................................
219,790,750
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
(903,169,873)
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
(549,876)
Forward
exchange
contracts
.................................................................
1,232,490
Net
change
in
unrealized
appreciation
(depreciation)
............................................
(902,487,259)
Net
realized
and
unrealized
gain
(loss)
............................................................
(682,696,509)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$(682,530,090)
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
20
Templeton
World
Fund
Year
Ended
August
31,
2022
Year
Ended
August
31,
2021
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$166,419
$45,221,882
Net
realized
gain
(loss)
.................................................
219,790,750
208,380,573
Net
change
in
unrealized
appreciation
(depreciation)
...........................
(902,487,259)
372,038,154
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
(682,530,090)
625,640,609
Distributions
to
shareholders:
Class
A
.............................................................
(44,013,452)
—
Class
C
.............................................................
(55,139)
—
Class
R6
............................................................
(780,101)
—
Advisor
Class
........................................................
(1,988,799)
—
Total
distributions
to
shareholders
..........................................
(46,837,491)
—
Capital
share
transactions:
(Note
2
)
Class
A
.............................................................
(233,613,207)
(364,041,894)
Class
C
.............................................................
(2,686,637)
(9,478,984)
Class
R6
............................................................
2,778,432
(4,859,427)
Advisor
Class
........................................................
(1,935,608)
(5,032,934)
Total
capital
share
transactions
............................................
(235,457,020)
(383,413,239)
Net
increase
(decrease)
in
net
assets
...................................
(964,824,601)
242,227,370
Net
assets:
Beginning
of
year
.......................................................
3,231,132,311
2,988,904,941
End
of
year
...........................................................
$2,266,307,710
$3,231,132,311
Templeton
Funds
21
franklintempleton.com
Annual
Report
Notes
to
Financial
Statements
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
on
a
monthly
basis,
after
they
have
been
held
for
8
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.
Certain
derivative
financial
instruments
trade
in
the
OTC
market.
The
Fund's
pricing
services
use
various
techniques
including
industry
standard
option
pricing
models
and
proprietary
discounted
cash
flow
models
to
determine
the
fair
value
of
those
instruments.
The
Fund's
net
benefit
or
obligation
under
the
derivative
contract,
as
measured
by
the
fair
value
of
the
contract,
is
included
in
net
assets.
The
Fund
has
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the Fund
primarily
employs
a
market-based
approach
which
may
use
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
book
values,
and
other
relevant
information
for
the
investment
to
determine
the
fair
value
of
the
investment.
An
income-based
valuation
approach
may
also
be
used
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
to
calculate
fair
value.
Discounts
may
also
be
applied
due
to
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
Due
to
the
inherent
uncertainty
of
valuations
of
such
investments,
the
fair
values
may
differ
significantly
from
the
values
that
would
have
been
used
had
an
active
market
existed.
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Fund's
business
day.
Events
can
occur
between
the
time
at
which
trading
in
a
foreign
security
is
completed
and
4
p.m.
Eastern
time
that
might
call
into
question
the
reliability
of
the
value
of
a
portfolio
security
held
by
the
Fund.
As
a
result,
differences
may
arise
between
the
value
of
the
Fund's
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
at
4
p.m.
Eastern
time.
In
order
to
minimize
the
potential
for
these
differences,
an
independent
pricing
service
may
be
used
to
adjust
the
value
of
the
Fund's
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
August
31,
2022,
certain
securities
may
have
been
fair
valued
using
these
procedures,
in
which
case
the
securities
Templeton
Funds
Notes
to
Financial
Statements
22
franklintempleton.com
Annual
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.
The
Fund
entered
into
OTC
forward
exchange
contracts
primarily
to
manage
and/or
gain
exposure
to
certain
foreign
currencies.
A
forward
exchange
contract
is
an
agreement
between
the
Fund
and
a
counterparty
to
buy
or
sell
a
foreign
currency
at
a
specific
exchange
rate
on
a
future
date.
See
Note
9
regarding
other
derivative
information.
d.
Securities
Lending
The
Fund
participates
in
an
agency
based
securities
lending
program
to
earn
additional
income.
The
Fund
receives
collateral
in
the
form
of
cash
and/or
U.S.
Government
and
Agency
securities
against
the
loaned
securities
in
an
amount
equal
to
at
least
102%
of
the
fair
value
of
the
loaned
securities.
Collateral
is
maintained
over
the
life
of
the
loan
in
an
amount
not
less
than
100%
of
the
fair
value
of
loaned
securities,
as
determined
at
the
close
of
Fund
business
each
day;
any
additional
collateral
required
due
to
changes
in
security
values
is
delivered
to
the
Fund
on
the
next
business
day.
Any
cash
collateral
received
is
deposited
into
a
joint
cash
account
with
other
funds
and
is
used
to
invest
in
a
money
market
fund
managed
by
Franklin
Advisers,
Inc.,
an
affiliate
of
the Fund.
Additionally,
at
August
31,
2022,
the
Fund
held
$24,002,984
in
U.S.
Government
and
Agency
securities
as
collateral.
These
securities
are
held
as
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation 
(continued)
Templeton
Funds
Notes
to
Financial
Statements
23
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
collateral
in
segregated
accounts
with
the
Fund’s
custodian.
The
Fund
cannot
repledge
or
resell
these
securities
held
as
collateral.
As
such,
the
non-cash
collateral
is
excluded
from
the
Statement
of
Assets
and
Liabilities.
The
Fund
may
receive
income
from
the
investment
of
cash
collateral,
in
addition
to
lending
fees
and
rebates
paid
by
the
borrower.
Income
from
securities
loaned,
net
of
fees
paid
to
the
securities
lending
agent
and/or
third-party
vendor,
is
reported
separately
in
the
Statement
of
Operations.
The
Fund
bears
the
market
risk
with
respect
to any
cash collateral
investment,
securities
loaned,
and
the
risk
that
the
agent
may
default
on
its
obligations
to
the
Fund.
If
the
borrower
defaults
on
its
obligation
to
return
the
securities
loaned,
the
Fund
has
the
right
to
repurchase
the
securities
in
the
open
market
using
the
collateral
received.
The
securities
lending
agent
has
agreed
to
indemnify
the
Fund
in
the
event
of
default
by
a
third
party
borrower.
e.
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). 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.
Any
fees
associated
with
these
filings
are
reflected
in
other
expenses
in
the
Statement
of
Operations.
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
amount
of
foreign
taxes
Fund
shareholders
can
use
as
tax
deductions
or credits
on
their
income
tax
returns.
In
the
event
that
EU
reclaims
received
by
the Fund
during a
fiscal
year
exceed
foreign
withholding
taxes
paid
by
the
Fund,
and
the
Fund previously
passed
through to
its
shareholders
foreign
taxes
incurred
by
the
Fund
to
be
used
as
a
credit
or
deduction
on
a
shareholder’s
income
tax
return,
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.
During
the
fiscal
year
ended
August
31,
2022,
the Fund
received
EU
reclaims
in
excess
of
the
foreign
taxes
paid
during
the
year.
The
Fund
determined
to
enter
into
a
closing
agreement
with
the
IRS
and
recorded
the
estimated payments
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
August
31,
2022,
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Securities
Lending
(continued)
Templeton
Funds
Notes
to
Financial
Statements
24
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
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.
g.
Accounting
Estimates
The
preparation
of
financial
statements
in
accordance
with
U.S.
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
at
the
date
of
the
financial
statements
and
the
amounts
of
income
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
those
estimates.
h.
Guarantees
and
Indemnifications
Under
the
Trust's
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust,
on
behalf
of
the
Fund,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust's
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
August
31,
2022,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Fund’s
shares
were
as
follows:
Year
Ended
August
31,
2022
Year
Ended
August
31,
2021
Shares
Amount
Shares
Amount
Class
A
Shares:
Shares
sold
a
...................................
7,163,158
$100,026,779
9,217,073
$133,230,977
Shares
issued
in
reinvestment
of
distributions
..........
2,756,371
40,243,011
—
—
Shares
redeemed
...............................
(26,739,266)
(373,882,997)
(34,710,249)
(497,272,871)
Net
increase
(decrease)
..........................
(16,819,737)
$(233,613,207)
(25,493,176)
$(364,041,894)
Class
C
Shares:
Shares
sold
...................................
59,313
$799,919
111,842
$1,540,029
Shares
issued
in
reinvestment
of
distributions
..........
3,910
54,747
—
—
Shares
redeemed
a
..............................
(265,836)
(3,541,303)
(788,496)
(11,019,013)
Net
increase
(decrease)
..........................
(202,613)
$(2,686,637)
(676,654)
$(9,478,984)
1.
Organization
and
Significant
Accounting
Policies
(continued)
f.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
(continued)
Templeton
Funds
Notes
to
Financial
Statements
25
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Trust
are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
The
Fund
pays
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
Global
Advisors
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
For
the
year
ended
August
31,
2022,
the
gross
effective
investment
management
fee
rate
was
0.695%
of
the
Fund’s
average
daily
net
assets. 
b.
Administrative
Fees
Under
an
agreement
with
Global
Advisors,
FT
Services
provides
administrative
services
to
the
Fund.
The
fee
is
paid
by
Global
Advisors
based
on
the
Fund’s
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
Year
Ended
August
31,
2022
Year
Ended
August
31,
2021
Shares
Amount
Shares
Amount
Class
R6
Shares:
Shares
sold
...................................
591,711
$8,400,647
519,191
$7,465,031
Shares
issued
in
reinvestment
of
distributions
..........
28,589
416,823
—
—
Shares
redeemed
...............................
(438,321)
(6,039,038)
(878,650)
(12,324,458)
Net
increase
(decrease)
..........................
181,979
$2,778,432
(359,459)
$(4,859,427)
Advisor
Class
Shares:
Shares
sold
...................................
1,574,879
$22,222,607
1,575,746
$22,918,244
Shares
issued
in
reinvestment
of
distributions
..........
125,855
1,836,223
—
—
Shares
redeemed
...............................
(1,870,594)
(25,994,438)
(1,959,012)
(27,951,178)
Net
increase
(decrease)
..........................
(169,860)
$(1,935,608)
(383,266)
$(5,032,934)
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
Distributors,
LLC
(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%
In
excess
of
$20
billion
2.
Shares
of
Beneficial
Interest
(continued)
Templeton
Funds
Notes
to
Financial
Statements
26
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
c.
Distribution
Fees
The
Board
has
adopted
distribution
plans
for
each
share
class,
with
the
exception
of
Class
R6
and
Advisor
Class
shares,
pursuant
to
Rule
12b-1
under
the
1940
Act.
Under
the
Fund’s
Class A reimbursement
distribution
plan,
the
Fund
reimburses
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
the
Fund's
shares
up
to
the
maximum
annual
plan
rate.
Under
the
Class
A
reimbursement
distribution
plan,
costs
exceeding
the
maximum
for
the
current
plan
year
cannot
be
reimbursed
in
subsequent
periods.
In
addition,
under
the
Fund’s
Class C
compensation
distribution
plan,
the
Fund
pays
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
the
Fund's
shares
up
to
the
maximum
annual
plan
rate.
The
plan
year,
for
purposes
of
monitoring
compliance
with
the
maximum
annual
plan
rates,
is
February
1
through
January
31.
The
maximum
annual
plan
rates,
based
on
the
average
daily
net
assets,
for
each
class,
are
as
follows:
d.
Sales
Charges/Underwriting
Agreements
Front-end
sales
charges
and
contingent
deferred
sales
charges
(CDSC)
do
not
represent
expenses
of
the
Fund.
These
charges
are
deducted
from
the
proceeds
of
sales
of
Fund
shares
prior
to
investment
or
from
redemption
proceeds
prior
to
remittance,
as
applicable.
Distributors
has
advised
the
Fund
of
the
following
commission
transactions
related
to
the
sales
and
redemptions
of
the
Fund's
shares
for
the
year:
e.
Transfer
Agent
Fees
Each
class
of
shares pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
The
fees
are
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
In
addition,
each
class reimburses
Investor
Services
for
out
of
pocket
expenses
incurred
and,
except
for
Class
R6,
reimburses
shareholder
servicing
fees
paid
to
third
parties.
These
fees
are
allocated
daily
based
upon
their
relative
proportion
of
such
classes'
aggregate
net
assets.
Class
R6
pays
Investor
Services
transfer
agent
fees
specific
to
that
class. 
For
the
year
ended
August
31,
2022,
the
Fund
paid
transfer
agent
fees
of
$2,183,225,
of
which $1,004,877
was
retained
by
Investor
Services.
f.
Waiver
and
Expense
Reimbursements
Investor
Services
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
so
that
the
Class
R6
transfer
agent
fees
do
not
exceed
0.03%
based
on
the
average
net
assets
of
the
class
until
December
31,
2022.
4.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains. 
At
August
31,
2022,
the
capital
loss
carryforwards
were
as
follows:
Class
A
....................................................................................
0.25%
Class
C
....................................................................................
1.00%
Sales
charges
retained
net
of
commissions
paid
to
unaffiliated
brokers/dealers
..............................
$29,243
CDSC
retained
..............................................................................
$922
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
................................................................................
$1,596,246
3.
Transactions
with
Affiliates
(continued)
Templeton
Funds
Notes
to
Financial
Statements
27
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
During
the
year
ended August
31,
2022
the
Fund
utilized
$202,221,200
of
capital
loss
carryforwards.
The
tax
character
of
distributions
paid
during
the
years
ended
August
31,
2022
and
2021,
was
as
follows:
At
August
31
,
202
2
,
the
cost
of
investments
,
net
unrealized
appreciation
(depreciation)
and
undistributed
ordinary
income
for
income
tax
purposes
were
as
follows:
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatment
s
of
foreign
currency
transactions,
EU
reclaims
and
corporate
actions.
5.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities)
for
the
year
ended
August
31,
2022,
aggregated
$2,179,304,363
and
$2,222,803,411,
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.
Political
and
financial
uncertainty
in
many
foreign
regions
may
increase
market
volatility
and
the
economic
risk
of
investing
in
foreign
securities.
In
addition,
certain
foreign
securities
may
not
be
as
liquid
as
U.S.
securities.
7.
Geopolitical
Risk
On
February
24,
2022,
Russia
engaged
in
military
actions
in
the
sovereign
territory
of
Ukraine.
The
current
political
and
financial
uncertainty
surrounding
Russia
and
Ukraine
may
increase
market
volatility
and
the
economic
risk
of
investing
in
securities
in
these
countries
and
may
also
cause
uncertainty
for
the
global
economy
and
broader
financial
markets.
The
ultimate
fallout
and
long-term
impact
from
these
events
are
not
known.
The
Fund
will
continue
to
assess
the
impact
on
valuations
and
liquidity
and
will
take
any
potential
actions
needed
in
accordance
with
procedures
approved
by
the
Board.
2022
2021
Distributions
paid
from:
Ordinary
income
..........................................................
$46,837,491
—
Cost
of
investments
..........................................................................
$2,479,913,747
Unrealized
appreciation
........................................................................
$186,655,713
Unrealized
depreciation
........................................................................
(370,207,709)
Net
unrealized
appreciation
(depreciation)
..........................................................
$(183,551,996
)
Distributable
earnings:
Undistributed
ordinary
income
...................................................................
$7,285,690
4.
Income
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
28
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
8.
Novel
Coronavirus
Pandemic 
The
global
outbreak
of
the
novel
coronavirus
disease,
known
as
COVID-19, has
caused
adverse
effects
on
many
companies,
sectors,
nations,
regions
and
the
markets
in
general, and
may
continue for
an unpredictable duration.
The
effects
of
this
pandemic
may
materially
impact
the
value
and
performance
of
the Fund, its ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and its ability
to
achieve its investment
objectives.
9.
Other
Derivative
Information
For
the
year
ended
August
31,
2022,
the
effect
of
derivative
contracts
in
the
Statement
of
Operations
was
as
follows:
For
the
year
ended
August
31
,
2022
,
the
average
month
end
contract
value
of
forward
exchange
contracts
was
$
123
,
401
,
051
.
See
Note
1(c)
regarding
derivative
financial
instruments. 
10.
Credit
Facility
The
Fund,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2.675
billion
(Global
Credit
Facility)
which
matures
on
February
3,
2023.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
Fund
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Fund
and
other
costs
incurred
by
the
Fund,
pay
its
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
its
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statement
of
Operations.
During
the
year
ended
August
31,
2022,
the Fund
did
not
use
the
Global
Credit
Facility.
11.
Fair
Value
Measurements
The
Fund
follows
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Fund's
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the
Fund's financial
instruments
and
are
summarized
in
the
following
fair
value
hierarchy:
Level
1
–
quoted
prices
in
active
markets
for
identical
financial
instruments
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Year
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Year
Templeton
World
Fund
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
  appreciation
(depreciation)
on:
Foreign
exchange
contracts
.....
Forward
exchange
contracts
$15,752,137
Forward
exchange
contracts
$1,232,490
Total
.......................
$15,752,137
$1,232,490
Templeton
Funds
Notes
to
Financial
Statements
29
franklintempleton.com
Annual
Report
Templeton
World
Fund
(continued)
Level
2
–
other
significant
observable
inputs
(including
quoted
prices
for
similar
financial
instruments,
interest
rates,
prepayment
speed,
credit
risk,
etc.)
Level
3
–
significant
unobservable
inputs
(including
the
Fund's
own
assumptions
in
determining
the
fair
value
of
financial
instruments)
The
input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level.
A
summary
of
inputs
used
as
of
August
31,
2022,
in
valuing
the
Fund's
assets
and
liabilities
carried
at
fair
value,
is
as
follows:
12.
New
Accounting
Pronouncements
In June
2022,
the
Financial
Accounting
Standards
Board
(FASB)
issued
Accounting
Standards
Update
(ASU)
No.
2022-03,
Fair
Value
Measurement
(Topic
820)
–
Fair
Value
Measurement
of
Equity
Securities
Subject
to
Contractual
Sale
Restrictions.
The
amendments
in
the
ASU
clarify
that
a
contractual
restriction
on
the
sale
of
an
equity
security
is
not
considered
part
of
the
unit
of
account
of
the
equity
security
and,
therefore,
should
not
be
considered
in
measuring
fair
value.
The
ASU
is
effective
for
interim
and
annual
reporting
periods
beginning
after
December
15,
2023,
with
the
option
of
early
adoption.
Management
is
currently
evaluating
the
impact,
if
any,
of
applying
this
ASU.
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.
Level
1
Level
2
Level
3
Total
Templeton
World
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Belgium
..............................
$
—
$
49,315,422
$
—
$
49,315,422
China
...............................
—
70,610,876
—
70,610,876
France
...............................
—
92,909,823
—
92,909,823
Germany
.............................
—
153,758,541
—
153,758,541
Hong
Kong
...........................
—
67,238,584
—
67,238,584
Japan
...............................
—
90,559,226
—
90,559,226
South
Korea
..........................
—
51,452,889
—
51,452,889
Taiwan
...............................
—
72,112,393
—
72,112,393
United
Kingdom
........................
19,918,276
147,243,171
—
167,161,447
United
States
..........................
1,378,619,824
71,122,726
—
1,449,742,550
Short
Term
Investments
...................
—
31,500,000
—
31,500,000
Total
Investments
in
Securities
...........
$1,398,538,100
$897,823,651
a
$—
$2,296,361,751
a
Includes
foreign
securities
valued
at
$866,323,650
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.
11.
Fair
Value
Measurements
(continued)
Templeton
Funds
Report
of
Independent
Registered
Public
Accounting
Firm
30
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
of
Templeton
Funds
and
Shareholders
of
Templeton
World
Fund
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statement
of
assets
and
liabilities,
including
the
schedule
of
investments,
of
Templeton
World
Fund
(one
of
the
funds
constituting
Templeton
Funds,
referred
to
hereafter
as
the
“Fund”)
as
of
August
31,
2022,
the
related
statement
of
operations
for
the
year
ended
August
31,
2022,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2022,
including
the
related
notes,
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2022
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Fund
as
of
August
31,
2022,
the
results
of
its
operations
for
the
year
then
ended,
the
changes
in
its
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2022
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
August
31,
2022
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinion
These
financial
statements
are
the
responsibility
of
the
Fund’s
management.
Our
responsibility
is
to
express
an
opinion
on
the
Fund’s
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(PCAOB)
and
are
required
to
be
independent
with
respect
to
the
Fund
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
of
these
financial
statements
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
August
31,
2022
by
correspondence
with
the
custodian
and
brokers;
when
replies
were
not
received
from
brokers,
we
performed
other
auditing
procedures.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinion.
PricewaterhouseCoopers
LLP
San
Francisco,
California
October
17,
2022
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Templeton
Funds
Tax
Information
(unaudited)
31
franklintempleton.com
Annual
Report
Templeton
World
Fund
By
mid-February,
tax
information
related
to
a
shareholder's
proportionate
share
of
distributions
paid
during
the
preceding
calendar
year
will
be
received,
if
applicable.
Please
also
refer
to
www.franklintempleton.com
for
per
share
tax
information
related
to
any
distributions
paid
during
the
preceding
calendar
year.
Shareholders
are
advised
to
consult
with
their
tax
advisors
for
further
information
on
the
treatment
of
these
amount
on
their
tax
returns.
The
following
tax
information
for
the
Fund
is
required
to
be
furnished
to
shareholders
with
respect
to
income
earned
and
distributions
paid
during
its
fiscal
year.
The
Fund
hereby
reports
the
following
amount,
or
if
subsequently
determined
to
be
different,
the
maximum
allowable
amount,
for
the
fiscal
year
ended
August
31,
2022:
Pursuant
to:
Amount
Reported
Income
Eligible
for
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$8,956,597
Qualified
Dividend
Income
Earned
(QDI)
§854(b)(1)(B)
$30,702,727
Section
163(j)
Interest
Dividends
Earned
§163(j)
$196,648
Templeton
Funds
Board
Members
and
Officers
32
franklintempleton.com
Annual
Report
The
name,
year
of
birth
and
address
of
the
officers
and
board
members,
as
well
as
their
affiliations,
positions
held
with
the
Trust,
principal
occupations
during
at
least
the
past
five
years
and
number
of
U.S.
registered
portfolios
overseen
in
the
Franklin
Templeton\Legg
Mason
fund
complex,
are
shown
below.
Generally,
each
board
member
serves
until
that
person’s
successor
is
elected
and
qualified.
Independent
Board
Members
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Harris
J.
Ashton
(1932)
Trustee
Since
1992
119
Bar-S
Foods
(meat
packing
company)
(1981-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Director,
RBC
Holdings,
Inc.
(bank
holding
company)
(until
2002);
and
President,
Chief
Executive
Officer
and
Chairman
of
the
Board,
General
Host
Corporation
(nursery
and
craft
centers)
(until
1998).
Ann
Torre
Bates
(1958)
Trustee
Since
2008
30
Ares
Capital
Corporation
(specialty
finance
company)
(2010-present),
United
Natural
Foods,
Inc.
(distributor
of
natural,
organic
and
specialty
foods)
(2013-present),
formerly
,
Allied
Capital
Corporation
(financial
services)
(2003-
2010),
SLM
Corporation
(Sallie
Mae)
(1997-2014)
and
Navient
Corporation
(loan
management,
servicing
and
asset
recovery)
(2014-2016).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Executive
Vice
President
and
Chief
Financial
Officer,
NHP
Incorporated
(manager
of
multifamily
housing)
(1995-1997);
and
Vice
President
and
Treasurer,
US
Airways,
Inc.
(until
1995).
Mary
C.
Choksi
(1950)
Trustee
Since
2016
120
Omnicom
Group
Inc.
(advertising
and
marketing
communications
services)
(2011-present)
and
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2017-present);
and
formerly
,
Avis
Budget
Group
Inc.
(car
rental)
(2007-2020).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Founder
and
Senior
Advisor,
Strategic
Investment
Group
(investment
management
group)
(2015-2017);
Founding
Partner
and
Senior
Managing
Director,
Strategic
Investment
Group
(1987-2015);
Founding
Partner
and
Managing
Director,
Emerging
Markets
Management
LLC
(investment
management
firm)
(1987-2011);
and
Loan
Officer/Senior
Loan
Officer/Senior
Pension
Investment
Officer,
World
Bank
Group
(international
financial
institution)
(1977-1987).
Templeton
Funds
33
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Edith
E.
Holiday
(1952)
Lead
Independent
Trustee
Trustee
since
2003
and
Lead
Independent
Trustee
since
2007
120
Hess
Corporation
(exploration
of
oil
and
gas)
(1993-present),
Santander
Consumer
USA
Holdings,
Inc.
(consumer
finance)
(2016-present);
Santander
Holdings
USA
(holding
company)
(2019-present);
and
formerly
,
Canadian
National
Railway
(railroad)
(2001-2021),
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2004-
2021),
RTI
International
Metals,
Inc.
(manufacture
and
distribution
of
titanium)
(1999-2015)
and
H.J.
Heinz
Company
(processed
foods
and
allied
products)
(1994-2013).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
or
Trustee
of
various
companies
and
trusts;
and
formerly
,
Assistant
to
the
President
of
the
United
States
and
Secretary
of
the
Cabinet
(1990-1993);
General
Counsel
to
the
United
States
Treasury
Department
(1989-1990);
and
Counselor
to
the
Secretary
and
Assistant
Secretary
for
Public
Affairs
and
Public
Liaison-United
States
Treasury
Department
(1988-1989).
J.
Michael
Luttig
(1954)
Trustee
Since
2009
120
Boeing
Capital
Corporation
(aircraft
financing)
(2006-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Counselor
and
Special
Advisor
to
the
CEO
and
Board
of
Directors
of
the
Coca-Cola
Company
(beverage
company)
(2021-present);
and
formerly
,
Counselor
and
Senior
Advisor
to
the
Chairman,
CEO,
and
Board
of
Directors,
of
The
Boeing
Company
(aerospace
company),
and
member
of
the
Executive
Council
(2019-2020);
Executive
Vice
President,
General
Counsel
and
member
of
the
Executive
Council,
The
Boeing
Company
(2006-2019);
and
Federal
Appeals
Court
Judge,
United
States
Court
of
Appeals
for
the
Fourth
Circuit
(1991-2006).
David
W.
Niemiec
(1949)
Trustee
Since
2005
30
Hess
Midstream
LP
(oil
and
gas
midstream
infrastructure)
(2017-present).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Advisor,
Saratoga
Partners
(private
equity
fund);
and
formerly
,
Managing
Director,
Saratoga
Partners
(1998-2001)
and
SBC
Warburg
Dillon
Read
(investment
banking)
(1997-1998);
Vice
Chairman,
Dillon,
Read
&
Co.
Inc.
(investment
banking)
(1991-1997);
and
Chief
Financial
Officer,
Dillon,
Read
&
Co.
Inc.
(1982-1997).
Larry
D.
Thompson
(1945)
Trustee
Since
2005
120
Graham
Holdings
Company
(education
and
media
organization)
(2011-2021);
The
Southern
Company
(energy
company)
(2014-2020;
previously
2010-
2012)
and
Cbeyond,
Inc.
(business
communications
provider)
(2010-
2012).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
Counsel,
Finch
McCranie,
LLP
(law
firm)
(2015-present);
John
A.
Sibley
Professor
of
Corporate
and
Business
Law,
University
of
Georgia
School
of
Law
(2015-present;
previously
2011-2012);
and
formerly
,
Independent
Compliance
Monitor
and
Auditor,
Volkswagen
AG
(manufacturer
of
automobiles
and
commercial
vehicles)
(2017-2020);
Executive
Vice
President
-
Government
Affairs,
General
Counsel
and
Corporate
Secretary,
PepsiCo,
Inc.
(consumer
products)
(2012-2014);
Senior
Vice
President
-
Government
Affairs,
General
Counsel
and
Secretary,
PepsiCo,
Inc.
(2004-2011);
Senior
Fellow
of
The
Brookings
Institution
(2003-2004);
Visiting
Professor,
University
of
Georgia
School
of
Law
(2004);
and
Deputy
Attorney
General,
U.S.
Department
of
Justice
(2001-2003).
Independent
Board
Members
(continued)
Templeton
Funds
34
franklintempleton.com
Annual
Report
Interested
Board
Members
and
Officers
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Constantine
D.
Tseretopoulos
(1954)
Trustee
Since
2003
20
None
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Physician,
Chief
of
Staff,
owner
and
operator
of
the
Lyford
Cay
Hospital
(1987-present);
director
of
various
nonprofit
organizations;
and
formerly
,
Cardiology
Fellow,
University
of
Maryland
(1985-1987);
and
Internal
Medicine
Resident,
Greater
Baltimore
Medical
Center
(1982-
1985).
Robert
E.
Wade
(1946)
Trustee
Since
2006
30
El
Oro
Ltd
(investments)
(2003-
2019).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Attorney
at
law
engaged
in
private
practice
as
a
sole
practitioner
(1972-2008)
and
member
of
various
boards.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
**Gregory
E.
Johnson
(1961)
Trustee
Since
2013
131
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Executive
Chairman,
Chairman
of
the
Board
and
Director,
Franklin
Resources,
Inc.;
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
Vice
Chairman,
Investment
Company
Institute;
and
formerly
,
Chief
Executive
Officer
(2013-2020)
and
President
(1994-2015)
Franklin
Resources,
Inc.
**Rupert
H.
Johnson,
Jr.
(1940)
Chairman
of
the
Board,
Trustee
and
Vice
President
Chairman
of
the
Board
since
2013,
Trustee
since
1992
and
Vice
President
since
1996
120
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
(Vice
Chairman),
Franklin
Resources,
Inc.;
Director,
Franklin
Advisers,
Inc.;
and
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Alan
T.
Bartlett
(1970)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
2019
Not
Applicable
Not
Applicable
Lyford
Cay
Nassau,
Bahamas
Principal
Occupation
During
at
Least
the
Past
5
Years:
President
and
Director,
Templeton
Global
Advisors
Limited;
Chief
Investment
Officer
of
Templeton
Global
Equity
Group;
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
Chairman
of
the
Board,
Goodhart
Partners;
and
formerly
,
Chief
Executive
Officer,
Goodhart
Partners
(2009-2019).
Independent
Board
Members
(continued)
Templeton
Funds
35
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Alison
E.
Baur
(1964)
Vice
President
Since
2012
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Deputy
General
Counsel,
Franklin
Templeton;
and
officer
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Breda
M.
Beckerle
(1958)
Chief
Compliance
Officer
Since
2020
Not
Applicable
Not
Applicable
280
Park
Avenue
New
York,
NY
10017
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Compliance
Officer,
Fiduciary
Investment
Management
International,
Inc.,
Franklin
Advisers,
Inc.,
Franklin
Mutual
Advisers,
LLC,
Franklin
Templeton
Institutional,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Steven
J.
Gray
(1955)
Vice
President
Since
2009
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Distributors,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Matthew
T.
Hinkle
(1971)
Chief
Executive
Officer
–
Finance
and
Administration
Since
2017
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Vice
President,
Franklin
Templeton
Services,
LLC;
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
and
formerly
,
Vice
President,
Global
Tax
(2012-April
2017)
and
Treasurer/Assistant
Treasurer,
Franklin
Templeton
(2009-2017).
Susan
Kerr
(1949)
Vice
President
–
AML
Compliance
Since
2021
Not
Applicable
Not
Applicable
620
Eighth
Avenue
New
York,
NY
10018
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Compliance
Analyst,
Franklin
Templeton;
Chief
Anti-Money
Laundering
Compliance
Officer,
Legg
Mason
&
Co.,
or
its
affiliates;
Anti
Money
Laundering
Compliance
Officer;
Senior
Compliance
Officer,
LMIS;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Christopher
Kings
(1974)
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
January
2022
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Treasurer,
U.S.
Fund
Administration
&
Reporting;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Navid
J.
Tofigh
(1972)
Vice
President
Since
2015
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
36
franklintempleton.com
Annual
Report
*We
base
the
number
of
portfolios
on
each
separate
series
of
the
U.S.
registered
investment
companies
within
the
Franklin
Templeton/Legg
Mason
fund
complex.
These
portfolios
have
a
common
investment
manager
or
affiliated
investment
managers.
**Gregory
E.
Johnson
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
of
Franklin
Resources,
Inc.
(Resources),
which
is
the
parent
company
of
the
Fund’s
investment
manager
and
distributor.
Rupert
H.
Johnson,
Jr.
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
and
major
shareholder
of
Resources.
Note
1:
Rupert
H.
Johnson,
Jr.
is
the
uncle
of
Gregory
E.
Johnson.
Note
2:
Officer
information
is
current
as
of
the
date
of
this
report.
It
is
possible
that
after
this
date,
information
about
officers
may
change.
The
Sarbanes-Oxley
Act
of
2002
and
Rules
adopted
by
the
U.S.
Securities
and
Exchange
Commission
require
the
Fund
to
disclose
whether
the
Fund’s
Audit
Committee
includes
at
least
one
member
who
is
an
audit
committee
financial
expert
within
the
meaning
of
such
Act
and
Rules.
The
Fund’s
Board
has
determined
that
there
is
at
least
one
such
financial
expert
on
the
Audit
Committee
and
has
designated
each
of
Ann
Torre
Bates
and
David
W.
Niemiec
as
an
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
qualify
as
such
an
expert
in
view
of
their
extensive
business
background
and
experience.
Ms.
Bates
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2008.
She
currently
serves
as
a
director
of
Ares
Capital
Corporation
(2010-present)
and
United
Natural
Foods,
Inc.
(2013-present)
and
was
formerly
a
director
of
Navient
Corporation
from
2014
to
2016,
SLM
Corporation
from
1997
to
2014
and
Allied
Capital
Corporation
from
2003
to
2010,
Executive
Vice
President
and
Chief
Financial
Officer
of
NHP
Incorporated
from
1995
to
1997
and
Vice
President
and
Treasurer
of
US
Airways,
Inc.
until
1995.
Mr.
Niemiec
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2005,
currently
serves
as
an
Advisor
to
Saratoga
Partners
and
was
formerly
its
Managing
Director
from
1998
to
2001
and
serves
as
a
director
of
Hess
Midstream
LP
(2017-present).
Mr.
Niemiec
was
formerly
a
director
of
Emeritus
Corporation
from
1999
to
2010
and
OSI
Pharmaceuticals,
Inc.
from
2006
to
2010,
Managing
Director
of
SBC
Warburg
Dillon
Read
from
1997
to
1998,
and
was
Vice
Chairman
from
1991
to
1997
and
Chief
Financial
Officer
from
1982
to
1997
of
Dillon,
Read
&
Co.
Inc.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
have
each
acquired
an
understanding
of
generally
accepted
accounting
principles
and
financial
statements,
the
general
application
of
such
principles
in
connection
with
the
accounting
estimates,
accruals
and
reserves,
and
analyzing
and
evaluating
financial
statements
that
present
a
breadth
and
level
of
complexity
of
accounting
issues
generally
comparable
to
those
of
the
Fund,
as
well
as
an
understanding
of
internal
controls
and
procedures
for
financial
reporting
and
an
understanding
of
audit
committee
functions.
Ms.
Bates
and
Mr.
Niemiec
are
independent
Board
members
as
that
term
is
defined
under
the
applicable
U.S.
Securities
and
Exchange
Commission
Rules
and
Releases.
The
Statement
of
Additional
Information
(SAI)
includes
additional
information
about
the
board
members
and
is
available,
without
charge,
upon
request.
Shareholders
may
call
(800)
DIAL
BEN/342-5236
to
request
the
SAI.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Lori
A.
Weber
(1964)
Vice
President
and
Secretary
Vice
President
since
2011
and
Secretary
since
2013
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Resources,
Inc.;
Vice
President
and
Secretary,
Templeton
Investment
Counsel,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
Shareholder
Information
37
franklintempleton.com
Annual
Report
Liquidity
Risk
Management
Program
Each
Fund
has
adopted
and
implemented
a
written
Liquidity
Risk
Management
Program
(the
“LRMP”)
as
required
by
Rule
22e-4
under
the
Investment
Company
Act
of
1940
(the
“Liquidity
Rule”).
The
LRMP
for
the
Franklin
Templeton
and
Legg
Mason
Funds
is
designed
to
assess
and
manage
each
Fund’s
liquidity
risk,
which
is
defined
as
the
risk
that
the
Fund
could
not
meet
requests
to
redeem
shares
issued
by
the
Fund
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
In
accordance
with
the
Liquidity
Rule,
the
LRMP
includes
policies
and
procedures
that
provide
for:
(1)
assessment,
management,
and
review
(no
less
frequently
than
annually)
of
each
Fund’s
liquidity
risk;
(2)
classification
of
each
Fund’s
portfolio
holdings
into
one
of
four
liquidity
categories
(Highly
Liquid,
Moderately
Liquid,
Less
Liquid,
and
Illiquid);
(3)
for
Funds
that
do
not
primarily
hold
assets
that
are
Highly
Liquid,
establishing
and
maintaining
a
minimum
percentage
of
the
Fund’s
net
assets
in
Highly
Liquid
investments
(called
a
“Highly
Liquid
Investment
Minimum”
or
“HLIM”);
and
(4)
prohibiting
the
Fund’s
acquisition
of
Illiquid
investments
that
would
result
in
the
Fund
holding
more
than
15%
of
its
net
assets
in
Illiquid
assets.
The
LRMP
also
requires
reporting
to
the
Securities
and
Exchange
Commission
(“SEC”)
(on
a
non-public
basis)
and
to
the
Board
if
the
Fund’s
holdings
of
Illiquid
assets
exceed
15%
of
the
Fund’s
net
assets.
Funds
with
HLIMs
must
have
procedures
for
addressing
HLIM
shortfalls,
including
reporting
to
the
Board
and,
with
respect
to
HLIM
shortfalls
lasting
more
than
seven
consecutive
calendar
days,
reporting
to
the
SEC
(on
a
non-public
basis).
The
Director
of
Liquidity
Risk
within
the
Investment
Risk
Management
Group
(the
“IRMG”)
is
the
appointed
Administrator
of
the
LRMP.
The
IRMG
maintains
the
Investment
Liquidity
Committee
(the
“ILC”)
to
provide
oversight
and
administration
of
policies
and
procedures
governing
liquidity
risk
management
for
Franklin
Templeton
and
Legg
Mason
products
and
portfolios.
The
ILC
includes
representatives
from
Franklin
Templeton’s
Risk,
Trading,
Global
Compliance,
Legal,
Investment
Compliance,
Investment
Operations,
Valuation
Committee,
Product
Management
and
Global
Product
Strategy.
In
assessing
and
managing
each
Fund’s
liquidity
risk,
the
ILC
considers,
as
relevant,
a
variety
of
factors,
including
the
Fund’s
investment
strategy
and
the
liquidity
of
its
portfolio
investments
during
both
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources
including
the
Funds’
interfund
lending
facility
and
line
of
credit.
Classification
of
the
Fund’s
portfolio
holdings
in
the
four
liquidity
categories
is
based
on
the
number
of
days
it
is
reasonably
expected
to
take
to
convert
the
investment
to
cash
(for
Highly
Liquid
and
Moderately
Liquid
holdings)
or
sell
or
dispose
of
the
investment
(for
Less
Liquid
and
Illiquid
investments),
in
current
market
conditions
without
significantly
changing
the
investment’s
market
value.
Each
Fund
primarily
holds
liquid
assets
that
are
defined
under
the
Liquidity
Rule
as
"Highly
Liquid
Investments,"
and
therefore
is
not
required
to
establish
an
HLIM.
Highly
Liquid
Investments
are
defined
as
cash
and
any
investment
reasonably
expected
to
be
convertible
to
cash
in
current
market
conditions
in
three
business
days
or
less
without
the
conversion
to
cash
significantly
changing
the
market
value
of
the
investment.
At
meetings
of
the
Funds’
Board
of
Trustees
held
in
May
2022,
the
Program
Administrator
provided
a
written
report
to
the
Board
addressing
the
adequacy
and
effectiveness
of
the
program
for
the
year
ended
December
31,
2021.
The
Program
Administrator
report
concluded
that
(i.)
the
LRMP,
as
adopted
and
implemented,
remains
reasonably
designed
to
assess
and
manage
each
Fund’s
liquidity
risk;
(ii.)
the
LRMP,
including
the
Highly
Liquid
Investment
Minimum
(“HLIM”)
where
applicable,
was
implemented
and
operated
effectively
to
achieve
the
goal
of
assessing
and
managing
each
Fund’s
liquidity
risk;
and
(iii.)
each
Fund
was
able
to
meet
requests
for
redemption
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
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.
Templeton
Funds
Shareholder
Information
38
franklintempleton.com
Annual
Report
Quarterly
Schedule
of
Investments
The
Trust,
on
behalf
of
the
Fund,
files
a
complete
schedule
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
by
visiting
the
Commission’s
website
at
sec.gov.
The
filed
form
may
also
be
viewed
and
copied
at
the
Commission’s
Public
Reference
Room
in
Washington,
DC.
Information
regarding
the
operations
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
Householding
of
Reports
and
Prospectuses
You
will
receive,
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
A
10/22
©
2022
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
and
Shareholder
Letter
Templeton
World
Fund
Investment
Manager
Distributor
Shareholder
Services
Templeton
Global
Advisors
Limited
Franklin
Distributors,
LLC
(800)
DIAL
BEN
®
/
342-5236
franklintempleton.com
(800)
632-2301
Item 2. Code of Ethics.
 
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
 
(c) N/A
 
(d) N/A
 
(f) Pursuant to Item 13(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
 
 
Item 3. Audit Committee Financial Expert.
 
(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.
 
(2) The audit committee financial experts are Ann Torre Bates and
David W. Niemiec and they are "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.
 
 
Item 4.
Principal Accountant Fees and Services.
 
(a)      Audit Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $168,490 for the fiscal year ended August 31, 2022 and $164,793 for the fiscal year ended August 31, 2021.
 
(b)      Audit-Related Fees
The aggregate fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of Item 4 were $6,000 for the fiscal year ended August 31, 2022 and $6,266 for the fiscal year ended August 31, 2021. The services for which these fees were paid included attestation services.
 
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant's investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.  
 
(c)      Tax Fees
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.
 
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning.
 
(d)      All Other Fees
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant not reported in paragraphs (a)-(c) of Item 4
 
were $0 for the fiscal year ended August 31, 2022 and $3,198 for the fiscal year ended August 31, 2021. The services for which these fees were paid included review of materials provided to the fund Board in connection with the investment management contract renewal process.
 
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $181,126 for the fiscal year ended August 31, 2022 and $25,812 for the fiscal year ended August 31, 2021.  The services for which these fees were paid included benchmarking services in connection with the ICI TA Survey, professional fees in connection with SOC 1 reports, fees in connection with license for accounting and business knowledge platform Viewpoint, and fees in connection with license for employee development tool ProEdge.
 
(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:
 
      (i)   pre-approval of all audit and audit related services;
 
      (ii)  pre-approval of all non-audit related services to be provided to the Fund by the auditors;
 
      (iii) pre-approval of all non-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where the non-audit services relate directly to the operations or financial reporting of the registrant; and
 
      (iv)  establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
 
(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.
 
(f) No disclosures are required by this Item 4(f).
 
(g) The aggregate non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $187,126 for the fiscal year ended August 31, 2022 and $35,276 for the fiscal year ended August 31, 2021.
 
(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
 
(i) N/A
 
 
(j) 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 Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer
 
 
(a)(2)(1) There were no written solicitations to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the Registrant to 10 or more persons.
 
(a)(2)(2) There was no change in the Registrant’s independent public accountant during the period covered by the report.
 
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer
 
 
 
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
TEMPLETON FUNDS
 
 
By S\MATTHEW T. HINKLE______________________
Matthew T. Hinkle
      Chief Executive Officer - Finance and Administration
Date  October 28, 2022
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 
By S\MATTHEW T. HINKLE______________________
Matthew T. Hinkle
      Chief Executive Officer - Finance and Administration
Date  October 28, 2022
 
 
By S\CHRISTOPHER KINGS______________________
      Christopher Kings
      Chief Financial Officer, Chief Accounting Officer and Treasurer
Date  October 28, 2022