UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-05387

Franklin Mutual Series Funds

(Exact name of registrant as specified in charter)

101 John F. Kennedy Parkway, Short Hills, NJ 07078-2705

(Address of principal executive offices) (Zip code)

Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906

(Name and address of agent for service)

Registrant’s telephone number, including area code: (210) 912-2100

Date of fiscal year end: 12/31

Date of reporting period: 06/30/20

Item 1. Reports to Stockholders.

Sign up for electronic delivery at franklintempleton.com/edelivery

Internet Delivery of Fund Reports Unless You Request Paper Copies: Effective January 1, 2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request them from the Fund or your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not signed up for electronic delivery, we would encourage you to join fellow shareholders who have. You may elect to receive shareholder reports and other communications electronically from the Fund by calling (800) 632-2301 or by contacting your financial intermediary.

You may elect to continue to receive paper copies of all your future shareholder reports free of charge by contacting your financial intermediary or, if you invest directly with a Fund, calling (800) 632-2301 to let the Fund know of your request. Your election to receive reports in paper will apply to all funds held in your account.

SHAREHOLDER LETTER

Dear Franklin Mutual Beacon Fund Shareholder:

During the six months ended June 30, 2020, global equity markets were extremely volatile and declined as the spread of the novel coronavirus (COVID-19)—first reported in December and initially centered in China—disrupted economic activity and contributed to negative investor sentiment for risk assets. Share prices plunged dramatically, pulling global equities from near-record levels in mid-February before bottoming in late March. Global stocks snapped back in April and May but moderated in June to close the period significantly above the market trough, although still in negative territory. The broad U.S. equity market, as measured by the Standard & Poor’s^® 500 Index, finished the period down -3.08%, and global stocks, as measured by the MSCI World Index, retreated -5.48%.1

As the period opened, major equity markets were rallying, lifted by China and the United States’ Phase-One trade agreement that was intended to serve as the foundation of a comprehensive settlement of two years of tariff one-upmanship between the world’s two largest economies. Then, COVID-19 emerged and upended these and other plans.

The spread of the pandemic evolved into a global public health crisis, and countries around the world implemented lockdown and physical distancing measures intended to “flatten the curve” of the contagion. Consumer and business spending fell, and manufacturing and other activity came to a virtual halt. Consequently, the world’s major economies fell into recession—including an end to the record-long U.S. expansion—and projections about the economic fallout exceeded that of the 2007–2009 Global Financial Crisis.

In response, central banks expanded their mandates to support economies and markets. The U.S. Federal Reserve (Fed) and the U.S. Congress undertook unprecedented monetary and fiscal stimulus that included lowering the federal funds rate to a range of 0.00%–0.25%; initiating open-ended quantitative easing; pledging to purchase short-dated investment-grade corporate debt and exchange-traded funds; sending checks directly to millions of Americans; expanding unemployment insurance; and

offering billions in loans to both small and large businesses. The European Union approved a €750 billion (US$825 billion) COVID-19 recovery fund that recommended financial burden sharing among member states.

Policymakers’ “whatever-it-takes” approach lifted investor sentiment, and stock prices surged. Rates of infection in some of the viral epicenters around the world slowed, and government officials, eager to restart economies, embarked on a gradual, albeit uneven, reopening.

In the period’s final month, the market rally continued but slowed considerably as the number of new, daily COVID-19 diagnoses spiked in U.S. states that were among the first to reopen. These trends may have worsened as many restless citizens, locked down since March, were less than diligent about adhering to social distancing and face-covering guidelines.

In late June, the Fed released the results of its annual Comprehensive Capital Analysis and Review report of large banks, better known as stress tests, and concluded that “banks can remain strong in the face of even the harshest shocks.” Nevertheless, the Fed capped dividends of banks at current levels and halted share buybacks until after the third quarter. Bank stocks reacted negatively to this development.

Market volatility and economic uncertainty can often present what we consider opportunities. We used our bottom-up, fundamentally driven investment process to add select positions that historically have not met our investment criteria but were now, in our opinion, attractively valued, and to move capital between existing positions to reflect market shifts. We believe this approach may offer meaningful upside potential and a degree of downside protection in periods of financial market turbulence. While the current level of uncertainty may be unnerving, it is important to remember that the market historically rewards investors who take a long-term perspective. To that end, we recognize the importance of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing

1. Source: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

Not FDIC Insured | May Lose Value |  No Bank Guarantee 

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markets and economic conditions, we are confident investors with a well-diversified portfolio and a patient, long-term outlook should be well-positioned for the years ahead.

On the following pages, the portfolio management team reviews investment decisions that pertain to performance during the past six months considering the economic environment and other factors. 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 continuing to serve your investment needs in the years ahead.

Sincerely,

Peter A. Langerman

Chairman, President and Chief Executive Officer

Franklin Mutual Advisers, LLC

This letter reflects our analysis and opinions as of June 30, 2020, 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.

Contents
Semiannual Report
Franklin Mutual Beacon Fund	3
Performance Summary	8
Your Fund’s Expenses	10
Financial Highlights and Statement of Investments	11
Financial Statements	22
Notes to Financial Statements	27
Shareholder Information	39

Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.

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SEMIANNUAL REPORT

Franklin Mutual Beacon Fund

This semiannual report for Franklin Mutual Beacon Fund covers the period ended June 30, 2020.

Your Fund’s Goal and Main Investments

The Fund’s principal investment goal is capital appreciation, which may occasionally be short term. The secondary goal is income. Under normal market conditions, the Fund invests primarily in equity securities of U.S. and foreign companies that we believe are available at market prices less than their intrinsic value. The equity securities in which the Fund invests are primarily common stock, with a current focus on mid- and large-cap companies. To a lesser extent, the Fund also invests in merger arbitrage securities and the debt and equity of distressed companies. The Fund may invest a substantial portion, potentially up to 100% of its assets, in foreign securities, which may include sovereign debt and participations in foreign government debt. The Geographic Composition bar chart on this page lists the leading countries where the Fund invests.

Performance Overview

The Fund’s Class Z shares posted a -16.71% cumulative total return for the six months ended June 30, 2020. In comparison, the Fund’s benchmark, the MSCI World Index (USD), which tracks stock performance in global developed markets, posted a -5.48% total return.¹ You can find more of the Fund’s performance data in the Performance Summary beginning on page 8.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Economic and Market Overview

Global developed and emerging market equities, as measured by the MSCI All Country World Index (USD), posted a -5.99% total return during the six months under review.¹ Stocks fell sharply in early 2020 as countries around the world implemented lockdown measures in an effort to

Geographic Composition*

Based on Total Net Assets as of 6/30/20

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors. The Fund held 36.6% of total net assets in foreign securities.

slow the spread of the novel coronavirus (COVID-19). Global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments such as government bonds and cash. While global equities, notably in the U.S., rebounded in April and May amid optimism about easing lockdown restrictions, concerns about a second wave of infections hindered equities in June, as investors weighed the possibility of renewed restrictions.

In the U.S., government mandates to mitigate the COVID-19 pandemic severely impacted the economy beginning in

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.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

The SOI begins on page 16.

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March 2020. As a result, the unemployment rate surged to 14.7% in April, as many businesses, particularly those involved in hospitality, retail and travel, announced mass layoffs.² According to the National Bureau of Economic Research, the longest U.S. economic expansion in history ended in February 2020 as the country slipped into a severe recession. Nonetheless, near period-end, there were signs that a recovery was underway, as jobless claims fell considerably from their peak in early April, retail sales rose sharply in May, and the unemployment rate fell to 11.1% in June.² Along with optimism about improved treatments and potential vaccines for COVID-19, the positive economic signals contributed to a significant equity rebound in April and May. However, an increase in COVID-19 infections in many states throughout June pressured U.S. stocks.

Additionally, the U.S. Federal Reserve (Fed) made significant efforts to support the U.S. economy. In March 2020, as the pandemic began to severely impact the economy and financial markets, the Fed implemented two emergency rate cuts, lowering the federal funds target rate to a range of 0.00%–0.25%, and announced sweeping quantitative easing measures aimed at ensuring credit flow to borrowers and supporting credit markets with unlimited amounts of bond purchasing.

In the eurozone, some analysts forecasted a significant contraction in 2020, particularly in southern European countries, as the magnitude of the economic disruption caused by the pandemic became apparent. European developed market equities, as measured by the MSCI Europe Index (USD), posted a -12.43% total return for the period.¹ To stimulate growth, the European Central Bank implemented a broad bond-buying program, and many countries passed fiscal stimulus measures.

Asian developed and emerging market equities, as measured by the MSCI All Country Asia Index (USD), posted a -5.51% total return during the six-month period.¹ The onset of the pandemic brought dramatically slower economic activity in Asia, as businesses halted operations and manufacturing and export activity declined sharply in the region’s major economies. Asian markets generally advanced toward period-end, bolstered by fiscal stimulus measures and economies reopening throughout the region, especially in China.

Emerging market stocks, as measured by the MSCI Emerging Markets Index (USD), posted a -9.67% total return due primarily to the COVID-19 pandemic.¹ A sharp decrease

in prices for oil and other natural resources also hurt emerging market economies reliant on these exports. In the last quarter of the reporting period, however, investor optimism led to a stock rally, particularly in emerging market countries that had successfully lowered infection rates.

Investment Strategy

At Franklin Mutual Series, we are committed to our distinctive value approach to investing, which we believe can generate above-average risk-adjusted returns over time for our shareholders. Our major investment strategy is investing in undervalued stocks. When selecting undervalued equities, we are attracted to what we believe are fundamentally strong companies with healthy balance sheets, high-quality assets, substantial free cash flow and shareholder-oriented management teams and whose stocks are trading at discounts to our assessment of the companies’ intrinsic or business value. We also look for asset-rich companies whose shares may be trading at depressed levels due to concerns over short-term earnings disappointments, litigation, management strategy or other perceived negatives. This strict value approach is not only intended to improve the likelihood of capital appreciation, but also reduces the risk of substantial declines, in our opinion. While the vast majority of our undervalued equity investments are made in publicly traded companies globally, we may invest occasionally in privately held companies as well. Our portfolio selection process generally includes an assessment of the potential impacts of any material environmental, social and governance (ESG) factors on the long-term risk and return profile of a company.

To a lesser extent, we complement this more traditional investment strategy with two others. One is distressed investing, a highly specialized field that has proven quite profitable during certain periods over the years. Distressed investing is complex and can take many forms. The most common distressed investment the Fund undertakes is the purchase of financially troubled or bankrupt companies’ debt at a substantial discount to face value. After the financially distressed company is reorganized, often in bankruptcy court, the old debt is typically replaced with new securities issued by the financially stronger company.

The other piece of our investment strategy is participating in arbitrage situations, another highly specialized field. When companies announce proposed mergers or takeovers, commonly referred to as deals, the target company may trade at a discount to the bid it ultimately accepts. One form

2. Source: U.S. Bureau of Labor Statistics.

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of arbitrage involves purchasing the target company’s stock when it is trading below the value we believe it would receive in a deal. In keeping with our commitment to a relatively conservative investment approach, we typically focus our arbitrage efforts on announced deals, and avoid rumored deals or other situations we consider relatively risky. In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

Manager’s Discussion

The novel coronavirus (COVID-19) pandemic has significantly altered our way of life. Despite this, stocks have rallied off the March 23 market bottom and are within range of the pre-pandemic, all-time highs achieved earlier in the year. While the economy has reopened, the recovery is likely to be uneven. The question that we wrestle with daily is what does this scenario mean for equities in general and undervalued stocks in particular?

Markets rose sharply in April, as investors moved back into the growth stocks that propelled the market to the all-time highs of January. In late May, however, there was a turn in market sentiment resulting in value briefly outperforming growth. Undervalued stocks often benefit in periods of improving economic activity or stabilization as business prospects improve. Increasing demand across the economy, especially in cyclical sectors, can provide a tailwind for these companies and drive shareholder value. This is a scenario that often occurs off an economic bottom, and we are positioning our portfolios to capitalize on this trend.

The second-quarter earnings reporting season (occurring in July and August) marks the first period with the full impact of the economic lockdowns and will provide a more complete view into the pandemic’s impact on corporate statements. Many financial officers withdrew full-year 2020 guidance, as they reported first-quarter results, due to limited revenue visibility. As a result, the path ahead for stocks is less clear. We remain cautious amid these elevated risks.

Our traditional value equity investment approach is complemented with two other strategies: distressed investing and merger arbitrage.

Within our distressed credit strategy, we targeted companies and industries directly impacted by the coronavirus pandemic. The robust government fiscal and monetary intervention have limited the number of attractive options, but we have found opportunities in the energy sector and the retail and travel industries. Although each situation is unique, these securities have strong collateral packages and

Top 10 Sectors/Industries

Based on Equity Securities as of 6/30/20

	% of Total Net Assets
Pharmaceuticals	13.5%
Banks	8.1%
Software	7.1%
Media	6.4%
Technology Hardware, Storage & Peripherals	6.0%
Tobacco	4.1%
Electrical Equipment	3.6%
IT Services	3.5%
Textiles, Apparel & Luxury Goods	3.4%
Equity Real Estate Investment Trusts (REITs)	3.3%

covenant protections or other features that we believe make them substantially more attractive than the broad array of available distressed debt.

Within merger arbitrage, which involves trading the stocks of companies involved in a merger or acquisition (M&A), activity has slowed significantly since the onset of the pandemic. Deal terms agreed to before the virus emerged have become unbalanced and are now more favorable for sellers than they are for buyers. Not surprisingly, some of these proposals have become embroiled in litigation. Also, M&A activity has slowed as the economic realities of the coronavirus get priced into the market, and bankers are challenged to conduct due diligence remotely. As the period ended, we began to see signs that transactions activity might resume, but we would expect the second half of the year to be focused on resolving pending deals, rather than significant growth in new ones.

Fund Performance

Turning to Fund performance, investments that detracted included Wells Fargo, Brixmor Property Group and Discovery, Inc. Brixmor Property Group is listed among the Fund’s largest positions in the Top 10 Equity Holdings table on page 6.

The shares of diversified financial services company Wells Fargo were pulled down by negative investor sentiment for financials, which have trailed the broader market rally from the March 23 bottom. Concerns about a possible dividend cut as bank earnings have come under pressure, and speculation about the Fed moving to negative interest rates—subsequently refuted by Fed Chairman Jerome Powell—contributed to the selloff. Earlier in the period, management reported year-end 2019 earnings that fell well short of consensus estimates.

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Shares of real estate investment trust (REIT) Brixmor Property Group sold off on concern about slowing economic growth due to the spread of COVID-19. A shopping center REIT, Brixmor’s first-quarter results met expectations, and during the earnings call, management announced cash preservation measures: dividend suspension and capital expenditure and property level expense reductions. More than 50% of the company’s tenant base is considered essential and almost all are current on their rent. Brixmor will, nevertheless, face short-term challenges collecting from some smaller tenants that have temporarily closed. Management is working proactively with struggling tenants to navigate the challenges of the current environment.

Cable network operator Discovery Inc., which provides non-fiction and educational media entertainment, reported first-quarter 2020 financial results that were generally in line with consensus estimates, but its shares sold off due to declining advertising revenue amid the COVID-19 pandemic. Discovery’s management said the company would suspend the remaining $1.8 billion stock buyback program, although it repurchased $523 million of its shares early in the period. The postponement of the 2020 Tokyo Summer Olympics will be an additional headwind, but the company retains the broadcast rights when the event returns in 2021. Late in the period, management announced that Peter Faricy, head of the company’s direct-to-consumer operations (DTC), will depart on July 15. DTC is a major initiative at Discovery as the company attempts to navigate a challenging media landscape characterized by viewers cancelling cable subscriptions in favor of DTC streaming options..

During the period under review, Fund investments that contributed positively to performance included U.S.-based companies Eli Lilly, NortonLifeLock (not held at period-end) and Kraft Heinz.

Shares of pharmaceutical products company Eli Lilly were volatile but climbed during the period. Investor sentiment improved as the market came to the realization that the company’s business may not be meaningfully impacted by the disruption caused by the COVID-19 pandemic. First-quarter financial results exceeded consensus sales and earnings expectations, with revenues benefiting from customers stocking up amid COVID-19, which is likely to reverse later in the year. Management raised 2020 guidance for earnings per share and reiterated the outlook for revenue and operating margin. In our view, Eli Lilly has a strong drug pipeline with several important compounds that positions the company well for continued growth over time.

Shares of cybersecurity solutions provider NortonLifeLock outperformed during the period as work-from-home

Top 10 Equity Holdings

6/30/20

Company Sector/Industry, Country	% of Total Net Assets
Oracle Corp. Software, U.S.	4.1%
GlaxoSmithKline PLC Pharmaceuticals, U.K.	4.1%
British American Tobacco PLC Tobacco, U.K.	4.1%
Charter Communications Inc. Media, U.S.	3.8%
Sensata Technologies Holding PLC Electrical Equipment, U.S.	3.6%
Cognizant Technology Solutions Corp. IT Services, U.S.	3.5%
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea	3.4%
Brixmor Property Group Inc. Equity Real Estate Investment Trusts (REITs), U.S.	3.3%
Medtronic PLC Health Care Equipment & Supplies, U.S.	3.2%
Merck & Co. Inc. Pharmaceuticals, U.S.	3.2%

requirements attributable to the COVID-19 pandemic led to increased consumer purchases of the company’s cybersecurity subscriptions, generating solid fiscal fourth-quarter earnings that were in line with consensus expectations. NortonLifeLock’s stock rallied entering the year and surged after management announced in early January the payment of a one-time, $12 per share cash dividend funded by the 2019 sale of the enterprise security business to Broadcom. Symantec, the precursor to NortonLifeLock, sold the business as part of its transition to a pure-play consumer-focused cybersecurity company, and management subsequently changed the company’s name to Norton-LifeLock, highlighting its lead brands. NortonLifeLock’s shares appreciated materially, and we exited our position by period-end.

Investors bid up shares of food products producer Kraft Heinz as surging demand for its products led to better-than-expected sales growth. Management raised its sales guidance in a business update early in the period, and financial results in the subsequent quarterly earnings report exceeded consensus estimates. The company reaffirmed the dividend payment, which also contributed to positive investor sentiment, and several analysts upgraded Kraft Heinz stock.

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During the period, the Fund held currency forwards and futures seeking to hedge most of the currency risk of the portfolio’s non-U.S. dollar investments. The hedges had a positive overall impact on the Fund’s performance.

As fellow shareholders, we found recent absolute and relative performance disappointing, but our strategy of seeking undervalued stocks can lag the growth equity markets at times. We remain committed to our disciplined, value investment approach as we seek to generate attractive, long-term, risk-adjusted returns for shareholders.

Thank you for your participation in Franklin Mutual Beacon Fund. We look forward to continuing to serve your investment needs.

Christian Correa, CFA

Co-Portfolio Manager

Mandana Hormozi

Co-Portfolio Manager

Aman Gupta, CFA

Co-Portfolio Manager

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2020, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, 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.

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Performance Summary as of June 30, 2020

The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.

Performance as of 6/30/20

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%. Class A: 5.50% maximum initial sales charge. For other share classes, visit franklintempleton.com.

Share Class	Cumulative Total Return	1	Average Annual Total Return	2
Z
6-Month	-16.71%		-16.71%
1-Year	-8.72%		-8.72%
5-Year	+17.91%		+3.35%
10-Year	+124.61%		+8.43%
A3
6-Month	-16.81%		-21.41%
1-Year	-8.90%		-13.90%
5-Year	+16.45%		+1.93%
10-Year	+118.51%		+7.52%

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.

See page 9 for Performance Summary footnotes.

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PERFORMANCE SUMMARY

Total Annual Operating Expenses⁴

Share Class
Z	0.82	%
A	1.07	%

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. Value securities may not increase in price as anticipated or may decline further in value. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. 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. Smaller-company stocks have exhibited greater price volatility than larger-company stocks, particularly over the short term. The Fund’s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. The Fund may invest in lower-rated bonds, which entail higher credit risk. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental or man-made disasters; financial, political or social disruptions; terrorism and war; and other tragedies or catastrophes, can cause investor fear and panic, which can adversely affect the economies of many companies, sectors, nations, regions and the market in general, in ways that cannot necessarily be foreseen. The Fund’s prospectus also includes a description of the main investment risks.

1. Cumulative total return represents the change in value of an investment over the periods indicated.

2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

3. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns (with sales charges) would have differed. Average annual total returns (with sales charges) have been restated to reflect the current maximum initial sales charge of 5.50%.

4. 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.

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FRANKLIN MUTUAL BEACON FUND

Your Fund’s Expenses

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.

		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
Share   Class	Beginning Account Value 1/1/20	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Net Annualized Expense Ratio2
Z	$1,000	$832.90	$3.83	$1,020.69	$4.22	0.84%
A	$1,000	$831.90	$4.96	$1,019.44	$5.47	1.09%
C	$1,000	$828.70	$8.37	$1,015.71	$9.22	1.84%
R	$1,000	$830.90	$6.10	$1,018.20	$6.72	1.34%
R6	$1,000	$832.90	$3.51	$1,021.03	$3.87	0.77%

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 182/366 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements, for Class R6.

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Financial Highlights

Franklin Mutual Beacon Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class Z
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.40			$13.76			$16.61			$15.30			$14.30			$16.59
Income from investment operationsa:
Net investment incomeb		0.37	c		0.33			0.29			0.29			0.37	d		0.29
Net realized and unrealized gains (losses)		(3.11	)		3.06			(1.68	)		1.90			1.93			(0.99	)
Total from investment operations		(2.74	)		3.39			(1.39	)		2.19			2.30			(0.70	)
Less distributions from:
Net investment income		—			(0.36	)		(0.31	)		(0.31	)		(0.37	)		(0.37	)
Net realized gains		—			(0.39	)		(1.15	)		(0.57	)		(0.93	)		(1.22	)
Total distributions		—			(0.75	)		(1.46	)		(0.88	)		(1.30	)		(1.59	)
Net asset value, end of period		$13.66			$16.40			$13.76			$16.61			$15.30			$14.30
Total returne		(16.71)%			24.96%			(8.24)%			14.39%			16.11%			(4.14)%
Ratios to average net assetsf
Expensesg,h		0.84%			0.81%	i		0.80%	i		0.78%			0.80%			0.84%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			0.01%			—%			0.01%			0.04%
Net investment income		5.28%	c		2.11%			1.77%			1.78%			2.48%	d		1.73%
Supplemental data
Net assets, end of period (000’s)		$2,024,259			$2,600,744			$2,271,217			$2,700,327			$2,564,120			$2,420,165
Portfolio turnover rate		20.61%			30.72%			47.20%			24.80%			30.94%			35.80%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.79%.

^dNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.81%.

^eTotal return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         11

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Beacon Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class A
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.24			$13.63			$16.47			$15.18			$14.20			$16.47
Income from investment operationsa:
Net investment incomeb		0.35	c		0.28			0.25			0.25			0.33	d		0.24
Net realized and unrealized gains (losses)		(3.08	)		3.04			(1.67	)		1.87			1.91			(0.97	)
Total from investment operations		(2.73	)		3.32			(1.42	)		2.12			2.24			(0.73	)
Less distributions from:
Net investment income		—			(0.32	)		(0.27	)		(0.26	)		(0.33	)		(0.32	)
Net realized gains.		—			(0.39	)		(1.15	)		(0.57	)		(0.93	)		(1.22	)
Total distributions		—			(0.71	)		(1.42	)		(0.83	)		(1.26	)		(1.54	)
Net asset value, end of period		$13.51			$16.24			$13.63			$16.47			$15.18			$14.20
Total returne		(16.81)%			24.69%			(8.49)%			14.09%			15.80%			(4.33)%
Ratios to average net assetsf
Expensesg,h		1.09%			1.06%	i		1.05%	i		1.03%			1.05%			1.12%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			0.01%			—%			0.01%			0.04%
Net investment income		5.03%	c		1.80%			1.52%			1.53%			2.23%	d		1.45%
Supplemental data
Net assets, end of period (000’s)		$792,289			$1,028,482			$890,294			$983,048			$992,306			$1,019,568
Portfolio turnover rate		20.61%			30.72%			47.20%			24.80%			30.94%			35.80%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.54%.

^dNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.56%.

^eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

12         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Beacon Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class C
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.29			$13.65			$16.34			$15.06			$14.10			$16.36
Income from investment operationsa:
Net investment incomeb		0.31	c		0.17			0.13			0.12			0.22	d		0.12
Net realized and unrealized gains (losses)		(3.10	)		3.04			(1.65	)		1.86			1.88			(0.96	)
Total from investment operations		(2.79	)		3.21			(1.52	)		1.98			2.10			(0.84	)
Less distributions from:
Net investment income		—			(0.18	)		(0.02	)		(0.13	)		(0.21	)		(0.20	)
Net realized gains		—			(0.39	)		(1.15	)		(0.57	)		(0.93	)		(1.22	)
Total distributions		—			(0.57	)		(1.17	)		(0.70	)		(1.14	)		(1.42	)
Net asset value, end of period		$13.50			$16.29			$13.65			$16.34			$15.06			$14.10
Total returne		(17.13)%			23.74%			(9.19)%			13.25%			14.94%			(5.06)%
Ratios to average net assetsf
Expensesg,h		1.84%			1.81%	i		1.80%	i		1.78%			1.80%			1.84%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			0.01%			—%			0.01%			0.04%
Net investment income		4.28%	c		1.11%			0.77%			0.78%			1.48%	d		0.73%
Supplemental data
Net assets, end of period (000’s)		$36,930			$52,620			$59,828			$260,113			$275,138			$285,333
Portfolio turnover rate		20.61%			30.72%			47.20%			24.80%			30.94%			35.80%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.79%.

^dNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.81%.

^eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         13

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Beacon Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class R
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.03			$13.46			$16.28			$15.01			$14.05			$16.33
Income from investment operationsa:
Net investment incomeb		0.33	c		0.24			0.20			0.21			0.30	d		0.20
Net realized and unrealized gains (losses)		(3.04	)		3.01			(1.64	)		1.84			1.89			(0.97	)
Total from investment operations		(2.71	)		3.25			(1.44	)		2.05			2.19			(0.77	)
Less distributions from:
Net investment income		—			(0.29	)		(0.23	)		(0.21	)		(0.30	)		(0.29	)
Net realized gains		—			(0.39	)		(1.15	)		(0.57	)		(0.93	)		(1.22	)
Total distributions		—			(0.68	)		(1.38	)		(0.78	)		(1.23	)		(1.51	)
Net asset value, end of period		$13.32			$16.03			$13.46			$16.28			$15.01			$14.05
Total returne		(16.91)%			24.33%			(8.65)%			13.76%			15.58%			(4.61)%
Ratios to average net assetsf
Expensesg,h		1.34%			1.31%i			1.30%	i		1.28%			1.30%			1.34%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			0.01%			—%			0.01%			0.04%
Net investment income		4.78%	c		1.61%			1.27%			1.28%			1.98%	d		1.23%
Supplemental data
Net assets, end of period (000’s)		$1,294			$1,769			$1,662			$1,601			$2,035			$2,343
Portfolio turnover rate		20.61%			30.72%			47.20%			24.80%			30.94%			35.80%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.29%.

^dNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.31%.

^eTotal return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

14         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Beacon Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class R6
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$16.40			$13.75			$16.60			$15.30			$14.30			$16.58
Income from investment operationsa:
Net investment incomeb		0.38	c		0.34			0.30			0.37			0.38	d		0.30
Net realized and unrealized gains (losses)		(3.12	)		3.07			(1.68	)		1.82			1.93			(0.98	)
Total from investment operations		(2.74	)		3.41			(1.38	)		2.19			2.31			(0.68	)
Less distributions from:
Net investment income		—			(0.37	)		(0.32	)		(0.32	)		(0.38	)		(0.38	)
Net realized gains		—			(0.39	)		(1.15	)		(0.57	)		(0.93	)		(1.22	)
Total distributions		—			(0.76	)		(1.47	)		(0.89	)		(1.31	)		(1.60	)
Net asset value, end of period		$13.66			$16.40			$13.75			$16.60			$15.30			$14.30
Total returne		(16.71)%			25.13%			(8.18)%			14.42%			16.20%			(3.98)%
Ratios to average net assetsf
Expenses before waiver and payments by affiliatesg		0.80%			0.76%			0.75%			0.72%			0.71%			0.74%
Expenses net of waiver and payments by affiliatesg,h		0.77%			0.74%			0.73%			0.71%			0.71%			0.74%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			0.01%			—%			0.01%			0.04%
Net investment income		5.35%	c		2.18%			1.84%			1.85%			2.57%	d		1.83%
Supplemental data
Net assets, end of period (000’s)		$69,076			$90,220			$79,358			$106,845			$604			$48,844
Portfolio turnover rate		20.61%			30.72%			47.20%			24.80%			30.94%			35.80%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.81%.

^dNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.90%.

^eTotal return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         15

FRANKLIN MUTUAL SERIES FUNDS

Statement of Investments, June 30, 2020 (unaudited)

Franklin Mutual Beacon Fund

	Country		Shares/ Warrants		Value
Common Stocks and Other Equity Interests 85.9%
Aerospace & Defense 2.6%
BAE Systems PLC		United Kingdom		12,866,872	$	76,933,832
Auto Components 0.0%†
a,b,cInternational Automotive Components Group Brazil LLC		Brazil		2,846,329		53,522
Banks 8.1%
ING Groep NV		Netherlands		8,921,267		62,183,758
JPMorgan Chase & Co.		United States		694,630		65,336,898
Standard Chartered PLC		United Kingdom		8,499,629		46,072,880
Wells Fargo & Co.		United States		2,477,150		63,415,040
						237,008,576
Beverages 2.4%
Heineken NV		Netherlands		761,385		70,189,192
Chemicals 2.4%
BASF SE		Germany		1,233,060		69,253,947
Communications Equipment 3.1%
Cisco Systems Inc.		United States		1,972,342		91,990,031
Consumer Finance 1.8%
Capital One Financial Corp.		United States		820,298		51,342,452
Electrical Equipment 3.6%
aSensata Technologies Holding PLC		United States		2,864,727		106,653,786
Entertainment 2.7%
The Walt Disney Co.		United States		708,300		78,982,533
Equity Real Estate Investment Trusts (REITs) 3.3%
Brixmor Property Group Inc.		United States		7,426,876		95,212,550
Food Products 3.1%
The Kraft Heinz Co.		United States		2,830,075		90,251,092
Health Care Equipment & Supplies 3.2%
Medtronic PLC		United States		1,025,167		94,007,814
Health Care Providers & Services 2.8%
Anthem Inc.		United States		306,138		80,508,171
Insurance 2.1%
The Hartford Financial Services Group Inc.		United States		1,624,115		62,609,633
Interactive Media & Services 2.1%
aBaidu Inc., ADR		China		504,347		60,466,162
IT Services 3.5%
Cognizant Technology Solutions Corp., A		United States		1,818,630		103,334,557
Media 6.4%
aCharter Communications Inc., A		United States		215,087		109,702,973
aDiscovery Inc., C		United States		4,012,310		77,277,091
a,biHeartMedia Inc., B		United States		7,025		49,860
aiHeartMedia Inc., wts., A, 5/01/39		United States		418		3,490
						187,033,414

16         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

	Country		Shares/ Warrants		Value
Common Stocks and Other Equity Interests (continued)
Pharmaceuticals 13.5%
aElanco Animal Health Inc.		United States		854,316	$	18,325,078
Eli Lilly and Co.		United States		455,381		74,764,453
GlaxoSmithKline PLC		United Kingdom		5,903,395		119,241,867
Merck & Co. Inc.		United States		1,198,529		92,682,248
Novartis AG, ADR		Switzerland		1,026,980		89,696,433
						394,710,079
Software 7.1%
aCheck Point Software Technologies Ltd.		Israel		824,312		88,555,838
Oracle Corp.		United States		2,167,000		119,770,090
						208,325,928
Specialty Retail 1.2%
Tiffany & Co.		United States		287,700		35,082,138
Technology Hardware, Storage & Peripherals 2.6%
Western Digital Corp.		United States		1,718,767		75,883,563
Textiles, Apparel & Luxury Goods 3.4%
Cie Financiere Richemont SA		Switzerland		956,809		61,714,482
Tapestry Inc.		United States		2,928,600		38,891,808
						100,606,290
Thrifts & Mortgage Finance 0.8%
Indiabulls Housing Finance Ltd.		India		8,676,627		23,780,393
Tobacco 4.1%
British American Tobacco PLC		United Kingdom		3,091,324		118,556,158
Total Common Stocks and Other Equity Interests (Cost $2,387,525,306)						2,512,775,813
Preferred Stocks 6.3%
Automobiles 2.9%
aPorsche Automobil Holding SE, pfd.		Germany		1,451,423		84,057,073
Technology Hardware, Storage & Peripherals 3.4%
dSamsung Electronics Co. Ltd., 3.024%, pfd.		South Korea		2,571,242		100,428,865
Total Preferred Stocks (Cost $116,423,225)						184,485,938
			Principal Amount
Corporate Notes and Senior Floating Rate Interests 1.5%
eOccidental Petroleum Corp., senior note, FRN, 1.842%, (3-month USD LIBOR + 1.45%), 8/15/22		United States	$	3,776,000		3,475,367
e,fVeritas U.S. Inc., Term Loan B1, 5.50%, (3-month USD LIBOR + 4.50%), 1/27/23		United States		17,076,667		15,838,609
gVeritas U.S. Inc./Veritas Bermuda Ltd.,
senior note, 144A, 7.50%, 2/01/23		United States		2,766,000		2,734,592
senior note, 144A, 10.50%, 2/01/24.		United States		22,708,000		20,406,431
Total Corporate Notes and Senior Floating Rate Interests (Cost $41,931,496)						42,454,999

franklintempleton.com Semiannual Report         17

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

	Country		Principal Amount		Value
Corporate Notes in Reorganization 0.5%
hFrontier Communications Corp.,
senior note, 10.50%, 9/15/22		United States	$	16,691,000	$	5,817,064
senior note, 11.00%, 9/15/25		United States		23,907,000		8,342,826
Total Corporate Notes in Reorganization (Cost $38,067,059)						14,159,890
			Shares
Companies in Liquidation 0.0%†
a,b,iTribune Media Co., Litigation Trust, Contingent Distribution		United States		500,429		—
a,b,iVistra Energy Corp., Litigation Trust, Contingent Distribution		United States		46,282,735		25,456
a,b,iWalter Energy Inc., Litigation Trust, Contingent Distribution		United States		5,229,000		—
Total Companies in Liquidation (Cost $1,456,075)						25,456
Total Investments before Short Term Investments (Cost $2,585,403,161)						2,753,902,096
			Principal Amount
Short Term Investments 4.8%
Corporate Notes (Cost $1,079,238) 0.0%†
Occidental Petroleum Corp., senior note, 4.85%, 3/15/21		United States	$	1,177,000		1,173,322
U.S. Government and Agency Securities 4.8%
jFHLB, 7/01/20		United States		17,500,000		17,500,000
jU.S. Treasury Bill,
7/02/20		United States		85,000,000		84,999,800
k8/13/20		United States		15,000,000		14,997,850
8/06/20 - 11/27/20		United States		22,500,000		22,489,200
Total U.S. Government and Agency Securities (Cost $139,985,713)						139,986,850
Total Investments (Cost $2,726,468,112) 99.0%						2,895,062,268
Other Assets, less Liabilities 1.0%						28,786,314
Net Assets 100.0%					$	2,923,848,582

18         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bFair valued using significant unobservable inputs. See Note 14 regarding fair value measurements.

^cSee Note 11 regarding restricted securities.

^dVariable rate security. The rate shown represents the yield at period end.

^eThe coupon rate shown represents the rate at period end.

^fSee Note 1(f) regarding senior floating rate interests.

^gSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At June 30, 2020, the aggregate value of these securities was $23,141,023, representing 0.8% of net assets.

^hSee Note 8 regarding credit risk and defaulted securities.

ⁱContingent distributions represent the right to receive additional distributions, if any, during the reorganization of the underlying company. Shares represent total underlying principal of debt securities.

^jThe security was issued on a discount basis with no stated coupon rate.

^kA portion or all of the security has been segregated as collateral for open forward exchange contracts. At June 30, 2020, the value of the security pledged amounted to $1,500,785, representing 0.1% of net assets.

At June 30, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).

Futures Contracts

Description	Type		Number of Contracts		Notional  Amount*		Expiration Date		Value/ Unrealized Appreciation (Depreciation)
Currency Contracts
EUR/USD		Short		697		$98,046,119		9/14/20		$   650,707
GBP/USD		Short		985		76,319,031		9/14/20		2,100,054
Total Futures Contracts										$2,750,761

*As of period end.

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FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

At June 30, 2020, the Fund had the following forward exchange contracts outstanding. See Note 1(c).

Forward Exchange Contracts

Currency	Counterparty	a	Type	Quantity		Contract Amount	Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Euro	BOFA		Buy	4,175,163	$	4,625,089	7/15/20	$	67,020	$	—
Euro	BOFA		Sell	4,466,806		4,930,784	7/15/20		—		(89,078	)
Euro	BONY		Buy	9,655,078		10,740,474	7/15/20		110,043		—
Euro	HSBK		Buy	2,912,317		3,271,078	7/15/20		1,826		—
Euro	HSBK		Buy	3,458,733		3,901,697	7/15/20		—		(14,722	)
Euro	HSBK		Sell	10,305,000		11,550,904	7/15/20		—		(30,006	)
Euro	HSBK		Sell	19,394,673		21,821,529	7/15/20		25,512		—
Euro	SSBT		Sell	879,781		966,030	7/15/20		—		(22,681	)
Euro	SSBT		Sell	19,394,673		21,819,783	7/15/20		23,766		—
Euro	UBSW		Buy	2,772,700		3,109,707	7/15/20		6,293		—
Euro	UBSW		Sell	3,156,341		3,492,018	7/15/20		—		(55,124	)
British Pound	BOFA		Buy	3,000,000		3,803,310	7/16/20		—		(85,821	)
British Pound	BOFA		Sell	3,154,793		3,815,817	7/16/20		—		(93,486	)
British Pound	BONY		Sell	791,121		986,995	7/16/20		6,667		—
British Pound	HSBK		Buy	1,329,757		1,653,248	7/16/20		—		(5,461	)
British Pound	HSBK		Sell	15,360,628		20,054,058	7/16/20		1,019,736		—
British Pound	SSBT		Sell	12,632,192		16,506,548	7/16/20		853,203		—
South Korean Won	HSBK		Buy	5,097,078,849		4,169,105	7/17/20		80,518		—
South Korean Won	HSBK		Sell	808,890,004		659,941	7/17/20		—		(14,460	)
South Korean Won	HSBK		Sell	30,613,956,521		26,337,592	7/17/20		813,604		—
South Korean Won	UBSW		Buy	1,099,205,955		925,258	7/17/20		—		(8,809	)
South Korean Won	UBSW		Buy	8,915,781,635		7,413,755	7/17/20		19,662		—
South Korean Won	UBSW		Sell	51,410,643,810		44,181,681	7/17/20		1,318,725		—
British Pound	BOFA		Buy	3,054,109		3,873,191	8/14/20		—		(88,061	)
British Pound	HSBK		Buy	8,042,667		9,886,046	8/14/20		81,683		—
British Pound	HSBK		Sell	19,977,809		26,019,598	8/14/20		1,259,975		—
British Pound	SSBT		Sell	19,977,809		26,023,494	8/14/20		1,263,871		—
Euro	BOFA		Buy	4,825,067		5,423,569	8/18/20		3,131		—
Euro	BOFA		Sell	3,203,923		3,512,695	8/18/20		—		(90,722	)
Euro	BONY		Sell	3,202,321		3,490,017	8/18/20		—		(111,597	)
Euro	HSBK		Buy	2,000,000		2,248,700	8/18/20		678		—
Euro	HSBK		Sell	6,097,915		6,711,424	8/18/20		—		(146,833	)
Euro	UBSW		Sell	14,235,514		15,611,056	8/18/20		—		(399,468	)
Euro	BOFA		Sell	818,509		897,045	10/07/20		—		(24,614	)
Euro	BONY		Sell	2,239,211		2,524,547	10/07/20		3,147		—
Euro	BONY		Sell	9,103,900		9,881,373	10/07/20		—		(369,812	)
Euro	HSBK		Sell	4,105,015		4,665,078	10/07/20		42,743		—
Euro	HSBK		Sell	10,303,060		11,314,385	10/07/20		—		(287,080	)
Euro	SSBT		Sell	2,239,211		2,522,026	10/07/20		626		—
Euro	SSBT		Sell	6,173,174		6,707,753	10/07/20		—		(243,374	)
Euro	UBSW		Sell	5,515,035		6,245,556	10/07/20		35,508		—
Euro	UBSW		Sell	11,608,070		12,664,594	10/07/20		—		(406,342	)
South Korean Won	HSBK		Sell	5,647,090,242		4,741,271	11/12/20		26,876		—
South Korean Won	HSBK		Sell	32,759,736,819		26,851,613	11/12/20		—		(497,396	)
South Korean Won	UBSW		Sell	13,434,502,043		11,007,376	11/12/20		—		(208,231	)

20         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterparty	a	Type	Quantity		Contract Amount	Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
British Pound	SSBT		Sell	15,347,913	$	18,814,086	11/23/20	$	—	$	(219,900	)
British Pound	UBSW		Sell	3,328,652		4,246,098	11/23/20		118,010		—
Euro	BOFA		Sell	4,951,310		5,467,479	11/23/20		—		(115,038	)
Euro	HSBK		Sell	2,524,021		2,863,741	11/23/20		17,951		—
Euro	HSBK		Sell	4,666,362		5,184,642	11/23/20		—		(76,600	)
Euro	SSBT		Sell	2,540,330		2,879,515	11/23/20		15,336		—
Euro	SSBT		Sell	4,494,402		4,989,550	11/23/20		—		(77,811	)
Euro	UBSW		Sell	2,524,021		2,859,476	11/23/20		13,686		—
Euro	UBSW		Sell	38,515,128		42,382,469	11/23/20		—		(1,042,678	)
Total Forward Exchange Contracts								$	7,229,796	$	(4,825,205	)
Net unrealized appreciation (depreciation)								$	2,404,591

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Note 12 regarding other derivative information.

See Abbreviations on page 38.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         21

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities

June 30, 2020 (unaudited)

Franklin Mutual Beacon Fund

Assets:
Investments in securities:
Cost - Unaffiliated issuers	$2,726,468,112
Value - Unaffiliated issuers	$2,895,062,268
Cash	446,152
Receivables:
Investment securities sold	18,851,155
Capital shares sold	562,044
Dividends and interest	5,240,947
European Union tax reclaims	2,878,581
Deposits with brokers for:
Futures contracts	4,448,323
Unrealized appreciation on OTC forward exchange contracts	7,229,796
Other assets	1,458,968
Total assets	2,936,178,234
Liabilities:
Payables:
Capital shares redeemed	3,906,000
Management fees	1,652,240
Distribution fees	198,212
Transfer agent fees	458,017
Trustees’ fees and expenses	308,855
Variation margin on futures contracts	654,363
Unrealized depreciation on OTC forward exchange contracts	4,825,205
Accrued expenses and other liabilities	326,760
Total liabilities	12,329,652
Net assets, at value	$2,923,848,582
Net assets consist of:
Paid-in capital	$2,659,812,164
Total distributable earnings (losses)	264,036,418
Net assets, at value	$2,923,848,582

22         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2020 (unaudited)

Franklin Mutual Beacon Fund

Class Z:
Net assets, at value	$	2,024,258,989
Shares outstanding		148,155,374
Net asset value and maximum offering price per share		$13.66
Class A:
Net assets, at value	$	792,289,346
Shares outstanding		58,647,016
Net asset value per sharea		$13.51
Maximum offering price per share (net asset value per share ÷ 94.50%)		$14.30
Class C:
Net assets, at value	$	36,930,493
Shares outstanding		2,735,837
Net asset value and maximum offering price per sharea		$13.50
Class R:
Net assets, at value	$	1,293,630
Shares outstanding		97,149
Net asset value and maximum offering price per share		$13.32
Class R6:
Net assets, at value	$	69,076,124
Shares outstanding		5,055,675
Net asset value and maximum offering price per share		$13.66

^aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.

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FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual Beacon Fund

Investment income:
Dividends:(net of foreign taxes)*
Unaffiliated issuers	$	93,665,654
Interest:
Unaffiliated issuers		4,341,769
Adjustment for uncollectible interest (Note 8)		(2,142,470	)
Total investment income		95,864,953
Expenses:
Management fees (Note 3a)		10,604,189
Distribution fees: (Note 3c)
Class A		1,067,930
Class C		210,795
Class R		3,675
Transfer agent fees: (Note 3e)
Class Z		985,573
Class A		388,226
Class C		19,230
Class R		669
Class R6		17,860
Custodian fees (Note 4)		96,075
Reports to shareholders		86,517
Registration and filing fees		71,052
Professional fees		83,329
Trustees’ fees and expenses		115,385
Dividends on securities sold short		612,291
Other		43,989
Total expenses		14,406,785
Expense reductions (Note 4)		(13,753	)
Expenses waived/paid by affiliates (Note 3f)		(10,215	)
Net expenses		14,382,817
Net investment income		81,482,136
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		(26,930,626	)
Foreign currency transactions		435,668
Forward exchange contracts		5,209,993
Futures contracts		2,187,309
Securities sold short		(2,232,538	)
Net realized gain (loss)		(21,330,194	)
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(713,394,792	)
Translation of other assets and liabilities denominated in foreign currencies		(82,986	)
Forward exchange contracts		14,638,677
Futures contracts		4,598,936
Securities sold short		3,127,550

24         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations (continued)

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual Beacon Fund

Net change in unrealized appreciation (depreciation)		(691,112,615	)
Net realized and unrealized gain (loss)		(712,442,809	)
Net increase (decrease) in net assets resulting from operations	$	(630,960,673	)
*Foreign taxes withheld on dividends	$	1,798,141

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FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

Franklin Mutual Beacon Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31, 2019
Increase (decrease) in net assets:
Operations:
Net investment income		$     81,482,136			$     72,734,507
Net realized gain (loss)		(21,330,194	)		51,129,864
Net change in unrealized appreciation (depreciation)		(691,112,615	)		666,435,033
Net increase (decrease) in net assets resulting from operations		(630,960,673	)		790,299,404
Distributions to shareholders:
Class Z		—			(117,204,577	)
Class A		—			(44,297,307	)
Class C		—			(1,880,966	)
Class R		—			(73,857	)
Class R6		—			(4,118,811	)
Total distributions to shareholders		—			(167,575,518	)
Capital share transactions: (Note 2)
Class Z		(143,233,966	)		(100,073,026	)
Class A		(62,623,278	)		(29,105,095	)
Class C		(6,700,804	)		(17,741,717	)
Class R		(171,293	)		(184,983	)
Class R6		(6,295,566	)		(4,143,408	)
Total capital share transactions		(219,024,907	)		(151,248,229	)
Net increase (decrease) in net assets		(849,985,580	)		471,475,657
Net assets:
Beginning of period		3,773,834,162			3,302,358,505
End of period		$2,923,848,582			$3,773,834,162

26         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

Notes to Financial Statements (unaudited)

Franklin Mutual Beacon Fund

1.  Organization and Significant Accounting Policies

Franklin Mutual Series Funds (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of six separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Mutual Beacon Fund (Fund) is included in this report. The Fund offers five classes of shares: Class Z, Class A, Class C, Class R and Class R6. Class C shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees.

The following summarizes the Fund’s significant accounting policies.

a.  Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The Fund may utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and derivative financial instruments 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.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the 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

franklintempleton.com Semiannual Report         27

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

1.  Organization and Significant Accounting Policies (continued)

a.   Financial Instrument Valuation (continued)

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 June 30, 2020, certain securities may have been fair valued using these procedures, in which case the securities were categorized as Level 2 inputs within the fair value hierarchy. See the Fair Value Measurements note for more information.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b.   Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statement of Operations.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

c.   Derivative Financial Instruments

The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various

28         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At June 30, 2020, the Fund had OTC derivatives in a net liability position of $1,486,989 and the aggregate value of collateral pledged for such contracts was $1,500,785.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

At June 30, 2020, the Fund received $4,028,063 in U.K. Treasury Bonds and U.S. Treasury Bills, Bonds and Notes as collateral for derivatives.

The Fund entered into exchange traded futures contracts primarily to manage exposure to certain foreign currencies. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a

future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation

margin payable or receivable in the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage 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 12 regarding other derivative information.

d.   Securities Sold Short

The Fund is engaged in selling securities short, which obligates the Fund to replace a borrowed security with the same security at current fair value. The Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Gains are limited to the price at which the Fund sold the security short, while losses are potentially unlimited in size.

The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale to the extent necessary to meet margin requirements until the short position is closed out. A deposit must also be maintained with the Fund’s custodian/counterparty broker consisting of cash and/or securities having a value equal to a specified percentage of the value of the securities sold short. The Fund is obligated to pay fees for borrowing the securities sold short and is required to pay the counterparty any dividends and/or interest due on securities sold short. Such dividends and/or interest and any security borrowing fees are recorded as an expense to the Fund. At June 30, 2020, the Fund had no securities sold short.

e.   Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral 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

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

1.  Organization and Significant Accounting Policies (continued)

e.   Securities Lending (continued)

values is delivered to the Fund on the next business day. The collateral 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, and/or a joint repurchase agreement. 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 the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At June 30, 2020, the Fund had no securities on loan.

f.   Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

g.   Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are

recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

As a result of several court cases, in certain countries across the European Union, the Fund filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statement of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, EU reclaims received by the Fund, if any, reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns.

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2020, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

h.   Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and dividends declared on securities sold short are recorded on the ex-dividend date except for certain dividends from securities

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

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.

i.   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.

j.   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 June 30, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2020						Year Ended     December 31, 2019
	Shares			Amount			Shares			Amount
Class Z Shares:
Shares sold		3,935,112		$	53,873,732			6,417,333		$	99,580,274
Shares issued in reinvestment of distributions		—			—			6,936,116			109,259,281
Shares redeemed		(14,318,067	)		(197,107,698	)		(19,916,799	)		(308,912,581	)
Net increase (decrease)		(10,382,955	)	$	(143,233,966	)		(6,563,350	)	$	(100,073,026	)
Class A Shares:
Shares solda		3,522,108		$	47,405,977			5,986,582		$	92,355,623
Shares issued in reinvestment of distributions		—			—			2,768,759			43,071,568
Shares redeemed		(8,204,059	)		(110,029,255	)		(10,754,960	)		(164,532,286	)
Net increase (decrease)		(4,681,951	)	$	(62,623,278	)		(1,999,619	)	$	(29,105,095	)

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

2.  Shares of Beneficial Interest (continued)

	Six Months Ended June 30, 2020						Year Ended     December 31, 2019
	Shares			Amount			Shares			Amount
Class C Shares:
Shares sold		184,980		$	2,611,596			389,809		$	5,961,650
Shares issued in reinvestment of distributions		—			—			118,043			1,813,172
Shares redeemeda		(679,569	)		(9,312,400	)		(1,659,137	)		(25,516,539	)
Net increase (decrease)		(494,589	)	$	(6,700,804	)		(1,151,285	)	$	(17,741,717	)
Class R Shares:
Shares sold		7,050		$	91,030			11,975		$	176,283
Shares issued in reinvestment of distributions		—			—			4,826			73,857
Shares redeemed		(20,231	)		(262,323	)		(29,881	)		(435,123	)
Net increase (decrease)		(13,181	)	$	(171,293	)		(13,080	)	$	(184,983	)
Class R6 Shares:
Shares sold		611,862		$	8,494,816			1,239,238		$	19,145,578
Shares issued in reinvestment of distributions		—			—			260,098			4,098,079
Shares redeemed		(1,057,779	)		(14,790,382	)		(1,768,710	)		(27,387,065	)
Net increase (decrease)		(445,917	)	$	(6,295,566	)		(269,374	)	$	(4,143,408	)

^aMay include a portion of Class C shares that were automatically converted to Class A.

3.  Transactions with Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a.  Management Fees

The Fund pays an investment management fee to Franklin Mutual based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.675%	Up to and including $5 billion
0.645%	Over $5 billion, up to and including $7 billion
0.625%	Over $7 billion, up to and including $10 billion
0.615%	In excess of $10 billion

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Franklin Mutual Beacon Fund (continued)

b.   Administrative Fees

Under an agreement with Franklin Mutual, FT Services provides administrative services to the Fund. The fee is paid by Franklin Mutual 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 Z and Class R6 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:

Class A	0.35	%
Class C	1.00	%
Class R	0.50	%

The Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.

d.   Sales Charges/Underwriting Agreements

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the period:

Sales charges retained net of commissions paid to unaffiliated     brokers/dealers	$	27,574
CDSC retained	$	3,209

e.   Transfer Agent Fees

Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. The fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.

For the period ended June 30, 2020, the Fund paid transfer agent fees of $1,411,558, of which $662,052 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 0.02% based on the average net assets of the class until April 30, 2021.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

4.   Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2020, the custodian fees were reduced as noted in the Statement of Operations.

5.   Independent Trustees’ Retirement Plan

On January 1, 1993, the Trust adopted an Independent Trustees’ Retirement Plan (Plan). The Plan is an unfunded defined benefit plan that provides benefit payments to Trustees whose length of service and retirement age meets the eligibility requirements of the Plan. Benefits under the Plan are based on years of service and fees paid to each trustee at the time of retirement. Effective in December 1996, the Plan was closed to new participants.

During the period ended June 30, 2020, the Fund’s projected benefit obligation and benefit payments under the Plan were as follows:

aProjected benefit obligation at June 30, 2020	$	315,446
bIncrease in projected benefit obligation	$	14,942
Benefit payments made to retired trustees	$	(2,020	)

^aThe projected benefit obligation is included in trustees’ fees and expenses in the Statement of Assets and Liabilities.

^bThe increase in projected benefit obligation is included in trustees’ fees and expenses in the Statement of Operations.

6.   Income Taxes

At June 30, 2020, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	2,722,676,684
Unrealized appreciation	$	502,600,435
Unrealized depreciation		(325,055,346	)
Net unrealized appreciation (depreciation)	$	177,545,089

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of foreign currency transactions.

7.   Investment Transactions

Purchases and sales of investments (excluding short term securities and securities sold short) for the period ended June 30, 2020, aggregated $624,205,897 and $778,428,804, respectively.

8.   Credit Risk and Defaulted Securities

The Fund may purchase the pre-default or defaulted debt of distressed companies. Distressed companies are financially troubled and could be or are already involved in financial restructuring or bankruptcy. Risks associated with purchasing these securities include the possibility that the bankruptcy or other restructuring process takes longer than expected, or that distributions in restructuring are less than anticipated, either or both of which may result in unfavorable consequences to the

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

Fund. If it becomes probable that the income on debt securities, including those of distressed companies, will not be collected, the Fund discontinues accruing income and recognizes an adjustment for uncollectible interest. For the period ended June 30, 2020, the Fund recorded an adjustment for uncollectible interest of $2,142,470, as noted in the Statement of Operations.

At June 30, 2020, the aggregate long value of distressed company securities for which interest recognition has been discontinued was $14,159,890, representing 0.5% of the Fund’s net assets. For information as to specific securities, see the accompanying Statement of Investments.

9.   Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local, regional and global economic, political and social conditions, which may result in greater market volatility. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in securities in Europe. In addition, certain foreign securities may not be as liquid as U.S. securities.

10.   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.

11.   Restricted Securities

The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.

At June 30, 2020, investments in restricted securities, excluding securities exempt from registration under the 1933 Act, were as follows:

Shares	Issuer	Acquisition Date		Cost		Value
2,846,329	International Automotive Components Group Brazil LLC (Value is 0.0%† of Net Assets)		4/13/06 -12/26/08	$	1,890,264	$	53,522

^†Rounds to less than 0.1% of net assets.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

12.   Other Derivative Information

At June 30, 2020, investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:

	Asset Derivatives				Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin on futures contracts	$	2,750,761	a	Variation margin on futures contracts	$	—
	Unrealized appreciation on OTC forward exchange contracts		7,229,796		Unrealized depreciation on OTC forward exchange contracts		4,825,205
Totals		$	9,980,557			$	4,825,205

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/ payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

For the period ended June 30, 2020, the effect of derivative contracts in the Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Location	Net Realized Gain (Loss) for the Period			Statement of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Forward exchange contracts		$	5,209,993	Forward exchange contracts		$	14,638,677
	Futures contracts			2,187,309	Futures contracts			4,598,936
Totals			$	7,397,302			$	19,237,613

For the period ended June 30, 2020, the average month end notional amount of futures contracts represented $187,454,249. The average month end contract value of forward exchange contracts was $657,051,771.

See Note 1(c) regarding derivative financial instruments.

13.   Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 5, 2021. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended June 30, 2020, the Fund did not use the Global Credit Facility.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

14.   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 June 30, 2020, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:a
Equity Investments:b
Aerospace & Defense	$	—	$	76,933,832	$	—		$	76,933,832
Auto Components		—		—		53,522			53,522
Automobiles		—		84,057,073		—			84,057,073
Banks		128,751,938		108,256,638		—			237,008,576
Chemicals		—		69,253,947		—			69,253,947
Media		186,983,554		—		49,860			187,033,414
Pharmaceuticals		275,468,212		119,241,867		—			394,710,079
Technology Hardware, Storage & Peripherals		75,883,563		100,428,865		—			176,312,428
Textiles, Apparel & Luxury Goods		38,891,808		61,714,482		—			100,606,290
Thrifts & Mortgage Finance		—		23,780,393		—			23,780,393
Tobacco		—		118,556,158		—			118,556,158
All Other Equity Investments		1,228,956,039		—		—			1,228,956,039
Corporate Notes and Senior Floating Rate Interests		—		42,454,999		—			42,454,999
Corporate Notes in Reorganization		—		14,159,890		—			14,159,890
Companies in Liquidation		—		—		25,456	c		25,456
Short Term Investments		122,486,850		18,673,322		—			141,160,172
Total Investments in Securities	$	2,057,421,964	$	837,511,466	$	128,838		$	2,895,062,268
Other Financial Instruments:
Futures Contracts	$	2,750,761	$	—	$	—		$	2,750,761
Forward Exchange Contracts		—		7,229,796		—			7,229,796
Total Other Financial Instruments	$	2,750,761	$	7,229,796	$	—		$	9,980,557

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Beacon Fund (continued)

14.   Fair Value Measurements (continued)

	Level 1		Level 2		Level 3		Total
Liabilities:
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	4,825,205	$	—	$	4,825,205

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common and preferred stocks as well as other equity interests.

^cIncludes securities determined to have no value at June 30, 2020.

A reconciliation in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 assets and/or liabilities at the beginning and/or end of the period.

15.   New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provides optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of LIBOR and other interbank-offered based reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management is currently evaluating the impact, if any, of applying this ASU.

16.   Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty		Currency		Selected Portfolio
BOFA	Bank of America Corp.	EUR	Euro	ADR	American Depositary Receipt
BONY	The Bank of New York Mellon Corp.	GBP	British Pound	FHLB	Federal Home Loan Bank
HSBK	HSBC Bank PLC	USD	United States Dollar	FRN	Floating Rate Note
SSBT	State Street Bank and Trust Co., N.A.			LIBOR	London InterBank Offered Rate
UBSW	UBS AG

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FRANKLIN MUTUAL BEACON FUND

Shareholder Information

Board Approval of Investment

Management Agreements

FRANKLIN MUTUAL SERIES FUNDS

Franklin Mutual Beacon Fund

(Fund)

The Board of Trustees (Board), including a majority of trustees that are not “interested persons” as such term is defined in section 2(a)(19) of the Investment Company Act of 1940 (hereinafter referred to as “independent trustees”), at a meeting held on May 14, 2020, unanimously approved the renewal of the Fund’s investment management agreement. Prior to a meeting of all of the trustees for the purpose of considering such renewal, the independent trustees participated in two other meetings held in connection with the renewal process. Throughout the process, the independent trustees received assistance and advice from and met separately with independent counsel. The independent trustees met with and interviewed officers of the investment manager (including portfolio managers), the transfer agent and shareholder services group and the distributor. In approving the renewal of the investment management agreement for the Fund, the Board, including the independent trustees, determined that the investment management fee structure was fair and reasonable and that continuance of the agreement was in the best interests of the Fund and its shareholders.

In reaching their decision on the investment management agreement, the trustees took into account information furnished throughout the year at regular Board meetings, as well as information specifically requested and furnished for the renewal process, which culminated in the meetings referred to above for the specific purpose of considering such agreement. Information furnished throughout the year included, among others, reports on the Fund’s investment performance, expenses, portfolio composition, portfolio brokerage execution, client commission arrangements, derivatives, securities lending, asset segregation, portfolio turnover, Rule 12b-1 plan, distribution, shareholder servicing, legal and compliance matters, pricing of securities, sales and redemptions, and marketing support payments made to financial intermediaries, as well as a third-party survey of transfer agent fees charged to funds within the Franklin Templeton Investments (FT) complex in comparison with those charged to other fund complexes deemed comparable. Also, related financial statements and other information about the scope and quality of services provided by the investment manager and its affiliates and enhancements to

such services over the past year were provided. In addition, the trustees received periodic reports throughout the year and during the renewal process relating to compliance with the Fund’s investment policies and restrictions. During the renewal process, the independent trustees considered the investment manager’s methods of operation within the Franklin Templeton group and its activities on behalf of other clients. The Board also noted that it received an annual report on all payments made by FT or the Fund to financial intermediaries engaged in the sale of Fund shares, as well as a memorandum relating to third-party servicing arrangements in response to a Guidance Update from the U.S. Securities and Exchange Commission (SEC) relating to mutual fund distribution and sub-accounting fees.

The information obtained by the trustees during the renewal process also included a special report prepared by Broadridge Financial Solutions, Inc., an independent third-party analyst that utilizes data from Lipper, Inc. (“Lipper”), comparing the Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper (Broadridge Section 15(c) Report). The trustees reviewed the Broadridge Section 15(c) Report and its usefulness in the renewal process with respect to matters such as comparative fees, expenses, expense ratios, performance and volatility. They concluded that the report continues to be a reliable resource in the performance of their duties.

In addition, the trustees received a Profitability Study (Profitability Study) prepared by management discussing the profitability to FT from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Over the past year, the Board and counsel to the independent trustees continued to receive reports on management’s handling of recent regulatory inquiries and pending legal actions against the investment manager and its affiliates. The independent trustees were satisfied with the actions taken to date by management in response to such regulatory and legal matters.

The trustees reviewed the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of the investment manager. As part of this review, particular attention was given to management’s diligent risk management program, including continual monitoring and management of cybersecurity, liquidity and counterparty credit risk, and attention given to derivatives and other complex instruments that are held and expected to be held by the Fund and how such instruments

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are used to carry out the Fund’s investment goal(s). The Board also took into account, among other things, management’s efforts in establishing a global credit facility for the benefit of the Fund and other accounts managed by FT to provide a source of cash for temporary and emergency purposes or to meet unusual redemption requests as well as the strong financial position of the investment manager’s parent company and its commitment to the mutual fund business. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity and liquidity risk management. The Board also recognized management’s commitment to facilitating Board oversight of particular areas, including derivatives and payments to intermediaries, by enhanced reporting.

In addition to the above and other matters considered by the trustees throughout the course of the year, the following discussion relates to certain primary factors relevant to the Board’s decision. This discussion of the information and factors considered by the Board (including the information and factors discussed above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual trustees may have assigned different weights to various factors.

NATURE, EXTENT AND QUALITY OF SERVICES. The trustees reviewed the nature, extent and quality of the services provided, and to be provided, by the investment manager. The trustees cited the investment manager’s ability to implement the Fund’s disciplined value investment approach and its long-term relationship with the Fund as reasons that shareholders choose to invest, and remain invested, in the Fund. The trustees reviewed the Fund’s portfolio management team, including its performance, staffing, skills and compensation program. With respect to portfolio manager compensation, management assured the trustees that the Fund’s long-term performance is a significant component of incentive-based compensation and noted that a portion of a portfolio manager’s incentive-based compensation is paid in shares of pre-designated funds from the portfolio manager’s fund management area. The trustees noted that the portfolio manager compensation program aligned the interests of the portfolio managers with that of shareholders of the Fund. The trustees discussed with management various other products, portfolios and entities

that are advised by the investment manager and the allocation of assets and expenses among and within them, as well as their relative fees and reasons for differences with respect thereto and any potential conflicts. During regular Board meetings and the aforementioned meetings of the independent trustees, the trustees received reports and presentations on the investment manager’s best execution trading policies. The trustees considered periodic reports provided to them showing that the investment manager complied with the investment policies and restrictions of the Fund as well as other reports periodically furnished to the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics covering the investment management personnel, the adherence to fair value pricing procedures established by the Board and the accuracy of net asset value calculations. The Board noted the extent of the benefits provided to Fund shareholders from being part of the Franklin Templeton group of funds, including the right to exchange investments between funds (same class) without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings of other funds to obtain reduced sales charges. The Board considered the investment manager’s significant efforts in developing and implementing compliance procedures established in accordance with SEC and other requirements.

The Board considered the nature, extent and quality of the services to be provided under the Fund’s other service agreements to determine that, on an overall basis, Fund shareholders were well served. In this connection, the Board also took into account transfer agent and shareholder services provided to Fund shareholders by an affiliate of the investment manager, noting continuing expenditures by management to increase and improve the scope of such services and favorable periodic reports on shareholder services conducted by independent third parties. While such considerations directly affected the trustees’ decision in renewing the Fund’s transfer agent and shareholder services agreement, the Board also considered these commitments as incidental benefits to Fund shareholders deriving from the investment management relationship.

Based on their review, the trustees were satisfied with the nature and quality of the overall services provided, and to be provided, by the investment manager and its affiliates to the Fund and its shareholders and were confident in the abilities of the management team to continue the disciplined value investment approach of the Fund and to provide quality services to the Fund and its shareholders.

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INVESTMENT PERFORMANCE. The trustees reviewed and placed significant emphasis on the investment performance of the Fund over the one-, three-, five- and 10-year periods ended December 31, 2019. They considered the history of performance of the Fund relative to various benchmarks. As part of their review, they inquired of management regarding benchmarks, style drift and restrictions on permitted investments. Consideration was also given to performance in the context of available levels of cash during the periods.

The trustees had meetings during the year, including the meetings referred to above held in connection with the renewal process, with the Fund’s portfolio managers to discuss performance and the management of the Fund. In addition to the materials provided by management in connection with the renewal process, the independent trustees requested throughout the year (and received) additional presentations from the investment manager and senior management of FT regarding the performance of the investment manager and the Fund. As part of these presentations, the investment manager and senior management of FT reviewed enhancements that have been made, and are being made, to the investment manager’s investment process. In addition, it was noted that senior management of FT is conducting a review of the investment manager and the Fund and will report the results thereof to the independent trustees when completed.

Particular attention in assessing performance was given to the Broadridge Section 15(c) Report. That report showed the investment performance of the Fund (Class A shares) in comparison to other funds determined comparable by Lipper.

The comparable funds to the Fund, as chosen by Lipper, included all retail and institutional global multi-cap value funds. The Fund had total returns in the second-best performing quintile for the one-year period ended December 31, 2019, and had annualized total returns for the three- and five-year periods in the middle and best performing quintiles, respectively. The trustees noted that the Fund’s total return on an annualized basis for the 10-year period ended December 31, 2019 was in the best performing quintile. The Board was satisfied with such comparative performance.

The trustees also compared Fund performance to other industry benchmarks, including measures of risk-adjusted performance of a fund, as part of their evaluation of investment performance. The trustees concluded that the Fund had continued to perform well in comparison to its various benchmarks and in the context of the Fund’s goals.

COMPARATIVE EXPENSES AND MANAGEMENT PROFITABILITY. The trustees considered the cost of the services provided and to be provided and the profits realized by the investment manager and its affiliates from their respective relationships with the Fund. As part of the renewal process, the trustees explored with management the trends in expense ratios over the past three fiscal years and the reasons for any increases in the Fund’s expense ratios (or components thereof). In considering the appropriateness of the management fee and other expenses charged to the Fund, the Board took into account various factors including investment performance and matters relating to Fund operations, including, but not limited to, the quality and experience of its portfolio managers and research staff. Consideration was also given to a comparative analysis in the Broadridge Section 15(c) Report of the investment management fee and total expense ratio of the Fund in comparison with those of a group of other funds selected by Lipper as its appropriate Lipper expense group. Lipper expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Lipper to be an appropriate measure of comparative expenses.

In reviewing comparative costs, emphasis was given to the Fund’s contractual management fee in comparison with the contractual management fee that would have been charged by other funds within its Lipper expense group assuming they were similar in size to the Fund, as well as the actual total expenses of the Fund in comparison with those of its Lipper expense group. The Lipper contractual management fee analysis includes administrative charges as being part of the management fee, and total expenses, for comparative consistency, are shown by Lipper for Fund Class A shares.

The Fund’s contractual management fee rate was in the second-least expensive quintile of its Lipper expense group and its total expenses were in the least expensive quintile of such group. The Board was satisfied with such comparative fees and expenses.

The trustees also reviewed the Profitability Study addressing profitability of Franklin Resources, Inc., from its overall U.S. fund business, as well as profitability to the Fund’s investment manager and its affiliates, from providing

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investment management and other services to the Fund during the 12-month period ended September 30, 2019, the most recent fiscal year-end of Franklin Resources, Inc. The trustees reviewed the basis on which such reports are prepared and the cost allocation methodology utilized in the Profitability Study, it being recognized that allocation methodologies may each be reasonable while producing different results. In this respect, the Board noted that the reasonableness of the cost allocation methodologies was reviewed by independent accountants on an every other year basis.

The independent trustees met with management to discuss the Profitability Study. This included, among other things, a comparison of investment management income with investment management expenses of the Fund; comparison of underwriting revenues and expenses; the relative relationship of investment management and underwriting expenses; shareholder servicing profitability; economies of scale; and the relative contribution of the Fund to the profitability of the investment manager and its parent. In discussing the Profitability Study with the Board, the investment manager stated its belief that the costs incurred in establishing the infrastructure necessary to operate the type of mutual fund operations conducted by it and its affiliates may not be fully reflected in the expenses allocated to the Fund in determining its profitability.

The Board also took into account management’s expenditures in improving shareholder services provided to the Fund, as well as the need to meet additional regulatory and compliance requirements. The trustees also considered the extent to which the investment manager may derive ancillary benefits from Fund operations, including those derived from economies of scale, discussed below, the allocation of Fund brokerage and the use of commission dollars to pay for research and other similar services.

Based upon their consideration of all these factors, the trustees determined that the level of profits realized by the investment manager and its affiliates in providing services to the Fund was not excessive in view of the nature, quality and extent of services provided.

ECONOMIES OF SCALE. The Board considered economies of scale realized by the investment manager and its affiliates as the Fund grows larger and the extent to which they are shared with Fund shareholders, as for example, in the level of the investment management fee charged, in the quality and efficiency of services rendered and in increased capital commitments benefiting the Fund directly or indirectly. While

recognizing that any precise determination is inherently subjective, the trustees noted that, based upon the Profitability Study, as some funds increase in size, at some point economies of scale may result in the investment manager realizing a larger profit margin on investment management services provided to such a fund. The trustees also noted that benefits of economies of scale will be shared with Fund shareholders due to the decline in the effective investment management fee rate as breakpoints are achieved by the Fund.

The trustees noted that breakpoints had been instituted as part of the Fund’s investment management fee and that the Board regularly evaluates whether additional breakpoints are appropriate. The trustees assessed the savings to shareholders resulting from such breakpoints and believed they were, and continue to be, appropriate and they agreed to continue to monitor the appropriateness of the breakpoints. The trustees also considered the effects an increase in assets under management would have on the investment management fee and expense ratio of the Fund. To the extent further economies of scale may be realized by the investment manager and its affiliates, the Board believed the investment management fees provide a sharing of benefits with the Fund and its shareholders.

Liquidity Risk Management Program

The Funds have 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 program is designed to assess and manage each Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during 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. The Funds’ Board of Trustees approved the appointment of the Director of Liquidity Risk within the Investment Risk Management Group (the “IRMG”) as the Administrator of the LRMP. The IRMG maintains the Investment Liquidity Committee (the “ILC”) to provide oversight and administration of policies and procedures governing liquidity risk management for FT products and portfolios. The ILC includes representatives from Franklin Templeton’s Risk, Trading, Global Compliance, Investment Compliance, Investment Operations, Valuation Committee and Product Management groups.

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The LRMP Administrator Annual Report was presented to the Fund(s) Board of Trustees at their meetings in May 2020. The report covered the adequacy and effectiveness of the program during the period December 1, 2018 to December 31, 2019 (the “covered period”). The 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. In addition, the LRMP Administrator presented the Fund Board of Trustees an update on liquidity during the first quarter of 2020 in relation to the COVID-19 pandemic.

During the reporting period, the Fund maintained a high level of liquid assets that are defined under the Liquidity Rule as ‘‘Highly Liquid Investments.’’ As a result, the Fund was designated a “Primarily Highly Liquid Fund” as defined under the Liquidity Rule and has not adopted a ‘‘Highly Liquid Investment Minimum.’’ A Highly Liquid Investment is 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.

There can be no assurance that the program will achieve its objectives in the future. Please refer to your Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

Proxy Voting Policies and Procedures

The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust, on behalf of the Fund, files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year as an exhibit to its report on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

Householding of Reports and Prospectuses

You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800) 632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.

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Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.

	Semiannual Report and Shareholder Letter Franklin Mutual Beacon Fund
	Investment Manager	Distributor	Shareholder Services
	Franklin Mutual Advisers, LLC	Franklin Templeton Distributors, Inc. (800) DIAL BEN® / 342-5236	(800) 632-2301 - (Class A, C, R & R6)
		franklintempleton.com	(800) 448-FUND - (Class Z)

© 2020 Franklin Templeton Investments. All rights reserved. 476 S 08/20

Sign up for electronic delivery at franklintempleton.com/edelivery

Internet Delivery of Fund Reports Unless You Request Paper Copies: Effective January 1, 2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request them from the Fund or your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not signed up for electronic delivery, we would encourage you to join fellow shareholders who have. You may elect to receive shareholder reports and other communications electronically from the Fund by calling (800) 632-2301 or by contacting your financial intermediary.

You may elect to continue to receive paper copies of all your future shareholder reports free of charge by contacting your financial intermediary or, if you invest directly with a Fund, calling (800) 632-2301 to let the Fund know of your request. Your election to receive reports in paper will apply to all funds held in your account.

SHAREHOLDER LETTER

Dear Franklin Mutual Global Discovery Fund Shareholder:

During the six months ended June 30, 2020, global equity markets were extremely volatile and declined as the spread of the novel coronavirus (COVID-19)—first reported in December and initially centered in China—disrupted economic activity and contributed to negative investor sentiment for risk assets. Share prices plunged dramatically, pulling global equities from near-record levels in mid-February before bottoming in late March. Global stocks snapped back in April and May but moderated in June to close the period significantly above the market trough, although still in negative territory. The broad U.S. equity market, as measured by the Standard & Poor’s^® 500 Index, finished the period down -3.08%, and global stocks, as measured by the MSCI World Index, retreated -5.48%.1

As the period opened, major equity markets were rallying, lifted by China and the United States’ Phase-One trade agreement that was intended to serve as the foundation of a comprehensive settlement of two years of tariff one-upmanship between the world’s two largest economies. Then, COVID-19 emerged and upended these and other plans.

The spread of the pandemic evolved into a global public health crisis, and countries around the world implemented lockdown and physical distancing measures intended to “flatten the curve” of the contagion. Consumer and business spending fell, and manufacturing and other activity came to a virtual halt. Consequently, the world’s major economies fell into recession—including an end to the record-long U.S. expansion—and projections about the economic fallout exceeded that of the 2007–2009 Global Financial Crisis.

In response, central banks expanded their mandates to support economies and markets. The U.S. Federal Reserve (Fed) and the U.S. Congress undertook unprecedented monetary and fiscal stimulus that included lowering the federal funds rate to a range of 0.00%–0.25%; initiating open-ended quantitative easing; pledging to purchase short-dated investment-grade corporate debt and exchange-traded funds; sending checks directly to millions of Americans; expanding unemployment insurance; and

offering billions in loans to both small and large businesses. The European Union approved a €750 billion (US$825 billion) COVID-19 recovery fund that recommended financial burden sharing among member states.

Policymakers’ “whatever-it-takes” approach lifted investor sentiment, and stock prices surged. Rates of infection in some of the viral epicenters around the world slowed, and government officials, eager to restart economies, embarked on a gradual, albeit uneven, reopening.

In the period’s final month, the market rally continued but slowed considerably as the number of new, daily COVID-19 diagnoses spiked in U.S. states that were among the first to reopen. These trends may have worsened as many restless citizens, locked down since March, were less than diligent about adhering to social distancing and face-covering guidelines.

In late June, the Fed released the results of its annual Comprehensive Capital Analysis and Review report of large banks, better known as stress tests, and concluded that “banks can remain strong in the face of even the harshest shocks.” Nevertheless, the Fed capped dividends of banks at current levels and halted share buybacks until after the third quarter. Bank stocks reacted negatively to this development.

Market volatility and economic uncertainty can often present what we consider opportunities. We used our bottom-up, fundamentally driven investment process to add select positions that historically have not met our investment criteria but were now, in our opinion, attractively valued, and to move capital between existing positions to reflect market shifts. We believe this approach may offer meaningful upside potential and a degree of downside protection in periods of financial market turbulence. While the current level of uncertainty may be unnerving, it is important to remember that the market historically rewards investors who take a long-term perspective. To that end, we recognize the importance of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing

1. Source: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

Not FDIC Insured  | May Lose Value | No Bank Guarantee

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markets and economic conditions, we are confident investors with a well-diversified portfolio and a patient, long-term outlook should be well-positioned for the years ahead.

On the following pages, the portfolio management team reviews investment decisions that pertain to performance during the past six months considering the economic environment and other factors. 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 continuing to serve your investment needs in the years ahead.

Sincerely,

Peter A. Langerman

Chairman, President and Chief Executive Officer

Franklin Mutual Advisers, LLC

This letter reflects our analysis and opinions as of June 30, 2020, 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.

Contents

Semiannual Report
Franklin Mutual Global Discovery Fund	3
Performance Summary	8
Your Fund’s Expenses	10
Financial Highlights and Statement of Investments	11
Financial Statements	23
Notes to Financial Statements	28
Shareholder Information	42

Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.

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SEMIANNUAL REPORT

Franklin Mutual Global Discovery Fund

This semiannual report for Franklin Mutual Global Discovery Fund covers the period ended June 30, 2020. The reorganization of Franklin Mutual International Fund into Franklin Mutual Global Discovery Fund, as approved by shareholders, was completed on February 21, 2020. Shares of Franklin Mutual International Fund share classes A, C, R, R6 and Z were exchanged for shares in Franklin Mutual Global Discovery Fund share classes A, C, R, R6 and Z, respectively. We welcome the former shareholders of Franklin Mutual International Fund that now own shares of Franklin Mutual Global Discovery Fund.

Your Fund’s Goal and Main Investments

The Fund’s investment goal is capital appreciation. Under normal market conditions, the Fund invests primarily in equity securities of U.S. and foreign companies that we believe are available at market prices less than their intrinsic value. The equity securities in which the Fund invests are primarily common stock, with a current focus on mid- and large cap companies. To a lesser extent, the Fund also invests in merger arbitrage securities and the debt and equity of distressed companies. The Fund may invest a substantial portion, potentially up to 100% of its assets, in foreign securities, which may include sovereign debt and participations in foreign government debt. The Geographic Composition bar chart on this page lists the leading countries where the Fund invests.

Performance Overview

The Fund’s Class Z shares posted a -21.67% cumulative total return for the six months ended June 30, 2020. For comparison, the Fund’s benchmark, the MSCI World Index (USD), which tracks stock performance in global developed markets, posted a -5.48% total return.¹ You can find more of the Fund’s performance data in the Performance Summary beginning on page 8.

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

Geographic Composition*

Based on Total Net Assets as of 6/30/20

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Economic and Market Overview

Global developed and emerging market equities, as measured by the MSCI All Country World Index (USD), posted a -5.99% total return during the six months under review.¹ Stocks fell sharply in early 2020 as countries around the world implemented lockdown measures in an effort to slow the spread of the novel coronavirus (COVID-19). Global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments

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.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

The SOI begins on page 16.

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such as government bonds and cash. While global equities, notably in the U.S., rebounded in April and May amid optimism about easing lockdown restrictions, concerns about a second wave of infections hindered equities in June, as investors weighed the possibility of renewed restrictions.

In the U.S., government mandates to mitigate the COVID-19 pandemic severely impacted the economy beginning in March 2020. As a result, the unemployment rate surged to 14.7% in April, as many businesses, particularly those involved in hospitality, retail and travel, announced mass layoffs.² According to the National Bureau of Economic Research, the longest U.S. economic expansion in history ended in February 2020 as the country slipped into a severe recession. Nonetheless, near period-end, there were signs that a recovery was underway, as jobless claims fell considerably from their peak in early April, retail sales rose sharply in May, and the unemployment rate fell to 11.1% in June.² Along with optimism about improved treatments and potential vaccines for COVID-19, the positive economic signals contributed to a significant equity rebound in April and May. However, an increase in COVID-19 infections in many states throughout June pressured U.S. stocks.

Additionally, the U.S. Federal Reserve (Fed) made significant efforts to support the U.S. economy. In March 2020, as the pandemic began to severely impact the economy and financial markets, the Fed implemented two emergency rate cuts, lowering the federal funds target rate to a range of 0.00%–0.25%, and announced sweeping quantitative easing measures aimed at ensuring credit flow to borrowers and supporting credit markets with unlimited amounts of bond purchasing.

In the eurozone, some analysts forecasted a significant contraction in 2020, particularly in southern European countries, as the magnitude of the economic disruption caused by the pandemic became apparent. European developed market equities, as measured by the MSCI Europe Index (USD), posted a -12.43% total return for the period.¹ To stimulate growth, the European Central Bank implemented a broad bond-buying program, and many countries passed fiscal stimulus measures.

Asian developed and emerging market equities, as measured by the MSCI All Country Asia Index (USD), posted a -5.51% total return during the six-month period.¹ The onset of the pandemic brought dramatically slower economic activity in Asia, as businesses halted operations and

manufacturing and export activity declined sharply in the region’s major economies. Asian markets generally advanced toward period-end, bolstered by fiscal stimulus measures and economies reopening throughout the region, especially in China.

Emerging market stocks, as measured by the MSCI Emerging Markets Index (USD), posted a -9.67% total return due primarily to the COVID-19 pandemic.¹ A sharp decrease in prices for oil and other natural resources also hurt emerging market economies reliant on these exports. In the last quarter of the reporting period, however, investor optimism led to a stock rally, particularly in emerging market countries that had successfully lowered infection rates.

Investment Strategy

At Franklin Mutual Series, we are committed to our distinctive value approach to investing, which we believe can generate above-average risk-adjusted returns over time for our shareholders. Our major investment strategy is investing in undervalued stocks. When selecting undervalued equities, we are attracted to what we believe are fundamentally strong companies with healthy balance sheets, high-quality assets, substantial free cash flow and shareholder-oriented management teams and whose stocks are trading at discounts to our assessment of the companies’ intrinsic or business value. We also look for asset-rich companies whose shares may be trading at depressed levels due to concerns over short-term earnings disappointments, litigation, management strategy or other perceived negatives. This strict value approach is not only intended to improve the likelihood of capital appreciation, but also reduces the risk of substantial declines, in our opinion. While the vast majority of our undervalued equity investments are made in publicly traded companies globally, we may invest occasionally in privately held companies as well. Our portfolio selection process generally includes an assessment of the potential impacts of any material environmental, social and governance (ESG) factors on the long-term risk and return profile of a company.

To a lesser extent, we complement this more traditional investment strategy with two others. One is distressed investing, a highly specialized field that has proven quite profitable during certain periods over the years. Distressed investing is complex and can take many forms. The most common distressed investment the Fund undertakes is the purchase of financially troubled or bankrupt companies’ debt

2. Source: U.S. Bureau of Labor Statistics.

See www.franklintempletondatasources.com for additional data provider information.

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at a substantial discount to face value. After the financially distressed company is reorganized, often in bankruptcy court, the old debt is typically replaced with new securities issued by the financially stronger company.

The other piece of our investment strategy is participating in arbitrage situations, another highly specialized field. When companies announce proposed mergers or takeovers, commonly referred to as deals, the target company may trade at a discount to the bid it ultimately accepts. One form of arbitrage involves purchasing the target company’s stock when it is trading below the value we believe it would receive in a deal. In keeping with our commitment to a relatively conservative investment approach, we typically focus our arbitrage efforts on announced deals, and avoid rumored deals or other situations we consider relatively risky. In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

Manager’s Discussion

The novel coronavirus (COVID-19) pandemic has significantly altered our way of life. Despite this, stocks have rallied off the March 23 market bottom and are within range of the pre-pandemic, all-time highs achieved earlier in the year. While the economy has reopened, the recovery is likely to be uneven. The question that we wrestle with daily is what does this scenario mean for equities in general and undervalued stocks in particular?

Markets rose sharply in April, as investors moved back into the growth stocks that propelled the market to the all-time highs of January. In late May, however, there was a turn in market sentiment resulting in value briefly outperforming growth. Undervalued stocks often benefit in periods of improving economic activity or stabilization as business prospects improve. Increasing demand across the economy, especially in cyclical sectors, can provide a tailwind for these companies and drive shareholder value. This is a scenario that often occurs off an economic bottom, and we are positioning our portfolios to capitalize on this trend.

The second-quarter earnings reporting season (occurring in July and August) marks the first period with the full impact of the economic lockdowns and will provide a more complete view into the pandemic’s impact on corporate statements. Many financial officers withdrew full-year 2020 guidance, as they reported first-quarter results, due to limited revenue visibility. As a result, the path ahead for stocks is less clear. We remain cautious amid these elevated risks.

Top 10 Sectors/Industries

Based on Equity Securities as of 6/30/20

	% of Total Net Assets
Pharmaceuticals	12.1%
Oil, Gas & Consumable Fuels	8.9%
Banks	7.3%
Insurance	6.9%
Technology Hardware, Storage & Peripherals	4.9%
Software	4.3%
Tobacco	4.1%
Health Care Providers & Services	3.8%
Automobiles	3.4%
Capital Markets	3.3%

Our traditional value equity investment approach is complemented with two other strategies: distressed investing and merger arbitrage.

Within our distressed credit strategy, we targeted companies and industries directly impacted by the coronavirus pandemic. The robust government fiscal and monetary intervention have limited the number of attractive options, but we have found opportunities in the energy sector and the retail and travel industries. Although each situation is unique, these securities have strong collateral packages and covenant protections or other features that we believe make them substantially more attractive than the broad array of available distressed debt.

Within merger arbitrage, which involves trading the stocks of companies involved in a merger or acquisition (M&A), activity has slowed significantly since the onset of the pandemic. Deal terms agreed to before the virus emerged have become unbalanced and are now more favorable for sellers than they are for buyers. Not surprisingly, some of these proposals have become embroiled in litigation. Also, M&A activity has slowed as the economic realities of the coronavirus get priced into the market, and bankers are challenged to conduct due diligence remotely. As the period ended, we began to see signs that transactions activity might resume, but we would expect the second half of the year to be focused on resolving pending deals, rather than significant growth in new ones.

Fund Performance

Turning to Fund performance, investments that detracted included U.S.-based companies Wells Fargo, American International Group (AIG; not held at period-end) and Hartford Financial Services Group.

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The shares of diversified financial services company Wells Fargo were pulled down by negative investor sentiment for financials, which have trailed the broader market rally from the March 23 bottom. Concerns about a possible dividend cut as bank earnings have come under pressure, and speculation about the Fed moving to negative interest rates—subsequently refuted by Fed Chairman Jerome Powell—contributed to the selloff. Earlier in the period, management reported year-end 2019 earnings that fell well short of consensus estimates.

Shares of insurer AIG retreated as COVID-19 concerns and a lack of clarity on forward guidance related to expenses and investment income contributed to negative investor sentiment. The stock initially rallied following the company’s first-quarter earnings call at which management revealed that the majority of its property policies—which include coverage for business interruption—contained exclusions for losses related to viruses.

Shares of insurance products provider Hartford Financial Services Group trended down on investor concerns about COVID-19 exposure within the company’s various insurance lines. Management asserted that significant losses on business interruption coverages are unlikely because of existing policy language containing virus exclusions in most policies. Nevertheless, there has been a surge in property claims attributable to the pandemic, and management acknowledged there could be higher loss costs, litigation activity and legal expenses. Share repurchases totaled $150 million in 2020’s first quarter, but like most companies, stock buybacks have been suspended pending greater clarity on earnings. There is $650 million remaining under the authorization, which expires in December. Earlier in the period, Hartford’s stock price rallied after the insurer reported fourth-quarter 2019 financial results that surpassed consensus estimates for operating earnings and revenue, driven by underwriting results in property and casualty, a lower group disability loss ratio in group benefits and improved net investment income.

During the period under review, Fund investments that contributed positively to performance included U.S.-based companies Eli Lilly, Kraft Heinz and NortonLifeLock (not held at period-end).

Shares of pharmaceutical products company Eli Lilly were volatile but climbed during the period. Investor sentiment improved as the market came to the realization that the company’s business may not be meaningfully impacted by the disruption caused by the COVID-19 pandemic. First-quarter financial results exceeded consensus sales and earnings expectations, with revenues benefiting from

Top 10 Equity Holdings

6/30/20

Company Sector/Industry, Country	% of Total Net Assets
GlaxoSmithKline PLC Pharmaceuticals, U.K.	3.5%
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea	3.2%
Novartis AG Pharmaceuticals, Switzerland	3.2%
Merck & Co. Inc. Pharmaceuticals, U.S.	3.1%
British American Tobacco PLC Tobacco, U.K.	3.0%
Medtronic PLC Health Care Equipment & Supplies, U.S.	2.9%
Volkswagen AG Automobiles, Germany	2.6%
Charter Communications Inc. Media, U.S.	2.6%
Check Point Software Technologies Ltd. Software, Israel	2.6%
CVS Health Corp. Health Care Providers & Services, U.S.	2.6%

customers stocking up amid COVID-19, which is likely to reverse later in the year. Management raised 2020 guidance for earnings per share and reiterated the outlook for revenue and operating margin. In our view, Eli Lilly has a strong drug pipeline with several important compounds that positions the company well for continued growth over time.

Investors bid up shares of food products producer Kraft Heinz as surging demand for its products led to better-than-expected sales growth. Management raised its sales guidance in a business update early in the period, and financial results in the subsequent quarterly earnings report exceeded consensus estimates. The company reaffirmed the dividend payment, which also contributed to positive investor sentiment, and several analysts upgraded Kraft Heinz stock.

Shares of cybersecurity solutions provider NortonLifeLock outperformed during the period as work-from-home requirements attributable to the COVID-19 pandemic led to increased consumer purchases of the company’s cybersecurity subscriptions, generating solid fiscal fourth-quarter earnings that were in line with consensus expectations. NortonLifeLock’s stock rallied entering the year and surged after management announced in early January the payment of a one-time, $12 per share cash dividend

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funded by the 2019 sale of the enterprise security business to Broadcom. Symantec, the precursor to NortonLifeLock, sold the business as part of its transition to a pure-play consumer-focused cybersecurity company, and management subsequently changed the company’s name to Norton-LifeLock, highlighting its lead brands. NortonLifeLock’s shares appreciated materially, and we exited our position by period-end.

During the period, the Fund held currency forwards and futures seeking to hedge most of the currency risk of the portfolio’s non-U.S. dollar investments. The hedges had a positive overall impact on the Fund’s performance.

As fellow shareholders, we found recent absolute and relative performance disappointing, but our strategy of seeking undervalued stocks can lag the growth equity markets at times. We remain committed to our disciplined, value investment approach as we seek to generate attractive, long-term, risk-adjusted returns for shareholders.

Thank you for your participation in Franklin Mutual Global Discovery Fund. We look forward to continuing to serve your investment needs.

Peter A. Langerman

Co-Portfolio Manager

Timothy Rankin, CFA

Co-Portfolio Manager

Christian Correa, CFA

Co-Portfolio Manager

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2020, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, 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.

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Performance Summary as of June 30, 2020

The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.

Performance as of 6/30/20

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%. Class A: 5.50% maximum initial sales charge. For other share classes, visit franklintempleton.com.

Share Class	Cumulative Total Return	1	Average Annual Total Return	2
Z
6-Month	-21.67%		-21.67%
1-Year	-15.07%		-15.07%
5-Year	+1.53%		+0.30%
10-Year	+76.63%		+5.85%
A3
6-Month	-21.76%		-26.08%
1-Year	-15.25%		-19.91%
5-Year	+0.27%		-1.07%
10-Year	+71.85%		+4.97%

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.

See page 9 for Performance Summary footnotes.

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PERFORMANCE SUMMARY

Total Annual Operating Expenses⁴

Share Class
Z	1.01	%
A	1.26	%

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. Value securities may not increase in price as anticipated or may decline further in value. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. To the extent that the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, the Fund may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. 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. Smaller-company stocks have exhibited greater price volatility than larger-company stocks, particularly over the short term. The Fund’s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. The Fund may invest in lower-rated bonds, which entail higher credit risk. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental or man-made disasters; financial, political or social disruptions; terrorism and war; and other tragedies or catastrophes, can cause investor fear and panic, which can adversely affect the economies of many companies, sectors, nations, regions and the market in general, in ways that cannot necessarily be foreseen. The Fund’s prospectus also includes a description of the main investment risks.

1. Cumulative total return represents the change in value of an investment over the periods indicated.

2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

3. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns (with sales charges) would have differed. Average annual total returns (with sales charges) have been restated to reflect the current maximum initial sales charge of 5.50%.

4. 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.

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FRANKLIN MUTUAL GLOBAL DISCOVERY FUND

Your Fund’s Expenses

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.

		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
Share   Class	Beginning Account Value 1/1/20	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Net Annualized Expense Ratio2
Z	$1,000	$783.30	$4.57	$1,019.74	$5.17	1.03%
A	$1,000	$782.40	$5.67	$1,018.50	$6.42	1.28%
C	$1,000	$779.40	$8.98	$1,014.77	$10.17	2.03%
R	$1,000	$781.20	$6.78	$1,017.26	$7.67	1.53%
R6	$1,000	$783.80	$4.08	$1,020.29	$4.62	0.92%

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 182/366 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

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Financial Highlights

Franklin Mutual Global Discovery Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class Z
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$31.19			$26.86			$32.42			$31.12			$29.35			$33.32
Income from investment operationsa:
Net investment incomeb		0.51	c		0.67			0.58			0.76	d		0.67	e		0.53
Net realized and unrealized gains (losses)		(7.27	)		5.91			(4.13	)		2.29			3.08			(1.71	)
Total from investment operations		(6.76	)		6.58			(3.55	)		3.05			3.75			(1.18	)
Less distributions from:
Net investment income		—			(0.70	)		(0.64	)		(0.79	)		(0.69	)		(0.55	)
Net realized gains		—			(1.55	)		(1.37	)		(0.96	)		(1.29	)		(2.24	)
Total distributions		—			(2.25	)		(2.01	)		(1.75	)		(1.98	)		(2.79	)
Net asset value, end of period		$24.43			$31.19			$26.86			$32.42			$31.12			$29.35
Total returnf		(21.67)%			24.70%			(10.78)%			9.84%			12.86%			(3.36)%
Ratios to average net assetsg
Expensesh,i		1.03%	j		1.00%	j		0.97%	j		0.96%			0.99%	j		0.99%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		3.92%	c		2.20%			1.82%			2.30%	d		2.27%	e		1.56%
Supplemental data
Net assets, end of period (000’s)		$3,318,296			$5,176,787			$5,114,274			$7,175,981			$8,354,865			$9,132,752
Portfolio turnover rate		10.84%			14.08%			14.70%			17.50%			17.01%			21.79%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.93%.

^dNet investment income per share includes approximately $0.20 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.68%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.94%.

^fTotal return is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

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FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Global Discovery Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class A
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$30.51			$26.32			$31.80			$30.57			$28.86			$32.81
Income from investment operationsa:
Net investment incomeb		0.46	c		0.58			0.49			0.66	d		0.59	e		0.42
Net realized and unrealized gains (losses)		(7.10	)		5.78			(4.04	)		2.25			3.01			(1.67	)
Total from investment operations		(6.64	)		6.36			(3.55	)		2.91			3.60			(1.25	)
Less distributions from:
Net investment income		—			(0.62	)		(0.56	)		(0.72	)		(0.60	)		(0.46	)
Net realized gains		—			(1.55	)		(1.37	)		(0.96	)		(1.29	)		(2.24	)
Total distributions		—			(2.17	)		(1.93	)		(1.68	)		(1.89	)		(2.70	)
Net asset value, end of period		$23.87			$30.51			$26.32			$31.80			$30.57			$28.86
Total returnf		(21.76)%			24.37%			(10.99)%			9.57%			12.56%			(3.63)%
Ratios to average net assetsg
Expensesh,i		1.28%	j		1.25%	j		1.22%	j		1.21%			1.24%	j		1.27%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		3.67%	c		1.95%			1.57%			2.05%	d		2.02%	e		1.28%
Supplemental data
Net assets, end of period (000’s)		$5,219,814			$7,683,644			$7,461,444			$9,589,033			$10,498,722			$11,274,721
Portfolio turnover rate		10.84%			14.08%			14.70%			17.50%			17.01%			21.79%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.68%.

^dNet investment income per share includes approximately $0.20 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.43%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.69%.

^fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

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FINANCIAL HIGHLIGHTS

Franklin Mutual Global Discovery Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class C
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$30.46			$26.25			$31.44			$30.22			$28.55			$32.49
Income from investment operationsa:
Net investment incomeb		0.37	c		0.36			0.26			0.41	d		0.36	e		0.18
Net realized and unrealized gains (losses)		(7.09	)		5.74			(3.98	)		2.23			2.97			(1.64	)
Total from investment operations		(6.72	)		6.10			(3.72	)		2.64			3.33			(1.46	)
Less distributions from:
Net investment income		—			(0.34	)		(0.10	)		(0.46	)		(0.37	)		(0.24	)
Net realized gains		—			(1.55	)		(1.37	)		(0.96	)		(1.29	)		(2.24	)
Total distributions		—			(1.89	)		(1.47	)		(1.42	)		(1.66	)		(2.48	)
Net asset value, end of period		$23.74			$30.46			$26.25			$31.44			$30.22			$28.55
Total returnf		(22.06)%			23.43%			(11.70)%			8.78%			11.70%			(4.33)%
Ratios to average net assetsg
Expensesh,i		2.03%	j		2.00%	j		1.97%	j		1.96%			1.99%	j		1.99%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		2.92%	c		1.20%			0.82%			1.30%	d		1.27%	e		0.56%
Supplemental data
Net assets, end of period (000’s)		$550,455			$872,717			$1,054,412			$2,438,507			$2,758,563			$2,983,216
Portfolio turnover rate		10.84%			14.08%			14.70%			17.50%			17.01%			21.79%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.93%.

^dNet investment income per share includes approximately $0.20 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.68%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.94%.

^fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         13

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Global Discovery Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class R
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$30.08			$25.97			$31.37			$30.17			$28.51			$32.43
Income from investment operationsa:
Net investment incomeb		0.42	c		0.50			0.41			0.57	d		0.50	e		0.35
Net realized and unrealized gains (losses)		(7.00	)		5.69			(3.97	)		2.22			2.98			(1.64	)
Total from investment operations		(6.58	)		6.19			(3.56	)		2.79			3.48			(1.29	)
Less distributions from:
Net investment income		—			(0.53	)		(0.47	)		(0.63	)		(0.53	)		(0.39	)
Net realized gains		—			(1.55	)		(1.37	)		(0.96	)		(1.29	)		(2.24	)
Total distributions		—			(2.08	)		(1.84	)		(1.59	)		(1.82	)		(2.63	)
Net asset value, end of period		$23.50			$30.08			$25.97			$31.37			$30.17			$28.51
Total returnf		(21.88)%			24.09%			(11.24)%			9.31%			12.28%			(3.82)%
Ratios to average net assetsg
Expensesh,i		1.53%	j		1.50%	j		1.47%	j		1.46%			1.49%	j		1.49%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		3.42%	c		1.70%			1.32%			1.80%	d		1.77%	e		1.06%
Supplemental data
Net assets, end of period (000’s)		$175,002			$251,089			$274,086			$398,692			$444,813			$468,425
Portfolio turnover rate		10.84%			14.08%			14.70%			17.50%			17.01%			21.79%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.43%.

^dNet investment income per share includes approximately $0.20 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.18%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.44%.

^fTotal return is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

14         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Global Discovery Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class R6
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$31.17			$26.85			$32.41			$31.13			$29.35			$33.33
Income from investment operationsa:
Net investment incomeb		0.52	c		0.70			0.62			0.75	d		0.61	e		0.55
Net realized and unrealized gains (losses)		(7.26	)		5.90			(4.13	)		2.34			3.19			(1.69	)
Total from investment operations		(6.74	)		6.60			(3.51	)		3.09			3.80			(1.14	)
Less distributions from:
Net investment income		—			(0.73	)		(0.68	)		(0.85	)		(0.73	)		(0.60	)
Net realized gains		—			(1.55	)		(1.37	)		(0.96	)		(1.29	)		(2.24	)
Total distributions		—			(2.28	)		(2.05	)		(1.81	)		(2.02	)		(2.84	)
Net asset value, end of period		$24.43			$31.17			$26.85			$32.41			$31.13			$29.35
Total returnf		(21.62)%			24.80%			(10.67)%			9.98%			13.02%			(3.23)%
Ratios to average net assetsg
Expenses before waiver and payments by affiliatesh		0.93%			0.90%			0.88%			0.84%			0.85%			0.84%
Expenses net of waiver and payments by affiliatesh,i		0.92%			0.89%			0.87%			0.84%			0.85%	j		0.84%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		4.03%	c		2.31%			1.92%			2.42%	d		2.41%	e		1.71%
Supplemental data
Net assets, end of period (000’s)		$891,006			$1,295,457			$1,418,812			$2,221,338			$528,617			$229,765
Portfolio turnover rate		10.84%			14.08%			14.70%			17.50%			17.01%			21.79%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.04%.

^dNet investment income per share includes approximately $0.20 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.80%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.08%.

^fTotal return is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         15

FRANKLIN MUTUAL SERIES FUNDS

Statement of Investments, June 30, 2020 (unaudited)

Franklin Mutual Global Discovery Fund

	Country		Shares/ Warrants		Value
Common Stocks and Other Equity Interests 90.8%
Aerospace & Defense 1.3%
BAE Systems PLC		United Kingdom		21,813,405	$	130,427,103
Auto Components 0.0%†
a,b,cInternational Automotive Components Group Brazil LLC		Brazil		3,819,425		71,821
Automobiles 0.7%
General Motors Co.		United States		2,874,252		72,718,576
Banks 7.3%
Citigroup Inc.		United States		2,029,040		103,683,944
First Horizon National Corp.		United States		7,743,203		77,122,302
ING Groep NV		Netherlands		19,138,491		133,400,705
JPMorgan Chase & Co.		United States		1,676,856		157,725,075
Standard Chartered PLC		United Kingdom		21,802,525		118,182,231
Wells Fargo & Co.		United States		6,026,804		154,286,182
						744,400,439
Beverages 0.8%
Heineken NV		Netherlands		936,911		86,370,267
Building Products 2.1%
Johnson Controls International PLC		United States		6,119,300		208,912,902
Capital Markets 3.3%
Credit Suisse Group AG		Switzerland		16,988,277		176,760,761
aDeutsche Bank AG		Germany		10,513,763		100,293,370
Guotai Junan Securities Co. Ltd.		China		41,520,689		57,742,144
						334,796,275
Chemicals 2.7%
BASF SE		Germany		2,980,897		167,419,982
Covestro AG		Germany		2,915,166		111,023,668
						278,443,650
Communications Equipment 1.3%
Cisco Systems Inc.		United States		2,838,530		132,389,039
Construction Materials 1.2%
aLafargeHolcim Ltd., B		Switzerland		2,852,492		125,669,452
Consumer Finance 1.1%
Capital One Financial Corp.		United States		1,804,365		112,935,205
Containers & Packaging 1.3%
International Paper Co.		United States		3,679,148		129,542,801
Diversified Financial Services 3.3%
aBerkshire Hathaway Inc., B		United States		685,400		122,350,754
M&G PLC		United Kingdom		24,508,843		50,889,194
Voya Financial Inc.		United States		3,426,353		159,839,367
						333,079,315
Entertainment 2.3%
The Walt Disney Co.		United States		2,097,061		233,843,272

16         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

	Country		Shares/ Warrants		Value
Common Stocks and Other Equity Interests (continued)
Food & Staples Retailing 1.0%
Walgreens Boots Alliance Inc.		United States		2,329,672	$	98,754,796
Food Products 2.1%
The Kraft Heinz Co.		United States		6,638,200		211,692,198
Health Care Equipment & Supplies 2.9%
Medtronic PLC		United States		3,251,401		298,153,472
Health Care Providers & Services 3.8%
Anthem Inc.		United States		496,728		130,629,530
CVS Health Corp.		United States		3,993,966		259,487,971
						390,117,501
Hotels, Restaurants & Leisure 1.1%
aAccor SA		France		3,991,363		108,921,089
Industrial Conglomerates 0.9%
General Electric Co.		United States		12,864,150		87,862,145
Insurance 6.9%
Alleghany Corp.		United States		76,761		37,546,875
China Pacific Insurance Group Co. Ltd., H		China		45,099,632		121,212,847
Direct Line Insurance Group PLC		United Kingdom		668,514		2,241,474
Everest Re Group Ltd.		United States		282,300		58,210,260
The Hartford Financial Services Group Inc.		United States		5,759,287		222,020,514
NN Group NV		Netherlands		7,637,416		256,653,645
						697,885,615
IT Services 1.9%
Cognizant Technology Solutions Corp., A		United States		3,420,390		194,346,560
Machinery 0.9%
aCNH Industrial NV		United Kingdom		5,804,196		40,774,378
aCNH Industrial NV, special voting		United Kingdom		7,338,645		51,553,857
						92,328,235
Media 2.8%
aCharter Communications Inc., A		United States		521,865		266,172,024
a,diHeartMedia Inc., A		United States		2,634,302		21,996,422
a,biHeartMedia Inc., B		United States		44,430		315,342
aiHeartMedia Inc., wts., A, 5/01/39		United States		292		2,438
						288,486,226
Oil, Gas & Consumable Fuels 8.9%
Ampol Ltd.		Australia		442,183		9,008,765
BP PLC		United Kingdom		43,368,646		166,140,345
Canadian Natural Resources Ltd.		Canada		6,183,700		107,271,286
ENEOS Holdings Inc.		Japan		23,391,167		83,379,295
Kinder Morgan Inc.		United States		10,580,858		160,511,616
Royal Dutch Shell PLC, A (EUR Traded)		United Kingdom		2,310,469		37,817,534
Royal Dutch Shell PLC, A (GBP Traded)		United Kingdom		6,164,658		98,699,969
Royal Dutch Shell PLC, B		United Kingdom		79,534		1,205,710

franklintempleton.com Semiannual Report         17

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

	Country		Shares/ Warrants		Value
Common Stocks and Other Equity Interests (continued)
Oil, Gas & Consumable Fuels (continued)
The Williams Cos. Inc.		United States		12,380,235	$	235,472,070
						899,506,590
Pharmaceuticals 12.1%
aElanco Animal Health Inc.		United States		1,336,464		28,667,153
Eli Lilly and Co.		United States		1,293,426		212,354,681
GlaxoSmithKline PLC		United Kingdom		17,375,814		350,971,687
Merck & Co. Inc.		United States		4,071,173		314,823,808
Novartis AG		Switzerland		31,288		2,725,842
Novartis AG, ADR		Switzerland		3,631,876		317,208,050
						1,226,751,221
Semiconductors & Semiconductor Equipment 1.4%
aRenesas Electronics Corp.		Japan		27,484,238		141,280,049
Software 4.3%
aAvaya Holdings Corp.		United States		537		6,637
aAvaya Holdings Corp., wts., 12/15/22		United States		401,411		501,764
aCheck Point Software Technologies Ltd.		Israel		2,433,172		261,395,668
Oracle Corp.		United States		3,083,000		170,397,410
						432,301,479
Specialty Retail 0.4%
aDufry AG		Switzerland		1,213,846		36,358,961
Technology Hardware, Storage & Peripherals 4.9%
Hewlett Packard Enterprise Co.		United States		3,025,336		29,436,519
Samsung Electronics Co. Ltd.		South Korea		7,324,785		325,118,521
Western Digital Corp.		United States		3,247,529		143,378,406
						497,933,446
Textiles, Apparel & Luxury Goods 1.0%
Cie Financiere Richemont SA		Switzerland		1,537,099		99,143,370
Tobacco 4.0%
Altria Group Inc.		United States		2,606,727		102,314,035
British American Tobacco PLC		United Kingdom		5,861,984		224,814,449
British American Tobacco PLC, ADR		United Kingdom		2,178,905		84,585,092
						411,713,576
Wireless Telecommunication Services 0.8%
Vodafone Group PLC		United Kingdom		54,326,638		86,362,758
Total Common Stocks and Other Equity Interests (Cost $8,983,265,098)						9,223,499,404
Preferred Stocks (Cost $353,608,119) 2.6%
Automobiles 2.6%
aVolkswagen AG, pfd.		Germany		1,761,537		267,729,825

18         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

	Country		Principal Amount		Value
Corporate Bonds, Notes and Senior Floating Rate Interests 1.8%
eAmerican Airlines Inc., senior secured note, 144A, 11.75%, 7/15/25		United States	$	91,146,000	$	85,885,964
eMacy’s Inc., senior secured note, first lien, 144A, 8.375%, 6/15/25		United States		19,531,000		19,469,966
f,g,h,iMileage Plus Holdings LLC, Term Loan B, TBD, 6/25/27		United States		12,367,000		12,296,335
e,jMileage Plus Holdings LLC/Mileage Plus Intellectual Property Assets Ltd., senior secured note, first lien, 144A, 6.50%, 6/20/27		United States		47,777,000		48,015,885
gOccidental Petroleum Corp., senior note, FRN, 1.842%, (3-month USD LIBOR + 1.45%), 8/15/22		United States		13,499,000		12,424,254
Total Corporate Bonds, Notes and Senior Floating Rate Interests (Cost $179,286,439)						178,092,404
Corporate Notes in Reorganization 0.9%
kFrontier Communications Corp.,
senior note, 10.50%, 9/15/22		United States		117,895,000		41,088,176
senior note, 11.00%, 9/15/25		United States		133,179,000		46,475,476
Total Corporate Notes in Reorganization (Cost $234,025,004)						87,563,652
			Shares
Companies in Liquidation 0.0%†
a,b,lTribune Media Co., Litigation Trust, Contingent Distribution		United States		1,295,342		—
a,b,lVistra Energy Corp., Litigation Trust, Contingent Distribution		United States		142,325,613		78,279
a,b,lWalter Energy Inc., Litigation Trust, Contingent Distribution		United States		30,996,000		—
Total Companies in Liquidation (Cost $4,500,343)						78,279
Total Investments before Short Term Investments (Cost $9,754,685,003)						9,756,963,564
			Principal Amount
Short Term Investments 3.3%
Corporate Notes (Cost $3,871,320) 0.0%†
Occidental Petroleum Corp., senior note, 4.85%, 3/15/21		United States	$	4,222,000		4,208,806
U.S. Government and Agency Securities 3.3%
mFHLB, 7/01/20		United States		25,000,000		25,000,000
mU.S. Treasury Bill,
7/02/20		United States		131,500,000		131,499,690
7/16/20 - 8/13/20		United States		113,000,000		112,992,461
n11/12/20 - 11/27/20		United States		64,000,000		63,962,528
Total U.S. Government and Agency Securities (Cost $333,377,686)						333,454,679

franklintempleton.com Semiannual Report         19

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

	Country		Principal Amount		Value
Short Term Investments (continued)
oInvestments from Cash Collateral Received for Loaned Securities 0.0%†
			Shares
Money Market Funds (Cost $219,000) 0.0%†
p,qInstitutional Fiduciary Trust Money Market Portfolio, 0.00%		United States		219,000	$	219,000
			Principal Amount
Repurchase Agreements (Cost $55,117) 0.0%†
rJoint Repurchase Agreement, 0.07%, 7/01/20 (Maturity Value $55,117)
BNP Paribas Securities Corp.
Collateralized by U.S. Treasury Bonds, 7.875%, 2/5/21; U.S. Treasury Notes, 0.125% - 2.875%, 12/31/20 - 1/31/24; U.S. Treasury Strips, 8/15/20 - 11/15/22 (valued at $56,219)		United States	$	55,117		55,117
Total Investments from Cash Collateral Received for Loaned Securities (Cost $274,117)						274,117
Total Investments (Cost $10,092,208,126) 99.4%						10,094,901,166
Other Assets, less Liabilities 0.6%						59,673,771
Net Assets 100.0%					$	10,154,574,937

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bFair valued using significant unobservable inputs. See Note 15 regarding fair value measurements.

^cSee Note 11 regarding restricted securities.

^dA portion or all of the security is on loan at June 30, 2020. See Note 1(g).

^eSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At June 30, 2020, the aggregate value of these securities was $153,371,815, representing 1.5% of net assets.

^fSecurity purchased on a delayed delivery basis. See Note 1(d).

^gThe coupon rate shown represents the rate at period end.

^hA portion or all of the security represents an unsettled loan commitment. The coupon rate is to-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.

ⁱSee Note 1(h) regarding senior floating rate interests.

^jSecurity purchased on a when-issued basis. See Note 1(d).

^kSee Note 8 regarding credit risk and defaulted securities.

^lContingent distributions represent the right to receive additional distributions, if any, during the reorganization of the underlying company. Shares represent total underlying principal of debt securities.

^mThe security was issued on a discount basis with no stated coupon rate.

ⁿA portion or all of the security has been segregated as collateral for open forward exchange contracts. At June 30, 2020, the aggregate value of these securities pledged amounted to $6,527,527, representing 0.1% of net assets.

^oSee Note 1(g) regarding securities on loan.

^pSee Note 3(f) regarding investments in affiliated management investment companies.

^qThe rate shown is the annualized seven-day effective yield at period end.

^rSee Note 1(c) regarding joint repurchase agreement.

20         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

At June 30, 2020, the Fund had the following futures contracts outstanding. See Note 1(e).

Futures Contracts

Description	Type	Number of Contracts	Notional Amount	*	Expiration Date	Value/ Unrealized Appreciation (Depreciation)
Currency Contracts
EUR/USD	Short	4,656	$654,953,700		9/14/20	$  4,297,404
GBP/USD	Short	3,641	282,109,231		9/14/20	7,756,813
Total Futures Contracts						$12,054,217

*As of period end.

At June 30, 2020, the Fund had the following forward exchange contracts outstanding. See Note 1(e).

Forward Exchange Contracts

Currency	Counterparty	a	Type	Quantity		Contract Amount	Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Australian Dollar	HSBK		Buy	878,161	$	602,453	7/15/20	$	3,576	$	—
Australian Dollar	UBSW		Buy	1,819,659		1,262,257	7/15/20		—		(6,489	)
Australian Dollar	UBSW		Buy	73,830,967		50,783,192	7/15/20		168,442		—
Australian Dollar	UBSW		Sell	89,491,464		61,786,965	7/15/20		27,834		—
Euro	BOFA		Buy	28,602,948		31,992,239	7/15/20		152,170		—
Euro	BOFA		Sell	71,343,339		78,717,198	7/15/20		—		(1,459,488	)
Euro	BONY		Buy	9,675,895		10,631,380	7/15/20		242,532		—
Euro	HSBK		Buy	26,948,715		30,267,204	7/15/20		18,155		—
Euro	HSBK		Buy	31,939,656		35,948,995	7/15/20		—		(54,743	)
Euro	HSBK		Sell	19,764,111		21,798,436	7/15/20		—		(412,761	)
Euro	HSBK		Sell	22,735,660		25,580,573	7/15/20		29,907		—
Euro	SSBT		Sell	19,229,538		21,114,687	7/15/20		—		(495,749	)
Euro	SSBT		Sell	22,735,660		25,578,526	7/15/20		27,861		—
Euro	UBSW		Sell	26,309,131		29,117,154	7/15/20		—		(449,432	)
British Pound	BOFA		Buy	4,820,062		5,758,013	7/16/20		214,830		—
British Pound	BOFA		Buy	8,935,376		11,328,002	7/16/20		—		(255,614	)
British Pound	BOFA		Sell	2,062,383		2,710,917	7/16/20		155,289		—
British Pound	BOFA		Sell	12,418,623		15,020,697	7/16/20		—		(368,002	)
British Pound	HSBK		Buy	5,667,900		6,965,113	7/16/20		58,340		—
British Pound	HSBK		Buy	9,251,925		11,736,212	7/16/20		—		(271,568	)
British Pound	HSBK		Sell	57,768,777		75,527,262	7/16/20		3,942,327		—
British Pound	SSBT		Sell	50,922,516		66,540,706	7/16/20		3,439,406		—
South Korean Won	HSBK		Buy	23,133,144,184		19,016,218	7/17/20		270,742		—
South Korean Won	HSBK		Sell	1,547,002,789		1,262,138	7/17/20		—		(27,655	)
South Korean Won	HSBK		Sell	101,814,702,911		87,665,340	7/17/20		2,778,654		—
South Korean Won	UBSW		Buy	9,229,229,100		7,768,711	7/17/20		—		(73,962	)
South Korean Won	UBSW		Buy	28,603,285,425		23,784,538	7/17/20		63,079		—
South Korean Won	UBSW		Sell	184,310,510,898		158,481,556	7/17/20		4,815,064		—
British Pound	BOFA		Buy	8,500,000		10,779,615	8/14/20		—		(245,087	)
British Pound	HSBK		Sell	32,795,651		42,713,876	8/14/20		2,068,381		—

franklintempleton.com Semiannual Report         21

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
British Pound		SSBT		Sell		32,795,651	$	42,720,271		8/14/20	$	2,074,776	$	—
Swiss Franc		UBSW		Sell		160,460,421		170,751,621		8/17/20		1,143,523		—
Euro		BOFA		Sell		17,386,165		19,057,524		8/18/20		—		(496,502	)
Euro		BONY		Sell		13,710,204		14,941,929		8/18/20		—		(477,786	)
Euro		HSBK		Sell		28,704,035		31,411,544		8/18/20		—		(871,566	)
Euro		UBSW		Sell		215,407,019		236,243,924		8/18/20		—		(6,021,960	)
Euro		BOFA		Sell		11,042,488		12,075,210		10/07/20		—		(358,869	)
Euro		BONY		Sell		11,122,721		12,540,055		10/07/20		15,634		—
Euro		BONY		Sell		17,743,631		19,432,364		10/07/20		—		(547,345	)
Euro		HSBK		Sell		17,491,264		19,878,641		10/07/20		183,104		—
Euro		HSBK		Sell		54,242,146		59,517,633		10/07/20		—		(1,560,185	)
Euro		SSBT		Sell		11,122,720		12,527,531		10/07/20		3,110		—
Euro		UBSW		Sell		23,221,638		25,419,596		10/07/20		—		(728,466	)
Euro		UBSW		Sell		25,580,138		28,959,042		10/07/20		155,258		—
South Korean Won		HSBK		Sell		15,711,663,825		13,191,439		11/12/20		74,776		—
South Korean Won		HSBK		Sell		67,982,187,235		55,734,324		11/12/20		—		(1,019,655	)
South Korean Won		UBSW		Sell		76,348,239,051		62,554,887		11/12/20		—		(1,183,375	)
British Pound		SSBT		Sell		4,512,637		5,531,771		11/23/20		—		(64,656	)
British Pound		UBSW		Sell		2,771,067		3,419,650		11/23/20		—		(16,938	)
British Pound		UBSW		Sell		21,372,612		27,006,048		11/23/20		500,423		—
Euro		BOFA		Sell		11,308,700		12,592,813		11/23/20		—		(157,553	)
Euro		HSBK		Sell		11,107,470		12,602,480		11/23/20		78,998		—
Euro		HSBK		Sell		20,878,625		23,267,469		11/23/20		—		(272,823	)
Euro		SSBT		Sell		11,179,243		12,671,895		11/23/20		67,491		—
Euro		SSBT		Sell		18,606,151		20,708,581		11/23/20		—		(269,535	)
Euro		UBSW		Sell		11,107,470		12,583,708		11/23/20		60,226		—
Euro		UBSW		Sell		95,998,206		105,760,872		11/23/20		—		(2,475,461	)
Total Forward Exchange Contracts											$	22,833,908	$	(20,643,225	)
Net unrealized appreciation (depreciation)											$	2,190,683

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Note 12 regarding other derivative information.

See Abbreviations on page 41.

22         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities

June 30, 2020 (unaudited)

Franklin Mutual Global Discovery Fund

Assets:
Investments in securities:
Cost - Unaffiliated issuers	$10,091,934,009
Cost - Non-controlled affiliates (Note 3f)	219,000
Cost - Unaffiliated repurchase agreements	55,117
Value - Unaffiliated issuers+	$10,094,627,049
Value - Non-controlled affiliates (Note 3f)	219,000
Value - Unaffiliated repurchase agreements	55,117
Cash	75,933
Receivables:
Investment securities sold	84,380,829
Capital shares sold	4,946,791
Dividends and interest	31,280,555
European Union tax reclaims	8,595,828
Deposits with brokers for:
Futures contracts.	21,601,453
Unrealized appreciation on OTC forward exchange contracts	22,833,908
Other assets	2,925,497
Total assets	10,271,541,960
Liabilities:
Payables:
Investment securities purchased	59,294,490
Capital shares redeemed	20,178,864
Management fees	7,322,452
Distribution fees	1,656,965
Transfer agent fees	2,070,819
Trustees’ fees and expenses	1,229,336
Variation margin on futures contracts	2,405,819
Payable upon return of securities loaned	274,117
Unrealized depreciation on OTC forward exchange contracts	20,643,225
Accrued expenses and other liabilities	1,890,936
Total liabilities	116,967,023
Net assets, at value	$10,154,574,937
Net assets consist of:
Paid-in capital	$10,155,789,167
Total distributable earnings (losses)	(1,214,230	)
Net assets, at value	$10,154,574,937

⁺Includes securities loaned $            261,355

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         23

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2020 (unaudited)

Franklin Mutual Global Discovery Fund

Class Z:
Net assets, at value	$3,318,296,382
Shares outstanding	135,833,200
Net asset value and maximum offering price per share	$24.43
Class A:
Net assets, at value	$5,219,814,497
Shares outstanding	218,700,103
Net asset value per sharea	$23.87
Maximum offering price per share (net asset value per share ÷ 94.50%)	$25.26
Class C:
Net assets, at value	$ 550,455,127
Shares outstanding	23,183,212
Net asset value and maximum offering price per sharea	$23.74
Class R:
Net assets, at value	$ 175,002,442
Shares outstanding	7,447,050
Net asset value and maximum offering price per share	$23.50
Class R6:
Net assets, at value	$ 891,006,489
Shares outstanding	36,470,109
Net asset value and maximum offering price per share	$24.43

^aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.

24         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual Global Discovery Fund

Investment income:
Dividends:(net of foreign taxes)*
Unaffiliated issuers	$	294,183,290
Interest:
Unaffiliated issuers		11,227,128
Adjustment for uncollectible interest (Note 8)		(13,214,014	)
Income from securities loaned:
Unaffiliated entities (net of fees and rebates)		1,599
Non-controlled affiliates (Note 3f)		64
Total investment income		292,198,067
Expenses:
Management fees (Note 3a)		49,818,681
Distribution fees: (Note 3c)
Class A		7,504,910
Class C		3,297,904
Class R		484,883
Transfer agent fees: (Note 3e)
Class Z		2,501,880
Class A		3,795,678
Class C		417,788
Class R		123,015
Class R6		154,905
Custodian fees (Note 4)		322,430
Reports to shareholders		620,367
Registration and filing fees		121,410
Professional fees		166,443
Trustees’ fees and expenses		503,438
Dividends on securities sold short		1,516,483
Other		204,795
Total expenses		71,555,010
Expense reductions (Note 4)		(59,520	)
Expenses waived/paid by affiliates (Note 3f and 3g)		(35,261	)
Net expenses		71,460,229
Net investment income		220,737,838
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		(370,692,737	)
Foreign currency transactions		(822,706	)
Forward exchange contracts		6,246,593
Futures contracts		6,989,036
Securities sold short		(8,011,183	)
Net realized gain (loss)		(366,290,997	)
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(3,245,041,543	)
Translation of other assets and liabilities denominated in foreign currencies		(272,443	)
Forward exchange contracts		38,426,662
Futures contracts		24,025,068
Securities sold short		10,227,891

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         25

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations (continued)

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual Global Discovery Fund

Net change in unrealized appreciation (depreciation)		(3,172,634,365	)
Net realized and unrealized gain (loss)		(3,538,925,362	)
Net increase (decrease) in net assets resulting from operations	$	(3,318,187,524	)
*Foreign taxes withheld on dividends	$	7,400,860

26         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

Franklin Mutual Global Discovery Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31, 2019
Increase (decrease) in net assets:
Operations:
Net investment income	$	220,737,838		$	314,928,953
Net realized gain (loss)		(366,290,997	)		677,497,640
Net change in unrealized appreciation (depreciation)		(3,172,634,365	)		2,424,756,459
Net increase (decrease) in net assets resulting from operations		(3,318,187,524	)		3,417,183,052
Distributions to shareholders:
Class Z		—			(361,251,360	)
Class A		—			(528,196,610	)
Class C		—			(53,529,898	)
Class R		—			(17,206,023	)
Class R6		—			(92,112,429	)
Total distributions to shareholders		—			(1,052,296,320	)
Capital share transactions: (Note 2)
Class Z		(724,222,497	)		(733,602,714	)
Class A		(791,476,201	)		(931,107,368	)
Class C		(132,261,233	)		(339,610,836	)
Class R		(23,798,890	)		(64,450,784	)
Class R6		(135,172,914	)		(339,450,065	)
Total capital share transactions		(1,806,931,735	)		(2,408,221,767	)
Net increase (decrease) in net assets		(5,125,119,259	)		(43,335,035	)
Net assets:
Beginning of period		15,279,694,196			15,323,029,231
End of period	$	10,154,574,937		$	15,279,694,196

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         27

FRANKLIN MUTUAL SERIES FUNDS

Notes to Financial Statements (unaudited)

Franklin Mutual Global Discovery Fund

1.   Organization and Significant Accounting Policies

Franklin Mutual Series Funds (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of six separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Mutual Global Discovery Fund (Fund) is included in this report. The Fund offers five classes of shares: Class Z, Class A, Class C, Class R and Class R6. Class C shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees.

The following summarizes the Fund’s significant accounting policies.

a.   Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The Fund may utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and derivative financial instruments 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.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.

Investments in open-end mutual funds are valued at the closing NAV. Investments in repurchase agreements 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.

28         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

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 June 30, 2020, certain securities may have been fair valued using these procedures, in which case the securities were categorized as Level 2 inputs within the fair value hierarchy. See the Fair Value Measurements note for more information.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant 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.   Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2020.

franklintempleton.com Semiannual Report         29

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

1.   Organization and Significant Accounting

Policies (continued)

d.   Securities Purchased on a When-Issued or Delayed Delivery Basis

The Fund purchases securities on a when-issued or delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.

e.   Derivative Financial Instruments

The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party

the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At June 30, 2020, the Fund had OTC derivatives in a net liability position of $7,608,026 and the aggregate value of collateral pledged for such contracts was $6,527,527.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

At June 30, 2020, the Fund received $11,482,375 in U.K. Treasury Bonds and U.S. Treasury Bills, Bonds and Notes as collateral for derivatives.

The Fund entered into exchange traded futures contracts primarily to manage exposure to certain foreign currencies. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund,

30         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage 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 12 regarding other derivative information.

f.  Securities Sold Short

The Fund is engaged in selling securities short, which obligates the Fund to replace a borrowed security with the same security at current fair value. The Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Gains are limited to the price at which the Fund sold the security short, while losses are potentially unlimited in size.

The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale to the extent necessary to meet margin requirements until the short position is closed out. A deposit must also be maintained with the Fund’s custodian/counterparty broker consisting of cash and/or securities having a value equal to a specified percentage of the value of the securities sold short. The Fund is obligated to pay fees for borrowing the securities sold short and is required to pay the counterparty any dividends and/or interest due on securities sold short. Such dividends and/or interest and any security borrowing fees are recorded as an expense to the Fund. At June 30, 2020, the Fund had no securities sold short.

g.  Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral 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. The

collateral 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, and/or a joint repurchase agreement in 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 the 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.

h.  Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

i.  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

franklintempleton.com Semiannual Report         31

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

1.  Organization and Significant Accounting

Policies (continued)

i.  Income and Deferred Taxes (continued)

gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

As a result of several court cases, in certain countries across the European Union, the Fund filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statement of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, EU reclaims received by the Fund, if any, reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns.

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2020, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

j.  Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and dividends

declared on securities sold short are 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.

k.  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.

l.  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.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

2.  Shares of Beneficial Interest

At June 30, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2020						Year Ended December 31, 2019
	Shares			Amount			Shares			Amount
Class Z Shares:
Shares sold		6,067,478		$	151,432,214			12,263,198		$	369,164,159
Shares issued in reinvestment of distributions		—			—			10,621,505			326,481,046
Shares issued on reorganization (Note 13)		1,077,880			35,598,560			—			—
Shares redeemed		(37,297,934	)		(911,253,271	)		(47,272,140	)		(1,429,247,919	)
Net increase (decrease)		(30,152,576	)	$	(724,222,497	)		(24,387,437	)	$	(733,602,714	)
Class A Shares:
Shares solda		8,302,876		$	206,458,462			17,462,220		$	518,262,717
Shares issued in reinvestment of distributions		—			—			17,190,278			516,611,982
Shares issued on reorganization (Note 13)		1,407,732			45,465,152			—			—
Shares redeemed		(42,858,875	)		(1,043,399,815	)		(66,274,047	)		(1,965,982,067	)
Net increase (decrease)		(33,148,267	)	$	(791,476,201	)		(31,621,549	)	$	(931,107,368	)
Class C Shares:
Shares sold		844,384		$	20,403,292			1,771,751		$	52,145,801
Shares issued in reinvestment of distributions		—			—			1,728,177			51,590,928
Shares issued on reorganization (Note 13)		342,264			11,024,642			—			—
Shares redeemeda		(6,650,341	)		(163,689,167	)		(15,014,827	)		(443,347,565	)
Net increase (decrease)		(5,463,693	)	$	(132,261,233	)		(11,514,899	)	$	(339,610,836	)
Class R Shares:
Shares sold		659,823		$	14,900,976			673,375		$	19,591,339
Shares issued in reinvestment of distributions		—			—			571,874			16,917,190
Shares issued on reorganization (Note 13)		52,424			1,668,374			—			—
Shares redeemed		(1,613,665	)		(40,368,240	)		(3,452,518	)		(100,959,313	)
Net increase (decrease)		(901,418	)	$	(23,798,890	)		(2,207,269	)	$	(64,450,784	)
Class R6 Shares:
Shares sold		4,495,098		$	107,882,929			5,767,180		$	173,953,547
Shares issued in reinvestment of distributions		—			—			2,704,420			83,110,071
Shares issued on reorganization (Note 13)		152,681			5,040,894			—			—
Shares redeemed		(9,732,809	)		(248,096,737	)		(19,752,108	)		(596,513,683	)
Net increase (decrease)		(5,085,030	)	$	(135,172,914	)		(11,280,508	)	$	(339,450,065	)

^aMay include a portion of Class C shares that were automatically converted to Class A.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery 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:

Subsidiary	Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a.  Management Fees

The Fund pays an investment management fee to Franklin Mutual based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.875%	Up to and including $4 billion
0.845%	Over $4 billion, up to and including $7 billion
0.825%	Over $7 billion, up to and including $10 billion
0.805%	Over $10 billion, up to and including $13 billion
0.785%	Over $13 billion, up to and including $16 billion
0.765%	Over $16 billion, up to and including $19 billion
0.745%	Over $19 billion, up to and including $22 billion
0.725%	Over $22 billion, up to and including $25 billion
0.705%	Over $25 billion, up to and including $28 billion
0.685%	In excess of $28 billion

For the period ended June 30, 2020, the annualized gross effective investment management fee rate was 0.845% of the Fund’s average daily net assets.

b.  Administrative Fees

Under an agreement with Franklin Mutual, FT Services provides administrative services to the Fund. The fee is paid by Franklin Mutual 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 Z and Class R6 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.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:

Class A	0.35	%
Class C	1.00	%
Class R	0.50	%

The Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.

d.  Sales Charges/Underwriting Agreements

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the period:

Sales charges retained net of commissions paid to unaffiliated brokers/dealers	$	232,871
CDSC retained	$	21,895

e.  Transfer Agent Fees

Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. The fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6 reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.

For the period ended June 30, 2020, the Fund paid transfer agent fees of $6,993,266, of which $3,209,323 was retained by Investor Services.

f.  Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended June 30, 2020, the Fund held investments in affiliated management investment companies as follows:

	Value at Beginning of Period		Purchases		Sales			Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Value at End of Period		Number of Shares Held at End of Period		Income from securities loaned
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 0.00%		$    —	$	6,084,000	$	(5,865,000	)		$    —		$    —	$	219,000		219,000		$64

g.  Waiver and Expense Reimbursements

Investor Services has contractually agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.03% based on the average net assets of the class until April 30, 2021. Prior to May 1, 2020, the Class R6 transfer agent fees were limited to 0.02%.

franklintempleton.com Semiannual Report         35

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

3.  Transactions with Affiliates (continued)

h.  Interfund Transactions

The Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the period ended June 30, 2020, these purchase and sale transactions aggregated $0 and $1,233,191, respectively.

4.  Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2020, the custodian fees were reduced as noted in the Statement of Operations.

5.  Independent Trustees’ Retirement Plan

On January 1, 1993, the Trust adopted an Independent Trustees’ Retirement Plan (Plan). The Plan is an unfunded defined benefit plan that provides benefit payments to Trustees whose length of service and retirement age meets the eligibility requirements of the Plan. Benefits under the Plan are based on years of service and fees paid to each trustee at the time of retirement. Effective in December 1996, the Plan was closed to new participants.

During the period ended June 30, 2020, the Fund’s projected benefit obligation and benefit payments under the Plan were as follows:

aProjected benefit obligation at June 30, 2020.	$	1,217,079
bIncrease in projected benefit obligation	$	62,494
Benefit payments made to retired trustees	$	(8,021	)

^aThe projected benefit obligation is included in trustees’ fees and expenses in the Statement of Assets and Liabilities.

^bThe increase in projected benefit obligation is included in trustees’ fees and expenses in the Statement of Operations.

6.  Income Taxes

At June 30, 2020, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	10,057,199,669
Unrealized appreciation	$	1,862,833,141
Unrealized depreciation		(1,810,866,271	)
Net unrealized appreciation (depreciation)	$	51,966,870

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of foreign currency transactions.

7.  Investment Transactions

Purchases and sales of investments (excluding short term securities and securities sold short) for the period ended June 30, 2020, aggregated $1,242,918,297 and $2,764,620,638, respectively.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

At June 30, 2020, in connection with securities lending transactions, the Fund loaned equity investments and received $274,117 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.

8.  Credit Risk and Defaulted Securities

The Fund may purchase the pre-default or defaulted debt of distressed companies. Distressed companies are financially troubled and could be or are already involved in financial restructuring or bankruptcy. Risks associated with purchasing these securities include the possibility that the bankruptcy or other restructuring process takes longer than expected, or that distributions in restructuring are less than anticipated, either or both of which may result in unfavorable consequences to the Fund. If it becomes probable that the income on debt securities, including those of distressed companies, will not be collected, the Fund discontinues accruing income and recognizes an adjustment for uncollectible interest. For the period ended June 30, 2020, the Fund recorded an adjustment for uncollectible interest of $13,214,014, as noted in the Statement of Operations.

At June 30, 2020, the aggregate long value of distressed company securities for which interest recognition has been discontinued was $87,563,652, representing 0.9% of the Fund’s net assets. For information as to specific securities, see the accompanying Statement of Investments.

9.  Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local, regional and global economic, political and social conditions, which may result in greater market volatility. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in securities in Europe. In addition, certain foreign securities may not be as liquid as U.S. securities.

10.  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.

11.  Restricted Securities

The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.

At June 30, 2020, investments in restricted securities, excluding securities exempt from registration under the 1933 Act, were as follows:

Shares	Issuer	Acquisition Date		Cost		Value
3,819,425	International Automotive Components Group Brazil LLC (Value is 0.0%† of Net Assets)		4/13/06 - 12/26/08	$	2,536,498	$	71,821

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

11.  Restricted Securities (continued)

^†Rounds to less than 0.1% of net assets.

12.  Other Derivative Information

At June 30, 2020, investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:

	Asset Derivatives				Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin on futures contracts	$	12,054,217	a	Variation margin on futures contracts	$	—
	Unrealized appreciation on OTC forward exchange contracts		22,833,908		Unrealized depreciation on OTC forward exchange contracts		20,643,225
Totals		$	34,888,125			$	20,643,225

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/ payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

For the period ended June 30, 2020, the effect of derivative contracts in the Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Location	Net Realized Gain (Loss) for the Period		Statement of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:			Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Forward exchange contracts		$  6,246,593	Forward exchange contracts		$38,426,662
	Futures contracts		6,989,036	Futures contracts		24,025,068
Totals			$13,235,629			$62,451,730

For the period ended June 30, 2020, the average month end notional amount of futures contracts represented $1,082,142,159. The average month end contract value of forward exchange contracts was $2,321,290,950.

See Note 1(e) regarding derivative financial instruments.

13.  Reorganization

On February 21, 2020, Franklin Mutual Global Discovery Fund (Surviving Fund), pursuant to a plan of reorganization approved on December 6, 2019, by shareholders of Franklin Mutual International Fund (Acquired Fund), a series of Franklin Mutual Series Funds, acquired 100% of the Acquired Fund’s net assets, primarily made up of investment securities, which included $6,750,005 of unrealized depreciation, through a tax-free exchange of 3,032,981 shares of the Surviving Fund (valued at $98,797,622). Immediately after the completion of the reorganization, the combined net assets of the Surviving Fund were $14,766,810,033.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

The primary purpose for the reorganization was to combine the Acquired Fund with a larger fund that had lower annual fund operating expenses (before waivers), better long-term historical performance and similar investment goals, principal investment strategies and risks. The estimated cost of the reorganization was $175,174 of which the Surviving Fund and the Acquired Fund each paid 25% and Franklin Mutual paid 50%. The allocated portion of the Surviving Fund’s reorganization expenses are included with other expenses in the Statement of Operations.

Assuming the reorganization had been completed on January 1, 2020, the Surviving Fund’s pro forma results of operations, would have been as follows:

Period	Net Investment Income		Net Realized and Unrealized Gain (Loss)			Net Increase (Decrease) in Net Assets from Operations
For the period January 01, 2020 through June 30, 2020	$	220,734,931	$	(3,540,397,029	)	$	(3,319,662,098	)

Subsequent to the reorganization, the Surviving Fund has been managed as a single entity. Accordingly, it is impracticable to identify the amount of net investment income attributable to the Acquired Fund’s assets after the completion of the reorganization.

14.  Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 5, 2021. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended June 30, 2020, the Fund did not use the Global Credit Facility.

15.  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.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

15.  Fair Value Measurements (continued)

A summary of inputs used as of June 30, 2020, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:a
Equity Investments:b
Aerospace & Defense	$	—	$	130,427,103	$	—		$	130,427,103
Auto Components		—		—		71,821			71,821
Automobiles		72,718,576		267,729,825		—			340,448,401
Banks		492,817,503		251,582,936		—			744,400,439
Capital Markets		—		334,796,275		—			334,796,275
Chemicals		—		278,443,650		—			278,443,650
Construction Materials		—		125,669,452		—			125,669,452
Diversified Financial Services		282,190,121		50,889,194		—			333,079,315
Hotels, Restaurants & Leisure		—		108,921,089		—			108,921,089
Insurance		317,777,649		380,107,966		—			697,885,615
Machinery		—		92,328,235		—			92,328,235
Media		288,170,884		—		315,342			288,486,226
Oil, Gas & Consumable Fuels		503,254,972		396,251,618		—			899,506,590
Pharmaceuticals		873,053,692		353,697,529		—			1,226,751,221
Semiconductors & Semiconductor Equipment		—		141,280,049		—			141,280,049
Software		431,799,715		501,764		—			432,301,479
Specialty Retail		—		36,358,961		—			36,358,961
Technology Hardware, Storage & Peripherals		172,814,925		325,118,521		—			497,933,446
Textiles, Apparel & Luxury Goods		—		99,143,370		—			99,143,370
Tobacco		186,899,127		224,814,449		—			411,713,576
Wireless Telecommunication Services		—		86,362,758		—			86,362,758
All Other Equity Investments		2,184,920,158		—		—			2,184,920,158
Corporate Bonds, Notes and Senior Floating Rate Interests		—		178,092,404		—			178,092,404
Corporate Notes in Reorganization		—		87,563,652		—			87,563,652
Companies in Liquidation		—		—		78,279	c		78,279
Short Term Investments		308,673,679		29,263,923		—			337,937,602
Total Investments in Securities	$	6,115,091,001	$	3,979,344,723	$	465,442		$	10,094,901,166
Other Financial Instruments:
Futures Contracts	$	12,054,217	$	—	$	—		$	12,054,217
Forward Exchange Contracts		—		22,833,908		—			22,833,908
Total Other Financial Instruments	$	12,054,217	$	22,833,908	$	—		$	34,888,125
Liabilities:
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	20,643,225	$	—		$	20,643,225

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common and preferred stocks as well as other equity interests.

^cIncludes securities determined to have no value at June 30, 2020.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Global Discovery Fund (continued)

A reconciliation in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 assets and/or liabilities at the beginning and/or end of the period.

16. New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provides optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the LIBOR and other interbank-offered based reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management is currently evaluating the impact, if any, of applying this ASU.

17. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty		Currency		Selected Portfolio
BOFA	Bank of America Corp.	EUR	Euro	ADR	American Depositary Receipt
BONY	The Bank of New York Mellon Corp.	GBP	British Pound	FHLB	Federal Home Loan Bank
HSBK	HSBC Bank PLC	USD	United States Dollar	FRN	Floating Rate Note
SSBT	State Street Bank and Trust Co., N.A.			LIBOR	London InterBank Offered Rate
UBSW	UBS AG

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Shareholder Information

Board Approval of Investment

Management Agreements

FRANKLIN MUTUAL SERIES FUNDS

Franklin Mutual Global Discovery Fund

(Fund)

The Board of Trustees (Board), including a majority of trustees that are not “interested persons” as such term is defined in section 2(a)(19) of the Investment Company Act of 1940 (hereinafter referred to as “independent trustees”), at a meeting held on May 14, 2020, unanimously approved the renewal of the Fund’s investment management agreement. Prior to a meeting of all of the trustees for the purpose of considering such renewal, the independent trustees participated in two other meetings held in connection with the renewal process. Throughout the process, the independent trustees received assistance and advice from and met separately with independent counsel. The independent trustees met with and interviewed officers of the investment manager (including portfolio managers), the transfer agent and shareholder services group and the distributor. In approving the renewal of the investment management agreement for the Fund, the Board, including the independent trustees, determined that the investment management fee structure was fair and reasonable and that continuance of the agreement was in the best interests of the Fund and its shareholders.

In reaching their decision on the investment management agreement, the trustees took into account information furnished throughout the year at regular Board meetings, as well as information specifically requested and furnished for the renewal process, which culminated in the meetings referred to above for the specific purpose of considering such agreement. Information furnished throughout the year included, among others, reports on the Fund’s investment performance, expenses, portfolio composition, portfolio brokerage execution, client commission arrangements, derivatives, securities lending, asset segregation, portfolio turnover, Rule 12b-1 plan, distribution, shareholder servicing, legal and compliance matters, pricing of securities, sales and redemptions, and marketing support payments made to financial intermediaries, as well as a third-party survey of transfer agent fees charged to funds within the Franklin Templeton Investments (FT) complex in comparison with those charged to other fund complexes deemed comparable. Also, related financial statements and other information about the scope and quality of services provided by the investment manager and its affiliates and enhancements to

such services over the past year were provided. In addition, the trustees received periodic reports throughout the year and during the renewal process relating to compliance with the Fund’s investment policies and restrictions. During the renewal process, the independent trustees considered the investment manager’s methods of operation within the Franklin Templeton group and its activities on behalf of other clients. The Board also noted that it received an annual report on all payments made by FT or the Fund to financial intermediaries engaged in the sale of Fund shares, as well as a memorandum relating to third-party servicing arrangements in response to a Guidance Update from the U.S. Securities and Exchange Commission (SEC) relating to mutual fund distribution and sub-accounting fees.

The information obtained by the trustees during the renewal process also included a special report prepared by Broadridge Financial Solutions, Inc., an independent third-party analyst that utilizes data from Lipper, Inc. (“Lipper”), comparing the Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper (Broadridge Section 15(c) Report). The trustees reviewed the Broadridge Section 15(c) Report and its usefulness in the renewal process with respect to matters such as comparative fees, expenses, expense ratios, performance and volatility. They concluded that the report continues to be a reliable resource in the performance of their duties.

In addition, the trustees received a Profitability Study (Profitability Study) prepared by management discussing the profitability to FT from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Over the past year, the Board and counsel to the independent trustees continued to receive reports on management’s handling of recent regulatory inquiries and pending legal actions against the investment manager and its affiliates. The independent trustees were satisfied with the actions taken to date by management in response to such regulatory and legal matters.

The trustees reviewed the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of the investment manager. As part of this review, particular attention was given to management’s diligent risk management program, including continual monitoring and management of cybersecurity, liquidity and counterparty credit risk, and attention given to derivatives and other complex instruments that are held and expected to be held by the Fund and how such instruments

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are used to carry out the Fund’s investment goal(s). The Board also took into account, among other things, management’s efforts in establishing a global credit facility for the benefit of the Fund and other accounts managed by FT to provide a source of cash for temporary and emergency purposes or to meet unusual redemption requests as well as the strong financial position of the investment manager’s parent company and its commitment to the mutual fund business. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity and liquidity risk management. The Board also recognized management’s commitment to facilitating Board oversight of particular areas, including derivatives and payments to intermediaries, by enhanced reporting.

In addition to the above and other matters considered by the trustees throughout the course of the year, the following discussion relates to certain primary factors relevant to the Board’s decision. This discussion of the information and factors considered by the Board (including the information and factors discussed above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual trustees may have assigned different weights to various factors.

NATURE, EXTENT AND QUALITY OF SERVICES. The trustees reviewed the nature, extent and quality of the services provided, and to be provided, by the investment manager. The trustees cited the investment manager’s ability to implement the Fund’s disciplined value investment approach and its long-term relationship with the Fund as reasons that shareholders choose to invest, and remain invested, in the Fund. The trustees reviewed the Fund’s portfolio management team, including its performance, staffing, skills and compensation program. With respect to portfolio manager compensation, management assured the trustees that the Fund’s long-term performance is a significant component of incentive-based compensation and noted that a portion of a portfolio manager’s incentive-based compensation is paid in shares of pre-designated funds from the portfolio manager’s fund management area. The trustees noted that the portfolio manager compensation program aligned the interests of the portfolio managers with that of shareholders of the Fund. The trustees discussed with management various other products, portfolios and entities

that are advised by the investment manager and the allocation of assets and expenses among and within them, as well as their relative fees and reasons for differences with respect thereto and any potential conflicts. During regular Board meetings and the aforementioned meetings of the independent trustees, the trustees received reports and presentations on the investment manager’s best execution trading policies. The trustees considered periodic reports provided to them showing that the investment manager complied with the investment policies and restrictions of the Fund as well as other reports periodically furnished to the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics covering the investment management personnel, the adherence to fair value pricing procedures established by the Board and the accuracy of net asset value calculations. The Board noted the extent of the benefits provided to Fund shareholders from being part of the Franklin Templeton group of funds, including the right to exchange investments between funds (same class) without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings of other funds to obtain reduced sales charges. The Board considered the investment manager’s significant efforts in developing and implementing compliance procedures established in accordance with SEC and other requirements.

The Board considered the nature, extent and quality of the services to be provided under the Fund’s other service agreements to determine that, on an overall basis, Fund shareholders were well served. In this connection, the Board also took into account transfer agent and shareholder services provided to Fund shareholders by an affiliate of the investment manager, noting continuing expenditures by management to increase and improve the scope of such services and favorable periodic reports on shareholder services conducted by independent third parties. While such considerations directly affected the trustees’ decision in renewing the Fund’s transfer agent and shareholder services agreement, the Board also considered these commitments as incidental benefits to Fund shareholders deriving from the investment management relationship.

Based on their review, the trustees were satisfied with the nature and quality of the overall services provided, and to be provided, by the investment manager and its affiliates to the Fund and its shareholders and were confident in the abilities of the management team to continue the disciplined value investment approach of the Fund and to provide quality services to the Fund and its shareholders.

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INVESTMENT PERFORMANCE. The trustees reviewed and placed significant emphasis on the investment performance of the Fund over the one-, three-, five- and 10-year periods ended December 31, 2019. They considered the history of performance of the Fund relative to various benchmarks. As part of their review, they inquired of management regarding benchmarks, style drift and restrictions on permitted investments. Consideration was also given to performance in the context of available levels of cash during the periods.

The trustees had meetings during the year, including the meetings referred to above held in connection with the renewal process, with the Fund’s portfolio managers to discuss performance and the management of the Fund. In addition to the materials provided by management in connection with the renewal process, the independent trustees requested throughout the year (and received) additional presentations from the investment manager and senior management of FT regarding the performance of the investment manager and the Fund. As part of these presentations, the investment manager and senior management of FT reviewed enhancements that have been made, and are being made, to the investment manager’s investment process. In addition, it was noted that senior management of FT is conducting a review of the investment manager and the Fund and will report the results thereof to the independent trustees when completed.

Particular attention in assessing performance was given to the Broadridge Section 15(c) Report. That report showed the investment performance of the Fund (Class A shares) in comparison to other funds determined comparable by Lipper.

The comparable funds to the Fund, as chosen by Lipper, included all retail and institutional global multi-cap value funds. The Fund had total returns in the second-best performing quintile for the one-year period ended December 31, 2019, and had annualized total returns for the three- and five-year periods in the lowest and second-lowest performing quintiles, respectively. The trustees noted that the Fund’s total return on an annualized basis for the 10-year period ended December 31, 2019 was in the middle performing quintile. The trustees noted that the Fund continued to exhibit improved relative performance in 2019 and discussed with management the reasons for the relative underperformance for the three- and five-year periods ended December 31, 2019. Encouraged by the continued improved relative performance and continued enhancements to the investment process noted above, the Board did not believe that any changes with respect to the Fund were warranted at

the time and noted that it would continue to monitor future performance.

The trustees also compared Fund performance to other industry benchmarks, including measures of risk-adjusted performance of a fund, as part of their evaluation of investment performance. The trustees concluded that the Fund had continued to perform well in comparison to its various benchmarks and in the context of the Fund’s goal.

COMPARATIVE EXPENSES AND MANAGEMENT PROFITABILITY. The trustees considered the cost of the services provided and to be provided and the profits realized by the investment manager and its affiliates from their respective relationships with the Fund. As part of the renewal process, the trustees explored with management the trends in expense ratios over the past three fiscal years and the reasons for any increases in the Fund’s expense ratios (or components thereof). In considering the appropriateness of the management fee and other expenses charged to the Fund, the Board took into account various factors including investment performance and matters relating to Fund operations, including, but not limited to, the quality and experience of its portfolio managers and research staff. Consideration was also given to a comparative analysis in the Broadridge Section 15(c) Report of the investment management fee and total expense ratio of the Fund in comparison with those of a group of other funds selected by Lipper as its appropriate Lipper expense group. Lipper expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Lipper to be an appropriate measure of comparative expenses.

In reviewing comparative costs, emphasis was given to the Fund’s contractual management fee in comparison with the contractual management fee that would have been charged by other funds within its Lipper expense group assuming they were similar in size to the Fund, as well as the actual total expenses of the Fund in comparison with those of its Lipper expense group. The Lipper contractual management fee analysis includes administrative charges as being part of the management fee, and total expenses, for comparative consistency, are shown by Lipper for Fund Class A shares.

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The Fund’s contractual management fee rate was in the most expensive quintile of its Lipper expense group and its total expenses were in the middle quintile of such group. The Board found such comparative fees and expenses to be acceptable in view of factors relating to the Fund’s operations, such as the quality and experience of its portfolio managers.

The trustees also reviewed the Profitability Study addressing profitability of Franklin Resources, Inc., from its overall U.S. fund business, as well as profitability to the Fund’s investment manager and its affiliates, from providing investment management and other services to the Fund during the 12-month period ended September 30, 2019, the most recent fiscal year-end of Franklin Resources, Inc. The trustees reviewed the basis on which such reports are prepared and the cost allocation methodology utilized in the Profitability Study, it being recognized that allocation methodologies may each be reasonable while producing different results. In this respect, the Board noted that the reasonableness of the cost allocation methodologies was reviewed by independent accountants on an every other year basis.

The independent trustees met with management to discuss the Profitability Study. This included, among other things, a comparison of investment management income with investment management expenses of the Fund; comparison of underwriting revenues and expenses; the relative relationship of investment management and underwriting expenses; shareholder servicing profitability; economies of scale; and the relative contribution of the Fund to the profitability of the investment manager and its parent. In discussing the Profitability Study with the Board, the investment manager stated its belief that the costs incurred in establishing the infrastructure necessary to operate the type of mutual fund operations conducted by it and its affiliates may not be fully reflected in the expenses allocated to the Fund in determining its profitability.

The Board also took into account management’s expenditures in improving shareholder services provided to the Fund, as well as the need to meet additional regulatory and compliance requirements. The trustees also considered the extent to which the investment manager may derive ancillary benefits from Fund operations, including those derived from economies of scale, discussed below, the allocation of Fund brokerage and the use of commission dollars to pay for research and other similar services.

Based upon their consideration of all these factors, the trustees determined that the level of profits realized by the investment manager and its affiliates in providing services to the Fund was not excessive in view of the nature, quality and extent of services provided.

ECONOMIES OF SCALE. The Board considered economies of scale realized by the investment manager and its affiliates as the Fund grows larger and the extent to which they are shared with Fund shareholders, as for example, in the level of the investment management fee charged, in the quality and efficiency of services rendered and in increased capital commitments benefiting the Fund directly or indirectly. While recognizing that any precise determination is inherently subjective, the trustees noted that, based upon the Profitability Study, as some funds increase in size, at some point economies of scale may result in the investment manager realizing a larger profit margin on investment management services provided to such a fund. The trustees also noted that benefits of economies of scale will be shared with Fund shareholders due to the decline in the effective investment management fee rate as breakpoints are achieved by the Fund.

The trustees noted that breakpoints had been instituted as part of the Fund’s investment management fee and that the Board regularly evaluates whether additional breakpoints are appropriate. The trustees assessed the savings to shareholders resulting from such breakpoints and believed they were, and continue to be, appropriate and they agreed to continue to monitor the appropriateness of the breakpoints. The trustees also considered the effects an increase in assets under management would have on the investment management fee and expense ratio of the Fund. To the extent further economies of scale may be realized by the investment manager and its affiliates, the Board believed the investment management fees provide a sharing of benefits with the Fund and its shareholders.

Liquidity Risk Management Program

The Funds have 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 program is designed to assess and manage each Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its short and long-term cash flow projections; and its cash holdings and access to other

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funding sources including the Funds’ interfund lending facility and line of credit. The Funds’ Board of Trustees approved the appointment of the Director of Liquidity Risk within the Investment Risk Management Group (the “IRMG”) as the Administrator of the LRMP. The IRMG maintains the Investment Liquidity Committee (the “ILC”) to provide oversight and administration of policies and procedures governing liquidity risk management for FT products and portfolios. The ILC includes representatives from Franklin Templeton’s Risk, Trading, Global Compliance, Investment Compliance, Investment Operations, Valuation Committee and Product Management groups.

The LRMP Administrator Annual Report was presented to the Fund(s) Board of Trustees at their meetings in May 2020. The report covered the adequacy and effectiveness of the program during the period December 1, 2018 to December 31, 2019 (the “covered period”). The 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. In addition, the LRMP Administrator presented the Fund Board of Trustees an update on liquidity during the first quarter of 2020 in relation to the COVID-19 pandemic.

During the reporting period, the Fund maintained a high level of liquid assets that are defined under the Liquidity Rule as ‘‘Highly Liquid Investments.’’ As a result, the Fund was designated a “Primarily Highly Liquid Fund” as defined under the Liquidity Rule and has not adopted a ‘‘Highly Liquid Investment Minimum.’’ A Highly Liquid Investment is 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.

There can be no assurance that the program will achieve its objectives in the future. Please refer to your Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

Proxy Voting Policies and Procedures

The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust, on behalf of the Fund, files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year as an exhibit to its report on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

Householding of Reports and Prospectuses

You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800) 632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.

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Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.

	Semiannual Report and Shareholder Letter Franklin Mutual Global Discovery Fund
	Investment Manager	Distributor	Shareholder Services
	Franklin Mutual Advisers, LLC	Franklin Templeton Distributors, Inc. (800) DIAL BEN® / 342-5236	(800) 632-2301 - (Class A, C, R & R6)
		franklintempleton.com	(800) 448-FUND - (Class Z)

© 2020 Franklin Templeton Investments. All rights reserved. 477 S 08/20

Sign up for electronic delivery at franklintempleton.com/edelivery

Internet Delivery of Fund Reports Unless You Request Paper Copies: Effective January 1, 2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request them from the Fund or your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not signed up for electronic delivery, we would encourage you to join fellow shareholders who have. You may elect to receive shareholder reports and other communications electronically from the Fund by calling (800) 632-2301 or by contacting your financial intermediary.

You may elect to continue to receive paper copies of all your future shareholder reports free of charge by contacting your financial intermediary or, if you invest directly with a Fund, calling (800) 632-2301 to let the Fund know of your request. Your election to receive reports in paper will apply to all funds held in your account.

SHAREHOLDER LETTER

Dear Franklin Mutual European Fund Shareholder:

During the six months ended June 30, 2020, European equity markets were extremely volatile and declined as the spread of the novel coronavirus (COVID-19)—first reported in December and initially centered in China—disrupted economic activity and contributed to negative investor sentiment for risk assets. Share prices plunged dramatically, pulling European equities from high levels in mid-February before bottoming in late March. European stocks snapped back in April and May but moderated in June to close the period significantly above the market trough, although still in negative territory for the period. The broad European equity market, as measured by the MSCI Europe Index, finished the period down -11.55%.¹

As the period opened, the U.K. was preparing to formally exit the European Union, and major equity markets were rallying, lifted by China and the United States’ Phase-One trade agreement that was intended to serve as the foundation for a similar deal between the U.S. and the European Union (EU). However, concerns about U.S. tariffs on European auto exports late in the month contributed to negative market sentiment. Then, COVID-19 emerged and upended these and other plans.

The spread of the pandemic evolved into a global public health crisis, and countries around the world implemented lockdown and physical distancing measures intended to “flatten the curve” of the contagion. Consumer and business spending fell, and manufacturing and other activity came to a virtual halt. Consequently, the world’s major economies fell into recession and projections about the economic fallout exceeded that of the 2007–2009 Global Financial Crisis.

In response, central banks expanded their mandates to support economies and markets. The Bank of England, in coordination and consultation with neighboring central banks, lowered interest rates to 0.1% and implemented quantitative easing via a bond purchase program, and the European Central Bank launched the Pandemic Emergency Purchase Programme. Later in the period, the EU approved a €750 billion (US$825 billion) European Recovery Fund that recommended financial burden sharing among member

states. Policymakers’ “whatever-it-takes” approach lifted investor sentiment and stock prices rebounded. Rates of infection in some of the viral epicenters around the world slowed, and government officials, eager to restart economies, embarked on a gradual, albeit uneven, reopening.

The pandemic has highlighted structural weaknesses between Europe’s haves and the have-nots. Countries such as Italy, which is still recovering from the Global Financial Crisis, were hit hard by COVID-19 and lack the fiscal wherewithal to finance their recovery. As such, the European Recovery Fund is probably one of the most significant COVID-19 related relief actions. Depending upon the structure of the final agreement, it could represent the first steps in the fiscal integration of the region, as well as lead to the euro being considered a safe-haven currency.

As long-term investors, we can weather turbulence and look for it to provide opportunities to acquire shares in good franchises at attractive valuations. We remain disciplined in our approach and are committed to buying companies based on fundamentals, active engagement with management teams and a keen focus on cash flow and valuation. While the current level of uncertainty may be unnerving, it is important to remember that the market historically rewards investors who take a long-term perspective. To that end, we recognize the importance of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing markets and economic conditions, we are confident investors with a well-diversified portfolio and a patient, long-term outlook should be well-positioned for the years ahead.

On the following pages, the portfolio management team reviews investment decisions that pertain to performance during the past six months considering the economic environment and other factors. Please remember all securities markets fluctuate, as do mutual fund share prices.

1. Source: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

Not FDIC Insured | May Lose Value  | No Bank Guarantee 

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We thank you for investing with Franklin Templeton, welcome your questions and comments, and look forward to continuing to serve your investment needs in the years ahead.

Sincerely,

Peter A. Langerman

Chairman, President and Chief Executive Officer

Franklin Mutual Advisers, LLC

This letter reflects our analysis and opinions as of June 30, 2020, 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.

Contents
Semiannual Report
Franklin Mutual European Fund.	3
Performance Summary	7
Your Fund’s Expenses	9
Financial Highlights and Statement of Investments	10
Financial Statements	20
Notes to Financial Statements	24
Shareholder Information	39

Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.

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SEMIANNUAL REPORT

Franklin Mutual European Fund

This semiannual report for Franklin Mutual European Fund covers the period ended June 30, 2020.

Your Fund’s Goal and Main Investments

The Fund’s principal goal is capital appreciation, which may occasionally be short term. Its secondary goal is income. The Fund normally invests at least 80% of its total assets in securities of European companies that we believe are available at market prices less than their intrinsic value. The Fund invests primarily in equity securities, mainly common stocks, with a focus on mid- and large cap companies. To a lesser extent, the Fund also invests in merger arbitrage securities and the debt and equity of distressed companies. The Geographic Composition bar chart on this page lists the leading European countries where the Fund invests.

Performance Overview

The Fund’s Class Z shares posted a -20.55% cumulative total return for the six months ended June 30, 2020. For comparison, the Fund’s primary benchmark, the MSCI Europe Index-NR (Local Currency), which tracks equity performance in Europe’s developed markets, posted a -11.56% total return.¹ Also for comparison, the Fund’s secondary benchmark, the MSCI Europe Index-NR (USD), posted a -12.78% total return.¹ You can find more of the Fund’s performance data in the Performance Summary beginning on page 7.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Economic and Market Overview

Global developed and emerging market equities, as measured by the MSCI All Country World Index (USD), posted a -5.99% total return during the six months under review.¹ Stocks fell sharply in early 2020 as countries around the world implemented lockdown measures in an effort to

Geographic Composition*

Based on Total Net Assets as of 6/30/20

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

slow the spread of the novel coronavirus (COVID-19). Global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments such as government bonds and cash. While global equities, notably in the U.S., rebounded in April and May amid optimism about easing lockdown restrictions, concerns about a second wave of infections hindered equities in June, as investors weighed the possibility of renewed restrictions.

In the eurozone, some analysts forecasted a significant contraction in 2020, particularly in southern European

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 Statement of Investments (SOI).

The SOI begins on page 15.

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FRANKLIN MUTUAL EUROPEAN FUND

countries, as the magnitude of the economic disruption caused by the pandemic became apparent. European developed market equities, as measured by the MSCI Europe Index (USD), posted a -12.43% total return for the period.¹ To stimulate growth, the European Central Bank implemented a broad bond-buying program, and many countries passed fiscal stimulus measures.

Investment Strategy

We follow a distinctive value investment approach that combines investments in what we believe are undervalued common stocks with, to a lesser extent, distressed debt investing and merger arbitrage. Our style aims to provide our shareholders with superior risk-adjusted results over time. We employ rigorous, fundamental analysis to find compelling situations. In our opinion, successful investing is as much about assessing risk and containing losses as it is about achieving profits. In choosing investments, we look at the market price of an individual company’s securities relative to our evaluation of its intrinsic value based on factors including book value, cash flow generation, long-term earnings potential and earnings multiples. Our portfolio selection process generally includes an assessment of the potential impacts of any material environmental, social and governance (ESG) factors on the long-term risk and return profile of a company. We may invest in bankrupt or distressed companies if we believe the market overreacted to adverse developments or failed to appreciate positive changes, including restructuring. In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

Manager’s Discussion

The novel coronavirus (COVID-19) pandemic has significantly altered our way of life. Despite this, stocks have rallied off the March 23 market bottom and are within range of the pre-pandemic, all-time highs achieved earlier in the year. While the economy has reopened, the recovery is likely to be uneven. The question that we wrestle with daily is what does this scenario mean for equities in general and undervalued stocks in particular?

Markets rose sharply in April, as investors moved back into the growth stocks that propelled the market to the all-time highs of January. In late May, however, there was a turn in market sentiment resulting in value briefly outperforming growth. Undervalued stocks often benefit in periods of improving economic activity or stabilization as business prospects improve. Increasing demand across the economy, especially in cyclical sectors, can provide a tailwind for these companies and drive shareholder value. This is a scenario

Top 10 Sectors/Industries

Based on Equity Securities as of 6/30/20

	% of Total Net Assets
Banks	8.8%
Insurance	7.3%
Pharmaceuticals	6.8%
Construction Materials	6.2%
Oil, Gas & Consumable Fuels	5.9%
Trading Companies & Distributors	5.8%
Machinery	5.7%
Chemicals	5.1%
Auto Components	4.3%
Diversified Telecommunication Services	4.2%

that often occurs off an economic bottom, and we are positioning our portfolios to capitalize on this trend.

The second-quarter earnings reporting season (occurring in July and August) marks the first period with the full impact of the economic lockdowns and will provide a more complete view into the pandemic’s impact on corporate statements. Many financial officers withdrew full-year 2020 guidance, as they reported first-quarter results, due to limited revenue visibility. As a result, the path ahead for stocks is less clear. We remain cautious amid these elevated risks.

Fund Performance

Turning to Fund performance, investments that detracted included Dufry, Standard Chartered and ING Groep.

The share price of Dufry, a Switzerland-based operator of global duty-free and duty-paid stores in airports and other transportation-related facilities in 65 countries, suffered a sharp drop as the COVID-19 pandemic significantly reduced air passenger traffic. In response, management took several steps to enhance liquidity and preserve cash, including raising equity and issuing convertible debt; eliminating the company’s dividend; securing commitments from lenders to waive financial covenants until the end of 2021; and reducing capital expenditures and cutting costs. Late in the period, management announced that it would reduce personnel expenses by up to 35%.

Shares of London-based bank Standard Chartered weakened during the period. Management canceled the company’s dividend and eliminated stock buybacks in response to a request by the U.K.’s banking regulator to use the capital to support the economy through 2020. The Prudential Regulation Authority also requested that banks not pay bonuses to senior staff and material risk takers.

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Top 10 Equity Holdings

6/30/20

Company Sector/Industry, Country	% of Total Net Assets
Rexel SA Trading Companies & Distributors, France	3.9%
LafargeHolcim Ltd. Construction Materials, Switzerland	3.8%
Cie Generale des Etablissements Michelin SCA Auto Components, France	3.5%
Hellenic Telecommunications Organization SA Diversified Telecommunication Services, Greece	3.5%
Novartis AG Pharmaceuticals, Switzerland	3.4%
GlaxoSmithKline PLC Pharmaceuticals, U.K.	3.3%
NN Group NV Insurance, Netherlands	2.9%
BASF SE Chemicals, Germany	2.9%
Volkswagen AG Automobiles, Germany	2.8%
British American Tobacco PLC Tobacco, U.K.	2.7%

Standard Chartered later reported financial results that beat consensus estimates and set aside loan-loss reserves of close to $1 billion in anticipation of a spike in defaults. The stock price dipped further later in the period on concerns about a resumption of tensions between China and the U.S. Standard Chartered operates primarily in developing countries, and Hong Kong is one of its key markets.

Shares of Netherlands-based ING Groep, a global bank and financial institution, sold off as part of a broad equity market decline related to the economic impact of COVID-19 containment measures on global growth. The stock price began to recover later in the period on indications of a recovery in oil prices and a reopening of economies that closed to stem the spread of COVID-19. First-quarter financial results exceeded consensus forecasts, and a decline in net profit was less than anticipated.

During the period under review, Fund investments that contributed positively to performance included Avast, Reckitt Benckiser Group and Siemens.

Shares of Avast, a Czech Republic-based software company, rose during the period as an increase in remote working has led to greater demand for its cybersecurity products. The company generates free cash flow via a

subscription revenue model, and customer acquisition costs are minimized using a “freemium” pricing strategy that gives away its basic antivirus software, but charges customers for enhanced versions. Toward the end of the period, Avast’s stock price also benefited from news that the company was being added to the FTSE 100 Index.

The share price of U.K.-based Reckitt Benckiser Group jumped early in the period on news reports that the manufacturer of health, hygiene and home products planned to test its disinfectants on COVID-19 samples that it had obtained. Later in the period, management reported solid first-quarter financial results that benefited from increased demand for its offerings within the over-the-counter and hygiene/home business segments. Full-year 2020 results are expected to exceed initial forecasts, and management planned to provide formal updated guidance following the end of the first half of the year.

Shares of Germany-based Siemens rallied off the late-March market bottom following a leadership reshuffling and greater clarity from management about a previously announced restructuring of the industrial conglomerate. The company’s chief executive officer (CEO) Joe Kaeser stepped down and was replaced by deputy CEO Roland Busch. Kaeser will become chairman of Siemens Energy, a spinoff of Siemens’ gas and power operating company. The divestiture is expected to be completed in September, and Siemens will initially retain a 45% stake that it plans to reduce significantly over the next 12 to 18 months. During the first-quarter earnings call, management pulled its fiscal 2020 guidance, citing the impact of the economic effects of the COVID-19 pandemic.

During the period, the Fund held currency forwards and futures seeking to hedge most of the currency risk of the portfolio’s non-U.S. dollar investments. The hedges had a positive overall impact on the Fund’s performance.

As fellow shareholders, we found recent absolute and relative performance disappointing, but our strategy of seeking undervalued stocks can lag European growth equity market returns at times. We remain committed to our disciplined, value investment approach as we seek to generate attractive, long-term, risk-adjusted returns for shareholders.

Thank you for your participation in Franklin Mutual European Fund. We look forward to continuing to serve your investment needs.

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FRANKLIN MUTUAL EUROPEAN FUND

Katrina Dudley, CFA

Co-Portfolio Manager

Mandana Hormozi

Co-Portfolio Manager

Todd Ostrow

Co-Portfolio Manager

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2020, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, 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.

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FRANKLIN MUTUAL EUROPEAN FUND

Performance Summary as of June 30, 2020

The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.

Performance as of 6/30/20

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%. Class A: 5.50% maximum initial sales charge. For other share classes, visit franklintempleton.com.

Share Class	Cumulative   Total Return1	Average Annual   Total Return2
Z
6-Month	-20.55%	-20.55%
1-Year	-13.23%	-13.23%
5-Year	-7.01%	-1.44%
10-Year	+45.76%	+3.84%
A3
6-Month	-20.66%	-25.01%
1-Year	-13.48%	-18.23%
5-Year	-8.21%	-2.80%
10-Year	+41.76%	+2.97%

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.

See page 8 for Performance Summary footnotes.

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FRANKLIN MUTUAL EUROPEAN FUND

PERFORMANCE SUMMARY

Total Annual Operating Expenses⁴

Share Class
Z	1.04%
A	1.29%

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. Value securities may not increase in price as anticipated or may decline further in value. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. 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. The Fund’s investments in smaller-company stocks carry an increased risk of price fluctuation, especially over the short term. The Fund’s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental or man-made disasters; financial, political or social disruptions; terrorism and war; and other tragedies or catastrophes, can cause investor fear and panic, which can adversely affect the economies of many companies, sectors, nations, regions and the market in general, in ways that cannot necessarily be foreseen. The Fund’s prospectus also includes a description of the main investment risks.

1. Cumulative total return represents the change in value of an investment over the periods indicated.

2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

3. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns (with sales charges) would have differed. Average annual total returns (with sales charges) have been restated to reflect the current maximum initial sales charge of 5.50%.

4. 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.

8         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL EUROPEAN FUND

Your Fund’s Expenses

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.

		Actual		Hypothetical
		(actual return after expenses)		(5% annual return before expenses)
Share Class	Beginning Account Value 1/1/20	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Net Annualized Expense Ratio2
Z	$1,000	$794.50	$4.77	$1,019.54	$  5.37	1.07%
A	$1,000	$793.40	$5.89	$1,018.30	$  6.62	1.32%
C	$1,000	$790.70	$9.22	$1,014.57	$10.37	2.07%
R	$1,000	$792.30	$7.00	$1,017.06	$  7.87	1.57%
R6	$1,000	$794.70	$4.24	$1,020.14	$  4.77	0.95%

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 182/366 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

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FRANKLIN MUTUAL SERIES FUNDS

Financial Highlights

Franklin Mutual European Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class Z
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$21.31			$17.89			$20.93			$19.20			$19.48			$20.86
Income from investment operationsa:
Net investment incomeb		0.11			0.54			0.49			0.35			0.63	c		0.42
Net realized and unrealized gains (losses)		(4.49	)		3.46			(2.80	)		1.65			(0.17	)		(0.27	)
Total from investment operations		(4.38	)		4.00			(2.31	)		2.00			0.46			0.15
Less distributions from:
Net investment income		—			(0.58	)		(0.73	)		(0.27	)		(0.47	)		(0.46	)
Net realized gains		—			—			—			—			(0.27	)		(1.07	)
Total distributions		—			(0.58	)		(0.73	)		(0.27	)		(0.74	)		(1.53	)
Net asset value, end of period		$16.93			$21.31			$17.89			$20.93			$19.20			$19.48
Total returnd		(20.55)%			22.28%			(11.12)%			10.45%			2.40%			0.82%
Ratios to average net assetse
Expensesf		1.07%	g,h		1.04%	g		1.04%	g,h		1.04%	g		1.06%	g,h		1.05%
Expenses incurred in connection with securities sold short		—%			—%			—%	i		—%			—%			—%	i
Net investment income		1.21%			2.77%			2.38%			1.75%			3.42%	c		1.93%
Supplemental data
Net assets, end of period (000’s)		$461,172			$789,012			$958,149			$1,328,622			$1,175,972			$1,355,780
Portfolio turnover rate		15.54%			12.16%			35.42%			17.33%			16.43%			32.59%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.17 per share related to a nonrecurring distribution. The amount, although initially recorded as dividend income, is subject to recharacterization once the issuer provides information regarding the actual composition of the distribution. Excluding this amount, the ratio of net investment income to average net assets would have been 2.50%.

^dTotal return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.

10         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual European Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class A
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$20.67			$17.37			$20.33			$18.66			$18.95			$20.33
Income from investment operationsa:
Net investment incomeb		0.08			0.49			0.41			0.31			0.57	c		0.35
Net realized and unrealized gains (losses)		(4.35	)		3.33			(2.69	)		1.58			(0.18	)		(0.26	)
Total from investment operations		(4.27	)		3.82			(2.28	)		1.89			0.39			0.09
Less distributions from:
Net investment income		—			(0.52	)		(0.68	)		(0.22	)		(0.41	)		(0.40	)
Net realized gains		—			—			—			—			(0.27	)		(1.07	)
Total distributions		—			(0.52	)		(0.68	)		(0.22	)		(0.68	)		(1.47	)
Net asset value, end of period		$16.40			$20.67			$17.37			$20.33			$18.66			$18.95
Total returnd		(20.66)%			21.98%			(11.29)%			10.14%			2.12%			0.57%
Ratios to average net assetse
Expensesf		1.32%	g,h		1.29%	g		1.29%	g,h		1.29%	g		1.31%	g,h		1.33%
Expenses incurred in connection with securities sold short		—%			—%			—%	i		—%			—%			—%	i
Net investment income		0.96%			2.52%			2.13%			1.50%			3.17%	c		1.65%
Supplemental data
Net assets, end of period (000’s)		$356,699			$512,218			$564,038			$714,915			$769,297			$1,033,307
Portfolio turnover rate		15.54%			12.16%			35.42%			17.33%			16.43%			32.59%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.17 per share related to a nonrecurring distribution. The amount, although initially recorded as dividend income, is subject to recharacterization once the issuer provides information regarding the actual composition of the distribution. Excluding this amount, the ratio of net investment income to average net assets would have been 2.25%.

^dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         11

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual European Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class C
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$20.93			$17.56			$20.38			$18.70			$18.97			$20.37
Income from investment operationsa:
Net investment incomeb		0.02			0.35			0.29			0.15			0.44	c		0.19
Net realized and unrealized gains (losses)		(4.40	)		3.35			(2.72	)		1.60			(0.19	)		(0.25	)
Total from investment operations		(4.38	)		3.70			(2.43	)		1.75			0.25			(0.06	)
Less distributions from:
Net investment income		—			(0.33	)		(0.39	)		(0.07	)		(0.25	)		(0.27	)
Net realized gains		—			—			—			—			(0.27	)		(1.07	)
Total distributions		—			(0.33	)		(0.39	)		(0.07	)		(0.52	)		(1.34	)
Net asset value, end of period		$16.55			$20.93			$17.56			$20.38			$18.70			$18.97
Total returnd		(20.93)%			21.01%			(11.96)%			9.37%			1.32%			(0.16)%
Ratios to average net assetse
Expensesf		2.07%	g,h		2.04%	g		2.04%	g,h		2.04%	g		2.06%	g,h		2.05%
Expenses incurred in connection with securities sold short		—%			—%			—%	i		—%			—%			—%	i
Net investment income		0.21%			1.77%			1.38%			0.75%			2.42%	c		0.93%
Supplemental data
Net assets, end of period (000’s)		$38,164			$61,743			$78,149			$179,123			$209,196			$291,752
Portfolio turnover rate		15.54%			12.16%			35.42%			17.33%			16.43%			32.59%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.17 per share related to a nonrecurring distribution. The amount, although initially recorded as dividend income, is subject to recharacterization once the issuer provides information regarding the actual composition of the distribution. Excluding this amount, the ratio of net investment income to average net assets would have been 1.50%.

^dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.

12         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual European Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class R
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$20.27			$17.05			$19.97			$18.35			$18.62			$20.04
Income from investment operationsa:
Net investment incomeb		0.06			0.43			0.35			0.22			0.52	c		0.27
Net realized and unrealized gains (losses)		(4.27	)		3.27			(2.64	)		1.60			(0.18	)		(0.23	)
Total from investment operations		(4.21	)		3.70			(2.29	)		1.82			0.34			0.04
Less distributions from:
Net investment income		—			(0.48	)		(0.63	)		(0.20	)		(0.34	)		(0.39	)
Net realized gains		—			—			—			—			(0.27	)		(1.07	)
Total distributions		—			(0.48	)		(0.63	)		(0.20	)		(0.61	)		(1.46	)
Net asset value, end of period		$16.06			$20.27			$17.05			$19.97			$18.35			$18.62
Total returnd		(20.77)%			21.70%			(11.54)%			9.92%			1.86%			0.37%
Ratios to average net assetse
Expensesf		1.57%	g,h		1.54%	g		1.54%	g,h		1.54%	g		1.56%	g,h		1.55%
Expenses incurred in connection with securities sold short		—%			—%			—%	i		—%			—%			—%	i
Net investment income		0.71%			2.27%			1.88%			1.25%			2.92%	c		1.43%
Supplemental data
Net assets, end of period (000’s)		$565			$733			$731			$821			$626			$997
Portfolio turnover rate		15.54%			12.16%			35.42%			17.33%			16.43%			32.59%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.17 per share related to a nonrecurring distribution. The amount, although initially recorded as dividend income, is subject to recharacterization once the issuer provides information regarding the actual composition of the distribution. Excluding this amount, the ratio of net investment income to average net assets would have been 2.00%.

^dTotal return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         13

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual European Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class R6
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$21.29			$17.87			$20.91			$19.19			$19.47			$20.85
Income from investment operationsa:
Net investment incomeb		0.12			0.69			0.56			0.41			0.66	c		0.46
Net realized and unrealized gains (losses)		(4.49	)		3.33			(2.85	)		1.62			(0.17	)		(0.28	)
Total from investment operations		(4.37	)		4.02			(2.29	)		2.03			0.49			0.18
Less distributions from:
Net investment income		—			(0.60	)		(0.75	)		(0.31	)		(0.50	)		(0.49	)
Net realized gains		—			—			—			—			(0.27	)		(1.07	)
Total distributions		—			(0.60	)		(0.75	)		(0.31	)		(0.77	)		(1.56	)
Net asset value, end of period		$16.92			$21.29			$17.87			$20.91			$19.19			$19.47
Total returnd		(20.53)%			22.35%			(10.94)%			10.63%			2.53%			0.98%
Ratios to average net assetse
Expenses before waiver and payments by affiliatesf		0.98%			0.94%			0.92%			0.88%			0.89%			0.89%
Expenses net of waiver and payments by affiliatesf		0.95%	g		0.93%	g		0.91%	g		0.88%	g		0.89%	g,h		0.89%
Expenses incurred in connection with securities sold short		—%			—%			—%	i		—%			—%			—%	i
Net investment income		1.33%			2.88%			2.51%			1.91%			3.59%	c		2.09%
Supplemental data
Net assets, end of period (000’s)		$32,942			$44,561			$149,796			$294,660			$311,784			$373,904
Portfolio turnover rate		15.54%			12.16%			35.42%			17.33%			16.43%			32.59%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.17 per share related to a nonrecurring distribution. The amount, although initially recorded as dividend income, is subject to recharacterization once the issuer provides information regarding the actual composition of the distribution. Excluding this amount, the ratio of net investment income to average net assets would have been 2.67%.

^dTotal return is not annualized for periods less than one year.

^eRatios are annualized for periods less than one year.

^fIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(d).

^gBenefit of expense reduction rounds to less than 0.01%.

^hBenefit of waiver and payments by affiliates rounds to less than 0.01%.

ⁱRounds to less than 0.01%.

14         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

Statement of Investments, June 30, 2020 (unaudited)

Franklin Mutual European Fund

	Country		Shares		Value
Common Stocks 90.9%
Aerospace & Defense 2.2%
BAE Systems PLC		United Kingdom		3,303,112	$	19,750,027
Auto Components 3.5%
Cie Generale des Etablissements Michelin SCA		France		294,547		30,698,796
Banks 8.8%
aAIB Group PLC		Ireland		637,038		804,279
CaixaBank SA		Spain		5,720,550		12,236,814
ING Groep NV		Netherlands		3,424,039		23,866,522
Standard Chartered PLC		United Kingdom		3,913,575		21,213,828
aUniCredit SpA		Italy		2,221,742		20,503,113
						78,624,556
Beverages 3.4%
Anheuser-Busch InBev SA/NV		Belgium		368,823		18,180,036
Diageo PLC		United Kingdom		83,470		2,774,208
Heineken NV		Netherlands		98,897		9,116,939
						30,071,183
Chemicals 5.1%
BASF SE		Germany		459,069		25,783,287
Covestro AG		Germany		522,678		19,906,115
						45,689,402
Commercial Services & Supplies 1.1%
G4S PLC		United Kingdom		6,685,539		9,457,684
Construction Materials 6.2%
HeidelbergCement AG		Germany		389,156		20,830,343
aLafargeHolcim Ltd., B		Switzerland		769,431		33,898,069
						54,728,412
Diversified Financial Services 1.0%
M&G PLC		United Kingdom		4,238,725		8,801,121
Diversified Telecommunication Services 4.2%
Deutsche Telekom AG		Germany		402,179		6,747,657
Hellenic Telecommunications Organization SA		Greece		2,268,373		30,638,447
						37,386,104
Energy Equipment & Services 0.9%
Tenaris SA, ADR		Italy		635,416		8,215,929
Health Care Providers & Services 2.5%
aFresenius SE and Co. KGaA		Germany		456,222		22,673,517
Hotels, Restaurants & Leisure 2.6%
aAccor SA		France		834,577		22,774,936
Household Durables 2.5%
The Berkeley Group Holdings PLC		United Kingdom		27,829		1,433,141
Husqvarna AB, B		Sweden		2,085,623		17,162,711
aPersimmon PLC		United Kingdom		57,576		1,629,425
Taylor Wimpey PLC		United Kingdom		899,076		1,586,812
						21,812,089

franklintempleton.com Semiannual Report         15

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

	Country		Shares		Value
Common Stocks (continued)
Household Products 2.6%
Reckitt Benckiser Group PLC		United Kingdom		252,629	$	23,240,520
Industrial Conglomerates 1.9%
Siemens AG		Germany		143,434		16,914,690
Insurance 7.3%
ASR Nederland NV		Netherlands		729,331		22,437,589
Direct Line Insurance Group PLC		United Kingdom		4,870,911		16,331,774
NN Group NV		Netherlands		779,270		26,187,193
						64,956,556
Machinery 5.7%
aCNH Industrial NV		United Kingdom		2,024,969		14,225,373
aCNH Industrial NV, special voting		United Kingdom		833,461		5,855,049
aVossloh AG		Germany		500,980		21,970,966
Weir Group PLC		United Kingdom		672,284		8,834,303
						50,885,691
Media 0.4%
Informa PLC		United Kingdom		594,414		3,436,609
Oil, Gas & Consumable Fuels 5.9%
BP PLC		United Kingdom		5,861,577		22,455,034
aCairn Energy PLC		United Kingdom		11,140,689		16,212,129
Royal Dutch Shell PLC, A		United Kingdom		890,580		14,258,734
						52,925,897
Pharmaceuticals 6.8%
GlaxoSmithKline PLC		United Kingdom		1,458,174		29,453,457
Novartis AG		Switzerland		351,286		30,604,393
						60,057,850
Road & Rail 0.0%
a,b,c,dEuro Wagon LP		Jersey Islands		16,127,149		—
Software 2.4%
Avast PLC		United Kingdom		3,251,987		21,253,677
Specialty Retail 1.0%
aDufry AG		Switzerland		310,039		9,286,760
Textiles, Apparel & Luxury Goods 1.9%
Cie Financiere Richemont SA		Switzerland		267,925		17,281,247
Tobacco 2.7%
British American Tobacco PLC		United Kingdom		622,963		23,891,413
Trading Companies & Distributors 5.8%
aKloeckner & Co. SE		Germany		3,031,653		16,614,182
Rexel SA		France		3,057,614		35,040,626
						51,654,808
Wireless Telecommunication Services 2.5%
Vodafone Group PLC		United Kingdom		14,245,323		22,645,712
Total Common Stocks (Cost $1,018,895,825)						809,115,186

16         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

	Country		Shares		Value
Preferred Stocks 3.6%
Auto Components 0.8%
eSchaeffler AG, 6.736%, pfd.		Germany		886,950	$	6,656,160
Automobiles 2.8%
aVolkswagen AG, pfd.		Germany		165,211		25,109,840
Total Preferred Stocks (Cost $33,618,385)						31,766,000
Total Investments before Short Term Investments (Cost $1,052,514,210)						840,881,186
			Principal     Amount
Short Term Investments 4.0%
U.S. Government and Agency Securities 4.0%
fFHLB, 7/01/20		United States	$	12,000,000		12,000,000
fU.S. Treasury Bill,
7/02/20		United States		15,000,000		14,999,965
g9/03/20 - 12/10/20		United States		8,000,000		7,996,354
Total U.S. Government and Agency Securities (Cost $34,995,912)						34,996,319
Total Investments (Cost $1,087,510,122) 98.5%						875,877,505
Other Assets, less Liabilities 1.5%						13,665,016
Net Assets 100.0%					$	889,542,521

^aNon-income producing.

^bSee Note 12 regarding holdings of 5% voting securities.

^cFair valued using significant unobservable inputs. See Note 14 regarding fair value measurements.

^dSee Note 10 regarding restricted securities.

^eVariable rate security. The rate shown represents the yield at period end.

^fThe security was issued on a discount basis with no stated coupon rate.

^gA portion or all of the security has been segregated as collateral for open forward exchange contracts. At June 30, 2020, the aggregate value of these securities pledged amounted to $2,076,168, representing 0.2% of net assets.

franklintempleton.com Semiannual Report         17

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

At June 30, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).

Futures Contracts

Description	Type		Number of Contracts		Notional  Amount*		Expiration Date		Value/ Unrealized Appreciation (Depreciation)
Currency Contracts
EUR/USD		Short		1,599		$224,929,332		9/14/20		$1,483,684
GBP/USD		Short		1,585		122,807,781		9/14/20		3,392,979
Total Futures Contracts										$4,876,663

*As of period end.

At June 30, 2020, the Fund had the following forward exchange contracts outstanding. See Note 1(c).

Forward Exchange Contracts

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Euro		BOFA		Buy		12,979,960	$	14,552,804		7/15/20	$	34,266	$	—
Euro		BOFA		Sell		6,903,172		7,635,592		7/15/20		—		(122,293	)
Euro		BONY		Buy		13,810,512		15,373,279		7/15/20		147,175		—
Euro		HSBK		Buy		2,249,651		2,537,765		7/15/20		—		(9,576	)
Euro		HSBK		Buy		14,413,613		16,066,672		7/15/20		131,556		—
Euro		HSBK		Sell		73,672,886		82,891,574		7/15/20		96,910		—
Euro		SSBT		Buy		2,864,322		3,245,628		7/15/20		—		(26,661	)
Euro		SSBT		Sell		73,672,886		82,884,944		7/15/20		90,280		—
Euro		UBSW		Buy		403,749		454,000		7/15/20		—		(261	)
Euro		UBSW		Buy		13,828,902		15,519,145		7/15/20		21,978		—
Euro		UBSW		Sell		6,713,338		7,427,301		7/15/20		—		(117,245	)
British Pound		BOFA		Sell		2,005,492		2,425,703		7/16/20		—		(59,429	)
British Pound		BONY		Sell		1,600,663		1,996,971		7/16/20		13,489		—
British Pound		HSBK		Buy		5,000,000		6,347,050		7/16/20		—		(151,235	)
British Pound		HSBK		Sell		9,370,685		12,155,862		7/16/20		544,056		—
British Pound		SSBT		Sell		7,190,570		9,395,954		7/16/20		485,665		—
British Pound		UBSW		Sell		1,332,828		1,661,828		7/16/20		10,237		—
British Pound		BOFA		Buy		4,647,479		5,553,612		8/14/20		206,271		—
British Pound		BOFA		Buy		8,421,427		10,679,970		8/14/20		—		(242,821	)
British Pound		BONY		Sell		343,351		421,642		8/14/20		—		(3,893	)
British Pound		HSBK		Buy		5,552,452		6,825,074		8/14/20		56,392		—
British Pound		HSBK		Sell		40,040,937		52,150,317		8/14/20		2,525,332		—
British Pound		SSBT		Sell		936,303		1,103,246		8/14/20		—		(57,167	)
British Pound		SSBT		Sell		40,040,937		52,158,125		8/14/20		2,533,140		—
Swiss Franc		UBSW		Sell		42,236,058		44,944,886		8/17/20		300,996		—
Euro		BOFA		Sell		3,672,036		4,028,184		8/18/20		—		(101,714	)
Euro		BONY		Sell		8,547,459		9,315,362		8/18/20		—		(297,870	)
Euro		HSBK		Sell		11,462,154		12,528,456		8/18/20		—		(362,902	)
Euro		UBSW		Sell		10,201,284		11,156,156		8/18/20		—		(317,115	)
Swedish Krona		SSBT		Sell		143,747,853		15,284,601		8/24/20		—		(150,612	)

18         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
Euro		BOFA		Sell		5,290,117	$	5,785,479		10/07/20	$	—	$	(171,306	)
Euro		BONY		Sell		3,415,420		3,850,637		10/07/20		4,801		—
Euro		BONY		Sell		7,585,529		8,304,165		10/07/20		—		(237,304	)
Euro		HSBK		Sell		1,140,865		1,297,871		10/07/20		13,232		—
Euro		HSBK		Sell		14,512,372		15,993,316		10/07/20		—		(347,926	)
Euro		SSBT		Sell		524,740		568,251		10/07/20		—		(22,618	)
Euro		SSBT		Sell		3,415,420		3,846,791		10/07/20		955		—
Euro		UBSW		Sell		4,528,259		5,112,159		10/07/20		13,242		—
Euro		UBSW		Sell		10,291,032		11,256,818		10/07/20		—		(331,104	)
British Pound		SSBT		Sell		712,059		872,870		11/23/20		—		(10,202	)
British Pound		UBSW		Sell		691,733		853,654		11/23/20		—		(4,211	)
British Pound		UBSW		Sell		5,600,128		7,035,641		11/23/20		90,544		—
Euro		BOFA		Sell		648,542		727,282		11/23/20		—		(3,939	)
Euro		HSBK		Sell		4,219,318		4,713,095		11/23/20		—		(44,116	)
Euro		HSBK		Sell		9,052,623		10,235,265		11/23/20		28,588		—
Euro		SSBT		Sell		1,532,598		1,707,745		11/23/20		—		(20,233	)
Euro		SSBT		Sell		3,332,864		3,777,869		11/23/20		20,121		—
Euro		UBSW		Sell		3,311,467		3,751,577		11/23/20		17,955		—
Euro		UBSW		Sell		31,916,518		35,093,052		11/23/20		—		(892,276	)
Total Forward Exchange Contracts											$	7,387,181	$	(4,106,029	)
Net unrealized appreciation (depreciation)											$	3,281,152

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Note 11 regarding other derivative information.

See Abbreviations on page 38.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         19

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities

June 30, 2020 (unaudited)

Franklin Mutual European Fund

Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	1,081,227,613
Cost - Controlled affiliates (Note 3f and 12)		6,282,509
Value - Unaffiliated issuers	$	875,877,505
Value - Controlled affiliates (Note 3f and 12)		—
Cash		433,987
Receivables:
Investment securities sold		2,795,343
Capital shares sold		599,703
Dividends.		4,939,698
European Union tax reclaims		2,903,600
Deposits with brokers for:
Futures contracts		8,286,010
Unrealized appreciation on OTC forward exchange contracts		7,387,181
Other assets		559,686
Total assets		903,782,713
Liabilities:
Payables:
Investment securities purchased		6,744,945
Capital shares redeemed		956,629
Management fees		651,114
Distribution fees		106,834
Transfer agent fees		256,109
Trustees’ fees and expenses		146,648
Variation margin on futures contracts		1,049,975
Unrealized depreciation on OTC forward exchange contracts		4,106,029
Accrued expenses and other liabilities.		221,909
Total liabilities		14,240,192
Net assets, at value	$	889,542,521
Net assets consist of:
Paid-in capital	$	1,160,205,700
Total distributable earnings (losses)		(270,663,179	)
Net assets, at value	$	889,542,521

20         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2020 (unaudited)

Franklin Mutual European Fund

Class Z:
Net assets, at value	$461,172,387
Shares outstanding	27,239,972
Net asset value and maximum offering price per share	$16.93
Class A:
Net assets, at value	$356,699,253
Shares outstanding	21,744,346
Net asset value per sharea	$16.40
Maximum offering price per share (net asset value per share ÷ 94.50%)	$17.35
Class C:
Net assets, at value	$ 38,163,916
Shares outstanding	2,305,404
Net asset value and maximum offering price per sharea	$16.55
Class R:
Net assets, at value	$     565,095
Shares outstanding	35,177
Net asset value and maximum offering price per share	$16.06
Class R6:
Net assets, at value	$ 32,941,870
Shares outstanding	1,946,463
Net asset value and maximum offering price per share	$16.92

^aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         21

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual European Fund

Investment income:
Dividends:(net of foreign taxes)*
Unaffiliated issuers	$	11,589,577
Interest:
Unaffiliated issuers		240,855
Income from securities loaned:
Unaffiliated entities (net of fees and rebates)		12
Total investment income		11,830,444
Expenses:
Management fees (Note 3a)		4,535,351
Distribution fees: (Note 3c)
Class A		486,000
Class C		224,480
Class R		1,486
Transfer agent fees: (Note 3e)
Class Z		388,852
Class A		264,591
Class C		30,527
Class R		406
Class R6		8,783
Custodian fees (Note 4)		71,284
Reports to shareholders		55,138
Registration and filing fees		55,054
Professional fees		69,638
Trustees’ fees and expenses		51,618
Other		11,865
Total expenses		6,255,073
Expense reductions (Note 4)		(7,504	)
Expenses waived/paid by affiliates (Note 3f and 3g)		(5,269	)
Net expenses		6,242,300
Net investment income		5,588,144
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		(90,935,481	)
Foreign currency transactions		(348,289	)
Forward exchange contracts		(3,909,279	)
Futures contracts		4,220,809
Net realized gain (loss)		(90,972,240	)
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(237,645,062	)
Translation of other assets and liabilities denominated in foreign currencies		(3,094	)
Forward exchange contracts		17,317,628
Futures contracts		9,561,864
Net change in unrealized appreciation (depreciation)		(210,768,664	)
Net realized and unrealized gain (loss)		(301,740,904	)
Net increase (decrease) in net assets resulting from operations	$	(296,152,760	)
*Foreign taxes withheld on dividends	$	899,736

22         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

Franklin Mutual European Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31, 2019
Increase (decrease) in net assets:
Operations:
Net investment income		$     5,588,144			$     41,950,270
Net realized gain (loss)		(90,972,240	)		55,462,083
Net change in unrealized appreciation (depreciation)		(210,768,664	)		224,438,946
Net increase (decrease) in net assets resulting from operations		(296,152,760	)		321,851,299
Distributions to shareholders:
Class Z		—			(20,967,947	)
Class A		—			(12,671,231	)
Class C		—			(972,882	)
Class R		—			(16,815	)
Class R6		—			(1,222,857	)
Total distributions to shareholders		—			(35,851,732	)
Capital share transactions: (Note 2)
Class Z		(154,719,559	)		(321,483,450	)
Class A		(54,250,095	)		(150,432,479	)
Class C		(10,969,736	)		(29,238,553	)
Class R		(5,906	)		(117,087	)
Class R6		(2,626,791	)		(127,323,705	)
Total capital share transactions		(222,572,087	)		(628,595,274	)
Net increase (decrease) in net assets		(518,724,847	)		(342,595,707	)
Net assets:
Beginning of period		1,408,267,368			1,750,863,075
End of period		$  889,542,521			$1,408,267,368

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         23

FRANKLIN MUTUAL SERIES FUNDS

Notes to Financial Statements (unaudited)

Franklin Mutual European Fund

1. Organization and Significant Accounting Policies

Franklin Mutual Series Funds (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of six separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Mutual European Fund (Fund) is included in this report. The Fund offers five classes of shares: Class Z, Class A, Class C, Class R and Class R6. Class C shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The Fund may utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and derivative financial instruments 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.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.

Investments in open-end mutual funds are valued at the closing NAV.

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.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

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 June 30, 2020, certain securities may have been fair valued using these procedures, in which case the securities were categorized as Level 2 inputs within the fair value hierarchy. See the Fair Value Measurements note for more information.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b.  Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statement of Operations.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

c.  Derivative Financial Instruments

The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various

franklintempleton.com Semiannual Report         25

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

1. Organization and Significant Accounting Policies (continued)

c.  Derivative Financial Instruments (continued)

periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

The Fund entered into exchange traded futures contracts primarily to manage exposure to certain foreign currencies. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund,

and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage 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 11 regarding other derivative information.

d.  Securities Sold Short

The Fund is engaged in selling securities short, which obligates the Fund to replace a borrowed security with the same security at current fair value. The Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Gains are limited to the price at which the Fund sold the security short, while losses are potentially unlimited in size.

The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale to the extent necessary to meet margin requirements until the short position is closed out. A deposit must also be maintained with the Fund’s custodian/counterparty broker consisting of cash and/or securities having a value equal to a specified percentage of the value of the securities sold short. The Fund is obligated to pay fees for borrowing the securities sold short and is required to pay the counterparty any dividends and/or interest due on securities sold short. Such dividends and/or interest and any security borrowing fees are recorded as an expense to the Fund. At June 30, 2020, the Fund had no securities sold short.

e.  Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral 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. The

26         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

collateral 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, and/or a joint repurchase agreement. 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 the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At June 30, 2020, the Fund had no securities on loan.

f.  Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

As a result of several court cases, in certain countries across the European Union, the Fund filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statement of Assets and Liabilities. When uncertainty

exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, EU reclaims received by the Fund, if any, reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns.

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2020, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

g.  Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and dividends declared on securities sold short are 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

franklintempleton.com Semiannual Report         27

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

1. Organization and Significant Accounting Policies (continued)

g.  Security Transactions, Investment Income, Expenses and Distributions (continued)

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.

h.  Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

i.  Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

At June 30, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2020						Year Ended December 31, 2019
	Shares			Amount			Shares			Amount
Class Z Shares:
Shares sold		2,403,152		$	41,251,208			4,771,932		$	94,210,649
Shares issued in reinvestment of distributions		—			—			916,245			19,535,245
Shares redeemed		(12,196,459	)		(195,970,767	)		(22,203,969	)		(435,229,344	)
Net increase (decrease)		(9,793,307	)	$	(154,719,559	)		(16,515,792	)	$	(321,483,450	)
Class A Shares:
Shares solda		2,209,627		$	33,489,244			3,580,834		$	69,916,200
Shares issued in reinvestment of distributions		—			—			473,589			9,797,244
Shares redeemed		(5,247,013	)		(87,739,339	)		(11,746,709	)		(230,145,923	)
Net increase (decrease)		(3,037,386	)	$	(54,250,095	)		(7,692,286	)	$	(150,432,479	)
Class C Shares:
Shares sold		60,447		$	1,044,751			149,698		$	2,911,176
Shares issued in reinvestment of distributions		—			—			44,429			929,543
Shares redeemeda		(704,316	)		(12,014,487	)		(1,694,293	)		(33,079,272	)
Net increase (decrease)		(643,869	)	$	(10,969,736	)		(1,500,166	)	$	(29,238,553	)

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

	Six Months Ended June 30, 2020						Year Ended December 31, 2019
	Shares			Amount			Shares			Amount
Class R Shares:
Shares sold		3,942			$            73,580			6,114			$          118,329
Shares issued in reinvestment of distributions		—			—			829			16,815
Shares redeemed		(4,958	)		(79,486	)		(13,638	)		(252,231	)
Net increase (decrease)		(1,016	)		$            (5,906	)		(6,695	)		$        (117,087	)
Class R6 Shares:
Shares sold		247,341			$      4,094,318			354,277			$      7,045,227
Shares issued in reinvestment of distributions		—			—			13,656			290,912
Shares redeemed		(394,414	)		(6,721,109	)		(6,655,454	)		(134,659,844	)
Net increase (decrease)		(147,073	)		$     (2,626,791	)		(6,287,521	)		$(127,323,705	)

^aMay include a portion of Class C shares that were automatically converted to Class A.

3. Transactions with Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a.  Management Fees

The Fund pays an investment management fee to Franklin Mutual based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.875%	Up to and including $1 billion
0.845%	Over $1 billion, up to and including $2 billion
0.825%	Over $2 billion, up to and including $5 billion
0.805%	In excess of $5 billion

b.  Administrative Fees

Under an agreement with Franklin Mutual, FT Services provides administrative services to the Fund. The fee is paid by Franklin Mutual 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 Z and Class R6 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

franklintempleton.com Semiannual Report         29

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

3. Transactions with Affiliates (continued)

c. Distribution Fees (continued)

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:

Class A	0.35	%
Class C	1.00	%
Class R	0.50	%

The Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.

d. Sales Charges/Underwriting Agreements

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the period:

Sales charges retained net of commissions paid to unaffiliated brokers/dealers	$	5,392
CDSC retained	$	2,034

e. Transfer Agent Fees

Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. The fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.

For the period ended June 30, 2020, the Fund paid transfer agent fees of $693,159, of which $249,564 was retained by Investor Services.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

f. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended June 30, 2020, the Fund held investments in affiliated management investment companies as follows:

	Value at Beginning of Period		Purchases		Sales			Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Value at End of Period			Number of Shares Held at End of Period		Income from securities loaned
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 0.00%		$—		$180,000		$	(180,000)		$—		$—		$—	a		—		$—

^aAs of June 30, 2020, no longer held by the Fund.

g. Waiver and Expense Reimbursements

Investor Services has contractually agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.02% based on the average net assets of the class until April 30, 2021.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2020, the custodian fees were reduced as noted in the Statement of Operations.

5. Independent Trustees’ Retirement Plan

On January 1, 1993, the Trust adopted an Independent Trustees’ Retirement Plan (Plan). The Plan is an unfunded defined benefit plan that provides benefit payments to Trustees whose length of service and retirement age meets the eligibility requirements of the Plan. Benefits under the Plan are based on years of service and fees paid to each trustee at the time of retirement. Effective in December 1996, the Plan was closed to new participants.

During the period ended June 30, 2020, the Fund’s projected benefit obligation and benefit payments under the Plan were as follows:

aProjected benefit obligation at June 30, 2020	$	140,301
bIncrease in projected benefit obligation	$	5,781
Benefit payments made to retired trustees	$	(726	)

^aThe projected benefit obligation is included in trustees’ fees and expenses in the Statement of Assets and Liabilities.

^b The increase in projected benefit obligation is included in trustees’ fees and expenses in the Statement of Operations.

6. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual European Fund (continued)

6. Income Taxes (continued)

At December 31, 2019, the capital loss carryforwards were as follows:

Capital loss carryforwards not subject to expiration:
Short term	$	11,726,704

At June 30, 2020, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	1,066,997,102
Unrealized appreciation	$	98,271,608
Unrealized depreciation		(281,225,525	)
Net unrealized appreciation (depreciation)	$	(182,953,917	)

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of foreign currency transactions.

7. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2020, aggregated $155,793,582 and $332,198,914, respectively.

8. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local, regional and global economic, political and social conditions, which may result in greater market volatility. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in securities in Europe. In addition, certain foreign securities may not be as liquid as U.S. securities.

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. Restricted Securities

The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.

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Franklin Mutual European Fund (continued)

At June 30, 2020, investments in restricted securities, excluding securities exempt from registration under the 1933 Act, were as follows:

Shares	Issuer	Acquisition Date		Cost		Value
16,127,149	Euro Wagon LP (Value is —% of Net Assets)		12/08/05 - 1/02/08	$	6,282,509	$	—

11. Other Derivative Information

At June 30, 2020, investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:

	Asset Derivatives				Liability Derivatives
Derivative Contracts   Not Accounted for as   Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin on futures contracts	$	4,876,663	a	Variation margin on futures contracts	$              —
	Unrealized appreciation on OTC forward exchange contracts		7,387,181		Unrealized depreciation on OTC forward exchange contracts	4,106,029
Totals		$	12,263,844			$4,106,029

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/ payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

For the period ended June 30, 2020, the effect of derivative contracts in the Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Location	Net Realized Gain (Loss) for the Period			Statement of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Forward exchange contracts	$	(3,909,279	)	Forward exchange contracts	$	17,317,628
	Futures contracts		4,220,809		Futures contracts		9,561,864
Totals		$	311,530			$	26,879,492

For the period ended June 30, 2020, the average month end notional amount of futures contracts represented $410,267,448.

The average month end contract value of forward exchange contracts was $776,954,257.

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Franklin Mutual European Fund (continued)

11. Other Derivative Information (continued)

At June 30, 2020, OTC derivative assets and liabilities are as follows:

	Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
	Assetsa		Liabilitiesa
Derivatives
Forward exchange contracts		$7,387,181		$4,106,029

^aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

At June 30, 2020, OTC derivative assets, which may be offset against OTC derivative liabilities and collateral received from the counterparty, are as follows:

			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Receiveda,b			Cash Collateral Received		Net Amount   (Not less   than zero)
Counterparty
BOFA		$    240,537		$(240,537	)		$                —			$    —		$    —
BONY		165,465		(165,465	)		—			—		—
HSBK		3,396,066		(915,755	)		(2,480,311	)		—		—
SSBT		3,130,161		(287,493	)		(2,842,668	)		—		—
UBSW		454,952		(454,952	)		—			—		—
Total		$7,387,181		$(2,064,202	)		$(5,322,979	)		$    —		$    —

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Franklin Mutual European Fund (continued)

At June 30, 2020, OTC derivative liabilities, which may be offset against OTC derivative assets and collateral pledged to the counterparty, are as follows:

			Amounts Not Offset in the     Statement of Assets and Liabilities
	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledgedb,c			Cash Collateral Pledged		Net Amount  (Not less  than zero)
Counterparty
BOFA		$   701,502		$   (240,537	)		$   (460,965	)		$    —		$      —
BONY		539,067		(165,465	)		(368,916	)		—		4,686
HSBK		915,755		(915,755	)		—			—		—
SSBT		287,493		(287,493	)		—			—		—
UBSW		1,662,212		(454,952	)		(1,132,557	)		—		74,703
Total		$4,106,029		$(2,064,202	)		$(1,962,438	)		$    —		$79,389

^aAt June 30, 2020 the Fund received U.K. Treasury Bonds and U.S. Treasury Bills, Bonds and Notes as collateral for derivatives.

^bIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit the collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.

^cSee the accompanying Statement of Investments for securities pledged as collateral for derivatives.

See Note 1(c) regarding derivative financial instruments.

See Abbreviations on page 38.

12. Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines ‘‘affiliated companies’’ to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. During the period ended June 30, 2020, investments in “affiliated companies” were as follows:

Name of Issuer	Value at Beginning of Period		Purchases		Sales		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Value at End of Period		Number of Shares Held at End of Period		Dividend Income
Controlled Affiliatesa
Euro Wagon LP (Value is —% of Net Assets)		$ —		$ —		$ —		$ —		$ —		$ —		16,127,149		$ —

^aIssuer in which the Fund owns 25% or more of the outstanding voting securities.

13. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 5, 2021. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

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Franklin Mutual European Fund (continued)

13. Credit Facility (continued)

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended June 30, 2020, the Fund did not use the Global Credit Facility.

14. 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.

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Franklin Mutual European Fund (continued)

A summary of inputs used as of June 30, 2020, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:a
Equity Investments:b
Aerospace & Defense	$	—	$	19,750,027	$	—		$	19,750,027
Auto Components		—		37,354,956		—			37,354,956
Automobiles		—		25,109,840		—			25,109,840
Banks		—		78,624,556		—			78,624,556
Beverages		9,116,939		20,954,244		—			30,071,183
Chemicals		—		45,689,402		—			45,689,402
Commercial Services & Supplies		—		9,457,684		—			9,457,684
Construction Materials		—		54,728,412		—			54,728,412
Diversified Financial Services		—		8,801,121		—			8,801,121
Diversified Telecommunication Services		—		37,386,104		—			37,386,104
Health Care Providers & Services		—		22,673,517		—			22,673,517
Hotels, Restaurants & Leisure		—		22,774,936		—			22,774,936
Household Durables		—		21,812,089		—			21,812,089
Household Products		—		23,240,520		—			23,240,520
Industrial Conglomerates		—		16,914,690		—			16,914,690
Insurance		—		64,956,556		—			64,956,556
Machinery		—		50,885,691		—			50,885,691
Media		—		3,436,609		—			3,436,609
Oil, Gas & Consumable Fuels		—		52,925,897		—			52,925,897
Pharmaceuticals		—		60,057,850		—			60,057,850
Software		—		21,253,677		—			21,253,677
Specialty Retail		—		9,286,760		—			9,286,760
Textiles, Apparel & Luxury Goods		—		17,281,247		—			17,281,247
Tobacco		—		23,891,413		—			23,891,413
Trading Companies & Distributors		—		51,654,808		—			51,654,808
Wireless Telecommunication Services		—		22,645,712		—			22,645,712
All Other Equity Investments		8,215,929		—		—	c		8,215,929
Short Term Investments		22,996,319		12,000,000		—			34,996,319
Total Investments in Securities	$	40,329,187	$	835,548,318	$	—		$	875,877,505
Other Financial Instruments:
Futures Contracts	$	4,876,663	$	—	$	—		$	4,876,663
Forward Exchange Contracts		—		7,387,181		—			7,387,181
Total Other Financial Instruments	$	4,876,663	$	7,387,181	$	—		$	12,263,844
Liabilities:
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	4,106,029	$	—		$	4,106,029

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common and preferred stocks.

^cIncludes securities determined to have no value at June 30, 2020.

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Franklin Mutual European Fund (continued)

14. Fair Value Measurements (continued)

A reconciliation in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 assets and/or liabilities at the beginning and/or end of the period.

15. New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provides optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank-offered based reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management is currently evaluating the impact, if any, of applying this ASU.

16. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty		Currency		Selected Portfolio
BOFA	Bank of America Corp.	EUR	Euro	ADR	American Depositary Receipt
BONY	The Bank of New York Mellon Corp.	GBP	British Pound	FHLB	Federal Home Loan Bank
HSBK	HSBC Bank PLC	USD	United States Dollar
SSBT	State Street Bank and Trust Co., N.A.
UBSW	UBS AG

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Shareholder Information

Board Approval of Investment

Management Agreements

FRANKLIN MUTUAL SERIES FUNDS

Franklin Mutual European Fund

(Fund)

The Board of Trustees (Board), including a majority of trustees that are not “interested persons” as such term is defined in section 2(a)(19) of the Investment Company Act of 1940 (hereinafter referred to as “independent trustees”), at a meeting held on May 14, 2020, unanimously approved the renewal of the Fund’s investment management agreement. Prior to a meeting of all of the trustees for the purpose of considering such renewal, the independent trustees participated in two other meetings held in connection with the renewal process. Throughout the process, the independent trustees received assistance and advice from and met separately with independent counsel. The independent trustees met with and interviewed officers of the investment manager (including portfolio managers), the transfer agent and shareholder services group and the distributor. In approving the renewal of the investment management agreement for the Fund, the Board, including the independent trustees, determined that the investment management fee structure was fair and reasonable and that continuance of the agreement was in the best interests of the Fund and its shareholders.

In reaching their decision on the investment management agreement, the trustees took into account information furnished throughout the year at regular Board meetings, as well as information specifically requested and furnished for the renewal process, which culminated in the meetings referred to above for the specific purpose of considering such agreement. Information furnished throughout the year included, among others, reports on the Fund’s investment performance, expenses, portfolio composition, portfolio brokerage execution, client commission arrangements, derivatives, securities lending, asset segregation, portfolio turnover, Rule 12b-1 plan, distribution, shareholder servicing, legal and compliance matters, pricing of securities, sales and redemptions, and marketing support payments made to financial intermediaries, as well as a third-party survey of transfer agent fees charged to funds within the Franklin Templeton Investments (FT) complex in comparison with those charged to other fund complexes deemed comparable. Also, related financial statements and other information about the scope and quality of services provided by the investment manager and its affiliates and enhancements to

such services over the past year were provided. In addition, the trustees received periodic reports throughout the year and during the renewal process relating to compliance with the Fund’s investment policies and restrictions. During the renewal process, the independent trustees considered the investment manager’s methods of operation within the Franklin Templeton group and its activities on behalf of other clients. The Board also noted that it received an annual report on all payments made by FT or the Fund to financial intermediaries engaged in the sale of Fund shares, as well as a memorandum relating to third-party servicing arrangements in response to a Guidance Update from the U.S. Securities and Exchange Commission (SEC) relating to mutual fund distribution and sub-accounting fees.

The information obtained by the trustees during the renewal process also included a special report prepared by Broadridge Financial Solutions, Inc., an independent third-party analyst that utilizes data from Lipper, Inc. (“Lipper”), comparing the Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper (Broadridge Section 15(c) Report). The trustees reviewed the Broadridge Section 15(c) Report and its usefulness in the renewal process with respect to matters such as comparative fees, expenses, expense ratios, performance and volatility. They concluded that the report continues to be a reliable resource in the performance of their duties.

In addition, the trustees received a Profitability Study (Profitability Study) prepared by management discussing the profitability to FT from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Over the past year, the Board and counsel to the independent trustees continued to receive reports on management’s handling of recent regulatory inquiries and pending legal actions against the investment manager and its affiliates. The independent trustees were satisfied with the actions taken to date by management in response to such regulatory and legal matters.

The trustees reviewed the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of the investment manager. As part of this review, particular attention was given to management’s diligent risk management program, including continual monitoring and management of cybersecurity, liquidity and counterparty credit risk, and attention given to derivatives and other complex instruments that are held and expected to be held by the Fund and how such instruments

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are used to carry out the Fund’s investment goal(s). The Board also took into account, among other things, management’s efforts in establishing a global credit facility for the benefit of the Fund and other accounts managed by FT to provide a source of cash for temporary and emergency purposes or to meet unusual redemption requests as well as the strong financial position of the investment manager’s parent company and its commitment to the mutual fund business. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity and liquidity risk management. The Board also recognized management’s commitment to facilitating Board oversight of particular areas, including derivatives and payments to intermediaries, by enhanced reporting.

In addition to the above and other matters considered by the trustees throughout the course of the year, the following discussion relates to certain primary factors relevant to the Board’s decision. This discussion of the information and factors considered by the Board (including the information and factors discussed above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual trustees may have assigned different weights to various factors.

NATURE, EXTENT AND QUALITY OF SERVICES. The trustees reviewed the nature, extent and quality of the services provided, and to be provided, by the investment manager. The trustees cited the investment manager’s ability to implement the Fund’s disciplined value investment approach and its long-term relationship with the Fund as reasons that shareholders choose to invest, and remain invested, in the Fund. The trustees reviewed the Fund’s portfolio management team, including its performance, staffing, skills and compensation program. With respect to portfolio manager compensation, management assured the trustees that the Fund’s long-term performance is a significant component of incentive-based compensation and noted that a portion of a portfolio manager’s incentive-based compensation is paid in shares of pre-designated funds from the portfolio manager’s fund management area. The trustees noted that the portfolio manager compensation program aligned the interests of the portfolio managers with that of shareholders of the Fund. The trustees discussed with management various other products, portfolios and entities

that are advised by the investment manager and the allocation of assets and expenses among and within them, as well as their relative fees and reasons for differences with respect thereto and any potential conflicts. During regular Board meetings and the aforementioned meetings of the independent trustees, the trustees received reports and presentations on the investment manager’s best execution trading policies. The trustees considered periodic reports provided to them showing that the investment manager complied with the investment policies and restrictions of the Fund as well as other reports periodically furnished to the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics covering the investment management personnel, the adherence to fair value pricing procedures established by the Board and the accuracy of net asset value calculations. The Board noted the extent of the benefits provided to Fund shareholders from being part of the Franklin Templeton group of funds, including the right to exchange investments between funds (same class) without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings of other funds to obtain reduced sales charges. The Board considered the investment manager’s significant efforts in developing and implementing compliance procedures established in accordance with SEC and other requirements.

The Board considered the nature, extent and quality of the services to be provided under the Fund’s other service agreements to determine that, on an overall basis, Fund shareholders were well served. In this connection, the Board also took into account transfer agent and shareholder services provided to Fund shareholders by an affiliate of the investment manager, noting continuing expenditures by management to increase and improve the scope of such services and favorable periodic reports on shareholder services conducted by independent third parties. While such considerations directly affected the trustees’ decision in renewing the Fund’s transfer agent and shareholder services agreement, the Board also considered these commitments as incidental benefits to Fund shareholders deriving from the investment management relationship.

Based on their review, the trustees were satisfied with the nature and quality of the overall services provided, and to be provided, by the investment manager and its affiliates to the Fund and its shareholders and were confident in the abilities of the management team to continue the disciplined value investment approach of the Fund and to provide quality services to the Fund and its shareholders.

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INVESTMENT PERFORMANCE. The trustees reviewed and placed significant emphasis on the investment performance of the Fund over the one-, three-, five- and 10-year periods ended December 31, 2019. They considered the history of performance of the Fund relative to various benchmarks. As part of their review, they inquired of management regarding benchmarks, style drift and restrictions on permitted investments. Consideration was also given to performance in the context of available levels of cash during the periods.

The trustees had meetings during the year, including the meetings referred to above held in connection with the renewal process, with the Fund’s portfolio managers to discuss performance and the management of the Fund. In addition to the materials provided by management in connection with the renewal process, the independent trustees requested throughout the year (and received) additional presentations from the investment manager and senior management of FT regarding the performance of the investment manager and the Fund. As part of these presentations, the investment manager and senior management of FT reviewed enhancements that have been made, and are being made, to the investment manager’s investment process. In addition, it was noted that senior management of FT is conducting a review of the investment manager and the Fund and will report the results thereof to the independent trustees when completed.

Particular attention in assessing performance was given to the Broadridge Section 15(c) Report. That report showed the investment performance of the Fund (Class A shares) in comparison to other funds determined comparable by Lipper.

The comparable funds to the Fund, as chosen by Lipper, included all retail and institutional European region funds. The Fund had total returns in the second-lowest performing quintile for the one-year period ended December 31, 2019, and had annualized total returns for the three- and five-year periods in the lowest and second-lowest performing quintiles, respectively. The trustees noted that the Fund’s total return on an annualized basis for the 10-year period ended December 31, 2019 was in the middle performing quintile. The trustees also compared Fund performance to other industry benchmarks, including measures of risk-adjusted performance of a fund, as part of their evaluation of investment performance. The trustees discussed with management the reasons for the relative underperformance for the one-, three-, and five-year periods ended December 31, 2019. While disappointed with the relative underperformance of the Fund, the Board did not believe

that any changes with respect to the Fund were warranted at the time, particularly as the enhancements to the investment manager’s investment process continue to be implemented and as the review being conducted by senior management of FT is in process. The Board noted that it would continue to monitor future performance.

COMPARATIVE EXPENSES AND MANAGEMENT PROFITABILITY. The trustees considered the cost of the services provided and to be provided and the profits realized by the investment manager and its affiliates from their respective relationships with the Fund. As part of the renewal process, the trustees explored with management the trends in expense ratios over the past three fiscal years and the reasons for any increases in the Fund’s expense ratios (or components thereof). In considering the appropriateness of the management fee and other expenses charged to the Fund, the Board took into account various factors including investment performance and matters relating to Fund operations, including, but not limited to, the quality and experience of its portfolio managers and research staff. Consideration was also given to a comparative analysis in the Broadridge Section 15(c) Report of the investment management fee and total expense ratio of the Fund in comparison with those of a group of other funds selected by Lipper as its appropriate Lipper expense group. Lipper expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Lipper to be an appropriate measure of comparative expenses.

In reviewing comparative costs, emphasis was given to the Fund’s contractual management fee in comparison with the contractual management fee that would have been charged by other funds within its Lipper expense group assuming they were similar in size to the Fund, as well as the actual total expenses of the Fund in comparison with those of its Lipper expense group. The Lipper contractual management fee analysis includes administrative charges as being part of the management fee, and total expenses, for comparative consistency, are shown by Lipper for Fund Class A shares.

The Fund’s contractual management fee rate was in the middle quintile of its Lipper expense group and its total expenses were in the second-least expensive quintile of

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such group. The Board was satisfied with such comparative fees and expenses.

The trustees also reviewed the Profitability Study addressing profitability of Franklin Resources, Inc., from its overall U.S. fund business, as well as profitability to the Fund’s investment manager and its affiliates, from providing investment management and other services to the Fund during the 12-month period ended September 30, 2019, the most recent fiscal year-end of Franklin Resources, Inc. The trustees reviewed the basis on which such reports are prepared and the cost allocation methodology utilized in the Profitability Study, it being recognized that allocation methodologies may each be reasonable while producing different results. In this respect, the Board noted that the reasonableness of the cost allocation methodologies was reviewed by independent accountants on an every other year basis.

The independent trustees met with management to discuss the Profitability Study. This included, among other things, a comparison of investment management income with investment management expenses of the Fund; comparison of underwriting revenues and expenses; the relative relationship of investment management and underwriting expenses; shareholder servicing profitability; economies of scale; and the relative contribution of the Fund to the profitability of the investment manager and its parent. In discussing the Profitability Study with the Board, the investment manager stated its belief that the costs incurred in establishing the infrastructure necessary to operate the type of mutual fund operations conducted by it and its affiliates may not be fully reflected in the expenses allocated to the Fund in determining its profitability.

The Board also took into account management’s expenditures in improving shareholder services provided to the Fund, as well as the need to meet additional regulatory and compliance requirements. The trustees also considered the extent to which the investment manager may derive ancillary benefits from Fund operations, including those derived from economies of scale, discussed below, the allocation of Fund brokerage and the use of commission dollars to pay for research and other similar services.

Based upon their consideration of all these factors, the trustees determined that the level of profits realized by the investment manager and its affiliates in providing services to the Fund was not excessive in view of the nature, quality and extent of services provided.

ECONOMIES OF SCALE. The Board considered economies of scale realized by the investment manager and its affiliates as the Fund grows larger and the extent to which they are shared with Fund shareholders, as for example, in the level of the investment management fee charged, in the quality and efficiency of services rendered and in increased capital commitments benefiting the Fund directly or indirectly. While recognizing that any precise determination is inherently subjective, the trustees noted that, based upon the Profitability Study, as some funds increase in size, at some point economies of scale may result in the investment manager realizing a larger profit margin on investment management services provided to such a fund. The trustees also noted that benefits of economies of scale will be shared with Fund shareholders due to the decline in the effective investment management fee rate as breakpoints are achieved by the Fund.

The trustees noted that breakpoints had been instituted as part of the Fund’s investment management fee and that the Board regularly evaluates whether additional breakpoints are appropriate. The trustees assessed the savings to shareholders resulting from such breakpoints and believed they were, and continue to be, appropriate and they agreed to continue to monitor the appropriateness of the breakpoints. The trustees also considered the effects an increase in assets under management would have on the investment management fee and expense ratio of the Fund. To the extent further economies of scale may be realized by the investment manager and its affiliates, the Board believed the investment management fees provide a sharing of benefits with the Fund and its shareholders.

Liquidity Risk Management Program

The Funds have 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 program is designed to assess and manage each Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during 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. The Funds’ Board of Trustees approved the appointment of the Director of Liquidity Risk within the Investment Risk Management Group (the “IRMG”) as the Administrator of the LRMP. The IRMG maintains the Investment Liquidity Committee (the “ILC”) to provide

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FRANKLIN MUTUAL SERIES FUNDS

FRANKLIN MUTUAL EUROPEAN FUND

SHAREHOLDER INFORMATION

oversight and administration of policies and procedures governing liquidity risk management for FT products and portfolios. The ILC includes representatives from Franklin Templeton’s Risk, Trading, Global Compliance, Investment Compliance, Investment Operations, Valuation Committee and Product Management groups.

The LRMP Administrator Annual Report was presented to the Fund(s) Board of Trustees at their meetings in May 2020. The report covered the adequacy and effectiveness of the program during the period December 1, 2018 to December 31, 2019 (the “covered period”). The 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. In addition, the LRMP Administrator presented the Fund Board of Trustees an update on liquidity during the first quarter of 2020 in relation to the COVID-19 pandemic.

During the reporting period, the Fund maintained a high level of liquid assets that are defined under the Liquidity Rule as “Highly Liquid Investments.” As a result, the Fund was designated a “Primarily Highly Liquid Fund” as defined under the Liquidity Rule and has not adopted a “Highly Liquid Investment Minimum.” A Highly Liquid Investment is 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.

There can be no assurance that the program will achieve its objectives in the future. Please refer to your Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

Proxy Voting Policies and Procedures

The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678

or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust, on behalf of the Fund, files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year as an exhibit to its report on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

Householding of Reports and Prospectuses

You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800) 632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.

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Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.

	Semiannual Report and Shareholder Letter     Franklin Mutual European Fund
	Investment Manager	Distributor	Shareholder Services
	Franklin Mutual Advisers, LLC	Franklin Templeton Distributors, Inc. (800) DIAL BEN® / 342-5236 franklintempleton.com	(800) 632-2301 - (Class A, C, R & R6) (800) 448-FUND - (Class Z)

© 2020 Franklin Templeton Investments. All rights reserved. 478 S 08/20

Sign up for electronic delivery at franklintempleton.com/edelivery

Internet Delivery of Fund Reports Unless You Request Paper Copies: Effective January 1, 2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request them from the Fund or your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not signed up for electronic delivery, we would encourage you to join fellow shareholders who have. You may elect to receive shareholder reports and other communications electronically from the Fund by calling (800) 632-2301 or by contacting your financial intermediary.

You may elect to continue to receive paper copies of all your future shareholder reports free of charge by contacting your financial intermediary or, if you invest directly with a Fund, calling (800) 632-2301 to let the Fund know of your request. Your election to receive reports in paper will apply to all funds held in your account.

SHAREHOLDER LETTER

Dear Franklin Mutual Quest Fund Shareholder:

During the six months ended June 30, 2020, global equity markets were extremely volatile and declined as the spread of the novel coronavirus (COVID-19)—first reported in December and initially centered in China—disrupted economic activity and contributed to negative investor sentiment for risk assets. Share prices plunged dramatically, pulling global equities from near-record levels in mid-February before bottoming in late March. Global stocks snapped back in April and May but moderated in June to close the period significantly above the market trough, although still in negative territory. The broad U.S. equity market, as measured by the Standard & Poor’s^® 500 Index, finished the period down -3.08%, and global stocks, as measured by the MSCI World Index, retreated -5.48%.¹

As the period opened, major equity markets were rallying, lifted by China and the United States’ Phase-One trade agreement that was intended to serve as the foundation of a comprehensive settlement of two years of tariff one-upmanship between the world’s two largest economies. Then, COVID-19 emerged and upended these and other plans.

The spread of the pandemic evolved into a global public health crisis, and countries around the world implemented lockdown and physical distancing measures intended to “flatten the curve” of the contagion. Consumer and business spending fell, and manufacturing and other activity came to a virtual halt. Consequently, the world’s major economies fell into recession—including an end to the record-long U.S. expansion—and projections about the economic fallout exceeded that of the 2007–2009 Global Financial Crisis.

In response, central banks expanded their mandates to support economies and markets. The U.S. Federal Reserve (Fed) and the U.S. Congress undertook unprecedented monetary and fiscal stimulus that included lowering the federal funds rate to a range of 0.00%–0.25%; initiating open-ended quantitative easing; pledging to purchase short-dated investment-grade corporate debt and exchange-traded funds; sending checks directly to millions of Americans; expanding unemployment insurance; and

offering billions in loans to both small and large businesses. The European Union approved a €750 billion (US$825 billion) COVID-19 recovery fund that recommended financial burden sharing among member states.

Policymakers’ “whatever-it-takes” approach lifted investor sentiment, and stock prices surged. Rates of infection in some of the viral epicenters around the world slowed, and government officials, eager to restart economies, embarked on a gradual, albeit uneven, reopening.

In the period’s final month, the market rally continued but slowed considerably as the number of new, daily COVID-19 diagnoses spiked in U.S. states that were among the first to reopen. These trends may have worsened as many restless citizens, locked down since March, were less than diligent about adhering to social distancing and face-covering guidelines.

In late June, the Fed released the results of its annual Comprehensive Capital Analysis and Review report of large banks, better known as stress tests, and concluded that “banks can remain strong in the face of even the harshest shocks.” Nevertheless, the Fed capped dividends of banks at current levels and halted share buybacks until after the third quarter. Bank stocks reacted negatively to this development.

Market volatility and economic uncertainty can often present what we consider opportunities. We used our bottom-up, fundamentally driven investment process to add select positions that historically have not met our investment criteria but were now, in our opinion, attractively valued, and to move capital between existing positions to reflect market shifts. We believe this approach may offer meaningful upside potential and a degree of downside protection in periods of financial market turbulence. While the current level of uncertainty may be unnerving, it is important to remember that the market historically rewards investors who take a long-term perspective. To that end, we recognize the importance of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing

1. Source: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

Not FDIC Insured | May Lose Value  | No Bank Guarantee 

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markets and economic conditions, we are confident investors with a well-diversified portfolio and a patient, long-term outlook should be well-positioned for the years ahead.

On the following pages, the portfolio management team reviews investment decisions that pertain to performance during the past six months considering the economic environment and other factors. 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 continuing to serve your investment needs in the years ahead.

Sincerely,

Peter A. Langerman

Chairman, President and Chief Executive Officer

Franklin Mutual Advisers, LLC

This letter reflects our analysis and opinions as of June 30, 2020, 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.

Contents

Semiannual Report
Franklin Mutual Quest Fund	3
Performance Summary	8
Your Fund’s Expenses	10
Financial Highlights and Statement of Investments	11
Financial Statements	25
Notes to Financial Statements	30
Shareholder Information	46

Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.

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SEMIANNUAL REPORT

Franklin Mutual Quest Fund

This semiannual report for Franklin Mutual Quest Fund covers the period ended June 30, 2020.

Your Fund’s Goal and Main Investments

The Fund’s principal investment goal is capital appreciation, which may occasionally be short term. The secondary goal is income. Under normal market conditions, the Fund invests substantially to primarily in equity securities of U.S. and foreign companies that we believe are available at market prices less than their intrinsic value. The equity securities in which the Fund invests are primarily common stock, with a current focus on mid- and large-cap companies. To a lesser extent, the Fund also invests in merger arbitrage securities and the debt and equity of distressed companies. The Fund may invest a substantial portion, potentially up to 100% of its assets, in foreign securities, which may include sovereign debt and participations in foreign government debt. The Geographic Composition bar chart on this page lists the leading countries where the Fund invests.

Performance Overview

The Fund’s Class Z shares posted a -15.50% cumulative total return for the six months ended June 30, 2020. In comparison, the Fund’s benchmark, the MSCI World Index (USD), which tracks stock performance in global developed markets, posted a total return of -5.48%.¹ Also for comparison, the Fund’s secondary benchmark, the Bloomberg Barclays U.S. Corporate High Yield Index, which measures the U.S. corporate market of non-investment grade, fixed-rate corporate bonds, defined as the middle or lower ratings of Moody’s, Fitch and Standard & Poor’s, posted a -3.80% total return.¹ You can find more of the Fund’s performance data in the Performance Summary beginning on page 8.

Geographic Composition*

Based on Total Net Assets as of 6/30/20

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Economic and Market Overview

Global developed and emerging market equities, as measured by the MSCI All Country World Index (USD), posted a -5.99% total return during the six months under review.¹ Stocks fell sharply in early 2020 as countries around the world implemented lockdown measures in an effort to slow the spread of the novel coronavirus (COVID-19). Global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments such as government bonds and cash. While global equities, notably in the U.S., rebounded in April and May amid optimism about easing lockdown restrictions, concerns about a second wave of infections hindered equities in June, as investors weighed the possibility of renewed restrictions.

In the U.S., government mandates to mitigate the COVID-19 pandemic severely impacted the economy beginning in

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.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

The SOI begins on page 16.

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March 2020. As a result, the unemployment rate surged to 14.7% in April, as many businesses, particularly those involved in hospitality, retail and travel, announced mass layoffs.² According to the National Bureau of Economic Research, the longest U.S. economic expansion in history ended in February 2020 as the country slipped into a severe recession. Nonetheless, near period-end, there were signs that a recovery was underway, as jobless claims fell considerably from their peak in early April, retail sales rose sharply in May, and the unemployment rate fell to 11.1% in June.² Along with optimism about improved treatments and potential vaccines for COVID-19, the positive economic signals contributed to a significant equity rebound in April and May. However, an increase in COVID-19 infections in many states throughout June pressured U.S. stocks.

Additionally, the U.S. Federal Reserve (Fed) made significant efforts to support the U.S. economy. In March 2020, as the pandemic began to severely impact the economy and financial markets, the Fed implemented two emergency rate cuts, lowering the federal funds target rate to a range of 0.00%–0.25%, and announced sweeping quantitative easing measures aimed at ensuring credit flow to borrowers and supporting credit markets with unlimited amounts of bond purchasing.

In the eurozone, some analysts forecasted a significant contraction in 2020, particularly in southern European countries, as the magnitude of the economic disruption caused by the pandemic became apparent. European developed market equities, as measured by the MSCI Europe Index (USD), posted a -12.43% total return for the period.¹ To stimulate growth, the European Central Bank implemented a broad bond-buying program, and many countries passed fiscal stimulus measures.

Asian developed and emerging market equities, as measured by the MSCI All Country Asia Index (USD), posted a -5.51% total return during the six-month period.¹ The onset of the pandemic brought dramatically slower economic activity in Asia, as businesses halted operations and manufacturing and export activity declined sharply in the region’s major economies. Asian markets generally advanced toward period-end, bolstered by fiscal stimulus measures and economies reopening throughout the region, especially in China.

Emerging market stocks, as measured by the MSCI Emerging Markets Index (USD), posted a -9.67% total return

due primarily to the COVID-19 pandemic.¹ A sharp decrease in prices for oil and other natural resources also hurt emerging market economies reliant on these exports. In the last quarter of the reporting period, however, investor optimism led to a stock rally, particularly in emerging market countries that had successfully lowered infection rates.

Investment Strategy

At Franklin Mutual Series, we are committed to our distinctive value approach to investing, which we believe can generate above-average risk-adjusted returns over time for our shareholders. Our major investment strategy is investing in undervalued stocks. When selecting undervalued equities, we are attracted to what we believe are fundamentally strong companies with healthy balance sheets, high-quality assets, substantial free cash flow and shareholder-oriented management teams and whose stocks are trading at discounts to our assessment of the companies’ intrinsic or business value. We also look for asset-rich companies whose shares may be trading at depressed levels due to concerns over short-term earnings disappointments, litigation, management strategy or other perceived negatives. This strict value approach is not only intended to improve the likelihood of capital appreciation, but also reduces the risk of substantial declines, in our opinion. While the vast majority of our undervalued equity investments are made in publicly traded companies globally, we may invest occasionally in privately held companies as well. Our portfolio selection process generally includes an assessment of the potential impacts of any material environmental, social and governance (ESG) factors on the long-term risk and return profile of a company.

To a lesser extent, we complement this more traditional investment strategy with two others. One is distressed investing, a highly specialized field that has proven quite profitable during certain periods over the years. Distressed investing is complex and can take many forms. The most common distressed investment the Fund undertakes is the purchase of financially troubled or bankrupt companies’ debt at a substantial discount to face value. After the financially distressed company is reorganized, often in bankruptcy court, the old debt is typically replaced with new securities issued by the financially stronger company.

The other piece of our investment strategy is participating in arbitrage situations, another highly specialized field. When companies announce proposed mergers or takeovers,

2. Source: U.S. Bureau of Labor Statistics.

See www.franklintempletondatasources.com for additional data provider information.

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Asset Allocation*

Based on Total Net Assets as of 6/30/20

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

commonly referred to as deals, the target company may trade at a discount to the bid it ultimately accepts. One form of arbitrage involves purchasing the target company’s stock when it is trading below the value we believe it would receive in a deal. In keeping with our commitment to a relatively conservative investment approach, we typically focus our arbitrage efforts on announced deals, and avoid rumored deals or other situations we consider relatively risky. The current percentages of the Fund’s assets devoted to these investment strategies are listed in the Asset Allocation bar chart on this page. In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

Manager’s Discussion

The novel coronavirus (COVID-19) pandemic has significantly altered our way of life. Despite this, stocks have rallied off the March 23 market bottom and are within range of the pre-pandemic, all-time highs achieved earlier in the year. While the economy has reopened, the recovery is likely to be uneven. The question that we wrestle with daily is what does this scenario mean for equities in general and undervalued stocks in particular?

Markets rose sharply in April, as investors moved back into the growth stocks that propelled the market to the all-time highs of January. In late May, however, there was a turn in market sentiment resulting in value briefly outperforming growth. Undervalued stocks often benefit in periods of improving economic activity or stabilization as business prospects improve. Increasing demand across the economy, especially in cyclical sectors, can provide a tailwind for these companies and drive shareholder value. This is a scenario that often occurs off an economic bottom, and we are positioning our portfolios to capitalize on this trend.

Top 10 Sectors/Industries

Based on Equity Securities as of 6/30/20

	% of Total Net Assets
Insurance	8.6%
Tobacco	7.3%
Oil, Gas & Consumable Fuels	5.7%
Communications Equipment	4.8%
Software	3.5%
Media	3.2%
Diversified Telecommunication Services	3.1%
Pharmaceuticals	3.0%
Specialty Retail	2.8%
Diversified Financial Services	2.6%

The second-quarter earnings reporting season (occurring in July and August) marks the first period with the full impact of the economic lockdowns and will provide a more complete view into the pandemic’s impact on corporate statements. Many financial officers withdrew full-year 2020 guidance, as they reported first-quarter results, due to limited revenue visibility. As a result, the path ahead for stocks is less clear. We remain cautious amid these elevated risks.

Our traditional value equity investment approach is complemented with two other strategies: distressed investing and merger arbitrage.

Within our distressed credit strategy, we targeted companies and industries directly impacted by the coronavirus pandemic. The robust government fiscal and monetary intervention have limited the number of attractive options, but we have found opportunities in the energy sector and the retail and travel industries. Although each situation is unique, these securities have strong collateral packages and covenant protections or other features that we believe make them substantially more attractive than the broad array of available distressed debt.

Within merger arbitrage, which involves trading the stocks of companies involved in a merger or acquisition (M&A), activity has slowed significantly since the onset of the pandemic. Deal terms agreed to before the virus emerged have become unbalanced and are now more favorable for sellers than they are for buyers. Not surprisingly, some of these proposals have become embroiled in litigation. Also, M&A activity has slowed as the economic realities of the coronavirus get priced into the market, and bankers are challenged to conduct due diligence remotely. As the period ended, we began to see signs that transactions activity might resume, but we would expect the second half of the year to

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FRANKLIN MUTUAL QUEST FUND

be focused on resolving pending deals, rather than significant growth in new ones.

Fund Performance

Turning to Fund performance, investments that detracted included Intelsat, Envision Healthcare and Discovery, Inc.

The equity and debt securities of Luxembourg-based Intelsat, a satellite communication services company, were volatile and trended down during the period amid poor financial results as it prepared to sell some of its C-band spectrum to mobile phone companies seeking 5G networks. Intelsat failed to make a $125 million interest payment on April 15. S&P Global Ratings classified the missed payment as a selective default that would not be paid within the 30-day grace period, requiring the company to reach a restructuring agreement with its lenders or file for Chapter 11 bankruptcy protection, which it did on May 14. Also, during the period, there were several notices of intent to file a class action lawsuit against two large Intelsat shareholders, alleging that the defendants benefited from material, non-public information at the expense of other shareholders.

Our debt holding of U.S.-based Envision Healthcare, a privately held physician services provider, declined during the period amid the suspension of elective surgeries due to COVID-19 and as the company negotiated with creditors. Envision was acquired by private equity firm KKR through a leveraged buyout in 2018. Company management completed a debt exchange transaction in May 2020 to deleverage the balance sheet and reduce its cash interest expense. The bonds held by creditors were replaced by a substantially reduced balance of term loans, which we continue to hold.

U.S.-based cable network operator Discovery, Inc., which provides non-fiction and educational media entertainment, reported first-quarter 2020 financial results that were generally in line with consensus estimates, but its shares sold off due to declining advertising revenue amid the COVID-19 pandemic. Discovery’s management said the company would suspend the remaining $1.8 billion stock buyback program, although it repurchased $523 million of its shares early in the period. The postponement of the 2020 Tokyo Summer Olympics will be an additional headwind, but the company retains the broadcast rights when the event returns in 2021. Late in the period, management announced that Peter Faricy, head of the company’s direct-to-consumer operations (DTC), will depart on July 15. DTC is a major initiative at Discovery as the company attempts to navigate a challenging media landscape characterized by viewers cancelling cable subscriptions in favor of DTC streaming options.

Top 10 Equity Holdings

6/30/20

Company Sector/Industry, Country	% of Total Net Assets
Sorenson Communications LLC Communications Equipment, U.S.	4.8%
British American Tobacco PLC Tobacco, U.K.	3.3%
Liberty Global PLC Diversified Telecommunication Services, U.K.	2.8%
Navistar International Corp. Machinery, U.S.	2.4%
Imperial Brands PLC Tobacco, U.K.	2.2%
Voya Financial Inc. Diversified Financial Services, U.S.	2.2%
Tiffany & Co. Specialty Retail, U.S.	2.1%
Everest Re Group Ltd. Insurance, U.S.	2.1%
Discovery Inc. Media, U.S.	2.0%
The Williams Cos. Inc. Oil, Gas & Consumable Fuels, U.S.	1.9%

During the period under review, Fund investments that contributed positively to performance included Liberty Global, NortonLifeLock (not held at period-end) and Oracle. Liberty Global is listed among the Fund’s largest positions in the Top 10 Equity Holdings table on this page.

Shares of U.K.-based Liberty Global jumped on the news that the multinational telecom company would merge Virgin Media, its British cable television operator (the country’s largest) subsidiary, with O2, the U.K.’s number two mobile telephone provider that is owned by Telefónica of Spain. According to the deal terms, the parent companies will equally own the combined entity, which is valued at £31.4 billion including debt.

Shares of U.S.-based cybersecurity solutions provider NortonLifeLock outperformed during the period as work-from-home requirements attributable to the COVID-19 pandemic led to increased consumer purchases of the company’s cybersecurity subscriptions, generating solid fiscal fourth-quarter earnings that were in line with consensus expectations. NortonLifeLock’s stock rallied entering the year and surged after management announced in early January the payment of a one-time, $12 per share cash dividend funded by the 2019 sale of the enterprise security business to Broadcom. Symantec, the precursor to

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NortonLifeLock, sold the business as part of its transition to a pure-play consumer-focused cybersecurity company, and management subsequently changed the company’s name to NortonLifeLock, highlighting its lead brands. NortonLifeLock’s shares appreciated materially, and we exited our position by period-end.

The stock of U.S.-based Oracle, a supplier of enterprise information management software, recovered from a steep drop early in the period as the company’s fiscal third- and fourth-quarter earnings-per-share results surpassed consensus forecasts. Following a brief selloff in June—attributable to fiscal fourth-quarter revenue that missed both management and analysts’ targets—the stock reversed course and outperformed the broad market. An authorization of $15 billion in share buybacks early in the period also contributed to positive investor sentiment.

During the period, the Fund held currency forwards and futures seeking to hedge most of the currency risk of the portfolio’s non-U.S. dollar investments. The hedges had a positive overall impact on the Fund’s performance.

As fellow shareholders, we found recent absolute and relative performance disappointing, but our strategy of seeking undervalued stocks can lag the growth equity markets at times. We remain committed to our disciplined, value investment approach as we seek to generate attractive, long-term, risk-adjusted returns for shareholders.

Thank you for your participation in Franklin Mutual Quest Fund. We look forward to continuing to serve your investment needs.

Shawn M. Tumulty

Co-Portfolio Manager

Keith Luh, CFA

Co-Portfolio Manager

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2020, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, 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.

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Performance Summary as of June 30, 2020

The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.

Performance as of 6/30/20

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%. Class A: 5.50% maximum initial sales charge. For other share classes, visit franklintempleton.com.

Share Class	Cumulative  Total Return1	Average Annual  Total Return2
Z
6-Month	-15.50%3	-15.50%3
1-Year	-11.77%	-11.77%
5-Year	+ 2.85%	+ 0.56%
10-Year	+72.98%	+ 5.63%
A4
6-Month	-15.61%3	-20.27%
1-Year	-11.99%	-16.84%
5-Year	+ 1.63%	-0.81%
10-Year	+68.29%	+ 4.75%

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.

See page 9 for Performance Summary footnotes.

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PERFORMANCE SUMMARY

Total Annual Operating Expenses⁵

Share Class
Z	0.79	%
A	1.04	%

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. Value securities may not increase in price as anticipated or may decline further in value. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. 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. Smaller-company stocks have exhibited greater price volatility than larger-company stocks, particularly over the short term. The Fund’s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. The Fund may invest in lower-rated bonds, which entail higher credit risk. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental or man-made disasters; financial, political or social disruptions; terrorism and war; and other tragedies or catastrophes, can cause investor fear and panic, which can adversely affect the economies of many companies, sectors, nations, regions and the market in general, in ways that cannot necessarily be foreseen. The Fund’s prospectus also includes a description of the main investment risks.

1. Cumulative total return represents the change in value of an investment over the periods indicated.

2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

3. Total return information is based on net asset values calculated for shareholder transactions. Certain adjustments were made to the net asset values of the Fund at 6/30/20 for financial reporting purposes. Accordingly, adjusted total returns have been disclosed in the Financial Highlights and differ from those reported here.

4. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns (with sales charges) would have differed. Average annual total returns (with sales charges) have been restated to reflect the current maximum initial sales charge of 5.50%.

5. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

See www.franklintempletondatasources.com for additional data provider information.

franklintempleton.com Semiannual Report         9

FRANKLIN MUTUAL QUEST FUND

Your Fund’s Expenses

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.

		Actual		Hypothetical
		(actual return after expenses)		(5% annual return before expenses)
Share Class	Beginning Account Value 1/1/20	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201,2	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201,2	Net Annualized Expense Ratio2
Z	$1,000	$843.50	$3.80	$1,020.74	$4.17	0.83%
A	$1,000	$842.50	$4.95	$1,019.49	$5.42	1.08%
C	$1,000	$839.00	$8.37	$1,015.76	$9.17	1.83%
R	$1,000	$841.30	$6.09	$1,018.25	$6.67	1.33%
R6	$1,000	$843.40	$3.53	$1,021.03	$3.87	0.77%

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 182/366 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

10         Semiannual Report   franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

Financial Highlights

Franklin Mutual Quest Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class Z
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$14.06			$12.95			$15.83			$15.52			$14.47			$16.21
Income from investment operationsa:
Net investment incomeb		0.20	c		0.45			0.48			0.58			0.87	d		0.54
Net realized and unrealized gains (losses)		(2.40	)		1.16			(1.58	)		0.49			1.47			(1.45	)
Total from investment operations		(2.20	)		1.61			(1.10	)		1.07			2.34			(0.91	)
Less distributions from:
Net investment income		—			(0.50	)		(0.58	)		(0.63	)		(1.01	)		(0.68	)
Net realized gains		—			—			(1.20	)		(0.13	)		(0.28	)		(0.15	)
Total distributions		—			(0.50	)		(1.78	)		(0.76	)		(1.29	)		(0.83	)
Net asset value, end of period		$11.86			$14.06			$12.95			$15.83			$15.52			$14.47
Total returne		(15.65)%			12.40%			(6.85)%			6.92%			16.26%			(5.55)%
Ratios to average net assetsf
Expensesg,h		0.83%	i		0.78%			0.78%			0.79%			0.79%	i		0.82%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			—%	j		—%			0.01%			0.03%
Net investment income		3.22%	c		3.22%			2.96%			3.65%			5.74%	d		3.35%
Supplemental data
Net assets, end of period (000’s)		$2,349,300			$3,042,387			$3,054,792			$3,667,351			$3,683,095			$3,577,696
Portfolio turnover rate		29.90%			60.96%			115.52%			32.90%			44.04%			30.51%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.06 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.19%.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 5.42%.

^eTotal return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^jRounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         11

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Quest Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class A
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$13.84			$12.75			$15.60			$15.32			$14.29			$16.02
Income from investment operationsa:
Net investment incomeb		0.18	c		0.41			0.43			0.53			0.83	d		0.49
Net realized and unrealized gains (losses)		(2.36	)		1.14			(1.54	)		0.46			1.45			(1.43	)
Total from investment operations		(2.18	)		1.55			(1.11	)		0.99			2.28			(0.94	)
Less distributions from:
Net investment income		—			(0.46	)		(0.54	)		(0.58	)		(0.97	)		(0.64	)
Net realized gains		—			—			(1.20	)		(0.13	)		(0.28	)		(0.15	)
Total distributions		—			(0.46	)		(1.74	)		(0.71	)		(1.25	)		(0.79	)
Net asset value, end of period		$11.66			$13.84			$12.75			$15.60			$15.32			$14.29
Total returne		(15.75)%			12.14%			(7.00)%			6.54%			16.04%			(5.85)%
Ratios to average net assetsf
Expensesg,h		1.08%	i		1.03%			1.03%			1.04%			1.04%	i		1.10%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			—%	j		—%			0.01%			0.03%
Net investment income		2.97%	c		2.97%			2.71%			3.40%			5.49%	d		3.07%
Supplemental data
Net assets, end of period (000’s)		$763,413			$1,035,699			$1,067,382			$1,153,870			$1,216,085			$1,203,508
Portfolio turnover rate		29.90%			60.96%			115.52%			32.90%			44.04%			30.51%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.06 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.94%.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 5.17%.

^eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^jRounds to less than 0.01%.

12         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Quest Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class C
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period		$13.73			$12.64			$15.35			$15.06			$14.08			$15.78
Income from investment operationsa:
Net investment incomeb		0.14	c		0.30			0.29			0.41			0.70	d		0.36
Net realized and unrealized gains (losses)		(2.35	)		1.12			(1.49	)		0.47			1.41			(1.39	)
Total from investment operations		(2.21	)		1.42			(1.20	)		0.88			2.11			(1.03	)
Less distributions from:
Net investment income		—			(0.33	)		(0.31	)		(0.46	)		(0.85	)		(0.52	)
Net realized gains		—			—			(1.20	)		(0.13	)		(0.28	)		(0.15	)
Total distributions		—			(0.33	)		(1.51	)		(0.59	)		(1.13	)		(0.67	)
Net asset value, end of period		$11.52			$13.73			$12.64			$15.35			$15.06			$14.08
Total returne		(16.10)%			11.26%			(7.77)%			5.89%			15.10%			(6.49)%
Ratios to average net assetsf
Expensesg,h		1.83%	i		1.78%			1.78%			1.79%			1.79%	i		1.82%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			—%	j		—%			0.01%			0.03%
Net investment income		2.22%	c		2.22%			1.96%			2.65%			4.74%	d		2.35%
Supplemental data
Net assets, end of period (000’s)		$75,474			$112,751			$141,619			$309,160			$343,624			$337,974
Portfolio turnover rate		29.90%			60.96%			115.52%			32.90%			44.04%			30.51%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.06 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.19%.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 4.42%.

^eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^jRounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         13

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Quest Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class R
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$13.61			$12.54			$15.40			$15.14			$14.14			$15.87
Income from investment operationsa:
Net investment incomeb		0.16	c		0.37			0.39			0.50			0.78	d		0.44
Net realized and unrealized gains (losses)		(2.32	)		1.12			(1.53	)		0.46			1.43			(1.40	)
Total from investment operations		(2.16	)		1.49			(1.14	)		0.96			2.21			(0.96	)
Less distributions from:
Net investment income		—			(0.42	)		(0.52	)		(0.57	)		(0.93	)		(0.62	)
Net realized gains		—			—			(1.20	)		(0.13	)		(0.28	)		(0.15	)
Total distributions		—			(0.42	)		(1.72	)		(0.70	)		(1.21	)		(0.77	)
Net asset value, end of period		$11.45			$13.61			$12.54			$15.40			$15.14			$14.14
Total returne		(15.87)%			11.88%			(7.31)%			6.38%			15.69%			(6.03)%
Ratios to average net assetsf
Expensesg,h		1.33%	i		1.28%			1.28%			1.29%			1.29%	i		1.32%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			—%	j		—%			0.01%			0.03%
Net investment income		2.72%	c		2.72%			2.46%			3.15%			5.24%	d		2.85%
Supplemental data
Net assets, end of period (000’s)		$2,882			$3,415			$2,929			$1,774			$880			$898
Portfolio turnover rate		29.90%			60.96%			115.52%			32.90%			44.04%			30.51%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.06 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.69%.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 4.92%.

^eTotal return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^jRounds to less than 0.01%.

14         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Quest Fund (continued)

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31,
				2019			2018			2017			2016			2015
Class R6
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$14.05			$12.94			$15.81			$15.51			$14.45			$16.19
Income from investment operationsa:
Net investment incomeb		0.20	c		0.46			0.49			0.64			0.88	d		0.55
Net realized and unrealized gains (losses)		(2.40	)		1.15			(1.57	)		0.43			1.48			(1.44	)
Total from investment operations		(2.20	)		1.61			(1.08	)		1.07			2.36			(0.89	)
Less distributions from:
Net investment income		—			(0.50	)		(0.59	)		(0.64	)		(1.02	)		(0.70	)
Net realized gains		—			—			(1.20	)		(0.13	)		(0.28	)		(0.15	)
Total distributions		—			(0.50	)		(1.79	)		(0.77	)		(1.30	)		(0.85	)
Net asset value, end of period		$11.85			$14.05			$12.94			$15.81			$15.51			$14.45
Total returne		(15.66)%			12.40%			(6.73)%			6.94%			16.44%			(5.54)%
Ratios to average net assetsf
Expenses before waiver and payments by affiliatesg		0.81%			0.74%			0.74%			0.72%			0.71%			0.74%
Expenses net of waiver and payments by affiliatesg,h		0.77%			0.72%			0.72%			0.72%			0.71%	i		0.74%	i
Expenses incurred in connection with securities sold short		0.04%			0.02%			—%	j		—%			0.01%			0.03%
Net investment income		3.28%	c		3.28%			3.02%			3.72%			5.82%	d		3.43%
Supplemental data
Net assets, end of period (000’s)		$78,461			$107,723			$116,012			$123,863			$52,277			$41,408
Portfolio turnover rate		29.90%			60.96%			115.52%			32.90%			44.04%			30.51%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.06 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.25%.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 5.50%.

^eTotal return is not annualized for periods less than one year.

^fRatios are annualized for periods less than one year.

^gIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^jRounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         15

FRANKLIN MUTUAL SERIES FUNDS

Statement of Investments, June 30, 2020 (unaudited)

Franklin Mutual Quest Fund

	Country		Shares/ Units/     Warrants		Value
Common Stocks and Other Equity Interests 61.5%
Aerospace & Defense 2.0%
BAE Systems PLC		United Kingdom		3,900,794	$	23,323,698
Huntington Ingalls Industries Inc.		United States		238,460		41,608,885
						64,932,583
Auto Components 0.0%†
a,b,cInternational Automotive Components Group Brazil LLC		Brazil		2,548,299		47,918
Automobiles 0.2%
General Motors Co.		United States		284,600		7,200,380
Banks 0.5%
aBNP Paribas SA		France		316,236		12,633,773
First Horizon National Corp.		United States		51,600		513,936
Wells Fargo & Co.		United States		124,600		3,189,760
						16,337,469
Chemicals 0.9%
dAdvanced Emissions Solutions Inc.		United States		1,724,209		8,362,414
Covestro AG		Germany		474,675		18,077,927
eWestlake Chemical Corp.		United States		66,100		3,546,265
						29,986,606
Commercial Services & Supplies 1.3%
aAdvanced Disposal Services Inc.		United States		1,162,200		35,063,574
Waste Management Inc.		United States		73,000		7,731,430
						42,795,004
Communications Equipment 4.8%
a,b,c,dSorenson Communications LLC, Membership Interests		United States		224,279		157,052,072
Containers & Packaging 0.1%
International Paper Co.		United States		60,500		2,130,205
Diversified Consumer Services 0.0%
a,bCxloyalty Group Holdings Inc., wts., 4/10/24		United States		48,381		—
Diversified Financial Services 2.6%
M&G PLC		United Kingdom		5,362,814		11,135,135
Voya Financial Inc.		United States		1,557,986		72,680,047
						83,815,182
Diversified Telecommunication Services 3.1%
AT&T Inc.		United States		347,100		10,492,833
a,eIntelsat SA		United States		992,495		535,947
aLiberty Global PLC, C.		United Kingdom		4,194,789		90,229,912
						101,258,692
Electrical Equipment 0.1%
aSensata Technologies Holding PLC		United States		100,200		3,730,446
Energy Equipment & Services 0.0%†
Schlumberger Ltd.		United States		11,332		208,396

16         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

	Country		Shares/ Units/ Warrants		Value
Common Stocks and Other Equity Interests (continued)
Entertainment 0.3%
The Walt Disney Co.		United States		102,500	$	11,429,775
Equity Real Estate Investment Trusts (REITs) 1.0%
Brixmor Property Group Inc.		United States		835,200		10,707,264
Taubman Centers Inc.		United States		275,700		10,410,432
Vornado Realty Trust		United States		269,600		10,301,416
						31,419,112
Food Products 0.3%
Bunge Ltd.		United States		59,678		2,454,556
Conagra Brands Inc.		United States		215,712		7,586,591
						10,041,147
Health Care Equipment & Supplies 0.9%
Envista Holdings Corp.		United States		906,400		19,115,976
Medtronic PLC		United States		102,143		9,366,513
						28,482,489
Independent Power & Renewable Electricity Producers 1.7%
Vistra Corp.		United States		3,073,147		57,221,997
Insurance 8.6%
American International Group Inc.		United States		171,600		5,350,488
ASR Nederland NV		Netherlands		1,510,686		46,475,677
aBrighthouse Financial Inc.		United States		328,459		9,137,729
Direct Line Insurance Group PLC		United Kingdom		5,009,941		16,797,931
Everest Re Group Ltd.		United States		334,566		68,987,509
The Hartford Financial Services Group Inc.		United States		1,129,790		43,553,405
NN Group NV		Netherlands		1,223,210		41,105,697
RSA Insurance Group PLC		United Kingdom		9,614,692		48,690,985
						280,099,421
Interactive Media & Services 1.8%
aBaidu Inc., ADR		China		486,493		58,325,646
IT Services 1.1%
Cognizant Technology Solutions Corp., A		United States		649,000		36,876,180
Machinery 2.4%
aNavistar International Corp.		United States		2,830,559		79,821,764
Media 3.2%
aCharter Communications Inc., A		United States		6,670		3,401,967
aClear Channel Outdoor Holdings Inc.		United States		17,622,660		18,327,566
aDiscovery Inc., C		United States		3,370,684		64,919,374
a,eiHeartMedia Inc., A		United States		1,623,513		13,556,334
a,biHeartMedia Inc., B		United States		23,770		168,708
aiHeartMedia Inc., wts., A, 5/01/39		United States		1,872		15,629
aLee Enterprises Inc./IA		United States		2,367,044		2,319,703
a,b,cLee Enterprises Inc., wts., 12/31/22		United States		1,110,000		322,568
						103,031,849

franklintempleton.com Semiannual Report         17

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

	Country		Shares/ Units/ Warrants		Value
Common Stocks and Other Equity Interests (continued)
Oil, Gas & Consumable Fuels 5.7%
Ampol Ltd.		Australia		768,121	$	15,649,226
BP PLC		United Kingdom		8,136,413		31,169,671
Canadian Natural Resources Ltd.		Canada		55,600		964,517
ENEOS Holdings Inc.		Japan		16,466,092		58,694,426
Royal Dutch Shell PLC, A		United Kingdom		1,122,432		18,371,859
The Williams Cos. Inc.		United States		3,292,500		62,623,350
						187,473,049
Pharmaceuticals 3.0%
aElanco Animal Health Inc.		United States		512,220		10,987,119
GlaxoSmithKline PLC		United Kingdom		320,959		6,483,007
Merck & Co. Inc.		United States		638,900		49,406,137
Novartis AG, ADR		Switzerland		334,806		29,241,956
Perrigo Co. PLC		United States		55,820		3,085,171
						99,203,390
Software 3.5%
aAvaya Holdings Corp., wts., 12/15/22		United States		338,090		422,612
aCheck Point Software Technologies Ltd.		Israel		576,711		61,956,063
Oracle Corp.		United States		912,426		50,429,785
						112,808,460
Specialty Retail 2.8%
Tiffany & Co.		United States		569,896		69,493,118
a,b,dTRU Kids Parent LLC		United States		7,104		22,890,097
a,b,dWayne Services Legacy Inc.		United States		7,104		—
						92,383,215
Technology Hardware, Storage & Peripherals 0.9%
Hewlett Packard Enterprise Co.		United States		252,400		2,455,852
Western Digital Corp.		United States		636,782		28,113,925
						30,569,777
Tobacco 7.3%
Altria Group Inc.		United States		1,494,845		58,672,666
British American Tobacco PLC		United Kingdom		2,788,247		106,932,775
Imperial Brands PLC		United Kingdom		3,824,765		72,807,723
						238,413,164
Wireless Telecommunication Services 1.4%
Vodafone Group PLC		United Kingdom		27,952,495		44,435,928
Total Common Stocks and Other Equity Interests (Cost $2,250,725,033)						2,011,531,316
Convertible Preferred Stocks (Cost $22,951,706) 0.7%
Multi-Utilities 0.7%
Sempra Energy, 6.00%, cvt. pfd., A		United States		225,650		22,052,775

18         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

	Country		Shares			Value
Preferred Stocks (Cost $2,880,729) 0.1%
Auto Components 0.1%
fSchaeffler AG, 6.736%, pfd		Germany		342,769		$	2,572,327
				Principal Amount	*
Corporate Bonds, Notes and Senior Floating Rate Interests 13.3%
gAmerican Airlines Inc., senior secured note, 144A, 11.75%, 7/15/25		United States	$	43,795,000			41,267,591
gBanff Merger Sub Inc., senior note, 144A, 9.75%, 9/01/26		United States		50,000,000			50,428,000
gBoxer Parent Co. Inc., senior secured note, first lien, 144A, 7.125%, 10/02/25		United States		5,874,700			6,181,213
Charter Communications Operating LLC/Charter Communications Operating Capital, senior secured note, first lien, 4.50%, 2/01/24		United States		1,642,000			1,817,916
h,iCxloyalty Group Inc., Term Loan, 6.75%, (6-month USD LIBOR + 5.75%), 4/05/24 .		United States		18,760,621			13,632,724
gDelta Air Lines Inc., senior note, first lien, 144A, 7.00%, 5/01/25		United States		4,308,000			4,451,538
h,iEnvision Healthcare Corp.,
j2020 New Term Loan, PIK, 5.491%, (3-month USD LIBOR + 4.50%), 10/11/25		United States		75,150,000			43,211,250
Term Loan B, 3.928%, (1-month USD LIBOR + 3.75%), 10/11/25		United States		40,434,373			27,177,681
gFrontier Communications Corp.,
second lien, 144A, 8.50%, 4/01/26		United States		25,000,000			23,662,500
senior secured note, first lien, 144A, 8.00%, 4/01/27		United States		20,000,000			20,333,600
iHeartCommunications Inc., senior note, 8.375%, 5/01/27		United States		20,000,000			18,363,700
h,iIntelsat Jackson Holdings SA, Term B-3 Loan, 8.00%, (Prime + 4.75%), 11/27/23		Luxembourg		8,000,000			8,007,504
gMacy’s Inc., senior secured note, first lien, 144A, 8.375%, 6/15/25		United States		6,246,000			6,226,481
h,i,k,lMileage Plus Holdings LLC, Term Loan B, TBD, 6/25/27		United States		4,012,000			3,989,075
g,mMileage Plus Holdings LLC/Mileage Plus Intellectual Property Assets Ltd., senior secured note, first lien, 144A, 6.50%, 6/20/27		United States		15,498,000			15,575,490
h,iNavistar Inc., Tranche B Term Loan, 3.70%, (1-month USD LIBOR + 3.50%), 11/06/24		United States		10,067,190			9,563,830
gNavistar International Corp.,
senior note, 144A, 6.625%, 11/01/25		United States		13,500,000			12,826,418
senior secured note, 144A, 9.50%, 5/01/25.		United States		7,061,400			7,595,418
hOccidental Petroleum Corp., senior note, FRN, 1.842%, (3-month USD LIBOR + 1.45%), 8/15/22		United States		4,260,700			3,921,477
d,h,iSorenson Communications LLC, Initial Term Loans, 6.808%, (3-month USD LIBOR + 6.50%), 3/14/24.		United States		11,106,686			10,967,853
h,iVeritas U.S. Inc., Term Loan B1, 5.50%, (3-month USD LIBOR + 4.50%), 1/27/23		United States		22,806,574			21,153,097
gVeritas U.S. Inc./Veritas Bermuda Ltd.,
senior note, 144A, 7.50%, 2/01/23		United States		3,682,000			3,640,191
senior note, 144A, 10.50%, 2/01/24		United States		30,222,000			27,158,849
h,iWindstream Services LLC,
PSA Holder Revolving Commitment, 6.25%, (Prime + 3.00%), 2/20/49		United States		74,847,868			46,031,439
PSA Holder Term Loan B6, 8.25%, (Prime + 5.00%), 3/30/21		United States		12,922,000			8,140,860
Total Corporate Bonds, Notes and Senior Floating Rate Interests (Cost $575,678,078)							435,325,695

franklintempleton.com Semiannual Report         19

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

	Country		Principal Amount*		Value
Corporate Bonds and Notes in Reorganization 2.7%
nFrontier Communications Corp.,
senior note, 8.875%, 9/15/20		United States	$	21,382,000	$	6,735,330
senior note, 10.50%, 9/15/22		United States		77,063,000		26,857,611
senior note, 11.00%, 9/15/25		United States		41,812,000		14,591,134
g,nIntelsat Connect Finance SA, senior note, 144A, 9.50%, 2/15/23		Luxembourg		48,845,000		12,363,890
nIntelsat Jackson Holdings SA, senior bond, 5.50%, 8/01/23		Luxembourg		45,750,000		26,179,294
nWhiting Petroleum Corp., cvt., senior note, 1.25%, 2/20/49		United States		10,964,000		1,672,010
Total Corporate Bonds and Notes in Reorganization (Cost $213,970,990)						88,399,269
			Shares
Companies in Liquidation 0.0%†
a,b,oBosgen Liquidating Trust c/o Verdolino and Lowey P.C., Contingent Distribution		United States		159,828		—
a,b,oTribune Media, Litigation Trust, Contingent Distribution		United States		1,528,360		—
a,b,oVistra Energy Corp., Litigation Trust, Contingent Distribution		United States		104,175,133		57,296
a,b,oWalter Energy Inc., Litigation Trust, Contingent Distribution		United States		7,443,000		—
Total Companies in Liquidation (Cost $3,234,626)						57,296
	Number of Contracts		Notional Amount#
Options Purchased (Cost $373,718) 0.0%†
Calls - Exchange-Traded
The Walt Disney Co., January Strike Price $140.00, Expires 1/15/21		650		65,000		189,800
Total Investments before Short Term Investments (Cost $3,069,814,880)						2,560,128,478
	Country		Principal Amount*
Short Term Investments 21.8%
Corporate Notes (Cost $1,218,613) 0.0%†
Occidental Petroleum Corp., senior note, 4.85%, 3/15/21		United States	$	1,329,000		1,324,848
U.S. Government and Agency Securities 21.7%
pFHLB, 7/01/20		United States		89,200,000		89,200,000
pU.S. Treasury Bill,
7/02/20		United States		150,000,000		149,999,646
7/07/20		United States		80,000,000		79,998,500
q7/16/20		United States		50,000,000		49,997,838
q7/23/20		United States		50,000,000		49,996,639
8/06/20		United States		50,000,000		49,994,125
8/13/20		United States		31,000,000		30,995,557
8/25/20		United States		125,000,000		124,976,129
11/12/20		United States		40,000,000		39,978,783

20         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

	Country		Principal Amount*		Value
Short Term Investments (continued)
U.S. Government and Agency Securities (continued)
pU.S. Treasury Bill, (continued) q11/27/20		United States	$	43,000,000	$	42,973,304
Total U.S. Government and Agency Securities (Cost $708,029,167)						708,110,521
rInvestments from Cash Collateral Received for Loaned Securities 0.1%
				Shares
Money Market Funds (Cost $2,998,000) 0.1%
s,tInstitutional Fiduciary Trust Money Market Portfolio, 0.00%		United States		2,998,000		2,998,000
			Principal Amount*
Repurchase Agreements (Cost $720,465) 0.0%†
uJoint Repurchase Agreement, 0.07%, 7/01/20 (Maturity Value $720,465)
BNP Paribas Securities Corp.
Collateralized by U.S. Treasury Bonds, 7.875%, 2/5/21; U.S. Treasury Notes, 0.125% - 2.875%, 12/31/20 - 1/31/24; U.S. Treasury Strips, 8/15/20 - 11/15/22 (valued at $734,875)		United States	$	720,465		720,465
Total Investments from Cash Collateral Received for Loaned Securities (Cost $3,718,465)						3,718,465
Total Investments (Cost $3,782,781,125) 100.1%						3,273,282,312
Options Written (0.0)%†						(206,500	)
Securities Sold Short (0.2)%						(5,419,276	)
Other Assets, less Liabilities 0.1%						1,872,265
Net Assets 100.0%					$	3,269,528,801
	Number of Contracts		Notional Amount#
vOptions Written (0.0)%†
Puts - Exchange-Traded
Western Digital Corp., July Strike Price $40.00, Expires 7/17/20		500		50,000		(34,000	)
Western Digital Corp., October Strike Price $40.00, Expires 10/16/20		500		50,000		(172,500	)
Total Options Written (Premiums received $604,703)					$	(206,500	)
	Country		Shares
wSecurities Sold Short (0.2)%
Common Stocks (0.2)%
Biotechnology (0.1)%
AbbVie Inc.		United States		9,464		(929,176	)

franklintempleton.com Semiannual Report         21

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

	Country	Shares		Value
wSecurities Sold Short (continued)
Common Stocks (continued)
Internet & Direct Marketing Retail (0.1)%
Alibaba Group Holding Ltd., ADR	China	17,000	$	(3,666,900	)
Pharmaceuticals (0.0)%†
Bristol-Myers Squibb Co.	United States	14,000		(823,200	)
Total Securities Sold Short (Proceeds $4,150,993)			$	(5,419,276	)

^†Rounds to less than 0.1% of net assets.

^*The principal amount is stated in U.S. dollars unless otherwise indicated.

^#Notional amount is the number of units specified in the contract, and can include currency units, bushels, shares, pounds, barrels or other units. Currency units are stated in U.S. dollars unless otherwise indicated.

^aNon-income producing.

^bFair valued using significant unobservable inputs. See Note 15 regarding fair value measurements.

^cSee Note 11 regarding restricted securities.

^dSee Note 13 regarding holdings of 5% voting securities.

^eA portion or all of the security is on loan at June 30, 2020. See Note 1(g).

^fVariable rate security. The rate shown represents the yield at period end.

^gSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At June 30, 2020, the aggregate value of these securities was $231,711,179, representing 7.1% of net assets.

^hThe coupon rate shown represents the rate at period end.

ⁱSee Note 1(h) regarding senior floating rate interests.

^jIncome may be received in additional securities and/or cash.

^kSecurity purchased on a delayed delivery basis. See Note 1(d).

^lA portion or all of the security represents an unsettled loan commitment. The coupon rate is to-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.

^mSecurity purchased on a when-issued basis. See Note 1(d).

ⁿSee Note 8 regarding credit risk and defaulted securities.

^oContingent distributions represent the right to receive additional distributions, if any, during the reorganization of the underlying company. Shares represent total underlying principal of debt securities.

^pThe security was issued on a discount basis with no stated coupon rate.

^qA portion or all of the security has been segregated as collateral for securities sold short, open forward exchange contracts and/or open written options contracts. At June 30, 2020, the aggregate value of these securities pledged amounted to $4,652,576, representing 0.1% of net assets.

^rSee Note 1(g) regarding securities on loan.

^sSee Note 3(f) regarding investments in affiliated management investment companies.

^tThe rate shown is the annualized seven-day effective yield at period end.

^uSee Note 1(c) regarding joint repurchase agreement.

^vSee Note 1(e) regarding written options.

^wSee Note 1(f) regarding securities sold short.

22         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

At June 30, 2020, the Fund had the following futures contracts outstanding. See Note 1(e).

Futures Contracts

Description	Type		Number of Contracts		Notional Amount*		Expiration Date		Value/ Unrealized Appreciation (Depreciation)
Currency Contracts
EUR/USD		Short		307		$43,185,306		9/14/20		$    292,397
GBP/USD		Short		735		56,948,719		9/14/20		1,599,809
Total Futures Contracts										$1,892,206

*As of period end.

At June 30, 2020, the Fund had the following forward exchange contracts outstanding. See Note 1(e).

Forward Exchange Contracts

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Australian Dollar		UBSW		Sell		19,802,991	$	13,672,440		7/15/20	$	6,159	$	—
Euro		BOFA		Buy		4,663,642		5,327,635		7/15/20		—		(86,566	)
Euro		BOFA		Buy		5,267,451		5,901,438		7/15/20		18,200		—
Euro		BOFA		Sell		2,418,824		2,722,914		7/15/20		4,604		—
Euro		BOFA		Sell		3,208,689		3,568,266		7/15/20		—		(37,704	)
Euro		BONY		Buy		1,851,031		2,126,514		7/15/20		—		(46,299	)
Euro		BONY		Buy		2,469,439		2,763,903		7/15/20		11,290		—
Euro		HSBK		Buy		3,440,405		3,937,141		7/15/20		—		(70,765	)
Euro		HSBK		Buy		4,903,052		5,408,002		7/15/20		102,120		—
Euro		HSBK		Sell		1,000,000		1,114,140		7/15/20		—		(9,675	)
Euro		HSBK		Sell		22,742,983		25,588,813		7/15/20		29,916		—
Euro		SSBT		Buy		1,863,274		2,140,611		7/15/20		—		(46,636	)
Euro		SSBT		Buy		2,309,714		2,590,084		7/15/20		5,606		—
Euro		SSBT		Sell		68,852		75,602		7/15/20		—		(1,775	)
Euro		SSBT		Sell		25,091,223		28,231,904		7/15/20		34,021		—
Euro		UBSW		Buy		3,319,875		3,718,269		7/15/20		12,655		—
Euro		UBSW		Buy		5,337,035		6,096,334		7/15/20		—		(98,497	)
Euro		UBSW		Sell		3,130,000		3,484,823		7/15/20		—		(32,717	)
Euro		UBSW		Sell		4,600,000		5,191,187		7/15/20		21,640		—
British Pound		BOFA		Sell		8,985,817		11,680,601		7/16/20		545,709		—
British Pound		HSBK		Sell		8,688,671		11,356,166		7/16/20		589,486		—
British Pound		SSBT		Sell		6,898,671		9,014,528		7/16/20		465,950		—
South Korean Won		HSBK		Buy		2,777,803,773		2,267,066		7/17/20		48,892		—
South Korean Won		HSBK		Buy		7,845,359,600		6,596,065		7/17/20		—		(55,098	)
South Korean Won		HSBK		Sell		10,623,163,373		9,138,011		7/17/20		281,087		—
South Korean Won		UBSW		Buy		3,720,017,367		3,079,593		7/17/20		21,923		—
South Korean Won		UBSW		Buy		5,417,216,800		4,549,607		7/17/20		—		(33,073	)
South Korean Won		UBSW		Sell		9,137,234,167		7,869,547		7/17/20		251,496		—
British Pound		BOFA		Sell		4,834,708		6,298,706		8/14/20		306,780		—
British Pound		HSBK		Sell		33,137,884		43,170,774		8/14/20		2,101,130		—

franklintempleton.com Semiannual Report         23

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
British Pound		SSBT		Sell		31,594,609	$	41,155,770		8/14/20	$	1,998,793	$	—
Euro		BOFA		Sell		2,387,558		2,616,950		8/18/20		—		(68,310	)
Euro		BONY		Sell		2,427,571		2,645,664		8/18/20		—		(84,598	)
Euro		HSBK		Sell		2,412,167		2,631,293		8/18/20		—		(81,644	)
Euro		UBSW		Sell		3,225,776		3,534,315		8/18/20		—		(93,681	)
Euro		BOFA		Sell		795,009		867,609		10/07/20		—		(27,588	)
Euro		BONY		Sell		901,914		1,016,843		10/07/20		1,268		—
Euro		BONY		Sell		3,047,961		3,319,422		10/07/20		—		(112,647	)
Euro		HSBK		Sell		583,353		663,111		10/07/20		6,243		—
Euro		HSBK		Sell		2,056,355		2,277,869		10/07/20		—		(37,630	)
Euro		SSBT		Sell		901,914		1,015,827		10/07/20		252		—
Euro		UBSW		Sell		529,857		581,977		10/07/20		—		(14,653	)
Euro		UBSW		Sell		1,390,780		1,571,593		10/07/20		5,547		—
British Pound		SSBT		Sell		53,422,930		65,487,964		11/23/20		—		(765,428	)
British Pound		UBSW		Sell		6,555,958		8,081,553		11/23/20		—		(48,935	)
British Pound		UBSW		Sell		11,078,060		13,965,564		11/23/20		226,912		—
Euro		BOFA		Sell		779,201		867,610		11/23/20		—		(10,926	)
Euro		HSBK		Sell		853,834		968,756		11/23/20		6,073		—
Euro		HSBK		Sell		2,619,389		2,918,828		11/23/20		—		(34,488	)
Euro		SSBT		Sell		859,352		974,092		11/23/20		5,188		—
Euro		SSBT		Sell		1,679,428		1,866,765		11/23/20		—		(26,762	)
Euro		UBSW		Sell		853,834		967,313		11/23/20		4,630		—
Euro		UBSW		Sell		1,965,971		2,182,208		11/23/20		—		(34,391	)
Total Forward Exchange Contracts											$	7,113,570	$	(1,960,486	)
Net unrealized appreciation (depreciation)											$	5,153,084

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Note 12 regarding other derivative information.

See Abbreviations on page 45.

24         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities

June 30, 2020 (unaudited)

Franklin Mutual Quest Fund

Assets:
Investments in securities:
Cost - Unaffiliated issuers	$3,706,989,678
Cost - Non-controlled affiliates (Note 3f and 13)	75,070,982
Cost - Unaffiliated repurchase agreements	720,465
Value - Unaffiliated issuers+	$3,070,291,411
Value - Non-controlled affiliates (Note 3f and 13)	202,270,436
Value - Unaffiliated repurchase agreements	720,465
Cash	4,137,777
Foreign currency, at value (cost $988,097)	988,097
Receivables:
Capital shares sold	1,049,590
Dividends and interest	11,256,865
European Union tax reclaims	644,757
Affiliates	221,728
Deposits with brokers for:
Securities sold short	5,484,793
Futures contracts	2,688,255
Unrealized appreciation on OTC forward exchange contracts	7,113,570
Other assets	1,007,318
Total assets	3,307,875,062
Liabilities:
Payables:
Investment securities purchased	19,236,035
Capital shares redeemed	4,122,603
Management fees	1,849,636
Distribution fees	234,282
Transfer agent fees	415,843
Trustees’ fees and expenses	374,506
Variation margin on futures contracts	489,613
Options written, at value (premiums received $604,703)	206,500
Securities sold short, at value (proceeds $4,150,993)	5,419,276
Payable upon return of securities loaned	3,718,465
Unrealized depreciation on OTC forward exchange contracts	1,960,486
Accrued expenses and other liabilities	319,016
Total liabilities	38,346,261
Net assets, at value	$3,269,528,801
Net assets consist of:
Paid-in capital	$4,215,365,290
Total distributable earnings (losses)	(945,836,489	)
Net assets, at value	$3,269,528,801
+Includes securities loaned	$        3,427,825

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         25

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2020 (unaudited)

Franklin Mutual Quest Fund

Class Z:
Net assets, at value	$	2,349,299,503
Shares outstanding		198,099,828
Net asset value and maximum offering price per share		$11.86
Class A:
Net assets, at value	$	763,412,814
Shares outstanding		65,494,689
Net asset value per sharea		$11.66
Maximum offering price per share (net asset value per share ÷ 94.50%)		$12.34
Class C:
Net assets, at value	$	75,474,245
Shares outstanding		6,551,835
Net asset value and maximum offering price per sharea		$11.52
Class R:
Net assets, at value	$	2,881,706
Shares outstanding		251,744
Net asset value and maximum offering price per share		$11.45
Class R6:
Net assets, at value	$	78,460,533
Shares outstanding		6,622,609
Net asset value and maximum offering price per share		$11.85

^aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.

26         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual Quest Fund

Investment income:
Dividends: (net of foreign taxes)*
Unaffiliated issuers	$	49,110,099
Non-controlled affiliates (Note 3f and 13)		431,052
Interest:
Unaffiliated issuers		30,615,806
Adjustment for uncollectible interest (Note 8)		(10,102,743	)
Non-controlled affiliates (Note 13)		2,740,569
Income from securities loaned:
Unaffiliated entities (net of fees and rebates)		41,788
Non-controlled affiliates (Note 3f)		4,386
Total investment income		72,840,957
Expenses:
Management fees (Note 3a)		12,152,701
Distribution fees: (Note 3c)
Class A		1,071,917
Class C		446,910
Class R		7,686
Transfer agent fees: (Note 3e)
Class Z		1,031,349
Class A		345,157
Class C		35,991
Class R		1,244
Class R6		24,106
Custodian fees (Note 4)		65,351
Reports to shareholders		112,193
Registration and filing fees		77,176
Professional fees		84,962
Trustees’ fees and expenses		146,517
Dividends on securities sold short		798,284
Other		49,598
Total expenses		16,451,142
Expense reductions (Note 4)		(38,704	)
Expenses waived/paid by affiliates (Note 3f and 3g)		(16,954	)
Net expenses		16,395,484
Net investment income		56,445,473
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		(196,210,653	)
Non-controlled affiliates (Note 3f and 13)		1,493,148
Written options		1,464,632
Foreign currency transactions		(959,022	)
Forward exchange contracts		4,083,300
Futures contracts		2,132,029
Securities sold short		(4,688,215	)
Net realized gain (loss)		(192,684,781	)
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(548,520,794	)
Non-controlled affiliates (Note 3f and 13)		(3,141,829	)

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         27

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations (continued)

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual Quest Fund

Translation of other assets and liabilities denominated in foreign currencies		(234,462	)
Forward exchange contracts		18,217,170
Written options		364,078
Futures contracts		2,981,503
Securities sold short		4,553,746
Net change in unrealized appreciation (depreciation)		(525,780,588	)
Net realized and unrealized gain (loss)		(718,465,369	)
Net increase (decrease) in net assets resulting from operations		$(662,019,896	)
*Foreign taxes withheld on dividends	$	573,442

28         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

Franklin Mutual Quest Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31, 2019
Increase (decrease) in net assets:
Operations:
Net investment income	$	56,445,473		$	140,355,063
Net realized gain (loss)		(192,684,781	)		(205,867,676	)
Net change in unrealized appreciation (depreciation)		(525,780,588	)		583,830,277
Net increase (decrease) in net assets resulting from operations		(662,019,896	)		518,317,664
Distributions to shareholders:
Class Z		—			(104,723,243	)
Class A		—			(33,694,633	)
Class C		—			(2,725,827	)
Class R		—			(102,662	)
Class R6		—			(3,763,980	)
Total distributions to shareholders		—			(145,010,345	)
Capital share transactions: (Note 2)
Class Z		(225,055,446	)		(273,149,893	)
Class A		(111,914,229	)		(122,215,243	)
Class C		(19,989,302	)		(40,715,515	)
Class R		48,027			223,722
Class R6		(13,514,749	)		(18,209,640	)
Total capital share transactions		(370,425,699	)		(454,066,569	)
Net increase (decrease) in net assets		(1,032,445,595	)		(80,759,250	)
Net assets:
Beginning of period		4,301,974,396			4,382,733,646
End of period	$	3,269,528,801		$	4,301,974,396

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         29

FRANKLIN MUTUAL SERIES FUNDS

Notes to Financial Statements (unaudited)

Franklin Mutual Quest Fund

1.   Organization and Significant Accounting Policies

Franklin Mutual Series Funds (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of six separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Mutual Quest Fund (Fund) is included in this report. The Fund offers five classes of shares: Class Z, Class A, Class C, Class R and Class R6. Class C shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees.

The following summarizes the Fund’s significant accounting policies.

a.   Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The Fund may utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and derivative financial instruments 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.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the date that the values of the foreign debt securities are determined.

Investments in open-end mutual funds are valued at the closing NAV. Investments in repurchase agreements 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

30         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

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 June 30, 2020, certain securities may have been fair valued using these procedures, in which case the securities were categorized as Level 2 inputs within the fair value hierarchy. See the Fair Value Measurements note for more information.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant 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.   Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls

franklintempleton.com Semiannual Report         31

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

1.   Organization and Significant Accounting Policies (continued)

c.   Joint Repurchase Agreement (continued)

below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2020.

d.   Securities Purchased on a When-Issued or Delayed Delivery Basis

The Fund purchases securities on a when-issued or delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.

e.   Derivative Financial Instruments

The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to

the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At June 30, 2020, the Fund had OTC derivatives in a net liability position of $230,986 and the aggregate value of collateral pledged for such contracts was $262,837.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

At June 30, 2020, the Fund received $6,515,351 in U.K. Treasury Bonds and U.S. Treasury Bills, Bonds and Notes as collateral for derivatives.

32         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

The Fund entered into exchange traded futures contracts primarily to manage exposure to certain foreign currencies. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage 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.

The Fund purchased or wrote exchange traded and/or OTC option contracts primarily to manage exposure to equity price risk. An option is a contract entitling the holder to purchase or sell a specific amount of shares or units of an asset or notional amount of a swap (swaption), at a specified price. When an option is purchased or written, an amount equal to the premium paid or received is recorded as an asset or liability, respectively. Upon exercise of an option, the acquisition cost or sales proceeds of the underlying investment is adjusted by any premium received or paid. Upon expiration of an option, any premium received or paid is recorded as a realized gain or loss. Upon closing an option other than through expiration or exercise, the difference between the premium received or paid and the cost to close the position is recorded as a realized gain or loss.

See Note 12 regarding other derivative information.

f.   Securities Sold Short

The Fund is engaged in selling securities short, which obligates the Fund to replace a borrowed security with the same security at current fair value. The Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Gains are limited to the price at which the Fund sold the security short, while losses are potentially unlimited in size.

The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale to the extent necessary to meet margin requirements until the short position is closed out. A deposit must also be

maintained with the Fund’s custodian/counterparty broker consisting of cash and/or securities having a value equal to a specified percentage of the value of the securities sold short. The Fund is obligated to pay fees for borrowing the securities sold short and is required to pay the counterparty any dividends and/or interest due on securities sold short. Such dividends and/or interest and any security borrowing fees are recorded as an expense to the Fund.

g.   Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral 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. The collateral 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, and/or a joint repurchase agreement in 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 the 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.

h.   Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially

franklintempleton.com Semiannual Report         33

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

1. Organization and Significant Accounting Policies (continued)

h. Senior Floating Rate Interests (continued)

less than the stated maturity. Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

i. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

As a result of several court cases, in certain countries across the European Union, the Fund filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statement of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, EU reclaims received by the Fund, if any, reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns.

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be

sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2020, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

j. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and dividends declared on securities sold short are 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.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

k. 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.

l. 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 June 30, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2020						Year Ended December 31, 2019
	Shares			Amount			Shares			Amount
Class Z Shares:
Shares sold		6,389,687		$	79,634,973			15,090,002		$	210,921,808
Shares issued in reinvestment of distributions		—			—			7,039,345			99,052,207
Shares redeemed		(24,616,986	)		(304,690,419	)		(41,662,846	)		(583,123,908	)
Net increase (decrease)		(18,227,299	)	$	(225,055,446	)		(19,533,499	)	$	(273,149,893	)
Class A Shares:
Shares solda		3,227,146		$	38,953,442			8,918,707		$	122,459,568
Shares issued in reinvestment of distributions		—			—			2,357,320			32,648,125
Shares redeemed		(12,564,371	)		(150,867,671	)		(20,150,894	)		(277,322,936	)
Net increase (decrease)		(9,337,225	)	$	(111,914,229	)		(8,874,867	)	$	(122,215,243	)
Class C Shares:
Shares sold		297,342		$	3,643,656			1,166,930		$	15,819,778
Shares issued in reinvestment of distributions		—			—			195,226			2,680,611
Shares redeemeda		(1,958,020	)		(23,632,958	)		(4,357,765	)		(59,215,904	)
Net increase (decrease)		(1,660,678	)	$	(19,989,302	)		(2,995,609	)	$	(40,715,515	)
Class R Shares:
Shares sold		37,559		$	476,257			96,194		$	1,289,422
Shares issued in reinvestment of distributions		—			—			7,540			102,662
Shares redeemed		(36,785	)		(428,230	)		(86,277	)		(1,168,362	)
Net increase (decrease)		774		$	48,027			17,457		$	223,722

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

2. Shares of Beneficial Interest (continued)

	Six Months Ended     June 30, 2020						Year Ended     December 31, 2019
	Shares			Amount			Shares			Amount
Class R6 Shares:
Shares sold		787,197		$	9,490,293			1,870,657		$	26,089,722
Shares issued in reinvestment of distributions		—			—			264,636			3,718,560
Shares redeemed		(1,834,088	)		(23,005,042	)		(3,434,204	)		(48,017,922	)
Net increase (decrease)		(1,046,891	)	$	(13,514,749	)		(1,298,911	)	$	(18,209,640	)

^aMay include a portion of Class C shares that were automatically converted to Class A.

3. Transactions with Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

The Fund pays an investment management fee to Franklin Mutual based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.675%	Up to and including $5 billion
0.645%	Over $5 billion, up to and including $7 billion
0.625%	Over $7 billion, up to and including $10 billion
0.615%	In excess of $10 billion

b. Administrative Fees

Under an agreement with Franklin Mutual, FT Services provides administrative services to the Fund. The fee is paid by Franklin Mutual 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 Z and Class R6 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

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

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:

Class A	0.35	%
Class C	1.00	%
Class R	0.50	%

The Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.

d. Sales Charges/Underwriting Agreements

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the period:

Sales charges retained net of commissions paid to  unaffiliated brokers/dealers.	$	31,144
CDSC retained	$	6,458

e. Transfer Agent Fees

Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. The fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.

For the period ended June 30, 2020, the Fund paid transfer agent fees of $1,437,847, of which $748,010 was retained by Investor Services.

f. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended June 30, 2020, the Fund held investments in affiliated management investment companies as follows:

	Value at Beginning of Period		Purchases		Sales			Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Value at End of Period		Number of Shares Held at End of Period		Income from securities loaned
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 0.00%	$	—	$	12,180,000	$	(9,182,000	)	$	—	$	—	$	2,998,000		2,998,000		$4,386

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

3. Transactions with Affiliates (continued)

g. Waiver and Expense Reimbursements

Investor Services has contractually agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.02% based on the average net assets of the class until April 30, 2021.

h. Interfund Transactions

The Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the period ended June 30, 2020, these purchase and sale transactions aggregated $10,210,804 and $0, respectively.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2020, the custodian fees were reduced as noted in the Statement of Operations.

5. Independent Trustees’ Retirement Plan

On January 1, 1993, the Trust adopted an Independent Trustees’ Retirement Plan (Plan). The Plan is an unfunded defined benefit plan that provides benefit payments to Trustees whose length of service and retirement age meets the eligibility requirements of the Plan. Benefits under the Plan are based on years of service and fees paid to each trustee at the time of retirement. Effective in December 1996, the Plan was closed to new participants.

During the period ended June 30, 2020, the Fund’s projected benefit obligation and benefit payments under the Plan were as follows:

aProjected benefit obligation at June 30, 2020	$	371,131
bIncrease in projected benefit obligation	$	17,804
Benefit payments made to retired trustees	$	(2,338	)

^aThe projected benefit obligation is included in trustees’ fees and expenses in the Statement of Assets and Liabilities.

^bThe increase in projected benefit obligation is included in trustees’ fees and expenses in the Statement of Operations.

6. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains.

At December 31, 2019, the capital loss carryforwards were as follows:

Capital loss carryforwards not subject to expiration:
Long term	$	271,513,668

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

At June 30, 2020, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	3,819,139,707
Unrealized appreciation	$	245,713,142
Unrealized depreciation		(788,939,043	)
Net unrealized appreciation (depreciation)	$	(543,225,901	)

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of wash sales and foreign currency transactions.

7. Investment Transactions

Purchases and sales of investments (excluding short term securities and securities sold short) for the period ended June 30, 2020, aggregated $865,364,378 and $1,197,670,108, respectively.

At June 30, 2020, in connection with securities lending transactions, the Fund loaned equity investments and received $3,718,465 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.

8. Credit Risk and Defaulted Securities

The Fund may purchase the pre-default or defaulted debt of distressed companies. Distressed companies are financially troubled and could be or are already involved in financial restructuring or bankruptcy. Risks associated with purchasing these securities include the possibility that the bankruptcy or other restructuring process takes longer than expected, or that distributions in restructuring are less than anticipated, either or both of which may result in unfavorable consequences to the Fund. If it becomes probable that the income on debt securities, including those of distressed companies, will not be collected, the Fund discontinues accruing income and recognizes an adjustment for uncollectible interest. For the period ended June 30, 2020, the Fund recorded an adjustment for uncollectible interest of $10,102,743, as noted in the Statement of Operations.

At June 30, 2020, the aggregate long value of distressed company securities for which interest recognition has been discontinued was $88,399,269, representing 2.7% of the Fund’s net assets. For information as to specific securities, see the accompanying Statement of Investments.

9. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local, regional and global economic, political and social conditions, which may result in greater market volatility. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in securities in Europe. In addition, certain foreign securities may not be as liquid as U.S. securities.

10. 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.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

11. Restricted Securities

The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.

At June 30, 2020, investments in restricted securities, excluding securities exempt from registration under the 1933 Act, were as follows:

Shares/ Warrants	Issuer	Acquisition Date		Cost		Value
2,548,299	International Automotive Components Group Brazil LLC		4/13/06 - 12/26/08		$1,692,334	$	47,918
1,110,000	a Lee Enterprises Inc., wts., 12/31/22		3/31/14		1,490,026		322,568
224,279	b Sorenson Communications LLC, Membership Interests		4/30/14		—		157,052,072
	Total Restricted Securities (Value is 4.8% of Net Assets)				$3,182,360	$	157,422,558

^aThe Fund also invests in unrestricted securities of other investments in the issuer, valued at $2,319,703 as of June 30, 2020.

^bThe Fund also invests in unrestricted securities of other investments in the issuer, valued at $10,967,853 as of June 30, 2020.

12. Other Derivative Information

At June 30, 2020, investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:

	Asset Derivatives				Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin on futures contracts	$	1,892,206	a	Variation margin on futures contracts	$	—
	Unrealized appreciation on OTC forward exchange contracts		7,113,570		Unrealized depreciation on OTC forward exchange contracts		1,960,486
Equity contracts	Investments in securities, at value		189,800	b	Options written, at value		206,500
Totals		$	9,195,576			$	2,166,986

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/ payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

^bPurchased option contracts are included in investments in securities, at value in the Statement of Assets and Liabilities.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

For the period ended June 30, 2020, the effect of derivative contracts in the Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Location	Net Realized Gain (Loss) for the Period			Statement of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:				Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Forward exchange contracts		$4,083,300		Forward exchange contracts		$18,217,170
	Futures contracts		2,132,029		Futures contracts		2,981,503
Equity contracts	Investments		(96,019	)a	Investments		(141,379	)a
	Written options		1,464,632		Written options		364,078
Totals			$7,583,942				$21,421,372

^aPurchased option contracts are included in net realized gain (loss) from investments and net change in unrealized appreciation (depreciation) on investments in the Statement of Operations.

For the period ended June 30, 2020, the average month end notional amount of futures contracts and options represented $110,714,099 and 636,543 shares, respectively. The average month end contract value of forward exchange contracts was $483,966,628.

See Note 1(e) regarding derivative financial instruments.

13. Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. During the period ended June 30, 2020, investments in “affiliated companies” were as follows:

Name of Issuer	Value at Beginning of Period		Purchases		Sales			Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Value at End of Period			Number of Shares/ Units/Principal Amount Held at End of Period			Investment Income
Non-Controlled Affiliates
																				Dividends
Advanced Emissions Solutions Inc.	$	18,104,195	$	—	$	—			$            —			$(9,741,781	)	$	8,362,414			1,724,209		$	431,052
Lee Enterprises Inc./IA		4,609,275		—		(2,329,081	)		(387,686	)		—	a		—	a		—	a		—
Lee Enterprises Inc., wts., 12/31/22		130,691		—		—			—			—	a		—	a		—	a		—
Sorenson Communications LLC,
Membership Interests		152,057,986		—		—			—			4,994,086			157,052,072			224,279			—
TRU Kids Parent LLC		26,506,829		—		—			—			(3,616,732	)		22,890,097			7,104			—
Wayne Services Legacy Inc.		—		—		(683,307	)b		683,307			—			—			7,104			—
	$	201,408,976		$  —	$	(3,012,388	)		$ 295,621			$(8,364,427	)	$	188,304,583						$431,052

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

13. Holdings of 5% Voting Securities of Portfolio Companies (continued)

Name of Issuer	Value at Beginning of Period		Purchases			Sales			Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Value at End of Period			Number of Shares/ Units/Principal Amount Held at End of Period		Investment Income
Non-Controlled Affiliates (continued)
																			Interest
Lee Enterprises Inc., Second Lien Term Loan, 12.00%, 12/15/22		34,210,244		41,580	b		(34,317,486	)		644,118		(578,456	)		—	c		—		452,880
Lee Enterprises Inc., senior secured note, first lien, 144A, 9.50%, 3/15/22		90,529,405		45,481	b		(97,050,000	)		507,122		5,967,992			—	c		—		1,920,781
Sorenson Communications LLC, Initial Term Loans, 6.808%, (3-month USD LIBOR + 6.50%), 3/14/24		12,473,036		44,496	b		(1,429,028	)		46,287		(166,938	)		10,967,853			11,106,686		366,908
		$137,212,685		$131,557			$(132,796,514	)		$1,197,527		$ 5,222,598		$	10,967,853					$2,740,569
Total Affiliated Securities (Value is 6.1% of Net Assets)		$338,621,661		$131,557			$(135,808,902	)		$1,493,148		$(3,141,829	)	$	199,272,436				$	3,171,621

^aAs of June 30, 2020, no longer an affiliate.

^bMay include accretion, amortization, partnership adjustments, and/or corporate actions.

^cAs of June 30, 2020, no longer held by the Fund.

14. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 5, 2021. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended June 30, 2020, the Fund did not use the Global Credit Facility.

15. 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.)

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

• 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 June 30, 2020, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:a
Equity Investments:b
Aerospace & Defense	$	41,608,885	$	23,323,698	$	—		$	64,932,583
Auto Components		—		2,572,327		47,918			2,620,245
Banks		3,703,696		12,633,773		—			16,337,469
Chemicals		11,908,679		18,077,927		—			29,986,606
Communications Equipment		—		—		157,052,072			157,052,072
Diversified Financial Services		72,680,047		11,135,135		—			83,815,182
Insurance		127,029,131		153,070,290		—			280,099,421
Media		102,540,573		—		491,276			103,031,849
Oil, Gas & Consumable Fuels		63,587,867		123,885,182		—			187,473,049
Pharmaceuticals		92,720,383		6,483,007		—			99,203,390
Software		112,385,848		422,612		—			112,808,460
Specialty Retail		69,493,118		—		22,890,097	c		92,383,215
Tobacco		58,672,666		179,740,498		—			238,413,164
Wireless Telecommunication Services		—		44,435,928		—			44,435,928
All Other Equity Investments		523,563,785		—		—	c		523,563,785
Corporate Bonds, Notes and Senior Floating Rate Interests		—		435,325,695		—			435,325,695
Corporate Bonds and Notes in Reorganization		—		88,399,269		—			88,399,269
Companies in Liquidation		—		—		57,296	c		57,296
Options Purchased		189,800		—		—			189,800
Short Term Investments		621,908,521		91,245,313		—			713,153,834
Total Investments in Securities	$	1,901,992,999	$	1,190,750,654	$	180,538,659		$	3,273,282,312
Other Financial Instruments:
Futures Contracts	$	1,892,206	$	—	$	—		$	1,892,206
Forward Exchange Contracts		—		7,113,570		—			7,113,570
Total Other Financial Instruments	$	1,892,206	$	7,113,570	$	—		$	9,005,776
Liabilities:
Other Financial Instruments:
Options Written	$	206,500	$	—	$	—		$	206,500
Securities Sold Shorta		5,419,276		—		—			5,419,276
Forward Exchange Contracts		—		1,960,486		—			1,960,486
Total Other Financial Instruments	$	5,625,776	$	1,960,486	$	—		$	7,586,262

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common, preferred and convertible preferred stocks as well as other equity interests.

^cIncludes securities determined to have no value at June 30, 2020.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

15. Fair Value Measurements (continued)

A reconciliation in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 assets and/or liabilities at the beginning and/or end of the period. At June 30, 2020, the reconciliation is as follows:

	Balance at Beginning of Period			Purchases		Sales		Transfer Into Level 3		Transfer Out of Level 3		Cost Basis Adjustmentsa			Net Realized Gain (Loss)		Net Unrealized Appreciation (Depreciation)			Balance at End of Period			Net Change in Unrealized Appreciation (Depreciation) on Assets Held at Period End
Assets:
Investments in Securities:
Equity Investments:b
Auto Components	$	92,503			$—		$—		$—		$—		$            —		$	—		$     (44,585	)	$	47,918			$     (44,585	)
Communications Equipment		152,057,986			—		—		—		—		—			—		4,994,086			157,052,072			4,994,086
Media		472,147			—		—		—		—		—			—		19,129			491,276			19,129
Specialty Retail		26,506,829	c		—		—		—		—		(683,307	)		683,307		(3,616,732	)		22,890,097	c		(3,616,732	)
Companies in Liquidation		57,296	c		—		—		—		—		(17,597	)		17,597		—			57,296	c		—
Total Investments in Securities	$	179,186,761			$—		$—		$—		$—		$(700,904	)	$	700,904		$ 1,351,898		$	180,538,659			$ 1,351,898

^aMay include accretion, amortization, partnership adjustments, and/or other cost basis adjustments. May also include amounts related to a corporate action.

^bIncludes common stocks as well as other equity interests.

^cIncludes securities determined to have no value.

Significant unobservable valuation inputs for material Level 3 assets and/or liabilities and impact to fair value as a result of changes in unobservable valuation inputs as of June 30, 2020, are as follows:

Description	Fair Value at End of Period			Valuation Technique	Unobservable Inputs	Amount/ Range		Impact to Fair Value if Input Increasesa
Assets:
Investments in Securities:
Equity Investments:
Communications Equipment	$	157,052,072		Market transaction	Transaction price weighting		50%		Increaseb
				Market comparables	EV / EBITDA multiple		4.9 x		Increaseb
Specialty Retail		22,890,097		Market comparables	Discount for lack of marketability		28.5%		Decreaseb
					EV / EBITDA multiple		11.6x - 14.4x		Increasec
					EV / Revenue multiple		0.4x		Increase
All Other Investmentsd		596,490	e
Total	$	180,538,659

^aRepresents the directional change in the fair value that would result from a significant and reasonable increase in the corresponding input. A significant and reasonable decrease in the input would have the opposite effect. Significant impacts, if any, to fair value and/or net assets have been indicated.

^bRepresents a significant impact to fair value and net assets.

^cRepresents a significant impact to fair value but not net assets.

^dIncludes fair value of immaterial financial instruments developed using various valuation techniques and unobservable inputs. May also include financial instruments with values derived using private transaction prices or non-public third party pricing information which is unobservable.

eIncludes securities determined to have no value at June 30, 2020.

Abbreviations List
EBITDA	Earnings before interest, taxes, depreciation and amortization
EV	Enterprise value

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Quest Fund (continued)

16. New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provides optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the LIBOR and other interbank-offered based reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management is currently evaluating the impact, if any, of applying this ASU.

17. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty		Currency		Selected Portfolio
BOFA	Bank of America Corp.	EUR	Euro	ADR	American Depositary Receipt
BONY	The Bank of New York Mellon Corp.	GBP	British Pound	FHLB	Federal Home Loan Bank
HSBK	HSBC Bank PLC	USD	United States Dollar	FRN	Floating Rate Note
SSBT	State Street Bank and Trust Co., N.A.			LIBOR	London InterBank Offered Rate
UBSW	UBS AG			PIK	Payment In-Kind

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Shareholder Information

Board Approval of Investment

Management Agreements

FRANKLIN MUTUAL SERIES FUNDS

Franklin Mutual Quest Fund

(Fund)

The Board of Trustees (Board), including a majority of trustees that are not “interested persons” as such term is defined in section 2(a)(19) of the Investment Company Act of 1940 (hereinafter referred to as “independent trustees”), at a meeting held on May 14, 2020, unanimously approved the renewal of the Fund’s investment management agreement. Prior to a meeting of all of the trustees for the purpose of considering such renewal, the independent trustees participated in two other meetings held in connection with the renewal process. Throughout the process, the independent trustees received assistance and advice from and met separately with independent counsel. The independent trustees met with and interviewed officers of the investment manager (including portfolio managers), the transfer agent and shareholder services group and the distributor. In approving the renewal of the investment management agreement for the Fund, the Board, including the independent trustees, determined that the investment management fee structure was fair and reasonable and that continuance of the agreement was in the best interests of the Fund and its shareholders.

In reaching their decision on the investment management agreement, the trustees took into account information furnished throughout the year at regular Board meetings, as well as information specifically requested and furnished for the renewal process, which culminated in the meetings referred to above for the specific purpose of considering such agreement. Information furnished throughout the year included, among others, reports on the Fund’s investment performance, expenses, portfolio composition, portfolio brokerage execution, client commission arrangements, derivatives, securities lending, asset segregation, portfolio turnover, Rule 12b-1 plan, distribution, shareholder servicing, legal and compliance matters, pricing of securities, sales and redemptions, and marketing support payments made to financial intermediaries, as well as a third-party survey of transfer agent fees charged to funds within the Franklin Templeton Investments (FT) complex in comparison with those charged to other fund complexes deemed comparable. Also, related financial statements and other information about the scope and quality of services provided by the investment manager and its affiliates and enhancements to

such services over the past year were provided. In addition, the trustees received periodic reports throughout the year and during the renewal process relating to compliance with the Fund’s investment policies and restrictions. During the renewal process, the independent trustees considered the investment manager’s methods of operation within the Franklin Templeton group and its activities on behalf of other clients. The Board also noted that it received an annual report on all payments made by FT or the Fund to financial intermediaries engaged in the sale of Fund shares, as well as a memorandum relating to third-party servicing arrangements in response to a Guidance Update from the U.S. Securities and Exchange Commission (SEC) relating to mutual fund distribution and sub-accounting fees.

The information obtained by the trustees during the renewal process also included a special report prepared by Broadridge Financial Solutions, Inc., an independent third-party analyst that utilizes data from Lipper, Inc. (“Lipper”), comparing the Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper (Broadridge Section 15(c) Report). The trustees reviewed the Broadridge Section 15(c) Report and its usefulness in the renewal process with respect to matters such as comparative fees, expenses, expense ratios, performance and volatility. They concluded that the report continues to be a reliable resource in the performance of their duties.

In addition, the trustees received a Profitability Study (Profitability Study) prepared by management discussing the profitability to FT from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Over the past year, the Board and counsel to the independent trustees continued to receive reports on management’s handling of recent regulatory inquiries and pending legal actions against the investment manager and its affiliates. The independent trustees were satisfied with the actions taken to date by management in response to such regulatory and legal matters.

The trustees reviewed the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of the investment manager. As part of this review, particular attention was given to management’s diligent risk management program, including continual monitoring and management of cybersecurity, liquidity and counterparty credit risk, and attention given to derivatives and other complex instruments that are held and expected to be held by the Fund and how such instruments

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are used to carry out the Fund’s investment goal(s). The Board also took into account, among other things, management’s efforts in establishing a global credit facility for the benefit of the Fund and other accounts managed by FT to provide a source of cash for temporary and emergency purposes or to meet unusual redemption requests as well as the strong financial position of the investment manager’s parent company and its commitment to the mutual fund business. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity and liquidity risk management. The Board also recognized management’s commitment to facilitating Board oversight of particular areas, including derivatives and payments to intermediaries, by enhanced reporting.

In addition to the above and other matters considered by the trustees throughout the course of the year, the following discussion relates to certain primary factors relevant to the Board’s decision. This discussion of the information and factors considered by the Board (including the information and factors discussed above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual trustees may have assigned different weights to various factors.

NATURE, EXTENT AND QUALITY OF SERVICES. The trustees reviewed the nature, extent and quality of the services provided, and to be provided, by the investment manager. The trustees cited the investment manager’s ability to implement the Fund’s disciplined value investment approach and its long-term relationship with the Fund as reasons that shareholders choose to invest, and remain invested, in the Fund. The trustees reviewed the Fund’s portfolio management team, including its performance, staffing, skills and compensation program. With respect to portfolio manager compensation, management assured the trustees that the Fund’s long-term performance is a significant component of incentive-based compensation and noted that a portion of a portfolio manager’s incentive-based compensation is paid in shares of pre-designated funds from the portfolio manager’s fund management area. The trustees noted that the portfolio manager compensation program aligned the interests of the portfolio managers with that of shareholders of the Fund. The trustees discussed with management various other products, portfolios and entities

that are advised by the investment manager and the allocation of assets and expenses among and within them, as well as their relative fees and reasons for differences with respect thereto and any potential conflicts. During regular Board meetings and the aforementioned meetings of the independent trustees, the trustees received reports and presentations on the investment manager’s best execution trading policies. The trustees considered periodic reports provided to them showing that the investment manager complied with the investment policies and restrictions of the Fund as well as other reports periodically furnished to the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics covering the investment management personnel, the adherence to fair value pricing procedures established by the Board and the accuracy of net asset value calculations. The Board noted the extent of the benefits provided to Fund shareholders from being part of the Franklin Templeton group of funds, including the right to exchange investments between funds (same class) without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings of other funds to obtain reduced sales charges. The Board considered the investment manager’s significant efforts in developing and implementing compliance procedures established in accordance with SEC and other requirements.

The Board considered the nature, extent and quality of the services to be provided under the Fund’s other service agreements to determine that, on an overall basis, Fund shareholders were well served. In this connection, the Board also took into account transfer agent and shareholder services provided to Fund shareholders by an affiliate of the investment manager, noting continuing expenditures by management to increase and improve the scope of such services and favorable periodic reports on shareholder services conducted by independent third parties. While such considerations directly affected the trustees’ decision in renewing the Fund’s transfer agent and shareholder services agreement, the Board also considered these commitments as incidental benefits to Fund shareholders deriving from the investment management relationship.

Based on their review, the trustees were satisfied with the nature and quality of the overall services provided, and to be provided, by the investment manager and its affiliates to the Fund and its shareholders and were confident in the abilities of the management team to continue the disciplined value investment approach of the Fund and to provide quality services to the Fund and its shareholders.

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INVESTMENT PERFORMANCE. The trustees reviewed and placed significant emphasis on the investment performance of the Fund over the one-, three-, five- and 10-year periods ended December 31, 2019. They considered the history of performance of the Fund relative to various benchmarks. As part of their review, they inquired of management regarding benchmarks, style drift and restrictions on permitted investments. Consideration was also given to performance in the context of available levels of cash during the periods.

The trustees had meetings during the year, including the meetings referred to above held in connection with the renewal process, with the Fund’s portfolio managers to discuss performance and the management of the Fund. In addition to the materials provided by management in connection with the renewal process, the independent trustees requested throughout the year (and received) additional presentations from the investment manager and senior management of FT regarding the performance of the investment manager and the Fund. As part of these presentations, the investment manager and senior management of FT reviewed enhancements that have been made, and are being made, to the investment manager’s investment process. In addition, it was noted that senior management of FT is conducting a review of the investment manager and the Fund and will report the results thereof to the independent trustees when completed.

Particular attention in assessing performance was given to the Broadridge Section 15(c) Report. That report showed the investment performance of the Fund (Class A shares) in comparison to other funds determined comparable by Lipper.

The comparable funds to the Fund, as chosen by Lipper, included all retail and institutional flexible portfolio funds. The Fund had total returns in the second-lowest performing quintile for the one-year period ended December 31, 2019, and had annualized total returns for the three- and five-year periods in the lowest and the second-lowest performing quintiles, respectively. The trustees noted that the Fund’s total return on an annualized basis for the 10-year period ended December 31, 2019 was in the second-best performing quintile. The trustees also compared Fund performance to other industry benchmarks, including measures of risk-adjusted performance of a fund, as part of their evaluation of investment performance. The trustees discussed with management the reasons for the relative underperformance for the one-, three-, and five-year periods ended December 31, 2019. While disappointed with the relative underperformance of the Fund, the Board did not

believe that any changes with respect to the Fund were warranted at the time, particularly as the enhancements to the investment manager’s investment process continue to be implemented and as the review being conducted by senior management of FT is in process. The Board noted that it would continue to monitor future performance.

COMPARATIVE EXPENSES AND MANAGEMENT PROFITABILITY. The trustees considered the cost of the services provided and to be provided and the profits realized by the investment manager and its affiliates from their respective relationships with the Fund. As part of the renewal process, the trustees explored with management the trends in expense ratios over the past three fiscal years and the reasons for any increases in the Fund’s expense ratios (or components thereof). In considering the appropriateness of the management fee and other expenses charged to the Fund, the Board took into account various factors including investment performance and matters relating to Fund operations, including, but not limited to, the quality and experience of its portfolio managers and research staff. Consideration was also given to a comparative analysis in the Broadridge Section 15(c) Report of the investment management fee and total expense ratio of the Fund in comparison with those of a group of other funds selected by Lipper as its appropriate Lipper expense group. Lipper expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Lipper to be an appropriate measure of comparative expenses.

In reviewing comparative costs, emphasis was given to the Fund’s contractual management fee in comparison with the contractual management fee that would have been charged by other funds within its Lipper expense group assuming they were similar in size to the Fund, as well as the actual total expenses of the Fund in comparison with those of its Lipper expense group. The Lipper contractual management fee analysis includes administrative charges as being part of the management fee, and total expenses, for comparative consistency, are shown by Lipper for Fund Class A shares.

The Fund’s contractual management fee rate was in the middle quintile of its Lipper expense group and its total expenses were in the second-least expensive quintile of

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such group. The Board was satisfied with such comparative fees and expenses.

The trustees also reviewed the Profitability Study addressing profitability of Franklin Resources, Inc., from its overall U.S. fund business, as well as profitability to the Fund’s investment manager and its affiliates, from providing investment management and other services to the Fund during the 12-month period ended September 30, 2019, the most recent fiscal year-end of Franklin Resources, Inc. The trustees reviewed the basis on which such reports are prepared and the cost allocation methodology utilized in the Profitability Study, it being recognized that allocation methodologies may each be reasonable while producing different results. In this respect, the Board noted that the reasonableness of the cost allocation methodologies was reviewed by independent accountants on an every other year basis.

The independent trustees met with management to discuss the Profitability Study. This included, among other things, a comparison of investment management income with investment management expenses of the Fund; comparison of underwriting revenues and expenses; the relative relationship of investment management and underwriting expenses; shareholder servicing profitability; economies of scale; and the relative contribution of the Fund to the profitability of the investment manager and its parent. In discussing the Profitability Study with the Board, the investment manager stated its belief that the costs incurred in establishing the infrastructure necessary to operate the type of mutual fund operations conducted by it and its affiliates may not be fully reflected in the expenses allocated to the Fund in determining its profitability.

The Board also took into account management’s expenditures in improving shareholder services provided to the Fund, as well as the need to meet additional regulatory and compliance requirements. The trustees also considered the extent to which the investment manager may derive ancillary benefits from Fund operations, including those derived from economies of scale, discussed below, the allocation of Fund brokerage and the use of commission dollars to pay for research and other similar services.

Based upon their consideration of all these factors, the trustees determined that the level of profits realized by the investment manager and its affiliates in providing services to the Fund was not excessive in view of the nature, quality and extent of services provided.

ECONOMIES OF SCALE. The Board considered economies of scale realized by the investment manager and its affiliates as the Fund grows larger and the extent to which they are shared with Fund shareholders, as for example, in the level of the investment management fee charged, in the quality and efficiency of services rendered and in increased capital commitments benefiting the Fund directly or indirectly. While recognizing that any precise determination is inherently subjective, the trustees noted that, based upon the Profitability Study, as some funds increase in size, at some point economies of scale may result in the investment manager realizing a larger profit margin on investment management services provided to such a fund. The trustees also noted that benefits of economies of scale will be shared with Fund shareholders due to the decline in the effective investment management fee rate as breakpoints are achieved by the Fund.

The trustees noted that breakpoints had been instituted as part of the Fund’s investment management fee and that the Board regularly evaluates whether additional breakpoints are appropriate. The trustees assessed the savings to shareholders resulting from such breakpoints and believed they were, and continue to be, appropriate and they agreed to continue to monitor the appropriateness of the breakpoints. The trustees also considered the effects an increase in assets under management would have on the investment management fee and expense ratio of the Fund. To the extent further economies of scale may be realized by the investment manager and its affiliates, the Board believed the investment management fees provide a sharing of benefits with the Fund and its shareholders.

Liquidity Risk Management Program

The Funds have 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 program is designed to assess and manage each Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during 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. The Funds’ Board of Trustees approved the appointment of the Director of Liquidity Risk within the Investment Risk Management Group (the “IRMG”) as the Administrator of the LRMP. The IRMG maintains the Investment Liquidity Committee (the “ILC”) to provide

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oversight and administration of policies and procedures governing liquidity risk management for FT products and portfolios. The ILC includes representatives from Franklin Templeton’s Risk, Trading, Global Compliance, Investment Compliance, Investment Operations, Valuation Committee and Product Management groups.

The LRMP Administrator Annual Report was presented to the Fund(s) Board of Trustees at their meetings in May 2020. The report covered the adequacy and effectiveness of the program during the period December 1, 2018 to December 31, 2019 (the “covered period”). The 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. In addition, the LRMP Administrator presented the Fund Board of Trustees an update on liquidity during the first quarter of 2020 in relation to the COVID-19 pandemic.

During the reporting period, the Fund maintained a high level of liquid assets that are defined under the Liquidity Rule as “Highly Liquid Investments.” As a result, the Fund was designated a “Primarily Highly Liquid Fund” as defined under the Liquidity Rule and has not adopted a “Highly Liquid Investment Minimum.” A Highly Liquid Investment is 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.

There can be no assurance that the program will achieve its objectives in the future. Please refer to your Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

Proxy Voting Policies and Procedures

The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678

or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust, on behalf of the Fund, files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year as an exhibit to its report on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

Householding of Reports and Prospectuses

You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800) 632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.

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Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.

	Semiannual Report and Shareholder Letter     Franklin Mutual Quest Fund
	Investment Manager	Distributor	Shareholder Services
	Franklin Mutual Advisers, LLC	Franklin Templeton Distributors, Inc. (800) DIAL BEN® / 342-5236 franklintempleton.com	(800) 632-2301 - (Class A, C, R & R6) (800) 448-FUND - (Class Z)

© 2020 Franklin Templeton Investments. All rights reserved. 475 S 08/20

Sign up for electronic delivery at franklintempleton.com/edelivery

Internet Delivery of Fund Reports Unless You Request Paper Copies: Effective January 1, 2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request them from the Fund or your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not signed up for electronic delivery, we would encourage you to join fellow shareholders who have. You may elect to receive shareholder reports and other communications electronically from the Fund by calling (800) 632-2301 or by contacting your financial intermediary.

You may elect to continue to receive paper copies of all your future shareholder reports free of charge by contacting your financial intermediary or, if you invest directly with a Fund, calling (800) 632-2301 to let the Fund know of your request. Your election to receive reports in paper will apply to all funds held in your account.

SHAREHOLDER LETTER

Dear Franklin Mutual Shares Fund Shareholder:

During the six months ended June 30, 2020, global equity markets were extremely volatile and declined as the spread of the novel coronavirus (COVID-19)—first reported in December and initially centered in China—disrupted economic activity and contributed to negative investor sentiment for risk assets. Share prices plunged dramatically, pulling global equities from near-record levels in mid-February before bottoming in late March. Global stocks snapped back in April and May but moderated in June to close the period significantly above the market trough, although still in negative territory. The broad U.S. equity market, as measured by the Standard & Poor’s^® 500 Index, finished the period down -3.08%, and global stocks, as measured by the MSCI World Index, retreated -5.48%.¹

As the period opened, major equity markets were rallying, lifted by China and the United States’ Phase-One trade agreement that was intended to serve as the foundation of a comprehensive settlement of two years of tariff one-upmanship between the world’s two largest economies. Then, COVID-19 emerged and upended these and other plans.

The spread of the pandemic evolved into a global public health crisis, and countries around the world implemented lockdown and physical distancing measures intended to “flatten the curve” of the contagion. Consumer and business spending fell, and manufacturing and other activity came to a virtual halt. Consequently, the world’s major economies fell into recession—including an end to the record-long U.S. expansion—and projections about the economic fallout exceeded that of the 2007–2009 Global Financial Crisis.

In response, central banks expanded their mandates to support economies and markets. The U.S. Federal Reserve (Fed) and the U.S. Congress undertook unprecedented monetary and fiscal stimulus that included lowering the federal funds rate to a range of 0.00%–0.25%; initiating open-ended quantitative easing; pledging to purchase short-dated investment-grade corporate debt and exchange-traded funds; sending checks directly to millions of Americans; expanding unemployment insurance; and

offering billions in loans to both small and large businesses. The European Union approved a €750 billion (US$825 billion) COVID-19 recovery fund that recommended financial burden sharing among member states.

Policymakers’ “whatever-it-takes” approach lifted investor sentiment, and stock prices surged. Rates of infection in some of the viral epicenters around the world slowed, and government officials, eager to restart economies, embarked on a gradual, albeit uneven, reopening.

In the period’s final month, the market rally continued but slowed considerably as the number of new, daily COVID-19 diagnoses spiked in U.S. states that were among the first to reopen. These trends may have worsened as many restless citizens, locked down since March, were less than diligent about adhering to social distancing and face-covering guidelines.

In late June, the Fed released the results of its annual Comprehensive Capital Analysis and Review report of large banks, better known as stress tests, and concluded that “banks can remain strong in the face of even the harshest shocks.” Nevertheless, the Fed capped dividends of banks at current levels and halted share buybacks until after the third quarter. Bank stocks reacted negatively to this development.

Market volatility and economic uncertainty can often present what we consider opportunities. We used our bottom-up, fundamentally driven investment process to add select positions that historically have not met our investment criteria but were now, in our opinion, attractively valued, and to move capital between existing positions to reflect market shifts. We believe this approach may offer meaningful upside potential and a degree of downside protection in periods of financial market turbulence. While the current level of uncertainty may be unnerving, it is important to remember that the market historically rewards investors who take a long-term perspective. To that end, we recognize the importance of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing

1. Source: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

 Not FDIC Insured |  May Lose Value | No Bank Guarantee 

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markets and economic conditions, we are confident investors with a well-diversified portfolio and a patient, long-term outlook should be well-positioned for the years ahead.

On the following pages, the portfolio management team reviews investment decisions that pertain to performance during the past six months considering the economic environment and other factors. 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 continuing to serve your investment needs in the years ahead.

Sincerely,

Peter A. Langerman

Chairman, President and Chief Executive Officer

Franklin Mutual Advisers, LLC

This letter reflects our analysis and opinions as of June 30, 2020, 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.

Contents

Semiannual Report
Franklin Mutual Shares Fund	3
Performance Summary	8
Your Fund’s Expenses	10
Financial Highlights and Statement of Investments	11
Financial Statements	24
Notes to Financial Statements	29
Shareholder Information	43

Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.

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SEMIANNUAL REPORT

Franklin Mutual Shares Fund

This semiannual report for Franklin Mutual Shares Fund covers the period ended June 30, 2020.

Your Fund’s Goal and Main Investments

The Fund’s principal investment goal is capital appreciation, which may occasionally be short term. The secondary goal is income. Under normal market conditions, the Fund invests primarily in equity securities, primarily common stock, of U.S. and foreign companies that we believe are available at market prices less than their intrinsic value, with a current focus on companies with market capitalizations greater than $5 billion. To a lesser extent, the Fund also invests in merger arbitrage securities and the debt and equity of distressed companies. The Fund may invest up to 35% of its assets in foreign securities, which may include sovereign debt and participations in foreign government debt. The Geographic Composition bar chart on this page lists the leading countries where the Fund invests.

Performance Overview

The Fund’s Class Z shares posted a cumulative total return of -20.79% for the six months ended June 30, 2020. For comparison, the Fund’s benchmark, the Standard & Poor’s 500 Index (S&P 500^®), which is a broad measure of U.S. stock performance, posted a total return of -3.08%.¹ You can find more of the Fund’s performance data in the Performance Summary beginning on page 8.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Economic and Market Overview

Global developed and emerging market equities, as measured by the MSCI All Country World Index (USD), posted a -5.99% total return during the six months under review.¹ Stocks fell sharply in early 2020 as countries around

Geographic Composition*

Based on Total Net Assets as of 6/30/20

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

the world implemented lockdown measures in an effort to slow the spread of the novel coronavirus (COVID-19). Global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments such as government bonds and cash. While global equities, notably in the U.S., rebounded in April and May amid optimism about easing lockdown restrictions, concerns about a second wave of infections hindered equities in June, as investors weighed the possibility of renewed restrictions.

In the U.S., government mandates to mitigate the COVID-19 pandemic severely impacted the economy beginning in March 2020. As a result, the unemployment rate surged to 14.7% in April, as many businesses, particularly those involved in hospitality, retail and travel, announced mass layoffs.² According to the National Bureau of Economic Research, the longest U.S. economic expansion in history ended in February 2020 as the country slipped into a severe recession. Nonetheless, near period-end, there were signs that a recovery was underway, as jobless claims fell

1. Source: Morningstar.

The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.

2. Source: U.S. Bureau of Labor Statistics.

See www.franklintempletondatasources.com for additional data provider information.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

The SOI begins on page 16.

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considerably from their peak in early April, retail sales rose sharply in May, and the unemployment rate fell to 11.1% in June.² Along with optimism about improved treatments and potential vaccines for COVID-19, the positive economic signals contributed to a significant equity rebound in April and May. However, an increase in COVID-19 infections in many states throughout June pressured U.S. stocks.

Additionally, the U.S. Federal Reserve (Fed) made significant efforts to support the U.S. economy. In March 2020, as the pandemic began to severely impact the economy and financial markets, the Fed implemented two emergency rate cuts, lowering the federal funds target rate to a range of 0.00%–0.25%, and announced sweeping quantitative easing measures aimed at ensuring credit flow to borrowers and supporting credit markets with unlimited amounts of bond purchasing.

In the eurozone, some analysts forecasted a significant contraction in 2020, particularly in southern European countries, as the magnitude of the economic disruption caused by the pandemic became apparent. European developed market equities, as measured by the MSCI Europe Index (USD), posted a -12.43% total return for the period.¹ To stimulate growth, the European Central Bank implemented a broad bond-buying program, and many countries passed fiscal stimulus measures.

Asian developed and emerging market equities, as measured by the MSCI All Country Asia Index (USD), posted a -5.51% total return during the six-month period.¹ The onset of the pandemic brought dramatically slower economic activity in Asia, as businesses halted operations and manufacturing and export activity declined sharply in the region’s major economies. Asian markets generally advanced toward period-end, bolstered by fiscal stimulus measures and economies reopening throughout the region, especially in China.

Emerging market stocks, as measured by the MSCI Emerging Markets Index (USD), posted a -9.67% total return due primarily to the COVID-19 pandemic.¹ A sharp decrease in prices for oil and other natural resources also hurt emerging market economies reliant on these exports. In the last quarter of the reporting period, however, investor optimism led to a stock rally, particularly in emerging market countries that had successfully lowered infection rates.

Investment Strategy

At Franklin Mutual Series, we are committed to our distinctive value approach to investing, which we believe can generate above-average risk-adjusted returns over time for our

shareholders. Our major investment strategy is investing in undervalued stocks. When selecting undervalued equities, we are attracted to what we believe are fundamentally strong companies with healthy balance sheets, high-quality assets, substantial free cash flow and shareholder-oriented management teams and whose stocks are trading at discounts to our assessment of the companies’ intrinsic or business value. We also look for asset-rich companies whose shares may be trading at depressed levels due to concerns over short-term earnings disappointments, litigation, management strategy or other perceived negatives. This strict value approach is not only intended to improve the likelihood of capital appreciation, but also reduces the risk of substantial declines, in our opinion. While the vast majority of our undervalued equity investments are made in publicly traded companies globally, we may invest occasionally in privately held companies as well. Our portfolio selection process generally includes an assessment of the potential impacts of any material environmental, social and governance (ESG) factors on the long-term risk and return profile of a company.

To a lesser extent, we complement this more traditional investment strategy with two others. One is distressed investing, a highly specialized field that has proven quite profitable during certain periods over the years. Distressed investing is complex and can take many forms. The most common distressed investment the Fund undertakes is the purchase of financially troubled or bankrupt companies’ debt at a substantial discount to face value. After the financially distressed company is reorganized, often in bankruptcy court, the old debt is typically replaced with new securities issued by the financially stronger company.

The other piece of our investment strategy is participating in arbitrage situations, another highly specialized field. When companies announce proposed mergers or takeovers, commonly referred to as deals, the target company may trade at a discount to the bid it ultimately accepts. One form of arbitrage involves purchasing the target company’s stock when it is trading below the value we believe it would receive in a deal. In keeping with our commitment to a relatively conservative investment approach, we typically focus our arbitrage efforts on announced deals, and avoid rumored deals or other situations we consider relatively risky. In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

Manager’s Discussion

The novel coronavirus (COVID-19) pandemic has significantly altered our way of life. Despite this, stocks have

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rallied off the March 23 market bottom and are within range of the pre-pandemic, all-time highs achieved earlier in the year. While the economy has reopened, the recovery is likely to be uneven. The question that we wrestle with daily is what does this scenario mean for equities in general and undervalued stocks in particular?

Markets rose sharply in April, as investors moved back into the growth stocks that propelled the market to the all-time highs of January. In late May, however, there was a turn in market sentiment resulting in value briefly outperforming growth. Undervalued stocks often benefit in periods of improving economic activity or stabilization as business prospects improve. Increasing demand across the economy, especially in cyclical sectors, can provide a tailwind for these companies and drive shareholder value. This is a scenario that often occurs off an economic bottom, and we are positioning our portfolios to capitalize on this trend.

The second-quarter earnings reporting season (occurring in July and August) marks the first period with the full impact of the economic lockdowns and will provide a more complete view into the pandemic’s impact on corporate statements. Many financial officers withdrew full-year 2020 guidance, as they reported first-quarter results, due to limited revenue visibility. As a result, the path ahead for stocks is less clear. We remain cautious amid these elevated risks.

Our traditional value equity investment approach is complemented with two other strategies: distressed investing and merger arbitrage.

Within our distressed credit strategy, we targeted companies and industries directly impacted by the coronavirus pandemic. The robust government fiscal and monetary intervention have limited the number of attractive options, but we have found opportunities in the energy sector and the retail and travel industries. Although each situation is unique, these securities have strong collateral packages and covenant protections or other features that we believe make them substantially more attractive than the broad array of available distressed debt.

Within merger arbitrage, which involves trading the stocks of companies involved in a merger or acquisition (M&A), activity has slowed significantly since the onset of the pandemic. Deal terms agreed to before the virus emerged have become unbalanced and are now more favorable for sellers than they are for buyers. Not surprisingly, some of these proposals have become embroiled in litigation. Also, M&A activity has slowed as the economic realities of the coronavirus get priced into the market, and bankers are challenged to conduct due diligence remotely. As the period

Top 10 Sectors/Industries

Based on Equity Securities as of 6/30/20

	% of Total Net Assets
Pharmaceuticals		10.7%
Banks		6.8%
Media		6.1%
Oil, Gas & Consumable Fuels		5.8%
Insurance		5.4%
Technology Hardware, Storage & Peripherals		4.3%
Food Products		4.2%
Software		3.4%
Food & Staples Retailing		3.4%
Tobacco		3.3%

ended, we began to see signs that transactions activity might resume, but we would expect the second half of the year to be focused on resolving pending deals, rather than significant growth in new ones.

Fund Performance

Turning to Fund performance, investments that detracted included U.S.-based companies American International Group (AIG; not held at period-end), Wells Fargo and Citigroup.

Shares of insurer AIG retreated as COVID-19 concerns and a lack of clarity on forward guidance related to expenses and investment income contributed to negative investor sentiment. The stock initially rallied following the company’s first-quarter earnings call at which management revealed that the majority of its property policies—which include coverage for business interruption—contained exclusions for losses related to viruses.

The shares of diversified financial services company Wells Fargo were pulled down by negative investor sentiment for financials, which have trailed the broader market rally from the March 23 bottom. Concerns about a possible dividend cut as bank earnings have come under pressure, and speculation about the Fed moving to negative interest rates—subsequently refuted by Fed Chairman Jerome Powell—contributed to the selloff. Earlier in the period, management reported year-end 2019 earnings that fell well short of consensus estimates.

The stocks of a number of U.S. banks, including Citigroup, sold off during the period as concern about the economic effects of COVID-19 and Fed interest-rate cuts led to negative sentiment for financials. The Fed’s decision in late June to cap bank dividends and curtail stock buybacks—as

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part of its stress test review of large banks—also contributed to the bearish outlook. During the period, Citigroup reported a sharp drop in first-quarter profit, although earnings per share was relatively in line with expectations. A year-over-year increase in revenue was driven by strong capital markets revenue but was offset by a significant rise in loan loss provision. Earlier in the period, management reported fourth-quarter 2019 earnings that surpassed consensus forecasts.

During the period under review, Fund investments that contributed positively to performance included U.S.-based companies Eli Lilly, NortonLifeLock and Kraft Heinz. Kraft Heinz is listed among the Fund’s largest positions in the Top 10 Equity Holdings table on this page.

Shares of pharmaceutical products company Eli Lilly were volatile but climbed during the period. Investor sentiment improved as the market came to the realization that the company’s business may not be meaningfully impacted by the disruption caused by the COVID-19 pandemic. First-quarter financial results exceeded consensus sales and earnings expectations, with revenues benefiting from customers stocking up amid COVID-19, which is likely to reverse later in the year. Management raised 2020 guidance for earnings per share and reiterated the outlook for revenue and operating margin. In our view, Eli Lilly has a strong drug pipeline with several important compounds that positions the company well for continued growth over time.

Shares of cybersecurity solutions provider NortonLifeLock outperformed during the period as work-from-home requirements attributable to the COVID-19 pandemic led to increased consumer purchases of the company’s cybersecurity subscriptions, generating solid fiscal fourth-quarter earnings that were in line with consensus expectations. NortonLifeLock’s stock rallied entering the year and surged after management announced in early January the payment of a one-time, $12 per share cash dividend funded by the 2019 sale of the enterprise security business to Broadcom. Symantec, the precursor to NortonLifeLock, sold the business as part of its transition to a pure-play consumer-focused cybersecurity company, and management subsequently changed the company’s name to Norton-LifeLock, highlighting its lead brands.

Investors bid up shares of food products producer Kraft Heinz as surging demand for its products led to better-than-expected sales growth. Management raised its sales guidance in a business update early in the period, and financial results in the subsequent quarterly earnings report

CFA^® is a trademark owned by CFA Institute.

Top 10 Equity Holdings

6/30/20

Company Sector/Industry, Country	% of Total Net Assets
Charter Communications Inc. Media, U.S.		3.0%
Medtronic PLC Health Care Equipment & Supplies, U.S.		2.7%
Merck & Co. Inc. Pharmaceuticals, U.S.		2.6%
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea		2.5%
GlaxoSmithKline PLC Pharmaceuticals, U.K.		2.4%
British American Tobacco PLC Tobacco, U.K.		2.4%
The Kroger Co. Food & Staples Retailing, U.S.		2.3%
The Kraft Heinz Co. Food Products, U.S.		2.3%
Novartis AG Pharmaceuticals, Switzerland		2.2%
Oracle Corp. Software, U.S.		2.2%

exceeded consensus estimates. The company reaffirmed the dividend payment, which also contributed to positive investor sentiment, and several analysts upgraded Kraft Heinz stock.

During the period, the Fund held currency forwards and futures seeking to hedge most of the currency risk of the portfolio’s non-U.S. dollar investments. The hedges had a positive overall impact on the Fund’s performance.

As fellow shareholders, we found recent absolute and relative performance disappointing, but our strategy of seeking undervalued stocks can lag the growth equity markets at times. We remain committed to our disciplined, value investment approach as we seek to generate attractive, long-term, risk-adjusted returns for shareholders.

Thank you for your participation in Franklin Mutual Shares Fund. We look forward to continuing to serve your investment needs.

Peter A. Langerman

Co-Portfolio Manager

F. David Segal, CFA

Co-Portfolio Manager

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Debbie A. Turner, CFA

Co-Portfolio Manager

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2020, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, 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.

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Performance Summary as of June 30, 2020

The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.

Performance as of 6/30/20

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%. Class A: 5.50% maximum initial sales charge. For other share classes, visit franklintempleton.com.

Share Class	Cumulative Total Return1		Average Annual Total Return2
Z
6-Month		-20.79%		-20.79%
1-Year		-14.28%		-14.28%
5-Year		+4.91%		+0.96%
10-Year		+96.43%		+6.98%
A3
6-Month		-20.91%		-25.27%
1-Year		-14.48%		-19.19%
5-Year		+3.59%		-0.42%
10-Year		+91.05%		+6.08%

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.

See page 9 for Performance Summary footnotes.

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PERFORMANCE SUMMARY

Total Annual Operating Expenses⁴

Share Class
Z	0.79	%
A	1.04	%

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. Value securities may not increase in price as anticipated or may decline further in value. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. The Fund’s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. The Fund may invest in lower rated bonds, which entail higher credit risk. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental or man-made disasters; financial, political or social disruptions; terrorism and war; and other tragedies or catastrophes, can cause investor fear and panic, which can adversely affect the economies of many companies, sectors, nations, regions and the market in general, in ways that cannot necessarily be foreseen. The Fund’s prospectus also includes a description of the main investment risks.

1. Cumulative total return represents the change in value of an investment over the periods indicated.

2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

3. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns (with sales charges) would have differed. Average annual total returns (with sales charges) have been restated to reflect the current maximum initial sales charge of 5.50%.

4. 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.

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Your Fund’s Expenses

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.

		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
Share Class	Beginning Account Value 1/1/20	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Net Annualized Expense Ratio2
Z	$1,000	$792.10	$3.65	$1,020.79	$4.12	0.82%
A	$1,000	$790.90	$4.76	$1,019.54	$5.37	1.07%
C	$1,000	$788.00	$8.09	$1,015.81	$9.12	1.82%
R	$1,000	$790.20	$5.88	$1,018.30	$6.62	1.32%
R6	$1,000	$792.40	$3.30	$1,021.18	$3.72	0.74%

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 182/366 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

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Financial Highlights

Franklin Mutual Shares Fund

	Six Months Ended June 30, 2020			Year Ended December 31,
	(unaudited)			2019			2018			2017			2016			2015
Class Z
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$27.56			$24.25			$28.63			$28.22			$26.00			$29.52
Income from investment operationsa:
Net investment incomeb		0.51	c		0.63			0.51			0.65	d		0.63	e		0.54
Net realized and unrealized gains (losses)		(6.24	)		4.90			(3.11	)		1.73			3.48			(1.71	)
Total from investment operations		(5.73	)		5.53			(2.60	)		2.38			4.11			(1.17	)
Less distributions from:
Net investment income		—			(0.71	)		(0.53	)		(0.68	)		(0.64	)		(0.59	)
Net realized gains		—			(1.51	)		(1.25	)		(1.29	)		(1.25	)		(1.76	)
Total distributions		—			(2.22	)		(1.78	)		(1.97	)		(1.89	)		(2.35	)
Net asset value, end of period		$21.83			$27.56			$24.25			$28.63			$28.22			$26.00
Total returnf		(20.79)%			23.13%			(8.95)%			8.49%			15.88%			(3.81)%
Ratios to average net assetsg
Expensesh,i		0.82%	j		0.78%	j		0.76%	j		0.78%			0.80%	j		0.81%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		4.37%	c		2.32%			1.77%			2.23%	d		2.33%	e		1.82%
Supplemental data
Net assets, end of period (000’s)		$3,976,956			$5,472,276			$5,189,476			$6,229,996			$7,681,881			$6,770,056
Portfolio turnover rate		14.67%			21.71%			20.72%			18.15%			20.56%			19.99%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.17%.

^dNet investment income per share includes approximately $0.16 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.69%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.96%.

^fTotal return is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

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FINANCIAL HIGHLIGHTS

Franklin Mutual Shares Fund (continued)

	Six Months Ended June 30, 2020			Year Ended December 31,
	(unaudited)			2019			2018			2017			2016			2015
Class A
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$27.26			$24.00			$28.35			$27.97			$25.78			$29.29
Income from investment operationsa:
Net investment incomeb		0.47	c		0.55			0.43			0.58	d		0.56	e		0.45
Net realized and unrealized gains (losses)		(6.17	)		4.86			(3.07	)		1.70			3.45			(1.69	)
Total from investment operations		(5.70	)		5.41			(2.64	)		2.28			4.01			(1.24	)
Less distributions from:
Net investment income		—			(0.64	)		(0.46	)		(0.61	)		(0.57	)		(0.51	)
Net realized gains		—			(1.51	)		(1.25	)		(1.29	)		(1.25	)		(1.76	)
Total distributions		—			(2.15	)		(1.71	)		(1.90	)		(1.82	)		(2.27	)
Net asset value, end of period		$21.56			$27.26			$24.00			$28.35			$27.97			$25.78
Total returnf		(20.91)%			22.86%			(9.18)%			8.21%			15.61%			(4.10)%
Ratios to average net assetsg
Expensesh,i		1.07%	j		1.03%	j		1.01%	j		1.03%			1.05%	j		1.09%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		4.12%	c		2.03%			1.52%			1.98%	d		2.08%	e		1.54%
Supplemental data
Net assets, end of period (000’s)		$2,887,619			$4,042,626			$3,852,134			$4,386,829			$4,737,576			$4,819,868
Portfolio turnover rate		14.67%			21.71%			20.72%			18.15%			20.56%			19.99%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.92%.

^dNet investment income per share includes approximately $0.16 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.44%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.71%.

^fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

12         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Shares Fund (continued)

	Six Months Ended June 30, 2020			Year Ended December 31,
	(unaudited)			2019			2018			2017			2016			2015
Class C
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$27.22			$23.97			$28.04			$27.68			$25.54			$29.02
Income from investment operationsa:
Net investment incomeb		0.39	c		0.36			0.21			0.35	d		0.35	e		0.24
Net realized and unrealized gains (losses)		(6.16	)		4.82			(3.00	)		1.67			3.40			(1.67	)
Total from investment operations		(5.77	)		5.18			(2.79	)		2.02			3.75			(1.43	)
Less distributions from:
Net investment income		—			(0.42	)		(0.03	)		(0.37	)		(0.36	)		(0.29	)
Net realized gains		—			(1.51	)		(1.25	)		(1.29	)		(1.25	)		(1.76	)
Total distributions		—			(1.93	)		(1.28	)		(1.66	)		(1.61	)		(2.05	)
Net asset value, end of period		$21.45			$27.22			$23.97			$28.04			$27.68			$25.54
Total returnf		(21.20)%			21.93%			(9.87)%			7.37%			14.77%			(4.79)%
Ratios to average net assetsg
Expensesh,i		1.82%	j		1.78%	j		1.76%	j		1.78%			1.80%	j		1.81%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		3.37%	c		1.32%			0.77%			1.23%	d		1.33%	e		0.82%
Supplemental data
Net assets, end of period (000’s)		$202,084			$302,296			$309,756			$995,665			$1,114,760			$1,101,302
Portfolio turnover rate.		14.67%			21.71%			20.72%			18.15%			20.56%			19.99%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.17%.

^dNet investment income per share includes approximately $0.16 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.69%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.96%.

^fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         13

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Series Funds (continued)

	Six Months Ended
	June 30, 2020			Year Ended December 31,
	(unaudited)			2019			2018			2017			2016			2015
Class R
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$27.17			$23.91			$28.21			$27.83			$25.66			$29.14
Income from investment operationsa:
Net investment incomeb		0.44	c		0.49			0.36			0.50	d		0.49	e		0.38
Net realized and unrealized gains (losses)		(6.14)			4.83			(3.05)			1.70			3.42			(1.67)
Total from investment operations		(5.70)			5.32			(2.69)			2.20			3.91			(1.29)
Less distributions from:
Net investment income		—			(0.55)			(0.36)			(0.53)			(0.49)			(0.43)
Net realized gains		—			(1.51)			(1.25)			(1.29)			(1.25)			(1.76)
Total distributions		—			(2.06)			(1.61)			(1.82)			(1.74)			(2.19)
Net asset value, end of period		$21.47			$27.17			$23.91			$28.21			$27.83			$25.66
Total returnf		(20.98)%			22.55%			(9.41)%			7.96%			15.31%			(4.32)%
Ratios to average net assetsg
Expensesh,i		1.32%	j		1.28%	j		1.26%	j		1.28%			1.30%	j		1.31%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		3.87%	c		1.82%			1.27%			1.73%	d		1.83%	e		1.32%
Supplemental data
Net assets, end of period (000’s)		$46,352			$66,038			$74,345			$107,660			$123,013			$134,050
Portfolio turnover rate		14.67%			21.71%			20.72%			18.15%			20.56%			19.99%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.67%.

^dNet investment income per share includes approximately $0.16 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.19%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.46%.

^fTotal return is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

14         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Shares Fund (continued)

	Six Months Ended
	June 30, 2020			Year Ended December 31,
	(unaudited)			2019			2018			2017			2016			2015
Class R6
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$27.55			$24.23			$28.61			$28.21			$25.98			$29.51
Income from investment operationsa:
Net investment incomeb		0.51	c		0.64			0.53			0.70	d		0.66	e		0.57
Net realized and unrealized gains (losses)		(6.23)			4.92			(3.11)			1.71			3.49			(1.71)
Total from investment operations		(5.72)			5.56			(2.58)			2.41			4.15			(1.14)
Less distributions from:
Net investment income		—			(0.73)			(0.55)			(0.72)			(0.67)			(0.63)
Net realized gains		—			(1.51)			(1.25)			(1.29)			(1.25)			(1.76)
Total distributions		—			(2.24)			(1.80)			(2.01)			(1.92)			(2.39)
Net asset value, end of period		$21.83			$27.55			$24.23			$28.61			$28.21			$25.98
Total returnf		(20.76)%			23.26%			(8.88)%			8.61%			16.05%			(3.71)%
Ratios to average net assetsg
Expensesh,i		0.74%	j		0.70%	j		0.69%	j		0.67%			0.68%	j		0.69%	j
Expenses incurred in connection with securities sold short		0.03%			0.02%			—%	k		—%			0.01%			0.02%
Net investment income		4.45%	c		2.40%			1.84%			2.34%	d		2.45%	e		1.94%
Supplemental data
Net assets, end of period (000’s)		$1,319,798			$1,680,600			$3,160,186			$3,741,430			$1,896,497			$1,923,466
Portfolio turnover rate		14.67%			21.71%			20.72%			18.15%			20.56%			19.99%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.25 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.25%.

^dNet investment income per share includes approximately $0.16 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.80%.

^eNet investment income per share includes approximately $0.10 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.08%.

^fTotal return is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hIncludes dividend and/or interest expense on securities sold short and security borrowing fees, if any. See below for the ratios of such expenses to average net assets for the periods presented. See Note 1(f).

ⁱBenefit of expense reduction rounds to less than 0.01%.

^jBenefit of waiver and payments by affiliates rounds to less than 0.01%.

^kRounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         15

FRANKLIN MUTUAL SERIES FUNDS

Statement of Investments, June 30, 2020 (unaudited)

Franklin Mutual Shares Fund

	Country		Shares/ Units/ Warrants		Value
Common Stocks and Other Equity Interests 90.9%
Aerospace & Defense 2.4%
BAE Systems PLC		United Kingdom		15,590,083	$	93,216,505
Huntington Ingalls Industries Inc.		United States		632,084		110,292,337
						203,508,842
Auto Components 0.0%†
a,b,c,dInternational Automotive Components Group Brazil LLC		Brazil		7,234,813		136,043
Automobiles 0.6%
General Motors Co.		United States		1,850,794		46,825,088
Banks 6.8%
Bank of America Corp.		United States		3,751,300		89,093,375
Citigroup Inc.		United States		3,077,706		157,270,777
Columbia Banking System Inc.		United States		75,396		2,137,100
JPMorgan Chase & Co.		United States		1,644,490		154,680,729
Synovus Financial Corp.		United States		2,934,440		60,244,053
Wells Fargo & Co.		United States		4,234,603		108,405,837
						571,831,871
Beverages 0.5%
Heineken NV		Netherlands		495,798		45,705,735
Building Products 1.3%
Johnson Controls International PLC		United States		3,293,400		112,436,676
Capital Markets 1.1%
Credit Suisse Group AG		Switzerland		8,506,542		88,509,437
Communications Equipment 1.1%
Cisco Systems Inc.		United States		2,020,910		94,255,242
Consumer Finance 1.3%
Capital One Financial Corp.		United States		1,731,205		108,356,121
Containers & Packaging 1.8%
International Paper Co.		United States		4,358,737		153,471,130
Diversified Financial Services 3.0%
aBerkshire Hathaway Inc., B		United States		653,700		116,691,987
Voya Financial Inc.		United States		2,937,130		137,017,114
						253,709,101
Electric Utilities 1.0%
Pinnacle West Capital Corp.		United States		1,141,200		83,638,548
Electrical Equipment 1.7%
aSensata Technologies Holding PLC		United States		3,755,370		139,812,425
Electronic Equipment, Instruments & Components 1.2%
Corning Inc.		United States		4,042,414		104,698,523
Energy Equipment & Services 1.1%
Baker Hughes Co., A		United States		2,405,627		37,022,600
Schlumberger Ltd.		United States		3,224,000		59,289,360
						96,311,960

16         Semiannual Report   franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

	Country		Shares/ Units/ Warrants		Value
Common Stocks and Other Equity Interests (continued)
Entertainment 2.0%
The Walt Disney Co.		United States		1,482,874	$	165,355,280
Equity Real Estate Investment Trusts (REITs) 1.5%
Alexander’s Inc.		United States		231,286		55,716,797
Vornado Realty Trust		United States		1,752,422		66,960,045
						122,676,842
Food & Staples Retailing 3.4%
The Kroger Co.		United States		5,711,194		193,323,917
Walgreens Boots Alliance Inc.		United States		2,104,829		89,223,701
						282,547,618
Food Products 4.2%
Archer-Daniels-Midland Co.		United States		2,402,500		95,859,750
Conagra Brands Inc.		United States		1,929,383		67,856,400
The Kraft Heinz Co.		United States		6,008,600		191,614,254
						355,330,404
Health Care Equipment & Supplies 2.8%
Medtronic PLC.		United States		2,533,754		232,345,242
Health Care Providers & Services 3.2%
Anthem Inc.		United States		391,272		102,896,711
CVS Health Corp.		United States		2,595,215		168,611,118
						271,507,829
Household Durables 2.8%
Lennar Corp., A		United States		2,069,386		127,515,565
Newell Brands Inc.		United States		6,793,795		107,885,465
						235,401,030
Household Products 0.9%
Energizer Holdings Inc.		United States		1,538,433		73,060,183
Industrial Conglomerates 1.0%
General Electric Co.		United States		11,699,600		79,908,268
Insurance 5.4%
Alleghany Corp.		United States		325,189		159,062,947
Everest Re Group Ltd.		United States		444,994		91,757,763
The Hartford Financial Services Group Inc.		United States		3,214,299		123,911,226
MetLife Inc.		United States		2,277,830		83,186,352
						457,918,288
IT Services 1.9%
Cognizant Technology Solutions Corp., A		United States		2,857,050		162,337,581
Machinery 0.8%
aCNH Industrial NV		United Kingdom		3,744,919		26,307,992
aCNH Industrial NV, special voting		United Kingdom		5,296,616		37,208,638
						63,516,630

franklintempleton.com Semiannual Report         17

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

	Country		Shares/ Units/ Warrants		Value
Common Stocks and Other Equity Interests (continued)
Media 6.1%
aCharter Communications Inc., A		United States		489,029	$	249,424,351
Comcast Corp., A		United States		4,398,700		171,461,326
aDiscovery Inc., C		United States		4,106,800		79,096,968
a,eiHeartMedia Inc., A		United States		1,795,072		14,988,851
a,ciHeartMedia Inc., B		United States		35,201		249,839
aiHeartMedia Inc., wts., A, 5/01/39		United States		1,786		14,912
						515,236,247
Oil, Gas & Consumable Fuels 5.8%
BP PLC		United Kingdom		26,795,044		102,648,763
Kinder Morgan Inc.		United States		5,693,740		86,374,036
Marathon Oil Corp.		United States		9,432,085		57,724,360
Royal Dutch Shell PLC, A (EUR Traded)		United Kingdom		1,123,167		18,383,889
Royal Dutch Shell PLC, A (GBP Traded)		United Kingdom		2,719,064		43,533,888
The Williams Cos. Inc.		United States		9,628,984		183,143,276
						491,808,212
Pharmaceuticals 10.7%
aElanco Animal Health Inc.		United States		1,054,483		22,618,660
Eli Lilly and Co.		United States		1,125,710		184,819,068
GlaxoSmithKline PLC		United Kingdom		9,979,574		201,576,048
Merck & Co. Inc.		United States		2,797,172		216,305,311
Novartis AG, ADR		Switzerland		2,151,041		187,871,921
Perrigo Co. PLC		United States		1,643,800		90,852,826
						904,043,834
Software 3.4%
aAvaya Holdings Corp.		United States		364		4,499
aAvaya Holdings Corp., wts., 12/15/22		United States		276,741		345,926
NortonLifeLock Inc.		United States		5,120,934		101,548,121
Oracle Corp.		United States		3,378,327		186,720,134
						288,618,680
Specialty Retail 1.2%
Tiffany & Co.		United States		651,800		79,480,492
a,b,cTRU Kids Parent LLC		United States		7,469		24,065,394
a,b,cWayne Services Legacy Inc.		United States		7,469		—
						103,545,886
Technology Hardware, Storage & Peripherals 4.3%
Hewlett Packard Enterprise Co.		United States		4,776,938		46,479,607
Samsung Electronics Co. Ltd.		South Korea		4,751,619		210,905,759
Western Digital Corp.		United States		2,461,412		108,671,340
						366,056,706
Textiles, Apparel & Luxury Goods 0.7%
PVH Corp.		United States		1,285,900		61,787,495

18         Semiannual Report   franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

	Country		Shares/ Units/ Warrants		Value
Common Stocks and Other Equity Interests (continued)
Tobacco 3.3%
Altria Group Inc.		United States		2,023,360	$	79,416,880
British American Tobacco PLC		United Kingdom		3,767,740		144,497,562
British American Tobacco PLC, ADR		United Kingdom		1,424,588		55,302,506
						279,216,948
Wireless Telecommunication Services 0.6%
Vodafone Group PLC		United Kingdom		30,709,264		48,818,348
Total Common Stocks and Other Equity Interests (Cost $6,910,422,826)						7,664,244,293
			Principal     Amount
Corporate Bonds, Notes and Senior Floating Rate Interests 5.6%
fAmerican Airlines Inc., senior secured note, 144A, 11.75%, 7/15/25		United States	$	75,163,000		70,825,343
fBanff Merger Sub Inc., senior note, 144A, 9.75%, 9/01/26		United States		59,688,000		60,198,929
fBoxer Parent Co. Inc., senior secured note, first lien, 144A, 7.125%, 10/02/25		United States		14,646,300		15,410,471
fDelta Air Lines Inc., senior note, first lien, 144A, 7.00%, 5/01/25		United States		4,360,000		4,505,270
fFrontier Communications Corp., senior secured note, first lien, 144A, 8.00%, 4/01/27		United States		19,878,000		20,209,565
fMacy’s Inc., senior secured note, first lien, 144A, 8.375%, 6/15/25		United States		16,039,000		15,988,878
g,h,i,jMileage Plus Holdings LLC, Term Loan B, TBD, 6/25/27		United States		10,222,000		10,163,592
f,kMileage Plus Holdings LLC/Mileage Plus Intellectual Property Assets Ltd., senior secured note, first lien, 144A, 6.50%, 6/20/27		United States		39,492,000		39,689,460
fNavistar International Corp., senior secured note, 144A, 9.50%, 5/01/25		United States		18,060,400		19,426,218
hOccidental Petroleum Corp., senior note, FRN, 1.842%, (3-month USD LIBOR + 1.45%), 8/15/22		United States		10,903,900		10,035,767
h,jVeritas U.S. Inc., Term Loan B1, 5.50%, (3-month USD LIBOR + 4.50%), 1/27/23		United States		57,741,630		53,555,362
fVeritas U.S. Inc./Veritas Bermuda Ltd.,
senior note, 144A, 7.50%, 2/01/23		United States		9,656,000		9,546,356
senior note, 144A, 10.50%, 2/01/24		United States		76,705,000		68,930,565
h,jWindstream Services LLC,
PSA Holder Revolving Commitment, 6.25%, (Prime + 3.00%), 2/20/49		United States		91,322,291		56,163,209
PSA Holder Term Loan B6, 8.25%, (Prime + 5.00%), 3/30/21		United States		23,496,000		14,802,480
Total Corporate Bonds, Notes and Senior Floating Rate Interests (Cost $511,158,661)						469,451,465
Corporate Notes in Reorganization 0.6%
l Frontier Communications Corp.,
senior note, 10.50%, 9/15/22		United States		72,365,000		25,220,288
senior note, 11.00%, 9/15/25		United States		81,506,000		28,443,149
Total Corporate Notes in Reorganization (Cost $142,859,241)						53,663,437

franklintempleton.com Semiannual Report         19

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

	Country		Shares		Value
Companies in Liquidation 0.0%†
a,c,mBosgen Liquidating Trust c/o Verdolino and Lowey P.C., Contingent Distribution		United States		555,154	$	—
a,c,mTribune Media Co., Litigation Trust, Contingent Distribution		United States		1,002,994		—
a,c,mVistra Energy Corp., Litigation Trust, Contingent Distribution		United States		194,177,556		106,798
a,c,mWalter Energy Inc., Litigation Trust, Contingent Distribution		United States		20,046,000		—
Total Companies in Liquidation (Cost $6,071,371)						106,798
Total Investments before Short Term Investments (Cost $7,570,512,099)						8,187,465,993
			Principal     Amount
Short Term Investments 3.1%
Corporate Notes (Cost $3,117,595) 0.1%
Occidental Petroleum Corp., senior note, 4.85%, 3/15/21		United States	$	3,400,000		3,389,375
U.S. Government and Agency Securities 3.0%
nFHLB, 7/01/20		United States		40,000,000		40,000,000
nU.S. Treasury Bill, 7/02/20 - 11/12/20		United States		216,000,000		215,977,574
Total U.S. Government and Agency Securities (Cost $255,911,360)						255,977,574
oInvestments from Cash Collateral Received for Loaned Securities 0.0%†
			Shares
Money Market Funds (Cost $1,477,000) 0.0%†
p,qInstitutional Fiduciary Trust Money Market Portfolio, 0.00%		United States		1,477,000		1,477,000
			Principal     Amount
Repurchase Agreements (Cost $673,869) 0.0%†
rJoint Repurchase Agreement, 0.07%, 7/01/20 (Maturity Value $673,870)
J.P. Morgan Securities LLC
Collateralized by U.S. Treasury Notes, 0.125%, 5/31/22 (valued at $687,348)		United States	$	673,869		673,869
Total Investments from Cash Collateral Received for Loaned Securities (Cost $2,150,869)						2,150,869
Total Investments (Cost $7,831,691,923) 100.2%						8,448,983,811
Other Assets, less Liabilities (0.2)%						(16,174,601	)
Net Assets 100.0%					$	8,432,809,210

20         Semiannual Report   franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

^†Rounds to less than 0.1% of net assets.

^aNon-income producing.

^bSee Note 12 regarding holdings of 5% voting securities.

^cFair valued using significant unobservable inputs. See Note 14 regarding fair value measurements.

^dSee Note 10 regarding restricted securities.

^eA portion or all of the security is on loan at June 30, 2020. See Note 1(g).

^fSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At June 30, 2020, the aggregate value of these securities was $324,731,055, representing 3.9% of net assets.

^gSecurity purchased on a delayed delivery basis. See Note 1(d).

^hThe coupon rate shown represents the rate at period end.

ⁱA portion or all of the security represents an unsettled loan commitment. The coupon rate is to-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.

^jSee Note 1(h) regarding senior floating rate interests.

^kSecurity purchased on a when-issued basis. See Note 1(d).

^lSee Note 8 regarding credit risk and defaulted securities.

^mContingent distributions represent the right to receive additional distributions, if any, during the reorganization of the underlying company. Shares represent total underlying principal of debt securities.

ⁿThe security was issued on a discount basis with no stated coupon rate.

^oSee Note 1(g) regarding securities on loan.

^pSee Note 3(f) regarding investments in affiliated management investment companies.

^qThe rate shown is the annualized seven-day effective yield at period end.

^rSee Note 1(c) regarding joint repurchase agreement.

At June 30, 2020, the Fund had the following futures contracts outstanding. See Note 1(e).

Futures Contracts

Description	Type	Number of Contracts		Notional Amount	*	Expiration Date	Value/ Unrealized Appreciation (Depreciation)
Currency Contracts
EUR/USD	Short	305	$	42,903,969		9/14/20	$   278,202
GBP/USD	Short	1,444		111,882,925		9/14/20	3,066,046
Total Futures Contracts							$3,344,248

*As of period end.

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FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

At June 30, 2020, the Fund had the following forward exchange contracts outstanding. See Note 1(e).

Forward Exchange Contracts

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Euro		BOFA		Buy		1,191,791	$	1,289,256		7/15/20	$	50,096	$	—
Euro		BONY		Buy		1,203,085		1,321,889		7/15/20		30,156		—
Euro		HSBK		Buy		2,939,031		3,198,122		7/15/20		104,804		—
Euro		HSBK		Sell		12,500,710		14,064,924		7/15/20		16,444		—
Euro		SSBT		Buy		1,323,000		1,489,548		7/15/20		—		(2,742	)
Euro		SSBT		Sell		12,500,710		14,063,799		7/15/20		15,318		—
British Pound		BOFA		Sell		3,201,001		4,199,703		7/16/20		233,142		—
British Pound		BOFA		Sell		6,788,191		8,280,319		7/16/20		—		(131,358	)
British Pound		BONY		Sell		2,249,415		2,806,348		7/16/20		18,956		—
British Pound		HSBK		Buy		1,755,150		2,182,125		7/16/20		—		(7,208	)
British Pound		HSBK		Sell		1,527,371		1,882,011		7/16/20		—		(10,650	)
British Pound		HSBK		Sell		19,621,656		25,456,182		7/16/20		1,141,750		—
British Pound		SSBT		Sell		13,136,663		17,165,743		7/16/20		887,276		—
British Pound		UBSW		Sell		791,922		991,058		7/16/20		9,738		—
South Korean Won		HSBK		Buy		15,006,568,443		12,335,901		7/17/20		175,631		—
South Korean Won		HSBK		Sell		1,003,547,250		818,754		7/17/20		—		(17,940	)
South Korean Won		HSBK		Sell		87,901,409,788		75,712,917		7/17/20		2,426,260		—
South Korean Won		UBSW		Buy		5,987,039,940		5,039,596		7/17/20		—		(47,979	)
South Korean Won		UBSW		Buy		18,555,072,195		15,429,130		7/17/20		40,920		—
South Korean Won		UBSW		Sell		50,514,132,047		43,490,924		7/17/20		1,375,423		—
British Pound		BOFA		Buy		3,000,000		3,804,570		8/14/20		—		(86,501	)
British Pound		HSBK		Sell		6,878,173		8,958,304		8/14/20		433,798		—
British Pound		SSBT		Sell		6,878,173		8,959,645		8/14/20		435,139		—
Swiss Franc		UBSW		Sell		80,347,364		85,500,478		8/17/20		572,596		—
Euro		BOFA		Sell		3,424,808		3,755,952		8/18/20		—		(95,891	)
Euro		HSBK		Sell		3,023,120		3,315,125		8/18/20		—		(84,945	)
Euro		BOFA		Sell		128,294		140,604		10/07/20		—		(3,858	)
Euro		BONY		Sell		876,283		987,945		10/07/20		1,232		—
Euro		HSBK		Sell		2,933,905		3,331,693		10/07/20		28,053		—
Euro		HSBK		Sell		9,287,516		10,156,140		10/07/20		—		(301,805	)
Euro		SSBT		Sell		876,283		986,958		10/07/20		245		—
Euro		UBSW		Sell		3,266,158		3,700,601		10/07/20		22,839		—
Euro		UBSW		Sell		10,420,524		11,357,912		10/07/20		—		(375,822	)
South Korean Won		HSBK		Sell		10,192,222,755		8,557,342		11/12/20		48,508		—
South Korean Won		HSBK		Sell		89,708,146,222		73,523,232		11/12/20		—		(1,368,362	)
South Korean Won		UBSW		Sell		51,114,705,716		41,880,136		11/12/20		—		(792,263	)
British Pound		SSBT		Sell		30,540,977		37,438,351		11/23/20		—		(437,582	)
British Pound		UBSW		Sell		4,487,372		5,695,721		11/23/20		130,627		—
British Pound		UBSW		Sell		6,037,482		7,450,519		11/23/20		—		(36,972	)
Euro		BOFA		Sell		182,674		204,852		11/23/20		—		(1,109	)
Euro		HSBK		Sell		645,458		732,334		11/23/20		4,591		—
Euro		HSBK		Sell		2,803,264		3,127,880		11/23/20		—		(32,752	)
Euro		SSBT		Sell		649,629		736,367		11/23/20		3,922		—
Euro		SSBT		Sell		978,004		1,086,566		11/23/20		—		(16,118	)
Euro		UBSW		Sell		645,458		731,243		11/23/20		3,500		—

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FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterparty	a	Type	Quantity		Contract Amount	Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
Euro	UBSW		Sell	3,779,509	$	4,164,266	11/23/20	$	—	$	(97,065	)
Total Forward Exchange Contracts								$	8,210,964	$	(3,948,922	)
Net unrealized appreciation (depreciation)								$	4,262,042

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Note 11 regarding other derivative information.

See Abbreviations on page 42.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         23

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities

June 30, 2020 (unaudited)

Franklin Mutual Shares Fund

Assets:
Investments in securities:
Cost - Unaffiliated issuers	$7,788,138,946
Cost - Non-controlled affiliates (Note 3f and 12)	42,879,108
Cost - Unaffiliated repurchase agreements	673,869
Value - Unaffiliated issuers+	$8,422,631,505
Value - Non-controlled affiliates (Note 3f and 12)	25,678,437
Value - Unaffiliated repurchase agreements	673,869
Cash	2,723,287
Receivables:
Investment securities sold	5,994,067
Capital shares sold	1,682,732
Dividends and interest	25,037,724
European Union tax reclaims	6,177,648
Deposits with brokers for:
Futures contracts	4,894,938
Unrealized appreciation on OTC forward exchange contracts	8,210,964
Other assets	3,460,366
Total assets	8,507,165,537
Liabilities:
Payables:
Investment securities purchased	49,015,910
Capital shares redeemed	9,599,298
Management fees	4,704,471
Distribution fees	802,690
Transfer agent fees	1,284,746
Trustees’ fees and expenses	1,114,658
Variation margin on futures contracts	963,769
Payable upon return of securities loaned	2,150,869
Unrealized depreciation on OTC forward exchange contracts	3,948,922
Accrued expenses and other liabilities	770,994
Total liabilities	74,356,327
Net assets, at value	$8,432,809,210
Net assets consist of:
Paid-in capital	$7,674,110,813
Total distributable earnings (losses)	758,698,397
Net assets, at value	$8,432,809,210

⁺Includes securities loaned $           2,053,799

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FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2020 (unaudited)

Franklin Mutual Shares Fund

Class Z:
Net assets, at value	$	3,976,955,771
Shares outstanding		182,153,537
Net asset value and maximum offering price per share		$21.83
Class A:
Net assets, at value	$	2,887,619,125
Shares outstanding		133,925,127
Net asset value per sharea		$21.56
Maximum offering price per share (net asset value per share ÷ 94.50%)		$22.81
Class C:
Net assets, at value	$	202,084,090
Shares outstanding		9,420,585
Net asset value and maximum offering price per sharea		$21.45
Class R:
Net assets, at value	$	46,352,080
Shares outstanding		2,159,202
Net asset value and maximum offering price per share		$21.47
Class R6:
Net assets, at value	$	1,319,798,144
Shares outstanding		60,467,400
Net asset value and maximum offering price per share		$21.83

^aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         25

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual Shares Fund

Investment income:
Dividends:(net of foreign taxes)*
Unaffiliated issuers	$	223,873,646
Interest:
Unaffiliated issuers		25,565,421
Adjustment for uncollectible interest (Note 8)		(8,097,948	)
Income from securities loaned:
Unaffiliated entities (net of fees and rebates)		1,508
Non-controlled affiliates (Note 3f)		62
Total investment income		241,342,689
Expenses:
Management fees (Note 3a)		30,746,726
Distribution fees: (Note 3c)
Class A		4,043,818
Class C		1,186,683
Class R		125,646
Transfer agent fees: (Note 3e)
Class Z		2,163,310
Class A		1,587,782
Class C		116,471
Class R		24,798
Class R6		156,734
Custodian fees (Note 4)		129,825
Reports to shareholders		316,168
Registration and filing fees		101,029
Professional fees		124,195
Trustees’ fees and expenses		411,696
Dividends on securities sold short		1,440,340
Other		132,763
Total expenses		42,807,984
Expense reductions (Note 4)		(42,318	)
Expenses waived/paid by affiliates (Note 3f)		(231	)
Net expenses		42,765,435
Net investment income		198,577,254
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		(254,612,657	)
Written options		(959,764	)
Foreign currency transactions		(45,952	)
Forward exchange contracts		4,862,927
Futures contracts		5,195,390
Securities sold short		(5,239,621	)
Net realized gain (loss)		(250,799,677	)
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(2,353,517,374	)
Non-controlled affiliates (Note 3f and 12)		(3,929,015	)
Translation of other assets and liabilities denominated in foreign currencies		(205,630	)
Forward exchange contracts		13,300,947

26         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations (continued)

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual Shares Fund

Futures contracts		5,502,090
Securities sold short		7,345,027
Net change in unrealized appreciation (depreciation)		(2,331,503,955	)
Net realized and unrealized gain (loss)		(2,582,303,632	)
Net increase (decrease) in net assets resulting from operations	$	(2,383,726,378	)

*Foreign taxes withheld on dividends $         2,174,020

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         27

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

Franklin Mutual Shares Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31, 2019
Increase (decrease) in net assets:
Operations:
Net investment income	$	198,577,254		$	286,473,860
Net realized gain (loss)		(250,799,677	)		589,248,324
Net change in unrealized appreciation (depreciation)		(2,331,503,955	)		1,737,821,368
Net increase (decrease) in net assets resulting from operations		(2,383,726,378	)		2,613,543,552
Distributions to shareholders:
Class Z		—			(424,957,060	)
Class A		—			(310,738,396	)
Class C		—			(20,683,973	)
Class R		—			(5,167,516	)
Class R6		—			(180,523,371	)
Total distributions to shareholders		—			(942,070,316	)
Capital share transactions: (Note 2)
Class Z		(363,109,014	)		(407,966,163	)
Class A		(319,935,808	)		(326,358,495	)
Class C		(36,573,505	)		(49,007,989	)
Class R		(6,670,152	)		(18,388,105	)
Class R6		(21,011,972	)		(1,891,813,271	)
Total capital share transactions		(747,300,451	)		(2,693,534,023	)
Net increase (decrease) in net assets		(3,131,026,829	)		(1,022,060,787	)
Net assets:
Beginning of period		11,563,836,039			12,585,896,826
End of period	$	8,432,809,210		$	11,563,836,039

28         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

Notes to Financial Statements (unaudited)

Franklin Mutual Shares Fund

1. Organization and Significant Accounting Policies

Franklin Mutual Series Funds (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of six separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Mutual Shares Fund (Fund) is included in this report. The Fund offers five classes of shares: Class Z, Class A, Class C, Class R and Class R6.Class C shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The Fund may utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and derivative financial instruments 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.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.

Investments in open-end mutual funds are valued at the closing NAV. Investments in repurchase agreements 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.

franklintempleton.com Semiannual Report         29

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

1. Organization and Significant Accounting Policies (continued)

a. Financial Instrument Valuation (continued)

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 June 30, 2020, certain securities may have been fair valued using these procedures, in which case the securities were categorized as Level 2 inputs within the fair value hierarchy. See the Fair Value Measurements note for more information.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant 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. Joint Repurchase Agreement

The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on their pro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit the non-defaulting party to net and close-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls

30         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at period end, as indicated in the Statement of Investments, had been entered into on June 30, 2020.

d. Securities Purchased on a When-Issued or Delayed Delivery Basis

The Fund purchases securities on a when-issued or delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.

e. Derivative Financial Instruments

The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various

periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At June 30, 2020, the Fund had OTC derivatives in a net liability position of $35,479.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

At June 30, 2020, the Fund received $4,612,924 in U.K. Treasury Bonds and U.S. Treasury Bills, Bonds and Notes as collateral for derivatives.

The Fund entered into exchange traded futures contracts primarily to manage exposure to certain foreign currencies. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund,

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

1. Organization and Significant Accounting Policies (continued)

e. Derivative Financial Instruments (continued)

and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage 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.

The Fund purchased or wrote exchange traded option contracts primarily to manage exposure to equity price risk. An option is a contract entitling the holder to purchase or sell a specific amount of shares or units of an asset or notional amount of a swap (swaption), at a specified price. When an option is purchased or written, an amount equal to the premium paid or received is recorded as an asset or liability, respectively. Upon exercise of an option, the acquisition cost or sales proceeds of the underlying investment is adjusted by any premium received or paid. Upon expiration of an option, any premium received or paid is recorded as a realized gain or loss. Upon closing an option other than through expiration or exercise, the difference between the premium received or paid and the cost to close the position is recorded as a realized gain or loss.

See Note 11 regarding other derivative information.

f. Securities Sold Short

The Fund is engaged in selling securities short, which obligates the Fund to replace a borrowed security with the same security at current fair value. The Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Gains are limited to the price at which the Fund sold the security short, while losses are potentially unlimited in size.

The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale to the extent necessary to meet margin requirements until the short position is closed out. A deposit must also be maintained with the Fund’s custodian/counterparty broker

consisting of cash and/or securities having a value equal to a specified percentage of the value of the securities sold short. The Fund is obligated to pay fees for borrowing the securities sold short and is required to pay the counterparty any dividends and/or interest due on securities sold short. Such dividends and/or interest and any security borrowing fees are recorded as an expense to the Fund. At June 30, 2020, the Fund had no securities sold short.

g. Securities Lending

The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral 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. The collateral 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, and/or a joint repurchase agreement in 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 the 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.

h. Senior Floating Rate Interests

The Fund invests in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

less than the stated maturity. Senior secured corporate loans in which the Fund invests are generally readily marketable, but may be subject to certain restrictions on resale.

i. Income and Deferred Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

As a result of several court cases, in certain countries across the European Union, the Fund filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statement of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, EU reclaims received by the Fund, if any, reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns.

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2020, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax

years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

j. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and dividends declared on securities sold short are 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.

k. 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

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

1. Organization and Significant Accounting

Policies (continued)

k. Accounting Estimates (continued)

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.

l. 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 June 30, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2020						Year Ended December 31, 2019
	Shares			Amount			Shares			Amount
Class Z Shares:
Shares sold		3,248,691		$	74,729,821			5,703,921		$	154,451,161
Shares issued in reinvestment of distributions		—			—			13,821,998			375,962,807
Shares redeemed		(19,620,464	)		(437,838,835	)		(35,007,575	)		(938,380,131	)
Net increase (decrease)		(16,371,773	)	$	(363,109,014	)		(15,481,656	)	$	(407,966,163	)
Class A Shares:
Shares solda		5,009,300		$	108,908,681			9,660,276		$	258,457,935
Shares issued in reinvestment of distributions		—			—			10,821,922			290,798,586
Shares redeemed		(19,402,791	)		(428,844,489	)		(32,673,689	)		(875,615,016	)
Net increase (decrease)		(14,393,491	)	$	(319,935,808	)		(12,191,491	)	$	(326,358,495	)
Class C Shares:
Shares sold		786,451		$	18,293,610			1,854,760		$	49,227,044
Shares issued in reinvestment of distributions		—			—			765,482			20,460,413
Shares redeemeda		(2,471,647	)		(54,867,115	)		(4,437,754	)		(118,695,446	)
Net increase (decrease)		(1,685,196	)	$	(36,573,505	)		(1,817,512	)	$	(49,007,989	)
Class R Shares:
Shares sold		212,095		$	4,808,203			246,671		$	6,553,429
Shares issued in reinvestment of distributions		—			—			193,343			5,163,831
Shares redeemed		(483,355	)		(11,478,355	)		(1,118,911	)		(30,105,365	)
Net increase (decrease)		(271,260	)	$	(6,670,152	)		(678,897)		$	(18,388,105	)

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

	Six Months Ended June 30, 2020						Year Ended December 31, 2019
	Shares			Amount			Shares			Amount
Class R6 Shares:
Shares sold		2,314,740		$	48,855,337			7,406,299		$	199,310,809
Shares issued in reinvestment of distributions		—			—			6,673,123			180,428,324
Shares redeemed		(2,856,528	)		(69,867,309	)		(83,508,648	)		(2,271,552,404	)
Net increase (decrease)		(541,788	)	$	(21,011,972	)		(69,429,226	)	$	(1,891,813,271	)

^aMay include a portion of Class C shares that were automatically converted to Class A.

3. Transactions with Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

a. Management Fees

The Fund pays an investment management fee to Franklin Mutual based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.675%	Up to and including $5 billion
0.645%	Over $5 billion, up to and including $10 billion
0.625%	Over $10 billion, up to and including $15 billion
0.595%	Over $15 billion, up to and including $20 billion
0.585%	Over $20 billion, up to and including $25 billion
0.565%	Over $25 billion, up to and including $30 billion
0.555%	Over $30 billion, up to and including $35 billion
0.545%	In excess of $35 billion

For the period ended June 30, 2020, the annualized gross effective investment management fee rate was 0.661% of the Fund’s average daily net assets.

b. Administrative Fees

Under an agreement with Franklin Mutual, FT Services provides administrative services to the Fund. The fee is paid by Franklin Mutual based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

3. Transactions with Affiliates (continued)

c. Distribution Fees

The Board has adopted distribution plans for each share class, with the exception of Class Z and Class R6 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:

Class A	0.35%
Class C	1.00%
Class R	0.50%

The Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.

d. Sales Charges/Underwriting Agreements

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the period:

Sales charges retained net of commissions paid to unaffiliated brokers/dealers	$	86,604
CDSC retained	$	5,182

e. Transfer Agent Fees

Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. The fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.

For the period ended June 30, 2020, the Fund paid transfer agent fees of $4,049,095, of which $2,002,092 was retained by Investor Services.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

f. Investments in Affiliated Management Investment Companies

The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended June 30, 2020, the Fund held investments in affiliated management investment companies as follows:

	Value at Beginning of Period		Purchases		Sales			Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Value at End of Period		Number of Shares Held at End of Period		Income from securities loaned
Non-Controlled Affiliates
Institutional Fiduciary Trust Money Market Portfolio, 0.00%	$	—	$	9,836,000	$	(8,359,000	)	$	—	$	—	$	1,477,000		1,477,000		$62

g. Waiver and Expense Reimbursements

Investor Services has contractually agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.03% based on the average net assets of the class until April 30, 2021. Prior to May 1, 2020, the Class R6 transfer agent fees were limited to 0.02%.

h. Other Affiliated Transactions

At June 30, 2020, one or more of the funds in Franklin Fund Allocator Series owned 14.2% of the Fund’s outstanding shares.

i. Interfund Transactions

The Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the period ended June 30, 2020, these purchase and sale transactions aggregated $0 and $6,515,609, respectively.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2020, the custodian fees were reduced as noted in the Statement of Operations.

5. Independent Trustees’ Retirement Plan

On January 1, 1993, the Trust adopted an Independent Trustees’ Retirement Plan (Plan). The Plan is an unfunded defined benefit plan that provides benefit payments to Trustees whose length of service and retirement age meets the eligibility requirements of the Plan. Benefits under the Plan are based on years of service and fees paid to each trustee at the time of retirement. Effective in December 1996, the Plan was closed to new participants.

During the period ended June 30, 2020, the Fund’s projected benefit obligation and benefit payments under the Plan were as follows:

aProjected benefit obligation at June 30, 2020	$	1,078,204
bIncrease in projected benefit obligation	$	48,446

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

5. Independent Trustees’ Retirement Plan (continued)

Benefit payments made to retired trustees $ (6,116 ) 

^aThe projected benefit obligation is included in trustees’ fees and expenses in the Statement of Assets and Liabilities.

^bThe increase in projected benefit obligation is included in trustees’ fees and expenses in the Statement of Operations.

6. Income Taxes

At June 30, 2020, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	7,824,386,689
Unrealized appreciation	$	1,697,266,526
Unrealized depreciation		(1,065,058,796	)
Net unrealized appreciation (depreciation)	$	632,207,730

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, pass-through entity income and defaulted securities.

7. Investment Transactions

Purchases and sales of investments (excluding short term securities and securities sold short) for the period ended June 30, 2020, aggregated $1,315,323,176 and $1,399,486,601, respectively.

At June 30, 2020, in connection with securities lending transactions, the Fund loaned equity investments and received $2,150,869 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.

8. Credit Risk and Defaulted Securities

The Fund may purchase the pre-default or defaulted debt of distressed companies. Distressed companies are financially troubled and could be or are already involved in financial restructuring or bankruptcy. Risks associated with purchasing these securities include the possibility that the bankruptcy or other restructuring process takes longer than expected, or that distributions in restructuring are less than anticipated, either or both of which may result in unfavorable consequences to the Fund. If it becomes probable that the income on debt securities, including those of distressed companies, will not be collected, the Fund discontinues accruing income and recognizes an adjustment for uncollectible interest. For the period ended June 30, 2020, the Fund recorded an adjustment for uncollectible interest of $8,097,948, as noted in the Statement of Operations.

At June 30, 2020, the aggregate long value of distressed company securities for which interest recognition has been discontinued was $53,663,437, representing 0.6% of the Fund’s net assets. For information as to specific securities, see the accompanying Statement of Investments.

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.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

10. Restricted Securities

The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.

At June 30, 2020, investments in restricted securities, excluding securities exempt from registration under the 1933 Act, were as follows:

Shares	Issuer	Acquisition Date		Cost		Value
7,234,813	International Automotive Components Group Brazil LLC (Value is 0.0%† of Net Assets)		4/13/06 - 12/26/08	$	4,804,678	$	136,043

^†Rounds to less than 0.1% of net assets.

11. Other Derivative Information

At June 30, 2020, investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:

	Asset Derivatives				Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin on futures contracts	$	3,344,248	a	Variation margin on futures contracts	$	—
	Unrealized appreciation on OTC forward exchange contracts		8,210,964		Unrealized depreciation on OTC forward exchange contracts		3,948,922
Totals		$	11,555,212			$	3,948,922

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

For the period ended June 30, 2020, the effect of derivative contracts in the Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Location	Net Realized Gain (Loss) for the Period		Statement of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:			Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Forward exchange contracts		$4,862,927	Forward exchange contracts		$13,300,947
	Futures contracts		5,195,472	Futures contracts		5,502,090
Equity contracts	Written options		(959,764)	Written options		—
Totals			$9,098,635			$18,803,037

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Shares Fund (continued)

11. Other Derivative Information (continued)

For the period ended June 30, 2020, the average month end notional amount of futures contracts and options represented $189,889,139 and 6,000 shares, respectively. The average month end contract value of forward exchange contracts was $643,917,971.

See Note 1(e) regarding derivative financial instruments.

12. Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. During the period ended June 30, 2020, investments in “affiliated companies” were as follows:

Name of Issuer	Value at Beginning of Period		Purchases		Sales		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Value at End of Period		Number of Shares/Units Held at End of Period		Dividend Income
Non-Controlled Affiliates
International Automotive Components Group Brazil LLC		$     262,624		$  —		$  —		$  —		$   (126,581	)		$     136,043		7,234,813		$  —
TRU Kids Parent LLC		27,867,828		—		—		—		(3,802,434	)		24,065,394		7,469		—
Wayne Services Legacy Inc.		—		—		—		—		—			—		7,469		—
Total Affiliated Securities (Value is 0.3% of Net Assets)		$28,130,452		$  —		$  —		$  —		$(3,929,015	)		$24,201,437				$  —

13. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 5, 2021. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended June 30, 2020, the Fund did not use the Global Credit Facility.

14. 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.)

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Franklin Mutual Shares Fund (continued)

• 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 June 30, 2020, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:a
Equity Investments:b
Aerospace & Defense	$	110,292,337	$	93,216,505	$	—		$	203,508,842
Auto Components		—		—		136,043			136,043
Capital Markets		—		88,509,437		—			88,509,437
Machinery		—		63,516,630		—			63,516,630
Media		514,986,408		—		249,839			515,236,247
Oil, Gas & Consumable Fuels		327,241,672		164,566,540		—			491,808,212
Pharmaceuticals		702,467,786		201,576,048		—			904,043,834
Software		288,272,754		345,926		—			288,618,680
Specialty Retail		79,480,492		—		24,065,394	c		103,545,886
Technology Hardware, Storage & Peripherals		155,150,947		210,905,759		—			366,056,706
Tobacco		134,719,386		144,497,562		—			279,216,948
Wireless Telecommunication Services		—		48,818,348		—			48,818,348
All Other Equity Investments		4,311,228,480		—		—			4,311,228,480
Corporate Bonds, Notes and Senior Floating Rate Interests		—		469,451,465		—			469,451,465
Corporate Notes in Reorganization		—		53,663,437		—			53,663,437
Companies in Liquidation		—		—		106,798	c		106,798
Short Term Investments		217,454,574		44,063,244		—			261,517,818
Total Investments in Securities	$	6,841,294,836	$	1,583,130,901	$	24,558,074		$	8,448,983,811
Other Financial Instruments:
Futures Contracts	$	3,344,248	$	—	$	—		$	3,344,248
Forward Exchange Contracts		—		8,210,964		—			8,210,964
Total Other Financial Instruments	$	3,344,248	$	8,210,964	$	—		$	11,555,212
Liabilities:
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	3,948,922	$	—		$	3,948,922

^aFor detailed categories, see the accompanying Statement of Investments.

^bIncludes common stocks as well as other equity interests.

^cIncludes securities determined to have no value at June 30, 2020.

A reconciliation in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 assets and/or liabilities at the beginning and/or end of the period.

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Franklin Mutual Shares Fund (continued)

15. New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provides optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the LIBOR and other interbank-offered based reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management is currently evaluating the impact, if any, of applying this ASU.

16. Subsequent Events

The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.

Abbreviations

Counterparty		Currency		Selected Portfolio
BOFA	Bank of America Corp.	EUR	Euro	ADR	American Depositary Receipt
BONY	The Bank of New York Mellon Corp.	GBP	British Pound	FHLB	Federal Home Loan Bank
HSBK	HSBC Bank PLC	USD	United States Dollar	FRN	Floating Rate Note
SSBT	State Street Bank and Trust Co., N.A.			LIBOR	London InterBank Offered Rate
UBSW	UBS AG

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Shareholder Information

Board Approval of Investment Management Agreements

FRANKLIN MUTUAL SERIES FUNDS

Franklin Mutual Shares Fund

(Fund)

The Board of Trustees (Board), including a majority of trustees that are not “interested persons” as such term is defined in section 2(a)(19) of the Investment Company Act of 1940 (hereinafter referred to as “independent trustees”), at a meeting held on May 14, 2020, unanimously approved the renewal of the Fund’s investment management agreement. Prior to a meeting of all of the trustees for the purpose of considering such renewal, the independent trustees participated in two other meetings held in connection with the renewal process. Throughout the process, the independent trustees received assistance and advice from and met separately with independent counsel. The independent trustees met with and interviewed officers of the investment manager (including portfolio managers), the transfer agent and shareholder services group and the distributor. In approving the renewal of the investment management agreement for the Fund, the Board, including the independent trustees, determined that the investment management fee structure was fair and reasonable and that continuance of the agreement was in the best interests of the Fund and its shareholders.

In reaching their decision on the investment management agreement, the trustees took into account information furnished throughout the year at regular Board meetings, as well as information specifically requested and furnished for the renewal process, which culminated in the meetings referred to above for the specific purpose of considering such agreement. Information furnished throughout the year included, among others, reports on the Fund’s investment performance, expenses, portfolio composition, portfolio brokerage execution, client commission arrangements, derivatives, securities lending, asset segregation, portfolio turnover, Rule 12b-1 plan, distribution, shareholder servicing, legal and compliance matters, pricing of securities, sales and redemptions, and marketing support payments made to financial intermediaries, as well as a third-party survey of transfer agent fees charged to funds within the Franklin Templeton Investments (FT) complex in comparison with those charged to other fund complexes deemed comparable. Also, related financial statements and other information about the scope and quality of services provided by the investment manager and its affiliates and enhancements to

such services over the past year were provided. In addition, the trustees received periodic reports throughout the year and during the renewal process relating to compliance with the Fund’s investment policies and restrictions. During the renewal process, the independent trustees considered the investment manager’s methods of operation within the Franklin Templeton group and its activities on behalf of other clients. The Board also noted that it received an annual report on all payments made by FT or the Fund to financial intermediaries engaged in the sale of Fund shares, as well as a memorandum relating to third-party servicing arrangements in response to a Guidance Update from the U.S. Securities and Exchange Commission (SEC) relating to mutual fund distribution and sub-accounting fees.

The information obtained by the trustees during the renewal process also included a special report prepared by Broadridge Financial Solutions, Inc., an independent third-party analyst that utilizes data from Lipper, Inc. (“Lipper”), comparing the Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper (Broadridge Section 15(c) Report). The trustees reviewed the Broadridge Section 15(c) Report and its usefulness in the renewal process with respect to matters such as comparative fees, expenses, expense ratios, performance and volatility. They concluded that the report continues to be a reliable resource in the performance of their duties.

In addition, the trustees received a Profitability Study (Profitability Study) prepared by management discussing the profitability to FT from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Over the past year, the Board and counsel to the independent trustees continued to receive reports on management’s handling of recent regulatory inquiries and pending legal actions against the investment manager and its affiliates. The independent trustees were satisfied with the actions taken to date by management in response to such regulatory and legal matters.

The trustees reviewed the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of the investment manager. As part of this review, particular attention was given to management’s diligent risk management program, including continual monitoring and management of cybersecurity, liquidity and counterparty credit risk, and attention given to derivatives and other complex instruments that are held and expected to be held by the Fund and how such instruments

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are used to carry out the Fund’s investment goal(s). The Board also took into account, among other things, management’s efforts in establishing a global credit facility for the benefit of the Fund and other accounts managed by FT to provide a source of cash for temporary and emergency purposes or to meet unusual redemption requests as well as the strong financial position of the investment manager’s parent company and its commitment to the mutual fund business. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity and liquidity risk management. The Board also recognized management’s commitment to facilitating Board oversight of particular areas, including derivatives and payments to intermediaries, by enhanced reporting.

In addition to the above and other matters considered by the trustees throughout the course of the year, the following discussion relates to certain primary factors relevant to the Board’s decision. This discussion of the information and factors considered by the Board (including the information and factors discussed above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual trustees may have assigned different weights to various factors.

NATURE, EXTENT AND QUALITY OF SERVICES. The trustees reviewed the nature, extent and quality of the services provided, and to be provided, by the investment manager. The trustees cited the investment manager’s ability to implement the Fund’s disciplined value investment approach and its long-term relationship with the Fund as reasons that shareholders choose to invest, and remain invested, in the Fund. The trustees reviewed the Fund’s portfolio management team, including its performance, staffing, skills and compensation program. With respect to portfolio manager compensation, management assured the trustees that the Fund’s long-term performance is a significant component of incentive-based compensation and noted that a portion of a portfolio manager’s incentive-based compensation is paid in shares of pre-designated funds from the portfolio manager’s fund management area. The trustees noted that the portfolio manager compensation program aligned the interests of the portfolio managers with that of shareholders of the Fund. The trustees discussed with management various other products, portfolios and entities

that are advised by the investment manager and the allocation of assets and expenses among and within them, as well as their relative fees and reasons for differences with respect thereto and any potential conflicts. During regular Board meetings and the aforementioned meetings of the independent trustees, the trustees received reports and presentations on the investment manager’s best execution trading policies. The trustees considered periodic reports provided to them showing that the investment manager complied with the investment policies and restrictions of the Fund as well as other reports periodically furnished to the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics covering the investment management personnel, the adherence to fair value pricing procedures established by the Board and the accuracy of net asset value calculations. The Board noted the extent of the benefits provided to Fund shareholders from being part of the Franklin Templeton group of funds, including the right to exchange investments between funds (same class) without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings of other funds to obtain reduced sales charges. The Board considered the investment manager’s significant efforts in developing and implementing compliance procedures established in accordance with SEC and other requirements.

The Board considered the nature, extent and quality of the services to be provided under the Fund’s other service agreements to determine that, on an overall basis, Fund shareholders were well served. In this connection, the Board also took into account transfer agent and shareholder services provided to Fund shareholders by an affiliate of the investment manager, noting continuing expenditures by management to increase and improve the scope of such services and favorable periodic reports on shareholder services conducted by independent third parties. While such considerations directly affected the trustees’ decision in renewing the Fund’s transfer agent and shareholder services agreement, the Board also considered these commitments as incidental benefits to Fund shareholders deriving from the investment management relationship.

Based on their review, the trustees were satisfied with the nature and quality of the overall services provided, and to be provided, by the investment manager and its affiliates to the Fund and its shareholders and were confident in the abilities of the management team to continue the disciplined value investment approach of the Fund and to provide quality services to the Fund and its shareholders.

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INVESTMENT PERFORMANCE. The trustees reviewed and placed significant emphasis on the investment performance of the Fund over the one-, three-, five- and 10-year periods ended December 31, 2019. They considered the history of performance of the Fund relative to various benchmarks. As part of their review, they inquired of management regarding benchmarks, style drift and restrictions on permitted investments. Consideration was also given to performance in the context of available levels of cash during the periods.

The trustees had meetings during the year, including the meetings referred to above held in connection with the renewal process, with the Fund’s portfolio managers to discuss performance and the management of the Fund. In addition to the materials provided by management in connection with the renewal process, the independent trustees requested throughout the year (and received) additional presentations from the investment manager and senior management of FT regarding the performance of the investment manager and the Fund. As part of these presentations, the investment manager and senior management of FT reviewed enhancements that have been made, and are being made, to the investment manager’s investment process. In addition, it was noted that senior management of FT is conducting a review of the investment manager and the Fund and will report the results thereof to the independent trustees when completed.

Particular attention in assessing performance was given to the Broadridge Section 15(c) Report. That report showed the investment performance of the Fund (Class A shares) in comparison to other funds determined comparable by Lipper.

The comparable funds to the Fund, as chosen by Lipper, included all retail and institutional multi-cap value funds. The Fund had total returns in the second-lowest performing quintile for the one-year period ended December 31, 2019, and had annualized total returns for the three- and five-year periods in the lowest and second-lowest performing quintiles, respectively. The trustees noted that the Fund’s total return on an annualized basis for the 10-year period ended December 31, 2019 was in the lowest performing quintile. The trustees also compared Fund performance to other industry benchmarks, including measures of risk-adjusted performance of a fund, as part of their evaluation of investment performance. The Board noted that on a risk-adjusted basis, the Fund’s relative performance was more favorable. The trustees discussed with management the reasons for the relative underperformance for the one-, three-, five- and 10-year periods ended December 31, 2019.

While disappointed with the relative underperformance of the Fund, the Board did not believe that any changes with respect to the Fund were warranted at the time, particularly as the enhancements to the investment manager’s investment process continue to be implemented and as the review being conducted by senior management of FT is in process. The Board noted that it would continue to monitor future performance.

COMPARATIVE EXPENSES AND MANAGEMENT PROFITABILITY. The trustees considered the cost of the services provided and to be provided and the profits realized by the investment manager and its affiliates from their respective relationships with the Fund. As part of the renewal process, the trustees explored with management the trends in expense ratios over the past three fiscal years and the reasons for any increases in the Fund’s expense ratios (or components thereof). In considering the appropriateness of the management fee and other expenses charged to the Fund, the Board took into account various factors including investment performance and matters relating to Fund operations, including, but not limited to, the quality and experience of its portfolio managers and research staff. Consideration was also given to a comparative analysis in the Broadridge Section 15(c) Report of the investment management fee and total expense ratio of the Fund in comparison with those of a group of other funds selected by Lipper as its appropriate Lipper expense group. Lipper expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Lipper to be an appropriate measure of comparative expenses.

In reviewing comparative costs, emphasis was given to the Fund’s contractual management fee in comparison with the contractual management fee that would have been charged by other funds within its Lipper expense group assuming they were similar in size to the Fund, as well as the actual total expenses of the Fund in comparison with those of its Lipper expense group. The Lipper contractual management fee analysis includes administrative charges as being part of the management fee, and total expenses, for comparative consistency, are shown by Lipper for Fund Class A shares.

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The Fund’s contractual management fee rate was in the second-most expensive quintile of its Lipper expense group and its total expenses were in the second-least expensive quintile of such group. The Board was satisfied with such comparative fees and expenses.

The trustees also reviewed the Profitability Study addressing profitability of Franklin Resources, Inc., from its overall U.S. fund business, as well as profitability to the Fund’s investment manager and its affiliates, from providing investment management and other services to the Fund during the 12-month period ended September 30, 2019, the most recent fiscal year-end of Franklin Resources, Inc. The trustees reviewed the basis on which such reports are prepared and the cost allocation methodology utilized in the Profitability Study, it being recognized that allocation methodologies may each be reasonable while producing different results. In this respect, the Board noted that the reasonableness of the cost allocation methodologies was reviewed by independent accountants on an every other year basis.

The independent trustees met with management to discuss the Profitability Study. This included, among other things, a comparison of investment management income with investment management expenses of the Fund; comparison of underwriting revenues and expenses; the relative relationship of investment management and underwriting expenses; shareholder servicing profitability; economies of scale; and the relative contribution of the Fund to the profitability of the investment manager and its parent. In discussing the Profitability Study with the Board, the investment manager stated its belief that the costs incurred in establishing the infrastructure necessary to operate the type of mutual fund operations conducted by it and its affiliates may not be fully reflected in the expenses allocated to the Fund in determining its profitability.

The Board also took into account management’s expenditures in improving shareholder services provided to the Fund, as well as the need to meet additional regulatory and compliance requirements. The trustees also considered the extent to which the investment manager may derive ancillary benefits from Fund operations, including those derived from economies of scale, discussed below, the allocation of Fund brokerage and the use of commission dollars to pay for research and other similar services.

Based upon their consideration of all these factors, the trustees determined that the level of profits realized by the investment manager and its affiliates in providing services to

the Fund was not excessive in view of the nature, quality and extent of services provided.

ECONOMIES OF SCALE. The Board considered economies of scale realized by the investment manager and its affiliates as the Fund grows larger and the extent to which they are shared with Fund shareholders, as for example, in the level of the investment management fee charged, in the quality and efficiency of services rendered and in increased capital commitments benefiting the Fund directly or indirectly. While recognizing that any precise determination is inherently subjective, the trustees noted that, based upon the Profitability Study, as some funds increase in size, at some point economies of scale may result in the investment manager realizing a larger profit margin on investment management services provided to such a fund. The trustees also noted that benefits of economies of scale will be shared with Fund shareholders due to the decline in the effective investment management fee rate as breakpoints are achieved by the Fund.

The trustees noted that breakpoints had been instituted as part of the Fund’s investment management fee and that the Board regularly evaluates whether additional breakpoints are appropriate. The trustees assessed the savings to shareholders resulting from such breakpoints and believed they were, and continue to be, appropriate and they agreed to continue to monitor the appropriateness of the breakpoints. The trustees also considered the effects an increase in assets under management would have on the investment management fee and expense ratio of the Fund. To the extent further economies of scale may be realized by the investment manager and its affiliates, the Board believed the investment management fees provide a sharing of benefits with the Fund and its shareholders.

Liquidity Risk Management Program

The Funds have 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 program is designed to assess and manage each Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during 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. The Funds’ Board of Trustees approved the appointment of the Director of Liquidity Risk within the

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Investment Risk Management Group (the “IRMG”) as the Administrator of the LRMP. The IRMG maintains the Investment Liquidity Committee (the “ILC”) to provide oversight and administration of policies and procedures governing liquidity risk management for FT products and portfolios. The ILC includes representatives from Franklin Templeton’s Risk, Trading, Global Compliance, Investment Compliance, Investment Operations, Valuation Committee and Product Management groups.

The LRMP Administrator Annual Report was presented to the Fund(s) Board of Trustees at their meetings in May 2020. The report covered the adequacy and effectiveness of the program during the period December 1, 2018 to December 31, 2019 (the “covered period”). The 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. In addition, the LRMP Administrator presented the Fund Board of Trustees an update on liquidity during the first quarter of 2020 in relation to the COVID-19 pandemic.

During the reporting period, the Fund maintained a high level of liquid assets that are defined under the Liquidity Rule as “Highly Liquid Investments.” As a result, the Fund was designated a “Primarily Highly Liquid Fund” as defined under the Liquidity Rule and has not adopted a “Highly Liquid Investment Minimum.” A Highly Liquid Investment is 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.

There can be no assurance that the program will achieve its objectives in the future. Please refer to your Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

Proxy Voting Policies and Procedures

The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete

Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust, on behalf of the Fund, files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year as an exhibit to its report on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

Householding of Reports and Prospectuses

You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800) 632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.

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Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.

	Semiannual Report and Shareholder Letter Franklin Mutual Shares Fund
	Investment Manager	Distributor	Shareholder Services
	Franklin Mutual Advisers, LLC	Franklin Templeton Distributors, Inc. (800) DIAL BEN® / 342-5236 franklintempleton.com	(800) 632-2301 - (Class A, C, R & R6) (800) 448-FUND - (Class Z)

© 2020 Franklin Templeton Investments. All rights reserved. 474 S 08/20

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Internet Delivery of Fund Reports Unless You Request Paper Copies: Effective January 1, 2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request them from the Fund or your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not signed up for electronic delivery, we would encourage you to join fellow shareholders who have. You may elect to receive shareholder reports and other communications electronically from the Fund by calling (800) 632-2301 or by contacting your financial intermediary.

You may elect to continue to receive paper copies of all your future shareholder reports free of charge by contacting your financial intermediary or, if you invest directly with a Fund, calling (800) 632-2301 to let the Fund know of your request. Your election to receive reports in paper will apply to all funds held in your account.

SHAREHOLDER LETTER

Dear Franklin Mutual Financial Services Fund Shareholder:

During the six months ended June 30, 2020, global equity markets were extremely volatile and declined as the spread of the novel coronavirus (COVID-19)—first reported in December and initially centered in China—disrupted economic activity and contributed to negative investor sentiment for risk assets. Share prices plunged dramatically, pulling global equities from near-record levels in mid-February before bottoming in late March. Global stocks snapped back in April and May but moderated in June to close the period significantly above the market trough, although still in negative territory. The broad U.S. equity market, as measured by the Standard & Poor’s^® 500 Index, finished the period down -3.08%, and global stocks, as measured by the MSCI World Index, retreated -5.48% .¹

As the period opened, major equity markets were rallying, lifted by China and the United States’ Phase-One trade agreement that was intended to serve as the foundation of a comprehensive settlement of two years of tariff one-upmanship between the world’s two largest economies. Then, COVID-19 emerged and upended these and other plans.

The spread of the pandemic evolved into a global public health crisis, and countries around the world implemented lockdown and physical distancing measures intended to “flatten the curve” of the contagion. Consumer and business spending fell, and manufacturing and other activity came to a virtual halt. Consequently, the world’s major economies fell into recession—including an end to the record-long U.S. expansion—and projections about the economic fallout exceeded that of the 2007–2009 Global Financial Crisis.

In response, central banks expanded their mandates to support economies and markets. The U.S. Federal Reserve (Fed) and the U.S. Congress undertook unprecedented monetary and fiscal stimulus that included lowering the federal funds rate to a range of 0.00%–0.25%; initiating open-ended quantitative easing; pledging to purchase short-dated investment-grade corporate debt and exchange-traded funds; sending checks directly to millions of Americans; expanding unemployment insurance; and

offering billions in loans to both small and large businesses. The European Union approved a €750 billion (US$825 billion) COVID-19 recovery fund that recommended financial burden sharing among member states.

Policymakers’ “whatever-it-takes” approach lifted investor sentiment, and stock prices surged. Rates of infection in some of the viral epicenters around the world slowed, and government officials, eager to restart economies, embarked on a gradual, albeit uneven, reopening.

In the period’s final month, the market rally continued but slowed considerably as the number of new, daily COVID-19 diagnoses spiked in U.S. states that were among the first to reopen. These trends may have worsened as many restless citizens, locked down since March, were less than diligent about adhering to social distancing and face-covering guidelines.

In late June, the Fed released the results of its annual Comprehensive Capital Analysis and Review report of large banks, better known as stress tests, and concluded that “banks can remain strong in the face of even the harshest shocks.” Nevertheless, the Fed capped dividends of banks at current levels and halted share buybacks until after the third quarter. Bank stocks reacted negatively to this development.

Market volatility and economic uncertainty can often present what we consider opportunities. We used our bottom-up, fundamentally driven investment process to add select positions that historically have not met our investment criteria but were now, in our opinion, attractively valued, and to move capital between existing positions to reflect market shifts. We believe this approach may offer meaningful upside potential and a degree of downside protection in periods of financial market turbulence. While the current level of uncertainty may be unnerving, it is important to remember that the market historically rewards investors who take a long-term perspective. To that end, we recognize the importance of financial advisors in today’s markets and encourage investors to continue to seek their advice. Amid changing

1. Source: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

 Not FDIC Insured | May Lose Value  | No Bank Guarantee 

franklintempleton.com Not part of the semiannual report         1

markets and economic conditions, we are confident investors with a well-diversified portfolio and a patient, long-term outlook should be well-positioned for the years ahead.

On the following pages, the portfolio management team reviews investment decisions that pertain to performance during the past six months considering the economic environment and other factors. 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 continuing to serve your investment needs in the years ahead.

Sincerely,

Peter A. Langerman

Chairman, President and Chief Executive Officer

Franklin Mutual Advisers, LLC

This letter reflects our analysis and opinions as of June 30, 2020, 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.

Contents

Semiannual Report
Franklin Mutual Financial Services Fund	3
Performance Summary	7
Your Fund’s Expenses	9
Financial Highlights and Statement of Investments	10
Financial Statements	18
Notes to Financial Statements	22
Shareholder Information	35

Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.

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SEMIANNUAL REPORT

Franklin Mutual Financial Services Fund

This semiannual report for Franklin Mutual Financial Services Fund covers the period ended June 30, 2020.

Your Fund’s Goal and Main Investments

The Fund’s principal investment goal is capital appreciation, which may occasionally be short term. Its secondary goal is income. Under normal market conditions, the Fund invests at least 80% of its net assets in securities of financial services companies that we believe are available at market prices less than their intrinsic value. The Fund invests primarily in equity securities, mainly common stocks with a current focus on mid- and large cap companies. To a significantly lesser extent, the Fund also invests in merger arbitrage securities and the debt and equity of distressed companies. The Fund may invest in foreign securities without limit. The Geographic Composition bar chart on this page lists the leading countries where the Fund invests.

Performance Overview

The Fund’s Class Z shares posted a cumulative total return of -27.74% for the six months ended June 30, 2020. For comparison, the Fund’s primary benchmark, the MSCI World Financials Index (USD), which captures large and midcap representation across developed markets countries, posted a -22.71% total return, while its secondary benchmark, the Standard & Poor’s 500 (S&P 500^®) Financials Index, which tracks financials stocks in the S&P 500, posted a -23.62% total return.¹ You can find more of the Fund’s performance data in the Performance Summary beginning on page 7.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Economic and Market Overview

Global developed and emerging market equities, as measured by the MSCI All Country World Index (USD), posted a -5.99% total return during the six months under review.¹ Stocks fell sharply in early 2020 as countries around

Geographic Composition*

Based on Total Net Assets as of 6/30/20

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

the world implemented lockdown measures in an effort to slow the spread of the novel coronavirus (COVID-19). Global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to

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.

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).

The SOI begins on page 14.

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FRANKLIN MUTUAL FINANCIAL SERVICES FUND

sell equity holdings in favor of perceived safe investments such as government bonds and cash. While global equities, notably in the U.S., rebounded in April and May amid optimism about easing lockdown restrictions, concerns about a second wave of infections hindered equities in June, as investors weighed the possibility of renewed restrictions.

In the U.S., government mandates to mitigate the COVID-19 pandemic severely impacted the economy beginning in March 2020. As a result, the unemployment rate surged to 14.7% in April, as many businesses, particularly those involved in hospitality, retail and travel, announced mass layoffs.² According to the National Bureau of Economic Research, the longest U.S. economic expansion in history ended in February 2020 as the country slipped into a severe recession. Nonetheless, near period-end, there were signs that a recovery was underway, as jobless claims fell considerably from their peak in early April, retail sales rose sharply in May, and the unemployment rate fell to 11.1% in June.² Along with optimism about improved treatments and potential vaccines for COVID-19, the positive economic signals contributed to a significant equity rebound in April and May. However, an increase in COVID-19 infections in many states throughout June pressured U.S. stocks.

Additionally, the U.S. Federal Reserve (Fed) made significant efforts to support the U.S. economy. In March 2020, as the pandemic began to severely impact the economy and financial markets, the Fed implemented two emergency rate cuts, lowering the federal funds target rate to a range of 0.00%–0.25%, and announced sweeping quantitative easing measures aimed at ensuring credit flow to borrowers and supporting credit markets with unlimited amounts of bond purchasing.

In the eurozone, some analysts forecasted a significant contraction in 2020, particularly in southern European countries, as the magnitude of the economic disruption caused by the pandemic became apparent. European developed market equities, as measured by the MSCI Europe Index (USD), posted a -12.43% total return for the period.¹ To stimulate growth, the European Central Bank implemented a broad bond-buying program, and many countries passed fiscal stimulus measures.

Asian developed and emerging market equities, as measured by the MSCI All Country Asia Index (USD), posted a -5.51% total return during the six-month period.¹ The onset of the pandemic brought dramatically slower economic activity in Asia, as businesses halted operations and manufacturing and export

activity declined sharply in the region’s major economies. Asian markets generally advanced toward period-end, bolstered by fiscal stimulus measures and economies reopening throughout the region, especially in China.

Emerging market stocks, as measured by the MSCI Emerging Markets Index (USD), posted a -9.67% total return due primarily to the COVID-19 pandemic.¹ A sharp decrease in prices for oil and other natural resources also hurt emerging market economies reliant on these exports. In the last quarter of the reporting period, however, investor optimism led to a stock rally, particularly in emerging market countries that had successfully lowered infection rates.

Investment Strategy

We strive to provide investors with superior risk-adjusted returns over time through our distinctive, value investment style, which includes investments in undervalued common stocks, and to a significantly lesser extent, distressed debt and merger arbitrage. Rigorous fundamental analysis drives our investment process. We attempt to determine each investment’s intrinsic value as well as the price at which we would be willing to commit shareholder funds. While valuation remains our key consideration, we utilize numerous fundamental factors such as return on equity, financial leverage and long-term earnings power. We also consider factors such as management quality and competitive position. As always, our approach to investing is as such about assessing risk and containing losses as it is about achieving profits. Our portfolio selection process generally includes an assessment of the potential impacts of any material environmental, social and governance (ESG) factors on the long-term risk and return profile of a company. In addition, it is our practice to hedge the Fund’s currency exposure when we deem it advantageous for our shareholders.

Manager’s Discussion

The novel coronavirus (COVID-19) pandemic has significantly altered our way of life. Despite this, stocks have rallied off the March 23 market bottom and are within range of the pre-pandemic, all-time highs achieved earlier in the year. While the economy has reopened, the recovery is likely to be uneven. The question that we wrestle with daily is what does this scenario mean for equities in general and undervalued stocks in particular?

2. Source: U.S. Bureau of Labor Statistics.

See www.franklintempletondatasources.com for additional data provider information.

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FRANKLIN MUTUAL FINANCIAL SERVICES FUND

Markets rose sharply in April, as investors moved back into the growth stocks that propelled the market to the all-time highs of January. In late May, however, there was a turn in market sentiment resulting in value briefly outperforming growth. Undervalued stocks often benefit in periods of improving economic activity or stabilization as business prospects improve. Increasing demand across the economy, especially in cyclical sectors, can provide a tailwind for these companies and drive shareholder value. This is a scenario that often occurs off an economic bottom, and we are positioning our portfolios to capitalize on this trend.

The second-quarter earnings reporting season (occurring in July and August) marks the first period with the full impact of the economic lockdowns and will provide a more complete view into the pandemic’s impact on corporate statements. Many financial officers withdrew full-year 2020 guidance, as they reported first-quarter results, due to limited revenue visibility. As a result, the path ahead for stocks is less clear. We remain cautious amid these elevated risks.

Fund Performance

Turning to Fund performance, investments that detracted included American International Group (AIG; not held at period-end), Wells Fargo and Everest Re Group.

Shares of U.S.-based insurer AIG retreated as COVID-19 concerns and a lack of clarity on forward guidance related to expenses and investment income contributed to negative investor sentiment. The stock initially rallied following the company’s first-quarter earnings call at which management revealed that the majority of its property policies—which include coverage for business interruption—contained exclusions for losses related to viruses.

The shares of U.S.-based diversified financial services company Wells Fargo were pulled down by negative investor sentiment for financials, which have trailed the broader market rally from the March 23 bottom. Concerns about a possible dividend cut as bank earnings have come under pressure, and speculation about the Fed moving to negative interest rates—subsequently refuted by Fed Chairman Jerome Powell—contributed to the selloff. Earlier in the period, management reported year-end 2019 earnings that fell well short of consensus estimates.

Shares of Bermuda-based insurer Everest Re Group sold off as part of a broad equity market decline related to the economic impact of COVID-19 containment measures on global growth. Financial stocks were severely punished and have trailed the rebound off the March bottom. Everest Re’s stock price recovered some lost ground late in the period as

Portfolio Composition*

*Based on Total Net Assets as of 6/30/20

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

supportive monetary and fiscal policies boosted investor sentiment, lifting equities. The reinsurer reported earnings that exceeded analysts’ consensus forecasts, and first-quarter share repurchases totaled more than 970,000 shares. Late in the period, management increased the buyback authorization by 2 million shares.

During the period under review, Fund investments that contributed positively to performance included Deutsche Bank, BRP Group and PNC Financial Services Group. Deutsche Bank is listed among the Fund’s largest positions in the Top 10 Equity Holdings table on page 6.

Shares of Germany-based global financial services provider Deutsche Bank rose during the period, improving as COVID-19 related lockdowns were eased and investor sentiment turned positive. First-quarter financial results exceeded consensus expectations, and the stock continued its run as the year’s best performing European lender. Robust government support and low levels of household and corporate debt in the German market should help Deutsche Bank withstand the financial pressures caused by the COVID-19 pandemic.

U.S.-based insurance distribution and holding company BRP Group was an outperformer during the period. Management has continued to execute on its growth-via-acquisition strategy throughout the market correction and subsequent

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FRANKLIN MUTUAL FINANCIAL SERVICES FUND

Top 10 Equity Holdings

6/30/20

Company Sector/Industry, Country	% of Total Net Assets
Voya Financial Inc. Diversified Financial Services, U.S.		4.9%
The Hartford Financial Services Group Inc. Insurance, U.S.		4.4%
Everest Re Group Ltd. Insurance, U.S.		4.1%
NN Group NV Insurance, Netherlands		4.1%
ING Groep NV Banks, Netherlands		3.8%
ASR Nederland NV Insurance, Netherlands		3.8%
Deutsche Bank AG Capital Markets, Germany		3.8%
Alleghany Corp. Insurance, U.S.		3.6%
Capital One Financial Corp. Consumer Finance, U.S.		3.2%
Credito Valtellinese SpA Banks, Italy		3.1%

recovery, and the company, which went public in 2019, has made seven acquisitions this year. BRP operates in four core segments: middle market, specialty, Main Street and Medicare. We took advantage of a pandemic-related market pullback to buy shares at an attractive valuation during a secondary market offering.

Shares of U.S.-based diversified banking and asset management company PNC Financial Services Group were volatile during the period as investors continued to digest the fallout from COVID-19. Additionally, and importantly, company management sold its 22% stake in BlackRock, the world’s largest asset manager. The transaction, which generated more than $14 billion, bolsters PNC’s capital position, allowing it to make opportunistic acquisitions that could emerge as the economy slows and the competitive environment becomes challenging for some banks. PNC’s short-term results will be impacted by the loss of profit from BlackRock, but the lender will benefit from selling during a lower corporate tax rate environment, and it has a war chest to take advantage of potential market distress.

During the period, the Fund held currency forwards and futures seeking to hedge most of the currency risk of the

portfolio’s non-U.S. dollar investments. The hedges had a positive overall impact on the Fund’s performance.

As fellow shareholders, we found recent absolute and relative performance disappointing, but our strategy of seeking undervalued stocks can lag the growth equity markets at times. We remain committed to our disciplined, value investment approach as we seek to generate attractive, long-term, risk-adjusted returns for shareholders.

Thank you for your participation in Franklin Mutual Financial Services Fund. We look forward to continuing to serve your investment needs.

Andrew Sleeman, CFA

Co-Portfolio Manager

Andrew B. Dinnhaupt, CFA

Co-Portfolio Manager

Luis Hernandez

Co-Portfolio Manager

The foregoing information reflects our analysis, opinions and portfolio holdings as of June 30, 2020, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, 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.

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FRANKLIN MUTUAL FINANCIAL SERVICES FUND

Performance Summary as of June 30, 2020

The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.

Performance as of 6/30/20

Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%. Class A: 5.50% maximum initial sales charge. For other share classes, visit franklintempleton.com.

Share Class	Cumulative Total Return	1	Average Annual Total Return	2
Z
6-Month	-27.74%		-27.74%
1-Year	-22.29%		-22.29%
5-Year	-7.81%		-1.61%
10-Year	+75.35%		+5.78%
A3
6-Month	-27.83%		-31.76%
1-Year	-22.42%		-26.69%
5-Year	-8.89%		-2.94%
10-Year	+70.58%		+4.89%

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.

See page 8 for Performance Summary footnotes.

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FRANKLIN MUTUAL FINANCIAL SERVICES FUND

PERFORMANCE SUMMARY

Total Annual Operating Expenses⁴

Share Class
Z	1.10	%
A	1.35	%

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. Value securities may not increase in price as anticipated or may decline further in value. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investing in a single-sector fund involves special risks, including greater sensitivity to economic, political or regulatory developments impacting the sector. 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. Smaller-company stocks have exhibited greater price volatility than larger-company stocks, particularly over the short term. The Fund’s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. The Fund may invest in lower-rated bonds, which entail higher credit risk. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental or man-made disasters; financial, political or social disruptions; terrorism and war; and other tragedies or catastrophes, can cause investor fear and panic, which can adversely affect the economies of many companies, sectors, nations, regions and the market in general, in ways that cannot necessarily be foreseen. The Fund’s prospectus also includes a description of the main investment risks.

1. Cumulative total return represents the change in value of an investment over the periods indicated.

2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.

3. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns (with sales charges) would have differed. Average annual total returns (with sales charges) have been restated to reflect the current maximum initial sales charge of 5.50%.

4. 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.

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FRANKLIN MUTUAL FINANCIAL SERVICES FUND

Your Fund’s Expenses

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.

		Actual (actual return after expenses)		Hypothetical (5% annual return before expenses)
Share Class	Beginning Account Value 1/1/20	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Ending Account Value 6/30/20	Expenses Paid During Period 1/1/20–6/30/201, 2	Net Annualized Expense Ratio2
Z	$1,000	$722.60	$4.80	$1,019.29	$ 5.62	1.12%
A	$1,000	$722.10	$5.87	$1,018.05	$ 6.87	1.37%
C	$1,000	$719.20	$9.06	$1,014.32	$10.62	2.12%
R6	$1,000	$723.10	$4.24	$1,019.94	$ 4.97	0.99%

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 182/366 to reflect the one-half year period.

2. Reflects expenses after fee waivers and expense reimbursements, for Class R6.

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FRANKLIN MUTUAL SERIES FUNDS

Financial Highlights

Franklin Mutual Financial Services Fund

	Six Months Ended June 30, 2020			Year Ended December 31,
	(unaudited)			2019			2018			2017			2016			2015
Class Z
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.78			$19.46			$24.14			$21.65			$19.63			$18.40
Income from investment operationsa:
Net investment incomeb		0.12			0.38			0.38	c		0.22			0.31	d		0.30	e
Net realized and unrealized gains (losses)		(6.44	)		3.38			(4.37	)		2.76			2.00			1.23
Total from investment operations		(6.32	)		3.76			(3.99	)		2.98			2.31			1.53
Less distributions from:
Net investment income		—			(0.44	)		(0.17	)		(0.49	)		(0.29	)		(0.30	)
Net realized gains		—			—			(0.52	)		—			—			—
Total distributions		—			(0.44	)		(0.69	)		(0.49	)		(0.29	)		(0.30	)
Net asset value, end of period		$16.46			$22.78			$19.46			$24.14			$21.65			$19.63
Total returnf		(27.74)%			19.32%			(16.49)%			13.77%			11.79%			8.34%
Ratios to average net assetsg
Expensesh		1.12%			1.10%			1.09%	i		1.09%			1.13%	i		1.13%
Net investment income		1.36%			1.80%			1.61%	c		0.95%			1.64%	d		1.53%	e
Supplemental data
Net assets, end of period (000’s)		$90,484			$139,189			$142,212			$210,825			$162,687			$178,157
Portfolio turnover rate		18.93%			17.06%			33.11%			67.89%			34.58%			25.43%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.08 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.29%.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.38%.

^eNet investment income per share includes approximately $0.14 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.81%.

^fTotal return is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

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FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Financial Services Fund (continued)

	Six Months Ended June 30, 2020			Year Ended December 31,
	(unaudited)			2019			2018			2017			2016			2015
Class A
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.85			$19.52			$24.21			$21.70			$19.69			$18.46
Income from investment operationsa:
Net investment incomeb		0.10			0.33			0.31	c		0.16			0.26	d		0.25	e
Net realized and unrealized gains (losses)		(6.46	)		3.38			(4.36	)		2.78			1.99			1.23
Total from investment operations		(6.36	)		3.71			(4.05	)		2.94			2.25			1.48
Less distributions from:
Net investment income		—			(0.38	)		(0.12	)		(0.43	)		(0.24	)		(0.25	)
Net realized gains		—			—			(0.52	)		—			—			—
Total distributions		—			(0.38	)		(0.64	)		(0.43	)		(0.24	)		(0.25	)
Net asset value, end of period		$16.49			$22.85			$19.52			$24.21			$21.70			$19.69
Total returnf		(27.83)%			19.06%			(16.72)%			13.55%			11.46%			8.05%
Ratios to average net assetsg
Expensesh		1.37%			1.35%			1.34%	i		1.34%			1.38%	i		1.41%
Net investment income		1.11%			1.55%			1.36%	c		0.70%			1.39%	d		1.25%	e
Supplemental data
Net assets, end of period (000’s)		$181,312			$278,968			$298,878			$368,850			$346,008			$360,278
Portfolio turnover rate		18.93%			17.06%			33.11%			67.89%			34.58%			25.43%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.08 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.04%.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.13%.

^eNet investment income per share includes approximately $0.14 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.53%.

^fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

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FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Financial Services Fund (continued)

	Six Months Ended June 30, 2020		Year Ended December 31,
	(unaudited)		2019		2018			2017		2016			2015
Class C
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.65		$19.32		$24.08			$21.60		$19.61			$18.41
Income from investment operationsa:
Net investment income (loss)b		0.03		0.18		0.15	c		(0.01)		0.12	d		0.10	e
Net realized and unrealized gains (losses)		(6.39)		3.32		(4.33)			2.74		1.96			1.24
Total from investment operations		(6.36)		3.50		(4.18)			2.73		2.08			1.34
Less distributions from:
Net investment income		—		(0.17)		(0.06)			(0.25)		(0.09)			(0.14)
Net realized gains		—		—		(0.52)			—		—			—
Total distributions		—		(0.17)		(0.58)			(0.25)		(0.09)			(0.14)
Net asset value, end of period		$16.29		$22.65		$19.32			$24.08		$21.60			$19.61
Total returnf		(28.08)%		18.15%		(17.35)%			12.66%		10.64%			7.30%
Ratios to average net assetsg
Expensesh		2.12%		2.10%		2.09%	i		2.09%		2.13%	i		2.13%
Net investment income (loss)		0.36%		0.80%		0.61%	c		(0.05)%		0.64%	d		0.53%	e
Supplemental data
Net assets, end of period (000’s)		$27,016		$46,132		$58,610			$134,117		$128,766			$132,975
Portfolio turnover rate		18.93%		17.06%		33.11%			67.89%		34.58%			25.43%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.08 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.29%.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.38%.

^eNet investment income per share includes approximately $0.14 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been (0.19)%.

^fTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hBenefit of expense reduction rounds to less than 0.01%.

ⁱBenefit of waiver and payments by affiliates rounds to less than 0.01%.

12         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL HIGHLIGHTS

Franklin Mutual Financial Services Fund (continued)

	Six Months Ended June 30, 2020			Year Ended December 31,
	(unaudited)			2019			2018			2017			2016			2015
Class R6
Per share operating performance (for a share outstanding throughout the period)
Net asset value, beginning of period		$22.93			$19.58			$24.30			$21.79			$19.76			$18.52
Income from investment operationsa:
Net investment incomeb		0.13			0.42			0.41	c		0.25			0.32	d		0.07	e
Net realized and unrealized gains (losses)		(6.48	)		3.40			(4.41	)		2.78			2.03			1.49
Total from investment operations		(6.35	)		3.82			(4.00	)		3.03			2.35			1.56
Less distributions from:
Net investment income		—			(0.47	)		(0.20	)		(0.52	)		(0.32	)		(0.32	)
Net realized gains		—			—			(0.52	)		—			—			—
Total distributions		—			(0.47	)		(0.72	)		(0.52	)		(0.32	)		(0.32	)
Net asset value, end of period		$16.58			$22.93			$19.58			$24.30			$21.79			$19.76
Total returnf		(27.69)%			19.51%			(16.41)%			13.92%			11.93%			8.55%
Ratios to average net assetsg
Expenses before waiver and payments by affiliates		1.14%			1.05%			1.06%			0.97%			0.99%			1.16%
Expenses net of waiver and payments by affiliatesh		0.99%			0.97%			0.97%			0.95%			0.96%			0.96%
Net investment income		1.49%			1.93%			1.73 %	c		1.09%			1.81%	d		1.70%	e
Supplemental data
Net assets, end of period (000’s)		$1,741			$2,931			$3,371			$4,523			$2,601			$1,421
Portfolio turnover rate		18.93%			17.06%			33.11%			67.89%			34.58%			25.43%

^aThe 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.

^bBased on average daily shares outstanding.

^cNet investment income per share includes approximately $0.08 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.41%.

^dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.55%.

^eNet investment income per share includes approximately $0.14 per share related to income received in the form of special dividends in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.98%.

^fTotal return is not annualized for periods less than one year.

^gRatios are annualized for periods less than one year.

^hBenefit of expense reduction rounds to less than 0.01%.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         13

FRANKLIN MUTUAL SHARES FUND

Statement of Investments, June 30, 2020 (unaudited)

Franklin Mutual Financial Services Fund

	Country		Shares		Value
Common Stocks 92.8%
Banks 36.4%
aAB&T Financial Corp.		United States		226,100	$	85,918
bAIB Group PLC		Ireland		2,267,537		2,862,830
Bank of America Corp.		United States		110,800		2,631,500
Barclays PLC		United Kingdom		6,526,213		9,206,800
b,cBAWAG Group AG, 144A		Austria		220,031		7,612,845
bBNP Paribas SA		France		154,440		6,169,949
CaixaBank SA		Spain		3,048,869		6,521,828
Citigroup Inc.		United States		39,510		2,018,961
Citizens Financial Group Inc.		United States		373,300		9,422,092
bCredito Valtellinese SpA		Italy		1,587,663		9,423,804
First Horizon National Corp.		United States		553,729		5,515,141
ING Groep NV		Netherlands		1,655,210		11,537,283
JPMorgan Chase & Co.		United States		43,980		4,136,759
PNC Financial Services Group Inc.		United States		12,900		1,357,209
Shinsei Bank Ltd.		Japan		271,911		3,288,820
Southern National Bancorp of Virginia Inc.		United States		649,760		6,296,174
Standard Chartered PLC		United Kingdom		1,298,159		7,036,769
Synovus Financial Corp.		United States		270,611		5,555,644
bUniCredit SpA		Italy		663,877		6,126,519
Wells Fargo & Co.		United States		101,870		2,607,872
						109,414,717
Capital Markets 6.8%
Credit Suisse Group AG		Switzerland		683,381		7,110,488
bDeutsche Bank AG		Germany		1,205,177		11,496,480
Guotai Junan Securities Co. Ltd.		China		1,396,063		1,941,482
						20,548,450
Consumer Finance 3.8%
Capital One Financial Corp.		United States		154,910		9,695,817
Sun Hung Kai & Co. Ltd.		Hong Kong		4,361,704		1,716,848
						11,412,665
Diversified Financial Services 6.8%
M&G PLC		United Kingdom		2,775,972		5,763,919
Voya Financial Inc.		United States		315,950		14,739,067
						20,502,986
Household Durables 2.3%
Cairn Homes PLC		Ireland		6,659,782		6,751,424
Insurance 34.1%
Alleghany Corp.		United States		21,947		10,735,156
ASR Nederland NV		Netherlands		373,840		11,501,045
bBRP Group Inc.		United States		300,000		5,181,000
China Pacific Insurance Group Co. Ltd., H		China		1,238,600		3,328,946
Direct Line Insurance Group PLC		United Kingdom		2,460,898		8,251,194
Everest Re Group Ltd.		United States		59,100		12,186,420
The Hartford Financial Services Group Inc.		United States		341,672		13,171,456
bInternational General Insurance Holdings Ltd.		Jordan		1,062,755		7,333,009

14         Semiannual Report franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

	Country		Shares		Value
Common Stocks (continued)
Insurance (continued)
MetLife Inc.		United States		155,970	$	5,696,024
NN Group NV		Netherlands		362,274		12,174,136
RSA Insurance Group PLC		United Kingdom		1,581,336		8,008,245
T&D Holdings Inc.		Japan		563,469		4,839,750
						102,406,381
Real Estate Management & Development 1.5%
bDolphin Capital Investors Ltd.		Greece		3,979,650		152,388
Kenedix Inc.		Japan		874,000		4,319,506
						4,471,894
Thrifts & Mortgage Finance 1.1%
Indiabulls Housing Finance Ltd.		India		1,200,419		3,290,038
Total Common Stocks (Cost $366,980,171)						278,798,555
			Principal Amount
Short Term Investments 6.4%
U.S. Government and Agency Securities 6.4%
dFHLB, 7/01/20		United States	$	4,300,000		4,300,000
dU.S. Treasury Bill,
7/02/20		United States		12,000,000		11,999,972
7/07/20		United States		2,000,000		1,999,962
e11/27/20		United States		1,000,000		999,379
Total U.S. Government and Agency Securities (Cost $19,299,266)						19,299,313
Total Investments (Cost $386,279,437) 99.2%						298,097,868
Other Assets, less Liabilities 0.8%						2,455,455
Net Assets 100.0%					$	300,553,323

^aSee Note 11 regarding holdings of 5% voting securities.

^bNon-income producing.

^cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At June 30, 2020, the value of this security was $7,612,845, representing 2.5% of net assets.

^dThe security was issued on a discount basis with no stated coupon rate.

^eA portion or all of the security has been segregated as collateral for open forward exchange contracts. At June 30, 2020, the value of this security pledged amounted to $586,635, representing 0.2% of net assets.

franklintempleton.com Semiannual Report         15

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

At June 30, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).

Futures Contracts

Description	Type		Number of Contracts		Notional  Amount*		Expiration Date		Value/ Unrealized Appreciation (Depreciation)
Currency Contracts
EUR/USD		Short		146		$20,537,637		9/14/20		$136,765
GBP/USD		Short		118		9,142,788		9/14/20		254,458
Total Futures Contracts										$391,223

*As of period end.

At June 30, 2020, the Fund had the following forward exchange contracts outstanding. See Note 1(c).

Forward Exchange Contracts

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts
Euro		BOFA		Buy		2,988,365	$	3,343,890		7/15/20	$	14,479	$	—
Euro		BOFA		Sell		3,783,039		4,172,286		7/15/20		—		(79,147	)
Euro		BONY		Buy		2,662,010		2,964,645		7/15/20		26,961		—
Euro		HSBK		Buy		502,596		571,662		7/15/20		—		(6,836	)
Euro		HSBK		Buy		5,899,109		6,498,034		7/15/20		131,470		—
Euro		HSBK		Sell		4,459,258		4,929,198		7/15/20		—		(82,181	)
Euro		HSBK		Sell		16,334,651		18,378,607		7/15/20		21,487		—
Euro		SSBT		Buy		237,462		269,255		7/15/20		—		(2,392	)
Euro		SSBT		Buy		1,798,310		2,016,882		7/15/20		4,085		—
Euro		SSBT		Sell		2,219,468		2,458,128		7/15/20		—		(36,143	)
Euro		SSBT		Sell		16,334,651		18,377,136		7/15/20		20,017		—
Euro		UBSW		Buy		1,108,487		1,262,909		7/15/20		—		(17,175	)
Euro		UBSW		Buy		2,976,755		3,340,567		7/15/20		4,755		—
Euro		UBSW		Sell		1,494,782		1,654,857		7/15/20		—		(24,999	)
British Pound		BOFA		Sell		1,396,131		1,688,662		7/16/20		—		(41,372	)
British Pound		BONY		Sell		168,151		209,784		7/16/20		1,417		—
British Pound		HSBK		Buy		22,969		28,556		7/16/20		—		(94	)
British Pound		HSBK		Sell		445,646		557,499		7/16/20		5,271		—
British Pound		SSBT		Buy		317,836		394,799		7/16/20		—		(948	)
British Pound		BOFA		Buy		398,289		475,945		8/14/20		17,678		—
British Pound		BOFA		Buy		871,496		1,105,222		8/14/20		—		(25,128	)
British Pound		BOFA		Sell		200,788		249,804		8/14/20		957		—
British Pound		BONY		Buy		1,100,000		1,350,821		8/14/20		12,471		—
British Pound		HSBK		Buy		1,961,395		2,410,947		8/14/20		19,920		—
British Pound		HSBK		Buy		2,278,529		2,856,811		8/14/20		—		(32,902	)
British Pound		HSBK		Sell		284,360		337,109		8/14/20		—		(15,315	)
British Pound		HSBK		Sell		11,227,458		14,622,922		8/14/20		708,102		—
British Pound		SSBT		Sell		324,106		381,894		8/14/20		—		(19,789	)
British Pound		SSBT		Sell		11,227,458		14,625,111		8/14/20		710,291		—
British Pound		UBSW		Buy		503,470		617,640		8/14/20		6,339		—

16         Semiannual Report   franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

STATEMENT OF INVESTMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

Forward Exchange Contracts (continued)

Currency	Counterpartya		Type		Quantity		Contract Amount		Settlement Date		Unrealized Appreciation		Unrealized Depreciation
OTC Forward Exchange Contracts (continued)
British Pound		UBSW		Buy		1,192,517	$	1,565,499		8/14/20	$	—	$	(87,548	)
Swiss Franc		SSBT		Buy		156,580		165,317		8/17/20		189		—
Swiss Franc		UBSW		Sell		6,729,338		7,160,928		8/17/20		47,957		—
Euro		BOFA		Sell		2,095,385		2,296,774		8/18/20		—		(59,884	)
Euro		BONY		Sell		4,829,856		5,338,918		8/18/20		—		(93,167	)
Euro		HSBK		Sell		3,556,128		3,877,622		8/18/20		—		(121,915	)
Euro		UBSW		Sell		3,635,069		3,980,911		8/18/20		—		(107,412	)
Japanese Yen		SSBT		Sell		1,365,012,507		12,792,575		8/24/20		141,702		—
Japanese Yen		UBSW		Buy		48,817,468		453,622		8/24/20		—		(1,184	)
Euro		BOFA		Sell		718,173		784,067		10/07/20		—		(24,611	)
Euro		BONY		Sell		723,739		815,962		10/07/20		1,017		—
Euro		BONY		Sell		1,542,245		1,687,852		10/07/20		—		(48,749	)
Euro		HSBK		Sell		1,229,191		1,395,364		10/07/20		11,269		—
Euro		HSBK		Sell		2,521,134		2,778,654		10/07/20		—		(60,197	)
Euro		SSBT		Sell		723,739		815,148		10/07/20		202		—
Euro		UBSW		Sell		1,620,948		1,833,942		10/07/20		8,721		—
Euro		UBSW		Sell		2,411,528		2,630,243		10/07/20		—		(85,189	)
British Pound		UBSW		Sell		1,247,247		1,539,112		11/23/20		—		(7,682	)
British Pound		UBSW		Sell		2,369,137		2,991,039		11/23/20		52,911		—
Euro		BOFA		Sell		1,303,279		1,442,789		11/23/20		—		(26,637	)
Euro		HSBK		Sell		775,693		880,098		11/23/20		5,517		—
Euro		HSBK		Sell		2,544,036		2,834,939		11/23/20		—		(33,418	)
Euro		SSBT		Sell		780,705		884,945		11/23/20		4,713		—
Euro		SSBT		Sell		1,539,298		1,710,583		11/23/20		—		(24,950	)
Euro		UBSW		Sell		775,693		878,787		11/23/20		4,206		—
Euro		UBSW		Sell		2,431,848		2,693,646		11/23/20		—		(48,221	)
Total Forward Exchange Contracts											$	1,984,104	$	(1,215,185	)
Net unrealized appreciation (depreciation)											$	768,919

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Note 10 regarding other derivative information.

See Abbreviations on page 34.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         17

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities

June 30, 2020 (unaudited)

Franklin Mutual Financial Services Fund

Assets:
Investments in securities:
Cost - Unaffiliated issuers	$	384,052,682
Cost - Non-controlled affiliates (Note 11)		2,226,755
Value - Unaffiliated issuers	$	298,011,950
Value - Non-controlled affiliates (Note 11)		85,918
Cash		178,418
Foreign currency, at value (cost $32,680)		31,919
Receivables:
Investment securities sold		30,898
Capital shares sold		200,680
Dividends		666,183
European Union tax reclaims		833,509
Deposits with brokers for:
Futures contracts		669,955
Unrealized appreciation on OTC forward exchange contracts		1,984,104
Other assets		388,084
Total assets		303,081,618
Liabilities:
Payables:
Capital shares redeemed		704,786
Management fees		221,270
Distribution fees		61,377
Transfer agent fees		61,751
Trustees’ fees and expenses		38,462
Variation margin on futures contracts		78,000
Unrealized depreciation on OTC forward exchange contracts		1,215,185
Accrued expenses and other liabilities		147,464
Total liabilities		2,528,295
Net assets, at value	$	300,553,323
Net assets consist of:
Paid-in capital	$	427,555,340
Total distributable earnings (losses)		(127,002,017	)
Net assets, at value	$	300,553,323

18         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Assets and Liabilities (continued)

June 30, 2020 (unaudited)

Franklin Mutual Financial Services Fund

Class Z:
Net assets, at value	$	90,484,335
Shares outstanding		5,495,699
Net asset value and maximum offering price per share		$16.46
Class A:
Net assets, at value	$	181,311,823
Shares outstanding		10,991,932
Net asset value per sharea		$16.49
Maximum offering price per share (net asset value per share ÷ 94.50%)		$17.45
Class C:
Net assets, at value	$	27,015,799
Shares outstanding		1,658,881
Net asset value and maximum offering price per sharea		$16.29
Class R6:
Net assets, at value	$	1,741,366
Shares outstanding		105,011
Net asset value and maximum offering price per share		$16.58

^aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         19

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statement of Operations

for the six months ended June 30, 2020 (unaudited)

Franklin Mutual Financial Services Fund

Investment income:
Dividends:(net of foreign taxes)*
Unaffiliated issuers	$	4,166,646
Non-controlled affiliates (Note 11)		574
Interest:
Unaffiliated issuers		68,787
Total investment income		4,236,007
Expenses:
Management fees (Note 3a)		1,500,844
Distribution fees: (Note 3c)
Class A		256,873
Class C		163,496
Transfer agent fees: (Note 3e)
Class Z		76,495
Class A		152,649
Class C		24,275
Class R6		1,701
Custodian fees (Note 4)		12,041
Reports to shareholders		32,595
Registration and filing fees		38,386
Professional fees		54,047
Trustees’ fees and expenses		15,642
Other		6,053
Total expenses		2,335,097
Expense reductions (Note 4)		(1,126	)
Expenses waived/paid by affiliates (Note 3f)		(1,468	)
Net expenses		2,332,503
Net investment income		1,903,504
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers		(28,599,001	)
Foreign currency transactions		54,515
Forward exchange contracts		(2,100,386	)
Futures contracts		189,858
Net realized gain (loss)		(30,455,014	)
Net change in unrealized appreciation (depreciation) on:
Investments:
Unaffiliated issuers		(103,369,129	)
Non-controlled affiliates (Note 11)		(23,740	)
Translation of other assets and liabilities denominated in foreign currencies		8,646
Forward exchange contracts		3,803,950
Futures contracts		681,989
Net change in unrealized appreciation (depreciation)		(98,898,284	)
Net realized and unrealized gain (loss)		(129,353,298	)
Net increase (decrease) in net assets resulting from operations	$	(127,449,794	)
*Foreign taxes withheld on dividends	$	91,602

20         Semiannual Report  |  The accompanying notes are an integral part of these financial statements. franklintempleton.com

FRANKLIN MUTUAL SERIES FUNDS

FINANCIAL STATEMENTS

Statements of Changes in Net Assets

Franklin Mutual Financial Services Fund

	Six Months Ended June 30, 2020 (unaudited)			Year Ended December 31, 2019
Increase (decrease) in net assets:
Operations:
Net investment income		$    1,903,504			$    7,499,710
Net realized gain (loss)		(30,455,014	)		4,459,602
Net change in unrealized appreciation (depreciation)		(98,898,284	)		72,985,025
Net increase (decrease) in net assets resulting from operations		(127,449,794	)		84,944,337
Distributions to shareholders:
Class Z		—			(2,651,907	)
Class A		—			(4,583,542	)
Class C		—			(357,699	)
Class R6		—			(62,332	)
Total distributions to shareholders		—			(7,655,480	)
Capital share transactions: (Note 2)
Class Z		(10,894,056	)		(25,248,222	)
Class A		(21,295,128	)		(65,850,270	)
Class C		(6,537,345	)		(21,041,157	)
Class R6		(490,173	)		(1,001,103	)
Total capital share transactions		(39,216,702	)		(113,140,752	)
Net increase (decrease) in net assets		(166,666,496	)		(35,851,895	)
Net assets:
Beginning of period		467,219,819			503,071,714
End of period		$ 300,553,323			$ 467,219,819

franklintempleton.com The accompanying notes are an integral part of these financial statements.  |  Semiannual Report         21

FRANKLIN MUTUAL SERIES FUNDS

Notes to Financial Statements (unaudited)

Franklin Mutual Financial Services Fund

1. Organization and Significant Accounting Policies

Franklin Mutual Series Funds (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of six separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Mutual Financial Services Fund (Fund) is included in this report. The Fund offers four classes of shares: Class Z, Class A, Class C and Class R6. Class C shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The Fund may utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and derivative financial instruments 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.

Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the 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

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

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 June 30, 2020, certain securities may have been fair valued using these procedures, in which case the securities were categorized as Level 2 inputs within the fair value hierarchy. See the Fair Value Measurements note for more information.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statement of Operations.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

c. Derivative Financial Instruments

The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.

Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

1. Organization and Significant Accounting Policies (continued)

c. Derivative Financial Instruments (continued)

and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement.

Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

The Fund entered into exchange traded futures contracts primarily to manage exposure to certain foreign currencies. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statement of Assets and Liabilities.

The Fund entered into OTC forward exchange contracts primarily to manage 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 10 regarding other derivative information.

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 capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

As a result of several court cases, in certain countries across the European Union, the Fund filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statement of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the financial statements. For U.S. income tax purposes, EU reclaims received by the Fund, if any, reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns.

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

sustained upon examination by the tax authorities based on its technical merits. As of June 30, 2020, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.

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. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust or based on the ratio of

number of shareholders of each Fund to the combined number of shareholders of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.

Realized and unrealized gains and losses and net investment income, excluding class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions by class are generally due to differences in class specific expenses.

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.

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.

franklintempleton.com Semiannual Report         25

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

2. Shares of Beneficial Interest

At June 30, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:

	Six Months Ended June 30, 2020						Year Ended December 31, 2019
	Shares			Amount			Shares			Amount
Class Z Shares:
Shares sold		528,645		$	9,123,959			812,603		$	17,390,341
Shares issued in reinvestment of distributions		—			—			105,805			2,403,432
Shares redeemed		(1,143,181	)		(20,018,015	)		(2,116,626	)		(45,041,995)
Net increase (decrease)		(614,536	)	$	(10,894,056	)		(1,198,218	)	$	(25,248,222)
Class A Shares:
Shares solda		855,227		$	14,004,332			938,834		$	20,168,898
Shares issued in reinvestment of distributions		—			—			195,362			4,450,004
Shares redeemed		(2,071,941	)		(35,299,460	)		(4,240,433	)		(90,469,172)
Net increase (decrease)		(1,216,714	)	$	(21,295,128	)		(3,106,237	)	$	(65,850,270)
Class C Shares:
Shares sold		111,047		$	1,824,205			185,573		$	3,904,208
Shares issued in reinvestment of distributions		—			—			15,462			346,913
Shares redeemeda		(488,852	)		(8,361,550	)		(1,197,724	)		(25,292,278)
Net increase (decrease)		(377,805	)	$	(6,537,345	)		(996,689	)	$	(21,041,157)
Class R6 Shares:
Shares sold		33,511		$	525,667			82,219		$	1,781,383
Shares issued in reinvestment of distributions		—			—			2,727			62,332
Shares redeemed		(56,328	)		(1,015,840	)		(129,250	)		(2,844,818)
Net increase (decrease)		(22,817	)	$	(490,173	)		(44,304	)	$	(1,001,103)
aMay include a portion of Class C shares that were automatically converted to Class A

3. Transactions with Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:

Subsidiary	Affiliation
Franklin Mutual Advisers, LLC (Franklin Mutual)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services)	Transfer agent

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

a. Management Fees

The Fund pays an investment management fee to Franklin Mutual based on the average daily net assets of the Fund as follows:

Annualized Fee Rate	Net Assets
0.875%	Up to and including $1 billion
0.845%	Over $1 billion, up to and including $2 billion
0.825%	Over $2 billion, up to and including $5 billion
0.805%	In excess of $5 billion

b. Administrative Fees

Under an agreement with Franklin Mutual, FT Services provides administrative services to the Fund. The fee is paid by Franklin Mutual 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 Z and Class R6 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:

Class A	0.35	%
Class C	1.00	%

The Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.

d. Sales Charges/ Underwriting Agreements

Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the period:

Sales charges retained net of commissions paid to unaffiliated brokers/dealers	$	17,507
CDSC retained	$	1,757

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

3. Transactions with Affiliates (continued)

e. Transfer Agent Fees

Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. The fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.

For the period ended June 30, 2020, the Fund paid transfer agent fees of $255,120, of which $133,148 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 April 30, 2021. Prior to May 1, 2020, the Class R6 transfer agent fees were limited to 0.02%.

g. Interfund Transactions

The Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the period ended June 30, 2020, these purchase and sale transactions aggregated $1,233,191 and $1,580,612, respectively.

4. Expense Offset Arrangement

The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended June 30, 2020, the custodian fees were reduced as noted in the Statement of Operations.

5. Independent Trustees’ Retirement Plan

On January 1, 1993, the Trust adopted an Independent Trustees’ Retirement Plan (Plan). The Plan is an unfunded defined benefit plan that provides benefit payments to Trustees whose length of service and retirement age meets the eligibility requirements of the Plan. Benefits under the Plan are based on years of service and fees paid to each trustee at the time of retirement. Effective in December 1996, the Plan was closed to new participants.

During the period ended June 30, 2020, the Fund’s projected benefit obligation and benefit payments under the Plan were as follows:

aProjected benefit obligation at June 30, 2020	$	37,671
bIncrease in projected benefit obligation	$	1,877
Benefit payments made to retired trustees	$	(240	)

^aThe projected benefit obligation is included in trustees’ fees and expenses in the Statement of Assets and Liabilities.

^bThe increase in projected benefit obligation is included in trustees’ fees and expenses in the Statement of Operations.

6. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

At December 31, 2019, the capital loss carryforwards were as follows:

Capital loss carryforwards not subject to expiration:
Short term	$	5,515,313
Long term		5,361,458
Total capital loss carryforwards	$	10,876,771

At June 30, 2020, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments	$	387,639,530
Unrealized appreciation	$	14,089,366
Unrealized depreciation		(102,470,234)
Net unrealized appreciation (depreciation)	$	(88,380,868)

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 and corporate actions.

7. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended June 30, 2020, aggregated $62,727,183 and $102,861,734, respectively.

8. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local, regional and global economic, political and social conditions, which may result in greater market volatility. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in securities in Europe. In addition, certain foreign securities may not be as liquid as U.S. securities.

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.

franklintempleton.com Semiannual Report         29

FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

10. Other Derivative Information

At June 30, 2020, investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:

	Asset Derivatives				Liability Derivatives
Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Assets and Liabilities Location	Fair Value			Statement of Assets and Liabilities Location	Fair Value
Foreign exchange contracts	Variation margin on futures contracts	$	391,223	a	Variation margin on futures contracts	$	—
	Unrealized appreciation on OTC forward exchange contracts		1,984,104		Unrealized depreciation on OTC forward exchange contracts		1,215,185
Totals		$	2,375,327			$	1,215,185

^aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/ payable at period end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

For the period ended June 30, 2020, the effect of derivative contracts in the Statement of Operations was as follows:

Derivative Contracts Not Accounted for as Hedging Instruments	Statement of Operations Location	Net Realized Gain (Loss) for the Period		Statement of Operations Location	Net Change in Unrealized Appreciation (Depreciation) for the Period
	Net realized gain (loss) from:			Net change in unrealized appreciation (depreciation) on:
Foreign exchange contracts	Forward exchange contracts		$(2,100,386)	Forward exchange contracts		$3,803,950
	Futures contracts		189,858	Futures contracts		681,989
Totals			$(1,910,528)			$4,485,939

For the period ended June 30, 2020, the average month end notional amount of futures contracts represented $30,710,436. The average month end contract value of forward exchange contracts was $183,111,380.

At June 30, 2020, OTC derivative assets and liabilities are as follows:

	Gross Amounts of Assets and Liabilities Presented     in the Statement of Assets and Liabilities
	Assetsa		Liabilitiesa
Derivatives
Forward exchange contracts		$1,984,104		$1,215,185

^aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

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FRANKLIN MUTUAL SERIES FUNDS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

At June 30, 2020, OTC derivative assets, which may be offset against OTC derivative liabilities and collateral received from the counterparty, are as follows:

			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Receiveda			Cash Collateral Received		Net Amount (Not less than zero)
Counterparty
BOFA		$    33,114		$(33,114	)		$—			$—		$—
BONY		41,866		(41,866	)		—			—		—
HSBK		903,036		(352,858	)		(486,261	)		—		63,917
SSBT		881,199		(84,222	)		(781,394	)		—		15,583
UBSW		124,889		(124,889	)		—			—		—
Total		$1,984,104		$(636,949	)		$(1,267,655	)		$—		$79,500

At June 30, 2020, OTC derivative liabilities, which may be offset against OTC derivative assets and collateral pledged to the counterparty, are as follows:

			Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments Available for Offset			Financial Instruments Collateral Pledgedb,c			Cash Collateral Pledged		Net Amount (Not less than zero)
Counterparty
BOFA		$    256,779		$  (33,114	)		$(223,665	)		$  —		$        —
BONY		141,916		(41,866	)		(100,050	)		—		—
HSBK		352,858		(352,858	)		—			—		—
SSBT		84,222		(84,222	)		—			—		—
UBSW		379,410		(124,889	)		(211,868	)		—		42,653
Total		$1,215,185		$(636,949	)		$(535,583	)		$  —		$42,653

^aAt June 30, 2020 the Fund received U.K. Treasury Bonds and U.S. Treasury Bills, Bonds and Notes as collateral for derivatives.

^bSee the accompanying Statement of Investments for securities pledged as collateral for derivatives.

^cIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit the collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.

See Note 1(c) regarding derivative financial instruments.

See Abbreviations on page 34.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Franklin Mutual Financial Services Fund (continued)

11. Holdings of 5% Voting Securities of Portfolio Companies

The 1940 Act defines “affiliated companies” to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. During the period ended June 30, 2020, investments in “affiliated companies” were as follows:

Name of Issuer	Value at Beginning of Period		Purchases		Sales		Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Value at End of Period		Number of Shares Held at End of Period		Dividend Income
Non-Controlled Affiliates
AB&T Financial Corp. (Value is 0.0%† of Net Assets)		$109,658		$—		$—		$—		$(23,740	)		$85,918		226,100		$574

^†Rounds to less than 0.1% of net assets.

12. Credit Facility

The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 5, 2021. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.

Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended June 30, 2020, the Fund did not use the Global Credit Facility.

13. 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.

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Franklin Mutual Financial Services Fund (continued)

A summary of inputs used as of June 30, 2020, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:

	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:a
Equity Investments:
Banks	$	39,627,270	$	69,787,447	$	—	$	109,414,717
Capital Markets		—		20,548,450		—		20,548,450
Consumer Finance		9,695,817		1,716,848		—		11,412,665
Diversified Financial Services		14,739,067		5,763,919		—		20,502,986
Household Durables		—		6,751,424		—		6,751,424
Insurance		54,303,065		48,103,316		—		102,406,381
Real Estate Management & Development		—		4,471,894		—		4,471,894
Thrifts & Mortgage Finance		—		3,290,038		—		3,290,038
Short Term Investments		14,999,313		4,300,000		—		19,299,313
Total Investments in Securities	$	133,364,532	$	164,733,336	$	—	$	298,097,868
Other Financial Instruments:
Futures Contracts	$	391,223	$	—	$	—	$	391,223
Forward Exchange Contracts		—		1,984,104		—		1,984,104
Total Other Financial Instruments	$	391,223	$	1,984,104	$	—	$	2,375,327
Liabilities:
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	1,215,185	$	—	$	1,215,185

^aFor detailed categories, see the accompanying Statement of Investments.

14. New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provides optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank-offered based reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management is currently evaluating the impact, if any, of applying this ASU.

15. 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.

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Franklin Mutual Financial Services Fund (continued)

Abbreviations

Counterparty		Currency		Selected Portfolio
BOFA	Bank of America Corp.	EUR	Euro	FHLB     Federal Home Loan Bank
BONY	The Bank of New York Mellon Corp.	GBP	British Pound
HSBK	HSBC Bank PLC	USD	United States Dollar
SSBT	State Street Bank and Trust Co., N.A.
UBSW	UBS AG

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Shareholder Information

Board Approval of Investment

Management Agreements

FRANKLIN MUTUAL SERIES FUNDS

Franklin Mutual Financial Services Fund

(Fund)

The Board of Trustees (Board), including a majority of trustees that are not “interested persons” as such term is defined in section 2(a)(19) of the Investment Company Act of 1940 (hereinafter referred to as “independent trustees”), at a meeting held on May 14, 2020, unanimously approved the renewal of the Fund’s investment management agreement. Prior to a meeting of all of the trustees for the purpose of considering such renewal, the independent trustees participated in two other meetings held in connection with the renewal process. Throughout the process, the independent trustees received assistance and advice from and met separately with independent counsel. The independent trustees met with and interviewed officers of the investment manager (including portfolio managers), the transfer agent and shareholder services group and the distributor. In approving the renewal of the investment management agreement for the Fund, the Board, including the independent trustees, determined that the investment management fee structure was fair and reasonable and that continuance of the agreement was in the best interests of the Fund and its shareholders.

In reaching their decision on the investment management agreement, the trustees took into account information furnished throughout the year at regular Board meetings, as well as information specifically requested and furnished for the renewal process, which culminated in the meetings referred to above for the specific purpose of considering such agreement. Information furnished throughout the year included, among others, reports on the Fund’s investment performance, expenses, portfolio composition, portfolio brokerage execution, client commission arrangements, derivatives, securities lending, asset segregation, portfolio turnover, Rule 12b-1 plan, distribution, shareholder servicing, legal and compliance matters, pricing of securities, sales and redemptions, and marketing support payments made to financial intermediaries, as well as a third-party survey of transfer agent fees charged to funds within the Franklin Templeton Investments (FT) complex in comparison with those charged to other fund complexes deemed comparable. Also, related financial statements and other information about the scope and quality of services provided by the investment manager and its affiliates and enhancements to

such services over the past year were provided. In addition, the trustees received periodic reports throughout the year and during the renewal process relating to compliance with the Fund’s investment policies and restrictions. During the renewal process, the independent trustees considered the investment manager’s methods of operation within the Franklin Templeton group and its activities on behalf of other clients. The Board also noted that it received an annual report on all payments made by FT or the Fund to financial intermediaries engaged in the sale of Fund shares, as well as a memorandum relating to third-party servicing arrangements in response to a Guidance Update from the U.S. Securities and Exchange Commission (SEC) relating to mutual fund distribution and sub-accounting fees.

The information obtained by the trustees during the renewal process also included a special report prepared by Broadridge Financial Solutions, Inc., an independent third-party analyst that utilizes data from Lipper, Inc. (“Lipper”), comparing the Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper (Broadridge Section 15(c) Report). The trustees reviewed the Broadridge Section 15(c) Report and its usefulness in the renewal process with respect to matters such as comparative fees, expenses, expense ratios, performance and volatility. They concluded that the report continues to be a reliable resource in the performance of their duties.

In addition, the trustees received a Profitability Study (Profitability Study) prepared by management discussing the profitability to FT from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Over the past year, the Board and counsel to the independent trustees continued to receive reports on management’s handling of recent regulatory inquiries and pending legal actions against the investment manager and its affiliates. The independent trustees were satisfied with the actions taken to date by management in response to such regulatory and legal matters.

The trustees reviewed the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of the investment manager. As part of this review, particular attention was given to management’s diligent risk management program, including continual monitoring and management of cybersecurity, liquidity and counterparty credit risk, and attention given to derivatives and other complex instruments that are held and expected to be held by the Fund and how such instruments

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are used to carry out the Fund’s investment goal(s). The Board also took into account, among other things, management’s efforts in establishing a global credit facility for the benefit of the Fund and other accounts managed by FT to provide a source of cash for temporary and emergency purposes or to meet unusual redemption requests as well as the strong financial position of the investment manager’s parent company and its commitment to the mutual fund business. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the mutual fund industry, such as cybersecurity and liquidity risk management. The Board also recognized management’s commitment to facilitating Board oversight of particular areas, including derivatives and payments to intermediaries, by enhanced reporting.

In addition to the above and other matters considered by the trustees throughout the course of the year, the following discussion relates to certain primary factors relevant to the Board’s decision. This discussion of the information and factors considered by the Board (including the information and factors discussed above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual trustees may have assigned different weights to various factors.

NATURE,EXTENT AND QUALITY OF SERVICES. The trustees reviewed the nature, extent and quality of the services provided, and to be provided, by the investment manager. The trustees cited the investment manager’s ability to implement the Fund’s disciplined value investment approach and its long-term relationship with the Fund as reasons that shareholders choose to invest, and remain invested, in the Fund. The trustees reviewed the Fund’s portfolio management team, including its performance, staffing, skills and compensation program. With respect to portfolio manager compensation, management assured the trustees that the Fund’s long-term performance is a significant component of incentive-based compensation and noted that a portion of a portfolio manager’s incentive-based compensation is paid in shares of pre-designated funds from the portfolio manager’s fund management area. The trustees noted that the portfolio manager compensation program aligned the interests of the portfolio managers with that of shareholders of the Fund. The trustees discussed with management various other products, portfolios and entities

that are advised by the investment manager and the allocation of assets and expenses among and within them, as well as their relative fees and reasons for differences with respect thereto and any potential conflicts. During regular Board meetings and the aforementioned meetings of the independent trustees, the trustees received reports and presentations on the investment manager’s best execution trading policies. The trustees considered periodic reports provided to them showing that the investment manager complied with the investment policies and restrictions of the Fund as well as other reports periodically furnished to the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics covering the investment management personnel, the adherence to fair value pricing procedures established by the Board and the accuracy of net asset value calculations. The Board noted the extent of the benefits provided to Fund shareholders from being part of the Franklin Templeton group of funds, including the right to exchange investments between funds (same class) without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings of other funds to obtain reduced sales charges. The Board considered the investment manager’s significant efforts in developing and implementing compliance procedures established in accordance with SEC and other requirements.

The Board considered the nature, extent and quality of the services to be provided under the Fund’s other service agreements to determine that, on an overall basis, Fund shareholders were well served. In this connection, the Board also took into account transfer agent and shareholder services provided to Fund shareholders by an affiliate of the investment manager, noting continuing expenditures by management to increase and improve the scope of such services and favorable periodic reports on shareholder services conducted by independent third parties. While such considerations directly affected the trustees’ decision in renewing the Fund’s transfer agent and shareholder services agreement, the Board also considered these commitments as incidental benefits to Fund shareholders deriving from the investment management relationship.

Based on their review, the trustees were satisfied with the nature and quality of the overall services provided, and to be provided, by the investment manager and its affiliates to the Fund and its shareholders and were confident in the abilities of the management team to continue the disciplined value investment approach of the Fund and to provide quality services to the Fund and its shareholders.

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INVESTMENT PERFORMANCE. The trustees reviewed and placed significant emphasis on the investment performance of the Fund over the one-, three-, five- and 10-year periods ended December 31, 2019. They considered the history of performance of the Fund relative to various benchmarks. As part of their review, they inquired of management regarding benchmarks, style drift and restrictions on permitted investments. Consideration was also given to performance in the context of available levels of cash during the periods.

The trustees had meetings during the year, including the meetings referred to above held in connection with the renewal process, with the Fund’s portfolio managers to discuss performance and the management of the Fund. In addition to the materials provided by management in connection with the renewal process, the independent trustees requested throughout the year (and received) additional presentations from the investment manager and senior management of FT regarding the performance of the investment manager and the Fund. As part of these presentations, the investment manager and senior management of FT reviewed enhancements that have been made, and are being made, to the investment manager’s investment process. In addition, it was noted that senior management of FT is conducting a review of the investment manager and the Fund and will report the results thereof to the independent trustees when completed.

Particular attention in assessing performance was given to the Broadridge Section 15(c) Report. That report showed the investment performance of the Fund (Class A shares) in comparison to other funds determined comparable by Lipper.

The comparable funds to the Fund, as chosen by Lipper, included all retail and institutional global financial services funds. The Fund had total returns in the second-lowest performing quintile for the one-year period ended December 31, 2019, and had annualized total returns for the three- and five-year periods in the lowest and second-lowest performing quintiles, respectively. The trustees noted that the Fund’s total return on an annualized basis for the 10-year period ended December 31, 2019 was in the middle performing quintile. The trustees also compared Fund performance to other industry benchmarks, including measures of risk-adjusted performance of a fund, as part of their evaluation of investment performance. The trustees discussed with management the reasons for the relative underperformance for the one-, three-, and five-year periods ended December 31, 2019. While disappointed with the relative underperformance of the Fund, the Board did not

believe that any changes with respect to the Fund were warranted at the time, particularly as the enhancements to the investment manager’s investment process continue to be implemented and as the review being conducted by senior management of FT is in process. The Board noted that it would continue to monitor future performance.

COMPARATIVE EXPENSES AND MANAGEMENT PROFITABILITY. The trustees considered the cost of the services provided and to be provided and the profits realized by the investment manager and its affiliates from their respective relationships with the Fund. As part of the renewal process, the trustees explored with management the trends in expense ratios over the past three fiscal years and the reasons for any increases in the Fund’s expense ratios (or components thereof). In considering the appropriateness of the management fee and other expenses charged to the Fund, the Board took into account various factors including investment performance and matters relating to Fund operations, including, but not limited to, the quality and experience of its portfolio managers and research staff. Consideration was also given to a comparative analysis in the Broadridge Section 15(c) Report of the investment management fee and total expense ratio of the Fund in comparison with those of a group of other funds selected by Lipper as its appropriate Lipper expense group. Lipper expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Lipper to be an appropriate measure of comparative expenses.

In reviewing comparative costs, emphasis was given to the Fund’s contractual management fee in comparison with the contractual management fee that would have been charged by other funds within its Lipper expense group assuming they were similar in size to the Fund, as well as the actual total expenses of the Fund in comparison with those of its Lipper expense group. The Lipper contractual management fee analysis includes administrative charges as being part of the management fee, and total expenses, for comparative consistency, are shown by Lipper for Fund Class A shares.

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The Fund’s contractual management fee rate was in the second-most expensive quintile of its Lipper expense group and its total expenses were also in the second-most expensive quintile of such group. The Board noted that the Fund’s total expenses were within 1 basis point of its Lipper expense group median. The Board found such comparative fees and expenses to be acceptable in view of factors relating to the Fund’s operations, such as the quality and experience of its portfolio managers.

The trustees also reviewed the Profitability Study addressing profitability of Franklin Resources, Inc., from its overall U.S. fund business, as well as profitability to the Fund’s investment manager and its affiliates, from providing investment management and other services to the Fund during the 12-month period ended September 30, 2019, the most recent fiscal year-end of Franklin Resources, Inc. The trustees reviewed the basis on which such reports are prepared and the cost allocation methodology utilized in the Profitability Study, it being recognized that allocation methodologies may each be reasonable while producing different results. In this respect, the Board noted that the reasonableness of the cost allocation methodologies was reviewed by independent accountants on an every other year basis.

The independent trustees met with management to discuss the Profitability Study. This included, among other things, a comparison of investment management income with investment management expenses of the Fund; comparison of underwriting revenues and expenses; the relative relationship of investment management and underwriting expenses; shareholder servicing profitability; economies of scale; and the relative contribution of the Fund to the profitability of the investment manager and its parent. In discussing the Profitability Study with the Board, the investment manager stated its belief that the costs incurred in establishing the infrastructure necessary to operate the type of mutual fund operations conducted by it and its affiliates may not be fully reflected in the expenses allocated to the Fund in determining its profitability.

The Board also took into account management’s expenditures in improving shareholder services provided to the Fund, as well as the need to meet additional regulatory and compliance requirements. The trustees also considered the extent to which the investment manager may derive ancillary benefits from Fund operations, including those derived from economies of scale, discussed below, the allocation of Fund brokerage and the use of commission dollars to pay for research and other similar services.

Based upon their consideration of all these factors, the trustees determined that the level of profits realized by the investment manager and its affiliates in providing services to

the Fund was not excessive in view of the nature, quality and extent of services provided.

ECONOMIES OF SCALE. The Board considered economies of scale realized by the investment manager and its affiliates as the Fund grows larger and the extent to which they are shared with Fund shareholders, as for example, in the level of the investment management fee charged, in the quality and efficiency of services rendered and in increased capital commitments benefiting the Fund directly or indirectly. While recognizing that any precise determination is inherently subjective, the trustees noted that, based upon the Profitability Study, as some funds increase in size, at some point economies of scale may result in the investment manager realizing a larger profit margin on investment management services provided to such a fund. The trustees also noted that benefits of economies of scale will be shared with Fund shareholders due to the decline in the effective investment management fee rate as breakpoints are achieved by the Fund.

The trustees noted that breakpoints had been instituted as part of the Fund’s investment management fee and that the Board regularly evaluates whether additional breakpoints are appropriate. The trustees assessed the savings to shareholders resulting from such breakpoints and believed they were, and continue to be, appropriate and they agreed to continue to monitor the appropriateness of the breakpoints. The trustees also considered the effects an increase in assets under management would have on the investment management fee and expense ratio of the Fund. To the extent further economies of scale may be realized by the investment manager and its affiliates, the Board believed the investment management fees provide a sharing of benefits with the Fund and its shareholders.

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Liquidity Risk Management Program

The Funds have 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 program is designed to assess and manage each Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during 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. The Funds’ Board of Trustees approved the appointment of the Director of Liquidity Risk within the Investment Risk Management Group (the “IRMG”) as the Administrator of the LRMP. The IRMG maintains the Investment Liquidity Committee (the “ILC”) to provide oversight and administration of policies and procedures governing liquidity risk management for FT products and portfolios. The ILC includes representatives from Franklin Templeton’s Risk, Trading, Global Compliance, Investment Compliance, Investment Operations, Valuation Committee and Product Management groups.

The LRMP Administrator Annual Report was presented to the Fund(s) Board of Trustees at their meetings in May 2020. The report covered the adequacy and effectiveness of the program during the period December 1, 2018 to December 31, 2019 (the “covered period”). The 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. In addition, the LRMP Administrator presented the Fund Board of Trustees an update on liquidity during the first quarter of 2020 in relation to the COVID-19 pandemic.

During the reporting period, the Fund maintained a high level of liquid assets that are defined under the Liquidity Rule as “Highly Liquid Investments.” As a result, the Fund was designated a “Primarily Highly Liquid Fund” as defined under the Liquidity Rule and has not adopted a “Highly Liquid

Investment Minimum.” A Highly Liquid Investment is 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.

There can be no assurance that the program will achieve its objectives in the future. Please refer to your Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an investment in the Fund may be subject.

Proxy Voting Policies and Procedures

The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust, on behalf of the Fund, files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year as an exhibit to its report on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

Householding of Reports and Prospectuses

You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports

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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.

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Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.

	Semiannual Report and Shareholder Letter
	Franklin Mutual Financial Services Fund
	Investment Manager	Distributor	Shareholder Services
	Franklin Mutual Advisers, LLC	Franklin Templeton Distributors, Inc.	(800) 632-2301 - (Class A, C &
		(800) DIAL BEN® / 342-5236	R6)
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© 2020 Franklin Templeton Investments. All rights reserved. 479 S 08/20

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 Edward I. Altman, Ann Torre Bates and David W. Niemiec and they are “independent” as defined under the relevant Securities and Exchange Commission Rules and Releases.

Item 4. Principal Accountant Fees and Services. N/A

Item 5. Audit Committee of Listed Registrants. N/A

Item 6. Schedule of Investments. N/A

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A

Item 8. Portfolio Managers of Closed-End Management Investment Companies. N/A

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. N/A

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.

Item 11. Controls and Procedures.

(a)    Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.

(b)    Changes in Internal Controls. There have been no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Company. N/A

Item 13. Exhibits.

(a)(1) Code of Ethics

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer

(b) Certifications pursuant to Section  906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FRANKLIN MUTUAL SERIES FUNDS

By	S\MATTHEW T. HINKLE
	Matthew T. Hinkle
	Chief Executive Officer – Finance and Administration
Date	August 25, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By	S\MATTHEW T. HINKLE
	Matthew T. Hinkle
	Chief Executive Officer – Finance and Administration
Date	August 25, 2020
By	S\ROBERT G. KUBILIS
	Robert G. Kubilis
	Chief Financial Officer and Chief Accounting Officer
Date	August 25, 2020