UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-05387

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: 12/31/21

Item 1. Reports to Stockholders.

a.)

The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1.)

b.)

Include a copy of each notice transmitted to stockholders in reliance on Rule 30e-3 under the Act (17 CFR 270.30e-3) that contains disclosures specified by paragraph (c)(3) of that rule.

Not Applicable

.

ANNUAL

REPORT

AND

SHAREHOLDER

LETTER

Franklin

Mutual

European

Fund

A

Series

of

Franklin

Mutual

Series

Funds

December

31,

2021

Sign

up

for

electronic

delivery

at

franklintempleton.com/edelivery

Not

FDIC

Insured

May

Lose

Value

No

Bank

Guarantee

franklintempleton.com

Annual

Report

1

SHAREHOLDER

LETTER

Dear

Franklin

Mutual

European

Fund

Shareholder:

After

a

difficult

period

of

lockdowns,

anxiety

and

grief,

the

start

of

2021

brought

much

needed

optimism

with

authorities

in

the

United

States

and

Europe

approving

the

first

vaccines

for

emergency

use

late

in

the

prior

year.

The

rotation

into

many

“reopening”

names

meant

companies

which

had

benefited

from

consumer

behavior

shifts

during

the

lockdown,

such

as

online

payment

processors,

online

retailers,

and

remote

worker

infrastructure

providers,

fell

out

of

favor.

Instead,

companies

positioned

to

benefit

from

economic

reopening,

such

as

hotels,

casinos,

restaurants,

and

other

leisure

companies,

received

a

boost.

Smaller

capitalization

companies,

which

tend

to

be

more

sensitive

to

the

economic

cycle,

also

outperformed

their

larger

capitalization

counterparts

in

the

first

half

of

the

period.

By

the

late

spring

of

2021,

massive

amounts

of

stimulus

provided

by

central

banks,

combined

with

increased

consumer

spending

and

supply

chain

difficulties,

led

to

building

inflationary

pressure

and

rising

interest

rates.

While

this

propelled

some

areas

of

the

market

upward,

such

as

the

financials

and

energy

sectors,

growing

investor

concern

about

rising

interest

rates

stoked

pockets

of

volatility.

Furthermore,

divergence

in

countries’

vaccination

rates

constrained

a

widespread

economic

reopening

as

the

highly

contagious

COVID-19

Delta

variant

forced

some

countries

to

reinstate

business

and

travel

restrictions.

Many

European

countries

struggled

with

a

third

wave

of

COVID-19

outbreaks

in

April

and

early

May

and

major

economic

powerhouses,

such

as

Germany,

France

and

Italy,

implemented

additional

lockdown

measures

during

these

months,

temporarily

hampering

recovery.

However,

as

the

vaccine

rollout

accelerated

across

the

continent,

restrictions

lifted.

Mid-year,

the

European

Union

(EU)

developed

a

digital

COVID

certificate,

which

would

help

facilitate

travel

for

people

across

the

Union.

In

the

late

summer,

the

EU

surpassed

several

other

developed

countries,

including

the

United

States,

in

the

number

of

vaccine

doses

administered

per

100

people.

During

the

period,

investor

focus

was

also

on

the

European

Recovery

Fund

and

the

potential

beneficiaries.

The

funds

are

expected

to

be

distributed

to

those

countries

that

were

disproportionately

impacted

by

the

pandemic

to

help

stabilize

their

fiscal

situation.

The

Recovery

Fund

is

also

being

used

to

accelerate

the

transition

to

green

energy

and

other

environmentally

friendly

initiatives,

something

we

think

will

be

good

for

the

European

economy.

Volatility

increased

in

September

2021

and

markets

fell

over

the

final

weeks

of

the

third

calendar

quarter,

as

continued

supply

chain

disruptions,

inflationary

pressures

and

hawkish

central

bank

commentary

stoked

investor

anxiety.

Markets

stabilized

and

rebounded

in

October

with

some

indices

reaching

new

records.

However,

high

volatility

crept

in

again

in

late

November

as

the

COVID-19

Omicron

variant

emerged,

but

it

was

short

lived.

At

year-end,

12-month

returns

for

both

growth

and

value

European

equities

were

strong.

Not

all

progress

is

evidenced

by

a

steady

march

forward.

Ongoing

uncertainties

surrounding

COVID-19,

supply

chain

disruptions

and

inflation

continued

to

affect

financial

markets.

As

these

elements

influence

investor

behavior,

pockets

of

volatility

may

continue

to

crop

up.

However,

market

volatility

can

often

present

opportunities.

As

an

organization,

Franklin

Mutual

Series

remains

dedicated

to

using

fundamental

research,

coupled

with

a

long-term

approach,

to

identify

attractively

valued

companies

that

can

offer

both

meaningful

upside

potential

and

a

degree

of

downside

protection

in

periods

of

financial

market

turbulence.

On

the

following

pages,

the

portfolio

management

team

reviews

investment

decisions

made

during

the

past

12

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,

Christian

Correa,

CFA

President

and

Chief

Investment

Officer

Franklin

Mutual

Advisers,

LLC

This

letter

reflects

our

analysis

and

opinions

as

of

December

31,

2021,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

franklintempleton.com

Annual

Report

2

Contents

Annual

Report

Franklin

Mutual

European

Fund

3

Performance

Summary

6

Your

Fund’s

Expenses

9

Financial

Highlights

and

Statement

of

Investments

10

Financial

Statements

20

Notes

to

Financial

Statements

24

Report

of

Independent

Registered

Public

Accounting

Firm

38

Tax

Information

39

Board

Members

and

Officers

40

Shareholder

Information

45

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Annual

Report

ANNUAL

REPORT

Franklin

Mutual

European

Fund

This

annual

report

for

Franklin

Mutual

European

Fund

covers

the

fiscal

year

ended

December

31,

2021

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

capital

appreciation,

which

may

occasionally

be

short

term.

Its

secondary

goal

is

income.

The

Fund

normally

invests

at

least

80%

of

its

net

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

Fund

may

invest

up

to

20%

of

its

total

assets

in

securities

of

U.S.

issuers

and

in

securities

of

issuers

from

the

Middle

East

and

the

remaining

regions

of

the

world.

The

Geographic

Composition

table

on

this

page

lists

the

leading

countries

where

the

Fund

invests.

Performance

Overview

The

Fund’s

Class

Z

shares

posted

a

+16.49%

cumulative

total

return

for

the

12

months

ended

December

31,

2021.

For

comparison,

the

Fund’s

primary

benchmark,

the

MSCI

Europe

Value

Index-NR

(Local

Currency),

which

measures

the

performance

of

stocks

exhibiting

overall

value

style

characteristics

in

European

developed

markets,

posted

a

+22.61%

cumulative

total

return,

and

the

Fund’s

secondary

benchmark,

the

MSCI

Europe

Value

Index-NR

(USD),

posted

a

+16.30%

cumulative

total

return.

1

You

can

find

more

of

the

Fund’s

performance

data

in

the

Performance

Summary

beginning

on

page

6

.

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-NR

(USD),

posted

a

+18.54%

total

return

for

the

12

months

ended

December

31,

2021.

1

Global

equities

benefited

from

monetary

and

fiscal

stimulus

measures,

easing

COVID-19

pandemic

restrictions

in

certain

regions

and

the

development

of

treatments

and

vaccines.

However,

the

Chinese

government’s

imposition

of

additional

restrictions

on

some

businesses

pressured

Asian

and

global

emerging

market

stocks.

Additionally,

the

spread

of

the

Delta

and

Omicron

variants

and

higher

inflation

in

an

environment

of

persistent

supply-chain

disruptions

and

wage

increases

hindered

global

equities

at

certain

points

during

the

12-month

period.

The

economic

recovery

in

the

eurozone

was

slow,

as

quarter-over-quarter

GDP

growth

contracted

in

2021’s

first

quarter

before

returning

to

growth

in

2021’s

second

and

third

quarters.

GDP

growth

rates

were

initially

sluggish

among

the

region’s

largest

economies,

although

most

showed

signs

of

improvement

later

in

the

12-month

period.

Business

activity

growth

also

helped

European

developed

market

equities,

as

measured

by

the

MSCI

Europe

Index-NR

(USD),

to

post

a

+16.30%

total

return

for

the

12

months

under

review.

1

However,

in

November

2021,

the

annual

inflation

rate

in

the

eurozone

reached

the

highest

level

since

the

introduction

of

the

euro,

and

the

prospect

of

energy

shortages

during

the

winter

months

tempered

investor

optimism.

Geographic

Composition

12/31/21

%

of

Total

Net

Assets

Germany

23.0%

France

19.9%

United

Kingdom

18.8%

Netherlands

14.0%

Switzerland

6.4%

United

States

3.1%

Greece

3.0%

Spain

2.9%

Ireland

2.1%

Belgium

2.0%

Short-Term

Investments

&

Other

Net

Assets

4.8%

1.

Source:

Morningstar.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

15

.

Franklin

Mutual

European

Fund

4

franklintempleton.com

Annual

Report

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

During

2021,

the

Fund

underperformed

its

benchmark,

as

stock

selection

and

an

underweight

in

financials,

and

stock

selection

in

materials

and

energy,

detracted

from

relative

results.

Conversely,

an

underweight

in

utilities,

an

overweight

in

information

technology

(IT)

and

stock

selection

in

consumer

discretionary

contributed

positively

to

relative

results.

During

the

12-month

period,

investments

that

detracted

from

Fund

performance

included

Accor,

Credit

Suisse

Group

(not

held

at

period-end)

and

Direct

Line

Insurance

Group.

France-based

high-end

hotel

chain

operator

Accor

weighed

on

relative

performance

as

the

emergence

of

the

Delta

coronavirus

variant

has

continued

to

keep

travel,

particularly

in

Europe,

below

pre-pandemic

levels.

We

believe

Accor’s

strong

position

in

Europe

and

good

pipeline

of

room

growth

positions

it

well

for

an

eventual

pickup

in

travel

over

time.

Furthermore,

the

company

continues

to

transition

to

a

more

asset-light

business

model,

in

line

with

many

of

its

peers.

Switzerland-based

Credit

Suisse

Group

detracted

from

relative

returns

after

dealing

with

several

scandals

earlier

in

the

year

including

exposure

to

the

collapse

of

Greensill

(not

a

Fund

holding),

a

supply

chain

finance

provider,

and

the

failure

of

prime

broker

client

Archegos

Capital

Management

(not

a

Fund

holding).

As

a

result,

the

shares

are

trading

at

a

significant

discount

to

peers,

despite

the

company’s

premier

wealth

management

platform

with

strong

positions

in

Europe,

Asia,

and

Latin

America.

The

company’s

new

management

team

is

focused

on

turning

around

the

business

and

further

building

its

wealth

management

operations

in

Asia

and

the

Middle

East.

Personal

and

small

business

general

insurer

Direct

Line

Insurance

Group

detracted

from

relative

returns

during

the

year

amid

concerns

about

a

pricing

review

from

regulators.

Nonetheless,

the

insurance

business

remains

robust

as

the

pandemic

has

led

to

fewer

claims

overall,

particularly

in

the

motor

vehicle

business,

and

its

cash

generation

remains

strong

as

evidenced

by

its

recent

dividend

increase.

Top

positive

contributors

to

performance

during

the

12-month

period

included

Cie

Financière

Richemont,

Capgemini

and

ING

Groep.

Capgemini

and

ING

Groep

are

listed

among

the

Fund’s

largest

positions

in

the

Top

10

Holdings

table

on

page

5.

Swiss

luxury

goods

company

Cie

Financière

Richemont

boosted

relative

performance

during

the

period

following

a

strong

first-half

earnings

update.

The

company’s

operating

results

were

better

than

anticipated

with

robust

growth

in

its

jewelry

business

amid

the

ongoing

recovery

from

the

impact

of

COVID-19

on

its

business

in

2020.

The

company

has

a

leading

portfolio

of

jewelry

brands

and,

in

our

view,

can

deliver

consistent

long-term

growth,

which

should

help

improve

investor

sentiment

over

time.

French

IT

services

company

Capgemini

contributed

to

relative

returns

over

the

period

on

strong

financial

results.

The

company

issued

a

robust

trading

statement

during

the

fourth

quarter

in

which

it

raised

guidance

for

the

full

year,

despite

facing

a

tough

comparison

with

the

year-earlier

Top

10

Industries

12/31/21

%

of

Total

Net

Assets

a

Insurance

9.5%

Banks

9.4%

Pharmaceuticals

7.5%

Diversified

Telecommunication

Services

5.9%

Oil,

Gas

&

Consumable

Fuels

5.2%

Trading

Companies

&

Distributors

4.9%

Textiles,

Apparel

&

Luxury

Goods

4.7%

Aerospace

&

Defense

4.5%

Software

4.2%

Beverages

4.1%

Franklin

Mutual

European

Fund

5

franklintempleton.com

Annual

Report

period.

Capgemini

reported

that

bookings

climbed

by

strong

double

digits

due

to

accelerating

demand

for

digital

and

cloud

services.

The

results

reinforced

our

view

that

Capgemini

is

well-positioned

to

capture

structural

growth

in

demand

for

digital

IT

services.  

ING

Groep,

a

Dutch

financial

services

firm,

supported

relative

performance

following

upbeat

financial

results

during

the

year.

The

company

benefited

from

lower-than-expected

credit

loss

provisions

and

higher

fees

and

reduced

costs.

Net

interest

income

was

down,

however.

ING

expects

to

see

ongoing

growth

in

fees

as

it

adds

new

services

and

reprices

existing

ones.

Furthermore,

the

bank

has

ample

excess

capital

that

we

expect

will

continue

to

be

returned

to

shareholders.

During

the

period,

the

Fund

held

currency

forwards

and

futures,

seeking

to

substantially

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

the

U.S.

dollar

rose

against

most

currencies

during

the

period.

As

fellow

shareholders,

we

found

recent

relative

performance

disappointing,

but

our

strategy

of

seeking

undervalued

stocks

can

lag

the

European

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

European

Fund.

We

look

forward

to

continuing

to

serve

your

investment

needs.

Katrina

Dudley,

CFA

Co-Lead

Portfolio

Manager

Mandana

Hormozi

Co-Lead

Portfolio

Manager

Todd

Ostrow

Assistant

Portfolio

Manager

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

December

31,

2021,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Top

10

Holdings

12/31/21

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

Novartis

AG

3.8%

Pharmaceuticals,

Switzerland

GlaxoSmithKline

plc

3.7%

Pharmaceuticals,

United

Kingdom

BNP

Paribas

SA

3.4%

Banks,

France

NN

Group

NV

3.3%

Insurance,

Netherlands

ING

Groep

NV

3.1%

Banks,

Netherlands

Cie

Generale

des

Etablissements

Michelin

SCA

3.1%

Auto

Components,

France

Hellenic

Telecommunications

Organization

SA

3.0%

Diversified

Telecommunication

Services,

Greece

ASR

Nederland

NV

3.0%

Insurance,

Netherlands

Deutsche

Telekom

AG

3.0%

Diversified

Telecommunication

Services,

Germany

Capgemini

SE

2.9%

IT

Services,

France

Performance

Summary

as

of

December

31,

2021

Franklin

Mutual

European

Fund

6

franklintempleton.com

Annual

Report

The

performance

table

and

graphs

do

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

12/31/21

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A:

5.50%

maximum

initial

sales

charge;

For

other

share

classes,

visit

franklintempleton.com

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

1

Average

Annual

Total

Return

2

–

Z

1-Year

+16.49%

+16.49%

5-Year

+31.14%

+5.57%

10-Year

+93.84%

+6.84%

A

3

1-Year

+16.23%

+9.84%

5-Year

+29.52%

+4.12%

10-Year

+88.70%

+5.96%

See

page

8

for

Performance

Summary

footnotes.

Franklin

Mutual

European

Fund

Performance

Summary

7

franklintempleton.com

Annual

Report

See

page

8

for

Performance

Summary

footnotes.

Total

Return

Index

Comparison

for

a

Hypothetical

$10,000

Investment

Total

return

represents

the

change

in

value

of

an

investment

over

the

periods

shown.

It

includes

any

applicable

maximum

sales

charge,

Fund

expenses,

account

fees

and

reinvested

distributions.

The

unmanaged

indexes

include

reinvestment

of

any

income

or

distributions.

They

differ

from

the

Fund

in

composition

and

do

not

pay

management

fees

or

expenses.

One

cannot

invest

directly

in

an

index.

Class

Z

(

1/1/12–12/31/21)

Class

A

(1/1/12–12/31/21)

Franklin

Mutual

European

Fund

Performance

Summary

8

franklintempleton.com

Annual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

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.

Events

such

as

the

spread

of

deadly

diseases,

disasters,

and

financial,

political

or

social

disruptions,

may

heighten

risks

and

adversely

affect

performance.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

2.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

3.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

4.

Source:

Morningstar.

The

MSCI

Europe

Value

Index-NR

(Local

Currency

and

USD)

is

a

market

capitalization-weighted

index

designed

to

measure

the

performance

of

stocks

exhibiting

overall

value

style

characteristics

in

European

developed

markets.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

5.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Distributions

(1/1/21–12/31/21)

Share

Class

Net

Investment

Income

Z

$0.7708

A

$0.7177

C

$0.4936

R

$0.6703

R6

$0.7904

Total

Annual

Operating

Expenses

5

Share

Class

Z

1.08%

A

1.33%

Your

Fund’s

Expenses

Franklin

Mutual

European

Fund

9

franklintempleton.com

Annual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6

).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

7/1/21

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

a

Net

Annualized

Expense

Ratio

2

Z

$1,000

$1,033.40

$5.48

$1,019.81

$5.45

1.07%

A

$1,000

$1,031.90

$6.76

$1,018.55

$6.72

1.32%

C

$1,000

$1,027.80

$10.55

$1,014.80

$10.48

2.06%

R

$1,000

$1,030.80

$8.05

$1,017.28

$8.00

1.57%

R6

$1,000

$1,033.50

$5.14

$1,020.15

$5.11

1.00%

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

European

Fund

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

10

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

Z

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$19.49

$21.31

$17.89

$20.93

$19.20

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.58

0.56

c

0.54

0.49

0.35

Net

realized

and

unrealized

gains

(losses)

...........

2.61

(1.92)

3.46

(2.80)

1.65

Total

from

investment

operations

....................

3.19

(1.36)

4.00

(2.31)

2.00

Less

distributions

from:

Net

investment

income

..........................

(0.77)

(0.46)

(0.58)

(0.73)

(0.27)

Net

asset

value,

end

of

year

.......................

$21.91

$19.49

$21.31

$17.89

$20.93

Total

return

....................................

16.49%

(6.23)%

22.28%

(11.12)%

10.45%

Ratios

to

average

net

assets

Expenses

d

,e

....................................

1.07%

f

1.08%

f

1.04%

1.04%

f

1.04%

Expenses

-

incurred

in

connection

with

securities

sold

short

—%

—%

—%

—%

g

—%

Net

investment

income

...........................

2.71%

3.19%

c

2.77%

2.38%

1.75%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$457,644

$450,864

$789,012

$958,149

$1,328,622

Portfolio

turnover

rate

............................

32.03%

24.04%

12.16%

35.42%

17.33%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.30

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.48%.

d

Includes

dividends

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(e).

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

g

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

European

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

11

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$18.91

$20.67

$17.37

$20.33

$18.66

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.51

0.54

c

0.49

0.41

0.31

Net

realized

and

unrealized

gains

(losses)

...........

2.54

(1.91)

3.33

(2.69)

1.58

Total

from

investment

operations

....................

3.05

(1.37)

3.82

(2.28)

1.89

Less

distributions

from:

Net

investment

income

..........................

(0.72)

(0.39)

(0.52)

(0.68)

(0.22)

Net

asset

value,

end

of

year

.......................

$21.24

$18.91

$20.67

$17.37

$20.33

Total

return

d

...................................

16.23%

(6.50)%

21.98%

(11.29)%

10.14%

Ratios

to

average

net

assets

Expenses

e

,f

....................................

1.32%

g

1.33%

g

1.29%

1.29%

g

1.29%

Expenses

-

incurred

in

connection

with

securities

sold

short

—%

—%

—%

—%

h

—%

Net

investment

income

...........................

2.45%

3.14%

c

2.52%

2.13%

1.50%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$281,685

$272,579

$512,218

$564,038

$714,915

Portfolio

turnover

rate

............................

32.03%

24.04%

12.16%

35.42%

17.33%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.44%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Includes

dividends

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(e).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

European

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$19.17

$20.93

$17.56

$20.38

$18.70

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.38

0.38

c

0.35

0.29

0.15

Net

realized

and

unrealized

gains

(losses)

...........

2.54

(1.90)

3.35

(2.72)

1.60

Total

from

investment

operations

....................

2.92

(1.52)

3.70

(2.43)

1.75

Less

distributions

from:

Net

investment

income

..........................

(0.49)

(0.24)

(0.33)

(0.39)

(0.07)

Net

asset

value,

end

of

year

.......................

$21.60

$19.17

$20.93

$17.56

$20.38

Total

return

d

...................................

15.32%

(7.15)%

21.01%

(11.96)%

9.37%

Ratios

to

average

net

assets

Expenses

e

,f

....................................

2.07%

g

2.08%

g

2.04%

2.04%

g

2.04%

Expenses

-

incurred

in

connection

with

securities

sold

short

—%

—%

—%

—%

h

—%

Net

investment

income

...........................

1.83%

2.18%

c

1.77%

1.38%

0.75%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$24,236

$34,693

$61,743

$78,149

$179,123

Portfolio

turnover

rate

............................

32.03%

24.04%

12.16%

35.42%

17.33%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

0.47%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Includes

dividends

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(e).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

European

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

13

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$18.49

$20.27

$17.05

$19.97

$18.35

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.45

0.53

c

0.43

0.35

0.22

Net

realized

and

unrealized

gains

(losses)

...........

2.48

(1.92)

3.27

(2.64)

1.60

Total

from

investment

operations

....................

2.93

(1.39)

3.70

(2.29)

1.82

Less

distributions

from:

Net

investment

income

..........................

(0.67)

(0.39)

(0.48)

(0.63)

(0.20)

Net

asset

value,

end

of

year

.......................

$20.75

$18.49

$20.27

$17.05

$19.97

Total

return

....................................

15.96%

(6.76)%

21.70%

(11.54)%

9.92%

Ratios

to

average

net

assets

Expenses

d

,e

....................................

1.58%

f

1.58%

f

1.54%

1.54%

f

1.54%

Expenses

-

incurred

in

connection

with

securities

sold

short

—%

—%

—%

—%

g

—%

Net

investment

income

...........................

2.21%

3.19%

c

2.27%

1.88%

1.25%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$639

$714

$733

$731

$821

Portfolio

turnover

rate

............................

32.03%

24.04%

12.16%

35.42%

17.33%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.48%.

d

Includes

dividends

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(e).

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

g

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

European

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$19.47

$21.29

$17.87

$20.91

$19.19

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.60

0.64

c

0.69

0.56

0.41

Net

realized

and

unrealized

gains

(losses)

...........

2.60

(1.97)

3.33

(2.85)

1.62

Total

from

investment

operations

....................

3.20

(1.33)

4.02

(2.29)

2.03

Less

distributions

from:

Net

investment

income

..........................

(0.79)

(0.49)

(0.60)

(0.75)

(0.31)

Net

asset

value,

end

of

year

.......................

$21.88

$19.47

$21.29

$17.87

$20.91

Total

return

....................................

16.56%

(6.10)%

22.35%

(10.94)%

10.63%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

d

.....

1.02%

1.00%

0.94%

0.92%

0.88%

Expenses

net

of

waiver

and

payments

by

affiliates

d,e

.....

0.99%

0.97%

0.93%

0.91%

0.88%

Expenses

-

incurred

in

connection

with

securities

sold

short

—%

—%

—%

—%

f

—%

Net

investment

income

...........................

2.78%

3.61%

c

2.88%

2.51%

1.91%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$35,798

$33,407

$44,561

$149,796

$294,660

Portfolio

turnover

rate

............................

32.03

%

24.04%

12.16%

35.42%

17.33%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.30

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.91%.

d

Includes

dividends

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(e).

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Statement

of

Investments,

December

31,

2021

Franklin

Mutual

European

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

15

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

95.1%

Aerospace

&

Defense

4.5%

a

Airbus

SE

...........................................

France

153,607

$

19,637,536

BAE

Systems

plc

.....................................

United

Kingdom

2,234,016

16,645,964

36,283,500

Auto

Components

3.1%

Cie

Generale

des

Etablissements

Michelin

SCA

..............

France

150,695

24,661,963

Banks

9.4%

BNP

Paribas

SA

......................................

France

392,420

27,110,887

CaixaBank

SA

........................................

Spain

8,415,839

22,970,881

ING

Groep

NV

.......................................

Netherlands

1,786,921

24,823,939

74,905,707

Beverages

4.1%

Anheuser-Busch

InBev

SA/NV

...........................

Belgium

270,235

16,279,581

Heineken

NV

........................................

Netherlands

145,140

16,321,108

32,600,689

Chemicals

3.9%

BASF

SE

...........................................

Germany

198,530

13,922,888

b

Covestro

AG,

144A,

Reg

S

..............................

Germany

275,899

16,967,620

30,890,508

Construction

Materials

2.4%

HeidelbergCement

AG

.................................

Germany

278,881

18,858,924

Diversified

Telecommunication

Services

5.9%

Deutsche

Telekom

AG

..................................

Germany

1,286,312

23,749,046

Hellenic

Telecommunications

Organization

SA

................

Greece

1,289,726

23,807,748

47,556,794

Food

Products

2.8%

Danone

SA

..........................................

France

357,075

22,178,049

Health

Care

Providers

&

Services

2.2%

Fresenius

SE

&

Co.

KGaA

...............................

Germany

445,374

17,886,955

Hotels,

Restaurants

&

Leisure

1.6%

a

Accor

SA

...........................................

France

385,893

12,498,226

Household

Durables

2.8%

Berkeley

Group

Holdings

plc

.............................

United

Kingdom

118,413

7,661,621

Persimmon

plc

.......................................

United

Kingdom

186,692

7,230,124

Taylor

Wimpey

plc

.....................................

United

Kingdom

3,206,027

7,637,373

22,529,118

Household

Products

2.5%

Reckitt

Benckiser

Group

plc

.............................

United

Kingdom

233,301

20,067,079

Industrial

Conglomerates

2.4%

Siemens

AG

.........................................

Germany

111,048

19,218,629

Insurance

9.5%

ASR

Nederland

NV

....................................

Netherlands

517,151

23,797,680

Conduit

Holdings

Ltd.

..................................

United

States

1,190,000

6,960,722

Direct

Line

Insurance

Group

plc

..........................

United

Kingdom

5,181,143

19,561,568

NN

Group

NV

........................................

Netherlands

481,477

26,017,835

76,337,805

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

European

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

IT

Services

2.9%

Capgemini

SE

........................................

France

94,330

$

23,100,188

Machinery

3.6%

Alstom

SA

...........................................

France

217,688

7,724,091

Vossloh

AG

..........................................

Germany

413,802

21,213,980

28,938,071

Multi-Utilities

2.4%

RWE

AG

............................................

Germany

482,808

19,546,263

Oil,

Gas

&

Consumable

Fuels

5.2%

BP

plc

..............................................

United

Kingdom

4,474,679

20,033,061

Royal

Dutch

Shell

plc,

A

................................

Netherlands

973,315

21,312,288

41,345,349

Pharmaceuticals

7.5%

GlaxoSmithKline

plc

...................................

United

Kingdom

1,369,794

29,799,958

Novartis

AG

.........................................

Switzerland

348,036

30,547,428

60,347,386

Software

4.2%

b

Avast

plc,

144A,

Reg

S

.................................

United

States

2,156,101

17,706,065

Software

AG

.........................................

Germany

408,632

16,267,241

33,973,306

Textiles,

Apparel

&

Luxury

Goods

4.6%

adidas

AG

...........................................

Germany

58,815

16,922,119

Cie

Financiere

Richemont

SA

............................

Switzerland

134,000

20,001,225

36,923,344

Tobacco

2.7%

British

American

Tobacco

plc

.............................

United

Kingdom

580,351

21,531,922

Trading

Companies

&

Distributors

4.9%

a

AerCap

Holdings

NV

...................................

Ireland

253,601

16,590,577

Rexel

SA

...........................................

France

1,103,893

22,338,893

38,929,470

Total

Common

Stocks

(Cost

$652,172,082)

.....................................

761,109,245

Warrants

Warrants

0.1%

Textiles,

Apparel

&

Luxury

Goods

0.1%

a

Cie

Financiere

Richemont

SA,

11/22/23

.....................

Switzerland

472,886

518,373

Total

Warrants

(Cost

$—)

.....................................................

518,373

Total

Long

Term

Investments

(Cost

$652,172,082)

...............................

761,627,618

a

Short

Term

Investments

1.4%

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

1.4%

c

FHLB,

1/03/22

.......................................

United

States

1,700,000

1,700,000

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

European

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

17

Short

Term

Investments

(continued)

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

(continued)

c

U.S.

Treasury

Bills

,

1/06/22

...........................................

United

States

3,000,000

$

3,000,000

2/17/22

...........................................

United

States

3,000,000

2,999,906

4/28/22

...........................................

United

States

1,500,000

1,499,659

5/26/22

...........................................

United

States

2,000,000

1,999,293

9,498,858

Total

U.S.

Government

and

Agency

Securities

(Cost

$11,198,912)

.................

11,198,858

Total

Short

Term

Investments

(Cost

$11,198,912

)

................................

11,198,858

a

Total

Investments

(Cost

$663,370,994)

96.6%

...................................

$772,826,476

Other

Assets,

less

Liabilities

3.4%

.............................................

27,175,060

Net

Assets

100.0%

...........................................................

$800,001,536

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

a

Non-income

producing.

b

Security

was

purchased

pursuant

to

Rule

144A

or

Regulation

S

under

the

Securities

Act

of

1933.

144A

securities

may

be

sold

in

transactions

exempt

from

registration

only

to

qualified

institutional

buyers

or

in

a

public

offering

registered

under

the

Securities

Act

of

1933.

Regulation

S

securities

cannot

be

sold

in

the

United

States

without

either

an

effective

registration

statement

filed

pursuant

to

the

Securities

Act

of

1933,

or

pursuant

to

an

exemption

from

registration.

At

December

31,

2021,

the

aggregate

value

of

these

securities

was

$34,673,685,

representing

4.3%

of

net

assets.

c

The

security

was

issued

on

a

discount

basis

with

no

stated

coupon

rate.

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

European

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

At

December

31,

2021,

the

Fund

had

the

following futures

contracts

outstanding.

See

Note

1(c). 

At

December

31,

2021,

the

Fund

had

the

following

forward

exchange

contracts

outstanding.

See

Note

1

(

c

). 

Futures

Contracts

Description

Type

Number

of

Contracts

Notional

Amount

*

Expiration

Date

Value/

Unrealized

Appreciation

(Depreciation)

Equity

contracts

MSCI

EAFE

Index

............................

Long

92

$

10,680,280

3/18/22

$

302,476

Foreign

exchange

contracts

Foreign

Exchange

EUR/USD

...................

Short

1,104

157,354,500

3/14/22

(839,007)

Foreign

Exchange

GBP/USD

...................

Short

1,182

99,960,262

3/14/22

(2,143,773)

Total

Futures

Contracts

......................................................................

$(2,680,304)

*

As

of

period

end.

Forward

Exchange

Contracts

Currency

Counter-

party

a

Type

Quantity

Contract

Amount

*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

British

Pound

......

BOFA

Buy

8,612,727

11,749,616

1/18/22

$

3,633

$

(105,550)

British

Pound

......

BOFA

Sell

1,117,750

1,548,610

1/18/22

36,984

—

British

Pound

......

HSBK

Buy

2,662,866

3,579,756

1/18/22

25,558

(4,101)

British

Pound

......

SSBT

Buy

1,100,808

1,507,991

1/18/22

—

(19,277)

British

Pound

......

SSBT

Sell

44,831,036

62,110,764

1/18/22

1,482,064

—

British

Pound

......

UBSW

Buy

5,755,218

7,869,753

1/18/22

245

(86,744)

British

Pound

......

UBSW

Sell

2,992,546

4,116,839

1/18/22

69,773

—

Swiss

Franc

.......

HSBK

Buy

4,310,497

4,697,340

1/20/22

29,778

—

Swiss

Franc

.......

HSBK

Sell

55,923,192

60,566,065

1/20/22

—

(762,244)

Swiss

Franc

.......

SSBT

Buy

715,654

782,740

1/20/22

2,084

—

Swiss

Franc

.......

UBSW

Buy

10,825,144

11,698,095

1/20/22

173,326

—

Swiss

Franc

.......

UBSW

Sell

4,201,063

4,557,252

1/20/22

—

(49,854)

Euro

.............

BOFA

Buy

236,022

266,650

1/24/22

1,958

—

Euro

.............

BOFA

Sell

17,566,704

20,624,409

1/24/22

632,329

—

Euro

.............

HSBK

Buy

224,852

254,869

1/24/22

1,027

—

Euro

.............

HSBK

Sell

19,853,424

23,353,320

1/24/22

758,801

—

Euro

.............

SSBT

Sell

2,221,223

2,629,203

1/24/22

101,304

—

Euro

.............

UBSW

Buy

3,075,556

3,467,747

1/24/22

32,440

—

Euro

.............

UBSW

Sell

897,470

1,062,766

1/24/22

41,385

—

Euro

.............

BOFA

Sell

19,678,677

22,866,356

2/07/22

464,414

—

Euro

.............

HSBK

Sell

1,013,461

1,178,858

2/07/22

25,147

—

Euro

.............

SSBT

Sell

18,155,404

21,099,285

2/07/22

431,417

—

Euro

.............

UBSW

Sell

6,233,938

7,197,695

2/07/22

101,063

—

Euro

.............

BOFA

Sell

53,257,664

61,138,010

4/19/22

413,830

(3,621)

Euro

.............

HSBK

Sell

571,508

648,226

4/19/22

160

(3,604)

Euro

.............

SSBT

Sell

103,019

117,189

4/19/22

—

(280)

Euro

.............

UBSW

Sell

54,620,975

62,687,708

4/19/22

409,866

(4,493)

Total

Forward

Exchange

Contracts

...................................................

$5,238,586

$(1,039,768)

Net

unrealized

appreciation

(depreciation)

............................................

$4,198,818

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

European

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

19

See

Note 10 regarding

other

derivative

information.

*

In

U.S.

dollars

unless

otherwise

indicated.

a

May

be

comprised

of

multiple

contracts

with

the

same

counterparty,

currency

and

settlement

date.

See

A

bbreviations

on

page

37

.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

Franklin

Mutual

European

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

...................................................................

$663,370,994

Value

-

Unaffiliated

issuers

..................................................................

$772,826,476

Cash

....................................................................................

7,672,754

Restricted

cash

for

OTC

derivative

contracts

(Note

1d)

...............................................

3,662,000

Receivables:

Investment

securities

sold

...................................................................

503,780

Capital

shares

sold

........................................................................

168,786

Dividends

and

interest

.....................................................................

4,626,401

European

Union

tax

reclaims

(Note

1

g

)

.........................................................

13,300,497

Deposits

with

brokers

for:

Futures

contracts

........................................................................

5,749,053

Unrealized

appreciation

on

OTC

forward

exchange

contracts

..........................................

5,238,586

Other

assets

..............................................................................

357,911

Total

assets

..........................................................................

814,106,244

Liabilities:

Payables:

Capital

shares

redeemed

...................................................................

731,423

Management

fees

.........................................................................

584,702

Distribution

fees

..........................................................................

79,565

Transfer

agent

fees

........................................................................

120,289

Trustees'

fees

and

expenses

.................................................................

168,359

IRS

closing

agreement

fees

for

European

Union

tax

reclaims

(Note

1

g

)

.................................

6,206,729

Variation

margin

on

futures

contracts

...........................................................

991,555

Due

to

brokers

.............................................................................

3,662,000

Unrealized

depreciation

on

OTC

forward

exchange

contracts

..........................................

1,039,768

Accrued

expenses

and

other

liabilities

...........................................................

520,318

Total

liabilities

.........................................................................

14,104,708

Net

assets,

at

value

.................................................................

$800,001,536

Net

assets

consist

of:

Paid-in

capital

.............................................................................

$856,022,729

Total

distributable

earnings

(losses)

.............................................................

(56,021,193)

Net

assets,

at

value

.................................................................

$800,001,536

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

(continued)

December

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

21

Franklin

Mutual

European

Fund

Class

Z:

Net

assets,

at

value

.......................................................................

$457,643,545

Shares

outstanding

........................................................................

20,886,140

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$21.91

Class

A:

Net

assets,

at

value

.......................................................................

$281,684,999

Shares

outstanding

........................................................................

13,261,753

Net

asset

value

per

share

a

..................................................................

$21.24

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50%)

................................

$22.48

Class

C:

Net

assets,

at

value

.......................................................................

$24,235,559

Shares

outstanding

........................................................................

1,121,839

Net

asset

value

and

maximum

offering

price

per

share

a

.............................................

$21.60

Class

R:

Net

assets,

at

value

.......................................................................

$639,120

Shares

outstanding

........................................................................

30,807

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$20.75

Class

R6:

Net

assets,

at

value

.......................................................................

$35,798,313

Shares

outstanding

........................................................................

1,635,860

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$21.88

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Operations

for

the

year

ended

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

Franklin

Mutual

European

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$1,878,288)

Unaffiliated

issuers

........................................................................

$27,416,076

Interest:

Unaffiliated

issuers

........................................................................

15,798

Other

income

(Note

1

g

)

......................................................................

3,502,248

Total

investment

income

...................................................................

30,934,122

Expenses:

Management

fees

(Note

3

a

)

...................................................................

7,155,685

Distribution

fees:

(Note

3c

)

    Class

A

................................................................................

709,077

    Class

C

................................................................................

302,359

    Class

R

................................................................................

3,112

Transfer

agent

fees:

(Note

3e

)

    Class

Z

................................................................................

492,961

    Class

A

................................................................................

298,828

    Class

C

................................................................................

31,976

    Class

R

................................................................................

654

    Class

R6

...............................................................................

16,630

Custodian

fees

(Note

4

)

......................................................................

71,732

Reports

to

shareholders

fees

..................................................................

194,233

Registration

and

filing

fees

....................................................................

96,573

Professional

fees

...........................................................................

121,618

Trustees'

fees

and

expenses

..................................................................

86,444

Other

....................................................................................

189,867

Total

expenses

.........................................................................

9,771,749

Expense

reductions

(Note

4

)

...............................................................

(84)

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

..............................................

(9,548)

Net

expenses

.........................................................................

9,762,117

Net

investment

income

................................................................

21,172,005

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

Unaffiliated

issuers

......................................................................

23,795,981

Controlled

affiliates

(Note

3f

and

11)

..........................................................

(5,650,155)

Foreign

currency

transactions

................................................................

(267,347)

Forward

exchange

contracts

.................................................................

(277,525)

Futures

contracts

.........................................................................

13,439,961

Net

realized

gain

(loss)

..................................................................

31,040,915

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

......................................................................

45,802,032

Controlled

affiliates

(Note

3f

and

11)

..........................................................

6,282,509

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

..............................

(1,589,903)

Forward

exchange

contracts

.................................................................

19,971,938

Futures

contracts

.........................................................................

23,743

Net

change

in

unrealized

appreciation

(depreciation)

............................................

70,490,319

Net

realized

and

unrealized

gain

(loss)

............................................................

101,531,234

Net

increase

(decrease)

in

net

assets

resulting

from

operations

..........................................

$122,703,239

Franklin

Mutual

Series

Funds

Financial

Statements

Statements

of

Changes

in

Net

Assets

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

23

Franklin

Mutual

European

Fund

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

.................................................

$21,172,005

$29,682,321

Net

realized

gain

(loss)

.................................................

31,040,915

(220,932,200)

Net

change

in

unrealized

appreciation

(depreciation)

...........................

70,490,319

32,954,428

Net

increase

(decrease)

in

net

assets

resulting

from

operations

................

122,703,239

(158,295,451)

Distributions

to

shareholders:

Class

Z

.............................................................

(15,926,586)

(10,843,330)

Class

A

.............................................................

(9,419,264)

(6,539,024)

Class

C

.............................................................

(570,434)

(465,752)

Class

R

.............................................................

(20,425)

(14,566)

Class

R6

............................................................

(1,269,921)

(851,982)

Total

distributions

to

shareholders

..........................................

(27,206,630)

(18,714,654)

Capital

share

transactions:

(Note

2

)

Class

Z

.............................................................

(48,044,865)

(227,283,400)

Class

A

.............................................................

(23,274,928)

(185,469,446)

Class

C

.............................................................

(14,611,281)

(19,544,155)

Class

R

.............................................................

(145,394)

50,875

Class

R6

............................................................

(1,676,181)

(6,753,561)

Total

capital

share

transactions

............................................

(87,752,649)

(438,999,687)

Net

increase

(decrease)

in

net

assets

...................................

7,743,960

(616,009,792)

Net

assets:

Beginning

of

year

.......................................................

792,257,576

1,408,267,368

End

of

year

...........................................................

$800,001,536

$792,257,576

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

Franklin

Mutual

European

Fund

24

franklintempleton.com

Annual

Report

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.

Effective

August

2,

2021,

Class

C

shares

automatically

convert

to

Class

A

shares

on

a

monthly

basis,

after

they

have

been

held

for

8

years.

Prior

to

August

2,

2021,

Class

C

shares

converted

to

Class

A

shares

after

a

10-year

holding

period.

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

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

25

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

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

December

31,

2021,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy

(referred

to

as

“market

level

fair

value”).

See

the

Fair

Value

Measurements

note

for

more

information.

When

the

last

day

of

the

reporting

period

is

a

non-business

day,

certain

foreign

markets

may

be

open

on

those

days

that

the

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

portfolio

securities

on

the

last

business

day

and

the

last

calendar

day

of

the

reporting

period.

Any

security

valuation

changes

due

to

an

open

foreign

market

are

adjusted

and

reflected

by

the

Fund

for

financial

reporting

purposes.

b.

Foreign

Currency

Translation 

Portfolio

securities

and

other

assets

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

based

on

the

exchange

rate

of

such

currencies

against

U.S.

dollars

on

the

date

of

valuation.

The

Fund

may

enter

into

foreign

currency

exchange

contracts

to

facilitate

transactions

denominated

in

a

foreign

currency.

Purchases

and

sales

of

securities,

income

and

expense

items

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

at

the

exchange

rate

in

effect

on

the

transaction

date.

Portfolio

securities

and

assets

and

liabilities

denominated

in

foreign

currencies

contain

risks

that

those

currencies

will

decline

in

value

relative

to

the

U.S.

dollar.

Occasionally,

events

may

impact

the

availability

or

reliability

of

foreign

exchange

rates

used

to

convert

the

U.S.

dollar

equivalent

value.

If

such

an

event

occurs,

the

foreign

exchange

rate

will

be

valued

at

fair

value

using

procedures

established

and

approved

by

the

Board.

The

Fund

does

not

separately

report

the

effect

of

changes

in

foreign

exchange

rates

from

changes

in

market

prices

on

securities

held.

Such

changes

are

included

in

net

realized

and

unrealized

gain

or

loss

from

investments

in

the

Statement of

Operations.

Realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

the

trade

and

settlement

dates

on

securities

transactions

and

the

difference

between

the

recorded

amounts

of

dividends,

interest,

and

foreign

withholding

taxes

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

foreign

exchange

gains

and

losses

arise

from

changes

in

foreign

exchange

rates

on

foreign

denominated

assets

and

liabilities

other

than

investments

in

securities

held

at

the

end

of

the

reporting

period.

c.

Derivative

Financial

Instruments

The

Fund

invested

in

derivative

financial

instruments

in

order

to

manage

risk

or

gain

exposure

to

various

other

investments

or

markets.

Derivatives

are

financial

contracts

based

on

an

underlying

or

notional

amount,

require

no

initial

investment

or

an

initial

net

investment

that

is

smaller

than

would

normally

be

required

to

have

a

similar

response

to

changes

in

market

factors,

and

require

or

permit

net

settlement.

Derivatives

contain

various

risks

including

the

potential

inability

of

the

counterparty

to

fulfill

their

obligations

under

the

terms

of

the

contract,

the

potential

for

an

illiquid

secondary

market,

and/or

the

potential

for

market

movements

which

expose

the

Fund

to

gains

or

losses

in

excess

of

the

amounts

shown

in

the

Statement

of

Assets

and

Liabilities.

Realized

gain

and

loss

and

unrealized

appreciation

and

depreciation

on

these

contracts

for

the

period

are

included

in

the

Statement

of

Operations. 

Derivative

counterparty

credit

risk

is

managed

through

a

formal

evaluation

of

the

creditworthiness

of

all

potential

counterparties.

The

Fund

attempts

to

reduce

its

exposure

to

counterparty

credit

risk

on

OTC

derivatives,

whenever

possible,

by

entering

into

International

Swaps

and

Derivatives

Association

(ISDA)

master

agreements

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

26

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

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

December

31,

2021,

the

Fund

had

no

OTC

derivatives

in

a

net

liability

position

for

such

contracts.

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

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

December

31,

2021,

the

Fund

received

$1,906,654

in

U.S.

Treasury

Bills,

Bonds

and

Notes

as

collateral

for

derivatives.

The

Fund

entered

into

exchange

traded

futures

contracts

primarily

to

manage

and/or

gain

exposure

to

certain

foreign

currencies

and

equity

price

risk.

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.

Restricted

Cash

At

December

31,

2021, the

Fund

held

restricted

cash

in

connection

with

investments

in

certain

derivative

securities.

Restricted

cash

is

held

in

a

segregated

account

with

the

Fund’s

counterparty

broker

and

is

reflected

in

the

Statement

of

Assets

and

Liabilities.

e.

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

1.

Organization

and

Significant

Accounting

Policies

(continued)

c.

Derivative

Financial

Instruments

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

27

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

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

December

31,

2021,

the

Fund

had

no

securities

sold

short. 

f.

Securities

Lending

The

Fund

participates

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the Fund,

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 any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

The

securities

lending

agent

has

agreed

to

indemnify

the

Fund

in

the

event

of

default

by

a

third

party

borrower.

At

December

31,

2021,

the

Fund

had

no

securities

on

loan.

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). Income

recognized,

if

any,

for

EU

reclaims

is

reflected

as

other

income

in

the

Statement

of

Operations

and

any

related

receivable,

if

any,

is

reflected

as

European

Union

tax

reclaims

in

the

Statement

of

Assets

and

Liabilities.

Any

fees

associated

with

these

filings

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

When

uncertainty

exists

as

to

the

ultimate

resolution

of

these

proceedings,

the

likelihood

of

receipt

of

these

EU

reclaims,

and

the

potential

timing

of

payment,

no

amounts

are

reflected

in

the

financial

statements.

For

U.S.

income

tax

purposes,

EU

reclaims

received

by

the

Fund,

if

any,

reduce

the

amount

of

foreign

taxes

Fund

shareholders

can

use

as

tax

deductions

or credits

on

their

income

tax

returns.

In

the

event

that

EU

reclaims

received

by

the Fund

during a

fiscal

year

exceed

foreign

withholding

taxes

paid

by

the

Fund,

and

the

Fund previously

passed

through to

its

shareholders

foreign

taxes

incurred

by

the

Fund

to

be

used

as

a

credit

or

deduction

on

a

shareholder’s

income

tax

return,

the Fund

will enter

into

a

closing

agreement

with

the

Internal

Revenue

Service

(IRS)

in

order

to

pay

the

associated

tax

liability

on

behalf

of

the Fund's

shareholders.

During

the

fiscal

year

ended

December

31,

2021,

the Fund

received

EU

reclaims

in

excess

of

the

foreign

taxes

paid

during

the

year.

The

Fund

previously

entered

into

a

closing

agreement

with

the

IRS

and

any

adjustments

to

the

estimated

fees

are

reflected

as

other

income

in

the

Statement

of

Operations.

The

Fund

may

recognize

an

income

tax

liability

related

to

its

uncertain

tax

positions

under

U.S.

GAAP

when

the

uncertain

tax

position

has

a

less

than

50%

probability

that

it

will

be

sustained

upon

examination

by

the

tax

authorities

based

1.

Organization

and

Significant

Accounting

Policies

(continued)

e.

Securities

Sold

Short

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

28

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

on

its

technical

merits.

As

of

December

31,

2021,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

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

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

December

31,

2021,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

Transactions

in

the

Fund’s

shares

were

as

follows:

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

Z

Shares:

Shares

sold

...................................

1,924,462

$41,875,442

3,375,088

$58,616,261

Shares

issued

in

reinvestment

of

distributions

..........

687,137

14,708,283

537,877

10,019,489

Shares

redeemed

...............................

(4,859,850)

(104,628,590)

(17,811,853)

(295,919,150)

Net

increase

(decrease)

..........................

(2,248,251)

$(48,044,865)

(13,898,888)

$(227,283,400)

1.

Organization

and

Significant

Accounting

Policies

(continued)

g.

Income

and

Deferred

Taxes

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

29

franklintempleton.com

Annual

Report

Franklin

Mutual

European

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:

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

A

Shares:

Shares

sold

a

...................................

1,186,474

$25,072,584

3,581,794

$56,839,029

Shares

issued

in

reinvestment

of

distributions

..........

433,686

9,001,850

308,074

5,527,258

Shares

redeemed

...............................

(2,770,582)

(57,349,362)

(14,259,425)

(247,835,733)

Net

increase

(decrease)

..........................

(1,150,422)

$(23,274,928)

(10,369,557)

$(185,469,446)

Class

C

Shares:

Shares

sold

...................................

108,558

$2,310,237

106,324

$1,854,156

Shares

issued

in

reinvestment

of

distributions

..........

26,553

561,304

25,992

455,449

Shares

redeemed

a

..............................

(823,111)

(17,482,822)

(1,271,750)

(21,853,760)

Net

increase

(decrease)

..........................

(688,000)

$(14,611,281)

(1,139,434)

$(19,544,155)

Class

R

Shares:

Shares

sold

...................................

9,141

$189,771

9,455

$165,585

Shares

issued

in

reinvestment

of

distributions

..........

1,007

20,425

829

14,566

Shares

redeemed

...............................

(17,956)

(355,590)

(7,862)

(129,276)

Net

increase

(decrease)

..........................

(7,808)

$(145,394)

2,422

$50,875

Class

R6

Shares:

Shares

sold

...................................

238,083

$5,116,650

386,102

$6,622,641

Shares

issued

in

reinvestment

of

distributions

..........

11,304

241,602

9,215

171,502

Shares

redeemed

...............................

(329,726)

(7,034,433)

(772,654)

(13,547,704)

Net

increase

(decrease)

..........................

(80,339)

$(1,676,181)

(377,337)

$(6,753,561)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Franklin

Mutual

Advisers,

LLC

(Franklin

Mutual)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Distributors,

LLC

(Distributors)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

2.

Shares

of

Beneficial

Interest

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

30

franklintempleton.com

Annual

Report

Franklin

Mutual

European

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:

For

the

year

ended

December

31,

2021,

the

gross

effective

investment

management

fee

rate

was

0.875%

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.

The

maximum

annual

plan

rates,

based

on

the

average

daily

net

assets,

for

each

class,

are

as

follows:

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

year:

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

Class

A

....................................................................................

0.35%

Class

C

....................................................................................

1.00%

Class

R

....................................................................................

0.50%

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

..............................

$12,073

CDSC

retained

..............................................................................

$3,163

3.

Transactions

with

Affiliates

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

31

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

e.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

year

ended

December

31,

2021,

the

Fund

paid

transfer

agent

fees

of

$841,049,

of

which $402,825

was

retained

by

Investor

Services.

f.

Investments

in

Affiliated

Management

Investment

Companies

The

Fund

invests

in

one

or

more

affiliated

management

investment

companies.

As

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

fund’s

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

fund.

The

Fund

does

not

invest

for

purposes

of

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Fund

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statement

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

year

ended

December

31,

2021,

the

Fund

held

investments

in

affiliated

management

investment

companies

as

follows:

g.

Waiver

and

Expense

Reimbursements

Investor

Services

has

contractually

agreed

in

advance

to

waive

or

limit

its

fees

so

that

the

Class

R6

transfer

agent

fees

do

not

exceed

0.02%

based

on

the

average

net

assets

of

the

class

until

April

30,

2022.

4.

Expense

Offset

Arrangement

The Fund has

entered

into

an

arrangement

with

its

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Fund's

custodian

expenses.

During

the

year

ended

December

31,

2021,

the

custodian

fees

were

reduced

as

noted

in

the

Statement

of

Operations. 

    aa

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

a      

a  

a  

a  

a  

a  

a  

a  

Franklin

Mutual

European

Fund

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0.01%

.

$—

$9,000

$(9,000)

$—

$—

$—

—

$—

Total

Affiliated

Securities

...

$—

$9,000

$(9,000)

$—

$—

$—

$—

3.

Transactions

with

Affiliates

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

32

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

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

year

ended

December

31,

2021,

the

Fund’s

projected

benefit

obligation

and

benefit

payments

under

the

Plan

were

as

follows:

6.

Income

Taxes

For

tax

purposes,

capital

losses

may

be

carried

over

to

offset

future

capital

gains.

At

December

31,

2021,

the

capital

loss

carryforwards

were

as

follows:

During

the

year

ended December

31,

2021,

the

Fund

utilized

$52,168,698

of

capital

loss

carryforwards.

The

tax

character

of

distributions

paid

during

the

years

ended

December

31,

2021

and

2020,

was

as

follows:

At

December

31,

2021,

the

cost

of

investments,

net

unrealized

appreciation

(depreciation)

and

undistributed

ordinary

income

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatments

of

foreign

currency

transactions,

EU

reclaims,

corporate

actions

and

futures

contracts.

a

Projected

benefit

obligation

at

December

31,

2021

......

$145,912

b

Increase

(decrease)

in

projected

benefit

obligation

......

$12,152

Benefit

payments

made

to

retired

trustees

.............

$(415)

a

The

projected

benefit

obligation

is

included

in

trustees’

fees

and

expenses

in

the

Statement

of

Assets

and

Liabilities.

b

The

increase

(decrease)

in

projected

benefit

obligation

is

reflected

in

trustees’

fees

and

expenses

in

the

Statement

of

Operations.

The

increase

(decrease)

was

primarily

due

to

demographic

losses.

Capital

loss

carryforwards

not

subject

to

expiration:

Short

term

................................................................................

$26,359,012

Long

term

................................................................................

152,896,913

Total

capital

loss

carryforwards

...............................................................

$179,255,925

2021

2020

Distributions

paid

from:

Ordinary

income

..........................................................

$27,206,630

$18,714,654

Cost

of

investments

..........................................................................

$666,142,921

Unrealized

appreciation

........................................................................

$156,659,083

Unrealized

depreciation

........................................................................

(48,457,014)

Net

unrealized

appreciation

(depreciation)

..........................................................

$108,202,069

Distributable

earnings:

Undistributed

ordinary

income

...................................................................

$5,267,425

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

33

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

7.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities)

for

the

year

ended

December

31,

2021,

aggregated

$241,832,311

and

$296,189,998,

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.

Political

and

financial

uncertainty

in

many

foreign

regions

may

increase

market

volatility

and

the

economic

risk

of

investing

in

foreign

securities.

In

addition,

certain

foreign

securities

may

not

be

as

liquid

as

U.S.

securities.

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.

Other

Derivative

Information

At

December

31,

2021,

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

Franklin

Mutual

European

Fund

Foreign

exchange

contracts

..

Variation

margin

on

futures

contracts

$

—

Variation

margin

on

futures

contracts

$

2,982,780

a

Unrealized

appreciation

on

OTC

forward

exchange

contracts

5,238,586

Unrealized

depreciation

on

OTC

forward

exchange

contracts

1,039,768

Equity

contracts

...........

Variation

margin

on

futures

contracts

302,476

a

Variation

margin

on

futures

contracts

—

Total

....................

$5,541,062

$4,022,548

a

This

amount

reflects

the

cumulative

appreciation

(depreciation)

of

futures

contracts

as

reported

in

the

Statement

of

Investments.

Only

the

variation

margin

receivable/

payable

at

year

end

is

separately

reported

within

the

Statement

of

Assets

and

Liabilities.

Prior

variation

margin

movements

were

recorded

to

cash

upon

receipt

or

payment.

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

34

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

For

the

year

ended

December

31,

2021,

the

effect

of

derivative

contracts

in

the

Statement

of

Operations

was

as

follows:

For

the

year

ended

December

31,

2021,

the

average

month

end

notional

amount

of

futures

contracts

represented

$270,098,493.

The

average

month

end

contract

value

of

forward

exchange

contracts

was

$365,160,914.

See

Note

1(c)

regarding

derivative

financial

instruments. 

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.

Additionally,

as

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

companies’

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

company.

During

the

year

ended

December

31,

2021,

investments

in

“affiliated

companies”

were

as

follows:

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Statement

of

Operations

Location

Net

Realized

Gain

(Loss)

for

the

Year

Statement

of

Operations

Location

Net

Change

in

Unrealized

Appreciation

(Depreciation)

for

the

Year

Franklin

Mutual

European

Fund

Net

realized

gain

(loss)

from:

Net

change

in

unrealized

  appreciation

(depreciation)

on:

Foreign

exchange

contracts

.....

Futures

contracts

$13,847,185

Futures

contracts

$(278,733)

Forward

exchange

contracts

(277,525)

Forward

exchange

contracts

19,971,938

Equity

Contracts

..............

Futures

contracts

(407,224)

Futures

contracts

302,476

Total

.......................

$13,162,436

$19,995,681

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

Franklin

Mutual

European

Fund

Controlled

Affiliates

a

Dividends

Euro

Wagon

LP

......

$

—

$

—

$

(632,354)

b

$

(5,650,155)

b

$

6,282,509

$

—

c

—

$

—

Total

Affiliated

Securities

(Value

is

—%

of

Net

Assets)

..........

$—

$—

$(632,354)

$

(5,650,155)

$

6,282,509

$—

$—

a

Issuer

in

which

the

Fund

owns

25%

or

more

of

the

outstanding

voting

securities.

b

May

include

accretion,

amortization,

partnership

adjustments,

and/or

corporate

actions.

c

As

of

December

31,

2021,

no

longer

held

by

the

fund.

10.

Other

Derivative

Information

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

35

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

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

$2.675

billion

(Global

Credit

Facility)

which

matured

on

February

4,

2022.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

Effective

February

4,

2022,

the

Borrowers

renewed

the

Global

Credit

Facility

for

a

one-year

term,

maturing

February

3,

2023,

for

a

total

of

$2.675

billion.

Under

the

terms

of

the

Global

Credit

Facility,

the

Fund

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Fund

and

other

costs

incurred

by

the

Fund,

pay

its

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

its

relative

share

of

the

aggregate

net

assets

of

all

of

the

Borrowers,

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

During

the

year

ended

December

31,

2021,

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.

A

summary

of

inputs

used

as

of

December

31,

2021,

in

valuing

the

Fund's

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

Level

1

Level

2

Level

3

Total

Franklin

Mutual

European

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Aerospace

&

Defense

...................

$

—

$

36,283,500

$

—

$

36,283,500

Auto

Components

......................

—

24,661,963

—

24,661,963

Banks

...............................

—

74,905,707

—

74,905,707

Beverages

...........................

—

32,600,689

—

32,600,689

Chemicals

...........................

—

30,890,508

—

30,890,508

Construction

Materials

..................

—

18,858,924

—

18,858,924

Diversified

Telecommunication

Services

.....

—

47,556,794

—

47,556,794

Food

Products

........................

—

22,178,049

—

22,178,049

Health

Care

Providers

&

Services

..........

—

17,886,955

—

17,886,955

Hotels,

Restaurants

&

Leisure

.............

—

12,498,226

—

12,498,226

Household

Durables

....................

—

22,529,118

—

22,529,118

Household

Products

....................

—

20,067,079

—

20,067,079

Industrial

Conglomerates

................

—

19,218,629

—

19,218,629

Insurance

............................

6,960,722

69,377,083

—

76,337,805

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

36

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

14.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

(FASB)

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

In

January

2021,

the

FASB

issued

ASU

No.

2021-01,

with

further

amendments

to

Topic

848.

The

amendments

in

the

ASUs

provide

optional

temporary

accounting

recognition

and 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

for

certain

LIBOR

settings

and

2023

for

the

remainder. The

ASUs

are

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

these

ASUs

will

not

have

a

material

impact

on

the

financial

statements. 

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

other

than

those

already

disclosed

in

the

financial

statements.

Level

1

Level

2

Level

3

Total

Franklin

Mutual

European

Fund

(continued)

Assets:

(continued)

Investments

in

Securities:

Common

Stocks:

IT

Services

...........................

$

—

$

23,100,188

$

—

$

23,100,188

Machinery

............................

—

28,938,071

—

28,938,071

Multi-Utilities

..........................

—

19,546,263

—

19,546,263

Oil,

Gas

&

Consumable

Fuels

.............

—

41,345,349

—

41,345,349

Pharmaceuticals

.......................

—

60,347,386

—

60,347,386

Software

.............................

17,706,065

16,267,241

—

33,973,306

Textiles,

Apparel

&

Luxury

Goods

..........

—

36,923,344

—

36,923,344

Tobacco

.............................

—

21,531,922

—

21,531,922

Trading

Companies

&

Distributors

..........

16,590,577

22,338,893

—

38,929,470

Warrants

..............................

518,373

—

—

518,373

Short

Term

Investments

...................

9,498,858

1,700,000

—

11,198,858

Total

Investments

in

Securities

...........

$51,274,595

$721,551,881

a

$—

$772,826,476

Other

Financial

Instruments:

Forward

exchange

contracts

...............

$

—

$

5,238,586

$

—

$

5,238,586

Futures

contracts

........................

302,476

—

—

302,476

Total

Other

Financial

Instruments

.........

$302,476

$5,238,586

$—

$5,541,062

Liabilities:

Other

Financial

Instruments:

Forward

exchange

contracts

................

$

—

$

1,039,768

$

—

$

1,039,768

Futures

contracts

........................

2,982,780

—

—

2,982,780

Total

Other

Financial

Instruments

.........

$2,982,780

$1,039,768

$—

$4,022,548

a

Includes

foreign

securities

valued

at

$719,851,881,

which

were

categorized

as

Level

2

as

a

result

of

the

application

of

market

level

fair

value

procedures.

See

the

Financial

Instrument

Valuation

note

for

more

information.

13.

Fair

Value

Measurements

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

37

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

(continued)

Abbreviations

Counterparty

BOFA

Bank

of

America

N.A.

HSBK

HSBC

Bank

plc

SSBT

State

Street

Bank

and

Trust

Co.

UBSW

UBS

AG

Currency

EUR

Euro

GBP

British

Pound

USD

United

States

Dollar

Selected

Portfolio

FHLB

Federal

Home

Loan

Banks

Index

EAFE

Europe,

Australasia

and

the

Far

East

MSCI

Morgan

Stanley

Capital

International

Franklin

Mutual

Series

Funds

Report

of

Independent

Registered

Public

Accounting

Firm

38

franklintempleton.com

Annual

Report

To

the

Board

of

Trustees

of

Franklin

Mutual

Series

Funds

and

Shareholders

of

Franklin

Mutual

European

Fund:

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities

of

Franklin

Mutual

European

Fund

(the

“Fund”)

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds),

including

the

statement

of

investments,

as

of

December

31,

2021,

and

the

related

statement

of

operations

for

the

year

then

ended,

the

statements

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

then

ended,

the

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended

and

the

related

notes

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

Franklin

Mutual

European

Fund

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds)

at

December

31,

2021,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

then

ended

and

its

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended,

in

conformity

with

U.S.

generally

accepted

accounting

principles.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

("PCAOB")

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

The

Fund

is

not

required

to

have,

nor

were

we

engaged

to

perform,

an

audit

of

the

Fund’s

internal

control

over

financial

reporting.

As

part

of

our

audits,

we

are

required

to

obtain

an

understanding

of

internal

control

over

financial

reporting,

but

not

for

the

purpose

of

expressing

an

opinion

on

the

effectiveness

of

the

Fund’s

internal

control

over

financial

reporting.

Accordingly,

we

express

no

such

opinion.

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

December

31,

2021,

by

correspondence

with

the

custodian

and

brokers.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

We

believe

that

our

audits

provide

a

reasonable

basis

for

our

opinion.

We

have

served

as

the

auditor

of

one

or

more

Franklin

investment

companies

since

1987.

Boston,

Massachusetts

February

18,

2022

Franklin

Mutual

Series

Funds

Tax

Information

(unaudited)

39

franklintempleton.com

Annual

Report

Franklin

Mutual

European

Fund

By

mid-February,

tax

information

related

to

a

shareholder's

proportionate

share

of

distributions

paid

during

the

preceding

calendar

year

will

be

received,

if

applicable.

Please

also

refer

to

www.franklintempleton.com

for

per

share

tax

information

related

to

any

distributions

paid

during

the

preceding

calendar

year.

Shareholders

are

advised

to

consult

with

their

tax

advisors

for

further

information

on

the

treatment

of

these

amount

s

on

their

tax

returns.

The

following

tax

information

for

the

Fund

is

required

to

be

furnished

to

shareholders

with

respect

to

income

earned

and

distributions

paid

during

its

fiscal

year.

The

Fund

hereby

reports

the

following

amounts,

or

if

subsequently

determined

to

be

different,

the

maximum

allowable

amounts,

for

the

fiscal

year

ended

December

31,

2021:

Note

(1)

-

The

Law

varies

in

each

state

as

to

whether

and

what

percentage

of

dividend

income

attributable

to

Federal

obligations

is

exempt

from

state

income

tax.

Shareholders

are

advised

to

consult

with

their

tax

advisors

to

determine

if

any

portion

of

the

dividends

received

is

exempt

from

state

income

taxes.

Pursuant

to:

Amount

Reported

Qualified

Dividend

Income

Earned

(QDI)

§854(b)(1)(B)

$27,165,469

Section

163(j)

Interest

Earned

§163(j)

$15,884

Interest

Earned

from

Federal

Obligations

Note

(1)

$8,724

Franklin

Mutual

Series

Funds

Board

Members

and

Officers

40

franklintempleton.com

Annual

Report

The

name,

year

of

birth

and

address

of

the

officers

and

board

members,

as

well

as

their

affiliations,

positions

held

with

the

Trust,

principal

occupations

during

at

least

the

past

five

years

and

number

of

U.S.

registered

portfolios

overseen

in

the

Franklin

Templeton/Legg

Mason

fund

complex,

are

shown

below.

Generally,

each

board

member

serves

until

that

person’s

successor

is

elected

and

qualified.

Independent

Board

Members

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Edward

I.

Altman,

Ph.D.

(1941)

Trustee

Since

1987

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Max

L.

Heine

Professor

of

Finance,

Emeritus

and

Director

of

The

Credit

and

Debt

Markets

Research

Program,

Salomon

Center,

Stern

School

of

Business,

New

York

University;

editor

and

author

of

numerous

financial

publications;

financial

consultant;

an

adviser

to

numerous

financial

and

publishing

organizations;

and

formerly

,

Vice

Director,

Salomon

Center,

Stern

School

of

Business,

New

York

University.

Ann

Torre

Bates

(1958)

Trustee

and

Chairperson

Trustee

since

1995

and

Chairperson

since

2020

30

Ares

Capital

Corporation

(specialty

finance

company)

(2010-present),

United

Natural

Foods,

Inc.

(distributor

of

natural,

organic

and

specialty

foods)

(2013-present),

formerly

,

Allied

Capital

Corporation

(financial

services)

(2003-

2010),

SLM

Corporation

(Sallie

Mae)

(1997-2014)

and

Navient

Corporation

(loan

management,

servicing

and

asset

recovery)

(2014-2016).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

companies;

and

formerly

,

Executive

Vice

President

and

Chief

Financial

Officer,

NHP

Incorporated

(manager

of

multifamily

housing)

(1995-1997);

and

Vice

President

and

Treasurer,

US

Airways,

Inc.

(until

1995).

Jan

Hopkins

Trachtman

(1947)

Trustee

Since

2009

11

FTAC

Olympus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(2020-present)

and

FTAC

Parnassus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(February

2021-present);

and

formerly

,

FinTech

Acquisition

Corp.

III

(special

purpose

fintech

acquisition

company)

(2018-2021).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President

and

Founder,

The

Jan

Hopkins

Group

(communications

consulting

firm);

serves

on

Alumni

Advisory

Board

of

Knight

Bagehot

Fellowship;

and

formerly

,

President,

Economic

Club

of

New

York

(2007-2015);

Anchor/Correspondent,

CNN

Financial

News

(until

2003);

Managing

Director

and

Head

of

Client

Communications,

Citigroup

Private

Bank

(until

2005);

Off-Air

reporter,

ABC

News’

World

News

Tonight;

and

Editor,

CBS

Network

News.

Franklin

Mutual

Series

Funds

41

franklintempleton.com

Annual

Report

Interested

Board

Members

and

Officers

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Keith

Mitchell

(1954)

Trustee

Since

2009

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

boards

of

asset

management

firms;

and

formerly

,

Managing

Member,

Mitchell,

Hartley

&

Bechtel

Advisers,

LLC

(

formerly

,

Mitchell

Advisers,

LLC)

(advisory

firm)

(2003-2015)

and

Managing

Director,

Putman

Lovell

NBF.

David

W.

Niemiec

(1949)

Trustee

Since

2015

30

Hess

Midstream

LP

(oil

and

gas

midstream

infrastructure)

(2017-present).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Advisor,

Saratoga

Partners

(private

equity

fund);

and

formerly

,

Managing

Director,

Saratoga

Partners

(1998-2001)

and

SBC

Warburg

Dillon

Read

(investment

banking)

(1997-1998);

Vice

Chairman,

Dillon,

Read

&

Co.

Inc.

(investment

banking)

(1991-1997);

and

Chief

Financial

Officer,

Dillon,

Read

&

Co.

Inc.

(1982-1997).

Robert

E.

Wade

(1946)

Trustee

Since

1991

30

El

Oro

Ltd

(investments)

(2003-

2019).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Attorney

at

law

engaged

in

private

practice

as

a

sole

practitioner

(1972-2008)

and

member

of

various

boards.

Gregory

H.

Williams

(1943)

Trustee

Since

2015

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Private

investor;

Consultant;

and

formerly

,

President,

University

of

Cincinnati

(2009-2012);

President,

The

City

College

of

New

York

(2001-

2009);

Dean,

College

of

Law,

Ohio

State

University

(1993-2001);

and

Associate

Vice

President,

Academic

Affairs

and

Professor

of

Law,

University

of

Iowa

(1977-1993).

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Gregory

E.

Johnson

(1961)

Trustee

Since

2007

132

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Executive

Chairman,

Chairman

of

the

Board

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

Vice

Chairman,

Investment

Company

Institute;

and

formerly

,

Chief

Executive

Officer

(2013-2020)

and

President

(1994-2015)

Franklin

Resources,

Inc.

Independent

Board

Members

(continued)

Franklin

Mutual

Series

Funds

42

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Jennifer

M.

Johnson

(1964)

Trustee

Since

March

2021

70

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Executive

Officer,

President

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Chief

Operating

Officer

and

Executive

Vice

President,

Franklin

Resources,

Inc.

(1994-2015);

Executive

Vice

President

of

Operations

and

Technology,

Franklin

Resources,

Inc.

(2005-2010);

and

Senior

Vice

President,

Franklin

Resources,

Inc.

(2003-2005).

Alison

E.

Baur

(1964)

Vice

President

Since

2012

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Deputy

General

Counsel,

Franklin

Templeton;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Breda

M.

Beckerle

(1958)

Chief

Compliance

Officer

Since

2020

Not

Applicable

Not

Applicable

280

Park

Avenue

New

York,

NY

10017

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Compliance

Officer,

Fiduciary

Investment

Management

International,

Inc.,

Franklin

Advisers,

Inc.,

Franklin

Mutual

Advisers,

LLC,

Franklin

Templeton

Institutional,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christian

K.

Correa

(1973)

President,

and

Chief

Executive

Officer

–

Investment

Management

Since

April

2021

Not

Applicable

Not

Applicable

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President,

Franklin

Mutual

Advisers,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Steven

J.

Gray

(1955)

Vice

President

and

Secretary

Vice

President

since

2009

and

Secretary

since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Vice

President,

FASA,

LLC;

Assistant

Secretary,

Franklin

Distributors,

LLC;

and

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Matthew

T.

Hinkle

(1971)

Chief

Executive

Officer

–

Finance

and

Administration

Since

2017

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Vice

President,

Franklin

Templeton

Services,

LLC;

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Vice

President,

Global

Tax

(2012-April

2017)

and

Treasurer/Assistant

Treasurer,

Franklin

Templeton

(2009-2017).

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

43

franklintempleton.com

Annual

Report

*We

base

the

number

of

portfolios

on

each

separate

series

of

the

U.S.

registered

investment

companies

within

the

Franklin

Templeton/Legg

Mason

complex.

These

portfolios

have

a

common

investment

manager

or

affiliated

investment

managers.

**Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

considered

to

be

interested

people

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

of

Franklin

Resources,

Inc.

(Resources),

which

is

the

parent

company

of

the

Fund’s

investment

manager

and

distributor.

Note

1:

Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

siblings.

Note

2:

Officer

information

is

current

as

of

the

date

of

this

report.

It

is

possible

that

after

this

date,

information

about

officers

may

change.

Note

3:

Effective

September

30,

2021,

Peter

A.

Langerman

ceased

to

be

a

trustee

of

the

Trust.

Note

4:

Effective

December

31,

2021,

Burton

J.

Greenwald

ceased

to

be

a

trustee

of

the

Trust.

The

Sarbanes-Oxley

Act

of

2002

and

Rules

adopted

by

the

U.S.

Securities

and

Exchange

Commission

require

the

Fund

to

disclose

whether

the

Fund’s

Audit

Committee

includes

at

least

one

member

who

is

an

audit

committee

financial

expert

within

the

meaning

of

such

Act

and

Rules.

The

Fund’s

Board

has

determined

that

there

is

at

least

one

such

financial

expert

on

the

Audit

Committee

and

has

designated

each

of

Ann

Torre

Bates

and

David

W.

Niemiec

as

an

audit

committee

financial

expert.

The

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

qualify

as

such

an

expert

in

view

of

their

extensive

business

background

and

experience.

Ms.

Bates

has

served

as

a

member

of

the

Fund

Audit

Committee

since

1995.

She

currently

serves

as

a

director

of

Ares

Capital

Corporation

(2010-present)

and

United

Natural

Foods,

Inc.

(2013-present)

and

was

formerly

a

director

of

Navient

Corporation

from

2014

to

2016,

SLM

Corporation

from

1997

to

2014

and

Allied

Capital

Corporation

from

2003

to

2010,

Executive

Vice

President

and

Chief

Financial

Officer

of

NHP

Incorporated

from

1995

to

1997

and

Vice

President

and

Treasurer

of

US

Airways,

Inc.

until

1995.

Mr.

Niemiec

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2015,

currently

serves

as

an

Advisor

to

Saratoga

Partners

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Susan

Kerr

(1949)

Vice

President

–

AML

Compliance

Since

July

2021

Not

Applicable

Not

Applicable

620

Eighth

Avenue

New

York,

NY

10018

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Compliance

Analyst,

Franklin

Templeton;

Chief

Anti-Money

Laundering

Compliance

Officer,

Legg

Mason

&

Co.,

or

its

affiliates;

Anti

Money

Laundering

Compliance

Officer;

Senior

Compliance

Officer,

LMIS;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christopher

Kings

(1974)

Chief

Financial

Officer,

Chief

Accounting

Officer

and

Treasurer

Since

January

2022

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Treasurer,

U.S.

Fund

Administration

&

Reporting;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Navid

J.

Tofigh

(1972)

Vice

President

Since

2015

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Craig

S.

Tyle

(1960)

Vice

President

Since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

General

Counsel

and

Executive

Vice

President,

Franklin

Resources,

Inc.;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Lori

A.

Weber

(1964)

Vice

President

Since

2011

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Assistant

Secretary,

Franklin

Resources,

Inc.;

Vice

President

and

Secretary,

Templeton

Investment

Counsel,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

44

franklintempleton.com

Annual

Report

and

was

formerly

its

Managing

Director

from

1998

to

2001

and

serves

as

a

director

of

Hess

Midstream

LP

(2017-present).

Mr.

Niemiec

was

formerly

a

director

of

Emeritus

Corporation

from

1999

to

2010

and

OSI

Pharmaceuticals,

Inc.

from

2006

to

2010,

Managing

Director

of

SBC

Warburg

Dillon

Read

from

1997

to

1998,

and

was

Vice

Chairman

from

1991

to

1997

and

Chief

Financial

Officer

from

1982

to

1997

of

Dillon,

Read

&

Co.

Inc.

As

a

result

of

such

background

and

experience,

the

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

have

each

acquired

an

understanding

of

generally

accepted

accounting

principles

and

financial

statements,

the

general

application

of

such

principles

in

connection

with

the

accounting

estimates,

accruals

and

reserves,

and

analyzing

and

evaluating

financial

statements

that

present

a

breadth

and

level

of

complexity

of

accounting

issues

generally

comparable

to

those

of

the

Fund,

as

well

as

an

understanding

of

internal

controls

and

procedures

for

financial

reporting

and

an

understanding

of

audit

committee

functions.

Ms.

Bates

and

Mr.

Niemiec

are

independent

Board

members

as

that

term

is

defined

under

the

applicable

U.S.

Securities

and

Exchange

Commission

Rules

and

Releases.

The

Statement

of

Additional

Information

(SAI)

includes

additional

information

about

the

board

members

and

is

available,

without

charge,

upon

request.

Shareholders

may

call

(800)

DIAL

BEN/342-5236

to

request

the

SAI.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

Shareholder

Information

45

franklintempleton.com

Annual

Report

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,

or

receive

notice

of

the

availability

of,

the

Fund’s

financial

reports

every

six

months.

In

addition,

you

will

receive

an

annual

updated

summary

prospectus

(detail

prospectus

available

upon

request).

To

reduce

Fund

expenses,

we

try

to

identify

related

shareholders

in

a

household

and

send

only

one

copy

of

the

financial

reports

(to

the

extent

received

by

mail)

and

summary

prospectus.

This

process,

called

“householding,”

will

continue

indefinitely

unless

you

instruct

us

otherwise.

If

you

prefer

not

to

have

these

documents

householded,

please

call

us

at

(800)

632-2301.

At

any

time

you

may

view

current

prospectuses/

summary

prospectuses

and

financial

reports

on

our

website.

If

you

choose,

you

may

receive

these

documents

through

electronic

delivery.

478

A

02/22

©

2022

Franklin

Templeton

Investments.

All

rights

reserved.

Authorized

for

distribution

only

when

accompanied

or

preceded

by

a

summary

prospectus

and/or

prospectus.

Investors

should

carefully

consider

a

fund’s

investment

goals,

risks,

charges

and

expenses

before

investing.

A

prospectus

contains

this

and

other

information;

please

read

it

carefully

before

investing.

To

help

ensure

we

provide

you

with

quality

service,

all

calls

to

and

from

our

service

areas

are

monitored

and/or

recorded.

Annual

Report

and

Shareholder

Letter

Franklin

Mutual

European

Fund

Investment

Manager

Distributor

Shareholder

Services

Franklin

Mutual

Advisers,

LLC

Franklin

Distributors,

LLC

(800)

DIAL

BEN

®

/

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(Class

A,

C,

R

&

R6)

(800)

448-FUND

-

(Class

Z)

ANNUAL

REPORT

AND

SHAREHOLDER

LETTER

Franklin

Mutual

Financial

Services

Fund

A

Series

of

Franklin

Mutual

Series

Funds

December

31,

2021

Sign

up

for

electronic

delivery

at

franklintempleton.com/edelivery

Not

FDIC

Insured

May

Lose

Value

No

Bank

Guarantee

franklintempleton.com

Annual

Report

1

SHAREHOLDER

LETTER

Dear

Franklin

Mutual

Financial

Services

Fund

Shareholder:

After

a

difficult

period

of

lockdowns,

anxiety

and

grief,

the

start

of

2021

brought

much

needed

optimism.

Prior

to

the

start

of

the

period,

authorities

in

the

United

States

and

Europe

approved

the

first

vaccines

for

emergency

use.

The

U.S.

also

passed

an

additional

stimulus

package,

delivering

financial

assistance

to

many

people

in

need.

Ten-year

U.S.

Treasury

yields

rose

as

investors

began

to

anticipate

a

possible

economic

recovery.

This

economic

optimism

sparked

a

rotation

out

of

growth

stocks

and

into

value

stocks

over

the

first

half

of

the

year.

The

rotation

into

many

“reopening”

names

meant

companies

which

had

benefited

from

consumer

behavior

shifts

during

the

lockdown,

such

as

online

payment

processors,

online

retailers,

and

remote

worker

infrastructure

providers,

fell

out

of

favor.

Instead,

companies

positioned

to

benefit

from

economic

reopening,

such

as

hotels,

casinos,

restaurants,

and

other

leisure

companies,

received

a

boost.

Smaller

capitalization

companies,

which

tend

to

be

more

sensitive

to

the

economic

cycle,

outperformed

their

larger

capitalization

counterparts

during

the

first

half

of

the

period.

The

new

Biden

administration,

and

its

focus

on

overhauling

America’s

infrastructure,

also

supported

a

rally

in

building

products

companies

and

other

potential

beneficiaries

of

greater

stimulus

spending.

The

U.S.

government

successfully

passed

another

stimulus

bill

in

March

2021.

By

the

late

spring

of

2021,

massive

amounts

of

fiscal

and

monetary

stimulus,

combined

with

increased

consumer

spending

and

supply

chain

difficulties,

led

to

building

inflationary

pressure

and

rising

interest

rates.

While

this

propelled

some

areas

of

the

market

upward,

such

as

the

financials

and

energy

sectors,

growing

investor

concern

about

rising

interest

rates

stoked

pockets

of

volatility.

Furthermore,

differences

in

regional

vaccination

rates

constrained

a

widespread

economic

reopening

as

the

highly

contagious

COVID-19

Delta

variant

forced

some

countries

to

reinstate

business

and

travel

restrictions.

The

reopening

trade

stalled,

and

growth

stocks

once

again

generally

outperformed

value

stocks

during

much

of

the

late

summer

and

fall.

Volatility

increased

in

September

2021

and

markets

fell

over

the

final

weeks

of

the

third

calendar

quarter,

as

continued

supply

chain

disruptions,

inflationary

pressures

and

hawkish

central

bank

commentary

stoked

investor

anxiety.

Markets

stabilized

and

rebounded

in

October

with

some

indices

reaching

new

records.

However,

high

volatility

crept

in

again

in

late

November

as

the

COVID-19

Omicron

variant

emerged,

but

it

was

short

lived.

At

year-end,

both

growth

and

value

returns

for

the

12-month

period

were

strong,

as

the

two

styles

ended

the

year

with

comparable

results.

Not

all

progress

is

evidenced

by

a

steady

march

forward.

Ongoing

uncertainties

surrounding

COVID-19,

supply

chain

disruptions

and

inflation

continued

to

affect

financial

markets.

As

these

elements

influence

investor

behavior,

pockets

of

volatility

may

continue

to

crop

up.

However,

market

volatility

can

often

present

opportunities.

As

an

organization,

Franklin

Mutual

Series

remains

dedicated

to

using

fundamental

research,

coupled

with

a

long-term

approach,

to

identify

attractively

valued

companies

that

can

offer

both

meaningful

upside

potential

and

a

degree

of

downside

protection

in

periods

of

financial

market

turbulence.

On

the

following

pages,

the

portfolio

management

team

reviews

investment

decisions

made

during

the

past

12

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,

Christian

Correa,

CFA

President

and

Chief

Investment

Officer

Franklin

Mutual

Advisers,

LLC

This

letter

reflects

our

analysis

and

opinions

as

of

December

31,

2021,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

franklintempleton.com

Annual

Report

2

Contents

Annual

Report

Franklin

Mutual

Financial

Services

Fund

3

Performance

Summary

7

Your

Fund’s

Expenses

10

Financial

Highlights

and

Statement

of

Investments

11

Financial

Statements

19

Notes

to

Financial

Statements

23

Report

of

Independent

Registered

Public

Accounting

Firm

36

Tax

Information

37

Board

Members

and

Officers

38

Shareholder

Information

43

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Annual

Report

ANNUAL

REPORT

Franklin

Mutual

Financial

Services

Fund

This

annual

report

for

Franklin

Mutual

Financial

Services

Fund

covers

the

fiscal

year

ended

December

31,

2021

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

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

undervalued

equity

securities,

mainly

common

stocks

with

a

substantial

focus

on

mid-

and

large

cap

companies

and

may

invest

a

significant

portion

of

its

equity

portfolio

in

small-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

table

on

this

page

lists

the

leading

countries

where

the

Fund

invests.

Performance

Overview

The

Fund’s

Class

Z

shares

posted

a

+23.98%

cumulative

total

return

for

the

12

months

ended

December

31,

2021.

For

comparison,

the

Fund’s

primary

benchmark,

the

MSCI

World

Financials

Index-NR

(USD),

which

captures

large-

and

mid-cap

representation

across

developed

market

countries,

posted

a

+27.87%

cumulative

total

return.

1

Also

for

comparison,

the

Standard

&

Poor’s

®

500

(S&P

500

®

)

Financials

Index,

which

consists

of

all

financial

stocks

in

the

S&P

500,

posted

a

+28.71%

cumulative

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-NR

(USD),

posted

a

+18.54%

total

return

for

the

12

months

ended

December

31,

2021.

1

Global

equities

benefited

from

monetary

and

fiscal

stimulus

measures,

easing

COVID-19

pandemic

restrictions

in

certain

regions

and

the

development

of

treatments

and

vaccines.

However,

the

Chinese

government’s

imposition

of

additional

restrictions

on

some

businesses

pressured

Asian

and

global

emerging

market

stocks.

Additionally,

the

spread

of

the

Delta

and

Omicron

variants

and

higher

inflation

in

an

environment

of

persistent

supply-chain

disruptions

and

wage

increases

hindered

global

equities

at

certain

points

during

the

12-month

period.

In

the

U.S.,

the

economy

continued

to

recover

and

equities

rallied

amid

monetary

and

fiscal

stimulus

measures

and

the

continued

progress

of

vaccination

programs.

Gross

domestic

product

(GDP)

growth

was

generally

robust,

as

the

lifting

of

many

COVID-19

restrictions

and

strong

consumer

spending

supported

the

economy.

A

rebound

in

corporate

earnings

and

the

passage

of

a

bipartisan

infrastructure

bill

further

bolstered

investor

sentiment.

In

an

effort

to

support

the

economy,

the

U.S.

Federal

Reserve

(Fed)

kept

the

federal

Geographic

Composition

12/31/21

%

of

Total

Net

Assets

United

States

51.4%

Netherlands

10.9%

United

Kingdom

9.1%

France

4.3%

Germany

3.5%

Italy

3.1%

Austria

3.0%

Spain

2.8%

Ireland

2.7%

Jordan

2.4%

China

1.8%

Switzerland

1.7%

Other

1.0%

Short-Term

Investments

&

Other

Net

Assets

2.3%

1.

Source:

Morningstar.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).The

SOI

begins

on

page

15

.

Franklin

Mutual

Financial

Services

Fund

4

franklintempleton.com

Annual

Report

funds

target

rate

at

a

record-low

range

of

0.00%–0.25%.

While

the

Fed

also

maintained

quantitative

easing

measures

with

U.S.

Treasury

and

mortgage

bond

purchasing,

it

began

to

reduce

the

rate

of

purchases

beginning

in

November

2021

and

accelerated

the

pace

of

tapering

in

December.

The

Fed

also

noted

that

it

expected

easing

supply

constraints

to

help

reduce

inflationary

pressures

and

that

further

employment

progress

was

needed

before

the

Fed

would

consider

raising

the

range

for

the

federal

funds

target

rate.

The

economic

recovery

in

the

eurozone

was

slow,

as

quarter-over-quarter

GDP

growth

contracted

in

2021’s

first

quarter

before

returning

to

growth

in

2021’s

second

and

third

quarters.

GDP

growth

rates

were

initially

sluggish

among

the

region’s

largest

economies,

although

most

showed

signs

of

improvement

later

in

the

12-month

period.

Business

activity

growth

also

helped

European

developed

market

equities,

as

measured

by

the

MSCI

Europe

Index-NR

(USD),

to

post

a

+16.30%

total

return

for

the

12

months

under

review.

1

However,

in

November

2021,

the

annual

inflation

rate

in

the

eurozone

reached

the

highest

level

since

the

introduction

of

the

euro,

and

the

prospect

of

energy

shortages

during

the

winter

months

tempered

investor

optimism.

Asian

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

All

Country

Asia

Index-NR

(USD),

posted

a

-2.49%

total

return

for

the

12-month

period.

1

While

many

Asian

countries

experienced

improving

economic

conditions,

Japan’s

quarter-over-quarter

GDP

contracted

in

2021’s

third

quarter.

China’s

economic

recovery

continued,

although

the

country’s

quarter-over-quarter

GDP

growth

in

2021’s

first

three

quarters

was

slower

than

in

2020’s

second

half,

pressured

by

higher

commodity

prices.

Unexpected

regulatory

changes

by

the

Chinese

government,

which

negatively

impacted

education-

and

technology-related

businesses,

and

concerns

about

a

large

Chinese

property

developer’s

solvency

and

several

smaller

developer

defaults

pressured

Asian

stocks

during

2021’s

fourth

quarter.

Global

emerging

market

stocks,

as

measured

by

the

MSCI

Emerging

Markets

Index-NR

(USD),

posted

a

-2.54%

total

return

for

the

12

months

under

review.

1

Higher

inflation

led

many

central

banks

in

emerging

market

countries

to

raise

interest

rates,

which

dampened

economic

growth.

The

Omicron

variant

of

COVID-19

also

negatively

impacted

global

emerging

markets,

as

some

countries

reimplemented

restrictions

in

an

effort

to

counter

rising

infections.

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

much

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

In

2021,

the

Fund

underperformed

its

benchmark,

as

security

selection

in

the

capital

markets

industry,

stock

selection

and

off-benchmark

exposure

to

the

information

technology

sector,

where

the

Fund

holds

a

few

payments

companies,

and

stock

selection

in

the

diversified

financials

industry,

detracted

from

relative

results.

Conversely,

security

selection

in

the

banks

and

consumer

finance

industries

boosted

relative

returns.

Portfolio

Composition

12/31/21

%

of

Total

Net

Assets

Banks

38.6%

Insurance

37.5%

Diversified

Financial

Services

6.1%

Capital

Markets

5.7%

IT

Services

4.4%

Household

Durables

2.4%

Consumer

Finance

1.3%

Equity

Real

Estate

Investment

Trusts

(REITs)

1.1%

Other

0.6%

Short-Term

Investments

&

Other

Net

Assets

2.3%

Franklin

Mutual

Financial

Services

Fund

5

franklintempleton.com

Annual

Report

During

the

12-month

period,

investments

that

detracted

from

Fund

performance

included

Direct

Line

Insurance

Group,

Credit

Suisse

Group

and

Global

Payments.

Personal

and

small

business

general

insurer

Direct

Line

Insurance

Group

detracted

from

relative

returns

during

the

year

amid

concerns

about

a

pricing

review

from

regulators.

Nonetheless,

the

insurance

business

remains

robust

as

the

pandemic

has

led

to

fewer

claims

overall,

particularly

in

the

motor

vehicle

business,

and

its

cash

generation

remains

strong

as

evidenced

by

its

recent

dividend

increase.

Switzerland-based

Credit

Suisse

Group

detracted

from

relative

returns

after

dealing

with

several

scandals

earlier

in

the

year,

including

exposure

to

the

collapse

of

Greensill

(not

a

Fund

holding),

a

supply

chain

finance

provider,

and

the

failure

of

prime

broker

client

Archegos

Capital

Management

(not

a

Fund

holding).

As

a

result,

the

shares

are

trading

at

a

significant

discount

to

peers,

despite

the

company’s

premier

wealth

management

platform

with

strong

positions

in

Europe,

Asia,

and

Latin

America.

The

company’s

new

management

team

is

focused

on

turning

around

the

business

and

further

building

its

wealth

management

operations

in

Asia

and

the

Middle

East.

Payments

firm

Global

Payments

was

a

relative

detractor

during

the

period.

The

stock

has

been

under

pressure

as

concerns

remain

over

potential

market

share

losses

to

the

modern

age

FinTech

players

and

a

slew

of

new

listings

lead

to

a

rotation

of

capital

in

the

space.

Nonetheless,

we

see

opportunity

for

Global

Payments

over

the

longer

term,

as

we

believe

it

is

well-positioned

to

benefit

from

the

continued

shift

from

cash

to

electronic

payments

and

has

good

exposure

to

the

high-yielding

smaller-

and

medium-sized

merchants.

Top

positive

contributors

to

performance

during

the

12-month

period

included

Capital

One

Financial,

ING

Groep

and

BAWAG

Group.

ING

Groep

is

listed

among

the

Fund’s

largest

positions

in

the

Top

10

Holdings

table

on

this

page.

Capital

One

Financial

boosted

relative

performance

amid

a

strong

period

for

financial

stocks

in

general

in

2021.

We

believe

Capital

One

is

one

of

the

best

managed

and

positioned

consumer

banks

in

the

United

States,

with

a

good

brand

and

strong

franchises

in

credit

card

and

auto

lending.

Furthermore,

the

bank

has

invested

heavily

in

technology

as

evidenced

by

being

the

first

U.S.

bank

to

migrate

its

technology

to

the

cloud.

ING

Groep,

a

Dutch

financial

services

firm,

supported

relative

performance

following

upbeat

financial

results

during

the

year.

The

company

benefited

from

lower-than-

expected

credit

loss

provisions,

higher

fees,

and

reduced

costs.

Net

interest

income

was

down,

however.

ING

expects

to

see

ongoing

growth

in

fees

as

it

adds

new

services

and

reprices

existing

ones.

Furthermore,

the

bank

has

ample

excess

capital

that

we

expect

will

continue

to

be

returned

to

shareholders.

Austrian

bank

BAWAG

Group

was

a

relative

contributor

for

the

year.

The

bank

is

one

of

the

most

profitable

in

Europe,

by our

analysis,

with

a

good

management

team

and

the

ability

to

undertake

profitable

acquisitions.

Management

also

laid

out

ambitious

goals

to boost

growth

and

improve

returns. Furthermore,

the

bank

has

ample

excess

capital,

a

portion

of

which

is

in

the

process

of

being

returned

to

shareholders.

During

the

period,

the

Fund

held

currency

forwards

and

futures,

seeking

to

substantially

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

the

U.S.

dollar

rose

against

most

currencies

during

the

period.

As

fellow

shareholders,

we

found

recent

relative

performance

disappointing,

but

our

strategy

of

seeking

undervalued

stocks

and

focus

on

special

situation

investments,

including

distressed

investments

and

merger

arbitrage,

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.

Top

10

Holdings

12/31/21

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

BNP

Paribas

SA

4.3%

Banks,

France

ING

Groep

NV

4.3%

Banks,

Netherlands

Wells

Fargo

&

Co.

4.2%

Banks,

United

States

Citizens

Financial

Group,

Inc.

4.1%

Banks,

United

States

Hartford

Financial

Services

Group,

Inc.

(The)

4.1%

Insurance,

United

States

Everest

Re

Group

Ltd.

4.0%

Insurance,

United

States

Voya

Financial,

Inc.

3.9%

Diversified

Financial

Services,

United

States

Barclays

plc

3.7%

Banks,

United

Kingdom

MetLife,

Inc.

3.6%

Insurance,

United

States

Alleghany

Corp.

3.5%

Insurance,

United

States

Franklin

Mutual

Financial

Services

Fund

6

franklintempleton.com

Annual

Report

Thank

you

for

your

participation

in

Franklin

Mutual

Financial

Services

Fund.

We

look

forward

to

continuing

to

serve

your

investment

needs.

Andrew

B.

Dinnhaupt,

CFA

Lead

Portfolio

Manager

Luis

Hernandez

Portfolio

Manager

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

December

31,

2021,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Performance

Summary

as

of

December

31,

2021

Franklin

Mutual

Financial

Services

Fund

7

franklintempleton.com

Annual

Report

The

performance

table

and

graphs

do

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

12/31/21

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A:

5.50%

maximum

initial

sales

charge;

For

other

share

classes,

visit

franklintempleton.com

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

1

Average

Annual

Total

Return

2

–

Z

1-Year

+23.98%

+23.98%

5-Year

+30.94%

+5.54%

10-Year

+165.96%

+10.28%

A

3

1-Year

+23.70%

+16.89%

5-Year

+29.37%

+4.11%

10-Year

+158.77%

+9.36%

See

page

9

for

Performance

Summary

footnotes.

Franklin

Mutual

Financial

Services

Fund

Performance

Summary

8

franklintempleton.com

Annual

Report

See

page

9

for

Performance

Summary

footnotes.

Total

Return

Index

Comparison

for

a

Hypothetical

$10,000

Investment

Total

return

represents

the

change

in

value

of

an

investment

over

the

periods

shown.

It

includes

any

applicable

maximum

sales

charge,

Fund

expenses,

account

fees

and

reinvested

distributions.

The

unmanaged

indexes

include

reinvestment

of

any

income

or

distributions.

They

differ

from

the

Fund

in

composition

and

do

not

pay

management

fees

or

expenses.

One

cannot

invest

directly

in

an

index.

Class

Z

(

1/1/12–12/31/21)

Class

A

(1/1/12–12/31/21)

Franklin

Mutual

Financial

Services

Fund

Performance

Summary

9

franklintempleton.com

Annual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

Value

securities

may

not

increase

in

price

as

anticipated

or

may

decline

further

in

value.

The

Fund

concentrates

its

investments

in

companies

operating

in

the

financial

services

industry,

and

is

particularly

sensitive

to

associated

risks,

including

interest

rate

risks,

economic

risks,

competition

and

political

risks.

Special

risks

are

associated

with

foreign

investing,

including

currency

fluctuations,

economic

instabili-

ty

and

political

developments.

Investing

in

a

single-sector

fund

involves

special

risks,

including

greater

sensitivity

to

economic,

political

or

regulatory

develop-

ments

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.

Events

such

as

the

spread

of

deadly

diseases,

disasters,

and

financial,

political

or

social

disruptions,

may

heighten

risks

and

adversely

affect

performance.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

2.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

3.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

4.

Source:

Morningstar.

The

MSCI

World

Financials

Index-NR

(USD)

captures

large-

and

mid-cap

representation

across

developed

market

countries.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

The

S&P

500

Financials

Index

is

market

capitalization-weighted

and

consists

of

all

financial

stocks

in

the

S&P

500.

The

S&P

500

is

a

market

capitalization-weighted

index

of

500

stocks

designed

to

measure

total

U.S.

equity

market

performance.

5.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Distributions

(1/1/21–12/31/21)

Share

Class

Net

Investment

Income

Z

$0.3767

A

$0.3156

C

$0.0943

R6

$0.4036

Total

Annual

Operating

Expenses

5

Share

Class

Z

1.14%

A

1.39%

Your

Fund’s

Expenses

Franklin

Mutual

Financial

Services

Fund

10

franklintempleton.com

Annual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6

).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

7/1/21

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

a

Net

Annualized

Expense

Ratio

2

Z

$1,000

$1,053.60

$5.96

$1,019.40

$5.86

1.15%

A

$1,000

$1,052.20

$7.25

$1,018.14

$7.13

1.40%

C

$1,000

$1,047.90

$11.09

$1,014.38

$10.91

2.15%

R6

$1,000

$1,054.00

$5.42

$1,019.93

$5.33

1.05%

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Financial

Services

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

11

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

Z

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$20.89

$22.78

$19.46

$24.14

$21.65

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.46

0.18

0.38

0.38

c

0.22

Net

realized

and

unrealized

gains

(losses)

...........

4.54

(1.72)

3.38

(4.37)

2.76

Total

from

investment

operations

....................

5.00

(1.54)

3.76

(3.99)

2.98

Less

distributions

from:

Net

investment

income

..........................

(0.38)

(0.35)

(0.44)

(0.17)

(0.49)

Net

realized

gains

.............................

—

—

—

(0.52)

—

Total

distributions

...............................

(0.38)

(0.35)

(0.44)

(0.69)

(0.49)

Net

asset

value,

end

of

year

.......................

$25.51

$20.89

$22.78

$19.46

$24.14

Total

return

....................................

23.98%

(6.70)%

19.32%

(16.49)%

13.77%

Ratios

to

average

net

assets

Expenses

d

....................................

1.12%

e

1.14%

e

1.10%

1.09%

e

1.09%

Net

investment

income

...........................

1.87%

0.99%

1.80%

1.61%

c

0.95%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$128,352

$104,183

$139,189

$142,212

$210,825

Portfolio

turnover

rate

............................

28.64%

28.18%

17.06%

33.11%

67.89%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.08

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%.

d

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

e

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Financial

Services

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$20.95

$22.85

$19.52

$24.21

$21.70

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.40

0.26

0.33

0.31

c

0.16

Net

realized

and

unrealized

gains

(losses)

...........

4.56

(1.86)

3.38

(4.36)

2.78

Total

from

investment

operations

....................

4.96

(1.60)

3.71

(4.05)

2.94

Less

distributions

from:

Net

investment

income

..........................

(0.32)

(0.30)

(0.38)

(0.12)

(0.43)

Net

realized

gains

.............................

—

—

—

(0.52)

—

Total

distributions

...............................

(0.32)

(0.30)

(0.38)

(0.64)

(0.43)

Net

asset

value,

end

of

year

.......................

$25.59

$20.95

$22.85

$19.52

$24.21

Total

return

d

...................................

23.70%

(6.95)%

19.06%

(16.72)%

13.55%

Ratios

to

average

net

assets

Expenses

e

....................................

1.37%

f

1.39%

f

1.35%

1.34%

f

1.34%

Net

investment

income

...........................

1.62%

1.42%

1.55%

1.36%

c

0.70%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$259,203

$209,222

$278,968

$298,878

$368,850

Portfolio

turnover

rate

............................

28.64%

28.18%

17.06%

33.11%

67.89%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.08

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%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Financial

Services

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

13

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$20.78

$22.65

$19.32

$24.08

$21.60

Income

from

investment

operations

a

:

Net

investment

income

(loss)

b

....................

0.20

0.12

0.18

0.15

c

(0.01)

Net

realized

and

unrealized

gains

(losses)

...........

4.52

(1.86)

3.32

(4.33)

2.74

Total

from

investment

operations

....................

4.72

(1.74)

3.50

(4.18)

2.73

Less

distributions

from:

Net

investment

income

..........................

(0.09)

(0.13)

(0.17)

(0.06)

(0.25)

Net

realized

gains

.............................

—

—

—

(0.52)

—

Total

distributions

...............................

(0.09)

(0.13)

(0.17)

(0.58)

(0.25)

Net

asset

value,

end

of

year

.......................

$25.41

$20.78

$22.65

$19.32

$24.08

Total

return

d

...................................

22.74%

(7.66)%

18.15%

(17.35)%

12.66%

Ratios

to

average

net

assets

Expenses

e

....................................

2.12%

f

2.14%

f

2.10%

2.09%

f

2.09%

Net

investment

income

(loss)

......................

0.83%

0.69%

0.80%

0.61%

c

(0.05)%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$25,503

$27,498

$46,132

$58,610

$134,117

Portfolio

turnover

rate

............................

28.64%

28.18%

17.06%

33.11%

67.89%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.08

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%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Financial

Services

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$21.03

$22.93

$19.58

$24.30

$21.79

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.47

0.33

0.42

0.41

c

0.25

Net

realized

and

unrealized

gains

(losses)

...........

4.58

(1.85)

3.40

(4.41)

2.78

Total

from

investment

operations

....................

5.05

(1.52)

3.82

(4.00)

3.03

Less

distributions

from:

Net

investment

income

..........................

(0.40)

(0.38)

(0.47)

(0.20)

(0.52)

Net

realized

gains

.............................

—

—

—

(0.52)

—

Total

distributions

...............................

(0.40)

(0.38)

(0.47)

(0.72)

(0.52)

Net

asset

value,

end

of

year

.......................

$25.68

$21.03

$22.93

$19.58

$24.30

Total

return

....................................

24.09%

(6.57)%

19.51%

(16.41)%

13.92%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

......

1.19%

1.16%

1.05%

1.06%

0.97%

Expenses

net

of

waiver

and

payments

by

affiliates

d

......

1.02%

1.02%

0.97%

0.97%

0.95%

Net

investment

income

...........................

1.89%

1.83%

1.93%

1.73%

c

1.09%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$2,995

$2,191

$2,931

$3,371

$4,523

Portfolio

turnover

rate

............................

28.64%

28.18%

17.06%

33.11%

67.89%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.08

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%.

d

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Statement

of

Investments,

December

31,

2021

Franklin

Mutual

Financial

Services

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

15

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

97.7%

Banks

38.6%

a

AB&T

Financial

Corp.

..................................

United

States

226,100

$

221,578

Bank

of

America

Corp.

.................................

United

States

191,738

8,530,424

Barclays

plc

.........................................

United

Kingdom

5,970,072

15,194,989

b

BAWAG

Group

AG,

144A,

Reg

S

..........................

Austria

206,132

12,632,354

BNP

Paribas

SA

......................................

France

259,382

17,919,770

CaixaBank

SA

........................................

Spain

4,277,324

11,674,879

Citizens

Financial

Group,

Inc.

............................

United

States

360,057

17,012,693

First

Horizon

Corp.

....................................

United

States

454,876

7,428,125

ING

Groep

NV

.......................................

Netherlands

1,280,801

17,792,911

Primis

Financial

Corp.

..................................

United

States

718,833

10,811,248

Synovus

Financial

Corp.

................................

United

States

234,111

11,206,894

UniCredit

SpA

........................................

Italy

834,672

12,819,898

Wells

Fargo

&

Co.

.....................................

United

States

361,870

17,362,523

160,608,286

Capital

Markets

5.7%

Credit

Suisse

Group

AG,

A

..............................

Switzerland

749,626

7,259,723

c

Deutsche

Bank

AG

....................................

Germany

1,162,459

14,467,005

b

Guotai

Junan

Securities

Co.

Ltd.,

H,

144A,

Reg

S

.............

China

1,396,063

2,168,163

23,894,891

Consumer

Finance

1.3%

Capital

One

Financial

Corp.

.............................

United

States

36,844

5,345,696

Diversified

Financial

Services

6.1%

M&G

plc

............................................

United

Kingdom

3,333,617

9,011,160

Voya

Financial,

Inc.

....................................

United

States

244,300

16,199,533

25,210,693

Equity

Real

Estate

Investment

Trusts

(REITs)

1.1%

Vornado

Realty

Trust

...................................

United

States

105,533

4,417,611

Household

Durables

2.4%

Cairn

Homes

plc

......................................

Ireland

7,837,963

10,091,631

Insurance

37.5%

c

Alleghany

Corp.

......................................

United

States

21,755

14,523,420

ASR

Nederland

NV

....................................

Netherlands

307,350

14,143,291

c

Brighthouse

Financial,

Inc.

..............................

United

States

64,778

3,355,500

c

BRP

Group,

Inc.,

A

....................................

United

States

229,709

8,294,792

China

Pacific

Insurance

Group

Co.

Ltd.,

H

...................

China

1,953,200

5,307,356

Conduit

Holdings

Ltd.

..................................

United

States

1,482,895

8,673,966

Direct

Line

Insurance

Group

plc

..........................

United

Kingdom

3,601,222

13,596,527

Everest

Re

Group

Ltd.

.................................

United

States

60,088

16,459,305

Hartford

Financial

Services

Group,

Inc.

(The)

................

United

States

245,601

16,956,293

International

General

Insurance

Holdings

Ltd.

................

Jordan

1,211,455

9,812,785

MetLife,

Inc.

.........................................

United

States

237,570

14,845,749

NN

Group

NV

........................................

Netherlands

244,661

13,220,880

c

Ryan

Specialty

Group

Holdings,

Inc.,

A

.....................

United

States

25,642

1,034,655

T&D

Holdings,

Inc.

....................................

Japan

314,469

4,015,139

Willis

Towers

Watson

plc

................................

United

States

49,920

11,855,501

156,095,159

IT

Services

4.4%

Alliance

Data

Systems

Corp.

.............................

United

States

78,702

5,239,192

c

Fiserv,

Inc.

..........................................

United

States

59,472

6,172,599

Global

Payments,

Inc.

..................................

United

States

50,009

6,760,217

18,172,008

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Financial

Services

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Media

0.3%

c

Loyalty

Ventures,

Inc.

..................................

United

States

44,524

$

1,338,837

Trading

Companies

&

Distributors

0.3%

c

AerCap

Holdings

NV

...................................

Ireland

17,426

1,140,009

Total

Common

Stocks

(Cost

$331,582,264)

.....................................

406,314,821

Short

Term

Investments

0.7%

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

0.7%

d

FHLB,

1/03/22

.......................................

United

States

1,000,000

1,000,000

d

U.S.

Treasury

Bills

,

4/28/22

...........................................

United

States

1,000,000

999,772

5/26/22

...........................................

United

States

1,000,000

999,647

1,999,419

Total

U.S.

Government

and

Agency

Securities

(Cost

$2,999,499)

..................

2,999,419

Total

Short

Term

Investments

(Cost

$2,999,499

)

.................................

2,999,419

a

Total

Investments

(Cost

$334,581,763)

98.4%

...................................

$409,314,240

Other

Assets,

less

Liabilities

1.6%

.............................................

6,738,226

Net

Assets

100.0%

...........................................................

$416,052,466

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

a

See

Note

11

regarding

holdings

of

5%

voting

securities.

b

Security

was

purchased

pursuant

to

Rule

144A

or

Regulation

S

under

the

Securities

Act

of

1933.

144A

securities

may

be

sold

in

transactions

exempt

from

registration

only

to

qualified

institutional

buyers

or

in

a

public

offering

registered

under

the

Securities

Act

of

1933.

Regulation

S

securities

cannot

be

sold

in

the

United

States

without

either

an

effective

registration

statement

filed

pursuant

to

the

Securities

Act

of

1933,

or

pursuant

to

an

exemption

from

registration.

At

December

31,

2021,

the

aggregate

value

of

these

securities

was

$14,800,517,

representing

3.6%

of

net

assets.

c

Non-income

producing.

d

The

security

was

issued

on

a

discount

basis

with

no

stated

coupon

rate.

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Financial

Services

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

17

At

December

31,

2021,

the

Fund

had

the

following futures

contracts

outstanding.

See

Note

1(c). 

At

December

31,

2021,

the

Fund

had

the

following

forward

exchange

contracts

outstanding.

See

Note

1

(

c

). 

Futures

Contracts

Description

Type

Number

of

Contracts

Notional

Amount

*

Expiration

Date

Value/

Unrealized

Appreciation

(Depreciation)

Foreign

exchange

contracts

Foreign

Exchange

EUR/USD

...................

Short

62

$

8,836,938

3/14/22

$

(47,118)

Foreign

Exchange

GBP/USD

...................

Short

112

9,471,700

3/14/22

(203,939)

Total

Futures

Contracts

......................................................................

$(251,057)

*

As

of

period

end.

Forward

Exchange

Contracts

Currency

Counter-

party

a

Type

Quantity

Contract

Amount

*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

British

Pound

......

BOFA

Buy

298,944

396,544

1/18/22

$

7,742

$

—

British

Pound

......

BOFA

Sell

7,278,624

10,042,127

1/18/22

198,645

—

British

Pound

......

HSBK

Buy

1,100,575

1,466,510

1/18/22

21,887

—

British

Pound

......

HSBK

Sell

656,319

909,562

1/18/22

21,969

—

British

Pound

......

SSBT

Sell

15,872,449

22,005,520

1/18/22

539,901

—

British

Pound

......

UBSW

Sell

1,374,411

1,889,979

1/18/22

35,325

(4,074)

Japanese

Yen

......

BOFA

Buy

5,345,973

47,039

1/18/22

—

(587)

Japanese

Yen

......

BOFA

Sell

8,632,000

76,072

1/18/22

1,068

—

Japanese

Yen

......

UBSW

Buy

37,736,280

332,095

1/18/22

—

(4,202)

Japanese

Yen

......

UBSW

Sell

465,099,651

4,104,850

1/18/22

63,562

—

Swiss

Franc

.......

HSBK

Sell

6,990,327

7,570,680

1/20/22

—

(95,280)

Swiss

Franc

.......

UBSW

Buy

444,592

481,624

1/20/22

5,940

—

Euro

.............

BOFA

Sell

4,627,687

5,431,956

1/24/22

165,340

—

Euro

.............

HSBK

Sell

5,777,447

6,789,617

1/24/22

214,498

—

Euro

.............

SSBT

Sell

869,195

1,020,038

1/24/22

30,835

—

Euro

.............

UBSW

Sell

873,390

1,023,098

1/24/22

29,122

—

Euro

.............

BOFA

Sell

8,996,386

10,455,500

2/07/22

214,135

—

Euro

.............

HSBK

Sell

929,255

1,080,909

2/07/22

23,058

—

Euro

.............

SSBT

Sell

9,193,578

10,684,631

2/07/22

218,784

—

Euro

.............

UBSW

Sell

513,694

596,947

2/07/22

12,164

—

Euro

.............

BOFA

Sell

9,775,445

11,223,140

4/19/22

76,551

—

Euro

.............

HSBK

Sell

149,946

171,100

4/19/22

122

—

Euro

.............

UBSW

Sell

9,775,120

11,222,473

4/19/22

76,255

—

Total

Forward

Exchange

Contracts

...................................................

$1,956,903

$(104,143)

Net

unrealized

appreciation

(depreciation)

............................................

$1,852,760

*

In

U.S.

dollars

unless

otherwise

indicated.

a

May

be

comprised

of

multiple

contracts

with

the

same

counterparty,

currency

and

settlement

date.

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Financial

Services

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

See

Note 10 regarding

other

derivative

information.

See

Abbreviations

on

page

35

.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

December

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

19

Franklin

Mutual

Financial

Services

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

...................................................................

$332,355,008

Cost

-

Non-controlled

affiliates

(Note

3

f

and

11

)

...................................................

2,226,755

Value

-

Unaffiliated

issuers

..................................................................

$409,092,662

Value

-

Non-controlled

affiliates

(Note

3

f

and

11

)

..................................................

221,578

Cash

....................................................................................

4,498,310

Restricted

cash

for

OTC

derivative

contracts

(Note

1d)

...............................................

1,833,000

Receivables:

Capital

shares

sold

........................................................................

132,602

Dividends

and

interest

.....................................................................

564,327

European

Union

tax

reclaims

(Note

1

f

)

.........................................................

359,672

Deposits

with

brokers

for:

Futures

contracts

........................................................................

388,280

Unrealized

appreciation

on

OTC

forward

exchange

contracts

..........................................

1,956,903

Other

assets

..............................................................................

256,585

Total

assets

..........................................................................

419,303,919

Liabilities:

Payables:

Capital

shares

redeemed

...................................................................

177,487

Management

fees

.........................................................................

303,788

Distribution

fees

..........................................................................

75,509

Transfer

agent

fees

........................................................................

53,671

Trustees'

fees

and

expenses

.................................................................

42,598

IRS

closing

agreement

fees

for

European

Union

tax

reclaims

(Note

1

f

)

.................................

304,490

Variation

margin

on

futures

contracts

...........................................................

62,763

Due

to

brokers

.............................................................................

1,833,000

Unrealized

depreciation

on

OTC

forward

exchange

contracts

..........................................

104,143

Accrued

expenses

and

other

liabilities

...........................................................

294,004

Total

liabilities

.........................................................................

3,251,453

Net

assets,

at

value

.................................................................

$416,052,466

Net

assets

consist

of:

Paid-in

capital

.............................................................................

$393,356,295

Total

distributable

earnings

(losses)

.............................................................

22,696,171

Net

assets,

at

value

.................................................................

$416,052,466

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

(continued)

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

Franklin

Mutual

Financial

Services

Fund

Class

Z:

Net

assets,

at

value

.......................................................................

$128,352,133

Shares

outstanding

........................................................................

5,032,372

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$25.51

Class

A:

Net

assets,

at

value

.......................................................................

$259,202,825

Shares

outstanding

........................................................................

10,130,467

Net

asset

value

per

share

a

..................................................................

$25.59

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50%)

................................

$27.08

Class

C:

Net

assets,

at

value

.......................................................................

$25,502,902

Shares

outstanding

........................................................................

1,003,517

Net

asset

value

and

maximum

offering

price

per

share

a

.............................................

$25.41

Class

R6:

Net

assets,

at

value

.......................................................................

$2,994,606

Shares

outstanding

........................................................................

116,602

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$25.68

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Operations

for

the

year

ended

December

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

21

Franklin

Mutual

Financial

Services

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$543,775)

Unaffiliated

issuers

........................................................................

$11,540,731

Non-controlled

affiliates

(Note

3

f

and

11

)

........................................................

1,151

Interest:

Unaffiliated

issuers

........................................................................

6,494

Income

from

securities

loaned:

Unaffiliated

entities

(net

of

fees

and

rebates)

.....................................................

2,917

Non-controlled

affiliates

(Note

3

f

)

.............................................................

7

Other

income

(Note

1

f

)

.......................................................................

432,976

Total

investment

income

...................................................................

11,984,276

Expenses:

Management

fees

(Note

3

a

)

...................................................................

3,512,685

Distribution

fees:

(Note

3c

)

    Class

A

................................................................................

618,013

    Class

C

................................................................................

280,023

Transfer

agent

fees:

(Note

3e

)

    Class

Z

................................................................................

167,109

    Class

A

................................................................................

334,007

    Class

C

................................................................................

37,834

    Class

R6

...............................................................................

5,120

Custodian

fees

(Note

4

)

......................................................................

15,379

Reports

to

shareholders

fees

..................................................................

114,122

Registration

and

filing

fees

....................................................................

70,409

Professional

fees

...........................................................................

119,415

Trustees'

fees

and

expenses

..................................................................

30,877

Other

....................................................................................

97,356

Total

expenses

.........................................................................

5,402,349

Expense

reductions

(Note

4

)

...............................................................

(104)

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

..............................................

(4,448)

Net

expenses

.........................................................................

5,397,797

Net

investment

income

................................................................

6,586,479

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

Unaffiliated

issuers

......................................................................

3,663,450

Foreign

currency

transactions

................................................................

(37,494)

Forward

exchange

contracts

.................................................................

457,176

Futures

contracts

.........................................................................

875,154

Net

realized

gain

(loss)

..................................................................

4,958,286

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

......................................................................

62,480,351

Non-controlled

affiliates

(Note

3

f

and

11

)

......................................................

74,613

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

..............................

(58,294)

Forward

exchange

contracts

.................................................................

6,031,883

Futures

contracts

.........................................................................

(53,110)

Net

change

in

unrealized

appreciation

(depreciation)

............................................

68,475,443

Net

realized

and

unrealized

gain

(loss)

............................................................

73,433,729

Net

increase

(decrease)

in

net

assets

resulting

from

operations

..........................................

$80,020,208

Franklin

Mutual

Series

Funds

Financial

Statements

Statements

of

Changes

in

Net

Assets

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

Franklin

Mutual

Financial

Services

Fund

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

.................................................

$6,586,479

$4,006,314

Net

realized

gain

(loss)

.................................................

4,958,286

(47,662,001)

Net

change

in

unrealized

appreciation

(depreciation)

...........................

68,475,443

(3,964,320)

Net

increase

(decrease)

in

net

assets

resulting

from

operations

................

80,020,208

(47,620,007)

Distributions

to

shareholders:

Class

Z

.............................................................

(1,873,457)

(1,737,034)

Class

A

.............................................................

(3,171,283)

(3,028,717)

Class

C

.............................................................

(94,563)

(172,058)

Class

R6

............................................................

(45,462)

(39,029)

Total

distributions

to

shareholders

..........................................

(5,184,765)

(4,976,838)

Capital

share

transactions:

(Note

2

)

Class

Z

.............................................................

1,153,445

(19,671,087)

Class

A

.............................................................

4,267,198

(38,992,744)

Class

C

.............................................................

(7,775,630)

(12,372,390)

Class

R6

............................................................

478,344

(493,087)

Total

capital

share

transactions

............................................

(1,876,643)

(71,529,308)

Net

increase

(decrease)

in

net

assets

...................................

72,958,800

(124,126,153)

Net

assets:

Beginning

of

year

.......................................................

343,093,666

467,219,819

End

of

year

...........................................................

$416,052,466

$343,093,666

Franklin

Mutual

Series

Funds

23

franklintempleton.com

Annual

Report

Notes

to

Financial

Statements

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. Effective

August

2,

2021,

Class

C

shares

automatically

convert

to

Class

A

shares

on

a

monthly

basis,

after

they

have

been

held

for

8

years.

Prior

to

August

2,

2021,

Class

C

shares

converted

to

Class

A

shares

after

a

10-year

holding

period.

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

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

24

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

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

December

31,

2021,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy

(referred

to

as

“market

level

fair

value”).

See

the

Fair

Value

Measurements

note

for

more

information.

When

the

last

day

of

the

reporting

period

is

a

non-business

day,

certain

foreign

markets

may

be

open

on

those

days

that

the

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

portfolio

securities

on

the

last

business

day

and

the

last

calendar

day

of

the

reporting

period.

Any

security

valuation

changes

due

to

an

open

foreign

market

are

adjusted

and

reflected

by

the

Fund

for

financial

reporting

purposes.

b.

Foreign

Currency

Translation 

Portfolio

securities

and

other

assets

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

based

on

the

exchange

rate

of

such

currencies

against

U.S.

dollars

on

the

date

of

valuation.

The

Fund

may

enter

into

foreign

currency

exchange

contracts

to

facilitate

transactions

denominated

in

a

foreign

currency.

Purchases

and

sales

of

securities,

income

and

expense

items

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

at

the

exchange

rate

in

effect

on

the

transaction

date.

Portfolio

securities

and

assets

and

liabilities

denominated

in

foreign

currencies

contain

risks

that

those

currencies

will

decline

in

value

relative

to

the

U.S.

dollar.

Occasionally,

events

may

impact

the

availability

or

reliability

of

foreign

exchange

rates

used

to

convert

the

U.S.

dollar

equivalent

value.

If

such

an

event

occurs,

the

foreign

exchange

rate

will

be

valued

at

fair

value

using

procedures

established

and

approved

by

the

Board.

The

Fund

does

not

separately

report

the

effect

of

changes

in

foreign

exchange

rates

from

changes

in

market

prices

on

securities

held.

Such

changes

are

included

in

net

realized

and

unrealized

gain

or

loss

from

investments

in

the

Statement of

Operations.

Realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

the

trade

and

settlement

dates

on

securities

transactions

and

the

difference

between

the

recorded

amounts

of

dividends,

interest,

and

foreign

withholding

taxes

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

foreign

exchange

gains

and

losses

arise

from

changes

in

foreign

exchange

rates

on

foreign

denominated

assets

and

liabilities

other

than

investments

in

securities

held

at

the

end

of

the

reporting

period.

c.

Derivative

Financial

Instruments

The

Fund

invested

in

derivative

financial

instruments

in

order

to

manage

risk

or

gain

exposure

to

various

other

investments

or

markets.

Derivatives

are

financial

contracts

based

on

an

underlying

or

notional

amount,

require

no

initial

investment

or

an

initial

net

investment

that

is

smaller

than

would

normally

be

required

to

have

a

similar

response

to

changes

in

market

factors,

and

require

or

permit

net

settlement.

Derivatives

contain

various

risks

including

the

potential

inability

of

the

counterparty

to

fulfill

their

obligations

under

the

terms

of

the

contract,

the

potential

for

an

illiquid

secondary

market,

and/or

the

potential

for

market

movements

which

expose

the

Fund

to

gains

or

losses

in

excess

of

the

amounts

shown

in

the

Statement

of

Assets

and

Liabilities.

Realized

gain

and

loss

and

unrealized

appreciation

and

depreciation

on

these

contracts

for

the

period

are

included

in

the

Statement

of

Operations. 

Derivative

counterparty

credit

risk

is

managed

through

a

formal

evaluation

of

the

creditworthiness

of

all

potential

counterparties.

The

Fund

attempts

to

reduce its

exposure

to

counterparty

credit

risk

on

OTC

derivatives,

whenever

possible,

by

entering

into

International

Swaps

and

Derivatives

Association

(ISDA)

master

agreements

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

25

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

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

December

31,

2021,

the

Fund

had

no

OTC

derivatives

in

a

net

liability

position

for

such

contracts.

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

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

December

31,

2021,

the

Fund

received

$413,348

in

United

Kingdom

Treasury

Bonds

and

U.S.

Treasury

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

10

regarding

other

derivative

information.

d.

Restricted

Cash

At

December

31,

2021, the

Fund

held

restricted

cash

in

connection

with

investments

in

certain

derivative

securities.

Restricted

cash

is

held

in

a

segregated

account

with

the

Fund’s

counterparty

broker

and

is

reflected

in

the

Statement

of

Assets

and

Liabilities.

e.

Securities

Lending

The

Fund

participates

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the Fund,

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

1.

Organization

and

Significant

Accounting

Policies

(continued)

c.

Derivative

Financial

Instruments

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

26

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

borrower.

Income

from

securities

loaned,

net

of

fees

paid

to

the

securities

lending

agent

and/or

third-party

vendor,

is

reported

separately

in

the

Statement

of

Operations.

The

Fund

bears

the

market

risk

with

respect

to any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

The

securities

lending

agent

has

agreed

to

indemnify

the

Fund

in

the

event

of

default

by

a

third

party

borrower.

At

December

31,

2021,

the

Fund

had

no

securities

on

loan.

f.

Income

and

Deferred

Taxes

It

is the Fund's

policy

to

qualify

as

a

regulated

investment

company

under

the

Internal

Revenue

Code. The Fund

intends

to

distribute

to

shareholders

substantially

all

of

its

taxable

income

and

net

realized

gains

to

relieve

it

from

federal

income

and excise

taxes.

As

a

result,

no

provision

for

U.S.

federal

income

taxes

is

required.

The

Fund

may

be

subject

to

foreign

taxation

related

to

income

received,

capital

gains

on

the

sale

of

securities

and

certain

foreign

currency

transactions

in

the

foreign

jurisdictions

in

which it

invests.

Foreign

taxes,

if

any,

are

recorded

based

on

the

tax

regulations

and

rates

that

exist

in

the

foreign

markets

in

which

the

Fund

invests.

When

a

capital

gain

tax

is

determined

to

apply,

the

Fund

records

an

estimated

deferred

tax

liability

in

an

amount

that

would

be

payable

if

the

securities

were

disposed

of

on

the

valuation

date.

As

a

result

of

several

court

cases,

in

certain

countries

across

the

European

Union, the

Fund

filed

additional

tax

reclaims

for

previously

withheld

taxes

on

dividends

earned

in

those

countries

(EU

reclaims). Income

recognized,

if

any,

for

EU

reclaims

is

reflected

as

other

income

in

the

Statement

of

Operations

and

any

related

receivable,

if

any,

is

reflected

as

European

Union

tax

reclaims

in

the

Statement

of

Assets

and

Liabilities.

Any

fees

associated

with

these

filings

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

When

uncertainty

exists

as

to

the

ultimate

resolution

of

these

proceedings,

the

likelihood

of

receipt

of

these

EU

reclaims,

and

the

potential

timing

of

payment,

no

amounts

are

reflected

in

the

financial

statements.

For

U.S.

income

tax

purposes,

EU

reclaims

received

by

the

Fund,

if

any,

reduce

the

amount

of

foreign

taxes

Fund

shareholders

can

use

as

tax

deductions

or credits

on

their

income

tax

returns.

In

the

event

that

EU

reclaims

received

by

the Fund

during a

fiscal

year

exceed

foreign

withholding

taxes

paid

by

the

Fund,

and

the

Fund previously

passed

through to

its

shareholders

foreign

taxes

incurred

by

the

Fund

to

be

used

as

a

credit

or

deduction

on

a

shareholder’s

income

tax

return,

the Fund

will enter

into

a

closing

agreement

with

the

Internal

Revenue

Service

(IRS)

in

order

to

pay

the

associated

tax

liability

on

behalf

of

the Fund's

shareholders.

The

Fund

previously

entered

into

a

closing

agreement

with

the

IRS

and

any

adjustments

to

the

estimated

fees

are

reflected

as

other

income

in

the

Statement

of

Operations.

The

Fund

may

recognize

an

income

tax

liability

related

to

its

uncertain

tax

positions

under

U.S.

GAAP

when

the

uncertain

tax

position

has

a

less

than

50%

probability

that

it

will

be

sustained

upon

examination

by

the

tax

authorities

based

on

its

technical

merits.

As

of

December

31,

2021,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

g.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

Security

transactions

are

accounted

for

on

trade

date.

Realized

gains

and

losses

on

security

transactions

are

determined

on

a

specific

identification

basis.

Interest

income

and

estimated

expenses

are

accrued

daily.

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.

1.

Organization

and

Significant

Accounting

Policies

(continued)

e.

Securities

Lending

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

27

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

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.

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

December

3

1

,

2021

,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value)

.

Transactions

in

the

Fund’s

shares

were

as

follows:

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

Z

Shares:

Shares

sold

...................................

784,766

$19,144,281

885,209

$15,601,988

Shares

issued

in

reinvestment

of

distributions

..........

70,399

1,743,108

78,955

1,603,385

Shares

redeemed

...............................

(810,179)

(19,733,944)

(2,087,013)

(36,876,460)

Net

increase

(decrease)

..........................

44,986

$1,153,445

(1,122,849)

$(19,671,087)

Class

A

Shares:

Shares

sold

a

...................................

1,796,743

$44,503,944

1,404,069

$23,829,027

Shares

issued

in

reinvestment

of

distributions

..........

123,180

3,061,930

143,965

2,928,431

Shares

redeemed

...............................

(1,774,053)

(43,298,676)

(3,772,083)

(65,750,202)

Net

increase

(decrease)

..........................

145,870

$4,267,198

(2,224,049)

$(38,992,744)

Class

C

Shares:

Shares

sold

...................................

196,028

$4,867,182

164,610

$2,798,831

Shares

issued

in

reinvestment

of

distributions

..........

3,740

93,205

8,558

169,668

Shares

redeemed

a

..............................

(519,218)

(12,736,017)

(886,887)

(15,340,889)

Net

increase

(decrease)

..........................

(319,450)

$(7,775,630)

(713,719)

$(12,372,390)

1.

Organization

and

Significant

Accounting

Policies

(continued)

g.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

28

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

3.

Transactions

with

Affiliates

Franklin

Resources,

Inc.

is

the

holding

company

for

various

subsidiaries

that

together

are

referred

to

as

Franklin

Templeton.

Certain

officers

and

trustees

of

the

Fund

are

also

officers

and/or

directors

of

the

following

subsidiaries:

a.

Management

Fees

The

Fund

pays

an

investment

management

fee

to

Franklin

Mutual

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

For

the

year

ended

December

31,

2021,

the

gross

effective

investment

management

fee

rate

was

0.875%

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

compensation

distribution

plan,

the

Fund

pays

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

R6

Shares:

Shares

sold

...................................

131,569

$3,272,275

68,045

$1,147,174

Shares

issued

in

reinvestment

of

distributions

..........

1,824

45,462

1,907

39,029

Shares

redeemed

...............................

(120,973)

(2,839,393)

(93,598)

(1,679,290)

Net

increase

(decrease)

..........................

12,420

$478,344

(23,646)

$(493,087)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Franklin

Mutual

Advisers,

LLC

(Franklin

Mutual)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Distributors,

LLC

(Distributors)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

Annualized

Fee

Rate

Net

Assets

0.875%

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

2.

Shares

of

Beneficial

Interest

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

29

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

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:

 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

year:

e.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

year

ended

December

31,

2021,

the

Fund

paid

transfer

agent

fees

of

$544,070,

of

which $273,932

was

retained

by

Investor

Services.

f.

Investments

in

Affiliated

Management

Investment

Companies

The

Fund

invests

in

one

or

more

affiliated

management

investment

companies.

As

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

fund’s

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

fund.

The

Fund

does

not

invest

for

purposes

of

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Fund

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statement

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

year

ended

December

31,

2021,

the

Fund

held

investments

in

affiliated

management

investment

companies

as

follows:

Class

A

....................................................................................

0.35%

Class

C

....................................................................................

1.00%

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

..............................

$28,026

CDSC

retained

..............................................................................

$2,223

3.

Transactions

with

Affiliates

(continued)

c.

Distribution

Fees

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

30

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(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

0.03%

based

on

the

average

net

assets

of

the

class

until

April

30,

2022.

4.

Expense

Offset

Arrangement

The Fund has

entered

into

an

arrangement

with

its

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Fund's

custodian

expenses.

During

the

year

ended

December

31,

2021,

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

year

ended

December

31,

2021,

the

Fund’s

projected

benefit

obligation

and

benefit

payments

under

the

Plan

were

as

follows:

    aa

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

a      

a  

a  

a  

a  

a  

a  

a  

Franklin

Mutual

Financial

Services

Fund

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0.01%

.

$—

$1,089,000

$(1,089,000)

$—

$—

$—

—

$7

Total

Affiliated

Securities

...

$—

$1,089,000

$(1,089,000)

$—

$—

$—

$7

a

Projected

benefit

obligation

at

December

31,

2021

......

$41,786

b

Increase

(decrease)

in

projected

benefit

obligation

......

$6,305

Benefit

payments

made

to

retired

trustees

.............

$(193)

a

The

projected

benefit

obligation

is

included

in

trustees’

fees

and

expenses

in

the

Statement

of

Assets

and

Liabilities.

b

The

increase

(decrease)

in

projected

benefit

obligation

is

reflected

in

trustees’

fees

and

expenses

in

the

Statement

of

Operations.

The

increase

(decrease)

was

primarily

due

to

demographic

losses.

3.

Transactions

with

Affiliates

(continued)

f.

Investments

in

Affiliated

Management

Investment

Companies

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

31

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

6.

Income

Taxes

For

tax

purposes,

capital

losses

may

be

carried

over

to

offset

future

capital

gains.

At

December

31,

2021,

the

capital

loss

carryforwards

were

as

follows:

During

the

year

ended December

31,

2021

,

the

Fund

utilized

$10,606,401

of

capital

loss

carryforwards.

For

tax

purposes,

the

Fund

may

elect

to

defer

any

portion

of

a

post-October

capital

loss

or

late-year

ordinary

loss

to

the

first

day

of

the

following

fiscal

year.

At

December

31,

2021,

the

Fund

deferred

late-year

ordinary

losses

of

$97,336.

The

tax

character

of

distributions

paid

during

the

years

ended

December

31,

2021

and

2020,

was

as

follows:

At

December

31,

2021,

the

cost

of

investments

and

net

unrealized

appreciation

(depreciation)

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatments

of

foreign

currency

transactions,

EU

reclaims,

passive

foreign

investment

company

shares,

corporate

actions

and

wash

sales.

7.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities)

for

the

year

ended

December

31,

2021,

aggregated

$114,906,007

and

$109,931,168,

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.

Political

and

financial

uncertainty

in

many

foreign

regions

may

increase

market

volatility

and

the

economic

risk

of

investing

in

foreign

securities.

In

addition,

certain

foreign

securities

may

not

be

as

liquid

as

U.S.

securities.

Capital

loss

carryforwards

not

subject

to

expiration:

Short

term

................................................................................

$3,091,768

Long

term

................................................................................

44,917,536

Total

capital

loss

carryforwards

...............................................................

$48,009,304

2021

2020

Distributions

paid

from:

Ordinary

income

..........................................................

$5,184,765

$4,976,838

Cost

of

investments

..........................................................................

$340,331,935

Unrealized

appreciation

........................................................................

$93,903,830

Unrealized

depreciation

........................................................................

(23,319,822)

Net

unrealized

appreciation

(depreciation)

..........................................................

$70,584,008

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

32

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

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.

Other

Derivative

Information

At

December

31,

2021,

investments

in

derivative

contracts

are

reflected

in

the

Statement of

Assets

and

Liabilities

as

follows:

For

the

year

ended

December

31,

2021,

the

effect

of

derivative

contracts

in

the

Statement

of

Operations

was

as

follows:

For

the

year

ended

December

31,

2021,

the

average

month

end

notional

amount

of

futures

contracts

represented

$18,787,628.

The

average

month

end

contract

value

of

forward

exchange

contracts

was

$115,704,446.

See

Note

1(c) regarding

derivative

financial

instruments. 

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

Franklin

Mutual

Financial

Services

Fund

Foreign

exchange

contracts

..

Variation

margin

on

futures

contracts

$

—

Variation

margin

on

futures

contracts

$

251,057

a

Unrealized

appreciation

on

OTC

forward

exchange

contracts

1,956,903

Unrealized

depreciation

on

OTC

forward

exchange

contracts

104,143

Total

....................

$1,956,903

$355,200

a

This

amount

reflects

the

cumulative

appreciation

(depreciation)

of

futures

contracts

as

reported

in

the

Statement

of

Investments.

Only

the

variation

margin

receivable/

payable

at

year

end

is

separately

reported

within

the

Statement

of

Assets

and

Liabilities.

Prior

variation

margin

movements

were

recorded

to

cash

upon

receipt

or

payment.

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Statement

of

Operations

Location

Net

Realized

Gain

(Loss)

for

the

Year

Statement

of

Operations

Location

Net

Change

in

Unrealized

Appreciation

(Depreciation)

for

the

Year

Franklin

Mutual

Financial

Services

Fund

Net

realized

gain

(loss)

from:

Net

change

in

unrealized

  appreciation

(depreciation)

on:

Foreign

exchange

contracts

.....

Futures

contracts

$875,154

Futures

contracts

$(53,110)

Forward

exchange

contracts

457,176

Forward

exchange

contracts

6,031,883

Total

.......................

$1,332,330

$5,978,773

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

33

franklintempleton.com

Annual

Report

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.

Additionally,

as

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

companies’

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

company.

During

the

year

ended

December

31,

2021,

investments

in

“affiliated

companies”

were

as

follows:

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

$2.675

billion

(Global

Credit

Facility)

which

matured

on

February

4,

2022.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

Effective

February

4,

2022,

the

Borrowers

renewed

the

Global

Credit

Facility

for

a

one-year

term,

maturing

February

3,

2023,

for

a

total

of

$2.675

billion.

Under

the

terms

of

the

Global

Credit

Facility,

the

Fund

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Fund

and

other

costs

incurred

by

the

Fund,

pay

its

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

its

relative

share

of

the

aggregate

net

assets

of

all

of

the

Borrowers,

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

During

the

year

ended

December

31,

2021,

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)

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

Franklin

Mutual

Financial

Services

Fund

Non-Controlled

Affiliates

Dividends

AB&T

Financial

Corp

..

$

146,965

$

—

$

—

$

—

$

74,613

$

221,578

226,100

$

1,151

Total

Affiliated

Securities

(Value

is

0.1%

of

Net

Assets)

..........

$146,965

$—

$—

$

—

$

74,613

$221,578

$1,151

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

34

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

The

input

levels

are

not

necessarily

an

indication

of

the

risk

or

liquidity

associated

with

financial

instruments

at

that

level.

A

summary

of

inputs

used

as

of

December

31,

2021,

in

valuing

the

Fund's

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

14.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

(FASB)

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

In

January

2021,

the

FASB

issued

ASU

No.

2021-01,

with

further

amendments

to

Topic

848.

The

amendments

in

the

ASUs

provide

optional

temporary

accounting

recognition

and 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

for

certain

LIBOR

settings

and

2023

for

the

remainder. The

ASUs

are

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

these

ASUs

will

not

have

a

material

impact

on

the

financial

statements. 

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

other

than

those

already

disclosed

in

the

financial

statements.

Level

1

Level

2

Level

3

Total

Franklin

Mutual

Financial

Services

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Banks

...............................

$

72,573,485

$

88,034,801

$

—

$

160,608,286

Capital

Markets

........................

—

23,894,891

—

23,894,891

Consumer

Finance

.....................

5,345,696

—

—

5,345,696

Diversified

Financial

Services

.............

16,199,533

9,011,160

—

25,210,693

Equity

Real

Estate

Investment

Trusts

(REITs)

.

4,417,611

—

—

4,417,611

Household

Durables

....................

10,091,631

—

—

10,091,631

Insurance

............................

105,811,966

50,283,193

—

156,095,159

IT

Services

...........................

18,172,008

—

—

18,172,008

Media

...............................

1,338,837

—

—

1,338,837

Trading

Companies

&

Distributors

..........

1,140,009

—

—

1,140,009

Short

Term

Investments

...................

1,999,419

1,000,000

—

2,999,419

Total

Investments

in

Securities

...........

$237,090,195

$172,224,045

a

$—

$409,314,240

Other

Financial

Instruments:

Forward

exchange

contracts

...............

$

—

$

1,956,903

$

—

$

1,956,903

Total

Other

Financial

Instruments

.........

$—

$1,956,903

$—

$1,956,903

Liabilities:

Other

Financial

Instruments:

Forward

exchange

contracts

................

$

—

$

104,143

$

—

$

104,143

Futures

contracts

........................

251,057

—

—

251,057

Total

Other

Financial

Instruments

.........

$251,057

$104,143

$—

$355,200

a

Includes

foreign

securities

valued

at

$171,224,045,

which

were

categorized

as

Level

2

as

a

result

of

the

application

of

market

level

fair

value

procedures.

See

the

Financial

Instrument

Valuation

note

for

more

information.

13.

Fair

Value

Measurements

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

35

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

(continued)

Abbreviations

Counterparty

BOFA

Bank

of

America

N.A.

HSBK

HSBC

Bank

plc

SSBT

State

Street

Bank

and

Trust

Co.

UBSW

UBS

AG

Currency

EUR

Euro

GBP

British

Pound

USD

United

States

Dollar

Selected

Portfolio

FHLB

Federal

Home

Loan

Banks

Franklin

Mutual

Series

Funds

Report

of

Independent

Registered

Public

Accounting

Firm

36

franklintempleton.com

Annual

Report

To

the

Board

of

Trustees

of

Franklin

Mutual

Series

Funds

and

Shareholders

of

Franklin

Mutual

Financial

Services

Fund:

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities

of

Franklin

Mutual

Financial

Services

Fund

(the

“Fund”)

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds),

including

the

statement

of

investments,

as

of

December

31,

2021,

and

the

related

statement

of

operations

for

the

year

then

ended,

the

statements

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

then

ended,

the

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended

and

the

related

notes

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

Franklin

Mutual

Financial

Services

Fund

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds)

at

December

31,

2021,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

then

ended

and

its

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended,

in

conformity

with

U.S.

generally

accepted

accounting

principles.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

("PCAOB")

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

The

Fund

is

not

required

to

have,

nor

were

we

engaged

to

perform,

an

audit

of

the

Fund’s

internal

control

over

financial

reporting.

As

part

of

our

audits,

we

are

required

to

obtain

an

understanding

of

internal

control

over

financial

reporting,

but

not

for

the

purpose

of

expressing

an

opinion

on

the

effectiveness

of

the

Fund’s

internal

control

over

financial

reporting.

Accordingly,

we

express

no

such

opinion.

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

December

31,

2021,

by

correspondence

with

the

custodian

and

brokers.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

We

believe

that

our

audits

provide

a

reasonable

basis

for

our

opinion.

We

have

served

as

the

auditor

of

one

or

more

Franklin

investment

companies

since

1987.

Boston,

Massachusetts

February

18,

2022

Franklin

Mutual

Series

Funds

Tax

Information

(unaudited)

37

franklintempleton.com

Annual

Report

Franklin

Mutual

Financial

Services

Fund

By

mid-February,

tax

information

related

to

a

shareholder's

proportionate

share

of

distributions

paid

during

the

preceding

calendar

year

will

be

received,

if

applicable.

Please

also

refer

to

www.franklintempleton.com

for

per

share

tax

information

related

to

any

distributions

paid

during

the

preceding

calendar

year.

Shareholders

are

advised

to

consult

with

their

tax

advisors

for

further

information

on

the

treatment

of

these

amount

s

on

their

tax

returns.

The

following

tax

information

for

the

Fund

is

required

to

be

furnished

to

shareholders

with

respect

to

income

earned

and

distributions

paid

during

its

fiscal

year.

The

Fund

hereby

reports

the

following

amounts,

or

if

subsequently

determined

to

be

different,

the

maximum

allowable

amounts,

for

the

fiscal

year

ended

December

31,

2021:

Note

(1)

-

The

Law

varies

in

each

state

as

to

whether

and

what

percentage

of

dividend

income

attributable

to

Federal

obligations

is

exempt

from

state

income

tax.

Shareholders

are

advised

to

consult

with

their

tax

advisors

to

determine

if

any

portion

of

the

dividends

received

is

exempt

from

state

income

taxes.

Under

Section

853

of

the

Internal

Revenue

Code,

the

Fund

intends

to

elect

to

pass

through

to

its

shareholders

the

following

amounts,

or

amounts

as

finally

determined,

of

foreign

taxes

paid

and

foreign

s

ource

income

earned

by

the

Fund

during

the

fiscal

year

ended

December

31,

2021

:

Pursuant

to:

Amount

Reported

Income

Eligible

for

Dividends

Received

Deduction

(DRD)

§854(b)(1)(A)

$3,324,005

Qualified

Dividend

Income

Earned

(QDI)

§854(b)(1)(B)

$10,459,435

Section

163(j)

Interest

Earned

§163(j)

$6,403

Interest

Earned

from

Federal

Obligations

Note

(1)

$2,108

Amount

Reported

Foreign

Taxes

Paid

$554,933

Foreign

Source

Income

Earned

$4,992,409

Franklin

Mutual

Series

Funds

Board

Members

and

Officers

38

franklintempleton.com

Annual

Report

The

name,

year

of

birth

and

address

of

the

officers

and

board

members,

as

well

as

their

affiliations,

positions

held

with

the

Trust,

principal

occupations

during

at

least

the

past

five

years

and

number

of

U.S.

registered

portfolios

overseen

in

the

Franklin

Templeton/Legg

Mason

fund

complex,

are

shown

below.

Generally,

each

board

member

serves

until

that

person’s

successor

is

elected

and

qualified.

Independent

Board

Members

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Edward

I.

Altman,

Ph.D.

(1941)

Trustee

Since

1987

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Max

L.

Heine

Professor

of

Finance,

Emeritus

and

Director

of

The

Credit

and

Debt

Markets

Research

Program,

Salomon

Center,

Stern

School

of

Business,

New

York

University;

editor

and

author

of

numerous

financial

publications;

financial

consultant;

an

adviser

to

numerous

financial

and

publishing

organizations;

and

formerly

,

Vice

Director,

Salomon

Center,

Stern

School

of

Business,

New

York

University.

Ann

Torre

Bates

(1958)

Trustee

and

Chairperson

Trustee

since

1995

and

Chairperson

since

2020

30

Ares

Capital

Corporation

(specialty

finance

company)

(2010-present),

United

Natural

Foods,

Inc.

(distributor

of

natural,

organic

and

specialty

foods)

(2013-present),

formerly

,

Allied

Capital

Corporation

(financial

services)

(2003-

2010),

SLM

Corporation

(Sallie

Mae)

(1997-2014)

and

Navient

Corporation

(loan

management,

servicing

and

asset

recovery)

(2014-2016).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

companies;

and

formerly

,

Executive

Vice

President

and

Chief

Financial

Officer,

NHP

Incorporated

(manager

of

multifamily

housing)

(1995-1997);

and

Vice

President

and

Treasurer,

US

Airways,

Inc.

(until

1995).

Jan

Hopkins

Trachtman

(1947)

Trustee

Since

2009

11

FTAC

Olympus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(2020-present)

and

FTAC

Parnassus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(February

2021-present);

and

formerly

,

FinTech

Acquisition

Corp.

III

(special

purpose

fintech

acquisition

company)

(2018-2021).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President

and

Founder,

The

Jan

Hopkins

Group

(communications

consulting

firm);

serves

on

Alumni

Advisory

Board

of

Knight

Bagehot

Fellowship;

and

formerly

,

President,

Economic

Club

of

New

York

(2007-2015);

Anchor/Correspondent,

CNN

Financial

News

(until

2003);

Managing

Director

and

Head

of

Client

Communications,

Citigroup

Private

Bank

(until

2005);

Off-Air

reporter,

ABC

News’

World

News

Tonight;

and

Editor,

CBS

Network

News.

Franklin

Mutual

Series

Funds

39

franklintempleton.com

Annual

Report

Interested

Board

Members

and

Officers

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Keith

Mitchell

(1954)

Trustee

Since

2009

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

boards

of

asset

management

firms;

and

formerly

,

Managing

Member,

Mitchell,

Hartley

&

Bechtel

Advisers,

LLC

(

formerly

,

Mitchell

Advisers,

LLC)

(advisory

firm)

(2003-2015)

and

Managing

Director,

Putman

Lovell

NBF.

David

W.

Niemiec

(1949)

Trustee

Since

2015

30

Hess

Midstream

LP

(oil

and

gas

midstream

infrastructure)

(2017-present).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Advisor,

Saratoga

Partners

(private

equity

fund);

and

formerly

,

Managing

Director,

Saratoga

Partners

(1998-2001)

and

SBC

Warburg

Dillon

Read

(investment

banking)

(1997-1998);

Vice

Chairman,

Dillon,

Read

&

Co.

Inc.

(investment

banking)

(1991-1997);

and

Chief

Financial

Officer,

Dillon,

Read

&

Co.

Inc.

(1982-1997).

Robert

E.

Wade

(1946)

Trustee

Since

1991

30

El

Oro

Ltd

(investments)

(2003-

2019).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Attorney

at

law

engaged

in

private

practice

as

a

sole

practitioner

(1972-2008)

and

member

of

various

boards.

Gregory

H.

Williams

(1943)

Trustee

Since

2015

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Private

investor;

Consultant;

and

formerly

,

President,

University

of

Cincinnati

(2009-2012);

President,

The

City

College

of

New

York

(2001-

2009);

Dean,

College

of

Law,

Ohio

State

University

(1993-2001);

and

Associate

Vice

President,

Academic

Affairs

and

Professor

of

Law,

University

of

Iowa

(1977-1993).

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Gregory

E.

Johnson

(1961)

Trustee

Since

2007

132

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Executive

Chairman,

Chairman

of

the

Board

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

Vice

Chairman,

Investment

Company

Institute;

and

formerly

,

Chief

Executive

Officer

(2013-2020)

and

President

(1994-2015)

Franklin

Resources,

Inc.

Independent

Board

Members

(continued)

Franklin

Mutual

Series

Funds

40

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Jennifer

M.

Johnson

(1964)

Trustee

Since

March

2021

70

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Executive

Officer,

President

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Chief

Operating

Officer

and

Executive

Vice

President,

Franklin

Resources,

Inc.

(1994-2015);

Executive

Vice

President

of

Operations

and

Technology,

Franklin

Resources,

Inc.

(2005-2010);

and

Senior

Vice

President,

Franklin

Resources,

Inc.

(2003-2005).

Alison

E.

Baur

(1964)

Vice

President

Since

2012

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Deputy

General

Counsel,

Franklin

Templeton;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Breda

M.

Beckerle

(1958)

Chief

Compliance

Officer

Since

2020

Not

Applicable

Not

Applicable

280

Park

Avenue

New

York,

NY

10017

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Compliance

Officer,

Fiduciary

Investment

Management

International,

Inc.,

Franklin

Advisers,

Inc.,

Franklin

Mutual

Advisers,

LLC,

Franklin

Templeton

Institutional,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christian

K.

Correa

(1973)

President,

and

Chief

Executive

Officer

–

Investment

Management

Since

April

2021

Not

Applicable

Not

Applicable

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President,

Franklin

Mutual

Advisers,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Steven

J.

Gray

(1955)

Vice

President

and

Secretary

Vice

President

since

2009

and

Secretary

since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Vice

President,

FASA,

LLC;

Assistant

Secretary,

Franklin

Distributors,

LLC;

and

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Matthew

T.

Hinkle

(1971)

Chief

Executive

Officer

–

Finance

and

Administration

Since

2017

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Vice

President,

Franklin

Templeton

Services,

LLC;

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Vice

President,

Global

Tax

(2012-April

2017)

and

Treasurer/Assistant

Treasurer,

Franklin

Templeton

(2009-2017).

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

41

franklintempleton.com

Annual

Report

*We

base

the

number

of

portfolios

on

each

separate

series

of

the

U.S.

registered

investment

companies

within

the

Franklin

Templeton/Legg

Mason

complex.

These

portfolios

have

a

common

investment

manager

or

affiliated

investment

managers.

**Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

considered

to

be

interested

people

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

of

Franklin

Resources,

Inc.

(Resources),

which

is

the

parent

company

of

the

Fund’s

investment

manager

and

distributor.

Note

1:

Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

siblings.

Note

2:

Officer

information

is

current

as

of

the

date

of

this

report.

It

is

possible

that

after

this

date,

information

about

officers

may

change.

Note

3:

Effective

September

30,

2021,

Peter

A.

Langerman

ceased

to

be

a

trustee

of

the

Trust.

Note

4:

Effective

December

31,

2021,

Burton

J.

Greenwald

ceased

to

be

a

trustee

of

the

Trust.

The

Sarbanes-Oxley

Act

of

2002

and

Rules

adopted

by

the

U.S.

Securities

and

Exchange

Commission

require

the

Fund

to

disclose

whether

the

Fund’s

Audit

Committee

includes

at

least

one

member

who

is

an

audit

committee

financial

expert

within

the

meaning

of

such

Act

and

Rules.

The

Fund’s

Board

has

determined

that

there

is

at

least

one

such

financial

expert

on

the

Audit

Committee

and

has

designated

each

of

Ann

Torre

Bates

and

David

W.

Niemiec

as

an

audit

committee

financial

expert.

The

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

qualify

as

such

an

expert

in

view

of

their

extensive

business

background

and

experience.

Ms.

Bates

has

served

as

a

member

of

the

Fund

Audit

Committee

since

1995.

She

currently

serves

as

a

director

of

Ares

Capital

Corporation

(2010-present)

and

United

Natural

Foods,

Inc.

(2013-present)

and

was

formerly

a

director

of

Navient

Corporation

from

2014

to

2016,

SLM

Corporation

from

1997

to

2014

and

Allied

Capital

Corporation

from

2003

to

2010,

Executive

Vice

President

and

Chief

Financial

Officer

of

NHP

Incorporated

from

1995

to

1997

and

Vice

President

and

Treasurer

of

US

Airways,

Inc.

until

1995.

Mr.

Niemiec

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2015,

currently

serves

as

an

Advisor

to

Saratoga

Partners

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Susan

Kerr

(1949)

Vice

President

–

AML

Compliance

Since

July

2021

Not

Applicable

Not

Applicable

620

Eighth

Avenue

New

York,

NY

10018

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Compliance

Analyst,

Franklin

Templeton;

Chief

Anti-Money

Laundering

Compliance

Officer,

Legg

Mason

&

Co.,

or

its

affiliates;

Anti

Money

Laundering

Compliance

Officer;

Senior

Compliance

Officer,

LMIS;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christopher

Kings

(1974)

Chief

Financial

Officer,

Chief

Accounting

Officer

and

Treasurer

Since

January

2022

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Treasurer,

U.S.

Fund

Administration

&

Reporting;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Navid

J.

Tofigh

(1972)

Vice

President

Since

2015

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Craig

S.

Tyle

(1960)

Vice

President

Since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

General

Counsel

and

Executive

Vice

President,

Franklin

Resources,

Inc.;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Lori

A.

Weber

(1964)

Vice

President

Since

2011

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Assistant

Secretary,

Franklin

Resources,

Inc.;

Vice

President

and

Secretary,

Templeton

Investment

Counsel,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

42

franklintempleton.com

Annual

Report

and

was

formerly

its

Managing

Director

from

1998

to

2001

and

serves

as

a

director

of

Hess

Midstream

LP

(2017-present).

Mr.

Niemiec

was

formerly

a

director

of

Emeritus

Corporation

from

1999

to

2010

and

OSI

Pharmaceuticals,

Inc.

from

2006

to

2010,

Managing

Director

of

SBC

Warburg

Dillon

Read

from

1997

to

1998,

and

was

Vice

Chairman

from

1991

to

1997

and

Chief

Financial

Officer

from

1982

to

1997

of

Dillon,

Read

&

Co.

Inc.

As

a

result

of

such

background

and

experience,

the

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

have

each

acquired

an

understanding

of

generally

accepted

accounting

principles

and

financial

statements,

the

general

application

of

such

principles

in

connection

with

the

accounting

estimates,

accruals

and

reserves,

and

analyzing

and

evaluating

financial

statements

that

present

a

breadth

and

level

of

complexity

of

accounting

issues

generally

comparable

to

those

of

the

Fund,

as

well

as

an

understanding

of

internal

controls

and

procedures

for

financial

reporting

and

an

understanding

of

audit

committee

functions.

Ms.

Bates

and

Mr.

Niemiec

are

independent

Board

members

as

that

term

is

defined

under

the

applicable

U.S.

Securities

and

Exchange

Commission

Rules

and

Releases.

The

Statement

of

Additional

Information

(SAI)

includes

additional

information

about

the

board

members

and

is

available,

without

charge,

upon

request.

Shareholders

may

call

(800)

DIAL

BEN/342-5236

to

request

the

SAI.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

Shareholder

Information

43

franklintempleton.com

Annual

Report

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,

or

receive

notice

of

the

availability

of,

the

Fund’s

financial

reports

every

six

months.

In

addition,

you

will

receive

an

annual

updated

summary

prospectus

(detail

prospectus

available

upon

request).

To

reduce

Fund

expenses,

we

try

to

identify

related

shareholders

in

a

household

and

send

only

one

copy

of

the

financial

reports

(to

the

extent

received

by

mail)

and

summary

prospectus.

This

process,

called

“householding,”

will

continue

indefinitely

unless

you

instruct

us

otherwise.

If

you

prefer

not

to

have

these

documents

householded,

please

call

us

at

(800)

632-2301.

At

any

time

you

may

view

current

prospectuses/

summary

prospectuses

and

financial

reports

on

our

website.

If

you

choose,

you

may

receive

these

documents

through

electronic

delivery.

479

A

02/22

©

2022

Franklin

Templeton

Investments.

All

rights

reserved.

Authorized

for

distribution

only

when

accompanied

or

preceded

by

a

summary

prospectus

and/or

prospectus.

Investors

should

carefully

consider

a

fund’s

investment

goals,

risks,

charges

and

expenses

before

investing.

A

prospectus

contains

this

and

other

information;

please

read

it

carefully

before

investing.

To

help

ensure

we

provide

you

with

quality

service,

all

calls

to

and

from

our

service

areas

are

monitored

and/or

recorded.

Annual

Report

and

Shareholder

Letter

Franklin

Mutual

Financial

Services

Fund

Investment

Manager

Distributor

Shareholder

Services

Franklin

Mutual

Advisers,

LLC

Franklin

Distributors,

LLC

(800)

DIAL

BEN

®

/

342-5236

franklintempleton.com

(800)

632-2301

-

(Class

A,

C

&

R6)

(800)

448-FUND

-

(Class

Z)

ANNUAL

REPORT

AND

SHAREHOLDER

LETTER

Franklin

Mutual

Shares

Fund

A

Series

of

Franklin

Mutual

Series

Funds

December

31,

2021

Sign

up

for

electronic

delivery

at

franklintempleton.com/edelivery

Not

FDIC

Insured

May

Lose

Value

No

Bank

Guarantee

franklintempleton.com

Annual

Report

1

SHAREHOLDER

LETTER

Dear

Franklin

Mutual

Shares

Fund

Shareholder:

After

a

difficult

period

of

lockdowns,

anxiety

and

grief,

the

start

of

2021

brought

much

needed

optimism.

Prior

to

the

start

of

the

period,

authorities

in

the

United

States

and

Europe

approved

the

first

vaccines

for

emergency

use.

The

U.S.

also

passed

an

additional

stimulus

package,

delivering

financial

assistance

to

many

people

in

need.

Ten-year

U.S.

Treasury

yields

rose

as

investors

began

to

anticipate

a

possible

economic

recovery.

This

economic

optimism

sparked

a

rotation

out

of

growth

stocks

and

into

value

stocks

over

the

first

half

of

the

year.

The

rotation

into

many

“reopening”

names

meant

companies

which

had

benefited

from

consumer

behavior

shifts

during

the

lockdown,

such

as

online

payment

processors,

online

retailers,

and

remote

worker

infrastructure

providers,

fell

out

of

favor.

Instead,

companies

positioned

to

benefit

from

economic

reopening,

such

as

hotels,

casinos,

restaurants,

and

other

leisure

companies,

received

a

boost.

Smaller

capitalization

companies,

which

tend

to

be

more

sensitive

to

the

economic

cycle,

outperformed

their

larger

capitalization

counterparts

during

the

first

half

of

the

period.

The

new

Biden

administration,

and

its

focus

on

overhauling

America’s

infrastructure,

also

supported

a

rally

in

building

products

companies

and

other

potential

beneficiaries

of

greater

stimulus

spending.

The

U.S.

government

successfully

passed

another

stimulus

bill

in

March

2021.

By

the

late

spring

of

2021,

massive

amounts

of

fiscal

and

monetary

stimulus,

combined

with

increased

consumer

spending

and

supply

chain

difficulties,

led

to

building

inflationary

pressure

and

rising

interest

rates.

While

this

propelled

some

areas

of

the

market

upward,

such

as

the

financials

and

energy

sectors,

growing

investor

concern

about

rising

interest

rates

stoked

pockets

of

volatility.

Furthermore,

differences

in

regional

vaccination

rates

constrained

a

widespread

economic

reopening

as

the

highly

contagious

COVID-19

Delta

variant

forced

some

countries

to

reinstate

business

and

travel

restrictions.

The

reopening

trade

stalled,

and

growth

stocks

once

again

generally

outperformed

value

stocks

during

much

of

the

late

summer

and

fall.

Volatility

increased

in

September

2021

and

markets

fell

over

the

final

weeks

of

the

third

calendar

quarter,

as

continued

supply

chain

disruptions,

inflationary

pressures

and

hawkish

central

bank

commentary

stoked

investor

anxiety.

Markets

stabilized

and

rebounded

in

October

with

some

indices

reaching

new

records.

However,

high

volatility

crept

in

again

in

late

November

as

the

COVID-19

Omicron

variant

emerged,

but

it

was

short

lived.

At

year-end,

both

growth

and

value

returns

for

the

12-month

period

were

strong,

as

the

two

styles

ended

the

year

with

comparable

results.

Not

all

progress

is

evidenced

by

a

steady

march

forward.

Ongoing

uncertainties

surrounding

COVID-19,

supply

chain

disruptions

and

inflation

continued

to

affect

financial

markets.

As

these

elements

influence

investor

behavior,

pockets

of

volatility

may

continue

to

crop

up.

However,

market

volatility

can

often

present

opportunities.

As

an

organization,

Franklin

Mutual

Series

remains

dedicated

to

using

fundamental

research,

coupled

with

a

long-term

approach,

to

identify

attractively

valued

companies

that

can

offer

both

meaningful

upside

potential

and

a

degree

of

downside

protection

in

periods

of

financial

market

turbulence.

On

the

following

pages,

the

portfolio

management

team

reviews

investment

decisions

made

during

the

past

12

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,

Christian

Correa,

CFA

President

and

Chief

Investment

Officer

Franklin

Mutual

Advisers,

LLC

This

letter

reflects

our

analysis

and

opinions

as

of

December

31,

2021,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

franklintempleton.com

Annual

Report

2

Contents

Annual

Report

Franklin

Mutual

Shares

Fund

3

Performance

Summary

7

Your

Fund’s

Expenses

10

Financial

Highlights

and

Statement

of

Investments

11

Financial

Statements

22

Notes

to

Financial

Statements

27

Report

of

Independent

Registered

Public

Accounting

Firm

42

Tax

Information

43

Board

Members

and

Officers

44

Shareholder

Information

49

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Annual

Report

ANNUAL

REPORT

Franklin

Mutual

Shares

Fund

This

annual

report

for

Franklin

Mutual

Shares

Fund

covers

the

fiscal

year

ended

December

31,

2021

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

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

up

to

35%

of

its

assets

in

foreign

securities

and

participations

in

foreign

government

debt.

The

Geographic

Composition

table

on

this

page

lists

the

leading

countries

where

the

Fund

invests.

*The

Fund

held

13.6%

of

total

net

assets

in

foreign

securities.

**

Rounds

to

less

than

0.1%.

Performance

Overview

The

Fund’s

Class

Z

shares

posted

a

+19.34%

cumulative

total

return

for

the

six

months

ended

June

30,

2021.

For

comparison,

the

Fund’s

benchmark,

the

Russell

1000

®

Value

Index,

which

measures

the

performance

of

the

large-

cap

value

segment

of

the

U.S.

equity

universe,

posted

a

+25.16%

cumulative

total

return

for

the

period

under

review.

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-NR

(USD),

posted

a

+18.54%

total

return

for

the

12

months

ended

December

31,

2021.

1

Global

equities

benefited

from

monetary

and

fiscal

stimulus

measures,

easing

COVID-19

pandemic

restrictions

in

certain

regions

and

the

development

of

treatments

and

vaccines.

However,

the

Chinese

government’s

imposition

of

additional

restrictions

on

some

businesses

pressured

Asian

and

global

emerging

market

stocks.

Additionally,

the

spread

of

the

Delta

and

Omicron

variants

and

higher

inflation

in

an

environment

of

persistent

supply-chain

disruptions

and

wage

increases

hindered

global

equities

at

certain

points

during

the

12-month

period.

In

the

U.S.,

the

economy

continued

to

recover

and

equities

rallied

amid

monetary

and

fiscal

stimulus

measures

and

the

continued

progress

of

vaccination

programs.

Gross

domestic

product

(GDP)

growth

was

generally

robust,

as

the

lifting

of

many

COVID-19

restrictions

and

strong

consumer

spending

supported

the

economy.

A

rebound

in

corporate

earnings

and

the

passage

of

a

bipartisan

infrastructure

bill

further

bolstered

investor

sentiment.

In

an

effort

to

support

the

economy,

the

U.S.

Federal

Reserve

(Fed)

kept

the

federal

funds

target

rate

at

a

record-low

range

of

0.00%–0.25%.

While

the

Fed

also

maintained

quantitative

easing

measures

with

U.S.

Treasury

and

mortgage

bond

purchasing,

it

began

to

reduce

the

rate

of

purchases

beginning

in

November

2021

and

accelerated

the

pace

of

tapering

in

December.

The

Fed

also

noted

that

it

expected

easing

supply

constraints

to

help

Geographic

Composition*

12/31/21

%

of

Total

Net

Assets

United

States

81.8%

United

Kingdom

5.7%

Netherlands

2.5%

Switzerland

2.0%

South

Korea

1.8%

France

1.6%

Other**

0.0%

Short-Term

Investments

&

Other

Net

Assets

4.6%

1.

Source:

Morningstar

Frank

Russell

Company

is

the

source

and

owner

of

the

trademarks,

service

marks

and

copyrights

related

to

the

Russell

Indexes.

Russell

®

is

a

trade-

mark

of

Frank

Russell

Company.

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

16

.

Franklin

Mutual

Shares

Fund

4

franklintempleton.com

Annual

Report

reduce

inflationary

pressures

and

that

further

employment

progress

was

needed

before

the

Fed

would

consider

raising

the

range

for

the

federal

funds

target

rate.

The

economic

recovery

in

the

eurozone

was

slow,

as

quarter-over-quarter

GDP

growth

contracted

in

2021’s

first

quarter

before

returning

to

growth

in

2021’s

second

and

third

quarters.

GDP

growth

rates

were

initially

sluggish

among

the

region’s

largest

economies,

although

most

showed

signs

of

improvement

later

in

the

12-month

period.

Business

activity

growth

also

helped

European

developed

market

equities,

as

measured

by

the

MSCI

Europe

Index-NR

(USD),

to

post

a

+16.30%

total

return

for

the

12

months

under

review.

1

However,

in

November

2021,

the

annual

inflation

rate

in

the

eurozone

reached

the

highest

level

since

the

introduction

of

the

euro,

and

the

prospect

of

energy

shortages

during

the

winter

months

tempered

investor

optimism.

Asian

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

All

Country

Asia

Index-NR

(USD),

posted

a

-2.49%

total

return

for

the

12-month

period.

1

While

many

Asian

countries

experienced

improving

economic

conditions,

Japan’s

quarter-over-quarter

GDP

contracted

in

2021’s

third

quarter.

China’s

economic

recovery

continued,

although

the

country’s

quarter-over-quarter

GDP

growth

in

2021’s

first

three

quarters

was

slower

than

in

2020’s

second

half,

pressured

by

higher

commodity

prices.

Unexpected

regulatory

changes

by

the

Chinese

government,

which

negatively

impacted

education-

and

technology-related

businesses,

and

concerns

about

a

large

Chinese

property

developer’s

solvency

and

several

smaller

developer

defaults

pressured

Asian

stocks

during

2021’s

fourth

quarter.

Global

emerging

market

stocks,

as

measured

by

the

MSCI

Emerging

Markets

Index-NR

(USD),

posted

a

-2.54%

total

return

for

the

12

months

under

review.

1

Higher

inflation

led

many

central

banks

in

emerging

market

countries

to

raise

interest

rates,

which

dampened

economic

growth.

The

Omicron

variant

of

COVID-19

also

negatively

impacted

global

emerging

markets,

as

some

countries

reimplemented

restrictions

in

an

effort

to

counter

rising

infections.

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

and

debt

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

Top

10

Industries

12/31/21

%

of

Total

Net

Assets

a

Pharmaceuticals

9.1%

Insurance

7.6%

Banks

7.3%

Health

Care

Providers

&

Services

6.1%

IT

Services

5.9%

Oil,

Gas

&

Consumable

Fuels

5.0%

Media

4.8%

Software

4.5%

Technology

Hardware,

Storage

&

Peripherals

4.0%

Food

Products

3.9%

Franklin

Mutual

Shares

Fund

5

franklintempleton.com

Annual

Report

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

During

2021,

the

Fund

underperformed

its

benchmark,

driven

by

difficult

performance

in

the

information

technology

sector,

primarily

as

the

result

of

weak

stock

selection.

Stock

selection

and

an

underweight

in

real

estate

also

weighed

on

returns.

Overweighting

to

areas

of

the

health

care

sector,

which

lagged

during

the

year

due

to

COVID-related

headwinds,

also

detracted

from

relative

results.

Conversely,

security

selection

in

industrials,

which

were

bolstered

by

government

support

during

the

period,

and

an

underweight

in

utilities

contributed

positively

to

performance

on

a

relative

basis,

as

did

stock

selection

in

consumer

staples.

During

the

12-month

period,

investments

that

detracted

from

Fund

performance

included

Charter

Communications,

Novartis

and

Samsung

Electronics.

Charter

Communications

is

listed

among

the

Fund’s

largest

positions

in

the

Top

10

Holdings

table

on

this

page.

Charter

Communications

detracted

from

performance

due

to

weaker-than-expected

growth

in

broadband

subscribers.

While

overall

loss

of

customers

in

the

broadband

market

continued

to

be

very

low

this

year,

there

is

concern

that

the

overall

market

growth

is

slowing,

and

that

the

cable

industry’s

share

of

that

growth

will

come

under

pressure

as

telecommunications

companies

build

out

their

fiber

footprints

and

introduce

fixed

wireless

access

services.

We

believe

market

expectations

are

too

low

for

broadband

service

growth

and

that

in

a

market

with

only

two

suppliers,

Charter

can

continue

to

take

its

fair

share

of

growth.

Swiss

pharmaceutical

company

Novartis

hindered

performance

in

2021

amid

concerns

around

the

potential

impact

of

drug

pricing

reforms

in

the

United

States.

However,

we

believe

that

given

the

company’s

geographic

and

product

diversification

and

its

focus

on

innovation,

it

should

be

able

to

manage

through

these

concerns

and

continue

to

provide

value

to

patients.

The

company’s

financial

results

have

been

robust

despite

uncertainty

surrounding

the

impact

of

the

global

pandemic,

and

Novartis

expects

its

overall

business

to

continue

to

normalize. 

Samsung

Electronics,

a

South

Korea-based

maker

of

semiconductors,

smartphones,

and

consumer

electronics,

was

a

relative

detractor

in

2021

amid

concerns

about

the

memory

semiconductor

cycle.

However,

underlying

fundamentals

have

been

robust

and

continue

to

improve.

The

company

has

a

strong

semiconductor

business,

particularly

in

memory

chips

and

foundry.

We

believe

that

improved

capital

allocation

and

corporate

governance

should

augment

robust

cash

flows

and

create

value

for

shareholders.

Top

positive

contributors

to

performance

during

the

12-month

period

included

Capital

One

Financial

(not

held

at

period-

end),

Johnson

Controls

International

and

Eli

Lilly.

Johnson

Controls

International

is

listed

among

the

Fund’s

largest

positions

in

the

Top

10

Holdings

table

on

this

page.

Capital

One

Financial

boosted

relative

performance,

amid

a

strong

period

for

financial

stocks

in

general

in

2021.

We

believe

Capital

One

is

one

of

the

best

managed

and

positioned

consumer

banks

in

the

United

States,

with

a

good

brand

and

strong

franchises

in

credit

card

and

auto

lending.

Furthermore,

the

bank

has

invested

heavily

in

technology

as

evidenced

by

being

the

first

U.S.

bank

to

migrate

its

technology

to

the

cloud.

Johnson

Controls

International,

a

leader

in

commercial

heating,

ventilation,

and

air

conditioning

products,

boosted

relative

performance.

Recent

financial

results

have

been

positive

as

the

company

has

exited

lower

returning

businesses

and

cut

costs

aggressively

to

focus

on

margins

and

returns.

At

an

investor

day

earlier

in

the

year,

Johnson

Controls

articulated

three-year

financial

goals,

which

were

well

received

by

the

market.

Over

the

longer

term,

we

believe

Johnson

Controls

should

benefit

from

commercial

construction

growth

and

the

need

to

build

more

sustainably.

Top

10

Holdings

12/31/21

Company

Industry

,

Country

%

of

Total

Net

Assets

A

a

CVS

Health

Corp.

3.4%

Health

Care

Providers

&

Services,

United

States

Charter

Communications,

Inc.

2.9%

Media,

United

States

Anthem,

Inc.

2.7%

Health

Care

Providers

&

Services,

United

States

Kraft

Heinz

Co.

(The)

2.6%

Food

Products,

United

States

Merck

&

Co.,

Inc.

2.6%

Pharmaceuticals,

United

States

ING

Groep

NV

2.5%

Banks,

Netherlands

Fiserv,

Inc.

2.5%

IT

Services,

United

States

Williams

Cos.,

Inc.

(The)

2.5%

Oil,

Gas

&

Consumable

Fuels,

United

States

Sensata

Technologies

Holding

plc

2.4%

Electrical

Equipment,

United

States

Johnson

Controls

International

plc

2.3%

Building

Products,

United

States

Franklin

Mutual

Shares

Fund

6

franklintempleton.com

Annual

Report

Pharmaceutical

maker

Eli

Lilly

contributed

to

relative

performance

in

2021

amid

positive

pipeline

news

on

several

medicines

as

well

as

strong

financial

performance.

The

company

announced

that

it

would

file

its

Alzheimer’s

drug

with

the

U.S.

Food

and

Drug

Administration

much

earlier

than

expected

following

approval

of

a

rival

Alzheimer’s

treatment.

In

addition,

Lilly’s

diabetes

drug,

Trulicity,

continues

to

grow,

and

their

key

diabetes

pipeline

compound,

Tirzepatide,

showed

positive

results

in

multiple

Phase

3

clinical

trials,

further

strengthening

the

company’s

position

in

the

growing

diabetes

end

market.

During

the

period,

the

Fund

held

currency

forwards

and

futures,

seeking

to

substantially

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

the

U.S.

dollar

rose

against

most

currencies

during

the

period.

As

fellow

shareholders,

we

found

recent

relative

performance

disappointing,

but

our

strategy

of

seeking

undervalued

stocks

and

focus

on

special

situation

investments,

including

distressed

investments

and

merger

arbitrage,

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.

Christian

Correa,

CFA

Co-Lead

Portfolio

Manager

Grace

Hoefig

Co-Lead

Portfolio

Manager

Debbie

A.

Turner,

CFA

Assistant

Portfolio

Manager

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

December

31,

2021,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Performance

Summary

as

of

December

31,

2021

Franklin

Mutual

Shares

Fund

7

franklintempleton.com

Annual

Report

The

performance

table

and

graphs

do

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

12/31/21

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A:

5.50%

maximum

initial

sales

charge;

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

1

Average

Annual

Total

Return

2

–

Z

1-Year

+19.34%

+19.34%

5-Year

+38.87%

+6.79%

10-Year

+145.65%

+9.40%

A

3

1-Year

+19.07%

+12.51%

5-Year

+37.16%

+5.32%

10-Year

+139.19%

+8.50%

See

page

9

for

Performance

Summary

footnotes.

Franklin

Mutual

Shares

Fund

Performance

Summary

8

franklintempleton.com

Annual

Report

See

page

9

for

Performance

Summary

footnotes.

Total

Return

Index

Comparison

for

a

Hypothetical

$10,000

Investment

Total

return

represents

the

change

in

value

of

an

investment

over

the

periods

shown.

It

includes

any

applicable

maximum

sales

charge,

Fund

expenses,

account

fees

and

reinvested

distributions.

The

unmanaged

index

includes

reinvestment

of

any

income

or

distributions.

It

differs

from

the

Fund

in

composition

and

does

not

pay

management

fees

or

expenses.

One

cannot

invest

directly

in

an

index.

Class

Z

(1/1/12–12/31/21)

Class

A

(1/1/12–12/31/21)

Franklin

Mutual

Shares

Fund

Performance

Summary

9

franklintempleton.com

Annual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

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.

Events

such

as

the

spread

of

deadly

diseases,

disasters,

and

financial,

political

or

social

disruptions,

may

heighten

risks

and

adversely

affect

performance.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

2.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

3.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

4.

The

Russell

1000

Value

Index

is

market

capitalization

weighted

and

measures

the

performance

of

those

Russell

1000

Index

companies

with

relatively

lower

price-to-book

ratios

and

lower

forecasted

growth

rates.

Russell

1000

Index

is

market

capitalization

weighted

and

measures

the

performance

of

the

approximately

1,000

largest

companies

in

the

Russell

3000

Index,

which

represents

the

majority

of

the

U.S.

market’s

total

capitalization.

5.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Distributions

(1/1/21–12/31/21)

Share

Class

Net

Investment

Income

Long-Term

Capital

Gain

Total

Z

$0.9394

$2.1238

$3.0632

A

$0.8659

$2.1238

$2.9897

C

$0.6155

$2.1238

$2.7393

R

$0.7928

$2.1238

$2.9166

R6

$0.9541

$2.1238

$3.0779

Total

Annual

Operating

Expenses

5

Share

Class

Z

0.80%

A

1.05%

Your

Fund’s

Expenses

Franklin

Mutual

Shares

Fund

10

franklintempleton.com

Annual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6

).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

7/1/21

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

a

Net

Annualized

Expense

Ratio

2

Z

$1,000

$1,020.20

$4.10

$1,021.15

$4.10

0.81%

A

$1,000

$1,019.30

$5.37

$1,019.89

$5.37

1.06%

C

$1,000

$1,015.30

$9.17

$1,016.10

$9.18

1.81%

R

$1,000

$1,018.20

$6.64

$1,018.62

$6.64

1.31%

R6

$1,000

$1,020.40

$3.82

$1,021.42

$3.82

0.75%

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Shares

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

11

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

Z

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$25.33

$27.56

$24.25

$28.63

$28.22

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.39

0.83

c

0.63

0.51

0.65

d

Net

realized

and

unrealized

gains

(losses)

...........

4.43

(2.11)

4.90

(3.11)

1.73

Total

from

investment

operations

....................

4.82

(1.28)

5.53

(2.60)

2.38

Less

distributions

from:

Net

investment

income

..........................

(0.94)

(0.53)

(0.71)

(0.53)

(0.68)

Net

realized

gains

.............................

(2.12)

(0.42)

(1.51)

(1.25)

(1.29)

Total

distributions

...............................

(3.06)

(0.95)

(2.22)

(1.78)

(1.97)

Net

asset

value,

end

of

year

.......................

$27.09

$25.33

$27.56

$24.25

$28.63

Total

return

....................................

19.34%

(4.34)%

23.13%

(8.95)%

8.49%

Ratios

to

average

net

assets

Expenses

e,f

....................................

0.81%

g

0.80%

g

0.78%

g

0.76%

g

0.78%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.02%

0.02%

—%

h

—%

Net

investment

income

...........................

1.36%

3.56%

c

2.32%

1.77%

2.23%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$4,717,528

$4,376,135

$5,472,276

$5,189,476

$6,229,996

Portfolio

turnover

rate

............................

41.18%

i

21.35%

21.71%

20.72%

18.15%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

2.30%.

d

Net

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%.

e

Includes

dividends

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).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

i

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

See

Note

3(h).

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Shares

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$25.04

$27.26

$24.00

$28.35

$27.97

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.31

0.76

c

0.56

0.43

0.58

d

Net

realized

and

unrealized

gains

(losses)

...........

4.39

(2.10)

4.85

(3.07)

1.70

Total

from

investment

operations

....................

4.70

(1.34)

5.41

(2.64)

2.28

Less

distributions

from:

Net

investment

income

..........................

(0.87)

(0.46)

(0.64)

(0.46)

(0.61)

Net

realized

gains

.............................

(2.12)

(0.42)

(1.51)

(1.25)

(1.29)

Total

distributions

...............................

(2.99)

(0.88)

(2.15)

(1.71)

(1.90)

Net

asset

value,

end

of

year

.......................

$26.75

$25.04

$27.26

$24.00

$28.35

Total

return

e

...................................

19.07%

(4.60)%

22.86%

(9.18)%

8.21%

Ratios

to

average

net

assets

Expenses

f,g

....................................

1.06%

h

1.05%

h

1.03%

h

1.01%

h

1.03%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.02%

0.02%

—%

i

—%

Net

investment

income

...........................

1.11%

3.32%

c

2.07%

1.52%

1.98%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$3,125,320

$2,965,127

$4,042,626

$3,852,134

$4,386,829

Portfolio

turnover

rate

............................

41.18%

j

21.35%

21.71%

20.72%

18.15%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

2.07%.

d

Net

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%.

e

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

f

Includes

dividends

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).

g

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

h

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

i

Rounds

to

less

than

0.01%.

j

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

See

Note

3(h).

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Shares

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

13

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$25.02

$27.22

$23.97

$28.04

$27.68

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.10

0.60

c

0.36

0.21

0.35

d

Net

realized

and

unrealized

gains

(losses)

...........

4.37

(2.12)

4.82

(3.00)

1.67

Total

from

investment

operations

....................

4.47

(1.52)

5.18

(2.79)

2.02

Less

distributions

from:

Net

investment

income

..........................

(0.62)

(0.26)

(0.42)

(0.03)

(0.37)

Net

realized

gains

.............................

(2.12)

(0.42)

(1.51)

(1.25)

(1.29)

Total

distributions

...............................

(2.74)

(0.68)

(1.93)

(1.28)

(1.66)

Net

asset

value,

end

of

year

.......................

$26.75

$25.02

$27.22

$23.97

$28.04

Total

return

e

...................................

18.13%

(5.29)%

21.93%

(9.87)%

7.37%

Ratios

to

average

net

assets

Expenses

f,g

....................................

1.81%

h

1.80%

h

1.78%

h

1.76%

h

1.78%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.02%

0.02%

—%

i

—%

Net

investment

income

...........................

0.35%

2.63%

c

1.32%

0.77%

1.23%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$192,660

$206,196

$302,296

$309,756

$995,665

Portfolio

turnover

rate

............................

41.18%

j

21.35%

21.71%

20.72%

18.15%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.37%.

d

Net

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%.

e

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

f

Includes

dividends

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).

g

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

h

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

i

Rounds

to

less

than

0.01%.

j

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

See

Note

3(h).

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Shares

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$24.96

$27.17

$23.91

$28.21

$27.83

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.24

0.70

c

0.49

0.36

0.50

d

Net

realized

and

unrealized

gains

(losses)

...........

4.36

(2.09)

4.83

(3.05)

1.70

Total

from

investment

operations

....................

4.60

(1.39)

5.32

(2.69)

2.20

Less

distributions

from:

Net

investment

income

..........................

(0.79)

(0.40)

(0.55)

(0.36)

(0.53)

Net

realized

gains

.............................

(2.12)

(0.42)

(1.51)

(1.25)

(1.29)

Total

distributions

...............................

(2.91)

(0.82)

(2.06)

(1.61)

(1.82)

Net

asset

value,

end

of

year

.......................

$26.65

$24.96

$27.17

$23.91

$28.21

Total

return

....................................

18.75%

(4.80)%

22.55%

(9.41)%

7.96%

Ratios

to

average

net

assets

Expenses

e,f

....................................

1.31%

g

1.30%

g

1.28%

g

1.26%

g

1.28%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.02%

0.02%

—%

h

—%

Net

investment

income

...........................

0.86%

3.06%

c

1.82%

1.27%

1.73%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$49,843

$48,216

$66,038

$74,345

$107,660

Portfolio

turnover

rate

............................

41.18%

i

21.35%

21.71%

20.72%

18.15%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.80%.

d

Net

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%.

e

Includes

dividends

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).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

i

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

See

Note

3(h).

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Shares

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

15

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$25.32

$27.55

$24.23

$28.61

$28.21

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.39

0.83

c

0.64

0.53

0.70

d

Net

realized

and

unrealized

gains

(losses)

...........

4.43

(2.09)

4.92

(3.11)

1.71

Total

from

investment

operations

....................

4.82

(1.26)

5.56

(2.58)

2.41

Less

distributions

from:

Net

investment

income

..........................

(0.95)

(0.55)

(0.73)

(0.55)

(0.72)

Net

realized

gains

.............................

(2.12)

(0.42)

(1.51)

(1.25)

(1.29)

Total

distributions

...............................

(3.07)

(0.97)

(2.24)

(1.80)

(2.01)

Net

asset

value,

end

of

year

.......................

$27.07

$25.32

$27.55

$24.23

$28.61

Total

return

....................................

19.37%

(4.27)%

23.26%

(8.88)%

8.61%

Ratios

to

average

net

assets

Expenses

e,f

....................................

0.74%

g

0.72%

g

0.70%

g

0.69%

g

0.67%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.02%

0.02%

—%

h

—%

Net

investment

income

...........................

1.40%

3.57%

c

2.40%

1.84%

2.34%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$372,115

$1,449,696

$1,680,600

$3,160,186

$3,741,430

Portfolio

turnover

rate

............................

41.18%

i

21.35%

21.71%

20.72%

18.15%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

2.31%.

d

Net

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%.

e

Includes

dividends

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).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

i

Excludes

the

value

of

portfolio

activity

as

a

result

of

in-kind

transactions.

See

Note

3(h).

Franklin

Mutual

Series

Funds

Statement

of

Investments,

December

31,

2021

Franklin

Mutual

Shares

Fund

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

95.5%

Aerospace

&

Defense

3.0%

a

Airbus

SE

...........................................

France

1,044,869

$

133,578,892

Huntington

Ingalls

Industries,

Inc.

.........................

United

States

643,353

120,139,739

253,718,631

Auto

Components

0.0%

†

a,b,c,d

International

Automotive

Components

Group

Brazil

LLC

........

Brazil

7,234,813

273,903

Automobiles

1.9%

a

General

Motors

Co.

....................................

United

States

2,685,168

157,431,400

Banks

7.3%

Bank

of

America

Corp.

.................................

United

States

2,411,359

107,281,362

ING

Groep

NV

.......................................

Netherlands

15,397,217

213,898,418

JPMorgan

Chase

&

Co.

.................................

United

States

731,264

115,795,654

Wells

Fargo

&

Co.

.....................................

United

States

3,726,503

178,797,614

615,773,048

Building

Products

2.3%

Johnson

Controls

International

plc

.........................

United

States

2,433,150

197,839,426

Chemicals

1.8%

Ashland

Global

Holdings,

Inc.

............................

United

States

1,440,789

155,115,344

Containers

&

Packaging

1.0%

International

Paper

Co.

.................................

United

States

1,837,937

86,346,280

Diversified

Financial

Services

2.0%

Voya

Financial,

Inc.

....................................

United

States

2,584,730

171,393,446

Diversified

Telecommunication

Services

0.6%

a

Frontier

Communications

Parent,

Inc.

......................

United

States

343,602

10,132,823

a,b,c

Windstream

Holdings,

Inc.

...............................

United

States

2,123,740

37,382,547

47,515,370

Electric

Utilities

1.9%

Evergy

,

Inc.

..........................................

United

States

1,147,757

78,747,608

Pinnacle

West

Capital

Corp.

.............................

United

States

1,205,815

85,118,481

163,866,089

Electrical

Equipment

2.4%

a

Sensata

Technologies

Holding

plc

.........................

United

States

3,304,770

203,871,261

Electronic

Equipment,

Instruments

&

Components

0.7%

a

Flex

Ltd.

............................................

United

States

3,230,368

59,212,645

Entertainment

1.5%

a,e

Walt

Disney

Co.

(The)

..................................

United

States

818,102

126,715,819

Equity

Real

Estate

Investment

Trusts

(REITs)

2.0%

Uniti

Group,

Inc.

......................................

United

States

601,603

8,428,458

Vornado

Realty

Trust

...................................

United

States

3,924,117

164,263,538

172,691,996

Food

Products

3.9%

Archer-Daniels-Midland

Co.

.............................

United

States

1,596,954

107,938,121

Kraft

Heinz

Co.

(The)

..................................

United

States

6,082,387

218,357,693

326,295,814

Health

Care

Equipment

&

Supplies

1.8%

Medtronic

plc

........................................

United

States

1,501,831

155,364,417

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Shares

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

17

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Health

Care

Providers

&

Services

6.1%

Anthem,

Inc.

.........................................

United

States

488,644

$

226,506,040

CVS

Health

Corp.

.....................................

United

States

2,774,475

286,214,841

512,720,881

Household

Durables

1.9%

Lennar

Corp.,

A

.......................................

United

States

1,364,544

158,505,431

Industrial

Conglomerates

1.6%

General

Electric

Co.

...................................

United

States

1,406,350

132,857,885

Insurance

7.6%

a

Alleghany

Corp.

......................................

United

States

168,949

112,788,663

Everest

Re

Group

Ltd.

.................................

United

States

492,581

134,927,787

e

Hartford

Financial

Services

Group,

Inc.

(The)

................

United

States

1,900,525

131,212,246

MetLife,

Inc.

.........................................

United

States

1,929,863

120,597,139

Willis

Towers

Watson

plc

................................

United

States

593,171

140,872,181

640,398,016

IT

Services

5.9%

Alliance

Data

Systems

Corp.

.............................

United

States

1,298,031

86,409,923

Cognizant

Technology

Solutions

Corp.,

A

....................

United

States

2,194,550

194,700,476

a

Fiserv,

Inc.

..........................................

United

States

2,058,401

213,641,440

494,751,839

Media

4.8%

a

Charter

Communications,

Inc.,

A

..........................

United

States

381,924

249,002,990

Comcast

Corp.,

A

.....................................

United

States

2,787,000

140,269,710

a

Loyalty

Ventures,

Inc.

..................................

United

States

519,212

15,612,705

404,885,405

Oil,

Gas

&

Consumable

Fuels

4.5%

BP

plc

..............................................

United

Kingdom

38,411,250

171,966,504

Williams

Cos.,

Inc.

(The)

................................

United

States

8,113,684

211,280,331

383,246,835

Paper

&

Forest

Products

0.1%

a

Sylvamo

Corp.

.......................................

United

States

167,085

4,660,001

Pharmaceuticals

9.1%

a

Elanco

Animal

Health,

Inc.

...............................

United

States

3,553,587

100,850,799

Eli

Lilly

&

Co.

........................................

United

States

388,119

107,206,230

GlaxoSmithKline

plc

...................................

United

Kingdom

8,009,460

174,246,325

Merck

&

Co.,

Inc.

.....................................

United

States

2,848,676

218,322,529

Novartis

AG,

ADR

.....................................

Switzerland

1,965,544

171,926,134

772,552,017

Professional

Services

1.4%

KBR,

Inc.

...........................................

United

States

2,517,409

119,879,017

Semiconductors

&

Semiconductor

Equipment

2.0%

Xilinx,

Inc.

...........................................

United

States

803,900

170,450,917

Software

3.7%

a

Avaya

Holdings

Corp.

..................................

United

States

364

7,207

NortonLifeLock

,

Inc.

...................................

United

States

7,208,153

187,267,815

Oracle

Corp.

.........................................

United

States

1,385,464

120,826,316

308,101,338

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Shares

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Specialty

Retail

2.0%

Best

Buy

Co.,

Inc.

.....................................

United

States

1,677,906

$

170,475,250

b,c,d

Wayne

Services

Legacy,

Inc.

.............................

United

States

7,469

—

170,475,250

Technology

Hardware,

Storage

&

Peripherals

4.0%

Samsung

Electronics

Co.

Ltd.

............................

South

Korea

2,325,988

152,746,344

a,e

Western

Digital

Corp.

..................................

United

States

2,897,164

188,924,065

341,670,409

Textiles,

Apparel

&

Luxury

Goods

1.9%

Tapestry,

Inc.

........................................

United

States

3,917,214

159,038,888

Tobacco

3.0%

Altria

Group,

Inc.

......................................

United

States

2,481,360

117,591,650

British

American

Tobacco

plc

.............................

United

Kingdom

3,655,087

135,609,396

253,201,046

Wireless

Telecommunication

Services

1.8%

a

T-Mobile

US,

Inc.

.....................................

United

States

1,310,062

151,940,991

Total

Common

Stocks

(Cost

$5,828,155,645)

....................................

8,072,761,055

Warrants

Warrants

0.0%

†

Diversified

Telecommunication

Services

0.0%

†

a,b,c

Windstream

Holdings,

Inc.,

9/21/55

........................

United

States

119,757

2,107,989

Software

0.0%

†

a

Avaya

Holdings

Corp.,

12/15/22

..........................

United

States

193,072

540,602

Total

Warrants

(Cost

$1,519,716)

..............................................

2,648,591

Principal

Amount

*

Corporate

Bonds

1.4%

Airlines

0.1%

f

American

Airlines

Inc

/

AAdvantage

Loyalty

IP

Ltd.

,

Senior

Secured

Note,

144A,

5.5%,

4/20/26

................

United

States

3,211,353

3,344,399

Senior

Secured

Note,

144A,

5.75%,

4/20/29

...............

United

States

1,279,672

1,370,215

4,714,614

Diversified

Telecommunication

Services

0.1%

Frontier

Communications

Holdings

LLC

,

Secured

Note

,

5.875

%

,

11/01/29

..........................................

United

States

10,568,178

10,583,026

Oil,

Gas

&

Consumable

Fuels

0.5%

f

Citgo

Holding,

Inc.

,

Senior

Secured

Note

,

144A,

9.25

%

,

8/01/24

..

United

States

41,442,000

41,695,418

Specialty

Retail

0.7%

f

Staples,

Inc.

,

Senior

Note

,

144A,

10.75

%

,

4/15/27

.............

United

States

63,292,000

59,718,534

Total

Corporate

Bonds

(Cost

$116,316,859)

.....................................

116,711,592

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Shares

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

19

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

g,h

Senior

Floating

Rate

Interests

0.8%

Software

0.8%

Banff

Guarantor,

Inc.

,

Second

Lien,

Initial

Term

Loan

,

6

%

,

(

3-month

USD

LIBOR

+

5.5

%

),

2/27/26

...........................

United

States

20,487,800

20,722,488

Veritas

US,

Inc.

,

2021

Dollar

Term

Loan,

B

,

6

%

,

(

3-month

USD

LIBOR

+

5

%

),

9/01/25

................................

United

States

47,474,231

47,533,574

68,256,062

a

a

a

a

a

a

Total

Senior

Floating

Rate

Interests

(Cost

$67,652,347)

..........................

68,256,062

Asset-Backed

Securities

0.1%

Airlines

0.1%

American

Airlines

Pass-Through

Trust

,

2013-2

,

A

,

4.95

%

,

1/15/23

.

United

States

6,309,302

6,450,908

Total

Asset-Backed

Securities

(Cost

$6,214,663)

................................

6,450,908

Shares

Companies

in

Liquidation

0.0%

a,b,i

Bosgen

Liquidating

Trust

c/o

Verdolino

and

Lowey

P.C.,

Contingent

Distribution

........................................

Netherlands

555,154

—

a,b,i

Tribune

Media,

Litigation

Trust,

Contingent

Distribution

.........

United

States

1,005,034

—

a,b,i

Walter

Energy,

Inc.,

Litigation

Trust,

Contingent

Distribution

......

United

States

20,046,000

—

Total

Companies

in

Liquidation

(Cost

$–)

......................................

—

Total

Long

Term

Investments

(Cost

$6,019,859,230)

.............................

8,266,828,208

a

Short

Term

Investments

1.0%

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

1.0%

j

FHLB,

1/03/22

.......................................

United

States

16,200,000

16,200,000

j

U.S.

Treasury

Bills

,

1/06/22

...........................................

United

States

10,000,000

10,000,001

2/17/22

...........................................

United

States

32,000,000

31,999,000

4/28/22

...........................................

United

States

17,000,000

16,996,131

5/26/22

...........................................

United

States

3,000,000

2,998,939

6/23/22

...........................................

United

States

5,000,000

4,996,141

66,990,212

Total

U.S.

Government

and

Agency

Securities

(Cost

$83,190,657)

.................

83,190,212

Total

Short

Term

Investments

(Cost

$83,190,657

)

................................

83,190,212

a

Total

Investments

(Cost

$6,103,049,887)

98.8%

..................................

$8,350,018,420

Securities

Sold

Short

(2.4)%

..................................................

(199,364,960)

Other

Assets,

less

Liabilities

3.6%

.............................................

306,812,466

Net

Assets

100.0%

...........................................................

$8,457,465,926

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Shares

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

a

a

a

Country

Shares

a

Value

k

Securities

Sold

Short

(2.4)%

Common

Stocks

(2.4)%

Semiconductors

&

Semiconductor

Equipment

(2.4)%

Advanced

Micro

Devices,

Inc.

............................

United

States

1,385,441

(199,364,960)

Total

Common

Stocks

(Proceeds

$124,618,173)

.................................

(199,364,960)

Total

Securities

Sold

Short

(Proceeds

$124,618,173)

.............................

$(199,364,960)

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

†

Rounds

to

less

than

0.1%

of

net

assets.

a

Non-income

producing.

b

Fair

valued

using

significant

unobservable

inputs.

See

Note

14

regarding

fair

value

measurements.

c

See

Note

10

regarding

restricted

securities.

d

See

Note

12

regarding

holdings

of

5%

voting

securities.

e

A

portion

or

all

of

the

security

has

been

segregated

as

collateral

for

securities

sold

short.

At

December

31,

2021,

the

aggregate

value

of

these

securities

pledged

amounted

to

$248,985,761,

representing

2.9%

of

net

assets.

f

Security

was

purchased

pursuant

to

Rule

144A

or

Regulation

S

under

the

Securities

Act

of

1933.

144A

securities

may

be

sold

in

transactions

exempt

from

registration

only

to

qualified

institutional

buyers

or

in

a

public

offering

registered

under

the

Securities

Act

of

1933.

Regulation

S

securities

cannot

be

sold

in

the

United

States

without

either

an

effective

registration

statement

filed

pursuant

to

the

Securities

Act

of

1933,

or

pursuant

to

an

exemption

from

registration.

At

December

31,

2021,

the

aggregate

value

of

these

securities

was

$106,128,566,

representing

1.3%

of

net

assets.

g

See

Note

1(f)

regarding

senior

floating

rate

interests.

h

The

coupon

rate

shown

represents

the

rate

at

period

end.

i

Contingent

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.

j

The

security

was

issued

on

a

discount

basis

with

no

stated

coupon

rate.

k

See

Note

1(d)

regarding

securities

sold

short.

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Shares

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

21

At

December

31,

2021,

the

Fund

had

the

following futures

contracts

outstanding.

See

Note

1(c).

At

December

31,

2021,

the

Fund

had

the

following

forward

exchange

contracts

outstanding.

See

Note

1

(

c

). 

See

Note 11 regarding

other

derivative

information.

See

A

bbreviations

on

page

41

.

Futures

Contracts

Description

Type

Number

of

Contracts

Notional

Amount

*

Expiration

Date

Value/

Unrealized

Appreciation

(Depreciation)

Foreign

exchange

contracts

Foreign

Exchange

EUR/USD

...................

Short

52

$

7,411,625

3/14/22

$

(39,519)

Foreign

Exchange

GBP/USD

...................

Short

445

37,633,094

3/14/22

(805,305)

Total

Futures

Contracts

......................................................................

$(844,824)

*

As

of

period

end.

Forward

Exchange

Contracts

Currency

Counter-

party

a

Type

Quantity

Contract

Amount

*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

British

Pound

......

BOFA

Buy

469,852

644,476

1/18/22

$

—

$

(9,056)

British

Pound

......

BOFA

Sell

9,043,636

12,478,533

1/18/22

248,080

—

British

Pound

......

SSBT

Buy

400,000

546,702

1/18/22

—

(5,750)

British

Pound

......

SSBT

Sell

1,008,307

1,350,596

1/18/22

7,219

(20,240)

British

Pound

......

UBSW

Sell

1,486,166

2,008,993

1/18/22

14,582

(15,454)

Euro

.............

BOFA

Sell

2,583,195

3,032,141

1/24/22

92,293

—

Euro

.............

HSBK

Sell

4,501,140

5,295,773

1/24/22

173,176

—

Euro

.............

SSBT

Sell

899,681

1,055,813

1/24/22

31,917

—

Euro

.............

UBSW

Buy

2,397,720

2,703,475

1/24/22

25,290

—

Euro

.............

UBSW

Sell

3,816,524

4,470,715

1/24/22

127,256

—

Euro

.............

BOFA

Sell

40,558,306

47,136,740

2/07/22

965,707

—

Euro

.............

SSBT

Sell

42,941,939

49,907,969

2/07/22

1,023,440

—

Euro

.............

UBSW

Sell

1,171,679

1,368,533

2/07/22

34,710

—

Euro

.............

BOFA

Sell

9,757,207

11,202,200

4/19/22

76,408

—

Euro

.............

HSBK

Sell

1,730,624

1,974,772

4/19/22

1,403

—

Euro

.............

UBSW

Sell

9,756,882

11,201,534

4/19/22

76,113

—

South

Korean

Won

..

HSBK

Sell

77,533,185,946

65,624,217

5/16/22

595,583

—

South

Korean

Won

..

UBSW

Sell

2,211,484,881

1,873,171

5/16/22

18,355

—

South

Korean

Won

..

HSBK

Sell

64,413,049,545

54,379,949

6/17/22

382,812

—

South

Korean

Won

..

UBSW

Sell

25,972,019,912

21,935,828

6/17/22

163,613

—

Total

Forward

Exchange

Contracts

...................................................

$4,057,957

$(50,500)

Net

unrealized

appreciation

(depreciation)

............................................

$4,007,457

*

In

U.S.

dollars

unless

otherwise

indicated.

a

May

be

comprised

of

multiple

contracts

with

the

same

counterparty,

currency

and

settlement

date.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

Franklin

Mutual

Shares

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

...................................................................

$6,098,245,209

Cost

-

Non-controlled

affiliates

(Note

3

f

and

12

)

...................................................

4,804,678

Value

-

Unaffiliated

issuers

..................................................................

$8,349,744,517

Value

-

Non-controlled

affiliates

(Note

3

f

and

12

)

..................................................

273,903

Cash

....................................................................................

67,792,180

Receivables:

Investment

securities

sold

...................................................................

18,120,752

Capital

shares

sold

........................................................................

2,292,225

Dividends

and

interest

.....................................................................

20,328,485

European

Union

tax

reclaims

(Note

1

g

)

.........................................................

3,247,509

Deposits

with

brokers

for:

Securities

sold

short

.....................................................................

205,118,696

Futures

contracts

........................................................................

1,133,925

Unrealized

appreciation

on

OTC

forward

exchange

contracts

..........................................

4,057,957

Other

assets

..............................................................................

2,065,127

Total

assets

..........................................................................

8,674,175,276

Liabilities:

Payables:

Investment

securities

purchased

..............................................................

2,345,382

Capital

shares

redeemed

...................................................................

5,434,280

Management

fees

.........................................................................

4,703,467

Distribution

fees

..........................................................................

829,811

Transfer

agent

fees

........................................................................

852,371

Trustees'

fees

and

expenses

.................................................................

1,261,507

Variation

margin

on

futures

contracts

...........................................................

109,688

Securities

sold

short,

at

value

(proceeds

$124,618,173)

..............................................

199,364,960

Unrealized

depreciation

on

OTC

forward

exchange

contracts

..........................................

50,500

Accrued

expenses

and

other

liabilities

...........................................................

1,757,384

Total

liabilities

.........................................................................

216,709,350

Net

assets,

at

value

.................................................................

$8,457,465,926

Net

assets

consist

of:

Paid-in

capital

.............................................................................

$6,074,183,759

Total

distributable

earnings

(losses)

.............................................................

2,383,282,167

Net

assets,

at

value

.................................................................

$8,457,465,926

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

(continued)

December

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

23

Franklin

Mutual

Shares

Fund

Class

Z:

Net

assets,

at

value

.......................................................................

$4,717,527,816

Shares

outstanding

........................................................................

174,118,065

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$27.09

Class

A:

Net

assets,

at

value

.......................................................................

$3,125,320,451

Shares

outstanding

........................................................................

116,853,588

Net

asset

value

per

share

a

..................................................................

$26.75

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50%)

................................

$28.31

Class

C:

Net

assets,

at

value

.......................................................................

$192,659,604

Shares

outstanding

........................................................................

7,201,544

Net

asset

value

and

maximum

offering

price

per

share

a

.............................................

$26.75

Class

R:

Net

assets,

at

value

.......................................................................

$49,842,854

Shares

outstanding

........................................................................

1,870,563

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$26.65

Class

R6:

Net

assets,

at

value

.......................................................................

$372,115,201

Shares

outstanding

........................................................................

13,744,449

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$27.07

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Operations

for

the

year

ended

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

24

Franklin

Mutual

Shares

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$4,439,933)

Unaffiliated

issuers

........................................................................

$162,550,041

Non-controlled

affiliates

(Note

3

f

and

12

)

........................................................

424,504

Interest:

Unaffiliated

issuers

........................................................................

20,605,108

Income

from

securities

loaned:

Unaffiliated

entities

(net

of

fees

and

rebates)

.....................................................

1,355

Non-controlled

affiliates

(Note

3

f

)

.............................................................

10

Other

income

(Note

1

g

)

......................................................................

3,598,392

Total

investment

income

...................................................................

187,179,410

Expenses:

Management

fees

(Note

3

a

)

...................................................................

57,332,882

Distribution

fees:

(Note

3c

)

    Class

A

................................................................................

7,924,296

    Class

C

................................................................................

2,067,708

    Class

R

................................................................................

251,052

Transfer

agent

fees:

(Note

3e

)

    Class

Z

................................................................................

3,948,567

    Class

A

................................................................................

2,629,309

    Class

C

................................................................................

171,648

    Class

R

................................................................................

41,650

    Class

R6

...............................................................................

126,529

Custodian

fees

(Note

4

)

......................................................................

109,573

Reports

to

shareholders

fees

..................................................................

1,096,922

Registration

and

filing

fees

....................................................................

146,437

Professional

fees

...........................................................................

146,458

Trustees'

fees

and

expenses

..................................................................

783,272

Dividends

on

securities

sold

short

..............................................................

1,677,941

Other

....................................................................................

1,181,194

Total

expenses

.........................................................................

79,635,438

Expense

reductions

(Note

4

)

...............................................................

(1,451)

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

..............................................

(4,524)

Net

expenses

.........................................................................

79,629,463

Net

investment

income

................................................................

107,549,947

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Operations

(continued)

for

the

year

ended

December

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

25

Franklin

Mutual

Shares

Fund

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

+

Unaffiliated

issuers

......................................................................

1,402,588,225

Non-controlled

affiliates

(Note

3

f

and

12

)

......................................................

(17,552,688)

Foreign

currency

transactions

................................................................

(434,075)

Forward

exchange

contracts

.................................................................

9,040,959

Futures

contracts

.........................................................................

(1,330,601)

Securities

sold

short

.......................................................................

(51,105,460)

Net

realized

gain

(loss)

..................................................................

1,341,206,360

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

......................................................................

57,494,230

Non-controlled

affiliates

(Note

3

f

and

12

)

......................................................

19,665,894

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

..............................

(1,002,521)

Forward

exchange

contracts

.................................................................

17,923,634

Futures

contracts

.........................................................................

937,773

Securities

sold

short

.......................................................................

(72,774,860)

Net

change

in

unrealized

appreciation

(depreciation)

............................................

22,244,150

Net

realized

and

unrealized

gain

(loss)

............................................................

1,363,450,510

Net

increase

(decrease)

in

net

assets

resulting

from

operations

..........................................

$1,471,000,457

+

Includes

gains

from

a

redemption

in-kind

(Note

3h)

$233,383,169

Franklin

Mutual

Series

Funds

Financial

Statements

Statements

of

Changes

in

Net

Assets

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

26

Franklin

Mutual

Shares

Fund

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

.................................................

$107,549,947

$309,769,468

Net

realized

gain

(loss)

.................................................

1,341,206,360

(258,998,205)

Net

change

in

unrealized

appreciation

(depreciation)

...........................

22,244,150

(802,612,748)

Net

increase

(decrease)

in

net

assets

resulting

from

operations

................

1,471,000,457

(751,841,485)

Distributions

to

shareholders:

Class

Z

.............................................................

(496,840,798)

(164,290,286)

Class

A

.............................................................

(322,688,187)

(107,633,936)

Class

C

.............................................................

(17,613,198)

(5,681,043)

Class

R

.............................................................

(4,992,101)

(1,617,401)

Class

R6

............................................................

(38,662,402)

(55,414,182)

Total

distributions

to

shareholders

..........................................

(880,796,686)

(334,636,848)

Capital

share

transactions:

(Note

2

)

Class

Z

.............................................................

19,243,353

(581,646,646)

Class

A

.............................................................

(58,457,674)

(679,006,313)

Class

C

.............................................................

(31,912,453)

(63,162,723)

Class

R

.............................................................

(1,977,617)

(11,810,447)

Class

R6

............................................................

(1,105,003,117)

(96,361,914)

Total

capital

share

transactions

............................................

(1,178,107,508)

(1,431,988,043)

Net

increase

(decrease)

in

net

assets

...................................

(587,903,737)

(2,518,466,376)

Net

assets:

Beginning

of

year

.......................................................

9,045,369,663

11,563,836,039

End

of

year

...........................................................

$8,457,465,926

$9,045,369,663

Franklin

Mutual

Series

Funds

27

franklintempleton.com

Annual

Report

Notes

to

Financial

Statements

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. Effective

August

2,

2021,

Class

C

shares

automatically

convert

to

Class

A

shares

on

a

monthly

basis,

after

they

have

been

held

for

8

years.

Prior

to

August

2,

2021,

Class

C

shares

converted

to

Class

A

shares

after

a

10-year

holding

period.

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

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

28

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

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

December

31,

2021,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy

(referred

to

as

“market

level

fair

value”).

See

the

Fair

Value

Measurements

note

for

more

information.

When

the

last

day

of

the

reporting

period

is

a

non-business

day,

certain

foreign

markets

may

be

open

on

those

days

that

the

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

portfolio

securities

on

the

last

business

day

and

the

last

calendar

day

of

the

reporting

period.

Any

security

valuation

changes

due

to

an

open

foreign

market

are

adjusted

and

reflected

by

the

Fund

for

financial

reporting

purposes.

b.

Foreign

Currency

Translation 

Portfolio

securities

and

other

assets

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

based

on

the

exchange

rate

of

such

currencies

against

U.S.

dollars

on

the

date

of

valuation.

The

Fund

may

enter

into

foreign

currency

exchange

contracts

to

facilitate

transactions

denominated

in

a

foreign

currency.

Purchases

and

sales

of

securities,

income

and

expense

items

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

at

the

exchange

rate

in

effect

on

the

transaction

date.

Portfolio

securities

and

assets

and

liabilities

denominated

in

foreign

currencies

contain

risks

that

those

currencies

will

decline

in

value

relative

to

the

U.S.

dollar.

Occasionally,

events

may

impact

the

availability

or

reliability

of

foreign

exchange

rates

used

to

convert

the

U.S.

dollar

equivalent

value.

If

such

an

event

occurs,

the

foreign

exchange

rate

will

be

valued

at

fair

value

using

procedures

established

and

approved

by

the

Board.

The

Fund

does

not

separately

report

the

effect

of

changes

in

foreign

exchange

rates

from

changes

in

market

prices

on

securities

held.

Such

changes

are

included

in

net

realized

and

unrealized

gain

or

loss

from

investments

in

the

Statement of

Operations.

Realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

the

trade

and

settlement

dates

on

securities

transactions

and

the

difference

between

the

recorded

amounts

of

dividends,

interest,

and

foreign

withholding

taxes

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

foreign

exchange

gains

and

losses

arise

from

changes

in

foreign

exchange

rates

on

foreign

denominated

assets

and

liabilities

other

than

investments

in

securities

held

at

the

end

of

the

reporting

period. 

c.

Derivative

Financial

Instruments

The

Fund

invested

in

derivative

financial

instruments

in

order

to

manage

risk

or

gain

exposure

to

various

other

investments

or

markets.

Derivatives

are

financial

contracts

based

on

an

underlying

or

notional

amount,

require

no

initial

investment

or

an

initial

net

investment

that

is

smaller

than

would

normally

be

required

to

have

a

similar

response

to

changes

in

market

factors,

and

require

or

permit

net

settlement.

Derivatives

contain

various

risks

including

the

potential

inability

of

the

counterparty

to

fulfill

their

obligations

under

the

terms

of

the

contract,

the

potential

for

an

illiquid

secondary

market,

and/or

the

potential

for

market

movements

which

expose

the

Fund

to

gains

or

losses

in

excess

of

the

amounts

shown

in

the Statement

of

Assets

and

Liabilities.

Realized

gain

and

loss

and

unrealized

appreciation

and

depreciation

on

these

contracts

for

the

period

are

included

in

the

Statement

of

Operations. 

Derivative

counterparty

credit

risk

is

managed

through

a

formal

evaluation

of

the

creditworthiness

of

all

potential

counterparties.

The

Fund

attempts

to

reduce its

exposure

to

counterparty

credit

risk

on

OTC

derivatives,

whenever

possible,

by

entering

into

International

Swaps

and

Derivatives

Association

(ISDA)

master

agreements

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

29

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

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

December

31,

2021,

the

Fund

had

no

OTC

derivatives

in

a

net

liability

position

for

such

contracts.  

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

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

December

31,

2021,

the

Fund

received

$1,296,394

in

United

Kingdom

Treasury

Bonds

and

U.S.

Treasury

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

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.

1.

Organization

and

Significant

Accounting

Policies

(continued)

c.

Derivative

Financial

Instruments

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

30

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

e.

Securities

Lending

The

Fund

participates

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the Fund,

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 any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

The

securities

lending

agent

has

agreed

to

indemnify

the

Fund

in

the

event

of

default

by

a

third

party

borrower.

At

December

31,

2021,

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). Income

recognized,

if

any,

for

EU

reclaims

is

reflected

as

other

income

in

the

Statement

of

Operations

and

any

related

receivable,

if

any,

is

reflected

as

European

Union

tax

reclaims

in

the

Statement

of

Assets

and

Liabilities.

Any

fees

associated

with

these

filings

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

When

uncertainty

exists

as

to

the

ultimate

resolution

of

these

proceedings,

the

likelihood

of

receipt

of

these

EU

reclaims,

and

the

potential

timing

of

payment,

no

amounts

are

reflected

in

the

financial

statements.

For

U.S.

income

tax

purposes,

EU

reclaims

received

by

the

Fund,

if

any,

reduce

the

amount

of

foreign

taxes

Fund

shareholders

can

use

as

tax

deductions

or credits

on

their

income

tax

returns.

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

December

31,

2021,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

1.

Organization

and

Significant

Accounting

Policies

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

31

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

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.

Paydown

gains

and

losses

are

recorded

as

an

adjustment

to

interest

income.

Facility

fees

are

recognized

as

income

over

the

expected

term

of

the

loan.

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.

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

December

3

1

,

2021

,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value)

.

Transactions

in

the

Fund’s

shares

were

as

follows:

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

Z

Shares:

Shares

sold

...................................

6,091,043

$174,007,370

6,418,611

$148,599,302

Shares

issued

in

reinvestment

of

distributions

..........

16,483,348

441,867,539

6,211,305

145,377,724

Shares

redeemed

...............................

(21,197,536)

(596,631,556)

(38,414,016)

(875,623,672)

Net

increase

(decrease)

..........................

1,376,855

$19,243,353

(25,784,100)

$(581,646,646)

1.

Organization

and

Significant

Accounting

Policies

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

32

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

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:

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

A

Shares:

Shares

sold

a

...................................

6,646,689

$189,023,732

8,640,892

$191,690,060

Shares

issued

in

reinvestment

of

distributions

..........

11,866,324

314,119,841

4,451,003

102,359,470

Shares

redeemed

...............................

(20,070,111)

(561,601,247)

(42,999,827)

(973,055,843)

Net

increase

(decrease)

..........................

(1,557,098)

$(58,457,674)

(29,907,932)

$(679,006,313)

Class

C

Shares:

Shares

sold

...................................

1,651,127

$45,796,881

1,584,225

$36,733,855

Shares

issued

in

reinvestment

of

distributions

..........

662,128

17,541,173

252,555

5,661,915

Shares

redeemed

a

..............................

(3,354,065)

(95,250,507)

(4,700,207)

(105,558,493)

Net

increase

(decrease)

..........................

(1,040,810)

$(31,912,453)

(2,863,427)

$(63,162,723)

Class

R

Shares:

Shares

sold

...................................

194,613

$5,492,280

342,269

$7,791,511

Shares

issued

in

reinvestment

of

distributions

..........

189,241

4,992,082

71,017

1,617,370

Shares

redeemed

...............................

(445,333)

(12,461,979)

(911,706)

(21,219,328)

Net

increase

(decrease)

..........................

(61,479)

$(1,977,617)

(498,420)

$(11,810,447)

Class

R6

Shares:

Shares

sold

...................................

632,661

$18,045,148

2,685,472

$57,438,893

Shares

issued

in

reinvestment

of

distributions

..........

1,442,258

38,638,322

2,365,014

55,401,352

Shares

redeemed

in-kind

(Note

3h)

..................

(42,074,815)

(1,065,296,437)

—

—

Shares

redeemed

...............................

(3,521,096)

(96,390,150)

(8,794,233)

(209,202,159)

Net

increase

(decrease)

..........................

(43,520,992)

$(1,105,003,117)

(3,743,747)

$(96,361,914)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Franklin

Mutual

Advisers,

LLC

(Franklin

Mutual)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Distributors,

LLC

(Distributors)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

2.

Shares

of

Beneficial

Interest

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

33

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

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:

For

the

year

ended

December

31,

2021,

the

gross

effective

investment

management

fee

rate

was

0.663%

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.

The

maximum

annual

plan

rates,

based

on

the

average

daily

net

assets,

for

each

class,

are

as

follows:

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

year:

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

Class

A

....................................................................................

0.35%

Class

C

....................................................................................

1.00%

Class

R

....................................................................................

0.50%

3.

Transactions

with

Affiliates

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

34

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

e.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

year

ended

December

31,

2021,

the

Fund

paid

transfer

agent

fees

of

$6,917,703,

of

which $3,272,807

was

retained

by

Investor

Services.

f.

Investments

in

Affiliated

Management

Investment

Companies

The

Fund

invests

in

one

or

more

affiliated

management

investment

companies.

As

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

fund’s

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

fund.

The

Fund

does

not

invest

for

purposes

of

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Fund

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statement

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

year

ended

December

31,

2021,

the

Fund

held

investments

in

affiliated

management

investment

companies

as

follows:

g.

Waiver

and

Expense

Reimbursements

Investor

Services

has

contractually

agreed

in

advance

to

waive

or

limit

its

fees

so

that

the

Class

R6

transfer

agent

fees

do

not

exceed

0.03%

based

on

the

average

net

assets

of

the

class

until

April

30,

2022.

h.

Other

Affiliated

Transactions

During

the

year

ended

December

31,

2021,

the

Franklin

Global

Allocation

Fund

(formerly

Franklin

Founding

Funds

Allocation

Fund)

(Allocation

Fund),

a

series

of

the

Franklin

Fund

Allocator

Series,

repositioned

to

a

direct

investment

fund

and

subsequently

fully

redeemed

out

of

the

Fund.

As

a

result,

on

January

29,

2021,

the

Fund

delivered

portfolio

securities

and

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

..............................

$179,710

CDSC

retained

..............................................................................

$8,196

    aa

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

a      

a  

a  

a  

a  

a  

a  

a  

Franklin

Mutual

Shares

Fund

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0.01%

.

$—

$21,118,000

$(21,118,000)

$—

$—

$—

—

$10

Total

Affiliated

Securities

...

$—

$21,118,000

$(21,118,000)

$—

$—

$—

$10

3.

Transactions

with

Affiliates

(continued)

d.

Sales

Charges/Underwriting

Agreements

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

35

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

cash

that

were

transferred

in-kind

to

the

Allocation

Fund,

which

included

$233,383,169

of

net

realized

gains.

As

such

gains

are

not

taxable

to

the

Fund

and

are

not

distributed

to

remaining

shareholders,

they

are

reclassified

from

accumulated

net

realized

gains

to

paid-in

capital.

4.

Expense

Offset

Arrangement

The Fund has

entered

into

an

arrangement

with

its

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Fund's

custodian

expenses.

During

the

year

ended

December

31,

2021,

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

year

ended

December

31,

2021,

the

Fund’s

projected

benefit

obligation

and

benefit

payments

under

the

Plan

were

as

follows:

6.

Income

Taxes

For

tax

purposes,

capital

losses

may

be

carried

over

to

offset

future

capital

gains

.

During

the

year

ended December

31,

2021,

the

Fund

utilized

$262,064,619

of

capital

loss

carryforwards.

The

tax

character

of

distributions

paid

during

the

years

ended

December

31,

2021

and

2020,

was

as

follows:

At

December

31,

2021,

the

cost

of

investments,

net

unrealized

appreciation

(depreciation),

undistributed

ordinary

income

and

undistributed

long

term

capital

gains

for

income

tax

purposes

were

as

follows:

a

Projected

benefit

obligation

at

December

31,

2021

......

$1,150,088

b

Increase

(decrease)

in

projected

benefit

obligation

......

$128,204

Benefit

payments

made

to

retired

trustees

.............

$(4,430)

a

The

projected

benefit

obligation

is

included

in

trustees’

fees

and

expenses

in

the

Statement

of

Assets

and

Liabilities.

b

The

increase

(decrease)

in

projected

benefit

obligation

is

reflected

in

trustees’

fees

and

expenses

in

the

Statement

of

Operations.

The

increase

(decrease)

was

primarily

due

to

demographic

losses.

2021

2020

Distributions

paid

from:

Ordinary

income

..........................................................

$263,515,339

$209,885,626

Long

term

capital

gain

......................................................

617,281,347

124,751,222

$880,796,686

$334,636,848

3.

Transactions

with

Affiliates

(continued)

h.

Other

Affiliated

Transactions

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

36

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatments

of

defaulted

securities,

foreign

currency

transactions

and

gains

realized

on

in-kind

shareholder

redemptions.

The

Fund

utilized

a

tax

accounting

practice

to

treat

a

portion

of

the

proceeds

from

capital

shares

redeemed

as

a

distribution

from

net

investment

income

and

realized

capital

gains.

7.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities,

securities

sold

short

and

in-kind

transactions)

for

the

year

ended

December

31,

2021,

aggregated

$3,455,081,338

and

$4,543,723,017,

respectively.

Sales

of

investments

excludes

in-kind

transactions

of

$930,229,340.

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. 

At

December

31,

2021,

the

Fund

did

not

hold

any

distressed

company

securities

for

which

interest

recognition

has

been

discontinued.

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.

Cost

of

investments

..........................................................................

$5,984,339,318

Unrealized

appreciation

........................................................................

$2,422,507,106

Unrealized

depreciation

........................................................................

(253,030,331)

Net

unrealized

appreciation

(depreciation)

..........................................................

$2,169,476,775

Distributable

earnings:

Undistributed

ordinary

income

...................................................................

$1,286,531

Undistributed

long

term

capital

gains

..............................................................

212,191,663

Total

distributable

earnings

.....................................................................

$213,478,194

6.

Income

Taxes

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

37

franklintempleton.com

Annual

Report

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

December

31,

2021,

investments

in

restricted

securities,

excluding

securities

exempt

from

registration

under

the

1933

Act,

were

as

follows:

11.

Other

Derivative

Information

At

December

31,

2021,

investments

in

derivative

contracts

are

reflected

in

the

Statement of

Assets

and

Liabilities

as

follows:

Shares

/

Warrants

Issuer

Acquisition

Date

Cost

Value

Franklin

Mutual

Shares

Fund

7,234,813

International

Automotive

Components

Group

Brazil

LLC

4/13/06

-

12/26/08

$

4,804,678

$

273,903

7,469

Wayne

Services

Legacy,

Inc.

...................

1/22/19

—

—

119,757

Windstream

Holdings

Inc

,

9/21/55

...............

9/21/20

1,519,716

2,107,989

2,123,740

Windstream

Holdings,

Inc.

.....................

9/21/20

16,822,436

37,382,547

Total

Restricted

Securities

(Value

is

0.5%

of

Net

Assets)

..............

$23,146,830

$39,764,439

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

Franklin

Mutual

Shares

Fund

Foreign

exchange

contracts

..

Variation

margin

on

futures

contracts

$

—

Variation

margin

on

futures

contracts

$

844,824

a

Unrealized

appreciation

on

OTC

forward

exchange

contracts

4,057,957

Unrealized

depreciation

on

OTC

forward

exchange

contracts

50,500

Total

....................

$4,057,957

$895,324

a

This

amount

reflects

the

cumulative

appreciation

(depreciation)

of

futures

contracts

as

reported

in

the

Statement

of

Investments.

Only

the

variation

margin

receivable/

payable

at

year

end

is

separately

reported

within

the

Statement

of

Assets

and

Liabilities.

Prior

variation

margin

movements

were

recorded

to

cash

upon

receipt

or

payment.

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

38

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

For

the

year

ended

December

3

1

,

2021

,

the

effect

of

derivative

contracts

in

the

Statement

of

Operations

was

as

follows:

6

For

the

year

ended

December

31,

2021,

the

average

month

end

notional

amount

of

futures

contracts

represented

$61,909,435.

The

average

month

end

contract

value

of

forward

exchange

contracts

was

$467,755,917.

See

Note

1(c) 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.

Additionally,

as

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

companies’

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

company.

During

the

year

ended

December

31,

2021,

investments

in

“affiliated

companies”

were

as

follows:

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Statement

of

Operations

Location

Net

Realized

Gain

(Loss)

for

the

Year

Statement

of

Operations

Location

Net

Change

in

Unrealized

Appreciation

(Depreciation)

for

the

Year

Franklin

Mutual

Shares

Fund

Net

realized

gain

(loss)

from:

Net

change

in

unrealized

  appreciation

(depreciation)

on:

Foreign

exchange

contracts

.....

Futures

contracts

$(1,330,601)

Futures

contracts

$937,773

Forward

exchange

contracts

9,040,959

Forward

exchange

contracts

17,923,634

Total

.......................

$7,710,358

$18,861,407

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

Franklin

Mutual

Shares

Fund

Non-Controlled

Affiliates

Dividends

International

Automotive

Components

Group

Brazil

LLC

........

$

153,856

$

—

$

—

$

—

$

120,047

$

273,903

7,234,813

$

—

TRU

Kids

Parent

LLC

..

17,051,583

—

(19,044,742)

a

(17,552,688)

19,545,847

—

b

—

—

Wayne

Services

Legacy,

Inc.

............

—

—

—

—

—

—

7,469

424,504

Total

Affiliated

Securities

(Value

is

0.0%

†

of

Net

Assets)

..........

$17,205,439

$—

$(19,044,742)

$(17,552,688)

$19,665,894

$273,903

$424,504

†

Rounds

to

less

than

0.1%

of

net

assets.

a

May

include

accretion,

amortization,

partnership

adjustments,

and/or

corporate

actions.

b

As

of

December

31,

2021,

no

longer

held

by

the

fund.

11.

Other

Derivative

Information

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

39

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

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

$2.675

billion

(Global

Credit

Facility)

which

matured

on

February

4,

2022.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

Effective

February

4,

2022,

the

Borrowers

renewed

the

Global

Credit

Facility

for

a

one-year

term,

maturing

February

3,

2023,

for

a

total

of

$2.675

billion.

Under

the

terms

of

the

Global

Credit

Facility,

the

Fund

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Fund

and

other

costs

incurred

by

the

Fund,

pay

its

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

its

relative

share

of

the

aggregate

net

assets

of

all

of

the

Borrowers,

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

During

the

year

ended

December

31,

2021,

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.

A

summary

of

inputs

used

as

of

December

31,

2021,

in

valuing

the

Fund's

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

Level

1

Level

2

Level

3

Total

Franklin

Mutual

Shares

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Aerospace

&

Defense

...................

$

120,139,739

$

133,578,892

$

—

$

253,718,631

Auto

Components

......................

—

—

273,903

273,903

Automobiles

..........................

157,431,400

—

—

157,431,400

Banks

...............................

401,874,630

213,898,418

—

615,773,048

Building

Products

......................

197,839,426

—

—

197,839,426

Chemicals

...........................

155,115,344

—

—

155,115,344

Containers

&

Packaging

.................

86,346,280

—

—

86,346,280

Diversified

Financial

Services

.............

171,393,446

—

—

171,393,446

Diversified

Telecommunication

Services

.....

10,132,823

—

37,382,547

47,515,370

Electric

Utilities

........................

163,866,089

—

—

163,866,089

Electrical

Equipment

....................

203,871,261

—

—

203,871,261

Electronic

Equipment,

Instruments

&

Components

........................

59,212,645

—

—

59,212,645

Entertainment

.........................

126,715,819

—

—

126,715,819

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

40

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

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 year.

15.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

(FASB)

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

In

January

2021,

the

FASB

issued

ASU

No.

2021-01,

with

further

amendments

to

Topic

848.

The

amendments

in

the

ASUs

provide

Level

1

Level

2

Level

3

Total

Franklin

Mutual

Shares

Fund

(continued)

Assets:

(continued)

Investments

in

Securities:

Common

Stocks:

Equity

Real

Estate

Investment

Trusts

(REITs)

.

$

172,691,996

$

—

$

—

$

172,691,996

Food

Products

........................

326,295,814

—

—

326,295,814

Health

Care

Equipment

&

Supplies

.........

155,364,417

—

—

155,364,417

Health

Care

Providers

&

Services

..........

512,720,881

—

—

512,720,881

Household

Durables

....................

158,505,431

—

—

158,505,431

Industrial

Conglomerates

................

132,857,885

—

—

132,857,885

Insurance

............................

640,398,016

—

—

640,398,016

IT

Services

...........................

494,751,839

—

—

494,751,839

Media

...............................

404,885,405

—

—

404,885,405

Oil,

Gas

&

Consumable

Fuels

.............

211,280,331

171,966,504

—

383,246,835

Paper

&

Forest

Products

.................

4,660,001

—

—

4,660,001

Pharmaceuticals

.......................

598,305,692

174,246,325

—

772,552,017

Professional

Services

...................

119,879,017

—

—

119,879,017

Semiconductors

&

Semiconductor

Equipment

.

170,450,917

—

—

170,450,917

Software

.............................

308,101,338

—

—

308,101,338

Specialty

Retail

........................

170,475,250

—

—

a

170,475,250

Technology

Hardware,

Storage

&

Peripherals

.

188,924,065

152,746,344

—

341,670,409

Textiles,

Apparel

&

Luxury

Goods

..........

159,038,888

—

—

159,038,888

Tobacco

.............................

117,591,650

135,609,396

—

253,201,046

Wireless

Telecommunication

Services

.......

151,940,991

—

—

151,940,991

Warrants

:

Diversified

Telecommunication

Services

.....

—

—

2,107,989

2,107,989

Software

.............................

540,602

—

—

540,602

Corporate

Bonds

........................

—

116,711,592

—

116,711,592

Senior

Floating

Rate

Interests

...............

—

68,256,062

—

68,256,062

Asset-Backed

Securities

..................

—

6,450,908

—

6,450,908

Companies

in

Liquidation

..................

—

—

—

a

—

Short

Term

Investments

...................

66,990,212

16,200,000

—

83,190,212

Total

Investments

in

Securities

...........

$7,120,589,540

$1,189,664,441

b

$39,764,439

$8,350,018,420

Other

Financial

Instruments:

Forward

exchange

contracts

...............

$

—

$

4,057,957

$

—

$

4,057,957

Total

Other

Financial

Instruments

.........

$—

$4,057,957

$—

$4,057,957

Liabilities:

Other

Financial

Instruments:

Securities

Sold

Short

.....................

$

199,364,960

$

—

$

—

$

1

99,364,960

Forward

exchange

contracts

................

—

50,500

—

50,500

Futures

contracts

........................

844,824

—

—

844,824

Total

Other

Financial

Instruments

.........

$200,209,784

$50,500

$—

$200,260,284

a

Includes

securities

determined

to

have

no

value

at

December

31,

2021.

b

Includes

foreign

securities

valued

at

$982,045,879,

which

were

categorized

as

Level

2

as

a

result

of

the

application

of

market

level

fair

value

procedures.

See

the

Financial

Instrument

Valuation

note

for

more

information.

14.

Fair

Value

Measurements

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

41

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

(continued)

optional

temporary

accounting

recognition

and 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

for

certain

LIBOR

settings

and

2023

for

the

remainder. The

ASUs

are

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

these

ASUs

will

not

have

a

material

impact

on

the

financial

statements. 

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

other

than

those

already

disclosed

in

the

financial

statements.

Abbreviations

Counterparty

BOFA

Bank

of

America

N.A.

HSBK

HSBC

Bank

plc

SSBT

State

Street

Bank

and

Trust

Co.

UBSW

UBS

AG

Currency

EUR

Euro

GBP

British

Pound

USD

United

States

Dollar

Selected

Portfolio

ADR

American

Depositary

Receipt

FHLB

Federal

Home

Loan

Banks

LIBOR

London

Inter-Bank

Offered

Rate

15.

New

Accounting

Pronouncements

(continued)

Franklin

Mutual

Series

Funds

Report

of

Independent

Registered

Public

Accounting

Firm

42

franklintempleton.com

Annual

Report

To

the

Board

of

Trustees

of

Franklin

Mutual

Series

Funds

and

Shareholders

of

Franklin

Mutual

Shares

Fund:

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities

of

Franklin

Mutual

Shares

Fund

(the

“Fund”)

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds),

including

the

statement

of

investments,

as

of

December

31,

2021,

and

the

related

statement

of

operations

for

the

year

then

ended,

the

statements

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

then

ended,

the

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended

and

the

related

notes

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

Franklin

Mutual

Shares

Fund

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds)

at

December

31,

2021,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

then

ended

and

its

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended,

in

conformity

with

U.S.

generally

accepted

accounting

principles.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

("PCAOB")

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

The

Fund

is

not

required

to

have,

nor

were

we

engaged

to

perform,

an

audit

of

the

Fund’s

internal

control

over

financial

reporting.

As

part

of

our

audits,

we

are

required

to

obtain

an

understanding

of

internal

control

over

financial

reporting,

but

not

for

the

purpose

of

expressing

an

opinion

on

the

effectiveness

of

the

Fund’s

internal

control

over

financial

reporting.

Accordingly,

we

express

no

such

opinion.

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

December

31,

2021,

by

correspondence

with

the

custodian

or

by

other

appropriate

auditing

procedures

where

replies

from

others

were

not

received.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

We

believe

that

our

audits

provide

a

reasonable

basis

for

our

opinion.

We

have

served

as

the

auditor

of

one

or

more

Franklin

investment

companies

since

1987.

Boston,

Massachusetts

February

18,

2022

Franklin

Mutual

Series

Funds

Tax

Information

(unaudited)

43

franklintempleton.com

Annual

Report

Franklin

Mutual

Shares

Fund

By

mid-February,

tax

information

related

to

a

shareholder's

proportionate

share

of

distributions

paid

during

the

preceding

calendar

year

will

be

received,

if

applicable.

Please

also

refer

to

www.franklintempleton.com

for

per

share

tax

information

related

to

any

distributions

paid

during

the

preceding

calendar

year.

Shareholders

are

advised

to

consult

with

their

tax

advisors

for

further

information

on

the

treatment

of

these

amount

s

on

their

tax

returns.

The

following

tax

information

for

the

Fund

is

required

to

be

furnished

to

shareholders

with

respect

to

income

earned

and

distributions

paid

during

its

fiscal

year.

The

Fund

hereby

reports

the

following

amounts,

or

if

subsequently

determined

to

be

different,

the

maximum

allowable

amounts,

for

the

fiscal

year

ended

December

31,

2021:

Note

(1)

-

The

Law

varies

in

each

state

as

to

whether

and

what

percentage

of

dividend

income

attributable

to

Federal

obligations

is

exempt

from

state

income

tax.

Shareholders

are

advised

to

consult

with

their

tax

advisors

to

determine

if

any

portion

of

the

dividends

received

is

exempt

from

state

income

taxes.

Pursuant

to:

Amount

Reported

Long-Term

Capital

Gain

Dividends

Distributed

§852(b)(3)(C)

$632,875,974

Income

Eligible

for

Dividends

Received

Deduction

(DRD)

§854(b)(1)(A)

$109,071,398

Qualified

Dividend

Income

Earned

(QDI)

§854(b)(1)(B)

$168,865,252

Short-Term

Capital

Gain

Dividends

Distributed

§871(k)(2)(C)

$1,271,974

Section

163(j)

Interest

Earned

§163(j)

$20,476,378

Interest

Earned

from

Federal

Obligations

Note

(1)

$81,871

Franklin

Mutual

Series

Funds

Board

Members

and

Officers

44

franklintempleton.com

Annual

Report

The

name,

year

of

birth

and

address

of

the

officers

and

board

members,

as

well

as

their

affiliations,

positions

held

with

the

Trust,

principal

occupations

during

at

least

the

past

five

years

and

number

of

U.S.

registered

portfolios

overseen

in

the

Franklin

Templeton/Legg

Mason

fund

complex,

are

shown

below.

Generally,

each

board

member

serves

until

that

person’s

successor

is

elected

and

qualified.

Independent

Board

Members

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Edward

I.

Altman,

Ph.D.

(1941)

Trustee

Since

1987

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Max

L.

Heine

Professor

of

Finance,

Emeritus

and

Director

of

The

Credit

and

Debt

Markets

Research

Program,

Salomon

Center,

Stern

School

of

Business,

New

York

University;

editor

and

author

of

numerous

financial

publications;

financial

consultant;

an

adviser

to

numerous

financial

and

publishing

organizations;

and

formerly

,

Vice

Director,

Salomon

Center,

Stern

School

of

Business,

New

York

University.

Ann

Torre

Bates

(1958)

Trustee

and

Chairperson

Trustee

since

1995

and

Chairperson

since

2020

30

Ares

Capital

Corporation

(specialty

finance

company)

(2010-present),

United

Natural

Foods,

Inc.

(distributor

of

natural,

organic

and

specialty

foods)

(2013-present),

formerly

,

Allied

Capital

Corporation

(financial

services)

(2003-

2010),

SLM

Corporation

(Sallie

Mae)

(1997-2014)

and

Navient

Corporation

(loan

management,

servicing

and

asset

recovery)

(2014-2016).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

companies;

and

formerly

,

Executive

Vice

President

and

Chief

Financial

Officer,

NHP

Incorporated

(manager

of

multifamily

housing)

(1995-1997);

and

Vice

President

and

Treasurer,

US

Airways,

Inc.

(until

1995).

Jan

Hopkins

Trachtman

(1947)

Trustee

Since

2009

11

FTAC

Olympus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(2020-present)

and

FTAC

Parnassus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(February

2021-present);

and

formerly

,

FinTech

Acquisition

Corp.

III

(special

purpose

fintech

acquisition

company)

(2018-2021).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President

and

Founder,

The

Jan

Hopkins

Group

(communications

consulting

firm);

serves

on

Alumni

Advisory

Board

of

Knight

Bagehot

Fellowship;

and

formerly

,

President,

Economic

Club

of

New

York

(2007-2015);

Anchor/Correspondent,

CNN

Financial

News

(until

2003);

Managing

Director

and

Head

of

Client

Communications,

Citigroup

Private

Bank

(until

2005);

Off-Air

reporter,

ABC

News’

World

News

Tonight;

and

Editor,

CBS

Network

News.

Franklin

Mutual

Series

Funds

45

franklintempleton.com

Annual

Report

Interested

Board

Members

and

Officers

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Keith

Mitchell

(1954)

Trustee

Since

2009

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

boards

of

asset

management

firms;

and

formerly

,

Managing

Member,

Mitchell,

Hartley

&

Bechtel

Advisers,

LLC

(

formerly

,

Mitchell

Advisers,

LLC)

(advisory

firm)

(2003-2015)

and

Managing

Director,

Putman

Lovell

NBF.

David

W.

Niemiec

(1949)

Trustee

Since

2015

30

Hess

Midstream

LP

(oil

and

gas

midstream

infrastructure)

(2017-present).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Advisor,

Saratoga

Partners

(private

equity

fund);

and

formerly

,

Managing

Director,

Saratoga

Partners

(1998-2001)

and

SBC

Warburg

Dillon

Read

(investment

banking)

(1997-1998);

Vice

Chairman,

Dillon,

Read

&

Co.

Inc.

(investment

banking)

(1991-1997);

and

Chief

Financial

Officer,

Dillon,

Read

&

Co.

Inc.

(1982-1997).

Robert

E.

Wade

(1946)

Trustee

Since

1991

30

El

Oro

Ltd

(investments)

(2003-

2019).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Attorney

at

law

engaged

in

private

practice

as

a

sole

practitioner

(1972-2008)

and

member

of

various

boards.

Gregory

H.

Williams

(1943)

Trustee

Since

2015

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Private

investor;

Consultant;

and

formerly

,

President,

University

of

Cincinnati

(2009-2012);

President,

The

City

College

of

New

York

(2001-

2009);

Dean,

College

of

Law,

Ohio

State

University

(1993-2001);

and

Associate

Vice

President,

Academic

Affairs

and

Professor

of

Law,

University

of

Iowa

(1977-1993).

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Gregory

E.

Johnson

(1961)

Trustee

Since

2007

132

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Executive

Chairman,

Chairman

of

the

Board

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

Vice

Chairman,

Investment

Company

Institute;

and

formerly

,

Chief

Executive

Officer

(2013-2020)

and

President

(1994-2015)

Franklin

Resources,

Inc.

Independent

Board

Members

(continued)

Franklin

Mutual

Series

Funds

46

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Jennifer

M.

Johnson

(1964)

Trustee

Since

March

2021

70

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Executive

Officer,

President

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Chief

Operating

Officer

and

Executive

Vice

President,

Franklin

Resources,

Inc.

(1994-2015);

Executive

Vice

President

of

Operations

and

Technology,

Franklin

Resources,

Inc.

(2005-2010);

and

Senior

Vice

President,

Franklin

Resources,

Inc.

(2003-2005).

Alison

E.

Baur

(1964)

Vice

President

Since

2012

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Deputy

General

Counsel,

Franklin

Templeton;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Breda

M.

Beckerle

(1958)

Chief

Compliance

Officer

Since

2020

Not

Applicable

Not

Applicable

280

Park

Avenue

New

York,

NY

10017

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Compliance

Officer,

Fiduciary

Investment

Management

International,

Inc.,

Franklin

Advisers,

Inc.,

Franklin

Mutual

Advisers,

LLC,

Franklin

Templeton

Institutional,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christian

K.

Correa

(1973)

President,

and

Chief

Executive

Officer

–

Investment

Management

Since

April

2021

Not

Applicable

Not

Applicable

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President,

Franklin

Mutual

Advisers,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Steven

J.

Gray

(1955)

Vice

President

and

Secretary

Vice

President

since

2009

and

Secretary

since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Vice

President,

FASA,

LLC;

Assistant

Secretary,

Franklin

Distributors,

LLC;

and

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Matthew

T.

Hinkle

(1971)

Chief

Executive

Officer

–

Finance

and

Administration

Since

2017

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Vice

President,

Franklin

Templeton

Services,

LLC;

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Vice

President,

Global

Tax

(2012-April

2017)

and

Treasurer/Assistant

Treasurer,

Franklin

Templeton

(2009-2017).

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

47

franklintempleton.com

Annual

Report

*We

base

the

number

of

portfolios

on

each

separate

series

of

the

U.S.

registered

investment

companies

within

the

Franklin

Templeton/Legg

Mason

complex.

These

portfolios

have

a

common

investment

manager

or

affiliated

investment

managers.

**Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

considered

to

be

interested

people

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

of

Franklin

Resources,

Inc.

(Resources),

which

is

the

parent

company

of

the

Fund’s

investment

manager

and

distributor.

Note

1:

Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

siblings.

Note

2:

Officer

information

is

current

as

of

the

date

of

this

report.

It

is

possible

that

after

this

date,

information

about

officers

may

change.

Note

3:

Effective

September

30,

2021,

Peter

A.

Langerman

ceased

to

be

a

trustee

of

the

Trust.

Note

4:

Effective

December

31,

2021,

Burton

J.

Greenwald

ceased

to

be

a

trustee

of

the

Trust.

The

Sarbanes-Oxley

Act

of

2002

and

Rules

adopted

by

the

U.S.

Securities

and

Exchange

Commission

require

the

Fund

to

disclose

whether

the

Fund’s

Audit

Committee

includes

at

least

one

member

who

is

an

audit

committee

financial

expert

within

the

meaning

of

such

Act

and

Rules.

The

Fund’s

Board

has

determined

that

there

is

at

least

one

such

financial

expert

on

the

Audit

Committee

and

has

designated

each

of

Ann

Torre

Bates

and

David

W.

Niemiec

as

an

audit

committee

financial

expert.

The

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

qualify

as

such

an

expert

in

view

of

their

extensive

business

background

and

experience.

Ms.

Bates

has

served

as

a

member

of

the

Fund

Audit

Committee

since

1995.

She

currently

serves

as

a

director

of

Ares

Capital

Corporation

(2010-present)

and

United

Natural

Foods,

Inc.

(2013-present)

and

was

formerly

a

director

of

Navient

Corporation

from

2014

to

2016,

SLM

Corporation

from

1997

to

2014

and

Allied

Capital

Corporation

from

2003

to

2010,

Executive

Vice

President

and

Chief

Financial

Officer

of

NHP

Incorporated

from

1995

to

1997

and

Vice

President

and

Treasurer

of

US

Airways,

Inc.

until

1995.

Mr.

Niemiec

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2015,

currently

serves

as

an

Advisor

to

Saratoga

Partners

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Susan

Kerr

(1949)

Vice

President

–

AML

Compliance

Since

July

2021

Not

Applicable

Not

Applicable

620

Eighth

Avenue

New

York,

NY

10018

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Compliance

Analyst,

Franklin

Templeton;

Chief

Anti-Money

Laundering

Compliance

Officer,

Legg

Mason

&

Co.,

or

its

affiliates;

Anti

Money

Laundering

Compliance

Officer;

Senior

Compliance

Officer,

LMIS;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christopher

Kings

(1974)

Chief

Financial

Officer,

Chief

Accounting

Officer

and

Treasurer

Since

January

2022

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Treasurer,

U.S.

Fund

Administration

&

Reporting;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Navid

J.

Tofigh

(1972)

Vice

President

Since

2015

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Craig

S.

Tyle

(1960)

Vice

President

Since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

General

Counsel

and

Executive

Vice

President,

Franklin

Resources,

Inc.;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Lori

A.

Weber

(1964)

Vice

President

Since

2011

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Assistant

Secretary,

Franklin

Resources,

Inc.;

Vice

President

and

Secretary,

Templeton

Investment

Counsel,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

48

franklintempleton.com

Annual

Report

and

was

formerly

its

Managing

Director

from

1998

to

2001

and

serves

as

a

director

of

Hess

Midstream

LP

(2017-present).

Mr.

Niemiec

was

formerly

a

director

of

Emeritus

Corporation

from

1999

to

2010

and

OSI

Pharmaceuticals,

Inc.

from

2006

to

2010,

Managing

Director

of

SBC

Warburg

Dillon

Read

from

1997

to

1998,

and

was

Vice

Chairman

from

1991

to

1997

and

Chief

Financial

Officer

from

1982

to

1997

of

Dillon,

Read

&

Co.

Inc.

As

a

result

of

such

background

and

experience,

the

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

have

each

acquired

an

understanding

of

generally

accepted

accounting

principles

and

financial

statements,

the

general

application

of

such

principles

in

connection

with

the

accounting

estimates,

accruals

and

reserves,

and

analyzing

and

evaluating

financial

statements

that

present

a

breadth

and

level

of

complexity

of

accounting

issues

generally

comparable

to

those

of

the

Fund,

as

well

as

an

understanding

of

internal

controls

and

procedures

for

financial

reporting

and

an

understanding

of

audit

committee

functions.

Ms.

Bates

and

Mr.

Niemiec

are

independent

Board

members

as

that

term

is

defined

under

the

applicable

U.S.

Securities

and

Exchange

Commission

Rules

and

Releases.

The

Statement

of

Additional

Information

(SAI)

includes

additional

information

about

the

board

members

and

is

available,

without

charge,

upon

request.

Shareholders

may

call

(800)

DIAL

BEN/342-5236

to

request

the

SAI.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

Shareholder

Information

49

franklintempleton.com

Annual

Report

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,

or

receive

notice

of

the

availability

of,

the

Fund’s

financial

reports

every

six

months.

In

addition,

you

will

receive

an

annual

updated

summary

prospectus

(detail

prospectus

available

upon

request).

To

reduce

Fund

expenses,

we

try

to

identify

related

shareholders

in

a

household

and

send

only

one

copy

of

the

financial

reports

(to

the

extent

received

by

mail)

and

summary

prospectus.

This

process,

called

“householding,”

will

continue

indefinitely

unless

you

instruct

us

otherwise.

If

you

prefer

not

to

have

these

documents

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A

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and

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Mutual

Shares

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ANNUAL

REPORT

AND

SHAREHOLDER

LETTER

Franklin

Mutual

Beacon

Fund

A

Series

of

Franklin

Mutual

Series

Funds

December

31,

2021

Sign

up

for

electronic

delivery

at

franklintempleton.com/edelivery

Not

FDIC

Insured

May

Lose

Value

No

Bank

Guarantee

franklintempleton.com

Annual

Report

1

SHAREHOLDER

LETTER

Dear

Franklin

Mutual

Beacon

Fund

Shareholder:

After

a

difficult

period

of

lockdowns,

anxiety

and

grief,

the

start

of

2021

brought

much

needed

optimism.

Prior

to

the

start

of

the

period,

authorities

in

the

United

States

and

Europe

approved

the

first

vaccines

for

emergency

use.

The

U.S.

also

passed

an

additional

stimulus

package,

delivering

financial

assistance

to

many

people

in

need.

Ten-year

U.S.

Treasury

yields

rose

as

investors

began

to

anticipate

a

possible

economic

recovery.

This

economic

optimism

sparked

a

rotation

out

of

growth

stocks

and

into

value

stocks

over

the

first

half

of

the

year.

The

rotation

into

many

“reopening”

names

meant

companies

which

had

benefited

from

consumer

behavior

shifts

during

the

lockdown,

such

as

online

payment

processors,

online

retailers,

and

remote

worker

infrastructure

providers,

fell

out

of

favor.

Instead,

companies

positioned

to

benefit

from

economic

reopening,

such

as

hotels,

casinos,

restaurants,

and

other

leisure

companies,

received

a

boost.

Smaller

capitalization

companies,

which

tend

to

be

more

sensitive

to

the

economic

cycle,

outperformed

their

larger

capitalization

counterparts

during

the

first

half

of

the

period.

The

new

Biden

administration,

and

its

focus

on

overhauling

America’s

infrastructure,

also

supported

a

rally

in

building

products

companies

and

other

potential

beneficiaries

of

greater

stimulus

spending.

The

U.S.

government

successfully

passed

another

stimulus

bill

in

March

2021.

By

the

late

spring

of

2021,

massive

amounts

of

fiscal

and

monetary

stimulus,

combined

with

increased

consumer

spending

and

supply

chain

difficulties,

led

to

building

inflationary

pressure

and

rising

interest

rates.

While

this

propelled

some

areas

of

the

market

upward,

such

as

the

financials

and

energy

sectors,

growing

investor

concern

about

rising

interest

rates

stoked

pockets

of

volatility.

Furthermore,

differences

in

regional

vaccination

rates

constrained

a

widespread

economic

reopening

as

the

highly

contagious

COVID-19

Delta

variant

forced

some

countries

to

reinstate

business

and

travel

restrictions.

The

reopening

trade

stalled,

and

growth

stocks

once

again

generally

outperformed

value

stocks

during

much

of

the

late

summer

and

fall.

Volatility

increased

in

September

2021

and

markets

fell

over

the

final

weeks

of

the

third

calendar

quarter,

as

continued

supply

chain

disruptions,

inflationary

pressures

and

hawkish

central

bank

commentary

stoked

investor

anxiety.

Markets

stabilized

and

rebounded

in

October

with

some

indices

reaching

new

records.

However,

high

volatility

crept

in

again

in

late

November

as

the

COVID-19

Omicron

variant

emerged,

but

it

was

short

lived.

At

year-end,

both

growth

and

value

returns

for

the

12-month

period

were

strong,

as

the

two

styles

ended

the

year

with

comparable

results.

Not

all

progress

is

evidenced

by

a

steady

march

forward.

Ongoing

uncertainties

surrounding

COVID-19,

supply

chain

disruptions

and

inflation

continued

to

affect

financial

markets.

As

these

elements

influence

investor

behavior,

pockets

of

volatility

may

continue

to

crop

up.

However,

market

volatility

can

often

present

opportunities.

As

an

organization,

Franklin

Mutual

Series

remains

dedicated

to

using

fundamental

research,

coupled

with

a

long-term

approach,

to

identify

attractively

valued

companies

that

can

offer

both

meaningful

upside

potential

and

a

degree

of

downside

protection

in

periods

of

financial

market

turbulence.

On

the

following

pages,

the

portfolio

management

team

reviews

investment

decisions

made

during

the

past

12

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,

Christian

Correa,

CFA

President

and

Chief

Investment

Officer

Franklin

Mutual

Advisers,

LLC

This

letter

reflects

our

analysis

and

opinions

as

of

December

31,

2021,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

franklintempleton.com

Annual

Report

2

Contents

Annual

Report

Franklin

Mutual

Beacon

Fund

3

Performance

Summary

7

Your

Fund’s

Expenses

10

Financial

Highlights

and

Statement

of

Investments

11

Financial

Statements

20

Notes

to

Financial

Statements

24

Report

of

Independent

Registered

Public

Accounting

Firm

36

Tax

Information

37

Board

Members

and

Officers

38

Shareholder

Information

43

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Annual

Report

ANNUAL

REPORT

Franklin

Mutual

Beacon

Fund

This

annual

report

for

Franklin

Mutual

Beacon

Fund

covers

the

fiscal

year

ended

December

31,

2021

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

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

and

participations

in

foreign

government

debt.

The

Geographic

Composition

table

on

this

page

lists

the

leading

countries

where

the

Fund

invests.

Performance

Overview

The

Fund’s

Class

Z

shares

posted

a

+16.68%

cumulative

total

return

for

the

12

months

ended

December

31,

2021.

In

comparison,

the

Fund’s

benchmark,

the

MSCI

World

Value

Index-NR

(USD),

which

measures

the

performance

of

stocks

exhibiting

overall

value

style

characteristics

in

global

developed

markets,

posted

a

+21.94%

cumulative

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-NR

(USD),

posted

a

+18.54%

total

return

for

the

12

months

ended

December

31,

2021.

1

Global

equities

benefited

from

monetary

and

fiscal

stimulus

measures,

easing

COVID-19

pandemic

restrictions

in

certain

regions

and

the

development

of

treatments

and

vaccines.

However,

the

Chinese

government’s

imposition

of

additional

restrictions

on

some

businesses

pressured

Asian

and

global

emerging

market

stocks.

Additionally,

the

spread

of

the

Delta

and

Omicron

variants

and

higher

inflation

in

an

environment

of

persistent

supply-chain

disruptions

and

wage

increases

hindered

global

equities

at

certain

points

during

the

12-month

period.

In

the

U.S.,

the

economy

continued

to

recover

and

equities

rallied

amid

monetary

and

fiscal

stimulus

measures

and

the

continued

progress

of

vaccination

programs.

Gross

domestic

product

(GDP)

growth

was

generally

robust,

as

the

lifting

of

many

COVID-19

restrictions

and

strong

consumer

spending

supported

the

economy.

A

rebound

in

corporate

earnings

and

the

passage

of

a

bipartisan

infrastructure

bill

further

bolstered

investor

sentiment.

In

an

effort

to

support

the

economy,

the

U.S.

Federal

Reserve

(Fed)

kept

the

federal

funds

target

rate

at

a

record-low

range

of

0.00%–0.25%.

While

the

Fed

also

maintained

quantitative

easing

measures

with

U.S.

Treasury

and

mortgage

bond

purchasing,

it

began

to

reduce

the

rate

of

purchases

beginning

in

November

2021

and

accelerated

the

pace

of

tapering

in

December.

The

Fed

also

noted

that

it

expected

easing

supply

constraints

to

help

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

16

.

*Rounds

to

less

than

0.1%.

Geographic

Composition

12/31/21

%

of

Total

Net

Assets

United

States

51.9%

United

Kingdom

11.8%

France

8.5%

Germany

6.8%

Switzerland

6.1%

Netherlands

5.6%

Israel

3.4%

South

Korea

2.8%

Other*

0.0%

Short-Term

Investments

&

Other

Net

Assets

3.1%

Franklin

Mutual

Beacon

Fund

4

franklintempleton.com

Annual

Report

reduce

inflationary

pressures

and

that

further

employment

progress

was

needed

before

the

Fed

would

consider

raising

the

range

for

the

federal

funds

target

rate.

The

economic

recovery

in

the

eurozone

was

slow,

as

quarter-over-quarter

GDP

growth

contracted

in

2021’s

first

quarter

before

returning

to

growth

in

2021’s

second

and

third

quarters.

GDP

growth

rates

were

initially

sluggish

among

the

region’s

largest

economies,

although

most

showed

signs

of

improvement

later

in

the

12-month

period.

Business

activity

growth

also

helped

European

developed

market

equities,

as

measured

by

the

MSCI

Europe

Index-NR

(USD),

to

post

a

+16.30%

total

return

for

the

12

months

under

review.

1

However,

in

November

2021,

the

annual

inflation

rate

in

the

eurozone

reached

the

highest

level

since

the

introduction

of

the

euro,

and

the

prospect

of

energy

shortages

during

the

winter

months

tempered

investor

optimism.

Asian

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

All

Country

Asia

Index-NR

(USD),

posted

a

-2.49%

total

return

for

the

12-month

period.

1

While

many

Asian

countries

experienced

improving

economic

conditions,

Japan’s

quarter-over-quarter

GDP

contracted

in

2021’s

third

quarter.

China’s

economic

recovery

continued,

although

the

country’s

quarter-over-quarter

GDP

growth

in

2021’s

first

three

quarters

was

slower

than

in

2020’s

second

half,

pressured

by

higher

commodity

prices.

Unexpected

regulatory

changes

by

the

Chinese

government,

which

negatively

impacted

education-

and

technology-related

businesses,

and

concerns

about

a

large

Chinese

property

developer’s

solvency

and

several

smaller

developer

defaults

pressured

Asian

stocks

during

2021’s

fourth

quarter.

Global

emerging

market

stocks,

as

measured

by

the

MSCI

Emerging

Markets

Index-NR

(USD),

posted

a

-2.54%

total

return

for

the

12

months

under

review.

1

Higher

inflation

led

many

central

banks

in

emerging

market

countries

to

raise

interest

rates,

which

dampened

economic

growth.

The

Omicron

variant

of

COVID-19

also

negatively

impacted

global

emerging

markets,

as

some

countries

reimplemented

restrictions

in

an

effort

to

counter

rising

infections.

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

and

debt

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

Top

10

Industries

12/31/21

%

of

Total

Net

Assets

a

Pharmaceuticals

18.3%

Banks

12.5%

IT

Services

6.9%

Technology

Hardware,

Storage

&

Peripherals

6.6%

Textiles,

Apparel

&

Luxury

Goods

4.6%

Media

4.5%

Diversified

Telecommunication

Services

4.4%

Household

Products

3.9%

Software

3.8%

Health

Care

Equipment

&

Supplies

3.8%

Franklin

Mutual

Beacon

Fund

5

franklintempleton.com

Annual

Report

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

During

2021,

the

Fund

underperformed

its

benchmark,

as

security

selection

in

the

information

technology

(IT)

sector,

an

overweight

in

communication

services

and

a

lack

of

exposure

to

energy

detracted

from

relative

returns.

Conversely,

security

selection

in

consumer

discretionary,

financials

and

real

estate

buoyed

relative

performance.

During

the

12-month

period,

investments

that

detracted

from

Fund

performance

included

Global

Payments,

Check

Point

Software

Technologies

and

Charter

Communications.

Global

Payments

and

Charter

Communications

are

listed

among

the

Fund’s

largest

positions

in

the

Top

10

Holdings

table

on

this

page.

Payments

firm

Global

Payments

was

a

relative

detractor

during

the

period.

The

stock

has

been

under

pressure

as

concerns

remain

over

potential

market

share

losses

to

the

modern

age

FinTech

players

and

a

slew

of

new

listings

lead

to

a

rotation

of

capital

in

the

space.

Nonetheless,

we

see

opportunity

for

Global

Payments

over

the

longer

term,

as

we

believe

it

is

well-positioned

to

benefit

from

the

continued

shift

from

cash

to

electronic

payments

and

has

good

exposure

to

the

high-yielding

smaller-

and

medium-sized

merchants.

IT

security

company

Check

Point

Software

Technologies

detracted

from

relative

results

during

the

year.

After

a

profit

warning

early

in

the

year,

recent

results

have

been

more

upbeat,

and

the

company

has

been

positive

about

momentum

in

areas

like

cloud

security

and

end-user

access

security

that

can

help

its

long-term

growth

outlook.

Charter

Communications

detracted

from

performance

due

to

weaker-than-expected

growth

in

broadband

subscribers.

While

overall

loss

of

customers

in

the

broadband

market

continued

to

be

very

low

this

year,

there

is

concern

that

the

overall

market

growth

is

slowing,

and

that

the

cable

industry’s

share

of

that

growth

will

come

under

pressure

as

telecommunications

companies

build

out

their

fiber

footprints

and

introduce

fixed

wireless

access

services.

We

believe

market

expectations

are

too

low

for

broadband

service

growth

and

that

in

a

market

with

only

two

suppliers,

Charter

can

continue

to

take

its

fair

share

of

growth.

Top

positive

contributors

to

performance

during

the

12-month

period

included

Eli

Lilly,

Cie

Financière

Richemont

and

Brixmor

Property

Group.

Pharmaceutical

maker

Eli

Lilly

contributed

to

relative

performance

in

2021

amid

positive

pipeline

news

on

several

medicines

as

well

as

strong

financial

performance.

The

company

announced

that

it

would

file

its

Alzheimer’s

drug

with

the

U.S.

Food

and

Drug

Administration

much

earlier

than

expected

following

approval

of

a

rival

Alzheimer’s

treatment.

In

addition,

Lilly’s

diabetes

drug,

Trulicity,

continues

to

grow,

and

its

key

diabetes

pipeline

compound,

Tirzepatide,

showed

positive

results

in

multiple

Phase

3

clinical

trials,

further

strengthening

the

company’s

position

in

the

growing

diabetes

end

market.

Swiss

luxury

goods

company

Cie

Financière

Richemont

boosted

relative

performance

during

the

period

following

a

strong

first-half

earnings

update.

The

company’s

operating

results

were

better

than

anticipated,

with

robust

growth

in

its

jewelry

business

amid

the

ongoing

recovery

from

the

impact

of

COVID-19

on

its

business

in

2020.

The

company

has

a

leading

portfolio

of

jewelry

brands

and,

in

our

view,

can

deliver

consistent

long-term

growth,

which

should

help

improve

investor

sentiment

over

time.

Shopping

center

real

estate

investment

trust

(REIT)

Brixmor

Property

Group

was

among

the

leading

contributors

to

relative

results

during

the

year.

Early

in

the

year,

when

investors

rotated

into

stocks

that

stood

to

benefit

from

Top

10

Holdings

12/31/21

Company

Industry

,

Country

%

of

Total

Net

Assets

A

a

GlaxoSmithKline

plc

5.0%

Pharmaceuticals,

United

Kingdom

Charter

Communications,

Inc.

4.5%

Media,

United

States

Deutsche

Telekom

AG

4.4%

Diversified

Telecommunication

Services,

Germany

Global

Payments,

Inc.

4.3%

IT

Services,

United

States

Novartis

AG

4.0%

Pharmaceuticals,

Switzerland

Reckitt

Benckiser

Group

plc

3.9%

Household

Products,

United

Kingdom

Merck

&

Co.,

Inc.

3.8%

Pharmaceuticals,

United

States

Western

Digital

Corp.

3.8%

Technology

Hardware,

Storage

&

Peripherals,

United

States

Medtronic

plc

3.8%

Health

Care

Equipment

&

Supplies,

United

States

Sensata

Technologies

Holding

plc

3.7%

Electrical

Equipment,

United

States

Franklin

Mutual

Beacon

Fund

6

franklintempleton.com

Annual

Report

economic

reopening,

shares

of

Brixmor

rose.

The

company

further

benefited

as

collections

and

leasing

activity

improved

and

as

the

pandemic

highlighted

the

relevance

of

grocery-

anchored

open-air

shopping

centers. We

have

seen

a

positive

shift

in

sentiment

on

shopping

center

REITs

since

the

depths

of

the

pandemic,

given

their

relevance

with

an

increase

in

omnichannel

retail

that

seeks

to

provide

shoppers

a

unified

experience

across

all

touchpoints.

Coupled

with

ongoing

consolidation

in

the

space,

this

could

help

serve

as

a

tailwind

for

shopping

center

operators

like

Brixmor.

During

the

period,

the

Fund

held

currency

forwards

and

futures,

seeking

to

substantially

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

the

U.S.

dollar

rose

against

most

currencies

during

the

period.

As

fellow

shareholders,

we

found

recent

relative

performance

disappointing,

but

our

strategy

of

seeking

undervalued

stocks

and

focus

on

special

situation

investments,

including

distressed

investments

and

merger

arbitrage,

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

Mandana

Hormozi

Aman

Gupta,

CFA

Portfolio

Management

Team

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

December

31,

2021,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Performance

Summary

as

of

December

31,

2021

Franklin

Mutual

Beacon

Fund

7

franklintempleton.com

Annual

Report

The

performance

table

and

graphs

do

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

12/31/21

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A:

5.50%

maximum

initial

sales

charge;

For

other

share

classes,

visit

franklintempleton.com

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

1

Average

Annual

Total

Return

2

–

Z

1-Year

+16.68%

+16.68%

5-Year

+59.29%

+9.76%

10-Year

+184.73%

+11.03%

A

3

1-Year

+16.46%

+10.04%

5-Year

+57.29%

+8.26%

10-Year

+177.23%

+10.11%

See

page

9

for

Performance

Summary

footnotes.

Franklin

Mutual

Beacon

Fund

Performance

Summary

8

franklintempleton.com

Annual

Report

See

page

9

for

Performance

Summary

footnotes.

Total

Return

Index

Comparison

for

a

Hypothetical

$10,000

Investment

Total

return

represents

the

change

in

value

of

an

investment

over

the

periods

shown.

It

includes

any

applicable

maximum

sales

charge,

Fund

expenses,

account

fees

and

reinvested

distributions.

The

unmanaged

index

includes

reinvestment

of

any

income

or

distributions.

It

differs

from

the

Fund

in

composition

and

does

not

pay

management

fees

or

expenses.

One

cannot

invest

directly

in

an

index.

Class

Z

(

1/1/12–12/31/21)

Class

A

(1/1/12–12/31/21)

Franklin

Mutual

Beacon

Fund

Performance

Summary

9

franklintempleton.com

Annual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

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.

Events

such

as

the

spread

of

deadly

diseases,

disasters,

and

financial,

political

or

social

disruptions,

may

heighten

risks

and

adversely

affect

performance.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

2.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

3.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

4.

Source:

Morningstar.

The

MSCI

World

Value

Index-NR

(USD)

is

a

free

float-adjusted,

market

capitalization-weighted

index

designed

to

measure

the

performance

of

stocks

exhibiting

overall

value

style

characteristics

in

global

developed

markets.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

5.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Distributions

(1/1/21–12/31/21)

Share

Class

Net

Investment

Income

Short-Term

Capital

Gain

Long-Term

Capital

Gain

Total

Z

$0.3674

$0.1146

$0.7447

$1.2267

A

$0.3218

$0.1146

$0.7447

$1.1811

C

$0.1428

$0.1146

$0.7447

$1.0021

R

$0.2762

$0.1146

$0.7447

$1.1355

R6

$0.3793

$0.1146

$0.7447

$1.2386

Total

Annual

Operating

Expenses

5

Share

Class

Z

0.82%

A

1.07%

Your

Fund’s

Expenses

Franklin

Mutual

Beacon

Fund

10

franklintempleton.com

Annual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6

).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements,

for

Class

R6.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

7/1/21

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

a

Net

Annualized

Expense

Ratio

2

Z

$1,000

$1,005.70

$4.09

$1,021.13

$4.12

0.81%

A

$1,000

$1,004.90

$5.36

$1,019.86

$5.40

1.06%

C

$1,000

$1,000.80

$9.12

$1,016.09

$9.19

1.81%

R

$1,000

$1,003.40

$6.62

$1,018.60

$6.67

1.31%

R6

$1,000

$1,006.40

$3.80

$1,021.42

$3.83

0.75%

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Beacon

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

11

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

Z

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$16.48

$16.40

$13.76

$16.61

$15.30

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.26

0.51

c

0.33

0.29

0.29

Net

realized

and

unrealized

gains

(losses)

...........

2.45

0.12

3.06

(1.68)

1.90

Total

from

investment

operations

....................

2.71

0.63

3.39

(1.39)

2.19

Less

distributions

from:

Net

investment

income

..........................

(0.37)

(0.45)

(0.36)

(0.31)

(0.31)

Net

realized

gains

.............................

(0.86)

(0.10)

(0.39)

(1.15)

(0.57)

Total

distributions

...............................

(1.23)

(0.55)

(0.75)

(1.46)

(0.88)

Net

asset

value,

end

of

year

.......................

$17.96

$16.48

$16.40

$13.76

$16.61

Total

return

....................................

16.68%

4.08%

24.96%

(8.24)%

14.39%

Ratios

to

average

net

assets

Expenses

d,e

....................................

0.81%

0.82%

0.81%

f

0.80%

f

0.78%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.01%

0.02%

0.02%

0.01%

—%

Net

investment

income

...........................

1.41%

3.56%

c

2.11%

1.77%

1.78%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$2,508,213

$2,320,077

$2,600,744

$2,271,217

$2,700,327

Portfolio

turnover

rate

............................

40.89%

42.37%

30.72%

47.20%

24.80%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.56%.

d

Includes

dividends

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(e).

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Beacon

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$16.30

$16.24

$13.63

$16.47

$15.18

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.21

0.47

c

0.29

0.25

0.25

Net

realized

and

unrealized

gains

(losses)

...........

2.43

0.10

3.03

(1.67)

1.87

Total

from

investment

operations

....................

2.64

0.57

3.32

(1.42)

2.12

Less

distributions

from:

Net

investment

income

..........................

(0.32)

(0.41)

(0.32)

(0.27)

(0.26)

Net

realized

gains

.............................

(0.86)

(0.10)

(0.39)

(1.15)

(0.57)

Total

distributions

...............................

(1.18)

(0.51)

(0.71)

(1.42)

(0.83)

Net

asset

value,

end

of

year

.......................

$17.76

$16.30

$16.24

$13.63

$16.47

Total

return

d

...................................

16.46%

3.75%

24.69%

(8.49)%

14.09%

Ratios

to

average

net

assets

Expenses

e,f

....................................

1.06%

1.07%

1.06%

g

1.05%

g

1.03%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.01%

0.02%

0.02%

0.01%

—%

Net

investment

income

...........................

1.16%

3.32%

c

1.86%

1.52%

1.53%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$987,817

$893,378

$1,028,482

$890,294

$983,048

Portfolio

turnover

rate

............................

40.89%

42.37%

30.72%

47.20%

24.80%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.28

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.33%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Includes

dividends

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(e).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Beacon

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

13

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$16.37

$16.29

$13.65

$16.34

$15.06

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.08

0.39

c

0.17

0.13

0.12

Net

realized

and

unrealized

gains

(losses)

...........

2.43

0.06

3.04

(1.65)

1.86

Total

from

investment

operations

....................

2.51

0.45

3.21

(1.52)

1.98

Less

distributions

from:

Net

investment

income

..........................

(0.14)

(0.27)

(0.18)

(0.02)

(0.13)

Net

realized

gains

.............................

(0.86)

(0.10)

(0.39)

(1.15)

(0.57)

Total

distributions

...............................

(1.00)

(0.37)

(0.57)

(1.17)

(0.70)

Net

asset

value,

end

of

year

.......................

$17.88

$16.37

$16.29

$13.65

$16.34

Total

return

d

...................................

15.55%

2.96%

23.74%

(9.19)%

13.25%

Ratios

to

average

net

assets

Expenses

e,f

....................................

1.80%

1.82%

1.81%

g

1.80%

g

1.78%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.01%

0.02%

0.02%

0.01%

—%

Net

investment

income

...........................

0.43%

2.75%

c

1.11%

0.77%

0.78%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$27,853

$35,273

$52,620

$59,828

$260,113

Portfolio

turnover

rate

............................

40.89%

42.37%

30.72%

47.20%

24.80%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.28

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

0.76%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Includes

dividends

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(e).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Beacon

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$16.09

$16.03

$13.46

$16.28

$15.01

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.16

0.44

c

0.24

0.20

0.21

Net

realized

and

unrealized

gains

(losses)

...........

2.40

0.09

3.01

(1.64)

1.84

Total

from

investment

operations

....................

2.56

0.53

3.25

(1.44)

2.05

Less

distributions

from:

Net

investment

income

..........................

(0.28)

(0.37)

(0.29)

(0.23)

(0.21)

Net

realized

gains

.............................

(0.86)

(0.10)

(0.39)

(1.15)

(0.57)

Total

distributions

...............................

(1.14)

(0.47)

(0.68)

(1.38)

(0.78)

Net

asset

value,

end

of

year

.......................

$17.51

$16.09

$16.03

$13.46

$16.28

Total

return

....................................

16.12%

3.49%

24.33%

(8.65)%

13.76%

Ratios

to

average

net

assets

Expenses

d,e

....................................

1.31%

1.32%

1.31%

f

1.30%

f

1.28%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.01%

0.02%

0.02%

0.01%

—%

Net

investment

income

...........................

0.92%

3.16%

c

1.61%

1.27%

1.28%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$1,388

$1,262

$1,769

$1,662

$1,601

Portfolio

turnover

rate

............................

40.89%

42.37%

30.72%

47.20%

24.80%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.28

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.17%.

d

Includes

dividends

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(e).

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Beacon

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

15

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$16.47

$16.40

$13.75

$16.60

$15.30

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.26

0.53

c

0.34

0.30

0.37

Net

realized

and

unrealized

gains

(losses)

...........

2.47

0.10

3.07

(1.68)

1.82

Total

from

investment

operations

....................

2.73

0.63

3.41

(1.38)

2.19

Less

distributions

from:

Net

investment

income

..........................

(0.38)

(0.46)

(0.37)

(0.32)

(0.32)

Net

realized

gains

.............................

(0.86)

(0.10)

(0.39)

(1.15)

(0.57)

Total

distributions

...............................

(1.24)

(0.56)

(0.76)

(1.47)

(0.89)

Net

asset

value,

end

of

year

.......................

$17.96

$16.47

$16.40

$13.75

$16.60

Total

return

....................................

16.83%

4.08%

25.13%

(8.18)%

14.42%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

d

.....

0.77%

0.78%

0.76%

0.75%

0.72%

Expenses

net

of

waiver

and

payments

by

affiliates

d

,e

.....

0.75%

0.75%

0.74%

0.73%

0.71%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.01%

0.02%

0.02%

0.01%

—%

Net

investment

income

...........................

1.39%

3.67%

c

2.18%

1.84%

1.85%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$151,226

$70,839

$90,220

$79,358

$106,845

Portfolio

turnover

rate

............................

40.89

%

42.37%

30.72%

47.20%

24.80%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.29

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.68%.

d

Includes

dividends

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(e).

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Statement

of

Investments,

December

31,

2021

Franklin

Mutual

Beacon

Fund

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

95.0%

Aerospace

&

Defense

2.4%

a

Airbus

SE

...........................................

France

698,989

$

89,360,653

Auto

Components

2.8%

Cie

Generale

des

Etablissements

Michelin

SCA

..............

France

632,201

103,462,740

a,b,c

International

Automotive

Components

Group

Brazil

LLC

........

Brazil

2,846,329

107,759

103,570,499

Banks

12.5%

BNP

Paribas

SA

......................................

France

1,718,905

118,752,968

ING

Groep

NV

.......................................

Netherlands

6,938,650

96,391,852

JPMorgan

Chase

&

Co.

.................................

United

States

776,620

122,977,777

Wells

Fargo

&

Co.

.....................................

United

States

2,560,191

122,837,964

460,960,561

Beverages

3.0%

Heineken

NV

........................................

Netherlands

976,799

109,841,824

Chemicals

2.5%

BASF

SE

...........................................

Germany

1,295,116

90,826,345

Diversified

Telecommunication

Services

4.4%

Deutsche

Telekom

AG

..................................

Germany

8,681,465

160,284,990

Electrical

Equipment

3.7%

a

Sensata

Technologies

Holding

plc

.........................

United

States

2,190,149

135,110,292

Entertainment

3.3%

a,d

Walt

Disney

Co.

(The)

..................................

United

States

785,435

121,656,027

Equity

Real

Estate

Investment

Trusts

(REITs)

2.5%

Brixmor

Property

Group,

Inc.

.............................

United

States

3,667,618

93,194,173

Health

Care

Equipment

&

Supplies

3.8%

Medtronic

plc

........................................

United

States

1,339,040

138,523,688

Health

Care

Providers

&

Services

2.5%

Anthem,

Inc.

.........................................

United

States

200,449

92,916,130

Household

Products

3.9%

Reckitt

Benckiser

Group

plc

.............................

United

Kingdom

1,649,726

141,899,018

Insurance

2.1%

Hartford

Financial

Services

Group,

Inc.

(The)

................

United

States

1,140,480

78,738,739

IT

Services

6.9%

Cognizant

Technology

Solutions

Corp.,

A

....................

United

States

1,063,050

94,313,796

Global

Payments,

Inc.

..................................

United

States

1,171,877

158,414,333

252,728,129

Media

4.5%

a

Charter

Communications,

Inc.,

A

..........................

United

States

255,653

166,678,086

Pharmaceuticals

18.3%

a

Elanco

Animal

Health,

Inc.

...............................

United

States

3,823,163

108,501,366

Eli

Lilly

&

Co.

........................................

United

States

344,907

95,270,212

GlaxoSmithKline

plc

...................................

United

Kingdom

8,366,655

182,017,126

Merck

&

Co.,

Inc.

.....................................

United

States

1,819,252

139,427,473

Novartis

AG,

ADR

.....................................

Switzerland

1,686,090

147,482,292

672,698,469

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Beacon

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

17

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Semiconductors

&

Semiconductor

Equipment

1.1%

Xilinx,

Inc.

...........................................

United

States

188,700

$

40,010,061

Software

3.4%

a

Check

Point

Software

Technologies

Ltd.

....................

Israel

1,082,000

126,117,920

Technology

Hardware,

Storage

&

Peripherals

3.8%

a,d

Western

Digital

Corp.

..................................

United

States

2,130,105

138,904,147

Textiles,

Apparel

&

Luxury

Goods

4.6%

Cie

Financiere

Richemont

SA

............................

Switzerland

511,346

76,324,974

Tapestry,

Inc.

........................................

United

States

2,326,980

94,475,388

170,800,362

Tobacco

3.0%

British

American

Tobacco

plc

.............................

United

Kingdom

2,934,551

108,876,393

Total

Common

Stocks

(Cost

$2,501,993,809)

....................................

3,493,696,506

Preferred

Stocks

2.8%

Technology

Hardware,

Storage

&

Peripherals

2.8%

e

Samsung

Electronics

Co.

Ltd.,

1.52%

......................

South

Korea

1,695,716

101,370,992

Total

Preferred

Stocks

(Cost

$25,486,984)

......................................

101,370,992

Principal

Amount

*

f,g

Senior

Floating

Rate

Interests

0.4%

Software

0.4%

Veritas

US,

Inc.

,

2021

Dollar

Term

Loan,

B

,

6

%

,

(

3-month

USD

LIBOR

+

5

%

),

9/01/25

................................

United

States

15,969,347

15,989,309

Total

Senior

Floating

Rate

Interests

(Cost

$15,899,170)

..........................

15,989,309

Shares

a

Companies

in

Liquidation

0.0%

a,b,h

Tribune

Media,

Litigation

Trust,

Contingent

Distribution

.........

United

States

501,447

—

a,b,h

Walter

Energy,

Inc.,

Litigation

Trust,

Contingent

Distribution

......

United

States

5,229,000

—

Total

Companies

in

Liquidation

(Cost

$–)

......................................

—

Total

Long

Term

Investments

(Cost

$2,543,379,963)

.............................

3,611,056,807

a

Short

Term

Investments

0.8%

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

0.8%

i

FHLB,

1/03/22

.......................................

United

States

5,200,000

5,200,000

i

U.S.

Treasury

Bills

,

1/06/22

...........................................

United

States

3,000,000

3,000,000

2/17/22

...........................................

United

States

10,000,000

9,999,688

4/28/22

...........................................

United

States

3,500,000

3,499,203

5/26/22

...........................................

United

States

1,000,000

999,646

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Beacon

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

Short

Term

Investments

(continued)

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

(continued)

i

U.S.

Treasury

Bills,

(continued)

6/23/22

...........................................

United

States

5,000,000

$

4,996,141

22,494,678

Total

U.S.

Government

and

Agency

Securities

(Cost

$27,694,907)

.................

27,694,678

Total

Short

Term

Investments

(Cost

$27,694,907

)

................................

27,694,678

a

Total

Investments

(Cost

$2,571,074,870)

99.0%

..................................

$3,638,751,485

Securities

Sold

Short

(1.3)%

..................................................

(46,797,000)

Other

Assets,

less

Liabilities

2.3%

.............................................

84,542,260

Net

Assets

100.0%

...........................................................

$3,676,496,745

Shares

j

Securities

Sold

Short

(1.3)%

Common

Stocks

(1.3)%

Semiconductors

&

Semiconductor

Equipment

(1.3)%

Advanced

Micro

Devices,

Inc.

............................

United

States

325,205

(46,797,000)

Total

Common

Stocks

(Proceeds

$29,330,778)

..................................

(46,797,000)

Total

Securities

Sold

Short

(Proceeds

$29,330,778)

..............................

$(46,797,000)

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

a

Non-income

producing.

b

Fair

valued

using

significant

unobservable

inputs.

See

Note

14

regarding

fair

value

measurements.

c

See

Note

11

regarding

restricted

securities.

d

A

portion

or

all

of

the

security

has

been

segregated

as

collateral

for

securities

sold

short.

At

December

31,

2021,

the

aggregate

value

of

these

securities

pledged

amounted

to

$56,834,643,

representing

1.5%

of

net

assets.

e

Variable

rate

security.

The

rate

shown

represents

the

yield

at

period

end.

f

See

Note

1(f)

regarding

senior

floating

rate

interests.

g

The

coupon

rate

shown

represents

the

rate

at

period

end.

h

Contingent

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.

i

The

security

was

issued

on

a

discount

basis

with

no

stated

coupon

rate.

j

See

Note

1(e)

regarding

securities

sold

short.

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Beacon

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

19

At

December

31,

2021,

the

Fund

had

the

following futures

contracts

outstanding.

See

Note

1(c). 

At

December

31,

2021,

the

Fund

had

the

following

forward

exchange

contracts

outstanding.

See

Note

1

(

c

). 

Futures

Contracts

Description

Type

Number

of

Contracts

Notional

Amount

*

Expiration

Date

Value/

Unrealized

Appreciation

(Depreciation)

Foreign

exchange

contracts

Foreign

Exchange

EUR/USD

...................

Short

221

$

31,499,406

3/14/22

$

(167,953)

Total

Futures

Contracts

......................................................................

$(167,953)

*

As

of

period

end.

Forward

Exchange

Contracts

Currency

Counter-

party

a

Type

Quantity

Contract

Amount

*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

Euro

.............

BOFA

Sell

40,419,366

47,706,362

1/24/22

$

1,706,432

$

—

Euro

.............

HSBK

Sell

37,596,002

44,222,408

1/24/22

1,435,651

—

Euro

.............

SSBT

Sell

13,485,388

15,936,136

1/24/22

588,867

—

Euro

.............

UBSW

Buy

3,160,094

3,563,066

1/24/22

33,331

—

Euro

.............

UBSW

Sell

9,777,004

11,530,754

1/24/22

403,872

—

Euro

.............

BOFA

Sell

38,952,909

45,263,153

2/07/22

919,684

—

Euro

.............

SSBT

Sell

40,387,533

46,906,175

2/07/22

929,547

—

Euro

.............

UBSW

Sell

432,199

495,918

2/07/22

3,909

—

Euro

.............

BOFA

Sell

22,636,988

25,989,413

4/19/22

177,268

—

Euro

.............

HSBK

Sell

450,053

513,545

4/19/22

365

—

Euro

.............

UBSW

Sell

22,636,234

25,987,868

4/19/22

176,583

—

Total

Forward

Exchange

Contracts

...................................................

$6,375,509

—

Net

unrealized

appreciation

(depreciation)

............................................

$6,375,509

*

In

U.S.

dollars

unless

otherwise

indicated.

a

May

be

comprised

of

multiple

contracts

with

the

same

counterparty,

currency

and

settlement

date.

See

Note 

12

 regarding

other

derivative

information

.

See

Abbreviations

on

page

35

.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

Franklin

Mutual

Beacon

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

...................................................................

$2,571,074,870

Value

-

Unaffiliated

issuers

..................................................................

$3,638,751,485

Cash

....................................................................................

22,383,497

Restricted

cash

for

OTC

derivative

contracts

(Note

1d)

...............................................

6,032,000

Receivables:

Capital

shares

sold

........................................................................

919,662

Dividends

and

interest

.....................................................................

8,902,303

European

Union

tax

reclaims

(Note

1

g

)

.........................................................

2,890,920

Deposits

with

brokers

for:

Securities

sold

short

.....................................................................

48,147,576

Futures

contracts

........................................................................

492,140

Unrealized

appreciation

on

OTC

forward

exchange

contracts

..........................................

6,375,509

Other

assets

..............................................................................

820,819

Total

assets

..........................................................................

3,735,715,911

Liabilities:

Payables:

Capital

shares

redeemed

...................................................................

2,493,223

Management

fees

.........................................................................

2,055,407

Distribution

fees

..........................................................................

228,094

Transfer

agent

fees

........................................................................

375,006

Trustees'

fees

and

expenses

.................................................................

354,887

Variation

margin

on

futures

contracts

...........................................................

158,844

Due

to

brokers

.............................................................................

6,032,000

Securities

sold

short,

at

value

(proceeds

$29,330,778)

...............................................

46,797,000

Accrued

expenses

and

other

liabilities

...........................................................

724,705

Total

liabilities

.........................................................................

59,219,166

Net

assets,

at

value

.................................................................

$3,676,496,745

Net

assets

consist

of:

Paid-in

capital

.............................................................................

$2,549,441,066

Total

distributable

earnings

(losses)

.............................................................

1,127,055,679

Net

assets,

at

value

.................................................................

$3,676,496,745

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

(continued)

December

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

21

Franklin

Mutual

Beacon

Fund

Class

Z:

Net

assets,

at

value

.......................................................................

$2,508,213,087

Shares

outstanding

........................................................................

139,654,145

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$17.96

Class

A:

Net

assets,

at

value

.......................................................................

$987,816,888

Shares

outstanding

........................................................................

55,629,527

Net

asset

value

per

share

a

..................................................................

$17.76

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50%)

................................

$18.79

Class

C:

Net

assets,

at

value

.......................................................................

$27,852,616

Shares

outstanding

........................................................................

1,557,569

Net

asset

value

and

maximum

offering

price

per

share

a

.............................................

$17.88

Class

R:

Net

assets,

at

value

.......................................................................

$1,388,234

Shares

outstanding

........................................................................

79,281

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$17.51

Class

R6:

Net

assets,

at

value

.......................................................................

$151,225,920

Shares

outstanding

........................................................................

8,422,394

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$17.96

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Operations

for

the

year

ended

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

Franklin

Mutual

Beacon

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$4,114,771)

Unaffiliated

issuers

........................................................................

$77,190,153

Interest:

Unaffiliated

issuers

........................................................................

2,762,491

Other

income

(Note

1

g

)

......................................................................

186,944

Total

investment

income

...................................................................

80,139,588

Expenses:

Management

fees

(Note

3

a

)

...................................................................

24,394,334

Distribution

fees:

(Note

3c

)

    Class

A

................................................................................

2,425,825

    Class

C

................................................................................

332,267

    Class

R

................................................................................

6,831

Transfer

agent

fees:

(Note

3e

)

    Class

Z

................................................................................

1,947,919

    Class

A

................................................................................

757,183

    Class

C

................................................................................

25,832

    Class

R

................................................................................

1,066

    Class

R6

...............................................................................

50,352

Custodian

fees

(Note

4

)

......................................................................

128,003

Reports

to

shareholders

fees

..................................................................

303,982

Registration

and

filing

fees

....................................................................

104,069

Professional

fees

...........................................................................

92,331

Trustees'

fees

and

expenses

..................................................................

271,560

Dividends

on

securities

sold

short

..............................................................

497,621

Other

....................................................................................

513,786

Total

expenses

.........................................................................

31,852,961

Expense

reductions

(Note

4

)

...............................................................

(187)

Expenses

waived/paid

by

affiliates

(Note

3f)

....................................................

(27,922)

Net

expenses

.........................................................................

31,824,852

Net

investment

income

................................................................

48,314,736

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

Unaffiliated

issuers

......................................................................

361,148,278

Foreign

currency

transactions

................................................................

(676,674)

Forward

exchange

contracts

.................................................................

1,105,076

Futures

contracts

.........................................................................

2,558,408

Securities

sold

short

.......................................................................

(13,503,185)

Net

realized

gain

(loss)

..................................................................

350,631,903

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

......................................................................

139,874,524

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

..............................

(605,085)

Forward

exchange

contracts

.................................................................

14,065,924

Futures

contracts

.........................................................................

31,284

Securities

sold

short

.......................................................................

(16,909,745)

Net

change

in

unrealized

appreciation

(depreciation)

............................................

136,456,902

Net

realized

and

unrealized

gain

(loss)

............................................................

487,088,805

Net

increase

(decrease)

in

net

assets

resulting

from

operations

..........................................

$535,403,541

Franklin

Mutual

Series

Funds

Financial

Statements

Statements

of

Changes

in

Net

Assets

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

23

Franklin

Mutual

Beacon

Fund

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

.................................................

$48,314,736

$107,019,795

Net

realized

gain

(loss)

.................................................

350,631,903

(113,120,672)

Net

change

in

unrealized

appreciation

(depreciation)

...........................

136,456,902

55,219,517

Net

increase

(decrease)

in

net

assets

resulting

from

operations

................

535,403,541

49,118,640

Distributions

to

shareholders:

Class

Z

.............................................................

(162,681,570)

(76,905,231)

Class

A

.............................................................

(62,361,827)

(27,957,723)

Class

C

.............................................................

(1,505,030)

(810,951)

Class

R

.............................................................

(84,510)

(40,279)

Class

R6

............................................................

(9,884,661)

(2,431,509)

Total

distributions

to

shareholders

..........................................

(236,517,598)

(108,145,693)

Capital

share

transactions:

(Note

2

)

Class

Z

.............................................................

(25,340,408)

(245,275,617)

Class

A

.............................................................

14,131,543

(116,168,396)

Class

C

.............................................................

(11,186,159)

(14,894,960)

Class

R

.............................................................

7,046

(451,128)

Class

R6

............................................................

79,169,839

(17,188,067)

Total

capital

share

transactions

............................................

56,781,861

(393,978,168)

Net

increase

(decrease)

in

net

assets

...................................

355,667,804

(453,005,221)

Net

assets:

Beginning

of

year

.......................................................

3,320,828,941

3,773,834,162

End

of

year

...........................................................

$3,676,496,745

$3,320,828,941

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

Franklin

Mutual

Beacon

Fund

24

franklintempleton.com

Annual

Report

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. Effective

August

2,

2021,

Class

C

shares

automatically

convert

to

Class

A

shares

on

a

monthly

basis,

after

they

have

been

held

for

8

years.

Prior

to

August

2,

2021,

Class

C

shares

converted

to

Class

A

shares

after

a

10-year

holding

period.

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.

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

25

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

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

December

31,

2021,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy

(referred

to

as

“market

level

fair

value”).

See

the

Fair

Value

Measurements

note

for

more

information.

When

the

last

day

of

the

reporting

period

is

a

non-business

day,

certain

foreign

markets

may

be

open

on

those

days

that

the

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

portfolio

securities

on

the

last

business

day

and

the

last

calendar

day

of

the

reporting

period.

Any

security

valuation

changes

due

to

an

open

foreign

market

are

adjusted

and

reflected

by

the

Fund

for

financial

reporting

purposes.

b.

Foreign

Currency

Translation 

Portfolio

securities

and

other

assets

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

based

on

the

exchange

rate

of

such

currencies

against

U.S.

dollars

on

the

date

of

valuation.

The

Fund

may

enter

into

foreign

currency

exchange

contracts

to

facilitate

transactions

denominated

in

a

foreign

currency.

Purchases

and

sales

of

securities,

income

and

expense

items

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

at

the

exchange

rate

in

effect

on

the

transaction

date.

Portfolio

securities

and

assets

and

liabilities

denominated

in

foreign

currencies

contain

risks

that

those

currencies

will

decline

in

value

relative

to

the

U.S.

dollar.

Occasionally,

events

may

impact

the

availability

or

reliability

of

foreign

exchange

rates

used

to

convert

the

U.S.

dollar

equivalent

value.

If

such

an

event

occurs,

the

foreign

exchange

rate

will

be

valued

at

fair

value

using

procedures

established

and

approved

by

the

Board.

The

Fund

does

not

separately

report

the

effect

of

changes

in

foreign

exchange

rates

from

changes

in

market

prices

on

securities

held.

Such

changes

are

included

in

net

realized

and

unrealized

gain

or

loss

from

investments

in

the

Statement of

Operations.

Realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

the

trade

and

settlement

dates

on

securities

transactions

and

the

difference

between

the

recorded

amounts

of

dividends,

interest,

and

foreign

withholding

taxes

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

foreign

exchange

gains

and

losses

arise

from

changes

in

foreign

exchange

rates

on

foreign

denominated

assets

and

liabilities

other

than

investments

in

securities

held

at

the

end

of

the

reporting

period.

c.

Derivative

Financial

Instruments

The

Fund

invested

in

derivative

financial

instruments

in

order

to

manage

risk

or

gain

exposure

to

various

other

investments

or

markets.

Derivatives

are

financial

contracts

based

on

an

underlying

or

notional

amount,

require

no

initial

investment

or

an

initial

net

investment

that

is

smaller

than

would

normally

be

required

to

have

a

similar

response

to

changes

in

market

factors,

and

require

or

permit

net

settlement.

Derivatives

contain

various

risks

including

the

potential

inability

of

the

counterparty

to

fulfill

their

obligations

under

the

terms

of

the

contract,

the

potential

for

an

illiquid

secondary

market,

and/or

the

potential

for

market

movements

which

expose

the

Fund

to

gains

or

losses

in

excess

of

the

amounts

shown

in

the

Statement

of

Assets

and

Liabilities.

Realized

gain

and

loss

and

unrealized

appreciation

and

depreciation

on

these

contracts

for

the

period

are

included

in

the

Statement

of

Operations. 

Derivative

counterparty

credit

risk

is

managed

through

a

formal

evaluation

of

the

creditworthiness

of

all

potential

counterparties.

The

Fund

attempts

to

reduce

its

exposure

to

counterparty

credit

risk

on

OTC

derivatives,

whenever

possible,

by

entering

into

International

Swaps

and

Derivatives

Association

(ISDA)

master

agreements

with

certain

counterparties.

These

agreements

contain

various

provisions,

including

but

not

limited

to

collateral

requirements,

events

of

default,

or

early

termination.

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

26

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

(continued)

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

December

31,

2021,

the

Fund

had

no

OTC

derivatives

in

a

net

liability

position

for

such

contracts. 

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

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

December

31,

2021,

the

Fund

received

$1,766,115

in

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.

Restricted

Cash

At

December

31,

2021, the

Fund

held

restricted

cash

in

connection

with

investments

in

certain

derivative

securities.

Restricted

cash

is

held

in

a

segregated

account

with

the

Fund’s

counterparty

broker

and

is

reflected

in

the

Statement

of

Assets

and

Liabilities.

e.

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

1.

Organization

and

Significant

Accounting

Policies

(continued)

c.

Derivative

Financial

Instruments

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

27

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

(continued)

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.

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). Income

recognized,

if

any,

for

EU

reclaims

is

reflected

as

other

income

in

the

Statement

of

Operations

and

any

related

receivable,

if

any,

is

reflected

as

European

Union

tax

reclaims

in

the

Statement

of

Assets

and

Liabilities.

Any

fees

associated

with

these

filings

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

When

uncertainty

exists

as

to

the

ultimate

resolution

of

these

proceedings,

the

likelihood

of

receipt

of

these

EU

reclaims,

and

the

potential

timing

of

payment,

no

amounts

are

reflected

in

the

financial

statements.

For

U.S.

income

tax

purposes,

EU

reclaims

received

by

the

Fund,

if

any,

reduce

the

amount

of

foreign

taxes

Fund

shareholders

can

use

as

tax

deductions

or credits

on

their

income

tax

returns.

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

December

31,

2021,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

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.

Paydown

gains

and

losses

are

recorded

as

an

adjustment

to

interest

income.

Facility

fees

are

recognized

as

income

over

the

expected

term

of

the

loan.

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.

1.

Organization

and

Significant

Accounting

Policies

(continued)

e.

Securities

Sold

Short

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

28

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

(continued)

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

December

31,

2021,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

Transactions

in

the

Fund’s

shares

were

as

follows:

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

Z

Shares:

Shares

sold

...................................

5,839,985

$106,986,048

6,518,275

$91,753,757

Shares

issued

in

reinvestment

of

distributions

..........

8,699,407

151,861,397

4,589,573

71,459,173

Shares

redeemed

...............................

(15,681,677)

(284,187,853)

(28,849,747)

(408,488,547)

Net

increase

(decrease)

..........................

(1,142,285)

$(25,340,408)

(17,741,899)

$(245,275,617)

Class

A

Shares:

Shares

sold

a

...................................

5,278,156

$96,885,950

5,565,356

$76,803,772

Shares

issued

in

reinvestment

of

distributions

..........

3,513,835

60,642,108

1,766,127

27,128,904

Shares

redeemed

...............................

(7,955,475)

(143,396,515)

(15,867,439)

(220,101,072)

Net

increase

(decrease)

..........................

836,516

$14,131,543

(8,535,956)

$(116,168,396)

Class

C

Shares:

Shares

sold

...................................

274,584

$5,035,296

296,691

$4,210,695

Shares

issued

in

reinvestment

of

distributions

..........

85,888

1,494,056

52,948

803,079

Shares

redeemed

a

..............................

(957,065)

(17,715,511)

(1,425,903)

(19,908,734)

Net

increase

(decrease)

..........................

(596,593)

$(11,186,159)

(1,076,264)

$(14,894,960)

1.

Organization

and

Significant

Accounting

Policies

(continued)

h.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

29

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

(continued)

3.

Transactions

with

Affiliates

Franklin

Resources,

Inc.

is

the

holding

company

for

various

subsidiaries

that

together

are

referred

to

as

Franklin

Templeton.

Certain

officers

and

trustees

of

the

Fund

are

also

officers

and/or

directors

of

the

following

subsidiaries:

a.

Management

Fees

The

Fund

pays

an

investment

management

fee

to

Franklin

Mutual

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

For

the

year

ended

December

31,

2021,

the

gross

effective

investment

management

fee

rate

was

0.675%

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.

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

R

Shares:

Shares

sold

...................................

6,338

$114,528

11,185

$148,721

Shares

issued

in

reinvestment

of

distributions

..........

4,963

84,510

2,678

40,279

Shares

redeemed

...............................

(10,458)

(191,992)

(45,755)

(640,128)

Net

increase

(decrease)

..........................

843

$7,046

(31,892)

$(451,128)

Class

R6

Shares:

Shares

sold

...................................

5,583,463

$106,269,417

1,026,719

$14,461,224

Shares

issued

in

reinvestment

of

distributions

..........

564,162

9,847,608

155,064

2,412,061

Shares

redeemed

...............................

(2,025,526)

(36,947,186)

(2,383,080)

(34,061,352)

Net

increase

(decrease)

..........................

4,122,099

$79,169,839

(1,201,297)

$(17,188,067)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Franklin

Mutual

Advisers,

LLC

(Franklin

Mutual)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Distributors,

LLC

(Distributors)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

Annualized

Fee

Rate

Net

Assets

0.675%

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

2.

Shares

of

Beneficial

Interest

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

30

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

(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:

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

year:

e.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

year

ended

December

31,

2021,

the

Fund

paid

transfer

agent

fees

of

$2,782,352,

of

which $1,196,775

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,

2022.

4.

Expense

Offset

Arrangement

The Fund has

entered

into

an

arrangement

with

its

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Fund's

custodian

expenses.

During

the

year

ended

December

31,

2021,

the

custodian

fees

were

reduced

as

noted

in

the

Statement

of

Operations. 

Class

A

....................................................................................

0.35%

Class

C

....................................................................................

1.00%

Class

R

....................................................................................

0.50%

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

..............................

$70,310

CDSC

retained

..............................................................................

$6,206

3.

Transactions

with

Affiliates

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

31

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

(continued)

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

year

ended

December

31,

2021,

the

Fund’s

projected

benefit

obligation

and

benefit

payments

under

the

Plan

were

as

follows:

6.

Income

Taxes

For

tax

purposes,

capital

losses

may

be

carried

over

to

offset

future

capital

gains.

During

the

year

ended December

31,

2021,

the

Fund

utilized

$112,319,089

of

capital

loss

carryforwards.

The

tax

character

of

distributions

paid

during

the

years

ended

December

31,

2021

and

2020,

was

as

follows:

At

December

31,

2021,

the

cost

of

investments,

net

unrealized

appreciation

(depreciation),

undistributed

ordinary

income

and

undistributed

long

term

capital

gains

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatments

of

defaulted

securities,

foreign

currency

transactions,

EU

reclaims

and

wash

sales.

The

Fund

utilized

a

tax

accounting

practice

to

treat

a

portion

of

the

proceeds

from

capital

shares

redeemed

as

a

distribution

from

net

investment

income

and

realized

capital

gains.

a

Projected

benefit

obligation

at

December

31,

2021

......

$352,555

b

Increase

(decrease)

in

projected

benefit

obligation

......

$55,009

Benefit

payments

made

to

retired

trustees

.............

$(1,778)

a

The

projected

benefit

obligation

is

included

in

trustees’

fees

and

expenses

in

the

Statement

of

Assets

and

Liabilities.

b

The

increase

(decrease)

in

projected

benefit

obligation

is

reflected

in

trustees’

fees

and

expenses

in

the

Statement

of

Operations.

The

increase

(decrease)

was

primarily

due

to

demographic

losses.

2021

2020

Distributions

paid

from:

Ordinary

income

..........................................................

$91,448,294

$96,261,869

Long

term

capital

gain

......................................................

145,069,304

11,883,824

$236,517,598

$108,145,693

Cost

of

investments

..........................................................................

$2,552,681,505

Unrealized

appreciation

........................................................................

$1,128,306,550

Unrealized

depreciation

........................................................................

(82,826,013)

Net

unrealized

appreciation

(depreciation)

..........................................................

$1,045,480,537

Distributable

earnings:

Undistributed

ordinary

income

...................................................................

$4,684,118

Undistributed

long

term

capital

gains

..............................................................

74,209,748

Total

distributable

earnings

.....................................................................

$78,893,866

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

32

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

(continued)

7.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities

and

securities

sold

short)

for

the

year

ended

December

31,

2021,

aggregated

$1,428,185,020

and

$1,559,258,575,

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

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.

At

December

31,

2021,

the

Fund

did

not

hold

any

distressed

company

securities

for

which

interest

recognition

has

been

discontinued.

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.

Political

and

financial

uncertainty

in

many

foreign

regions

may

increase

market

volatility

and

the

economic

risk

of

investing

in

foreign

securities.

In

addition,

certain

foreign

securities

may

not

be

as

liquid

as

U.S.

securities.

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

December

31,

2021,

investments

in

restricted

securities,

excluding

securities

exempt

from

registration

under

the

1933

Act,

were

as

follows:

Shares

Issuer

Acquisition

Date

Cost

Value

Franklin

Mutual

Beacon

Fund

2,846,329

International

Automotive

Components

Group

Brazil

LLC

4/13/06

-

12/26/08

$

1,890,264

$

107,759

Total

Restricted

Securities

(Value

is

0.0%

†

of

Net

Assets)

.............

$1,890,264

$107,759

†

Rounds

to

less

than

0.1%

of

net

assets.

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

33

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

(continued)

12.

Other

Derivative

Information

At

December

31,

2021,

investments

in

derivative

contracts

are

reflected

in

the

Statement of

Assets

and

Liabilities

as

follows:

For

the

year

ended

December

31,

2021,

the

effect

of

derivative

contracts

in

the

Statement

of

Operations

was

as

follows:

For

the

year

ended

December

31,

2021,

the

average

month

end

notional

amount

of

futures

contracts

represented

$32,702,369.

The

average

month

end

contract

value

of

forward

exchange

contracts

was

$248,098,108.

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

$2.675

billion

(Global

Credit

Facility)

which

matured

on

February

4,

2022.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

Effective

February

4,

2022,

the

Borrowers

renewed

the

Global

Credit

Facility

for

a

one-year

term,

maturing

February

3,

2023,

for

a

total

of

$2.675

billion.

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,

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

Franklin

Mutual

Beacon

Fund

Foreign

exchange

contracts

..

Variation

margin

on

futures

contracts

$

—

Variation

margin

on

futures

contracts

$

167,953

a

Unrealized

appreciation

on

OTC

forward

exchange

contracts

6,375,509

Unrealized

depreciation

on

OTC

forward

exchange

contracts

—

Total

....................

$6,375,509

$167,953

a

This

amount

reflects

the

cumulative

appreciation

(depreciation)

of

futures

contracts

as

reported

in

the

Statement

of

Investments.

Only

the

variation

margin

receivable/payable

at

year

end

is

separately

reported

within

the

Statement

of

Assets

and

Liabilities.

Prior

variation

margin

movements

were

recorded

to

cash

upon

receipt

or

payment.

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Statement

of

Operations

Location

Net

Realized

Gain

(Loss)

for

the

Year

Statement

of

Operations

Location

Net

Change

in

Unrealized

Appreciation

(Depreciation)

for

the

Year

Franklin

Mutual

Beacon

Fund

Net

realized

gain

(loss)

from:

Net

change

in

unrealized

  appreciation

(depreciation)

on:

Foreign

exchange

contracts

.....

Futures

contracts

$2,558,408

Futures

contracts

$31,284

Forward

exchange

contracts

1,105,076

Forward

exchange

contracts

14,065,924

Total

.......................

$3,663,484

$14,097,208

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

34

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

(continued)

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

During

the

year

ended

December

31,

2021,

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.

A

summary

of

inputs

used

as

of

December

31,

2021,

in

valuing

the

Fund's

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

Level

1

Level

2

Level

3

Total

Franklin

Mutual

Beacon

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Aerospace

&

Defense

...................

$

—

$

89,360,653

$

—

$

89,360,653

Auto

Components

......................

—

103,462,740

107,759

103,570,499

Banks

...............................

245,815,741

215,144,820

—

460,960,561

Beverages

...........................

—

109,841,824

—

109,841,824

Chemicals

...........................

—

90,826,345

—

90,826,345

Diversified

Telecommunication

Services

.....

—

160,284,990

—

160,284,990

Electrical

Equipment

....................

135,110,292

—

—

135,110,292

Entertainment

.........................

121,656,027

—

—

121,656,027

Equity

Real

Estate

Investment

Trusts

(REITs)

.

93,194,173

—

—

93,194,173

Health

Care

Equipment

&

Supplies

.........

138,523,688

—

—

138,523,688

Health

Care

Providers

&

Services

..........

92,916,130

—

—

92,916,130

Household

Products

....................

—

141,899,018

—

141,899,018

Insurance

............................

78,738,739

—

—

78,738,739

IT

Services

...........................

252,728,129

—

—

252,728,129

Media

...............................

166,678,086

—

—

166,678,086

Pharmaceuticals

.......................

490,681,343

182,017,126

—

672,698,469

Semiconductors

&

Semiconductor

Equipment

.

40,010,061

—

—

40,010,061

Software

.............................

126,117,920

—

—

126,117,920

Technology

Hardware,

Storage

&

Peripherals

.

138,904,147

—

—

138,904,147

Textiles,

Apparel

&

Luxury

Goods

..........

94,475,388

76,324,974

—

170,800,362

Tobacco

.............................

—

108,876,393

—

108,876,393

Preferred

Stocks

........................

—

101,370,992

—

101,370,992

Senior

Floating

Rate

Interests

...............

—

15,989,309

—

15,989,309

Companies

in

Liquidation

..................

—

—

—

a

—

Short

Term

Investments

...................

22,494,678

5,200,000

—

27,694,678

Total

Investments

in

Securities

...........

$2,238,044,542

$1,400,599,184

b

$107,759

$3,638,751,485

13.

Credit

Facility

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

35

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

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 year.

15.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

(FASB)

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

In

January

2021,

the

FASB

issued

ASU

No.

2021-01,

with

further

amendments

to

Topic

848.

The

amendments

in

the

ASUs

provide

optional

temporary

accounting

recognition

and 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

for

certain

LIBOR

settings

and

2023

for

the

remainder. The

ASUs

are

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

these

ASUs

will

not

have

a

material

impact

on

the

financial

statements. 

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

other

than

those

already

disclosed

in

the

financial

statements.

Abbreviations

Level

1

Level

2

Level

3

Total

Franklin

Mutual

Beacon

Fund

(continued)

Assets:

(continued)

Other

Financial

Instruments:

Forward

exchange

contracts

...............

$

—

$

6,375,509

$

—

$

6,375,509

Total

Other

Financial

Instruments

.........

$—

$6,375,509

$—

$6,375,509

Liabilities:

Other

Financial

Instruments:

Securities

Sold

Short

.....................

$

46,797,000

$

—

$

—

$

46,797,000

Futures

contracts

........................

167,953

—

—

167,953

Total

Other

Financial

Instruments

.........

$46,964,953

$—

$—

$46,964,953

a

Includes

securities

determined

to

have

no

value

at

December

31,

2021.

b

Includes

foreign

securities

valued

at

$1,379,409,875,

which

were

categorized

as

Level

2

as

a

result

of

the

application

of

market

level

fair

value

procedures.

See

the

Financial

Instrument

Valuation

note

for

more

information.

Counterparty

BOFA

Bank

of

America

N.A.

HSBK

HSBC

Bank

plc

SSBT

State

Street

Bank

and

Trust

Co.

UBSW

UBS

AG

Currency

EUR

Euro

USD

United

States

Dollar

Selected

Portfolio

ADR

American

Depositary

Receipt

FHLB

Federal

Home

Loan

Banks

LIBOR

London

Inter-Bank

Offered

Rate

14.

Fair

Value

Measurements

(continued)

Franklin

Mutual

Series

Funds

Report

of

Independent

Registered

Public

Accounting

Firm

36

franklintempleton.com

Annual

Report

To

the

Board

of

Trustees

of

Franklin

Mutual

Series

Funds

and

Shareholders

of

Franklin

Mutual

Beacon

Fund:

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities

of

Franklin

Mutual

Beacon

Fund

(the

“Fund”)

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds),

including

the

statement

of

investments,

as

of

December

31,

2021,

and

the

related

statement

of

operations

for

the

year

then

ended,

the

statements

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

then

ended,

the

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended

and

the

related

notes

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

Franklin

Mutual

Beacon

Fund

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds)

at

December

31,

2021,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

then

ended

and

its

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended,

in

conformity

with

U.S.

generally

accepted

accounting

principles.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

("PCAOB")

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

The

Fund

is

not

required

to

have,

nor

were

we

engaged

to

perform,

an

audit

of

the

Fund’s

internal

control

over

financial

reporting.

As

part

of

our

audits,

we

are

required

to

obtain

an

understanding

of

internal

control

over

financial

reporting,

but

not

for

the

purpose

of

expressing

an

opinion

on

the

effectiveness

of

the

Fund’s

internal

control

over

financial

reporting.

Accordingly,

we

express

no

such

opinion.

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

December

31,

2021,

by

correspondence

with

the

custodian

and

brokers.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

We

believe

that

our

audits

provide

a

reasonable

basis

for

our

opinion.

We

have

served

as

the

auditor

of

one

or

more

Franklin

investment

companies

since

1987.

Boston,

Massachusetts

February

18,

2022

Franklin

Mutual

Series

Funds

Tax

Information

(unaudited)

37

franklintempleton.com

Annual

Report

Franklin

Mutual

Beacon

Fund

By

mid-February,

tax

information

related

to

a

shareholder's

proportionate

share

of

distributions

paid

during

the

preceding

calendar

year

will

be

received,

if

applicable.

Please

also

refer

to

www.franklintempleton.com

for

per

share

tax

information

related

to

any

distributions

paid

during

the

preceding

calendar

year.

Shareholders

are

advised

to

consult

with

their

tax

advisors

for

further

information

on

the

treatment

of

these

amount

s

on

their

tax

returns.

The

following

tax

information

for

the

Fund

is

required

to

be

furnished

to

shareholders

with

respect

to

income

earned

and

distributions

paid

during

its

fiscal

year.

The

Fund

hereby

reports

the

following

amounts,

or

if

subsequently

determined

to

be

different,

the

maximum

allowable

amounts,

for

the

fiscal

year

ended

December

31,

2021:

Note

(1)

-

The

Law

varies

in

each

state

as

to

whether

and

what

percentage

of

dividend

income

attributable

to

Federal

obligations

is

exempt

from

state

income

tax.

Shareholders

are

advised

to

consult

with

their

tax

advisors

to

determine

if

any

portion

of

the

dividends

received

is

exempt

from

state

income

taxes.

Under

Section

853

of

the

Internal

Revenue

Code,

the

Fund

intends

to

elect

to

pass

through

to

its

shareholders

the

following

amounts,

or

amounts

as

finally

determined,

of

foreign

taxes

paid

and

foreign

source

income

earned

by

the

Fund

during

the

fiscal

year

ended

December

31,

2021

:

Pursuant

to:

Amount

Reported

Long-Term

Capital

Gain

Dividends

Distributed

§852(b)(3)(C)

$145,069,304

Income

Eligible

for

Dividends

Received

Deduction

(DRD)

§854(b)(1)(A)

$18,812,680

Qualified

Dividend

Income

Earned

(QDI)

§854(b)(1)(B)

$69,690,258

Short-Term

Capital

Gain

Dividends

Distributed

§871(k)(2)(C)

$25,452,161

Section

163(j)

Interest

Earned

§163(j)

$2,761,421

Interest

Earned

from

Federal

Obligations

Note

(1)

$24,801

Amount

Reported

Foreign

Taxes

Paid

$3,831,230

Foreign

Source

Income

Earned

$48,341,212

Franklin

Mutual

Series

Funds

Board

Members

and

Officers

38

franklintempleton.com

Annual

Report

The

name,

year

of

birth

and

address

of

the

officers

and

board

members,

as

well

as

their

affiliations,

positions

held

with

the

Trust,

principal

occupations

during

at

least

the

past

five

years

and

number

of

U.S.

registered

portfolios

overseen

in

the

Franklin

Templeton/Legg

Mason

fund

complex,

are

shown

below.

Generally,

each

board

member

serves

until

that

person’s

successor

is

elected

and

qualified.

Independent

Board

Members

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Edward

I.

Altman,

Ph.D.

(1941)

Trustee

Since

1987

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Max

L.

Heine

Professor

of

Finance,

Emeritus

and

Director

of

The

Credit

and

Debt

Markets

Research

Program,

Salomon

Center,

Stern

School

of

Business,

New

York

University;

editor

and

author

of

numerous

financial

publications;

financial

consultant;

an

adviser

to

numerous

financial

and

publishing

organizations;

and

formerly

,

Vice

Director,

Salomon

Center,

Stern

School

of

Business,

New

York

University.

Ann

Torre

Bates

(1958)

Trustee

and

Chairperson

Trustee

since

1995

and

Chairperson

since

2020

30

Ares

Capital

Corporation

(specialty

finance

company)

(2010-present),

United

Natural

Foods,

Inc.

(distributor

of

natural,

organic

and

specialty

foods)

(2013-present),

formerly

,

Allied

Capital

Corporation

(financial

services)

(2003-

2010),

SLM

Corporation

(Sallie

Mae)

(1997-2014)

and

Navient

Corporation

(loan

management,

servicing

and

asset

recovery)

(2014-2016).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

companies;

and

formerly

,

Executive

Vice

President

and

Chief

Financial

Officer,

NHP

Incorporated

(manager

of

multifamily

housing)

(1995-1997);

and

Vice

President

and

Treasurer,

US

Airways,

Inc.

(until

1995).

Jan

Hopkins

Trachtman

(1947)

Trustee

Since

2009

11

FTAC

Olympus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(2020-present)

and

FTAC

Parnassus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(February

2021-present);

and

formerly

,

FinTech

Acquisition

Corp.

III

(special

purpose

fintech

acquisition

company)

(2018-2021).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President

and

Founder,

The

Jan

Hopkins

Group

(communications

consulting

firm);

serves

on

Alumni

Advisory

Board

of

Knight

Bagehot

Fellowship;

and

formerly

,

President,

Economic

Club

of

New

York

(2007-2015);

Anchor/Correspondent,

CNN

Financial

News

(until

2003);

Managing

Director

and

Head

of

Client

Communications,

Citigroup

Private

Bank

(until

2005);

Off-Air

reporter,

ABC

News’

World

News

Tonight;

and

Editor,

CBS

Network

News.

Franklin

Mutual

Series

Funds

39

franklintempleton.com

Annual

Report

Interested

Board

Members

and

Officers

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Keith

Mitchell

(1954)

Trustee

Since

2009

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

boards

of

asset

management

firms;

and

formerly

,

Managing

Member,

Mitchell,

Hartley

&

Bechtel

Advisers,

LLC

(

formerly

,

Mitchell

Advisers,

LLC)

(advisory

firm)

(2003-2015)

and

Managing

Director,

Putman

Lovell

NBF.

David

W.

Niemiec

(1949)

Trustee

Since

2015

30

Hess

Midstream

LP

(oil

and

gas

midstream

infrastructure)

(2017-present).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Advisor,

Saratoga

Partners

(private

equity

fund);

and

formerly

,

Managing

Director,

Saratoga

Partners

(1998-2001)

and

SBC

Warburg

Dillon

Read

(investment

banking)

(1997-1998);

Vice

Chairman,

Dillon,

Read

&

Co.

Inc.

(investment

banking)

(1991-1997);

and

Chief

Financial

Officer,

Dillon,

Read

&

Co.

Inc.

(1982-1997).

Robert

E.

Wade

(1946)

Trustee

Since

1991

30

El

Oro

Ltd

(investments)

(2003-

2019).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Attorney

at

law

engaged

in

private

practice

as

a

sole

practitioner

(1972-2008)

and

member

of

various

boards.

Gregory

H.

Williams

(1943)

Trustee

Since

2015

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Private

investor;

Consultant;

and

formerly

,

President,

University

of

Cincinnati

(2009-2012);

President,

The

City

College

of

New

York

(2001-

2009);

Dean,

College

of

Law,

Ohio

State

University

(1993-2001);

and

Associate

Vice

President,

Academic

Affairs

and

Professor

of

Law,

University

of

Iowa

(1977-1993).

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Gregory

E.

Johnson

(1961)

Trustee

Since

2007

132

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Executive

Chairman,

Chairman

of

the

Board

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

Vice

Chairman,

Investment

Company

Institute;

and

formerly

,

Chief

Executive

Officer

(2013-2020)

and

President

(1994-2015)

Franklin

Resources,

Inc.

Independent

Board

Members

(continued)

Franklin

Mutual

Series

Funds

40

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Jennifer

M.

Johnson

(1964)

Trustee

Since

March

2021

70

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Executive

Officer,

President

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Chief

Operating

Officer

and

Executive

Vice

President,

Franklin

Resources,

Inc.

(1994-2015);

Executive

Vice

President

of

Operations

and

Technology,

Franklin

Resources,

Inc.

(2005-2010);

and

Senior

Vice

President,

Franklin

Resources,

Inc.

(2003-2005).

Alison

E.

Baur

(1964)

Vice

President

Since

2012

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Deputy

General

Counsel,

Franklin

Templeton;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Breda

M.

Beckerle

(1958)

Chief

Compliance

Officer

Since

2020

Not

Applicable

Not

Applicable

280

Park

Avenue

New

York,

NY

10017

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Compliance

Officer,

Fiduciary

Investment

Management

International,

Inc.,

Franklin

Advisers,

Inc.,

Franklin

Mutual

Advisers,

LLC,

Franklin

Templeton

Institutional,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christian

K.

Correa

(1973)

President,

and

Chief

Executive

Officer

–

Investment

Management

Since

April

2021

Not

Applicable

Not

Applicable

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President,

Franklin

Mutual

Advisers,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Steven

J.

Gray

(1955)

Vice

President

and

Secretary

Vice

President

since

2009

and

Secretary

since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Vice

President,

FASA,

LLC;

Assistant

Secretary,

Franklin

Distributors,

LLC;

and

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Matthew

T.

Hinkle

(1971)

Chief

Executive

Officer

–

Finance

and

Administration

Since

2017

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Vice

President,

Franklin

Templeton

Services,

LLC;

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Vice

President,

Global

Tax

(2012-April

2017)

and

Treasurer/Assistant

Treasurer,

Franklin

Templeton

(2009-2017).

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

41

franklintempleton.com

Annual

Report

*We

base

the

number

of

portfolios

on

each

separate

series

of

the

U.S.

registered

investment

companies

within

the

Franklin

Templeton/Legg

Mason

complex.

These

portfolios

have

a

common

investment

manager

or

affiliated

investment

managers.

**Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

considered

to

be

interested

people

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

of

Franklin

Resources,

Inc.

(Resources),

which

is

the

parent

company

of

the

Fund’s

investment

manager

and

distributor.

Note

1:

Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

siblings.

Note

2:

Officer

information

is

current

as

of

the

date

of

this

report.

It

is

possible

that

after

this

date,

information

about

officers

may

change.

Note

3:

Effective

September

30,

2021,

Peter

A.

Langerman

ceased

to

be

a

trustee

of

the

Trust.

Note

4:

Effective

December

31,

2021,

Burton

J.

Greenwald

ceased

to

be

a

trustee

of

the

Trust.

The

Sarbanes-Oxley

Act

of

2002

and

Rules

adopted

by

the

U.S.

Securities

and

Exchange

Commission

require

the

Fund

to

disclose

whether

the

Fund’s

Audit

Committee

includes

at

least

one

member

who

is

an

audit

committee

financial

expert

within

the

meaning

of

such

Act

and

Rules.

The

Fund’s

Board

has

determined

that

there

is

at

least

one

such

financial

expert

on

the

Audit

Committee

and

has

designated

each

of

Ann

Torre

Bates

and

David

W.

Niemiec

as

an

audit

committee

financial

expert.

The

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

qualify

as

such

an

expert

in

view

of

their

extensive

business

background

and

experience.

Ms.

Bates

has

served

as

a

member

of

the

Fund

Audit

Committee

since

1995.

She

currently

serves

as

a

director

of

Ares

Capital

Corporation

(2010-present)

and

United

Natural

Foods,

Inc.

(2013-present)

and

was

formerly

a

director

of

Navient

Corporation

from

2014

to

2016,

SLM

Corporation

from

1997

to

2014

and

Allied

Capital

Corporation

from

2003

to

2010,

Executive

Vice

President

and

Chief

Financial

Officer

of

NHP

Incorporated

from

1995

to

1997

and

Vice

President

and

Treasurer

of

US

Airways,

Inc.

until

1995.

Mr.

Niemiec

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2015,

currently

serves

as

an

Advisor

to

Saratoga

Partners

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Susan

Kerr

(1949)

Vice

President

–

AML

Compliance

Since

July

2021

Not

Applicable

Not

Applicable

620

Eighth

Avenue

New

York,

NY

10018

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Compliance

Analyst,

Franklin

Templeton;

Chief

Anti-Money

Laundering

Compliance

Officer,

Legg

Mason

&

Co.,

or

its

affiliates;

Anti

Money

Laundering

Compliance

Officer;

Senior

Compliance

Officer,

LMIS;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christopher

Kings

(1974)

Chief

Financial

Officer,

Chief

Accounting

Officer

and

Treasurer

Since

January

2022

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Treasurer,

U.S.

Fund

Administration

&

Reporting;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Navid

J.

Tofigh

(1972)

Vice

President

Since

2015

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Craig

S.

Tyle

(1960)

Vice

President

Since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

General

Counsel

and

Executive

Vice

President,

Franklin

Resources,

Inc.;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Lori

A.

Weber

(1964)

Vice

President

Since

2011

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Assistant

Secretary,

Franklin

Resources,

Inc.;

Vice

President

and

Secretary,

Templeton

Investment

Counsel,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

42

franklintempleton.com

Annual

Report

and

was

formerly

its

Managing

Director

from

1998

to

2001

and

serves

as

a

director

of

Hess

Midstream

LP

(2017-present).

Mr.

Niemiec

was

formerly

a

director

of

Emeritus

Corporation

from

1999

to

2010

and

OSI

Pharmaceuticals,

Inc.

from

2006

to

2010,

Managing

Director

of

SBC

Warburg

Dillon

Read

from

1997

to

1998,

and

was

Vice

Chairman

from

1991

to

1997

and

Chief

Financial

Officer

from

1982

to

1997

of

Dillon,

Read

&

Co.

Inc.

As

a

result

of

such

background

and

experience,

the

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

have

each

acquired

an

understanding

of

generally

accepted

accounting

principles

and

financial

statements,

the

general

application

of

such

principles

in

connection

with

the

accounting

estimates,

accruals

and

reserves,

and

analyzing

and

evaluating

financial

statements

that

present

a

breadth

and

level

of

complexity

of

accounting

issues

generally

comparable

to

those

of

the

Fund,

as

well

as

an

understanding

of

internal

controls

and

procedures

for

financial

reporting

and

an

understanding

of

audit

committee

functions.

Ms.

Bates

and

Mr.

Niemiec

are

independent

Board

members

as

that

term

is

defined

under

the

applicable

U.S.

Securities

and

Exchange

Commission

Rules

and

Releases.

The

Statement

of

Additional

Information

(SAI)

includes

additional

information

about

the

board

members

and

is

available,

without

charge,

upon

request.

Shareholders

may

call

(800)

DIAL

BEN/342-5236

to

request

the

SAI.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

Shareholder

Information

43

franklintempleton.com

Annual

Report

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,

or

receive

notice

of

the

availability

of,

the

Fund’s

financial

reports

every

six

months.

In

addition,

you

will

receive

an

annual

updated

summary

prospectus

(detail

prospectus

available

upon

request).

To

reduce

Fund

expenses,

we

try

to

identify

related

shareholders

in

a

household

and

send

only

one

copy

of

the

financial

reports

(to

the

extent

received

by

mail)

and

summary

prospectus.

This

process,

called

“householding,”

will

continue

indefinitely

unless

you

instruct

us

otherwise.

If

you

prefer

not

to

have

these

documents

householded,

please

call

us

at

(800)

632-2301.

At

any

time

you

may

view

current

prospectuses/

summary

prospectuses

and

financial

reports

on

our

website.

If

you

choose,

you

may

receive

these

documents

through

electronic

delivery.

476

A

02/22

©

2022

Franklin

Templeton

Investments.

All

rights

reserved.

Authorized

for

distribution

only

when

accompanied

or

preceded

by

a

summary

prospectus

and/or

prospectus.

Investors

should

carefully

consider

a

fund’s

investment

goals,

risks,

charges

and

expenses

before

investing.

A

prospectus

contains

this

and

other

information;

please

read

it

carefully

before

investing.

To

help

ensure

we

provide

you

with

quality

service,

all

calls

to

and

from

our

service

areas

are

monitored

and/or

recorded.

Annual

Report

and

Shareholder

Letter

Franklin

Mutual

Beacon

Fund

Investment

Manager

Distributor

Shareholder

Services

Franklin

Mutual

Advisers,

LLC

Franklin

Distributors,

LLC

(800)

DIAL

BEN

®

/

342-5236

franklintempleton.com

(800)

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-

(Class

A,

C,

R

&

R6)

(800)

448-FUND

-

(Class

Z)

ANNUAL

REPORT

AND

SHAREHOLDER

LETTER

Franklin

Mutual

Global

Discovery

Fund

A

Series

of

Franklin

Mutual

Series

Funds

December

31,

2021

Sign

up

for

electronic

delivery

at

franklintempleton.com/edelivery

Not

FDIC

Insured

May

Lose

Value

No

Bank

Guarantee

franklintempleton.com

Annual

Report

1

SHAREHOLDER

LETTER

Dear

Franklin

Mutual

Global

Discovery

Fund

Shareholder:

After

a

difficult

period

of

lockdowns,

anxiety

and

grief,

the

start

of

2021

brought

much

needed

optimism.

Prior

to

the

start

of

the

period,

authorities

in

the

United

States

and

Europe

approved

the

first

vaccines

for

emergency

use.

The

U.S.

also

passed

an

additional

stimulus

package,

delivering

financial

assistance

to

many

people

in

need.

Ten-year

U.S.

Treasury

yields

rose

as

investors

began

to

anticipate

a

possible

economic

recovery.

This

economic

optimism

sparked

a

rotation

out

of

growth

stocks

and

into

value

stocks

over

the

first

half

of

the

year.

The

rotation

into

many

“reopening”

names

meant

companies

which

had

benefited

from

consumer

behavior

shifts

during

the

lockdown,

such

as

online

payment

processors,

online

retailers,

and

remote

worker

infrastructure

providers,

fell

out

of

favor.

Instead,

companies

positioned

to

benefit

from

economic

reopening,

such

as

hotels,

casinos,

restaurants,

and

other

leisure

companies,

received

a

boost.

Smaller

capitalization

companies,

which

tend

to

be

more

sensitive

to

the

economic

cycle,

outperformed

their

larger

capitalization

counterparts

during

the

first

half

of

the

period.

The

new

Biden

administration,

and

its

focus

on

overhauling

America’s

infrastructure,

also

supported

a

rally

in

building

products

companies

and

other

potential

beneficiaries

of

greater

stimulus

spending.

The

U.S.

government

successfully

passed

another

stimulus

bill

in

March

2021.

By

the

late

spring

of

2021,

massive

amounts

of

fiscal

and

monetary

stimulus,

combined

with

increased

consumer

spending

and

supply

chain

difficulties,

led

to

building

inflationary

pressure

and

rising

interest

rates.

While

this

propelled

some

areas

of

the

market

upward,

such

as

the

financials

and

energy

sectors,

growing

investor

concern

about

rising

interest

rates

stoked

pockets

of

volatility.

Furthermore,

differences

in

regional

vaccination

rates

constrained

a

widespread

economic

reopening

as

the

highly

contagious

COVID-19

Delta

variant

forced

some

countries

to

reinstate

business

and

travel

restrictions.

The

reopening

trade

stalled,

and

growth

stocks

once

again

generally

outperformed

value

stocks

during

much

of

the

late

summer

and

fall.

Volatility

increased

in

September

2021

and

markets

fell

over

the

final

weeks

of

the

third

calendar

quarter,

as

continued

supply

chain

disruptions,

inflationary

pressures

and

hawkish

central

bank

commentary

stoked

investor

anxiety.

Markets

stabilized

and

rebounded

in

October

with

some

indices

reaching

new

records.

However,

high

volatility

crept

in

again

in

late

November

as

the

COVID-19

Omicron

variant

emerged,

but

it

was

short

lived.

At

year-end,

both

growth

and

value

returns

for

the

12-month

period

were

strong,

as

the

two

styles

ended

the

year

with

comparable

results.

Not

all

progress

is

evidenced

by

a

steady

march

forward.

Ongoing

uncertainties

surrounding

COVID-19,

supply

chain

disruptions

and

inflation

continued

to

affect

financial

markets.

As

these

elements

influence

investor

behavior,

pockets

of

volatility

may

continue

to

crop

up.

However,

market

volatility

can

often

present

opportunities.

As

an

organization,

Franklin

Mutual

Series

remains

dedicated

to

using

fundamental

research,

coupled

with

a

long-term

approach,

to

identify

attractively

valued

companies

that

can

offer

both

meaningful

upside

potential

and

a

degree

of

downside

protection

in

periods

of

financial

market

turbulence.

On

the

following

pages,

the

portfolio

management

team

reviews

investment

decisions

made

during

the

past

12

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,

Christian

Correa,

CFA

President

and

Chief

Investment

Officer

Franklin

Mutual

Advisers,

LLC

This

letter

reflects

our

analysis

and

opinions

as

of

December

31,

2021,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

franklintempleton.com

Annual

Report

2

Contents

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

3

Performance

Summary

7

Your

Fund’s

Expenses

10

Financial

Highlights

and

Statement

of

Investments

11

Financial

Statements

22

Notes

to

Financial

Statements

26

Report

of

Independent

Registered

Public

Accounting

Firm

41

Tax

Information

42

Board

Members

and

Officers

43

Shareholder

Information

48

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Annual

Report

ANNUAL

REPORT

Franklin

Mutual

Global

Discovery

Fund

This

annual

report

for

Franklin

Mutual

Global

Discovery

Fund

covers

the

fiscal

year

ended

December

31,

2021.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

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

and

participations

in

foreign

government

debt.

The

Geographic

Composition

table

on

this

page

lists

the

leading

countries

where

the

Fund

invests.

Performance

Overview

The

Fund’s

Class

Z

shares

posted

a

+19.67%

cumulative

total

return

for

the

12

months

ended

December

31,

2021.

In

comparison,

the

Fund’s

benchmark,

the

MSCI

World

Value

Index-NR

(USD),

which

measures

the

performance

of

stocks

exhibiting

overall

value

style

characteristics

in

global

developed

markets,

posted

a

+21.94%

cumulative

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-NR

(USD),

posted

a

+18.54%

total

return

for

the

12

months

ended

December

31,

2021.

1

Global

equities

benefited

from

monetary

and

fiscal

stimulus

measures,

easing

COVID-19

pandemic

restrictions

in

certain

regions

and

the

development

of

treatments

and

vaccines.

However,

the

Chinese

government’s

imposition

of

additional

restrictions

on

some

businesses

pressured

Asian

and

global

emerging

market

stocks.

Additionally,

the

spread

of

the

Delta

and

Omicron

variants

and

higher

inflation

in

an

environment

of

persistent

supply-chain

disruptions

and

wage

increases

hindered

global

equities

at

certain

points

during

the

12-month

period.

In

the

U.S.,

the

economy

continued

to

recover

and

equities

rallied

amid

monetary

and

fiscal

stimulus

measures

and

the

continued

progress

of

vaccination

programs.

Gross

domestic

product

(GDP)

growth

was

generally

robust,

as

the

lifting

of

many

COVID-19

restrictions

and

strong

consumer

spending

supported

the

economy.

A

rebound

in

corporate

earnings

and

the

passage

of

a

bipartisan

infrastructure

bill

further

bolstered

investor

sentiment.

In

an

effort

to

support

the

economy,

the

U.S.

Federal

Reserve

(Fed)

kept

the

federal

funds

target

rate

at

a

record-low

range

of

0.00%–0.25%.

While

the

Fed

also

maintained

quantitative

easing

measures

with

U.S.

Treasury

and

mortgage

bond

purchasing,

it

began

to

reduce

the

rate

of

purchases

beginning

in

November

2021

and

accelerated

the

pace

of

tapering

in

December.

The

Fed

also

noted

that

it

expected

easing

supply

constraints

to

help

Geographic

Composition

12/31/21

%

of

Total

Net

Assets

United

States

41.9%

France

11.3%

United

Kingdom

11.1%

Germany

8.7%

Netherlands

6.2%

Switzerland

5.3%

Japan

3.4%

Israel

2.2%

Canada

1.8%

South

Korea

1.6%

China

1.3%

Other

1.0%

Short-Term

Investments

&

Other

Net

Assets

4.2%

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

16

.

Franklin

Mutual

Global

Discovery

Fund

4

franklintempleton.com

Annual

Report

reduce

inflationary

pressures

and

that

further

employment

progress

was

needed

before

the

Fed

would

consider

raising

the

range

for

the

federal

funds

target

rate.

The

economic

recovery

in

the

eurozone

was

slow,

as

quarter-over-quarter

GDP

growth

contracted

in

2021’s

first

quarter

before

returning

to

growth

in

2021’s

second

and

third

quarters.

GDP

growth

rates

were

initially

sluggish

among

the

region’s

largest

economies,

although

most

showed

signs

of

improvement

later

in

the

12-month

period.

Business

activity

growth

also

helped

European

developed

market

equities,

as

measured

by

the

MSCI

Europe

Index-NR

(USD),

to

post

a

+16.30%

total

return

for

the

12

months

under

review.

1

However,

in

November

2021,

the

annual

inflation

rate

in

the

eurozone

reached

the

highest

level

since

the

introduction

of

the

euro,

and

the

prospect

of

energy

shortages

during

the

winter

months

tempered

investor

optimism

Asian

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

All

Country

Asia

Index-NR

(USD),

posted

a

-2.49%

total

return

for

the

12-month

period.

1

While

many

Asian

countries

experienced

improving

economic

conditions,

Japan’s

quarter-over-quarter

GDP

contracted

in

2021’s

third

quarter.

China’s

economic

recovery

continued,

although

the

country’s

quarter-over-quarter

GDP

growth

in

2021’s

first

three

quarters

was

slower

than

in

2020’s

second

half,

pressured

by

higher

commodity

prices.

Unexpected

regulatory

changes

by

the

Chinese

government,

which

negatively

impacted

education-

and

technology-related

businesses,

and

concerns

about

a

large

Chinese

property

developer’s

solvency

and

several

smaller

developer

defaults

pressured

Asian

stocks

during

2021’s

fourth

quarter.

Global

emerging

market

stocks,

as

measured

by

the

MSCI

Emerging

Markets

Index-NR

(USD),

posted

a

-2.54%

total

return

for

the

12

months

under

review.

1

Higher

inflation

led

many

central

banks

in

emerging

market

countries

to

raise

interest

rates,

which

dampened

economic

growth.

The

Omicron

variant

of

COVID-19

also

negatively

impacted

global

emerging

markets,

as

some

countries

reimplemented

restrictions

in

an

effort

to

counter

rising

infections.

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

and

debt

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

Top

10

Industries

12/31/21

%

of

Total

Net

Assets

a

Insurance

9.0%

Oil,

Gas

&

Consumable

Fuels

7.8%

Banks

7.7%

Pharmaceuticals

7.7%

IT

Services

6.7%

Health

Care

Providers

&

Services

5.7%

Technology

Hardware,

Storage

&

Peripherals

4.2%

Chemicals

3.5%

Tobacco

3.4%

Aerospace

&

Defense

3.2%

Franklin

Mutual

Global

Discovery

Fund

5

franklintempleton.com

Annual

Report

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

In

2021,

the

Fund

slightly

underperformed

its

benchmark,

as

stock

selection

in

the

information

technology

(IT),

materials

and

financials

sectors

detracted

from

relative

returns.

Security

selection

in

health

care,

an

underweight

in

utilities

and

an

overweight

in

energy

contributed

positively

to

relative

performance.

During

the

12-month

period,

investments

that

detracted

from

Fund

performance

included

Credit

Suisse

Group,

Check

Point

Software

Technologies

and

Charter

Communications.

Charter

Communications

is

listed

among

the

Fund’s

largest

positions

in

the

Top

10

Holdings

table

on

this

page.

Switzerland-based

Credit

Suisse

Group

detracted

from

relative

returns

after

dealing

with

several

scandals

earlier

in

the

year,

including

exposure

to

the

collapse

of

Greensill

(not

a

Fund

holding),

a

supply

chain

finance

provider,

and

the

failure

of

prime

broker

client

Archegos

Capital

Management

(not

a

Fund

holding).

As

a

result,

the

shares

are

trading

at

a

significant

discount

to

peers,

despite

the

company’s

premier

wealth

management

platform

with

strong

positions

in

Europe,

Asia,

and

Latin

America.

The

company’s

new

management

team

is

focused

on

turning

around

the

business

and

further

building

its

wealth

management

operations

in

Asia

and

the

Middle

East.

IT

security

company

Check

Point

Software

Technologies

detracted

from

relative

results

during

the

year.

After

a

profit

warning

early

in

the

year,

recent

results

have

been

more

upbeat,

and

the

company

has

been

positive

about

momentum

in

areas

like

cloud

security

and

end-user

access

security

that

can

help

its

long-term

growth

outlook.

Charter

Communications

detracted

from

performance

due

to

weaker-than-expected

growth

in

broadband

subscribers.

While

overall

loss

of

customers

in

the

broadband

market

continued

to

be

very

low

this

year,

there

is

concern

that

the

overall

market

growth

is

slowing,

and

that

the

cable

industry’s

share

of

that

growth

will

come

under

pressure

as

telecommunications

companies

build

out

their

fiber

footprints

and

introduce

fixed

wireless

access

services.

We

believe

market

expectations

are

too

low

for

broadband

service

growth

and

that

in

a

market

with

only

two

suppliers,

Charter

can

continue

to

take

its

fair

share

of

growth.

Top

positive

contributors

to

performance

during

the

12-month

period

included

Eli

Lilly,

Canadian

Natural

Resources

and

ING

Groep.

ING

Groep

is

listed

among

the

Fund’s

largest

positions

in

the

Top

10

Holdings

table

on

this

page.

Pharmaceutical

maker

Eli

Lilly

contributed

to

relative

performance

in

2021

amid

positive

pipeline

news

on

several

medicines

as

well

as

strong

financial

performance.

The

company

announced

that

it

would

file

its

Alzheimer’s

drug

with

the

U.S.

Food

and

Drug

Administration

much

earlier

than

expected

following

approval

of

a

rival

Alzheimer’s

treatment.

In

addition,

Lilly’s

diabetes

drug,

Trulicity,

continues

to

grow,

and

its

key

diabetes

pipeline

compound,

Tirzepatide,

showed

positive

results

in

multiple

Phase

3

clinical

trials,

further

strengthening

the

company’s

position

in

the

growing

diabetes

end

market.

We

exited

this

position

on

the

stock’s

strong

performance.

Canadian

Natural

Resources,

an

oil

and

gas

company,

bolstered

relative

performance

in

2021,

as

energy

stocks

generally

had

a

strong

year

due

to

higher

oil

and

natural

gas

prices.

Fundamentally,

the

company

generates

significant

amounts

of

excess

free

cash

flow

and

is

highly

disciplined

with

its

capital.

Additionally,

Canadian

Natural

Resources’

carbon

footprint is

improving

faster

than generally

perceived.

ING

Groep,

a

Dutch

financial

services

firm,

supported

relative

performance

following

upbeat

financial

results

during

the

year.

The

company

benefited

from

lower-than-

expected

credit

loss

provisions,

higher

fees,

and

reduced

costs.

Net

interest

income

was

down,

however.

ING

expects

to

see

ongoing

growth

in

fees

as

it

adds

new

services

and

Top

10

Holdings

12/31/21

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

CVS

Health

Corp.

3.1%

Health

Care

Providers

&

Services,

United

States

GlaxoSmithKline

plc

3.0%

Pharmaceuticals,

United

Kingdom

Novartis

AG

2.8%

Pharmaceuticals,

Switzerland

Charter

Communications,

Inc.

2.6%

Media,

United

States

Anthem,

Inc.

2.6%

Health

Care

Providers

&

Services,

United

States

ING

Groep

NV

2.6%

Banks,

Netherlands

Deutsche

Telekom

AG

2.6%

Diversified

Telecommunication

Services,

Germany

BP

plc

2.6%

Oil,

Gas

&

Consumable

Fuels,

United

Kingdom

Wells

Fargo

&

Co.

2.5%

Banks,

United

States

Cognizant

Technology

Solutions

Corp.

2.5%

IT

Services,

United

States

Franklin

Mutual

Global

Discovery

Fund

6

franklintempleton.com

Annual

Report

reprices

existing

ones.

Furthermore,

the

bank

has

ample

excess

capital

that

we

expect

will

continue

to

be

returned

to

shareholders.

During

the

period,

the

Fund

held

currency

forwards

and

futures,

seeking

to

substantially

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

the

U.S.

dollar

rose

against

most

currencies

during

the

period.

The

Fund

produced

near-benchmark

returns

as

we

continued

to

pursue

our

strategy

of

seeking

undervalued

stocks

and

focus

on

special

situation

investments,

including

distressed

investments

and

merger

arbitrage.

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.

Christian

Correa,

CFA

Katrina

Dudley,

CFA

Timothy

Rankin,

CFA

Portfolio

Management

Team

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

December

31,

2021,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Performance

Summary

as

of

December

31,

2021

Franklin

Mutual

Global

Discovery

Fund

7

franklintempleton.com

Annual

Report

The

performance

table

and

graphs

do

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

12/31/21

1

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A:

5.50%

maximum

initial

sales

charge;

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

2

Average

Annual

Total

Return

3

–

Z

1-Year

+19.67%

+19.67%

5-Year

+39.84%

+6.94%

10-Year

+129.38%

+8.66%

A

4

1-Year

+19.40%

+12.82%

5-Year

+38.14%

+5.48%

10-Year

+123.40%

+7.76%

See

page

9

for

Performance

Summary

footnotes.

Franklin

Mutual

Global

Discovery

Fund

Performance

Summary

8

franklintempleton.com

Annual

Report

See

page

9

for

Performance

Summary

footnotes.

Total

Return

Index

Comparison

for

a

Hypothetical

$10,000

Investment

1

Total

return

represents

the

change

in

value

of

an

investment

over

the

periods

shown.

It

includes

any

applicable

maximum

sales

charge,

Fund

expenses,

account

fees

and

reinvested

distributions.

The

unmanaged

index

includes

reinvestment

of

any

income

or

distributions.

It

differs

from

the

Fund

in

composition

and

does

not

pay

management

fees

or

expenses.

One

cannot

invest

directly

in

an

index.

Class

Z

(1/1/12–12/31/21)

Class

A

(1/1/12–12/31/21)

Franklin

Mutual

Global

Discovery

Fund

Performance

Summary

9

franklintempleton.com

Annual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

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.

Events

such

as

the

spread

of

deadly

diseases,

disasters,

and

financial,

political

or

social

disruptions,

may

heighten

risks

and

adversely

affect

performance.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

The

Fund

has

an

expense

reduction

contractually

guaranteed

through

4/30/22.

Fund

investment

results

reflect

the

expense

reduction;

without

this

reduction,

the

results

would

have

been

lower.

2.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

3.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

4.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

5.

Source:

Morningstar.

The

MSCI

World

Value

Index-NR

(USD)

is

a

free

float-adjusted,

market

capitalization-weighted

index

designed

to

measure

the

performance

of

stocks

exhibiting

overall

value

style

characteristics

in

global

developed

markets.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

6.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Distributions

(1/1/21–12/31/21)

Share

Class

Net

Investment

Income

Long-Term

Capital

Gain

Total

Z

$0.8139

$1.9485

$2.7624

A

$0.7325

$1.9485

$2.6810

C

$0.3809

$1.9485

$2.3294

R

$0.6211

$1.9485

$2.5696

R6

$0.8456

$1.9485

$2.7941

Total

Annual

Operating

Expenses

6

Share

Class

With

Fee

Waiver

Without

Fee

Waiver

Z

1.01%

1.02%

A

1.26%

1.27%

Your

Fund’s

Expenses

Franklin

Mutual

Global

Discovery

Fund

10

franklintempleton.com

Annual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6

).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

7/1/21

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

a

Net

Annualized

Expense

Ratio

2

Z

$1,000

$1,031.50

$5.08

$1,020.21

$5.05

0.99%

A

$1,000

$1,030.30

$6.36

$1,018.94

$6.32

1.24%

C

$1,000

$1,026.20

$10.18

$1,015.16

$10.12

1.99%

R

$1,000

$1,029.00

$7.63

$1,017.68

$7.59

1.49%

R6

$1,000

$1,032.20

$4.59

$1,020.69

$4.57

0.90%

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Global

Discovery

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

11

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

Z

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$28.77

$31.19

$26.86

$32.42

$31.12

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.42

0.96

c

0.67

0.58

0.76

d

Net

realized

and

unrealized

gains

(losses)

...........

5.15

(2.38)

5.91

(4.13)

2.29

Total

from

investment

operations

....................

5.57

(1.42)

6.58

(3.55)

3.05

Less

distributions

from:

Net

investment

income

..........................

(0.81)

(0.83)

(0.70)

(0.64)

(0.79)

Net

realized

gains

.............................

(1.95)

(0.17)

(1.55)

(1.37)

(0.96)

Total

distributions

...............................

(2.76)

(1.00)

(2.25)

(2.01)

(1.75)

Net

asset

value,

end

of

year

.......................

$31.58

$28.77

$31.19

$26.86

$32.42

Total

return

....................................

19.67%

(4.38)%

24.70%

(10.78)%

9.84%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

e

.....

1.04%

1.03%

1.00%

0.97%

0.96%

Expenses

net

of

waiver

and

payments

by

affiliates

e

,f

.....

1.02%

1.03%

g

1.00%

g

0.97%

g

0.96%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.01%

0.02%

—%

h

—%

Net

investment

income

...........................

1.28%

3.66%

c

2.20%

1.82%

2.30%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$3,355,158

$3,274,956

$5,176,787

$5,114,274

$7,175,981

Portfolio

turnover

rate

............................

40.67%

17.25%

14.08%

14.70%

17.50%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.43

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

2.02%.

d

Net

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%.

e

Includes

dividends

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(e).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Global

Discovery

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$28.12

$30.51

$26.32

$31.80

$30.57

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.33

0.86

c

0.58

0.49

0.66

d

Net

realized

and

unrealized

gains

(losses)

...........

5.04

(2.32)

5.78

(4.04)

2.25

Total

from

investment

operations

....................

5.37

(1.46)

6.36

(3.55)

2.91

Less

distributions

from:

Net

investment

income

..........................

(0.73)

(0.76)

(0.62)

(0.56)

(0.72)

Net

realized

gains

.............................

(1.95)

(0.17)

(1.55)

(1.37)

(0.96)

Total

distributions

...............................

(2.68)

(0.93)

(2.17)

(1.93)

(1.68)

Net

asset

value,

end

of

year

.......................

$30.81

$28.12

$30.51

$26.32

$31.80

Total

return

e

...................................

19.40%

(4.61)%

24.37%

(10.99)%

9.57%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

f

......

1.29%

1.28%

1.25%

1.22%

1.21%

Expenses

net

of

waiver

and

payments

by

affiliates

f

,g

.....

1.27%

1.28%

h

1.25%

h

1.22%

h

1.21%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.01%

0.02%

—%

i

—%

Net

investment

income

...........................

1.03%

3.39%

c

1.95%

1.57%

2.05%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$5,618,446

$5,358,016

$7,683,644

$7,461,444

$9,589,033

Portfolio

turnover

rate

............................

40.67%

17.25%

14.08%

14.70%

17.50%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.42

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.75%.

d

Net

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%.

e

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

f

Includes

dividends

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(e).

g

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

h

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

i

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Global

Discovery

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

13

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$28.12

$30.46

$26.25

$31.44

$30.22

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.09

0.67

c

0.36

0.26

0.41

d

Net

realized

and

unrealized

gains

(losses)

...........

5.04

(2.34)

5.74

(3.98)

2.23

Total

from

investment

operations

....................

5.13

(1.67)

6.10

(3.72)

2.64

Less

distributions

from:

Net

investment

income

..........................

(0.38)

(0.50)

(0.34)

(0.10)

(0.46)

Net

realized

gains

.............................

(1.95)

(0.17)

(1.55)

(1.37)

(0.96)

Total

distributions

...............................

(2.33)

(0.67)

(1.89)

(1.47)

(1.42)

Net

asset

value,

end

of

year

.......................

$30.92

$28.12

$30.46

$26.25

$31.44

Total

return

e

...................................

18.50%

(5.32)%

23.43%

(11.70)%

8.78%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

f

......

2.04%

2.03%

2.00%

1.97%

1.96%

Expenses

net

of

waiver

and

payments

by

affiliates

f,g

.....

2.02%

2.03%

h

2.00%

h

1.97%

h

1.96%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.01%

0.02%

—%

i

—%

Net

investment

income

...........................

0.29%

2.66%

c

1.20%

0.82%

1.30%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$335,605

$494,606

$872,717

$1,054,412

$2,438,507

Portfolio

turnover

rate

............................

40.67%

17.25%

14.08%

14.70%

17.50%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.42

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.01%.

d

Net

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%.

e

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

f

Includes

dividends

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(e).

g

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

h

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

i

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Global

Discovery

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$27.70

$30.08

$25.97

$31.37

$30.17

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.24

0.78

c

0.50

0.41

0.57

d

Net

realized

and

unrealized

gains

(losses)

...........

4.97

(2.29)

5.69

(3.97)

2.22

Total

from

investment

operations

....................

5.21

(1.51)

6.19

(3.56)

2.79

Less

distributions

from:

Net

investment

income

..........................

(0.62)

(0.70)

(0.53)

(0.47)

(0.63)

Net

realized

gains

.............................

(1.95)

(0.17)

(1.55)

(1.37)

(0.96)

Total

distributions

...............................

(2.57)

(0.87)

(2.08)

(1.84)

(1.59)

Net

asset

value,

end

of

year

.......................

$30.34

$27.70

$30.08

$25.97

$31.37

Total

return

....................................

19.10%

(4.87)%

24.09%

(11.24)%

9.31%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

e

.....

1.54%

1.53%

1.50%

1.47%

1.46%

Expenses

net

of

waiver

and

payments

by

affiliates

e,f

.....

1.52%

1.53%

g

1.50%

g

1.47%

g

1.46%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.01%

0.02%

—%

h

1.46%

Net

investment

income

...........................

0.79%

3.13%

c

1.70%

1.32%

1.80%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$136,983

$175,393

$251,089

$274,086

$398,692

Portfolio

turnover

rate

............................

40.67%

17.25%

14.08%

14.70%

17.50%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.41

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.48%.

d

Net

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%.

e

Includes

dividends

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(e).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Global

Discovery

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

15

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$28.75

$31.17

$26.85

$32.41

$31.13

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.44

0.97

c

0.70

0.62

0.75

d

Net

realized

and

unrealized

gains

(losses)

...........

5.18

(2.35)

5.90

(4.13)

2.34

Total

from

investment

operations

....................

5.62

(1.38)

6.60

(3.51)

3.09

Less

distributions

from:

Net

investment

income

..........................

(0.85)

(0.87)

(0.73)

(0.68)

(0.85)

Net

realized

gains

.............................

(1.95)

(0.17)

(1.55)

(1.37)

(0.96)

Total

distributions

...............................

(2.80)

(1.04)

(2.28)

(2.05)

(1.81)

Net

asset

value,

end

of

year

.......................

$31.57

$28.75

$31.17

$26.85

$32.41

Total

return

....................................

19.84%

(4.27)%

24.80%

(10.67)%

9.98%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

e

.....

0.95%

0.92%

0.90%

0.88%

0.84%

Expenses

net

of

waiver

and

payments

by

affiliates

e

,f

.....

0.92%

0.92%

g

0.89%

0.87%

0.84%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.02%

0.01%

0.02%

—%

h

—%

Net

investment

income

...........................

1.35%

3.73%

c

2.31%

1.92%

2.42%

d

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$653,091

$843,143

$1,295,457

$1,418,812

$2,221,338

Portfolio

turnover

rate

............................

40.67%

17.25%

14.08%

14.70%

17.50%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.43

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

2.08%.

d

Net

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%.

e

Includes

dividends

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(e).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Statement

of

Investments,

December

31,

2021

Franklin

Mutual

Global

Discovery

Fund

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

97.6%

Aerospace

&

Defense

3.2%

a

Airbus

SE

...........................................

France

1,275,231

$

163,028,996

BAE

Systems

plc

.....................................

United

Kingdom

21,813,405

162,534,709

325,563,705

Auto

Components

1.7%

Cie

Generale

des

Etablissements

Michelin

SCA

..............

France

1,058,149

173,171,182

a,b,c

International

Automotive

Components

Group

Brazil

LLC

........

Brazil

3,819,425

144,600

173,315,782

Automobiles

1.7%

a

General

Motors

Co.

....................................

United

States

2,998,830

175,821,403

Banks

7.7%

BNP

Paribas

SA

......................................

France

3,529,909

243,868,725

CaixaBank

SA

........................................

Spain

9,750,316

26,613,312

ING

Groep

NV

.......................................

Netherlands

18,847,842

261,834,563

Wells

Fargo

&

Co.

.....................................

United

States

5,207,432

249,852,588

782,169,188

Beverages

1.4%

Heineken

NV

........................................

Netherlands

1,242,920

139,767,342

Building

Products

2.0%

Johnson

Controls

International

plc

.........................

United

States

2,422,107

196,941,520

Capital

Markets

1.5%

Credit

Suisse

Group

AG,

A

..............................

Switzerland

15,731,476

152,350,854

Chemicals

3.5%

BASF

SE

...........................................

Germany

2,207,699

154,825,693

d

Covestro

AG,

144A,

Reg

S

..............................

Germany

3,156,038

194,094,410

348,920,103

Construction

Materials

1.6%

HeidelbergCement

AG

.................................

Germany

2,396,662

162,070,797

Diversified

Financial

Services

2.1%

Voya

Financial,

Inc.

....................................

United

States

3,206,753

212,639,791

Diversified

Telecommunication

Services

2.7%

Deutsche

Telekom

AG

..................................

Germany

14,148,132

261,215,498

a

Frontier

Communications

Parent,

Inc.

......................

United

States

495,483

14,611,793

275,827,291

Electrical

Equipment

1.5%

Mitsubishi

Electric

Corp.

................................

Japan

11,794,558

149,617,738

Entertainment

1.5%

a,e

Walt

Disney

Co.

(The)

..................................

United

States

963,642

149,258,509

Food

Products

2.9%

Danone

SA

..........................................

France

2,536,137

157,520,327

Kraft

Heinz

Co.

(The)

..................................

United

States

3,899,800

140,002,820

297,523,147

Health

Care

Equipment

&

Supplies

1.9%

Medtronic

plc

........................................

United

States

1,830,177

189,331,811

Health

Care

Providers

&

Services

5.7%

Anthem,

Inc.

.........................................

United

States

569,556

264,011,988

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Global

Discovery

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

17

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Health

Care

Providers

&

Services

(continued)

CVS

Health

Corp.

.....................................

United

States

3,058,731

$

315,538,691

579,550,679

Hotels,

Restaurants

&

Leisure

1.3%

a

Accor

SA

...........................................

France

3,979,284

128,880,260

Household

Products

1.8%

Reckitt

Benckiser

Group

plc

.............................

United

Kingdom

2,088,264

179,619,288

Industrial

Conglomerates

1.6%

General

Electric

Co.

...................................

United

States

1,707,120

161,271,626

Insurance

9.0%

a

Alleghany

Corp.

......................................

United

States

103,472

69,076,873

China

Pacific

Insurance

Group

Co.

Ltd.,

H

...................

China

46,728,965

126,974,838

Everest

Re

Group

Ltd.

.................................

United

States

633,300

173,473,536

Hartford

Financial

Services

Group,

Inc.

(The)

................

United

States

2,061,059

142,295,513

NN

Group

NV

........................................

Netherlands

4,070,867

219,979,655

Willis

Towers

Watson

plc

................................

United

States

743,147

176,489,981

908,290,396

IT

Services

6.7%

Capgemini

SE

........................................

France

705,592

172,790,289

Cognizant

Technology

Solutions

Corp.,

A

....................

United

States

2,794,761

247,951,196

a

Fiserv,

Inc.

..........................................

United

States

1,373,503

142,555,876

Global

Payments,

Inc.

..................................

United

States

870,837

117,719,746

681,017,107

Machinery

1.0%

Alstom

SA

...........................................

France

2,772,805

98,385,758

Media

2.6%

a

Charter

Communications,

Inc.,

A

..........................

United

States

410,308

267,508,507

Multi-Utilities

1.1%

RWE

AG

............................................

Germany

2,728,819

110,474,999

Oil,

Gas

&

Consumable

Fuels

7.8%

BP

plc

..............................................

United

Kingdom

58,180,054

260,471,099

Canadian

Natural

Resources

Ltd.

.........................

Canada

4,280,811

180,948,476

Kinder

Morgan,

Inc.

....................................

United

States

6,799,738

107,843,845

e

Williams

Cos.,

Inc.

(The)

................................

United

States

9,186,656

239,220,522

788,483,942

Pharmaceuticals

7.7%

GlaxoSmithKline

plc

...................................

United

Kingdom

13,830,653

300,886,759

Merck

&

Co.,

Inc.

.....................................

United

States

2,526,315

193,616,782

Novartis

AG,

ADR

.....................................

Switzerland

3,178,290

278,005,026

772,508,567

Semiconductors

&

Semiconductor

Equipment

3.6%

a

Renesas

Electronics

Corp.

..............................

Japan

15,502,134

192,430,322

Xilinx,

Inc.

...........................................

United

States

793,900

168,330,617

360,760,939

Software

2.2%

a

Avaya

Holdings

Corp.

..................................

United

States

537

10,633

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Global

Discovery

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Software

(continued)

a

Check

Point

Software

Technologies

Ltd.

....................

Israel

1,913,931

$

223,087,797

223,098,430

Technology

Hardware,

Storage

&

Peripherals

4.2%

Catcher

Technology

Co.

Ltd.

.............................

Taiwan

13,524,000

76,321,313

Samsung

Electronics

Co.

Ltd.

............................

South

Korea

2,392,712

157,128,072

a,e

Western

Digital

Corp.

..................................

United

States

2,953,597

192,604,061

426,053,446

Textiles,

Apparel

&

Luxury

Goods

1.0%

Cie

Financiere

Richemont

SA

............................

Switzerland

689,240

102,877,944

Tobacco

3.4%

Altria

Group,

Inc.

......................................

United

States

2,606,727

123,532,793

British

American

Tobacco

plc

.............................

United

Kingdom

5,861,984

217,488,697

341,021,490

Total

Common

Stocks

(Cost

$7,449,605,969)

....................................

9,860,922,359

Warrants

Warrants

0.0%

†

Software

0.0%

†

a

Avaya

Holdings

Corp.,

12/15/22

..........................

United

States

280,051

784,143

Total

Warrants

(Cost

$—)

.....................................................

784,143

Principal

Amount

*

Corporate

Bonds

0.1%

Airlines

0.1%

d

American

Airlines

Inc

/

AAdvantage

Loyalty

IP

Ltd.

,

Senior

Secured

Note,

144A,

5.5%,

4/20/26

................

United

States

4,006,686

4,172,683

Senior

Secured

Note,

144A,

5.75%,

4/20/29

...............

United

States

1,596,282

1,709,227

5,881,910

Total

Corporate

Bonds

(Cost

$5,602,968)

.......................................

5,881,910

Shares

a

Companies

in

Liquidation

0.0%

a,b,f

Tribune

Media,

Litigation

Trust,

Contingent

Distribution

.........

United

States

1,297,978

—

a,b,f

Walter

Energy,

Inc.,

Litigation

Trust,

Contingent

Distribution

......

United

States

30,996,000

—

Total

Companies

in

Liquidation

(Cost

$–)

......................................

—

Total

Long

Term

Investments

(Cost

$7,455,208,937)

.............................

9,867,588,412

a

Short

Term

Investments

1.2%

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

1.2%

g

FHLB,

1/03/22

.......................................

United

States

15,700,000

15,700,000

g

U.S.

Treasury

Bills

,

1/06/22

...........................................

United

States

25,000,000

25,000,002

2/17/22

...........................................

United

States

27,000,000

26,999,156

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Global

Discovery

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

19

Short

Term

Investments

(continued)

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

(continued)

g

U.S.

Treasury

Bills,

(continued)

4/28/22

...........................................

United

States

30,000,000

$

29,993,172

5/26/22

...........................................

United

States

20,000,000

19,992,929

6/23/22

...........................................

United

States

5,000,000

4,996,141

106,981,400

Total

U.S.

Government

and

Agency

Securities

(Cost

$122,683,023)

................

122,681,400

Total

Short

Term

Investments

(Cost

$122,683,023

)

...............................

122,681,400

a

Total

Investments

(Cost

$7,577,891,960)

98.9%

..................................

$9,990,269,812

Securities

Sold

Short

(1.9)%

..................................................

(196,885,131)

Other

Assets,

less

Liabilities

3.0%

.............................................

305,898,188

Net

Assets

100.0%

...........................................................

$10,099,282,869

Shares

h

Securities

Sold

Short

(1.9)%

Common

Stocks

(1.9)%

Semiconductors

&

Semiconductor

Equipment

(1.9)%

Advanced

Micro

Devices,

Inc.

............................

United

States

1,368,208

(196,885,131)

Total

Common

Stocks

(Proceeds

$124,884,140)

.................................

(196,885,131)

Total

Securities

Sold

Short

(Proceeds

$124,884,140)

.............................

$(196,885,131)

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

†

Rounds

to

less

than

0.1%

of

net

assets.

a

Non-income

producing.

b

Fair

valued

using

significant

unobservable

inputs.

See

Note

14

regarding

fair

value

measurements.

c

See

Note

11

regarding

restricted

securities.

d

Security

was

purchased

pursuant

to

Rule

144A

or

Regulation

S

under

the

Securities

Act

of

1933.

144A

securities

may

be

sold

in

transactions

exempt

from

registration

only

to

qualified

institutional

buyers

or

in

a

public

offering

registered

under

the

Securities

Act

of

1933.

Regulation

S

securities

cannot

be

sold

in

the

United

States

without

either

an

effective

registration

statement

filed

pursuant

to

the

Securities

Act

of

1933,

or

pursuant

to

an

exemption

from

registration.

At

December

31,

2021,

the

aggregate

value

of

these

securities

was

$199,976,320,

representing

2.0%

of

net

assets.

e

A

portion

or

all

of

the

security

has

been

segregated

as

collateral

for

securities

sold

short.

At

December

31,

2021,

the

aggregate

value

of

these

securities

pledged

amounted

to

$241,681,575,

representing

2.4%

of

net

assets.

f

Contingent

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.

g

The

security

was

issued

on

a

discount

basis

with

no

stated

coupon

rate.

h

See

Note

1(e)

regarding

securities

sold

short.

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Global

Discovery

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

At

December

31,

2021,

the

Fund

had

the

following futures

contracts

outstanding.

See

Note

1(c).

At

December

31,

2021,

the

Fund

had

the

following

forward

exchange

contracts

outstanding.

See

Note

1

(

c

). 

Futures

Contracts

Description

Type

Number

of

Contracts

Notional

Amount

*

Expiration

Date

Value/

Unrealized

Appreciation

(Depreciation)

Foreign

exchange

contracts

Foreign

Exchange

EUR/USD

...................

Short

2,929

$

417,474,031

3/14/22

$

(2,225,952)

Foreign

Exchange

GBP/USD

...................

Short

2,262

191,294,512

3/14/22

(4,099,231)

Total

Futures

Contracts

......................................................................

$(6,325,183)

*

As

of

period

end.

Forward

Exchange

Contracts

Currency

Counter-

party

a

Type

Quantity

Contract

Amount

*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

British

Pound

......

BOFA

Buy

10,568,831

14,442,725

1/18/22

$

38,035

$

(187,661)

British

Pound

......

BOFA

Sell

3,163,857

4,368,619

1/18/22

89,876

—

British

Pound

......

SSBT

Sell

39,497,609

54,755,685

1/18/22

1,339,819

—

British

Pound

......

UBSW

Sell

5,140,256

7,074,725

1/18/22

123,134

—

Japanese

Yen

......

BOFA

Sell

9,138,270,073

80,573,934

1/18/22

1,170,774

—

Japanese

Yen

......

UBSW

Buy

914,750,543

8,067,551

1/18/22

—

(119,210)

Japanese

Yen

......

UBSW

Sell

8,584,134,116

75,443,517

1/18/22

855,289

—

Swiss

Franc

.......

HSBK

Sell

137,586,815

149,009,592

1/20/22

—

(1,875,336)

Swiss

Franc

.......

UBSW

Buy

9,714,631

10,519,839

1/20/22

133,735

—

Swiss

Franc

.......

UBSW

Sell

9,495,064

10,391,354

1/20/22

6,274

(27,706)

Euro

.............

BOFA

Sell

97,975,652

115,065,424

1/24/22

3,562,607

—

Euro

.............

HSBK

Sell

77,061,224

90,516,039

1/24/22

2,815,232

—

Euro

.............

SSBT

Sell

2,092,469

2,464,447

1/24/22

83,078

—

Euro

.............

UBSW

Buy

7,735,000

8,721,360

1/24/22

81,586

—

Euro

.............

UBSW

Sell

1,319,544

1,545,727

1/24/22

43,998

—

Euro

.............

BOFA

Sell

184,334,511

214,149,661

2/07/22

4,305,720

—

Euro

.............

HSBK

Sell

22,470,000

26,137,104

2/07/22

557,557

—

Euro

.............

SSBT

Sell

139,999,315

162,703,704

2/07/22

3,330,357

—

Euro

.............

UBSW

Sell

32,631,713

38,060,493

2/07/22

912,987

—

New

Taiwan

Dollar

..

HSBK

Sell

1,354,746,106

49,190,157

3/30/22

21,088

—

New

Taiwan

Dollar

..

UBSW

Sell

734,711,894

26,688,458

3/30/22

22,871

—

Euro

.............

BOFA

Sell

89,944,924

103,116,182

4/19/22

646,406

(91,191)

Euro

.............

HSBK

Sell

18,852,569

21,389,645

4/19/22

5,157

(112,421)

Euro

.............

UBSW

Sell

120,994,087

138,434,445

4/19/22

643,908

(174,677)

South

Korean

Won

..

HSBK

Sell

9,416,491,267

7,993,291

5/16/22

95,492

—

South

Korean

Won

..

UBSW

Sell

2,556,005,623

2,164,987

5/16/22

21,214

—

South

Korean

Won

..

HSBK

Sell

40,479,977,554

34,174,738

6/17/22

240,576

—

South

Korean

Won

..

UBSW

Sell

78,805,125,918

66,558,383

6/17/22

496,440

—

Total

Forward

Exchange

Contracts

...................................................

$21,643,210

$(2,588,202)

Net

unrealized

appreciation

(depreciation)

............................................

$19,055,008

*

In

U.S.

dollars

unless

otherwise

indicated.

a

May

be

comprised

of

multiple

contracts

with

the

same

counterparty,

currency

and

settlement

date.

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Global

Discovery

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

21

See

Note 12 regarding

other

derivative

information.

See

A

bbreviations

on

page

40

.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

Franklin

Mutual

Global

Discovery

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

...................................................................

$7,577,891,960

Value

-

Unaffiliated

issuers

..................................................................

$9,990,269,812

Cash

....................................................................................

66,898,788

Restricted

cash

for

OTC

derivative

contracts

(Note

1d)

...............................................

16,515,064

Receivables:

Investment

securities

sold

...................................................................

10,273,669

Capital

shares

sold

........................................................................

2,042,606

Dividends

and

interest

.....................................................................

26,955,843

European

Union

tax

reclaims

(Note

1

g

)

.........................................................

13,662,900

Deposits

with

brokers

for:

Securities

sold

short

.....................................................................

202,567,299

Futures

contracts

........................................................................

11,838,585

Unrealized

appreciation

on

OTC

forward

exchange

contracts

..........................................

21,643,210

Other

assets

..............................................................................

1,324,756

Total

assets

..........................................................................

10,363,992,532

Liabilities:

Payables:

Investment

securities

purchased

..............................................................

1,340,810

Capital

shares

redeemed

...................................................................

18,845,452

Management

fees

.........................................................................

6,059,494

Distribution

fees

..........................................................................

1,510,108

Transfer

agent

fees

........................................................................

1,895,859

Trustees'

fees

and

expenses

.................................................................

1,474,968

Variation

margin

on

futures

contracts

...........................................................

2,472,794

Due

to

brokers

.............................................................................

16,515,064

Securities

sold

short,

at

value

(proceeds

$124,884,140)

..............................................

196,885,131

Unrealized

depreciation

on

OTC

forward

exchange

contracts

..........................................

2,588,202

Accrued

expenses

and

other

liabilities

...........................................................

15,121,781

Total

liabilities

.........................................................................

264,709,663

Net

assets,

at

value

.................................................................

$10,099,282,869

Net

assets

consist

of:

Paid-in

capital

.............................................................................

$7,510,754,150

Total

distributable

earnings

(losses)

.............................................................

2,588,528,719

Net

assets,

at

value

.................................................................

$10,099,282,869

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

(continued)

December

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

23

Franklin

Mutual

Global

Discovery

Fund

Class

Z:

Net

assets,

at

value

.......................................................................

$3,355,158,266

Shares

outstanding

........................................................................

106,227,195

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$31.58

Class

A:

Net

assets,

at

value

.......................................................................

$5,618,446,299

Shares

outstanding

........................................................................

182,376,739

Net

asset

value

per

share

a

..................................................................

$30.81

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50%)

................................

$32.60

Class

C:

Net

assets,

at

value

.......................................................................

$335,605,031

Shares

outstanding

........................................................................

10,852,495

Net

asset

value

and

maximum

offering

price

per

share

a

.............................................

$30.92

Class

R:

Net

assets,

at

value

.......................................................................

$136,982,666

Shares

outstanding

........................................................................

4,514,569

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$30.34

Class

R6:

Net

assets,

at

value

.......................................................................

$653,090,607

Shares

outstanding

........................................................................

20,690,090

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$31.57

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Operations

for

the

year

ended

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

24

Franklin

Mutual

Global

Discovery

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$14,450,131)

Unaffiliated

issuers

........................................................................

$218,716,011

Interest:

Unaffiliated

issuers

........................................................................

12,349,962

Income

from

securities

loaned:

Unaffiliated

entities

(net

of

fees

and

rebates)

.....................................................

4,395

Non-controlled

affiliates

(Note

3

f

)

.............................................................

33

Other

income

(Note

1

g

)

......................................................................

6,534,482

Total

investment

income

...................................................................

237,604,883

Expenses:

Management

fees

(Note

3

a

)

...................................................................

87,391,941

Distribution

fees:

(Note

3c

)

    Class

A

................................................................................

14,092,576

    Class

C

................................................................................

4,325,941

    Class

R

................................................................................

793,648

Transfer

agent

fees:

(Note

3e

)

    Class

Z

................................................................................

4,275,897

    Class

A

................................................................................

7,062,044

    Class

C

................................................................................

542,550

    Class

R

................................................................................

198,961

    Class

R6

...............................................................................

248,505

Custodian

fees

(Note

4

)

......................................................................

266,718

Reports

to

shareholders

fees

..................................................................

2,444,487

Registration

and

filing

fees

....................................................................

197,169

Professional

fees

...........................................................................

244,098

Trustees'

fees

and

expenses

..................................................................

976,601

Dividends

on

securities

sold

short

..............................................................

1,922,431

Other

....................................................................................

1,468,346

Total

expenses

.........................................................................

126,451,913

Expense

reductions

(Note

4

)

...............................................................

(294)

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

..............................................

(2,621,753)

Net

expenses

.........................................................................

123,829,866

Net

investment

income

................................................................

113,775,017

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

Unaffiliated

issuers

......................................................................

1,359,994,300

Foreign

currency

transactions

................................................................

(847,877)

Forward

exchange

contracts

.................................................................

24,590,370

Futures

contracts

.........................................................................

34,667,358

Securities

sold

short

.......................................................................

(56,645,297)

Net

realized

gain

(loss)

..................................................................

1,361,758,854

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

......................................................................

381,329,911

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

..............................

(2,498,814)

Forward

exchange

contracts

.................................................................

55,110,729

Futures

contracts

.........................................................................

(75,063)

Securities

sold

short

.......................................................................

(69,733,000)

Net

change

in

unrealized

appreciation

(depreciation)

............................................

364,133,763

Net

realized

and

unrealized

gain

(loss)

............................................................

1,725,892,617

Net

increase

(decrease)

in

net

assets

resulting

from

operations

..........................................

$1,839,667,634

Franklin

Mutual

Series

Funds

Financial

Statements

Statements

of

Changes

in

Net

Assets

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

25

Franklin

Mutual

Global

Discovery

Fund

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

.................................................

$113,775,017

$376,927,972

Net

realized

gain

(loss)

.................................................

1,361,758,854

(534,362,129)

Net

change

in

unrealized

appreciation

(depreciation)

...........................

364,133,763

(1,200,560,423)

Net

increase

(decrease)

in

net

assets

resulting

from

operations

................

1,839,667,634

(1,357,994,580)

Distributions

to

shareholders:

Class

Z

.............................................................

(276,128,825)

(114,749,627)

Class

A

.............................................................

(457,270,411)

(179,565,272)

Class

C

.............................................................

(24,042,977)

(12,234,587)

Class

R

.............................................................

(10,862,941)

(5,652,491)

Class

R6

............................................................

(54,549,168)

(30,706,058)

Total

distributions

to

shareholders

..........................................

(822,854,322)

(342,908,035)

Capital

share

transactions:

(Note

2

)

Class

Z

.............................................................

(250,575,020)

(1,287,029,331)

Class

A

.............................................................

(265,944,649)

(1,502,192,342)

Class

C

.............................................................

(215,958,967)

(272,533,751)

Class

R

.............................................................

(56,653,739)

(52,024,364)

Class

R6

............................................................

(274,511,772)

(318,898,089)

Total

capital

share

transactions

............................................

(1,063,644,147)

(3,432,677,877)

Net

increase

(decrease)

in

net

assets

...................................

(46,830,835)

(5,133,580,492)

Net

assets:

Beginning

of

year

.......................................................

10,146,113,704

15,279,694,196

End

of

year

...........................................................

$10,099,282,869

$10,146,113,704

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

Franklin

Mutual

Global

Discovery

Fund

26

franklintempleton.com

Annual

Report

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. Effective

August

2,

2021,

Class

C

shares

automatically

convert

to

Class

A

shares

on

a

monthly

basis,

after

they

have

been

held

for

8

years.

Prior

to

August

2,

2021,

Class

C

shares

converted

to

Class

A

shares

after

a

10-year

holding

period.

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

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

27

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

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

December

31,

2021,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy

(referred

to

as

“market

level

fair

value”).

See

the

Fair

Value

Measurements

note

for

more

information.

When

the

last

day

of

the

reporting

period

is

a

non-business

day,

certain

foreign

markets

may

be

open

on

those

days

that

the

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

portfolio

securities

on

the

last

business

day

and

the

last

calendar

day

of

the

reporting

period.

Any

security

valuation

changes

due

to

an

open

foreign

market

are

adjusted

and

reflected

by

the

Fund

for

financial

reporting

purposes.

b.

Foreign

Currency

Translation 

Portfolio

securities

and

other

assets

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

based

on

the

exchange

rate

of

such

currencies

against

U.S.

dollars

on

the

date

of

valuation.

The

Fund

may

enter

into

foreign

currency

exchange

contracts

to

facilitate

transactions

denominated

in

a

foreign

currency.

Purchases

and

sales

of

securities,

income

and

expense

items

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

at

the

exchange

rate

in

effect

on

the

transaction

date.

Portfolio

securities

and

assets

and

liabilities

denominated

in

foreign

currencies

contain

risks

that

those

currencies

will

decline

in

value

relative

to

the

U.S.

dollar.

Occasionally,

events

may

impact

the

availability

or

reliability

of

foreign

exchange

rates

used

to

convert

the

U.S.

dollar

equivalent

value.

If

such

an

event

occurs,

the

foreign

exchange

rate

will

be

valued

at

fair

value

using

procedures

established

and

approved

by

the

Board.

The

Fund

does

not

separately

report

the

effect

of

changes

in

foreign

exchange

rates

from

changes

in

market

prices

on

securities

held.

Such

changes

are

included

in

net

realized

and

unrealized

gain

or

loss

from

investments

in

the

Statement of

Operations.

Realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

the

trade

and

settlement

dates

on

securities

transactions

and

the

difference

between

the

recorded

amounts

of

dividends,

interest,

and

foreign

withholding

taxes

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

foreign

exchange

gains

and

losses

arise

from

changes

in

foreign

exchange

rates

on

foreign

denominated

assets

and

liabilities

other

than

investments

in

securities

held

at

the

end

of

the

reporting

period.

c.

Derivative

Financial

Instruments

The

Fund

invested

in

derivative

financial

instruments

in

order

to

manage

risk

or

gain

exposure

to

various

other

investments

or

markets.

Derivatives

are

financial

contracts

based

on

an

underlying

or

notional

amount,

require

no

initial

investment

or

an

initial

net

investment

that

is

smaller

than

would

normally

be

required

to

have

a

similar

response

to

changes

in

market

factors,

and

require

or

permit

net

settlement.

Derivatives

contain

various

risks

including

the

potential

inability

of

the

counterparty

to

fulfill

their

obligations

under

the

terms

of

the

contract,

the

potential

for

an

illiquid

secondary

market,

and/or

the

potential

for

market

movements

which

expose

the

Fund

to

gains

or

losses

in

excess

of

the

amounts

shown

in

the

Statement

of

Assets

and

Liabilities.

Realized

gain

and

loss

and

unrealized

appreciation

and

depreciation

on

these

contracts

for

the

period

are

included

in

the

Statement

of

Operations. 

Derivative

counterparty

credit

risk

is

managed

through

a

formal

evaluation

of

the

creditworthiness

of

all

potential

counterparties.

The

Fund

attempts

to

reduce its

exposure

to

counterparty

credit

risk

on

OTC

derivatives,

whenever

possible,

by

entering

into

International

Swaps

and

Derivatives

Association

(ISDA)

master

agreements

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

28

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

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

December

31,

2021,

the

Fund

had

no

OTC

derivatives

in

a

net

liability

position

for

such

contracts.  

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

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

December

31,

2021, the

Fund

received

$6,912,397

in

United

Kingdom

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.

Restricted

Cash

At

December

31,

2021, the

Fund

held

restricted

cash

in

connection

with

investments

in

certain

derivative

securities.

Restricted

cash

is

held

in

a

segregated

account

with

the

Fund’s

counterparty

broker

and

is

reflected

in

the

Statement

of

Assets

and

Liabilities.

e.

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

1.

Organization

and

Significant

Accounting

Policies

(continued)

c.

Derivative

Financial

Instruments

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

29

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

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.

f.

Securities

Lending

The

Fund

participates

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the Fund,

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 any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

The

securities

lending

agent

has

agreed

to

indemnify

the

Fund

in

the

event

of

default

by

a

third

party

borrower.

At

December

31,

2021,

the

Fund

had

no

securities

on

loan.

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). Income

recognized,

if

any,

for

EU

reclaims

is

reflected

as

other

income

in

the

Statement

of

Operations

and

any

related

receivable,

if

any,

is

reflected

as

European

Union

tax

reclaims

in

the

Statement

of

Assets

and

Liabilities.

Any

fees

associated

with

these

filings

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

When

uncertainty

exists

as

to

the

ultimate

resolution

of

these

proceedings,

the

likelihood

of

receipt

of

these

EU

reclaims,

and

the

potential

timing

of

payment,

no

amounts

are

reflected

in

the

financial

statements.

For

U.S.

income

tax

purposes,

EU

reclaims

received

by

the

Fund,

if

any,

reduce

the

amount

of

foreign

taxes

Fund

shareholders

can

use

as

tax

deductions

or credits

on

their

income

tax

returns.

In

the

event

that

EU

reclaims

received

by

the Fund

during a

fiscal

year

exceed

foreign

withholding

taxes

paid

by

the

Fund,

and

the

Fund previously

passed

through to

its

shareholders

foreign

taxes

incurred

by

the

Fund

to

be

used

as

a

credit

or

deduction

on

a

shareholder’s

income

tax

return,

the Fund

will enter

into

a

closing

agreement

with

the

Internal

Revenue

Service

(IRS)

in

order

to

pay

the

associated

tax

liability

on

behalf

of

the Fund's

shareholders.

During

the

fiscal

year

ended

December

31,

2021,

the Fund

received

EU

reclaims

in

excess

of

the

foreign

taxes

paid

during

the

year.

The

Fund

previously

entered

into

a

closing

agreement

with

the

IRS

and

any

adjustments

to

the

estimated

fees

are

reflected

as

other

income

in

the

Statement

of

Operations.

The

Fund

may

recognize

an

income

tax

liability

related

to

its

uncertain

tax

positions

under

U.S.

GAAP

when

the

uncertain

tax

position

has

a

less

than

50%

probability

that

it

will

be

sustained

upon

examination

by

the

tax

authorities

based

1.

Organization

and

Significant

Accounting

Policies

(continued)

e.

Securities

Sold

Short

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

30

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

on

its

technical

merits.

As

of

December

31,

2021,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

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

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.

1.

Organization

and

Significant

Accounting

Policies

(continued)

g.

Income

and

Deferred

Taxes

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

31

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

2.

Shares

of

Beneficial

Interest

At

December

31,

2021,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

Transactions

in

the

Fund’s

shares

were

as

follows:

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

Z

Shares:

Shares

sold

...................................

5,593,455

$178,799,789

10,135,382

$262,062,155

Shares

issued

in

reinvestment

of

distributions

..........

8,188,488

252,494,886

3,777,102

104,139,014

Shares

issued

on

reorganization

....................

—

—

1,077,880

33,166,426

Shares

redeemed

...............................

(21,392,850)

(681,869,695)

(67,138,038)

(1,686,396,926)

Net

increase

(decrease)

..........................

(7,610,907)

$(250,575,020)

(52,147,674)

$(1,287,029,331)

Class

A

Shares:

Shares

sold

a

...................................

13,871,126

$442,848,145

15,209,053

$385,426,903

Shares

issued

in

reinvestment

of

distributions

..........

14,845,564

446,658,739

6,518,510

175,257,194

Shares

issued

on

reorganization

....................

—

—

1,407,732

42,358,901

Shares

redeemed

...............................

(36,892,543)

(1,155,451,533)

(84,431,073)

(2,105,235,340)

Net

increase

(decrease)

..........................

(8,175,853)

$(265,944,649)

(61,295,778)

$(1,502,192,342)

Class

C

Shares:

Shares

sold

...................................

937,475

$29,473,650

1,462,444

$36,852,493

Shares

issued

in

reinvestment

of

distributions

..........

790,049

23,879,124

458,386

12,128,301

Shares

issued

on

reorganization

....................

—

—

342,264

10,271,407

Shares

redeemed

a

..............................

(8,462,035)

(269,311,741)

(13,322,993)

(331,785,952)

Net

increase

(decrease)

..........................

(6,734,511)

$(215,958,967)

(11,059,899)

$(272,533,751)

Class

R

Shares:

Shares

sold

...................................

408,568

$12,784,868

976,306

$23,071,005

Shares

issued

in

reinvestment

of

distributions

..........

366,002

10,849,071

213,165

5,628,938

Shares

issued

on

reorganization

....................

—

—

52,424

1,554,387

Shares

redeemed

...............................

(2,591,277)

(80,287,678)

(3,259,087)

(82,278,694)

Net

increase

(decrease)

..........................

(1,816,707)

$(56,653,739)

(2,017,192)

$(52,024,364)

Class

R6

Shares:

Shares

sold

...................................

3,222,144

$104,019,457

7,168,764

$177,915,442

Shares

issued

in

reinvestment

of

distributions

..........

1,491,907

45,976,392

987,854

27,232,946

Shares

issued

on

reorganization

....................

—

—

152,681

4,696,495

Shares

redeemed

...............................

(13,347,493)

(424,507,621)

(20,540,906)

(528,742,972)

Net

increase

(decrease)

..........................

(8,633,442)

$(274,511,772)

(12,231,607)

$(318,898,089)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

32

franklintempleton.com

Annual

Report

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:

a.

Management

Fees

Effective

July

1,

2021,

the

Fund

pays

an

investment

management

fee

to

Franklin

Mutual

based

on

the

average

daily

net

assets of

the

Fund

as

follows:

Prior

to

July

1,

2021,

the

Fund

paid

fees

to

Franklin

Mutual

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

For

the

year

ended

December

31,

2021,

the

gross

effective

investment

management

fee

rate

was

0.844%

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.

Subsidiary

Affiliation

Franklin

Mutual

Advisers,

LLC

(Franklin

Mutual)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Distributors,

LLC

(Distributors)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

Annualized

Fee

Rate

Net

Assets

0.845%

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

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

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

33

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(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:

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

year:

e.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

year

ended

December

31,

2021,

the

Fund

paid

transfer

agent

fees

of

$12,327,957,

of

which

$4,797,632

was

retained

by

Investor

Services.

f.

Investments

in

Affiliated

Management

Investment

Companies

The

Fund

invests

in

one

or

more

affiliated

management

investment

companies.

As

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

fund’s

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

fund.

The

Fund

does

not

invest

for

purposes

of

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Fund

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statement

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

year

ended

December

31,

2021,

the

Fund

held

investments

in

affiliated

management

investment

companies

as

follows:

Class

A

....................................................................................

0.35%

Class

C

....................................................................................

1.00%

Class

R

....................................................................................

0.50%

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

..............................

$324,880

CDSC

retained

..............................................................................

$21,784

3.

Transactions

with

Affiliates

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

34

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

g.

Waiver

and

Expense

Reimbursements

Effective

July

1,

2021,

Franklin

Mutual

contractually

agreed

in

advance

to

waive

or

limit

its

fees

and

to

assume

as

its

own

expense

certain

expenses

otherwise

payable

by

the

Fund

so

that

the

operating

expenses

(excluding

interest

expense,

distribution

fees,

and

acquired

fund

fees

and

expenses,

expenses

related

to

securities

sold

short,

and

certain

non-routine

expenses

or

costs,

including

those

relating

to

litigation,

indemnification,

reorganizations,

and

liquidations)

for

each

class

of

the

Fund

do

not

exceed

1.00%

based

on

the

average

net

assets

of

each

class

until

April

30,

2022.

Total

expenses

waived

or

paid

are

not

subject

to

recapture

subsequent

to

the

Fund's

fiscal

year

end.

Investor

Services

has

contractually

agreed

in

advance

to

waive

or

limit

its

fees

so

that

the

Class

R6

transfer

agent

fees

do

not

exceed

0.03%

based

on

the

average

net

assets

of

the

class

until

April

30,

2022.

4.

Expense

Offset

Arrangement

The Fund has

entered

into

an

arrangement

with

its

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Fund's

custodian

expenses.

During

the

year

ended

December

31,

2021,

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

year

ended

December

31,

2021,

the

Fund’s

projected

benefit

obligation

and

benefit

payments

under

the

Plan

were

as

follows:

    aa

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

a      

a  

a  

a  

a  

a  

a  

a  

Franklin

Mutual

Global

Discovery

Fund

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0.01%

.

$—

$8,653,000

$(8,653,000)

$—

$—

$—

—

$33

Total

Affiliated

Securities

...

$—

$8,653,000

$(8,653,000)

$—

$—

$—

$33

a

Projected

benefit

obligation

at

December

31,

2021

......

$1,299,181

b

Increase

(decrease)

in

projected

benefit

obligation

......

$153,790

Benefit

payments

made

to

retired

trustees

.............

$(5,218)

a

The

projected

benefit

obligation

is

included

in

trustees’

fees

and

expenses

in

the

Statement

of

Assets

and

Liabilities.

b

The

increase

(decrease)

in

projected

benefit

obligation

is

reflected

in

trustees’

fees

and

expenses

in

the

Statement

of

Operations.

The

increase

(decrease)

was

primarily

due

to

demographic

losses.

3.

Transactions

with

Affiliates

(continued)

f.

Investments

in

Affiliated

Management

Investment

Companies

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

35

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

6.

Income

Taxes

For

tax

purposes,

capital

losses

may

be

carried

over

to

offset

future

capital

gains.

At

December

31,

2021,

the

capital

loss

carryforwards

were

as

follows:

During

the

year

ended December

31,

2021,

the

Fund

utilized

$522,453,481

of

capital

loss

carryforwards.

The

tax

character

of

distributions

paid

during

the

years

ended

December

31,

2021

and

2020,

was

as

follows:

At

December

31,

2021,

the

cost

of

investments,

net

unrealized

appreciation

(depreciation)

and

undistributed

long

term

capital

gains

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatments

of

defaulted

securities,

foreign

currency

transactions,

EU

reclaims,

tax

straddles

and

wash

sales.

The

Fund

utilized

a

tax

accounting

practice

to

treat

a

portion

of

the

proceeds

from

capital

shares

redeemed

as

a

distribution

from

net

investment

income

and

realized

capital

gains.

7.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities

and

securities

sold

short)

for

the

year

ended

December

31,

2021,

aggregated

$4,049,645,863

and

$5,716,832,746,

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

Capital

loss

carryforwards

not

subject

to

expiration:

Long

term

................................................................................

$4,437,257

a

a

Includes

$4,437,257

from

the

acquired

Franklin

Mutual

International

Fund,

which

may

be

carried

over

to

offset

future

capital

gains,

subject

to

certain

limitations

.

2021

2020

Distributions

paid

from:

Ordinary

income

..........................................................

$230,330,737

$297,243,026

Long

term

capital

gain

......................................................

592,523,585

45,665,009

$822,854,322

$342,908,035

Cost

of

investments

..........................................................................

$7,485,530,831

Unrealized

appreciation

........................................................................

$2,701,515,148

Unrealized

depreciation

........................................................................

(380,931,473)

Net

unrealized

appreciation

(depreciation)

..........................................................

$2,320,583,675

Distributable

earnings:

Undistributed

long

term

capital

gains

..............................................................

$282,164,284

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

36

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

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. 

At

December

31,

2021,

the

Fund

did

not

hold

any

distressed

company

securities

for

which

interest

recognition

has

been

discontinued.

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.

Political

and

financial

uncertainty

in

many

foreign

regions

may

increase

market

volatility

and

the

economic

risk

of

investing

in

foreign

securities.

In

addition,

certain

foreign

securities

may

not

be

as

liquid

as

U.S.

securities.

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

December

31,

2021,

investments

in

restricted

securities,

excluding

securities

exempt

from

registration

under

the

1933

Act,

were

as

follows:

Shares

Issuer

Acquisition

Date

Cost

Value

Franklin

Mutual

Global

Discovery

Fund

3,819,425

International

Automotive

Components

Group

Brazil

LLC

4/13/06

-

12/26/08

$

2,536,498

$

144,600

Total

Restricted

Securities

(Value

is

0.0%

†

of

Net

Assets)

.............

$2,536,498

$144,600

†

Rounds

to

less

than

0.1%

of

net

assets.

8.

Credit Risk

and

Defaulted

Securities

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

37

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

12.

Other

Derivative

Information

At

December

31,

2021,

investments

in

derivative

contracts

are

reflected

in

the

Statement of

Assets

and

Liabilities

as

follows:

For

the

year

ended

December

31,

2021,

the

effect

of

derivative

contracts

in

the

Statement

of

Operations

was

as

follows:

For

the

year

ended

December

31,

2021,

the

average

month

end

notional

amount

of

futures

contracts

represented

$646,514,307.

The

average

month

end

contract

value

of

forward

exchange

contracts

was

$1,336,644,024.

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

$2.675

billion

(Global

Credit

Facility)

which

matured

on

February

4,

2022.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

Effective

February

4,

2022,

the

Borrowers

renewed

the

Global

Credit

Facility

for

a

one-year

term,

maturing

February

3,

2023,

for

a

total

of

$2.675

billion.

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,

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

Franklin

Mutual

Global

Discovery

Fund

Foreign

exchange

contracts

..

Variation

margin

on

futures

contracts

$

—

Variation

margin

on

futures

contracts

$

6,325,183

a

Unrealized

appreciation

on

OTC

forward

exchange

contracts

21,643,210

Unrealized

depreciation

on

OTC

forward

exchange

contracts

2,588,202

Total

....................

$21,643,210

$8,913,385

a

This

amount

reflects

the

cumulative

appreciation

(depreciation)

of

futures

contracts

as

reported

in

the

Statement

of

Investments.

Only

the

variation

margin

receivable/

payable

at

year

end

is

separately

reported

within

the

Statement

of

Assets

and

Liabilities.

Prior

variation

margin

movements

were

recorded

to

cash

upon

receipt

or

payment.

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Statement

of

Operations

Location

Net

Realized

Gain

(Loss)

for

the

Year

Statement

of

Operations

Location

Net

Change

in

Unrealized

Appreciation

(Depreciation)

for

the

Year

Franklin

Mutual

Global

Discovery

Fund

Net

realized

gain

(loss)

from:

Net

change

in

unrealized

  appreciation

(depreciation)

on:

Foreign

exchange

contracts

.....

Futures

contracts

$34,667,358

Futures

contracts

$(75,063)

Forward

exchange

contracts

24,590,370

Forward

exchange

contracts

55,110,729

Total

.......................

$59,257,728

$55,035,666

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

38

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

During

the

year

ended

December

31,

2021,

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.

A

summary

of

inputs

used

as

of

December

31,

2021,

in

valuing

the

Fund's

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

Level

1

Level

2

Level

3

Total

Franklin

Mutual

Global

Discovery

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Aerospace

&

Defense

...................

$

—

$

325,563,705

$

—

$

325,563,705

Auto

Components

......................

—

173,171,182

144,600

173,315,782

Automobiles

..........................

175,821,403

—

—

175,821,403

Banks

...............................

249,852,588

532,316,600

—

782,169,188

Beverages

...........................

—

139,767,342

—

139,767,342

Building

Products

......................

196,941,520

—

—

196,941,520

Capital

Markets

........................

—

152,350,854

—

152,350,854

Chemicals

...........................

—

348,920,103

—

348,920,103

Construction

Materials

..................

—

162,070,797

—

162,070,797

Diversified

Financial

Services

.............

212,639,791

—

—

212,639,791

Diversified

Telecommunication

Services

.....

14,611,793

261,215,498

—

275,827,291

Electrical

Equipment

....................

—

149,617,738

—

149,617,738

Entertainment

.........................

149,258,509

—

—

149,258,509

Food

Products

........................

140,002,820

157,520,327

—

297,523,147

Health

Care

Equipment

&

Supplies

.........

189,331,811

—

—

189,331,811

Health

Care

Providers

&

Services

..........

579,550,679

—

—

579,550,679

Hotels,

Restaurants

&

Leisure

.............

—

128,880,260

—

128,880,260

Household

Products

....................

—

179,619,288

—

179,619,288

Industrial

Conglomerates

................

161,271,626

—

—

161,271,626

Insurance

............................

561,335,903

346,954,493

—

908,290,396

IT

Services

...........................

508,226,818

172,790,289

—

681,017,107

Machinery

............................

—

98,385,758

—

98,385,758

Media

...............................

267,508,507

—

—

267,508,507

Multi-Utilities

..........................

—

110,474,999

—

110,474,999

Oil,

Gas

&

Consumable

Fuels

.............

528,012,843

260,471,099

—

788,483,942

Pharmaceuticals

.......................

471,621,808

300,886,759

—

772,508,567

Semiconductors

&

Semiconductor

Equipment

.

168,330,617

192,430,322

—

360,760,939

13.

Credit

Facility

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

39

franklintempleton.com

Annual

Report

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 year.

15.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

(FASB)

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

In

January

2021,

the

FASB

issued

ASU

No.

2021-01,

with

further

amendments

to

Topic

848.

The

amendments

in

the

ASUs

provide

optional

temporary

accounting

recognition

and 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

for

certain

LIBOR

settings

and

2023

for

the

remainder. The

ASUs

are

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

these

ASUs

will

not

have

a

material

impact

on

the

financial

statements. 

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

other

than

those

already

disclosed

in

the

financial

statements.

Level

1

Level

2

Level

3

Total

Franklin

Mutual

Global

Discovery

Fund

(continued)

Assets:

(continued)

Investments

in

Securities:

Common

Stocks:

Software

.............................

$

223,098,430

$

—

$

—

$

223,098,430

Technology

Hardware,

Storage

&

Peripherals

.

192,604,061

233,449,385

—

426,053,446

Textiles,

Apparel

&

Luxury

Goods

..........

—

102,877,944

—

102,877,944

Tobacco

.............................

123,532,793

217,488,697

—

341,021,490

Warrants

..............................

784,143

—

—

784,143

Corporate

Bonds

........................

—

5,881,910

—

5,881,910

Companies

in

Liquidation

..................

—

—

—

a

—

Short

Term

Investments

...................

106,981,400

15,700,000

—

122,681,400

Total

Investments

in

Securities

...........

$5,221,319,863

$4,768,805,349

b

$144,600

$9,990,269,812

Other

Financial

Instruments:

Forward

exchange

contracts

...............

$

—

$

21,643,210

$

—

$

21,643,210

Total

Other

Financial

Instruments

.........

$—

$21,643,210

$—

$21,643,210

Liabilities:

Other

Financial

Instruments:

Securities

Sold

Short

.....................

$196,885,131

$—

$—

$196,885,131

Forward

exchange

contracts

................

—

2,588,202

—

2,588,202

Futures

contracts

........................

6,325,183

—

—

6,325,183

Total

Other

Financial

Instruments

.........

$203,210,314

$2,588,202

$—

$205,798,516

a

Includes

securities

determined

to

have

no

value

at

December

31,

2021.

b

Includes

foreign

securities

valued

at

$4,747,223,439,

which

were

categorized

as

Level

2

as

a

result

of

the

application

of

market

level

fair

value

procedures.

See

the

Financial

Instrument

Valuation

note

for

more

information.

14.

Fair

Value

Measurements

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

40

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

(continued)

Abbreviations

Counterparty

BOFA

Bank

of

America

N.A.

HSBK

HSBC

Bank

plc

SSBT

State

Street

Bank

and

Trust

Co.

UBSW

UBS

AG

Currency

EUR

Euro

GBP

British

Pound

USD

United

States

Dollar

Selected

Portfolio

ADR

American

Depositary

Receipt

FHLB

Federal

Home

Loan

Banks

Franklin

Mutual

Series

Funds

Report

of

Independent

Registered

Public

Accounting

Firm

41

franklintempleton.com

Annual

Report

To

the

Board

of

Trustees

of

Franklin

Mutual

Series

Funds

and

Shareholders

of

Franklin

Mutual

Global

Discovery

Fund:

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities

of

Franklin

Mutual

Global

Discovery

Fund

(the

“Fund”)

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds),

including

the

statement

of

investments,

as

of

December

31,

2021,

and

the

related

statement

of

operations

for

the

year

then

ended,

the

statements

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

then

ended,

the

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended

and

the

related

notes

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

Franklin

Mutual

Global

Discovery

Fund

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds)

at

December

31,

2021,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

then

ended

and

its

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended,

in

conformity

with

U.S.

generally

accepted

accounting

principles.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

("PCAOB")

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

The

Fund

is

not

required

to

have,

nor

were

we

engaged

to

perform,

an

audit

of

the

Fund’s

internal

control

over

financial

reporting.

As

part

of

our

audits,

we

are

required

to

obtain

an

understanding

of

internal

control

over

financial

reporting,

but

not

for

the

purpose

of

expressing

an

opinion

on

the

effectiveness

of

the

Fund’s

internal

control

over

financial

reporting.

Accordingly,

we

express

no

such

opinion.

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

December

31,

2021,

by

correspondence

with

the

custodian

and

brokers

or

by

other

appropriate

auditing

procedures

where

replies

from

others

were

not

received.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

We

believe

that

our

audits

provide

a

reasonable

basis

for

our

opinion.

We

have

served

as

the

auditor

of

one

or

more

Franklin

investment

companies

since

1987.

Boston,

Massachusetts

February

18,

2022

Franklin

Mutual

Series

Funds

Tax

Information

(unaudited)

42

franklintempleton.com

Annual

Report

Franklin

Mutual

Global

Discovery

Fund

By

mid-February,

tax

information

related

to

a

shareholder's

proportionate

share

of

distributions

paid

during

the

preceding

calendar

year

will

be

received,

if

applicable.

Please

also

refer

to

www.franklintempleton.com

for

per

share

tax

information

related

to

any

distributions

paid

during

the

preceding

calendar

year.

Shareholders

are

advised

to

consult

with

their

tax

advisors

for

further

information

on

the

treatment

of

these

amount

s

on

their

tax

returns.

The

following

tax

information

for

the

Fund

is

required

to

be

furnished

to

shareholders

with

respect

to

income

earned

and

distributions

paid

during

its

fiscal

year.

The

Fund

hereby

reports

the

following

amounts,

or

if

subsequently

determined

to

be

different,

the

maximum

allowable

amounts,

for

the

fiscal

year

ended

December

31,

2021:

Note

(1)

-

The

Law

varies

in

each

state

as

to

whether

and

what

percentage

of

dividend

income

attributable

to

Federal

obligations

is

exempt

from

state

income

tax.

Shareholders

are

advised

to

consult

with

their

tax

advisors

to

determine

if

any

portion

of

the

dividends

received

is

exempt

from

state

income

taxes.

Under

Section

853

of

the

Internal

Revenue

Code,

the

Fund

intends

to

elect

to

pass

through

to

its

shareholders

the

following

amounts,

or

amounts

as

finally

determined,

of

foreign

taxes

paid

and

foreign

source

income

earned

by

the

Fund

during

the

fiscal

year

ended

December

31,

2021

:

Pursuant

to:

Amount

Reported

Long-Term

Capital

Gain

Dividends

Distributed

§852(b)(3)(C)

$615,150,826

Income

Eligible

for

Dividends

Received

Deduction

(DRD)

§854(b)(1)(A)

$79,429,505

Qualified

Dividend

Income

Earned

(QDI)

§854(b)(1)(B)

$240,598,718

Section

163(j)

Interest

Earned

§163(j)

$12,362,013

Interest

Earned

from

Federal

Obligations

Note

(1)

$91,268

Amount

Reported

Foreign

Taxes

Paid

$9,448,819

Foreign

Source

Income

Earned

$125,013,477

Franklin

Mutual

Series

Funds

Board

Members

and

Officers

43

franklintempleton.com

Annual

Report

The

name,

year

of

birth

and

address

of

the

officers

and

board

members,

as

well

as

their

affiliations,

positions

held

with

the

Trust,

principal

occupations

during

at

least

the

past

five

years

and

number

of

U.S.

registered

portfolios

overseen

in

the

Franklin

Templeton/Legg

Mason

fund

complex,

are

shown

below.

Generally,

each

board

member

serves

until

that

person’s

successor

is

elected

and

qualified.

Independent

Board

Members

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Edward

I.

Altman,

Ph.D.

(1941)

Trustee

Since

1987

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Max

L.

Heine

Professor

of

Finance,

Emeritus

and

Director

of

The

Credit

and

Debt

Markets

Research

Program,

Salomon

Center,

Stern

School

of

Business,

New

York

University;

editor

and

author

of

numerous

financial

publications;

financial

consultant;

an

adviser

to

numerous

financial

and

publishing

organizations;

and

formerly

,

Vice

Director,

Salomon

Center,

Stern

School

of

Business,

New

York

University.

Ann

Torre

Bates

(1958)

Trustee

and

Chairperson

Trustee

since

1995

and

Chairperson

since

2020

30

Ares

Capital

Corporation

(specialty

finance

company)

(2010-present),

United

Natural

Foods,

Inc.

(distributor

of

natural,

organic

and

specialty

foods)

(2013-present),

formerly

,

Allied

Capital

Corporation

(financial

services)

(2003-

2010),

SLM

Corporation

(Sallie

Mae)

(1997-2014)

and

Navient

Corporation

(loan

management,

servicing

and

asset

recovery)

(2014-2016).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

companies;

and

formerly

,

Executive

Vice

President

and

Chief

Financial

Officer,

NHP

Incorporated

(manager

of

multifamily

housing)

(1995-1997);

and

Vice

President

and

Treasurer,

US

Airways,

Inc.

(until

1995).

Jan

Hopkins

Trachtman

(1947)

Trustee

Since

2009

11

FTAC

Olympus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(2020-present)

and

FTAC

Parnassus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(February

2021-present);

and

formerly

,

FinTech

Acquisition

Corp.

III

(special

purpose

fintech

acquisition

company)

(2018-2021).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President

and

Founder,

The

Jan

Hopkins

Group

(communications

consulting

firm);

serves

on

Alumni

Advisory

Board

of

Knight

Bagehot

Fellowship;

and

formerly

,

President,

Economic

Club

of

New

York

(2007-2015);

Anchor/Correspondent,

CNN

Financial

News

(until

2003);

Managing

Director

and

Head

of

Client

Communications,

Citigroup

Private

Bank

(until

2005);

Off-Air

reporter,

ABC

News’

World

News

Tonight;

and

Editor,

CBS

Network

News.

Franklin

Mutual

Series

Funds

44

franklintempleton.com

Annual

Report

Interested

Board

Members

and

Officers

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Keith

Mitchell

(1954)

Trustee

Since

2009

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

boards

of

asset

management

firms;

and

formerly

,

Managing

Member,

Mitchell,

Hartley

&

Bechtel

Advisers,

LLC

(

formerly

,

Mitchell

Advisers,

LLC)

(advisory

firm)

(2003-2015)

and

Managing

Director,

Putman

Lovell

NBF.

David

W.

Niemiec

(1949)

Trustee

Since

2015

30

Hess

Midstream

LP

(oil

and

gas

midstream

infrastructure)

(2017-present).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Advisor,

Saratoga

Partners

(private

equity

fund);

and

formerly

,

Managing

Director,

Saratoga

Partners

(1998-2001)

and

SBC

Warburg

Dillon

Read

(investment

banking)

(1997-1998);

Vice

Chairman,

Dillon,

Read

&

Co.

Inc.

(investment

banking)

(1991-1997);

and

Chief

Financial

Officer,

Dillon,

Read

&

Co.

Inc.

(1982-1997).

Robert

E.

Wade

(1946)

Trustee

Since

1991

30

El

Oro

Ltd

(investments)

(2003-

2019).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Attorney

at

law

engaged

in

private

practice

as

a

sole

practitioner

(1972-2008)

and

member

of

various

boards.

Gregory

H.

Williams

(1943)

Trustee

Since

2015

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Private

investor;

Consultant;

and

formerly

,

President,

University

of

Cincinnati

(2009-2012);

President,

The

City

College

of

New

York

(2001-

2009);

Dean,

College

of

Law,

Ohio

State

University

(1993-2001);

and

Associate

Vice

President,

Academic

Affairs

and

Professor

of

Law,

University

of

Iowa

(1977-1993).

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Gregory

E.

Johnson

(1961)

Trustee

Since

2007

132

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Executive

Chairman,

Chairman

of

the

Board

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

Vice

Chairman,

Investment

Company

Institute;

and

formerly

,

Chief

Executive

Officer

(2013-2020)

and

President

(1994-2015)

Franklin

Resources,

Inc.

Independent

Board

Members

(continued)

Franklin

Mutual

Series

Funds

45

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Jennifer

M.

Johnson

(1964)

Trustee

Since

March

2021

70

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Executive

Officer,

President

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Chief

Operating

Officer

and

Executive

Vice

President,

Franklin

Resources,

Inc.

(1994-2015);

Executive

Vice

President

of

Operations

and

Technology,

Franklin

Resources,

Inc.

(2005-2010);

and

Senior

Vice

President,

Franklin

Resources,

Inc.

(2003-2005).

Alison

E.

Baur

(1964)

Vice

President

Since

2012

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Deputy

General

Counsel,

Franklin

Templeton;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Breda

M.

Beckerle

(1958)

Chief

Compliance

Officer

Since

2020

Not

Applicable

Not

Applicable

280

Park

Avenue

New

York,

NY

10017

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Compliance

Officer,

Fiduciary

Investment

Management

International,

Inc.,

Franklin

Advisers,

Inc.,

Franklin

Mutual

Advisers,

LLC,

Franklin

Templeton

Institutional,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christian

K.

Correa

(1973)

President,

and

Chief

Executive

Officer

–

Investment

Management

Since

April

2021

Not

Applicable

Not

Applicable

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President,

Franklin

Mutual

Advisers,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Steven

J.

Gray

(1955)

Vice

President

and

Secretary

Vice

President

since

2009

and

Secretary

since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Vice

President,

FASA,

LLC;

Assistant

Secretary,

Franklin

Distributors,

LLC;

and

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Matthew

T.

Hinkle

(1971)

Chief

Executive

Officer

–

Finance

and

Administration

Since

2017

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Vice

President,

Franklin

Templeton

Services,

LLC;

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Vice

President,

Global

Tax

(2012-April

2017)

and

Treasurer/Assistant

Treasurer,

Franklin

Templeton

(2009-2017).

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

46

franklintempleton.com

Annual

Report

*We

base

the

number

of

portfolios

on

each

separate

series

of

the

U.S.

registered

investment

companies

within

the

Franklin

Templeton/Legg

Mason

complex.

These

portfolios

have

a

common

investment

manager

or

affiliated

investment

managers.

**Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

considered

to

be

interested

people

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

of

Franklin

Resources,

Inc.

(Resources),

which

is

the

parent

company

of

the

Fund’s

investment

manager

and

distributor.

Note

1:

Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

siblings.

Note

2:

Officer

information

is

current

as

of

the

date

of

this

report.

It

is

possible

that

after

this

date,

information

about

officers

may

change.

Note

3:

Effective

September

30,

2021,

Peter

A.

Langerman

ceased

to

be

a

trustee

of

the

Trust.

Note

4:

Effective

December

31,

2021,

Burton

J.

Greenwald

ceased

to

be

a

trustee

of

the

Trust.

The

Sarbanes-Oxley

Act

of

2002

and

Rules

adopted

by

the

U.S.

Securities

and

Exchange

Commission

require

the

Fund

to

disclose

whether

the

Fund’s

Audit

Committee

includes

at

least

one

member

who

is

an

audit

committee

financial

expert

within

the

meaning

of

such

Act

and

Rules.

The

Fund’s

Board

has

determined

that

there

is

at

least

one

such

financial

expert

on

the

Audit

Committee

and

has

designated

each

of

Ann

Torre

Bates

and

David

W.

Niemiec

as

an

audit

committee

financial

expert.

The

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

qualify

as

such

an

expert

in

view

of

their

extensive

business

background

and

experience.

Ms.

Bates

has

served

as

a

member

of

the

Fund

Audit

Committee

since

1995.

She

currently

serves

as

a

director

of

Ares

Capital

Corporation

(2010-present)

and

United

Natural

Foods,

Inc.

(2013-present)

and

was

formerly

a

director

of

Navient

Corporation

from

2014

to

2016,

SLM

Corporation

from

1997

to

2014

and

Allied

Capital

Corporation

from

2003

to

2010,

Executive

Vice

President

and

Chief

Financial

Officer

of

NHP

Incorporated

from

1995

to

1997

and

Vice

President

and

Treasurer

of

US

Airways,

Inc.

until

1995.

Mr.

Niemiec

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2015,

currently

serves

as

an

Advisor

to

Saratoga

Partners

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Susan

Kerr

(1949)

Vice

President

–

AML

Compliance

Since

July

2021

Not

Applicable

Not

Applicable

620

Eighth

Avenue

New

York,

NY

10018

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Compliance

Analyst,

Franklin

Templeton;

Chief

Anti-Money

Laundering

Compliance

Officer,

Legg

Mason

&

Co.,

or

its

affiliates;

Anti

Money

Laundering

Compliance

Officer;

Senior

Compliance

Officer,

LMIS;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christopher

Kings

(1974)

Chief

Financial

Officer,

Chief

Accounting

Officer

and

Treasurer

Since

January

2022

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Treasurer,

U.S.

Fund

Administration

&

Reporting;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Navid

J.

Tofigh

(1972)

Vice

President

Since

2015

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Craig

S.

Tyle

(1960)

Vice

President

Since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

General

Counsel

and

Executive

Vice

President,

Franklin

Resources,

Inc.;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Lori

A.

Weber

(1964)

Vice

President

Since

2011

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Assistant

Secretary,

Franklin

Resources,

Inc.;

Vice

President

and

Secretary,

Templeton

Investment

Counsel,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

47

franklintempleton.com

Annual

Report

and

was

formerly

its

Managing

Director

from

1998

to

2001

and

serves

as

a

director

of

Hess

Midstream

LP

(2017-present).

Mr.

Niemiec

was

formerly

a

director

of

Emeritus

Corporation

from

1999

to

2010

and

OSI

Pharmaceuticals,

Inc.

from

2006

to

2010,

Managing

Director

of

SBC

Warburg

Dillon

Read

from

1997

to

1998,

and

was

Vice

Chairman

from

1991

to

1997

and

Chief

Financial

Officer

from

1982

to

1997

of

Dillon,

Read

&

Co.

Inc.

As

a

result

of

such

background

and

experience,

the

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

have

each

acquired

an

understanding

of

generally

accepted

accounting

principles

and

financial

statements,

the

general

application

of

such

principles

in

connection

with

the

accounting

estimates,

accruals

and

reserves,

and

analyzing

and

evaluating

financial

statements

that

present

a

breadth

and

level

of

complexity

of

accounting

issues

generally

comparable

to

those

of

the

Fund,

as

well

as

an

understanding

of

internal

controls

and

procedures

for

financial

reporting

and

an

understanding

of

audit

committee

functions.

Ms.

Bates

and

Mr.

Niemiec

are

independent

Board

members

as

that

term

is

defined

under

the

applicable

U.S.

Securities

and

Exchange

Commission

Rules

and

Releases.

The

Statement

of

Additional

Information

(SAI)

includes

additional

information

about

the

board

members

and

is

available,

without

charge,

upon

request.

Shareholders

may

call

(800)

DIAL

BEN/342-5236

to

request

the

SAI.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

Shareholder

Information

48

franklintempleton.com

Annual

Report

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,

or

receive

notice

of

the

availability

of,

the

Fund’s

financial

reports

every

six

months.

In

addition,

you

will

receive

an

annual

updated

summary

prospectus

(detail

prospectus

available

upon

request).

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reduce

Fund

expenses,

we

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to

identify

related

shareholders

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Annual

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and

Shareholder

Letter

Franklin

Mutual

Global

Discovery

Fund

Investment

Manager

Distributor

Shareholder

Services

Franklin

Mutual

Advisers,

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ANNUAL

REPORT

AND

SHAREHOLDER

LETTER

Franklin

Mutual

Quest

Fund

A

Series

of

Franklin

Mutual

Series

Funds

December

31,

2021

Sign

up

for

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delivery

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franklintempleton.com

Annual

Report

1

SHAREHOLDER

LETTER

Dear

Franklin

Mutual

Quest

Fund

Shareholder:

After

a

difficult

period

of

lockdowns,

anxiety

and

grief,

the

start

of

2021

brought

much

needed

optimism.

Prior

to

the

start

of

the

period,

authorities

in

the

United

States

and

Europe

approved

the

first

vaccines

for

emergency

use.

The

U.S.

also

passed

an

additional

stimulus

package,

delivering

financial

assistance

to

many

people

in

need.

Ten-year

U.S.

Treasury

yields

rose

as

investors

began

to

anticipate

a

possible

economic

recovery.

This

economic

optimism

sparked

a

rotation

out

of

growth

stocks

and

into

value

stocks

over

the

first

half

of

the

year.

The

rotation

into

many

“reopening”

names

meant

companies

which

had

benefited

from

consumer

behavior

shifts

during

the

lockdown,

such

as

online

payment

processors,

online

retailers,

and

remote

worker

infrastructure

providers,

fell

out

of

favor.

Instead,

companies

positioned

to

benefit

from

economic

reopening,

such

as

hotels,

casinos,

restaurants,

and

other

leisure

companies,

received

a

boost.

Smaller

capitalization

companies,

which

tend

to

be

more

sensitive

to

the

economic

cycle,

outperformed

their

larger

capitalization

counterparts

during

the

first

half

of

the

period.

The

new

Biden

administration,

and

its

focus

on

overhauling

America’s

infrastructure,

also

supported

a

rally

in

building

products

companies

and

other

potential

beneficiaries

of

greater

stimulus

spending.

The

U.S.

government

successfully

passed

another

stimulus

bill

in

March

2021.

By

the

late

spring

of

2021,

massive

amounts

of

fiscal

and

monetary

stimulus,

combined

with

increased

consumer

spending

and

supply

chain

difficulties,

led

to

building

inflationary

pressure

and

rising

interest

rates.

While

this

propelled

some

areas

of

the

market

upward,

such

as

the

financials

and

energy

sectors,

growing

investor

concern

about

rising

interest

rates

stoked

pockets

of

volatility.

Furthermore,

differences

in

regional

vaccination

rates

constrained

a

widespread

economic

reopening

as

the

highly

contagious

COVID-19

Delta

variant

forced

some

countries

to

reinstate

business

and

travel

restrictions.

The

reopening

trade

stalled,

and

growth

stocks

once

again

generally

outperformed

value

stocks

during

much

of

the

late

summer

and

fall.

Volatility

increased

in

September

2021

and

markets

fell

over

the

final

weeks

of

the

third

calendar

quarter,

as

continued

supply

chain

disruptions,

inflationary

pressures

and

hawkish

central

bank

commentary

stoked

investor

anxiety.

Markets

stabilized

and

rebounded

in

October

with

some

indices

reaching

new

records.

However,

high

volatility

crept

in

again

in

late

November

as

the

COVID-19

Omicron

variant

emerged,

but

it

was

short

lived.

At

year-end,

both

growth

and

value

returns

for

the

12-month

period

were

strong,

as

the

two

styles

ended

the

year

with

comparable

results.

Not

all

progress

is

evidenced

by

a

steady

march

forward.

Ongoing

uncertainties

surrounding

COVID-19,

supply

chain

disruptions

and

inflation

continued

to

affect

financial

markets.

As

these

elements

influence

investor

behavior,

pockets

of

volatility

may

continue

to

crop

up.

However,

market

volatility

can

often

present

opportunities.

As

an

organization,

Franklin

Mutual

Series

remains

dedicated

to

using

fundamental

research,

coupled

with

a

long-term

approach,

to

identify

attractively

valued

companies

that

can

offer

both

meaningful

upside

potential

and

a

degree

of

downside

protection

in

periods

of

financial

market

turbulence.

On

the

following

pages,

the

portfolio

management

team

reviews

investment

decisions

made

during

the

past

12

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,

Christian

Correa,

CFA

President

and

Chief

Investment

Officer

Franklin

Mutual

Advisers,

LLC

This

letter

reflects

our

analysis

and

opinions

as

of

December

31,

2021,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

franklintempleton.com

Annual

Report

2

Contents

Annual

Report

Franklin

Mutual

Quest

Fund

3

Performance

Summary

7

Your

Fund’s

Expenses

10

Financial

Highlights

and

Statement

of

Investments

11

Financial

Statements

23

Notes

to

Financial

Statements

28

Report

of

Independent

Registered

Public

Accounting

Firm

44

Tax

Information

45

Board

Members

and

Officers

46

Shareholder

Information

51

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Annual

Report

ANNUAL

REPORT

Franklin

Mutual

Quest

Fund

This

annual

report

for

Franklin

Mutual

Quest

Fund

covers

the

fiscal

year

ended

December

31,

2021

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

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

and

participations

in

foreign

government

debt.

The

Geographic

Composition

table

on

this

page

lists

the

leading

countries

where

the

Fund

invests

Performance

Overview

The

Fund’s

Class

Z

shares

posted

a

+11.51%

cumulative

total

return

for

the

12

months

ended

December

31,

2021.

In

comparison,

the

Fund’s

new

primary

benchmark,

the

blended

70%

MSCI

World

Value

Index-NR

(USD)

+

30%

Bloomberg

U.S.

Corporate

High

Yield

Bond

Index

(Blended

Benchmark),

posted

a

+16.84%

cumulative

total

return.

1

Also

for

comparison,

the

Fund’s

secondary

and

former

primary

benchmark,

the

MSCI

World

Value

Index-NR

(USD),

which

measures

the

performance

of

stocks

exhibiting

overall

value

style

characteristics

in

global

developed

markets,

posted

a

+21.94%

cumulative

total

return.

2

Additionally,

the

Fund’s

third

and

former

secondary

benchmark,

the

Bloomberg

U.S.

Corporate

High

Yield

Bond

Index,

which

measures

the

performance

of

the

U.S.

dollar-denominated,

high-yield,

fixed-rate

corporate

bond

market,

defined

as

the

middle

or

lower

ratings

of

Moody’s,

Standard

&

Poor’s

and

Fitch

(Ba1/BB+/BB+

or

below),

posted

a

+5.28%

cumulative

total

return.

2

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-NR

(USD),

posted

a

+18.54%

total

return

for

the

12

months

ended

December

31,

2021.

2

Global

equities

benefited

from

monetary

and

fiscal

stimulus

measures,

easing

COVID-19

pandemic

restrictions

in

certain

regions

and

the

development

of

treatments

and

vaccines.

However,

the

Chinese

government’s

imposition

of

additional

restrictions

on

some

businesses

pressured

Asian

and

global

emerging

market

stocks.

Additionally,

the

spread

of

the

Delta

and

Omicron

variants

and

higher

inflation

in

an

environment

of

persistent

supply-chain

disruptions

and

wage

increases

hindered

global

equities

at

certain

points

during

the

12-month

period.

In

the

U.S.,

the

economy

continued

to

recover

and

equities

rallied

amid

monetary

and

fiscal

stimulus

measures

and

the

continued

progress

of

vaccination

programs.

Gross

domestic

product

(GDP)

growth

was

generally

robust,

as

the

lifting

of

many

COVID-19

restrictions

and

strong

consumer

spending

supported

the

economy.

A

rebound

in

corporate

earnings

and

the

passage

of

a

bipartisan

infrastructure

bill

further

bolstered

investor

sentiment.

In

an

effort

to

support

the

Geographic

Composition

12/31/21

%

of

Total

Net

Assets

United

States

48.0%

United

Kingdom

16.6%

Netherlands

5.1%

Switzerland

4.5%

Germany

3.3%

Israel

3.1%

France

2.1%

Other

2.0%

Short-Term

Investments

&

Other

Net

Assets

15.3%

1.

Source:

FactSet.

The

Blended

Benchmark

was

calculated

internally.

2.

Source:

Morningstar.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

16

.

Franklin

Mutual

Quest

Fund

4

franklintempleton.com

Annual

Report

economy,

the

U.S.

Federal

Reserve

(Fed)

kept

the

federal

funds

target

rate

at

a

record-low

range

of

0.00%–0.25%.

While

the

Fed

also

maintained

quantitative

easing

measures

with

U.S.

Treasury

and

mortgage

bond

purchasing,

it

began

to

reduce

the

rate

of

purchases

beginning

in

November

2021

and

accelerated

the

pace

of

tapering

in

December.

The

Fed

also

noted

that

it

expected

easing

supply

constraints

to

help

reduce

inflationary

pressures

and

that

further

employment

progress

was

needed

before

the

Fed

would

consider

raising

the

range

for

the

federal

funds

target

rate.

The

economic

recovery

in

the

eurozone

was

slow,

as

quarter-over-quarter

GDP

growth

contracted

in

2021’s

first

quarter

before

returning

to

growth

in

2021’s

second

and

third

quarters.

GDP

growth

rates

were

initially

sluggish

among

the

region’s

largest

economies,

although

most

showed

signs

of

improvement

later

in

the

12-month

period.

Business

activity

growth

also

helped

European

developed

market

equities,

as

measured

by

the

MSCI

Europe

Index-NR

(USD),

to

post

a

+16.30%

total

return

for

the

12

months

under

review.

2

However,

in

November

2021,

the

annual

inflation

rate

in

the

eurozone

reached

the

highest

level

since

the

introduction

of

the

euro,

and

the

prospect

of

energy

shortages

during

the

winter

months

tempered

investor

optimism.

Asian

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

All

Country

Asia

Index-NR

(USD),

posted

a

-2.49%

total

return

for

the

12-month

period.

2

While

many

Asian

countries

experienced

improving

economic

conditions,

Japan’s

quarter-over-quarter

GDP

contracted

in

2021’s

third

quarter.

China’s

economic

recovery

continued,

although

the

country’s

quarter-over-quarter

GDP

growth

in

2021’s

first

three

quarters

was

slower

than

in

2020’s

second

half,

pressured

by

higher

commodity

prices.

Unexpected

regulatory

changes

by

the

Chinese

government,

which

negatively

impacted

education-

and

technology-related

businesses,

and

concerns

about

a

large

Chinese

property

developer’s

solvency

and

several

smaller

developer

defaults

pressured

Asian

stocks

during

2021’s

fourth

quarter.

Global

emerging

market

stocks,

as

measured

by

the

MSCI

Emerging

Markets

Index-NR

(USD),

posted

a

-2.54%

total

return

for

the

12

months

under

review.

2

Higher

inflation

led

many

central

banks

in

emerging

market

countries

to

raise

interest

rates,

which

dampened

economic

growth.

The

Omicron

variant

of

COVID-19

also

negatively

impacted

global

emerging

markets,

as

some

countries

reimplemented

restrictions

in

an

effort

to

counter

rising

infections.

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

and

debt

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

Top

10

Industries

12/31/21

%

of

Total

Net

Assets

a

Insurance

13.6%

Pharmaceuticals

11.2%

Diversified

Telecommunication

Services

8.8%

Tobacco

8.2%

Oil,

Gas

&

Consumable

Fuels

5.9%

Software

5.2%

IT

Services

4.5%

Aerospace

&

Defense

3.6%

Diversified

Financial

Services

3.3%

Specialty

Retail

2.6%

Franklin

Mutual

Quest

Fund

5

franklintempleton.com

Annual

Report

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

During

2021,

the

Fund

underperformed

its

benchmark,

as

stock

selection

in

information

technology

(IT),

financials

and

industrials

detracted

from

relative

results.

Conversely,

security

selection

in

communication

services,

stock

selection

and

an

underweight

in

utilities,

and

an

overweight

in

consumer

staples

bolstered

relative

results.

During

the

12-month

period,

investments

that

detracted

from

Fund

performance

included

Check

Point

Software

Technologies,

G4S

and

Global

Payments.

Check

Point

Software

Technologies

is

listed

among

the

Fund’s

largest

positions

in

the

Top

10

Holdings

table

on

this

page.

IT

security

company

Check

Point

Software

Technologies

detracted

from

relative

results

during

the

year.

After

a

profit

warning

early

in

the

year,

recent

results

have

been

more

upbeat,

and

the

company

has

been

positive

about

momentum

in

areas

like

cloud

security

and

end-user

access

security

that

can

help

its

long-term

growth

outlook.

Security

services

company

G4S

weighed

on

portfolio

returns

during

the

period.

Prior

to

the

start

of

2021,

G4S

was

the

takeover

target

of

two

companies.

In

mid-February,

the

two

potential

acquirers

announced

they

would

not

be

increasing

their

respective

bids,

and

the

price

of

the

stock

fell

as

the

market

had

anticipated

a

bidding

war.

We

exited

the

position

after

the

deal

gained

regulatory

approval

and

closed.

Payments

firm

Global

Payments

was

a

relative

detractor

during

the

period.

The

stock

has

been

under

pressure

as

concerns

remain

over

potential

market

share

losses

to

the

modern

age

FinTech

players

and

a

slew

of

new

listings

lead

to

a

rotation

of

capital

in

the

space.

Nonetheless,

we

see

opportunity

for

Global

Payments

over

the

longer

term,

as

we

believe

it

is

well-positioned

to

benefit

from

the

continued

shift

from

cash

to

electronic

payments

and

has

good

exposure

to

the

high-yielding

smaller-

and

medium-sized

merchants.

Top

positive

contributors

to

performance

during

the

12-month

period

included

Frontier

Communications

Holdings,

Clear

Channel

Outdoor

Holdings

and

Hartford

Financial

Services

Group.

Frontier

Communications

Holdings,

a

telecommunications

firm,

contributed

to

relative

returns

after

the

company

emerged

from

Chapter

11

bankruptcy

during

the

year.

The

company

is

planning

to

replace

its

old

copper

network

with

a

fiber

network

that

it

expects

to

help

it

become

more

competitive

and

can

help

the

shares

re-rate

over

time.

Outdoor

advertising

company

Clear

Channel

Outdoor

Holdings

contributed

to

relative

returns

during

the

year

as

the

end

of

strict

government

lockdowns

in

the

United

States

and

Europe

generated

greater

optimism

about

advertising

spending

after

the

sharp

drop

off

in

early

2020.

We

believe

that

the

outdoor

advertising

market

should

see

robust

long-

term

growth

as

the

medium

still

offers

one

of

the

most

cost-

effective

ways

for

advertisers

to

garner

mass

views.

Hartford

Financial

Services

Group

was

a

relative

contributor,

amid

a

positive

environment

for

financial

stocks

in

general

and

following

robust

earnings

updates. The

company

saw strong

performance across

its

business

in

recent

quarters

after

a

takeover

approach

by

a

competitor.

Events

Top

10

Holdings

12/31/21

Company

Industry,

Country

%

of

Total

Net

Assets

a

aa

Sorenson

Communications

LLC,

Membership

Interests

5.2%

Diversified

Telecommunication

Services

Xilinx,

Inc.

4.3%

Semiconductors

&

Semiconductor

Equipment

British

American

Tobacco

plc

3.5%

Tobacco,

United

Kingdom

Novartis

AG

3.3%

Pharmaceuticals,

Switzerland

GlaxoSmithKline

plc

3.2%

Pharmaceuticals,

United

Kingdom

Check

Point

Software

Technologies

Ltd.

3.1%

Software,

Israel

Everest

Re

Group

Ltd.

2.9%

Insurance

Voya

Financial,

Inc.

2.8%

Diversified

Financial

Services

Willis

Towers

Watson

plc

2.8%

Insurance

Imperial

Brands

plc

2.5%

Tobacco,

United

Kingdom

Franklin

Mutual

Quest

Fund

6

franklintempleton.com

Annual

Report

like

Hurricane

Ida

and charges

related

to

a

legal

settlement

impacted

earnings,

but

we

believe

risk

management

initiatives

from

reinsurance

should

blunt

the

impact.

During

the

period,

the

Fund

held

currency

forwards

and

futures,

seeking

to

substantially

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

the

U.S.

dollar

rose

against

most

currencies

during

the

period.

As

fellow

shareholders,

we

found

recent

relative

performance

disappointing,

but

our

strategy

of

seeking

undervalued

stocks

and

focus

on

special

situation

investments,

including

distressed

investments

and

merger

arbitrage,

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.

Keith

Luh,

CFA

Lead

Portfolio

Manager

Andrew

B.

Dinnhaupt,

CFA

Portfolio

Manager

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

December

31,

2021,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

Performance

Summary

as

of

December

31,

2021

Franklin

Mutual

Quest

Fund

7

franklintempleton.com

Annual

Report

The

performance

table

and

graphs

do

not

reflect

any

taxes

that

a

shareholder

would

pay

on

Fund

dividends,

capital

gain

distributions,

if

any,

or

any

realized

gains

on

the

sale

of

Fund

shares.

Total

return

reflects

reinvestment

of

the

Fund’s

dividends

and

capital

gain

distributions,

if

any,

and

any

unrealized

gains

or

losses.

Your

dividend

income

will

vary

depending

on

dividends

or

interest

paid

by

securities

in

the

Fund’s

portfolio,

adjusted

for

operating

expenses

of

each

class.

Capital

gain

distributions

are

net

profits

realized

from

the

sale

of

portfolio

securities.

Performance

as

of

12/31/21

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A:

5.50%

maximum

initial

sales

charge;

For

other

share

classes,

visit

franklintempleton.com

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

1

Average

Annual

Total

Return

2

–

Z

1-Year

+11.51%

+11.51%

5-Year

+22.54%

+4.15%

10-Year

+97.37%

+7.04%

A

3

1-Year

+11.26%

+5.16%

5-Year

+21.00%

+2.72%

10-Year

+92.12%

+6.14%

See

page

9

for

Performance

Summary

footnotes.

Franklin

Mutual

Quest

Fund

Performance

Summary

8

franklintempleton.com

Annual

Report

See

page

9

for

Performance

Summary

footnotes.

Total

Return

Index

Comparison

for

a

Hypothetical

$10,000

Investment

Total

return

represents

the

change

in

value

of

an

investment

over

the

periods

shown.

It

includes

any

applicable

maximum

sales

charge,

Fund

expenses,

account

fees

and

reinvested

distributions.

The

unmanaged

indexes

include

reinvestment

of

any

income

or

distributions.

They

differ

from

the

Fund

in

composition

and

do

not

pay

management

fees

or

expenses.

One

cannot

invest

directly

in

an

index.

Class

Z

(

1/1/12–12/31/21)

Class

A

(1/1/12–12/31/21)

Franklin

Mutual

Quest

Fund

Performance

Summary

9

franklintempleton.com

Annual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

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.

Events

such

as

the

spread

of

deadly

diseases,

disasters,

and

financial,

political

or

social

disruptions,

may

heighten

risks

and

adversely

affect

performance.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

2.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

3.

Prior

to

9/10/18,

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

4.

Source:

FactSet.

The

Blended

Benchmark

(70%

MSCI

World

Value

Index-NR

(USD)

+

30%

Bloomberg

U.S.

Corporate

High

Yield

Bond

Index)

is

a

combination

of

leading

global

stock

and

U.S.

high-yield

bond

indexes.

The

MSCI

World

Value

Index-NR

(USD)

is

a

free

float-adjusted,

market

capitalization-weighted

index

designed

to

measure

the

performance

of

stocks

exhibiting

overall

value

style

characteristics

in

global

developed

markets.

The

Bloomberg

U.S.

Corporate

High

Yield

Bond

Index

measures

the

perfor-

mance

of

the

U.S.

dollar-denominated,

high-yield,

fixed-rate

corporate

bond

market.

Securities

are

classified

as

high

yield

if

the

middle

rating

of

Moody’s,

S&P

and

Fitch

(Ba1/

BB+/BB+)

or

below.

Bonds

from

issuers

with

an

emerging

markets

(EM)

country

of

risk,

based

on

Bloomberg

EM

country

definition,

are

excluded.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

5.

Source:

Morningstar.

The

MSCI

World

Value

Index-NR

(USD)

is

a

free

float-adjusted,

market

capitalization-weighted

index

designed

to

measure

the

performance

of

stocks

exhibiting

overall

value

style

characteristics

in

global

developed

markets.

The

Bloomberg

U.S.

Corporate

High

Yield

Bond

Index

measures

the

performance

of

the

U.S.

dollar-denominated,

high-yield,

fixed-rate

corporate

bond

market.

Securities

are

classified

as

high

yield

if

the

middle

rating

of

Moody’s,

S&P

and

Fitch

(Ba1/BB+/BB+)

or

below.

Bonds

from

issuers

with

an

emerging

markets

(EM)

country

of

risk,

based

on

Bloomberg

EM

country

definition,

are

excluded.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

6.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Distributions

(1/1/21–12/31/21)

Share

Class

Net

Investment

Income

Z

$0.3748

A

$0.3377

C

$0.1921

R

$0.3061

R6

$0.3831

Total

Annual

Operating

Expenses

6

Share

Class

Z

0.81%

A

1.06%

Your

Fund’s

Expenses

Franklin

Mutual

Quest

Fund

10

franklintempleton.com

Annual

Report

As

a

Fund

shareholder,

you

can

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

(loads)

on

Fund

purchases

and

redemptions;

and

(2)

ongoing

Fund

costs,

including

management

fees,

distribution

and

service

(12b-1)

fees,

and

other

Fund

expenses.

All

mutual

funds

have

ongoing

costs,

sometimes

referred

to

as

operating

expenses.

The

table

below

shows

ongoing

costs

of

investing

in

the

Fund

and

can

help

you

understand

these

costs

and

compare

them

with

those

of

other

mutual

funds.

The

table

assumes

a

$1,000

investment

held

for

the

six

months

indicated.

Actual

Fund

Expenses

The

table

below

provides

information

about

actual

account

values

and

actual

expenses

in

the

columns

under

the

heading

“Actual.”

In

these

columns

the

Fund’s

actual

return,

which

includes

the

effect

of

Fund

expenses,

is

used

to

calculate

the

“Ending

Account

Value”

for

each

class

of

shares.

You

can

estimate

the

expenses

you

paid

during

the

period

by

following

these

steps

(

of

course,

your

account

value

and

expenses

will

differ

from

those

in

this

illustration

):

Divide

your

account

value

by

$1,000

(

if

your

account

had

an

$8,600

value,

then

$8,600

÷

$1,000

=

8.6

).

Then

multiply

the

result

by

the

number

in

the

row

for

your

class

of

shares

under

the

headings

“Actual”

and

“Expenses

Paid

During

Period”

(

if

Actual

Expenses

Paid

During

Period

were

$7.50,

then

8.6

x

$7.50

=

$64.50

).

In

this

illustration,

the

actual

expenses

paid

this

period

are

$64.50.

Hypothetical

Example

for

Comparison

with

Other

Funds

Under

the

heading

“Hypothetical”

in

the

table,

information

is

provided

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

This

information

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period,

but

it

can

help

you

compare

ongoing

costs

of

investing

in

the

Fund

with

those

of

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

for

the

class

of

shares

you

hold

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

other

funds.

Please

note

that

expenses

shown

in

the

table

are

meant

to

highlight

ongoing

costs

and

do

not

reflect

any

transactional

costs.

Therefore,

information

under

the

heading

“Hypothetical”

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

compare

total

costs

of

owning

different

funds.

In

addition,

if

transactional

costs

were

included,

your

total

costs

would

have

been

higher.

1.

Expenses

are

equal

to

the

annualized

expense

ratio

for

the

six-month

period

as

indicated

above—in

the

far

right

column—multiplied

by

the

simple

average

account

value

over

the

period

indicated,

and

then

multiplied

by

184/365

to

reflect

the

one-half

year

period.

2.

Reflects

expenses

after

fee

waivers

and

expense

reimbursements.

Does

not

include

acquired

fund

fees

and

expenses.

Actual

(actual

return

after

expenses)

Hypothetical

(5%

annual

return

before

expenses)

Share

Class

Beginning

Account

Value

7/1/21

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

Ending

Account

Value

12/31/21

Expenses

Paid

During

Period

7/1/21–12/31/21

1,2

a

Net

Annualized

Expense

Ratio

2

Z

$1,000

$1,021.20

$4.44

$1,020.81

$4.44

0.87%

A

$1,000

$1,022.00

$5.71

$1,019.55

$5.71

1.12%

C

$1,000

$1,018.10

$9.50

$1,015.79

$9.49

1.87%

R

$1,000

$1,020.90

$6.99

$1,018.29

$6.98

1.37%

R6

$1,000

$1,024.20

$4.15

$1,021.11

$4.14

0.81%

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Quest

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

11

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

Z

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$13.31

$14.06

$12.95

$15.83

$15.52

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.23

0.40

c

0.45

0.48

0.58

Net

realized

and

unrealized

gains

(losses)

...........

1.29

(0.66)

1.16

(1.58)

0.49

Total

from

investment

operations

....................

1.52

(0.26)

1.61

(1.10)

1.07

Less

distributions

from:

Net

investment

income

..........................

(0.37)

(0.49)

(0.50)

(0.58)

(0.63)

Net

realized

gains

.............................

—

—

—

(1.20)

(0.13)

Total

distributions

...............................

(0.37)

(0.49)

(0.50)

(1.78)

(1.78)

Net

asset

value,

end

of

year

.......................

$14.46

$13.31

$14.06

$12.95

$15.83

Total

return

....................................

11.51%

(1.83)%

12.40%

(6.85)%

6.92%

Ratios

to

average

net

assets

Expenses

d,e

....................................

0.87%

f

0.81%

f

0.78%

0.78%

0.79%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.06%

0.02%

0.02%

—%

g

—%

Net

investment

income

...........................

1.59%

3.22%

c

3.22%

2.96%

3.65%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$2,397,948

$2,472,118

$3,042,387

$3,054,792

$3,667,351

Portfolio

turnover

rate

............................

66.95%

52.07%

60.96%

115.52%

32.90%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

2.32%.

d

Includes

dividends

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).

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

g

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$13.09

$13.84

$12.75

$15.60

$15.32

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.19

0.37

c

0.41

0.43

0.53

Net

realized

and

unrealized

gains

(losses)

...........

1.28

(0.67)

1.14

(1.54)

0.46

Total

from

investment

operations

....................

1.47

(0.30)

1.55

(1.11)

0.99

Less

distributions

from:

Net

investment

income

..........................

(0.34)

(0.45)

(0.46)

(0.54)

(0.58)

Net

realized

gains

.............................

—

—

—

(1.20)

(0.13)

Total

distributions

...............................

(0.34)

(0.45)

(0.46)

(1.74)

(0.71)

Net

asset

value,

end

of

year

.......................

$14.22

$13.09

$13.84

$12.75

$15.60

Total

return

d

...................................

11.26%

(2.12)%

12.14%

(7.00)%

6.54%

Ratios

to

average

net

assets

Expenses

e,f

....................................

1.12%

g

1.06%

g

1.03%

1.03%

1.04%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.06%

0.02%

0.02%

—%

h

—%

Net

investment

income

...........................

1.34%

2.98%

c

2.97%

2.71%

3.40%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$723,791

$760,173

$1,035,699

$1,067,382

$1,153,870

Portfolio

turnover

rate

............................

66.95%

52.07%

60.96%

115.52%

32.90%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

2.08%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Includes

dividends

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).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

13

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$13.01

$13.73

$12.64

$15.35

$15.06

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.08

0.27

c

0.30

0.29

0.41

Net

realized

and

unrealized

gains

(losses)

...........

1.27

(0.66)

1.12

(1.49)

0.47

Total

from

investment

operations

....................

1.35

(0.39)

1.42

(1.20)

0.88

Less

distributions

from:

Net

investment

income

..........................

(0.19)

(0.33)

(0.33)

(0.31)

(0.46)

Net

realized

gains

.............................

—

—

—

(1.20)

(0.13)

Total

distributions

...............................

(0.19)

(0.33)

(0.33)

(1.51)

(0.59)

Net

asset

value,

end

of

year

.......................

$14.17

$13.01

$13.73

$12.64

$15.35

Total

return

d

...................................

10.42%

(2.83)%

11.26%

(7.77)%

5.89%

Ratios

to

average

net

assets

Expenses

e,f

....................................

1.87%

g

1.81%

g

1.78%

1.78%

1.79%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.06%

0.02%

0.02%

—%

h

—%

Net

investment

income

...........................

0.55%

2.24%

c

2.22%

1.96%

2.65%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$44,228

$65,715

$112,751

$141,619

$309,160

Portfolio

turnover

rate

............................

66.95%

52.07%

60.96%

115.52%

32.90%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.34%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Includes

dividends

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).

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

g

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

h

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$12.87

$13.61

$12.54

$15.40

$15.14

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.15

0.33

c

0.37

0.39

0.50

Net

realized

and

unrealized

gains

(losses)

...........

1.27

(0.66)

1.12

(1.53)

0.46

Total

from

investment

operations

....................

1.42

(0.33)

1.49

(1.14)

0.96

Less

distributions

from:

Net

investment

income

..........................

(0.31)

(0.41)

(0.42)

(0.52)

(0.57)

Net

realized

gains

.............................

—

—

—

(1.20)

(0.13)

Total

distributions

...............................

(0.31)

(0.41)

(0.42)

(1.72)

(0.70)

Net

asset

value,

end

of

year

.......................

$13.98

$12.87

$13.61

$12.54

$15.40

Total

return

....................................

11.05%

(2.38)%

11.88%

(7.31)%

6.38%

Ratios

to

average

net

assets

Expenses

d,e

....................................

1.37%

f

1.31%

f

1.28%

1.28%

1.29%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.06%

0.02%

0.02%

—%

g

—%

Net

investment

income

...........................

1.10%

2.72%

c

2.72%

2.46%

3.15%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$2,643

$2,495

$3,415

$2,929

$1,774

Portfolio

turnover

rate

............................

66.95%

52.07%

60.96%

115.52%

32.90%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.82%.

d

Includes

dividends

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).

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

g

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Financial

Highlights

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

15

a

Year

Ended

December

31,

2021

2020

2019

2018

2017

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

...................

$13.29

$14.05

$12.94

$15.81

$15.51

Income

from

investment

operations

a

:

Net

investment

income

b

.........................

0.23

0.41

c

0.46

0.49

0.64

Net

realized

and

unrealized

gains

(losses)

...........

1.31

(0.68)

1.15

(1.57)

0.43

Total

from

investment

operations

....................

1.54

(0.27)

1.61

(1.08)

1.07

Less

distributions

from:

Net

investment

income

..........................

(0.38)

(0.49)

(0.50)

(0.59)

(0.64)

Net

realized

gains

.............................

—

—

—

(1.20)

(0.13)

Total

distributions

...............................

(0.38)

(0.49)

(0.50)

(1.79)

(0.77)

Net

asset

value,

end

of

year

.......................

$14.45

$13.29

$14.05

$12.94

$15.81

Total

return

....................................

11.67%

(1.79)%

12.40%

(6.73)%

6.94%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

d

.....

0.87%

0.79%

0.74%

0.74%

0.72%

Expenses

net

of

waiver

and

payments

by

affiliates

d,e

.....

0.82%

0.75%

0.72%

0.72%

0.72%

Expenses

-

incurred

in

connection

with

securities

sold

short

0.06%

0.02%

0.02%

—%

f

—%

Net

investment

income

...........................

1.63%

3.28%

c

3.28%

3.02%

3.72%

Supplemental

data

Net

assets,

end

of

year

(000’s)

.....................

$39,292

$47,970

$107,723

$116,012

$123,863

Portfolio

turnover

rate

............................

66.95%

52.07%

60.96%

115.52%

32.90%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.11

per

share

related

to

income

received

in

the

form

of

special

dividends

and

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

2.38%.

d

Includes

dividends

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).

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Rounds

to

less

than

0.01%.

Franklin

Mutual

Series

Funds

Statement

of

Investments,

December

31,

2021

Franklin

Mutual

Quest

Fund

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

85.7%

Aerospace

&

Defense

3.6%

a

Airbus

SE

...........................................

France

189,371

$

24,209,703

BAE

Systems

plc

.....................................

United

Kingdom

3,919,425

29,204,180

Huntington

Ingalls

Industries,

Inc.

.........................

United

States

329,450

61,521,493

114,935,376

Auto

Components

0.0%

†

a,b,c

International

Automotive

Components

Group

Brazil

LLC

........

Brazil

2,548,299

96,476

Banks

1.6%

BNP

Paribas

SA

......................................

France

147,068

10,160,399

CaixaBank

SA

........................................

Spain

5,789,256

15,801,670

Wells

Fargo

&

Co.

.....................................

United

States

544,949

26,146,653

52,108,722

Beverages

1.2%

Heineken

NV

........................................

Netherlands

344,814

38,774,609

Chemicals

1.6%

BASF

SE

...........................................

Germany

149,763

10,502,863

d

Covestro

AG,

144A,

Reg

S

..............................

Germany

654,493

40,250,920

50,753,783

Commercial

Services

&

Supplies

0.3%

a

Stericycle,

Inc.

.......................................

United

States

138,519

8,261,273

Diversified

Financial

Services

3.3%

M&G

plc

............................................

United

Kingdom

6,099,665

16,488,113

Voya

Financial,

Inc.

....................................

United

States

1,360,348

90,204,676

106,692,789

Diversified

Telecommunication

Services

8.1%

Deutsche

Telekom

AG

..................................

Germany

2,957,039

54,595,506

a

Frontier

Communications

Parent,

Inc.

......................

United

States

309,203

9,118,397

a,b,c,e

Sorenson

Communications

LLC,

Membership

Interests

.........

United

States

224,279

168,209,173

a,b,c

Windstream

Holdings,

Inc.

...............................

United

States

1,623,438

28,576,119

260,499,195

Electric

Utilities

0.9%

f

Entergy

Corp.

........................................

United

States

103,152

11,620,073

Evergy

,

Inc.

..........................................

United

States

243,171

16,683,962

28,304,035

Electronic

Equipment,

Instruments

&

Components

0.6%

a

Flex

Ltd.

............................................

United

States

1,095,712

20,084,401

Entertainment

1.0%

a,f

Walt

Disney

Co.

(The)

..................................

United

States

195,298

30,249,707

Equity

Real

Estate

Investment

Trusts

(REITs)

0.9%

Uniti

Group,

Inc.

......................................

United

States

459,880

6,442,919

Vornado

Realty

Trust

...................................

United

States

545,055

22,816,002

29,258,921

Food

Products

1.0%

Danone

SA

..........................................

France

524,898

32,601,592

Health

Care

Equipment

&

Supplies

1.3%

Medtronic

plc

........................................

United

States

401,102

41,494,002

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

17

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Health

Care

Providers

&

Services

0.3%

Anthem,

Inc.

.........................................

United

States

18,500

$

8,575,490

Household

Products

1.6%

Reckitt

Benckiser

Group

plc

.............................

United

Kingdom

577,825

49,700,859

Insurance

14.6%

ASR

Nederland

NV

....................................

Netherlands

1,089,181

50,120,721

a

Brighthouse

Financial,

Inc.

..............................

United

States

225,284

11,669,711

China

Pacific

Insurance

Group

Co.

Ltd.,

H

...................

China

5,709,039

15,512,954

Conduit

Holdings

Ltd.

..................................

United

States

2,455,000

14,360,145

Direct

Line

Insurance

Group

plc

..........................

United

Kingdom

15,785,064

59,597,006

Everest

Re

Group

Ltd.

.................................

United

States

334,566

91,644,319

f

Hartford

Financial

Services

Group,

Inc.

(The)

................

United

States

1,100,626

75,987,219

NN

Group

NV

........................................

Netherlands

1,097,984

59,332,359

Willis

Towers

Watson

plc

................................

United

States

378,196

89,817,768

468,042,202

IT

Services

4.5%

Alliance

Data

Systems

Corp.

.............................

United

States

305,371

20,328,547

f

Cognizant

Technology

Solutions

Corp.,

A

....................

United

States

736,989

65,385,664

a

Fiserv,

Inc.

..........................................

United

States

86,269

8,953,860

Global

Payments,

Inc.

..................................

United

States

373,064

50,430,792

145,098,863

Media

1.9%

a

Charter

Communications,

Inc.,

A

..........................

United

States

18,819

12,269,423

a

Clear

Channel

Outdoor

Holdings,

Inc.

......................

United

States

7,615,460

25,207,173

Comcast

Corp.,

A

.....................................

United

States

364,466

18,343,574

a

Loyalty

Ventures,

Inc.

..................................

United

States

122,148

3,672,990

59,493,160

Oil,

Gas

&

Consumable

Fuels

4.4%

BP

plc

..............................................

United

Kingdom

11,228,588

50,270,195

Royal

Dutch

Shell

plc,

A

................................

Netherlands

704,604

15,400,909

f

Williams

Cos.,

Inc.

(The)

................................

United

States

2,890,319

75,263,907

140,935,011

Pharmaceuticals

11.2%

a

Elanco

Animal

Health,

Inc.

...............................

United

States

1,799,077

51,057,805

f

Eli

Lilly

&

Co.

........................................

United

States

74,917

20,693,574

GlaxoSmithKline

plc

...................................

United

Kingdom

4,704,705

102,351,164

f

Merck

&

Co.,

Inc.

.....................................

United

States

1,023,644

78,452,076

Novartis

AG,

ADR

.....................................

Switzerland

1,225,978

107,236,297

359,790,916

Professional

Services

0.6%

KBR,

Inc.

...........................................

United

States

429,100

20,433,742

Semiconductors

&

Semiconductor

Equipment

4.8%

a

Renesas

Electronics

Corp.

..............................

Japan

1,323,418

16,427,787

Xilinx,

Inc.

...........................................

United

States

648,300

137,459,049

153,886,836

Software

4.1%

d

Avast

plc,

144A,

Reg

S

.................................

United

States

64,739

531,642

a

Check

Point

Software

Technologies

Ltd.

....................

Israel

844,613

98,448,091

f

NortonLifeLock

,

Inc.

...................................

United

States

1,021,404

26,536,076

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

a

a

Country

Shares

a

Value

a

a

a

a

a

a

Common

Stocks

(continued)

Software

(continued)

Oracle

Corp.

.........................................

United

States

83,915

$

7,318,227

132,834,036

Specialty

Retail

1.2%

a

Dufry

AG

............................................

Switzerland

782,210

38,514,312

b,c,e

Wayne

Services

Legacy,

Inc.

.............................

United

States

7,104

—

38,514,312

Technology

Hardware,

Storage

&

Peripherals

1.0%

a,f

Western

Digital

Corp.

..................................

United

States

488,082

31,827,827

Tobacco

8.2%

Altria

Group,

Inc.

......................................

United

States

1,494,845

70,840,704

British

American

Tobacco

plc

.............................

United

Kingdom

3,030,835

112,448,679

Imperial

Brands

plc

....................................

United

Kingdom

3,675,409

80,480,394

263,769,777

Wireless

Telecommunication

Services

1.9%

a

T-Mobile

US,

Inc.

.....................................

United

States

245,609

28,485,732

Vodafone

Group

plc

...................................

United

Kingdom

21,517,736

32,384,467

60,870,199

Total

Common

Stocks

(Cost

$2,298,482,295)

....................................

2,747,888,111

Preferred

Stocks

0.1%

Oil,

Gas

&

Consumable

Fuels

0.1%

a

NGL

Energy

Partners

LP,

9%,

B

..........................

United

States

298,263

4,175,682

a

Total

Preferred

Stocks

(Cost

$4,244,791)

.......................................

4,175,682

Warrants

Warrants

0.1%

Diversified

Telecommunication

Services

0.1%

a,b,c

Windstream

Holdings,

Inc.,

9/21/55

........................

United

States

91,545

1,611,396

Media

0.0%

†

a

Lee

Enterprises,

Inc.,

12/31/22

...........................

United

States

1,110,000

802,266

a,b,c

Tenerity

,

Inc.,

4/10/24

..................................

United

States

48,381

183,988

986,254

Software

0.0%

†

a

Avaya

Holdings

Corp.,

12/15/22

..........................

United

States

235,873

660,444

Total

Warrants

(Cost

$9,242,827)

..............................................

3,258,094

Principal

Amount

*

Corporate

Bonds

3.3%

Airlines

0.1%

d

American

Airlines

Inc

/

AAdvantage

Loyalty

IP

Ltd.

,

Senior

Secured

Note,

144A,

5.5%,

4/20/26

................

United

States

3,180,945

3,312,732

Senior

Secured

Note,

144A,

5.75%,

4/20/29

...............

United

States

1,267,420

1,357,096

4,669,828

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

19

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

Corporate

Bonds

(continued)

Diversified

Telecommunication

Services

0.3%

Frontier

Communications

Holdings

LLC

,

Secured

Note

,

5.875

%

,

11/01/29

..........................................

United

States

9,628,717

$

9,642,245

Oil,

Gas

&

Consumable

Fuels

1.3%

d

Citgo

Holding,

Inc.

,

Senior

Secured

Note

,

144A,

9.25

%

,

8/01/24

..

United

States

40,476,000

40,723,511

Specialty

Retail

1.4%

d

Staples,

Inc.

,

Senior

Note

,

144A,

10.75

%

,

4/15/27

.............

United

States

48,058,000

45,344,645

Wireless

Telecommunication

Services

0.2%

d,g

Intelsat

Connect

Finance

SA

,

Senior

Note

,

144A,

9.5

%

,

2/15/23

..

Luxembourg

48,845,000

7,502,104

Total

Corporate

Bonds

(Cost

$134,840,474)

.....................................

107,882,333

h,i

Senior

Floating

Rate

Interests

1.4%

Diversified

Telecommunication

Services

0.3%

Intelsat

Jackson

Holdings

SA

,

Term

Loan,

B3

,

8

%

,

(

1-month

USD

LIBOR

+

4.75

%

),

11/27/23

.............................

Luxembourg

8,000,000

8,001,640

Software

1.1%

Banff

Guarantor,

Inc.

,

Second

Lien,

Initial

Term

Loan

,

6

%

,

(

3-month

USD

LIBOR

+

5.5

%

),

2/27/26

...........................

United

States

7,871,500

7,961,668

Boxer

Parent

Co.,

Inc.

,

2021

Replacement

Dollar

Term

Loan

,

3.974

%

,

(

3-month

USD

LIBOR

+

3.75

%

),

10/02/25

...........

United

States

7,478,360

7,440,968

Veritas

US,

Inc.

,

2021

Dollar

Term

Loan,

B

,

6

%

,

(

3-month

USD

LIBOR

+

5

%

),

9/01/25

................................

United

States

21,253,658

21,280,225

36,682,861

a

a

a

a

a

a

Total

Senior

Floating

Rate

Interests

(Cost

$44,368,613)

..........................

44,684,501

Asset-Backed

Securities

0.1%

Airlines

0.1%

American

Airlines

Pass-Through

Trust

,

2013-2

,

A

,

4.95

%

,

1/15/23

.

United

States

2,531,339

2,588,153

Total

Asset-Backed

Securities

(Cost

$2,493,369)

................................

2,588,153

Shares

a

Companies

in

Liquidation

0.0%

a,b,j

Bosgen

Liquidating

Trust

c/o

Verdolino

and

Lowey

P.C.,

Contingent

Distribution

........................................

Netherlands

159,828

—

a,b,j

Tribune

Media,

Litigation

Trust,

Contingent

Distribution

.........

United

States

1,531,470

—

a,b,j

Walter

Energy,

Inc.,

Litigation

Trust,

Contingent

Distribution

......

United

States

7,443,000

—

Total

Companies

in

Liquidation

(Cost

$–)

......................................

—

Total

Long

Term

Investments

(Cost

$2,493,672,369)

.............................

2,910,476,874

a

Short

Term

Investments

4.8%

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

4.8%

k

FHLB,

1/03/22

.......................................

United

States

26,100,000

26,100,000

k

U.S.

Treasury

Bills

,

1/06/22

...........................................

United

States

9,000,000

9,000,001

2/17/22

...........................................

United

States

50,000,000

49,998,437

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

Short

Term

Investments

(continued)

a

a

Country

Principal

Amount

*

a

Value

a

a

a

a

a

a

U.S.

Government

and

Agency

Securities

(continued)

k

U.S.

Treasury

Bills,

(continued)

4/28/22

...........................................

United

States

25,000,000

$

24,994,310

5/26/22

...........................................

United

States

20,000,000

19,992,929

6/23/22

...........................................

United

States

23,000,000

22,982,247

126,967,924

Total

U.S.

Government

and

Agency

Securities

(Cost

$153,069,840)

................

153,067,924

Total

Short

Term

Investments

(Cost

$153,069,840

)

...............................

153,067,924

a

Total

Investments

(Cost

$2,646,742,209)

95.5%

..................................

$3,063,544,798

Securities

Sold

Short

(6.0)%

..................................................

(193,301,692)

Other

Assets,

less

Liabilities

10.5%

............................................

337,659,131

Net

Assets

100.0%

...........................................................

$3,207,902,237

Shares

l

Securities

Sold

Short

(6.0)%

Common

Stocks

(6.0)%

Insurance

(1.0)%

Aon

plc,

A

...........................................

United

States

108,215

(32,525,100)

Semiconductors

&

Semiconductor

Equipment

(5.0)%

Advanced

Micro

Devices,

Inc.

............................

United

States

1,117,280

(160,776,592)

Total

Common

Stocks

(Proceeds

$127,127,293)

.................................

(193,301,692)

Total

Securities

Sold

Short

(Proceeds

$127,127,293)

.............................

$(193,301,692)

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

21

At

December

31,

2021,

the

Fund

had

the

following futures

contracts

outstanding.

See

Note

1(c). 

At

December

31,

2021,

the

Fund

had

the

following

forward

exchange

contracts

outstanding.

See

Note

1

(

c

). 

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

†

Rounds

to

less

than

0.1%

of

net

assets.

a

Non-income

producing.

b

Fair

valued

using

significant

unobservable

inputs.

See

Note

15

regarding

fair

value

measurements.

c

See

Note

11

regarding

restricted

securities.

d

Security

was

purchased

pursuant

to

Rule

144A

or

Regulation

S

under

the

Securities

Act

of

1933.

144A

securities

may

be

sold

in

transactions

exempt

from

registration

only

to

qualified

institutional

buyers

or

in

a

public

offering

registered

under

the

Securities

Act

of

1933.

Regulation

S

securities

cannot

be

sold

in

the

United

States

without

either

an

effective

registration

statement

filed

pursuant

to

the

Securities

Act

of

1933,

or

pursuant

to

an

exemption

from

registration.

At

December

31,

2021,

the

aggregate

value

of

these

securities

was

$139,022,650,

representing

4.3%

of

net

assets.

e

See

Note

13

regarding

holdings

of

5%

voting

securities.

f

A

portion

or

all

of

the

security

has

been

segregated

as

collateral

for

securities

sold

short.

At

December

31,

2021,

the

aggregate

value

of

these

securities

pledged

amounted

to

$243,869,338,

representing

7.6%

of

net

assets.

g

See

Note

8

regarding

credit

risk

and

defaulted

securities.

h

See

Note

1(f)

regarding

senior

floating

rate

interests.

i

The

coupon

rate

shown

represents

the

rate

at

period

end.

j

Contingent

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.

k

The

security

was

issued

on

a

discount

basis

with

no

stated

coupon

rate.

l

See

Note

1(d)

regarding

securities

sold

short.

Futures

Contracts

Description

Type

Number

of

Contracts

Notional

Amount

*

Expiration

Date

Value/

Unrealized

Appreciation

(Depreciation)

Foreign

exchange

contracts

Foreign

Exchange

EUR/USD

...................

Short

243

$

34,635,094

3/14/22

$

(184,673)

Foreign

Exchange

GBP/USD

...................

Short

735

62,158,031

3/14/22

(1,345,006)

Total

Futures

Contracts

......................................................................

$(1,529,679)

*

As

of

period

end.

Forward

Exchange

Contracts

Currency

Counter-

party

a

Type

Quantity

Contract

Amount

*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

British

Pound

......

BOFA

Buy

818,284

1,101,303

1/18/22

$

5,329

$

—

British

Pound

......

BOFA

Sell

154,801,273

213,514,945

1/18/22

4,191,245

(26,796)

British

Pound

......

HSBK

Buy

3,999,425

5,329,214

1/18/22

79,538

—

British

Pound

......

SSBT

Buy

7,163,294

9,613,789

1/18/22

73,723

—

British

Pound

......

SSBT

Sell

93,324,719

129,325,021

1/18/22

3,135,205

(20,880)

British

Pound

......

UBSW

Buy

18,484,433

24,923,769

1/18/22

74,251

—

British

Pound

......

UBSW

Sell

3,119,080

4,237,316

1/18/22

48,750

(29,621)

Euro

.............

BOFA

Sell

18,751,354

22,042,604

1/24/22

702,314

—

Euro

.............

HSBK

Sell

10,196,221

11,981,438

1/24/22

377,459

—

Euro

.............

UBSW

Sell

8,325,231

9,824,538

1/24/22

349,870

—

Euro

.............

BOFA

Sell

18,105,421

21,009,903

2/07/22

398,934

—

Euro

.............

HSBK

Sell

1,028,177

1,195,976

2/07/22

25,513

—

Euro

.............

SSBT

Sell

6,650,168

7,728,659

2/07/22

158,197

—

Euro

.............

BOFA

Sell

22,198,958

25,486,513

4/19/22

173,838

—

Euro

.............

HSBK

Sell

6,926,306

7,863,368

4/19/22

2,462

(36,912)

Euro

.............

SSBT

Sell

1,000,000

1,129,656

4/19/22

—

(10,608)

Franklin

Mutual

Series

Funds

Statement

of

Investments

Franklin

Mutual

Quest

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

See

Note 12 regarding

other

derivative

information.

Forward

Exchange

Contracts

(continued)

Currency

Counter-

party

a

Type

Quantity

Contract

Amount*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

(continued)

Euro

.............

UBSW

Sell

25,688,717

29,450,961

4/19/22

$

173,166

$

(14,126)

Total

Forward

Exchange

Contracts

...................................................

$9,969,794

$(138,943)

Net

unrealized

appreciation

(depreciation)

............................................

$9,830,851

*

In

U.S.

dollars

unless

otherwise

indicated.

a

May

be

comprised

of

multiple

contracts

with

the

same

counterparty,

currency

and

settlement

date.

See

Abbreviations

on

page

43

.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

December

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

23

Franklin

Mutual

Quest

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

...................................................................

$2,646,742,209

Cost

-

Non-controlled

affiliates

(Note

3

f

and

13

)

...................................................

—

Value

-

Unaffiliated

issuers

..................................................................

$2,895,335,625

Value

-

Non-controlled

affiliates

(Note

3

f

and

13

)

..................................................

168,209,173

Cash

....................................................................................

111,480,599

Receivables:

Investment

securities

sold

...................................................................

22,303,984

Capital

shares

sold

........................................................................

353,131

Dividends

and

interest

.....................................................................

12,747,326

European

Union

tax

reclaims

(Note

1

g

)

.........................................................

948,735

Deposits

with

brokers

for:

Securities

sold

short

.....................................................................

198,511,681

Futures

contracts

........................................................................

2,119,405

Unrealized

appreciation

on

OTC

forward

exchange

contracts

..........................................

9,969,794

Other

assets

..............................................................................

345,813

Total

assets

..........................................................................

3,422,325,266

Liabilities:

Payables:

Investment

securities

purchased

..............................................................

15,452,602

Capital

shares

redeemed

...................................................................

1,796,377

Management

fees

.........................................................................

1,821,631

Distribution

fees

..........................................................................

190,421

Transfer

agent

fees

........................................................................

273,897

Trustees'

fees

and

expenses

.................................................................

441,741

Variation

margin

on

futures

contracts

...........................................................

294,094

Securities

sold

short,

at

value

(proceeds

$127,127,293)

..............................................

193,301,692

Unrealized

depreciation

on

OTC

forward

exchange

contracts

..........................................

138,943

Accrued

expenses

and

other

liabilities

...........................................................

711,631

Total

liabilities

.........................................................................

214,423,029

Net

assets,

at

value

.................................................................

$3,207,902,237

Net

assets

consist

of:

Paid-in

capital

.............................................................................

$3,495,076,967

Total

distributable

earnings

(losses)

.............................................................

(287,174,730)

Net

assets,

at

value

.................................................................

$3,207,902,237

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

(continued)

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

24

Franklin

Mutual

Quest

Fund

Class

Z:

Net

assets,

at

value

.......................................................................

$2,397,948,187

Shares

outstanding

........................................................................

165,785,663

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$14.46

Class

A:

Net

assets,

at

value

.......................................................................

$723,791,368

Shares

outstanding

........................................................................

50,889,272

Net

asset

value

per

share

a

..................................................................

$14.22

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50%)

................................

$15.05

Class

C:

Net

assets,

at

value

.......................................................................

$44,227,773

Shares

outstanding

........................................................................

3,121,486

Net

asset

value

and

maximum

offering

price

per

share

a

.............................................

$14.17

Class

R:

Net

assets,

at

value

.......................................................................

$2,643,047

Shares

outstanding

........................................................................

189,109

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$13.98

Class

R6:

Net

assets,

at

value

.......................................................................

$39,291,862

Shares

outstanding

........................................................................

2,719,702

Net

asset

value

and

maximum

offering

price

per

share

.............................................

$14.45

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Operations

for

the

year

ended

December

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

25

Franklin

Mutual

Quest

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$1,743,887)

Unaffiliated

issuers

........................................................................

$68,821,576

Non-controlled

affiliates

(Note

3

f

and

13

)

........................................................

403,772

Interest:

Unaffiliated

issuers

........................................................................

11,468,089

Non-controlled

affiliates

(Note

3

f

a

nd

13

)

........................................................

125,250

Income

from

securities

loaned:

Unaffiliated

entities

(net

of

fees

and

rebates)

.....................................................

913

Non-controlled

affiliates

(Note

3

f

)

.............................................................

9

Other

income

(Note

1

g

)

......................................................................

957,391

Total

investment

income

...................................................................

81,777,000

Expenses:

Management

fees

(Note

3

a

)

...................................................................

22,423,852

Distribution

fees:

(Note

3c

)

    Class

A

................................................................................

1,872,673

    Class

C

................................................................................

558,761

    Class

R

................................................................................

13,055

Transfer

agent

fees:

(Note

3e

)

    Class

Z

................................................................................

1,877,387

    Class

A

................................................................................

568,794

    Class

C

................................................................................

42,317

    Class

R

................................................................................

1,991

    Class

R6

...............................................................................

30,949

Custodian

fees

(Note

4

)

......................................................................

88,454

Reports

to

shareholders

fees

..................................................................

336,966

Registration

and

filing

fees

....................................................................

112,501

Professional

fees

...........................................................................

141,056

Trustees'

fees

and

expenses

..................................................................

299,086

Dividends

on

securities

sold

short

..............................................................

2,106,088

Other

....................................................................................

1,000,100

Total

expenses

.........................................................................

31,474,030

Expense

reductions

(Note

4

)

...............................................................

(818)

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

..............................................

(22,468)

Net

expenses

.........................................................................

31,450,744

Net

investment

income

................................................................

50,326,256

Franklin

Mutual

Series

Funds

Financial

Statements

Statement

of

Operations

(continued)

for

the

year

ended

December

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

26

Franklin

Mutual

Quest

Fund

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

Unaffiliated

issuers

......................................................................

66,792,249

Non-controlled

affiliates

(Note

3

f

and

13

)

......................................................

(31,617,327)

Written

options

...........................................................................

599,516

Foreign

currency

transactions

................................................................

(773,283)

Forward

exchange

contracts

.................................................................

(19,687,585)

Futures

contracts

.........................................................................

3,850,530

Securities

sold

short

.......................................................................

(38,480,076)

Net

realized

gain

(loss)

..................................................................

(19,315,976)

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

......................................................................

331,934,680

Non-controlled

affiliates

(Note

3

f

and

13

)

......................................................

35,341,185

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

..............................

(587,350)

Forward

exchange

contracts

.................................................................

30,708,300

Futures

contracts

.........................................................................

(378,607)

Securities

sold

short

.......................................................................

(65,104,646)

Net

change

in

unrealized

appreciation

(depreciation)

............................................

331,913,562

Net

realized

and

unrealized

gain

(loss)

............................................................

312,597,586

Net

increase

(decrease)

in

net

assets

resulting

from

operations

..........................................

$362,923,842

Franklin

Mutual

Series

Funds

Financial

Statements

Statements

of

Changes

in

Net

Assets

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

27

Franklin

Mutual

Quest

Fund

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

.................................................

$50,326,256

$108,118,461

Net

realized

gain

(loss)

.................................................

(19,315,976)

(281,481,705)

Net

change

in

unrealized

appreciation

(depreciation)

...........................

331,913,562

4,730,623

Net

increase

(decrease)

in

net

assets

resulting

from

operations

................

362,923,842

(168,632,621)

Distributions

to

shareholders:

Class

Z

.............................................................

(61,256,361)

(88,513,242)

Class

A

.............................................................

(16,953,669)

(25,836,539)

Class

C

.............................................................

(596,751)

(1,653,400)

Class

R

.............................................................

(57,448)

(79,463)

Class

R6

............................................................

(1,024,107)

(1,787,534)

Total

distributions

to

shareholders

..........................................

(79,888,336)

(117,870,178)

Capital

share

transactions:

(Note

2

)

Class

Z

.............................................................

(284,073,890)

(375,723,823)

Class

A

.............................................................

(99,882,523)

(202,140,515)

Class

C

.............................................................

(27,037,736)

(38,007,161)

Class

R

.............................................................

(61,224)

(650,224)

Class

R6

............................................................

(12,549,942)

(50,477,828)

Total

capital

share

transactions

............................................

(423,605,315)

(666,999,551)

Net

increase

(decrease)

in

net

assets

...................................

(140,569,809)

(953,502,350)

Net

assets:

Beginning

of

year

.......................................................

3,348,472,046

4,301,974,396

End

of

year

...........................................................

$3,207,902,237

$3,348,472,046

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

Franklin

Mutual

Quest

Fund

28

franklintempleton.com

Annual

Report

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.

Effective

August

2,

2021,

Class

C

shares

automatically

convert

to

Class

A

shares

on

a

monthly

basis,

after

they

have

been

held

for

8

years.

Prior

to

August

2,

2021,

Class

C

shares

converted

to

Class

A

shares

after

a

10-year

holding

period.

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.

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

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

29

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

investments.

Due

to

the

inherent

uncertainty

of

valuations

of

such

investments,

the

fair

values

may

differ

significantly

from

the

values

that

would

have

been

used

had

an

active

market

existed.

Trading

in

securities

on

foreign

securities

stock

exchanges

and

OTC

markets

may

be

completed

before

4

p.m.

Eastern

time.

In

addition,

trading

in

certain

foreign

markets

may

not

take

place

on

every

Fund's

business

day. Events

can occur

between

the

time

at

which

trading

in

a

foreign

security

is

completed

and

4

p.m.

Eastern

time

that

might

call

into

question

the

reliability

of

the

value

of

a

portfolio

security

held

by

the

Fund.

As

a

result,

differences

may

arise

between

the

value

of

the

Fund's

portfolio

securities

as

determined

at

the

foreign

market

close

and

the

latest

indications

of

value

at

4

p.m.

Eastern

time. In

order

to

minimize

the

potential

for

these

differences,

an

independent

pricing

service

may

be

used

to

adjust

the

value

of

the

Fund's

portfolio

securities

to

the

latest

indications

of

fair

value

at

4

p.m.

Eastern

time.

At

December

31,

2021,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy

(referred

to

as

“market

level

fair

value”).

See

the

Fair

Value

Measurements

note

for

more

information.

When

the

last

day

of

the

reporting

period

is

a

non-business

day,

certain

foreign

markets

may

be

open

on

those

days

that

the

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

portfolio

securities

on

the

last

business

day

and

the

last

calendar

day

of

the

reporting

period.

Any

security

valuation

changes

due

to

an

open

foreign

market

are

adjusted

and

reflected

by

the

Fund

for

financial

reporting

purposes.

b.

Foreign

Currency

Translation 

Portfolio

securities

and

other

assets

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

based

on

the

exchange

rate

of

such

currencies

against

U.S.

dollars

on

the

date

of

valuation.

The

Fund

may

enter

into

foreign

currency

exchange

contracts

to

facilitate

transactions

denominated

in

a

foreign

currency.

Purchases

and

sales

of

securities,

income

and

expense

items

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

at

the

exchange

rate

in

effect

on

the

transaction

date.

Portfolio

securities

and

assets

and

liabilities

denominated

in

foreign

currencies

contain

risks

that

those

currencies

will

decline

in

value

relative

to

the

U.S.

dollar.

Occasionally,

events

may

impact

the

availability

or

reliability

of

foreign

exchange

rates

used

to

convert

the

U.S.

dollar

equivalent

value.

If

such

an

event

occurs,

the

foreign

exchange

rate

will

be

valued

at

fair

value

using

procedures

established

and

approved

by

the

Board.

The

Fund

does

not

separately

report

the

effect

of

changes

in

foreign

exchange

rates

from

changes

in

market

prices

on

securities

held.

Such

changes

are

included

in

net

realized

and

unrealized

gain

or

loss

from

investments

in

the

Statement of

Operations.

Realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

the

trade

and

settlement

dates

on

securities

transactions

and

the

difference

between

the

recorded

amounts

of

dividends,

interest,

and

foreign

withholding

taxes

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

foreign

exchange

gains

and

losses

arise

from

changes

in

foreign

exchange

rates

on

foreign

denominated

assets

and

liabilities

other

than

investments

in

securities

held

at

the

end

of

the

reporting

period.

c.

Derivative

Financial

Instruments

The

Fund

invested

in

derivative

financial

instruments

in

order

to

manage

risk

or

gain

exposure

to

various

other

investments

or

markets.

Derivatives

are

financial

contracts

based

on

an

underlying

or

notional

amount,

require

no

initial

investment

or

an

initial

net

investment

that

is

smaller

than

would

normally

be

required

to

have

a

similar

response

to

changes

in

market

factors,

and

require

or

permit

net

settlement.

Derivatives

contain

various

risks

including

the

potential

inability

of

the

counterparty

to

fulfill

their

obligations

under

the

terms

of

the

contract,

the

potential

for

an

illiquid

secondary

market,

and/or

the

potential

for

market

movements

which

expose

the

Fund

to

gains

or

losses

in

excess

of

the

amounts

shown

in

the

Statement

of

Assets

and

Liabilities.

Realized

gain

and

loss

and

unrealized

appreciation

and

depreciation

on

these

contracts

for

the

period

are

included

in

the

Statement

of

Operations. 

Derivative

counterparty

credit

risk

is

managed

through

a

formal

evaluation

of

the

creditworthiness

of

all

potential

counterparties.

The

Fund

attempts

to

reduce its

exposure

to

counterparty

credit

risk

on

OTC

derivatives,

whenever

possible,

by

entering

into

International

Swaps

and

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

30

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

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

December

31,

2021,

the

Fund

had

no

OTC

derivatives

in

a

net

liability

position

for

such

contracts.

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

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

December

31,

2021,

the

Fund

received

$6,401,404

in

U.S.

Treasury

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.

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.

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.

1.

Organization

and

Significant

Accounting

Policies

(continued)

c.

Derivative

Financial

Instruments

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

31

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

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.

e.

Securities

Lending

The

Fund

participates

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the Fund,

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 any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

The

securities

lending

agent

has

agreed

to

indemnify

the

Fund

in

the

event

of

default

by

a

third

party

borrower.

At

December

31,

2021,

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). Income

recognized,

if

any,

for

EU

reclaims

is

reflected

as

other

income

in

the

Statement

of

Operations

and

any

related

receivable,

if

any,

is

reflected

as

European

Union

tax

reclaims

in

the

Statement

of

Assets

and

Liabilities.

Any

fees

associated

with

these

filings

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

When

uncertainty

exists

as

to

the

ultimate

resolution

of

these

proceedings,

the

likelihood

of

receipt

of

these

EU

reclaims,

and

the

potential

timing

of

payment,

no

amounts

are

reflected

in

the

financial

statements.

For

U.S.

income

tax

purposes,

EU

reclaims

received

by

the

Fund,

if

any,

reduce

the

amount

of

foreign

taxes

Fund

shareholders

can

use

as

tax

deductions

or credits

on

their

income

tax

returns.

1.

Organization

and

Significant

Accounting

Policies

(continued)

d.

Securities

Sold

Short

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

32

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

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

December

31,

2021,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

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.

Paydown

gains

and

losses

are

recorded

as

an

adjustment

to

interest

income.

Facility

fees

are

recognized

as

income

over

the

expected

term

of

the

loan.

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.

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.

1.

Organization

and

Significant

Accounting

Policies

(continued)

g.

Income

and

Deferred

Taxes

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

33

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

2.

Shares

of

Beneficial

Interest

At

December

31

,

2021

,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

Transactions

in

the

Fund’s

shares

were

as

follows:

1

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:

Year

Ended

December

31,

2021

Year

Ended

December

31,

2020

Shares

Amount

Shares

Amount

Class

Z

Shares:

Shares

sold

...................................

8,934,947

$127,490,122

11,975,046

$149,320,633

Shares

issued

in

reinvestment

of

distributions

..........

4,090,779

58,092,057

6,365,818

83,875,711

Shares

redeemed

...............................

(33,019,969)

(469,656,069)

(48,888,085)

(608,920,167)

Net

increase

(decrease)

..........................

(19,994,243)

$(284,073,890)

(30,547,221)

$(375,723,823)

Class

A

Shares:

Shares

sold

a

...................................

3,890,182

$54,984,975

5,459,688

$66,335,009

Shares

issued

in

reinvestment

of

distributions

..........

1,170,021

16,334,740

1,926,839

24,975,532

Shares

redeemed

...............................

(12,246,018)

(171,202,238)

(24,143,354)

(293,451,056)

Net

increase

(decrease)

..........................

(7,185,815)

$(99,882,523)

(16,756,827)

$(202,140,515)

Class

C

Shares:

Shares

sold

...................................

334,809

$4,649,090

543,895

$6,612,820

Shares

issued

in

reinvestment

of

distributions

..........

42,473

590,978

127,396

1,638,319

Shares

redeemed

a

..............................

(2,308,765)

(32,277,804)

(3,830,835)

(46,258,300)

Net

increase

(decrease)

..........................

(1,931,483)

$(27,037,736)

(3,159,544)

$(38,007,161)

Class

R

Shares:

Shares

sold

...................................

59,804

$831,305

64,584

$795,475

Shares

issued

in

reinvestment

of

distributions

..........

4,187

57,448

6,240

79,463

Shares

redeemed

...............................

(68,758)

(949,977)

(127,918)

(1,525,162)

Net

increase

(decrease)

..........................

(4,767)

$(61,224)

(57,094)

$(650,224)

Class

R6

Shares:

Shares

sold

...................................

425,507

$6,035,726

1,366,692

$16,709,924

Shares

issued

in

reinvestment

of

distributions

..........

71,637

1,015,856

132,282

1,738,797

Shares

redeemed

...............................

(1,386,459)

(19,601,524)

(5,559,457)

(68,926,549)

Net

increase

(decrease)

..........................

(889,315)

$(12,549,942)

(4,060,483)

$(50,477,828)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Franklin

Mutual

Advisers,

LLC

(Franklin

Mutual)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Distributors,

LLC

(Distributors)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

34

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

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:

For

the

year

ended

December

31,

2021,

the

gross

effective

investment

management

fee

rate

was

0.675%

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.

The

maximum

annual

plan

rates,

based

on

the

average

daily

net

assets,

for

each

class,

are

as

follows:

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

year:

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

Class

A

....................................................................................

0.35%

Class

C

....................................................................................

1.00%

Class

R

....................................................................................

0.50%

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

..............................

$32,701

CDSC

retained

..............................................................................

$5,190

3.

Transactions

with

Affiliates

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

35

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

e.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

year

ended

December

31,

2021,

the

Fund

paid

transfer

agent

fees

of

$2,521,438,

of

which $1,343,411

was

retained

by

Investor

Services.

f.

Investments

in

Affiliated

Management

Investment

Companies

The

Fund

invests

in

one

or

more

affiliated

management

investment

companies.

As

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

fund’s

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

fund.

The

Fund

does

not

invest

for

purposes

of

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Fund

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statement

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

year

ended

December

31,

2021,

the

Fund

held

investments

in

affiliated

management

investment

companies

as

follows:

g.

Waiver

and

Expense

Reimbursements

Investor

Services

has

contractually

agreed

in

advance

to

waive

or

limit

its

fees

so

that

the

Class

R6

transfer

agent

fees

do

not

exceed

0.02%

based

on

the

average

net

assets

of

the

class

until

April

30,

202

2

.

4.

Expense

Offset

Arrangement

The Fund has

entered

into

an

arrangement

with

its

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Fund's

custodian

expenses.

During

the

year

ended

December

31,

2021,

the

custodian

fees

were

reduced

as

noted

in

the

Statement

of

Operations. 

    aa

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

a      

a  

a  

a  

a  

a  

a  

a  

Franklin

Mutual

Quest

Fund

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0.01%

.

$391,000

$30,879,000

$(31,270,000)

$—

$—

$—

—

$9

Total

Affiliated

Securities

...

$391,000

$30,879,000

$(31,270,000)

$—

$—

$—

$9

3.

Transactions

with

Affiliates

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

36

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

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

year

ended

December

31,

2021,

the

Fund’s

projected

benefit

obligation

and

benefit

payments

under

the

Plan

were

as

follows:

6.

Income

Taxes

For

tax

purposes,

capital

losses

may

be

carried

over

to

offset

future

capital

gains.

At

December

31,

2021,

the

capital

loss

carryforwards

were

as

follows:

The

tax

character

of

distributions

paid

during

the

years

ended

December

31,

2021

and

2020,

was

as

follows:

At

December

31,

2021,

the

cost

of

investments,

net

unrealized

appreciation

(depreciation)

and

undistributed

ordinary

income

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatments

of

defaulted

securities,

foreign

currency

transactions,

bond

discounts

and

premiums

and

wash

sales.

a

Projected

benefit

obligation

at

December

31,

2021

......

$399,239

b

Increase

(decrease)

in

projected

benefit

obligation

......

$48,932

Benefit

payments

made

to

retired

trustees

.............

$(1,695)

a

The

projected

benefit

obligation

is

included

in

trustees’

fees

and

expenses

in

the

Statement

of

Assets

and

Liabilities.

b

The

increase

(decrease)

in

projected

benefit

obligation

is

reflected

in

trustees’

fees

and

expenses

in

the

Statement

of

Operations.

The

increase

(decrease)

was

primarily

due

to

demographic

losses.

Capital

loss

carryforwards

not

subject

to

expiration:

Short

term

................................................................................

$70,611,298

Long

term

................................................................................

531,736,496

Total

capital

loss

carryforwards

...............................................................

$602,347,794

2021

2020

Distributions

paid

from:

Ordinary

income

..........................................................

$79,888,336

$117,870,178

Cost

of

investments

..........................................................................

$2,563,644,908

Unrealized

appreciation

........................................................................

$555,179,960

Unrealized

depreciation

........................................................................

(240,280,590)

Net

unrealized

appreciation

(depreciation)

..........................................................

$314,899,370

Distributable

earnings:

Undistributed

ordinary

income

...................................................................

$297,851

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

37

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

7.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities

and

securities

sold

short)

for

the

year

ended

December

31,

2021,

aggregated

$2,019,990,750

and

$2,369,140,246,

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

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.

At

December

31,

2021,

the

aggregate

long

value

of

distressed

company

securities

for

which

interest

recognition

has

been

discontinued

was

$7,502,104,

representing

0.2%

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.

Political

and

financial

uncertainty

in

many

foreign

regions

may

increase

market

volatility

and

the

economic

risk

of

investing

in

foreign

securities.

In

addition,

certain

foreign

securities

may

not

be

as

liquid

as

U.S.

securities.

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

December

31,

2021,

investments

in

restricted

securities,

excluding

securities

exempt

from

registration

under

the

1933

Act,

were

as

follows:

Shares

/

Warrants

Issuer

Acquisition

Date

Cost

Value

Franklin

Mutual

Quest

Fund

2,548,299

International

Automotive

Components

Group

Brazil

LLC

4/13/06

-

12/26/08

$

1,692,334

$

96,476

224,279

Sorenson

Communications

LLC,

Membership

Interests

4/30/14

—

168,209,173

48,381

Tenerity

,

Inc.,

4/10/24

.........................

5/11/17

6,591,095

183,988

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

38

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

12.

Other

Derivative

Information

At

December

31,

2021,

investments

in

derivative

contracts

are

reflected

in

the

Statement of

Assets

and

Liabilities

as

follows:

For

the

year

ended

December

31,

2021

,

the

effect

of

derivative

contracts

in

the

Statement

of

Operations

was

as

follows:

Shares/

Warrants

Issuer

Acquisition

Date

Cost

Value

Franklin

Mutual

Quest

Fund

(continued)

7,104

Wayne

Services

Legacy,

Inc.

...................

1/22/19

$

—

$

—

1,623,438

Windstream

Holdings,

Inc.

.....................

9/21/20

12,859,476

28,576,119

91,545

Windstream

Holdings,

Inc.,

9/21/55

..............

9/21/20

1,161,706

1,611,396

Total

Restricted

Securities

(Value

is

6.2%

of

Net

Assets)

..............

$22,304,611

$198,677,152

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

Franklin

Mutual

Quest

Fund

Foreign

exchange

contracts

..

Variation

margin

on

futures

contracts

$

—

Variation

margin

on

futures

contracts

$

1,529,679

a

Unrealized

appreciation

on

OTC

forward

exchange

contracts

9,969,794

Unrealized

depreciation

on

OTC

forward

exchange

contracts

138,943

Total

....................

$9,969,794

$1,668,622

a

This

amount

reflects

the

cumulative

appreciation

(depreciation)

of

futures

contracts

as

reported

in

the

Statement

of

Investments.

Only

the

variation

margin

receivable/

payable

at

year

end

is

separately

reported

within

the

Statement

of

Assets

and

Liabilities.

Prior

variation

margin

movements

were

recorded

to

cash

upon

receipt

or

payment.

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Statement

of

Operations

Location

Net

Realized

Gain

(Loss)

for

the

Year

Statement

of

Operations

Location

Net

Change

in

Unrealized

Appreciation

(Depreciation)

for

the

Year

Franklin

Mutual

Quest

Fund

Net

realized

gain

(loss)

from:

Net

change

in

unrealized

  appreciation

(depreciation)

on:

Foreign

exchange

contracts

.....

Futures

contracts

$3,850,530

Futures

contracts

$(378,607)

Forward

exchange

contracts

(19,687,585)

Forward

exchange

contracts

30,708,300

Equity

Contracts

..............

Investments

(328,164)

a

Investments

—

Written

options

599,516

Written

options

—

Total

.......................

$(15,565,703)

$30,329,693

a

Purchased

option

contracts

are

included

in

net

realized

gain

(loss)

from

investments

in

the

Statement

of

Operations.

11.

Restricted

Securities

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

39

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

For

the

year

ended

December

31,

2021,

the

average

month

end

notional

amount

of

futures

contracts

and

options

represented

$99,044,484

and

65,385

shares,

respectively.

The

average

month

end

contract

value

of

forward

exchange

contracts

was

$521,007,529.

See

Note

1(c)

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.

Additionally,

as

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

companies’

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

company.

During

the

year

ended

December

31,

2021,

investments

in

“affiliated

companies”

were

as

follows:

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

$2.675

billion

(Global

Credit

Facility)

which

matured

on

February

4,

2022.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

Effective

February

4,

2022,

the

Borrowers

renewed

the

Global

Credit

Facility

for

a

one-year

term,

maturing

February

3,

2023,

for

a

total

of

$2.675

billion.

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares/Principal

Amount

Held

at

End

of

Year

Investment

Income

Franklin

Mutual

Quest

Fund

Non-Controlled

Affiliates

Dividends

Advanced

Emissions

Solutions

Inc

......

$

9,483,150

$

—

$

(11,354,423)

$

(15,153,562)

$

17,024,835

$

—

b

—

$

—

Sorenson

Communications

LLC,

Membership

Interests

.........

168,209,173

—

—

—

—

168,209,173

224,279

—

TRU

Kids

Parent

LLC

..

16,218,825

—

(18,114,642)

a

(16,695,457)

18,591,274

—

b

—

—

Wayne

Services

Legacy,

Inc.

............

—

—

—

—

—

—

7,104

403,772

Interest

Sorenson

Communications

LLC,

First

Lien,

Initial

Term

Loan

........

8,929,446

—

(8,886,214)

a

231,692

(274,924)

—

b

—

125,250

Total

Affiliated

Securities

(Value

is

5.2%

of

Net

Assets)

..........

$202,840,594

$—

$(38,355,279)

$(31,617,327)

$35,341,185

$168,209,173

$529,022

a

May

include

accretion,

amortization,

partnership

adjustments,

and/or

corporate

actions.

b

As

of

December

31,

2021,

no

longer

held

by

the

fund.

12.

Other

Derivative

Information

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

40

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

Under

the

terms

of

the

Global

Credit

Facility,

the

Fund

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Fund

and

other

costs

incurred

by

the

Fund,

pay

its

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

its

relative

share

of

the

aggregate

net

assets

of

all

of

the

Borrowers,

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

During

the

year

ended

December

31,

2021,

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.

A

summary

of

inputs

used

as

of

December

31,

2021,

in

valuing

the

Fund's

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

Level

1

Level

2

Level

3

Total

Franklin

Mutual

Quest

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Aerospace

&

Defense

...................

$

61,521,493

$

53,413,883

$

—

$

114,935,376

Auto

Components

......................

—

—

96,476

96,476

Banks

...............................

26,146,653

25,962,069

—

52,108,722

Beverages

...........................

—

38,774,609

—

38,774,609

Chemicals

...........................

—

50,753,783

—

50,753,783

Commercial

Services

&

Supplies

...........

8,261,273

—

—

8,261,273

Diversified

Financial

Services

.............

90,204,676

16,488,113

—

106,692,789

Diversified

Telecommunication

Services

.....

9,118,397

54,595,506

196,785,292

260,499,195

Electric

Utilities

........................

28,304,035

—

—

28,304,035

Electronic

Equipment,

Instruments

&

Components

........................

20,084,401

—

—

20,084,401

Entertainment

.........................

30,249,707

—

—

30,249,707

Equity

Real

Estate

Investment

Trusts

(REITs)

.

29,258,921

—

—

29,258,921

Food

Products

........................

—

32,601,592

—

32,601,592

Health

Care

Equipment

&

Supplies

.........

41,494,002

—

—

41,494,002

Health

Care

Providers

&

Services

..........

8,575,490

—

—

8,575,490

Household

Products

....................

—

49,700,859

—

49,700,859

Insurance

............................

283,479,162

184,563,040

—

468,042,202

IT

Services

...........................

145,098,863

—

—

145,098,863

Media

...............................

59,493,160

—

—

59,493,160

Oil,

Gas

&

Consumable

Fuels

.............

75,263,907

65,671,104

—

140,935,011

Pharmaceuticals

.......................

257,439,752

102,351,164

—

359,790,916

Professional

Services

...................

20,433,742

—

—

20,433,742

14.

Credit

Facility

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

41

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

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

be

ginning

and/or

end

of

the

year

.

At 

December

31

,

2021

,

the

reconciliation

is

as

follows:

Level

1

Level

2

Level

3

Total

Franklin

Mutual

Quest

Fund

(continued)

Assets:

(continued)

Investments

in

Securities:

Common

Stocks:

Semiconductors

&

Semiconductor

Equipment

.

$

137,459,049

$

16,427,787

$

—

$

153,886,836

Software

.............................

132,834,036

—

—

132,834,036

Specialty

Retail

........................

—

38,514,312

—

a

38,514,312

Technology

Hardware,

Storage

&

Peripherals

.

31,827,827

—

—

31,827,827

Tobacco

.............................

70,840,704

192,929,073

—

263,769,777

Wireless

Telecommunication

Services

.......

28,485,732

32,384,467

—

60,870,199

Preferred

Stocks

........................

4,175,682

—

—

4,175,682

Warrants

:

Diversified

Telecommunication

Services

.....

—

—

1,611,396

1,611,396

Media

...............................

—

802,266

183,988

986,254

Software

.............................

660,444

—

—

660,444

Corporate

Bonds

........................

—

107,882,333

—

107,882,333

Senior

Floating

Rate

Interests

...............

—

44,684,501

—

44,684,501

Asset-Backed

Securities

..................

—

2,588,153

—

2,588,153

Companies

in

Liquidation

..................

—

—

—

a

—

Short

Term

Investments

...................

126,967,924

26,100,000

—

153,067,924

Total

Investments

in

Securities

...........

$1,727,679,032

$1,137,188,614

b

$198,677,152

$3,063,544,798

Other

Financial

Instruments:

Forward

exchange

contracts

...............

$

—

$

9,969,794

$

—

$

9,969,794

Total

Other

Financial

Instruments

.........

$—

$9,969,794

$—

$9,969,794

Liabilities:

Other

Financial

Instruments:

Securities

Sold

Short

.....................

$193,301,692

$—

$—

$193,301,692

Forward

exchange

contracts

................

—

138,943

—

138,943

Futures

contracts

........................

1,529,679

—

—

1,529,679

Total

Other

Financial

Instruments

.........

$194,831,371

$138,943

$—

$194,970,314

a

Includes

securities

determined

to

have

no

value

at

December

31,

2021.

b

Includes

foreign

securities

valued

at

$955,131,361,

which

were

categorized

as

Level

2

as

a

result

of

the

application

of

market

level

fair

value

procedures.

See

the

Financial

Instrument

Valuation

note

for

more

information.

Balance

at

Beginning

of

Year

Purchases

a

Sales

b

Transfer

Into

Level

3

Transfer

Out

of

Level

3

c

Net

Accretion

(

Amortiza

-

tion

)

Net

Realized

Gain

(Loss)

Net

Unr

ealized

Appreciatio

n

(

Depreciation

)

Balance

at

End

of

Year

Net

Change

in

Unrealized

Appreciation

(Depreciation)

on

Assets

Held

at

Year

End

a

a

a

a

a

a

a

a

a

a

a

Franklin

Mutual

Quest

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Auto

Components

....

$

54,192

$

—

$

—

$

—

$

—

$

—

$

—

$

42,284

$

96,476

$

42,284

Diversified

Telecommunication

Services

........

189,701,869

—

—

—

—

—

—

7,083,423

196,785,292

7,083,423

Media

...........

286,937

—

(519,612)

—

—

—

—

232,675

—

—

Specialty

Retail

.....

16,218,825

d

—

(18,114,642)

—

—

—

(16,695,457)

18,591,274

—

d

—

15.

Fair

Value

Measurements

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

42

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

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

December

31,

2021,

are

as

follows:

Balance

at

Beginning

of

Year

Purchases

a

Sales

b

Transfer

Into

Level

3

Transfer

Out

of

Level

3

c

Net

Accretion

(Amortiza-

tion)

Net

Realized

Gain

(Loss)

Net

Unrealized

Appreciation

(Depreciation)

Balance

at

End

of

Year

Net

Change

in

Unrealized

Appreciation

(Depreciation)

on

Assets

Held

at

Year

End

a

a

a

a

a

a

a

a

a

a

a

Franklin

Mutual

Quest

Fund

(continued)

Assets:

Investments

in

Securities:

Warrants

:

Diversified

Telecommunication

Services

........

$

1,211,964

$

—

$

—

$

—

$

—

$

—

$

—

$

399,432

$

1,611,396

$

399,432

Media

...........

37,851

d

—

—

—

(37,851)

—

—

183,988

183,988

183,988

Companies

in

Liquidation

156,262

d

—

—

—

—

—

(3,234,626)

3,078,364

—

d

—

Total

Investments

in

Securities

............

$207,667,900

$—

$(18,634,254)

$—

$(37,851)

$—

$(19,930,083)

$29,611,440

$198,677,152

$7,709,127

a

Purchases

include

all

purchases

of

securities

and

securities

received

in

corporate

actions.

b

Sales

include

all

sales

of

securities,

maturities,

paydowns

and

securities

tendered

in

corporate

actions.

c

Transferred

out

of

Level

3

as

a

result

of

the

availability

of

other

significant

observable

valuation

inputs.

d

Includes

securities

determined

to

have

no

value.

Description

Fair

Value

at

End

of

Year

Valuation

Technique

Unobservable

Inputs

Amount/Range

(Weighted

Average)

a

Impact

to

Fair

Value

if

Input

Increases

b

Franklin

Mutual

Quest

Fund

Assets:

Investments

in

Securities:

Common

Stocks:

Diversified

Telecommunication

Services

...................

$196,785,292

Market

comparables

Discount

for

lack

of

marketability

10.0%

Decrease

c

EV/EBITDA

multiple

3.9x-8.6x

(7.9x)

Increase

d

All

Other

Investments

..........

1,891,860

e,f

Total

..........................

$198,677,152

a

Weighted

based

on

the

relative

fair

value

of

the

financial

instruments.

b

Represents

the

directional

change

in

the

fair

value

of

the

Level

3

financial

instruments

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.

c

Represents

a

significant

impact

to

fair

value

but

not

net

assets.

d

Represents

a

significant

impact

to

fair

value

and

net

assets.

e

Includes

fair

value

of

immaterial

assets

and/or

liabilities

developed

using

various

valuation

techniques

and

unobservable

inputs.

May

include

values

derived

using

private

transaction

prices

or

non-public

third

party

pricing

information

which

is

unobservable.

f

Includes

securities

determined

to

have

no

value

at

December

31,

2021.

Abbreviations

List

EBITDA

-

Earnings

before

interest,

taxes,

depreciation

and

amortization

EV

-

Enterprise

value

15.

Fair

Value

Measurements

(continued)

Franklin

Mutual

Series

Funds

Notes

to

Financial

Statements

43

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

(continued)

16.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

(FASB)

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

In

January

2021,

the

FASB

issued

ASU

No.

2021-01,

with

further

amendments

to

Topic

848.

The

amendments

in

the

ASUs

provide

optional

temporary

accounting

recognition

and 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

for

certain

LIBOR

settings

and

2023

for

the

remainder. The

ASUs

are

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

these

ASUs

will

not

have

a

material

impact

on

the

financial

statements. 

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

other

than

those

already

disclosed

in

the

financial

statements.

Abbreviations

Counterparty

BOFA

Bank

of

America

N.A.

HSBK

HSBC

Bank

plc

SSBT

State

Street

Bank

and

Trust

Co.

UBSW

UBS

AG

Currency

EUR

Euro

GBP

British

Pound

USD

United

States

Dollar

Selected

Portfolio

ADR

American

Depositary

Receipt

FHLB

Federal

Home

Loan

Banks

FRN

Floating

Rate

Note

LIBOR

London

Inter-Bank

Offered

Rate

Franklin

Mutual

Series

Funds

Report

of

Independent

Registered

Public

Accounting

Firm

44

franklintempleton.com

Annual

Report

To

the

Board

of

Trustees

of

Franklin

Mutual

Series

Funds

and

Shareholders

of

Franklin

Mutual

Quest

Fund:

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities

of

Franklin

Mutual

Quest

Fund

(the

“Fund”)

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds),

including

the

statement

of

investments,

as

of

December

31,

2021,

and

the

related

statement

of

operations

for

the

year

then

ended,

the

statements

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

then

ended,

the

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended

and

the

related

notes

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

Franklin

Mutual

Quest

Fund

(one

of

the

funds

constituting

Franklin

Mutual

Series

Funds)

at

December

31,

2021,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

then

ended

and

its

financial

highlights

for

each

of

the

five

years

in

the

period

then

ended,

in

conformity

with

U.S.

generally

accepted

accounting

principles.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

("PCAOB")

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

The

Fund

is

not

required

to

have,

nor

were

we

engaged

to

perform,

an

audit

of

the

Fund’s

internal

control

over

financial

reporting.

As

part

of

our

audits,

we

are

required

to

obtain

an

understanding

of

internal

control

over

financial

reporting,

but

not

for

the

purpose

of

expressing

an

opinion

on

the

effectiveness

of

the

Fund’s

internal

control

over

financial

reporting.

Accordingly,

we

express

no

such

opinion.

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

December

31,

2021,

by

correspondence

with

the

custodian

and

brokers

or

by

other

appropriate

auditing

procedures

where

replies

from

others

were

not

received.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

We

believe

that

our

audits

provide

a

reasonable

basis

for

our

opinion.

We

have

served

as

the

auditor

of

one

or

more

Franklin

investment

companies

since

1987.

Boston,

Massachusetts

February

18,

2022

Franklin

Mutual

Series

Funds

Tax

Information

(unaudited)

45

franklintempleton.com

Annual

Report

Franklin

Mutual

Quest

Fund

By

mid-February,

tax

information

related

to

a

shareholder's

proportionate

share

of

distributions

paid

during

the

preceding

calendar

year

will

be

received,

if

applicable.

Please

also

refer

to

www.franklintempleton.com

for

per

share

tax

information

related

to

any

distributions

paid

during

the

preceding

calendar

year.

Shareholders

are

advised

to

consult

with

their

tax

advisors

for

further

information

on

the

treatment

of

these

amount

s

on

their

tax

returns.

The

following

tax

information

for

the

Fund

is

required

to

be

furnished

to

shareholders

with

respect

to

income

earned

and

distributions

paid

during

its

fiscal

year.

The

Fund

hereby

reports

the

following

amounts,

or

if

subsequently

determined

to

be

different,

the

maximum

allowable

amounts,

for

the

fiscal

year

ended

December

31,

2021:

Note

(1)

-

The

Law

varies

in

each

state

as

to

whether

and

what

percentage

of

dividend

income

attributable

to

Federal

obligations

is

exempt

from

state

income

tax.

Shareholders

are

advised

to

consult

with

their

tax

advisors

to

determine

if

any

portion

of

the

dividends

received

is

exempt

from

state

income

taxes.

Pursuant

to:

Amount

Reported

Income

Eligible

for

Dividends

Received

Deduction

(DRD)

§854(b)(1)(A)

$19,995,477

Qualified

Dividend

Income

Earned

(QDI)

§854(b)(1)(B)

$72,707,358

Section

163(j)

Interest

Earned

§163(j)

$11,227,206

Interest

Earned

from

Federal

Obligations

Note

(1)

$94,459

Franklin

Mutual

Series

Funds

Board

Members

and

Officers

46

franklintempleton.com

Annual

Report

The

name,

year

of

birth

and

address

of

the

officers

and

board

members,

as

well

as

their

affiliations,

positions

held

with

the

Trust,

principal

occupations

during

at

least

the

past

five

years

and

number

of

U.S.

registered

portfolios

overseen

in

the

Franklin

Templeton/Legg

Mason

fund

complex,

are

shown

below.

Generally,

each

board

member

serves

until

that

person’s

successor

is

elected

and

qualified.

Independent

Board

Members

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Edward

I.

Altman,

Ph.D.

(1941)

Trustee

Since

1987

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Max

L.

Heine

Professor

of

Finance,

Emeritus

and

Director

of

The

Credit

and

Debt

Markets

Research

Program,

Salomon

Center,

Stern

School

of

Business,

New

York

University;

editor

and

author

of

numerous

financial

publications;

financial

consultant;

an

adviser

to

numerous

financial

and

publishing

organizations;

and

formerly

,

Vice

Director,

Salomon

Center,

Stern

School

of

Business,

New

York

University.

Ann

Torre

Bates

(1958)

Trustee

and

Chairperson

Trustee

since

1995

and

Chairperson

since

2020

30

Ares

Capital

Corporation

(specialty

finance

company)

(2010-present),

United

Natural

Foods,

Inc.

(distributor

of

natural,

organic

and

specialty

foods)

(2013-present),

formerly

,

Allied

Capital

Corporation

(financial

services)

(2003-

2010),

SLM

Corporation

(Sallie

Mae)

(1997-2014)

and

Navient

Corporation

(loan

management,

servicing

and

asset

recovery)

(2014-2016).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

companies;

and

formerly

,

Executive

Vice

President

and

Chief

Financial

Officer,

NHP

Incorporated

(manager

of

multifamily

housing)

(1995-1997);

and

Vice

President

and

Treasurer,

US

Airways,

Inc.

(until

1995).

Jan

Hopkins

Trachtman

(1947)

Trustee

Since

2009

11

FTAC

Olympus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(2020-present)

and

FTAC

Parnassus

Acquisition

Corp.

(special

purpose

fintech

acquisition

company)

(February

2021-present);

and

formerly

,

FinTech

Acquisition

Corp.

III

(special

purpose

fintech

acquisition

company)

(2018-2021).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President

and

Founder,

The

Jan

Hopkins

Group

(communications

consulting

firm);

serves

on

Alumni

Advisory

Board

of

Knight

Bagehot

Fellowship;

and

formerly

,

President,

Economic

Club

of

New

York

(2007-2015);

Anchor/Correspondent,

CNN

Financial

News

(until

2003);

Managing

Director

and

Head

of

Client

Communications,

Citigroup

Private

Bank

(until

2005);

Off-Air

reporter,

ABC

News’

World

News

Tonight;

and

Editor,

CBS

Network

News.

Franklin

Mutual

Series

Funds

47

franklintempleton.com

Annual

Report

Interested

Board

Members

and

Officers

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Keith

Mitchell

(1954)

Trustee

Since

2009

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

boards

of

asset

management

firms;

and

formerly

,

Managing

Member,

Mitchell,

Hartley

&

Bechtel

Advisers,

LLC

(

formerly

,

Mitchell

Advisers,

LLC)

(advisory

firm)

(2003-2015)

and

Managing

Director,

Putman

Lovell

NBF.

David

W.

Niemiec

(1949)

Trustee

Since

2015

30

Hess

Midstream

LP

(oil

and

gas

midstream

infrastructure)

(2017-present).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Advisor,

Saratoga

Partners

(private

equity

fund);

and

formerly

,

Managing

Director,

Saratoga

Partners

(1998-2001)

and

SBC

Warburg

Dillon

Read

(investment

banking)

(1997-1998);

Vice

Chairman,

Dillon,

Read

&

Co.

Inc.

(investment

banking)

(1991-1997);

and

Chief

Financial

Officer,

Dillon,

Read

&

Co.

Inc.

(1982-1997).

Robert

E.

Wade

(1946)

Trustee

Since

1991

30

El

Oro

Ltd

(investments)

(2003-

2019).

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Attorney

at

law

engaged

in

private

practice

as

a

sole

practitioner

(1972-2008)

and

member

of

various

boards.

Gregory

H.

Williams

(1943)

Trustee

Since

2015

11

None

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

Private

investor;

Consultant;

and

formerly

,

President,

University

of

Cincinnati

(2009-2012);

President,

The

City

College

of

New

York

(2001-

2009);

Dean,

College

of

Law,

Ohio

State

University

(1993-2001);

and

Associate

Vice

President,

Academic

Affairs

and

Professor

of

Law,

University

of

Iowa

(1977-1993).

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Gregory

E.

Johnson

(1961)

Trustee

Since

2007

132

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Executive

Chairman,

Chairman

of

the

Board

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

Vice

Chairman,

Investment

Company

Institute;

and

formerly

,

Chief

Executive

Officer

(2013-2020)

and

President

(1994-2015)

Franklin

Resources,

Inc.

Independent

Board

Members

(continued)

Franklin

Mutual

Series

Funds

48

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Jennifer

M.

Johnson

(1964)

Trustee

Since

March

2021

70

None

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Executive

Officer,

President

and

Director,

Franklin

Resources,

Inc.;

officer

and/or

director

or

trustee,

as

the

case

may

be,

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Chief

Operating

Officer

and

Executive

Vice

President,

Franklin

Resources,

Inc.

(1994-2015);

Executive

Vice

President

of

Operations

and

Technology,

Franklin

Resources,

Inc.

(2005-2010);

and

Senior

Vice

President,

Franklin

Resources,

Inc.

(2003-2005).

Alison

E.

Baur

(1964)

Vice

President

Since

2012

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Deputy

General

Counsel,

Franklin

Templeton;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Breda

M.

Beckerle

(1958)

Chief

Compliance

Officer

Since

2020

Not

Applicable

Not

Applicable

280

Park

Avenue

New

York,

NY

10017

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Compliance

Officer,

Fiduciary

Investment

Management

International,

Inc.,

Franklin

Advisers,

Inc.,

Franklin

Mutual

Advisers,

LLC,

Franklin

Templeton

Institutional,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christian

K.

Correa

(1973)

President,

and

Chief

Executive

Officer

–

Investment

Management

Since

April

2021

Not

Applicable

Not

Applicable

c/o

Franklin

Mutual

Advisers,

LLC

101

John

F.

Kennedy

Parkway

Short

Hills,

NJ

07078-2716

Principal

Occupation

During

at

Least

the

Past

5

Years:

President,

Franklin

Mutual

Advisers,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Steven

J.

Gray

(1955)

Vice

President

and

Secretary

Vice

President

since

2009

and

Secretary

since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Vice

President,

FASA,

LLC;

Assistant

Secretary,

Franklin

Distributors,

LLC;

and

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Matthew

T.

Hinkle

(1971)

Chief

Executive

Officer

–

Finance

and

Administration

Since

2017

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Vice

President,

Franklin

Templeton

Services,

LLC;

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex;

and

formerly

,

Vice

President,

Global

Tax

(2012-April

2017)

and

Treasurer/Assistant

Treasurer,

Franklin

Templeton

(2009-2017).

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

49

franklintempleton.com

Annual

Report

*We

base

the

number

of

portfolios

on

each

separate

series

of

the

U.S.

registered

investment

companies

within

the

Franklin

Templeton/Legg

Mason

complex.

These

portfolios

have

a

common

investment

manager

or

affiliated

investment

managers.

**Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

considered

to

be

interested

people

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

of

Franklin

Resources,

Inc.

(Resources),

which

is

the

parent

company

of

the

Fund’s

investment

manager

and

distributor.

Note

1:

Gregory

E.

Johnson

and

Jennifer

M.

Johnson

are

siblings.

Note

2:

Officer

information

is

current

as

of

the

date

of

this

report.

It

is

possible

that

after

this

date,

information

about

officers

may

change.

Note

3:

Effective

September

30,

2021,

Peter

A.

Langerman

ceased

to

be

a

trustee

of

the

Trust.

Note

4:

Effective

December

31,

2021,

Burton

J.

Greenwald

ceased

to

be

a

trustee

of

the

Trust.

The

Sarbanes-Oxley

Act

of

2002

and

Rules

adopted

by

the

U.S.

Securities

and

Exchange

Commission

require

the

Fund

to

disclose

whether

the

Fund’s

Audit

Committee

includes

at

least

one

member

who

is

an

audit

committee

financial

expert

within

the

meaning

of

such

Act

and

Rules.

The

Fund’s

Board

has

determined

that

there

is

at

least

one

such

financial

expert

on

the

Audit

Committee

and

has

designated

each

of

Ann

Torre

Bates

and

David

W.

Niemiec

as

an

audit

committee

financial

expert.

The

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

qualify

as

such

an

expert

in

view

of

their

extensive

business

background

and

experience.

Ms.

Bates

has

served

as

a

member

of

the

Fund

Audit

Committee

since

1995.

She

currently

serves

as

a

director

of

Ares

Capital

Corporation

(2010-present)

and

United

Natural

Foods,

Inc.

(2013-present)

and

was

formerly

a

director

of

Navient

Corporation

from

2014

to

2016,

SLM

Corporation

from

1997

to

2014

and

Allied

Capital

Corporation

from

2003

to

2010,

Executive

Vice

President

and

Chief

Financial

Officer

of

NHP

Incorporated

from

1995

to

1997

and

Vice

President

and

Treasurer

of

US

Airways,

Inc.

until

1995.

Mr.

Niemiec

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2015,

currently

serves

as

an

Advisor

to

Saratoga

Partners

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Susan

Kerr

(1949)

Vice

President

–

AML

Compliance

Since

July

2021

Not

Applicable

Not

Applicable

620

Eighth

Avenue

New

York,

NY

10018

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Compliance

Analyst,

Franklin

Templeton;

Chief

Anti-Money

Laundering

Compliance

Officer,

Legg

Mason

&

Co.,

or

its

affiliates;

Anti

Money

Laundering

Compliance

Officer;

Senior

Compliance

Officer,

LMIS;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Christopher

Kings

(1974)

Chief

Financial

Officer,

Chief

Accounting

Officer

and

Treasurer

Since

January

2022

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Treasurer,

U.S.

Fund

Administration

&

Reporting;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Navid

J.

Tofigh

(1972)

Vice

President

Since

2015

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Craig

S.

Tyle

(1960)

Vice

President

Since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

General

Counsel

and

Executive

Vice

President,

Franklin

Resources,

Inc.;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Lori

A.

Weber

(1964)

Vice

President

Since

2011

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Assistant

Secretary,

Franklin

Resources,

Inc.;

Vice

President

and

Secretary,

Templeton

Investment

Counsel,

LLC;

and

officer

of

certain

funds

in

the

Franklin

Templeton/Legg

Mason

fund

complex.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

50

franklintempleton.com

Annual

Report

and

was

formerly

its

Managing

Director

from

1998

to

2001

and

serves

as

a

director

of

Hess

Midstream

LP

(2017-present).

Mr.

Niemiec

was

formerly

a

director

of

Emeritus

Corporation

from

1999

to

2010

and

OSI

Pharmaceuticals,

Inc.

from

2006

to

2010,

Managing

Director

of

SBC

Warburg

Dillon

Read

from

1997

to

1998,

and

was

Vice

Chairman

from

1991

to

1997

and

Chief

Financial

Officer

from

1982

to

1997

of

Dillon,

Read

&

Co.

Inc.

As

a

result

of

such

background

and

experience,

the

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

have

each

acquired

an

understanding

of

generally

accepted

accounting

principles

and

financial

statements,

the

general

application

of

such

principles

in

connection

with

the

accounting

estimates,

accruals

and

reserves,

and

analyzing

and

evaluating

financial

statements

that

present

a

breadth

and

level

of

complexity

of

accounting

issues

generally

comparable

to

those

of

the

Fund,

as

well

as

an

understanding

of

internal

controls

and

procedures

for

financial

reporting

and

an

understanding

of

audit

committee

functions.

Ms.

Bates

and

Mr.

Niemiec

are

independent

Board

members

as

that

term

is

defined

under

the

applicable

U.S.

Securities

and

Exchange

Commission

Rules

and

Releases.

The

Statement

of

Additional

Information

(SAI)

includes

additional

information

about

the

board

members

and

is

available,

without

charge,

upon

request.

Shareholders

may

call

(800)

DIAL

BEN/342-5236

to

request

the

SAI.

Interested

Board

Members

and

Officers

(continued)

Franklin

Mutual

Series

Funds

Shareholder

Information

51

franklintempleton.com

Annual

Report

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,

or

receive

notice

of

the

availability

of,

the

Fund’s

financial

reports

every

six

months.

In

addition,

you

will

receive

an

annual

updated

summary

prospectus

(detail

prospectus

available

upon

request).

To

reduce

Fund

expenses,

we

try

to

identify

related

shareholders

in

a

household

and

send

only

one

copy

of

the

financial

reports

(to

the

extent

received

by

mail)

and

summary

prospectus.

This

process,

called

“householding,”

will

continue

indefinitely

unless

you

instruct

us

otherwise.

If

you

prefer

not

to

have

these

documents

householded,

please

call

us

at

(800)

632-2301.

At

any

time

you

may

view

current

prospectuses/

summary

prospectuses

and

financial

reports

on

our

website.

If

you

choose,

you

may

receive

these

documents

through

electronic

delivery.

475

A

02/22

©

2022

Franklin

Templeton

Investments.

All

rights

reserved.

Authorized

for

distribution

only

when

accompanied

or

preceded

by

a

summary

prospectus

and/or

prospectus.

Investors

should

carefully

consider

a

fund’s

investment

goals,

risks,

charges

and

expenses

before

investing.

A

prospectus

contains

this

and

other

information;

please

read

it

carefully

before

investing.

To

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provide

you

with

quality

service,

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calls

to

and

from

our

service

areas

are

monitored

and/or

recorded.

Annual

Report

and

Shareholder

Letter

Franklin

Mutual

Quest

Fund

Investment

Manager

Distributor

Shareholder

Services

Franklin

Mutual

Advisers,

LLC

Franklin

Distributors,

LLC

(800)

DIAL

BEN

®

/

342-5236

franklintempleton.com

(800)

632-2301

-

(Class

A,

C,

R

&

R6)

(800)

448-FUND

-

(Class

Z)

Item 2. Code of Ethics.

(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.

(c) N/A

(d) N/A

(f) Pursuant to Item 13(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.

Item 3. Audit Committee Financial Expert.

(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.

(2) The audit committee financial experts are Ann Torre Bates and David W. Niemiec and they are "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.

Item 4. Principal Accountant Fees and Services.

(a)      Audit Fees

The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $340,028 for the fiscal year ended December 31, 2021 and $344,041 for the fiscal year ended December 31, 2020.

(b)      Audit-Related Fees

There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of Item 4.

There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant's investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements. 

(c)      Tax Fees

The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning were $0 for the fiscal year ended December 31, 2021 and $3,282 for the fiscal year ended December 31, 2020. The services for which these fees were paid included identifying passive foreign investment companies to manage exposure to tax liabilities and India tax compliance services.

The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning were $0 for the fiscal year ended December 31, 2021 and $91,000 for the fiscal year ended December 31, 2020. The services for which these fees were paid included technical tax consultation for withholding tax report to foreign governments, application of local country tax laws and tax advice.

(d)      All Other Fees

There were no fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant other than the services reported in paragraphs (a)-(c) of Item 4.

There were no fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant other than the services reported in paragraphs (a)-(c) of Item 4.   

(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:

        (i)     pre-approval of all audit and audit related services;

        (ii)    pre-approval of all non-audit related services to be provided to the Fund by the auditors;

        (iii)   pre-approval of all non-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where the non-audit services relate directly to the operations or financial reporting of the registrant; and

        (iv)    establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.

(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.

(f) No disclosures are required by this Item 4(f).

(g) The aggregate non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $0 for the fiscal year ended December 31, 2021 and $94,282 for the fiscal year ended December 31, 2020.

(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Item 5. Audit Committee

of Listed Registrants. 

N/A

Item 6. Schedule of Investments.         

N/A

Item 7

. Disclosure of Proxy Voting Policies and Procedures for

Closed-End Management Investment Companies.  N/A

Item 8

. Portfolio Managers of Closed-End Management Investment Companies.  N/A

Item 9

. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.  N/A

Item 10

. Submission of Matters to a Vote of Security Holders.

There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.

Item 11. Controls and Procedures.

(a)  Evaluation of Disclosure Controls and Procedures

The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.

(b)   Changes in Internal Controls

.  

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

codeofethics

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer

section302

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and

Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer

section906

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 February 28, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By S\Matthew T. Hinkle______________________

      Matthew T. Hinkle

      Chief Executive Officer – Finance and Administration

Date February 28, 2022

By S\Christopher Kings________________________

     Christopher Kings

     Chief Financial Officer, Chief Accounting Officer and Treasurer

Date February 28, 2022