N-CSR 1 primary-document.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

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

(Address of principal executive offices) (Zip code)
 
Alison Baur, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
 
Registrant's telephone number, including area code: 954 527-7500
 
Date of fiscal year end: 8/31
 
Date of reporting period: 8/31/23
 
Item 1. Reports to Stockholders.
 
a.)
 
The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1.)


b.)
 
Include a copy of each notice transmitted to stockholders in reliance on Rule 30e-3 under the Act (17 CFR 270.30e-3) that contains disclosures specified by paragraph (c)(3) of that rule.
Not Applicable
.
 
 
Annual
Report
and
Shareholder
Letter
Templeton
Funds
August
31,
2023
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
.
The
Securities
and
Exchange
Commission
has
adopted
new
regulations
that
will
result
in
changes
to
the
design
and
delivery
of
annual
and
semiannual
shareholder
reports
beginning
in
July
2024.
If
you
have
previously
elected
to
receive
shareholder
reports
electronically,
you
will
continue
to
do
so
and
need
not
take
any
action.
Otherwise,
paper
copies
of
the
Fund’s
shareholder
reports
will
be
mailed
to
you
beginning
in
July
2024.
If
you
would
like
to
receive
shareholder
reports
and
other
communications
from
the
Fund
electronically
instead
of
by
mail,
you
may
make
that
request
at
any
time
by
contacting
your
financial
intermediary
(such
as
a
broker-dealer
or
bank)
or,
if
you
are
a
direct
investor,
enrolling
at
franklintempleton.com.
You
may
access
franklintempleton.com
by
scanning
the
code
below.
Templeton
Funds
1
franklintempleton.com
Annual
Report
SHAREHOLDER
LETTER
Dear
Shareholder,
We
are
pleased
to
provide
the
annual
report
of
Templeton
Funds
for
the
12-month
reporting
period
ended
August
31,
2023.
Please
read
on
for
a
detailed
look
at
prevailing
economic
and
market
conditions
during
the
Fund’s
reporting
period
and
to
learn
how
those
conditions
have
affected
Fund
performance.
As
always,
we
remain
committed
to
providing
you
with
excellent
service
and
a
full
spectrum
of
investment
choices.
We
also
remain
committed
to
supplementing
the
support
you
receive
from
your
financial
advisor.
One
way
we
accomplish
this
is
through
our
website,
www.franklintempleton.com
.
Here
you
can
gain
immediate
access
to
market
and
investment
information,
including:
•
Fund
prices
and
performance.
•
Market
insights
and
commentaries
from
our
portfolio
Managers,
and
•
A
host
of
educational
resources.
We
look
forward
to
helping
you
meet
your
financial
goals.
Sincerely,
Manraj
S.
Sekhon,
CFA
Chief
Investment
Officer
Templeton
Global
Equity
Group
CFA
®
is
a
trademark
owned
by
CFA
Institute.
franklintempleton.com
Annual
Report
2
Contents
Funds’
Overview
3
Templeton
Foreign
Fund
4
Templeton
International
Climate
Change
Fund
11
Templeton
World
Fund
18
Financial
Highlights
and
Schedules
of
Investments
25
Financial
Statements
45
Notes
to
Financial
Statements
51
Report
of
Independent
Registered
Public
Accounting
Firm
68
Tax
Information
69
Board
Members
and
Officers
70
Shareholder
Information
75
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
3
franklintempleton.com
Annual
Report
Funds’
Overview
Q.
What
were
the
overall
market
conditions
during
the
Funds'
reporting
period?
A.
Global
stocks
rose
during
the
12-month
reporting
period
ended
August
31,
2023.
After
reaching
a
low
in
mid-October,
stocks
rallied
as
many
investors
hoped
the
U.S.
Federal
Reserve
(Fed)
would
soon
slow
the
pace
of
its
policy
tightening,
but
this
optimism
faded
and
equities
worldwide
collectively
ended
2022
with
a
significant
loss.
A
strong
rally
in
January
2023
was
followed
by
heightened
volatility
in
March
due
to
banking
turmoil
in
the
U.S.
and
Switzerland.
However,
fairly
quick
action
by
authorities
in
both
countries
to
stem
potential
contagion
calmed
investors.
During
the
latter
part
of
the
period,
global
equities
benefited
from
easing
concerns
about
the
banking
industry,
passage
of
legislation
that
suspended
the
U.S.
debt
ceiling,
first-quarter
corporate
earnings
reports
that
generally
exceeded
consensus
estimates,
and
several
central
banks’
slower
pace
or
pausing
of
interest-rate
hikes.
The
final
quarter
of
the
period
showed
a
significant
rotation
back
into
U.S.
growth
stocks
following
the
banking
turmoil
in
the
U.S.
with
the
top
5
technology
companies
now
accounting
for
most
of
the
return
in
the
S&P
500
and
over
50%
of
the
return
in
global
indices.
This
is
despite
interest
rates
and
inflation
remaining
at
elevated
levels.
4
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
Fund
Overview
Q.
What
was
the
Fund's
investment
strategy?
A.
Our
investment
strategy
employs
a
bottom-up,
value-
oriented,
long-term
approach.
We
focus
on
the
market
price
of
a
company’s
securities
relative
to
our
evaluation
of
the
company’s
long-term
earnings,
asset
value
and
cash
flow
potential.
We
also
consider
the
company’s
price/earnings
ratio,
price/cash
flow
ratio,
profit
margins
and
liquidation
value.
The
Fund
may,
from
time
to
time,
engage
in
currency-related
derivatives,
such
as
currency
and
cross-currency
forwards
and
currency
futures
contracts,
to
seek
to
hedge
(protect)
against
currency
risks.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
+24.57%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
MSCI
All
Country
World
Index
(ACWI)
ex
USA
Index-NR,
which
measures
stock
performance
in
global
developed
and
emerging
markets
excluding
the
U.S.,
posted
a
+11.89%
cumulative
total
return.
1
Please
note
index
performance
information
is
provided
for
reference
and
we
do
not
attempt
to
track
the
index
but
rather
undertake
investments
on
the
basis
of
fundamental
research.
You
can
find
more
performance
data
in
the
Performance
Summary
beginning
on
page
7
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Q.
How
did
we
respond
to
these
changing
market
conditions?
A.
As
always,
the
focus
in
the
Fund
is
to
buy
value,
not
market
outlooks
or
trends.
We
continue
to
try
and
identify
those
areas
of
the
market
where
both
earnings
and
expectations
are
already
low,
combined
with
strong
long-
term
drivers
which
will
emerge
and
drive
performance
over
time.
We
remained
encouraged
by
the
relative
and
absolute
valuations
on
international
markets
and
the
number
of
value
opportunities
on
offer.
The
Fund
remains
attractively
valued
to
us
at
sub
10x
earnings
with
a
strong
expected
EPS
growth
over
the
coming
years,
in
our
view.
Q.
What
were
the
leading
contributors
to
performance?
A.
The
leading
individual
contributor
was
the
U.K.-based
aerospace
and
defense
company
Rolls-Royce
Holdings
which
has
undergone
a
revival
of
fortunes
in
the
past
year
under
the
stewardship
of
a
new
CEO.
Its
share
price
surged
following
the
publication
of
an
unscheduled
earnings
update
in
July
that
indicated
results
for
the
first
half
of
2023
were
“materially
above
consensus
expectations.”
As
a
result,
Rolls-Royce’s
shares,
which
had
plummeted
after
the
onset
of
the
COVID-19
pandemic,
experienced
a
double-digit
percentage
price
gain
in
one
day.
In
our
view,
the
company
remains
a
compelling
turnaround
story.
Elsewhere,
holdings
in
autos
and
auto
suppliers
contributed
strongly.
We
have
been
encouraged
by
attractive
valuations
in
an
industry
that
is
slowly
emerging
from
a
3-year
recession
post
COVID-19
with
supply
chains
gradually
easing
and
production
continuing
to
rise,
while
pricing
has
remained
stubbornly
strong.
This
has
been
recognized
by
the
market
with
our
holdings
up
significantly
during
the
period.
In
terms
of
individual
stocks,
BMW
was
the
second
largest
contributor,
behind
Rolls-Royce.
BMW
rallied
since
bottoming
in
September
2022,
below
the
value
of
its
cash
on
the
balance
sheet
and
lease
fleet
(with
nothing
ascribed
for
the
core
business).
Auto
parts
supplier
Forvia
performed
strongly
as
results
in
the
period
were
better-
than-expected
and
leverage
decreased
significantly
on
the
back
of
disposals
and
better
FCF
generation.
They
had
also
managed
to
refinance
the
debt
associated
with
the
Hella
acquisition.
Forvia
remains
part
of
the
portfolio,
whereas
the
stake
in
BMW
was
liquidated
by
period-end.
Geographic
Composition
8/31/23
%
of
Total
Net
Assets
Europe
57.1%
Asia
31.7%
North
America
2.1%
Short-Term
Investments
&
Other
Net
Assets
9.1%
1.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
30
.
Templeton
Foreign
Fund
5
franklintempleton.com
Annual
Report
Q.
What
were
the
leading
detractors
from
performance?
A.
DXC
Technology,
a
U.S.-based
multinational
IT
solutions
company,
was
the
leading
relative
detractor.
Its
performance
was
affected
by
the
release
in
early
August
of
disappointing
fiscal
first-quarter
2024
earnings
results
and
management’s
lower
guidance.
Management
downwardly
revised
its
guidance
on
fiscal-year
2024
revenue,
earnings
per
share,
and
free
cash
flow
(FCF).
The
company’s
earnings
results
were
impacted
by
resale
equipment
revenue
declining
faster
than
initial
expectations
and
lower
project
work
in
the
global
infrastructure
services
segment
given
the
uncertain
macro
environment.
Due
to
the
magnitude
of
the
earnings
cuts
for
fiscal-year
2024
and
carryover
for
future
years,
the
investor
reaction
seems
justified;
however,
the
earnings
results
did
include
some
positives
as
analytics
and
engineering
(within
the
global
business
services
segment)
performed
well
and
FCF
came
in
better
for
the
quarter.
S4
Capital,
a
digital-focused
marketing
agency
founded
in
2018
by
the
former
chief
executive
officer
of
WPP
(not
a
fund
holding),
Sir
Martin
Sorrell,
also
hampered
relative
performance.
Its
shares
sold
off
in
July
2023
after
the
company
issued
a
profit
warning
citing
“challenging
macroeconomic
conditions”
and
technology
clients
“remaining
cautious
and
very
focused
on
the
short
term.”
Despite
this
setback,
we
believe
that
S4
is
well
positioned
to
continue
to
benefit
from
the
structural
growth
of
its
underlying
markets
(digital
marketing
and
digital
transformation),
which
are
poised
to
grow
in
the
medium
term.
S4
was
initiated
during
the
reporting
period
and
is
one
of
the
smaller
positions
in
the
Fund.
Q.
Were
there
any
significant
changes
to
the
Fund
during
the
reporting
period?
A.
There
were
no
significant
changes
to
the
investment
philosophy
or
Fund
process
during
the
reporting
period.
In
terms
of
the
composition
of
the
portfolio,
the
Fund
was
down
to
49
stocks
at
the
end
of
August
2023.
The
most
significant
change
was,
therefore,
to
reduce
the
number
of
companies
in
the
Fund
and
focus
on
our
highest
conviction
ideas.
Seven
new
positions
were
established
which
were
still
part
of
the
Fund
at
the
close
of
the
period,
all
of
which
were
established
in
the
first
six
months
of
the
reporting
period
(i.e.
Q3
and
Q4
2022).
Of
these,
two
of
the
largest
new
positions
were
in
U.K.
home
builders
Persimmon
and
Barratt
Developments.
On
purchasing
in
late
2022,
both
stocks
had
declined
some
50%
over
the
year,
pushing
valuations
to
tangible
book
Top
10
Industries
8/31/23
%
of
Total
Net
Assets
a
Banks
17.5%
Oil,
Gas
&
Consumable
Fuels
11.2%
Semiconductors
&
Semiconductor
Equipment
6.9%
Automobile
Components
6.2%
Broadline
Retail
5.2%
Technology
Hardware,
Storage
&
Peripherals
4.9%
Aerospace
&
Defense
4.4%
Household
Durables
4.2%
Pharmaceuticals
4.1%
Insurance
3.2%
Top
10
Countries
8/31/23
a
%
of
Total
Net
Assets
a
a
United
Kingdom
22.7%
Netherlands
10.6%
Germany
10.3%
South
Korea
8.7%
Japan
7.5%
China
6.4%
France
5.7%
Ireland
3.6%
Hong
Kong
3.2%
Taiwan
2.6%
Top
10
Holdings
8/31/23
Company
Industry,
Country
%
of
Total
Net
Assets
a
a
BP
plc
5.0%
Oil,
Gas
&
Consumable
Fuels,
United
Kingdom
Samsung
Electronics
Co.
Ltd.
4.9%
Technology
Hardware,
Storage
&
Peripherals,
South
Korea
Shell
plc
4.6%
Oil,
Gas
&
Consumable
Fuels,
Netherlands
Standard
Chartered
plc
3.1%
Banks,
United
Kingdom
Lloyds
Banking
Group
plc
2.8%
Banks,
United
Kingdom
Rolls-Royce
Holdings
plc
2.7%
Aerospace
&
Defense,
United
Kingdom
Infineon
Technologies
AG
2.6%
Semiconductors
&
Semiconductor
Equipment,
Germany
Bayer
AG
2.6%
Pharmaceuticals,
Germany
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
2.6%
Semiconductors
&
Semiconductor
Equipment,
Taiwan
Alibaba
Group
Holding
Ltd.
2.5%
Broadline
Retail,
China
Templeton
Foreign
Fund
6
franklintempleton.com
Annual
Report
levels
or
below.
Although
the
near-term
outlook
was
and
is
challenging
with
affordability
decreasing
and
house
prices
falling,
we
believed
this
to
be
adequately
reflected
in
the
valuations.
Additionally,
the
homebuilders,
like
staffing
companies,
have
counter
cyclical
cash
flows
which
will
help
cushion
the
downside
as
inventory
is
sold
(albeit
at
lower
prices)
and
new
land
purchases
slow.
Finally,
we
believe
Persimmon
and
Barratt
(and
the
industry
in
general)
are
much
better
positioned
for
the
inevitable
slowdown
this
time
round
with
net
cash
balance
sheets
(relative
to
the
financial
crisis).
We
believe
these
companies
have
produced
strong
returns
on
capital
over
the
long
term,
and
we
expect
that
to
continue
after
the
downcycle
has
passed.
In
keeping
with
the
focus
on
reducing
the
number
of
stocks
in
the
Fund,
seventeen
positions
which
existed
in
September
2022
had
been
liquidated
over
the
course
of
the
following
year.
These
included
stakes
in
E.ON,
VIPSHOP,
Justeattakeway.com,
and
BAE
Systems.
Thank
you
for
your
continued
participation
in
Templeton
Foreign
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Christopher
James
Peel,
CFA
Lead
Portfolio
Manager
Herbert
J.
Arnett,
Jr.
Peter
M.
Moeschter,
CFA
Warren
Pustam,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
August
31,
2023,
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
August
31,
2023
Templeton
Foreign
Fund
7
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/23
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A
:
5.50%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4
1-Year
+24.57%
+17.68%
5-Year
+14.69%
+1.62%
10-Year
+34.84%
+2.45%
Advisor
1-Year
+24.84%
+24.84%
5-Year
+16.07%
+3.02%
10-Year
+38.17%
+3.29%
See
page
9
for
Performance
Summary
footnotes.
Templeton
Foreign
Fund
Performance
Summary
8
franklintempleton.com
Annual
Report
See
page
9
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
A
(8/31/13–8/31/23)
Advisor
Class
(8/31/13–8/31/23)
Templeton
Foreign
Fund
Performance
Summary
9
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
All
investments
involve
risks,
including
possible
loss
of
principal.
International
investments
are
subject
to
special
risks,
including
currency
fluctuations
and
social,
economic
and
political
uncertainties,
which
could
increase
volatility.
These
risks
are
magnified
in
emerging
markets.
To
the
extent
the
Fund
invests
in
companies
in
a
specific
country
or
region,
the
Fund
may
experience
greater
volatility
than
a
fund
that
is
more
broadly
diversified
geographically.
Derivative
instruments
can
be
illiquid,
may
disproportionately
increase
losses,
and
have
a
potentially
large
impact
on
performance.
The
manager
may
consider
environmental,
social
and
governance
(ESG)
criteria
in
the
research
or
investment
process;
however,
ESG
considerations
may
not
be
a
determinative
factor
in
security
selection.
In
addition,
the
manager
may
not
assess
every
investment
for
ESG
criteria,
and
not
every
ESG
factor
may
be
identified
or
evaluated.
These
and
other
risks
are
discussed
in
the
Fund’s
prospectus.
1.
Gross
expenses
are
the
Fund’s
total
annual
operating
expenses
as
of
the
Fund’s
prospectus
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
Net
expenses
reflect
contractual
fee
waivers,
expense
caps
and/or
reimbursements,
which
cannot
be
terminated
prior
to
12/31/23
without
Board
consent.
Additional
amounts
may
be
voluntarily
waived
and/or
reimbursed
and
may
be
modified
or
discontinued
at
any
time
without
notice.
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:
FactSet.
The
MSCI
ACWI
ex
USA
Index-NR
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
the
equity
market
performance
of
global
developed
and
emerging
markets,
excluding
the
U.S.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(9/1/22–8/31/23)
Share
Class
Net
Investment
Income
A
$0.0814
C
$0.0156
R
$0.0660
R6
$0.1060
Advisor
$0.0985
Total
Annual
Operating
Expenses
6
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
1.10%
1.16%
Advisor
0.85%
0.91%
Your
Fund’s
Expenses
Templeton
Foreign
Fund
10
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
3/1/23
Ending
Account
Value
8/31/23
Expenses
Paid
During
Period
3/1/23–8/31/23
1,2
Ending
Account
Value
8/31/23
Expenses
Paid
During
Period
3/1/23–8/31/23
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,037.30
$5.64
$1,019.66
$5.60
1.10%
C
$1,000
$1,033.30
$9.47
$1,015.89
$9.39
1.85%
R
$1,000
$1,035.50
$6.92
$1,018.40
$6.86
1.35%
R6
$1,000
$1,039.50
$3.80
$1,021.48
$3.77
0.74%
Advisor
$1,000
$1,039.50
$4.37
$1,020.92
$4.33
0.85%
11
franklintempleton.com
Annual
Report
1.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
37
.
Templeton
International
Climate
Change
Fund
Fund
Overview
Q.
What
was
the
Fund's
investment
strategy?
A.
When
choosing
equity
investments
for
the
Fund,
we
apply
a
bottom-up,
value-oriented,
long-term
approach
to
select
securities
of
companies
we
believe
are
both
undervalued
and
meet
our
standards
for
transitioning
to
a
lower
carbon
economy.
We
focus
on
the
market
price
of
the
company’s
securities
relative
to
our
evaluation
of
the
company’s
long-term
earnings,
asset
value
and
cash
flow
potential.
Our
analysis
includes
an
assessment
of
the
potential
impacts
of
material
environmental,
social
and
governance
(ESG)
factors
on
the
long-term
risk
and
return
profile
of
a
company.
We
also
consider
a
company’s
price/earnings
ratio,
price/cash
flow
ratio,
profit
margins
and
liquidation
value.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
+25.60%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
MSCI
All
Country
World
Index
(ACWI)
ex
USA
Index-NR,
which
measures
stock
performance
in
global
developed
and
emerging
markets
excluding
the
U.S.,
posted
a
+11.89%
cumulative
total
return.
1
Please
note
index
performance
information
is
provided
for
reference
and
we
do
not
attempt
to
track
the
index
but
rather
undertake
investments
on
the
basis
of
fundamental
research.
You
can
find
more
performance
data
in
the
Performance
Summary
beginning
on
page
14
.
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
.
Q.
What
were
the
leading
contributors
to
performance?
A.
Our
financials
holdings
contributed
positively
to
relative
performance
as
the
shares
of
Dutch
bank
ING
Groep
and
U.K.-headquartered
bank
Standard
Chartered
rebounded
well
following
the
banking
turmoil
seen
in
March
2023
and
benefited
more
broadly
from
rising
interest
rates.
Financials
was
the
top
performer
at
the
sector
level
and
ING
was
the
best
performer
at
the
individual
stock
level.
ING
shares
rallied
as
sentiment
towards
Europe,
and
European
banks
in
particular,
improved
following
a
fall
in
European
gas
prices
which
reduced
pressure
on
European
economies
in
the
final
quarter
of
2022.
The
company
has
also
benefited
from
continued
rate
hikes
from
the
European
Central
Bank.
We
continue
to
believe
many
investors
are
underestimating
the
potential
earnings
growth
that
can
come
from
higher
normalized
global
interest
rates,
and
we
see
our
financial
holdings
as
attractive
enablers
of
green
finance
in
their
respective
regions.
Utilities
made
the
second
largest
relative
contribution
at
the
sector
level,
despite
an
underweight
allocation
proving
detrimental,
thanks
primarily
to
German
power
distributor
E.ON,
U.K.-based
power
producer
SSE
and
Indian
hydro
utility
NHPC.
Amid
a
‘risk-off’
environment
in
March
2023
these
stocks
performed
strongly
and
continued
to
do
so
in
April.
We
believe
these
stocks
continue
to
be
rewarded
by
investors
given
what
we
consider
their
attractive
starting
valuation
multiples,
high
dividend
payouts
and
reasonably
defensive
business
models.
We
see
these
companies
as
potentially
significant
beneficiaries
of
decarbonization,
with
a
key
role
to
play
in
expanding
transmission,
distribution,
and
renewable
energy
infrastructure.
The
industrials
sector
was
also
a
significant
contributor,
driven
by
stock
selection
and
an
overweight
in
the
sector.
Within
the
sector,
more
cyclical
European
companies
such
as
Italian
cabling
manufacturer
Prysmian
and
French
building
materials
leader
Saint-Gobain
performed
well
on
the
back
of
a
mild
winter
in
Europe
and
an
easing
of
recessionary
fears.
Within
the
information
technology
sector,
semiconductor
stocks
made
a
significant
contribution
as
the
shares
of
many
manufacturers
rose
higher
on
the
back
of
astonishingly
strong
earnings
results
reported
by
NVIDIA.
Semiconductor
companies
subject
to
this
share-price
uptrend
in
the
portfolio
included
German
power
electronics
provider
Infineon
Technologies
and
Switzerland-based
STMicroelectronics.
We
continue
to
like
these
companies
as
long-term
plays
on
several
trends
linked
to
decarbonization
(including
EV
adoption),
the
internet
of
things,
and
digitalization.
Several
regions
made
favorable
contributions
to
relative
quarterly
performance,
although
none
more
so
than
in
Europe
where
stock
selection
and
an
overweight
resulted
in
significant
gains.
Within
Europe,
the
Netherlands,
Germany,
the
U.K.
and
Switzerland
made
the
largest
positive
contributions.
Templeton
International
Climate
Change
Fund
12
franklintempleton.com
Annual
Report
Q.
What
were
the
leading
detractors
from
performance?
A.
In
what
was
a
very
strong
year
for
the
Fund,
none
of
the
twelve
GICS
sectors
detracted
from
relative
performance.
Health
care,
which
is
a
significant
underweight
for
the
Fund,
contributed
the
least.
The
leading
source
of
relative
losses
at
the
stock
level
was
in
the
industrials
sector,
in
the
form
of
Spanish
solar
tracker
manufacturer
Soltec
Power
Holdings
which
detracted
as
many
investors
looked
to
sell
down
smaller
companies
and
those
with
potential
leverage
issues.
We
think
the
company
remains
an
attractive
play
on
the
Spanish
and
Latin
American
solar
industries,
and
at
period-end
it
still
traded
at
a
significant
discount
to
what
we
considered
to
be
its
intrinsic
value.
Within
the
materials
sector,
our
mining
holdings
dragged
on
Fund
performance,
with
Japanese
nickel
and
copper
producer
Sumitomo
Metal
Mining
and
Norwegian
aluminum
company
Norsk
Hydro
underperforming
the
broad
equity
market
as
raw
material
prices
fell.
We
believe
the
demand
for
metals
such
as
aluminum
and
copper
should
see
substantial
demand
growth
from
energy
transition,
putting
upward
pressure
on
pricing
and
benefiting
lower-carbon
manufacturers
of
these
products.
Thank
you
for
your
continued
participation
in
Templeton
International
Climate
Change
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Craig
Cameron,
CFA
Tina
Sadler,
CFA
Herbert
J.
Arnett,
Jr.
Portfolio
Management
Team
Geographic
Composition
8/31/23
%
of
Total
Net
Assets
Europe
63.5%
Asia
21.9%
North
America
7.5%
Other
1.0%
Short-Term
Investments
&
Other
Net
Assets
6.1%
Top
10
Industries
8/31/23
%
of
Total
Net
Assets
a
Electrical
Equipment
16.5%
Banks
12.7%
Semiconductors
&
Semiconductor
Equipment
11.3%
Metals
&
Mining
8.9%
Multi-Utilities
8.8%
Automobiles
8.1%
Building
Products
6.0%
Containers
&
Packaging
6.0%
Electric
Utilities
4.9%
Automobile
Components
3.4%
Top
10
Holdings
8/31/23
Company
Industry,
Country
%
of
Total
Net
Assets
a
a
Cie
de
Saint-Gobain
SA
6.0%
Building
Products,
France
Smurfit
Kappa
Group
plc
6.0%
Containers
&
Packaging,
Ireland
ING
Groep
NV
6.0%
Banks,
Netherlands
Standard
Chartered
plc
4.8%
Banks,
United
Kingdom
E.ON
SE
4.6%
Multi-Utilities,
Germany
Signify
NV
4.4%
Electrical
Equipment,
United
States
Honda
Motor
Co.
Ltd.
4.3%
Automobiles,
Japan
Prysmian
SpA
4.3%
Electrical
Equipment,
Italy
Veolia
Environnement
SA
4.2%
Multi-Utilities,
France
SSE
plc
4.1%
Electric
Utilities,
United
Kingdom
Top
10
Countries
8/31/23
a
%
of
Total
Net
Assets
a
a
France
13.6%
Germany
12.2%
United
Kingdom
12.0%
Japan
8.3%
United
States
7.5%
Ireland
6.0%
Netherlands
6.0%
Italy
4.3%
Taiwan
4.0%
Norway
3.9%
Templeton
International
Climate
Change
Fund
13
franklintempleton.com
Annual
Report
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
August
31,
2023,
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
August
31,
2023
Templeton
International
Climate
Change
Fund
14
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/23
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A:
5.50%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4
1-Year
+25.60%
+18.70%
5-Year
+38.69%
+5.56%
Since
Inception
(6/1/18)
+33.62%
+4.54%
Advisor
1-Year
+25.88%
+25.88%
5-Year
+40.50%
+7.04%
Since
Inception
(6/1/18)
+35.44%
+5.95%
See
page
16
for
Performance
Summary
footnotes.
Templeton
International
Climate
Change
Fund
Performance
Summary
15
franklintempleton.com
Annual
Report
See
page
16
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
A
(6/1/18–8/31/23)
Advisor
Class
(6/1/18–8/31/22)
Templeton
International
Climate
Change
Fund
Performance
Summary
16
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.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
All
investments
involve
risks,
including
possible
loss
of
principal.
Equity
securities
are
subject
to
price
fluctuation
and
possible
loss
of
principal.
International
investments
are
subject
to
special
risks,
including
currency
fluctuations
and
social,
economic
and
political
uncertainties,
which
could
increase
volatility.
These
risks
are
magnified
in
emerging
markets
.
Derivative
instruments
can
be
illiquid,
may
disproportionately
increase
losses,
and
have
a
potentially
large
impact
on
performance.
The
managers‘
environmental,
social
and
governance
(ESG)
strategies
may
limit
the
types
and
number
of
investments
available
and,
as
a
result,
may
forgo
favorable
market
opportunities
or
underperform
strategies
that
are
not
subject
to
such
criteria.
There
is
no
guarantee
that
the
strategy's
ESG
directives
will
be
successful
or
will
result
in
better
performance.
These
and
other
risks
are
discussed
in
the
Fund’s
prospectus.
1.
Gross
expenses
are
the
Fund’s
total
annual
operating
expenses
as
of
the
Fund's
prospectus
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
Net
expenses
reflect
contractual
fee
waivers,
expense
caps
and/or
reimbursements,
which
cannot
be
terminated
prior
to
12/31/23
without
Board
consent.
Additional
amounts
may
be
voluntarily
waived
and/or
reimbursed
and
may
be
modified
or
discontinued
at
any
time
without
notice.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Effective
6/3/22,
the
Fund
began
offering
Class
A
shares.
Class
A
performance
shown
has
been
calculated
as
follows:
(a)
for
periods
prior
to
6/3/22,
a
restated
figure
is
used
based
on
the
Fund’s
Advisor
Class
performance
that
includes
any
Rule
12b-1
rate
differential
that
exists
between
Class
A
and
Advisor
Class;
and
(b)
for
periods
after
6/3/22,
actual
Class
A
performance
is
used,
reflecting
all
charges
and
fees
applicable
to
that
class.
5.
Source:
FactSet.
The
MSCI
ACWI
ex
USA
Index-NR
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
the
equity
market
performance
of
global
developed
and
emerging
markets,
excluding
the
U.S.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(9/1/22–8/31/23)
Share
Class
Net
Investment
Income
Long-Term
Capital
Gain
Total
A
$0.1532
$0.4095
$0.5627
C
$0.1272
$0.4095
$0.5367
R6
$0.1528
$0.4095
$0.5623
Advisor
$0.1520
$0.4095
$0.5615
Total
Annual
Operating
Expenses
6
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
A
1.22%
18.81%
Advisor
0.97%
9.16%
Your
Fund’s
Expenses
Templeton
International
Climate
Change
Fund
17
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
3/1/23
Ending
Account
Value
8/31/23
Expenses
Paid
During
Period
3/1/23–8/31/23
1,2
Ending
Account
Value
8/31/23
Expenses
Paid
During
Period
3/1/23–8/31/23
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,022.08
$6.22
$1,019.06
$6.21
1.22%
C
$1,000
$1,022.00
$6.60
$1,018.68
$6.58
1.29%
R6
$1,000
$1,022.90
$4.79
$1,020.47
$4.78
0.94%
Advisor
$1,000
$1,022.91
$4.95
$1,020.32
$4.94
0.97%
18
franklintempleton.com
Annual
Report
Templeton
World
Fund
Fund
Overview
Q.
What
was
the
Fund's
investment
strategy?
A.
Our
investment
strategy
employs
a
bottom-up,
value-
oriented,
long-term
approach.
We
focus
on
the
market
price
of
a
company’s
securities
relative
to
our
evaluation
of
the
company’s
long-term
earnings,
asset
value
and
cash
flow
potential.
We
also
consider
the
company’s
price/earnings
ratio,
price/cash
flow
ratio,
profit
margins
and
liquidation
value.
The
Fund
may
use
a
variety
of
equity-related
derivatives,
which
may
include
equity
futures
and
equity
index
futures,
for
various
purposes
including
enhancing
Fund
returns,
increasing
liquidity
and
gaining
exposure
to
particular
markets
in
more
efficient
or
less
expensive
ways.
The
Fund
also
may
from
time
to
time
engage
in
currency-related
derivatives,
such
as
currency
and
cross-currency
forwards
and
currency
futures
contracts,
to
hedge
some
of
its
foreign
currency
exposure.
Performance
Overview
The
Fund’s
Class
A
shares
posted
a
+19.23%
cumulative
total
return
for
the
12
months
under
review.
In
comparison,
the
Fund’s
benchmark,
the
MSCI
All
Country
World
Index
(ACWI)-NR,
which
measures
stock
performance
in
global
developed
and
emerging
markets,
posted
a
+13.95%
cumulative
total
return.
1
Please
note
index
performance
information
is
provided
for
reference
and
we
do
not
attempt
to
track
the
index
but
rather
undertake
investments
on
the
basis
of
fundamental
research.
You
can
find
more
performance
data
in
the
Performance
Summary
beginning
on
page
21
.
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
.
Q.
How
did
we
respond
to
these
changing
market
conditions?
A.
Throughout
the
reporting
period,
our
goal
in
managing
the
portfolio
has
not
been
to
predict
the
macroeconomic
outcome
over
the
coming
quarters,
but
to
position
the
portfolio
to
navigate
an
uncertain
macroeconomic
backdrop
with
rising
risk.
Given
the
World’s
Fund's
focus
on
higher-
quality
companies
at
reasonable
prices,
our
goal
has
been
to
protect
capital
during
market
drawdowns.
We
use
a
three-pronged
approach
to
limit
permanent
capital
loss
by
investing
in
high-quality
companies,
but
only
paying
reasonable
valuations
versus
long-term
interest
rates
and
weighting
the
portfolio
towards
companies
that
are
more
resilient
than
their
industry
peers.
These
high
hurdles
will
naturally
limit
our
ability
to
outperform
in
broad
market
rallies
that
typically
happen
when
corporate
earnings
bottom
during
a
recession
or
during
periods
led
by
investment
bubbles
created
through
cheap
money
and
investor
exuberance.
Regardless
of
what
is
happening
in
the
broader
market,
we
remain
keenly
focused
on
the
financial
productivity
of
our
portfolio
companies,
the
long-term
prospects
of
the
industries
they
operate
in
and
the
price
we
pay
for
a
stream
of
future
cashflows.
Q.
What
were
the
leading
contributors
to
performance?
A.
Stock
selection
in
the
industrials
sector
was
comfortably
the
largest
contributing
factor
at
the
sector
level
during
the
reporting
period.
Within
industrials,
the
best
performing
holding
was
Rolls-Royce
Holdings,
a
U.K.-based
aerospace
and
defence
company.
Over
the
one-year
period,
Rolls-
Royce
has
rebounded
strongly
from
pandemic
lows
under
the
guidance
of
a
new
CEO.
Its
share
price
rose
sharply
towards
the
end
of
the
period
following
the
publication
of
an
unscheduled
earnings
update
that
indicated
results
for
the
first
half
of
2023
were
“materially
above
consensus
expectations.”
This
included
an
upgrade
of
full-year
2023
guidance
that
was
significantly
ahead
of
consensus
estimates,
first-half
engine
flying
hours
recovering
to
83%
of
the
2019
level,
and
FCF
(free
cash
flow)
improvement
coming
through
faster
than
previously
guided,
further
Geographic
Composition
8/31/23
%
of
Total
Net
Assets
North
America
67.8%
Europe
19.4%
Asia
11.2%
Short-Term
Investments
&
Other
Net
Assets
1.6%
1.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
43
.
Templeton
World
Fund
19
franklintempleton.com
Annual
Report
strengthening
the
group’s
balance
sheet.
As
a
result,
Rolls-
Royce’s
shares,
which
had
plummeted
after
the
onset
of
the
COVID-19
pandemic,
experienced
a
double-digit
percentage
price
gain
in
one
day.
In
our
view,
the
company
remains
a
compelling
turnaround
story.
We
believe
the
maturing
of
the
XWB
engine
program
should
continue
to
drive
earnings
and
FCF
growth,
while
the
group’s
new
chief
executive
officer
(CEO)
is
expected
to
announce
a
new
strategic
plan
and
mid-term
target
in
the
second
half
of
2023.
Other
top
performers
included
U.S.
mega
caps,
Meta
and
Salesforce
in
information
technology
(IT)
and
Alphabet
in
Communication
Services.
We
added
shares
in
these
stocks
when
the
market
was
overly
focused
on
near-term
headwinds
driven
mostly
by
slowing
growth
and
a
rising
discount
rate
despite
managements’
commitments
in
late
2022
to
improve
fundamentals
and
capital
efficiency.
At
the
sector
level,
an
overweight
in
IT
proved
favorable,
as
did
having
no
exposure
to
Utilities
and
Real
Estate.
Q.
What
were
the
leading
detractors
from
performance?
A.
In
what
was
a
strong
year
for
the
Fund
against
the
benchmark,
only
health
care
and
financials
detracted
at
the
sector
level.
In
the
case
of
health
care
this
was
due
to
a
combination
of
stock
selection
and
an
overweight
allocation.
During
a
period
where
cyclical
sectors
performed
especially
well,
defensive
sectors
like
health
care
lagged
somewhat.
In
the
communication
services
sector,
T-Mobile
and
the
Walt
Disney
Company
were
the
two
largest
detractors
at
the
stock
level.
T-Mobile
remains
a
part
of
the
portfolio,
but
Disney
was
eliminated
given
what
we
believe
to
be
persistent
headwinds
that
are
not
discounted
in
the
current
share
price.
Disney’s
assets
are
worth
more
than
the
current
enterprise
value.
However,
the
transition
from
the
U.S.
cable
bundle
to
global
streaming
is
return
on
invested
capital
(ROIC)
dilutive
in
the
short
run
and
this
negative
shift
has
yet
to
peak.
Also,
Disney
may
acquire
the
Hulu
asset
from
Comcast
for
$10bn,
which
means
the
balance
sheet
will
only
deteriorate
further.
Despite
the
rally
in
technology
names
YTD,
we
can
purchase
some
of
the
better
managed
internet
businesses
at
a
lower
valuation
than
Disney
despite
its
recent
underperformance,
which
might
indicate
less
downside
support
at
the
current
level.
Target,
one
of
the
largest
U.S.
retailers,
was
a
new
position
established
in
Q1
2023
but
ended
the
one-year
reporting
period
as
one
of
the
Fund’s
main
detractors.
Our
view
is
that
Target
offers
above
average
growth
driven
by
strong
customer
loyalty
and
superior
merchandising
driving
market
share
gains.
The
stock
sold
off
in
2022,
as
the
company
struggled
to
manage
discretionary
inventory
and
supply
chain
after
years
of
rapid
sales
growth
during
Covid.
The
Company
has
made
significant
progress
aligning
inventory
with
demand,
and
they
have
identified
material
cost
savings
to
structurally
improve
operating
margins.
Importantly,
Target's
customer
traffic
remains
positive
post
Covid,
indicating
it
is
a
matter
of
when,
not
if,
discretionary
sales
return.
We
believe
the
market
is
underestimating
Target's
earnings
recovery,
leading
to
the
stock
trading
at
a
material
discount
to
peers.
Top
10
Industries
8/31/23
%
of
Total
Net
Assets
a
Semiconductors
&
Semiconductor
Equipment
13.4%
Software
12.9%
Interactive
Media
&
Services
8.7%
Broadline
Retail
7.3%
Oil,
Gas
&
Consumable
Fuels
5.9%
Life
Sciences
Tools
&
Services
5.9%
Capital
Markets
5.0%
Health
Care
Providers
&
Services
4.6%
Aerospace
&
Defense
3.8%
Ground
Transportation
3.7%
Top
10
Countries
8/31/23
a
%
of
Total
Net
Assets
a
a
United
States
67.7%
Germany
9.7%
United
Kingdom
5.6%
India
3.6%
Japan
3.2%
Taiwan
2.8%
France
2.6%
Hong
Kong
1.7%
Netherlands
1.5%
Templeton
World
Fund
20
franklintempleton.com
Annual
Report
Thank
you
for
your
continued
participation
in
Templeton
World
Fund.
We
look
forward
to
serving
your
future
investment
needs.
Peter
M.
Moeschter,
CFA
Lead
Portfolio
Manager
Herbert
J.
Arnett,
Jr.
Christopher
James
Peel,
CFA
Warren
Pustam,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
August
31,
2023,
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
8/31/23
Company
Industry,
Country
%
of
Total
Net
Assets
a
a
Amazon.com,
Inc.
7.2%
Broadline
Retail,
United
States
Alphabet,
Inc.
5.7%
Interactive
Media
&
Services,
United
States
Microsoft
Corp.
5.3%
Software,
United
States
Salesforce,
Inc.
4.0%
Software,
United
States
Rolls-Royce
Holdings
plc
3.8%
Aerospace
&
Defense,
United
Kingdom
SAP
SE
3.5%
Software,
Germany
UnitedHealth
Group,
Inc.
3.1%
Health
Care
Providers
&
Services,
United
States
Thermo
Fisher
Scientific,
Inc.
3.1%
Life
Sciences
Tools
&
Services,
United
States
Meta
Platforms,
Inc.
2.9%
Interactive
Media
&
Services,
United
States
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
2.8%
Semiconductors
&
Semiconductor
Equipment,
Taiwan
Performance
Summary
as
of
August
31,
2023
Templeton
World
Fund
21
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
8/31/23
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A
:
5.50%
maximum
initial
sales
charge;
Advisor
Class:
no
sales
charges.
For
other
share
classes,
visit
franklintempleton.com.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
A
4
1-Year
+19.23%
+12.67%
5-Year
+5.83%
+0.01%
10-Year
+41.30%
+2.93%
Advisor
1-Year
+19.52%
+19.52%
5-Year
+7.09%
+1.38%
10-Year
+44.85%
+3.77%
See
page
23
for
Performance
Summary
footnotes.
Templeton
World
Fund
Performance
Summary
22
franklintempleton.com
Annual
Report
See
page
23
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
indexes
include
reinvestment
of
any
income
or
distributions.
They
differ
from
the
Fund
in
composition
and
do
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
A
(8/31/13–8/31/23)
Advisor
Class
(8/31/13–8/31/23)
Templeton
World
Fund
Performance
Summary
23
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.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
All
investments
involve
risks,
including
possible
loss
of
principal.
International
investments
are
subject
to
special
risks,
including
currency
fluctuations
and
social,
economic
and
political
uncertainties,
which
could
increase
volatility.
These
risks
are
magnified
in
emerging
markets.
To
the
extent
the
Fund
invests
in
companies
in
a
specific
country
or
region,
the
Fund
may
experience
greater
volatility
than
a
fund
that
is
more
broadly
diversified
geographically.
Derivative
instruments
can
be
illiquid,
may
disproportionately
increase
losses,
and
have
a
potentially
large
impact
on
performance.
The
manager
may
consider
environmental,
social
and
governance
(ESG)
criteria
in
the
research
or
investment
process;
however,
ESG
considerations
may
not
be
a
determinative
factor
in
security
selection.
In
addition,
the
manager
may
not
assess
every
investment
for
ESG
criteria,
and
not
every
ESG
factor
may
be
identified
or
evaluated.
These
and
other
risks
are
discussed
in
the
Fund’s
prospectus.
1.
The
total
annual
operating
expenses
are
as
of
the
Fund's
prospectus
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
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:
FactSet.
The
MSCI
ACWI-NR
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
the
equity
market
performance
of
global
devel-
oped
and
emerging
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
(9/1/22–8/31/23)
Share
Class
Net
Investment
Income
Long-Term
Capital
Gain
Total
A
$0.0466
$0.1356
$0.1822
C
–
$0.1356
$0.1356
R6
$0.0736
$0.1356
$0.2092
Advisor
$0.0680
$0.1356
$0.2036
Total
Annual
Operating
Expenses
6
Share
Class
A
1.05%
Advisor
0.81%
Your
Fund’s
Expenses
Templeton
World
Fund
24
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
3/1/23
Ending
Account
Value
8/31/23
Expenses
Paid
During
Period
3/1/23–8/31/23
1,2
Ending
Account
Value
8/31/23
Expenses
Paid
During
Period
3/1/23–8/31/23
1,2
a
Net
Annualized
Expense
Ratio
2
A
$1,000
$1,127.20
$5.47
$1,020.06
$5.20
1.02%
C
$1,000
$1,123.30
$9.51
$1,016.25
$9.03
1.78%
R6
$1,000
$1,129.00
$3.96
$1,021.49
$3.76
0.74%
Advisor
$1,000
$1,128.80
$4.19
$1,021.27
$3.98
0.78%
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
25
a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.32
$7.77
$6.22
$6.61
$7.69
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.16
0.13
0.18
c
0.10
0.19
Net
realized
and
unrealized
gains
(losses)
...........
1.38
(1.28)
1.46
(0.25)
(1.09)
Total
from
investment
operations
....................
1.54
(1.15)
1.64
(0.15)
(0.90)
Less
distributions
from:
Net
investment
income
..........................
(0.08)
(0.30)
(0.09)
(0.24)
(0.18)
Net
asset
value,
end
of
year
.......................
$7.78
$6.32
$7.77
$6.22
$6.61
Total
return
d
...................................
24.57%
(15.25)%
26.57%
(2.76)%
(11.73)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.12%
1.16%
1.15%
1.19%
1.15%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.10%
1.10%
1.07%
1.10%
1.08%
Net
investment
income
...........................
2.20%
1.80%
2.45%
c
1.55%
2.69%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$1,605,982
$1,418,293
$1,990,939
$1,766,365
$2,395,260
Portfolio
turnover
rate
............................
14.85%
29.07%
37.85%
e
42.37%
e
30.81%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.23%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
26
a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.29
$7.70
$6.17
$6.54
$7.49
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.10
0.07
0.13
c
0.05
0.12
Net
realized
and
unrealized
gains
(losses)
...........
1.39
(1.27)
1.43
(0.25)
(1.05)
Total
from
investment
operations
....................
1.49
(1.20)
1.56
(0.20)
(0.93)
Less
distributions
from:
Net
investment
income
..........................
(0.02)
(0.21)
(0.03)
(0.17)
(0.02)
Net
asset
value,
end
of
year
.......................
$7.76
$6.29
$7.70
$6.17
$6.54
Total
return
d
...................................
23.65%
(15.95)%
25.55%
(3.42)%
(12.40)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.87%
1.91%
1.90%
1.94%
1.90%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.85%
1.85%
1.82%
1.85%
1.83%
Net
investment
income
...........................
1.41%
1.03%
1.81%
c
0.81%
1.94%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$21,611
$23,962
$39,083
$54,093
$87,160
Portfolio
turnover
rate
............................
14.85%
29.07%
37.85%
e
42.37%
e
30.81%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.58%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
27
a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.16
$7.58
$6.08
$6.47
$7.53
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.14
0.11
0.16
c
0.08
0.17
Net
realized
and
unrealized
gains
(losses)
...........
1.35
(1.25)
1.42
(0.24)
(1.07)
Total
from
investment
operations
....................
1.49
(1.14)
1.58
(0.16)
(0.90)
Less
distributions
from:
Net
investment
income
..........................
(0.07)
(0.28)
(0.08)
(0.23)
(0.16)
Net
asset
value,
end
of
year
.......................
$7.58
$6.16
$7.58
$6.08
$6.47
Total
return
....................................
24.27%
(15.54)%
26.29%
(3.03)%
(11.96)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.37%
1.41%
1.40%
1.44%
1.40%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.35%
1.35%
1.32%
1.35%
1.33%
Net
investment
income
...........................
1.95%
1.57%
2.21%
c
1.33%
2.44%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$116,518
$103,984
$123,744
$109,187
$127,546
Portfolio
turnover
rate
............................
14.85%
29.07%
37.85%
d
42.37%
d
30.81%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.98%.
d
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
28
a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.20
$7.64
$6.12
$6.51
$7.58
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.18
0.15
0.21
c
0.12
0.22
Net
realized
and
unrealized
gains
(losses)
...........
1.36
(1.26)
1.43
(0.24)
(1.08)
Total
from
investment
operations
....................
1.54
(1.11)
1.64
(0.12)
(0.86)
Less
distributions
from:
Net
investment
income
..........................
(0.11)
(0.33)
(0.12)
(0.27)
(0.21)
Net
asset
value,
end
of
year
.......................
$7.63
$6.20
$7.64
$6.12
$6.51
Total
return
....................................
25.02%
(14.98)%
27.02%
(2.38)%
(11.34)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.77%
0.81%
0.79%
0.79%
0.77%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.74%
0.73%
0.69%
0.70%
0.68%
Net
investment
income
...........................
2.57%
2.13%
2.86%
c
1.96%
3.09%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$341,058
$290,974
$531,344
$594,452
$906,474
Portfolio
turnover
rate
............................
14.85%
29.07%
37.85%
d
42.37%
d
30.81%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.63%.
d
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
Templeton
Funds
Financial
Highlights
Templeton
Foreign
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
29
a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$6.21
$7.64
$6.12
$6.51
$7.58
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.17
0.15
0.20
c
0.11
0.20
Net
realized
and
unrealized
gains
(losses)
...........
1.36
(1.26)
1.43
(0.24)
(1.07)
Total
from
investment
operations
....................
1.53
(1.11)
1.63
(0.13)
(0.87)
Less
distributions
from:
Net
investment
income
..........................
(0.10)
(0.32)
(0.11)
(0.26)
(0.20)
Net
asset
value,
end
of
year
.......................
$7.64
$6.21
$7.64
$6.12
$6.51
Total
return
....................................
24.84%
(14.99)%
26.88%
(2.57)%
(11.53)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.87%
0.92%
0.90%
0.94%
0.90%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.85%
0.85%
0.82%
0.85%
0.83%
Net
investment
income
...........................
2.43%
2.06%
2.80%
c
1.79%
2.94%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$680,297
$602,921
$620,885
$857,179
$857,482
Portfolio
turnover
rate
............................
14.85%
29.07%
37.85%
d
42.37%
d
30.81%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.09
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings
.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.57%.
d
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
Templeton
Funds
Schedule
of
Investments,
August
31,
2023
Templeton
Foreign
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
30
a
a
Industry
Shares
a
Value
a
Common
Stocks
90.9%
China
6.4%
a,b
Alibaba
Group
Holding
Ltd.
.........
Broadline
Retail
5,842,970
$
67,814,362
NXP
Semiconductors
NV
..........
Semiconductors
&
Semiconductor
Equipment
234,593
48,260,472
a
Prosus
NV
.....................
Broadline
Retail
874,860
60,345,716
176,420,550
France
5.7%
Dassault
Aviation
SA
..............
Aerospace
&
Defense
233,110
45,775,601
a
Forvia
SE
......................
Automobile
Components
3,190,019
67,615,731
Valeo
SE
.......................
Automobile
Components
2,244,853
43,638,116
157,029,448
Germany
10.3%
Bayer
AG
......................
Pharmaceuticals
1,313,477
71,866,955
Continental
AG
..................
Automobile
Components
797,919
59,190,957
a,c
Covestro
AG,
144A,
Reg
S
.........
Chemicals
892,495
47,397,498
d
Fresenius
Medical
Care
AG
&
Co.
KGaA
Health
Care
Providers
&
Services
697,029
33,561,701
Infineon
Technologies
AG
..........
Semiconductors
&
Semiconductor
Equipment
2,020,173
72,195,560
284,212,671
Hong
Kong
3.2%
AIA
Group
Ltd.
..................
Insurance
5,430,543
49,136,965
Prudential
plc,
(GBP
Traded)
........
Insurance
2,655,561
32,342,251
Prudential
plc,
(HKD
Traded)
........
Insurance
589,500
7,344,042
88,823,258
India
2.0%
HDFC
Bank
Ltd.
.................
Banks
2,973,174
56,352,138
Ireland
3.6%
CRH
plc
.......................
Construction
Materials
938,589
54,002,953
Smurfit
Kappa
Group
plc
...........
Containers
&
Packaging
1,067,660
44,790,897
98,793,850
Japan
7.5%
Honda
Motor
Co.
Ltd.
.............
Automobiles
2,033,895
65,741,706
Seria
Co.
Ltd.
...................
Broadline
Retail
1,029,807
16,266,068
Sony
Group
Corp.
................
Household
Durables
315,984
26,292,924
Sumitomo
Metal
Mining
Co.
Ltd.
.....
Metals
&
Mining
1,214,093
37,685,466
Sumitomo
Mitsui
Financial
Group,
Inc.
.
Banks
1,369,363
62,615,356
208,601,520
Netherlands
10.6%
EXOR
NV
......................
Financial
Services
489,813
43,348,985
ING
Groep
NV
..................
Banks
4,484,698
63,546,631
SBM
Offshore
NV
................
Energy
Equipment
&
Services
3,949,134
57,215,329
Shell
plc
.......................
Oil,
Gas
&
Consumable
Fuels
4,181,677
127,855,926
291,966,871
Portugal
1.6%
Galp
Energia
SGPS
SA,
B
.........
Oil,
Gas
&
Consumable
Fuels
3,303,785
45,601,535
South
Korea
8.7%
KB
Financial
Group,
Inc.
...........
Banks
1,428,246
58,037,535
Samsung
Electronics
Co.
Ltd.
.......
Technology
Hardware,
Storage
&
Peripherals
2,698,871
136,161,392
Shinhan
Financial
Group
Co.
Ltd.
....
Banks
1,744,881
46,754,503
240,953,430
Templeton
Funds
Schedule
of
Investments
Templeton
Foreign
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
31
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
Spain
0.8%
a
Tecnicas
Reunidas
SA
............
Energy
Equipment
&
Services
2,261,657
$
20,831,918
Switzerland
1.9%
Adecco
Group
AG
................
Professional
Services
1,252,163
53,858,899
Taiwan
2.6%
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
......................
Semiconductors
&
Semiconductor
Equipment
4,127,044
70,878,101
Thailand
1.2%
Kasikornbank
PCL
...............
Banks
9,025,777
33,615,055
United
Kingdom
22.7%
AstraZeneca
plc
.................
Pharmaceuticals
301,438
40,489,974
Barratt
Developments
plc
..........
Household
Durables
7,724,482
44,280,409
BP
plc
.........................
Oil,
Gas
&
Consumable
Fuels
22,252,522
137,504,727
CK
Hutchison
Holdings
Ltd.
.........
Industrial
Conglomerates
7,143,676
38,933,000
Imperial
Brands
plc
...............
Tobacco
2,949,536
66,782,193
Lloyds
Banking
Group
plc
..........
Banks
146,982,840
78,527,550
Persimmon
plc
..................
Household
Durables
3,296,017
44,434,566
a
Rolls-Royce
Holdings
plc
..........
Aerospace
&
Defense
26,976,655
75,678,263
a,d
S4
Capital
plc
...................
Media
12,586,320
15,787,426
Standard
Chartered
plc
............
Banks
9,428,705
84,836,782
627,254,890
United
States
2.1%
a
DXC
Technology
Co.
..............
IT
Services
2,083,670
43,215,316
Freeport-McMoRan,
Inc.
...........
Metals
&
Mining
384,510
15,345,794
58,561,110
Total
Common
Stocks
(Cost
$2,277,953,218)
....................................
2,513,755,244
Short
Term
Investments
9.0%
a
a
Industry
Principal
Amount
*
a
Value
a
a
a
a
a
a
Time
Deposits
9.0%
Canada
6.8%
National
Bank
of
Canada,
5.31%,
9/01/23
......................
50,000,000
50,000,000
Royal
Bank
of
Canada,
5.3%,
9/01/23
.
107,900,000
107,900,000
Toronto-Dominion
Bank
(The),
5.3%,
9/01/23
......................
32,000,000
32,000,000
189,900,000
France
2.2%
Credit
Agricole
Corporate
and
Investment
Bank
SA,
5.3%,
9/01/23
.
60,000,000
60,000,000
Total
Time
Deposits
(Cost
$249,900,000)
.......................................
249,900,000
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$249,900,000
)
...............................
249,900,000
a
a
a
Total
Investments
(Cost
$2,527,853,218)
99.9%
..................................
$2,763,655,244
Other
Assets,
less
Liabilities
0.1%
.............................................
1,810,674
Net
Assets
100.0%
...........................................................
$2,765,465,918
a
a
a
Templeton
Funds
Schedule
of
Investments
Templeton
Foreign
Fund
(continued)
franklintempleton.com
Annual
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The
accompanying
notes
are
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integral
part
of
these
financial
statements.
32
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Non-income
producing.
b
Variable
interest
entity
(VIE).
See
the
Fund’s
statement
of
additional
information
regarding
investments
made
through
a
VIE
structure.
At
August
31,
2023,
the
aggregate
value
of
this
security
was
$67,814,362,
representing
2.5%
of
net
assets.
c
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
August
31,
2023,
the
value
of
this
security
was
$47,397,498,
representing
1.7%
of
net
assets.
d
A
portion
or
all
of
the
security
is
on
loan
at
August
31,
2023.
See
Note
1(d).
See
Abbreviations
on
page
67
.
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
franklintempleton.com
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accompanying
notes
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an
integral
part
of
these
financial
statements.
Annual
Report
33
a
Year
Ended
August
31,
2023
2022
a
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
........................................................
$9.73
$11.44
Income
from
investment
operations
b
:
Net
investment
income
c
..............................................................
0.32
0.03
Net
realized
and
unrealized
gains
(losses)
................................................
2.08
(1.74)
Total
from
investment
operations
.........................................................
2.40
(1.71)
Less
distributions
from:
Net
investment
income
...............................................................
(0.15)
—
Net
realized
gains
..................................................................
(0.41)
—
Total
distributions
....................................................................
(0.56)
—
Net
asset
value,
end
of
year
............................................................
$11.57
$9.73
Total
return
d
........................................................................
25.60%
(15.03)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
and
expense
reduction
.........................
3.81%
18.81%
Expenses
net
of
waiver
and
payments
by
affiliates
............................................
1.23%
1.23%
Expenses
net
of
waiver
and
payments
by
affiliates
and
expense
reduction
..........................
1.22%
1.22%
Net
investment
income
................................................................
2.81%
1.41%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..........................................................
$974
$4
Portfolio
turnover
rate
.................................................................
21.51%
35.15%
a
For
the
period
June
3,
2022
(effective
date)
to
August
31,
2022.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable
and
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
(continued)
franklintempleton.com
Annual
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The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
34
a
Year
Ended
August
31,
2023
2022
a
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
........................................................
$9.71
$11.44
Income
from
investment
operations
b
:
Net
investment
income
c
..............................................................
0.30
0.01
Net
realized
and
unrealized
gains
(losses)
................................................
2.12
(1.74)
Total
from
investment
operations
.........................................................
2.42
(1.73)
Less
distributions
from:
Net
investment
income
...............................................................
(0.13)
—
Net
realized
gains
..................................................................
(0.41)
—
Total
distributions
....................................................................
(0.54)
—
Net
asset
value,
end
of
year
............................................................
$11.59
$9.71
Total
return
d
........................................................................
25.64%
(15.12)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
and
expense
reduction
.........................
5.44%
18.95%
Expenses
net
of
waiver
and
payments
by
affiliates
............................................
1.21%
1.98%
Expenses
net
of
waiver
and
payments
by
affiliates
and
expense
reduction
..........................
1.21%
1.97%
Net
investment
income
................................................................
2.70%
0.57%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..........................................................
$12
$4
Portfolio
turnover
rate
.................................................................
21.51%
35.15%
a
For
the
period
June
3,
2022
(effective
date)
to
August
31,
2022.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable
and
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
(continued)
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part
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financial
statements.
Annual
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35
a
Year
Ended
August
31,
2023
2022
a
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
........................................................
$9.73
$11.44
Income
from
investment
operations
b
:
Net
investment
income
c
..............................................................
0.26
0.04
Net
realized
and
unrealized
gains
(losses)
................................................
2.18
(1.75)
Total
from
investment
operations
.........................................................
2.44
(1.71)
Less
distributions
from:
Net
investment
income
...............................................................
(0.15)
—
Net
realized
gains
..................................................................
(0.41)
—
Total
distributions
....................................................................
(0.56)
—
Net
asset
value,
end
of
year
............................................................
$11.61
$9.73
Total
return
d
........................................................................
25.89%
(14.95)%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
and
expense
reduction
.........................
7.05%
20.46%
Expenses
net
of
waiver
and
payments
by
affiliates
............................................
0.94%
0.98%
Expenses
net
of
waiver
and
payments
by
affiliates
and
expense
reduction
..........................
0.94%
0.97%
Net
investment
income
................................................................
2.37%
1.57%
Supplemental
data
Net
assets,
end
of
year
(000’s)
..........................................................
$5
$4
Portfolio
turnover
rate
.................................................................
21.51%
35.15%
a
For
the
period
June
3,
2022
(effective
date)
to
August
31,
2022.
b
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
c
Based
on
average
daily
shares
outstanding.
d
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
Templeton
Funds
Financial
Highlights
Templeton
International
Climate
Change
Fund
(continued)
franklintempleton.com
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The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
36
a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$9.74
$14.68
$10.71
$8.91
$9.64
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.26
0.18
0.10
0.07
0.27
Net
realized
and
unrealized
gains
(losses)
...........
2.18
(4.39)
3.96
2.03
(0.93)
Total
from
investment
operations
....................
2.44
(4.21)
4.06
2.10
(0.66)
Less
distributions
from:
Net
investment
income
..........................
(0.15)
(0.13)
(0.09)
(0.30)
(0.05)
Net
realized
gains
.............................
(0.41)
(0.60)
—
—
(0.02)
Total
distributions
...............................
(0.56)
(0.73)
(0.09)
(0.30)
(0.07)
Net
asset
value,
end
of
year
.......................
$11.62
$9.74
$14.68
$10.71
$8.91
Total
return
....................................
25.88%
(29.83)%
37.89%
23.70%
(6.75)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
and
expense
reduction
...............................
6.25%
9.16%
8.16%
6.48%
9.65%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.97%
0.98%
0.97%
0.97%
0.97%
Expenses
net
of
waiver
and
payments
by
affiliates
and
expense
reduction
...............................
0.97%
0.97%
0.97%
c
0.97%
0.97%
Net
investment
income
...........................
2.39%
1.47%
0.80%
0.74%
2.94%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,500
$1,968
$2,935
$2,142
$1,783
Portfolio
turnover
rate
............................
21.51%
35.15%
53.37%
39.99%
9.55%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Templeton
Funds
Schedule
of
Investments,
August
31,
2023
Templeton
International
Climate
Change
Fund
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accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
37
a
a
Industry
Shares
a
Value
a
Common
Stocks
93.9%
Chile
1.0%
Antofagasta
plc
..................
Metals
&
Mining
1,891
$
34,632
Denmark
2.9%
a
Vestas
Wind
Systems
A/S
..........
Electrical
Equipment
4,446
102,722
France
13.6%
Cie
de
Saint-Gobain
SA
...........
Building
Products
3,240
210,779
Valeo
SE
.......................
Automobile
Components
6,018
116,985
Veolia
Environnement
SA
..........
Multi-Utilities
4,711
146,975
474,739
Germany
12.2%
Bayerische
Motoren
Werke
AG
......
Automobiles
1,260
132,532
E.ON
SE
.......................
Multi-Utilities
13,041
160,538
Infineon
Technologies
AG
..........
Semiconductors
&
Semiconductor
Equipment
3,730
133,300
426,370
Hong
Kong
0.7%
a
Cadeler
A/S
....................
Construction
&
Engineering
6,736
25,333
India
3.5%
a
Kaveri
Seed
Co.
Ltd.
..............
Food
Products
8,009
52,908
NHPC
Ltd.
.....................
Independent
Power
and
Renewable
Electricity
Producers
116,361
70,594
123,502
Ireland
6.0%
Smurfit
Kappa
Group
plc
...........
Containers
&
Packaging
4,968
208,419
Italy
4.3%
Prysmian
SpA
...................
Electrical
Equipment
3,635
148,520
Japan
8.3%
Honda
Motor
Co.
Ltd.
.............
Automobiles
4,665
150,787
Sumitomo
Metal
Mining
Co.
Ltd.
.....
Metals
&
Mining
4,442
137,880
288,667
Netherlands
6.0%
ING
Groep
NV
..................
Banks
14,675
207,940
Norway
3.9%
Norsk
Hydro
ASA
................
Metals
&
Mining
24,912
137,847
Singapore
3.5%
STMicroelectronics
NV
............
Semiconductors
&
Semiconductor
Equipment
2,564
121,013
South
Korea
1.9%
Samsung
SDI
Co.
Ltd.
............
Electronic
Equipment,
Instruments
&
Components
145
67,085
Spain
2.6%
Redeia
Corp.
SA
.................
Electric
Utilities
1,789
29,053
a
Soltec
Power
Holdings
SA
..........
Electrical
Equipment
14,289
60,999
90,052
Taiwan
4.0%
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.,
ADR
..................
Semiconductors
&
Semiconductor
Equipment
1,498
140,168
United
Kingdom
12.0%
AstraZeneca
plc
.................
Pharmaceuticals
303
40,700
Templeton
Funds
Schedule
of
Investments
Templeton
International
Climate
Change
Fund
(continued)
franklintempleton.com
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accompanying
notes
are
an
integral
part
of
these
financial
statements.
38
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
United
Kingdom
(continued)
Lloyds
Banking
Group
plc
..........
Banks
129,813
$
69,354
SSE
plc
.......................
Electric
Utilities
6,932
142,447
Standard
Chartered
plc
............
Banks
18,541
166,826
419,327
United
States
7.5%
Schneider
Electric
SE
.............
Electrical
Equipment
626
107,307
b
Signify
NV,
144A,
Reg
S
...........
Electrical
Equipment
5,476
154,799
262,106
Total
Common
Stocks
(Cost
$2,925,726)
.......................................
3,278,442
Short
Term
Investments
8.3%
a
a
Industry
Shares
a
Value
a
a
a
a
a
a
Money
Market
Funds
8.3%
United
States
8.3%
c,d
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
5.066%
.........
289,072
289,072
Total
Money
Market
Funds
(Cost
$289,072)
.....................................
289,072
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$289,072
)
..................................
289,072
a
a
a
Total
Investments
(Cost
$3,214,798)
102.2%
....................................
$3,567,514
Other
Assets,
less
Liabilities
(2.2)%
...........................................
(77,094)
Net
Assets
100.0%
...........................................................
$3,490,420
a
a
a
See
Abbreviations
on
page
67
.
a
Non-income
producing.
b
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
August
31,
2023,
the
value
of
this
security
was
$154,799,
representing
4.4%
of
net
assets.
c
See
Note
3(f)
regarding
investments
in
affiliated
management
investment
companies.
d
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
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integral
part
of
these
financial
statements.
Annual
Report
39
a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$11.85
$15.52
$12.71
$12.76
$17.24
Income
from
investment
operations
a
:
Net
investment
income
(loss)
b
....................
0.04
(—)
c
0.20
d
0.16
0.29
Net
realized
and
unrealized
gains
(losses)
...........
2.21
(3.44)
2.61
0.45
(2.17)
Total
from
investment
operations
....................
2.25
(3.44)
2.81
0.61
(1.88)
Less
distributions
from:
Net
investment
income
..........................
(0.05)
(0.23)
—
(0.50)
(0.67)
Net
realized
gains
.............................
(0.14)
—
—
(0.16)
(1.93)
Total
distributions
...............................
(0.19)
(0.23)
—
(0.66)
(2.60)
Net
asset
value,
end
of
year
.......................
$13.91
$11.85
$15.52
$12.71
$12.76
Total
return
e
...................................
19.23%
(22.39)%
22.11%
4.47%
(10.22)%
Ratios
to
average
net
assets
Expenses
.....................................
1.04%
f
1.04%
1.03%
f
1.05%
1.05%
f
Net
investment
income
(loss)
......................
0.32%
(—)%
g
1.42%
d
1.29%
2.06%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,289,332
$2,138,297
$3,060,714
$2,831,844
$3,150,057
Portfolio
turnover
rate
............................
47.28%
81.20%
41.83%
52.25%
25.16%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Amount
rounds
to
less
than
$0.01
per
share.
d
Net
investment
income
per
share
includes
approximately
$0.13
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.48%.
e
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
Templeton
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financial
statements.
40
a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$11.30
$14.76
$12.18
$12.26
$16.35
Income
from
investment
operations
a
:
Net
investment
income
(loss)
b
....................
(0.06)
(0.10)
0.10
c
0.07
0.13
Net
realized
and
unrealized
gains
(losses)
...........
2.11
(3.29)
2.48
0.42
(2.01)
Total
from
investment
operations
....................
2.05
(3.39)
2.58
0.49
(1.88)
Less
distributions
from:
Net
investment
income
..........................
—
(0.07)
—
(0.41)
(0.28)
Net
realized
gains
.............................
(0.14)
—
—
(0.16)
(1.93)
Total
distributions
...............................
(0.14)
(0.07)
—
(0.57)
(2.21)
Net
asset
value,
end
of
year
.......................
$13.21
$11.30
$14.76
$12.18
$12.26
Total
return
d
...................................
18.33%
(23.01)%
21.18%
3.61%
(10.94)%
Ratios
to
average
net
assets
Expenses
.....................................
1.79%
e
1.81%
1.80%
e
1.82%
1.80%
e
Net
investment
income
(loss)
......................
(0.48)%
(0.77)%
0.70%
c
0.54%
1.31%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$6,476
$7,348
$12,585
$18,630
$28,850
Portfolio
turnover
rate
............................
47.28%
81.20%
41.83%
52.25%
25.16%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.13
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
(0.24)%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Templeton
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Financial
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Templeton
World
Fund
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part
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financial
statements.
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a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$11.86
$15.53
$12.69
$12.73
$17.21
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.08
0.04
0.24
c
0.20
0.34
Net
realized
and
unrealized
gains
(losses)
...........
2.19
(3.43)
2.60
0.45
(2.17)
Total
from
investment
operations
....................
2.27
(3.39)
2.84
0.65
(1.83)
Less
distributions
from:
Net
investment
income
..........................
(0.07)
(0.28)
—
(0.53)
(0.72)
Net
realized
gains
.............................
(0.14)
—
—
(0.16)
(1.93)
Total
distributions
...............................
(0.21)
(0.28)
—
(0.69)
(2.65)
Net
asset
value,
end
of
year
.......................
$13.92
$11.86
$15.53
$12.69
$12.73
Total
return
....................................
19.50%
(22.14)%
22.38%
4.71%
(9.88)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
0.77%
0.78%
0.78%
0.79%
0.77%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
0.75%
0.76%
0.76%
0.76%
0.75%
Net
investment
income
...........................
0.61%
0.29%
1.68%
c
1.59%
2.36%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$38,834
$34,238
$42,010
$38,885
$43,595
Portfolio
turnover
rate
............................
47.28%
81.20%
41.83%
52.25%
25.16%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.13
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.74%.
Templeton
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The
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of
these
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42
a
Year
Ended
August
31,
2023
2022
2021
2020
2019
Advisor
Class
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$11.86
$15.54
$12.70
$12.74
$17.23
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.07
0.03
0.24
c
0.19
0.33
Net
realized
and
unrealized
gains
(losses)
...........
2.21
(3.44)
2.60
0.45
(2.17)
Total
from
investment
operations
....................
2.28
(3.41)
2.84
0.64
(1.84)
Less
distributions
from:
Net
investment
income
..........................
(0.07)
(0.27)
—
(0.52)
(0.72)
Net
realized
gains
.............................
(0.14)
—
—
(0.16)
(1.93)
Total
distributions
...............................
(0.21)
(0.27)
—
(0.68)
(2.65)
Net
asset
value,
end
of
year
.......................
$13.93
$11.86
$15.54
$12.70
$12.74
Total
return
....................................
19.52%
(22.22)%
22.36%
4.66%
(9.99)%
Ratios
to
average
net
assets
Expenses
.....................................
0.79%
d
0.81%
0.80%
d
0.81%
0.80%
d
Net
investment
income
...........................
0.57%
0.24%
1.64%
c
1.53%
2.31%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$99,935
$86,424
$115,823
$99,546
$112,891
Portfolio
turnover
rate
............................
47.28%
81.20%
41.83%
52.25%
25.16%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.13
per
share
related
to
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings
.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.70%.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Templeton
Funds
Schedule
of
Investments,
August
31,
2023
Templeton
World
Fund
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statements.
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43
a
a
Industry
Shares
a
Value
a
Common
Stocks
98.4%
France
2.6%
LVMH
Moet
Hennessy
Louis
Vuitton
SE
Textiles,
Apparel
&
Luxury
Goods
37,809
$
31,974,942
a
SOITEC
.......................
Semiconductors
&
Semiconductor
Equipment
168,562
30,811,737
62,786,679
Germany
9.7%
Bayer
AG
......................
Pharmaceuticals
1,087,095
59,480,453
Deutsche
Boerse
AG
..............
Capital
Markets
334,180
59,327,695
Infineon
Technologies
AG
..........
Semiconductors
&
Semiconductor
Equipment
890,349
31,818,683
SAP
SE
.......................
Software
618,682
86,312,849
236,939,680
Hong
Kong
1.7%
AIA
Group
Ltd.
..................
Insurance
4,460,034
40,355,547
India
3.6%
HDFC
Bank
Ltd.
.................
Banks
1,285,078
24,356,762
a
Jio
Financial
Services
Ltd.
..........
Consumer
Finance
2,221,010
6,270,201
Reliance
Industries
Ltd.
............
Oil,
Gas
&
Consumable
Fuels
1,944,624
56,545,729
87,172,692
Japan
3.2%
KDDI
Corp.
.....................
Wireless
Telecommunication
Services
768,800
22,859,164
Tokyo
Electron
Ltd.
...............
Semiconductors
&
Semiconductor
Equipment
367,350
54,572,157
77,431,321
Netherlands
1.5%
Shell
plc
.......................
Oil,
Gas
&
Consumable
Fuels
1,197,542
37,095,090
Taiwan
2.8%
Taiwan
Semiconductor
Manufacturing
Co.
Ltd.
......................
Semiconductors
&
Semiconductor
Equipment
3,923,559
67,383,437
United
Kingdom
5.6%
a,b,c
Just
Eat
Takeaway.com
NV,
144A,
Reg
S
...........................
Hotels,
Restaurants
&
Leisure
1,936,670
27,203,624
a
Rolls-Royce
Holdings
plc
..........
Aerospace
&
Defense
32,850,961
92,157,596
a,b
S4
Capital
plc
...................
Media
13,364,499
16,763,521
136,124,741
United
States
67.7%
Albemarle
Corp.
.................
Chemicals
181,878
36,140,977
a
Alphabet,
Inc.,
A
.................
Interactive
Media
&
Services
1,026,770
139,815,271
a
Amazon.com,
Inc.
................
Broadline
Retail
1,278,900
176,500,989
Applied
Materials,
Inc.
.............
Semiconductors
&
Semiconductor
Equipment
396,690
60,598,364
a
Booking
Holdings,
Inc.
............
Hotels,
Restaurants
&
Leisure
11,269
34,990,583
Comcast
Corp.,
A
................
Media
1,307,048
61,117,565
a
DXC
Technology
Co.
..............
IT
Services
1,601,152
33,207,893
Exxon
Mobil
Corp.
................
Oil,
Gas
&
Consumable
Fuels
440,170
48,942,502
a
F5,
Inc.
........................
Communications
Equipment
238,786
39,079,717
Freeport-McMoRan,
Inc.
...........
Metals
&
Mining
358,207
14,296,041
HCA
Healthcare,
Inc.
..............
Health
Care
Providers
&
Services
130,730
36,251,429
a,b
ICON
plc
.......................
Life
Sciences
Tools
&
Services
256,060
66,560,236
Intercontinental
Exchange,
Inc.
......
Capital
Markets
535,061
63,131,847
Kenvue,
Inc.
....................
Personal
Care
Products
1,610,632
37,125,068
a
Meta
Platforms,
Inc.,
A
............
Interactive
Media
&
Services
239,679
70,918,619
Microchip
Technology,
Inc.
.........
Semiconductors
&
Semiconductor
Equipment
649,288
53,137,730
Micron
Technology,
Inc.
............
Semiconductors
&
Semiconductor
Equipment
406,086
28,401,655
Microsoft
Corp.
..................
Software
396,871
130,078,439
a
Salesforce,
Inc.
..................
Software
439,880
97,415,825
Templeton
Funds
Schedule
of
Investments
Templeton
World
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
44
a
a
Industry
Shares
a
Value
a
Common
Stocks
(continued)
United
States
(continued)
Schneider
Electric
SE
.............
Electrical
Equipment
295,530
$
50,658,645
Target
Corp.
....................
Consumer
Staples
Distribution
&
Retail
474,693
60,072,399
Thermo
Fisher
Scientific,
Inc.
.......
Life
Sciences
Tools
&
Services
136,302
75,933,844
a
T-Mobile
US,
Inc.
................
Wireless
Telecommunication
Services
228,277
31,102,741
a
Uber
Technologies,
Inc.
............
Ground
Transportation
466,280
22,022,404
Union
Pacific
Corp.
...............
Ground
Transportation
302,613
66,747,350
UnitedHealth
Group,
Inc.
...........
Health
Care
Providers
&
Services
160,672
76,573,062
Zimmer
Biomet
Holdings,
Inc.
.......
Health
Care
Equipment
&
Supplies
322,951
38,469,923
1,649,291,118
Total
Common
Stocks
(Cost
$2,185,240,872)
....................................
2,394,580,305
Short
Term
Investments
1.8%
a
a
Industry
Principal
Amount
*
a
Value
a
a
a
a
a
a
Time
Deposits
1.8%
Canada
1.8%
National
Bank
of
Canada,
5.31%,
9/01/23
......................
43,800,000
43,800,000
Total
Time
Deposits
(Cost
$43,800,000)
........................................
43,800,000
a
a
a
a
a
Total
Short
Term
Investments
(Cost
$43,800,000
)
................................
43,800,000
a
a
a
Total
Investments
(Cost
$2,229,040,872)
100.2%
................................
$2,438,380,305
Other
Assets,
less
Liabilities
(0.2)%
...........................................
(3,802,684)
Net
Assets
100.0%
...........................................................
$2,434,577,621
a
a
a
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Non-income
producing.
b
A
portion
or
all
of
the
security
is
on
loan
at
August
31,
2023.
See
Note
1(d).
c
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
August
31,
2023,
the
value
of
this
security
was
$27,203,624,
representing
1.1%
of
net
assets.
Templeton
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
August
31,
2023
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
45
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
.................................
$2,527,853,218
$2,925,726
$2,229,040,872
Cost
-
Non-controlled
affiliates
(Not
e
3f)
......................
—
289,072
—
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$8,959,480,
$—
and
$23,107,096,
respectively)
..........................
$2,763,655,244
$3,278,442
$2,438,380,305
Value
-
Non-controlled
affiliates
(Not
e
3f)
......................
—
289,072
—
Cash
..................................................
42,062
—
232,939
Foreign
currency,
at
value
(cost
$209,
$2,288
and
$107
,
respectively)
.
209
2,274
108
Receivables:
Investment
securities
sold
.................................
5,074,210
—
6,177,530
Capital
shares
sold
......................................
41,943,379
2,523
84,102
Dividends
and
interest
...................................
11,501,847
10,683
6,513,715
European
Union
tax
reclaims
(Note
1
e
)
.......................
362,238
—
787,583
Affiliates
..............................................
—
39
—
Total
assets
........................................
2,822,579,189
3,583,033
2,452,176,282
Liabilities:
Payables:
Investment
securities
purchased
............................
27,634,450
—
—
Capital
shares
redeemed
.................................
2,478,646
—
1,169,948
Management
fees
.......................................
1,601,500
28,738
1,432,209
Distribution
fees
........................................
411,683
217
489,054
Transfer
agent
fees
......................................
1,149,781
—
328,362
Registration
and
filing
fees
................................
5,301
6,777
9,888
Professional
fees
.......................................
74,148
52,095
81,067
Trustees'
fees
and
expenses
...............................
15,056
—
7,816
IRS
closing
agreement
payments
for
European
Union
tax
reclaims
(Note
1
e
)
.............................................
21,287,961
—
13,944,332
Deferred
tax
.............................................
2,193,291
3,770
—
Accrued
expenses
and
other
liabilities
.........................
261,454
1,016
135,985
Total
liabilities
.......................................
57,113,271
92,613
17,598,661
Net
assets,
at
value
...............................
$2,765,465,918
$3,490,420
$2,434,577,621
Net
assets
consist
of:
Paid-in
capital
...........................................
$2,794,731,060
$3,141,202
$2,242,781,289
Total
distributable
earnings
(losses)
...........................
(29,265,142)
349,218
191,796,332
Net
assets,
at
value
...............................
$2,765,465,918
$3,490,420
$2,434,577,621
Templeton
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
(continued)
August
31,
2023
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
46
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Class
A:
Net
assets,
at
value
.....................................
$1,605,982,377
$973,528
$2,289,332,393
Shares
outstanding
......................................
206,488,372
84,137
164,560,051
Net
asset
value
per
share
a
................................
$7.78
$11.57
$13.91
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%)
..............................................
$8.23
$12.24
$14.72
Class
C:
Net
assets,
at
value
.....................................
$21,610,869
$11,530
$6,476,297
Shares
outstanding
......................................
2,784,767
995
490,202
Net
asset
value
and
maximum
offering
price
per
share
a
...........
$7.76
$11.59
$13.21
Class
R:
Net
assets,
at
value
.....................................
$116,518,261
$—
$—
Shares
outstanding
......................................
15,365,574
—
—
Net
asset
value
and
maximum
offering
price
per
share
...........
$7.58
$—
$—
Class
R6:
Net
assets,
at
value
.....................................
$341,057,535
$5,076
$38,833,647
Shares
outstanding
......................................
44,692,160
437
2,789,174
Net
asset
value
and
maximum
offering
price
per
share
...........
$7.63
$11.61
$13.92
Advisor
Class:
Net
assets,
at
value
.....................................
$680,296,876
$2,500,286
$99,935,284
Shares
outstanding
......................................
89,070,889
215,240
7,173,605
Net
asset
value
and
maximum
offering
price
per
share
...........
$7.64
$11.62
$13.93
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Templeton
Funds
Financial
Statements
Statements
of
Operations
for
the
year
ended
August
31,
2023
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
47
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$6,384,432,
$13,031
and
$1,740,883,
respectively)
Unaffiliated
issuers
......................................
$75,292,273
$83,923
$27,702,054
Non-controlled
affiliates
(Note
3f)
...........................
—
8,317
—
Interest:
Unaffiliated
issuers
......................................
6,119,412
—
2,986,826
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
...................
183,226
—
19,104
Non-controlled
affiliates
(Note
3f)
...........................
287,601
—
519
Other
income
(Note
1
e
)
....................................
4,987,237
—
316,796
Less:
IRS
closing
agreement
payments
for
European
Union
tax
reclaims
(Note
1
e
)
...............................................
(330,866)
—
(207,883)
Total
investment
income
.................................
86,538,883
92,240
30,817,416
Expenses:
Management
fees
(Note
3
a
)
.................................
18,276,131
18,809
15,876,060
Distribution
fees:
(Note
3c
)
    Class
A
..............................................
3,866,965
934
5,258,669
    Class
C
..............................................
228,499
16
66,630
    Class
R
..............................................
570,660
—
—
Transfer
agent
fees:
(Note
3e
)
    Class
A
..............................................
2,374,112
233
1,611,805
    Class
C
..............................................
35,263
4
4,988
    Class
R
..............................................
175,273
—
—
    Class
R6
.............................................
192,524
40
17,002
    Advisor
Class
..........................................
956,348
1,419
61,210
Custodian
fees
(Note
4)
....................................
198,927
10
65,722
Reports
to
shareholders
fees
................................
(391,551)
(1,959)
(125,013)
Registration
and
filing
fees
..................................
108,668
65,000
91,381
Professional
fees
.........................................
18,754
69,707
44,830
Trustees'
fees
and
expenses
................................
322,641
3,149
279,431
Other
..................................................
168,782
158
133,926
Total
expenses
.......................................
27,101,996
157,520
23,386,641
Expense
reductions
(Note
4
)
.............................
—
(89)
—
Expenses
waived/paid
by
affiliates
(Note
3
f
and
3
g
)
............
(503,431)
(130,604)
(6,211)
Net
expenses
.......................................
26,598,565
26,827
23,380,430
Net
investment
income
..............................
59,940,318
65,413
7,436,986
Templeton
Funds
Financial
Statements
Statements
of
Operations
(continued)
for
the
year
ended
August
31,
2023
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
48
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
(net
of
foreign
taxes
of
$–,
$–
and
$127,135,
respectively)
Unaffiliated
issuers
....................................
90,793,523
(51,174)
291,769
Written
options
.........................................
128,973
—
—
Foreign
currency
transactions
..............................
6,174
910
735,387
Net
realized
gain
(loss)
................................
90,928,670
(50,264)
1,027,156
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
....................................
416,924,877
510,569
392,890,120
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
...........................................
758,736
218
365,868
Change
in
deferred
taxes
on
unrealized
appreciation
.............
(620,461)
(2,611)
—
Net
change
in
unrealized
appreciation
(depreciation)
..........
417,063,152
508,176
393,255,988
Net
realized
and
unrealized
gain
(loss)
..........................
507,991,822
457,912
394,283,144
Net
increase
(decrease)
in
net
assets
resulting
from
operations
........
$567,932,140
$523,325
$401,720,130
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
49
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Year
Ended
August
31,
2023
Year
Ended
August
31,
2022
Year
Ended
August
31,
2023
Year
Ended
August
31,
2022
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$59,940,318
$56,742,134
$65,413
$36,354
Net
realized
gain
(loss)
............
90,928,670
158,736,046
(50,264)
93,086
Net
change
in
unrealized
appreciation
(depreciation)
.................
417,063,152
(681,581,753)
508,176
(978,202)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
567,932,140
(466,103,573)
523,325
(848,762)
Distributions
to
shareholders:
Class
A
........................
(17,674,304)
(68,477,455)
(6,003)
—
Class
C
........................
(51,405)
(999,549)
(235)
—
Class
R
........................
(1,094,380)
(4,571,272)
—
—
Class
R6
.......................
(4,832,491)
(20,850,055)
(246)
—
Advisor
Class
...................
(8,718,598)
(34,087,582)
(113,511)
(147,060)
Total
distributions
to
shareholders
.....
(32,371,178)
(128,985,913)
(119,995)
(147,060)
Capital
share
transactions:
(Note
2
)
Class
A
........................
(127,590,385)
(240,351,269)
941,636
5,009
Class
C
........................
(6,998,992)
(9,046,243)
6,454
5,000
Class
R
........................
(10,994,510)
3,756,831
—
—
Class
R6
.......................
(15,350,359)
(158,973,250)
—
5,000
Advisor
Class
...................
(49,294,028)
133,841,510
158,680
25,871
Total
capital
share
transactions
.......
(210,228,274)
(270,772,421)
1,106,770
40,880
Net
increase
(decrease)
in
net
assets
.....................
325,332,688
(865,861,907)
1,510,100
(954,942)
Net
assets:
Beginning
of
year
..................
2,440,133,230
3,305,995,137
1,980,320
2,935,262
End
of
year
......................
$2,765,465,918
$2,440,133,230
$3,490,420
$1,980,320
Templeton
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
50
Templeton
World
Fund
Year
Ended
August
31,
2023
Year
Ended
August
31,
2022
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$7,436,986
$166,419
Net
realized
gain
(loss)
.................................................
1,027,156
219,790,750
Net
change
in
unrealized
appreciation
(depreciation)
...........................
393,255,988
(902,487,259)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
401,720,130
(682,530,090)
Distributions
to
shareholders:
Class
A
.............................................................
(31,728,587)
(44,013,452)
Class
C
.............................................................
(79,288)
(55,139)
Class
R6
............................................................
(605,219)
(780,101)
Advisor
Class
........................................................
(1,357,839)
(1,988,799)
Total
distributions
to
shareholders
..........................................
(33,770,933)
(46,837,491)
Capital
share
transactions:
(Note
2
)
Class
A
.............................................................
(197,637,235)
(233,613,207)
Class
C
.............................................................
(1,899,715)
(2,686,637)
Class
R6
............................................................
(1,391,055)
2,778,432
Advisor
Class
........................................................
1,248,719
(1,935,608)
Total
capital
share
transactions
............................................
(199,679,286)
(235,457,020)
Net
increase
(decrease)
in
net
assets
...................................
168,269,911
(964,824,601)
Net
assets:
Beginning
of
year
.......................................................
2,266,307,710
3,231,132,311
End
of
year
...........................................................
$2,434,577,621
$2,266,307,710
Templeton
Funds
51
franklintempleton.com
Annual
Report
Notes
to
Financial
Statements
1.
Organization
and
Significant
Accounting
Policies
Templeton
Funds (Trust)
is
registered
under
the
Investment
Company
Act
of
1940
(1940
Act)
as
an
open-end
management
investment
company,
consisting
of three separate
funds
(Funds).
The
Funds
follow
the
accounting
and
reporting
guidance
in
Financial
Accounting
Standards
Board
(FASB)
Accounting
Standards
Codification
Topic
946,
Financial
Services
–
Investment
Companies
(ASC
946)
and apply
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP),
including,
but
not
limited
to,
ASC
946.
The
classes
of
shares
offered
within
each
of
the
Funds
are
indicated
below.
Class
C
shares
automatically
convert
to
Class
A
shares
on
a
monthly
basis,
after
they
have
been
held
for
8
years.
Each
class
of
shares
may
differ
by
its
initial
sales
load,
contingent
deferred
sales
charges,
voting
rights
on
matters
affecting
a
single
class,
its
exchange
privilege
and
fees
due
to
differing
arrangements
for
distribution
and
transfer
agent
fees.
Class
A,
Class
C,
Class
R,
Class
R6
&
Advisor
Class
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Class
A,
Class
C,
Class
R6
&
Advisor
Class
Templeton
World
Fund
The
following
summarizes
the Funds'
significant
accounting
policies. 
a.
Financial
Instrument
Valuation 
The Funds'
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 Funds calculate 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
Board
has
designated
the
Funds’
investment
manager
as
the
valuation
designee
and
has
responsibility
for
oversight
of
valuation.
The
investment
manager
is
assisted
by
the
Funds'
administrator
in
performing
this
responsibility,
including
leading
the
cross-
functional
Valuation
Committee
(VC).
The
Funds
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value. 
Equity
securities
listed
on
an
exchange
or
on
the
NASDAQ
National
Market
System
are
valued
at
the
last
quoted
sale
price
or
the
official
closing
price of
the
day,
respectively.
Foreign
equity
securities
are
valued
as
of
the
close
of
trading
on
the
foreign
stock
exchange
on
which
the
security
is
primarily
traded,
or
as
of
4
p.m.
Eastern
time.
The
value
is
then
converted
into
its
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
day
that
the
value
of
the
security
is
determined.
Over-the-counter
(OTC)
securities
are
valued
within
the
range
of
the
most
recent
quoted
bid
and
ask
prices.
Securities
that
trade
in
multiple
markets
or
on
multiple
exchanges
are
valued
according
to
the
broadest
and
most
representative
market.
Certain
equity
securities
are
valued
based
upon
fundamental
characteristics
or
relationships
to
similar
securities. 
Investments
in
open-end
mutual
funds
are
valued
at
the
closing
NAV.
Investments
in
time
deposits
are
valued
at
cost,
which
approximates
fair
value.
The
Funds
have
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the
Funds
primarily
employ
a
market-based
approach
which
may
use
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
and
other
relevant
information
for
the
investment
to
determine
the
fair
value
of
the
investment.
An
income-based
valuation
approach
may
also
be
used
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
to
calculate
fair
value.
Discounts
may
also
be
applied
due
to
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
Due
to
the
inherent
uncertainty
of
valuations
of
such
investments,
the
fair
values
may
differ
significantly
from
the
values
that
would
have
been
used
had
an
active
market
existed.
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Funds'
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
Funds.
As
a
result,
differences
may
arise
between
the
value
of
the
Funds'
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
Templeton
Funds
Notes
to
Financial
Statements
52
franklintempleton.com
Annual
Report
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
Funds'
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
August
31,
2023,
certain
securities
may
have
been
fair
valued
using
these
procedures,
in
which
case
the
securities
were
categorized
as
Level
2
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
Funds'
NAV
is
not
calculated,
which
could
result
in
differences
between
the
value
of
the
Funds'
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
Funds
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
Funds
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
Funds
do
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
Statements
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
Certain
or
all
Funds
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
Statements
of
Assets
and
Liabilities.
Realized
gain
and
loss
and
unrealized
appreciation
and
depreciation
on
these
contracts
for
the
period
are
included
in
the
Statements
of
Operations.
Certain
or
all
Funds
purchased
or
wrote
exchange
traded
option
contracts
primarily
to
manage
and/or
gain
exposure
to
equity
price
risk.
An
option
is
a
contract
entitling
the
holder
to
purchase
or
sell
a
specific
amount
of
shares
or
units
of
an
asset
or
notional
amount
of
a
swap
(swaption),
at
a
specified
price.
When
an
option
is
purchased
or
written,
an
amount
equal
to
the
premium
paid
or
received
is
recorded
as
an
asset
or
liability,
respectively.
Upon
exercise
of
an
option,
the
acquisition
cost
or
sales
proceeds
of
the
underlying
investment
is
adjusted
by
any
premium
received
or
paid.
Upon
expiration
of
an
option,
any
premium
received
or
paid
is
recorded
as
a
realized
gain
or
loss.
Upon
closing
an
option
other
than
through
expiration
or
exercise,
the
difference
between
the
premium
received
or
paid
and
the
cost
to
close
the
position
is
recorded
as
a
realized
gain
or
loss.
At
August
31,
2023,
Templeton
Foreign
Fund,
Templeton
International
Climate
Change
Fund
and
Templeton
World
Fund
had
no
options.
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation 
(continued)
Templeton
Funds
Notes
to
Financial
Statements
53
franklintempleton.com
Annual
Report
d.
Securities
Lending
Certain
or
all
Funds
participate
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
Funds.
Additionally,
at
August
31,
2023,
Templeton
Foreign
Fund
and
Templeton
World
Fund
held
$9,520,116
and
$24,932,478,
respectively,
in
U.S.
Government
and
Agency
securities
as
collateral.
These
securities
are
held
as
collateral
in
segregated
accounts
with
the
Funds’
custodian.
The
Fund
cannot
repledge
or
resell
these
securities
held
as
collateral.
As
such,
the
non-cash
collateral
is
excluded
from
the
Statements
of
Assets
and
Liabilities.
The
Fund
may
receive
income
from
the
investment
of
cash
collateral,
in
addition
to
lending
fees
and
rebates
paid
by
the
borrower.
Income
from
securities
loaned,
net
of
fees
paid
to
the
securities
lending
agent
and/or
third-party
vendor,
is
reported
separately
in
the
Statements
of
Operations.
The
Fund
bears
the
market
risk
with
respect
to any
cash collateral
investment,
securities
loaned,
and
the
risk
that
the
agent may
default
on
its
obligations
to
the
Fund.
If
the
borrower
defaults
on
its
obligation
to
return
the
securities
loaned,
the
Fund
has
the
right
to
repurchase
the
securities
in
the
open
market
using
the
collateral
received.
The
securities
lending
agent
has
agreed
to
indemnify
the
Fund
in
the
event
of
default
by
a
third
party
borrower.
At
August
31,
2023,
Templeton
International
Climate
Change
Fund
had
no
securities
on
loan.
e.
Income
and
Deferred
Taxes
It
is each
Fund's
policy
to
qualify
as
a
regulated
investment
company
under
the
Internal
Revenue
Code. Each
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
Funds
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
the
Funds
invest.
Foreign
taxes,
if
any,
are
recorded
based
on
the
tax
regulations
and
rates
that
exist
in
the
foreign
markets
in
which
the
Funds
invest.
When
a
capital
gain
tax
is
determined
to
apply,
certain
or
all
Funds
record
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,
certain
or
all
Funds
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
Statements of
Operations
and
any
related
receivable,
if
any,
is
reflected
as
European
Union
tax
reclaims
in
the
Statements
of
Assets
and
Liabilities.
Any
fees
associated
with
these
filings
are
reflected
in
other
expenses
in
the
Statements
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
Funds,
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
Funds during a
fiscal
year
exceed
foreign
withholding
taxes
paid
by
the
Funds,
and
the Funds
previously
passed through
to
its
shareholders
foreign
taxes
incurred
by
the
Funds
to
be
used
as
a
credit
or
deduction
on
a
shareholder’s
income
tax
return,
the
Funds will
enter
into
a
closing
agreement
with
the
Internal
Revenue
Service
(IRS)
in
order
to
pay
the
associated
tax
liability
on
behalf
of
the Funds'
shareholders.
During
the
fiscal
year
ended
August
31,
2023,
certain
or
all
Funds
received
EU
reclaims
in
excess
of
the
foreign
taxes
paid
during
the
year.
Templeton
Foreign
Fund
and
Templeton
World
Fund
determined
to
enter
into
closing
agreements
with
the
IRS
and
recorded
the
estimated payments
as
a
reduction
to
income,
as
reflected
in
the
Statements
of
Operations.
Each
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
1.
Organization
and
Significant
Accounting
Policies
(continued)
Templeton
Funds
Notes
to
Financial
Statements
54
franklintempleton.com
Annual
Report
it
will
be
sustained
upon
examination
by
the
tax
authorities
based
on
its
technical
merits.
As
of
August
31,
2023, each
Fund
has
determined
that
no
tax
liability
is
required
in
its
financial
statements
related
to
uncertain
tax
positions
for
any
open
tax
years
(or
expected
to
be
taken
in
future
tax
years).
Open
tax
years
are
those
that
remain
subject
to
examination
and
are
based
on
the
statute
of
limitations
in
each
jurisdiction
in
which
the
Fund
invests.
f.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
Security
transactions
are
accounted
for
on
trade
date.
Realized
gains
and
losses
on
security
transactions
are
determined
on
a
specific
identification
basis.
Interest
income
and
estimated
expenses
are
accrued
daily.
Dividend
income
is
recorded
on
the
ex-dividend
date
except
for
certain
dividends
from
securities
where
the
dividend
rate
is
not
available.
In
such
cases,
the
dividend
is
recorded
as
soon
as
the
information
is
received
by
the
Funds.
Distributions
to shareholders
are
recorded
on
the
ex-dividend
date.
Distributable
earnings
are
determined
according
to
income
tax
regulations
(tax
basis)
and
may
differ
from
earnings
recorded
in
accordance
with
U.S.
GAAP.
These
differences
may
be
permanent
or
temporary.
Permanent
differences
are
reclassified
among
capital
accounts
to
reflect
their
tax
character.
These
reclassifications
have
no
impact
on
net
assets
or
the
results
of
operations.
Temporary
differences
are
not
reclassified,
as
they
may
reverse
in
subsequent
periods. 
Common
expenses
incurred
by
the
Trust
are
allocated
among
the
Funds
based
on
the
ratio
of
net
assets
of
each
Fund
to
the
combined
net
assets
of
the
Trust
or
based
on
the
ratio
of
number
of
shareholders
of
each
Fund
to
the
combined
number
of
shareholders
of
the
Trust.
Fund
specific
expenses
are
charged
directly
to
the
Fund
that
incurred
the
expense.
Realized
and
unrealized
gains
and
losses
and
net
investment
income,
excluding
class
specific
expenses,
are
allocated
daily
to
each
class
of
shares
based
upon
the
relative
proportion
of
net
assets
of
each
class.
Differences
in
per
share
distributions
by
class
are
generally
due
to
differences
in
class
specific
expenses.
g.
Accounting
Estimates
The
preparation
of
financial
statements
in
accordance
with
U.S.
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
at
the
date
of
the
financial
statements
and
the
amounts
of
income
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
those
estimates.
h.
Guarantees
and
Indemnifications
Under
the
Trust's
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust,
on
behalf
of
the
Funds,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust's
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
2.
Shares
of
Beneficial
Interest
At
August
31,
2023,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Funds’
shares
were
as
follows:
1.
Organization
and
Significant
Accounting
Policies
(continued)
e.
Income
and
Deferred
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
55
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Shares
Amount
Shares
Amount
Class
A
Class
A
Shares:
Year
ended
August
31,
2023
Shares
sold
a
...................................
18,464,161
$134,477,091
121,328
$1,361,086
Shares
issued
in
reinvestment
of
distributions
..........
2,451,683
16,720,477
559
5,758
Shares
redeemed
...............................
(38,885,805)
(278,787,953)
(38,187)
(425,208)
Net
increase
(decrease)
..........................
(17,969,961)
$(127,590,385)
83,700
$941,636
Year
ended
August
31,
2022
Shares
sold
a
...................................
15,055,350
$108,801,684
630
$6,959
Shares
issued
in
reinvestment
of
distributions
..........
9,189,754
64,695,870
—
—
Shares
redeemed
...............................
(56,182,941)
(413,848,823)
(193)
(1,950)
Net
increase
(decrease)
..........................
(31,937,837)
$(240,351,269)
437
$5,009
Class
C
Class
C
Shares:
Year
ended
August
31,
2023
Shares
sold
...................................
634,917
$4,603,951
558
$6,454
Shares
issued
in
reinvestment
of
distributions
..........
7,484
51,192
—
—
Shares
redeemed
a
..............................
(1,666,045)
(11,654,135)
—
—
Net
increase
(decrease)
..........................
(1,023,644)
$(6,998,992)
558
$6,454
Year
ended
August
31,
2022
Shares
sold
...................................
417,818
$3,009,157
437
$5,000
Shares
issued
in
reinvestment
of
distributions
..........
139,410
982,841
—
—
Shares
redeemed
a
..............................
(1,823,590)
(13,038,241)
—
—
Net
increase
(decrease)
..........................
(1,266,362)
$(9,046,243)
437
$5,000
Class
R
Class
R
Shares:
Six
Months
ended
August
31,
2023
Shares
sold
...................................
2,067,697
$14,539,898
—
$—
Shares
issued
in
reinvestment
of
distributions
..........
163,984
1,092,131
—
—
Shares
redeemed
...............................
(3,736,121)
(26,626,539)
—
—
Net
increase
(decrease)
..........................
(1,504,440)
$(10,994,510)
—
$—
Six
Months
ended
August
31,
2022
Shares
sold
...................................
2,580,769
$18,083,292
—
$—
Shares
issued
in
reinvestment
of
distributions
..........
662,175
4,555,764
—
—
Shares
redeemed
...............................
(2,688,708)
(18,882,225)
—
—
Net
increase
(decrease)
..........................
554,236
$3,756,831
—
$—
Class
R6
2.
Shares
of
Beneficial
Interest
(continued)
Templeton
Funds
Notes
to
Financial
Statements
56
franklintempleton.com
Annual
Report
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Shares
Amount
Shares
Amount
Class
R6
Shares:
Year
ended
August
31,
2023
Shares
sold
...................................
11,025,849
$78,141,072
—
$—
Shares
issued
in
reinvestment
of
distributions
..........
634,986
4,241,705
—
—
Shares
redeemed
...............................
(13,888,696)
(97,733,136)
—
—
Net
increase
(decrease)
..........................
(2,227,861)
$(15,350,359)
—
$—
Year
ended
August
31,
2022
Shares
sold
...................................
10,791,025
$76,072,674
437
$5,000
Shares
issued
in
reinvestment
of
distributions
..........
2,743,028
18,899,459
—
—
Shares
redeemed
...............................
(36,204,674)
(253,945,383)
—
—
Net
increase
(decrease)
..........................
(22,670,621)
$(158,973,250)
437
$5,000
Advisor
Class
Advisor
Class
Shares:
Year
ended
August
31,
2023
Shares
sold
...................................
23,938,302
$170,152,009
18,449
$219,837
Shares
issued
in
reinvestment
of
distributions
..........
1,223,343
8,184,167
118
1,212
Shares
redeemed
...............................
(33,228,043)
(227,630,204)
(5,425)
(62,369)
Net
increase
(decrease)
..........................
(8,066,398)
$(49,294,028)
13,142
$158,680
Year
ended
August
31,
2022
Shares
sold
...................................
54,602,589
$402,173,464
2,098
$25,871
Shares
issued
in
reinvestment
of
distributions
..........
4,600,357
31,742,463
—
—
Shares
redeemed
...............................
(43,367,478)
(300,074,417)
—
—
Net
increase
(decrease)
..........................
15,835,468
$133,841,510
2,098
$25,871
2.
Shares
of
Beneficial
Interest
(continued)
Templeton
Funds
Notes
to
Financial
Statements
57
franklintempleton.com
Annual
Report
Templeton
World
Fund
Shares
Amount
Class
A
Class
A
Shares:
Year
ended
August
31,
2023
Shares
sold
a
...................................
11,879,311
$152,104,842
Shares
issued
in
reinvestment
of
distributions
..........
2,535,772
29,423,758
Shares
redeemed
...............................
(30,260,078)
(379,165,835)
Net
increase
(decrease)
..........................
(15,844,995)
$(197,637,235)
Year
ended
August
31,
2022
Shares
sold
a
...................................
7,163,158
$100,026,779
Shares
issued
in
reinvestment
of
distributions
..........
2,756,371
40,243,011
Shares
redeemed
...............................
(26,739,266)
(373,882,997)
Net
increase
(decrease)
..........................
(16,819,737)
$(233,613,207)
Class
C
Class
C
Shares:
Year
ended
August
31,
2023
Shares
sold
...................................
181,830
$2,243,324
Shares
issued
in
reinvestment
of
distributions
..........
7,104
78,786
Shares
redeemed
a
..............................
(348,831)
(4,221,825)
Net
increase
(decrease)
..........................
(159,897)
$(1,899,715)
Year
ended
August
31,
2022
Shares
sold
...................................
59,313
$799,919
Shares
issued
in
reinvestment
of
distributions
..........
3,910
54,747
Shares
redeemed
a
..............................
(265,836)
(3,541,303)
Net
increase
(decrease)
..........................
(202,613)
$(2,686,637)
Class
R6
Class
R6
Shares:
Year
ended
August
31,
2023
Shares
sold
...................................
464,419
$5,841,348
Shares
issued
in
reinvestment
of
distributions
..........
27,679
320,529
Shares
redeemed
...............................
(590,728)
(7,552,932)
Net
increase
(decrease)
..........................
(98,630)
$(1,391,055)
Year
ended
August
31,
2022
Shares
sold
...................................
591,711
$8,400,647
Shares
issued
in
reinvestment
of
distributions
..........
28,589
416,823
Shares
redeemed
...............................
(438,321)
(6,039,038)
Net
increase
(decrease)
..........................
181,979
$2,778,432
Advisor
Class
2.
Shares
of
Beneficial
Interest
(continued)
Templeton
Funds
Notes
to
Financial
Statements
58
franklintempleton.com
Annual
Report
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Trust
are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
Templeton
Foreign
Fund
pays
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
Global
Advisors
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
Templeton
World
Fund
Shares
Amount
Advisor
Class
Shares:
Year
ended
August
31,
2023
Shares
sold
...................................
3,260,778
$42,886,023
Shares
issued
in
reinvestment
of
distributions
..........
109,395
1,268,495
Shares
redeemed
...............................
(3,482,114)
(42,905,799)
Net
increase
(decrease)
..........................
(111,941)
$1,248,719
Year
ended
August
31,
2022
Shares
sold
...................................
1,574,879
$22,222,607
Shares
issued
in
reinvestment
of
distributions
..........
125,855
1,836,223
Shares
redeemed
...............................
(1,870,594)
(25,994,438)
Net
increase
(decrease)
..........................
(169,860)
$(1,935,608)
a
May
include
a
portion
of
Class
C
shares
that
were
automatically
converted
to
Class
A.
Subsidiary
Affiliation
Franklin
Templeton
Investments
Corp.
(FTIC)
Investment
manager
Franklin
Templeton
Investment
Management
Ltd.
(FTIML)
Investment
manager
Templeton
Global
Advisors
Limited
(Global
Advisors)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Distributors,
LLC
(Distributors)
Principal
underwriter
Franklin
Templeton
Investor
Services,
LLC
(Investor
Services)
Transfer
agent
Annualized
Fee
Rate
Net
Assets
0.705%
Up
to
and
including
$1
billion
0.690%
Over
$1
billion,
up
to
and
including
$5
billion
0.675%
Over
$5
billion,
up
to
and
including
$10
billion
0.655%
Over
$10
billion,
up
to
and
including
$15
billion
0.635%
Over
$15
billion,
up
to
and
including
$20
billion
0.615%
Over
$20
billion,
up
to
and
including
$25
billion
0.605%
Over
$25
billion,
up
to
and
including
$30
billion
0.595%
Over
$30
billion,
up
to
and
including
$35
billion
0.585%
In
excess
of
$35
billion
2.
Shares
of
Beneficial
Interest
(continued)
Templeton
Funds
Notes
to
Financial
Statements
59
franklintempleton.com
Annual
Report
Effective
May
1,
2023,
Templeton
International
Climate
Change
Fund
pays
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
FTIC
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
Prior
to
May
1,
2023,
Templeton
International
Climate
Change
Fund
paid
fees,
calculated
daily
and
paid
monthly,
to
FTIC
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
Templeton
World
Fund
pays
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
Global
Advisors
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
For
the
year
ended
August
31,
2023,
each
Fund's
gross
effective
investment
management
fee
rate
based
on
average
daily
net
assets
was
as
follows: 
Annualized
Fee
Rate
Net
Assets
0.705%
Up
to
and
including
$500
million
0.690%
Over
$500
million,
up
to
and
including
$1
billion
0.675%
Over
$1
billion,
up
to
and
including
$5
billion
0.655%
Over
$5
billion,
up
to
and
including
$10
billion
0.635%
Over
$10
billion,
up
to
and
including
$15
billion
0.615%
Over
$15
billion,
up
to
and
including
$20
billion
0.605%
Over
$20
billion,
up
to
and
including
$25
billion
0.595%
Over
$25
billion,
up
to
and
including
$30
billion
0.585%
In
excess
of
$30
billion
Annualized
Fee
Rate
Net
Assets
0.705%
Up
to
and
including
$1
billion
0.690%
Over
$1
billion,
up
to
and
including
$5
billion
0.675%
Over
$5
billion,
up
to
and
including
$10
billion
0.655%
Over
$10
billion,
up
to
and
including
$15
billion
0.635%
Over
$15
billion,
up
to
and
including
$20
billion
0.615%
Over
$20
billion,
up
to
and
including
$25
billion
0.605%
Over
$25
billion,
up
to
and
including
$30
billion
0.595%
Over
$30
billion,
up
to
and
including
$35
billion
0.585%
In
excess
of
$35
billion
Annualized
Fee
Rate
Net
Assets
0.705%
Up
to
and
including
$1
billion
0.690%
Over
$1
billion,
up
to
and
including
$5
billion
0.675%
Over
$5
billion,
up
to
and
including
$10
billion
0.655%
Over
$10
billion,
up
to
and
including
$15
billion
0.635%
Over
$15
billion,
up
to
and
including
$20
billion
0.615%
In
excess
of
$20
billion
3.
Transactions
with
Affiliates
(continued)
a.
Management
Fees
(continued)
Templeton
Funds
Notes
to
Financial
Statements
60
franklintempleton.com
Annual
Report
Under
a
subadvisory
agreement,
FTIML
and
Global
Advisors,
affiliates
of
FTIC,
provide
subadvisory
services
to
Templeton
International
Climate
Change.
The
subadvisory
fee
is
paid
by
FTIC
based
on
the
Fund’s
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund. 
b.
Administrative
Fees
Under
an
agreement
with
Global
Advisors,
FT
Services
provides
administrative
services
to
Templeton
Foreign
Fund
and
Templeton
World
Fund.
The
fee
is
paid
by
Global
Advisors
based
on
the
Funds’
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Funds.
Under
an
agreement
with
FTIC,
FT
Services
provides
administrative
services
to
Templeton
International
Climate
Change
Fund.
The
fee
is
paid
by
FTIC
based
on
the
Fund's
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
c.
Distribution
Fees
The
Board
has
adopted
distribution
plans
for
each
share
class,
with
the
exception
of
Class
R6
and
Advisor
Class
shares,
pursuant
to
Rule
12b-1
under
the
1940
Act.
Under
the
Funds’
Class A reimbursement
distribution
plan,
the
Funds
reimburse
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
each
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
Funds’
Class C
and
R
compensation
distribution
plans,
the
Funds
pay
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
each
Funds'
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
for
each
Fund.
The
maximum
annual
plan
rates,
based
on
the
average
daily
net
assets,
for
each
class,
are
as
follows:
d.
Sales
Charges/Underwriting
Agreements
Front-end
sales
charges
and
contingent
deferred
sales
charges
(CDSC)
do
not
represent
expenses
of
the
Funds.
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
Funds
of
the
following
commission
transactions
related
to
the
sales
and
redemptions
of
the
Funds'
shares
for
the
year:
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Gross
effective
investment
management
fee
rate
........
0.696%
0.705%
0.697%
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Class
A
...............................
0.25%
0.25%
0.25%
Class
C
...............................
1.00%
1.00%
1.00%
Class
R
...............................
0.50%
0.50%
—%
3.
Transactions
with
Affiliates
(continued)
a.
Management
Fees
(continued)
Templeton
Funds
Notes
to
Financial
Statements
61
franklintempleton.com
Annual
Report
e.
Transfer
Agent
Fees
Each
class
of
shares
pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
Effective
October
1,
2022,
the
fees
are
based
on
an
annualized
asset
based
fee
of
0.016%
plus
a
reduced
transaction
based
fee.
Prior
to
October
1,
2022,
the
fees
were
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
In
addition,
each
class
reimburses
Investor
Services
for
out
of
pocket
expenses
incurred
and,
except
for
Class
R6,
reimburses
shareholder
servicing
fees
paid
to
third
parties.
These
fees
are
allocated
daily
based
upon
their
relative
proportion
of
such
classes'
aggregate
net
assets.
Class
R6
pays
Investor
Services
transfer
agent
fees
specific
to
that
class.
For
the
year
ended
August
31,
2023,
the
Funds
paid
transfer
agent
fees
as
noted
in
the
Statements
of
Operations
of
which
the
following
amounts
were
retained
by
Investor
Services:
f.
Investments
in
Affiliated
Management
Investment
Companies
Certain
or
all
Funds
invest
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
Funds
do
not
invest
for
purposes
of
exercising
a
controlling
influence
over
the
management
or
policies.
Management
fees
paid
by
the
Funds
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statements
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
year
ended
August
31,
2023,
investments
in
affiliated
management
investment
companies
were
as
follows:
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Sales
charges
retained
net
of
commissions
paid
to
unaffiliated
brokers/dealers
..................
$47,756
$291
$22,878
CDSC
retained
...........................
$3,246
$—
$620
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Transfer
agent
fees
........................
$1,215,305
$1,506
$791,596
    aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
a      
a  
a  
a  
a  
a  
a  
a  
Templeton
Foreign
Fund
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
5.066%
$23,064,789
$53,460,197
$(76,524,986)
$—
$—
$—
—
$287,601
Total
Affiliated
Securities
...
$23,064,789
$53,460,197
$(76,524,986)
$—
$—
$—
$287,601
3.
Transactions
with
Affiliates
(continued)
d.
Sales
Charges/Underwriting
Agreements
(continued)
Templeton
Funds
Notes
to
Financial
Statements
62
franklintempleton.com
Annual
Report
g.
Waiver
and
Expense
Reimbursements
Global
Advisors
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
and
to
assume
as
its
own
expense
certain
expenses
otherwise
payable
by
Templeton
Foreign
Fund
so
that
the
operating
expenses
(excluding
distribution
fees,
acquired
fund
fees
and
expenses,
and
certain
non-routine
expenses
or
costs,
including
those
relating
to
litigation,
indemnification,
reorganizations,
and
liquidations)
for
each
class
of
the
Fund
do
not
exceed
0.85%,
based
on
the
average
net
assets
of
each
class
until
December
31,
2023.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund's
fiscal
year
end.
FTIC
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
and
to
assume
as
its
own
expense
certain
expenses
otherwise
payable
by
Templeton
International
Climate
Change
Fund
so
that
the
operating
expenses
(excluding
distribution
fees,
acquired
fund
fees
and
expenses
and
certain
non-routine
expenses
or
costs,
including
those
relating
to
litigation,
indemnification,
reorganizations,
and
liquidations)
for
each
class
of
the
Fund
does
not
exceed
0.97%
based
on
the
average
net
assets
of
each
class
until
December
31,
2023.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund's
fiscal
year
end.
Investor
Services
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
so
that
the
Class
R6
transfer
agent
fees
do
not
exceed
0.03%
based
on
the
average
net
assets
of
the
class
until
December
31,
2023.
h.
Other
Affiliated
Transactions
At
August
31,
2023,
Franklin
Resources,
Inc.
owned
66.5%
of
Templeton
International
Climate
Change
Fund's
outstanding
shares.
Investment
activities
of
this
shareholder
could
have
a
material
impact
on
the
Fund.
    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
Templeton
International
Climate
Change
Fund
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
5.066%
$81,707
$2,058,365
$(1,851,000)
$—
$—
$289,072
289,072
$8,317
Total
Affiliated
Securities
...
$81,707
$2,058,365
$(1,851,000)
$—
$—
$289,072
$8,317
Templeton
World
Fund
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
5.066%
$—
$1,161,951
$(1,161,951)
$—
$—
$—
—
$519
Total
Affiliated
Securities
...
$—
$1,161,951
$(1,161,951)
$—
$—
$—
$519
3.
Transactions
with
Affiliates
(continued)
f.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Templeton
Funds
Notes
to
Financial
Statements
63
franklintempleton.com
Annual
Report
4.
Expense
Offset
Arrangement
Templeton
International
Climate
Change
Fund
has
previously
entered
into
an
arrangement
with
its
custodian
whereby
credits
realized
as
a
result
of
uninvested
cash
balances
are
used
to
reduce
a
portion
of
the
Fund's
custodian
expenses.
During
the
year
ended
August
31,
2023,
the
custodian
fees
were
reduced
as
noted
in
the
Statements
of
Operations.
Effective
June
12,
2023,
earned
credits,
if
any,
will
be
recognized
as
income.
5.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains. 
At
August
31,
2023,
the
capital
loss
carryforwards
were
as
follows:
During
the
year
ended
August
31,
2023,
the
following
Funds
utilized
capital
loss
carryforwards
as
follows:
For
tax
purposes,
the
Funds
may
elect
to
defer
any
portion
of
a
post-October
capital
loss
or
late-year
ordinary
loss
to
the
first
day
of
the
following
fiscal
year.
At
August
31,
2023,
Templeton
World
Fund
deferred
post-October
capital
losses
of
$15,884,478.
The
tax
character
of
distributions
paid
during
the
years
ended
August
31,
2023
and
2022,
was
as
follows:
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
1
1
1
Capital
loss
carryforwards
not
subject
to
expiration:
Long
term
.............................
$
282,123,323
$
40,703
Templeton
Foreign
Fund
Templeton
World
Fund
Capital
loss
utilized
carryforwards
....
$88,030,243
$1,596,246
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
2023
2022
2023
2022
Distributions
paid
from:
Ordinary
income
........................
$32,371,178
$128,985,913
$32,551
$50,520
Long
term
capital
gain
....................
—
—
87,444
96,540
$32,371,178
$128,985,913
$119,995
$147,060
Templeton
World
Fund
2023
2022
Distributions
paid
from:
Ordinary
income
........................
$8,841,707
$46,837,491
Long
term
capital
gain
....................
24,929,226
—
$33,770,933
$46,837,491
Templeton
Funds
Notes
to
Financial
Statements
64
franklintempleton.com
Annual
Report
At
August
31,
2023,
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
wash
sales,
passive
foreign
investment
company
shares
and
corporate
actions.
The
Funds,
except
for
Templeton
World
Fund
utilized
a
tax
accounting
practice
to
treat
a
portion
of
the
proceeds
from
capital
shares
redeemed
as
a
distribution
from
net
investment
income.
6.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities
and
securities
sold
short)
for
the
year
ended
August
31,
2023,
were
as
follows:
7.
Concentration
of
Risk
Investing
in
foreign
securities
may
include
certain
risks
and
considerations
not
typically
associated
with
investing
in
U.S.
securities,
such
as
fluctuating
currency
values
and
changing
local,
regional
and
global
economic,
political
and
social
conditions,
which
may
result
in
greater
market
volatility.
Political
and
financial
uncertainty
in
many
foreign
regions
may
increase
market
volatility
and
the
economic
risk
of
investing
in
foreign
securities.
In
addition,
certain
foreign
securities
may
not
be
as
liquid
as
U.S.
securities.
8.
Other
Derivative
Information
For
the
year
ended
August
31,
2023,
the
effect
of
derivative
contracts
in
the
Statements
of
Operations
was
as
follows:
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
a
a
a
a
Cost
of
investments
.......................
$2,566,026,126
$3,239,842
$2,245,559,294
Unrealized
appreciation
.....................
$523,943,472
$489,595
$346,309,842
Unrealized
depreciation
.....................
(326,314,354)
(161,923)
(153,488,831)
Net
unrealized
appreciation
(depreciation)
.......
$197,629,118
$327,672
$192,821,011
Distributable
earnings:
Undistributed
ordinary
income
................
$57,146,931
$66,127
$14,508,589
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Purchases
..............................
$371,198,097
$1,444,168
$1,057,009,533
Sales
..................................
$765,430,194
$546,248
$1,313,806,173
5.
Income
Taxes
(continued)
Templeton
Funds
Notes
to
Financial
Statements
65
franklintempleton.com
Annual
Report
See
Note
1(c) regarding
derivative
financial
instruments. 
9.
Credit
Facility
The
Funds,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2.675
billion
(Global
Credit
Facility)
which
matures
on
February
2,
2024.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Under
the
terms
of
the
Global
Credit
Facility,
the
Funds
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Funds
and
other
costs
incurred
by
the
Funds,
pay
their
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
their
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
Statements
of
Operations.
During
the
year ended
August
31,
2023,
the
Funds
did
not
use
the
Global
Credit
Facility.
10.
Fair
Value
Measurements
The Funds
follow
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Funds'
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the Funds' 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 Funds'
own
assumptions
in
determining
the
fair
value
of
financial
instruments)
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Year
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Year
Templeton
Foreign
Fund
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
  appreciation
(depreciation)
on:
Equity
Contracts
..............
Written
options
$128,973
Written
options
$—
Total
.......................
$128,973
$—
8.
Other
Derivative
Information
(continued)
Templeton
Funds
Notes
to
Financial
Statements
66
franklintempleton.com
Annual
Report
The
input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level.
A
summary
of
inputs
used
as
of
August
31,
2023,
in
valuing
the
Funds'
assets
carried
at
fair
value,
is
as
follows:
Level
1
Level
2
Level
3
Total
Templeton
Foreign
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
China
...............................
$
48,260,472
$
128,160,078
$
—
$
176,420,550
France
...............................
—
157,029,448
—
157,029,448
Germany
.............................
—
284,212,671
—
284,212,671
Hong
Kong
...........................
—
88,823,258
—
88,823,258
India
................................
—
56,352,138
—
56,352,138
Ireland
...............................
—
98,793,850
—
98,793,850
Japan
...............................
—
208,601,520
—
208,601,520
Netherlands
...........................
—
291,966,871
—
291,966,871
Portugal
..............................
—
45,601,535
—
45,601,535
South
Korea
..........................
—
240,953,430
—
240,953,430
Spain
................................
—
20,831,918
—
20,831,918
Switzerland
...........................
—
53,858,899
—
53,858,899
Taiwan
...............................
—
70,878,101
—
70,878,101
Thailand
.............................
—
33,615,055
—
33,615,055
United
Kingdom
........................
—
627,254,890
—
627,254,890
United
States
..........................
58,561,110
—
—
58,561,110
Short
Term
Investments
...................
—
249,900,000
—
249,900,000
Total
Investments
in
Securities
...........
$106,821,582
$2,656,833,662
a
$—
$2,763,655,244
Templeton
International
Climate
Change
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Chile
................................
—
34,632
—
34,632
Denmark
.............................
—
102,722
—
102,722
France
...............................
—
474,739
—
474,739
Germany
.............................
—
426,370
—
426,370
Hong
Kong
...........................
25,333
—
—
25,333
India
................................
—
123,502
—
123,502
Ireland
...............................
—
208,419
—
208,419
Italy
.................................
—
148,520
—
148,520
Japan
...............................
—
288,667
—
288,667
Netherlands
...........................
—
207,940
—
207,940
Norway
..............................
—
137,847
—
137,847
Singapore
............................
—
121,013
—
121,013
South
Korea
..........................
—
67,085
—
67,085
Spain
................................
—
90,052
—
90,052
Taiwan
...............................
140,168
—
—
140,168
United
Kingdom
........................
—
419,327
—
419,327
United
States
..........................
—
262,106
—
262,106
Short
Term
Investments
...................
289,072
—
—
289,072
Total
Investments
in
Securities
...........
$454,573
$3,112,941
b
$—
$3,567,514
Templeton
World
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
France
...............................
—
62,786,679
—
62,786,679
Germany
.............................
—
236,939,680
—
236,939,680
Hong
Kong
...........................
—
40,355,547
—
40,355,547
10.
Fair
Value
Measurements
(continued)
Templeton
Funds
Notes
to
Financial
Statements
67
franklintempleton.com
Annual
Report
11.
Subsequent
Events
The
Funds
has
evaluated
subsequent
events
through
the
issuance
of
the financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure.
Abbreviations
Level
1
Level
2
Level
3
Total
Templeton
World
Fund
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
India
................................
$
6,270,201
$
80,902,491
$
—
$
87,172,692
Japan
...............................
—
77,431,321
—
77,431,321
Netherlands
...........................
—
37,095,090
—
37,095,090
Taiwan
...............................
—
67,383,437
—
67,383,437
United
Kingdom
........................
—
136,124,741
—
136,124,741
United
States
..........................
1,598,632,473
50,658,645
—
1,649,291,118
Short
Term
Investments
...................
—
43,800,000
—
43,800,000
Total
Investments
in
Securities
...........
$1,604,902,674
$833,477,631
c
$—
$2,438,380,305
a
Includes
foreign
securities
valued
at
$2,406,933,662,
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.
b
Includes
foreign
securities
valued
at
$3,112,941,
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.
c
Includes
foreign
securities
valued
at
$789,677,631,
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.
Currency
GBP
British
Pound
HKD
Hong
Kong
Dollar
Selected
Portfolio
ADR
American
Depositary
Receipt
10.
Fair
Value
Measurements
(continued)
Templeton
Funds
Report
of
Independent
Registered
Public
Accounting
Firm
68
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
of
Templeton
Funds
and
Shareholders
of
Templeton
World
Fund,
Templeton
Foreign
Fund
and
Templeton
International
Climate
Change
Fund
Opinions
on
the
Financial
Statements
We
have
audited
the
accompanying
statements
of
assets
and
liabilities,
including
the
schedules
of
investments,
of
Templeton
World
Fund,
Templeton
Foreign
Fund
and
Templeton
International
Climate
Change
Fund
(constituting
Templeton
Funds,
hereafter
collectively
referred
to
as
the
"Funds")
as
of
August
31,
2023,
the
related
statements
of
operations
for
the
year
ended
August
31,
2023,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2023,
including
the
related
notes,
and
the
financial
highlights
for
each
of
the
periods
indicated
therein
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
each
of
the
Funds
as
of
August
31,
2023,
the
results
of
each
of
their
operations
for
the
year
then
ended,
the
changes
in
each
of
their
net
assets
for
each
of
the
two
years
in
the
period
ended
August
31,
2023
and
each
of
the
financial
highlights
for
each
of
the
periods
indicated
therein
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinions
These
financial
statements
are
the
responsibility
of
the
Funds’
management.
Our
responsibility
is
to
express
an
opinion
on
the
Funds’
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
Funds
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
of
these
financial
statements
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
August
31,
2023
by
correspondence
with
the
custodian,
transfer
agent
and
brokers;
when
replies
were
not
received
from
brokers,
we
performed
other
auditing
procedures.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinions.
PricewaterhouseCoopers
LLP
San
Francisco,
California
October
23,
2023
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Templeton
Funds
Tax
Information
(unaudited)
69
franklintempleton.com
Annual
Report
By
mid-February,
tax
information
related
to
a
shareholder's
proportionate
share
of
distributions
paid
during
the
preceding
calendar
year
will
be
received,
if
applicable.
Please
also
refer
to
www.franklintempleton.com
for
per
share
tax
information
related
to
any
distributions
paid
during
the
preceding
calendar
year.
Shareholders
are
advised
to
consult
with
their
tax
advisors
for
further
information
on
the
treatment
of
this
amount
on
their
tax
returns.
The
following
tax
information
for
the
Funds
is
required
to
be
furnished
to
shareholders
with
respect
to
income
earned
and
distributions
paid
during
their
fiscal
year.
The
Funds
below
hereby
report
the
following
amounts,
or
if
subsequently
determined
to
be
different,
the
maximum
allowable
amounts,
for
the
fiscal
year
ended
August
31,
2023:
Under
Section
853
of
the
Internal
Revenue
Code,
the
Funds
below
intend
to
elect
to
pass
through
to
their
shareholders
the
following
amounts,
or
amounts
as
finally
determined,
of
foreign
taxes
paid
and
foreign
source
income
earned
by
the
Funds
during
the
fiscal
year
ended
August
31,
2023:
Pursuant
to:
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
Long-Term
Capital
Gain
Dividends
Distributed
§852(b)(3)(C)
—
$87,444
$24,929,226
Income
Eligible
for
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$294,582
—
$11,286,222
Qualified
Dividend
Income
Earned
(QDI)
§854(b)(1)(B)
$70,567,829
$92,584
$33,933,153
Section
163(j)
Interest
Dividends
Earned
§163(j)
$4,348,230
$6,218
$1,144,557
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Foreign
Taxes
Paid
$1,651,475
$10,647
Foreign
Source
Income
Earned
$57,715,276
$66,937
Templeton
Funds
Board
Members
and
Officers
70
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
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Harris
J.
Ashton
(1932)
Trustee
Since
1992
119
Bar-S
Foods
(meat
packing
company)
(1981-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Director,
RBC
Holdings,
Inc.
(bank
holding
company)
(until
2002);
and
President,
Chief
Executive
Officer
and
Chairman
of
the
Board,
General
Host
Corporation
(nursery
and
craft
centers)
(until
1998).
Ann
Torre
Bates
(1958)
Trustee
Since
2008
29
Ares
Strategic
Income
Fund
(closed-end
investment
management
company)
(September
2022-present);
Ares
Capital
Corporation
(specialty
finance
company)
(2010-present),
United
Natural
Foods,
Inc.
(food
distribution)
(2013-present),
formerly
,
Navient
Corporation
(loan
management,
servicing
and
asset
recovery)
(2014-2016).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Executive
Vice
President
and
Chief
Financial
Officer,
NHP
Incorporated
(manager
of
multifamily
housing)
(1995-1997);
and
Vice
President
and
Treasurer,
US
Airways,
Inc.
(until
1995).
Terrence
J.
Checki
(1945)
Trustee
Since
January
2023
119
Hess
Corporation
(exploration
of
oil
and
gas)
(2014-present).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Member
of
the
Council
on
Foreign
Relations
(1996-present);
Member
of
the
National
Committee
on
U.S.-China
Relations
(1999-present);
member
of
the
board
of
trustees
of
the
Economic
Club
of
New
York
(2013-present);
member
of
the
board
of
trustees
of
the
Foreign
Policy
Association
(2005-present);
member
of
the
board
of
directors
of
Council
of
the
Americas
(2007-present)
and
the
Tallberg
Foundation
(2018-present);
and
formerly
,
Executive
Vice
President
of
the
Federal
Reserve
Bank
of
New
York
and
Head
of
its
Emerging
Markets
and
Internal
Affairs
Group
and
Member
of
Management
Committee
(1995-2014);
and
Visiting
Fellow
at
the
Council
on
Foreign
Relations
(2014).
Mary
C.
Choksi
(1950)
Trustee
Since
2016
119
Omnicom
Group
Inc.
(advertising
and
marketing
communications
services)
(2011-present)
and
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2017-present);
and
formerly
,
Avis
Budget
Group
Inc.
(car
rental)
(2007-2020).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Founder
and
Senior
Advisor,
Strategic
Investment
Group
(investment
management
group)
(2015-2017);
Founding
Partner
and
Senior
Managing
Director,
Strategic
Investment
Group
(1987-2015);
Founding
Partner
and
Managing
Director,
Emerging
Markets
Management
LLC
(investment
management
firm)
(1987-2011);
and
Loan
Officer/Senior
Loan
Officer/Senior
Pension
Investment
Officer,
World
Bank
Group
(international
financial
institution)
(1977-1987).
Templeton
Funds
71
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
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Edith
E.
Holiday
(1952)
Lead
Independent
Trustee
Trustee
since
2003
and
Lead
Independent
Trustee
since
2007
119
Hess
Corporation
(exploration
of
oil
and
gas)
(1993-present),
Santander
Consumer
USA
Holdings,
Inc.
(consumer
finance)
(2016-present);
Santander
Holdings
USA
(holding
company)
(2019-present);
and
formerly
,
Canadian
National
Railway
(railroad)
(2001-2021),
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2004-
2021),
RTI
International
Metals,
Inc.
(manufacture
and
distribution
of
titanium)
(1999-2015)
and
H.J.
Heinz
Company
(processed
foods
and
allied
products)
(1994-2013).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
or
Trustee
of
various
companies
and
trusts;
and
formerly
,
Assistant
to
the
President
of
the
United
States
and
Secretary
of
the
Cabinet
(1990-1993);
General
Counsel
to
the
United
States
Treasury
Department
(1989-1990);
and
Counselor
to
the
Secretary
and
Assistant
Secretary
for
Public
Affairs
and
Public
Liaison-United
States
Treasury
Department
(1988-1989).
J.
Michael
Luttig
(1954)
Trustee
Since
2009
119
Boeing
Capital
Corporation
(aircraft
financing)
(2006-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Counselor
and
Special
Advisor
to
the
CEO
and
Board
of
Directors
of
the
Coca-Cola
Company
(beverage
company)
(2021-present);
and
formerly
,
Counselor
and
Senior
Advisor
to
the
Chairman,
CEO,
and
Board
of
Directors,
of
The
Boeing
Company
(aerospace
company),
and
member
of
the
Executive
Council
(2019-2020);
Executive
Vice
President,
General
Counsel
and
member
of
the
Executive
Council,
The
Boeing
Company
(2006-2019);
and
Federal
Appeals
Court
Judge,
United
States
Court
of
Appeals
for
the
Fourth
Circuit
(1991-2006).
David
W.
Niemiec
(1949)
Trustee
Since
2005
29
Hess
Midstream
LP
(oil
and
gas
midstream
infrastructure)
(2017-present).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Advisor,
Saratoga
Partners
(private
equity
fund);
and
formerly
,
Managing
Director,
Saratoga
Partners
(1998-2001)
and
SBC
Warburg
Dillon
Read
(investment
banking)
(1997-1998);
Vice
Chairman,
Dillon,
Read
&
Co.
Inc.
(investment
banking)
(1991-1997);
and
Chief
Financial
Officer,
Dillon,
Read
&
Co.
Inc.
(1982-1997).
Larry
D.
Thompson
(1945)
Trustee
Since
2005
119
Graham
Holdings
Company
(education
and
media
organization)
(2011-2021);
The
Southern
Company
(energy
company)
(2014-2020;
previously
(2010-
2012)
and
Cbeyond,
Inc.
(business
communications
provider)
(2010-
2012).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
Counsel,
Finch
McCranie,
LLP
(law
firm)
(2015-present);
John
A.
Sibley
Professor
of
Corporate
and
Business
Law,
University
of
Georgia
School
of
Law
(2015-present;
previously
2011-2012);
and
formerly
,
Independent
Compliance
Monitor
and
Auditor,
Volkswagen
AG
(manufacturer
of
automobiles
and
commercial
vehicles)
(2017-2020);
Executive
Vice
President
-
Government
Affairs,
General
Counsel
and
Corporate
Secretary,
PepsiCo,
Inc.
(consumer
products)
(2012-2014);
Senior
Vice
President
-
Government
Affairs,
General
Counsel
and
Secretary,
PepsiCo,
Inc.
(2004-2011);
Senior
Fellow
of
The
Brookings
Institution
(2003-2004);
Visiting
Professor,
University
of
Georgia
School
of
Law
(2004);
and
Deputy
Attorney
General,
U.S.
Department
of
Justice
(2001-2003).
Independent
Board
Members
(continued)
Templeton
Funds
72
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
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Constantine
D.
Tseretopoulos
(1954)
Trustee
Since
2003
19
None
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Physician,
Chief
of
Staff,
owner
and
operator
of
the
Lyford
Cay
Hospital
(1987-present);
director
of
various
nonprofit
organizations;
and
formerly
,
Cardiology
Fellow,
University
of
Maryland
(1985-1987);
and
Internal
Medicine
Resident,
Greater
Baltimore
Medical
Center
(1982-
1985).
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Gregory
E.
Johnson
2
(1961)
Chairman
of
the
Board,
Trustee
and
Vice
President
Chairman
of
the
Board
and
Vice
President
since
January
2023
and
Trustee
since
2013
129
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Executive
Chairman,
Chairman
of
the
Board
and
Director,
Franklin
Resources,
Inc.;
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
Vice
Chairman,
Investment
Company
Institute;
and
formerly
,
Chief
Executive
Officer
(2013-2020)
and
President
(1994-2015)
Franklin
Resources,
Inc.
Rupert
H.
Johnson,
Jr.
3
(1940)
Trustee
Since
1992
119
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
(Vice
Chairman),
Franklin
Resources,
Inc.;
Director,
Franklin
Advisers,
Inc.;
and
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Ted
P.
Becker
(1951)
Chief
Compliance
Officer
Since
June
2023
Not
Applicable
Not
Applicable
280
Park
Avenue
New
York,
NY
10017
Principal
Occupation
During
at
Least
the
Past
5
Years:
Vice
President,
Global
Compliance
of
Franklin
Templeton
(since
2020);
Chief
Compliance
Officer
of
Legg
Mason
Partners
Fund
Advisor,
LLC
(since
2006);
Chief
Compliance
Officer
of
certain
funds
associated
with
Legg
Mason
&
Co.
or
its
affiliates
(since
2006);
formerly
,
Director
of
Global
Compliance
at
Legg
Mason
(2006
to
2020);
Managing
Director
of
Compliance
of
Legg
Mason
&
Co.
(2005
to
2020).
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).
Independent
Board
Members
(continued)
Templeton
Funds
73
franklintempleton.com
Annual
Report
Note
1:
Rupert
H.
Johnson,
Jr.
is
the
uncle
of
Gregory
E.
Johnson.
Note
2:
Officer
information
is
current
as
of
the
date
of
this
report.
It
is
possible
that
after
this
date,
information
about
officers
may
change.
Note
3:
Effective
December
31,
2022,
Robert
E.
Wade
ceased
to
be
a
trustee
of
the
Trust.
1.
We
base
the
number
of
portfolios
on
each
separate
series
of
the
U.S.
registered
investment
companies
within
the
Franklin
Templeton/Legg
Mason
fund
complex.
These
portfolios
have
a
common
investment
manager
or
affiliated
investment
managers.
2.
Gregory
E.
Johnson
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
of
Franklin
Resources,
Inc.
(Resources),
which
is
the
parent
company
of
the
Fund's
investment
manager
and
distributor.
3.
Rupert
H.
Johnson,
Jr.
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
and
a
major
shareholder
of
Resources,
which
is
the
parent
company
of
the
Fund's
investment
manager
and
distributor.
The
Sarbanes-Oxley
Act
of
2002
and
Rules
adopted
by
the
U.S.
Securities
and
Exchange
Commission
require
the
Fund
to
disclose
whether
the
Fund’s
Audit
Committee
includes
at
least
one
member
who
is
an
audit
committee
financial
expert
within
the
meaning
of
such
Act
and
Rules.
The
Fund’s
Board
has
determined
that
there
is
at
least
one
such
financial
expert
on
the
Audit
Committee
and
has
designated
each
of
Ann
Torre
Bates
and
David
W.
Niemiec
as
an
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
qualify
as
such
an
expert
in
view
of
their
extensive
business
background
and
experience.
Ms.
Bates
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2008.
She
currently
serves
as
a
director
of
Ares
Capital
Corporation
(2010-present)
and
United
Natural
Foods,
Inc.
(2013-present)
and
was
formerly
a
director
of
Navient
Corporation
from
2014
to
2016,
SLM
Corporation
from
1997
to
2014
and
Allied
Capital
Corporation
from
2003
to
2010,
Executive
Vice
President
and
Chief
Financial
Officer
of
NHP
Incorporated
from
1995
to
1997
and
Vice
President
and
Treasurer
of
US
Airways,
Inc.
until
1995.
Mr.
Niemiec
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2005,
currently
serves
as
an
Advisor
to
Saratoga
Partners
and
was
formerly
its
Managing
Director
from
1998
to
2001
and
serves
as
a
director
of
Hess
Midstream
LP
(2017-present).
Mr.
Niemiec
was
formerly
a
director
of
Emeritus
Corporation
from
1999
to
2010
and
OSI
Pharmaceuticals,
Inc.
from
2006
to
2010,
Managing
Director
of
SBC
Warburg
Dillon
Read
from
1997
to
1998,
and
was
Vice
Chairman
from
1991
to
1997
and
Chief
Financial
Officer
from
1982
to
1997
of
Dillon,
Read
&
Co.
Inc.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
have
each
acquired
an
understanding
of
generally
accepted
accounting
principles
and
financial
statements,
the
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Susan
Kerr
(1949)
Vice
President
–
AML
Compliance
Since
2021
Not
Applicable
Not
Applicable
280
Park
Avenue
New
York,
NY
10017
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
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.
Manraj
S.
Shekhon
(1969)
President
and
Chief
Executive
Officer
–
Investment
Management
Since
April
2023
Not
Applicable
Not
Applicable
7
Temasek
Blvd.
Suntec
Tower
1,
#38-03
Singapore
038987
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Investment
Officer
Franklin
Templeton
Emerging
Markets
Equity;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Navid
J.
Tofigh
(1972)
Vice
President
and
Secretary
Vice
President
Since
2015
and
Secretary
since
September
2023
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Interested
Board
Members
and
Officers
(continued)
Templeton
Funds
74
franklintempleton.com
Annual
Report
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)
Templeton
Funds
Shareholder
Information
75
franklintempleton.com
Annual
Report
Board
Approval
of
Investment
Management
Agreements
TEMPLETON
FUNDS
Templeton
Foreign
Fund
Templeton
International
Climate
Change
Fund
Templeton
World
Fund
(each
a
Fund)
March
27,
2023
15(c)
Meeting
At
a
meeting
held
on
March
27,
2023
(March
Meeting),
the
Board
of
Trustees
(Board)
of
Templeton
Funds
(Trust),
including
a
majority
of
the
trustees
who
are
not
“interested
persons”
as
defined
in
the
Investment
Company
Act
of
1940
(Independent
Trustees),
reviewed
and
approved
the
continuance
of
the:
(i)
investment
management
agreement
between
Templeton
Global
Advisors
Limited
(TGAL)
and
the
Trust,
on
behalf
of
each
of
the
Templeton
Foreign
Fund
and
the
Templeton
World
Fund,
(ii)
investment
management
agreement
between
Franklin
Templeton
Investments
Corp.
(FTIC)
and
the
Trust,
on
behalf
of
the
Templeton
International
Climate
Change
Fund,
(iii)
investment
sub-
advisory
agreement
between
FTIC
and
Franklin
Templeton
Investment
Management
Limited
(FTIML),
an
affiliate
of
FTIC,
and
(iv)
investment
sub-advisory
agreement
between
FTIC
and
TGAL
(collectively
with
FTIML,
the
Sub-Advisers),
an
affiliate
of
FTIC,
each
on
behalf
of
the
Fund
(each
a
Management
Agreement)
for
the
period
May
1,
2023
through
June
30,
2023
(Stub
Period).
The
Independent
Trustees
noted
that
each
Fund’s
annual
contract
review
was
historically
held
at
the
February
Board
meeting
and
that
management
proposed
to
move
the
contract
review
to
the
May
Board
meeting.
The
Independent
Trustees
further
noted
management’s
explanation
that,
to
effect
this
change,
the
Board
needed
to
consider
the
renewal
of
each
Fund’s
Management
Agreement(s)
prior
to
their
current
April
30,
2023
expiration
date.
The
Independent
Trustees
also
noted
that
management
would
ask
them
to
consider
the
continuation
of
the
Management
Agreements
again
at
the
May
Board
meeting
for
the
12-month
period
beginning
July
1,
2023.
The
Independent
Trustees
received
advice
from
and
met
separately
with
Independent
Trustee
counsel
in
considering
whether
to
approve
the
continuation
of
each
Management
Agreement
for
the
Stub
Period.
Although
the
Management
Agreements
for
the
Funds
were
considered
at
the
same
Board
meeting,
the
Board
considered
the
information
provided
to
it
about
the
Funds
together
and
with
respect
to
each
Fund
separately
as
the
Board
deemed
appropriate.
FTIC,
FTIML
and
TGAL
are
each
referred
to
herein
as
a
Manager.
In
considering
the
continuation
of
each
Management
Agreement,
the
Board
reviewed
and
considered
information
provided
by
each
Manager
at
the
March
Meeting
and
throughout
the
year
at
meetings
of
the
Board
and
its
committees.
The
Board
also
reviewed
and
considered
information
provided
in
response
to
a
detailed
set
of
requests
for
information
submitted
to
the
Managers
by
Independent
Trustee
counsel
on
behalf
of
the
Independent
Trustees
in
connection
with
the
annual
contract
renewal
process.
In
addition,
prior
to
the
March
Meeting,
the
Independent
Trustees
held
a
virtual
contract
renewal
meeting
at
which
the
Independent
Trustees
first
conferred
amongst
themselves
and
Independent
Trustee
counsel
about
contract
renewal
matters;
and
then
met
with
management
to
request
additional
information
that
the
Independent
Trustees
reviewed
and
considered
prior
to
and
at
the
March
Meeting.
The
Board
reviewed
and
considered
all
of
the
factors
it
deemed
relevant
in
approving
the
continuance
of
each
Management
Agreement,
including,
but
not
limited
to:
(i)
the
nature,
extent
and
quality
of
the
services
provided
by
each
Manager;
(ii)
the
investment
performance
of
each
Fund;
(iii)
the
costs
of
the
services
provided
and
profits
realized
by
each
Manager
and
its
affiliates
from
the
relationship
with
each
Fund;
(iv)
the
extent
to
which
economies
of
scale
are
realized
as
each
Fund
grows;
and
(v)
whether
fee
levels
reflect
these
economies
of
scale
for
the
benefit
of
Fund
investors
(Factors).
In
approving
the
continuance
of
each
Management
Agreement,
the
Board,
including
a
majority
of
the
Independent
Trustees,
determined
that
the
terms
of
the
Management
Agreements
are
fair
and
reasonable
and
that
the
continuance
of
each
Management
Agreement
is
in
the
best
interests
of
the
applicable
Fund
and
its
shareholders.
While
attention
was
given
to
all
information
furnished,
the
following
discusses
some
primary
factors
relevant
to
the
Board’s
determination.
Nature,
Extent
and
Quality
of
Services
The
Board
reviewed
and
considered
information
regarding
the
nature,
extent
and
quality
of
investment
management
services
provided
by
each
Manager
and
its
affiliates
to
the
Funds
and
their
shareholders.
This
information
included,
among
other
things,
the
qualifications,
background
and
experience
of
the
senior
management
and
investment
Templeton
Funds
Shareholder
Information
76
franklintempleton.com
Annual
Report
personnel
of
each
Manager,
as
well
as
information
on
succession
planning
where
appropriate;
the
structure
of
investment
personnel
compensation;
oversight
of
third-
party
service
providers;
investment
performance
reports
and
related
financial
information
for
each
Fund;
reports
on
expenses
and
shareholder
services;
legal
and
compliance
matters;
risk
controls;
pricing
and
other
services
provided
by
each
Manager
and
its
affiliates;
and
management
fees
charged
by
each
Manager
and
its
affiliates
to
US
funds
and
other
accounts,
including
management’s
explanation
of
differences
among
accounts
where
relevant.
The
Board
also
reviewed
and
considered
an
annual
report
on
payments
made
by
Franklin
Templeton
(FT)
or
the
Funds
to
financial
intermediaries,
as
well
as
a
memorandum
relating
to
third-
party
servicing
arrangements.
The
Board
acknowledged
management’s
continued
development
of
strategies
to
address
areas
of
heightened
concern
in
the
mutual
fund
industry,
including
various
regulatory
initiatives
and
continuing
geopolitical
concerns.
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Managers’
parent,
and
its
commitment
to
the
mutual
fund
business
as
evidenced
by
its
reassessment
of
the
fund
offerings
in
response
to
the
market
environment
and
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Funds
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
technological
innovation
and
advancement
and
investments
to
promote
alternative
investing.
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
each
Manager
and
its
affiliates
to
the
Funds
and
their
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
each
Fund
over
various
time
periods
ended
December
31,
2022.
The
Board
considered
the
performance
returns
for
each
Fund
in
comparison
to
the
performance
returns
of
mutual
funds
deemed
comparable
to
the
Fund
included
in
a
universe
(Performance
Universe)
selected
by
Broadridge
Financial
Solutions,
Inc.
(Broadridge),
an
independent
provider
of
investment
company
data.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
a
Performance
Universe.
The
Board
also
reviewed
and
considered
Fund
performance
reports
provided
and
discussions
that
occurred
with
portfolio
managers
at
Board
meetings
throughout
the
year.
A
summary
of
each
Fund’s
performance
results
is
below.
Templeton
Foreign
Fund
-
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
international
multi-cap
value
funds.
The
Board
noted
that
the
Fund’s
annualized
total
return
for
the
three-,
five-
and
10-year
periods
was
below
the
median
of
its
Performance
Universe,
but
for
the
one-year
period
was
above
the
median
and
in
the
first
quintile
(best
performance)
of
its
Performance
Universe.
The
Board
discussed
this
performance
with
management
and
management
explained
that
the
Fund
had
recent
improved
relative
performance,
noting
that
the
Fund,
for
the
one-year
period,
had
first
quintile
performance
versus
its
Performance
Universe
and
outperformed
its
benchmark,
the
MSCI
All
Country
World
ex
US
Index
-
NR.
Management
further
explained
that
the
Fund’s
relative
longer-term
underperformance
was
due,
in
part,
to
the
Fund’s
more
diverse
and
deeper
value
portfolio
positioning
in
comparison
to
peers.
Management
then
discussed
with
the
Board
the
actions
that
are
being
taken
in
an
effort
to
improve
the
performance
of
the
Fund,
noting
its
confidence
in
the
current
portfolio
positioning
of
the
Fund
and
that
the
Fund’s
valuation
profile
remains
attractive.
The
Board
concluded
that
the
Fund’s
performance
was
acceptable
and
that
the
Management
Agreement
should
be
continued
for
the
Stub
Period,
while
management’s
efforts
to
improve
performance
continue
to
be
closely
monitored.
Templeton
International
Climate
Change
Fund
-
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
international
multi-cap
value
funds.
The
Board
noted
that
the
Fund
commenced
operations
on
June
1,
2018
and
was
100%
owned
by
FRI
until
December
15,
2021
when
the
Fund
became
publicly
available.
The
Board
noted
that
the
Fund’s
annualized
total
return
for
the
one-year
period
was
below
the
median
of
its
Performance
Universe,
but
for
the
three-year
period
was
above
the
median
and
in
the
first
quintile
(best)
of
its
Performance
Universe.
The
Board
further
noted
the
short
operating
history
of
the
Fund.
After
consideration
of
the
above,
the
Board
concluded
that
the
Fund’s
performance
was
acceptable.
Templeton
World
Fund
-
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
retail
and
institutional
global
multi-cap
value
funds.
The
Board
noted
that
the
Fund’s
annualized
total
return
was
below
the
median
of
its
Performance
Universe
for
the
one-,
three-,
five-
and
10-year
periods.
The
Board
discussed
this
performance
with
management
and
management
explained
that,
even
though
the
Fund’s
peer
group
is
comprised
of
multi-cap
value
funds,
some
funds
within
the
Performance
Universe
are
more
skewed
toward
the
growth
style,
which
negatively
impacted
the
Fund’s
relative
returns
during
periods
of
outperformance
of
growth
investing
strategies
over
value
Templeton
Funds
Shareholder
Information
77
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investing
strategies.
Management
further
explained
that
the
Fund
had
underweight
positions
to
domestic
securities
during
the
one-,
three-
and
five-year
periods
compared
to
its
peer
group,
which
detracted
from
the
Fund’s
relative
performance.
Management
discussed
with
the
Board
the
impact
the
timing
of
the
transition
of
the
Fund’s
strategy
from
core
value
to
quality
value
had
on
Fund
performance
as
it
coincided
with
a
market
rotation
away
from
quality-oriented
stocks
to
more
cyclical
value
stocks
in
the
face
of
rising
inflation,
increased
interest
rates
and
tightened
fiscal
policy.
The
Board
noted
management’s
confidence
in
the
Fund’s
current
portfolio
positioning.
The
Board
concluded
that
the
Fund’s
Management
Agreement
should
be
continued
for
the
Stub
Period,
while
management’s
efforts
continue
to
be
closely
monitored.
Comparative
Fees
and
Expenses
The
Board
reviewed
and
considered
information
regarding
each
Fund’s
actual
total
expense
ratio
and
its
various
components,
including,
as
applicable,
management
fees;
transfer
agent
expenses;
underlying
fund
expenses;
Rule
12b-1
and
non-Rule
12b-1
service
fees;
and
other
non-
management
fees.
The
Board
also
noted
the
quarterly
and
annual
reports
it
receives
on
all
marketing
support
payments
made
by
FT
to
financial
intermediaries.
The
Board
considered
the
actual
total
expense
ratio
and,
separately,
the
contractual
management
fee
rate,
without
the
effect
of
fee
waivers,
if
any
(Management
Rate)
of
each
Fund
in
comparison
to
the
median
expense
ratio
and
median
Management
Rate,
respectively,
of
other
mutual
funds
deemed
comparable
to
and
with
a
similar
expense
structure
to
the
Fund
selected
by
Broadridge
(Expense
Group).
Broadridge
fee
and
expense
data
is
based
upon
information
taken
from
each
fund’s
most
recent
annual
or
semi-annual
report,
which
reflects
historical
asset
levels
that
may
be
quite
different
from
those
currently
existing,
particularly
in
a
period
of
market
volatility.
While
recognizing
such
inherent
limitation
and
the
fact
that
expense
ratios
and
Management
Rates
generally
increase
as
assets
decline
and
decrease
as
assets
grow,
the
Board
believed
the
independent
analysis
conducted
by
Broadridge
to
be
an
appropriate
measure
of
comparative
fees
and
expenses.
The
Broadridge
Management
Rate
includes
administrative
charges,
and
the
actual
total
expense
ratio,
for
comparative
consistency,
was
shown
for:
(i)
Class
A
shares
for
the
Templeton
Foreign
Fund
and
for
each
of
the
other
funds
in
the
Expense
Group,
(ii)
Advisor
Class
shares
for
the
Templeton
International
Climate
Change
Fund
and
Class
I,
Class
P,
Investor
Class,
and
Institutional
Class
shares
for
funds
in
the
Expense
Group
with
multiple
classes
of
shares
and
(iii)
Class
A
shares
for
the
Templeton
World
Fund
and
for
each
other
fund
in
the
Expense
Group.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
an
Expense
Group.
Templeton
Foreign
Fund
-
The
Expense
Group
for
the
Fund
included
the
Fund,
three
other
international
multi-cap
value
funds,
four
international
multi-cap
growth
funds,
and
five
international
multi-cap
core
funds.
The
Board
noted
that
the
Management
Rate
and
actual
total
expense
ratio
for
the
Fund
were
below
the
medians
and
in
the
first
quintile
(least
expensive)
of
its
Expense
Group.
The
Board
also
noted
that
the
Fund’s
actual
total
expense
ratio
reflected
a
fee
waiver
from
management.
The
Board
concluded
that
the
Management
Rate
charged
to
the
Fund
is
reasonable.
Templeton
International
Climate
Change
Fund
-
The
Expense
Group
for
the
Fund
included
the
Fund
and
nine
other
international
multi-cap
value
funds.
The
Board
noted
that
the
Management
Rate
and
actual
total
expense
ratio
for
the
Fund
were
below
the
medians
of
its
Expense
Group.
The
Board
further
noted
that
the
Fund’s
actual
total
expense
ratio
reflected
a
fee
waiver
from
management.
The
Board
also
noted
that
each
of
the
Fund’s
Sub-Advisers
is
paid
by
FTIC
out
of
the
management
fee
FTIC
receives
from
the
Fund
and
that
the
allocation
of
the
fee
between
FTIC
and
each
Sub-
Adviser
reflected
the
services
provided
by
each
to
the
Fund
.
In
response
to
discussions
with
the
Independent
Trustees,
management
proposed
to
change
the
first
breakpoint
tier
of
the
Fund’s
Management
Rate
schedule
from
“up
to
$1
billion”
to
“up
to
$500
million”,
effective
May
1,
2023.
After
consideration
of
the
above,
the
Board
concluded
that
the
Management
Rate
charged
to
the
Fund
and
the
sub-advisory
fee
paid
to
each
Sub-Adviser
are
reasonable.
Templeton
World
Fund
-
The
Expense
Group
for
the
Fund
included
the
Fund
and
11
other
global
multi-cap
value
funds.
The
Board
noted
that
the
Management
Rate
and
actual
total
expense
ratio
for
the
Fund
were
below
the
medians
of
its
Expense
Group.
The
Board
concluded
that
the
Management
Rate
charged
to
the
Fund
is
reasonable.
Profitability
The
Board
reviewed
and
considered
information
regarding
the
profits
realized
by
each
Manager
and
its
affiliates
in
connection
with
the
operation
of
each
Fund.
In
this
respect,
the
Board
considered
the
Fund
profitability
analysis
that
addresses
the
overall
profitability
of
FT’s
US
fund
business,
as
well
as
its
profits
in
providing
investment
management
and
other
services
to
each
of
the
individual
funds
during
the
12-month
period
ended
September
30,
2022,
being
the
most
recent
fiscal
year-end
for
FRI.
The
Board
noted
that
although
management
continually
makes
refinements
to
its
Templeton
Funds
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Information
78
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Report
methodologies
used
in
calculating
profitability
in
response
to
organizational
and
product-related
changes,
the
overall
methodology
has
remained
consistent
with
that
used
in
the
Funds’
profitability
report
presentations
from
prior
years.
The
Board
also
noted
that
PricewaterhouseCoopers
LLP,
auditor
to
FRI
and
certain
FT
funds,
has
been
engaged
to
periodically
review
and
assess
the
allocation
methodologies
to
be
used
solely
by
the
Funds’
Board
with
respect
to
the
profitability
analysis.
The
Board
noted
management’s
belief
that
costs
incurred
in
establishing
the
infrastructure
necessary
for
the
type
of
mutual
fund
operations
conducted
by
each
Manager
and
its
affiliates
may
not
be
fully
reflected
in
the
expenses
allocated
to
each
Fund
in
determining
its
profitability,
as
well
as
the
fact
that
the
level
of
profits,
to
a
certain
extent,
reflected
operational
cost
savings
and
efficiencies
initiated
by
management.
As
part
of
this
evaluation,
the
Board
considered
management’s
outsourcing
of
certain
operations,
which
effort
has
required
considerable
up-front
expenditures
by
each
Manager
but,
over
the
long
run
is
expected
to
result
in
greater
efficiencies.
The
Board
also
noted
management’s
expenditures
in
improving
shareholder
services
provided
to
the
Funds,
as
well
as
the
need
to
implement
systems
and
meet
additional
regulatory
and
compliance
requirements
resulting
from
recent
US
Securities
and
Exchange
Commission
and
other
regulatory
requirements.
The
Board
also
considered
the
extent
to
which
each
Manager
and
its
affiliates
might
derive
ancillary
benefits
from
fund
operations,
including
revenues
generated
from
transfer
agent
services,
potential
benefits
resulting
from
personnel
and
systems
enhancements
necessitated
by
fund
growth,
as
well
as
increased
leverage
with
service
providers
and
counterparties.
Based
upon
its
consideration
of
all
these
factors,
the
Board
concluded
that
the
level
of
profits
realized
by
each
Manager
and
its
affiliates
from
providing
services
to
each
Fund
was
not
excessive
in
view
of
the
nature,
extent,
and
quality
of
services
provided
to
each
Fund.
Economies
of
Scale
The
Board
reviewed
and
considered
the
extent
to
which
each
Manager
may
realize
economies
of
scale,
if
any,
as
the
Fund
grows
larger
and
whether
the
Fund’s
management
fee
structure
reflects
any
economies
of
scale
for
the
benefit
of
shareholders.
With
respect
to
possible
economies
of
scale,
the
Board
noted
the
existence
of
management
fee
breakpoints,
which
operate
generally
to
share
any
economies
of
scale
with
the
Fund’s
shareholders
by
reducing
the
Fund’s
effective
management
fees
as
the
Fund
grows
in
size.
The
Board
considered
management’s
view
that
any
analyses
of
potential
economies
of
scale
in
managing
a
particular
fund
are
inherently
limited
in
light
of
the
joint
and
common
costs
and
investments
each
Manager
incurs
across
the
FT
family
of
funds
as
a
whole.
The
Board
noted
that
the
Templeton
International
Climate
Change
Fund
does
not
currently
have
an
asset
size
that
would
likely
enable
the
Fund
to
achieve
economies
of
scale.
The
Board
noted
that
the
Templeton
Foreign
Fund
had
experienced
a
decrease
in
assets
and
would
not
be
expected
to
demonstrate
additional
economies
of
scale
in
the
near
term.
The
Board
concluded
that
to
the
extent
economies
of
scale
may
be
realized
by
each
Manager
and
its
affiliates,
each
Fund’s
management
fee
structure
provided
a
sharing
of
benefits
with
the
Fund
and
its
shareholders
as
the
Fund
grows.
Conclusion
Based
on
its
review,
consideration
and
evaluation
of
all
factors
it
believed
relevant,
including
the
above-described
factors
and
conclusions,
the
Board
unanimously
approved
the
continuation
of
each
Management
Agreement
for
the
Stub
Period.
May
24,
2023
15(c)
Meeting
At
a
meeting
held
on
May
24,
2023
(May
Meeting),
the
Board
reviewed
and
approved
each
Management
Agreement
for
an
additional
twelve-month
period
beginning
July
1,
2023.
The
Board
noted
its
review
and
consideration
of
the
information
it
received
in
connection
with
both
the
March
Meeting
and
the
May
Meeting.
In
particular,
the
Board
reviewed
and
considered
information
provided
in
response
to
a
follow-up
set
of
requests
for
information
submitted
to
the
Managers
by
Independent
Trustee
counsel
on
behalf
of
the
Independent
Trustees,
which
included
information
on
Fund
performance
for
the
one-,
three-
and
five-year
periods
ended
March
31,
2023
and
the
other
Factors.
The
Board
noted
Templeton
Foreign
Fund’s
recent
improving,
absolute
and
relative
performance
and
Templeton
International
Climate
Change
Fund’s
recent
strong,
absolute
and
relative
performance.
The
Board
determined
that
the
conclusions
it
made
at
the
March
Meeting
had
not
changed.
Based
on
its
review,
consideration
and
evaluation
of
all
factors
it
believed
relevant,
including
the
above-described
Factors
and
conclusions,
the
Board
unanimously
approved
the
continuation
of
the
Management
Agreements
for
an
additional
twelve-month
period
beginning
July
1,
2023.
Liquidity
Risk
Management
Program
Each
of
the
Franklin
Templeton
and
Legg
Mason
Funds
has
adopted
and
implemented
a
written
Liquidity
Risk
Management
Program
(the
“LRMP”)
as
required
by
Rule
22e-4
under
the
Investment
Company
Act
of
1940
(the
“Liquidity
Rule”).
The
LRMP
is
designed
to
assess
and
manage
each
Fund’s
liquidity
risk,
which
is
defined
as
the
Templeton
Funds
Shareholder
Information
79
franklintempleton.com
Annual
Report
risk
that
the
Fund
could
not
meet
requests
to
redeem
shares
issued
by
the
Fund
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
In
accordance
with
the
Liquidity
Rule,
the
LRMP
includes
policies
and
procedures
that
provide
for:
(1)
assessment,
management,
and
review
(no
less
frequently
than
annually)
of
each
Fund’s
liquidity
risk;
(2)
classification
of
each
Fund’s
portfolio
holdings
into
one
of
four
liquidity
categories
(Highly
Liquid,
Moderately
Liquid,
Less
Liquid,
and
Illiquid);
(3)
for
Funds
that
do
not
primarily
hold
assets
that
are
Highly
Liquid,
establishing
and
maintaining
a
minimum
percentage
of
the
Fund’s
net
assets
in
Highly
Liquid
investments
(called
a
“Highly
Liquid
Investment
Minimum”
or
“HLIM”);
and
(4)
prohibiting
the
Fund’s
acquisition
of
Illiquid
investments
that
would
result
in
the
Fund
holding
more
than
15%
of
its
net
assets
in
Illiquid
assets.
The
LRMP
also
requires
reporting
to
the
Securities
and
Exchange
Commission
(“SEC”)
(on
a
non-public
basis)
and
to
the
Board
if
the
Fund’s
holdings
of
Illiquid
assets
exceed
15%
of
the
Fund’s
net
assets.
Funds
with
HLIMs
must
have
procedures
for
addressing
HLIM
shortfalls,
including
reporting
to
the
Board
and,
with
respect
to
HLIM
shortfalls
lasting
more
than
seven
consecutive
calendar
days,
reporting
to
the
SEC
(on
a
non-public
basis).
The
Director
of
Liquidity
Risk
within
the
Investment
Risk
Management
Group
(the
“IRMG”)
is
the
appointed
Administrator
of
the
LRMP.
The
IRMG
maintains
the
Investment
Liquidity
Committee
(the
“ILC”)
to
provide
oversight
and
administration
of
policies
and
procedures
governing
liquidity
risk
management
for
Franklin
Templeton
and
Legg
Mason
products
and
portfolios.
The
ILC
includes
representatives
from
Franklin
Templeton’s
Risk,
Trading,
Global
Compliance,
Legal,
Investment
Compliance,
Investment
Operations,
Valuation
Committee,
Product
Management
and
Global
Product
Strategy.
In
assessing
and
managing
each
Fund’s
liquidity
risk,
the
ILC
considers,
as
relevant,
a
variety
of
factors,
including
the
Fund’s
investment
strategy
and
the
liquidity
of
its
portfolio
investments
during
both
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources
including
the
Funds’
interfund
lending
facility
and
line
of
credit.
Classification
of
the
Fund’s
portfolio
holdings
in
the
four
liquidity
categories
is
based
on
the
number
of
days
it
is
reasonably
expected
to
take
to
convert
the
investment
to
cash
(for
Highly
Liquid
and
Moderately
Liquid
holdings)
or
sell
or
dispose
of
the
investment
(for
Less
Liquid
and
Illiquid
investments),
in
current
market
conditions
without
significantly
changing
the
investment’s
market
value.
Each
Fund
primarily
holds
liquid
assets
that
are
defined
under
the
Liquidity
Rule
as
"Highly
Liquid
Investments,"
and
therefore
is
not
required
to
establish
an
HLIM.
Highly
Liquid
Investments
are
defined
as
cash
and
any
investment
reasonably
expected
to
be
convertible
to
cash
in
current
market
conditions
in
three
business
days
or
less
without
the
conversion
to
cash
significantly
changing
the
market
value
of
the
investment.
At
meetings
of
the
Funds’
Board
of
Trustees
held
in
May
2023,
the
Program
Administrator
provided
a
written
report
to
the
Board
addressing
the
adequacy
and
effectiveness
of
the
program
for
the
year
ended
December
31,
2022.
The
Program
Administrator
report
concluded
that
(i.)
the
LRMP,
as
adopted
and
implemented,
remains
reasonably
designed
to
assess
and
manage
each
Fund’s
liquidity
risk;
(ii.)
the
LRMP,
including
the
Highly
Liquid
Investment
Minimum
(“HLIM”)
where
applicable,
was
implemented
and
operated
effectively
to
achieve
the
goal
of
assessing
and
managing
each
Fund’s
liquidity
risk;
and
(iii.)
each
Fund
was
able
to
meet
requests
for
redemption
without
significant
dilution
of
remaining
investors’
interests
in
the
Fund.
Proxy
Voting
Policies
and
Procedures
The
Trust’s
investment
manager
has
established
Proxy
Voting
Policies
and
Procedures
(Policies)
that
the
Trust
uses
to
determine
how
to
vote
proxies
relating
to
portfolio
securities.
Shareholders
may
view
the
Trust’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
Trust’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
Schedule
of
Investments
The
Trust
files
a
complete
schedule
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
by
visiting
the
Commission’s
website
at
sec.
gov.
The
filed
form
may
also
be
viewed
and
copied
at
the
Commission’s
Public
Reference
Room
in
Washington,
DC.
Information
regarding
the
operations
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
Templeton
Funds
Shareholder
Information
80
franklintempleton.com
Annual
Report
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.
TLF
A
10/23
©
2023
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
and
Shareholder
Letter
Templeton
Funds
Investment
Manager
Distributor
Shareholder
Services
Franklin
Templeton
Investments
Corp.
Templeton
Global
Advisors
Limited
Franklin
Distributors,
LLC
(800)
DIAL
BEN
®
/
342-5236
franklintempleton.com
(800)
632-2301
Item 2. Code of Ethics.
 
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
 
(c) N/A
 
(d) N/A
 
(f) Pursuant to Item 13(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
 
 
Item 3. Audit Committee Financial Expert.
 
(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.
 
(2) The audit committee financial experts are Ann Torre Bates and
David W. Niemiec and they are "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.
 
 
Item 4.
Principal Accountant Fees and Services.
 
(a)      Audit Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $164,475 for the fiscal year ended August 31, 2023 and $168,490 for the fiscal year ended August 31, 2022.
 
(b)      Audit-Related Fees
The aggregate fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of Item 4 were $6,000 for the fiscal year ended August 31, 2023 and $6,000 for the fiscal year ended August 31, 2022. The services for which these fees were paid included attestation services.
 
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant's investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.  
 
(c)      Tax Fees
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.
 
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning were $70,000 for the fiscal year ended August 31, 2023, and $0 for the fiscal year ended August 31, 2022. The services for which these fees were paid included global access to tax platform International Tax View.
 
(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 not reported in paragraphs (a)-(c) of Item 4.
 
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $37,215 for the fiscal year ended August 31, 2023 and $181,126 for the fiscal year ended August 31, 2022. The services for which these fees were paid included professional fees in connection with SOC 1 reports, fees in connection with license for accounting and business knowledge platform Viewpoint, and fees in connection with license for employee development tool ProEdge.
 
(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:
 
      (i)   pre-approval of all audit and audit related services;
 
      (ii)  pre-approval of all non-audit related services to be provided to the Fund by the auditors;
 
      (iii) pre-approval of all non-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where the non-audit services relate directly to the operations or financial reporting of the registrant; and
 
      (iv)  establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
 
(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.
 
(f) No disclosures are required by this Item 4(f).
 
(g) The aggregate non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $113,215 for the fiscal year ended August 31, 2023 and $187,126 for the fiscal year ended August 31, 2022.
 
(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
 
(i) N/A
 
 
(j) N/A
 
 
Item 5. Audit Committee
of Listed Registrants.             
N/A
 
 
Item 6. Schedule of Investments.
                            N/A
 
 
Item 7
. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.                           N/A
 
 
Item 8. Portfolio Managers of Closed-End Management Investment Companies.  N/A
 
 
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.                          N/A
 
 
Item 10. Submission of Matters to a Vote of Security Holders.
 
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
 
 
Item 11. Controls and Procedures.
 
(a)
 Evaluation of Disclosure Controls and Procedures.  The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
 
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
 
(b)
  Changes in Internal Controls. There have been no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.
 
 
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Company.                             N/A
 
 
 
Item 13. Exhibits.
 
(a)(1) Code of Ethics
 
 
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer
 
 
(a)(2)(1) There were no written solicitations to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the Registrant to 10 or more persons.
 
(a)(2)(2) There was no change in the Registrant’s independent public accountant during the period covered by the report.
 
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer
 
 
 
 
 
 
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
TEMPLETON FUNDS
 
 
By S\MATTHEW T. HINKLE______________________
Matthew T. Hinkle
      Chief Executive Officer - Finance and Administration
Date  October 30, 2023
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 
By S\MATTHEW T. HINKLE______________________
Matthew T. Hinkle
      Chief Executive Officer - Finance and Administration
Date  October 30, 2023
 
 
By S\CHRISTOPHER KINGS______________________
      Christopher Kings
      Chief Financial Officer, Chief Accounting Officer and Treasurer
Date  October 30, 2023