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. 2^nd Street, Fort Lauderdale, FL 33301-1923

(Address of principal executive offices) (Zip code)

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

(Name and address of agent for service)

Registrant's telephone number, including area code:(954) 527-7500

Date of fiscal year end: 8/31

Date of reporting period: 8/31/21

Item 1. Reports to Stockholders.

a.)

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

b.)

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

Not Applicable

.

ANNUAL

REPORT

AND

SHAREHOLDER

LETTER

Templeton

Foreign

Fund

A

Series

of

Templeton

Funds

August

31,

2021

Sign

up

for

electronic

delivery

at

franklintempleton.com/edelivery

Not

FDIC

Insured

May

Lose

Value

No

Bank

Guarantee

franklintempleton.com

Not

part

of

the

annual

report

1

SHAREHOLDER

LETTER

Dear

Shareholder:

During

the

12

months

ended

August

31,

2021,

the

global

economic

recovery

was

supported

by

continued

monetary

and

fiscal

stimulus

measures,

easing

novel

coronavirus

(COVID-19)

pandemic

restrictions

and

the

development

of

treatments

and

vaccines.

During

parts

of

the

period,

geopolitical

tensions

and

surges

of

COVID-19

cases

in

certain

regions

pressured

global

stock

prices,

but

economic

growth

in

the

U.S.

and

China

and

continued

accommodative

monetary

policy

by

the

U.S.

Federal

Reserve

supported

equities

for

the

period

as

a

whole.

Asian

and

global

emerging

market

equities

trimmed

some

gains

near

period-end

after

the

Chinese

government

imposed

additional

regulation

on

some

businesses.

In

this

environment,

stocks

in

global

developed

and

emerging

markets

excluding

the

U.S.,

as

measured

by

the

MSCI

All

Country

World

Index

ex

USA

Index-NR

(net

of

tax

withholding

when

dividends

are

paid),

posted

a

+24.87%

total

return

for

the

period.

1

We

are

committed

to

our

long-term

perspective

and

disciplined

investment

approach

as

we

conduct

a

rigorous,

fundamental

analysis

of

securities

with

a

regular

emphasis

on

investment

risk

management.

Historically,

patient

investors

have

achieved

rewarding

results

by

evaluating

their

goals,

diversifying

their

assets

globally

and

maintaining

a

disciplined

investment

program,

all

hallmarks

of

the

Templeton

investment

philosophy.

We

continue

to

recommend

investors

consult

financial

professionals

and

review

their

portfolios

to

design

a

long-term

strategy

and

portfolio

allocation

that

meet

their

individual

needs,

goals

and

risk

tolerance.

Templeton

Foreign

Fund’s

annual

report

includes

more

detail

about

prevailing

conditions

and

a

discussion

about

investment

decisions

during

the

period.

Please

remember

all

securities

markets

fluctuate,

as

do

mutual

fund

share

prices.

We

thank

you

for

investing

with

Franklin

Templeton,

welcome

your

questions

and

comments,

and

look

forward

to

serving

your

investment

needs

in

the

years

ahead.

Sincerely,

Alan

Bartlett

Chief

Investment

Officer

Templeton

Global

Equity

Group

This

letter

reflects

our

analysis

and

opinions

as

of

August

31,

2021,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

1.

Source:

Morningstar.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

franklintempleton.com

Annual

Report

2

Contents

Annual

Report

Templeton

Foreign

Fund

3

Performance

Summary

8

Your

Fund’s

Expenses

11

Financial

Highlights

and

Statement

of

Investments

12

Financial

Statements

20

Notes

to

Financial

Statements

24

Report

of

Independent

Registered

Public

Accounting

Firm

35

Tax

Information

36

Board

Members

and

Officers

37

Shareholder

Information

42

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Annual

Report

ANNUAL

REPORT

Templeton

Foreign

Fund

This

annual

report

for

Templeton

Foreign

Fund

covers

the

fiscal

year

ended

August

31,

2021

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

long-term

capital

growth.

Under

normal

market

conditions,

the

Fund

invests

at

least

80%

of

its

net

assets

in

foreign

securities.

These

securities

are

predominantly

equity

securities

of

companies

located

outside

the

U.S.,

including

developing

markets.

Performance

Overview

The

Fund’s

Class

A

shares

posted

a

+26.57%

cumulative

total

return

for

the

12

months

under

review.

In

comparison,

the

Fund’s

new

benchmark,

the

MSCI

All

Country

World

Index

(ACWI)

ex

USA

Index-NR,

which

measures

stock

performance

in

global

developed

and

emerging

markets

excluding

the

U.S.,

posted

a

+24.87%

cumulative

total

return.

1

Also

in

comparison,

the

Fund’s

former

benchmark,

the

MSCI

ACWI

ex

USA

Index,

posted

a

+25.37%

cumulative

total

return

for

the

same

period.

The

MSCI

ACWI

ex

USA

Index-NR

is

replacing

the

MSCI

ACWI

ex

USA

Index

because

the

investment

manager

believes

the

composition

of

the

MSCI

ACWI

ex

USA

Index-NR

provides

a

more

consistent

basis

for

comparison

relative

to

the

Fund’s

peers.

For

the

10-year

period

ended

August

31,

2021,

the

Fund’s

Class

A

shares

posted

a

+56.77%

cumulative

total

return,

compared

with

the

MSCI

ACWI

ex

USA

Index-NR’s

+88.89%

cumulative

total

return

for

the

same

period.

1

Please

note

index

performance

information

is

provided

for

reference

and

we

do

not

attempt

to

track

the

index

but

rather

undertake

investments

on

the

basis

of

fundamental

research.

You

can

find

more

performance

data

in

the

Performance

Summary

beginning

on

page

8

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Economic

and

Market

Overview

Global

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

ACWI-NR,

posted

a

+28.64%

total

return

for

the

12

months

ended

August

31,

2021.

1

Global

equities

benefited

from

monetary

and

fiscal

stimulus

measures,

easing

novel

coronavirus

(COVID-19)

pandemic

restrictions

in

certain

regions

and

the

development

of

treatments

and

vaccines.

Geopolitical

tensions

and

rising

infection

rates

in

the

fall

of

2020

reduced

stock

prices,

but

the

implementation

of

vaccination

programs

and

additional

fiscal

stimulus

measures

led

many

equity

markets

to

reach

new

price

highs

during

the

rest

of

the

period.

However,

the

Chinese

government’s

imposition

of

additional

restrictions

on

some

businesses

pressured

Asian

and

global

emerging

market

stocks

late

in

the

12-month

period.

In

the

U.S.,

the

economy

continued

to

recover

and

equities

rallied

amid

monetary

and

fiscal

stimulus

measures,

vaccine

development

and

the

beginning

of

vaccination

programs.

As

economic

conditions

improved,

gross

domestic

product

(GDP)

rebounded

at

a

record

annualized

pace

in

2020’s

third

quarter.

Although

GDP

growth

was

less

robust

in

the

three

subsequent

quarters,

the

lifting

of

many

COVID-19

restrictions

and

strong

consumer

spending

continued

to

support

the

economy.

A

rebound

in

corporate

earnings

and

the

U.S.

Senate’s

passage

of

a

bipartisan

infrastructure

bill

further

bolstered

investor

sentiment.

The

U.S.

Federal

Reserve

(Fed)

kept

the

federal

funds

target

rate

at

a

record-

low

range

of

0.00%–0.25%

and

continued

its

program

of

open-ended

U.S.

Treasury

and

mortgage

bond

purchases

to

help

keep

markets

functioning.

In

his

Jackson

Hole

Economic

Policy

Symposium

speech

in

August

2021,

Fed

Geographic

Composition

8/31/21

%

of

Total

Net

Assets

Asia

44.7%

Europe

41.7%

North

America

8.2%

Latin

America

&

Caribbean

2.0%

Other

0.5%

Short-Term

Investments

&

Other

Net

Assets

2.9%

1.

Source:

Morningstar.

As

of

8/31/21,

the

Fund’s

Class

A

10-year

average

annual

total

return

not

including

the

maximum

sales

charge

was

+4.60%,

compared

with

the

MSCI

ACWI

ex

USA

Index-NR’s

10-year

average

annual

total

return

of

+6.57%.

The

index

is

unmanaged

and

includes

reinvestment

of

any

income

or

distributions.

It

does

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

17

.

Templeton

Foreign

Fund

4

franklintempleton.com

Annual

Report

Chair

Jerome

Powell

hinted

that,

if

employment

and

price

conditions

progressed

as

expected,

the

Fed

would

begin

reducing

its

bond

purchases

later

in

2021;

however,

such

reduction

would

not

be

intended

as

a

signal

for

the

beginning

of

interest-rate

increases.

He

also

indicated

that

the

Fed

viewed

inflation

as

partially

transitory,

and

that

further

employment

progress

was

needed

before

the

Fed

would

consider

raising

the

range

for

the

federal

funds

target

rate.

The

economic

recovery

in

the

eurozone

was

relatively

weak,

as

quarter-over-quarter

GDP

growth

rebounded

in

2020’s

third

quarter

but

slightly

contracted

over

the

subsequent

two

quarters,

before

returning

to

growth

in

2021’s

second

quarter.

GDP

growth

rates

were

mostly

sluggish

among

the

region’s

largest

economies

amid

renewed

lockdowns,

delays

in

COVID-19

vaccine

distribution

and

weak

consumer

spending.

Nevertheless,

the

fastest

rate

of

business

activity

growth

in

more

than

a

decade

helped

European

developed

market

equities,

as

measured

by

the

MSCI

Europe

Index-

NR,

to

post

a

+29.18%

total

return

for

the

12

months

under

review.

1

Asian

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

All

Country

Asia

Index-NR,

posted

a

+18.42%

total

return

for

the

12-month

period.

1

China’s

economic

recovery

helped

the

region

rebound,

although

the

country’s

quarter-over-quarter

GDP

growth

in

2021’s

first

and

second

quarters

was

slower

than

2020’s

last

two

quarters,

pressured

by

higher

commodity

prices.

Asian

equity

markets

experienced

heightened

volatility

toward

period-end

due

to

inflation

concerns

and

rising

COVID-19

infection

rates

in

some

countries.

Unexpected

regulatory

changes

by

the

Chinese

government,

which

negatively

impacted

education-

and

technology-related

businesses,

led

some

foreign

investors

to

shift

capital

away

from

China.

Global

emerging

market

stocks,

as

measured

by

the

MSCI

Emerging

Markets

Index-NR,

posted

a

+21.12%

total

return

for

the

12

months

under

review.

1

Generally

improving

economic

activity,

increasing

oil

prices

and

U.S.

dollar

weakness

supported

global

emerging

market

equities.

During

the

latter

part

of

the

period,

higher

COVID-19

cases

in

some

countries,

limited

vaccine

rollouts

and

concerns

about

rising

interest

rates

and

higher

inflation

amid

rising

commodity

prices

dampened

investor

enthusiasm

in

global

emerging

market

equities.

Investment

Strategy

Our

investment

strategy

employs

a

bottom-up,

value-

oriented,

long-term

approach.

We

focus

on

the

market

price

of

a

company’s

securities

relative

to

our

evaluation

of

the

company’s

long-term

earnings,

asset

value

and

cash

flow

potential.

Our

analysis

includes

an

assessment

of

the

potential

impacts

of

material

environmental,

social

and

governance

(ESG)

factors

on

the

long-term

risk

and

return

profile

of

a

company.

We

also

consider

the

company’s

price/

earnings

ratio,

price/cash

flow

ratio,

profit

margins

and

liquidation

value.

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.

Top

10

Industries

8/31/21

%

of

Total

Net

Assets

a

Banks

9.5%

Oil,

Gas

&

Consumable

Fuels

7.0%

Pharmaceuticals

6.6%

Industrial

Conglomerates

5.6%

Automobiles

5.1%

Metals

&

Mining

5.1%

Semiconductors

&

Semiconductor

Equipment

4.5%

Internet

&

Direct

Marketing

Retail

4.2%

Aerospace

&

Defense

3.7%

Real

Estate

Management

&

Development

3.4%

Top

10

Countries

8/31/21

a

%

of

Total

Net

Assets

a

a

Japan

20.2%

United

Kingdom

17.5%

Germany

9.8%

China

7.7%

United

States

7.4%

South

Korea

6.5%

Netherlands

6.4%

Hong

Kong

4.5%

Taiwan

2.6%

India

2.3%

Templeton

Foreign

Fund

5

franklintempleton.com

Annual

Report

Manager’s

Discussion

The

Templeton

Foreign

Fund

delivered

double-digit

absolute

gains

and

outperformed

its

benchmark

MSCI

ACWI

ex

USA

Index-NR

during

the

12

months

under

review.

Value

was

the

top

performing

factor

style

during

the

period,

buoyed

by

positive

news

about

COVID-19

vaccines

in

November

2020,

which

sparked

a

rebound

in

economically-sensitive

stocks

that

had

come

under

pressure

amid

pandemic-related

lockdowns.

The

quality

factor

was

also

in

favor

during

the

year,

particularly

late

in

the

period

amid

concerns

about

new

COVID-19

variants

and

slowing

economic

data.

Stock

selection

and

an

underweighting

in

the

communication

services

sector

significantly

helped

relative

performance.

Chinese

internet

search

engine

Baidu

contributed

despite

a

late

selloff

sparked

by

fears

of

regulatory

tightening

in

China.

Shares

rallied

in

late

2020

due

to

enthusiasm

about

the

growth

potential

of

the

company’s

ancillary

businesses,

including

autonomous

driving

and

cloud

computing.

Shares

have

since

softened

following

the

company’s

Hong

Kong

initial

public

offering

(IPO)

in

March

2021

and

the

aforementioned

regulatory

concerns,

though

our

analysis

suggests

the

firm’s

core

search

and

information

flow

businesses

remain

undervalued

while

its

innovative

non-core

businesses

could

represent

significant

upside

potential.

Stock

selection

in

the

information

technology

sector

also

contributed

to

relative

results.

Significant

contributors

included

Dutch

semiconductor

firm

NXP

Semiconductors

(not

part

of

the

index)

and

South

Korean

semiconductor

and

consumer

electronics

manufacturer

Samsung

Electronics,

which

both

benefited

from

surging

demand

for

semiconductors

across

the

industrial

value

chain.

NXP

was

particularly

boosted

by

strong

demand

from

the

automobile

industry,

which

resulted

in

better-than-expected

results,

upgraded

guidance

and

the

announcement

of

a

new

share

buyback

program

during

the

period.

Samsung’s

management

also

offered

investors

positive

guidance,

anticipating

continued

strength

in

the

memory

business

attributable

to

new

smartphone

launches,

broader

adoption

of

5G

and

healthy

demand

from

server

and

PC

companies.

We

continue

to

think

highly

of

Samsung’s

diversified

revenue

base

and

cash-rich

balance

sheet,

which

is

being

used

to

enhance

shareholder

value

through

dividends,

buybacks

and

potentially

accretive

acquisitions.

In

our

view,

the

stock

remains

undervalued

for

a

global

technology

leader

with

a

wide

range

of

growth-oriented

businesses.

Other

relative

contributors

included

stock

selection

and

an

underweighting

in

the

consumer

staples

sector

and

stock

selection

in

the

financials

and

materials

sectors.

In

financials,

South

Korean

lender

KB

Financial

Group

was

a

significant

contributor.

We

have

been

encouraged

by

the

transition

of

KB

to

a

shareholder-focused

bank

and

successful

execution

of

its

strategy

to

improve

profitability,

capital

levels

and

risk

management.

Despite

trading

at

a

deep

discount

to

book

value,

the

company

has

recently

delivered

record

profits

and

a

near

10%

return

on

tangible

equity

while

building

capital

levels

well

above

the

regulatory

minimum,

creating

scope

for

future

dividends

and

buybacks.

We

remain

constructive

on

the

stock.

In

materials,

Luxembourg-based

global

steel-maker

ArcelorMittal

boosted

performance.

Shares

rallied

on

the

combination

of

supply

chain

bottlenecks

and

surging

steel

demand.

While

we

recognize

ArcelorMittal

is

a

high-beta

industrial

cyclical

holding

that

has

benefited

from

a

favorable

backdrop,

the

firm

has

undergone

structural

improvements

that

suggest

it

may

still

have

additional

upside

potential.

Valuations

are

approaching

fair

value,

but

do

not

appear

outright

expensive,

particularly

in

light

of

the

firm’s

de-risked

balance

sheet,

a

newly

announced

cash

return

strategy

and

a

favorable

regulatory

backdrop

and

supply

situation

in

Europe.

Turning

to

detractors,

stock

selection

and

an

overweighting

in

the

health

care

sector

and

an

underweighting

and

stock

selection

in

the

consumer

discretionary

sector

hurt

relative

performance.

Top

10

Holdings

8/31/21

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

Hitachi

Ltd.

3.4%

Industrial

Conglomerates,

Japan

Samsung

Electronics

Co.

Ltd.

2.8%

Technology

Hardware,

Storage

&

Peripherals,

South

Korea

Taiwan

Semiconductor

Manufacturing

Co.

Ltd.

2.6%

Semiconductors

&

Semiconductor

Equipment,

Taiwan

BP

plc

2.5%

Oil,

Gas

&

Consumable

Fuels,

United

Kingdom

Alibaba

Group

Holding

Ltd.

2.3%

Internet

&

Direct

Marketing

Retail,

China

Bayer

AG

2.3%

Pharmaceuticals,

Germany

Housing

Development

Finance

Corp.

Ltd.

2.3%

Thrifts

&

Mortgage

Finance,

India

Royal

Dutch

Shell

plc

2.2%

Oil,

Gas

&

Consumable

Fuels,

Netherlands

CK

Hutchison

Holdings

Ltd.

2.2%

Industrial

Conglomerates,

United

Kingdom

SBM

Offshore

NV

2.2%

Energy

Equipment

&

Services,

Netherlands

Templeton

Foreign

Fund

6

franklintempleton.com

Annual

Report

In

health

care,

German

pharmaceuticals

and

chemicals

firm

Bayer

hurt

relative

returns.

Shares

were

under

pressure

during

much

of

the

period

as

the

firm

worked

to

resolve

ongoing

litigation

relating

to

a

product

it

acquired

when

it

purchased

U.S.

crop

sciences

firm

Monsanto

in

2018.

While

the

market

remains

skeptical

about

the

finality

of

the

complex

multi-billion

U.S.

dollar

settlement,

liabilities

are

now

capped

(and

mostly

paid

for

by

the

end

of

2021)

and

we

believe

the

market

will

begin

to

look

past

the

issue

and

refocus

on

the

underlying

business.

To

that

end,

Bayer’s

crop

science

business

will

likely

be

the

main

driver

of

growth

going

forward.

As

the

market

leader

in

this

area,

with

the

largest

research-and-development

budget,

numerous

upcoming

product

launches

and

one

of

the

leading

technology

platforms,

we

expect

the

business

to

deliver

growth

above

the

baseline

increase

of

GDP.

Industry

consolidation,

along

with

the

decline

of

arable

land

and

continued

growth

in

protein

consumption

(driven

by

emerging

markets)

should

all

provide

continued

tailwinds

for

volumes

and

pricing.

With

shares

continuing

to

trade

at

a

substantial

discount

to

our

estimation

of

fair

value

on

numerous

metrics,

we

remain

constructive

on

the

stock.

In

consumer

discretionary,

relative

detractors

included

Chinese

e-commerce

company

Alibaba

Group

Holding

and

Netherlands-listed

food-delivery

firm

Just

Eat

Takeaway.

com.

Shares

of

Just

Eat,

Europe’s

largest

food

delivery

business,

slumped

on

news

of

increased

competition

in

its

key

German

market.

As

we

have

long

observed,

profitability

in

the

food

delivery

business

is

currently

masked

by

growth

investments

and

irrational

pricing

behavior

from

competitive

upstarts.

However,

Just

Eat

has

established

clear

leadership

positions

in

most

of

their

markets

and

looks

well-positioned

to

defend

its

position

and

take

market

share

from

logistics

players

with

structurally

lower

levels

of

profitability.

We

have

repeatedly

witnessed

a

significant

improvement

in

unit

economics

once

markets

rationalize,

and

ultimately

those

improvements

accrue

to

the

market

share

winner,

which

in

most

cases

has

been

Just

Eat.

Industry

consolidation

and

upcoming

IPOs

should

further

help

rationalize

industry

profitability

over

our

investment

horizon.

Just

Eat

also

has

attractive

optionality

through

its

growth

investments

in

areas

like

advertising,

subscriptions,

business-to-business,

cloud

kitchens

and

delivery

of

non-restaurant

add-ons,

as

well

as

the

monetization

of

its

Latin

American

assets.

The

Fund’s

cash

allocation

also

negatively

impacted

performance

in

a

rising

market

environment.

While

the

portfolio

manager

decreased

our

cash

position

over

the

course

of

the

period,

we

continue

to

keep

some

cash

on

hand

for

downside

protection

given

elevated

market

risks

as

well

as

a

source

of

dry

powder

should

additional

opportunities

emerge.

From

a

regional

standpoint,

stock

selection

among

Asian

holdings

boosted

relative

performance,

led

by

China

and

South

Korea.

Stock

selection

and

an

overweighting

in

North

America

also

contributed.

In

contrast,

stock

selection

hurt

relative

returns

in

Europe,

where

strength

in

the

U.K.

and

France

was

offset

by

weakness

in

Germany

and

Belgium.

We

remain

aware

of

heightened

global

political

and

economic

risks

and

have

sought

to

prepare

for

them

by

owning

what

we

consider

high-quality,

defensive

stocks

with

attractive

valuation

profiles.

Yet

we

also

understand

that

current

bullish

conditions

can

persist,

and

that

positive

near-term

catalysts

remain

in

the

form

of

earnings

upgrades,

impending

fiscal

stimulus,

continued

share

buybacks,

elevated

equity

inflows

and

the

potential

for

an

improvement

in

COVID-19

statistics.

For

these

reasons,

we

remain

sensibly

diversified,

with

exposures

also

spanning

cyclical

and

economically

sensitive

stocks

that

we

believe

offer

valuation

support

and

positive

beta

to

potential

future

value

rallies.

The

result

is

a

balanced

portfolio

full

of

stocks

with

diverse

value

drivers

whose

common

characteristic

is

material

undervaluation

relative

to

our

assessment

of

their

long-term

fundamental

earnings

capability.

Thank

you

for

your

continued

participation

in

Templeton

Foreign

Fund.

We

look

forward

to

serving

your

future

investment

needs.

Christopher

James

Peel,

CFA

Herbert

J.

Arnett,

Jr.

Peter

M.

Moeschter,

CFA

Warren

Pustam,

CFA

Portfolio

Management

Team

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

August

31,

2021,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

CFA

®

is

a

trademark

owned

by

CFA

Institute

Templeton

Foreign

Fund

7

franklintempleton.com

Annual

Report

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,

2021

Templeton

Foreign

Fund

8

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

8/31/21

1

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A

:

5.50%

maximum

initial

sales

charge;

Advisor

Class:

no

sales

charges.

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

2

Average

Annual

Total

Return

3

–

A

4

1-Year

+26.57%

+19.65%

5-Year

+25.64%

+3.49%

10-Year

+56.77%

+4.01%

Advisor

1-Year

+26.88%

+26.88%

5-Year

+27.18%

+4.93%

10-Year

+60.81%

+4.87%

See

page

10

for

Performance

Summary

footnotes.

Templeton

Foreign

Fund

Performance

Summary

9

franklintempleton.com

Annual

Report

See

page

10

for

Performance

Summary

footnotes.

Total

Return

Index

Comparison

for

a

Hypothetical

$10,000

Investment

1

Total

return

represents

the

change

in

value

of

an

investment

over

the

periods

shown.

It

includes

any

applicable

maximum

sales

charge,

Fund

expenses,

account

fees

and

reinvested

distributions.

The

unmanaged

index

includes

reinvestment

of

any

income

or

distributions.

It

differs

from

the

Fund

in

composition

and

does

not

pay

management

fees

or

expenses.

One

cannot

invest

directly

in

an

index.

Class

A

(9/1/11–8/31/21)

Advisor

Class

(9/1/11–8/31/21)

Templeton

Foreign

Fund

Performance

Summary

10

franklintempleton.com

Annual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

Special

risks

are

associated

with

foreign

investing,

including

currency

fluctuations,

economic

instability

and

political

developments;

investments

in

developing

markets

involve

heightened

risks

related

to

the

same

factors.

Currency

rates

may

fluctuate

significantly

over

short

periods

of

time,

and

can

reduce

returns.

Because

the

Fund

may

invest

its

assets

in

companies

in

a

specific

region,

including

Europe,

it

is

subject

to

greater

risks

of

adverse

developments

in

that

region

and/or

the

surrounding

regions

than

a

fund

that

is

more

broadly

diversified

geographical-

ly.

Current

political

uncertainty

concerning

the

economic

consequences

of

the

departure

of

the

U.K.

from

the

European

Union

may

increase

market

volatility.

Derivatives,

including

currency

management

strategies,

involve

costs

and

can

create

economic

leverage

in

the

portfolio

which

may

result

in

significant

volatility

and

cause

the

Fund

to

participate

in

losses

(as

well

as

enable

gains)

on

an

amount

that

exceeds

the

Fund’s

initial

investment.

The

Fund

may

not

achieve

the

anticipated

benefits,

and

may

realize

losses

when

a

counterparty

fails

to

perform

as

promised.

Events

such

as

the

spread

of

deadly

diseases,

disasters,

and

financial,

political

or

social

disruptions,

may

heighten

risks

and

adversely

affect

performance.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

The

Fund

has

an

expense

reduction

contractually

guaranteed

through

12/31/21.

Fund

investment

results

reflect

the

expense

reduction;

without

this

reduction,

the

results

would

have

been

lower.

2.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

3.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

4.

Prior

to

9/10/18

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

5.

Source:

Morningstar.

The

MSCI

ACWI

ex

USA

Index

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

(9/1/20–8/31/21)

Share

Class

Net

Investment

Income

A

$0.0940

C

$0.0332

R

$0.0808

R6

$0.1215

Advisor

$0.1141

Total

Annual

Operating

Expenses

6

Share

Class

With

Fee

Waiver

Without

Fee

Waiver

A

1.10%

1.19%

Advisor

0.85%

0.94%

Your

Fund’s

Expenses

Templeton

Foreign

Fund

11

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

3/1/21

Ending

Account

Value

8/31/21

Expenses

Paid

During

Period

3/1/21–8/31/21

1,2

Ending

Account

Value

8/31/21

Expenses

Paid

During

Period

3/1/21–8/31/21

1,2

a

Net

Annualized

Expense

Ratio

2

A

$1,000

$1,041.60

$5.47

$1,019.84

$5.41

1.06%

C

$1,000

$1,039.10

$9.33

$1,016.05

$9.23

1.82%

R

$1,000

$1,041.20

$6.76

$1,018.59

$6.68

1.31%

R6

$1,000

$1,043.70

$3.36

$1,021.92

$3.32

0.65%

Advisor

$1,000

$1,042.30

$4.19

$1,021.10

$4.15

0.81%

Templeton

Funds

Financial

Highlights

Templeton

Foreign

Fund

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

a

Year

Ended

August

31,

2021

2020

2019

2018

2017

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$6.22

$6.61

$7.69

$7.81

$6.87

Income

from

investment

operations

a

:

Net

investment

income

b

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

0.18

c

0.10

0.19

0.12

0.11

Net

realized

and

unrealized

gains

(losses)

...........

1.46

(0.25)

(1.09)

(0.13)

0.96

Total

from

investment

operations

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

1.64

(0.15)

(0.90)

(0.01)

1.07

Less

distributions

from:

Net

investment

income

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

(0.09)

(0.24)

(0.18)

(0.11)

(0.13)

Net

asset

value,

end

of

year

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

$7.77

$6.22

$6.61

$7.69

$7.81

Total

return

d

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

26.57%

(2.76)%

(11.73)%

(0.15)%

15.83%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

......

1.15%

1.19%

1.15%

1.16%

1.21%

Expenses

net

of

waiver

and

payments

by

affiliates

.......

1.07%

1.10%

1.08%

1.11%

e

1.21%

e,f

Net

investment

income

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

2.45%

c

1.55%

2.69%

1.54%

1.55%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$1,990,939

$1,766,365

$2,395,260

$2,929,181

$3,287,394

Portfolio

turnover

rate

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

37.85%

g

42.37%

h

30.81%

23.01%

42.56%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.09

per

share

related

to

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.23%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

g

Excludes

the

value

of

portfolio

securities

delivered

as

a

result

of

a

redemption

in-kind.

See

Note

3h.

h

Excludes

the

value

of

portfolio

securities

received

as

a

result

of

a

subscription

in-kind.

See

Note

10.

Templeton

Funds

Financial

Highlights

Templeton

Foreign

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

13

a

Year

Ended

August

31,

2021

2020

2019

2018

2017

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$6.17

$6.54

$7.49

$7.60

$6.69

Income

from

investment

operations

a

:

Net

investment

income

b

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

0.13

c

0.05

0.12

0.06

0.05

Net

realized

and

unrealized

gains

(losses)

...........

1.43

(0.25)

(1.05)

(0.12)

0.94

Total

from

investment

operations

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

1.56

(0.20)

(0.93)

(0.06)

0.99

Less

distributions

from:

Net

investment

income

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

(0.03)

(0.17)

(0.02)

(0.05)

(0.08)

Net

asset

value,

end

of

year

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

$7.70

$6.17

$6.54

$7.49

$7.60

Total

return

d

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

25.55%

(3.42)%

(12.40)%

(0.79)%

14.92%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

......

1.90%

1.94%

1.90%

1.91%

1.96%

Expenses

net

of

waiver

and

payments

by

affiliates

.......

1.82%

1.85%

1.83%

1.86%

e

1.96%

e,f

Net

investment

income

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

1.81%

c

0.81%

1.94%

0.79%

0.80%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$39,083

$54,093

$87,160

$281,640

$346,032

Portfolio

turnover

rate

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

37.85%

g

42.37%

h

30.81%

23.01%

42.56%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.09

per

share

related

to

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

0.58%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

f

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

g

Excludes

the

value

of

portfolio

securities

delivered

as

a

result

of

a

redemption

in-kind.

See

Note

3h.

h

Excludes

the

value

of

portfolio

securities

received

as

a

result

of

a

subscription

in-kind.

See

Note

10.

Templeton

Funds

Financial

Highlights

Templeton

Foreign

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

a

Year

Ended

August

31,

2021

2020

2019

2018

2017

Class

R

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$6.08

$6.47

$7.53

$7.65

$6.73

Income

from

investment

operations

a

:

Net

investment

income

b

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

0.16

c

0.08

0.17

0.10

0.09

Net

realized

and

unrealized

gains

(losses)

...........

1.42

(0.24)

(1.07)

(0.12)

0.94

Total

from

investment

operations

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

1.58

(0.16)

(0.90)

(0.02)

1.03

Less

distributions

from:

Net

investment

income

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

(0.08)

(0.23)

(0.16)

(0.10)

(0.11)

Net

asset

value,

end

of

year

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

$7.58

$6.08

$6.47

$7.53

$7.65

Total

return

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

26.29%

(3.03)%

(11.96)%

(0.32)%

15.57%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

......

1.40%

1.44%

1.40%

1.41%

1.46%

Expenses

net

of

waiver

and

payments

by

affiliates

.......

1.32%

1.35%

1.33%

1.36%

d

1.46%

d,e

Net

investment

income

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

2.21%

c

1.33%

2.44%

1.29%

1.30%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$123,744

$109,187

$127,546

$148,638

$153,516

Portfolio

turnover

rate

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

37.85%

f

42.37%

g

30.81%

23.01%

42.56%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.09

per

share

related

to

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

0.98%.

d

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

e

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

f

Excludes

the

value

of

portfolio

securities

delivered

as

a

result

of

a

redemption

in-kind.

See

Note

3h.

g

Excludes

the

value

of

portfolio

securities

received

as

a

result

of

a

subscription

in-kind.

See

Note

10.

Templeton

Funds

Financial

Highlights

Templeton

Foreign

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

15

a

Year

Ended

August

31,

2021

2020

2019

2018

2017

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$6.12

$6.51

$7.58

$7.70

$6.78

Income

from

investment

operations

a

:

Net

investment

income

b

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

0.21

c

0.12

0.22

0.15

0.16

Net

realized

and

unrealized

gains

(losses)

...........

1.43

(0.24)

(1.08)

(0.12)

0.93

Total

from

investment

operations

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

1.64

(0.12)

(0.86)

0.03

1.09

Less

distributions

from:

Net

investment

income

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

(0.12)

(0.27)

(0.21)

(0.15)

(0.17)

Net

asset

value,

end

of

year

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

$7.64

$6.12

$6.51

$7.58

$7.70

Total

return

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

27.02%

(2.38)%

(11.34)%

0.24%

16.52%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

......

0.79%

0.79%

0.77%

0.73%

0.74%

Expenses

net

of

waiver

and

payments

by

affiliates

.......

0.69%

0.70%

0.68%

0.68%

d

0.73%

d

Net

investment

income

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

2.86%

c

1.96%

3.09%

1.97%

2.03%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$531,344

$594,452

$906,474

$1,496,328

$1,757,902

Portfolio

turnover

rate

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

37.85%

e

42.37%

f

30.81%

23.01%

42.56%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.09

per

share

related

to

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.63%.

d

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

e

Excludes

the

value

of

portfolio

securities

delivered

as

a

result

of

a

redemption

in-kind.

See

Note

3h.

f

Excludes

the

value

of

portfolio

securities

received

as

a

result

of

a

subscription

in-kind.

See

Note

10.

Templeton

Funds

Financial

Highlights

Templeton

Foreign

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

a

Year

Ended

August

31,

2021

2020

2019

2018

2017

Advisor

Class

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$6.12

$6.51

$7.58

$7.70

$6.78

Income

from

investment

operations

a

:

Net

investment

income

b

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

0.20

c

0.11

0.20

0.14

0.13

Net

realized

and

unrealized

gains

(losses)

...........

1.43

(0.24)

(1.07)

(0.12)

0.94

Total

from

investment

operations

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

1.63

(0.13)

(0.87)

0.02

1.07

Less

distributions

from:

Net

investment

income

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

(0.11)

(0.26)

(0.20)

(0.14)

(0.15)

Net

asset

value,

end

of

year

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

$7.64

$6.12

$6.51

$7.58

$7.70

Total

return

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

26.88%

(2.57)%

(11.53)%

0.16%

16.10%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

......

0.90%

0.94%

0.90%

0.91%

0.96%

Expenses

net

of

waiver

and

payments

by

affiliates

.......

0.82%

0.85%

0.83%

0.86%

d

0.96%

d,e

Net

investment

income

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

2.80%

c

1.79%

2.94%

1.79%

1.80%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$620,885

$857,179

$857,482

$1,627,827

$1,717,937

Portfolio

turnover

rate

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

37.85%

f

42.37%

g

30.81%

23.01%

42.56%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.09

per

share

related

to

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

1.57%.

d

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

e

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

f

Excludes

the

value

of

portfolio

securities

delivered

as

a

result

of

a

redemption

in-kind.

See

Note

3h

.

g

Excludes

the

value

of

portfolio

securities

received

as

a

result

of

a

subscription

in-kind.

See

Note

10.

Templeton

Funds

Statement

of

Investments,

August

31,

2021

Templeton

Foreign

Fund

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

17

a

a

Industry

Shares

a

Value

a

Common

Stocks

97.1%

Australia

0.5%

Downer

EDI

Ltd.

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

Commercial

Services

&

Supplies

3,753,052

$

17,746,546

Belgium

0.4%

a

Galapagos

NV

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

Biotechnology

204,890

12,118,747

a

Brazil

2.0%

Wheaton

Precious

Metals

Corp.

.....

Metals

&

Mining

1,449,919

65,363,034

Canada

0.8%

Cenovus

Energy,

Inc.

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

Oil,

Gas

&

Consumable

Fuels

3,079,986

25,566,838

China

7.7%

a

Alibaba

Group

Holding

Ltd.

.........

Internet

&

Direct

Marketing

Retail

3,672,870

76,907,907

a

Baidu,

Inc.,

ADR

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

Interactive

Media

&

Services

148,719

23,351,857

China

Overseas

Land

&

Investment

Ltd.

Real

Estate

Management

&

Development

11,716,250

26,990,407

Gree

Electric

Appliances,

Inc.

of

Zhuhai,

A

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

Household

Durables

3,965,000

25,225,374

NXP

Semiconductors

NV

..........

Semiconductors

&

Semiconductor

Equipment

290,453

62,485,154

Sinopec

Engineering

Group

Co.

Ltd.,

H

Construction

&

Engineering

41,084,300

21,768,998

Sinopharm

Group

Co.

Ltd.,

H

.......

Health

Care

Providers

&

Services

7,030,179

18,092,095

254,821,792

France

2.1%

Dassault

Aviation

SA

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

Aerospace

&

Defense

28,250

31,891,852

Valeo

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

Auto

Components

1,349,499

38,516,530

70,408,382

Germany

9.8%

Bayer

AG

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

Pharmaceuticals

1,364,167

75,886,583

Bayerische

Motoren

Werke

AG

......

Automobiles

498,707

47,334,640

a

Continental

AG

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

Auto

Components

285,549

38,372,639

b

Covestro

AG,

144A,

Reg

S

.........

Chemicals

661,935

42,896,539

E.ON

SE

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

Multi-Utilities

4,914,866

64,841,857

Fresenius

Medical

Care

AG

&

Co.

KGaA

Health

Care

Providers

&

Services

714,769

54,956,233

324,288,491

Hong

Kong

4.5%

AIA

Group

Ltd.

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

Insurance

5,316,653

63,484,294

CK

Asset

Holdings

Ltd.

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

Real

Estate

Management

&

Development

9,515,056

61,962,534

Swire

Pacific

Ltd.,

A

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

Real

Estate

Management

&

Development

3,599,862

24,370,308

149,817,136

India

2.3%

Housing

Development

Finance

Corp.

Ltd.

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

Thrifts

&

Mortgage

Finance

1,952,237

74,625,291

Japan

20.2%

Elecom

Co.

Ltd.

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

Technology

Hardware,

Storage

&

Peripherals

137,600

2,226,229

Hitachi

Ltd.

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

Industrial

Conglomerates

2,023,179

111,814,059

Honda

Motor

Co.

Ltd.

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

Automobiles

2,116,405

64,056,473

Isuzu

Motors

Ltd.

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

Automobiles

4,589,756

58,020,348

Kirin

Holdings

Co.

Ltd.

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

Beverages

1,133,673

20,538,473

Komatsu

Ltd.

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

Machinery

1,565,667

38,081,278

Seria

Co.

Ltd.

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

Multiline

Retail

895,267

32,668,213

Sony

Group

Corp.

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

Household

Durables

493,994

51,076,698

Sumitomo

Metal

Mining

Co.

Ltd.

.....

Metals

&

Mining

1,589,983

60,929,709

Sumitomo

Mitsui

Financial

Group,

Inc.

.

Banks

1,531,623

52,865,075

Sundrug

Co.

Ltd.

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

Food

&

Staples

Retailing

1,456,839

48,217,955

Taisei

Corp.

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

Construction

&

Engineering

1,354,100

42,363,853

Templeton

Funds

Statement

of

Investments

Templeton

Foreign

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

a

a

Industry

Shares

a

Value

a

Common

Stocks

(continued)

Japan

(continued)

Takeda

Pharmaceutical

Co.

Ltd.

.....

Pharmaceuticals

1,477,680

$

49,185,339

TBS

Holdings,

Inc.

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

Media

922,768

13,505,027

Toyota

Industries

Corp.

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

Auto

Components

255,924

21,607,821

667,156,550

Luxembourg

1.2%

ArcelorMittal

SA

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

Metals

&

Mining

1,232,026

41,320,375

Netherlands

6.4%

EXOR

NV

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

Diversified

Financial

Services

275,543

22,988,529

ING

Groep

NV

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

Banks

3,112,298

42,930,403

Royal

Dutch

Shell

plc,

B

...........

Oil,

Gas

&

Consumable

Fuels

3,694,267

72,697,014

SBM

Offshore

NV

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

Energy

Equipment

&

Services

3,949,574

71,877,046

210,492,992

Norway

1.1%

Equinor

ASA

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

Oil,

Gas

&

Consumable

Fuels

1,658,302

35,144,066

Portugal

0.5%

Galp

Energia

SGPS

SA,

B

.........

Oil,

Gas

&

Consumable

Fuels

1,492,245

15,263,395

South

Korea

6.5%

KB

Financial

Group,

Inc.

...........

Banks

1,474,406

67,108,153

Samsung

Electronics

Co.

Ltd.

.......

Technology

Hardware,

Storage

&

Peripherals

1,421,831

93,919,012

Shinhan

Financial

Group

Co.

Ltd.

....

Banks

1,659,811

55,325,115

216,352,280

Spain

1.1%

a

Amadeus

IT

Group

SA

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

IT

Services

438,067

26,755,059

a,c

Tecnicas

Reunidas

SA

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

Energy

Equipment

&

Services

1,170,272

11,258,971

38,014,030

Switzerland

1.6%

Roche

Holding

AG

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

Pharmaceuticals

128,083

51,429,583

Taiwan

2.6%

Taiwan

Semiconductor

Manufacturing

Co.

Ltd.

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

Semiconductors

&

Semiconductor

Equipment

3,876,044

85,211,046

Thailand

0.9%

Kasikornbank

PCL

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

Banks

8,167,437

31,062,260

United

Kingdom

17.5%

AstraZeneca

plc

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

Pharmaceuticals

344,588

40,298,773

BAE

Systems

plc

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

Aerospace

&

Defense

6,645,848

51,923,374

BP

plc

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

Oil,

Gas

&

Consumable

Fuels

19,926,930

81,071,581

CK

Hutchison

Holdings

Ltd.

.........

Industrial

Conglomerates

9,929,086

72,383,663

Imperial

Brands

plc

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

Tobacco

2,864,846

60,756,449

a

Informa

plc

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

Media

3,963,053

28,963,267

a

International

Consolidated

Airlines

Group

SA

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

Airlines

13,368,864

29,312,251

a,b

Just

Eat

Takeaway.com

NV,

144A,

Reg

S

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

Internet

&

Direct

Marketing

Retail

672,415

60,922,508

Prudential

plc

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

Insurance

2,357,881

49,127,355

a

Rolls-Royce

Holdings

plc

..........

Aerospace

&

Defense

24,666,395

38,900,872

Standard

Chartered

plc

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

Banks

10,272,965

64,065,947

577,726,040

Templeton

Funds

Statement

of

Investments

Templeton

Foreign

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

19

a

a

Industry

Shares

a

Value

a

Common

Stocks

(continued)

United

States

7.4%

a

Array

Technologies,

Inc.

...........

Electrical

Equipment

1,491,850

$

28,449,579

a

Berkshire

Hathaway,

Inc.,

B

.........

Diversified

Financial

Services

175,413

50,127,773

a

Booking

Holdings,

Inc.

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

Hotels,

Restaurants

&

Leisure

19,064

43,840,909

a

DXC

Technology

Co.

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

IT

Services

1,529,110

56,148,919

H&R

Block,

Inc.

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

Diversified

Consumer

Services

1,317,343

33,789,848

ManpowerGroup

,

Inc.

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

Professional

Services

273,659

33,227,676

245,584,704

Total

Common

Stocks

(Cost

$2,708,962,931)

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

3,209,513,578

Short

Term

Investments

3.2%

a

a

Principal

Amount

*

a

Value

a

a

a

a

a

a

Time

Deposits

3.2%

Canada

2.6%

National

Bank

of

Canada,

0.05%,

9/01/21

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

25,000,000

25,000,000

Royal

Bank

of

Canada,

0.03%,

9/01/21

60,800,000

60,800,000

85,800,000

France

0.6%

Credit

Agricole

Corporate

and

Investment

Bank

SA,

0.05%,

9/01/21

20,000,000

20,000,000

Total

Time

Deposits

(Cost

$105,800,000)

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

105,800,000

a

a

a

a

a

Total

Short

Term

Investments

(Cost

$105,800,000

)

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

105,800,000

a

a

a

Total

Investments

(Cost

$2,814,762,931)

100.3%

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

$3,315,313,578

Other

Assets,

less

Liabilities

(0.3)%

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

(9,318,441)

Net

Assets

100.0%

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

$3,305,995,137

a

a

a

See

Abbreviations

on

page

34.

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

a

Non-income

producing.

b

Security

was

purchased

pursuant

to

Rule

144A

or

Regulation

S

under

the

Securities

Act

of

1933.

144A

securities

may

be

sold

in

transactions

exempt

from

registration

only

to

qualified

institutional

buyers

or

in

a

public

offering

registered

under

the

Securities

Act

of

1933.

Regulation

S

securities

cannot

be

sold

in

the

United

States

without

either

an

effective

registration

statement

filed

pursuant

to

the

Securities

Act

of

1933,

or

pursuant

to

an

exemption

from

registration.

At

August

31,

2021,

the

aggregate

value

of

these

securities

was

$103,819,047,

representing

3.1%

of

net

assets.

c

A

portion

or

all

of

the

security

is

on

loan

at

August

31,

2021.

See

Note

1(d).

Templeton

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

August

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

Templeton

Foreign

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

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

$2,814,762,931

Value

-

Unaffiliated

issuers

(Includes

securities

loaned

of

$395,743)

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

$3,315,313,578

Cash

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

72,872

Receivables:

Investment

securities

sold

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

3,086,534

Capital

shares

sold

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

2,331,057

Dividends

and

interest

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

12,785,865

European

Union

tax

reclaims

(Note

1

e

)

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

1,764,712

Other

assets

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

4,861,061

Total

assets

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

3,340,215,679

Liabilities:

Payables:

Investment

securities

purchased

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

3,452,712

Capital

shares

redeemed

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

2,906,412

Management

fees

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

1,625,372

Distribution

fees

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

512,097

Transfer

agent

fees

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

1,207,447

IRS

closing

agreement

fees

for

European

Union

tax

reclaims

(Note

1

e

)

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

20,739,069

Deferred

tax

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

2,803,665

Accrued

expenses

and

other

liabilities

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

973,768

Total

liabilities

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

34,220,542

Net

assets,

at

value

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

$3,305,995,137

Net

assets

consist

of:

Paid-in

capital

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

$3,273,050,245

Total

distributable

earnings

(losses)

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

32,944,892

Net

assets,

at

value

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

$3,305,995,137

Templeton

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

(continued)

August

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

21

Templeton

Foreign

Fund

Class

A:

Net

assets,

at

value

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

$1,990,939,321

Shares

outstanding

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

256,396,170

Net

asset

value

per

share

a

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

$7.77

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50%)

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

$8.22

Class

C:

Net

assets,

at

value

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

$39,082,542

Shares

outstanding

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

5,074,773

Net

asset

value

and

maximum

offering

price

per

share

a

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

$7.70

Class

R:

Net

assets,

at

value

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

$123,744,165

Shares

outstanding

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

16,315,778

Net

asset

value

and

maximum

offering

price

per

share

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

$7.58

Class

R6:

Net

assets,

at

value

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

$531,344,416

Shares

outstanding

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

69,590,642

Net

asset

value

and

maximum

offering

price

per

share

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

$7.64

Advisor

Class:

Net

assets,

at

value

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

$620,884,693

Shares

outstanding

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

81,301,819

Net

asset

value

and

maximum

offering

price

per

share

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

$7.64

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Templeton

Funds

Financial

Statements

Statement

of

Operations

for

the

year

ended

August

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

Templeton

Foreign

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$9,397,254)

Unaffiliated

issuers

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

$83,417,602

Interest:

Unaffiliated

issuers

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

52,638

Income

from

securities

loaned:

Unaffiliated

entities

(net

of

fees

and

rebates)

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

88,558

Non-controlled

affiliates

(Note

3

f

)

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

251

Other

income

(Note

1e

)

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

64,941,095

Less:

IRS

closing

agreement

fees

for

European

Union

tax

reclaims

(Note

1

e

)

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

(20,739,069)

Total

investment

income

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

127,761,075

Expenses:

Management

fees

(Note

3

a

)

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

24,954,455

Distribution

fees:

(Note

3c

)

    Class

A

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

4,902,175

    Class

C

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

521,943

    Class

R

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

603,944

Transfer

agent

fees:

(Note

3e

)

    Class

A

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

3,278,745

    Class

C

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

87,319

    Class

R

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

202,674

    Class

R6

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

291,468

    Advisor

Class

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

1,541,188

Custodian

fees

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

360,615

Reports

to

shareholders

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

422,127

Registration

and

filing

fees

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

121,201

Professional

fees

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

206,534

Trustees'

fees

and

expenses

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

246,264

Other

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

155,941

Total

expenses

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

37,896,593

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

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

(3,076,331)

Net

expenses

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

34,820,262

Net

investment

income

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

92,940,813

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

(net

of

foreign

taxes

of

$41,432)

Unaffiliated

issuers

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

338,100,492

Written

options

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

146,721

Foreign

currency

transactions

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

(520,880)

Net

realized

gain

(loss)

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

337,726,333

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

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

404,030,515

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

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

(3,456,323)

Change

in

deferred

taxes

on

unrealized

appreciation

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

(2,354,739)

Net

change

in

unrealized

appreciation

(depreciation)

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

398,219,453

Net

realized

and

unrealized

gain

(loss)

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

735,945,786

Net

increase

(decrease)

in

net

assets

resulting

from

operations

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

$828,886,599

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

23

Templeton

Foreign

Fund

Year

Ended

August

31,

2021

Year

Ended

August

31,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

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

$92,940,813

$63,838,421

Net

realized

gain

(loss)

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

337,726,333

(499,686,561)

Net

change

in

unrealized

appreciation

(depreciation)

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

398,219,453

353,612,661

Net

increase

(decrease)

in

net

assets

resulting

from

operations

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

828,886,599

(82,235,479)

Distributions

to

shareholders:

Class

A

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

(25,789,554)

(79,858,470)

Class

C

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

(254,786)

(1,948,865)

Class

R

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

(1,399,512)

(4,201,944)

Class

R6

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

(9,135,018)

(35,631,273)

Advisor

Class

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

(14,872,436)

(28,374,973)

Total

distributions

to

shareholders

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

(51,451,306)

(150,015,525)

Capital

share

transactions:

(Note

2

)

Class

A

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

(197,236,237)

(507,216,275)

Class

C

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

(27,080,860)

(29,035,746)

Class

R

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

(11,727,543)

(11,200,337)

Class

R6

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

(176,375,993)

(247,767,572)

Advisor

Class

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

(440,296,554)

34,825,853

Total

capital

share

transactions

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

(852,717,187)

(760,394,077)

Net

increase

(decrease)

in

net

assets

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

(75,281,894)

(992,645,081)

Net

assets:

Beginning

of

year

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

3,381,277,031

4,373,922,112

End

of

year

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

$3,305,995,137

$3,381,277,031

Templeton

Funds

Notes

to

Financial

Statements

Templeton

Foreign

Fund

24

franklintempleton.com

Annual

Report

1.

Organization

and

Significant

Accounting

Policies

Templeton

Funds (Trust)

is

registered

under

the

Investment

Company

Act

of

1940

(1940

Act)

as

an

open-end

management

investment

company,

consisting

of three separate

funds

and

applies

the

specialized

accounting

and

reporting

guidance

in

U.S.

Generally

Accepted

Accounting

Principles

(U.S.

GAAP).

Templeton

Foreign

Fund

(Fund)

is

included

in

this

report.

The

Fund

offers five

classes

of

shares:

Class

A,

Class

C,

Class

R,

Class

R6

and

Advisor

Class. Effective

August

2,

2021,

Class

C

shares

automatically

convert

to

Class

A

shares

after

they

have

been

held

for

8

years.

Prior

to

August

2,

2021,

Class

C

shares

converted

to

Class

A

shares

after

a

10-year

holding

period.

Each

class

of

shares

may

differ

by

its

initial

sales

load,

contingent

deferred

sales

charges,

voting

rights

on

matters

affecting

a

single

class,

its

exchange

privilege

and

fees

due

to

differing

arrangements

for

distribution

and

transfer

agent

fees.

The

following

summarizes

the Fund's

significant

accounting

policies.

a.

Financial

Instrument

Valuation 

The

Fund's

investments

in

financial

instruments

are

carried

at

fair

value

daily.

Fair

value

is

the

price

that

would

be

received

to

sell

an

asset

or

paid

to

transfer

a

liability

in

an

orderly

transaction

between

market

participants

on

the

measurement

date.

The

Fund

calculates

the

net

asset

value

(NAV)

per

share

each business

day as

of

4

p.m.

Eastern

time

or

the

regularly

scheduled

close

of

the

New

York

Stock

Exchange

(NYSE),

whichever

is

earlier.

Under

compliance

policies

and

procedures

approved

by

the

Trust’s

Board

of

Trustees

(the

Board),

the Fund's

administrator

has

responsibility

for

oversight

of

valuation,

including

leading

the

cross-functional

Valuation

Committee

(VC).

The

Fund

may

utilize

independent

pricing

services,

quotations

from

securities

and

financial

instrument

dealers,

and

other

market

sources

to

determine

fair

value. 

Equity

securities

listed

on

an

exchange

or

on

the

NASDAQ

National

Market

System

are

valued

at

the

last

quoted

sale

price

or

the

official

closing

price of

the

day,

respectively.

Foreign

equity

securities

are

valued

as

of

the

close

of

trading

on

the

foreign

stock

exchange

on

which

the

security

is

primarily

traded,

or

as

of

4

p.m.

Eastern

time.

The

value

is

then

converted

into

its

U.S.

dollar

equivalent

at

the

foreign

exchange

rate

in

effect

at

4

p.m.

Eastern

time

on

the

day

that

the

value

of

the

security

is

determined.

Over-the-

counter

(OTC)

securities

are

valued

within

the

range

of

the

most

recent

quoted

bid

and

ask

prices.

Securities

that

trade

in

multiple

markets

or

on

multiple

exchanges

are

valued

according

to

the

broadest

and

most

representative

market.

Certain

equity

securities

are

valued

based

upon

fundamental

characteristics

or

relationships

to

similar

securities. 

Investments

in

open-end

mutual

funds

are

valued

at

the

closing

NAV.

Investments

in

time

deposits

are

valued

at

cost,

which

approximates

fair

value.

The

Fund

has

procedures

to

determine

the

fair

value

of

financial

instruments

for

which

market

prices

are

not

reliable

or

readily

available.

Under

these

procedures,

the Fund

primarily

employs

a

market-based

approach

which

may

use

related

or

comparable

assets

or

liabilities,

recent

transactions,

market

multiples,

book

values,

and

other

relevant

information

for

the

investment

to

determine

the

fair

value

of

the

investment.

An

income-based

valuation

approach

may

also

be

used

in

which

the

anticipated

future

cash

flows

of

the

investment

are

discounted

to

calculate

fair

value.

Discounts

may

also

be

applied

due

to

the

nature

or

duration

of

any

restrictions

on

the

disposition

of

the

investments.

Due

to

the

inherent

uncertainty

of

valuations

of

such

investments,

the

fair

values

may

differ

significantly

from

the

values

that

would

have

been

used

had

an

active

market

existed.

Trading

in

securities

on

foreign

securities

stock

exchanges

and

OTC

markets

may

be

completed

before

4

p.m.

Eastern

time.

In

addition,

trading

in

certain

foreign

markets

may

not

take

place

on

every

Fund's

business

day.

Events

can

occur

between

the

time

at

which

trading

in

a

foreign

security

is

completed

and

4

p.m.

Eastern

time

that

might

call

into

question

the

reliability

of

the

value

of

a

portfolio

security

held

by

the

Fund.

As

a

result,

differences

may

arise

between

the

value

of

the

Fund's

portfolio

securities

as

determined

at

the

foreign

market

close

and

the

latest

indications

of

value

at

4

p.m.

Eastern

time.

In

order

to

minimize

the

potential

for

these

differences,

an

independent

pricing

services

may

be

used

to

adjust

the

value

of

the

Fund’s

portfolio

securities

to

the

latest

indications

of

fair

value

at

4

p.m.

Eastern

time.

At

August

31,

2021,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy

(referred

to

as

“market

level

fair

value”).

See

the

Fair

Value

Measurements

note

for

more

information.

Templeton

Funds

Notes

to

Financial

Statements

25

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

When

the

last

day

of

the

reporting

period

is

a

non-business

day,

certain

foreign

markets

may

be

open

on

those

days

that

the

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

portfolio

securities

on

the

last

business

day

and

the

last

calendar

day

of

the

reporting

period.

Any

security

valuation

changes

due

to

an

open

foreign

market

are

adjusted

and

reflected

by

the

Fund

for

financial

reporting

purposes.

b.

Foreign

Currency

Translation 

Portfolio

securities

and

other

assets

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

based

on

the

exchange

rate

of

such

currencies

against

U.S.

dollars

on

the

date

of

valuation.

The

Fund

may

enter

into

foreign

currency

exchange

contracts

to

facilitate

transactions

denominated

in

a

foreign

currency.

Purchases

and

sales

of

securities,

income

and

expense

items

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

at

the

exchange

rate

in

effect

on

the

transaction

date.

Portfolio

securities

and

assets

and

liabilities

denominated

in

foreign

currencies

contain

risks

that

those

currencies

will

decline

in

value

relative

to

the

U.S.

dollar.

Occasionally,

events

may

impact

the

availability

or

reliability

of

foreign

exchange

rates

used

to

convert

the

U.S.

dollar

equivalent

value.

If

such

an

event

occurs,

the

foreign

exchange

rate

will

be

valued

at

fair

value

using

procedures

established

and

approved

by

the

Board.

The

Fund

does

not

separately

report

the

effect

of

changes

in

foreign

exchange

rates

from

changes

in

market

prices

on

securities

held.

Such

changes

are

included

in

net

realized

and

unrealized

gain

or

loss

from

investments

in

the

Statement of

Operations.

Realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

the

trade

and

settlement

dates

on

securities

transactions

and

the

difference

between

the

recorded

amounts

of

dividends,

interest,

and

foreign

withholding

taxes

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

foreign

exchange

gains

and

losses

arise

from

changes

in

foreign

exchange

rates

on

foreign

denominated

assets

and

liabilities

other

than

investments

in

securities

held

at

the

end

of

the

reporting

period.

c.

Derivative

Financial

Instruments

The

Fund invested

in

derivative

financial

instruments

in

order

to

manage

risk

or

gain

exposure

to

various

other

investments

or

markets.

Derivatives

are

financial

contracts

based

on

an

underlying

or

notional

amount,

require

no

initial

investment

or

an

initial

net

investment

that

is

smaller

than

would

normally

be

required

to

have

a

similar

response

to

changes

in

market

factors,

and

require

or

permit

net

settlement.

Derivatives

contain

various

risks

including

the

potential

inability

of

the

counterparty

to

fulfill

their

obligations

under

the

terms

of

the

contract,

the

potential

for

an

illiquid

secondary

market,

and/or

the

potential

for

market

movements

which

expose

the

Fund

to

gains

or

losses

in

excess

of

the

amounts

shown

in

the

Statement

of

Assets

and

Liabilities.

Realized

gain

and

loss

and

unrealized

appreciation

and

depreciation

on

these

contracts

for

the

period

are

included

in

the

Statement

of

Operations.

The

Fund

purchased

or

wrote

exchange

traded

option

contracts

primarily

to

manage

and/or

gain

exposure

to

equity

price

risk.

An

option

is

a

contract

entitling

the

holder

to

purchase

or

sell

a

specific

amount

of

shares

or

units

of

an

asset

or

notional

amount

of

a

swap

(swaption),

at

a

specified

price.

When

an

option

is

purchased

or

written,

an

amount

equal

to

the

premium

paid

or

received

is

recorded

as

an

asset

or

liability,

respectively.

Upon

exercise

of

an

option,

the

acquisition

cost

or

sales

proceeds

of

the

underlying

investment

is

adjusted

by

any

premium

received

or

paid.

Upon

expiration

of

an

option,

any

premium

received

or

paid

is

recorded

as

a

realized

gain

or

loss.

Upon

closing

an

option

other

than

through

expiration

or

exercise,

the

difference

between

the

premium

received

or

paid

and

the

cost

to

close

the

position

is

recorded

as

a

realized

gain

or

loss.

See

Note

8

regarding

other

derivative

information.

d.

Securities

Lending

The

Fund

participates

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Templeton

Funds

Notes

to

Financial

Statements

26

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the Fund.

Additionally,

the

Fund

held

$472,163

in

U.S.

Government

and

Agency

securities

as

collateral.

These

securities

received

as

collateral

are

held

in

segregated

accounts

with

the

Fund’s

custodian.

The

Fund

cannot

repledge

or

resell

these

securities

received

as

collateral.

As

such,

the

non-cash

collateral

is

excluded

from

the

Statement

of

Assets

and

Liabilities.

The

Fund

may

receive

income

from

the

investment

of

cash

collateral,

in

addition

to

lending

fees

and

rebates

paid

by

the

borrower.

Income

from

securities

loaned,

net

of

fees

paid

to

the

securities

lending

agent

and/

or

third-party

vendor,

is

reported

separately

in

the

Statement

of

Operations.

The

Fund

bears

the

market

risk

with

respect

to any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

The

securities

lending

agent

has

agreed

to

indemnify

the

Fund

in

the

event

of

default

by

a

third

party

borrower.

e.

Income

and

Deferred

Taxes

It

is the Fund's

policy

to

qualify

as

a

regulated

investment

company

under

the

Internal

Revenue

Code. The Fund

intends

to

distribute

to

shareholders

substantially

all

of

its

taxable

income

and

net

realized

gains

to

relieve

it

from

federal

income

and excise

taxes.

As

a

result,

no

provision

for

U.S.

federal

income

taxes

is

required.

The

Fund

may

be

subject

to

foreign

taxation

related

to

income

received,

capital

gains

on

the

sale

of

securities

and

certain

foreign

currency

transactions

in

the

foreign

jurisdictions

in

which it

invests.

Foreign

taxes,

if

any,

are

recorded

based

on

the

tax

regulations

and

rates

that

exist

in

the

foreign

markets

in

which

the

Fund

invests.

When

a

capital

gain

tax

is

determined

to

apply,

the

Fund

records

an

estimated

deferred

tax

liability

in

an

amount

that

would

be

payable

if

the

securities

were

disposed

of

on

the

valuation

date.

As

a

result

of

several

court

cases,

in

certain

countries

across

the

European

Union, the

Fund

filed

additional

tax

reclaims

for

previously

withheld

taxes

on

dividends

earned

in

those

countries

(EU

reclaims). Income

recognized,

if

any,

for

EU

reclaims

is

reflected

as

other

income

in

the

Statement

of

Operations

and

any

related

receivable,

if

any,

is

reflected

as

European

Union

tax

reclaims

in

the

Statement

of

Assets

and

Liabilities.

When

uncertainty

exists

as

to

the

ultimate

resolution

of

these

proceedings,

the

likelihood

of

receipt

of

these

EU

reclaims,

and

the

potential

timing

of

payment,

no

amounts

are

reflected

in

the

financial

statements.

For

U.S.

income

tax

purposes,

EU

reclaims

received

by

the

Fund,

if

any,

reduce

the

amount

of

foreign

taxes

Fund

shareholders

can

use

as

tax

deductions

or credits

on

their

income

tax

returns.

In

the

event

that

EU

reclaims

received

by

the Fund

during a

fiscal

year

exceed

foreign

withholding

taxes

paid

by

the

Fund,

and

the

Fund previously

passed

through to

its

shareholders

foreign

taxes

incurred

by

the

Fund

to

be

used

as

a

credit

or

deduction

on

a

shareholder’s

income

tax

return,

the Fund

will enter

into

a

closing

agreement

with

the

Internal

Revenue

Service

(IRS)

in

order

to

pay

the

associated

tax

liability

on

behalf

of

the Fund's

shareholders.

During

the

fiscal

year

ended

August

31,

2021,

the Fund

received

EU

reclaims

in

excess

of

the

foreign

taxes

paid

during

the

year.

The

Fund

determined

to

enter

into

a

closing

agreement

with

the

IRS

and

recorded

the

estimated

fees

as

a

reduction

to

income,

as

reflected

in

the

Statement

of

Operations.

The

Fund

may

recognize

an

income

tax

liability

related

to

its

uncertain

tax

positions

under

U.S.

GAAP

when

the

uncertain

tax

position

has

a

less

than

50%

probability

that

it

will

be

sustained

upon

examination

by

the

tax

authorities

based

on

its

technical

merits.

As

of

August

31,

2021,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

f.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

Security

transactions

are

accounted

for

on

trade

date.

Realized

gains

and

losses

on

security

transactions

are

determined

on

a

specific

identification

basis.

Interest

income

and

estimated

expenses

are

accrued

daily.

Dividend

income

is

recorded

on

the

ex-dividend

date

except

for

certain

dividends

from

securities

where

the

dividend

rate

is

not

available.

In

such

cases,

the

dividend

is

recorded

as

soon

as

the

information

is

received

by

the

Fund.

Distributions

to shareholders

are

recorded

on

the

ex-dividend

date.

1.

Organization

and

Significant

Accounting

Policies

(continued)

d.

Securities

Lending

(continued)

Templeton

Funds

Notes

to

Financial

Statements

27

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

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

Fund,

enters

into

contracts

with

service

providers

that

contain

general

indemnification

clauses.

The

Trust’s

maximum

exposure

under

these

arrangements

is

unknown

as

this

would

involve

future

claims

that

may

be

made

against

the

Trust

that

have

not

yet

occurred.

Currently,

the

Trust

expects

the

risk

of

loss

to

be

remote.

2.

Shares

of

Beneficial

Interest

At

August

31,

2021,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

Transactions

in

the

Fund’s

shares

were

as

follows:

Year

Ended

August

31,

2021

Year

Ended

August

31,

2020

Shares

Amount

Shares

Amount

Class

A

Shares:

Shares

sold

a

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

28,785,548

$209,553,273

69,357,092

$423,459,874

Shares

issued

in

reinvestment

of

distributions

..........

3,171,878

22,520,330

10,008,404

72,260,672

Shares

redeemed

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

(59,457,247)

(429,309,840)

(157,643,462)

(1,002,936,821)

Net

increase

(decrease)

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

(27,499,821)

$(197,236,237)

(78,277,966)

$(507,216,275)

Class

C

Shares:

Shares

sold

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

641,829

$4,680,418

1,009,042

$6,191,651

Shares

issued

in

reinvestment

of

distributions

..........

35,520

251,483

254,680

1,833,698

Shares

redeemed

a

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

(4,376,336)

(32,012,761)

(5,809,614)

(37,061,095)

Net

increase

(decrease)

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

(3,698,987)

$(27,080,860)

(4,545,892)

$(29,035,746)

1.

Organization

and

Significant

Accounting

Policies

(continued)

f.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

(continued)

Templeton

Funds

Notes

to

Financial

Statements

28

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

3.

Transactions

with

Affiliates

Franklin

Resources,

Inc.

is

the

holding

company

for

various

subsidiaries

that

together

are

referred

to

as

Franklin

Templeton.

Certain

officers

and

trustees

of

the

Trust

are

also

officers

and/or

directors

of

the

following

subsidiaries:

Year

Ended

August

31,

2021

Year

Ended

August

31,

2020

Shares

Amount

Shares

Amount

Class

R

Shares:

Shares

sold

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

2,527,401

$18,072,742

3,392,420

$20,676,976

Shares

issued

in

reinvestment

of

distributions

..........

200,428

1,392,973

582,573

4,118,799

Shares

redeemed

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

(4,363,676)

(31,193,258)

(5,730,365)

(35,996,112)

Net

increase

(decrease)

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

(1,635,847)

$(11,727,543)

(1,755,372)

$(11,200,337)

Class

R6

Shares:

Shares

sold

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

22,666,025

$167,068,991

26,657,151

$166,908,516

Shares

sold

in-kind

(Note

10)

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

—

—

4,415,123

25,960,926

Shares

issued

in

reinvestment

of

distributions

..........

1,210,174

8,422,812

4,730,244

33,490,128

Shares

redeemed

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

(51,442,655)

(351,867,796)

(77,893,716)

(474,127,142)

Net

increase

(decrease)

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

(27,566,456)

$(176,375,993)

(42,091,198)

$(247,767,572)

Advisor

Class

Shares:

Shares

sold

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

29,013,447

$207,655,897

73,215,449

$446,263,258

Shares

issued

in

reinvestment

of

distributions

..........

2,047,132

14,268,511

3,669,165

26,051,069

Shares

redeemed

in-kind

(Note

3h

)

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

(48,183,921)

(363,822,338)

—

—

Shares

redeemed

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

(41,534,758)

(298,398,624)

(68,556,435)

(437,488,474)

Net

increase

(decrease)

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

(58,658,100)

$(440,296,554)

8,328,179

$34,825,853

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Templeton

Global

Advisors

Limited

(Global

Advisors)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Distributors,

LLC

(Distributors)

(formerly

Franklin

Templeton

Distributors,

Inc.)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

2.

Shares

of

Beneficial

Interest

(continued)

Templeton

Funds

Notes

to

Financial

Statements

29

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

a.

Management

Fees

The

Fund

pays

an

investment

management

fee

to

Global

Advisors

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

For

the

year

ended

August

31,

2021,

the

gross

effective

investment

management

fee

rate

was

0.694%

of

the

Fund’s

average

daily

net

assets. 

b.

Administrative

Fees

Under

an

agreement

with

Global

Advisors,

FT

Services

provides

administrative

services

to

the

Fund.

The

fee

is

paid

by

Global

Advisors

based

on

the

Fund’s

average

daily

net

assets,

and

is

not

an

additional

expense

of

the

Fund.

c.

Distribution

Fees

The

Board

has

adopted

distribution

plans

for

each

share

class,

with

the

exception

of

Class

R6

and

Advisor

Class

shares,

pursuant

to

Rule

12b-1

under

the

1940

Act.

Under

the

Fund’s

Class A reimbursement

distribution

plan,

the

Fund

reimburses

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of

the

Fund's

shares

up

to

the

maximum

annual

plan

rate.

Under

the

Class

A

reimbursement

distribution

plan,

costs

exceeding

the

maximum

for

the

current

plan

year

cannot

be

reimbursed

in

subsequent

periods.

In

addition,

under

the

Fund’s

Class C

and

R

compensation

distribution

plans,

the

Fund

pays

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of

the

Fund's

shares

up

to

the

maximum

annual

plan

rate

for

each

class.

The

plan

year,

for

purposes

of

monitoring

compliance

with

the

maximum

annual

plan

rates,

is

February

1

through

January

31.

 The

maximum

annual

plan

rates,

based

on

the

average

daily

net

assets,

for

each

class,

are

as

follows:

d.

Sales

Charges/Underwriting

Agreements

Front-end

sales

charges

and

contingent

deferred

sales

charges

(CDSC)

do

not

represent

expenses

of

the

Fund.

These

charges

are

deducted

from

the

proceeds

of

sales

of

Fund

shares

prior

to

investment

or

from

redemption

proceeds

prior

to

remittance,

as

applicable.

Distributors

has

advised

the

Fund

of

the

following

commission

transactions

related

to

the

sales

and

redemptions

of

the

Fund's

shares

for

the

year:

Annualized

Fee

Rate

Net

Assets

0.705%

Up

to

and

including

$1

billion

0.690%

Over

$1

billion,

up

to

and

including

$5

billion

0.675%

Over

$5

billion,

up

to

and

including

$10

billion

0.655%

Over

$10

billion,

up

to

and

including

$15

billion

0.635%

Over

$15

billion,

up

to

and

including

$20

billion

0.615%

Over

$20

billion,

up

to

and

including

$25

billion

0.605%

Over

$25

billion,

up

to

and

including

$30

billion

0.595%

Over

$30

billion,

up

to

and

including

$35

billion

0.585%

In

excess

of

$35

billion

Class

A

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

0.25%

Class

C

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

1.00%

Class

R

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

0.50%

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

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

$124,998

3.

Transactions

with

Affiliates

(continued)

Templeton

Funds

Notes

to

Financial

Statements

30

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

e.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

year

ended

August

31,

2021,

the

Fund

paid

transfer

agent

fees

of

$5,401,394,

of

which

$1,978,689

was

retained

by

Investor

Services.

f.

Investments

in

Affiliated

Management

Investment

Companies

The

Fund

invests

in

one

or

more

affiliated

management

investment

companies.

As

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

fund’s

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

fund.

The

Fund

does

not

invest

for

purposes

of

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Fund

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statement

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

year

ended

August

31,

2021,

the

Fund

held

investments

in

affiliated

management

investment

companies

as

follows:

g.

Waiver

and

Expense

Reimbursements

Global

Advisors

and

Investor

Services

have

contractually

agreed

in

advance

to

waive

or

limit

their

respective

fees

and

to

assume

as

their

own

expense

certain

expenses

otherwise

payable

by

the

Fund

so

that

the

operating

expenses

(excluding

distribution

fees,

acquired

fund

fees

and

expenses,

and

certain

non-routine

expenses

or

costs,

including

those

relating

to

litigation,

indemnification,

reorganizations,

and

liquidations)

for

each

class

of

the

Fund

do

not

exceed

0.85%,

based

on

the

average

net

assets

of

each

class

until

December

31,

2021.

Total

expenses

waived

or

paid

are

not

subject

to

recapture

subsequent

to

the

Fund's

fiscal

year

end.

Prior

to

January

1,

2021,

expenses

(excluding

certain

fees

and

expenses

as

previously

disclosed)

for

Class

R6

were

limited

to

0.70%

based

on

the

average

net

assets

of

the

class.

CDSC

retained

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

$9,631

    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,

0.01%

..

$—

$117,241,213

$(117,241,213)

$

—

$

—

$—

—

$251

Total

Affiliated

Securities

....

$—

$117,241,213

$(117,241,213)

$—

$—

$—

$251

3.

Transactions

with

Affiliates

(continued)

d.

Sales

Charges/Underwriting

Agreements

(continued)

Templeton

Funds

Notes

to

Financial

Statements

31

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

Investor

Services

has

contractually

agreed

in

advance

to

its

fees

so

that

the

Class

R6

transfer

agent

fees

do

not

exceed

0.03%

based

on

the

average

net

assets

of

the

class

until

December

31,

2021.

h.

Other

Affiliated

Transactions

During

the

year

August

31,

2021,

CollegeInvest

(Colorado

529

Plans),

an

affiliated

shareholder

of

the

Fund,

fully

redeemed

out

of

the

Fund.

As

a

result,

on

July

16,

2021,

the

Fund

delivered

portfolio

securities

and

cash

that

were

transferred

in-kind

to

the

Colorado

529

Plans,

which

included

$32,278,642

of

net

realized

gains.

As

such

gains

are

not

taxable

to

the

Fund

and

are

not

distributed

to

remaining

shareholders,

they

are

reclassified

from

accumulated

net

realized

gains

to

paid-in

capital.

4.

Income

Taxes

For

tax

purposes,

capital

losses

may

be

carried

over

to

offset

future

capital

gains. 

At

August

31,

2021,

the

capital

loss

carryforwards

were

as

follows:

During

the

year

ended August

31,

2021

the

Fund

utilized

$272,848,371

of

capital

loss

carryforwards.

The

tax

character

of

distributions

paid

during

the

years

ended

August

31,

2021

and

2020,

was

as

follows:

At

August

31,

2021,

the

cost

of

investments,

net

unrealized

appreciation

(depreciation)

and

undistributed

ordinary

income

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatments

of

EU

reclaims,

wash

sales,

passive

foreign

investment

company

shares

and

gains

realized

on

in-kind

shareholder

redemptions.

Capital

loss

carryforwards

not

subject

to

expiration:

Long

term

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

$525,755,254

2021

2020

Distributions

paid

from:

Ordinary

income

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

$51,451,306

$150,015,525

Cost

of

investments

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

$2,844,366,690

Unrealized

appreciation

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

$721,933,921

Unrealized

depreciation

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

(250,987,033)

Net

unrealized

appreciation

(depreciation)

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

$470,946,888

Distributable

earnings:

Undistributed

ordinary

income

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

$88,054,724

3.

Transactions

with

Affiliates

(continued)

g.

Waiver

and

Expense

Reimbursements

(continued)

Templeton

Funds

Notes

to

Financial

Statements

32

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

5.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities

and

in-kind

transactions)

for

the

year

ended

August

31,

2021,

aggregated

$1,243,539,167,

and

$1,483,763,449,

respectively.

Sales

of

investments

excludes

in-kind

transactions

of

$303,428,350.

6.

Concentration

of

Risk

Investing

in

foreign

securities

may

include

certain

risks

and

considerations

not

typically

associated

with

investing

in

U.S.

securities,

such

as

fluctuating

currency

values

and

changing

local,

regional

and

global

economic,

political

and

social

conditions,

which

may

result

in

greater

market

volatility.

Political

and

financial

uncertainty

in

many

foreign

regions

may

increase

market

volatility

and

the

economic

risk

of

investing

in

foreign

securities.

In

addition,

certain

foreign

securities

may

not

be

as

liquid

as

U.S.

securities.

7.

Novel

Coronavirus

Pandemic 

The

global

outbreak

of

the

novel

coronavirus

disease,

known

as

COVID-19, has

caused

adverse

effects

on

many

companies,

sectors,

nations,

regions

and

the

markets

in

general, and

may

continue for

an unpredictable duration.

The

effects

of

this

pandemic

may

materially

impact

the

value

and

performance

of

the Fund, its ability

to

buy

and

sell

fund

investments

at

appropriate

valuations

and its ability

to

achieve its investment

objectives.

8.

Other

Derivative

Information

For

the

year

ended

August

31,

2021

,

the

effect

of

derivative

contracts

in

the

Statement

of

Operations

was

as

follows: 

For

the

year

ended

August

31,

2021,

the

average

month

end

notional

amount

of

options

represented

10,962

shares.

See

Note

1(c)

regarding

derivative

financial

instruments.

9.

Credit

Facility

The

Fund,

together

with

other

U.S.

registered

and

foreign

investment

funds

(collectively,

Borrowers),

managed

by

Franklin

Templeton,

are

borrowers

in

a

joint

syndicated

senior

unsecured

credit

facility

totaling

$2.675

billion

(Global

Credit

Facility)

which

matures

on

February

4,

2022.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

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

$146,721

Written

options

$—

Total

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

$146,721

$–

Templeton

Funds

Notes

to

Financial

Statements

33

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

Under

the

terms

of

the

Global

Credit

Facility,

the

Fund

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Fund

and

other

costs

incurred

by

the Fund,

pay

its

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

its

relative

share

of

the

aggregate

net

assets

of

all

of

the

Borrowers,

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

During

the

year

ended

August

31,

2021,

the Fund

did

not

use

the

Global

Credit

Facility.

10.

Subscription

In-Kind

On

June

19,

2020,

certain

shareholders

purchased

Class

R6

shares

of

Templeton

Foreign

Fund.

The

portfolio

securities

were

received

primarily

by

means

of

a

subscription

in-kind

in

exchange

for

shares

of

the

Fund.

Portfolio

securities

were

transferred

as

detailed

below: 

*This

amount

includes

cash

of

$6,339,296

associated

with

the

subscription

in-kind. 

11.

Fair

Value

Measurements

The

Fund

follows

a

fair

value

hierarchy

that

distinguishes

between

market

data

obtained

from

independent

sources

(observable

inputs)

and

the Fund's

own

market

assumptions

(unobservable

inputs).

These

inputs

are

used

in

determining

the

value

of

the

Fund's financial

instruments

and

are

summarized

in

the

following

fair

value

hierarchy:

Level

1

–

quoted

prices

in

active

markets

for

identical

financial

instruments

Level

2

–

other

significant

observable

inputs

(including

quoted

prices

for

similar

financial

instruments,

interest

rates,

prepayment

speed,

credit

risk,

etc.)

Level

3

–

significant

unobservable

inputs

(including

the

Fund's

own

assumptions

in

determining

the

fair

value

of

financial

instruments)

The

input

levels

are

not

necessarily

an

indication

of

the

risk

or

liquidity

associated

with

financial

instruments

at

that

level.

A

summary

of

inputs

used

as

of

August

31,

2021,

in

valuing

the

Fund's

assets

carried

at

fair

value,

is

as

follows:

Value

Type

$25,960,926*

Subscription

in-kind

Level

1

Level

2

Level

3

Total

Templeton

Foreign

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Australia

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

$

—

$

17,746,546

$

—

$

17,746,546

Belgium

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

—

12,118,747

—

12,118,747

Brazil

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

65,363,034

—

—

65,363,034

Canada

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

25,566,838

—

—

25,566,838

China

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

85,837,011

168,984,781

—

254,821,792

France

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

—

70,408,382

—

70,408,382

Germany

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

—

324,288,491

—

324,288,491

Hong

Kong

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

—

149,817,136

—

149,817,136

India

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

—

74,625,291

—

74,625,291

Japan

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

—

667,156,550

—

667,156,550

Luxembourg

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

—

41,320,375

—

41,320,375

Netherlands

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

—

210,492,992

—

210,492,992

9.

Credit

Facility

(continued)

Templeton

Funds

Notes

to

Financial

Statements

34

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

(continued)

12.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

(FASB)

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

In

January

2021,

the

FASB

issued

ASU

No.

2021-01,

with

further

amendments

to

Topic

848.

The

amendments

in

the

ASUs

provide

optional

temporary

accounting

recognition

and financial

reporting

relief

from

the

effect

of

certain

types

of

contract

modifications

due

to

the

planned

discontinuation

of

the

London

Interbank

Offered

Rate

(LIBOR)

and

other

interbank-offered

based

reference

rates

as

of

the

end

of

2021

and

2023. The

ASUs

are

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

these

ASUs

will

not

have

a

material

impact

on

the

financial

statements. 

13.

Subsequent

Events

The

Fund

has

evaluated

subsequent

events

through

the

issuance

of

the financial

statements

and

determined

that

no

events

have

occurred

that

require

disclosure.

Abbreviations

Level

1

Level

2

Level

3

Total

Templeton

Foreign

Fund

(continued)

Assets:

Investments

in

Securities:

Common

Stocks:

Norway

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

$

—

$

35,144,066

$

—

$

35,144,066

Portugal

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

—

15,263,395

—

15,263,395

South

Korea

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

—

216,352,280

—

216,352,280

Spain

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

—

38,014,030

—

38,014,030

Switzerland

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

—

51,429,583

—

51,429,583

Taiwan

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

—

85,211,046

—

85,211,046

Thailand

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

—

31,062,260

—

31,062,260

United

Kingdom

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

—

577,726,040

—

577,726,040

United

States

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

245,584,704

—

—

245,584,704

Short

Term

Investments

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

—

105,800,000

—

105,800,000

Total

Investments

in

Securities

...........

$422,351,587

$2,892,961,991

a

$—

$3,315,313,578

a

Includes

foreign

securities

valued

at

$2,787,161,991,

which

were

categorized

as

Level

2

as

a

result

of

the

application

of

market

level

fair

value

procedures.

See

the

Financial

Instrument

Valuation

note

for

more

information.

Selected

Portfolio

ADR

American

Depositary

Receipt

11.

Fair

Value

Measurements

(continued)

Templeton

Funds

Report

of

Independent

Registered

Public

Accounting

Firm

35

franklintempleton.com

Annual

Report

To

the

Board

of

Trustees

and

Shareholders

of

Templeton

Foreign

Fund

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities,

including

the

statement

of

investments,

of

Templeton

Foreign

Fund

(one

of

the

funds

constituting

Templeton

Funds,

referred

to

hereafter

as

the

“Fund”)

as

of

August

31,

2021,

the

related

statement

of

operations

for

the

year

ended

August

31,

2021,

the

statements

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

ended

August

31,

2021,

including

the

related

notes,

and

the

financial

highlights

for

each

of

the

five

years

in

the

period

ended

August

31,

2021

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

the

Fund

as

of

August

31,

2021,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

ended

August

31,

2021

and

the

financial

highlights

for

each

of

the

five

years

in

the

period

ended

August

31,

2021

in

conformity

with

accounting

principles

generally

accepted

in

the

United

States

of

America.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

(PCAOB)

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

of

these

financial

statements

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

August

31,

2021

by

correspondence

with

the

custodian

and

brokers;

when

replies

were

not

received

from

brokers,

we

performed

other

auditing

procedures.

We

believe

that

our

audits

provide

a

reasonable

basis

for

our

opinion.

PricewaterhouseCoopers

LLP

San

Francisco,

California

October

19,

2021

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)

36

franklintempleton.com

Annual

Report

Templeton

Foreign

Fund

By

mid-February,

tax

information

related

to

a

shareholder's

proportionate

share

of

distributions

paid

during

the

preceding

calendar

year

will

be

received,

if

applicable.

Please

also

refer

to

www.franklintempleton.com

for

per

share

tax

information

related

to

any

distributions

paid

during

the

preceding

calendar

year.

Shareholders

are

advised

to

consult

with

their

tax

advisors

for

further

information

on

the

treatment

of

this

amount

on

their

tax

returns.

The

following

tax

information

for

the

Fund

is

required

to

be

furnished

to

shareholders

with

respect

to

income

earned

and

distributions

paid

during

its

fiscal

year.

The

Fund

hereby

reports

the

following

amount,

or

if

subsequently

determined

to

be

different,

the

maximum

allowable

amount,

for

the

fiscal

year

ended

August

31,

2021:

Pursuant

to:

Amount

Dividends

Received

Deduction

(DRD)

§854(b)(1)(A)

$2,723,967

Qualified

Dividend

Income

(QDI)

§854(b)(1)(B)

$79,543,431

Templeton

Funds

Board

Members

and

Officers

37

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

fund

complex,

are

shown

below.

Generally,

each

board

member

serves

until

that

person’s

successor

is

elected

and

qualified.

Independent

Board

Members

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Harris

J.

Ashton

(1932)

Trustee

Since

1992

122

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

Capital

Corporation

(specialty

finance

company)

(2010-present),

United

Natural

Foods,

Inc.

(distributor

of

natural,

organic

and

specialty

foods)

(2013-present),

formerly

,

Allied

Capital

Corporation

(financial

services)

(2003-

2010),

SLM

Corporation

(Sallie

Mae)

(1997-2014)

and

Navient

Corporation

(loan

management,

servicing

and

asset

recovery)

(2014-2016).

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

companies;

and

formerly

,

Executive

Vice

President

and

Chief

Financial

Officer,

NHP

Incorporated

(manager

of

multifamily

housing)

(1995-1997);

and

Vice

President

and

Treasurer,

US

Airways,

Inc.

(until

1995).

Mary

C.

Choksi

(1950)

Trustee

Since

2016

123

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

38

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Edith

E.

Holiday

(1952)

Lead

Independent

Trustee

Trustee

since

2003

and

Lead

Independent

Trustee

since

2007

123

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-April

2021),

White

Mountains

Insurance

Group,

Ltd.

(holding

company)

(2004-May

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

123

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:

Private

investor;

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

(May

2019-January

1,

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

123

Formerly,

Graham

Holdings

Company

(education

and

media

organization)

(2011-May

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

39

franklintempleton.com

Annual

Report

Interested

Board

Members

and

Officers

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

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).

Robert

E.

Wade

(1946)

Trustee

Since

2006

29

El

Oro

Ltd

(investments)

(2003-

2019).

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Attorney

at

law

engaged

in

private

practice

as

a

sole

practitioner

(1972-2008)

and

member

of

various

boards.

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Gregory

E.

Johnson

(1961)

Trustee

Since

2013

134

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

39

of

the

investment

companies

in

Franklin

Templeton;

Vice

Chairman,

Investment

Company

Institute;

and

formerly

,

Chief

Executive

Officer

(2013-2020)

and

President

(1994-2015),

Franklin

Resources,

Inc.

**Rupert

H.

Johnson,

Jr.

(1940)

Chairman

of

the

Board,

Trustee

and

Vice

President

Chairman

of

the

Board

since

2013,

Trustee

since

1992

and

Vice

President

since

1996

123

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

37

of

the

investment

companies

in

Franklin

Templeton.

Alan

T.

Bartlett

(1970)

President

and

Chief

Executive

Officer

–

Investment

Management

Since

2019

Not

Applicable

Not

Applicable

Lyford

Cay

Nassau,

Bahamas

Principal

Occupation

During

at

Least

the

Past

5

Years:

President

and

Director,

Templeton

Global

Advisors

Limited;

Chief

Investment

Officer

of

Templeton

Global

Equity

Group;

officer

of

five

of

the

investment

companies

in

Franklin

Templeton;

Chairman

of

the

Board,

Goodhart

Partners;

and

formerly

,

Chief

Executive

Officer,

Goodhart

Partners

(2009-2019).

Independent

Board

Members

(continued)

Templeton

Funds

40

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Alison

E.

Baur

(1964)

Vice

President

Since

2012

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Deputy

General

Counsel,

Franklin

Templeton;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

44

of

the

investment

companies

in

Franklin

Templeton.

Breda

M.

Beckerle

(1958)

Chief

Compliance

Officer

Since

2020

Not

Applicable

Not

Applicable

280

Park

Avenue

New

York,

NY

10017

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Compliance

Officer,

Fiduciary

Investment

Management

International,

Inc.,

Franklin

Advisers,

Inc.,

Franklin

Mutual

Advisers,

LLC,

Franklin

Templeton

Institutional,

LLC;

and

officer

of

39

of

the

investment

companies

in

Franklin

Templeton.

Steven

J.

Gray

(1955)

Vice

President

Since

2009

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Vice

President,

FASA,

LLC;

Assistant

Secretary,

Franklin

Distributors,

LLC;

and

officer

of

44

of

the

investment

companies

in

Franklin

Templeton

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

44

of

the

investment

companies

in

Franklin

Templeton;

and

formerly

,

Vice

President,

Global

Tax

(2012-April

2017)

and

Treasurer/Assistant

Treasurer,

Franklin

Templeton

(2009-2017).

Susan

Kerr

(1949)

Vice

President

–

AML

Compliance

Since

July

2021

Not

Applicable

Not

Applicable

620

Eighth

Avenue

New

York,

NY

10018

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Compliance

Analyst,

Global

Compliance,

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

41

of

the

investment

companies

in

Franklin

Templeton

Navid

J.

Tofigh

(1972)

Vice

President

Since

2015

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Associate

General

Counsel

and

officer

of

44

of

the

investment

companies

in

Franklin

Templeton.

Craig

S.

Tyle

(1960)

Vice

President

Since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

General

Counsel

and

Executive

Vice

President,

Franklin

Resources,

Inc.;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

44

of

the

investment

companies

in

Franklin

Templeton.

Interested

Board

Members

and

Officers

(continued)

Templeton

Funds

41

franklintempleton.com

Annual

Report

*We

base

the

number

of

portfolios

on

each

separate

series

of

the

U.S.

registered

investment

companies

within

the

Franklin

Templeton

fund

complex.

These

portfolios

have

a

common

investment

manager

or

affiliated

investment

managers.

**Gregory

E.

Johnson

is

considered

to

be

an

interested

person

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

of

Franklin

Resources,

Inc.

(Resources),

which

is

the

parent

company

of

the

Fund’s

investment

manager

and

distributor.

Rupert

H.

Johnson,

Jr.

is

considered

to

be

an

interested

person

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

and

major

shareholder

of

Resources.

Note

1:

Rupert

H.

Johnson,

Jr.

is

the

uncle

of

Gregory

E.

Johnson.

Note

2:

Officer

information

is

current

as

of

the

date

of

this

report.

It

is

possible

that

after

this

date,

information

about

officers

may

change.

The

Sarbanes-Oxley

Act

of

2002

and

Rules

adopted

by

the

U.S.

Securities

and

Exchange

Commission

require

the

Fund

to

disclose

whether

the

Fund’s

Audit

Committee

includes

at

least

one

member

who

is

an

audit

committee

financial

expert

within

the

meaning

of

such

Act

and

Rules.

The

Fund’s

Board

has

determined

that

there

is

at

least

one

such

financial

expert

on

the

Audit

Committee

and

has

designated

each

of

Ann

Torre

Bates

and

David

W.

Niemiec

as

an

audit

committee

financial

expert.

The

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

qualify

as

such

an

expert

in

view

of

their

extensive

business

background

and

experience.

Ms.

Bates

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2008.

She

currently

serves

as

a

director

of

Ares

Capital

Corporation

(2010-present)

and

United

Natural

Foods,

Inc.

(2013-present)

and

was

formerly

a

director

of

Navient

Corporation

from

2014

to

2016,

SLM

Corporation

from

1997

to

2014

and

Allied

Capital

Corporation

from

2003

to

2010,

Executive

Vice

President

and

Chief

Financial

Officer

of

NHP

Incorporated

from

1995

to

1997

and

Vice

President

and

Treasurer

of

US

Airways,

Inc.

until

1995.

Mr.

Niemiec

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2005,

currently

serves

as

an

Advisor

to

Saratoga

Partners

and

was

formerly

its

Managing

Director

from

1998

to

2001

and

serves

as

a

director

of

Hess

Midstream

LP

(2017-present).

Mr.

Niemiec

was

formerly

a

director

of

Emeritus

Corporation

from

1999

to

2010

and

OSI

Pharmaceuticals,

Inc.

from

2006

to

2010,

Managing

Director

of

SBC

Warburg

Dillon

Read

from

1997

to

1998,

and

was

Vice

Chairman

from

1991

to

1997

and

Chief

Financial

Officer

from

1982

to

1997

of

Dillon,

Read

&

Co.

Inc.

As

a

result

of

such

background

and

experience,

the

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

have

each

acquired

an

understanding

of

generally

accepted

accounting

principles

and

financial

statements,

the

general

application

of

such

principles

in

connection

with

the

accounting

estimates,

accruals

and

reserves,

and

analyzing

and

evaluating

financial

statements

that

present

a

breadth

and

level

of

complexity

of

accounting

issues

generally

comparable

to

those

of

the

Fund,

as

well

as

an

understanding

of

internal

controls

and

procedures

for

financial

reporting

and

an

understanding

of

audit

committee

functions.

Ms.

Bates

and

Mr.

Niemiec

are

independent

Board

members

as

that

term

is

defined

under

the

applicable

U.S.

Securities

and

Exchange

Commission

Rules

and

Releases.

The

Statement

of

Additional

Information

(SAI)

includes

additional

information

about

the

board

members

and

is

available,

without

charge,

upon

request.

Shareholders

may

call

(800)

DIAL

BEN/342-5236

to

request

the

SAI.

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Lori

A.

Weber

(1964)

Vice

President

and

Secretary

Vice

President

since

2011

and

Secretary

since

2013

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Assistant

Secretary,

Franklin

Resources,

Inc.;

Vice

President

and

Secretary,

Templeton

Investment

Counsel,

LLC;

and

officer

of

44

of

the

investment

companies

in

Franklin

Templeton.

Ryan

R.

Wheeler

(1985)

Interim

Chief

Financial

Officer,

Chief

Accounting

Officer

and

Treasurer

Since

October

2021

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director,

Fund

Administration

&

Reporting;

officer

of

15

of

the

investment

companies

in

Franklin

Templeton;

and

formerly

,

Director,

Senior

Manager

and

Manager

PricewaterhouseCoopers,

LLC

(2014-January

2021)

Interested

Board

Members

and

Officers

(continued)

Templeton

Funds

Shareholder

Information

42

franklintempleton.com

Annual

Report

Liquidity

Risk

Management

Program-

Funds

no

HLIM

Each

Fund

has

adopted

and

implemented

a

written

Liquidity

Risk

Management

Program

(the

“LRMP”)

as

required

by

Rule

22e-4

under

the

Investment

Company

Act

of

1940

(the

“Liquidity

Rule”).

The

LRMP

is

designed

to

assess

and

manage

each

Fund’s

liquidity

risk,

which

is

defined

as

the

risk

that

the

Fund

could

not

meet

requests

to

redeem

shares

issued

by

the

Fund

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

In

accordance

with

the

Liquidity

Rule,

the

LRMP

includes

policies

and

procedures

that

provide

for:

(1)

assessment,

management,

and

review

(no

less

frequently

than

annually)

of

each

Fund’s

liquidity

risk;

(2)

classification

of

each

Fund’s

portfolio

holdings

into

one

of

four

liquidity

categories

(Highly

Liquid,

Moderately

Liquid,

Less

Liquid,

and

Illiquid);

(3)

for

Funds

that

do

not

primarily

hold

assets

that

are

Highly

Liquid,

establishing

and

maintaining

a

minimum

percentage

of

the

Fund’s

net

assets

in

Highly

Liquid

investments

(called

a

“Highly

Liquid

Investment

Minimum”

or

“HLIM”);

and

(4)

prohibiting

the

Fund’s

acquisition

of

Illiquid

investments

that

would

result

in

the

Fund

holding

more

than

15%

of

its

net

assets

in

Illiquid

assets.

The

LRMP

also

requires

reporting

to

the

Securities

and

Exchange

Commission

(“SEC”)

(on

a

non-public

basis)

and

to

the

Board

if

the

Fund’s

holdings

of

Illiquid

assets

exceed

15%

of

the

Fund’s

net

assets.

Funds

with

HLIMs

must

have

procedures

for

addressing

HLIM

shortfalls,

including

reporting

to

the

Board

and,

with

respect

to

HLIM

shortfalls

lasting

more

than

seven

consecutive

calendar

days,

reporting

to

the

SEC

(on

a

non-public

basis).

The

Director

of

Liquidity

Risk

within

the

Investment

Risk

Management

Group

(the

“IRMG”)

is

the

appointed

Administrator

of

the

LRMP.

The

IRMG

maintains

the

Investment

Liquidity

Committee

(the

“ILC”)

to

provide

oversight

and

administration

of

policies

and

procedures

governing

liquidity

risk

management

for

FT

products

and

portfolios.

The

ILC

includes

representatives

from

Franklin

Templeton’s

Risk,

Trading,

Global

Compliance,

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

2021,

the

Program

Administrator

provided

a

written

report

to

the

Board

addressing

the

adequacy

and

effectiveness

of

the

program

for

the

year

ended

December

31,

2020.

The

Program

Administrator

report

concluded

that

(i.)

the

LRMP,

as

adopted

and

implemented,

remains

reasonably

designed

to

assess

and

manage

each

Fund’s

liquidity

risk;

(ii.)

the

LRMP,

including

the

Highly

Liquid

Investment

Minimum

(“HLIM”)

where

applicable,

was

implemented

and

operated

effectively

to

achieve

the

goal

of

assessing

and

managing

each

Fund’s

liquidity

risk;

and

(iii.)

each

Fund

was

able

to

meet

requests

for

redemption

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

Proxy

Voting

Policies

and

Procedures

The

Fund’s

investment

manager

has

established

Proxy

Voting

Policies

and

Procedures

(Policies)

that

the

Fund

uses

to

determine

how

to

vote

proxies

relating

to

portfolio

securities.

Shareholders

may

view

the

Fund’s

complete

Policies

online

at

franklintempleton.com.

Alternatively,

shareholders

may

request

copies

of

the

Policies

free

of

charge

by

calling

the

Proxy

Group

collect

at

(954)

527-

7678

or

by

sending

a

written

request

to:

Franklin

Templeton

Companies,

LLC,

300

S.E.

2nd

Street,

Fort

Lauderdale,

FL

33301,

Attention:

Proxy

Group.

Copies

of

the

Fund’s

proxy

voting

records

are

also

made

available

online

at

franklintempleton.com

and

posted

on

the

U.S.

Securities

and

Exchange

Commission’s

website

at

sec.gov

and

reflect

the

most

recent

12-month

period

ended

June

30.

Templeton

Funds

Shareholder

Information

43

franklintempleton.com

Annual

Report

Quarterly

Statement

of

Investments

The

Trust,

on

behalf

of

the

Fund,

files

a

complete

statement

of

investments

with

the

U.S.

Securities

and

Exchange

Commission

for

the

first

and

third

quarters

for

each

fiscal

year

as

an

exhibit

to

its

report

on

Form

N-PORT.

Shareholders

may

view

the

filed

Form

N-PORT

by

visiting

the

Commission’s

website

at

sec.gov.

The

filed

form

may

also

be

viewed

and

copied

at

the

Commission’s

Public

Reference

Room

in

Washington,

DC.

Information

regarding

the

operations

of

the

Public

Reference

Room

may

be

obtained

by

calling

(800)

SEC-0330.

Householding

of

Reports

and

Prospectuses

You

will

receive,

or

receive

notice

of

the

availability

of,

the

Fund’s

financial

reports

every

six

months.

In

addition,

you

will

receive

an

annual

updated

summary

prospectus

(detail

prospectus

available

upon

request).

To

reduce

Fund

expenses,

we

try

to

identify

related

shareholders

in

a

household

and

send

only

one

copy

of

the

financial

reports

(to

the

extent

received

by

mail)

and

summary

prospectus.

This

process,

called

“householding,”

will

continue

indefinitely

unless

you

instruct

us

otherwise.

If

you

prefer

not

to

have

these

documents

householded,

please

call

us

at

(800)

632-2301.

At

any

time

you

may

view

current

prospectuses/

summary

prospectuses

and

financial

reports

on

our

website.

If

you

choose,

you

may

receive

these

documents

through

electronic

delivery.

104

A

10/21

©

2021

Franklin

Templeton

Investments.

All

rights

reserved.

Authorized

for

distribution

only

when

accompanied

or

preceded

by

a

summary

prospectus

and/or

prospectus.

Investors

should

carefully

consider

a

fund’s

investment

goals,

risks,

charges

and

expenses

before

investing.

A

prospectus

contains

this

and

other

information;

please

read

it

carefully

before

investing.

To

help

ensure

we

provide

you

with

quality

service,

all

calls

to

and

from

our

service

areas

are

monitored

and/or

recorded.

Annual

Report

and

Shareholder

Letter

Templeton

Foreign

Fund

Investment

Manager

Distributor

Shareholder

Services

Templeton

Global

Advisors

Limited

Franklin

Distributors,

LLC

(800)

DIAL

BEN

®

/

342-5236

franklintempleton.com

(800)

632-2301

1

Annual

Report

ANNUAL

REPORT

Templeton

International

Climate

Change

Fund

This

annual

report

for

Templeton

International

Climate

Change

Fund

covers

the

fiscal

year

ended

August

31,

2021

.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

total

return

over

the

longer

term.

Under

normal

market

conditions,

the

Fund

invests

at

least

80%

of

its

net

assets

in

“non-U.S.

securities,”

as

defined

in

the

prospectus.

These

securities

are

predominantly

equity

securities

of

companies

located

outside

the

U.S.,

including

developing

markets.

Under

normal

market

conditions,

the

Fund

invests

predominantly

in

companies

that

we

determined

to

exhibit

superior

practices

in

identifying,

adapting

and

providing

solutions

to

the

consequences

of

climate

change

(i.e.,

companies

that,

based

on

our

fundamental

analysis

and

research,

are

able

to

successfully

transition

to

a

lower

carbon

economy).

Performance

Overview

The

Fund’s

Advisor

Class

shares

posted

a

+37.89%

cumulative

total

return

for

the

12

months

under

review.

In

comparison,

the

Fund’s

new

benchmark,

the

MSCI

All

Country

World

Index

(ACWI)

ex

USA

Index-NR,

which

measures

stock

performance

in

global

developed

and

emerging

markets

excluding

the

U.S.,

posted

a

+24.87%

cumulative

total

return,

while

the

Fund’s

former

benchmark,

the

MSCI

ACWI

ex

USA

Index,

posted

a

+25.37%

cumulative

total

return.

1

The

MSCI

ACWI

ex

USA

Index-NR

replaced

the

MSCI

ACWI

ex

USA

Index

as

the

Fund’s

benchmark

because

the

investment

manager

believes

the

MSCI

ACWI

ex

USA

Index-NR

provides

a

more

consistent

basis

for

comparison

relative

to

the

Fund’s

peers.

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

5

.

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.

Economic

and

Market

Overview

Global

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

ACWI-NR,

posted

a

+28.64%

total

return

for

the

12

months

ended

August

31,

2021.

1

Global

equities

benefited

from

monetary

and

fiscal

stimulus

measures,

easing

novel

coronavirus

(COVID-19)

pandemic

restrictions

in

certain

regions

and

the

development

of

treatments

and

vaccines.

Geopolitical

tensions

and

rising

infection

rates

in

the

fall

of

2020

reduced

stock

prices,

but

the

implementation

of

vaccination

programs

and

additional

fiscal

stimulus

measures

led

many

equity

markets

to

reach

new

price

highs

during

the

rest

of

the

period.

However,

the

Chinese

government’s

imposition

of

additional

restrictions

on

some

businesses

pressured

Asian

and

global

emerging

market

stocks

late

in

the

12-month

period.

In

the

U.S.,

the

economy

continued

to

recover

and

equities

rallied

amid

monetary

and

fiscal

stimulus

measures,

vaccine

development

and

the

beginning

of

vaccination

programs.

As

economic

conditions

improved,

gross

domestic

product

(GDP)

rebounded

at

a

record

annualized

pace

in

2020’s

third

quarter.

Although

GDP

growth

was

less

robust

in

the

three

subsequent

quarters,

the

lifting

of

many

COVID-19

restrictions

and

strong

consumer

spending

continued

to

support

the

economy.

A

rebound

in

corporate

earnings

and

the

U.S.

Senate’s

passage

of

a

bipartisan

infrastructure

bill

further

bolstered

investor

sentiment.

The

U.S.

Federal

Reserve

(Fed)

kept

the

federal

funds

target

rate

at

a

record-

low

range

of

0.00%–0.25%

and

continued

its

program

of

open-ended

U.S.

Treasury

and

mortgage

bond

purchases

to

help

keep

markets

functioning.

In

his

Jackson

Hole

Economic

Policy

Symposium

speech

in

August

2021,

Fed

Chair

Jerome

Powell

hinted

that,

if

employment

and

price

conditions

progressed

as

expected,

the

Fed

would

begin

reducing

its

bond

purchases

later

in

2021;

however,

such

Geographic

Composition

8/31/21

%

of

Total

Net

Assets

Europe

72.7%

Asia

22.8%

North

America

2.2%

Short-Term

Investments

&

Other

Net

Assets

2.3%

1.

Source:

Morningstar.

The

index

is

unmanaged

and

includes

reinvestment

of

any

income

or

distributions.

It

does

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

10

.

Templeton

International

Climate

Change

Fund

2

Annual

Report

reduction

would

not

be

intended

as

a

signal

for

the

beginning

of

interest-rate

increases.

He

also

indicated

that

the

Fed

viewed

inflation

as

partially

transitory,

and

that

further

employment

progress

was

needed

before

the

Fed

would

consider

raising

the

range

for

the

federal

funds

target

rate.

The

economic

recovery

in

the

eurozone

was

relatively

weak,

as

quarter-over-quarter

GDP

growth

rebounded

in

2020’s

third

quarter

but

slightly

contracted

over

the

subsequent

two

quarters,

before

returning

to

growth

in

2021’s

second

quarter.

GDP

growth

rates

were

mostly

sluggish

among

the

region’s

largest

economies

amid

renewed

lockdowns,

delays

in

COVID-19

vaccine

distribution

and

weak

consumer

spending.

Nevertheless,

the

fastest

rate

of

business

activity

growth

in

more

than

a

decade

helped

European

developed

market

equities,

as

measured

by

the

MSCI

Europe

Index-

NR,

to

post

a

+29.18%

total

return

for

the

12

months

under

review.

1

Asian

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

All

Country

Asia

Index-NR,

posted

a

+18.42%

total

return

for

the

12-month

period.

1

China’s

economic

recovery

helped

the

region

rebound,

although

the

country’s

quarter-over-quarter

GDP

growth

in

2021’s

first

and

second

quarters

was

slower

than

2020’s

last

two

quarters,

pressured

by

higher

commodity

prices.

Asian

equity

markets

experienced

heightened

volatility

toward

period-end

due

to

inflation

concerns

and

rising

COVID-19

infection

rates

in

some

countries.

Unexpected

regulatory

changes

by

the

Chinese

government,

which

negatively

impacted

education-

and

technology-related

businesses,

led

some

foreign

investors

to

shift

capital

away

from

China.

Global

emerging

market

stocks,

as

measured

by

the

MSCI

Emerging

Markets

Index-NR,

posted

a

+21.12%

total

return

for

the

12

months

under

review.

1

Generally

improving

economic

activity,

increasing

oil

prices

and

U.S.

dollar

weakness

supported

global

emerging

market

equities.

During

the

latter

part

of

the

period,

higher

COVID-19

cases

in

some

countries,

limited

vaccine

rollouts

and

concerns

about

rising

interest

rates

and

higher

inflation

amid

rising

commodity

prices

dampened

investor

enthusiasm

in

global

emerging

market

equities.

Investment

Strategy

When

choosing

equity

investments

for

the

Fund,

we

apply

a

bottom-up,

value-oriented,

long-term

approach

to

select

attractively

valued

companies

preparing

for

a

transition

to

a

lower

carbon

economy

and

that

meet

our

climate

change

criteria.

We

focus

on

the

market

price

of

the

company’s

securities

relative

to

our

evaluation

of

the

company’s

long-

term

earnings,

asset

value

and

cash

flow

potential.

Our

analysis

includes

an

assessment

of

the

potential

impacts

of

material

environmental,

social

and

governance

(ESG)

factors

on

the

long-term

risk

and

return

profile

of

a

company.

We

also

consider

a

company’s

price/earnings

ratio,

price/cash

flow

ratio,

profit

margins

and

liquidation

value.

Manager’s

Discussion

During

the

12

months

under

review,

the

Fund

significantly

outperformed

its

benchmark,

the

MSCI

ACWI

ex

USA

Index-

NR,

driven

primarily

by

stock

selection

and

overweightings

in

the

industrials,

information

technology

and

materials

sectors.

At

the

stock

level,

Netherlands-based

Arcadis,

one

of

the

world’s

largest

design,

engineering

and

consultancy

firms,

was

the

top

relative

contributor.

The

company

focuses

on

sustainability

and

benefits

from

the

growing

demand

for

environmental

and

water-related

projects,

particularly

in

the

U.S.

Despite

facing

unique

challenges

across

end-

markets

during

the

period,

Arcadis

reported

robust

organic

sales

growth,

with

its

core

engineering

business

significantly

outperforming

many

peers.

Across

all

sectors,

our

approach

is

to

identify

and

invest

in

companies

we

believe

are

successfully

managing

their

own

environmental

footprint,

while

providing

the

necessary

materials

for

the

transition

to

cleaner

energy.

Netherlands-

based

lighting

products

firm

Signify,

which

produces

light-

emitting

diode

(LED)

lighting

systems,

is

a

strong

example

of

our

approach.

LED

and

smart

lighting

solutions

reduce

energy

usage,

and

Signify

was

the

world’s

only

major

industrials

company

to

have

achieved

carbon

neutrality

in

2020.

The

firm

has

also

substantially

reduced

its

landfill

waste

and

fostered

a

strong

culture

of

broader

stakeholder

awareness.

Its

LED

business

is

growing

steadily

(offsetting

the

annual

decline

in

conventional

lighting),

and

an

improved

mix

shift

and

strong

execution

have

driven

the

company’s

Top

10

Industries

8/31/21

%

of

Total

Net

Assets

a

Electrical

Equipment

19.4%

Semiconductors

&

Semiconductor

Equipment

11.7%

Multi-Utilities

7.9%

Pharmaceuticals

7.1%

Independent

Power

and

Renewable

Electricity

Producers

6.2%

Food

Products

5.4%

Chemicals

5.1%

Banks

4.4%

Automobiles

4.1%

Building

Products

4.1%

Templeton

International

Climate

Change

Fund

3

Annual

Report

profit

margin

expansion

above

analyst

expectations.

Looking

at

the

longer

term,

we

continue

to

like

the

stock

given

the

company’s

steady

growth

trajectory

and

undeniable

environmental

credentials.

We

are

overweight

the

materials

sector

and

see

the

higher

usage

of

certain

commodities

as

part

of

the

necessary

shift

toward

a

net-zero

economy.

Maintaining

high

environmental

standards

in

such

industries

is

challenging

and

something

we

often

discuss

with

company

management.

Belgium-

based

Umicore,

which

provides

electric

vehicle

(EV)

battery

cathode

materials

and

catalysts

as

well

as

metal

and

EV

battery

recycling,

was

the

materials

sector’s

top

relative

contributor

for

the

period.

The

company

is

a

play

on

our

sustainable

transportation

theme

and

benefited

from

strong

demand

and

earnings.

EV

adoption

is

in

its

infancy,

and

we

believe

Umicore

is

set

to

benefit

from

this

sustainable,

secular

growth

opportunity.

The

long-term

upside

comes

from

the

enormous

and

sustained

growth

from

the

production

of

cathode

materials,

changes

in

auto

emission

regulations

and

recycling

of

EV

battery

materials.

In

contrast,

an

underweighting

in

the

financials

sector

detracted

from

the

Fund’s

relative

performance

during

the

12-month

period.

While

some

banks

are

shifting

lending

practices

to

focus

more

on

sustainable

projects,

their

environmental

impact

is

relatively

limited

and

we

expect

to

remain

underweight

financials.

At

the

stock

level,

France-based

Valeo,

a

global

auto

components

supplier

and

a

play

on

our

sustainable

transportation

theme,

was

the

period’s

top

stock

detractor

from

relative

performance.

We

believe

Valeo

can

benefit

from

major

shifts

in

powertrain

technologies

as

the

industry

transitions

from

internal

combustion

engines

(ICE)

to

battery

electric

vehicles

(BEVs).

Valeo

supplies

a

majority

of

BEV

powertrain

products,

which

require

significantly

more

supplier

content

than

the

ICE

equivalent.

In

the

short

term,

concerns

over

Valeo’s

ICE

exposure,

destocking

by

original

equipment

manufacturers

and

supply

chain

disruptions

have

caused

most

European

auto

component

suppliers,

such

as

Valeo,

to

underperform—despite

being

well-prepared

for

the

EV

transition.

French

pharmaceuticals

firm

Sanofi

was

another

significant

relative

detractor

for

the

period,

with

shares

underperforming

the

index

after

the

company

experienced

a

major

setback

in

its

work

to

produce

a

COVID-19

vaccine.

Looking

at

the

longer

term,

the

company’s

carbon

intensity

is

significantly

below

the

market

overall

and

well

below

its

industry

average,

with

a

2025

carbon

neutrality

target.

Sanofi

also

recycles

a

majority

of

its

waste

with

a

goal

to

substantially

reduce

waste

by

2030.

We

believe

Sanofi

should

enjoy

tailwinds

from

the

non-pharmaceutical

businesses

in

the

near

term,

as

growth

in

vaccines

and

consumer

health

care

help

to

offset

a

high

proportion

of

sales

coming

from

off-patent

drugs.

A

strong

balance

sheet

and

diversified

exposure

also

offer

attractive

defensive

characteristics.

Regionally,

stock

selection

and

an

overweighting

in

Europe

contributed

to

the

Fund’s

relative

performance

for

the

period.

In

Asia,

holdings

in

India,

Taiwan

and

Singapore

detracted

from

relative

results.

Top

10

Holdings

8/31/21

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

Prysmian

SpA

5.1%

Electrical

Equipment,

Italy

E.ON

SE

4.9%

Multi-Utilities,

Germany

Danone

SA

4.5%

Food

Products,

France

STMicroelectronics

NV

4.4%

Semiconductors

&

Semiconductor

Equipment,

Switzerland

ING

Groep

NV

4.3%

Banks,

Netherlands

Vestas

Wind

Systems

A/S

4.2%

Electrical

Equipment,

Denmark

Cie

de

Saint-Gobain

4.1%

Building

Products,

France

Infineon

Technologies

AG

4.0%

Semiconductors

&

Semiconductor

Equipment,

Germany

Signify

NV

3.9%

Electrical

Equipment,

Netherlands

Azure

Power

Global

Ltd.

3.4%

Independent

Power

and

Renewable

Electricity

Producers,

India

Top

10

Countries

8/31/21

a

%

of

Total

Net

Assets

a

a

France

18.4%

Germany

11.9%

Netherlands

11.4%

Japan

8.9%

India

7.1%

Denmark

6.6%

Spain

6.6%

Italy

6.2%

Switzerland

4.4%

United

Kingdom

4.2%

Templeton

International

Climate

Change

Fund

4

Annual

Report

Maarten

Bloemen

Craig

Cameron,

CFA

Tina

Sadler,

CFA

Herbert

J.

Arnett,

Jr.

Portfolio

Management

Team

The

foregoing

information

reflects

our

analysis,

opinions

and

portfolio

holdings

as

of

August

31,

2021,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

Performance

Summary

as

of

August

31,

2021

Templeton

International

Climate

Change

Fund

5

Annual

Report

The

performance

table

and

graph

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

8/31/21

1

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

Advisor

Class

shares

are

offered

without

sales

charges.

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.

Cumulative

Total

Return

2

Average

Annual

Total

Return

3

–

1-Year

+37.89%

+37.89%

3-Year

+59.07%

+16.73%

Since

Inception

(6/1/18)

+53.34%

+14.06%

See

page

7

for

Performance

Summary

footnotes.

Templeton

International

Climate

Change

Fund

Performance

Summary

6

Annual

Report

See

page

7

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.

6/1/18–8/31/21

Templeton

International

Climate

Change

Fund

Performance

Summary

7

Annual

Report

All

investments

involve

risks,

including

possible

loss

of

principal.

Special

risks

are

associated

with

foreign

investing,

including

currency

fluctuations,

economic

instability

and

political

developments;

investments

in

developing

markets

involve

heightened

risks

related

to

the

same

factors.

Currency

rates

may

fluctuate

significantly

over

short

periods

of

time,

and

can

reduce

returns.

Because

the

Fund

may

invest

its

assets

in

companies

in

a

specific

region,

including

Europe,

it

is

subject

to

greater

risks

of

adverse

developments

in

that

region

and/or

the

surrounding

regions

than

a

fund

that

is

more

broadly

diversified

geographical-

ly.

Current

political

uncertainty

concerning

the

economic

consequences

of

the

departure

of

the

U.K.

from

the

European

Union

may

increase

market

volatility.

Derivatives,

including

currency

management

strategies,

involve

costs

and

can

create

economic

leverage

in

the

portfolio,

which

may

result

in

significant

volatility

and

cause

the

Fund

to

participate

in

losses

(as

well

as

enable

gains)

on

an

amount

that

exceeds

the

Fund’s

initial

investment.

The

Fund

may

not

achieve

the

anticipated

benefits,

and

may

realize

losses

when

a

counterparty

fails

to

perform

as

promised.

Events

such

as

the

spread

of

deadly

diseases,

disasters,

and

financial,

political

or

social

disruptions,

may

heighten

risks

and

adversely

affect

performance.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

The

Fund

has

an

expense

reduction

contractually

guaranteed

through

12/31/21.

Fund

investment

results

reflect

the

expense

reduction;

without

this

reduction,

the

results

would

have

been

lower.

2.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

3.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

4.

Source:

Morningstar.

The

MSCI

ACWI

ex

USA

Index

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.

5.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Distributions

(9/1/20–8/31/21)

Net

Investment

Income

$0.0858

Total

Annual

Operating

Expenses

5

With

Fee

Waiver

Without

Fee

Waiver

0.98%

6.49%

Your

Fund’s

Expenses

Templeton

International

Climate

Change

Fund

8

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.”

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

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)

Beginning

Account

Value

3/1/21

Ending

Account

Value

8/31/21

Expenses

Paid

During

Period

3/1/21–8/31/21

1,2

Ending

Account

Value

8/31/21

Expenses

Paid

During

Period

3/1/21–8/31/21

1,2

a

Annualized

Expense

Ratio

2

$1,000

$1,100.50

$5.13

$1,020.32

$4.93

0.97%

Templeton

Funds

Financial

Highlights

Templeton

International

Climate

Change

Fund

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

9

a

Year

Ended

August

31,

Year

Ended

August

31,

2018

a

2021

2020

2019

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$10.71

$8.91

$9.64

$10.00

Income

from

investment

operations

b

:

Net

investment

income

c

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

0.10

0.07

0.27

0.04

Net

realized

and

unrealized

gains

(losses)

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

3.96

2.03

(0.93)

(0.40)

Total

from

investment

operations

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

4.06

2.10

(0.66)

(0.36)

Less

distributions

from:

Net

investment

income

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

(0.09)

(0.30)

(0.05)

—

Net

realized

gains

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

—

—

(0.02)

—

Total

distributions

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

(0.09)

(0.30)

(0.07)

—

Net

asset

value,

end

of

year

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

$14.68

$10.71

$8.91

$9.64

Total

return

d

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

37.89%

23.70%

(6.75)%

(3.60)%

Ratios

to

average

net

assets

e

Expenses

before

waiver

and

payments

by

affiliates

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

8.16%

6.48%

9.65%

13.30%

Expenses

net

of

waiver

and

payments

by

affiliates

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

0.97%

f

0.97%

0.97%

0.97%

Net

investment

income

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

0.80%

0.74%

2.94%

1.51%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$2,935

$2,142

$1,783

$1,929

Portfolio

turnover

rate

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

53.37%

39.99%

9.55%

7.95%

a

For

the

period

June

1,

2018

(commencement

of

operations)

to

August

31,

2018.

b

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

c

Based

on

average

daily

shares

outstanding.

d

Total

return

is

not

annualized

for

periods

less

than

one

year.

e

Ratios

are

annualized

for

periods

less

than

one

year,

except

for

non-recurring

expenses,

if

any.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Templeton

Funds

Statement

of

Investments,

August

31,

2021

Templeton

International

Climate

Change

Fund

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

10

a

a

Industry

Shares

a

Value

a

Common

Stocks

97.7%

Belgium

2.9%

Umicore

SA

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

Chemicals

1,313

$

86,394

Denmark

6.6%

a

Orsted

A/S,

144A,

Reg

S

...........

Electric

Utilities

439

69,791

Vestas

Wind

Systems

A/S

..........

Electrical

Equipment

3,068

123,869

193,660

France

18.4%

Air

Liquide

SA

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

Chemicals

351

62,912

Cie

de

Saint-Gobain

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

Building

Products

1,646

119,319

Danone

SA

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

Food

Products

1,806

131,879

Sanofi

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

Pharmaceuticals

647

67,051

Valeo

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

Auto

Components

2,437

69,555

Veolia

Environnement

SA

..........

Multi-Utilities

2,562

87,917

538,633

Germany

11.9%

E.ON

SE

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

Multi-Utilities

10,970

144,728

Infineon

Technologies

AG

..........

Semiconductors

&

Semiconductor

Equipment

2,754

117,254

Siemens

AG

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

Industrial

Conglomerates

524

86,925

348,907

Hong

Kong

0.7%

b

Cadeler

A/S

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

Construction

&

Engineering

5,608

21,302

b

India

7.1%

b

Azure

Power

Global

Ltd.

...........

Independent

Power

and

Renewable

Electricity

Producers

4,500

101,070

Kaveri

Seed

Co.

Ltd.

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

Food

Products

3,219

25,471

NHPC

Ltd.

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

Independent

Power

and

Renewable

Electricity

Producers

218,430

80,632

207,173

Italy

6.2%

Danieli

&

C

Officine

Meccaniche

SpA

.

Machinery

1,610

30,605

Prysmian

SpA

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

Electrical

Equipment

3,991

150,255

180,860

Japan

8.9%

Honda

Motor

Co.

Ltd.

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

Automobiles

1,400

42,374

Sumitomo

Metal

Mining

Co.

Ltd.

.....

Metals

&

Mining

2,300

88,138

Takeda

Pharmaceutical

Co.

Ltd.

.....

Pharmaceuticals

1,591

52,957

Toyota

Motor

Corp.

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

Automobiles

900

78,384

261,853

Netherlands

11.4%

Arcadis

NV

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

Construction

&

Engineering

1,873

92,738

ING

Groep

NV

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

Banks

9,253

127,634

a

Signify

NV,

144A,

Reg

S

...........

Electrical

Equipment

2,045

114,562

334,934

South

Korea

2.9%

Samsung

Electronics

UK

Ltd.,

GDR

..

Diversified

Financial

Services

23

37,553

Samsung

SDI

Co.

Ltd.

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

Electronic

Equipment,

Instruments

&

Components

71

48,419

85,972

Templeton

Funds

Statement

of

Investments

Templeton

International

Climate

Change

Fund

(continued)

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

11

See

Abbreviations

on

page

22

.

a

a

Industry

Shares

a

Value

a

Common

Stocks

(continued)

Spain

6.6%

a

Befesa

SA,

144A,

Reg

S

...........

Commercial

Services

&

Supplies

624

$

50,603

Red

Electrica

Corp.

SA

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

Electric

Utilities

1,412

28,159

b

Siemens

Gamesa

Renewable

Energy

SA

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

Electrical

Equipment

2,062

61,139

b

Soltec

Power

Holdings

SA

..........

Electrical

Equipment

6,508

53,135

193,036

Switzerland

4.5%

STMicroelectronics

NV

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

Semiconductors

&

Semiconductor

Equipment

2,929

130,472

Taiwan

3.2%

Taiwan

Semiconductor

Manufacturing

Co.

Ltd.,

ADR

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

Semiconductors

&

Semiconductor

Equipment

800

95,208

United

Kingdom

4.2%

AstraZeneca

plc

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

Pharmaceuticals

756

88,412

DS

Smith

plc

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

Containers

&

Packaging

5,629

34,254

122,666

United

States

2.2%

Schneider

Electric

SE

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

Electrical

Equipment

366

65,389

Total

Common

Stocks

(Cost

$2,045,794)

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

2,866,459

Short

Term

Investments

5.4%

a

a

Industry

Shares

a

Value

a

a

a

a

a

a

Money

Market

Funds

5.4%

United

States

5.4%

c,d

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0.01%

..........

158,272

158,272

Total

Money

Market

Funds

(Cost

$158,272)

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

158,272

a

a

a

a

a

Total

Short

Term

Investments

(Cost

$158,272

)

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

158,272

a

a

a

Total

Investments

(Cost

$2,204,066)

103.1%

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

$3,024,731

Other

Assets,

less

Liabilities

(3.1)%

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

(89,469)

Net

Assets

100.0%

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

$2,935,262

a

a

a

a

Security

was

purchased

pursuant

to

Rule

144A

or

Regulation

S

under

the

Securities

Act

of

1933.

144A

securities

may

be

sold

in

transactions

exempt

from

registration

only

to

qualified

institutional

buyers

or

in

a

public

offering

registered

under

the

Securities

Act

of

1933.

Regulation

S

securities

cannot

be

sold

in

the

United

States

without

either

an

effective

registration

statement

filed

pursuant

to

the

Securities

Act

of

1933,

or

pursuant

to

an

exemption

from

registration.

At

August

31,

2021,

the

aggregate

value

of

these

securities

was

$234,956,

representing

8.0%

of

net

assets.

b

Non-income

producing.

c

See

Note

3(e)

regarding

investments

in

affiliated

management

investment

companies.

d

The

rate

shown

is

the

annualized

seven-day

effective

yield

at

period

end.

Templeton

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

August

31,

2021

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

Templeton

International

Climate

Change

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

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

$2,045,794

Cost

-

Non-controlled

affiliates

(Note

3

e

)

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

158,272

Value

-

Unaffiliated

issuers

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

$2,866,459

Value

-

Non-controlled

affiliates

(Note

3

e

)

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

158,272

Cash

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

183

Foreign

currency,

at

value

(cost

$2,012)

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

2,012

Receivables:

Investment

securities

sold

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

2,448

Dividends

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

2,663

Affiliates

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

14,626

Total

assets

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

3,046,663

Liabilities:

Payables:

Investment

securities

purchased

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

15,711

Professional

fees

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

73,680

Pricing

fees

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

14,845

Deferred

tax

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

1,760

Accrued

expenses

and

other

liabilities

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

5,405

Total

liabilities

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

111,401

Net

assets,

at

value

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

$2,935,262

Net

assets

consist

of:

Paid-in

capital

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

$1,990,852

Total

distributable

earnings

(losses)

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

944,410

Net

assets,

at

value

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

$2,935,262

Shares

outstanding

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

200,000

Net

asset

value

and

maximum

offering

price

per

share

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

$14.68

Templeton

Funds

Financial

Statements

Statement

of

Operations

for

the

year

ended

August

31,

2021

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

13

Templeton

International

Climate

Change

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$9,413)

Unaffiliated

issuers

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

$46,543

Non-controlled

affiliates

(Note

3

e

)

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

5

Total

investment

income

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

46,548

Expenses:

Management

fees

(Note

3

a

)

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

18,583

Transfer

agent

fees

(Note

3

d

)

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

660

Custodian

fees

(Note

4

)

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

1,041

Reports

to

shareholders

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

7,330

Registration

and

filing

fees

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

3,285

Professional

fees

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

160,441

Trustees'

fees

and

expenses

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

1,297

Pricing

fees

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

16,591

Other

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

6,041

Total

expenses

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

215,269

Expense

reductions

(Note

4

)

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

(127)

Expenses

waived/paid

by

affiliates

(Note

3f)

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

(189,584)

Net

expenses

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

25,558

Net

investment

income

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

20,990

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

(net

of

foreign

taxes

of

$226)

Unaffiliated

issuers

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

335,644

Foreign

currency

transactions

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

985

Net

realized

gain

(loss)

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

336,629

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

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

455,118

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

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

(82)

Change

in

deferred

taxes

on

unrealized

appreciation

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

(1,760)

Net

change

in

unrealized

appreciation

(depreciation)

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

453,276

Net

realized

and

unrealized

gain

(loss)

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

789,905

Net

increase

(decrease)

in

net

assets

resulting

from

operations

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

$810,895

Templeton

Funds

Financial

Statements

Statements

of

Changes

in

Net

Assets

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

Templeton

International

Climate

Change

Fund

Year

Ended

August

31,

2021

Year

Ended

August

31,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

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

$20,990

$13,852

Net

realized

gain

(loss)

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

336,629

(197,635)

Net

change

in

unrealized

appreciation

(depreciation)

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

453,276

601,746

Net

increase

(decrease)

in

net

assets

resulting

from

operations

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

810,895

417,963

Distributions

to

shareholders

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

(17,160)

(59,000)

Net

increase

(decrease)

in

net

assets

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

793,735

358,963

Net

assets:

Beginning

of

year

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

2,141,527

1,782,564

End

of

year

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

$2,935,262

$2,141,527

Templeton

Funds

15

Annual

Report

Notes

to

Financial

Statements

Templeton

International

Climate

Change

Fund

1.

Organization

and

Significant

Accounting

Policies

Templeton

Funds (Trust)

is

registered

under

the

Investment

Company

Act

of

1940

(1940

Act)

as

an

open-end

management

investment

company,

consisting

of three separate

funds

and

applies

the

specialized

accounting

and

reporting

guidance

in

U.S.

Generally

Accepted

Accounting

Principles

(U.S.

GAAP).

Templeton

International

Climate

Change

Fund

(Fund)

is

included

in

this

report.

The

Fund

has

five

classes

of

shares:

Class

A,

Class

C,

Class

R,

Class

R6

and

Advisor

Class.

Each

class

of

shares

may

differ

by

its

initial

sales

load,

contingent

deferred

sales

charges,

voting

rights

on

matters

affecting

a

single

class,

its

exchange

privilege

and

fees

due

to

differing

arrangements

for

distribution

and

transfer

agent

fees. 

The

Fund

currently

operates

with

one

class

of

shares,

Advisor

Class.

The

following

summarizes

the Fund's

significant

accounting

policies.

a.

Financial

Instrument

Valuation 

The

Fund’s

investments

in

financial

instruments

are

carried

at

fair

value

daily.

Fair

value

is

the

price

that

would

be

received

to

sell

an

asset

or

paid

to

transfer

a

liability

in

an

orderly

transaction

between

market

participants

on

the

measurement

date.

The

Fund

calculates

the

net

asset

value

(NAV)

per

share

each business

day as

of

4

p.m.

Eastern

time

or

the

regularly

scheduled

close

of

the

New

York

Stock

Exchange

(NYSE),

whichever

is

earlier.

Under

compliance

policies

and

procedures

approved

by

the

Trust’s

Board

of

Trustees

(the

Board),

the

Fund’s

administrator

has

responsibility

for

oversight

of

valuation,

including

leading

the

cross-functional

Valuation

Committee

(VC).

The

Fund

may

utilize

independent

pricing

services,

quotations

from

securities

and

financial

instrument

dealers,

and

other

market

sources

to

determine

fair

value. 

Equity

securities

listed

on

an

exchange

or

on

the

NASDAQ

National

Market

System

are

valued

at

the

last

quoted

sale

price

or

the

official

closing

price of

the

day,

respectively.

Foreign

equity

securities

are

valued

as

of

the

close

of

trading

on

the

foreign

stock

exchange

on

which

the

security

is

primarily

traded,

or

as

of

4

p.m.

Eastern

time.

The

value

is

then

converted

into

its

U.S.

dollar

equivalent

at

the

foreign

exchange

rate

in

effect

at

4

p.m.

Eastern

time

on

the

day

that

the

value

of

the

security

is

determined.

Over-the-counter

(OTC)

securities

are

valued

within

the

range

of

the

most

recent

quoted

bid

and

ask

prices.

Securities

that

trade

in

multiple

markets

or

on

multiple

exchanges

are

valued

according

to

the

broadest

and

most

representative

market.

Certain

equity

securities

are

valued

based

upon

fundamental

characteristics

or

relationships

to

similar

securities. 

Investments

in

open-end

mutual

funds

are

valued

at

the

closing

NAV.

The

Fund

has

procedures

to

determine

the

fair

value

of

financial

instruments

for

which

market

prices

are

not

reliable

or

readily

available.

Under

these

procedures,

the Fund

primarily

employs

a

market-based

approach

which

may

use

related

or

comparable

assets

or

liabilities,

recent

transactions,

market

multiples,

book

values,

and

other

relevant

information

for

the

investment

to

determine

the

fair

value

of

the

investment.

An

income-based

valuation

approach

may

also

be

used

in

which

the

anticipated

future

cash

flows

of

the

investment

are

discounted

to

calculate

fair

value.

Discounts

may

also

be

applied

due

to

the

nature

or

duration

of

any

restrictions

on

the

disposition

of

the

investments.

Due

to

the

inherent

uncertainty

of

valuations

of

such

investments,

the

fair

values

may

differ

significantly

from

the

values

that

would

have

been

used

had

an

active

market

existed.

Trading

in

securities

on

foreign

securities

stock

exchanges

and

OTC

markets

may

be

completed

before

4

p.m.

Eastern

time.

In

addition,

trading

in

certain

foreign

markets

may

not

take

place

on

every

Fund's

business

day.

Events

can

occur

between

the

time

at

which

trading

in

a

foreign

security

is

completed

and

4

p.m.

Eastern

time

that

might

call

into

question

the

reliability

of

the

value

of

a

portfolio

security

held

by

the

Fund.

As

a

result,

differences

may

arise

between

the

value

of

the

Fund's

portfolio

securities

as

determined

at

the

foreign

market

close

and

the

latest

indications

of

value

at

4

p.m.

Eastern

time.

In

order

to

minimize

the

potential

for

these

differences,

an

independent

pricing

service

may

be

used

to

adjust

the

value

of

the

Fund's

portfolio

securities

to

the

latest

indications

of

fair

value

at

4

p.m.

Eastern

time.

At

August

31,

2021,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy

(referred

to

as

“market

level

fair

value”).

See

the

Fair

Value

Measurements

note

for

more

information.

When

the

last

day

of

the

reporting

period

is

a

non-business

day,

certain

foreign

markets

may

be

open

on

those

days

that

the

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

portfolio

Templeton

Funds

Notes

to

Financial

Statements

16

Annual

Report

Templeton

International

Climate

Change

Fund

(continued)

securities

on

the

last

business

day

and

the

last

calendar

day

of

the

reporting

period.

Any

security

valuation

changes

due

to

an

open

foreign

market

are

adjusted

and

reflected

by

the

Fund

for

financial

reporting

purposes.

b.

Foreign

Currency

Translation 

Portfolio

securities

and

other

assets

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

based

on

the

exchange

rate

of

such

currencies

against

U.S.

dollars

on

the

date

of

valuation.

The

Fund

may

enter

into

foreign

currency

exchange

contracts

to

facilitate

transactions

denominated

in

a

foreign

currency.

Purchases

and

sales

of

securities,

income

and

expense

items

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

at

the

exchange

rate

in

effect

on

the

transaction

date.

Portfolio

securities

and

assets

and

liabilities

denominated

in

foreign

currencies

contain

risks

that

those

currencies

will

decline

in

value

relative

to

the

U.S.

dollar.

Occasionally,

events

may

impact

the

availability

or

reliability

of

foreign

exchange

rates

used

to

convert

the

U.S.

dollar

equivalent

value.

If

such

an

event

occurs,

the

foreign

exchange

rate

will

be

valued

at

fair

value

using

procedures

established

and

approved

by

the

Board.

The

Fund

does

not

separately

report

the

effect

of

changes

in

foreign

exchange

rates

from

changes

in

market

prices

on

securities

held.

Such

changes

are

included

in

net

realized

and

unrealized

gain

or

loss

from

investments

in

the

Statement of

Operations.

Realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

the

trade

and

settlement

dates

on

securities

transactions

and

the

difference

between

the

recorded

amounts

of

dividends,

interest,

and

foreign

withholding

taxes

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

foreign

exchange

gains

and

losses

arise

from

changes

in

foreign

exchange

rates

on

foreign

denominated

assets

and

liabilities

other

than

investments

in

securities

held

at

the

end

of

the

reporting

period.

c.

Income

and

Deferred

Taxes

It

is the Fund's

policy

to

qualify

as

a

regulated

investment

company

under

the

Internal

Revenue

Code. The Fund

intends

to

distribute

to

shareholders

substantially

all

of

its

taxable

income

and

net

realized

gains

to

relieve

it

from

federal

income

and excise

taxes.

As

a

result,

no

provision

for

U.S.

federal

income

taxes

is

required.

The Fund

may

be

subject

to

foreign

taxation

related

to

income

received,

capital

gains

on

the

sale

of

securities

and

certain

foreign

currency

transactions

in

the

foreign

jurisdictions

in

which

it

invests.

Foreign

taxes,

if

any,

are

recorded

based

on

the

tax

regulations

and

rates

that

exist

in

the

foreign

markets

in

which

the

Fund

invests.

When

a

capital

gain

tax

is

determined

to

apply,

the

Fund

records

an

estimated

deferred

tax

liability

in

an

amount

that

would

be

payable

if

the

securities

were

disposed

of

on

the

valuation

date.

The

Fund

may

recognize

an

income

tax

liability

related

to

its

uncertain

tax

positions

under

U.S.

GAAP

when

the

uncertain

tax

position

has

a

less

than

50%

probability

that

it

will

be

sustained

upon

examination

by

the

tax

authorities

based

on

its

technical

merits.

As

of

August

31,

2021,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

d.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

Security

transactions

are

accounted

for

on

trade

date.

Realized

gains

and

losses

on

security

transactions

are

determined

on

a

specific

identification

basis.

Estimated

expenses

are

accrued

daily.

Dividend

income

is

recorded

on

the

ex-dividend

date

except

for

certain

dividends

from

securities

where

the

dividend

rate

is

not

available.

In

such

cases,

the

dividend

is

recorded

as

soon

as

the

information

is

received

by

the

Fund.

Distributions

to shareholders

are

recorded

on

the

ex-dividend

date.

Distributable

earnings

are

determined

according

to

income

tax

regulations

(tax

basis)

and

may

differ

from

earnings

recorded

in

accordance

with

U.S.

GAAP.

These

differences

may

be

permanent

or

temporary.

Permanent

differences

are

reclassified

among

capital

accounts

to

reflect

their

tax

character.

These

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Templeton

Funds

Notes

to

Financial

Statements

17

Annual

Report

Templeton

International

Climate

Change

Fund

(continued)

reclassifications

have

no

impact

on

net

assets

or

the

results

of

operations.

Temporary

differences

are

not

reclassified,

as

they

may

reverse

in

subsequent

periods. 

Common

expenses

incurred

by

the

Trust

are

allocated

among

the

Funds

based

on

the

ratio

of

net

assets

of

each

Fund

to

the

combined

net

assets

of

the

Trust

or

based

on

the

ratio

of

number

of

shareholders

of

each

Fund

to

the

combined

number

of

shareholders

of

the

Trust.

Fund

specific

expenses

are

charged

directly

to

the

Fund

that

incurred

the

expense.

Realized

and

unrealized

gains

and

losses

and

net

investment

income,

excluding

class

specific

expenses,

are

allocated

daily

to

each

class

of

shares

based

upon

the

relative

proportion

of

net

assets

of

each

class.

Differences

in

per

share

distributions

by

class

are

generally

due

to

differences

in

class

specific

expenses.

e.

Accounting

Estimates

The

preparation

of

financial

statements

in

accordance

with

U.S.

GAAP

requires

management

to

make

estimates

and

assumptions

that

affect

the

reported

amounts

of

assets

and

liabilities

at

the

date

of

the

financial

statements

and

the

amounts

of

income

and

expenses

during

the

reporting

period.

Actual

results

could

differ

from

those

estimates.

f.

Guarantees

and

Indemnifications

Under

the

Trust's

organizational

documents,

its

officers

and

trustees

are

indemnified

by

the

Trust

against

certain

liabilities

arising

out

of

the

performance

of

their

duties

to

the

Trust.

Additionally,

in

the

normal

course

of

business,

the

Trust, on

behalf

of

the

Fund,

enters

into

contracts

with

service

providers

that

contain

general

indemnification

clauses.

The

Trust's

maximum

exposure

under

these

arrangements

is

unknown

as

this

would

involve

future

claims

that

may

be

made

against

the

Trust

that

have

not

yet

occurred.

Currently,

the

Trust

expects

the

risk

of

loss

to

be

remote.

2.

Shares

of

Beneficial

Interest

At

August

31,

2020,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

During

the

years ended

August

31,

2021

and

2020

there

were

no

transactions

of

the

Fund’s

shares.

3.

Transactions

with

Affiliates

Franklin

Resources,

Inc.

is

the

holding

company

for

various

subsidiaries

that

together

are

referred

to

as

Franklin

Templeton.

Certain

officers

and

trustees

of

the

Fund

are

also

officers

and/or

directors

of

the

following

subsidiaries:

Effective

June

11,

2021,

under

a

subadvisory

agreement,

FTIML

and

Global

Advisors,

affiliates

of

FTIC,

provides

subadvisory

services

to

the

Fund.

The

subadvisory

fee

is

paid

by

FTIC

based

on

the

Fund’s

average

daily

net

assets,

and

is

not

an

additional

expense

of

the

Fund.

Subsidiary

Affiliation

Franklin

Templeton

Investments

Corp.

(FTIC)

Investment

manager

Franklin

Templeton

Investment

Management

Ltd.

(FTIML)

Investment

manager

Templeton

Global

Advisors

Ltd.

(Global

Advisors)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Distributors,

LLC

(Distributors)

(formerly

Franklin

Templeton

Distributors,

Inc.)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

1.

Organization

and

Significant

Accounting

Policies

(continued)

d.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

(continued)

Templeton

Funds

Notes

to

Financial

Statements

18

Annual

Report

Templeton

International

Climate

Change

Fund

(continued)

a.

Management

Fees

The

Fund

pays

an

investment

management

fee

to

FTIC

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

For

the

year

ended

August

31,

2021,

the

gross

effective

investment

management

fee

rate

was

0.705%

of

the

Fund’s

average

daily

net

assets. 

b.

Administrative

Fees

Under

an

agreement

with

FTIC,

FT

Services

provides

administrative

services

to

the

Fund.

The

fee

is

paid

by

FTIC

based

on

the

Fund's

average

daily

net

assets,

and

is

not

an

additional

expense

of

the

Fund.

c.

Distribution

Fees

The

Board

has

adopted

distribution

plans

for

each

share

class,

with

the

exception

of

Class

R6

and

Advisor

Class

shares,

pursuant

to

Rule

12b-1

under

the

1940

Act.

Under

the

Fund’s

Class

A

reimbursement

distribution

plan,

the

Fund

reimburses

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of the

Fund's

shares

up

to

the

maximum

annual

plan

rate.

Under

the

Class

A

reimbursement

distribution

plan,

costs

exceeding

the

maximum

for

the

current

plan

year

cannot

be

reimbursed

in

subsequent

periods.

In

addition,

under

the

Fund’s

Class

C

and

R

compensation

distribution

plans,

the

Fund

pays

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of

the

Fund's

shares

up

to

the

maximum

annual

plan

rate

for

each

class.

The

plan

year,

for

purposes

of

monitoring

compliance

with

the

maximum

annual

plan

rates,

is

February

1

through

January

31.

The

maximum

annual

plan

rates,

based

on

the

average

daily

net

assets,

for

each

class,

are

as

follows:

d.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes’

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

year

ended

August

31,

2021,

the

Fund

paid

transfer

agent

fees

of

$660,

of

which

$554

were

retained

by

Investor

Services.

Annualized

Fee

Rate

Net

Assets

0.705%

Up

to

and

including

$1

billion

0.690%

Over

$1

billion,

up

to

and

including

$5

billion

0.675%

Over

$5

billion,

up

to

and

including

$10

billion

0.655%

Over

$10

billion,

up

to

and

including

$15

billion

0.635%

Over

$15

billion,

up

to

and

including

$20

billion

0.615%

Over

$20

billion,

up

to

and

including

$25

billion

0.605%

Over

$25

billion,

up

to

and

including

$30

billion

0.595%

Over

$30

billion,

up

to

and

including

$35

billion

0.585%

In

excess

of

$35

billion

Class

A

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

0.25%

Class

C

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

1.00%

Class

R

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

0.50%

3.

Transactions

with

Affiliates

(continued)

Templeton

Funds

Notes

to

Financial

Statements

19

Annual

Report

Templeton

International

Climate

Change

Fund

(continued)

e.

Investments

in

Affiliated

Management

Investment

Companies

The

Fund

invests

in

one

or

more

affiliated

management

investment

companies.

As

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

fund’s

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

fund.

The

Fund

does

not

invest

for

purposes

of

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Fund

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statement

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

year

ended

August

31,

2021,

the

Fund

held

investments

in

affiliated

management

investment

companies

as

follows:

f.

Waiver

and

Expense

Reimbursements

FTIC

has

contractually

agreed

in

advance

to

waive

or

limit

its

fees

and

to

assume

as

its

own

expense

certain

expenses

otherwise

payable

by

the

Fund

so

that

the

operating expenses

(excluding

distribution

fees,

acquired

fund

fees

and

expenses

and

certain

non-routine

expenses

or

costs,

including

those

relating

to

litigation,

indemnification,

reorganizations,

and

liquidations)

of

the

Fund

does

not

exceed

0.97%

based

on

the

average

net

assets

of

each

class

until

December

31,

2021.

Total

expenses

waived

or

paid

are

not

subject

to

recapture

subsequent

to

the

Fund's

fiscal

year

end.

g.

Other

Affiliated

Transactions

At

August

31,

2021,

Franklin

Resources,

Inc.

owned

100%

of

the

Fund's

outstanding

shares.

Investment

activities

of

this

shareholder

could

have

a

material

impact

on

the

Fund.

4.

Expense

Offset

Arrangement

The Fund has

entered

into

an

arrangement

with

its

custodian

whereby

credits

realized

as

a

result

of

uninvested

cash

balances

are

used

to

reduce

a

portion

of

the

Fund's

custodian

expenses.

During

the

year

ended

August

31,

2021,

the

custodian

fees

were

reduced

as

noted

in

the

Statement

of

Operations. 

5.

Income

Taxes

During

the

year

ended August

31,

2021

the

Fund

utilized

$222,854

of

capital

loss

carryforwards.

    aa

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

a      

a  

a  

a  

a  

a  

a  

a  

Templeton

International

Climate

Change

Fund

Non-Controlled

Affiliates

Dividends

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0.01%

..

$74,649

$884,286

$(800,663)

$—

$—

$158,272

158,272

$5

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0.01%

..

$—

$61,800

$(61,800)

$

—

$

—

$—

—

$—

Total

Affiliated

Securities

....

$74,649

$946,086

$(862,463)

$—

$—

$158,272

$5

3.

Transactions

with

Affiliates

(continued)

Templeton

Funds

Notes

to

Financial

Statements

20

Annual

Report

Templeton

International

Climate

Change

Fund

(continued)

The

tax

character

of

distributions

paid

during

the

years

ended

August

31,

2021

and

August

31,

2020,

was

as

follows:

At

August

31,

2021,

the

cost

of

investments,

net

unrealized

appreciation

(depreciation)

and

undistributed

ordinary

income

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatment

of

wash

sales

and

corporate

actions.

6.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities)

for

the

year

ended

August

31,

2021,

aggregated

$1,376,231

and

$1,342,097,

respectively.

7.

Concentration

of

Risk

Investing

in

foreign

securities

may

include

certain

risks

and

considerations

not

typically

associated

with

investing

in

U.S.

securities,

such

as

fluctuating

currency

values

and

changing

local,

regional

and

global

economic,

political

and

social

conditions,

which

may

result

in

greater

market

volatility.

Political

and

financial

uncertainty

in

many

foreign

regions

may

increase

market

volatility

and

the

economic

risk

of

investing

in

foreign

securities.

In

addition,

certain

foreign

securities

may

not

be

as

liquid

as

U.S.

securities.

8.

Novel

Coronavirus

Pandemic 

The

global

outbreak

of

the

novel

coronavirus

disease,

known

as

COVID-19, has

caused

adverse

effects

on

many

companies,

sectors,

nations,

regions

and

the

markets

in

general, and

may

continue for

an unpredictable duration.

The

effects

of

this

pandemic

may

materially

impact

the

value

and

performance

of

the Fund, its ability

to

buy

and

sell

fund

investments

at

appropriate

valuations

and its ability

to

achieve its investment

objectives.

2021

2020

Distributions

paid

from:

Ordinary

income

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

$17,160

$59,000

Cost

of

investments

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

$2,215,323

Unrealized

appreciation

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

$839,458

Unrealized

depreciation

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

(30,050)

Net

unrealized

appreciation

(depreciation)

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

$809,408

Distributable

earnings:

Undistributed

ordinary

income

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

$48,052

Undistributed

long

term

capital

gains

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

$88,980

Total

distributable

earnings

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

$137,032

5.

Income

Taxes

(continued)

Templeton

Funds

Notes

to

Financial

Statements

21

Annual

Report

Templeton

International

Climate

Change

Fund

(continued)

9.

Credit

Facility

The

Fund,

together

with

other

U.S.

registered

and

foreign

investment

funds

(collectively,

Borrowers),

managed

by

Franklin

Templeton,

are

borrowers

in

a

joint

syndicated

senior

unsecured

credit

facility

totaling

$2.675

billion

(Global

Credit

Facility)

which

matures

on

February

4,

2022.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

Under

the

terms

of

the

Global

Credit

Facility,

the

Fund

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Fund

and

other

costs

incurred

by

the

Fund,

pay

its

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

its

relative

share

of

the

aggregate

net

assets

of

all

of

the

Borrowers,

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

During

the

year

ended

August

31,

2021,

the Fund

did

not

use

the

Global

Credit

Facility.

10.

Fair

Value

Measurements

The

Fund

follows

a

fair

value

hierarchy

that

distinguishes

between

market

data

obtained

from

independent

sources

(observable

inputs)

and

the Fund's

own

market

assumptions

(unobservable

inputs).

These

inputs

are

used

in

determining

the

value

of

the

Fund's financial

instruments

and

are

summarized

in

the

following

fair

value

hierarchy:

Level

1

–

quoted

prices

in

active

markets

for

identical

financial

instruments

Level

2

–

other

significant

observable

inputs

(including

quoted

prices

for

similar

financial

instruments,

interest

rates,

prepayment

speed,

credit

risk,

etc.)

Level

3

–

significant

unobservable

inputs

(including

the

Fund's

own

assumptions

in

determining

the

fair

value

of

financial

instruments)

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,

2021,

in

valuing

the

Fund's

assets

carried

at

fair

value,

is

as

follows:

Level

1

Level

2

Level

3

Total

Templeton

International

Climate

Change

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Belgium

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

$

—

$

86,394

$

—

$

86,394

Denmark

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

123,869

69,791

—

193,660

France

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

—

538,633

—

538,633

Germany

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

—

348,907

—

348,907

Hong

Kong

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

—

21,302

—

21,302

India

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

101,070

106,103

—

207,173

Italy

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

30,605

150,255

—

180,860

Japan

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

—

261,853

—

261,853

Netherlands

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

—

334,934

—

334,934

South

Korea

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

—

85,972

—

85,972

Spain

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

53,135

139,901

—

193,036

Switzerland

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

—

130,472

—

130,472

Taiwan

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

95,208

—

—

95,208

United

Kingdom

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

—

122,666

—

122,666

United

States

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

—

65,389

—

65,389

Short

Term

Investments

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

158,272

—

—

158,272

Total

Investments

in

Securities

...........

$562,159

$2,462,572

a

$—

$3,024,731

Templeton

Funds

Notes

to

Financial

Statements

22

Annual

Report

Templeton

International

Climate

Change

Fund

(continued)

11.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

(FASB)

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

In

January

2021,

the

FASB

issued

ASU

No.

2021-01,

with

further

amendments

to

Topic

848.

The

amendments

in

the

ASUs

provide

optional

temporary

accounting

recognition

and financial

reporting

relief

from

the

effect

of

certain

types

of

contract

modifications

due

to

the

planned

discontinuation

of

the

London

Interbank

Offered

Rate

(LIBOR)

and

other

interbank-offered

based

reference

rates

as

of

the

end

of

2021

and

2023. The

ASUs

are

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

these

ASUs

will

not

have

a

material

impact

on

the

financial

statements. 

12.

Subsequent

Events

The

Fund

has

evaluated

subsequent

events

through

the

issuance

of

the financial

statements

and

determined

that

no

events

have

occurred

that

require

disclosure.

Abbreviations

a

Includes

foreign

securities

valued

at

$2,462,572,

which

were

categorized

as

Level

2

as

a

result

of

the

application

of

market

level

fair

value

procedures.

See

the

Financial

Instrument

Valuation

note

for

more

information.

Selected

Portfolio

ADR

American

Depositary

Receipt

GDR

Global

Depositary

Receipt

10.

Fair

Value

Measurements

(continued)

Templeton

Funds

Report

of

Independent

Registered

Public

Accounting

Firm

23

Annual

Report

To

the

Board

of

Trustees

of

Templeton

Funds

and

Shareholders

of

Templeton

International

Climate

Change

Fund

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities,

including

the

statement

of

investments,

of

Templeton

International

Climate

Change

Fund

(one

of

the

funds

constituting

Templeton

Funds,

referred

to

hereafter

as

the

“Fund”)

as

of

August

31,

2021,

the

related

statement

of

operations

for

the

year

ended

August

31,

2021,

the

statements

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

ended

August

31,

2021,

including

the

related

notes,

and

the

financial

highlights

for

each

of

the

periods

indicated

therein

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

the

Fund

as

of

August

31,

2021,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

ended

August

31,

2021

and

the

financial

highlights

for

each

of

the

periods

indicated

therein

in

conformity

with

accounting

principles

generally

accepted

in

the

United

States

of

America.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

(PCAOB)

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

of

these

financial

statements

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

August

31,

2021

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

opinion.

PricewaterhouseCoopers

LLP

San

Francisco,

California

October

19,

2021

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)

24

Annual

Report

Templeton

International

Climate

Change

Fund

By

mid-February,

tax

information

related

to

a

shareholder's

proportionate

share

of

distributions

paid

during

the

preceding

calendar

year

will

be

received,

if

applicable.

Please

also

refer

to

www.franklintempleton.com

for

per

share

tax

information

related

to

any

distributions

paid

during

the

preceding

calendar

year.

Shareholders

are

advised

to

consult

with

their

tax

advisors

for

further

information

on

the

treatment

of

these

amounts

on

their

tax

returns.

The

following

tax

information

for

the

Fund

is

required

to

be

furnished

to

shareholders

with

respect

to

income

earned

and

distributions

paid

during

its

fiscal

year.

The

Fund

hereby

reports

the

following

amount,

or

if

subsequently

determined

to

be

different,

the

maximum

allowable

amount,

for

the

fiscal

year

ended

August

31,

2021:

Under

Section

853

of

the

Internal

Revenue

Code,

the

Fund

intends

to

elect

to

pass

through

to

its

shareholders

the

following

amounts,

or

amounts

as

finally

determined,

of

foreign

taxes

paid

and

foreign

source

income

earned

by

the

fund

during

the

fiscal

year

ended

August

31,

2021:

Pursuant

to:

Amount

Qualified

Dividend

Income

(QDI)

§854(b)(1)(B)

$62,542

Foreign

Taxes

Paid

$6,329

Foreign

Source

Income

$62,686

Templeton

Funds

Board

Members

and

Officers

25

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

fund

complex,

are

shown

below.

Generally,

each

board

member

serves

until

that

person’s

successor

is

elected

and

qualified.

Independent

Board

Members

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Harris

J.

Ashton

(1932)

Trustee

Since

1992

122

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

Capital

Corporation

(specialty

finance

company)

(2010-present),

United

Natural

Foods,

Inc.

(distributor

of

natural,

organic

and

specialty

foods)

(2013-present),

formerly

,

Allied

Capital

Corporation

(financial

services)

(2003-

2010),

SLM

Corporation

(Sallie

Mae)

(1997-2014)

and

Navient

Corporation

(loan

management,

servicing

and

asset

recovery)

(2014-2016).

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

companies;

and

formerly

,

Executive

Vice

President

and

Chief

Financial

Officer,

NHP

Incorporated

(manager

of

multifamily

housing)

(1995-1997);

and

Vice

President

and

Treasurer,

US

Airways,

Inc.

(until

1995).

Mary

C.

Choksi

(1950)

Trustee

Since

2016

123

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

26

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Edith

E.

Holiday

(1952)

Lead

Independent

Trustee

Trustee

since

2003

and

Lead

Independent

Trustee

since

2007

123

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-April

2021),

White

Mountains

Insurance

Group,

Ltd.

(holding

company)

(2004-May

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

123

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:

Private

investor;

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

(May

2019-January

1,

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

123

Formerly,

Graham

Holdings

Company

(education

and

media

organization)

(2011-May

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

27

Annual

Report

Interested

Board

Members

and

Officers

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Constantine

D.

Tseretopoulos

(1954)

Trustee

Since

2003

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).

Robert

E.

Wade

(1946)

Trustee

Since

2006

29

El

Oro

Ltd

(investments)

(2003-

2019).

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Attorney

at

law

engaged

in

private

practice

as

a

sole

practitioner

(1972-2008)

and

member

of

various

boards.

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Gregory

E.

Johnson

(1961)

Trustee

Since

2013

134

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

39

of

the

investment

companies

in

Franklin

Templeton;

Vice

Chairman,

Investment

Company

Institute;

and

formerly

,

Chief

Executive

Officer

(2013-2020)

and

President

(1994-2015),

Franklin

Resources,

Inc.

**Rupert

H.

Johnson,

Jr.

(1940)

Chairman

of

the

Board,

Trustee

and

Vice

President

Chairman

of

the

Board

since

2013,

Trustee

since

1992

and

Vice

President

since

1996

123

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

37

of

the

investment

companies

in

Franklin

Templeton.

Alan

T.

Bartlett

(1970)

President

and

Chief

Executive

Officer

–

Investment

Management

Since

2019

Not

Applicable

Not

Applicable

Lyford

Cay

Nassau,

Bahamas

Principal

Occupation

During

at

Least

the

Past

5

Years:

President

and

Director,

Templeton

Global

Advisors

Limited;

Chief

Investment

Officer

of

Templeton

Global

Equity

Group;

officer

of

five

of

the

investment

companies

in

Franklin

Templeton;

Chairman

of

the

Board,

Goodhart

Partners;

and

formerly

,

Chief

Executive

Officer,

Goodhart

Partners

(2009-2019).

Independent

Board

Members

(continued)

Templeton

Funds

28

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Alison

E.

Baur

(1964)

Vice

President

Since

2012

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Deputy

General

Counsel,

Franklin

Templeton;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

44

of

the

investment

companies

in

Franklin

Templeton.

Breda

M.

Beckerle

(1958)

Chief

Compliance

Officer

Since

2020

Not

Applicable

Not

Applicable

280

Park

Avenue

New

York,

NY

10017

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Compliance

Officer,

Fiduciary

Investment

Management

International,

Inc.,

Franklin

Advisers,

Inc.,

Franklin

Mutual

Advisers,

LLC,

Franklin

Templeton

Institutional,

LLC;

and

officer

of

39

of

the

investment

companies

in

Franklin

Templeton.

Steven

J.

Gray

(1955)

Vice

President

Since

2009

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Vice

President,

FASA,

LLC;

Assistant

Secretary,

Franklin

Distributors,

LLC;

and

officer

of

44

of

the

investment

companies

in

Franklin

Templeton

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

44

of

the

investment

companies

in

Franklin

Templeton;

and

formerly

,

Vice

President,

Global

Tax

(2012-April

2017)

and

Treasurer/Assistant

Treasurer,

Franklin

Templeton

(2009-2017).

Susan

Kerr

(1949)

Vice

President

–

AML

Compliance

Since

July

2021

Not

Applicable

Not

Applicable

620

Eighth

Avenue

New

York,

NY

10018

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Compliance

Analyst,

Global

Compliance,

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

41

of

the

investment

companies

in

Franklin

Templeton

Navid

J.

Tofigh

(1972)

Vice

President

Since

2015

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Associate

General

Counsel

and

officer

of

44

of

the

investment

companies

in

Franklin

Templeton.

Craig

S.

Tyle

(1960)

Vice

President

Since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

General

Counsel

and

Executive

Vice

President,

Franklin

Resources,

Inc.;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

44

of

the

investment

companies

in

Franklin

Templeton.

Interested

Board

Members

and

Officers

(continued)

Templeton

Funds

29

Annual

Report

*We

base

the

number

of

portfolios

on

each

separate

series

of

the

U.S.

registered

investment

companies

within

the

Franklin

Templeton

fund

complex.

These

portfolios

have

a

common

investment

manager

or

affiliated

investment

managers.

**Gregory

E.

Johnson

is

considered

to

be

an

interested

person

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

of

Franklin

Resources,

Inc.

(Resources),

which

is

the

parent

company

of

the

Fund’s

investment

manager

and

distributor.

Rupert

H.

Johnson,

Jr.

is

considered

to

be

an

interested

person

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

and

major

shareholder

of

Resources.

Note

1:

Rupert

H.

Johnson,

Jr.

is

the

uncle

of

Gregory

E.

Johnson.

Note

2:

Officer

information

is

current

as

of

the

date

of

this

report.

It

is

possible

that

after

this

date,

information

about

officers

may

change.

The

Sarbanes-Oxley

Act

of

2002

and

Rules

adopted

by

the

U.S.

Securities

and

Exchange

Commission

require

the

Fund

to

disclose

whether

the

Fund’s

Audit

Committee

includes

at

least

one

member

who

is

an

audit

committee

financial

expert

within

the

meaning

of

such

Act

and

Rules.

The

Fund’s

Board

has

determined

that

there

is

at

least

one

such

financial

expert

on

the

Audit

Committee

and

has

designated

each

of

Ann

Torre

Bates

and

David

W.

Niemiec

as

an

audit

committee

financial

expert.

The

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

qualify

as

such

an

expert

in

view

of

their

extensive

business

background

and

experience.

Ms.

Bates

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2008.

She

currently

serves

as

a

director

of

Ares

Capital

Corporation

(2010-present)

and

United

Natural

Foods,

Inc.

(2013-present)

and

was

formerly

a

director

of

Navient

Corporation

from

2014

to

2016,

SLM

Corporation

from

1997

to

2014

and

Allied

Capital

Corporation

from

2003

to

2010,

Executive

Vice

President

and

Chief

Financial

Officer

of

NHP

Incorporated

from

1995

to

1997

and

Vice

President

and

Treasurer

of

US

Airways,

Inc.

until

1995.

Mr.

Niemiec

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2005,

currently

serves

as

an

Advisor

to

Saratoga

Partners

and

was

formerly

its

Managing

Director

from

1998

to

2001

and

serves

as

a

director

of

Hess

Midstream

LP

(2017-present).

Mr.

Niemiec

was

formerly

a

director

of

Emeritus

Corporation

from

1999

to

2010

and

OSI

Pharmaceuticals,

Inc.

from

2006

to

2010,

Managing

Director

of

SBC

Warburg

Dillon

Read

from

1997

to

1998,

and

was

Vice

Chairman

from

1991

to

1997

and

Chief

Financial

Officer

from

1982

to

1997

of

Dillon,

Read

&

Co.

Inc.

As

a

result

of

such

background

and

experience,

the

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

have

each

acquired

an

understanding

of

generally

accepted

accounting

principles

and

financial

statements,

the

general

application

of

such

principles

in

connection

with

the

accounting

estimates,

accruals

and

reserves,

and

analyzing

and

evaluating

financial

statements

that

present

a

breadth

and

level

of

complexity

of

accounting

issues

generally

comparable

to

those

of

the

Fund,

as

well

as

an

understanding

of

internal

controls

and

procedures

for

financial

reporting

and

an

understanding

of

audit

committee

functions.

Ms.

Bates

and

Mr.

Niemiec

are

independent

Board

members

as

that

term

is

defined

under

the

applicable

U.S.

Securities

and

Exchange

Commission

Rules

and

Releases.

The

Statement

of

Additional

Information

(SAI)

includes

additional

information

about

the

board

members

and

is

available,

without

charge,

upon

request.

Shareholders

may

call

(800)

DIAL

BEN/342-5236

to

request

the

SAI.

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Lori

A.

Weber

(1964)

Vice

President

and

Secretary

Vice

President

since

2011

and

Secretary

since

2013

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Assistant

Secretary,

Franklin

Resources,

Inc.;

Vice

President

and

Secretary,

Templeton

Investment

Counsel,

LLC;

and

officer

of

44

of

the

investment

companies

in

Franklin

Templeton.

Ryan

R.

Wheeler

(1985)

Interim

Chief

Financial

Officer,

Chief

Accounting

Officer

and

Treasurer

Since

October

2021

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director,

Fund

Administration

&

Reporting;

officer

of

15

of

the

investment

companies

in

Franklin

Templeton;

and

formerly

,

Director,

Senior

Manager

and

Manager

PricewaterhouseCoopers,

LLC

(2014-January

2021)

Interested

Board

Members

and

Officers

(continued)

Templeton

Funds

Shareholder

Information

30

Annual

Report

Board

Approval

of

Investment

Management

Agreements

TEMPLETON

FUNDS

Templeton

International

Climate

Change

Fund

(Fund)

At

a

meeting

held

on

May

18,

2021

(Meeting),

the

Board

of

Trustees

(Board)

of

Templeton

Funds,

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

a

new

investment

sub-advisory

agreement

between

Franklin

Templeton

Investments

Corp.

(FTIC),

the

Fund’s

investment

manager,

and

Franklin

Templeton

Investment

Management

Limited

(FTIML)

and

a

new

investment

sub-advisory

agreement

between

FTIC

and

Templeton

Global

Advisors

Limited

(TGAL),

on

behalf

of

the

Fund

(each

a

Sub-Advisory

Agreement)

each

for

initial

two-year

period

and

subject

to

prior

approval

of

the

Fund’s

sole

shareholder,

Franklin

Resources,

Inc.

(“FRI”).

The

Independent

Trustees

received

advice

from

and

met

separately

with

Independent

Trustee

counsel

in

considering

whether

to

approve

each

Sub-

Advisory

Agreement.

FTIC,

FTIML

and

TGAL

are

each

referred

to

herein

as

a

Manager.

The

Board

reviewed

and

considered

information

provided

by

each

Manager

at

the

Meeting

with

respect

to

each

Sub-Advisory

Agreement.

The

Board

also

reviewed

and

considered

the

factors

it

deemed

relevant

in

approving

each

Sub-Advisory

Agreement,

including,

but

not

limited

to:

(i)

the

nature,

extent,

and

quality

of

the

services

to

be

provided

by

each

of

FTIML

and

TGAL;

and

(ii)

the

costs

of

the

services

to

be

provided

by

each

of

FTIML

and

TGAL.

The

Board

also

considered

that

management

proposed

that

the

Board

approve

each

Sub-Advisory

Agreement

in

order

to

facilitate

certain

portfolio

management

team

enhancements.

The

Board

reviewed

and

further

considered

the

form

of

each

Sub-Advisory

Agreement

and

the

terms

of

each

Sub-

Advisory

Agreement

which

were

discussed

at

the

Meeting,

noting

that

the

terms

and

conditions

of

each

Sub-Advisory

Agreement

are

substantially

identical

to

the

terms

and

conditions

of

sub-advisory

agreements

for

other

Franklin

Templeton

(FT)

mutual

funds.

In

approving

each

Sub-Advisory

Agreement,

the

Board,

including

a

majority

of

the

Independent

Trustees,

determined

that

the

terms

of

the

Sub-Advisory

Agreement

are

fair

and

reasonable

and

that

the

approval

of

such

Sub-Advisory

Agreement

is

in

the

best

interests

of

the

Fund

and

its

shareholders.

While

attention

was

given

to

all

information

furnished,

the

following

discusses

some

primary

factors

relevant

to

the

Board’s

determination.

Nature,

Extent

and

Quality

of

Services

The

Board

reviewed

and

considered

information

regarding

the

nature,

extent

and

quality

of

investment

management

services

to

be

provided

by

each

of

FTIML

and

TGAL

and

currently

being

provided

by

FTIC

and

its

affiliates

to

the

Fund

and

its

shareholders.

The

Board

reviewed

and

considered

information

regarding

the

nature,

quality

and

extent

of

investment

subadvisory

services

to

be

provided

by

each

of

FTIML

and

TGAL

to

the

Fund

and

its

shareholders

under

each

Sub-Advisory

Agreement;

each

of

FTIML’s

and

TGAL’s

experience

as

a

manager

of

other

funds

and

accounts,

including

those

within

the

FT

organization;

the

personnel,

operations,

financial

condition,

and

investment

management

capabilities,

methodologies

and

resources

of

each

of

FTIML

and

TGAL

and

each

of

FTIML’s

and

TGAL’s

capabilities,

as

demonstrated

by,

among

other

things,

its

policies

and

procedures

reasonably

designed

to

prevent

violations

of

the

federal

securities

laws,

which

had

previously

been

approved

by

the

Board

in

connection

with

its

oversight

of

other

funds

in

the

FT

organization.

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

FRI,

the

parent

of

each

Manager,

and

its

commitment

to

the

mutual

fund

business

as

evidenced

by

its

reassessment

of

the

fund

offerings

in

response

to

the

market

environment

and

project

initiatives

and

capital

investments

relating

to

the

services

provided

to

the

Fund

by

the

FT

organization.

The

Board

specifically

noted

FT’s

commitment

to

enhancing

services

and

controlling

costs,

as

reflected

in

its

outsourcing

of

certain

administrative

functions,

and

growth

opportunities,

as

evidenced

by

its

recent

acquisition

of

the

Legg

Mason

companies.

The

Board

also

noted

FT’s

attention

focused

on

expanding

the

distribution

opportunities

for

all

funds

in

the

FT

family

of

funds.

Following

consideration

of

such

information,

the

Board

was

satisfied

with

the

nature,

extent

and

quality

of

services

to

be

provided

by

each

of

FTIML

and

TGAL

to

the

Fund

and

its

shareholders.

Templeton

Funds

Shareholder

Information

31

Annual

Report

Fund

Performance

The

Board

noted

its

review

and

consideration

of

the

performance

results

of

the

Fund

in

connection

with

the

February

2021

annual

contract

renewal

(Annual

Contract

Renewal)

of

the

Fund’s

investment

management

agreement.

The

Board

recalled

its

conclusion

at

that

time

that

the

Fund’s

performance

was

satisfactory.

The

Board

also

noted

the

proposed

portfolio

management

team

enhancements

for

the

Fund,

and

determined

that,

in

light

of

these

changes,

additional

time

will

be

needed

to

evaluate

the

effectiveness

of

management’s

actions.

Comparative

Fees

and

Expenses

The

Board

reviewed

and

considered

information

regarding

the

investment

subadvisory

fee

to

be

charged

by

each

of

FTIML

and

TGAL.

The

Board

noted

that

the

addition

of

FTIML

and

TGAL

will

have

no

impact

on

the

amount

of

management

fees

that

are

currently

paid

by

the

Fund

as

each

of

FTIML

and

TGAL

will

be

paid

by

FTIC

out

of

the

management

fee

that

FTIC

receives

from

the

Fund.

The

Board

concluded

that

the

proposed

investment

subadvisory

fees

are

reasonable.

Management

Profitability

and

Economies

of

Scale

The

Board

determined

that

its

conclusions

regarding

profitability

and

economies

of

scale

reached

in

connection

with

the

Annual

Contract

Renewal

of

the

investment

management

agreement

with

FTIC

had

not

changed

as

a

result

of

the

proposal

to

approve

the

Sub-Advisory

Agreements.

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

each

Sub-Advisory

Agreement

for

an

initial

two-year

period,

subject

to

prior

approval

of

the

sole

shareholder

of

the

Fund.

Liquidity

Risk

Management

Program-

Funds

no

HLIM

Each

Fund

has

adopted

and

implemented

a

written

Liquidity

Risk

Management

Program

(the

“LRMP”)

as

required

by

Rule

22e-4

under

the

Investment

Company

Act

of

1940

(the

“Liquidity

Rule”).

The

LRMP

is

designed

to

assess

and

manage

each

Fund’s

liquidity

risk,

which

is

defined

as

the

risk

that

the

Fund

could

not

meet

requests

to

redeem

shares

issued

by

the

Fund

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

In

accordance

with

the

Liquidity

Rule,

the

LRMP

includes

policies

and

procedures

that

provide

for:

(1)

assessment,

management,

and

review

(no

less

frequently

than

annually)

of

each

Fund’s

liquidity

risk;

(2)

classification

of

each

Fund’s

portfolio

holdings

into

one

of

four

liquidity

categories

(Highly

Liquid,

Moderately

Liquid,

Less

Liquid,

and

Illiquid);

(3)

for

Funds

that

do

not

primarily

hold

assets

that

are

Highly

Liquid,

establishing

and

maintaining

a

minimum

percentage

of

the

Fund’s

net

assets

in

Highly

Liquid

investments

(called

a

“Highly

Liquid

Investment

Minimum”

or

“HLIM”);

and

(4)

prohibiting

the

Fund’s

acquisition

of

Illiquid

investments

that

would

result

in

the

Fund

holding

more

than

15%

of

its

net

assets

in

Illiquid

assets.

The

LRMP

also

requires

reporting

to

the

Securities

and

Exchange

Commission

(“SEC”)

(on

a

non-public

basis)

and

to

the

Board

if

the

Fund’s

holdings

of

Illiquid

assets

exceed

15%

of

the

Fund’s

net

assets.

Funds

with

HLIMs

must

have

procedures

for

addressing

HLIM

shortfalls,

including

reporting

to

the

Board

and,

with

respect

to

HLIM

shortfalls

lasting

more

than

seven

consecutive

calendar

days,

reporting

to

the

SEC

(on

a

non-public

basis).

The

Director

of

Liquidity

Risk

within

the

Investment

Risk

Management

Group

(the

“IRMG”)

is

the

appointed

Administrator

of

the

LRMP.

The

IRMG

maintains

the

Investment

Liquidity

Committee

(the

“ILC”)

to

provide

oversight

and

administration

of

policies

and

procedures

governing

liquidity

risk

management

for

FT

products

and

portfolios.

The

ILC

includes

representatives

from

Franklin

Templeton’s

Risk,

Trading,

Global

Compliance,

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.

Templeton

Funds

Shareholder

Information

32

Annual

Report

At

meetings

of

the

Funds’

Board

of

Trustees

held

in

May

2021,

the

Program

Administrator

provided

a

written

report

to

the

Board

addressing

the

adequacy

and

effectiveness

of

the

program

for

the

year

ended

December

31,

2020.

The

Program

Administrator

report

concluded

that

(i.)

the

LRMP,

as

adopted

and

implemented,

remains

reasonably

designed

to

assess

and

manage

each

Fund’s

liquidity

risk;

(ii.)

the

LRMP,

including

the

Highly

Liquid

Investment

Minimum

(“HLIM”)

where

applicable,

was

implemented

and

operated

effectively

to

achieve

the

goal

of

assessing

and

managing

each

Fund’s

liquidity

risk;

and

(iii.)

each

Fund

was

able

to

meet

requests

for

redemption

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

Proxy

Voting

Policies

and

Procedures

The

Fund’s

investment

manager

has

established

Proxy

Voting

Policies

and

Procedures

(Policies)

that

the

Fund

uses

to

determine

how

to

vote

proxies

relating

to

portfolio

securities.

Shareholders

may

view

the

Fund’s

complete

Policies

online

at

franklintempleton.com.

Alternatively,

shareholders

may

request

copies

of

the

Policies

free

of

charge

by

calling

the

Proxy

Group

collect

at

(954)

527-

7678

or

by

sending

a

written

request

to:

Franklin

Templeton

Companies,

LLC,

300

S.E.

2nd

Street,

Fort

Lauderdale,

FL

33301,

Attention:

Proxy

Group.

Copies

of

the

Fund’s

proxy

voting

records

are

also

made

available

online

at

franklintempleton.com

and

posted

on

the

U.S.

Securities

and

Exchange

Commission’s

website

at

sec.gov

and

reflect

the

most

recent

12-month

period

ended

June

30.

Quarterly

Statement

of

Investments

The

Trust,

on

behalf

of

the

Fund,

files

a

complete

statement

of

investments

with

the

U.S.

Securities

and

Exchange

Commission

for

the

first

and

third

quarters

for

each

fiscal

year

as

an

exhibit

to

its

report

on

Form

N-PORT.

Shareholders

may

view

the

filed

Form

N-PORT

by

visiting

the

Commission’s

website

at

sec.gov.

The

filed

form

may

also

be

viewed

and

copied

at

the

Commission’s

Public

Reference

Room

in

Washington,

DC.

Information

regarding

the

operations

of

the

Public

Reference

Room

may

be

obtained

by

calling

(800)

SEC-0330.

ANNUAL

REPORT

AND

SHAREHOLDER

LETTER

Templeton

World

Fund

A

Series

of

Templeton

Funds

August

31,

2021

Sign

up

for

electronic

delivery

at

franklintempleton.com/edelivery

Not

FDIC

Insured

May

Lose

Value

No

Bank

Guarantee

franklintempleton.com

Not

part

of

the

annual

report

1

SHAREHOLDER

LETTER

Dear

Shareholder:

During

the

12

months

ended

August

31,

2021,

the

global

economic

recovery

was

supported

by

continued

monetary

and

fiscal

stimulus

measures,

easing

novel

coronavirus

(COVID-19)

pandemic

restrictions

and

the

development

of

treatments

and

vaccines.

During

parts

of

the

period,

geopolitical

tensions

and

surges

of

COVID-19

cases

in

certain

regions

pressured

global

stock

prices,

but

economic

growth

in

the

U.S.

and

China

and

continued

accommodative

monetary

policy

by

the

U.S.

Federal

Reserve

supported

equities

for

the

period

as

a

whole.

Asian

and

global

emerging

market

equities

trimmed

some

gains

near

period-end

after

the

Chinese

government

imposed

additional

regulation

on

some

businesses.

In

this

environment,

global

developed

and

emerging

market

stocks,

as

measured

by

the

MSCI

All

Country

World

Index-NR

(net

of

tax

withholding

when

dividends

are

paid),

posted

a

+28.64%

total

return

for

the

period.

1

We

are

committed

to

our

long-term

perspective

and

disciplined

investment

approach

as

we

conduct

a

rigorous,

fundamental

analysis

of

securities

with

a

regular

emphasis

on

investment

risk

management.

Historically,

patient

investors

have

achieved

rewarding

results

by

evaluating

their

goals,

diversifying

their

assets

globally

and

maintaining

a

disciplined

investment

program,

all

hallmarks

of

the

Templeton

investment

philosophy.

We

continue

to

recommend

investors

consult

financial

professionals

and

review

their

portfolios

to

design

a

long-term

strategy

and

portfolio

allocation

that

meet

their

individual

needs,

goals

and

risk

tolerance.

Templeton

World

Fund’s

annual

report

includes

more

detail

about

prevailing

conditions

and

a

discussion

about

investment

decisions

during

the

period.

Please

remember

all

securities

markets

fluctuate,

as

do

mutual

fund

share

prices.

We

thank

you

for

investing

with

Franklin

Templeton,

welcome

your

questions

and

comments,

and

look

forward

to

serving

your

investment

needs

in

the

years

ahead.

Sincerely,

Alan

Bartlett

Chief

Investment

Officer

Templeton

Global

Equity

Group

This

letter

reflects

our

analysis

and

opinions

as

of

August

31,

2021,

unless

otherwise

indicated.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

fund.

Statements

of

fact

are

from

sources

considered

reliable.

1.

Source:

Morningstar.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

franklintempleton.com

Annual

Report

2

Contents

Annual

Report

Templeton

World

Fund

3

Performance

Summary

8

Your

Fund’s

Expenses

11

Financial

Highlights

and

Statement

of

Investments

12

Financial

Statements

20

Notes

to

Financial

Statements

24

Report

of

Independent

Registered

Public

Accounting

Firm

35

Tax

Information

36

Board

Members

and

Officers

37

Shareholder

Information

42

Visit

franklintempleton.com

for

fund

updates,

to

access

your

account,

or

to

find

helpful

financial

planning

tools.

3

franklintempleton.com

Annual

Report

ANNUAL

REPORT

Templeton

World

Fund

This

annual

report

for

Templeton

World

Fund

covers

the

fiscal

year

ended

August

31,

2021

.

Effective

September

30,

2021,

Templeton

World

Fund

will

be

repositioned

to

implement

a

more

focused

global

equity

strategy

with

a

greater

emphasis

on

quality

companies.

The

Fund

will

remain

diversified

but

may

hold

a

smaller

number

of

issuers.

Additionally,

the

Fund’s

primary

benchmark

will

change

to

the

MSCI

All

Country

World

Index

(net

of

dividend

tax

withholdings).

Effective

September

30,

2021,

the

Fund

will

no

longer

regularly

engage

in

currency-related

derivatives,

such

as

currency

and

cross-currency

forwards

and

currency

futures

contracts,

to

seek

to

hedge

all

or

substantially

all

of

its

foreign

currency

exposure

to

the

U.S.

dollar.

Your

Fund’s

Goal

and

Main

Investments

The

Fund

seeks

long-term

capital

growth.

Under

normal

market

conditions,

the

Fund

invests

primarily

in

the

equity

securities

of

companies

located

anywhere

in

the

world,

including

developing

markets.

Under

normal

circumstances,

the

Fund

will

invest

in

issuers

located

in

at

least

three

different

countries

(including

the

U.S.).

The

Fund

intends

to

regularly

engage

in

currency-related

derivatives,

such

as

currency

and

cross-currency

forwards

and

currency

futures

contracts,

to

seek

to

hedge

all

or

substantially

all

of

its

foreign

currency

exposure

to

the

U.S.

dollar.

Performance

Overview

The

Fund’s

Class

A

shares

posted

a

+21.93%

cumulative

total

return

for

the

12

months

under

review.

In

comparison,

the

Fund’s

new

primary

benchmark,

the

MSCI

All

Country

World

Index

(ACWI)

100%

Hedged

to

USD-NR,

which

measures

stock

performance

in

global

developed

and

emerging

markets,

posted

a

+28.70%

cumulative

total

return,

while

the

Fund’s

former

primary

benchmark,

the

MSCI

ACWI

100%

Hedged

to

USD,

posted

a

+29.25%

cumulative

total

return.

1

The

MSCI

ACWI

100%

Hedged

to

USD-NR

replaced

the

MSCI

ACWI

100%

Hedged

to

USD

as

the

Fund’s

primary

benchmark

because

the

investment

manager

believes

the

MSCI

ACWI

100%

Hedged

to

USD-NR

provides

a

more

consistent

basis

for

comparison

relative

to

the

Fund’s

peers.

Also

in

comparison,

the

Fund’s

new

secondary

benchmark,

the

Linked

MSCI

ACWI

100%

Hedged

to

USD-NR/ACWI-

NR,

posted

a

+28.70%

cumulative

total

return,

2

while

the

Fund’s

former

secondary

benchmarks,

the

Linked

MSCI

ACWI

100%

Hedged

to

USD/World

and

the

MSCI

ACWI,

posted

+29.25%

2

and

+29.18%

3

cumulative

total

returns,

respectively.

The

Linked

MSCI

ACWI

100%

Hedged

to

USD-NR/ACWI-NR

replaced

the

Linked

MSCI

ACWI

100%

Hedged

to

USD/World

and

the

MSCI

ACWI

as

the

Fund’s

secondary

benchmark

because

the

investment

manager

believes

the

Linked

MSCI

ACWI

Hedged

to

USD-NR/ACWI-

NR

provides

a

more

consistent

basis

for

comparison

relative

to

the

Fund’s

peers.

For

the

10-year

period

ended

August

31,

2021,

the

Fund’s

Class

A

shares

posted

a

+106.02%

cumulative

total

return,

compared

with

the

MSCI

ACWI

100%

Hedged

to

USD-NR’s

+233.89%

cumulative

total

return

for

the

same

period.

1

Please

note

index

performance

information

is

provided

for

reference

and

we

do

not

attempt

to

track

the

index

but

rather

undertake

investments

on

the

basis

of

fundamental

research.

You

can

find

more

performance

data

in

the

Performance

Summary

beginning

on

page

8

.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

1.

Source:

FactSet.

As

of

8/31/21,

the

Fund’s

Class

A

10-year

average

annual

total

return

not

including

the

maximum

sales

charge

was

+7.50%,

compared

with

the

MSCI

ACWI

100%

Hedged

to

USD-NR’s

10-year

average

annual

total

return

of

+11.54%.

2.

Source:

FactSet.

The

Linked

MSCI

ACWI

100%

Hedged

to

USD-NR/ACWI-NR

reflects

performance

of

the

MSCI

ACWI-NR

through

6/29/16

and

the

MSCI

ACWI

100%

Hedged

to

USD-NR

thereafter.

The

Linked

MSCI

ACWI

100%

Hedged

to

USD/World

reflects

performance

of

the

MSCI

World

Index

through

6/29/16

and

performance

of

the

MSCI

ACWI

100%

Hedged

to

USD

thereafter.

3.

Source:

Morningstar.

The

indexes

are

unmanaged

and

include

reinvestment

of

any

income

or

distributions.

They

do

not

reflect

any

fees,

expenses

or

sales

charges.

One

cannot

invest

directly

in

an

index,

and

an

index

is

not

representative

of

the

Fund’s

portfolio.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

The

dollar

value,

number

of

shares

or

principal

amount,

and

names

of

all

portfolio

holdings

are

listed

in

the

Fund’s

Statement

of

Investments

(SOI).

The

SOI

begins

on

page

16

.

Templeton

World

Fund

4

franklintempleton.com

Annual

Report

Economic

and

Market

Overview

Global

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

All

Country

World

Index-NR,

posted

a

+28.64%

total

return

for

the

12

months

ended

August

31,

2021.

3

Global

equities

benefited

from

monetary

and

fiscal

stimulus

measures,

easing

novel

coronavirus

(COVID-19)

pandemic

restrictions

in

certain

regions

and

the

development

of

treatments

and

vaccines.

Geopolitical

tensions

and

rising

infection

rates

in

the

fall

of

2020

reduced

stock

prices,

but

the

implementation

of

vaccination

programs

and

additional

fiscal

stimulus

measures

led

many

equity

markets

to

reach

new

price

highs

during

the

rest

of

the

period.

However,

the

Chinese

government’s

imposition

of

additional

restrictions

on

some

businesses

pressured

Asian

and

global

emerging

market

stocks

late

in

the

12-month

period.

In

the

U.S.,

the

economy

continued

to

recover

and

equities

rallied

amid

monetary

and

fiscal

stimulus

measures,

vaccine

development

and

the

beginning

of

vaccination

programs.

As

economic

conditions

improved,

gross

domestic

product

(GDP)

rebounded

at

a

record

annualized

pace

in

2020’s

third

quarter.

Although

GDP

growth

was

less

robust

in

the

three

subsequent

quarters,

the

lifting

of

many

COVID-19

restrictions

and

strong

consumer

spending

continued

to

support

the

economy.

A

rebound

in

corporate

earnings

and

the

U.S.

Senate’s

passage

of

a

bipartisan

infrastructure

bill

further

bolstered

investor

sentiment.

The

U.S.

Federal

Reserve

(Fed)

kept

the

federal

funds

target

rate

at

a

record-

low

range

of

0.00%–0.25%

and

continued

its

program

of

open-ended

U.S.

Treasury

and

mortgage

bond

purchases

to

help

keep

markets

functioning.

In

his

Jackson

Hole

Economic

Policy

Symposium

speech

in

August

2021,

Fed

Chair

Jerome

Powell

hinted

that,

if

employment

and

price

conditions

progressed

as

expected,

the

Fed

would

begin

reducing

its

bond

purchases

later

in

2021;

however,

such

reduction

would

not

be

intended

as

a

signal

for

the

beginning

of

interest-rate

increases.

He

also

indicated

that

the

Fed

viewed

inflation

as

partially

transitory,

and

that

further

employment

progress

was

needed

before

the

Fed

would

consider

raising

the

range

for

the

federal

funds

target

rate.

The

economic

recovery

in

the

eurozone

was

relatively

weak,

as

quarter-over-quarter

GDP

growth

rebounded

in

2020’s

third

quarter

but

slightly

contracted

over

the

subsequent

two

quarters,

before

returning

to

growth

in

2021’s

second

quarter.

GDP

growth

rates

were

mostly

sluggish

among

the

region’s

largest

economies

amid

renewed

lockdowns,

delays

in

COVID-19

vaccine

distribution

and

weak

consumer

spending.

Nevertheless,

the

fastest

rate

of

business

activity

growth

in

more

than

a

decade

helped

European

developed

market

equities,

as

measured

by

the

MSCI

Europe

Index-

NR,

to

post

a

+29.18%

total

return

for

the

12

months

under

review.

3

Asian

developed

and

emerging

market

equities,

as

measured

by

the

MSCI

All

Country

Asia

Index-NR,

posted

a

+18.42%

total

return

for

the

12-month

period.

3

China’s

economic

recovery

helped

the

region

rebound,

although

the

country’s

quarter-over-quarter

GDP

growth

in

2021’s

first

and

second

quarters

was

slower

than

2020’s

last

two

quarters,

pressured

by

higher

commodity

prices.

Asian

equity

markets

experienced

heightened

volatility

toward

period-end

due

to

inflation

concerns

and

rising

COVID-19

infection

rates

in

some

countries.

Unexpected

regulatory

changes

by

the

Chinese

government,

which

negatively

impacted

education-

and

technology-related

businesses,

led

some

foreign

investors

to

shift

capital

away

from

China.

Global

emerging

market

stocks,

as

measured

by

the

MSCI

Emerging

Markets

Index-NR,

posted

a

+21.12%

total

return

for

the

12

months

under

review.

3

Generally

improving

economic

activity,

increasing

oil

prices

and

U.S.

dollar

weakness

supported

global

emerging

market

equities.

During

the

latter

part

of

the

period,

higher

COVID-19

cases

in

some

countries,

limited

vaccine

rollouts

and

concerns

about

rising

interest

rates

and

higher

inflation

amid

rising

commodity

prices

dampened

investor

enthusiasm

in

global

emerging

market

equities.

Investment

Strategy

Our

investment

strategy

employs

a

bottom-up,

value-

oriented,

long-term

approach.

We

focus

on

the

market

price

of

a

company’s

securities

relative

to

our

evaluation

of

the

company’s

long-term

earnings,

asset

value

and

cash

flow

potential.

Our

analysis

includes

an

assessment

of

the

potential

impacts

of

material

environmental,

social

and

governance

(ESG)

factors

on

the

long-term

risk

and

return

profile

of

a

company.

We

also

consider

the

company’s

price/

earnings

ratio,

price/cash

flow

ratio,

profit

margins

and

liquidation

value.

Geographic

Composition

8/31/21

%

of

Total

Net

Assets

North

America

44.4%

Europe

28.0%

Asia

19.6%

Latin

America

&

Caribbean

1.1%

Short-Term

Investments

&

Other

Net

Assets

6.9%

Templeton

World

Fund

5

franklintempleton.com

Annual

Report

Manager’s

Discussion

The

Templeton

World

Fund

delivered

double-digit

absolute

gains,

but

trailed

its

custom

currency-hedged

global

benchmark

during

the

12

months

under

review.

Value

was

the

top-performing

factor

style

during

the

period,

buoyed

by

positive

news

about

COVID-19

vaccines

in

November

2020,

which

sparked

a

rebound

in

economically-sensitive

stocks

that

had

come

under

pressure

amid

pandemic-related

lockdowns.

The

quality

factor

was

also

in

favor

during

the

year,

particularly

late

in

the

period

amid

concerns

about

new

COVID-19

variants

and

slowing

economic

data.

At

the

sector

level,

an

underweighting

and

stock

selection

in

financials

detracted

from

relative

performance.

We

have

largely

avoided

banks—particularly

in

Europe—due

to

concerns

about

regulatory

pressures,

a

flatter

yield

curve

and

a

potential

credit

cycle,

all

of

which

could

pressure

sector

profits

over

our

investment

horizon.

However,

the

combination

of

rising

bond

yields

and

improving

risk

appetite

following

the

positive

vaccine

news

last

year

helped

banks

rebound

in

the

latter

half

of

the

period.

The

Fund’s

relative

weakness

in

the

sector

was

primarily

attributable

to

lack

of

exposure,

as

there

were

no

financials

holdings

among

the

10

biggest

absolute

detractors.

A

significant

overweighting

in

consumer

discretionary

also

detracted

from

relative

performance.

U.S.

budget

retailer

Dollar

Tree

was

the

sector’s

biggest

detractor,

declining

after

management

downgraded

guidance

due

to

rising

costs

and

higher

price

sensitivity

among

consumers.

We

believe

such

headwinds

are

temporary.

In

our

view,

Dollar

Tree

is

a

well-

managed

company

belonging

to

a

select

group

of

retailers

with

a

long

track

record

of

consistent

sales

and

earnings

growth.

We

believe

the

company

is

poised

to

continue

this

trajectory

given

various

strategic

initiatives

designed

to

boost

same-store

sales

and

margins,

such

as

the

rollout

of

multi-price

point

offerings

and

ongoing

store

renovations.

As

a

budget

retailer,

Dollar

Tree

should,

in

our

opinion,

offer

downside

protection

in

the

event

of

a

recession

scenario,

and

remains

relatively

shielded

from

e-commerce

threats.

The

stock

continues

to

trade

at

a

discount

to

historical

earnings

multiples

and

represents

a

core

long-term

holding

for

the

Fund’s

portfolio.

Other

notable

relative

detractors

during

the

period

included

stock

selection

in

the

health

care

and

communication

services

sectors.

In

health

care,

French

pharmaceuticals

firm

Sanofi

was

a

significant

detractor.

Shares

have

been

pressured

by

concerns

about

sales

volumes

amid

pandemic-

related

lockdowns

and,

more

recently,

a

difficult

setback

with

the

firm’s

COVID-19

vaccine.

We

exited

the

position

during

the

period

in

favor

of

what

we

believe

to

be

better

risk-

reward

opportunities

elsewhere.

In

communication

services,

shares

of

U.S.

mobile

operator

Verizon

Communications

negatively

impacted

performance.

The

stock’s

defensive

profile

was

broadly

out

of

favor

with

investors

who

took

a

more

risk-on

posture

as

the

period

progressed

and

expectations

for

economic

reopening

improved.

We

believe

Verizon

remains

an

attractive

core

defensive

holding

for

the

portfolio.

Although

the

U.S.

wireless

industry

is

competitive,

mature

and

subject

to

periods

of

deflationary

discounting

and

promotions,

we

think

Verizon’s

more

pure-play

wireless

business

has

less

financial

risk,

as

data

demand

growth

should

be

resilient

across

various

economic

cycles.

In

our

view,

the

firm

enjoys

a

strong

competitive

position

with

a

decent

balance

sheet,

modest

valuation

and

core

business

that

should

remain

a

solid

free

cash

flow

generator.

Top

10

Industries

8/31/21

%

of

Total

Net

Assets

a

Hotels,

Restaurants

&

Leisure

8.3%

Chemicals

5.3%

Pharmaceuticals

4.6%

Machinery

4.4%

IT

Services

4.4%

Oil,

Gas

&

Consumable

Fuels

4.1%

Health

Care

Providers

&

Services

4.1%

Health

Care

Equipment

&

Supplies

3.9%

Household

Durables

3.8%

Specialty

Retail

3.3%

Top

10

Holdings

8/31/21

Company

Industry

,

Country

%

of

Total

Net

Assets

a

a

Samsung

Electronics

Co.

Ltd.

2.4%

Technology

Hardware,

Storage

&

Peripherals,

South

Korea

Albemarle

Corp.

2.4%

Chemicals,

United

States

Walt

Disney

Co.

(The)

2.3%

Entertainment,

United

States

Sysco

Corp.

2.3%

Food

&

Staples

Retailing,

United

States

Medtronic

plc

2.2%

Health

Care

Equipment

&

Supplies,

United

States

E.ON

SE

2.2%

Multi-Utilities,

Germany

Roche

Holding

AG

2.1%

Pharmaceuticals,

Switzerland

Booking

Holdings,

Inc.

2.0%

Hotels,

Restaurants

&

Leisure,

United

States

AIA

Group

Ltd.

1.9%

Insurance,

Hong

Kong

Westinghouse

Air

Brake

Technologies

Corp.

1.9%

Machinery,

United

States

Templeton

World

Fund

6

franklintempleton.com

Annual

Report

Elsewhere,

Canadian

precious

metals

firm

Wheaton

Precious

Metals

hurt

relative

returns

due

to

higher

(albeit

still

negative)

real

interest

rates

reducing

demand

for

precious

metals,

which

offer

no

yield.

This

stock

has

been

a

strong

performer

in

previous

years

and

remains

a

core

holding

given

what

we

view

as

its

attractive

asset-lite,

high-

margin,

cash-generative

business

model

and

exposure

to

world-class

mining

assets

via

its

financing

arrangements

with

primarily

base

metals

miners

to

purchase

precious

metals

byproduct.

Wheaton

has

proven

to

be

very

adept

at

generating

value

from

such

arrangements,

and

has

a

portfolio

offering

significant

upside

optionality

in

the

event

of

higher

precious

metals

prices

or

successful

mine

expansion

efforts

by

its

producing

partners.

The

Fund’s

cash

allocation

also

negatively

impacted

performance

in

a

rising

market

environment.

While

the

portfolio

manager

has

decreased

our

cash

position

over

the

course

of

the

period,

we

continue

to

keep

some

cash

on

hand

for

downside

protection

given

elevated

market

risks

as

well

as

a

source

of

dry

powder

should

additional

opportunities

emerge.

Turning

to

contributors,

stock

selection

in

the

materials

sector

boosted

relative

performance.

The

sector

was

responsible

for

three

of

the

top

four

contributors:

Luxembourg-based

steel-maker

ArcelorMittal,

U.S.

copper

miner

Freeport-McMoRan

and

U.S.

lithium

miner

Albemarle.

All

three

benefited

from

a

strong

combination

of

supply

constraints

and

robust

demand.

While

supply

constraints

during

the

year

were

largely

COVID-19

related,

structural

deficits

do

appear

to

be

emerging

in

some

markets

like

copper

and

lithium,

which

should

help

support

prices.

Meanwhile,

on

the

demand

side,

these

stocks

are

benefiting

from

both

cyclical

demand

improvements

related

to

the

reopening

trade

as

well

as

longer-term

structural

demand

improvements

relating

to

energy

efficiency,

electrification

and

the

transition

to

a

more

sustainable

future.

Stock

selection

among

information

technology

holdings

also

contributed

to

relative

returns.

South

Korean

semiconductor

and

consumer

electronics

manufacturer

Samsung

Electronics

was

the

sector’s

top

contributor.

The

company

has

benefited

from

surging

demand

for

semiconductors

across

the

industrial

value

chain.

During

the

period,

management

offered

investors

positive

guidance

which

foresaw

continued

strength

in

the

memory

business

attributable

to

new

smartphone

launches,

broader

adoption

of

5G

and

healthy

demand

from

server

and

PC

companies.

We

continue

to

think

highly

of

Samsung’s

diversified

revenue

base

and

cash-rich

balance

sheet,

which

is

being

used

to

enhance

shareholder

value

through

dividends,

buybacks

and

potentially

accretive

acquisitions.

In

our

view,

the

stock

remains

undervalued

for

a

global

technology

leader

with

a

wide

range

of

growth-oriented

businesses.

Other

notable

contributors

in

the

sector

included

Dutch

chipmaker

NXP

Semiconductors

and

U.S.

software

firm

EPAM

Systems

(not

held

at

period-end).

From

a

regional

standpoint,

stock

selection

in

North

America

was

primarily

responsible

for

the

Fund’s

relative

underperformance.

Stock

selection

in

Europe

and

Asia

also

hurt

relative

returns.

In

Europe,

outperformance

in

Denmark

and

the

Netherlands

was

offset

by

weakness

in

Germany

and

the

U.K.,

while

in

Asia,

outperformance

in

China

and

South

Korea

was

offset

by

underperformance

in

Japan.

We

remain

aware

of

heightened

global

political

and

economic

risks,

and

have

sought

to

prepare

for

them

by

owning

what

we

consider

high-quality,

defensive

stocks

with

attractive

valuation

profiles.

Yet

we

also

understand

that

current

bullish

conditions

can

persist,

and

that

positive

near-term

catalysts

remain

in

the

form

of

earnings

upgrades,

impending

fiscal

stimulus,

continued

share

buybacks,

elevated

equity

inflows

and

the

potential

for

an

improvement

in

COVID-19

statistics.

For

these

reasons,

we

remain

sensibly

diversified,

with

exposures

also

spanning

cyclical

and

economically

sensitive

stocks

that

we

believe

offer

valuation

support

and

positive

beta

to

potential

future

value

rallies.

The

result

is

a

balanced

portfolio

full

of

stocks

with

diverse

value

drivers

whose

common

characteristic

is

material

undervaluation

relative

to

our

assessment

of

their

long-term

fundamental

earnings

capability.

Top

10

Countries

8/31/21

a

%

of

Total

Net

Assets

a

a

United

States

44.4%

Japan

10.9%

United

Kingdom

10.7%

Germany

8.1%

China

3.9%

Belgium

3.0%

South

Korea

2.4%

Switzerland

2.1%

Hong

Kong

1.9%

France

1.9%

Templeton

World

Fund

7

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

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,

2021,

the

end

of

the

reporting

period.

The

way

we

implement

our

main

investment

strategies

and

the

resulting

portfolio

holdings

may

change

depending

on

factors

such

as

market

and

economic

conditions.

These

opinions

may

not

be

relied

upon

as

investment

advice

or

an

offer

for

a

particular

security.

The

information

is

not

a

complete

analysis

of

every

aspect

of

any

market,

country,

industry,

security

or

the

Fund.

Statements

of

fact

are

from

sources

considered

reliable,

but

the

investment

manager

makes

no

representation

or

warranty

as

to

their

completeness

or

accuracy.

Although

historical

performance

is

no

guarantee

of

future

results,

these

insights

may

help

you

understand

our

investment

management

philosophy.

CFA

®

is

a

trademark

owned

by

CFA

Institute.

Performance

Summary

as

of

August

31,

2021

Templeton

World

Fund

8

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

8/31/21

Cumulative

total

return

excludes

sales

charges.

Average

annual

total

return

includes

maximum

sales

charges.

Sales

charges

will

vary

depending

on

the

size

of

the

investment

and

the

class

of

share

purchased.

The

maximum

is

5.50%

and

the

minimum

is

0%.

Class

A

:

5.50%

maximum

initial

sales

charge;

Advisor

Class:

no

sales

charges.

For

other

share

classes,

visit

franklintempleton.com.

Performance

data

represent

past

performance,

which

does

not

guarantee

future

results.

Investment

return

and

principal

value

will

fluctuate,

and

you

may

have

a

gain

or

loss

when

you

sell

your

shares.

Current

performance

may

differ

from

figures

shown.

For

most

recent

month-end

performance,

go

to

franklintempleton.com

or

call

(800)

342-5236

.

Share

Class

Cumulative

Total

Return

1

Average

Annual

Total

Return

2

–

A

3

1-Year

+21.93%

4

+15.23%

5-Year

+43.58%

+6.29%

10-Year

+106.02%

+6.89%

Advisor

1-Year

+22.28%

4

+22.28%

5-Year

+45.35%

+7.77%

10-Year

+111.29%

+7.77%

See

page

10

for

Performance

Summary

footnotes.

Templeton

World

Fund

Performance

Summary

9

franklintempleton.com

Annual

Report

See

page

10

for

Performance

Summary

footnotes.

Total

Return

Index

Comparison

for

a

Hypothetical

$10,000

Investment

Total

return

represents

the

change

in

value

of

an

investment

over

the

periods

shown.

It

includes

any

applicable

maximum

sales

charge,

Fund

expenses,

account

fees

and

reinvested

distributions.

The

unmanaged

indexes

include

reinvestment

of

any

income

or

distributions.

They

differ

from

the

Fund

in

composition

and

do

not

pay

management

fees

or

expenses.

One

cannot

invest

directly

in

an

index.

Class

A

(9/1/11

–

8/31/21)

Advisor

Class

(9/1/11

–

8/31/21)

Templeton

World

Fund

Performance

Summary

10

franklintempleton.com

Annual

Report

Each

class

of

shares

is

available

to

certain

eligible

investors

and

has

different

annual

fees

and

expenses,

as

described

in

the

prospectus.

All

investments

involve

risks,

including

possible

loss

of

principal.

Special

risks

are

associated

with

foreign

investing,

including

currency

fluctuations,

economic

instability

and

political

developments;

investments

in

developing

markets

involve

heightened

risks

related

to

the

same

factors.

Currency

rates

may

fluctuate

significantly

over

short

periods

of

time,

and

can

reduce

returns.

Because

the

Fund

may

invest

its

assets

in

companies

in

a

specific

region,

including

Europe,

it

is

subject

to

greater

risks

of

adverse

developments

in

that

region

and/or

the

surrounding

regions

than

a

fund

that

is

more

broadly

diversified

geographically.

Current

political

and

financial

uncertainty

concerning

the

economic

consequences

of

the

departure

of

the

U.K.

from

the

European

Union

may

increase

market

volatility.

Derivatives,

including

currency

management

strategies,

involve

costs

and

can

create

economic

leverage

in

the

portfolio

which

may

result

in

significant

volatility

and

cause

the

Fund

to

participate

in

losses

(as

well

as

enable

gains)

on

an

amount

that

exceeds

the

Fund’s

initial

investment.

The

Fund

may

not

achieve

the

anticipated

benefits,

and

may

realize

losses

when

a

counterparty

fails

to

perform

as

promised.

Events

such

as

the

spread

of

deadly

diseases,

disasters,

and

financial,

political

or

social

disruptions,

may

heighten

risks

and

adversely

affect

performance.

The

Fund’s

prospectus

also

includes

a

description

of

the

main

investment

risks.

1.

Cumulative

total

return

represents

the

change

in

value

of

an

investment

over

the

periods

indicated.

2.

Average

annual

total

return

represents

the

average

annual

change

in

value

of

an

investment

over

the

periods

indicated.

Return

for

less

than

one

year,

if

any,

has

not

been

annualized.

3.

Prior

to

9/10/18

these

shares

were

offered

at

a

higher

initial

sales

charge

of

5.75%,

thus

actual

returns

(with

sales

charges)

would

have

differed.

Average

annual

total

returns

(with

sales

charges)

have

been

restated

to

reflect

the

current

maximum

initial

sales

charge

of

5.50%.

4.

Total

return

information

is

based

on

net

asset

values

calculated

for

shareholder

transactions.

Certain

adjustments

were

made

to

the

net

assets

of

the

Fund

at

08/31/21

for

financial

reporting

purposes.

Accordingly,

adjusted

total

returns

have

been

disclosed

in

the

Financial

Highlights

and

differ

from

those

reported

here.

5.

Source:

FactSet.

The

MSCI

ACWI

100%

Hedged

to

USD-NR

and

the

MSCI

ACWI

100%

Hedged

to

USD

represent

a

close

estimation

of

the

performance

that

can

be

achieved

by

hedging

the

currency

exposures

of

its

parent

index,

the

MSCI

ACWI,

to

the

USD,

the

"home"

currency

for

the

hedged

index.

The

Linked

MSCI

ACWI

100%

Hedged

to

USD-NR/ACWI-NR

reflects

performance

of

the

MSCI

ACWI-NR

through

6/29/16

and

the

MSCI

ACWI

100%

Hedged

to

USD-NR

thereafter.

The

Linked

MSCI

ACWI

100%

Hedged

to

USD/World

reflects

performance

of

the

MSCI

World

Index

through

6/29/16

and

performance

of

the

MSCI

ACWI

100%

Hedged

to

USD

thereafter.

Net

Returns

(NR)

include

income

net

of

tax

withholding

when

dividends

are

paid.

6.

Source:

Morningstar.

The

MSCI

ACWI

is

a

free

float-adjusted,

market

capitalization-weighted

index

designed

to

measure

equity

market

performance

of

global

developed

and

emerging

markets.

7.

Figures

are

as

stated

in

the

Fund’s

current

prospectus

and

may

differ

from

the

expense

ratios

disclosed

in

the

Your

Fund’s

Expenses

and

Financial

Highlights

sections

in

this

report.

In

periods

of

market

volatility,

assets

may

decline

significantly,

causing

total

annual

Fund

operating

expenses

to

become

higher

than

the

figures

shown.

See

www.franklintempletondatasources.com

for

additional

data

provider

information.

Total

Annual

Operating

Expenses

7

Share

Class

A

1.06%

Advisor

0.81%

Your

Fund’s

Expenses

Templeton

World

Fund

11

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

3/1/21

Ending

Account

Value

8/31/21

Expenses

Paid

During

Period

3/1/21–8/31/21

1,2

Ending

Account

Value

8/31/21

Expenses

Paid

During

Period

3/1/21–8/31/21

1,2

a

Net

Annualized

Expense

Ratio

2

A

$1,000

$1,068.20

$5.34

$1,020.04

$5.22

1.03%

C

$1,000

$1,065.00

$9.33

$1,016.17

$9.11

1.79%

R6

$1,000

$1,070.30

$3.93

$1,021.40

$3.84

0.75%

Advisor

$1,000

$1,069.60

$4.13

$1,021.22

$4.03

0.79%

Templeton

Funds

Financial

Highlights

Templeton

World

Fund

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

12

a

Year

Ended

August

31,

2021

2020

2019

2018

2017

Class

A

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$12.71

$12.76

$17.24

$16.94

$15.47

Income

from

investment

operations

a

:

Net

investment

income

b

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

0.20

c

0.16

0.29

0.28

0.27

Net

realized

and

unrealized

gains

(losses)

...........

2.61

0.45

(2.17)

1.03

2.21

Total

from

investment

operations

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

2.81

0.61

(1.88)

1.31

2.48

Less

distributions

from:

Net

investment

income

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

—

(0.50)

(0.67)

(0.02)

(0.57)

Net

realized

gains

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

—

(0.16)

(1.93)

(0.99)

(0.44)

Total

distributions

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

—

(0.66)

(2.60)

(1.01)

(1.01)

Net

asset

value,

end

of

year

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

$15.52

$12.71

$12.76

$17.24

$16.94

Total

return

d

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

22.11%

4.47%

(10.22)%

7.81%

16.45%

Ratios

to

average

net

assets

Expenses

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

1.03%

e

1.05%

1.05%

e

1.04%

f

1.06%

e,f

Net

investment

income

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

1.42%

c

1.29%

2.06%

1.64%

1.63%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$3,060,714

$2,831,844

$3,150,057

$3,973,648

$4,240,117

Portfolio

turnover

rate

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

41.83%

52.25%

25.16%

28.39%

31.46%

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

0.48%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Templeton

Funds

Financial

Highlights

Templeton

World

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

13

a

Year

Ended

August

31,

2021

2020

2019

2018

2017

Class

C

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$12.18

$12.26

$16.35

$16.21

$14.84

Income

from

investment

operations

a

:

Net

investment

income

b

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

0.10

c

0.07

0.13

0.14

0.14

Net

realized

and

unrealized

gains

(losses)

...........

2.48

0.42

(2.01)

0.99

2.12

Total

from

investment

operations

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

2.58

0.49

(1.88)

1.13

2.26

Less

distributions

from:

Net

investment

income

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

—

(0.41)

(0.28)

—

(0.45)

Net

realized

gains

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

—

(0.16)

(1.93)

(0.99)

(0.44)

Total

distributions

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

—

(0.57)

(2.21)

(0.99)

(0.89)

Net

asset

value,

end

of

year

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

$14.76

$12.18

$12.26

$16.35

$16.21

Total

return

d

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

21.18%

3.61%

(10.94)%

7.01%

15.59%

Ratios

to

average

net

assets

Expenses

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

1.80%

e

1.82%

1.80%

e

1.80%

f

1.81%

e,f

Net

investment

income

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

0.70%

c

0.54%

1.31%

0.88%

0.88%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$12,585

$18,630

$28,850

$117,879

$138,534

Portfolio

turnover

rate

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

41.83%

52.25%

25.16%

28.39%

31.46%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.13

per

share

related

to

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

(0.24)%.

d

Total

return

does

not

reflect

sales

commissions

or

contingent

deferred

sales

charges,

if

applicable.

e

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

f

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Templeton

Funds

Financial

Highlights

Templeton

World

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

14

a

Year

Ended

August

31,

2021

2020

2019

2018

2017

Class

R6

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$12.69

$12.73

$17.21

$16.92

$15.45

Income

from

investment

operations

a

:

Net

investment

income

b

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

0.24

c

0.20

0.34

0.33

0.32

Net

realized

and

unrealized

gains

(losses)

...........

2.60

0.45

(2.17)

1.03

2.22

Total

from

investment

operations

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

2.84

0.65

(1.83)

1.36

2.54

Less

distributions

from:

Net

investment

income

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

—

(0.53)

(0.72)

(0.08)

(0.63)

Net

realized

gains

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

—

(0.16)

(1.93)

(0.99)

(0.44)

Total

distributions

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

—

(0.69)

(2.65)

(1.07)

(1.07)

Net

asset

value,

end

of

year

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

$15.53

$12.69

$12.73

$17.21

$16.92

Total

return

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

22.38%

4.71%

(9.88)%

8.13%

16.87%

Ratios

to

average

net

assets

Expenses

before

waiver

and

payments

by

affiliates

......

0.78%

0.79%

0.77%

0.74%

0.73%

Expenses

net

of

waiver

and

payments

by

affiliates

.......

0.76%

0.76%

0.75%

0.72%

d

0.73%

d,e

Net

investment

income

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

1.68%

c

1.59%

2.36%

1.96%

1.96%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$42,010

$38,885

$43,595

$51,431

$55,504

Portfolio

turnover

rate

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

41.83%

52.25%

25.16%

28.39%

31.46%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.13

per

share

related

to

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

0.74%.

d

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

e

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

Templeton

Funds

Financial

Highlights

Templeton

World

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

15

a

Year

Ended

August

31,

2021

2020

2019

2018

2017

Advisor

Class

Per

share

operating

performance

(for

a

share

outstanding

throughout

the

year)

Net

asset

value,

beginning

of

year

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

$12.70

$12.74

$17.23

$16.93

$15.46

Income

from

investment

operations

a

:

Net

investment

income

b

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

0.24

c

0.19

0.33

0.32

0.32

Net

realized

and

unrealized

gains

(losses)

...........

2.60

0.45

(2.17)

1.03

2.20

Total

from

investment

operations

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

2.84

0.64

(1.84)

1.35

2.52

Less

distributions

from:

Net

investment

income

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

—

(0.52)

(0.72)

(0.06)

(0.61)

Net

realized

gains

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

—

(0.16)

(1.93)

(0.99)

(0.44)

Total

distributions

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

—

(0.68)

(2.65)

(1.05)

(1.05)

Net

asset

value,

end

of

year

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

$15.54

$12.70

$12.74

$17.23

$16.93

Total

return

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

22.36%

4.66%

(9.99)%

8.09%

16.74%

Ratios

to

average

net

assets

Expenses

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

0.80%

d

0.81%

0.80%

d

0.80%

e

0.81%

d,e

Net

investment

income

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

1.64%

c

1.53%

2.31%

1.88%

1.88%

Supplemental

data

Net

assets,

end

of

year

(000’s)

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

$115,823

$99,546

$112,891

$146,883

$157,237

Portfolio

turnover

rate

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

41.83%

52.25%

25.16%

28.39%

31.46%

a

The

amount

shown

for

a

share

outstanding

throughout

the

period

may

not

correlate

with

the

Statement

of

Operations

for

the

period

due

to

the

timing

of

sales

and

repurchases

of

the

Fund’s

shares

in

relation

to

income

earned

and/or

fluctuating

fair

value

of

the

investments

of

the

Fund.

b

Based

on

average

daily

shares

outstanding.

c

Net

investment

income

per

share

includes

approximately

$0.13

per

share

related

to

an

adjustment

for

EU

reclaims

in

connection

with

certain

Fund

holdings.

Excluding

this

amount,

the

ratio

of

net

investment

income

to

average

net

assets

would

have

been

0.70

%.

d

Benefit

of

waiver

and

payments

by

affiliates

rounds

to

less

than

0.01%.

e

Benefit

of

expense

reduction

rounds

to

less

than

0.01%.

Templeton

Funds

Statement

of

Investments,

August

31,

2021

Templeton

World

Fund

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

16

a

a

Industry

Shares

a

Value

a

Common

Stocks

93.1%

Belgium

3.0%

Anheuser-Busch

InBev

SA/NV

......

Beverages

954,583

$

58,544,237

Umicore

SA

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

Chemicals

598,200

39,361,081

97,905,318

Brazil

1.1%

Wheaton

Precious

Metals

Corp.

.....

Metals

&

Mining

781,977

35,251,893

China

3.9%

Gree

Electric

Appliances,

Inc.

of

Zhuhai,

A

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

Household

Durables

3,611,486

22,976,314

NXP

Semiconductors

NV

..........

Semiconductors

&

Semiconductor

Equipment

234,438

50,434,647

a

Prosus

NV

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

Internet

&

Direct

Marketing

Retail

210,485

18,630,401

Yum

China

Holdings,

Inc.

..........

Hotels,

Restaurants

&

Leisure

564,531

34,752,528

126,793,890

France

1.9%

Danone

SA

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

Food

Products

379,826

27,735,916

Pernod

Ricard

SA

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

Beverages

154,236

32,466,521

60,202,437

Germany

8.1%

adidas

AG

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

Textiles,

Apparel

&

Luxury

Goods

88,633

31,441,207

a

Continental

AG

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

Auto

Components

298,629

40,130,355

E.ON

SE

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

Multi-Utilities

5,372,141

70,874,689

Fresenius

Medical

Care

AG

&

Co.

KGaA

Health

Care

Providers

&

Services

591,732

45,496,324

Infineon

Technologies

AG

..........

Semiconductors

&

Semiconductor

Equipment

855,659

36,430,490

Siemens

AG

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

Industrial

Conglomerates

227,496

37,738,810

262,111,875

Hong

Kong

1.9%

AIA

Group

Ltd.

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

Insurance

5,111,204

61,031,100

Japan

10.9%

Fujitsu

Ltd.

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

IT

Services

252,180

46,423,060

Honda

Motor

Co.

Ltd.

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

Automobiles

1,206,355

36,512,315

Komatsu

Ltd.

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

Machinery

1,883,300

45,806,976

Kyocera

Corp.

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

Electronic

Equipment,

Instruments

&

Components

420,725

26,155,222

Makita

Corp.

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

Machinery

658,700

37,840,202

Mitsubishi

Electric

Corp.

...........

Electrical

Equipment

2,800,100

38,280,467

Nexon

Co.

Ltd.

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

Entertainment

1,248,723

22,775,013

Panasonic

Corp.

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

Household

Durables

3,699,103

44,223,051

Sony

Group

Corp.

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

Household

Durables

526,700

54,458,348

352,474,654

Luxembourg

1.0%

ArcelorMittal

SA

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

Metals

&

Mining

941,164

31,565,283

Macau

0.5%

a

Galaxy

Entertainment

Group

Ltd.

....

Hotels,

Restaurants

&

Leisure

2,334,405

14,967,173

a

Norway

1.2%

Equinor

ASA

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

Oil,

Gas

&

Consumable

Fuels

1,792,690

37,992,124

South

Korea

2.4%

Samsung

Electronics

Co.

Ltd.

.......

Technology

Hardware,

Storage

&

Peripherals

1,202,028

79,399,930

Switzerland

2.1%

Roche

Holding

AG

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

Pharmaceuticals

170,825

68,591,917

Templeton

Funds

Statement

of

Investments

Templeton

World

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

17

a

a

Industry

Shares

a

Value

a

Common

Stocks

(continued)

United

Kingdom

10.7%

AstraZeneca

plc

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

Pharmaceuticals

261,594

$

30,592,815

BAE

Systems

plc

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

Aerospace

&

Defense

4,693,668

36,671,179

BP

plc

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

Oil,

Gas

&

Consumable

Fuels

8,707,866

35,427,458

Burberry

Group

plc

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

Textiles,

Apparel

&

Luxury

Goods

1,248,859

31,979,104

a

Compass

Group

plc

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

Hotels,

Restaurants

&

Leisure

2,112,246

43,640,491

a

InterContinental

Hotels

Group

plc

....

Hotels,

Restaurants

&

Leisure

559,401

35,743,734

a

International

Consolidated

Airlines

Group

SA

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

Airlines

10,184,233

22,329,706

a

Rolls-Royce

Holdings

plc

..........

Aerospace

&

Defense

22,724,458

35,838,282

Unilever

plc

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

Personal

Products

829,540

46,175,597

a

Whitbread

plc

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

Hotels,

Restaurants

&

Leisure

602,268

26,596,740

344,995,106

United

States

44.4%

Albemarle

Corp.

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

Chemicals

324,467

76,814,318

American

Express

Co.

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

Consumer

Finance

318,049

52,783,412

a

Booking

Holdings,

Inc.

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

Hotels,

Restaurants

&

Leisure

28,043

64,489,646

BorgWarner,

Inc.

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

Auto

Components

752,049

32,097,451

Comcast

Corp.,

A

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

Media

720,989

43,749,613

a

Dollar

Tree,

Inc.

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

Multiline

Retail

516,365

46,751,687

DuPont

de

Nemours,

Inc.

..........

Chemicals

756,528

55,998,203

a

DXC

Technology

Co.

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

IT

Services

1,365,632

50,146,007

Freeport-McMoRan,

Inc.

...........

Metals

&

Mining

765,837

27,868,808

Honeywell

International,

Inc.

........

Industrial

Conglomerates

129,728

30,085,220

a

Hyatt

Hotels

Corp.,

A

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

Hotels,

Restaurants

&

Leisure

226,075

16,636,859

Johnson

&

Johnson

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

Pharmaceuticals

281,501

48,736,268

a

Laboratory

Corp.

of

America

Holdings

.

Health

Care

Providers

&

Services

118,297

35,888,944

Lear

Corp.

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

Auto

Components

176,862

28,287,308

Marathon

Petroleum

Corp.

.........

Oil,

Gas

&

Consumable

Fuels

995,613

59,009,983

Medtronic

plc

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

Health

Care

Equipment

&

Supplies

538,447

71,871,906

Public

Service

Enterprise

Group,

Inc.

.

Multi-Utilities

278,904

17,833,122

Ross

Stores,

Inc.

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

Specialty

Retail

445,759

52,777,866

Southern

Co.

(The)

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

Electric

Utilities

541,373

35,584,447

a

Southwest

Airlines

Co.

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

Airlines

737,595

36,717,479

Starbucks

Corp.

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

Hotels,

Restaurants

&

Leisure

264,910

31,124,276

Sysco

Corp.

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

Food

&

Staples

Retailing

914,968

72,877,201

TJX

Cos.,

Inc.

(The)

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

Specialty

Retail

743,819

54,090,518

a

T-Mobile

US,

Inc.

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

Wireless

Telecommunication

Services

231,760

31,755,755

United

Parcel

Service,

Inc.,

B

.......

Air

Freight

&

Logistics

151,056

29,551,085

UnitedHealth

Group,

Inc.

...........

Health

Care

Providers

&

Services

121,883

50,736,236

Verizon

Communications,

Inc.

.......

Diversified

Telecommunication

Services

875,242

48,138,310

Visa,

Inc.,

A

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

IT

Services

196,474

45,012,193

a

Walt

Disney

Co.

(The)

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

Entertainment

403,337

73,124,998

Westinghouse

Air

Brake

Technologies

Corp.

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

Machinery

666,448

59,840,366

Zimmer

Biomet

Holdings,

Inc.

.......

Health

Care

Equipment

&

Supplies

355,497

53,484,524

1,433,864,009

Total

Common

Stocks

(Cost

$2,287,527,523)

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

3,007,146,709

Templeton

Funds

Statement

of

Investments

Templeton

World

Fund

(continued)

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

18

At

August

31,

2021,

the

Fund

had

the

following

forward

exchange

contracts

outstanding.

See

Note

1(c)

. 

Short

Term

Investments

6.5%

a

a

Principal

Amount

*

a

Value

a

a

a

a

a

a

Time

Deposits

6.5%

Canada

4.9%

National

Bank

of

Canada,

0.05%,

9/01/21

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

65,000,000

$

65,000,000

Royal

Bank

of

Canada,

0.03%,

9/01/21

94,200,000

94,200,000

159,200,000

France

1.6%

Credit

Agricole

Corporate

and

Investment

Bank

SA,

0.05%,

9/01/21

50,000,000

50,000,000

Total

Time

Deposits

(Cost

$209,200,000)

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

209,200,000

a

a

a

a

a

Total

Short

Term

Investments

(Cost

$209,200,000

)

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

209,200,000

a

a

a

Total

Investments

(Cost

$2,496,727,523)

99.6%

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

$3,216,346,709

Other

Assets,

less

Liabilities

0.4%

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

14,785,602

Net

Assets

100.0%

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

$3,231,132,311

a

a

a

*

The

principal

amount

is

stated

in

U.S.

dollars

unless

otherwise

indicated.

a

Non-income

producing.

Forward

Exchange

Contracts

Currency

Counter-

party

a

Type

Quantity

Contract

Amount

*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

Canadian

Dollar

....

BOFA

Sell

8,335,335

6,524,877

9/29/21

$

—

$

(82,895)

Canadian

Dollar

....

BZWS

Sell

8,607,458

6,736,706

9/29/21

—

(86,790)

Canadian

Dollar

....

CITI

Sell

7,338,802

5,755,698

9/29/21

—

(62,081)

Canadian

Dollar

....

HSBK

Sell

9,118,016

7,154,976

9/29/21

—

(73,260)

Canadian

Dollar

....

UBSW

Sell

8,569,857

6,724,816

9/29/21

—

(68,872)

British

Pound

......

BOFA

Sell

35,668,012

48,853,406

9/30/21

—

(190,371)

British

Pound

......

BZWS

Sell

35,941,774

49,256,796

9/30/21

—

(163,406)

British

Pound

......

CITI

Sell

43,671,617

59,828,692

9/30/21

—

(220,100)

British

Pound

......

GSCO

Sell

6,001,815

8,223,567

9/30/21

—

(28,973)

British

Pound

......

HSBK

Sell

52,201,001

71,656,691

9/30/21

35,627

(155,692)

British

Pound

......

UBSW

Sell

35,952,303

49,275,148

9/30/21

—

(159,531)

Euro

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

BOFA

Sell

78,737,326

92,784,065

9/30/21

—

(235,842)

Euro

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

BZWS

Sell

78,746,872

92,795,337

9/30/21

—

(235,847)

Euro

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

CITI

Sell

32,412,371

38,227,067

9/30/21

—

(64,757)

Euro

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

GSCO

Sell

46,447,935

54,762,116

9/30/21

—

(111,257)

Euro

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

HSBK

Sell

111,782,769

131,829,890

9/30/21

—

(229,747)

Euro

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

UBSW

Sell

78,730,245

92,911,924

9/30/21

—

(99,617)

Hong

Kong

Dollar

...

BOFA

Buy

19,627,083

2,523,410

9/30/21

350

—

Hong

Kong

Dollar

...

BOFA

Sell

123,266,568

15,867,915

9/30/21

17,611

—

Hong

Kong

Dollar

...

BZWS

Sell

120,712,965

15,539,164

9/30/21

17,216

—

Hong

Kong

Dollar

...

CITI

Buy

24,434,326

3,139,226

9/30/21

2,676

—

Hong

Kong

Dollar

...

CITI

Sell

124,657,342

16,046,493

9/30/21

17,356

—

Hong

Kong

Dollar

...

HSBK

Buy

20,101,195

2,586,594

9/30/21

—

(1,870)

Hong

Kong

Dollar

...

HSBK

Sell

134,003,223

17,249,851

9/30/21

18,968

—

Hong

Kong

Dollar

...

UBSW

Sell

133,028,017

17,124,333

9/30/21

18,847

—

Japanese

Yen

......

BOFA

Sell

7,182,808,371

65,665,387

9/30/21

359,243

—

Templeton

Funds

Statement

of

Investments

Templeton

World

Fund

(continued)

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

19

See

Note 8 regarding

other

derivative

information.

Forward

Exchange

Contracts

(continued)

Currency

Counter-

party

a

Type

Quantity

Contract

Amount*

Settlement

Date

Unrealized

Appreciation

Unrealized

Depreciation

a

a

a

a

a

a

a

a

OTC

Forward

Exchange

Contracts

(continued)

Japanese

Yen

......

BZWS

Buy

2,200,000,000

20,060,638

9/30/21

$

—

$

(58,222)

Japanese

Yen

......

BZWS

Sell

9,038,988,547

82,637,950

9/30/21

455,403

—

Japanese

Yen

......

CITI

Buy

1,385,010,488

12,585,103

9/30/21

7,422

—

Japanese

Yen

......

CITI

Sell

9,039,078,054

82,633,344

9/30/21

449,983

—

Japanese

Yen

......

HSBK

Buy

1,800,000,000

16,482,611

9/30/21

—

(116,998)

Japanese

Yen

......

HSBK

Sell

9,037,919,440

82,624,852

9/30/21

452,025

—

Japanese

Yen

......

UBSW

Buy

1,779,480,315

16,242,566

9/30/21

—

(63,519)

Japanese

Yen

......

UBSW

Sell

9,688,417,168

88,567,668

9/30/21

480,511

—

Norwegian

Krone

...

BOFA

Sell

45,471,423

5,076,301

9/30/21

—

(153,605)

Norwegian

Krone

...

BZWS

Sell

57,167,176

6,385,910

9/30/21

—

(189,185)

Norwegian

Krone

...

CITI

Sell

48,080,967

5,378,044

9/30/21

—

(152,000)

Norwegian

Krone

...

GSCO

Sell

38,090,627

4,256,721

9/30/21

—

(124,281)

Norwegian

Krone

...

HSBK

Sell

84,554,686

9,554,133

9/30/21

7,746

(178,689)

Norwegian

Krone

...

UBSW

Sell

57,177,968

6,406,407

9/30/21

—

(169,930)

South

Korean

Won

..

BOFA

Buy

2,900,000,000

2,484,153

9/30/21

17,529

—

South

Korean

Won

..

BOFA

Sell

16,283,950,406

14,106,597

9/30/21

59,264

—

South

Korean

Won

..

BZWS

Sell

15,230,081,709

13,192,843

9/30/21

54,628

—

South

Korean

Won

..

CITI

Buy

3,339,073,150

2,872,568

9/30/21

7,880

—

South

Korean

Won

..

CITI

Sell

17,659,668,934

15,303,669

9/30/21

69,573

—

South

Korean

Won

..

GSCO

Sell

14,845,203,077

12,859,670

9/30/21

53,470

—

South

Korean

Won

..

HSBK

Sell

16,736,044,006

14,508,924

9/30/21

71,593

—

South

Korean

Won

..

UBSW

Sell

13,423,140,559

11,635,871

9/30/21

56,412

—

Swiss

Franc

.......

BOFA

Sell

10,558,464

11,484,706

9/30/21

—

(53,162)

Swiss

Franc

.......

BZWS

Sell

10,058,477

10,940,521

9/30/21

—

(50,980)

Swiss

Franc

.......

CITI

Sell

13,023,911

14,184,439

9/30/21

—

(47,571)

Swiss

Franc

.......

HSBK

Buy

2,072,229

2,273,103

9/30/21

—

(8,654)

Swiss

Franc

.......

HSBK

Sell

16,133,145

17,569,065

9/30/21

—

(60,592)

Swiss

Franc

.......

UBSW

Sell

9,836,887

10,720,000

9/30/21

—

(29,357)

Yuan

Renminbi

.....

BOFA

Buy

8,865,617

1,366,780

9/30/21

2,965

—

Yuan

Renminbi

.....

BOFA

Sell

42,581,943

6,517,977

9/30/21

—

(60,967)

Yuan

Renminbi

.....

BZWS

Sell

21,814,608

3,338,937

9/30/21

—

(31,438)

Yuan

Renminbi

.....

CITI

Buy

16,116,619

2,471,077

9/30/21

18,954

—

Yuan

Renminbi

.....

CITI

Sell

49,559,283

7,580,596

9/30/21

—

(76,353)

Yuan

Renminbi

.....

HSBK

Buy

7,325,008

1,132,500

9/30/21

—

(780)

Yuan

Renminbi

.....

HSBK

Sell

41,742,040

6,391,370

9/30/21

—

(57,808)

Yuan

Renminbi

.....

UBSW

Sell

21,829,286

3,341,899

9/30/21

—

(30,743)

Total

Forward

Exchange

Contracts

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

$2,753,252

$(3,985,742)

Net

unrealized

appreciation

(depreciation)

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

$(1,232,490)

*

In

U.S.

dollars

unless

otherwise

indicated.

a

May

be

comprised

of

multiple

contracts

with

the

same

counterparty,

currency

and

settlement

date.

See

abbreviations

on

page

34

.

Templeton

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

August

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

20

Templeton

World

Fund

Assets:

Investments

in

securities:

Cost

-

Unaffiliated

issuers

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

$2,496,727,523

Value

-

Unaffiliated

issuers

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

$3,216,346,709

Cash

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

80,880

Receivables:

Capital

shares

sold

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

1,288,372

Dividends

and

interest

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

7,497,293

European

Union

tax

reclaims

(Note

1e)

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

23,012,257

Deposits

with

brokers

for:

OTC

derivative

contracts

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

631,501

Unrealized

appreciation

on

OTC

forward

exchange

contracts

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

2,753,252

Total

assets

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

3,251,610,264

Liabilities:

Payables:

Capital

shares

redeemed

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

2,987,370

Management

fees

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

1,910,658

Distribution

fees

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

663,413

Transfer

agent

fees

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

391,448

IRS

closing

agreement

fees

for

European

Union

tax

reclaims

(Note

1e)

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

9,909,338

Unrealized

depreciation

on

OTC

forward

exchange

contracts

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

3,985,742

Accrued

expenses

and

other

liabilities

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

629,984

Total

liabilities

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

20,477,953

Net

assets,

at

value

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

$3,231,132,311

Net

assets

consist

of:

Paid-in

capital

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

$2,675,517,589

Total

distributable

earnings

(losses)

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

555,614,722

Net

assets,

at

value

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

$3,231,132,311

Templeton

Funds

Financial

Statements

Statement

of

Assets

and

Liabilities

(continued)

August

31,

2021

franklintempleton.com

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

Annual

Report

21

Templeton

World

Fund

Class

A:

Net

assets,

at

value

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

$3,060,714,075

Shares

outstanding

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

197,224,783

Net

asset

value

per

share

a

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

$15.52

Maximum

offering

price

per

share

(net

asset

value

per

share

÷

94.50%)

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

$16.42

Class

C:

Net

assets,

at

value

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

$12,584,593

Shares

outstanding

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

852,712

Net

asset

value

and

maximum

offering

price

per

share

a

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

$14.76

Class

R6:

Net

assets,

at

value

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

$42,010,494

Shares

outstanding

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

2,705,825

Net

asset

value

and

maximum

offering

price

per

share

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

$15.53

Advisor

Class:

Net

assets,

at

value

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

$115,823,149

Shares

outstanding

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

7,455,406

Net

asset

value

and

maximum

offering

price

per

share

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

$15.54

a

Redemption

price

is

equal

to

net

asset

value

less

contingent

deferred

sales

charges,

if

applicable.

Templeton

Funds

Financial

Statements

Statement

of

Operations

for

the

year

ended

August

31,

2021

franklintempleton.com

Annual

Report

The

accompanying

notes

are

an

integral

part

of

these

financial

statements.

22

Templeton

World

Fund

Investment

income:

Dividends:

(net

of

foreign

taxes

of

$4,190,231)

Unaffiliated

issuers

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

$50,313,105

Interest:

Unaffiliated

issuers

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

124,921

Income

from

securities

loaned:

Unaffiliated

entities

(net

of

fees

and

rebates)

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

195,478

Non-controlled

affiliates

(Note

3

f

)

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

105

Other

income

(Note

1

e

)

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

37,050,185

Less:

IRS

closing

agreement

fees

for

European

Union

tax

reclaims

(Note

1

e

)

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

(9,909,338)

Total

investment

income

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

77,774,456

Expenses:

Management

fees

(Note

3

a

)

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

22,056,834

Distribution

fees:

(Note

3c

)

    Class

A

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

7,116,443

    Class

C

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

173,050

Transfer

agent

fees:

(Note

3e

)

    Class

A

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

2,042,703

    Class

C

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

11,764

    Class

R6

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

20,125

    Advisor

Class

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

73,656

Custodian

fees

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

170,260

Reports

to

shareholders

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

205,760

Registration

and

filing

fees

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

114,319

Professional

fees

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

200,011

Trustees'

fees

and

expenses

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

213,051

Other

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

163,739

Total

expenses

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

32,561,715

Expenses

waived/paid

by

affiliates

(Note

3

f

and

3

g

)

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

(9,141)

Net

expenses

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

32,552,574

Net

investment

income

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

45,221,882

Realized

and

unrealized

gains

(losses):

Net

realized

gain

(loss)

from:

Investments:

Unaffiliated

issuers

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

230,559,721

Foreign

currency

transactions

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

(429,339)

Forward

exchange

contracts

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

(21,749,809)

Net

realized

gain

(loss)

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

208,380,573

Net

change

in

unrealized

appreciation

(depreciation)

on:

Investments:

Unaffiliated

issuers

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

332,094,871

Translation

of

other

assets

and

liabilities

denominated

in

foreign

currencies

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

(2,142,123)

Forward

exchange

contracts

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

42,085,406

Net

change

in

unrealized

appreciation

(depreciation)

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

372,038,154

Net

realized

and

unrealized

gain

(loss)

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

580,418,727

Net

increase

(decrease)

in

net

assets

resulting

from

operations

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

$625,640,609

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

23

Templeton

World

Fund

Year

Ended

August

31,

2021

Year

Ended

August

31,

2020

Increase

(decrease)

in

net

assets:

Operations:

Net

investment

income

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

$45,221,882

$40,966,855

Net

realized

gain

(loss)

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

208,380,573

(429,725,653)

Net

change

in

unrealized

appreciation

(depreciation)

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

372,038,154

534,580,103

Net

increase

(decrease)

in

net

assets

resulting

from

operations

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

625,640,609

145,821,305

Distributions

to

shareholders:

Class

A

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

—

(154,280,365)

Class

C

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

—

(1,156,202)

Class

R6

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

—

(2,209,999)

Advisor

Class

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

—

(5,819,233)

Total

distributions

to

shareholders

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

—

(163,465,799)

Capital

share

transactions:

(Note

2

)

Class

A

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

(364,041,894)

(302,268,890)

Class

C

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

(9,478,984)

(9,949,131)

Class

R6

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

(4,859,427)

(4,480,810)

Advisor

Class

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

(5,032,934)

(12,145,110)

Total

capital

share

transactions

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

(383,413,239)

(328,843,941)

Net

increase

(decrease)

in

net

assets

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

242,227,370

(346,488,435)

Net

assets:

Beginning

of

year

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

2,988,904,941

3,335,393,376

End

of

year

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

$3,231,132,311

$2,988,904,941

Templeton

Funds

Notes

to

Financial

Statements

Templeton

World

Fund

24

franklintempleton.com

Annual

Report

1.

Organization

and

Significant

Accounting

Policies

Templeton

Funds (Trust)

is

registered

under

the

Investment

Company

Act

of

1940

(1940

Act)

as

an

open-end

management

investment

company,

consisting

of three separate

funds

and

applies

the

specialized

accounting

and

reporting

guidance

in

U.S.

Generally

Accepted

Accounting

Principles

(U.S.

GAAP).

Templeton

World

Fund

(Fund)

is

included

in

this

report.

The

Fund

offers four

classes

of

shares:

Class

A,

Class

C,

Class

R6

and

Advisor

Class. Effective

August

2,

2021,

Class

C

shares

automatically

convert

to

Class

A

shares

after

they

have

been

held

for

8

years.

Prior

to

August

2,

2021,

Class

C

shares

converted

to

Class

A

shares

after

a

10-year

holding

period.

Each

class

of

shares

may

differ

by

its

initial

sales

load,

contingent

deferred

sales

charges,

voting

rights

on

matters

affecting

a

single

class,

its

exchange

privilege

and

fees

due

to

differing

arrangements

for

distribution

and

transfer

agent

fees. 

The

following

summarizes

the Fund's

significant

accounting

policies.

a.

Financial

Instrument

Valuation 

The

Fund's

investments

in

financial

instruments

are

carried

at

fair

value

daily.

Fair

value

is

the

price

that

would

be

received

to

sell

an

asset

or

paid

to

transfer

a

liability

in

an

orderly

transaction

between

market

participants

on

the

measurement

date.

The

Fund

calculates

the

net

asset

value

(NAV)

per

share

each business

day as

of

4

p.m.

Eastern

time

or

the

regularly

scheduled

close

of

the

New

York

Stock

Exchange

(NYSE),

whichever

is

earlier.

Under

compliance

policies

and

procedures

approved

by

the

Trust's

Board

of

Trustees

(the

Board),

the Fund's

administrator

has

responsibility

for

oversight

of

valuation,

including

leading

the

cross-functional

Valuation

Committee

(VC).

The

Fund

may

utilize

independent

pricing

services,

quotations

from

securities

and

financial

instrument

dealers,

and

other

market

sources

to

determine

fair

value. 

Equity

securities

listed

on

an

exchange

or

on

the

NASDAQ

National

Market

System

are

valued

at

the

last

quoted

sale

price

or

the

official

closing

price of

the

day,

respectively.

Foreign

equity

securities

are

valued

as

of

the

close

of

trading

on

the

foreign

stock

exchange

on

which

the

security

is

primarily

traded,

or

as

of

4

p.m.

Eastern

time.

The

value

is

then

converted

into

its

U.S.

dollar

equivalent

at

the

foreign

exchange

rate

in

effect

at

4

p.m.

Eastern

time

on

the

day

that

the

value

of

the

security

is

determined.

Over-the-counter

(OTC)

securities

are

valued

within

the

range

of

the

most

recent

quoted

bid

and

ask

prices.

Securities

that

trade

in

multiple

markets

or

on

multiple

exchanges

are

valued

according

to

the

broadest

and

most

representative

market.

Certain

equity

securities

are

valued

based

upon

fundamental

characteristics

or

relationships

to

similar

securities. 

Investments

in

open-end

mutual

funds

are

valued

at

the

closing

NAV.

Investments

in

time

deposits

are

valued

at

cost,

which

approximates

fair

value.

Certain

derivative

financial

instruments

trade

in

the

OTC

market.

The

Fund's

pricing

services

use

various

techniques

including

industry

standard

option

pricing

models

and

proprietary

discounted

cash

flow

models

to

determine

the

fair

value

of

those

instruments.

The

Fund's

net

benefit

or

obligation

under

the

derivative

contract,

as

measured

by

the

fair

value

of

the

contract,

is

included

in

net

assets.

The

Fund

has

procedures

to

determine

the

fair

value

of

financial

instruments

for

which

market

prices

are

not

reliable

or

readily

available.

Under

these

procedures,

the Fund

primarily

employs

a

market-based

approach

which

may

use

related

or

comparable

assets

or

liabilities,

recent

transactions,

market

multiples,

book

values,

and

other

relevant

information

for

the

investment

to

determine

the

fair

value

of

the

investment.

An

income-based

valuation

approach

may

also

be

used

in

which

the

anticipated

future

cash

flows

of

the

investment

are

discounted

to

calculate

fair

value.

Discounts

may

also

be

applied

due

to

the

nature

or

duration

of

any

restrictions

on

the

disposition

of

the

investments.

Due

to

the

inherent

uncertainty

of

valuations

of

such

investments,

the

fair

values

may

differ

significantly

from

the

values

that

would

have

been

used

had

an

active

market

existed.

Trading

in

securities

on

foreign

securities

stock

exchanges

and

OTC

markets

may

be

completed

before

4

p.m.

Eastern

time.

In

addition,

trading

in

certain

foreign

markets

may

not

take

place

on

every

Fund's

business

day.

Events

can

occur

between

the

time

at

which

trading

in

a

foreign

security

is

completed

and

4

p.m.

Eastern

time

that

might

call

into

question

the

reliability

of

the

value

of

a

portfolio

security

held

by

the

Fund.

As

a

result,

differences

may

arise

between

the

value

of

the

Fund's

portfolio

securities

as

determined

at

the

foreign

market

close

and

the

latest

indications

of

value

at

4

p.m.

Eastern

time.

In

order

to

minimize

the

potential

for

these

differences,

an

independent

pricing

service

may

be

used

to

adjust

the

value

of

the

Fund's

portfolio

securities

to

the

latest

indications

of

fair

value

at

4

p.m.

Eastern

time.

Templeton

Funds

Notes

to

Financial

Statements

25

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

At

August

31,

2021,

certain

securities

may

have

been

fair

valued

using

these

procedures,

in

which

case

the

securities

were

categorized

as

Level

2

inputs

within

the

fair

value

hierarchy

(referred

to

as

“market

level

fair

value”).

See

the

Fair

Value

Measurements

note

for

more

information.

When

the

last

day

of

the

reporting

period

is

a

non-business

day,

certain

foreign

markets

may

be

open

on

those

days

that

the

Fund's

NAV

is

not

calculated,

which

could

result

in

differences

between

the

value

of

the

Fund's

portfolio

securities

on

the

last

business

day

and

the

last

calendar

day

of

the

reporting

period.

Any

security

valuation

changes

due

to

an

open

foreign

market

are

adjusted

and

reflected

by

the

Fund

for

financial

reporting

purposes.

b.

Foreign

Currency

Translation 

Portfolio

securities

and

other

assets

and

liabilities

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

based

on

the

exchange

rate

of

such

currencies

against

U.S.

dollars

on

the

date

of

valuation.

The

Fund

may

enter

into

foreign

currency

exchange

contracts

to

facilitate

transactions

denominated

in

a

foreign

currency.

Purchases

and

sales

of

securities,

income

and

expense

items

denominated

in

foreign

currencies

are

translated

into

U.S.

dollars

at

the

exchange

rate

in

effect

on

the

transaction

date.

Portfolio

securities

and

assets

and

liabilities

denominated

in

foreign

currencies

contain

risks

that

those

currencies

will

decline

in

value

relative

to

the

U.S.

dollar.

Occasionally,

events

may

impact

the

availability

or

reliability

of

foreign

exchange

rates

used

to

convert

the

U.S.

dollar

equivalent

value.

If

such

an

event

occurs,

the

foreign

exchange

rate

will

be

valued

at

fair

value

using

procedures

established

and

approved

by

the

Board.

The

Fund

does

not

separately

report

the

effect

of

changes

in

foreign

exchange

rates

from

changes

in

market

prices

on

securities

held.

Such

changes

are

included

in

net

realized

and

unrealized

gain

or

loss

from

investments

in

the

Statement of

Operations.

Realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

the

trade

and

settlement

dates

on

securities

transactions

and

the

difference

between

the

recorded

amounts

of

dividends,

interest,

and

foreign

withholding

taxes

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

foreign

exchange

gains

and

losses

arise

from

changes

in

foreign

exchange

rates

on

foreign

denominated

assets

and

liabilities

other

than

investments

in

securities

held

at

the

end

of

the

reporting

period.

c.

Derivative

Financial

Instruments

The

Fund invested

in

derivative

financial

instruments

in

order

to

manage

risk

or

gain

exposure

to

various

other

investments

or

markets.

Derivatives

are

financial

contracts

based

on

an

underlying

or

notional

amount,

require

no

initial

investment

or

an

initial

net

investment

that

is

smaller

than

would

normally

be

required

to

have

a

similar

response

to

changes

in

market

factors,

and

require

or

permit

net

settlement.

Derivatives

contain

various

risks

including

the

potential

inability

of

the

counterparty

to

fulfill

their

obligations

under

the

terms

of

the

contract,

the

potential

for

an

illiquid

secondary

market,

and/or

the

potential

for

market

movements

which

expose

the

Fund

to

gains

or

losses

in

excess

of

the

amounts

shown

in

the

Statement

of

Assets

and

Liabilities.

Realized

gain

and

loss

and

unrealized

appreciation

and

depreciation

on

these

contracts

for

the

period

are

included

in

the

Statement

of

Operations.

Derivative

counterparty

credit

risk

is

managed

through

a

formal

evaluation

of

the

creditworthiness

of

all

potential

counterparties.

The

Fund

attempts

to

reduce its

exposure

to

counterparty

credit

risk

on

OTC

derivatives,

whenever

possible,

by

entering

into

International

Swaps

and

Derivatives

Association

(ISDA)

master

agreements

with

certain

counterparties.

These

agreements

contain

various

provisions,

including

but

not

limited

to

collateral

requirements,

events

of

default,

or

early

termination.

Termination

events

applicable

to

the

counterparty

include

certain

deteriorations

in

the

credit

quality

of

the

counterparty.

Termination

events

applicable

to

the Fund

include

failure

of

the

Fund

to

maintain

certain

net

asset

levels

and/or

limit

the

decline

in

net

assets

over

various

periods

of

time.

In

the

event

of

default

or

early

termination,

the

ISDA

master

agreement

gives

the

non-defaulting

party

the

right

to

net

and

close-out

all

transactions

traded,

whether

or

not

arising

under

the

ISDA

agreement,

to

one

net

amount

payable

by

one

counterparty

to

the

other.

However,

absent

an

event

of

default

or

early

termination,

OTC

derivative

assets

and

liabilities

are

presented

gross

and

not

offset

in

the

Statement

of

Assets

and

Liabilities.

Early

termination

by

the

1.

Organization

and

Significant

Accounting

Policies

(continued)

a.

Financial

Instrument

Valuation 

(continued)

Templeton

Funds

Notes

to

Financial

Statements

26

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

counterparty

may

result

in

an

immediate

payment

by

the

Fund

of

any

net

liability

owed

to

that

counterparty

under

the

ISDA

agreement.

Collateral

requirements

differ

by

type

of

derivative.

Collateral

terms

are

contract

specific

for

OTC

derivatives.

For

OTC

derivatives

traded

under

an

ISDA

master

agreement,

posting

of

collateral

is

required

by

either

the

Fund

or

the

applicable

counterparty

if

the

total

net

exposure

of

all

OTC

derivatives

with

the

applicable

counterparty

exceeds

the

minimum

transfer

amount,

which

typically

ranges

from

$100,000

to

$250,000,

and

can

vary

depending

on

the

counterparty

and

the

type

of

the

agreement.

Generally,

collateral

is

determined

at

the

close

of

Fund

business

each

day

and

any

additional

collateral

required

due

to

changes

in

derivative

values

may

be

delivered

by

the

Fund

or

the

counterparty

the

next

business

day,

or

within

a

few

business

days.

Collateral

pledged

and/or

received

by

the

Fund,

if

any,

is

held

in

segregated

accounts

with

the

Fund’s

custodian/counterparty

broker

and

can

be

in

the

form

of

cash

and/or

securities.

Unrestricted

cash

may

be

invested

according

to

the

Fund's

investment

objectives.

To

the

extent

that

the

amounts

due

to

the

Fund

from

its

counterparties

are

not

subject

to

collateralization

or

are

not

fully

collateralized,

the

Fund

bears

the

risk

of

loss

from

counterparty

non-performance. 

The

Fund

entered

into

OTC

forward

exchange

contracts

primarily

to

manage

and/or

gain

exposure

to

certain

foreign

currencies.

A

forward

exchange

contract

is

an

agreement

between

the

Fund

and

a

counterparty

to

buy

or

sell

a

foreign

currency

at

a

specific

exchange

rate

on

a

future

date.

See

Note

8

regarding

other

derivative

information.

d.

Securities

Lending

The

Fund

participates

in

an

agency

based

securities

lending

program

to

earn

additional

income.

The

Fund

receives

collateral

in

the

form

of

cash

and/or

U.S.

Government

and

Agency

securities

against

the

loaned

securities

in

an

amount

equal

to

at

least

102%

of

the

fair

value

of

the

loaned

securities.

Collateral

is

maintained

over

the

life

of

the

loan

in

an

amount

not

less

than

100%

of

the

fair

value

of

loaned

securities,

as

determined

at

the

close

of

Fund

business

each

day;

any

additional

collateral

required

due

to

changes

in

security

values

is

delivered

to

the

Fund

on

the

next

business

day.

Any

cash

collateral

received

is

deposited

into

a

joint

cash

account

with

other

funds

and

is

used

to

invest

in

a

money

market

fund

managed

by

Franklin

Advisers,

Inc.,

an

affiliate

of

the Fund.

The

Fund

may

receive

income

from

the

investment

of

cash

collateral,

in

addition

to

lending

fees

and

rebates

paid

by

the

borrower.

Income

from

securities

loaned,

net

of

fees

paid

to

the

securities

lending

agent

and/

or

third-party

vendor,

is

reported

separately

in

the

Statement

of

Operations.

The

Fund

bears

the

market

risk

with

respect

to any

cash collateral

investment,

securities

loaned,

and

the

risk

that

the

agent

may

default

on

its

obligations

to

the

Fund.

If

the

borrower

defaults

on

its

obligation

to

return

the

securities

loaned,

the

Fund

has

the

right

to

repurchase

the

securities

in

the

open

market

using

the

collateral

received.

The

securities

lending

agent

has

agreed

to

indemnify

the

Fund

in

the

event

of

default

by

a

third

party

borrower.

At

August

31,

2021,

the Fund

had

no

securities

on

loan.

e.

Income

and

Deferred

Taxes

It

is the Fund's

policy

to

qualify

as

a

regulated

investment

company

under

the

Internal

Revenue

Code. The Fund

intends

to

distribute

to

shareholders

substantially

all

of

its

taxable

income

and

net

realized

gains

to

relieve

it

from

federal

income

and excise

taxes.

As

a

result,

no

provision

for

U.S.

federal

income

taxes

is

required.

The

Fund

may

be

subject

to

foreign

taxation

related

to

income

received,

capital

gains

on

the

sale

of

securities

and

certain

foreign

currency

transactions

in

the

foreign

jurisdictions

in

which it

invests.

Foreign

taxes,

if

any,

are

recorded

based

on

the

tax

regulations

and

rates

that

exist

in

the

foreign

markets

in

which

the

Fund

invests.

When

a

capital

gain

tax

is

determined

to

apply,

the

Fund

records

an

estimated

deferred

tax

liability

in

an

amount

that

would

be

payable

if

the

securities

were

disposed

of

on

the

valuation

date.

As

a

result

of

several

court

cases,

in

certain

countries

across

the

European

Union, the

Fund

filed

additional

tax

reclaims

for

previously

withheld

taxes

on

dividends

earned

in

those

countries

(EU

reclaims). Income

recognized,

if

any,

for

EU

reclaims

is

reflected

as

other

income

in

the

Statement

of

Operations

and

any

related

receivable,

if

any,

is

reflected

as

European

Union

tax

reclaims

in

the

Statement

of

Assets

and

Liabilities.

When

uncertainty

exists

as

to

the

ultimate

resolution

of

these

proceedings,

the

likelihood

of

receipt

of

these

EU

reclaims,

and

the

potential

timing

of

payment,

no

amounts

are

reflected

in

the

financial

statements.

For

U.S.

income

tax

purposes,

EU

reclaims

received

by

the

Fund,

if

1.

Organization

and

Significant

Accounting

Policies

(continued)

c.

Derivative

Financial

Instruments

(continued)

Templeton

Funds

Notes

to

Financial

Statements

27

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

any,

reduce

the

amount

of

foreign

taxes

Fund

shareholders

can

use

as

tax

deductions

or credits

on

their

income

tax

returns.

In

the

event

that

EU

reclaims

received

by

the Fund

during a

fiscal

year

exceed

foreign

withholding

taxes

paid

by

the

Fund,

and

the

Fund previously

passed

through to

its

shareholders

foreign

taxes

incurred

by

the

Fund

to

be

used

as

a

credit

or

deduction

on

a

shareholder’s

income

tax

return,

the Fund

will enter

into

a

closing

agreement

with

the

Internal

Revenue

Service

(IRS)

in

order

to

pay

the

associated

tax

liability

on

behalf

of

the Fund's

shareholders.

During

the

fiscal

year

ended

August

31,

2021,

the

Fund

received

EU

reclaims

in

excess

of

the

foreign

taxes

paid

during

the

year.

The

Fund

determined

to

enter

into

a

closing

agreement

with

the

IRS

and

recorded

the

estimated

fees

as

a

reduction

to

income,

as

reflected

in

the

Statement

of

Operations.

The

Fund

may

recognize

an

income

tax

liability

related

to

its

uncertain

tax

positions

under

U.S.

GAAP

when

the

uncertain

tax

position

has

a

less

than

50%

probability

that

it

will

be

sustained

upon

examination

by

the

tax

authorities

based

on

its

technical

merits.

As

of

August

31,

2021,

the

Fund

has

determined

that

no

tax

liability

is

required

in

its

financial

statements

related

to

uncertain

tax

positions

for

any

open

tax

years

(or

expected

to

be

taken

in

future

tax

years).

Open

tax

years

are

those

that

remain

subject

to

examination

and

are

based

on

the

statute

of

limitations

in

each

jurisdiction

in

which

the

Fund

invests. 

f.

Security

Transactions,

Investment

Income,

Expenses

and

Distributions

Security

transactions

are

accounted

for

on

trade

date.

Realized

gains

and

losses

on

security

transactions

are

determined

on

a

specific

identification

basis.

Interest

income

and

estimated

expenses

are

accrued

daily.

Dividend

income

is

recorded

on

the

ex-dividend

date

except

for

certain

dividends

from

securities

where

the

dividend

rate

is

not

available.

In

such

cases,

the

dividend

is

recorded

as

soon

as

the

information

is

received

by

the

Fund.

Distributions

to shareholders

are

recorded

on

the

ex-dividend

date.

Distributable

earnings

are

determined

according

to

income

tax

regulations

(tax

basis)

and

may

differ

from

earnings

recorded

in

accordance

with

U.S.

GAAP.

These

differences

may

be

permanent

or

temporary.

Permanent

differences

are

reclassified

among

capital

accounts

to

reflect

their

tax

character.

These

reclassifications

have

no

impact

on

net

assets

or

the

results

of

operations.

Temporary

differences

are

not

reclassified,

as

they

may

reverse

in

subsequent

periods.

Common

expenses

incurred

by

the

Trust

are

allocated

among

the

Funds

based

on

the

ratio

of

net

assets

of

each

Fund

to

the

combined

net

assets

of

the

Trust

or

based

on

the

ratio

of

number

of

shareholders

of

each

Fund

to

the

combined

number

of

shareholders

of

the

Trust.

Certain

Fund

specific

expenses

are

charged

directly

to

the

Fund

that

incurred

the

expense.

Realized

and

unrealized

gains

and

losses

and

net

investment

income,

excluding

class

specific

expenses,

are

allocated

daily

to

each

class

of

shares

based

upon

the

relative

proportion

of

net

assets

of

each

class.

Differences

in

per

share

distributions

by

class

are

generally

due

to

differences

in

class

specific

expenses.

g.

Accounting

Estimates

The

preparation

of

financial

statements

in

accordance

with

U.S.

GAAP

requires

management

to

make

estimates

and

assumptions

that

affect

the

reported

amounts

of

assets

and

liabilities

at

the

date

of

the

financial

statements

and

the

amounts

of

income

and

expenses

during

the

reporting

period.

Actual

results

could

differ

from

those

estimates.

h.

Guarantees

and

Indemnifications

Under

the

Trust's

organizational

documents,

its

officers

and

trustees

are

indemnified

by

the

Trust

against

certain

liabilities

arising

out

of

the

performance

of

their

duties

to

the

Trust.

Additionally,

in

the

normal

course

of

business,

the

Trust,

on

behalf

of

the

Fund,

enters

into

contracts

with

service

providers

that

contain

general

indemnification

clauses.

The

Trust's

maximum

exposure

under

these

arrangements

is

unknown

as

this

would

involve

future

claims

that

may

be

made

against

the

Trust

that

have

not

yet

occurred.

Currently,

the

Trust

expects

the

risk

of

loss

to

be

remote.

1.

Organization

and

Significant

Accounting

Policies

(continued)

e.

Income

and

Deferred

Taxes

(continued)

Templeton

Funds

Notes

to

Financial

Statements

28

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

2.

Shares

of

Beneficial

Interest

At

August

31,

2021,

there

were

an

unlimited

number

of

shares

authorized

(without

par

value).

Transactions

in

the

Fund’s

shares

were

as

follows:

3.

Transactions

with

Affiliates

Franklin

Resources,

Inc.

is

the

holding

company

for

various

subsidiaries

that

together

are

referred

to

as

Franklin

Templeton.

Certain

officers

and

trustees

of

the

Trust

are

also

officers

and/or

directors

of

the

following

subsidiaries:

Year

Ended

August

31,

2021

Year

Ended

August

31,

2020

Shares

Amount

Shares

Amount

Class

A

Shares:

Shares

sold

a

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

9,217,073

$133,230,977

10,921,897

$138,692,097

Shares

issued

in

reinvestment

of

distributions

..........

—

—

10,423,866

142,494,243

Shares

redeemed

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

(34,710,249)

(497,272,871)

(45,423,196)

(583,455,230)

Net

increase

(decrease)

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

(25,493,176)

$(364,041,894)

(24,077,433)

$(302,268,890)

Class

C

Shares:

Shares

sold

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

111,842

$1,540,029

154,322

$1,871,972

Shares

issued

in

reinvestment

of

distributions

..........

—

—

83,052

1,093,794

Shares

redeemed

a

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

(788,496)

(11,019,013)

(1,060,707)

(12,914,897)

Net

increase

(decrease)

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

(676,654)

$(9,478,984)

(823,333)

$(9,949,131)

Class

R6

Shares:

Shares

sold

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

519,191

$7,465,031

595,082

$7,580,152

Shares

issued

in

reinvestment

of

distributions

..........

—

—

89,223

1,214,330

Shares

redeemed

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

(878,650)

(12,324,458)

(1,044,860)

(13,275,292)

Net

increase

(decrease)

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

(359,459)

$(4,859,427)

(360,555)

$(4,480,810)

Advisor

Class

Shares:

Shares

sold

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

1,575,746

$22,918,244

2,063,507

$26,613,673

Shares

issued

in

reinvestment

of

distributions

..........

—

—

380,651

5,188,265

Shares

redeemed

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

(1,959,012)

(27,951,178)

(3,467,124)

(43,947,048)

Net

increase

(decrease)

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

(383,266)

$(5,032,934)

(1,022,966)

$(12,145,110)

a

May

include

a

portion

of

Class

C

shares

that

were

automatically

converted

to

Class

A.

Subsidiary

Affiliation

Templeton

Global

Advisors

Limited

(Global

Advisors)

Investment

manager

Franklin

Templeton

Services,

LLC

(FT

Services)

Administrative

manager

Franklin

Distributors,

LLC

(Distributors)

(formerly

Franklin

Templeton

Distributors,

Inc.)

Principal

underwriter

Franklin

Templeton

Investor

Services,

LLC

(Investor

Services)

Transfer

agent

Templeton

Funds

Notes

to

Financial

Statements

29

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

a.

Management

Fees

The

Fund

pays

an

investment

management

fee

to

Global

Advisors

based

on

the

average

daily

net

assets

of

the

Fund

as

follows:

For

the

year

ended

August

31,

2021,

the

gross

effective

investment

management

fee

rate

was

0.694%

of

the

Fund’s

average

daily

net

assets. 

b.

Administrative

Fees

Under

an

agreement

with

Global

Advisors,

FT

Services

provides

administrative

services

to

the

Fund.

The

fee

is

paid

by

Global

Advisors

based

on

the

Fund’s

average

daily

net

assets,

and

is

not

an

additional

expense

of

the

Fund.

c.

Distribution

Fees

The

Board

has

adopted

distribution

plans

for

each

share

class,

with

the

exception

of

Class

R6

and

Advisor

Class

shares,

pursuant

to

Rule

12b-1

under

the

1940

Act.

Under

the

Fund’s

Class A reimbursement

distribution

plan,

the

Fund

reimburses

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of

the

Fund's

shares

up

to

the

maximum

annual

plan

rate.

Under

the

Class

A

reimbursement

distribution

plan,

costs

exceeding

the

maximum

for

the

current

plan

year

cannot

be

reimbursed

in

subsequent

periods.

In

addition,

under

the

Fund’s

Class C

compensation

distribution

plan,

the

Fund

pays

Distributors

for

costs

incurred

in

connection

with

the

servicing,

sale

and

distribution

of

the

Fund's

shares

up

to

the

maximum

annual

plan

rate.

The

plan

year,

for

purposes

of

monitoring

compliance

with

the

maximum

annual

plan

rates,

is

February

1

through

January

31.

The

maximum

annual

plan

rates,

based

on

the

average

daily

net

assets,

for

each

class,

are

as

follows:

d.

Sales

Charges/Underwriting

Agreements

Front-end

sales

charges

and

contingent

deferred

sales

charges

(CDSC)

do

not

represent

expenses

of

the

Fund.

These

charges

are

deducted

from

the

proceeds

of

sales

of

Fund

shares

prior

to

investment

or

from

redemption

proceeds

prior

to

remittance,

as

applicable.

Distributors

has

advised

the

Fund

of

the

following

commission

transactions

related

to

the

sales

and

redemptions

of

the

Fund's

shares

for

the

year:

Annualized

Fee

Rate

Net

Assets

0.705%

Up

to

and

including

$1

billion

0.690%

Over

$1

billion,

up

to

and

including

$5

billion

0.675%

Over

$5

billion,

up

to

and

including

$10

billion

0.655%

Over

$10

billion,

up

to

and

including

$15

billion

0.635%

Over

$15

billion,

up

to

and

including

$20

billion

0.615%

In

excess

of

$20

billion

Class

A

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

0.25%

Class

C

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

1.00%

Sales

charges

retained

net

of

commissions

paid

to

unaffiliated

brokers/dealers

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

$40,527

CDSC

retained

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

$1,858

3.

Transactions

with

Affiliates

(continued)

Templeton

Funds

Notes

to

Financial

Statements

30

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

e.

Transfer

Agent

Fees

Each

class

of

shares pays

transfer

agent

fees

to

Investor

Services

for

its

performance

of

shareholder

servicing

obligations.

The

fees

are

based

on

an

annualized

asset

based

fee

of

0.02%

plus

a

transaction

based

fee.

In

addition,

each

class reimburses

Investor

Services

for

out

of

pocket

expenses

incurred

and,

except

for

Class

R6,

reimburses

shareholder

servicing

fees

paid

to

third

parties.

These

fees

are

allocated

daily

based

upon

their

relative

proportion

of

such

classes'

aggregate

net

assets.

Class

R6

pays

Investor

Services

transfer

agent

fees

specific

to

that

class.

For

the

year

ended

August

31,

2021,

the

Fund

paid

transfer

agent

fees

of

$2,148,248,

of

which $1,094,093

was

retained

by

Investor

Services.

f.

Investments

in

Affiliated

Management

Investment

Companies

The

Fund

invests

in

one

or

more

affiliated

management

investment

companies.

As

defined

in

the

1940

Act,

an

investment

is

deemed

to

be

a

“Controlled

Affiliate”

of

a

fund

when

a

fund

owns,

either

directly

or

indirectly,

25%

or

more

of

the

affiliated

fund’s

outstanding

shares

or

has

the

power

to

exercise

control

over

management

or

policies

of

such

fund.

The

Fund

does

not

invest

for

purposes

of

exercising

a

controlling

influence

over

the

management

or

policies.

Management

fees

paid

by

the

Fund

are

waived

on

assets

invested

in

the

affiliated

management

investment

companies,

as

noted

in

the

Statement

of

Operations,

in

an

amount

not

to

exceed

the

management

and

administrative

fees

paid

directly

or

indirectly

by

each

affiliate.

During

the

year

ended

August

31,

2021,

the

Fund

held

investments

in

affiliated

management

investment

companies

as

follows:

g.

Waiver

and

Expense

Reimbursements

Investor

Services

has

contractually

agreed

in

advance

to

waive

or

limit

its

fees

so

that

the

Class

R6

transfer

agent

fees

do

not

exceed

0.03%

based

on

the

average

net

assets

of

the

class

until

December

31,

2021.

4.

Income

Taxes

For

tax

purposes,

capital

losses

may

be

carried

over

to

offset

future

capital

gains. 

At

August

31,

2021,

the

capital

loss

carryforwards

were

as

follows:

During

the

year

ended August

31,

2021,

the

Fund

utilized

$225,453,124

of

capital

loss

carryforwards.

    aa

Value

at

Beginning

of

Year

Purchases

Sales

Realized

Gain

(Loss)

Net

Change

in

Unrealized

Appreciation

(Depreciation)

Value

at

End

of

Year

Number

of

Shares

Held

at

End

of

Year

Investment

Income

a      

a  

a  

a  

a  

a  

a  

a  

Templeton

World

Fund

Non-Controlled

Affiliates

Income

from

securities

loaned

Institutional

Fiduciary

Trust

-

Money

Market

Portfolio,

0.01%

.

$—

$139,377,305

$(139,377,305)

$

—

$

—

$—

—

$105

Total

Affiliated

Securities

...

$—

$139,377,305

$(139,377,305)

$—

$—

$—

$105

Capital

loss

carryforwards

not

subject

to

expiration:

Long

term

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

$203,817,446

3.

Transactions

with

Affiliates

(continued)

Templeton

Funds

Notes

to

Financial

Statements

31

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

The

tax

character

of

distributions

paid

during

the

years

ended

August

31,

2021

and

2020,

was

as

follows:

At

August

31,

2021,

the

cost

of

investments,

net

unrealized

appreciation

(depreciation)

and

undistributed

ordinary

income

for

income

tax

purposes

were

as

follows:

Differences

between

income

and/or

capital

gains

as

determined

on

a

book

basis

and

a

tax

basis

are

primarily

due

to

differing

treatments

of

foreign

currency

transactions,

EU

reclaims

and

corporate

actions.

5.

Investment

Transactions

Purchases

and

sales

of

investments

(excluding

short

term

securities)

for

the

year

ended

August

31,

2021,

aggregated

$1,209,668,108

and

$1,457,536,106,

respectively.

6.

Concentration

of

Risk

Investing

in

foreign

securities

may

include

certain

risks

and

considerations

not

typically

associated

with

investing

in

U.S.

securities,

such

as

fluctuating

currency

values

and

changing

local,

regional

and

global

economic,

political

and

social

conditions,

which

may

result

in

greater

market

volatility.

Political

and

financial

uncertainty

in

many

foreign

regions

may

increase

market

volatility

and

the

economic

risk

of

investing

in

foreign

securities.

In

addition,

certain

foreign

securities

may

not

be

as

liquid

as

U.S.

securities.

7.

Novel

Coronavirus

Pandemic 

The

global

outbreak

of

the

novel

coronavirus

disease,

known

as

COVID-19, has

caused

adverse

effects

on

many

companies,

sectors,

nations,

regions

and

the

markets

in

general, and

may

continue for

an unpredictable duration.

The

effects

of

this

pandemic

may

materially

impact

the

value

and

performance

of

the Fund, its ability

to

buy

and

sell

fund

investments

at

appropriate

valuations

and its ability

to

achieve its investment

objectives.

2021

2020

Distributions

paid

from:

Ordinary

income

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

—

$132,056,008

Long

term

capital

gain

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

—

31,409,791

—

$163,465,799

Cost

of

investments

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

$2,497,699,312

Unrealized

appreciation

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

$769,155,461

Unrealized

depreciation

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

(51,740,554)

Net

unrealized

appreciation

(depreciation)

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

$717,414,907

Distributable

earnings:

Undistributed

ordinary

income

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

$25,853,626

4.

Income

Taxes

(continued)

Templeton

Funds

Notes

to

Financial

Statements

32

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

8.

Other

Derivative

Information

At

August

31,

2021,

investments

in

derivative

contracts

are

reflected

in

the

Statement of

Assets

and

Liabilities

as

follows:

For

the

year

ended

August

31,

2021,

the

effect

of

derivative

contracts

in

the

Statement

of

Operations

was

as

follows:

For

the

year

ended

August

31,

2021,

the

average

month

end

contract

value

of

forward

exchange

contracts

was

$1,784,504,004.

See

Note

1(c) regarding

derivative

financial

instruments. 

9.

Credit

Facility

The

Fund,

together

with

other

U.S.

registered

and

foreign

investment

funds

(collectively,

Borrowers),

managed

by

Franklin

Templeton,

are

borrowers

in

a

joint

syndicated

senior

unsecured

credit

facility

totaling

$2.675

billion

(Global

Credit

Facility)

which

matures

on

February

4,

2022.

This

Global

Credit

Facility

provides

a

source

of

funds

to

the

Borrowers

for

temporary

and

emergency

purposes,

including

the

ability

to

meet

future

unanticipated

or

unusually

large

redemption

requests.

Under

the

terms

of

the

Global

Credit

Facility,

the

Fund

shall,

in

addition

to

interest

charged

on

any

borrowings

made

by

the

Fund

and

other

costs

incurred

by

the

Fund,

pay

its

share

of

fees

and

expenses

incurred

in

connection

with

the

implementation

and

maintenance

of

the

Global

Credit

Facility,

based

upon

its

relative

share

of

the

aggregate

net

assets

of

all

of

the

Borrowers,

including

an

annual

commitment

fee

of

0.15%

based

upon

the

unused

portion

of

the

Global

Credit

Facility.

These

fees

are

reflected

in

other

expenses

in

the

Statement

of

Operations.

During

the

year

ended

August

31,

2021,

the Fund

did

not

use

the

Global

Credit

Facility.

Asset

Derivatives

Liability

Derivatives

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Statement

of

Assets

and

Liabilities

Location

Fair

Value

Statement

of

Assets

and

Liabilities

Location

Fair

Value

Templeton

World

Fund

Foreign

exchange

contracts

..

Unrealized

appreciation

on

OTC

forward

exchange

contracts

$

2,753,252

Unrealized

depreciation

on

OTC

forward

exchange

contracts

$

3,985,742

Total

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

$2,753,252

$3,985,742

Derivative

Contracts

Not

Accounted

for

as

Hedging

Instruments

Statement

of

Operations

Location

Net

Realized

Gain

(Loss)

for

the

Year

Statement

of

Operations

Location

Net

Change

in

Unrealized

Appreciation

(Depreciation)

for

the

Year

Templeton

World

Fund

Net

realized

gain

(loss)

from:

Net

change

in

unrealized

  appreciation

(depreciation)

on:

Foreign

exchange

contracts

.....

Forward

exchange

contracts

$(21,749,809)

Forward

exchange

contracts

$42,085,406

Total

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

$(21,749,809)

$42,085,406

Templeton

Funds

Notes

to

Financial

Statements

33

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

10.

Fair

Value

Measurements

The

Fund

follows

a

fair

value

hierarchy

that

distinguishes

between

market

data

obtained

from

independent

sources

(observable

inputs)

and

the Fund's

own

market

assumptions

(unobservable

inputs).

These

inputs

are

used

in

determining

the

value

of

the

Fund's financial

instruments

and

are

summarized

in

the

following

fair

value

hierarchy:

Level

1

–

quoted

prices

in

active

markets

for

identical

financial

instruments

Level

2

–

other

significant

observable

inputs

(including

quoted

prices

for

similar

financial

instruments,

interest

rates,

prepayment

speed,

credit

risk,

etc.)

Level

3

–

significant

unobservable

inputs

(including

the

Fund's

own

assumptions

in

determining

the

fair

value

of

financial

instruments)

The

input

levels

are

not

necessarily

an

indication

of

the

risk

or

liquidity

associated

with

financial

instruments

at

that

level.

A

summary

of

inputs

used

as

of

August

31,

2021,

in

valuing

the

Fund's

assets

and

liabilities

carried

at

fair

value,

is

as

follows:

11.

New

Accounting

Pronouncements

In

March

2020,

the

Financial

Accounting

Standards

Board

(FASB)

issued

Accounting

Standards

Update

(ASU)

No.

2020-04,

Reference

Rate

Reform

(Topic

848)

–

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting.

In

January

2021,

the

FASB

issued

ASU

No.

2021-01,

with

further

amendments

to

Topic

848.

The

amendments

in

the

ASUs

provide

optional

temporary

accounting

recognition

and financial

reporting

relief

from

the

effect

of

certain

types

of

contract

modifications

due

to

the

planned

discontinuation

of

the

London

Interbank

Offered

Rate

(LIBOR)

and

other

interbank-offered

based

reference

Level

1

Level

2

Level

3

Total

Templeton

World

Fund

Assets:

Investments

in

Securities:

Common

Stocks

:

Belgium

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

$

—

$

97,905,318

$

—

$

97,905,318

Brazil

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

35,251,893

—

—

35,251,893

China

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

85,187,175

41,606,715

—

126,793,890

France

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

—

60,202,437

—

60,202,437

Germany

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

—

262,111,875

—

262,111,875

Hong

Kong

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

—

61,031,100

—

61,031,100

Japan

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

—

352,474,654

—

352,474,654

Luxembourg

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

—

31,565,283

—

31,565,283

Macau

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

—

14,967,173

—

14,967,173

Norway

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

—

37,992,124

—

37,992,124

South

Korea

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

—

79,399,930

—

79,399,930

Switzerland

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

—

68,591,917

—

68,591,917

United

Kingdom

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

46,175,597

298,819,509

—

344,995,106

United

States

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

1,433,864,009

—

—

1,433,864,009

Short

Term

Investments

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

—

209,200,000

—

209,200,000

Total

Investments

in

Securities

...........

$1,600,478,674

$1,615,868,035

a

$—

$3,216,346,709

Other

Financial

Instruments:

Forward

exchange

contracts

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

$

—

$

2,753,252

$

—

$

2,753,252

Total

Other

Financial

Instruments

.........

$—

$2,753,252

$—

$2,753,252

Liabilities:

Other

Financial

Instruments:

Forward

exchange

contracts

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

$—

$3,985,742

$—

$3,985,742

a

Includes

foreign

securities

valued

at

$1,406,668,035,

which

were

categorized

as

Level

2

as

a

result

of

the

application

of

market

level

fair

value

procedures.

See

the

Financial

Instrument

Valuation

note

for

more

information.

Templeton

Funds

Notes

to

Financial

Statements

34

franklintempleton.com

Annual

Report

Templeton

World

Fund

(continued)

rates

as

of

the

end

of

2021

and

2023. The

ASUs

are

effective

for

certain

reference

rate-related

contract

modifications

that

occur

during

the

period

March

12,

2020

through

December

31,

2022.

Management

has

reviewed

the

requirements

and

believes

the

adoption

of

these

ASUs

will

not

have

a

material

impact

on

the

financial

statements. 

12.

Subsequent

Events

The

Fund

has

evaluated

subsequent

events

through

the

issuance

of

the financial

statements

and

determined

that

no

events

have

occurred

that

require

disclosure.

Abbreviations

Counterparty

BOFA

Bank

of

America

Corp.

BZWS

Barclays

Bank

plc

CITI

Citibank

NA

GSCO

Goldman

Sachs

Group,

Inc.

HSBK

HSBC

Bank

plc

UBSW

UBS

AG

11.

New

Accounting

Pronouncements

(continued)

Templeton

Funds

Report

of

Independent

Registered

Public

Accounting

Firm

35

franklintempleton.com

Annual

Report

To

the

Board

of

Trustees

of

Templeton

Funds

and

Shareholders

of

Templeton

World

Fund

Opinion

on

the

Financial

Statements

We

have

audited

the

accompanying

statement

of

assets

and

liabilities,

including

the

statement

of

investments,

of

Templeton

World

Fund

(one

of

the

funds

constituting

Templeton

Funds,

referred

to

hereafter

as

the

“Fund”)

as

of

August

31,

2021,

the

related

statement

of

operations

for

the

year

ended

August

31,

2021,

the

statements

of

changes

in

net

assets

for

each

of

the

two

years

in

the

period

ended

August

31,

2021,

including

the

related

notes,

and

the

financial

highlights

for

each

of

the

five

years

in

the

period

ended

August

31,

2021

(collectively

referred

to

as

the

“financial

statements”).

In

our

opinion,

the

financial

statements

present

fairly,

in

all

material

respects,

the

financial

position

of

the

Fund

as

of

August

31,

2021,

the

results

of

its

operations

for

the

year

then

ended,

the

changes

in

its

net

assets

for

each

of

the

two

years

in

the

period

ended

August

31,

2021

and

the

financial

highlights

for

each

of

the

five

years

in

the

period

ended

August

31,

2021

in

conformity

with

accounting

principles

generally

accepted

in

the

United

States

of

America.

Basis

for

Opinion

These

financial

statements

are

the

responsibility

of

the

Fund’s

management.

Our

responsibility

is

to

express

an

opinion

on

the

Fund’s

financial

statements

based

on

our

audits.

We

are

a

public

accounting

firm

registered

with

the

Public

Company

Accounting

Oversight

Board

(United

States)

(PCAOB)

and

are

required

to

be

independent

with

respect

to

the

Fund

in

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

of

the

Securities

and

Exchange

Commission

and

the

PCAOB.

We

conducted

our

audits

of

these

financial

statements

in

accordance

with

the

standards

of

the

PCAOB.

Those

standards

require

that

we

plan

and

perform

the

audit

to

obtain

reasonable

assurance

about

whether

the

financial

statements

are

free

of

material

misstatement,

whether

due

to

error

or

fraud.

Our

audits

included

performing

procedures

to

assess

the

risks

of

material

misstatement

of

the

financial

statements,

whether

due

to

error

or

fraud,

and

performing

procedures

that

respond

to

those

risks.

Such

procedures

included

examining,

on

a

test

basis,

evidence

regarding

the

amounts

and

disclosures

in

the

financial

statements.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

by

management,

as

well

as

evaluating

the

overall

presentation

of

the

financial

statements.

Our

procedures

included

confirmation

of

securities

owned

as

of

August

31,

2021

by

correspondence

with

the

custodian

and

brokers;

when

replies

were

not

received

from

brokers,

we

performed

other

auditing

procedures.

We

believe

that

our

audits

provide

a

reasonable

basis

for

our

opinion.

PricewaterhouseCoopers

LLP

San

Francisco,

California

October

19,

2021

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)

36

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

these

amount

on

their

tax

returns.

The

following

tax

information

for

the

Fund

is

required

to

be

furnished

to

shareholders

with

respect

to

income

earned

and

distributions

paid

during

its

fiscal

year.

The

Fund

hereby

reports

the

following

amount,

or

if

subsequently

determined

to

be

different,

the

maximum

allowable

amount,

for

the

fiscal

year

ended

August

31,

2021:

Pursuant

to:

Amount

Dividends

Received

Deduction

(DRD)

§854(b)(1)(A)

$17,245,535

Qualified

Dividend

Income

(QDI)

§854(b)(1)(B)

$58,327,700

Templeton

Funds

Board

Members

and

Officers

37

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

fund

complex,

are

shown

below.

Generally,

each

board

member

serves

until

that

person’s

successor

is

elected

and

qualified.

Independent

Board

Members

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Harris

J.

Ashton

(1932)

Trustee

Since

1992

122

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

Capital

Corporation

(specialty

finance

company)

(2010-present),

United

Natural

Foods,

Inc.

(distributor

of

natural,

organic

and

specialty

foods)

(2013-present),

formerly

,

Allied

Capital

Corporation

(financial

services)

(2003-

2010),

SLM

Corporation

(Sallie

Mae)

(1997-2014)

and

Navient

Corporation

(loan

management,

servicing

and

asset

recovery)

(2014-2016).

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director

of

various

companies;

and

formerly

,

Executive

Vice

President

and

Chief

Financial

Officer,

NHP

Incorporated

(manager

of

multifamily

housing)

(1995-1997);

and

Vice

President

and

Treasurer,

US

Airways,

Inc.

(until

1995).

Mary

C.

Choksi

(1950)

Trustee

Since

2016

123

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

38

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Edith

E.

Holiday

(1952)

Lead

Independent

Trustee

Trustee

since

2003

and

Lead

Independent

Trustee

since

2007

123

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-April

2021),

White

Mountains

Insurance

Group,

Ltd.

(holding

company)

(2004-May

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

123

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:

Private

investor;

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

(May

2019-January

1,

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

123

Formerly,

Graham

Holdings

Company

(education

and

media

organization)

(2011-May

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

39

franklintempleton.com

Annual

Report

Interested

Board

Members

and

Officers

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

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).

Robert

E.

Wade

(1946)

Trustee

Since

2006

29

El

Oro

Ltd

(investments)

(2003-

2019).

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Attorney

at

law

engaged

in

private

practice

as

a

sole

practitioner

(1972-2008)

and

member

of

various

boards.

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

**Gregory

E.

Johnson

(1961)

Trustee

Since

2013

134

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

39

of

the

investment

companies

in

Franklin

Templeton;

Vice

Chairman,

Investment

Company

Institute;

and

formerly

,

Chief

Executive

Officer

(2013-2020)

and

President

(1994-2015),

Franklin

Resources,

Inc.

**Rupert

H.

Johnson,

Jr.

(1940)

Chairman

of

the

Board,

Trustee

and

Vice

President

Chairman

of

the

Board

since

2013,

Trustee

since

1992

and

Vice

President

since

1996

123

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

37

of

the

investment

companies

in

Franklin

Templeton.

Alan

T.

Bartlett

(1970)

President

and

Chief

Executive

Officer

–

Investment

Management

Since

2019

Not

Applicable

Not

Applicable

Lyford

Cay

Nassau,

Bahamas

Principal

Occupation

During

at

Least

the

Past

5

Years:

President

and

Director,

Templeton

Global

Advisors

Limited;

Chief

Investment

Officer

of

Templeton

Global

Equity

Group;

officer

of

five

of

the

investment

companies

in

Franklin

Templeton;

Chairman

of

the

Board,

Goodhart

Partners;

and

formerly

,

Chief

Executive

Officer,

Goodhart

Partners

(2009-2019).

Independent

Board

Members

(continued)

Templeton

Funds

40

franklintempleton.com

Annual

Report

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Alison

E.

Baur

(1964)

Vice

President

Since

2012

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Deputy

General

Counsel,

Franklin

Templeton;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

44

of

the

investment

companies

in

Franklin

Templeton.

Breda

M.

Beckerle

(1958)

Chief

Compliance

Officer

Since

2020

Not

Applicable

Not

Applicable

280

Park

Avenue

New

York,

NY

10017

Principal

Occupation

During

at

Least

the

Past

5

Years:

Chief

Compliance

Officer,

Fiduciary

Investment

Management

International,

Inc.,

Franklin

Advisers,

Inc.,

Franklin

Mutual

Advisers,

LLC,

Franklin

Templeton

Institutional,

LLC;

and

officer

of

39

of

the

investment

companies

in

Franklin

Templeton.

Steven

J.

Gray

(1955)

Vice

President

Since

2009

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Vice

President,

FASA,

LLC;

Assistant

Secretary,

Franklin

Distributors,

LLC;

and

officer

of

44

of

the

investment

companies

in

Franklin

Templeton

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

44

of

the

investment

companies

in

Franklin

Templeton;

and

formerly

,

Vice

President,

Global

Tax

(2012-April

2017)

and

Treasurer/Assistant

Treasurer,

Franklin

Templeton

(2009-2017).

Susan

Kerr

(1949)

Vice

President

–

AML

Compliance

Since

July

2021

Not

Applicable

Not

Applicable

620

Eighth

Avenue

New

York,

NY

10018

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Compliance

Analyst,

Global

Compliance,

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

41

of

the

investment

companies

in

Franklin

Templeton

Navid

J.

Tofigh

(1972)

Vice

President

Since

2015

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

Associate

General

Counsel

and

officer

of

44

of

the

investment

companies

in

Franklin

Templeton.

Craig

S.

Tyle

(1960)

Vice

President

Since

2005

Not

Applicable

Not

Applicable

One

Franklin

Parkway

San

Mateo,

CA

94403-1906

Principal

Occupation

During

at

Least

the

Past

5

Years:

General

Counsel

and

Executive

Vice

President,

Franklin

Resources,

Inc.;

and

officer

of

some

of

the

other

subsidiaries

of

Franklin

Resources,

Inc.

and

of

44

of

the

investment

companies

in

Franklin

Templeton.

Interested

Board

Members

and

Officers

(continued)

Templeton

Funds

41

franklintempleton.com

Annual

Report

*We

base

the

number

of

portfolios

on

each

separate

series

of

the

U.S.

registered

investment

companies

within

the

Franklin

Templeton

fund

complex.

These

portfolios

have

a

common

investment

manager

or

affiliated

investment

managers.

**Gregory

E.

Johnson

is

considered

to

be

an

interested

person

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

of

Franklin

Resources,

Inc.

(Resources),

which

is

the

parent

company

of

the

Fund’s

investment

manager

and

distributor.

Rupert

H.

Johnson,

Jr.

is

considered

to

be

an

interested

person

of

the

Fund

under

the

federal

securities

laws

due

to

his

position

as

an

officer

and

director

and

major

shareholder

of

Resources.

Note

1:

Rupert

H.

Johnson,

Jr.

is

the

uncle

of

Gregory

E.

Johnson.

Note

2:

Officer

information

is

current

as

of

the

date

of

this

report.

It

is

possible

that

after

this

date,

information

about

officers

may

change.

The

Sarbanes-Oxley

Act

of

2002

and

Rules

adopted

by

the

U.S.

Securities

and

Exchange

Commission

require

the

Fund

to

disclose

whether

the

Fund’s

Audit

Committee

includes

at

least

one

member

who

is

an

audit

committee

financial

expert

within

the

meaning

of

such

Act

and

Rules.

The

Fund’s

Board

has

determined

that

there

is

at

least

one

such

financial

expert

on

the

Audit

Committee

and

has

designated

each

of

Ann

Torre

Bates

and

David

W.

Niemiec

as

an

audit

committee

financial

expert.

The

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

qualify

as

such

an

expert

in

view

of

their

extensive

business

background

and

experience.

Ms.

Bates

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2008.

She

currently

serves

as

a

director

of

Ares

Capital

Corporation

(2010-present)

and

United

Natural

Foods,

Inc.

(2013-present)

and

was

formerly

a

director

of

Navient

Corporation

from

2014

to

2016,

SLM

Corporation

from

1997

to

2014

and

Allied

Capital

Corporation

from

2003

to

2010,

Executive

Vice

President

and

Chief

Financial

Officer

of

NHP

Incorporated

from

1995

to

1997

and

Vice

President

and

Treasurer

of

US

Airways,

Inc.

until

1995.

Mr.

Niemiec

has

served

as

a

member

of

the

Fund

Audit

Committee

since

2005,

currently

serves

as

an

Advisor

to

Saratoga

Partners

and

was

formerly

its

Managing

Director

from

1998

to

2001

and

serves

as

a

director

of

Hess

Midstream

LP

(2017-present).

Mr.

Niemiec

was

formerly

a

director

of

Emeritus

Corporation

from

1999

to

2010

and

OSI

Pharmaceuticals,

Inc.

from

2006

to

2010,

Managing

Director

of

SBC

Warburg

Dillon

Read

from

1997

to

1998,

and

was

Vice

Chairman

from

1991

to

1997

and

Chief

Financial

Officer

from

1982

to

1997

of

Dillon,

Read

&

Co.

Inc.

As

a

result

of

such

background

and

experience,

the

Board

believes

that

Ms.

Bates

and

Mr.

Niemiec

have

each

acquired

an

understanding

of

generally

accepted

accounting

principles

and

financial

statements,

the

general

application

of

such

principles

in

connection

with

the

accounting

estimates,

accruals

and

reserves,

and

analyzing

and

evaluating

financial

statements

that

present

a

breadth

and

level

of

complexity

of

accounting

issues

generally

comparable

to

those

of

the

Fund,

as

well

as

an

understanding

of

internal

controls

and

procedures

for

financial

reporting

and

an

understanding

of

audit

committee

functions.

Ms.

Bates

and

Mr.

Niemiec

are

independent

Board

members

as

that

term

is

defined

under

the

applicable

U.S.

Securities

and

Exchange

Commission

Rules

and

Releases.

The

Statement

of

Additional

Information

(SAI)

includes

additional

information

about

the

board

members

and

is

available,

without

charge,

upon

request.

Shareholders

may

call

(800)

DIAL

BEN/342-5236

to

request

the

SAI.

Name,

Year

of

Birth

and

Address

Position

Length

of

Time

Served

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member*

Other

Directorships

Held

During

at

Least

the

Past

5

Years

Lori

A.

Weber

(1964)

Vice

President

and

Secretary

Vice

President

since

2011

and

Secretary

since

2013

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Senior

Associate

General

Counsel,

Franklin

Templeton;

Assistant

Secretary,

Franklin

Resources,

Inc.;

Vice

President

and

Secretary,

Templeton

Investment

Counsel,

LLC;

and

officer

of

44

of

the

investment

companies

in

Franklin

Templeton.

Ryan

R.

Wheeler

(1985)

Interim

Chief

Financial

Officer,

Chief

Accounting

Officer

and

Treasurer

Since

October

2021

Not

Applicable

Not

Applicable

300

S.E.

2nd

Street

Fort

Lauderdale,

FL

33301-

1923

Principal

Occupation

During

at

Least

the

Past

5

Years:

Director,

Fund

Administration

&

Reporting;

officer

of

15

of

the

investment

companies

in

Franklin

Templeton;

and

formerly

,

Director,

Senior

Manager

and

Manager

PricewaterhouseCoopers,

LLC

(2014-January

2021)

Interested

Board

Members

and

Officers

(continued)

Templeton

Funds

Shareholder

Information

42

franklintempleton.com

Annual

Report

Liquidity

Risk

Management

Program-

Funds

with

no

HLIM

Each

Fund

has

adopted

and

implemented

a

written

Liquidity

Risk

Management

Program

(the

“LRMP”)

as

required

by

Rule

22e-4

under

the

Investment

Company

Act

of

1940

(the

“Liquidity

Rule”).

The

LRMP

is

designed

to

assess

and

manage

each

Fund’s

liquidity

risk,

which

is

defined

as

the

risk

that

the

Fund

could

not

meet

requests

to

redeem

shares

issued

by

the

Fund

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

In

accordance

with

the

Liquidity

Rule,

the

LRMP

includes

policies

and

procedures

that

provide

for:

(1)

assessment,

management,

and

review

(no

less

frequently

than

annually)

of

each

Fund’s

liquidity

risk;

(2)

classification

of

each

Fund’s

portfolio

holdings

into

one

of

four

liquidity

categories

(Highly

Liquid,

Moderately

Liquid,

Less

Liquid,

and

Illiquid);

(3)

for

Funds

that

do

not

primarily

hold

assets

that

are

Highly

Liquid,

establishing

and

maintaining

a

minimum

percentage

of

the

Fund’s

net

assets

in

Highly

Liquid

investments

(called

a

“Highly

Liquid

Investment

Minimum”

or

“HLIM”);

and

(4)

prohibiting

the

Fund’s

acquisition

of

Illiquid

investments

that

would

result

in

the

Fund

holding

more

than

15%

of

its

net

assets

in

Illiquid

assets.

The

LRMP

also

requires

reporting

to

the

Securities

and

Exchange

Commission

(“SEC”)

(on

a

non-public

basis)

and

to

the

Board

if

the

Fund’s

holdings

of

Illiquid

assets

exceed

15%

of

the

Fund’s

net

assets.

Funds

with

HLIMs

must

have

procedures

for

addressing

HLIM

shortfalls,

including

reporting

to

the

Board

and,

with

respect

to

HLIM

shortfalls

lasting

more

than

seven

consecutive

calendar

days,

reporting

to

the

SEC

(on

a

non-public

basis).

The

Director

of

Liquidity

Risk

within

the

Investment

Risk

Management

Group

(the

“IRMG”)

is

the

appointed

Administrator

of

the

LRMP.

The

IRMG

maintains

the

Investment

Liquidity

Committee

(the

“ILC”)

to

provide

oversight

and

administration

of

policies

and

procedures

governing

liquidity

risk

management

for

FT

products

and

portfolios.

The

ILC

includes

representatives

from

Franklin

Templeton’s

Risk,

Trading,

Global

Compliance,

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

2021,

the

Program

Administrator

provided

a

written

report

to

the

Board

addressing

the

adequacy

and

effectiveness

of

the

program

for

the

year

ended

December

31,

2020.

The

Program

Administrator

report

concluded

that

(i.)

the

LRMP,

as

adopted

and

implemented,

remains

reasonably

designed

to

assess

and

manage

each

Fund’s

liquidity

risk;

(ii.)

the

LRMP,

including

the

Highly

Liquid

Investment

Minimum

(“HLIM”)

where

applicable,

was

implemented

and

operated

effectively

to

achieve

the

goal

of

assessing

and

managing

each

Fund’s

liquidity

risk;

and

(iii.)

each

Fund

was

able

to

meet

requests

for

redemption

without

significant

dilution

of

remaining

investors’

interests

in

the

Fund.

Proxy

Voting

Policies

and

Procedures

The

Fund’s

investment

manager

has

established

Proxy

Voting

Policies

and

Procedures

(Policies)

that

the

Fund

uses

to

determine

how

to

vote

proxies

relating

to

portfolio

securities.

Shareholders

may

view

the

Fund’s

complete

Policies

online

at

franklintempleton.com.

Alternatively,

shareholders

may

request

copies

of

the

Policies

free

of

charge

by

calling

the

Proxy

Group

collect

at

(954)

527-

7678

or

by

sending

a

written

request

to:

Franklin

Templeton

Companies,

LLC,

300

S.E.

2nd

Street,

Fort

Lauderdale,

FL

33301,

Attention:

Proxy

Group.

Copies

of

the

Fund’s

proxy

voting

records

are

also

made

available

online

at

franklintempleton.com

and

posted

on

the

U.S.

Securities

and

Exchange

Commission’s

website

at

sec.gov

and

reflect

the

most

recent

12-month

period

ended

June

30.

Templeton

Funds

Shareholder

Information

43

franklintempleton.com

Annual

Report

Quarterly

Statement

of

Investments

The

Trust,

on

behalf

of

the

Fund,

files

a

complete

statement

of

investments

with

the

U.S.

Securities

and

Exchange

Commission

for

the

first

and

third

quarters

for

each

fiscal

year

as

an

exhibit

to

its

report

on

Form

N-PORT.

Shareholders

may

view

the

filed

Form

N-PORT

by

visiting

the

Commission’s

website

at

sec.gov.

The

filed

form

may

also

be

viewed

and

copied

at

the

Commission’s

Public

Reference

Room

in

Washington,

DC.

Information

regarding

the

operations

of

the

Public

Reference

Room

may

be

obtained

by

calling

(800)

SEC-0330.

Householding

of

Reports

and

Prospectuses

You

will

receive,

or

receive

notice

of

the

availability

of,

the

Fund's

financial

reports

every

six

months.

In

addition,

you

will

receive

an

annual

updated

summary

prospectus

(detail

prospectus

available

upon

request).

To

reduce

Fund

expenses,

we

try

to

identify

related

shareholders

in

a

household

and

send

only

one

copy

of

the

financial

reports

(to

the

extent

received

by

mail)

and

summary

prospectus.

This

process,

called

“householding,”

will

continue

indefinitely

unless

you

instruct

us

otherwise.

If

you

prefer

not

to

have

these

documents

householded,

please

call

us

at

(800)

632-2301.

At

any

time

you

may

view

current

prospectuses/

summary

prospectuses

and

financial

reports

on

our

website.

If

you

choose,

you

may

receive

these

documents

through

electronic

delivery.

102

A

10/21

©

2021

Franklin

Templeton

Investments.

All

rights

reserved.

Authorized

for

distribution

only

when

accompanied

or

preceded

by

a

summary

prospectus

and/or

prospectus.

Investors

should

carefully

consider

a

fund’s

investment

goals,

risks,

charges

and

expenses

before

investing.

A

prospectus

contains

this

and

other

information;

please

read

it

carefully

before

investing.

To

help

ensure

we

provide

you

with

quality

service,

all

calls

to

and

from

our

service

areas

are

monitored

and/or

recorded.

Annual

Report

and

Shareholder

Letter

Templeton

World

Fund

Investment

Manager

Distributor

Shareholder

Services

Templeton

Global

Advisors

Limited

Franklin

Distributors,

LLC

(800)

DIAL

BEN

®

/

342-5236

franklintempleton.com

(800)

632-2301

Item 2. Code of Ethics.

(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.

(c) N/A

(d) N/A

(f) Pursuant to Item 13(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.

Item 3. Audit Committee Financial Expert.

(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.

(2) The audit committee financial experts are Ann Torre Bates andDavid 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 $164,793 for the fiscal year ended August 31, 2021 and $197,036 for the fiscal year ended August 31, 2020.

(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 $6,266 for the fiscal year ended August 31, 2021 and $6,266 for the fiscal year ended August 31, 2020. The services for which these fees were paid included attestation services.

There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant's investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.  

(c)      Tax Fees

There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.

There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning.

(d)      All Other Fees

The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant not reported in paragraphs (a)-(c) of Item 4
were $3,198 for the fiscal year ended August 31, 2021 and $0 for the fiscal year ended August 31, 2020. The services for which these fees were paid included review of materials provided to the fund Board in connection with the investment management contract renewal process.

The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $25,812 for the fiscal year ended August 31, 2021 and $145,744 for the fiscal year ended August 31, 2020. The services for which these fees were paid included the issuance of an Auditors’ Certificate for South Korean regulatory shareholder disclosures, benchmarking services in connection with the ICI TA Survey, valuation services related to a fair value engagement, and professional fees in connection with SOC 1 reports.

(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 $35,276 for the fiscal year ended August 31, 2021 and $152,010 for the fiscal year ended August 31, 2020.

(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Item 5. Audit Committee

of Listed Registrants.             

N/A

Item 6. Schedule of Investments.

                            N/A

Item 7

. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.                           N/A

Item 8. Portfolio Managers of Closed-End Management Investment Companies.  N/A

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.                          N/A

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.

Item 11. Controls and Procedures.

(a)

 Evaluation of Disclosure Controls and Procedures.  The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.

(b)

  Changes in Internal Controls. There have been no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Company.                             N/A

Item 13. Exhibits.

(a)(1)

Code of Ethics

codeofethics

(a)(2)

Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Ryan R. Wheeler, Interim Chief Financial Officer, Chief Accounting Officer and Treasurer

section302

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Ryan R. Wheeler, Interim Chief Financial Officer, Chief Accounting Officer and Treasurer

section906

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TEMPLETON FUNDS

By S\MATTHEW T. HINKLE______________________

Matthew T. Hinkle

Chief Executive Officer - Finance and Administration

Date October 28, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By S\MATTHEW T. HINKLE_______________________

Matthew T. Hinkle

      Chief Executive Officer – Finance and Administration

Date October 28, 2021

By S\Ryan R. Wheeler______________________

Ryan R. Wheeler

Interim Chief Financial Officer, Chief Accounting Officer and Treasurer

Date October 28, 2021