Franklin Templeton Investment Funds

Transcription

1 UNAUDITED SEMI-ANNUAL REPORT DECEMBER 31, 2010 R.C.S. B35177 Franklin Templeton Investment Funds SOCIÉTÉ D INVESTISSEMENT À CAPITAL VARIABLE

2 société d investissement à capital variable UNAUDITED SEMI-ANNUAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 2010 This report shall not constitute an offer or a solicitation of an offer to buy shares of Franklin Templeton Investment Funds (the Company ). Subscriptions are to be made on the basis of the current simplified prospectus accompanied by the current full prospectus and its addendum, a copy of the latest available audited report and, if published thereafter, the latest unaudited semi-annual report.

3 Contents General Information 3 Report of the Investment Managers 5 Fund Performance 6 Statement of Net Assets 8 Statement of Operations and Changes in Net Assets 20 Statistical Information 32 Notes to the Financial Statements 45 Franklin Asian Flex Cap Fund 67 Franklin Biotechnology Discovery Fund 69 Franklin Euroland Core Fund 71 Franklin European Growth Fund 74 Franklin European Small-Mid Cap Growth Fund 76 Franklin Global Growth Fund 77 Franklin Global Real Estate Fund 79 Franklin Global Small-Mid Cap Growth Fund 81 Franklin Gold and Precious Metals Fund 83 Franklin High Yield Fund 85 Franklin Income Fund 89 Franklin India Fund 93 Franklin MENA Fund 95 Franklin Natural Resources Fund 97 Franklin Real Return Fund 100 Franklin Strategic Income Fund 102 Franklin Technology Fund 111 Franklin U.S. Dollar Liquid Reserve Fund 113 Franklin U.S. Equity Fund 114 Franklin U.S. Focus Fund 116 Franklin U.S. Government Fund 117 Franklin U.S. Opportunities Fund 118 Franklin U.S. Small-Mid Cap Growth Fund 121 Franklin U.S. Total Return Fund 124 Franklin U.S. Ultra Short Bond Fund 130 Franklin World Perspectives Fund 134 Franklin Mutual Beacon Fund 141 Franklin Mutual Euroland Fund 146 Franklin Mutual European Fund 148 Franklin Mutual Global Discovery Fund 151 Franklin Templeton Global Equity Strategies Fund 156 Franklin Templeton Global Fundamental Strategies Fund 162 Franklin Templeton Global Growth And Value Fund 170 Franklin Templeton Japan Fund 174 Templeton Asian Bond Fund 177 Templeton Asian Growth Fund 179 Templeton Asian Smaller Companies Fund 181 Templeton Bric Fund 184 Templeton China Fund 187 Templeton Eastern Europe Fund 190 Templeton Emerging s Bond Fund 192 Templeton Emerging s Fund 196 Templeton Emerging s Smaller Companies Fund 199 Templeton Euro Government Bond Fund 202 Templeton Euro High Yield Fund 203 Templeton Euro Liquid Reserve Fund 206 Templeton Euro Money Fund 207 Templeton Euroland Fund 208 Templeton European Corporate Bond Fund 210 Templeton European Fund 212 Templeton European Total Return Fund 215 Templeton Frontier s Fund 217 Templeton Global Fund 221 Templeton Global (Euro) Fund 224 Templeton Global Aggregate Bond Fund 227 Templeton Global Balanced Fund 229 Templeton Global Bond Fund 233 Templeton Global Bond (Euro) Fund 237 Templeton Global Equity Income Fund 239 Templeton Global High Yield Fund 242 Templeton Global Income Fund 247 Templeton Global Smaller Companies Fund 254 Templeton Global Total Return Fund 257 Templeton Growth (Euro) Fund 265 Templeton Korea Fund 269 Templeton Latin America Fund 270 Templeton Thailand Fund 272 Templeton U.S. Value Fund 274 Franklin Templeton Investments Office Directory Unaudited Semi-Annual Report

4 société d investissement à capital variable 26, boulevard Royal, L-2449 Luxembourg, Grand-Duchy of Luxembourg (Registered with the registre de commerce et des sociétés, Luxembourg, under number B ) General Information (as at December 31, 2010) BOARD OF DIRECTORS Chairman The Honorable Nicholas F. Brady Chairman and Chief Executive Officer CHOPTANK PARTNERS, INC. 16 North Washington Street Easton, MD 21601, U.S.A. Directors Gregory E. Johnson President and Chief Executive Officer FRANKLIN RESOURCES, INC. One Franklin Parkway San Mateo, CA , U.S.A. Dr J. B. Mark Mobius Executive Chairman TEMPLETON S EMERGING MARKETS GROUP 7 Temasek Boulevard, # Suntec Tower One Singapore Mark G. Holowesko President HOLOWESKO PARTNERS LTD Shipston House Box N-7776, West Bay Street, Lyford Cay, Nassau, Bahamas Gregory E. McGowan Executive Vice President and General Counsel TEMPLETON WORLDWIDE, INC. 500 East Broward Boulevard, Suite 2100 Fort Lauderdale, FL 33394, U.S.A. Duke of Abercorn James Hamilton KG Director TITANIC QUARTER Barons Court Omagh BT78 4EZ, Northern Ireland, U.K. Vijay C. Advani Executive Vice President-Global Advisory Services FRANKLIN RESOURCES, INC. One Franklin Parkway San Mateo, CA , U.S.A. Richard H. Frank Chief Executive Officer DARBY OVERSEAS INVESTMENTS, LTD 1133 Connecticut Avenue, NW, Suite 400 Washington DC 20036, U.S.A. David E. Smart Director and Co-Chief Executive Officer FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITED The Adelphi Building, 1-11 John Adam Street London WC2N 6HT, England, U.K. The Honourable Trevor G. Trefgarne Chairman GARRO SECURITIES LIMITED 30 Kimbell Gardens London SW6 6QQ, U.K. James J. K. Hung President and Chief Executive Officer ASIA SECURITIES GLOBAL LTD Room 63, 21st floor, New World Tower 1 18 Queen s Road, Central Hong Kong Geoffrey A. Langlands Managing Partner LANGLANDS CONSULTORIA Ltda Avenida das Americas 500 Bloco 6, Sala 227 (Downtown) Rio de Janeiro RJ CEP , Brazil CONDUCTING OFFICERS: William Lockwood 26, boulevard Royal, L-2449 Luxembourg Grand-Duchy of Luxembourg Denise Voss 26, boulevard Royal, L-2449 Luxembourg Grand-Duchy of Luxembourg REGISTERED OFFICE: 26, boulevard Royal, L-2449 Luxembourg Grand-Duchy of Luxembourg FRANKLIN TEMPLETON INVESTMENT FUNDS PRINCIPAL DISTRIBUTOR: TEMPLETON GLOBAL ADVISORS LIMITED P.O. Box N-7759, Lyford Cay, Nassau, Bahamas INVESTMENT MANAGERS: FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITED 5 Morrison Street Edinburgh EH3 8BH, Scotland U.K. Franklin Templeton Investment Management Limited manages the following Funds: Franklin Euroland Core Fund; Franklin European Growth Fund*; Franklin World Perspectives Fund ; Templeton Euro Government Bond Fund; Templeton Euro High Yield Fund**; Templeton Euro Liquid Reserve Fund; Templeton Euro Money Fund; Templeton Euroland Fund; Templeton European Corporate Bond Fund ; Templeton European Fund; Templeton European Total Return Fund**; Templeton Global Aggregate Bond Fund; Templeton Global Balanced Fund**; Templeton Global Equity Income Fund; Templeton Global Fund; and Templeton U.S. Value Fund. * Franklin Templeton Investment Management Limited has been appointed as Co-Investment Manager of this Fund, together with Franklin Templeton Institutional LLC. ** Franklin Templeton Investment Management Limited has been appointed as Co-Investment Manager of these Funds, together with Franklin Advisers, Inc. Franklin Templeton Investment Management Limited has been selected and appointed by the lead Investment Manager Franklin Advisers, Inc. as Co-Investment Manager of this Fund together with (i) Franklin Templeton Investments Corp., (ii) Franklin Templeton Investments Japan Limited, (iii) Franklin Templeton Investimentos (Brasil) Ltda.and (iv) Franklin Templeton Investment Trust Management Co. Limited. Franklin Templeton Investment Management Limited has been appointed as Co-Investment Manager for this Fund, together with (i) Franklin Templeton Institutional LLC and (ii) Franklin Advisers, Inc. TEMPLETON ASSET MANAGEMENT LIMITED 7 Temasek Boulevard # Suntec Tower One Singapore Templeton Asset Management Limited manages the following Funds: Franklin Templeton Global Equity Strategies Fund*; Templeton Asian Growth Fund; Templeton Asian Smaller Companies Fund; Templeton BRIC Fund; Templeton China Fund; Templeton Eastern Europe Fund; Templeton Emerging s Fund; Templeton Emerging s Smaller Companies Fund; Templeton Frontier s Fund; Templeton Global Income Fund ; Templeton Korea Fund; Templeton Latin America Fund; and Templeton Thailand Fund. * Templeton Asset Management Limited has been appointed as Co- Investment Manager of this Fund, together with (i) Franklin Advisers, Inc., (ii) Franklin Mutual Advisers, LLC and (iii) Templeton Global Advisors Limited. Templeton Asset Management Limited has been appointed as Co- Investment Manager of this Fund, together with Franklin Advisers, Inc. FRANKLIN ADVISERS, INC. One Franklin Parkway San Mateo, CA , U.S.A. Franklin Advisers, Inc. manages the following Funds: Franklin Asian Flex Cap Fund; Franklin Biotechnology Discovery Fund; Franklin Gold and Precious Metals Fund; Franklin High Yield Fund; Franklin Income Fund; Franklin India Fund; Franklin MENA Fund; Franklin Natural Resources Fund; Franklin Real Return Fund; Franklin Strategic Income Fund; Franklin Technology Fund; Franklin Templeton Global Equity Strategies Fund**; Franklin Templeton Global Fundamental Strategies Fund ; Franklin World Perspectives Fund ; Franklin U.S. Dollar Liquid Reserve Fund; Franklin U.S. Equity Fund; Unaudited Semi-Annual Report 3

5 General Information (as at December 31, 2010) Franklin U.S. Focus Fund; Franklin U.S. Government Fund; Franklin U.S. Opportunities Fund; Franklin U.S. Small-Mid Cap Growth Fund; Franklin U.S. Total Return Fund; Franklin U.S. Ultra Short Bond Fund; Templeton Asian Bond Fund; Templeton Emerging s Bond Fund; Templeton Euro High Yield Fund*; Templeton European Corporate Bond Fund***; Templeton European Total Return Fund*; Templeton Global Balanced Fund*; Templeton Global Bond Fund; Templeton Global Bond (Euro) Fund; Templeton Global High Yield Fund; Templeton Global Income Fund ; and Templeton Global Total Return Fund. * Franklin Advisers, Inc. has been appointed as Co-Investment Manager of these Funds, together with Franklin Templeton Investment Management Limited. ** Franklin Advisers, Inc. has been appointed as Co-Investment Manager of this Fund, together with (i) Franklin Mutual Advisers, LLC, (ii) Templeton Asset Management Limited, and (iii) Templeton Global Advisors Limited. *** Franklin Advisers, Inc. has been appointed as Co-Investment Manager of this Fund, together with (i) Franklin Templeton Investment Management Limited and (ii) Franklin Templeton Institutional LLC. Franklin Advisers, Inc. has been appointed as Co-Investment Manager of this Fund, together with (i) Franklin Mutual Advisers, LLC and (ii) Templeton Global Advisors Limited. Franklin Advisers, Inc. has been appointed as lead Investment Manager of this Fund and has selected and appointed as Co-Investment Managers (i) Franklin Templeton Investments Corp., (ii) Franklin Templeton Investments Japan Limited, (iii) Franklin Templeton Investimentos (Brasil) Ltda., (iv) Franklin Templeton Investment Management Limited and (v) Franklin Templeton Investment Trust Management Co. Limited. Franklin Advisers, Inc. has been appointed as Co-Investment Manager of this Fund, together with Templeton Asset Management Limited. FRANKLIN TEMPLETON INSTITUTIONAL LLC 600 Fifth Avenue, New York, NY 10020, U.S.A. Franklin Templeton Institutional LLC manages the following Funds: Franklin European Growth Fund*; Franklin European Small-Mid Cap Growth Fund; Franklin Global Growth Fund; Franklin Global Real Estate Fund; Franklin Global Small-Mid Cap Growth Fund; Franklin Templeton Global Growth and Value Fund; and Templeton European Corporate Bond Fund**. * Franklin Templeton Institutional LLC has been appointed as Co- Investment Manager of this Fund, together with Franklin Templeton Investment Management Limited. ** Franklin Templeton Institutional LLC has been appointed as Co- Investment Manager of this Fund, together with (i) Franklin Templeton Investment Management Limited and (ii) Franklin Advisers, Inc. TEMPLETON GLOBAL ADVISORS LIMITED P.O. Box N-7759 Lyford Cay, Nassau, Bahamas Templeton Global Advisors Limited manages the following Funds: Templeton Growth (Euro) Fund; Franklin Templeton Global Equity Strategies Fund*; and Franklin Templeton Global Fundamental Strategies Fund. * Templeton Global Advisors Limited has been appointed as Co-Investment Manager of this Fund, together with (i) Franklin Mutual Advisers, LLC, (ii) Templeton Asset Management Limited and (iii) Franklin Advisers, Inc. Templeton Global Advisors Limited has been appointed as Co-Investment Manager of this Fund, together with (i) Franklin Mutual Advisers, LLC and (ii) Franklin Advisers, Inc. FRANKLIN TEMPLETON INVESTMENTS CORP. 1, Adelaide Street East, Suite 2101, Toronto Ontario M5C 3B8, Canada Franklin Templeton Investments Corp. manages the following Funds: Franklin World Perspectives Fund*; Templeton Global (Euro) Fund; and Templeton Global Smaller Companies Fund. * Franklin Templeton Investments Corp. has been selected and appointed by the lead Investment Manager Franklin Advisers, Inc. as Co-Investment Manager of this Fund together with (i) Franklin Templeton Investments Japan Limited, (ii) Franklin Templeton Investimentos (Brasil) Ltda., (iii) Franklin Templeton Investment Management Limited and (iv) Franklin Templeton Investment Trust Management Co. Limited. FRANKLIN MUTUAL ADVISERS, LLC 101 John F. Kennedy Parkway Short Hills, NJ , U.S.A Franklin Mutual Advisers, LLC manages the following Funds: Franklin Mutual Beacon Fund; Franklin Mutual Euroland Fund; Franklin Mutual European Fund; Franklin Mutual Global Discovery Fund; Franklin Templeton Global Equity Strategies Fund ; and Franklin Templeton Global Fundamental Strategies Fund. Franklin Mutual Advisers, LLC has been appointed as Co-Investment Manager of this Fund, together with (i) Franklin Advisers, Inc., (ii) Templeton Asset Management Limited and (iii) Templeton Global Advisors Limited. Franklin Mutual Advisers, LLC has been appointed as Co-Investment Manager of this Fund, together with (i) Franklin Advisers, Inc. and (ii) Templeton Global Advisors Limited. FRANKLIN TEMPLETON INVESTMENTS JAPAN LIMITED Kanematsu Building, 6th Floor 14-1, Kyobashi 2 chome Chuo-Ku, Tokyo, Japan Franklin Templeton Investments Japan Limited manages the following Funds: Franklin World Perspectives Fund*; and Franklin Templeton Japan Fund. * Franklin Templeton Investments Japan Limited has been selected and appointed by the lead Investment Manager Franklin Advisers, Inc. as Co- Investment Manager of this Fund together with (i) Franklin Templeton Investments Corp., (ii) Franklin Templeton Investimentos (Brasil) Ltda., (iii) Franklin Templeton Investment Management Limited and (iv) Franklin Templeton Investment Trust Management Co. Limited. FRANKLIN TEMPLETON INVESTIMENTOS (Brasil) Ltda. Avenue Brigadeiro Faria Lima 3311, 5o andar, São Paulo , Brazil Franklin Templeton Investimentos (Brasil) Ltda manages the following Fund: Franklin World Perspectives Fund*. * Franklin Templeton Investimentos (Brasil) Ltda. has been selected and appointed by the lead Investment Manager Franklin Advisers, Inc. as Co- Investment Manager of this Fund together with (i) Franklin Templeton Investments Corp., (ii) Franklin Templeton Investments Japan Limited, (iii) Franklin Templeton Investment Management Limited and (iv) Franklin Templeton Investment Trust Management Co. Limited. FRANKLIN TEMPLETON INVESTMENT TRUST MANAGEMENT CO. LIMITED 12 Youido-dong, Youngdungpo-gu, Seoul, Korea Franklin Templeton Investment Trust Management Co. Limited manages the following Fund: Franklin World Perspectives Fund*. * Franklin Templeton Investment Trust Management Co. Limited has been selected and appointed by the lead Investment Manager Franklin Advisers, Inc. as Co-Investment Manager of this Fund together with (i) Franklin Templeton Investments Corp., (ii) Franklin Templeton Investments Japan Limited, (iii) Franklin Templeton Investimentos (Brasil) Ltda. and (iv) Franklin Templeton Investment Management Limited. CUSTODIAN, LISTING AGENT AND PRINCIPAL PAYING AGENT: J.P. MORGAN BANK LUXEMBOURG S.A. European Bank and Business Centre 6 Route de Trèves, L-2633 Senningerberg Grand-Duchy of Luxembourg REGISTRAR AND TRANSFER, CORPORATE, DOMICILIARY AND ADMINISTRATIVE AGENT: FRANKLIN TEMPLETON INTERNATIONAL SERVICES S.A. 26, boulevard Royal, L-2449 Luxembourg Grand-Duchy of Luxembourg AUDITOR: PRICEWATERHOUSECOOPERS S.à r.l. 400, route d Esch, B.P. 1443, L-1014 Luxembourg Grand-Duchy of Luxembourg LEGAL ADVISERS: ELVINGER, HOSS & PRUSSEN 2, place Winston Churchill, B.P. 425, L-2014 Luxembourg Grand-Duchy of Luxembourg 4 Unaudited Semi-Annual Report

6 Report of the Investment Managers The six months under review were marked by a gradual improvement in the fortunes of most of the major industrialized nations, continued strong economic growth in emerging markets, and signs of transition in certain sections of the capital markets. Gross domestic product (GDP) growth in the U.S. rose by 2.6% in the period from July to September, marking an acceleration from the previous quarter. Nevertheless, the U.S. economy s rate of recovery has remained relatively subdued since recession officially ended in late 2009, and unemployment has remained high. Consequently, moary policy has remained relaxed. The Federal Reserve (Fed) actually loosened policy further at the beginning of November when it committed to buy an additional US$600 billion in government bonds. A month after this announcement came legislative agreement to extend sizable tax cuts that were set to expire. With stimulus so much in focus, global equities performed well for much of the half year under review. The Standard & Poor s 500 (S&P 500) Index rose to a level higher than where it stood just before the collapse of Lehman Brothers in late 2008, and world equity indexes all climbed steadily from low points registered in July. With investors becoming more comfortable with risk and increasingly reluctant to leave cash on the sidelines, equity-market inflows began to pick up again during the period, to the general detriment of fixed income, which had previously grabbed most investor interest. Robust demand, loose moary policy and a massive inflow of foreign money looking for comparatively high yields ensured that most emerging-market equities (and bonds) performed strongly during the half year under review. Commodities rose sharply over the six months due to the abundance of global liquidity caused by lax moary policies in the West and Japan, as well as solid global growth, especially in the emerging world. The cost of cereals, oil and iron ore had surged to two-year highs by the end of December The waves of money being injected into the economy, together with the improvement in the economic picture meant that 10-year Treasury yields ended 2010 at 3.30% from a period low point of 2.41% at the beginning of October. Yields on bonds issued by the biggest European economies and Japan also climbed. Some of this rise in long-term yields may reflect a stabilization or even an improvement in the global economic outlook, although a further rise in bond yields could cause problems for economies at some stage. Bond investors have also had to contend with festering sovereign debt problems in Europe. Back in May, massive help from the European Union (EU) and the International Moary Fund (IMF) calmed bond market fears about Greece s financial wellbeing. But yield spreads over German Bunds for European peripheral countries started to widen again in October and November, necessitating a further EU/IMF bailout, this time of Ireland. Corporate debt both of investment- and noninvestment-grade quality has done well for some time, offering higher yields than government bonds for comparatively low risk, thanks to the substantial improvement in corporate fundamentals and the gradual improvement in the economy. The period under review was also marked by tensions, with prolonged moary and fiscal easing in the West leading to significant appreciation in the currencies of developing and commodity-producing countries. U.S. dollar weakness and large inflows of foreign capital have not only supported relatively strong growth in recipient economies, but have also forced central banks in Asia and Latin America to impose administrative controls on banks to try to stem volatility and prevent asset price bubbles. Despite apparent improvements in economic growth prospects, growing volatility and lingering concerns over eurozone sovereign debt mean that investors have increasingly been turning to precious metals, particularly gold, whose price reached a nominal record high in December. Outside of Europe and on a macroeconomic level at least the outlook for the immediate future looks relatively favorable to us. The latest data showed that manufacturing activity around the world has been picking up. Significantly, consumer and business spending has been increasing again in the U.S., and jobless claims have continued to decline. U.S. growth over the next year is likely to benefit significantly from the stimulus measures adopted over the past six months, even taking ongoing deleveraging into account. Although there remains a significant threat that the sovereign debt problems of Ireland and Greece could spill over to other Mediterranean countries, with all the political as well as economic turmoil that would entail for the eurozone, economies in northern and eastern Europe have continued to forge ahead, with a noticeable revival in manufacturing activity. Longer term, we believe there are reasons for caution. The extension of tax cuts in the U.S. was not accompanied by any new initiatives for medium-term fiscal consolidation. Should U.S. inflation expectations increase significantly, a bond market revolt remains a possibility at some stage. By contrast, growth in Europe stands to be affected by the major fiscal consolidation measures now being adopted throughout the Continent. Furthermore, from a purely market viewpoint, an examination of cyclically adjusted price-to-earnings ratios suggests that stocks in general were not particularly cheap as of December-end. The rise in commodity prices will also need to be closely monitored, as will the large capital inflows into emerging markets. While we are largely satisfied that central banks have been ahead of the curve in tightening moary policy, inflation and asset price bubbles remain a concern. THE INVESTMENT MANAGERS January, 2011 The information stated in this report represents historical data and is not an indication of future results. Unaudited Semi-Annual Report 5

7 Fund Performance in Base Currency Percentage Change to December 31, 2010 Launch Date Base Currency 6 Months % 1 Year % 3 Year % 5 Year % 10 Year % Since Launch % Franklin Asian Flex Cap Fund 15 Nov 06 USD (6.3) 38.2 Franklin Biotechnology Discovery Fund 03 Apr 00 USD (8.2) 2.1 Franklin Euroland Core Fund 28 Nov 08 EUR Franklin European Growth Fund 29 Dec 00 EUR Franklin European Small-Mid Cap Growth Fund 03 Dec 01 EUR Franklin Global Growth Fund 29 Dec 00 USD (14.0) Franklin Global Real Estate Fund 29 Dec 05 USD (20.9) (14.4) (14.4) Franklin Global Small-Mid Cap Growth Fund 15 Apr 02 USD Franklin Gold and Precious Metals Fund 30 Apr 10 USD Franklin High Yield Fund 01 Mar 96 USD Franklin Income Fund 01 Jul 99 USD Franklin India Fund 25 Oct 05 USD Franklin MENA Fund 16 Jun 08 USD (50.5) Franklin Natural Resources Fund 12 Jul 07 USD Franklin Real Return Fund 30 Apr 10 USD Franklin Strategic Income Fund 12 Jul 07 USD Franklin Technology Fund 03 Apr 00 USD (2.4) (28.2) Franklin U.S. Dollar Liquid Reserve Fund 01 Jun 94 USD (0.2) (0.3) Franklin U.S. Equity Fund 01 Jul 99 USD (4.8) Franklin U.S. Focus Fund 15 May 08 USD Franklin U.S. Government Fund 28 Feb 91 USD Franklin U.S. Opportunities Fund 03 Apr 00 USD (25.3) Franklin U.S. Small-Mid Cap Growth Fund 29 Dec 00 USD Franklin U.S. Total Return Fund 29 Aug 03 USD Franklin U.S. Ultra Short Bond Fund 29 Aug 03 USD Franklin World Perspectives Fund 14 Oct 08 USD Franklin Mutual Beacon Fund 07 Jul 97 USD (15.6) Franklin Mutual Euroland Fund 14 Oct 08 EUR Franklin Mutual European Fund* 31 Dec 01 EUR (16.0) Franklin Mutual Global Discovery Fund 25 Oct 05 USD (3.1) Franklin Templeton Global Equity Strategies Fund 15 May 08 USD Franklin Templeton Global Fundamental Strategies Fund 25 Oct 07 USD Franklin Templeton Global Growth and Value Fund 09 Sep 02 USD (15.1) Franklin Templeton Japan Fund 01 Sep 00 JPY 6.5 (1.4) (50.7) (60.2) (40.7) (51.1) Templeton Asian Bond Fund 25 Oct 05 USD Templeton Asian Growth Fund 30 Jun 91 USD Templeton Asian Smaller Companies Fund 14 Oct 08 USD Templeton BRIC Fund 25 Oct 05 USD (18.2) Templeton China Fund 01 Sep 94 USD Unaudited Semi-Annual Report

8 Fund Performance in Base Currency Percentage Change to December 31, 2010 (continued) Launch Date Base Currency 6 Months % 1 Year % 3 Year % 5 Year % 10 Year % Since Launch % Templeton Eastern Europe Fund 10 Nov 97 EUR (15.7) Templeton Emerging s Fund 28 Feb 91 USD (6.3) Templeton Emerging s Bond Fund 05 Jul 91 USD Templeton Emerging s Smaller Companies Fund 18 Oct 07 USD (4.9) (5.5) Templeton Euro Government Bond Fund 08 Jan 99 EUR (1.4) (0.3) Templeton Euro High Yield Fund 17 Apr 00 EUR Templeton Euro Liquid Reserve Fund 01 Jun 94 EUR Templeton Euro Money Fund 23 Oct 09 EUR Templeton Euroland Fund 08 Jan 99 EUR (33.6) (20.7) (5.3) 25.4 Templeton European Fund 03 Dec 01 EUR (25.7) (16.2) 1.4 Templeton European Corporate Bond Fund 30 Apr 10 EUR 1.0 (0.4) Templeton European Total Return Fund 29 Aug 03 EUR (2.6) (2.0) 10.9 Templeton Frontier s Fund 14 Oct 08 USD Templeton Global Fund 28 Feb 91 USD (24.9) Templeton Global (Euro) Fund 26 Apr 91 EUR (22.1) (15.7) (9.4) Templeton Global Aggregate Bond Fund 29 Oct 10 USD (2.9) Templeton Global Balanced Fund 01 Jun 94 USD (9.1) Templeton Global Bond Fund 28 Feb 91 USD Templeton Global Bond (Euro) Fund 29 Aug 03 EUR Templeton Global Equity Income Fund 27 May 05 USD (28.0) (0.8) 5.7 Templeton Global High Yield Fund 27 Sep 07 USD Templeton Global Income Fund 27 May 05 USD Templeton Global Smaller Companies Fund 08 Jul 91 USD (6.0) Templeton Global Total Return Fund 29 Aug 03 USD Templeton Growth (Euro) Fund 09 Aug 00 EUR (15.3) (15.9) (1.5) (3.2) Templeton Korea Fund 08 May 95 USD (17.9) (24.8) Templeton Latin America Fund 28 Feb 91 USD Templeton Thailand Fund 20 Jun 97 USD Templeton U.S. Value Fund 29 Aug 03 USD (15.3) (8.0) 17.8 Data source Performance Franklin Templeton Investments * The inception date is for the primary class A (Acc) EUR, however the sub-fund originally launched on April 3, The inception date is for the primary class A (Acc) EUR, however the sub-fund originally launched on April 17, Fund performance prior to Sept 1996 excluded from calculation because a different portfolio allocation strategy was in use. All of the figures above are for Class A distribution A(dis) Shares with all income reinvested (total return) in base. Where Class A(dis) Shares are not in issue, Class A accumulation A(acc) Shares are shown. Information on other Share Classes is available on request. This report does not constitute or form part of any offer of an invitation to apply for shares. Subscriptions are to be made on the basis of the current simplified prospectus accompanied by the current full prospectus and its addendum, a copy of the latest available audited report and, if published thereafter, the latest unaudited semi-annual report. The price of shares and income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is no guarantee of future performance. Currency fluctuations may affect the of investments. Unaudited Semi-Annual Report 7

9 Statement of Net Assets at December 31, 2010 TOTAL Franklin Asian Flex Cap Fund Franklin Biotechnology Discovery Fund Franklin Euroland Core Fund Franklin European Growth Fund (USD) (USD) (USD) (EUR) (EUR) ASSETS Investment in securities at market (note 2(b)) 112,437,095,578 23,573, ,251,511 22,131, ,666,430 Cash 1,267,876, ,342 14,989,773 4, ,401 Time deposits and repurchase agreements (note 19) 7,577,732, , ,000 30,200,000 Amounts receivable on sale of investments 117,420, ,620 1,658,786 Amounts receivable on subscriptions 685,462,956 17,372 2,030,570 4,985 4,324,278 Interest and dividends receivable, 847,392,509 5,503 5,883 3,415,596 Other receivables 12,815,342 1,736 34,191 10,229 Unrealised profit on forward foreign exchange contracts (note 4) 429,012,723 Unrealised profit on credit default swaps (note 5) 1,264,836 Unrealised profit on interest rate swaps (note 6) 4,959,760 Unrealised profit on financial futures contracts (note 7) 22,037 TOTAL ASSETS 123,381,055,180 24,197, ,473,474 22,840, ,519,720 LIABILITIES Amounts payable on purchases of investments 429,523,833 12,933, ,144 Amounts payable on redemptions 393,328, , ,720 4,941 2,394,771 Bank overdraft 9,887,437 Unrealised loss on forward foreign exchange contracts (note 4) 19,867,157 Unrealised loss on financial futures contracts (note 7) 82,482 Investment management fees payable (note 3) 93,347,710 19,462 78,902 14, ,137 Taxes and expense payable 118,389,845 47, ,135 14, ,458 TOTAL LIABILITIES 1,064,427, ,772 13,864,017 34,068 3,691,510 TOTAL NET ASSETS 122,316,628,043 23,912, ,609,457 22,806, ,828,210 THREE YEAR ASSET SUMMARY June 30, ,411,687,219 29,920,224 74,572,597 20,658, ,493,564 June 30, ,048,939,530 29,819,379 70,628,479 17,234,474 31,894,597 June 30, ,534,169,142 36,332,132 53,201,179 17,635,809 The accompanying notes form an integral 8 Unaudited Semi-Annual Report

10 Statement of Net Assets at December 31, 2010 (continued) Franklin European Small-Mid Cap Growth Fund Franklin Global Growth Fund Franklin Global Real Estate Fund Franklin Global Small-Mid Cap Growth Fund Franklin Gold and Precious Metals Fund Franklin High Yield Fund (EUR) (USD) (USD) (USD) (USD) (USD) (USD) Franklin Income Fund 430,411, ,187, ,073,539 66,829,062 58,031,995 3,052,767, ,840, , , ,308 8,005 3,199,844 66,815, ,432 45,000,000 3,000,000 4,900,000 5,300,000 1,321,545 84,931 4,352, , ,548 1,373,667 3,035,577 99, , ,565 1,497,983 13,069,936 6,207,041 4,531,228 9, , ,407 5,203 59,324,121 7,305,476 50,496 6, , ,729 25, , ,856 1,856, , ,800, ,584, ,213,882 73,300,328 63,071,429 3,195,987, ,467, ,586 6,116, ,637 3,057, ,228 99, , , ,428 15,600,158 5,248,120 1, ,731 79,928 97,032 58,750 42,130 2,092, , ,759 70, ,791 68,307 44,378 3,205, ,013 1,591, ,560 6,607, ,008 3,520,561 20,898,036 6,503, ,208, ,332, ,605,937 72,826,320 59,550,868 3,175,089, ,963, ,497,144 57,266,803 64,793,655 36,904,320 5,565,752 2,681,403, ,230,165 59,920,404 32,915,531 19,258,439 28,541,329 1,870,189, ,970,744 45,036,706 36,397,878 38,398,156 20,482,747 1,944,931, ,173,789 part of these financial statements Unaudited Semi-Annual Report 9

11 Statement of Net Assets at December 31, 2010 (continued) Franklin India Fund Franklin MENA Fund Franklin Natural Resources Fund Franklin Real Return Fund Franklin Strategic Income Fund (USD) (USD) (USD) (USD) (USD) ASSETS Investment in securities at market (note 2(b)) 1,553,371, ,144, ,443,361 5,667, ,639,856 Cash 5,348,382 25,386, ,801 38,539,182 Time deposits and repurchase agreements (note 19) 91,600,000 2,000,000 Amounts receivable on sale of investments 1,023, , ,705 Amounts receivable on subscriptions 22,500,646 1,532,424 10,931,352 89, ,030 Interest and dividends receivable, 309,921 86,872 47,195 3,341,600 Other receivables 133,516 1,798 63,087 Unrealised profit on forward foreign exchange contracts (note 4) 216,075 12,819 55,056 Unrealised profit on credit default swaps (note 5) 1,009,619 Unrealised profit on interest rate swaps (note 6) Unrealised profit on financial futures contracts (note 7) TOTAL ASSETS 1,669,154, ,038, ,127,601 6,436, ,366,079 LIABILITIES Amounts payable on purchases of investments 832, ,863 17,604,693 5,711,318 Amounts payable on redemptions 5,077, ,228 5,480,619 1,024,556 Bank overdraft 4,781 Unrealised loss on forward foreign exchange contracts (note 4) 300,608 Unrealised loss on financial futures contracts (note 7) Investment management fees payable (note 3) 1,272, , ,308 3, ,636 Taxes and expense payable 1,561, , ,173 9, ,368 TOTAL LIABILITIES 8,749, ,721 23,451,793 13,318 7,499,486 TOTAL NET ASSETS 1,660,405, ,515, ,675,808 6,423, ,866,593 THREE YEAR ASSET SUMMARY June 30, ,024,275,135 95,002, ,946,439 4,638, ,900,788 June 30, ,549,176 17,944,197 37,802,931 90,479,128 June 30, ,169,523 22,298,037 50,542,306 70,341,741 The accompanying notes form an integral 10 Unaudited Semi-Annual Report

12 Statement of Net Assets at December 31, 2010 (continued) Franklin Technology Fund Franklin U.S. Dollar Liquid Reserve Fund Franklin U.S. Equity Fund Franklin U.S. Focus Fund Franklin U.S. Government Fund Franklin U.S. Opportunities Fund Franklin U.S. Small-Mid Cap Growth Fund (USD) (USD) (USD) (USD) (USD) (USD) (USD) 391,397, ,855, ,289,686 9,850,066 2,356,799,587 1,604,455,009 49,326,184 17,601, ,752,445 14,273, ,481 11,650,377 32,412,394 12,053,956 46,953 43,890,000 7,770,426 7,751 6,091, ,601 2,478,204 21,659 5,714,886 12,095,417 1,121,561 22, , ,606 6,707 9,169, ,541 8,089 80,795 13, , ,238 4, , , , ,240, ,248, ,858,387 10,665,934 2,383,492,345 1,650,060,087 62,514,335 4,810,146 43,889, , ,356 11,712,474 14,731 2,666,326 2,265,128 3,430,739 10,240 12,922,303 3,480,054 1,147, ,827 57, ,046 7,868 1,143,934 1,200,317 45, , , ,852 15,627 1,613,088 1,086,448 63,755 8,117,049 46,365,422 5,383,903 33,962 16,380,681 17,479,293 1,271, ,123, ,883, ,474,484 10,631,972 2,367,111,664 1,632,580,794 61,242, ,049, ,260, ,871,864 8,945,646 2,498,161, ,151,288 37,277,528 89,066, ,851, ,454,736 3,908,033 2,393,496, ,577,568 24,424, ,248, ,877, ,499,067 4,587,040 1,551,406, ,292,850 31,515,579 part of these financial statements Unaudited Semi-Annual Report 11

13 Statement of Net Assets at December 31, 2010 (continued) Franklin U.S. Total Return Fund Franklin U.S. Ultra Short Bond Fund Franklin World Perspectives Fund Franklin Mutual Beacon Fund Franklin Mutual Euroland Fund (USD) (USD) (USD) (USD) (EUR) ASSETS Investment in securities at market (note 2(b)) 63,917, ,320,692 42,056,664 1,313,613,862 8,540,561 Cash 11,356,524 31,929, ,418 8,637,266 1,053,912 Time deposits and repurchase agreements (note 19) 1,600,000 Amounts receivable on sale of investments 50, ,916 45,140 10,083,270 Amounts receivable on subscriptions 389, , ,816 4,269,638 1,638 Interest and dividends receivable, 623, , ,949 1,569,855 22,675 Other receivables 68,449 16,213 2, ,344 10,659 Unrealised profit on forward foreign exchange contracts (note 4) Unrealised profit on credit default swaps (note 5) 93,810 Unrealised profit on interest rate swaps (note 6) Unrealised profit on financial futures contracts (note 7) TOTAL ASSETS 76,499, ,918,993 44,370,848 1,338,434,235 9,629,445 LIABILITIES Amounts payable on purchases of investments 9,666,074 20,991, ,410 4,046,561 Amounts payable on redemptions 280,701 1,338,483 1,941 3,857,760 7,538 Bank overdraft Unrealised loss on forward foreign exchange contracts (note 4) 31,341 1,289,141 Unrealised loss on financial futures contracts (note 7) 82,482 Investment management fees payable (note 3) 38, ,119 32,330 1,044,919 7,092 Taxes and expense payable 64, ,340 36,373 1,648,027 9,323 TOTAL LIABILITIES 10,164,558 22,611, ,054 11,886,408 23,953 TOTAL NET ASSETS 66,334, ,307,895 44,181,794 1,326,547,827 9,605,492 THREE YEAR ASSET SUMMARY June 30, ,575, ,448,721 32,889,202 1,208,336,071 9,222,542 June 30, ,699,155 91,095,674 26,153,247 1,106,317,603 14,446,829 June 30, ,717,257 63,539,119 2,038,468,236 The accompanying notes form an integral 12 Unaudited Semi-Annual Report

14 Statement of Net Assets at December 31, 2010 (continued) Franklin Mutual European Fund Franklin Mutual Global Discovery Fund Franklin Templeton Global Equity Strategies Fund Franklin Templeton Global Fundamental Strategies Fund Franklin Templeton Global Growth and Value Fund Franklin Templeton Japan Fund Templeton Asian Bond Fund (EUR) (USD) (USD) (USD) (USD) (JPY) (USD) 2,815,998,293 1,042,645,465 66,506, ,023,893 92,449,928 6,409,155,800 2,987,496,777 13,033,616 20,387, ,046 29,191,981 44,870 9,912,894 32,197, ,060,935 25,380,080 2,000,000 3,900, ,300, ,348 3,369,357 51, ,276 14, ,530,874 6,684,276 4,711, ,182 1,414, ,447 37,853,225 11,809,818 5,606,062 1,651,109 93,826 3,026,515 55,259 4,194,951 35,213,647 2,639, ,496 6,076 92,022 19, ,752 33,272 2,143,400 80,250 4,728,675 8,275,056 3,148 2,950,203,459 1,100,488,706 69,148, ,987,288 96,717,659 6,643,647,744 3,564,616,049 80,687 5,990,583 73, ,811 46,869,045 19,665 12,182,896 2,230, , ,125 36,066 36,453,253 7,105,115 2,294, ,318 73, ,746 66,740 5,594,812 2,101,259 2,951, ,540 64, ,929 82,543 14,017,974 5,342,344 17,509,641 10,007, ,269 1,488, , ,935,084 14,568,383 2,932,693,818 1,090,481,118 68,835, ,498,677 96,532,310 6,540,712,660 3,550,047,666 2,591,062, ,956,429 55,677, ,235,313 64,486,472 7,225,256,114 2,279,041,816 2,540,051, ,426,316 48,381, ,325,706 41,662,310 11,648,307, ,350,532 4,378,425, ,586,135 9,289, ,159,691 47,903,942 28,640,457, ,249,143 part of these financial statements Unaudited Semi-Annual Report 13

15 Statement of Net Assets at December 31, 2010 (continued) Templeton Asian Growth Fund Templeton Asian Smaller Companies Fund Templeton BRIC Fund Templeton China Fund Templeton Eastern Europe Fund (USD) (USD) (USD) (USD) (EUR) ASSETS Investment in securities at market (note 2(b)) 14,684,595, ,391,002 3,206,248,369 1,477,723,757 1,032,473,912 Cash 1,166,546 26,423,015 2,247,311 58,520 20,109,032 Time deposits and repurchase agreements (note 19) 2,241,600,000 55,200,000 67,400,000 63,400,000 Amounts receivable on sale of investments 2,433,106 2,329, ,827 69,731 Amounts receivable on subscriptions 105,117,523 2,895,262 11,636,889 17,758,615 7,616,009 Interest and dividends receivable, 5,962,802 78,422 6,811,519 1,056,741 Other receivables 36, ,673 2, ,046 Unrealised profit on forward foreign exchange contracts (note 4) 2,372, ,364 Unrealised profit on credit default swaps (note 5) Unrealised profit on interest rate swaps (note 6) Unrealised profit on financial futures contracts (note 7) TOTAL ASSETS 17,043,284, ,788,613 3,285,359,906 1,563,215,237 1,125,265,471 LIABILITIES Amounts payable on purchases of investments 2,293,386 1,002,456 3,273, ,906 43,994,788 Amounts payable on redemptions 47,385, ,427 12,456,164 14,318,744 4,912,372 Bank overdraft Unrealised loss on forward foreign exchange contracts (note 4) Unrealised loss on financial futures contracts (note 7) Investment management fees payable (note 3) 16,410, ,578 4,239,856 1,993,209 1,302,126 Taxes and expense payable 12,081, ,311 3,533,008 1,299,234 1,247,244 TOTAL LIABILITIES 78,170,928 1,450,772 23,502,680 18,611,093 51,456,530 TOTAL NET ASSETS 16,965,113, ,337,841 3,261,857,226 1,544,604,144 1,073,808,941 THREE YEAR ASSET SUMMARY June 30, ,393,185,887 37,740,758 2,611,189, ,951, ,325,555 June 30, ,003,281,807 9,190,269 1,707,702, ,340, ,499,527 June 30, ,348,631,189 2,603,423, ,040, ,335,704 The accompanying notes form an integral 14 Unaudited Semi-Annual Report

16 Statement of Net Assets at December 31, 2010 (continued) Templeton Emerging s Fund Templeton Emerging s Bond Fund Templeton Emerging s Smaller Companies Fund Templeton Euro Government Bond Fund Templeton Euro High Yield Fund Templeton Euro Liquid Reserve Fund Templeton Euro Money Fund (USD) (USD) (USD) (EUR) (EUR) (EUR) (EUR) 1,277,173,630 5,549,329, ,554,204 19,549, ,505,111 98,034,079 20,287, ,745 39,129,803 31,795,965 4,371 88,304 36,833 48,100, ,600, ,000 55,900,000 2,000,000 2,800, ,750 2,540,897 1,000,000 5,528,179 49,406,878 5,646, ,548 2,762, ,667 28,612 2,950,476 79,427, , ,433 9,339,007 65,761 6, , ,549 12, , ,201 3,148 1,334,904,176 5,952,449, ,484,571 20,946, ,557, ,997,811 24,159,534 12,135,044 31,753 3,564,209 5,617,930 14,893, ,698 72,878 1,484,336 1,745,163 5,339 7,372,455 15,808,698 1,628,388 1,713,793 4,544, ,427 8, ,741 26,602 4,365 1,552,220 5,208, ,286 27, ,957 94,874 11,777 21,018,987 40,486,579 5,449, ,491 11,188,877 1,866,639 21,481 1,313,885,189 5,911,962, ,034,951 20,836, ,369,002 99,131,172 24,138,053 1,007,586,053 4,111,146, ,588,749 18,498, ,893, ,927,433 24,421, ,247,442 1,082,133, ,712,514 16,836, ,178,626 95,182,412 1,385,750,299 1,301,111, ,862,226 27,728, ,682, ,874,425 part of these financial statements Unaudited Semi-Annual Report 15

17 Statement of Net Assets at December 31, 2010 (continued) Templeton Euroland Fund Templeton European Fund Templeton European Corporate Bond Fund Templeton European Total Return Fund Templeton Frontier s Fund (EUR) (EUR) (EUR) (EUR) (USD) ASSETS Investment in securities at market (note 2(b)) 115,724, ,205,108 10,847,617 64,476, ,130,429 Cash 243,170 93,760 12, ,095 62,297,578 Time deposits and repurchase agreements (note 19) 3,500, , ,000 2,300,000 Amounts receivable on sale of investments 3,088,271 Amounts receivable on subscriptions 13, ,114 20,990 92,574 12,723,916 Interest and dividends receivable, 137, ,335 1,361, ,442 Other receivables 376, , ,165 63,524 Unrealised profit on forward foreign exchange contracts (note 4) , ,660 Unrealised profit on credit default swaps (note 5) Unrealised profit on interest rate swaps (note 6) Unrealised profit on financial futures contracts (note 7) TOTAL ASSETS 119,857, ,179,377 11,582,165 68,935, ,044,820 LIABILITIES Amounts payable on purchases of investments ,379,301 Amounts payable on redemptions 119, , ,531 4,857,345 Bank overdraft Unrealised loss on forward foreign exchange contracts (note 4) Unrealised loss on financial futures contracts (note 7) Investment management fees payable (note 3) 104, ,798 4,410 43,660 1,087,430 Taxes and expense payable 177, ,750 8, , ,948 TOTAL LIABILITIES 401, ,974 12, ,010 21,118,024 TOTAL NET ASSETS 119,456, ,502,403 11,569,186 68,062, ,926,796 THREE YEAR ASSET SUMMARY June 30, ,622, ,182,884 10,850,259 70,690, ,478,066 June 30, ,356, ,814,010 89,996,188 10,932,543 June 30, ,107, ,284, ,656,134 *This fund was launched on October 29, 2010 The accompanying notes form an integral 16 Unaudited Semi-Annual Report

18 Statement of Net Assets at December 31, 2010 (continued) Templeton Global Fund Templeton Global (Euro) Fund Templeton Global Aggregate Bond Fund* Templeton Global Balanced Fund Templeton Global Bond Fund Templeton Global Bond (Euro) Fund Templeton Global Equity Income Fund (USD) (EUR) (USD) (USD) (USD) (EUR) (USD) 1,063,042, ,793,537 11,327, ,251,270 31,620,796, ,653,158 95,442, ,504 3,843, ,464 1,637, ,075,976 3,393,887 12,700,000 5,400,000 18,100,000 3,489,300,000 19,700,000 2,600,000 2,711,189 13,418 99,566 1,154, , , ,102,779 2,726,216 45,290 1,574, , ,710 4,958, ,484,971 3,445, , , ,764 2, , , ,635 29, , , ,246, ,917 4,959,760 3,148 2,354 1,082,193, ,044,529 11,949, ,292,894 36,147,096, ,061,622 98,674,675 1,030, ,131, ,961, ,212 1,037,508 94,879,847 1,086, ,978 20, , ,718 4, ,035 21,696, ,129 84,616 1,129, ,397 9, ,903 36,796, , ,072 3,939,928 1,682,327 1,043,278 2,442, ,504,081 1,870, ,848 1,078,254, ,362,202 10,905, ,850,883 35,882,592, ,190,788 98,091, ,156, ,441, ,907,869 26,724,456, ,872,646 90,904,876 1,002,383, ,030, ,982,642 9,472,784, ,972,094 99,738,750 1,635,360, ,563, ,992,609 10,134,928, ,603, ,141,209 part of these financial statements Unaudited Semi-Annual Report 17

19 Statement of Net Assets at December 31, 2010 (continued) Templeton Templeton Global Templeton Templeton Global Templeton Global High Yield Fund Income Fund Global Smaller Companies Fund Total Return Fund Growth (Euro) Fund (USD) (USD) (USD) (USD) (EUR) ASSETS Investment in securities at market (note 2(b)) 76,639, ,547, ,477,560 13,144,560,164 4,822,048,478 Cash 11,175, , , ,097,534 12,818,993 Time deposits and repurchase agreements (note 19) 39,100,000 43,100,000 74,375,377 Amounts receivable on sale of investments 53, ,102 7,441,432 1,312,203 Amounts receivable on subscriptions 1,137,539 2,346,679 1,414, ,748,957 3,625,790 Interest and dividends receivable, 1,296,524 1,832, , ,058,170 6,682,642 Other receivables 15,315 83, ,507, ,684 Unrealised profit on forward foreign exchange contracts (note 4) 1,213, ,315,325 28,921 Unrealised profit on credit default swaps (note 5) 145,085 Unrealised profit on interest rate swaps (note 6) Unrealised profit on financial futures contracts (note 7) 3,148 3,148 3,148 TOTAL ASSETS 90,465, ,327, ,025,140 13,904,732,531 4,921,637,088 LIABILITIES Amounts payable on purchases of investments 2,494,684 6,944 2,103,459 47,835,038 Amounts payable on redemptions 689, , ,085 54,743,595 6,558,658 Bank overdraft Unrealised loss on forward foreign exchange contracts (note 4) 256,983 Unrealised loss on financial futures contracts (note 7) Investment management fees payable (note 3) 55, , ,659 8,265,700 4,138,786 Taxes and expense payable 90, , ,359 14,520,161 4,927,165 TOTAL LIABILITIES 3,587,364 1,089,185 3,427, ,364,494 15,624,609 TOTAL NET ASSETS 86,878, ,238, ,597,578 13,779,368,037 4,906,012,479 THREE YEAR ASSET SUMMARY June 30, ,991, ,043, ,574,862 9,247,942,075 4,490,061,960 June 30, ,856,828 97,979, ,392,526 2,481,854,834 3,583,682,816 June 30, ,533, ,616, ,141,227 3,624,150,774 4,561,999,638 The accompanying notes form an integral 18 Unaudited Semi-Annual Report

20 Statement of Net Assets at December 31, 2010 (continued) Templeton Korea Fund Templeton Latin America Fund Templeton Thailand Fund Templeton U.S. Value Fund (USD) (USD) (USD) (USD) 109,601,957 4,042,347, ,193,055 34,618,706 59,639 2,691,856 83, ,068 3,200, ,500,000 6,400, ,280,853 1,040,193 1,839,962 21,273,154 2,810, ,336 5,044,610 29,027 1,598 2, ,733 58, ,703,316 4,215,619, ,527,342 35,806, ,875 14,615,048 1,289, ,960 15,855,703 1,461,165 4, ,122 4,402, ,396 25, ,035 3,495, ,671 30,922 1,271,992 38,369,644 3,251,932 60, ,431,324 4,177,249, ,275,410 35,745,845 82,332,757 3,000,450, ,863,578 30,343,326 74,580,646 2,234,440, ,376,363 16,843, ,452,365 2,629,312, ,115,502 15,769,035 part of these financial statements Unaudited Semi-Annual Report 19

21 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 TOTAL Franklin Asian Flex Cap Fund Franklin Biotechnology Discovery Fund Franklin Euroland Core Fund Franklin European Growth Fund (USD) (USD) (USD) (EUR) (EUR) NET ASSETS AT THE BEGINNING OF THE PERIOD Currency translation adjustment INCOME Dividends ( of withholding taxes) Interest on bonds ( of withholding taxes) Bank interest Securities lending Interest on swaps Sundry income TOTAL INCOME EXPENSES Investment management fees (note 3) Administration and transfer agency fees Subscription tax (note 10) Custodian fees Audit, printing and publishing expenses Bank charges Class A(dis) and Class A(acc) shares maintenance charges (note 13) Class AX(acc) shares maintenance charges (note 13) Class B(dis) and Class B(acc) shares maintenance and service charges (note 13) Class C(dis) and Class C(acc) shares maintenance and service charges (note 13) Class N(dis) and Class N(acc) shares distribution charges (note 13) Other charges TOTAL EXPENSES Expenses reimbursement (note 16) NET EXPENSES NET PROFIT/(LOSS) FROM INVESTMENTS Net realised profit/(loss) on sale of investments Net realised profit/(loss) on forward foreign exchange contracts Net realised profit/(loss) on financial futures contracts Net realised profit/(loss) on credit default swaps Net realised profit/(loss) on interest rate swaps Net realised profit/(loss) on foreign exchange transactions NET REALISED PROFIT/(LOSS) FOR THE PERIOD Change in unrealised appreciation/(depreciation) on: Investments Forward foreign exchange contracts Financial futures contracts Options contracts Credit default swaps Interest rate swaps Foreign exchange transactions NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF OPERATIONS MOVEMENT OF CAPITAL Issue of shares Redemption of shares Issue of shares in course of merger Redemption of shares in course of merger Equalisation (note 12) Dividends paid/accumulated (note 18) NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF MOVEMENT IN CAPITAL NET ASSETS AT THE END OF THE PERIOD Portfolio Turnover Ratio (note 21) 88,411,687,219 29,920,224 74,572,597 20,658, ,493,564 1,166,386,271 89,578,073,490 29,920,224 74,572,597 20,658, ,493, ,580, ,704 79,004 4,740,425 1,588,411,162 2,067 7,239, ,966 23,969,380 64,107 2,781,955 5,365, ,022,348, ,700 2, ,495 4,799, ,445, , ,695 85,550 1,472, ,579,955 51, ,179 22, ,064 25,034,597 5,638 20,528 2,119 60,658 25,773,134 7,541 1,712 2,072 30,895 3,625,905 7,395 8,564 4,757 15,095 75, , ,965,040 25, ,557 11, ,413 2,696,290 36,617,073 86,110 31,119 17,063,353 3,319 5,194 56,781,486 6,696 31,564 4, ,065 13,100,759 3,314 24,464 2,602 36, ,758, , , ,631 2,637,591 (3,600,342) (15,396) (3,791) 934,158, , , ,840 2,637,591 1,088,189,425 (32,929) (889,360) 11,655 2,162, ,652,705 2,876,304 2,662, ,473 13,854, ,703, , ,177,609 6,796,382 (3,869) 5,231 1,742 91,857 3,113,745,118 2,839,506 1,778, ,870 16,108,455 11,625,665,969 1,929,171 15,125,196 1,971,851 31,344,616 (475,990,496) (75,064) (6,491) 1,301,461 (90,895,268) 85,257,393 (1,014) 29 (86,943) 14,259,002,622 4,767,663 16,903,428 2,473,721 47,366,128 45,900,619,090 5,860,682 47,063, , ,569,210 (26,166,059,150) (16,548,844) (22,930,100) (631,524) (84,381,947) 21,636,988 (23,092,858) 46,586,942 (24,657) 100,665 19,779,691,012 (10,712,819) 24,133, ,287,928 (1,300,139,081) (62,967) (326,962) (2,319,410) 18,479,551,931 (10,775,786) 24,133,432 (326,264) 120,968, ,316,628,043 23,912, ,609,457 22,806, ,828, % 40.42% 28.33% 11.73% *This Fund was merged into Franklin Global Real Estate Fund effective on August 27, 2010 The accompanying notes form an integral 20 Unaudited Semi-Annual Report

22 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Franklin European Small-Mid Cap Growth Fund Franklin Global Growth Fund Franklin Global Real Estate Fund Franklin Global Real Estate (Euro) Fund* Franklin Global Small-Mid Cap Growth Fund Franklin Gold and Precious Metals Fund Franklin High Yield Fund (EUR) (USD) (USD) (EUR) (USD) (USD) (USD) 252,497,144 57,266,803 64,793,655 16,605,960 36,904,320 5,565,752 2,681,403, ,497,144 57,266,803 64,793,655 16,605,960 36,904,320 5,565,752 2,681,403,357 6,518, ,156 1,346,303 67,879 1,117,058 36,818 97, ,967,597 88,543 2,858 3,272 4, , ,038,651 6,607, ,835 1,358,850 67,933 1,121,774 37, ,104,113 1,606, , ,293 27, , ,176 11,706, , , ,668 8,726 70,380 27,555 3,854,471 57,424 13,450 25,854 1,398 14,228 6, ,962 35,338 6,782 4, ,264 1,285 62,762 17,047 8,484 19,340 2,121 6,791 8,671 97,862 14, ,225 91, ,775 10, ,100 45,714 4,123,142 4,006 44,373 15,903 5,282,522 61, , ,227 54,327 75,292 8,252 44,945 6, ,271 46,932 9,763 11, ,175 1, ,724 2,697, ,993 1,038,662 59, , ,133 26,467,079 (239) (1,058) (86) (632) (49) (70,431) 2,697, ,993 1,037,604 59, , ,084 26,396,648 3,910,557 (162,158) 321,246 8, ,366 (168,368) 96,707,465 14,296,133 2,025,973 3,928,542 74, , ,323 50,836, ,067 1,408, ,110 94,675 1,472,728 (308,548) 242,236 (130,311) 59,165 6,272 (258,110) 718 (6,968) 5,388 18,076,379 2,116,047 5,356, ,758 1,441, , ,021,824 40,150,112 16,114,396 13,253, ,138 9,495,538 5,603, ,487,372 (23,235) 388,342 19, ,903 (932,112) (9,135) (18,416) 389,174 (8,856) 1, , ,036 58,217,356 18,188,792 19,387,580 1,029,325 10,939,366 6,145, ,239, ,246,278 58,185,827 35,792,800 1,161,292 41,238,402 51,913,942 1,063,713,664 (147,032,971) (19,119,652) (20,686,488) (1,288,799) (16,107,257) (4,074,380) (729,922,730) 21,636,988 (17,262,461) 61,283 52,393 6,888 (129) 11,603 1,680, ,274,590 39,118,568 36,750,188 (17,390,097) 25,142,748 47,839, ,471,607 (2,780,118) (241,483) (325,486) (245,188) (160,114) (97,024,898) 172,494,472 38,877,085 36,424,702 (17,635,285) 24,982,634 47,839, ,446, ,208, ,332, ,605,937 72,826,320 59,550,868 3,175,089,186 (12.35)% (14.95)% 76.58% 59.18% (20.77)% (4.01)% 56.75% part of these financial statements Unaudited Semi-Annual Report 21

23 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Franklin Income Fund Franklin India Fund Franklin MENA Fund Franklin Natural Resources Fund Franklin Real Return Fund (USD) (USD) (USD) (USD) (USD) NET ASSETS AT THE BEGINNING OF THE PERIOD Currency translation adjustment INCOME Dividends ( of withholding taxes) Interest on bonds ( of withholding taxes) Bank interest Securities lending Interest on swaps Sundry income TOTAL INCOME EXPENSES Investment management fees (note 3) Administration and transfer agency fees Subscription tax (note 10) Custodian fees Audit, printing and publishing expenses Bank charges Class A(dis) and Class A(acc) shares maintenance charges (note 13) Class AX(acc) shares maintenance charges (note 13) Class B(dis) and Class B(acc) shares maintenance and service charges (note 13) Class C(dis) and Class C(acc) shares maintenance and service charges (note 13) Class N(dis) and Class N(acc) shares distribution charges (note 13) Other charges TOTAL EXPENSES Expenses reimbursement (note 16) NET EXPENSES NET PROFIT/(LOSS) FROM INVESTMENTS Net realised profit/(loss) on sale of investments Net realised profit/(loss) on forward foreign exchange contracts Net realised profit/(loss) on financial futures contracts Net realised profit/(loss) on credit default swaps Net realised profit/(loss) on interest rate swaps Net realised profit/(loss) on foreign exchange transactions NET REALISED PROFIT/(LOSS) FOR THE PERIOD Change in unrealised appreciation/(depreciation) on: Investments Forward foreign exchange contracts Financial futures contracts Options contracts Credit default swaps Interest rate swaps Foreign exchange transactions NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF OPERATIONS MOVEMENT OF CAPITAL Issue of shares Redemption of shares Issue of shares in course of merger Redemption of shares in course of merger Equalisation (note 12) Dividends paid/accumulated (note 18) NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF MOVEMENT IN CAPITAL NET ASSETS AT THE END OF THE PERIOD Portfolio Turnover Ratio (note 21) 653,230,165 1,024,275,135 95,002, ,946,439 4,638, ,230,165 1,024,275,135 95,002, ,946,439 4,638,420 4,409,841 6,905, , ,448 6,705 17,697,179 3,311 32, ,907 3,926 1,562, ,669,420 6,963, , ,759 39, ,851,527 6,389, , ,186 19, ,066 1,552, , ,022 5, , ,866 16,016 35,028 1,565 15, , ,706 4, ,854 43,844 11,229 10,196 5,264 1, ,026,963 2,287,137 85, ,083 13,260 1,184, ,309 11, , , , ,919 1,233,313 34,503 78,035 79, ,507 14,055 16, ,831,337 13,031,129 1,203,748 1,376,983 46,316 (200) (18,517) (10,454) 6,831,137 13,012,612 1,203,748 1,376,983 35,862 16,838,283 (6,048,918) (721,710) (591,224) 3,523 5,239,987 74,071, ,405 2,162,108 6,684 1,279,792 1,057, , ,021 19,236 (2,051,759) 58,628 (6,249) 1,889 23,377,298 67,027, ,165 1,564, ,117 55,196, ,362,517 18,873,898 53,291, , , ,779 (36,042) 77, ,364 (489,254) 102,924 45,038 65,758 79,996, ,113,669 19,570,945 54,901, , ,660,416 1,048,992,700 53,763, ,515,827 1,311,564 (275,611,610) (646,657,222) (19,757,374) (141,687,914) (33,886) (388,414) 4,789 6, (45,339,608) 402,340,267 34,012,835 97,827,913 1,277,811 (14,923,252) (323,482) (1,070,670) (13,182) (60,262,860) 402,016,785 32,942,165 97,827,913 1,264, ,963,853 1,660,405, ,515, ,675,808 6,423, % 31.37% % (2.87)% 1.73% The accompanying notes form an integral 22 Unaudited Semi-Annual Report

24 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Franklin Strategic Income Fund Franklin Technology Fund Franklin U.S. Dollar Liquid Reserve Fund Franklin U.S. Equity Fund Franklin U.S. Focus Fund Franklin U.S. Government Fund Franklin U.S. Opportunities Fund (USD) (USD) (USD) (USD) (USD) (USD) (USD) 191,900, ,049, ,260, ,871,864 8,945,646 2,498,161, ,151, ,900, ,049, ,260, ,871,864 8,945,646 2,498,161, ,151, , ,278 3,564,644 61,658 2,706,320 5,829,205 6, ,996 15, ,959,913 15, ,753 23,708 1,269 12, ,898 6,563, , ,996 3,592,157 61,795 58,959,960 2,961, ,922 1,506, ,604 2,956,928 44,493 7,069,001 5,345, , , , ,253 12,196 2,773,762 1,279,496 59,749 75,868 12, ,804 1, , ,091 19,856 7,050 4,429 12, ,998 24,509 12,263 14,911 13,706 26,232 7,237 83,088 41,384 2, ,012 2, ,430 3, , ,564 86, ,799 9,086 1,409,621 1,781, , ,984 29, , ,664 1,297, , ,062 12,250 51, , , , , , ,906 15, , ,604 26,176 41,640 29,538 74,280 1, , ,070 2,124,464 2,851,655 1,036,763 5,545,731 91,662 15,347,854 9,597,166 (231,375) (368) (198,048) 1,893,089 2,851,655 1,036,763 5,545,731 91,294 15,149,806 9,597,166 4,670,513 (2,556,157) (451,767) (1,953,574) (29,499) 43,810,154 (6,635,695) 2,560,368 13,241,733 18,664, ,939 5,595,610 17,848, ,550 4,525, , ,497 1,437, ,692 (79,519) 48, , ,447 7,519,604 10,733,684 (451,719) 21,756,671 1,026,928 49,836,741 12,807,268 6,359,287 69,417,233 (314,241) 96,206,773 1,456,854 (25,256,461) 292,425,656 (1,276,109) 19,028 (50,127) 80, ,994 1,018,944 39,910 15,766 11,379 (50,122) 80, ,335 13,661,636 80,166,683 (765,960) 117,993,851 2,383,533 24,741, ,474, ,434, ,972, ,294, ,164,029 2,578, ,393, ,352,017 (55,699,300) (198,065,669) (181,905,041) (336,617,345) (3,274,027) (710,484,221) (360,396,764) 178, (12,328) (1,209) (607,388) 74,914,080 62,906,937 (46,610,205) (169,465,644) (697,207) (103,698,339) 446,955,253 (4,609,911) (1,195) (925,587) (52,092,955) 70,304,169 62,906,937 (46,611,400) (170,391,231) (697,207) (155,791,294) 446,955, ,866, ,123, ,883, ,474,484 10,631,972 2,367,111,664 1,632,580, % 11.93% N/A 70.90% 22.61% 35.40% 55.92% part of these financial statements Unaudited Semi-Annual Report 23

25 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Franklin U.S. Small-Mid Cap Growth Fund Franklin U.S. Total Return Fund Franklin U.S. Ultra Short Bond Fund Franklin World Perspectives Fund Franklin Mutual Beacon Fund (USD) (USD) (USD) (USD) (USD) NET ASSETS AT THE BEGINNING OF THE PERIOD Currency translation adjustment INCOME Dividends ( of withholding taxes) Interest on bonds ( of withholding taxes) Bank interest Securities lending Interest on swaps Sundry income TOTAL INCOME EXPENSES Investment management fees (note 3) Administration and transfer agency fees Subscription tax (note 10) Custodian fees Audit, printing and publishing expenses Bank charges Class A(dis) and Class A(acc) shares maintenance charges (note 13) Class AX(acc) shares maintenance charges (note 13) Class B(dis) and Class B(acc) shares maintenance and service charges (note 13) Class C(dis) and Class C(acc) shares maintenance and service charges (note 13) Class N(dis) and Class N(acc) shares distribution charges (note 13) Other charges TOTAL EXPENSES Expenses reimbursement (note 16) NET EXPENSES NET PROFIT/(LOSS) FROM INVESTMENTS Net realised profit/(loss) on sale of investments Net realised profit/(loss) on forward foreign exchange contracts Net realised profit/(loss) on financial futures contracts Net realised profit/(loss) on credit default swaps Net realised profit/(loss) on interest rate swaps Net realised profit/(loss) on foreign exchange transactions NET REALISED PROFIT/(LOSS) FOR THE PERIOD Change in unrealised appreciation/(depreciation) on: Investments Forward foreign exchange contracts Financial futures contracts Options contracts Credit default swaps Interest rate swaps Foreign exchange transactions NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF OPERATIONS MOVEMENT OF CAPITAL Issue of shares Redemption of shares Issue of shares in course of merger Redemption of shares in course of merger Equalisation (note 12) Dividends paid/accumulated (note 18) NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF MOVEMENT IN CAPITAL NET ASSETS AT THE END OF THE PERIOD Portfolio Turnover Ratio (note 21) 37,277,528 56,575, ,448,721 32,889,202 1,208,336,071 37,277,528 56,575, ,448,721 32,889,202 1,208,336, , ,959 21,661, ,187,105 2,503, ,288, ,202 39, ,171 35,577 20,188 1, , ,110 1,224,490 2,503, ,550 24,084, , , , ,748 6,147,279 69,661 75, ,549 41,061 1,510,281 10,646 14,151 46,914 7, , ,865 3,766 4,679 49,584 6,963 9,759 10,926 7,259 48, , ,920 75,600 52,056 90,459 44,467 1,925, ,888 36,259 29,429 42,559 3, ,005 22,673 18, ,760 1, ,126 21,086 38, ,968 35,885 1,032,644 5,200 6,975 22,817 4, , , ,451 1,435, ,746 12,176,663 (52,512) (97,935) (1,035) 464, ,939 1,337, ,711 12,176,663 (320,981) 808,551 1,165,677 (9,161) 11,908,077 2,739,983 (1,214,023) (1,662,716) 2,256,074 (15,099,713) 92,388 (3,998,632) 81,505 (24,840) 8,339 (41) (5,427) 873,466 2,419,002 (248,080) (497,080) 2,241,486 (6,316,802) 9,040,584 2,898,323 1,183,784 6,026, ,172,430 (222,455) (13,467,291) (117,608) (6,491) 87,860 11,754 6,818 (257,105) 11,459,586 2,409, ,704 8,275, ,124,741 38,458,519 22,434, ,487,069 4,287, ,153,261 (25,953,057) (14,268,357) (71,209,743) (1,179,646) (406,789,570) 40,772 81,099 (413) (311,768) 12,505,462 8,206,822 75,358,425 3,106,984 (80,948,077) (857,103) (1,185,955) (89,547) (1,964,908) 12,505,462 7,349,719 74,172,470 3,017,437 (82,912,985) 61,242,576 66,334, ,307,895 44,181,794 1,326,547, % % (52.03)% % 16.70% The accompanying notes form an integral 24 Unaudited Semi-Annual Report

26 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Franklin Mutual Euroland Fund Franklin Mutual European Fund Franklin Mutual Global Discovery Fund Franklin Templeton Global Equity Strategies Fund Franklin Templeton Global Fundamental Strategies Fund Franklin Templeton Global Growth and Value Fund Franklin Templeton Japan Fund (EUR) (EUR) (USD) (USD) (USD) (USD) (JPY) 9,222,542 2,591,062, ,956,429 55,677, ,235,313 64,486,472 7,225,256,114 9,222,542 2,591,062, ,956,429 55,677, ,235,313 64,486,472 7,225,256,114 61,639 17,579,707 7,484, ,062 2,668, ,640 53,851,481 3, ,086 19,348 5,386, ,071 44,076 2, ,372 5,424 5,368,073 1,568,511 49, , ,586 23,543,134 9,894, ,566 8,054, ,776 53,851,481 44,740 12,954,607 4,625, ,010 2,624, ,781 33,157,916 11,045 3,143,059 1,187, , , ,750 11,551,844 1, , ,165 16, ,332 16,844 1,490, ,781 59,957 9,782 72,824 5, ,898 4,389 92,339 38,729 7,625 22,704 8, , ,210 4,316,228 1,097, ,004 1,289, ,793 12,940, , ,675 2,105 13, , , , , ,058 3,799 1,667,269 1,111,613 51,728 32,124 7,456,024 1, , ,269 7,874 60,455 9, ,117 80,909 23,765,396 9,191, ,436 5,006, ,686 69,622,582 (807) (41) (3,110) 80,102 23,765,396 9,191, ,436 5,006, ,645 69,619,472 (9,516) (222,262) 702,757 (176,870) 3,048,009 (118,869) (15,767,991) 722,982 49,448,339 18,808,298 2,216,713 6,527, ,442 (442,897,475) 67,720 2,430, ,686 8,054,142 1,762 (1,234,209) 895,875 (2,553) 84,375 19,966 3,367, ,228 48,059,588 22,837,332 2,689,976 17,714, ,539 (455,297,561) 266, ,136, ,188,193 10,590,434 61,645,460 13,543, ,369,965 (2,294) 2,369,999 (71,535) 1,976,513 (3,008) 397,763 2,656,802 (51,508) 3,213,700 4, , , ,591, ,052,326 13,157,367 84,550,030 14,434, ,590,102 2,936, ,258, ,486,117 5,828,240 54,549,752 34,605,446 2,290,933,785 (3,458,739) (627,476,756) (265,297,590) (5,827,948) (32,296,496) (16,816,051) (3,378,986,910) (10) (12,588) (22,673) 27,543 14,060 (15,472) (522,276) 135,768,841 57,165, ,280,799 17,803,455 (1,088,068,597) (73,004) (23,728,928) (3,693,491) (7,567,465) (191,900) (1,064,959) (595,280) 112,039,913 53,472, ,713,334 17,611,555 (1,089,133,556) 9,605,492 2,932,693,818 1,090,481,118 68,835, ,498,677 96,532,310 6,540,712, % 10.09% 39.79% 28.81% 28.12% (19.14)% % part of these financial statements Unaudited Semi-Annual Report 25

27 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Templeton Asian Bond Fund Templeton Asian Growth Fund Templeton Asian Smaller Companies Fund Templeton BRIC Fund Templeton China Fund (USD) (USD) (USD) (USD) (USD) NET ASSETS AT THE BEGINNING OF THE PERIOD Currency translation adjustment INCOME Dividends ( of withholding taxes) Interest on bonds ( of withholding taxes) Bank interest Securities lending Interest on swaps Sundry income TOTAL INCOME EXPENSES Investment management fees (note 3) Administration and transfer agency fees Subscription tax (note 10) Custodian fees Audit, printing and publishing expenses Bank charges Class A(dis) and Class A(acc) shares maintenance charges (note 13) Class AX(acc) shares maintenance charges (note 13) Class B(dis) and Class B(acc) shares maintenance and service charges (note 13) Class C(dis) and Class C(acc) shares maintenance and service charges (note 13) Class N(dis) and Class N(acc) shares distribution charges (note 13) Other charges TOTAL EXPENSES Expenses reimbursement (note 16) NET EXPENSES NET PROFIT/(LOSS) FROM INVESTMENTS Net realised profit/(loss) on sale of investments Net realised profit/(loss) on forward foreign exchange contracts Net realised profit/(loss) on financial futures contracts Net realised profit/(loss) on credit default swaps Net realised profit/(loss) on interest rate swaps Net realised profit/(loss) on foreign exchange transactions NET REALISED PROFIT/(LOSS) FOR THE PERIOD Change in unrealised appreciation/(depreciation) on: Investments Forward foreign exchange contracts Financial futures contracts Options contracts Credit default swaps Interest rate swaps Foreign exchange transactions NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF OPERATIONS MOVEMENT OF CAPITAL Issue of shares Redemption of shares Issue of shares in course of merger Redemption of shares in course of merger Equalisation (note 12) Dividends paid/accumulated (note 18) NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF MOVEMENT IN CAPITAL NET ASSETS AT THE END OF THE PERIOD Portfolio Turnover Ratio (note 21) 2,279,041,816 10,393,185,887 37,740,758 2,611,189, ,951,071 2,279,041,816 10,393,185,887 37,740,758 2,611,189, ,951, ,039, ,966 26,055,388 10,101,196 54,591, , , , ,124 51,028 55,288, ,490, ,698 26,213,512 10,152,224 10,875,749 80,651, ,651 23,914,239 9,617,131 3,165,072 14,424, ,214 3,780,291 1,404, ,289 2,654,844 22, , , ,739 4,676,885 24, , ,595 95, ,232 8,763 97,725 41, , ,350,017 18,917, ,617 5,904,197 2,596, , ,618 11,407 1,454,475 1, , , , , ,791 3,793,101 1,357, , ,628 1,493,179 9, , ,773 21,286, ,849, ,720 39,076,251 14,889,555 (42,123) (214,031) (259) (108,858) (530) 21,244, ,635, ,461 38,967,393 14,889,025 34,043,927 6,854,873 (299,763) (12,753,881) (4,736,801) 10,378,351 83,503,563 2,526,773 58,793,824 6,325,557 (367,403) 20,499,765 3,942,310 (5,575) 966,808 (3,961,508) 61,358 (813,362) (228,604) 45,016, ,896,693 2,288,368 49,168,891 1,360, ,213,916 3,155,260,729 19,652, ,808, ,113,958 21,215,542 63, ,372 6,039 2,885,170 (88,239) (1,812) 353,953 28, ,336,775 3,262,133,106 21,939, ,687, ,502,290 1,651,247,298 6,547,574, ,553, ,365, ,731,116 (570,153,593) (3,194,354,937) (53,839,852) (777,286,814) (585,485,606) 1,472,936 5,972, ,703 (1,360) 449,048 1,082,566,641 3,359,191, ,888,591 (69,922,478) 372,694,558 (32,897,566) (49,397,801) (230,761) (1,097,522) (543,775) 1,049,669,075 3,309,794, ,657,830 (71,020,000) 372,150,783 3,550,047,666 16,965,113, ,337,841 3,261,857,226 1,544,604,144 (38.71)% (22.90)% (135.73)% 11.75% (35.07)% The accompanying notes form an integral 26 Unaudited Semi-Annual Report

28 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Templeton Eastern Europe Fund Templeton Emerging s Fund Templeton Emerging s Bond Fund Templeton Emerging s Smaller Companies Fund Templeton Euro Government Bond Fund Templeton Euro High Yield Fund Templeton Euro Liquid Reserve Fund (EUR) (USD) (USD) (USD) (EUR) (EUR) (EUR) 711,325,555 1,007,586,053 4,111,146, ,588,749 18,498, ,893, ,927, ,325,555 1,007,586,053 4,111,146, ,588,749 18,498, ,893, ,927,433 2,563,394 13,896,836 4,536,064 16, ,488 32, ,162,673 6, ,606 16,892, ,392 53,209 35, , ,180 65,843 9, ,231 2, ,812 2,830,091 13,964, ,007,192 4,542, ,810 17,051, ,439 6,544,943 9,529,359 23,913,151 2,866,850 51,688 1,689, ,529 1,114,974 1,530,176 6,310, ,159 27, ,784 91, , ,158 1,140,571 88,473 5,134 97,291 5, , ,413 1,704, , ,940 4,417 30,450 41, ,747 17,523 6,758 20,424 7, , ,661,808 2,385,387 6,837, ,114 11, ,025 31, , ,224 6,907,112 83,546 31, , ,954 36, , ,208 1,281,671 87,203 32, , , , , ,950 41,969 2,400 51,717 12,803 10,776,266 15,661,470 49,349,705 4,468, ,962 3,362, ,491 (22,787) (3,189) (46,982) (28,242) (13) 10,753,479 15,658,281 49,302,723 4,439, ,949 3,362, ,491 (7,923,388) (1,693,316) 135,704, , ,861 13,688, ,948 4,685,675 23,351,692 (5,421,010) 7,384, ,184 7,598,335 (111,428) 24,631,832 5,694,376 (5,575) 13,418,987 (484,641) (24,098) 4,968,403 (137,383) (18,551) (3,722,354) 21,634, ,297,106 7,349, ,045 26,962, , ,439, ,691, ,783,271 90,445,713 (658,811) 9,547,584 40,275 (26,406,552) 1,351,302 6,039 12,201 (11,282,193) 71,373 81,624 1,496, ,697 (166,263) 143,788, ,407, ,893,845 98,038,778 (358,766) 37,707, , ,033, ,379,365 3,079,451, ,372,668 11,896, ,803, ,083,674 (334,235,223) (239,136,651) (1,542,913,088) (86,595,394) (8,787,212) (105,113,797) (109,977,675) 18,257 (2,060) 11,766, ,487 6, ,810 (17,972) 218,816,239 20,240,654 1,548,305,539 94,926,761 3,115,655 66,032,570 (8,911,973) (121,508) (348,966) (128,382,704) (1,519,337) (418,104) (20,264,525) (246,083) 218,694,731 19,891,688 1,419,922,835 93,407,424 2,697,551 45,768,045 (9,158,056) 1,073,808,941 1,313,885,189 5,911,962, ,034,951 20,836, ,369,002 99,131,172 (19.12)% 13.40% (27.57)% 5.85% 85.66% 84.96% N/A part of these financial statements Unaudited Semi-Annual Report 27

29 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Templeton Euro Money Fund Templeton Euroland Fund Templeton European Fund Templeton European Corporate Bond Fund Templeton European Total Return Fund (EUR) (EUR) (EUR) (EUR) (EUR) NET ASSETS AT THE BEGINNING OF THE PERIOD Currency translation adjustment INCOME Dividends ( of withholding taxes) Interest on bonds ( of withholding taxes) Bank interest Securities lending Interest on swaps Sundry income TOTAL INCOME EXPENSES Investment management fees (note 3) Administration and transfer agency fees Subscription tax (note 10) Custodian fees Audit, printing and publishing expenses Bank charges Class A(dis) and Class A(acc) shares maintenance charges (note 13) Class AX(acc) shares maintenance charges (note 13) Class B(dis) and Class B(acc) shares maintenance and service charges (note 13) Class C(dis) and Class C(acc) shares maintenance and service charges (note 13) Class N(dis) and Class N(acc) shares distribution charges (note 13) Other charges TOTAL EXPENSES Expenses reimbursement (note 16) NET EXPENSES NET PROFIT/(LOSS) FROM INVESTMENTS Net realised profit/(loss) on sale of investments Net realised profit/(loss) on forward foreign exchange contracts Net realised profit/(loss) on financial futures contracts Net realised profit/(loss) on credit default swaps Net realised profit/(loss) on interest rate swaps Net realised profit/(loss) on foreign exchange transactions NET REALISED PROFIT/(LOSS) FOR THE PERIOD Change in unrealised appreciation/(depreciation) on: Investments Forward foreign exchange contracts Financial futures contracts Options contracts Credit default swaps Interest rate swaps Foreign exchange transactions NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF OPERATIONS MOVEMENT OF CAPITAL Issue of shares Redemption of shares Issue of shares in course of merger Redemption of shares in course of merger Equalisation (note 12) Dividends paid/accumulated (note 18) NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF MOVEMENT IN CAPITAL NET ASSETS AT THE END OF THE PERIOD Portfolio Turnover Ratio (note 21) 24,421, ,622, ,182,884 10,850,259 70,690,229 24,421, ,622, ,182,884 10,850,259 70,690, , ,872 2,305 77, ,469 1,524,559 4,687 2,566 1, , , ,164 21, ,000 82, ,672 1,075, ,647 1,533,817 25, , ,956 25, ,675 13, , ,514 11,655 89,083 1,263 26,711 29,169 1,167 17,457 1,132 13,844 10, ,673 4,389 9,259 8,750 4,752 8,694 1, , ,723 1,569 59,396 1,853 1,062 1,652 3,479 44,693 27,785 5, ,235 3,259 16,686 14,677 1,338 8,931 50,913 1,182,354 1,150,209 52, ,623 (21,714) (4,580) (109,902) 29,199 1,182,354 1,150,209 47, ,721 52,944 (309,682) (74,211) 176,942 1,025, ,970 3,451,961 (68,280) 524,859 9,673 (3,024) (4,365) (28,548) (93) 4,696 52, ,923 3,349, ,242 1,551,627 9,874,928 8,330,690 1,394 (1,110,455) 5, , (9,164) (57) 5,951 52,944 10,345,653 11,670, ,518 1,186,583 2,024,039 9,580,741 10,219, ,494 17,093,850 (2,299,434) (31,293,688) (17,197,591) (27,627) (19,829,121) (1,924) (38,693) (3,211) 4,442 (5,870) (277,319) (21,751,640) (6,981,633) 644,309 (2,741,141) (58,762) (1,759,755) (1,369,576) (50,900) (1,073,480) (336,081) (23,511,395) (8,351,209) 593,409 (3,814,621) 24,138, ,456, ,502,403 11,569,186 68,062,191 N/A 19.00% 46.99% 40.57% % **This Fund was launched on October 29, 2010 The accompanying notes form an integral 28 Unaudited Semi-Annual Report

30 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Templeton Frontier s Fund Templeton Global Fund Templeton Global (Euro) Fund Templeton Global Aggregate Bond Fund** Templeton Global Balanced Fund Templeton Global Bond Fund Templeton Global Bond (Euro) Fund (USD) (USD) (EUR) (USD) (USD) (USD) (EUR) 355,478, ,156, ,441, ,907,869 26,724,456, ,872, ,478, ,156, ,441, ,907,869 26,724,456, ,872,646 4,005,659 6,585,136 3,325,943 3,635,369 2,481 40,863 4,536, ,453,195 6,905,071 2,423 14,911 10, ,890 3,255, ,566 1,723, , , ,591 55,100 27,373 42,303 76,444 4,010,563 8,378,353 3,860,827 41,331 9,207, ,767,693 7,034,637 4,521,493 4,897,459 2,766,262 8,645 2,847, ,175,312 1,567, ,282 1,297, ,120 3,779 1,073,368 34,146, , , , , ,060 8,119, , ,285 75,585 36, ,815 8,925,973 61,136 24,506 36,794 22,173 5,156 29, ,502 17,970 1, ,872 1,897,094 1,341,806 1,487 1,427,041 30,271, ,779 1,774,480 3, , ,561 10,535,843 1,542 5,177 94, ,571 8,136, , ,229 24,580 1,654 88,210 24,605, ,359 64, ,169 66, ,435 3,831,279 47,893 7,372,982 9,237,543 5,156,633 21,687 6,788, ,459,773 3,305,423 (59,692) (5,443) (258) (70,070) (43,001) 7,313,290 9,237,543 5,156,633 16,244 6,788, ,389,703 3,262,422 (3,302,727) (859,190) (1,295,806) 25,087 2,419, ,377,990 3,772,215 3,080,725 15,302,427 2,927,805 (25,268) 7,720, ,503, ,931 4,734,682 84,330 (290,024) (2,718,705) 706,114,885 (8,016,670) (5,575) (4,473) 61,607,737 (876,400) 173,117 53,829 (58,582) 309,704 3,612, ,094 3,636,280 14,616,354 1,770,158 (348,787) 7,730,344 1,447,211,445 (3,626,903) 102,369, ,617,462 41,340,641 (441,902) 101,545,901 2,018,609,675 (5,086,178) (302,266) 30, ,688 2,685,327 (473,335,282) 12,070,914 6,039 4,717 (44,164,661) (318,797) 36,987 (351,555) 102, ,416 4,688,069 (159,204) 105,384, ,270,803 42,789,720 (500,831) 112,346,988 2,953,015,285 3,203, ,121, ,329,373 27,725,775 11,406,354 45,066,211 13,384,780, ,458,167 (166,008,189) (161,092,289) (47,234,566) (100,650,007) (6,700,237,891) (108,748,739) 28, ,384 (28,240) 407 (39,999) 14,982, , ,141,717 (40,654,532) (19,537,031) 11,406,761 (55,623,795) 6,699,525, ,137,829 (2,077,781) (5,519,076) (2,331,878) (12) (5,780,179) (494,404,645) (14,023,033) 487,063,936 (46,173,608) (21,868,909) 11,406,749 (61,403,974) 6,205,120,677 98,114, ,926,796 1,078,254, ,362,202 10,905, ,850,883 35,882,592, ,190,788 (26.75)% 38.77% 44.81% 42.75% 10.89% (14.39)% (44.27)% part of these financial statements Unaudited Semi-Annual Report 29

31 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Templeton Global Equity Income Fund Templeton Global High Yield Fund Templeton Global Income Fund Templeton Global Smaller Companies Fund Templeton Global Total Return Fund (USD) (USD) (USD) (USD) (USD) NET ASSETS AT THE BEGINNING OF THE PERIOD Currency translation adjustment INCOME Dividends ( of withholding taxes) Interest on bonds ( of withholding taxes) Bank interest Securities lending Interest on swaps Sundry income TOTAL INCOME EXPENSES Investment management fees (note 3) Administration and transfer agency fees Subscription tax (note 10) Custodian fees Audit, printing and publishing expenses Bank charges Class A(dis) and Class A(acc) shares maintenance charges (note 13) Class AX(acc) shares maintenance charges (note 13) Class B(dis) and Class B(acc) shares maintenance and service charges (note 13) Class C(dis) and Class C(acc) shares maintenance and service charges (note 13) Class N(dis) and Class N(acc) shares distribution charges (note 13) Other charges TOTAL EXPENSES Expenses reimbursement (note 16) NET EXPENSES NET PROFIT/(LOSS) FROM INVESTMENTS Net realised profit/(loss) on sale of investments Net realised profit/(loss) on forward foreign exchange contracts Net realised profit/(loss) on financial futures contracts Net realised profit/(loss) on credit default swaps Net realised profit/(loss) on interest rate swaps Net realised profit/(loss) on foreign exchange transactions NET REALISED PROFIT/(LOSS) FOR THE PERIOD Change in unrealised appreciation/(depreciation) on: Investments Forward foreign exchange contracts Financial futures contracts Options contracts Credit default swaps Interest rate swaps Foreign exchange transactions NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF OPERATIONS MOVEMENT OF CAPITAL Issue of shares Redemption of shares Issue of shares in course of merger Redemption of shares in course of merger Equalisation (note 12) Dividends paid/accumulated (note 18) NET INCREASE/(DECREASE) IN NET ASSETS AS A RESULT OF MOVEMENT IN CAPITAL NET ASSETS AT THE END OF THE PERIOD Portfolio Turnover Ratio (note 21) 90,904,876 57,991, ,043, ,574,862 9,247,942,075 90,904,876 57,991, ,043, ,574,862 9,247,942,075 1,251,327 99,384 1,724,763 1,891,384 51,638 2,490,716 2,579, ,162,546 1, ,490 35,443 45, ,723 39,691 1,078,396 8,656 3,896 1, ,426 1,292,757 1,538,385 2,633,720 4,339,772 2,273, ,631, , , ,015 1,391,116 42,983, ,355 80, , ,991 12,406,455 24,952 17,743 58,176 66,188 3,030,229 10,802 11,167 30,608 36,447 3,321,291 9,521 8,564 12,931 14, , , , , , ,877 11,551,776 67, ,542 23,615 1,865,017 3, ,346 7,830 2,558,520 7,017 70, ,948 65,844 10,360,138 11,995 7,965 25,468 32,731 1,306, , ,893 2,162,022 2,588,067 89,746,720 (190,718) (214,682) (1,633,599) 804, ,893 1,947,340 2,588,067 88,113, ,117 2,035,827 2,392,432 (314,814) 249,518,071 (407,096) 503,352 (1,496,409) 10,486,701 29,574,630 (151,285) (626,419) 199,479,018 (5,575) (5,575) (5,575) 25,012 41,150,885 (33,339) (2,752) (261,084) (833) 12,057, ,682 2,404,579 2,945 10,171, ,774,759 18,591,387 3,538,835 29,970,353 59,573, ,763,585 (538,085) 1,576,598 (11,266,063) 6,039 6,039 6, ,335 (35,448,414) 16,095 3,118 58,916 (10,807) 69,279,725 18,901,164 5,592,821 31,614,851 69,733,891 1,297,109,631 9,560,868 53,514, ,261, ,512,467 6,481,523,943 (19,715,440) (28,288,196) (40,916,449) (120,913,527) (3,013,667,074) (15,720) 97, ,042 12,843 8,986,339 (10,170,292) 25,323,635 60,519,333 22,611,783 3,476,843,208 (1,543,921) (2,030,003) (2,939,051) (322,958) (242,526,877) (11,714,213) 23,293,632 57,580,282 22,288,825 3,234,316,331 98,091,827 86,878, ,238, ,597,578 13,779,368, % (51.62)% 18.47% (60.14)% (1.30)% The accompanying notes form an integral 30 Unaudited Semi-Annual Report

32 Statement of Operations and Changes in Net Assets For the Period ended December 31, 2010 (continued) Templeton Growth (Euro) Fund Templeton Korea Fund Templeton Latin America Fund Templeton Thailand Fund Templeton U.S. Value Fund (EUR) (USD) (USD) (USD) (USD) 4,490,061,960 82,332,757 3,000,450, ,863,578 30,343,326 4,490,061,960 82,332,757 3,000,450, ,863,578 30,343,326 32,287, ,478 34,349,260 2,610, , , ,950 3,685 90,858 6,520 7,340,484 8,626 40,670, ,163 34,440,118 2,617, ,697 23,243, ,493 23,599,719 1,389, ,976 6,468, ,911 4,156, ,227 41,423 1,122,897 24, ,207 44,642 4, ,260 32,746 1,114,141 47, ,325 8, ,323 10,786 7,967 2, , ,549, ,999 5,967, ,089 26,767 1,814 1,020,843 38,420 7, , ,158 7, ,425 30, ,634 44,007 17, ,467 11, ,107 20,436 4,071 43,543,056 1,274,359 38,204,202 2,211, ,026 (307) (6,299) (163) 43,543,056 1,274,052 38,197,903 2,211, ,026 (2,872,819) (1,138,889) (3,757,785) 405,877 (78,329) 39,705,154 5,411,353 88,089,473 9,326,879 1,586,303 63,451 3,493,949 (25,850) (2,025,341) 10,967 (4,447,901) 28, ,870,445 4,283,431 83,377,736 9,761,343 1,482, ,793,294 29,626, ,162,446 40,285,436 4,792,985 28,443 87,692 46,974 (1,550,719) (5,047) 488,107 (1,046) 46, ,141,463 33,904, ,115,981 50,045,733 6,369, ,648,472 78,590,726 1,589,207, ,930,468 20,130,746 (259,005,017) (81,386,622) (1,306,555,073) (162,526,612) (21,037,191) (56,862) 305, ,290 (942) (60,413,407) (2,795,896) 282,957,699 6,565,146 (907,387) (19,777,537) (10,340) (18,274,741) (1,199,047) (59,897) (80,190,944) (2,806,236) 264,682,958 5,366,099 (967,284) 4,906,012, ,431,324 4,177,249, ,275,410 35,745, % (39.58)% (10.77)% (100.99)% 3.63% part of these financial statements Unaudited Semi-Annual Report 31

33 Statistical Information All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Franklin Asian Flex Cap Fund USD Franklin Asian Flex Cap A (Acc) 2.00% 464, Franklin Asian Flex Cap A (Acc) SGD 1.95% 3, Franklin Asian Flex Cap A (Ydis) 2.00% 178, Franklin Asian Flex Cap A (Ydis) GBP 2.00% 105, Franklin Asian Flex Cap B (Acc) 3.24% 631, Franklin Asian Flex Cap C (Acc) 2.60% 47, Franklin Asian Flex Cap I (Acc) 0.99% 141, Franklin Asian Flex Cap I (Ydis) 1.00% 99, Franklin Asian Flex Cap N (Acc) 2.75% 91, Franklin Biotechnology Discovery Fund USD Franklin Biotechnology Discovery A (Acc) 2.02% 8,744, Franklin Biotechnology Discovery A (Acc) SGD 2.02% 1,414, Franklin Biotechnology Discovery B (Acc) 3.32% 393, Franklin Biotechnology Discovery C (Acc) 2.59% 72, Franklin Biotechnology Discovery I (Acc) 1.00% 436, Franklin Biotechnology Discovery N (Acc) 2.76% 539, Franklin Euroland Core Fund EUR Franklin Euroland Core A (Acc) 1.86% 195, Franklin Euroland Core A (Acc) USD 1.86% 178, Franklin Euroland Core I (Acc) 0.95% 638, Franklin Euroland Core I (Acc) USD 0.95% 811, Franklin Euroland Core N (Acc) 2.61% 50, Franklin European Growth Fund EUR Franklin European Growth A (Acc) 1.82% 21,836, Franklin European Growth A (Ydis) GBP 1.84% 5, Franklin European Growth I (Acc) 0.96% 7,685, Franklin European Growth N (Acc) 2.58% 5,867, Franklin European Small-Mid Cap Growth Fund EUR Franklin European Small-Mid Cap Growth A (Acc) 1.85% 9,470, Franklin European Small-Mid Cap Growth A (Acc) USD 1.85% 185, Franklin European Small-Mid Cap Growth A (Ydis) GBP 1.87% 8, Franklin European Small-Mid Cap Growth B (Acc) USD 3.14% 21, Franklin European Small-Mid Cap Growth I (Acc) 0.96% 6,829, Franklin European Small-Mid Cap Growth I (Acc) USD 0.97% 3,353, Franklin European Small-Mid Cap Growth N (Acc) 2.60% 1,243, Franklin Global Growth Fund USD Franklin Global Growth A (Acc) 1.88% 3,312, Franklin Global Growth A (Acc) EUR 1.92% 4, Franklin Global Growth A (Acc) EUR hedged (H1) 1.89% 81, Franklin Global Growth A (Acc) GBP 1.91% Franklin Global Growth A (Acc) SGD 1.91% Franklin Global Growth I (Acc) 0.98% 7,215, Franklin Global Growth I (Acc) EUR 0.98% Franklin Global Growth I (Acc) EUR hedged (H1) 0.96% 80, Franklin Global Growth N (Acc) 2.64% 770, Franklin Global Growth N (Acc) EUR 2.65% Franklin Global Real Estate Fund USD Franklin Global Real Estate A (Acc) 1.91% 5,071, Franklin Global Real Estate A (Acc) EUR hedged (H1) 1.90% 1,114, Franklin Global Real Estate A (Qdis) 1.91% 1,808, Franklin Global Real Estate A (Qdis) SGD 1.91% 3, Franklin Global Real Estate A (Ydis) EUR hedged (H1) 1.90% 178, Franklin Global Real Estate A (Ydis) EUR hedged (H2) 1.93% 236, Franklin Global Real Estate B (Qdis) 3.22% 786, Franklin Global Real Estate C (Qdis) 2.49% 1,833, Franklin Global Real Estate I (Acc) 1.00% 141, Franklin Global Real Estate I (Qdis) 1.00% 350, Franklin Global Real Estate N (Acc) 2.66% 1,005, Franklin Global Real Estate N (Acc) EUR hedged (H1) 2.65% 438, Franklin Global Real Estate N (Qdis) 2.66% 59, Unaudited Semi-Annual Report

34 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Franklin Global Small-Mid Cap Growth Fund USD Franklin Global Small-Mid Cap Growth A (Acc) 1.88% 2,769, Franklin Global Small-Mid Cap Growth B (Acc) 3.19% 98, Franklin Global Small-Mid Cap Growth I (Acc) 1.00% 169, Franklin Global Small-Mid Cap Growth N (Acc) 2.64% 349, Franklin Gold and Precious Metals Fund USD Franklin Gold and Precious Metals A (Acc) 1.96% 1,260, Franklin Gold and Precious Metals A (Acc) EUR 1.94% 477, Franklin Gold and Precious Metals A (Acc) EUR hedged (H1) 1.93% 198, Franklin Gold and Precious Metals A (Acc) HKD 1.93% 1,907, Franklin Gold and Precious Metals A (Acc) SGD 1.95% 1,232, Franklin Gold and Precious Metals A (Acc) CHF hedged (H1) 1.94% 248, Franklin Gold and Precious Metals A (Acc) SEK hedged (H1) 1.87% 698, Franklin Gold and Precious Metals A (Ydis) EUR 1.93% 7, Franklin Gold and Precious Metals A (Ydis) EUR hedged (H1) 1.92% 79, Franklin Gold and Precious Metals I (Acc) 1.02% 249, Franklin Gold and Precious Metals I (Ydis) 1.00% 125, Franklin Gold and Precious Metals N (Acc) 2.78% 338, Franklin Gold and Precious Metals N (Acc) EUR 2.72% 100, Franklin High Yield Fund USD Franklin High Yield A (Acc) 1.55% 6,975, Franklin High Yield A (Mdis) 1.55% 303,470, Franklin High Yield A (Mdis) SGD hedged (H1) 1.55% 5,297, Franklin High Yield B (Mdis) 2.96% 87,934, Franklin High Yield C (Acc) 2.23% 1,540, Franklin High Yield I (Acc) 0.80% 14,591, Franklin High Yield I (Mdis) 0.80% 9,834, Franklin High Yield N (Acc) 2.16% 2,544, Franklin High Yield Z (Mdis) 1.13% Franklin Income Fund USD Franklin Income A (Mdis) 1.68% 33,188, Franklin Income A (Mdis) SGD hedged (H1) 1.67% 3,915, Franklin Income B (Mdis) 2.99% 11,880, Franklin Income C (Acc) 2.26% 3,488, Franklin Income C (Mdis) 2.26% 1,060, Franklin Income I (Acc) 0.90% 652, Franklin Income N (Acc) 2.18% 3,073, Franklin Income Z (Acc) 1.22% 13, Franklin Income Z (Mdis) 1.18% Franklin India Fund USD Franklin India A (Acc) 1.91% 25,255, Franklin India A (Acc) EUR 1.91% 10,461, Franklin India A (Acc) SGD 1.95% Franklin India A (Ydis) EUR 1.93% 264, Franklin India A (Ydis) GBP 1.91% 630, Franklin India B (Acc) 3.22% 2,151, Franklin India C (Acc) 2.49% 914, Franklin India I (Acc) 1.00% 5,361, Franklin India I (Acc) EUR 1.00% 1,787, Franklin India I (Ydis) EUR 1.00% 30, Franklin India N (Acc) 2.67% 2,788, Franklin India N (Acc) EUR 2.67% 4,758, Franklin India N (Acc) PLN hedged (H1) 2.67% 1,695, Franklin MENA Fund USD Franklin MENA A (Acc) 2.64% 5,009, Franklin MENA A (Acc) EUR 2.64% 1,637, Franklin MENA A (Acc) EUR hedged (H1) 2.63% 1,206, Franklin MENA A (Ydis) 2.63% 9, Franklin MENA A (Ydis) EUR 2.54% 6, Franklin MENA A (Ydis) GBP 2.64% 299, Franklin MENA B (Acc) 3.93% 237, Franklin MENA C (Acc) 3.20% 10, Franklin MENA I (Acc) 1.54% 294, Franklin MENA I (Acc) EUR 1.51% 4,197, Franklin MENA I (Acc) EUR hedged (H1) 1.54% 1,911, Unaudited Semi-Annual Report 33

35 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Franklin MENA Fund USD (continued) Franklin MENA I (Ydis) 1.51% 11,529, Franklin MENA N (Acc) 3.15% 429, Franklin MENA N (Acc) EUR hedged (H1) 3.13% 1,711, Franklin Natural Resources Fund USD Franklin Natural Resources A (Acc) 1.86% 15,206, Franklin Natural Resources A (Acc) EUR 1.86% 2,970, Franklin Natural Resources A (Ydis) 1.85% 656, Franklin Natural Resources B (Acc) 3.25% Franklin Natural Resources C (Acc) 2.44% 869, Franklin Natural Resources I (Acc) 0.97% 1,780, Franklin Natural Resources I (Acc) EUR 0.96% 393, Franklin Natural Resources N (Acc) EUR 2.61% 1,930, Franklin Real Return Fund USD Franklin Real Return A (Acc) 1.35% 291, Franklin Real Return A (Ydis) EUR hedged (H1) 1.35% 247, Franklin Strategic Income Fund USD Franklin Strategic Income A (Acc) 1.35% 4,445, Franklin Strategic Income A (Acc) EUR 1.35% 762, Franklin Strategic Income A (Mdis) 1.35% 10,045, Franklin Strategic Income A (Mdis) EUR 1.35% 474, Franklin Strategic Income B (Mdis) 2.60% 2,907, Franklin Strategic Income C (Mdis) 1.95% 5,701, Franklin Strategic Income I (Acc) 0.82% 402, Franklin Strategic Income N (Acc) 2.10% 55, Franklin Strategic Income Z (Acc) 0.85% 15, Franklin Technology Fund USD Franklin Technology A (Acc) 1.82% 36,635, Franklin Technology A (Acc) EUR 1.83% 5,124, Franklin Technology B (Acc) 3.13% 664, Franklin Technology C (Acc) 2.41% 195, Franklin Technology I (Acc) EUR 0.95% 3,828, Franklin Technology N (Acc) 2.57% 2,479, Franklin Technology N (Acc) EUR 2.58% 5,627, Franklin U.S. Dollar Liquid Reserve Fund USD Franklin U.S. Dollar Liquid Reserve A (Acc) 0.59% 9,249, Franklin U.S. Dollar Liquid Reserve A (Mdis) 0.59% 5,049, Franklin U.S. Dollar Liquid Reserve B (Mdis) 1.65% 2,502, Franklin U.S. Dollar Liquid Reserve C (Acc) 1.57% 864, Franklin U.S. Dollar Liquid Reserve I (Acc) 0.36% 599, Franklin U.S. Dollar Liquid Reserve N (Acc) 1.48% 2,154, Franklin U.S. Equity Fund USD Franklin U.S. Equity A (Acc) 1.82% 17,029, Franklin U.S. Equity A (Acc) EUR 1.82% 3,729, Franklin U.S. Equity A (Acc) EUR hedged (H1) 1.81% 1,204, Franklin U.S. Equity A (Acc) SGD 1.85% 1, Franklin U.S. Equity B (Acc) 3.13% 1,403, Franklin U.S. Equity C (Acc) 2.40% 1,651, Franklin U.S. Equity I (Acc) 0.95% 10,073, Franklin U.S. Equity I (Acc) EUR 0.95% 1,828, Franklin U.S. Equity I (Acc) EUR hedged (H1) 0.89% 1,145, Franklin U.S. Equity N (Acc) 2.57% 2,703, Franklin U.S. Equity N (Acc) EUR 2.55% 1,558, Franklin U.S. Focus Fund USD Franklin U.S. Focus A (Acc) 1.94% 212, Franklin U.S. Focus A (Acc) EUR hedged (H1) 1.98% 256, Franklin U.S. Focus I (Acc) 1.09% 82, Franklin U.S. Focus I (Acc) EUR hedged (H1) 1.08% 307, Franklin U.S. Focus N (Acc) 2.69% 21, Franklin U.S. Focus N (Acc) EUR hedged (H1) 2.72% 332, Franklin U.S. Government Fund USD Franklin U.S. Government A (Acc) 1.32% Franklin U.S. Government A (Acc) HKD 1.28% 4, Unaudited Semi-Annual Report

36 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Franklin U.S. Government Fund USD (continued) Franklin U.S. Government A (Mdis) 1.27% 89,699, Franklin U.S. Government A (Mdis) HKD 1.22% 3, Franklin U.S. Government A (Mdis) SGD hedged (H1) 1.26% 627, Franklin U.S. Government AX (Acc) 1.47% 21,289, Franklin U.S. Government B (Acc) 2.53% 1,118, Franklin U.S. Government B (Mdis) 2.52% 12,968, Franklin U.S. Government C (Acc) 2.05% 5,334, Franklin U.S. Government I (Acc) 0.60% 3,046, Franklin U.S. Government I (Mdis) 0.60% 80,530, Franklin U.S. Government N (Acc) 1.97% 7,802, Franklin U.S. Government N (Mdis) 1.97% 4,777, Franklin U.S. Government Z (Acc) 0.98% 525, Franklin U.S. Government Z (Mdis) USD 0.97% Franklin U.S. Opportunities Fund USD Franklin U.S. Opportunities A (Acc) 1.82% 102,930, Franklin U.S. Opportunities A (Acc) EUR 1.82% 19,104, Franklin U.S. Opportunities A (Acc) EUR hedged (H1) 1.82% 3,776, Franklin U.S. Opportunities A (Acc) SGD 1.82% 1,345, Franklin U.S. Opportunities A (Acc) CHF hedged (H1) 1.87% 145, Franklin U.S. Opportunities A (acc) SEK hedged (H1) 1.79% 694, Franklin U.S. Opportunities A (Ydis) EUR 1.83% 694, Franklin U.S. Opportunities A (Ydis) GBP 1.81% 331, Franklin U.S. Opportunities B (Acc) 3.12% 3,794, Franklin U.S. Opportunities C (Acc) 2.40% 2,853, Franklin U.S. Opportunities I (Acc) 0.95% 22,417, Franklin U.S. Opportunities I (Acc) EUR 0.95% 5,517, Franklin U.S. Opportunities I (Acc) EUR hedged (H1) 0.94% 1,338, Franklin U.S. Opportunities N (Acc) 2.57% 3,477, Franklin U.S. Opportunities N (Acc) EUR 2.57% 1,905, Franklin U.S. Opportunities N (Acc) PLN hedged (H1) 2.56% 581, Franklin U.S. Opportunities Z (Acc) 1.31% 156, Franklin U.S. Small-Mid Cap Growth Fund USD Franklin U.S. Small-Mid Cap Growth A (Acc) 1.94% 3,385, Franklin U.S. Small-Mid Cap Growth B (Acc) 3.27% 320, Franklin U.S. Small-Mid Cap Growth C (Acc) 2.53% 445, Franklin U.S. Small-Mid Cap Growth I (Acc) 0.97% 155, Franklin U.S. Small-Mid Cap Growth N (Acc) 2.69% 421, Franklin U.S. Total Return Fund USD Franklin U.S. Total Return A (Acc) 1.20% 2,196, Franklin U.S. Total Return A (Mdis) 1.20% 818, Franklin U.S. Total Return B (Acc) 2.65% 254, Franklin U.S. Total Return B (Mdis) 2.65% 17, Franklin U.S. Total Return C (Mdis) 2.21% 352, Franklin U.S. Total Return I (Acc) 0.85% 40, Franklin U.S. Total Return I (Mdis) 0.83% 1,053, Franklin U.S. Total Return N (Mdis) 1.90% 793, Franklin U.S. Ultra Short Bond Fund USD Franklin U.S. Ultra Short Bond A (Acc) 1.15% Franklin U.S. Ultra Short Bond A (Mdis) 1.15% 12,076, Franklin U.S. Ultra Short Bond AX (Acc) 1.35% 3,374, Franklin U.S. Ultra Short Bond B (Acc) 2.34% 157, Franklin U.S. Ultra Short Bond B (Mdis) 2.35% 320, Franklin U.S. Ultra Short Bond C (Mdis) 2.06% 2,037, Franklin U.S. Ultra Short Bond I (Acc) 0.67% 757, Franklin U.S. Ultra Short Bond N (Mdis) 1.85% 4,548, Franklin World Perspectives Fund USD Franklin World Perspectives A (Acc) 1.85% 622, Franklin World Perspectives A (Acc) EUR 1.85% 412, Franklin World Perspectives A (Ydis) GBP 1.84% 143, Franklin World Perspectives B (Acc) 3.16% 46, Franklin World Perspectives C (Acc) 2.44% 20, Franklin World Perspectives I (Acc) 1.00% 413, Franklin World Perspectives I (Acc) EUR 1.00% 313, Franklin World Perspectives I (Ydis) GBP 1.00% 143, Franklin World Perspectives N (Acc) 2.60% 474, Unaudited Semi-Annual Report 35

37 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Franklin Mutual Beacon Fund USD Franklin Mutual Beacon A (Acc) 1.85% 13,798, Franklin Mutual Beacon A (Acc) EUR 1.86% 1,379, Franklin Mutual Beacon A (Acc) EUR hedged (H1) 1.85% 1,288, Franklin Mutual Beacon A (Acc) SGD 1.85% 633, Franklin Mutual Beacon A (Ydis) 1.85% 172, Franklin Mutual Beacon B (Acc) 3.16% 2,981, Franklin Mutual Beacon B (Ydis) EUR 3.17% Franklin Mutual Beacon C (Acc) 2.43% 3,411, Franklin Mutual Beacon I (Acc) 0.98% 16,552, Franklin Mutual Beacon I (Acc) EUR 0.97% 2,723, Franklin Mutual Beacon I (Acc) EUR hedged (H1) 0.98% 1,307, Franklin Mutual Beacon N (Acc) 2.60% 3,699, Franklin Mutual Beacon N (Acc) EUR 2.61% 3,024, Franklin Mutual Beacon N (Acc) EUR hedged (H1) 2.59% 481, Franklin Mutual Beacon Z (Acc) 1.36% Franklin Mutual Euroland Fund EUR Franklin Mutual Euroland A (Acc) 1.90% 341, Franklin Mutual Euroland A (Acc) USD 1.77% 1, Franklin Mutual Euroland I (Acc) 1.00% 173, Franklin Mutual Euroland I (Acc) USD 1.00% 236, Franklin Mutual Euroland N (Acc) 2.65% 51, Franklin Mutual European Fund EUR Franklin Mutual European A (Acc) 1.83% 89,136, Franklin Mutual European A (Acc) CHF hedged (H1) 1.83% 162, Franklin Mutual European A (Acc) SGD 1.86% 3, Franklin Mutual European A (Acc) USD 1.82% 15,348, Franklin Mutual European A (Ydis) 1.83% 1,747, Franklin Mutual European A (Ydis) GBP 1.81% 182, Franklin Mutual European B (Acc) USD 3.13% 2,314, Franklin Mutual European B (Ydis) 3.13% 38, Franklin Mutual European C (Acc) 2.38% 173, Franklin Mutual European C (Acc) USD 2.40% 1,145, Franklin Mutual European I (Acc) 0.96% 51,426, Franklin Mutual European I (Ydis) 0.95% 1,054, Franklin Mutual European N (Acc) 2.58% 18,864, Franklin Mutual European N (Acc) USD 2.57% 1,139, Franklin Mutual European Z (Acc) USD 1.34% 107, Franklin Mutual Global Discovery Fund USD Franklin Mutual Global Discovery A (Acc) 1.84% 18,735, Franklin Mutual Global Discovery A (Acc) CHF hedged (H1) 1.85% 303, Franklin Mutual Global Discovery A (Acc) EUR 1.84% 10,049, Franklin Mutual Global Discovery A (Acc) EUR hedged (H2) 1.83% 3,407, Franklin Mutual Global Discovery A (Ydis) EUR 1.84% 648, Franklin Mutual Global Discovery A (Ydis) GBP 1.85% 120, Franklin Mutual Global Discovery B (Acc) 3.15% 2,615, Franklin Mutual Global Discovery C (Acc) 2.42% 6,527, Franklin Mutual Global Discovery I (Acc) 0.96% 8,333, Franklin Mutual Global Discovery I (Acc) EUR 0.96% 7,925, Franklin Mutual Global Discovery I (Acc) EUR hedged (H2) 0.95% 2,729, Franklin Mutual Global Discovery I (Ydis) EUR 0.94% 39, Franklin Mutual Global Discovery N (Acc) 2.59% 3,369, Franklin Mutual Global Discovery N (Acc) EUR 2.60% 3,959, Franklin Mutual Global Discovery N (Acc) EUR hedged (H2) 2.59% 7,594, Franklin Mutual Global Discovery Z (Acc) 1.35% 29, Franklin Templeton Global Equity Strategies Fund USD Franklin Templeton Global Equity Strategies A (Acc) 2.24% 1,100, Franklin Templeton Global Equity Strategies A (Acc) EUR 2.24% 4,367, Franklin Templeton Global Equity Strategies A (Acc) EUR hedged (H1) 2.23% 1,055, Franklin Templeton Global Equity Strategies A (Ydis) 2.24% 71, Franklin Templeton Global Equity Strategies A (Ydis) EUR 2.24% 420, Franklin Templeton Global Fundamental Strategies Fund USD Franklin Templeton Global Fundamental Strategies A (Acc) 1.90% 7,119, Franklin Templeton Global Fundamental Strategies A (Acc) EUR 1.90% 30,635, Franklin Templeton Global Fundamental Strategies A (Acc) EUR hedged (H1) 1.89% 14,056, Unaudited Semi-Annual Report

38 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Franklin Templeton Global Fundamental Strategies Fund USD (continued) Franklin Templeton Global Fundamental Strategies A (Ydis) 1.89% 418, Franklin Templeton Global Fundamental Strategies A (Ydis) EUR 1.90% 2,109, Franklin Templeton Global Fundamental Strategies B (Acc) 3.21% 23, Franklin Templeton Global Fundamental Strategies C (Acc) 2.47% 23, Franklin Templeton Global Fundamental Strategies I (Acc) EUR 0.98% 57, Franklin Templeton Global Fundamental Strategies N (Acc) EUR hedged (H1) 2.64% 1,242, Franklin Templeton Global Fundamental Strategies N (Acc) PLN hedged (H1) 2.64% 321, Franklin Templeton Global Growth and Value Fund USD Franklin Templeton Global Growth and Value A (Acc) 1.87% 3,061, Franklin Templeton Global Growth and Value B (Acc) 3.18% 92, Franklin Templeton Global Growth and Value C (Acc) 2.45% 190, Franklin Templeton Global Growth and Value I (Acc) 0.97% 828, Franklin Templeton Global Growth and Value I (Acc) EUR 0.88% Franklin Templeton Global Growth and Value N (Acc) 2.62% 304, Franklin Templeton Global Growth And Value X (Acc) SGD 0.27% 1,484, Franklin Templeton Japan Fund JPY Franklin Templeton Japan A (Acc) 1.96% 6,563, Franklin Templeton Japan A (Acc) EUR 1.95% 759, Franklin Templeton Japan A (Acc) SGD 1.96% 340, Franklin Templeton Japan A (Acc) USD 1.96% 2,834, Franklin Templeton Japan A (Ydis) EUR 1.91% 1, Franklin Templeton Japan A (Ydis) GBP 1.93% 16, Franklin Templeton Japan B (Acc) USD 3.25% 43, Franklin Templeton Japan C (Acc) USD 2.53% 171, Franklin Templeton Japan I (Acc) EUR 1.00% 118, Franklin Templeton Japan I (Acc) USD 0.99% 210, Franklin Templeton Japan N (Acc) EUR 2.70% 1,879, Franklin Templeton Japan N (Acc) USD 2.70% 400, Templeton Asian Bond Fund USD Templeton Asian Bond A (Acc) 1.42% 85,697, Templeton Asian Bond A (Acc) CHF hedged (H1) 1.43% 1,203, Templeton Asian Bond A (Acc) EUR 1.41% 19,797, Templeton Asian Bond A (Acc) EUR hedged (H1) 1.42% 10,784, Templeton Asian Bond A (Mdis) 1.41% 35,036, Templeton Asian Bond A (Mdis) EUR 1.42% 4,743, Templeton Asian Bond A (Mdis) SGD 1.41% 1,154, Templeton Asian Bond A (Mdis) SGD hedged (H1) 1.39% 131, Templeton Asian Bond B (Mdis) 2.88% 3,830, Templeton Asian Bond C (Mdis) 2.20% 7,500, Templeton Asian Bond I (Acc) 0.86% 26,037, Templeton Asian Bond I (Acc) CHF hedged (H1) 0.86% 474, Templeton Asian Bond I (Acc) EUR 0.86% 6,784, Templeton Asian Bond I (Acc) EUR hedged (H1) 0.86% 1,667, Templeton Asian Bond I (Mdis) EUR 0.86% 1,081, Templeton Asian Bond N (Acc) 2.12% 4,859, Templeton Asian Bond N (Acc) EUR 2.12% 2,804, Templeton Asian Bond N (Mdis) 2.11% 2,377, Templeton Asian Bond Z (Acc) 1.13% 1,492, Templeton Asian Growth Fund USD Templeton Asian Growth A (Acc) 2.22% 116,223, Templeton Asian Growth A (Acc) CHF hedged (H1) 2.23% 1,662, Templeton Asian Growth A (Acc) EUR 2.23% 33,220, Templeton Asian Growth A (Acc) EUR hedged (H1) 2.23% 10,152, Templeton Asian Growth A (Acc) SGD 2.22% 20,452, Templeton Asian Growth A (Acc) HKD 2.26% 30, Templeton Asian Growth A (Ydis) 2.22% 100,253, Templeton Asian Growth A (Ydis) EUR 2.23% 4,804, Templeton Asian Growth A (Ydis) GBP 2.23% 1,345, Templeton Asian Growth B (Acc) 3.50% 10,365, Templeton Asian Growth C (Acc) 2.80% 6,033, Templeton Asian Growth I (Acc) 1.20% 146,361, Templeton Asian Growth I (Acc) EUR 1.20% 28,313, Templeton Asian Growth I (Acc) EUR hedged (H1) 1.22% 1,918, Templeton Asian Growth I (Acc) CHF hedged (H1) 1.25% 545, Templeton Asian Growth I (Ydis) EUR hedged (H2) 1.20% 4,756, Unaudited Semi-Annual Report 37

39 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Templeton Asian Growth Fund USD (continued) Templeton Asian Growth N (Acc) 2.72% 10,872, Templeton Asian Growth N (Acc) EUR 2.73% 6,224, Templeton Asian Growth N (Acc) EUR hedged (H1) 2.74% 3,339, Templeton Asian Growth N (Acc) PLN hedged (H1) 2.76% 2,422, Templeton Asian Growth N (Acc) HUF 2.86% 1,597, Templeton Asian Growth X (Acc) SGD 0.30% 1,472, Templeton Asian Growth Z (Acc) 1.75% 709, Templeton Asian Growth Z (Ydis) EUR hedged (H1) 1.71% 74, Templeton Asian Smaller Companies Fund USD Templeton Asian Smaller Companies A (Acc) 2.29% 3,126, Templeton Asian Smaller Companies A (Acc) EUR 2.26% 1,121, Templeton Asian Smaller Companies A (Acc) SGD 2.23% 269, Templeton Asian Smaller Companies A (Ydis) 2.26% 183, Templeton Asian Smaller Companies A (Ydis) GBP 2.23% 29, Templeton Asian Smaller Companies B (Acc) 3.59% 84, Templeton Asian Smaller Companies B (Acc) EUR 3.66% 12, Templeton Asian Smaller Companies I (Acc) 1.21% 706, Templeton Asian Smaller Companies I (Acc) EUR 1.20% 140, Templeton Asian Smaller Companies I (Ydis) GBP 1.20% 54, Templeton BRIC Fund USD Templeton BRIC A (Acc) 2.48% 106,412, Templeton BRIC A (Acc) EUR 2.48% 13,196, Templeton BRIC A (Acc) EUR hedged (H1) 2.49% 3,845, Templeton BRIC A (Acc) SGD 2.47% 457, Templeton BRIC A (Acc) HKD 2.50% 3, Templeton BRIC A (Ydis) EUR 2.48% 203, Templeton BRIC A (Ydis) GBP 2.48% 456, Templeton BRIC B (Acc) 3.75% 9,072, Templeton BRIC C (Acc) 3.06% 6,142, Templeton BRIC I (Acc) 1.39% 5,205, Templeton BRIC I (Acc) EUR 1.39% 523, Templeton BRIC I (Acc) EUR hedged (H1) 1.42% 159, Templeton BRIC I (Ydis) EUR 1.39% Templeton BRIC N (Acc) 2.97% 5,191, Templeton BRIC N (Acc) EUR 2.98% 8,097, Templeton BRIC N (Acc) PLN hedged (H1) 2.97% 715, Templeton BRIC X (Acc) 0.29% 354, Templeton BRIC Z (Acc) 1.99% 160, Templeton China Fund USD Templeton China A (Acc) 2.46% 45,376, Templeton China A (Acc) SGD 2.46% 2,559, Templeton China A (Ydis) EUR 2.46% 1,743, Templeton China A (Ydis) GBP 2.46% 438, Templeton China B (Acc) 3.84% 32, Templeton China C (Acc) 3.03% 1,966, Templeton China I (Acc) 1.38% 2,879, Templeton China I (Ydis) GBP 1.40% 5,373, Templeton China N (Acc) 2.96% 2,881, Templeton Eastern Europe Fund EUR Templeton Eastern Europe A (Acc) 2.56% 17,340, Templeton Eastern Europe A (Acc) SGD 2.56% 6, Templeton Eastern Europe A (Acc) USD 2.57% 6,581, Templeton Eastern Europe A (Ydis) 2.56% 84, Templeton Eastern Europe A (Ydis) GBP 2.56% 52, Templeton Eastern Europe B (Acc) USD 3.88% 6,208, Templeton Eastern Europe B (Ydis) 3.75% 520, Templeton Eastern Europe C (Acc) 3.14% 5, Templeton Eastern Europe C (Acc) USD 3.13% 560, Templeton Eastern Europe I (Acc) 1.40% 8,482, Templeton Eastern Europe N (Acc) 3.06% 1,658, Templeton Eastern Europe X (Acc) 0.30% 2,439, Templeton Eastern Europe Z (Acc) USD 2.09% 16, Unaudited Semi-Annual Report

40 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Templeton Emerging s Fund USD Templeton Emerging s A (Acc) 2.50% 13,337, Templeton Emerging s A (Acc) SGD 2.50% 3,544, Templeton Emerging s A (Ydis) 2.50% 12,560, Templeton Emerging s B (Acc) 3.81% 3,717, Templeton Emerging s C (Acc) 3.08% 1,556, Templeton Emerging s I (Acc) 1.40% 1,955, Templeton Emerging s N (Acc) 3.00% 2,623, Templeton Emerging s N (Acc) EUR 3.00% 2,218, Templeton Emerging s Bond Fund USD Templeton Emerging s Bond A (Acc) 1.91% 13,483, Templeton Emerging s Bond A (Acc) CHF hedged (H1) 1.90% 1,491, Templeton Emerging s Bond A (acc) NOK hedged (H1) 1.97% 1,761, Templeton Emerging s Bond A (Acc) SEK hedged (H1) 1.90% 975, Templeton Emerging s Bond A (Mdis) 1.92% 46,277, Templeton Emerging s Bond A (Qdis) 1.91% 93,313, Templeton Emerging s Bond A (Qdis) EUR 1.92% 22,702, Templeton Emerging s Bond A (Qdis) GBP 1.94% 550, Templeton Emerging s Bond A (Ydis) EUR hedged (H1) 1.94% 6,720, Templeton Emerging s Bond B (Mdis) 3.23% 21,097, Templeton Emerging s Bond B (Qdis) 3.22% 31,568, Templeton Emerging s Bond C (Acc) 2.49% 4,273, Templeton Emerging s Bond I (Acc) 1.00% 60,640, Templeton Emerging s Bond I (Acc) EUR hedged (H1) 1.00% 9,922, Templeton Emerging s Bond I (Qdis) 1.00% 9,121, Templeton Emerging s Bond I (Qdis) GBP hedged (H1) 1.00% 204, Templeton Emerging s Bond N (Acc) 2.42% 10,107, Templeton Emerging s Bond Z (Acc) 1.51% 179, Templeton Emerging s Bond Z (Mdis) USD 1.42% 5, Templeton Emerging s Smaller Companies Fund USD Templeton Emerging s Smaller Companies A (Acc) 2.50% 27,077, Templeton Emerging s Smaller Companies A (Acc) EUR 2.50% 5,827, Templeton Emerging s Smaller Companies A (Ydis) 2.50% 2,447, Templeton Emerging s Smaller Companies A (Ydis) GBP 2.50% 391, Templeton Emerging s Smaller Companies C (Acc) 3.10% 1,553, Templeton Emerging s Smaller Companies I (Acc) 1.40% 3,531, Templeton Emerging s Smaller Companies I (Acc) EUR 1.40% 2,708, Templeton Emerging s Smaller Companies N (Acc) 3.00% 3,661, Templeton Euro Government Bond Fund EUR Templeton Euro Government Bond A (Ydis) 1.12% 1,250, Templeton Euro Government Bond I (Acc) 0.62% Templeton Euro Government Bond N (Acc) 1.67% 823, Templeton Euro High Yield Fund EUR Templeton Euro High Yield A (Acc) 1.51% 3,649, Templeton Euro High Yield A (Mdis) 1.51% 38,897, Templeton Euro High Yield A (Mdis) USD 1.54% 271, Templeton Euro High Yield A (Ydis) 1.51% 9,814, Templeton Euro High Yield B (Mdis) 2.94% 1,008, Templeton Euro High Yield B (Mdis) USD 2.93% Templeton Euro High Yield I (Acc) 0.85% 1,610, Templeton Euro High Yield I (Mdis) 0.59% Templeton Euro High Yield I (Ydis) 0.85% 4,258, Templeton Euro High Yield N (Acc) 2.11% 5,678, Templeton Euro Liquid Reserve Fund EUR Templeton Euro Liquid Reserve A (Acc) 0.63% 6,164, Templeton Euro Liquid Reserve A (Ydis) 0.63% 5,514, Templeton Euro Liquid Reserve I (Acc) 0.37% 368, Templeton Euro Liquid Reserve N (Acc) 1.53% 3,417, Templeton Euro Money Fund EUR Templeton Euro Money A (Acc) 0.22% 20, , , Templeton Euro Money I (Acc) 0.32% 3, , , Templeton Euroland Fund EUR Templeton Euroland A (Acc) 1.89% 7,670, Templeton Euroland A (Ydis) 1.89% 36, Unaudited Semi-Annual Report 39

41 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Templeton Euroland Fund EUR (continued) Templeton Euroland B (Acc) USD 3.22% 12, Templeton Euroland B (Ydis) 3.19% 14, Templeton Euroland C (Acc) 2.49% 21, Templeton Euroland C (Acc) USD 2.48% 2, Templeton Euroland I (Acc) 0.97% 1,489, Templeton Euroland I (Ydis) 0.99% Templeton Euroland N (Acc) 2.64% 868, Templeton European Fund EUR Templeton European A (Acc) 1.87% 2,593, Templeton European A (Acc) SGD 1.87% 195, Templeton European A (Acc) USD 1.87% 1,546, Templeton European A (Ydis) 1.86% 15, Templeton European A (Ydis) USD 1.87% 4,409, Templeton European C (Acc) 2.45% Templeton European C (Acc) USD 2.44% 33, Templeton European I (Acc) 0.97% 97, Templeton European N (Acc) 2.61% 217, Templeton European N (Acc) USD 2.62% 119, Templeton European Corporate Bond Fund EUR Templeton European Corporate Bond A (Acc) 1.15% 54, Templeton European Corporate Bond A (Ydis) 1.15% 51, Templeton European Corporate Bond I (Acc) 0.65% 450, Templeton European Corporate Bond I (Ydis) 0.65% 450, Templeton European Corporate Bond N (Acc) 2.05% 79, Templeton European Corporate Bond N (Ydis) 2.05% 75, Templeton European Total Return Fund EUR Templeton European Total Return A (Acc) 1.10% 1,738, Templeton European Total Return A (Mdis) 1.10% 1,786, Templeton European Total Return A (Mdis) USD 1.09% 178, Templeton European Total Return A (Ydis) 1.10% 13, Templeton European Total Return C (Acc) 1.90% 12, Templeton European Total Return C (Mdis) USD 1.90% 64, Templeton European Total Return I (Acc) 0.85% 205, Templeton European Total Return I (Mdis) 0.83% 22, Templeton European Total Return I (Ydis) 0.81% Templeton European Total Return N (Acc) 1.80% 1,966, Templeton European Total Return N (Mdis) 1.80% 837, Templeton Frontier s Fund USD Templeton Frontier s A (Acc) 2.61% 11,351, Templeton Frontier s A (Acc) EUR 2.60% 10,912, Templeton Frontier s A (Acc) EUR hedged (H1) 2.63% 2,000, Templeton Frontier s A (Acc) SGD 2.57% 184, Templeton Frontier s A (Ydis) 2.62% 532, Templeton Frontier s A (Ydis) GBP 2.61% 528, Templeton Frontier s B (Acc) 3.91% 36, Templeton Frontier s B (Acc) EUR 3.91% 1, Templeton Frontier s C (Acc) 3.20% 109, Templeton Frontier s I (Acc) 1.53% 5,775, Templeton Frontier s I (Acc) EUR 1.53% 6,588, Templeton Frontier s I (Ydis) GBP 1.53% 661, Templeton Frontier s N (Acc) EUR 3.11% 852, Templeton Frontier s N (Acc) EUR hedged (H1) 3.09% 5,785, Templeton Frontier s X (Acc) 0.30% Templeton Frontier s Z (Ydis) EUR hedged (H1) 2.09% 74, Templeton Global Fund USD Templeton Global A (Acc) 1.85% 5,626, Templeton Global A (Acc) SGD 1.86% 4,368, Templeton Global A (Ydis) 1.86% 23,470, Templeton Global B (Acc) 3.16% 2,553, Templeton Global C (Acc) 2.43% 1,078, Templeton Global I (Acc) 0.96% 14,703, Templeton Global N (Acc) 2.60% 1,631, Unaudited Semi-Annual Report

42 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Templeton Global (Euro) Fund EUR Templeton Global (Euro) A (Acc) 1.87% 2,662, Templeton Global (Euro) A (Ydis) 1.87% 44,985, Templeton Global (Euro) B (Acc) USD 3.18% Templeton Global (Euro) I (Acc) 0.95% 326, Templeton Global (Euro) I (Acc) hedged (H2) 0.95% 275, Templeton Global (Euro) N (Acc) 2.62% 375, Templeton Global Aggregate Bond Fund USD* Templeton Global Aggregate Bond A (Acc) 1.25% 1, Templeton Global Aggregate Bond A (Acc) EUR 1.25% Templeton Global Aggregate Bond A (Acc) EUR hedged (H1) 1.22% 71, Templeton Global Aggregate Bond A (Mdis) 1.25% 1, Templeton Global Aggregate Bond A (Mdis) EUR 1.25% Templeton Global Aggregate Bond A (Qdis) GBP hedged (H1) 1.22% 62, Templeton Global Aggregate Bond A (Ydis) EUR hedged (H1) 1.22% 71, Templeton Global Aggregate Bond I (Acc) 0.59% 335, Templeton Global Aggregate Bond I (Acc) CHF hedged (H1) 0.58% 98, Templeton Global Aggregate Bond I (Acc) EUR 0.60% Templeton Global Aggregate Bond I (Acc) EUR hedged (H1) 0.59% 71, Templeton Global Aggregate Bond I (Qdis) EUR hedged (H1) 0.59% 71, Templeton Global Aggregate Bond I (Qdis) GBP hedged (H1) 0.59% 62, Templeton Global Aggregate Bond N (Acc) 1.93% 1, Templeton Global Aggregate Bond N (Acc) EUR 1.93% Templeton Global Aggregate Bond N (Acc) EUR hedged (H1) 1.91% 71, Templeton Global Balanced Fund USD Templeton Global Balanced A (Acc) 1.71% 4,778, Templeton Global Balanced A (Acc) EUR 1.71% 432, Templeton Global Balanced A (Acc) EUR hedged (H1) 1.69% 130, Templeton Global Balanced A (Acc) SGD 1.71% 29,179, Templeton Global Balanced A (Qdis) 1.71% 14,819, Templeton Global Balanced B (Acc) 3.01% 5,596, Templeton Global Balanced C (Qdis) 2.28% 3,236, Templeton Global Balanced I (Acc) 0.90% 80, Templeton Global Balanced I (Acc) EUR hedged (H1) 0.86% 86, Templeton Global Balanced N (Acc) EUR 2.21% 1,085, Templeton Global Balanced N (Acc) EUR hedged (H1) 2.17% 119, Templeton Global Bond Fund USD Templeton Global Bond A (Acc) 1.40% 182,875, Templeton Global Bond A (Acc) EUR 1.41% 80,848, Templeton Global Bond A (Acc) EUR hedged (H1) 1.41% 141,448, Templeton Global Bond A (Acc) HKD 1.42% 12,375, Templeton Global Bond A (Acc) NOK hedged (H1) 1.41% 1,964, Templeton Global Bond A (Acc) SEK hedged (H1) 1.42% 71,569, Templeton Global Bond A (Acc) CHF hedged (H1) 1.40% 11,528, Templeton Global Bond A (Mdis) 1.40% 409,856, Templeton Global Bond A (Mdis) EUR 1.40% 42,944, Templeton Global Bond A (Mdis) EUR hedged (H1) 1.41% 74,490, Templeton Global Bond A (Mdis) GBP 1.41% 9,073, Templeton Global Bond A (Mdis) GBP hedged (H1) 1.41% 27,757, Templeton Global Bond A (Mdis) HKD 1.41% 95,327, Templeton Global Bond A (Mdis) SGD 1.37% 22,947, Templeton Global Bond A (Mdis) SGD hedged (H1) 1.41% 25,941, Templeton Global Bond A (Mdis) AUD hedged (H1) 1.40% 103, Templeton Global Bond A (Ydis) EUR 1.37% 7,296, Templeton Global Bond A (Ydis) EUR hedged (H1) 1.43% 11,806, Templeton Global Bond AX (Acc) 1.60% 38,675, Templeton Global Bond B (Mdis) 2.91% 55,050, Templeton Global Bond C (Mdis) 2.18% 104,255, Templeton Global Bond I (Acc) 0.85% 89,513, Templeton Global Bond I (Acc) CHF hedged (H1) 0.84% 2,857, Templeton Global Bond I (Acc) EUR 0.84% 29,354, Templeton Global Bond I (Acc) EUR hedged (H1) 0.85% 51,758, Templeton Global Bond I (Mdis) EUR 0.85% 1,721, Templeton Global Bond I (Mdis) GBP 0.85% 10,952, Templeton Global Bond I (Mdis) GBP hedged (H1) 0.85% 22,699, Templeton Global Bond I (Mdis) JPY 0.85% 365, Unaudited Semi-Annual Report 41

43 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Templeton Global Bond Fund USD (continued) Templeton Global Bond I (Mdis) JPY hedged (H1) 0.85% 121, , Templeton Global Bond I (Ydis) EUR 0.85% 150, Templeton Global Bond I (Ydis) EUR hedged (H1) 0.85% 11,573, Templeton Global Bond N (Acc) 2.10% 48,110, Templeton Global Bond N (Acc) EUR 2.10% 10,889, Templeton Global Bond N (Acc) EUR hedged (H1) 2.10% 78,986, Templeton Global Bond N (Acc) HUF 2.35% 942, Templeton Global Bond N (Acc) PLN hedged (H1) 2.10% 3,232, Templeton Global Bond N (Mdis) EUR hedged (H1) 2.11% 110,564, Templeton Global Bond N (Ydis) EUR hedged (H1) 2.15% 459, Templeton Global Bond Z (Acc) 1.11% 7,758, Templeton Global Bond Z (Mdis) USD 1.89% 10, Templeton Global Bond Z (Ydis) EUR hedged (H1) 1.11% 74, Templeton Global Bond (Euro) Fund EUR Templeton Global Bond (Euro) A (Acc) 1.36% 17,177, Templeton Global Bond (Euro) A (Acc) USD 1.40% Templeton Global Bond (Euro) A (Ydis) 1.36% 8,021, Templeton Global Bond (Euro) B (Acc) USD 2.86% 17, Templeton Global Bond (Euro) I (Acc) 0.83% 727, Templeton Global Bond (Euro) N (Acc) 2.06% 10,299, Templeton Global Equity Income Fund USD Templeton Global Equity Income A (Acc) 1.50% 1,928, Templeton Global Equity Income A (Acc) EUR 1.50% 104, Templeton Global Equity Income A (Qdis) 1.50% 5,545, Templeton Global Equity Income A (Qdis) SGD 1.50% 3,595, Templeton Global Equity Income B (Qdis) 2.75% 835, Templeton Global Equity Income C (Qdis) 2.10% 60, Templeton Global Equity Income I (Acc) 1.00% Templeton Global Equity Income I (Qdis) JPY 0.92% 3, Templeton Global Equity Income N (Acc) 2.25% 115, Templeton Global High Yield Fund USD Templeton Global High Yield A (Acc) 1.67% 859, Templeton Global High Yield A (Acc) EUR 1.66% 1,261, Templeton Global High Yield A (Mdis) 1.66% 354, Templeton Global High Yield A (Mdis) EUR 1.67% 3,303, Templeton Global High Yield A (Mdis) GBP 1.66% 168, Templeton Global High Yield I (Acc) 0.86% 416, Templeton Global High Yield I (Acc) EUR 0.87% 347, Templeton Global High Yield N (Acc) EUR 2.16% 1,134, Templeton Global Income Fund USD Templeton Global Income A (Acc) 1.50% 4,776, Templeton Global Income A (Acc) EUR 1.50% 1,683, Templeton Global Income A (Acc) HKD 1.50% 3, Templeton Global Income A (Qdis) 1.50% 4,674, Templeton Global Income A (Qdis) HKD 1.50% 198, Templeton Global Income A (Qdis) SGD 1.50% Templeton Global Income B (Qdis) 2.75% 1,725, Templeton Global Income C (Qdis) 2.10% 3,976, Templeton Global Income I (Acc) 0.89% 739, Templeton Global Income N (Acc) 2.00% 2,393, Templeton Global Income Z (Acc) 1.00% 37, Templeton Global Smaller Companies Fund USD Templeton Global Smaller Companies A (Acc) 1.85% 3,731, Templeton Global Smaller Companies A (Acc) SGD 1.85% 931, Templeton Global Smaller Companies A (Ydis) 1.85% 3,942, Templeton Global Smaller Companies B (Acc) 3.17% 395, Templeton Global Smaller Companies C (Acc) EUR 2.46% 51, Templeton Global Smaller Companies C (Ydis) 2.44% 80, Templeton Global Smaller Companies I (Acc) 0.98% 2,442, Templeton Global Smaller Companies N (Acc) 2.60% 520, Templeton Global Total Return Fund USD Templeton Global Total Return A (Acc) 1.37% 125,057, Templeton Global Total Return A (Acc) CHF hedged (H1) 1.40% 14,429, Unaudited Semi-Annual Report

44 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Templeton Global Total Return Fund USD (continued) Templeton Global Total Return A (Acc) EUR 1.37% 15,118, Templeton Global Total Return A (Acc) EUR hedged (H1) 1.40% 52,771, Templeton Global Total Return A (Acc) HKD 1.37% 9,773, Templeton Global Total Return A (Acc) PLN hedged (H1) 1.40% 4,507, Templeton Global Total Return A (Acc) SEK hedged (H1) 1.40% 892, Templeton Global Total Return A (Mdis) 1.37% 122,705, Templeton Global Total Return A (Mdis) EUR 1.37% 18,915, Templeton Global Total Return A (Mdis) EUR hedged (H1) 1.40% 36,713, Templeton Global Total Return A (Mdis) GBP 1.37% 3,822, Templeton Global Total Return A (Mdis) GBP hedged (H1) 1.40% 9,572, Templeton Global Total Return A (Mdis) HKD 1.37% 303,838, Templeton Global Total Return A (Mdis) SGD 1.37% 13,169, Templeton Global Total Return A (Mdis) SGD hedged (H1) 1.40% 17,628, Templeton Global Total Return A (Mdis) AUD hedged (H1) 1.40% 149, Templeton Global Total Return A (Ydis) EUR 1.38% 3,616, Templeton Global Total Return A (Ydis) EUR hedged (H1) 1.43% 862, Templeton Global Total Return B (Acc) 2.84% 4,075, Templeton Global Total Return B (Mdis) 2.85% 8,456, Templeton Global Total Return C (Mdis) 2.01% 35,730, Templeton Global Total Return I (Acc) 0.85% 36,064, Templeton Global Total Return I (Acc) EUR 0.84% 4,864, Templeton Global Total Return I (Acc) EUR hedged (H1) 0.85% 26,692, Templeton Global Total Return I (Acc) CHF hedged (H1) 0.85% 348, Templeton Global Total Return I (Mdis) CHF 0.84% 8, Templeton Global Total Return I (Mdis) EUR 0.85% 891, Templeton Global Total Return I (Mdis) GBP 0.85% 910, Templeton Global Total Return I (Mdis) GBP hedged (H1) 0.85% 4,603, Templeton Global Total Return I (Ydis) EUR 0.85% 622, Templeton Global Total Return I (Ydis) EUR hedged (H1) 0.85% 690, Templeton Global Total Return N (Acc) 2.07% 29,348, Templeton Global Total Return N (Acc) EUR 2.07% 12,054, Templeton Global Total Return N (Acc) EUR hedged (H1) 2.10% 33,928, Templeton Global Total Return N (Acc) HUF 2.36% 754, Templeton Global Total Return N (Mdis) EUR hedged (H1) 2.10% 50,798, Templeton Global Total Return N (Ydis) EUR hedged (H1) 2.13% 204, Templeton Global Total Return Z (Acc) 1.11% 2,659, Templeton Global Total Return Z (Mdis) USD 1.83% 8, Templeton Global Total Return Z (Ydis) EUR hedged (H1) 1.09% 93, Templeton Growth (Euro) Fund EUR Templeton Growth (Euro) A (Acc) 1.86% 457,211, Templeton Growth (Euro) A (Acc) hedged (H2) 1.86% 227, Templeton Growth (Euro) A (Acc) USD 1.86% 18,376, Templeton Growth (Euro) A (Ydis) 1.86% 20,639, Templeton Growth (Euro) A (Ydis) USD 1.86% 2,291, Templeton Growth (Euro) B (Ydis) 3.14% 20, Templeton Growth (Euro) C (Acc) 2.44% 2, Templeton Growth (Euro) I (Acc) 0.95% 2,450, Templeton Growth (Euro) I (Ydis) 0.95% 783, Templeton Growth (Euro) I (Ydis) USD 0.95% 675, Templeton Growth (Euro) N (Acc) 2.61% 2,668, Templeton Korea Fund USD Templeton Korea A (Acc) 2.57% 11,323, Templeton Korea A (Acc) SGD 2.57% 5,191, Templeton Korea C (Acc) 3.17% 53, Templeton Korea I (Acc) 1.39% 291, Templeton Korea N (Acc) 3.06% 445, Templeton Latin America Fund USD Templeton Latin America A (Acc) 2.28% 6,645, Templeton Latin America A (Acc) SGD 2.29% 5,649, Templeton Latin America A (Ydis) 2.28% 20,414, Templeton Latin America A (Ydis) EUR 2.29% 822, Templeton Latin America A (Ydis) GBP 2.29% 147, Templeton Latin America B (Acc) 3.59% 7,232, Templeton Latin America C (Acc) 2.86% 1,524, Templeton Latin America I (Acc) 1.30% 35,771, Templeton Latin America I (Ydis) EUR hedged (H2) 1.29% 3,145, Unaudited Semi-Annual Report 43

45 Statistical Information (continued) All classes in base unless otherwise stated Total Expense Ratio Dec 31, 2010 (see Note 17) Shares Outstanding Dec 31, 2010 Dec 31, 2010 Net Asset Value per Share Jun 30, 2010 Jun 30, 2009 Templeton Latin America Fund USD (continued) Templeton Latin America N (Acc) 2.78% 4,028, Templeton Latin America N (Acc) PLN hedged (H1) 2.79% 1,190, Templeton Latin America Z (Acc) 1.79% 31, Templeton Thailand Fund USD Templeton Thailand A (Acc) 2.49% 10,558, Templeton Thailand A (Acc) SGD 2.50% 1,197, Templeton Thailand B (Acc) 3.79% 337, Templeton Thailand I (Acc) 1.40% 675, Templeton Thailand N (Acc) 3.02% 765, Templeton U.S. Value Fund USD Templeton U.S. Value A (Acc) 1.91% 724, Templeton U.S. Value A (Acc) EUR 1.89% 8, Templeton U.S. Value A (Acc) EUR hedged (H1) 1.90% 86, Templeton U.S. Value A (Ydis) EUR 1.92% Templeton U.S. Value A (Ydis) GBP 1.93% 12, Templeton U.S. Value B (Acc) 3.19% 74, Templeton U.S. Value C (Acc) 2.49% 140, Templeton U.S. Value I (Acc) 0.99% 1,419, Templeton U.S. Value I (Acc) EUR 0.99% Templeton U.S. Value I (Acc) EUR hedged (H1) 1.00% 384, Templeton U.S. Value I (Ydis) GBP 0.99% Templeton U.S. Value N (Acc) 2.67% 292, * This Fund was launched during the current period. 44 Unaudited Semi-Annual Report

46 Note 1 The Company Franklin Templeton Investment Funds ( FTIF or the Company ) is a collective investment undertaking pursuant to Part 1 of the Luxembourg law of December 20, 2002 on undertakings for collective investment, as amended, and qualifies as a société d investissement à capital variable. The Company was incorporated in Luxembourg on November 6, 1990, for an undetermined period. At the date of this report, it offers shares in 68 sub-funds of the Company (the Funds ). The Board of Directors of the Company may authorise the creation of additional Funds in the future with different investment objectives. The Company aims to provide investors with a choice of funds investing in a wide range of eligible on a worldwide basis and featuring a diverse array of investment objectives, including capital growth and income. The overall objective of the Company is to seek to minimize investment exposure through diversification and to provide Shareholders with the benefit of a portfolio managed by Franklin Templeton Investments, according to its successful time-tested investment selection methods. Fund launches The following Fund was launched effective on October 29, 2010: Templeton Global Aggregate Bond Fund Fund mergers On August 27, 2010 Franklin Global Real Estate (Euro) Fund was merged into Franklin Global Real Estate Fund. Share class launches The following share classes were launched effective on July 28, 2010: Templeton Asian Growth Fund Class N (Acc) HUF Templeton Global Bond Fund Class N (Acc) HUF Templeton Global Total Return Fund Class N (Acc) HUF Templeton Global Total Return Fund Class I (Acc) CHF hedged (H1) The following share classes were launched effective on August 20, 2010: Franklin Global Real Estate Fund Class A (Acc) EUR hedged (H1) Franklin Global Real Estate Fund Class A (YDis) EUR hedged (H1) Franklin Global Real Estate Fund Class A (YDis) EUR hedged (H2) Franklin Global Real Estate Fund Class N (Acc) EUR hedged (H1) The following share classes were launched effective on September 30, 2010: Franklin Gold and Precious Metals Fund Class A (Acc) CHF hedged (H1) Franklin India Fund Class A (Acc) SGD Franklin U.S. Government Fund Class A (Acc) Franklin U.S. Opportunities Fund Class A (Acc) CHF hedged (H1) Franklin Templeton Growth and Value Fund Class X (Acc) SGD Templeton Asian Growth Fund Class A (Acc) HKD Templeton Asian Growth Fund Class X (Acc) SGD Templeton Asian Growth Fund Class I (Acc) CHF hedged (H1) Templeton BRIC Fund Class A (Acc) HKD Templeton Eastern Europe Fund Class X (Acc) Templeton Frontier Fund Class X (Acc) Templeton Global Bond Fund Class A (MDis) AUD hedged (H1) Templeton Global Total Return Fund Class A (MDis) AUD hedged (H1) The following share class was launched effective on October 22, 2010: Templeton China Fund Class I (YDis) GBP Notes to the Financial Statements at December 31, 2010 The following share class was launched effective on November 19, 2010: Franklin Strategic Income Fund Class N (Acc) Unaudited Semi-Annual Report 45

47 Note 1 The Company (continued) The following share classes were launched effective on December 8, 2010: Franklin Gold and Precious Metals Fund Class A (Acc) SEK hedged (H1) Franklin High Yield Fund Class Z (MDis) Franklin Income Fund Class Z (MDis) Franklin U.S. Government Fund Class Z (MDis) Franklin U.S. Opportunities Fund Class A (Acc) SEK hedged (H1) Franklin U.S. Ultra Short Bond Fund Class A (Acc) Templeton Asian Bond Fund Class A (MDis) SGD hedged (H1) Templeton Emerging s Bond Fund Class A (Acc) NOK hedged (H1) Templeton Emerging s Bond Fund Class A (Acc) SEK hedged (H1) Templeton Emerging s Bond Fund Class Z (MDis) Templeton Global Bond (Euro) Fund Class A (Acc) USD Templeton Global Bond Fund Class I (MDis) JPY Templeton Global Bond Fund Class I (MDis) JPY hedged (H1) Templeton Global Bond Fund Class Z (MDis) Templeton Global Total Return Fund Class Z (MDis) Templeton Global Total Return Fund Class A (Acc) SEK hedged (H1) Note 2 Significant accounting policies (a) General Notes to the Financial Statements at December 31, 2010 (continued) The financial statements are prepared in accordance with the regulations of the Grand-Duchy of Luxembourg relating to investment funds. (b) Investment in securities Securities which are listed on a stock exchange or traded on any other organised market are d at the last available price on such exchange or market which is normally the principal market for each security, and those securities dealt in on an over-the-counter market are d in a manner as near as possible to that for quoted securities. Securities not listed on any stock exchange nor traded on any organised market are d at the last available price, or if such price is not representative of their fair, they are d prudently and in good faith on the basis of their reasonably foreseeable sales prices. The Fund has procedures to determine the fair of individual securities and other for which market prices are not readily available or which may not be reliably priced. In such circumstances, the price of such investment shall be adjusted in accordance with the procedures adopted, as determined by or under the direction of the Board of Directors. During the accounting period under review, gains and losses on investment securities sold were computed on the average cost basis for all Funds with the exception of the Franklin High Yield Fund, the Franklin Income Fund, the Franklin U.S. Government Fund, the Templeton Asian Bond Fund and the Templeton BRIC Fund which were computed on the first-in, first-out basis. During the accounting period under review, discounts and premiums were amortised to income over the period to maturity, or date sold, if earlier. For mortgage-backed and other similar holdings with scheduled debt paydowns, the Funds record estimates, based on their historical experience, for anticipated paydowns. Such estimates are recorded as a reduction or increase to the related holdings as disclosed on the Schedule of Investments and are included in the related unrealised appreciation/depreciation on investments shown on the Statement of Operations and Changes in Net Assets. For the Templeton Euro Money Fund, all securities are d at amortised cost, which approximates market. Under this method, the cost of investments is adjusted to income for the amortisation of premiums and discounts over the life of the investments. Where the amortised cost basis does not reflect a prudent approach to the valuation of the security, the latest available price prevailing on the valuation day is used. (c) Foreign exchange transactions Transactions expressed in currencies other than each Fund s are translated into each Fund s at the exchange rates applicable on the transaction dates. Assets and liabilities designated in currencies other than each Fund s are translated into each Fund s at the appropriate exchange rates ruling at the period-end. Gains and losses on foreign exchange transactions are recognised in the Statement of Operations and Changes in Net Assets in determining the results for the accounting period. (d) Forward foreign exchange contracts Forward exchange contracts are d at the forward rate applicable at the Statement of Net Assets date for the remaining period, until maturity. Gains or losses resulting from forward exchange contracts are recognised in the Statement of Operations and Changes in Net Assets. 46 Unaudited Semi-Annual Report

48 Note 2 Significant accounting policies (continued) (e) Income Dividends are credited to income on their ex-dividend date. Interest income is accrued on a daily basis. Notes to the Financial Statements at December 31, 2010 (continued) (f) Formation expenses Formation expenses associated with the launch of the new Funds are expensed as incurred. (g) Future contracts The Company may enter into financial future contracts to gain exposure to market changes. A financial future contract is an agreement between two parties to buy or sell a security for a set price on a future date. Required initial margin deposits of cash or securities are maintained by a broker in a segregated account. Subsequent payments, known as variation margin, are made or received by the Company depending on the fluctuations in the of the underlying securities. Such variation margin is accounted for as unrealised gains or losses until the contract is closed, at which time the gains or losses are reclassified to realised gains or losses. Realised and unrealised gains and losses are included in the Statement of Operations and Changes in Net Assets. (h) Option contracts Options are contracts entitling the holder to purchase or sell a specified number of units of a particular security at a specified price at any time until the contract-stated expiration date. Options purchased are recorded as investments; options written (sold) are recorded as liabilities. When the exercise of an option results in a cash settlement, the difference between the premium (original option ) and the settlement proceeds is accounted for as a realised gain or loss. When securities are acquired or delivered upon exercise of an option, the acquisition cost or sale proceeds are adjusted by the amount of the premium. When an option is closed, the difference between the premium and the cost to close the position is accounted for as a realised gain or loss. When an option expires, the premium is accounted for as a realised gain or loss for options written or as a realised loss for options purchased. The risks include price movements in the underlying securities, the possibility there may be an illiquid options market, or the inability of the counterparties to fulfill their obligations under the contract. (i) Interest Rate Swaps Interest Rate Swap contracts are used to hedge the risk of changes in interest rates and are agreements between two parties to exchange cash flows based on a notional principal amount. The interest received or paid on interest rate swap agreements is accrued daily as interest income/ expense. Interest rate swaps are marked to market daily based upon quotations from the market makers and the change, if any, is recorded as an unrealized gain or loss in the Statement of Operations. When the swap contract is terminated early, the fund records a realized gain or loss equal to the difference between the current present and the executed present. Any outstanding interest accrual will be recorded as either a receivable or payable. The risks of interest rate swaps include changes in market conditions and the possible inability of the counterparty to fulfill its obligations under the agreement. (j) Credit Default Swaps A Credit Default Swap is a credit derivative transaction in which two parties enter into an agreement, whereby one party pays the other a fixed periodic payment for the specified life of the agreement. The other party makes no payments unless a credit event, relating to a predetermined reference asset, occurs. If such an event occurs, the party will then make a payment to the first party, and the swap will terminate. The of the underlying securities shall be taken into account for the calculation of the investment and borrowing powers applicable to individual users. Credit default swaps are marked to market daily based upon quotations from the market makers and the change in, if any, is recorded as an unrealized gain or loss in the Statement of Operations. Any payment received or paid to initiate a contract is recorded as a liability or asset in the Statement of Assets and Liabilities. When the swap contract is terminated early, the Fund records a realized gain or loss for any payments received or paid. The risks of credit default swaps include unfavorable changes in interest rates, an illiquid secondary market and the possible inability of the counterparty to fulfill its obligations under the agreement, which may be in excess of the amount reflected in the Statement of Assets and Liabilities. (k) Mortgage Dollar Rolls In a mortgage dollar roll, a Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (name, type, coupon, and maturity) securities on a specified future date. During the period between the sale and repurchase, the Fund foregoes principal and interest paid on the mortgage-backed securities. The Fund is compensated by the difference between the current sales price and the lower forward price for the future purchase, as well as by the interest earned on the cash proceeds of the initial sale. The difference between the current sales price and the lower forward price is treated as realized gain. (l) Securities Lending The Company may lend selected sub-funds portfolio securities to specialised banks, credit institutions and other financial institutions of high standing, or through recognised clearing institutions such as Clearstream or Euroclear. The lending of securities will be made for periods not exceeding 30 calendar days provided, however, that this limit is not applicable where the Company has the right to terminate the lending contract at any time and obtain restitution of the securities lent. Loans will be secured continuously by collateral which must at least equal the of Unaudited Semi-Annual Report 47

49 Note 2 Significant accounting policies (continued) Notes to the Financial Statements at December 31, 2010 (continued) the global valuation of the securities lent. Lending transactions may not be carried out on more than 50 the aggregate market of the securities of each sub-fund s portfolio except where the Company has the right to terminate the lending contract at any time and obtain restitution of the securities lent. The dividends earned on the collateral are included in the Statement of Operations and Changes in Net Assets. Any transaction expenses in connection with the loans are charged to the concerned Fund. Note 3 Investment management fees The Investment Managers, as noted on pages 3 and 4, receive from the Company a monthly fee equivalent to a certain percentage per annum (as detailed below) of each Fund s average daily during the accounting year. The following percentages apply in respect of the different Funds as at December 31, No management fees will be payable by an investor on the acquisition of Class X Shares, instead a fee will be paid to the Investment Manager or affiliates under an agreement. All classes except Class I and Class X Class I Franklin Asian Flex Cap Fund 1.00% 0.70% Franklin Biotechnology Discovery Fund 1.00% 0.70% Franklin Euroland Core Fund 1.00% 0.70% Franklin European Growth Fund 1.00% 0.70% Franklin European Small-Mid Cap Growth Fund 1.00% 0.70% Franklin Global Growth Fund 1.00% 0.70% Franklin Global Real Estate Fund 1.00% 0.70% Franklin Global Real Estate (Euro) Fund* 1.00% 0.70% Franklin Global Small-Mid Cap Growth Fund 1.00% 0.70% Franklin Gold and Precious Metals Fund 1.00% 0.70% Franklin High Yield Fund 0.80% 0.60% Franklin Income Fund 0.85% 0.60% Franklin India Fund 1.00% 0.70% Franklin MENA Fund 1.50% 1.05% Franklin Natural Resources Fund 1.00% 0.70% Franklin Real Return Fund 0.75% Franklin Strategic Income Fund 0.75% 0.55% Franklin Technology Fund 1.00% 0.70% Franklin U.S. Dollar Liquid Reserve Fund 0.30% 0.20% Franklin U.S. Equity Fund 1.00% 0.70% Franklin U.S. Focus Fund 1.00% 0.70% Franklin U.S. Government Fund 0.65% 0.40% Franklin U.S. Opportunities Fund 1.00% 0.70% Franklin U.S. Small-Mid Cap Growth Fund 1.00% 0.70% Franklin U.S. Total Return Fund 0.75% 0.55% Franklin U.S. Ultra Short Bond Fund 0.65% 0.40% Franklin World Perspectives Fund 1.00% 0.70% Franklin Mutual Beacon Fund 1.00% 0.70% Franklin Mutual Euroland Fund 1.00% 0.70% Franklin Mutual European Fund 1.00% 0.70% Franklin Mutual Global Discovery Fund 1.00% 0.70% Franklin Templeton Global Equity Strategies Fund 1.25% Franklin Templeton Global Fundamental Strategies Fund 1.00% 0.70% Franklin Templeton Global Growth and Value Fund 1.00% 0.70% Franklin Templeton Japan Fund 1.00% 0.70% Templeton Asian Bond Fund 0.75% 0.55% Templeton Asian Growth Fund 1.35% 0.90% Templeton Asian Smaller Companies Fund 1.35% 0.90% Templeton BRIC Fund 1.60% 1.10% Templeton China Fund 1.60% 1.10% Templeton Eastern Europe Fund 1.60% 1.10% Templeton Emerging s Fund 1.60% 1.10% Templeton Emerging s Bond Fund 1.00% 0.70% Templeton Emerging s Smaller Companies Fund 1.60% 1.10% Templeton Euro Government Bond Fund 0.50% 0.35% Templeton Euro High Yield Fund 0.80% 0.60% Templeton Euro Liquid Reserve Fund 0.30% 0.20% Templeton Euro Money Fund 0.25% 0.20% Templeton Euroland Fund 1.00% 0.70% Templeton European Fund 1.00% 0.70% Templeton European Corporate Bond Fund 0.65% 0.40% Templeton European Total Return Fund 0.75% 0.55% Templeton Frontier s Fund 1.60% 1.10% Templeton Global Fund 1.00% 0.70% Templeton Global (Euro) Fund 1.00% 0.70% Templeton Global Aggregate Bond Fund 0.65% 0.40% Templeton Global Balanced Fund 0.80% 0.60% Templeton Global Bond Fund 0.75% 0.55% Templeton Global Bond (Euro) Fund 0.75% 0.55% Templeton Global Equity Income Fund 1.00% 0.70% Templeton Global High Yield Fund 0.85% 0.60% Templeton Global Income Fund 0.85% 0.60% Templeton Global Smaller Companies Fund 1.00% 0.70% Templeton Global Total Return Fund 0.75% 0.55% Templeton Growth (Euro) Fund 1.00% 0.70% *This Fund was merged into Franklin Global Real Estate Fund on August 27, Unaudited Semi-Annual Report

50 Note 3 Investment management fees (continued) Notes to the Financial Statements at December 31, 2010 (continued) Templeton Korea Fund 1.60% 1.10% Templeton Latin America Fund 1.40% 1.00% Templeton Thailand Fund 1.60% 1.10% Templeton U.S. Value Fund 1.00% 0.70% In addition, investment management fees are charged on the underlying target funds as detailed in note 22. Note 4 Forward foreign exchange contracts As at December 31, 2010 the Company had entered into the following outstanding contracts: Franklin Global Growth Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 19 EUR 1,841,385 USD 2,463,719 (477) 2 USD 100,000 EUR 75,731 (1,306) (1,783) Franklin Global Real Estate Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 25 EUR 20,666,327 USD 27,254, ,947 3 USD 576,403 EUR 438,109 (9,656) 3 EUR 298,858 HKD 3,045,300 7,880 2 EUR 245,852 JPY 26,855,400 (2,054) 2 AUD 68,100 EUR 52,077 (318) 2 EUR 136,233 GBP 116,000 1,297 1 EUR 303,986 AUD 399, ,342 Franklin Gold and Precious Metals Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 21 EUR 3,594,318 USD 4,745,409 62,735 6 CHF 2,647,238 USD 2,730, ,872 2 SEK 6,852,256 USD 1,000,576 19,444 1 USD 175,382 EUR 132,000 (1,195) 185,856 Franklin High Yield Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 12 SGD 44,169,145 USD 33,581, ,216 1 USD 19,226,299 EUR 13,616,841 1,011,165 1,856,381 Franklin Income Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 9 SGD 31,129,457 USD 23,641, ,703 Franklin India Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 13 PLN 24,463,786 USD 8,003, ,653 2 USD 1,164,873 PLN 3,532,000 (25,578) 216,075 Unaudited Semi-Annual Report 49

51 Notes to the Financial Statements at December 31, 2010 (continued) Note 4 Forward foreign exchange contracts (continued) As at December 31, 2010 the Company had entered into the following outstanding contracts: Franklin MENA Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 36 EUR 14,460,838 USD 19,320,573 23,846 2 USD 760,832 EUR 577,000 (11,027) 12,819 Franklin Real Return Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 5 EUR 2,441,012 USD 3,222,621 42,737 1 CLP 24,562,500 USD 50,000 1,015 1 USD 345,260 EUR 250,000 11,304 55,056 Franklin Strategic Income Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 59 USD 20,403,114 EUR 15,423,050 (211,199) 53 USD 9,339,836 JPY 802,169,300 (573,191) 30 INR 148,370,000 USD 3,156,233 73, PHP 147,963,000 USD 3,275, , CLP 1,760,054,700 USD 3,426, ,010 3 USD 618,816 GBP 394,419 4,863 3 CNY 4,009,950 USD 598,891 8,693 2 USD 334,918 MXN 4,331,340 (13,680) 1 IDR 1,445,400,000 USD 150,000 8,645 1 ILS 752,800 USD 200,000 13,386 (300,608) Franklin U.S. Equity Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 20 EUR 29,756,056 USD 39,285, ,324 1 USD 11,013,498 EUR 8,341,000 (144,314) 375,010 Franklin U.S. Focus Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 34 EUR 5,294,594 USD 7,082,863 (227) Franklin U.S. Government Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 7 SGD 6,387,193 USD 4,854, ,171 1 USD 131,006 SGD 171,000 (2,276) 121, Unaudited Semi-Annual Report

52 Notes to the Financial Statements at December 31, 2010 (continued) Note 4 Forward foreign exchange contracts (continued) As at December 31, 2010 the Company had entered into the following outstanding contracts: Franklin U.S. Opportunities Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 21 EUR 38,415,465 USD 50,700, , PLN 7,156,797 USD 2,361,984 48,620 9 CHF 1,605,767 USD 1,660,821 58,856 3 USD 3,930,217 EUR 2,974,636 (48,974) 3 SEK 6,983,114 USD 1,019,576 19, ,488 Franklin U.S. Total Return Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 23 INR 20,970,350 USD 454,942 (2,664) 18 PHP 20,528,000 USD 448,183 19, USD 2,879,809 EUR 2,191,560 (49,571) 5 MYR 361,527 USD 111,703 4,259 5 USD 457,997 GBP 293,000 7,615 3 CLP 31,085,000 USD 59,306 6,464 1 USD 209,000 MXN 2,796,984 (17,385) (31,341) Franklin Mutual Beacon Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 69 EUR 84,836,139 USD 114,083,027 (600,516) 14 USD 130,693,414 EUR 98,811,367 (1,466,477) 13 DKK 16,325,026 USD 2,953,458 (23,900) 11 USD 89,806,054 GBP 55,973,409 2,514, NOK 22,580,414 USD 3,720, ,417 8 GBP 3,910,000 USD 6,218,340 (121,020) 8 CHF 4,108,273 USD 4,252, ,489 7 USD 6,272,494 JPY 509,602,053 (13,305) 6 USD 15,249,987 NOK 94,759,906 (986,560) 5 USD 23,783,353 CHF 22,939,427 (820,026) 3 USD 5,324,190 DKK 30,080,110 (73,743) (1,289,141) Franklin Mutual European Fund Purchases Sales Unrealised Profit/(Loss) contracts EUR 7 CHF 1,788,979 EUR 1,398,943 33,272 Franklin Mutual Global Discovery Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 11 CHF 3,255,559 USD 3,303, ,694 4 EUR 7,670,685 CHF 9,552,200 30,578 4 EUR 14,771,675 GBP 12,589, ,122 4 EUR 64,051,543 USD 83,852,300 1,829,188 3 CHF 269,800 EUR 216,088 (103) 2 GBP 185,200 EUR 216,146 (256) 1 USD 1,056,900 EUR 805,656 (20,823) 2,143,400 Unaudited Semi-Annual Report 51

53 Notes to the Financial Statements at December 31, 2010 (continued) Note 4 Forward foreign exchange contracts (continued) As at December 31, 2010 the Company had entered into the following outstanding contracts: Franklin Templeton Global Equity Strategies Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 11 EUR 6,232,466 USD 8,257,096 80,250 Franklin Templeton Global Fundamental Strategies Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 72 USD 34,593,014 JPY 2,953,530,046 (1,907,003) 47 USD 38,452,005 EUR 28,407, , PHP 426,216,000 USD 9,525, , CLP 6,115,002,000 USD 11,745,326 1,243, INR 456,851,050 USD 9,782, , EUR 101,664,633 USD 134,213,290 1,784, NOK 87,344,150 EUR 10,608, , MYR 21,146,423 USD 6,534, , PLN 3,448,941 USD 1,137,968 23,729 9 PLN 14,177,000 EUR 3,423, ,051 5 USD 3,926,523 NZD 5,727,233 (522,047) 5 SEK 58,924,245 EUR 6,201, ,364 4 KRW 942,000,000 JPY 71,209,452 (39,519) 4 MYR 3,116,000 EUR 746, AUD 921,000 JPY 68,156,149 96,098 3 ILS 11,461,245 USD 3,069, ,603 2 PEN 749,941 USD 261,495 4,378 2 BRL 1,618,000 JPY 73,747,202 60,309 2 AUD 4,836,086 USD 4,028, ,905 1 CNY 21,367,000 USD 3,217,679 14,862 1 NZD 854,871 USD 647,906 16,205 1 KRW 1,136,628,900 USD 963,000 48,431 1 SEK 33,492,452 USD 4,357, ,725 4,728,675 Templeton Asian Bond Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 62 USD 312,347,650 JPY 26,566,209,719 (15,926,373) 42 PHP 14,942,996,700 USD 328,314,125 13,046, EUR 165,451,052 USD 218,434,596 2,890, CHF 16,598,271 USD 17,129, , INR 13,883,058,459 USD 300,064,343 1,188,790 5 MYR 143,915,000 USD 42,853,343 3,504,386 4 CNY 461,868,200 USD 67,748,803 2,123,663 2 USD 29,670,781 EUR 22,471,093 (388,951) 2 USD 2,516,900 NZD 3,668,393 (332,914) 1 SGD 1,275,375 USD 967,913 26,160 1 KRW 58,200,000,000 USD 50,000,000 1,497,285 8,275,056 Templeton Asian Growth Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 48 EUR 404,669,130 USD 540,800, , CHF 27,492,759 USD 28,455, , PLN 34,645,532 USD 11,546, ,477 2 USD 6,163,351 EUR 4,662,000 (73,058) 2 EUR 4,313,730 IDR 51,382,728,700 90,194 1 EUR 5,048,527 KRW 7,653,567,500 (62,146) 1 USD 1,028,317 CHF 995,000 (37,238) 1 HKD 4,113,700 EUR 403,113 (9,848) 1 USD 1,086,015 PLN 3,248,000 (8,142) 1 IDR 1,782,727,100 EUR 150,568 (4,337) 1 EUR 10,847,712 INR 645,221, ,740 1 EUR 11,130,653 THB 440,495, ,893 1 EUR 16,671,708 HKD 169,743, ,370 2,372, Unaudited Semi-Annual Report

54 Notes to the Financial Statements at December 31, 2010 (continued) Note 4 Forward foreign exchange contracts (continued) As at December 31, 2010 the Company had entered into the following outstanding contracts: Templeton BRIC Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 23 EUR 50,736,974 USD 67,174, , PLN 10,930,520 USD 3,571, ,584 2 USD 1,111,365 PLN 3,330,000 (11,003) 2 USD 141,315 EUR 106,000 (485) 799,364 Templeton Emerging s Bond Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 57 CLP 94,834,501,007 USD 180,743,163 20,715, INR 7,830,233,250 USD 166,912,088 3,198, PHP 9,765,520,000 USD 215,865,545 7,241, USD 559,430,705 EUR 424,945,003 (8,616,484) 16 EUR 167,667,013 USD 224,200,265 89, USD 424,834,372 JPY 38,497,457,333 (50,108,377) 12 GBP 2,061,286 USD 3,263,266 (47,813) 10 CHF 16,878,133 USD 17,476, ,068 7 SEK 9,491,436 USD 1,385,298 27,684 7 PLN 188,285,000 EUR 45,420,839 2,038,732 6 MYR 307,967,724 USD 95,819,770 2,287,157 4 NOK 17,110,579 USD 2,875,479 60,493 4 KRW 187,257,020,300 USD 159,488,773 6,624,491 1 USD 1,175,072 CHF 1,137,000 (42,553) 1 CNY 54,396,000 USD 8,191,552 37,835 1 PEN 14,312,777 USD 4,988,769 84,436 (15,808,698) Templeton Euro High Yield Fund Purchases Sales Unrealised Profit/(Loss) contracts EUR 4 EUR 53,979,530 GBP 46,870,000 (676,632) 2 EUR 44,618,609 USD 61,000,000 (982,335) 2 USD 3,000,000 EUR 2,259,630 (16,961) 1 GBP 2,100,000 EUR 2,401,317 47,540 (1,628,388) Templeton European Corporate Bond Fund Purchases Sales Unrealised Profit/(Loss) contracts EUR 1 PLN 800,000 EUR 201,580 (532) 1 EUR 91,892 GBP 78, Templeton European Total Return Fund Purchases Sales Unrealised Profit/(Loss) contracts EUR 1 PLN 8,000,000 EUR 2,013,693 (3,210) 1 SEK 55,000,000 EUR 5,846, ,030 1 NOK 50,000,000 EUR 6,093, , ,738 Templeton Frontier s Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 34 EUR 112,616,582 USD 150,438, ,838 1 USD 822,177 EUR 614, ,660 Unaudited Semi-Annual Report 53

55 Notes to the Financial Statements at December 31, 2010 (continued) Note 4 Forward foreign exchange contracts (continued) As at December 31, 2010 the Company had entered into the following outstanding contracts: Templeton Global (Euro) Fund Purchases Sales Unrealised Profit/(Loss) contracts EUR 1 EUR 166,006 JPY 18,155,200 (1,237) 1 EUR 448,924 GBP 382,600 2,788 1 EUR 1,285,207 USD 1,682,400 27,522 29,073 Templeton Global Aggregate Bond Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 6 USD 2,348,062 EUR 1,681,000 99,390 5 EUR 3,410,447 USD 4,500,392 61,785 2 USD 42,116 GBP 27,000 (2) 2 GBP 1,184,873 USD 1,844,575 3,708 1 USD 564,002 AUD 570,000 (16,494) 1 KRW 800,000,000 USD 717,875 (5,428) 1 USD 21,716 CHF 21,000 (774) 1 MYR 2,200,000 USD 711, MXN 4,500,000 USD 363, SGD 500,000 USD 388,145 1,574 1 CAD 280,000 USD 276,601 4,056 1 CHF 934,335 USD 961,408 39, ,688 Templeton Global Balanced fund Purchases Sales Unrealised Profit/(Loss) contracts USD 39 USD 31,009,425 JPY 2,638,885,000 (1,600,957) 33 EUR 3,494,528 USD 4,673, INR 633,581,000 USD 13,565, , CLP 8,052,618,000 USD 15,445,836 1,646,099 5 USD 1,121,870 EUR 806,890 42,697 4 NZD 11,220,000 USD 7,835, ,588 1 USD 8,740,511 NZD 12,744,985 (1,155,071) 1 CNY 17,840,000 USD 2,686,545 12,409 1 MYR 10,640,000 USD 3,248, , , Unaudited Semi-Annual Report

56 Notes to the Financial Statements at December 31, 2010 (continued) Note 4 Forward foreign exchange contracts (continued) As at December 31, 2010 the Company had entered into the following outstanding contracts: Templeton Global Bond Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 96 EUR 7,380,256,193 USD 9,771,311, ,466, USD 7,095,858,390 EUR 5,260,218,315 63,204, USD 5,691,448,090 JPY 490,746,001,495 (370,196,445) 66 CLP 762,433,933,790 USD 1,471,249, ,111, INR 74,497,233,935 USD 1,582,663,654 38,851, PHP 77,656,734,468 USD 1,689,153,152 84,010, NOK 10,685,931,983 EUR 1,299,838,002 83,121, GBP 514,077,241 USD 812,043,617 (10,070,265) 19 CHF 158,748,762 USD 160,988,844 8,999, MYR 1,557,558,715 USD 476,928,807 22,850, SGD 313,392,797 USD 238,513,678 5,753, SEK 6,263,467,396 EUR 653,157,020 52,220, SEK 791,241,484 USD 114,554,349 3,269,111 9 PLN 34,927,772 USD 11,404, ,034 8 NOK 20,903,410 USD 3,469, ,645 7 PLN 1,022,944,500 EUR 246,817,758 10,185,933 6 AUD 319,628,345 USD 289,224,400 27,693,470 4 KRW 100,056,000,000 JPY 7,563,662,159 (4,198,113) 3 USD 114,193,319 NZD 166,302,415 (14,999,774) 3 JPY 116,179,960 USD 1,390,000 41,410 3 AUD 97,962,000 JPY 7,249,416,578 10,221,403 2 ILS 169,383,124 USD 45,135,805 2,866,579 2 BRL 165,294,000 JPY 7,533,971,142 6,161,209 2 BRL 166,220,021 USD 83,620,928 15,758,117 1 USD 3,813,589 SEK 26,313,000 (104,670) 1 USD 1,017,877 CHF 985,000 (36,861) 1 PEN 13,700,000 USD 4,775,183 80,821 1 CNY 763,726,000 USD 115,010, ,207 1 KRW 59,910,000,000 USD 51,332,362 1,967, ,246,789 Templeton Global Bond (Euro) Fund Purchases Sales Unrealised Profit/(Loss) contracts EUR 18 EUR 50,607,016 USD 66,053,999 1,204, EUR 33,943,702 MXN 583,281,811 (528,685) 8 EUR 14,374,070 PLN 58,860,728 (276,003) 6 EUR 18,314,381 IDR 220,714,018, ,524 4 EUR 10,902,444 BRL 26,351,765 (696,408) 4 EUR 40,652,486 KRW 61,962,684,920 (395,720) 2 EUR 689,794 AUD 1,033,977 (81,611) 1 EUR 44,916,994 MYR 189,033,170 (115,954) 1 EUR 297,162 NZD 540,000 (15,805) 1 MYR 4,100,000 EUR 953,948 23,459 1 CLP 575,000,000 EUR 818,214 94,447 1 EUR 17,097,322 HUF 4,898,211, ,975 1 SEK 24,284,109 EUR 2,537, , ,917 Templeton Global High Yield Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 65 USD 5,851,338 JPY 508,049,576 (421,045) 36 USD 7,875,553 EUR 6,005,894 (152,675) 6 EUR 284,490 USD 378,580 1,931 4 USD 521,072 GBP 345,666 (17,301) 4 KRW 144,000,000 JPY 10,885,932 (6,046) 3 AUD 141,000 JPY 10,434,329 14,712 3 PHP 69,042,440 USD 1,450, ,451 2 BRL 221,000 JPY 10,072,995 8,238 2 MYR 5,453,090 USD 1,671,409 76,729 1 USD 35,261 NZD 51,561 (4,795) 1 INR 155,000,000 USD 3,209, ,818 (256,983) Unaudited Semi-Annual Report 55

57 Notes to the Financial Statements at December 31, 2010 (continued) Note 4 Forward foreign exchange contracts (continued) As at December 31, 2010 the Company had entered into the following outstanding contracts: Templeton Global Income Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 54 USD 12,732,660 JPY 1,086,677,000 (694,651) 31 PHP 186,657,000 USD 4,166,196 93, INR 95,516,000 USD 2,048,971 37, CLP 1,782,579,000 USD 3,444, , MYR 33,776,342 USD 10,156, ,189 7 USD 14,531,889 EUR 11,107,341 (315,803) 6 AUD 3,005,512 USD 2,662, ,451 4 SEK 47,879,203 EUR 4,950, ,407 3 USD 617,609 NZD 901,846 (82,906) 3 NOK 8,667,900 EUR 1,041,417 92,681 2 USD 308,600 GBP 199,168 (1,371) 2 BRL 644,000 JPY 29,353,008 24,005 1 CNY 5,245,000 USD 789,850 3,648 1 PEN 703,645 USD 245,258 4,151 1 NOK 2,555,000 USD 424,123 13,640 1 KRW 4,323,438,900 USD 3,663, ,217 1,213,271 Templeton Global Total Return Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 96 EUR 2,854,797,727 USD 3,767,858,999 51,023, USD 2,328,689,729 EUR 1,766,004,059 (31,916,214) 85 USD 2,071,039,617 JPY 178,826,503,226 (137,705,971) 67 CLP 252,501,456,000 USD 490,023,835 44,621, INR 22,016,788,813 USD 471,654,007 8,307, PHP 28,161,602,176 USD 621,093,801 21,727, NOK 5,128,660,786 EUR 626,083,802 34,163, GBP 128,549,283 USD 200,310, , SEK 4,273,303,320 EUR 447,989,604 32,439, CHF 172,941,520 USD 178,400,475 6,809, SGD 188,458,835 USD 143,106,260 3,785, PLN 826,582,769 EUR 200,824,584 5,610, AUD 428,005,745 USD 396,511,216 23,269, PLN 272,695,541 USD 90,004,674 1,846,582 8 MYR 1,441,013,694 USD 425,518,520 39,228,206 4 KRW 28,733,000,000 JPY 2,172,050,268 (1,205,564) 4 USD 13,387,316 GBP 8,775,811 (278,167) 4 ILS 334,659,714 USD 89,125,082 5,698,851 3 KRW 89,082,350,000 USD 76,092,661 2,869,201 3 AUD 28,074,000 JPY 2,077,541,506 2,929,255 2 USD 30,366,039 NZD 44,212,797 (3,980,955) 2 SEK 8,568,901 USD 1,250,576 24,982 2 CNY 611,370,600 USD 91,781, ,618 2 BRL 46,262,000 JPY 2,108,585,619 1,724,383 2 BRL 25,239,660 USD 12,976,094 1,912,193 1 NOK 30,855,000 USD 5,121, ,726 1 PEN 39,899,863 USD 13,907, ,382 1 NZD 25,650,000 USD 17,833,419 2,092, ,315,325 Templeton Growth (Euro) Fund Purchases Sales Unrealised Profit/(Loss) contracts EUR 2 EUR 147,554 CHF 183, EUR 332,504 GBP 283,100 2,392 2 EUR 1,218,481 USD 1,595,000 26,132 28, Unaudited Semi-Annual Report

58 Notes to the Financial Statements at December 31, 2010 (continued) Note 4 Forward foreign exchange contracts (continued) As at December 31, 2010 the Company had entered into the following outstanding contracts: Templeton Latin America Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 13 PLN 16,830,637 USD 5,613,915 55,842 1 EUR 16,616,000 BRL 37,178,300 (46,860) 1 USD 1,010,900 EUR 770,668 (20,019) 1 USD 1,076,056 PLN 3,218,000 (7,995) 1 BRL 1,116,800 EUR 502,045 (2,494) 1 EUR 17,524,730 USD 22,942, , ,733 Templeton U.S. Value Fund Purchases Sales Unrealised Profit/(Loss) contracts USD 20 EUR 3,461,544 USD 4,570,362 60,169 2 USD 125,378 EUR 94,841 (1,490) 58,679 CURRENCY ABBREVIATIONS AUD Australian Dollar BRL Brazilian Real CAD Canadian Dollar CHF Swiss Franc CLP Chilean Peso CNY Chinese Yuan DKK Danish Krone EUR Euro GBP British Pound HKD Hong Kong Dollar HUF Hungarian Forint IDR Indonesian Rupiah ILS Israeli Shekel INR Indian Rupee JPY Japanese Yen KRW Korean Won MXN Mexican Peso MYR Malaysian Ringgit NOK Norwegian Krone NZD New-Zealand Dollar PEN Peruvian Nuevo Sol PHP Philippine Peso PLN Polish Zloty SEK Swedish Krona SGD Singapore Dollar THB Thai Baht USD U.S. Dollar Note 5 Open positions on credit default swap contracts As at December 31, 2010 the Company had entered into the following outstanding contracts: Franklin Strategic Income Fund Nominal Counterparty Buy/Sell Unrealised protection profit/(loss) USD USD 27,472,500 LCDX.NA.14, Jun Barclays Bank/ Credit Suisse International/ Goldman Sachs International JP Morgan Chase Bank Sell USD 93,407 1,009,619 Franklin U.S. Total Return Fund Nominal Counterparty Buy/Sell Unrealised protection profit/(loss) USD USD (2,425,000) CDX.NA.HY.15, Dec Barclays Bank/ Credit Suisse International/ JP Morgan Chase Bank Buy USD (71,396) (104,537) 3,960,000 LCDX.NA.14, Jun Credit Suisse International Sell USD 13, ,347 Templeton Euro High Yield Fund Nominal Counterparty Buy/Sell Unrealised protection profit/(loss) EUR EUR 93,810 20,000,000 ITRX.EUR.XOVER.14, Dec UBS AG Sell EUR 510,789 12,201 Unaudited Semi-Annual Report 57

59 Notes to the Financial Statements at December 31, 2010 (continued) Note 5 Open positions on credit default swap contracts (continued) As at December 31, 2010 the Company had entered into the following outstanding contracts: Templeton Global High Yield Fund Nominal Counterparty Buy/Sell Unrealised protection profit/(loss) USD USD 4,455,000 LCDX.NA.14, Jun Barclays Bank/ Credit Suisse International Sell USD 15, ,085 Note 6 Open positions on interest rate swap contracts As at December 31, 2010, the Company had entered into the following outstanding contracts: Templeton Global Bond Fund Notional Counterparty Maturity Unrealised amount date profit/(loss) USD 34,400,000 Receiving floating rate USD-LIBOR Paying fixed rate % Citigroup 20-Dec-40 USD (1,574,170) 263,000,000 Receiving floating rate USD-LIBOR Paying fixed rate % JPMorgan Chase Bank 23-Nov-40 USD 6,778,807 31,200,000 Receiving floating rate USD-LIBOR Paying fixed rate 4.153% JPMorgan Chase Bank 10-Dec-40 USD (244,877) 4,959,760 Note 7 Open positions on futures contracts As at December 31, 2010, the Company had entered into the following outstanding contracts: Franklin U.S. Total Return Fund Unrealised contracts profit/(loss) purchased/(sold) USD USD Templeton Asian Bond Fund 35 U.S. Treasury Note 2 years, Mar USD 7,661,719 (14,437) 21 U.S. Treasury Note 10 years, Mar USD 2,527,219 (68,045) (82,482) Unrealised contracts profit/(loss) purchased/(sold) USD USD (1) U.S. Treasury Note 10 years, Mar USD (120,344) 3,148 Templeton Emerging s Bond Fund Unrealised contracts profit/(loss) purchased/(sold) USD USD Templeton Global Bond Fund (1) U.S. Treasury Note 10 years, Mar USD (120,344) 3,148 Unrealised contracts profit/(loss) purchased/(sold) USD USD (1) U.S. Treasury Note 10 years, Mar USD (120,344) 3,148 Templeton Global Bond (Euro) Fund Unrealised contracts profit/(loss) purchased/(sold) EUR EUR (1) U.S. Treasury Note 10 years, Mar USD (89,960) 2, Unaudited Semi-Annual Report

60 Notes to the Financial Statements at December 31, 2010 (continued) Note 7 Open positions on futures contracts (continued) As at December 31, 2010, the Company had entered into the following outstanding contracts: Templeton Global High Yield Fund Unrealised contracts profit/(loss) purchased/(sold) USD USD (1) U.S. Treasury Note 10 years, Mar USD (120,344) 3,148 Templeton Global Income Fund Unrealised contracts profit/(loss) purchased/(sold) USD USD (1) U.S. Treasury Note 10 years, Mar USD (120,344) 3,148 Templeton Global Total Return Fund Unrealised contracts profit/(loss) purchased/(sold) USD USD (1) U.S. Treasury Note 10 years, Mar USD (120,344) 3,148 Note 8 Open positions on options contracts As at December 31, 2010 the Company had no open positions on options contracts. Note 9 Securities lending As at December 31, 2010, the Fund was not involved in any loan program. Note 10 Taxation Under current tax laws and practice, the Company is not liable in the Grand-Duchy of Luxembourg to any taxes on income or on realised or unrealised capital gains. The Company is liable in the Grand-Duchy of Luxembourg to a tax of 0.05% per annum, such tax being accrued monthly and paid quarterly, and calculated on the asset of each Fund at the end of each relevant quarter (except the Templeton Euro Liquid Reserve Fund, the Templeton Euro Money Fund and the Franklin U.S. Dollar Liquid Reserve Fund for which the rate is 0.01%). This tax is not applicable for the portion of the of a Fund invested in other undertakings for collective investment that have already been subject to such tax. Class I shares and Class X shares may benefit from a reduced rate of 0.01% per annum if all shareholders of this Class of Shares are institutional investors. Investment income received or capital gains realised by the Company may be subject to tax in the countries of origin. All liabilities in respect of taxes payable on unrealised capital gains on investments are provided for as soon as there is a reasonable certainty that a liability will crystallise. No stamp duty or other tax is payable in the Grand-Duchy of Luxembourg on the issue of shares in the Company. The Company is registered for Value Added Tax in the Grand-Duchy of Luxembourg and subject to account for Value Added Tax in accordance with current laws. Note 11 Statement of changes in the investment portfolio A list, specifying for each Fund total purchases and sales transacted during the period under review, may be obtained, upon request, at the registered office of the Company. Note 12 Equalisation The Funds use an accounting practice known as equalisation, by which a portion of the proceeds from sales and costs of redemption of shares, equivalent on a per share basis to the amount of undistributed investment income on the date of the transaction, is credited or charged to undistributed income. As a result, undistributed investment income per share is unaffected by sales or redemptions of shares. Note 13 Classes of shares Class A(acc) Shares: No distribution of dividends will be made in respect of Class A(acc) shares but the income attributable will be reflected in the increased of the shares. All other terms and conditions are the same as those which apply for Class A(dis) shares. Class A(dis) Shares: are offered at the applicable asset, plus an initial sales charge of up to 6.50 the total amount invested. In addition, a maintenance charge of up to 0.50% per annum of the applicable average asset is deducted and paid to the Principal Distributor. This charge is accrued daily and is deducted and paid monthly to the Principal Distributor. A contingent deferred sales charge of 1% applies to certain redemptions on qualified investments of USD 1 million or more within 18 months after repurchase. Class AX(acc) Shares: are offered at the applicable asset, plus an initial sales charge of up to 6.50 the total amount invested. In addition, a maintenance charge of up to 0.50% per annum of the applicable average asset is deducted and paid to the Principal Distributor. This charge is accrued daily and is deducted and paid monthly to the Principal Distributor. No distribution of dividends will be made in respect of Class AX(acc) shares but the income attributable will be reflected in the increased of the shares. A contingent deferred sales charge of 1% applies to certain redemptions on qualified investments of USD 1 million or more within 18 months after repurchase. Class B(acc) Shares: No distribution of dividends will be made in respect of Class B(acc) shares but the income attributable will be reflected in the increased of the shares. All other terms and conditions are the same as those which apply for Class B(dis) shares. Unaudited Semi-Annual Report 59

61 Notes to the Financial Statements at December 31, 2010 (continued) Note 13 Classes of shares (continued) Class B(dis) Shares: are not subject to an initial sales charge but are subject to a contingent deferred sales charge if an investor redeems shares within four years of purchase. In addition, a maintenance charge of up to 0.75% per annum of the applicable average asset and a servicing charge of up to 1.06% per annum of the applicable average asset are applied. These charges are accrued daily and are deducted and paid monthly to the Principal Distributor and/or other parties. Shares purchased from February 1, 2004 forward shall be automatically converted into Class A shares of the same fund eight years after their purchase as more fully disclosed in the Prospectus. Shares purchased by January 31, 2004 will be automatically converted into the same fund s Class A shares on January 31, Class C(acc) Shares: No distribution of dividends will be made but the income attributable will be reflected in the increased of the shares. All other terms and conditions are the same as the those which apply for Class C(dis) Shares. Class C(dis) Shares: are not subject to an initial sales charge but are subject to a contingent deferred sales charge of 1.00% if an investor redeems shares within one year of purchase. In addition, a servicing charge (during the first year of investment) and a maintenance charge (from the second and subsequent years of investment) of 1.08% per annum of the applicable average asset is deducted. These charges are accrued daily and are deducted and paid monthly to the Principal Distributor and/or other party. Class I(acc) Shares: No distribution of dividends will be made but the income attributable will be reflected in the increased of the shares. All other terms and conditions are the same as those which apply for Class I(dis) shares. Class I(dis) Shares: are offered to institutional investors as more fully described in the current Prospectus and addendums of the Company. Purchases of Class I(dis) shares are not subject to an initial sales charge, nor a contingent deferred sales charge or any maintenance, distribution or servicing charges. Class I(dis) shares benefit from a reduced Investment Management fee (note 3). Class N(acc) Shares: No distribution of dividends will be made but the income attributable will be reflected in the increased of the shares. All other terms and conditions are the same as these which apply for Class N(dis) shares. Class N(dis) Shares: are subject to an initial sales charge of up to 3 the total amount invested. In addition, a distribution charge of up to 1.25% per annum of the applicable average asset is accrued daily and is deducted and paid monthly to the Principal Distributor. Class N(dis) shares may be offered in certain limited circumstances as more fully described in the current prospectus and addendum of the Company. Class X(acc) Shares: No distribution of dividends will be made but the income attributable will be reflected in the increased of the shares. All other terms and conditions are the same as these which apply for Class X(dis) shares. Class X(dis) Shares: are not subject to an initial sales charge and no management fees will be payable by an investor on the acquisition of Class X Shares (instead a fee will be paid to the Investment Manager or affiliates under an agreement between the Investment Manager and the investor). Class X Shares are offered to institutional investors in certain limited circumstances as more fully described in the current prospectus and addendum of the Company. Class Z(acc) Shares: No distribution of dividends will be made but the income attributable will be reflected in the increased of the shares. All other terms and conditions are the same as these which apply for Class Z(dis) shares. Class Z(dis) Shares: are not subject to an initial sales charge, contingent deferred sales charge nor any maintenance, distribution or servicing charge. Class Z(dis) shares may be offered in certain limited circumstances as more fully described in the current prospectus and addendum of the Company. Alternative hedged class of shares: In respect of Hedged Share Classes, either the base exposure of the Hedged Share Class may be hedged into the Fund Hedged Share Class alternative to reduce exchange rate fluctuations and to reduce return fluctuations (H1), or a hedging strategy may be applied in order to reduce the risk of movements between the of the Hedged Share Class and other material currencies of the securities held by said Fund (H2). Hedged Share Classes using the first methodology will contain the abbreviation H1 in their denomination whereas Hedged Share Classes using the second methodology will contain the abbreviation H2. The above mentioned distributing share classes may have different frequencies: Mdis share classes distribute monthly, Qdis share classes distribute quarterly and Ydis share classes distribute annually. Note 14 Soft commission Consistent with obtaining best execution, brokerage commissions on portfolio transactions for the Company may be directed by the Investment Managers to broker-dealers in recognition of research services furnished by them as well as for services rendered in the execution of orders by such broker-dealers. The receipt of investment research and information and related services permits the Investment Managers to supplement their own research and analysis and makes available to them the views and information of individuals and research staffs of other firms. Such services do not include travel, accommodation, entertainment, general administrative goods or services, general office equipment or premises, membership fees, employee salaries or direct money payment, which are paid by the Investment Managers. Note 15 Connected party transactions Certain directors of the Company are or may also be officers and/or directors of one or more of the various Investment Managers of the Funds, among others Franklin Advisers, Inc., Franklin Mutual Advisers L.L.C., Franklin Templeton Investment Management Limited, Franklin Templeton Investments Corp., Franklin Templeton Investments Japan Limited, Templeton Asset Management Limited and Templeton Global Advisors Limited and the Registrar and Transfer, Corporate, Domiciliary and Administrative Agent, Franklin Templeton International Services S.A., and the Commission Payer, Lightning Finance Limited/SG Constellation One Inc. All transactions with connected parties were entered into in the ordinary course of business and under normal commercial terms. The investment management fees that are paid by the Company to the Investment Managers are detailed in note 3 to the financial statements. There are no connected brokers in Franklin Templeton Investments, and no transactions were entered into with connected brokers during the period ended December 31, Unaudited Semi-Annual Report

62 Note 15 Connected party transactions (continued) The Company paid the following fees to Franklin Templeton International Services S.A. as the Registrar and Transfer, Corporate, Domiciliary and Administrative Agent for the period ended December 31, 2010: Administration and Transfer Agency Fees USD 118,760,141 The Company paid the following fees to Templeton Global Advisors Limited as the Principal Distributor of the Funds for the period ended December 31, 2010: Maintenance and Distribution charge USD 225,234,947 The Company paid the following fees to Lightning Finance Limited/SG Constellation One, Inc. as the Commission Payer to the Funds for the period ended December 31, 2010: Servicing charge USD 29,847,319 Note 16 Expenses reimbursement For the period ended December 31, 2010, the following expenses will be reimbursed in the first instance by the Administrative Agent Franklin Templeton International Services S.A. and in the event that the expense exceeds the Administration fee, they will be reimbursed by the Fund s Investment Managers as detailed on pages 3 and 4. Fund Currency Amount Franklin Asian Flex Cap Fund USD 15,396 Franklin India Fund USD 18,517 Franklin Real Return Fund USD 10,454 Franklin Global Real Estate (Euro) Fund EUR 86 Franklin Strategic Income Fund USD 231,375 Franklin U.S. Focus Fund USD 368 Franklin U.S. Total Return Fund USD 52,512 Franklin U.S. Ultra Short Bond Fund USD 97,935 Franklin World Perspectives Fund USD 1,035 Franklin Templeton Japan Fund JPY 3,110 Templeton Asian Bond Fund USD 42,123 Templeton Asian Growth Fund USD 214,031 Templeton Asian Smaller Companies Fund USD 259 Templeton BRIC Fund USD 108,858 Templeton Eastern Europe Fund EUR 22,787 Templeton Emerging s Bond Fund USD 46,982 Templeton Emerging s Smaller Companies Fund USD 28,242 Templeton Euro Money Fund EUR 21,714 Templeton European Corporate Bond Fund EUR 4,580 Templeton European Total Return Fund EUR 109,902 Templeton Frontier s Fund USD 59,692 Templeton Global Aggregate Bond Fund USD 5,443 Templeton Global Bond Fund USD 70,070 Templeton Global Bond (Euro) Fund EUR 43,001 Templeton Global Equity Income Fund USD 190,718 Templeton Global Income Fund USD 214,682 Templeton Global Total Return Fund USD 1,633,599 *The reimbursement applies only to the class disclosed. Notes to the Financial Statements at December 31, 2010 (continued) Fund* Class Currency Amount Franklin Euroland Core Fund I (Acc) EUR 1,895 Franklin Euroland Core Fund I (Acc) USD EUR 1,896 Franklin European Small-Mid Cap Growth Fund I (Acc) EUR 156 Franklin European Small-Mid Cap Growth Fund I (Acc) USD EUR 83 Franklin Global Real Estate Fund I (Acc) USD 420 Franklin Global Real Estate Fund I (Qdis) USD 638 Franklin Global Small-Mid Cap Growth Fund I (Acc) USD 632 Franklin Gold and Precious Metals Fund I (Ydis) USD 49 Franklin High Yield Fund I (Acc) USD 43,013 Franklin High Yield Fund I (Mdis) USD 27,418 Franklin Income Fund I (Acc) USD 200 Franklin U.S. Government Fund I (Acc) USD 10,542 Franklin U.S. Government Fund I (Mdis) USD 187,506 Franklin Mutual Euroland Fund I (Acc) EUR 409 Franklin Mutual Euroland Fund I (Acc) USD EUR 398 Franklin Templeton Global Growth and Value Fund I (Acc) EUR USD 41 Templeton China Fund I (Acc) USD 275 Templeton China Fund I (Ydis) GBP USD 255 Templeton Emerging s Fund I (Acc) USD 3,189 Templeton Euro Government Bond Fund I (Acc) EUR 13 Templeton Global Balanced Fund I (Acc) USD 258 Templeton Korea Fund I (Acc) USD 307 Templeton Latin America Fund I (Acc) USD 6,299 Templeton Thailand Fund I (Acc) USD 163 Note 17 Total expense ratio The Total Expense Ratio ( TER ), expressed as a percentage, represents how the total expenses of the Funds relate to the average of the Funds for the period ended December 31, The total expenses comprise the investment management fees, the administration and transfer agency fees, the custodian fees and other expenses as summarised in the Statement of Operations and Changes in Net Assets. Note 18 Annual and interim dividends distributed for the period ended December 31, 2010 Accumulated dividends have not been paid out and are reflected as an increase in the Issue of shares in the Statement of Operations and Changes in Net Assets. Ex-dividend dates 01-Jul Jul Aug Sep Oct Nov Dec-10 Franklin Asian Flex Cap Fund A (Ydis) A (Ydis) GBP I (Ydis) Franklin European Growth Fund A (Ydis) GBP Franklin European Small-Mid Cap Growth Fund A (Ydis) GBP Franklin Global Real Estate (Euro) Fund A (Ydis) I (Ydis) Franklin Global Real Estate (USD) Fund A (Qdis) A (Qdis) SGD B (Qdis) C (Qdis) I (Qdis) N (Qdis) Unaudited Semi-Annual Report 61

63 Notes to the Financial Statements at December 31, 2010 (continued) Note 18 Annual and interim dividends distributed for the period ended December 31, 2010 (continued) Accumulated dividends have not been paid out and are reflected as an increase in the Issue of shares in the Statement of Operations and Changes in Net Assets. Ex-dividend dates 01-Jul Jul Aug Sep Oct Nov Dec-10 Franklin Gold and Precious Metals Fund A (Ydis) EUR A (Ydis) EUR hedged (H1) I (Ydis) Franklin High Yield (Euro) Fund A (Mdis) A (Mdis) USD A (Ydis) B (Mdis) B (Mdis) USD I (Mdis) I (Ydis) Franklin High Yield Fund A (Mdis) A (Mdis) SGD hedged (H1) B (Mdis) I (Mdis) Z (Mdis) USD Franklin Income Fund A (Mdis) A (Mdis) SGD hedged (H1) B (Mdis) C (Mdis) Z (Mdis) USD Franklin India Fund A (Ydis) EUR A (Ydis) GBP I (Ydis) EUR I (Ydis) EUR hedged (H2) Franklin MENA Fund A (Ydis) A (Ydis) EUR A (Ydis) GBP I (Ydis) Franklin Mutual Beacon Fund A (Ydis) B (Ydis) EUR Franklin Mutual European Fund A (Ydis) A (Ydis) GBP B (Ydis) I (Ydis) Franklin Mutual Global Discovery Fund A (Ydis) EUR A (Ydis) GBP I (Ydis) EUR Franklin Natural Resources Fund A (Ydis) Franklin Real Return Fund A (Ydis) EUR hedged (H1) Franklin Strategic Income Fund A (Mdis) A (Mdis) EUR B (Mdis) C (Mdis) Franklin Templeton Global Equity Strategies Fund A (Ydis) A (Ydis) EUR Franklin Templeton Global Fundamental Strategies Fund A (Ydis) A (Ydis) EUR Franklin Templeton Japan Fund A (Ydis) EUR A (Ydis) GBP 62 Unaudited Semi-Annual Report

64 Notes to the Financial Statements at December 31, 2010 (continued) Note 18 Annual and interim dividends distributed for the period ended December 31, 2010 (continued) Accumulated dividends have not been paid out and are reflected as an increase in the Issue of shares in the Statement of Operations and Changes in Net Assets. Ex-dividend dates 01-Jul Jul Aug Sep Oct Nov Dec-10 Franklin U.S. Government Fund A (Mdis) A (Mdis) HKD A (Mdis) SGD hedged (H1) B (Mdis) I (Mdis) N (Mdis) Z (Mdis) USD Franklin U.S. Opportunities Fund A (Ydis) EUR A (Ydis) GBP Franklin U.S. Total Return Fund A (Mdis) B (Mdis) C (Mdis) I (Mdis) N (Mdis) Franklin U.S. Ultra Short Bond Fund A (Mdis) B (Mdis) C (Mdis) N (Mdis) Franklin World Perspectives Fund A (Ydis) GBP I (Ydis) GBP Templeton Asian Bond Fund A (Mdis) A (Mdis) EUR A (Mdis) SGD A (Mdis) SGD hedged (H1) B (Mdis) C (Mdis) I (Mdis) EUR N (Mdis) Templeton Asian Growth Fund A (Ydis) A (Ydis) EUR A (Ydis) GBP I (Ydis) EUR hedged (H2) Z (Ydis) EUR hedged (H1) Templeton Asian Smaller Companies Fund A (Ydis) A (Ydis) GBP I (Ydis) GBP Templeton BRIC Fund A (Ydis) EUR A (Ydis) GBP I (Ydis) EUR Templeton China Fund A (Ydis) EUR A (Ydis) GBP Templeton Eastern Europe Fund A (Ydis) A (Ydis) GBP B (Ydis) Templeton Emerging s Bond Fund A (Mdis) A (Qdis) A (Qdis) EUR A (Qdis) GBP A (Ydis) EUR hedged (H1) B (Mdis) B (Qdis) I (Qdis) I (Qdis) GBP hedged (H1) Z (Mdis) USD Templeton Emerging s Fund A (Ydis) Unaudited Semi-Annual Report 63

65 Notes to the Financial Statements at December 31, 2010 (continued) Note 18 Annual and interim dividends distributed for the period ended December 31, 2010 (continued) Accumulated dividends have not been paid out and are reflected as an increase in the Issue of shares in the Statement of Operations and Changes in Net Assets. Ex-dividend dates 01-Jul Jul Aug Sep Oct Nov Dec-10 Templeton Emerging s Smaller Companies Fund A (Ydis) A (Ydis) GBP Templeton Euro Government Bond Fund A (Ydis) Templeton Euro Liquid Reserve Fund A (Ydis) Templeton Euroland Fund A (Ydis) B (Ydis) I (Ydis) Templeton European Corporate Bond Fund A (Ydis) I (Ydis) N (Ydis) Templeton European Fund A (Ydis) A (Ydis) USD Templeton European Total Return Fund A (Mdis) A (Mdis) USD A (Ydis) C (Mdis) USD I (Mdis) I (Ydis) N (Mdis) Templeton Frontier s Fund A (Ydis) A (Ydis) GBP I (Ydis) GBP Z (Ydis) EUR hedged (H1) Templeton Global (Euro) Fund A (Ydis) Templeton Global Aggregate Bond Fund A (Mdis) A (Mdis) EUR Templeton Global Balanced Fund A (Qdis) C (Qdis) Templeton Global Bond (Euro) Fund A (Ydis) Templeton Global Bond Fund A (Mdis) A (Mdis) AUD hedged (H1) A (Mdis) EUR A (Mdis) EUR hedged (H1) A (Mdis) GBP A (Mdis) GBP hedged (H1) A (Mdis) HKD A (Mdis) SGD A (Mdis) SGD hedged (H1) A (Ydis) EUR A (Ydis) EUR hedged (H1) B (Mdis) C (Mdis) I (Mdis) EUR I (Mdis) GBP I (Mdis) GBP hedged (H1) I (Mdis) JPY I (Mdis) JPY hedged (H1) I (Ydis) EUR I (Ydis) EUR hedged (H1) N (Mdis) EUR hedged (H1) N (Ydis) EUR hedged (H1) Z (Mdis) USD Z (Ydis) EUR hedged (H1) Unaudited Semi-Annual Report

66 Notes to the Financial Statements at December 31, 2010 (continued) Note 18 Annual and interim dividends distributed for the period ended December 31, 2010 (continued) Accumulated dividends have not been paid out and are reflected as an increase in the Issue of shares in the Statement of Operations and Changes in Net Assets. Ex-dividend dates 01-Jul Jul Aug Sep Oct Nov Dec-10 Templeton Global Equity Income Fund A (Qdis) A (Qdis) SGD B (Qdis) C (Qdis) I (Qdis) JPY Templeton Global Fund A (Ydis) Templeton Global High Yield Fund A (Mdis) A (Mdis) EUR A (Mdis) GBP Templeton Global Income Fund A (Qdis) A (Qdis) HKD A (Qdis) SGD B (Qdis) C (Qdis) Templeton Global Smaller Companies Fund A (Ydis) C (Ydis) Templeton Global Total Return Fund A (Mdis) A (Mdis) AUD hedged (H1) A (Mdis) EUR A (Mdis) EUR hedged (H1) A (Mdis) GBP A (Mdis) GBP hedged (H1) A (Mdis) HKD A (Mdis) SGD A (Mdis) SGD hedged (H1) A (Ydis) EUR A (Ydis) EUR hedged (H1) B (Mdis) C (Mdis) I (Mdis) CHF I (Mdis) EUR I (Mdis) GBP I (Mdis) GBP hedged (H1) I (Ydis) EUR I (Ydis) EUR hedged (H1) N (Mdis) EUR hedged (H1) N (Ydis) EUR hedged (H1) Z (Mdis) USD Z (Ydis) EUR hedged (H1) Templeton Growth (Euro) Fund A (Ydis) A (Ydis) USD B (Ydis) I (Ydis) I (Ydis) USD Templeton Latin America Fund A (Ydis) A (Ydis) EUR A (Ydis) GBP I (Ydis) EUR hedged (H2) Templeton U.S. Dollar Liquid Reserve Fund A (Mdis) B (Mdis) Templeton U.S. Value Fund A (Ydis) EUR A (Ydis) GBP I (Ydis) GBP Unaudited Semi-Annual Report 65

67 Notes to the Financial Statements at December 31, 2010 (continued) Note 19 Time deposits and cash repurchase agreements As at December 31, 2010, the Company had the following cash on time deposit and repos held with highly rated financial institutions: TIME DEPOSITS SubFund Currency Amount Franklin Asian Flex Cap Fund USD 400,000 Franklin Euroland Core Fund EUR 660,000 Franklin European Growth Fund EUR 30,200,000 Franklin European Small-Mid Cap Growth Fund EUR 45,000,000 Franklin Global Growth Fund USD 3,000,000 Franklin Global Real Estate Fund USD 4,900,000 Franklin Global Small-Mid Cap Growth Fund USD 5,300,000 Franklin India Fund USD 91,600,000 Franklin MENA Fund USD 2,000,000 Franklin World Perspectives Fund USD 1,600,000 Franklin Mutual European Fund EUR 106,060,935 Franklin Mutual Global Discovery Fund USD 25,380,080 Franklin Templeton Global Equity Strategies Fund USD 2,000,000 Franklin Templeton Global Growth And Value Fund USD 3,900,000 Templeton Asian Bond Fund USD 489,300,000 Templeton Asian Growth Fund USD 2,241,600,000 Templeton BRIC Fund USD 55,200,000 Templeton China Fund USD 67,400,000 Templeton Eastern Europe Fund EUR 63,400,000 Templeton Emerging s Fund USD 48,100,000 Templeton Emerging s Bond Fund USD 234,600,000 SubFund Currency Amount Templeton Euro Government Bond Fund EUR 875,000 Templeton Euro High Yield Fund EUR 55,900,000 Templeton Euro Liquid Reserve Fund EUR 2,000,000 Templeton Euro Money Fund EUR 2,800,000 Templeton Euroland Fund EUR 3,500,000 Templeton European Fund EUR 400,000 Templeton European Corporate Bond Fund EUR 400,000 Templeton European Total Return Fund EUR 2,300,000 Templeton Global Fund USD 12,700,000 Templeton Global (Euro) Fund EUR 5,400,000 Templeton Global Balanced Fund USD 18,100,000 Templeton Global Bond Fund USD 3,489,300,000 Templeton Global Bond (Euro) Fund EUR 19,700,000 Templeton Global Equity Income Fund USD 2,600,000 Templeton Global Income Fund USD 39,100,000 Templeton Global Smaller Companies Fund USD 43,100,000 Templeton Growth (Euro) Fund EUR 74,375,377 Templeton Korea Fund USD 3,200,000 Templeton Latin America Fund USD 134,500,000 Templeton Thailand Fund USD 6,400,000 As at December 31, 2010, the Company had no outstanding cash repos. Note 20 Audited and unaudited semi-annual reports The audited annual reports and unaudited semi-annual reports will be available on the following Franklin Templeton website, or may be obtained on request at the registered office of the Company; they are only distributed to registered Shareholders in those countries where local regulation so requires. The complete audited annual reports and unaudited semi-annual reports are available at the registered office of the Company. Note 21 Portfolio Turnover Ratio The portfolio turnover ratio, expressed as a percentage, is equal to the total of purchases and sales of securities ted against the absolute of subscriptions and redemptions, over average of the fund for the year. It is effectively a measure of how frequently a fund buys or sells securities. The portfolio turnover ratio calculation is not applicable for Money Funds, as such a ratio is not relevant to such Funds due to the shortterm nature of the investments. Note 22 Management fees of the underlying target funds The Management fees are included in the Total Expense Ratios summarised in the Statement of Operations and Changes in Net Assets. The Management fees below are for the funds held by FTIF on December 31, Franklin Strategic Income Fund Franklin Templeton Series II Funds Franklin Floating Rate II Fund Class I (Mdis) 0.40% Templeton Emerging s Fund Franklin India Blue Chip Offshore Fund Class A (Acc) 0.00% Templeton Global High Yield Fund Franklin Templeton Series II Funds Franklin Floating Rate II Fund Class I (Mdis) 0.40% Templeton Growth (Euro) Fund Franklin Templeton Selected s Fund Templeton China Opportunities Fund Class F2 (Acc) USD 0.00% Templeton Global Aggregate Bond Fund Franklin Templeton Emerging s Debt Opportunities Fund 0.70% Note 23 Global Credit Facility Effective January 23, 2009, the Company, together with other European and U.S. registered investment funds managed by Franklin Templeton Investments (individually, Borrower ; collectively Borrowers ), entered into a joint syndicated senior unsecured credit facility totaling USD725 million (Global Credit Facility) to provide 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 Company shall, in addition to interest charged on any borrowings made by the Company and other costs incurred by the Company, 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 of all of the Borrowers, including an annual commitment fee based upon the unused portion of the Global Credit Facility. During the period ended December 31, 2010, the Company did not utilize the Global Credit Facility. 66 Unaudited Semi-Annual Report

68 Franklin Asian Flex Cap Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Auto Components 2,237 Bosch Ltd. IND INR 316, Automobiles 6,680 Hyundai Motor Co. Ltd. KOR KRW 1,033, ,000 Dongfeng Motor Group Co. Ltd., H CHN HKD 55, ,088, Chemicals 11,516 Grasim Industries Ltd. IND INR 602, ,000 Yingde Gases Group Co. Ltd. CHN HKD 261, , Commercial Banks 641,210 China Construction Bank Corp., H CHN HKD 577, ,025 Industrial and Commercial Bank of China Ltd., H CHN HKD 568, ,500 Bangkok Bank Public Co. Ltd., fgn. THA THB 469, ,360 Woori Finance Holdings Co. Ltd. KOR KRW 447, ,443 Yes Bank Ltd. IND INR 380, ,145 IndusInd Bank Ltd. IND INR 351, ,122 Union Bank of India IND INR 350, ,145, Communications Equipment 69,000 Comba Telecom Systems Holdings Ltd. HKG HKD 77, Construction & Engineering 2,486 GS Engineering & Construction Corp. KOR KRW 257, Diversified Financial Services 42,500 Hong Kong Exchanges & Clearing Ltd. HKG HKD 964, ,000 Singapore Exchange Ltd. SGP SGD 400, ,364, Electronic Equipment, Instruments & Components 26,630 Hollysys Automation Technologies Ltd. USA USD 403, ,606 Cando Corp. TWN TWD 154, , Food & Staples Retailing 82,955 Dairy Farm International Holdings Ltd. HKG USD 770, Gas Utilities 38,156 GAIL India Ltd. IND INR 435, Health Care Equipment & Supplies 5,562 Cochlear Ltd. AUS AUD 456, ,600 Mindray Medical International Ltd., ADR CHN USD 121, , Household Durables 4,055 LG Electronics Inc. KOR KRW 426, Household Products 327,000 NVC Lighting Holdings Ltd. CHN HKD 171, Insurance 45,500 Ping An Insurance (Group) Co. of China Ltd. CHN HKD 507, ,000 Meritz Fire & Marine Insurance Co. Ltd. KOR KRW 403, , IT Services 461,000 Travelsky Technology Ltd., H CHN HKD 481, Machinery 119,500 PT United Tractors IDN IDR 315, Media 93,345 Jagran Prakashan Ltd. IND INR 275, Metals & Mining 556,000 Fushan International Energy Group Ltd. HKG HKD 381, ,954 Gujarat Mineral Development Corp. Ltd. IND INR 308, ,049 Korea Zinc Co. Ltd. KOR KRW 258, ,279 Hyundai Steel Co. KOR KRW 253, ,201, Unaudited Semi-Annual Report 67

69 Franklin Asian Flex Cap Fund Multiline Retail 592,500 Parkson Retail Group Ltd. CHN HKD 911, Oil, Gas & Consumable Fuels 224,500 China Shenhua Energy Co. Ltd., H CHN HKD 941, ,863,000 Adaro Energy PT IDN IDR 527, ,000 CNOOC Ltd. CHN HKD 295, ,000 PetroChina Co. Ltd., H CHN HKD 291, ,056, Real Estate Management & Development 310,800 China Overseas Land & Investment Ltd. HKG HKD 575, ,000 China Resources Land Ltd. CHN HKD 406, ,000 Hang Lung Properties Ltd. HKG HKD 265, ,247, Semiconductors & Semiconductor Equipment 563,365 Taiwan Semiconductor Manufacturing Co. Ltd. TWN TWD 1,371, ,400 Samsung Electronics Co. Ltd. KOR KRW 1,184, ,182 MediaTek Inc. TWN TWD 560, ,164 Melfas Inc. KOR KRW 314, ,664 Jusung Engineering Co. Ltd. KOR KRW 261, ,690 Hynix Semiconductor Inc. KOR KRW 121, ,814, Software 9,950 Longtop Financial Technologies Ltd., ADR CHN USD 359, Specialty Retail 70,818 Esprit Holdings Ltd. HKG HKD 336, ,500 ACE Hardware Indonesia IDN IDR 179, , Transportation Infrastructure 198,000 SATS Ltd. SGP SGD 444, Wireless Telecommunication Services 122,521 Bharti Airtel Ltd. IND INR 982, TOTAL SHARES 23,573, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 23,573, TOTAL INVESTMENTS 23,573, Unaudited Semi-Annual Report

70 Franklin Biotechnology Discovery Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Biotechnology 174,200 Celgene Corp. USA USD 10,302, ,300 Amgen Inc. USA USD 10,282, ,900 Gilead Sciences Inc. USA USD 9,853, ,700 Genzyme Corp. USA USD 6,529, ,600 Alexion Pharmaceuticals Inc. USA USD 4,639, ,600 Onyx Pharmaceuticals Inc. USA USD 3,709, ,800 Dendreon Corp. USA USD 3,415, ,040 Biogen Idec Inc. USA USD 3,355, ,800 Human Genome Sciences USA USD 2,981, ,200 Acorda Therapeutics Inc. USA USD 2,322, ,700 United Therapeutics Corp. USA USD 2,320, ,409 BioMarin Pharmaceutical Inc. USA USD 2,300, ,500 Vertex Pharmaceuticals Inc. USA USD 1,839, ,400 InterMune Inc. USA USD 1,616, ,900 Amarin Corp. PLC., ADR GBR USD 1,518, ,452 Pharmasset Inc. USA USD 1,495, ,300 ArQule Inc. USA USD 1,369, ,000 Incyte Corp. USA USD 1,357, ,200 AMAG Pharmaceuticals Inc. USA USD 1,270, ,700 Biospecifics Technologies Corp. USA USD 1,169, ,000 Chelsea Therapeutics International Ltd. USA USD 1,110, ,300 Theravance Inc. USA USD 1,035, ,900 Achillion Pharmaceuticals Inc. USA USD 966, ,800 Pharmacyclics Inc. USA USD 843, ,700 Ironwood Pharmaceuticals Inc. USA USD 814, ,220 Gentium SpA, ADR ITA USD 778, ,800 Amylin Pharmaceuticals Inc. USA USD 761, ,656 Anacor Pharmaceuticals Inc. USA USD 626, ,600 NPS Pharmaceuticals Inc. USA USD 462, ,500 Medivir AB, B SWE SEK 405, ,400 Curis Inc. USA USD 400, ,600 Transcept Pharmaceuticals Inc. USA USD 396, ,100 Savient Pharmaceuticals Inc. USA USD 290, ,500 Lexicon Pharmaceuticals Inc. USA USD 258, ,800 Ablynx NV BEL EUR 200, ,600 Celldex Therapeutics Inc. USA USD 167, ,046 Anadys Pharmaceuticals Inc. USA USD 149, ,600 Cytokiics Inc. USA USD 128, ,814 Orexigen Therapeutics Inc. USA USD 119, ,800 Ablynx NV BEL EUR Inhibitex Inc. USA USD ,566, Life Sciences Tools & Services 51,900 Life Technologies Corp. USA USD 2,880, ,600 QIAGEN NV NLD USD 2,044, ,200 Pacific Biosciences of California Inc. USA USD 400, ,326, Pharmaceuticals 101,600 Salix Pharmaceuticals Ltd. USA USD 4,771, ,500 Questcor Pharmaceuticals Inc. USA USD 2,599, ,700 Teva Pharmaceutical Industries Ltd., ADR ISR USD 2,330, ,131 Jazz Pharmaceuticals Inc. USA USD 1,832, ,700 Ardea Biosciences Inc. USA USD 1,682, ,200 Auxilium Pharmaceuticals Inc. USA USD 1,185, ,800 Aegerion Pharmaceuticals Inc. USA USD 1,031, ,100 Corcept Therapeutics Inc. USA USD 961, ,600 Nektar Therapeutics USA USD 791, ,855 Map Pharmaceuticals Inc. USA USD 750, ,100 NuPathe Inc. USA USD 707, ,800 Inspire Pharmaceuticals Inc. USA USD 703, ,000 Cardiome Pharma Corp. CAN USD 622, ,218 DepoMed Inc. USA USD 554, ,612,400 Nuvo Research Inc. CAN CAD 543, ,300 Cadence Pharmaceuticals Inc. USA USD 191, ,200 Optimer Pharmaceuticals Inc. USA USD 47, ,308, TOTAL SHARES 110,200, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 110,200, Unaudited Semi-Annual Report 69

71 Franklin Biotechnology Discovery Fund TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Securities Maturing Within One Year 2,000,000 US Treasury Bill, 0.00%, 01/13/11 USA USD 1,999, TOTAL BONDS 1,999, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 1,999, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Pharmaceuticals 161,700 Indevus Pharmaceuticals Inc., Escrow Account** USA USD 50, TOTAL SHARES 50, WARRANTS Biotechnology 33,841 AEterna Zentaris Inc., wts., 12/23/11 CAN USD TOTAL WARRANTS TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 50, TOTAL INVESTMENTS 112,251, ** These securities are submitted to a Fair Valuation 70 Unaudited Semi-Annual Report

72 Franklin Euroland Core Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 22,000 Finmeccanica SpA ITA EUR 187, ,100 MTU Aero Engines Holding AG DEU EUR 105, , Auto Components 4,962 Compagnie Generale des Etablissements Michelin, B FRA EUR 266, ,500 Elringklinger AG DEU EUR 116, , Automobiles 11,300 Daimler AG DEU EUR 575, ,600 Volkswagen AG, pfd. DEU EUR 316, ,600 Peugeot SA FRA EUR 159, ,051, Beverages 6,700 Anheuser-Busch InBev NV BEL EUR 286, Building Products 15,880 Wienerberger AG AUT EUR 226, Capital s 8,650 Deutsche Bank AG DEU EUR 337, Chemicals 11,100 BASF SE DEU EUR 666, ,900 Akzo Nobel NV NLD EUR 227, , Commercial Banks 89,229 Banco Santander SA ESP EUR 707, ,600 BNP Paribas SA FRA EUR 457, ,100 Societe Generale, A FRA EUR 406, ,700 Intesa Sanpaolo SpA ITA EUR 283, ,412 Banco Bilbao Vizcaya Argentaria SA ESP EUR 260, ,793 UniCredit SpA ITA EUR 221, ,218 Erste Group Bank AG AUT EUR 183, ,518, Communications Equipment 36,300 Nokia OYJ, A FIN EUR 280, Construction & Engineering 6,600 Vinci SA FRA EUR 268, ,700 Bauer AG DEU EUR 199, ,100 Imtech NV NLD EUR 144, , Construction Materials 26,700 CRH PLC IRL EUR 413, ,750 HeidelbergCement AG DEU EUR 268, , Diversified Financial Services 70,052 ING Groep NV NLD EUR 509, Diversified Telecommunication Services 33,900 Telefonica SA ESP EUR 575, ,200 Deutsche Telekom AG DEU EUR 280, ,500 France Telecom SA FRA EUR 210, ,000 Koninklijke KPN NV NLD EUR 141, ,700 Telekom Austria AG AUT EUR 102, ,310, Electric Utilities 20,900 E.ON AG DEU EUR 477, ,900 Enel SpA ITA EUR 179, ,950 Iberdrola SA ESP EUR 132, ,000 EDF SA FRA EUR 92, Iberdrola SA ESP EUR 3, , Unaudited Semi-Annual Report 71

73 Franklin Euroland Core Fund (Currency EUR) Electrical Equipment 2,100 Schneider Electric SA FRA EUR 235, ,100 Prysmian SpA ITA EUR 230, ,900 Nexans SA FRA EUR 111, , Energy Equipment & Services 12,300 Saipem SpA ITA EUR 453, ,600 Fugro NV NLD EUR 344, , Food & Staples Retailing 4,900 Carrefour SA FRA EUR 151, Food Products 10,616 Danone FRA EUR 499, ,700 Unilever NV NLD EUR 435, , Health Care Providers & Services 3,500 Fresenius Medical Care AG & Co. KGaA DEU EUR 151, Hotels, Restaurants & Leisure 4,400 Accor SA FRA EUR 146, Household Products 4,900 Henkel AG & Co. KGaA, pfd. DEU EUR 229, Industrial Conglomerates 11,000 Siemens AG DEU EUR 1,024, ,800 Koninklijke Philips Electronics NV NLD EUR 178, ,100 Rheinmetall AG DEU EUR 125, ,329, Insurance 5,800 Allianz SE DEU EUR 515, ,100 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 238, ,372 Assicurazioni Generali SpA ITA EUR 118, ,100 Sampo OYJ, A FIN EUR 62, , Life Sciences Tools & Services 11,100 MorphoSys AG DEU EUR 206, ,800 Gerresheimer AG DEU EUR 186, ,500 QIAGEN NV NLD EUR 124, , Machinery 10,900 GEA Group AG DEU EUR 235, Media 26,000 Reed Elsevier NV NLD EUR 240, ,300 Vivendi SA FRA EUR 167, ,800 GFK AG DEU EUR 141, , Metals & Mining 13,300 ArcelorMittal NLD EUR 377, Multi-Utilities 6,100 RWE AG DEU EUR 305, ,900 GDF Suez FRA EUR 292, , Office Electronics 1,400 Neopost SA FRA EUR 91, Oil, Gas & Consumable Fuels 25,300 Total SA, B FRA EUR 1,003, ,100 Eni SpA ITA EUR 393, ,800 Repsol YPF SA ESP EUR 183, ,700 Royal Dutch Shell PLC, A GBR EUR 165, ,746, Pharmaceuticals 10,000 Bayer AG, Br. DEU EUR 553, ,000 Sanofi-Aventis FRA EUR 382, ,500 Merck KGaA DEU EUR 150, ,086, Unaudited Semi-Annual Report

74 Franklin Euroland Core Fund (Currency EUR) Real Estate Investment Trust (REIT) 700 Unibail-Rodamco SE FRA EUR 103, Semiconductors & Semiconductor Equipment 17,200 Dialog Semiconductor PLC DEU EUR 292, Software 1,700 Software AG DEU EUR 184, ,400 SAP AG DEU EUR 166, , Specialty Retail 24,400 Jumbo SA GRC EUR 120, Textiles, Apparel & Luxury Goods 1,800 LVMH Moet Hennessy Louis Vuitton FRA EUR 221, Transportation Infrastructure 3,800 Flughafen Wien AG AUT EUR 194, ,400 Koninklijke Vopak NV NLD EUR 120, , TOTAL SHARES 22,131, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 22,131, TOTAL INVESTMENTS 22,131, Unaudited Semi-Annual Report 73

75 Franklin European Growth Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Beverages 357,900 Anheuser-Busch InBev NV BEL EUR 15,318, ,500 Diageo PLC GBR GBP 12,282, ,600, Biotechnology 781,545 Genus PLC GBR GBP 7,829, Commercial Services & Supplies 1,907,500 De La Rue PLC GBR GBP 18,286, ,423,775 Homeserve PLC GBR GBP 12,567, ,854, Diversified Consumer Services 1,800,285 Dignity PLC GBR GBP 15,064, Diversified Financial Services 899,507 RHJ International BEL EUR 5,576, Electrical Equipment 265,200 Nexans SA FRA EUR 15,609, ,039,500 Prysmian SpA ITA EUR 13,253, ,000 ABB Ltd. CHE CHF 3,084, ,947, Energy Equipment & Services 249,500 Fugro NV NLD EUR 15,344, Food & Staples Retailing 2,950,132 Tesco PLC GBR GBP 14,646, Food Products 190,600 Aryzta AG CHE EUR 6,669, Hotels, Restaurants & Leisure 472,400 Paddy Power PLC IRL EUR 14,502, Household Products 324,700 Reckitt Benckiser Group PLC GBR GBP 13,375, Industrial Conglomerates 44,860 DCC PLC IRL EUR 1,058, Insurance 2,125,200 Lancashire Holdings Ltd. GBR GBP 13,681, ,153 Hiscox Ltd. GBR GBP 3,000, ,681, Machinery 853,400 Rotork PLC GBR GBP 18,193, ,500 Spirax-Sarco Engineering PLC GBR GBP 12,684, ,188 Pfeiffer Vacuum Technology AG DEU EUR 4,904, ,782, Marine 30,359 Kuehne & Nagel International AG CHE CHF 3,158, Media 1,576,300 Reed Elsevier NV NLD EUR 14,591, Office Electronics 272,800 Neopost SA FRA EUR 17,786, Professional Services 2,499,100 Experian PLC GBR GBP 23,287, Real Estate Management & Development 4,102,947 Savills PLC GBR GBP 18,432, Specialty Retail 1,928,476 Carpetright PLC GBR GBP 17,902, ,712,400 Jumbo SA GRC EUR 13,399, ,147 Halfords Group PLC GBR GBP 2,841, ,143, Unaudited Semi-Annual Report

76 Franklin European Growth Fund (Currency EUR) Transportation Infrastructure 484,100 Koninklijke Vopak NV NLD EUR 17,112, ,600 Flughafen Wien AG AUT EUR 16,219, ,332, TOTAL SHARES 381,666, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 381,666, TOTAL INVESTMENTS 381,666, Unaudited Semi-Annual Report 75

77 Franklin European Small-Mid Cap Growth Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 8,471,131 Qiiq Group PLC GBR GBP 12,833, Beverages 97,064 C&C Group PLC IRL EUR 328, Biotechnology 1,200,947 Genus PLC GBR GBP 12,031, Commercial Services & Supplies 1,825,200 De La Rue PLC GBR GBP 17,497, ,704,275 Homeserve PLC GBR GBP 14,022, ,519, Construction & Engineering 933,621 Wavin NV NLD EUR 10,638, Distributors 3,934,670 Headlam Group PLC GBR GBP 14,385, Diversified Consumer Services 1,858,405 Dignity PLC GBR GBP 15,550, Diversified Financial Services 3,842,500 RHJ International BEL EUR 23,823, ,457,942 Neovia Financial PLC GBR GBP 7,013, ,836, Electrical Equipment 1,489,900 Prysmian SpA ITA EUR 18,996, ,400 Nexans SA FRA EUR 18,858, ,854, Hotels, Restaurants & Leisure 294,900 Paddy Power PLC IRL EUR 9,053, Household Products 10,612,737 McBride PLC GBR GBP 23,207, Industrial Conglomerates 767,200 DCC PLC IRL EUR 18,105, Insurance 2,685,460 Lancashire Holdings Ltd. GBR GBP 17,288, Leisure Equipment & Products 2,018,165 Vitec Group PLC GBR GBP 13,804, ,905 Beeau FRA EUR 11,981, ,786, Machinery 773,300 Spirax-Sarco Engineering PLC GBR GBP 17,469, ,500 Rotork PLC GBR GBP 14,891, ,440 Pfeiffer Vacuum Technology AG DEU EUR 1,958, ,319, Office Electronics 325,414 Neopost SA FRA EUR 21,216, Professional Services 2,601,200 Experian PLC GBR GBP 24,238, Real Estate Management & Development 3,916,791 Savills PLC GBR GBP 17,595, Specialty Retail 2,654,104 Carpetright PLC GBR GBP 24,638, ,657,876 Jumbo SA GRC EUR 18,069, ,500 Valora Holding AG CHE CHF 12,663, ,372, Transportation Infrastructure 356,200 Flughafen Wien AG AUT EUR 18,248, TOTAL SHARES 430,411, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 430,411, TOTAL INVESTMENTS 430,411, Unaudited Semi-Annual Report

78 Franklin Global Growth Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 42,000 MTU Aero Engines Holding AG DEU EUR 2,812, Biotechnology 80,000 CSL Ltd. AUS AUD 2,966, ,000 Dendreon Corp. USA USD 2,793, ,000 Gilead Sciences Inc. USA USD 2,536, ,296, Capital s 85,000 Macquarie Group Ltd. AUS AUD 3,214, ,000 Man Group PLC GBR GBP 3,003, ,000 Credit Suisse Group AG CHE CHF 2,823, ,041, Chemicals 11,500 Syngenta AG CHE CHF 3,367, ,000 Praxair Inc. USA USD 2,864, ,231, Commercial Banks 210,000 United Overseas Bank Ltd. SGP SGD 2,978, Communications Equipment 20,000 QUALCOMM Inc. USA USD 989, Computers & Peripherals 7,500 Apple Inc. USA USD 2,419, Distributors 500,000 Li & Fung Ltd. HKG HKD 2,923, Diversified Financial Services 44,000 Deutsche Boerse AG DEU EUR 3,049, Electrical Equipment 135,000 ABB Ltd. CHE CHF 3,010, Energy Equipment & Services 70,000 Saipem SpA ITA EUR 3,449, ,000 WorleyParsons Ltd. AUS AUD 3,278, ,000 Schlumberger Ltd. USA USD 3,256, ,984, Food & Staples Retailing 360,000 Tesco PLC GBR GBP 2,390, Health Care Equipment & Supplies 140,000 Getinge AB, B SWE SEK 2,938, ,000 Terumo Corp. JPN JPY 2,927, ,000 Cochlear Ltd. AUS AUD 2,793, ,659, Household Durables 1,000,000 Urbi, Desarrollos Urbanos, SAB de CV MEX MXN 2,350, Household Products 45,000 Reckitt Benckiser Group PLC GBR GBP 2,479, Insurance 160,000 QBE Insurance Group Ltd. AUS AUD 2,967, Inter & Catalog Retail 6,000 Priceline.com Inc. USA USD 2,397, ,000 Amazon.com Inc. USA USD 2,340, ,737, Inter Software & Services 48,000 MercadoLibre Inc. ARG USD 3,199, IT Services 40,000 Visa Inc., A USA USD 2,815, Life Sciences Tools & Services 155,000 QIAGEN NV NLD USD 3,030, Machinery 59,000 Danaher Corp. USA USD 2,783, Media 170,000 Pearson PLC GBR GBP 2,684, Unaudited Semi-Annual Report 77

79 Franklin Global Growth Fund Personal Products 300,000 Hengan International Group Co. Ltd. CHN HKD 2,587, Real Estate Management & Development 560,000 Hang Lung Properties Ltd. HKG HKD 2,604, Software 68,000 Autodesk Inc. USA USD 2,597, ,000 The Sage Group PLC GBR GBP 2,564, ,162, Specialty Retail 36,000 Inditex SA ESP EUR 2,698, Textiles, Apparel & Luxury Goods 85,000 Luxottica Group SpA ITA EUR 2,592, Companies & Distributors 2,000,090 Noble Group Ltd. HKG SGD 3,382, Wireless Telecommunication Services 45,000 American Tower Corp., A USA USD 2,323, TOTAL SHARES 111,187, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 111,187, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Commercial Banks 83,500 Anglo Irish Bancorp PLC ** IRL EUR TOTAL SHARES TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET TOTAL INVESTMENTS 111,187, ** These securities are submitted to a Fair Valuation 78 Unaudited Semi-Annual Report

80 Franklin Global Real Estate Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Diversified Financial Services 291,587 Westfield Retail Trust AUS AUD 765, Hotels, Resorts & Cruiselines 14,300 Starwood Hotels & Resorts Worldwide Inc. USA USD 869, ,870 Hyatt Hotels Corp. USA USD 726, ,595, Real Estate Investment Trusts 48,418 Simon Property Group Inc. USA USD 4,817, ,183 Host Hotels & Resorts Inc. USA USD 3,434, ,900 Boston Properties Inc. USA USD 3,349, ,900 Equity Residential USA USD 3,059, ,238 Vornado Realty Trust USA USD 3,019, ,685 Stockland AUS AUD 2,452, ,100 Ventas Inc. USA USD 2,419, ,567 Land Securities Group PLC GBR GBP 2,303, ,300 The Link REIT HKG HKD 2,032, ,200 Westfield Group AUS AUD 1,900, ,700 AMB Property Corp. USA USD 1,829, ,500 ProLogis USA USD 1,812, ,213 The Macerich Co. USA USD 1,810, ,600 Public Storage USA USD 1,784, ,168 GPT Group AUS AUD 1,778, ,600 SL Green Realty Corp. USA USD 1,728, ,482 British Land Co. PLC GBR GBP 1,686, ,000 HCP Inc. USA USD 1,655, ,011,766 Goodman Group AUS AUD 1,336, ,050,000 CapitaCommercial Trust SGP SGD 1,227, Japan Real Estate Investment Co. JPN JPY 1,223, ,700 Alexandria Real Estate Equities Inc. USA USD 1,223, ,115 Developers Diversified Realty Corp. USA USD 1,213, ,208 UDR Inc. USA USD 1,204, ,750 Corio NV NLD EUR 1,204, ,852 Hammerson PLC GBR GBP 1,198, ,300 Federal Realty Investment Trust USA USD 1,192, ,076 AvalonBay Communities Inc. USA USD 1,134, ,700 Boardwalk REIT CAN CAD 1,063, ,700 National Retail Properties Inc. USA USD 1,052, Kenedix Realty Investment Corp. JPN JPY 963, United Urban Investment Corp. JPN JPY 941, ,544 Great Portland Estates PLC GBR GBP 935, ,600 Colonial Properties Trust USA USD 931, ,500 Apartment Investment & Management Co., A USA USD 917, ,800 Kimco Realty Corp. USA USD 916, ,541,535 Champion REIT HKG HKD 910, ,400 Regency Centers Corp. USA USD 903, ORIX JREIT Inc. JPN JPY 839, Japan Retail Fund Investment Corp. JPN JPY 834, ,000 CDL Hospitality Trusts SGP SGD 830, ,530 Eurocommercial Properties NV NLD EUR 807, ,700 American Campus Communities Inc. USA USD 784, ,200 Kilroy Realty Corp. USA USD 736, ,800 RioCan REIT CAN CAD 723, ,000 Canadian REIT CAN CAD 716, ,000 Suntec REIT SGP SGD 701, ,305 Charter Hall Retail REIT AUS AUD 655, Japan Logistics Fund Inc. JPN JPY 632, Frontier Real Estate Investment Corp. JPN JPY 620, ,400 Camden Property Trust USA USD 615, ,800 Health Care REIT Inc. USA USD 609, ,300 Essex Property Trust Inc. USA USD 605, ,900 Highwoods Properties Inc. USA USD 601, Nippon Accommodations Fund Inc. JPN JPY 595, ,200 Realty Income Corp. USA USD 588, ,120 Mapletree Logistics Trust, 144A SGP SGD 581, ,800 Taubman Centers Inc. USA USD 545, ,897 ING Office Fund AUS AUD 539, ,700 H&R REIT CAN CAD 500, ,657 Mirvac Group AUS AUD 490, ,500 Hersha Hospitality Trust USA USD 485, ,000 BRE Properties Inc. USA USD 478, ,800 Douglas Emmett Inc. USA USD 461, ,300 Liberty Property Trust USA USD 424, ,851 Commonwealth Property Office Fund AUS AUD 374, ,600 Equity Lifestyle Properties Inc. USA USD 369, ,910 Pebblebrook Hotel Trust USA USD 363, Unaudited Semi-Annual Report 79

81 Franklin Global Real Estate Fund Real Estate Investment Trusts (continued) 89 Daiwa Office Investment Corp. JPN JPY 316, ,542 CFS Retail Property Trust AUS AUD 276, Nippon Building Fund Inc. JPN JPY 236, ,700 Ascendas REIT SGP SGD 227, ,736, Real Estate Ownership, Management & Development 327,000 Sun Hung Kai Properties Ltd. HKG HKD 5,410, ,615 Unibail-Rodamco SE FRA EUR 5,269, ,000 Hang Lung Properties Ltd. HKG HKD 2,692, ,000 Mitsui Fudosan Co. Ltd. JPN JPY 2,433, ,000 Mitsubishi Estate Co. Ltd. JPN JPY 2,096, ,000 Wharf (Holdings) Ltd. HKG HKD 1,923, ,000 Hysan Development Co. Ltd. HKG HKD 1,539, ,000 Hongkong Land Holdings Ltd. HKG USD 1,212, ,694 Fastighets AB Hufvudstaden, A SWE SEK 1,154, ,000 Keppel Land Ltd. SGP SGD 976, ,400 Brookfield Properties Corp. CAN CAD 605, ,000 Agile Property Holdings Ltd. CHN HKD 600, ,000 China Overseas Land & Investment Ltd. HKG HKD 596, ,165,000 Evergrande Real Estate Group Ltd. CHN HKD 569, ,000 Soho China Ltd. CHN HKD 530, ,090 Silic FRA EUR 507, ,610 Klepierre FRA EUR 455, ,540 Derwent London PLC GBR GBP 378, ,330 Sponda OYJ FIN EUR 375, ,000 City Developments Ltd. SGP SGD 244, ,627 KWG Property Holdings Ltd. CHN HKD 167, ,741, TOTAL SHARES 115,839, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 115,839, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Real Estate Ownership, Management & Development 155,000 CapitaMalls Asia Ltd., 144A SGP SGD 234, TOTAL SHARES 234, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 234, TOTAL INVESTMENTS 116,073, Unaudited Semi-Annual Report

82 Franklin Global Small-Mid Cap Growth Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 691,122 Qiiq Group PLC GBR GBP 1,400, Beverages 10,987 C&C Group PLC IRL EUR 49, Biotechnology 123,874 Genus PLC GBR GBP 1,660, Capital s 2,253,000 ARA Asset Management Ltd. SGP SGD 2,721, Commercial Services & Supplies 204,100 De La Rue PLC GBR GBP 2,617, ,100 Homeserve PLC GBR GBP 1,464, ,081, Construction & Engineering 77,307 Wavin NV NLD EUR 1,178, Distributors 266,992 Headlam Group PLC GBR GBP 1,305, Diversified Consumer Services 76,800 Dignity PLC GBR GBP 859, Diversified Financial Services 347,619 RHJ International BEL EUR 2,883, ,152,521 Neovia Financial PLC GBR GBP 1,033, ,917, Electrical Equipment 30,600 Nexans SA FRA EUR 2,409, ,200 Prysmian SpA ITA EUR 2,152, ,561, Food Products 20,350 Binggrae Co. Ltd. KOR KRW 1,016, Hotels, Restaurants & Leisure 20,500 Paddy Power PLC IRL EUR 841, Household Products 1,021,919 McBride PLC GBR GBP 2,989, Industrial Conglomerates 70,480 DCC PLC IRL EUR 2,225, Insurance 6,200 Fairfax Financial Holdings Ltd. CAN CAD 2,542, ,100 Lancashire Holdings Ltd. GBR GBP 1,998, ,600 Arch Capital Group Ltd. USA USD 1,725, ,267, Inter Software & Services 170,500 Stamps.com Inc. USA USD 2,259, IT Services 83,200 Broadridge Financial Solutions Inc. USA USD 1,824, Leisure Equipment & Products 47,300 Sankyo Co. Ltd. JPN JPY 2,671, ,956 Vitec Group PLC GBR GBP 1,344, ,016, Machinery 54,300 Rotork PLC GBR GBP 1,548, ,700 Spirax-Sarco Engineering PLC GBR GBP 1,078, ,251 Pfeiffer Vacuum Technology AG DEU EUR 262, ,890, Media 79,300 ASATSU-DK Inc. JPN JPY 2,164, Office Electronics 29,640 Neopost SA FRA EUR 2,585, Personal Products 158,000 Unihair Co. Ltd. JPN JPY 2,121, Unaudited Semi-Annual Report 81

83 Franklin Global Small-Mid Cap Growth Fund Professional Services 198,500 Experian PLC GBR GBP 2,474, Real Estate Management & Development 297,800 Daibiru Corp. JPN JPY 2,450, ,540 Savills PLC GBR GBP 1,932, ,382, Specialty Retail 240,699 Carpetright PLC GBR GBP 2,989, ,456 Jumbo SA GRC EUR 2,315, ,305, Transportation Infrastructure 25,200 Flughafen Wien AG AUT EUR 1,727, TOTAL SHARES 66,829, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 66,829, TOTAL INVESTMENTS 66,829, Unaudited Semi-Annual Report

84 Franklin Gold and Precious Metals Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Gold and Diversified Resources 592,900 PanAust Ltd. AUS AUD 539, ,000 Royal Gold Inc. USA USD 327, , Gold Exploration and Development 368,100 Nevsun Resources Ltd. CAN CAD 2,742, ,000 Osisko Mining Corp. CAN CAD 1,994, ,500 Ivanhoe Mines Ltd. CAN USD 1,180, ,400 Romarco Minerals Inc. CAN CAD 1,085, ,400 Guyana Goldfields Inc. CAN CAD 905, ,200 Sandfire Resources NL AUS AUD 805, ,427 Ivanhoe Australia Ltd. AUS AUD 690, ,800 Great Basin Gold Ltd. CAN CAD 685, ,500 Anatolia Minerals Development Ltd. CAN CAD 668, ,400 Colossus Minerals Inc. CAN CAD 498, ,400 Gran Colombia Gold Corp. CAN CAD 470, ,000 Gold Resource Corp. USA USD 411, ,300 Banro Corp. CAN CAD 378, ,200 Ratel Gold Ltd. CAN CAD 333, ,100 Imperial Metals Corp. CAN CAD 319, ,200 East Asia Minerals Corp. CAN CAD 289, ,466,840 G-Resources Group Ltd. HKG HKD 272, ,000 Torex Gold Resources Inc. CAN CAD 259, ,900 MAG Silver Corp. CAN CAD 209, ,400 Nautilus Minerals Inc. CAN CAD 159, ,430 Red 5 Ltd. AUS AUD 152, ,500 Kula Gold Ltd. AUS AUD 129, ,300 International Minerals Corp. CAN CAD 79, ,200 Ivanhoe Mines Ltd. CAN CAD 73, ,900 Unity Mining Ltd. AUS AUD 35, ,000 Chalice Gold Mines Ltd. AUS AUD 26, ,200 Banro Corp. CAN USD 20, ,881, Long Life Gold Mines 112,424 Newcrest Mining Ltd. AUS AUD 4,645, ,720 AngloGold Ashanti Ltd., ADR ZAF USD 2,841, ,600 Randgold Resources Ltd., ADR GBR USD 2,436, ,500 Barrick Gold Corp. CAN USD 2,366, ,900 Goldcorp Inc. CAN USD 2,248, ,100 Centerra Gold Inc. CAN CAD 2,190, ,156 Kinross Gold Corp. CAN CAD 1,520, ,300 Eldorado Gold Corp. CAN CAD 1,174, ,800 CGA Mining Ltd. AUS CAD 1,127, ,400 Newmont Mining Corp. USA USD 1,068, ,000 Centamin Egypt Ltd. AUS GBP 936, ,400 Gold Fields Ltd., ADR ZAF USD 931, ,000 Centamin Egypt Ltd., 144A AUS CAD 904, ,100 Agnico-Eagle Mines Ltd. CAN USD 774, ,100 African Barrick Gold Ltd. GBR GBP 752, ,157 Minefinders Corp. Ltd. CAN USD 597, ,500 Alamos Gold Inc. CAN CAD 502, ,300 Kingsgate Consolidated Ltd. AUS AUD 247, ,100 Goldcorp Inc. CAN CAD 142, ,300 SEMAFO Inc. CAN CAD 132, ,000 Harmony Gold Mining Co. Ltd. ZAF ZAR 112, ,100 Mineral Deposits Ltd. AUS AUD 75, ,900 China Gold International Resources Corp. Ltd., Reg S CHN HKD 69, ,802, Medium Life Gold Mines 70,300 IAMGOLD Corp. CAN USD 1,251, ,000 Yamana Gold Inc. CAN CAD 742, ,300 Allied Gold Ltd. AUS AUD 624, ,234 St. Barbara Ltd. AUS AUD 592, ,000 Compania de Minas Buenaventura SA, ADR PER USD 538, ,400 San Gold Corp. CAN CAD 419, ,400 Primero Mining Corp. CAN CAD 357, ,900 New Gold Inc. CAN CAD 232, ,400 Gammon Gold Inc. CAN CAD 206, ,400 Teranga Gold Corp. CAN CAD 200, ,900 Jinshan Gold Mines Inc. CAN CAD 108, ,600 Golden Star Resources Ltd. CAN CAD 103, ,000 Aurizon Mines Ltd. CAN CAD 102, ,800 Real Gold Mining Ltd. HKG HKD 72, ,010 Teranga Gold Corp. CAN AUD 58, ,400 IAMGOLD Corp. CAN CAD 42, ,653, Unaudited Semi-Annual Report 83

85 Franklin Gold and Precious Metals Fund Platinum & Palladium 69,700 Impala Platinum Holdings Ltd. ZAF ZAR 2,452, ,700 Anglo Platinum Ltd. ZAF ZAR 1,436, ,600 Eastern Platinum Ltd. CAN CAD 778, ,500 Platinum Group Metals Ltd. CAN CAD 460, ,200 Aquarius Platinum Ltd. ZAF GBP 307, ,200 Mvelaphanda Resources Ltd. ZAF ZAR 280, ,500 Lonmin PLC GBR GBP 199, ,700 Royal Bafokeng Platinum Ltd. ZAF ZAR 138, ,054, Silver Mines 42,300 Fresnillo PLC GBR GBP 1,102, ,100 Tahoe Resources Inc. CAN CAD 561, ,400 Silver Wheaton Corp. CAN USD 523, ,700 Hochschild Mining PLC GBR GBP 506, ,693, TOTAL SHARES 57,883, WARRANTS Metals & Mining 10,063 Ivanhoe Australia Ltd., wts., 09/20/11 AUS AUD 4, Kinross Gold Corp., wts., 09/17/14 CAN CAD 1, , TOTAL WARRANTS 6, RIGHTS Metals & Mining 48,600 Ivanhoe Mines Ltd., rts., 01/26/11 CAN USD 68, ,200 Ivanhoe Mines Ltd., rts., 01/26/11 CAN CAD 4, , TOTAL RIGHTS 72, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 58,031, TOTAL INVESTMENTS 58,031, ** These securities are submitted to a Fair Valuation 84 Unaudited Semi-Annual Report

86 Franklin High Yield Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Advertising 370,000 Dex One Corp. USA USD 2,760, TOTAL SHARES 2,760, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 2,760, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Consumer Finance 4,029 GMAC Inc., 7.00%, pfd., 144A USA USD 3,808, TOTAL SHARES 3,808, BONDS Corporate Bonds 50,000,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 50,250, ,000,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 8.50%, 05/15/18 USA USD 40,400, ,996,000 GMAC Inc., senior note, 6.875%, 08/28/12 USA USD 32,545, ,000,000 Bank of America Corp., pfd., sub. bond, M, 8.125%, Perpetual USA USD 32,289, ,000,000 Cricket Communications Inc., senior note, 144A, 7.75%, 10/15/20 USA USD 30,560, ,000,000 Harrah s Operating Co. Inc., senior secured note, 11.25%, 06/01/17 USA USD 30,510, ,000,000 Abengoa Finance SAU, senior note, 144A, 8.875%, 11/01/17 ESP USD 30,489, ,000,000 EchoStar DBS Corp., senior note, 7.125%, 02/01/16 USA USD 30,087, ,500,000 CHC Helicopter SA, senior secured note, 9.25%, 10/15/20 CAN USD 29,640, ,200,000 Visant Corp., senior note, 144A, 10.00%, 10/01/17 USA USD 28,968, ,000,000 International Lease Finance Corp., senior note, R, 5.65%, 06/01/14 USA USD 28,927, ,900,000 Chesapeake Energy Corp., senior note, 6.625%, 08/15/20 USA USD 28,611, ,000,000 Energy XXI Gulf Coast Inc., senior note, 9.25%, 12/15/17 USA USD 28,147, ,900,000 FMC Finance III SA, senior note, 6.875%, 07/15/17 DEU USD 27,583, ,000,000 Sprint Nextel Corp., senior note, 8.375%, 08/15/17 USA USD 26,937, ,000,000 HCA Inc., senior secured note, 7.875%, 02/15/20 USA USD 26,875, ,400,000 The Manitowoc Co. Inc., senior note, 9.50%, 02/15/18 USA USD 26,840, ,100,000 CKE Restaurants Inc., senior secured note, %, 07/15/18 USA USD 26,811, ,000,000 Host Hotels & Resorts LP, senior note, Q, 6.75%, 06/01/16 USA USD 26,682, ,000,000 NewPage Corp., senior secured note, %, 12/31/14 USA USD 26,460, ,000,000 Intelsat Intermediate, senior note, 9.50%, 02/01/15 BMU USD 25,875, ,900,000 The Goodyear Tire & Rubber Co., senior note, 8.25%, 08/15/20 USA USD 24,856, ,800,000 Mylan Inc., senior note, 144A, 7.875%, 07/15/20 USA USD 24,681, ,600,000 RBS Global & Rexnord Corp., senior sub. note, 11.75%, 08/01/16 USA USD 24,351, ,500,000 Ford Motor Credit Co. LLC, senior note, 7.50%, 08/01/12 USA USD 23,850, ,400,000 Ford Motor Credit Co. LLC, senior note, 6.625%, 08/15/17 USA USD 23,573, ,000,000 Norwegian Cruise Line Ltd., senior secured note, 11.75%, 11/15/16 USA USD 23,237, ,800,000 Michaels Stores Inc., senior note, 144A, 7.75%, 11/01/18 USA USD 22,857, ,000,000 Pinnacle Foods Finance LLC, senior note, 8.25%, 09/01/17 USA USD 22,605, ,000,000 Anadarko Petroleum Corp., senior note, 8.70%, 03/15/19 USA USD 22,015, ,334,449 CCH II LLC/CCH II Capital Corp., senior note, 13.50%, 11/30/16 USA USD 21,955, ,039,114 Radio One Inc., senior sub. note, PIK, 15.00%, 05/24/16 USA USD 21,928, ,000,000 Calpine Corp., senior secured note, 144A, 7.50%, 02/15/21 USA USD 21,780, ,000,000 Jarden Corp., senior sub. note, 7.50%, 05/01/17 USA USD 21,175, ,000,000 Antero Resources Finance, senior note, 9.375%, 12/01/17 USA USD 21,025, ,500,000 West Corp., senior note, 144A, 7.875%, 01/15/19 USA USD 20,910, ,050,000 Quicksilver Resources Inc., senior note, 8.25%, 08/01/15 USA USD 20,902, ,000,000 Hertz Corp., senior note, 144A, 7.50%, 10/15/18 USA USD 20,850, ,000,000 Petrohawk Energy Corp., senior note, 10.50%, 08/01/14 USA USD 20,587, ,500,000 Plains Exploration & Production Co., senior note, 7.625%, 06/01/18 USA USD 20,548, ,700,000 Linn Energy Corp., senior note, 144A, 8.625%, 04/15/20 USA USD 20,242, ,700,000 Kerling PLC, senior note, Reg S, %, 01/28/17 GBR EUR 20,114, ,000,000 JBS USA LLC, senior note, %, 05/01/14 USA USD 19,932, ,300,000 Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, Reg S, 15.00%, 04/01/21 USA USD 19,276, ,900,000 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 03/15/18 USA USD 19,063, ,400,000 CSC Holdings Inc., senior deb., 7.625%, 07/15/18 USA USD 18,966, ,000,000 Rite Aid Corp., senior secured note, 8.00%, 08/15/20 USA USD 18,832, ,400,000 Sungard Data Systems Inc., senior note, 144A, 7.625%, 11/15/20 USA USD 18,722, ,000,000 Enterprise Products Operating LLC, junior sub. note, FRN, 7.034%, 01/15/68 USA USD 18,700, ,700,000 Freeport-McMoRan Copper & Gold Inc., senior note, 8.375%, 04/01/17 USA USD 18,497, ,000,000 MGM Resorts International, senior note, 6.625%, 07/15/15 USA USD 18,425, ,800,000 Energy Transfer Equity LP, senior note, 7.50%, 10/15/20 USA USD 18,423, ,650,000 Peabody Energy Corp., senior note, 6.50%, 09/15/20 USA USD 17,857, ,000,000 Compagnie Generale de Geophysique-Veritas, senior note, 7.75%, 05/15/17 FRA USD 17,510, ,900,000 Ceva Group PLC, senior secured note, 144A, 11.50%, 04/01/18 GBR USD 17,362, ,200,000 Air Canada, senior secured note, 9.25%, 08/01/15 CAN USD 17,091, ,800,000 Dean Foods Co., senior note, 144A, 9.75%, 12/15/18 USA USD 17,010, ,000,000 El Paso Corp., senior note, 7.00%, 06/15/17 USA USD 16,965, ,100,000 Diversey Holdings Inc., senior note, PIK, 10.50%, 05/15/20 USA USD 16,723, ,000,000 ClubCorp Club Operations Inc., senior note, Reg S, 10.00%, 12/01/18 USA USD 16,235, Unaudited Semi-Annual Report 85

87 Franklin High Yield Fund Corporate Bonds (continued) 15,000,000 WMG Acquisition Corp., senior secured note, 9.50%, 06/15/16 USA USD 16,162, ,200,000 Chaparral Energy Inc., senior note, 144A, 9.875%, 10/01/20 USA USD 16,074, ,600,000 Solo Cup Co., senior sub. note, 8.50%, 02/15/14 USA USD 15,928, ,800,000 Universal City Development, senior note, 8.875%, 11/15/15 USA USD 15,799, ,500,000 M/I Homes Inc., senior note, Reg S, 8.625%, 11/15/18 USA USD 15,713, ,700,000 FMG Resources Aug 2006, senior note, 144A, 6.875%, 02/01/18 AUS USD 15,700, ,100,000 Case New Holland Inc., senior note, 144A, 7.875%, 12/01/17 USA USD 15,580, ,000,000 United Rentals North America Inc., senior sub. note, 8.375%, 09/15/20 USA USD 15,337, ,300,000 International Lease Finance Corp., senior secured note, 144A, 6.75%, 09/01/16 USA USD 15,336, ,500,000 Wells Fargo Capital XIII, pfd., 7.70%, Perpetual USA USD 15,061, ,200,000 Ball Corp., senior note, 6.75%, 09/15/20 USA USD 14,981, ,000,000 HCA Inc., senior note, 6.50%, 02/15/16 USA USD 14,737, ,700,000 Berry Petroleum Co., senior note, 10.25%, 06/01/14 USA USD 14,636, ,300,000 Vantage Drilling Co., senior secured note, 144A, 11.50%, 08/01/15 USA USD 14,497, ,000,000 Atlas Pipeline Partners LP, senior note, 8.125%, 12/15/15 USA USD 14,490, ,000,000 Vanguard Health Holding Co. II LLC, senior note, 8.00%, 02/01/18 USA USD 14,420, ,500,000 Kinder Morgan Finance Co. ULC, secured senior note, 144A, 6.00%, 01/15/18 USA USD 14,318, ,000,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 6.75%, 05/15/18 USA USD 14,300, ,000,000 Freescale Semiconductor Inc., senior note, Reg S, 10.75%, 08/01/20 USA USD 14,267, ,700,000 Crown Castle International Corp., senior note, 9.00%, 01/15/15 USA USD 14,065, ,300,000 Novelis Inc., senior note, 144A, 8.75%, 12/15/20 IND USD 13,865, ,100,000 Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 USA USD 13,755, ,000,000 Media General Inc., senior secured note, 11.75%, 02/15/17 USA USD 13,731, ,500,000 MarkWest Energy Partners LP/Finance Corp., senior note, 8.75%, 04/15/18 USA USD 13,593, ,000,000 MetroPCS Wireless Inc., senior note, 7.875%, 09/01/18 USA USD 13,552, ,800,000 Travelport LLC/Travelport Inc., senior note, 9.00%, 03/01/16 USA USD 13,420, ,000,000 Linn Energy Corp., senior note, 144A, 7.75%, 02/01/21 USA USD 13,390, ,000,000 Building Materials Corp. of America, senior note, 144A, 6.875%, 08/15/18 USA USD 12,935, ,950,000 CMS Energy Corp., senior note, 8.75%, 06/15/19 USA USD 12,934, ,800,000 Pinnacle Entertainment Inc., senior note, 8.625%, 08/01/17 USA USD 12,921, ,000,000 Ford Motor Credit Co. LLC, senior note, 7.00%, 04/15/15 USA USD 12,907, ,100,000 Integra Telecom Inc., senior secured note, 144A, 10.75%, 04/15/16 USA USD 12,584, ,000,000 United Surgical Partners International Inc., senior sub. note, PIK, 9.25%, 05/01/17 USA USD 12,540, ,000,000 NCL Corp. Ltd., senior note, 144A, 9.50%, 11/15/18 USA USD 12,420, ,000,000 NRG Energy Inc., senior note, 7.375%, 01/15/17 USA USD 12,390, ,320,000 Dollar General Corp., senior note, %, 07/15/15 USA USD 12,367, ,000,000 NRG Energy Inc., senior note, 7.375%, 02/01/16 USA USD 12,330, ,100,000 Forest City Enterprises Inc., senior note, 7.625%, 06/01/15 USA USD 12,314, ,800,000 Holly Energy Partners LP, senior note, 144A, 8.25%, 03/15/18 USA USD 12,301, ,050,000 Rite Aid Corp., senior secured note, 9.75%, 06/12/16 USA USD 12,224, ,100,000 BreitBurn Energy Partners LP, senior note, 144A, 8.625%, 10/15/20 USA USD 12,221, ,750,000 Intelsat Jackson Holding Ltd., senior note, 144A, 7.25%, 10/15/20 LUX USD 11,926, ,200,000 Marquette Transportation Co. Inc./Finance Corp., senior secured note, 144A, %, 01/15/17 USA USD 11,522, ,518,000 HCA Inc., senior secured note, PIK, 9.625%, 11/15/16 USA USD 11,293, ,000,000 Dynegy Holdings Inc., senior note, 8.375%, 05/01/16 USA USD 11,287, ,400,000 Virgin Media Secured Finance, senior secured note, 6.50%, 01/15/18 GBR USD 10,998, ,000,000 Compagnie Generale de Geophysique-Veritas, senior note, 9.50%, 05/15/16 FRA USD 10,950, ,000,000 Case New Holland Inc., senior note, 7.75%, 09/01/13 USA USD 10,800, ,500,000 Arvinmeritor Inc., senior note, %, 03/15/18 USA USD 10,687, ,000,000 El Paso Corp., senior note, 6.875%, 06/15/14 USA USD 10,674, ,600,000 Clear Channel Worldwide Holdings Inc., senior note, B, 9.25%, 12/15/17 USA USD 10,560, ,000,000 QVC Inc., senior secured note, 144A, 7.375%, 10/15/20 USA USD 10,475, ,000,000 QVC Inc., senior secured note, 144A, 7.125%, 04/15/17 USA USD 10,475, ,300,000 Sanmina-SCI Corp., senior sub. note, 8.125%, 03/01/16 USA USD 10,454, ,000,000 Boston Scientific Corp., senior note, 6.00%, 01/15/20 USA USD 10,442, ,200,000 Calpine Corp., senior secured note, 144A, 7.875%, 07/31/20 USA USD 10,378, ,000,000 MGM Resorts International, senior note, 144A, 10.00%, 11/01/16 USA USD 10,300, ,400,000 Frontier Communications Corp., senior note, 8.75%, 04/15/22 USA USD 10,293, ,000,000 Pinnacle Entertainment Inc., senior sub. note, 7.50%, 06/15/15 USA USD 10,075, ,500,000 Petco Animal Supplies Inc., senior note, 144A, 9.25%, 12/01/18 USA USD 10,058, ,700,000 Martin Midstream Partners LP, senior note, 8.875%, 04/01/18 USA USD 10,039, ,000,000 KB Home, senior note, 6.25%, 06/15/15 USA USD 9,950, ,200,000 Atkore International Inc., senior secured note, 144A, 9.875%, 01/01/18 USA USD 9,614, ,100,000 TPC Group LLC, senior secured note, 144A, 8.25%, 10/01/17 USA USD 9,555, ,000,000 Building Materials Corp. of America, senior note, 144A, 7.50%, 03/15/20 USA USD 9,202, ,500,000 Lamar Media Corp., senior sub. note, 7.875%, 04/15/18 USA USD 9,073, ,000,000 Sanmina-SCI Corp., senior sub. note, 6.75%, 03/01/13 USA USD 9,022, ,000,000 MGM Resorts International, senior note, 6.875%, 04/01/16 USA USD 8,962, ,406,000 The Williams Cos. Inc., senior note, 7.875%, 09/01/21 USA USD 8,757, ,400,000 FMG Finance Pty. Ltd., senior note, 144A, 7.00%, 11/01/15 AUS USD 8,589, ,450,000 MarkWest Energy Partners LP/Finance Corp., senior note, 6.75%, 11/01/20 USA USD 8,492, ,000,000 HCA Inc., senior secured note, 9.125%, 11/15/14 USA USD 8,410, ,000,000 Texas Competitive Electric Holdings Co. LLC, senior note, A, 10.25%, 11/01/15 USA USD 8,362, ,900,000 Univision Communications Inc., senior secured note, 144A, 7.875%, 11/01/20 USA USD 8,334, Unaudited Semi-Annual Report

88 Franklin High Yield Fund Corporate Bonds (continued) 7,370,000 Ameren Corp., senior note, 8.875%, 05/15/14 USA USD 8,298, ,900,000 Sitel LLC, senior note, 144A, 11.50%, 04/01/18 USA USD 8,217, ,000,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 7.875%, 10/15/14 USA USD 7,956, ,900,000 inventiv Health Inc., senior note, 144A, 10.00%, 08/15/18 USA USD 7,939, ,185,000 First Data Corp., senior secured bond, Reg S, 8.25%, 01/15/21 USA USD 7,898, ,600,000 Carrizo Oil & Gas Inc., senior note, 144A, 8.625%, 10/15/18 USA USD 7,866, ,185,000 First Data Corp., senior bond, Reg S, %, 01/15/21 USA USD 7,857, ,500,000 United Surgical Partners International Inc., senior sub. note, 8.875%, 05/01/17 USA USD 7,762, ,300,000 Citadel Broadcasting Corp., senior note, 144A, 7.75%, 12/15/18 USA USD 7,592, ,600,000 TransUnion LLC/TransUnion Corp., senior note, 144A, %, 06/15/18 USA USD 7,557, ,300,000 Bresnan Broadband Holdings LLC, senior note, 144A, 8.00%, 12/15/18 USA USD 7,555, ,200,000 CCO Holdings LLC, senior note, 7.875%, 04/30/18 USA USD 7,488, ,700,000 NXP BV/NXP Funding LLC, senior secured note, 144A, 9.75%, 08/01/18 NLD USD 7,474, ,000,000 GMAC Inc., sub. note, 8.00%, 12/31/18 USA USD 7,472, ,900,000 Cott Beverages USA Inc., senior note, 8.125%, 09/01/18 USA USD 7,469, ,300,000 Davita Inc., senior note, 6.375%, 11/01/18 USA USD 7,281, ,100,000 Endo Pharmaceuticals Holdings Inc., senior note, 144A, 7.00%, 12/15/20 USA USD 7,277, ,000,000 CCO Holdings LLC/CCO Holdings Capital Corp., senior note, Reg S, 7.25%, 10/30/17 USA USD 7,140, ,400,000 Holly Corp., senior note, 9.875%, 06/15/17 USA USD 7,008, ,000,000 Owens-Illinois Inc., senior note, 7.80%, 05/15/18 USA USD 6,405, ,000,000 Atlas Pipeline Partners LP, senior note, 8.75%, 06/15/18 USA USD 6,300, ,850,000 Salem Communications Corp., senior secured note, 9.625%, 12/15/16 USA USD 6,230, ,000,000 Royal Caribbean Cruises Ltd., senior note, %, 07/15/15 USA USD 6,200, ,700,000 Crosstex Energy LP/Crosstex Energy Finance Corp., senior note, 8.875%, 02/15/18 USA USD 6,134, ,900,000 Te Healthcare Corp., senior note, 144A, 8.00%, 08/01/20 USA USD 6,003, ,900,000 OMNOVA Solutions Inc., senior note, 144A, 7.875%, 11/01/18 USA USD 5,973, ,000,000 Mylan Inc., senior note, 144A, 6.00%, 11/15/18 USA USD 5,910, ,300,000 Interactive Data Corp., senior note, 144A, 10.25%, 08/01/18 USA USD 5,830, ,800,000 OPTI Canada Inc., senior secured note, 9.75%, 08/15/13 CAN USD 5,829, ,400,000 RBS Global & Rexnord Corp., senior note, 8.50%, 05/01/18 USA USD 5,764, ,800,000 Davita Inc., senior note, 6.625%, 11/01/20 USA USD 5,756, ,200,000 Consol Energy Inc., senior note, 144A, 8.25%, 04/01/20 USA USD 5,642, ,800,000 Ford Motor Credit Co. LLC, senior note, 8.125%, 01/15/20 USA USD 5,593, ,000,000 Te Healthcare Corp., senior secured note, 9.00%, 05/01/15 USA USD 5,575, ,000,000 Intelsat Bermuda Ltd., senior note, 11.25%, 06/15/16 LUX USD 5,412, ,200,000 Jarden Corp., senior sub. note, 7.50%, 01/15/20 USA USD 5,382, ,900,000 Cablevision Systems Corp., senior note, 8.625%, 09/15/17 USA USD 5,359, ,100,000 Ardagh Packaging Finance PLC, senior note, Reg S, 9.125%, 10/15/20 IRL USD 5,329, ,000,000 Plains Exploration & Production Co., senior note, 7.625%, 04/01/20 USA USD 5,293, ,000,000 HCA Holdings Inc., senior note, Reg S, 7.75%, 05/15/21 USA USD 5,012, ,000,000 Ally Financial Inc., 144A, 6.25%, 12/01/17 USA USD 5,006, ,700,000 Advanced Micro Devices Inc., senior note, 8.125%, 12/15/17 USA USD 5,005, ,600,000 Consol Energy Inc., senior note, 144A, 8.00%, 04/01/17 USA USD 4,922, ,400,000 Frontier Communications Corp., senior note, 8.50%, 04/15/20 USA USD 4,829, ,700,000 MedAssets Inc., senior note, 144A, 8.00%, 11/15/18 USA USD 4,747, ,200,000 Pinafore LLC/Inc., senior secured note, 144A, 9.00%, 10/01/18 USA USD 4,557, ,300,000 HCA Inc., senior secured bond, 7.25%, 09/15/20 USA USD 4,515, ,000,000 Frontier Communications Corp., senior note, 8.25%, 04/15/17 USA USD 4,410, ,100,000 Ceva Group PLC, senior secured note, 144A, 8.375%, 12/01/17 GBR USD 4,138, ,900,000 SunGard Data Systems Inc., senior sub. note, 10.25%, 08/15/15 USA USD 4,109, ,800,000 Regions Bank, sub. note, 7.50%, 05/15/18 USA USD 3,919, ,800,000 Compagnie Generale de Geophysique-Veritas, senior note, 7.50%, 05/15/15 FRA USD 3,885, ,700,000 Solo Cup Co., senior secured note, 10.50%, 11/01/13 USA USD 3,885, ,950,000 General Maritime Corp., senior note, 12.00%, 11/15/17 USA USD 3,831, ,500,000 Pride International Inc., senior note, 6.875%, 08/15/20 USA USD 3,648, ,600,000 Marina District Finance Co. Inc., senior secured note, 144A, 9.50%, 08/15/18 USA USD 3,555, ,300,000 SandRidge Energy Inc., senior note, 8.75%, 01/15/20 USA USD 3,407, ,300,000 International Lease Finance Corp., senior note, 8.25%, 12/15/20 USA USD 3,403, ,300,000 Petrohawk Energy Corp., senior note, 7.25%, 08/15/18 USA USD 3,349, ,200,000 Advanced Micro Devices Inc., senior note, 144A, 7.75%, 08/01/20 USA USD 3,336, ,000,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 7.15%, 12/01/19 USA USD 3,330, ,400,000 Jarden Corp., senior note, 6.125%, 11/15/22 USA USD 3,259, ,000,000 Ally Financial Inc., senior bond, 144A, 7.50%, 09/15/20 USA USD 3,161, ,100,000 Marina District Finance Co. Inc., senior secured note, 144A, 9.875%, 08/15/18 USA USD 3,069, ,800,000 Huntsman International LLC, senior sub. note, 144A, 8.625%, 03/15/21 USA USD 3,038, ,900,000 SandRidge Energy Inc., senior note, PIK, 8.625%, 04/01/15 USA USD 2,983, ,700,000 Ball Corp., senior note, 7.125%, 09/01/16 USA USD 2,922, ,800,000 Berry Petroleum Co., senior note, 6.75%, 11/01/20 USA USD 2,821, ,600,000 Ball Corp., senior note, 7.375%, 09/01/19 USA USD 2,808, ,400,000 Clear Channel Worldwide Holdings Inc., senior note, A, 9.25%, 12/15/17 USA USD 2,622, ,300,000 The Manitowoc Co. Inc., senior note, 8.50%, 11/01/20 USA USD 2,455, ,200,000 Universal City Development, senior sub. note, %, 11/15/16 USA USD 2,414, ,000,000 Plains Exploration & Production Co., senior note, 8.625%, 10/15/19 USA USD 2,200, ,900,000 Ardagh Packaging Finance PLC, senior secured note, Reg S, 7.375%, 10/15/17 IRL USD 1,976, Unaudited Semi-Annual Report 87

89 Franklin High Yield Fund Corporate Bonds (continued) 1,800,000 Qwest Communications International Inc., senior note, 144A, 7.125%, 04/01/18 USA USD 1,872, ,700,000 Ineos Finance PLC, senior secured note, 144A, 9.00%, 05/15/15 GBR USD 1,827, ,700,000 RSC Equipment Rental Inc. and RSC Holdings III LLC, senior note, 9.50%, 12/01/14 USA USD 1,793, ,600,000 Crown Castle International Corp., senior bond, 7.125%, 11/01/19 USA USD 1,700, ,400,000 Freescale Semiconductor Inc., senior note, %, 12/15/16 USA USD 1,480, ,508,000 First Data Corp., senior note, 9.875%, 09/24/15 USA USD 1,443, ,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 9.00%, 04/15/19 USA USD 416, ,000 First Data Corp., senior note, 9.875%, 09/24/15 USA USD 306, ,775,000 Station Casinos Inc., senior sub. note, 6.875%, 03/01/16 * USA USD 1, ,750,000 Station Casinos Inc., senior note, 7.75%, 08/15/16 * USA USD 1, ,500,000 Station Casinos Inc., senior note, 6.00%, 04/01/12 * USA USD ,700,000 Station Casinos Inc., senior sub. note, 6.50%, 02/01/14 * USA USD ,725,667, Securities Maturing Within One Year 5,000,000 GMAC Inc., senior note, 6.875%, 09/15/11 USA USD 5,156, TOTAL BONDS 2,730,823, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 2,734,631, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Tyres & Rubber 1,342,566 Cambridge Industries Liquidating Trust Interest ** USA USD 4, TOTAL SHARES 4, BONDS Corporate Bonds 30,678,000 MacDermid Inc., senior sub. note, 144A, 9.50%, 04/15/17 USA USD 32,518, ,000,000 Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16 GBR USD 29,950, ,000,000 Intergen NV, senior secured note, 144A, 9.00%, 06/30/17 NLD USD 27,690, ,000,000 SandRidge Energy Inc., senior note, 144A, 8.00%, 06/01/18 USA USD 23,460, ,500,000 TRW Automotive Inc., senior note, 144A, 7.25%, 03/15/17 USA USD 22,242, ,200,000 UPC Germany GmbH, senior secured note, 144A, 8.125%, 12/01/17 DEU USD 20,364, ,500,000 Wind Acquisition Finance SA, senior note, 144A, 11.75%, 07/15/17 ITA USD 19,632, ,000,000 Digicel Group Ltd., senior note, 144A, 8.875%, 01/15/15 JAM USD 17,255, ,000,000 Petroplus Finance Ltd., senior note, 144A, 6.75%, 05/01/14 CHE USD 16,650, ,000,000 Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 02/15/16 GBR USD 14,362, ,000,000 QVC Inc., senior secured note, 144A, 7.50%, 10/01/19 USA USD 12,720, ,600,000 OPTI Canada Inc., senior secured note, 9.00%, 12/15/12 CAN USD 11,687, ,500,000 Shingle Springs Tribal Gaming Authority, senior note, 144A, 9.375%, 06/15/15 USA USD 9,382, ,900,000 CEDC Finance Corp. International Inc., senior secured note, 144A, 9.125%, 12/01/16 USA USD 8,433, ,000,000 Digicel Group Ltd., senior note, 144A, 8.25%, 09/01/17 JAM USD 8,240, ,018,052 Wind Acquisition Holdings Finance SA, senior secured note, 144A, PIK, 12.25%, 07/15/17 ITA USD 8,176, ,061,257 Univision Communications Inc., senior note, 144A, PIK, 7.198%, 03/15/15 USA USD 7,661, ,500,000 Ceva Group PLC, senior secured note, 144A, %, 10/01/16 GBR USD 7,074, ,100,000 Petroplus Finance Ltd., senior note, 144A, 7.00%, 05/01/17 CHE USD 5,429, ,300,000 Fresenius US Finance II, senior note, 144A, 9.00%, 07/15/15 DEU USD 4,945, ,100,000 SandRidge Energy Inc., senior note, 144A, 9.875%, 05/15/16 USA USD 4,356, ,700,000 Univision Communications Inc., senior secured note, 144A, 12.00%, 07/01/14 USA USD 2,970, ,000,000 Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 * USA USD 170, ,733,089 Goss Graphic Systems Inc., senior sub. note, 12.25%, 11/19/05 ** USA USD ,371, TOTAL BONDS 315,371, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 315,375, TOTAL INVESTMENTS 3,052,767, * These Corporate Bonds are currently in default Floating Rates are indicated as at December 31, 2010 ** These securities are submitted to a Fair Valuation Income may be received in additional securities and/or cash 88 Unaudited Semi-Annual Report

90 Franklin Income Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Consumer Discretionary 49,400 The Home Depot Inc. USA USD 1,731, ,500 General Motors Co., 4.75%, cvt. pfd., B USA USD 1,596, ,192 Charter Communications Inc., A USA USD 1,565, ,500 Comcast Corp., A USA USD 1,482, ,072 Dex One Corp. USA USD 858, ,234, Consumer Staples 60,000 PepsiCo Inc. USA USD 3,919, ,000 Diageo PLC GBR GBP 2,316, ,236, Energy 170,000 Exxon Mobil Corp. USA USD 12,430, ,000 ConocoPhillips USA USD 8,512, ,000 Spectra Energy Corp. USA USD 4,498, ,000 BP PLC, ADR GBR USD 4,417, ,000 Schlumberger Ltd. USA USD 2,922, ,000 Chevron Corp. USA USD 2,281, ,000 Weatherford International Ltd. USA USD 2,280, ,000 Chesapeake Energy Corp. USA USD 1,554, ,000 Baker Hughes Inc. USA USD 1,429, ,753 Callon Petroleum Co. USA USD 555, ,880, Financials 397,500 Wells Fargo & Co. USA USD 12,318, ,000 Canadian Oil Sands Trust CAN CAD 9,283, ,000 Bank of America Corp., 7.25%, cvt. pfd., L USA USD 7,655, ,000 Bank of America Corp. USA USD 5,336, ,000 M&T Bank Corp. USA USD 5,223, ,000 JPMorgan Chase & Co. USA USD 5,090, ,000 Wells Fargo & Co., 7.50%, cvt. pfd., A USA USD 5,002, ,000 HSBC Holdings PLC GBR GBP 4,066, ,000 Citigroup Inc. USA USD 3,547, ,000 CIT Group Inc. USA USD 1,884, ,000 Banco Santander SA ESP EUR 1,590, ,400 Westfield Retail Trust AUS AUD 1,400, ,000 Felcor Lodging Trust Inc., 7.80%, cvt. pfd., A USA USD 1,120, ,000 Barclays PLC GBR GBP 614, ,134, Health Care 300,000 Merck & Co. Inc. USA USD 10,812, ,000 Roche Holding AG CHE CHF 10,267, ,000 Johnson & Johnson USA USD 7,731, ,000 Pfizer Inc. USA USD 3,502, ,312, Industrials 200,000 General Electric Co. USA USD 3,658, Information Technology 250,000 Intel Corp. USA USD 5,257, ,000 Xerox Corp. USA USD 1,843, ,100, Materials 70,000 Newmont Mining Corp. USA USD 4,300, ,000 Nucor Corp. USA USD 1,752, ,000 Anglogold Ashanti Holdings Finance PLC, 6.00%, cvt. pfd. ZAF USD 1,109, ,600 Barrick Gold Corp. CAN USD 670, ,832, Telecommunication Services 275,000 AT&T Inc. USA USD 8,079, ,000 Verizon Communications Inc. USA USD 7,871, ,500,000 Vodafone Group PLC GBR GBP 6,470, ,000,000 Telstra Corp. Ltd. AUS AUD 2,850, ,000 CenturyLink Inc. USA USD 2,308, ,808 Frontier Communications Corp. USA USD 1,000, ,581, Unaudited Semi-Annual Report 89

91 Franklin Income Fund Utilities 320,000 The Southern Co. USA USD 12,233, ,000 Duke Energy Corp. USA USD 6,233, ,000 PG&E Corp. USA USD 6,219, ,700 American Electric Power Co. Inc. USA USD 5,494, ,000 Xcel Energy Inc. USA USD 5,416, ,000 Progress Energy Inc. USA USD 4,782, ,000 Public Service Enterprise Group Inc. USA USD 4,771, ,000 NextEra Energy Inc. USA USD 4,679, ,000 Dominion Resources Inc. USA USD 4,272, ,000 Sempra Energy USA USD 4,198, ,000 Pinnacle West Capital Corp. USA USD 4,145, ,000 FirstEnergy Corp. USA USD 3,702, ,000 Consolidated Edison Inc. USA USD 3,469, ,000 TECO Energy Inc. USA USD 2,670, ,000 Entergy Corp. USA USD 2,479, ,000 AGL Resources Inc. USA USD 1,792, ,700 PPL Corp. USA USD 1,597, ,000 DTE Energy Co. USA USD 1,586, ,000 CenterPoint Energy Inc. USA USD 1,257, ,000, TOTAL SHARES 278,972, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 278,972, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Consumer Discretionary 224,146 Charter Communications Inc. USA USD 8,728, ,000 General Motors Corp., 6.25%, cvt. pfd., C USA USD 795, ,523, Energy 40,000 Sandridge Energy Inc., 144A, 7.00%, cvt. pfd. USA USD 4,799, ,500 Chesapeake Energy Corp., 5.75%, cvt. pfd., 144A USA USD 3,933, ,732, Financials 3,261 GMAC Inc., 7.00%, pfd., 144A USA USD 3,082, ,300 Freddie Mac, 8.375%, pfd., Z USA USD 78, ,700 Fannie Mae, 8.25%, pfd. USA USD 68, ,228, Health Care 1,500 Te Healthcare Corp., 7.00%, cvt. pfd. USA USD 1,638, Utilities 10,000 Nextera Energy Inc., 8.375%, cvt. pfd. USA USD 496, TOTAL SHARES 23,619, BONDS Asset-Backed Securities 4,985,463 Banc of America Large Loan, 2010-HLTN, 144A, 2.002%, 11/15/15 USA USD 4,451, Corporate Bonds 25,000,000 Texas Competitive Electric Holdings Co. LLC, senior note, A, 10.25%, 11/01/15 USA USD 13,937, ,150,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/16 USA USD 13,232, ,800,000 JPMorgan Chase & Co., junior sub. note, 1, 7.90%, Perpetual USA USD 7,252, ,000,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/15 USA USD 7,052, ,657,000 CapitalSource Inc., cvt., senior sub. note, 4.00%, 07/15/34 USA USD 6,648, ,000,000 Freescale Semiconductor Inc., senior note, Reg S, 10.75%, 08/01/20 USA USD 6,585, ,500,000 RBS Global & Rexnord Corp., senior note, 8.50%, 05/01/18 USA USD 5,871, ,800,000 KB Home, senior note, 5.75%, 02/01/14 USA USD 5,829, ,026,000 Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, Reg S, 15.00%, 04/01/21 USA USD 5,453, ,000,000 Ford Motor Credit Co. LLC, senior note, 7.00%, 04/15/15 USA USD 5,378, ,000,000 Energy Future Holdings Corp., senior note, R, 6.55%, 11/15/34 USA USD 5,175, ,263,000 First Data Corp., senior bond, Reg S, %, 01/15/21 USA USD 5,052, ,000,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 5,025, ,000,000 El Paso Corp., senior note, MTN, 7.75%, 01/15/32 USA USD 4,987, ,450,000 Te Healthcare Corp., senior secured note, 9.00%, 05/01/15 USA USD 4,961, ,000,000 Calpine Corp., senior secured note, 144A, 7.50%, 02/15/21 USA USD 4,950, ,900,000 Cricket Communications Inc., senior note, 144A, 7.75%, 10/15/20 USA USD 4,679, ,000,000 Freescale Semiconductor Inc., senior secured note, 144A, 9.25%, 04/15/18 USA USD 4,420, ,000,000 First Data Corp., senior sub. note, 11.25%, 03/31/16 USA USD 4,400, ,000,000 Niska Gas Storage US/Canada, senior note, 144A, 8.875%, 03/15/18 USA USD 4,300, Unaudited Semi-Annual Report

92 Franklin Income Fund Corporate Bonds (continued) 4,000,000 HCA Inc., senior secured note, 7.875%, 02/15/20 USA USD 4,300, ,000,000 Hertz Corp., senior note, 8.875%, 01/01/14 USA USD 4,110, ,900,000 Cablevision Systems Corp., senior note, 7.75%, 04/15/18 USA USD 4,104, ,800,000 Visant Corp., senior note, 144A, 10.00%, 10/01/17 USA USD 4,047, ,000,000 Dynegy Holdings Inc., senior note, 7.75%, 06/01/19 USA USD 4,035, ,500,000 Chesapeake Energy Corp., senior note, 9.50%, 02/15/15 USA USD 3,963, ,700,000 CCO Holdings LLC, senior note, 8.125%, 04/30/20 USA USD 3,912, ,500,000 Wells Fargo Capital XV, pfd., 9.75%, Perpetual USA USD 3,911, ,700,000 Community Health Systems Inc., senior sub. note, 8.875%, 07/15/15 USA USD 3,894, ,000,000 Dynegy Holdings Inc., senior note, 8.375%, 05/01/16 USA USD 3,762, ,500,000 HCA Inc., senior secured note, 9.25%, 11/15/16 USA USD 3,742, ,500,000 CHC Helicopter SA, senior secured note, 9.25%, 10/15/20 CAN USD 3,640, ,300,000 Linn Energy Corp., senior note, 144A, 8.625%, 04/15/20 USA USD 3,572, ,000,000 Te Healthcare Corp., senior secured note, 10.00%, 05/01/18 USA USD 3,510, ,500,000 GenOn Energy Inc., senior note, 7.875%, 06/15/17 USA USD 3,412, ,900,000 Ceva Group PLC, senior secured note, 144A, 11.50%, 04/01/18 GBR USD 3,166, ,000,000 SunGard Data Systems Inc., senior sub. note, 10.25%, 08/15/15 USA USD 3,161, ,000,000 Chesapeake Energy Corp., senior note, 6.50%, 08/15/17 USA USD 3,030, ,800,000 Consol Energy Inc., senior note, 144A, 8.00%, 04/01/17 USA USD 2,996, ,493,485 CCH II LLC/CCH II Capital Corp., senior note, 13.50%, 11/30/16 USA USD 2,985, ,000,000 ClubCorp Club Operations Inc., senior note, Reg S, 10.00%, 12/01/18 USA USD 2,865, ,500,000 Freescale Semiconductor Inc., senior secured note, 144A, %, 03/15/18 USA USD 2,818, ,500,000 International Lease Finance Corp., senior secured note, 144A, 7.125%, 09/01/18 USA USD 2,668, ,800,000 Abengoa Finance SAU, senior note, 144A, 8.875%, 11/01/17 ESP USD 2,667, ,500,000 Energy Transfer Equity LP, senior note, 7.50%, 10/15/20 USA USD 2,587, ,500,000 Vanguard Health Holding Co. II LLC, senior note, 8.00%, 02/01/18 USA USD 2,575, ,562,000 istar Financial Inc., senior secured note, 10.00%, 06/15/14 USA USD 2,568, ,634,000 First Data Corp., senior secured note, Reg S, PIK, 8.75%, 01/15/22 USA USD 2,561, ,627,000 First Data Corp., senior secured bond, Reg S, 8.25%, 01/15/21 USA USD 2,535, ,300,000 The Goodyear Tire & Rubber Co., senior note, 8.25%, 08/15/20 USA USD 2,392, ,500,000 Sabine Pass LNG LP, senior secured note, 7.50%, 11/30/16 USA USD 2,356, ,300,000 Calpine Corp., senior secured note, 144A, 7.875%, 07/31/20 USA USD 2,340, ,000,000 Harrah s Operating Co. Inc., senior secured note, 11.25%, 06/01/17 USA USD 2,260, ,000,000 Frontier Communications Corp., senior note, 8.50%, 04/15/20 USA USD 2,195, ,000,000 International Lease Finance Corp., senior note, 144A, 8.75%, 03/15/17 USA USD 2,150, ,000,000 Freescale Semiconductor Inc., senior note, %, 12/15/16 USA USD 2,115, ,100,000 MGM Resorts International, senior note, 6.75%, 04/01/13 USA USD 2,097, ,000,000 MGM Resorts International, senior note, 144A, 10.00%, 11/01/16 USA USD 2,060, ,400,000 Kerling PLC, senior secured note, 144A, %, 01/28/17 GBR EUR 2,055, ,000,000 HCA Holdings Inc., senior note, Reg S, 7.75%, 05/15/21 USA USD 2,005, ,800,000 Frontier Communications Corp., senior note, 8.25%, 04/15/17 USA USD 1,984, ,000,000 Mylan Inc., senior note, 144A, 6.00%, 11/15/18 USA USD 1,970, ,900,000 Te Healthcare Corp., senior note, 144A, 8.00%, 08/01/20 USA USD 1,933, ,700,000 FelCor Lodging LP, senior secured note, 10.00%, 10/01/14 USA USD 1,912, ,000,000 ATP Oil & Gas Corp., senior secured note, 144A, %, 05/01/15 USA USD 1,900, ,600,000 Petrohawk Energy Corp., senior note, 10.50%, 08/01/14 USA USD 1,830, ,600,000 Diversey Holdings Inc., senior note, PIK, 10.50%, 05/15/20 USA USD 1,772, ,800,000 EXCO Resources Inc., senior note, 7.50%, 09/15/18 USA USD 1,764, ,500,000 Interactive Data Corp., senior note, 144A, 10.25%, 08/01/18 USA USD 1,650, ,500,000 Holly Corp., senior note, 9.875%, 06/15/17 USA USD 1,642, ,600,000 FMG Finance Pty. Ltd., senior note, 144A, 7.00%, 11/01/15 AUS USD 1,636, ,500,000 Diversey Inc., senior note, 8.25%, 11/15/19 USA USD 1,635, ,600,000 Chesapeake Energy Corp., senior note, 6.875%, 08/15/18 USA USD 1,632, ,500,000 Plains Exploration & Production Co., senior note, 7.75%, 06/15/15 USA USD 1,571, ,500,000 Petrohawk Energy Corp., senior note, 7.875%, 06/01/15 USA USD 1,569, ,500,000 Energy XXI Gulf Coast Inc., senior note, 9.25%, 12/15/17 USA USD 1,563, ,500,000 SESI LLC, senior note, 6.875%, 06/01/14 USA USD 1,530, ,500,000 Terex Corp., senior sub. note, 8.00%, 11/15/17 USA USD 1,522, ,500,000 istar Financial Inc., senior note, 8.625%, 06/01/13 USA USD 1,410, ,500,000 SandRidge Energy Inc., senior note, FRN, 3.928%, 04/01/14 USA USD 1,397, ,400,000 HCA Inc., senior note, 6.50%, 02/15/16 USA USD 1,375, ,200,000 Clear Channel Worldwide Holdings Inc., senior note, B, 9.25%, 12/15/17 USA USD 1,320, ,300,000 Dean Foods Co., senior note, 144A, 9.75%, 12/15/18 USA USD 1,316, ,000,000 JBS USA LLC, senior note, %, 05/01/14 USA USD 1,172, ,100,000 United Rentals North America Inc., senior sub. note, 8.375%, 09/15/20 USA USD 1,124, ,000,000 NXP BV/NXP Funding LLC, senior secured note, 144A, 9.75%, 08/01/18 NLD USD 1,115, ,100,000 Ceva Group PLC, senior secured note, 144A, 8.375%, 12/01/17 GBR USD 1,110, ,000,000 Case New Holland Inc., senior note, 144A, 7.875%, 12/01/17 USA USD 1,105, ,000,000 The Manitowoc Co. Inc., senior note, 9.50%, 02/15/18 USA USD 1,100, ,000,000 Cablevision Systems Corp., senior note, 8.625%, 09/15/17 USA USD 1,093, ,000,000 Hertz Corp., senior sub. note, 10.50%, 01/01/16 USA USD 1,060, ,000,000 CDW LLC/CDW Finance Corp., senior note, 11.00%, 10/12/15 USA USD 1,042, ,000,000 SandRidge Energy Inc., senior note, 8.75%, 01/15/20 USA USD 1,032, ,000,000 Sungard Data Systems Inc., senior note, 144A, 7.625%, 11/15/20 USA USD 1,017, ,000,000 Seagate HDD Cayman, senior note, 144A, 7.75%, 12/15/18 USA USD 1,017, ,000 Public Service Co. of New Mexico, senior note, 7.95%, 05/15/18 USA USD 1,008, ,000,000 Berry Plastics Corp., senior secured note, 144A, 9.75%, 01/15/21 USA USD 995, ,000,000 CDW LLC/CDW Finance Corp., senior sub. note, %, 10/12/17 USA USD 995, Unaudited Semi-Annual Report 91

93 Franklin Income Fund Corporate Bonds (continued) 600,000 Virgin Media Secured Finance, senior secured note, 7.00%, 01/15/18 GBR GBP 988, ,000,000 Huntsman International LLC, senior note, 5.50%, 06/30/16 USA USD 972, ,000 International Lease Finance Corp., senior note, 144A, 8.625%, 09/15/15 USA USD 969, ,000,000 SUPERVALU Inc., senior note, 8.00%, 05/01/16 USA USD 962, ,250,000 Dynegy Holdings Inc., senior note, 7.50%, 06/01/15 USA USD 950, ,000 Antero Resources Finance, senior note, 9.375%, 12/01/17 USA USD 946, ,000,000 istar Financial Inc., cvt., senior note, FRN, 0.803%, 10/01/12 USA USD 890, ,000 Pinafore LLC/Inc., senior secured note, 144A, 9.00%, 10/01/18 USA USD 759, ,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/14 USA USD 707, ,000 Host Hotels & Resorts LP, senior note, T, 9.00%, 05/15/17 USA USD 669, ,000 Huntsman International LLC, senior sub. note, 144A, 8.625%, 03/15/21 USA USD 542, ,000 NewPage Corp., senior secured note, %, 12/31/14 USA USD 519, ,000 Dynegy Holdings Inc., senior note, 7.50%, 06/01/15 USA USD 494, ,000 Denbury Resources Inc., senior sub. note, 8.25%, 02/15/20 USA USD 432, ,000 First Data Corp., senior note, 9.875%, 09/24/15 USA USD 431, ,000 The AES Corp., senior note, 8.00%, 10/15/17 USA USD 212, ,000 NewPage Corp., senior secured note, 10.00%, 05/01/12 USA USD 135, ,000 First Data Corp., senior note, 9.875%, 09/24/15 USA USD 131, ,868, Government and Municipal Bonds 4,000,000 California State GO, 7.95%, 03/01/36 USA USD 4,106, TOTAL BONDS 320,427, WARRANTS Consumer Discretionary 7,545 Charter Communications Inc., wts., 11/30/14 USA USD 62, TOTAL WARRANTS 62, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 344,108, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 7,500,000 Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 02/15/16 GBR USD 7,181, ,000,000 SandRidge Energy Inc., senior note, 144A, 8.00%, 06/01/18 USA USD 5,100, ,600,000 W&T Offshore Inc., senior note, 144A, 8.25%, 06/15/14 USA USD 4,462, ,000,000 Quintiles Transnational Corp., senior note, 144A, PIK, 9.50%, 12/30/14 USA USD 4,110, ,824,503 Univision Communications Inc., senior note, 144A, PIK, 10.50%, 03/15/15 USA USD 3,064, ,550,000 Clearwire Corp., senior secured note, 144A, 12.00%, 12/01/15 USA USD 2,760, ,750,000 Petroplus Finance Ltd., senior note, 144A, 6.75%, 05/01/14 CHE USD 2,543, ,700,000 Petroplus Finance Ltd., senior note, 144A, 7.00%, 05/01/17 CHE USD 2,403, ,000,000 Calpine Corp., senior secured note, 144A, 7.25%, 10/15/17 USA USD 2,010, ,000,000 Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16 GBR USD 1,932, ,500,000 Western Refining Inc., senior secured note, 144A, 11.25%, 06/15/17 USA USD 1,627, ,347,000 Delta Air Lines Inc., senior secured note, 144A, 9.50%, 09/15/14 USA USD 1,471, ,250,000 Cequel Communications Holdings I LLC, senior note, 144A, 8.625%, 11/15/17 USA USD 1,312, ,000,000 Petroplus Finance Ltd., senior note, 144A, 9.375%, 09/15/19 BMU USD 930, ,000 SandRidge Energy Inc., senior note, 144A, 9.875%, 05/15/16 USA USD 850, ,758, TOTAL BONDS 41,758, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 41,758, TOTAL INVESTMENTS 664,840, Floating Rates are indicated as at December 31, 2010 Income may be received in additional securities and/or cash 92 Unaudited Semi-Annual Report

94 Franklin India Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Auto Components 125,000 Bosch Ltd. IND INR 17,665, ,500,000 Exide Industries Ltd. IND INR 16,787, ,453, Automobiles 2,000,000 Mahindra & Mahindra Ltd. IND INR 34,779, Chemicals 334,700 Grasim Industries Ltd. IND INR 17,522, Commercial Banks 3,500,000 ICICI Bank Ltd. IND INR 89,600, ,250,000 HDFC Bank Ltd. IND INR 65,599, ,000 State Bank of India IND INR 40,865, ,100,000 Axis Bank Ltd. IND INR 33,199, ,900,000 Federal Bank Ltd. IND INR 25,787, ,400,000 IndusInd Bank Ltd. IND INR 20,185, ,400,000 Yes Bank Ltd. IND INR 16,784, ,850,000 Union Bank of India IND INR 14,377, ,401, Construction & Engineering 515,000 Larsen & Toubro Ltd. IND INR 22,794, ,600 Larsen & Toubro Ltd., GDR, Reg S IND USD 6,075, ,870, Construction Materials 725,000 Ultra Tech Cement Ltd. IND INR 17,546, Diversified Financial Services 6,050,000 Kotak Mahindra Bank Ltd. IND INR 61,220, ,232 Crisil Ltd. IND INR 19,854, ,075, Electric Utilities 11,700,000 Power Grid Corp. of India Ltd. IND INR 25,696, Electrical Equipment 5,017,000 Crompton Greaves Ltd. IND INR 34,828, ,000 Bharat Heavy Electricals Ltd. IND INR 27,556, ,385, Food Products 172,900 Nestle India Ltd. IND INR 14,675, Gas Utilities 5,700,000 GAIL India Ltd. IND INR 65,117, Independent Power Producers & Energy Traders 7,400,000 NTPC Ltd. IND INR 33,199, IT Services 2,000,000 Infosys Technologies Ltd. IND INR 154,095, ,200,000 Tata Consultancy Services Ltd. IND INR 31,267, ,700,000 Wipro Ltd. IND INR 18,639, ,460 Cognizant Technology Solutions Corp., A USA USD 16,743, ,746, Machinery 2,562,400 Cummins India Ltd. IND INR 44,772, ,993 Thermax Ltd. IND INR 10,461, ,233, Media 9,485,806 IBN18 Broadcast Ltd. IND INR 18,881, ,342,646 Jagran Prakashan Ltd. IND INR 15,748, ,120,995 Television Eighteen India Ltd. IND INR 4,962, ,725 New Delhi Television Ltd. IND INR 223, ,816, Unaudited Semi-Annual Report 93

95 Franklin India Fund Metals & Mining 2,600,000 Tata Steel Ltd. IND INR 39,480, ,000,000 Steel Authority of India Ltd. IND INR 24,489, ,000,000 Hindalco Industries Ltd. IND INR 22,007, ,731,363 Gujarat Mineral Development Corp. Ltd. IND INR 14,745, ,000 JSW Steel Ltd. IND INR 12,889, ,613, Oil, Gas & Consumable Fuels 5,350,000 Reliance Industries Ltd. IND INR 126,623, ,000,000 Bharat Petroleum Corp. Ltd. IND INR 29,430, ,200,000 Cairn India Ltd. IND INR 23,792, ,300,000 Coal India Ltd. IND INR 23,211, ,000 Oil & Natural Gas Corp. Ltd. IND INR 17,356, ,992,823 Great Eastern Shipping Co. Ltd. IND INR 15,318, ,732, Personal Products 6,070,119 Marico Ltd. IND INR 16,331, Pharmaceuticals 149,198 Dr. Reddy s Laboratories Ltd. IND INR 5,547, Textiles, Apparel & Luxury Goods 180,000 Titan Industries Ltd. IND INR 14,497, Thrifts & Mortgage Finance 750,000 Housing Development Finance Corp. Ltd. IND INR 12,210, Wireless Telecommunication Services 12,000,000 Bharti Airtel Ltd. IND INR 96,187, ,000,000 Idea Cellular Ltd. IND INR 21,729, ,917, TOTAL SHARES 1,553,371, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 1,553,371, TOTAL INVESTMENTS 1,553,371, Unaudited Semi-Annual Report

96 Franklin MENA Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Chemicals 103,400 HSBC Bank PLC (CRTP Saudi Basic Industries Corp.) SAU USD 2,888, ,160 Credit Suisse International (CRTP Saudi Arabia Fertilizer Co.) SAU USD 2,554, ,174 Sidi Kerir Petrochemicals EGY EGP 2,374, ,200 HSBC Bank PLC (CRTP Yanbu National Petrochemicals Co.) SAU USD 2,363, ,400 Deutsche Bank AG/London (CRTP Saudi Basic Industries Corp.) SAU USD 1,938, ,200 Deutsche Bank AG/London (CRTP Saudi Arabia Fertilizer Co.) SAU USD 1,452, ,700 Credit Suisse International (CRTP Yanbu National Petrochemicals Co.) SAU USD 1,265, ,836, Commercial Banks 1,523,260 National Bank of Kuwait KWD KWD 7,793, ,240 Commercial International Bank Ltd. EGY EGP 7,098, ,323 Commercial Bank of Qatar QAT QAR 6,173, ,887,500 Bank Muscat SAOG OMN OMR 4,706, ,065 Qatar National Bank QAT QAR 4,525, ,422 National Societe Generale Bank EGY EGP 2,823, ,705 National Bank of Abu Dhabi ARE AED 2,803, ,416 Deutsche Bank AG/London (CRTP Samba Financial Group) SAU USD 2,244, ,950 Credit Suisse International (CRTP Saudi Basic Industries Corp.) SAU USD 2,093, ,300 Deutsche Bank AG/London (CRTP Al Rajhi Bank) SAU USD 1,533, ,800 Credit Suisse International (CRTP Samba Financial Group) SAU USD 1,417, ,400 Deutsche Bank AG/London (CRTP Alinma Bank) SAU USD 1,326, ,575 Credit Suisse International (CRTP Al Rajhi Bank) SAU USD 1,185, ,700 HSBC Bank PLC (CRTP Alinma Bank) SAU USD 1,141, ,500 HSBC Bank PLC (CRTP Al Rajhi Bank) SAU USD 1,117, ,600 Credit Suisse International (CRTP Alinma Bank) SAU USD 612, ,596, Commercial Services & Supplies 8,158,500 Depa Ltd. ARE USD 5,710, ,079 Deutsche Bank AG/London (CRTP Jarir ing Co.) SAU USD 1,090, ,159 HSBC Bank PLC (CRTP Jarir ing Co.) SAU USD 1,013, ,500 Credit Suisse International (CRTP Jarir ing Co.) SAU USD 785, ,599, Construction & Engineering 2,037,275 Mabanee Co SAKC KWD KWD 5,790, Construction Materials 774,915 Carthage Cement TUN TND 1,781, ,261 HSBC Bank PLC (CRTP Yamama Saudi Cement Co. Ltd.) SAU USD 1,349, ,252 Credit Suisse International (CRTP Saudi Cement Co.) SAU USD 946, ,998 Deutsche Bank AG/London (CRTP Saudi Cement Co.) SAU USD 703, ,849 Credit Suisse International (CRTP Yamama Saudi Cement Co. Ltd.) SAU USD 423, ,785 HSBC Bank PLC (CRTP Saudi Cement Co.) SAU USD 395, ,599, Food Products 3,158,843 Juhayna Food Industries EGY EGP 3,264, Industrial Conglomerates 105,007 Industries Qatar QAT QAR 3,979, Metals & Mining 200,708 Aluminium Bahrain BSC, GDR, REG S BHN USD 2,237, Multi-Utilities 131,529 Qatar Electricity & Water Co. QAT QAR 4,609, Oil, Gas & Consumable Fuels 1,201,029 Qatar Gas Transport Co. Ltd. QAT QAR 6,597, Real Estate Management & Development 2,418,763 Talaat Mostafa Group EGY EGP 3,583, ,500 HSBC Bank PLC (CRTP Dar Al Arkan Real Estate Development Co.) SAU USD 1,078, ,520 Credit Suisse International (CRTP Dar Al Arkan Real Estate Development Co.) SAU USD 675, ,200 Deutsche Bank AG/London (CRTP Dar Al Arkan Real Estate Development Co.) SAU USD 602, ,940, Specialty Retail 91,800 Deutsche Bank AG/London (CRTP Fawaz Abdulaziz Al Hokair Co.) SAU USD 1,055, ,800 Credit Suisse International (CRTP Fawaz Abdulaziz Al Hokair Co.) SAU USD 802, ,857, Unaudited Semi-Annual Report 95

97 Franklin MENA Fund Wireless Telecommunication Services 1,095,000 Mobile Telecommunications Co. KWD KWD 5,913, ,000 National Mobile Telecommunications Co. KWD KWD 5,501, ,312,465 Orascom Telecom Holding SAE EGY EGP 2,459, ,700 HSBC Bank PLC (CRTP Etihad Etisalat Co.) SAU USD 1,940, ,100 Deutsche Bank AG/London (CRTP Etihad Etisalat Co.) SAU USD 1,901, ,180 Credit Suisse International (CRTP Etihad Etisalat Co.) SAU USD 1,048, ,765, TOTAL SHARES 130,675, RIGHTS Construction Materials 774,915 Carthage Cement, rts., 02/01/49 TUN TND 32, TOTAL RIGHTS 32, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 130,708, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Chemicals 35,900 CLSA Financial Products Ltd. (CRTP Saudi Cement Co.) SAU USD 476, ,600 CLSA Financial Products Ltd. (CRTP Saudi Arabia Fertilizer Co.) SAU USD 407, , Commercial Banks 105,200 CLSA Financial Products Ltd. (CRTP Samba Financial Group) SAU USD 1,718, ,100 CLSA Financial Products Ltd. (CRTP Al Rajhi Bank) SAU USD 1,219, ,500 CLSA Financial Products Ltd. (CRTP Alinma Bank) SAU USD 1,087, ,024, Construction Materials 32,000 CLSA Financial Products Ltd. (CRTP Yamama Saudi Cement Co. Ltd.) SAU USD 439, Real Estate Management & Development 3,741,280 Amer Group Holding EGY EGP 1,811, ,100 CLSA Financial Products Ltd. (CRTP Dar Al Arkan Real Estate Development Co.) SAU USD 696, ,507, Specialty Retail 50,500 CLSA Financial Products Ltd. (CRTP Fawaz Abdulaziz Al Hokair Co.) SAU USD 580, TOTAL SHARES 8,436, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 8,436, TOTAL INVESTMENTS 139,144, Unaudited Semi-Annual Report

98 Franklin Natural Resources Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Agricultural Products 25,150 Bunge Ltd. USA USD 1,647, Coal & Consumable Fuels 67,840 Peabody Energy Corp. USA USD 4,340, ,770 Alpha Natural Resources Inc. USA USD 4,128, ,200 Uranium One Inc. CAN CAD 1,685, ,570 Yanzhou Coal Mining Co. Ltd., ADR CHN USD 1,302, ,900 SouthGobi Resources Ltd. CAN HKD 783, ,240, Commodity Chemicals 34,300 Celanese Corp., A USA USD 1,412, Construction & Engineering 305,026 Boart Longyear Group AUS AUD 1,421, Diversified Metals & Mining 41,040 BHP Billiton PLC, ADR GBR USD 3,303, ,390 Freeport-McMoRan Copper & Gold Inc., B USA USD 2,688, ,750 Xstrata PLC GBR GBP 2,179, ,570 Rio Tinto PLC, ADR GBR USD 1,975, ,338 Sandfire Resources NL AUS AUD 1,386, ,490 Ivanhoe Mines Ltd. CAN USD 1,340, ,600 Imperial Metals Corp. CAN CAD 1,151, ,095,431 PanAust Ltd. AUS AUD 996, ,035 Ivanhoe Australia Ltd. AUS AUD 922, ,010 Mirabela Nickel Ltd. AUS CAD 742, ,500 Nautilus Minerals Inc. CAN CAD 626, ,314, Fertilizers & Agricultural Chemicals 6,100 CF Industries Holdings Inc. USA USD 824, Gold 69,297 Newcrest Mining Ltd. AUS AUD 2,863, ,270 Barrick Gold Corp. CAN USD 2,194, ,950 Randgold Resources Ltd., ADR GBR USD 1,642, ,940 AngloGold Ashanti Ltd., ADR ZAF USD 1,523, ,140 Osisko Mining Corp. CAN CAD 1,385, ,570 IAMGOLD Corp. CAN USD 1,238, ,763,563 Allied Gold Ltd. AUS AUD 1,234, ,200 Centerra Gold Inc. CAN CAD 978, ,500 CGA Mining Ltd. AUS CAD 862, ,700 African Barrick Gold Ltd. GBR GBP 815, ,400 Guyana Goldfields Inc. CAN CAD 766, ,570 Nevsun Resources Ltd. CAN CAD 734, ,820 Centamin Egypt Ltd. AUS CAD 468, ,059 St. Barbara Ltd. AUS AUD 258, ,085 St. Barbara Ltd., 144A AUS AUD 133, ,620 Gold Fields Ltd., ADR ZAF USD 83, ,183, Independent Power Producers & Energy Traders 344,400 Magma Energy Corp. CAN CAD 507, Integrated Oil & Gas 96,270 Chevron Corp. USA USD 8,784, ,490 Occidental Petroleum Corp. USA USD 8,680, ,570 Exxon Mobil Corp. USA USD 8,231, ,970 Murphy Oil Corp. USA USD 3,874, ,460 Hess Corp. USA USD 3,862, ,384 Petroleo Brasileiro SA, ADR, pfd. BRA USD 3,669, ,740 Marathon Oil Corp. USA USD 3,397, ,810 ConocoPhillips USA USD 2,574, ,360 Total SA, B, ADR FRA USD 2,318, ,100 BP PLC, ADR GBR USD 1,682, ,076, Inter Software & Services 4,131,060 G-Resources Group Ltd. HKG HKD 324, Marine 22,030 Genco Shipping & Ltd. USA USD 317, Unaudited Semi-Annual Report 97

99 Franklin Natural Resources Fund Oil & Gas Drilling 77,750 Pride International Inc. USA USD 2,565, ,970 Patterson-UTI Energy Inc. USA USD 1,637, ,500 Rowan Cos. Inc. USA USD 1,518, ,880 Noble Corp. USA USD 1,390, ,112, Oil & Gas Equipment & Services 114,847 Schlumberger Ltd. USA USD 9,589, ,530 Halliburton Co. USA USD 8,514, ,340 Cameron International Corp. USA USD 5,901, ,270 Weatherford International Ltd. USA USD 5,660, ,150 National Oilwell Varco Inc. USA USD 4,045, ,955 Baker Hughes Inc. USA USD 3,198, ,000 Oil States International Inc. USA USD 2,627, ,100 Superior Energy Services Inc. USA USD 2,487, ,550 FMC Technologies Inc. USA USD 2,360, ,600 Dril-Quip Inc. USA USD 2,222, ,020 Oceaneering International Inc. USA USD 1,842, ,370 Dresser-Rand Group Inc. USA USD 1,421, ,130 T-3 Energy Services Inc. USA USD 1,319, ,680 Key Energy Services Inc. USA USD 1,021, ,960 Hornbeck Offshore Services Inc. USA USD 938, ,780 Helix Energy Solutions Group Inc. USA USD 701, ,340 PHI Inc. USA USD 628, ,500 RigNet Inc. USA USD 591, ,073, Oil & Gas Exploration & Production 98,810 Devon Energy Corp. USA USD 7,757, ,120 Anadarko Petroleum Corp. USA USD 6,711, ,230 Petrohawk Energy Corp. USA USD 5,314, ,410 Noble Energy Inc. USA USD 4,769, ,120 Concho Resources Inc. USA USD 4,043, ,215 Apache Corp. USA USD 3,840, ,890 SM Energy Co. USA USD 3,706, ,180 Southwestern Energy Co. USA USD 3,375, ,060 Brigham Exploration Co. USA USD 2,398, ,030 Bill Barrett Corp. USA USD 2,263, ,590 EOG Resources Inc. USA USD 2,247, ,220 Denbury Resources Inc. USA USD 2,199, ,860 Gran Tierra Energy Inc. CAN USD 1,971, ,628 Canadian Natural Resources Ltd. CAN CAD 1,895, ,130 Comstock Resources Inc. USA USD 1,403, ,730 Oasis Petroleum Inc. USA USD 1,348, ,700 Triangle Petroleum Corp. USA USD 1,233, ,320 Range Resources Corp. USA USD 1,228, ,780 Cobalt International Energy Inc. USA USD 1,218, HRT Participacoes em Petroleo SA BRA BRL 766, Northern Oil & Gas Inc. USA USD 16, ,710, Oil & Gas Refining & ing 114,060 Frontier Oil Corp. USA USD 2,054, ,200 Holly Corp. USA USD 2,046, ,770 CVR Energy Inc. USA USD 1,590, ,650 Aegean Marine Petroleum Network Inc. USA USD 1,320, ,012, Oil & Gas Storage & Transportation 43,150 Scorpio Tankers Inc. USA USD 436, ,610 DHT Holdings Inc. JER USD 323, , Precious Metals & Minerals 56,079 Impala Platinum Holdings Ltd. ZAF ZAR 1,973, ,400 Tahoe Resources Inc. CAN CAD 1,155, ,500 MAG Silver Corp. CAN CAD 925, ,180 Fresnillo PLC GBR GBP 682, ,737, Semiconductors 7,340 First Solar Inc. USA USD 955, Unaudited Semi-Annual Report

100 Franklin Natural Resources Fund Steel 31,780 Cliffs Natural Resources Inc. USA USD 2,479, ,490 Vale SA, ADR, pfd., A BRA USD 2,281, ,910 United States Steel Corp. USA USD 1,455, ,215, TOTAL SHARES 241,846, WARRANTS Diversified Metals & Mining 16,713 Ivanhoe Australia Ltd., wts., 144A, 09/20/11 AUS AUD 7, TOTAL WARRANTS 7, RIGHTS Diversified Metals & Mining 57,090 Ivanhoe Mines Ltd., rts., 01/26/11 CAN USD 79, TOTAL RIGHTS 79, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 241,934, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Gold 21,615 Newcrest Mining Ltd., ADR AUS USD 900, Oil & Gas Equipment & Services 52,825 Tesco Corp. CAN USD 838, Oil & Gas Exploration & Production 200 McMoRan Exploration Co., 8.00%, cvt. pfd. USA USD 529, TOTAL SHARES 2,268, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 2,268, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Diversified Metals & Mining 132,900 PanAust Ltd., 144A AUS AUD 120, Inter Software & Services 1,523,500 G-Resources Group Ltd., 144A HKG HKD 119, TOTAL SHARES 240, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 240, TOTAL INVESTMENTS 244,443, Unaudited Semi-Annual Report 99

101 Franklin Real Return Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Energy 600 Devon Energy Corp. USA USD 47, Schlumberger Ltd. USA USD 33, Exxon Mobil Corp. USA USD 32, Noble Energy Inc. USA USD 25, Peabody Energy Corp. USA USD 25, Anadarko Petroleum Corp. USA USD 22, Southwestern Energy Co. USA USD 22, Weatherford International Ltd. USA USD 20, Occidental Petroleum Corp. USA USD 19, Marathon Oil Corp. USA USD 18, Chevron Corp. USA USD 18, Transocean Ltd. USA USD 13, Noble Corp. USA USD 10, Nabors Industries Ltd. USA USD 9, Valero Energy Corp. USA USD 6, , Materials 400 Freeport-McMoRan Copper & Gold Inc., B USA USD 48, Barrick Gold Corp. CAN USD 47, ,000 Alcoa Inc. USA USD 15, United States Steel Corp. USA USD 11, Nucor Corp. USA USD 8, , TOTAL SHARES 459, INVESTMENTS FUNDS Diversified Financial Services 6,700 SPDR Dow Jones Reit ETF USA USD 408, TOTAL INVESTMENTS FUNDS 408, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 868, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 50,000 Ford Motor Credit Co. LLC, senior note, 8.125%, 01/15/20 USA USD 58, ,000 Frontier Communications Corp., senior note, 8.25%, 04/15/17 USA USD 55, ,000 HCA Inc., senior secured note, PIK, 9.625%, 0.00%, 11/15/16 USA USD 53, ,000 Consol Energy Inc., senior note, 144A, 8.00%, 04/01/17 USA USD 53, ,000 GMAC Inc., senior note, 6.875%, 08/28/12 USA USD 52, ,000 NRG Energy Inc., senior note, 7.25%, 02/01/14 USA USD 51, ,000 Chesapeake Energy Corp., senior note, 6.625%, 08/15/20 USA USD 49, , Government and Municipal Bonds US Issued 1,163,990 US Treasury Note, Index Linked, 2.00%, 01/15/14 USA USD 1,207, ,042 US Treasury Note, Index Linked, 2.00%, 01/15/14 USA USD 928, ,479 US Treasury Note, Index Linked, 2.375%, 04/15/11 USA USD 889, ,166 US Treasury Note, Index Linked, 1.625%, 01/15/15 USA USD 220, ,168 US Treasury Bond, Index Linked, 3.375%, 01/15/12 USA USD 128, ,006 US Treasury Note, Index Linked, 1.25%, 04/15/14 USA USD 97, ,095 US Treasury Note, Index Linked, 2.00%, 01/15/16 USA USD 60, TOTAL US ISSUED 3,532, Non US Issued 70,000,000 Korea Treasury Bond, 4.25%, 12/10/12 KOR KRW 63, Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/15 BRA BRL 59, Nota Do Tesouro Nacional, 9.609%, 01/01/12 BRA BRL 47, TOTAL NON US ISSUED 170, ,702, Unaudited Semi-Annual Report

102 Franklin Real Return Fund Securities Maturing Within One Year 710,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 232, ,000 Queensland Treasury Corp., 6.00%, 06/14/11 AUS AUD 153, ,000 Government of Norway, 6.00%, 05/16/11 NOR NOK 149, ,000 Government of Poland, 4.25%, 05/24/11 POL PLN 101, ,000 Government of Sweden, 5.25%, 03/15/11 SWE SEK 85, , TOTAL BONDS 4,798, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 4,798, TOTAL INVESTMENTS 5,667, Income may be received in additional securities and/or cash Unaudited Semi-Annual Report 101

103 Franklin Strategic Income Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Advertising 2,967 Dex One Corp. USA USD 22, Media 533 Charter Communications Inc., A USA USD 20, TOTAL SHARES 42, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 42, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET INVESTMENTS FUNDS Diversified Financial Services 1,900,917 Franklin Templeton Series II Funds Franklin Floating Rate II Fund, Class I LUX USD 17,431, TOTAL INVESTMENTS FUNDS 17,431, SHARES Consumer Finance 53 GMAC Inc., 7.00%, pfd., 144A USA USD 50, Thrifts & Mortgage Finance 2,800 Freddie Mac, 8.375%, pfd., Z USA USD 1, ,400 Fannie Mae, 8.75%, cvt. pfd. USA USD 1, , TOTAL SHARES 53, BONDS Asset-Backed Securities 1,400,000 Citigroup Commercial Mortgage Trust, 2008-C7, A4, 6.299%, 12/10/49 USA USD 1,507, ,125,000 Greenwich Capital Commercial Funding Corp., 2006-GG7, A4, FRN, 5.913%, 07/10/38 USA USD 1,228, ,000 GS Mortgage Securities Corp. II, 2006-GG6, A4, FRN, 5.553%, 04/10/38 USA USD 844, ,000 Bear Stearns Commercial Mortgage Securities Inc., 2007-PW16, AM, FRN, 5.712%, 06/11/40 USA USD 750, ,000 Citigroup/Deutsche Bank Commercial Mortgage Trust, 2006-CD3, A5, 5.617%, 10/15/48 USA USD 665, ,061 Wells Fargo Mortgage Backed Securities Trust, , 3A1, 5.50%, 04/25/37 USA USD 610, ,000 Greenwich Capital Commercial Funding Corp., 2005-GG5, A5, 5.224%, 04/10/37 USA USD 584, ,000 LB-UBS Commercial Mortgage Trust, 2005-C5, A4, 4.954%, 09/15/30 USA USD 533, ,000 GS Mortgage Securities Corp. II, 2006-GG8, A4, 5.56%, 11/10/39 USA USD 531, ,000 LB-UBS Commercial Mortgage Trust, 2006-C1, A4, 5.156%, 02/15/31 USA USD 481, ,000 JPMorgan Chase Commercial Mortgage Securities Corp., 2006-CB14, AM, FRN, 5.627%, 12/12/44 USA USD 375, ,000 JPMorgan Chase Commercial Mortgage Securities Corp., 2006-CB17, AM, 5.464%, 12/12/43 USA USD 369, ,000 Citigroup/Deutsche Bank Commercial Mortgage Trust, 2005-CD1, A4, FRN, 5.225%, 07/15/44 USA USD 323, ,000 Wells Fargo Mortgage Backed Securities Trust, 2004-W, A9, FRN, 2.993%, 11/25/34 USA USD 281, ,000 Greenwich Capital Commercial Funding Corp., 2004-GG1, A7, 5.317%, 06/10/36 USA USD 269, ,000 Foxe Basin CLO Ltd., A, A2, 1.157%, 12/15/15 CYM USD 249, ,906 Homebanc Mortgage Trust, , A1, FRN, 0.531%, 10/25/35 USA USD 205, ,000 GS Mortgage Securities Corp. II, 2003-C1, A3, 4.608%, 01/10/40 USA USD 104, ,000 Citigroup Commercial Mortgage Trust, 2007-C6, AM, FRN, 5.888%, 06/10/17 USA USD 80, ,000 JPMorgan Chase Commercial Mortgage Securities Corp., 2005-LDP2, AM, 4.78%, 07/15/42 USA USD 55, ,274 LB-UBS Commercial Mortgage Trust, 2005-C1, A2, 4.31%, 02/15/30 USA USD 17, ,070, Corporate Bonds 1,700,000 Harrah s Operating Co. Inc., senior secured note, 11.25%, 06/01/17 USA USD 1,921, ,500,000 Chesapeake Energy Corp., senior note, 6.625%, 08/15/20 USA USD 1,485, ,400,000 EchoStar DBS Corp., senior note, 7.125%, 02/01/16 USA USD 1,452, ,500,000 MGM Resorts International, senior note, 6.625%, 07/15/15 USA USD 1,381, ,300,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 8.50%, 05/15/18 USA USD 1,313, ,100,000 Bank of America Corp., senior note, 5.65%, 05/01/18 USA USD 1,125, ,000 HCA Inc., senior secured note, PIK, 9.625%, 11/15/16 USA USD 966, ,000 Intelsat Jackson Holding Ltd., senior note, 144A, 7.25%, 10/15/20 LUX USD 913, ,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 904, ,000 Wells Fargo & Co., senior note, 5.625%, 12/11/17 USA USD 887, ,000 Freescale Semiconductor Inc., senior note, 144A, 10.75%, 08/01/20 USA USD 878, ,000 Ford Motor Credit Co. LLC, senior note, 7.00%, 04/15/15 USA USD 860, ,000 The Goldman Sachs Group Inc., senior bond, 5.375%, 03/15/20 USA USD 828, Unaudited Semi-Annual Report

104 Franklin Strategic Income Fund Corporate Bonds (continued) 800,000 CCO Holdings LLC/CCO Holdings Capital Corp., senior note, 7.25%, 10/30/17 USA USD 816, ,000 Ford Motor Credit Co. LLC, senior note, 8.125%, 01/15/20 USA USD 815, ,000 Bank of America Corp., pfd., sub. bond, M, 8.125%, Perpetual USA USD 807, ,000 KKR Group Finance Co., senior note, 144A, 6.375%, 09/29/20 USA USD 798, ,000 DIRECTV Holdings LLC/DIRECTV Financing Co. Inc., senior note, 4.60%, 02/15/21 USA USD 791, ,000 JPMorgan Chase & Co., senior note, 4.25%, 10/15/20 USA USD 782, ,000 HSBC USA Inc., sub. note, 5.00%, 09/27/20 USA USD 775, ,000 Intelsat Bermuda Ltd., senior note, 11.25%, 06/15/16 LUX USD 757, ,000 RBS Global & Rexnord Corp., senior note, 8.50%, 05/01/18 USA USD 747, ,000 Visant Corp., senior note, 144A, 10.00%, 10/01/17 USA USD 745, ,000 Anadarko Petroleum Corp., senior note, 8.70%, 03/15/19 USA USD 733, ,000 Rite Aid Corp., senior secured note, 8.00%, 08/15/20 USA USD 732, ,000 Time Warner Inc., 7.625%, 04/15/31 USA USD 731, ,000 CHC Helicopter SA, senior secured note, 9.25%, 10/15/20 CAN USD 728, ,000 Copano Energy LLC, senior note, 8.125%, 03/01/16 USA USD 724, ,000 Morgan Stanley, senior note, 5.50%, 07/24/20 USA USD 708, ,000 Royal Bank of Scotland Group PLC, senior note, 6.40%, 10/21/19 GBR USD 705, ,000 Edcon Proprietary Ltd., senior secured note, Reg S, FRN, 4.276%, 06/15/14 ZAF EUR 682, ,000 Cricket Communications Inc., senior note, 144A, 7.75%, 10/15/20 USA USD 668, ,000 NewPage Corp., senior secured note, %, 12/31/14 USA USD 661, ,000 The Manitowoc Co. Inc., senior note, 9.50%, 02/15/18 USA USD 660, ,000 Sprint Nextel Corp., senior note, 8.375%, 08/15/17 USA USD 646, ,000 Crosstex Energy LP/Crosstex Energy Finance Corp., senior note, 8.875%, 02/15/18 USA USD 645, ,000 GMAC Inc., sub. note, 8.00%, 12/31/18 USA USD 640, ,000 El Paso Corp., senior note, 7.00%, 06/15/17 USA USD 636, ,000 Jarden Corp., senior sub. note, 7.50%, 05/01/17 USA USD 635, ,000 Antero Resources Finance, senior note, 9.375%, 12/01/17 USA USD 630, ,000 Energy XXI Gulf Coast Inc., senior note, 144A, 9.25%, 12/15/17 USA USD 625, ,000 Enterprise Products Operating LLC, junior sub. note, FRN, 7.034%, 01/15/68 USA USD 623, ,000 NRG Energy Inc., senior note, 7.375%, 02/01/16 USA USD 616, ,000 Sanmina-SCI Corp., senior sub. note, 8.125%, 03/01/16 USA USD 609, ,000 HCA Holdings Inc., senior note, 144A, 7.75%, 05/15/21 USA USD 601, ,000 Michaels Stores Inc., senior note, 144A, 7.75%, 11/01/18 USA USD 601, ,000 Ally Financial Inc., 144A, 6.25%, 12/01/17 USA USD 600, ,000 Simon Property Group LP, senior note, 4.375%, 03/01/21 USA USD 594, ,000 Moody s Corp., senior note, 5.50%, 09/01/20 USA USD 593, ,000 Lloyds TSB Bank PLC, 144A, 5.80%, 01/13/20 GBR USD 591, ,000 Kerling PLC, senior note, Reg S, %, 01/28/17 GBR EUR 587, ,000 JBS USA LLC, senior note, %, 05/01/14 USA USD 586, ,000 Norwegian Cruise Line Ltd., senior secured note, 11.75%, 11/15/16 USA USD 580, ,000 Arvinmeritor Inc., senior note, %, 03/15/18 USA USD 562, ,000 CKE Restaurants Inc., senior secured note, %, 07/15/18 USA USD 556, ,000 Rite Aid Corp., senior secured note, 9.75%, 06/12/16 USA USD 553, ,000 Linn Energy Corp., senior note, 144A, 8.625%, 04/15/20 USA USD 541, ,000 WMG Acquisition Corp., senior secured note, 9.50%, 06/15/16 USA USD 538, ,000 International Lease Finance Corp., senior secured note, 144A, 6.75%, 09/01/16 USA USD 536, ,000 United Surgical Partners International Inc., senior sub. note, PIK, 9.25%, 05/01/17 USA USD 522, ,000 Boston Scientific Corp., senior note, 6.00%, 01/15/20 USA USD 522, ,000 Regions Financial Corp., senior note, 7.75%, 11/10/14 USA USD 520, ,000 The Goodyear Tire & Rubber Co., senior note, 8.25%, 08/15/20 USA USD 520, ,000 Sungard Data Systems Inc., senior note, 144A, 7.625%, 11/15/20 USA USD 508, ,000 MarkWest Energy Partners LP/Finance Corp., senior note, 6.75%, 11/01/20 USA USD 502, ,000 RSC Equipment Rental Inc. and RSC Holdings III LLC, senior note, 9.50%, 12/01/14 USA USD 474, ,000 CMS Energy Corp., senior note, 8.75%, 06/15/19 USA USD 472, ,000 Thomas Cook Group PLC, senior note, 7.75%, 06/22/17 GBR GBP 469, ,000 JPMorgan Chase & Co., 6.00%, 01/15/18 USA USD 447, ,000 Abengoa SA, senior note, 8.50%, 03/31/16 ESP EUR 444, ,000 UBS AG Stamford, senior note, 5.875%, 12/20/17 USA USD 440, ,000 Plains Exploration & Production Co., senior note, 8.625%, 10/15/19 USA USD 440, ,000 Frontier Communications Corp., senior note, 8.50%, 04/15/20 USA USD 439, ,000 Citigroup Inc., senior note, 6.125%, 11/21/17 USA USD 438, ,000 Mylan Inc., senior note, 144A, 7.875%, 07/15/20 USA USD 433, ,000 JPMorgan Chase & Co., junior sub. note, 1, 7.90%, Perpetual USA USD 426, ,000 FMC Finance III SA, senior note, 6.875%, 07/15/17 DEU USD 426, ,000 KB Home, senior note, 9.10%, 09/15/17 USA USD 426, ,000 Merrill Lynch & Co. Inc., senior note, 6.40%, 08/28/17 USA USD 423, ,000 Chaparral Energy Inc., senior note, 144A, 9.875%, 10/01/20 USA USD 423, ,000 CCO Holdings LLC, senior note, 8.125%, 04/30/20 USA USD 423, ,000 Media General Inc., senior secured note, 11.75%, 02/15/17 USA USD 422, ,000 Capital One Capital VI, pfd., junior sub. bond, 8.875%, 05/15/40 USA USD 419, ,000 Pinnacle Foods Finance LLC, senior note, 9.25%, 04/01/15 USA USD 418, ,000 MetroPCS Wireless Inc., senior note, 7.875%, 09/01/18 USA USD 417, Unaudited Semi-Annual Report 103

105 Franklin Strategic Income Fund Corporate Bonds (continued) 400,000 Novelis Inc., senior note, 144A, 8.75%, 12/15/20 IND USD 417, ,000 Citigroup Inc., senior note, 5.375%, 08/09/20 USA USD 416, ,000 Ziggo Bond Co., Reg S, 8.00%, 05/15/18 NLD EUR 415, ,000 Energy Transfer Equity LP, senior note, 7.50%, 10/15/20 USA USD 414, ,000 Gaz Capital (GAZPROM), senior note, Reg S, 5.092%, 11/29/15 RUS USD 411, ,000 West Corp., senior note, 144A, 7.875%, 01/15/19 USA USD 408, ,000 Digital Realty Trust LP, 5.875%, 02/01/20 USA USD 407, ,000 Coventry Health Care Inc., senior note, 5.95%, 03/15/17 USA USD 407, ,000 M/I Homes Inc., senior note, Reg S, 8.625%, 11/15/18 USA USD 405, ,000 Dean Foods Co., senior note, 144A, 9.75%, 12/15/18 USA USD 405, ,000 Pinnacle Entertainment Inc., senior sub. note, 7.50%, 06/15/15 USA USD 403, ,000 JPMorgan Chase Capital XXII, sub. bond, 6.45%, 02/02/37 USA USD 400, ,000 BB&T Capital Trust IV, junior sub. bond, 6.82%, 06/12/77 USA USD 399, ,000 Calpine Corp., senior secured note, 144A, 7.50%, 02/15/21 USA USD 396, ,000 Mylan Inc., senior note, 144A, 6.00%, 11/15/18 USA USD 394, ,000 Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, Reg S, 15.00%, 04/01/21 USA USD 385, ,000 ClubCorp Club Operations Inc., senior note, Reg S, 10.00%, 12/01/18 USA USD 382, ,000 Morgan Stanley, senior note, 6.625%, 04/01/18 USA USD 380, ,000 Morgan Stanley, senior note, 6.00%, 04/28/15 USA USD 379, ,000 Forest City Enterprises Inc., senior note, 7.625%, 06/01/15 USA USD 376, ,000 Vanguard Health Holding Co. II LLC, senior note, 8.00%, 02/01/18 USA USD 360, ,000 Berry Petroleum Co., senior note, 10.25%, 06/01/14 USA USD 345, ,344 CCH II LLC/CCH II Capital Corp., senior note, 13.50%, 11/30/16 USA USD 339, ,000 Seat Pagine Gialle SpA, Reg S, 10.50%, 01/31/17 ITA EUR 338, ,000 CenterPoint Energy Inc., senior note, 6.125%, 11/01/17 USA USD 335, ,000 Wells Fargo Capital XV, pfd., 9.75%, Perpetual USA USD 335, ,000 Peabody Energy Corp., senior note, 7.375%, 11/01/16 USA USD 334, ,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 7.15%, 12/01/19 USA USD 333, ,000 Crown Castle International Corp., senior note, 9.00%, 01/15/15 USA USD 332, ,000 Sitel LLC, senior note, 144A, 11.50%, 04/01/18 USA USD 332, ,000 Case New Holland Inc., senior note, 144A, 7.875%, 12/01/17 USA USD 331, ,000 Quicksilver Resources Inc., senior note, 9.125%, 08/15/19 USA USD 330, ,000 Freescale Semiconductor Inc., senior note, Reg S, 10.75%, 08/01/20 USA USD 329, ,000 Compagnie Generale de Geophysique-Veritas, senior note, 9.50%, 05/15/16 FRA USD 328, ,000 CSC Holdings Inc., senior deb., 7.625%, 07/15/18 USA USD 327, ,000 Univision Communications Inc., senior secured note, 144A, 7.875%, 11/01/20 USA USD 316, ,000 Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 USA USD 315, ,000 Petrohawk Energy Corp., senior note, 7.875%, 06/01/15 USA USD 313, ,000 Quicksilver Resources Inc., senior note, 8.25%, 08/01/15 USA USD 312, ,000 Wells Fargo Capital XIII, pfd., 7.70%, Perpetual USA USD 311, ,000 Citigroup Inc., sub. note, 5.00%, 09/15/14 USA USD 310, ,000 Martin Midstream Partners LP, senior note, 8.875%, 04/01/18 USA USD 310, ,000 Linn Energy Corp., senior note, 144A, 7.75%, 02/01/21 USA USD 309, ,000 Aflac Inc., senior note, 6.45%, 08/15/40 USA USD 308, ,000 OPTI Canada Inc., senior secured note, 9.75%, 08/15/13 CAN USD 301, ,000 Dynegy Holdings Inc., senior note, 8.375%, 05/01/16 USA USD 301, ,000 FMG Resources Aug 2006, senior note, 144A, 6.875%, 02/01/18 AUS USD 300, ,000 Building Materials Corp. of America, senior note, 144A, 6.875%, 08/15/18 USA USD 298, ,000 Kinder Morgan Finance Co. ULC, secured senior note, 144A, 6.00%, 01/15/18 USA USD 296, ,000 Conti-Gummi Finance BV, senior secured note, Reg S, 8.50%, 07/15/15 DEU EUR 290, ,000 MetLife Inc., junior sub. note, FRN, 6.40%, 12/15/66 USA USD 286, ,000 Campofrio Food Group SA, senior note, Reg S, 8.25%, 10/31/16 ESP EUR 276, ,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 6.75%, 05/15/18 USA USD 275, ,000 Pinnacle Entertainment Inc., senior note, 8.625%, 08/01/17 USA USD 273, ,000 Dollar General Corp., senior note, %, 07/15/15 USA USD 273, ,000 Solo Cup Co., senior sub. note, 8.50%, 02/15/14 USA USD 271, ,000 Codere Finance SA, senior secured note, Reg S, 8.25%, 06/15/15 ESP EUR 267, ,000 EchoStar DBS Corp., senior note, 7.75%, 05/31/15 USA USD 266, ,000 HCA Inc., senior secured note, 9.125%, 11/15/14 USA USD 262, ,000 Te Healthcare Corp., senior secured note, 10.00%, 05/01/18 USA USD 234, ,000 Petrohawk Energy Corp., senior note, 10.50%, 08/01/14 USA USD 228, ,000 Te Healthcare Corp., senior secured bond, 8.875%, 07/01/19 USA USD 227, ,000 General Electric Capital Corp., 5.90%, 05/13/14 USA USD 221, ,000 Diversey Holdings Inc., senior note, PIK, 10.50%, 05/15/20 USA USD 221, ,000 Holly Corp., senior note, 9.875%, 06/15/17 USA USD 219, ,000 Frontier Communications Corp., senior note, 8.75%, 04/15/22 USA USD 219, ,000 Ceva Group PLC, senior secured note, 144A, 11.50%, 04/01/18 GBR USD 218, ,000 Vantage Drilling Co., senior secured note, 144A, 11.50%, 08/01/15 USA USD 218, ,000 Ball Corp., senior note, 7.375%, 09/01/19 USA USD 216, ,000 HCA Inc., senior secured note, 7.875%, 02/15/20 USA USD 215, ,000 Royal Caribbean Cruises Ltd., senior note, 7.25%, 06/15/16 USA USD 214, ,000 Peabody Energy Corp., senior note, 6.50%, 09/15/20 USA USD 214, ,000 Consol Energy Inc., senior note, 144A, 8.00%, 04/01/17 USA USD 214, ,000 Lamar Media Corp., senior sub. note, 7.875%, 04/15/18 USA USD 213, ,000 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 03/15/18 USA USD 213, ,000 Crown Castle International Corp., senior bond, 7.125%, 11/01/19 USA USD 212, ,000 Ford Motor Credit Co. LLC, senior note, 7.50%, 08/01/12 USA USD 212, Unaudited Semi-Annual Report

106 Franklin Strategic Income Fund Corporate Bonds (continued) 200,000 Myriad International Holding BV, senior note, 144A, 6.375%, 07/28/17 ZAF USD 211, ,000 Petco Animal Supplies Inc., senior note, 144A, 9.25%, 12/01/18 USA USD 211, ,000 Coventry Health Care Inc., senior note, 6.30%, 08/15/14 USA USD 211, ,000 Plains Exploration & Production Co., senior note, 7.625%, 06/01/18 USA USD 210, ,000 Time Warner Inc., 6.10%, 07/15/40 USA USD 210, ,000 GMAC Inc., senior note, 6.875%, 08/28/12 USA USD 210, ,000 TPC Group LLC, senior secured note, 144A, 8.25%, 10/01/17 USA USD 210, ,000 Ardagh Packaging Finance PLC, senior note, Reg S, 9.125%, 10/15/20 IRL USD 209, ,000 Atkore International Inc., senior secured note, 144A, 9.875%, 01/01/18 USA USD 209, ,000 Integra Telecom Inc., senior secured note, 144A, 10.75%, 04/15/16 USA USD 208, ,000 Ardagh Packaging Finance PLC, senior secured note, Reg S, 7.375%, 10/15/17 IRL USD 208, ,000 Carrizo Oil & Gas Inc., senior note, 144A, 8.625%, 10/15/18 USA USD 207, ,000 NRG Energy Inc., senior note, 7.375%, 01/15/17 USA USD 206, ,000 International Lease Finance Corp., senior note, 8.25%, 12/15/20 USA USD 206, ,000 Compagnie Generale de Geophysique-Veritas, senior note, 7.75%, 05/15/17 FRA USD 206, ,000 Endo Pharmaceuticals Holdings Inc., senior note, 144A, 7.00%, 12/15/20 USA USD 205, ,000 Compagnie Generale de Geophysique-Veritas, senior note, 7.50%, 05/15/15 FRA USD 204, ,000 FMG Finance Pty. Ltd., senior note, 144A, 7.00%, 11/01/15 AUS USD 204, ,000 United Rentals North America Inc., senior sub. note, 8.375%, 09/15/20 USA USD 204, ,000 Calpine Corp., senior secured note, 144A, 7.875%, 07/31/20 USA USD 203, ,000 Petrohawk Energy Corp., senior note, 7.25%, 08/15/18 USA USD 203, ,000 El Paso Corp., senior note, 144A, 6.50%, 09/15/20 USA USD 202, ,000 Intelsat Subsidiary Holding Co. Ltd., senior note, 8.50%, 01/15/13 LUX USD 201, ,000 Davita Inc., senior note, 6.375%, 11/01/18 USA USD 199, ,000 KB Home, senior note, 6.25%, 06/15/15 USA USD 199, ,000 Abengoa Finance SAU, senior note, 144A, 8.875%, 11/01/17 ESP USD 190, ,147 Radio One Inc., senior sub. note, PIK, 15.00%, 05/24/16 USA USD 190, ,000 Lloyds TSB Bank PLC, senior sub. note, 144A, 6.50%, 09/14/20 GBR USD 184, ,000 Plains Exploration & Production Co., senior note, 10.00%, 03/01/16 USA USD 168, ,000 Texas Competitive Electric Holdings Co. LLC, senior note, A, 10.25%, 11/01/15 USA USD 167, ,000 Infinis PLC, senior note, Reg S, 9.125%, 12/15/14 GBR GBP 164, ,000 Cablevision Systems Corp., senior note, 8.625%, 09/15/17 USA USD 164, ,145 Wind Acquisition Holdings Finance SA, senior secured note, Reg S, PIK, 11.75%, 07/15/17 ITA EUR 163, ,000 NRG Energy Inc., senior note, 7.25%, 02/01/14 USA USD 153, ,000 Nalco Co., senior sub. note, 8.875%, 11/15/13 USA USD 153, ,000,000 General Electric Capital Corp., senior note, A, 8.50%, 04/06/18 USA MXN 148, ,000 UPC Germany GmbH, senior bond, Reg S, 9.625%, 12/01/19 DEU EUR 146, ,000 Ineos Finance PLC, senior note, Reg S, 9.25%, 05/15/15 GBR EUR 143, ,000 Sunrise Communications Holdings, senior note, Reg S, 8.50%, 12/31/18 CHE EUR 140, ,000 Conti-Gummi Finance BV, senior secured note, Reg S, 7.50%, 09/15/17 DEU EUR 138, ,000 Cirsa Funding Luxembourg SA, senior bond, Reg S, 8.75%, 05/15/18 LUX EUR 137, ,000 The Export-Import Bank of Korea, senior note, 8.125%, 01/21/14 KOR USD 114, ,000 TransUnion LLC/TransUnion Corp., senior note, 144A, %, 06/15/18 USA USD 114, ,000 Ameren Corp., senior note, 8.875%, 05/15/14 USA USD 112, ,000 NXP BV/NXP Funding LLC, senior secured note, 144A, 9.75%, 08/01/18 NLD USD 111, ,000 CenterPoint Energy Inc., senior note, 6.50%, 05/01/18 USA USD 111, ,000 Frontier Communications Corp., senior note, 8.25%, 04/15/17 USA USD 110, ,000 Interactive Data Corp., senior note, 144A, 10.25%, 08/01/18 USA USD 110, ,000 Clear Channel Worldwide Holdings Inc., senior note, B, 9.25%, 12/15/17 USA USD 110, ,000 Universal City Development, senior sub. note, %, 11/15/16 USA USD 109, ,000 Clear Channel Worldwide Holdings Inc., senior note, A, 9.25%, 12/15/17 USA USD 109, ,000 Consol Energy Inc., senior note, 144A, 8.25%, 04/01/20 USA USD 108, ,000 Cott Beverages Inc., senior note, 8.375%, 11/15/17 USA USD 108, ,000 Pinafore LLC/Inc., senior secured note, 144A, 9.00%, 10/01/18 USA USD 108, ,000 Huntsman International LLC, senior sub. note, 144A, 8.625%, 03/15/21 USA USD 108, ,000 Libbey Glass Inc., senior secured note, 144A, 10.00%, 02/15/15 USA USD 108, ,000 Case New Holland Inc., senior note, 7.75%, 09/01/13 USA USD 108, ,000 Ineos Finance PLC, senior secured note, 144A, 9.00%, 05/15/15 GBR USD 107, ,000 ViaSat Inc., senior note, 8.875%, 09/15/16 USA USD 107, ,000 Owens-Illinois Inc., senior note, 7.80%, 05/15/18 USA USD 106, ,000 The Manitowoc Co. Inc., senior note, 8.50%, 11/01/20 USA USD 106, ,000 Universal City Development, senior note, 8.875%, 11/15/15 USA USD 106, ,000 Advanced Micro Devices Inc., senior note, 8.125%, 12/15/17 USA USD 106, ,000 Freescale Semiconductor Inc., senior note, %, 12/15/16 USA USD 105, ,000 Virgin Media Secured Finance, senior secured note, 6.50%, 01/15/18 GBR USD 105, ,000 SunGard Data Systems Inc., senior sub. note, 10.25%, 08/15/15 USA USD 105, ,000 Ally Financial Inc., senior bond, 144A, 7.50%, 09/15/20 USA USD 105, ,000 Solo Cup Co., senior secured note, 10.50%, 11/01/13 USA USD 105, ,000 Advanced Micro Devices Inc., senior note, 144A, 7.75%, 08/01/20 USA USD 104, ,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 9.00%, 04/15/19 USA USD 104, ,000 Jarden Corp., senior sub. note, 7.50%, 01/15/20 USA USD 103, ,000 SandRidge Energy Inc., senior note, 8.75%, 01/15/20 USA USD 103, ,000 Regions Bank, sub. note, 7.50%, 05/15/18 USA USD 103, ,000 Building Materials Corp. of America, senior note, 144A, 7.50%, 03/15/20 USA USD 102, ,000 Ceva Group PLC, senior secured note, 144A, 8.375%, 12/01/17 GBR USD 100, ,000 Berry Petroleum Co., senior note, 6.75%, 11/01/20 USA USD 100, ,000 Davita Inc., senior note, 6.625%, 11/01/20 USA USD 99, Unaudited Semi-Annual Report 105

107 Franklin Strategic Income Fund Corporate Bonds (continued) 100,000 Marina District Finance Co. Inc., senior secured note, 144A, 9.875%, 08/15/18 USA USD 99, ,000 Marina District Finance Co. Inc., senior secured note, 144A, 9.50%, 08/15/18 USA USD 98, ,000 Regions Financial Corp., senior note, 5.75%, 06/15/15 USA USD 97, ,000 Huntsman International LLC, senior note, 5.50%, 06/30/16 USA USD 97, ,000 General Maritime Corp., senior note, 12.00%, 11/15/17 USA USD 97, ,000 Royal Caribbean Cruises Ltd., senior note, %, 07/15/15 USA USD 62, ,000 Quicksilver Resources Inc., senior note, 11.75%, 01/01/16 USA USD 58, ,000 Chesapeake Energy Corp., senior note, 9.50%, 02/15/15 USA USD 56, ,000 Chesapeake Energy Corp., senior note, 7.25%, 12/15/18 USA USD 51, ,000 Copano Energy LLC, senior note, 7.75%, 06/01/18 USA USD 51, ,000 Lamar Media Corp., senior sub. note, C, 6.625%, 08/15/15 USA USD 51, ,000 HCA Inc., senior note, 6.50%, 02/15/16 USA USD 49, ,000 Station Casinos Inc., senior note, 7.75%, 08/15/16 * USA USD ,707, Government and Municipal Bonds 10,935,000 Government of Poland, 4.75%, 04/25/12 POL PLN 3,706, ,350,000 Western Australia Treasury Corp., 5.50%, 07/17/12 AUS AUD 3,434, ,519,660,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 3,173, ,440,000,000 Korea Treasury Bond, 4.25%, 12/10/12 KOR KRW 3,119, ,934,347 FNMA, 5.50%, 01/01/25 USA USD 2,081, ,000,000 California State GO, Build America Bonds, Various Purpose, 7.55%, 04/01/39 USA USD 2,076, ,784,630 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 2,061, ,920,000 Government of Australia, TB123, 5.75%, 04/15/12 AUS AUD 1,981, ,900,000 US Treasury Note, 2.375%, 03/31/16 USA USD 1,924, ,650 Government of Mexico, M 20, 10.00%, 12/05/24 MEX MXN 1,687, ,665,000 FNMA, 4.00%, 07/01/40 USA USD 1,659, ,700,000 Government of Argentina, senior bond, FRN, 0.677%, 08/03/12 ARG USD 1,604, ,393,282 FHLMC, 4.50%, 09/01/40 USA USD 1,429, ,360,000 California State GO, Build America Bonds, 7.60%, 11/01/40 USA USD 1,417, ,215 Nota Do Tesouro Nacional, 9.609%, 01/01/12 BRA BRL 1,310, ,150,000 Government of Sweden, 5.50%, 10/08/12 SWE SEK 1,290, ,200,000 Detroit School District GO, Qualified School Construction Bonds, 6.645%, 05/01/29 USA USD 1,164, Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/15 BRA BRL 1,155, ,100,000 Illinois State GO, Build America Bonds, 7.35%, 07/01/35 USA USD 1,078, ,800 Government of Mexico, M 10, 7.75%, 12/14/17 MEX MXN 1,059, ,000,000 Bay Area Toll Authority Toll Bridge Revenue, Build America Bonds, Series S1, 7.043%, 04/01/50 USA USD 1,012, ,000,000 US Treasury Note, 3.125%, 05/15/19 USA USD 1,010, ,015,000 FNMA, 4.00%, 01/01/41 USA USD 1,009, ,900,000 Government of Hungary, 14/C, 5.50%, 02/12/14 HUN HUF 1,002, ,020,000 Government of Hungary, senior note, 6.25%, 01/29/20 HUN USD 994, ,000,000 FHLMC, 4.00%, 10/01/40 USA USD 994, ,000 Government of Mexico, MI10, 9.00%, 12/20/12 MEX MXN 990, ,470,000,000 Government of Indonesia, FR34, 12.80%, 06/15/21 IDN IDR 980, ,000 FNMA, 6.00%, 01/01/40 USA USD 978, ,000 New York City Municipal Water Finance Authority Water and Sewer System Revenue, Second General Resolution, Build America Bonds, Series CC, 6.282%, 06/15/42 USA USD 971, ,000 FNMA, 5.50%, 01/01/25 USA USD 967, ,000 Los Angeles Department of Water and Power Revenue, Build America Bonds, 6.574%, 07/01/45 USA USD 816, ,000 Government of Ukraine, Reg S, 7.75%, 09/23/20 UKR USD 816, ,000 Government of Venezuela, 10.75%, 09/19/13 VEN USD 787, ,000 Government of Poland, senior note, 6.375%, 07/15/19 POL USD 786, ,000 FNMA, 5.00%, 01/01/40 USA USD 735, ,000 Los Angeles County Public Works Financing Authority Lease Revenue, Build America Bonds-Recovery Zone Economic Development, ReFunding, 7.488%, 08/01/33 USA USD 722, ,381,000,000 Government of Indonesia, FR40, 11.00%, 09/15/25 IDN IDR 705, ,000,000 Korea Treasury Bond, senior bond, 3.75%, 06/10/13 KOR KRW 692, ,800,000,000 Government of Indonesia, FR36, 11.50%, 09/15/19 IDN IDR 666, ,200 Nota Do Tesouro Nacional, 9.609%, 01/01/17 BRA BRL 663, ,000 Government of Vietnam, Reg S, 6.75%, 01/29/20 VND USD 631, ,000 California State GO, 7.625%, 03/01/40 USA USD 626, ,000 Los Angeles Community College District GO, Build America Bonds, 6.75%, 08/01/49 USA USD 619, ,695 FHLMC, 4.50%, 10/01/40 USA USD 563, ,218 FNMA, 6.00%, 05/01/38 USA USD 558, ,000 California State GO, ReFunding, 5.00%, 04/01/38 USA USD 539, ,373 FNMA, 5.00%, 06/01/40 USA USD 524, ,000 US Treasury Note, 3.125%, 10/31/16 USA USD 521, ,000 Arab Republic of Egypt, Reg S, 5.75%, 04/29/20 EGY USD 520, Unaudited Semi-Annual Report

108 Franklin Strategic Income Fund Government and Municipal Bonds (continued) 500,000 California State GO, Various Purpose, ReFunding, 6.00%, 03/01/33 USA USD 518, ,882 FNMA, 5.00%, 04/01/39 USA USD 512, ,955 FNMA, 6.00%, 12/01/38 USA USD 489, ,300,000 Government of Hungary, 5.50%, 02/12/16 HUN HUF 457, ,208 FNMA, 4.50%, 08/01/40 USA USD 454, ,529 FNMA, 6.00%, 11/01/37 USA USD 453, ,000 US Treasury Note, 4.125%, 05/15/15 USA USD 440, ,000 US Treasury Note, 3.125%, 04/30/13 USA USD 422, ,000 Cook County GO, Build America Bonds, Series D, 6.229%, 11/15/34 USA USD 415, ,448 FNMA, 5.50%, 02/01/38 USA USD 404, ,403 FNMA, 4.50%, 06/01/40 USA USD 398, ,186 FNMA, 5.00%, 09/01/39 USA USD 397, ,622 FNMA, 6.00%, 08/01/36 USA USD 388, ,160,000 Government of Poland, 5.75%, 09/23/22 POL PLN 380, ,144 FNMA, 6.00%, 01/01/38 USA USD 371, ,000 Redondo Beach USD, GO, Build America Bonds, Election of 2008, Direct Payment to District, Series D, 6.461%, 08/01/40 USA USD 363, ,158 FNMA, 4.00%, 08/01/39 USA USD 342, ,776,000,000 Government of Indonesia, FR47, 10.00%, 02/15/28 IDN IDR 330, ,250 FNMA, 6.00%, 11/01/36 USA USD 327, ,000 US Treasury Bond, 6.25%, 08/15/23 USA USD 314, ,165 FNMA, 5.50%, 12/01/37 USA USD 308, ,511 FHLMC, 6.00%, 11/01/37 USA USD 302, ,000,000 Government of Hungary, 7.50%, 11/12/20 HUN HUF 289, ,000 Sonoma County Pension Obligation Revenue, Series A, 6.00%, 12/01/29 USA USD 271, ,303 FNMA, 4.00%, 07/01/39 USA USD 270, ,000 California State GO, Various Purpose, ReFunding, 5.00%, 06/01/37 USA USD 269, ,126,000,000 Government of Indonesia, FR44, 10.00%, 09/15/24 IDN IDR 259, ,886 FNMA, 5.00%, 02/01/40 USA USD 253, ,060 FNMA, 6.00%, 09/01/37 USA USD 252, ,792 FNMA, 4.50%, 05/01/24 USA USD 245, Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/17 BRA BRL 239, ,000 California State GO, Various Purpose, ReFunding, 5.25%, 03/01/38 USA USD 237, ,000 Government of Poland, 5.75%, 04/25/14 POL PLN 235, ,000 San Francisco City and County GO, Build America Bonds, 5.75%, 06/15/27 USA USD 234, ,000 Government of Malaysia, senior bond, 2.509%, 08/27/12 MYS MYR 218, ,000,000 Korea Treasury Bond, 5.25%, 09/10/12 KOR KRW 211, ,000 Queensland Treasury Corp., 6.00%, 09/14/17 AUS AUD 211, ,000 San Francisco City and County GO, Build America Bonds, 5.93%, 06/15/28 USA USD 210, ,720 FHLMC, 5.50%, 11/01/37 USA USD 196, ,323 FNMA, 4.50%, 11/01/39 USA USD 195, ,000 New York City Municipal Water Finance Authority Water and Sewer Revenue, Build America Bonds, Second General, ReFunding, Series EE, 6.491%, 06/15/42 USA USD 186, ,000 New South Wales Treasury Corp., senior note, 5.50%, 03/01/17 AUS AUD 186, ,800,000 Government of Hungary, 19/A, 6.50%, 06/24/19 HUN HUF 178, ,278,000,000 Government of Indonesia, FR31, 11.00%, 11/15/20 IDN IDR 175, ,132,000,000 Government of Indonesia, FR35, 12.90%, 06/15/22 IDN IDR 170, ,809 FNMA, 5.50%, 06/01/38 USA USD 166, ,145 FNMA, 5.50%, 07/01/37 USA USD 157, ,553 FNMA, 5.50%, 03/01/34 USA USD 153, ,000 US Treasury Note, 4.75%, 08/15/17 USA USD 147, ,000,000 Government of Sri Lanka, A, 11.00%, 08/01/15 LKA LKR 143, ,000,000,000 Government of Indonesia, FR37, 12.00%, 09/15/26 IDN IDR 139, ,123,000,000 Government of Indonesia, FR42, 10.25%, 07/15/27 IDN IDR 137, ,232 FHLMC, 5.00%, 04/01/40 USA USD 133, ,603 FNMA, 6.00%, 09/01/37 USA USD 133, ,406 FNMA, 6.00%, 08/01/38 USA USD 132, ,538 FNMA, 5.00%, 04/01/40 USA USD 132, ,100,000,000 Government of Indonesia, FR46, 9.50%, 07/15/23 IDN IDR 131, ,772 FNMA, 5.00%, 11/01/39 USA USD 130, ,195 FNMA, 6.00%, 12/01/36 USA USD 130, ,000 Government of Poland, 6.25%, 10/24/15 POL PLN 129, ,200,000 Government of Sri Lanka, A, 11.25%, 07/15/14 LKA LKR 126, ,000 Province of Manitoba, 6.375%, 09/01/15 CAN NZD 122, ,001 FNMA, 5.50%, 06/01/37 USA USD 121, ,651 FNMA, 5.00%, 02/01/39 USA USD 114, ,000 Clovis USD, GO, Capital Appreciation, Election of 2004, Series A, NATL RE, FGIC Insured, zero cpn., 08/01/25 USA USD 113, ,000 US Treasury Bond, 7.25%, 08/15/22 USA USD 108, ,741 FNMA, 6.00%, 07/01/36 USA USD 104, ,292 FNMA, 6.00%, 02/01/37 USA USD 102, ,091 FNMA, 6.00%, 05/01/36 USA USD 102, ,291 FNMA, 6.50%, 08/01/36 USA USD 101, ,000 Government of Poland, Strip, 01/25/12 POL PLN 95, ,869 FHLMC, 5.50%, 11/01/38 USA USD 92, ,000 Government of Poland, Strip, 10/25/12 POL PLN 90, Unaudited Semi-Annual Report 107

109 Franklin Strategic Income Fund Government and Municipal Bonds (continued) 82,032 FNMA, 5.50%, 01/01/24 USA USD 88, ,325 FNMA, 6.00%, 03/01/38 USA USD 81, ,922 GNMA, SF, 5.50%, 06/15/38 USA USD 81, ,000 Government of Poland, Strip, 01/25/13 POL PLN 78, ,873 FNMA, 6.00%, 07/01/37 USA USD 72, ,475 FNMA, 4.50%, 04/01/40 USA USD 67, ,000 Clovis USD, GO, Capital Appreciation, Election of 2004, Series A, NATL RE, FGIC Insured, zero cpn., 08/01/27 USA USD 65, ,281 FNMA, 6.50%, 10/01/37 USA USD 64, Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/45 BRA BRL 63, ,683 FNMA, 5.50%, 04/01/38 USA USD 63, ,100 FNMA, 4.50%, 09/01/24 USA USD 63, ,942 FHLMC, 6.00%, 01/01/38 USA USD 59, ,136 FNMA, 6.00%, 07/01/37 USA USD 58, ,698 FHLMC, 5.50%, 05/01/37 USA USD 58, ,273 FNMA, 5.00%, 07/01/23 USA USD 57, ,000,000 Government of Indonesia, FR52, 10.50%, 08/15/30 IDN IDR 56, ,000 Clovis USD, GO, Capital Appreciation, Election of 2004, Series A, NATL RE, FGIC Insured, zero cpn., 08/01/29 USA USD 56, ,612 FHLMC, 5.50%, 03/01/23 USA USD 56, ,720 FNMA, 6.00%, 07/01/37 USA USD 56, ,273 FNMA, 4.50%, 07/01/23 USA USD 55, ,986 FHLMC, 5.00%, 09/01/37 USA USD 53, ,000 Clovis USD, GO, Capital Appreciation, Election of 2004, Series A, NATL RE, FGIC Insured, zero cpn., 08/01/26 USA USD 53, ,311 FNMA, 5.50%, 07/01/23 USA USD 49, ,460 FNMA, 6.50%, 11/01/36 USA USD 49, ,867 FNMA, 4.50%, 03/01/40 USA USD 47, ,500 Government of Mexico, M 10, 7.25%, 12/15/16 MEX MXN 46, ,300 FNMA, 6.50%, 11/01/35 USA USD 46, ,684 FNMA, 5.00%, 01/01/24 USA USD 45, ,500,000 Government of Sri Lanka, A, 13.50%, 02/01/13 LKA LKR 44, ,006 FHLMC, 5.50%, 05/01/22 USA USD 44, ,398 FNMA, 5.00%, 12/01/23 USA USD 40, ,575 FHLMC, 6.00%, 12/01/37 USA USD 40, ,654 FHLMC, 6.00%, 08/01/37 USA USD 40, ,234 FHLMC, 5.00%, 02/01/23 USA USD 39, ,363 GNMA, SF, 5.00%, 06/15/37 USA USD 37, ,678 FHLMC, 6.00%, 02/01/39 USA USD 37, ,600,000 Korea Treasury Bond, 5.25%, 03/10/13 KOR KRW 36, ,000 Queensland Treasury Corp., 6.00%, 08/14/13 AUS AUD 36, ,712 FNMA, 5.50%, 11/01/36 USA USD 35, ,800,000 Government of Sri Lanka, A, 8.50%, 01/15/13 LKA LKR 34, ,399 FHLMC, 6.00%, 11/01/37 USA USD 32, ,000,000 Government of Indonesia, FR39, 11.75%, 08/15/23 IDN IDR 31, ,485 FNMA, 5.50%, 07/01/37 USA USD 31, ,869 FNMA, 6.50%, 10/01/37 USA USD 25, ,729 FNMA, 5.50%, 12/01/22 USA USD 21, ,291 FNMA, 5.50%, 10/01/17 USA USD 20, ,000 Government of Malaysia, senior bond, 0309, 2.711%, 02/14/12 MYS MYR 19, ,335 FNMA, 5.00%, 11/01/22 USA USD 17, ,428 FNMA, 5.50%, 09/01/23 USA USD 14, ,209 FNMA, 5.50%, 09/01/23 USA USD 14, ,102 FNMA, 6.00%, 06/01/38 USA USD 13, ,000 San Mateo County Community College District GO, Election of 2001, Series C, NATL Insured, zero cpn., 09/01/30 USA USD 12, ,000 Poway USD, GO, Election of 2008, ID 07-1-A, zero cpn., 08/01/27 USA USD 8, ,000 Poway USD, GO, Election of 2008, ID 07-1-A, zero cpn., 08/01/32 USA USD 6, ,000 Poway USD, GO, Election of 2008, ID 07-1-A, zero cpn., 08/01/30 USA USD 6, ,000 San Mateo County Community College District GO, Election of 2001, Series C, NATL Insured, zero cpn., 09/01/30 USA USD 6, ,882 FNMA, 6.00%, 11/01/37 USA USD 5, ,000 Government of Sri Lanka, A, 7.00%, 03/01/14 LKA LKR 4, ,000 San Mateo County Community College District GO, Election of 2001, Series C, NATL Insured, zero cpn., 03/01/31 USA USD 4, ,000 Government of Sri Lanka, B, 6.60%, 06/01/14 LKA LKR 4, ,000 Poway USD, GO, Election of 2008, ID 07-1-A, zero cpn., 08/01/33 USA USD 3, ,000 Government of Sri Lanka, A, 6.50%, 07/15/15 LKA LKR 2, ,789, Securities Maturing Within One Year 26,930,000 Government of Norway, 6.00%, 05/16/11 NOR NOK 4,687, ,165,000 Government of Sweden, 5.25%, 03/15/11 SWE SEK 3,628, ,740,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 3,512, ,053,540,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 1,864, ,690,000 Israel Treasury Bill, 0.00%, 04/06/11 ISR ILS 1,605, ,400,000 Queensland Treasury Corp., 6.00%, 06/14/11 AUS AUD 1,437, Unaudited Semi-Annual Report

110 Franklin Strategic Income Fund Securities Maturing Within One Year (continued) 4,207,000 Government of Malaysia, senior bond, 3.756%, 04/28/11 MYS MYR 1,370, ,200,000 Egypt Treasury Bill, 0.00%, 04/12/11 EGY EGP 1,042, ,200,000 Egypt Treasury Bill, 0.00%, 09/06/11 EGY EGP 998, ,000 Petroleos de Venezuela SA, senior bond, zero cpn., 07/10/11 VEN USD 868, ,600,000 Israel Treasury Bill, 0.00%, 09/07/11 ISR ILS 722, ,110,000 Korea Treasury Bond, senior bond, 5.50%, 06/10/11 KOR KRW 584, ,100,000 Egypt Treasury Bill, 0.00%, 07/12/11 EGY EGP 505, ,800,000 Egypt Treasury Bill, 0.00%, 02/08/11 EGY EGP 477, ,305,000 Bank of Negara Moary Note, 0.00%, 01/27/11 MYS MYR 422, ,300,000 Malaysia Treasury Bill, 0.00%, 07/29/11 MYS MYR 415, ,150,000 Israel Treasury Bill, 0.00%, 01/05/11 ISR ILS 326, ,025,000 Government of Israel, 2680, 7.00%, 04/29/11 ISR ILS 295, ,750,000 Egypt Treasury Bill, 0.00%, 12/06/11 EGY EGP 274, ,350,000 Egypt Treasury Bill, 0.00%, 03/22/11 EGY EGP 227, ,000 GMAC Inc., senior note, 6.875%, 09/15/11 USA USD 206, ,200,000 Egypt Treasury Bill, 0.00%, 05/31/11 EGY EGP 198, ,000 Government of Venezuela, Reg S, FRN, 1.288%, 04/20/11 VEN USD 187, ,000 Malaysia Treasury Bill, 0.00%, 09/29/11 MYS MYR 165, ,000 Bank of Negara Moary Note, 0.00%, 07/19/11 MYS MYR 162, ,000 Fresenius Medical Care Capital Trust IV, 7.875%, 06/15/11 DEU USD 153, ,200 Israel Treasury Bill, 0.00%, 07/06/11 ISR ILS 113, ,000 Egypt Treasury Bill, 0.00%, 11/08/11 EGY EGP 106, ,000 Egypt Treasury Bill, 0.00%, 08/09/11 EGY EGP 84, ,000 Malaysia Treasury Bill, 0.00%, 04/05/11 MYS MYR 78, ,000 Israel Treasury Bill, 0.00%, 10/05/11 ISR ILS 62, ,000 Israel Treasury Bill, 0.00%, 08/03/11 ISR ILS 61, ,000 Bank of Negara Moary Note, 0.00%, 07/28/11 MYS MYR 60, Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/11 BRA BRL 41, ,000 Government of Poland, 4.25%, 05/24/11 POL PLN 40, ,000 Egypt Treasury Bill, 0.00%, 03/08/11 EGY EGP 29, ,000 Egypt Treasury Bill, 0.00%, 06/07/11 EGY EGP 20, ,000 Bank of Negara Moary Note, 0.00%, 01/06/11 MYS MYR 19, ,000 Bank of Negara Moary Note, 0.00%, 03/10/11 MYS MYR 14, ,080,000 Government of Sri Lanka, A, 12.00%, 07/15/11 LKA LKR 9, ,000 Sri Lanka Treasury Bill, 0.00%, 07/08/11 LKA LKR 4, ,089, TOTAL BONDS 212,657, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 230,141, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Asset-Backed Securities 586,676 Wachovia Bank Commercial Mortgage Trust, 2007-WHL8, A1, 144A, FRN, 0.34%, 06/15/20 USA USD 549, ,155 Armstrong Loan Funding Ltd., A, B, 144A, FRN, 1.287%, 08/01/16 CYM USD 466, ,952 Westchester CLO Ltd., A, A1A, 144A, FRN, 0.512%, 08/01/22 CYM USD 397, ,333 Schiller Park CLO Ltd., A, A2, 144A, FRN, 0.528%, 04/25/21 USA USD 217, ,795 Babson CLO Ltd., A, A1, 144A, FRN, 0.539%, 07/20/19 CYM USD 182, ,919 Citigroup Commercial Mortgage Trust, FRN, 144A, 0.33%, 04/15/22 USA USD 140, ,100 Credit Suisse Mortgage Capital Certificates, 2006-TF2A, A2, 144A, FRN, 0.43%, 10/15/21 USA USD 133, ,000 MAPS CLO Fund LLC, A, B, 144A, FRN, 0.804%, 12/21/17 USA USD 129, ,000 ARES CLO Funds, A, B, 144A, FRN, 1.288%, 01/20/11 CYM USD 112, ,014 Cent CDO Ltd., A, A2B, 144A, FRN, 0.642%, 03/11/21 CYM USD 71, ,000 Columbus Nova CLO Ltd., A, A2, 144A, FRN, 1.289%, 10/15/21 CYM USD 52, ,452, Corporate Bonds 700,000 Intergen NV, senior secured note, 144A, 9.00%, 06/30/17 NLD USD 745, ,000 Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16 GBR USD 676, ,000 Digicel Group Ltd., senior note, 144A, 8.875%, 01/15/15 JAM USD 609, ,000 MacDermid Inc., senior sub. note, 144A, 9.50%, 04/15/17 USA USD 530, ,000 SandRidge Energy Inc., senior note, 144A, 8.00%, 06/01/18 USA USD 510, ,000 TRW Automotive Inc., senior note, 144A, 7.25%, 03/15/17 USA USD 488, ,000 Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 02/15/16 GBR USD 478, ,000 Xstrata Finance Canada Ltd., 144A, 5.80%, 11/15/16 GBR USD 439, ,000 CEDC Finance Corp. International Inc., senior secured note, 144A, 9.125%, 12/01/16 USA USD 427, ,000 Fresenius US Finance II, senior note, 144A, 9.00%, 07/15/15 DEU USD 345, ,000 Ceva Group PLC, senior secured note, 144A, %, 10/01/16 GBR USD 326, ,000 BNP Paribas, 144A, 7.195%, Perpetual FRA USD 289, Unaudited Semi-Annual Report 109

111 Franklin Strategic Income Fund Corporate Bonds (continued) 200,000 UPC Holding BV, senior note, 144A, 9.875%, 04/15/18 NLD USD 220, ,000 SandRidge Energy Inc., senior note, 144A, 9.875%, 05/15/16 USA USD 212, ,000 Shingle Springs Tribal Gaming Authority, senior note, 144A, 9.375%, 06/15/15 USA USD 139, ,000 MetLife Capital Trust X, secured bond, 144A, FRN, 9.25%, 04/08/68 USA USD 118, ,000 Wind Acquisition Finance SA, senior note, 144A, 11.75%, 07/15/17 ITA USD 112, ,000 OPTI Canada Inc., senior secured note, 9.00%, 12/15/12 CAN USD 100, ,000 Sanmina-SCI Corp., senior note, 144A, FRN, 3.052%, 06/15/14 USA USD 95, ,000 Fontainebleau Las Vegas, 144A, 10.25%, 06/15/15 * USA USD 1, ,863, Government and Municipal Bonds 100,000 New York City IDA, 144A, 11.00%, 03/01/29 USA USD 126, ,000 Queensland Treasury Corp., 144A, 7.125%, 09/18/17 AUS NZD 12, , TOTAL BONDS 9,455, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 9,455, TOTAL INVESTMENTS 239,639, * These Corporate Bonds are currently in default Floating Rates are indicated as at December 31, 2010 Income may be received in additional securities and/or cash 110 Unaudited Semi-Annual Report

112 Franklin Technology Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 109,400 Keyw Holding Corp. USA USD 1,604, Communications Equipment 601,800 Cisco Systems Inc. USA USD 12,174, ,800 Polycom Inc. USA USD 8,762, ,900 Juniper Networks Inc. USA USD 7,712, ,800 QUALCOMM Inc. USA USD 6,522, ,000 Research In Motion Ltd. CAN USD 4,069, ,300 Brocade Communications Systems Inc. USA USD 4,032, ,100 F5 Networks Inc. USA USD 3,397, ,300 Riverbed Technology Inc. USA USD 1,628, ,299, Computers & Peripherals 47,300 Apple Inc. USA USD 15,257, ,000 EMC Corp. USA USD 12,114, ,200 NetApp Inc. USA USD 5,067, ,569 SMART Technologies Inc., A CAN USD 1,798, ,237, Electrical Equipment 221,900 Ener1 Inc. USA USD 841, Electronic Equipment, Instruments & Components 183,000 FLIR Systems Inc. USA USD 5,444, ,000 Dolby Laboratories Inc., A USA USD 2,668, ,112, Energy Equipment & Services 100,000 RigNet Inc. USA USD 1,359, Health Care Equipment & Supplies 174,800 DexCom Inc. USA USD 2,386, ,900 HeartWare International Inc. USA USD 2,005, ,000 China Kanghui Holdings Inc., ADR CHN USD 610, ,002, Hotels, Restaurants & Leisure 72,400 Ctrip.com International Ltd., ADR CHN USD 2,928, Inter & Catalog Retail 82,400 Amazon.com Inc. USA USD 14,832, ,900 Blue Nile Inc. USA USD 4,502, ,500 E-Commerce China Dangdang Inc., ADR CHN USD 365, ,699, Inter Software & Services 23,500 Google Inc., A USA USD 13,958, ,300 GSI Commerce Inc. USA USD 4,577, ,100 Baidu Inc., ADR CHN USD 3,870, ,900 Akamai Technologies Inc. USA USD 2,959, ,500 LogMeIn Inc. USA USD 2,859, ,600 Mail.ru Group Ltd., Reg S, GDR RUS USD 985, ,200 Youku.com Inc., ADR CHN USD 392, ,603, IT Services 21,200 MasterCard Inc., A USA USD 4,751, ,900 Syntel Inc. USA USD 4,057, ,000 Teradata Corp. USA USD 3,004, ,813, Life Sciences Tools & Services 146,500 Agilent Technologies Inc. USA USD 6,069, ,000 Waters Corp. USA USD 5,983, ,053, Media 63,600 DreamWorks Animation SKG Inc., A USA USD 1,874, Office Electronics 481,200 Xerox Corp. USA USD 5,543, Unaudited Semi-Annual Report 111

113 Franklin Technology Fund Professional Services 78,000 ICF International Inc. USA USD 2,006, Semiconductors & Semiconductor Equipment 176,800 Silicon Laboratories Inc. USA USD 8,136, ,100 Netlogic Microsystems Inc. USA USD 7,698, ,100 Hittite Microwave Corp. USA USD 7,269, ,100 Atmel Corp. USA USD 6,777, ,000 Atheros Communications USA USD 6,681, ,900 Lam Research Corp. USA USD 6,674, ,100 Varian Semiconductor Equipment Associates Inc. USA USD 6,473, ,700 ARM Holdings PLC GBR GBP 5,571, ,000 Xilinx Inc. USA USD 5,506, ,300 Analog Devices Inc. USA USD 5,473, ,000 Power Integrations Inc. USA USD 5,418, ,100 Cymer Inc. USA USD 5,322, ,400 First Solar Inc. USA USD 4,086, ,500 Cree Inc. USA USD 3,920, ,700 Volterra Semiconductor Corp. USA USD 3,050, ,200 NXP Semiconductors NV NLD USD 2,725, ,500 Samsung Electronics Co. Ltd. KOR KRW 2,115, ,000 Broadcom Corp., A USA USD 1,611, ,100 Inphi Corp. USA USD 1,569, ,600 Yingli Green Energy Holding Co. Ltd., ADR CHN USD 964, ,800 SemiLEDs Corp. TWN USD 400, ,447, Software 444,300 Oracle Corp. USA USD 13,906, ,100 Citrix Systems Inc. USA USD 8,010, ,300 Nuance Communications Inc. USA USD 6,913, ,600 Red Hat Inc. USA USD 6,692, ,700 ANSYS Inc. USA USD 6,493, ,500 Activision Blizzard Inc. USA USD 5,728, ,429 Bottomline Technologies Inc. USA USD 5,241, ,200 Taleo Corp., A USA USD 4,733, ,900 Sonic Solutions USA USD 4,228, ,500 Salesforce.com Inc. USA USD 4,158, ,900 Informatica Corp. USA USD 4,002, ,765 Concur Technologies Inc. USA USD 3,103, ,700 Longtop Financial Technologies Ltd., ADR CHN USD 1,942, ,700 CommVault Systems Inc. USA USD 1,823, ,600 Rovi Corp. USA USD 1,091, ,070, Wireless Telecommunication Services 317,600 American Tower Corp., A USA USD 16,400, TOTAL SHARES 376,897, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 376,897, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Securities Maturing Within One Year 7,000,000 US Treasury Bill, 0.00%, 01/13/11 USA USD 6,999, ,000,000 US Treasury Bill, 0.00%, 01/20/11 USA USD 4,999, ,500,000 US Treasury Bill, 0.00%, 01/06/11 USA USD 2,499, ,499, TOTAL BONDS 14,499, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 14,499, TOTAL INVESTMENTS 391,397, Unaudited Semi-Annual Report

114 Franklin U.S. Dollar Liquid Reserve Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Securities Maturing Within One Year 17,390,000 US Treasury Bill, 0.00%, 01/13/11 USA USD 17,389, ,000,000 International Finance Corp., zero cpn., 01/05/11 SP USD 15,000, ,530,000 FNMA, 0.00%, 02/22/11 USA USD 8,529, ,000,000 The Goldman Sachs Group Inc., FDIC Guaranteed, 1.625%, 07/15/11 USA USD 8,058, ,000,000 State Street Corp., FDIC Guaranteed, 1.85%, 03/15/11 USA USD 8,026, ,500,000 Citibank NA, FDIC Guaranteed, 1.375%, 08/10/11 USA USD 7,546, ,500,000 JPMorgan Chase & Co., FDIC Guaranteed, 1.65%, 02/23/11 USA USD 7,514, ,000,000 General Electric Capital Corp., 0.00%, 01/21/11 USA USD 6,999, ,140,000 International Finance Corp., zero cpn., 01/04/11 SP USD 6,140, ,000,000 PNC Funding Corp., senior note, FDIC Guaranteed, 1.875%, 06/22/11 USA USD 5,039, ,000,000 General Electric Capital Corp., senior note, FDIC Guaranteed, 1.625%, 01/07/11 USA USD 5,000, ,000,000 General Electric Capital Corp., FDIC Guaranteed, 1.80%, 03/11/11 USA USD 4,011, ,936,000 FHLMC, 0.00%, 02/04/11 USA USD 3,935, ,879,000 FHLMC, 0.00%, 03/07/11 USA USD 3,878, ,285,000 Johnson & Johnson, zero cpn., 03/22/11 USA USD 3,283, ,504,000 Bank of America NA, 0.00%, 01/18/11 USA USD 2,503, ,300,000 FHLMC, 0.00%, 03/15/11 USA USD 2,299, ,980,000 Abbott Laboratories, zero cpn., 02/01/11 USA USD 1,979, ,735,000 Johnson & Johnson, zero cpn., 02/01/11 USA USD 1,734, ,225,000 Johnson & Johnson, zero cpn., 03/10/11 USA USD 1,224, ,000 Abbott Laboratories, zero cpn., 01/20/11 USA USD 759, ,855, TOTAL BONDS 120,855, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 120,855, TOTAL INVESTMENTS 120,855, Unaudited Semi-Annual Report 113

115 Franklin U.S. Equity Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Consumer Discretionary 200,310 Kohl s Corp. USA USD 10,884, ,600 Target Corp. USA USD 8,754, ,400 Marriott International Inc., A USA USD 5,541, ,900 Best Buy Co. Inc. USA USD 4,317, ,600 Guess? Inc. USA USD 3,861, ,800 General Motors Co. USA USD 3,678, ,672 The Walt Disney Co. USA USD 3,326, ,364, Consumer Staples 142,550 The Procter & Gamble Co. USA USD 9,170, ,000 Costco Wholesale Corp. USA USD 8,809, ,334 CVS Caremark Corp. USA USD 7,452, ,250 Walgreen Co. USA USD 6,983, ,300 Wal-Mart Stores Inc. USA USD 5,463, ,800 PepsiCo Inc. USA USD 4,886, ,765, Energy 222,100 Exxon Mobil Corp. USA USD 16,239, ,480 Devon Energy Corp. USA USD 13,776, ,250 Schlumberger Ltd. USA USD 12,879, ,500 Chevron Corp. USA USD 9,261, ,327 Petrohawk Energy Corp. USA USD 6,448, ,000 ConocoPhillips USA USD 6,060, ,340 Occidental Petroleum Corp. USA USD 4,644, ,311, Financials 553,400 Wells Fargo & Co. USA USD 17,149, ,170 JPMorgan Chase & Co. USA USD 17,144, ,700 US Bancorp USA USD 15,769, ,700 Northern Trust Corp. USA USD 10,455, ,163,306 Citigroup Inc. USA USD 5,502, ,400 Bank of America Corp. USA USD 5,341, ,100 Janus Capital Group Inc. USA USD 5,124, ,300 Invesco Ltd. USA USD 4,410, ,870 The Allstate Corp. USA USD 3,980, ,620 State Street Corp. USA USD 3,828, ,300 T. Rowe Price Group Inc. USA USD 3,762, ,800 Berkshire Hathaway Inc., B USA USD 2,787, ,800 BlackRock Inc. USA USD 1,677, ,935, Health Care 304,334 Merck & Co. Inc. USA USD 10,968, ,180 Gilead Sciences Inc. USA USD 10,914, ,585 Medtronic Inc. USA USD 10,814, ,710 Celgene Corp. USA USD 8,439, ,685 Johnson & Johnson USA USD 7,897, ,270 Teva Pharmaceutical Industries Ltd., ADR ISR USD 7,416, ,950 Agilent Technologies Inc. USA USD 6,585, ,900 Express Scripts Inc. USA USD 6,480, ,800 Aetna Inc. USA USD 6,187, ,685 Abbott Laboratories USA USD 6,165, ,400 Baxter International Inc. USA USD 6,044, ,550 Thoratec Corp. USA USD 3,697, ,611, Industrials 737,400 General Electric Co. USA USD 13,487, ,900 FedEx Corp. USA USD 11,244, ,800 General Dynamics Corp. USA USD 10,133, ,620 United Technologies Corp. USA USD 5,086, ,300 Caterpillar Inc. USA USD 4,430, ,500 Union Pacific Corp. USA USD 4,308, ,150 Expeditors International of Washington Inc. USA USD 3,666, ,500 The Boeing Co. USA USD 3,360, ,800 Precision Castparts Corp. USA USD 3,173, ,892, Unaudited Semi-Annual Report

116 Franklin U.S. Equity Fund Information Technology 47,550 Apple Inc. USA USD 15,337, ,600 International Business Machines Corp. USA USD 15,204, ,180 Google Inc., A USA USD 13,768, ,320 Microsoft Corp. USA USD 9,613, ,100 Hewlett-Packard Co. USA USD 8,466, ,000 EMC Corp. USA USD 7,282, ,320 FLIR Systems Inc. USA USD 7,209, ,770 Cisco Systems Inc. USA USD 7,116, ,670 Intel Corp. USA USD 7,101, ,680 MasterCard Inc., A USA USD 7,099, ,120 QUALCOMM Inc. USA USD 6,984, ,200 Oracle Corp. USA USD 6,954, ,900 NetApp Inc. USA USD 6,864, ,160 Visa Inc., A USA USD 6,415, ,630 First Solar Inc. USA USD 3,856, ,500 Dell Inc. USA USD 3,841, ,900 PMC-Sierra Inc. USA USD 3,082, ,500 Cree Inc. USA USD 2,932, ,300 Atheros Communications USA USD 2,848, ,200 Xilinx Inc. USA USD 1,251, ,230, Materials 177,219 Celanese Corp., A USA USD 7,296, ,500 Randgold Resources Ltd., ADR GBR USD 2,511, ,807, Telecommunication Services 238,805 AT&T Inc. USA USD 7,016, ,100 Vodafone Group PLC, ADR GBR USD 6,425, ,441, Utilities 121,800 The Southern Co. USA USD 4,656, ,500 Sempra Energy USA USD 3,594, ,300 American Electric Power Co. Inc. USA USD 3,428, ,300 Exelon Corp. USA USD 3,177, ,300 Public Service Enterprise Group Inc. USA USD 3,063, ,920, TOTAL SHARES 584,280, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 584,280, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Health Care 245,820 Roche Holding AG, ADR CHE USD 9,009, TOTAL SHARES 9,009, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 9,009, TOTAL INVESTMENTS 593,289, Unaudited Semi-Annual Report 115

117 Franklin U.S. Focus Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Consumer Discretionary 10,140 Apollo Group Inc., A USA USD 400, ,380 Harman International Industries Inc. USA USD 295, ,190 Target Corp. USA USD 251, , Consumer Staples 11,720 CVS Caremark Corp. USA USD 407, Energy 8,640 Marathon Oil Corp. USA USD 319, ,866 Petroplus Holdings AG CHE CHF 262, ,950 Petrohawk Energy Corp. USA USD 163, , Financials 3,090 BlackRock Inc. USA USD 588, ,830 JPMorgan Chase & Co. USA USD 544, ,404 Northern Trust Corp. USA USD 410, ,000 US Bancorp USA USD 350, ,130 Legg Mason Inc. USA USD 186, Berkshire Hathaway Inc., B USA USD 32, Loews Corp. USA USD 19, ,132, Health Care 4,440 Roche Holding AG CHE CHF 651, ,590 Merck & Co. Inc. USA USD 597, ,660 Aetna Inc. USA USD 355, ,990 Gilead Sciences Inc. USA USD 253, Alcon Inc. CHE USD 111, ,969, Industrials 9,960 Ryanair Holdings PLC, ADR IRL USD 306, ,740 FedEx Corp. USA USD 254, ,450 3M Co. USA USD 211, ,140 Rockwell Collins Inc. USA USD 182, , Information Technology 20,470 Maxim Integrated Products Inc. USA USD 483, ,040 MasterCard Inc., A USA USD 457, ,850 Corning Inc. USA USD 441, ,510 Visa Inc., A USA USD 106, Apple Inc. USA USD 99, ,588, Materials 18,870 Celanese Corp., A USA USD 776, ,610 Monsanto Co. USA USD 112, , Telecommunication Services 4,800 NII Holdings Inc. USA USD 214, TOTAL SHARES 9,850, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 9,850, TOTAL INVESTMENTS 9,850, Unaudited Semi-Annual Report

118 Franklin U.S. Government Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Government and Municipal Bonds 531,349,767 GNMA, SF, 5.00%, 07/15/33 06/15/40 USA USD 568,142, ,916,146 GNMA, SF, 4.50%, 01/15/39 08/15/40 USA USD 446,274, ,697,287 GNMA, SF, 5.50%, 11/15/28 02/15/40 USA USD 272,013, ,956,874 GNMA, SF, 6.00%, 10/15/23 11/15/38 USA USD 200,553, ,410,579 GNMA, II, SF, 4.50%, 05/20/33 09/20/40 USA USD 178,324, ,235,535 GNMA, II, SF, 5.50%, 05/20/34 04/20/40 USA USD 177,317, ,502,861 GNMA, II, SF, 6.00%, 06/20/34 07/20/39 USA USD 131,345, ,107,244 GNMA, II, SF, 5.00%, 10/20/32 06/20/40 USA USD 121,878, ,084,308 GNMA, SF, 4.00%, 09/15/40 12/15/40 USA USD 77,808, ,164,232 GNMA, SF, 6.50%, 07/15/23 07/15/38 USA USD 52,438, ,451,811 GNMA, II, SF, 4.00%, 05/20/40 12/20/40 USA USD 40,794, ,980,362 GNMA, II, SF, 6.50%, 09/20/26 10/20/38 USA USD 29,269, ,898,021 GNMA, SF, 7.00%, 03/15/22 09/15/32 USA USD 15,925, ,234,736 GNMA, II, SF, 7.00%, 05/20/26 03/20/33 USA USD 9,404, ,269,762 GNMA, SF, 7.50%, 02/15/17 08/15/33 USA USD 7,344, ,880,839 GNMA, 6.00%, 11/15/28 05/20/34 USA USD 6,486, ,040,560 GNMA, SF, 8.00%, 11/15/16 12/15/30 USA USD 5,827, ,476,108 GNMA, II, SF, 7.50%, 12/20/17 09/20/32 USA USD 4,010, ,934,139 GNMA, SF, 8.50%, 06/15/16 06/15/28 USA USD 3,263, ,674,708 GNMA, II, SF, 8.00%, 06/20/22 07/20/31 USA USD 1,970, ,405,772 GNMA, 6.50%, 04/20/34 USA USD 1,586, ,165,829 GNMA, SF, 9.00%, 08/15/16 03/15/25 USA USD 1,376, ,170 GNMA, SF, 10.00%, 02/15/16 03/15/25 USA USD 835, ,971 GNMA, 7.50%, 04/15/31 USA USD 555, ,616 GNMA, II, SF, 8.50%, 11/20/21 05/20/29 USA USD 388, ,101 GNMA, SF, 9.50%, 08/15/16 06/15/25 USA USD 346, ,796 GNMA, 8.00%, 05/20/17 02/15/31 USA USD 284, ,136 GNMA, II, SF, 9.50%, 12/20/15 07/20/25 USA USD 200, ,321 GNMA, II, 8.00%, 03/20/17 03/20/27 USA USD 190, ,520 GNMA, SF, 8.625%, 10/15/18 USA USD 109, ,142 GNMA, 9.00%, 05/20/16 06/20/17 USA USD 107, ,549 GNMA, 9.50%, 10/15/18 11/15/21 USA USD 83, ,973 GNMA, SF, 7.95%, 01/15/21 USA USD 60, ,534 GNMA, SF, 10.50%, 12/15/17 04/15/25 USA USD 59, ,735 GNMA, II, SF, 9.00%, 10/20/16 USA USD 50, ,304 GNMA, SF, 8.25%, 04/15/17 USA USD 37, ,020 GNMA, SF, 8.30%, 07/15/17 USA USD 33, ,748 GNMA, SF, 7.80%, 02/15/20 USA USD 33, ,595 GNMA, SF, 11.00%, 08/15/17 04/15/21 USA USD 24, ,606 GNMA, 8.50%, 03/15/17 05/15/18 USA USD 20, ,179 GNMA, SF, 7.75%, 03/15/27 USA USD 9, ,023 GNMA, SF, 11.50%, 07/15/15 USA USD 6, ,356,795, Securities Maturing Within One Year 4,381 GNMA, SF, 10.00%, 10/15/11 USA USD 4, GNMA, 9.00%, 06/15/11 USA USD , TOTAL BONDS 2,356,799, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 2,356,799, TOTAL INVESTMENTS 2,356,799, Unaudited Semi-Annual Report 117

119 Franklin U.S. Opportunities Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Automobiles & Components 514,700 Johnson Controls Inc. USA USD 19,661, ,200 General Motors Co. USA USD 8,448, ,109, Banks 173,700 Signature Bank USA USD 8,685, Capital Goods 256,900 Cummins Inc. USA USD 28,261, ,010 Precision Castparts Corp. USA USD 22,692, ,900 Flowserve Corp. USA USD 16,082, ,900 Rockwell Automation Inc. USA USD 15,912, ,900 ABB Ltd., ADR CHE USD 13,310, ,925 Heico Corp. USA USD 11,682, ,942, Consumer Durables & Apparel 175,600 Polo Ralph Lauren Corp. USA USD 19,477, ,500 NIKE Inc., B USA USD 16,614, ,091, Consumer Services 400,200 WMS Industries Inc. USA USD 18,105, ,800 Starwood Hotels & Resorts Worldwide Inc. USA USD 17,310, ,500 Peet s Coffee & Tea Inc. USA USD 8,911, ,326, Diversified Financials 283,900 BlackRock Inc. USA USD 54,105, ,225,100 Bank of America Corp. USA USD 16,342, ,100 MSCI Inc., A USA USD 8,536, ,300 Green Dot Corp. USA USD 6,542, ,526, Energy 343,500 Concho Resources Inc. USA USD 30,114, ,400 Anadarko Petroleum Corp. USA USD 27,448, ,800 Cameron International Corp. USA USD 26,166, ,091,100 Weatherford International Ltd. USA USD 24,877, ,740 FMC Technologies Inc. USA USD 23,626, ,150 Schlumberger Ltd. USA USD 22,474, ,000 SM Energy Co. USA USD 18,504, ,100 Petrohawk Energy Corp. USA USD 16,956, ,300 Brigham Exploration Co. USA USD 12,810, ,400 Key Energy Services Inc. USA USD 8,896, ,874, Food, Beverage & Tobacco 318,900 Mead Johnson Nutrition Co., A USA USD 19,851, ,100 TreeHouse Foods Inc. USA USD 14,923, ,000 Hansen Natural Corp. USA USD 13,645, ,419, Health Care Equipment & Services 301,600 Edwards Lifesciences Corp. USA USD 24,381, ,900 Express Scripts Inc. USA USD 12,426, ,500 HeartWare International Inc. USA USD 10,026, ,900 Varian Medical Systems Inc. USA USD 7,890, ,725, Household & Personal Products 282,200 Avon Products Inc. USA USD 8,200, Materials 885,100 Celanese Corp., A USA USD 36,439, ,500 Praxair Inc. USA USD 20,096, ,300 Ecolab Inc. USA USD 9,594, ,130, Unaudited Semi-Annual Report

120 Franklin U.S. Opportunities Fund Pharmaceuticals, Biotechnology & Life Sciences 511,200 Salix Pharmaceuticals Ltd. USA USD 24,005, ,200 Pharmaceutical Product Development Inc. USA USD 17,863, ,600 Life Technologies Corp. USA USD 14,352, ,170 Celgene Corp. USA USD 13,316, ,940 Gilead Sciences Inc. USA USD 13,007, ,900 Human Genome Sciences USA USD 12,563, ,351 Perrigo Co. USA USD 11,801, ,100 Allergan Inc. USA USD 10,788, ,960 Onyx Pharmaceuticals Inc. USA USD 8,183, ,883, Retailing 606,200 Urban Outfitters Inc. USA USD 21,708, ,000 Guess? Inc. USA USD 21,294, ,900 Priceline.com Inc. USA USD 18,339, ,200 Amazon.com Inc. USA USD 18,216, ,000 Kohl s Corp. USA USD 14,400, ,700 Ulta Salon Cosmetics & Fragrance Inc. USA USD 10,427, ,385, Semiconductors & Semiconductor Equipment 3,720,300 ARM Holdings PLC GBR GBP 24,598, ,600 Silicon Laboratories Inc. USA USD 20,552, ,600 Netlogic Microsystems Inc. USA USD 19,116, ,200 Cree Inc. USA USD 14,706, ,973, Software & Services 177,500 MasterCard Inc., A USA USD 39,779, ,900 Citrix Systems Inc. USA USD 36,455, ,900 Salesforce.com Inc. USA USD 25,198, ,000 Red Hat Inc. USA USD 22,231, ,920 Google Inc., A USA USD 18,365, ,300 Baidu Inc., ADR CHN USD 14,411, ,600 Visa Inc., A USA USD 13,132, ,400 ANSYS Inc. USA USD 10,122, ,200 Nuance Communications Inc. USA USD 9,493, ,000 Taleo Corp., A USA USD 9,318, ,170 Bottomline Technologies Inc. USA USD 7,949, ,000 Mail.ru Group Ltd., Reg S, GDR RUS USD 6,251, ,700 FleetCor Technologies Inc. USA USD 2,464, ,174, Technology Hardware & Equipment 217,930 Apple Inc. USA USD 70,295, ,810 QUALCOMM Inc. USA USD 38,741, ,320 Trimble Navigation Ltd. USA USD 26,606, ,200 EMC Corp. USA USD 22,744, ,100 Juniper Networks Inc. USA USD 20,383, ,100 F5 Networks Inc. USA USD 18,105, ,600 FLIR Systems Inc. USA USD 16,737, ,500 ViaSat Inc. USA USD 14,322, ,300 Dolby Laboratories Inc., A USA USD 8,157, ,010 Cisco Systems Inc. USA USD 7,323, ,416, Telecommunication Services 1,052,500 SBA Communications Corp. USA USD 43,089, ,830 NII Holdings Inc. USA USD 19,732, ,821, Transportation 473,800 Expeditors International of Washington Inc. USA USD 25,869, ,800 FedEx Corp. USA USD 22,396, ,266, TOTAL SHARES 1,578,955, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 1,578,955, Unaudited Semi-Annual Report 119

121 Franklin U.S. Opportunities Fund TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Securities Maturing Within One Year 12,500,000 US Treasury Bill, 0.00%, 01/06/11 USA USD 12,499, ,000,000 US Treasury Bill, 0.00%, 01/20/11 USA USD 9,999, ,000,000 US Treasury Bill, 0.00%, 01/13/11 USA USD 2,999, ,499, TOTAL BONDS 25,499, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 25,499, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Technology Hardware & Equipment 70,246 Dilithium Networks Inc., depository receipt, D, pfd., 144A, PIPES ** USA USD ,226 Dilithium Networks Inc. ** USA USD TOTAL SHARES WARRANTS Technology Hardware & Equipment 30,163 Dilithium Networks Inc., wts., 02/20/49 ** USA USD TOTAL WARRANTS TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET TOTAL INVESTMENTS 1,604,455, ** These securities are submitted to a Fair Valuation 120 Unaudited Semi-Annual Report

122 Franklin U.S. Small-Mid Cap Growth Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Consumer Discretionary 20,000 Urban Outfitters Inc. USA USD 716, ,700 BorgWarner Inc. USA USD 701, ,000 Wolverine World Wide Inc. USA USD 637, ,100 Tenneco Inc. USA USD 621, ,600 Starwood Hotels & Resorts Worldwide Inc. USA USD 583, ,000 Polo Ralph Lauren Corp. USA USD 554, ,400 Johnson Controls Inc. USA USD 511, ,000 Limited Brands Inc. USA USD 491, ,000 Guess? Inc. USA USD 473, ,400 Jarden Corp. USA USD 413, ,000 Advance Auto Parts Inc. USA USD 396, ,200 Dick s Sporting Goods Inc. USA USD 382, ,600 WMS Industries Inc. USA USD 343, ,000 Ulta Salon Cosmetics & Fragrance Inc. USA USD 340, ,600 Discovery Communications Inc., A USA USD 316, ,500 Under Armour Inc., A USA USD 301, ,800 Expedia Inc. USA USD 296, ,700 Buffalo Wild Wings Inc. USA USD 293, ,700 Peet s Coffee & Tea Inc. USA USD 279, ,300 Chipotle Mexican Grill Inc. USA USD 276, ,000 Dollar General Corp. USA USD 276, ,900 Blue Nile Inc. USA USD 222, ,000 DreamWorks Animation SKG Inc., A USA USD 176, ,100 Autoliv Inc. SWE USD 86, ,300 Grand Canyon Education Inc. USA USD 84, E-Commerce China Dangdang Inc., ADR CHN USD 21, ,801, Consumer Staples 10,000 TreeHouse Foods Inc. USA USD 510, ,500 Hansen Natural Corp. USA USD 392, , Energy 16,200 SM Energy Co. USA USD 954, ,500 FMC Technologies Inc. USA USD 666, ,000 Alpha Natural Resources Inc. USA USD 600, ,500 Concho Resources Inc. USA USD 394, ,000 Superior Energy Services Inc. USA USD 349, ,050 Petrohawk Energy Corp. USA USD 238, ,204, Financials 13,603 Lazard Ltd. USA USD 537, ,700 Stifel Financial Corp. USA USD 415, ,300 T. Rowe Price Group Inc. USA USD 406, ,900 Affiliated Managers Group Inc. USA USD 386, ,700 Janus Capital Group Inc. USA USD 372, ,900 IntercontinentalExchange Inc. USA USD 345, ,500 W.R. Berkley Corp. USA USD 314, ,800 Signature Bank USA USD 290, ,500 MSCI Inc., A USA USD 253, ,300 Northern Trust Corp. USA USD 238, ,700 First Niagara Financial Group Inc. USA USD 177, Capitol Federal Financial USA USD 10, ,748, Unaudited Semi-Annual Report 121

123 Franklin U.S. Small-Mid Cap Growth Fund Health Care 5,300 Mettler-Toledo International Inc. USA USD 801, ,000 Edwards Lifesciences Corp. USA USD 646, ,000 Community Health Systems Inc. USA USD 597, ,000 Coventry Health Care Inc. USA USD 528, ,600 Waters Corp. USA USD 512, ,800 C. R. Bard Inc. USA USD 440, ,700 DaVita Inc. USA USD 396, ,000 Pharmaceutical Product Development Inc. USA USD 325, ,300 Cerner Corp. USA USD 312, ,500 Varian Medical Systems Inc. USA USD 311, ,800 Salix Pharmaceuticals Ltd. USA USD 272, ,000 Human Genome Sciences USA USD 262, ,300 Allscripts Healthcare Solutions Inc. USA USD 256, ,900 HeartWare International Inc. USA USD 253, ,100 BioMarin Pharmaceutical Inc. USA USD 245, ,000 Dendreon Corp. USA USD 174, ,400 Thoratec Corp. USA USD 152, Intuitive Surgical Inc. USA USD 128, ,700 Stereotaxis Inc. USA USD 117, ,800 ArQule Inc. USA USD 86, ,200 Savient Pharmaceuticals Inc. USA USD 69, ,894, Industrials 19,500 AMETEK Inc. USA USD 765, ,900 Cummins Inc. USA USD 649, ,000 Rockwell Collins Inc. USA USD 466, ,500 Fastenal Co. USA USD 449, ,600 Joy Global Inc. USA USD 399, ,200 Flowserve Corp. USA USD 381, ,400 Gardner Denver Inc. USA USD 371, ,100 Heico Corp. USA USD 362, ,300 Knight Transportation Inc. USA USD 347, ,000 Robert Half International Inc. USA USD 306, ,100 Allegiant Travel Co. USA USD 300, ,500 Fluor Corp. USA USD 298, ,000 Cooper Industries PLC, A USA USD 291, ,000 Rockwell Automation Inc. USA USD 286, ,500 Roper Industries Inc. USA USD 267, ,700 Expeditors International of Washington Inc. USA USD 256, ,100 C.H. Robinson Worldwide Inc. USA USD 248, ,900 J.B. Hunt Transport Services Inc. USA USD 240, ,600 Ryanair Holdings PLC, ADR IRL USD 233, ,204 Esterline Technologies Corp. USA USD 219, ,500 Kansas City Southern USA USD 167, ,900 Marten Transport Ltd. USA USD 104, ,414, Unaudited Semi-Annual Report

124 Franklin U.S. Small-Mid Cap Growth Fund Information Technology 19,100 Silicon Laboratories Inc. USA USD 878, ,500 Citrix Systems Inc. USA USD 786, ,200 Red Hat Inc. USA USD 739, ,000 Sensata Technologies Holding NV USA USD 692, ,889 Trimble Navigation Ltd. USA USD 674, ,300 Nuance Communications Inc. USA USD 659, ,000 First Solar Inc. USA USD 650, ,000 Hittite Microwave Corp. USA USD 610, ,200 Atheros Communications USA USD 581, ,200 Global Payments Inc. USA USD 563, ,000 FactSet Research Systems Inc. USA USD 562, ,300 Juniper Networks Inc. USA USD 527, ,000 Netlogic Microsystems Inc. USA USD 471, ,400 Alliance Data Systems Corp. USA USD 454, ,600 ANSYS Inc. USA USD 447, ,200 Power Integrations Inc. USA USD 409, ,000 NXP Semiconductors NV NLD USD 397, ,900 Shoretel Inc. USA USD 397, ,100 FLIR Systems Inc. USA USD 389, ,400 Xilinx Inc. USA USD 388, ,200 Lam Research Corp. USA USD 372, ,700 F5 Networks Inc. USA USD 351, ,500 Taleo Corp., A USA USD 317, ,600 Varian Semiconductor Equipment Associates Inc. USA USD 317, ,700 Activision Blizzard Inc. USA USD 307, ,500 Cree Inc. USA USD 296, ,600 Polycom Inc. USA USD 296, ,100 Avago Technologies Ltd. SGP USD 259, ,500 ViaSat Inc. USA USD 244, ,400 GSI Commerce Inc. USA USD 241, ,000 SMART Technologies Inc., A CAN USD 236, ,000 Informatica Corp. USA USD 132, ,779 Bottomline Technologies Inc. USA USD 82, ,600 FleetCor Technologies Inc. USA USD 80, ,200 SemiLEDs Corp. TWN USD 34, Youku.com Inc., ADR CHN USD 14, ChinaCache International Holdings Ltd., ADR CHN USD 12, ,882, Materials 18,200 Celanese Corp., A USA USD 749, ,200 The Scotts Miracle-Gro Co., A USA USD 416, ,600 Ecolab Inc. USA USD 332, ,600 STR Holdings Inc. USA USD 132, ,630, Telecommunication Services 15,100 SBA Communications Corp. USA USD 618, Utilities 17,200 Calpine Corp. USA USD 229, TOTAL SHARES 49,326, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 49,326, TOTAL INVESTMENTS 49,326, Unaudited Semi-Annual Report 123

125 Franklin U.S. Total Return Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Advertising 1,000 Dex One Corp. USA USD 7, TOTAL SHARES 7, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 7, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Automobiles 2,200 General Motors Corp., 6.25%, cvt. pfd., C USA USD 17, Consumer Finance 13 GMAC Inc., 7.00%, pfd., 144A USA USD 12, TOTAL SHARES 29, BONDS Asset-Backed Securities 968,526 FNMA, , FN, FRN, 0.611%, 01/25/36 USA USD 966, ,000 Morgan Stanley Capital I Trust, 2004-IQ7, A4, FRN, 5.404%, 06/15/38 USA USD 641, ,000 Chase Issuance Trust, 2009-A2, A2, FRN, 1.81%, 04/15/14 USA USD 640, ,000 Citigroup/Deutsche Bank Commercial Mortgage Trust, 2006-CD3, A5, 5.617%, 10/15/48 USA USD 569, ,000 Capital One Multi-Asset Execution Trust, 2006-A6, A6, 5.30%, 02/18/14 USA USD 506, ,000 Capital One Multi-Asset Execution Trust, 2009-A2, A2, 3.20%, 04/15/14 USA USD 505, ,000 Chase Issuance Trust, 2007-A1, A1, FRN, 0.28%, 10/15/12 USA USD 499, ,945 JPMorgan Chase Commercial Mortgage Securities Corp., 2004-CB9, A4, FRN, 5.558%, 06/12/41 USA USD 499, ,000 Citibank Credit Card Issuance Trust, 2004-A7, A7, FRN, 0.374%, 11/25/13 USA USD 499, ,000 Greenwich Capital Commercial Funding Corp., 2007-GG9, C, 5.554%, 03/10/39 USA USD 378, ,000 Citigroup/Deutsche Bank Commercial Mortgage Trust, 2005-CD1, E, FRN, 5.40%, 07/15/44 USA USD 317, ,000 JPMorgan Chase Commercial Mortgage Securities Corp., 2006-CB17, AM, 5.464%, 12/12/43 USA USD 295, ,000 GMAC Commercial Mortgage Securities Inc., 2005-C1, B, 4.936%, 05/10/43 USA USD 227, ,000 Bear Stearns Commercial Mortgage Securities Inc., 2006-T24, AM, 5.568%, 10/12/16 USA USD 204, ,532 Securitized Asset-Backed Receivables LLC Trust, 2006-FR2, A2, FRN, 0.411%, 03/25/36 USA USD 200, ,407 Chase Funding Mortgage Loan Asset-Backed Certificates, , 2A2, FRN, 0.761%, 02/25/35 USA USD 177, ,991 Wells Fargo Mortgage Backed Securities Trust, , 3A1, 5.50%, 04/25/37 USA USD 114, ,321 FNMA, G93-33, K, 7.00%, 09/25/23 USA USD 108, ,000 JPMorgan Chase Commercial Mortgage Securities Corp., 2006-CB14, AM, FRN, 5.627%, 12/12/44 USA USD 100, ,000 Bear Stearns Commercial Mortgage Securities Inc., 2007-PW16, AM, FRN, 5.712%, 06/11/40 USA USD 100, ,980 Capital One Auto Finance Trust, 2006-C, A4, FRN, 0.29%, 05/15/13 USA USD 94, ,000 Wells Fargo Mortgage Backed Securities Trust, 2004-W, A9, FRN, 2.993%, 11/25/34 USA USD 93, ,912 wide Asset-Backed Certificates, , 1A2, FRN, 0.631%, 12/25/34 USA USD 86, ,000 Greenwich Capital Commercial Funding Corp., 2005-GG5, B, 5.369%, 04/10/37 USA USD 77, ,481 Homebanc Mortgage Trust, , A1, FRN, 0.531%, 10/25/35 USA USD 68, ,278 Residential Asset Securities Corp., 2005-AHL2, A2, FRN, 0.521%, 10/25/35 USA USD 66, ,702 wide Home Loans, 2004-J8, 3A3, 5.50%, 12/25/34 USA USD 63, ,479 Bear Stearns Alt-A Trust, , A2, FRN, 1.141%, 11/25/34 USA USD 40, ,734 Residential Asset Securities Corp., 2004-KS1, AI4, 4.213%, 04/25/32 USA USD 36, ,550 First Franklin Mortgage Loan Asset-Backed Certificates, 2004-FF11, 1A2, FRN, 0.611%, 01/25/35 USA USD 31, ,000 Citigroup Commercial Mortgage Trust, 2007-C6, AM, FRN, 5.888%, 06/10/17 USA USD 29, ,561 FHLMC, 2942, TF, FRN, 0.61%, 03/15/35 USA USD 7, ,041 Chase Funding Mortgage Loan Asset-Backed Certificates, , 2A2, FRN, 0.861%, 07/25/33 USA USD 2, ,252, Unaudited Semi-Annual Report

126 Franklin U.S. Total Return Fund Corporate Bonds 600,000 Moody s Corp., senior note, 5.50%, 09/01/20 USA USD 593, ,000,000 General Electric Capital Corp., senior note, A, 8.50%, 04/06/18 USA MXN 592, ,000 JPMorgan Chase Capital XXII, sub. bond, 6.45%, 02/02/37 USA USD 400, ,000 Ralcorp Holdings Inc., 4.95%, 08/15/20 USA USD 399, ,000 DIRECTV Holdings LLC/DIRECTV Financing Co. Inc., senior note, 4.60%, 02/15/21 USA USD 395, ,000 American Express Credit Corp., senior note, 5.375%, 10/01/14 USA GBP 325, ,000 Kraft Foods Inc., senior note, 5.375%, 02/10/20 USA USD 323, ,000 PNC Funding Corp., sub. note, 5.625%, 02/01/17 USA USD 321, ,000 Verizon New York Inc., senior deb., A, 6.875%, 04/01/12 USA USD 320, ,000 Lazard Group, senior note, 6.85%, 06/15/17 USA USD 314, ,000 Wachovia Capital Trust III, junior sub. bond, 5.80%, Perpetual USA USD 304, ,000 JPMorgan Chase & Co., senior note, 4.25%, 10/15/20 USA USD 293, ,000 Fifth Third Capital Trust IV, junior sub. note, FRN, 6.50%, 04/15/67 USA USD 286, ,000 ERP Operating LP, 5.75%, 06/15/17 USA USD 274, ,000 Valero Energy Corp., senior note, 9.375%, 03/15/19 USA USD 248, ,000 BB&T Corp., senior note, 6.85%, 04/30/19 USA USD 230, ,000 Wells Fargo Capital XV, pfd., 9.75%, Perpetual USA USD 223, ,000 CVS Caremark Corp., senior note, 5.75%, 06/01/17 USA USD 222, ,000 Merrill Lynch & Co. Inc., 6.875%, 04/25/18 USA USD 219, ,000 General Electric Capital Corp., senior note, A, 5.45%, 01/15/13 USA USD 215, ,000 Time Warner Inc., 6.10%, 07/15/40 USA USD 210, ,000 Wm. Wrigley Jr. Co., senior secured note, 144A, 3.05%, 06/28/13 USA USD 204, ,000 Barclays Bank PLC, senior note, 5.125%, 01/08/20 GBR USD 204, ,000 HSBC Finance Corp., senior sub. bond, 144A, 6.676%, 01/15/21 USA USD 202, ,000 Morgan Stanley, senior note, 5.50%, 01/26/20 USA USD 201, ,000 Royal Bank of Scotland Group PLC, senior note, 6.40%, 10/21/19 GBR USD 201, ,000 KKR Group Finance Co., senior note, 144A, 6.375%, 09/29/20 USA USD 199, ,000 Corn Products International Inc., senior note, 4.625%, 11/01/20 USA USD 197, ,000 Cliffs Natural Resources Inc., senior note, 4.80%, 10/01/20 USA USD 195, ,000 Woolworths Ltd., senior note, 144A, 4.00%, 09/22/20 AUS USD 194, ,000 SVB Financial Group, senior note, 5.375%, 09/15/20 USA USD 192, ,000 Viacom Inc., senior note, 6.25%, 04/30/16 USA USD 170, ,000 Telecom Italia Capital SA, senior note, 6.999%, 06/04/18 ITA USD 159, ,000 Georgia Power Co., senior note, 5.40%, 06/01/40 USA USD 152, ,000 Intelsat Bermuda Ltd., senior note, 11.25%, 06/15/16 LUX USD 135, ,000 Citigroup Inc., senior note, 8.125%, 07/15/39 USA USD 127, ,000 Aflac Inc., senior note, 8.50%, 05/15/19 USA USD 123, ,000 Express Scripts Inc., senior note, 7.25%, 06/15/19 USA USD 118, ,000 Target Corp., 6.50%, 10/15/37 USA USD 117, ,000 Ford Motor Credit Co. LLC, senior note, 8.125%, 01/15/20 USA USD 116, ,000 Reynolds American Inc., senior secured note, 7.625%, 06/01/16 USA USD 116, ,000 Harrah s Operating Co. Inc., senior secured note, 11.25%, 06/01/17 USA USD 113, ,000 CenterPoint Energy Inc., senior note, 6.125%, 11/01/17 USA USD 111, ,000 RPM International Inc., 6.25%, 12/15/13 USA USD 109, ,000 Morgan Stanley, senior note, 6.00%, 04/28/15 USA USD 108, ,000 HCP Inc., senior note, 6.70%, 01/30/18 USA USD 107, ,000 Boston Properties LP, senior note, 5.625%, 11/15/20 USA USD 106, ,000 Myriad International Holding BV, senior note, 144A, 6.375%, 07/28/17 ZAF USD 105, ,000 Coventry Health Care Inc., senior note, 6.30%, 08/15/14 USA USD 105, ,000 HSBC Holdings PLC, sub. note, 6.50%, 09/15/37 GBR USD 105, ,000 Capital One Capital VI, pfd., junior sub. bond, 8.875%, 05/15/40 USA USD 104, ,000 Boston Scientific Corp., senior note, 6.00%, 01/15/20 USA USD 104, ,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 9.00%, 04/15/19 USA USD 104, ,000 Regions Financial Corp., senior note, 7.75%, 11/10/14 USA USD 104, ,000 Enterprise Products Operating LLC, senior note, 5.20%, 09/01/20 USA USD 103, ,000 Telecom Italia Capital SA, senior note, 4.95%, 09/30/14 ITA USD 102, ,000 The Goldman Sachs Group Inc., sub. note, 6.75%, 10/01/37 USA USD 102, ,000 HSBK (Europe) BV, Reg S, 7.25%, 05/03/17 KAZ USD 101, ,000 The Nasdaq OMX Group Inc., senior note, 5.25%, 01/16/18 USA USD 101, ,000 Bank of America Corp., pfd., sub. bond, M, 8.125%, Perpetual USA USD 100, ,000 Teck Resources Ltd., senior note, 4.50%, 01/15/21 CAN USD 99, ,000 Chesapeake Energy Corp., senior note, 6.625%, 08/15/20 USA USD 99, ,000 Lloyds TSB Bank PLC, 144A, 5.80%, 01/13/20 GBR USD 98, ,000 DP World Ltd., Reg S, 6.85%, 07/02/37 ARE USD 92, ,000 MGM Resorts International, senior note, 6.625%, 07/15/15 USA USD 92, ,000 Lloyds TSB Bank PLC, senior sub. note, 144A, 6.50%, 09/14/20 GBR USD 92, ,338 CCH II LLC/CCH II Capital Corp., senior note, 13.50%, 11/30/16 USA USD 87, ,000 Rite Aid Corp., senior secured note, 9.75%, 06/12/16 USA USD 82, ,000 Infinis PLC, senior note, Reg S, 9.125%, 12/15/14 GBR GBP 82, ,000 Ceva Group PLC, senior secured note, 144A, 11.50%, 04/01/18 GBR USD 81, ,572 Wind Acquisition Holdings Finance SA, senior secured note, Reg S, PIK, 12.25%, 07/15/17 ITA EUR 81, ,000 HCA Inc., senior secured note, PIK, 9.625%, 11/15/16 USA USD 80, ,000 RBS Global & Rexnord Corp., senior note, 8.50%, 05/01/18 USA USD 80, ,000 GMAC Inc., senior note, 6.875%, 08/28/12 USA USD 78, ,000 MetroPCS Wireless Inc., senior note, 7.875%, 09/01/18 USA USD 78, ,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 75, ,000 UPC Germany GmbH, senior bond, Reg S, 9.625%, 12/01/19 DEU EUR 73, Unaudited Semi-Annual Report 125

127 Franklin U.S. Total Return Fund Corporate Bonds (continued) 75,000 NewPage Corp., senior secured note, %, 12/31/14 USA USD 70, ,000 Diversey Holdings Inc., senior note, PIK, 10.50%, 05/15/20 USA USD 55, ,000 Embarq Corp., senior note, 7.082%, 06/01/16 USA USD 55, ,000 Case New Holland Inc., senior note, 144A, 7.875%, 12/01/17 USA USD 55, ,000 Clear Channel Worldwide Holdings Inc., senior note, B, 9.25%, 12/15/17 USA USD 55, ,000 Frontier Communications Corp., senior note, 8.50%, 04/15/20 USA USD 54, ,000 Compagnie Generale de Geophysique-Veritas, senior note, 9.50%, 05/15/16 FRA USD 54, ,000 WMG Acquisition Corp., senior secured note, 9.50%, 06/15/16 USA USD 53, ,000 The Goldman Sachs Group Inc., 5.125%, 01/15/15 USA USD 53, ,000 Royal Caribbean Cruises Ltd., senior note, 7.25%, 06/15/16 USA USD 53, ,000 Peabody Energy Corp., senior note, 6.50%, 09/15/20 USA USD 53, ,000 The Manitowoc Co. Inc., senior note, 8.50%, 11/01/20 USA USD 53, ,000 HCA Inc., senior secured bond, 7.25%, 09/15/20 USA USD 52, ,000 Pinnacle Foods Finance LLC, senior note, 9.25%, 04/01/15 USA USD 52, ,000 The Goodyear Tire & Rubber Co., senior note, 8.25%, 08/15/20 USA USD 52, ,000 Enterprise Products Operating LLC, junior sub. note, FRN, 7.034%, 01/15/68 USA USD 51, ,000 EchoStar DBS Corp., senior note, 7.125%, 02/01/16 USA USD 51, ,000 United Rentals North America Inc., senior sub. note, 8.375%, 09/15/20 USA USD 51, ,000 Pinnacle Entertainment Inc., senior sub. note, 7.50%, 06/15/15 USA USD 50, ,000 MarkWest Energy Partners LP/Finance Corp., senior note, 6.75%, 11/01/20 USA USD 50, ,000 Michaels Stores Inc., senior note, 144A, 7.75%, 11/01/18 USA USD 50, ,000 Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, Reg S, 15.00%, 04/01/21 USA USD 47, ,000 Forest City Enterprises Inc., senior note, 7.625%, 06/01/15 USA USD 47, ,000 GMAC Inc., sub. note, 8.00%, 12/31/18 USA USD 26, ,000 Ally Financial Inc., 144A, 6.25%, 12/01/17 USA USD 25, ,000 Station Casinos Inc., senior note, 7.75%, 08/15/16 * USA USD ,786, Government and Municipal Bonds US Issued 2,800,000 FNMA, 4.00%, 01/01/41 USA USD 2,786, ,710,000 FNMA, 6.00%, 01/01/40 USA USD 1,858, ,400,000 FNMA, 5.50%, 01/01/25 USA USD 1,505, ,250,000 FHLMC, 4.50%, 01/01/40 USA USD 1,281, ,200,000 US Treasury Note, 1.375%, 01/15/13 USA USD 1,218, ,160,000 US Treasury Bond, 4.50%, 02/15/36 USA USD 1,201, ,200,000 US Treasury Note, 1.75%, 07/31/15 USA USD 1,196, ,100,000 US Treasury Note, 2.375%, 01/31/15 USA USD 1,129, ,100,000 US Treasury Note, 1.75%, 03/31/14 USA USD 1,121, ,100,000 US Treasury Note, 1.25%, 10/31/15 USA USD 1,064, ,000 US Treasury Bond, 5.375%, 02/15/31 USA USD 1,050, ,000 FHLMC, 6.00%, 01/01/40 USA USD 872, ,000 US Treasury Note, 4.25%, 08/15/15 USA USD 830, ,000 US Treasury Bond, 3.625%, 02/15/39 USA USD 818, ,919 FNMA, 4.50%, 02/01/39 USA USD 756, ,000 US Treasury Note, 2.125%, 05/31/15 USA USD 711, ,685 FNMA, 5.50%, 04/01/36 USA USD 661, ,000 FHLMC, 4.00%, 01/01/41 USA USD 645, ,000 FHLMC, 4.50%, 01/15/15 USA USD 552, ,000 US Treasury Note, 1.50%, 12/31/13 USA USD 507, ,051 FNMA, ARM, 4.324%, 09/01/34 USA USD 473, ,000 US Treasury Note, 2.375%, 08/31/14 USA USD 414, ,000 Los Angeles Community College District GO, Build America Bonds, 6.75%, 08/01/49 USA USD 309, ,000 Detroit School District GO, Qualified School Construction Bonds, 6.645%, 05/01/29 USA USD 291, ,000 California State GO, Various Purpose, ReFunding, 6.00%, 03/01/33 USA USD 284, ,156 FHLMC, 5.50%, 09/01/35 USA USD 275, ,000 FNMA, 4.50%, 01/01/40 USA USD 256, ,000 FNMA, 6.50%, 01/01/40 USA USD 255, ,282 FNMA, 6.00%, 05/01/36 USA USD 248, ,000 Oregon State GO, Build America Bonds, State Board of Education, ReFunding, Series C, 5.382%, 08/01/39 USA USD 245, ,000 New York City Municipal Water Finance Authority Water and Sewer System Revenue, Second General Resolution, Build America Bonds, Series CC, 6.282%, 06/15/42 USA USD 239, ,000 San Francisco City and County GO, Build America Bonds, 5.93%, 06/15/28 USA USD 210, ,000 California State GO, Build America Bonds, 7.60%, 11/01/40 USA USD 208, ,000 California State GO, Various Purpose, 6.00%, 04/01/38 USA USD 204, ,000 New York State Dormitory Authority State Personal Income Tax Revenue, Build America Bonds, 5.50%, 03/15/30 USA USD 202, ,000 Los Angeles County Public Works Financing Authority Lease Revenue, Build America Bonds-Recovery Zone Economic Development, ReFunding, 7.488%, 08/01/33 USA USD 201, ,075 FNMA, 5.50%, 04/01/35 USA USD 180, ,435 FNMA, 5.00%, 10/01/34 USA USD 179, ,820 FNMA, ARM, 5.295%, 11/01/32 USA USD 154, Unaudited Semi-Annual Report

128 Franklin U.S. Total Return Fund Government and Municipal Bonds (continued) 135,154 GNMA, SF, 5.00%, 05/15/34 USA USD 144, ,692 FNMA, ARM, 4.368%, 02/01/34 USA USD 123, ,864 US Treasury Note, Index Linked, 0.00%, 01/15/19 USA USD 112, ,000 Illinois State GO, Build America Bonds, 7.35%, 07/01/35 USA USD 112, ,943 FHLMC, 5.00%, 04/01/34 USA USD 109, ,447 FHLMC, 6.50%, 03/01/38 USA USD 105, ,094 FHLMC, 7.00%, 05/01/32 USA USD 105, ,000 California State Judgement Trust COP, 1.688%, 06/01/15 USA USD 90, ,043 FNMA, 6.50%, 01/01/36 USA USD 88, ,770 FHLMC, 5.50%, 08/01/33 USA USD 67, ,920 FNMA, 7.50%, 02/01/30 USA USD 60, ,977 FNMA, 5.00%, 01/01/20 USA USD 51, ,000 Indianapolis Local Public Improvement Bond Bank Revenue, Waterworks Project, Series A, Assured Guaranty, 5.50%, 01/01/38 USA USD 51, ,816 FHLMC, 4.50%, 04/01/20 USA USD 49, ,191 FNMA, 5.00%, 05/01/18 USA USD 48, ,273 FNMA, 5.00%, 04/01/20 USA USD 45, ,976 FNMA, 6.00%, 10/01/34 USA USD 44, ,070 FHLMC, 4.50%, 09/01/18 USA USD 41, ,009 FNMA, 5.50%, 09/01/19 USA USD 37, ,947 FNMA, 4.50%, 04/01/19 USA USD 34, ,555 GNMA, ARM, 3.75%, 08/20/20 USA USD 34, ,278 FNMA, ARM, 4.649%, 12/01/34 USA USD 33, ,271 GNMA, ARM, 3.50%, 09/20/29 USA USD 33, ,727 FHLMC, 4.50%, 03/01/20 USA USD 31, ,816 FNMA, 5.00%, 01/01/20 USA USD 30, ,196 FNMA, ARM, 4.08%, 12/01/34 USA USD 25, ,881 GNMA, 6.50%, 09/15/32 USA USD 22, ,489 FHLMC, 5.00%, 03/01/19 USA USD 20, ,225 GNMA, SF, 5.50%, 06/15/34 USA USD 17, ,339 FNMA, 4.50%, 04/01/19 USA USD 16, ,365 FHLMC, ARM, 4.775%, 09/01/32 USA USD 14, ,682 GNMA, SF, 6.00%, 03/15/33 USA USD 14, ,055 FHLMC, 6.00%, 08/01/17 USA USD 13, ,650 GNMA, SF, 6.50%, 11/15/32 USA USD 12, ,097 GNMA, SF, 5.00%, 03/15/34 USA USD 10, ,716 FHLMC, 5.50%, 06/01/18 USA USD 10, ,553 GNMA, SF, 5.50%, 07/15/33 USA USD 8, TOTAL US ISSUED 28,481, Non US Issued 1,160,000,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 1,046, ,000,000 Korea Treasury Bond, 4.25%, 12/10/12 KOR KRW 548, ,330,000 Government of Poland, 4.75%, 04/25/12 POL PLN 450, Nota Do Tesouro Nacional, 9.609%, 01/01/17 BRA BRL 337, ,000 Government of Australia, TB123, 5.75%, 04/15/12 AUS AUD 288, ,720,000 Government of Sweden, 5.50%, 10/08/12 SWE SEK 272, ,060,000,000 Government of Indonesia, FR40, 11.00%, 09/15/25 IDN IDR 270, Nota Do Tesouro Nacional, 9.609%, 01/01/14 BRA BRL 228, ,000 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 206, ,000 Government of Poland, 5.75%, 04/25/14 POL PLN 204, ,690,000,000 Government of Indonesia, FR47, 10.00%, 02/15/28 IDN IDR 201, ,220,000,000 Government of Indonesia, FR35, 12.90%, 06/15/22 IDN IDR 183, ,721 Peru Enhanced Pass-Through Finance Ltd., senior secured bond, A-1, Reg S, zero cpn., 05/31/18 PER USD 164, ,320,000,000 Government of Indonesia, FR44, 10.00%, 09/15/24 IDN IDR 161, ,000 New South Wales Treasury Corp., senior note, 5.50%, 03/01/17 AUS AUD 140, ,000 Western Australia Treasury Corp., 5.50%, 07/17/12 AUS AUD 112, ,000 Government of Lithuania, Reg S, 7.375%, 02/11/20 LTU USD 110, ,000 Government of Lithuania, Reg S, 6.75%, 01/15/15 LTU USD 108, ,000 Government of South Africa, senior note, 5.875%, 05/30/22 ZAF USD 107, ,000 Government of Vietnam, Reg S, 6.75%, 01/29/20 VND USD 101, ,000 Government of Peru, 7.84%, 08/12/20 PER PEN 100, ,000 Government of Poland, senior note, 6.375%, 07/15/19 POL USD 78, ,000 Government of Hungary, senior note, 6.25%, 01/29/20 HUN USD 73, ,000 Queensland Treasury Corp., 6.00%, 09/14/17 AUS AUD 51, ,000 Government of Poland, 6.25%, 10/24/15 POL PLN 38, ,000 Government of Venezuela, 10.75%, 09/19/13 VEN USD 28, ,000 Government of Poland, 5.00%, 10/24/13 POL PLN 28, ,000 Queensland Treasury Corp., 6.00%, 08/14/13 AUS AUD 25, ,900 Government of Argentina, senior bond, FRN, 0.677%, 08/03/12 ARG USD 23, ,000 Government of Hungary, senior note, 4.375%, 07/04/17 HUN EUR 17, ,400,000 Government of Sri Lanka, A, 11.00%, 08/01/15 LKA LKR 13, ,300,000 Government of Sri Lanka, A, 11.25%, 07/15/14 LKA LKR 12, ,000 Government of Hungary, senior note, 5.75%, 06/11/18 HUN EUR 12, Unaudited Semi-Annual Report 127

129 Franklin U.S. Total Return Fund Government and Municipal Bonds (continued) 10,000 Government of Hungary, senior note, 3.50%, 07/18/16 HUN EUR 11, ,000 Government of South Africa, senior note, 6.50%, 06/02/14 ZAF USD 5, ,000 Government of Hungary, senior note, 3.875%, 02/24/20 HUN EUR 5, ,000 Government of Sri Lanka, A, 13.50%, 02/01/13 LKA LKR 3, ,000 Government of Sri Lanka, A, 8.50%, 01/15/13 LKA LKR 3, ,000 Government of Sri Lanka, A, 7.00%, 03/01/14 LKA LKR ,000 Government of Sri Lanka, A, 6.50%, 07/15/15 LKA LKR TOTAL NON US ISSUED 5,783, ,265, Securities Maturing Within One Year 2,850,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 932, ,270,000 Government of Sweden, 5.25%, 03/15/11 SWE SEK 641, ,910,000 Government of Norway, 6.00%, 05/16/11 NOR NOK 506, ,385,000 Norway Treasury Bill, 0.00%, 06/15/11 NOR NOK 405, ,000 Petroleos de Venezuela SA, senior bond, zero cpn., 07/10/11 VEN USD 300, ,000 Queensland Treasury Corp., 6.00%, 06/14/11 AUS AUD 246, ,000 Israel Treasury Bill, 0.00%, 04/06/11 ISR ILS 238, ,000,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 181, ,000 Norwegian Treasury Bill, Strip, 09/21/11 NOR NOK 96, ,000 US Treasury Bill, 0.00%, 02/24/11 USA USD 59, ,000 Government of Malaysia, senior bond, 3.756%, 04/28/11 MYS MYR 55, ,000 Government of Israel, 2680, 7.00%, 04/29/11 ISR ILS 46, ,000 Israel Treasury Bill, 0.00%, 01/05/11 ISR ILS 39, ,000 Government of Venezuela, Reg S, FRN, 1.288%, 04/20/11 VEN USD 39, ,000 Bank of Negara Moary Note, 0.00%, 03/10/11 MYS MYR 30, ,000 Bank of Negara Moary Note, 0.00%, 07/19/11 MYS MYR 25, ,200 Israel Treasury Bill, 0.00%, 07/06/11 ISR ILS 22, ,000 Israel Treasury Bill, 0.00%, 03/02/11 ISR ILS 21, ,000 Bank of Negara Moary Note, 0.00%, 03/15/11 MYS MYR 16, ,000 Bank of Negara Moary Note, 0.00%, 07/28/11 MYS MYR 12, ,000 Israel Treasury Bill, 0.00%, 08/03/11 ISR ILS 9, ,000 Israel Treasury Bill, 0.00%, 10/05/11 ISR ILS 9, ,000 Bank of Negara Moary Note, 0.00%, 03/22/11 MYS MYR 6, ,000 Malaysia Treasury Bill, 0.00%, 05/06/11 MYS MYR 6, ,000 Malaysia Treasury Bill, 0.00%, 07/01/11 MYS MYR 3, ,000 Government of Malaysia, 7.50%, 07/15/11 MYS USD 2, ,000 Government of Sri Lanka, A, 12.00%, 07/15/11 LKA LKR ,000 Sri Lanka Treasury Bill, 0.00%, 07/08/11 LKA LKR ,957, TOTAL BONDS 61,262, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 61,292, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Asset-Backed Securities 389,018 Wachovia Bank Commercial Mortgage Trust, 2007-WHL8, A1, 144A, FRN, 0.34%, 06/15/20 USA USD 364, ,000 Bear Stearns Commercial Mortgage Securities Inc., 2006-T24, B, 144A, FRN, 5.657%, 10/12/41 USA USD 235, ,729 Legacy Benefits Insurance Settlements LLC, , A, 144A, 5.35%, 02/10/39 USA USD 176, ,111 Citigroup Commercial Mortgage Trust, FRN, 144A, 0.33%, 04/15/22 USA USD 69, ,550 Credit Suisse Mortgage Capital Certificates, 2006-TF2A, A2, 144A, FRN, 0.43%, 10/15/21 USA USD 66, , Corporate Bonds 300,000 Gaz Capital SA, 144A, 6.212%, 11/22/16 LUX USD 319, ,000 LUKOIL International Finance BV, 144A, 6.656%, 06/07/22 RUS USD 254, ,000 Woodside Finance Ltd., 144A, 4.50%, 11/10/14 AUS USD 210, ,000 Enogex LLC, senior note, 144A, 6.25%, 03/15/20 USA USD 106, ,000 Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16 GBR USD 96, ,000 SandRidge Energy Inc., senior note, 144A, 9.875%, 05/15/16 USA USD 53, ,000 OPTI Canada Inc., senior secured note, 9.00%, 12/15/12 CAN USD 50, ,000 BNP Paribas, 144A, 7.195%, Perpetual FRA USD 48, ,000 Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 02/15/16 GBR USD 47, ,000 VeriFone Holdings Inc., cvt., senior note, 144A, 1.375%, 06/15/12 USA USD 43, ,230, Unaudited Semi-Annual Report

130 Franklin U.S. Total Return Fund Government and Municipal Bonds 460,000 New South Wales Treasury Corp., 6.00%, 05/01/12 AUS AUD 474, TOTAL BONDS 2,617, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 2,617, TOTAL INVESTMENTS 63,917, Floating Rates are indicated as at December 31, 2010 * These Corporate Bonds are currently in default Income may be received in additional securities and/or cash Unaudited Semi-Annual Report 129

131 Franklin U.S. Ultra Short Bond Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Asset-Backed Securities 5,300,000 Chase Issuance Trust, 2007-A9, A9, FRN, 0.29%, 06/16/14 USA USD 5,284, ,565,000 Ford Credit Auto Owner Trust, 2008-C, A4B, FRN, 2.01%, 04/15/13 USA USD 4,631, ,000,000 Discover Card Master Trust, 2009-A1, A1, FRN, 1.56%, 12/15/14 USA USD 4,054, ,000,000 Chase Issuance Trust, 2006-A5, A, FRN, 0.28%, 11/15/13 USA USD 3,994, ,000,000 Bank of America Credit Card Trust, 2006-A15, FRN, 0.26%, 04/15/14 USA USD 3,993, ,666,000 Bank One Issuance Trust, 2004-A7, A7, FRN, 0.38%, 05/15/14 USA USD 3,663, ,500,000 Discover Card Master Trust, 2009-A2, A, FRN, 1.56%, 02/17/15 USA USD 3,553, ,500,000 Bank of America Credit Card Trust, 2006-A6, FRN, 0.29%, 11/15/13 USA USD 3,497, ,500,000 Discover Card Master Trust I, , A1, FRN, 0.29%, 03/15/14 USA USD 3,496, ,400,000 Capital One Multi-Asset Execution Trust, 2004-A7, A7, FRN, 0.436%, 06/15/14 USA USD 3,396, ,000,000 Citibank Credit Card Issuance Trust, 2005-A8, FRN, 0.331%, 10/20/14 USA USD 2,988, ,000,000 MBNA Credit Card Master Note Trust, 2006-A5, FRN, 0.32%, 10/15/15 USA USD 2,980, ,570,000 Capital One Multi-Asset Execution Trust, 2005-A1, A1, FRN, 0.33%, 12/15/10 USA USD 2,560, ,500,000 Capital One Multi-Asset Execution Trust, 2004-A8, A8, FRN, 0.39%, 08/15/14 USA USD 2,495, ,110,000 Citibank Credit Card Issuance Trust, 2002-A10, A10, FRN, 0.511%, 12/17/14 USA USD 2,108, ,000,000 Ford Credit Auto Owner Trust, 2009-D, A3, 2.17%, 10/15/13 USA USD 2,022, ,000,000 Capital One Multi-Asset Execution Trust, 2006-A4, A4, FRN, 0.30%, 12/15/13 USA USD 1,999, ,000,000 Bank of America Credit Card Trust, 2006-A12, A12, FRN, 0.28%, 03/15/14 USA USD 1,997, ,000,000 Citibank Credit Card Issuance Trust, 2005-A3, A3, FRN, 0.331%, 04/24/14 USA USD 1,994, ,800,000 Chase Issuance Trust, 2009-A2, A2, FRN, 1.81%, 04/15/14 USA USD 1,830, ,560,188 SLM Student Loan Trust, , A3, FRN, 0.318%, 10/25/19 USA USD 1,557, ,500,000 Citibank Credit Card Issuance Trust, 2009-A2, FRN, 1.81%, 05/15/14 USA USD 1,526, ,491,340 Ford Credit Auto Owner Trust, 2006-C, A4A, 5.15%, 02/15/12 USA USD 1,504, ,452,790 FNMA, , FN, FRN, 0.611%, 01/25/36 USA USD 1,449, ,424,697 Capital One Auto Finance Trust, 2006-C, A4, FRN, 0.29%, 05/15/13 USA USD 1,417, ,249,846 Ford Credit Auto Owner Trust, 2008-B, A3A, 4.28%, 05/15/12 USA USD 1,259, ,035,930 Ford Credit Auto Owner Trust, 2009-A, A3B, FRN, 2.76%, 05/15/13 USA USD 1,047, ,000,000 Citibank Credit Card Issuance Trust, 2009-A1, A1, FRN, 2.01%, 03/17/14 USA USD 1,018, ,009,577 FNMA, , FC, FRN, 0.511%, 07/25/35 USA USD 1,011, ,000,000 Capital One Multi-Asset Execution Trust, 2004-A5, A5, FRN, 0.41%, 03/17/14 USA USD 999, ,000 American Express Credit Account Master Trust, , A, FRN, 0.33%, 01/15/15 USA USD 815, ,344 Structured Asset Investment Loan Trust, 2003-BC12, 3A, FRN, 1.001%, 11/25/33 USA USD 395, ,523 Ameriquest Mortgage Securities Inc., 2005-R9, A2B, FRN, 0.491%, 11/25/35 USA USD 333, ,543 CS First Boston Mortgage Securities Corp., 2001-HE8, M1, FRN, 1.311%, 02/25/31 USA USD 324, ,074 First Franklin Mortgage Loan Asset Backed Certificates, 2001-FF2, A1, FRN, 0.881%, 11/25/31 USA USD 281, ,745 Accredited Mortgage Loan Trust, , A1, FRN, 0.501%, 09/25/35 USA USD 210, ,532 Securitized Asset-Backed Receivables LLC Trust, 2006-FR2, A2, FRN, 0.411%, 03/25/36 USA USD 200, ,407 Chase Funding Mortgage Loan Asset-Backed Certificates, , 2A2, FRN, 0.761%, 02/25/35 USA USD 177, ,196 Residential Asset Securities Corp., 2005-AHL2, A2, FRN, 0.521%, 10/25/35 USA USD 166, ,434 Amortizing Residential Collateral Trust, 2002-BC1, M1, FRN, 1.536%, 01/25/32 USA USD 99, ,308 Morgan Stanley ABS Capital I Inc. Trust, 2003-NC9, M, FRN, 1.386%, 09/25/33 USA USD 97, ,857 wide Asset-Backed Certificates, , 1AF1, FRN, 0.381%, 09/25/46 USA USD 92, ,770 First Plus Home Loan Trust, , M1, FRN, 7.42%, 12/10/24 * USA USD 61, ,756 Morgan Stanley ABS Capital I Inc. Trust, 2004-HE6, A2, FRN, 0.601%, 08/25/34 USA USD 54, ,928 First Plus Home Loan Trust, , M1, 6.95%, 01/10/24 * USA USD 29, ,188 wide Asset-Backed Certificates, , A1, FRN, 1.001%, 02/25/33 USA USD 23, ,082 Argent Securities Inc., 2004-W1, AV2, FRN, 0.581%, 03/25/34 USA USD 15, ,740 FHLMC, 2942, TF, FRN, 0.61%, 03/15/35 USA USD 8, ,672 wide Asset-Backed Certificates, 2003-BC3, A2, FRN, 0.881%, 09/25/33 USA USD 3, ,679 Asset Backed Securities Corp. Home Equity Loan Trust, 2004-HE7, A4, FRN, 0.761%, 10/25/34 USA USD 3, ,348 Asset Backed Securities Corp. Home Equity Loan Trust, 2004-HE7, A2, FRN, 0.641%, 10/25/34 USA USD 1, ,459 Structured Asset Investment Loan Trust, 2003-BC2, M3, FRN, 5.136%, 04/25/33 USA USD 1, ,733, Unaudited Semi-Annual Report

132 Franklin U.S. Ultra Short Bond Fund Government and Municipal Bonds 7,078,303 FNMA, ARM, 4.621%, 10/01/34 USA USD 7,397, ,935,463 FNMA, ARM, 3.398%, 05/01/39 USA USD 6,190, ,517,659 FHLMC, ARM, 5.14%, 01/01/37 USA USD 5,752, ,516,538 FNMA, ARM, 4.113%, 02/01/36 USA USD 5,718, ,752,482 FNMA, ARM, 5.534%, 07/01/36 USA USD 4,991, ,208,148 FHLMC, ARM, 4.494%, 02/01/35 USA USD 4,346, ,059,403 FNMA, ARM, 4.741%, 05/01/38 USA USD 4,228, ,381,514 FNMA, ARM, 4.027%, 12/01/35 USA USD 3,545, ,351,946 FNMA, ARM, 5.508%, 06/01/36 USA USD 3,531, ,336,185 FNMA, ARM, 4.151%, 07/01/34 USA USD 3,486, ,309,401 FNMA, ARM, 3.852%, 07/01/35 USA USD 3,462, ,031,839 FHLMC, ARM, 5.053%, 12/01/35 USA USD 3,186, ,759,527 FNMA, ARM, 5.519%, 04/01/36 USA USD 2,903, ,474,914 FNMA, ARM, 5.479%, 02/01/37 USA USD 2,611, ,429,352 FNMA, ARM, 2.797%, 06/01/34 USA USD 2,543, ,289,772 FNMA, ARM, 2.931%, 08/01/35 USA USD 2,396, ,276,107 FHLMC, ARM, 4.379%, 04/01/37 USA USD 2,393, ,059,738 FNMA, ARM, 5.473%, 05/01/36 USA USD 2,163, ,924,516 FHLMC, ARM, 4.217%, 09/01/33 USA USD 2,005, ,835,636 FNMA, ARM, 2.993%, 01/01/35 USA USD 1,888, ,694,117 FNMA, ARM, 5.825%, 03/01/36 USA USD 1,784, ,708,701 FNMA, ARM, 4.805%, 07/01/35 USA USD 1,769, ,690,094 FHLMC, ARM, 4.55%, 03/01/34 USA USD 1,769, ,658,220 FNMA, ARM, 4.267%, 01/01/35 USA USD 1,732, ,593,271 FNMA, ARM, 5.022%, 11/01/35 USA USD 1,647, ,512,558 FHLMC, ARM, 5.588%, 11/01/37 USA USD 1,582, ,493,694 FNMA, ARM, 5.192%, 08/01/35 USA USD 1,558, ,377,208 FNMA, ARM, 4.416%, 06/01/34 USA USD 1,437, ,347,319 FHLMC, ARM, 5.501%, 03/01/37 USA USD 1,419, ,317,886 FNMA, ARM, 5.556%, 04/01/36 USA USD 1,385, ,294,675 FHLMC, ARM, 5.818%, 03/01/34 USA USD 1,346, ,254,396 FHLMC, ARM, 2.683%, 09/01/35 USA USD 1,309, ,185,692 FHLMC, ARM, 5.723%, 05/01/36 USA USD 1,242, ,173,499 FNMA, ARM, 2.886%, 09/01/35 USA USD 1,227, ,166,943 FNMA, ARM, 4.39%, 07/01/34 USA USD 1,217, ,142,684 FNMA, ARM, 5.276%, 11/01/35 USA USD 1,187, ,115,953 FNMA, ARM, 5.821%, 03/01/36 USA USD 1,163, ,112,239 FHLMC, ARM, 4.616%, 06/01/35 USA USD 1,160, ,097,751 FHLMC, ARM, 4.815%, 09/01/35 USA USD 1,150, ,088,103 FHLMC, ARM, 3.926%, 07/01/24 USA USD 1,116, ,088,531 FNMA, ARM, 3.865%, 07/01/35 USA USD 1,111, ,059,773 FNMA, ARM, 5.665%, 06/01/36 USA USD 1,110, ,008,584 FHLMC, ARM, 3.525%, 08/01/34 USA USD 1,061, ,017,299 FNMA, ARM, 3.441%, 05/01/35 USA USD 1,049, ,160 FNMA, ARM, 5.287%, 10/01/36 USA USD 1,031, ,334 FHLMC, ARM, 5.097%, 02/01/36 USA USD 997, ,435 FNMA, ARM, 2.618%, 02/01/33 USA USD 972, ,507 FNMA, ARM, 5.29%, 04/01/35 USA USD 915, ,543 FNMA, ARM, 5.119%, 01/01/36 USA USD 888, ,556 FNMA, ARM, 5.35%, 03/01/36 USA USD 864, ,212 FNMA, ARM, 2.547%, 03/01/33 USA USD 858, ,287 FNMA, ARM, 4.87%, 12/01/35 USA USD 814, ,591 FNMA, ARM, 4.616%, 10/01/33 USA USD 790, ,871 FNMA, ARM, 5.688%, 05/01/37 USA USD 777, ,885 FHLMC, ARM, 5.798%, 07/01/36 USA USD 765, ,115 FHLMC, ARM, 5.155%, 11/01/35 USA USD 760, ,496 FHLMC, ARM, 3.926%, 04/01/25 USA USD 740, ,001 FNMA, ARM, 3.564%, 01/01/27 USA USD 715, ,552 FHLMC, ARM, 2.598%, 03/01/33 USA USD 647, ,558 FNMA, ARM, 4.738%, 12/01/34 USA USD 618, ,552 FNMA, ARM, 2.589%, 02/01/33 USA USD 579, ,242 FHLMC, ARM, 5.671%, 07/01/36 USA USD 514, ,368 FNMA, ARM, 4.521%, 11/01/35 USA USD 461, ,951 FNMA, ARM, 2.95%, 06/01/33 USA USD 426, ,424 FHLMC, ARM, 5.397%, 03/01/36 USA USD 425, ,107 FNMA, ARM, 4.764%, 02/01/35 USA USD 413, ,553 FNMA, ARM, 6.146%, 04/01/36 USA USD 406, ,301 FHLMC, ARM, 6.573%, 08/01/36 USA USD 404, ,195 FNMA, ARM, 3.196%, 11/01/32 USA USD 392, ,929 FNMA, ARM, 4.449%, 02/01/34 USA USD 384, ,281 FHLMC, ARM, 5.433%, 05/01/36 USA USD 381, ,994 FNMA, ARM, 5.473%, 01/01/35 USA USD 368, ,957 FHLMC, ARM, 2.598%, 02/01/33 USA USD 356, ,676 FHLMC, ARM, 3.168%, 12/01/23 USA USD 337, ,795 FNMA, ARM, 4.475%, 08/01/35 USA USD 336, ,735 FNMA, ARM, 2.79%, 01/01/33 USA USD 329, ,971 FHLMC, ARM, 4.631%, 12/01/35 USA USD 319, Unaudited Semi-Annual Report 131

133 Franklin U.S. Ultra Short Bond Fund Government and Municipal Bonds (continued) 280,569 FHLMC, ARM, 5.337%, 03/01/36 USA USD 293, ,679 FHLMC, ARM, 2.391%, 11/01/21 USA USD 292, ,493 FHLMC, ARM, 2.473%, 09/01/33 USA USD 286, ,148 FHLMC, ARM, 5.31%, 06/01/25 USA USD 259, ,434 FHLMC, ARM, 2.599%, 02/01/34 USA USD 259, ,792 FHLMC, ARM, 5.258%, 04/01/32 USA USD 254, ,995 FHLMC, ARM, 3.657%, 10/01/23 USA USD 253, ,546 FNMA, ARM, 3.021%, 07/01/20 USA USD 219, ,746 FNMA, ARM, 5.387%, 02/01/36 USA USD 207, ,860 FHLMC, ARM, 4.829%, 03/01/24 USA USD 206, ,695 FHLMC, ARM, 4.653%, 11/01/20 USA USD 203, ,144 FNMA, ARM, 3.165%, 03/01/18 USA USD 201, ,698 FNMA, ARM, 3.846%, 03/01/19 USA USD 199, ,416 FNMA, ARM, 3.477%, 12/01/28 USA USD 193, ,807 FHLMC, ARM, 6.149%, 06/01/23 USA USD 193, ,246 FHLMC, ARM, 4.624%, 12/01/30 USA USD 185, ,401 FNMA, ARM, 3.899%, 03/01/39 USA USD 176, ,275 FHLMC, ARM, 2.714%, 07/01/34 USA USD 168, ,121 FNMA, ARM, 7.677%, 01/01/17 USA USD 165, ,162 FHLMC, ARM, 5.374%, 07/01/21 USA USD 163, ,417 FNMA, ARM, 2.888%, 03/01/36 USA USD 161, ,080 FHLMC, ARM, 2.598%, 12/01/32 USA USD 161, ,160 GNMA, ARM, 4.625%, 12/20/23 USA USD 156, ,934 FNMA, ARM, 2.925%, 06/01/37 USA USD 152, ,553 FHLMC, ARM, 4.555%, 01/01/32 USA USD 147, ,208 FNMA, ARM, 4.865%, 11/01/36 USA USD 146, ,343 GNMA, ARM, 4.00%, 08/20/29 USA USD 145, ,103 GNMA, ARM, 4.625%, 11/20/24 USA USD 143, ,787 FNMA, ARM, 3.196%, 10/01/32 USA USD 140, ,064 FNMA, ARM, 3.128%, 04/01/32 USA USD 139, ,378 FNMA, ARM, 3.606%, 03/01/31 USA USD 139, ,078 FNMA, ARM, 3.568%, 02/01/25 USA USD 124, ,897 GNMA, ARM, 5.50%, 11/20/29 USA USD 119, ,079 GNMA, Cap 6.375%, Margin 1.50% + CMT, Resets Annually, ARM, 10.50%, 04/20/28 USA USD 110, ,811 GNMA, Cap 4.00%, Margin 1.50% + CMT, Resets Annually, ARM, 10.00%, 07/20/32 USA USD 110, ,868 FHLMC, ARM, 6.797%, 12/01/30 USA USD 95, ,441 FHLMC, ARM, 5.449%, 11/01/31 USA USD 93, ,824 FNMA, Cap 5.82%, Margin 2.02% + CMT, Resets Annually, ARM, 10.82%, 02/01/31 USA USD 84, ,279 GNMA, ARM, 4.50%, 02/20/21 USA USD 76, ,749 FNMA, ARM, 5.469%, 09/01/32 USA USD 75, ,340 FHLMC, ARM, 6.138%, 12/01/31 USA USD 72, ,757 FHLMC, ARM, 5.70%, 06/01/31 USA USD 70, ,602 FHLMC, ARM, 3.30%, 04/01/24 USA USD 68, ,487 GNMA, ARM, 4.625%, 12/20/24 USA USD 64, ,310 FNMA, ARM, 5.664%, 07/01/31 USA USD 61, ,340 FNMA, ARM, 5.234%, 09/01/35 USA USD 56, ,165 FNMA, ARM, 5.076%, 12/01/31 USA USD 56, ,688 FNMA, ARM, 4.125%, 10/01/28 USA USD 53, ,473 FNMA, ARM, 4.79%, 10/01/27 USA USD 49, ,427 FNMA, ARM, 5.35%, 06/01/32 USA USD 44, ,887 FHLMC, ARM, 5.089%, 02/01/21 USA USD 41, ,841 FHLMC, ARM, 5.935%, 07/01/31 USA USD 37, ,446 FNMA, ARM, 5.991%, 09/01/31 USA USD 31, ,878 FNMA, ARM, 5.156%, 08/01/32 USA USD 29, ,014 FNMA, ARM, 3.314%, 04/01/33 USA USD 28, ,160 FNMA, ARM, 4.304%, 08/01/33 USA USD 19, ,709 FHLMC, ARM, 5.927%, 07/01/31 USA USD 7, ,983, Securities Maturing Within One Year 4,015,000 American Express Credit Account Master Trust, 15, , A, 0.30%, 02/17/11 USA USD 4,006, ,000,000 FNMA, 1.75%, 03/23/11 USA USD 2,006, ,013, TOTAL BONDS 219,729, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 219,729, Unaudited Semi-Annual Report

134 Franklin U.S. Ultra Short Bond Fund TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Asset-Backed Securities 345,794 Wachovia Bank Commercial Mortgage Trust, 2007-WHL8, A1, 144A, FRN, 0.34%, 06/15/20 USA USD 323, ,899 Structured Asset Securities Corp., 2005-SC1, 1A1, 144A, FRN, 0.531%, 05/25/31 USA USD 267, , TOTAL BONDS 591, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 591, TOTAL INVESTMENTS 220,320, Floating Rates are indicated as at December 31, 2010 * These Corporate Bonds are currently in default Unaudited Semi-Annual Report 133

135 Franklin World Perspectives Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 39,530 Rolls-Royce Group PLC GBR GBP 385, ,000 United Technologies Corp. USA USD 157, ,100 Precision Castparts Corp. USA USD 153, , Air Freight & Logistics 2,400 FedEx Corp. USA USD 223, ,200 Expeditors International of Washington Inc. USA USD 174, , Airlines 3,300 Gol Linhas Aereas Inteligentes SA, pfd. BRA BRL 49, Auto Components 9,000 Johnson Controls Inc. USA USD 343, ,000 Denso Corp. JPN JPY 138, Bosch Ltd. IND INR 120, ,712 Sungwoo Hitech Co. Ltd. KOR KRW 33, , Automobiles 885 Hyundai Motor Co. Ltd. KOR KRW 136, ,500 Yamaha Motor Co. Ltd. JPN JPY 73, ,700 Nissan Motor Co. Ltd. JPN JPY 54, ,000 Isuzu Motors Ltd. JPN JPY 36, Kia Motors Corp. KOR KRW 33, ,000 Dongfeng Motor Corp., H CHN HKD 13, , Beverages 8,114 Anheuser-Busch InBev NV BEL EUR 464, ,660 Diageo PLC GBR GBP 308, ,800 PepsiCo Inc. USA USD 182, ,304 Anheuser-Busch Inbev NV, VVPR Strip BEL EUR , Biotechnology 3,500 Celgene Corp. USA USD 206, ,290 Genus PLC GBR GBP 204, ,000 Human Genome Sciences USA USD 119, ,200 Gilead Sciences Inc. USA USD 115, ,506 CSL Ltd. AUS AUD 55, , Capital s 5,000 Lazard Ltd. USA USD 197, ,000 BlackRock Inc. USA USD 190, ,800 T. Rowe Price Group Inc. USA USD 180, ,759 Macquarie Group Ltd. AUS AUD 104, ,425 IGM Financial Inc. CAN CAD 62, ,600 Nomura Holdings Inc. JPN JPY 60, , Chemicals 4,400 Praxair Inc. USA USD 420, ,000 Celanese Corp., A USA USD 329, ,700 Ecolab Inc. USA USD 287, ,761 Grasim Industries Ltd. IND INR 92, ,000 Tokyo Ohka Kogyo Co. Ltd. JPN JPY 64, ,000 Nippon Paint Co. Ltd. JPN JPY 53, ,000 Yingde Gases Group Co. Ltd. CHN HKD 49, Agrium Inc. CAN CAD 48, Credit Suisse International (CRTP Saudi Arabia Fertilizer Co.) SAU USD 39, LG Chem Ltd. KOR KRW 36, OCI Company Ltd. KOR KRW 35, ,690 HSBC Bank PLC (CRTP Yanbu National Petrochemicals Co.) SAU USD 34, ,211 HSBC Bank PLC (CRTP Saudi Basic Industries Corp.) SAU USD 33, Honam Petrochemical Corp. KOR KRW 22, ,545, Unaudited Semi-Annual Report

136 Franklin World Perspectives Fund Commercial Banks 5,900 Sumitomo Mitsui Financial Group Inc. JPN JPY 210, ,995 Industrial and Commercial Bank of China Ltd., H CHN HKD 189, ,800 Banco Do Brasil SA BRA BRL 185, ,800 Bangkok Bank Public Co. Ltd., fgn. THA THB 156, ,270 China Construction Bank Corp., H CHN HKD 155, ,130 Hana Financial Group Inc. KOR KRW 120, ,310 Union Bank of India IND INR 111, ,825 Bank of Nova Scotia CAN CAD 104, ,825 Royal Bank of Canada CAN CAD 95, ,647 Yes Bank Ltd. IND INR 95, ,801 IndusInd Bank Ltd. IND INR 93, ,000 Wells Fargo & Co. USA USD 92, ,175 Canadian Imperial Bank of Commerce CAN CAD 92, ,100 The Toronto-Dominion Bank CAN CAD 81, ,432 Chinatrust Financial Holding Co. Ltd. TWN TWD 61, Bank of Montreal CAN CAD 41, ,151 National Bank of Kuwait KWD KWD 41, ,882 Commercial International Bank Ltd. EGY EGP 39, ,230 Industrial Bank of Korea KOR KRW 37, ,595 HSBC Bank PLC (CRTP Al Rajhi Bank) SAU USD 35, ,397 Commercial Bank of Qatar QAT QAR 35, ,530 Woori Finance Holdings Co. Ltd. KOR KRW 34, ,068 HSBC Bank PLC (CRTP Samba Financial Group) SAU USD 33, Qatar National Bank QAT QAR 26, ,474 Bank Muscat SAOG OMN OMR 26, ,198, Commercial Services & Supplies 35,270 De La Rue PLC GBR GBP 452, ,270 Homeserve PLC GBR GBP 362, ,700 Stericycle Inc. USA USD 299, ,300 Depa Ltd. ARE USD 36, ,150, Communications Equipment 4,300 QUALCOMM Inc. USA USD 212, ,000 Cisco Systems Inc. USA USD 202, ,000 Juniper Networks Inc. USA USD 184, , Computers & Peripherals 2,400 Apple Inc. USA USD 774, ,000 EMC Corp. USA USD 412, ,000 NetApp Inc. USA USD 329, ,516, Construction & Engineering 1,200 SNC-Lavalin Group Inc., A CAN CAD 71, GS Engineering & Construction Corp. KOR KRW 36, ,500 Mabanee Co SAKC KWD KWD 29, , Containers & Packaging 9,589 Amcor Ltd. AUS AUD 66, ,100 FP Corp. JPN JPY 60, , Diversified Consumer Services 34,542 Dignity PLC GBR GBP 386, Diversified Financial Services 14,300 Hong Kong Exchanges & Clearing Ltd. HKG HKD 324, ,000 Singapore Exchange Ltd. SGP SGD 210, ,300 JPMorgan Chase & Co. USA USD 97, ,000 BM&F BOVESPA SA BRA BRL 79, ,225 TMX Group Inc. CAN CAD 45, , Diversified Telecommunication Services 37,000 Singapore Telecommunications Ltd. SGP SGD 87, Electric Utilities 4,100 Energias do Brasil SA BRA BRL 95, Unaudited Semi-Annual Report 135

137 Franklin World Perspectives Fund Electrical Equipment 20,015 Prysmian SpA ITA EUR 341, ,850 Nexans SA FRA EUR 303, ,600 Emerson Electric Co. USA USD 205, ,000 Rockwell Automation Inc. USA USD 143, ,600 ABB Ltd. CHE CHF 80, Nidec Corp. JPN JPY 70, ,144, Electronic Equipment, Instruments & Components 5,500 Trimble Navigation Ltd. USA USD 219, ,400 FLIR Systems Inc. USA USD 160, ,980 National Instruments Corp. USA USD 149, ,800 FUJIFILM Holdings Corp. JPN JPY 101, Kyocera Corp. JPN JPY 81, ,720 Hollysys Automation Technologies Ltd. USA USD 71, ,600 Cando Corp. TWN TWD 10, , Energy Equipment & Services 5,730 Fugro NV NLD EUR 471, ,400 Cameron International Corp. USA USD 273, ,600 Schlumberger Ltd. USA USD 133, ,298 Saipem SpA ITA EUR 113, ,200 FMC Technologies Inc. USA USD 106, ,325 Mullen Group Ltd. CAN CAD 56, ,500 Savanna Energy Services Corp. CAN CAD 46, ,201, Food & Staples Retailing 66,770 Tesco PLC GBR GBP 443, ,600 Dairy Farm International Holdings Ltd. HKG USD 117, ,200 Raia SA BRA BRL 110, ,700 AEON Co. Ltd. JPN JPY 71, ,275 Alimentation Couche-Tard Inc., B CAN CAD 61, ,033 Woolworths Ltd. AUS AUD 56, , Food Products 4,890 Aryzta AG CHE CHF 225, ,800 Mead Johnson Nutrition Co., A USA USD 174, ,000 China Yurun Food Group Ltd. CHN HKD 122, ,900 Marfrig Alimentos SA BRA BRL 83, HSBC Bank PLC (CRTP Almarai Co. Ltd.) SAU USD 14, , Gas Utilities 13,431 GAIL India Ltd. IND INR 153, Health Care Equipment & Supplies 2,309 Cochlear Ltd. AUS AUD 189, ,800 Edwards Lifesciences Corp. USA USD 145, ,240 Mindray Medical International Ltd., ADR CHN USD 32, , Health Care Providers & Services 4,670 Express Scripts Inc. USA USD 252, ,100 DaVita Inc. USA USD 76, , Hotels, Restaurants & Leisure 8,880 Paddy Power PLC IRL EUR 364, ,000 Marriott International Inc., A USA USD 290, Oriental Land Co. Ltd. JPN JPY 74, ,203 Modetour Network Inc. KOR KRW 38, , Household Durables 3,400 Sony Corp. JPN JPY 122, ,100 Rinnai Corp. JPN JPY 67, LG Electronics Inc. KOR KRW 46, Woongjin Coway Co. Ltd. KOR KRW 17, , Unaudited Semi-Annual Report

138 Franklin World Perspectives Fund Household Products 7,200 Reckitt Benckiser Group PLC GBR GBP 396, ,100 The Procter & Gamble Co. USA USD 135, ,000 NVC Lighting Holdings Ltd. CHN HKD 46, , Industrial Conglomerates 12,500 General Electric Co. USA USD 228, ,220 DCC PLC IRL EUR 227, LG Corp. KOR KRW 27, , Insurance 39,600 Lancashire Holdings Ltd. GBR GBP 341, ,300 Aflac Inc. USA USD 242, ,100 Power Financial Corp. CAN CAD 95, ,800 MS&AD Insurance Group Holdings Inc. JPN JPY 95, ,163 Hiscox Ltd. GBR GBP 78, ,350 Manulife Financial Corp. CAN CAD 57, ,875 Sun Life Financial Inc. CAN CAD 56, ,210 Hyundai Marine & Fire Insurance Co. Ltd. KOR KRW 28, , Inter & Catalog Retail 420 Priceline.com Inc. USA USD 167, Amazon.com Inc. USA USD 162, Rakuten Inc. JPN JPY 82, , Inter Software & Services 450 Google Inc., A USA USD 267, IT Services 1,100 MasterCard Inc., A USA USD 246, ,500 International Business Machines Corp. USA USD 220, ,400 Visa Inc., A USA USD 168, ,899 Infosys Technologies Ltd. IND INR 146, , Life Sciences Tools & Services 3,000 Waters Corp. USA USD 233, ,450 QIAGEN NV NLD EUR 204, , Machinery 16,380 Rotork PLC GBR GBP 467, ,000 Cummins Inc. USA USD 330, ,000 Danaher Corp. USA USD 188, ,200 Flowserve Corp. USA USD 143, ,800 Komatsu Ltd. JPN JPY 84, Fanuc Ltd. JPN JPY 76, ,000 PT United Tractors IDN IDR 73, ,000 Amada Co. Ltd. JPN JPY 73, ,754 TSM Tech Co. Ltd. KOR KRW 27, ,465, Marine 14,000 Mitsui O.S.K. Lines Ltd. JPN JPY 95, Kuehne & Nagel International AG CHE CHF 82, , Media 29,190 Reed Elsevier NV NLD EUR 361, ,500 Discovery Communications Inc., C USA USD 275, ,200 The Walt Disney Co. USA USD 157, ,200 Thomson Reuters Corp. CAN CAD 119, ,591 IBN18 Broadcast Ltd. IND INR 98, ,450 Bona Film Group Ltd., ADR CHN USD 73, ,625 Jagran Prakashan Ltd. IND INR 63, ,093 Television Eighteen India Ltd. IND INR 51, CJ CGV Co. Ltd. KOR KRW 23, ,223, Unaudited Semi-Annual Report 137

139 Franklin World Perspectives Fund Metals & Mining 6,940 BHP Billiton Ltd. AUS AUD 320, ,000 Companhia Siderurgica Nacional SA BRA BRL 112, ,123 Gujarat Mineral Development Corp. Ltd. IND INR 109, ,225 Inmet Mining Corp. CAN CAD 94, ,900 Vale SA BRA BRL 63, , Multiline Retail 165,000 Parkson Retail Group Ltd. CHN HKD 253, ,000 Dollar General Corp. USA USD 153, ,500 Target Corp. USA USD 150, ,990 Kohl s Corp. USA USD 108, Canadian Tire Corp. Ltd., A CAN CAD 47, , Office Electronics 5,300 Neopost SA FRA EUR 462, Oil, Gas & Consumable Fuels 3,600 Concho Resources Inc. USA USD 315, ,000 China Shenhua Energy Co. Ltd., H CHN HKD 255, ,000 CNOOC Ltd. CHN HKD 236, ,300 Petroleo Brasileiro SA, pfd. BRA BRL 235, ,500 Alpha Natural Resources Inc. USA USD 210, ,500 Adaro Energy PT IDN IDR 132, ,000 Petrohawk Energy Corp. USA USD 127, ,800 Petroleo Brasileiro SA BRA BRL 125, ,790 Paladin Energy Ltd. AUS AUD 119, ,600 SM Energy Co. USA USD 94, ,950 Canadian Natural Resources Ltd. CAN CAD 86, ,117 Suncor Energy Inc. CAN CAD 81, ,150 Bonavista Energy Trust CAN CAD 62, ,900 Nuvista Energy Ltd. CAN CAD 54, ,000 China Petroleum and Chemical Corp., H CHN HKD 53, ,000 Celtic Exploration Ltd. CAN CAD 53, ,300 Cenovus Energy Inc. CAN CAD 43, ,656 Qatar Gas Transport Co. Ltd. QAT QAR 42, SK Energy Co. Ltd. KOR KRW 39, ,200 JX Holdings Inc. JPN JPY 28, ,397, Pharmaceuticals 2,600 Novo-Nordisk A/S, ADR DNK USD 292, ,500 Merck & Co. Inc. USA USD 198, ,000 Salix Pharmaceuticals Ltd. USA USD 140, ,300 Johnson & Johnson USA USD 80, ,900 Shionogi & Co. Ltd. JPN JPY 57, , Real Estate Management & Development 81,490 Savills PLC GBR GBP 489, ,963 Aliansce Shopping Centers SA BRA BRL 140, ,625 Brookfield Asset Management Inc., A CAN CAD 120, ,000 China Overseas Land & Investment Ltd. HKG HKD 114, ,000 China Resources Land Ltd. CHN HKD 94, ,000 Mitsubishi Estate Co. Ltd. JPN JPY 74, ,277 HSBC Bank PLC (CRTP Dar Al Arkan Real Estate Development Co.) SAU USD 34, ,068, Road & Rail 2,600 Kansas City Southern USA USD 124, ,300 Canadian National Railway Co. CAN CAD 86, ,000 Hitachi Transport Systems Ltd. JPN JPY 62, , Semiconductors & Semiconductor Equipment 7,500 Microchip Technology Inc. USA USD 256, ,300 Xilinx Inc. USA USD 211, Samsung Electronics Co. Ltd. KOR KRW 207, ,095 Taiwan Semiconductor Manufacturing Co. Ltd., ADR TWN USD 189, ,300 First Solar Inc. USA USD 169, ,044 MediaTek Inc. TWN TWD 158, ,000 Broadcom Corp. USA USD 130, ,500 Intel Corp. USA USD 115, ,500 Cree Inc. USA USD 98, ,520 Hynix Semiconductor Inc. KOR KRW 32, ,569, Unaudited Semi-Annual Report

140 Franklin World Perspectives Fund Software 79,250 The Sage Group PLC GBR GBP 338, ,500 Red Hat Inc. USA USD 296, ,300 Citrix Systems Inc. USA USD 294, ,500 Oracle Corp. USA USD 266, ,000 Nuance Communications Inc. USA USD 181, ,000 Informatica Corp. USA USD 132, ,400 FactSet Research Systems Inc. USA USD 131, ,375 MacDonald Dettwiler and Associates Ltd. CAN CAD 69, ,890 Longtop Financial Technologies Ltd., ADR CHN USD 68, NCsoft Corp. KOR KRW 28, ,807, Specialty Retail 38,350 Carpetright PLC GBR GBP 476, ,810 Jumbo SA GRC EUR 348, ,200 Urban Outfitters Inc. USA USD 114, ,533 Esprit Holdings Ltd. HKG HKD 92, ,196 Halfords Group PLC GBR GBP 72, ,000 ACE Hardware Indonesia IDN IDR 43, ,148, Textiles, Apparel & Luxury Goods 4,000 NIKE Inc., B USA USD 341, ,000 Polo Ralph Lauren Corp. USA USD 332, ,325 Gildan Activewear Inc. CAN CAD 37, , Thrifts & Mortgage Finance 1,125 Home Capital Group Inc. CAN CAD 58, Companies & Distributors 6,200 Mitsubishi Corp. JPN JPY 167, ,249 Daewoo International Corp. KOR KRW 40, Samsung C&T Corp. KOR KRW 40, , Transportation Infrastructure 8,970 Koninklijke Vopak NV NLD EUR 424, ,100 Flughafen Wien AG AUT EUR 418, , Wireless Telecommunication Services 6,000 American Tower Corp., A USA USD 309, ,845 Bharti Airtel Ltd. IND INR 295, ,000 NII Holdings Inc. USA USD 178, NTT DoCoMo Inc. JPN JPY 96, ,125 Rogers Communications Inc., B CAN CAD 73, ,691 Idea Cellular Ltd. IND INR 67, ,800 Softbank Corp. JPN JPY 62, ,500 Mobile Telecommunications Co. KWD KWD 40, ,337 HSBC Bank PLC (CRTP Etihad Etisalat Co.) SAU USD 34, ,000 National Mobile Telecommunications Co. KWD KWD 33, ,192, TOTAL SHARES 40,469, INVESTMENTS FUNDS Diversified Financial Services 5,800 ishares MSCI South Africa Index Fund ZAF USD 433, ,515 db x-trackers MSCI Russia Capped Index RUS USD 420, ,202 SPDR S&P ASX 200 Fund AUS AUD 373, ,242 ishares MSCI Mexico Investable Index Fund MEX USD 262, ,220 ishares MSCI Turkey TUR USD 92, ,582, TOTAL INVESTMENTS FUNDS 1,582, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 42,051, Unaudited Semi-Annual Report 139

141 Franklin World Perspectives Fund TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Food & Staples Retailing 22 Companhia Brasileira De Distribuicao, Pfd., B BRA BRL TOTAL SHARES TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Aerospace & Defense 2,529,920 Rolls-Royce Group PLC, C ** GBR GBP 3, TOTAL SHARES 3, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 3, TOTAL INVESTMENTS 42,056, ** These securities are submitted to a Fair Valuation 140 Unaudited Semi-Annual Report

142 Franklin Mutual Beacon Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 125,910 GenCorp Inc. USA USD 650, Air Freight & Logistics 69,490 TNT NV NLD EUR 1,835, Automobiles 153,453 Daimler AG DEU EUR 10,452, Beverages 169,971 Pernod Ricard SA FRA EUR 15,998, ,129 Dr. Pepper Snapple Group Inc. USA USD 10,200, ,950 PepsiCo Inc. USA USD 9,926, ,630 Coca-Cola Enterprises Inc. GBR USD 4,796, ,187 Brown-Forman Corp., B USA USD 4,399, ,736 Carlsberg AS, B DNK DKK 2,779, ,101, Biotechnology 180,040 Genzyme Corp. USA USD 12,818, ,170 Amgen Inc. USA USD 7,914, ,733, Capital s 524,580 Morgan Stanley USA USD 14,273, ,403 UBS AG CHE CHF 8,437, ,711, Chemicals 101,652 Linde AG DEU EUR 15,441, Commercial Banks 646,270 Wells Fargo & Co. USA USD 20,027, ,020 PNC Financial Services Group Inc. USA USD 16,517, ,742,944 Barclays PLC GBR GBP 11,241, ,544,819 Intesa Sanpaolo SpA ITA EUR 4,195, ,534 Guaranty Bancorp USA USD 601, ,583, Communications Equipment 1,142,313 Motorola Inc. USA USD 10,360, (126,300) Motorola Mobility Holdings Inc. USA USD (3,675,330) (0.28) 6,685, Computers & Peripherals 363,760 Hewlett-Packard Co. USA USD 15,314, Diversified Financial Services 903,930 Bank of America Corp. USA USD 12,058, ,123 Deutsche Boerse AG DEU EUR 7,908, ,966, Diversified Telecommunication Services 691,434 Telefonica SA ESP EUR 15,692, ,409 AboveNet Inc. USA USD 3,882, ,649,927 Cable & Wireless Worldwide PLC GBR GBP 3,738, ,649,927 Cable & Wireless Communication PLC GBR GBP 2,770, ,083, Electric Utilities 465,596 E.ON AG DEU EUR 14,241, ,380 Exelon Corp. USA USD 12,008, ,960 Entergy Corp. USA USD 5,451, ,700, Electrical Equipment 146,950 Alstom SA FRA EUR 7,039, Electronic Equipment, Instruments & Component 331,765 Tyco Electronics Ltd. USA USD 11,744, Unaudited Semi-Annual Report 141

143 Franklin Mutual Beacon Fund Energy Equipment & Services 229,980 Transocean Ltd. USA USD 15,985, ,225 Baker Hughes Inc. USA USD 8,188, ,490 Pride International Inc. USA USD 7,672, ,630 Exterran Holding Inc. USA USD 2,457, ,304, Food & Staples Retailing 1,036,255 CVS Caremark Corp. USA USD 36,030, ,322 Kroger Co. USA USD 15,502, ,038 Wal-Mart Stores Inc. USA USD 7,875, ,477 Carrefour SA FRA EUR 5,426, ,835, Food Products 845,125 Kraft Foods Inc., A USA USD 26,629, ,427 Nestle SA CHE CHF 19,369, ,410 General Mills Inc. USA USD 10,727, ,790 Farmer Brothers Co. USA USD 1,046, ,772, Health Care Equipment & Supplies 338,750 Medtronic Inc. USA USD 12,564, ,051 Alcon Inc. CHE USD 9,485, ,235,220 Boston Scientific Corp. USA USD 9,350, ,062 Zimmer Holdings Inc. USA USD 4,083, ,483, Health Care Providers & Services 650,750 UnitedHealth Group Inc. USA USD 23,498, ,422,856 Te Healthcare Corp. USA USD 16,208, ,642 Community Health Systems Inc. USA USD 16,018, ,700 Coventry Health Care Inc. USA USD 388, ,113, Hotels, Restaurants & Leisure 376,368 Thomas Cook Group PLC GBR GBP 1,110, Household Durables 74,740 Stanley Black & Decker Inc. USA USD 4,997, Independent Power Producers & Energy Traders 451,058 NRG Energy Inc. USA USD 8,813, Industrial Conglomerates 1,431,226 Orkla ASA NOR NOK 13,937, Insurance 65,330 White Mountains Insurance Group Ltd. USA USD 21,924, ,183,200 Symetra Financial Corp. USA USD 16,209, ,328 ACE Ltd. USA USD 12,657, ,038 Old Republic International Corp. USA USD 9,418, ,305 Zurich Financial Services AG CHE CHF 7,080, ,358 Alleghany Corp. USA USD 5,317, ,479 Berkshire Hathaway Inc., B USA USD 2,201, ,810, Leisure Equipment & Products 409,628 Mattel Inc. USA USD 10,416, Marine 1,919 A.P. Moller Maersk AS, B DNK DKK 17,395, Media 453,740 Time Warner Inc. USA USD 14,596, ,070 News Corp., A USA USD 13,294, ,807 British Sky Broadcasting Group PLC GBR GBP 10,419, ,574 Time Warner Cable Inc. USA USD 10,206, ,440 Virgin Media Inc. GBR USD 6,195, ,800 Comcast Corp., A, Special USA USD 4,428, ,141, Metals & Mining 7,004 Thyssenkruup AG DEU EUR 291, Multi-Utilities 273,810 GDF Suez FRA EUR 9,834, Unaudited Semi-Annual Report

144 Franklin Mutual Beacon Fund Office Electronics 1,819,145 Xerox Corp. USA USD 20,956, Oil, Gas & Consumable Fuels 569,570 Marathon Oil Corp. USA USD 21,091, ,549 Royal Dutch Shell PLC, A GBR EUR 18,246, ,500 BP PLC GBR GBP 6,809, ,280 Total SA, B FRA EUR 6,008, ,800 Noble Energy Inc. USA USD 4,803, ,959, Paper & Forest Products 645,020 International Paper Co. USA USD 17,570, ,901 MeadWestvaco Corp. USA USD 13,443, ,291 Domtar Corp. USA USD 6,019, ,033, Pharmaceuticals 1,178,915 Pfizer Inc. USA USD 20,642, ,970 Eli Lilly & Co. USA USD 19,586, ,229, Real Estate Investment Trusts (REITs) 945,679 Weyerhaeuser Co. USA USD 17,901, ,861 The Link REIT HKG HKD 2,438, ,340, Real Estate Management & Development 211,591 Forestar Group Inc. USA USD 4,083, ,300 The St. Joe Co. USA USD 3,087, ,171, Semiconductors & Semiconductor Equipment 2,250,952 LSI Corp. USA USD 13,483, ,731 Maxim Integrated Products Inc. USA USD 11,024, ,507, Software 967,059 Microsoft Corp. USA USD 27,000, ,450 McAfee Inc. USA USD 7,986, ,840 Symantec Corp. USA USD 6,258, ,683 Nintendo Co. Ltd. JPN JPY 5,778, ,022, Tobacco 672,845 British American Tobacco PLC GBR GBP 25,870, ,568 Altria Group Inc. USA USD 21,851, ,630 Imperial Tobacco Group PLC GBR GBP 14,486, ,830 Reynolds American Inc. USA USD 10,074, ,824 Philip Morris International Inc. USA USD 8,535, ,506 Lorillard Inc. USA USD 7,755, ,044 Japan Tobacco Inc. JPN JPY 7,566, ,140, Wireless Telecommunication Services 7,938,826 Vodafone Group PLC GBR GBP 20,547, TOTAL SHARES 1,111,212, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 1,111,212, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Commercial Services & Supplies 118 Comdisco Holding Co. Inc. USA USD 1, Diversified Financial Services 83,700 Bond Street Holdings LLC, A, 144A, USA USD 1,699, TOTAL SHARES 1,700, Unaudited Semi-Annual Report 143

145 Franklin Mutual Beacon Fund BONDS Corporate Bonds 5,649,044 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/16 USA USD 5,684, ,945,454 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 3,965, ,876,106 Adelphia Recovery Trust, Escrow Account, ACC-1, 0.00% USA USD 138, ,106,158 Adelphia Recovery Trust, Escrow Account, Arahova, 0.00% USA USD 110, ,898, Securities Maturing Within One Year 24,500,000 FHLB, 0.00%, 01/03/11 USA USD 24,500, ,000,000 US Treasury Bill, 0.00%, 01/20/11 USA USD 9,999, ,000,000 US Treasury Bill, 0.00%, 02/24/11 USA USD 9,998, ,000,000 US Treasury Bill, 0.00%, 03/24/11 USA USD 9,997, ,000,000 US Treasury Bill, 0.00%, 06/16/11 USA USD 9,992, ,000,000 US Treasury Bill, 0.00%, 06/23/11 USA USD 9,991, ,000,000 FHLB, 0.00%, 01/04/11 USA USD 4,999, ,000,000 US Treasury Bill, 0.00%, 01/27/11 USA USD 4,999, ,000,000 US Treasury Bill, 0.00%, 02/17/11 USA USD 4,999, ,000,000 US Treasury Bill, 0.00%, 04/14/11 USA USD 4,998, ,000,000 US Treasury Bill, 0.00%, 04/21/11 USA USD 4,998, ,000,000 US Treasury Bill, 0.00%, 04/28/11 USA USD 4,997, ,000,000 US Treasury Bill, 0.00%, 05/12/11 USA USD 4,997, ,000,000 US Treasury Bill, 0.00%, 05/19/11 USA USD 4,997, ,000,000 US Treasury Bill, 0.00%, 01/06/11 USA USD 2,999, ,000,000 US Treasury Bill, 0.00%, 05/26/11 USA USD 2,998, ,000,000 FHLB, 0.00%, 01/05/11 USA USD 1,999, ,467, TOTAL BONDS 132,366, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 134,066, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Auto Components 4,639,041 International Automotive Components Group North America, LLC ** USA USD 5,643, ,254,867 International Automotive Components Group LLC ** LUX USD 3,191, ,806 International Automotive Components Group Brazil LLC ** BRA USD 1,614, ,007 IACNA Investor LLC ** USA USD 1, ,450, Computers & Peripherals 21,176 DecisionOne Corp., Escrow Account ** USA USD Consumer Finance 8,430,771 Cerberus CG Investor I LLC ** USA USD 6,828, ,430,645 Cerberus CG Investor II LLC ** USA USD 6,828, GMAC Inc. ** USA USD 5,240, ,215,890 Cerberus CG Investor III LLC ** USA USD 3,414, ,757,459 CB FIM Coinvestors LLC ** USA USD ,202,506 FIM Coinvestor Holdings I LLC ** USA USD ,313, Electric Utilities 1,191,432 Prime Infrastructure Group ** AUS AUD 6,019, ,191,432 Prime AET&D Holdings No. 1 Pty. Ltd. ** AUS AUD ,019, Hotels, Restaurants & Leisure 5,584,925 GLCP Harrah s Investment LP ** USA USD 2,378, Insurance 2,600 Olympus Re Holdings Ltd. ** USA USD IT Services 838 Glodyne Technoserve Ltd. ** IND INR 12, Real Estate Management & Development 1,181,766 Canary Wharf Group PLC ** GBR GBP 5,123, TOTAL SHARES 46,297, Unaudited Semi-Annual Report

146 Franklin Mutual Beacon Fund BONDS Corporate Bonds 7,909,781 First Data Corp., Term Loan B-1, FRN, 3.011%, 09/24/14 USA USD 7,309, ,578,400 Cerberus CG Investor I LLC, 12.00%, 07/31/14 ** USA USD 5,328, ,578,400 Cerberus CG Investor II LLC, 12.00%, 07/31/14 ** USA USD 5,328, ,289,200 Cerberus CG Investor III LLC, 12.00%, 07/31/14 ** USA USD 2,664, ,396,600 International Automotive Components Group NA LLC, 11.00%, 11/12/14 ** USA USD 1,396, ,988,000 Tropicana Entertainment LLC/Tropicana Finance Corp., senior sub. note, 9.625%, 12/15/14 * USA USD 9, ,000 Comdisco Holding Co. Inc., Escrow Account, 6.375%, 11/30/01 ** USA USD ,000 Comdisco Holding Co. Inc., Escrow Account, 6.13%, 08/01/01 ** USA USD ,000 Comdisco Holding Co. Inc., Escrow Account, 6.65%, 11/13/01 ** USA USD ,000 Comdisco Holding Co. Inc., Escrow Account, 7.23%, 08/16/01 ** USA USD ,000 Comdisco Holding Co. Inc., Escrow Account, 6.125%, 01/15/03 ** USA USD ,000 Comdisco Holding Co. Inc., Escrow Account, 6.00%, 01/30/02 ** USA USD ,000 Comdisco Holding Co. Inc., Escrow Account, 5.95%, 04/30/02 ** USA USD ,000 Comdisco Holding Co. Inc., Escrow Account, 9.50%, 08/15/03 ** USA USD ,365,399 Global Crossing Holdings Ltd., Escrow Account, zero cpn., 02/20/49 ** USA USD ,000 Global Crossing Holdings Ltd., Escrow Account, 9.50%, 11/15/09 ** USA USD ,000 Global Crossing Holdings Ltd., Escrow Account, 9.625%, 05/15/08 ** USA USD ,000 Global Crossing Holdings Ltd., Escrow Account, 9.125%, 11/16/06 ** USA USD ,000 Global Crossing Holdings Ltd., Escrow Account, 6.00%, 02/20/49 ** USA USD ,000 Global Crossing Holdings Ltd., Escrow Account, 7.25%, 02/20/49 ** USA USD ,000 Marconi Corp., Escrow Account, 2.364%, 05/21/09 ** GBR USD ,015,000 Marconi Corp., Escrow Account, 8.375%, 09/15/30 ** GBR USD ,000 Marconi Corp., Escrow Account, 5.625%, 03/30/05 ** GBR USD ,000 Marconi Corp., Escrow Account, 6.375%, 03/20/10 ** GBR USD ,000 Dow Corning Corp., Escrow Account, 9.375%, 02/01/08 ** USA USD ,302,000 Century Communications Corp., Escrow Account, 0.00%, 02/20/49 ** USA USD ,000 Century Communications Corp., Escrow Account, 9.50%, 03/01/05 ** USA USD ,000 Century Communications Corp., Escrow Account, 8.875%, 02/20/49 ** USA USD ,000 Century Communications Corp., Escrow Account, 8.75%, 10/01/07 ** USA USD ,000 Century Communications Corp., Escrow Account, 8.375%, 12/15/07 ** USA USD ,000 Century Communications Corp., Escrow Account, 0.00%, 01/15/08 ** USA USD ,000 Dana Holding Corp., Escrow Account, 7.00%, 03/15/28 ** USA USD ,148,000 Dana Holding Corp., Escrow Account, 6.50%, 03/01/09 ** USA USD ,000 Dana Holding Corp., Escrow Account, 7.00%, 03/01/29 ** USA USD ,893,000 Dana Holding Corp., Escrow Account, 5.85%, 01/15/15 ** USA USD ,496,000 Calpine Corp., Escrow Account, 8.50%, 07/15/10 ** USA USD ,000 Calpine Corp., Escrow Account, 8.75%, 07/15/13 ** USA USD ,036, Securities Maturing Within One Year 526,000 Calpine Corp., Escrow Account, 9.875%, 12/01/11 ** USA USD TOTAL BONDS 22,036, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 68,334, TOTAL INVESTMENTS 1,313,613, * These Corporate Bonds are currently in default Floating Rates are indicated as at December 31, 2010 ** These securities are submitted to a Fair Valuation Unaudited Semi-Annual Report 145

147 Franklin Mutual Euroland Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Air Freight & Logistics 9,196 TNT NV NLD EUR 181, Automobiles 4,808 Daimler AG DEU EUR 244, ,041 Porsche Automobile Holding SE, pfd. DEU EUR 240, Volkswagen AG, pfd. DEU EUR 75, , Beverages 4,330 Pernod Ricard SA FRA EUR 304, Biotechnology 4,600 Crucell NV NLD EUR 108, Capital s 23,232 UBS AG CHE CHF 285, Chemicals 2,095 Linde AG DEU EUR 237, Commercial Banks 5,741 BNP Paribas SA FRA EUR 273, ,153 Intesa Sanpaolo SpA ITA EUR 162, ,253 Societe Generale, A FRA EUR 90, ,745 Intesa Sanpaolo SpA, di Risp ITA EUR 65, KBC Groep NV BEL EUR 10, , Commercial Services & Supplies 13,978 Edenred FRA EUR 247, Construction & Engineering 7,619 Vinci SA FRA EUR 309, ,660 KHD Humboldt Wedag International AG DEU EUR 101, , Construction Materials 5,505 SA des Ciments Vicat FRA EUR 344, ,888 CRH PLC IRL EUR 137, , Diversified Financial Services 5,676 Deutsche Boerse AG DEU EUR 294, Diversified Telecommunication Services 16,308 Telefonica SA ESP EUR 276, ,033 Cable & Wireless Worldwide PLC GBR GBP 81, ,033 Cable & Wireless Communication PLC GBR GBP 60, , Electric Utilities 10,050 E.ON AG DEU EUR 229, Electrical Equipment 7,499 Alstom SA FRA EUR 268, Food & Staples Retailing 30,332 Koninklijke Ahold NV NLD EUR 299, ,430 Carrefour SA FRA EUR 198, , Health Care Providers & Services 18,057 Rhoen-Klinikum AG DEU EUR 297, Hotels, Restaurants & Leisure 7,684 Accor SA FRA EUR 255, Insurance 14,148 AXA SA FRA EUR 176, ,976 Ageas BEL EUR 111, Zurich Financial Services AG CHE CHF 96, , Machinery 8,151 Demag Cranes AG DEU EUR 295, Marine 39 A.P. Moller Maersk AS, B DNK DKK 264, Unaudited Semi-Annual Report

148 Franklin Mutual Euroland Fund (Currency EUR) Media 12,238 Vivendi SA FRA EUR 247, ,732 Stroer Out-of-Home Media AG DEU EUR 177, ,076 Eutelsat Communications FRA EUR 166, , Metals & Mining 3,138 Thyssenkruup AG DEU EUR 97, Multi-Utilities 10,867 GDF Suez FRA EUR 291, ,407 Iren SpA ITA EUR 261, ,751 Hera SpA ITA EUR 27, , Oil, Gas & Consumable Fuels 10,796 Royal Dutch Shell PLC, A GBR EUR 266, Tobacco 4,220 Imperial Tobacco Group PLC GBR GBP 97, ,320 British American Tobacco PLC GBR GBP 95, , Wireless Telecommunication Services 94,990 Vodafone Group PLC GBR GBP 183, TOTAL SHARES 8,540, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 8,540, TOTAL INVESTMENTS 8,540, Unaudited Semi-Annual Report 147

149 Franklin Mutual European Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Air Freight & Logistics 1,289,978 TNT NV NLD EUR 25,477, Automobiles 1,513,469 Daimler AG DEU EUR 77,065, ,058,627 Porsche Automobile Holding SE, pfd. DEU EUR 63,072, ,476 Audi AG DEU EUR 27,868, ,620 Volkswagen AG, pfd. DEU EUR 21,270, ,277, Beverages 620,929 Pernod Ricard SA FRA EUR 43,688, ,692 Carlsberg AS, B DNK DKK 27,698, ,387, Biotechnology 578,800 Crucell NV NLD EUR 13,659, Capital s 4,597,423 UBS AG CHE CHF 56,480, Chemicals 549,836 Linde AG DEU EUR 62,433, Commercial Banks 25,612,021 Intesa Sanpaolo SpA ITA EUR 51,992, ,492 BNP Paribas SA FRA EUR 44,729, ,609,012 Barclays PLC GBR GBP 32,503, ,462,290 Danske Bank AS DNK DKK 28,052, ,788 Societe Generale, A FRA EUR 25,571, ,471 KBC Groep NV BEL EUR 12,379, ,436 Intesa Sanpaolo SpA, di Risp ITA EUR 945, ,173, Commercial Services & Supplies 1,679,390 Edenred FRA EUR 29,750, Construction & Engineering 719,371 Vinci SA FRA EUR 29,264, Construction Materials 709,629 SA des Ciments Vicat FRA EUR 44,351, ,437,556 CRH PLC IRL EUR 37,782, ,133, Containers & Packaging 11,850,867 Rexam PLC GBR GBP 46,107, Diversified Financial Services 986,933 Deutsche Boerse AG DEU EUR 51,123, ,049,064 Investor AB, B SWE SEK 32,833, ,439,495 Guinness Peat Group PLC GBR NZD 11,081, ,000 Oslo Bors VPS Holding ASA NOR NOK 5,589, ,627, Diversified Telecommunication Services 3,338,886 Telefonica SA ESP EUR 56,644, ,441,537 Koninklijke KPN NV NLD EUR 26,661, ,917,672 Cable & Wireless Worldwide PLC GBR GBP 25,203, ,053,364 TDC AS DNK DKK 19,845, ,917,672 Cable & Wireless Communication PLC GBR GBP 18,676, ,031, Electric Utilities 1,814,621 E.ON AG DEU EUR 41,491, Electrical Equipment 1,601,889 Alstom SA FRA EUR 57,363, Food & Staples Retailing 6,407,770 Koninklijke Ahold NV NLD EUR 63,283, ,154,820 Carrefour SA FRA EUR 35,626, ,909, Food Products 1,989,462 Nestle SA CHE CHF 87,176, ,693,885 Kraft Foods Inc., A USA USD 39,898, ,074, Unaudited Semi-Annual Report

150 Franklin Mutual European Fund (Currency EUR) Health Care Providers & Services 2,723,850 Rhoen-Klinikum AG DEU EUR 44,861, Hotels, Restaurants & Leisure 2,022,326 Accor SA FRA EUR 67,343, ,094,050 Thomas Cook Group PLC GBR GBP 11,240, ,583, Household Durables 3,576,760 Berkeley Group Holdings PLC GBR GBP 37,146, Industrial Conglomerates 171,903 Siemens AG DEU EUR 16,016, Insurance 420,819 Zurich Financial Services AG CHE CHF 81,573, ,482,418 AXA SA FRA EUR 43,356, ,745,530 Ageas BEL EUR 26,924, ,680 ACE Ltd. USA USD 18,458, ,613,918 Lancashire Holdings Ltd. GBR GBP 16,827, ,518 Storebrand ASA NOR NOK 58, ,199, Machinery 792,377 Schindler Holding AG, participation certificate CHE CHF 70,139, ,102 Schindler Holding AG CHE CHF 22,309, ,449, Marine 13,912 A.P. Moller Maersk AS, B DNK DKK 94,268, Media 2,554,074 Vivendi SA FRA EUR 51,592, ,880,775 Eutelsat Communications FRA EUR 51,514, ,553,860 Stroer Out-of-Home Media AG DEU EUR 40,990, ,596,545 British Sky Broadcasting Group PLC GBR GBP 39,481, ,579, Metals & Mining 939,416 Thyssenkruup AG DEU EUR 29,206, Multi-Utilities 2,513,682 GDF Suez FRA EUR 67,492, ,248,027 Hera SpA ITA EUR 6,580, ,072, Oil, Gas & Consumable Fuels 2,909,590 Royal Dutch Shell PLC, A GBR EUR 71,954, ,558,154 Total SA, B FRA EUR 61,780, ,269,894 Eni SpA ITA EUR 37,090, ,268,660 BP PLC GBR GBP 23,201, ,026, Pharmaceuticals 598,241 Novartis AG CHE CHF 26,310, Tobacco 2,753,522 British American Tobacco PLC GBR GBP 79,142, ,686,087 Imperial Tobacco Group PLC GBR GBP 38,797, ,939, Wireless Telecommunication Services 42,121,428 Vodafone Group PLC GBR GBP 81,496, TOTAL SHARES 2,631,799, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 2,631,799, Unaudited Semi-Annual Report 149

151 Franklin Mutual European Fund (Currency EUR) TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Securities Maturing Within One Year 20,000,000 German Treasury Bill, 0.00%, 01/26/11 DEU EUR 19,996, ,000,000 German Treasury Bill, 0.00%, 02/23/11 DEU EUR 19,991, ,000,000 German Treasury Bill, 0.00%, 03/30/11 DEU EUR 19,985, ,000,000 German Treasury Bill, 0.00%, 04/20/11 DEU EUR 19,977, ,000,000 German Treasury Bill, 0.00%, 05/18/11 DEU EUR 19,969, ,000,000 German Treasury Bill, 0.00%, 07/27/11 DEU EUR 19,946, ,000,000 German Treasury Bill, 0.00%, 08/24/11 DEU EUR 19,939, ,000,000 German Treasury Bill, 0.00%, 06/29/11 DEU EUR 9,978, ,785, TOTAL BONDS 149,785, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 149,785, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Oil, Gas & Consumable Fuels 18,431,027 Euro Wagon LP ** JER EUR 14,035, Real Estate Management & Development 2,100 Canary Wharf Group PLC ** GBR GBP 6, TOTAL SHARES 14,041, BONDS Corporate Bonds 32,492,000 Trico Shipping AS, senior secured note, 144A, %, 11/01/14 * NOR USD 20,372, ,571,000 Marconi Corp., Term Escrow, Escrow Account, zero cpn., 02/20/49 ** GBR USD ,000 Marconi Corp., Escrow Account, 2.364%, 05/21/09 ** GBR USD ,000 Marconi Corp., Escrow Account, 8.375%, 09/15/30 ** GBR USD ,000 Marconi Corp., Escrow Account, 5.625%, 03/30/05 ** GBR USD ,000 Marconi Corp., Escrow Account, 6.375%, 03/20/10 ** GBR USD ,900 Marconi Corp., Term Escrow, Escrow Account, zero cpn., 02/20/49 ** GBR GBP ,372, TOTAL BONDS 20,372, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 34,413, TOTAL INVESTMENTS 2,815,998, * These Corporate Bonds are currently in default ** These securities are submitted to a Fair Valuation 150 Unaudited Semi-Annual Report

152 Franklin Mutual Global Discovery Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Automobiles 231,888 Daimler AG DEU EUR 15,795, ,951 Porsche Automobile Holding SE, pfd. DEU EUR 10,118, ,085 Volkswagen AG, pfd. DEU EUR 7,509, ,423, Beverages 218,941 Pernod Ricard SA FRA EUR 20,607, ,306 Carlsberg AS, B DNK DKK 9,953, ,920 Coca-Cola Enterprises Inc. GBR USD 8,908, ,065 Dr. Pepper Snapple Group Inc. USA USD 5,452, ,921, Biotechnology 147,720 Genzyme Corp. USA USD 10,517, ,770 Amgen Inc. USA USD 7,014, ,532, Capital s 949,866 UBS AG CHE CHF 15,610, ,310 Morgan Stanley USA USD 11,028, ,639, Chemicals 87,090 Linde AG DEU EUR 13,229, ,477 Airgas Inc. USA USD 5,026, ,255, Commercial Banks 523,580 Wells Fargo & Co. USA USD 16,225, ,866 BNP Paribas SA FRA EUR 11,328, ,751,641 Barclays PLC GBR GBP 11,277, ,065,012 Intesa Sanpaolo SpA ITA EUR 11,039, ,260 PNC Financial Services Group Inc. USA USD 10,034, ,905, Commercial Services & Supplies 209,772 Edenred FRA EUR 4,971, Computers & Peripherals 214,040 Hewlett-Packard Co. USA USD 9,011, Construction & Engineering 109,434 Vinci SA FRA EUR 5,955, Construction Materials 6,644 Hanil Cement Co. Ltd. KOR KRW 355, Containers & Packaging 1,050,304 Rexam PLC GBR GBP 5,466, Diversified Financial Services 915,880 Bank of America Corp. USA USD 12,217, ,495 Deutsche Boerse AG DEU EUR 12,161, ,378, Diversified Telecommunication Services 643,843 Telefonica SA ESP EUR 14,611, ,570 Koninklijke KPN NV NLD EUR 7,370, ,576,600 Cable & Wireless Worldwide PLC GBR GBP 2,639, ,576,600 Cable & Wireless Communication PLC GBR GBP 1,955, ,577, Electric Utilities 412,740 E.ON AG DEU EUR 12,624, ,770 Exelon Corp. USA USD 12,440, ,065, Unaudited Semi-Annual Report 151

153 Franklin Mutual Global Discovery Fund Electrical Equipment 245,200 Alstom SA FRA EUR 11,746, Energy Equipment & Services 161,294 Transocean Ltd. USA USD 11,211, ,100 Pride International Inc. USA USD 10,497, ,508 Seadrill Ltd. BMU NOK 6,350, ,207 Petroleum Geo-Services ASA NOR NOK 783, ,842, Food & Staples Retailing 548,100 CVS Caremark Corp. USA USD 19,057, ,903 Koninklijke Ahold NV NLD EUR 9,273, ,322 Carrefour SA FRA EUR 8,679, ,010, Food Products 575,172 Kraft Foods Inc., A USA USD 18,123, ,463 Nestle SA CHE CHF 16,088, Lotte Confectionery Co. Ltd. KOR KRW 1,108, ,523 Nong Shim Co. Ltd. KOR KRW 820, ,141, Health Care Equipment & Supplies 223,200 Medtronic Inc. USA USD 8,278, ,500 Beckman Coulter Inc. USA USD 8,237, ,356 Alcon Inc. CHE USD 6,757, ,920 Boston Scientific Corp. USA USD 6,539, ,120 Zimmer Holdings Inc. USA USD 3,280, ,094, Health Care Providers & Services 293,990 UnitedHealth Group Inc. USA USD 10,615, ,138 Rhoen-Klinikum AG DEU EUR 5,511, ,127, Hotels, Restaurants & Leisure 5,124,260 Ladbrokes PLC GBR GBP 9,849, ,400 Accor SA FRA EUR 9,506, ,355, Household Durables 38,607 Stanley Black & Decker Inc. USA USD 2,581, Independent Power Producers & Energy Traders 463,530 NRG Energy Inc. USA USD 9,057, Industrial Conglomerates 535,240 Jardine Strategic Holdings Ltd. HKG USD 14,815, ,253,097 Orkla ASA NOR NOK 12,202, ,389 Jardine Matheson Holdings Ltd. HKG USD 9,477, ,495, Insurance 228,060 ACE Ltd. USA USD 14,196, ,010 Zurich Financial Services AG CHE CHF 10,893, ,183,440 RSA Insurance Group PLC GBR GBP 8,178, ,230 PartnerRe Ltd. BMU USD 7,973, White Mountains Insurance Group Ltd. USA USD 70, ,312, Machinery 143,316 Schindler Holding AG, participation certificate CHE CHF 16,970, ,569 Schindler Holding AG CHE CHF 547, ,518, Marine 1,848 A.P. Moller Maersk AS, B DNK DKK 16,751, Unaudited Semi-Annual Report

154 Franklin Mutual Global Discovery Fund Media 313,006 Stroer Out-of-Home Media AG DEU EUR 11,045, ,340 Time Warner Inc. USA USD 10,176, ,299 Eutelsat Communications FRA EUR 10,087, ,360 British Sky Broadcasting Group PLC GBR GBP 7,944, ,910 Time Warner Cable Inc. USA USD 4,880, ,200 Comcast Corp., A, Special USA USD 3,562, ,970 Daekyo Co. Ltd. KOR KRW 625, ,322, Metals & Mining 34,334 Thyssenkruup AG DEU EUR 1,427, Multi-Utilities 444,959 GDF Suez FRA EUR 15,982, ,019,355 Hera SpA ITA EUR 2,112, ,094, Office Electronics 1,137,124 Xerox Corp. USA USD 13,099, Oil, Gas & Consumable Fuels 529,627 Royal Dutch Shell PLC, A GBR EUR 17,521, ,609 Total SA, B FRA EUR 9,685, ,305 BP PLC GBR GBP 5,942, ,150, Pharmaceuticals 933,635 Pfizer Inc. USA USD 16,347, ,220 Eli Lilly & Co. USA USD 12,341, ,689, Real Estate Investment Trusts (REITs) 4,927,335 The Link REIT HKG HKD 15,309, ,838 Weyerhaeuser Co. USA USD 375, ,685, Real Estate Management & Development 711,743 Swire Pacific Ltd., B HKG HKD 2,129, ,680 Great Eagle Holdings Ltd. HKG HKD 777, ,208,696 Dolphin Capital Investors Ltd. VGB GBP 763, ,670, Software 747,920 Microsoft Corp. USA USD 20,881, ,116 Nintendo Co. Ltd. JPN JPY 10,015, ,790 Symantec Corp. USA USD 5,085, ,520 McAfee Inc. USA USD 4,886, ,869, Tobacco 661,446 British American Tobacco PLC GBR GBP 25,432, ,752 Imperial Tobacco Group PLC GBR GBP 19,569, ,860 Lorillard Inc. USA USD 18,944, ,302 Reynolds American Inc. USA USD 12,927, ,153 Altria Group Inc. USA USD 10,418, ,423 Philip Morris International Inc. USA USD 8,862, ,518 ITC Ltd. IND INR 1,239, ,393, Wireless Telecommunication Services 7,747,380 Vodafone Group PLC GBR GBP 20,052, TOTAL SHARES 928,950, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 928,950, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Automobiles 1,900 Daimler AG DEU USD 128, TOTAL SHARES 128, Unaudited Semi-Annual Report 153

155 Franklin Mutual Global Discovery Fund BONDS Corporate Bonds 5,248,727 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/16 USA USD 5,281, ,437,364 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 4,459, ,741, Securities Maturing Within One Year 14,000,000 FHLB, 0.00%, 01/03/11 USA USD 14,000, ,000,000 US Treasury Bill, 0.00%, 04/21/11 USA USD 9,996, ,000,000 US Treasury Bill, 0.00%, 04/28/11 USA USD 9,995, ,000,000 German Treasury Bill, 0.00%, 06/29/11 DEU EUR 6,674, ,000,000 US Treasury Bill, 0.00%, 01/06/11 USA USD 4,999, ,000,000 US Treasury Bill, 0.00%, 01/20/11 USA USD 4,999, ,000,000 US Treasury Bill, 0.00%, 01/27/11 USA USD 4,999, ,000,000 US Treasury Bill, 0.00%, 02/24/11 USA USD 4,999, ,000,000 US Treasury Bill, 0.00%, 03/24/11 USA USD 4,998, ,000,000 US Treasury Bill, 0.00%, 05/05/11 USA USD 4,997, ,000,000 US Treasury Bill, 0.00%, 05/12/11 USA USD 4,997, ,000,000 US Treasury Bill, 0.00%, 05/19/11 USA USD 4,997, ,000,000 US Treasury Bill, 0.00%, 06/23/11 USA USD 4,995, ,000,000 US Treasury Bill, 0.00%, 05/26/11 USA USD 2,998, ,651, TOTAL BONDS 98,392, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 98,520, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Auto Components 153,810 International Automotive Components Group North America, LLC ** USA USD 187, ,371 IACNA Investor LLC ** USA USD , Commercial Banks 100,000 The Bankshares Inc. ** USA USD 363, Consumer Finance 201,978 Cerberus CG Investor I LLC ** USA USD 163, ,975 Cerberus CG Investor II LLC ** USA USD 163, ,001 Cerberus CG Investor III LLC ** USA USD 81, ,544 FIM Coinvestor Holdings I LLC ** USA USD , Diversified Financial Services 7,190,000 Hightower Holding LLC, pfd., A ** USA USD 5,982, ,080 Hightower Holding LLC, pfd., A, 2 ** USA USD 828, ,810, Electric Utilities 922,546 Prime Infrastructure Group ** AUS AUD 4,660, ,546 Prime AET&D Holdings No. 1 Pty. Ltd. ** AUS AUD ,660, TOTAL SHARES 12,430, Unaudited Semi-Annual Report

156 Franklin Mutual Global Discovery Fund BONDS Corporate Bonds 998,041 First Data Corp., Term Loan B-1, FRN, 3.011%, 09/24/14 USA USD 922, ,000 Seadrill Ltd., cvt., senior note, 3.625%, 11/08/12 BMU USD 871, ,250 Eurocastle Investment Ltd., cvt., sub. note, Reg S, 20.00%, Perpetual ** GNS EUR 584, ,600 Cerberus CG Investor I LLC, 12.00%, 07/31/14 ** USA USD 127, ,600 Cerberus CG Investor II LLC, 12.00%, 07/31/14 ** USA USD 127, ,800 Cerberus CG Investor III LLC, 12.00%, 07/31/14 ** USA USD 63, ,300 International Automotive Components Group NA LLC, 11.00%, 11/12/14 ** USA USD 46, ,000 Dana Holding Corp., Escrow Account, 7.00%, 03/15/28 ** USA USD ,000 Dana Holding Corp., Escrow Account, 6.50%, 03/01/09 ** USA USD ,000 Dana Holding Corp., Escrow Account, 7.00%, 03/01/29 ** USA USD ,000 Dana Holding Corp., Escrow Account, 5.85%, 01/15/15 ** USA USD ,000 Calpine Corp., Escrow Account, 8.50%, 07/15/10 ** USA USD ,000 Calpine Corp., Escrow Account, 8.75%, 07/15/13 ** USA USD ,743, Securities Maturing Within One Year 68,000 Calpine Corp., Escrow Account, 9.875%, 12/01/11 ** USA USD TOTAL BONDS 2,743, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 15,174, TOTAL INVESTMENTS 1,042,645, Floating Rates are indicated as at December 31, 2010 ** These securities are submitted to a Fair Valuation Unaudited Semi-Annual Report 155

157 Franklin Templeton Global Equity Strategies Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Automobiles & Components 4,974 Daimler AG DEU EUR 338, ,674 Hyundai Motor Co. Ltd. KOR KRW 259, ,540 Bayerische Motoren Werke AG DEU EUR 199, ,090 Porsche Automobile Holding SE, pfd. DEU EUR 166, ,003 Volkswagen AG, pfd. DEU EUR 163, ,100 Toyota Motor Corp. JPN JPY 162, ,886 Compagnie Generale des Etablissements Michelin, B FRA EUR 135, ,125 Cheng Shin Rubber Industry Co. Ltd. TWN TWD 113, ,539, Banks 41,080 Itau Unibanco Holding SA, ADR BRA USD 986, ,335 Industrial and Commercial Bank of China Ltd., H CHN HKD 591, ,492 Shinhan Financial Group Co. Ltd. KOR KRW 542, ,999 Akbank TAS TUR TRY 467, ,226 Nedbank Group Ltd. ZAF ZAR 437, ,265 Intesa Sanpaolo SpA ITA EUR 380, ,510 Wells Fargo & Co. USA USD 325, ,500 Kasikornbank Public Co. Ltd., fgn. THA THB 310, ,896 HSBC Holdings PLC GBR HKD 286, ,586 PNC Financial Services Group Inc. USA USD 278, ,805 BNP Paribas SA FRA EUR 242, ,492 Barclays PLC GBR GBP 235, ,849 KB Financial Group Inc. KOR KRW 205, ,500 DBS Group Holdings Ltd. SGP SGD 173, ,561 Chinatrust Financial Holding Co. Ltd. TWN TWD 153, ,750 ICICI Bank Ltd., ADR IND USD 139, ,742 UniCredit SpA ITA EUR 136, ,590 OTP Bank Ltd. HUN HUF 134, ,027, Capital Goods 4,368 GS Engineering & Construction Corp. KOR KRW 451, ,373 Schindler Holding AG, participation certificate CHE CHF 399, ,000 Lonking Holdings Ltd. CHN HKD 328, ,028 Daelim Industrial Co. KOR KRW 317, ,420 Siemens AG DEU EUR 301, ,210 Hyundai Development Co. KOR KRW 279, ,240 Tyco International Ltd. USA USD 258, ,350 Alstom SA FRA EUR 256, ,810 General Electric Co. USA USD 252, ,197 KOC Holding AS TUR TRY 249, ,457 Orkla ASA NOR NOK 247, ,600 Sime Darby Bhd. MYS MYR 244, ,529 Wolseley PLC GBR GBP 208, ,100 Barloworld Ltd. ZAF ZAR 183, ,540 Koninklijke Philips Electronics NV NLD EUR 139, ,600 Jardine Strategic Holdings Ltd. HKG USD 127, ,000 Hutchison Whampoa Ltd. HKG HKD 113, ,850 KHD Humboldt Wedag International AG DEU EUR 110, ,312 BAE Systems PLC GBR GBP 89, ,080 Embraer SA, ADR BRA USD 61, ,200 Jardine Matheson Holdings Ltd. HKG USD 52, ,672, Commercial & Professional Services 452,000 Fook Woo Group Holdings Ltd. CHN HKD 179, ,960 Randstad Holding NV NLD EUR 156, ,840 Adecco SA CHE CHF 120, ,321 Edenred FRA EUR 102, ,262 Brambles Ltd. AUS AUD 52, ,473 Rentokil Initial PLC GBR GBP 24, , Consumer Durables & Apparel 26,674 Gafisa SA BRA BRL 193, ,000 China Dongxiang Group Co. CHN HKD 165, ,038 Stanley Black & Decker Inc. USA USD 69, ,600 Persimmon PLC GBR GBP 55, , Unaudited Semi-Annual Report

158 Franklin Templeton Global Equity Strategies Fund Consumer Services 5,970 Accor SA FRA EUR 265, ,780 Ladbrokes PLC GBR GBP 209, ,160 Compass Group PLC GBR GBP 83, ,638 NagaCorp Ltd. KH HKD 70, , Diversified Financials 23,024 UBS AG CHE CHF 378, ,860 Bank of America Corp. USA USD 318, ,100 Remgro Ltd. ZAF ZAR 240, ,220 Morgan Stanley USA USD 223, ,832 ING Groep NV NLD EUR 202, ,720 Haci Omer Sabanci Holding AS TUR TRY 185, ,660 Deutsche Boerse AG DEU EUR 184, ,980 American Express Co. USA USD 170, ,170 JPMorgan Chase & Co. USA USD 134, ,380 The Bank of New York Mellon Corp. USA USD 132, ,171, Energy 29,970 Petroleo Brasileiro SA, ADR, pfd. BRA USD 1,024, ,000 Yanzhou Coal Mining Co. Ltd., H CHN HKD 585, ,550 LUKOIL Holdings, ADR RUS USD 483, ,644 Total SA, B FRA EUR 458, ,386 SK Energy Co. Ltd. KOR KRW 412, ,367 BP PLC GBR GBP 409, ,801 Royal Dutch Shell PLC, A GBR EUR 357, ,802 Transocean Ltd. USA USD 333, ,872 Royal Dutch Shell PLC, B GBR GBP 293, ,820 Halliburton Co. USA USD 278, ,030 Baker Hughes Inc. USA USD 173, ,860 Chevron Corp. USA USD 169, ,452 Eni SpA ITA EUR 162, ,000 CNOOC Ltd. CHN HKD 159, ,211 Pride International Inc. USA USD 138, ,747 Seadrill Ltd. BMU NOK 126, ,990 Statoil ASA NOR NOK 118, ,840 BG Group PLC GBR GBP 97, ,987 Petroleum Geo-Services ASA NOR NOK 93, ,012 SBM Offshore NV NLD EUR 89, ,483 Repsol YPF SA ESP EUR 69, ,913 Noble Corp. USA USD 68, ,274 Tenaris SA, ADR ARG USD 62, ,990 Chesapeake Energy Corp. USA USD 51, ,221, Food & Staples Retailing 16,283 CVS Caremark Corp. USA USD 566, ,413 Tesco PLC GBR GBP 195, ,024 President Chain Store Corp. TWN TWD 193, ,680 Koninklijke Ahold NV NLD EUR 180, ,142 Carrefour SA FRA EUR 170, ,306, Food, Beverage & Tobacco 12,815 Nestle SA CHE CHF 751, ,297 British American Tobacco PLC GBR GBP 549, ,150 Imperial Tobacco Group PLC GBR GBP 435, ,238 Pernod Ricard SA FRA EUR 398, ,566 Kraft Foods Inc., A USA USD 395, ,414 Lorillard Inc. USA USD 362, ,165 Companhia de Bebidas das Americas (AmBev), IDR BRA BRL 291, ,072 Reynolds American Inc. USA USD 263, ,238 Carlsberg AS, B DNK DKK 224, ,570 Altria Group Inc. USA USD 210, ,000 Shenguan Holdings Group Ltd. CHN HKD 193, ,180 Coca-Cola Enterprises Inc. GBR USD 179, ,869 China Foods Ltd. CHN HKD 177, ,970 Philip Morris International Inc. USA USD 173, ,626 Dr. Pepper Snapple Group Inc. USA USD 162, Japan Tobacco Inc. JPN JPY 122, ,337 Brown-Forman Corp., B USA USD 93, ,000 Uni-President China Holdings Ltd. TWN HKD 81, ,000 China Yurun Food Group Ltd. CHN HKD 72, ,142 ITC Ltd. IND INR 16, ,157, Unaudited Semi-Annual Report 157

159 Franklin Templeton Global Equity Strategies Fund Health Care Equipment & Services 9,540 Medtronic Inc. USA USD 353, ,370 Boston Scientific Corp. USA USD 275, ,560 Covidien PLC USA USD 253, ,950 UnitedHealth Group Inc. USA USD 214, ,600 Quest Diagnostics Inc. USA USD 194, ,200 Beckman Coulter Inc. USA USD 165, Alcon Inc. CHE USD 147, ,368 Zimmer Holdings Inc. USA USD 73, ,412 Rhoen-Klinikum AG DEU EUR 31, ,709, Household & Personal Products 8,000 Natura Cosmeticos SA BRA BRL 229, ,790 Oriflame Cosmetics SA, SDR SWE SEK 199, ,600 Kimberly Clark de Mexico SAB de CV, A MEX MXN 119, , Insurance 6,667 ACE Ltd. USA USD 415, ,000 China Life Insurance Co. Ltd., H CHN HKD 395, Zurich Financial Services AG CHE CHF 234, ,250 Aviva PLC GBR GBP 229, ,220 RSA Insurance Group PLC GBR GBP 197, ,410 Progressive Corp. USA USD 167, ,020 PartnerRe Ltd. BMU USD 162, Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 145, ,030 Swiss Reinsurance Co. CHE CHF 109, ,553 AXA SA FRA EUR 109, ,690 RenaissanceRe Holdings Ltd. USA USD 107, ,600 AIA Group Ltd. HKG HKD 69, Berkshire Hathaway Inc., B USA USD 28, ,370, Materials 49,250 Vale SA, ADR, pfd., A BRA USD 1,488, ,116 Anglo American PLC GBR ZAR 835, ,100 Metalurgica Gerdau SA, pfd. BRA BRL 647, ,180 POSCO KOR KRW 512, ,000 Hidili Industry International Development Ltd. CHN HKD 479, ,130 Sesa Goa Ltd. IND INR 471, ,894 CRH PLC IRL EUR 412, ,260 Linde AG DEU EUR 343, ,800 Hindalco Industries Ltd. IND INR 323, ,000 Anhui Conch Cement Co. Ltd., H CHN HKD 318, ,000 Angang Steel Co. Ltd., H CHN HKD 220, ,000 Tata Steel Ltd. IND INR 212, ,000 Tata Chemicals Ltd. IND INR 193, ,351 Rexam PLC GBR GBP 152, ,892 Grasim Industries Ltd. IND INR 151, ,972 JK Cements Ltd. IND INR 121, ,800 Ternium SA, ADR ARG USD 118, ,330 Alcoa Inc. USA USD 97, ,980 Svenska Cellulosa AB, B SWE SEK 94, ,510 Airgas Inc. USA USD 94, ,179 Samsung Fine Chemicals Co. Ltd. KOR KRW 87, ,000 China Molybdenum Co. Ltd., H CHN HKD 55, Thyssenkruup AG DEU EUR 30, ,216 Freeworld Coatings Ltd. ZAF ZAR 5, ,468, Media 24,505 Comcast Corp., A, Special USA USD 509, ,230 News Corp., A USA USD 338, ,672 Time Warner Cable Inc. USA USD 308, ,290 Vivendi SA FRA EUR 278, ,897 Eutelsat Communications FRA EUR 252, ,730 Time Warner Inc. USA USD 248, ,130 British Sky Broadcasting Group PLC GBR GBP 242, ,476 Stroer Out-of-Home Media AG DEU EUR 193, ,000 The Walt Disney Co. USA USD 187, ,007 Pearson PLC GBR GBP 157, ,470 Viacom Inc., B USA USD 97, ,620 Reed Elsevier NV NLD EUR 94, ,909, Unaudited Semi-Annual Report

160 Franklin Templeton Global Equity Strategies Fund Pharmaceuticals, Biotechnology & Life Sciences 11,000 Amgen Inc. USA USD 603, ,190 Pfizer Inc. USA USD 598, ,950 Sanofi-Aventis FRA EUR 380, ,173 GlaxoSmithKline PLC GBR GBP 351, ,530 Merck & Co. Inc. USA USD 271, ,270 Novartis AG CHE CHF 251, ,090 Eli Lilly & Co. USA USD 248, ,170 Genzyme Corp. USA USD 225, ,510 Roche Holding AG CHE CHF 221, ,970 Biogen Idec Inc. USA USD 132, ,410 Merck KGaA DEU EUR 113, ,410 Lonza Group AG CHE CHF 113, ,070 Bristol-Myers Squibb Co. USA USD 81, ,590 Abbott Laboratories USA USD 76, ,669, Real Estate 127,673 The Link REIT HKG HKD 396, ,000 Renhe Commercial Holdings Co. Ltd. CHN HKD 147, ,500 Swire Pacific Ltd., A HKG HKD 139, ,000 Beijing Capital Land Ltd., H CHN HKD 130, ,000 Cheung Kong (Holdings) Ltd. HKG HKD 123, ,400 Land and Houses Public Co. Ltd., fgn. THA THB 110, ,048, Retailing 142,000 Golden Eagle Retail Group Ltd. CHN HKD 348, ,080 GOME Electrical Appliances Holdings Ltd. CHN HKD 202, ,810 Kingfisher PLC GBR GBP 201, ,905 Inditex SA ESP EUR 142, ,150 Target Corp. USA USD 129, ,697 Lewis Group Ltd. ZAF ZAR 119, ,040 The Home Depot Inc. USA USD 106, ,190 USS Co. Ltd. JPN JPY 97, ,360 Expedia Inc. USA USD 84, ,431, Semiconductors & Semiconductor Equipment 744 Samsung Electronics Co. Ltd. KOR KRW 629, ,070 MediaTek Inc. TWN TWD 244, ,169 Taiwan Semiconductor Manufacturing Co. Ltd., ADR TWN USD 240, ,000 Siliconware Precision Industries Co. TWN TWD 237, ,704 Taiwan Semiconductor Manufacturing Co. Ltd. TWN TWD 223, ,575, Software & Services 28,050 Microsoft Corp. USA USD 783, ,840 Oracle Corp. USA USD 527, ,810 Accenture PLC, A USA USD 524, ,126 Nintendo Co. Ltd. JPN JPY 330, ,090 SAP AG DEU EUR 207, ,000 Travelsky Technology Ltd., H CHN HKD 130, ,552 Symantec Corp. USA USD 109, ,220 Check Point Software Technologies Ltd. ISR USD 102, ,400 HCL Infosystems Ltd. IND INR 100, ,120 McAfee Inc. USA USD 98, ,320 Cap Gemini FRA EUR 61, ,975, Unaudited Semi-Annual Report 159

161 Franklin Templeton Global Equity Strategies Fund Technology Hardware & Equipment 94,887 Acer Inc. TWN TWD 293, ,080 Cisco Systems Inc. USA USD 244, ,312 Xerox Corp. USA USD 233, ,690 Tyco Electronics Ltd. USA USD 201, ,920 Hon Hai Precision Industry Co. Ltd. TWN TWD 184, ,300 Hewlett-Packard Co. USA USD 181, ,220 Flextronics International Ltd. SGP USD 127, ,032 Telefonaktiebolaget LM Ericsson, B SWE SEK 116, ,910 Brocade Communications Systems Inc. USA USD 105, ,700 FUJIFILM Holdings Corp. JPN JPY 97, ,200 Dell Inc. USA USD 97, ,920 Seagate Technology USA USD 88, ,000 Konica Minolta Holdings Ltd. JPN JPY 83, ,000 Ju Teng International Holdings Ltd. CHN HKD 74, ,894 Compal Electronics Inc. TWN TWD 74, ,204, Telecommunication Services 289,200 Vodafone Group PLC GBR GBP 748, ,800 America Movil SAB de CV, L, ADR MEX USD 561, ,250 Telefonica SA ESP EUR 482, ,000 Singapore Telecommunications Ltd. SGP SGD 261, ,950 Turkcell Iletisim Hizmetleri AS TUR TRY 245, ,060 France Telecom SA FRA EUR 230, ,340 Telenor ASA NOR NOK 200, ,690 Koninklijke KPN NV NLD EUR 170, ,040 Sprint Nextel Corp. USA USD 127, ,900 Mobile TeleSystems, ADR RUS USD 123, ,060 China Telecom Corp. Ltd., ADR CHN USD 107, ,120 Telekom Austria AG AUT EUR 100, ,400 Magyar Telekom PLC HUN HUF 67, ,980 AT&T Inc. USA USD 58, ,831 Cable & Wireless Worldwide PLC GBR GBP 47, ,831 Cable & Wireless Communication PLC GBR GBP 35, ,570, Transportation 272,148 Cosco Pacific Ltd. CHN HKD 475, ,611 Julio Simoes Logistica SA BRA BRL 387, ,000 China Shipping Container Lines Co. Ltd., H CHN HKD 367, A.P. Moller Maersk AS, B DNK DKK 317, ,000 China COSCO Holdings Co. Ltd. CHN HKD 262, ,793 FedEx Corp. USA USD 259, ,450 United Parcel Service Inc., B USA USD 250, ,400 Localiza Rent a Car SA BRA BRL 136, ,250 Deutsche Post AG DEU EUR 88, ,545, Utilities 9,280 GDF Suez FRA EUR 333, ,844 E.ON AG DEU EUR 301, ,130 Exelon Corp. USA USD 255, ,160 NRG Energy Inc. USA USD 178, ,587 Hera SpA ITA EUR 50, ,119, TOTAL SHARES 63,995, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 63,995, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Automobiles & Components 100 Daimler AG DEU USD 6, Energy 21,900 Gazprom, ADR RUS USD 557, TOTAL SHARES 563, Unaudited Semi-Annual Report

162 Franklin Templeton Global Equity Strategies Fund BONDS Corporate Bonds 106,610 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/16 USA USD 107, ,204 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 90, , Securities Maturing Within One Year 120,000 BP Capital s PLC, FRN, 1.302%, 03/17/11 GBR USD 120, TOTAL BONDS 318, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 882, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Banks 174,590 Sberbank RF RUS USD 594, Diversified Financials 7,182 Hightower Holding LLC, pfd., A, 2 ** USA USD 14, Materials 3,821 Mining and Metallurgical Co. Norilsk Nickel RUS USD 895, TOTAL SHARES 1,505, BONDS Corporate Bonds 100,000 Seadrill Ltd., cvt., senior note, 3.625%, 11/08/12 BMU USD 124, TOTAL BONDS 124, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 1,629, TOTAL INVESTMENTS 66,506, Floating Rates are indicated as at December 31, 2010 ** These securities are submitted to a Fair Valuation Unaudited Semi-Annual Report 161

163 Franklin Templeton Global Fundamental Strategies Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 154,137 BAE Systems PLC GBR GBP 794, ,260 Embraer SA, ADR BRA USD 625, ,419, Air Freight & Logistics 29,340 FedEx Corp. USA USD 2,728, ,870 United Parcel Service Inc., B USA USD 2,458, ,720 Deutsche Post AG DEU EUR 840, ,027, Auto Components 16,414 Compagnie Generale des Etablissements Michelin, B FRA EUR 1,179, Automobiles 39,837 Daimler AG DEU EUR 2,713, ,003 Hyundai Motor Co. Ltd. KOR KRW 2,321, ,540 Bayerische Motoren Werke AG DEU EUR 1,770, ,100 Toyota Motor Corp. JPN JPY 1,431, ,776 Volkswagen AG, pfd. DEU EUR 1,267, ,504, Beverages 35,186 Pernod Ricard SA FRA EUR 3,311, ,948 Carlsberg AS, B DNK DKK 1,698, ,700 Coca-Cola Enterprises Inc. GBR USD 1,444, ,093 Dr. Pepper Snapple Group Inc. USA USD 987, ,310 Brown-Forman Corp., B USA USD 787, ,229, Biotechnology 83,060 Amgen Inc. USA USD 4,559, ,510 Genzyme Corp. USA USD 1,745, ,590 Biogen Idec Inc. USA USD 1,045, ,350, Capital s 185,868 UBS AG CHE CHF 3,054, ,430 Morgan Stanley USA USD 1,807, ,450 The Bank of New York Mellon Corp. USA USD 1,100, ,963, Chemicals 13,990 Linde AG DEU EUR 2,125, ,914 Airgas Inc. USA USD 806, ,931, Commercial Banks 84,360 Wells Fargo & Co. USA USD 2,614, ,834 Intesa Sanpaolo SpA ITA EUR 2,123, ,403 KB Financial Group Inc. KOR KRW 1,947, ,699 Barclays PLC GBR GBP 1,871, ,841 BNP Paribas SA FRA EUR 1,709, ,700 PNC Financial Services Group Inc. USA USD 1,621, ,500 DBS Group Holdings Ltd. SGP SGD 1,612, ,200 HSBC Holdings PLC GBR HKD 1,509, ,430 ICICI Bank Ltd., ADR IND USD 1,085, ,610 UniCredit SpA ITA EUR 1,069, ,165, Commercial Services & Supplies 34,692 Edenred FRA EUR 822, ,857 Rentokil Initial PLC GBR GBP 602, ,307 Brambles Ltd. AUS AUD 446, ,870, Communications Equipment 95,510 Cisco Systems Inc. USA USD 1,932, ,560 Telefonaktiebolaget LM Ericsson, B SWE SEK 1,147, ,430 Brocade Communications Systems Inc. USA USD 795, ,875, Unaudited Semi-Annual Report

164 Franklin Templeton Global Fundamental Strategies Fund Computers & Peripherals 34,160 Hewlett-Packard Co. USA USD 1,438, ,530 Seagate Technology USA USD 954, ,880 Dell Inc. USA USD 865, ,647 Lite-On Technology Corp. TWN TWD 435, ,693, Construction & Engineering 91,500 KHD Humboldt Wedag International AG DEU EUR 850, Construction Materials 161,571 CRH PLC IRL EUR 3,350, Consumer Finance 36,250 American Express Co. USA USD 1,555, Containers & Packaging 175,241 Rexam PLC GBR GBP 912, Diversified Financial Services 203,520 Bank of America Corp. USA USD 2,714, ,813 Deutsche Boerse AG DEU EUR 1,996, ,560 ING Groep NV NLD EUR 1,738, ,120 JPMorgan Chase & Co. USA USD 1,277, ,728, Diversified Telecommunication Services 171,163 Telefonica SA ESP EUR 3,884, ,012,000 Singapore Telecommunications Ltd. SGP SGD 2,405, ,070 Telenor ASA NOR NOK 1,792, ,710 France Telecom SA FRA EUR 1,662, ,701 Koninklijke KPN NV NLD EUR 1,544, ,910 China Telecom Corp. Ltd., ADR CHN USD 1,093, ,360 Telekom Austria AG AUT EUR 624, ,220 AT&T Inc. USA USD 594, ,028 Cable & Wireless Worldwide PLC GBR GBP 397, ,028 Cable & Wireless Communication PLC GBR GBP 294, ,292, Electric Utilities 77,305 E.ON AG DEU EUR 2,364, ,020 Exelon Corp. USA USD 2,082, ,447, Electrical Equipment 35,440 Alstom SA FRA EUR 1,697, Electronic Equipment, Instruments & Components 35,630 Tyco Electronics Ltd. USA USD 1,261, ,040 Flextronics International Ltd. SGP USD 1,146, ,800 FUJIFILM Holdings Corp. JPN JPY 788, ,196, Energy Equipment & Services 57,060 Halliburton Co. USA USD 2,329, ,950 Transocean Ltd. USA USD 1,803, ,980 Baker Hughes Inc. USA USD 1,485, ,560 Pride International Inc. USA USD 1,338, ,218 Seadrill Ltd. BMU NOK 1,057, ,128 SBM Offshore NV NLD EUR 899, ,319 Petroleum Geo-Services ASA NOR NOK 769, ,767 Noble Corp. USA USD 492, ,176, Food & Staples Retailing 136,489 CVS Caremark Corp. USA USD 4,745, ,258 Tesco PLC GBR GBP 1,582, ,114 Koninklijke Ahold NV NLD EUR 1,481, ,003 Carrefour SA FRA EUR 1,403, ,212, Unaudited Semi-Annual Report 163

165 Franklin Templeton Global Fundamental Strategies Fund Food Products 96,597 Nestle SA CHE CHF 5,662, ,996 Kraft Foods Inc., A USA USD 2,930, Lotte Confectionery Co. Ltd. KOR KRW 110, ,702, Health Care Equipment & Supplies 76,220 Medtronic Inc. USA USD 2,827, ,940 Covidien PLC USA USD 2,554, ,490 Beckman Coulter Inc. USA USD 1,315, ,612 Alcon Inc. CHE USD 1,243, ,900 Boston Scientific Corp. USA USD 710, ,375 Zimmer Holdings Inc. USA USD 556, ,208, Health Care Providers & Services 35,630 Quest Diagnostics Inc. USA USD 1,922, ,750 UnitedHealth Group Inc. USA USD 1,724, ,442 Rhoen-Klinikum AG DEU EUR 824, ,472, Hotels, Restaurants & Leisure 845,270 Ladbrokes PLC GBR GBP 1,624, ,060 Accor SA FRA EUR 1,561, ,820 Compass Group PLC GBR GBP 724, ,911, Household Durables 99,440 Persimmon PLC GBR GBP 646, ,430 Stanley Black & Decker Inc. USA USD 429, ,076, Independent Power Producers & Energy Traders 73,630 NRG Energy Inc. USA USD 1,438, Industrial Conglomerates 20,450 Siemens AG DEU EUR 2,548, ,440 Tyco International Ltd. USA USD 2,546, ,434 Orkla ASA NOR NOK 2,107, ,910 General Electric Co. USA USD 1,991, ,088 Jardine Strategic Holdings Ltd. HKG USD 1,690, ,801 Jardine Matheson Holdings Ltd. HKG USD 1,047, ,850 Koninklijke Philips Electronics NV NLD EUR 792, ,725, Insurance 57,020 ACE Ltd. USA USD 3,549, ,870 Aviva PLC GBR GBP 1,942, ,980 Zurich Financial Services AG CHE CHF 1,810, ,210 Progressive Corp. USA USD 1,633, ,950 RSA Insurance Group PLC GBR GBP 1,538, ,510 PartnerRe Ltd. BMU USD 1,326, ,150 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 1,236, ,760 Swiss Reinsurance Co. CHE CHF 1,064, ,290 RenaissanceRe Holdings Ltd. USA USD 973, ,546 AXA SA FRA EUR 941, ,600 AIA Group Ltd. HKG HKD 589, ,160 Torchmark Corp. USA USD 367, ,898 Berkshire Hathaway Inc., B USA USD 232, White Mountains Insurance Group Ltd. USA USD 55, ,360 Old Republic International Corp. USA USD 32, ,293, Inter & Catalog Retail 31,210 Expedia Inc. USA USD 783, IT Services 99,940 Accenture PLC, A USA USD 4,846, ,170 Cap Gemini FRA EUR 615, ,461, Life Sciences Tools & Services 13,580 Lonza Group AG CHE CHF 1,089, Unaudited Semi-Annual Report

166 Franklin Templeton Global Fundamental Strategies Fund Machinery 32,341 Schindler Holding AG, participation certificate CHE CHF 3,829, ,730 GEA Group AG DEU EUR 483, ,313, Marine 285 A.P. Moller Maersk AS, B DNK DKK 2,583, Media 192,069 Comcast Corp., A, Special USA USD 3,996, ,570 News Corp., A USA USD 3,080, ,060 Vivendi SA FRA EUR 2,352, ,883 Time Warner Inc. USA USD 2,248, ,968 Time Warner Cable Inc. USA USD 2,176, ,809 Eutelsat Communications FRA EUR 1,971, ,149 Stroer Out-of-Home Media AG DEU EUR 1,840, ,710 The Walt Disney Co. USA USD 1,714, ,430 Pearson PLC GBR GBP 1,459, ,465 British Sky Broadcasting Group PLC GBR GBP 1,338, ,240 Viacom Inc., B USA USD 1,316, ,824 Reed Elsevier NV NLD EUR 877, ,372, Metals & Mining 45,350 Vale SA, ADR, pfd., A BRA USD 1,370, ,400 Alcoa Inc. USA USD 944, ,329 POSCO KOR KRW 577, ,716 Thyssenkruup AG DEU EUR 237, ,130, Multi-Utilities 71,809 GDF Suez FRA EUR 2,579, ,332 Hera SpA ITA EUR 408, ,988, Multiline Retail 20,130 Target Corp. USA USD 1,210, Office Electronics 171,520 Xerox Corp. USA USD 1,975, ,000 Konica Minolta Holdings Ltd. JPN JPY 603, ,578, Oil, Gas & Consumable Fuels 68,842 Total SA, B FRA EUR 3,651, ,365 BP PLC GBR GBP 3,041, ,905 Royal Dutch Shell PLC, A GBR EUR 2,908, ,560 Royal Dutch Shell PLC, B GBR GBP 2,204, ,142 Eni SpA ITA EUR 1,555, ,280 Chevron Corp. USA USD 1,029, ,700 BG Group PLC GBR GBP 884, ,960 Petroleo Brasileiro SA, ADR, pfd. BRA USD 852, ,410 Statoil ASA NOR NOK 819, ,568 Repsol YPF SA ESP EUR 657, ,604, Paper & Forest Products 59,270 Svenska Cellulosa AB, B SWE SEK 937, Pharmaceuticals 291,943 Pfizer Inc. USA USD 5,111, ,390 Sanofi-Aventis FRA EUR 3,609, ,235 GlaxoSmithKline PLC GBR GBP 2,849, ,940 Merck & Co. Inc. USA USD 2,232, ,060 Novartis AG CHE CHF 2,062, ,720 Roche Holding AG CHE CHF 2,012, ,860 Eli Lilly & Co. USA USD 1,992, ,230 Merck KGaA DEU EUR 985, ,690 Bristol-Myers Squibb Co. USA USD 865, ,640 Abbott Laboratories USA USD 797, ,519, Professional Services 26,840 Randstad Holding NV NLD EUR 1,418, ,390 Adecco SA CHE CHF 1,402, ,820, Unaudited Semi-Annual Report 165

167 Franklin Templeton Global Fundamental Strategies Fund Real Estate Investment Trust (REIT) 826,810 The Link REIT HKG HKD 2,568, Real Estate Management & Development 84,000 Swire Pacific Ltd., A HKG HKD 1,381, ,988,000 Renhe Commercial Holdings Co. Ltd. CHN HKD 1,213, ,000 Cheung Kong (Holdings) Ltd. HKG HKD 1,155, ,865 Dolphin Capital Investors Ltd. VGB GBP 99, ,993 Swire Pacific Ltd., B HKG HKD 11, ,861, Semiconductors & Semiconductor Equipment 3,739 Samsung Electronics Co. Ltd. KOR KRW 3,164, ,956 Taiwan Semiconductor Manufacturing Co. Ltd., ADR TWN USD 2,118, ,283, Software 261,140 Microsoft Corp. USA USD 7,291, ,930 Oracle Corp. USA USD 5,005, ,332 Nintendo Co. Ltd. JPN JPY 2,739, ,890 SAP AG DEU EUR 1,770, ,210 Symantec Corp. USA USD 857, ,750 McAfee Inc. USA USD 775, ,310 Check Point Software Technologies Ltd. ISR USD 708, ,147, Specialty Retail 344,169 Kingfisher PLC GBR GBP 1,418, ,090 Inditex SA ESP EUR 1,206, ,610 USS Co. Ltd. JPN JPY 949, ,420 The Home Depot Inc. USA USD 926, ,500, Tobacco 121,112 British American Tobacco PLC GBR GBP 4,656, ,950 Imperial Tobacco Group PLC GBR GBP 3,692, ,580 Lorillard Inc. USA USD 2,919, ,836 Reynolds American Inc. USA USD 2,147, ,728 Altria Group Inc. USA USD 1,864, Japan Tobacco Inc. JPN JPY 1,536, ,288 Philip Morris International Inc. USA USD 1,187, ,105 ITC Ltd. IND INR 148, ,153, Companies & Distributors 58,394 Wolseley PLC GBR GBP 1,865, Wireless Telecommunication Services 2,423,894 Vodafone Group PLC GBR GBP 6,273, ,270 Sprint Nextel Corp. USA USD 999, ,053 Turkcell Iletisim Hizmetleri AS TUR TRY 944, ,217, TOTAL SHARES 341,453, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 341,453, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Automobiles 400 Daimler AG DEU USD 27, Oil, Gas & Consumable Fuels 30,600 Gazprom, ADR RUS USD 778, TOTAL SHARES 805, BONDS Corporate Bonds 861,106 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/16 USA USD 866, ,632 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 730, ,596, Unaudited Semi-Annual Report

168 Franklin Templeton Global Fundamental Strategies Fund Government and Municipal Bonds 1,065,200 Government of Mexico, M 20, 10.00%, 12/05/24 MEX MXN 10,783, ,956,225 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 6,879, ,320 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/15 BRA BRL 5,119, ,427,000,000 Government of Indonesia, FR34, 12.80%, 06/15/21 IDN IDR 5,063, ,500 Government of Mexico, M 30, 10.00%, 11/20/36 MEX MXN 4,957, ,800,000,000 Korea Treasury Bond, 5.75%, 09/10/13 KOR KRW 4,510, ,150,000 Government of Australia, TB123, 5.75%, 04/15/12 AUS AUD 4,282, ,880 Nota Do Tesouro Nacional, 9.609%, 01/01/12 BRA BRL 4,071, ,290,000,000 Government of Indonesia, FR46, 9.50%, 07/15/23 IDN IDR 3,990, ,102,500,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 3,699, ,040,000,000 Korea Treasury Bond, senior bond, 3.75%, 06/10/13 KOR KRW 3,631, ,320,000 Government of South Africa, 6.875%, 05/27/19 ZAF USD 2,713, ,990,000 Government of Hungary, senior note, 5.75%, 06/11/18 HUN EUR 2,484, ,430,000 New South Wales Treasury Corp., senior note, 5.50%, 03/01/17 AUS AUD 2,444, ,100,000 Government of Poland, senior note, 6.375%, 07/15/19 POL USD 2,358, ,200 Government of Mexico, M 10, 7.75%, 12/14/17 MEX MXN 2,338, ,620,000 Government of Poland, 5.75%, 04/25/14 POL PLN 2,278, ,185,000 Queensland Treasury Corp., 6.00%, 08/14/13 AUS AUD 2,267, ,825,000 Government of Poland, 5.75%, 09/23/22 POL PLN 2,239, ,870,000 Korea Treasury Bond, senior note, 7.125%, 04/16/19 KOR USD 2,234, ,300 Government of Mexico, M 20, 7.50%, 06/03/27 MEX MXN 2,198, ,320,000 Government of Lithuania, senior note, 9.375%, 06/22/14 LTU EUR 2,066, ,206,000,000 Korea Treasury Bond, 5.25%, 09/10/12 KOR KRW 2,031, ,060,000 Government of Argentina, senior bond, FRN, 0.677%, 08/03/12 ARG USD 1,930, ,300 Government of Mexico, M, 9.00%, 06/20/13 MEX MXN 1,926, ,917,840,000 Korea Treasury Bond, 5.25%, 03/10/13 KOR KRW 1,772, ,431,000 Government of Indonesia, senior bond, Reg S, 7.75%, 01/17/38 IDN USD 1,751, ,685,000 Government of Venezuela, 10.75%, 09/19/13 VEN USD 1,619, ,580,000 Government of Poland, 6.25%, 10/24/15 POL PLN 1,601, ,525,000 Government of Vietnam, Reg S, 6.75%, 01/29/20 VND USD 1,553, ,445,000 New South Wales Treasury Corp., 6.00%, 05/01/12 AUS AUD 1,491, ,230,000 Government of Qatar, senior note, Reg S, 6.55%, 04/09/19 QAT USD 1,422, ,210,000 Emirate of Abu Dhabi, Reg S, 6.75%, 04/08/19 ARE USD 1,408, ,400,000 Government of Sri Lanka, A, 11.00%, 08/01/15 LKA LKR 1,306, ,250,000 California State GO, 7.625%, 03/01/40 USA USD 1,305, ,040,000 Corporacion Andina De Fomento, 8.125%, 06/04/19 SP USD 1,245, ,193,000,000 Government of Indonesia, FR35, 12.90%, 06/15/22 IDN IDR 1,233, ,180,000 California State GO, Various Purpose, 6.00%, 04/01/38 USA USD 1,203, ,100,000 Western Australia Treasury Corp., 5.50%, 07/17/12 AUS AUD 1,127, ,000 Government of Indonesia, senior note, Reg S, %, 03/04/19 IDN USD 1,047, ,000 Queensland Treasury Corp., 6.00%, 09/14/17 AUS AUD 1,021, ,000 Government of South Africa, senior note, 5.875%, 05/30/22 ZAF USD 969, ,000,000 Government of Iraq, Reg S, 5.80%, 01/15/28 IQ USD 918, ,000 Government of Hungary, senior note, 4.375%, 07/04/17 HUN EUR 914, ,000 Government of Indonesia, senior bond, Reg S, 8.50%, 10/12/35 IDN USD 905, Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/45 BRA BRL 869, ,000 Government of Lithuania, Reg S, 7.375%, 02/11/20 LTU USD 842, ,812,000,000 Government of Indonesia, FR47, 10.00%, 02/15/28 IDN IDR 811, ,355,000 Government of Poland, 4.75%, 04/25/12 POL PLN 798, ,900,000 Government of Sri Lanka, A, 11.25%, 07/15/14 LKA LKR 748, ,000 Government of Mexico, M 10, 7.25%, 12/15/16 MEX MXN 741, ,000 Bay Area Toll Authority Toll Bridge Revenue, Build America Bonds, Series S1, 6.793%, 04/01/30 USA USD 727, ,400,000 Government of Sri Lanka, A, 13.50%, 02/01/13 LKA LKR 680, ,000 Government of Hungary, senior note, 3.875%, 02/24/20 HUN EUR 655, ,015,000 Government of Poland, Strip, 01/25/12 POL PLN 649, ,600,000 Government of Sri Lanka, A, 8.50%, 01/15/13 LKA LKR 643, ,030,000 Government of Poland, Strip, 10/25/12 POL PLN 629, ,868,000,000 Government of Indonesia, FR42, 10.25%, 07/15/27 IDN IDR 594, ,934,000,000 Government of Indonesia, FR43, 10.25%, 07/15/22 IDN IDR 501, ,000 Government of Mexico, MI10, 8.00%, 12/19/13 MEX MXN 379, ,000 Government of South Africa, 5.25%, 05/16/13 ZAF EUR 353, ,320,000 Government of Philippine, senior bond, 5.75%, 02/21/12 PHL PHP 290, ,000 California State GO, Various Purpose, ReFunding, 5.25%, 03/01/30 USA USD 275, ,000 Government of South Africa, 4.50%, 04/05/16 ZAF EUR 256, ,000 Government of Hungary, senior note, 3.50%, 07/18/16 HUN EUR 230, ,000 California State GO, Various Purpose, ReFunding, 5.50%, 03/01/40 USA USD 228, Nota Do Tesouro Nacional, 9.609%, 01/01/17 BRA BRL 221, ,000 California State GO, 6.65%, 03/01/22 USA USD 197, ,410,000 Government of Philippine, senior bond, 8.75%, 03/03/13 PHL PHP 184, ,000 California State GO, ReFunding, 5.125%, 04/01/33 USA USD 184, ,000 California State GO, 6.20%, 03/01/19 USA USD 172, ,000 Los Angeles Community College District GO, 2008 Election, Series D, 6.68%, 08/01/36 USA USD 165, ,000 Los Angeles USD, GO, Series KRY, 5.25%, 07/01/26 USA USD 164, Unaudited Semi-Annual Report 167

169 Franklin Templeton Global Fundamental Strategies Fund Government and Municipal Bonds (continued) 1,020,000,000 Government of Indonesia, FR39, 11.75%, 08/15/23 IDN IDR 141, ,000 Illinois Municipal Electricity Agency Power Supply Revenue, Series A, BHAC Insured, 5.00%, 02/01/35 USA USD 135, ,000 Tarrant County Cultural Education Facilities Finance Corp. Revenue, Christus Health, ReFunding, Series A, Assured Guaranty, 6.25%, 07/01/28 USA USD 128, ,000 Government of Mexico, M 10, 8.00%, 12/17/15 MEX MXN 121, ,000 Government of Poland, 5.00%, 10/24/13 POL PLN 113, ,000 North Carolina Eastern Municipal Power Agency Power System Revenue, ReFunding, Series A, Assured Guaranty, 5.25%, 01/01/19 USA USD 110, ,000 Government of Indonesia, senior bond, Reg S, 6.625%, 02/17/37 IDN USD 109, ,000 Bexar County Revenue, Venue Project, ReFunding, Series A, BHAC Insured, 5.25%, 08/15/47 USA USD 102, ,000 Government of Malaysia, senior bond, 0309, 2.711%, 02/14/12 MYS MYR 102, ,000 California State GO, Build America Bonds, 7.30%, 10/01/39 USA USD 100, ,800 Government of Mexico, MI10, 9.00%, 12/20/12 MEX MXN 76, ,000 California State GO, ReFunding, 5.00%, 04/01/38 USA USD 76, ,000 Government of South Africa, senior note, 6.50%, 06/02/14 ZAF USD 67, ,000 Detroit GO, Distribution State Aid, 4.50%, 11/01/23 USA USD 60, ,000 California State GO, 7.95%, 03/01/36 USA USD 56, ,000 Philadelphia GO, ReFunding, Series A, Assured Guaranty, 5.00%, 08/01/24 USA USD 50, ,800,000 Government of Sri Lanka, B, 6.60%, 06/01/14 LKA LKR 48, ,390,000 Government of Sri Lanka, A, 7.00%, 03/01/14 LKA LKR 37, ,000,000 Korea Treasury Bond, 5.00%, 09/10/16 KOR KRW 32, ,000 California State GO, Build America Bonds, Various Purpose, 7.55%, 04/01/39 USA USD 31, ,000,000 Korea Treasury Bond, 4.75%, 03/10/12 KOR KRW 25, ,000,000 Government of Indonesia, FR44, 10.00%, 09/15/24 IDN IDR 22, ,870,000 Government of Sri Lanka, A, 6.50%, 07/15/15 LKA LKR 15, ,500,000 Government of Sri Lanka, A, 6.90%, 08/01/12 LKA LKR 13, ,000 Alabama State University Revenue, General Tuition and Fee, Assured Guaranty, 5.00%, 09/01/29 USA USD 5, ,308, Securities Maturing Within One Year 8,191,940,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 7,437, ,200,000 Government of Sweden, 5.25%, 03/15/11 SWE SEK 6,335, ,295,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 5,329, ,800,000 Egypt Treasury Bill, 0.00%, 04/12/11 EGY EGP 4,673, ,042,200 Israel Treasury Bill, 0.00%, 07/06/11 ISR ILS 3,937, ,135,000 Government of Malaysia, senior bond, 3.756%, 04/28/11 MYS MYR 2,975, ,193,120,000 Korea Treasury Bond, senior bond, 5.50%, 06/10/11 KOR KRW 1,979, ,100,000 Government of Norway, 6.00%, 05/16/11 NOR NOK 1,410, ,095,000 BP Capital s PLC, FRN, 1.302%, 03/17/11 GBR USD 1,097, ,975,000 Egypt Treasury Bill, 0.00%, 04/05/11 EGY EGP 1,002, ,430,000 Malaysia Treasury Bill, 0.00%, 12/15/11 MYS MYR 767, ,525,000 Egypt Treasury Bill, 0.00%, 07/12/11 EGY EGP 737, ,550,000 Government of Israel, 2680, 7.00%, 04/29/11 ISR ILS 734, ,570,000 Israel Treasury Bill, 0.00%, 04/06/11 ISR ILS 725, ,600,000 Egypt Treasury Bill, 0.00%, 05/10/11 EGY EGP 598, ,855,000 Israel Treasury Bill, 0.00%, 10/05/11 ISR ILS 516, ,050,000 Egypt Treasury Bill, 0.00%, 08/09/11 EGY EGP 493, ,000 Government of Venezuela, Reg S, FRN, 1.288%, 04/20/11 VEN USD 488, ,800,000 Egypt Treasury Bill, 0.00%, 06/21/11 EGY EGP 460, ,583,000 Israel Treasury Bill, 0.00%, 08/03/11 ISR ILS 442, ,300,000 Egypt Treasury Bill, 0.00%, 11/08/11 EGY EGP 362, ,060,000 Bank of Negara Moary Note, 0.00%, 01/27/11 MYS MYR 343, ,975,000 Egypt Treasury Bill, 0.00%, 03/31/11 EGY EGP 334, Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/11 BRA BRL 251, ,000 Israel Treasury Bill, 0.00%, 06/01/11 ISR ILS 250, ,000 Israel Treasury Bill, 0.00%, 02/02/11 ISR ILS 202, ,000 Petroleos de Venezuela SA, senior bond, zero cpn., 07/10/11 VEN USD 200, ,175,000 Egypt Treasury Bill, 0.00%, 03/22/11 EGY EGP 198, ,125,000 Egypt Treasury Bill, 0.00%, 05/03/11 EGY EGP 187, ,000 Israel Treasury Bill, 0.00%, 01/05/11 ISR ILS 158, ,000 Egypt Treasury Bill, 0.00%, 05/31/11 EGY EGP 128, ,000 Malaysia Treasury Bill, 0.00%, 08/25/11 MYS MYR 127, ,000 Bank of Negara Moary Note, 0.00%, 10/13/11 MYS MYR 108, ,650,000 Government of Sri Lanka, A, 12.00%, 07/15/11 LKA LKR 107, ,000 Israel Treasury Bill, 0.00%, 03/02/11 ISR ILS 100, ,000 Israel Treasury Bill, 0.00%, 09/07/11 ISR ILS 93, ,000 Egypt Treasury Bill, 0.00%, 03/29/11 EGY EGP 92, ,000 Bank of Negara Moary Note, 0.00%, 03/22/11 MYS MYR 87, ,780,000 Philippine Treasury Bill, 0.00%, 11/16/11 PHL PHP 85, ,000 Queensland Treasury Corp., 6.00%, 06/14/11 AUS AUD 82, ,760,000 Philippine Treasury Bill, 0.00%, 11/29/11 PHL PHP 62, Unaudited Semi-Annual Report

170 Franklin Templeton Global Fundamental Strategies Fund Securities Maturing Within One Year (continued) 185,000 Malaysia Treasury Bill, 0.00%, 04/05/11 MYS MYR 59, ,000 Egypt Treasury Bill, 0.00%, 09/20/11 EGY EGP 55, ,000 Bank of Negara Moary Note, 0.00%, 07/28/11 MYS MYR 51, ,000 Malaysia Treasury Bill, 0.00%, 03/25/11 MYS MYR 41, ,290,000 Sri Lanka Treasury Bill, 0.00%, 07/08/11 LKA LKR 37, ,000 Egypt Treasury Bill, 0.00%, 03/22/11 EGY EGP 25, ,000 Egypt Treasury Bill, 0.00%, 06/07/11 EGY EGP 24, ,000 Bank of Negara Moary Note, 0.00%, 01/06/11 MYS MYR 17, ,000 Bank of Negara Moary Note, 0.00%, 07/19/11 MYS MYR 17, ,000 Bank of Negara Moary Note, 0.00%, 03/10/11 MYS MYR 11, ,100,000 Sri Lanka Treasury Bill, 0.00%, 09/16/11 LKA LKR 9, ,000 Malaysia Treasury Bill, 0.00%, 09/29/11 MYS MYR 6, ,066, TOTAL BONDS 176,971, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 177,776, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Diversified Financial Services 230,000 Hightower Holding LLC, pfd., A ** USA USD 191, ,507 Hightower Holding LLC, pfd., A, 2 ** USA USD 123, , TOTAL SHARES 315, BONDS Corporate Bonds 200,000 Seadrill Ltd., cvt., senior note, 3.625%, 11/08/12 BMU USD 249, Government and Municipal Bonds 250,000 Government of Iraq, 144A, 5.80%, 01/15/28 IQ USD 229, TOTAL BONDS 478, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 793, TOTAL INVESTMENTS 520,023, Floating Rates are indicated as at December 31, 2010 ** These securities are submitted to a Fair Valuation Unaudited Semi-Annual Report 169

171 Franklin Templeton Global Growth and Value Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 18,500 MTU Aero Engines Holding AG DEU EUR 1,238, ,710 Embraer SA, ADR BRA USD 520, ,640 BAE Systems PLC GBR GBP 312, ,071, Air Freight & Logistics 10,150 United Parcel Service Inc., B USA USD 736, ,000 FedEx Corp. USA USD 651, ,700 Deutsche Post AG DEU EUR 299, ,687, Airlines 83,360 British Airways PLC GBR GBP 355, Auto Components 5,740 Compagnie Generale des Etablissements Michelin, B FRA EUR 412, Automobiles 3,030 Bayerische Motoren Werke AG DEU EUR 237, Biotechnology 37,000 CSL Ltd. AUS AUD 1,371, ,000 Dendreon Corp. USA USD 1,222, ,000 Gilead Sciences Inc. USA USD 1,087, ,100 Amgen Inc. USA USD 664, ,345, Capital s 37,000 Macquarie Group Ltd. AUS AUD 1,399, ,000 Man Group PLC GBR GBP 1,247, ,000 Credit Suisse Group AG CHE CHF 1,169, ,120 The Bank of New York Mellon Corp. USA USD 517, ,997 UBS AG CHE CHF 230, ,563, Chemicals 5,000 Syngenta AG CHE CHF 1,464, ,000 Praxair Inc. USA USD 1,241, ,260 Akzo Nobel NV NLD EUR 327, ,032, Commercial Banks 88,000 United Overseas Bank Ltd. SGP SGD 1,248, ,000 DBS Group Holdings Ltd. SGP SGD 636, ,870 ICICI Bank Ltd., ADR IND USD 601, ,863 KB Financial Group Inc. KOR KRW 474, ,900 Mitsubishi UFJ Financial Group Inc. JPN JPY 372, ,805 Banco Santander SA ESP EUR 369, ,710 Intesa Sanpaolo SpA ITA EUR 319, ,730 HSBC Holdings PLC GBR HKD 315, ,264 UniCredit SpA ITA EUR 307, ,530 Banco Espirito Santo SA PRT EUR 221, ,680 Banco Comercial Portugues SA (BCP) PRT EUR 150, ,015, Communications Equipment 34,950 Cisco Systems Inc. USA USD 707, ,016 Telefonaktiebolaget LM Ericsson, B SWE SEK 512, ,000 QUALCOMM Inc. USA USD 494, ,160 Brocade Communications Systems Inc. USA USD 461, ,175, Computers & Peripherals 2,800 Apple Inc. USA USD 903, ,580 Dell Inc. USA USD 455, ,416 Compal Electronics Inc., GDR, Reg S TWN USD 49, ,407, Construction Materials 21,070 CRH PLC IRL EUR 436, Consumer Finance 8,380 American Express Co. USA USD 359, Unaudited Semi-Annual Report

172 Franklin Templeton Global Growth and Value Fund Distributors 225,000 Li & Fung Ltd. HKG HKD 1,315, Diversified Financial Services 19,000 Deutsche Boerse AG DEU EUR 1,316, ,200 JPMorgan Chase & Co. USA USD 602, ,380 Citigroup Inc. USA USD 493, ,884 ING Groep NV NLD EUR 456, ,750 Bank of America Corp. USA USD 370, ,239, Diversified Telecommunication Services 22,450 AT&T Inc. USA USD 659, ,820 Telenor ASA NOR NOK 599, ,360 France Telecom SA FRA EUR 487, ,000 China Telecom Corp. Ltd., H CHN HKD 483, ,245 Telefonica SA ESP EUR 414, ,000 Singapore Telecommunications Ltd. SGP SGD 404, ,940 Portugal Telecom SGPS SA PRT EUR 346, ,300 Telekom Austria AG AUT EUR 327, ,722, Electric Utilities 16,410 E.ON AG DEU EUR 501, ,596 Iberdrola SA ESP EUR 459, , Electrical Equipment 55,000 ABB Ltd. CHE CHF 1,226, ,000 Shanghai Electric Group Co. Ltd. CHN HKD 592, ,819, Energy Equipment & Services 55,000 WorleyParsons Ltd. AUS AUD 1,502, ,500 Schlumberger Ltd. USA USD 1,461, ,000 Saipem SpA ITA EUR 1,379, ,120 Baker Hughes Inc. USA USD 578, ,770 SBM Offshore NV NLD EUR 219, ,141, Food & Staples Retailing 160,000 Tesco PLC GBR GBP 1,062, ,400 CVS Caremark Corp. USA USD 361, ,424, Food Products 8,443 Unilever PLC GBR GBP 259, Health Care Equipment & Supplies 23,000 Terumo Corp. JPN JPY 1,294, ,000 Getinge AB, B SWE SEK 1,259, ,000 Cochlear Ltd. AUS AUD 1,232, ,786, Health Care Providers & Services 10,120 Quest Diagnostics Inc. USA USD 546, ,440 Rhoen-Klinikum AG DEU EUR 406, ,580 Celesio AG DEU EUR 88, ,040, Household Durables 470,000 Urbi, Desarrollos Urbanos, SAB de CV MEX MXN 1,104, Household Products 20,000 Reckitt Benckiser Group PLC GBR GBP 1,102, Industrial Conglomerates 36,550 General Electric Co. USA USD 668, ,150 Siemens AG DEU EUR 641, ,590 Koninklijke Philips Electronics NV NLD EUR 447, ,757, Unaudited Semi-Annual Report 171

173 Franklin Templeton Global Growth and Value Fund Insurance 66,000 QBE Insurance Group Ltd. AUS AUD 1,223, ,590 ACE Ltd. USA USD 472, ,400 AIA Group Ltd. HKG HKD 414, ,596 AXA SA FRA EUR 409, ,700 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 409, ,270 Aviva PLC GBR GBP 358, ,017 Swiss Reinsurance Co. CHE CHF 270, ,558, Inter & Catalog Retail 2,700 Priceline.com Inc. USA USD 1,078, ,600 Amazon.com Inc. USA USD 1,008, ,086, Inter Software & Services 22,000 MercadoLibre Inc. ARG USD 1,466, IT Services 17,000 Visa Inc., A USA USD 1,196, ,110 SAIC Inc. USA USD 334, ,531, Life Sciences Tools & Services 62,000 QIAGEN NV NLD USD 1,212, Machinery 26,000 Danaher Corp. USA USD 1,226, ,120 MAN SE DEU EUR 614, ,840, Media 98,420 Pearson PLC GBR GBP 1,553, ,840 Comcast Corp., A, Special USA USD 579, ,390 News Corp., A USA USD 529, ,990 Time Warner Inc. USA USD 482, ,050 Vivendi SA FRA EUR 325, ,470, Metals & Mining 9,990 Vale SA, ADR, pfd., A BRA USD 301, Multiline Retail 8,670 Target Corp. USA USD 521, ,520 Marks & Spencer Group PLC GBR GBP 337, , Oil, Gas & Consumable Fuels 38,200 Talisman Energy Inc. CAN CAD 847, ,210 Statoil ASA NOR NOK 790, ,940 Chevron Corp. USA USD 724, ,234 Royal Dutch Shell PLC, B GBR GBP 703, ,590 Total SA, B FRA EUR 508, ,720 Petroleo Brasileiro SA, ADR, pfd. BRA USD 502, ,580 BP PLC GBR GBP 309, ,763 Eni SpA ITA EUR 257, ,400 Gazprom, ADR RUS USD 237, ,881, Personal Products 135,000 Hengan International Group Co. Ltd. CHN HKD 1,164, Pharmaceuticals 15,020 Watson Pharmaceuticals Inc. USA USD 775, ,690 Pfizer Inc. USA USD 729, ,212 Sanofi-Aventis FRA EUR 525, ,010 Roche Holding AG CHE CHF 294, ,150 GlaxoSmithKline PLC GBR GBP 273, ,260 Merck KGaA DEU EUR 262, ,862, Professional Services 5,890 Adecco SA CHE CHF 386, ,103 Randstad Holding NV NLD EUR 375, , Unaudited Semi-Annual Report

174 Franklin Templeton Global Growth and Value Fund Real Estate Management & Development 200,000 Hang Lung Properties Ltd. HKG HKD 930, Semiconductors & Semiconductor Equipment 850 Samsung Electronics Co. Ltd. KOR KRW 719, ,857 Taiwan Semiconductor Manufacturing Co. Ltd., ADR TWN USD 637, ,630 Infineon Technologies AG DEU EUR 380, ,738, Software 30,000 Autodesk Inc. USA USD 1,146, ,000 The Sage Group PLC GBR GBP 1,111, ,180 Microsoft Corp. USA USD 730, ,900 SAP AG DEU EUR 502, ,650 Oracle Corp. USA USD 489, Nintendo Co. Ltd. JPN JPY 234, ,215, Specialty Retail 17,000 Inditex SA ESP EUR 1,274, ,040 The Home Depot Inc. USA USD 737, ,480 Kingfisher PLC GBR GBP 414, ,425, Textiles, Apparel & Luxury Goods 39,000 Luxottica Group SpA ITA EUR 1,189, Companies & Distributors 888,181 Noble Group Ltd. HKG SGD 1,502, Wireless Telecommunication Services 20,000 American Tower Corp., A USA USD 1,032, ,903 Vodafone Group PLC GBR GBP 641, ,674, TOTAL SHARES 92,449, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 92,449, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Commercial Banks 90,000 Anglo Irish Bancorp PLC ** IRL EUR TOTAL SHARES TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET TOTAL INVESTMENTS 92,449, ** These securities are submitted to a Fair Valuation Unaudited Semi-Annual Report 173

175 Franklin Templeton Japan Fund Schedule of Investments as of December 31, 2010 (Currency JPY) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Auto Components 42,800 Denso Corp. JPN JPY 119,925, ,600 Keihin Corp. JPN JPY 35,868, ,793, Automobiles 88,500 Honda Motor Co. Ltd. JPN JPY 284,527, ,100 Yamaha Motor Co. Ltd. JPN JPY 164,184, ,000 Nissan Motor Co. Ltd. JPN JPY 112,858, ,000 Isuzu Motors Ltd. JPN JPY 65,313, ,882, Capital s 324,600 Nomura Holdings Inc. JPN JPY 167,169, ,000 Mizuho Securities Co. Ltd. JPN JPY 66,172, ,341, Chemicals 50,900 Tokyo Ohka Kogyo Co. Ltd. JPN JPY 88,973, ,900 Kuraray Co. Ltd. JPN JPY 83,691, ,000 Nippon Paint Co. Ltd. JPN JPY 78,372, ,000 Denki Kagaku Kogyo KK Ltd. JPN JPY 65,620, ,656, Commercial Banks 485,200 Mitsubishi UFJ Financial Group Inc. JPN JPY 213,002, ,700 Mizuho Financial Group Inc. JPN JPY 150,506, ,000 Sumitomo Mitsui Financial Group Inc. JPN JPY 133,032, ,000 Gunma Bank Ltd. JPN JPY 25,422, ,962, Commercial Services & Supplies 77,600 Park24 Co. Ltd. JPN JPY 67,434, Computers & Peripherals 98,000 Fujitsu Ltd. JPN JPY 55,370, ,000 Toshiba Corp. JPN JPY 46,852, ,222, Containers & Packaging 14,200 FP Corp. JPN JPY 63,900, Distributors 38,000 Jin Co. Ltd. JPN JPY 19,912, Diversified Financial Services 41,740 Mitsubishi UFJ Lease & Finance Co. Ltd. JPN JPY 134,402, Diversified Telecommunication Services 24,900 Nippon Telegraph & Telephone Corp. JPN JPY 91,507, Electrical Equipment 9,700 Nidec Corp. JPN JPY 79,637, Electronic Equipment, Instruments & Components 15,800 Kyocera Corp. JPN JPY 130,982, ,000 Nippon Electric Glass Co. Ltd. JPN JPY 101,964, ,800 FUJIFILM Holdings Corp. JPN JPY 99,236, ,000 Hitachi Ltd. JPN JPY 95,260, ,900 Murata Manufacturing Co. Ltd. JPN JPY 67,711, ,000 Shimadzu Corp. JPN JPY 61,207, ,700 Alps Electric Co. Ltd. JPN JPY 39,281, ,642, Food & Staples Retailing 62,400 AEON Co. Ltd. JPN JPY 63,398, Food Products 47,000 Ajinomoto Co. Inc. JPN JPY 39,762, ,300 Fuji Oil Co. Ltd. JPN JPY 33,592, ,354, Gas Utilities 218,000 Tokyo Gas Co. Ltd. JPN JPY 78,480, Unaudited Semi-Annual Report

176 Franklin Templeton Japan Fund (Currency JPY) Hotels, Restaurants & Leisure 10,400 Oriental Land Co. Ltd. JPN JPY 78,208, Household Durables 78,500 Sony Corp. JPN JPY 229,769, ,900 Rinnai Corp. JPN JPY 73,904, ,200 Foster Electric Co. Ltd. JPN JPY 34,165, ,300 Hajime Construction Co Ltd JPN JPY 23,165, ,004, Household Products 12,800 Unicharm Corp. JPN JPY 41,344, Insurance 74,600 MS&AD Insurance Group Holdings Inc. JPN JPY 151,811, Inter & Catalog Retail 1,847 Rakuten Inc. JPN JPY 125,596, Leisure Equipment & Products 29,400 Sega Sammy Holdings Inc. JPN JPY 45,423, Machinery 8,600 Fanuc Ltd. JPN JPY 107,242, ,000 Amada Co. Ltd. JPN JPY 104,438, ,000 Mitsubishi Heavy Industries Ltd. JPN JPY 93,025, ,500 Komatsu Ltd. JPN JPY 70,024, ,200 SMC Corp. JPN JPY 58,422, ,000 Hirano Tecseed Co. Ltd. JPN JPY 19,545, ,696, Marine 63,000 Mitsui O.S.K. Lines Ltd. JPN JPY 34,902, Media 69,500 Tokyo Broadcasting System Inc. JPN JPY 80,133, Metals & Mining 47,000 Sumitomo Metal Mining Co. Ltd. JPN JPY 66,693, ,900 Toho Titanium Co. Ltd. JPN JPY 64,549, ,000 Mitsui Mining & Smelting Co. Ltd. JPN JPY 39,128, ,000 Nisshin Steel Co. Ltd. JPN JPY 33,666, ,036, Multiline Retail 20,000 Don Quijote Co. Ltd. JPN JPY 49,460, Office Electronics 15,500 CANON Inc. JPN JPY 65,255, Oil, Gas & Consumable Fuels 181,700 JX Holdings Inc. JPN JPY 100,116, Pharmaceuticals 53,300 Shionogi & Co. Ltd. JPN JPY 85,439, ,700 Astellas Pharmaceutical Inc. JPN JPY 60,971, ,411, Real Estate Management & Development 150,000 Mitsubishi Estate Co. Ltd. JPN JPY 225,900, Road & Rail 21,600 East Japan Railway Co. JPN JPY 114,048, ,900 Hitachi Transport Systems Ltd. JPN JPY 66,601, ,649, Semiconductors & Semiconductor Equipment 9,500 Disco Corp. JPN JPY 46,835, Specialty Retail 15,700 ABC-Mart Inc. JPN JPY 45,530, Tobacco 210 Japan Tobacco Inc. JPN JPY 63,105, Companies & Distributors 136,400 Mitsubishi Corp. JPN JPY 299,807, ,400 Mitsui & Co. Ltd. JPN JPY 129,272, ,079, Unaudited Semi-Annual Report 175

177 Franklin Templeton Japan Fund (Currency JPY) Wireless Telecommunication Services 1,177 NTT DoCoMo Inc. JPN JPY 166,898, ,100 Softbank Corp. JPN JPY 90,233, ,131, TOTAL SHARES 6,409,155, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 6,409,155, TOTAL INVESTMENTS 6,409,155, Unaudited Semi-Annual Report

178 Templeton Asian Bond Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 105,540,000 Sinochem Overseas Capital Co. Ltd., senior note, Reg S, 4.50%, 11/12/20 CHN USD 104,434, ,120,000,000 The Export-Import Bank of Korea, senior note, Reg S, 4.00%, 11/26/15 KOR PHP 48,387, ,960,000 ICICI Bank Ltd., Reg S, FRN, 6.375%, 04/30/22 IND USD 17,982, ,000,000 Petronas Capital Ltd., Reg S, 5.25%, 08/12/19 MYS USD 10,779, ,000,000 VTB Capital SA, senior bond, 2.95%, 12/23/13 RUS CNY 9,804, ,350,000 KazMunaiGaz Finance Sub BV, senior note, Reg S, 11.75%, 01/23/15 KAZ USD 5,438, ,800,000 HSBC Holdings PLC, sub. note, 6.50%, 09/15/37 GBR USD 3,992, ,000,000 LUKOIL International Finance BV, Reg S, 6.656%, 06/07/22 RUS USD 3,055, ,800,000 LUKOIL International Finance BV, Reg S, 6.356%, 06/07/17 RUS USD 1,887, ,000 Hutchison Whampoa International Ltd., Reg S, 7.45%, 11/24/33 HKG USD 204, ,966, Government and Municipal Bonds 507,446,000,000 Korea Treasury Bond, 4.25%, 12/10/12 KOR KRW 460,151, ,797,860,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 193,698, ,047,000,000 Government of Indonesia, FR40, 11.00%, 09/15/25 IDN IDR 123,397, ,182,000,000 Korea Treasury Bond, senior bond, 3.75%, 06/10/13 KOR KRW 78,364, ,400,000,000 Government of India, senior bond, 7.02%, 08/17/16 IND INR 73,250, ,620,000,000 Government of Indonesia, FR46, 9.50%, 07/15/23 IDN IDR 73,201, ,000,000,000 Government of India, 7.99%, 07/09/17 IND INR 67,603, ,250,000 Western Australia Treasury Corp., 5.50%, 07/17/12 AUS AUD 63,825, ,471,000,000 Government of Indonesia, FR43, 10.25%, 07/15/22 IDN IDR 57,931, ,000,000 Government of Sri Lanka, senior note, Reg S, 6.25%, 10/04/20 LKA USD 50,875, ,900,000 Government of Australia, TB123, 5.75%, 04/15/12 AUS AUD 39,108, ,530,000 Government of Malaysia, senior bond, 3.718%, 06/15/12 MYS MYR 33,953, ,000,000,000 Government of Indonesia, senior bond, FR17, 13.15%, 01/15/12 IDN IDR 32,667, ,695,000 Government of Vietnam, Reg S, 6.75%, 01/29/20 VND USD 31,270, ,600,000,000 Government of Indonesia, FR47, 10.00%, 02/15/28 IDN IDR 28,775, ,408,000,000 Government of Indonesia, FR42, 10.25%, 07/15/27 IDN IDR 26,438, ,890,000,000 Government of Indonesia, FR39, 11.75%, 08/15/23 IDN IDR 21,908, ,000,000 Government of the Philippines, senior note, 4.95%, 01/15/21 PHL PHP 21,360, ,000,000 Government of Philippine, senior bond, 5.75%, 02/21/12 PHL PHP 21,058, ,000,000,000 Government of Indonesia, FR34, 12.80%, 06/15/21 IDN IDR 20,450, ,600,000,000 Korea Treasury Bond, 4.75%, 03/10/12 KOR KRW 18,741, ,000,000 Government of Malaysia, senior bond, 2.509%, 08/27/12 MYS MYR 14,810, ,000,000 Government of India, senior bond, 7.46%, 08/28/17 IND INR 13,162, ,210,000 Government of Malaysia, senior bond, 0309, 2.711%, 02/14/12 MYS MYR 12,373, ,760,000 Queensland Treasury Corp., 6.00%, 08/14/13 AUS AUD 12,206, ,000,000,000 Government of Indonesia, FR35, 12.90%, 06/15/22 IDN IDR 10,536, ,000,000,000 Government of Sri Lanka, B, 11.75%, 04/01/14 LKA LKR 9,748, ,000,000 Government of Pakistan, Reg S, 6.875%, 06/01/17 PAK USD 9,050, ,900,000,000 Korea Treasury Bond, 5.75%, 09/10/13 KOR KRW 8,362, ,577,000,000 Government of Indonesia, FR44, 10.00%, 09/15/24 IDN IDR 7,284, ,000,000,000 Government of Indonesia, FR31, 11.00%, 11/15/20 IDN IDR 6,852, ,300,000 Government of Sri Lanka, A, 11.00%, 08/01/15 LKA LKR 6,064, ,950,000 Korea Treasury Bond, senior note, 7.125%, 04/16/19 KOR USD 4,719, ,470,000 Government of Vietnam, Reg S, 6.875%, 01/15/16 VND USD 4,687, ,400,000 Government of Sri Lanka, Reg S, 7.40%, 01/22/15 LKA USD 3,748, ,400,000 Government of Sri Lanka, A, 13.50%, 02/01/13 LKA LKR 3,495, ,700,000 Government of Sri Lanka, A, 8.50%, 01/15/13 LKA LKR 3,380, ,200,000 Government of Sri Lanka, A, 11.25%, 07/15/14 LKA LKR 3,010, ,215,000,000 Government of Indonesia, FR37, 12.00%, 09/15/26 IDN IDR 2,960, ,530,000,000 Indonesia Retail Bond, 9.35%, 08/15/12 IDN IDR 1,917, ,700,000 Government of Sri Lanka, B, 11.00%, 09/01/15 LKA LKR 1,357, ,590,000,000 Indonesia Recapital Bond, senior bond, FR18, %, 07/15/12 IDN IDR 1,180, ,000 Government of Indonesia, senior bond, Reg S, 7.75%, 01/17/38 IDN USD 1,143, ,000,000 Government of Sri Lanka, B, 6.60%, 06/01/14 LKA LKR 421, ,300,000,000 Republic of Indonesia, senior bond, ORI4, 9.50%, 03/12/12 IDN IDR 377, ,420,000 Government of Sri Lanka, A, 6.50%, 07/15/15 LKA LKR 344, ,420,000 Korea Treasury Bond, 5.25%, 03/10/13 KOR KRW 334, ,950,000 Government of Sri Lanka, A, 7.00%, 03/01/14 LKA LKR 171, ,300,000 Government of Sri Lanka, A, 6.90%, 08/01/12 LKA LKR 127, ,681,861, Unaudited Semi-Annual Report 177

179 Templeton Asian Bond Fund Securities Maturing Within One Year 188,940,000 Queensland Treasury Corp., 6.00%, 06/14/11 AUS AUD 193,961, ,570,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 171,561, ,165,000 Bank of Negara Moary Note, 0.00%, 07/19/11 MYS MYR 106,465, ,400,000 Malaysia Treasury Bill, 0.00%, 09/29/11 MYS MYR 98,742, ,811,000,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 84,265, ,055,000 Government of Malaysia, senior bond, 3.756%, 04/28/11 MYS MYR 65,480, ,140,000 Bank of Negara Moary Note, 0.00%, 03/10/11 MYS MYR 40,708, ,797,900,000 Government of India, 9.39%, 07/02/11 IND INR 40,625, ,105,000 Bank of Negara Moary Note, 0.00%, 01/27/11 MYS MYR 30,147, ,325,000 Bank of Negara Moary Note, 0.00%, 07/28/11 MYS MYR 29,844, ,100,000,000 India Treasury Bill, 0.00%, 03/11/11 IND INR 24,166, ,040,000 Bank of Negara Moary Note, 0.00%, 02/10/11 MYS MYR 16,832, ,320,000 Bank of Negara Moary Note, 0.00%, 03/15/11 MYS MYR 16,555, ,000,000,000 Government of Indonesia, FR25, 10.00%, 10/15/11 IDN IDR 16,077, ,333,000,000 Government of Sri Lanka, B, 7.00%, 08/01/11 LKA LKR 11,965, ,640,000 Bank of Negara Moary Note, 0.00%, 03/22/11 MYS MYR 11,490, ,000,000 India Treasury Bill, 364, 0.00%, 08/20/10 IND INR 11,002, ,267,000 Republic of Fiji, 6.875%, 09/13/11 FJ USD 10,272, ,000,000 India Treasury Bill, 0.00%, 02/18/11 IND INR 9,967, ,000,000,000 Indonesia Treasury Bill, 0.00%, 02/10/11 IDN IDR 9,937, ,741,560,000 Korea Treasury Bond, senior bond, 5.50%, 06/10/11 KOR KRW 6,989, ,650,000 Bank of Negara Moary Note, 0.00%, 01/27/11 MYS MYR 6,686, ,650,000 Bank of Negara Moary Note, 0.00%, 03/08/11 MYS MYR 6,665, ,650,000 Bank of Negara Moary Note, 0.00%, 10/13/11 MYS MYR 6,561, ,730,000 Malaysia Treasury Bill, 0.00%, 04/05/11 MYS MYR 6,353, ,580,000,000 Indonesia Treasury Bill, 0.00%, 03/03/11 IDN IDR 5,458, ,790,000 Malaysia Treasury Bill, 0.00%, 05/06/11 MYS MYR 4,433, ,390,000 Malaysia Treasury Bill, 0.00%, 04/29/11 MYS MYR 3,984, ,840,000 Malaysia Treasury Bill, 0.00%, 05/18/11 MYS MYR 3,478, ,320,000 Malaysia Treasury Bill, 0.00%, 03/17/11 MYS MYR 3,328, ,320,000 Malaysia Treasury Bill, 0.00%, 05/26/11 MYS MYR 3,309, ,100,000 Government of India, 6.57%, 02/24/11 IND INR 2,058, ,380,000 Malaysia Treasury Bill, 0.00%, 07/01/11 MYS MYR 1,722, ,330,000 Government of Sri Lanka, A, 12.00%, 07/15/11 LKA LKR 520, ,540,000 Sri Lanka Treasury Bill, 0.00%, 07/08/11 LKA LKR 169, ,000 Malaysia Treasury Bill, 0.00%, 03/25/11 MYS MYR 96, ,000,000 Sri Lanka Treasury Bill, 0.00%, 09/16/11 LKA LKR 94, ,460,000 Sri Lanka Treasury Bill, 0.00%, 02/04/11 LKA LKR 75, ,062,056, TOTAL BONDS 2,949,884, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 2,949,884, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 8,275,000 ICICI Bank Ltd., 144A, 6.625%, 10/03/12 IND USD 8,857, Government and Municipal Bonds 22,380,000 New South Wales Treasury Corp., 6.00%, 05/01/12 AUS AUD 23,096, ,395,000 Government of Vietnam, 144A, 6.875%, 01/15/16 VND USD 5,658, ,754, TOTAL BONDS 37,612, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 37,612, TOTAL INVESTMENTS 2,987,496, Floating Rates are indicated as at December 31, Unaudited Semi-Annual Report

180 Templeton Asian Growth Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Automobiles 101,054,500 PT Astra International Tbk IDN IDR 611,822, ,986,895 Guangzhou Automobile Group Co. Ltd., H CHN HKD 469,282, ,420,000 Brilliance China Automotive Holdings Ltd. CHN HKD 380,261, ,461,367, Commercial Banks 146,423,900 Siam Commercial Bank Public Co. Ltd., fgn. THA THB 504,070, ,178,576 China Merchants Bank Co. Ltd., H CHN HKD 479,487, ,771,600 Kasikornbank Public Co. Ltd., fgn. THA THB 454,771, ,005,009 PT Bank Central Asia Tbk IDN IDR 267,794, ,975,970 PT Bank Danamon Indonesia Tbk IDN IDR 258,098, ,300,792 MCB Bank Ltd. PAK PKR 99,323, ,753,100 Tisco Financial Group Public Co. Ltd., fgn. THA THB 45,748, ,842,600 Kiatnakin Bank Public Co. Ltd., fgn. THA THB 32,225, ,278,000 PT Bank Rakyat Indonesia (Persero) Tbk IDN IDR 22,466, ,179,332 Faysal Bank Ltd. PAK PKR 6,543, ,170,529, Communications Equipment 23,911,500 VTech Holdings Ltd. HKG HKD 282,108, Construction & Engineering 3,349,801 GS Engineering & Construction Corp. KOR KRW 346,556, ,374,373 Hyundai Development Co. KOR KRW 223,615, ,172, Construction Materials 43,539,786 Siam Cement Public Co. Ltd., fgn. THA THB 522,796, Diversified Financial Services 56,429,000 Thanachart Capital Public Co. Ltd., fgn. THA THB 67,568, Electronic Equipment, Instruments & Components 186,148,600 Cal-Comp Electronics (Thailand) Public Co. Ltd., fgn. THA THB 21,422, ,778 Intelligent Digital Integrated Security Co. Ltd. KOR KRW 15,680, ,996,600 Delta Electronics (Thailand) Public Co. Ltd., fgn. THA THB 4,652, ,756, Food & Staples Retailing 29,645,734 Dairy Farm International Holdings Ltd. HKG USD 275,408, Food Products 104,226,000 People s Food Holdings Ltd. CHN SGD 62,145, ,659,500 Thai Union Frozen Products Ltd., fgn. THA THB 51,791, ,937, Health Care Equipment & Supplies 11,660,180 Microlife Corp. TWN TWD 20,466, Household Durables 106,502,000 Samson Holding Ltd. CHN HKD 22,608, ,430,800 Fancy Wood Industries Public Co. Ltd., fgn. THA THB 2,404, ,013, IT Services 28,798,501 Tata Consultancy Services Ltd. IND INR 750,387, ,273,247 Infosys Technologies Ltd. IND INR 483,339, ,042,492 HCL Infosystems Ltd. IND INR 55,132, ,288,860, Machinery 85,998,058 China International Marine Containers (Group) Co. Ltd., B CHN HKD 199,159, Media 142,134,100 BEC World Public Co. Ltd., fgn. THA THB 150,100, ,968,300 GMM Grammy Public Co. Ltd., fgn. THA THB 23,240, ,340, Unaudited Semi-Annual Report 179

181 Templeton Asian Growth Fund Metals & Mining 626,402,000 Aluminum Corp. of China Ltd., H CHN HKD 571,397, ,387,479 Sesa Goa Ltd. IND INR 568,387, ,179,311 Hindalco Industries Ltd. IND INR 160,539, ,362,572 National Aluminium Co. Ltd. IND INR 125,870, ,036,100 Tycoons Worldwide Groups (Thailand) Public Co. Ltd., fgn. THA THB 12,264, ,438,460, Oil, Gas & Consumable Fuels 621,728,000 PetroChina Co. Ltd., H CHN HKD 809,506, ,613,255 SK Energy Co. Ltd. KOR KRW 798,190, ,107,471 PTT Public Co. Ltd., fgn. THA THB 682,334, ,741,402 Oil & Gas Development Co. Ltd. PAK PKR 595,460, ,437,000 CNOOC Ltd. CHN HKD 518,659, ,210,000 China Petroleum and Chemical Corp., H CHN HKD 508,485, ,356,945 Oil & Natural Gas Corp. Ltd. IND INR 415,303, ,285,900 Reliance Industries Ltd. IND INR 409,120, ,802,000 Yanzhou Coal Mining Co. Ltd., H CHN HKD 261,628, ,674,801 PTT Aromatics & Refining Public Co. Ltd., fgn. THA THB 198,056, ,430,927 Inner Mongolia Yitai Coal Co. Ltd., B CHN USD 174,314, ,866,600 PTT Exploration and Production Public Co. Ltd., fgn. THA THB 155,715, ,137,294 Coal India Ltd. IND INR 43,168, ,569,945, Personal Products 745,374 Neopharm Co. Ltd. KOR KRW 3,423, Real Estate Management & Development 403,336,380 Land and Houses Public Co. Ltd., fgn. THA THB 86,529, ,116,266 Peninsula Land Ltd. IND INR 28,636, ,365,600 Sansiri PLC, fgn. THA THB 20,742, ,084,204 Hemaraj Land and Development Public Co. Ltd., fgn. THA THB 11,204, ,113, Semiconductors & Semiconductor Equipment 9,809,415 MediaTek Inc. TWN TWD 140,398, Textiles, Apparel & Luxury Goods 2,799,462 Youngone Corp. KOR KRW 26,340, ,970 Youngone Holdings Co. Ltd. KOR KRW 24,056, ,571,581 Tainan Enterprises Co. Ltd. TWN TWD 22,579, ,583,579 Win Hanverky Holdings Ltd. CHN HKD 19,227, ,004,011 Victory City International Holdings Ltd. HKG HKD 6,566, ,620 Avista Inc. KOR KRW 4,245, ,015, Transportation Infrastructure 38,389,042 Chiwan Wharf Holdings Ltd., B CHN HKD 67,616, TOTAL SHARES 14,682,456, WARRANTS Real Estate Management & Development 54,517,600 Sansiri Public Co., Ltd., wts., 01/20/15 THA THB 2,139, TOTAL WARRANTS 2,139, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 14,684,595, TOTAL INVESTMENTS 14,684,595, Unaudited Semi-Annual Report

182 Templeton Asian Smaller Companies Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Auto Components 248,431 Apollo Tyres Ltd. IND INR 370, Automobiles 455,910 Chongqing Changan Automobile Co. Ltd., B CHN HKD 385, Beverages 47,765 Hite Brewery Co. Ltd. KOR KRW 5,133, ,460 Jinro Ltd. KOR KRW 2,161, ,294, Capital s 32,270 Tata Investment Corp. Ltd. IND INR 402, Chemicals 725,613 Tata Chemicals Ltd. IND INR 6,391, ,691,000 China XLX Fertiliser Ltd. CHN SGD 5,421, ,813, Commercial Banks 373,597 ING Vysya Bank Ltd. IND INR 3,071, ,066,400 Tisco Financial Group Public Co. Ltd., fgn. THA THB 1,445, ,137 PT Bank Danamon Indonesia Tbk IDN IDR 410, ,518 Federal Bank Ltd. IND INR 315, ,243, Communications Equipment 51,000 VTech Holdings Ltd. HKG HKD 601, Computers & Peripherals 754,000 Advantech Co. Ltd. TWN TWD 2,132, ,039 Lite-On Technology Corp. TWN TWD 287, ,419, Construction & Engineering 10,000 Hyundai Development Co. KOR KRW 303, Construction Materials 112,025 Huaxin Cement Co. Ltd., B CHN USD 317, Consumer Finance 208,100 Sundaram Finance Ltd. IND INR 2,769, Containers & Packaging 2,174,546 Amvig Holdings Ltd. CHN HKD 1,826, Electronic Equipment, Instruments & Components 4,047,000 Digital China Holdings Ltd. CHN HKD 7,560, ,808 SFA Engineering Corp. KOR KRW 2,526, ,600 Hana Microelectronics Public Co. Ltd., fgn. THA THB 318, ,405, Energy Equipment & Services 5,773,188 KNM Group Berhad MYS MYR 5,317, ,287,000 Honghua Group Ltd. CHN HKD 1,190, ,507, Food & Staples Retailing 2,348,000 Beijing Jingkelong Co. Ltd., H CHN HKD 3,111, ,024 Siam Makro Public Co. Ltd., fgn. THA THB 1,651, ,000 President Chain Store Corp. TWN TWD 839, ,000 Lianhua Supermarket Holdings Ltd. CHN HKD 143, ,745, Food Products 285,342 Maeil Dairy Industry KOR KRW 4,160, ,576 Binggrae Co. Ltd. KOR KRW 3,824, ,000 Uni-President China Holdings Ltd. TWN HKD 387, Namyang Dairy Products Co. Ltd. KOR KRW 314, ,687, Gas Utilities 66,814 Gujarat Gas Co. Ltd. IND INR 595, Unaudited Semi-Annual Report 181

183 Templeton Asian Smaller Companies Fund Health Care Equipment & Supplies 52,500 Hartalega Holdings Bhd. MYS MYR 90, Hotels, Restaurants & Leisure 573,300 QSR Brands Berhad MYS MYR 940, Household Products 1,225,000 Goodbaby International Holdings Ltd., Reg S CHN HKD 851, Independent Power Producers & Energy Traders 610,500 Electricity Generating Public Co. Ltd., fgn. THA THB 2,142, ,800 Guangdong Electric Power Development Co. Ltd., B CHN HKD 314, ,456, Industrial Conglomerates 1,900,000 Chongqing Machinery and Electric Co. Ltd., H CHN HKD 708, Insurance 74,373,832 PT Panin Financial Tbk IDN IDR 1,733, Inter & Catalog Retail 55,819 GS Home Shopping Inc. KOR KRW 5,441, Inter Software & Services 19,700 Sohu.com Inc. CHN USD 1,250, IT Services 5,045,000 Travelsky Technology Ltd., H CHN HKD 5,270, ,170 MindTree Ltd. IND INR 2,276, ,000 HCL Infosystems Ltd. IND INR 96, ,644, Leisure Equipment & Products 201,361 Giant Manufacturing Co. Ltd. TWN TWD 821, ,102,000 Yorkey Optical International Cayman Ltd. CHN HKD 198, ,019, Machinery 12,086,000 Shanghai Prime Machinery Co. Ltd., H CHN HKD 3,218, ,570 TK Corp. KOR KRW 322, ,187 Zhongde Waste Technology AG CHN EUR 318, ,859, Media 411,650 Daekyo Co. Ltd. KOR KRW 2,202, ,030,000 Hong Kong Economic Times Holdings Ltd. HKG HKD 726, ,400 Media Prima Bhd MYS MYR 609, ,538, Metals & Mining 2,148,271 Usha Martin Ltd. IND INR 3,370, ,084,000 Lion Industries Corp. Bhd. MYS MYR 1,970, ,340, Oil, Gas & Consumable Fuels 1,912,000 Bangchak Petroleum Public Co. Ltd. THA THB 1,182, Personal Products 37,533 Pacific Corp. KOR KRW 7,364, Pharmaceuticals 215,403 Medy-tox Inc. KOR KRW 5,513, ,160 Dr. Reddy s Laboratories Ltd. IND INR 377, ,891, Real Estate Management & Development 4,107,320 Ishaan Real Estate PLC GBR GBP 4,197, Semiconductors & Semiconductor Equipment 1,527,000 Novatek Microelectronics Corp. Ltd. TWN TWD 4,920, ,883 Silicon Works Co. Ltd. KOR KRW 4,717, ,906 Anapass Inc. KOR KRW 3,875, ,513, Unaudited Semi-Annual Report

184 Templeton Asian Smaller Companies Fund Specialty Retail 13,506,000 Giordano International Ltd. HKG HKD 7,871, ,360,000 Sa Sa International Holdings Ltd. HKG HKD 5,205, ,000 Luk Fook Holdings (International) Ltd. HKG HKD 1,278, ,355, Textiles, Apparel & Luxury Goods 112,572 Youngone Holdings Co. Ltd. KOR KRW 3,679, ,128,000 Win Hanverky Holdings Ltd. CHN HKD 172, ,852, Tobacco 56,500 PT Gudang Garam Tbk IDN IDR 250, Transportation Infrastructure 750,000 Sichuan Expressway Co. Ltd., H CHN HKD 482, ,000 Hopewell Highway Infrastructure Ltd. HKG HKD 374, ,000 International Container Terminal Services Inc. PHL PHP 288, ,145, TOTAL SHARES 152,322, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 152,322, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Metals & Mining 6,854 MOIL Ltd., Reg S IND INR 68, TOTAL SHARES 68, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 68, TOTAL INVESTMENTS 152,391, Unaudited Semi-Annual Report 183

185 Templeton BRIC Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Air Freight & Logistics 45,241,000 Sinotrans Ltd., H CHN HKD 12,397, Automobiles 10,455,108 Chongqing Changan Automobile Co. Ltd., B CHN HKD 8,851, Beverages 3,695,480 Companhia de Bebidas das Americas (AmBev), IDR BRA BRL 96,642, Chemicals 1,368,750 Uralkali, GDR, Reg S RUS USD 50,287, ,700 Grasim Industries Ltd. IND INR 47,624, ,343,771 Tata Chemicals Ltd. IND INR 20,645, ,557, Commercial Banks 6,411,682 Itau Unibanco Holding SA, ADR BRA USD 153,944, ,838,885 Banco Bradesco SA, ADR, pfd. BRA USD 138,760, ,729,743 Itausa Investimentos Itau SA, pfd. BRA BRL 85,343, ,328,320 China Construction Bank Corp., H CHN HKD 57,934, ,692,455 Industrial and Commercial Bank of China Ltd., H CHN HKD 53,221, ,128,938 ICICI Bank Ltd. IND INR 28,901, ,292,300 Bank of China Ltd., H CHN HKD 18,133, ,830,923 Federal Bank Ltd. IND INR 16,281, ,911,714 Karnataka Bank Ltd. IND INR 10,718, ,459 Union Bank of India IND INR 4,316, ,814 ING Vysya Bank Ltd. IND INR 1,363, ,920, Commercial Services & Supplies 18,142,000 Fook Woo Group Holdings Ltd. CHN HKD 7,189, Electric Utilities 1,188,434 Reliance Infrastructure Ltd. IND INR 22,379, ,756,757 RusHydro, ADR RUS USD 9,644, ,024, Electronic Equipment, Instruments & Component 1,421,700 China Security & Surveillance Technology Inc. CHN USD 7,577, Energy Equipment & Services 3,503,614 OAO TMK, GDR RUS USD 72,279, ,626 Anhui Tianda Oil Pipe Co. Ltd., H CHN HKD 1, ,280, Food Products 1,223,100 BRF Brasil Foods SA BRA BRL 20,149, ,804,000 Uni-President China Holdings Ltd. TWN HKD 6,317, ,467, Household Durables 6,974,222 Gafisa SA BRA BRL 50,597, ,003,826 MRV Engenharia e Participacoes SA BRA BRL 9,442, ,039, Insurance 6,444,800 AIA Group Ltd. HKG HKD 18,117, IT Services 972,300 Infosys Technologies Ltd. IND INR 74,913, ,450,453 Tata Consultancy Services Ltd. IND INR 37,793, ,469,203 MindTree Ltd. IND INR 18,361, ,728,000 Travelsky Technology Ltd., H CHN HKD 10,162, ,231, Marine 16,380,000 China Shipping Development Co. Ltd., H CHN HKD 21,832, ,111,000 China Shipping Container Lines Co. Ltd., H CHN HKD 14,253, ,256,067 Pacific Basin Shipping Ltd. CHN HKD 8,168, ,254, Unaudited Semi-Annual Report

186 Templeton BRIC Fund Metals & Mining 9,042,800 Vale SA, ADR, pfd., A BRA USD 273,273, ,689,488 Hindalco Industries Ltd. IND INR 152,342, ,349,149 Minings and Metallurgical Co. Norilsk Nickel, ADR RUS USD 128,593, ,817,157 Steel Authority of India Ltd. IND INR 60,478, ,279,200 Tata Steel Ltd. IND INR 49,793, ,110,818 Maharashtra Seamless Ltd. IND INR 35,152, ,981,230 Sesa Goa Ltd. IND INR 29,240, ,500 Bradespar SA, pfd. BRA BRL 25,698, ,041,241 Metalurgica Gerdau SA, pfd. BRA BRL 16,814, ,034,467 Confab Industrial SA, pfd. BRA BRL 11,153, ,466 Usinas Siderurgicas de Minas Gerais SA, pfd., A BRA BRL 9,899, ,880,172 Usha Martin Ltd. IND INR 6,087, ,000 MOIL Ltd. IND INR 925, Mining and Metallurgical Co. Norilsk Nickel, ADR RUS USD 16, ,472, Oil, Gas & Consumable Fuels 124,280,000 PetroChina Co. Ltd., H CHN HKD 161,815, ,341,419 Yanzhou Coal Mining Co. Ltd., H CHN HKD 153,501, ,716,400 Petroleo Brasileiro SA, ADR, pfd. BRA USD 126,989, ,604,000 China Petroleum and Chemical Corp., H CHN HKD 102,043, ,657,000 CNOOC Ltd. CHN HKD 65,971, ,410,300 Reliance Industries Ltd. IND INR 57,046, ,081,913 Inner Mongolia Yitai Coal Co. Ltd., B CHN USD 43,394, ,390,346 KazMuniGas Exploration Production, GDR KAZ USD 27,514, ,807,500 Rosneft Oil Co., GDR RUS USD 20,101, ,228,000 China Coal Energy Co., H CHN HKD 15,975, ,400 Oil & Natural Gas Corp. Ltd. IND INR 12,970, ,000 LUKOIL Holdings, ADR RUS USD 8,320, ,250 Coal India Ltd. IND INR 6,951, ,400 Great Eastern Shipping Co. Ltd. IND INR 5,283, ,100 Gazprom, ADR RUS USD 179, ,060, Real Estate Management & Development 105,504,500 Soho China Ltd. CHN HKD 77,915, ,086,000 Beijing Capital Land Ltd., H CHN HKD 13,074, ,803,615 Peninsula Land Ltd. IND INR 11,108, ,146,000 China Vanke Co. Ltd., B CHN HKD 8,826, ,924, Road & Rail 1,317,967 Localiza Rent a Car SA BRA BRL 21,363, Transportation Infrastructure 4,094,000 Cosco Pacific Ltd. CHN HKD 7,152, TOTAL SHARES 2,961,527, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 2,961,527, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Oil, Gas & Consumable Fuels 3,398,307 Gazprom, ADR RUS USD 86,452, ,150 LUKOIL Holdings, ADR RUS USD 37,373, ,826, TOTAL SHARES 123,826, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 123,826, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Chemicals 11,286 Silvinit RUS USD 10,150, Commercial Banks 18,555,040 Sberbank RF RUS USD 63,217, Energy Equipment & Services 1,150,637 OAO TMK RUS USD 5,790, Unaudited Semi-Annual Report 185

187 Templeton BRIC Fund Metals & Mining 2,799,662 Raspadskaya OAO RUS USD 19,680, ,823 MOIL Ltd., Reg S IND INR 803, ,483, Oil, Gas & Consumable Fuels 7,653,200 TNK-BP RUS USD 20,516, ,000 Rosneft Oil Co. RUS USD 737, ,253, TOTAL SHARES 120,894, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 120,894, TOTAL INVESTMENTS 3,206,248, Unaudited Semi-Annual Report

188 Templeton China Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Air Freight & Logistics 15,435,000 Sinotrans Ltd., H CHN HKD 4,229, Auto Components 6,973,227 Cheng Shin Rubber Industry Co. Ltd. TWN TWD 15,538, ,194,000 Xinyi Glass Holdings Ltd. CHN HKD 5,100, ,638, Automobiles 11,268,000 Dongfeng Motor Group Co. Ltd., H CHN HKD 19,455, ,725,924 Great Wall Motor Co. Ltd., H CHN HKD 14,775, ,780,718 Jiangling Motors Corp. Ltd., B CHN HKD 10,934, ,615,280 Chongqing Changan Automobile Co. Ltd., B CHN HKD 8,140, ,550,454 Guangzhou Automobile Group Co. Ltd., H CHN HKD 4,915, ,220, Beverages 1,333,744 Yantai Changyu Pioneer Wine Co. Ltd., B CHN HKD 14,194, Chemicals 2,664,000 Yingde Gases Group Co. Ltd. CHN HKD 2,347, ,866,000 Lumena Resources Corp. CHN HKD 1,397, ,745, Commercial Banks 102,271,400 Bank of China Ltd., H CHN HKD 54,079, ,906,271 China Construction Bank Corp., H CHN HKD 48,548, ,069,550 Industrial and Commercial Bank of China Ltd., H CHN HKD 18,610, ,302,500 BOC Hong Kong (Holdings) Ltd. CHN HKD 18,146, ,539,800 China Minsheng Banking Corp. Ltd., H CHN HKD 6,470, ,956,000 Agricultural Bank of China Ltd. CHN HKD 4,982, ,839, Commercial Services & Supplies 11,327,922 Fook Woo Group Holdings Ltd. CHN HKD 4,488, Communications Equipment 226,800 HTC Corp. TWN TWD 6,997, ,361 ZTE Corp., H CHN HKD 2,064, ,061, Computers & Peripherals 2,457,300 Simplo Technology Co. Ltd. TWN TWD 17,859, ,739,333 Asustek Computer Inc. TWN TWD 16,516, ,649,799 Lite-On IT Corp. TWN TWD 14,462, ,017,057 Pegatron Corp. TWN TWD 4,344, ,765 Advantech Co. Ltd. TWN TWD 2,768, ,950, Construction Materials 1,762,550 Huaxin Cement Co. Ltd., B CHN USD 4,988, ,420,500 Asia Cement China Holdings Corp. CHN HKD 2,650, ,660,000 BBMG Corp. CHN HKD 2,259, ,897, Distributors 15,553,960 Dah Chong Hong Holdings Ltd. CHN HKD 16,509, Diversified Telecommunication Services 6,968,176 China Unicom (Hong Kong) Ltd. CHN HKD 9,969, ,428,000 China Telecom Corp. Ltd., H CHN HKD 2,301, ,270, Electric Utilities 4,003,000 Cheung Kong Infrastructure Holdings Ltd. HKG HKD 18,334, Electrical Equipment 3,053,092 Dongfang Electric Corp. Ltd., H CHN HKD 15,142, Electronic Equipment, Instruments & Components 5,009,179 Synnex Technology International Corp. TWN TWD 13,514, ,300 China Security & Surveillance Technology Inc. CHN USD 2,559, ,074, Unaudited Semi-Annual Report 187

189 Templeton China Fund Energy Equipment & Services 4,122,000 Honghua Group Ltd. CHN HKD 673, Food & Staples Retailing 7,544,772 Dairy Farm International Holdings Ltd. HKG USD 70,090, ,495,662 President Chain Store Corp. TWN TWD 29,950, ,936,000 China Resources Enterprise Ltd. CHN HKD 20,226, ,102,982 Beijing Jingkelong Co. Ltd., H CHN HKD 6,762, ,030, Food Products 10,022,000 Shenguan Holdings Group Ltd. CHN HKD 13,126, ,012,000 China Yurun Food Group Ltd. CHN HKD 9,959, ,372,000 China Foods Ltd. CHN HKD 9,789, ,205,000 Wilmar International Ltd. SGP SGD 5,287, ,631,300 Uni-President China Holdings Ltd. TWN HKD 5,154, ,501,215 Xiwang Sugar Holdings Co. Ltd. CHN HKD 4,238, ,835,000 People s Food Holdings Ltd. CHN SGD 2,882, ,439, Hotels, Restaurants & Leisure 5,427,000 SJM Holdings Ltd. HKG HKD 8,616, ,054,841 NagaCorp Ltd. KH HKD 2,121, ,737, Independent Power Producers & Energy Traders 26,972,000 Datang International Power Generation Co. Ltd., H CHN HKD 9,577, ,354,423 Guangdong Electric Power Development Co. Ltd., B CHN HKD 2,369, ,947, Industrial Conglomerates 3,568,000 Shanghai Industrial Holdings Ltd. CHN HKD 15,378, Insurance 5,198,000 China Life Insurance Co. Ltd., H CHN HKD 21,199, ,242,600 AIA Group Ltd. HKG HKD 11,926, ,126, Inter Software & Services 231,000 Sohu.com Inc. CHN USD 14,666, IT Services 9,850,861 Travelsky Technology Ltd., H CHN HKD 10,291, Leisure Equipment & Products 5,802,000 Yorkey Optical International Cayman Ltd. CHN HKD 1,045, Machinery 8,286,800 Changsha Zoomlion Heavy Industry Science and Technology Development Co. Ltd., H, Reg S CHN HKD 18,721, ,896,000 Lonking Holdings Ltd. CHN HKD 14,879, ,830,000 China National Materials Co. Ltd., H CHN HKD 7,929, ,824 Shin Zu Shing Co. Ltd. TWN TWD 795, ,025 Zhongde Waste Technology AG CHN EUR 616, ,943, Marine 29,595,000 China Shipping Container Lines Co. Ltd., H CHN HKD 13,136, ,612,000 China Shipping Development Co. Ltd., H CHN HKD 12,811, ,848,262 Sinotrans Shipping Ltd. CHN HKD 4,103, ,051, Metals & Mining 18,532,000 Jiangxi Copper Co. Ltd., H CHN HKD 61,038, ,780,000 Angang Steel Co. Ltd., H CHN HKD 27,176, ,235,600 China Zhongwang Holdings Ltd. CHN HKD 1,802, ,350 Vale SA, A BRA HKD 1,540, ,557, Multiline Retail 1,292,000 Springland International Holdings Ltd. CHN HKD 1,038, Unaudited Semi-Annual Report

190 Templeton China Fund Oil, Gas & Consumable Fuels 101,954,000 China Petroleum and Chemical Corp., H CHN HKD 97,592, ,340,000 CNOOC Ltd. CHN HKD 96,224, ,440,000 Yanzhou Coal Mining Co. Ltd., H CHN HKD 86,719, ,302,000 PetroChina Co. Ltd., H CHN HKD 74,608, ,964,500 China Shenhua Energy Co. Ltd., H CHN HKD 62,765, ,321,000 China Coal Energy Co., H CHN HKD 25,492, ,402, Pharmaceuticals 1,519,000 Tong Ren Tang Technologies Co. Ltd., H CHN HKD 4,651, Real Estate Management & Development 17,802,500 Soho China Ltd. CHN HKD 13,147, ,696,000 Hopewell Holdings Ltd. HKG HKD 11,602, ,465,000 Agile Property Holdings Ltd. CHN HKD 9,565, ,151,700 China Vanke Co. Ltd., B CHN HKD 1,422, ,737, Semiconductors & Semiconductor Equipment 11,844,214 Taiwan Semiconductor Manufacturing Co. Ltd. TWN TWD 28,828, ,862 MediaTek Inc. TWN TWD 8,900, ,630 Realtek Semiconductor Corp. TWN TWD 1,702, ,432, Software 21,773 Shanda Interactive Entertainment Ltd., ADR CHN USD 863, Specialty Retail 21,457,240 GOME Electrical Appliances Holdings Ltd. CHN HKD 7,785, Textiles, Apparel & Luxury Goods 8,516,806 Anta Sports Products Ltd. CHN HKD 13,653, Transportation Infrastructure 11,571,593 Cosco Pacific Ltd. CHN HKD 20,217, ,636,000 Sichuan Expressway Co. Ltd., H CHN HKD 7,485, ,703, Wireless Telecommunication Services 5,433,500 China Mobile Ltd. CHN HKD 53,967, TOTAL SHARES 1,477,723, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 1,477,723, TOTAL INVESTMENTS 1,477,723, Unaudited Semi-Annual Report 189

191 Templeton Eastern Europe Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Beverages 1,534,242 Central European Distribution Corp. POL USD 26,263, Building Products 20,982,245 Trakya Cam Sanayii AS TUR TRY 32,348, Chemicals 484,000 Gubre Fabrikalari TAS TUR TRY 4,024, Commercial Banks 31,132,815 Turkiye Vakiflar Bankasi T.A.O., D TUR TRY 59,015, ,565,989 Erste Group Bank AG AUT EUR 55,028, ,215,811 Turkiye Is Bankasi (Isbank), C TUR TRY 53,904, ,132,323 Raiffeisen Bank International AG AUT EUR 46,425, ,254,370 OTP Bank Ltd. HUN HUF 40,652, ,210,000 Turkiye Garanti Bankasi AS TUR TRY 34,916, ,877,645 BRD-Groupe Societe Generale ROM RON 8,381, ,324, Construction & Engineering 1,796,330 Polnord SA POL PLN 15,035, Containers & Packaging 864,266 Anadolu Cam Sanayii AS TUR TRY 1,382, Electric Utilities 9,917,712 RusHydro, ADR RUS USD 40,701, Food Products 12,550,679 Tat Konserve Sanayii AS TUR TRY 26,164, ,000 Kernel Holding SA UKR PLN 17,843, ,049,537 Pinar Sut Mamulleri Sanayii AS TUR TRY 14,656, ,000 Agroton Public Ltd. UKR PLN 7,725, ,388, Hotels, Restaurants & Leisure 684,793 AmRest Holdings NV POL PLN 14,675, ,200 Do & Co Restaurants & Catering AG AUT TRY 2,749, ,424, Media 3,787,900 CTC Media Inc. RUS USD 66,343, ,119,091 TVN SA POL PLN 9,135, ,478, Metals & Mining 512,300 Novolipetsk Steel, GDR, Reg S RUS USD 18,209, ,780 Koza Altin Isletmeleri AS TUR TRY 9,325, ,949,440 KazakhGold Group Ltd., GDR, Reg S KAZ USD 8,164, ,699, Oil, Gas & Consumable Fuels 1,319,420 OMV AG AUT EUR 41,033, ,726,544 KazMuniGas Exploration Production, GDR KAZ USD 25,541, ,742,185 Zhaikmunai LP, GDR, Reg S KAZ USD 24,905, ,100 LUKOIL Holdings, ADR RUS USD 2,458, ,939, Pharmaceuticals 534,524 Egis Nyrt HUN HUF 38,575, Real Estate Management & Development 3,804,819 Immofinanz Immobilien Anlagen AG AUT EUR 12,133, ,827,155 Ablon Group Ltd. HUN GBP 5,522, ,656, Textiles, Apparel & Luxury Goods 783,986 Pegas Nonwovens SA CZE CZK 14,684, TOTAL SHARES 777,926, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 777,926, Unaudited Semi-Annual Report

192 Templeton Eastern Europe Fund (Currency EUR) TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Beverages 858,160 Synergy Co. RUS USD 32,074, Electric Utilities 61,873,391 RusHydro RUS USD 2,494, ,592,601 RusHydro RUS USD 1,313, ,808, Oil, Gas & Consumable Fuels 2,197,425 Gazprom, ADR RUS USD 41,788, ,340 LUKOIL Holdings, ADR RUS USD 37,141, ,930, TOTAL SHARES 114,813, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 114,813, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Commercial Banks 26,640,640 Sberbank RF RUS USD 67,848, Metals & Mining 240,025 Mining and Metallurgical Co. Norilsk Nickel RUS USD 42,043, ,309,200 Raspadskaya OAO RUS USD 6,879, ,923, Oil, Gas & Consumable Fuels 248,000 Gazprom RUS USD 1,173, ,900 Lukoil Holdings RUS USD 932, ,105, Pharmaceuticals 365,207 Veropharm RUS USD 13,923, Real Estate Management & Development 3,282,670 Immoeast AG ** AUT EUR TOTAL SHARES 132,800, BONDS Corporate Bonds 27,500,000 Polnord SA, cvt., FRN, 6.85%, 11/03/12 ** POL PLN 6,933, TOTAL BONDS 6,933, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 139,734, TOTAL INVESTMENTS 1,032,473, Floating Rates are indicated as at December 31, 2010 ** These securities are submitted to a Fair Valuation Unaudited Semi-Annual Report 191

193 Templeton Emerging s Bond Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 95,090,000 Dubai Electricity & Water Authority, senior note, 7.375%, 10/21/20 ARE USD 89,189, ,375,000 Sinochem Overseas Capital Co. Ltd., senior note, Reg S, 4.50%, 11/12/20 CHN USD 69,637, ,230,000 DP World Ltd., Reg S, 6.85%, 07/02/37 ARE USD 69,348, ,520,000 Gaz Capital (GAZPROM), senior note, Reg S, 5.092%, 11/29/15 RUS USD 65,323, ,000,000 Kazatomprom, Reg S, 6.25%, 05/20/15 KAZ USD 58,377, ,430,000 Alfa Bond Issuance, Reg S, 7.875%, 09/25/17 RUS USD 51,259, ,000,000 Yasar Holdings SA, 9.625%, 10/07/15 TUR USD 41,459, ,910,000 Kazakhstan Temir Zholy Finance BV, senior note, Reg S, 6.375%, 10/06/20 KAZ USD 40,515, ,600,000 LUKOIL Holdings, senior note, Reg S, 6.125%, 11/09/20 RUS USD 36,689, ,420,000 Edcon Holdings Proprietary Ltd., senior bond, Reg S, FRN, 6.526%, 06/15/15 ZAF EUR 36,525, ,800,000 Commercial Bank of Qatar, senior note, Reg S, 5.00%, 11/18/14 QAT USD 35,334, ,000,000 General Electric Capital Corp., senior note, A, 8.50%, 04/06/18 USA MXN 25,768, ,000,000 Petroleos de Venezuela SA, senior sub. bond, 4.90%, 10/28/14 VEN USD 24,375, ,000,000 ING Americas Issuance BV, cvt., Reg S, 11.00%, 04/16/12 UKR UAH 22,926, ,400,000 City of Kyiv, loan partn., Credit Suisse First Boston International, secured note, Reg S, 8.25%, 11/26/12 UKR USD 21,812, ,800,000 HSBK (Europe) BV, Reg S, 7.25%, 05/03/17 KAZ USD 21,029, ,500,000 Gaz Capital SA, senior bond, Reg S, 8.146%, 04/11/18 RUS USD 20,285, ,000,000 Edcon Proprietary Ltd., senior secured note, Reg S, FRN, 4.276%, 06/15/14 ZAF EUR 19,330, ,185,000 LUKOIL International Finance BV, Reg S, 6.656%, 06/07/22 RUS USD 18,523, ,400,000 VTB Capital SA, senior bond, Reg S, 6.25%, 06/30/35 RUS USD 15,822, ,680,000 KazMunaiGaz Finance Sub BV, senior note, Reg S, 11.75%, 01/23/15 KAZ USD 14,603, ,000,000 Export-Import Bank of India, N-01, 5.90%, 05/07/13 IND INR 12,725, ,000,000 National Bank for Agriculture & Rural Development, 11B, 5.82%, 05/05/13 IND INR 12,720, ,440,000 Petro Co. of Trinidad and Tobago Ltd., senior note, Reg S, 9.75%, 08/14/19 TTO USD 10,170, ,840,000 Centrais Eletricas Brasileiras SA, senior note, Reg S, 6.875%, 07/30/19 BRA USD 8,887, ,620,000 RSHB Capital SA, Reg S, 9.00%, 06/11/14 RUS USD 8,592, ,700,000 ICICI Bank Ltd., Reg S, FRN, 6.375%, 04/30/22 IND USD 6,708, ,810,000 TNK-BP Finance SA, senior note, Reg S, 7.875%, 03/13/18 RUS USD 6,590, ,690,000 LUKOIL International Finance BV, Reg S, 6.356%, 06/07/17 RUS USD 5,965, ,050,000 TNK-BP Finance SA, Reg S, 7.25%, 02/02/20 RUS USD 4,405, ,590,000 Alfa MTN s Ltd. for ABH Financial Ltd., Reg S, 8.20%, 06/25/12 RUS USD 2,745, ,240,000 The Export-Import Bank of Korea, senior note, 8.125%, 01/21/14 KOR USD 1,420, ,000 The Export-Import Bank of Korea, 5.125%, 03/16/15 KOR USD 387, ,000 The Export-Import Bank of Korea, Reg S, 5.25%, 02/10/14 KOR USD 382, ,000 The Export-Import Bank of Korea, 4.625%, 02/20/17 KOR EUR 325, ,162, Government and Municipal Bonds 253,055,000,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 228,198, ,773,500 Government of Mexico, MI10, 9.00%, 12/20/12 MEX MXN 215,203, ,301,120,000,000 Government of Indonesia, FR40, 11.00%, 09/15/25 IDN IDR 170,613, ,990,000 Government of Ukraine, Reg S, 7.75%, 09/23/20 UKR USD 124,429, ,745,000 Government of Mexico, M, 9.00%, 06/20/13 MEX MXN 120,775, ,183,000,000 Korea Treasury Bond, 4.25%, 12/10/12 KOR KRW 117,142, ,500 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/15 BRA BRL 110,812, ,575,000 Government of Argentina, senior bond, FRN, 3.169%, 12/15/35 ARG USD 110,348, ,915 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/45 BRA BRL 93,272, ,430 Nota Do Tesouro Nacional, 9.609%, 01/01/17 BRA BRL 77,079, ,500,000 Government of Ghana, 15.65%, 06/03/13 GHA GHS 74,067, ,295,000 Government of Iraq, Reg S, 5.80%, 01/15/28 IQ USD 73,750, ,280,000 Financing of Infrastructure Projects State Enterprise, Reg S, 8.375%, 11/03/17 UKR USD 73,003, ,000,000 Kingdom of Jordan, 3.875%, 11/12/15 JOR USD 71,906, ,622,000,000 Government of Hungary, 5.50%, 02/12/16 HUN HUF 67,817, ,018,000 ING Americas Issuance BV, 5.50%, 08/24/15 UKR UAH 64,657, ,295,175 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 62,713, ,995,000 Government of Poland, 4.75%, 04/25/12 POL PLN 62,024, ,190,000 Government of Venezuela, 10.75%, 09/19/13 VEN USD 59,755, ,138,000 Government of Argentina, senior bond, FRN, 0.677%, 08/03/12 ARG USD 57,525, ,762,300,000 Government of Hungary, 23/A, 6.00%, 11/24/23 HUN HUF 51,939, ,695,000 Government of Peru, 7.35%, 07/21/25 PER USD 51,771, ,850,000 Government of Croatia, Reg S, 6.75%, 11/05/19 HRV USD 46,531, ,000 Nota Do Tesouro Nacional, Index Linked, 6.00%, 08/15/12 BRA BRL 46,316, ,580,000 Government of Ghana, 13.30%, 09/30/13 GHA GHS 44,407, ,520,000 Government of Poland, 5.75%, 04/25/14 POL PLN 44,235, ,770,000,000 Government of Indonesia, FR47, 10.00%, 02/15/28 IDN IDR 41,420, ,730,000 Arab Republic of Egypt, Reg S, 5.75%, 04/29/20 EGY USD 41,319, ,770,000 Government of Hungary, senior note, 6.25%, 01/29/20 HUN USD 39,750, ,220,000 ING Americas Issuance BV, Reg S, 5.50%, 08/25/15 UKR UAH 39,422, ,370,000 Government of Lithuania, senior note, 9.375%, 06/22/14 LTU EUR 38,143, Unaudited Semi-Annual Report

194 Templeton Emerging s Bond Fund Government and Municipal Bonds (continued) 7,812,000,000 Government of Hungary, 13/E, 7.50%, 10/24/13 HUN HUF 37,515, ,110,000 Government of Vietnam, Reg S, 6.75%, 01/29/20 VND USD 36,787, ,380,000 Government of Poland, Strip, 01/25/12 POL PLN 30,442, ,245,000 Government of Lithuania, Reg S, 7.375%, 02/11/20 LTU USD 30,207, ,000,000 Eastern & Southern African Trade and Development Bank, Reg S, 6.875%, 01/09/16 SP USD 28,882, ,702,300,000 Government of Hungary, 7.50%, 11/12/20 HUN HUF 26,589, ,800,000 Government of Ghana, 14.99%, 03/11/13 GHA GHS 26,362, ,925,000 Government of Poland, Strip, 07/25/12 POL PLN 24,192, ,000,000 Inter-American Development Bank, senior note, 7.50%, 12/05/24 SP MXN 22,725, ,490,000,000 Government of Indonesia, FR34, 12.80%, 06/15/21 IDN IDR 21,282, ,050,000 Government of Lithuania, Reg S, 6.75%, 01/15/15 LTU USD 20,693, ,425,100,000 Government of Hungary, 19/A, 6.50%, 06/24/19 HUN HUF 19,402, ,260,000 Government of Ghana, 14.25%, 07/29/13 GHA GHS 18,828, ,500,000 Government of Poland, senior note, 6.375%, 07/15/19 POL USD 18,530, ,000,000 Government of Pakistan, Reg S, 6.875%, 06/01/17 PAK USD 18,100, ,270,000 Government of South Africa, senior note, 5.875%, 05/30/22 ZAF USD 17,524, ,800,000 Government of Sri Lanka, Reg S, 7.40%, 01/22/15 LKA USD 17,419, ,065,000 Government of Peru, 7.84%, 08/12/20 PER PEN 16,699, ,740,600,000 Government of Sri Lanka, A, 11.00%, 08/01/15 LKA LKR 16,667, ,300,000 Government of Macedonia, 9.875%, 01/08/13 MAC EUR 16,250, ,890,000 Government of Hungary, 6.75%, 07/28/14 HUN EUR 16,208, ,200,000 Government of South Africa, 4.50%, 04/05/16 ZAF EUR 15,540, ,577,300,000 Government of Sri Lanka, A, 11.25%, 07/15/14 LKA LKR 15,158, ,075,300,000 Government of Hungary, 17/B, 6.75%, 02/24/17 HUN HUF 13,986, ,500 Nota Do Tesouro Nacional, 9.609%, 01/01/14 BRA BRL 13,405, ,490 Nota Do Tesouro Nacional, 9.609%, 01/01/12 BRA BRL 13,310, ,440,000 Korea Treasury Bond, senior note, 7.125%, 04/16/19 KOR USD 12,473, ,000,000 Government of Colombia, senior note, 7.375%, 03/18/19 COL USD 12,017, ,247,300,000 Government of Sri Lanka, B, 11.00%, 09/01/15 LKA LKR 11,948, ,000,000 Government of Sri Lanka, A, 13.50%, 02/01/13 LKA LKR 9,916, ,725,000,000 Korea Treasury Bond, 4.75%, 03/10/12 KOR KRW 9,757, ,059,000,000 Government of Sri Lanka, A, 8.50%, 01/15/13 LKA LKR 9,656, ,925,000 Government of Poland, Strip, 10/25/12 POL PLN 9,287, ,610,000,000 Government of Indonesia, FR42, 10.25%, 07/15/27 IDN IDR 9,115, ,860,000,000 Government of Indonesia, FR39, 11.75%, 08/15/23 IDN IDR 8,999, ,505,000 Government of Malaysia, senior bond, 0309, 2.711%, 02/14/12 MYS MYR 8,906, ,000,000 Government of Georgia, 7.50%, 04/15/13 GE USD 8,261, ,810,000 Corporacion Andina De Fomento, 8.125%, 06/04/19 SP USD 8,157, ,340,000,000 Government of Indonesia, FR43, 10.25%, 07/15/22 IDN IDR 8,073, ,140,000,000 Government of Indonesia, FR35, 12.90%, 06/15/22 IDN IDR 7,848, ,750,000 Government of Qatar, senior note, Reg S, 6.55%, 04/09/19 QAT USD 7,804, ,630,000 Emirate of Abu Dhabi, Reg S, 6.75%, 04/08/19 ARE USD 7,715, ,060,000 Government of Indonesia, senior note, Reg S, %, 03/04/19 IDN USD 7,519, ,050,000,000 Government of Indonesia, FR46, 9.50%, 07/15/23 IDN IDR 7,318, ,625,000,000 Government of Indonesia, FR37, 12.00%, 09/15/26 IDN IDR 6,506, ,567,053 Government of Bosnia and Herzegovina, senior bond, B, FRN, 2.063%, 12/11/21 BIH EUR 6,232, ,955,000,000 Government of Indonesia, FR20, %, 12/15/13 IDN IDR 6,181, ,300,000 Government of Ghana, Reg S, 8.50%, 10/04/17 GHA USD 5,947, ,450,000 Government of Ukraine, Reg S, 7.65%, 06/11/13 UKR USD 5,753, ,100,000,000 Government of Indonesia, FR44, 10.00%, 09/15/24 IDN IDR 5,636, ,728,000,000 Government of Indonesia, FR19, 14.25%, 06/15/13 IDN IDR 5,611, ,530,000 Government of Poland, 5.25%, 04/25/13 POL PLN 5,289, ,420 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/13 BRA BRL 5,239, ,000,000 Government of Hungary, senior note, 5.75%, 06/11/18 HUN EUR 4,994, ,500,000 Government of Peru, 9.91%, 05/05/15 PER PEN 4,971, ,080,000 Korea Development Bank, senior note, 8.00%, 01/23/14 KOR USD 4,660, ,700,000,000 Government of Indonesia, FR45, 9.75%, 05/15/37 IDN IDR 4,506, ,620,000,000 Government of Indonesia, FR31, 11.00%, 11/15/20 IDN IDR 4,333, ,475,000 Government of Vietnam, Reg S, 6.875%, 01/15/16 VND USD 3,644, ,200,000 Government of Ghana, 19.00%, 01/14/13 GHA GHS 3,134, ,630,984 Peru Enhanced Pass-Through Finance Ltd., senior secured bond, A-1, Reg S, zero cpn., 05/31/18 PER USD 2,964, ,130,000,000 Government of Indonesia, FR52, 10.50%, 08/15/30 IDN IDR 2,856, ,000,000,000 Government of Indonesia, FR36, 11.50%, 09/15/19 IDN IDR 2,778, ,645,000 Government of Poland, 5.00%, 10/24/13 POL PLN 2,585, ,880,000,000 Government of Indonesia, FR48, 9.00%, 09/15/18 IDN IDR 2,523, ,047,000 Government of Indonesia, senior bond, Reg S, 7.75%, 01/17/38 IDN USD 2,505, ,585,000,000 Government of Indonesia, FR28, 10.00%, 07/15/17 IDN IDR 2,490, ,845,000 Government of Hungary, senior note, 4.375%, 07/04/17 HUN EUR 2,178, ,780,000 Republic of El Salvador, Reg S, 7.65%, 06/15/35 SVC USD 1,866, ,705,000 Government of Hungary, senior note, 3.875%, 02/24/20 HUN EUR 1,831, ,002,589 Government of Bosnia & Herzegovina, FRN, 2.063%, 12/11/17 BIH EUR 1,022, ,000 Government of Korea, senior bond, 5.625%, 11/03/25 KOR USD 811, Unaudited Semi-Annual Report 193

195 Templeton Emerging s Bond Fund Government and Municipal Bonds (continued) 600,000 Government of Hungary, senior note, 3.50%, 07/18/16 HUN EUR 692, ,710,000 Government of Sri Lanka, A, 7.00%, 03/01/14 LKA LKR 666, ,400,000 Government of Sri Lanka, B, 6.60%, 06/01/14 LKA LKR 652, ,000 Government of Mexico, M 20, 10.00%, 12/05/24 MEX MXN 597, ,400,000 Government of Sri Lanka, A, 6.50%, 07/15/15 LKA LKR 351, ,700,000 Government of Sri Lanka, A, 6.90%, 08/01/12 LKA LKR 309, ,400,000,000 Government of Indonesia, FR23, 11.00%, 12/15/12 IDN IDR 169, ,350,345, Securities Maturing Within One Year 212,195,000 Petroleos de Venezuela SA, senior bond, zero cpn., 07/10/11 VEN USD 202,450, ,700,000 Egypt Treasury Bill, 0.00%, 01/04/11 EGY EGP 124,950, ,410,000,000 Indonesia Treasury Bill, 0.00%, 03/03/11 IDN IDR 84,054, ,740,000 Government of Venezuela, Reg S, FRN, 1.288%, 04/20/11 VEN USD 82,693, ,140,000 Government of Malaysia, senior bond, 3.756%, 04/28/11 MYS MYR 79,186, ,650,000 Egypt Treasury Bill, 0.00%, 12/06/11 EGY EGP 66,835, ,925,000 Egypt Treasury Bill, 0.00%, 02/08/11 EGY EGP 58,466, ,225,000 Egypt Treasury Bill, 0.00%, 11/08/11 EGY EGP 57,891, ,725,000,000 Korea Treasury Bond, senior bond, 5.50%, 06/10/11 KOR KRW 55,724, ,342,100,000 Government of India, 9.39%, 07/02/11 IND INR 52,921, ,805,000 Republic of Fiji, 6.875%, 09/13/11 FJ USD 49,830, ,415,000 City of Kiev, Reg S, 8.625%, 07/15/11 UKR USD 39,538, ,910,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 37,254, ,575,000 Egypt Treasury Bill, 0.00%, 03/29/11 EGY EGP 32,928, ,550,000,000 Indonesia Treasury Bill, SP16, 0.00%, 04/07/11 IDN IDR 31,365, ,580,000 Malaysia Treasury Bill, 0.00%, 04/05/11 MYS MYR 25,627, ,175,000 Egypt Treasury Bill, 0.00%, 03/08/11 EGY EGP 23,559, ,000,000 ING Americas Issuance BV, cvt., Reg S, FRN, 10.85%, 10/17/11 UKR UAH 23,265, ,075,000 Bank of Negara Moary Note, 0.00%, 07/19/11 MYS MYR 20,795, ,585,000 Bank of Negara Moary Note, 0.00%, 03/10/11 MYS MYR 20,197, ,355,000 Bank of Negara Moary Note, 0.00%, 07/28/11 MYS MYR 12,905, ,835,000 Bank of Negara Moary Note, 0.00%, 01/27/11 MYS MYR 10,631, ,000,000 Egypt Treasury Bill, 0.00%, 04/12/11 EGY EGP 10,255, ,720,000 African Development Bank, senior note, 340, 25.50%, 06/24/11 SP GHS 9,080, ,000,000,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 8,171, ,480,000,000 Indonesia Treasury Bill, 0.00%, 02/10/11 IDN IDR 8,113, ,000,000,000 Indonesia Treasury Bill, SP17, 0.00%, 05/05/11 IDN IDR 7,304, ,270,000,000 African Development Bank, senior note, 12.50%, 12/22/11 SP ZMK 7,043, ,030,000 Bank of Negara Moary Note, 0.00%, 03/15/11 MYS MYR 6,138, ,675,000 Egypt Treasury Bill, 0.00%, 08/09/11 EGY EGP 4,964, ,825,000 Egypt Treasury Bill, 0.00%, 06/07/11 EGY EGP 4,920, ,500,000 African Development Bank, 21.50%, 08/24/11 SP GHS 3,914, ,500,000 Egypt Treasury Bill, 0.00%, 07/12/11 EGY EGP 3,832, ,900,000 Government of India, 6.57%, 02/24/11 IND INR 3,529, ,130,000 Malaysia Treasury Bill, 0.00%, 05/18/11 MYS MYR 3,250, ,990,000 Bank of Negara Moary Note, 0.00%, 03/22/11 MYS MYR 2,576, ,875,000 Egypt Treasury Bill, 0.00%, 03/22/11 EGY EGP 2,171, ,630,000 Bank of Negara Moary Note, 0.00%, 01/06/11 MYS MYR 2,150, ,560,000 Bank of Negara Moary Note, 0.00%, 01/20/11 MYS MYR 1,801, ,420,000 Malaysia Treasury Bill, 0.00%, 05/06/11 MYS MYR 1,742, ,850,000 Government of Sri Lanka, A, 12.00%, 07/15/11 LKA LKR 1,448, ,460,000 Sri Lanka Treasury Bill, 0.00%, 02/04/11 LKA LKR 666, ,120,000 Sri Lanka Treasury Bill, 0.00%, 07/08/11 LKA LKR 660, ,990,000 Malaysia Treasury Bill, 0.00%, 07/01/11 MYS MYR 637, ,590,000 Malaysia Treasury Bill, 0.00%, 09/29/11 MYS MYR 505, ,250,000 Egypt Treasury Bill, 0.00%, 10/11/11 EGY EGP 357, ,600,000 Sri Lanka Treasury Bill, 0.00%, 09/16/11 LKA LKR 227, ,833,000,000 Government of Indonesia, FR25, 10.00%, 10/15/11 IDN IDR 210, ,288,752, TOTAL BONDS 5,519,260, RIGHTS Government and Municipal Bonds 1,000,000 Republic of Uruguay, rts., 02/19/21 URY USD TOTAL RIGHTS TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 5,519,261, Unaudited Semi-Annual Report

196 Templeton Emerging s Bond Fund TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 13,400,000 KazMunaiGaz Finance Sub BV, 144A, 9.125%, 07/02/18 KAZ USD 15,745, ,625,000 ICICI Bank Ltd., 144A, 6.625%, 10/03/12 IND USD 7,091, ,000 Petro Co. of Trinidad and Tobago Ltd., senior note, 144A, 9.75%, 08/14/19 TTO USD 1,108, ,448,835 Sphynx Capital s, secured note, 10.25%, 01/30/10 * CI EUR 784, ,730, Government and Municipal Bonds 3,155,000 Government of Vietnam, 144A, 6.875%, 01/15/16 VND USD 3,308, ,210,000 Government of Iraq, 144A, 5.80%, 01/15/28 IQ USD 2,029, ,338, TOTAL BONDS 30,068, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 30,068, TOTAL INVESTMENTS 5,549,329, * These Corporate Bonds are currently in default Floating Rates are indicated as at December 31, Unaudited Semi-Annual Report 195

197 Templeton Emerging s Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Automobiles 5,897,500 PT Astra International Tbk IDN IDR 35,705, ,511,590 Guangzhou Automobile Group Co. Ltd., H CHN HKD 18,705, ,391,000 Great Wall Motor Co. Ltd., H CHN HKD 4,348, ,759, Beverages 2,091,065 Companhia de Bebidas das Americas (AmBev), IDR BRA BRL 54,684, ,775,197 Embotelladora Andina SA, pfd., A CHL CLP 11,385, ,660 Yantai Changyu Pioneer Wine Co. Ltd., B CHN HKD 7,786, ,441,707 Nigerian Breweries PLC NGA NGN 1,228, ,085, Chemicals 1,828,202 Tata Chemicals Ltd. IND INR 16,103, ,000 Uralkali, GDR, Reg S RUS USD 6,870, ,058 Grasim Industries Ltd. IND INR 3,091, ,270 Petrovietnam Fertilizer and Chemical JSC VND VND 458, ,524, Commercial Banks 1,859,343 Itau Unibanco Holding SA, ADR BRA USD 44,642, ,941,478 Akbank TAS TUR TRY 21,932, ,956 Banco Bradesco SA, ADR, pfd. BRA USD 19,091, ,314,123 Itausa Investimentos Itau SA, pfd. BRA BRL 18,406, ,219,000 Kasikornbank Public Co. Ltd., fgn. THA THB 18,312, ,673,500 PT Bank Central Asia Tbk IDN IDR 17,526, ,548,259 MCB Bank Ltd. PAK PKR 9,448, ,550,500 PT Bank Rakyat Indonesia (Persero) Tbk IDN IDR 8,799, ,160, Communications Equipment 734,000 VTech Holdings Ltd. HKG HKD 8,659, Diversified Financial Services 780,350 Remgro Ltd. ZAF ZAR 13,315, Food & Staples Retailing 5,670,028 President Chain Store Corp. TWN TWD 26,143, ,470,409 Dairy Farm International Holdings Ltd. HKG USD 13,660, ,804, Food Products 4,120,000 Uni-President China Holdings Ltd. TWN HKD 2,205, Hotels, Restaurants & Leisure 769,866 Ajisen China Holdings Ltd. CHN HKD 1,297, Household Products 1,320,297 Kimberly Clark de Mexico SAB de CV, A MEX MXN 8,061, Industrial Conglomerates 863,803 Keppel Corp. Ltd. SGP SGD 7,621, IT Services 2,620,042 Tata Consultancy Services Ltd. IND INR 68,269, ,290 Infosys Technologies Ltd. IND INR 28,221, ,490, Machinery 694,000 Changsha Zoomlion Heavy Industry Science and Technology Development Co. Ltd., H, Reg S CHN HKD 1,567, Marine 10,484,000 China Shipping Development Co. Ltd., H CHN HKD 13,974, Metals & Mining 2,823,150 Vale SA, ADR, pfd., A BRA USD 85,315, ,913,100 Minings and Metallurgical Co. Norilsk Nickel, ADR RUS USD 45,990, ,435 Anglo American PLC GBR ZAR 35,516, ,720,904 Sesa Goa Ltd. IND INR 27,328, ,076,999 Antofagasta PLC GBR GBP 27,136, ,807,554 Hindalco Industries Ltd. IND INR 20,948, ,716,000 Aluminum Corp. of China Ltd., H CHN HKD 18,896, ,251,983 Steel Authority of India Ltd. IND INR 9,191, ,686 National Aluminium Co. Ltd. IND INR 8,051, ,163 Koza Altin Isletmeleri AS TUR TRY 710, ,087, Unaudited Semi-Annual Report

198 Templeton Emerging s Fund Multiline Retail 1,857,000 Golden Eagle Retail Group Ltd. CHN HKD 4,563, Oil, Gas & Consumable Fuels 26,324,000 PetroChina Co. Ltd., H CHN HKD 34,274, ,133 LUKOIL Holdings, ADR RUS USD 29,892, ,615 Oil & Natural Gas Corp. Ltd. IND INR 26,717, ,033,000 CNOOC Ltd. CHN HKD 26,317, ,904 Tupras-Turkiye Petrol Rafinerileri AS TUR TRY 23,354, ,692 SK Energy Co. Ltd. KOR KRW 22,266, ,222,000 China Coal Energy Co., H CHN HKD 15,965, ,279,200 Oil & Gas Development Co. Ltd. PAK PKR 12,474, ,001,000 PTT Exploration and Production Public Co. Ltd., fgn. THA THB 11,181, ,560,110 Inner Mongolia Yitai Coal Co. Ltd., B CHN USD 11,131, ,012,900 PTT Public Co. Ltd., fgn. THA THB 10,780, ,000 Gazprom, ADR RUS USD 7,543, ,891 Petroleo Brasileiro SA, ADR, pfd. BRA USD 6,864, ,048 Coal India Ltd. IND INR 6,309, ,074, Personal Products 1,275,965 Natura Cosmeticos SA BRA BRL 36,667, ,881 Oriflame Cosmetics SA, SDR SWE SEK 11,014, ,681, Real Estate Management & Development 13,810,118 Emaar Properties PJSC ARE AED 13,347, ,000,000 KSL Holdings Bhd. MYS MYR 8,853, ,201, Semiconductors & Semiconductor Equipment 2,535 Silicon Works Co. Ltd. KOR KRW 75, Textiles, Apparel & Luxury Goods 3,275,000 Anta Sports Products Ltd. CHN HKD 5,250, ,431,000 China Dongxiang Group Co. CHN HKD 3,688, ,346,000 Daphne International Holdings Ltd. CHN HKD 1,260, ,198, Tobacco 310,096 Souza Cruz SA BRA BRL 16,889, Wireless Telecommunication Services 476,824 America Movil SAB de CV, L, ADR MEX USD 27,341, ,500 Mobile TeleSystems, ADR RUS USD 13,471, ,812, TOTAL SHARES 1,178,113, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 1,178,113, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Oil, Gas & Consumable Fuels 1,361,700 Gazprom, ADR RUS USD 34,641, ,900 LUKOIL Holdings, ADR RUS USD 6,402, ,044, TOTAL SHARES 41,044, INVESTMENTS FUNDS Diversified Financial Services 500 Franklin India Bluechip Offshore Fund IND USD 22, TOTAL INVESTMENTS FUNDS 22, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 41,067, Unaudited Semi-Annual Report 197

199 Templeton Emerging s Fund TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Commercial Banks 9,472,710 Sberbank RF RUS USD 32,273, Oil, Gas & Consumable Fuels 8,144,586 TNK-BP RUS USD 21,833, Wireless Telecommunication Services 457,200 Mobile TeleSystems RUS USD 3,885, TOTAL SHARES 57,993, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 57,993, TOTAL INVESTMENTS 1,277,173, Unaudited Semi-Annual Report

200 Templeton Emerging s Smaller Companies Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Air Freight & Logistics 5,509,384 Aramex Co. ARE AED 3,119, Auto Components 5,103,115 Apollo Tyres Ltd. IND INR 7,612, Automobiles 1,101,776 Indus Motor Co. Ltd. PAK PKR 3,252, Beverages 252,529 Central European Distribution Corp. POL USD 5,782, ,620 Hite Brewery Co. Ltd. KOR KRW 5,010, ,835,320 Pepsi-Cola Products Philippines Inc. PHL PHP 3,005, ,798, Building Products 1,538,473 Trakya Cam Sanayii AS TUR TRY 3,172, Capital s 3,157,890 IS Yatirim Menkul Degerler AS TUR TRY 5,345, Chemicals 779,747 Tata Chemicals Ltd. IND INR 6,868, ,046 E.I.D. Parry (India) Ltd. IND INR 4,522, ,471,709 Freeworld Coatings Ltd. ZAF ZAR 4,424, ,518 Paints & Chemical Industries Co. SAE EGY EGP 2,516, ,740 KPX Chemical Co. Ltd. KOR KRW 1,602, ,934, Commercial Banks 995,887 Federal Bank Ltd. IND INR 8,855, ,676,969 MCB Bank Ltd. PAK PKR 4,465, ,459,612 Ecobank Transnational Inc. GHA NGN 2,113, ,434, Commercial Services & Supplies 646,000 Valid Solucoes E Servicos DE Seguranca EM Meios DE Paga, mento E Identificacao SA BRA BRL 7,882, ,073,193 Depa Ltd. ARE USD 7,051, ,933, Communications Equipment 7,004,380 D-Link Corp. TWN TWD 7,203, Computers & Peripherals 1,321,144 Simplo Technology Co. Ltd. TWN TWD 9,601, Construction & Engineering 10,674,664 Arabtec Holding Co. ARE AED 5,725, Containers & Packaging 8,470,000 Amvig Holdings Ltd. CHN HKD 7,115, Diversified Financial Services 40,553 SC Bursa De Valori Bucuresti SA ROM RON 521, Diversified Telecommunication Services 1,164,088 Tulip Telecom Ltd. IND INR 4,562, Electronic Equipment, Instruments & Components 4,990,953 Redington India Ltd. IND INR 9,147, ,806,000 Ju Teng International Holdings Ltd. CHN HKD 7,625, ,099,200 Delta Electronics (Thailand) Public Co. Ltd., fgn. THA THB 7,100, ,831,100 Hana Microelectronics Public Co. Ltd., fgn. THA THB 4,848, ,722, Energy Equipment & Services 14,619,675 KNM Group Berhad MYS MYR 13,465, ,534,000 Anhui Tianda Oil Pipe Co. Ltd., H CHN HKD 6,395, ,540,352 Maridive & Oil Services SAE EGY USD 5,499, ,359, Food & Staples Retailing 1,111,000 President Chain Store Corp. TWN TWD 5,122, Unaudited Semi-Annual Report 199

201 Templeton Emerging s Smaller Companies Fund Food Products 1,524,029 Marfrig Alimentos SA BRA BRL 14,234, ,450 MHP SA, GDR UKR USD 9,251, ,546 Pinar Sut Mamulleri Sanayii AS TUR TRY 7,916, ,745 Binggrae Co. Ltd. KOR KRW 4,182, ,811,500 Universal Robina Corp. PHL PHP 3,852, ,746 AVI Ltd. ZAF ZAR 2,858, ,428 Namyang Dairy Products Co. Ltd. KOR KRW 2,124, ,300 Grupo Herdez SA MEX MXN 14, ,435, Health Care Equipment & Supplies 8,000 Hartalega Holdings Bhd. MYS MYR 13, Hotels, Restaurants & Leisure 25,297,113 NagaCorp Ltd. KH HKD 5,337, Household Durables 20,676,000 Aupu Group Holding Co. Ltd. CHN HKD 3,431, Independent Power Producers & Energy Traders 1,822,400 Electricity Generating Public Co. Ltd., fgn. THA THB 6,394, ,996,000 Glow Energy Public Co. Ltd., fgn. THA THB 6,280, ,675, Industrial Conglomerates 23,184,000 Chongqing Machinery and Electric Co. Ltd., H CHN HKD 8,650, Insurance 330,044,668 PT Panin Financial Tbk IDN IDR 7,692, Inter Software & Services 101,200 Sohu.com Inc. CHN USD 6,425, IT Services 5,231,000 Travelsky Technology Ltd., H CHN HKD 5,464, ,183 HCL Infosystems Ltd. IND INR 1,845, ,309, Leisure Equipment & Products 18,038,000 Yorkey Optical International Cayman Ltd. CHN HKD 3,249, ,141 Giant Manufacturing Co. Ltd. TWN TWD 2,725, ,974, Machinery 440,352 TK Corp. KOR KRW 10,466, ,177 ABG Shipyard Ltd. IND INR 8,289, ,482,000 Shanghai Prime Machinery Co. Ltd., H CHN HKD 6,520, ,165,400 Marcopolo SA, pfd. BRA BRL 4,908, ,308,000 Lonking Holdings Ltd. CHN HKD 4,596, ,950 Zhongde Waste Technology AG CHN EUR 810, ,590, Marine 538,610 Ultrapetrol Bahamas Ltd. ARG USD 3,463, Media 321,200 CTC Media Inc. RUS USD 7,525, ,259,020 Kagiso Media Ltd. ZAF ZAR 3,185, ,100 Daekyo Co. Ltd. KOR KRW 2,306, ,048,175 Hong Kong Economic Times Holdings Ltd. HKG HKD 732, ,751, Metals & Mining 12,040,000 Lion Industries Corp. Bhd. MYS MYR 7,692, ,854 Maharashtra Seamless Ltd. IND INR 4,488, ,339,078 Usha Martin Ltd. IND INR 3,669, ,850, Paper & Forest Products 4,739,961 Ballarpur Industries Ltd. IND INR 4,160, Personal Products 38,302 Pacific Corp. KOR KRW 7,515, Unaudited Semi-Annual Report

202 Templeton Emerging s Smaller Companies Fund Pharmaceuticals 5,261,711 Selcuk Ecza Deposu TUR TRY 8,804, ,129,692 Egyptian International Pharmaceutical Industries Co. EGY EGP 7,288, ,703 Egis Nyrt HUN HUF 2,191, ,122 Medy-tox Inc. KOR KRW 1,692, ,508 Grindeks LVA LVL 1,016, ,992, Real Estate Management & Development 21,774,000 Beijing Capital Land Ltd., H CHN HKD 7,283, ,488,911 Ishaan Real Estate PLC IND GBP 4,587, ,870, Road & Rail 128,099 Globaltrans Investment PLC, GDR, Reg S RUS USD 2,241, Semiconductors & Semiconductor Equipment 2,837,000 Novatek Microelectronics Corp. Ltd. TWN TWD 9,142, ,823 Silicon Works Co. Ltd. KOR KRW 4,954, ,096, Specialty Retail 2,082,000 Luk Fook Holdings (International) Ltd. HKG HKD 7,272, ,823 Lewis Group Ltd. ZAF ZAR 4,713, ,168 HSBC Bank PLC (CRTP Fawaz Abdulaziz Al Hokair Co.) SAU USD 2,530, ,516, Textiles, Apparel & Luxury Goods 121,600 Pegas Nonwovens SA CZE CZK 3,046, ,666,000 Bauhaus International (Holdings) Ltd. HKG HKD 2,536, ,720 Youngone Holdings Co. Ltd. KOR KRW 2,344, ,927, Tobacco 139,720 Eastern Tobacco EGY EGP 2,888, ,126 Adris Grupa d.d., pfd. HRV HRK 1,774, ,662, Transportation Infrastructure 11,720,000 Sichuan Expressway Co. Ltd., H CHN HKD 7,539, ,869,170 Chiwan Wharf Holdings Ltd., B CHN HKD 3,292, ,831, TOTAL SHARES 449,957, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 449,957, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Metals & Mining 31,047 MOIL Ltd., Reg S IND INR 312, Pharmaceuticals 84,000 Veropharm RUS USD 4,284, TOTAL SHARES 4,596, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 4,596, TOTAL INVESTMENTS 454,554, Unaudited Semi-Annual Report 201

203 Templeton Euro Government Bond Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Government and Municipal Bonds 4,000,000 Government of the Netherlands, 4.00%, 07/15/18 NLD EUR 4,319, ,500,000 Government of Germany, 2.25%, 09/04/20 DEU EUR 4,256, ,500,000 Government of Germany, 3.75%, 01/04/19 DEU EUR 2,681, ,000,000 Republic of Austria, 3.50%, 09/15/21 AUT EUR 2,003, ,500,000 Belgium Kingdom, 3.50%, 03/28/15 BEL EUR 1,528, ,000,000 Government of the Netherlands, 2.50%, 01/15/12 NLD EUR 1,018, ,000,000 Government of Poland, 3.625%, 02/01/16 POL EUR 1,006, ,000,000 Government of Italy, 4.00%, 02/01/37 ITA EUR 825, ,000 Government of Lithuania, senior note, 9.375%, 06/22/14 LTU EUR 585, ,000 Government of France, 3.50%, 04/25/26 FRA EUR 487, ,000 Government of Hungary, senior note, 5.75%, 06/11/18 HUN EUR 466, ,000 Government of Germany, 4.75%, 07/04/40 DEU EUR 371, ,549, TOTAL BONDS 19,549, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 19,549, TOTAL INVESTMENTS 19,549, Unaudited Semi-Annual Report

204 Templeton Euro High Yield Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Consumer Finance 1,000 GMAC Inc., 7.00%, pfd., 144A USA USD 706, TOTAL SHARES 706, BONDS Corporate Bonds 8,800,000 UPC Germany GmbH, senior secured note, Reg S, 8.125%, 12/01/17 DEU EUR 9,331, ,000,000 Campofrio Food Group SA, senior note, Reg S, 8.25%, 10/31/16 ESP EUR 8,259, ,450,000 Infinis PLC, senior note, Reg S, 9.125%, 12/15/14 GBR GBP 7,939, ,500,000 Wind Acquisition Finance SA, senior secured note, Reg S, 7.375%, 02/15/18 ITA EUR 7,650, ,000,000 Conti-Gummi Finance BV, senior note, Reg S, 6.50%, 01/15/16 DEU EUR 7,131, ,050,000 ISS Financing PLC, senior secured note, Reg S, 11.00%, 06/15/14 DNK EUR 6,673, ,000,000 Nordenia Holdings GmbH, 9.75%, 07/15/17 DEU EUR 6,652, ,500,000 Chesapeake Energy Corp., senior bond, 6.25%, 01/15/17 USA EUR 6,573, ,531,814 Nordic Telephone Co. Holdings, senior secured note, Reg S, FRN, 6.545%, 05/01/16 DNK EUR 6,548, ,500,000 Groupe BPCE SA, 9.00%, Perpetual FRA EUR 6,364, ,000,000 Ziggo Finance BV, senior secured note, Reg S, 6.125%, 11/15/17 NLD EUR 6,007, ,500,000 Intergen NV, senior note, Reg S, 8.50%, 06/30/17 NLD EUR 5,923, ,000,000 Lottomatica SPA, junior sub. bond, Reg S, 8.25%, 03/31/66 ITA EUR 5,879, ,000,000 DFS Furniture Holdings PLC, senior secured note, Reg S, 9.75%, 07/15/17 GBR GBP 5,811, ,500,000 UBS Capital Securities Jersey Ltd., junior sub. note, 8.836%, Perpetual CHE EUR 5,713, ,500,000 Codere Finance SA, senior secured note, Reg S, 8.25%, 06/15/15 ESP EUR 5,498, ,000,000 ING Verzekeringen NV, sub. bond, FRN, 6.25%, 06/21/21 NLD EUR 5,400, ,000,000 R&R Ice Cream PLC, senior note, Reg S, 8.375%, 11/15/17 GBR EUR 5,180, ,000,000 Taylor Wimpey PLC, senior note, %, 12/31/15 GBR GBP 4,874, ,500,000 Agrokor, senior note, Reg S, 10.00%, 12/07/16 HRV EUR 4,872, ,500,000 HeidelbergCement AG, senior note, 8.00%, 01/31/17 DEU EUR 4,832, ,000,000 Intesa Sanpaolo SPA, 8.375%, Perpetual ITA EUR 4,792, ,000,000 Obrascon Huarte Lain SA, senior note, 7.375%, 04/28/15 ESP EUR 4,792, ,000,000 Royal Bank of Scotland PLC, sub. note, 6.934%, 04/09/18 GBR EUR 4,746, ,500,000 CEDC Finance Corp. International Inc., senior secured note, Reg S, 8.875%, 12/01/16 POZ EUR 4,717, ,280,000 Egg Banking PLC, sub. note, 6.875%, 12/29/21 GBR GBP 4,644, ,480,000 Nalco Co., senior sub. note, 9.00%, 11/15/13 USA EUR 4,569, ,000,000 Wind Acquisition Finance SA, senior note, Reg S, 11.75%, 07/15/17 ITA EUR 4,478, ,600,000 Care UK Health & Social Care PLC, senior secured note, Reg S, 9.75%, 08/01/17 GBR GBP 4,345, ,700,000 Vac Finanzierung GmbH, Reg S, 9.25%, 04/15/16 DEU EUR 4,206, ,000,000 Sunrise Communications I, senior secured note, Reg S, 7.00%, 12/31/17 LUX EUR 4,202, ,000,000 GMAC International Finance BV, senior bond, 7.50%, 04/21/15 USA EUR 4,151, ,150,000 Iron Mountain Inc., senior sub. note, 6.75%, 10/15/18 USA EUR 4,134, ,750,000 Sunrise Communications Holdings, senior note, Reg S, 8.50%, 12/31/18 LUX EUR 3,941, ,000,000 American International Group Inc., junior sub. bond, A3, 4.875%, 03/15/67 USA EUR 3,925, ,750,000 Beverage Packaging Holdings Luxembourg II SA, Reg S, 8.00%, 12/15/16 LUX EUR 3,765, ,000,000 Matalan Finance Ltd., senior note, Reg S, 9.625%, 03/31/17 GBR GBP 3,727, ,900,000 Abengoa SA, senior note, 8.50%, 03/31/16 ESP EUR 3,706, ,600,000 Jarden Corp., senior sub. note, 7.50%, 01/15/20 USA EUR 3,705, ,325,000 HBOS PLC, senior sub. note, FRN, 6.305%, 10/18/17 GBR GBP 3,681, ,500,000 LBG Capital No. 2 PLC, cvt., sub. bond, 18, 6.385%, 05/12/20 GBR EUR 3,653, ,500,000 Nalco Co., senior note, Reg S, 6.875%, 01/15/19 USA EUR 3,629, ,500,000 Ziggo Bond Co., Reg S, 8.00%, 05/15/18 NLD EUR 3,619, ,500,000 Cirsa Funding Luxembourg SA, senior bond, Reg S, 8.75%, 05/15/18 ESP EUR 3,596, ,500,000 RBS Global & Rexnord Corp., senior note, 8.50%, 05/01/18 USA USD 3,590, ,000,000 IFCO Systems NV, senior secured note, Reg S, 10.00%, 06/30/16 NLD EUR 3,555, ,000,000 Fresenius US Finance II, senior note, Reg S, 8.75%, 07/15/15 DEU EUR 3,495, ,000,000 FCE Bank PLC, 5.125%, 11/16/15 GBR GBP 3,398, ,000,000 Harrah s Operating Co. Inc., senior secured note, 11.25%, 06/01/17 USA USD 3,378, ,000,000 FCE Bank PLC, 9.375%, 01/17/14 GBR EUR 3,340, ,000,000 Kerling PLC, senior note, Reg S, %, 01/28/17 GBR EUR 3,292, ,000,000 Compagnie Generale de Geophysique-Veritas, senior note, 9.50%, 05/15/16 FRA USD 3,274, ,000,000 Pinnacle Entertainment Inc., senior note, 8.625%, 08/01/17 USA USD 3,274, ,000,000 Hapag-Lloyd AG, senior note, Reg S, 9.00%, 10/15/15 DEU EUR 3,226, ,500,000 Ineos Group Holdings PLC, senior note, Reg S, 7.875%, 02/15/16 GBR EUR 3,211, ,000,000 Ineos Finance PLC, senior note, Reg S, 9.25%, 05/15/15 GBR EUR 3,209, ,700,000 Iron Mountain Inc., senior sub. bond, Reg S, 7.25%, 04/15/14 USA GBP 3,207, ,000,000 SPCM SA, senior note, Reg S, 8.25%, 06/15/17 FRA EUR 3,172, ,700,000 Thomas Cook Group PLC, senior note, 7.75%, 06/22/17 GBR GBP 3,160, ,000,000 FCE Bank PLC, 7.125%, 01/15/13 GBR EUR 3,142, ,000,000 Standard Chartered Bank, sub. note, 17, 5.875%, 09/26/17 GBR EUR 3,139, ,000,000 Polish Television Holding BV, senior secured note, 11.00% to 11/19/10, 11.25% to 11/15/14, 13.00% thereafter, 05/15/17 POL EUR 3,112, ,000,000 Levi Strauss & Co., senior note, 7.75%, 05/15/18 USA EUR 3,054, Unaudited Semi-Annual Report 203

205 Templeton Euro High Yield Fund (Currency EUR) Corporate Bonds (continued) 2,700,000 Lyondell Chemical Co., senior secured note, Reg S, 8.00%, 11/01/17 USA EUR 2,943, ,750,000 Bombardier Inc., senior note, Reg S, 7.25%, 11/15/16 CAN EUR 2,919, ,000,000 Wendel, senior bond, 4.875%, 09/21/15 FRA EUR 2,910, ,500,000 Santander Finanace Preferred SA Unipersonal, 11.30%, Perpetual ESP GBP 2,904, ,000,000 Wendel, senior bond, 4.875%, 05/26/16 FRA EUR 2,823, ,750,000 Owens-Brockway Glass Container Inc., senior note, 6.75%, 12/01/14 USA EUR 2,811, ,500,000 Oxea Finance/Cy SCA, senior secured note, Reg S, 9.625%, 07/15/17 LUX EUR 2,781, ,250,000 Virgin Media Secured Finance, senior secured note, 7.00%, 01/15/18 GBR GBP 2,771, ,500,000 Ardagh Glass Finance, senior secured note, Reg S, 9.25%, 07/01/16 IRL EUR 2,743, ,500,000 Picard Bondco, senior note, Reg S, 9.00%, 10/01/18 FRA EUR 2,650, ,200,000 Frontier Communications Corp., senior note, 8.50%, 04/15/20 USA USD 2,625, ,500,000 CET 21 Spol SRO, senior secured note, 9.00%, 11/01/17 CZE EUR 2,582, ,750,000 Calcipar SA, Reg S, FRN, 2.21%, 07/01/14 LUX EUR 2,557, ,500,000 Ardagh Packaging Finance PLC, senior secured note, Reg S, 7.375%, 10/15/17 IRL EUR 2,532, ,500,000 Stena AB, senior note, Reg S, 7.875%, 03/15/20 SWE EUR 2,521, ,400,000 Conti-Gummi Finance BV, senior secured note, Reg S, 7.50%, 09/15/17 DEU EUR 2,487, ,500,000 Grohe Holdings, FRN, 3.86%, 01/15/14 DEU EUR 2,414, ,100,000 Conti-Gummi Finance BV, senior secured note, Reg S, 8.50%, 07/15/15 DEU EUR 2,283, ,250,000 New World Resources BV, senior bond, Reg S, 7.375%, 05/15/15 CZE EUR 2,270, ,900,000 Yasar Holdings SA, 9.625%, 10/07/15 TUR USD 2,246, ,962,000 Millipore Corp., senior note, Reg S, 5.875%, 06/30/16 USA EUR 2,196, ,000,000 UPC Germany GmbH, senior bond, Reg S, 9.625%, 12/01/19 DEU EUR 2,195, ,100,000 Thomas Cook Group PLC, senior note, 6.75%, 06/22/15 GBR EUR 2,113, ,530,000 Cemex Finance Europe BV, 4.75%, 03/05/14 MEX EUR 2,111, ,000,000 Smurfit Kappa Acquisitions, senior secured bond, Reg S, 7.75%, 11/15/19 IRL EUR 2,107, ,500,000 Seat Pagine Gialle SpA, Reg S, 10.50%, 01/31/17 ITA EUR 2,105, ,000,000 Reynolds Group Escrow, senior secured note, Reg S, 7.75%, 10/15/16 GBR EUR 2,102, ,000,000 Crown European Holdings SA, senior note, Reg S, 7.125%, 08/15/18 FRA EUR 2,092, ,000,000 Heidelbergcement AG, senior note, 7.50%, 04/03/20 DEU EUR 2,070, ,000,000 Convatec Healthcare, senior note, Reg S, 7.375%, 12/15/17 LUX EUR 2,032, ,000,000 Convatec Healthcare, senior note, Reg S, %, 12/15/18 LUX EUR 2,010, ,000,000 Europcar Groupe SA, senior sub. bond, Reg S, FRN, 4.55%, 05/15/13 FRA EUR 1,924, ,000,000 Nara Cable Funding, senior secured note, Reg S, 8.875%, 12/01/18 IRL EUR 1,915, ,000,000 SGL Carbon AG, senior sub. note, FRN, 2.30%, 05/16/15 DEU EUR 1,893, ,025,000 Ceva Group PLC, Reg S, 8.50%, 12/01/14 GBR EUR 1,883, ,550,000 ITV PLC, senior note, 10.00%, 06/30/14 GBR EUR 1,797, ,200,000 HCA Inc., senior secured note, 9.125%, 11/15/14 USA USD 1,728, ,661,250 Ardagh Glass Group PLC, senior note, PIK, 10.75%, 03/01/15 IRL EUR 1,706, ,000,000 Edcon Proprietary Ltd., senior secured note, Reg S, FRN, 4.276%, 06/15/14 ZAF EUR 1,700, ,000,000 Bank of Ireland, senior note, 4.625%, 04/08/13 IRL EUR 1,660, ,500,000 TVN Finance Corp. PLC, senior note, Reg S, 10.75%, 11/15/17 POL EUR 1,658, ,000,000 Clear Channel Worldwide Holdings Inc., senior note, B, 9.25%, 12/15/17 USA USD 1,644, ,600,000 OI European Group BV, senior note, Reg S, 6.75%, 09/15/20 NLD EUR 1,619, ,000,000 HCA Inc., senior secured note, 7.875%, 02/15/20 USA USD 1,607, ,000,000 GMAC Inc., sub. note, 8.00%, 12/31/18 USA USD 1,595, ,000,000 Ally Financial Inc., senior bond, 144A, 7.50%, 09/15/20 USA USD 1,575, ,000,000 NRG Energy Inc., senior note, 7.375%, 02/01/16 USA USD 1,536, ,000,000 MarkWest Energy Partners LP/Finance Corp., senior note, 6.75%, 11/01/20 USA USD 1,502, ,500,000 Cemex Finance LLC, senior secured note, Reg S, 9.625%, 12/14/17 MEX EUR 1,479, ,500,000 TUI AG, cvt., senior bond, Reg S, 2.75%, 09/01/12 DEU EUR 1,441, ,600,000 Ceva Group PLC, senior secured note, 144A, 11.50%, 04/01/18 GBR USD 1,306, ,500,000 Edcon Holdings Proprietary Ltd., senior bond, Reg S, FRN, 6.526%, 06/15/15 ZAF EUR 1,263, ,400,000 Ford Motor Credit Co. LLC, senior note, 8.125%, 01/15/20 USA USD 1,219, ,400,000 Central European Media Enterprises Ltd., senior note, Reg S, FRN, 2.90%, 05/15/14 CZE EUR 1,217, ,400,000 Frontier Communications Corp., senior note, 8.75%, 04/15/22 USA USD 1,145, ,000,000 Dynegy Holdings Inc., senior note, 8.375%, 05/01/16 USA USD 1,125, ,000,000 HeidelbergCement AG, senior note, 8.50%, 10/31/19 DEU EUR 1,098, ,000,000 Boardriders SA, senior note, Reg S, 8.875%, 12/15/17 USA EUR 1,045, ,000,000 Ardagh Packaging Finance PLC, senior note, Reg S, 9.25%, 10/15/20 IRL EUR 1,027, ,000,000 Clondalkin Industries BV, senior note, Reg S, 8.00%, 03/15/14 NLD EUR 976, ,000,000 Bombardier Inc., senior note, Reg S, 6.125%, 05/15/21 CAN EUR 971, ,420,000 Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, Reg S, 15.00%, 04/01/21 USA USD 960, ,000,000 Clondalkin Acquisition, senior secured bond, Reg S, FRN, 3.026%, 12/15/13 NLD EUR 950, ,500,000 Lighthouse International Co., senior secured note, Reg S, 8.00%, 04/30/14 ITL EUR 934, ,000,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 9.00%, 04/15/19 USA USD 778, ,645 Wind Acquisition Holdings Finance SA, senior secured note, Reg S, PIK, 12.25%, 07/15/17 ITA EUR 772, Unaudited Semi-Annual Report

206 Templeton Euro High Yield Fund (Currency EUR) Corporate Bonds (continued) 1,000,000 Compagnie Generale de Geophysique-Veritas, senior note, 7.75%, 05/15/17 FRA USD 769, ,000,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 8.50%, 05/15/18 USA USD 754, ,000 Ceva Group PLC, senior secured note, 144A, 8.375%, 12/01/17 GBR USD 679, ,000 Pinafore LLC/Inc., senior secured note, 144A, 9.00%, 10/01/18 USA USD 567, ,000 Frontier Communications Corp., senior note, 8.25%, 04/15/17 USA USD 494, ,000 Clear Channel Worldwide Holdings Inc., senior note, A, 9.25%, 12/15/17 USA USD 408, ,344, Government and Municipal Bonds 1,950,000 Eesti Energia AS, senior bond, 4.50%, 11/18/20 EST EUR 1,901, TOTAL BONDS 420,245, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 420,952, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 3,900,000 Fresenius US Finance II, senior note, 144A, 9.00%, 07/15/15 DEU USD 3,352, ,000,000 Astana-Finance, 7.875%, 06/08/10 * KAZ EUR 200, ,552, TOTAL BONDS 3,552, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 3,552, TOTAL INVESTMENTS 424,505, * These Corporate Bonds are currently in default Floating Rates are indicated as at December 31, 2010 Income may be received in additional securities and/or cash Unaudited Semi-Annual Report 205

207 Templeton Euro Liquid Reserve Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 3,000,000 Danske Bank AS, senior note, FRN, 1.576%, 09/16/13 DNK EUR 2,993, ,000,000 DNB NOR Bank ASA, senior note, FRN, 1.881%, 02/28/12 NOR EUR 2,020, ,000,000 Nordea Bank AB, FRN, 1.479%, 12/10/12 SWE EUR 2,005, ,000,000 Credit Suisse London, senior note, FRN, 1.556%, 01/17/13 CHE EUR 2,003, ,000,000 Lloyds TSB Bank PLC, senior note, FRN, 2.214%, 03/25/13 GBR EUR 1,998, ,000,000 Diageo Finance PLC, FRN, 1.281%, 05/22/12 GBR EUR 1,997, ,000,000 The Bear Stearns Cos. LLC, senior note, FRN, 1.332%, 07/27/12 USA EUR 1,985, ,000,000 Goldman Sachs Group Inc., senior note, FRN, 1.192%, 10/04/12 USA EUR 1,973, ,000,000 Morgan Stanley, senior note, G, FRN, 1.30%, 07/20/12 USA EUR 1,971, ,000,000 Santander U K PLC, senior note, FRN, 1.124%, 06/20/12 GBR EUR 1,956, ,000,000 Santander International Debt SA, senior note, FRN, 1.437%, 01/18/13 ESP EUR 1,926, ,000,000 Vodafone Group PLC, senior note, 0.00%, 01/13/12 GBR EUR 1,001, ,833, Securities Maturing Within One Year 3,000,000 UniCredit SpA, FRN, 1.067%, 04/05/11 ITA EUR 2,997, ,000,000 Ulster Bank Finance PLC, senior note, FRN, 1.104%, 03/29/11 IRL EUR 2,984, ,500,000 Banque Federative du Credit Mutuel, 0.00%, 01/04/11 FRA EUR 2,499, ,500,000 Macquarie Bank, 0.00%, 01/13/11 AUS EUR 2,499, ,500,000 Unicredito London, 0.00%, 01/10/11 GBR EUR 2,499, ,500,000 BNP Paribas Fortis Funding, 0.00%, 01/17/11 LUX EUR 2,499, ,500,000 Nordea Bank AB, 0.00%, 01/19/11 FIN EUR 2,498, ,500,000 ABN Amro Bank, 0.00%, 01/20/11 NLD EUR 2,498, ,500,000 Intesa Sanpaolo Ireland, 0.00%, 01/20/11 IRL EUR 2,498, ,500,000 Korea Development Bank, 0.00%, 02/25/11 KOR EUR 2,497, ,500,000 BPCE, 0.00%, 02/16/11 FRA EUR 2,497, ,500,000 Natixis, 0.00%, 02/09/11 FRA EUR 2,497, ,500,000 Swedish Housing Finance, 0.00%, 02/18/11 SWE EUR 2,496, ,500,000 Societe Generale, 0.00%, 03/09/11 FRA EUR 2,496, ,500,000 Credit Agricole SA, 0.00%, 03/01/11 FRA EUR 2,496, ,500,000 Banco Bilbao Viz London, 0.00%, 02/23/11 GBR EUR 2,495, ,500,000 Lloyds TSB Bank PLC, 0.00%, 02/28/11 GBR EUR 2,495, ,500,000 Royal Bank of Scotland PLC, 0.00%, 03/04/11 GBR EUR 2,495, ,500,000 Svenska Handelsbanken Inc., 0.00%, 03/22/11 SWE EUR 2,495, ,500,000 Skandinaviska Enskilda Banken, 0.00%, 03/16/11 SWE EUR 2,495, ,500,000 Nykredit, 0.00%, 04/21/11 DNK EUR 2,491, ,500,000 Banesto Financial, 0.00%, 05/03/11 IRL EUR 2,488, ,000,000 ING Bank NV, senior note, FRN, 1.791%, 08/22/11 NLD EUR 2,007, ,000,000 Commonwealth Bank of Australia, senior note, 2468, FRN, 1.095%, 11/02/11 AUS EUR 2,001, ,000,000 Westpac Banking Corp., senior note, FRN, 1.089%, 06/27/11 AUS EUR 2,000, ,000,000 Nationwide Building Society, 1.00%, 02/24/11 GBR EUR 2,000, ,000,000 Merrill Lynch & Co. Inc., senior note, FRN, 1.372%, 03/22/11 USA EUR 1,997, ,000,000 GE Capital Euro Funding, senior note, FRN, 0.912%, 07/01/11 IRL EUR 1,997, ,000,000 BBVA Senior Finance SA, senior note, FRN, 1.322%, 12/23/11 ESP EUR 1,980, ,800,000 ING Bank NV, 0.00%, 01/18/11 NLD EUR 1,798, ,500,000 National Australia Bank Ltd., senior note, FRN, 1.099%, 03/18/11 AUS EUR 1,500, ,000,000 Volkswagen Bank GmbH, senior note, FRN, 1.14%, 06/27/11 DEU EUR 998, ,200, TOTAL BONDS 98,034, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 98,034, TOTAL INVESTMENTS 98,034, Floating Rates are indicated as at December 31, Unaudited Semi-Annual Report

208 Templeton Euro Money Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Securities Maturing Within One Year 1,000,000 Italy Treasury Bill, 0.00%, 01/14/11 ITA EUR 999, ,000,000 German Treasury Bill, 0.00%, 02/09/11 DEU EUR 999, ,000,000 Dutch Treasury Bill, 0.00%, 02/28/11 NLD EUR 999, ,000,000 German Treasury Bill, 0.00%, 03/16/11 DEU EUR 999, ,000,000 Italy Treasury Bill, 0.00%, 02/15/11 ITA EUR 999, ,000 ING Bank NV, senior note, FRN, 1.791%, 08/22/11 NLD EUR 501, ,000 Rabobank Nederland, senior note, FRN, 1.491%, 05/22/11 NLD EUR 501, ,000 Commonwealth Bank of Australia, senior note, 2468, FRN, 1.095%, 11/02/11 AUS EUR 500, ,000 HSBC Bank PLC, senior note, FRN, 1.297%, 02/04/11 GBR EUR 500, ,000 National Australia Bank Ltd., senior note, FRN, 1.099%, 03/18/11 AUS EUR 500, ,000 Westpac Banking Corp., senior note, FRN, 1.089%, 06/27/11 AUS EUR 500, ,000 Nationwide Building Society, 1.00%, 02/24/11 GBR EUR 500, ,000 Banque Federative du Credit Mutuel, 0.00%, 01/04/11 FRA EUR 499, ,000 French Treasury Bill, 0.00%, 01/27/11 FRA EUR 499, ,000 Macquarie Bank, 0.00%, 01/13/11 AUS EUR 499, ,000 Unicredito London, 0.00%, 01/10/11 GBR EUR 499, ,000 BNP Paribas Fortis Funding, 0.00%, 01/17/11 LUX EUR 499, ,000 Nordea Bank AB, 0.00%, 01/19/11 FIN EUR 499, ,000 ABN Amro Bank, 0.00%, 01/20/11 NLD EUR 499, ,000 Intesa Sanpaolo Ireland, 0.00%, 01/20/11 IRL EUR 499, ,000 ING Bank NV, 0.00%, 01/18/11 NLD EUR 499, ,000 Merrill Lynch & Co. Inc., senior note, FRN, 1.372%, 03/22/11 USA EUR 499, ,000 Korea Development Bank, 0.00%, 02/25/11 KOR EUR 499, ,000 BPCE, 0.00%, 02/16/11 FRA EUR 499, ,000 Natixis, 0.00%, 02/09/11 FRA EUR 499, ,000 Swedish Housing Finance, 0.00%, 02/18/11 SWE EUR 499, ,000 Societe Generale, 0.00%, 03/09/11 FRA EUR 499, ,000 Credit Agricole SA, 0.00%, 03/01/11 FRA EUR 499, ,000 Banco Bilbao Viz London, 0.00%, 02/23/11 GBR EUR 499, ,000 Lloyds TSB Bank PLC, 0.00%, 02/28/11 GBR EUR 499, ,000 Royal Bank of Scotland PLC, 0.00%, 03/04/11 GBR EUR 499, ,000 Svenska Handelsbanken Inc., 0.00%, 03/22/11 SWE EUR 499, ,000 Skandinaviska Enskilda Banken, 0.00%, 03/16/11 SWE EUR 499, ,000 Nykredit, 0.00%, 04/21/11 DNK EUR 498, ,000 Banesto Financial, 0.00%, 05/03/11 IRL EUR 497, ,000 GE Capital Euro Funding, senior note, FRN, 0.912%, 07/01/11 IRL EUR 299, ,287, TOTAL BONDS 20,287, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 20,287, TOTAL INVESTMENTS 20,287, Floating Rates are indicated as at December 31, Unaudited Semi-Annual Report 207

209 Templeton Euroland Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 33,220 Thales SA FRA EUR 869, Air Freight & Logistics 139,220 Deutsche Post AG DEU EUR 1,759, Airlines 142,500 Deutsche Lufthansa AG DEU EUR 2,344, Auto Components 25,254 Compagnie Generale des Etablissements Michelin, B FRA EUR 1,356, Automobiles 29,210 Bayerische Motoren Werke AG DEU EUR 1,714, Biotechnology 13,260 Basilea Pharmaceutica AG CHE CHF 689, Capital s 127,768 Mediobanca SpA ITA EUR 850, Chemicals 70,920 Akzo Nobel NV NLD EUR 3,296, ,230 Symrise AG DEU EUR 1,092, ,389, Commercial Banks 326,200 Credit Agricole SA FRA EUR 3,100, ,216,470 UniCredit SpA ITA EUR 1,883, ,580 BNP Paribas SA FRA EUR 1,741, ,454 Intesa Sanpaolo SpA ITA EUR 1,501, ,592 Banco Santander SA ESP EUR 995, ,221, Construction & Engineering 36,102 Vinci SA FRA EUR 1,468, Construction Materials 122,145 CRH PLC IRL EUR 1,893, Diversified Financial Services 487,002 ING Groep NV NLD EUR 3,545, Diversified Telecommunication Services 144,841 Telefonica SA ESP EUR 2,457, ,968 France Telecom SA FRA EUR 2,447, ,770 Koninklijke KPN NV NLD EUR 2,214, ,140 Telekom Austria AG AUT EUR 2,094, ,338,346 Telecom Italia SpA ITA EUR 1,898, ,210 Hellenic Telecommunications Organization SA (OTE) GRC EUR 669, ,782, Electric Utilities 333,336 Iberdrola SA ESP EUR 1,922, ,310 E.ON AG DEU EUR 1,607, ,699 Iberdrola SA ESP EUR 73, ,603, Electrical Equipment 31,830 Alstom SA FRA EUR 1,139, Energy Equipment & Services 68,332 SBM Offshore NV NLD EUR 1,145, ,470 Aker Solutions ASA NOR NOK 490, ,635, Food & Staples Retailing 38,140 Carrefour SA FRA EUR 1,176, Food Products 142,687 Unilever NV NLD EUR 3,324, Health Care Providers & Services 105,483 Rhoen-Klinikum AG DEU EUR 1,737, ,256 Celesio AG DEU EUR 1,371, ,108, Unaudited Semi-Annual Report

210 Templeton Euroland Fund (Currency EUR) Hotels, Restaurants & Leisure 191,085 Autogrill SpA ITA EUR 2,019, ,133 Sol Melia SA ESP EUR 876, ,583 Accor SA FRA EUR 752, ,648, Industrial Conglomerates 38,070 Siemens AG DEU EUR 3,546, ,640 Koninklijke Philips Electronics NV NLD EUR 1,160, ,707, Insurance 27,480 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 3,115, ,375 AXA SA FRA EUR 2,992, ,310 Sampo OYJ, A1 FIN EUR 2,011, ,119, IT Services 59,240 Cap Gemini FRA EUR 2,069, Machinery 23,450 MAN SE DEU EUR 2,102, ,360 Rational AG DEU EUR 1,511, ,878 GEA Group AG DEU EUR 1,164, ,778, Media 304,158 Reed Elsevier NV NLD EUR 2,815, ,750 Vivendi SA FRA EUR 2,600, ,226 Antena 3 de Television SA ESP EUR 1,308, ,724, Oil, Gas & Consumable Fuels 153,700 Royal Dutch Shell PLC, A GBR EUR 3,801, ,890 Total SA, B FRA EUR 3,009, ,770 Statoil ASA NOR NOK 2,433, ,621 Repsol YPF SA ESP EUR 1,534, ,778, Pharmaceuticals 36,810 Roche Holding AG CHE CHF 4,036, ,655 Sanofi-Aventis FRA EUR 3,572, ,728 Merck KGaA DEU EUR 2,936, ,830 Elan Corp. PLC, ADR IRL USD 1,014, ,310 Ipsen SA FRA EUR 669, ,007 Alapis Holding Industrial and Commercial SA GRC EUR 197, ,426, Software 104,390 SAP AG DEU EUR 3,958, Specialty Retail 23,029 Inditex SA ESP EUR 1,290, Wireless Telecommunication Services 18,840 Millicom International Cellular SA LUX USD 1,346, TOTAL SHARES 115,724, WARRANTS Capital s 139,500 Mediobanca SpA, wts., 03/18/11 ITA EUR TOTAL WARRANTS TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 115,724, TOTAL INVESTMENTS 115,724, Unaudited Semi-Annual Report 209

211 Templeton European Corporate Bond Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 200,000 Siemens Financieringsmaatschappij NV, senior note, 5.125%, 02/20/17 DEU EUR 221, ,000 Pfizer Inc., senior note, 4.75%, 06/03/16 USA EUR 216, ,000 Svenska Handelsbanken AB, senior note, 4.875%, 03/25/14 SWE EUR 215, ,000 StatoilHydro ASA, senior note, 4.375%, 03/11/15 NOR EUR 214, ,000 HSBC Holdings PLC, sub. note, 6.00%, 06/10/19 GBR EUR 212, ,000 Daimler AG, senior note, 4.125%, 01/19/17 DEU EUR 208, ,000 ING Bank NV, sub. note, 5.50%, 01/04/12 NLD EUR 204, ,000 Fortis Bank Nederland NV, senior note, Reg S, 4.00%, 02/03/15 NLD EUR 203, ,000 Rabobank Nederland NV, sub. note, 3.75%, 11/09/20 NLD EUR 203, ,000 Barclays Bank PLC, senior note, 4.00%, 01/20/17 GBR EUR 199, ,000 Telefonica Emisones SAU, senior note, 3.406%, 03/24/15 ESP EUR 197, ,000 Bank of America Corp., senior note, 4.625%, 08/07/17 USA EUR 192, ,000 E.ON International Finance, senior note, 5.25%, 09/08/15 DEU EUR 166, ,000 JPMorgan Chase & Co., senior note, 6.125%, 04/01/14 USA EUR 163, ,000 Standard Chartered PLC, senior note, 5.75%, 04/30/14 GBR EUR 163, ,000 Royal Bank of Scotland PLC, sub. note, FRN, 1.293%, 01/30/17 GBR EUR 163, ,000 Goldman Sachs Group Inc., senior note, 6.375%, 05/02/18 USA EUR 161, ,000 McDonald s Corp., senior note, 4.25%, 06/10/16 USA EUR 160, ,000 DnB NOR Bank ASA, senior note, 4.50%, 05/29/14 NOR EUR 159, ,000 Anglian Water Services Financing PLC, senior secured note, 4.625%, 10/07/13 GBR EUR 159, ,000 Intesa Sanpaolo SPA, senior note, 5.375%, 12/19/13 ITA EUR 158, ,000 Deutsche Bank AG, senior note, 4.875%, 09/24/12 DEU EUR 158, ,000 Swiss Re Treasury US Corp., senior note, 6.00%, 05/18/12 USA EUR 158, ,000 UBS AG London, senior note, 4.875%, 01/21/13 GBR EUR 157, ,000 GE Capital Euro Funding, senior note, 5.375%, 01/23/20 USA EUR 157, ,000 Merrill Lynch & Co. Inc., senior note, 4.875%, 05/30/14 USA EUR 152, ,000 Anglo Irish Bank Corp. Ltd., senior note, government guaranted, 4.00%, 04/15/15 IRL EUR 152, ,000 Commonwealth Bank of Australia, senior note, 4.375%, 02/25/20 AUS EUR 152, ,000 Zurich Finance (USA) Inc., sub. note, 9, FRN, 4.50%, 06/15/25 CHE EUR 150, ,000 GE Capital European Funding, senior note, 2.875%, 09/17/15 USA EUR 148, ,000 UniCredit SpA, junior sub. note, 6.70%, 06/05/18 ITA EUR 148, ,000 BNP Paribas Capital Trust, junior sub. note, FRN, 6.342%, 01/24/12 USA EUR 147, ,000 Nordea Bank AB, sub. note, 4.50%, 03/26/20 SWE EUR 145, ,000 Morgan Stanley, senior note, 5.375%, 08/10/20 USA EUR 144, ,000 Koninklijke KPN NV, senior note, 3.75%, 09/21/20 NLD EUR 142, ,000 Lloyds TSB Bank PLC, sub. note, 6.50%, 03/24/20 GBR EUR 138, ,000 Atlantia SpA, senior note, 4.375%, 09/16/25 ITA EUR 137, ,000 Citigroup Inc., sub. note, FRN, 3.625%, 11/30/17 USA EUR 137, ,000 AXA SA, sub. note, 5.25%, 04/16/40 FRA EUR 135, ,000 RWE AG, 4.625%, Perpetual DEU EUR 135, ,000 Santander Issuances S.A. Unipersonal, sub. note, 4.25%, 05/30/18 ESP EUR 134, ,000 Roche Holdings Inc., senior note, 6.50%, 03/04/21 CHE EUR 121, ,000 GDF Suez, senior note, 6.375%, 01/18/21 FRA EUR 119, ,000 Groupe BPCE, junior sub. note, 4.625%, Perpetual FRA EUR 116, ,000 Bacardi Ltd., senior note, 7.75%, 04/09/14 BMU EUR 114, ,000 Wolters Kluwer NV, senior note, 6.375%, 04/10/18 NLD EUR 112, ,000 British Telecommunications PLC, senior note, 6.125%, 07/11/14 GBR EUR 110, ,000 Schering-Plough Corp., senior note, 5.375%, 10/01/14 USA EUR 110, ,000 National Australia Bank Ltd., senior note, 5.50%, 05/20/15 AUS EUR 110, ,000 Urenco Finance NV, 5.375%, 05/22/15 NLD EUR 110, ,000 Sunrise Communications I, senior secured note, Reg S, 7.00%, 12/31/17 LUX EUR 105, ,000 The Procter & Gamble Co., senior note, 4.125%, 12/07/20 USA EUR 104, ,000 Hutchison Whampoa International Ltd., senior bond, 4.75%, 11/14/16 HKG EUR 104, ,000 BAA Funding Ltd., senior secured bond, Reg S, 1, A7, 4.60%, 09/30/16 GBR EUR 102, ,000 Casino Guichard Perrachon SA, senior note, 4.379%, 02/08/17 FRA EUR 102, ,000 CEZ AS, senior note, 5.00%, 10/19/21 CZE EUR 102, ,000 Enel Finance International SA, senior note, 5.00%, 09/14/22 ITA EUR 101, ,000 Ardagh Packaging Finance PLC, senior secured note, Reg S, 7.375%, 10/15/17 IRL EUR 101, ,000 Experian Finance PLC, senior note, 4.75%, 02/04/20 GBR EUR 101, ,000 Credit Suisse London, senior note, 3.875%, 01/25/17 CHE EUR 100, ,000 State Bank of India/London, senior note, 4.50%, 11/30/15 IND EUR 100, ,000 Vodafone Group PLC, senior note, 1.377%, 01/13/12 GBR EUR 100, ,000 A.P. Moller Maersk AS, senior note, 4.375%, 11/24/17 DNK EUR 99, ,000 Motability Operations Group PLC, senior note, 3.75%, 11/29/17 GBR EUR 99, ,000 Carrefour SA, senior note, 4.00%, 04/09/20 FRA EUR 99, ,000 Arkema, 4.00%, 10/25/17 FRA EUR 98, ,000 Alstom SA, senior note, 4.50%, 03/18/20 FRA EUR 98, ,000 Carlsberg Brewery Malaysia BHD, senior note, 3.375%, 10/13/17 DNK EUR 96, ,000 Virgin Media Secured Finance, senior secured note, Reg S, 7.00%, 01/15/18 GBR GBP 92, ,000 Gas Natural Capital, 4.125%, 01/26/18 ESP EUR 90, ,000 Allianz Finance II BV, junior sub. bond, 4.375%, Perpetual DEU EUR 88, Unaudited Semi-Annual Report

212 Templeton European Corporate Bond Fund (Currency EUR) Corporate Bonds (continued) 75,000 Wind Acquisition Finance SA, senior note, Reg S, 11.75%, 07/15/17 ITA EUR 83, ,000 Intergen NV, senior note, Reg S, 8.50%, 06/30/17 NLD EUR 80, ,000 Kraft Foods Inc., senior note, 6.25%, 03/20/15 USA EUR 78, ,000 GMAC International Finance BV, senior bond, 7.50%, 04/21/15 USA EUR 77, ,000 Heidelbergcement AG, senior note, 7.50%, 04/03/20 DEU EUR 77, ,000 Chesapeake Energy Corp., senior bond, 6.25%, 01/15/17 USA EUR 75, ,000 FCE Bank PLC, 9.375%, 01/17/14 GBR EUR 55, ,000 Xstrata Canada Financial Corp., senior note, 6.25%, 05/27/15 CAN EUR 55, ,000 Ineos Finance PLC, senior note, Reg S, 9.25%, 05/15/15 GBR EUR 53, ,000 UPC Germany GmbH, senior secured note, Reg S, 8.125%, 12/01/17 DEU EUR 53, ,000 Conti-Gummi Finance BV, senior secured note, Reg S, 7.50%, 09/15/17 DEU EUR 51, ,000 Campofrio Food Group SA, senior note, Reg S, 8.25%, 10/31/16 ESP EUR 51, ,000 Lottomatica SPA, junior sub. bond, Reg S, 8.25%, 03/31/66 ITA EUR 49, ,847, TOTAL BONDS 10,847, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 10,847, TOTAL INVESTMENTS 10,847, Floating Rates are indicated as at December 31, Unaudited Semi-Annual Report 211

213 Templeton European Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 505,900 BAE Systems PLC GBR GBP 1,948, ,600 Meggitt PLC GBR GBP 1,305, ,100 Qiiq Group PLC GBR GBP 1,246, ,200 Thales SA FRA EUR 686, ,187, Air Freight & Logistics 111,303 Deutsche Post AG DEU EUR 1,406, Airlines 345,600 British Airways PLC GBR GBP 1,100, ,800 Deutsche Lufthansa AG DEU EUR 868, ,968, Auto Components 19,496 Compagnie Generale des Etablissements Michelin, B FRA EUR 1,046, Automobiles 24,562 Bayerische Motoren Werke AG DEU EUR 1,442, Biotechnology 19,300 Basilea Pharmaceutica AG CHE CHF 1,004, Capital s 675,800 Henderson Group PLC GBR GBP 1,064, ,725 Mediobanca SpA ITA EUR 297, ,362, Chemicals 37,800 Akzo Nobel NV NLD EUR 1,757, ,400 Symrise AG DEU EUR 972, ,730, Commercial Banks 240,300 Credit Agricole SA FRA EUR 2,283, ,097,300 UniCredit SpA ITA EUR 1,698, ,200 Banco Santander SA ESP EUR 1,222, ,100 Standard Chartered PLC GBR GBP 927, ,281 Intesa Sanpaolo SpA ITA EUR 824, ,957, Commercial Services & Supplies 965,300 Rentokil Initial PLC GBR GBP 1,092, ,500 Davis Service Group PLC GBR GBP 1,002, ,872 G4S PLC GBR GBP 662, ,756, Communications Equipment 137,204 Telefonaktiebolaget LM Ericsson, B SWE SEK 1,193, Construction & Engineering 27,188 Vinci SA FRA EUR 1,106, Construction Materials 93,257 CRH PLC IRL EUR 1,445, Containers & Packaging 260,600 Rexam PLC GBR GBP 1,013, Diversified Financial Services 338,818 ING Groep NV NLD EUR 2,466, Diversified Telecommunication Services 134,917 Telenor ASA NOR NOK 1,642, ,801 Telefonica SA ESP EUR 1,591, ,933,500 Telecom Italia SpA ITA EUR 1,570, ,246 France Telecom SA FRA EUR 1,407, ,200 Telekom Austria AG AUT EUR 1,222, ,900 Hellenic Telecommunications Organization SA (OTE) GRC EUR 765, ,198, Unaudited Semi-Annual Report

214 Templeton European Fund (Currency EUR) Electric Utilities 287,712 Iberdrola SA ESP EUR 1,659, ,300 E.ON AG DEU EUR 1,195, ,992 Iberdrola SA ESP EUR 46, ,901, Electrical Equipment 23,100 Alstom SA FRA EUR 827, Electronic Equipment, Instruments & Component 669,500 Laird PLC GBR GBP 1,359, Energy Equipment & Services 71,100 SBM Offshore NV NLD EUR 1,191, Food & Staples Retailing 243,900 Tesco PLC GBR GBP 1,210, ,200 Carrefour SA FRA EUR 592, ,803, Food Products 69,000 Unilever NV NLD EUR 1,607, Health Care Providers & Services 81,500 Celesio AG DEU EUR 1,505, ,866 Rhoen-Klinikum AG DEU EUR 1,430, ,935, Hotels, Restaurants & Leisure 139,800 Autogrill SpA ITA EUR 1,477, Industrial Conglomerates 34,094 Siemens AG DEU EUR 3,176, Insurance 51,293 Swiss Reinsurance Co. CHE CHF 2,064, ,266 Aviva PLC GBR GBP 2,014, ,700 Swiss Life Holding CHE CHF 1,915, ,665 AXA SA FRA EUR 1,726, ,386 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 1,291, ,012, IT Services 32,100 Cap Gemini FRA EUR 1,121, Machinery 16,000 MAN SE DEU EUR 1,434, ,600 Invensys PLC GBR GBP 1,347, ,782, Media 161,347 Pearson PLC GBR GBP 1,904, ,600 Vivendi SA FRA EUR 1,446, ,500 Antena 3 de Television SA ESP EUR 1,358, ,680 Schibsted ASA NOR NOK 1,251, ,021 Reed Elsevier NV NLD EUR 1,203, ,164, Multiline Retail 292,400 Marks & Spencer Group PLC GBR GBP 1,259, Oil, Gas & Consumable Fuels 124,023 Royal Dutch Shell PLC, A GBR EUR 3,067, ,900 Total SA, B FRA EUR 2,454, ,000 Statoil ASA NOR NOK 2,366, ,600 BG Group PLC GBR GBP 2,233, ,200 Gazprom, ADR RUS USD 1,795, ,651 BP PLC GBR GBP 1,226, ,700 Repsol YPF SA ESP EUR 1,182, ,325, Unaudited Semi-Annual Report 213

215 Templeton European Fund (Currency EUR) Pharmaceuticals 40,800 Roche Holding AG CHE CHF 4,473, ,947 Sanofi-Aventis FRA EUR 2,868, ,065 Merck KGaA DEU EUR 2,113, ,500 Elan Corp. PLC, ADR IRL USD 1,287, ,400 Ipsen SA FRA EUR 785, ,950 Alapis Holding Industrial and Commercial SA GRC EUR 158, ,685, Professional Services 1,088,859 Hays PLC GBR GBP 1,644, Software 93,600 SAP AG DEU EUR 3,549, ,200 The Sage Group PLC GBR GBP 936, ,486, Specialty Retail 476,400 Kingfisher PLC GBR GBP 1,467, ,000 Inditex SA ESP EUR 1,400, ,868, Wireless Telecommunication Services 1,361,514 Vodafone Group PLC GBR GBP 2,634, ,300 Millicom International Cellular SA LUX USD 1,450, ,771 Turkcell Iletisim Hizmetleri AS, ADR TUR USD 1,200, ,285, TOTAL SHARES 120,205, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 120,205, TOTAL INVESTMENTS 120,205, Unaudited Semi-Annual Report

216 Templeton European Total Return Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING BONDS Government and Municipal Bonds 1,000,000 Government of France, 4.75%, 10/25/12 FRA EUR 1,067, TOTAL BONDS 1,067, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 1,067, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Consumer Finance 150 GMAC Inc., 7.00%, pfd., 144A USA USD 105, TOTAL SHARES 105, BONDS Corporate Bonds 1,500,000 US Bank NA, sub. note, FRN, 4.375%, 02/28/17 USA EUR 1,482, ,200,000 Santander Issuances, sub. bond, 23, FRN, 6.50%, 07/27/19 ESP EUR 1,137, ,000,000 Rabobank Nederland NV, sub. note, 3.75%, 11/09/20 NLD EUR 925, ,000,000 Citigroup Inc., FRN, 3.625%, 11/30/17 USA EUR 919, ,000 JPMorgan Chase & Co., senior note, 6.125%, 04/01/14 USA EUR 874, ,000 GE Capital European Funding, senior note, 2.875%, 09/17/15 USA EUR 844, ,000 UniCredit SpA, sub note, 6.70%, 06/05/18 ITA EUR 834, ,000 Siemens Financieringsmaatschappij NV, senior note, 5.125%, 02/20/17 DEU EUR 774, ,000 Goldman Sachs Group Inc., senior note, 6.375%, 05/02/18 USA EUR 755, ,000 HSBC Holdings PLC, sub. note, 6.00%, 06/10/19 GBR EUR 743, ,000 Commonwealth Bank of Australia, senior note, 4.25%, 11/10/16 AUS EUR 732, ,000 Bank Of America Corp., FRN, 4.75%, 05/23/17 USA EUR 726, ,000 Carrefour SA, 4.00%, 04/09/20 FRA EUR 695, ,000 Smiths Group PLC, senior note, 4.125%, 05/05/17 GBR EUR 687, ,000 Tesco PLC, senior note, 5.875%, 09/12/16 GBR EUR 687, ,000 Nordea Bank AB, sub. note, 4.50%, 03/26/20 SWE EUR 680, ,000 Barclays Bank PLC, senior sub. note, 6.00%, 01/14/21 GBR EUR 680, ,000 Wolters Kluwer NV, 6.375%, 04/10/18 NLD EUR 677, ,000 Morgan Stanley, 5.375%, 08/10/20 USA EUR 675, ,000 National Australia Bank Ltd., senior note, 5.50%, 05/20/15 AUS EUR 661, ,000 Lloyds TSB Bank PLC, sub. note, 6.50%, 03/24/20 GBR EUR 646, ,000 Gas Natural Capital, 4.125%, 01/26/18 ESP EUR 633, ,000 Veolia Environnement, 4.375%, 12/11/20 FRA EUR 614, ,000 CEZ AS, 5.00%, 10/19/21 CZE EUR 612, ,000 Merrill Lynch & Co. Inc., 4.875%, 05/30/14 USA EUR 611, ,000 Anglo Irish Bank Corp. Ltd., 4.00%, 04/15/15 IRL EUR 611, ,000 Enel Finance International SA, senior note, 5.00%, 09/14/22 ITA EUR 609, ,000 Credit Agricole SA, 3.90%, 04/19/21 FRA EUR 586, ,000 Nomura Europe Finance Nv, senior note, 5.125%, 12/09/14 JPN EUR 578, ,000 Standard Chartered PLC, senior note, 5.75%, 04/30/14 GBR EUR 545, ,000 Nordea Bank AB, senior note, 4.50%, 05/12/14 SWE EUR 531, ,000 Casino Guichard Perrachon SA, senior bond, 4.379%, 02/08/17 FRA EUR 510, ,000 Motability Operations Group PLC, senior note, 3.75%, 11/29/17 GBR EUR 499, ,000 Roche Holdings Inc., 6.50%, 03/04/21 CHE EUR 484, ,000 RWE AG, 4.625%, Perpetual DEU EUR 482, ,000 Fresenius US Finance II, senior note, Reg S, 8.75%, 07/15/15 DEU EUR 466, ,000 AXA SA, sub. note, 5.25%, 04/16/40 FRA EUR 450, ,000 Xstrata Canada Financial Corp., senior note, 6.25%, 05/27/15 CAN EUR 444, ,000 Allianz Finance II BV, 4.375%, Perpetual DEU EUR 443, ,000 British Telecommunications PLC, senior note, 6.125%, 07/11/14 GBR EUR 441, ,000 Imperial Tobacco Finance PLC, 4.375%, 11/22/13 GBR EUR 421, ,000 GMAC International Finance BV, senior bond, 7.50%, 04/21/15 USA EUR 415, ,000 Beverage Packaging Holdings Luxembourg II SA, Reg S, 8.00%, 12/15/16 LUX EUR 401, ,000 Iron Mountain Inc., senior sub. note, 6.75%, 10/15/18 USA EUR 398, ,000 ThyssenKruup AG, senior note, 8.00%, 06/18/14 DEU EUR 398, ,000 Arkema, 4.00%, 10/25/17 FRA EUR 395, ,000 Telecom Italia Finance SA, 7.75%, 01/24/33 ITA EUR 384, ,000 Koninklijke KPN NV, senior note, 3.75%, 09/21/20 NLD EUR 379, ,000 Edcon Holdings Proprietary Ltd., senior bond, Reg S, FRN, 6.526%, 06/15/15 ZAF EUR 336, ,000 GE Capital Trust IV, sub. bond, Reg S, FRN, 4.625%, 09/15/66 USA EUR 336, ,000 Nordenia Holdings GmbH, 9.75%, 07/15/17 DEU EUR 332, ,000 Intergen NV, senior note, Reg S, 8.50%, 06/30/17 NLD EUR 323, ,000 Ineos Finance PLC, senior note, Reg S, 9.25%, 05/15/15 GBR EUR 320, ,000 UPC Germany GmbH, senior secured note, Reg S, 8.125%, 12/01/17 DEU EUR 318, ,000 Campofrio Food Group SA, senior note, Reg S, 8.25%, 10/31/16 ESP EUR 309, ,000 Chesapeake Energy Corp., senior bond, 6.25%, 01/15/17 USA EUR 303, ,000 New World Resources BV, senior bond, Reg S, 7.375%, 05/15/15 CZE EUR 302, ,000 Wind Acquisition Finance SA, senior note, Reg S, 11.75%, 07/15/17 ITA EUR 279, Unaudited Semi-Annual Report 215

217 Templeton European Total Return Fund (Currency EUR) Corporate Bonds (continued) 250,000 Sunrise Communications Holdings, senior note, Reg S, 8.50%, 12/31/18 LUX EUR 262, ,000 Nalco Co., senior sub. note, 9.00%, 11/15/13 USA EUR 255, ,000 Conti-Gummi Finance BV, senior secured note, Reg S, 7.50%, 09/15/17 DEU EUR 207, ,000 OI European Group BV, senior note, Reg S, 6.75%, 09/15/20 NLD EUR 101, ,184, Government and Municipal Bonds 8,000,000 Government of the Netherlands, 4.00%, 07/15/18 NLD EUR 8,638, ,000,000 Government of Germany, 2.25%, 09/04/20 DEU EUR 7,567, ,000,000 Government of Italy, 4.00%, 02/01/37 ITA EUR 2,477, ,000,000 Government of Poland, 5.25%, 10/25/17 POL PLN 2,464, ,000,000 Government of Poland, 5.75%, 09/23/22 POL PLN 2,453, ,000,000 Government of Germany, 3.50%, 01/04/16 DEU EUR 2,145, ,100,000 Government of Germany, 4.75%, 07/04/40 DEU EUR 1,362, ,300,000 Government of Mexico, senior note, 4.25%, 07/14/17 MEX EUR 1,307, ,000 Government of Lithuania, senior note, 9.375%, 06/22/14 LTU EUR 702, ,118, TOTAL BONDS 63,303, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 63,409, TOTAL INVESTMENTS 64,476, Floating Rates are indicated as at December 31, Unaudited Semi-Annual Report

218 Templeton Frontier s Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Air Freight & Logistics 14,425,459 Aramex Co. ARE AED 8,169, Auto Components 1,525,010 Danang Rubber JSC VND VND 3,128, ,877,146 The Southern Rubber Industry JSC VND VND 3,080, ,209, Automobiles 1,693,739 Indus Motor Co. Ltd. PAK PKR 5,000, Beverages 15,506,816 Nigerian Breweries PLC NGA NGN 7,804, ,269,312 Guinness Nigeria PLC NGA NGN 1,636, ,570 Chuong Duong Beverages JSC VND VND 629, ,070, Building Products 7,830,000 Dangote Cement PLC NGA NGN 6,387, ,304,800 Binh Minh Plastics JSC VND VND 5,614, ,002, Capital s 130,819 Press Corp. Ltd., GDR, Reg S MWI USD 3,022, ,833,000 SIF 5 Oltenia Craiova ROM RON 1,921, ,333,049 Ominvest OMN OMR 1,554, ,725,000 SIF 4 Muntenia Bucuresti ROM RON 1,366, ,864, Chemicals 775,473 HSBC Bank PLC (CRTP Saudi Basic Industries Corp.) SAU USD 21,660, ,685 Arab Potash Co. Ltd. JOR JOD 6,925, ,885,080 Dong Phu Rubber JSC VND VND 6,574, ,118 HSBC Bank PLC (CRTP Yanbu National Petrochemicals Co.) SAU USD 5,700, ,063,980 Tay Ninh Rubber JSC VND VND 3,874, ,748 HSBC Bank PLC (CRTP Saudi Arabia Fertilizer Co.) SAU USD 2,579, ,368 Viet Nam Fumigation JSC VND VND 2,328, ,635 Paints & Chemical Industries Co. SAE EGY EGP 1,661, ,304, Commercial Banks 470,233,758 United Bank for Africa PLC NGA NGN 28,337, ,308,386 Zenith Bank PLC NGA NGN 22,742, ,584 Commercial Bank of Qatar QAT QAR 21,467, ,857,486 Ecobank Transnational Inc. GHA NGN 16,718, ,255 HSBC Bank PLC (CRTP Samba Financial Group) SAU USD 16,042, ,991,935 United Bank Ltd. PAK PKR 15,104, ,824,910 BRD-Groupe Societe Generale ROM RON 14,902, ,681,544 National Bank of Abu Dhabi ARE AED 14,785, ,531,009 Access Bank Nigeria PLC NGA NGN 14,375, ,884,097 First Gulf Bank ARE AED 14,330, ,000 Bank of Georgia JSC, GDR, Reg S GE USD 13,145, ,831 Raiffeisen Bank International AG AUT EUR 12,496, ,155,778 First Bank of Nigeria PLC NGA NGN 10,582, ,783,801 Bank Muscat SAOG OMN OMR 9,434, ,065 Qatar National Bank QAT QAR 9,403, ,550 Banque Audi Sal-audi Saradar Group, GDR, Reg S LBN USD 8,427, ,854 AIK Banka AD Nis SER RSD 8,333, ,815 Arab Bank PLC JOR JOD 7,893, ,000 Blom Bank Sal, GDR LBN USD 5,657, ,531 Banco Latinoamericano de Comercio Exterior SA PAN USD 4,920, ,683,714 Union National Bank ARE AED 4,858, ,202,114 Vietnam Export-Import Commercial JSB VND VND 3,340, ,247 Mauritius Commercial Bank MUS MUR 3,083, ,234 National Societe Generale Bank EGY EGP 2,881, ,500 National Bank of Kuwait KWD KWD 1,435, ,900 Security Bank Corp. PHL PHP 1,107, ,000 Asia Commercial Bank VND VND 24, ,831, Commercial Services & Supplies 8,868,589 Depa Ltd. ARE USD 6,208, Unaudited Semi-Annual Report 217

219 Templeton Frontier s Fund Construction & Engineering 195,697 Orascom Construction Industries EGY EGP 9,702, ,761,231 Arabtec Holding Co. ARE AED 4,162, ,900 Song Da No. 10 JSC VND VND 783, ,648, Construction Materials 753,050 Hoa An JSC VND VND 826, Containers & Packaging 1,109,220 Tan Tien Plastic Packaging JSC VND VND 1,911, Diversified Financial Services 4,325,000 SIF 2 Moldova Bacau ROM RON 1,585, ,100,000 SIF 3 Transilvania Brasov ROM RON 1,560, ,566,000 SIF 1 Banat-Crisana Arad ROM RON 1,460, ,268 SC Bursa De Valori Bucuresti SA ROM RON 1,199, ,805, Diversified Telecommunication Services 423,358 Qatar Telecom QSC QAT QAR 20,778, ,070 Telecom Argentina SA, B, ADR ARG USD 18,221, ,745,218 Pakistan Telecommunications Corp., A PAK PKR 5,888, ,887, Electrical Equipment 1,704,630 Dry Cell Storage Battery JSC VND VND 4,721, Energy Equipment & Services 1,650,990 Renaissance Services SAOG OMN OMR 4,759, ,878 Maridive & Oil Services SAE EGY USD 3,412, ,400 Tenaris SA, ADR ARG USD 2,958, ,950 PetroVietnam Drilling and Well Services JSC VND VND 2,538, ,200 Petrovietnam Technical Services Corp. VND VND 573, ,242, Food & Staples Retailing 330,173 Avangardco Investments Public Ltd., GDR UKR USD 4,846, Food Products 1,080,872 Agroton Public Ltd., GDR, Reg S UKR EUR 12,001, ,737 MHP SA, GDR UKR USD 11,400, ,000 Mriya Agro Holding PLC, GDR, Reg S UKR EUR 7,190, ,540,433 Sintal Agriculture Ltd., GDR, Reg S CYP EUR 7,006, ,452,225 Dangote Sugar Refinery PLC NGA NGN 6,889, ,000 Agroton Public Ltd. UKR PLN 2,398, ,130 Vietnam Dairy Products JSC VND VND 2,122, ,612,400 Universal Robina Corp. PHL PHP 1,291, ,460,170 Zambeef Products PLC ZMB ZMK 1,125, ,870,682 Agthia Group PJSC ARE AED 1,059, ,081 Nestle Foods Nigeria PLC NGA NGN 525, ,684 Southern Seed Corp. VND VND 250, ,670 Vinh Hoan Corp. VND VND 17, ,277, Hotels, Restaurants & Leisure 28,286,999 NagaCorp Ltd. KH HKD 5,968, ,000 Kout Food Group KWD KWD 326, ,295, Household Products 450,000 Lix Detergent JSC VND VND 1,419, Industrial Conglomerates 403,418 Industries Qatar QAT QAR 15,290, ,622,688 UAC of Nigeria PLC NGA NGN 905, ,195, Insurance 2,281,000 Vietnam National Reinsurance Corp. VND VND 3,100, Marine 317,882 Ultrapetrol Bahamas Ltd. ARG USD 2,043, ,145 Vietnam Container Shipping JSC VND VND 1,945, ,989, Unaudited Semi-Annual Report

220 Templeton Frontier s Fund Media 506,000 Grupo Clarin SA, B, GDR, Reg S ARG USD 5,237, Metals & Mining 548,845 Kazakhmys PLC GBR GBP 13,854, ,640,170 Ferrexpo PLC GBR GBP 10,657, ,771 Jordan Phosphate Mines Co. JOR JOD 5,113, ,300 Aluminium Bahrain BSC, GDR, REG S BHN USD 4,507, ,600 Ternium SA, ADR ARG USD 4,096, ,580 Vimetco NV, GDR ROM USD 1,981, ,507 KazakhGold Group Ltd., GDR, Reg S KAZ USD 1,646, ,856 Gem Diamonds Ltd. GBR GBP 1,436, ,870,884 Africa Cellular Towers Ltd. ZAF ZAR 124, ,419, Multi-Utilities 129,834 Qatar Electricity & Water Co. QAT QAR 4,550, Oil, Gas & Consumable Fuels 2,303,533 KazMuniGas Exploration Production, GDR KAZ USD 45,586, ,679,315 Dragon Oil PLC IRL GBP 22,489, ,272,201 Oando PLC NGA NGN 9,670, ,875,600 OMV Petrom SA ROM RON 9,498, ,070 Repsol YPF SA ESP EUR 8,034, ,500 YPF Sociedad Anonima, D, ADR ARG USD 7,429, ,050 Zhaikmunai LP, GDR, Reg S KAZ USD 6,087, ,797, Pharmaceuticals 1,613,643 DHG Pharmaceutical JSC VND VND 9,931, ,031,514 Egyptian International Pharmaceutical Industries Co. EGY EGP 6,654, ,402 KRKA d.d. Novo Mesto SVN EUR 3,907, ,610 Imexpharm Pharmaceutical JSC VND VND 2,894, ,389 Grindeks LVA LVL 913, ,301, Real Estate Management & Development 285,977 SOLIDERE, A LBN USD 5,299, ,921,000 Emaar Properties PJSC ARE AED 4,756, ,055, Specialty Retail 446,198 HSBC Bank PLC (CRTP Fawaz Abdulaziz Al Hokair Co.) SAU USD 5,127, Tobacco 99,523 Eastern Tobacco EGY EGP 2,057, ,020 Cat Loi JSC VND VND 367, ,424, Transportation Infrastructure 8,836,904 DP World Ltd. ARE USD 5,567, ,315,106 Gemadept Corp. VND VND 3,942, ,333,830 Ho Chi Minh Infrastructure Investment JSC VND VND 2,462, ,972, Wireless Telecommunication Services 9,500,470 Orascom Telecom Holding SAE, GDR, Reg S EGY USD 34,610, ,347,667 MTN Group Ltd. ZAF ZAR 27,366, ,240,000 National Mobile Telecommunications Co. KWD KWD 15,121, ,362 HSBC Bank PLC (CRTP Etihad Etisalat Co.) SAU USD 9,876, ,974, TOTAL SHARES 871,689, BONDS Commercial Banks 1,177 Bank Muscat SAOG., cvt., 7.00%, 03/20/14 OMN OMR 3, TOTAL BONDS 3, RIGHTS Pharmaceuticals 917,610 Imexpharm Pharmaceutical JSC, rts., 02/24/11 VND VND 390, TOTAL RIGHTS 390, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 872,083, Unaudited Semi-Annual Report 219

221 Templeton Frontier s Fund TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Airlines 3,486,200 Kenya Airways Ltd. KEN KES 1,996, Beverages 12,251,819 Delta Corp. Ltd. ZWE USD 7,963, ,100 East African Breweries Ltd. KEN KES 1,776, ,739, Tobacco 625,500 British American Tobacco Kenya Ltd. Corp. KEN KES 2,099, Wireless Telecommunication Services 72,345,000 Safaricom Ltd. KEN KES 4,210, TOTAL SHARES 18,046, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 18,046, TOTAL INVESTMENTS 890,130, Unaudited Semi-Annual Report

222 Templeton Global Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 570,934 BAE Systems PLC GBR GBP 2,942, Air Freight & Logistics 669,393 Deutsche Post AG DEU EUR 11,318, ,466 United Parcel Service Inc., B USA USD 6,928, ,674 FedEx Corp. USA USD 4,527, ,774, Airlines 2,500,499 British Airways PLC GBR GBP 10,650, ,502 Deutsche Lufthansa AG DEU EUR 9,165, ,815, Auto Components 148,669 Compagnie Generale des Etablissements Michelin, B FRA EUR 10,679, Automobiles 415,438 Toyota Motor Corp. JPN JPY 16,479, ,781 Bayerische Motoren Werke AG DEU EUR 6,187, ,666, Biotechnology 235,740 Amgen Inc. USA USD 12,942, Capital s 656,975 UBS AG CHE CHF 10,797, ,198 The Bank of New York Mellon Corp. USA USD 8,914, ,889 Legg Mason Inc. USA USD 8,773, ,485, Chemicals 138,751 Akzo Nobel NV NLD EUR 8,628, ,879 E. I. du Pont de Nemours and Co. USA USD 3,286, ,914, Commercial Banks 5,556,133 UniCredit SpA ITA EUR 11,505, ,063,600 HSBC Holdings PLC GBR HKD 10,906, ,003,595 Intesa Sanpaolo SpA ITA EUR 10,872, ,323 Credit Agricole SA FRA EUR 9,959, ,146,189 Lloyds Banking Group PLC GBR GBP 8,365, ,163 DBS Group Holdings Ltd. SGP SGD 8,350, ,041 KB Financial Group Inc. KOR KRW 6,102, ,061, Communications Equipment 817,603 Cisco Systems Inc. USA USD 16,540, ,820,180 Brocade Communications Systems Inc. USA USD 9,628, ,138 Telefonaktiebolaget LM Ericsson, B SWE SEK 6,835, ,003, Computers & Peripherals 1,206,133 Dell Inc. USA USD 16,343, Construction Materials 435,910 CRH PLC IRL EUR 9,038, Containers & Packaging 2,501,230 Rexam PLC GBR GBP 13,018, Diversified Financial Services 2,386,191 ING Groep NV NLD EUR 23,238, ,980 Bank of America Corp. USA USD 10,338, ,255,200 Citigroup Inc. USA USD 5,937, ,514, Unaudited Semi-Annual Report 221

223 Templeton Global Fund Diversified Telecommunication Services 746,563 Telefonica SA ESP EUR 16,943, ,680 France Telecom SA FRA EUR 16,286, ,799,000 China Telecom Corp. Ltd., H CHN HKD 14,449, ,982,000 Singapore Telecommunications Ltd. SGP SGD 14,220, ,295 Telenor ASA NOR NOK 8,226, ,782 Telekom Austria AG AUT EUR 7,976, ,474 AT&T Inc. USA USD 4,244, ,347, Electric Utilities 2,106,735 Iberdrola SA ESP EUR 16,255, ,439 E.ON AG DEU EUR 15,490, ,703 CEZ CZE CZK 5,007, ,520 Iberdrola SA ESP EUR 451, ,205, Electrical Equipment 181,847 Alstom SA FRA EUR 8,711, Electronic Equipment, Instruments & Component 269,297 Tyco Electronics Ltd. USA USD 9,533, Energy Equipment & Services 236,800 Noble Corp. USA USD 8,470, ,690 Baker Hughes Inc. USA USD 8,157, ,967 Halliburton Co. USA USD 3,387, ,015, Food Products 490,125 Unilever NV NLD EUR 15,276, ,220 Tate & Lyle PLC GBR GBP 7,856, ,617 Nestle SA CHE CHF 6,718, ,521,196 Premier Foods PLC GBR GBP 6,483, ,335, Health Care Providers & Services 434,541 Omnicare Inc. USA USD 11,032, Household Durables 223,130 Sony Corp. JPN JPY 8,045, Household Products 209,492 The Procter & Gamble Co. USA USD 13,476, Industrial Conglomerates 918,339 General Electric Co. USA USD 16,796, ,394 Siemens AG DEU EUR 14,881, ,764 Koninklijke Philips Electronics NV NLD EUR 11,306, ,984, Insurance 282,687 Swiss Reinsurance Co. CHE CHF 15,223, ,416,824 Aviva PLC GBR GBP 14,863, ,317 AXA SA FRA EUR 11,164, ,267 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 10,051, ,580 Swiss Life Holding CHE CHF 6,163, ,000 NKSJ Holdings Inc. JPN JPY 5,930, ,742,400 AIA Group Ltd. HKG HKD 4,898, ,295, IT Services 70,158 Accenture PLC, A USA USD 3,401, Machinery 29,959 MAN SE DEU EUR 3,594, Media 751,352 News Corp., A USA USD 10,939, ,586 Viacom Inc., B USA USD 10,638, ,479 Time Warner Cable Inc. USA USD 9,870, ,896 The Walt Disney Co. USA USD 8,473, ,556 Time Warner Inc. USA USD 8,060, ,996 Reed Elsevier NV NLD EUR 5,820, ,802, Unaudited Semi-Annual Report

224 Templeton Global Fund Metals & Mining 266,924 Vale SA, ADR, pfd., A BRA USD 8,066, Multi-Utilities 256,676 GDF Suez FRA EUR 9,219, Multiline Retail 1,299,790 Marks & Spencer Group PLC GBR GBP 7,486, Oil, Gas & Consumable Fuels 2,601,799 BP PLC GBR GBP 18,917, ,289 Total SA, B FRA EUR 17,678, ,124 Royal Dutch Shell PLC, B GBR GBP 14,938, ,234 Gazprom, ADR RUS USD 14,714, ,849 Chevron Corp. USA USD 12,487, ,530 Chesapeake Energy Corp. USA USD 12,139, ,842 Petroleo Brasileiro SA, ADR, pfd. BRA USD 10,245, ,122, Personal Products 292,691 Avon Products Inc. USA USD 8,505, Pharmaceuticals 452,375 Merck & Co. Inc. USA USD 16,303, ,835 Merck KGaA DEU EUR 15,141, ,208 Pfizer Inc. USA USD 12,908, ,261 GlaxoSmithKline PLC GBR GBP 11,501, ,645 Watson Pharmaceuticals Inc. USA USD 8,813, ,530,490 Elan Corp. PLC, ADR IRL USD 8,769, ,422 Roche Holding AG CHE CHF 7,249, ,433 Sanofi-Aventis FRA EUR 5,980, ,668, Real Estate Management & Development 608,600 Cheung Kong (Holdings) Ltd. HKG HKD 9,380, Semiconductors & Semiconductor Equipment 1,280,509 Infineon Technologies AG DEU EUR 12,004, ,346 Samsung Electronics Co. Ltd. KOR KRW 9,602, ,607, Software 654,459 Oracle Corp. USA USD 20,484, ,854 Microsoft Corp. USA USD 17,138, ,415 Nintendo Co. Ltd. JPN JPY 4,231, ,583 SAP AG DEU EUR 4,189, ,044, Textiles, Apparel & Luxury Goods 1,555,539 Liz Claiborne Inc. USA USD 11,137, Companies & Distributors 1,261,550 Itochu Corp. JPN JPY 12,774, Wireless Telecommunication Services 4,677,011 Sprint Nextel Corp. USA USD 19,783, ,122,851 Vodafone Group PLC GBR GBP 13,259, ,043, TOTAL SHARES 1,063,042, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 1,063,042, TOTAL INVESTMENTS 1,063,042, Unaudited Semi-Annual Report 223

225 Templeton Global (Euro) Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 1,441,020 BAE Systems PLC GBR GBP 5,550, Automobiles 195,280 Toyota Motor Corp. JPN JPY 5,790, Biotechnology 165,547 Amgen Inc. USA USD 6,793, ,392 Basilea Pharmaceutica AG CHE CHF 5,170, ,297 Biogen Idec Inc. USA USD 3,172, ,137, Capital s 335,046 The Bank of New York Mellon Corp. USA USD 7,563, ,994 UBS AG CHE CHF 5,577, ,800 Nomura Holdings Inc. JPN JPY 3,195, ,336, Commercial Banks 858,000 HSBC Holdings PLC GBR HKD 6,576, ,819,281 UniCredit SpA ITA EUR 5,912, ,086,420 Lloyds Banking Group PLC GBR GBP 5,439, ,105 KB Financial Group Inc. KOR KRW 4,564, ,810 BB&T Corp. USA USD 2,708, ,105 Banco Santander SA ESP EUR 2,688, ,900 Credit Agricole SA FRA EUR 2,641, ,530, Communications Equipment 526,604 Cisco Systems Inc. USA USD 7,963, ,391 Telefonaktiebolaget LM Ericsson, B SWE SEK 5,659, ,860 Brocade Communications Systems Inc. USA USD 2,407, ,030, Computers & Peripherals 675,553 Dell Inc. USA USD 6,842, Construction Materials 322,290 CRH PLC IRL EUR 4,995, Consumer Finance 187,106 American Express Co. USA USD 6,003, Containers & Packaging 1,812,142 Rexam PLC GBR GBP 7,050, Diversified Financial Services 1,205,032 ING Groep NV NLD EUR 8,772, ,082 JPMorgan Chase & Co. USA USD 8,595, ,890,800 Citigroup Inc. USA USD 6,685, ,258 Bank of America Corp. USA USD 3,343, ,397, Diversified Telecommunication Services 578,428 Telenor ASA NOR NOK 7,039, ,463,882 Singapore Telecommunications Ltd. SGP SGD 6,155, ,144 Telefonica SA ESP EUR 5,176, ,842 Telekom Austria AG AUT EUR 4,301, ,166,107 Telecom Italia SpA ITA EUR 2,570, ,266 Hellenic Telecommunications Organization SA (OTE) GRC EUR 2,502, ,746, Electric Utilities 190,965 E.ON AG DEU EUR 4,366, ,734 Iberdrola SA ESP EUR 3,447, ,603 Iberdrola SA ESP EUR 95, ,909, Electrical Equipment 174,142 Alstom SA FRA EUR 6,236, Unaudited Semi-Annual Report

226 Templeton Global (Euro) Fund (Currency EUR) Energy Equipment & Services 235,801 Halliburton Co. USA USD 7,196, ,630 Noble Corp. USA USD 4,562, ,460 Baker Hughes Inc. USA USD 3,737, ,497, Food & Staples Retailing 1,159,398 Tesco PLC GBR GBP 5,756, Food Products 97,006 Nestle SA CHE CHF 4,250, ,269,043 Premier Foods PLC GBR GBP 2,763, ,013, Health Care Providers & Services 190,790 Quest Diagnostics Inc. USA USD 7,697, ,616 Rhoen-Klinikum AG DEU EUR 5,922, ,620, Household Durables 1,280,340 Persimmon PLC GBR GBP 6,220, Household Products 137,765 The Procter & Gamble Co. USA USD 6,624, Industrial Conglomerates 108,500 Siemens AG DEU EUR 10,108, ,902 Koninklijke Philips Electronics NV NLD EUR 3,802, ,680 General Electric Co. USA USD 3,030, ,942, Insurance 492,126 Marsh & McLennan Cos. Inc. USA USD 10,057, ,251 AXA SA FRA EUR 6,937, ,326,073 Aviva PLC GBR GBP 6,096, ,194 Progressive Corp. USA USD 5,142, ,484 Swiss Reinsurance Co. CHE CHF 5,051, ,916,000 AIA Group Ltd. HKG HKD 4,026, ,000 NKSJ Holdings Inc. JPN JPY 3,133, ,989 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 2,720, ,165, IT Services 167,021 Accenture PLC, A USA USD 6,054, Machinery 61,065 MAN SE DEU EUR 5,476, Media 193,635 Time Warner Cable Inc. USA USD 9,557, ,434 The Walt Disney Co. USA USD 7,919, ,348 Reed Elsevier NV NLD EUR 5,177, ,196 Vivendi SA FRA EUR 5,094, ,749, Metals & Mining 243,951 Vale SA, ADR, pfd., A BRA USD 5,510, Multi-Utilities 126,300 GDF Suez FRA EUR 3,391, Multiline Retail 913,070 Marks & Spencer Group PLC GBR GBP 3,931, Office Electronics 649,000 Konica Minolta Holdings Ltd. JPN JPY 5,044, Oil, Gas & Consumable Fuels 468,236 Chesapeake Energy Corp. USA USD 9,068, ,674 Total SA, B FRA EUR 8,987, ,755 Gazprom, ADR RUS USD 7,520, ,629 BG Group PLC GBR GBP 7,363, ,294,442 BP PLC GBR GBP 7,035, ,090 Chevron Corp. USA USD 6,895, ,996 Petroleo Brasileiro SA, ADR, pfd. BRA USD 5,900, ,500 Valero Energy Corp. USA USD 5,297, ,873 Talisman Energy Inc. CAN CAD 3,480, ,900 Petroleo Brasileiro SA, pfd. BRA BRL 2,752, ,301, Unaudited Semi-Annual Report 225

227 Templeton Global (Euro) Fund (Currency EUR) Pharmaceuticals 245,812 Watson Pharmaceuticals Inc. USA USD 9,490, ,859 Sanofi-Aventis FRA EUR 8,032, ,952 GlaxoSmithKline PLC GBR GBP 7,276, ,189 Pfizer Inc. USA USD 6,900, ,822 Roche Holding AG CHE CHF 6,230, ,623 Merck & Co. Inc. USA USD 5,728, ,624 Merck KGaA DEU EUR 5,039, ,370 Bayer AG, Br. DEU EUR 4,997, ,165,261 Elan Corp. PLC, ADR IRL USD 4,991, ,686, Semiconductors & Semiconductor Equipment 10,029 Samsung Electronics Co. Ltd. KOR KRW 6,345, Software 486,741 Microsoft Corp. USA USD 10,158, ,679 Oracle Corp. USA USD 9,164, ,065 SAP AG DEU EUR 8,535, ,456,518 The Sage Group PLC GBR GBP 7,849, ,789 Nintendo Co. Ltd. JPN JPY 7,414, ,123, Specialty Retail 108,929 Inditex SA ESP EUR 6,103, Companies & Distributors 753,500 Itochu Corp. JPN JPY 5,703, ,084,122 SIG PLC GBR GBP 4,603, ,307, Wireless Telecommunication Services 1,719,693 Sprint Nextel Corp. USA USD 5,437, ,176 Turkcell Iletisim Hizmetleri AS, ADR TUR USD 4,932, ,369, TOTAL SHARES 554,793, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 554,793, TOTAL INVESTMENTS 554,793, Unaudited Semi-Annual Report

228 Templeton Global Aggregate Bond Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Asset-Backed Securities 220,000 Holmes Master Issuer PLC, A, A2, 144 A, FRN, 1.671%, 10/15/54 GBR USD 219, ,000 GS Mortgage Securities Corp. II, 2006-GG6, A4, FRN, 5.553%, 04/10/38 USA USD 215, , Corporate Bonds 70,000 Imperial Tobacco Finance PLC, 7.75%, 06/24/19 GBR GBP 130, ,000 HSBC Holdings PLC, senior note, 6.50%, 05/20/24 GBR GBP 119, ,000 Tesco PLC, senior note, 6.125%, 02/24/22 GBR GBP 119, ,000 Svenska Handelsbanken AB, senior bond, 5.50%, 05/26/16 SWE GBP 117, ,000 Barclays Bank PLC, senior sub. note, 6.00%, 01/14/21 GBR EUR 104, ,000 Morgan Stanley, senior note, 5.625%, 09/23/19 USA USD 102, ,000 Carlsberg AS, 7.25%, 11/28/16 DNK GBP 100, ,000 Sinochem Overseas Capital Co. Ltd., senior note, Reg S, 4.50%, 11/12/20 CHN USD 98, ,000 Lloyds TSB Bank PLC, 144A, 5.80%, 01/13/20 GBR USD 98, ,000 HSBC Finance Corp., senior note, FRN, 0.726%, 06/01/16 USA USD 92, ,000 Commonwealth Bank of Australia, senior note, 4.25%, 11/10/16 AUS EUR 90, ,000 Royal Bank of Scotland Group PLC, senior note, 5.375%, 09/30/19 GBR EUR 76, ,000 Tesco PLC, senior note, 5.875%, 09/12/16 GBR EUR 76, ,000 Comcast Corp., senior note, 6.30%, 11/15/17 USA USD 74, ,000 Xstrata Canada Financial Corp., senior note, 6.25%, 05/27/15 CAN EUR 74, ,000 National Australia Bank Ltd., senior note, 5.50%, 05/20/15 AUS EUR 73, ,000 Standard Chartered PLC, senior note, 5.75%, 04/30/14 GBR EUR 73, ,000 DnB NOR Bank ASA, senior note, 4.50%, 05/29/14 NOR EUR 71, ,000 HSBC Holdings PLC, sub. note, 6.00%, 06/10/19 GBR EUR 71, ,000 CEZ AS, senior note, 5.00%, 10/19/21 CZE EUR 68, ,000 Enel Finance International SA, senior note, 5.00%, 09/14/22 ITA EUR 67, ,000 UniCredit SpA, junior sub. note, 6.70%, 06/05/18 ITA EUR 66, ,000 Merrill Lynch & Co. Inc., 6.875%, 04/25/18 USA USD 65, ,000 Morgan Stanley, senior note, 5.375%, 08/10/20 USA EUR 64, ,000 Citigroup Inc., senior note, 8.125%, 07/15/39 USA USD 63, ,000 Lloyds TSB Bank PLC, sub. note, 6.50%, 03/24/20 GBR EUR 61, ,000 Credit Agricole SA, 3.90%, 04/19/21 FRA EUR 60, ,000 General Electric Capital Corp., senior note, 2.25%, 11/09/15 USA USD 52, ,000 RWE AG, 4.625%, Perpetual DEU EUR 51, ,000 The Goldman Sachs Group Inc., junior sub. note, 6.345%, 02/15/34 USA USD 47, ,000 Lincoln National Corp., senior note, 6.25%, 02/15/20 USA USD 43, ,000 News America Inc., 6.40%, 12/15/35 USA USD 43, ,000 Prudential Financial Inc., senior disc. note, D, 4.75%, 09/17/15 USA USD 42, ,000 American International Group Inc., senior note, 3.65%, 01/15/14 USA USD 30, ,000 Mylan Inc., senior note, 144A, 6.00%, 11/15/18 USA USD 29, ,000 Frontier Communications Corp., senior note, 8.25%, 04/15/17 USA USD 27, ,000 El Paso Corp., senior note, 7.00%, 06/15/17 USA USD 26, ,000 Bank of America Corp., senior note, 5.875%, 01/05/21 USA USD 25, ,000 Davita Inc., senior note, 6.375%, 11/01/18 USA USD 24, ,000 International Lease Finance Corp., senior note, 8.25%, 12/15/20 USA USD 5, ,735, Government and Municipal Bonds 500,000 Government of the Netherlands, 4.00%, 07/15/18 NLD EUR 722, ,000 Government of Germany, 2.25%, 09/04/20 DEU EUR 632, ,000 FNMA, 4.00%, 01/01/41 USA USD 617, ,000 Queensland Treasury Corp., 6.00%, 09/14/17 AUS AUD 567, ,000,000 Government of Japan, 1.50%, 09/20/18 JPN JPY 453, ,000 FNMA, 5.50%, 01/01/25 USA USD 240, ,000 US Treasury Bond, 2.75%, 02/15/19 USA USD 187, ,625 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 180, ,000 FHLMC, 6.00%, 01/01/40 USA USD 167, ,000 Government of Poland, 5.25%, 10/25/17 POL PLN 154, ,000 Government of Poland, 5.75%, 09/23/22 POL PLN 154, ,000 Government of the Netherlands, 2.50%, 01/15/12 NLD EUR 136, ,000 Government of Germany, 4.75%, 07/04/40 DEU EUR 132, ,000 Government of Italy, 4.00%, 02/01/37 ITA EUR 132, ,000 Government of Korea, senior note, 5.75%, 04/16/14 KOR USD 109, ,000 Government of Hungary, senior note, 6.25%, 01/29/20 HUN USD 107, ,000 Government of South Africa, 5.50%, 03/09/20 ZAF USD 106, ,000 Government of Croatia, Reg S, 6.75%, 11/05/19 HRV USD 103, ,000 Government of Qatar, senior note, Reg S, 4.00%, 01/20/15 QAT USD 103, ,000 US Treasury Bond, 4.50%, 08/15/39 USA USD 102, ,000 US Treasury Note, 3.50%, 05/15/20 USA USD 55, ,000 California State GO, Build America Bonds, 5.70%, 11/01/21 USA USD 48, ,000 ftci, 5.10%, 06/01/33 USA USD 29, ,000 San Diego County Water Authority Financing Agency Water Revenue, Build America Bonds, San Diego Water, Series B, 6.138%, 05/01/49 USA USD 20, ,268, Unaudited Semi-Annual Report 227

229 Templeton Global Aggregate Bond Fund Securities Maturing Within One Year 750,000 US Treasury Note, 0.875%, 02/28/11 USA USD 750, ,000 US Treasury Bill, 0.00%, 01/20/11 USA USD 519, ,000 US Treasury Note, 0.875%, 01/31/11 USA USD 440, ,000 US Treasury Bill, 0.00%, 01/13/11 USA USD 159, ,871, TOTAL BONDS 10,310, INVESTMENTS FUNDS Diversified Financial Services 48,728 Franklin Templeton Emerging Debt Opportunities Fund IRL USD 908, TOTAL INVESTMENTS FUNDS 908, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 11,219, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 100,000 Metropolitan Life Global Funding I, 144A, 5.125%, 06/10/14 USA USD 108, TOTAL BONDS 108, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 108, TOTAL INVESTMENTS 11,327, Floating Rates are indicated as at December 31, Unaudited Semi-Annual Report

230 Templeton Global Balanced Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 383,349 BAE Systems PLC GBR GBP 1,975, Air Freight & Logistics 255,620 Deutsche Post AG DEU EUR 4,322, Airlines 247,805 Deutsche Lufthansa AG DEU EUR 5,453, Auto Components 57,420 Compagnie Generale des Etablissements Michelin, B FRA EUR 4,124, Automobiles 58,786 Bayerische Motoren Werke AG DEU EUR 4,617, ,700 Toyota Motor Corp. JPN JPY 3,558, ,175, Biotechnology 149,804 Amgen Inc. USA USD 8,224, ,522 Biogen Idec Inc. USA USD 3,119, ,343, Capital s 171,655 The Bank of New York Mellon Corp. USA USD 5,183, ,137,032 Macquarie Korea Infrastructure Fund KOR KRW 4,918, ,776 Morgan Stanley USA USD 3,640, ,086 UBS AG CHE CHF 3,025, ,767, Commercial Banks 602,286 HSBC Holdings PLC GBR HKD 6,175, ,069 Credit Agricole SA FRA EUR 6,116, ,488,455 UniCredit SpA ITA EUR 5,153, ,800 Mitsubishi UFJ Financial Group Inc. JPN JPY 2,935, ,676 KB Financial Group Inc. KOR KRW 2,872, ,000 DBS Group Holdings Ltd. SGP SGD 2,355, ,701 BNP Paribas SA FRA EUR 1,764, ,462 Lloyds Banking Group PLC GBR GBP 850, ,223, Communications Equipment 298,508 Cisco Systems Inc. USA USD 6,038, Computers & Peripherals 298,373 Dell Inc. USA USD 4,042, Construction Materials 237,196 CRH PLC IRL EUR 4,918, Consumer Finance 116,471 American Express Co. USA USD 4,998, Diversified Financial Services 514,740 ING Groep NV NLD EUR 5,012, ,786 Bank of America Corp. USA USD 4,025, ,038, Diversified Telecommunication Services 671,656 Telenor ASA NOR NOK 10,935, ,374 Telefonica SA ESP EUR 9,880, ,590,628 Singapore Telecommunications Ltd. SGP SGD 8,535, ,852 France Telecom SA FRA EUR 8,446, ,089 Telekom Austria AG AUT EUR 5,588, ,386, Electric Utilities 488,097 Iberdrola SA ESP EUR 3,766, ,739 E.ON AG DEU EUR 3,173, ,558 Iberdrola SA ESP EUR 104, ,043, Electrical Equipment 46,444 Alstom SA FRA EUR 2,224, Unaudited Semi-Annual Report 229

231 Templeton Global Balanced Fund Electronic Equipment, Instruments & Components 603,113 Flextronics International Ltd. SGP USD 4,734, ,115 Tyco Electronics Ltd. USA USD 3,437, ,172, Energy Equipment & Services 295,831 SBM Offshore NV NLD EUR 6,634, ,491 Baker Hughes Inc. USA USD 3,229, ,864, Food & Staples Retailing 151,920 CVS Caremark Corp. USA USD 5,282, ,127 Tesco PLC GBR GBP 3,992, ,274, Food Products 64,289 Nestle SA CHE CHF 3,768, ,543,798 Premier Foods PLC GBR GBP 766, ,534, Health Care Equipment & Supplies 108,460 Medtronic Inc. USA USD 4,022, ,159 Covidien PLC USA USD 2,975, ,997, Hotels, Restaurants & Leisure 213,895 Autogrill SpA ITA EUR 3,024, Industrial Conglomerates 378,618 General Electric Co. USA USD 6,924, ,496 Siemens AG DEU EUR 6,916, ,157 Tyco International Ltd. USA USD 2,907, ,580 Koninklijke Philips Electronics NV NLD EUR 1,612, ,361, Insurance 123,174 Swiss Reinsurance Co. CHE CHF 6,633, ,200 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 5,946, ,590 ACE Ltd. USA USD 5,639, ,544 AXA SA FRA EUR 5,172, ,791 Aviva PLC GBR GBP 3,793, ,600 AIA Group Ltd. HKG HKD 2,287, ,471, IT Services 154,195 Accenture PLC, A USA USD 7,476, ,309 SAIC Inc. USA USD 2,415, ,892, Machinery 47,471 Navistar International Corp. USA USD 2,749, Media 134,049 Time Warner Cable Inc. USA USD 8,851, ,243 News Corp., A USA USD 5,914, ,918 Vivendi SA FRA EUR 5,834, ,150 Comcast Corp., A, Special USA USD 5,746, ,614 Reed Elsevier NV NLD EUR 5,728, ,076, Metals & Mining 164,127 Vale SA, ADR, pfd., A BRA USD 4,959, Multi-Utilities 69,656 GDF Suez FRA EUR 2,501, Unaudited Semi-Annual Report

232 Templeton Global Balanced Fund Oil, Gas & Consumable Fuels 282,260 Royal Dutch Shell PLC, B GBR GBP 9,346, ,319 Total SA, B FRA EUR 9,034, ,201,506 BP PLC GBR GBP 8,736, ,344 Chevron Corp. USA USD 4,958, ,340 Eni SpA ITA EUR 4,947, ,192 Petroleo Brasileiro SA, ADR, pfd. BRA USD 4,517, ,951 Gazprom, ADR RUS USD 3,758, ,837 Statoil ASA NOR NOK 3,447, ,363 Chesapeake Energy Corp. USA USD 2,600, ,545 Royal Dutch Shell PLC, A GBR GBP 118, ,465, Pharmaceuticals 551,986 Pfizer Inc. USA USD 9,665, ,158 GlaxoSmithKline PLC GBR GBP 8,131, ,917 Sanofi-Aventis FRA EUR 7,420, ,017 Merck & Co. Inc. USA USD 7,316, ,740 Roche Holding AG CHE CHF 4,655, ,823 Merck KGaA DEU EUR 2,162, ,303 Novartis AG CHE CHF 1,488, ,840, Real Estate Management & Development 231,000 Cheung Kong (Holdings) Ltd. HKG HKD 3,560, Semiconductors & Semiconductor Equipment 12,439 Samsung Electronics Co. Ltd. KOR KRW 10,528, Software 400,171 Microsoft Corp. USA USD 11,172, ,160 Oracle Corp. USA USD 7,955, ,687 SAP AG DEU EUR 4,144, ,695 Symantec Corp. USA USD 2,422, ,694, Specialty Retail 139,351 The Home Depot Inc. USA USD 4,885, ,641 JD Group Ltd. ZAF ZAR 4,071, ,635 USS Co. Ltd. JPN JPY 3,814, ,282 The Gap Inc. USA USD 958, ,729, Companies & Distributors 433,286 Itochu Corp. JPN JPY 4,387, Wireless Telecommunication Services 3,187,269 Vodafone Group PLC GBR GBP 8,249, ,500 Turkcell Iletisim Hizmetleri AS, ADR TUR USD 3,091, ,341, TOTAL SHARES 465,506, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 465,506, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Government and Municipal Bonds 61,900,000 Government of Poland, 5.75%, 09/23/22 POL PLN 20,314, ,669,000 Government of Mexico, M 20, 10.00%, 12/05/24 MEX MXN 16,895, ,279,075 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 11,872, ,460,000 Korea Treasury Bond, senior note, 7.125%, 04/16/19 KOR USD 10,107, ,156,000,000 Korea Deposit Insurance Corp., 08-1, 5.28%, 02/15/13 KOR KRW 8,444, ,710,000 Government of Malaysia, senior bond, 4.24%, 02/07/18 MYS MYR 8,250, ,630,000 Government of Poland, 4.75%, 04/25/12 POL PLN 8,009, ,000,000 Inter-American Development Bank, senior note, 7.50%, 12/05/24 SP MXN 7,467, ,688,870,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 6,031, ,150,000 Government of South Africa, 6.875%, 05/27/19 ZAF USD 6,022, ,600 Government of Mexico, M 30, 10.00%, 11/20/36 MEX MXN 5,784, ,570,000 Government of Australia, TB123, 5.75%, 04/15/12 AUS AUD 5,747, ,415,000 Government of Malaysia, senior bond, 3.814%, 02/15/17 MYS MYR 4,076, ,900,000 Government of Poland, 6.25%, 10/24/15 POL PLN 2,762, ,540,000 Government of the Netherlands, 4.50%, 07/15/17 NLD EUR 2,296, ,700 Government of Mexico, M, 9.00%, 06/20/13 MEX MXN 1,350, ,000 Government of Hungary, senior note, 5.75%, 06/11/18 HUN EUR 1,230, Unaudited Semi-Annual Report 231

233 Templeton Global Balanced Fund Government and Municipal Bonds (continued) 765,000 Province of Manitoba, 6.375%, 09/01/15 CAN NZD 624, ,000 Government of Hungary, senior note, 4.375%, 07/04/17 HUN EUR 619, ,630,000 Government of Malaysia, senior bond, 3.461%, 07/31/13 MYS MYR 532, ,000 Government of Hungary, senior note, 3.875%, 02/24/20 HUN EUR 467, ,790,000 Korea Treasury Bond, 5.25%, 03/10/13 KOR KRW 205, ,000 Government of Hungary, senior note, 3.50%, 07/18/16 HUN EUR 155, ,000 Government of Malaysia, senior bond, 0309, 2.711%, 02/14/12 MYS MYR 6, ,275, Securities Maturing Within One Year 377,575,000 Government of Sweden, 5.25%, 03/15/11 SWE SEK 56,687, ,055,000 Government of Malaysia, senior bond, 3.756%, 04/28/11 MYS MYR 21,187, ,100,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 5,919, ,485,580,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 4,980, ,274,390,000 Korea Treasury Bond, senior bond, 5.50%, 06/10/11 KOR KRW 2,053, ,000 Bank of Negara Moary Note, 0.00%, 07/28/11 MYS MYR 185, ,000 Queensland Treasury Corp., 6.00%, 06/14/11 AUS AUD 184, ,000 Bank of Negara Moary Note, 0.00%, 01/20/11 MYS MYR 103, ,000 Bank of Negara Moary Note, 0.00%, 01/06/11 MYS MYR 98, ,000 Malaysia Treasury Bill, 0.00%, 09/29/11 MYS MYR 38, ,000 Malaysia Treasury Bill, 0.00%, 04/05/11 MYS MYR 28, ,468, TOTAL BONDS 220,744, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 220,744, TOTAL INVESTMENTS 686,251, Unaudited Semi-Annual Report

234 Templeton Global Bond Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING BONDS Government and Municipal Bonds 66,500,000 Government of France, 4.25%, 04/25/19 FRA EUR 96,092, TOTAL BONDS 96,092, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 96,092, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 1,146,000,000 KfW Bankengruppe, 4.66%, 01/05/12 DEU NOK 200,473, ,800,000,000 National Bank for Agriculture & Rural Development, 11B, 5.82%, 05/05/13 IND INR 83,341, ,780,000,000 Export-Import Bank of India, N-01, 5.90%, 05/07/13 IND INR 82,935, ,630,000 The Export-Import Bank of Korea, senior note, 8.125%, 01/21/14 KOR USD 9,885, ,545,000 The Export-Import Bank of Korea, 5.125%, 03/16/15 KOR USD 2,664, ,495,000 The Export-Import Bank of Korea, Reg S, 5.25%, 02/10/14 KOR USD 2,651, ,585,000 The Export-Import Bank of Korea, 4.625%, 02/20/17 KOR EUR 2,151, ,104, Government and Municipal Bonds 2,021,018,610,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 1,822,499, ,536,194,000,000 Korea Treasury Bond, 4.25%, 12/10/12 KOR KRW 1,393,018, ,732,000,000 Korea Treasury Bond, senior bond, 3.75%, 06/10/13 KOR KRW 840,190, ,465,845,000 Government of Poland, 4.75%, 04/25/12 POL PLN 835,780, ,500,000 Government of Australia, TB123, 5.75%, 04/15/12 AUS AUD 774,424, ,289,940 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 617,131, ,512,400 Government of Mexico, M 20, 10.00%, 12/05/24 MEX MXN 572,076, ,620,000 Western Australia Treasury Corp., 5.50%, 07/17/12 AUS AUD 504,063, ,710 Nota Do Tesouro Nacional, 9.609%, 01/01/17 BRA BRL 383,493, ,097,170,000 Government of Poland, Strip, 07/25/12 POL PLN 345,052, ,178,780,000 Government of Sweden, 5.50%, 10/08/12 SWE SEK 344,953, ,405,000 Government of Poland, Strip, 01/25/12 POL PLN 318,492, ,310,000 Government of the Netherlands, 4.50%, 07/15/17 NLD EUR 316,557, ,965,000,000 Kommuninvest I Sverige, senior note, 1.75%, 10/08/12 SWE SEK 289,165, ,750 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/15 BRA BRL 288,882, ,125 Nota Do Tesouro Nacional, 9.609%, 01/01/12 BRA BRL 284,742, ,875,000 Government of Poland, Strip, 10/25/12 POL PLN 284,235, ,310,430,000,000 Government of Indonesia, FR46, 9.50%, 07/15/23 IDN IDR 276,976, ,000,000 California State GO, Build America Bonds, 7.60%, 11/01/40 USA USD 274,138, ,180 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/45 BRA BRL 224,090, ,470,000,000 European Bank for Reconstruction & Development, 1.50%, 05/15/12 SP SEK 216,012, ,646,800,000,000 Government of Indonesia, FR40, 11.00%, 09/15/25 IDN IDR 215,941, ,034,000 Government of Argentina, senior bond, FRN, 0.677%, 08/03/12 ARG USD 215,124, ,930,000 Government of Lithuania, Reg S, 7.375%, 02/11/20 LTU USD 211,693, ,345,000 Government of Hungary, senior note, 6.25%, 01/29/20 HUN USD 195,336, ,751,000 Government of Mexico, M 10, 7.25%, 12/15/16 MEX MXN 191,683, ,300,000,000 Export Development Canada, senior note, Reg S, 1.625%, 05/08/12 CAN SEK 191,618, ,300,000,000 European Investment Bank, 1.45%, 05/15/12 SP SEK 191,145, ,985,000 Queensland Treasury Corp., 6.00%, 08/14/13 AUS AUD 184,744, ,000,000 European Investment Bank, senior note, 5.375%, 07/16/12 SP NOK 177,802, ,225,000 Government of South Africa, 6.875%, 05/27/19 ZAF USD 176,857, ,330,000 California State GO, Various Purpose, 6.00%, 04/01/38 USA USD 169,666, ,350,400 Government of Mexico, M 10, 7.75%, 12/14/17 MEX MXN 166,878, ,000,000 Government of Poland, senior note, 6.375%, 07/15/19 POL USD 161,718, ,050,000 New South Wales Treasury Corp., 6.00%, 05/01/12 AUS AUD 156,895, ,670,000 Korea Treasury Bond, senior note, 7.125%, 04/16/19 KOR USD 156,117, ,715,000 Government of Mexico, M, 9.00%, 06/20/13 MEX MXN 155,659, ,450,000 Government of Poland, 5.75%, 09/23/22 POL PLN 147,499, ,150,000 Government of Malaysia, senior bond, 0309, 2.711%, 02/14/12 MYS MYR 146,094, ,865,000 New South Wales Treasury Corp., senior note, 5.50%, 03/01/17 AUS AUD 145,732, ,750,000,000 Inter-American Development Bank, senior note, 7.50%, 12/05/24 SP MXN 142,035, ,742,000,000 Government of Sri Lanka, A, 11.00%, 08/01/15 LKA LKR 141,163, ,160,000 Government of Hungary, 6.75%, 07/28/14 HUN EUR 139,261, ,240,000 Government of Lithuania, senior note, 9.375%, 06/22/14 LTU EUR 133,414, ,315,000 Government of Vietnam, Reg S, 6.75%, 01/29/20 VND USD 126,645, ,201,000,000 Korea Deposit Insurance Corp., 08-1, 5.28%, 02/15/13 KOR KRW 122,844, ,530,000 Government of Peru, 7.84%, 08/12/20 PER PEN 118,961, ,639,500 Government of Mexico, M 30, 10.00%, 11/20/36 MEX MXN 117,165, ,395,000 New York State Dormitory Authority State Personal Income Tax Revenue, Build America Bonds, 5.50%, 03/15/30 USA USD 110,957, ,920,000 California State GO, 7.625%, 03/01/40 USA USD 110,623, ,050,000,000 Government of Indonesia, FR31, 11.00%, 11/15/20 IDN IDR 109,233, ,382,000 Government of Mexico, MI10, 9.00%, 12/20/12 MEX MXN 107,560, ,678,000,000 Korea Treasury Bond, 4.75%, 03/10/12 KOR KRW 100,692, ,340,000 Government of Qatar, senior note, Reg S, 6.55%, 04/09/19 QAT USD 99,826, Unaudited Semi-Annual Report 233

235 Templeton Global Bond Fund Government and Municipal Bonds (continued) 107,201,000,000 Korea Treasury Bond, 5.25%, 09/10/12 KOR KRW 98,711, ,800,000 Emirate of Abu Dhabi, Reg S, 6.75%, 04/08/19 ARE USD 98,686, ,900,000 Government of Malaysia, senior bond, 3.461%, 07/31/13 MYS MYR 97,729, ,070,000 Government of Poland, 5.75%, 04/25/14 POL PLN 96,053, ,960,000 New York City Municipal Water Finance Authority Water and Sewer System Revenue, Second General Resolution, Build America Bonds, Series CC, 5.882%, 06/15/44 USA USD 88,981, ,280,775,000 Government of Sri Lanka, B, 11.00%, 09/01/15 LKA LKR 88,907, ,000,000 Santa Clara Valley Transportation Authority Sales Tax Revenue, Build America Bonds, 5.876%, 04/01/32 USA USD 87,067, ,350,000 Government of Venezuela, 10.75%, 09/19/13 VEN USD 84,891, ,850,000 Corporacion Andina De Fomento, 8.125%, 06/04/19 SP USD 84,873, ,727,000,000 Government of Indonesia, FR34, 12.80%, 06/15/21 IDN IDR 84,638, ,990,000,000 Government of Indonesia, FR42, 10.25%, 07/15/27 IDN IDR 78,187, ,490,160,000 Korea Treasury Bond, 5.25%, 03/10/13 KOR KRW 74,387, ,642,000,000 Government of Indonesia, FR47, 10.00%, 02/15/28 IDN IDR 71,776, ,651,000 Government of Indonesia, senior bond, Reg S, 8.50%, 10/12/35 IDN USD 71,210, ,630,000 Government of Indonesia, senior note, Reg S, %, 03/04/19 IDN USD 69,294, ,520,000 Government of Iraq, Reg S, 5.80%, 01/15/28 IQ USD 68,446, ,100,000 Government of Lithuania, Reg S, 6.75%, 01/15/15 LTU USD 66,369, ,551,000 Government of Mexico, M 10, 8.00%, 12/17/15 MEX MXN 65,431, ,000 Nota Do Tesouro Nacional, 9.609%, 01/01/14 BRA BRL 65,028, ,669,570,000 Government of Philippine, senior bond, 5.75%, 02/21/12 PHL PHP 62,881, ,045,000 Government of Poland, Strip, 01/25/13 POL PLN 61,634, ,170,000 Queensland Treasury Corp., 6.00%, 09/14/17 AUS AUD 61,047, ,150,000,000 Government of Indonesia, FR36, 11.50%, 09/15/19 IDN IDR 58,230, ,760,000 Government of Poland, 6.25%, 10/24/15 POL PLN 55,863, ,767,100,000 Government of Sri Lanka, A, 11.25%, 07/15/14 LKA LKR 55,424, ,600,000 University Regents Medical Center Pooled Revenue, Build America Bonds, 6.548%, 05/15/48 USA USD 54,295, ,920,000 Government of Indonesia, senior bond, Reg S, 7.75%, 01/17/38 IDN USD 53,756, ,525,000,000 Government of Indonesia, FR19, 14.25%, 06/15/13 IDN IDR 50,370, ,881,200,000 Government of Sri Lanka, A, 13.50%, 02/01/13 LKA LKR 48,548, ,965,000 Government of Peru, 7.35%, 07/21/25 PER USD 48,461, ,380,000 Bay Area Toll Authority Toll Bridge Revenue, Build America Bonds, Series S1, 7.043%, 04/01/50 USA USD 47,955, ,000,000 California State GO, ReFunding, 5.125%, 04/01/33 USA USD 47,902, ,027,000,000 Government of Sri Lanka, A, 8.50%, 01/15/13 LKA LKR 45,840, ,280,000 Government of South Africa, 5.50%, 03/09/20 ZAF USD 44,985, ,065,000,000 Government of Indonesia, FR20, %, 12/15/13 IDN IDR 43,862, ,480,000 Los Angeles County Public Works Financing Authority Lease Revenue, Build America Bonds-Recovery Zone Economic Development, ReFunding, 7.488%, 08/01/33 USA USD 43,726, ,580,000,000 Government of Indonesia, FR49, 9.00%, 09/15/13 IDN IDR 43,153, ,155,000 Government of Hungary, senior note, 5.75%, 06/11/18 HUN EUR 42,650, ,590,930,000 Government of Philippine, senior bond, 8.75%, 03/03/13 PHL PHP 39,646, ,560,000,000 Government of Indonesia, FR35, 12.90%, 06/15/22 IDN IDR 39,069, ,210,000 Government of Malaysia, senior bond, 3.718%, 06/15/12 MYS MYR 38,768, ,575 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/13 BRA BRL 37,426, ,650,000 Riverside County Transaction Commission Sales Tax Revenue, Build America Bonds, Taxable, Limited Tax, Series B, 6.807%, 06/01/39 USA USD 36,724, ,400,000 Wayne County Revenue, Recovery Zone Economic Dec Bonds, Build America Bonds-Taxable, 10.00%, 12/01/40 USA USD 34,932, ,200,000 Clark County GO, Build America Bonds, 7.00%, 07/01/38 USA USD 34,520, ,708,000,000 Korea Treasury Bond, 5.00%, 09/10/16 KOR KRW 33,086, ,000,000 California State GO, Various Purpose, ReFunding, 5.25%, 03/01/30 USA USD 32,920, ,175,000 Korea Development Bank, senior note, 8.00%, 01/23/14 KOR USD 32,183, ,700,000 New York State Dormitary Authority State Personal Income Tax Revenue, Build America Bonds, 5.60%, 03/15/40 USA USD 32,180, ,185,000 California Statewide Communities Development Authority Revenue, 7.55%, 05/15/40 USA USD 31,768, ,000,000 European Investment Bank, senior note, 4.50%, 05/15/13 SP NOK 31,491, ,950,000,000 Government of Indonesia, FR48, 9.00%, 09/15/18 IDN IDR 30,204, ,850,000 North Carolina Eastern Municipal Power Agency Power System Revenue, ReFunding, Series A, Assured Guaranty, 5.25%, 01/01/19 USA USD 28,633, ,600,000 California State GO, Various Purpose, ReFunding, 5.50%, 03/01/40 USA USD 27,789, ,720,000 Government of Poland, 5.25%, 04/25/13 POL PLN 27,152, ,025,000 California State GO, 6.65%, 03/01/22 USA USD 24,989, ,900,000 California State GO, 6.20%, 03/01/19 USA USD 21,177, ,120,000 California State GO, ReFunding, 5.00%, 04/01/38 USA USD 19,876, ,400,000,000 Government of Indonesia, FR43, 10.25%, 07/15/22 IDN IDR 19,299, ,400,000 California State GO, Build America Bonds, 7.30%, 10/01/39 USA USD 18,549, ,795,000,000 Government of Indonesia, FR39, 11.75%, 08/15/23 IDN IDR 18,426, ,750,000,000 Government of Indonesia, FR30, 10.75%, 05/15/16 IDN IDR 16,805, ,379,000 Government of Hungary, senior note, 4.375%, 07/04/17 HUN EUR 15,793, ,260,000,000 Government of Indonesia, FR44, 10.00%, 09/15/24 IDN IDR 15,438, ,905,000 Government of Hungary, senior note, 3.875%, 02/24/20 HUN EUR 14,938, Unaudited Semi-Annual Report

236 Templeton Global Bond Fund Government and Municipal Bonds (continued) 110,310,000,000 Government of Indonesia, FR26, 11.00%, 10/15/14 IDN IDR 14,026, ,970,000 Province of Manitoba, 6.375%, 09/01/15 CAN NZD 12,223, ,300,000,000 Government of Indonesia, FR28, 10.00%, 07/15/17 IDN IDR 11,738, ,450,000,000 Government of Indonesia, FR45, 9.75%, 05/15/37 IDN IDR 11,514, ,750,000 Government of Indonesia, senior bond, Reg S, 6.625%, 02/17/37 IDN USD 10,702, ,600,000 California State GO, Build America Bonds, Various Purpose, 7.50%, 04/01/34 USA USD 9,943, ,000,000 Government of Poland, 5.00%, 10/24/13 POL PLN 8,792, ,090,000 Government of South Africa, senior note, 5.875%, 05/30/22 ZAF USD 7,636, ,655,000 Detroit GO, Distribution State Aid, 4.50%, 11/01/23 USA USD 7,103, ,100,000 California State GO, Build America Bonds, Various Purpose, 7.55%, 04/01/39 USA USD 6,332, ,280,000 Government of Korea, senior bond, 5.625%, 11/03/25 KOR USD 5,637, ,200,000 Philadelphia GO, ReFunding, Series A, Assured Guaranty, 5.00%, 08/01/24 USA USD 5,272, ,175,000 Bay Area Toll Authority Toll Bridge Revenue, Build America Bonds, Series S1, 6.793%, 04/01/30 USA USD 5,194, ,500,000 Government of Sri Lanka, B, 6.60%, 06/01/14 LKA LKR 4,565, ,520,000 Los Angeles Community College District GO, 2008 Election, Series D, 6.68%, 08/01/36 USA USD 4,390, ,560,000 Government of Hungary, senior note, 3.50%, 07/18/16 HUN EUR 4,106, ,750,000,000 Government of Indonesia, FR27, 9.50%, 06/15/15 IDN IDR 3,029, ,420,000 Government of Sri Lanka, A, 7.00%, 03/01/14 LKA LKR 2,824, ,650,000 Government of Sri Lanka, A, 6.50%, 07/15/15 LKA LKR 2,511, ,100,000 Government of Sri Lanka, A, 6.90%, 08/01/12 LKA LKR 2,201, ,320,000 Alabama State University Revenue, General Tuition and Fee, Assured Guaranty, 5.00%, 09/01/29 USA USD 1,335, ,150,000 Los Angeles USD, GO, Series KRY, 5.25%, 07/01/26 USA USD 1,179, ,850,000,000 Government of Indonesia, FR32, 15.00%, 07/15/18 IDN IDR 295, ,000 California State GO, 7.95%, 03/01/36 USA USD 102, ,652,296, Securities Maturing Within One Year 3,172,760,000 Government of Malaysia, senior bond, 3.756%, 04/28/11 MYS MYR 1,033,315, ,690,000 Queensland Treasury Corp., 6.00%, 06/14/11 AUS AUD 898,961, ,208,350,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 800,071, ,242,325,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 733,354, ,564,550,000 Government of Sweden, 5.25%, 03/15/11 SWE SEK 685,308, ,295,000 Petroleos de Venezuela SA, senior bond, zero cpn., 07/10/11 VEN USD 435,340, ,959,750,000 Government of Norway, 6.00%, 05/16/11 NOR NOK 341,153, ,129,765,000 Israel Treasury Bill, 0.00%, 01/05/11 ISR ILS 320,541, ,847,500,000 Egypt Treasury Bill, 0.00%, 02/08/11 EGY EGP 314,984, ,425,210,000 Korea Treasury Bond, senior bond, 5.50%, 06/10/11 KOR KRW 300,110, ,715,025,000 Egypt Treasury Bill, 0.00%, 04/12/11 EGY EGP 288,322, ,100,000 Government of Israel, 2680, 7.00%, 04/29/11 ISR ILS 281,585, ,085,000 Israel Treasury Bill, 0.00%, 04/06/11 ISR ILS 279,069, ,638,967,000 Norwegian Treasury Bill, Strip, 09/21/11 NOR NOK 276,923, ,847,200 Israel Treasury Bill, 0.00%, 07/06/11 ISR ILS 253,175, ,431,000,000 Norway Treasury Bill, 0.00%, 03/16/11 NOR NOK 244,734, ,820,000 Israel Treasury Bill, 0.00%, 10/05/11 ISR ILS 231,700, ,149,825,000 Egypt Treasury Bill, 0.00%, 11/08/11 EGY EGP 181,265, ,435,000 Bank of Negara Moary Note, 0.00%, 01/27/11 MYS MYR 165,601, ,600,000 Egypt Treasury Bill, 0.00%, 01/04/11 EGY EGP 147,488, ,475,000 Bank of Negara Moary Note, 0.00%, 07/28/11 MYS MYR 145,019, ,275,000 Egypt Treasury Bill, 0.00%, 03/29/11 EGY EGP 132,383, ,235,000 Israel Treasury Bill, 0.00%, 03/02/11 ISR ILS 131,516, ,160,000 Government of Venezuela, Reg S, FRN, 1.288%, 04/20/11 VEN USD 125,570, ,775,000 Egypt Treasury Bill, 0.00%, 12/06/11 EGY EGP 118,863, ,505,000 Malaysia Treasury Bill, 0.00%, 12/15/11 MYS MYR 117,716, ,825,000 Egypt Treasury Bill, 0.00%, 08/09/11 EGY EGP 104,190, ,885,000 Bank of Negara Moary Note, 0.00%, 07/19/11 MYS MYR 102,541, ,830,000 Norway Treasury Bill, 0.00%, 06/15/11 NOR NOK 98,741, ,785,000 Bank of Negara Moary Note, 0.00%, 01/20/11 MYS MYR 91,937, ,160,000 Israel Treasury Bill, 0.00%, 06/01/11 ISR ILS 79,592, ,745,000 Israel Treasury Bill, 0.00%, 02/02/11 ISR ILS 79,215, ,475,000 Bank of Negara Moary Note, 0.00%, 03/10/11 MYS MYR 73,734, ,650,000 Bank of Negara Moary Note, 0.00%, 03/22/11 MYS MYR 73,718, ,250,000 Egypt Treasury Bill, 0.00%, 03/22/11 EGY EGP 71,896, ,000,000 Israel Treasury Bill, 511, 0.00%, 05/04/11 ISR ILS 70,399, ,260,000 Bank of Negara Moary Note, 0.00%, 03/15/11 MYS MYR 65,247, ,975,000 Bank of Negara Moary Note, 0.00%, 10/13/11 MYS MYR 63,220, ,010,000 Bank of Negara Moary Note, 0.00%, 01/06/11 MYS MYR 56,108, ,840,000 Bank of Negara Moary Note, 0.00%, 02/10/11 MYS MYR 55,581, ,350,000 Egypt Treasury Bill, 0.00%, 04/05/11 EGY EGP 49,898, ,175,000 Egypt Treasury Bill, 0.00%, 07/12/11 EGY EGP 42,592, ,500,000 Egypt Treasury Bill, 0.00%, 03/08/11 EGY EGP 42,405, ,025,000 Egypt Treasury Bill, 0.00%, 01/25/11 EGY EGP 35,817, ,420,000 Bank of Negara Moary Note, 0.00%, 05/11/11 MYS MYR 35,456, ,575,000 Egypt Treasury Bill, 0.00%, 05/10/11 EGY EGP 32,343, Unaudited Semi-Annual Report 235

237 Templeton Global Bond Fund Securities Maturing Within One Year (continued) 114,426,000 Israel Treasury Bill, 0.00%, 08/03/11 ISR ILS 32,020, ,185,000 Israel Treasury Bill, 0.00%, 09/07/11 ISR ILS 29,518, ,525,000 Egypt Treasury Bill, 0.00%, 05/03/11 EGY EGP 27,733, ,840,000 Bank of Negara Moary Note, 0.00%, 06/02/11 MYS MYR 27,542, ,835,000 Bank of Negara Moary Note, 0.00%, 10/25/11 MYS MYR 27,244, ,325,000 Egypt Treasury Bill, 0.00%, 05/31/11 EGY EGP 26,980, ,375,000 Egypt Treasury Bill, 0.00%, 06/07/11 EGY EGP 26,953, ,580,000 Malaysia Treasury Bill, 0.00%, 04/05/11 MYS MYR 21,763, ,975,000 Bank of Negara Moary Note, 0.00%, 03/08/11 MYS MYR 21,617, ,710,000 Malaysia Treasury Bill, 0.00%, 05/18/11 MYS MYR 21,087, ,775,000 Egypt Treasury Bill, 0.00%, 03/29/11 EGY EGP 19,661, ,330,000 Philippine Treasury Bill, 0.00%, 11/16/11 PHL PHP 17,834, ,320,000 Malaysia Treasury Bill, 0.00%, 08/25/11 MYS MYR 16,054, ,525,000 Egypt Treasury Bill, 0.00%, 06/21/11 EGY EGP 15,865, ,495,000 Malaysia Treasury Bill, 0.00%, 06/30/11 MYS MYR 15,223, ,650,000,000 Government of Indonesia, FR25, 10.00%, 10/15/11 IDN IDR 14,429, ,030,000 Philippine Treasury Bill, 0.00%, 11/29/11 PHL PHP 13,682, ,400,000 Malaysia Treasury Bill, 0.00%, 09/29/11 MYS MYR 12,851, ,375,000 Egypt Treasury Bill, 0.00%, 09/20/11 EGY EGP 11,739, ,600,000 Egypt Treasury Bill, 0.00%, 03/31/11 EGY EGP 11,633, ,620,000 Malaysia Treasury Bill, 0.00%, 03/25/11 MYS MYR 11,486, ,860,000 Bank of Negara Moary Note, 0.00%, 01/27/11 MYS MYR 11,287, ,145,540,000 Government of Sri Lanka, A, 12.00%, 07/15/11 LKA LKR 10,577, ,410,000 Government of Poland, 4.25%, 05/24/11 POL PLN 8,917, ,980,000 Malaysia Treasury Bill, 0.00%, 05/06/11 MYS MYR 8,352, ,850,000 Egypt Treasury Bill, 0.00%, 01/11/11 EGY EGP 7,880, ,200,000 Malaysia Treasury Bill, 0.00%, 07/01/11 MYS MYR 6,786, ,910,000 Malaysia Treasury Bill, 0.00%, 04/29/11 MYS MYR 6,725, ,430,000 Malaysia Treasury Bill, 0.00%, 03/17/11 MYS MYR 5,621, ,430,000 Malaysia Treasury Bill, 0.00%, 05/26/11 MYS MYR 5,590, ,550,000 Egypt Treasury Bill, 0.00%, 03/22/11 EGY EGP 5,152, ,100,000 Sri Lanka Treasury Bill, 0.00%, 02/04/11 LKA LKR 4,959, ,680,000 Sri Lanka Treasury Bill, 0.00%, 07/08/11 LKA LKR 2,801, ,100,000 Sri Lanka Treasury Bill, 0.00%, 09/16/11 LKA LKR 1,628, ,025,000 Egypt Treasury Bill, 0.00%, 10/11/11 EGY EGP 1,435, ,819,362, TOTAL BONDS 30,855,762, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 30,855,762, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 7,200,000 New York City IDA, 144A, 11.00%, 03/01/29 USA USD 9,105, Government and Municipal Bonds 628,510,000 New South Wales Treasury Corp., 6.00%, 05/01/12 AUS AUD 648,630, ,200,000 Government of Iraq, 144A, 5.80%, 01/15/28 IQ USD 11,205, ,835, TOTAL BONDS 668,941, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 668,941, TOTAL INVESTMENTS 31,620,796, Floating Rates are indicated as at December 31, Unaudited Semi-Annual Report

238 Templeton Global Bond (Euro) Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET BONDS Government and Municipal Bonds 100,000,000 Government of Malaysia, senior bond, 3.718%, 06/15/12 MYS MYR 24,515, ,888,000 Government of Mexico, M 20, 10.00%, 12/05/24 MEX MXN 21,854, ,730,000 Government of Poland, 5.75%, 09/23/22 POL PLN 15,879, ,000,000,000 Government of Indonesia, FR40, 11.00%, 09/15/25 IDN IDR 15,585, ,662,785 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 12,660, ,000,000 Government of Malaysia, senior bond, 0309, 2.711%, 02/14/12 MYS MYR 12,103, ,507,960,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 8,431, ,350 Nota Do Tesouro Nacional, 9.609%, 01/01/17 BRA BRL 6,756, ,885,000 Government of Argentina, senior bond, FRN, 0.677%, 08/03/12 ARG USD 6,604, ,000 Nota Do Tesouro Nacional, 9.609%, 01/01/14 BRA BRL 6,396, ,000,000 Inter-American Development Bank, senior note, 7.50%, 12/05/24 SP MXN 6,370, ,943,600,000 Government of Hungary, 23/A, 6.00%, 11/24/23 HUN HUF 5,912, ,000 Government of Mexico, M 10, 8.00%, 12/17/15 MEX MXN 5,829, ,619,700,000 Government of Hungary, 17/B, 6.75%, 02/24/17 HUN HUF 5,506, ,623,000,000 Government of Indonesia, FR34, 12.80%, 06/15/21 IDN IDR 5,279, ,820,000 Government of Lithuania, Reg S, 7.375%, 02/11/20 LTU USD 4,823, ,245,900,000 Government of Hungary, 19/A, 6.50%, 06/24/19 HUN HUF 4,083, ,230 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/45 BRA BRL 3,088, ,000 Government of Mexico, M 20, 8.00%, 12/07/23 MEX MXN 2,593, ,900,000 Government of Poland, senior note, 6.375%, 07/15/19 POL USD 2,434, ,875,000 Government of Hungary, senior note, 6.25%, 01/29/20 HUN USD 2,095, ,050,000 Government of Hungary, 6.75%, 07/28/14 HUN EUR 2,088, ,900 Government of Mexico, M 30, 10.00%, 11/20/36 MEX MXN 2,038, ,300,000,000 Government of Indonesia, FR35, 12.90%, 06/15/22 IDN IDR 1,946, ,585,000 New South Wales Treasury Corp., senior note, 5.50%, 03/01/17 AUS AUD 1,943, ,810,000 Government of Iraq, Reg S, 5.80%, 01/15/28 IQ USD 1,929, ,300,000 Government of Vietnam, Reg S, 6.75%, 01/29/20 VND USD 1,751, ,722,000 Government of Indonesia, senior bond, Reg S, 8.50%, 10/12/35 IDN USD 1,708, ,326,000 Government of Peru, 7.84%, 08/12/20 PER PEN 1,315, ,800,000 Government of Hungary, 7.50%, 11/12/20 HUN HUF 1,302, ,390,000 Government of Indonesia, senior bond, Reg S, 7.75%, 01/17/38 IDN USD 1,271, ,410,000,000 Government of Indonesia, FR20, %, 12/15/13 IDN IDR 1,147, ,310,000 Government of Qatar, senior note, Reg S, 6.55%, 04/09/19 QAT USD 1,132, ,290,000 Emirate of Abu Dhabi, Reg S, 6.75%, 04/08/19 ARE USD 1,122, ,000 Government of Lithuania, senior note, 9.375%, 06/22/14 LTU EUR 936, ,200,000 Government of Venezuela, 10.75%, 09/19/13 VEN USD 861, ,390,000,000 Government of Indonesia, FR19, 14.25%, 06/15/13 IDN IDR 823, ,050,000 Queensland Treasury Corp., 6.00%, 09/14/17 AUS AUD 809, ,550,000,000 Government of Indonesia, FR31, 11.00%, 11/15/20 IDN IDR 773, ,000 Government of Hungary, senior note, 5.75%, 06/11/18 HUN EUR 667, ,400,000,000 Government of Indonesia, FR28, 10.00%, 07/15/17 IDN IDR 608, ,000 Government of Mexico, MI10, 9.00%, 12/20/12 MEX MXN 603, ,500 Government of Mexico, M, 9.00%, 06/20/13 MEX MXN 476, ,000 New South Wales Treasury Corp., 6.00%, 05/01/12 AUS AUD 420, ,000 Queensland Treasury Corp., 6.00%, 08/14/13 AUS AUD 407, ,990,000,000 Government of Indonesia, FR44, 10.00%, 09/15/24 IDN IDR 364, ,000 Government of Indonesia, senior bond, Reg S, 6.625%, 02/17/37 IDN USD 328, ,780,000 Korea Treasury Bond, 5.25%, 03/10/13 KOR KRW 294, ,000 Government of Hungary, senior note, 4.375%, 07/04/17 HUN EUR 277, ,000 Government of Hungary, senior note, 3.875%, 02/24/20 HUN EUR 252, ,000 Government of South Africa, senior note, 5.875%, 05/30/22 ZAF USD 201, ,000,000 Korea Treasury Bond, 5.00%, 09/10/16 KOR KRW 112, ,000 Government of Hungary, senior note, 3.50%, 07/18/16 HUN EUR 94, ,171 Government of Bosnia and Herzegovina, senior bond, B, FRN, 2.063%, 12/11/21 BIH EUR 84, ,000 Government of Mexico, 5.375%, 06/10/13 MEX EUR 63, ,000 Government of South Africa, 5.25%, 05/16/13 ZAF EUR 42, ,011, Securities Maturing Within One Year 40,000,000 Finland Treasury Bill, 0.00%, 03/08/11 FIN EUR 39,966, ,000,000 French Treasury Bill, 0.00%, 05/07/11 FRA EUR 39,953, ,000,000 German Treasury Bill, 0.00%, 05/18/11 DEU EUR 38,940, ,500,000 Finland Treasury Bill, 0.00%, 04/12/11 FIN EUR 37,449, ,102,050,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 32,646, ,420,000 Petroleos de Venezuela SA, senior bond, zero cpn., 07/10/11 VEN USD 9,571, ,000,000 Government of Malaysia, senior note, 3.582%, 09/28/11 MYS MYR 8,541, ,361,370,000 Korea Treasury Bond, senior bond, 5.50%, 06/10/11 KOR KRW 2,943, ,295,000 Government of Venezuela, Reg S, FRN, 1.288%, 04/20/11 VEN USD 955, ,967, TOTAL BONDS 419,978, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 419,978, Unaudited Semi-Annual Report 237

239 Templeton Global Bond (Euro) Fund (Currency EUR) TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Government and Municipal Bonds 1,450,000 New South Wales Treasury Corp., 6.00%, 05/01/12 AUS AUD 1,118, ,000 Queensland Treasury Corp., 144A, 7.125%, 09/18/17 AUS NZD 370, ,000 Government of Iraq, 144A, 5.80%, 01/15/28 IQ USD 185, ,674, TOTAL BONDS 1,674, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 1,674, TOTAL INVESTMENTS 421,653, Floating Rates are indicated as at December 31, Unaudited Semi-Annual Report

240 Templeton Global Equity Income Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 166,003 BAE Systems PLC GBR GBP 855, Air Freight & Logistics 57,474 Deutsche Post AG DEU EUR 971, Automobiles 13,038 Bayerische Motoren Werke AG DEU EUR 1,023, ,800 Toyota Motor Corp. JPN JPY 825, ,849, Capital s 39,472 The Bank of New York Mellon Corp. USA USD 1,192, ,537 Macquarie Korea Infrastructure Fund KOR KRW 1,066, ,258, Commercial Banks 181,979 HSBC Holdings PLC GBR GBP 1,849, ,649 UniCredit SpA ITA EUR 1,573, ,213 Credit Agricole SA FRA EUR 1,566, ,029 Intesa Sanpaolo SpA ITA EUR 1,450, ,277 BNP Paribas SA FRA EUR 654, ,094, Computers & Peripherals 755,634 Compal Electronics Inc. TWN TWD 1,001, ,497 Lite-On Technology Corp. TWN TWD 4, ,006, Construction Materials 46,234 CRH PLC IRL EUR 958, Containers & Packaging 44,403 Paperlinx SPS Trust, pfd. AUS AUD 2,669, Distributors 1,656,690 Pacific Brands Ltd. AUS AUD 1,658, Diversified Financial Services 194,496 ING Groep NV NLD EUR 1,894, ,014 Bank of America Corp. USA USD 533, ,427, Diversified Telecommunication Services 1,012,000 Singapore Telecommunications Ltd. SGP SGD 2,405, ,544 Telefonica SA ESP EUR 2,145, ,188 France Telecom SA FRA EUR 2,069, ,349 Telekom Austria AG AUT EUR 1,890, ,487 Telenor ASA NOR NOK 1,489, ,591 Chunghwa Telecom Co. Ltd. TWN TWD 781, ,782, Electric Utilities 41,486 E.ON AG DEU EUR 1,268, ,593 Iberdrola SA ESP EUR 1,200, ,253 CEZ CZE CZK 972, ,322 Iberdrola SA ESP EUR 33, ,475, Food Products 29,315 Unilever NV NLD EUR 913, ,192,180 Premier Foods PLC GBR GBP 359, ,272, Household Products 15,958 The Procter & Gamble Co. USA USD 1,026, Industrial Conglomerates 80,641 General Electric Co. USA USD 1,474, ,004 Siemens AG DEU EUR 1,246, ,721, Unaudited Semi-Annual Report 239

241 Templeton Global Equity Income Fund Insurance 33,661 Swiss Reinsurance Co. CHE CHF 1,812, ,555 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 1,449, ,373 Aviva PLC GBR GBP 1,281, ,480 AXA SA FRA EUR 1,207, ,750, Media 67,223 Vivendi SA FRA EUR 1,816, ,991 Reed Elsevier NV NLD EUR 1,263, ,543 Time Warner Cable Inc. USA USD 1,026, ,105, Multi-Utilities 21,788 GDF Suez FRA EUR 782, Oil, Gas & Consumable Fuels 89,236 Royal Dutch Shell PLC, A GBR EUR 2,952, ,182 Total SA, B FRA EUR 2,767, ,507 Eni SpA ITA EUR 2,175, ,144 Chevron Corp. USA USD 2,020, ,922 BP PLC GBR GBP 1,533, ,497 Statoil ASA NOR NOK 797, ,246, Pharmaceuticals 42,009 Sanofi-Aventis FRA EUR 2,689, ,610 Pfizer Inc. USA USD 2,602, ,602 GlaxoSmithKline PLC GBR GBP 2,063, ,712 Merck & Co. Inc. USA USD 1,719, ,949 Roche Holding AG CHE CHF 1,312, ,544 Novartis AG CHE CHF 855, ,076 Valeant Pharmaceuticals International Inc. CAN CAD 569, ,811, Professional Services 463,636 Hays PLC GBR GBP 936, Software 118,759 Microsoft Corp. USA USD 3,315, ,050 Nintendo Co. Ltd. JPN JPY 1,188, ,572 The Sage Group PLC GBR GBP 1,143, ,648, Specialty Retail 124,986 JD Group Ltd. ZAF ZAR 1,095, ,448 The Home Depot Inc. USA USD 892, ,987, Textiles, Apparel & Luxury Goods 229,900 Yue Yuen Industrial Holdings Ltd. HKG HKD 825, Transportation Infrastructure 4,386,420 ConnectEast Group AUS AUD 1,904, Wireless Telecommunication Services 995,968 Vodafone Group PLC GBR GBP 2,577, ,933 Turkcell Iletisim Hizmetleri AS, ADR TUR USD 1,540, ,281 Egyptian Mobile Services EGY EGP 997, ,115, TOTAL SHARES 92,145, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 92,145, Unaudited Semi-Annual Report

242 Templeton Global Equity Income Fund TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Computers & Peripherals 34,500 The Goldman Sachs Group Inc. into Dell Inc., 6.25%, cvt. pfd. USA USD 475, Diversified Financial Services 44,538 Morgan Stanley into Bank of America Corp., 4.30%, cvt. pfd. USA USD 609, Energy Equipment & Services 21,300 The Goldman Sachs Group Inc. into Halliburton Co., 6.50%, cvt. pfd. USA USD 665, Industrial Conglomerates 56,098 The Goldman Sachs Group Inc. into General Electric Co., 5.00%, cvt. pfd. USA USD 1,036, Machinery 8,658 The Goldman Sachs Group Inc. into Navistar International Corp., 5.65%, cvt. pfd. USA USD 509, TOTAL SHARES 3,296, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 3,296, TOTAL INVESTMENTS 95,442, Unaudited Semi-Annual Report 241

243 Templeton Global High Yield Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Advertising 696 Dex One Corp. USA USD 5, TOTAL SHARES 5, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 5, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET INVESTMENTS FUNDS Diversified Financial Services 431,882 Franklin Templeton Series II Funds Franklin Floating Rate II Fund, Class I, LUX USD 3,960, TOTAL INVESTMENTS FUNDS 3,960, SHARES Consumer Finance 13 GMAC Inc., 7.00%, pfd., 144A USA USD 12, Thrifts & Mortgage Finance 1,000 Freddie Mac, 8.375%, pfd., Z USA USD TOTAL SHARES 12, BONDS Corporate Bonds 735,000 Gaz Capital SA, senior note, Reg S, 6.51%, 03/07/22 RUS USD 753, ,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 603, ,000 Dubai Electricity & Water Authority, senior note, 7.375%, 10/21/20 ARE USD 590, ,000 Harrah s Operating Co. Inc., senior secured note, 11.25%, 06/01/17 USA USD 565, ,000 Intelsat Bermuda Ltd., senior note, 11.25%, 06/15/16 LUX USD 541, ,000 HCA Inc., senior secured note, PIK, 9.625%, 11/15/16 USA USD 536, ,000 RBS Global & Rexnord Corp., senior note, 8.50%, 05/01/18 USA USD 533, ,000 Cricket Communications Inc., senior note, 144A, 7.75%, 10/15/20 USA USD 477, ,000 NewPage Corp., senior secured note, %, 12/31/14 USA USD 472, ,000 Ford Motor Credit Co. LLC, senior note, 8.125%, 01/15/20 USA USD 466, ,000 MGM Resorts International, senior note, 6.625%, 07/15/15 USA USD 460, ,000 Edcon Proprietary Ltd., senior secured note, Reg S, FRN, 4.276%, 06/15/14 ZAF EUR 454, ,000 The Manitowoc Co. Inc., senior note, 9.50%, 02/15/18 USA USD 440, ,000 Petroleos de Venezuela SA, senior sub. bond, 4.90%, 10/28/14 VEN USD 437, ,000 Visant Corp., senior note, 144A, 10.00%, 10/01/17 USA USD 426, ,000 El Paso Corp., senior note, 7.00%, 06/15/17 USA USD 424, ,000 Jarden Corp., senior sub. note, 7.50%, 05/01/17 USA USD 423, ,000 GeoEye Inc., senior secured note, 8.625%, 10/01/16 USA USD 420, ,000 Energy XXI Gulf Coast Inc., senior note, 9.25%, 12/15/17 USA USD 417, ,000 CHC Helicopter SA, senior secured note, 9.25%, 10/15/20 CAN USD 416, ,000 The Goodyear Tire & Rubber Co., senior note, 8.25%, 08/15/20 USA USD 416, ,000 EchoStar DBS Corp., senior note, 7.125%, 02/01/16 USA USD 415, ,000 CET 21 Spol SRO, senior secured note, 9.00%, 11/01/17 CZE EUR 414, ,000 Copano Energy LLC, senior note, 8.125%, 03/01/16 USA USD 414, ,000 Sanmina-SCI Corp., senior sub. note, 8.125%, 03/01/16 USA USD 406, ,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 8.50%, 05/15/18 USA USD 404, ,000 Michaels Stores Inc., senior note, 144A, 7.75%, 11/01/18 USA USD 401, ,000 KB Home, senior note, 6.25%, 06/15/15 USA USD 398, ,000 Chesapeake Energy Corp., senior note, 6.625%, 08/15/20 USA USD 396, ,000 Sprint Nextel Corp., senior note, 8.375%, 08/15/17 USA USD 377, ,000 Bank of America Corp., pfd., sub. bond, M, 8.125%, Perpetual USA USD 353, ,000 JBS USA LLC, senior note, %, 05/01/14 USA USD 351, ,000 Norwegian Cruise Line Ltd., senior secured note, 11.75%, 11/15/16 USA USD 348, ,000 Arvinmeritor Inc., senior note, %, 03/15/18 USA USD 337, ,000 CKE Restaurants Inc., senior secured note, %, 07/15/18 USA USD 333, ,000 Rite Aid Corp., senior secured note, 9.75%, 06/12/16 USA USD 331, ,000 Linn Energy Corp., senior note, 144A, 8.625%, 04/15/20 USA USD 324, ,000 Brigham Exploration Co., senior note, 144A, 8.75%, 10/01/18 USA USD 324, ,000 Crosstex Energy LP/Crosstex Energy Finance Corp., senior note, 8.875%, 02/15/18 USA USD 322, ,000 Air Canada, senior secured note, 9.25%, 08/01/15 CAN USD 316, ,000 Antero Resources Finance, senior note, 9.375%, 12/01/17 USA USD 315, ,000 MetroPCS Wireless Inc., senior note, 7.875%, 09/01/18 USA USD 312, ,000 Enterprise Products Operating LLC, junior sub. note, FRN, 7.034%, 01/15/68 USA USD 311, ,000 Yasar Holdings SA, 9.625%, 10/07/15 TUR USD 310, ,000 Uhs Escrow Corp., senior note, 144A, 7.00%, 10/01/18 USA USD 309, ,000 West Corp., senior note, 144A, 7.875%, 01/15/19 USA USD 306, ,000 Anadarko Petroleum Corp., senior note, 8.70%, 03/15/19 USA USD 305, ,000 Live Nation Entertainment Inc., senior note, 144A, 8.125%, 05/15/18 USA USD 305, ,000 Sungard Data Systems Inc., senior note, 144A, 7.625%, 11/15/20 USA USD 305, Unaudited Semi-Annual Report

244 Templeton Global High Yield Fund Corporate Bonds (continued) 300,000 Dean Foods Co., senior note, 144A, 9.75%, 12/15/18 USA USD 303, ,000 MarkWest Energy Partners LP/Finance Corp., senior note, 6.75%, 11/01/20 USA USD 301, ,000 FMG Resources Aug 2006, senior note, 144A, 6.875%, 02/01/18 AUS USD 300, ,000 International Lease Finance Corp., senior note, R, 5.65%, 06/01/14 USA USD 299, ,000 Calpine Corp., senior secured note, 144A, 7.50%, 02/15/21 USA USD 297, ,000 Mylan Inc., senior note, 144A, 6.00%, 11/15/18 USA USD 295, ,000 Kerling PLC, senior note, Reg S, %, 01/28/17 GBR EUR 293, ,000 ClubCorp Club Operations Inc., senior note, Reg S, 10.00%, 12/01/18 USA USD 286, ,000 Peabody Energy Corp., senior note, 7.375%, 11/01/16 USA USD 278, ,000 Ziggo Bond Co., Reg S, 8.00%, 05/15/18 NLD EUR 276, ,000 Campofrio Food Group SA, senior note, Reg S, 8.25%, 10/31/16 ESP EUR 276, ,000 WMG Acquisition Corp., senior secured note, 9.50%, 06/15/16 USA USD 269, ,000 FMC Finance III SA, senior note, 6.875%, 07/15/17 DEU USD 266, ,000 Boston Scientific Corp., senior note, 6.00%, 01/15/20 USA USD 261, ,000 Martin Midstream Partners LP, senior note, 8.875%, 04/01/18 USA USD 258, ,000 NRG Energy Inc., senior note, 7.375%, 02/01/16 USA USD 256, ,000 Abengoa SA, senior note, 8.50%, 03/31/16 ESP EUR 254, ,000 CMS Energy Corp., senior note, 8.75%, 06/15/19 USA USD 236, ,000 Thomas Cook Group PLC, senior note, 7.75%, 06/22/17 GBR GBP 234, ,000 Solo Cup Co., senior sub. note, 8.50%, 02/15/14 USA USD 226, ,000 Seat Pagine Gialle SpA, Reg S, 10.50%, 01/31/17 ITA EUR 225, ,000 Crown Castle International Corp., senior note, 9.00%, 01/15/15 USA USD 221, ,000 Case New Holland Inc., senior note, 144A, 7.875%, 12/01/17 USA USD 221, ,000 Quicksilver Resources Inc., senior note, 9.125%, 08/15/19 USA USD 220, ,000 Plains Exploration & Production Co., senior note, 8.625%, 10/15/19 USA USD 220, ,000 Frontier Communications Corp., senior note, 8.50%, 04/15/20 USA USD 219, ,000 Freescale Semiconductor Inc., senior note, Reg S, 10.75%, 08/01/20 USA USD 219, ,000 Compagnie Generale de Geophysique-Veritas, senior note, 9.50%, 05/15/16 FRA USD 219, ,000 Mylan Inc., senior note, 144A, 7.875%, 07/15/20 USA USD 216, ,000 Ball Corp., senior note, 7.375%, 09/01/19 USA USD 216, ,000 Royal Caribbean Cruises Ltd., senior note, 7.25%, 06/15/16 USA USD 214, ,000 International Lease Finance Corp., senior secured note, 144A, 6.75%, 09/01/16 USA USD 214, ,000 Consol Energy Inc., senior note, 144A, 8.00%, 04/01/17 USA USD 214, ,000 GMAC Inc., sub. note, 8.00%, 12/31/18 USA USD 213, ,000 Petco Animal Supplies Inc., senior note, 144A, 9.25%, 12/01/18 USA USD 211, ,000 Chaparral Energy Inc., senior note, 144A, 9.875%, 10/01/20 USA USD 211, ,000 CCO Holdings LLC, senior note, 8.125%, 04/30/20 USA USD 211, ,000 Univision Communications Inc., senior secured note, 144A, 7.875%, 11/01/20 USA USD 211, ,000 Pinnacle Foods Finance LLC, senior note, 9.25%, 04/01/15 USA USD 209, ,000 Petrohawk Energy Corp., senior note, 7.875%, 06/01/15 USA USD 209, ,000 Ardagh Packaging Finance PLC, senior note, Reg S, 9.125%, 10/15/20 IRL USD 209, ,000 Atkore International Inc., senior secured note, 144A, 9.875%, 01/01/18 USA USD 209, ,000 United Surgical Partners International Inc., senior sub. note, PIK, 9.25%, 05/01/17 USA USD 209, ,000 Quicksilver Resources Inc., senior note, 8.25%, 08/01/15 USA USD 208, ,000 Hertz Corp., senior note, 144A, 7.50%, 10/15/18 USA USD 208, ,000 Novelis Inc., senior note, 144A, 8.75%, 12/15/20 IND USD 208, ,000 Ardagh Packaging Finance PLC, senior secured note, Reg S, 7.375%, 10/15/17 IRL USD 208, ,338 CCH II LLC/CCH II Capital Corp., senior note, 13.50%, 11/30/16 USA USD 207, ,000 Asbury Automotive Group Inc., senior sub. note, Reg S, 8.375%, 11/15/20 USA USD 207, ,000 Gaz Capital (GAZPROM), senior note, Reg S, 5.092%, 11/29/15 RUS USD 205, ,000 LUKOIL International Finance BV, Reg S, 6.656%, 06/07/22 RUS USD 203, ,000 Intelsat Jackson Holding Ltd., senior note, 144A, 7.25%, 10/15/20 LUX USD 203, ,000 M/I Homes Inc., senior note, Reg S, 8.625%, 11/15/18 USA USD 202, ,000 BreitBurn Energy Partners LP, senior note, 144A, 8.625%, 10/15/20 USA USD 202, ,000 Pinnacle Entertainment Inc., senior sub. note, 7.50%, 06/15/15 USA USD 201, ,000 OPTI Canada Inc., senior secured note, 9.75%, 08/15/13 CAN USD 201, ,000 Codere Finance SA, senior secured note, Reg S, 8.25%, 06/15/15 ESP EUR 200, ,000 HCA Holdings Inc., senior note, Reg S, 7.75%, 05/15/21 USA USD 200, ,000 Kinder Morgan Finance Co. ULC, secured senior note, 144A, 6.00%, 01/15/18 USA USD 197, ,000 Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, Reg S, 15.00%, 04/01/21 USA USD 192, ,000 Dynegy Holdings Inc., senior note, 8.375%, 05/01/16 USA USD 188, ,000 Forest City Enterprises Inc., senior note, 7.625%, 06/01/15 USA USD 188, ,000 KazMunaiGaz Finance Sub BV, senior note, Reg S, 11.75%, 01/23/15 KAZ USD 175, ,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 7.15%, 12/01/19 USA USD 166, ,000 Sitel LLC, senior note, 144A, 11.50%, 04/01/18 USA USD 166, ,000 Pinnacle Entertainment Inc., senior note, 8.625%, 08/01/17 USA USD 164, ,000 Ford Motor Credit Co. LLC, senior note, 7.50%, 08/01/12 USA USD 159, ,000 Media General Inc., senior secured note, 11.75%, 02/15/17 USA USD 158, ,000 Compagnie Generale de Geophysique-Veritas, senior note, 7.75%, 05/15/17 FRA USD 154, ,000 Conti-Gummi Finance BV, senior secured note, Reg S, 8.50%, 07/15/15 DEU EUR 145, Unaudited Semi-Annual Report 243

245 Templeton Global High Yield Fund Corporate Bonds (continued) 100,000 Ineos Finance PLC, senior note, Reg S, 9.25%, 05/15/15 GBR EUR 143, ,000 Sunrise Communications Holdings, senior note, Reg S, 8.50%, 12/31/18 LUX EUR 140, ,000 Conti-Gummi Finance BV, senior secured note, Reg S, 7.50%, 09/15/17 DEU EUR 138, ,000 Cirsa Funding Luxembourg SA, senior bond, Reg S, 8.75%, 05/15/18 LUX EUR 137, ,000 Te Healthcare Corp., senior secured note, 10.00%, 05/01/18 USA USD 117, ,000 TransUnion LLC/TransUnion Corp., senior note, 144A, %, 06/15/18 USA USD 114, ,000 Petrohawk Energy Corp., senior note, 10.50%, 08/01/14 USA USD 114, ,000 Centrais Eletricas Brasileiras SA, senior note, Reg S, 6.875%, 07/30/19 BRA USD 113, ,000 Chesapeake Energy Corp., senior note, 9.50%, 02/15/15 USA USD 113, ,000 NXP BV/NXP Funding LLC, senior secured note, 144A, 9.75%, 08/01/18 NLD USD 111, ,000 Texas Competitive Electric Holdings Co. LLC, senior note, A, 10.25%, 11/01/15 USA USD 111, ,000 Diversey Holdings Inc., senior note, PIK, 10.50%, 05/15/20 USA USD 110, ,000 Frontier Communications Corp., senior note, 8.25%, 04/15/17 USA USD 110, ,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 6.75%, 05/15/18 USA USD 110, ,000 Interactive Data Corp., senior note, 144A, 10.25%, 08/01/18 USA USD 110, ,000 Clear Channel Worldwide Holdings Inc., senior note, B, 9.25%, 12/15/17 USA USD 110, ,000 Freescale Semiconductor Inc., senior note, 144A, 10.75%, 08/01/20 USA USD 109, ,000 Holly Corp., senior note, 9.875%, 06/15/17 USA USD 109, ,000 Frontier Communications Corp., senior note, 8.75%, 04/15/22 USA USD 109, ,000 Ceva Group PLC, senior secured note, 144A, 11.50%, 04/01/18 GBR USD 109, ,000 Vantage Drilling Co., senior secured note, 144A, 11.50%, 08/01/15 USA USD 109, ,000 Consol Energy Inc., senior note, 144A, 8.25%, 04/01/20 USA USD 108, ,000 Pinafore LLC/Inc., senior secured note, 144A, 9.00%, 10/01/18 USA USD 108, ,000 Huntsman International LLC, senior sub. note, 144A, 8.625%, 03/15/21 USA USD 108, ,000 Ford Motor Credit Co. LLC, senior note, 7.00%, 04/15/15 USA USD 107, ,000 Peabody Energy Corp., senior note, 6.50%, 09/15/20 USA USD 107, ,000 EchoStar DBS Corp., senior note, 7.75%, 05/31/15 USA USD 106, ,000 Owens-Illinois Inc., senior note, 7.80%, 05/15/18 USA USD 106, ,000 The Manitowoc Co. Inc., senior note, 8.50%, 11/01/20 USA USD 106, ,000 Lamar Media Corp., senior sub. note, 7.875%, 04/15/18 USA USD 106, ,000 Freescale Semiconductor Inc., senior note, %, 12/15/16 USA USD 105, ,000 Virgin Media Secured Finance, senior secured note, 6.50%, 01/15/18 GBR USD 105, ,000 SunGard Data Systems Inc., senior sub. note, 10.25%, 08/15/15 USA USD 105, ,000 Ally Financial Inc., senior bond, 144A, 7.50%, 09/15/20 USA USD 105, ,000 Ford Motor Credit Co. LLC, senior note, 6.625%, 08/15/17 USA USD 105, ,000 HCA Inc., senior secured note, 9.125%, 11/15/14 USA USD 105, ,000 GMAC Inc., senior note, 6.875%, 08/28/12 USA USD 105, ,000 HCA Inc., senior secured bond, 7.25%, 09/15/20 USA USD 105, ,000 Plains Exploration & Production Co., senior note, 7.75%, 06/15/15 USA USD 104, ,000 Rite Aid Corp., senior secured note, 8.00%, 08/15/20 USA USD 104, ,000 Advanced Micro Devices Inc., senior note, 144A, 7.75%, 08/01/20 USA USD 104, ,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 9.00%, 04/15/19 USA USD 104, ,000 Integra Telecom Inc., senior secured note, 144A, 10.75%, 04/15/16 USA USD 104, ,000 Citadel Broadcasting Corp., senior note, 144A, 7.75%, 12/15/18 USA USD 104, ,000 Carrizo Oil & Gas Inc., senior note, 144A, 8.625%, 10/15/18 USA USD 103, ,000 NCL Corp. Ltd., senior note, 144A, 9.50%, 11/15/18 USA USD 103, ,000 Bresnan Broadband Holdings LLC, senior note, 144A, 8.00%, 12/15/18 USA USD 103, ,000 SandRidge Energy Inc., senior note, 8.75%, 01/15/20 USA USD 103, ,000 NRG Energy Inc., senior note, 7.375%, 01/15/17 USA USD 103, ,000 Regions Bank, sub. note, 7.50%, 05/15/18 USA USD 103, ,000 International Lease Finance Corp., senior note, 8.25%, 12/15/20 USA USD 103, ,000 Linn Energy Corp., senior note, 144A, 7.75%, 02/01/21 USA USD 103, ,000 Pinnacle Foods Finance LLC, senior note, 8.25%, 09/01/17 USA USD 102, ,000 Endo Pharmaceuticals Holdings Inc., senior note, 144A, 7.00%, 12/15/20 USA USD 102, ,000 Building Materials Corp. of America, senior note, 144A, 7.50%, 03/15/20 USA USD 102, ,000 FMG Finance Pty. Ltd., senior note, 144A, 7.00%, 11/01/15 AUS USD 102, ,000 United Rentals North America Inc., senior sub. note, 8.375%, 09/15/20 USA USD 102, ,000 CCO Holdings LLC/CCO Holdings Capital Corp., senior note, 7.25%, 10/30/17 USA USD 102, ,000 Calpine Corp., senior secured note, 144A, 7.875%, 07/31/20 USA USD 101, ,000 Petrohawk Energy Corp., senior note, 7.25%, 08/15/18 USA USD 101, ,000 OMNOVA Solutions Inc., senior note, 144A, 7.875%, 11/01/18 USA USD 101, ,000 MedAssets Inc., senior note, 144A, 8.00%, 11/15/18 USA USD 101, ,000 Ceva Group PLC, senior secured note, 144A, 8.375%, 12/01/17 GBR USD 100, ,000 Berry Petroleum Co., senior note, 6.75%, 11/01/20 USA USD 100, ,000 inventiv Health Inc., senior note, 144A, 10.00%, 08/15/18 USA USD 100, ,000 Davita Inc., senior note, 6.375%, 11/01/18 USA USD 99, ,000 Building Materials Corp. of America, senior note, 144A, 6.875%, 08/15/18 USA USD 99, ,000 Davita Inc., senior note, 6.625%, 11/01/20 USA USD 99, ,000 Marina District Finance Co. Inc., senior secured note, 144A, 9.875%, 08/15/18 USA USD 99, ,000 Marina District Finance Co. Inc., senior secured note, 144A, 9.50%, 08/15/18 USA USD 98, ,000 Abengoa Finance SAU, senior note, 144A, 8.875%, 11/01/17 ESP USD 95, ,000 Infinis PLC, senior note, Reg S, 9.125%, 12/15/14 GBR GBP 82, Unaudited Semi-Annual Report

246 Templeton Global High Yield Fund Corporate Bonds (continued) 53,572 Wind Acquisition Holdings Finance SA, senior secured note, Reg S, PIK, 12.25%, 07/15/17 ITA EUR 81, ,000 UPC Germany GmbH, senior bond, Reg S, 9.625%, 12/01/19 DEU EUR 73, ,000 Gaz Capital (GAZPROM), senior note, 6.605%, 02/13/18 RUS EUR 71, ,000 Te Healthcare Corp., senior secured bond, 8.875%, 07/01/19 USA USD 56, ,000 Plains Exploration & Production Co., senior note, 10.00%, 03/01/16 USA USD 56, ,000 Universal City Development, senior sub. note, %, 11/15/16 USA USD 54, ,000 HCA Inc., senior secured note, 7.875%, 02/15/20 USA USD 53, ,000 ViaSat Inc., senior note, 8.875%, 09/15/16 USA USD 53, ,000 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 03/15/18 USA USD 53, ,000 Advanced Micro Devices Inc., senior note, 8.125%, 12/15/17 USA USD 53, ,000 Crown Castle International Corp., senior bond, 7.125%, 11/01/19 USA USD 53, ,000 Plains Exploration & Production Co., senior note, 7.625%, 06/01/18 USA USD 52, ,000 Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 USA USD 52, ,000 Compagnie Generale de Geophysique-Veritas, senior note, 7.50%, 05/15/15 FRA USD 51, ,000 NRG Energy Inc., senior note, 7.25%, 02/01/14 USA USD 51, ,000 Nalco Co., senior sub. note, 8.875%, 11/15/13 USA USD 51, ,000 El Paso Corp., senior note, 144A, 6.50%, 09/15/20 USA USD 50, ,000 Intelsat Subsidiary Holding Co. Ltd., senior note, 8.50%, 01/15/13 BMU USD 50, ,000 Huntsman International LLC, senior note, 5.50%, 06/30/16 USA USD 48, ,883 Radio One Inc., senior sub. note, PIK, 15.00%, 05/24/16 USA USD 47, ,000 First Data Corp., senior secured bond, Reg S, 8.25%, 01/15/21 USA USD 42, ,000 First Data Corp., senior bond, Reg S, %, 01/15/21 USA USD 42, ,000 First Data Corp., senior note, 9.875%, 09/24/15 USA USD 10, ,000 Station Casinos Inc., senior note, 7.75%, 08/15/16 * USA USD ,496, Government and Municipal Bonds 1,950,000,000 Korea Treasury Bond, senior bond, 3.75%, 06/10/13 KOR KRW 1,752, ,700,000,000 Korea Treasury Bond, 4.25%, 12/10/12 KOR KRW 1,541, ,200 Nota Do Tesouro Nacional, 9.609%, 01/01/12 BRA BRL 1,302, ,325 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 1,069, ,060,000 Government of Poland, 4.75%, 04/25/12 POL PLN 1,037, Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/15 BRA BRL 1,007, Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/45 BRA BRL 895, ,600,000 Government of Poland, 5.75%, 04/25/14 POL PLN 894, ,200,000,000 Government of Indonesia, FR47, 10.00%, 02/15/28 IDN IDR 857, ,000 Government of Hungary, senior note, 6.25%, 01/29/20 HUN USD 828, ,280,000,000 Government of Indonesia, FR34, 12.80%, 06/15/21 IDN IDR 799, ,150,000,000 Government of Indonesia, FR44, 10.00%, 09/15/24 IDN IDR 751, ,000 Government of Mexico, M 10, 8.00%, 12/17/15 MEX MXN 727, ,200 Nota Do Tesouro Nacional, 9.609%, 01/01/17 BRA BRL 663, ,400,000,000 Government of Indonesia, FR35, 12.90%, 06/15/22 IDN IDR 662, ,000 Government of Mexico, M 10, 7.25%, 12/15/16 MEX MXN 623, ,820,000 Government of Poland, Strip, 07/25/12 POL PLN 572, ,000,000 Government of Hungary, 5.50%, 02/12/16 HUN HUF 499, ,000,000 Government of Hungary, 7.50%, 11/12/20 HUN HUF 466, ,930,000 Government of Argentina, senior bond, FRN, 0.677%, 08/03/12 ARG USD 462, ,000 Government of Mexico, M 20, 10.00%, 12/05/24 MEX MXN 425, ,000,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 270, ,000 Government of Venezuela, 10.75%, 09/19/13 VEN USD 230, ,000 Government of Lithuania, Reg S, 7.375%, 02/11/20 LTU USD 221, ,810,000,000 Government of Indonesia, FR42, 10.25%, 07/15/27 IDN IDR 221, ,000 Government of South Africa, 6.875%, 05/27/19 ZAF USD 210, ,000,000 Government of Sri Lanka, B, 11.00%, 09/01/15 LKA LKR 201, ,000 Government of Poland, Strip, 01/25/12 POL PLN 196, ,000 Government of Poland, Strip, 10/25/12 POL PLN 192, ,000 Government of Peru, 7.35%, 07/21/25 PER USD 181, ,000 Government of Vietnam, Reg S, 6.75%, 01/29/20 VND USD 157, ,000 Government of Lithuania, senior note, 9.375%, 06/22/14 LTU EUR 140, ,400,000 Government of Sri Lanka, A, 11.00%, 08/01/15 LKA LKR 137, ,000,000 Government of Indonesia, FR40, 11.00%, 09/15/25 IDN IDR 118, ,000 Government of Lithuania, Reg S, 6.75%, 01/15/15 LTU USD 108, ,000,000 Government of Indonesia, FR45, 9.75%, 05/15/37 IDN IDR 102, ,000,000 Government of Indonesia, FR46, 9.50%, 07/15/23 IDN IDR 94, ,833 Government of Brazil, 8.00%, 01/15/18 BRA USD 83, ,000 Government of the Philippines, 8.875%, 03/17/15 PHL USD 61, ,000 Government of Panama, 9.375%, 04/01/29 PAN USD 14, ,000,000 Government of Indonesia, FR43, 10.25%, 07/15/22 IDN IDR 6, ,000 Government of Malaysia, senior bond, 3.814%, 02/15/17 MYS MYR 4, ,000 Government of Sri Lanka, A, 6.50%, 07/15/15 LKA LKR 3, ,000 Government of Sri Lanka, B, 6.60%, 06/01/14 LKA LKR 3, ,000 Government of Sri Lanka, A, 6.90%, 08/01/12 LKA LKR 2, ,000 Government of Sri Lanka, A, 7.00%, 03/01/14 LKA LKR ,809, Unaudited Semi-Annual Report 245

247 Templeton Global High Yield Fund Securities Maturing Within One Year 1,290,000 Petroleos de Venezuela SA, senior bond, zero cpn., 07/10/11 VEN USD 1,230, ,750,000 Egypt Treasury Bill, 0.00%, 03/22/11 EGY EGP 463, ,000,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 399, ,175,000 Egypt Treasury Bill, 0.00%, 02/08/11 EGY EGP 370, ,350,000 Egypt Treasury Bill, 0.00%, 01/04/11 EGY EGP 232, ,000 GMAC Inc., senior note, 6.875%, 09/15/11 USA USD 206, ,200,000 Egypt Treasury Bill, 0.00%, 03/29/11 EGY EGP 202, ,075,000 Egypt Treasury Bill, 0.00%, 12/06/11 EGY EGP 168, ,000 Egypt Treasury Bill, 0.00%, 04/12/11 EGY EGP 109, ,000 Fresenius Medical Care Capital Trust IV, 7.875%, 06/15/11 DEU USD 102, ,000 Egypt Treasury Bill, 0.00%, 11/08/11 EGY EGP 86, ,000 Egypt Treasury Bill, 0.00%, 06/07/11 EGY EGP 32, ,000 Egypt Treasury Bill, 0.00%, 08/09/11 EGY EGP 28, ,000 Government of Venezuela, Reg S, FRN, 1.288%, 04/20/11 VEN USD 24, ,000 Egypt Treasury Bill, 0.00%, 07/12/11 EGY EGP 24, ,000 Egypt Treasury Bill, 0.00%, 03/08/11 EGY EGP 12, ,250,000 Sri Lanka Treasury Bill, 0.00%, 02/04/11 LKA LKR 11, ,000 Government of Sri Lanka, A, 12.00%, 07/15/11 LKA LKR 6, ,000 Sri Lanka Treasury Bill, 0.00%, 09/16/11 LKA LKR 2, ,000 Sri Lanka Treasury Bill, 0.00%, 07/08/11 LKA LKR ,716, TOTAL BONDS 69,021, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 72,994, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 500,000 Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16 GBR USD 483, ,000 Intergen NV, senior secured note, 144A, 9.00%, 06/30/17 NLD USD 426, ,000 Digicel Group Ltd., senior note, 144A, 8.875%, 01/15/15 JAM USD 355, ,000 SandRidge Energy Inc., senior note, 144A, 8.00%, 06/01/18 USA USD 306, ,000 Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 02/15/16 GBR USD 287, ,000 TRW Automotive Inc., senior note, 144A, 7.25%, 03/15/17 USA USD 271, ,000 Wind Acquisition Finance SA, senior note, 144A, 11.75%, 07/15/17 ITA USD 224, ,000 Ceva Group PLC, senior secured note, 144A, %, 10/01/16 GBR USD 217, ,000 CEDC Finance Corp. International Inc., senior secured note, 144A, 9.125%, 12/01/16 USA USD 213, ,000 MacDermid Inc., senior sub. note, 144A, 9.50%, 04/15/17 USA USD 212, ,000 UPC Holding BV, senior note, 144A, 9.875%, 04/15/18 NLD USD 165, ,000 Fresenius US Finance II, senior note, 144A, 9.00%, 07/15/15 DEU USD 115, ,000 SandRidge Energy Inc., senior note, 144A, 9.875%, 05/15/16 USA USD 106, ,000 Shingle Springs Tribal Gaming Authority, senior note, 144A, 9.375%, 06/15/15 USA USD 104, ,000 Univision Communications Inc., senior secured note, 144A, 12.00%, 07/01/14 USA USD 55, ,000 OPTI Canada Inc., senior secured note, 9.00%, 12/15/12 CAN USD 50, ,000 Sanmina-SCI Corp., senior note, 144A, FRN, 3.052%, 06/15/14 USA USD 47, ,639, TOTAL BONDS 3,639, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 3,639, TOTAL INVESTMENTS 76,639, * These Corporate Bonds are currently in default Floating Rates are indicated as at December 31, 2010 Income may be received in additional securities and/or cash 246 Unaudited Semi-Annual Report

248 Templeton Global Income Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 165,040 BAE Systems PLC GBR GBP 850, Air Freight & Logistics 7,840 United Parcel Service Inc., B USA USD 569, ,150 FedEx Corp. USA USD 479, ,048, Airlines 30,530 Deutsche Lufthansa AG DEU EUR 671, ,600 British Airways PLC GBR GBP 534, ,206, Auto Components 2,913 Hyundai Mobis KOR KRW 739, Automobiles 19,110 Bayerische Motoren Werke AG DEU EUR 1,500, ,000 Toyota Motor Corp. JPN JPY 872, ,373, Capital s 326,157 Macquarie Korea Infrastructure Fund KOR KRW 1,410, ,930 Vontobel Holding AG CHE CHF 1,026, ,150 Invesco Ltd. USA USD 869, ,307, Chemicals 17,090 Akzo Nobel NV NLD EUR 1,062, ,160 E. I. du Pont de Nemours and Co. USA USD 706, ,769, Commercial Banks 235,000 DBS Group Holdings Ltd. SGP SGD 2,622, ,960 HSBC Holdings PLC GBR HKD 2,501, ,510 Credit Agricole SA FRA EUR 1,455, ,890 KB Financial Group Inc., ADR KOR USD 1,051, ,558 UniCredit SpA ITA EUR 924, ,842 National Australia Bank Ltd. AUS AUD 528, ,086, Commercial Services & Supplies 92,457 Brambles Ltd. AUS AUD 672, ,450 Edenred FRA EUR 200, , Communications Equipment 105,540 Telefonaktiebolaget LM Ericsson, B SWE SEK 1,228, ,970 Brocade Communications Systems Inc. USA USD 1,015, ,900 Cisco Systems Inc. USA USD 422, ,666, Computers & Peripherals 436,420 Compal Electronics Inc., GDR, Reg S TWN USD 2,894, ,104,277 Compal Electronics Inc. TWN TWD 1,463, ,357, Construction Materials 95,017 CRH PLC IRL EUR 1,970, Diversified Financial Services 193,318 ING Groep NV NLD EUR 1,882, ,020 JPMorgan Chase & Co. USA USD 509, ,392, Unaudited Semi-Annual Report 247

249 Templeton Global Income Fund Diversified Telecommunication Services 79,993 Telefonica SA ESP EUR 1,815, ,470 France Telecom SA FRA EUR 1,741, ,003 Singapore Telecommunications Ltd. SGP SGD 1,485, ,500 Telekom Austria AG AUT EUR 710, ,770 Chunghwa Telecom Co. Ltd. TWN TWD 654, ,070 AT&T Inc. USA USD 589, ,086,000 China Telecom Corp. Ltd., H CHN HKD 564, ,160 Telecom Italia SpA ITA EUR 543, ,810 Hellenic Telecommunications Organization SA (OTE)1 GRC EUR 441, ,546, Electric Utilities 42,170 E.ON AG DEU EUR 1,289, ,130 Iberdrola SA ESP EUR 1,204, ,200 CEZ CZE CZK 384, ,336 Iberdrola SA ESP EUR 33, ,912, Electrical Equipment 14,160 Alstom SA FRA EUR 678, Energy Equipment & Services 18,170 Baker Hughes Inc. USA USD 1,038, Food & Staples Retailing 36,200 CVS Caremark Corp. USA USD 1,258, ,860 Tesco PLC GBR GBP 889, ,869 Massmart Holdings Ltd. ZAF ZAR 861, ,009, Food Products 21,730 Unilever NV NLD EUR 677, Household Durables 961,500 Techtronic Industries Co. Ltd. HKG HKD 1,254, Household Products 34,160 The Procter & Gamble Co. USA USD 2,197, Independent Power Producers & Energy Traders 341,400 Electricity Generating Public Co. Ltd., fgn. THA THB 1,197, Industrial Conglomerates 130,780 General Electric Co. USA USD 2,391, ,130 Siemens AG DEU EUR 1,262, ,210 Tyco International Ltd. USA USD 837, ,000 Hutchison Whampoa Ltd. HKG HKD 732, ,224, Insurance 866,000 AIA Group Ltd. HKG HKD 2,434, ,884 AXA SA FRA EUR 2,113, ,100 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 1,683, ,140 Aviva PLC GBR GBP 1,101, ,333, IT Services 32,010 Accenture PLC, A USA USD 1,552, ,880 Cap Gemini FRA EUR 882, ,434, Machinery 13,960 MAN SE DEU EUR 1,674, ,500 Navistar International Corp. USA USD 260, ,935, Media 122,110 Comcast Corp., A, Special USA USD 2,541, ,700 Vivendi SA FRA EUR 1,802, ,210 Time Warner Cable Inc. USA USD 1,796, ,449 Reed Elsevier NV NLD EUR 1,157, ,090 Pearson PLC GBR GBP 759, ,000 Dex One Corp. USA USD 37, ,094, Unaudited Semi-Annual Report

250 Templeton Global Income Fund Metals & Mining 102,410 Vale SA, ADR, pfd., A BRA USD 3,094, ,360 Alcoa Inc. USA USD 975, ,069, Multi-Utilities 22,060 GDF Suez FRA EUR 792, ,160 Centrica PLC GBR GBP 717, ,509, Multiline Retail 194,897 Marks & Spencer Group PLC GBR GBP 1,122, Oil, Gas & Consumable Fuels 91,401 Royal Dutch Shell PLC, B GBR GBP 3,026, ,700 Chevron Corp. USA USD 2,436, ,890 Total SA, B FRA EUR 2,221, ,070 BP PLC GBR GBP 1,563, ,890 Statoil ASA NOR NOK 1,282, ,220 Chesapeake Energy Corp. USA USD 860, ,103 Repsol YPF SA ESP EUR 281, ,674, Pharmaceuticals 50,570 Sanofi-Aventis FRA EUR 3,237, ,030 Novartis AG CHE CHF 2,708, ,360 Roche Holding AG CHE CHF 2,693, ,129 GlaxoSmithKline PLC GBR GBP 2,479, ,260 Merck & Co. Inc. USA USD 2,027, ,730 Abbott Laboratories USA USD 1,951, ,670 Pfizer Inc. USA USD 1,307, ,404, Professional Services 560,378 Hays PLC GBR GBP 1,132, Real Estate Investment Trust (REIT) 1,981,757 Cambridge Industrial Trust SGP SGD 818, Semiconductors & Semiconductor Equipment 632,813 Taiwan Semiconductor Manufacturing Co. Ltd. TWN TWD 1,540, ,000 Siliconware Precision Industries Co. TWN TWD 1,095, ,635, Software 51,910 SAP AG DEU EUR 2,633, ,060 Microsoft Corp. USA USD 2,570, ,700 Oracle Corp. USA USD 1,148, ,260 The Sage Group PLC GBR GBP 1,074, ,300 Nintendo Co. Ltd. JPN JPY 968, ,395, Specialty Retail 636,277 Kingfisher PLC GBR GBP 2,621, ,740 The Home Depot Inc. USA USD 1,919, ,540, Textiles, Apparel & Luxury Goods 380,000 Yue Yuen Industrial Holdings Ltd. HKG HKD 1,364, Companies & Distributors 334,000 Itochu Corp. JPN JPY 3,382, Wireless Telecommunication Services 905,443 Vodafone Group PLC GBR GBP 2,343, ,430 Turkcell Iletisim Hizmetleri AS, ADR TUR USD 1,274, ,459 Egyptian Mobile Services EGY EGP 747, ,000 Advanced Info Service Public Co. Ltd., fgn. THA THB 596, ,963, TOTAL SHARES 141,187, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 141,187, Unaudited Semi-Annual Report 249

251 Templeton Global Income Fund TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Computers & Peripherals 66,510 The Goldman Sachs Group Inc. into Dell Inc., 6.25%, cvt. pfd. USA USD 916, Diversified Financial Services 88,000 Morgan Stanley into Bank of America Corp., 4.30%, cvt. pfd. USA USD 1,203, ,848 Morgan Stanley into JPMorgan Chase & Co., 2.85%, cvt. pfd. USA USD 1,009, ,213, Energy Equipment & Services 52,749 Morgan Stanley into Baker Hughes Inc., 8.00%, cvt. pfd., 144A USA USD 2,555, ,058 The Goldman Sachs Group Inc. into Halliburton Co., 6.50%, cvt. pfd. USA USD 1,283, ,420 Morgan Stanley into Halliburton Co., 6.50%, cvt. pfd., 144A USA USD 1,134, ,973, Industrial Conglomerates 88,195 The Goldman Sachs Group Inc. into General Electric Co., 5.00%, cvt. pfd. USA USD 1,629, Machinery 16,692 The Goldman Sachs Group Inc. into Navistar International Corp., 5.65%, cvt. pfd. USA USD 983, Media 69,667 The Goldman Sachs Group Inc. into News Corp., 7.00% cvt. pfd. USA USD 1,018, Oil, Gas & Consumable Fuels 7,700 Gazprom, ADR RUS USD 195, TOTAL SHARES 11,930, BONDS Corporate Bonds 18,000,000 General Electric Capital Corp., senior note, A, 8.50%, 04/06/18 USA MXN 1,332, ,000 KazMunaiGaz Finance Sub BV, senior note, Reg S, 11.75%, 01/23/15 KAZ USD 850, ,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 402, ,000 Chesapeake Energy Corp., senior note, 6.625%, 08/15/20 USA USD 396, ,000 HCA Inc., senior note, 6.50%, 02/15/16 USA USD 393, ,000 Edcon Proprietary Ltd., senior secured note, Reg S, FRN, 4.276%, 06/15/14 ZAF EUR 341, ,000 Harrah s Operating Co. Inc., senior secured note, 11.25%, 06/01/17 USA USD 339, ,000 Ford Motor Credit Co. LLC, senior note, 7.00%, 04/15/15 USA USD 322, ,000 Jarden Corp., senior sub. note, 7.50%, 05/01/17 USA USD 317, ,000 NRG Energy Inc., senior note, 7.375%, 02/01/16 USA USD 308, ,000 Anadarko Petroleum Corp., senior note, 8.70%, 03/15/19 USA USD 244, ,000 Norwegian Cruise Line Ltd., senior secured note, 11.75%, 11/15/16 USA USD 232, ,000 Berry Petroleum Co., senior note, 10.25%, 06/01/14 USA USD 230, ,000 The Kroger Co., 6.15%, 01/15/20 USA USD 227, ,000 Arvinmeritor Inc., senior note, %, 03/15/18 USA USD 225, ,000 Wells Fargo Capital XV, pfd., 9.75%, Perpetual USA USD 223, ,000 NXP BV/NXP Funding LLC, senior secured note, 144A, 9.75%, 08/01/18 NLD USD 223, ,000 Crown Castle International Corp., senior note, 9.00%, 01/15/15 USA USD 221, ,000 Case New Holland Inc., senior note, 144A, 7.875%, 12/01/17 USA USD 221, ,000 The Manitowoc Co. Inc., senior note, 9.50%, 02/15/18 USA USD 220, ,000 Universal City Development, senior sub. note, %, 11/15/16 USA USD 219, ,000 Vantage Drilling Co., senior secured note, 144A, 11.50%, 08/01/15 USA USD 218, ,000 Morgan Stanley, senior note, 6.00%, 04/28/15 USA USD 216, ,000 Libbey Glass Inc., senior secured note, 144A, 10.00%, 02/15/15 USA USD 216, ,000 WMG Acquisition Corp., senior secured note, 9.50%, 06/15/16 USA USD 215, ,000 Crosstex Energy LP/Crosstex Energy Finance Corp., senior note, 8.875%, 02/15/18 USA USD 215, ,000 RBS Global & Rexnord Corp., senior note, 8.50%, 05/01/18 USA USD 213, ,000 Alfa MTN s Ltd. for ABH Financial Ltd., Reg S, 8.20%, 06/25/12 RUS USD 211, ,000 Merrill Lynch & Co. Inc., senior note, 6.40%, 08/28/17 USA USD 211, ,000 Virgin Media Secured Finance, senior secured note, 6.50%, 01/15/18 GBR USD 211, ,000 Plains Exploration & Production Co., senior note, 7.625%, 06/01/18 USA USD 210, ,000 Antero Resources Finance, senior note, 9.375%, 12/01/17 USA USD 210, ,000 HCA Inc., senior secured note, 9.125%, 11/15/14 USA USD 210, ,000 Pinnacle Foods Finance LLC, senior note, 9.25%, 04/01/15 USA USD 209, ,000 United Surgical Partners International Inc., senior sub. note, PIK, 9.25%, 05/01/17 USA USD 209, ,000 MetroPCS Wireless Inc., senior note, 7.875%, 09/01/18 USA USD 208, ,000 Quicksilver Resources Inc., senior note, 8.25%, 08/01/15 USA USD 208, ,000 EchoStar DBS Corp., senior note, 7.125%, 02/01/16 USA USD 207, ,000 Copano Energy LLC, senior note, 8.125%, 03/01/16 USA USD 207, ,000 International Lease Finance Corp., senior note, 8.25%, 12/15/20 USA USD 206, ,000 Nalco Co., senior sub. note, 8.875%, 11/15/13 USA USD 204, ,000 West Corp., senior note, 144A, 7.875%, 01/15/19 USA USD 204, Unaudited Semi-Annual Report

252 Templeton Global Income Fund Corporate Bonds (continued) 200,000 Lamar Media Corp., senior sub. note, B, 6.625%, 08/15/15 USA USD 204, ,000 Calpine Corp., senior secured note, 144A, 7.875%, 07/31/20 USA USD 203, ,000 Dean Foods Co., senior note, 144A, 9.75%, 12/15/18 USA USD 202, ,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 8.50%, 05/15/18 USA USD 202, ,000 Bank of America Corp., pfd., sub. bond, M, 8.125%, Perpetual USA USD 201, ,000 Pinnacle Entertainment Inc., senior sub. note, 7.50%, 06/15/15 USA USD 201, ,000 MarkWest Energy Partners LP/Finance Corp., senior note, 6.75%, 11/01/20 USA USD 201, ,000 Michaels Stores Inc., senior note, 144A, 7.75%, 11/01/18 USA USD 200, ,000 JPMorgan Chase Capital XXII, sub. bond, 6.45%, 02/02/37 USA USD 200, ,000 FMG Resources Aug 2006, senior note, 144A, 6.875%, 02/01/18 AUS USD 200, ,000 MetLife Inc., junior sub. note, FRN, 6.40%, 12/15/66 USA USD 191, ,000 Cricket Communications Inc., senior note, 144A, 7.75%, 10/15/20 USA USD 191, ,000 Radio One Inc., senior sub. note, PIK, 15.00%, 05/24/16 USA USD 189, ,000 NewPage Corp., senior secured note, %, 12/31/14 USA USD 189, ,000 Forest City Enterprises Inc., senior note, 7.625%, 06/01/15 USA USD 188, ,676 CCH II LLC/CCH II Capital Corp., senior note, 13.50%, 11/30/16 USA USD 175, ,000 Infinis PLC, senior note, Reg S, 9.125%, 12/15/14 GBR GBP 164, ,000 Thomas Cook Group PLC, senior note, 7.75%, 06/22/17 GBR GBP 156, ,000 Kerling PLC, senior note, Reg S, %, 01/28/17 GBR EUR 146, ,000 UPC Germany GmbH, senior bond, Reg S, 9.625%, 12/01/19 DEU EUR 146, ,000 FMC Finance III SA, senior note, 6.875%, 07/15/17 DEU USD 133, ,000 Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, Reg S, 15.00%, 04/01/21 USA USD 128, ,000 Time Warner Inc., 7.625%, 04/15/31 USA USD 121, ,000 JBS USA LLC, senior note, %, 05/01/14 USA USD 117, ,000 Ford Motor Credit Co. LLC, senior note, 8.125%, 01/15/20 USA USD 116, ,000 TransUnion LLC/TransUnion Corp., senior note, 144A, %, 06/15/18 USA USD 114, ,000 Petrohawk Energy Corp., senior note, 10.50%, 08/01/14 USA USD 114, ,000 Canadian Natural Resources Ltd., 5.90%, 02/01/18 CAN USD 114, ,000 Seat Pagine Gialle SpA, Reg S, 10.50%, 01/31/17 ITA EUR 112, ,000 Edcon Holdings Proprietary Ltd., senior bond, Reg S, FRN, 6.526%, 06/15/15 ZAF EUR 112, ,000 CenterPoint Energy Inc., senior note, 6.125%, 11/01/17 USA USD 111, ,000 Diversey Holdings Inc., senior note, PIK, 10.50%, 05/15/20 USA USD 110, ,000 Rite Aid Corp., senior secured note, 9.75%, 06/12/16 USA USD 110, ,000 Frontier Communications Corp., senior note, 8.25%, 04/15/17 USA USD 110, ,000 UBS AG Stamford, senior note, 5.875%, 12/20/17 USA USD 110, ,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 6.75%, 05/15/18 USA USD 110, ,000 Interactive Data Corp., senior note, 144A, 10.25%, 08/01/18 USA USD 110, ,000 Clear Channel Worldwide Holdings Inc., senior note, B, 9.25%, 12/15/17 USA USD 110, ,000 Frontier Communications Corp., senior note, 8.50%, 04/15/20 USA USD 109, ,000 Freescale Semiconductor Inc., senior note, Reg S, 10.75%, 08/01/20 USA USD 109, ,000 Holly Corp., senior note, 9.875%, 06/15/17 USA USD 109, ,000 Compagnie Generale de Geophysique-Veritas, senior note, 9.50%, 05/15/16 FRA USD 109, ,000 Ceva Group PLC, senior secured note, 144A, 11.50%, 04/01/18 GBR USD 109, ,000 Consol Energy Inc., senior note, 144A, 8.25%, 04/01/20 USA USD 108, ,000 Cott Beverages Inc., senior note, 8.375%, 11/15/17 USA USD 108, ,000 Huntsman International LLC, senior sub. note, 144A, 8.625%, 03/15/21 USA USD 108, ,000 Mylan Inc., senior note, 144A, 7.875%, 07/15/20 USA USD 108, ,000 Intelsat Bermuda Ltd., senior note, 11.25%, 06/15/16 LUX USD 108, ,000 Linn Energy Corp., senior note, 144A, 8.625%, 04/15/20 USA USD 108, ,000 Ball Corp., senior note, 7.375%, 09/01/19 USA USD 108, ,000 ViaSat Inc., senior note, 8.875%, 09/15/16 USA USD 107, ,000 Consol Energy Inc., senior note, 144A, 8.00%, 04/01/17 USA USD 107, ,000 GMAC Inc., sub. note, 8.00%, 12/31/18 USA USD 106, ,000 Advanced Micro Devices Inc., senior note, 8.125%, 12/15/17 USA USD 106, ,000 Royal Caribbean Cruises Ltd., senior deb., 7.25%, 03/15/18 USA USD 106, ,000 CCO Holdings LLC, senior note, 8.125%, 04/30/20 USA USD 105, ,000 Media General Inc., senior secured note, 11.75%, 02/15/17 USA USD 105, ,000 RSC Equipment Rental Inc. and RSC Holdings III LLC, senior note, 9.50%, 12/01/14 USA USD 105, ,000 SunGard Data Systems Inc., senior sub. note, 10.25%, 08/15/15 USA USD 105, ,000 Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 USA USD 105, ,000 Advanced Micro Devices Inc., senior note, 144A, 7.75%, 08/01/20 USA USD 104, ,000 Novelis Inc., senior note, 144A, 8.75%, 12/15/20 IND USD 104, ,000 Integra Telecom Inc., senior secured note, 144A, 10.75%, 04/15/16 USA USD 104, ,000 Enterprise Products Operating LLC, junior sub. note, FRN, 7.034%, 01/15/68 USA USD 103, ,000 Citigroup Inc., sub. note, 5.00%, 09/15/14 USA USD 103, ,000 The Goldman Sachs Group Inc., senior bond, 5.375%, 03/15/20 USA USD 103, ,000 Martin Midstream Partners LP, senior note, 8.875%, 04/01/18 USA USD 103, ,000 Regions Bank, sub. note, 7.50%, 05/15/18 USA USD 103, ,000 Linn Energy Corp., senior note, 144A, 7.75%, 02/01/21 USA USD 103, ,000 Compagnie Generale de Geophysique-Veritas, senior note, 7.75%, 05/15/17 FRA USD 103, ,000 United Rentals North America Inc., senior sub. note, 8.375%, 09/15/20 USA USD 102, ,000 Building Materials Corp. of America, senior note, 144A, 7.50%, 03/15/20 USA USD 102, Unaudited Semi-Annual Report 251

253 Templeton Global Income Fund Corporate Bonds (continued) 100,000 Sungard Data Systems Inc., senior note, 144A, 7.625%, 11/15/20 USA USD 101, ,000 Petrohawk Energy Corp., senior note, 7.25%, 08/15/18 USA USD 101, ,000 HSBK (Europe) BV, Reg S, 7.25%, 05/03/17 KAZ USD 101, ,000 Ceva Group PLC, senior secured note, 144A, 8.375%, 12/01/17 GBR USD 100, ,000 Intelsat Subsidiary Holding Co. Ltd., senior note, 8.50%, 01/15/13 BMU USD 100, ,000 Kinder Morgan Finance Co. ULC, secured senior note, 144A, 6.00%, 01/15/18 USA USD 98, ,000 Mylan Inc., senior note, 144A, 6.00%, 11/15/18 USA USD 98, ,000 MGM Resorts International, senior note, 6.625%, 07/15/15 USA USD 92, ,000 Solo Cup Co., senior sub. note, 8.50%, 02/15/14 USA USD 90, ,000 Sitel LLC, senior note, 144A, 11.50%, 04/01/18 USA USD 83, ,000 GMAC Inc., senior note, 6.875%, 08/28/12 USA USD 82, ,000 Texas Competitive Electric Holdings Co. LLC, senior note, A, 10.25%, 11/01/15 USA USD 55, ,000 Dollar General Corp., senior note, %, 07/15/15 USA USD 54, ,000 Station Casinos Inc., senior sub. note, 6.875%, 03/01/16 * USA USD ,000 Station Casinos Inc., senior note, 7.75%, 08/15/16 * USA USD ,511, Government and Municipal Bonds 15,470 Nota Do Tesouro Nacional, 9.609%, 01/01/17 BRA BRL 8,552, ,600,000 Western Australia Treasury Corp., 5.50%, 07/17/12 AUS AUD 6,767, ,000 Government of Mexico, M 20, 10.00%, 12/05/24 MEX MXN 5,162, ,120,000 Government of Poland, 4.75%, 04/25/12 POL PLN 4,446, ,375 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/45 BRA BRL 4,317, ,200,000,000 Korea Treasury Bond, senior bond, 3.75%, 06/10/13 KOR KRW 3,775, ,270,000,000 Government of Indonesia, FR42, 10.25%, 07/15/27 IDN IDR 2,720, ,000 Government of Mexico, MI10, 9.00%, 12/20/12 MEX MXN 2,519, ,340,000 Korea Treasury Bond, senior note, 7.125%, 04/16/19 KOR USD 1,600, ,778,000 Government of Peru, 7.84%, 08/12/20 PER PEN 1,536, ,165,000 Government of Argentina, senior bond, FRN, 0.677%, 08/03/12 ARG USD 997, ,495,000 Government of Poland, 6.25%, 10/24/15 POL PLN 872, ,950,000,000 Government of Indonesia, FR27, 9.50%, 06/15/15 IDN IDR 850, ,100,000,000 Government of Indonesia, FR40, 11.00%, 09/15/25 IDN IDR 537, ,000 California State GO, 7.625%, 03/01/40 USA USD 516, ,800,000,000 Government of Indonesia, FR30, 10.75%, 05/15/16 IDN IDR 492, ,800,000,000 Government of Indonesia, FR28, 10.00%, 07/15/17 IDN IDR 483, ,000 California State GO, Build America Bonds, Various Purpose, 7.50%, 04/01/34 USA USD 424, ,640,000,000 Government of Indonesia, FR31, 11.00%, 11/15/20 IDN IDR 361, ,174,000,000 Government of Indonesia, FR34, 12.80%, 06/15/21 IDN IDR 329, ,329,000,000 Government of Indonesia, FR39, 11.75%, 08/15/23 IDN IDR 323, ,000 Government of Peru, 9.91%, 05/05/15 PER PEN 313, ,000 Illinois Finance Authority Revenue, Alexian Brothers Health System, ReFunding, Series A, AGMC Insured, 5.00%, 01/01/20 USA USD 304, ,000 Government of Peru, 7.35%, 07/21/25 PER USD 242, ,300,000,000 Government of Indonesia, FR43, 10.25%, 07/15/22 IDN IDR 165, ,400,000,000 Government of Indonesia, FR45, 9.75%, 05/15/37 IDN IDR 158, ,030,000,000 Government of Indonesia, FR37, 12.00%, 09/15/26 IDN IDR 143, ,000 Metropolitan Government of Nashville and Davidson County Health and Educational Facilities Board Revenue, Vanderbilt University, ReFunding, Series A, 5.00%, 10/01/18 USA USD 115, ,000 Republic of El Salvador, Reg S, 7.65%, 06/15/35 SVC USD 26, ,059, Securities Maturing Within One Year 2,665,000,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 2,419, ,830,000 Malaysia Treasury Bill, 0.00%, 12/15/11 MYS MYR 894, ,000 GMAC Inc., senior note, 7.25%, 03/02/11 USA USD 303, ,000 Government of Malaysia, senior bond, 3.756%, 04/28/11 MYS MYR 182, ,000 Malaysia Treasury Bill, 0.00%, 08/25/11 MYS MYR 153, ,000 Bank of Negara Moary Note, 10/13/2011, 0.00% MYS MYR 123, ,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 99, ,000 Fresenius Medical Care Capital Trust IV, 7.875%, 06/15/11 DEU USD 76, ,000 Bank of Negara Moary Note, 0.00%, 01/06/11 MYS MYR 29, ,000 Bank of Negara Moary Note, 0.00%, 01/20/11 MYS MYR 12, ,294, TOTAL BONDS 75,865, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 87,795, Unaudited Semi-Annual Report

254 Templeton Global Income Fund TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET BONDS Corporate Bonds 200,000 Wind Acquisition Finance SA, senior note, 144A, 11.75%, 07/15/17 ITA USD 224, ,000 TRW Automotive Inc., senior note, 144A, 7.25%, 03/15/17 USA USD 217, ,000 Intergen NV, senior secured note, 144A, 9.00%, 06/30/17 NLD USD 213, ,000 MacDermid Inc., senior sub. note, 144A, 9.50%, 04/15/17 USA USD 212, ,000 SandRidge Energy Inc., senior note, 144A, 8.00%, 06/01/18 USA USD 204, ,000 Digicel Group Ltd., senior note, 144A, 8.875%, 01/15/15 JAM USD 203, ,000 OPTI Canada Inc., senior secured note, 9.00%, 12/15/12 CAN USD 201, ,000 Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16 GBR USD 193, ,000 Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 02/15/16 GBR USD 191, ,000 Sanmina-SCI Corp., senior note, 144A, FRN, 3.052%, 06/15/14 USA USD 190, ,000 Fresenius US Finance II, senior note, 144A, 9.00%, 07/15/15 DEU USD 115, ,000 UPC Holding BV, senior note, 144A, 9.875%, 04/15/18 NLD USD 110, ,000 SandRidge Energy Inc., senior note, 144A, 9.875%, 05/15/16 USA USD 106, ,000 Shingle Springs Tribal Gaming Authority, senior note, 144A, 9.375%, 06/15/15 USA USD 69, ,000 Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 * USA USD 1, ,452, Government and Municipal Bonds 135,000 Queensland Treasury Corp., 144A, 7.125%, 09/18/17 AUS NZD 112, TOTAL BONDS 2,564, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 2,564, TOTAL INVESTMENTS 231,547, Floating Rates are indicated as at December 31, 2010 * These Corporate Bonds are currently in default Income may be received in additional securities and/or cash Unaudited Semi-Annual Report 253

255 Templeton Global Smaller Companies Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Air Freight & Logistics 59,260 Panalpina Welttransport Holding AG CHE CHF 7,645, ,128,917 Sinotrans Ltd., H CHN HKD 3,323, ,969, Building Products 385,917 Wienerberger AG AUT EUR 7,377, Capital s 774,750 MF Global Holdings Ltd. USA USD 6,476, ,385,899 Henderson Group PLC GBR GBP 5,028, ,537 Canaccord Financial Inc. CAN CAD 5,020, ,190 Legg Mason Inc. USA USD 3,234, ,102 Vontobel Holding AG CHE CHF 3,205, ,231 Verwaltungs-und Privat-Bank AG CHE CHF 765, ,870 Investment Technology Group Inc. USA USD 570, ,303, Commercial Banks 474,110 Busan Bank KOR KRW 6,067, ,117,000 Bank of Ayudhya Public Co. Ltd., fgn. THA THB 6,036, ,600 Dah Sing Financial Group HKG HKD 4,528, ,424,800 Ta Chong Bank Ltd. TWN TWD 4,022, ,000 Daegu Bank Co. Ltd. KOR KRW 2,963, ,619, Commercial Services & Supplies 1,271,609 Downer EDI Ltd. AUS AUD 5,963, ,530 Niscayah Group AB SWE SEK 1,736, ,007 Tomra Systems ASA NOR NOK 1,276, ,976, Communications Equipment 170,907 TKH Group NV NLD EUR 4,483, ,580 D-Link Corp. TWN TWD 607, ,090, Computers & Peripherals 1,513,357 KYE Systems Corp. TWN TWD 1,356, Construction & Engineering 254,749 Tutor Perini Corp. USA USD 5,454, ,847 Arcadis NV NLD EUR 1,883, ,337, Containers & Packaging 151,720 Huhtamaki OYJ FIN EUR 2,100, Distributors 4,363,404 Pacific Brands Ltd. AUS AUD 4,369, ,035,714 Test-Rite International Co. Ltd. TWN TWD 3,182, ,551, Diversified Consumer Services 112,689 Steiner Leisure Ltd. BHS USD 5,262, Diversified Financial Services 542,090 Hellenic Exchanges SA Holding Clearing Settlement and Registry GRC EUR 3,553, Electrical Equipment 71,948 Draka Holding NV NLD EUR 1,838, Electronic Equipment, Instruments & Components 70,647 Barco NV BEL EUR 4,562, ,509 Jenoptik AG DEU EUR 2,167, ,097,000 Huan Hsin Holdings Ltd. SGP SGD 367, ,098, Energy Equipment & Services 228,300 Mullen Group Ltd. CAN CAD 3,871, ,800 Shinko Plantech Co. Ltd. JPN JPY 765, ,636, Unaudited Semi-Annual Report

256 Templeton Global Smaller Companies Fund Food Products 77,780 Binggrae Co. Ltd. KOR KRW 3,884, ,969,000 People s Food Holdings Ltd. CHN SGD 2,366, ,251, Health Care Providers & Services 269,824 Mediq NV NLD EUR 5,053, Hotels, Restaurants & Leisure 300,810 Brinker International Inc. USA USD 6,280, ,682 Sol Melia SA ESP EUR 3,530, ,810, Household Durables 784,820 Bovis Homes Group PLC GBR GBP 5,053, ,279 Bellway PLC GBR GBP 4,592, ,227 Sealy Corp., 8.00%, cvt. pfd., PIK USA USD 3,684, ,743 Persimmon PLC GBR GBP 3,508, ,594 Dorel Industries Inc., B CAN CAD 2,511, ,951 Sealy Corp. USA USD 1,602, ,952, Independent Power Producers & Energy Traders 1,759,185 Glow Energy Public Co. Ltd., fgn. THA THB 2,764, Leisure Equipment & Products 414,196 Amer Sports OYJ FIN EUR 5,779, ,670 JAKKS Pacific Inc. USA USD 4,312, ,313 Giant Manufacturing Co. Ltd. TWN TWD 3,656, ,747, Machinery 169,300 Aalberts Industries NV NLD EUR 3,572, ,233 Bodycote PLC GBR GBP 3,015, ,266 ATS Automation Tooling Systems Inc. CAN CAD 1,358, ,946, Media 3,702,977 Future PLC GBR GBP 1,660, Metals & Mining 310,900 HudBay Minerals Inc. CAN CAD 5,602, Office Electronics 38,555 Sindoh Co. Ltd. KOR KRW 1,870, Paper & Forest Products 4,772,669 PaperlinX Ltd. AUS AUD 1,999, Personal Products 120,521 Kobayashi Pharmaceutical Co. Ltd. JPN JPY 5,597, ,368,300 Fiberweb PLC GBR GBP 3,436, ,033, Pharmaceuticals 1,288,125 Alapis Holding Industrial and Commercial SA GRC EUR 896, Professional Services 100,844 USG People NV NLD EUR 2,050, Road & Rail 257,950 Arkansas Best Corp. USA USD 7,072, ,248,428 Avis Europe PLC GBR GBP 4,612, ,685, Software 397,680 VASCO Data Security International Inc. USA USD 3,233, Specialty Retail 172,090 Hibbett Sports Inc. USA USD 6,350, ,580 Chico s FAS Inc. USA USD 5,853, ,017 Sonic Automotive Inc. USA USD 5,786, ,024,347 Giordano International Ltd. HKG HKD 4,093, ,435,810 GAME Group PLC GBR GBP 2,650, ,116 West Marine Inc. USA USD 2,307, ,042, Unaudited Semi-Annual Report 255

257 Templeton Global Smaller Companies Fund Textiles, Apparel & Luxury Goods 406,950 K-Swiss Inc., A USA USD 5,074, ,150 Billabong International Ltd. AUS AUD 5,005, ,098,746 Yue Yuen Industrial Holdings Ltd. HKG HKD 3,944, ,544,000 Texwinca Holdings Ltd. HKG HKD 3,240, ,073 Descente Ltd. JPN JPY 2,601, ,500 Stella International Holdings Ltd. CYM HKD 1,737, ,780 Volcom Inc. USA USD 1,599, ,666,000 Fountain Set (Holdings) Ltd. HKG HKD 1,538, ,710 Youngone Corp. KOR KRW 1,079, ,000 Asics Corp. JPN JPY 77, ,898, Thrifts & Mortgage Finance 101,399 Genworth MI Canada Inc. CAN CAD 2,805, Companies & Distributors 4,745,458 Emeco Holdings Ltd. AUS AUD 5,236, TOTAL SHARES 286,613, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 286,613, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Thrifts & Mortgage Finance 31,241 Genworth MI Canada Inc. CAN CAD 864, TOTAL SHARES 864, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 864, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Capital s 343,713 D. Carnegie & Co. AB ** SWE SEK TOTAL SHARES TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET TOTAL INVESTMENTS 287,477, ** These securities are submitted to a Fair Valuation Income may be received in additional securities and/or cash 256 Unaudited Semi-Annual Report

258 Templeton Global Total Return Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Advertising 65,097 Dex One Corp. USA USD 485, TOTAL SHARES 485, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 485, TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Consumer Finance 859 GMAC Inc., 7.00%, pfd., 144A USA USD 811, Thrifts & Mortgage Finance 292,525 Freddie Mac, 8.375%, pfd., Z USA USD 183, ,800 Fannie Mae, 8.75%, cvt. pfd. USA USD 132, ,275 Fannie Mae, 8.25%, pfd. USA USD TOTAL SHARES 1,129, BONDS Corporate Bonds 160,645,000 Sinochem Overseas Capital Co. Ltd., senior note, Reg S, 4.50%, 11/12/20 CHN USD 158,961, ,790,000,000 General Electric Capital Corp., senior note, A, 8.50%, 04/06/18 USA MXN 132,545, ,380,000 Alfa Bond Issuance, Reg S, 7.875%, 09/25/17 RUS USD 120,328, ,650,000 Dubai Electricity & Water Authority, senior note, 7.375%, 10/21/20 ARE USD 73,769, ,077,000 Gazprom, secured note, Reg S, 7.51%, 07/31/13 RUS USD 62,749, ,874,000 Bank of America Corp., pfd., sub. bond, M, 8.125%, Perpetual USA USD 39,225, ,690,000 DP World Ltd., Reg S, 6.85%, 07/02/37 ARE USD 37,508, ,140,000 HSBK (Europe) BV, Reg S, 7.25%, 05/03/17 KAZ USD 35,526, ,080,000 Petroleos de Venezuela SA, senior sub. bond, 4.90%, 10/28/14 VEN USD 34,425, ,000,000 Harrah s Operating Co. Inc., senior secured note, 11.25%, 06/01/17 USA USD 33,900, ,030,000 ING Americas Issuance BV, cvt., Reg S, 11.00%, 04/16/12 UKR UAH 32,634, ,177,000 Commercial Bank of Qatar, senior note, Reg S, 5.00%, 11/18/14 QAT USD 32,592, ,828,000 LUKOIL International Finance BV, Reg S, 6.656%, 06/07/22 RUS USD 32,421, ,820,000 LUKOIL Holdings, senior note, Reg S, 6.125%, 11/09/20 RUS USD 31,897, ,296,000 JPMorgan Chase & Co., junior sub. note, 1, 7.90%, Perpetual USA USD 25,913, ,000,000 HCA Inc., senior secured note, PIK, 9.625%, 11/15/16 USA USD 24,696, ,500,000 Chesapeake Energy Corp., senior note, 6.625%, 08/15/20 USA USD 22,275, ,437,000 Edcon Proprietary Ltd., senior secured note, Reg S, FRN, 4.276%, 06/15/14 ZAF EUR 22,101, ,393,000 Edcon Holdings Proprietary Ltd., senior bond, Reg S, FRN, 6.526%, 06/15/15 ZAF EUR 21,848, ,500,000 RBS Global & Rexnord Corp., senior note, 8.50%, 05/01/18 USA USD 20,816, ,000,000 EchoStar DBS Corp., senior note, 7.125%, 02/01/16 USA USD 20,750, ,000,000 NRG Energy Inc., senior note, 7.375%, 02/01/16 USA USD 20,550, ,409,000 JPMorgan Chase Capital XXII, sub. bond, 6.45%, 02/02/37 USA USD 20,442, ,437,000 Citigroup Inc., sub. note, 5.00%, 09/15/14 USA USD 20,124, ,000,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 8.50%, 05/15/18 USA USD 19,190, ,794,000 Centrais Eletricas Brasileiras SA, senior note, Reg S, 6.875%, 07/30/19 BRA USD 19,037, ,900,000 CCO Holdings LLC, senior note, 8.125%, 04/30/20 USA USD 17,871, ,790,000 Plains Exploration & Production Co., senior note, 7.625%, 06/01/18 USA USD 17,692, ,900,000 Compagnie Generale de Geophysique-Veritas, senior note, 7.75%, 05/15/17 FRA USD 17,407, ,420,000 HCA Inc., senior secured note, 9.125%, 11/15/14 USA USD 17,261, ,000,000 Boston Scientific Corp., senior note, 6.00%, 01/15/20 USA USD 16,707, ,249,000 ICICI Bank Ltd., Reg S, FRN, 6.375%, 04/30/22 IND USD 16,269, ,000,000 RSC Equipment Rental Inc. and RSC Holdings III LLC, senior note, 9.50%, 12/01/14 USA USD 15,825, ,300,000 Linn Energy Corp., senior note, 144A, 8.625%, 04/15/20 USA USD 15,479, ,000,000 Cricket Communications Inc., senior note, 144A, 7.75%, 10/15/20 USA USD 15,280, ,578,000 Wells Fargo Capital XIII, pfd., 7.70%, Perpetual USA USD 15,142, ,033,000 Alfa MTN s Ltd. for ABH Financial Ltd., Reg S, 8.20%, 06/25/12 RUS USD 14,874, ,160,000 LUKOIL International Finance BV, Reg S, 6.356%, 06/07/17 RUS USD 14,845, ,000,000 El Paso Corp., senior note, 7.00%, 06/15/17 USA USD 14,844, ,000,000 The Goodyear Tire & Rubber Co., senior note, 8.25%, 08/15/20 USA USD 14,560, ,500,000 Crosstex Energy LP/Crosstex Energy Finance Corp., senior note, 8.875%, 02/15/18 USA USD 14,529, ,954,000 Petro Co. of Trinidad and Tobago Ltd., senior note, Reg S, 9.75%, 08/14/19 TTO USD 14,404, ,000,000 CIT Group Inc., senior secured sub. bond, 7.00%, 05/01/17 USA USD 14,070, ,900,000 JBS USA LLC, senior note, %, 05/01/14 USA USD 13,952, ,169,000 HSBC Holdings PLC, sub. note, 6.50%, 09/15/37 GBR USD 13,835, ,800,000 CHC Helicopter SA, senior secured note, 144A, 9.25%, 10/15/20 CAN USD 13,312, ,000,000 Ford Motor Credit Co. LLC, senior note, 7.00%, 04/15/15 USA USD 12,907, ,200,000 Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., senior secured note, Reg S, 15.00%, 04/01/21 USA USD 12,851, Unaudited Semi-Annual Report 257

259 Templeton Global Total Return Fund Corporate Bonds (continued) 11,900,000 International Lease Finance Corp., senior secured note, 144A, 6.75%, 09/01/16 USA USD 12,762, ,500,000 Sanmina-SCI Corp., senior sub. note, 8.125%, 03/01/16 USA USD 12,687, ,000,000 Energy XXI Gulf Coast Inc., senior note, 9.25%, 12/15/17 USA USD 12,510, ,000,000 NewPage Corp., senior secured note, %, 12/31/14 USA USD 12,285, ,000,000 Anadarko Petroleum Corp., senior note, 8.70%, 03/15/19 USA USD 12,230, ,200,000 Visant Corp., senior note, 144A, 10.00%, 10/01/17 USA USD 11,928, ,718,000 Time Warner Inc., 7.625%, 04/15/31 USA USD 11,847, ,000,000 GMAC Inc., sub. note, 8.00%, 12/31/18 USA USD 11,742, ,000,000 Dynegy Holdings Inc., senior note, 8.375%, 05/01/16 USA USD 11,287, ,100,000 ING Americas Issuance BV, cvt., Reg S, 10.85%, 11/26/12 UKR UAH 11,112, ,000,000 Ziggo Bond Co., Reg S, 8.00%, 05/15/18 NLD EUR 11,067, ,700,000 CKE Restaurants Inc., senior secured note, %, 07/15/18 USA USD 10,791, ,700,000 Michaels Stores Inc., senior note, 144A, 7.75%, 11/01/18 USA USD 10,726, ,718,000 UBS AG Stamford, senior note, 5.875%, 12/20/17 USA USD 10,703, ,000,000 The Goldman Sachs Group Inc., senior bond, 5.375%, 03/15/20 USA USD 10,352, ,500,000 WMG Acquisition Corp., senior secured note, 9.50%, 06/15/16 USA USD 10,236, ,300,000 Mylan Inc., senior note, 144A, 7.875%, 07/15/20 USA USD 10,067, ,718,000 Barclays Bank PLC, senior note, 5.125%, 01/08/20 GBR USD 9,925, ,000,000 Frontier Communications Corp., senior note, 8.50%, 04/15/20 USA USD 9,877, ,500,000 Pinnacle Entertainment Inc., senior sub. note, 7.50%, 06/15/15 USA USD 9,571, ,000,000 Freescale Semiconductor Inc., senior note, %, 12/15/16 USA USD 9,517, ,430,000 MGM Resorts International, senior note, 6.875%, 04/01/16 USA USD 9,347, ,718,000 MetLife Inc., junior sub. note, FRN, 6.40%, 12/15/66 USA USD 9,287, ,200,000 Kerling PLC, senior note, Reg S, %, 01/28/17 GBR EUR 9,102, ,900,000 West Corp., senior note, 144A, 7.875%, 01/15/19 USA USD 9,078, ,800,000 Sungard Data Systems Inc., senior note, 144A, 7.625%, 11/15/20 USA USD 8,954, ,800,000 Dean Foods Co., senior note, 144A, 9.75%, 12/15/18 USA USD 8,910, ,910,000 TNK-BP Finance SA, Reg S, 7.25%, 02/02/20 RUS USD 8,603, ,450,000 Thomas Cook Group PLC, senior note, 7.75%, 06/22/17 GBR GBP 8,534, ,600,000 Kinder Morgan Finance Co. ULC, secured senior note, 144A, 6.00%, 01/15/18 USA USD 8,492, ,400,000 OPTI Canada Inc., senior secured note, 144A, 9.75%, 08/15/13 CAN USD 8,442, ,000,000 Antero Resources Finance, senior note, 9.375%, 12/01/17 USA USD 8,410, ,241,000 Codere Finance SA, senior secured note, Reg S, 8.25%, 06/15/15 ESP EUR 8,346, ,700,000 Jarden Corp., senior note, 6.125%, 11/15/22 USA USD 8,341, ,930,000 Toyota Motor Credit Corp., senior note, zero cpn., 02/15/17 JPN MXN 8,327, ,700,000 Libbey Glass Inc., senior secured note, 144A, 10.00%, 02/15/15 USA USD 8,316, ,355,000 KB Home, senior note, 6.25%, 06/15/15 USA USD 8,313, ,000,000 Enterprise Products Operating LLC, junior sub. note, FRN, 7.034%, 01/15/68 USA USD 8,311, ,800,000 Virgin Media Secured Finance, senior secured note, 6.50%, 01/15/18 GBR USD 8,248, ,200,000 FMG Resources Aug 2006, senior note, 144A, 6.875%, 02/01/18 AUS USD 8,200, ,833,445 CCH II LLC/CCH II Capital Corp., senior note, 13.50%, 11/30/16 USA USD 8,183, ,000,000 Royal Bank of Scotland Group PLC, senior note, 6.40%, 10/21/19 GBR USD 8,057, ,500,000 Freescale Semiconductor Inc., senior note, 8.875%, 12/15/14 USA USD 7,875, ,200,000 Consol Energy Inc., senior note, 144A, 8.25%, 04/01/20 USA USD 7,812, ,100,000 The Manitowoc Co. Inc., senior note, 9.50%, 02/15/18 USA USD 7,810, ,765,000 Berry Petroleum Co., senior note, 10.25%, 06/01/14 USA USD 7,796, ,600,000 Campofrio Food Group SA, senior note, Reg S, 8.25%, 10/31/16 ESP EUR 7,734, ,000,000 GMAC Inc., senior note, 8.30%, 02/12/15 USA USD 7,717, ,500,000 Solo Cup Co., senior sub. note, 8.50%, 02/15/14 USA USD 7,692, ,400,000 Energy Transfer Equity LP, senior note, 7.50%, 10/15/20 USA USD 7,659, ,944,000 Quicksilver Resources Inc., senior note, 9.125%, 08/15/19 USA USD 7,655, ,000,000 ClubCorp Club Operations Inc., senior note, 144A, 10.00%, 12/01/18 USA USD 7,640, ,300,000 Rite Aid Corp., senior secured note, 8.00%, 08/15/20 USA USD 7,637, ,000,000 Abengoa SA, senior note, 8.50%, 03/31/16 ESP EUR 7,627, ,013,000 MarkWest Energy Partners LP/Finance Corp., senior note, 8.75%, 04/15/18 USA USD 7,626, ,000,000 United Surgical Partners International Inc., senior sub. note, PIK, 9.25%, 05/01/17 USA USD 7,315, ,900,000 MetroPCS Wireless Inc., senior note, 7.875%, 09/01/18 USA USD 7,193, ,500,000 Vantage Drilling Co., senior secured note, 144A, 11.50%, 08/01/15 USA USD 7,085, ,000,000 Ford Motor Credit Co. LLC, senior note, 8.125%, 01/15/20 USA USD 6,991, ,000,000 Norwegian Cruise Line Ltd., senior secured note, 11.75%, 11/15/16 USA USD 6,971, ,500,000 ViaSat Inc., senior note, 8.875%, 09/15/16 USA USD 6,955, ,500,000 Pinnacle Foods Finance LLC, senior note, 8.25%, 09/01/17 USA USD 6,678, ,000,000 Clear Channel Worldwide Holdings Inc., senior note, B, 9.25%, 12/15/17 USA USD 6,600, ,000,000 Freescale Semiconductor Inc., senior note, 144A, 10.75%, 08/01/20 USA USD 6,585, ,300,000 Intelsat Jackson Holding Ltd., senior note, 144A, 7.25%, 10/15/20 LUX USD 6,394, ,375,000 Texas Competitive Electric Holdings Co. LLC, senior note, A, 10.25%, 11/01/15 USA USD 6,341, ,000,000 GMAC Inc., senior note, 6.875%, 08/28/12 USA USD 6,300, ,928,000 Yum! Brands Inc., senior note, 5.30%, 09/15/19 USA USD 6,289, ,935,000 Jarden Corp., senior sub. note, 7.50%, 05/01/17 USA USD 6,283, ,500,000 NXP BV/NXP Funding LLC, senior secured note, 144A, 9.75%, 08/01/18 NLD USD 6,135, Unaudited Semi-Annual Report

260 Templeton Global Total Return Fund Corporate Bonds (continued) 6,000,000 United Rentals North America Inc., senior sub. note, 8.375%, 09/15/20 USA USD 6,135, ,600,000 Lamar Media Corp., senior sub. note, 7.875%, 04/15/18 USA USD 5,978, ,000,000 Calpine Corp., senior secured note, 144A, 7.50%, 02/15/21 USA USD 5,940, ,600,000 Chaparral Energy Inc., senior note, 144A, 9.875%, 10/01/20 USA USD 5,922, ,228,000 City of Moscow, 5.064%, 10/20/16 RUS EUR 5,769, ,400,000 Univision Communications Inc., senior secured note, 144A, 7.875%, 11/01/20 USA USD 5,697, ,200,000 Frontier Communications Corp., senior note, 8.75%, 04/15/22 USA USD 5,694, ,300,000 Peabody Energy Corp., senior note, 6.50%, 09/15/20 USA USD 5,684, ,400,000 Infinis PLC, senior note, Reg S, 9.125%, 12/15/14 GBR GBP 5,598, ,859,000 Canadian Natural Resources Ltd., 5.90%, 02/01/18 CAN USD 5,542, ,300,000 Novelis Inc., senior note, 144A, 8.75%, 12/15/20 IND USD 5,525, ,859,000 The Kroger Co., 6.15%, 01/15/20 USA USD 5,515, ,859,000 Wells Fargo Capital XV, pfd., 9.75%, Perpetual USA USD 5,429, ,300,000 Petrohawk Energy Corp., senior note, 7.25%, 08/15/18 USA USD 5,379, ,000,000 EchoStar DBS Corp., senior note, 7.75%, 05/31/15 USA USD 5,337, ,100,000 Calpine Corp., senior secured note, 144A, 7.875%, 07/31/20 USA USD 5,189, ,859,000 Ford Motor Credit Co. LLC, senior note, 7.50%, 08/01/12 USA USD 5,150, ,401,000 Starwood Hotels & Resorts Worldwide Inc., senior note, 7.15%, 12/01/19 USA USD 4,885, ,750,000 CCO Holdings LLC/CCO Holdings Capital Corp., senior note, 7.25%, 10/30/17 USA USD 4,845, ,200,000 Case New Holland Inc., senior note, 144A, 7.875%, 12/01/17 USA USD 4,641, ,000,000 MGM Resorts International, senior note, 6.625%, 07/15/15 USA USD 4,606, ,263,000 Ball Corp., senior note, 7.375%, 09/01/19 USA USD 4,604, ,452,000 Rabobank Nederland, senior note, 8.75%, 01/24/17 NLD MXN 4,594, ,700,000 Abengoa Finance SAU, senior note, 144A, 8.875%, 11/01/17 ESP USD 4,478, ,000,000 Peabody Energy Corp., senior note, 7.375%, 11/01/16 USA USD 4,460, ,200,000 Petco Animal Supplies Inc., senior note, 144A, 9.25%, 12/01/18 USA USD 4,446, ,200,000 Conti-Gummi Finance BV, senior secured note, Reg S, 7.50%, 09/15/17 DEU EUR 4,435, ,000,000 Intelsat Bermuda Ltd., senior note, 11.25%, 06/15/16 LUX USD 4,330, ,000,000 Reinsurance Group of America Inc., senior note, 6.45%, 11/15/19 USA USD 4,228, ,900,000 Conti-Gummi Finance BV, senior secured note, Reg S, 8.50%, 07/15/15 DEU EUR 4,218, ,486,000 MGM Resorts International, senior note, 7.50%, 06/01/16 USA USD 4,216, ,000,000 Pinnacle Foods Finance LLC, senior note, 9.25%, 04/01/15 USA USD 4,185, ,900,000 FMG Finance Pty. Ltd., senior note, 144A, 7.00%, 11/01/15 AUS USD 3,987, ,566,000 Rite Aid Corp., senior secured note, 9.75%, 06/12/16 USA USD 3,944, ,000,000 Mylan Inc., senior note, 144A, 6.00%, 11/15/18 USA USD 3,940, ,600,000 Ceva Group PLC, senior secured note, 144A, 11.50%, 04/01/18 GBR USD 3,931, ,500,000 Quicksilver Resources Inc., senior note, 8.25%, 08/01/15 USA USD 3,648, ,255,000 Rabobank Nederland, zero cpn., 10/05/15 NLD MXN 3,495, ,500,000 Davita Inc., senior note, 6.375%, 11/01/18 USA USD 3,491, ,200,000 Huntsman International LLC, senior sub. note, 144A, 8.625%, 03/15/21 USA USD 3,472, ,300,000 Advanced Micro Devices Inc., senior note, 144A, 7.75%, 08/01/20 USA USD 3,440, ,300,000 International Lease Finance Corp., senior note, 8.25%, 12/15/20 USA USD 3,403, ,000,000 Seat Pagine Gialle SpA, Reg S, 10.50%, 01/31/17 ITA EUR 3,381, ,200,000 Ceva Group PLC, senior secured note, 144A, 8.375%, 12/01/17 GBR USD 3,230, ,000,000 Royal Caribbean Cruises Ltd., senior note, 7.25%, 06/15/16 USA USD 3,218, ,000,000 MarkWest Energy Partners LP/Finance Corp., senior note, 6.75%, 11/01/20 USA USD 3,015, ,750,000 Media General Inc., senior secured note, 11.75%, 02/15/17 USA USD 2,904, ,430,000 Viacom Inc., senior note, 6.875%, 04/30/36 USA USD 2,796, ,700,000 Davita Inc., senior note, 6.625%, 11/01/20 USA USD 2,679, ,900,000 Sunrise Communications Holdings, senior note, Reg S, 8.50%, 12/31/18 LUX EUR 2,671, ,400,000 Ardagh Packaging Finance PLC, senior note, 144A, 9.125%, 10/15/20 IRL USD 2,508, ,210,000 TNK-BP Finance SA, senior note, Reg S, 7.875%, 03/13/18 RUS USD 2,506, ,400,000 Pride International Inc., senior note, 6.875%, 08/15/20 USA USD 2,502, ,235,000 Diversey Holdings Inc., senior note, PIK, 10.50%, 05/15/20 USA USD 2,475, ,800,000 Cirsa Funding Luxembourg SA, senior bond, Reg S, 8.75%, 05/15/18 LUX EUR 2,474, ,300,000 The Manitowoc Co. Inc., senior note, 8.50%, 11/01/20 USA USD 2,455, ,235,000 Universal City Development, senior sub. note, %, 11/15/16 USA USD 2,452, ,607,187 Wind Acquisition Holdings Finance SA, senior secured note, Reg S, PIK, 12.25%, 07/15/17 ITA EUR 2,448, ,100,000 Compagnie Generale de Geophysique-Veritas, senior note, 9.50%, 05/15/16 FRA USD 2,299, ,000,000 TransUnion LLC/TransUnion Corp., senior note, 144A, %, 06/15/18 USA USD 2,290, ,000,000 Interactive Data Corp., senior note, 144A, 10.25%, 08/01/18 USA USD 2,200, ,000,000 Consol Energy Inc., senior note, 144A, 8.00%, 04/01/17 USA USD 2,140, ,900,000 Pinafore LLC/Inc., senior secured note, 144A, 9.00%, 10/01/18 USA USD 2,061, ,010,000 LIN Television Corp., senior sub. note, 6.50%, 05/15/13 USA USD 2,025, ,944,000 Coventry Health Care Inc., senior note, 5.95%, 03/15/17 USA USD 1,978, ,900,000 CCO Holdings LLC, senior note, 7.875%, 04/30/18 USA USD 1,976, ,700,000 Dollar General Corp., senior note, %, 07/15/15 USA USD 1,857, ,750,000 Regions Bank, sub. note, 7.50%, 05/15/18 USA USD 1,805, ,800,000 Marina District Finance Co. Inc., senior secured note, 144A, 9.50%, 08/15/18 USA USD 1,777, ,652,000 Universal City Development, senior note, 8.875%, 11/15/15 USA USD 1,763, ,761,000 General Maritime Corp., senior note, 12.00%, 11/15/17 USA USD 1,708, ,477,000 Holly Corp., senior note, 9.875%, 06/15/17 USA USD 1,617, ,500,000 Linn Energy Corp., senior note, 144A, 7.75%, 02/01/21 USA USD 1,545, Unaudited Semi-Annual Report 259

261 Templeton Global Total Return Fund Corporate Bonds (continued) 1,605,000 Forest City Enterprises Inc., senior note, 7.625%, 06/01/15 USA USD 1,508, ,500,000 Marina District Finance Co. Inc., senior secured note, 144A, 9.875%, 08/15/18 USA USD 1,485, ,263,000 Ball Corp., senior note, 7.125%, 09/01/16 USA USD 1,367, ,130,000 Ameren Corp., senior note, 8.875%, 05/15/14 USA USD 1,272, ,069,000 CMS Energy Corp., senior note, 8.75%, 06/15/19 USA USD 1,262, ,000,000 Hutchison Whampoa International Ltd., Reg S, 7.45%, 11/24/33 HKG USD 1,236, ,200,000 Berry Petroleum Co., senior note, 6.75%, 11/01/20 USA USD 1,209, ,100,000 SunGard Data Systems Inc., senior sub. note, 10.25%, 08/15/15 USA USD 1,159, ,000 Quicksilver Resources Inc., senior note, 11.75%, 01/01/16 USA USD 1,137, ,000,000 Ford Motor Credit Co. LLC, senior note, 6.625%, 08/15/17 USA USD 1,052, ,079,000 Dominion Resources Inc., junior sub. note, 06-B, FRN, 6.30%, 09/30/66 USA USD 1,052, ,000,000 Plains Exploration & Production Co., senior note, 7.75%, 06/15/15 USA USD 1,047, ,000,000 Reynolds Group Issuer Inc./LLC/SA, senior note, 144A, 9.00%, 04/15/19 USA USD 1,041, ,000 El Paso Corp., senior note, 6.875%, 06/15/14 USA USD 1,037, ,000 UPC Germany GmbH, senior bond, Reg S, 9.625%, 12/01/19 DEU EUR 1,027, ,000 Frontier Communications Corp., senior note, 8.25%, 04/15/17 USA USD 992, ,000 HCA Inc., senior secured bond, 7.25%, 09/15/20 USA USD 945, ,000 Ardagh Packaging Finance PLC, senior secured note, 144A, 7.375%, 10/15/17 IRL USD 832, ,000 Advanced Micro Devices Inc., senior note, 8.125%, 12/15/17 USA USD 827, ,000 Te Healthcare Corp., senior secured note, 10.00%, 05/01/18 USA USD 702, ,000 HCA Inc., senior note, 6.50%, 02/15/16 USA USD 668, ,000 Ineos Finance PLC, senior note, Reg S, 9.25%, 05/15/15 GBR EUR 644, ,000 Huntsman International LLC, senior note, 5.50%, 06/30/16 USA USD 566, ,000 Solo Cup Co., senior secured note, 10.50%, 11/01/13 USA USD 510, ,000 Lamar Media Corp., senior sub. note, C, 6.625%, 08/15/15 USA USD 495, ,814 Radio One Inc., senior sub. note, PIK, 15.00%, 05/24/16 USA USD 478, ,000 Gaz Capital (GAZPROM), 5.136%, 03/22/17 RUS EUR 473, ,000 GE Capital Trust IV, sub. bond, Reg S, FRN, 4.625%, 09/15/66 USA EUR 449, ,000 Clear Channel Worldwide Holdings Inc., senior note, A, 9.25%, 12/15/17 USA USD 424, ,000 Lamar Media Corp., senior sub. note, B, 6.625%, 08/15/15 USA USD 396, ,000 NRG Energy Inc., senior note, 7.375%, 01/15/17 USA USD 103, ,000 The Kroger Co., 6.40%, 08/15/17 USA USD 83, ,000 CVS Caremark Corp., senior note, 5.75%, 06/01/17 USA USD 81, ,000 Valero Energy Corp., 6.125%, 06/15/17 USA USD 78, ,000 Citigroup Inc., senior note, 5.50%, 04/11/13 USA USD 77, ,179,000 Station Casinos Inc., senior sub. note, 6.875%, 03/01/16 * USA USD ,818,000 Station Casinos Inc., senior note, 7.75%, 08/15/16 * USA USD ,363,512, Government and Municipal Bonds 792,219,010,000 Korea Treasury Bond, senior bond, 4.00%, 06/10/12 KOR KRW 714,401, ,808,000,000 Korea Treasury Bond, 4.25%, 12/10/12 KOR KRW 653,627, ,100,000 Government of Ukraine, Reg S, 7.75%, 09/23/20 UKR USD 233,682, ,537,262,970 Government of Argentina, senior bond, FRN, 0.00%, 12/15/35 ARG USD 232,511, ,230,000 Government of Poland, 4.75%, 04/25/12 POL PLN 224,458, ,900,000 Financing of Infrastructure Projects State Enterprise, Reg S, 8.375%, 11/03/17 UKR USD 195,892, ,234,075,000 Government of Sweden, 5.50%, 10/08/12 SWE SEK 195,383, ,095 Nota Do Tesouro Nacional, 9.609%, 01/01/17 BRA BRL 185,245, ,240,030,000 Government of Hungary, 5.50%, 02/12/16 HUN HUF 183,371, ,020,000 Western Australia Treasury Corp., 5.50%, 07/17/12 AUS AUD 145,614, ,898,500,000 Government of Hungary, 14/C, 5.50%, 11/24/23 HUN HUF 144,152, ,000,000 Government of Poland, Strip, 10/25/12 POL PLN 142,447, ,099,200,000 Government of Hungary, 7.50%, 11/12/20 HUN HUF 140,350, ,166,471 Government of Russia, senior bond, Reg S, 7.50%, 03/31/30 RUS USD 133,023, ,188,425,000 ING Americas Issuance BV, 5.50%, 08/24/15 UKR UAH 130,454, ,950,000 Government of Mexico, M 10, 7.25%, 12/15/16 MEX MXN 125,957, ,650,000,000 Government of Indonesia, FR40, 11.00%, 09/15/25 IDN IDR 124,787, ,170 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/45 BRA BRL 120,462, ,500,000 Government of Hungary, senior note, 6.25%, 01/29/20 HUN USD 111,637, ,730,000 Government of Ghana, 13.30%, 09/30/13 GHA GHS 106,129, ,885,000 Government of Mexico, M, 9.00%, 06/20/13 MEX MXN 104,431, ,034,000,000 Korea Treasury Bond, senior bond, 3.75%, 06/10/13 KOR KRW 103,399, ,567,500 Government of Mexico, MI10, 9.00%, 12/20/12 MEX MXN 100,485, ,830,000,000 Government of Indonesia, FR46, 9.50%, 07/15/23 IDN IDR 92,767, ,945,000 Government of Lithuania, Reg S, 7.375%, 02/11/20 LTU USD 90,856, ,315,000 Arab Republic of Egypt, Reg S, 5.75%, 04/29/20 EGY USD 88,727, ,505,000 Government of Poland, Strip, 01/25/12 POL PLN 81,769, ,120,000 Goverment of Bermuda, senior note, Reg S, 5.603%, 07/20/20 BMU USD 65,883, ,128,000,000 Korea Treasury Bond, 4.75%, 03/10/12 KOR KRW 65,620, ,695 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/15 BRA BRL 63,637, ,635,400,000 Government of Hungary, 13/E, 7.50%, 10/24/13 HUN HUF 60,678, ,900,000 Government of Poland, 5.75%, 09/23/22 POL PLN 59,367, ,863,700,000 Government of Hungary, 23/A, 6.00%, 11/24/23 HUN HUF 56,421, ,045,000 Government of Poland, Strip, 07/25/12 POL PLN 53,477, Unaudited Semi-Annual Report

262 Templeton Global Total Return Fund Government and Municipal Bonds (continued) 481,608,000 ING Americas Issuance BV, Reg S, 5.50%, 08/25/15 UKR UAH 52,854, ,880,000 Queensland Treasury Corp., 6.00%, 08/14/13 AUS AUD 51,774, ,248,000 Government of Malaysia, senior bond, 0309, 2.711%, 02/14/12 MYS MYR 49,302, ,600,000,000 Indonesia Retail Bond, 9.35%, 08/15/12 IDN IDR 46,231, ,000 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/17 BRA BRL 43,062, ,729,000 Government of Croatia, Reg S, 6.75%, 11/05/19 HRV USD 41,218, ,590,000 Government of Poland, senior note, 6.375%, 07/15/19 POL USD 41,092, ,175,000 California State GO, Various Purpose, 6.00%, 04/01/38 USA USD 39,960, ,784,000 Inter-American Development Bank, senior note, 7.50%, 12/05/24 SP MXN 39,833, ,054,638 Government of Argentina, senior bond, FRN, 0.677%, 08/03/12 ARG USD 38,580, ,220,000,000 Government of Indonesia, FR42, 10.25%, 07/15/27 IDN IDR 37,899, ,759,000 Korea Treasury Bond, senior note, 7.125%, 04/16/19 KOR USD 36,749, ,833,600,000 Government of Sri Lanka, A, 11.00%, 08/01/15 LKA LKR 36,709, ,591,000 Government of Mexico, M 20, 10.00%, 12/05/24 MEX MXN 36,351, ,819,000 Government of Lithuania, senior note, 9.375%, 06/22/14 LTU EUR 35,715, ,805,000 Government of Vietnam, Reg S, 6.75%, 01/29/20 VND USD 35,457, ,948,000 Government of Hungary, 6.75%, 07/28/14 HUN EUR 35,371, ,540,000,000 Government of Indonesia, FR47, 10.00%, 02/15/28 IDN IDR 30,792, ,540,000 New South Wales Treasury Corp., senior note, 5.50%, 03/01/17 AUS AUD 30,722, ,410,000 California State GO, 7.625%, 03/01/40 USA USD 30,716, ,309,700,000 Government of Sri Lanka, A, 8.50%, 01/15/13 LKA LKR 30,180, ,180,000 Government of South Africa, 5.50%, 03/09/20 ZAF USD 29,983, ,310,000 Bay Area Toll Authority Toll Bridge Revenue, Build America Bonds, Series S1, 7.043%, 04/01/50 USA USD 27,641, ,629,000 New South Wales Treasury Corp., 6.00%, 05/01/12 AUS AUD 27,477, ,300,000,000 Government of Indonesia, FR43, 10.25%, 07/15/22 IDN IDR 25,787, ,460,000 San Mateo Foster City School District GO, Capital Appreciation, Election of 2008, Series A, zero cpn. to 08/01/26, 6.625% thereafter, 08/01/42 USA USD 25,699, ,290 Nota Do Tesouro Nacional, 9.609%, 01/01/12 BRA BRL 25,028, ,757,000 Government of South Africa, 6.875%, 05/27/19 ZAF USD 21,936, ,196,400,000 Government of Sri Lanka, A, 13.50%, 02/01/13 LKA LKR 21,845, ,628,000,000 Government of Indonesia, FR34, 12.80%, 06/15/21 IDN IDR 21,757, ,060,000 California State GO, Various Purpose, ReFunding, 5.25%, 03/01/38 USA USD 21,512, ,229,000 Queensland Treasury Corp., 6.00%, 09/14/17 AUS AUD 20,870, ,676,000,000 Government of Hungary, 19/A, 6.50%, 06/24/19 HUN HUF 20,502, ,824,000,000 Government of Sri Lanka, A, 11.25%, 07/15/14 LKA LKR 17,529, ,115,000 Government of Poland, 5.75%, 04/25/14 POL PLN 16,904, ,499,000 Government of Indonesia, senior bond, Reg S, 7.75%, 01/17/38 IDN USD 16,522, ,027,000 Government of Venezuela, 10.75%, 09/19/13 VEN USD 16,360, ,227,000 Corporacion Andina De Fomento, 8.125%, 06/04/19 SP USD 15,845, ,830,000,000 Government of Indonesia, FR49, 9.00%, 09/15/13 IDN IDR 14,420, ,440,000,000 Government of Indonesia, FR48, 9.00%, 09/15/18 IDN IDR 13,950, ,490,000,000 Republic of Indonesia, senior bond, ORI4, 9.50%, 03/12/12 IDN IDR 13,915, ,129,000 Government of Indonesia, senior bond, Reg S, 8.50%, 10/12/35 IDN USD 13,444, ,420,000 Illinois Finance Authority Revenue, Alexian Brothers Health System, ReFunding, Series A, AGMC Insured, 5.00%, 01/01/20 USA USD 11,607, ,250 Nota Do Tesouro Nacional, 9.609%, 01/01/14 BRA BRL 11,551, ,735 Nota Do Tesouro Nacional, Index Linked, 6.00%, 05/15/13 BRA BRL 11,539, ,720,000,000 Government of Indonesia, FR31, 11.00%, 11/15/20 IDN IDR 11,062, ,180,000,000 Government of Indonesia, FR39, 11.75%, 08/15/23 IDN IDR 10,570, ,438,000 Government of Peru, 7.84%, 08/12/20 PER PEN 10,344, ,400,000 California State GO, Various Purpose, ReFunding, 5.25%, 03/01/30 USA USD 10,069, ,622,000 Citigroup Funding Inc., FRN, 0.00%, 09/01/15 UKR UAH 9,833, ,470,000,000 Indonesia Recapital Bond, senior bond, FR18, %, 07/15/12 IDN IDR 9,782, ,219,000 Government of Iraq, Reg S, 5.80%, 01/15/28 IQ USD 9,386, ,022,900,000 Government of Sri Lanka, B, 8.50%, 07/15/13 LKA LKR 9,311, ,170,000 Government of Poland, 5.25%, 04/25/13 POL PLN 8,572, ,740,000 California State GO, Various Purpose, ReFunding, 5.50%, 03/01/40 USA USD 8,492, ,300,000 Government of Sri Lanka, B, 11.00%, 09/01/15 LKA LKR 8,203, ,565,000 California State GO, 6.65%, 03/01/22 USA USD 7,868, ,830,000 California State GO, Build America Bonds, 7.30%, 10/01/39 USA USD 6,885, ,550,000,000 Government of Indonesia, FR36, 11.50%, 09/15/19 IDN IDR 6,744, ,650,000 California State GO, 6.20%, 03/01/19 USA USD 6,738, ,377,800,000 Government of Hungary, 17/B, 6.75%, 02/24/17 HUN HUF 6,266, ,200,000,000 Government of Indonesia, FR35, 12.90%, 06/15/22 IDN IDR 6,201, ,880,000 Government of Malaysia, senior bond, 3.718%, 06/15/12 MYS MYR 6,191, ,797,000 Government of Vietnam, Reg S, 6.875%, 01/15/16 VND USD 6,079, ,270,000,000 Korea Deposit Insurance Corp., 08-1, 5.28%, 02/15/13 KOR KRW 5,782, ,900,000 Government of Sri Lanka, A, 7.50%, 08/01/13 LKA LKR 5,780, ,019,000,000 Government of Indonesia, FR20, %, 12/15/13 IDN IDR 5,383, ,000,000 Government of Sri Lanka, A, 6.85%, 04/15/12 LKA LKR 5,357, ,440,000,000 Government of Indonesia, senior bond, FR17, 13.15%, 01/15/12 IDN IDR 5,279, ,160,000 Government of Peru, 7.35%, 07/21/25 PER USD 5,044, ,850,000,000 Government of Indonesia, FR44, 10.00%, 09/15/24 IDN IDR 4,994, ,459,000,000 Government of Indonesia, FR19, 14.25%, 06/15/13 IDN IDR 4,919, Unaudited Semi-Annual Report 261

263 Templeton Global Total Return Fund Government and Municipal Bonds (continued) 14,160,000 Government of Poland, 5.00%, 10/24/13 POL PLN 4,788, ,994,000 Government of Indonesia, senior bond, Reg S, 6.625%, 02/17/37 IDN USD 4,384, ,887,000 Government of Ghana, Reg S, 8.50%, 10/04/17 GHA USD 4,361, ,547,000 Government of Indonesia, senior bond, Reg S, 6.875%, 01/17/18 IDN USD 4,141, ,550,000,000 Government of Indonesia, FR28, 10.00%, 07/15/17 IDN IDR 4,012, ,000,000 Government of Sri Lanka, B, 6.85%, 10/15/12 LKA LKR 3,908, ,325,000,000 Government of Indonesia, FR45, 9.75%, 05/15/37 IDN IDR 3,895, ,507,000 Government of Peru, 8.75%, 11/21/33 PER USD 3,453, ,000,000 Government of Sri Lanka, C, 6.85%, 03/01/12 LKA LKR 3,130, ,357,000 Government of Hungary, senior note, 5.75%, 06/11/18 HUN EUR 2,943, ,800,000 Government of Peru, 9.91%, 05/05/15 PER PEN 2,939, ,000,000 Government of Sri Lanka, A, 13.50%, 04/01/12 LKA LKR 2,408, ,300,000 Detroit GO, Distribution State Aid, 4.50%, 11/01/23 USA USD 2,134, ,000,000 Government of Sri Lanka, B, 6.60%, 06/01/14 LKA LKR 1,795, ,880,000 Government of Philippine, senior bond, 8.75%, 03/03/13 PHL PHP 1,691, ,658,580,000 Korea Treasury Bond, 5.25%, 03/10/13 KOR KRW 1,532, ,920,000 Government of Sri Lanka, A, 7.00%, 03/01/14 LKA LKR 1,431, ,613,771 Peru Enhanced Pass-Through Finance Ltd., senior secured bond, A-1, Reg S, zero cpn., 05/31/18 PER USD 1,317, ,000,000 California State GO, Build America Bonds, Various Purpose, 7.55%, 04/01/39 USA USD 1,038, ,000 Government of Hungary, senior note, 3.875%, 02/24/20 HUN EUR 1,028, ,100,000,000 Korea Treasury Bond, 5.25%, 09/10/12 KOR KRW 1,012, ,000 Government of South Africa, senior note, 5.875%, 05/30/22 ZAF USD 958, ,000 Government of Hungary, senior note, 4.375%, 07/04/17 HUN EUR 946, ,000,000,000 Government of Indonesia, FR30, 10.75%, 05/15/16 IDN IDR 906, ,770,000 Government of Sri Lanka, A, 6.50%, 07/15/15 LKA LKR 865, ,780,000,000 Government of Indonesia, FR26, 11.00%, 10/15/14 IDN IDR 734, ,200,000 Government of Sri Lanka, A, 6.90%, 08/01/12 LKA LKR 598, ,000 Republic of El Salvador, Reg S, 7.65%, 06/15/35 SVC USD 438, ,000 Government of Hungary, senior note, 3.50%, 07/18/16 HUN EUR 336, ,000,000 Government of Indonesia, FR23, 11.00%, 12/15/12 IDN IDR 84, ,800 Government of Mexico, M 10, 8.00%, 12/17/15 MEX MXN 67, ,879,764, Securities Maturing Within One Year 393,700,000 Queensland Treasury Corp., 6.00%, 06/14/11 AUS AUD 404,162, ,825,000 Government of Malaysia, senior bond, 3.833%, 09/28/11 MYS MYR 260,275, ,497,140,000 Korea Treasury Bond, 4.75%, 12/10/11 KOR KRW 205,642, ,520,000 Israel Treasury Bill, 0.00%, 04/06/11 ISR ILS 202,165, ,051,285,000 Government of Sweden, 5.25%, 03/15/11 SWE SEK 157,836, ,598,000 Petroleos de Venezuela SA, senior bond, zero cpn., 07/10/11 VEN USD 146,544, ,820,000 Government of Malaysia, senior bond, 3.756%, 04/28/11 MYS MYR 134,774, ,850,000 Egypt Treasury Bill, 0.00%, 12/06/11 EGY EGP 131,563, ,000,000 Bank of Negara Moary Note, 0.00%, 05/11/11 MYS MYR 107,891, ,338,600 Israel Treasury Bill, 0.00%, 07/06/11 ISR ILS 97,400, ,000,000 Egypt Treasury Bill, 0.00%, 11/08/11 EGY EGP 82,291, ,644,000 Government of Norway, 6.00%, 05/16/11 NOR NOK 76,881, ,975,000 Egypt Treasury Bill, 0.00%, 02/08/11 EGY EGP 73,136, ,450,000 Egypt Treasury Bill, 0.00%, 03/29/11 EGY EGP 71,969, ,080,000 Israel Treasury Bill, 0.00%, 10/05/11 ISR ILS 70,215, ,290,000 Israel Treasury Bill, 0.00%, 03/02/11 ISR ILS 68,492, ,590,000 Bank of Negara Moary Note, 0.00%, 01/27/11 MYS MYR 62,360, ,750,000 Egypt Treasury Bill, 0.00%, 03/08/11 EGY EGP 60,560, ,065,000 Norway Treasury Bill, 0.00%, 06/15/11 NOR NOK 55,771, ,740,000 Government of Israel, 2680, 7.00%, 04/29/11 ISR ILS 54,048, ,263,570,000 Korea Treasury Bond, senior bond, 5.50%, 06/10/11 KOR KRW 51,697, ,000,000 Norway Treasury Bill, 0.00%, 03/16/11 NOR NOK 49,425, ,943,000 Norwegian Treasury Bill, Strip, 09/21/11 NOR NOK 48,144, ,200,000 Egypt Treasury Bill, 0.00%, 01/04/11 EGY EGP 47,211, ,450,000 Egypt Treasury Bill, 0.00%, 08/09/11 EGY EGP 39,235, ,294,000 Government of Venezuela, Reg S, FRN, 1.288%, 04/20/11 VEN USD 37,815, ,190,000,000 Indonesia Treasury Bill, 0.00%, 03/03/11 IDN IDR 36,795, ,000,000 Government of Poland, 4.25%, 05/24/11 POL PLN 34,440, ,030,000 ING Americas Issuance BV, cvt., Reg S, FRN, 10.85%, 10/17/11 UKR UAH 33,117, ,250,000 Bank of Negara Moary Note, 0.00%, 03/10/11 MYS MYR 32,030, ,380,000 Bank of Negara Moary Note, 0.00%, 07/28/11 MYS MYR 30,182, ,630,000 Israel Treasury Bill, 0.00%, 02/02/11 ISR ILS 29,911, ,630,000 Bank of Negara Moary Note, 0.00%, 03/22/11 MYS MYR 28,575, ,950,000 Israel Treasury Bill, 0.00%, 06/01/11 ISR ILS 24,440, ,930,000 Bank of Negara Moary Note, 0.00%, 03/15/11 MYS MYR 22,559, ,100,000 Egypt Treasury Bill, 0.00%, 04/12/11 EGY EGP 22,376, ,400,000,000 Indonesia Treasury Bill, 0.00%, 07/07/11 IDN IDR 22,101, ,475,000 Egypt Treasury Bill, 0.00%, 04/05/11 EGY EGP 21,559, ,980,000 Bank of Negara Moary Note, 0.00%, 07/19/11 MYS MYR 20,764, ,200,000 Israel Treasury Bill, 0.00%, 01/05/11 ISR ILS 17,363, ,858,000,000 Government of Sri Lanka, B, 7.00%, 08/01/11 LKA LKR 16,677, Unaudited Semi-Annual Report

264 Templeton Global Total Return Fund Securities Maturing Within One Year (continued) 20,652,000 African Development Bank, 21.50%, 08/24/11 SP GHS 14,697, ,475,000 Egypt Treasury Bill, 0.00%, 05/03/11 EGY EGP 14,568, ,050,000 Egypt Treasury Bill, 0.00%, 05/31/11 EGY EGP 14,545, ,650,000 Egypt Treasury Bill, 0.00%, 07/12/11 EGY EGP 14,294, ,314,000 Republic of Fiji, 6.875%, 09/13/11 FJ USD 13,320, ,080,000 Malaysia Treasury Bill, 0.00%, 04/05/11 MYS MYR 12,907, ,975,000 Egypt Treasury Bill, 0.00%, 03/29/11 EGY EGP 10,602, ,940,000,000 Indonesia Treasury Bill, SP16, 0.00%, 04/07/11 IDN IDR 10,063, ,500,000 Bank of Negara Moary Note, 0.00%, 02/10/11 MYS MYR 9,541, ,605,000 Israel Treasury Bill, 0.00%, 09/07/11 ISR ILS 9,063, ,900,000 Egypt Treasury Bill, 0.00%, 06/07/11 EGY EGP 8,892, ,550,000 Israel Treasury Bill, 0.00%, 08/03/11 ISR ILS 8,549, ,860,000 Bank of Negara Moary Note, 0.00%, 01/20/11 MYS MYR 7,729, ,325,000 Egypt Treasury Bill, 0.00%, 05/10/11 EGY EGP 7,700, ,080,000 Malaysia Treasury Bill, 0.00%, 05/18/11 MYS MYR 7,406, ,575,000 Egypt Treasury Bill, 0.00%, 09/20/11 EGY EGP 6,331, ,330,000,000 Indonesia Retail Bond, senior bond, OR13, 9.40%, 09/12/11 IDN IDR 6,064, ,900,000 Egypt Treasury Bill, 0.00%, 06/21/11 EGY EGP 5,900, ,025,000 Egypt Treasury Bill, 0.00%, 03/22/11 EGY EGP 5,233, ,430,000 Malaysia Treasury Bill, 0.00%, 03/25/11 MYS MYR 4,975, ,500,000 Egypt Treasury Bill, 0.00%, 03/31/11 EGY EGP 4,324, ,930,000 Malaysia Treasury Bill, 0.00%, 05/06/11 MYS MYR 3,835, ,280,000 Bank of Negara Moary Note, 0.00%, 03/08/11 MYS MYR 3,640, ,490,000 Government of Sri Lanka, A, 12.00%, 07/15/11 LKA LKR 3,190, ,475,000 Egypt Treasury Bill, 0.00%, 03/22/11 EGY EGP 2,778, ,545,000 Bank of Negara Moary Note, 0.00%, 06/02/11 MYS MYR 2,741, ,545,000 Bank of Negara Moary Note, 0.00%, 10/25/11 MYS MYR 2,712, ,570,000,000 Indonesia Treasury Bill, 0.00%, 02/10/11 IDN IDR 2,602, ,330,000 Malaysia Treasury Bill, 0.00%, 07/01/11 MYS MYR 2,346, ,335,000 Malaysia Treasury Bill, 0.00%, 12/15/11 MYS MYR 2,317, ,000,000,000 Indonesia Treasury Bill, SP17, 0.00%, 05/05/11 IDN IDR 2,180, ,730,000 Malaysia Treasury Bill, 0.00%, 06/30/11 MYS MYR 1,516, ,510,000 Sri Lanka Treasury Bill, 0.00%, 07/08/11 LKA LKR 1,419, ,850,000 Bank of Negara Moary Note, 0.00%, 10/13/11 MYS MYR 905, ,900,000 Egypt Treasury Bill, 0.00%, 10/11/11 EGY EGP 779, ,120,000 Sri Lanka Treasury Bill, 0.00%, 02/04/11 LKA LKR 457, ,700,000 Sri Lanka Treasury Bill, 0.00%, 09/16/11 LKA LKR 442, ,000 Kazakhstan Temir Zholy Finance BV, 6.50%, 05/11/11 KAZ USD 203, ,000,000 Government of Indonesia, FR25, 10.00%, 10/15/11 IDN IDR 97, ,421,293, TOTAL BONDS 12,664,569, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 12,665,699, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET SHARES Telecommunications Equipment 679 Centaur Funding Corp., 9.08%, pfd., 144A USA USD 734, TOTAL SHARES 734, BONDS Corporate Bonds 41,984,000 KazMunaiGaz Finance Sub BV, 144A, 9.125%, 07/02/18 KAZ USD 49,331, ,000,000 Digicel Group Ltd., senior note, 144A, 8.875%, 01/15/15 JAM USD 26,390, ,700,000 Intelsat Jackson Holding Ltd., senior note, 144A, 8.50%, 11/01/19 LUX USD 21,522, ,000,000 Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 02/15/16 GBR USD 16,277, ,000,000 SandRidge Energy Inc., senior note, 144A, 8.00%, 06/01/18 USA USD 14,280, ,000,000 Expro Finance Luxembourg, senior secured note, 144A, 8.50%, 12/15/16 GBR USD 13,526, ,221,000 ICICI Bank Ltd., 144A, 6.625%, 10/03/12 IND USD 13,081, ,000,000 Intergen NV, senior secured note, 144A, 9.00%, 06/30/17 NLD USD 12,780, ,718,000 Woodside Finance Ltd., 144A, 4.50%, 11/10/14 AUS USD 10,223, ,200,000 BNP Paribas, 144A, 7.195%, Perpetual FRA USD 6,948, ,000,000 Intelsat Subsidiary Holding Co. Ltd., senior note, 144A, 8.875%, 01/15/15 BMU USD 6,165, ,650,000 MetLife Capital Trust X, secured bond, 144A, FRN, 9.25%, 04/08/68 USA USD 5,487, ,082,000 Gaz Capital SA, senior bond, 144A, 8.146%, 04/11/18 RUS USD 4,731, ,300,000 CEDC Finance Corp. International Inc., senior secured note, 144A, 9.125%, 12/01/16 USA USD 4,590, ,916,000 New York City IDA, 144A, 11.00%, 03/01/29 USA USD 3,687, ,552,000 LUKOIL International Finance BV, 144A, 6.656%, 06/07/22 RUS USD 3,614, ,694,000 Sanmina-SCI Corp., senior note, 144A, FRN, 3.052%, 06/15/14 USA USD 3,509, ,000,000 Wind Acquisition Finance SA, senior note, 144A, 11.75%, 07/15/17 ITA USD 3,365, ,000,000 SandRidge Energy Inc., senior note, 144A, 9.875%, 05/15/16 USA USD 3,187, ,727,000 MacDermid Inc., senior sub. note, 144A, 9.50%, 04/15/17 USA USD 2,890, ,700,000 ICICI Bank Ltd., sub. bond, 144A, FRN, 6.375%, 04/30/22 IND USD 2,713, ,200,000 Ceva Group PLC, senior secured note, 144A, %, 10/01/16 GBR USD 2,394, Unaudited Semi-Annual Report 263

265 Templeton Global Total Return Fund Corporate Bonds (continued) 3,100,000 Shingle Springs Tribal Gaming Authority, senior note, 144A, 9.375%, 06/15/15 USA USD 2,154, ,130,000 HSBK (Europe) BV, 144A, 7.25%, 05/03/17 KAZ USD 2,153, ,800,000 VTB Capital SA, senior note, 144A, 6.25%, 06/30/35 RUS USD 1,858, ,500,000 Gazprom, secured note, 144A, 7.51%, 07/31/13 RUS USD 1,649, ,340,000 Petro Co. of Trinidad and Tobago Ltd., senior note, 144A, 9.75%, 08/14/19 TTO USD 1,614, ,458,000 Univision Communications Inc., senior secured note, 144A, 12.00%, 07/01/14 USA USD 1,603, ,450,000 LUKOIL International Finance BV, 144A, 6.356%, 06/07/17 RUS USD 1,522, ,300,000 UPC Holding BV, senior note, 144A, 9.875%, 04/15/18 NLD USD 1,430, ,100,000 Petroplus Finance Ltd., senior note, 144A, 6.75%, 05/01/14 CHE USD 1,017, ,000 OPTI Canada Inc., senior secured note, 144A, 9.00%, 12/15/12 CAN USD 979, ,000,000 Woori Bank, 144A, FRN, 6.208%, 05/02/37 KOR USD 977, ,799 Sphynx Capital s, secured note, 10.25%, 01/30/10 * CI EUR 454, ,000 Hutchison Whampoa International Ltd., senior note, 144A, 6.25%, 01/24/14 HKG USD 110, ,000 Alfa MTN s for ABH Financial Ltd., 144A, 8.20%, 06/25/12 RUS USD 106, ,429,500 Fontainebleau Las Vegas, 144A, 10.25%, 6/15/15 * USA USD 20, ,000 Astana-Finance, 7.875%, 6/08/10 * KAZ EUR 20, ,370, Government and Municipal Bonds 220,039,000 New South Wales Treasury Corp., 6.00%, 05/01/12 AUS AUD 227,082, ,480,000 Government of Iraq, 144A, 5.80%, 01/15/28 IQ USD 1,359, ,000 Government of Vietnam, 144A, 6.875%, 01/15/16 VND USD 828, ,270, TOTAL BONDS 477,641, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 478,375, TOTAL INVESTMENTS 13,144,560, * These Corporate Bonds are currently in default Floating Rates are indicated as at December 31, 2010 Income may be received in additional securities and/or cash 264 Unaudited Semi-Annual Report

266 Templeton Growth (Euro) Fund Schedule of Investments as of December 31, 2010 (Currency EUR) TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Aerospace & Defense 5,636,712 BAE Systems PLC GBR GBP 21,713, Air Freight & Logistics 1,190,480 United Parcel Service Inc., B USA USD 64,589, ,580 FedEx Corp. USA USD 27,851, ,747,480 Deutsche Post AG DEU EUR 22,088, ,529, Auto Components 550,290 Compagnie Generale des Etablissements Michelin, B FRA EUR 29,550, Automobiles 534,650 Hyundai Motor Co. Ltd. KOR KRW 61,843, ,620 Bayerische Motoren Werke AG DEU EUR 44,949, ,170,200 Toyota Motor Corp. JPN JPY 34,699, ,491, Biotechnology 2,496,330 Amgen Inc. USA USD 102,447, ,860 Biogen Idec Inc. USA USD 27,960, ,407, Capital s 1,523,708 UBS AG CHE CHF 18,719, Commercial Banks 1,194,141 KB Financial Group Inc., ADR KOR USD 47,212, ,801,571 HSBC Holdings PLC GBR HKD 44,470, ,430 ICICI Bank Ltd., ADR IND USD 28,445, ,158,474 UniCredit SpA ITA EUR 28,109, ,292,792 DBS Group Holdings Ltd. SGP SGD 27,472, ,552,675 Intesa Sanpaolo SpA ITA EUR 25,481, ,874 KB Financial Group Inc. KOR KRW 4,395, ,586, Communications Equipment 3,055,990 Cisco Systems Inc. USA USD 46,213, ,104,132 Telefonaktiebolaget LM Ericsson, B SWE SEK 35,714, ,439,630 Brocade Communications Systems Inc. USA USD 21,510, ,438, Computers & Peripherals 2,282,730 Seagate Technology USA USD 25,647, ,633,000 Dell Inc. USA USD 16,540, ,187, Construction Materials 2,765,781 CRH PLC IRL EUR 42,869, Consumer Finance 1,323,410 American Express Co. USA USD 42,459, Diversified Financial Services 6,276,278 ING Groep NV NLD EUR 45,691, ,640 JPMorgan Chase & Co. USA USD 24,500, ,238,960 Bank of America Corp. USA USD 22,326, ,518, Diversified Telecommunication Services 4,389,500 France Telecom SA FRA EUR 68,454, ,416,000 Singapore Telecommunications Ltd. SGP SGD 62,935, ,703,952 KT Corp., ADR KOR USD 42,042, ,094,584 Telefonica SA ESP EUR 35,534, ,540 AT&T Inc. USA USD 9,697, ,664, Electronic Equipment, Instruments & Components 1,713,600 Tyco Electronics Ltd. USA USD 45,345, ,575,080 Flextronics International Ltd. SGP USD 32,714, ,100 FUJIFILM Holdings Corp. JPN JPY 20,064, ,124, Unaudited Semi-Annual Report 265

267 Templeton Growth (Euro) Fund (Currency EUR) Energy Equipment & Services 2,044,910 Halliburton Co. USA USD 62,413, ,330 Baker Hughes Inc. USA USD 39,032, ,121,764 SBM Offshore NV NLD EUR 18,806, ,200 Noble Corp. USA USD 13,401, ,653, Food & Staples Retailing 1,889,217 CVS Caremark Corp. USA USD 49,103, ,374,511 Tesco PLC GBR GBP 41,577, ,680, Food Products 1,207,600 Nestle SA CHE CHF 52,915, Health Care Equipment & Supplies 2,094,720 Covidien PLC USA USD 71,496, ,367,180 Medtronic Inc.1 USA USD 37,905, ,402, Health Care Providers & Services 451,380 Quest Diagnostics Inc. USA USD 18,210, Hotels, Restaurants & Leisure 7,297,890 Compass Group PLC GBR GBP 49,534, Industrial Conglomerates 933,610 Siemens AG DEU EUR 86,984, ,182,350 Tyco International Ltd. USA USD 67,603, ,827,874 General Electric Co. USA USD 52,335, ,904,870 Koninklijke Philips Electronics NV NLD EUR 43,659, ,583, Insurance 11,132,960 Aviva PLC GBR GBP 51,182, ,889,760 Progressive Corp. USA USD 42,922, ,540 ACE Ltd. USA USD 31,295, ,860 Muenchener Rueckversicherungs-Gesellschaft AG DEU EUR 30,826, ,710 Swiss Reinsurance Co. CHE CHF 27,806, ,370 RenaissanceRe Holdings Ltd. USA USD 26,679, ,981,086 AXA SA FRA EUR 24,664, ,231,600 AIA Group Ltd. HKG HKD 15,196, ,351 Torchmark Corp. USA USD 5,508, ,081, Inter & Catalog Retail 1,072,310 Expedia Inc. USA USD 20,111, IT Services 3,394,130 Accenture PLC, A USA USD 123,028, Life Sciences Tools & Services 419,030 Lonza Group AG CHE CHF 25,135, Media 5,892,390 Comcast Corp., A, Special USA USD 91,661, ,566,420 News Corp., A USA USD 82,352, ,195,900 Vivendi SA FRA EUR 64,557, ,051,810 Viacom Inc., B USA USD 60,752, ,876,382 Pearson PLC GBR GBP 45,750, ,389,180 The Walt Disney Co. USA USD 38,952, ,051 Time Warner Cable Inc. USA USD 37,910, ,555,120 Time Warner Inc. USA USD 37,397, ,334, Metals & Mining 2,221,070 Alcoa Inc. USA USD 25,552, ,121,650 Vale SA, ADR, pfd., A BRA USD 25,338, ,890, Multiline Retail 603,740 Target Corp. USA USD 27,137, Office Electronics 4,193,439 Konica Minolta Holdings Ltd. JPN JPY 32,592, Unaudited Semi-Annual Report

268 Templeton Growth (Euro) Fund (Currency EUR) Oil, Gas & Consumable Fuels 3,293,726 Royal Dutch Shell PLC, B GBR GBP 81,531, ,890,830 Total SA, B FRA EUR 74,971, ,830,290 BP PLC GBR GBP 69,736, ,701,180 Eni SpA ITA EUR 44,137, ,360 Chevron Corp. USA USD 28,127, ,258,290 Statoil ASA NOR NOK 22,389, ,394,840 BG Group PLC GBR GBP 21,106, ,001, Paper & Forest Products 2,051,560 Svenska Cellulosa AB, B SWE SEK 24,260, Pharmaceuticals 7,955,800 Pfizer Inc. USA USD 104,134, ,982,190 Sanofi-Aventis FRA EUR 94,847, ,719,525 GlaxoSmithKline PLC GBR GBP 82,746, ,880,400 Novartis AG CHE CHF 82,698, ,208,340 Merck & Co. Inc. USA USD 59,494, ,390 Roche Holding AG CHE CHF 47,081, ,910 Merck KGaA DEU EUR 20,904, ,370 Bristol-Myers Squibb Co. USA USD 11,745, ,652, Professional Services 657,140 Adecco SA CHE CHF 32,213, ,770 Randstad Holding NV NLD EUR 30,958, ,172, Real Estate Management & Development 3,021,078 Swire Pacific Ltd., A HKG HKD 37,132, ,420,848 Cheung Kong (Holdings) Ltd. HKG HKD 27,892, ,025, Semiconductors & Semiconductor Equipment 136,560 Samsung Electronics Co. Ltd. KOR KRW 86,399, ,503,250 Taiwan Semiconductor Manufacturing Co. Ltd. TWN TWD 55,500, ,899, Software 6,503,340 Microsoft Corp. USA USD 135,730, ,335,690 Oracle Corp. USA USD 124,841, ,332,740 SAP AG DEU EUR 50,544, ,000 Nintendo Co. Ltd.1 JPN JPY 23,261, ,377, Specialty Retail 14,641,933 Kingfisher PLC GBR GBP 45,098, ,241 Inditex SA ESP EUR 29,373, ,440 The Home Depot Inc. USA USD 18,357, ,828, Companies & Distributors 1,123,383 Wolseley PLC GBR GBP 26,831, Wireless Telecommunication Services 47,948,280 Vodafone Group PLC GBR GBP 92,770, ,198,050 Sprint Nextel Corp. USA USD 29,084, ,740,260 Turkcell Iletisim Hizmetleri AS, ADR TUR USD 22,284, ,139, TOTAL SHARES 4,739,745, BONDS Securities Maturing Within One Year 35,000,000 Government of Germany, 5.00%, 07/04/11 DEU EUR 35,775, TOTAL BONDS 35,775, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 4,775,521, Unaudited Semi-Annual Report 267

269 Templeton Growth (Euro) Fund (Currency EUR) TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET SHARES Oil, Gas & Consumable Fuels 1,051,800 Gazprom, ADR RUS USD 20,002, TOTAL SHARES 20,002, TOTAL TRANSFERABLE SECURITIES DEALT IN ON ANOTHER REGULATED MARKET 20,002, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET INVESTMENTS FUNDS Diversified Financial Services 114,108 Templeton China Opportunities Fund, AT Class F2 (Acc)** LUX USD 26,525, TOTAL INVESTMENTS FUNDS 26,525, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 26,525, TOTAL INVESTMENTS 4,822,048, ** These securities are submitted to a Fair Valuation 268 Unaudited Semi-Annual Report

270 Templeton Korea Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Auto Components 8,870 Hyundai Mobis KOR KRW 2,250, Automobiles 27,000 Hyundai Motor Co. Ltd. KOR KRW 4,177, Beverages 134,570 Jinro Ltd. KOR KRW 4,248, Building Products 14,756 KCC Corp. KOR KRW 5,191, Commercial Banks 196,240 Shinhan Financial Group Co. Ltd. KOR KRW 9,258, ,000 Hana Financial Group Inc. KOR KRW 5,213, ,471, Construction & Engineering 49,774 GS Engineering & Construction Corp. KOR KRW 5,149, Electronic Equipment, Instruments & Component 119,560 LG Display Co. Ltd. KOR KRW 4,243, Food Products 8,676 CJ CheilJedang Corp. KOR KRW 1,679, Household Durables 91,240 Woongjin Coway Co. Ltd. KOR KRW 3,279, Industrial Conglomerates 67,880 LG Corp. KOR KRW 5,285, Machinery 153,700 Daewoo Shipbuilding & Marine Engineering Co. Ltd. KOR KRW 4,982, ,303 Hanjin Heavy Industries & Construction Co. Ltd. KOR KRW 4,460, ,443, Metals & Mining 44,100 Hyundai Steel Co. KOR KRW 4,896, ,309 POSCO KOR KRW 4,043, ,939, Multiline Retail 9,906 Lotte Shopping Co. Ltd. KOR KRW 4,178, Oil, Gas & Consumable Fuels 90,173 SK Energy Co. Ltd. KOR KRW 15,601, Semiconductors & Semiconductor Equipment 14,540 Samsung Electronics Co. Ltd. KOR KRW 12,306, ,640 Hynix Semiconductor Inc. KOR KRW 4,273, ,037 Anapass Inc. KOR KRW 1,627, ,109 Silicon Works Co. Ltd. KOR KRW 1,287, ,495, Companies & Distributors 27,930 Samsung C&T Corp. KOR KRW 1,965, TOTAL SHARES 109,601, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 109,601, TOTAL INVESTMENTS 109,601, Unaudited Semi-Annual Report 269

271 Templeton Latin America Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Airlines 1,401,192 Copa Holdings SA PAN USD 82,446, Beverages 8,845,150 Companhia de Bebidas das Americas (AmBev), IDR BRA BRL 231,315, ,347,012 Fomento Economico Mexicano SAB de CV, ADR MEX USD 75,324, ,888,245 Embotelladora Andina SA, pfd., A CHL CLP 20,054, ,014,594 Embotelladora Andina SA, pfd., B CHL CLP 15,259, ,928 Cia Cervecerias Unidas SA, ADR CHL USD 11,160, ,114, Commercial Banks 46,590,609 Itausa Investimentos Itau SA, pfd. BRA BRL 370,580, ,309,900 Credicorp Ltd. PER USD 155,760, ,197,503 Itau Unibanco Holding SA, ADR BRA USD 148,802, ,396,600 Grupo Financiero Banorte SAB de CV MEX MXN 44,698, ,840, Commercial Services & Supplies 1,136,357 Valid Solucoes E Servicos DE Seguranca EM Meios DE Paga, mento E Identificacao SA BRA BRL 13,865, Consumer Finance 11,631,200 Compartamos SAB de CV MEX MXN 25,317, Diversified Financial Services 10,802,000 BM&F BOVESPA SA BRA BRL 85,463, Electric Utilities 2,665,800 Energias do Brasil SA BRA BRL 62,181, Energy Equipment & Services 1,831,239 Tenaris SA, ADR ARG USD 89,694, Food Products 15,898,202 Marfrig Alimentos SA BRA BRL 148,487, ,485,842 BRF Brasil Foods SA BRA BRL 24,478, ,599,745 Grupo Herdez SA MEX MXN 11,846, ,811, Household Durables 4,537,154 Gafisa SA BRA BRL 32,916, ,976,200 Consorcio ARA SAB de CV MEX MXN 14,150, ,067, Independent Power Producers & Energy Traders 5,797,536 AES Tiete SA BRA BRL 75,108, IT Services 17,570,732 Sonda SA CHL CLP 44,001, Marine 1,703,700 Ultrapetrol Bahamas Ltd. ARG USD 10,954, Medium Life Gold Mines 1,630,460 Compania de Minas Buenaventura SA, ADR PER USD 79,827, Metals & Mining 10,254,703 Bradespar SA, pfd. BRA BRL 267,683, ,201,900 Vale SA, ADR, pfd., A BRA USD 217,641, ,092,500 Antofagasta PLC GBR GBP 153,509, ,498,071 Ternium SA, ADR ARG USD 105,943, ,416,182 Metalurgica Gerdau SA, pfd. BRA BRL 103,614, ,141,870 Companhia Siderurgica Nacional SA, ADR BRA USD 52,374, ,766, Oil, Gas & Consumable Fuels 7,993,537 Petroleo Brasileiro SA, ADR, pfd. BRA USD 273,139, ,935,500 OGX Petroleo e Gas Participacoes SA BRA BRL 107,685, ,479,720 Repsol YPF SA ESP EUR 41,272, ,000 HRT Participacoes em Petroleo SA BRA BRL 28,742, ,021 Pacific Rubiales Energy Corp. CAN CAD 26,331, ,172, Paper & Forest Products 7,623,067 Duratex SA BRA BRL 81,993, ,186 Empresas CMPC SA CHL CLP 48,523, ,516, Unaudited Semi-Annual Report

272 Templeton Latin America Fund Personal Products 2,991,041 Avon Products Inc. USA USD 86,919, Road & Rail 5,733,651 Localiza Rent a Car SA BRA BRL 92,937, ,343,630 Julio Simoes Logistica SA BRA BRL 76,214, ,152, Transportation Infrastructure 1,656,086 Wilson Sons Ltd., BDR BRA BRL 31,933, Water Utilities 25,332,906 Inversiones Aguas Metropolitanas SA CHL CLP 41,409, Wireless Telecommunication Services 5,447,944 America Movil SAB de CV, L, ADR MEX USD 312,385, ,052,357 Empresa Nacional de Telecomunicaciones SA CHL CLP 18,396, ,781, TOTAL SHARES 4,042,347, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 4,042,347, TOTAL INVESTMENTS 4,042,347, Unaudited Semi-Annual Report 271

273 Templeton Thailand Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Airlines 655,263 Thai Airways International Public Co. Ltd., fgn. THA THB 1,067, Beverages 5,352,000 Thai Beverages Co. Ltd., fgn. THA SGD 1,188, Chemicals 827,700 PTT Chemical Public Co. Ltd., fgn THA THB 4,046, Commercial Banks 3,811,800 Kasikornbank Public Co. Ltd., fgn. THA THB 16,545, ,093,500 Siam Commercial Bank Public Co. Ltd., fgn. THA THB 14,092, ,704,660 Bangkok Bank Public Co. Ltd., fgn. THA THB 13,718, ,974,800 Krung Thai Bank Public Co. Ltd., fgn. THA THB 8,616, ,087,900 Bank of Ayudhya Public Co. Ltd., fgn. THA THB 5,163, ,576,524 TMB Bank Public Co. Ltd., fgn. THA THB 1,693, ,099,856 Tisco Financial Group Public Co. Ltd., fgn. THA THB 1,490, ,700 Kiatnakin Bank Public Co. Ltd., fgn. THA THB 870, ,191, Construction Materials 833,346 Siam Cement Public Co. Ltd., fgn. THA THB 10,006, ,900 Siam City Cement Public Co. Ltd., fgn. THA THB 1,322, ,328, Electronic Equipment, Instruments & Components 1,748,900 Hana Microelectronics Public Co. Ltd., fgn. THA THB 1,454, ,008 Delta Electronics (Thailand) Public Co. Ltd., fgn. THA THB 513, ,967, Food & Staples Retailing 6,911,000 CP All PCL THA THB 9,022, ,411 Siam Makro Public Co. Ltd., fgn. THA THB 1,251, ,274, Food Products 752,200 Charoen Pokphand Foods Public Co. Ltd., fgn. THA THB 617, Health Care Providers & Services 4,708,675 Bangkok Chain Hospital PCL, fgn. THA THB 994, Hotels, Restaurants & Leisure 20,109,700 The Erawan Group Public Co. Ltd., fgn. THA THB 1,672, ,400 Dusit Thani Public Co. Ltd., fgn. THA THB 1,045, ,119,604 Minor International Public Co. Ltd., fgn. THA THB 831, ,549, Independent Power Producers & Energy Traders 3,003,500 Glow Energy Public Co. Ltd., fgn. THA THB 4,720, ,400 Electricity Generating Public Co. Ltd., fgn. THA THB 1,671, ,392, Marine 3,774,600 Precious Shipping Public Co. Ltd., fgn. THA THB 2,284, Media 8,254,070 BEC World Public Co. Ltd., fgn. THA THB 8,716, Oil, Gas & Consumable Fuels 1,661,630 PTT Public Co. Ltd., fgn. THA THB 17,685, ,895,300 PTT Exploration and Production Public Co. Ltd., fgn. THA THB 16,178, ,300 Banpu Public Co. Ltd., fgn. THA THB 9,888, ,456,600 Thai-Oil Public Co. Ltd. fgn THA THB 8,996, ,411,400 PTT Aromatics & Refining Public Co. Ltd., fgn. THA THB 8,156, ,036,300 IRPC PCL, fgn. THA THB 1,088, ,995, Real Estate Management & Development 12,847,600 Asian Property Development Public Co. Ltd., fgn. THA THB 2,478, ,153,630 Land and Houses Public Co. Ltd., fgn. THA THB 2,392, ,610,000 Supalai Public Co. Ltd., fgn. THA THB 1,579, ,295,958 Rojana Industrial Park Public Co. Ltd., fgn. THA THB 1,528, ,611,508 Hemaraj Land and Development Public Co. Ltd., fgn. THA THB 1,022, ,936,000 Amata Corp. Public Co. Ltd., fgn. THA THB 927, ,200 Pruksa Real Estate PCL, fgn. THA THB 550, ,479, Unaudited Semi-Annual Report

274 Templeton Thailand Fund Wireless Telecommunication Services 5,695,000 Shin Corp. Public Co. Ltd., fgn. THA THB 5,540, ,452,700 Advanced Info Service Public Co. Ltd., fgn. THA THB 4,107, ,300 Total Access Communication Public Co. Ltd., fgn. THA THB 1,419, ,066, TOTAL SHARES 198,162, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 198,162, TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET WARRANTS Hotels, Restaurants & Leisure 306,510 Minor International Public Co. Ltd., wts., 05/18/13 THA THB 30, TOTAL WARRANTS 30, TOTAL TRANSFERABLE SECURITIES NOT ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING NOR DEALT IN ON ANOTHER REGULATED MARKET 30, TOTAL INVESTMENTS 198,193, Unaudited Semi-Annual Report 273

275 Templeton U.S. Value Fund Schedule of Investments as of December 31, 2010 TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING SHARES Air Freight & Logistics 7,620 United Parcel Service Inc., B USA USD 553, ,700 FedEx Corp. USA USD 437, , Biotechnology 11,000 Amgen Inc. USA USD 603, Capital s 20,310 The Bank of New York Mellon Corp. USA USD 613, Chemicals 18,020 E. I. du Pont de Nemours and Co. USA USD 898, Communications Equipment 215,140 Brocade Communications Systems Inc. USA USD 1,138, ,010 Cisco Systems Inc. USA USD 1,112, ,250, Computers & Peripherals 97,180 Dell Inc. USA USD 1,316, Diversified Financial Services 299,700 Citigroup Inc. USA USD 1,417, ,431 Bank of America Corp. USA USD 1,166, ,450 JPMorgan Chase & Co. USA USD 528, ,112, Diversified Telecommunication Services 23,560 AT&T Inc. USA USD 692, Electronic Equipment, Instruments & Components 28,360 Arrow Electronics Inc. USA USD 971, ,072 Tyco Electronics Ltd. USA USD 852, ,823, Energy Equipment & Services 14,620 Baker Hughes Inc. USA USD 835, ,720 Noble Corp. USA USD 812, ,240 Halliburton Co. USA USD 703, ,352, Food & Staples Retailing 31,450 CVS Caremark Corp. USA USD 1,093, Health Care Providers & Services 35,310 Omnicare Inc. USA USD 896, ,160 LifePoint Hospitals Inc. USA USD 704, ,600, Household Products 13,480 The Procter & Gamble Co. USA USD 867, Industrial Conglomerates 83,330 General Electric Co. USA USD 1,524, ,722 Tyco International Ltd. USA USD 361, ,885, Media 63,030 News Corp., A USA USD 917, ,800 Time Warner Inc. USA USD 669, ,150 Viacom Inc., B USA USD 639, ,384 Time Warner Cable Inc. USA USD 619, ,110 The Walt Disney Co. USA USD 266, ,112, Oil, Gas & Consumable Fuels 50,000 Chesapeake Energy Corp. USA USD 1,295, ,360 Chevron Corp. USA USD 580, ,875, Personal Products 28,860 Avon Products Inc. USA USD 838, Unaudited Semi-Annual Report

276 Templeton U.S. Value Fund Pharmaceuticals 25,860 Merck & Co. Inc. USA USD 931, ,770 Watson Pharmaceuticals Inc. USA USD 866, ,840 Pfizer Inc. USA USD 837, ,635, Road & Rail 41,520 Arkansas Best Corp. USA USD 1,138, Software 37,710 Microsoft Corp. USA USD 1,052, ,600 Oracle Corp. USA USD 926, ,979, Specialty Retail 16,740 The Home Depot Inc. USA USD 586, Textiles, Apparel & Luxury Goods 145,740 Liz Claiborne Inc. USA USD 1,043, Wireless Telecommunication Services 308,790 Sprint Nextel Corp. USA USD 1,306, TOTAL SHARES 34,618, TOTAL TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING 34,618, TOTAL INVESTMENTS 34,618, Unaudited Semi-Annual Report 275

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279 FRANKLIN TEMPLETON INTERNATIONAL SERVICES S.A. 26, boulevard Royal L-2449 Luxembourg Tel: (352) Fax: (352) FTIF AR RGBR 12/10 Lit Code XX/XX