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Letter to StockholdersGregory E. JohnsonPresident and Chief Executive OfficerDear Fellow Stockholders,With the biggest and broadest decline in the financial markets in more than a generation, our fiscal yearended September 30, 2009 was one of the most challenging periods in our company’s 60-year history.Market volatility and the global recession shook investor confidence. However, Franklin Templeton hasnavigated through periods of uncertainty in the past, and despite this year’s challenges, I am proud tosay that we made significant progress on our initiatives and ended the fiscal year on a high note.During the first half of the fiscal year, we remained resolute and focused on expense reduction in responseto the decline in our assets under management. Our approach was measured and strategic. We proactivelyreached out to our clients and, most importantly, delivered strong relative investment performance.With global markets rebounding sharply beginning in March 2009, Franklin Templeton’s assets undermanagement ended the fiscal year at $523.4 billion, despite having decreased to a month-end low of$377.6 billion in February. Sales momentum improved throughout the year, and we finished fiscal 2009with one of the best quarters in company history for net new flows.Although market conditions have improved considerably since the first half of the fiscal year, thecompany’s year-over-year operating income was down 43%. Our simple monthly average assets undermanagement for fiscal year 2009 were $442.2 billion, compared to $604.9 billion for fiscal year 2008.Diluted earnings per share for the year ended September 30, 2009 declined 42% to $3.87 from $6.67 inthe previous year. However, total shareholder return from October 1, 2008 to September 30, 2009 was16%, outpacing returns for the S&P 500 ® Index of -7% and the S&P 500 Financials Index of -24%.UNWAVERING FOCUS ON INVESTMENT EXCELLENCEAt a time when most investment management organizations and financial advisors were remindingclients of the importance of investing with a long-term perspective, Franklin Templeton was recognizedfor delivering on that philosophy. In Barron’s annual review of U.S.-registered mutual fund families,Franklin Templeton topped the performance rankings for the 10-year period ended December 2008, andwas named “King of the Decade.” 11