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LETTER TO STOCKHOLDERSAlthough we are never satisfied when our funds decline in value, we were able to manage through thisvolatile period with strong relative investment performance across all asset classes. For the fiscal yearended September 30, 2009, at least 85% of Franklin Templeton’s U.S.-registered long-term mutual fundassets were in funds ranked in the top two quartiles of their respective Lipper peer groups for total returnfor the one-, three-, five- and 10-year periods (based on Class A shares). 2Our investment teams remain true to their distinct disciplines and time-tested approaches, regardless ofshort-term market cycles. Our results reinforced the value of this conviction amid the uncertainty ofunprecedented events.During this period, investors focused on fixed-income products, and the Franklin Templeton Fixed IncomeGroup ® benefited from that trend. Our best selling fund for the year, both in the U.S. and internationally,was Templeton Global Bond Fund. Only recently have investors looked to diversify the fixed-incomeportion of their portfolios with an international component, a concept that has long been a mainstay ofglobal equity investing. Franklin Templeton has been able to capitalize on this growing investor interest.In addition, tax-free funds remain another important component of our fixed-income offerings. Oursecond most popular fund in the U.S. this year was Franklin Federal Tax-Free Income Fund.It was gratifying to see the three-year relative performance of our Templeton equity funds rebound duringthe year. At the end of fiscal year 2009, 92% of Templeton’s U.S.-registered long-term equity mutualfund assets ranked in the top two quartiles of their respective Lipper peer groups for the three-year timeperiod (Class A shares), compared to only 4% of these assets for the equivalent time period a year earlier. 2For the second consecutive year, Templeton Emerging Markets Investment Trust, a closed-end investmentfund registered in the United Kingdom, received the Investment Week “Investment Trust of the YearAward 2009” in the emerging markets category.This past year also marked the 60 th anniversary of the founding of Mutual Series and the launch of itsflagship Mutual Shares Fund on July 1, 1949. Mutual Series has held true to its rich legacy in deep valueinvesting, and all seven U.S.-registered mutual funds outperformed their respective benchmarks duringthe down market (Class A shares). 3Franklin’s U.S.-registered long-term equity mutual funds finished the fiscal year with 85% of their assetsranked in the top two quartiles of their respective Lipper peer groups for the one-year time period endedSeptember 30, 2009 (Class A shares). 2 Franklin Global Advisers remained focused on investment themesthat emphasized three criteria—growth, quality and valuation.Our global risk management group continued to support our investment teams with an integratedapproach to risk that relies on regular interaction between risk managers and investment professionals.This collaboration has been successful in cultivating awareness of potential investment pitfalls, as wellas supplementing research efforts.DEPTH & BREADTH OF OUR GLOBAL PRESENCEFranklin Templeton currently has offices in countries collectively representing 85% of the world’sGDP, with investors in over 150 countries. We continue to see value in developing and expanding ourglobal presence.2