printmgr file - Franklin Templeton Investments.

NOTICE TO READERThe enclosed semi-annual financial statements have not been reviewed by the external auditor of the Funds.August 2013Dear Investor,If you are a regular reader of the business pages or other types of financial reporting, you might notice that there are two popularways to characterize broad market movements. Firstly, there are “headline-driven” markets, where rises or declines are based onthe short-term news of the day. Secondly, there are “fundamentals-driven” markets, where it is the strength of individualcompanies that determine losses or gains.The first half of 2013 gave us a rare glimpse into both. For most of the six-month period, we saw measured advances in stocksworldwide. Our analysis suggests these advances in many cases were driven by fundamentals: companies with strong earnings,good balance sheets and sound management. Then, in June, the US Federal Reserve indicated that it would now look foropportunities to gradually decrease its bond purchases that have been largely behind the extremely low interest rates of the pastfew years.These comments were enough to cause a temporary spate of volatility across equity and fixed income markets. However, it isimportant to note that the suggested withdrawal of stimulus policy is actually good news. It means central bankers are beginning tosee signs that the US, and possibly global, economy may soon be strong enough to stand on its own.Diversification in actionYet markets reacted negatively, at least in the short term, helping to illustrate that headline-driven markets can often be irrational.These reactions have also helped generate variation in how different types of investments have performed so far this year. TheCanadian bond market, often seen as a safe haven, actually reported a rare decline. Japan, an unpopular equity market for sometime, was one of the strongest performers. The US stock market posted impressive returns as well.Canada stood out among other markets, as domestic equities reported a slight loss. However, these numbers don’t tell the wholestory: much of the decline can be attributed to global commodities weakness. In fact, many Canadian stocks did well and, likewise,many Canadian fund managers were able to deliver gains to investors.The past six months have helped us see the difference between markets based on fundamentals and those based on emotions,plus the importance of not being overly invested in just one type of asset. You can work with your investment advisor to ensure yourportfolio remains properly diversified and reflects investing decisions made on goals and principles, rather than popular sentiment. Iinvite you to make an appointment with your advisor to ensure your investments stay on track.Thank you for your continued investment, and I wish you all the best for the remainder of 2013.Sincerely,Donald F. ReedPresident and Chief Executive OfficerFranklin Templeton Investments Corp.Franklin Templeton Investments Funds

Table of ContentsFinancial StatementsPageTempleton Asian Growth Fund ............... 3Templeton Canadian Balanced Fund .......... 6Templeton Canadian Stock Fund ............. 13Templeton EAFE Developed Markets Fund ..... 16Templeton Emerging Markets Fund ........... 20Templeton Frontier Markets Fund ............ 24Templeton Global Balanced Fund ............ 28Templeton Global Bond Fund ................ 40Templeton Global Smaller Companies Fund ..... 55Templeton International Stock Fund ........... 59Franklin Bissett Canadian All Cap Balanced Fund(formerly Bissett Focus Balanced Fund) ...... 63Franklin Flex Cap Growth Fund .............. 68Franklin High Income Fund ................. 73Franklin Strategic Income Fund .............. 82Franklin U.S. Core Equity Fund .............. 108Franklin U.S. Rising Dividends Fund .......... 111Franklin World Growth Fund ................. 115PageBissett Canadian Balanced Fund ............. 130Bissett Canadian Dividend Fund .............. 133Bissett Canadian Equity Fund ................ 136Bissett Canadian High Dividend Fund ......... 139Bissett Canadian Short Term Bond Fund ....... 142Bissett Corporate Bond Fund ................ 150Bissett Dividend Income Fund ............... 159Bissett Microcap Fund ..................... 163Bissett Small Cap Fund ..................... 166Bissett Strategic Income Fund ............... 169Bissett U.S. Focus Fund .................... 177Mutual Beacon Fund ...................... 180Mutual Global Discovery Fund ............... 188Franklin Templeton Canadian Core EquityFund ................................. 197Franklin Templeton Canadian Large Cap Fund . . 201Franklin Templeton Money Market Fund ....... 204Franklin Templeton Treasury Bill Fund ......... 209Notes to Financial Statements ................... 213Bissett All Canadian Focus Fund ............. 118Bissett Bond Fund ........................ 1212 Franklin Templeton Investments Funds

Templeton Asian Growth FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 198,395 $ 311,987CashCanadian 395 2,620Foreign 57 500ReceivablesCapital units sold 128 —Dividends and withholding tax 875 217Other assets (Note 8) 2 —Total assets 199,852 315,324LiabilitiesPayablesCapital units redeemed 24,195 —Foreign capital taxes payable — 131Total liabilities 24,195 131Net assets $ 175,657 $ 315,193Total net assets per series (000s)Series O $175,657 $315,193Number of units outstanding (Note 3)Series O 18,061,168 33,003,719Net assets per unit — CADSeries O $9.72 $9.55Net assets per unit — USDSeries O $9.25 $9.62Cost of investments held (000s) $189,154 $295,078STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld(000s) — 2013 — $262; 2012 — $431) $ 3,578 $ 6,302Interest — —Total investment income 3,578 6,302ExpensesManagement fees (Note 4(a)) — —Transfer agent fees (Note 4(c)) — —Custodian fees — —Legal fees — —Audit fees 10 9Unitholder reporting costs 3 3Independent review committee fees 1 1Registration fees 31 14Other expenses (Note 7) 4 5Total expenses 49 32Expenses waived/paid by Manager (Note 6) (49) (32)Net expenses — —Net investment income (loss) 3,578 6,302Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 12,721 (1)Net realized and/or unrealized foreign exchangegain (loss) 48 180Net change in unrealized appreciation(depreciation) in value of investments (7,668) 10,931Transaction costs (Note 11) (342) (189)Net gain (loss) on investments 4,759 10,921Increase (decrease) in net assets from operations $ 8,337 $ 17,223Increase (decrease) in net assets from operationsper series (000s)Series O $8,337 $17,223Increase (decrease) in net assets from operationsper unitSeries O $0.32 $0.54The accompanying notes are an integral part of these financial statements.4 Franklin Templeton Investments Funds

Templeton Asian Growth FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)Series O2013 2012Increase (decrease) in net assets from operations $ 8,337 $ 17,223Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 6,151 137,519Reinvestments — 1,061Redemptions (154,024) (29,980)(147,873) 108,600Increase (decrease) in net assets for the period (139,536) 125,823Net assets — beginning of period 315,193 180,510Net assets — end of period $ 175,657 $ 306,333The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 5

Templeton Canadian Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 97.88%COMMON STOCKS: 72.09%Canada: 71.32%Bank of Montreal ........................ 29,097 $ 1,193 $ 1,777Bank of Nova Scotia ..................... 50,903 1,446 2,861Barrick Gold Corp. ....................... 32,900 1,008 544BCE Inc. . . ............................ 26,900 644 1,160Bell Aliant Inc. . . ........................ 43,943 1,351 1,240Bombardier Inc., B ...................... 556,500 2,520 2,599CAE Inc. . . ............................ 172,718 1,520 1,881Calfrac Well Services Ltd. .................. 41,900 1,112 1,270Canadian Imperial Bank of Commerce ........ 22,589 1,130 1,686Canadian Natural Resources Ltd. ............ 100,620 2,197 2,983Cascades Inc. . . ........................ 153,600 1,126 888Cenovus Energy Inc. ..................... 71,136 1,864 2,131Dorel Industries Inc., B ................... 34,300 1,067 1,258EnCana Corp. . . ........................ 97,136 2,891 1,727Genworth MI Canada Inc. .................. 71,400 1,357 1,749George Weston Ltd. ...................... 32,900 2,152 2,750HudBay Minerals Inc. .................... 130,000 1,299 904Husky Energy Inc. ....................... 104,000 3,146 2,912Kingsway Financial Services Inc. ............. 43,672 1,149 157Laurentian Bank of Canada ................ 45,600 1,374 1,991Loblaw Cos. Ltd. ........................ 29,600 1,108 1,406Magellan Aerospace Corp. ................. 258,388 3,346 1,137SharesAverageCost Fair Value(000s) (000s)Canada: 71.32% (Continued)Martinrea International Inc. .............. 55,600 $ 466 $ 603Mullen Group Ltd. .................... 24,100 307 547National Bank of Canada ............... 14,022 475 1,050Potash Corp. of Saskatchewan Inc. ........ 51,000 2,271 2,045QLT Inc. ........................... 40,961 158 188Royal Bank of Canada ................. 66,985 2,542 4,104Shawcor Ltd., A ...................... 23,470 400 966Sherritt International Corp. .............. 309,300 1,605 1,203Shoppers Drug Mart Corp. .............. 21,900 875 1,060Sun Life Financial Inc. ................. 64,037 1,841 1,985Suncor Energy Inc. .................... 52,700 1,647 1,633Talisman Energy Inc. .................. 261,990 3,358 3,139Teck Resources Ltd., B ................ 54,300 1,760 1,219The Toronto-Dominion Bank . . . .......... 46,436 1,896 3,922Valener Inc. ......................... 96,400 1,455 1,54457,056 62,219Zambia: 0.77%First Quantum Minerals Ltd. . . . .......... 43,371 951 676Total Common Stocks: .................. 58,007 62,895PREFERRED STOCKS: 2.18%Vale SA, American Depositary Receipt,Preferred, A ....................... 149,180 3,101 1,901Total Preferred Stocks: ................. 3,101 1,901Principal Amountin Currencyof IssueBONDS: 23.61%Canada: 20.42%407 International Inc., Senior Secured Bond, 6.47%, 7/27/2029 ....................................... 160,000 CAD $ 207 $ 204AltaLink Investments LPSenior Bond, 12-1, 3.674%, 6/5/2019 .......................................................... 86,000 CAD 86 86Senior Note, 13-1, 3.265%, 6/5/2020 .......................................................... 150,000 CAD 150 144Bank of Montreal, Senior Note, 4.609%, 9/10/2025 ................................................. 96,000 CAD 96 103Bank of Nova Scotia2.898% to 8/3/2017, Floating Rate Note thereafter, 8/3/2022 ........................................ 68,000 CAD 68 683.036% to 10/17/2019, Floating Rate Note thereafter, 10/18/2024 ................................... 105,000 CAD 105 103Senior Note, 2.242%, 3/22/2018 .............................................................. 135,000 CAD 135 132bcIMC Realty Corp., 5.65%, 1/5/2018 ............................................................ 68,000 CAD 68 76Bell Aliant Regional Communications LPSenior Note, 3.54%, 6/12/2020 ............................................................... 50,000 CAD 50 49Senior Note, 5.41%, 9/26/2016 ............................................................... 113,000 CAD 111 123Bow Centre Street LP, Secured Note, 3.797%, 6/13/2023 ............................................ 55,000 CAD 55 53British Columbia Municipal Finance Authority, 4.875%, 6/3/2019 ...................................... 308,000 CAD 333 343Caisse Centrale Desjardins du Quebec, Senior Note, 2.281%, 10/17/2016 ............................... 90,000 CAD 90 90Calloway Real Estate Investment TrustSenior Bond, 5.37%, 10/12/2016 .............................................................. 90,000 CAD 97 97Senior Note, I, 3.985%, 5/30/2023 ............................................................. 15,000 CAD 15 14The accompanying notes are an integral part of these financial statements.6 Franklin Templeton Investments Funds

Templeton Canadian Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 20.42% (Continued)Cameco Corp.Senior Bond, D, 5.67%, 9/2/2019 ................................................................ 57,000 CAD $ 59 $ 63Senior Bond, E, 3.75%, 11/14/2022 .............................................................. 129,000 CAD 129 121Canada Housing TrustSecured Bond, 4.10%, 12/15/2018 .............................................................. 74,000 CAD 82 81Senior Secured Bond, Floating Rate Note, 3/15/2017 ................................................ 378,000 CAD 380 381Canadian Imperial Bank of Commerce, 2.35%, 10/18/2017 ............................................. 70,000 CAD 70 69Canadian Natural Resources Ltd., 2.89%, 8/14/2020 .................................................. 75,000 CAD 75 73Capital Desjardins Inc.Senior Note, 3.797% to 11/23/2015, Floating Rate Note thereafter, 11/23/2020 ........................... 111,000 CAD 111 115Senior Note, 5.756% to 4/1/2014, Floating Rate Note thereafter, 4/1/2019 ............................... 120,000 CAD 120 123Senior Secured Note, G, 5.187%, 5/5/2020 ........................................................ 159,000 CAD 159 175CDP Financial Inc., Senior Note, 4.60%, 7/15/2020 ................................................... 177,000 CAD 187 194Centre Street Trust, Secured Note, A, 3.69%, 6/14/2021 ............................................... 121,000 CAD 121 116City of Montreal, 5.00%, 12/1/2018 ................................................................ 142,000 CAD 145 157City of Toronto Canada3.50%, 12/6/2021 ............................................................................ 115,000 CAD 117 1163.80%, 12/13/2042 ........................................................................... 221,000 CAD 220 2044.95%, 6/27/2018 ............................................................................ 208,000 CAD 234 231CU Inc.Senior Bond, 3.805%, 9/10/2042 ................................................................ 73,000 CAD 73 68Senior Note, 5.563%, 5/26/2028 ................................................................ 73,000 CAD 73 84Eagle Credit Card Trust, 102A, Senior Secured Note, 3.474%, 12/17/2015 ................................. 51,000 CAD 51 53Enbridge Inc., Floating Rate Note, 8/19/2015 ........................................................ 116,000 CAD 116 117Enbridge Income Fund Holdings Inc.3.94%, 1/13/2023 ............................................................................ 84,000 CAD 84 83Senior Note, 2.92%, 12/14/2017 ................................................................ 66,000 CAD 66 66Senior Note, Floating Rate Note, 11/28/2014 ....................................................... 110,000 CAD 110 110Fairfax Financial Holdings Ltd., 5.84%, 10/14/2022 ................................................... 128,000 CAD 133 132Financement Quebec, Floating Rate Note, 6/1/2018 ................................................... 320,000 CAD 323 322Finning International Inc, 3.232%, 7/3/2020 ......................................................... 45,000 CAD 45 44First Capital Realty Inc., Senior Bond, Q, 3.90%, 10/30/2023 ............................................ 190,000 CAD 191 182Fortisalberta Inc., 5.37%, 10/30/2039 .............................................................. 52,000 CAD 52 60Government of Canada4.00%, 6/1/2041 ............................................................................. 279,000 CAD 365 3375.00%, 6/1/2037 ............................................................................. 95,000 CAD 136 1295.75%, 6/1/2029 ............................................................................. 97,000 CAD 122 1345.75%, 6/1/2033 ............................................................................. 225,000 CAD 324 323Great-West Lifeco Finance Delaware, 5.691% to 6/21/2017, Floating Rate Note thereafter, 6/21/2067 ........... 181,000 CAD 182 199Great-West Lifeco Inc., Senior Bond, 6.67%, 3/21/2033 ................................................ 99,000 CAD 121 126Greater Toronto Airports Authority, Senior Secured Bond, First Lien, 7.05%, 6/12/2030 ....................... 65,000 CAD 91 86Home Capital Group Inc., 5.20%, 5/4/2016 .......................................................... 86,000 CAD 86 89HSBC Bank Canada2.572%, 11/23/2015 .......................................................................... 143,000 CAD 143 1453.558%, 10/4/2017 ........................................................................... 127,000 CAD 127 1313.86%, 5/21/2015 ............................................................................ 105,000 CAD 105 109Senior Note, 2.938%, 1/14/2020 ................................................................ 56,000 CAD 56 55Senior Note, Floating Rate Note, 1/21/2016 ........................................................ 64,000 CAD 64 64The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 7

Templeton Canadian Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 20.42% (Continued)Hydro-Quebec, HL, 11.00%, 8/15/2020 ........................................................... 262,000 CAD $ 419 $ 397Inter Pipeline FundSenior Note, 3.839%, 7/30/2018 ............................................................... 85,000 CAD 85 89Senior Note, 4.967%, 2/2/2021 ................................................................ 57,000 CAD 57 62Manitoba Telecom Services Inc., Senior Note, 4.59%, 10/1/2018 ....................................... 49,000 CAD 49 52Manulife Bank of Canada, Senior Note, Floating Rate Note, 12/3/2014 ................................... 56,000 CAD 56 56Manulife Financial Corp., Senior Note, 5.505%, 6/26/2018 ............................................ 127,000 CAD 117 141Maritimes and Northeast Pipeline LP, Senior Secured Note, 4.34%, 11/30/2019 ........................... 109,020 CAD 109 113Master Credit Card Trust, Secured Note, 12-1, 2.626%, 1/21/2017 ..................................... 98,000 CAD 98 99Merrill Lynch Financial Asset Inc.2004-CA12, A1, 4.743%, 3/12/2036 ........................................................... 29,741 CAD 30 302006-CA19, A2, 4.85%, 6/12/2039 ............................................................. 109,735 CAD 109 115National Housing Association1.70%, 8/1/2017 ........................................................................... 57,138 CAD 56 561.70%, 12/1/2017 .......................................................................... 98,008 CAD 97 952.30%, 6/1/2016 ........................................................................... 105,899 CAD 105 107Floating Rate Note, 3/1/2016 .................................................................. 117,506 CAD 117 120Floating Rate Note, 12/1/2016 ................................................................. 325,123 CAD 324 321Floating Rate Note, 3/1/2017 .................................................................. 307,227 CAD 306 302NBC Asset Trust, Junior Subordinated Bond, 7.235%, Perpetual ....................................... 60,000 CAD 73 71OMERS Realty Corp., 4.74%, 6/4/2018 ............................................................ 143,000 CAD 145 157Ontario Strategic Infrastructure Finance, 4.60%, 6/1/2015 ............................................ 468,000 CAD 474 493OPB Finance TrustSenior Bond, A, 3.89%, 7/4/2042 .............................................................. 68,000 CAD 68 63Senior Note, 2.90%, 5/24/2023 ................................................................ 135,000 CAD 135 129Province of British Columbia5.70%, 6/18/2029 .......................................................................... 195,000 CAD 255 2436.35%, 6/18/2031 .......................................................................... 140,000 CAD 192 187Province of Manitoba4.40%, 9/5/2025 ........................................................................... 403,000 CAD 404 4396.30%, 3/5/2031 ........................................................................... 174,000 CAD 207 230Province of New Brunswick3.55%, 6/3/2043 ........................................................................... 76,000 CAD 76 705.50%, 1/27/2034 .......................................................................... 443,000 CAD 479 535Province of Nova Scotia4.40%, 6/1/2042 ........................................................................... 132,000 CAD 146 1425.80%, 6/1/2033 ........................................................................... 139,000 CAD 181 174Province of Ontario2.85%, 6/2/2023 ........................................................................... 350,000 CAD 353 3364.20%, 3/8/2018 ........................................................................... 159,000 CAD 177 1724.65%, 6/2/2041 ........................................................................... 369,000 CAD 441 4144.70%, 6/2/2037 ........................................................................... 277,000 CAD 339 309Floating Rate Note, 9/22/2017 ................................................................. 335,000 CAD 336 335Floating Rate Note, 11/23/2017 ................................................................ 1,189,000 CAD 1,190 1,195Strip, 12/2/2022 ............................................................................ 152,000 CAD 112 109Province of Quebec, 6.25%, 6/1/2032 ............................................................ 416,000 CAD 505 541PSP Capital Inc., Senior Note, 2.26%, 2/16/2017 .................................................... 110,000 CAD 110 110RBC Capital Trust, 4.87% to 12/31/2015, Floating Rate Note thereafter, Perpetual ......................... 45,000 CAD 47 48The accompanying notes are an integral part of these financial statements.8 Franklin Templeton Investments Funds

Templeton Canadian Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 20.42% (Continued)Rogers Communications Inc.Senior Note, 5.34%, 3/22/2021 ................................................................. 174,000 CAD $ 174 $ 191Senior Note, 5.38%, 11/4/2019 ................................................................. 80,000 CAD 84 88Royal Bank of Canada5.95%, 6/18/2014 ............................................................................ 56,000 CAD 61 58Senior Note, 2.58%, 4/13/2017 ................................................................. 126,000 CAD 126 126Senior Note, 2.68%, 12/8/2016 ................................................................. 87,000 CAD 87 88Senior Note, 3.66%, 1/25/2017 ................................................................. 110,000 CAD 110 115Senior Note, 4.93%, 7/16/2025 ................................................................. 153,000 CAD 153 169Shoppers Drug Mart Corp., 5.19%, 1/20/2014 ....................................................... 58,000 CAD 58 59Spy Hill Power LP, Secured Note, 4.14%, 3/31/2036 .................................................. 67,576 CAD 68 64Sun Life Capital Trust, Senior Bond, 5.863%, 12/31/2108 .............................................. 95,000 CAD 108 107Sun Life Financial Inc., Senior Bond, 4.95% to 6/1/2016, Floating Rate Note thereafter, 6/1/2036 ............... 134,000 CAD 139 142Suncor Energy Inc., 5.80%, 5/22/2018 ............................................................. 91,000 CAD 91 103Terasen Gas Inc.Senior Bond, 6.05%, 2/15/2038 ................................................................. 46,000 CAD 46 56Senior Note, 5.80%, 5/13/2038 ................................................................. 40,000 CAD 40 49The Toronto-Dominion BankSubordinated Note, 5.48% to 4/2/2015, Floating Rate Note thereafter, 4/2/2020 .......................... 117,000 CAD 118 124Subordinated Note, 5.763% to 12/18/2017, Floating Rate Note thereafter, 12/18/2106 ..................... 266,000 CAD 259 298TransCanada PipeLines Ltd., Senior Bond, 8.05%, 2/17/2039 ........................................... 34,000 CAD 35 51Union Gas Ltd., Senior Bond, 3.79%, 7/10/2023 ...................................................... 55,000 CAD 55 55Westcoast Energy Inc., Senior Note, 4.57%, 7/2/2020 ................................................. 59,000 CAD 59 6417,564 17,816United States: 1.66%American International Group Inc., Senior Note, 4.90%, 6/2/2014 ........................................ 99,000 CAD 97 102Aon Finance NS1 ULC, Senior Note, 4.76%, 3/8/2018 ................................................. 67,000 CAD 67 71BAC Canada Finance Co., Senior Note, Floating Rate Note, 2/21/2014 .................................... 86,000 CAD 86 86Bank of America Corp., 4.36%, 9/21/2015 .......................................................... 153,000 CAD 151 160GE Capital Canada Funding Co.4.40%, 2/8/2018 ............................................................................. 83,000 CAD 83 895.73%, 10/22/2037 ........................................................................... 130,000 CAD 128 151Senior Note, Floating Rate Note, 6/11/2014 ........................................................ 54,000 CAD 54 54JPMorgan Chase & Co., Senior Note, 2.92%, 9/19/2017 ................................................ 98,000 CAD 98 97Metropolitan Life Global Funding I2.624%, 4/10/2015 ........................................................................... 178,000 CAD 178 1794.45%, 11/8/2013 ............................................................................ 99,000 CAD 98 100Morgan Stanley, Senior Note, 4.85%, 2/3/2016 ....................................................... 57,000 CAD 57 60The Goldman Sachs Group Inc., Senior Note, 3.375%, 2/1/2018 ......................................... 72,000 CAD 72 72Wells Fargo Financial Canada Corp.Senior Note, 2.774%, 2/9/2017 ................................................................. 97,000 CAD 97 98Senior Note, 3.46%, 1/24/2023 ................................................................. 135,000 CAD 135 1301,401 1,449United Kingdom: 0.56%BP Capital Markets PLC, 2.744%, 2/24/2017 ........................................................ 125,000 CAD 125 126Heathrow Funding Ltd., Secured Note, 4.00%, 7/3/2019 ............................................... 61,000 CAD 60 62The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 9

Templeton Canadian Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United Kingdom: 0.56% (Continued)HSBC Bank Canada, 2.901%, 1/13/2017 .......................................................... 108,000 CAD $ 108 $ 110Network Rail Infrastructure Finance PLC, 4.40%, 3/6/2016 ............................................ 183,000 CAD 184 192477 490Supranational: 0.36%Inter-American Development Bank, 4.40%, 1/26/2026 ............................................... 297,000 CAD 290 313France: 0.28%Government of France, 4.45%, 10/26/2018 ........................................................ 230,000 CAD 230 246Netherlands: 0.19%Bank Nederlandse Gemeenten NV, Senior Bond, 4.55%, 2/15/2019 .................................... 152,000 CAD 151 163Australia: 0.10%BHP Billiton Finance Ltd., 3.23%, 5/15/2023 ....................................................... 90,000 CAD 90 84South Korea: 0.04%Korea Gas Corp., Senior Note, 4.58%, 5/12/2016 ................................................... 36,000 CAD 36 38Total Bonds: ................................................................................. 20,239 20,599Total Long-Term Investments: .................................................................... 81,347 85,395SHORT-TERM SECURITIES: 1.61%Royal Bank of Canada, Term Deposit, 0.97%, 7/2/2013 .............................................. 1,400,000 CAD 1,400 1,400Total Short-Term Securities: ..................................................................... 1,400 1,400Transaction costs (Note 2) ....................................................................... (52) —TOTAL INVESTMENTS: 99.49% .................................................................. $82,695 86,795OTHER ASSETS, less liabilities: 0.51% ............................................................ 446TOTAL NET ASSETS: 100.00% ..................................................................... $87,241Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................ 5.60 6.58AA ................................. 7.58 8.44A .................................. 7.63 8.32BBB ............................... 2.74 2.70Not Rated ........................... 0.06 —* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’s andFitch ratings.The accompanying notes are an integral part of these financial statements.10 Franklin Templeton Investments Funds

Templeton Canadian Balanced FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 86,795 $ 97,528CashCanadian 98 120Foreign 1 —ReceivablesInvestment securities sold 446 —Dividends and interest 586 460Other assets (Note 8) 38 35Total assets 87,964 98,143LiabilitiesPayablesInvestment securities purchased 423 —Capital units redeemed 73 52Management fees 139 154Accrued expenses 79 104Distributions to unitholders 9 —Total liabilities 723 310Net assets $ 87,241 $ 97,833Total net assets per series (000s)Series A $66,000 $74,607Series F 13,974 15,321Series O 6,005 6,386Series T 1,262 1,519Number of units outstanding (Note 3)Series A 7,856,473 8,820,278Series F 1,449,618 1,587,241Series O 553,622 592,338Series T 186,311 213,913Net assets per unit — CADSeries A $8.40 $8.45Series F 9.64 9.65Series O 10.84 10.78Series T 6.77 7.11Cost of investments held (000s) $82,695 $90,564STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld(000s) — 2013 — $10; 2012 — $10) $ 1,214 $ 1,338Interest 441 605Total investment income 1,655 1,943ExpensesManagement fees (Note 4(a)) 891 1,050Transfer agent fees (Note 4(c)) 285 331Custodian fees 4 7Legal fees 1 1Audit fees 10 10Unitholder reporting costs 10 10Independent review committee fees 1 1Registration fees 12 12Other expenses (Note 7) 40 62Total expenses 1,254 1,484Expenses waived/paid by Manager (Note 6) (205) (244)Net expenses 1,049 1,240Net investment income (loss) 606 703Realized and unrealized gain (loss) on investmentsand transaction costsNet realized gain (loss) on investments 1,967 3,747Net realized and/or unrealized foreign exchange gain(loss) (1) (10)Net change in unrealized appreciation (depreciation)in value of investments (2,864) (6,354)Transaction costs (Note 11) (17) (19)Net gain (loss) on investments (915) (2,636)Increase (decrease) in net assets from operations $ (309) $ (1,933)Increase (decrease) in net assets from operationsper series (000s)Series A $(353) $(1,625)Series F 4 (235)Series O 45 (36)Series T (5) (37)Increase (decrease) in net assets from operationsper unitSeries A $(0.04) $(0.16)Series F —** (0.13)Series O 0.08 (0.05)Series T (0.03) (0.12)** Amount rounded to zero in two decimal places.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 11

Templeton Canadian Balanced FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ (309) $ (1,933) $ (353) $ (1,625) $ 4 $ (235)Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital (55) (96) — — — —(55) (96) — — — —Capital unit transactionsSubscriptions 2,192 3,773 2,052 3,394 87 117Reinvestments 20 28 — — — —Redemptions (12,440) (15,498) (10,306) (12,361) (1,438) (1,606)(10,228) (11,697) (8,254) (8,967) (1,351) (1,489)Increase (decrease) in net assets for the period (10,592) (13,726) (8,607) (10,592) (1,347) (1,724)Net assets — beginning of period 97,833 114,985 74,607 87,952 15,321 17,447Net assets — end of period $ 87,241 $ 101,259 $ 66,000 $ 77,360 $ 13,974 $ 15,723Series OSeries T2013 2012 2013 2012Increase (decrease) in net assets from operations $ 45 $ (36) $ (5) $ (37)Distributions to unitholdersFrom net investment income — — — —From capital gains — — — —From return of capital — — (55) (96)— — (55) (96)Capital unit transactionsSubscriptions 43 185 10 77Reinvestments — — 20 28Redemptions (469) (948) (227) (583)(426) (763) (197) (478)Increase (decrease) in net assets for the period (381) (799) (257) (611)Net assets — beginning of period 6,386 6,954 1,519 2,632Net assets — end of period $ 6,005 $ 6,155 $ 1,262 $ 2,021The accompanying notes are an integral part of these financial statements.12 Franklin Templeton Investments Funds

Templeton Canadian Stock FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 99.00%COMMON STOCKS: 96.08%Commercial Banks: 25.89%Bank of Montreal ........................ 34,164 $ 1,144 $ 2,086Bank of Nova Scotia ..................... 61,659 1,067 3,465Canadian Imperial Bank of Commerce ........ 27,350 1,159 2,041Laurentian Bank of Canada ................ 50,400 1,196 2,200National Bank of Canada .................. 19,726 563 1,478Royal Bank of Canada .................... 74,486 1,646 4,564The Toronto-Dominion Bank ................ 55,566 1,904 4,6938,679 20,527Oil, Gas & Consumable Fuels: 23.51%Canadian Natural Resources Ltd. ............ 117,312 656 3,478Cenovus Energy Inc. ..................... 95,230 2,166 2,853EnCana Corp. . . ........................ 133,570 3,534 2,375Husky Energy Inc. ...................... 126,500 3,892 3,542Suncor Energy Inc. ...................... 64,200 2,004 1,990Talisman Energy Inc. .................... 367,200 1,960 4,39914,212 18,637Aerospace & Defense: 8.51%Bombardier Inc., B ...................... 678,200 3,008 3,167CAE Inc. . ............................ 180,178 1,483 1,962Magellan Aerospace Corp. ................. 367,350 6,683 1,61711,174 6,746Food & Staples Retailing: 7.99%George Weston Ltd. ..................... 39,820 2,762 3,329Loblaw Cos. Ltd. ........................ 36,300 1,413 1,724Shoppers Drug Mart Corp. ................. 26,500 1,059 1,2835,234 6,336Metals & Mining: 7.44%Barrick Gold Corp. ...................... 57,200 1,588 946First Quantum Minerals Ltd. ............... 51,700 1,095 806HudBay Minerals Inc. .................... 188,900 1,746 1,313Sherritt International Corp. ................ 347,200 1,767 1,351Teck Resources Ltd., B ................... 66,100 2,111 1,4848,307 5,900Energy Equipment & Services: 3.80%Calfrac Well Services Ltd. ................. 37,500 996 1,137Mullen Group Ltd. ...................... 24,310 310 551Shawcor Ltd., A . ........................ 32,100 494 1,3211,800 3,009Diversified Telecommunication Services: 3.44%BCE Inc. . ............................ 28,240 678 1,218Bell Aliant Inc. . . ........................ 53,479 1,578 1,5082,256 2,726SharesAverageCost Fair Value(000s) (000s)Insurance: 3.26%Kingsway Financial Services Inc. ...... 72,004 $ 1,933 $ 259Sun Life Financial Inc. ............. 75,126 1,566 2,3293,499 2,588Chemicals: 3.13%Potash Corp. of Saskatchewan Inc. .... 61,900 2,721 2,482Thrifts & Mortgage Finance: 2.54%Genworth MI Canada Inc. ........... 82,100 1,560 2,011Gas Utilities: 2.32%Valener Inc. ..................... 114,900 1,754 1,841Household Durables: 1.92%Dorel Industries Inc., B ............. 41,600 1,255 1,525Containers & Packaging: 1.42%Cascades Inc. ................... 194,900 1,457 1,127Auto Components: 0.69%Martinrea International Inc. . . ........ 50,600 425 549Biotechnology: 0.22%QLT Inc. ....................... 37,489 144 172Total Common Stocks: .............. 64,477 76,176PREFERRED STOCKS: 2.92%Vale SA, American Depositary Receipt,Preferred, A ................... 181,520 3,674 2,313Total Preferred Stocks: .............. 3,674 2,313Total Long-Term Investments: ......... 68,151 78,489Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 0.50%Royal Bank of Canada, Term Deposit,0.97%, 7/2/2013 ............... 400,000 CAD 400 400Total Short-Term Securities: .......... 400 400Transaction costs (Note 2) ........... (131) —TOTAL INVESTMENTS: 99.50% ........ $68,420 78,889OTHER ASSETS, less liabilities: 0.50% .. 396TOTAL NET ASSETS: 100.00% ........ $79,285The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 13

Templeton Canadian Stock FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 78,889 $ 88,114CashCanadian 162 216ReceivablesInvestment securities sold 38 —Capital units sold 3 5Dividends 467 313Other assets (Note 8) 30 29Total assets 79,589 88,677LiabilitiesPayablesCapital units redeemed 89 126Management fees 134 147Accrued expenses 81 109Total liabilities 304 382Net assets $ 79,285 $ 88,295Total net assets per series (000s)Series A $71,481 $79,642Series F 922 1,187Series O 6,882 7,466Number of units outstanding (Note 3)Series A 5,981,956 6,618,217Series F 66,455 85,483Series O 413,841 451,887Net assets per unit — CADSeries A $11.95 $12.03Series F 13.87 13.89Series O 16.63 16.52Cost of investments held (000s) $68,420 $74,605STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld(000s) — 2013 — $13; 2012 — $14) $ 1,477 $ 1,662Interest 2 3Total investment income 1,479 1,665ExpensesManagement fees (Note 4(a)) 858 999Transfer agent fees (Note 4(c)) 322 383Custodian fees 3 6Legal fees — —Audit fees 10 10Unitholder reporting costs 11 5Independent review committee fees 1 1Registration fees 11 11Other expenses (Note 7) 34 47Total expenses 1,250 1,462Expenses waived/paid by Manager (Note 6) (211) (247)Net expenses 1,039 1,215Net investment income (loss) 440 450Realized and unrealized gain (loss) on investmentsand transaction costsNet realized gain (loss) on investments 2,313 4,106Net realized and/or unrealized foreign exchange gain(loss) (1) (11)Net change in unrealized appreciation (depreciation)in value of investments (3,040) (7,389)Transaction costs (Note 11) (24) (18)Net gain (loss) on investments (752) (3,312)Increase (decrease) in net assets from operations $ (312) $ (2,862)Increase (decrease) in net assets from operationsper series (000s)Series A $(393) $(2,693)Series F 6 (34)Series O 75 (135)Increase (decrease) in net assets from operationsper unitSeries A $(0.06) $(0.35)Series F 0.07 (0.37)Series O 0.17 (0.26)The accompanying notes are an integral part of these financial statements.14 Franklin Templeton Investments Funds

Templeton Canadian Stock FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ (312) $ (2,862) $ (393) $ (2,693) $ 6 $ (34)Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 1,489 1,671 1,017 1,275 17 51Reinvestments — — — — — —Redemptions (10,187) (12,486) (8,785) (11,348) (288) (50)(8,698) (10,815) (7,768) (10,073) (271) 1Increase (decrease) in net assets for the period (9,010) (13,677) (8,161) (12,766) (265) (33)Net assets — beginning of period 88,295 103,865 79,642 94,366 1,187 1,218Net assets — end of period $ 79,285 $ 90,188 $ 71,481 $ 81,600 $ 922 $ 1,185Series O2013 2012Increase (decrease) in net assets from operations $ 75 $ (135)Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 455 345Reinvestments — —Redemptions (1,114) (1,088)(659) (743)Increase (decrease) in net assets for the period (584) (878)Net assets — beginning of period 7,466 8,281Net assets — end of period $ 6,882 $ 7,403The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 15

Templeton EAFE Developed Markets FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 96.35%COMMON STOCKS: 96.35%United Kingdom: 17.24%Aviva PLC . . ........................ 874,559 $ 6,924 $ 4,749BPPLC............................ 672,548 6,298 4,896GlaxoSmithKline PLC . . ................ 104,543 2,756 2,755HSBC Holdings PLC ................... 357,330 4,965 3,933International Consolidated AirlinesGroup SA ........................ 1,403,540 3,616 5,918Kingfisher PLC . ...................... 500,456 2,311 2,745Lloyds Banking Group PLC .............. 7,641,690 4,994 7,711Marks & Spencer Group PLC ............ 651,700 3,693 4,488Rexam PLC . ........................ 215,055 1,354 1,641Royal Dutch Shell PLC, B ............... 140,343 5,143 4,882Royal Dutch Shell PLC, A ............... 7,994 47 268Tesco PLC . . ........................ 796,740 4,207 4,222Vodafone Group PLC . . ................ 1,740,687 5,242 5,22851,550 53,436France: 12.04%AXASA............................ 323,479 6,676 6,680BNP Paribas SA ..................... 68,940 2,880 3,960Cie Generale des Etablissements Michelin, B . . . 62,329 4,260 5,858Compagnie de Saint-Gobain ............. 67,490 2,607 2,872Credit Agricole SA .................... 475,110 4,943 4,290Ipsen SA . . . ........................ 64,510 1,998 2,503Sanofi ............................. 40,686 3,238 4,430Total SA, B . ........................ 104,278 6,358 5,347Vivendi SA . . ........................ 68,520 1,516 1,36334,476 37,303Germany: 11.57%Bayer AG . . ........................ 57,430 3,937 6,437Deutsche Lufthansa AG ................ 219,520 3,343 4,680HeidelbergCement AG . ................ 63,950 3,383 4,525Kloeckner & Co. SE ................... 347,080 5,027 3,882Merck KGaA ........................ 39,580 4,367 6,326Muenchener Rueckversicherungs-GesellschaftAG ............................. 5,160 729 999SAPAG............................ 36,790 1,906 2,828Siemens AG ........................ 58,210 5,691 6,18728,383 35,864Japan: 11.48%ITOCHU Corp. . ...................... 483,940 4,927 5,873Konica Minolta Inc. ................... 547,500 4,773 4,335Mazda Motor Corp. ................... 1,519,800 3,081 6,299Nissan Motor Co. Ltd. . . ................ 377,000 3,455 4,012Suntory Beverage & Food Ltd. ............ 83,000 2,763 2,727Toyota Motor Corp. ................... 117,700 4,437 7,473Trend Micro Inc. ..................... 146,000 4,434 4,86727,870 35,586SharesAverageCost Fair Value(000s) (000s)Switzerland: 8.35%Adecco SA ......................... 62,800 $ 2,559 $ 3,704Credit Suisse Group AG ................ 194,920 4,991 5,433Novartis AG ......................... 49,200 2,917 3,613Roche Holding AG .................... 24,490 3,801 6,398Swiss Re AG ........................ 22,040 1,481 1,724UBSAG ........................... 279,561 6,491 5,00222,240 25,874Netherlands: 8.19%Akzo Nobel NV ...................... 61,169 3,149 3,626ING Groep NV, International DepositoryReceipt .......................... 657,094 6,404 6,294Koninklijke Philips NV ................. 76,455 2,092 2,190Randstad Holding NV .................. 103,011 3,487 4,441Reed Elsevier NV ..................... 132,580 1,581 2,321TNT Express NV ..................... 465,612 3,599 3,672Unilever NV, International DepositoryReceipt .......................... 68,918 2,156 2,85322,468 25,397Singapore: 4.34%DBS Group Holdings Ltd. ............... 287,490 2,557 3,697Flextronics International Ltd. ............. 515,570 4,171 4,190Singapore Telecommunications Ltd. ....... 1,784,720 4,531 5,56711,259 13,454Italy: 4.34%EniSpA............................ 199,097 4,831 4,280Intesa Sanpaolo SpA .................. 2,134,708 6,685 3,564Telecom Italia SpA .................... 3,991,447 3,875 2,323UniCredit SpA ....................... 666,054 6,893 3,27022,284 13,437Hong Kong: 4.03%AIA Group Ltd. ...................... 1,222,800 3,713 5,429Cheung Kong (Holdings) Ltd. ............ 289,000 3,911 4,109Haier Electronics Group Co. Ltd. .......... 1,765,000 2,262 2,9579,886 12,495Ireland: 3.12%CRHPLC .......................... 191,447 3,789 4,093Elan Corp. PLC, American DepositaryReceipt .......................... 374,360 3,314 5,5617,103 9,654China: 2.53%China Life Insurance Co. Ltd., H .......... 1,484,000 4,197 3,693China Telecom Corp. Ltd., H ............. 5,798,000 3,475 2,900Shanghai Pharmaceuticals Holding Co.Ltd., H .......................... 630,100 1,287 1,2378,959 7,830The accompanying notes are an integral part of these financial statements.16 Franklin Templeton Investments Funds

Templeton EAFE Developed Markets FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Norway: 2.37%Statoil ASA .................... 189,490 $ 4,663 $ 4,107Telenor ASA . . . ................ 155,880 1,976 3,2496,639 7,356Sweden: 2.19%Ericsson, B .................... 129,710 1,299 1,544Getinge AB, B . . ................ 119,970 3,603 3,833Oriflame Cosmetics SA, SDR ....... 42,380 1,581 1,4116,483 6,788Portugal: 2.16%Galp Energia SGPS SA, B .......... 280,000 4,466 4,359Portugal Telecom SGPS SA ........ 574,211 4,079 2,3498,545 6,708Spain: 1.32%Telefonica SA . . ................ 303,526 5,330 4,077Austria: 0.56%Wienerberger AG ................ 144,210 1,486 1,727Australia: 0.52%Bluescope Steel Ltd. ............. 360,628 1,445 1,616Total Common Stocks: ............ 276,406 298,602Total Long-Term Investments: ....... 276,406 298,602Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 4.16%Bank of Montreal, Term Deposit,0.90%, 7/2/2013 .............. 12,900,000 CAD 12,900 12,900Total Short-Term Securities: ........ 12,900 12,900Transaction costs (Note 2) ........... (586) —TOTAL INVESTMENTS: 100.51% ..... $288,720 311,502OTHER ASSETS, less liabilities:(0.51%) ...................... (1,573)TOTAL NET ASSETS: 100.00% ...... $309,929The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 17

Templeton EAFE Developed Markets FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 311,502 $ 313,012CashCanadian 128 90Foreign 16 —ReceivablesCapital units sold — 3Dividends and withholding tax 1,406 1,079Other assets (Note 8) 30 21Total assets 313,082 314,205LiabilitiesPayablesInvestment securities purchased 2,766 —Capital units redeemed 331 14Management fees 10 9Accrued expenses 46 60Total liabilities 3,153 83Net assets $ 309,929 $ 314,122Total net assets per series (000s)Series A $4,149 $4,172Series F 2,465 2,141Series O 303,315 307,809Number of units outstanding (Note 3)Series A 579,807 641,431Series F 298,862 287,322Series O 30,065,093 34,037,926Net assets per unit — CADSeries A $7.15 $6.51Series F 8.25 7.45Series O 10.09 9.05Net assets per unit — USDSeries A $6.80 $6.55Series F 7.85 7.50Series O 9.60 9.11Cost of investments held (000s) $288,720 $318,866STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $623; 2012 — $805) $ 5,235 $ 6,716Interest 27 63Total investment income 5,262 6,779ExpensesManagement fees (Note 4(a)) 59 63Transfer agent fees (Note 4(c)) 31 39Custodian fees 9 11Legal fees — —Audit fees 10 9Unitholder reporting costs 6 5Independent review committee fees 1 1Registration fees 10 10Other expenses (Note 7) 60 80Total expenses 186 218Expenses waived/paid by Manager (Note 6) (109) (137)Net expenses 77 81Net investment income (loss) 5,185 6,698Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 430 (3,429)Net realized and/or unrealized foreign exchangegain (loss) 114 14Net change in unrealized appreciation(depreciation) in value of investments 28,636 403Transaction costs (Note 11) (119) (97)Net gain (loss) on investments 29,061 (3,109)Increase (decrease) in net assets from operations $ 34,246 $ 3,589Increase (decrease) in net assets from operationsper series (000s)Series A $393 $69Series F 226 32Series O 33,627 3,488Increase (decrease) in net assets from operationsper unitSeries A $0.66 $0.08Series F 0.81 0.11Series O 1.08 0.11The accompanying notes are an integral part of these financial statements.18 Franklin Templeton Investments Funds

Templeton EAFE Developed Markets FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 34,246 $ 3,589 $ 393 $ 69 $ 226 $ 32Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 12,280 56,435 533 111 268 12Reinvestments — — — — — —Redemptions (50,719) (39,264) (949) (836) (170) (119)(38,439) 17,171 (416) (725) 98 (107)Increase (decrease) in net assets for the period (4,193) 20,760 (23) (656) 324 (75)Net assets — beginning of period 314,122 247,634 4,172 4,909 2,141 2,049Net assets — end of period $ 309,929 $ 268,394 $ 4,149 $ 4,253 $ 2,465 $ 1,974Series O2013 2012Increase (decrease) in net assets from operations $ 33,627 $ 3,488Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 11,479 56,312Reinvestments — —Redemptions (49,600) (38,309)(38,121) 18,003Increase (decrease) in net assets for the period (4,494) 21,491Net assets — beginning of period 307,809 240,676Net assets — end of period $ 303,315 $ 262,167The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 19

Templeton Emerging Markets FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 98.23%COMMON STOCKS: 87.87%China: 21.10%Bank of China Ltd., H ................ 6,652,100 $ 3,514 $ 2,858Brilliance China Automotive Holdings Ltd. . . 4,064,000 4,645 4,776China Construction Bank Corp., H . . . ..... 1,979,980 1,477 1,471China Mobile Ltd. ................... 489,000 5,291 5,379China Petroleum and Chemical Corp., H . . . 6,128,200 4,487 4,527CNOOC Ltd. ....................... 1,779,000 2,667 3,169COSCO Pacific Ltd. . ................. 5,089,508 8,523 6,892Guangzhou Automobile Group Co. Ltd., H . . 5,136,000 4,556 5,096Industrial and Commercial Bank of ChinaLtd., H ......................... 4,707,730 3,366 3,114PetroChina Co. Ltd., H ................ 5,348,000 6,584 5,981Shanghai Prime Machinery Co. Ltd., H . . . . 21,228,000 5,370 2,504Shenzhen Chiwan Wharf Holdings Ltd., B . . 2,143,368 3,992 3,423Sinotrans Ltd., H .................... 13,184,000 3,798 2,574Sohu.com Inc. ...................... 5,500 224 356Travelsky Technology Ltd., H ........... 9,899,000 5,417 6,575Uni-President China Holdings Ltd. . . . . . . . 5,094,000 4,712 5,44168,623 64,136Indonesia: 9.94%PT Astra International Tbk ............. 2,178,000 880 1,604PT Bank Central Asia Tbk .............. 5,347,500 3,019 5,551PT Bank Danamon Indonesia Tbk . . . ..... 13,269,887 6,993 8,153PT Bank Rakyat Indonesia (Persero) Tbk . . . 3,247,500 2,850 2,649PT Indo Tambangraya Megah Tbk . . . . . . . 533,000 1,972 1,544PT Indofood Sukses Makmur Tbk . . . ..... 6,411,000 4,056 4,890PT Semen Indonesia (Persero) Tbk . . . . . . . 1,488,500 1,562 2,649PT United Tractors Tbk ............... 1,715,000 3,738 3,17925,070 30,219South Korea: 8.87%Hite Jinro Co. Ltd. ................... 181,066 4,594 5,166Hyundai Development Co. ............. 201,640 5,418 4,611POSCO . .......................... 9,987 3,723 2,743Samsung Electronics Co. Ltd. ........... 9,015 6,895 11,126SK Innovation Co. Ltd. ................ 26,721 3,472 3,32024,102 26,966India: 8.57%Bajaj Holdings and Investment Ltd. . . . . . . . 327,096 5,742 4,582Infosys Ltd. . . . ..................... 108,100 5,049 4,751Reliance Industries Ltd. ............... 109,351 2,595 1,657Sesa Goa Ltd. ...................... 700,160 3,410 1,775Tata Chemicals Ltd. . ................. 1,015,205 6,083 4,842Tata Consultancy Services Ltd. . . . . . ..... 236,328 5,399 6,340Tata Investment Corp. Ltd. ............. 289,750 2,785 2,10331,063 26,050SharesAverageCost Fair Value(000s) (000s)Russia: 6.93%Gazprom, American Depositary Receipt .... 47,200 $ 451 $ 326Gazprom, American Depositary Receipt .... 634,970 8,812 4,391LUKOIL Holdings, American DepositaryReceipt ......................... 80,746 3,663 4,871LUKOIL Holdings, American DepositaryReceipt ......................... 23,517 1,308 1,418Mining and Metallurgical Co. Norilsk Nickel,American Depositary Receipt ......... 202,524 3,928 3,067Sberbank of Russia .................. 1,327,700 3,448 3,984X5 Retail Group NV, Global DepositaryReceipt ......................... 157,722 3,127 3,00124,737 21,058Thailand: 5.88%Banpu PCL, Foreign Traded Security . . .... 202,500 3,459 1,648Hana Microelectronics PCL, Foreign TradedSecurity ........................ 2,485,700 1,887 1,628PTT PCL, Foreign Traded Security ........ 337,600 2,633 3,818Shin Corp. PCL, Foreign Traded Security . . . 705,650 912 1,787Siam Commercial Bank PCL, Foreign TradedSecurity ........................ 525,400 1,337 3,051Thai Beverage PCL .................. 12,120,000 5,833 5,93316,061 17,865Singapore: 5.36%CapitaMall Trust .................... 2,026,000 3,584 3,345K-REIT Asia ........................ 3,047,660 3,605 3,262Keppel Corp. Ltd. .................... 926,800 6,373 7,996Rickmers Maritime .................. 7,572,000 3,531 1,69617,093 16,299Taiwan: 5.18%HTC Corp. ......................... 258,450 3,963 2,167President Chain Store Corp. ............ 217,401 450 1,495Taiwan Semiconductor Manufacturing Co.Ltd. ........................... 1,597,946 3,022 6,166Uni-President Enterprises Corp. ......... 2,889,440 3,190 5,90910,625 15,737Brazil: 4.64%Companhia de Bebidas das Americas(AmBev) ........................ 145,682 3,511 5,655Itau Unibanco Holding SA, AmericanDepositary Receipt ................ 623,102 10,828 8,45114,339 14,106Hong Kong: 2.69%Amvig Holdings Ltd. .................. 5,856,000 3,521 2,373Dairy Farm International Holdings Ltd. . .... 334,327 621 4,218Luk Fook Holdings (International) Ltd. . .... 652,000 1,682 1,5915,824 8,182The accompanying notes are an integral part of these financial statements.20 Franklin Templeton Investments Funds

Templeton Emerging Markets FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Mexico: 1.65%Kimberly Clark de Mexico SAB de CV, A .... 448,400 $ 884 $ 1,530Wal-Mart de Mexico SAB de CV, V ......... 1,182,800 3,570 3,4834,454 5,013Turkey: 1.34%Akbank TAS ........................ 697,790 2,728 2,960Tupras-Turkiye Petrol Rafinerileri AS ....... 43,640 719 1,1183,447 4,078Chile: 1.26%Cia Cervecerias Unidas SA, AmericanDepositary Receipt . . ................ 128,075 3,675 3,844Switzerland: 1.21%Compagnie Financiere Richemont SA ...... 39,547 3,523 3,677Malaysia: 0.97%Airasia Bhd. ........................ 2,830,600 2,744 2,967Hungary: 0.90%Egis Pharmaceuticals PLC .............. 26,844 3,241 2,729United Kingdom: 0.84%Anglo American PLC . . ................ 125,763 4,260 2,566South Africa: 0.54%Tiger Brands Ltd. ..................... 52,310 1,691 1,630Total Common Stocks: .................. 264,572 267,122SharesAverageCost Fair Value(000s) (000s)PREFERRED STOCKS: 10.36%Banco Bradesco SA, AmericanDepositary Receipt, Preferred ..... 582,195 $ 7,925 $ 7,957Embotelladora Andina SA,Preferred, A . ................. 1,248,770 5,298 5,802Petroleo Brasileiro SA, AmericanDepositary Receipt, Preferred ..... 374,304 10,728 5,757Sberbank of Russia, Preferred ....... 798,855 1,999 1,790Vale SA, American Depositary Receipt,Preferred, A . ................. 799,100 16,323 10,182Total Preferred Stocks: ............ 42,273 31,488Total Long-Term Investments: ........ 306,845 298,610Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 0.66%Royal Bank of Canada, Term Deposit,0.97%, 7/2/2013 .............. 2,000,000 CAD 2,000 2,000Total Short-Term Securities: ......... 2,000 2,000Transaction costs (Note 2) ............ (683) —TOTAL INVESTMENTS: 98.89% ...... $308,162 300,610OTHER ASSETS, lessliabilities: 1.11% ................ 3,361TOTAL NET ASSETS: 100.00% ....... $303,971The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 21

Templeton Emerging Markets FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 300,610 $ 370,111CashCanadian 23 32Foreign 1,083 —ReceivablesInvestment securities sold 3,098 9Capital units sold 614 37Dividends, interest and withholding tax 2,069 632Other assets (Note 8) 95 68Total assets 307,592 370,889LiabilitiesPayablesInvestment securities purchased 2,577 5,329Capital units redeemed 282 239Management fees 572 602Foreign capital taxes payable — 5Accrued expenses 190 213Total liabilities 3,621 6,388Net assets $ 303,971 $ 364,501Total net assets per series (000s)Series A $163,199 $184,214Series F 7,378 7,651Series I 572 385Series O 132,822 172,251Number of units outstanding (Note 3)Series A 18,281,649 19,414,729Series F 713,486 699,910Series I 58,056 36,835Series O 9,701,522 12,011,332Net assets per unit — CADSeries A $8.92 $9.49Series F 10.34 10.93Series I 9.85 10.45Series O 13.69 14.34Net assets per unit — USDSeries A $8.48 $9.55Series F 9.84 11.00Series I 9.37 10.52Series O 13.02 14.44Cost of investments held (000s) $308,162 $346,126STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $675; 2012 — $611) $ 5,314 $ 5,004Interest 29 50Total investment income 5,343 5,054ExpensesManagement fees (Note 4(a)) 2,563 2,765Transfer agent fees (Note 4(c)) 651 736Custodian fees 60 67Legal fees — —Audit fees 11 12Unitholder reporting costs 23 11Independent review committee fees 1 1Registration fees 34 42Other expenses (Note 7) 99 115Total expenses 3,442 3,749Expenses waived/paid by Manager (Note 6) (710) (785)Net expenses 2,732 2,964Net investment income (loss) 2,611 2,090Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 12,552 4,086Net realized and/or unrealized foreign exchangegain (loss) 37 (66)Net change in unrealized appreciation(depreciation) in value of investments (31,537) 5,342Transaction costs (Note 11) (507) (186)Net gain (loss) on investments (19,455) 9,176Increase (decrease) in net assets from operations $ (16,844) $ 11,266Increase (decrease) in net assets from operationsper series (000s)Series A $(10,103) $5,249Series F (465) 242Series I (38) 29Series O (6,238) 5,746Increase (decrease) in net assets from operationsper unitSeries A $(0.53) $0.25Series F (0.63) 0.33Series I (0.84) 0.63Series O (0.58) 0.58The accompanying notes are an integral part of these financial statements.22 Franklin Templeton Investments Funds

Templeton Emerging Markets FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ (16,844) $ 11,266 $ (10,103) $ 5,249 $ (465) $ 242Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 24,053 27,852 6,742 5,510 1,151 941Reinvestments — — — — — —Redemptions (67,739) (68,897) (17,654) (18,098) (959) (1,100)(43,686) (41,045) (10,912) (12,588) 192 (159)Increase (decrease) in net assets for the period (60,530) (29,779) (21,015) (7,339) (273) 83Net assets — beginning of period 364,501 348,383 184,214 188,143 7,651 7,414Net assets — end of period $ 303,971 $ 318,604 $ 163,199 $ 180,804 $ 7,378 $ 7,497Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ (38) $ 29 $ (6,238) $ 5,746Distributions to unitholdersFrom net investment income — — — —From capital gains — — — —From return of capital — — — —— — — —Capital unit transactionsSubscriptions 225 16 15,935 21,385Reinvestments — — — —Redemptions — (209) (49,126) (49,490)225 (193) (33,191) (28,105)Increase (decrease) in net assets for the period 187 (164) (39,429) (22,359)Net assets — beginning of period 385 497 172,251 152,329Net assets — end of period $ 572 $ 333 $ 132,822 $ 129,970The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 23

Templeton Frontier Markets FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 110.07%COMMON STOCKS: 110.07%Nigeria: 11.70%Ecobank Transnational Inc. . . . . . ....... 6,686,370 $ 477 $ 642FBN Holdings PLC ................... 29,382,923 2,510 3,378Guinness Nigeria PLC ................ 587,461 903 969Nigerian Breweries PLC ............... 208,721 181 210UAC of Nigeria PLC . ................. 3,132,405 785 1,091UBA Capital PLC .................... 1,360,908 10 11United Bank for Africa PLC ............. 40,331,896 1,123 2,111Zenith Bank PLC .................... 25,089,674 2,503 3,2058,492 11,617Qatar: 11.25%Commercial Bank of Qatar QSC . . . . ..... 89,313 1,770 1,792Industries Qatar QSC ................. 98,609 4,050 4,514Qatar Telecom QSC . ................. 139,750 4,206 4,86310,026 11,169Saudi Arabia: 8.29%Deutsche Bank AG/London, Al Tayyar TravelGroup, 3/20/2017 ................. 31,106 593 562Deutsche Bank AG/London, Saudi BasicIndustries Corp., 9/27/2016 . . . . . ..... 77,442 1,873 1,987Deutsche Bank AG/London, Saudi CeramicCo., 5/16/2017 ................... 19,000 570 593Deutsche Bank AG/London, Saudi Dairy &Foodstuff Co., 5/13/2014 . . . . . ....... 7,051 115 169HSBC Bank PLC, Al Mouwasat MedicalServices, 4/13/2015 ................ 41,000 683 787HSBC Bank PLC, Etihad Etisalat Co.,12/5/2014 ...................... 109,088 1,973 2,431HSBC Bank PLC, Fawaz Abdulaziz Alhokair& Co., 8/13/2014 . ................. 12,922 238 569HSBC Bank PLC, Samba Financial Group,8/13/2014 ...................... 50,523 618 700HSBC Bank PLC, Saudi Basic IndustriesCorp., 8/4/2014 ................... 16,984 414 4367,077 8,234United Arab Emirates: 6.95%Agthia Group PJSC . ................. 990,250 548 885Aramex Co. . . . ..................... 1,351,675 663 936Depa Ltd. ......................... 356,930 139 150First Gulf Bank PJSC ................. 1,079,613 3,492 4,9294,842 6,900Kazakhstan: 6.18%Kazakhmys PLC .................... 278,820 3,262 1,153KazMunaiGas Exploration Production, GlobalDepositary Receipt ................ 243,505 4,418 3,866SharesAverageCost Fair Value(000s) (000s)Kazakhstan: 6.18% (Continued)KCell JSC, Global Depositary Receipt . . .... 71,301 $ 888 $ 1,1248,568 6,143Romania: 6.09%Banca Transilvania .................. 5,099,921 1,728 1,924OMV Petrom SA .................... 31,553,831 3,608 4,073SC Bursa de Valori Bucuresti SA ......... 9,196 94 525,430 6,049Vietnam: 5.04%DHG Pharmaceutical JSC .............. 79,510 247 339Dong Phu Rubber JSC ................ 65,380 164 152FPT Corp. ......................... 72,637 144 151Hoa Phat Group JSC ................. 210,651 194 295Imexpharm Pharmaceutical JSC ......... 65,633 126 111PetroVietnam Drilling and Well ServicesJSC ........................... 600,850 1,092 1,403Petrovietnam Fertilizer and Chemical JSC . . 561,470 910 1,113PetroVietnam Technical Services Corp. .... 1,699,150 1,212 1,314Vietnam Dairy Products JSC ............ 20,000 99 1304,188 5,008Kenya: 4.92%British American Tobacco Kenya Ltd.Corp. .......................... 100,700 466 666East African Breweries Ltd. ............. 465,140 1,246 1,641Equity Bank Ltd. .................... 2,944,600 715 1,119KenolKobil Ltd. Group ................ 870,600 136 92Safaricom Ltd. ...................... 18,588,200 750 1,3673,313 4,885Panama: 4.76%Cable & Wireless Communications PLC .... 2,534,937 1,502 1,660Copa Holdings SA ................... 22,222 1,725 3,0633,227 4,723Egypt: 4.18%Alexandria Mineral Oils Co. ............. 72,521 864 680Eastern Tobacco .................... 41,102 633 566Egyptian International PharmaceuticalIndustries Co. .................... 129,740 778 735Maridive & Oil Services SAE ............ 436,363 597 408Orascom Telecom Holding SAE, GlobalDepositary Receipt ................ 320,000 961 932Telecom Egypt ...................... 491,970 1,079 8314,912 4,152Turkmenistan: 4.09%Dragon Oil PLC ..................... 445,292 4,086 4,066Ukraine: 3.98%Agroton Public Ltd. .................. 52,176 359 39Ferrexpo PLC ...................... 561,682 2,137 1,195The accompanying notes are an integral part of these financial statements.24 Franklin Templeton Investments Funds

Templeton Frontier Markets FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Ukraine: 3.98% (Continued)Kernel Holding SA .................... 62,000 $ 1,092 $ 916MHP SA, Global Depositary Receipt ....... 100,960 1,520 1,8055,108 3,955Argentina: 3.98%Telecom Argentina SA, B, AmericanDepositary Receipt . . ................ 44,316 461 692Tenaris SA, American Depositary Receipt .... 30,600 1,247 1,295Ternium SA, American Depositary Receipt . . . 82,800 1,876 1,9643,584 3,951Zimbabwe: 3.84%Delta Corp. Ltd. ...................... 1,431,440 1,168 2,032Econet Wireless Zimbabwe Ltd. ........... 2,644,503 1,149 1,7792,317 3,811South Africa: 3.52%Medium Term Notes Group Ltd. .......... 179,700 3,370 3,499Colombia: 3.24%Bancolombia SA, American DepositaryReceipt . . ........................ 18,183 1,187 1,080Pacific Rubiales Energy Corp. ............ 115,773 2,738 2,1383,925 3,218Oman: 2.61%Bank Muscat SAOG ................... 1,630,275 2,585 2,595Peru: 2.42%Compania de Minas Buenaventura SA,American Depositary Receipt .......... 93,470 2,718 1,450Credicorp Ltd. . ...................... 3,900 472 524Intercorp Financial Services Inc. .......... 12,740 418 4323,608 2,406South Korea: 2.33%Youngone Corp. ...................... 64,290 1,900 2,316Mauritius: 2.25%Mauritius Commercial Bank ............. 315,560 1,778 1,984New Mauritius Hotels Ltd. .............. 103,700 258 2462,036 2,230Georgia: 1.91%Bank of Georgia Holdings PLC ........... 71,000 1,240 1,892Pakistan: 1.73%Fauji Fertilizer Co. Ltd. . ................ 1,314,963 1,689 1,489Indus Motor Co. Ltd. . . ................ 73,376 194 2301,883 1,719Cambodia: 1.12%NagaCorp Ltd. . ...................... 1,358,000 461 1,112SharesAverageCost Fair Value(000s) (000s)Jordan: 0.70%Arab Potash Co. PLC .................. 4,276 $ 271 $ 276Jordan Phosphate Mines ............... 28,388 519 419790 695Senegal: 0.60%Sonatel ............................ 15,190 609 599Canada: 0.56%Petrominerales Ltd. ................... 93,000 578 557Lebanon: 0.54%BLOM Bank SAL, Global DepositaryReceipt .......................... 64,150 542 540Algeria: 0.54%CFAO SA ........................... 12,289 434 533Isle Of Man: 0.40%Zhaikmunai LP, Global Depositary Receipt . . . 34,900 373 395Mongolia: 0.35%Mongolian Mining Corp. ................ 1,800,600 915 347Total Common Stocks: .................. 100,419 109,316Total Long-Term Investments: ............ 100,419 109,316Transaction costs (Note 2) ................. (503) —TOTAL INVESTMENTS: 110.07% .......... $ 99,916 109,316OTHER ASSETS, less liabilities: (10.07%) ... (10,002)TOTAL NET ASSETS: 100.00% ............ $ 99,314The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 25

Templeton Frontier Markets FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 109,316 $ 86,881CashCanadian 4,390 6,230Foreign 332 202ReceivablesInvestment securities sold 3 —Capital units sold 37 —Dividends, interest and withholding tax 993 55Total assets 115,071 93,368LiabilitiesPayablesInvestment securities purchased 252 1,077Capital units redeemed 15,504 —Foreign capital taxes payable — 25Other liabilities (Note 9) 1 16Total liabilities 15,757 1,118Net assets $ 99,314 $ 92,250Total net assets per series (000s)Series O $99,314 $92,250Number of units outstanding (Note 3)Series O 8,377,753 8,615,523Net assets per unit — CADSeries O $11.86 $10.70Net assets per unit — USDSeries O $11.27 $10.77Cost of investments held (000s) $99,916 $80,780STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld(000s) — 2013 — $302; 2012 — $57) $ 5,010 $ 2,030Total investment income 5,010 2,030ExpensesManagement fees (Note 4(a)) — —Transfer agent fees (Note 4(c)) — —Custodian fees — 2Legal fees — —Audit fees 9 8Unitholder reporting costs 2 2Independent review committee fees 1 1Registration fees 17 15Other expenses (Note 7) 9 9Total expenses 38 37Expenses waived/paid by Manager (Note 6) (38) (37)Net expenses — —Net investment income (loss) 5,010 2,030Realized and unrealized gain (loss) on investmentsand transaction costsNet realized gain (loss) on investments 2,108 (135)Net realized and/or unrealized foreign exchange gain(loss) 1 13Net change in unrealized appreciation (depreciation)in value of investments 3,299 (781)Transaction costs (Note 11) (230) (130)Net gain (loss) on investments 5,178 (1,033)Increase (decrease) in net assets from operations $ 10,188 $ 997Increase (decrease) in net assets from operationsper series (000s)Series O $10,188 $997Increase (decrease) in net assets from operationsper unitSeries O $1.05 $0.33The accompanying notes are an integral part of these financial statements.26 Franklin Templeton Investments Funds

Templeton Frontier Markets FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)Series O2013 2012Increase (decrease) in net assets from operations $ 10,188 $ 997Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 35,406 36,544Reinvestments — 45Redemptions (38,530) (7,678)(3,124) 28,911Increase (decrease) in net assets for the period 7,064 29,908Net assets — beginning of period 92,250 5,866Net assets — end of period $ 99,314 $ 35,774The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 27

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 92.29%COMMON STOCKS: 64.81%United States: 22.15%Abbott Laboratories . . .................. 5,610 $ 290 $ 206Abercrombie & Fitch Co., A ............... 6,400 216 304Applied Materials Inc. . . ................ 50,210 553 787Baker Hughes Inc. . . .................. 11,056 478 536Brocade Communications Systems Inc. . . . . . . 62,460 333 378Chesapeake Energy Corp. ................ 20,050 350 429Chevron Corp. . . ...................... 5,860 478 728Cisco Systems Inc. . . .................. 45,890 1,007 1,173Citigroup Inc. . . ...................... 16,850 515 849Comcast Corp., Special A ................ 22,630 394 944CVS Caremark Corp. . . . ................ 16,170 517 972General Electric Co. . . .................. 23,020 751 561Halliburton Co. . ...................... 6,114 239 268Hewlett-Packard Co. . . . ................ 45,550 816 1,187JPMorgan Chase & Co. . ................ 21,930 1,089 1,217LyondellBasell Industries NV, A ............ 11,770 524 823Macy’s Inc. . . ........................ 18,520 668 934Medtronic Inc. . ...................... 12,850 536 695Merck & Co. Inc. ...................... 17,600 796 859Microsoft Corp. . ...................... 33,240 989 1,207Navistar International Corp. .............. 8,143 299 238NewPage Holdings Inc. . ................ 400 38 36Noble Corp. . ........................ 30,570 1,078 1,207Oracle Corp. . ........................ 20,777 566 671Pfizer Inc. . . . ........................ 27,500 641 811Service Corp. International ............... 36,020 397 682The Home Depot Inc. . . ................ 4,520 119 366The Procter & Gamble Co. ............... 7,700 489 623United Parcel Service Inc., B .............. 9,230 584 839Walgreen Co. . . ...................... 20,780 767 96516,517 21,495United Kingdom: 8.69%Aviva PLC . . . ........................ 128,570 1,802 698Carillion PLC . ........................ 78,920 481 348CEVA Holdings LLC . . .................. 22 25 21GlaxoSmithKline PLC . . . ................ 38,635 1,139 1,018Hays PLC . . . ........................ 226,963 356 322HSBC Holdings PLC . . .................. 113,209 1,956 1,246Kingfisher PLC . . ...................... 229,863 1,166 1,261Marks & Spencer Group PLC .............. 172,720 1,046 1,190Royal Dutch Shell PLC, B ................ 21,049 843 732Tesco PLC . . . ........................ 121,431 913 644Vodafone Group PLC . . . ................ 318,255 987 95610,714 8,436SharesAverageCost Fair Value(000s) (000s)France: 7.45%Alstom SA ........................... 13,920 $ 596 $ 479AXASA ............................. 54,497 1,028 1,125BNP Paribas SA ....................... 30,170 1,558 1,733Cie Generale des Etablissements Michelin, B . . 3,860 356 363Compagnie de Saint-Gobain .............. 17,790 740 757GDF Suez ........................... 21,060 585 434Sanofi .............................. 12,956 1,150 1,411Total SA, B . . . ....................... 18,100 1,386 9287,399 7,230Switzerland: 5.40%ABB Ltd. ........................... 39,240 770 895Credit Suisse Group AG ................. 70,142 1,781 1,955Novartis AG . . . ....................... 10,870 543 798Roche Holding AG ..................... 4,420 674 1,155Vontobel Holding AG ................... 14,063 455 4384,223 5,241Germany: 3.31%Draegerwerk AG & Co. KGAA .............. 2,891 331 349Metro AG ............................ 9,780 327 325Muenchener Rueckversicherungs-GesellschaftAG .............................. 4,310 655 834SAPAG ............................. 9,130 423 702Siemens AG . . . ....................... 9,400 788 9992,524 3,209Japan: 3.26%ITOCHU Corp. ........................ 66,200 701 803Nissan Motor Co. Ltd. .................. 123,800 1,172 1,317Toyota Motor Corp. .................... 16,500 756 1,0482,629 3,168China: 2.20%China Mobile Ltd. ..................... 63,500 703 698Shanghai Electric Group Co. Ltd. .......... 1,648,000 990 574Shanghai Pharmaceuticals Holding Co. Ltd.,H ............................... 158,200 315 311Travelsky Technology Ltd., H .............. 828,000 401 5502,409 2,133Hong Kong: 2.19%AIA Group Ltd. ....................... 224,600 636 997Cheung Kong (Holdings) Ltd. ............. 26,000 427 370Hutchison Whampoa Ltd. ................ 69,000 520 7611,583 2,128The accompanying notes are an integral part of these financial statements.28 Franklin Templeton Investments Funds

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Netherlands: 2.11%Akzo Nobel NV . ........................ 9,730 $ 630 $ 577Fugro NV, International Depository Receipt ..... 10,452 606 595ING Groep NV, International Depository Receipt . . 91,366 2,535 8753,771 2,047Singapore: 1.92%DBS Group Holdings Ltd. ................. 45,000 587 579Jardine Cycle & Carriage Ltd. ............... 15,000 567 529Singapore Telecommunications Ltd. .......... 244,000 587 7611,741 1,869Italy: 1.23%EniSpA .............................. 33,610 814 723UniCredit SpA . . ........................ 96,153 2,684 4723,498 1,195Canada: 1.03%Potash Corp. of Saskatchewan Inc. .......... 7,950 344 319Talisman Energy Inc. .................... 56,600 717 6781,061 997South Korea: 0.98%KB Financial Group Inc. .................. 15,148 913 476POSCO . . . ............................ 1,713 525 4711,438 947Ireland: 0.85%CRHPLC ............................. 38,445 1,033 822Portugal: 0.60%Galp Energia SGPS SA, B .................. 37,560 603 585Sweden: 0.54%Getinge AB, B . . ........................ 16,400 509 524Russia: 0.33%Mobile TeleSystems, American DepositaryReceipt ............................ 15,875 272 316SharesAverageCost Fair Value(000s) (000s)Denmark: 0.30%H. Lundbeck AS ....................... 15,790 $ 319 $ 296Norway: 0.27%Statoil ASA ........................... 12,040 264 261Total Common Stocks: ................... 62,507 62,899EQUITY-LINKED SECURITIES: 3.23%United States: 2.13%Royal Bank of Canada into Baker Hughes Inc.,2/18/2014 . . ....................... 12,820 576 615Royal Bank of Canada into Morgan Stanley,11/18/2013 ........................ 13,800 243 341Royal Bank of Canada into Morgan Stanley,4/11/2014 . . ....................... 20,450 457 505The Goldman Sachs Group Inc. into HalliburtonCo., 2/14/2014 ..................... 14,020 575 6091,851 2,070Netherlands: 0.64%The Barclays Bank PLC into TNT Express NV,5/2/2014 . . . ....................... 100,169 603 618United Kingdom: 0.46%The Goldman Sachs Group Inc. into LloydsBanking Group, PLC, 4/15/2014 ......... 1,203,000 603 447Total Equity-Linked Securities: ............. 3,057 3,135PREFERRED STOCKS: 0.78%CEVA Holdings LLC, ConvertiblePreferred, A-2 ...................... 49 55 46GMAC Capital Trust I, Preferred ............ 800 19 22Vale SA, American Depositary Receipt,Preferred, A ........................ 54,273 957 691Total Preferred Stocks: .................. 1,031 759Principal Amountin Currencyof IssueBONDS: 23.47%Brazil (1) : 5.24%Nota Do Tesouro Nacional10.00%, 1/1/2017 .............................................................................. 4,165 BRL 2,137 1,915Index Linked, 6.00%, 5/15/2015 .................................................................. 1,025 BRL 1,254 1,148Index Linked, 6.00%, 5/15/2045 .................................................................. 1,690 BRL 2,138 2,0195,529 5,082(1) Principal amount in 1000 Brazilian Real unitsThe accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 29

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 2.86%Ally Financial Inc., Senior Note, 7.50%, 9/15/2020 ............................................... 100,000 USD $ 111 $ 121Calpine Corp., Senior Secured Note, 7.875%, 7/31/2020 .......................................... 94,000 USD 97 107Chesapeake Energy Corp., Senior Note, 6.625%, 8/15/2020 ....................................... 100,000 USD 103 113CHS/Community Health Systems Inc., Senior Secured Note, 5.125%, 8/15/2018 ....................... 100,000 USD 99 107CIT Group Inc.Senior Note, 5.375%, 5/15/2020 ........................................................... 50,000 USD 49 54Senior Note, 5.00%, 8/15/2022 ............................................................ 50,000 USD 50 52Clear Channel Communications Inc., Senior Note, 9.00%, 3/1/2021 ................................. 50,000 USD 49 50Clear Channel Worldwide Holdings Inc., Senior Subordinate Note, 7.625%, 3/15/2020 .................. 50,000 USD 50 54Cricket Communications Inc., Senior Note, 7.75%, 10/15/2020 ..................................... 100,000 USD 99 101Fontainebleau Las Vegas, 11.00%, 6/15/2015 ................................................... 100,000 USD 100 —Ford Motor Credit Co. LLC, Senior Note, 8.125%, 1/15/2020 ....................................... 100,000 USD 102 127Frontier Communications Corp., Senior Note, 8.50%, 4/15/2020 .................................... 100,000 USD 103 116GMAC Inc., Subordinated Note, 8.00%, 12/31/2018 .............................................. 25,000 USD 24 30HCA Inc., Senior Note, 6.50%, 2/15/2016 ...................................................... 100,000 USD 100 113Jarden Corp., Senior Subordinate Note, 7.50%, 5/1/2017 .......................................... 100,000 USD 109 116Linn Energy LLC/Finance Corp., Senior Note, 8.625%, 4/15/2020 ................................... 100,000 USD 99 110Meritor Inc., Senior Note, 10.625%, 3/15/2018 .................................................. 100,000 USD 113 114MGM Resorts International, Senior Note, 7.75%, 3/15/2022 ........................................ 100,000 USD 99 114NewPage Corp., Escrow Account ............................................................. 100,000 USD — —Peabody Energy Corp., Senior Note, 6.00%, 11/15/2018 .......................................... 100,000 USD 101 105Quicksilver Resources Inc., Secured Note, Second Lien, Floating Rate Note, 6/21/2019 .................. 100,000 USD 98 95Radio One Inc., Senior Subordinate Note, Payment-In-Kind, 12.50%, 5/24/2016 ....................... 78,235 USD 75 83Reynolds Group Issuer Inc./LLC/SA, Senior Note, 8.50%, 5/15/2018 ................................. 100,000 USD 103 108Samson Investment Co., Senior Note, 9.75%, 2/15/2020 .......................................... 100,000 USD 100 111Shingle Springs Tribal Gaming Authority, Senior Note, 9.375%, 6/15/2015 ............................ 100,000 USD 84 104SLM Corp., Senior Note, 8.45%, 6/15/2018 ..................................................... 100,000 USD 117 117Sprint Nextel Corp., Senior Note, 9.00%, 11/15/2018 ............................................. 100,000 USD 102 123Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., SeniorSecured Note, 11.50%, 10/1/2020 .......................................................... 150,000 USD 115 118Univision Communications Inc., Senior Secured Note, 6.875%, 5/15/2019 ............................ 100,000 USD 95 110VPI Escrow Corp., Senior Note, 6.375%, 10/15/2020 ............................................. 100,000 USD 98 1042,644 2,777Ireland: 2.31%Government of Ireland5.50%, 10/18/2017 ...................................................................... 723,300 EUR 881 1,0945.00%, 10/18/2020 ...................................................................... 753,000 EUR 869 1,103Senior Bond, 5.40%, 3/13/2025 ............................................................ 29,590 EUR 44 441,794 2,241Uruguay: 2.18%Government of Uruguay, Senior Note, Index Linked, 4.375%, 12/15/2028 ............................ 1,019,232 UYU 60 60Uruguay Notas del Tesoro10.25%, 8/22/2015 ...................................................................... 4,050,000 UYU 216 2069.50%, 1/27/2016 ....................................................................... 4,050,000 UYU 212 203Uruguay Treasury BillStrip, 9/9/2013 .......................................................................... 31,490,000 UYU 1,581 1,583Strip, 5/14/2015 ........................................................................ 1,600,000 UYU 68 692,137 2,121The accompanying notes are an integral part of these financial statements.30 Franklin Templeton Investments Funds

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)South Korea: 1.30%Korea Monetary Stabilization Bond2.50%, 9/10/2013 ...................................................................... 26,700,000 KRW $ 24 $ 24Senior Bond, 3.90%, 8/2/2013 ............................................................ 37,280,000 KRW 33 34Senior Bond, 3.59%, 10/2/2013 ........................................................... 34,790,000 KRW 30 32Senior Bond, 3.48%, 12/2/2013 ........................................................... 59,660,000 KRW 52 55Senior Bond, 3.47%, 2/2/2014 ............................................................ 82,050,000 KRW 73 76Senior Bond, 3.59%, 4/2/2014 ............................................................ 120,590,000 KRW 107 112Senior Bond, 2.55%, 5/9/2014 ............................................................ 58,700,000 KRW 53 54Senior Bond, 2.47%, 4/2/2015 ............................................................ 26,200,000 KRW 24 24Senior Note, 3.28%, 6/2/2014 ............................................................ 142,950,000 KRW 126 132Senior Note, 2.57%, 6/9/2014 ............................................................ 27,000,000 KRW 24 25Senior Note, 2.84%, 12/2/2014 ........................................................... 14,210,000 KRW 13 13Senior Note, 2.74%, 2/2/2015 ............................................................ 13,390,000 KRW 13 12Senior Note, 2.76%, 6/2/2015 ............................................................ 281,900,000 KRW 257 259Korea Treasury BondSenior Bond, 3.00%, 12/10/2013 ......................................................... 346,440,000 KRW 308 319Senior Note, 3.25%, 12/10/2014 .......................................................... 30,730,000 KRW 29 29Senior Note, 3.25%, 6/10/2015 ........................................................... 13,700,000 KRW 12 13Senior Note, 2.75%, 12/10/2015 .......................................................... 51,700,000 KRW 47 471,225 1,260Poland: 1.27%Government of Poland, 6.25%, 10/24/2015 ................................................... 3,640,000 PLN 1,229 1,230Mexico: 1.22%Cemex SAB de CV, Senior Secured Note, 9.00%, 1/11/2018 ...................................... 100,000 USD 99 111Government of Mexico (2)8.00%, 12/19/2013 .................................................................... 21,800 MXN 177 1809.50%, 12/18/2014 .................................................................... 61,140 MXN 522 5346.00%, 6/18/2015 ...................................................................... 650MXN 6 68.00%, 12/17/2015 .................................................................... 35,420 MXN 316 3116.25%, 6/16/2016 ...................................................................... 4,870 MXN 42 411,162 1,183Supranational: 0.97%Inter-American Development Bank, Senior Note, 7.50%, 12/5/2024 ................................ 11,000,000 MXN 1,048 939Ukraine: 0.89%Government of Ukraine, Senior Note, 7.80%, 11/28/2022 ........................................ 920,000 USD 923 861Ghana: 0.73%Government of Ghana14.25%, 7/29/2013 .................................................................... 230,000 GHS 116 11924.00%, 5/25/2015 .................................................................... 400,000 GHS 226 22021.00%, 10/26/2015 ................................................................... 409,000 GHS 218 21519.24%, 5/30/2016 .................................................................... 120,000 GHS 62 6126.00%, 6/5/2017 ...................................................................... 160,000 GHS 100 95722 710(2) Principal amount in 100 Mexican Peso unitsThe accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 31

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Hungary: 0.69%Government of Hungary4.125%, 2/19/2018 ................................................................... 230,000 USD $ 230 $ 2355.375%, 2/21/2023 ................................................................... 430,000 USD 429 434659 669Indonesia: 0.66%Government of IndonesiaFR34, 12.80%, 6/15/2021 .............................................................. 1,730,000,000 IDR 257 246FR35, 12.90%, 6/15/2022 .............................................................. 380,000,000 IDR 50 55FR36, 11.50%, 9/15/2019 .............................................................. 1,045,000,000 IDR 129 136FR39, 11.75%, 8/15/2023 .............................................................. 1,015,000,000 IDR 139 141FR43, 10.25%, 7/15/2022 .............................................................. 500,000,000 IDR 62 63637 641Slovenia: 0.40%Government of Slovenia, Senior Note, 5.85%, 5/10/2023 ....................................... 400,000 USD 385 391Australia: 0.35%Government of Australia, 125, 6.25%, 6/15/2014 ............................................. 35,000 AUD 35 35New South Wales Treasury Corp., 5.50%, 8/1/2013 ............................................ 65,000 AUD 68 63Queensland Treasury Corp.Senior Note, 6.00%, 8/14/2013 .......................................................... 200,000 AUD 171 193Senior Note, 6.00%, 8/21/2013 .......................................................... 50,000 AUD 51 48325 339United Kingdom: 0.33%Expro Finance Luxembourg, Senior Secured Note, 8.50%, 12/15/2016 ............................ 100,000 USD 102 110Kerling PLC, Senior Secured Note, 10.625%, 2/1/2017 ......................................... 50,000 EUR 65 72The Royal Bank of Scotland PLC, Subordinated Note, 6.934%, 4/9/2018 ........................... 100,000 EUR 116 143283 325Russia: 0.29%Government of Russia, Senior Bond, 7.50%, 3/31/2030 ........................................ 227,225 USD 242 280Malaysia: 0.28%Government of Malaysia3.434%, 8/15/2014 ................................................................... 180,000 MYR 58 603.741%, 2/27/2015 ................................................................... 90,000 MYR 30 303.835%, 8/12/2015 ................................................................... 75,000 MYR 25 253.197%, 10/15/2015 .................................................................. 20,000 MYR 7 7Senior Bond, 3.461%, 7/31/2013 ........................................................ 150,000 MYR 48 50Senior Bond, 8.00%, 10/30/2013 ........................................................ 10,000 MYR 4 3Senior Bond, 5.094%, 4/30/2014 ........................................................ 280,000 MYR 93 95265 270Sri Lanka: 0.26%Government of Sri LankaC, 8.50%, 4/1/2018 ................................................................... 18,500,000 LKR 132 134A, 9.00%, 5/1/2021 ................................................................... 16,500,000 LKR 112 115244 249The accompanying notes are an integral part of these financial statements.32 Franklin Templeton Investments Funds

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Bermuda: 0.22%Digicel Group Ltd., Senior Note, 8.25%, 9/30/2020 ............................................... 200,000 USD $ 196 $ 218Luxembourg: 0.22%ArcelorMittal, Senior Note, 5.50%, 3/1/2021 ..................................................... 100,000 USD 92 104Intelsat Jackson Holdings SA, Senior Note, 7.50%, 4/1/2021 ........................................ 100,000 USD 98 111190 215Japan: 0.16%eAccess Ltd., Senior Note, 8.375%, 4/1/2018 .................................................... 100,000 EUR 123 151Netherlands: 0.14%UPCB Finance II Ltd., Senior Secured Note, 6.375%, 7/1/2020 ..................................... 100,000 EUR 135 139South Africa: 0.13%Edcon Pty. Ltd., Secured Note, 9.50%, 3/1/2018 ................................................. 100,000 EUR 130 126Kazakhstan: 0.11%HSBK (Europe) BV, Senior Note, 7.25%, 5/3/2017 ................................................ 100,000 USD 84 109Italy: 0.11%Wind Acquisition Finance SA, Senior Secured Note, 11.75%, 7/15/2017 .............................. 100,000 USD 112 109Switzerland: 0.07%Ineos Group Holdings SA, Secured Note, Second Lien, 7.875%, 2/15/2016 ............................ 50,524 EUR 54 69Peru: 0.06%Government of Peru, Senior Bond, 7.84%, 8/12/2020 ............................................. 140,000 PEN 48 61El Salvador: 0.02%Government of El Salvador, Senior Bond, 7.65%, 6/15/2035 ........................................ 15,000 USD 17 15Total Bonds: ................................................................................ 22,542 22,780Total Long-Term Investments: ................................................................... 89,137 89,573SHORT-TERM SECURITIES: 3.37%Bank of Negara Monetary Note2.87%, 7/11/2013 ......................................................................... 100,000 MYR 32 332.87%, 7/25/2013 ......................................................................... 120,000 MYR 38 402.87%, 8/6/2013 .......................................................................... 290,000 MYR 92 962.83%, 8/15/2013 ......................................................................... 355,000 MYR 112 1182.831%, 8/27/2013 ........................................................................ 160,000 MYR 50 532.905%, 9/26/2013 ........................................................................ 40,000 MYR 13 132.98%, 10/8/2013 ......................................................................... 10,000 MYR 3 32.90%, 10/10/2013 ........................................................................ 70,000 MYR 23 232.90%, 10/22/2013 ........................................................................ 30,000 MYR 10 102.919%, 11/19/2013 ....................................................................... 10,000 MYR 3 32.894%, 11/26/2013 ....................................................................... 15,000 MYR 5 52.922%, 12/5/2013 ........................................................................ 10,000 MYR 3 32.924%, 12/10/2013 ....................................................................... 10,000 MYR 3 32.933%, 12/19/2013 ....................................................................... 20,000 MYR 7 72.87%, 12/26/2013 ........................................................................ 20,000 MYR 7 72.892%, 1/9/2014 ......................................................................... 40,000 MYR 13 132.88%, 1/16/2014 ......................................................................... 50,000 MYR 16 162.85%, 2/6/2014 .......................................................................... 5,000 MYR 2 22.85%, 2/18/2014 ......................................................................... 10,000 MYR 3 32.85%, 2/20/2014 ......................................................................... 5,000 MYR 2 2The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 33

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)2.88%, 2/25/2014 ....................................................................... 15,000 MYR $ 5 $ 52.902%, 3/13/2014 ..................................................................... 50,000 MYR 16 162.867%, 3/27/2014 ..................................................................... 10,000 MYR 3 32.898%, 4/3/2014 ....................................................................... 10,000 MYR 3 32.873%, 4/24/2014 ..................................................................... 30,000 MYR 10 102.908%, 5/15/2014 ..................................................................... 10,000 MYR 3 32.85%, 5/20/2014 ....................................................................... 30,000 MYR 10 102.862%, 5/27/2014 ..................................................................... 25,000 MYR 8 82.92%, 6/5/2014 ........................................................................ 100,000 MYR 32 322.954%, 6/19/2014 ..................................................................... 10,000 MYR 3 3Federal Home Loan Bank Discount Notes, 7/1/2013 ............................................. 2,000,000 USD 2,110 2,110Korea Monetary Stabilization Bond, 2.549%, 8/13/2013 ........................................... 65,600,000 KRW 59 60Mexico Treasury Bill3.835%, 10/31/2013 .................................................................... 20,400 MXN 17 163.73%, 11/14/2013 ..................................................................... 58,000 MXN 48 464.003%, 1/9/2014 ....................................................................... 69,750 MXN 56 563.718%, 4/3/2014 ....................................................................... 243,700 MXN 197 1923.873%, 4/30/2014 ..................................................................... 112,700 MXN 91 89Philippine Treasury Bill, 0.543%, 11/13/2013 ................................................... 3,120,000 PHP 76 76Singapore Treasury Bill, 0.35%, 12/27/2013 .................................................... 90,000 SGD 74 75Total Short-Term Securities: ................................................................. 3,258 3,266Transaction costs (Note 2) ................................................................... (202) —TOTAL INVESTMENTS: 95.66% .............................................................. $92,193 92,839NET UNREALIZED LOSS ON DERIVATIVES: (0.77%) ............................................. (743)OTHER ASSETS, less liabilities: 5.11% ........................................................ 4,960TOTAL NET ASSETS: 100.00% .................................................................. $97,056SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)BARCLAYS BANK PLC ............ A+ August 5, 2013 294 EUR $ 403 399 USD $ 420 1.3578 $ 17DEUTSCHE BANK AG ............. A+ July 5, 2013 99 EUR 135 434 PLN 137 4.3895 2DEUTSCHE BANK AG ............. A+ July 15, 2013 93 USD 98 300 MYR 100 3.2307 2DEUTSCHE BANK AG ............. A+ July 18, 2013 774 USD 814 2,496 MYR 830 3.2243 16DEUTSCHE BANK AG ............. A+ July 18, 2013 445,777 CLP 920 902 USD 950 0.0020 30DEUTSCHE BANK AG ............. A+ July 29, 2013 100 EUR 137 134 USD 141 1.3375 4DEUTSCHE BANK AG ............. A+ July 29, 2013 129 USD 136 100 EUR 137 0.7724 1DEUTSCHE BANK AG ............. A+ August 27, 2013 3,663 SEK 574 422 EUR 578 0.1151 4DEUTSCHE BANK AG ............. A+ December 10, 2013 92 EUR 126 121 USD 127 1.3127 1DEUTSCHE BANK AG ............. A+ December 10, 2013 950 EUR 1,306 1,240 USD 1,309 1.3053 3DEUTSCHE BANK AG ............. A+ February 6, 2014 97 EUR 133 130 USD 137 1.3473 4DEUTSCHE BANK AG ............. A+ April 25, 2014 50 EUR 70 66 USD 70 1.3060 —HSBC BANK PLC ................ AA- December 9, 2013 220 EUR 303 289 USD 306 1.3153 3JPMORGAN CHASE BANK, N.A. .... A+ July 29, 2013 1,558 USD 1,640 5,034 MYR 1,673 3.2311 33JPMORGAN CHASE BANK, N.A. .... A+ July 29, 2013 5,034 MYR 1,673 1,629 USD 1,715 0.3237 42The accompanying notes are an integral part of these financial statements.34 Franklin Templeton Investments Funds

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)JPMORGAN CHASE BANK, N.A. .... A+ October 31, 2013 395 MYR $ 131 127 USD $ 134 0.3223 $ 3UBS AG ........................ A December 18, 2013 471 EUR 648 4,183 SEK 656 8.8826 8UBS AG ........................ A January 13, 2014 73 EUR 101 96 USD 101 1.3090 —Total Number of Contracts ......18 $ 173BARCLAYS BANK PLC ............ A+ August 26, 2013 74 EUR 102 93 USD 98 1.2528 (4)DEUTSCHE BANK AG ............. A+ July 5, 2013 54 USD 57 3,057 INR 54 56.8258 (3)DEUTSCHE BANK AG ............. A+ July 8, 2013 20 USD 21 1,126 INR 20 56.7140 (1)DEUTSCHE BANK AG ............. A+ July 12, 2013 41 USD 43 2,247 INR 40 55.4008 (3)DEUTSCHE BANK AG ............. A+ July 17, 2013 82 USD 86 4,818 INR 85 58.7539 (1)DEUTSCHE BANK AG ............. A+ July 18, 2013 423 USD 444 214,947 CLP 443 508.7503 (1)DEUTSCHE BANK AG ............. A+ July 18, 2013 456 USD 479 230,830 CLP 476 506.5005 (3)DEUTSCHE BANK AG ............. A+ July 22, 2013 20 USD 22 1,117 INR 20 54.7415 (2)DEUTSCHE BANK AG ............. A+ July 23, 2013 96 EUR 131 118 USD 124 1.2336 (7)DEUTSCHE BANK AG ............. A+ July 26, 2013 41 USD 43 2,256 INR 40 55.0795 (3)DEUTSCHE BANK AG ............. A+ July 31, 2013 294 EUR 403 366 USD 385 1.2432 (18)DEUTSCHE BANK AG ............. A+ July 31, 2013 669 USD 704 36,806 INR 647 55.0535 (57)DEUTSCHE BANK AG ............. A+ August 27, 2013 433 EUR 594 3,663 SEK 574 8.4535 (20)DEUTSCHE BANK AG ............. A+ September 4, 2013 17 USD 18 970 INR 17 58.0005 (1)DEUTSCHE BANK AG ............. A+ September 10, 2013 20 USD 21 1,126 INR 20 57.2737 (1)DEUTSCHE BANK AG ............. A+ September 11, 2013 11 USD 11 610 INR 11 57.6233 —DEUTSCHE BANK AG ............. A+ September 18, 2013 26 USD 28 1,526 INR 27 58.6404 (1)DEUTSCHE BANK AG ............. A+ September 20, 2013 23 USD 25 1,390 INR 25 59.3814 —DEUTSCHE BANK AG ............. A+ September 24, 2013 254 USD 267 10,610 PHP 259 41.8019 (8)DEUTSCHE BANK AG ............. A+ September 30, 2013 128 USD 135 62,190 CLP 127 483.9990 (8)DEUTSCHE BANK AG ............. A+ October 4, 2013 170 USD 179 7,095 PHP 173 41.8000 (6)DEUTSCHE BANK AG ............. A+ October 7, 2013 535 EUR 734 2,269 PLN 715 4.2436 (19)DEUTSCHE BANK AG ............. A+ October 16, 2013 40 USD 42 1,659 PHP 41 41.6186 (1)DEUTSCHE BANK AG ............. A+ October 23, 2013 125 USD 132 387 MYR 129 3.1005 (3)DEUTSCHE BANK AG ............. A+ October 24, 2013 2,048 EUR 2,813 17,832 SEK 2,796 8.7053 (17)DEUTSCHE BANK AG ............. A+ October 31, 2013 5 EUR 7 6 USD 7 1.2943 —DEUTSCHE BANK AG ............. A+ November 19, 2013 70 USD 74 218 MYR 72 3.1160 (2)DEUTSCHE BANK AG ............. A+ December 10, 2013 2,130 USD 2,248 2,594 SGD 2,161 1.2178 (87)DEUTSCHE BANK AG ............. A+ December 13, 2013 274 USD 289 267 AUD 255 0.9761 (34)DEUTSCHE BANK AG ............. A+ January 8, 2014 104 USD 110 322 MYR 106 3.0933 (4)DEUTSCHE BANK AG ............. A+ February 3, 2014 119 USD 126 58,900 CLP 119 493.8996 (7)DEUTSCHE BANK AG ............. A+ February 18, 2014 107 USD 113 52,530 CLP 106 493.0311 (7)DEUTSCHE BANK AG ............. A+ February 25, 2014 52 USD 55 25,570 CLP 52 494.6033 (3)DEUTSCHE BANK AG ............. A+ February 26, 2014 80 USD 85 39,530 CLP 80 494.9974 (5)DEUTSCHE BANK AG ............. A+ February 27, 2014 131 USD 139 64,780 CLP 131 494.5982 (8)DEUTSCHE BANK AG ............. A+ March 3, 2014 106 USD 112 52,610 CLP 106 494.9480 (6)DEUTSCHE BANK AG ............. A+ March 5, 2014 106 USD 112 52,610 CLP 106 496.3020 (6)DEUTSCHE BANK AG ............. A+ March 6, 2014 133 USD 140 65,940 CLP 133 496.7494 (7)DEUTSCHE BANK AG ............. A+ March 7, 2014 132 USD 140 65,540 CLP 132 495.2508 (8)DEUTSCHE BANK AG ............. A+ March 13, 2014 129 USD 137 63,760 CLP 129 494.6010 (8)DEUTSCHE BANK AG ............. A+ March 18, 2014 262 USD 277 129,080 CLP 260 493.3006 (17)DEUTSCHE BANK AG ............. A+ April 4, 2014 134 USD 142 66,070 CLP 133 493.8004 (9)DEUTSCHE BANK AG ............. A+ May 12, 2014 2,000 EUR 2,764 2,672 CAD 2,673 1.3361 (91)DEUTSCHE BANK AG ............. A+ June 5, 2014 46 USD 50 23,817 CLP 48 512.5463 (2)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 35

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)DEUTSCHE BANK AG ............. A+ June 12, 2014 510 EUR $ 706 2,222 PLN $ 695 4.3537 $ (11)HSBC BANK PLC ................ AA- August 2, 2013 294 EUR 403 364 USD 383 1.2374 (20)HSBC BANK PLC ................ AA- August 9, 2013 2,640 USD 2,779 3,016,847 KRW 2,773 1,142.6000 (6)HSBC BANK PLC ................ AA- September 4, 2013 62 USD 65 3,533 INR 62 57.3763 (3)HSBC BANK PLC ................ AA- September 11, 2013 10 USD 11 601 INR 11 57.6609 —HSBC BANK PLC ................ AA- September 13, 2013 25 USD 27 1,520 INR 27 59.8850 —HSBC BANK PLC ................ AA- October 4, 2013 136 USD 144 5,691 PHP 139 41.7140 (5)HSBC BANK PLC ................ AA- October 7, 2013 204 USD 215 8,485 PHP 207 41.5891 (8)HSBC BANK PLC ................ AA- October 11, 2013 118 USD 124 4,894 PHP 119 41.5609 (5)HSBC BANK PLC ................ AA- October 17, 2013 652 EUR 896 848 USD 894 1.3000 (2)HSBC BANK PLC ................ AA- October 22, 2013 165 USD 174 507 MYR 168 3.0802 (6)HSBC BANK PLC ................ AA- October 24, 2013 83 USD 88 257 MYR 86 3.1010 (2)HSBC BANK PLC ................ AA- November 20, 2013 40 USD 43 126 MYR 42 3.1212 (1)HSBC BANK PLC ................ AA- January 10, 2014 86 USD 90 265 MYR 87 3.0922 (3)HSBC BANK PLC ................ AA- February 19, 2014 167 USD 176 527 MYR 174 3.1574 (2)JPMORGAN CHASE BANK, N.A. .... A+ July 18, 2013 58 USD 61 3,177 INR 56 55.1687 (5)JPMORGAN CHASE BANK, N.A. .... A+ July 22, 2013 29 USD 31 1,587 INR 28 54.7223 (3)JPMORGAN CHASE BANK, N.A. .... A+ July 29, 2013 12 USD 12 640 INR 11 54.9168 (1)JPMORGAN CHASE BANK, N.A. .... A+ July 29, 2013 35 USD 37 1,919 INR 34 54.9164 (3)JPMORGAN CHASE BANK, N.A. .... A+ July 31, 2013 294 EUR 403 365 USD 384 1.2416 (19)JPMORGAN CHASE BANK, N.A. .... A+ August 6, 2013 73 USD 76 3,940 INR 69 54.3156 (7)JPMORGAN CHASE BANK, N.A. .... A+ August 29, 2013 213 EUR 291 268 USD 282 1.2597 (9)JPMORGAN CHASE BANK, N.A. .... A+ September 17, 2013 54 USD 57 3,236 INR 56 59.3936 (1)JPMORGAN CHASE BANK, N.A. .... A+ October 11, 2013 67 USD 71 2,780 PHP 68 41.5409 (3)JPMORGAN CHASE BANK, N.A. .... A+ October 18, 2013 87 USD 91 269 MYR 89 3.1065 (2)JPMORGAN CHASE BANK, N.A. .... A+ October 31, 2013 128 USD 135 395 MYR 131 3.0963 (4)JPMORGAN CHASE BANK, N.A. .... A+ December 17, 2013 463 USD 490 1,438 MYR 476 3.1030 (14)JPMORGAN CHASE BANK, N.A. .... A+ January 16, 2014 20 USD 21 62 MYR 20 3.0685 (1)JPMORGAN CHASE BANK, N.A. .... A+ January 30, 2014 68 USD 72 33,530 CLP 68 492.0029 (4)JPMORGAN CHASE BANK, N.A. .... A+ January 30, 2014 130 USD 137 404 MYR 133 3.1060 (4)JPMORGAN CHASE BANK, N.A. .... A+ April 21, 2014 407 USD 431 1,255 MYR 414 3.0850 (17)JPMORGAN CHASE BANK, N.A. .... A+ April 28, 2014 106 USD 112 52,619 CLP 106 496.7478 (6)JPMORGAN CHASE BANK, N.A. .... A+ May 9, 2014 4,000 EUR 5,527 5,319 CAD 5,320 1.3299 (207)UBS AG ........................ A August 1, 2013 294 EUR 403 362 USD 381 1.2308 (22)UBS AG ........................ A August 26, 2013 59 EUR 81 500 SEK 79 8.4744 (2)UBS AG ........................ A August 26, 2013 140 EUR 192 175 USD 185 1.2512 (7)UBS AG ........................ A November 20, 2013 99 EUR 136 126 USD 134 1.2801 (2)Total Number of Contracts .......81 $ (916)Net Unrealized Loss ............. $(743)The accompanying notes are an integral part of these financial statements.36 Franklin Templeton Investments Funds

Templeton Global Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................. 1.35 1.51AA .................................. 1.41 2.49A ................................... 8.06 2.81BBB................................. 5.40 12.14BB .................................. 2.62 2.47B ................................... 3.74 3.06CCC ................................. 0.89 1.10* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’s andFitch ratings.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 37

Templeton Global Balanced FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 92,839 $ 74,429CashCanadian 616 624Foreign 3,457 8,126ReceivablesDue from broker 534 —Investment securities sold — 1Capital units sold 70 6Dividends, interest and withholding tax 1,079 693Unrealized gain on derivatives 173 848Other assets (Note 8) 34 27Total assets 98,802 84,754LiabilitiesPayablesInvestment securities purchased 193 35Capital units redeemed 31 3Management fees 182 161Foreign capital taxes payable 7 14Accrued expenses 69 88Distributions to unitholders 348 —Unrealized loss on derivatives 916 285Total liabilities 1,746 586Net assets $ 97,056 $ 84,168Total net assets per series (000s)Series A $17,928 $7,750Series F 1,417 1,277Series O 6,118 4,086Series S 1,257 975Series T 58,654 58,744Series T USD 11,682 11,336Number of units outstanding (Note 3)Series A 1,521,343 703,355Series F 127,213 123,267Series O 495,750 358,441Series S 77,685 63,000Series T 7,770,505 8,088,579Series T USD 1,539,075 1,551,368Net assets per unit — CADSeries A $11.78 $11.02Series F 11.14 10.36Series O 12.35 11.40Series S 16.18 15.48Series T 7.55 7.26Net assets per unit — USDSeries A $11.20 $11.09Series F 10.60 10.43Series O 11.74 11.48Series S 15.39 15.59Series T USD (Note 13 (b)) 7.22 7.36Cost of investments held (000s) $92,193 $78,857STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $135; 2012 — $138) $ 1,309 $ 1,231Interest (net of foreign taxes withheld (000s) —2013 — $6; 2012 — $17) 941 970Total investment income 2,250 2,201ExpensesManagement fees (Note 4(a)) 953 913Transfer agent fees (Note 4(c)) 172 188Custodian fees 15 17Legal fees 2 3Audit fees 11 12Unitholder reporting costs 7 2Independent review committee fees 1 1Registration fees 13 13Other expenses (Note 7) 39 57Total expenses 1,213 1,206Expenses waived/paid by Manager (Note 6) (151) (183)Net expenses 1,062 1,023Net investment income (loss) 1,188 1,178Realized and unrealized gain (loss) on investmentsand transaction costsNet realized gain (loss) on investments 266 (2,111)Net realized and/or unrealized foreign exchange gain(loss) 714 621Net change in unrealized appreciation (depreciation)in value of investments and derivatives 3,768 3,835Transaction costs (Note 11) (43) (24)Net gain (loss) on investments 4,705 2,321Increase (decrease) in net assets from operations $ 5,893 $ 3,499Increase (decrease) in net assets from operationsper series (000s)Series A $470 $242Series F 92 66Series O 385 148Series S 72 46Series T 4,085 2,490Series T USD 789 507Increase (decrease) in net assets from operationsper unitSeries A $0.46 $0.37Series F 0.81 0.43Series O 0.85 0.51Series S 1.06 0.65Series T 0.52 0.28Series T USD 0.52 0.29The accompanying notes are an integral part of these financial statements.38 Franklin Templeton Investments Funds

Templeton Global Balanced FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 5,893 $ 3,499 $ 470 $ 242 $ 92 $ 66Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital (2,107) (2,168) — — — —(2,107) (2,168) — — — —Capital unit transactionsSubscriptions 17,901 2,984 11,349 965 604 48Reinvestments 1,262 1,356 — — — —Redemptions (10,061) (10,225) (1,641) (561) (556) (145)9,102 (5,885) 9,708 404 48 (97)Increase (decrease) in net assets for the period 12,888 (4,554) 10,178 646 140 (31)Net assets — beginning of period 84,168 86,158 7,750 6,204 1,277 1,451Net assets — end of period $ 97,056 $ 81,604 $ 17,928 $ 6,850 $ 1,417 $ 1,420Series O Series S Series T2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 385 $ 148 $ 72 $ 46 $ 4,085 $ 2,490Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — (32) (31) (1,728) (1,783)— — (32) (31) (1,728) (1,783)Capital unit transactionsSubscriptions 1,788 408 284 2 3,223 1,293Reinvestments — — 1 — 1,071 1,149Redemptions (141) (153) (43) (117) (6,741) (7,195)1,647 255 242 (115) (2,447) (4,753)Increase (decrease) in net assets for the period 2,032 403 282 (100) (90) (4,046)Net assets — beginning of period 4,086 2,790 975 1,072 58,744 61,743Net assets — end of period $ 6,118 $ 3,193 $ 1,257 $ 972 $ 58,654 $ 57,697Series T USD2013 2012Increase (decrease) in net assets from operations $ 789 $ 507Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital (347) (354)(347) (354)Capital unit transactionsSubscriptions 653 268Reinvestments 190 207Redemptions (939) (2,054)(96) (1,579)Increase (decrease) in net assets for the period 346 (1,426)Net assets — beginning of period 11,336 12,898Net assets — end of period $ 11,682 $ 11,472The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 39

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)LONG-TERM INVESTMENTS: 70.94%BONDS: 70.94%South Korea: 8.87%Korea Monetary Stabilization BondSenior Bond, 3.90%, 8/2/2013 .................................................... 6,760,640,000 KRW $ 6,018 $ 6,229Senior Bond, 3.59%, 10/2/2013 ................................................... 1,549,920,000 KRW 1,352 1,429Senior Bond, 3.48%, 12/2/2013 ................................................... 2,657,040,000 KRW 2,332 2,454Senior Bond, 3.47%, 2/2/2014 .................................................... 3,653,460,000 KRW 3,233 3,376Senior Bond, 3.59%, 4/2/2014 .................................................... 5,369,470,000 KRW 4,761 4,973Senior Bond, 2.55%, 5/9/2014 .................................................... 2,630,800,000 KRW 2,391 2,417Senior Bond, 2.47%, 4/2/2015 .................................................... 2,456,200,000 KRW 2,201 2,245Senior Note, 3.28%, 6/2/2014 .................................................... 6,365,830,000 KRW 5,620 5,887Senior Note, 2.57%, 6/9/2014 .................................................... 6,039,000,000 KRW 5,462 5,548Senior Note, 2.82%, 8/2/2014 .................................................... 2,789,710,000 KRW 2,419 2,570Senior Note, 2.78%, 10/2/2014 ................................................... 614,400,000 KRW 562 565Senior Note, 2.84%, 12/2/2014 ................................................... 360,940,000 KRW 334 332Senior Note, 2.74%, 2/2/2015 .................................................... 42,592,230,000 KRW 40,343 39,118Senior Note, 2.76%, 6/2/2015 .................................................... 913,900,000 KRW 846 839Korea Treasury BondSenior Bond, 3.00%, 12/10/2013 .................................................. 74,305,420,000 KRW 66,113 68,487Senior Bond, 3.50%, 6/10/2014 ................................................... 3,850,000,000 KRW 3,406 3,569Senior Bond, 5.00%, 9/10/2016 ................................................... 75,000,000 KRW 76 73Senior Note, 3.25%, 12/10/2014 .................................................. 13,800,600,000 KRW 12,801 12,788Senior Note, 3.25%, 6/10/2015 ................................................... 1,708,900,000 KRW 1,546 1,585Senior Note, 2.75%, 12/10/2015 .................................................. 8,174,700,000 KRW 7,370 7,486The Export-Import Bank of Korea, Senior Note, 1.45%, 5/19/2014 .......................... 61,100,000 SEK 9,215 9,579178,401 181,549Ireland: 8.36%Government of Ireland5.50%, 10/18/2017 ............................................................. 12,588,800 EUR 15,343 19,0315.90%, 10/18/2019 ............................................................. 32,630,000 EUR 38,516 50,2694.50%, 4/18/2020 .............................................................. 9,591,000 EUR 10,589 13,7165.00%, 10/18/2020 ............................................................. 28,656,000 EUR 32,760 41,9843.90%, 3/20/2023 .............................................................. 3,908,000 EUR 5,094 5,260Senior Bond, 4.50%, 10/18/2018 .................................................. 4,638,000 EUR 5,249 6,766Senior Bond, 4.40%, 6/18/2019 ................................................... 11,467,000 EUR 12,623 16,443Senior Bond, 5.40%, 3/13/2025 ................................................... 11,898,530 EUR 13,268 17,656133,442 171,125Poland: 8.36%Government of Poland5.00%, 10/24/2013 ............................................................. 66,255,000 PLN 21,174 21,0915.75%, 4/25/2014 .............................................................. 121,800,000 PLN 40,032 39,4265.50%, 4/25/2015 .............................................................. 24,891,000 PLN 8,094 8,2146.25%, 10/24/2015 ............................................................. 27,441,000 PLN 9,121 9,2695.75%, 9/23/2022 .............................................................. 24,900,000 PLN 10,061 8,698Floating Rate Note, 1/25/2017 .................................................... 52,781,000 PLN 16,349 16,583Floating Rate Note, 1/25/2021 .................................................... 53,543,000 PLN 16,344 16,424Senior Note, 6.375%, 7/15/2019 .................................................. 2,500,000 USD 2,891 3,063The accompanying notes are an integral part of these financial statements.40 Franklin Templeton Investments Funds

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Poland: 8.36% (Continued)Strip, 7/25/2013 .................................................................. 5,825,000 PLN $ 1,998 $ 1,839Strip, 1/25/2014 .................................................................. 80,615,000 PLN 24,361 25,103Strip, 7/25/2014 .................................................................. 19,350,000 PLN 5,723 5,944Strip, 7/25/2015 .................................................................. 12,767,000 PLN 3,792 3,794Strip, 1/25/2016 .................................................................. 39,922,000 PLN 11,932 11,649171,872 171,097Mexico (1) : 8.34%Government of Mexico8.00%, 12/19/2013 ............................................................... 6,542,400 MXN 56,080 54,0527.00%, 6/19/2014 ................................................................ 728,210 MXN 6,102 6,0729.50%, 12/18/2014 ............................................................... 8,440,200 MXN 71,189 73,6616.00%, 6/18/2015 ................................................................ 332,640 MXN 2,700 2,7818.00%, 12/17/2015 ............................................................... 1,955,610 MXN 17,695 17,1806.25%, 6/16/2016 ................................................................ 283,990 MXN 2,478 2,4157.25%, 12/15/2016 ............................................................... 105,000 MXN 959 9197.75%, 12/14/2017 ............................................................... 358,000 MXN 3,327 3,208Mexican UdibonosIndex Linked, 4.50%, 12/18/2014 .................................................... 127,392 MXN 1,010 1,096Index Linked, 5.00%, 6/16/2016 ..................................................... 326,638 MXN 2,752 2,945Index Linked, 3.50%, 12/14/2017 .................................................... 329,164 MXN 2,659 2,883Index Linked, 4.00%, 6/13/2019 ..................................................... 225,418 MXN 1,854 2,032Index Linked, 2.50%, 12/10/2020 .................................................... 177,928 MXN 1,337 1,472170,142 170,716Sweden: 6.58%Government of Sweden1.50%, 8/30/2013 ................................................................ 188,865,000 SEK 29,003 29,6326.75%, 5/5/2014 .................................................................. 464,070,000 SEK 75,794 76,289Kommuninvest I Sverige AB, 2.25%, 5/5/2014 ............................................ 180,990,000 SEK 26,987 28,611131,784 134,532Canada: 3.98%Government of Canada1.00%, 2/1/2014 .................................................................. 3,660,000 CAD 3,658 3,6581.00%, 11/1/2014 ................................................................ 61,820,000 CAD 61,812 61,6701.00%, 2/1/2015 .................................................................. 16,090,000 CAD 16,042 16,04181,512 81,369Hungary: 3.93%Government of Hungary6.75%, 7/28/2014 ................................................................ 3,000,000 EUR 4,717 4,2804.125%, 2/19/2018 ............................................................... 11,850,000 USD 11,831 12,1166.00%, 1/11/2019 ................................................................ 730,000 EUR 973 1,0335.375%, 2/21/2023 ............................................................... 21,880,000 USD 21,842 22,095Senior Note, 3.50%, 7/18/2016 ...................................................... 25,000 EUR 32 34(1) Principal amount in 100 Mexican Peso unitsThe accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 41

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Hungary: 3.93% (Continued)Senior Note, 4.375%, 7/4/2017 ................................................... 12,925,000 EUR $ 14,327 $ 17,575Senior Note, 5.75%, 6/11/2018 ................................................... 4,855,000 EUR 6,767 6,810Senior Note, 6.25%, 1/29/2020 ................................................... 4,705,000 USD 5,008 5,169Senior Note, 3.875%, 2/24/2020 ................................................. 170,000 EUR 209 216Senior Note, 6.375%, 3/29/2021 ................................................. 10,020,000 USD 9,676 10,98275,382 80,310Australia: 3.55%Government of Australia, 125, 6.25%, 6/15/2014 ...................................... 7,067,000 AUD 6,984 7,040New South Wales Treasury Corp.5.50%, 8/1/2013 .............................................................. 27,710,000 AUD 28,574 26,709Senior Note, 5.50%, 3/1/2017 .................................................... 3,645,000 AUD 2,909 3,780Queensland Treasury Corp.Senior Bond, 6.00%, 9/14/2017 .................................................. 1,490,000 AUD 1,268 1,580Senior Note, 6.00%, 8/14/2013 ................................................... 12,405,000 AUD 12,200 11,976Senior Note, 6.00%, 8/21/2013 ................................................... 22,321,000 AUD 23,437 21,56175,372 72,646Indonesia: 3.17%Government of IndonesiaFR28, 10.00%, 7/15/2017 ...................................................... 9,200,000,000 IDR 1,150 1,094FR30, 10.75%, 5/15/2016 ...................................................... 10,335,000,000 IDR 1,242 1,215FR31, 11.00%, 11/15/2020 ..................................................... 2,763,000,000 IDR 315 359FR34, 12.80%, 6/15/2021 ...................................................... 12,005,000,000 IDR 1,261 1,705FR35, 12.90%, 6/15/2022 ...................................................... 7,690,000,000 IDR 800 1,115FR36, 11.50%, 9/15/2019 ...................................................... 33,075,000,000 IDR 4,101 4,293FR40, 11.00%, 9/15/2025 ...................................................... 33,050,000,000 IDR 3,353 4,448FR42, 10.25%, 7/15/2027 ...................................................... 5,900,000,000 IDR 629 758FR43, 10.25%, 7/15/2022 ...................................................... 1,790,000,000 IDR 147 227FR45, 9.75%, 5/15/2037 ....................................................... 425,000,000 IDR 51 54FR46, 9.50%, 7/15/2023 ....................................................... 150,920,000,000 IDR 15,733 18,459FR47, 10.00%, 2/15/2028 ...................................................... 243,580,000,000 IDR 25,348 30,842FR48, 9.00%, 9/15/2018 ....................................................... 3,280,000,000 IDR 274 38054,404 64,949Ukraine: 2.70%Financing of Infrastructure Projects State Enterprise8.375%, 11/3/2017 ............................................................ 680,000 USD 580 6587.40%, 4/20/2018 ............................................................. 520,000 USD 487 467Government of Ukraine9.25%, 7/24/2017 ............................................................. 7,120,000 USD 7,625 7,4957.75%, 9/23/2020 ............................................................. 14,448,000 USD 13,050 13,828Senior Bond, 4.95%, 10/13/2015 ................................................. 170,000 EUR 217 220Senior Bond, 6.58%, 11/21/2016 ................................................. 7,864,000 USD 6,952 7,700Senior Note, 6.25%, 6/17/2016 ................................................... 5,190,000 USD 4,689 5,088Senior Note, 7.95%, 2/23/2021 ................................................... 15,950,000 USD 15,513 15,336Senior Note, 7.80%, 11/28/2022 ................................................. 3,720,000 USD 3,626 3,482Senior Note, 7.50%, 4/17/2023 ................................................... 970,000 USD 863 89453,602 55,168The accompanying notes are an integral part of these financial statements.42 Franklin Templeton Investments Funds

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Brazil (2) : 2.45%Nota Do Tesouro Nacional10.00%, 1/1/2017 .................................................................. 27,790 BRL $ 14,179 $ 12,774Index Linked, 6.00%, 5/15/2015 ...................................................... 11,724 BRL 15,443 13,130Index Linked, 6.00%, 8/15/2016 ...................................................... 8,745 BRL 11,035 9,801Index Linked, 6.00%, 5/15/2017 ...................................................... 124BRL 152 139Index Linked, 6.00%, 8/15/2018 ...................................................... 5,775 BRL 7,512 6,573Index Linked, 6.00%, 5/15/2045 ...................................................... 6,380 BRL 8,209 7,62356,530 50,040Malaysia: 2.24%Government of Malaysia3.434%, 8/15/2014 ................................................................. 25,335,000 MYR 8,387 8,4603.741%, 2/27/2015 ................................................................. 32,995,000 MYR 11,033 11,0763.835%, 8/12/2015 ................................................................. 17,395,000 MYR 5,893 5,8514.72%, 9/30/2015 .................................................................. 110,000 MYR 38 383.197%, 10/15/2015 ................................................................ 3,845,000 MYR 1,274 1,277Senior Bond, 3.461%, 7/31/2013 ...................................................... 6,745,000 MYR 2,205 2,245Senior Bond, 8.00%, 10/30/2013 ...................................................... 140,000 MYR 48 47Senior Bond, 5.094%, 4/30/2014 ...................................................... 49,915,000 MYR 16,799 16,88945,677 45,883Russia: 1.36%Government of Russia, Senior Bond, 7.50%, 3/31/2030 ...................................... 22,575,735 USD 25,268 27,810Israel: 1.09%Government of Israel, 3.50%, 9/30/2013 .................................................. 76,661,000 ILS 21,001 22,287Lithuania: 1.01%Government of Lithuania6.75%, 1/15/2015 .................................................................. 2,830,000 USD 2,986 3,1637.375%, 2/11/2020 ................................................................. 10,090,000 USD 10,649 12,5576.125%, 3/9/2021 .................................................................. 1,550,000 USD 1,480 1,816Senior Note, 9.375%, 6/22/2014 ...................................................... 2,100,000 EUR 3,273 3,10918,388 20,645Singapore: 0.96%Government of Singapore, Senior Bond, 0.25%, 2/1/2014 .................................... 23,585,000 SGD 18,732 19,565Slovenia: 0.76%Government of SloveniaSenior Note, 5.50%, 10/26/2022 ...................................................... 9,185,000 USD 8,843 8,863Senior Note, 5.85%, 5/10/2023 ....................................................... 6,880,000 USD 6,773 6,72115,616 15,584Serbia: 0.67%Government of SerbiaSenior Note, 5.25%, 11/21/2017 ...................................................... 2,660,000 USD 2,644 2,741Senior Note, 4.875%, 2/25/2020 ...................................................... 5,260,000 USD 5,182 5,1067.25%, 9/28/2021 .................................................................. 5,520,000 USD 5,659 5,92713,485 13,774(2) Principal amount in 1000 Brazilian Real unitsThe accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 43

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Romania: 0.61%Government of Romania, Senior Note, 5.25%, 6/17/2016 ................................... 8,510,000 EUR $ 12,009 $ 12,386Sri Lanka: 0.56%Government of Sri LankaA, 7.50%, 8/1/2013 ............................................................... 101,770,000 LKR 827 817A, 7.00%, 3/1/2014 ............................................................... 16,130,000 LKR 135 127A, 11.25%, 7/15/2014 ............................................................. 369,500,000 LKR 3,345 2,988A, 11.75%, 3/15/2015 ............................................................. 2,410,000 LKR 24 20A, 6.50%, 7/15/2015 .............................................................. 64,510,000 LKR 529 478A, 11.00%, 8/1/2015 .............................................................. 331,100,000 LKR 2,941 2,667A, 6.40%, 8/1/2016 ............................................................... 35,100,000 LKR 284 248A, 5.80%, 1/15/2017 .............................................................. 41,600,000 LKR 233 283A, 9.00%, 5/1/2021 ............................................................... 217,870,000 LKR 1,509 1,523B, 8.50%, 7/15/2013 .............................................................. 1,550,000 LKR 12 13B, 11.75%, 4/1/2014 .............................................................. 25,580,000 LKR 189 207B, 6.60%, 6/1/2014 ............................................................... 13,900,000 LKR 118 108B, 6.40%, 10/1/2016 .............................................................. 29,300,000 LKR 235 206B, 8.50%, 7/15/2018 .............................................................. 30,840,000 LKR 220 222C, 8.50%, 4/1/2018 ............................................................... 61,070,000 LKR 437 441D, 8.50%, 6/1/2018 ............................................................... 160,050,000 LKR 1,157 1,15312,195 11,501Peru: 0.32%Government of Peru, Senior Bond, 7.84%, 8/12/2020 ...................................... 15,042,000 PEN 5,753 6,543Vietnam: 0.31%Government of Vietnam, 6.75%, 1/29/2020 .............................................. 5,775,000 USD 6,039 6,436Venezuela: 0.27%Government of Venezuela, 10.75%, 9/19/2013 ........................................... 5,325,000 USD 5,088 5,604Iceland: 0.25%Government of Iceland, 5.875%, 5/11/2022 .............................................. 4,570,000 USD 4,477 5,090Philippines: 0.12%Government of the PhilippinesSenior Bond, 7.00%, 1/27/2016 ..................................................... 44,930,000 PHP 1,165 1,190Senior Bond, 9.125%, 9/4/2016 ..................................................... 27,810,000 PHP 765 781Senior Note, 6.25%, 1/27/2014 ...................................................... 18,950,000 PHP 471 4712,401 2,442Supranational: 0.12%Inter-American Development Bank, Senior Note, 7.50%, 12/5/2024 ........................... 28,000,000 MXN 2,667 2,389Total Bonds: ....................................................................... 1,391,239 1,451,440Total Long-Term Investments: .......................................................... 1,391,239 1,451,440SHORT-TERM SECURITIES: 26.41%Bank of Montreal, Term Deposit, 0.90%, 7/2/2013 ......................................... 100,000,000 CAD 100,000 100,000Bank of Negara Monetary Note2.96%, 7/4/2013 ................................................................. 130,000 MYR 42 432.87%, 7/11/2013 ................................................................ 7,755,000 MYR 2,457 2,5782.96%, 7/18/2013 ................................................................ 120,000 MYR 39 402.87%, 7/25/2013 ................................................................ 8,535,000 MYR 2,710 2,834The accompanying notes are an integral part of these financial statements.44 Franklin Templeton Investments Funds

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)2.87%, 8/6/2013 ................................................................ 22,880,000 MYR $ 7,235 $ 7,5912.83%, 8/15/2013 ............................................................... 28,080,000 MYR 8,873 9,3092.831%, 8/27/2013 .............................................................. 12,320,000 MYR 3,889 4,0812.903%, 9/5/2013 ............................................................... 10,850,000 MYR 3,449 3,5912.90%, 9/17/2013 ............................................................... 24,390,000 MYR 7,741 8,0642.917%, 9/26/2013 .............................................................. 18,640,000 MYR 6,098 6,1592.98%, 10/8/2013 ............................................................... 2,630,000 MYR 863 8682.90%, 10/10/2013 .............................................................. 5,495,000 MYR 1,774 1,8142.90%, 10/22/2013 .............................................................. 590,000 MYR 189 1952.90%, 10/31/2013 .............................................................. 200,000 MYR 64 662.971%, 11/12/2013 ............................................................. 740,000 MYR 239 2442.912%, 11/19/2013 ............................................................. 1,340,000 MYR 434 4412.894%, 11/26/2013 ............................................................. 1,495,000 MYR 498 4912.903%, 12/5/2013 .............................................................. 845,000 MYR 281 2782.924%, 12/10/2013 ............................................................. 320,000 MYR 106 1052.91%, 12/12/2013 .............................................................. 750,000 MYR 240 2462.933%, 12/19/2013 ............................................................. 1,520,000 MYR 511 4992.87%, 12/26/2013 .............................................................. 790,000 MYR 262 2592.918%, 12/31/2013 ............................................................. 470,000 MYR 155 1542.884%, 1/9/2014 ............................................................... 4,780,000 MYR 1,534 1,5652.875%, 1/16/2014 .............................................................. 9,690,000 MYR 3,129 3,1712.85%, 2/6/2014 ................................................................ 530,000 MYR 172 1732.85%, 2/18/2014 ............................................................... 7,560,000 MYR 2,459 2,4682.861%, 2/20/2014 .............................................................. 18,095,000 MYR 5,912 5,9072.88%, 2/25/2014 ............................................................... 6,050,000 MYR 1,966 1,9742.907%, 3/13/2014 .............................................................. 6,045,000 MYR 1,949 1,9702.884%, 3/20/2014 .............................................................. 800,000 MYR 256 2612.86%, 3/27/2014 ............................................................... 1,060,000 MYR 346 3452.88%, 4/3/2014 ................................................................ 310,000 MYR 101 1012.873%, 4/24/2014 .............................................................. 2,590,000 MYR 863 8412.855%, 5/15/2014 .............................................................. 1,750,000 MYR 579 5672.85%, 5/20/2014 ............................................................... 2,665,000 MYR 882 8642.853%, 5/27/2014 .............................................................. 2,415,000 MYR 794 7822.87%, 6/3/2014 ................................................................ 3,960,000 MYR 1,248 1,2832.888%, 6/5/2014 ............................................................... 2,089,000 MYR 663 6772.921%, 6/10/2014 .............................................................. 240,000 MYR 76 782.87%, 6/17/2014 ............................................................... 3,090,000 MYR 973 1,0002.954%, 6/19/2014 .............................................................. 2,480,000 MYR 781 802Canadian Imperial Bank of Commerce, Term Deposit, 0.85%, 7/2/2013 ...................... 83,000,000 CAD 83,000 83,000Korea Monetary Stabilization Bond2.51%, 7/9/2013 ................................................................ 4,937,000,000 KRW 4,399 4,5412.549%, 8/13/2013 .............................................................. 2,945,200,000 KRW 2,669 2,7022.50%, 9/10/2013 ............................................................... 5,971,900,000 KRW 5,370 5,468Mexico Treasury Bill4.58%, 9/19/2013 ............................................................... 2,707,000 MXN 2,076 2,1773.835%, 10/31/2013 ............................................................. 1,191,700 MXN 979 9543.898%, 12/11/2013 ............................................................. 2,997,400 MXN 2,328 2,3884.003%, 1/9/2014 ............................................................... 4,060,660 MXN 3,281 3,2253.912%, 4/3/2014 ............................................................... 4,882,500 MXN 3,821 3,8413.985%, 4/30/2014 .............................................................. 9,092,500 MXN 7,149 7,133The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 45

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Monetary Authority of Singapore Treasury Bill0.248%, 7/5/2013 ................................................................. 19,671,000 SGD $ 16,051 $ 16,3190.271%, 7/26/2013 ................................................................ 5,950,000 SGD 4,854 4,935Philippine Treasury Bill0.24%, 7/10/2013 ................................................................. 5,250,000 PHP 127 1281.59%, 7/24/2013 ................................................................. 3,750,000 PHP 89 911.693%, 8/22/2013 ................................................................ 36,300,000 PHP 850 8840.973%, 9/4/2013 ................................................................. 67,120,000 PHP 1,636 1,6330.191%, 10/2/2013 ................................................................ 36,530,000 PHP 907 8880.543%, 11/13/2013 .............................................................. 54,030,000 PHP 1,313 1,3110.385%, 12/11/2013 .............................................................. 9,960,000 PHP 240 2410.609%, 1/8/2014 ................................................................. 14,570,000 PHP 351 3530.522%, 2/5/2014 ................................................................. 19,430,000 PHP 475 4700.455%, 3/5/2014 ................................................................. 47,100,000 PHP 1,184 1,1370.203%, 4/2/2014 ................................................................. 65,800,000 PHP 1,636 1,587Royal Bank of Canada, Term Deposit, 0.97%, 7/2/2013 ..................................... 110,100,000 CAD 110,100 110,100Singapore Treasury Bill0.165%, 7/11/2013 ................................................................ 7,560,000 SGD 6,204 6,2720.257%, 7/25/2013 ................................................................ 7,915,000 SGD 6,392 6,5650.20%, 8/12/2013 ................................................................. 5,570,000 SGD 4,558 4,6200.209%, 8/22/2013 ................................................................ 5,660,000 SGD 4,624 4,6940.221%, 9/5/2013 ................................................................. 4,742,000 SGD 3,898 3,9320.24%, 10/4/2013 ................................................................. 39,360,000 SGD 32,240 32,6340.291%, 11/1/2013 ................................................................ 4,070,000 SGD 3,328 3,3740.35%, 12/27/2013 ................................................................ 10,180,000 SGD 8,343 8,4330.251%, 5/2/2014 ................................................................. 12,210,000 SGD 10,035 10,104Sri Lanka Treasury Bill13.08%, 8/2/2013 ................................................................. 4,060,000 LKR 31 3212.25%, 10/11/2013 .............................................................. 2,760,000 LKR 20 22Sweden Treasury Bill0.855%, 9/18/2013 ................................................................ 132,410,000 SEK 20,984 20,7140.895%, 12/18/2013 .............................................................. 55,980,000 SEK 8,877 8,737Total Short-Term Securities: ........................................................... 537,251 540,418TOTAL INVESTMENTS: 97.35% ........................................................ $1,928,490 1,991,858NET UNREALIZED LOSS ON DERIVATIVES: (0.57%) ....................................... (11,669)OTHER ASSETS, less liabilities: 3.22% .................................................. 65,946TOTAL NET ASSETS: 100.00% ............................................................ $2,046,135SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCounterpartyCreditRatingSettlement DateCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)(000s) (000s) (000s) (000s) (000s)BARCLAYS BANK PLC ............ A+ July 29, 2013 2,995 EUR $ 4,102 4,010 USD $ 4,219 $ 1.3389 $ 117BARCLAYS BANK PLC ............ A+ August 5, 2013 5,119 EUR 7,013 6,951 USD 7,315 1.3578 301BARCLAYS BANK PLC ............ A+ September 19, 2013 394 EUR 540 519 USD 546 1.3173 6BARCLAYS BANK PLC ............ A+ October 25, 2013 380 EUR 522 496 USD 523 1.3044 1The accompanying notes are an integral part of these financial statements.46 Franklin Templeton Investments Funds

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)BARCLAYS BANK PLC ............ A+ February 11, 2014 4,290 EUR $ 5,911 5,796 USD $ 6,128 $ 1.3511 $ 217BARCLAYS BANK PLC ............ A+ March 7, 2014 2,007 EUR 2,768 2,626 USD 2,779 1.3084 11BARCLAYS BANK PLC ............ A+ April 25, 2014 2,895 EUR 3,998 3,781 USD 4,005 1.3062 7BARCLAYS BANK PLC ............ A+ May 7, 2014 1,636 EUR 2,261 2,147 USD 2,275 1.3124 14BARCLAYS BANK PLC ............ A+ May 7, 2014 2,249 EUR 3,107 2,959 USD 3,135 1.3157 28BARCLAYS BANK PLC ............ A+ June 20, 2014 559 EUR 774 751 USD 797 1.3427 23DEUTSCHE BANK AG ............. A+ July 12, 2013 688 USD 724 2,224 MYR 740 3.2330 16DEUTSCHE BANK AG ............. A+ July 15, 2013 777 USD 818 2,510 MYR 835 3.2307 17DEUTSCHE BANK AG ............. A+ July 18, 2013 16 USD 18 53 MYR 18 3.2242 —DEUTSCHE BANK AG ............. A+ July 22, 2013 26 USD 28 84 MYR 28 3.2012 —DEUTSCHE BANK AG ............. A+ July 25, 2013 32 USD 33 102 MYR 34 3.2182 1DEUTSCHE BANK AG ............. A+ July 31, 2013 84 USD 88 5,046 INR 89 60.2536 1DEUTSCHE BANK AG ............. A+ August 30, 2013 83 USD 88 5,046 INR 89 60.5791 1DEUTSCHE BANK AG ............. A+ September 4, 2013 19,050 USD 20,062 128,816 SEK 20,196 6.7620 134DEUTSCHE BANK AG ............. A+ September 23, 2013 27,260 EUR 37,400 36,262 USD 38,206 1.3302 806DEUTSCHE BANK AG ............. A+ September 27, 2013 10,795 EUR 14,812 14,260 USD 15,026 1.3210 214DEUTSCHE BANK AG ............. A+ September 30, 2013 83 USD 87 5,046 INR 88 60.8890 1DEUTSCHE BANK AG ............. A+ November 4, 2013 131 EUR 180 171 USD 180 1.3050 —DEUTSCHE BANK AG ............. A+ December 3, 2013 2,050 EUR 2,819 2,673 USD 2,822 1.3040 3DEUTSCHE BANK AG ............. A+ December 20, 2013 19,831 EUR 27,280 26,332 USD 27,804 1.3278 524DEUTSCHE BANK AG ............. A+ January 7, 2014 6,244 EUR 8,595 8,206 USD 8,669 1.3142 74DEUTSCHE BANK AG ............. A+ January 17, 2014 1,035 EUR 1,425 1,385 USD 1,463 1.3380 38DEUTSCHE BANK AG ............. A+ January 24, 2014 21,275 EUR 29,298 28,410 USD 30,023 1.3353 725DEUTSCHE BANK AG ............. A+ January 31, 2014 543 EUR 748 733 USD 774 1.3490 26DEUTSCHE BANK AG ............. A+ February 11, 2014 10,608 EUR 14,616 14,235 USD 15,050 1.3419 434DEUTSCHE BANK AG ............. A+ May 7, 2014 12,380 EUR 17,104 16,285 USD 17,254 1.3154 150DEUTSCHE BANK AG ............. A+ May 8, 2014 1,097 EUR 1,516 1,437 USD 1,523 1.3098 7DEUTSCHE BANK AG ............. A+ June 9, 2014 2,411 EUR 3,334 3,165 USD 3,356 1.3131 22DEUTSCHE BANK AG ............. A+ June 9, 2014 3,698 EUR 5,116 4,856 USD 5,150 1.3131 34DEUTSCHE BANK AG ............. A+ June 13, 2014 4,047 EUR 5,598 5,373 USD 5,698 1.3277 100DEUTSCHE BANK AG ............. A+ June 13, 2014 5,167 EUR 7,148 6,860 USD 7,276 1.3277 128DEUTSCHE BANK AG ............. A+ June 17, 2014 4,047 EUR 5,599 5,397 USD 5,724 1.3337 125DEUTSCHE BANK AG ............. A+ June 23, 2014 9,200 USD 9,759 29,637 MYR 9,761 3.2216 2DEUTSCHE BANK AG ............. A+ June 26, 2014 12,131 USD 12,870 535,506 PHP 13,033 44.1431 163DEUTSCHE BANK AG ............. A+ June 27, 2014 398 EUR 551 523 USD 555 1.3129 3DEUTSCHE BANK AG ............. A+ June 27, 2014 6,434 USD 6,826 7,517,000 KRW 6,904 1,168.3000 78HSBC BANK PLC ................ AA- July 31, 2013 76 USD 80 242 MYR 81 3.2026 1HSBC BANK PLC ................ AA- September 27, 2013 737 USD 777 44,897 INR 783 60.9038 6HSBC BANK PLC ................ AA- December 9, 2013 469 EUR 645 616 USD 651 1.3153 6HSBC BANK PLC ................ AA- February 10, 2014 1,840 EUR 2,535 2,488 USD 2,631 1.3524 96JPMORGAN CHASE BANK, N.A. .... A+ July 29, 2013 33 USD 35 107 MYR 36 3.2311 1JPMORGAN CHASE BANK, N.A. .... A+ September 25, 2013 460 USD 485 27,954 INR 487 60.7400 2JPMORGAN CHASE BANK, N.A. .... A+ September 25, 2013 8,269 USD 8,713 363,600 PHP 8,879 43.9700 166JPMORGAN CHASE BANK, N.A. .... A+ December 13, 2013 2,179 EUR 2,997 2,844 USD 3,003 1.3053 6JPMORGAN CHASE BANK, N.A. .... A+ December 26, 2013 7,717 USD 8,149 340,300 PHP 8,296 44.1000 147JPMORGAN CHASE BANK, N.A. .... A+ December 27, 2013 3,110 USD 3,285 135,300 PHP 3,299 43.5000 14JPMORGAN CHASE BANK, N.A. .... A+ January 14, 2014 714 EUR 983 935 USD 988 1.3093 5JPMORGAN CHASE BANK, N.A. .... A+ January 22, 2014 511 EUR 704 681 USD 720 1.3323 16The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 47

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)JPMORGAN CHASE BANK, N.A. .... A+ February 19, 2014 1,975 EUR $ 2,722 2,638 USD $ 2,790 $ 1.3358 $ 68JPMORGAN CHASE BANK, N.A. .... A+ February 19, 2014 1,975 EUR 2,722 2,641 USD 2,793 1.3371 71JPMORGAN CHASE BANK, N.A. .... A+ June 25, 2014 6,065 USD 6,434 268,600 PHP 6,537 44.2900 103JPMORGAN CHASE BANK, N.A. .... A+ June 27, 2014 1,555 USD 1,650 67,800 PHP 1,650 43.6000 —UBS AG ........................ A August 21, 2013 1,165 EUR 1,597 1,559 USD 1,641 1.3381 44UBS AG ........................ A September 20, 2013 1,339 EUR 1,837 1,770 USD 1,865 1.3217 28UBS AG ........................ A October 9, 2013 2,385 EUR 3,274 3,117 USD 3,285 1.3068 11UBS AG ........................ A December 9, 2013 1,254 EUR 1,724 1,646 USD 1,737 1.3128 13UBS AG ........................ A December 9, 2013 39,875 EUR 54,834 52,347 USD 55,257 1.3128 423UBS AG ........................ A January 13, 2014 617 EUR 849 808 USD 853 1.3090 4UBS AG ........................ A January 13, 2014 629 EUR 866 824 USD 870 1.3090 4UBS AG ........................ A January 13, 2014 669 EUR 920 876 USD 925 1.3097 5UBS AG ........................ A January 13, 2014 3,657 EUR 5,034 4,790 USD 5,060 1.3097 26UBS AG ........................ A January 27, 2014 904 EUR 1,246 1,205 USD 1,274 1.3322 28UBS AG ........................ A February 3, 2014 49 EUR 67 66 USD 70 1.3561 3UBS AG ........................ A February 10, 2014 1,700 EUR 2,342 2,302 USD 2,433 1.3539 91UBS AG ........................ A February 13, 2014 1,740 EUR 2,398 2,334 USD 2,468 1.3413 70UBS AG ........................ A May 12, 2014 816 EUR 1,128 1,077 USD 1,142 1.3204 14Total Number of Contracts ......70 $ 6,024BARCLAYS BANK PLC ............ A+ July 16, 2013 1,404 EUR 1,922 1,720 USD 1,809 1.2253 (113)BARCLAYS BANK PLC ............ A+ July 18, 2013 2,203 EUR 3,016 2,712 USD 2,852 1.2310 (164)BARCLAYS BANK PLC ............ A+ July 19, 2013 1,652 EUR 2,262 2,040 USD 2,146 1.2350 (116)BARCLAYS BANK PLC ............ A+ July 30, 2013 240 EUR 329 297 USD 312 1.2362 (17)BARCLAYS BANK PLC ............ A+ August 1, 2013 49 EUR 67 60 USD 63 1.2310 (4)BARCLAYS BANK PLC ............ A+ August 1, 2013 117 EUR 160 144 USD 151 1.2300 (9)BARCLAYS BANK PLC ............ A+ August 5, 2013 1,597 EUR 2,188 1,975 USD 2,078 1.2362 (110)BARCLAYS BANK PLC ............ A+ August 13, 2013 658 USD 693 815 SGD 677 1.2382 (16)BARCLAYS BANK PLC ............ A+ August 19, 2013 1,884 USD 1,984 2,331 SGD 1,937 1.2371 (47)BARCLAYS BANK PLC ............ A+ August 23, 2013 581 EUR 797 728 USD 767 1.2522 (30)BARCLAYS BANK PLC ............ A+ August 23, 2013 974 EUR 1,335 1,219 USD 1,284 1.2522 (51)BARCLAYS BANK PLC ............ A+ August 26, 2013 17,746 EUR 24,328 22,234 USD 23,410 1.2528 (918)BARCLAYS BANK PLC ............ A+ September 10, 2013 599 EUR 822 759 USD 799 1.2660 (23)BARCLAYS BANK PLC ............ A+ September 12, 2013 587 EUR 805 754 USD 794 1.2837 (11)BARCLAYS BANK PLC ............ A+ September 16, 2013 1,676 EUR 2,299 2,170 USD 2,286 1.2946 (13)BARCLAYS BANK PLC ............ A+ September 24, 2013 956 EUR 1,312 1,243 USD 1,310 1.2998 (2)BARCLAYS BANK PLC ............ A+ October 29, 2013 127 USD 135 64,140 CLP 131 503.5999 (4)BARCLAYS BANK PLC ............ A+ October 31, 2013 11,115 EUR 15,268 85,400 NOK 14,763 7.6830 (505)BARCLAYS BANK PLC ............ A+ November 5, 2013 924 EUR 1,269 1,202 USD 1,268 1.3018 (1)BARCLAYS BANK PLC ............ A+ February 11, 2014 516 EUR 711 2,224 PLN 698 4.3103 (13)BARCLAYS BANK PLC ............ A+ February 11, 2014 703 USD 744 346,700 CLP 701 493.2002 (43)BARCLAYS BANK PLC ............ A+ March 5, 2014 1,841 USD 1,947 911,700 CLP 1,839 495.2501 (108)BARCLAYS BANK PLC ............ A+ May 16, 2014 1,338 EUR 1,850 1,742 USD 1,846 1.3016 (4)BARCLAYS BANK PLC ............ A+ May 21, 2014 1,698 EUR 2,347 2,185 USD 2,317 1.2873 (30)BARCLAYS BANK PLC ............ A+ May 21, 2014 4,912 EUR 6,790 6,323 USD 6,702 1.2872 (88)BARCLAYS BANK PLC ............ A+ May 30, 2014 1,409 EUR 1,948 1,820 USD 1,930 1.2920 (18)BARCLAYS BANK PLC ............ A+ June 5, 2014 1,095 EUR 1,514 1,427 USD 1,513 1.3035 (1)BARCLAYS BANK PLC ............ A+ June 5, 2014 2,438 EUR 3,372 3,179 USD 3,370 1.3035 (2)The accompanying notes are an integral part of these financial statements.48 Franklin Templeton Investments Funds

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)DEUTSCHE BANK AG ............. A+ July 5, 2013 578 USD $ 608 32,847 INR $ 580 $ 56.8258 $ (28)DEUTSCHE BANK AG ............. A+ July 5, 2013 2,079 EUR 2,847 15,896 NOK 2,752 7.6451 (95)DEUTSCHE BANK AG ............. A+ July 5, 2013 4,906 USD 5,159 6,198 SGD 5,143 1.2634 (16)DEUTSCHE BANK AG ............. A+ July 5, 2013 23,580 EUR 32,275 29,819 USD 31,355 1.2646 (920)DEUTSCHE BANK AG ............. A+ July 8, 2013 213 USD 224 12,097 INR 213 56.7138 (11)DEUTSCHE BANK AG ............. A+ July 9, 2013 2,505 USD 2,634 140,000 INR 2,468 55.8903 (166)DEUTSCHE BANK AG ............. A+ July 12, 2013 943 USD 991 52,224 INR 920 55.4013 (71)DEUTSCHE BANK AG ............. A+ July 17, 2013 1,123 USD 1,181 65,955 INR 1,161 58.7540 (20)DEUTSCHE BANK AG ............. A+ July 18, 2013 282 USD 297 11,840 PHP 289 42.0000 (8)DEUTSCHE BANK AG ............. A+ July 18, 2013 6,314 USD 6,641 3,212,164 CLP 6,626 508.7500 (15)DEUTSCHE BANK AG ............. A+ July 18, 2013 17,794 USD 18,717 9,012,875 CLP 18,592 506.5000 (125)DEUTSCHE BANK AG ............. A+ July 22, 2013 219 USD 230 11,968 INR 211 54.7424 (19)DEUTSCHE BANK AG ............. A+ July 22, 2013 1,212 EUR 1,660 1,494 USD 1,572 1.2325 (88)DEUTSCHE BANK AG ............. A+ July 23, 2013 1,389 EUR 1,903 1,710 USD 1,799 1.2308 (104)DEUTSCHE BANK AG ............. A+ July 25, 2013 130 EUR 178 158 USD 167 1.2200 (11)DEUTSCHE BANK AG ............. A+ July 26, 2013 440 USD 463 24,244 INR 426 55.0795 (37)DEUTSCHE BANK AG ............. A+ July 29, 2013 70 EUR 96 85 USD 90 1.2204 (6)DEUTSCHE BANK AG ............. A+ July 29, 2013 928 USD 976 50,955 INR 895 54.9165 (81)DEUTSCHE BANK AG ............. A+ July 31, 2013 2,959 USD 3,114 162,923 INR 2,862 55.0535 (252)DEUTSCHE BANK AG ............. A+ July 31, 2013 5,117 EUR 7,010 6,361 USD 6,694 1.2432 (316)DEUTSCHE BANK AG ............. A+ August 6, 2013 2,102 EUR 2,880 2,573 USD 2,708 1.2240 (172)DEUTSCHE BANK AG ............. A+ August 7, 2013 2,517 USD 2,649 3,112 SGD 2,585 1.2366 (64)DEUTSCHE BANK AG ............. A+ August 9, 2013 1,505 EUR 2,062 1,881 USD 1,979 1.2497 (83)DEUTSCHE BANK AG ............. A+ August 12, 2013 5,012 USD 5,275 6,199 SGD 5,149 1.2368 (126)DEUTSCHE BANK AG ............. A+ August 19, 2013 2,833 USD 2,982 3,498 SGD 2,906 1.2347 (76)DEUTSCHE BANK AG ............. A+ August 19, 2013 6,831 EUR 9,363 29,046 PLN 9,170 4.2520 (193)DEUTSCHE BANK AG ............. A+ August 26, 2013 1,857 USD 1,955 2,318 SGD 1,926 1.2484 (29)DEUTSCHE BANK AG ............. A+ August 26, 2013 1,865 USD 1,964 2,311 SGD 1,920 1.2390 (44)DEUTSCHE BANK AG ............. A+ August 27, 2013 2,325 USD 2,448 2,886 SGD 2,398 1.2411 (50)DEUTSCHE BANK AG ............. A+ August 28, 2013 27 EUR 37 34 USD 36 1.2568 (1)DEUTSCHE BANK AG ............. A+ August 28, 2013 266 USD 281 15,139 INR 265 56.8411 (16)DEUTSCHE BANK AG ............. A+ August 28, 2013 587 EUR 805 738 USD 777 1.2569 (28)DEUTSCHE BANK AG ............. A+ August 30, 2013 1,156 USD 1,218 1,445 SGD 1,201 1.2497 (17)DEUTSCHE BANK AG ............. A+ September 4, 2013 180 USD 190 10,463 INR 183 57.9999 (7)DEUTSCHE BANK AG ............. A+ September 6, 2013 372 USD 392 21,411 INR 374 57.4923 (18)DEUTSCHE BANK AG ............. A+ September 10, 2013 211 USD 222 12,098 INR 211 57.2738 (11)DEUTSCHE BANK AG ............. A+ September 11, 2013 114 USD 120 6,550 INR 115 57.6245 (5)DEUTSCHE BANK AG ............. A+ September 11, 2013 3,698 EUR 5,072 4,750 USD 5,003 1.2844 (69)DEUTSCHE BANK AG ............. A+ September 18, 2013 280 USD 295 16,396 INR 286 58.6409 (9)DEUTSCHE BANK AG ............. A+ September 19, 2013 3,612 USD 3,805 4,508 SGD 3,748 1.2482 (57)DEUTSCHE BANK AG ............. A+ September 20, 2013 252 USD 265 14,935 INR 261 59.3816 (5)DEUTSCHE BANK AG ............. A+ September 24, 2013 1,130 USD 1,190 47,217 PHP 1,153 41.8020 (37)DEUTSCHE BANK AG ............. A+ September 30, 2013 450 USD 474 217,700 CLP 445 484.0004 (29)DEUTSCHE BANK AG ............. A+ October 4, 2013 1,359 USD 1,432 56,815 PHP 1,387 41.8000 (45)DEUTSCHE BANK AG ............. A+ October 16, 2013 307 USD 324 961 MYR 319 3.1292 (5)DEUTSCHE BANK AG ............. A+ October 16, 2013 319 USD 337 13,286 PHP 325 41.6190 (12)DEUTSCHE BANK AG ............. A+ October 16, 2013 711 USD 749 2,226 MYR 738 3.1329 (11)DEUTSCHE BANK AG ............. A+ October 23, 2013 1,010 USD 1,065 3,133 MYR 1,038 3.1005 (27)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 49

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)DEUTSCHE BANK AG ............. A+ October 29, 2013 254 USD $ 268 128,218 CLP $ 261 $ 504.6999 $ (7)DEUTSCHE BANK AG ............. A+ October 31, 2013 1,939 EUR 2,664 2,510 USD 2,647 1.2942 (17)DEUTSCHE BANK AG ............. A+ November 15, 2013 6,263 EUR 8,606 7,995 USD 8,435 1.2766 (171)DEUTSCHE BANK AG ............. A+ November 19, 2013 188 EUR 258 241 USD 254 1.2847 (4)DEUTSCHE BANK AG ............. A+ November 19, 2013 920 USD 971 2,867 MYR 949 3.1160 (22)DEUTSCHE BANK AG ............. A+ November 19, 2013 1,753 EUR 2,410 2,253 USD 2,377 1.2847 (33)DEUTSCHE BANK AG ............. A+ November 29, 2013 171 EUR 235 223 USD 235 1.3005 —DEUTSCHE BANK AG ............. A+ December 5, 2013 2,666 USD 2,814 1,340,820 CLP 2,725 503.0000 (89)DEUTSCHE BANK AG ............. A+ December 23, 2013 3,864 USD 4,081 4,854 SGD 4,046 1.2560 (35)DEUTSCHE BANK AG ............. A+ January 8, 2014 832 USD 879 2,575 MYR 851 3.0933 (28)DEUTSCHE BANK AG ............. A+ January 8, 2014 3,898 USD 4,118 1,926,470 CLP 3,903 494.2000 (215)DEUTSCHE BANK AG ............. A+ January 10, 2014 5,497 USD 5,808 2,706,900 CLP 5,484 492.4000 (324)DEUTSCHE BANK AG ............. A+ January 22, 2014 787 USD 832 387,160 CLP 784 491.9997 (48)DEUTSCHE BANK AG ............. A+ January 24, 2014 1,117 USD 1,181 549,160 CLP 1,112 491.5499 (69)DEUTSCHE BANK AG ............. A+ January 28, 2014 695 USD 735 341,940 CLP 692 491.7000 (43)DEUTSCHE BANK AG ............. A+ January 29, 2014 225 USD 238 110,470 CLP 223 490.6507 (15)DEUTSCHE BANK AG ............. A+ January 31, 2014 449 USD 475 220,930 CLP 447 492.2496 (28)DEUTSCHE BANK AG ............. A+ February 3, 2014 417 USD 441 206,170 CLP 417 493.8996 (24)DEUTSCHE BANK AG ............. A+ February 7, 2014 3,952 USD 4,177 1,945,790 CLP 3,933 492.4000 (244)DEUTSCHE BANK AG ............. A+ February 11, 2014 517 EUR 713 2,224 PLN 698 4.3011 (15)DEUTSCHE BANK AG ............. A+ February 12, 2014 703 USD 744 347,400 CLP 702 493.9002 (42)DEUTSCHE BANK AG ............. A+ February 14, 2014 516 EUR 712 2,224 PLN 698 4.3087 (14)DEUTSCHE BANK AG ............. A+ February 18, 2014 1,069 USD 1,130 526,890 CLP 1,064 493.0302 (66)DEUTSCHE BANK AG ............. A+ February 25, 2014 756 USD 800 374,150 CLP 755 494.5999 (45)DEUTSCHE BANK AG ............. A+ February 26, 2014 670 USD 709 331,830 CLP 670 494.9997 (39)DEUTSCHE BANK AG ............. A+ February 27, 2014 942 USD 996 465,910 CLP 940 494.5998 (56)DEUTSCHE BANK AG ............. A+ February 28, 2014 483 USD 511 239,150 CLP 483 495.2802 (28)DEUTSCHE BANK AG ............. A+ February 28, 2014 1,167 USD 1,235 1,445 SGD 1,207 1.2377 (28)DEUTSCHE BANK AG ............. A+ March 3, 2014 484 USD 513 239,720 CLP 484 494.9497 (29)DEUTSCHE BANK AG ............. A+ March 5, 2014 483 USD 511 239,720 CLP 484 496.3003 (27)DEUTSCHE BANK AG ............. A+ March 6, 2014 465 USD 492 230,810 CLP 466 496.7502 (26)DEUTSCHE BANK AG ............. A+ March 7, 2014 463 USD 490 229,420 CLP 463 495.2498 (27)DEUTSCHE BANK AG ............. A+ March 13, 2014 451 USD 477 223,210 CLP 450 494.6000 (27)DEUTSCHE BANK AG ............. A+ March 18, 2014 916 USD 970 451,860 CLP 911 493.3002 (59)DEUTSCHE BANK AG ............. A+ March 26, 2014 1,558 EUR 2,149 2,024 USD 2,142 1.2993 (7)DEUTSCHE BANK AG ............. A+ April 4, 2014 468 USD 496 231,280 CLP 466 493.7997 (30)DEUTSCHE BANK AG ............. A+ April 4, 2014 584 EUR 806 752 USD 796 1.2872 (10)DEUTSCHE BANK AG ............. A+ May 7, 2014 23,472 EUR 32,429 202,000 SEK 31,693 8.6060 (736)DEUTSCHE BANK AG ............. A+ May 19, 2014 1,861 EUR 2,573 2,403 USD 2,547 1.2912 (26)DEUTSCHE BANK AG ............. A+ May 19, 2014 2,714 EUR 3,751 3,504 USD 3,714 1.2912 (37)DEUTSCHE BANK AG ............. A+ May 30, 2014 9,141 EUR 12,638 11,787 USD 12,495 1.2895 (143)DEUTSCHE BANK AG ............. A+ June 5, 2014 134 USD 142 68,474 CLP 138 512.5491 (4)DEUTSCHE BANK AG ............. A+ June 5, 2014 931 EUR 1,288 1,212 USD 1,285 1.3013 (3)DEUTSCHE BANK AG ............. A+ June 18, 2014 10,824 USD 11,481 34,400 MYR 11,330 3.1780 (151)HSBC BANK PLC ................ AA- July 29, 2013 1,110 USD 1,168 61,006 INR 1,072 54.9415 (96)HSBC BANK PLC ................ AA- July 29, 2013 1,652 USD 1,738 90,878 INR 1,597 55.0235 (141)HSBC BANK PLC ................ AA- August 2, 2013 5,117 EUR 7,010 6,332 USD 6,663 1.2374 (347)HSBC BANK PLC ................ AA- August 12, 2013 159 USD 167 500 MYR 166 3.1497 (1)The accompanying notes are an integral part of these financial statements.50 Franklin Templeton Investments Funds

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)HSBC BANK PLC ................ AA- August 15, 2013 1,405 USD $ 1,479 1,749 SGD $ 1,453 $ 1.2451 $ (26)HSBC BANK PLC ................ AA- August 19, 2013 1,405 USD 1,479 1,749 SGD 1,453 1.2450 (26)HSBC BANK PLC ................ AA- August 27, 2013 1,757 EUR 2,409 2,216 USD 2,334 1.2614 (75)HSBC BANK PLC ................ AA- August 28, 2013 327 USD 344 18,450 INR 323 56.4674 (21)HSBC BANK PLC ................ AA- August 30, 2013 901 USD 948 50,955 INR 891 56.5700 (57)HSBC BANK PLC ................ AA- September 4, 2013 662 USD 697 37,958 INR 664 57.3758 (33)HSBC BANK PLC ................ AA- September 11, 2013 21,572 USD 22,722 1,243,827 INR 21,718 57.6595 (1,004)HSBC BANK PLC ................ AA- September 13, 2013 272 USD 287 16,300 INR 285 59.8855 (2)HSBC BANK PLC ................ AA- September 26, 2013 6,640 USD 6,997 7,542,000 KRW 6,929 1,135.7999 (68)HSBC BANK PLC ................ AA- September 30, 2013 1,249 USD 1,317 52,400 PHP 1,280 41.9380 (37)HSBC BANK PLC ................ AA- October 3, 2013 1,000 USD 1,054 41,700 PHP 1,019 41.7110 (35)HSBC BANK PLC ................ AA- October 4, 2013 1,093 USD 1,152 45,574 PHP 1,113 41.7140 (39)HSBC BANK PLC ................ AA- October 7, 2013 1,634 USD 1,722 67,945 PHP 1,659 41.5890 (63)HSBC BANK PLC ................ AA- October 11, 2013 943 USD 994 39,191 PHP 957 41.5610 (37)HSBC BANK PLC ................ AA- October 17, 2013 2,552 EUR 3,504 3,318 USD 3,498 1.3000 (6)HSBC BANK PLC ................ AA- October 22, 2013 1,360 USD 1,434 4,190 MYR 1,388 3.0802 (46)HSBC BANK PLC ................ AA- October 24, 2013 674 USD 711 2,090 MYR 693 3.1010 (18)HSBC BANK PLC ................ AA- November 20, 2013 558 USD 589 1,742 MYR 577 3.1212 (12)HSBC BANK PLC ................ AA- December 12, 2013 45,318 USD 47,842 140,913 MYR 46,611 3.1094 (1,231)HSBC BANK PLC ................ AA- February 6, 2014 10,885 USD 11,507 34,533 MYR 11,404 3.1725 (103)HSBC BANK PLC ................ AA- February 7, 2014 2,516 USD 2,659 3,112 SGD 2,597 1.2371 (62)HSBC BANK PLC ................ AA- February 19, 2014 338 USD 358 1,068 MYR 353 3.1574 (5)HSBC BANK PLC ................ AA- March 14, 2014 4,008 USD 4,241 4,999 SGD 4,175 1.2472 (66)HSBC BANK PLC ................ AA- March 19, 2014 4,130 USD 4,371 5,153 SGD 4,305 1.2475 (66)HSBC BANK PLC ................ AA- June 20, 2014 3,081 USD 3,268 3,879 SGD 3,248 1.2590 (20)JPMORGAN CHASE BANK, N.A. .... A+ July 18, 2013 619 USD 651 34,130 INR 601 55.1690 (50)JPMORGAN CHASE BANK, N.A. .... A+ July 22, 2013 465 USD 490 25,451 INR 448 54.7223 (42)JPMORGAN CHASE BANK, N.A. .... A+ July 29, 2013 124 USD 131 6,830 INR 120 54.9163 (11)JPMORGAN CHASE BANK, N.A. .... A+ July 29, 2013 375 USD 395 20,619 INR 362 54.9165 (33)JPMORGAN CHASE BANK, N.A. .... A+ July 31, 2013 5,117 EUR 7,009 6,353 USD 6,685 1.2416 (324)JPMORGAN CHASE BANK, N.A. .... A+ August 6, 2013 4,006 EUR 5,489 4,898 USD 5,155 1.2226 (334)JPMORGAN CHASE BANK, N.A. .... A+ August 13, 2013 2,550 USD 2,684 139,810 INR 2,451 54.8265 (233)JPMORGAN CHASE BANK, N.A. .... A+ August 16, 2013 812 USD 855 45,171 INR 792 55.6450 (63)JPMORGAN CHASE BANK, N.A. .... A+ August 27, 2013 842 USD 887 2,650 MYR 880 3.1480 (7)JPMORGAN CHASE BANK, N.A. .... A+ August 28, 2013 1,229 USD 1,295 69,220 INR 1,211 56.3000 (84)JPMORGAN CHASE BANK, N.A. .... A+ August 28, 2013 1,254 USD 1,321 70,780 INR 1,239 56.4375 (82)JPMORGAN CHASE BANK, N.A. .... A+ August 29, 2013 1,496 EUR 2,052 1,885 USD 1,985 1.2597 (67)JPMORGAN CHASE BANK, N.A. .... A+ September 17, 2013 585 USD 617 34,770 INR 607 59.3940 (10)JPMORGAN CHASE BANK, N.A. .... A+ September 19, 2013 2,629 USD 2,770 3,216 SGD 2,674 1.2232 (96)JPMORGAN CHASE BANK, N.A. .... A+ October 11, 2013 536 USD 565 22,262 PHP 544 41.5410 (21)JPMORGAN CHASE BANK, N.A. .... A+ October 18, 2013 746 USD 787 2,317 MYR 768 3.1065 (19)JPMORGAN CHASE BANK, N.A. .... A+ October 21, 2013 2,618 USD 2,760 3,240 SGD 2,696 1.2375 (64)JPMORGAN CHASE BANK, N.A. .... A+ October 31, 2013 568 USD 600 1,760 MYR 583 3.0963 (17)JPMORGAN CHASE BANK, N.A. .... A+ November 12, 2013 5,214 EUR 7,165 6,677 USD 7,044 1.2805 (121)JPMORGAN CHASE BANK, N.A. .... A+ November 20, 2013 6,110 EUR 8,398 7,800 USD 8,231 1.2766 (167)JPMORGAN CHASE BANK, N.A. .... A+ December 17, 2013 938 USD 991 2,912 MYR 963 3.1030 (28)JPMORGAN CHASE BANK, N.A. .... A+ January 16, 2014 173 USD 182 530 MYR 175 3.0685 (7)JPMORGAN CHASE BANK, N.A. .... A+ January 30, 2014 239 USD 252 117,360 CLP 237 491.9991 (15)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 51

Templeton Global Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)JPMORGAN CHASE BANK, N.A. .... A+ January 30, 2014 1,077 USD $ 1,138 3,345 MYR $ 1,105 $ 3.1060 $ (33)JPMORGAN CHASE BANK, N.A. .... A+ February 4, 2014 2,075 USD 2,193 6,532 MYR 2,157 3.1485 (36)JPMORGAN CHASE BANK, N.A. .... A+ February 21, 2014 650 USD 687 319,600 CLP 645 491.9996 (42)JPMORGAN CHASE BANK, N.A. .... A+ February 24, 2014 1,100 USD 1,164 542,400 CLP 1,095 492.9502 (69)JPMORGAN CHASE BANK, N.A. .... A+ February 28, 2014 499 USD 528 246,900 CLP 498 494.6498 (30)JPMORGAN CHASE BANK, N.A. .... A+ March 21, 2014 652 USD 690 322,300 CLP 650 494.5004 (40)JPMORGAN CHASE BANK, N.A. .... A+ April 14, 2014 1,221 USD 1,293 3,765 MYR 1,241 3.0832 (52)JPMORGAN CHASE BANK, N.A. .... A+ April 21, 2014 287 USD 304 887 MYR 292 3.0850 (12)JPMORGAN CHASE BANK, N.A. .... A+ April 21, 2014 824 USD 873 2,541 MYR 838 3.0850 (35)JPMORGAN CHASE BANK, N.A. .... A+ April 28, 2014 916 USD 971 455,165 CLP 915 496.7499 (56)JPMORGAN CHASE BANK, N.A. .... A+ May 23, 2014 2,937 EUR 4,059 3,797 USD 4,024 1.2929 (35)UBS AG ........................ A July 16, 2013 4,549 EUR 6,228 5,574 USD 5,863 1.2254 (365)UBS AG ........................ A July 18, 2013 4,549 EUR 6,229 5,596 USD 5,886 1.2301 (343)UBS AG ........................ A August 1, 2013 5,117 EUR 7,009 6,298 USD 6,627 1.2308 (382)UBS AG ........................ A August 22, 2013 3,080 EUR 4,222 3,812 USD 4,013 1.2377 (209)UBS AG ........................ A August 26, 2013 1,509 EUR 2,069 1,889 USD 1,988 1.2512 (81)UBS AG ........................ A August 26, 2013 1,534 EUR 2,103 13,000 SEK 2,038 8.4745 (65)UBS AG ........................ A August 26, 2013 1,890 EUR 2,590 2,364 USD 2,489 1.2512 (101)UBS AG ........................ A September 17, 2013 1,563 EUR 2,145 2,023 USD 2,131 1.2938 (14)UBS AG ........................ A October 7, 2013 1,560 EUR 2,141 2,020 USD 2,129 1.2951 (12)UBS AG ........................ A October 11, 2013 2,381 EUR 3,268 3,090 USD 3,257 1.2979 (11)UBS AG ........................ A November 8, 2013 3,568 EUR 4,902 26,600 NOK 4,598 7.4555 (304)UBS AG ........................ A November 20, 2013 986 EUR 1,355 1,262 USD 1,332 1.2801 (23)UBS AG ........................ A November 25, 2013 6,308 EUR 8,671 47,710 NOK 8,246 7.5634 (425)UBS AG ........................ A December 3, 2013 1,929 EUR 2,653 14,810 NOK 2,560 7.6765 (93)Total Number of Contracts ......197 $(17,693)Net Unrealized Loss .............. $(11,669)Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................ 14.14 18.24AA ................................. 9.92 10.02A .................................. 23.24 27.51BBB ............................... 14.04 18.62BB ................................. 6.07 5.17B .................................. 3.53 3.96* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’sand Fitch ratings.The accompanying notes are an integral part of these financial statements.52 Franklin Templeton Investments Funds

Templeton Global Bond FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 1,991,858 $ 1,768,048CashCanadian 9 69Foreign 56,583 35,255ReceivablesDue from broker 11,302 1,534Capital units sold 3,833 1,338Interest and withholding tax 20,816 21,103Unrealized gain on derivatives 6,024 10,259Other assets (Note 8) 200 161Total assets 2,090,625 1,837,767LiabilitiesPayablesInvestment securities purchased 3,108 52Capital units redeemed 14,889 366Management fees 1,020 786Foreign capital taxes payable 1,699 2,594Accrued expenses 524 467Distributions to unitholders 5,557 —Unrealized loss on derivatives 17,693 15,203Total liabilities 44,490 19,468Net assets $ 2,046,135 $ 1,818,299Total net assets per series (000s)Series A $499,097 $419,998Series F 158,648 89,524Series I 26,454 19,935Series O 1,361,936 1,288,842Number of units outstanding (Note 3)Series A 52,155,566 43,534,962Series F 15,506,888 8,704,250Series I 2,628,139 1,969,995Series O 108,964,610 103,405,268Net assets per unit — CADSeries A $9.57 $9.65Series F 10.23 10.29Series I 10.07 10.12Series O 12.50 12.47Net assets per unit — USDSeries A $9.10 $9.72Series F 9.73 10.36Series I 9.58 10.19Series O 11.89 12.55Cost of investments held (000s) $1,928,490 $1,698,795STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeInterest (net of foreign taxes withheld (000s) —2013 — $1,107; 2012 — $1,065) $ 39,932 $ 32,683Total investment income 39,932 32,683ExpensesManagement fees (Note 4(a)) 5,610 4,046Transfer agent fees (Note 4(c)) 1,174 873Custodian fees 234 167Legal fees 2 7Audit fees 15 18Unitholder reporting costs 48 60Independent review committee fees 1 1Registration fees 17 14Other expenses (Note 7) 364 279Total expenses 7,465 5,465Expenses waived/paid by Manager (Note 6) (1,151) (894)Net expenses 6,314 4,571Net investment income (loss) 33,618 28,112Realized and unrealized gain (loss) oninvestmentsNet realized gain (loss) on investments 2,626 (6,544)Net realized and/or unrealized foreign exchangegain (loss) 3,816 12,263Net change in unrealized appreciation(depreciation) in value of investments andderivatives (12,610) 26,793Net gain (loss) on investments (6,168) 32,512Increase (decrease) in net assets fromoperations $ 27,450 $ 60,624Increase (decrease) in net assets fromoperations per series (000s)Series A $2,119 $11,201Series F 142 2,427Series I 138 313Series O 25,051 46,683Increase (decrease) in net assets fromoperations per unitSeries A $0.04 $0.30Series F 0.02 0.31Series I 0.07 0.32Series O 0.22 0.51The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 53

Templeton Global Bond FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 27,450 $ 60,624 $ 2,119 $ 11,201 $ 142 $ 2,427Distributions to unitholdersFrom net investment income (32,057) (34,600) (7,611) (8,039) (2,050) (1,725)From capital gains — — — — — —From return of capital — — — — — —(32,057) (34,600) (7,611) (8,039) (2,050) (1,725)Capital unit transactionsSubscriptions 418,559 293,258 129,999 70,940 84,002 28,121Reinvestments 23,944 26,006 5,170 5,544 1,121 1,021Redemptions (210,060) (159,058) (50,578) (41,306) (14,091) (12,295)232,443 160,206 84,591 35,178 71,032 16,847Increase (decrease) in net assets for the period 227,836 186,230 79,099 38,340 69,124 17,549Net assets — beginning of period 1,818,299 1,436,271 419,998 335,363 89,524 65,174Net assets — end of period $ 2,046,135 $ 1,622,501 $ 499,097 $ 373,703 $ 158,648 $ 82,723Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ 138 $ 313 $ 25,051 $ 46,683Distributions to unitholdersFrom net investment income (380) (225) (22,016) (24,611)From capital gains — — — —From return of capital — — — —(380) (225) (22,016) (24,611)Capital unit transactionsSubscriptions 11,225 5,213 193,333 188,984Reinvestments 271 160 17,382 19,281Redemptions (4,735) (1,062) (140,656) (104,395)6,761 4,311 70,059 103,870Increase (decrease) in net assets for the period 6,519 4,399 73,094 125,942Net assets — beginning of period 19,935 7,485 1,288,842 1,028,249Net assets — end of period $ 26,454 $ 11,884 $ 1,361,936 $ 1,154,191The accompanying notes are an integral part of these financial statements.54 Franklin Templeton Investments Funds

Templeton Global Smaller Companies FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 89.42%COMMON STOCKS: 89.42%United States: 26.13%AllianceBernstein Holding LP ............ 669,522 $ 12,511 $ 14,669Brocade Communications Systems Inc. .... 2,250,150 8,906 13,603Callaway Golf Co. ..................... 1,651,110 9,632 11,422Cash America International Inc. .......... 222,880 9,454 10,643Columbia Sportswear Co. ............... 138,960 7,494 9,135Foster Wheeler AG .................... 298,460 7,206 6,812Green Dot Corp. ...................... 448,541 7,255 9,394Heidrick & Struggles International Inc. ..... 298,939 5,861 5,255Hibbett Sports Inc. .................... 198,370 10,760 11,571LeapFrog Enterprises Inc. .............. 1,346,710 13,504 13,904Navistar International Corp. ............. 79,740 2,161 2,326Popular Inc. ........................ 516,717 8,419 16,477Salix Pharmaceuticals Ltd. .............. 116,670 5,159 8,118Simpson Manufacturing Co. Inc. ......... 330,080 10,394 10,203Spartan Stores Inc. ................... 392,130 6,817 7,602Swift Energy Co. ...................... 1,058,420 18,300 13,320Thor Industries Inc. ................... 98,740 3,988 5,103True Religion Apparel Inc. .............. 270,260 7,379 8,993Tutor Perini Corp. .................... 628,310 12,445 11,936Unit Corp. . ........................ 93,080 3,662 4,166171,307 194,652United Kingdom: 12.00%African Minerals Ltd. . . ................ 2,854,979 11,698 8,594Bellway PLC ........................ 278,903 3,065 5,659Bovis Homes Group PLC ............... 488,100 2,917 5,951Dignity PLC . ........................ 371,001 4,380 8,062Greggs PLC . ........................ 383,640 3,097 2,548Homeserve PLC ...................... 3,056,850 11,699 13,583Laird PLC . . ........................ 3,348,711 8,427 9,477Man Group PLC ...................... 4,860,087 6,092 6,462Micro Focus International PLC ........... 651,557 3,114 7,386Ophir Energy PLC .................... 733,020 6,335 4,173Persimmon PLC ...................... 243,859 1,602 4,601SIGPLC ........................... 2,581,140 5,167 6,983Vectura Group PLC ................... 4,665,300 6,574 5,93074,167 89,409Japan: 8.34%Asahi Co. Ltd. . ...................... 233,500 3,308 3,599Asics Corp. . ........................ 736,800 9,211 12,253HAJIME CONSTRUCTION CO. LTD. ....... 321,000 8,531 18,679Keihin Corp. ........................ 521,900 10,108 8,370Kobayashi Pharmaceutical Co. Ltd. ....... 274,600 12,138 15,164Seria Co. Ltd. . ...................... 130,300 2,055 4,08545,351 62,150SharesAverageCost Fair Value(000s) (000s)China: 7.24%China Medical System Holdings Ltd. . . .... 5,633,000 $ 4,963 $ 5,269China Minzhong Food Corp. Ltd. ........ 16,844,000 13,725 14,393Kingsoft Corp. Ltd. .................. 2,357,000 1,093 4,102MIE Holdings Corp. .................. 21,230,000 6,090 5,180Minth Group Ltd. ................... 4,222,000 4,876 6,891Prince Frog International Holdings Ltd. .... 12,700,000 6,474 9,159Springland International Holdings Ltd. .... 7,500,000 3,746 3,914Yingde Gases ...................... 5,233,000 4,773 5,05145,740 53,959Canada: 5.79%Canaccord Financial Inc. .............. 1,065,489 7,615 6,073Ensign Energy Services Inc. ............ 1,086,000 16,925 17,648HudBay Minerals Inc. ................ 1,914,620 21,690 13,307Trican Well Service Ltd. ............... 435,400 5,402 6,07851,632 43,106Hong Kong: 4.01%Haier Electronics Group Co. Ltd. ........ 4,527,000 6,054 7,585Samsonite International SA ............. 3,199,800 6,610 8,111Techtronic Industries Co. Ltd. .......... 5,723,570 5,400 14,21318,064 29,909Singapore: 3.03%CSE Global Ltd. ..................... 10,064,000 8,486 6,972Ezion Holdings Ltd. .................. 3,898,000 4,810 6,791First Resources Ltd. ................. 5,979,000 7,882 8,80521,178 22,568Italy: 2.99%Amplifon SpA ...................... 1,681,399 8,480 8,620Azimut Holding SpA .................. 307,181 2,215 5,780Sorin SpA ......................... 2,973,811 7,205 7,91517,900 22,315Germany: 2.80%Gerresheimer AG .................... 145,490 7,271 8,867Gildemeister AG .................... 232,290 3,786 5,433GSW Immobilien AG ................. 123,850 4,628 5,024Software AG ....................... 47,810 1,529 1,50117,214 20,825Netherlands: 2.03%Aalberts Industries NV ................ 315,929 3,466 7,404Arcadis NV ........................ 274,173 3,582 7,7207,048 15,124South Korea: 2.03%BS Financial Group Inc. .............. 679,370 5,357 9,003Hyundai Mipo Dockyard Co. Ltd. ........ 52,760 5,693 6,11811,050 15,121The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 55

Templeton Global Smaller Companies FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Bahamas: 1.93%Steiner Leisure Ltd. . ................. 260,075 $ 8,571 $ 14,352Finland: 1.55%Amer Sports OYJ .................... 595,550 8,198 11,524Sweden: 1.16%D Carnegie & Co. AB ................. 2,485,010 25,695 —Oriflame Cosmetics SA, SDR . . . . . ....... 259,390 9,409 8,63335,104 8,633Turkey: 1.14%Aygaz AS ......................... 1,756,412 11,150 8,483Indonesia: 1.11%Sakari Resources Ltd. ................ 5,335,000 10,011 8,299Cayman Islands: 1.09%Stella International Holdings Ltd. . . . ..... 2,803,608 3,294 8,114Switzerland: 1.07%Lonza Group AG .................... 52,850 1,794 4,152Tecan Group AG .................... 41,590 3,929 3,7955,723 7,947Taiwan: 1.01%Simplo Technology Co. Ltd. . . . . . ....... 776,800 4,383 3,529Tripod Technology Corp. .............. 1,752,000 3,734 3,9648,117 7,493Belgium: 0.86%Barco NV ......................... 75,338 5,818 6,392Spain: 0.70%Construcciones y Auxiliar de FerrocarrilesSA ............................ 11,804 5,328 5,226Brazil: 0.58%Diagnosticos da America SA . . . . . ....... 793,100 5,587 4,339Philippines: 0.52%Energy Development Corp. ............. 27,682,800 4,353 3,849France: 0.31%Ipsos . . .......................... 59,310 1,920 2,342Total Common Stocks: ................ 593,825 666,131Total Long-Term Investments: ........... 593,825 666,131Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)SHORT-TERM SECURITIES: 8.24%Royal Bank of Canada, Term Deposit,0.97%, 7/2/2013 . . . ........... 61,400,000 CAD $ 61,400 $ 61,400Total Short-Term Securities: ........ 61,400 61,400Transaction costs (Note 2) ......... (1,547) —TOTAL INVESTMENTS: 97.66% ...... $653,678 727,531OTHER ASSETS, lessliabilities: 2.34% ............... 17,420TOTAL NET ASSETS: 100.00% ...... $744,951The accompanying notes are an integral part of these financial statements.56 Franklin Templeton Investments Funds

Templeton Global Smaller Companies FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 727,531 $ 714,006CashCanadian 235 169Foreign 1,715 —ReceivablesInvestment securities sold 19,646 2,060Capital units sold 375 16Dividends, interest and withholding tax 1,422 891Other assets (Note 8) 59 104Total assets 750,983 717,246LiabilitiesPayablesInvestment securities purchased 3,363 2,745Capital units redeemed 1,721 424Management fees 625 599Accrued expenses 323 416Total liabilities 6,032 4,184Net assets $ 744,951 $ 713,062Total net assets per series (000s)Series A $321,076 $314,889Series F 28,129 25,878Series I 1,881 1,907Series O 393,865 370,388Number of units outstanding (Note 3)Series A 17,266,312 19,526,917Series F 1,314,219 1,402,393Series I 91,012 106,827Series O 14,980,593 16,464,039Net assets per unit — CADSeries A $18.59 $16.13Series F 21.40 18.46Series I 20.67 17.85Series O 26.29 22.50Net assets per unit — USDSeries A $17.69 $16.24Series F 20.36 18.59Series I 19.66 17.97Series O 25.00 22.65Cost of investments held (000s) $653,678 $709,300STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $774; 2012 — $1,210) $ 9,120 $ 13,486Interest 200 117Total investment income 9,320 13,603ExpensesManagement fees (Note 4(a)) 3,808 4,281Transfer agent fees (Note 4(c)) 1,279 1,600Custodian fees 38 75Legal fees — 1Audit fees 12 14Unitholder reporting costs 40 13Independent review committee fees 1 1Registration fees 17 18Other expenses (Note 7) 210 287Total expenses 5,405 6,290Expenses waived/paid by Manager (Note 6) (778) (1,057)Net expenses 4,627 5,233Net investment income (loss) 4,693 8,370Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 38,344 (12,718)Net realized and/or unrealized foreign exchangegain (loss) (140) (337)Net change in unrealized appreciation(depreciation) in value of investments 69,147 19,717Transaction costs (Note 11) (797) (961)Net gain (loss) on investments 106,554 5,701Increase (decrease) in net assets from operations $ 111,247 $ 14,071Increase (decrease) in net assets from operationsper series (000s)Series A $46,543 $5,676Series F 4,109 643Series I 291 20Series O 60,304 7,732Increase (decrease) in net assets from operationsper unitSeries A $2.53 $0.23Series F 2.99 0.36Series I 2.74 0.19Series O 3.89 0.36The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 57

Templeton Global Smaller Companies FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 111,247 $ 14,071 $ 46,543 $ 5,676 $ 4,109 $ 643Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 26,635 61,253 8,999 9,718 2,149 2,537Reinvestments — — — — — —Redemptions (105,993) (96,784) (49,355) (58,886) (4,007) (6,808)(79,358) (35,531) (40,356) (49,168) (1,858) (4,271)Increase (decrease) in net assets for the period 31,889 (21,460) 6,187 (43,492) 2,251 (3,628)Net assets — beginning of period 713,062 830,043 314,889 369,473 25,878 31,854Net assets — end of period $ 744,951 $ 808,583 $ 321,076 $ 325,981 $ 28,129 $ 28,226Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ 291 $ 20 $ 60,304 $ 7,732Distributions to unitholdersFrom net investment income — — — —From capital gains — — — —From return of capital — — — —— — — —Capital unit transactionsSubscriptions 54 24 15,433 48,974Reinvestments — — — —Redemptions (371) (9) (52,260) (31,081)(317) 15 (36,827) 17,893Increase (decrease) in net assets for the period (26) 35 23,477 25,625Net assets — beginning of period 1,907 1,650 370,388 427,066Net assets — end of period $ 1,881 $ 1,685 $ 393,865 $ 452,691The accompanying notes are an integral part of these financial statements.58 Franklin Templeton Investments Funds

Templeton International Stock FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 98.58%COMMON STOCKS: 95.88%United Kingdom: 16.25%Aviva PLC ......................... 2,341,080 $ 10,496 $ 12,712BAE Systems PLC ................... 1,909,977 13,818 11,697BHP Billiton PLC .................... 391,100 11,943 10,515BPPLC........................... 1,065,306 10,626 7,755Compass Group PLC ................. 693,800 4,198 9,318HSBC Holdings PLC . ................. 1,283,063 26,834 14,123Kingfisher PLC ...................... 2,663,279 12,386 14,606Persimmon PLC .................... 674,101 6,932 12,719Tesco PLC . . . ..................... 2,052,960 13,363 10,878Vodafone Group PLC ................. 4,947,685 15,119 14,861125,715 119,184Switzerland: 10.76%Adecco SA . . . ..................... 220,449 11,582 13,001Credit Suisse Group AG ............... 607,463 19,963 16,932Nestle SA ......................... 203,810 7,576 14,049Novartis AG . . . ..................... 227,880 14,120 16,735Roche Holding AG ................... 69,720 10,876 18,21664,117 78,933Japan: 8.92%East Japan Railway Co. ............... 177,000 10,876 14,446ITOCHU Corp. ..................... 1,072,900 8,273 13,021Konica Minolta Inc. . ................. 1,648,000 18,241 13,048Olympus Corp. ..................... 479,700 11,165 15,279Trend Micro Inc. .................... 288,500 7,801 9,61756,356 65,411China: 8.10%China Coal Energy Co. Ltd., H ........... 17,070,000 13,393 9,371China Life Insurance Co. Ltd., H . . . . ..... 4,176,000 10,417 10,393China Mobile Ltd. ................... 1,241,500 6,186 13,657China Telecom Corp. Ltd., H . . . . . ....... 52,030,000 23,412 26,02553,408 59,446France: 7.78%AXASA........................... 579,536 15,860 11,968Cie Generale des EtablissementsMichelin, B ...................... 133,320 9,657 12,530Sanofi . . .......................... 166,907 15,177 18,175Total SA, B . . . ..................... 280,620 22,923 14,38963,617 57,062Germany: 7.02%Bayer AG ......................... 136,925 8,601 15,347Merck KGaA ....................... 97,900 11,712 15,648Metro AG ......................... 325,550 11,433 10,826Siemens AG ....................... 91,160 8,712 9,68940,458 51,510SharesAverageCost Fair Value(000s) (000s)Netherlands: 6.56%Akzo Nobel NV ...................... 232,830 $ 9,650 $ 13,801ING Groep NV, International DepositoryReceipt .......................... 1,391,381 21,671 13,327Koninklijke Philips NV ................. 304,616 8,837 8,727Randstad Holding NV .................. 284,256 7,076 12,25447,234 48,109Hong Kong: 4.82%Cheung Kong (Holdings) Ltd. ............ 671,000 11,098 9,541Hang Lung Group Ltd. ................. 2,579,300 6,895 14,510Hutchison Whampoa Ltd. .............. 1,025,700 7,670 11,31825,663 35,369Singapore: 4.18%DBS Group Holdings Ltd. .............. 821,000 9,324 10,558Singapore Telecommunications Ltd. ....... 3,094,000 6,915 9,651United Overseas Bank Ltd. ............. 635,000 8,778 10,46325,017 30,672Norway: 3.94%Aker Solutions ASA ................... 722,050 6,049 10,324Telenor ASA ........................ 893,121 10,019 18,61416,068 28,938Italy: 3.84%EniSpA............................ 421,942 8,049 9,071Intesa Sanpaolo SpA .................. 5,605,998 7,354 9,360UniCredit SpA ....................... 1,983,865 7,154 9,74122,557 28,172South Korea: 3.34%Hana Financial Group Inc. .............. 171,710 6,068 5,254KB Financial Group Inc. ............... 318,926 12,981 10,023POSCO ............................ 33,586 10,033 9,22729,082 24,504Spain: 2.66%Repsol SA .......................... 376,475 7,834 8,346Repsol SA, Rights, 7/4/2013 ............. 376,475 — 218Telefonica SA, American DepositaryReceipt .......................... 812,184 18,210 10,94726,044 19,511Sweden: 2.41%Ericsson, B ......................... 627,610 7,642 7,472Getinge AB, B ....................... 320,450 9,790 10,23817,432 17,710Russia: 1.68%Gazprom, American Depositary Receipt ..... 1,780,400 37,361 12,312Portugal: 1.43%Galp Energia SGPS SA, B ............... 673,470 11,371 10,484The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 59

Templeton International Stock FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Australia: 1.10%Qantas Airways Ltd. .............. 6,222,418 $ 10,157 $ 8,079South Africa: 1.09%Sasol Ltd. . .................... 175,242 7,671 8,022Total Common Stocks: ............. 679,328 703,428PREFERRED STOCKS: 1.68%Vale SA, American Depositary Receipt,Preferred, A .................. 968,700 2,464 12,343Total Preferred Stocks: ............ 2,464 12,343Units/SharesINVESTMENTS IN UNDERLYING FUNDS: 1.02%Templeton China OpportunitiesFund, AS .................... 700,623 7,174 7,499Total Investments In UnderlyingFunds: ...................... 7,174 7,499Total Long-Term Investments: ........ 688,966 723,270Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 0.83%Royal Bank of Canada, Term Deposit,0.97%, 7/2/2013 .............. 6,100,000 CAD 6,100 6,100Total Short-Term Securities: ......... 6,100 6,100Transaction costs (Note 2) ............ (1,174) —TOTAL INVESTMENTS: 99.41% ...... $693,892 729,370OTHER ASSETS, lessliabilities: 0.59% ................ 4,324TOTAL NET ASSETS: 100.00% ....... $733,694The accompanying notes are an integral part of these financial statements.60 Franklin Templeton Investments Funds

Templeton International Stock FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 729,370 $ 766,982CashCanadian 181 87ReceivablesCapital units sold 971 63Dividends, interest and withholding tax 5,487 3,447Other assets (Note 8) 133 205Total assets 736,142 770,784LiabilitiesPayablesCapital units redeemed 997 850Management fees 947 978Accrued expenses 492 673Distributions to unitholders 12 —Total liabilities 2,448 2,501Net assets $ 733,694 $ 768,283Total net assets per series (000s)Series A $493,208 $527,624Series F 16,873 18,116Series I 3,452 3,301Series O 218,366 217,203Series T 1,795 2,039Number of units outstanding (Note 3)Series A 34,438,449 38,049,786Series F 1,012,937 1,129,495Series I 215,525 213,787Series O 10,774,244 11,213,339Series T 312,371 352,299Net assets per unit — CADSeries A $14.33 $13.87Series F 16.66 16.04Series I 16.01 15.44Series O 20.27 19.37Series T 5.75 5.79Net assets per unit — USDSeries A $13.63 $13.96Series F 15.84 16.15Series I 15.23 15.54Series O 19.28 19.50Cost of investments held (000s) $ 693,892 $ 781,228STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $1,409; 2012 — $2,884) $ 14,661 $ 26,875Interest 31 37Total investment income 14,692 26,912ExpensesManagement fees (Note 4(a)) 5,929 6,494Transfer agent fees (Note 4(c)) 2,163 2,699Custodian fees 53 87Legal fees — 1Audit fees 13 18Unitholder reporting costs 65 23Independent review committee fees 1 1Registration fees 21 21Other expenses (Note 7) 209 447Total expenses 8,454 9,791Expenses waived/paid by Manager (Note 6) (1,479) (2,101)Net expenses 6,975 7,690Net investment income (loss) 7,717 19,222Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments (28,521) (10,048)Net realized and/or unrealized foreign exchangegain (loss) (42) (358)Net change in unrealized appreciation(depreciation) in value of investments 49,724 (5,969)Transaction costs (Note 11) (320) (207)Net gain (loss) on investments 20,841 (16,582)Increase (decrease) in net assets from operations $ 28,558 $ 2,640Increase (decrease) in net assets from operationsper series (000s)Series A $17,681 $(1,693)Series F 733 (84)Series I 123 (14)Series O 9,954 4,435Series T 67 (4)Increase (decrease) in net assets from operationsper unitSeries A $0.49 $(0.04)Series F 0.67 (0.05)Series I 0.58 (0.07)Series O 0.92 0.14Series T 0.20 (0.02)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 61

Templeton International Stock FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 28,558 $ 2,640 $ 17,681 $ (1,693) $ 733 $ (84)Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital (75) (104) — — — —(75) (104) — — — —Capital unit transactionsSubscriptions 28,714 50,480 8,238 9,037 1,663 1,305Reinvestments 27 30 — — — —Redemptions (91,813) (133,426) (60,335) (82,961) (3,639) (5,350)(63,072) (82,916) (52,097) (73,924) (1,976) (4,045)Increase (decrease) in net assets for the period (34,589) (80,380) (34,416) (75,617) (1,243) (4,129)Net assets — beginning of period 768,283 1,165,289 527,624 592,301 18,116 21,985Net assets — end of period $ 733,694 $ 1,084,909 $ 493,208 $ 516,684 $ 16,873 $ 17,856Series I Series O Series T2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 123 $ (14) $ 9,954 $ 4,435 $ 67 $ (4)Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — (75) (104)— — — — (75) (104)Capital unit transactionsSubscriptions 28 40 18,671 40,051 114 47Reinvestments — — — — 27 30Redemptions — — (27,462) (44,439) (377) (676)28 40 (8,791) (4,388) (236) (599)Increase (decrease) in net assets for the period 151 26 1,163 47 (244) (707)Net assets — beginning of period 3,301 2,765 217,203 545,349 2,039 2,889Net assets — end of period $ 3,452 $ 2,791 $ 218,366 $ 545,396 $ 1,795 $ 2,182The accompanying notes are an integral part of these financial statements.62 Franklin Templeton Investments Funds

Franklin Bissett Canadian All Cap Balanced Fund(formerly Bissett Focus Balanced Fund)STATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 98.71%COMMON STOCKS: 62.73%Financials: 15.34%AGF Management Ltd. . .................... 1,975 $ 23 $ 22Bank of Montreal . . . ...................... 1,325 79 81Bank of Nova Scotia . ...................... 2,325 128 131Brookfield Asset Management Inc., A ........... 3,225 126 122Canadian Imperial Bank of Commerce .......... 1,800 138 134Equitable Group Inc. . ...................... 3,000 112 107Equity Financial Holdings Inc. ................ 2,050 22 21Granite Real Estate Investment Trust ........... 550 21 20Home Capital Group Inc. .................... 825 42 46IGM Financial Inc. . . . ...................... 1,560 67 70Manulife Financial Corp. .................... 2,900 46 49Power Corp. of Canada . .................... 3,600 101 102Power Financial Corp. . . .................... 3,200 97 97Royal Bank of Canada . . .................... 2,205 130 135Sprott Resource Lending Corp. ................ 15,625 23 20Sun Life Financial Inc. . . .................... 1,350 40 42The Toronto-Dominion Bank ................. 1,395 111 1181,306 1,317Energy: 14.77%Advantage Oil & Gas Ltd. .................... 5,225 20 22Angle Energy Inc. . . . ...................... 6,750 23 22ARC Resources Ltd. . ...................... 600 16 16Baytex Energy Corp. . ...................... 650 25 25BlackPearl Resources Inc. ................... 12,150 25 19Bonavista Energy Corp. . .................... 2,150 34 29Calfrac Well Services Ltd. .................... 800 22 24Canadian Energy Services & Technology Corp., A . . 1,825 24 30Canadian Natural Resources Ltd. .............. 3,280 103 97Canyon Services Group Inc. .................. 1,850 20 22Cenovus Energy Inc. . ...................... 2,175 66 65Chinook Energy Inc. . ...................... 18,525 23 21Enbridge Inc. ............................ 1,475 70 65Essential Energy Services Ltd. ................ 8,700 21 23Kelt Exploration Ltd. . ...................... 5,175 37 38Keyera Corp. ............................ 500 31 28Mullen Group Ltd. . . . ...................... 1,700 36 39Nuvista Energy Ltd . . ...................... 25,800 172 184Peyto Exploration & Development Corp. ......... 600 18 18Rock Energy Inc. . . . ...................... 17,625 21 23Savanna Energy Services Corp ................ 23,775 169 161Secure Energy Services Inc. .................. 1,200 16 16Suncor Energy Inc. . . ...................... 1,075 35 33Tourmaline Oil Corp. . ...................... 600 24 25TransCanada Corp. . . ...................... 2,330 102 105Twin Butte Energy Ltd. . .................... 9,725 21 22Wenzel Downhole Tools Ltd. ................. 9,425 21 21SharesAverageCost Fair Value(000s) (000s)Energy: 14.77% (Continued)Xtreme Drilling and Coil Services Corp. .......... 9,100 $ 23 $ 22ZCL Composites Inc. ....................... 10,800 55 531,273 1,268Consumer Discretionary: 9.32%Automodular Corp. ........................ 13,575 20 23Danier Leather Inc. ........................ 1,875 22 21Dollarama Inc. ........................... 650 47 48easyhome Ltd. ........................... 2,250 22 24Gildan Activewear Inc. ...................... 1,125 48 48Glacier Media Inc. ......................... 13,975 22 23Indigo Books & Music Inc. ................... 10,250 114 113Leon’s Furniture Ltd. ....................... 8,300 112 105Mega Brands Inc. ......................... 1,425 22 21Reitmans (Canada) Ltd., A ................... 2,600 23 23RONA Inc. .............................. 10,600 109 115Sears Canada Inc. ......................... 2,275 22 25Thomson Reuters Corp. ..................... 3,975 140 136Transat A.T. Inc., B ........................ 10,000 53 75776 800Industrials: 8.93%Canadian National Railway Co. ................ 1,455 131 148Canadian Pacific Railway Ltd. ................ 405 39 52Cervus Equipment Corp. .................... 1,125 22 22Clarke Inc. .............................. 4,050 20 20Contrans Group Inc., A ..................... 1,900 22 21Exco Technologies Ltd. ..................... 3,575 21 21HNZ Group Inc. .......................... 975 21 21Horizon North Logistics Inc. .................. 16,500 109 105Richelieu Hardware Ltd. .................... 2,700 108 109Russel Metals Inc. ........................ 1,375 36 33SNC-Lavalin Group Inc., A ................... 2,310 98 103Transcontinental Inc., A ..................... 8,850 112 112739 767Materials: 6.34%ADF Group Inc. ........................... 14,350 21 20Agrium Inc. ............................. 395 34 36Brampton Brick Ltd., A ..................... 3,850 20 20Canam Group Inc., A ....................... 11,350 109 103Capstone Mining Corp. ..................... 11,175 24 20Fortress Paper Ltd. ........................ 1,725 11 10Franco-Nevada Corp. ...................... 2,125 84 80Major Drilling Group International Inc. ........... 10,025 74 72Orbit Garant Drilling Inc. .................... 17,825 22 21Potash Corp. of Saskatchewan Inc. ............. 1,850 84 74Silver Wheaton Corp. ....................... 1,700 46 35Winpak Ltd. ............................. 2,975 55 53584 544The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 63

Franklin Bissett Canadian All Cap Balanced Fund(formerly Bissett Focus Balanced Fund)STATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Consumer Staples: 4.08%Alimentation Couche-Tard Inc., B .............. 725 $ 27 $ 45Corby Distilleries Ltd., B . .................... 1,100 21 20Maple Leaf Foods Inc. . . .................... 4,250 53 62Metro Inc., A ............................ 1,355 73 95Saputo Inc. .............................. 955 40 46Shoppers Drug Mart Corp. ................... 1,285 54 62Sun-Rype Products Ltd. . .................... 3,450 21 20289 350Information Technology: 2.55%Aastra Technologies Ltd. .................... 2,900 55 57Blackline GPS Corp. . ...................... 16,875 24 19Calian Technologies Ltd. .................... 1,025 21 20SharesAverageCost Fair Value(000s) (000s)Information Technology: 2.55% (Continued)Enghouse Systems Ltd. ..................... 900 $ 20 $ 22MacDonald, Dettwiler and Associates Ltd. ........ 1,170 60 81Smart Technologies Inc. .................... 14,975 23 20203 219Telecommunication Services: 1.09%Rogers Communications Inc., B ............... 1,210 48 50Telus Corp. .............................. 1,425 53 43101 93Utilities: 0.31%ATCO Ltd., I ............................. 625 21 27Total Common Stocks: ...................... 5,292 5,385Principal Amountin Currencyof IssueBONDS: 35.98%Australia: 0.90%BHP Billiton Finance Ltd., 3.23%, 5/15/2023 ...................................................... 82,000 CAD 82 77Canada: 33.48%Bank of Nova Scotia, 2.898% to 8/3/2017, Floating Rate Note thereafter, 8/3/2022 ........................ 99,000 CAD 100 99bcIMC Realty Corp., 2.96%, 3/7/2019 ........................................................... 99,000 CAD 100 99British Columbia Municipal Finance Authority, 4.80%, 12/1/2017 ..................................... 145,000 CAD 164 160Canada Housing Trust3.75%, 3/15/2020 ......................................................................... 204,000 CAD 218 220Senior Secured Bond, Floating Rate Note, 3/15/2017 ............................................. 95,000 CAD 96 96Canada Post Corp., 4.08%, 7/16/2025 ........................................................... 132,000 CAD 146 144Canadian Utilities Ltd., Senior Note, 3.122%, 11/9/2022 ............................................. 105,000 CAD 105 102Capital Desjardins Inc., Senior Secured Note, G, 5.187%, 5/5/2020 .................................... 101,000 CAD 115 111City of Toronto Canada, 3.50%, 12/6/2021 ........................................................ 108,000 CAD 111 109Enbridge Pipelines Inc., Senior Note, 2.93%, 11/30/2022 ............................................ 86,000 CAD 86 82Government of Canada, 5.00%, 6/1/2037 ......................................................... 72,000 CAD 99 98HSBC Bank Canada, 3.558%, 10/4/2017 ......................................................... 94,000 CAD 96 97Manulife Financial Corp., Senior Note, 7.768%, 4/8/2019 ............................................ 104,000 CAD 128 128National Housing Association, 1.50%, 9/1/2017 .................................................... 65,612 CAD 65 63Province of Manitoba, 4.40%, 9/5/2025 .......................................................... 196,000 CAD 214 213Province of New Brunswick, 5.50%, 1/27/2034 .................................................... 50,000 CAD 63 60Province of Nova Scotia, 4.10%, 6/1/2021 ........................................................ 227,000 CAD 254 244Province of Ontario, 6.50%, 3/8/2029 ............................................................ 179,000 CAD 239 237Province of Quebec, 4.50%, 12/1/2018 .......................................................... 151,000 CAD 170 166RBC Capital Trust, 4.87% to 12/31/2015, Floating Rate Note thereafter, Perpetual ........................ 110,000 CAD 117 117Sun Life Financial Inc., Senior Note, 4.80% to 11/23/2015, Floating Rate Note thereafter, 11/23/2035 ........ 136,000 CAD 141 143The Toronto-Dominion Bank, Senior Note, 5.828% to 7/9/2018, Floating Rate Note thereafter, 7/9/2023 ....... 76,000 CAD 87 862,914 2,874United States: 0.79%GE Capital Canada Funding Co., 4.40%, 2/8/2018 .................................................. 64,000 CAD 66 68The accompanying notes are an integral part of these financial statements.64 Franklin Templeton Investments Funds

Franklin Bissett Canadian All Cap Balanced Fund(formerly Bissett Focus Balanced Fund)STATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United Kingdom: 0.81%BP Capital Markets PLC, 2.744%, 2/24/2017 .................................................... 69,000 CAD $ 70 $ 70Total Bonds: .............................................................................. 3,132 3,089Total Long-Term Investments: ................................................................. 8,424 8,474Transaction costs (Note 2) .................................................................... (6) —TOTAL INVESTMENTS: 98.71% ............................................................... $8,418 8,474OTHER ASSETS, less liabilities: 1.29% ......................................................... 111TOTAL NET ASSETS: 100.00% .................................................................. $8,585Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................. 9.10 10.40AA .................................. 9.58 10.62A ................................... 17.30 18.48* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’s andFitch ratings.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 65

Franklin Bissett Canadian All Cap Balanced Fund(formerly Bissett Focus Balanced Fund)STATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 8,474 $ 6,859CashCanadian 72 5ReceivablesInvestment securities sold 12 —Dividends, interest and withholding tax 45 33Other assets (Note 8) 22 11Total assets 8,625 6,908LiabilitiesPayablesInvestment securities purchased 12 —Management fees 9 8Accrued expenses 14 27Distributions to unitholders 5 —Total liabilities 40 35Net assets $ 8,585 $ 6,873Total net assets per series (000s)Series A $4,377 $3,631Series F 69 55Series I 6 6Series O 3,045 2,468Series T 1,088 713Number of units outstanding (Note 3)Series A 358,137 310,475Series F 5,346 4,551Series I 500 500Series O 223,741 191,639Series T 77,468 51,552Net assets per unit — CADSeries A $12.22 $11.70Series F 12.84 12.23Series I 12.62 12.03Series O 13.61 12.88Series T 14.05 13.84Cost of investments held (000s) $8,418 $6,357STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) — 2013 —$3; 2012 — $3) $ 84 $ 47Interest 58 42Total investment income 142 89ExpensesManagement fees (Note 4(a)) 54 37Transfer agent fees (Note 4(c)) 10 8Custodian fees — —Legal fees 1 —Audit fees 10 10Unitholder reporting costs 2 2Independent review committee fees 1 1Registration fees 13 11Other expenses (Note 7) 5 11Total expenses 96 80Expenses waived/paid by Manager (Note 6) (38) (39)Net expenses 58 41Net investment income (loss) 84 48Realized and unrealized gain (loss) on investments andtransaction costsNet realized gain (loss) on investments 701 7Net realized and/or unrealized foreign exchange gain(loss) 4 —Net change in unrealized appreciation (depreciation) invalue of investments (446) 76Transaction costs (Note 11) (7) (1)Net gain (loss) on investments 252 82Increase (decrease) in net assets from operations $ 336 $ 130Increase (decrease) in net assets from operations perseries (000s)Series A $157 $66Series F 3 2Series I —* —*Series O 143 61Series T 33 1Increase (decrease) in net assets from operations perunitSeries A $0.48 $0.23Series F 0.58 0.62Series I 0.58 0.28Series O 0.70 0.40Series T 0.51 0.26* Amount rounded to zero in the nearest thousand.The accompanying notes are an integral part of these financial statements.66 Franklin Templeton Investments Funds

Franklin Bissett Canadian All Cap Balanced Fund(formerly Bissett Focus Balanced Fund)STATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 336 $ 130 $ 157 $ 66 $ 3 $ 2Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital (28) (2) — — — —(28) (2) — — — —Capital unit transactionsSubscriptions 2,418 1,217 997 543 11 —Reinvestments 3 — — — — —Redemptions (1,017) (1,061) (408) (741) — —1,404 156 589 (198) 11 —Increase (decrease) in net assets for the period 1,712 284 746 (132) 14 2Net assets — beginning of period 6,873 5,037 3,631 3,257 55 28Net assets — end of period $ 8,585 $ 5,321 $ 4,377 $ 3,125 $ 69 $ 30Series I Series O Series T2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ —* $ —* $ 143 $ 61 $ 33 $ 1Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — (28) (2)— — — — (28) (2)Capital unit transactionsSubscriptions — — 1,037 644 373 30Reinvestments — — — — 3 —Redemptions — — (603) (320) (6) —— — 434 324 370 30Increase (decrease) in net assets for the period — — 577 385 375 29Net assets — beginning of period 6 6 2,468 1,701 713 45Net assets — end of period $ 6 $ 6 $ 3,045 $ 2,086 $ 1,088 $ 74* Amount rounded to zero in the nearest thousand.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 67

Franklin Flex Cap Growth FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 91.62%COMMON STOCKS: 91.62%IT Services: 6.23%Alliance Data Systems Corp. ............ 5,500 $ 1,037 $ 1,048FleetCor Technologies Inc. ............. 33,500 2,502 2,864International Business Machines Corp. ..... 13,500 2,347 2,710MasterCard Inc., A .................... 13,500 4,517 8,101Vantiv Inc., A ........................ 65,000 1,403 1,887Visa Inc., A . ........................ 40,000 3,620 7,67715,426 24,287Media: 6.10%Charter Communications Inc., A .......... 21,000 2,184 2,731DIRECTV . . . ........................ 45,000 2,055 2,914Discovery Communications Inc., C ........ 70,200 2,818 5,141Imax Corp. . ........................ 55,000 1,498 1,438Sirius XM Radio Inc. . . ................ 1,600,000 5,038 5,602The Walt Disney Co. ................... 90,000 4,059 5,97817,652 23,804Internet Software & Services: 5.90%eBay Inc. . . ........................ 80,000 3,822 4,362Facebook Inc., A ..................... 97,500 2,668 2,548Google Inc., A . ...................... 11,900 8,675 11,005LinkedIn Corp., A ..................... 13,500 1,463 2,533Pandora Media Inc. . . ................ 38,000 662 735Yahoo! Inc. . ........................ 70,000 1,918 1,84719,208 23,030Biotechnology: 5.39%ARIAD Pharmaceuticals Inc. ............ 57,000 1,137 1,048Biogen Idec Inc. ..................... 22,800 2,926 5,157Celgene Corp. . ...................... 47,400 3,812 5,826Celldex Therapeutics Inc. .............. 98,127 1,457 1,610Gilead Sciences Inc. . . ................ 77,900 3,776 4,194Pharmacyclics Inc. ................... 14,000 963 1,168Quintiles Transnational Holdings Inc. ...... 45,500 1,966 2,03616,037 21,039Software: 4.82%ANSYS Inc. ........................ 33,500 2,316 2,573Bottomline Technologies Inc. ............ 46,900 949 1,247BroadSoft Inc. ...................... 30,000 942 869Check Point Software Technologies Ltd. .... 15,500 779 809Electronic Arts Inc. ................... 40,000 939 966Fortinet Inc. ........................ 51,500 1,154 947NetSuite Inc. . ...................... 35,400 3,052 3,413Nuance Communications Inc. ........... 124,900 2,330 2,415Salesforce.com Inc. . . ................ 80,000 2,968 3,211Sourcefire Inc. ...................... 9,500 455 555Splunk Inc. ........................ 18,000 589 881Tableau Software Inc. . ................ 3,200 102 186SharesAverageCost Fair Value(000s) (000s)Software: 4.82% (Continued)Workday Inc. ....................... 11,000 $ 738 $ 74117,313 18,813Chemicals: 3.58%Airgas Inc. ......................... 24,000 2,174 2,409Ecolab Inc. ......................... 90,000 5,489 8,059Praxair Inc. ........................ 29,000 2,711 3,51010,374 13,978Textiles, Apparel & Luxury Goods: 3.56%Lululemon Athletica Inc. ............... 17,500 1,356 1,205Michael Kors Holdings Ltd. ............. 45,000 2,775 2,936NIKE Inc., B ........................ 42,500 1,969 2,845Ralph Lauren Corp. ................... 18,000 2,314 3,288Under Armour Inc., A .................. 57,500 2,302 3,60810,716 13,882Computers & Peripherals: 3.34%Apple Inc. ......................... 29,000 10,163 12,078Stratasys Ltd. ....................... 11,000 840 96711,003 13,045Pharmaceuticals: 3.11%Actavis Inc. ........................ 45,100 3,452 5,990Allergan Inc. ........................ 26,900 2,483 2,380Bristol-Myers Squibb Co. ............... 80,000 2,912 3,7598,847 12,129Aerospace & Defense: 2.98%DigitalGlobe Inc. ..................... 30,000 845 977Honeywell International Inc. ............. 25,000 1,652 2,084Precision Castparts Corp. .............. 25,000 3,951 5,921TransDigm Group Inc. ................. 16,000 2,322 2,6428,770 11,624Beverages: 2.81%Boston Beer Inc., A ................... 7,500 1,139 1,345Monster Beverage Corp. ............... 25,000 1,476 1,597PepsiCo Inc. ........................ 54,100 3,615 4,652The Coca-Cola Co. .................... 80,000 3,076 3,3759,306 10,969Road & Rail: 2.74%Genesee & Wyoming Inc. .............. 34,000 2,571 3,054Kansas City Southern .................. 25,000 1,627 2,786Union Pacific Corp. ................... 30,000 4,011 4,8658,209 10,705Internet & Catalog Retail: 2.32%Amazon.com Inc. .................... 20,000 4,172 5,839HomeAway Inc. ..................... 35,000 1,128 1,193Priceline.com Inc. .................... 2,300 728 1,9976,028 9,029The accompanying notes are an integral part of these financial statements.68 Franklin Templeton Investments Funds

Franklin Flex Cap Growth FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Oil, Gas & Consumable Fuels: 2.31%Anadarko Petroleum Corp. .............. 10,500 $ 950 $ 948Chevron Corp. ...................... 30,000 3,116 3,728Cobalt International Energy Inc. .......... 55,000 1,428 1,538Noble Energy Inc. .................... 44,000 2,472 2,7777,966 8,991Semiconductors & Semiconductor Equipment: 2.24%Microchip Technology Inc. ............. 75,000 2,472 2,937NXP Semiconductors NV ............... 75,000 2,378 2,442Xilinx Inc. . . ........................ 81,000 2,535 3,3737,385 8,752Capital Markets: 2.18%BlackRock Inc. ...................... 8,500 1,758 2,294Evercore Partners Inc. . ................ 25,000 1,010 1,031Financial Engines Inc. . ................ 24,000 838 1,150T. Rowe Price Group Inc. .............. 52,500 3,122 4,0386,728 8,513Machinery: 2.05%Pall Corp. . . ........................ 50,000 3,064 3,481Proto Labs Inc. ...................... 22,000 1,064 1,503The Manitowoc Co. Inc. ................ 160,000 2,687 3,0116,815 7,995Health Care Providers & Services: 1.93%Catamaran Corp. .................... 18,000 974 922DaVita HealthCare Partners Inc. .......... 20,000 1,591 2,540Express Scripts Holding Co. ............. 35,700 1,772 2,316McKesson Corp. ..................... 14,500 1,160 1,7465,497 7,524Energy Equipment & Services: 1.87%FMC Technologies Inc. ................ 31,000 1,307 1,814McDermott International Inc. ............ 100,000 1,101 861National Oilwell Varco Inc. .............. 25,000 1,870 1,811Schlumberger Ltd. ................... 37,500 2,844 2,8237,122 7,309Hotels, Restaurants & Leisure: 1.83%Chipotle Mexican Grill Inc. .............. 6,000 1,967 2,296Chuy’s Holdings Inc. . . ................ 18,570 726 749Las Vegas Sands Corp. ................ 20,000 1,118 1,112Noodles & Co. . ...................... 13,900 262 515Starwood Hotels & Resorts Worldwide Inc. . . 16,000 1,028 1,063Wynn Resorts Ltd. ................... 10,500 1,362 1,4126,463 7,147Commercial Banks: 1.76%Signature Bank/New York NY ............ 45,000 2,853 3,928Wells Fargo & Co. .................... 67,500 2,153 2,9285,006 6,856SharesAverageCost Fair Value(000s) (000s)Communications Equipment: 1.69%QUALCOMM Inc. .................... 102,500 $ 6,051 $ 6,582Trading Companies & Distributors: 1.57%Fastenal Co. ........................ 48,000 1,822 2,313HD Supply Holdings Inc. ............... 19,500 368 383United Rentals Inc. ................... 65,000 3,230 3,4105,420 6,106Insurance: 1.45%ACE Ltd. .......................... 39,000 2,847 3,668Aflac Inc. .......................... 32,500 1,601 1,9864,448 5,654Wireless Telecommunication Services: 1.20%SBA Communications Corp. ............. 60,000 4,364 4,676Specialty Retail: 1.20%Dick’s Sporting Goods Inc. .............. 49,100 2,067 2,585Tractor Supply Co. .................... 16,900 1,542 2,0883,609 4,673Food & Staples Retailing: 1.19%Fairway Group Holdings Corp. ........... 20,000 297 509Whole Foods Market Inc. ............... 76,000 2,935 4,1133,232 4,622Electrical Equipment: 1.18%Rockwell Automation Inc. .............. 20,000 1,588 1,748Roper Industries Inc. ................. 22,000 2,341 2,8663,929 4,614Health Care Technology: 1.10%Cerner Corp. ....................... 35,000 1,935 3,536HMS Holdings Corp. .................. 30,000 835 7342,770 4,270Food Products: 1.09%Mead Johnson Nutrition Co., A ........... 29,500 2,023 2,457WhiteWave Foods Co., A ................ 106,200 1,675 1,8113,698 4,268Professional Services: 1.06%IHS Inc., A ......................... 13,500 1,485 1,482Nielsen Holdings NV .................. 75,000 2,550 2,6494,035 4,131Health Care Equipment & Supplies: 1.04%Abbott Laboratories ................... 90,700 4,683 3,326HeartWare International Inc. ............ 7,400 596 7405,279 4,066Air Freight & Logistics: 1.01%Expeditors International of Washington Inc. . . 31,500 1,319 1,258Hub Group Inc., A .................... 70,000 2,389 2,6773,708 3,935The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 69

Franklin Flex Cap Growth FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Industrial Conglomerates: 0.99%Danaher Corp. ...................... 58,000 $ 2,602 $ 3,859Life Sciences Tools & Services: 0.96%Illumina Inc. ........................ 24,100 1,321 1,896Waters Corp. . ...................... 17,500 1,209 1,8402,530 3,736Real Estate Investment Trust (REIT): 0.95%American Tower Corp. . ................ 48,000 2,727 3,691Electronic Equipment, Instruments & Components: 0.94%National Instruments Corp. ............. 53,500 1,239 1,572Trimble Navigation Ltd. ................ 76,600 1,519 2,0932,758 3,665Auto Components: 0.67%BorgWarner Inc. ..................... 29,000 2,178 2,627Diversified Financial Services: 0.67%IntercontinentalExchange Inc. ........... 14,000 1,976 2,621Commercial Services & Supplies: 0.60%Stericycle Inc. . ...................... 20,000 1,582 2,322Multiline Retail: 0.48%Dollar General Corp. . . ................ 35,000 1,502 1,858Construction & Engineering: 0.43%Jacobs Engineering Group Inc. .......... 29,000 1,566 1,680Household Durables: 0.31%TRI Pointe Homes Inc. ................ 70,200 1,226 1,210SharesAverageCost Fair Value(000s) (000s)Airlines: 0.30%Spirit Airlines Inc. .................... 35,000 $ 757 $ 1,170Marine: 0.19%Kirby Corp. ......................... 9,000 664 752Automobiles: 0.16%Tesla Motors Inc. .................... 5,500 192 621Distributors: 0.14%LKQ Corp. ......................... 20,000 525 541Total Common Stocks: .................. 285,199 357,371Total Long-Term Investments: ............ 285,199 357,371Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 2.44%Federal Home Loan Bank DiscountNotes, 7/1/2013 . . .............. 9,000,000 USD 9,495 9,495Total Short-Term Securities: .......... 9,495 9,495Transaction costs (Note 2) ............. (298) —TOTAL INVESTMENTS: 94.06% ........ $294,396 366,866OTHER ASSETS, less liabilities: 5.94% .. 23,181TOTAL NET ASSETS: 100.00% ........ $390,047The accompanying notes are an integral part of these financial statements.70 Franklin Templeton Investments Funds

Franklin Flex Cap Growth FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 366,866 $ 270,625CashForeign 9,771 8,924ReceivablesInvestment securities sold 637 —Capital units sold 17,455 —Dividends and withholding tax 118 83Other assets (Note 8) 19 15Total assets 394,866 279,647LiabilitiesPayablesInvestment securities purchased 4,541 —Capital units redeemed 226 —Management fees 17 16Accrued expenses 25 46Other liabilities (Note 9) 10 10Total liabilities 4,819 72Net assets $ 390,047 $ 279,575Total net assets per series (000s)Series A $6,528 $5,969Series F 1,292 1,227Series O 382,227 272,379Number of units outstanding (Note 3)Series A 551,130 584,711Series F 95,224 105,484Series O 22,805,445 19,096,858Net assets per unit — CADSeries A $11.84 $10.21Series F 13.57 11.63Series O 16.76 14.26Net assets per unit — USDSeries A $11.26 $10.28Series F 12.91 11.71Series O 15.94 14.36Cost of investments held (000s) $294,396 $235,296STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld(000s) — 2013 — $188; 2012 — $163) $ 3,341 $ 993Interest 1 1Total investment income 3,342 994ExpensesManagement fees (Note 4(a)) 77 77Transfer agent fees (Note 4(c)) 47 54Custodian fees — —Legal fees 1 1Audit fees 11 9Unitholder reporting costs 6 5Independent review committee fees 1 1Registration fees 10 10Other expenses (Note 7) 2 14Total expenses 155 171Expenses waived/paid by Manager (Note 6) (66) (82)Net expenses 89 89Net investment income (loss) 3,253 905Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 11,251 2,531Net realized and/or unrealized foreign exchangegain (loss) 852 51Net change in unrealized appreciation(depreciation) in value of investments 37,141 13,223Transaction costs (Note 11) (276) (81)Net gain (loss) on investments 48,968 15,724Increase (decrease) in net assets from operations $ 52,221 $ 16,629Increase (decrease) in net assets from operationsper series (000s)Series A $936 $424Series F 196 74Series O 51,089 16,131Increase (decrease) in net assets from operationsper unitSeries A $1.64 $0.69Series F 2.04 0.89Series O 2.47 0.87The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 71

Franklin Flex Cap Growth FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 52,221 $ 16,629 $ 936 $ 424 $ 196 $ 74Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 86,965 113,671 267 613 331 317Reinvestments — — — — — —Redemptions (28,714) (26,039) (644) (733) (462) (186)58,251 87,632 (377) (120) (131) 131Increase (decrease) in net assets for the period 110,472 104,261 559 304 65 205Net assets — beginning of period 279,575 195,242 5,969 6,320 1,227 862Net assets — end of period $ 390,047 $ 299,503 $ 6,528 $ 6,624 $ 1,292 $ 1,067Series O2013 2012Increase (decrease) in net assets from operations $ 51,089 $ 16,131Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 86,367 112,741Reinvestments — —Redemptions (27,608) (25,120)58,759 87,621Increase (decrease) in net assets for the period 109,848 103,752Net assets — beginning of period 272,379 188,060Net assets — end of period $ 382,227 $ 291,812The accompanying notes are an integral part of these financial statements.72 Franklin Templeton Investments Funds

Franklin High Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 95.16%COMMON STOCKS: 0.26%United States: 0.26%NewPage Holdings Inc. ........................................................................ 4,800 $ 457 $ 429Total Common Stocks: ......................................................................... 457 429PREFERRED STOCKS: 0.58%GMAC Capital Trust I, Preferred ................................................................. 34,600 841 944Total Preferred Stocks: ......................................................................... 841 944Principal Amountin Currencyof IssueBONDS: 94.32%United States: 74.65%Alere Inc.Senior Note, 7.25%, 7/1/2018 ............................................................ 1,200,000 USD 1,190 1,337Senior Subordinate Note, 6.50%, 6/15/2020 ................................................. 100,000 USD 102 102Ally Financial Inc., Senior Note, 7.50%, 9/15/2020 .............................................. 1,000,000 USD 1,056 1,212Ashland Inc., Senior Note, 4.75%, 8/15/2022 .................................................. 800,000 USD 826 833Aviv Healthcare Properties LP/Aviv Healthcare Capital Corp, Senior Note, 7.75%, 2/15/2019 ............. 700,000 USD 701 786Bank of America Corp., Preferred, Subordinated Bond, M, 8.125% to 5/15/2018, Floating Rate Notethereafter, Perpetual .................................................................... 2,000,000 USD 1,990 2,366Caesars Operating Escrow LLC/Corp., First Lien, 9.00%, 2/15/2020 ................................. 100,000 USD 97 100Calpine Corp.Senior Secured Note, 7.50%, 2/15/2021 .................................................... 890,000 USD 908 999Senior Secured Note, 7.875%, 1/15/2023 ................................................... 454,000 USD 450 513Calumet Specialty Products Partners LP/Finance Corp.Senior Note, 9.375%, 5/1/2019 ........................................................... 400,000 USD 370 450Senior Note, 9.375%, 5/1/2019 ........................................................... 600,000 USD 583 675Senior Note, 9.625%, 8/1/2020 ........................................................... 200,000 USD 202 229Carrizo Oil & Gas Inc.Senior Note, 7.50%, 9/15/2020 ........................................................... 300,000 USD 296 328Senior Note, 8.625%, 10/15/2018 ......................................................... 1,000,000 USD 1,006 1,125CDW LLC/Finance Corp., Senior Note, 8.50%, 4/1/2019 .......................................... 400,000 USD 388 452CenturyLink Inc., Senior Note, 5.80%, 3/15/2022 ............................................... 1,000,000 USD 992 1,036Ceridian Corp.Secured Note, 8.875%, 7/15/2019 ......................................................... 500,000 USD 520 584Senior Note, 11.00%, 3/15/2021 .......................................................... 500,000 USD 510 578Chesapeake Energy Corp.Senior Note, 5.75%, 3/15/2023 ........................................................... 300,000 USD 308 319Senior Note, 6.625%, 8/15/2020 .......................................................... 1,500,000 USD 1,550 1,695CHS/Community Health Systems Inc.Senior Note, 7.125%, 7/15/2020 .......................................................... 100,000 USD 102 108Senior Note, 8.00%, 11/15/2019 .......................................................... 1,500,000 USD 1,547 1,678CIT Group Inc.Senior Note, 5.00%, 8/15/2022 ........................................................... 900,000 USD 904 939Senior Note, 5.375%, 5/15/2020 .......................................................... 700,000 USD 691 753Senior Note, 6.625%, 4/1/2018 ........................................................... 700,000 USD 711 795The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 73

Franklin High Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 74.65% (Continued)Clayton Williams Energy Inc., Senior Note, 7.75%, 4/1/2019 ....................................... 1,200,000 USD $ 1,131 $ 1,255Clear Channel Communications Inc., Senior Note, 9.00%, 3/1/2021 ................................ 1,700,000 USD 1,650 1,698Clear Channel Worldwide Holdings Inc.Senior Note, 6.50%, 11/15/2022 .......................................................... 600,000 USD 594 650Senior Subordinate Note, 7.625%, 3/15/2020 ................................................ 700,000 USD 691 762ClubCorp Club Operations Inc., Senior Note, 10.00%, 12/1/2018 ................................... 1,100,000 USD 1,068 1,249CommScope Holdings Inc., Senior Note, Payment-In-Kind, 6.625%, 6/1/2020 ........................ 200,000 USD 207 201CommScope Inc., Senior Note, 8.25%, 1/15/2019 .............................................. 1,100,000 USD 1,099 1,235CONSOL Energy Inc.Senior Note, 8.00%, 4/1/2017 ............................................................ 700,000 USD 724 775Senior Note, 8.25%, 4/1/2020 ............................................................ 900,000 USD 943 991Cricket Communications Inc., Senior Note, 7.75%, 10/15/2020 .................................... 1,200,000 USD 1,176 1,211Crosstex Energy LP/Crosstex Energy Finance Corp., Senior Note, 8.875%, 2/15/2018 ................... 1,000,000 USD 1,039 1,114CSC Holdings Inc., Senior Debenture, 7.625%, 7/15/2018 ........................................ 1,300,000 USD 1,327 1,541Cumulus Media Holdings Inc., Second Lien Term Loan, Floating Rate Note, 9/16/2019 ................. 500,000 USD 464 536Del Monte Corp., Senior Note, 7.625%, 2/15/2019 .............................................. 1,500,000 USD 1,472 1,620DISH DBS Corp.Senior Note, 5.875%, 7/15/2022 .......................................................... 300,000 USD 305 320Senior Note, 7.125%, 2/1/2016 ........................................................... 1,800,000 USD 1,897 2,049DJO Finance LLC/DJO Finance Corp.Second Lien, 8.75%, 3/15/2018 ........................................................... 300,000 USD 302 341Senior Note, 7.75%, 4/15/2018 ........................................................... 500,000 USD 485 519Drill Rigs Holdings Inc., Secured Note, 6.50%, 10/1/2017 ........................................ 700,000 USD 677 734E*TRADE Financial Corp., Senior Note, 6.375%, 11/15/2019 ...................................... 800,000 USD 792 854Eagle Rock Energy Partners LP/Finance Corp., Senior Note, 8.375%, 6/1/2019 ....................... 1,200,000 USD 1,194 1,284El Paso Corp., Senior Note, 7.00%, 6/15/2017 ................................................. 1,000,000 USD 1,051 1,143Energy Transfer Equity LP, Senior Note, 7.50%, 10/15/2020 ...................................... 1,500,000 USD 1,610 1,723EPL Oil & Gas Inc., Senior Note, 8.25%, 2/15/2018 ............................................. 800,000 USD 785 866Equinix Inc., Senior Bond, 5.375%, 4/1/2023 .................................................. 1,000,000 USD 1,028 1,030Euramax International Inc., Senior Secured Note, 9.50%, 4/1/2016 ................................. 400,000 USD 392 403ExamWorks Group Inc., Senior Note, 9.00%, 7/15/2019 .......................................... 700,000 USD 666 793Exopack Holding Corp., Senior Note, 10.00%, 6/1/2018 .......................................... 700,000 USD 694 745First Data Corp.Senior Bond, 12.625%, 1/15/2021 ......................................................... 600,000 USD 558 667Senior Secured Bond, 8.25%, 1/15/2021 .................................................... 403,000 USD 387 432Senior Secured Bond, 8.25%, 1/15/2021 .................................................... 800,000 USD 728 858Fontainebleau Las Vegas, 11.00%, 6/15/2015 .................................................. 2,000,000 USD 590 1Freescale Semiconductor Inc.Senior Note, 8.05%, 2/1/2020 ............................................................ 700,000 USD 675 745Senior Note, 10.75%, 8/1/2020 ........................................................... 600,000 USD 621 694Senior Secured Note, 9.25%, 4/15/2018 .................................................... 300,000 USD 318 340Frontier Communications Corp.Senior Bond, 7.625%, 4/15/2024 .......................................................... 200,000 USD 203 211Senior Note, 8.75%, 4/15/2022 ........................................................... 1,000,000 USD 1,014 1,146General Motors Financial Co. Inc., Senior Note, 3.25%, 5/15/2018 ................................. 500,000 USD 506 511GMAC Inc., Subordinated Note, 8.00%, 12/31/2018 ............................................. 500,000 USD 484 595Goodrich Petroleum Corp., Senior Note, 8.875%, 3/15/2019 ...................................... 1,200,000 USD 1,164 1,243Halcon Resources Corp., Senior Note, 8.875%, 5/15/2021 ........................................ 900,000 USD 901 918Harrah’s Operating Co. Inc., Senior Secured Note, 11.25%, 6/1/2017 ............................... 1,500,000 USD 1,614 1,642The accompanying notes are an integral part of these financial statements.74 Franklin Templeton Investments Funds

Franklin High Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 74.65% (Continued)HCA Holdings Inc., Senior Note, 7.75%, 5/15/2021 ............................................. 1,000,000 USD $ 1,000 $ 1,135HCA Inc.Senior Note, 5.875%, 5/1/2023 ........................................................... 1,200,000 USD 1,181 1,262Senior Secured Note, 5.875%, 3/15/2022 ................................................... 500,000 USD 504 539Senior Secured Note, 7.875%, 2/15/2020 ................................................... 500,000 USD 530 566HDTFS Inc., 6.25%, 10/15/2022 ............................................................ 100,000 USD 98 110Hertz Corp.Senior Note, 6.75%, 4/15/2019 ........................................................... 200,000 USD 207 222Senior Note, 7.50%, 10/15/2018 .......................................................... 1,000,000 USD 1,029 1,128Igloo Holdings Corp., Senior Note, Payment-In-Kind, 8.25%, 12/15/2017 ............................ 300,000 USD 292 322International Automotive Components Group SL, Senior Secured Note, 9.125%, 6/1/2018 ............... 800,000 USD 772 850inVentiv Health Inc.Senior Note, 9.00%, 1/15/2018 ........................................................... 500,000 USD 492 549Senior Note, 10.00%, 8/15/2018 .......................................................... 100,000 USD 92 87Senior Note, 10.00%, 8/15/2018 .......................................................... 400,000 USD 409 349Jaguar Holding Co. I, Senior Note, Payment-In-Kind, 9.375%, 10/15/2017 ........................... 800,000 USD 774 879Jaguar Holding Co. II/Merger Sub Inc., Senior Note, 9.50%, 12/1/2019 .............................. 300,000 USD 307 349JBS USA LLC/Finance Inc., Senior Note, 8.25%, 2/1/2020 ........................................ 1,400,000 USD 1,399 1,542KB Home, Senior Bond, 7.50%, 9/15/2022 .................................................... 1,200,000 USD 1,258 1,353Kodiak Oil & Gas Corp.Senior Note, 5.50%, 1/15/2021 ........................................................... 300,000 USD 295 308Senior Note, 8.125%, 12/1/2019 .......................................................... 700,000 USD 723 799Landry’s Inc., Senior Note, 9.375%, 5/1/2020 .................................................. 800,000 USD 877 887Linn Energy LLC/Finance Corp.Senior Note, 7.75%, 2/1/2021 ............................................................ 500,000 USD 509 527Senior Note, 8.625%, 4/15/2020 .......................................................... 1,000,000 USD 1,009 1,104M/I Homes Inc., Senior Note, 8.625%, 11/15/2018 .............................................. 700,000 USD 703 799Martin Midstream Partners LP/Martin Midstream Finance Corp.Senior Note, 7.25%, 2/15/2021 ........................................................... 200,000 USD 199 211Senior Note, 8.875%, 4/1/2018 ........................................................... 892,000 USD 899 987Media General Inc., Senior Secured Note, 11.75%, 2/15/2017 ..................................... 600,000 USD 622 697Meritor Inc., Senior Note, 10.625%, 3/15/2018 ................................................. 1,000,000 USD 1,027 1,138MGM Resorts InternationalSenior Note, 6.625%, 7/15/2015 .......................................................... 1,300,000 USD 1,071 1,457Senior Note, 6.625%, 12/15/2021 ......................................................... 300,000 USD 298 325Senior Note, 6.75%, 10/1/2020 ........................................................... 300,000 USD 292 326Midstates Petro Inc./LLC, Senior Note, 9.25%, 6/1/2021 .......................................... 500,000 USD 517 494Murray Energy Corp., Senior Secured Note, 8.625%, 6/15/2021 ................................... 300,000 USD 308 315Navistar Inc., Tranche B Term Loan, Floating Rate Note, 8/17/2017 ................................ 414,615 USD 406 437Navistar International Corp., Senior Note, 8.25%, 11/1/2021 ...................................... 800,000 USD 754 826Neuberger Berman Group LLC/Finance Corp., Senior Note, 5.875%, 3/15/2022 ....................... 600,000 USD 594 643NewPage Corp., Escrow Account, 11.375%, 12/31/2014 ......................................... 1,200,000 USD — —Nuveen Investments Inc., Senior Note, 9.50%, 10/15/2020 ....................................... 900,000 USD 872 941Offshore Group Investment Ltd.First Lien, 7.125%, 4/1/2023 ............................................................. 300,000 USD 310 310Senior Secured Note, First Lien, 7.50%, 11/1/2019 ............................................ 1,100,000 USD 1,079 1,201Olin Corp., Senior Bond, 5.50%, 8/15/2022 .................................................... 1,000,000 USD 991 1,062Par Pharmaceutical Companies Inc., Senior Note, 7.375%, 10/15/2020 ............................. 1,000,000 USD 974 1,078PBF Holding Co. LLC, First Lien, 8.25%, 2/15/2020 ............................................. 1,000,000 USD 1,004 1,101The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 75

Franklin High Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 74.65% (Continued)Peabody Energy Corp.Senior Note, 6.00%, 11/15/2018 .......................................................... 200,000 USD $ 203 $ 211Senior Note, 6.50%, 9/15/2020 ........................................................... 800,000 USD 838 843Senior Note, 7.375%, 11/1/2016 .......................................................... 500,000 USD 550 584Penn Virginia Corp., Senior Note, 8.50%, 5/1/2020 .............................................. 500,000 USD 506 510Penn Virginia Resource Partners LP/Finance Corp. IISenior Note, 6.50%, 5/15/2021 ........................................................... 300,000 USD 301 304Senior Note, 8.375%, 6/1/2020 ........................................................... 700,000 USD 703 776Plains Exploration & Production Co.Senior Note, 6.625%, 5/1/2021 ........................................................... 700,000 USD 708 779Senior Note, 6.875%, 2/15/2023 .......................................................... 500,000 USD 495 562Provident Fund Associates LP/Finance Corp., Senior Note, 6.75%, 6/15/2021 ........................ 300,000 USD 310 315QEP Resources Inc.Senior Note, 5.25%, 5/1/2023 ............................................................ 400,000 USD 396 410Senior Note, 5.375%, 10/1/2022 .......................................................... 800,000 USD 798 833QR Energy LP/QRE Finance, Senior Note, 9.25%, 8/1/2020 ....................................... 1,000,000 USD 996 1,080Quicksilver Resources Inc., Senior Note, 9.125%, 8/15/2019 ...................................... 1,000,000 USD 1,056 894Radio One Inc., Senior Subordinate Note, Payment-In-Kind, 12.50%, 5/24/2016 ...................... 600,000 USD 579 636Rain CII Carbon LLC/Corp., Second Lien, 8.25%, 1/15/2021 ...................................... 400,000 USD 395 421Reynolds Group Issuer Inc./LLC/SAFirst Lien, 5.75%, 10/15/2020 ............................................................ 300,000 USD 292 318Senior Note, 8.50%, 5/15/2018 ........................................................... 1,500,000 USD 1,535 1,624Senior Note, 9.75%, 4/15/2019 ........................................................... 200,000 USD 203 217Senior Secured Note, 7.125%, 4/15/2019 ................................................... 500,000 USD 497 555Rite Aid Corp., Senior Secured Note, 8.00%, 8/15/2020 .......................................... 500,000 USD 516 582Sabine Pass Liquefaction LLC5.625%, 4/15/2023 ..................................................................... 300,000 USD 303 298Secured Note, 5.625%, 2/1/2021 .......................................................... 1,100,000 USD 1,112 1,122Samson Investment Co., Senior Note, 9.75%, 2/15/2020 ......................................... 1,100,000 USD 1,096 1,219Sanchez Energy Corp., Senior Note, 7.75%, 6/15/2021 ........................................... 600,000 USD 614 621SandRidge Energy Inc.Senior Note, 7.50%, 2/15/2023 ........................................................... 100,000 USD 99 100Senior Note, 8.125%, 10/15/2022 ......................................................... 200,000 USD 198 208Sealed Air Corp.Senior Note, 6.50%, 12/1/2020 ........................................................... 200,000 USD 200 222Senior Note, 8.375%, 9/15/2021 .......................................................... 300,000 USD 310 356Shea Homes LP/Funding Corp., Senior Secured Note, 8.625%, 5/15/2019 ........................... 700,000 USD 670 786Sitel LLC/Finance Corp., Senior Secured Note, 11.00%, 8/1/2017 .................................. 100,000 USD 96 112SIWF Merger Sub Inc./Springs Industries Inc., Senior Secured Note, 6.25%, 6/1/2021 .................. 300,000 USD 309 309SLM Corp., Senior Note, 8.45%, 6/15/2018 .................................................... 100,000 USD 117 117Sprint Nextel Corp.Senior Note, 7.00%, 3/1/2020 ............................................................ 400,000 USD 398 454Senior Note, 8.375%, 8/15/2017 .......................................................... 1,500,000 USD 1,537 1,770Senior Note, 9.00%, 11/15/2018 .......................................................... 800,000 USD 828 984Sterling International Inc., Senior Note, 11.00%, 10/1/2019 ....................................... 500,000 USD 491 541Sun Products Corp., Tranche B Term Loan, Floating Rate Note, 3/23/2020 ........................... 1,097,250 USD 1,114 1,138Taylor Morrison Communities Inc./Monarch Communities Inc.Senior Note, 5.25%, 4/15/2021 ........................................................... 300,000 USD 304 300Senior Note, 7.75%, 4/15/2020 ........................................................... 212,000 USD 221 240Senior Note, 7.75%, 4/15/2020 ........................................................... 416,000 USD 416 471The accompanying notes are an integral part of these financial statements.76 Franklin Templeton Investments Funds

Franklin High Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 74.65% (Continued)Texas Competitive Electric Holdings Co. LLC, 2017 Term Loan, Floating Rate Note, 10/10/2017 .......... 1,424,041 USD $ 1,162 $ 1,045Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., SeniorSecured Note, 11.50%, 10/1/2020 ......................................................... 1,000,000 USD 814 786The Goodyear Tire & Rubber Co., Senior Note, 6.50%, 3/1/2021 ................................... 1,000,000 USD 1,019 1,068Univision Communications Inc., Senior Secured Note, 5.125%, 5/15/2023 ........................... 1,700,000 USD 1,742 1,689Visant Corp., Senior Note, 10.00%, 10/1/2017 ................................................. 1,000,000 USD 1,033 970VPI Escrow Corp., Senior Note, 6.375%, 10/15/2020 ............................................ 1,400,000 USD 1,367 1,455W&T Offshore Inc., Senior Note, 8.50%, 6/15/2019 ............................................. 1,100,000 USD 1,123 1,194West Corp., Senior Note, 7.875%, 1/15/2019 .................................................. 1,600,000 USD 1,620 1,749Zachry Holdings Inc., Senior Note, 7.50%, 2/1/2020 ............................................. 700,000 USD 696 758112,789 121,388Canada: 3.16%CHC Helicopter SASenior Note, 9.375%, 6/1/2021 ........................................................... 600,000 USD 601 624Senior Secured Note, First Lien, 9.25%, 10/15/2020 ........................................... 1,000,000 USD 1,015 1,078Eldorado Gold Corp., Senior Note, 6.125%, 12/15/2020 .......................................... 700,000 USD 708 710Inmet Mining Corp.Senior Note, 7.50%, 6/1/2021 ............................................................ 100,000 USD 98 101Senior Note, 8.75%, 6/1/2020 ............................................................ 1,400,000 USD 1,396 1,505Novelis Inc., Senior Note, 8.75%, 12/15/2020 .................................................. 1,000,000 USD 1,020 1,1284,838 5,146Luxembourg: 3.06%ArcelorMittal, Senior Note, 6.00%, 3/1/2021 ................................................... 800,000 USD 780 835Ardagh Packaging Finance PLC, Senior Note, 9.125%, 10/15/2020 ................................. 600,000 USD 636 670Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc.Secured Note, 4.875%, 11/15/2022 ........................................................ 300,000 USD 297 292Senior Note, 7.00%, 11/15/2020 .......................................................... 300,000 USD 298 304Intelsat Jackson Holdings SASenior Bond, 5.50%, 8/1/2023 ............................................................ 300,000 USD 309 295Senior Note, 6.625%, 12/15/2022 ......................................................... 800,000 USD 780 816Senior Note, 7.25%, 10/15/2020 .......................................................... 1,400,000 USD 1,422 1,545Orion Engineered Carbons Finance & Co. SCA, Senior Note, Payment-In-Kind, 9.25%, 8/1/2019 .......... 200,000 USD 199 2104,721 4,967United Kingdom: 3.04%CEVA Group PLC, Senior Note, 4.00%, 5/1/2018 ................................................ 1,200,000 USD 1,043 1,035Expro Finance Luxembourg, Senior Secured Note, 8.50%, 12/15/2016 .............................. 1,000,000 USD 1,001 1,104Ineos Finance PLCSenior Secured Note, 7.50%, 5/1/2020 ..................................................... 600,000 USD 590 670Senior Secured Note, 8.375%, 2/15/2019 ................................................... 200,000 USD 199 228Ineos Group Holdings SA, Senior Note, 6.125%, 8/15/2018 ....................................... 400,000 USD 403 402New Look Bondco I PLC, Secured Note, 8.375%, 5/14/2018 ...................................... 400,000 USD 402 405Royal Bank of Scotland Group PLC, Subordinated Note, 6.125%, 12/15/2022 ........................ 1,100,000 USD 1,092 1,0974,730 4,941The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 77

Franklin High Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Australia: 2.47%Barminco Finance Pty. Ltd., Senior Note, 9.00%, 6/1/2018 ....................................... 700,000 USD $ 710 $ 671BlueScope Steel Ltd./BlueScope Steel Finance, Senior Note, 7.125%, 5/1/2018 ....................... 1,500,000 USD 1,518 1,581FMG Resources (August 2006) Pty. Ltd.Senior Note, 6.875%, 2/1/2018 ........................................................... 1,300,000 USD 1,288 1,350Senior Note, 6.875%, 4/1/2022 ........................................................... 200,000 USD 184 204Senior Note, 8.25%, 11/1/2019 ........................................................... 200,000 USD 203 2173,903 4,023Netherlands: 1.17%InterGen NV, Secured Bond, 7.00%, 6/30/2023 ................................................ 800,000 USD 802 816UPCB Finance VI Ltd., Senior Secured Note, 6.875%, 1/15/2022 .................................. 1,000,000 USD 1,006 1,0911,808 1,907Mexico: 1.10%Cemex Finance LLC, Senior Secured Note, 9.375%, 10/12/2022 ................................... 200,000 USD 196 229Cemex SAB de CV, Senior Secured Note, 9.00%, 1/11/2018 ...................................... 1,400,000 USD 1,315 1,5531,511 1,782Bermuda: 0.98%Digicel Group Ltd., Senior Note, 8.25%, 9/30/2020 .............................................. 1,100,000 USD 1,076 1,198Digicel Ltd., Senior Note, 6.00%, 4/15/2021 ................................................... 400,000 USD 406 4021,482 1,600Italy: 0.94%Wind Acquisition Finance SA, Senior Secured Note, 11.75%, 7/15/2017 ............................. 700,000 USD 688 766Wind Acquisition Holdings Finance SA, Senior Secured Note, Payment-In-Kind, 12.25%, 7/15/2017 ...... 576,927 EUR 805 7551,493 1,521France: 0.93%CGGSenior Note, 7.75%, 5/15/2017 ........................................................... 800,000 USD 811 854Senior Note, 9.50%, 5/15/2016 ........................................................... 600,000 USD 657 6581,468 1,512Sweden: 0.65%Perstorp Holding AB, First Lien, 8.75%, 5/15/2017 .............................................. 1,000,000 USD 1,000 1,051Spain: 0.61%Abengoa Finance SAU, Senior Note, 8.875%, 11/1/2017 ......................................... 1,000,000 USD 1,014 992Germany: 0.60%Orion Engineered Carbons Bondco GmbH, Senior Secured Note, 9.625%, 6/15/2018 .................. 850,000 USD 864 968Japan: 0.57%eAccess Ltd., Senior Note, 8.25%, 4/1/2018 ................................................... 800,000 USD 781 933Belgium: 0.39%Barry Callebaut Services SA, Senior Note, 5.50%, 6/15/2023 ...................................... 400,000 USD 412 424LBC Tank Terminal Holding Netherlands BV, Senior Bond, 6.875%, 5/15/2023 ....................... 200,000 USD 201 211613 635Total Bonds: ............................................................................. 143,015 153,366Total Long-Term Investments: ................................................................ 144,313 154,739The accompanying notes are an integral part of these financial statements.78 Franklin Templeton Investments Funds

Franklin High Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)SHORT-TERM SECURITIES: 1.30%Federal Home Loan Bank Discount Notes, 7/1/2013 ............................................. 2,000,000 USD $ 2,110 $ 2,110Total Short-Term Securities: ................................................................. 2,110 2,110Transaction costs (Note 2) ................................................................... (1,720) —TOTAL INVESTMENTS: 96.46% ............................................................. $144,703 156,849NET UNREALIZED LOSS ON DERIVATIVES: (2.79%) ............................................ (4,535)OTHER ASSETS, less liabilities: 6.33% ........................................................ 10,292TOTAL NET ASSETS: 100.00% ................................................................. $162,606SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCounterpartyCreditRatingSettlement DateCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)(000s) (000s) (000s) (000s) (000s)DEUTSCHE BANK AG ............... A+ December 18, 2013 400 EUR $ 550 528 USD $ 558 1.3207 $ 8Total Number of Contracts ........1 $ 8DEUTSCHE BANK AG ............... A+ August 26, 2013 50,807 USD 53,495 51,900 CAD 51,900 1.0215 (1,595)JPMORGAN CHASE BANK, N.A. ....... A+ July 19, 2013 52,208 USD 54,917 53,400 CAD 53,400 1.0228 (1,517)THE BANK OF NEW YORK MELLON ... AA- September 20, 2013 48,058 USD 50,631 49,200 CAD 49,200 1.0238 (1,431)Total Number of Contracts .........3 $ (4,543)Net Unrealized Loss ............... $(4,535)Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsBBB................................. 0.90 1.45BB .................................. 27.52 25.51B ................................... 49.15 52.88CCC ................................. 16.75 14.77* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’s andFitch ratings.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 79

Franklin High Income FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 156,849 $ 180,237CashForeign 1,685 5,493ReceivablesDue from broker 2,933 1,115Investment securities sold — 7Capital units sold 4,105 107Interest 2,818 3,313Unrealized gain on derivatives 8 377Other assets (Note 8) 15 5Total assets 168,413 190,654LiabilitiesPayablesInvestment securities purchased 129 —Capital units redeemed 68 16Management fees 99 103Accrued expenses 57 70Distributions to unitholders 911 —Unrealized loss on derivatives 4,543 1,382Other liabilities (Note 9) — 21Total liabilities 5,807 1,592Net assets $ 162,606 $ 189,062Total net assets per series (000s)Series A $57,465 $62,146Series F 3,946 4,773Series I 1,080 858Series O 100,115 121,285Number of units outstanding (Note 3)Series A 8,948,035 9,496,633Series F 550,973 658,125Series I 99,547 77,933Series O 12,242,886 14,739,605Net assets per unit — CADSeries A $6.42 $6.54Series F 7.16 7.25Series I 10.84 11.01Series O 8.17 8.23Net assets per unit — USDSeries A $6.10 $6.58Series F 6.81 7.30Series I 10.32 11.09Series O 7.78 8.29Cost of investments held (000s) $144,703 $169,929STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends $ 35 $ 36Interest (net of foreign taxes withheld(000s) — 2013 — $23; 2012 — $11) 6,108 6,761Total investment income 6,143 6,797ExpensesManagement fees (Note 4(a)) 635 527Transfer agent fees (Note 4(c)) 154 146Custodian fees — 1Legal fees 2 2Audit fees 12 11Unitholder reporting costs 8 1Independent review committee fees 1 1Registration fees 11 11Other expenses (Note 7) 33 34Total expenses 856 734Expenses waived/paid by Manager (Note 6) (39) (52)Net expenses 817 682Net investment income (loss) 5,326 6,115Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 5,075 (1,123)Net realized and/or unrealized foreign exchangegain (loss) (4,334) 2,996Net change in unrealized appreciation(depreciation) in value of investments andderivatives (1,692) 4,175Transaction costs (Note 11) (345) (312)Net gain (loss) on investments (1,296) 5,736Increase (decrease) in net assets from operations $ 4,030 $ 11,851Increase (decrease) in net assets from operationsper series (000s)Series A $956 $3,040Series F 91 256Series I 7 51Series O 2,976 8,504Increase (decrease) in net assets from operationsper unitSeries A $0.10 $0.39Series F 0.14 0.46Series I 0.08 0.71Series O 0.24 0.58The accompanying notes are an integral part of these financial statements.80 Franklin Templeton Investments Funds

Franklin High Income FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 4,030 $ 11,851 $ 956 $ 3,040 $ 91 $ 256Distributions to unitholdersFrom net investment income (5,517) (6,563) (2,001) (1,943) (153) (148)From capital gains — — — — — —From return of capital — — — — — —(5,517) (6,563) (2,001) (1,943) (153) (148)Capital unit transactionsSubscriptions 17,628 14,182 8,705 9,183 1,202 826Reinvestments 4,103 4,953 1,209 1,157 100 95Redemptions (46,700) (9,344) (13,550) (6,931) (2,067) (680)(24,969) 9,791 (3,636) 3,409 (765) 241Increase (decrease) in net assets for the period (26,456) 15,079 (4,681) 4,506 (827) 349Net assets — beginning of period 189,062 163,963 62,146 48,488 4,773 3,575Net assets — end of period $ 162,606 $ 179,042 $ 57,465 $ 52,994 $ 3,946 $ 3,924Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ 7 $ 51 $ 2,976 $ 8,504Distributions to unitholdersFrom net investment income (31) (30) (3,332) (4,442)From capital gains — — — —From return of capital — — — —(31) (30) (3,332) (4,442)Capital unit transactionsSubscriptions 258 31 7,463 4,142Reinvestments 25 25 2,769 3,676Redemptions (37) (20) (31,046) (1,713)246 36 (20,814) 6,105Increase (decrease) in net assets for the period 222 57 (21,170) 10,167Net assets — beginning of period 858 733 121,285 111,167Net assets — end of period $ 1,080 $ 790 $ 100,115 $ 121,334The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 81

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 87.82%COMMON STOCKS: 0.23%United States: 0.21%Comfort Co. Inc., Contingent Distribution ...................................................... 6,393 $ — $ —MGM Holdings Inc., A ..................................................................... 13,184 354 693NewPage Holdings Inc. .................................................................... 4,800 457 429811 1,122United Kingdom: 0.02%CEVA Holdings LLC ....................................................................... 90 101 85Total Common Stocks: ..................................................................... 912 1,207PREFERRED STOCKS: 0.12%United Kingdom: 0.04%CEVA Holdings LLC, Convertible Preferred, A-1 ................................................. 3 — 4CEVA Holdings LLC, Convertible Preferred, A-2 ................................................. 194 219 184219 188United States: 0.08%GMAC Capital Trust I, Preferred ............................................................. 15,400 374 420Total Preferred Stocks: ..................................................................... 593 608Principal Amountin Currencyof IssueBONDS: 87.47%United States: 51.59%AbbVie Inc., Senior Note, 2.90%, 11/6/2022 ................................................... 700,000 USD 693 688Access Midstream Partner LP/ACMP Finance Corp., Senior Note, 6.125%, 7/15/2022 .................. 300,000 USD 321 319AdvancePierre Foods Inc.Loans, Floating Rate Note, 7/10/2017 ....................................................... 451,659 USD 441 477Second Lien Term Loan, Floating Rate Note, 10/10/2017 ....................................... 738,598 USD 716 787Affirmative Insurance Holdings Inc., Term Loan, Floating Rate Note, 1/31/2014 ....................... 94,051 USD 58 64Air Distribution Technologies (Tomkins Air Distr.), Second Lien Initial Loan, Floating Rate Note, 5/9/2020 . . . 135,882 USD 134 147Alere Inc., Senior Subordinate Note, 6.50%, 6/15/2020 .......................................... 300,000 USD 305 306Allflex Holidngs III Inc., 2nd Lien Term Loan, Floating Rate Note, 6/24/2021 .......................... 379,667 USD 384 401Allison Transmission Inc.Term B-2 Loan, Floating Rate Note, 8/7/2017 ................................................ 109,983 USD 112 116Term B-3 Loan, Floating Rate Note, 8/23/2019 ............................................... 374,674 USD 367 395Ally Financial Inc., Senior Note, 7.50%, 9/15/2020 .............................................. 1,300,000 USD 1,378 1,575Altegrity Inc., Tranche D Term Loan, 7.75%, 2/21/2015 .......................................... 411,569 USD 430 427American Rock Salt Co. LLC, Initial Loan, Floating Rate Note, 4/25/2017 ............................. 280,189 USD 271 293Ameristar Casinos Inc., B Term Loan, Floating Rate Note, 4/14/2018 ................................ 650,513 USD 628 684Apache Corp., Senior Bond, 2.625%, 1/15/2023 ................................................ 1,500,000 USD 1,480 1,453ARAMARK Corp.Synthetic L/C-3, Floating Rate Note, 7/26/2016 ............................................... 33,292 USD 35 35U.S. Term C Loan, Floating Rate Note, 7/26/2016 ............................................. 632,952 USD 640 667U.S. Term D Loan, Floating Rate Note, 8/22/2019 ............................................. 500,000 USD 509 526Arch Coal Inc., Term Loans, Floating Rate Note, 5/16/2018 ....................................... 2,153,676 USD 2,154 2,247Ardent Medical Services Inc., Second Lien Term Loan, Floating Rate Note, 1/2/2019 ................... 496,455 USD 488 528The accompanying notes are an integral part of these financial statements.82 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)Arysta Lifescience SPC LLC2nd Lien Initial Term Loan, Floating Rate Note, 11/30/2020 ..................................... 710,663 USD $ 733 $ 743Initial Term Loan, Floating Rate Note, 5/29/2020 .............................................. 1,442,069 USD 1,491 1,506Ashland Inc., Senior Note, 4.75%, 8/15/2022 .................................................. 1,000,000 USD 1,042 1,041Asurion LLC, Incremental Tranche B-1 Term Loan, Floating Rate Note, 5/24/2019 ..................... 1,547,530 USD 1,549 1,610ATP Oil & Gas Corp.Floating Rate Note, Additional NM Loans (DIP), Payment-In-Kind, 2/28/2014 ....................... 5,279 USD 5 3Floating Rate Note, Refinancing Loan (DIP), Payment-In-Kind, 2/28/2014 .......................... 79,871 USD 68 50New Money (DIP), Payment-In-Kind, Floating Rate Note, 2/28/2014 .............................. 37,406 USD 31 24August U.S. Holding Co. Inc., U.S. Second Lien, Floating Rate Note, 4/27/2019 ....................... 175,147 USD 174 184Avis Budget Car Rental LLC, Tranche B Term Loan, Floating Rate Note, 3/15/2019 .................... 887,775 USD 888 929Avis Budget Finance PLC, Senior Note, 6.00%, 3/1/2021 ......................................... 500,000 EUR 672 686Avon Products Inc., Senior Bond, 5.00%, 3/15/2023 ............................................. 300,000 USD 305 313Axalta Coating Systems U.S. Holdings Inc., Initial Term B Loans, Floating Rate Note, 2/1/2020 ........... 1,460,773 USD 1,467 1,535Banc of America Commercial Mortgage Inc., 2006-4, AJ, 5.695%, 7/10/2046 ......................... 1,533,000 USD 1,387 1,609Bank of America Corp.Preferred, Subordinated Bond, M, 8.125% to 5/15/2018, Floating Rate Note thereafter, Perpetual ....... 1,500,000 USD 1,446 1,774Senior Note, 5.65%, 5/1/2018 ............................................................. 1,500,000 USD 1,572 1,751Bausch & Lomb Inc., Parent Term Loans, Floating Rate Note, 5/18/2019 ............................ 1,034,220 USD 1,035 1,087Bear Stearns Commercial Mortgage Securities Inc.2006-PW11, AJ, Floating Rate Note, 3/11/2039 ............................................... 500,000 USD 474 5362006-PW12, AJ, Floating Rate Note, 9/11/2038 ............................................... 500,000 USD 506 5242006-PW13, AJ, 5.611%, 9/11/2041 ....................................................... 900,000 USD 764 922Berry Plastics Corp., Term D Loan, Floating Rate Note, 2/8/2020 ................................... 1,084,204 USD 1,082 1,126BJ’s Wholesale Club Inc.2013 Replacement Loans, Floating Rate Note, 9/26/2019 ....................................... 2,754,490 USD 2,666 2,883Second Lien Term Loan, Floating Rate Note, 3/26/2020 ........................................ 592,377 USD 573 629Blue Coat Systems Inc., Second Lien Term Loan, Floating Rate Note, 6/28/2020 ....................... 350,000 USD 363 366Burger King Corp., Tranche B Term Loan, Floating Rate Note, 9/28/2019 ............................ 193,502 USD 190 204Caesars Entertainment Operating Co. Inc., Term Loan B-4, Floating Rate Note, 10/31/2016 .............. 583,686 USD 608 609California State GORefunding, 5.00%, 4/1/2038 .............................................................. 1,500,000 USD 1,537 1,614Various Purpose, 6.00%, 11/1/2039 ........................................................ 130,000 USD 129 156Various Purpose, 5.25%, 11/1/2040 ........................................................ 450,000 USD 402 499Various Purpose, 7.60%, 11/1/2040 ........................................................ 800,000 USD 825 1,139Various Purpose, Refunding, NATL Insured, 4.50%, 12/1/2032 .................................. 240,000 USD 192 261Various Purpose, Refunding, Series 1, AGMC Insured, 4.75%, 9/1/2031 ........................... 235,000 USD 197 258Calpine Corp.Senior Secured Note, 7.50%, 2/15/2021 .................................................... 652,000 USD 679 732Senior Secured Note, 7.875%, 1/15/2023 ................................................... 500,000 USD 575 565Capsugel Financeco SCA, Senior Note, 9.875%, 8/1/2019 ........................................ 800,000 EUR 1,116 1,210Caraustar Industries Inc., Initial Term Loan, Floating Rate Note, 5/1/2019 ............................ 250,000 USD 252 264Carestream Health Inc., 2nd Lien Loan, Floating Rate Note, 12/7/2019 .............................. 1,190,000 USD 1,206 1,222CC Holdings GS V LLC / Crown Castle GS III Corp., Senior Secured Bond, 3.849%, 4/15/2023 ............ 1,000,000 USD 984 991CDW LLC/Finance Corp., Senior Note, 8.50%, 4/1/2019 .......................................... 1,000,000 USD 972 1,130Centaur Acquisition LLC, Second Lien Term Loan, Floating Rate Note, 2/20/2020 ...................... 150,000 USD 149 159CenturyLink Inc.Senior Note, 6.00%, 4/1/2017 ............................................................. 1,000,000 USD 1,017 1,133Senior Note, 5.80%, 3/15/2022 ............................................................ 200,000 USD 216 207The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 83

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)Ceridian Corp., Secured Note, 8.875%, 7/15/2019 .............................................. 500,000 USD $ 520 $ 584Chesapeake Energy Corp.Senior Note, 6.625%, 8/15/2020 .......................................................... 1,000,000 USD 1,026 1,130Senior Note, 6.125%, 2/15/2021 .......................................................... 800,000 USD 796 883Senior Note, 5.75%, 3/15/2023 ............................................................ 300,000 USD 315 319CHS/Community Health Systems Inc.Senior Note, 8.00%, 11/15/2019 .......................................................... 900,000 USD 918 1,007Senior Note, 7.125%, 7/15/2020 .......................................................... 300,000 USD 305 325Cinemark USA Inc., Term Loan, Floating Rate Note, 12/13/2019 ................................... 691,220 USD 696 726CIT Group Inc.Senior Note, 5.375%, 5/15/2020 .......................................................... 700,000 USD 690 753Senior Note, 5.00%, 8/15/2022 ............................................................ 1,300,000 USD 1,326 1,357Citigroup Commercial Mortgage Trust2006-C5, AJ, 5.482%, 10/15/2049 ......................................................... 1,600,000 USD 1,448 1,5662007-C6, AM, Floating Rate Note, 6/10/2017 ................................................. 2,808,000 USD 2,723 3,237Citigroup Inc.Senior Note, 6.125%, 11/21/2017 ......................................................... 600,000 USD 589 717Senior Note, 5.375%, 8/9/2020 ............................................................ 900,000 USD 1,002 1,046Subordinated Note, 4.05%, 7/30/2022 ...................................................... 100,000 USD 100 101Citigroup/Deutsche Bank Commercial Mortgage Trust, 2006-CD3, AJ, Floating Rate Note, 10/15/2048 ..... 540,000 USD 433 503Clear Channel Communications Inc.Senior Note, 9.00%, 3/1/2021 ............................................................. 2,000,000 USD 1,944 1,998Tranche B Term Loan, Floating Rate Note, 1/29/2016 .......................................... 1,788,449 USD 1,554 1,716Clear Channel Worldwide Holdings Inc.Senior Note, 6.50%, 11/15/2022 .......................................................... 400,000 USD 396 433Senior Subordinate Note, 7.625%, 3/15/2020 ................................................ 700,000 USD 693 762ClubCorp Club Operations Inc., Senior Note, 10.00%, 12/1/2018 ................................... 1,000,000 USD 975 1,135CommScope Holdings Inc., Senior Note, Payment-In-Kind, 6.625%, 6/1/2020 ........................ 100,000 USD 103 100CommScope Inc., Senior Note, 8.25%, 1/15/2019 ............................................... 1,200,000 USD 1,213 1,347Community Health Systems Inc., New Extended Term Loan, Floating Rate Note, 1/25/2017 .............. 4,082,142 USD 4,077 4,291CONSOL Energy Inc.Senior Note, 8.00%, 4/1/2017 ............................................................. 500,000 USD 523 553Senior Note, 8.25%, 4/1/2020 ............................................................. 500,000 USD 523 551Senior Note, 6.375%, 3/1/2021 ............................................................ 200,000 USD 194 209Constellation Brands Inc., Senior Note, 4.25%, 5/1/2023 ......................................... 300,000 USD 302 298Countrywide Asset Backed or Asset-Backed Certificates, 2005-11, AF4, 5.21%, 3/25/2034 .............. 225,000 USD 267 198Cricket Communications Inc., Senior Note, 7.75%, 10/15/2020 .................................... 1,100,000 USD 1,079 1,110Crosstex Energy LP/Crosstex Energy Finance Corp., Senior Note, 8.875%, 2/15/2018 ................... 1,000,000 USD 1,048 1,114Crown Castle International Corp., Senior Bond, 5.25%, 1/15/2023 .................................. 200,000 USD 213 202CSC Holdings Inc., Senior Debenture, 7.625%, 7/15/2018 ........................................ 400,000 USD 446 474CSC Holdings LLC, Senior Note, 6.75%, 11/15/2021 ............................................. 1,500,000 USD 1,591 1,699CSC Holdings LLC (Cablevision), Term B Loan, Floating Rate Note, 4/17/2020 ........................ 1,897,432 USD 1,924 1,972Cumulus Media Holdings Inc., Second Lien Term Loan, Floating Rate Note, 9/16/2019 ................. 2,664,015 USD 2,507 2,853DaVita HealthCare Partners Inc.Senior Note, 5.75%, 8/15/2022 ............................................................ 600,000 USD 594 629Tranche B Term Loan, Floating Rate Note, 10/20/2016 ......................................... 1,146,072 USD 1,166 1,209Tranche B-2 Term Loan, Floating Rate Note, 8/24/2019 ........................................ 1,833,219 USD 1,789 1,929Del Monte Corp., Senior Note, 7.625%, 2/15/2019 .............................................. 1,200,000 USD 1,181 1,296Del Monte Foods Co., Initial Term Loans, Floating Rate Note, 3/8/2018 .............................. 3,590,666 USD 3,502 3,756The accompanying notes are an integral part of these financial statements.84 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)DineEquity Inc., Term B-2 Loan, Floating Rate Note, 10/19/2017 ................................... 343,683 USD $ 337 $ 361DISH DBS Corp.Senior Bond, 5.00%, 3/15/2023 ........................................................... 300,000 USD 297 304Senior Note, 7.125%, 2/1/2016 ............................................................ 1,200,000 USD 1,265 1,366Senior Note, 6.75%, 6/1/2021 ............................................................. 200,000 USD 189 223Senior Note, 5.875%, 7/15/2022 .......................................................... 100,000 USD 100 107Dunkin’ Brands Inc., Term B-3 Loan, Floating Rate Note, 2/14/2020 ................................ 800,330 USD 800 838E*TRADE Financial Corp., Senior Note, 6.375%, 11/15/2019 ...................................... 700,000 USD 693 747El Paso Corp., Senior Bond, 6.50%, 9/15/2020 ................................................. 500,000 USD 514 560Energy Transfer Equity LP, Senior Note, 7.50%, 10/15/2020 ...................................... 1,500,000 USD 1,713 1,723Energy Transfer Partners LP, Senior Note, 5.20%, 2/1/2022 ....................................... 500,000 USD 534 556Enterprise Products Operating LLC, Junior Subordinated Note, 7.034% to 1/15/2018, Floating Rate Notethereafter, 1/15/2068 .................................................................... 700,000 USD 649 822EnviroSolutions Real Property Holdings, Second Lien Term Loan, Floating Rate Note, 7/29/2014 .......... 307,203 USD 302 321Equinix Inc., Senior Bond, 5.375%, 4/1/2023 .................................................. 900,000 USD 930 927Erickson Air-Crane Inc., Purchase Price Notes, Floating Rate Note, 11/2/2020 ........................ 108,060 USD 103 114Euramax International Inc., Senior Secured Note, 9.50%, 4/1/2016 ................................. 500,000 USD 487 503Evergreen AcqCo. 1 LP (Savers), Term Loan, Floating Rate Note, 7/9/2019 ........................... 1,475,005 USD 1,475 1,563Evergreen International Aviation Inc., First Lien Term Loan, Floating Rate Note, 6/30/2015 ............... 152,036 USD 144 155Federal Home Loan Mortgage Corporation6.00%, 2/1/2017 ....................................................................... 394USD 1 —5.50%, 9/1/2017 ....................................................................... 764USD 1 14.50%, 9/1/2018 ....................................................................... 2,773 USD 4 35.00%, 10/1/2018 ...................................................................... 3,985 USD 5 44.50%, 2/1/2019 ....................................................................... 10,040 USD 13 115.50%, 3/1/2019 ....................................................................... 2,542 USD 3 34.50%, 5/1/2019 ....................................................................... 12,054 USD 16 135.00%, 6/1/2019 ....................................................................... 2,881 USD 4 35.00%, 6/1/2019 ....................................................................... 3,297 USD 4 45.00%, 6/1/2019 ....................................................................... 37,861 USD 50 425.50%, 8/1/2019 ....................................................................... 6,011 USD 8 74.50%, 9/1/2019 ....................................................................... 8,169 USD 11 94.50%, 11/1/2019 ...................................................................... 5,532 USD 7 64.50%, 3/1/2020 ....................................................................... 7,563 USD 9 85.00%, 6/1/2020 ....................................................................... 26,548 USD 33 307.00%, 9/1/2021 ....................................................................... 2,779 USD 4 36.50%, 11/1/2027 ...................................................................... 3,156 USD 5 46.50%, 7/1/2031 ....................................................................... 1,078 USD 2 16.00%, 7/1/2032 ....................................................................... 2,113 USD 3 36.50%, 7/1/2032 ....................................................................... 2,294 USD 3 37.00%, 7/1/2032 ....................................................................... 1,514 USD 2 26.00%, 4/1/2033 ....................................................................... 11,100 USD 15 136.00%, 4/1/2033 ....................................................................... 3,527 USD 5 45.50%, 5/1/2033 ....................................................................... 6,643 USD 8 86.00%, 5/1/2033 ....................................................................... 5,166 USD 7 65.00%, 6/1/2033 ....................................................................... 3,523 USD 5 45.50%, 6/1/2033 ....................................................................... 10,948 USD 15 126.00%, 9/1/2033 ....................................................................... 8,317 USD 12 105.50%, 10/1/2033 ...................................................................... 2,187 USD 3 3The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 85

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)5.50%, 10/1/2033 ...................................................................... 2,476 USD $ 3 $ 35.00%, 11/1/2033 ...................................................................... 7,678 USD 10 95.50%, 11/1/2033 ...................................................................... 6,174 USD 8 76.00%, 11/1/2033 ...................................................................... 13,974 USD 17 165.00%, 12/1/2033 ...................................................................... 7,793 USD 10 96.00%, 7/1/2034 ....................................................................... 6,982 USD 9 85.50%, 6/1/2035 ....................................................................... 4,856 USD 6 65.00%, 7/1/2035 ....................................................................... 43,997 USD 55 496.00%, 7/1/2035 ....................................................................... 439,646 USD 494 5105.00%, 8/1/2035 ....................................................................... 14,459 USD 17 166.00%, 8/1/2035 ....................................................................... 321,283 USD 361 3755.50%, 3/1/2036 ....................................................................... 218,310 USD 239 2546.50%, 5/1/2036 ....................................................................... 69,276 USD 81 825.50%, 6/1/2036 ....................................................................... 244,986 USD 268 2816.00%, 6/1/2037 ....................................................................... 114,402 USD 126 1304.00%, 9/1/2040 ....................................................................... 18,896 USD 20 213.50%, 1/1/2041 ....................................................................... 304,304 USD 327 3253.00%, 11/1/2042 ...................................................................... 966,193 USD 1,002 9923.00%, 11/1/2042 ...................................................................... 241,507 USD 252 2483.50%, 3/1/2043 ....................................................................... 600,001 USD 649 640Adjustable Rate Mortgage, 2.459%, 1/1/2033 ................................................ 24,351 USD 30 27Federal National Mortgage Association - Asset Backed Agency Securities.5.50%, 11/1/2013 ...................................................................... 1,019 USD 1 15.50%, 1/1/2014 ....................................................................... 89USD — —5.50%, 2/1/2017 ....................................................................... 863USD 1 15.50%, 8/1/2017 ....................................................................... 1,256 USD 1 15.00%, 3/1/2018 ....................................................................... 3,856 USD 6 45.00%, 5/1/2018 ....................................................................... 2,662 USD 4 35.00%, 6/1/2018 ....................................................................... 1,967 USD 3 25.50%, 9/1/2019 ....................................................................... 9,050 USD 11 104.00%, 2/1/2020 ....................................................................... 750,998 USD 799 8324.50%, 3/1/2020 ....................................................................... 12,316 USD 15 145.00%, 6/1/2020 ....................................................................... 4,528 USD 6 53.50%, 12/1/2020 ...................................................................... 779,074 USD 821 8573.00%, 3/1/2022 ....................................................................... 451,353 USD 461 4955.50%, 8/1/2022 ....................................................................... 37,262 USD 41 425.00%, 7/1/2023 ....................................................................... 24,872 USD 27 285.50%, 7/1/2023 ....................................................................... 48,313 USD 52 555.00%, 1/1/2024 ....................................................................... 32,746 USD 35 374.50%, 9/1/2024 ....................................................................... 69,773 USD 75 785.50%, 1/1/2025 ....................................................................... 147,573 USD 161 1673.50%, 10/1/2025 ...................................................................... 571,703 USD 611 6273.50%, 5/1/2026 ....................................................................... 1,428,445 USD 1,526 1,5652.50%, 3/1/2027 ....................................................................... 193,143 USD 201 2052.50%, 6/1/2027 ....................................................................... 1,787,327 USD 1,856 1,8935.00%, 7/1/2027 ....................................................................... 133,954 USD 145 1522.50%, 11/1/2027 ...................................................................... 789,520 USD 821 8362.50%, 12/1/2027 ...................................................................... 800,000 USD 853 8472.50%, 12/1/2027 ...................................................................... 275,000 USD 293 291The accompanying notes are an integral part of these financial statements.86 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)2.50%, 5/1/2028 ....................................................................... 25,000 USD $ 27 $ 266.50%, 6/1/2028 ....................................................................... 10,200 USD 15 125.00%, 4/1/2029 ....................................................................... 157,653 USD 171 1805.00%, 4/1/2029 ....................................................................... 172,113 USD 186 1945.00%, 4/1/2029 ....................................................................... 151,965 USD 164 1726.50%, 9/1/2031 ....................................................................... 3,597 USD 6 45.50%, 10/1/2032 ...................................................................... 7,237 USD 9 85.50%, 4/1/2033 ....................................................................... 5,591 USD 8 75.50%, 5/1/2033 ....................................................................... 3,864 USD 5 45.50%, 5/1/2033 ....................................................................... 6,494 USD 10 75.00%, 6/1/2033 ....................................................................... 811,810 USD 881 9235.50%, 11/1/2033 ...................................................................... 4,773 USD 6 65.50%, 3/1/2034 ....................................................................... 346,177 USD 377 3995.00%, 4/1/2034 ....................................................................... 5,135 USD 7 65.00%, 5/1/2034 ....................................................................... 10,905 USD 14 126.00%, 6/1/2034 ....................................................................... 7,270 USD 9 86.00%, 9/1/2034 ....................................................................... 12,116 USD 15 145.00%, 3/1/2035 ....................................................................... 39,485 USD 49 455.00%, 10/1/2035 ...................................................................... 285,627 USD 310 3245.50%, 11/1/2036 ...................................................................... 146,813 USD 155 1676.50%, 11/1/2036 ...................................................................... 94,824 USD 93 1116.50%, 10/1/2037 ...................................................................... 56,381 USD 61 655.50%, 2/1/2038 ....................................................................... 51,403 USD 57 595.50%, 2/1/2038 ....................................................................... 199,932 USD 221 2286.00%, 5/1/2038 ....................................................................... 73,257 USD 81 845.00%, 9/1/2039 ....................................................................... 489,608 USD 529 5614.50%, 11/1/2039 ...................................................................... 317,643 USD 340 3535.00%, 2/1/2040 ....................................................................... 772,979 USD 830 8965.00%, 8/1/2040 ....................................................................... 30,209 USD 33 354.00%, 11/1/2040 ...................................................................... 337,414 USD 365 3704.50%, 12/1/2040 ...................................................................... 765,883 USD 828 8534.00%, 1/1/2041 ....................................................................... 543,946 USD 583 5964.50%, 2/1/2041 ....................................................................... 546,966 USD 545 6094.50%, 7/1/2041 ....................................................................... 76,661 USD 84 853.50%, 7/1/2042 ....................................................................... 273,438 USD 292 2923.00%, 12/1/2042 ...................................................................... 831,931 USD 870 8563.00%, 1/1/2043 ....................................................................... 981,108 USD 1,021 1,0093.00%, 5/1/2043 ....................................................................... 4,910,159 USD 5,157 5,0513.50%, 5/1/2043 ....................................................................... 2,444,546 USD 2,573 2,615Adjustable Rate Mortgage, 2.33%, 4/1/2020 ................................................... 15,720 USD 19 17First Data Corp.Senior Bond, 12.625%, 1/15/2021 ......................................................... 200,000 USD 194 222Senior Secured Bond, 8.25%, 1/15/2021 .................................................... 2,000,000 USD 1,907 2,145Florida Hurricane Catastrophe Fund Finance Corp. Revenue, Series A, 2.995%, 7/1/2020 ............... 1,900,000 USD 1,928 1,872FMG America Finance Inc. (Fortescue Metals Group), Loans, Floating Rate Note, 10/18/2017 ............ 1,082,321 USD 1,049 1,130Fontainebleau Las Vegas, 11.00%, 6/15/2015 .................................................. 1,300,000 USD 1,214 1Ford Motor Credit Co. LLCSenior Note, 5.00%, 5/15/2018 ............................................................ 500,000 USD 546 560Senior Note, 5.75%, 2/1/2021 ............................................................. 1,000,000 USD 988 1,138The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 87

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)FoxCo Acquisition Sub LLC, Initial Term Loan, Floating Rate Note, 7/14/2017 ........................ 761,011 USD $ 750 $ 807FRAM Group Holdings Inc. (Autoparts Holdings), Second Lien Term Loan, Floating Rate Note,1/29/2018 ........................................................................... 863,396 USD 859 871Freescale Semiconductor Inc.Senior Note, 8.875%, 12/15/2014 ........................................................ 98,000 USD 101 103Senior Note, 8.05%, 2/1/2020 ........................................................... 600,000 USD 580 639Senior Note, 10.75%, 8/1/2020 .......................................................... 300,000 USD 322 347Senior Secured Note, 9.25%, 4/15/2018 ................................................... 300,000 USD 318 340Frontier Communications Corp.Senior Bond, 7.625%, 4/15/2024 ......................................................... 100,000 USD 102 105Senior Note, 8.50%, 4/15/2020 .......................................................... 500,000 USD 514 580Senior Note, 8.75%, 4/15/2022 .......................................................... 800,000 USD 850 917Senior Note, 7.125%, 1/15/2023 ......................................................... 100,000 USD 102 105G-Force 2005-RR LLC, 2005-RRA, C, 5.20%, 8/22/2036 ........................................ 700,000 USD 655 684General Electric Capital Corp., Senior Note, A, 8.50%, 4/6/2018 .................................. 13,000,000 MXN 1,247 1,182General Motors Financial Co. Inc., Senior Note, 3.25%, 5/15/2018 ................................ 400,000 USD 405 409Genpact International Inc., Domestic Term B-1 Loan, Floating Rate Note, 8/30/2019 .................. 220,000 USD 223 232Gilead Sciences Inc., Senior Note, 4.50%, 4/1/2021 ............................................ 1,000,000 USD 1,054 1,139Glencore Funding LLC, Senior Note, 4.125%, 5/30/2023 ........................................ 300,000 USD 311 281GMAC Inc., Subordinated Note, 8.00%, 12/31/2018 ........................................... 400,000 USD 393 476Government National Mortgage Association6.50%, 2/20/2034 ..................................................................... 1,654 USD 2 2Single Family, 5.50%, 12/15/2032 ........................................................ 13,852 USD 19 16Single Family, 6.00%, 12/15/2032 ........................................................ 4,140 USD 6 5Single Family, 6.00%, 2/15/2033 ......................................................... 2,306 USD 3 3Single Family, 5.50%, 3/15/2033 ......................................................... 1,174 USD 2 1Single Family, 5.50%, 4/15/2033 ......................................................... 2,564 USD 4 3Single Family, 5.50%, 9/15/2033 ......................................................... 3,630 USD 5 4Single Family, 5.00%, 12/15/2033 ........................................................ 24,126 USD 33 28Single Family, 5.00%, 4/15/2034 ......................................................... 3,569 USD 5 4Single Family, 5.50%, 9/15/2034 ......................................................... 14,532 USD 18 17Single Family, 5.50%, 6/15/2036 ......................................................... 15,470 USD 17 18Single Family, 6.00%, 8/15/2036 ......................................................... 94,905 USD 106 111Government National Mortgage Association IISingle Family, 6.50%, 8/20/2031 ......................................................... 2,430 USD 4 3Single Family, 6.50%, 5/20/2032 ......................................................... 1,046 USD 1 1Single Family, 7.50%, 5/20/2033 ......................................................... 618USD 1 1Single Family, 5.00%, 11/20/2033 ........................................................ 27,348 USD 36 32Single Family, 6.00%, 11/20/2034 ........................................................ 15,252 USD 19 19Single Family, 3.50%, 5/20/2042 ......................................................... 1,400,001 USD 1,531 1,513Greenwich Capital Commercial Funding Corp., 2006-GG7, AJ, Floating Rate Note, 7/10/2038 ........... 905,000 USD 859 920Halcon Resources Corp.Senior Note, 9.75%, 7/15/2020 .......................................................... 200,000 USD 224 210Senior Note, 8.875%, 5/15/2021 ......................................................... 700,000 USD 699 714Harrah’s Operating Co. Inc., Senior Secured Note, 11.25%, 6/1/2017 .............................. 1,500,000 USD 1,632 1,642HCA Inc.Senior Note, 7.50%, 2/15/2022 .......................................................... 500,000 USD 474 582Senior Note, 5.875%, 5/1/2023 .......................................................... 400,000 USD 394 421Senior Secured Bond, 7.25%, 9/15/2020 .................................................. 100,000 USD 102 113The accompanying notes are an integral part of these financial statements.88 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)Senior Secured Note, 5.875%, 3/15/2022 ................................................... 1,000,000 USD $ 1,002 $ 1,079Tranche B-4 Term Loan, Floating Rate Note, 5/1/2018 ......................................... 60,000 USD 62 63Tranche B-5 Term Loan, Floating Rate Note, 3/31/2017 ........................................ 1,461,395 USD 1,433 1,527HDTFS Inc., 6.25%, 10/15/2022 ............................................................ 600,000 USD 617 658Hertz Corp.Senior Note, 6.75%, 4/15/2019 ............................................................ 200,000 USD 212 222Tranche B-1 Term Loan, Floating Rate Note, 3/11/2018 ........................................ 478,396 USD 470 504Hologic Inc.Senior Note, 6.25%, 8/1/2020 ............................................................. 400,000 USD 403 436Tranche B Term Loan, Floating Rate Note, 8/1/2019 ........................................... 1,154,647 USD 1,153 1,216HSBC USA Inc., Subordinated Note, 5.00%, 9/27/2020 .......................................... 1,500,000 USD 1,553 1,651Illinois State GO5.877%, 3/1/2019 ...................................................................... 1,000,000 USD 989 1,149Build America Bonds, 7.35%, 7/1/2035 ..................................................... 500,000 USD 521 579Ineos U.S. Finance LLC, Dollar Term Loan, Floating Rate Note, 5/4/2018 ............................. 980,727 USD 985 1,012ING Investment Management Collateralized Loan Obligations Ltd., 2013-2A, B, Floating Rate Note,4/25/2025 ............................................................................ 720,000 USD 724 740Interactive Data Corp., Term B Loan, Floating Rate Note, 2/11/2018 ................................ 1,409,522 USD 1,399 1,473inVentiv Health Inc.Senior Note, 9.00%, 1/15/2018 ............................................................ 300,000 USD 295 330Senior Note, 10.00%, 8/15/2018 .......................................................... 100,000 USD 89 87Senior Note, 10.00%, 8/15/2018 .......................................................... 500,000 USD 458 436Jaguar Holding Co. I, Senior Note, Payment-In-Kind, 9.375%, 10/15/2017 ........................... 800,000 USD 774 879JBS USA LLC/Finance Inc.Senior Note, 11.625%, 5/1/2014 .......................................................... 400,000 USD 472 444Senior Note, 8.25%, 2/1/2020 ............................................................. 800,000 USD 797 881JPMorgan Chase & Co.6.00%, 1/15/2018 ...................................................................... 300,000 USD 292 360Senior Note, 4.25%, 10/15/2020 .......................................................... 1,200,000 USD 1,208 1,311Senior Note, 3.25%, 9/23/2022 ............................................................ 600,000 USD 581 599Subordinated Note, 3.375%, 5/1/2023 ...................................................... 600,000 USD 612 587KAR Auction Services Inc. (Adesa), Term Loan, Floating Rate Note, 5/19/2017 ........................ 992,328 USD 963 1,044Kinder Morgan Finance Co. LLC, Senior Secured Note, 6.00%, 1/15/2018 ........................... 1,500,000 USD 1,572 1,655KKR Group Finance Co., Senior Note, 6.375%, 9/29/2020 ........................................ 1,400,000 USD 1,446 1,672Kraft Foods Group Inc., Senior Bond, 3.50%, 6/6/2022 ........................................... 1,400,000 USD 1,429 1,457Linn Energy LLC/Finance Corp.Senior Note, 8.625%, 4/15/2020 .......................................................... 600,000 USD 604 662Senior Note, 7.75%, 2/1/2021 ............................................................. 800,000 USD 826 843M/I Homes Inc., Senior Note, 8.625%, 11/15/2018 .............................................. 900,000 USD 904 1,027Macdermid Holdings LLC2nd Lien Tranche B Term Loan, Floating Rate Note, 12/7/2020 .................................. 374,846 USD 386 398First Lien Tranche B Term Loan, Floating Rate Note, 6/7/2020 ................................... 240,000 USD 246 251Martin Midstream Partners LP/Martin Midstream Finance Corp.Senior Note, 8.875%, 4/1/2018 ............................................................ 706,000 USD 725 781Senior Note, 7.25%, 2/15/2021 ............................................................ 200,000 USD 199 211Media General Inc., Senior Secured Note, 11.75%, 2/15/2017 ..................................... 400,000 USD 415 465Meritor Inc., Senior Note, 10.625%, 3/15/2018 ................................................. 1,000,000 USD 1,087 1,138MetLife Inc., Junior Subordinated Note, 6.40% to 12/15/2036, Floating Rate Note thereafter, 12/15/2066 . . 1,500,000 USD 1,414 1,613The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 89

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)MGM Resorts InternationalSenior Note, 6.625%, 7/15/2015 .......................................................... 800,000 USD $ 802 $ 897Senior Note, 8.625%, 2/1/2019 ............................................................ 100,000 USD 102 119Senior Note, 6.75%, 10/1/2020 ............................................................ 100,000 USD 97 109Senior Note, 6.625%, 12/15/2021 ......................................................... 500,000 USD 514 542Senior Note, 7.75%, 3/15/2022 ............................................................ 100,000 USD 99 114Midstates Petro Inc./LLC, Senior Note, 9.25%, 6/1/2021 .......................................... 400,000 USD 413 395MoneyGram International Inc., Term Loan, Floating Rate Note, 3/28/2020 ............................ 523,802 USD 536 550Morgan StanleySenior Note, 6.625%, 4/1/2018 ............................................................ 100,000 USD 108 119Senior Note, 5.50%, 7/24/2020 ............................................................ 1,500,000 USD 1,489 1,698Morgan Stanley Capital I Trust, 2006-HQ8, AJ, Floating Rate Note, 3/12/2044 ........................ 250,000 USD 235 268Navistar International Corp., Senior Note, 8.25%, 11/1/2021 ...................................... 900,000 USD 850 930NEP/NCP Holdco Inc., Second Lien Term Loan, Floating Rate Note, 7/22/2020 ....................... 183,683 USD 192 198Neuberger Berman Group LLC/Finance Corp., Senior Note, 5.875%, 3/15/2022 ....................... 900,000 USD 920 965NewPage Corp., Escrow Account, 11.375%, 12/31/2014 ......................................... 1,200,000 USD — —Nuveen Investments Inc., Senior Note, 9.50%, 10/15/2020 ....................................... 800,000 USD 775 837Offshore Group Investment Ltd.First Lien, 7.125%, 4/1/2023 .............................................................. 300,000 USD 310 310Senior Secured Note, First Lien, 7.50%, 11/1/2019 ............................................ 900,000 USD 884 983Pact Group LLC, Term Loans, Floating Rate Note, 5/29/2020 ...................................... 400,000 USD 411 417Par Pharmaceutical Companies Inc., Term B-1 Loan, Floating Rate Note, 9/30/2019 ................... 1,253,700 USD 1,233 1,308Party City Holdings Inc., 2013 Replacement Term Loan, Floating Rate Note, 7/27/2019 ................. 1,380,314 USD 1,385 1,445Patriot Coal Corp.Debtor-In-Possession Term Loan, Floating Rate Note, 10/3/2013 ................................. 1,587,047 USD 1,580 1,650Reimbursement Obligation (Second Out LC DIP), Floating Rate Note, 12/31/2013 .................... 140,473 USD 1 1Peabody Energy Corp.Senior Note, 6.00%, 11/15/2018 .......................................................... 600,000 USD 611 632Senior Note, 6.50%, 9/15/2020 ............................................................ 700,000 USD 733 738Senior Note, 6.25%, 11/15/2021 .......................................................... 200,000 USD 213 203Penn Virginia Corp., Senior Note, 8.50%, 5/1/2020 .............................................. 600,000 USD 611 612Penn Virginia Resource Partners LP/Finance Corp. IISenior Note, 8.375%, 6/1/2020 ............................................................ 700,000 USD 703 776Senior Note, 6.50%, 5/15/2021 ............................................................ 200,000 USD 201 202Pinnacle Foods Finance LLC, Tranche G Term Loan, Floating Rate Note, 4/29/2020 .................... 623,696 USD 636 652Plains Exploration & Production Co.Senior Note, 6.125%, 6/15/2019 .......................................................... 100,000 USD 99 111Senior Note, 8.625%, 10/15/2019 ......................................................... 100,000 USD 108 116Senior Note, 6.875%, 2/15/2023 .......................................................... 400,000 USD 396 450QR Energy LP/QRE Finance, Senior Note, 9.25%, 8/1/2020 ....................................... 900,000 USD 896 972Quicksilver Resources Inc.2nd Lien Term Loan, Floating Rate Note, 6/21/2019 ........................................... 330,000 USD 327 335Secured Note, Second Lien, Floating Rate Note, 6/21/2019 ..................................... 500,000 USD 492 473Senior Note, 9.125%, 8/15/2019 .......................................................... 400,000 USD 411 357Radio One Inc., Senior Subordinate Note, Payment-In-Kind, 12.50%, 5/24/2016 ...................... 600,000 USD 579 636RBS Global Inc. (Rexnord), Term B Loan, Floating Rate Note, 4/1/2018 ............................. 413,739 USD 412 434Regions Bank, Subordinated Note, 7.50%, 5/15/2018 ........................................... 400,000 USD 387 491The accompanying notes are an integral part of these financial statements.90 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)Regions Financial Corp.Senior Note, 7.75%, 11/10/2014 .......................................................... 141,000 USD $ 149 $ 160Senior Note, 5.75%, 6/15/2015 ............................................................ 200,000 USD 198 227Reynolds Group Holdings Inc., U.S. Term Loan, Floating Rate Note, 9/28/2018 ....................... 3,452,827 USD 3,370 3,635Reynolds Group Issuer Inc./LLC/SAFirst Lien, 5.75%, 10/15/2020 ............................................................ 200,000 USD 194 212Senior Note, 8.50%, 5/15/2018 ............................................................ 500,000 USD 518 541Senior Secured Note, 7.125%, 4/15/2019 ................................................... 200,000 USD 192 222Rite Aid Corp., Senior Secured Note, 8.00%, 8/15/2020 .......................................... 500,000 USD 528 582Road Infrastructure Investment LLC (Ennis Flint), Second Lien Term Loan, Floating Rate Note, 9/30/2018 . . 1,008,043 USD 1,002 1,070Sabine Pass Liquefaction LLC5.625%, 4/15/2023 ..................................................................... 300,000 USD 303 298Secured Note, 5.625%, 2/1/2021 .......................................................... 900,000 USD 912 918Safeway Inc., Senior Bond, 3.95%, 8/15/2020 .................................................. 1,400,000 USD 1,383 1,443Samson Investment Co., Senior Note, 9.75%, 2/15/2020 ......................................... 1,300,000 USD 1,303 1,440Sanchez Energy Corp., Senior Note, 7.75%, 6/15/2021 ........................................... 500,000 USD 512 518SandRidge Energy Inc., Senior Note, 7.50%, 2/15/2023 .......................................... 100,000 USD 99 100Sealed Air Corp.Senior Note, 6.50%, 12/1/2020 ............................................................ 300,000 USD 332 333Senior Note, 8.375%, 9/15/2021 .......................................................... 400,000 USD 421 475Senior not, 8.25%, 2/15/2021 ............................................................... 700,000 USD 699 729Sensus USA Inc., Second Lien Term Loan, Floating Rate Note, 5/9/2018 ............................. 1,293,235 USD 1,275 1,355Shea Homes LP/Funding Corp., Senior Secured Note, 8.625%, 5/15/2019 ........................... 600,000 USD 574 673Shingle Springs Tribal Gaming Authority, Senior Note, 9.375%, 6/15/2015 ........................... 500,000 USD 406 520SLM Corp., Senior Note, 8.45%, 6/15/2018 .................................................... 100,000 USD 117 117Sprint Nextel Corp.Senior Note, 8.375%, 8/15/2017 .......................................................... 1,700,000 USD 1,803 2,006Senior Note, 7.00%, 3/1/2020 ............................................................. 300,000 USD 299 341Senior Note, 6.00%, 11/15/2022 .......................................................... 500,000 USD 517 515Sterling International Inc., Senior Note, 11.00%, 10/1/2019 ....................................... 500,000 USD 491 541Terex Corp., U.S. Term Loan, Floating Rate Note, 4/28/2017 ...................................... 1,085,209 USD 1,064 1,148Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc., SeniorSecured Note, 11.50%, 10/1/2020 ......................................................... 2,000,000 USD 1,664 1,572The Goldman Sachs Group Inc., Senior Note, 2.375%, 1/22/2018 .................................. 1,200,000 USD 1,189 1,238The Goodyear Tire & Rubber Co., Senior Note, 6.50%, 3/1/2021 ................................... 900,000 USD 922 962Time Warner Inc.7.625%, 4/15/2031 ..................................................................... 900,000 USD 1,025 1,194Senior Bond, 3.40%, 6/15/2022 ........................................................... 100,000 USD 103 102Tomkins LLC and Tomkins Inc., Term B-2 Loan, Floating Rate Note, 9/21/2016 ....................... 384,267 USD 380 405Trans Union LLC, 2013 Replacement Term Loan, Floating Rate Note, 2/10/2019 ...................... 1,714,378 USD 1,707 1,807TransDigm Inc.Term Loan C, Floating Rate Note, 2/28/2020 ................................................. 530,000 USD 545 552Tranche C Term Loan, Floating Rate Note, 2/28/2020 .......................................... 223,605 USD 230 232Turtle Bay Holdings LLC, Term Loan B, Payment-In-Kind, Floating Rate Note, 3/1/2015 ................. 442,897 USD 422 431U.S. Acquisition Co., Second Lien Term Loan, Floating Rate Note, 6/3/2021 .......................... 142,727 USD 145 149U.S. Coatings Acquisition Inc./Flash Dutch 2 BV, Secured Note, 5.75%, 2/1/2021 ..................... 300,000 EUR 395 414U.S. Treasury Bond9.00%, 11/15/2018 ..................................................................... 1,000,000 USD 1,378 1,4627.125%, 2/15/2023 ..................................................................... 100,000 USD 141 148The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 91

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 51.59% (Continued)6.875%, 8/15/2025 ................................................................. 730,000 USD $ 1,088 $ 1,098U.S. Treasury Note2.375%, 3/31/2016* ............................................................... 3,000,000 USD 3,153 3,3083.75%, 11/15/2018 ................................................................. 3,500,000 USD 3,920 4,112Index Linked, 0.125%, 4/15/2016 ..................................................... 1,053,574 USD 1,073 1,136Index Linked, 0.625%, 7/15/2021 ..................................................... 1,444,546 USD 1,454 1,566Univision Communications Inc.Senior Secured Bond, 6.75%, 9/15/2022 ................................................ 100,000 USD 99 110Senior Secured Note, 7.875%, 11/1/2020 ............................................... 1,000,000 USD 1,024 1,138Senior Secured Note, 5.125%, 5/15/2023 ............................................... 200,000 USD 205 199Vertafore Inc., Second Lien Term Loan, Floating Rate Note, 10/27/2017 ......................... 1,022,822 USD 1,045 1,091Virgin Media Investment Holdings Ltd., B Facility, Floating Rate Note, 2/15/2020 .................. 1,953,100 USD 1,983 2,031Visant Corp., Senior Note, 10.00%, 10/1/2017 ............................................. 1,000,000 USD 1,044 970VPI Escrow Corp., Senior Note, 6.375%, 10/15/2020 ........................................ 1,200,000 USD 1,171 1,247W&T Offshore Inc., Senior Note, 8.50%, 6/15/2019 ......................................... 1,000,000 USD 1,034 1,086Walter Energy Inc., B Term Loan, Floating Rate Note, 4/1/2018 ................................ 216,668 USD 211 224Warner Chilcott Corp.Additional Term B-1 Loan, Floating Rate Note, 3/15/2018 ................................... 233,119 USD 228 245Term B-1 Loan, Floating Rate Note, 3/15/2018 ........................................... 531,236 USD 520 558Websense Inc., Second Lien Term Loan, Floating Rate Note, 12/27/2020 ........................ 103,403 USD 107 108Weight Watchers International Inc., Initial Tranche B-2 Term Loan, Floating Rate Note, 4/2/2020 ..... 2,182,902 USD 2,193 2,278Wells Fargo Mortgage Backed Securities Trust2004-W, A9, Floating Rate Note, 11/25/2034 ............................................. 509,989 USD 475 5492007-3, 3A1, 5.50%, 4/25/2037 ....................................................... 300,027 USD 315 326West Corp., Senior Note, 7.875%, 1/15/2019 .............................................. 1,000,000 USD 1,018 1,093WMG Acquisition Corp.Tranche B Delayed Draw Term Loan, Floating Rate Note, 7/1/2020 ........................... 42,927 USD 43 45Tranche B Initial Term Loan, Floating Rate Note, 7/1/2020 .................................. 277,073 USD 278 288YRC Worldwide Inc., U.S. Tranche Term Loan, Floating Rate Note, 3/21/2015 .................... 1,000,000 USD 1,023 1,038YRCW Receivables LLC, Term B Loan, Floating Rate Note, 9/30/2014 ........................... 99USD — —Zoetis Inc., Senior Bond, 3.25%, 2/1/2023 ................................................ 1,000,000 USD 990 998253,857 267,918South Korea: 3.53%Korea Monetary Stabilization BondSenior Bond, 3.59%, 10/2/2013 ....................................................... 97,410,000 KRW 85 90Senior Bond, 3.48%, 12/2/2013 ....................................................... 166,980,000 KRW 147 154Senior Bond, 3.47%, 2/2/2014 ........................................................ 229,580,000 KRW 203 212Senior Bond, 3.59%, 4/2/2014 ........................................................ 337,410,000 KRW 299 312Senior Bond, 2.55%, 5/9/2014 ........................................................ 164,600,000 KRW 150 151Senior Bond, 2.47%, 4/2/2015 ........................................................ 540,000,000 KRW 493 494Senior Note, 3.28%, 6/2/2014 ........................................................ 400,080,000 KRW 353 370Senior Note, 2.82%, 8/2/2014 ........................................................ 877,200,000 KRW 803 808Senior Note, 2.78%, 10/2/2014 ....................................................... 3,497,700,000 KRW 3,200 3,218Senior Note, 2.84%, 12/2/2014 ....................................................... 1,237,310,000 KRW 1,135 1,139Senior Note, 2.76%, 6/2/2015 ........................................................ 55,000,000 KRW 51 50* Principal amount of USD $267,285 pledged as collateral as at June 30, 2013The accompanying notes are an integral part of these financial statements.92 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)South Korea: 3.53% (Continued)Korea Treasury BondSenior Bond, 3.00%, 12/10/2013 ...................................................... 8,842,500,000 KRW $ 7,825 $ 8,150Senior Bond, 3.50%, 6/10/2014 ....................................................... 2,030,990,000 KRW 1,794 1,883Senior Note, 3.25%, 12/10/2014 ...................................................... 378,420,000 KRW 350 351Senior Note, 2.75%, 12/10/2015 ...................................................... 1,050,000,000 KRW 968 96217,856 18,344Canada: 2.53%CHC Helicopter SASenior Note, 9.375%, 6/1/2021 ....................................................... 300,000 USD 301 312Senior Secured Note, First Lien, 9.25%, 10/15/2020 ....................................... 1,000,000 USD 1,025 1,078Government of Canada2.50%, 9/1/2013 ................................................................... 188,000 CAD 189 1881.00%, 2/1/2014 ................................................................... 595,000 CAD 595 5952.00%, 3/1/2014 ................................................................... 220,000 CAD 222 2210.75%, 5/1/2014 ................................................................... 515,000 CAD 514 5132.25%, 8/1/2014 ................................................................... 146,000 CAD 149 1481.00%, 11/1/2014 .................................................................. 222,000 CAD 222 2212.00%, 12/1/2014 .................................................................. 532,000 CAD 541 5381.00%, 2/1/2015 ................................................................... 918,000 CAD 916 9151.00%, 5/1/2015 ................................................................... 2,032,000 CAD 2,032 2,024Inmet Mining Corp., Senior Note, 8.75%, 6/1/2020 .......................................... 1,500,000 USD 1,502 1,613Novelis Inc.Senior Note, 8.375%, 12/15/2017 ..................................................... 400,000 USD 407 446Senior Note, 8.75%, 12/15/2020 ...................................................... 600,000 USD 603 677Telesat Canada/Telesat LLC, U.S. Term B-2 Loan, Floating Rate Note, 3/28/2019 .................. 284,584 USD 281 299Valeant Pharmaceuticals International Inc.Series C-1 Tranche B Term Loan, Floating Rate Note, 12/11/2019 ............................ 1,089,724 USD 1,056 1,135Series D-1 Tranche B Term Loan, Floating Rate Note, 2/13/2019 ............................. 219,957 USD 221 229Series E Tranche B Term Loan, Floating Rate Note, 6/30/2020 ............................... 230,000 USD 237 241Xstrata Finance Canada Ltd., Senior Note, 4.95%, 11/15/2021 ................................. 1,700,000 USD 1,743 1,72912,756 13,122Sweden: 2.42%Government of Sweden1.50%, 8/30/2013 .................................................................. 29,590,000 SEK 4,527 4,6426.75%, 5/5/2014 ................................................................... 48,090,000 SEK 7,775 7,90612,302 12,548Poland: 2.14%Government of Poland5.00%, 10/24/2013 ................................................................. 870,000 PLN 276 2775.75%, 4/25/2014 .................................................................. 21,065,000 PLN 6,870 6,8195.50%, 4/25/2015 .................................................................. 4,557,000 PLN 1,495 1,5046.25%, 10/24/2015 ................................................................. 2,724,000 PLN 928 920Floating Rate Note, 1/25/2017 ........................................................ 498,000 PLN 154 156Floating Rate Note, 1/25/2021 ........................................................ 505,000 PLN 154 155Strip, 7/25/2013 .................................................................... 345,000 PLN 113 109Strip, 1/25/2014 .................................................................... 1,245,000 PLN 386 388Strip, 7/25/2015 .................................................................... 370,000 PLN 110 110The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 93

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Poland: 2.14% (Continued)Strip, 1/25/2016 ....................................................................... 2,349,000 PLN $ 702 $ 68511,188 11,123Mexico: 2.13%Cemex SAB de CVSecured Note, 5.875%, 3/25/2019 ......................................................... 200,000 USD 205 204Senior Secured Note, 9.00%, 1/11/2018 .................................................... 1,500,000 USD 1,468 1,664Government of Mexico (1)8.00%, 12/19/2013 ..................................................................... 321,800 MXN 2,827 2,6597.00%, 6/19/2014 ...................................................................... 243,700 MXN 1,939 2,0329.50%, 12/18/2014 ..................................................................... 216,340 MXN 1,825 1,8886.00%, 6/18/2015 ...................................................................... 5,100 MXN 43 428.00%, 12/17/2015 ..................................................................... 253,490 MXN 2,259 2,2276.25%, 6/16/2016 ...................................................................... 38,400 MXN 335 32610,901 11,042United Kingdom: 2.09%Algeco Scotsman Global Finance PLC, Secured Note, 8.50%, 10/15/2018 ........................... 1,000,000 USD 984 1,046Boparan Finance PLC, Senior Note, 9.75%, 4/30/2018 .......................................... 900,000 EUR 1,224 1,333CEVA Group PLC, Senior Note, 4.00%, 5/1/2018 ............................................... 800,000 USD 695 690Expro Finance Luxembourg, Senior Secured Note, 8.50%, 12/15/2016 .............................. 1,100,000 USD 1,117 1,214Ineos Finance PLCSenior Secured Note, 8.375%, 2/15/2019 ................................................... 200,000 USD 199 228Senior Secured Note, 7.50%, 5/1/2020 ..................................................... 100,000 USD 98 112Ineos Group Holdings SA, 6.50%, 8/15/2018 .................................................. 300,000 EUR 397 392Kerling PLC, Senior Secured Note, 10.625%, 2/1/2017 .......................................... 1,200,000 EUR 1,755 1,718Lynx II Corp., Senior Bond, 6.375%, 4/15/2023 ................................................ 300,000 USD 301 318Matalan Finance Ltd., Senior Secured Note, 8.875%, 4/29/2016 ................................... 600,000 GBP 938 964New Look Bondco I PLC, Secured Note, 8.75%, 5/14/2018 ....................................... 600,000 GBP 940 924Royal Bank of Scotland Group PLC, Subordinated Note, 6.125%, 12/15/2022 ........................ 500,000 USD 502 499The Royal Bank of Scotland PLC, Subordinated Note, 6.934%, 4/9/2018 ............................ 1,000,000 EUR 1,196 1,43010,346 10,868Luxembourg: 2.00%Accudyne Industries LLC (Silver II U.S. Holdings/Hamilton), 2013 Specified Refinancing Term Loan,Floating Rate Note, 12/13/2019 ........................................................... 962,464 USD 960 999ArcelorMittalSenior Note, 6.00%, 3/1/2021 ............................................................ 1,500,000 USD 1,469 1,566Senior Note, 6.75%, 2/25/2022 ........................................................... 400,000 USD 432 430Ardagh Packaging Finance PLC, Senior Note, 9.125%, 10/15/2020 ................................ 800,000 USD 846 894Ardagh Packaging Finance PLC/Ardagh MP Holdings USA Inc.Secured Note, 4.875%, 11/15/2022 ....................................................... 200,000 USD 198 195Senior Note, 7.00%, 11/15/2020 .......................................................... 200,000 USD 199 202August Luxuk Holding Co., Lux Second Lien, Floating Rate Note, 4/27/2019 .......................... 534,908 USD 532 562Intelsat Jackson Holdings SASenior Bond, 5.50%, 8/1/2023 ............................................................ 100,000 USD 103 98Senior Note, 7.25%, 10/15/2020 .......................................................... 700,000 USD 707 773Senior Note, 7.50%, 4/1/2021 ............................................................ 200,000 USD 199 221Senior Note, 6.625%, 12/15/2022 ......................................................... 800,000 USD 781 816(1) Principal amount in 100 Mexican Peso unitsThe accompanying notes are an integral part of these financial statements.94 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Luxembourg: 2.00% (Continued)Tranche B-1 Term Loan, Floating Rate Note, 4/2/2018 ....................................... 2,370,310 USD $ 2,354 $ 2,494OXEA German Luxembourg and U.S. Co-Borrowers, Second Lien Term Loan, Floating RateNote, 7/15/2020 ...................................................................... 423,430 USD 437 442Pacific Drilling SA, Term Loan, Floating Rate Note, 6/3/2018 .................................... 260,000 USD 265 272WC Luxco S.A.R.L., Term B-3 Loan, Floating Rate Note, 3/15/2018 ............................... 418,623 USD 410 4409,892 10,404Hungary: 1.84%Government of Hungary5.50%, 2/12/2014 .................................................................... 347,500,000 HUF 1,583 1,6247.75%, 8/24/2015 .................................................................... 1,700,000 HUF 8 85.50%, 2/12/2016 .................................................................... 733,200,000 HUF 3,359 3,4475.50%, 12/22/2016 ................................................................... 8,630,000 HUF 38 416.50%, 6/24/2019 .................................................................... 82,600,000 HUF 365 4017.50%, 11/12/2020 ................................................................... 25,300,000 HUF 117 128A, 8.00%, 2/12/2015 .................................................................. 5,510,000 HUF 25 27D, 6.75%, 8/22/2014 ................................................................. 125,000,000 HUF 661 596E, 7.50%, 10/24/2013 ................................................................. 19,890,000 HUF 87 93Senior Note, 6.25%, 1/29/2020 ......................................................... 2,200,000 USD 2,296 2,417Senior Note, 6.375%, 3/29/2021 ........................................................ 724,000 USD 675 7949,214 9,576Ireland: 1.63%Government of Ireland5.90%, 10/18/2019 ................................................................... 269,000 EUR 323 4154.50%, 4/18/2020 .................................................................... 902,000 EUR 1,012 1,2905.00%, 10/18/2020 ................................................................... 1,858,000 EUR 2,178 2,722Senior Bond, 4.50%, 10/18/2018 ........................................................ 96,000 EUR 109 140Senior Bond, 4.40%, 6/18/2019 ......................................................... 445,000 EUR 523 638Senior Bond, 5.40%, 3/13/2025 ......................................................... 1,400,000 EUR 1,554 2,077Talisman 6 Finance, Floating Rate Note, 10/22/2016 .......................................... 969,751 EUR 1,233 1,1886,932 8,470Cayman Islands: 1.46%ARES Collateralized Loan Obligations Funds, 2007-12A, B, Floating Rate Note, 11/25/2020 ........... 530,000 USD 450 557Atrium Collateralized Debt Obligations Corp., 10A, C, Floating Rate Note, 7/16/2025 ................. 470,000 USD 475 478Catamaran Collateralized Loan Obligations Ltd., 2013-1A, C, Floating Rate Note, 1/27/2025 ........... 370,000 USD 378 370Cent Collateralized Debt Obligations Ltd., 2007-15A, A2B, Floating Rate Note, 3/11/2021 ............. 203,000 USD 165 198Cent Collateralized Loan Obligations LP, 2013-17A, D, Floating Rate Note, 1/30/2025 ................ 196,078 USD 197 206CIFC Funding Ltd., 2007-3A, A1J, Floating Rate Note, 7/26/2021 ................................ 960,000 USD 772 963Columbus Nova Collateralized Loan Obligations Ltd., 2007-2A, A2, Floating Rate Note, 10/15/2021 ..... 150,000 USD 126 153CT Collateralized Debt Obligations IV Ltd., 2006-4A, A1, Floating Rate Note, 10/20/2043 .............. 851,776 USD 811 836Gleneagles Collateralized Loan Obligations Ltd., 2005-1A, A2, Floating Rate Note, 11/1/2017 .......... 2,000,000 USD 1,609 1,987ING Investment Management Collateralized Loan Obligations Ltd., 2013-1A, B, Floating Rate Note,4/15/2024 .......................................................................... 180,000 USD 183 188Newcastle Collateralized Debt Obligations Ltd., 2004-5A, 1, Floating Rate Note, 12/24/2039 ........... 539,863 USD 511 539Westchester Collateralized Loan Obligations Ltd., 2007-1A, A1A, Floating Rate Note, 8/1/2022 ......... 1,066,486 USD 971 1,0886,648 7,563The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 95

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Netherlands: 1.28%InterGen NV, Secured Bond, 7.00%, 6/30/2023 ............................................... 700,000 USD $ 702 $ 714Nokia Siemens Networks Finance BV, Senior Note, 7.125%, 4/15/2020 ............................ 600,000 EUR 817 835Tronox Pigments (Netherlands) BV, Term Loan, Floating Rate Note, 3/19/2020 ...................... 1,109,671 USD 1,134 1,171UPC Financing PartnershipTerm Loan AF, Floating Rate Note, 1/29/2021 ............................................... 290,300 USD 289 305Term Loan AH, Floating Rate Note, 6/30/2021 .............................................. 2,001,338 USD 1,998 2,090UPC Holding BV, Senior Note, 6.375%, 9/15/2022 ............................................. 100,000 EUR 126 131UPCB Finance II Ltd., Senior Secured Note, 6.375%, 7/1/2020 ................................... 1,000,000 EUR 1,340 1,3956,406 6,641Malaysia: 1.22%Government of Malaysia3.434%, 8/15/2014 .................................................................... 4,795,000 MYR 1,577 1,6013.741%, 2/27/2015 .................................................................... 775,000 MYR 257 2603.835%, 8/12/2015 .................................................................... 915,000 MYR 309 3084.72%, 9/30/2015 ..................................................................... 170,000 MYR 59 593.197%, 10/15/2015 ................................................................... 850,000 MYR 283 282Senior Bond, 3.461%, 7/31/2013 ......................................................... 8,535,000 MYR 2,715 2,841Senior Bond, 8.00%, 10/30/2013 ......................................................... 10,000 MYR 3 3Senior Bond, 5.094%, 4/30/2014 ......................................................... 2,835,000 MYR 944 9596,147 6,313Australia: 1.17%Barminco Finance Pty. Ltd., Senior Note, 9.00%, 6/1/2018 ...................................... 600,000 USD 609 576FMG Resources (August 2006) Pty. Ltd.Senior Note, 6.00%, 4/1/2017 ........................................................... 100,000 USD 99 102Senior Note, 6.875%, 2/1/2018 .......................................................... 1,200,000 USD 1,197 1,246Senior Note, 8.25%, 11/1/2019 .......................................................... 200,000 USD 212 216Government of Australia, 125, 6.25%, 6/15/2014 .............................................. 2,586,000 AUD 2,556 2,576Nine Entertainment Group Pty. Ltd., Term B Loan, Floating Rate Note, 2/5/2020 ..................... 1,286,207 USD 1,304 1,3435,977 6,059Uruguay: 1.14%Government of Uruguay, Senior Note, Index Linked, 4.375%, 12/15/2028 .......................... 62,947,214 UYU 3,264 3,736Uruguay Notas del Tesoro9.00%, 1/27/2014 ..................................................................... 3,790,000 UYU 190 19310.50%, 3/21/2015 .................................................................... 500,000 UYU 23 2510.25%, 8/22/2015 .................................................................... 11,830,000 UYU 606 6019.50%, 1/27/2016 ..................................................................... 4,610,000 UYU 233 231Index Linked, 2.25%, 8/23/2017 ......................................................... 5,784,896 UYU 272 289Uruguay Treasury Bill, Strip, 9/9/2013 ....................................................... 16,300,000 UYU 751 8195,339 5,894Germany: 0.98%Deutsche Bank AG, Subordinated Bond, 4.296% to 5/24/2023, Floating Rate Note thereafter, 5/24/2028 . . 1,800,000 USD 1,795 1,756German Residential Asset Note Distributor PLC, 1, C, Floating Rate Note, 1/20/2021 .................. 339,852 EUR 451 462KM Germany Holdings GmbH, 8.75%, 12/15/2020 ............................................ 800,000 EUR 1,061 1,123Orion Engineered Carbons Bondco GmbH, Senior Secured Bond, 10.00%, 6/15/2018 ................. 900,000 EUR 1,261 1,349Unitymedia Hessen GmbH & Co. KG/NRW GmbH, Senior Secured Note, 5.625%, 4/15/2023 ........... 300,000 EUR 398 394(2) Principal amount in 1000 Brazilian Real units4,966 5,084The accompanying notes are an integral part of these financial statements.96 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Brazil: 0.93%Banco do Brasil SA, Subordinated Note, 5.875%, 1/26/2022 .................................. 2,000,000 USD $ 1,981 $ 2,050Nota Do Tesouro Nacional (2)10.00%, 1/1/2017 .................................................................. 3,210 BRL 1,676 1,475Index Linked, 6.00%, 5/15/2015 ....................................................... 1,005 BRL 1,251 1,126Index Linked, 6.00%, 8/15/2018 ....................................................... 165BRL 217 1885,125 4,839Russia: 0.89%Gaz Capital SASenior Bond (OJSC Gazprom), Loan Participation, 6.51%, 3/7/2022 ........................... 300,000 USD 331 335Senior Note (OJSC Gazprom), Loan Participation, 5.092%, 11/29/2015 ........................ 1,100,000 USD 1,121 1,219Senior Note (OJSC Gazprom), Loan Participation, 3.85%, 2/6/2020 ........................... 200,000 USD 200 200Government of Russia, Senior Bond, 7.50%, 3/31/2030 ...................................... 1,132,400 USD 1,199 1,395LUKOIL International Finance BV, Senior Note, 4.563%, 4/24/2023 ............................. 1,500,000 USD 1,537 1,4674,388 4,616France: 0.85%Cegedim SA, 6.75%, 4/1/2020 .......................................................... 500,000 EUR 666 660CGGSenior Note, 7.75%, 5/15/2017 ........................................................ 400,000 USD 410 427Senior Note, 6.50%, 6/1/2021 ......................................................... 800,000 USD 751 849EDF SA, Subordinated Note, 5.25% to 1/29/2023, Floating Rate Note thereafter, Perpetual .......... 1,800,000 USD 1,791 1,813Loxam SAS, Senior Subordinate Note, 7.375%, 1/24/2020 .................................... 500,000 EUR 666 6774,284 4,426Ukraine: 0.73%Government of Ukraine7.75%, 9/23/2020 .................................................................. 2,500,000 USD 2,434 2,393Senior Note, 7.95%, 2/23/2021 ........................................................ 980,000 USD 896 942Senior Note, 7.80%, 11/28/2022 ....................................................... 460,000 USD 459 4313,789 3,766Indonesia: 0.64%Government of IndonesiaFR34, 12.80%, 6/15/2021 ............................................................ 3,130,000,000 IDR 466 444FR35, 12.90%, 6/15/2022 ............................................................ 8,130,000,000 IDR 1,061 1,179FR36, 11.50%, 9/15/2019 ............................................................ 6,300,000,000 IDR 894 818Indonesia Retail Bond, Senior Bond, ORI7, 7.95%, 8/15/2013 ................................. 8,300,000,000 IDR 993 8833,414 3,324Spain: 0.61%Abengoa Finance SAU, Senior Note, 8.875%, 11/1/2017 ..................................... 850,000 USD 854 843Abengoa SA, Senior Note, 8.50%, 3/31/2016 ............................................... 400,000 EUR 513 543Nara Cable Funding Ltd., Senior Note, 8.875%, 12/1/2018 100,000 USD 94 108Telefonica Emisiones SAUSenior Note, 5.462%, 2/16/2021 ....................................................... 1,100,000 USD 1,003 1,191Senior Note, 4.57%, 4/27/2023 ........................................................ 500,000 USD 513 5012,977 3,186The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 97

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Japan: 0.53%eAccess Ltd.Senior Note, 8.25%, 4/1/2018 ............................................................ 600,000 USD $ 585 $ 699Senior Note, 8.375%, 4/1/2018 .......................................................... 300,000 EUR 366 453Mitsui Sumitomo Insurance Co. Ltd., Junior Subordinated Note, 7.00% to 3/15/2022, Floating Rate Notethereafter, 3/15/2072 ................................................................... 1,400,000 USD 1,393 1,6112,344 2,763Philippines: 0.39%Government of the PhilippinesSenior Bond, 7.00%, 1/27/2016 .......................................................... 8,720,000 PHP 226 231Senior Note, 6.25%, 1/27/2014 .......................................................... 72,850,000 PHP 1,809 1,8132,035 2,044Sri Lanka: 0.37%Government of Sri LankaA, 7.50%, 8/1/2013 .................................................................... 18,380,000 LKR 149 148A, 7.00%, 3/1/2014 .................................................................... 2,660,000 LKR 22 21A, 11.25%, 7/15/2014 .................................................................. 66,800,000 LKR 605 540A, 11.75%, 3/15/2015 .................................................................. 440,000 LKR 4 4A, 6.50%, 7/15/2015 ................................................................... 10,950,000 LKR 92 81A, 11.00%, 8/1/2015 ................................................................... 75,100,000 LKR 666 605A, 6.40%, 8/1/2016 .................................................................... 7,700,000 LKR 62 54A, 9.00%, 5/1/2021 .................................................................... 27,610,000 LKR 191 193B, 11.75%, 4/1/2014 ................................................................... 2,630,000 LKR 20 21B, 6.60%, 6/1/2014 .................................................................... 2,600,000 LKR 22 20B, 6.40%, 10/1/2016 ................................................................... 5,400,000 LKR 43 38B, 8.50%, 7/15/2018 ................................................................... 5,720,000 LKR 41 41C, 8.50%, 4/1/2018 .................................................................... 3,020,000 LKR 22 22D, 8.50%, 6/1/2018 .................................................................... 20,280,000 LKR 147 1462,086 1,934Serbia: 0.33%Government of Serbia7.25%, 9/28/2021 ..................................................................... 600,000 USD 720 644Senior Note, 4.875%, 2/25/2020 ......................................................... 1,105,000 USD 1,170 1,0731,890 1,717Iceland: 0.32%Government of Iceland, 5.875%, 5/11/2022 .................................................. 1,490,000 USD 1,523 1,659Italy: 0.31%Seat Pagine Gialle SpA, 10.50%, 1/31/2017 .................................................. 400,000 EUR 548 137Wind Acquisition Finance SA, Senior Secured Note, 11.75%, 7/15/2017 ............................ 1,000,000 USD 1,038 1,093Wind Acquisition Holdings Finance SA, Senior Secured Note, Payment-In-Kind, 14.303%, 7/15/2017 .... 288,462 EUR 363 3781,949 1,608Bermuda: 0.29%Digicel Group Ltd., Senior Note, 8.25%, 9/30/2020 ............................................. 1,000,000 USD 978 1,089Digicel Ltd., Senior Note, 6.00%, 4/15/2021 .................................................. 400,000 USD 406 4021,384 1,491South Africa: 0.24%Edcon Pty. Ltd., Secured Note, 9.50%, 3/1/2018 ............................................... 1,000,000 EUR 1,302 1,262The accompanying notes are an integral part of these financial statements.98 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Chile: 0.24%Cencosud SA, Senior Note, 4.875%, 1/20/2023 ................................................ 1,200,000 USD $ 1,181 $ 1,236Czech Republic: 0.14%Central European Media Enterprises Ltd., Senior Secured Note, 11.625%, 9/15/2016 .................. 400,000 EUR 518 582CET 21 Spol SRO, Senior Secured Note, 9.00%, 11/1/2017 ....................................... 100,000 EUR 136 149654 731Switzerland: 0.14%Ineos Group Holdings SA, Secured Note, Second Lien, 7.875%, 2/15/2016 .......................... 336,828 EUR 364 461Mobile Challenger Intermediate Group SA, Senior Secured Note, Payment-In-Kind, 8.75%, 3/15/2019 ..... 200,000 EUR 265 265629 726Vietnam: 0.11%Government of Vietnam, 6.75%, 1/29/2020 .................................................... 525,000 USD 548 585Singapore: 0.10%Government of Singapore, Senior Bond, 0.25%, 2/1/2014 ........................................ 625,000 SGD 513 518Israel: 0.09%Government of Israel, 3.50%, 9/30/2013 ...................................................... 1,575,000 ILS 441 458Belgium: 0.06%Barry Callebaut Services SA, Senior Note, 5.50%, 6/15/2023 ...................................... 300,000 USD 309 318Puerto Rico: 0.01%Warner Chilcott Co. LLC, Term B-2 Loan, Floating Rate Note, 3/15/2018 ........................... 71,441 USD 70 75Total Bonds: ............................................................................. 433,562 454,251Total Long-Term Investments: ............................................................... 435,067 456,066SHORT-TERM SECURITIES: 8.72%Bank of Negara Monetary Note2.87%, 7/11/2013 ...................................................................... 1,080,000 MYR 342 3592.87%, 7/25/2013 ...................................................................... 960,000 MYR 304 3192.87%, 8/6/2013 ....................................................................... 1,770,000 MYR 560 5872.83%, 8/15/2013 ...................................................................... 4,030,000 MYR 1,274 1,3362.831%, 8/27/2013 ..................................................................... 1,760,000 MYR 556 5832.991%, 9/5/2013 ...................................................................... 50,000 MYR 16 172.90%, 9/17/2013 ...................................................................... 5,000 MYR 2 22.902%, 9/26/2013 ..................................................................... 180,000 MYR 58 592.98%, 10/8/2013 ...................................................................... 100,000 MYR 33 332.90%, 10/10/2013 ..................................................................... 205,000 MYR 66 682.90%, 10/22/2013 ..................................................................... 20,000 MYR 6 72.90%, 10/31/2013 ..................................................................... 10,000 MYR 3 32.938%, 11/12/2013 .................................................................... 330,000 MYR 108 1092.917%, 11/19/2013 .................................................................... 510,000 MYR 168 1682.894%, 11/26/2013 .................................................................... 830,000 MYR 277 2732.922%, 12/5/2013 ..................................................................... 350,000 MYR 116 1152.924%, 12/10/2013 .................................................................... 470,000 MYR 155 1542.91%, 12/12/2013 ..................................................................... 10,000 MYR 3 32.933%, 12/19/2013 .................................................................... 100,000 MYR 34 332.87%, 12/26/2013 ..................................................................... 1,170,000 MYR 389 3842.918%, 12/31/2013 .................................................................... 705,000 MYR 232 2312.882%, 1/9/2014 ...................................................................... 295,000 MYR 95 97The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 99

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)2.87%, 1/16/2014 .................................................................... 610,000 MYR $ 196 $ 2002.85%, 2/6/2014 ..................................................................... 15,000 MYR 5 52.85%, 2/18/2014 .................................................................... 190,000 MYR 62 622.852%, 2/20/2014 .................................................................. 165,000 MYR 54 542.88%, 2/25/2014 .................................................................... 145,000 MYR 47 472.90%, 3/6/2014 ..................................................................... 1,560,000 MYR 505 5092.903%, 3/13/2014 .................................................................. 465,000 MYR 149 1512.886%, 3/20/2014 .................................................................. 200,000 MYR 64 652.857%, 3/27/2014 .................................................................. 100,000 MYR 32 332.898%, 4/3/2014 .................................................................... 160,000 MYR 52 522.873%, 4/24/2014 .................................................................. 170,000 MYR 57 552.899%, 5/15/2014 .................................................................. 275,000 MYR 90 892.85%, 5/20/2014 .................................................................... 530,000 MYR 174 1722.859%, 5/27/2014 .................................................................. 1,060,000 MYR 348 3432.87%, 6/3/2014 ..................................................................... 580,000 MYR 183 1882.892%, 6/5/2014 .................................................................... 240,000 MYR 76 782.87%, 6/17/2014 .................................................................... 460,000 MYR 145 1492.954%, 6/19/2014 .................................................................. 310,000 MYR 98 100Canada Treasury Bill, 0.99%, 8/15/2013 .................................................... 118,000 CAD 118 118Federal Home Loan Bank Discount Notes, 7/1/2013 .......................................... 25,000,000 USD 26,374 26,374Hungary Treasury Bill4.42%, 7/17/2013 .................................................................... 4,300,000 HUF 19 204.30%, 7/24/2013 .................................................................... 4,800,000 HUF 22 224.48%, 9/18/2013 .................................................................... 1,840,000 HUF 8 84.578%, 1/8/2014 .................................................................... 34,170,000 HUF 143 1554.53%, 3/5/2014 ..................................................................... 97,410,000 HUF 405 439Korea Monetary Stabilization Bond, 2.549%, 8/13/2013 ........................................ 184,300,000 KRW 167 169Mexico Treasury Bill3.835%, 10/31/2013 ................................................................. 161,200 MXN 132 1294.003%, 1/9/2014 .................................................................... 549,130 MXN 444 4363.80%, 4/3/2014 ..................................................................... 107,500 MXN 87 853.938%, 4/30/2014 .................................................................. 611,300 MXN 492 479Monetary Authority of Singapore Treasury Bill0.248%, 7/5/2013 .................................................................... 335,000 SGD 273 2780.271%, 7/26/2013 .................................................................. 1,200,000 SGD 979 995Philippine Treasury Bill0.24%, 7/10/2013 .................................................................... 1,650,000 PHP 40 401.562%, 7/24/2013 .................................................................. 2,230,000 PHP 54 540.318%, 9/4/2013 .................................................................... 7,620,000 PHP 191 1850.316%, 10/2/2013 .................................................................. 24,750,000 PHP 610 6020.759%, 10/30/2013 ................................................................. 42,060,000 PHP 1,016 1,0210.543%, 11/13/2013 ................................................................. 3,690,000 PHP 90 890.609%, 1/8/2014 .................................................................... 4,570,000 PHP 110 1110.522%, 2/5/2014 .................................................................... 6,640,000 PHP 162 1610.455%, 3/5/2014 .................................................................... 10,020,000 PHP 252 2420.203%, 4/2/2014 .................................................................... 38,230,000 PHP 950 922Singapore Treasury Bill0.165%, 7/11/2013 .................................................................. 125,000 SGD 103 1040.257%, 7/25/2013 .................................................................. 110,000 SGD 89 91The accompanying notes are an integral part of these financial statements.100 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)0.20%, 8/12/2013 ..................................................................... 1,110,000 SGD $ 908 $ 9210.209%, 8/22/2013 .................................................................... 550,000 SGD 449 4560.221%, 9/5/2013 ..................................................................... 80,000 SGD 66 660.24%, 10/4/2013 ..................................................................... 660,000 SGD 541 5470.291%, 11/1/2013 .................................................................... 90,000 SGD 74 750.20%, 5/2/2014 ...................................................................... 2,120,000 SGD 1,743 1,754Sri Lanka Treasury Bill13.08%, 8/2/2013 ..................................................................... 790,000 LKR $ 6 $ 612.25%, 10/11/2013 ................................................................... 610,000 LKR 4 5Sweden Treasury Bill, 0.855%, 9/18/2013 .................................................... 730,000 SEK 116 114Uruguay Treasury Bill8.975%, 8/9/2013 ..................................................................... 12,910,000 UYU 616 6549.34%, 5/16/2014 ..................................................................... 1,070,000 UYU 50 50Total Short-Term Securities: ............................................................... 45,037 45,269Transaction costs (Note 2) ................................................................... (830) —TOTAL INVESTMENTS: 96.54% ............................................................... $479,274 501,335NET UNREALIZED LOSS ON DERIVATIVES: (2.90%) ........................................... (15,072)OTHER ASSETS, less liabilities: 6.36% ...................................................... 33,045TOTAL NET ASSETS: 100.00% ............................................................. $519,308SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)BARCLAYS BANK PLC ................. A+ July 29, 2013 697 EUR $ 955 933 USD $ 982 1.3389 $27BARCLAYS BANK PLC ................. A+ September 19, 2013 74 EUR 102 97 USD 103 1.3173 1BARCLAYS BANK PLC ................. A+ October 25, 2013 89 EUR 123 116 USD 123 1.3044 —BARCLAYS BANK PLC ................. A+ February 25, 2014 1,169 EUR 1,611 1,545 USD 1,634 1.3220 23BARCLAYS BANK PLC ................. A+ April 22, 2014 130 EUR 180 171 USD 182 1.3170 2BARCLAYS BANK PLC ................. A+ April 25, 2014 682 EUR 941 890 USD 943 1.3062 2BARCLAYS BANK PLC ................. A+ April 30, 2014 92 EUR 126 119 USD 126 1.3042 —DEUTSCHE BANK AG ................. A+ July 12, 2013 92 GBP 147 142 USD 150 1.5490 3DEUTSCHE BANK AG ................. A+ July 18, 2013 505,000 CLP 1,042 999 USD 1,051 0.0020 9DEUTSCHE BANK AG ................. A+ July 29, 2013 19 EUR 26 26 USD 27 1.3375 1DEUTSCHE BANK AG ................. A+ July 30, 2013 391 GBP 625 612 USD 644 1.5673 19DEUTSCHE BANK AG ................. A+ September 20, 2013 380 EUR 521 502 USD 529 1.3215 8DEUTSCHE BANK AG ................. A+ September 23, 2013 99 EUR 136 130 USD 137 1.3098 1DEUTSCHE BANK AG ................. A+ September 23, 2013 375 EUR 515 499 USD 526 1.3302 11DEUTSCHE BANK AG ................. A+ October 4, 2013 8,404 PHP 205 206 USD 217 0.0245 12DEUTSCHE BANK AG ................. A+ October 16, 2013 1,965 PHP 48 48 USD 51 0.0245 3DEUTSCHE BANK AG ................. A+ October 31, 2013 350 USD 369 270 EUR 371 0.7719 2DEUTSCHE BANK AG ................. A+ November 4, 2013 115 EUR 159 151 USD 159 1.3050 —DEUTSCHE BANK AG ................. A+ November 14, 2013 300 EUR 413 394 USD 416 1.3132 3DEUTSCHE BANK AG ................. A+ December 13, 2013 500 EUR 688 652 USD 689 1.3048 1DEUTSCHE BANK AG ................. A+ January 13, 2014 227 EUR 312 297 USD 314 1.3115 2The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 101

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)DEUTSCHE BANK AG ............... A+ January 16, 2014 93 EUR $ 128 124 USD $ 131 1.3336 $ 3DEUTSCHE BANK AG ............... A+ January 16, 2014 218 EUR 300 292 USD 308 1.3398 8DEUTSCHE BANK AG ............... A+ January 22, 2014 700 EUR 964 935 USD 988 1.3357 24DEUTSCHE BANK AG ............... A+ February 19, 2014 100 EUR 138 134 USD 142 1.3384 4DEUTSCHE BANK AG ............... A+ February 25, 2014 128 EUR 177 170 USD 180 1.3224 3DEUTSCHE BANK AG ............... A+ February 27, 2014 185 EUR 255 245 USD 259 1.3225 4DEUTSCHE BANK AG ............... A+ February 27, 2014 1,900 EUR 2,619 2,495 USD 2,638 1.3129 19DEUTSCHE BANK AG ............... A+ March 5, 2014 500 EUR 689 653 USD 691 1.3063 2DEUTSCHE BANK AG ............... A+ April 10, 2014 211 EUR 292 277 USD 294 1.3120 2DEUTSCHE BANK AG ............... A+ April 10, 2014 300 EUR 414 394 USD 417 1.3127 3DEUTSCHE BANK AG ............... A+ April 11, 2014 245 EUR 338 320 USD 339 1.3087 1DEUTSCHE BANK AG ............... A+ April 22, 2014 923 EUR 1,275 1,212 USD 1,284 1.3128 9DEUTSCHE BANK AG ............... A+ April 25, 2014 101 EUR 140 132 USD 140 1.3060 —DEUTSCHE BANK AG ............... A+ April 30, 2014 51 EUR 71 67 USD 71 1.3056 —DEUTSCHE BANK AG ............... A+ May 5, 2014 195 EUR 269 258 USD 273 1.3235 4DEUTSCHE BANK AG ............... A+ May 6, 2014 107 EUR 148 141 USD 149 1.3106 1DEUTSCHE BANK AG ............... A+ May 6, 2014 382 EUR 527 500 USD 530 1.3103 3DEUTSCHE BANK AG ............... A+ May 9, 2014 300 EUR 415 394 USD 418 1.3128 3DEUTSCHE BANK AG ............... A+ May 9, 2014 600 GBP 965 928 USD 983 1.5463 18DEUTSCHE BANK AG ............... A+ May 12, 2014 114 EUR 157 150 USD 159 1.3226 2DEUTSCHE BANK AG ............... A+ June 27, 2014 107 EUR 148 140 USD 149 1.3110 1DEUTSCHE BANK AG ............... A+ June 27, 2014 383 EUR 530 503 USD 533 1.3129 3HSBC BANK PLC ................... AA- October 4, 2013 6,741 PHP 165 166 USD 175 0.0246 10HSBC BANK PLC ................... AA- October 7, 2013 10,050 PHP 245 247 USD 260 0.0246 15HSBC BANK PLC ................... AA- October 11, 2013 5,797 PHP 142 143 USD 151 0.0246 9HSBC BANK PLC ................... AA- April 16, 2014 143 EUR 197 187 USD 198 1.3089 1JPMORGAN CHASE BANK, N.A. ....... A+ January 22, 2014 1,457 EUR 2,006 1,941 USD 2,051 1.3323 45JPMORGAN CHASE BANK, N.A. ....... A+ March 19, 2014 54 EUR 75 71 USD 75 1.3102 —JPMORGAN CHASE BANK, N.A. ....... A+ April 22, 2014 36 EUR 50 48 USD 50 1.3090 —UBS AG .......................... A September 20, 2013 534 EUR 733 706 USD 744 1.3217 11UBS AG .......................... A December 9, 2013 1,325 EUR 1,822 1,739 USD 1,836 1.3128 14UBS AG .......................... A January 13, 2014 199 EUR 274 260 USD 275 1.3090 1UBS AG .......................... A March 3, 2014 1,110 EUR 1,530 1,457 USD 1,540 1.3123 10Total Number of Contracts .......54 $ 363BARCLAYS BANK PLC ............... A+ July 15, 2013 47,047 USD 49,483 48,000 CAD 48,000 1.0203 (1,483)BARCLAYS BANK PLC ............... A+ August 1, 2013 206 EUR 282 253 USD 266 1.2300 (16)BARCLAYS BANK PLC ............... A+ August 12, 2013 923 USD 972 446,200 CLP 917 483.3000 (55)BARCLAYS BANK PLC ............... A+ August 20, 2013 1,416 EUR 1,941 1,753 USD 1,846 1.2379 (95)BARCLAYS BANK PLC ............... A+ August 23, 2013 132 EUR 180 165 USD 173 1.2522 (7)BARCLAYS BANK PLC ............... A+ August 23, 2013 220 EUR 302 276 USD 290 1.2522 (12)BARCLAYS BANK PLC ............... A+ August 26, 2013 1,159 EUR 1,588 1,452 USD 1,528 1.2528 (60)BARCLAYS BANK PLC ............... A+ September 10, 2013 114 EUR 156 144 USD 152 1.2660 (4)BARCLAYS BANK PLC ............... A+ September 12, 2013 111 EUR 152 142 USD 150 1.2837 (2)BARCLAYS BANK PLC ............... A+ September 16, 2013 316 EUR 434 409 USD 432 1.2946 (2)BARCLAYS BANK PLC ............... A+ September 24, 2013 180 EUR 247 234 USD 247 1.2998 —BARCLAYS BANK PLC ............... A+ October 11, 2013 1,386 EUR 1,903 1,802 USD 1,900 1.3005 (3)BARCLAYS BANK PLC ............... A+ November 5, 2013 218 EUR 299 283 USD 299 1.3018 —The accompanying notes are an integral part of these financial statements.102 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)BARCLAYS BANK PLC .............. A+ February 11, 2014 180 USD $ 190 88,700 CLP $ 179 493.1997 $ (11)BARCLAYS BANK PLC .............. A+ April 7, 2014 133 EUR 183 171 USD 181 1.2870 (2)DEUTSCHE BANK AG .............. A+ July 5, 2013 150 USD 158 8,529 INR 151 56.8259 (7)DEUTSCHE BANK AG .............. A+ July 5, 2013 2,505 USD 2,634 1,923 EUR 2,633 0.7678 (1)DEUTSCHE BANK AG .............. A+ July 5, 2013 7,336 EUR 10,041 9,277 USD 9,755 1.2646 (286)DEUTSCHE BANK AG .............. A+ July 8, 2013 92 USD 97 5,222 INR 92 56.7140 (5)DEUTSCHE BANK AG .............. A+ July 9, 2013 193 EUR 265 241 USD 254 1.2460 (11)DEUTSCHE BANK AG .............. A+ July 12, 2013 34 USD 36 21 GBP 34 0.6197 (2)DEUTSCHE BANK AG .............. A+ July 12, 2013 112 USD 119 70 GBP 113 0.6261 (6)DEUTSCHE BANK AG .............. A+ July 12, 2013 188 USD 198 10,421 INR 184 55.4014 (14)DEUTSCHE BANK AG .............. A+ July 15, 2013 53,813 USD 56,600 54,900 CAD 54,900 1.0202 (1,700)DEUTSCHE BANK AG .............. A+ July 18, 2013 742 USD 781 377,668 CLP 779 508.7500 (2)DEUTSCHE BANK AG .............. A+ July 18, 2013 1,065 USD 1,120 539,510 CLP 1,113 506.5000 (7)DEUTSCHE BANK AG .............. A+ July 22, 2013 95 USD 100 5,180 INR 92 54.7424 (8)DEUTSCHE BANK AG .............. A+ July 23, 2013 191 EUR 263 236 USD 249 1.2336 (14)DEUTSCHE BANK AG .............. A+ July 25, 2013 109 EUR 150 134 USD 141 1.2214 (9)DEUTSCHE BANK AG .............. A+ July 25, 2013 206 EUR 282 251 USD 264 1.2202 (18)DEUTSCHE BANK AG .............. A+ July 26, 2013 96 EUR 131 116 USD 122 1.2139 (9)DEUTSCHE BANK AG .............. A+ July 26, 2013 190 USD 200 10,465 INR 184 55.0795 (16)DEUTSCHE BANK AG .............. A+ July 29, 2013 1,970 EUR 2,698 2,401 USD 2,526 1.2187 (172)DEUTSCHE BANK AG .............. A+ July 30, 2013 152 USD 160 95 GBP 152 0.6262 (8)DEUTSCHE BANK AG .............. A+ July 30, 2013 318 USD 335 206 GBP 329 0.6461 (6)DEUTSCHE BANK AG .............. A+ July 31, 2013 381 EUR 522 471 USD 496 1.2379 (26)DEUTSCHE BANK AG .............. A+ August 1, 2013 78,202 USD 82,286 79,500 CAD 79,500 1.0166 (2,786)DEUTSCHE BANK AG .............. A+ August 22, 2013 1 EUR 1 1 USD 1 1.2595 —DEUTSCHE BANK AG .............. A+ August 26, 2013 199 USD 209 248 SGD 206 1.2484 (3)DEUTSCHE BANK AG .............. A+ August 27, 2013 249 USD 262 309 SGD 257 1.2411 (5)DEUTSCHE BANK AG .............. A+ August 28, 2013 5 EUR 7 7 USD 7 1.2569 —DEUTSCHE BANK AG .............. A+ August 28, 2013 69 EUR 94 87 USD 91 1.2609 (3)DEUTSCHE BANK AG .............. A+ August 28, 2013 160 EUR 220 201 USD 212 1.2569 (8)DEUTSCHE BANK AG .............. A+ August 28, 2013 390 EUR 535 490 USD 516 1.2569 (19)DEUTSCHE BANK AG .............. A+ August 29, 2013 326 EUR 447 412 USD 434 1.2648 (13)DEUTSCHE BANK AG .............. A+ August 30, 2013 124 USD 131 155 SGD 129 1.2497 (2)DEUTSCHE BANK AG .............. A+ September 4, 2013 78 USD 82 4,514 INR 79 57.9997 (3)DEUTSCHE BANK AG .............. A+ September 4, 2013 301 EUR 413 380 USD 401 1.2635 (12)DEUTSCHE BANK AG .............. A+ September 10, 2013 91 USD 96 5,222 INR 91 57.2738 (5)DEUTSCHE BANK AG .............. A+ September 11, 2013 49 USD 52 2,828 INR 50 57.6249 (2)DEUTSCHE BANK AG .............. A+ September 16, 2013 137,567 USD 144,918 142,600 CAD 142,600 1.0366 (2,318)DEUTSCHE BANK AG .............. A+ September 18, 2013 121 USD 127 7,078 INR 123 58.6408 (4)DEUTSCHE BANK AG .............. A+ September 19, 2013 194 USD 204 242 SGD 201 1.2482 (3)DEUTSCHE BANK AG .............. A+ September 20, 2013 109 USD 114 6,447 INR 112 59.3816 (2)DEUTSCHE BANK AG .............. A+ September 23, 2013 144 USD 152 110 EUR 151 0.7646 (1)DEUTSCHE BANK AG .............. A+ September 30, 2013 1,163 EUR 1,596 1,500 USD 1,581 1.2899 (15)DEUTSCHE BANK AG .............. A+ October 4, 2013 201 USD 212 8,404 PHP 205 41.7999 (7)DEUTSCHE BANK AG .............. A+ October 7, 2013 278 EUR 382 361 USD 380 1.2948 (2)DEUTSCHE BANK AG .............. A+ October 15, 2013 40 EUR 55 52 USD 55 1.2984 —DEUTSCHE BANK AG .............. A+ October 16, 2013 47 USD 50 1,965 PHP 48 41.6190 (2)DEUTSCHE BANK AG .............. A+ October 23, 2013 664 USD 701 2,060 MYR 683 3.1005 (18)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 103

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000S) (000s) (000S) (000s) (000s)DEUTSCHE BANK AG ................ A+ October 31, 2013 610 EUR $ 837 789 USD $ 832 1.2942 $ (5)DEUTSCHE BANK AG ................ A+ November 7, 2013 111 EUR 153 144 USD 151 1.2877 (2)DEUTSCHE BANK AG ................ A+ November 15, 2013 95 EUR 131 121 USD 128 1.2766 (3)DEUTSCHE BANK AG ................ A+ November 19, 2013 28 EUR 39 36 USD 38 1.2848 (1)DEUTSCHE BANK AG ................ A+ November 19, 2013 80 USD 85 249 MYR 83 3.1160 (2)DEUTSCHE BANK AG ................ A+ December 23, 2013 384 USD 405 482 SGD 402 1.2560 (3)DEUTSCHE BANK AG ................ A+ January 8, 2014 123 USD 130 381 MYR 126 3.0933 (4)DEUTSCHE BANK AG ................ A+ March 17, 2014 385 EUR 531 500 USD 529 1.2988 (2)DEUTSCHE BANK AG ................ A+ March 17, 2014 405 EUR 559 526 USD 557 1.2982 (2)DEUTSCHE BANK AG ................ A+ March 18, 2014 180 EUR 248 233 USD 247 1.2977 (1)DEUTSCHE BANK AG ................ A+ March 20, 2014 300 EUR 414 387 USD 410 1.2907 (4)DEUTSCHE BANK AG ................ A+ March 20, 2014 375 EUR 517 487 USD 516 1.3008 (1)DEUTSCHE BANK AG ................ A+ April 3, 2014 33 EUR 46 42 USD 45 1.2851 (1)DEUTSCHE BANK AG ................ A+ April 30, 2014 1,008 USD 1,068 1,247 SGD 1,043 1.2372 (25)DEUTSCHE BANK AG ................ A+ May 12, 2014 2,009 USD 2,129 2,472 SGD 2,068 1.2304 (61)DEUTSCHE BANK AG ................ A+ June 19, 2014 394 USD 419 202,675 CLP 406 514.0004 (13)HSBC BANK PLC .................... AA- July 3, 2013 974 USD 1,024 54,050 INR 954 55.5000 (70)HSBC BANK PLC .................... AA- August 8, 2013 428 USD 450 23,340 INR 410 54.5895 (40)HSBC BANK PLC .................... AA- September 4, 2013 286 USD 301 16,385 INR 287 57.3759 (14)HSBC BANK PLC .................... AA- September 11, 2013 48 USD 51 2,788 INR 49 57.6593 (2)HSBC BANK PLC .................... AA- September 13, 2013 118 USD 124 7,040 INR 123 59.8853 (1)HSBC BANK PLC .................... AA- October 4, 2013 162 USD 171 6,741 PHP 165 41.7141 (6)HSBC BANK PLC .................... AA- October 7, 2013 242 USD 255 10,050 PHP 246 41.5891 (9)HSBC BANK PLC .................... AA- October 11, 2013 139 USD 147 5,797 PHP 142 41.5609 (5)HSBC BANK PLC .................... AA- October 24, 2013 443 USD 467 1,374 MYR 455 3.1010 (12)HSBC BANK PLC .................... AA- November 20, 2013 48 USD 51 151 MYR 50 3.1212 (1)HSBC BANK PLC .................... AA- March 19, 2014 410 USD 435 512 SGD 428 1.2476 (7)HSBC BANK PLC .................... AA- June 20, 2014 306 USD 324 385 SGD 322 1.2590 (2)JPMORGAN CHASE BANK, N.A. ........ A+ July 18, 2013 267 USD 281 14,733 INR 259 55.1690 (22)JPMORGAN CHASE BANK, N.A. ........ A+ July 22, 2013 134 USD 141 7,360 INR 129 54.7224 (12)JPMORGAN CHASE BANK, N.A. ........ A+ July 29, 2013 54 USD 57 2,950 INR 52 54.9164 (5)JPMORGAN CHASE BANK, N.A. ........ A+ July 29, 2013 162 USD 171 8,900 INR 157 54.9166 (14)JPMORGAN CHASE BANK, N.A. ........ A+ August 6, 2013 117 EUR 160 143 USD 150 1.2226 (10)JPMORGAN CHASE BANK, N.A. ........ A+ August 8, 2013 300 USD 316 144,900 CLP 298 483.0000 (18)JPMORGAN CHASE BANK, N.A. ........ A+ August 16, 2013 418 USD 440 23,250 INR 408 55.6450 (32)JPMORGAN CHASE BANK, N.A. ........ A+ August 20, 2013 571 USD 602 286,135 CLP 588 501.0003 (14)JPMORGAN CHASE BANK, N.A. ........ A+ September 17, 2013 1,467 USD 1,545 87,114 INR 1,520 59.3940 (25)JPMORGAN CHASE BANK, N.A. ........ A+ September 19, 2013 262 USD 277 321 SGD 267 1.2232 (10)JPMORGAN CHASE BANK, N.A. ........ A+ October 11, 2013 79 USD 84 3,293 PHP 81 41.5410 (3)JPMORGAN CHASE BANK, N.A. ........ A+ October 18, 2013 98 USD 104 305 MYR 102 3.1065 (2)JPMORGAN CHASE BANK, N.A. ........ A+ October 21, 2013 259 USD 273 320 SGD 267 1.2375 (6)JPMORGAN CHASE BANK, N.A. ........ A+ November 12, 2013 210 EUR 289 269 USD 284 1.2805 (5)JPMORGAN CHASE BANK, N.A. ........ A+ November 20, 2013 94 EUR 130 120 USD 127 1.2766 (3)JPMORGAN CHASE BANK, N.A. ........ A+ January 16, 2014 23 USD 24 70 MYR 23 3.0686 (1)JPMORGAN CHASE BANK, N.A. ........ A+ March 20, 2014 90 EUR 124 117 USD 124 1.3000 —JPMORGAN CHASE BANK, N.A. ........ A+ March 21, 2014 90 EUR 124 116 USD 123 1.2940 (1)JPMORGAN CHASE BANK, N.A. ........ A+ March 24, 2014 90 EUR 124 117 USD 124 1.2989 —JPMORGAN CHASE BANK, N.A. ........ A+ March 25, 2014 72 EUR 100 93 USD 99 1.2946 (1)The accompanying notes are an integral part of these financial statements.104 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)JPMORGAN CHASE BANK, N.A. ....... A+ April 28, 2014 472 USD $ 500 234,301 CLP $ 471 496.7498 $ (29)JPMORGAN CHASE BANK, N.A. ....... A+ May 23, 2014 20 EUR 27 26 USD 27 1.2929 —JPMORGAN CHASE BANK, N.A. ....... A+ June 5, 2014 1,475 USD 1,564 1,854 SGD 1,552 1.2571 (12)UBS AG .......................... A July 15, 2013 58,795 USD 61,839 60,000 CAD 60,000 1.0205 (1,839)UBS AG .......................... A August 1, 2013 85,322 USD 89,778 86,782 CAD 86,782 1.0171 (2,996)UBS AG .......................... A August 22, 2013 350 EUR 480 433 USD 456 1.2377 (24)UBS AG .......................... A August 26, 2013 2,398 EUR 3,287 3,000 USD 3,159 1.2512 (128)UBS AG .......................... A September 16, 2013 25,184 USD 26,530 26,100 CAD 26,100 1.0364 (430)UBS AG .......................... A September 17, 2013 294 EUR 404 380 USD 401 1.2938 (3)UBS AG .......................... A October 7, 2013 1,070 EUR 1,469 1,386 USD 1,461 1.2951 (8)UBS AG .......................... A November 20, 2013 592 EUR 814 758 USD 800 1.2801 (14)Total Number of Contracts ........120 $ (15,278)Net Unrealized Loss ................ $(14,915)CREDIT DEFAULT SWAPSAs at June 30, 2013, the Fund had the following credit default swap contracts outstanding. The Fund has entered into the contracts to sellprotection to create a long position. See note 2 (c) and of the Notes to Financial Statements for further details.UpfrontDescriptionCounterpartyCreditRatingExpirationDatePaymentRateNotionalAmountPremiumsPaid/(Received)MarketValueUnrealizedAppreciation/(Depreciation)(000s) (000s) (000s) (000s)Contract to Buy Protection Traded IndexCMBX.NA.AJ.2 .................................... Credit Suisse International A+ 3/15/2049 1.09% $ 600 $ (86) $ (93) (7)CMBX.NA.AJ.2 .................................... Credit Suisse International A+ 3/15/2049 1.09% 600 (88) (93) (5)CMBX.NA.AJ.2 .................................... Credit Suisse International A+ 3/15/2049 1.09% 600 (82) (93) (11)MCDX.NA.20 ...................................... Deutsche Bank AG A+ 6/20/2018 1.00% 8,500 (79) (143) (64)CDX.NA.HY.20 .................................... Deutsche Bank AG A+ 6/20/2018 5.00% 7,000 324 220 (104)CDX.NA.HY.20 .................................... Deutsche Bank AG A+ 6/20/2018 5.00% 4,000 92 126 34CMBX.NA.AJ.2 .................................... Credit Suisse International A+ 3/15/2049 1.09% 500 (78) (78) —Total Unrealized Appreciation/(Depreciation) ............ $(157)Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................ 4.83 9.10AA ................................. 12.99 9.00A .................................. 10.54 11.77BBB ............................... 9.41 9.56BB ................................. 20.14 21.51B .................................. 22.58 22.07CCC ................................ 6.59 6.69CC ................................. 0.27 0.06D .................................. 0.04 0.02Not Rated ........................... 0.08 —* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’s andFitch ratings.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 105

Franklin Strategic Income FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 501,335 $ 493,909CashCanadian 1 89Foreign 22,097 51,628ReceivablesDue from broker 7,923 857Investment securities sold 13,083 1,671Capital units sold 7,042 112Interest and withholding tax 5,317 6,316Unrealized gain on derivatives 363 1,615Other assets (Note 8) 41 22Total assets 557,202 556,219LiabilitiesPayablesInvestment securities purchased 17,682 6,614Capital units redeemed 2,362 23Management fees 91 75Foreign capital taxes payable 34 92Accrued expenses 58 80Distributions to unitholders 2,232 —Unrealized loss on derivatives 15,435 2,882Total liabilities 37,894 9,766Net assets $ 519,308 $ 546,453Total net assets per series (000s)Series A $49,799 $44,533Series F 9,302 5,242Series I 1,292 1,066Series O 458,915 495,612Number of units outstanding (Note 3)Series A 7,383,180 6,397,540Series F 1,246,911 683,748Series I 116,865 93,549Series O 54,222,302 57,311,747Net assets per unit — CADSeries A $6.74 $6.96Series F 7.46 7.67Series I 11.06 11.39Series O 8.47 8.65Net assets per unit — USDSeries A $6.41 $7.01Series F 7.09 7.72Series I 10.52 11.47Series O 8.06 8.71Cost of investments held (000s) $479,274 $477,039STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $0; 2012 — $2) $ 16 $ 13Income (loss) on derivatives 129 88Interest (net of foreign taxes withheld (000s) —2013 — $156; 2012 — $250) 13,241 16,861Total investment income 13,386 16,962ExpensesManagement fees (Note 4(a)) 523 308Transfer agent fees (Note 4(c)) 109 66Custodian fees 5 4Legal fees 5 2Audit fees 13 12Unitholder reporting costs 11 12Independent review committee fees 1 1Registration fees 11 10Other expenses (Note 7) 28 40Total expenses 706 455Expenses waived/paid by Manager (Note 6) (156) (132)Net expenses 550 323Net investment income (loss) 12,836 16,639Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments andderivatives 6,481 (2,661)Net realized and/or unrealized foreign exchangegain (loss) (9,334) 14,131Net change in unrealized appreciation(depreciation) in value of investments andderivatives (8,614) 7,561Transaction costs (Note 11) (242) (274)Net gain (loss) on investments (11,709) 18,757Increase (decrease) in net assets from operations $ 1,127 $ 35,396Increase (decrease) in net assets from operationsper series (000s)Series A $(418) $1,512Series F (109) 138Series I (7) 7Series O 1,661 33,739Increase (decrease) in net assets from operationsper unitSeries A $(0.06) $0.33Series F (0.12) 0.39Series I (0.05) 0.37Series O 0.04 0.51The accompanying notes are an integral part of these financial statements.106 Franklin Templeton Investments Funds

Franklin Strategic Income FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 1,127 $ 35,396 $ (418) $ 1,512 $ (109) $ 138Distributions to unitholdersFrom net investment income (12,932) (15,565) (1,235) (831) (191) (74)From capital gains — — — — — —From return of capital — — — — — —(12,932) (15,565) (1,235) (831) (191) (74)Capital unit transactionsSubscriptions 67,350 70,992 12,767 5,640 5,665 1,677Reinvestments 10,414 12,746 753 536 136 46Redemptions (93,104) (87,114) (6,601) (3,784) (1,441) (634)(15,340) (3,376) 6,919 2,392 4,360 1,089Increase (decrease) in net assets for the period (27,145) 16,455 5,266 3,073 4,060 1,153Net assets — beginning of period 546,453 571,763 44,533 28,883 5,242 2,477Net assets — end of period $ 519,308 $ 588,218 $ 49,799 $ 31,956 $ 9,302 $ 3,630Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ (7) $ 7 $ 1,661 $ 33,739Distributions to unitholdersFrom net investment income (34) (6) (11,472) (14,654)From capital gains — — — —From return of capital — — — —(34) (6) (11,472) (14,654)Capital unit transactionsSubscriptions 490 204 48,428 63,471Reinvestments 28 3 9,497 12,161Redemptions (251) (11) (84,811) (82,685)267 196 (26,886) (7,053)Increase (decrease) in net assets for the period 226 197 (36,697) 12,032Net assets — beginning of period 1,066 142 495,612 540,261Net assets — end of period $ 1,292 $ 339 $ 458,915 $ 552,293The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 107

Franklin U.S. Core Equity FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 90.84%COMMON STOCKS: 90.84%Pharmaceuticals: 10.42%Actavis Inc. . . ........................ 34,840 $ 2,292 $ 4,627Roche Holding AG ..................... 27,050 4,705 7,067Teva Pharmaceutical Industries Ltd., AmericanDepositary Receipt ................... 144,824 5,963 5,966Valeant Pharmaceuticals International Inc. .... 84,380 5,933 7,63518,893 25,295Chemicals: 8.45%Axiall Corp. . . . ........................ 91,911 4,532 4,119Celanese Corp., A ...................... 93,590 3,663 4,408LyondellBasell Industries NV, A . . .......... 138,930 5,249 9,713PPG Industries Inc. ..................... 14,739 1,468 2,26714,912 20,507Insurance: 6.56%MetLife Inc. . . ........................ 143,690 5,501 6,913The Hartford Financial Services Group Inc. .... 277,010 6,100 8,99611,601 15,909Oil, Gas & Consumable Fuels: 6.08%Anadarko Petroleum Corp. ................ 88,110 6,410 7,959Marathon Oil Corp. ..................... 187,100 5,386 6,79811,796 14,757Diversified Financial Services: 5.60%Citigroup Inc. . ........................ 140,310 5,284 7,073JPMorgan Chase & Co. .................. 117,610 4,745 6,52510,029 13,598IT Services: 5.18%International Business Machines Corp. ....... 24,950 4,770 5,009Visa Inc., A . . . ........................ 39,460 5,684 7,57310,454 12,582Communications Equipment: 4.90%Cisco Systems Inc. ..................... 245,490 4,464 6,274QUALCOMM Inc. ...................... 87,620 5,650 5,62710,114 11,901Software: 4.68%Adobe Systems Inc. .................... 84,580 2,951 4,051Microsoft Corp. ........................ 201,270 5,943 7,3078,894 11,358Road & Rail: 3.93%Genesee & Wyoming Inc. ................. 45,460 3,751 4,084Norfolk Southern Corp. .................. 71,560 4,437 5,4648,188 9,548Internet Software & Services: 3.05%Google Inc., A . ........................ 8,000 5,570 7,398SharesAverageCost Fair Value(000s) (000s)Auto Components: 2.91%BorgWarner Inc. ................. 78,010 $ 5,054 $ 7,067Textiles, Apparel & Luxury Goods: 2.86%NIKE Inc., B .................... 103,606 4,787 6,935Food Products: 2.85%Mead Johnson Nutrition Co., A ...... 82,920 5,790 6,905Food & Staples Retailing: 2.71%CVS Caremark Corp. .............. 109,350 4,187 6,571Energy Equipment & Services: 2.66%Schlumberger Ltd. . . ............. 85,900 5,905 6,467Capital Markets: 2.34%BlackRock Inc. . ................. 21,060 3,857 5,683Health Care Providers & Services: 2.22%Aetna Inc. ..................... 80,490 3,137 5,376Semiconductors & SemiconductorEquipment: 2.18%Maxim Integrated Products Inc. ...... 180,960 4,577 5,289Air Freight & Logistics: 2.13%FedEx Corp. .................... 49,900 4,451 5,174Electronic Equipment, Instruments &Components: 2.09%Corning Inc. .................... 339,770 5,211 5,083Specialty Retail: 1.95%Guess? Inc. .................... 144,960 4,204 4,729Consumer Finance: 1.87%Capital One Financial Corp. ......... 68,590 3,554 4,529Computers & Peripherals: 1.80%EMC Corp. ..................... 175,990 4,269 4,370Media: 1.42%The Walt Disney Co. .............. 51,750 3,407 3,438Total Common Stocks: ............. 172,841 220,469Total Long-Term Investments: ........ 172,841 220,469Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 3.48%Federal Home Loan Bank DiscountNotes, 7/1/2013 . . ............. 8,000,000 USD 8,440 8,440Total Short-Term Securities: ......... 8,440 8,440Transaction costs (Note 2) ............ (212) —TOTAL INVESTMENTS: 94.32% ...... $181,069 228,909OTHER ASSETS, less liabilities:5.68% ....................... 13,787TOTAL NET ASSETS: 100.00% ....... $242,696The accompanying notes are an integral part of these financial statements.108 Franklin Templeton Investments Funds

Franklin U.S. Core Equity FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 228,909 $ 174,257CashForeign 2,279 2,705ReceivablesInvestment securities sold — 2,973Capital units sold 11,345 10Dividends and withholding tax 391 369Other assets (Note 8) 17 5Total assets 242,941 180,319LiabilitiesPayablesInvestment securities purchased 132 3,544Capital units redeemed 89 —Management fees 8 6Accrued expenses 16 29Total liabilities 245 3,579Net assets $ 242,696 $ 176,740Total net assets per series (000s)Series A $4,359 $2,858Series F 331 249Series O 238,006 173,633Number of units outstanding (Note 3)Series A 417,255 333,465Series F 29,742 27,490Series O 19,491,747 17,573,063Net assets per unit — CADSeries A $10.45 $8.57Series F 11.12 9.08Series O 12.21 9.88Net assets per unit — USDSeries A $9.94 $8.63Series F 10.58 9.14Series O 11.61 9.95Cost of investments held (000s) $181,069 $158,333STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $279; 2012 — $372) $ 1,323 $ 904Interest — 2Total investment income 1,323 906ExpensesManagement fees (Note 4(a)) 40 37Transfer agent fees (Note 4(c)) 11 11Custodian fees — —Legal fees 1 1Audit fees 11 9Unitholder reporting costs 4 4Independent review committee fees 1 1Registration fees 10 9Other expenses (Note 7) 1 9Total expenses 79 81Expenses waived/paid by Manager (Note 6) (29) (35)Net expenses 50 46Net investment income (loss) 1,273 860Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 8,521 (3,367)Net realized and/or unrealized foreign exchangegain (loss) 416 (588)Net change in unrealized appreciation(depreciation) in value of investments 31,916 4,559Transaction costs (Note 11) (101) (243)Net gain (loss) on investments 40,752 361Increase (decrease) in net assets from operations $ 42,025 $ 1,221Increase (decrease) in net assets from operationsper series (000s)Series A $660 $13Series F 57 (2)Series O 41,308 1,210Increase (decrease) in net assets from operationsper unitSeries A $1.86 $0.03Series F 2.01 (0.10)Series O 2.32 0.04The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 109

Franklin U.S. Core Equity FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 42,025 $ 1,221 $ 660 $ 13 $ 57 $ (2)Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 50,416 144,342 1,220 714 42 134Reinvestments — — — — — —Redemptions (26,485) (23,229) (379) (519) (17) —23,931 121,113 841 195 25 134Increase (decrease) in net assets for the period 65,956 122,334 1,501 208 82 132Net assets — beginning of period 176,740 147,363 2,858 2,973 249 103Net assets — end of period $ 242,696 $ 269,697 $ 4,359 $ 3,181 $ 331 $ 235Series O2013 2012Increase (decrease) in net assets from operations $ 41,308 $ 1,210Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 49,154 143,494Reinvestments — —Redemptions (26,089) (22,710)23,065 120,784Increase (decrease) in net assets for the period 64,373 121,994Net assets — beginning of period 173,633 144,287Net assets — end of period $ 238,006 $ 266,281The accompanying notes are an integral part of these financial statements.110 Franklin Templeton Investments Funds

Franklin U.S. Rising Dividends FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 92.51%COMMON STOCKS: 92.51%Health Care Equipment & Supplies: 11.90%Abbott Laboratories .............. 224,040 $ 11,247 $ 8,216Becton Dickinson and Co. ......... 213,295 16,088 22,135Hill-Rom Holdings Inc. ............ 53,672 1,605 1,895Medtronic Inc. ................. 490,500 18,530 26,548Stryker Corp. . . . ................ 325,590 16,755 22,151Teleflex Inc. . . . ................ 77,180 4,463 6,287West Pharmaceutical Services Inc. . . . 103,723 3,805 7,66372,493 94,895Chemicals: 9.70%Air Products and Chemicals Inc. ..... 274,500 21,388 26,427Albemarle Corp. ................ 348,455 18,579 22,816Ecolab Inc. .................... 86,100 4,576 7,710Praxair Inc. .................... 168,721 15,075 20,42259,618 77,375Oil, Gas & Consumable Fuels: 9.14%Chevron Corp. .................. 258,200 25,932 32,086Exxon Mobil Corp. ............... 209,500 16,760 19,808Occidental Petroleum Corp. ........ 223,385 18,306 20,96660,998 72,860Machinery: 7.70%Donaldson Co. Inc. .............. 72,568 1,479 2,721Dover Corp. . . . ................ 334,336 17,165 27,294Pentair Ltd. .................... 517,280 19,829 31,37438,473 61,389Pharmaceuticals: 6.00%AbbVie Inc. .................... 195,040 6,765 8,481Johnson & Johnson .............. 370,140 23,403 33,412Pfizer Inc. ..................... 200,350 5,332 5,90835,500 47,801Food & Staples Retailing: 4.98%Walgreen Co. .................. 350,600 12,381 16,274Wal-Mart Stores Inc. ............. 299,700 16,512 23,47128,893 39,745Food Products: 4.88%Archer-Daniels-Midland Co. ........ 576,410 16,315 20,544Bunge Ltd. .................... 107,998 7,843 8,034McCormick & Co. Inc. ............ 139,887 5,518 10,34229,676 38,920Aerospace & Defense: 4.74%General Dynamics Corp. .......... 74,500 4,796 6,134Honeywell International Inc. ........ 76,000 6,032 6,336United Technologies Corp. ......... 258,996 18,149 25,30428,977 37,774SharesAverageCost Fair Value(000s) (000s)Household Products: 4.24%Colgate-Palmolive Co. ............ 183,962 $ 8,568 $ 11,048The Procter & Gamble Co. ......... 281,260 18,267 22,76626,835 33,814IT Services: 3.79%International Business MachinesCorp. ...................... 150,600 22,364 30,234Electrical Equipment: 3.55%Brady Corp., A . . . .............. 164,728 5,467 5,324Roper Industries Inc. ............. 176,090 11,258 22,94116,725 28,265Insurance: 3.50%Aflac Inc. . . . .................. 57,739 2,626 3,528Arthur J. Gallagher & Co. .......... 79,190 2,268 3,637Erie Indemnity Co., A ............. 121,658 6,915 10,158Mercury General Corp. ............ 23,590 1,269 1,089Old Republic International Corp. ..... 348,729 7,996 4,711RLI Corp. . . . .................. 29,790 1,686 2,375The Chubb Corp. ................ 27,200 1,597 2,42024,357 27,918Auto Components: 2.74%Johnson Controls Inc. ............ 579,932 17,060 21,815Beverages: 2.65%PepsiCo Inc. . .................. 245,467 16,161 21,108Hotels, Restaurants & Leisure: 2.60%McDonald’s Corp. ............... 199,200 16,602 20,725Multiline Retail: 2.39%Family Dollar Stores Inc. .......... 291,110 12,578 19,067Communications Equipment: 1.44%QUALCOMM Inc. ............... 179,000 11,272 11,495Textiles, Apparel & Luxury Goods: 1.31%NIKE Inc., B . .................. 156,200 6,209 10,456Media: 1.19%John Wiley & Sons Inc., A ......... 224,210 9,539 9,452Commercial Services & Supplies: 0.88%ABM Industries Inc. .............. 101,147 2,292 2,606Cintas Corp. . .................. 92,557 3,076 4,4325,368 7,038Diversified Consumer Services: 0.83%Hillenbrand Inc. ................ 127,914 3,266 3,185Matthews International Corp., A ..... 86,677 2,799 3,4296,065 6,614Specialty Retail: 0.63%Ross Stores Inc. ................ 73,700 4,050 5,022Containers & Packaging: 0.50%Bemis Co. Inc. . . . .............. 97,160 3,114 3,997The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 111

Franklin U.S. Rising Dividends FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Metals & Mining: 0.35%Nucor Corp. . . . ................ 61,667 $ 3,112 $ 2,808Household Durables: 0.30%Leggett & Platt Inc. .............. 72,444 1,871 2,368Capital Markets: 0.29%State Street Corp. ............... 34,041 2,307 2,334Industrial Conglomerates: 0.24%Carlisle Companies Inc. ........... 29,404 1,228 1,926Trading Companies & Distributors: 0.05%W.W. Grainger Inc. .............. 1,500 281 398Total Common Stocks: ............ 561,726 737,613Total Long-Term Investments: ....... 561,726 737,613Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 3.97%Federal Home Loan Bank DiscountNotes, 7/1/2013 .............. 30,000,000 USD 31,649 31,649Total Short-Term Securities: ........ 31,649 31,649Transaction costs (Note 2) ........... (152) —TOTAL INVESTMENTS: 96.48% ...... $593,223 769,262OTHER ASSETS, lessliabilities: 3.52% ............... 28,086TOTAL NET ASSETS: 100.00% ...... $797,348The accompanying notes are an integral part of these financial statements.112 Franklin Templeton Investments Funds

Franklin U.S. Rising Dividends FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 769,262 $ 589,235CashCanadian 14 14Foreign 25,743 23,062ReceivablesInvestment securities sold 180 —Capital units sold 8,861 101Dividends 774 483Other assets (Note 8) 40 29Total assets 804,874 612,924LiabilitiesPayablesInvestment securities purchased 1,722 1Capital units redeemed 5,563 44Management fees 133 58Accrued expenses 80 90Distributions to unitholders 28 —Total liabilities 7,526 193Net assets $ 797,348 $ 612,731Total net assets per series (000s)Series A $70,052 $29,706Series F 7,586 3,597Series O 714,866 576,327Series T 4,844 3,101Number of units outstanding (Note 3)Series A 2,594,497 1,307,667Series F 244,772 138,730Series O 19,068,871 18,506,385Series T 537,118 394,179Net assets per unit — CADSeries A $27.00 $22.72Series F 31.00 25.93Series O 37.49 31.14Series T 9.02 7.87Net assets per unit — USDSeries A $25.68 $22.87Series F 29.49 26.11Series O 35.66 31.35Cost of investments held (000s) $593,223 $514,701STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $1,059; 2012 — $953) $ 14,456 $ 5,399Interest 2 4Total investment income 14,458 5,403ExpensesManagement fees (Note 4(a)) 597 210Transfer agent fees (Note 4(c)) 140 61Custodian fees 1 2Legal fees — —Audit fees 11 10Unitholder reporting costs 11 13Independent review committee fees 1 1Registration fees 10 11Other expenses (Note 7) 72 94Total expenses 843 402Expenses waived/paid by Manager (Note 6) (151) (156)Net expenses 692 246Net investment income (loss) 13,766 5,157Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 5,696 4,345Net realized and/or unrealized foreign exchangegain (loss) 2,879 990Net change in unrealized appreciation(depreciation) in value of investments 101,505 13,797Transaction costs (Note 11) (28) (36)Net gain (loss) on investments 110,052 19,096Increase (decrease) in net assets from operations $ 123,818 $ 24,253Increase (decrease) in net assets from operationsper series (000s)Series A $7,157 $384Series F 854 85Series O 115,165 23,704Series T 642 80Increase (decrease) in net assets from operationsper unitSeries A $3.89 $0.57Series F 4.67 0.87Series O 6.30 1.34Series T 1.38 0.23The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 113

Franklin U.S. Rising Dividends FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 123,818 $ 24,253 $ 7,157 $ 384 $ 854 $ 85Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital (150) (119) — — — —(150) (119) — — — —Capital unit transactionsSubscriptions 167,428 121,210 35,350 11,750 3,534 814Reinvestments 32 42 — — — —Redemptions (106,511) (124,953) (2,161) (1,283) (399) (395)60,949 (3,701) 33,189 10,467 3,135 419Increase (decrease) in net assets for the period 184,617 20,433 40,346 10,851 3,989 504Net assets — beginning of period 612,731 537,528 29,706 9,691 3,597 2,175Net assets — end of period $ 797,348 $ 557,961 $ 70,052 $ 20,542 $ 7,586 $ 2,679Series OSeries T2013 2012 2013 2012Increase (decrease) in net assets from operations $ 115,165 $ 23,704 $ 642 $ 80Distributions to unitholdersFrom net investment income — — — —From capital gains — — — —From return of capital — — (150) (119)— — (150) (119)Capital unit transactionsSubscriptions 126,553 107,530 1,991 1,116Reinvestments — — 32 42Redemptions (103,179) (122,872) (772) (403)23,374 (15,342) 1,251 755Increase (decrease) in net assets for the period 138,539 8,362 1,743 716Net assets — beginning of period 576,327 523,394 3,101 2,268Net assets — end of period $ 714,866 $ 531,756 $ 4,844 $ 2,984The accompanying notes are an integral part of these financial statements.114 Franklin Templeton Investments Funds

Franklin World Growth FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 96.05%COMMON STOCKS: 96.05%United States: 32.74%Amazon.com Inc. ................ 20,500 $ 3,386 $ 5,985American Tower Corp. ............ 72,000 3,455 5,537Apple Inc. . .................... 14,200 5,554 5,914athenahealth Inc. ................ 72,000 6,571 6,412Danaher Corp. .................. 90,000 3,998 5,988FMC Technologies Inc. ............ 50,000 2,911 2,925Informatica Corp. ................ 160,000 5,967 5,883IntercontinentalExchange Inc. . ...... 35,500 4,422 6,645Praxair Inc. .................... 55,000 5,189 6,657Priceline.com Inc. ................ 7,300 3,850 6,340Schlumberger Ltd. ............... 92,000 6,607 6,926U.S. Bank Corporation ............ 190,000 6,311 7,219Visa Inc., A .................... 31,000 2,277 5,95060,498 78,381United Kingdom: 11.97%Aberdeen Asset Management PLC .... 850,000 6,238 5,203Adjustable Rate MortgageHoldings PLC ................. 400,000 4,091 5,081Admiral Group PLC ............... 310,000 6,673 6,578Burberry Group PLC .............. 275,000 6,124 5,927Reckitt Benckiser Group PLC ........ 79,000 4,248 5,87127,374 28,660Switzerland: 8.70%Partners Group Holding AG ......... 16,200 4,418 4,592Roche Holding AG ............... 23,000 6,001 6,009SGSSA ....................... 1,900 3,648 4,290Syngenta AG . .................. 14,500 4,431 5,93718,498 20,828Australia: 7.30%Cochlear Ltd. . .................. 95,000 5,694 5,638CSL Ltd. . . . .................... 105,000 3,817 6,219WorleyParsons Ltd. ............... 300,000 7,267 5,62416,778 17,481Germany: 5.21%MTU Aero Engines AG ............ 60,000 3,030 6,079Symrise AG .................... 150,000 4,283 6,3957,313 12,474Italy: 3.43%Luxottica Group SpA .............. 120,000 3,392 6,339Saipem SpA .................... 110,000 4,089 1,8687,481 8,207SharesAverageCost Fair Value(000s) (000s)Hong Kong: 3.41%Hang Lung Properties Ltd. .......... 700,000 $ 2,573 $ 2,567Noble Group Ltd. . . . ............. 7,000,000 7,364 5,6049,937 8,171Denmark: 2.81%Novo Nordisk AS, B .............. 41,000 6,379 6,714China: 2.75%Hengan International Group Co. Ltd. . . 580,000 4,191 6,585France: 2.68%Dassault Systemes SA ............. 50,000 5,891 6,425Netherlands: 2.63%ASML Holding NV . . . ............. 76,000 4,087 6,303Canada: 2.58%Bank of Nova Scotia .............. 110,000 6,217 6,182Belgium: 2.56%Umicore SA .................... 140,000 6,935 6,116Singapore: 2.55%United Overseas Bank Ltd. ......... 370,000 5,401 6,096Sweden: 2.41%Elekta AB, B .................... 360,000 3,923 5,756Argentina: 2.32%MercadoLibre Inc. . . ............. 49,000 3,605 5,549Ireland: 0.00%Irish Bank Resolution Corp. Ltd. ...... 700,000 6,314 —Total Common Stocks: ............. 200,822 229,928Total Long-Term Investments: ........ 200,822 229,928Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 2.76%Bank of Montreal, Term Deposit,0.90%, 7/2/2013 .............. 6,600,000 CAD 6,600 6,600Total Short-Term Securities: ......... 6,600 6,600Transaction costs (Note 2) .......... (376) —TOTAL INVESTMENTS: 98.81% ...... $207,046 236,528OTHER ASSETS, lessliabilities: 1.19% ................ 2,860TOTAL NET ASSETS: 100.00% ....... $239,388The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 115

Franklin World Growth FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 236,528 $ 266,288CashCanadian 44 98Foreign 511 —ReceivablesInvestment securities sold 4,032 1,314Capital units sold 911 1Dividends, interest and withholding tax 694 385Other assets (Note 8) 23 13Total assets 242,743 268,099LiabilitiesPayablesInvestment securities purchased 2,655 1Capital units redeemed 640 5Management fees 23 24Accrued expenses 34 48Distributions to unitholders 3 —Total liabilities 3,355 78Net assets $ 239,388 $ 268,021Total net assets per series (000s)Series A $10,024 $10,424Series F 4,441 4,417Series O 224,550 252,770Series T 373 410Number of units outstanding (Note 3)Series A 937,141 1,017,436Series F 405,911 423,901Series O 19,882,349 23,672,985Series T 27,470 30,281Net assets per unit — CADSeries A $10.69 $10.25Series F 10.94 10.42Series O 11.29 10.68Series T 13.60 13.55Net assets per unit — USDSeries A $10.17 $10.32Series F 10.41 10.49Series O 10.74 10.75Cost of investments held (000s) $207,046 $232,617STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $255; 2012 — $189) $ 2,741 $ 3,066Interest 30 38Total investment income 2,771 3,104ExpensesManagement fees (Note 4(a)) 145 164Transfer agent fees (Note 4(c)) 87 103Custodian fees 1 1Legal fees — —Audit fees 11 10Unitholder reporting costs 7 7Independent review committee fees 1 1Registration fees 11 10Other expenses (Note 7) 13 15Total expenses 276 311Expenses waived/paid by Manager (Note 6) (100) (111)Net expenses 176 200Net investment income (loss) 2,595 2,904Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 17,535 4,818Net realized and/or unrealized foreign exchangegain (loss) 52 7Net change in unrealized appreciation(depreciation) in value of investments (4,189) 17,538Transaction costs (Note 11) (265) (132)Net gain (loss) on investments 13,133 22,231Increase (decrease) in net assets from operations $ 15,728 $ 25,135Increase (decrease) in net assets from operationsper series (000s)Series A $464 $1,198Series F 219 468Series O 15,026 23,414Series T 19 55Increase (decrease) in net assets from operationsper unitSeries A $0.48 $0.96Series F 0.52 0.99Series O 0.70 0.98Series T 0.65 1.50The accompanying notes are an integral part of these financial statements.116 Franklin Templeton Investments Funds

Franklin World Growth FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 15,728 $ 25,135 $ 464 $ 1,198 $ 219 $ 468Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital (16) (18) — — — —(16) (18) — — — —Capital unit transactionsSubscriptions 17,383 47,472 284 250 31 19Reinvestments 2 3 — — — —Redemptions (61,730) (44,557) (1,148) (2,368) (226) (454)(44,345) 2,918 (864) (2,118) (195) (435)Increase (decrease) in net assets for the period (28,633) 28,035 (400) (920) 24 33Net assets — beginning of period 268,021 225,682 10,424 12,036 4,417 4,451Net assets — end of period $ 239,388 $ 253,717 $ 10,024 $ 11,116 $ 4,441 $ 4,484Series OSeries T2013 2012 2013 2012Increase (decrease) in net assets from operations $ 15,026 $ 23,414 $ 19 $ 55Distributions to unitholdersFrom net investment income — — — —From capital gains — — — —From return of capital — — (16) (18)— — (16) (18)Capital unit transactionsSubscriptions 17,061 47,202 7 1Reinvestments — — 2 3Redemptions (60,307) (41,522) (49) (213)(43,246) 5,680 (40) (209)Increase (decrease) in net assets for the period (28,220) 29,094 (37) (172)Net assets — beginning of period 252,770 208,582 410 613Net assets — end of period $ 224,550 $ 237,676 $ 373 $ 441The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 117

Bissett All Canadian Focus FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 98.45%COMMON STOCKS: 98.45%Financials: 21.18%Bank of Montreal ...................... 115,600 $ 6,817 $ 7,060Bank of Nova Scotia .................... 118,200 6,434 6,643Canadian Imperial Bank of Commerce ....... 82,400 6,087 6,150Great-West Lifeco Inc. ................... 223,100 5,814 6,336IGM Financial Inc. ..................... 145,100 6,340 6,518Intact Financial Corp. ................... 128,500 6,832 7,585National Bank of Canada ................. 87,300 6,645 6,539Royal Bank of Canada ................... 113,500 6,670 6,954The Toronto-Dominion Bank . . ............ 86,900 6,664 7,33958,303 61,124Materials: 15.83%Agrium Inc. . . ........................ 69,000 5,119 6,287Alamos Gold Inc. ...................... 513,700 7,984 6,498Barrick Gold Corp. ..................... 375,900 10,674 6,217Goldcorp Inc. . ........................ 214,000 8,897 5,556Methanex Corp. . ...................... 215,400 6,922 9,639Potash Corp. of Saskatchewan Inc. .......... 133,900 6,428 5,370Silver Wheaton Corp. .................... 296,100 7,427 6,10053,451 45,667Consumer Staples: 14.26%Alimentation Couche-Tard Inc., B . .......... 141,300 4,432 8,704George Weston Ltd. ..................... 84,800 5,684 7,088Metro Inc., A . ........................ 135,000 6,082 9,504Saputo Inc. . . . ........................ 150,700 5,426 7,282Shoppers Drug Mart Corp. ................ 177,000 7,328 8,56928,952 41,147Energy: 13.34%Canadian Natural Resources Ltd. . .......... 170,500 5,827 5,055EnCana Corp. . ........................ 281,600 6,007 5,007Ensign Energy Services Inc. . . . ............ 390,800 6,553 6,351Imperial Oil Ltd. . ...................... 179,800 7,593 7,210TransCanada Corp. ..................... 169,000 6,788 7,647Vermilion Energy Inc. ................... 140,700 6,010 7,22138,778 38,491Industrials: 10.45%Canadian National Railway Co. . . . .......... 69,700 4,863 7,110Canadian Pacific Railway Ltd. . . . .......... 64,800 5,290 8,262SNC-Lavalin Group Inc., A ................ 142,700 6,100 6,333Stantec Inc. . . ........................ 190,700 5,908 8,43922,161 30,144SharesAverageCost Fair Value(000s) (000s)Information Technology: 8.65%CGI Group Inc., A . . . ............. 268,000 $ 4,744 $ 8,227MacDonald, Dettwiler andAssociates Ltd. . . . ............. 131,100 5,737 9,110Open Text Corp. ................. 106,000 5,087 7,61115,568 24,948Consumer Discretionary: 5.23%Canadian Tire Corp. Ltd., A ......... 108,100 6,828 8,507Tim Hortons Inc. . . . ............. 116,300 4,720 6,60011,548 15,107Utilities: 4.53%ATCO Ltd., I .................... 151,000 4,487 6,561Canadian Utilities Ltd., A ........... 177,400 4,712 6,5189,199 13,079Health Care: 2.91%Valeant PharmaceuticalsInternational Inc. .............. 92,900 5,433 8,398Telecommunication Services: 2.07%Rogers Communications Inc., B ...... 145,100 5,713 5,975Total Common Stocks: ............. 249,106 284,080Total Long-Term Investments: ........ 249,106 284,080Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 0.94%Royal Bank of Canada, Term Deposit,0.97%, 7/2/2013 .............. 2,700,000 CAD 2,700 2,700Total Short-Term Securities: ......... 2,700 2,700Transaction costs (Note 2) ............ (132) —TOTAL INVESTMENTS: 99.39% ...... $251,674 286,780OTHER ASSETS, lessliabilities: 0.61% ................ 1,762TOTAL NET ASSETS: 100.00% ....... $288,542The accompanying notes are an integral part of these financial statements.118 Franklin Templeton Investments Funds

Bissett All Canadian Focus FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 286,780 $ 257,518CashCanadian 164 180ReceivablesCapital units sold 1,953 1Dividends, interest and withholding tax 807 661Other assets (Note 8) 19 7Total assets 289,723 258,367LiabilitiesPayablesCapital units redeemed 1,103 4Management fees 44 47Accrued expenses 34 49Total liabilities 1,181 100Net assets $ 288,542 $ 258,267Total net assets per series (000s)Series A $22,248 $24,166Series F 2,436 2,759Series I 8 8Series O 263,850 231,334Number of units outstanding (Note 3)Series A 1,573,198 1,779,168Series F 156,357 185,421Series I 500 500Series O 14,849,965 13,739,085Net assets per unit — CADSeries A $14.14 $13.58Series F 15.58 14.88Series I 16.71 15.98Series O 17.76 16.84Cost of investments held (000s) $251,674 $223,233STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends $ 3,383 $ 3,060Interest 17 26Total investment income 3,400 3,086ExpensesManagement fees (Note 4(a)) 275 305Transfer agent fees (Note 4(c)) 90 105Custodian fees 1 2Legal fees — —Audit fees 11 10Unitholder reporting costs 7 8Independent review committee fees 1 1Registration fees 11 11Other expenses (Note 7) 14 18Total expenses 410 460Expenses waived/paid by Manager (Note 6) (73) (84)Net expenses 337 376Net investment income (loss) 3,063 2,710Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 8,635 5,780Net change in unrealized appreciation(depreciation) in value of investments 821 (5,405)Transaction costs (Note 11) (24) (143)Net gain (loss) on investments 9,432 232Increase (decrease) in net assets from operations $ 12,495 $ 2,942Increase (decrease) in net assets from operationsper series (000s)Series A $1,012 $(123)Series F 126 —*Series I —* (1)Series O 11,357 3,066Increase (decrease) in net assets from operationsper unitSeries A $0.61 $(0.07)Series F 0.76 0.01Series I 0.72 (0.35)Series O 0.81 0.21* Amount rounded to zero in the nearest thousand.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 119

Bissett All Canadian Focus FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 12,495 $ 2,942 $ 1,012 $ (123) $ 126 $ —*Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 62,479 31,816 957 2,030 57 90Reinvestments — — — — — —Redemptions (44,699) (113,985) (3,887) (4,684) (506) (372)17,780 (82,169) (2,930) (2,654) (449) (282)Increase (decrease) in net assets for the period 30,275 (79,227) (1,918) (2,777) (323) (282)Net assets — beginning of period 258,267 328,961 24,166 27,333 2,759 2,847Net assets — end of period $ 288,542 $ 249,734 $ 22,248 $ 24,556 $ 2,436 $ 2,565Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ —* $ (1) $ 11,357 $ 3,066Distributions to unitholdersFrom net investment income — — — —From capital gains — — — —From return of capital — — — —— — — —Capital unit transactionsSubscriptions — 40 61,465 29,656Reinvestments — — — —Redemptions — (39) (40,306) (108,890)— 1 21,159 (79,234)Increase (decrease) in net assets for the period — — 32,516 (76,168)Net assets — beginning of period 8 8 231,334 298,773Net assets — end of period $ 8 $ 8 $ 263,850 $ 222,605* Amount rounded to zero in the nearest thousand.The accompanying notes are an integral part of these financial statements.120 Franklin Templeton Investments Funds

Bissett Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)LONG-TERM INVESTMENTS: 98.28%BONDS: 98.28%Canada: 79.15%407 International Inc., Senior Secured Bond, 6.47%, 7/27/2029 ............................... 23,965,000 CAD $ 31,030 $ 30,590Agrium Inc.Senior Bond, 3.50%, 6/1/2023 ........................................................ 4,810,000 USD 4,999 4,837Senior Note, 3.15%, 10/1/2022 ....................................................... 5,241,000 USD 5,314 5,222Air Canada 2013-1 Class A Pass Through Trust, First Lien, 4.125%, 11/15/2026 .................. 5,815,000 USD 5,998 6,071AltaLink Investments LP, Senior Bond, 12-1, 3.674%, 6/5/2019 ............................... 9,599,000 CAD 9,599 9,561Bank of Montreal, Senior Note, 4.609%, 9/10/2025 ......................................... 9,970,000 CAD 10,032 10,693Bank of Nova Scotia2.898% to 8/3/2017, Floating Rate Note thereafter, 8/3/2022 ................................ 11,245,000 CAD 11,245 11,2823.036% to 10/17/2019, Floating Rate Note thereafter, 10/18/2024 ........................... 13,917,000 CAD 13,917 13,719Baytex Energy Corp., Senior Note, 6.625%, 7/19/2022 ....................................... 2,691,000 CAD 2,691 2,799BC Telecom Inc., Senior Bond, 9.65%, 4/8/2022 ........................................... 10,500,000 CAD 15,693 14,913bcIMC Realty Corp., 5.65%, 1/5/2018 .................................................... 6,670,000 CAD 6,913 7,502Bell Aliant Regional Communications LPSenior Note, 3.54%, 6/12/2020 ....................................................... 5,800,000 CAD 5,805 5,702Senior Note, 5.41%, 9/26/2016 ....................................................... 12,012,000 CAD 12,222 13,023Bow Centre Street LP, Secured Note, 3.797%, 6/13/2023 .................................... 6,330,000 CAD 6,330 6,143British Columbia Municipal Finance Authority, 4.875%, 6/3/2019 .............................. 30,276,000 CAD 32,969 33,727Caisse Centrale Desjardins du Quebec, Senior Note, 2.281%, 10/17/2016 ....................... 14,425,000 CAD 14,425 14,386Calloway Real Estate Investment TrustSenior Note, 4.05%, 7/27/2020 ....................................................... 15,000,000 CAD 15,119 14,883Senior Note, I, 3.985%, 5/30/2023 ..................................................... 3,000,000 CAD 3,007 2,879Cameco Corp.Senior Bond, D, 5.67%, 9/2/2019 ...................................................... 7,598,000 CAD 7,942 8,354Senior Bond, E, 3.75%, 11/14/2022 .................................................... 12,251,000 CAD 12,250 11,504Canada Housing Trust, Senior Secured Bond, Floating Rate Note, 3/15/2017 ..................... 13,648,000 CAD 13,747 13,771Canadian Natural Resources Ltd., 2.89%, 8/14/2020 ........................................ 8,150,000 CAD 8,150 7,921Capital Desjardins Inc.Senior Note, 3.797% to 11/23/2015, Floating Rate Note thereafter, 11/23/2020 ................. 13,900,000 CAD 13,900 14,359Senior Note, 5.756% to 4/1/2014, Floating Rate Note thereafter, 4/1/2019 ..................... 12,812,000 CAD 13,277 13,160Senior Secured Note, G, 5.187%, 5/5/2020 .............................................. 16,070,000 CAD 16,340 17,668CDP Financial Inc., Senior Note, 4.60%, 7/15/2020 ......................................... 17,476,000 CAD 18,479 19,194Centre Street Trust, Secured Note, A, 3.69%, 6/14/2021 ..................................... 13,026,000 CAD 13,026 12,530City of Montreal, 5.00%, 12/1/2018 ...................................................... 14,747,000 CAD 15,325 16,333City of Toronto Canada3.50%, 12/6/2021 .................................................................. 18,694,000 CAD 19,001 18,7953.80%, 12/13/2042 ................................................................. 28,465,000 CAD 28,369 26,2804.70%, 6/10/2041 .................................................................. 6,626,000 CAD 7,456 7,1004.95%, 6/27/2018 .................................................................. 23,080,000 CAD 25,995 25,621Cogeco Cable Inc.Secured Note, 4.175%, 5/26/2023 ..................................................... 3,915,000 CAD 3,918 3,756Senior Secured Note, 4.925%, 2/14/2022 ............................................... 1,176,000 CAD 1,222 1,197Senior Secured Note, 5.95%, 6/9/2014 ................................................. 7,093,000 CAD 7,421 7,345CU Inc.Senior Bond, 3.805%, 9/10/2042 ...................................................... 6,789,000 CAD 6,789 6,310Senior Note, 5.563%, 5/26/2028 ...................................................... 4,477,000 CAD 5,476 5,151The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 121

Bissett Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 79.15% (Continued)Enbridge Inc.Floating Rate Note, 8/19/2015 ........................................................ 13,170,000 CAD $ 13,170 $ 13,292Senior Bond, 4.24%, 8/27/2042 ....................................................... 5,000,000 CAD 5,014 4,659Enbridge Income Fund Holdings Inc.3.94%, 1/13/2023 .................................................................. 8,506,000 CAD 8,504 8,362Senior Note, 2.92%, 12/14/2017 ...................................................... 6,697,000 CAD 6,696 6,663Senior Note, Floating Rate Note, 11/28/2014 ............................................. 14,127,000 CAD 14,127 14,117Fairfax Financial Holdings Ltd.5.84%, 10/14/2022 ................................................................. 4,022,000 CAD 4,177 4,147Senior Note, 6.40%, 5/25/2021 ....................................................... 11,500,000 CAD 11,449 12,535Fifth Avenue LP, Secured Bond, 4.71%, 8/5/2021 .......................................... 7,253,681 CAD 7,254 7,446Financement Quebec, Floating Rate Note, 6/1/2018 ......................................... 51,210,000 CAD 51,618 51,588Finning International Inc, 3.232%, 7/3/2020 ............................................... 4,720,000 CAD 4,720 4,640First Capital Realty Inc.Senior Bond, Q, 3.90%, 10/30/2023 .................................................... 8,085,000 CAD 8,137 7,724Senior Note, 3.95%, 12/5/2022 ....................................................... 7,600,000 CAD 7,542 7,306Flint Energy Services Ltd., 7.50%, 6/15/2019 ............................................... 3,935,000 CAD 4,372 4,289Fortisalberta Inc., 5.37%, 10/30/2039 .................................................... 7,641,000 CAD 7,811 8,829Gibson Energy Inc., Senior Note, 7.00%, 7/15/2020 ......................................... 4,400,000 CAD 4,340 4,378Government of Canada4.00%, 6/1/2041 ................................................................... 26,568,000 CAD 34,816 32,1345.75%, 6/1/2029* .................................................................. 8,246,000 CAD 10,378 11,4125.75%, 6/1/2033 ................................................................... 24,621,000 CAD 35,319 35,347Great-West Lifeco Finance Delaware, 5.691% to 6/21/2017, Floating Rate Note thereafter,6/21/2067 ........................................................................ 18,780,000 CAD 19,398 20,614Great-West Lifeco Inc., Senior Bond, 6.67%, 3/21/2033 ...................................... 14,406,000 CAD 17,653 18,352Greater Toronto Airports Authority, Senior Secured Bond, First Lien, 7.05%, 6/12/2030 ............. 8,990,000 CAD 12,667 11,943Home Capital Group Inc., 5.20%, 5/4/2016 ................................................ 10,734,000 CAD 10,734 11,087HSBC Bank Canada2.572%, 11/23/2015 ................................................................ 15,555,000 CAD 15,555 15,7373.558%, 10/4/2017 ................................................................. 9,756,000 CAD 9,764 10,085Senior Note, Floating Rate Note, 1/21/2016 ................................................ 5,480,000 CAD 5,480 5,493Hydro-Quebec, HL, 11.00%, 8/15/2020 ................................................... 26,565,000 CAD 41,881 40,266Inter Pipeline FundSenior Note, 3.839%, 7/30/2018 ...................................................... 10,427,000 CAD 10,427 10,875Senior Note, 4.967%, 2/2/2021 ....................................................... 6,906,000 CAD 6,906 7,547Manitoba Telecom Services Inc., Senior Note, 4.59%, 10/1/2018 ............................... 6,055,000 CAD 6,054 6,430Manufacturers Life Insurance Co., Subordinated Note, 4.165% to 6/1/17, Floating Rate Note thereafter,6/1/2022 ......................................................................... 5,736,000 CAD 5,736 5,983Manulife Finance Delaware, Senior Note, 4.448% to 12/15/2016, Floating Rate Note thereafter,12/15/2026 ....................................................................... 7,480,000 CAD 7,937 7,840Manulife Financial Corp., Senior Note, 5.505%, 6/26/2018 .................................... 14,036,000 CAD 14,374 15,568Maritimes and Northeast Pipeline LP, Senior Secured Note, 4.34%, 11/30/2019 ................... 7,792,560 CAD 7,810 8,067Master Credit Card TrustSecured Note, 3.876%, 1/21/2017 ..................................................... 8,215,000 CAD 8,077 8,284Secured Note, 12-1, 2.626%, 1/21/2017 ................................................ 6,445,000 CAD 6,445 6,520Merrill Lynch Financial Asset Inc., 2006-CA20, A2, 4.659%, 10/12/2039 ........................ 5,584,112 CAD 5,584 5,854* Principal amount of USD $2,602,729 pledged as collateral as at June 30, 2013The accompanying notes are an integral part of these financial statements.122 Franklin Templeton Investments Funds

Bissett Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 79.15% (Continued)National Housing Association1.70%, 8/1/2017 ................................................................... 8,517,424 CAD $ 8,369 $ 8,2891.70%, 12/1/2017 .................................................................. 13,913,293 CAD 13,739 13,4932.30%, 6/1/2016 ................................................................... 14,163,345 CAD 14,041 14,259Floating Rate Note, 3/1/2016 ......................................................... 13,049,240 CAD 12,981 13,281Floating Rate Note, 12/1/2016 ........................................................ 32,314,582 CAD 32,230 31,910Floating Rate Note, 3/1/2017 ......................................................... 31,669,979 CAD 31,495 31,087NBC Asset Trust, Junior Subordinated Bond, 7.235%, Perpetual ............................... 7,250,000 CAD 8,840 8,563OMERS Realty Corp., 4.74%, 6/4/2018 ................................................... 14,307,000 CAD 14,739 15,697Ontario School Boards Finance, 06A1, 5.07%, 4/18/2031 .................................... 19,469,386 CAD 19,469 20,537Ontario Strategic Infrastructure Finance, 4.60%, 6/1/2015 .................................... 19,663,000 CAD 20,362 20,723OPB Finance TrustSenior Bond, A, 3.89%, 7/4/2042 ...................................................... 11,175,000 CAD 11,167 10,336Senior Note, 2.90%, 5/24/2023 ....................................................... 14,785,000 CAD 14,775 14,142Pembina Pipeline Corp., Senior Bond, 4.75%, 4/30/2043 ..................................... 3,000,000 CAD 2,993 2,876Petro-Canada, Senior Bond, 5.95%, 5/15/2035 ............................................. 3,600,000 USD 4,480 4,085Precision Drilling Corp., Senior Note, 6.50%, 3/15/2019 ...................................... 2,357,625 CAD 2,399 2,405Province of British Columbia5.70%, 6/18/2029 .................................................................. 22,210,000 CAD 29,021 27,6256.35%, 6/18/2031 .................................................................. 7,525,000 CAD 10,296 10,038Province of Manitoba4.40%, 9/5/2025 ................................................................... 39,179,000 CAD 40,245 42,6576.30%, 3/5/2031 ................................................................... 17,573,000 CAD 21,609 23,235Province of New Brunswick3.55%, 6/3/2043 ................................................................... 5,815,000 CAD 5,815 5,3375.50%, 1/27/2034 .................................................................. 51,863,000 CAD 59,609 62,641Province of Nova Scotia4.40%, 6/1/2042 ................................................................... 13,332,000 CAD 14,747 14,3375.80%, 6/1/2033 ................................................................... 17,215,000 CAD 22,373 21,582Province of Ontario2.85%, 6/2/2023 ................................................................... 38,805,000 CAD 39,135 37,2234.20%, 3/8/2018 ................................................................... 26,917,000 CAD 29,930 29,1974.65%, 6/2/2041 ................................................................... 34,765,000 CAD 41,570 38,9854.70%, 6/2/2037 ................................................................... 31,342,000 CAD 38,228 34,9986.25%, 9/1/2015 ................................................................... 30,394,000 CAD 32,832 33,377Floating Rate Note, 9/22/2017 ........................................................ 28,840,000 CAD 28,892 28,852Floating Rate Note, 11/23/2017 ....................................................... 88,672,000 CAD 88,687 89,153Strip, 12/2/2022 .................................................................... 17,168,000 CAD 12,622 12,293Province of Quebec, 6.25%, 6/1/2032 .................................................... 44,766,000 CAD 57,107 58,172PSP Capital Inc., Senior Note, 2.26%, 2/16/2017 ........................................... 13,127,000 CAD 13,123 13,183RBC Capital Trust, 4.87% to 12/31/2015, Floating Rate Note thereafter, Perpetual ................. 3,802,000 CAD 3,969 4,036Real Estate Asset Liquidity Trust, 2006-3, A1, 4.449%, 12/12/2038 ............................. 10,347,902 CAD 10,348 10,809Rogers Communications Inc.Senior Note, 5.34%, 3/22/2021 ....................................................... 17,539,000 CAD 17,584 19,227Senior Note, 5.38%, 11/4/2019 ....................................................... 12,013,000 CAD 12,582 13,256Royal Bank of CanadaSenior Note, 2.58%, 4/13/2017 ....................................................... 10,180,000 CAD 10,179 10,214Senior Note, 3.66%, 1/25/2017 ....................................................... 12,395,000 CAD 12,546 12,933The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 123

Bissett Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 79.15% (Continued)Senior Note, 4.93%, 7/16/2025 ....................................................... 15,113,000 CAD $ 15,259 $ 16,662Russel Metals Inc., Senior Note, 6.00%, 4/19/2022 ......................................... 6,870,000 CAD 7,051 6,870Sherritt International Corp., Senior Note, 7.50%, 9/24/2020 ................................... 5,885,000 CAD 5,917 5,826Spy Hill Power LP, Secured Note, 4.14%, 3/31/2036 ........................................ 7,035,871 CAD 7,036 6,666Sun Life Capital Trust, Senior Bond, 5.863%, 12/31/2108 .................................... 9,996,000 CAD 11,131 11,238Sun Life Financial Inc., Senior Bond, 4.95% to 6/1/2016, Floating Rate Note thereafter, 6/1/2036 .... 16,738,000 CAD 17,394 17,708Suncor Energy Inc., 5.80%, 5/22/2018 ................................................... 10,332,000 CAD 10,806 11,676Terasen Gas Inc.6.00%, 10/2/2037 .................................................................. 3,500,000 CAD 3,487 4,360Senior Bond, 6.05%, 2/15/2038 ....................................................... 5,831,000 CAD 5,943 7,152Senior Note, 6.55%, 2/24/2039 ....................................................... 2,000,000 CAD 1,993 2,676The Toronto-Dominion BankSubordinated Note, 5.48% to 4/2/2015, Floating Rate Note thereafter, 4/2/2020 ................ 15,965,000 CAD 16,469 16,931Subordinated Note, 5.763% to 12/18/2017, Floating Rate Note thereafter, 12/18/2106 ........... 27,307,000 CAD 27,694 30,563TransCanada PipeLines Ltd.Senior Bond, 8.05%, 2/17/2039 ....................................................... 5,140,000 CAD 5,619 7,710Senior Bond, 9.45%, 3/20/2018 ....................................................... 4,030,000 CAD 5,354 5,160Union Gas Ltd., Senior Bond, 3.79%, 7/10/2023 ........................................... 6,360,000 CAD 6,358 6,396Valeant Pharmaceuticals International Inc.Series C-1 Tranche B Term Loan, Floating Rate Note, 12/11/2019 ............................ 201,488 USD 204 210Series E Tranche B Term Loan, Floating Rate Note, 6/30/2020 .............................. 1,350,000 USD 1,393 1,416Westcoast Energy Inc., Senior Note, 4.57%, 7/2/2020 6,426,000 CAD 6,426 6,9171,917,979 1,930,874United States: 11.46%American International Group Inc., Senior Note, 4.90%, 6/2/2014 .............................. 12,261,000 CAD 12,259 12,587American Rock Salt Co. LLC, Initial Loan, Floating Rate Note, 4/25/2017 ......................... 583,056 USD 581 610Aon Finance NS1 ULC, Senior Note, 4.76%, 3/8/2018 ....................................... 8,628,000 CAD 8,686 9,139ARAMARK Corp., U.S. Term D Loan, Floating Rate Note, 8/22/2019 ............................ 450,000 USD 458 474Arch Coal Inc., Term Loans, Floating Rate Note, 5/16/2018 ................................... 1,293,016 USD 1,357 1,349Arysta Lifescience SPC LLC, Initial Term Loan, Floating Rate Note, 5/29/2020 .................... 1,055,000 USD 1,088 1,102Ashland Inc., Senior Note, 3.875%, 4/15/2018 ............................................. 5,350,000 USD 5,462 5,569Asurion LLC, Incremental Tranche B-1 Term Loan, Floating Rate Note, 5/24/2019 ................. 1,430,069 USD 1,480 1,488Avis Budget Car Rental LLC, Tranche B Term Loan, Floating Rate Note, 3/15/2019 ................ 867,825 USD 893 908Axalta Coating Systems U.S. Holdings Inc., Initial Term B Loans, Floating Rate Note, 2/1/2020 ....... 1,340,000 USD 1,393 1,408BAC Canada Finance Co., Senior Note, Floating Rate Note, 2/21/2014 .......................... 7,749,000 CAD 7,749 7,758Bank of America Corp., 4.36%, 9/21/2015 ................................................ 15,284,000 CAD 15,246 15,992Bausch & Lomb Inc., Parent Term Loans, Floating Rate Note, 5/18/2019 ........................ 1,336,650 USD 1,367 1,404Berry Plastics Corp., Term D Loan, Floating Rate Note, 2/8/2020 ............................... 368,078 USD 367 382BJ’s Wholesale Club Inc., 2013 Replacement Loans, Floating Rate Note, 9/26/2019 ............... 1,146,626 USD 1,174 1,200Canada Safeway Ltd., Senior Note, 3.00%, 3/31/2014 ....................................... 2,000,000 CAD 2,019 2,011Citigroup Inc.Junior Subordinated Bond, 5.95% to 1/30/2023, Floating Rate Note thereafter, Perpetual ......... 5,750,000 USD 6,240 6,016Subordinated Note, 4.65% to 10/11/2017, Floating Rate Note thereafter, 10/11/2022 ............ 10,650,000 CAD 10,599 10,991Community Health Systems Inc., New Extended Term Loan, Floating Rate Note, 1/25/2017 ......... 1,983,000 USD 2,056 2,085Constellation Brands Inc., Senior Note, 4.25%, 5/1/2023 ..................................... 7,105,000 USD 7,199 7,050CSC Holdings LLC (Cablevision), Term B Loan, Floating Rate Note, 4/17/2020 .................... 1,035,000 USD 1,048 1,076DaVita HealthCare Partners Inc., Tranche B-2 Term Loan, Floating Rate Note, 8/24/2019 ........... 1,336,642 USD 1,395 1,406The accompanying notes are an integral part of these financial statements.124 Franklin Templeton Investments Funds

Bissett Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 11.46% (Continued)Del Monte Foods Co., Initial Term Loans, Floating Rate Note, 3/8/2018 .......................... 392,765 USD $ 395 $ 411Dunkin’ Brands Inc., Term B-3 Loan, Floating Rate Note, 2/14/2020 ............................ 368,002 USD 368 385El Paso Corp., Senior Note, 7.25%, 6/1/2018 ............................................... 2,835,000 USD 3,284 3,301Energy Transfer Partners LP, Senior Bond, 3.60%, 2/1/2023 .................................. 3,342,000 USD 3,357 3,286Federal-Mogul Corp.Tranche B Term Loan, Floating Rate Note, 12/27/2014 ..................................... 456,500 USD 440 457Tranche C Term Loan, Floating Rate Note, 12/27/2015 ..................................... 232,908 USD 225 233FMG America Finance Inc. (Fortescue Metals Group), Loans, Floating Rate Note, 10/18/2017 ........ 1,162,677 USD 1,212 1,214Ford Credit Canada Ltd.Senior Note, 7.50%, 8/18/2015 ....................................................... 2,593,000 CAD 2,890 2,840Senior Note, 3.32%, 12/19/2017 ...................................................... 10,110,000 CAD 10,106 9,978FoxCo Acquisition Sub LLC, Initial Term Loan, Floating Rate Note, 7/14/2017 ..................... 582,069 USD 598 618GE Capital Canada Funding Co.4.40%, 2/8/2018 ................................................................... 10,120,000 CAD 10,104 10,7955.68%, 9/10/2019 .................................................................. 5,016,000 CAD 5,229 5,7115.73%, 10/22/2037 ................................................................. 17,336,000 CAD 17,426 20,200Senior Note, Floating Rate Note, 6/11/2014 .............................................. 6,345,000 CAD 6,350 6,384General Electric Capital Corp., B, 6.25% to 12/15/2049, Floating Rate Note thereafter, Perpetual ..... 2,393,000 USD 2,443 2,673Genpact International Inc., Domestic Term B-1 Loan, Floating Rate Note, 8/30/2019 ............... 1,780,000 USD 1,805 1,881HCA Inc.Senior Secured Note, 6.50%, 2/15/2020 ................................................ 4,442,000 USD 4,925 5,053Tranche B-5 Term Loan, Floating Rate Note, 3/31/2017 .................................... 440,000 USD 443 460Hologic Inc., Tranche B Term Loan, Floating Rate Note, 8/1/2019 .............................. 438,894 USD 456 462Ineos U.S. Finance LLC, Dollar Term Loan, Floating Rate Note, 5/4/2018 ........................ 1,558,904 USD 1,588 1,608Interactive Data Corp., Term B Loan, Floating Rate Note, 2/11/2018 ............................ 405,000 USD 404 423JPMorgan Chase & Co., Senior Note, 2.92%, 9/19/2017 ...................................... 9,443,000 CAD 9,443 9,341KAR Auction Services Inc. (Adesa), Term Loan, Floating Rate Note, 5/19/2017 .................... 359,686 USD 370 378Liberty Mutual Group Inc., Junior Subordinated Note, 10.75% to 6/15/2038, Floating Rate Notethereafter, 6/15/2058 ................................................................ 4,475,000 USD 7,102 7,175Macdermid Holdings LLC, First Lien Tranche B Term Loan, Floating Rate Note, 6/7/2020 ........... 1,780,000 USD 1,821 1,863MetLife Capital Trust IV, Preferred, Junior Subordinated Bond, 7.875% to 12/15/2037, Floating RateNote thereafter, 12/15/2067 .......................................................... 8,900,000 USD 11,482 11,143Metropolitan Life Global Funding I, 2.624%, 4/10/2015 ...................................... 15,653,000 CAD 15,653 15,785MoneyGram International Inc., Term Loan, Floating Rate Note, 3/28/2020 ....................... 1,586,025 USD 1,637 1,665Morgan Stanley, Senior Note, 4.85%, 2/3/2016 ............................................. 3,094,000 CAD 3,092 3,230Pact Group LLC, Term Loans, Floating Rate Note, 5/29/2020 .................................. 1,380,000 USD 1,419 1,440Par Pharmaceutical Companies Inc., Term B-1 Loan, Floating Rate Note, 9/30/2019 ............... 631,901 USD 636 659Party City Holdings Inc., 2013 Replacement Term Loan, Floating Rate Note, 7/27/2019 ............. 591,030 USD 598 619Pinnacle Foods Finance LLC, Tranche G Term Loan, Floating Rate Note, 4/29/2020 ............... 860,344 USD 876 899Reynolds Group Issuer Inc./LLC/SAFirst Lien, 5.75%, 10/15/2020 ........................................................ 2,700,000 USD 2,662 2,860Senior Secured Note, 6.875%, 2/15/2021 ............................................... 1,800,000 USD 1,872 1,987Safeway Inc., Senior Bond, 3.95%, 8/15/2020 .............................................. 8,100,000 USD 7,773 8,347Sinclair Television Group Inc., Tranche B Term Loans, Floating Rate Note, 4/9/2020 ............... 194,513 USD 198 203The Goldman Sachs Group Inc., Senior Note, 3.375%, 2/1/2018 ............................... 8,376,000 CAD 8,365 8,355Trans Union LLC, 2013 Replacement Term Loan, Floating Rate Note, 2/10/2019 .................. 1,742,917 USD 1,815 1,837TransDigm Inc.Term Loan C, Floating Rate Note, 2/28/2020 ............................................... 450,000 USD 463 469Tranche C Term Loan, Floating Rate Note, 2/28/2020 ........................................ 1,742,975 USD 1,794 1,807The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 125

Bissett Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 11.46% (Continued)Virgin Media Investment Holdings Ltd., B Facility, Floating Rate Note, 2/15/2020 .................. 862,500 USD $ 873 $ 897Walter Energy Inc., B Term Loan, Floating Rate Note, 4/1/2018 ................................ 351,279 USD 355 362Warner Chilcott Corp.Additional Term B-1 Loan, Floating Rate Note, 3/15/2018 .................................... 69,962 USD 72 74Term B-1 Loan, Floating Rate Note, 3/15/2018 ............................................. 160,712 USD 167 169Weight Watchers International Inc., Initial Tranche B-2 Term Loan, Floating Rate Note, 4/2/2020 ..... 1,980,000 USD 2,014 2,067Wells Fargo Financial Canada Corp.Senior Note, 2.774%, 2/9/2017 ....................................................... 10,531,000 CAD 10,531 10,623Senior Note, 3.46%, 1/24/2023 ....................................................... 13,706,000 CAD 13,706 13,238WMG Acquisition Corp.Tranche B Delayed Draw Term Loan, Floating Rate Note, 7/1/2020 ........................... 154,268 USD 155 161Tranche B Initial Term Loan, Floating Rate Note, 7/1/2020 .................................. 995,732 USD 998 1,036Tranche B Refinancing Term Loan, Floating Rate Note, 7/1/2020 ............................. 345,000 USD 346 360272,452 279,427United Kingdom: 2.29%British Airways PLC, Senior Secured Bond, 4.625%, 6/20/2024 ................................ 7,235,000 USD 7,601 7,559Heathrow Funding Ltd., Secured Note, 4.00%, 7/3/2019 ..................................... 5,273,000 CAD 5,239 5,394HSBC Bank Canada, 2.901%, 1/13/2017 ................................................. 11,530,000 CAD 11,530 11,716Lynx I Corp., First Lien, 5.375%, 4/15/2021 ................................................ 4,450,000 USD 4,678 4,702Lynx II Corp., Senior Bond, 6.375%, 4/15/2023 ............................................. 1,785,000 USD 1,892 1,891Network Rail Infrastructure Finance PLC, 4.40%, 3/6/2016 ................................... 23,465,000 CAD 23,569 24,64954,509 55,911Supranational: 1.74%Inter-American Development Bank, 4.40%, 1/26/2026 ....................................... 40,384,000 CAD 39,969 42,543France: 1.39%EDFSA.............................................................................Subordinated Note, 5.25% to 1/29/2023, Floating Rate Note thereafter, Perpetual ................. 1,867,000 USD 1,850 1,880Subordinated Note, Regs, 5.25% to 1/29/2023, Floating Rate Note thereafter, Perpetual ............ 6,468,000 USD 6,368 6,501Government of France, 4.45%, 10/26/2018 ................................................ 23,932,000 CAD 23,984 25,57132,202 33,952Netherlands: 0.75%Bank Nederlandse Gemeenten NV, Senior Bond, 4.55%, 2/15/2019 ............................ 13,971,000 CAD 14,123 14,956Tronox Pigments (Netherlands) BV, Term Loan, Floating Rate Note, 3/19/2020 ................... 1,520,000 USD 1,575 1,603UPC Financing Partnership, Term Loan AH, Floating Rate Note, 6/30/2021 ...................... 1,735,000 USD 1,786 1,81217,484 18,371Mexico: 0.41%Cemex Finance LLC, Senior Secured Note, 9.50%, 12/14/2016 ................................ 8,950,000 USD 9,946 9,951Australia: 0.38%BHP Billiton Finance Ltd., 3.23%, 5/15/2023 .............................................. 9,093,000 CAD 9,088 8,514Nine Entertainment Group Pty. Ltd., Term B Loan, Floating Rate Note, 2/5/2020 .................. 752,000 USD 763 7859,851 9,299South Korea: 0.31%Korea Gas Corp., Senior Note, 4.58%, 5/12/2016 ........................................... 7,183,000 CAD 7,181 7,451Japan: 0.27%Nippon Life Insurance Co., 5.00% to 10/17/2022, Floating Rate Note thereafter, 10/18/2042 ........ 6,461,000 USD 6,351 6,675The accompanying notes are an integral part of these financial statements.126 Franklin Templeton Investments Funds

Bissett Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Luxembourg: 0.13%Accudyne Industries LLC (Silver II U.S. Holdings/Hamilton), 2013 Specified Refinancing Term Loan,Floating Rate Note, 12/13/2019 ........................................................ 402,975 USD $ 402 $ 418Intelsat Jackson Holdings SA, Tranche B-1 Term Loan, Floating Rate Note, 4/2/2018 ............... 1,338,872 USD 1,392 1,409Pacific Drilling SA, Term Loan, Floating Rate Note, 6/3/2018 ................................... 1,050,000 USD 1,070 1,097WC Luxco S.A.R.L., Term B-3 Loan, Floating Rate Note, 3/15/2018 ............................. 126,644 USD 131 1332,995 3,057Puerto Rico: 0.00%Warner Chilcott Co. LLC, Term B-2 Loan, Floating Rate Note, 3/15/2018 ......................... 21,613 USD 22 23Total Bonds: ......................................................................... 2,370,941 2,397,534Total Long-Term Investments: ............................................................ 2,370,941 2,397,534SHORT-TERM SECURITIES: 0.25%Mexico Treasury Bill, 3.94%, 4/3/2014 .................................................... 7,956,746 MXN 6,014 6,260Total Short-Term Securities: ............................................................. 6,014 6,260TOTAL INVESTMENTS: 98.53% ............................................................. $2,376,955 2,403,794NET UNREALIZED LOSS ON DERIVATIVES: (0.13%) .............................................. (3,139)OTHER ASSETS, less liabilities: 1.60% ....................................................... 38,893TOTAL NET ASSETS: 100.00% ............................................................. $2,439,548SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCounterpartyCreditRatingSettlement DateCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)(000s) (000s) (000s) (000s) (000s)CREDIT SUISSE INTERNATIONAL .......... A+ July 22, 2013 18,635 USD 19,603 19,207 CAD 19,207 1.0307 $ (396)CREDIT SUISSE INTERNATIONAL .......... A+ July 22, 2013 18,635 USD 19,603 19,254 CAD 19,254 1.0332 (349)CREDIT SUISSE INTERNATIONAL .......... A+ July 22, 2013 24,183 USD 25,440 25,396 CAD 25,396 1.0501 (44)CREDIT SUISSE INTERNATIONAL .......... A+ July 22, 2013 73,130 USD 76,930 74,580 CAD 74,580 1.0198 (2,350)Total Number of Contracts ...............4 $(3,139)Net Unrealized Loss ..................... $(3,139)Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................. 19.09 22.23AA .................................. 26.84 32.23A ................................... 32.23 31.49BBB................................. 14.52 11.24BB .................................. 4.21 1.12B ................................... 1.39 0.28Not Rated ............................ 0.25 —* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’s andFitch ratings.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 127

Bissett Bond FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 2,403,794 $ 2,593,402CashCanadian 4,394 263Foreign 8,388 3ReceivablesInvestment securities sold 38,777 2,070Capital units sold 58,610 100Interest 19,672 21,114Unrealized gain on derivatives — 46Other assets (Note 8) 102 80Total assets 2,533,737 2,617,078LiabilitiesPayablesInvestment securities purchased 80,045 2,067Capital units redeemed 2,679 75Management fees 223 252Accrued expenses 202 252Distributions to unitholders 7,901 —Unrealized loss on derivatives 3,139 23Total liabilities 94,189 2,669Net assets $ 2,439,548 $ 2,614,409Total net assets per series (000s)Series A $156,716 $184,599Series F 31,610 34,056Series I 785 703Series O 2,250,437 2,395,051Number of units outstanding (Note 3)Series A 12,691,080 14,414,030Series F 2,350,953 2,451,774Series I 61,412 53,152Series O 151,377,050 156,583,380Net assets per unit — CADSeries A $12.35 $12.80Series F 13.45 13.89Series I 12.78 13.23Series O 14.87 15.30Cost of investments held (000s) $2,376,955 $2,482,330STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeInterest $ 48,299 $ 51,292Total investment income 48,299 51,292ExpensesManagement fees (Note 4(a)) 1,425 1,533Transfer agent fees (Note 4(c)) 472 486Custodian fees 19 26Legal fees 2 5Audit fees 16 15Unitholder reporting costs 44 46Independent review committee fees 1 1Registration fees 14 13Other expenses (Note 7) 139 170Total expenses 2,132 2,295Expenses waived/paid by Manager (Note 6) (624) (662)Net expenses 1,508 1,633Net investment income (loss) 46,791 49,659Realized and unrealized gain (loss) oninvestmentsNet realized gain (loss) on investments 11,861 20,763Net realized and/or unrealized foreign exchangegain (loss) (368) (355)Net change in unrealized appreciation(depreciation) in value of investments andderivatives (87,395) (7,808)Net gain (loss) on investments (75,902) 12,600Increase (decrease) in net assets fromoperations $ (29,111) $ 62,259Increase (decrease) in net assets fromoperations per series (000s)Series A $(3,212) $3,122Series F (537) 681Series I (14) 10Series O (25,348) 58,446Increase (decrease) in net assets fromoperations per unitSeries A $(0.24) $0.21Series F (0.24) 0.28Series I (0.23) 0.24Series O (0.17) 0.37The accompanying notes are an integral part of these financial statements.128 Franklin Templeton Investments Funds

Bissett Bond FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ (29,111) $ 62,259 $ (3,212) $ 3,122 $ (537) $ 681Distributions to unitholdersFrom net investment income (40,692) (54,648) (2,726) (3,961) (524) (701)From capital gains — — — — — —From return of capital — — — — — —(40,692) (54,648) (2,726) (3,961) (524) (701)Capital unit transactionsSubscriptions 216,950 225,480 12,360 26,391 2,363 2,983Reinvestments 32,545 45,422 2,032 3,006 395 551Redemptions (354,553) (494,040) (36,337) (26,460) (4,143) (2,713)(105,058) (223,138) (21,945) 2,937 (1,385) 821Increase (decrease) in net assets for the period (174,861) (215,527) (27,883) 2,098 (2,446) 801Net assets — beginning of period 2,614,409 2,747,206 184,599 186,549 34,056 33,032Net assets — end of period $ 2,439,548 $ 2,531,679 $ 156,716 $ 188,647 $ 31,610 $ 33,833Increase (decrease) in net assets from operationsSeries ISeries O2013 2012 2013 2012$ (14) $ 10 $ (25,348) $ 58,446Distributions to unitholdersFrom net investment income (13) (12) (37,429) (49,974)From capital gains — — — —From return of capital — — — —(13) (12) (37,429) (49,974)Capital unit transactionsSubscriptions 153 52 202,074 196,054Reinvestments 10 10 30,108 41,855Redemptions (54) — (314,019) (464,867)109 62 (81,837) (226,958)Increase (decrease) in net assets for the period 82 60 (144,614) (218,486)Net assets — beginning of period 703 527 2,395,051 2,527,098Net assets — end of period $ 785 $ 587 $ 2,250,437 $ 2,308,612The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 129

Bissett Canadian Balanced FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)UnitsAverageCost(000s)LONG-TERM INVESTMENTS: 98.94%INVESTMENTS IN UNDERLYING FUNDS: 98.94%Bissett All Canadian Focus Fund .................................................................. 1,556,561 $ 18,921 $ 27,722Bissett Bond Fund ............................................................................. 8,939,194 125,684 133,105Bissett Canadian Dividend Fund .................................................................. 1,064,629 17,539 19,227Bissett Canadian Equity Fund .................................................................... 1,596,021 117,957 172,195Bissett Canadian High Dividend Fund .............................................................. 1,007,896 19,631 20,884Bissett Canadian Short Term Bond Fund ........................................................... 3,939,899 42,432 42,404Bissett Corporate Bond Fund .................................................................... 4,870,897 51,996 53,385Bissett Microcap Fund .......................................................................... 963,319 27,542 37,569Bissett Small Cap Fund ......................................................................... 477,660 31,543 37,176Bissett U.S. Focus Fund ........................................................................ 3,404,793 27,891 40,177Franklin Strategic Income Fund .................................................................. 1,773,247 14,708 15,055Franklin U.S. Rising Dividends Fund .............................................................. 1,040,132 29,179 39,015Mutual Global Discovery Fund .................................................................... 2,023,831 32,476 40,072Templeton EAFE Developed Markets Fund .......................................................... 3,859,982 37,952 38,986Templeton Emerging Markets Fund ............................................................... 1,380,580 20,368 18,997Templeton Global Bond Fund .................................................................... 1,198,090 14,263 14,988Templeton Global Smaller Companies Fund ......................................................... 913,116 22,186 24,088Total Investments In Underlying Funds: .............................................................. 652,268 775,045Total Long-Term Investments: ..................................................................... 652,268 775,045FairValue(000s)Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 0.69%Royal Bank of Canada, Term Deposit, 0.97%, 7/2/2013 ........................................... 5,400,000 CAD 5,400 5,400Total Short-Term Securities: ................................................................. 5,400 5,400TOTAL INVESTMENTS: 99.63% .............................................................. $657,668 780,445OTHER ASSETS, less liabilities: 0.37% ........................................................ 2,918TOTAL NET ASSETS: 100.00% ............................................................... $783,363The accompanying notes are an integral part of these financial statements.130 Franklin Templeton Investments Funds

Bissett Canadian Balanced FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in underlying funds and securities — atfair value $ 780,445 $ 731,131CashCanadian 54 6ReceivablesInvestment securities sold 2,510 —Capital units sold 530 571Distributions 954 725Other assets (Note 8) 24 27Total assets 784,517 732,460LiabilitiesPayablesCapital units redeemed 229 354Management fees 573 560Accrued expenses 289 323Distributions to unitholders 63 —Total liabilities 1,154 1,237Net assets $ 783,363 $ 731,223Total net assets per series (000s)Series A $306,391 $305,088Series F 89,302 87,622Series I 339 78Series O 377,757 328,193Series T 9,574 10,242Number of units outstanding (Note 3)Series A 11,006,226 11,520,631Series F 2,732,555 2,838,477Series I 11,596 2,807Series O 10,134,144 9,370,840Series T 1,222,627 1,322,961Net assets per unit — CADSeries A $27.84 $26.48Series F 32.68 30.87Series I 29.25 27.72Series O 37.28 35.02Series T 7.83 7.74Cost of investments held (000s) $657,668 $643,454STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDistributions received from underlying funds(Note 4(d)) $ 4,807 $ 5,505Interest 54 47Total investment income 4,861 5,552ExpensesManagement fees (Note 4(a)) 3,482 3,549Transfer agent fees (Note 4(c)) 822 927Custodian fees 35 43Legal fees — 1Audit fees 11 11Unitholder reporting costs 31 20Independent review committee fees 1 1Registration fees 18 17Other expenses (Note 7) 291 302Total expenses 4,691 4,871Expenses waived/paid by Manager (Note 6) (232) (295)Net expenses 4,459 4,576Net investment income (loss) 402 976Realized and unrealized gain (loss) oninvestmentsNet realized gain (loss) on investments 6,757 5,483Net change in unrealized appreciation(depreciation) in value of investments 35,100 15,654Net gain (loss) on investments 41,857 21,137Increase (decrease) in net assets from operations $ 42,259 $ 22,113Increase (decrease) in net assets from operationsper series (000s)Series A $15,506 $8,506Series F 5,099 2,822Series I 6 1Series O 21,136 10,484Series T 512 300Increase (decrease) in net assets from operationsper unitSeries A $1.38 $0.66Series F 1.84 0.95Series I 0.79 2.21Series O 2.19 1.24Series T 0.40 0.21The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 131

Bissett Canadian Balanced FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 42,259 $ 22,113 $ 15,506 $ 8,506 $ 5,099 $ 2,822Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital (386) (435) — — — —(386) (435) — — — —Capital unit transactionsSubscriptions 80,595 44,957 20,039 14,860 1,729 924Reinvestments 120 130 — 3 — —Redemptions (70,448) (83,750) (34,242) (42,649) (5,148) (5,557)10,267 (38,663) (14,203) (27,786) (3,419) (4,633)Increase (decrease) in net assets for the period 52,140 (16,985) 1,303 (19,280) 1,680 (1,811)Net assets — beginning of period 731,223 697,556 305,088 327,155 87,622 86,306Net assets — end of period $ 783,363 $ 680,571 $ 306,391 $ 307,875 $ 89,302 $ 84,495Series I Series O Series T2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 6 $ 1 $ 21,136 $ 10,484 $ 512 $ 300Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — (386) (435)— — — — (386) (435)Capital unit transactionsSubscriptions 261 — 58,062 28,804 504 369Reinvestments — — — — 120 127Redemptions (6) (56) (29,634) (34,356) (1,418) (1,132)255 (56) 28,428 (5,552) (794) (636)Increase (decrease) in net assets for the period 261 (55) 49,564 4,932 (668) (771)Net assets — beginning of period 78 60 328,193 272,789 10,242 11,246Net assets — end of period $ 339 $ 5 $ 377,757 $ 277,721 $ 9,574 $ 10,475The accompanying notes are an integral part of these financial statements.132 Franklin Templeton Investments Funds

Bissett Canadian Dividend FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 94.92%COMMON STOCKS: 94.92%Financials: 34.43%Bank of Montreal ..................... 412,400 $ 24,739 $ 25,185Bank of Nova Scotia ................... 555,300 28,605 31,208Canadian Imperial Bank of Commerce ...... 413,800 30,062 30,886IGM Financial Inc. ................... 597,400 24,699 26,835National Bank of Canada ............... 312,200 19,916 23,384Power Financial Corp. . ................ 1,143,000 31,971 34,759Royal Bank of Canada . ................ 468,600 24,014 28,711Sun Life Financial Inc. . ................ 153,300 4,334 4,752The Toronto-Dominion Bank ............. 402,000 29,895 33,949218,235 239,669Energy: 26.91%ARC Resources Ltd. . . ................ 911,100 21,863 24,964Baytex Energy Corp. . . ................ 447,600 18,213 16,870Bonavista Energy Corp. ................ 881,900 17,662 12,038Bonterra Energy Corp. . ................ 194,600 9,074 9,590Cenovus Energy Inc. . . ................ 236,000 7,042 7,071Crescent Point Energy Corp. ............ 738,900 27,012 26,342Enbridge Inc. . ...................... 419,900 12,393 18,488Freehold Royalties Ltd. ................ 347,500 7,287 8,170Keyera Corp. . ...................... 165,500 6,667 9,228Longview Oil Corp. ................... 591,250 4,784 2,944Mullen Group Ltd. .................... 799,000 14,339 18,121TransCanada Corp. ................... 640,800 25,466 28,996Zargon Oil & Gas Ltd. . ................ 716,500 13,627 4,507185,429 187,329Industrials: 7.78%Bird Construction Inc. . ................ 930,500 11,635 12,068Horizon North Logistics Inc. ............. 645,100 3,754 4,090Morneau Shepell Inc. . ................ 527,800 6,753 7,347Russel Metals Inc. ................... 895,900 21,456 21,278Wajax Corp. ........................ 297,400 10,241 9,39253,839 54,175Telecommunication Services: 7.50%BCE Inc. . . ........................ 505,500 17,815 21,797Rogers Communications Inc., B .......... 361,500 13,034 14,887Telus Corp. ........................ 505,900 11,327 15,53142,176 52,215Utilities: 6.24%Canadian Utilities Ltd., A ............... 522,600 13,758 19,200Fortis Inc. . ........................ 753,500 22,974 24,24836,732 43,448SharesAverageCost Fair Value(000s) (000s)Consumer Discretionary: 4.48%Thomson Reuters Corp. .......... 911,600 $ 29,261 $ 31,213Consumer Staples: 3.93%North West Company Inc. ......... 1,170,500 22,904 27,355Materials: 3.65%Canexus Corp. ................. 1,565,300 13,867 14,385Labrador Iron Ore Royalty Corp. ..... 375,600 12,083 10,98625,950 25,371Total Common Stocks: ............ 614,526 660,775Total Long-Term Investments: ....... 614,526 660,775Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 5.06%Royal Bank of Canada, Term Deposit,0.97%, 7/2/2013 . . . ........... 35,200,000 CAD 35,200 35,200Total Short-Term Securities: ........ 35,200 35,200Transaction costs (Note 2) ......... (565) —TOTAL INVESTMENTS: 99.98% ...... $649,161 695,975OTHER ASSETS, less liabilities:0.02% ....................... 174TOTAL NET ASSETS: 100.00% ...... $696,149The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 133

Bissett Canadian Dividend FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 695,975 $ 699,315CashCanadian 163 88ReceivablesInvestment securities sold — 695Capital units sold 1,373 256Dividends 4,261 4,603Other assets (Note 8) 118 118Total assets 701,890 705,075LiabilitiesPayablesInvestment securities purchased 2,330 1,070Capital units redeemed 417 236Management fees 586 558Accrued expenses 226 232Distributions to unitholders 2,182 —Total liabilities 5,741 2,096Net assets $ 696,149 $ 702,979Total net assets per series (000s)Series A $304,440 $297,018Series F 21,152 19,704Series O 370,557 386,257Number of units outstanding (Note 3)Series A 21,207,786 20,859,407Series F 1,329,411 1,255,470Series O 20,573,604 21,874,950Net assets per unit — CADSeries A $14.35 $14.24Series F 15.91 15.69Series O 18.02 17.66Cost of investments held (000s) $649,161 $638,556STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends $ 15,518 $ 15,024Interest 78 94Total investment income 15,596 15,118ExpensesManagement fees (Note 4(a)) 3,555 3,075Transfer agent fees (Note 4(c)) 704 645Custodian fees 20 15Legal fees — —Audit fees 11 11Unitholder reporting costs 27 32Independent review committee fees 1 1Registration fees 14 13Other expenses (Note 7) 207 127Total expenses 4,539 3,919Expenses waived/paid by Manager (Note 6) (780) (652)Net expenses 3,759 3,267Net investment income (loss) 11,837 11,851Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 20,947 12,540Net realized and/or unrealized foreign exchangegain (loss) 5 —Net change in unrealized appreciation(depreciation) in value of investments (13,945) (14,596)Transaction costs (Note 11) (271) (132)Net gain (loss) on investments 6,736 (2,188)Increase (decrease) in net assets from operations $ 18,573 $ 9,663Increase (decrease) in net assets from operationsper series (000s)Series A $5,798 $2,115Series F 481 199Series O 12,294 7,349Increase (decrease) in net assets from operationsper unitSeries A $0.28 $0.10Series F 0.38 0.18Series O 0.62 0.33The accompanying notes are an integral part of these financial statements.134 Franklin Templeton Investments Funds

Bissett Canadian Dividend FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 18,573 $ 9,663 $ 5,798 $ 2,115 $ 481 $ 199Distributions to unitholdersFrom net investment income (7,949) (9,546) (3,588) (3,989) (240) (252)From capital gains — — — — — —From return of capital — — — — — —(7,949) (9,546) (3,588) (3,989) (240) (252)Capital unit transactionsSubscriptions 95,907 141,900 34,439 40,503 2,934 3,277Reinvestments 5,525 6,892 2,419 2,732 147 165Redemptions (118,886) (156,479) (31,646) (28,520) (1,874) (1,589)(17,454) (7,687) 5,212 14,715 1,207 1,853Increase (decrease) in net assets for the period (6,830) (7,570) 7,422 12,841 1,448 1,800Net assets — beginning of period 702,979 647,405 297,018 258,884 19,704 15,665Net assets — end of period $ 696,149 $ 639,835 $ 304,440 $ 271,725 $ 21,152 $ 17,465Series O2013 2012Increase (decrease) in net assets from operations $ 12,294 $ 7,349Distributions to unitholdersFrom net investment income (4,121) (5,305)From capital gains — —From return of capital — —(4,121) (5,305)Capital unit transactionsSubscriptions 58,534 98,120Reinvestments 2,959 3,995Redemptions (85,366) (126,370)(23,873) (24,255)Increase (decrease) in net assets for the period (15,700) (22,211)Net assets — beginning of period 386,257 372,856Net assets — end of period $ 370,557 $ 350,645The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 135

Bissett Canadian Equity FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 97.22%COMMON STOCKS: 97.22%Financials: 33.84%Bank of Montreal ................... 784,105 $ 37,310 $ 47,885Bank of Nova Scotia ................ 1,328,175 44,935 74,643Brookfield Asset Management Inc., A .... 1,898,864 38,903 71,777Canadian Imperial Bank of Commerce . . . 1,043,430 63,533 77,882Home Capital Group Inc. ............. 485,135 14,976 26,877IGM Financial Inc. ................. 861,345 28,673 38,692Manulife Financial Corp. ............. 1,837,800 37,546 30,893Power Corp. of Canada ............... 2,023,100 52,523 57,072Power Financial Corp. ............... 1,863,340 43,970 56,664Royal Bank of Canada ............... 1,267,650 49,617 77,669Sun Life Financial Inc. .............. 822,022 20,116 25,483The Toronto-Dominion Bank ........... 815,550 44,621 68,873476,723 654,410Energy: 24.37%ARC Resources Ltd. ................ 368,000 8,555 10,083Baytex Energy Corp. ................ 399,400 16,703 15,053Bonavista Energy Corp. .............. 1,549,055 30,675 21,145Calfrac Well Services Ltd. ............ 495,000 11,076 15,003Canadian Energy Services & TechnologyCorp., A . . ..................... 1,115,600 11,752 18,128Canadian Natural Resources Ltd. . . . .... 1,907,180 46,879 56,548Cenovus Energy Inc. ................ 1,243,003 31,617 37,240Enbridge Inc. ..................... 867,700 21,711 38,205Kelt Exploration Ltd. ................ 3,053,480 16,678 22,596Keyera Corp. ..................... 277,200 12,481 15,457Mullen Group Ltd. ................. 1,029,775 13,712 23,355Nuvista Energy Ltd ................. 7,491,865 79,336 53,492Peyto Exploration & Development Corp. . . 346,450 4,643 10,491Savanna Energy Services Corp ......... 4,700,822 37,015 31,731Secure Energy Services Inc. .......... 422,660 3,776 5,685Suncor Energy Inc. ................. 654,259 14,203 20,275Tourmaline Oil Corp. ................ 375,260 12,507 15,761TransCanada Corp. ................. 1,349,900 51,054 61,083424,373 471,331Industrials: 10.22%Canadian National Railway Co. ........ 831,500 32,119 84,821Canadian Pacific Railway Ltd. ......... 257,050 22,056 32,774Russel Metals Inc. ................. 800,450 15,649 19,011SNC-Lavalin Group Inc., A ............ 1,376,900 62,607 61,107132,431 197,713SharesAverageCost Fair Value(000s) (000s)Consumer Staples: 7.79%Alimentation Couche-Tard Inc., B . . 445,425 $ 6,606 $ 27,438Metro Inc., A ............... 813,370 37,314 57,261Saputo Inc. ................ 572,800 26,588 27,678Shoppers Drug Mart Corp. ..... 792,900 32,947 38,384103,455 150,761Materials: 7.72%Agrium Inc. ................ 244,550 16,881 22,283Franco-Nevada Corp. ......... 987,400 51,735 37,097Major Drilling Group InternationalInc. ................... 4,042,555 36,379 28,864Potash Corp. of SaskatchewanInc. ................... 1,073,600 46,128 43,051Silver Wheaton Corp. ......... 877,000 27,379 18,066178,502 149,361Consumer Discretionary: 7.20%Dollarama Inc. .............. 380,500 16,545 27,967Gildan Activewear Inc. ........ 767,264 15,627 32,440Thomson Reuters Corp. ....... 2,303,000 57,914 78,85490,086 139,261Telecommunication Services: 2.87%Rogers CommunicationsInc., B . . . ............... 739,987 24,331 30,473Telus Corp. ................ 814,300 13,260 24,99937,591 55,472Information Technology: 2.42%MacDonald, Dettwiler andAssociates Ltd. ........... 672,860 23,899 46,757Utilities: 0.79%ATCO Ltd., I ................ 351,200 12,335 15,260Total Common Stocks: ......... 1,479,395 1,880,326Total Long-Term Investments: .... 1,479,395 1,880,326Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 2.59%Royal Bank of Canada, TermDeposit, 0.97%, 7/2/2013 .... 50,000,000 CAD 50,000 50,000Total Short-Term Securities: ..... 50,000 50,000Transaction costs (Note 2) ........ (1,871) —TOTAL INVESTMENTS: 99.81% ... $1,527,524 1,930,326OTHER ASSETS, less liabilities:0.19% .................... 3,721TOTAL NET ASSETS: 100.00% ... $1,934,047The accompanying notes are an integral part of these financial statements.136 Franklin Templeton Investments Funds

Bissett Canadian Equity FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 1,930,326 $ 1,855,623CashCanadian 998 999Foreign 1 —ReceivablesInvestment securities sold 850 —Capital units sold 1,478 447Dividends 5,636 5,845Other assets (Note 8) 161 154Total assets 1,939,450 1,863,068LiabilitiesPayablesInvestment securities purchased — 85Capital units redeemed 3,953 359Management fees 997 971Accrued expenses 453 496Total liabilities 5,403 1,911Net assets $ 1,934,047 $ 1,861,157Total net assets per series (000s)Series A $420,028 $416,222Series F 239,130 234,438Series I 1,209 1,071Series O 1,273,680 1,209,426Number of units outstanding (Note 3)Series A 5,348,566 5,568,276Series F 2,610,029 2,705,621Series I 14,212 13,269Series O 11,830,337 11,948,525Net assets per unit — CADSeries A $78.53 $74.74Series F 91.62 86.65Series I 85.09 80.74Series O 107.66 101.22Cost of investments held (000s) $1,527,524 $1,470,721STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends $ 30,399 $ 27,326Interest 232 645Total investment income 30,631 27,971ExpensesManagement fees (Note 4(a)) 6,086 5,906Transfer agent fees (Note 4(c)) 1,182 1,317Custodian fees 49 56Legal fees — 1Audit fees 14 13Unitholder reporting costs 54 43Independent review committee fees 1 1Registration fees 21 20Other expenses (Note 7) 494 439Total expenses 7,901 7,796Expenses waived/paid by Manager (Note 6) (1,166) (1,227)Net expenses 6,735 6,569Net investment income (loss) 23,896 21,402Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 70,426 51,710Net realized and/or unrealized foreign exchangegain (loss) 14 —Net change in unrealized appreciation(depreciation) in value of investments 17,900 (10,294)Transaction costs (Note 11) (440) (368)Net gain (loss) on investments 87,900 41,048Increase (decrease) in net assets from operations $ 111,796 $ 62,450Increase (decrease) in net assets from operationsper series (000s)Series A $21,041 $10,919Series F 13,408 6,905Series I 56 23Series O 77,291 44,603Increase (decrease) in net assets from operationsper unitSeries A $3.85 $1.77Series F 5.03 2.42Series I 3.62 1.84Series O 6.50 3.45The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 137

Bissett Canadian Equity FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 111,796 $ 62,450 $ 21,041 $ 10,919 $ 13,408 $ 6,905Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 203,512 120,979 28,640 15,555 7,162 5,117Reinvestments — — — — — —Redemptions (242,418) (323,188) (45,875) (57,616) (15,878) (17,355)(38,906) (202,209) (17,235) (42,061) (8,716) (12,238)Increase (decrease) in net assets for the period 72,890 (139,759) 3,806 (31,142) 4,692 (5,333)Net assets — beginning of period 1,861,157 1,897,286 416,222 434,401 234,438 222,053Net assets — end of period $ 1,934,047 $ 1,757,527 $ 420,028 $ 403,259 $ 239,130 $ 216,720Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ 56 $ 23 $ 77,291 $ 44,603Distributions to unitholdersFrom net investment income — — — —From capital gains — — — —From return of capital — — — —— — — —Capital unit transactionsSubscriptions 318 126 167,392 100,181Reinvestments — — — —Redemptions (236) (53) (180,429) (248,164)82 73 (13,037) (147,983)Increase (decrease) in net assets for the period 138 96 64,254 (103,380)Net assets — beginning of period 1,071 854 1,209,426 1,239,978Net assets — end of period $ 1,209 $ 950 $ 1,273,680 $ 1,136,598The accompanying notes are an integral part of these financial statements.138 Franklin Templeton Investments Funds

Bissett Canadian High Dividend FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 99.14%COMMON STOCKS: 99.14%Energy: 41.42%Argent Energy Trust . ................. 2,406,200 $ 23,118 $ 24,591Baytex Energy Corp. . ................. 743,900 29,406 28,038Bonavista Energy Corp. ............... 1,353,100 24,811 18,470Bonterra Energy Corp. ................ 427,300 20,000 21,057Canadian Energy Services & TechnologyCorp., A . . . ..................... 474,400 4,652 7,709Canyon Services Group Inc. . . . . . ....... 960,000 9,620 11,443Cathedral Energy Services Ltd. . . . . . ..... 1,232,600 5,015 5,682Crescent Point Energy Corp. . . . . . ....... 1,020,600 38,675 36,384Eagle Energy Trust ................... 2,615,900 24,303 19,881Freehold Royalties Ltd. ................ 1,112,700 17,973 26,160Parallel Energy Trust ................. 3,287,400 18,040 12,196Pembina Pipeline Corp. ............... 498,850 11,669 16,033PHX Energy Services Corp. ............. 2,127,700 22,235 22,554Twin Butte Energy Ltd. ................ 13,293,250 30,575 30,176Veresen Inc. ....................... 2,262,000 28,898 28,207Zargon Oil & Gas Ltd. ................. 1,775,400 31,494 11,167340,484 319,748Financials: 22.49%Bank of Montreal .................... 294,800 17,156 18,003Calloway Real Estate Investment Trust . . . . . 182,200 3,693 4,657Canadian Imperial Bank of Commerce . . . . . 292,600 21,653 21,840Choice Properties Real Estate InvestmentTrust .......................... 860,600 8,606 8,606Cominar Real Estate Investment Trust . . . . . 1,262,300 23,652 26,193Crombie Real Estate Investment Trust . . . . . 1,185,900 17,655 16,164Davis & Henderson Income Corp. . . . ..... 1,168,400 19,234 26,312DirectCash Payments Inc. ............. 402,700 6,803 9,657Northern Property Real Estate InvestmentTrust .......................... 342,900 6,621 9,388Power Corp. of Canada ................ 72,600 1,708 2,048Power Financial Corp. ................ 908,000 23,518 27,612RioCan Real Estate Investment Trust . . . . . . 122,600 2,001 3,096152,300 173,576Industrials: 17.71%Bird Construction Inc. ................ 544,300 6,159 7,060Genivar Inc. ....................... 1,201,300 25,544 28,735Morneau Shepell Inc. ................. 2,185,200 23,342 30,418New Flyer Industries Inc. .............. 3,225,100 23,120 35,347The Churchill Corp., A ................ 26,000 210 216Vicwest Inc. . . . ..................... 770,800 9,484 9,119Wajax Corp. . . . ..................... 817,400 33,446 25,813121,305 136,708SharesAverageCost Fair Value(000s) (000s)Health Care: 7.86%CML Healthcare Inc. ............. 2,731,200 $ 26,954 $ 28,814Medical Facilities Corp. ........... 2,104,600 22,418 31,88549,372 60,699Materials: 4.58%Canexus Corp. . . . .............. 3,115,200 20,603 28,629Labrador Iron Ore Royalty Corp. ..... 230,300 7,413 6,73628,016 35,365Consumer Discretionary: 3.48%A&W Revenue RoyaltiesIncome Fund ................ 179,800 3,952 3,794Boston Pizza RoyaltiesIncome Fund ................ 733,300 8,947 16,213The Keg Royalties Income Fund ..... 483,900 5,184 6,86218,083 26,869Telecommunication Services: 1.12%Bell Aliant Inc. . . . .............. 305,000 8,456 8,604Consumer Staples: 0.48%North West Company Inc. ......... 159,800 2,882 3,735Total Common Stocks: ............ 720,898 765,304Total Long-Term Investments: ....... 720,898 765,304Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 3.17%Royal Bank of Canada, Term Deposit,0.97%, 7/2/2013 ............. 24,500,000 CAD 24,500 24,500Total Short-Term Securities: ........ 24,500 24,500Transaction costs (Note 2) ........... (1,421) —TOTAL INVESTMENTS: 102.31% ..... $743,977 789,804OTHER ASSETS, less liabilities:(2.31%) ...................... (17,858)TOTAL NET ASSETS: 100.00% ...... $771,946The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 139

Bissett Canadian High Dividend FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 789,804 $ 701,116CashCanadian 122 89ReceivablesInvestment securities sold 1,214 —Capital units sold 785 687Dividends and interest 5,197 4,987Other assets (Note 8) 80 87Total assets 797,202 706,966LiabilitiesPayablesInvestment securities purchased 17,521 159Capital units redeemed 2,673 239Management fees 982 872Accrued expenses 279 292Distributions to unitholders 3,801 —Total liabilities 25,256 1,562Net assets $ 771,946 $ 705,404Total net assets per series (000s)Series A $493,358 $437,492Series F 73,349 66,991Series I 1,357 2,232Series O 203,882 198,689Number of units outstanding (Note 3)Series A 32,390,798 30,078,889Series F 4,204,186 4,043,314Series I 83,048 143,610Series O 9,871,078 10,202,434Net assets per unit — CADSeries A $15.23 $14.54Series F 17.45 16.56Series I 16.34 15.55Series O 20.66 19.47Cost of investments held (000s) $743,977 $675,952STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends $ 19,931 $ 17,764Interest 71 116Total investment income 20,002 17,880ExpensesManagement fees (Note 4(a)) 5,795 4,405Transfer agent fees (Note 4(c)) 855 642Custodian fees 26 27Legal fees — 1Audit fees 11 11Unitholder reporting costs 31 23Independent review committee fees 1 1Registration fees 17 15Other expenses (Note 7) 255 222Total expenses 6,991 5,347Expenses waived/paid by Manager (Note 6) (568) (443)Net expenses 6,423 4,904Net investment income (loss) 13,579 12,976Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 21,492 20,120Net change in unrealized appreciation(depreciation) in value of investments 20,663 (24,011)Transaction costs (Note 11) (452) (634)Net gain (loss) on investments 41,703 (4,525)Increase (decrease) in net assets from operations $ 55,282 $ 8,451Increase (decrease) in net assets from operationsper series (000s)Series A $32,665 $3,463Series F 5,335 993Series I 134 73Series O 17,148 3,922Increase (decrease) in net assets from operationsper unitSeries A $1.03 $0.13Series F 1.29 0.28Series I 1.19 0.91Series O 1.77 0.36The accompanying notes are an integral part of these financial statements.140 Franklin Templeton Investments Funds

Bissett Canadian High Dividend FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 55,282 $ 8,451 $ 32,665 $ 3,463 $ 5,335 $ 993Distributions to unitholdersFrom net investment income (16,841) (15,704) (10,785) (9,018) (1,613) (1,461)From capital gains — — — — — —From return of capital (1,520) — (972) — (144) —(18,361) (15,704) (11,757) (9,018) (1,757) (1,461)Capital unit transactionsSubscriptions 116,857 126,861 69,633 70,438 6,608 5,136Reinvestments 11,666 9,818 7,132 5,118 1,014 814Redemptions (98,902) (68,977) (41,807) (34,079) (4,842) (2,459)29,621 67,702 34,958 41,477 2,780 3,491Increase (decrease) in net assets for the period 66,542 60,449 55,866 35,922 6,358 3,023Net assets — beginning of period 705,404 566,510 437,492 329,682 66,991 54,770Net assets — end of period $ 771,946 $ 626,959 $ 493,358 $ 365,604 $ 73,349 $ 57,793Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ 134 $ 73 $ 17,148 $ 3,922Distributions to unitholdersFrom net investment income (42) (29) (4,401) (5,196)From capital gains — — — —From return of capital (3) — (401) —(45) (29) (4,802) (5,196)Capital unit transactionsSubscriptions 647 305 39,969 50,982Reinvestments 32 27 3,488 3,859Redemptions (1,643) (1,482) (50,610) (30,957)(964) (1,150) (7,153) 23,884Increase (decrease) in net assets for the period (875) (1,106) 5,193 22,610Net assets — beginning of period 2,232 1,414 198,689 180,644Net assets — end of period $ 1,357 $ 308 $ 203,882 $ 203,254The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 141

Bissett Canadian Short Term Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)LONG-TERM INVESTMENTS: 99.56%BONDS: 99.56%Canada: 80.80%Agrium Inc., Senior Note, 3.15%, 10/1/2022 .................................................. 1,900,000 USD $ 1,914 $ 1,893Air Canada 2013-1 Class A Pass Through Trust, First Lien, 4.125%, 11/15/2026 ..................... 1,465,000 USD 1,497 1,529AltaLink Investments LP, Senior Note, 13-1, 3.265%, 6/5/2020 ................................... 3,000,000 CAD 3,000 2,887Bank of Montreal3.103%, 3/10/2016 .................................................................... 2,000,000 CAD 2,000 2,053Senior Note, Floating Rate Note, 1/9/2015 .................................................. 5,000,000 CAD 5,006 5,002Senior Note, Floating Rate Note, 3/23/2015 ................................................. 5,000,000 CAD 5,000 5,003Senior Note, 3.49%, 6/10/2016 .......................................................... 2,013,000 CAD 2,049 2,088Bank of Nova Scotia2.898% to 8/3/2017, Floating Rate Note thereafter, 8/3/2022 ................................... 2,200,000 CAD 2,206 2,2073.036% to 10/17/2019, Floating Rate Note thereafter, 10/18/2024 ............................... 2,305,000 CAD 2,305 2,272Senior Note, 2.242%, 3/22/2018 ......................................................... 4,555,000 CAD 4,555 4,462Subordinated Bond, 4.94% to 4/15/2014, Floating Rate Note thereafter, 4/15/2019 ................. 2,000,000 CAD 2,073 2,046Subordinated Note, 6.00% to 10/3/2013, Floating Rate Note thereafter, 10/3/2018 .................. 3,000,000 CAD 3,117 3,033bcIMC Realty Corp.2.96%, 3/7/2019 ...................................................................... 2,411,000 CAD 2,422 2,406Senior Note, 4.65%, 2/10/2015 .......................................................... 2,500,000 CAD 2,652 2,609Bell Aliant Regional Communications LPSenior Note, 5.41%, 9/26/2016 .......................................................... 1,750,000 CAD 1,906 1,897Senior Note, 3.54%, 6/12/2020 .......................................................... 2,500,000 CAD 2,500 2,458BMO Capital Trust, D, Junior Subordinated Bond, 5.474% to 12/31/2014, Floating Rate Note thereafter,Perpetual ............................................................................ 6,000,000 CAD 6,408 6,314BMW Canada Inc., Senior Note, D, 2.64%, 8/10/2015 .......................................... 3,910,000 CAD 3,910 3,967Bow Centre Street LP, Secured Note, 3.797%, 6/13/2023 ........................................ 1,585,000 CAD 1,585 1,538British Columbia Municipal Finance Authority4.90%, 12/2/2014 ..................................................................... 7,150,000 CAD 7,610 7,4905.10%, 11/20/2018 .................................................................... 3,418,000 CAD 3,964 3,839Caisse Centrale Desjardins du Quebec, Senior Note, 2.281%, 10/17/2016 .......................... 2,388,000 CAD 2,388 2,382Calloway Real Estate Investment Trust, Senior Bond, 5.37%, 10/12/2016 ........................... 2,000,000 CAD 2,181 2,155Cameco Corp., Senior Bond, D, 5.67%, 9/2/2019 .............................................. 3,310,000 CAD 3,808 3,639Canada Housing TrustSecured Bond, 2.75%, 6/15/2016 ........................................................ 8,687,000 CAD 8,992 8,970Secured Note, 2.05%, 6/15/2017 ......................................................... 7,895,000 CAD 8,055 7,938Senior Secured Bond, Floating Rate Note, 3/15/2017 ......................................... 2,075,000 CAD 2,090 2,094Canadian Credit Card Trust, 13-1, 1.596%, 9/24/2015 .......................................... 3,000,000 CAD 3,000 2,979Canadian Imperial Bank of Commerce2.35%, 10/18/2017 .................................................................... 1,114,000 CAD 1,113 1,1022.22%, 3/7/2018 ...................................................................... 2,000,000 CAD 1,999 1,958Canadian Natural Resources Ltd., 2.89%, 8/14/2020 ........................................... 2,052,000 CAD 2,052 1,994Canadian Wheat Board, 4.75%, 12/1/2014 ................................................... 10,000,000 CAD 10,792 10,479Capital Desjardins Inc., Senior Note, 5.756% to 4/1/2014, Floating Rate Note thereafter, 4/1/2019 ....... 5,000,000 CAD 5,343 5,136CDP Financial Inc.Senior Note, Floating Rate Note, 7/15/2015 ................................................. 4,131,000 CAD 4,141 4,150Senior Note, 4.60%, 7/15/2020 .......................................................... 4,265,000 CAD 4,851 4,684City of Montreal2.50%, 12/1/2016 ..................................................................... 3,000,000 CAD 3,002 3,0305.00%, 12/1/2018 ..................................................................... 5,000,000 CAD 5,563 5,538The accompanying notes are an integral part of these financial statements.142 Franklin Templeton Investments Funds

Bissett Canadian Short Term Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 80.80% (Continued)City of Toronto Canada5.30%, 5/21/2014 ..................................................................... 3,500,000 CAD $ 3,795 $ 3,6214.95%, 6/27/2018 ..................................................................... 5,000,000 CAD 5,693 5,5503.50%, 12/6/2021 ..................................................................... 5,388,000 CAD 5,477 5,417Cogeco Cable Inc., Senior Secured Note, 5.95%, 6/9/2014 ....................................... 4,319,000 CAD 4,555 4,472Eagle Credit Card Trust, Secured Note, 101A, 2.782%, 12/17/2013 ................................ 3,000,000 CAD 3,000 3,020Emera Inc., Senior Note, 2.96%, 12/13/2016 .................................................. 968,000 CAD 968 984Enbridge Inc.Floating Rate Note, 8/19/2015 ........................................................... 6,890,000 CAD 6,942 6,954Senior Note, Floating Rate Note, 11/25/2013 ................................................ 750,000 CAD 750 750Enbridge Income Fund Holdings Inc.3.94%, 1/13/2023 ..................................................................... 695,000 CAD 695 683Senior Note, Floating Rate Note, 11/28/2014 ................................................ 1,250,000 CAD 1,254 1,249Senior Note, 2.92%, 12/14/2017 ......................................................... 1,592,000 CAD 1,592 1,584Fairfax Financial Holdings Ltd., 5.84%, 10/14/2022 ............................................ 2,000,000 CAD 2,104 2,062Financement Quebec, Floating Rate Note, 6/1/2018 ............................................ 16,500,000 CAD 16,643 16,622Finning International Inc, 3.232%, 7/3/2020 .................................................. 1,200,000 CAD 1,200 1,180First Capital Realty Inc.Senior Note, 5.85%, 1/31/2017 ........................................................... 2,000,000 CAD 2,236 2,199Senior Note, 5.48%, 7/30/2019 ........................................................... 1,000,000 CAD 1,140 1,097Flint Energy Services Ltd., 7.50%, 6/15/2019 .................................................. 1,975,000 CAD 2,198 2,153Ford Auto Securitization Trust2012-R1, A1, 1.748%, 4/15/2014 ........................................................ 31,289 CAD 31 312013-R1, A1, 1.485%, 12/15/2014 ....................................................... 1,128,679 CAD 1,129 1,128Ford Floorplan Auto Securitization Trust, 2.063%, 6/15/2016 ..................................... 3,000,000 CAD 3,000 2,989Great-West Lifeco Finance Delaware, 5.691% to 6/21/2017, Floating Rate Note thereafter, 6/21/2067 ..... 7,350,000 CAD 7,793 8,068Home Capital Group Inc., 5.20%, 5/4/2016 ................................................... 1,133,000 CAD 1,133 1,170Honda Canada Finance Inc., Senior Note, Floating Rate Note, 2/23/2015 ........................... 5,100,000 CAD 5,129 5,151HSBC Bank Canada2.572%, 11/23/2015 ................................................................... 3,550,000 CAD 3,550 3,5923.558%, 10/4/2017 .................................................................... 4,100,000 CAD 4,198 4,238Senior Note, Floating Rate Note, 1/21/2016 ................................................. 1,000,000 CAD 1,001 1,002Senior Note, 2.938%, 1/14/2020 ......................................................... 928,000 CAD 928 912Subordinated Note, 4.94% to 3/16/2016, Floating Rate Note thereafter, 3/16/2021 .................. 3,500,000 CAD 3,753 3,706Husky Energy Inc., Senior Note, 3.75%, 3/12/2015 ............................................. 723,000 CAD 724 745Inter Pipeline Fund, Senior Note, 3.839%, 7/30/2018 ........................................... 1,235,000 CAD 1,235 1,288Manitoba Telecom Services Inc.Senior Note, 6.15%, 6/10/2014 ........................................................... 1,500,000 CAD 1,595 1,562Senior Note, 6.65%, 5/11/2016 ........................................................... 1,500,000 CAD 1,703 1,665Senior Note, 4.59%, 10/1/2018 ........................................................... 1,774,000 CAD 1,875 1,884Manufacturers Life Insurance Co.Subordinated Note, 4.165% to 6/1/17, Floating Rate Note thereafter, 6/1/2022 ..................... 1,516,000 CAD 1,533 1,581Subordinated Note, 2.819% to 2/26/18, Floating Rate Note thereafter, 2/26/2023 ................... 3,000,000 CAD 3,000 2,946Manulife Bank of CanadaSenior Note, Floating Rate Note, 12/3/2014 ................................................. 2,150,000 CAD 2,150 2,154Senior Note, Floating Rate Note, 3/14/2016 ................................................. 3,000,000 CAD 3,000 2,995Manulife Finance Delaware, Senior Note, 4.448% to 12/15/2016, Floating Rate Notethereafter, 12/15/2026 .................................................................. 1,385,000 CAD 1,470 1,452The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 143

Bissett Canadian Short Term Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 80.80% (Continued)Manulife Financial Corp.Senior Note, 4.896%, 6/2/2014 ........................................................... 4,000,000 CAD $ 4,172 $ 4,112Senior Note, 4.079%, 8/20/2015 ......................................................... 3,000,000 CAD 3,113 3,126Master Credit Card TrustSecured Note, 12-1, 2.626%, 1/21/2017 ................................................... 1,655,000 CAD 1,655 1,674Secured Note, 3.876%, 1/21/2017 ........................................................ 1,100,000 CAD 1,082 1,109Merrill Lynch Financial Asset Inc., 2004-CA12, A1, 4.743%, 3/12/2036 ............................ 38,903 CAD 39 39N-45 First CMBS Issuer Corp.2003-2, A2, 5.667%, 11/15/2020 ......................................................... 475,000 CAD 486 481Subordinated Bond, 2003-2, B, 5.758%, 11/15/2020 ......................................... 3,085,000 CAD 3,174 3,180Subordinated Bond, 2003-2, C, 6.224%, 11/15/2020 ......................................... 1,276,000 CAD 1,316 1,291National Bank of CanadaFloating Rate Note, Subordinated Note, 12/22/2019 .......................................... 5,000,000 CAD 5,281 5,211Subordinated Note, 5.55% to 11/15/2013, Floating Rate Note thereafter, 11/15/2018 ................ 2,000,000 CAD 2,055 2,029National Housing Association2.60%, 12/1/2014 ..................................................................... 6,427,515 CAD 6,368 6,5212.15%, 10/1/2015 ..................................................................... 4,551,655 CAD 4,409 4,5942.30%, 6/1/2016 ...................................................................... 1,423,660 CAD 1,411 1,4331.95%, 6/1/2017 ...................................................................... 4,670,757 CAD 4,694 4,6091.70%, 8/1/2017 ...................................................................... 1,340,847 CAD 1,318 1,3051.95%, 9/1/2017 ...................................................................... 1,917,247 CAD 1,905 1,8801.70%, 12/1/2017 ..................................................................... 2,313,758 CAD 2,285 2,2441.40%, 3/1/2018 ...................................................................... 3,469,476 CAD 3,404 3,3691.65%, 3/1/2018 ...................................................................... 3,963,305 CAD 3,937 3,8781.77%, 3/1/2018 ...................................................................... 1,471,143 CAD 1,464 1,421Floating Rate Note, 3/1/2017 ............................................................. 10,715,840 CAD 10,656 10,519NBC Asset Trust, Junior Subordinated Bond, 7.235%, Perpetual .................................. 1,775,000 CAD 2,164 2,097OMERS Realty Corp., 4.74%, 6/4/2018 ...................................................... 7,000,000 CAD 7,876 7,680Omers Realty Corp., Senior Note, 2.498%, 6/5/2018 ............................................ 2,000,000 CAD 2,000 1,975Ontario Strategic Infrastructure Finance, 4.60%, 6/1/2015 ....................................... 10,494,000 CAD 11,142 11,060OPB Finance Trust, Senior Bond, A, 3.89%, 7/4/2042 .......................................... 890,000 CAD 889 823Province of OntarioFloating Rate Note, 9/22/2017 ........................................................... 3,365,000 CAD 3,370 3,366Floating Rate Note, 11/23/2017 .......................................................... 49,146,000 CAD 49,211 49,412Province of Quebec, 9.375%, 1/16/2023 ..................................................... 2,000,000 CAD 3,127 2,970Province of Saskatchewan, Senior Note, 5.50%, 6/17/2019 ...................................... 4,435,000 CAD 5,195 5,111PSP Capital Inc., Senior Note, 2.26%, 2/16/2017 .............................................. 13,393,000 CAD 13,511 13,450RBC Capital Trust4.87% to 12/31/2015, Floating Rate Note thereafter, Perpetual .................................. 3,339,000 CAD 3,557 3,5445.812% to 12/31/2013, Floating Rate Note thereafter, Perpetual ................................ 10,373,000 CAD 10,836 10,583Real Estate Asset Liquidity Trust, 2004-1, C, 5.50%, 10/12/2036 .................................. 825,000 CAD 860 848Rogers Communications Inc., Senior Note, 5.38%, 11/4/2019 .................................... 4,643,000 CAD 5,175 5,123Royal Bank of Canada5.95%, 6/18/2014 ..................................................................... 5,084,000 CAD 5,547 5,282Senior Note, 3.36%, 1/11/2016 ........................................................... 3,000,000 CAD 2,988 3,097Senior Note, 2.68%, 12/8/2016 ........................................................... 2,164,000 CAD 2,164 2,187Senior Note, 2.58%, 4/13/2017 ........................................................... 3,350,000 CAD 3,349 3,361Senior Note, 2.26%, 3/12/2018 ........................................................... 3,000,000 CAD 2,999 2,937The accompanying notes are an integral part of these financial statements.144 Franklin Templeton Investments Funds

Bissett Canadian Short Term Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 80.80% (Continued)Scotiabank Capital Trust II, Subordinated Bond, 6.282% to 6/30/2013, Floating Rate Note thereafter,Perpetual ............................................................................. 8,000,000 CAD $ 8,200 $ 8,002Shoppers Drug Mart Corp.5.19%, 1/20/2014 ...................................................................... 1,000,000 CAD 1,028 1,018Senior Note, 2.01%, 5/24/2016 ........................................................... 2,975,000 CAD 2,974 2,958Sun Life Capital Trust, Senior Bond, 5.863%, 12/31/2108 ........................................ 4,500,000 CAD 5,096 5,059Sun Life Financial Inc.Senior Bond, 4.95% to 6/1/2016, Floating Rate Note thereafter, 6/1/2036 .......................... 7,550,000 CAD 7,822 7,988Subordinated Note, 7.90% to 3/31/2014, Floating Rate Note thereafter, 3/31/2019 ................... 3,000,000 CAD 3,141 3,116Suncor Energy Inc., 5.80%, 5/22/2018 ....................................................... 3,000,000 CAD 3,501 3,390The Toronto-Dominion Bank, 4.97% to 10/30/2015, Floating Rate Note thereafter, 10/30/2104 ........... 7,600,000 CAD 8,037 8,079TransCanada PipeLines Ltd., Senior Bond, 9.45%, 3/20/2018 ..................................... 670,000 CAD 890 858Union Gas Ltd., Senior Bond, 7.90%, 2/24/2014 ................................................ 1,240,000 CAD 1,347 1,289Wells Fargo Financial Canada Corp., 3.97%, 11/3/2014 .......................................... 3,700,000 CAD 3,780 3,806Westcoast Energy Inc., Senior Note, 3.28%, 1/15/2016 ........................................... 3,133,000 CAD 3,130 3,226496,351 492,797United States: 13.76%American Express Canada Credit Corp.Senior Note, 2.31%, 3/29/2018 ........................................................... 4,000,000 CAD 3,983 3,915Senior Note, Floating Rate Note, 6/6/2014 ................................................... 1,050,000 CAD 1,061 1,057Aon Finance NS1 ULC, Senior Note, 4.76%, 3/8/2018 ........................................... 2,500,000 CAD 2,677 2,648BAC Canada Finance Co., Senior Note, Floating Rate Note, 2/21/2014 .............................. 4,000,000 CAD 4,000 4,005Bank of America Corp., Subordinated Note, Floating Rate Note, 6/1/2016 ............................ 500,000 CAD 480 483Canada Safeway Ltd., Senior Note, 3.00%, 3/31/2014 ........................................... 4,800,000 CAD 4,846 4,826Citigroup Finance Canada Inc.Senior Bond, 4.75%, 3/17/2014 ........................................................... 2,000,000 CAD 2,063 2,042Senior Note, 6.75%, 9/22/2014 ........................................................... 3,000,000 CAD 3,211 3,172Energy Transfer Partners LP, Senior Bond, 3.60%, 2/1/2023 ...................................... 299,000 USD 300 294Ford Credit Canada Ltd.Senior Note, 4.875%, 3/17/2014 .......................................................... 3,455,000 CAD 3,554 3,524Senior Note, 7.50%, 8/18/2015 ........................................................... 1,000,000 CAD 1,115 1,095Senior Note, 3.32%, 12/19/2017 .......................................................... 830,000 CAD 830 819GE Capital Canada Funding Co.4.40%, 2/8/2018 ....................................................................... 4,000,000 CAD 4,248 4,267Senior Note, 2.95%, 2/10/2014 ........................................................... 3,000,000 CAD 3,014 3,028Senior Note, 5.53%, 8/17/2017 ........................................................... 3,000,000 CAD 3,418 3,331Senior Note, Floating Rate Note, 1/26/2015 .................................................. 2,700,000 CAD 2,700 2,729General Electric Capital Corp., B, 6.25% to 12/15/2049, Floating Rate Note thereafter, Perpetual ......... 362,000 USD 370 404JPMorgan Chase & Co., Senior Note, 2.92%, 9/19/2017 .......................................... 2,562,000 CAD 2,565 2,534Merrill Lynch Canada Finance Co., Senior Note, 5.00%, 2/18/2014 ................................. 2,970,000 CAD 3,060 3,030Metropolitan Life Global Funding I2.624%, 4/10/2015 ..................................................................... 2,900,000 CAD 2,900 2,925Floating Rate Note, 6/17/2014 ............................................................ 3,000,000 CAD 3,000 3,015Floating Rate Note, 9/25/2017 ............................................................ 3,000,000 CAD 3,000 2,994Morgan Stanley, Senior Note, 4.85%, 2/3/2016 ................................................. 1,109,000 CAD 1,108 1,158New York Life Global Funding, 4.30%, 3/19/2014 ............................................... 2,101,000 CAD 2,208 2,155Pricoa Global Funding I, Senior Secured Note, 4.95%, 5/29/2014 .................................. 8,000,000 CAD 8,309 8,251Safeway Inc., Senior Bond, 3.95%, 8/15/2020 .................................................. 1,627,000 USD 1,561 1,677The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 145

Bissett Canadian Short Term Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)United States: 13.76% (Continued)The Goldman Sachs Group Inc.Senior Note, 4.10%, 11/3/2015 .......................................................... 2,000,000 CAD $ 2,087 $ 2,057Senior Note, 5.25%, 6/1/2016 ........................................................... 3,048,000 CAD 3,267 3,228Senior Note, 3.375%, 2/1/2018 .......................................................... 553,000 CAD 552 552Wells Fargo Financial Canada Corp.Senior Note, 2.774%, 2/9/2017 .......................................................... 2,560,000 CAD 2,560 2,582Senior Note, 2.944%, 7/25/2019 ......................................................... 1,553,000 CAD 1,549 1,538WTH Car Rental ULC4.143%, 3/20/2015 ................................................................... 2,500,000 CAD 2,500 2,5802.619%, 12/20/2016 .................................................................. 2,000,000 CAD 2,000 2,007FairValue(000s)84,096 83,922Germany: 2.29%Daimler Canada Finance Inc., Senior Note, Floating Rate Note, 9/12/2014 .......................... 9,000,000 CAD 9,047 8,981VW Credit Canada Inc., Senior Note, 2.20%, 10/11/2016 ........................................ 5,000,000 CAD 4,995 4,97514,042 13,956United Kingdom: 1.76%BP Capital Markets PLC, 2.744%, 2/24/2017 ................................................. 3,944,000 CAD 3,987 3,972British Airways PLC, Senior Secured Bond, 4.625%, 6/20/2024 .................................. 1,860,000 USD 1,954 1,943Heathrow Funding Ltd., Secured Note, 4.00%, 7/3/2019 ........................................ 851,000 CAD 846 871HSBC Bank Canada, 2.901%, 1/13/2017 .................................................... 1,880,000 CAD 1,880 1,910Rio Tinto Finance USA PLC, Senior Note, 2.25%, 12/14/2018 .................................... 2,000,000 USD 2,015 2,04010,682 10,736Netherlands: 0.30%Bank Nederlandse Gemeenten NV, Senior Bond, 4.55%, 2/15/2019 ............................... 1,740,000 CAD 1,915 1,863South Korea: 0.30%Korea Gas Corp., Senior Note, 4.58%, 5/12/2016 .............................................. 1,763,000 CAD 1,826 1,829Australia: 0.23%BHP Billiton Finance Ltd., 3.23%, 5/15/2023 ................................................. 1,500,000 CAD 1,475 1,404France: 0.12%EDF SASubordinated Note, 5.25% to 1/29/2023, Floating Rate Note thereafter, Perpetual .................. 24,000 USD 24 24Subordinated Note, Regs, 5.25% to 1/29/2023, Floating Rate Note thereafter, Perpetual ............. 703,000 USD 690 707714 731Total Bonds: ............................................................................ 611,101 607,238Total Long-Term Investments: .............................................................. 611,101 607,238SHORT-TERM SECURITIES: 2.13%Mexico Treasury Bill, 3.94%, 4/3/2014 2,017,019 MXN 1,525 1,587Royal Bank of Canada, Term Deposit, 0.97%, 7/2/2013 ......................................... 11,400,000 CAD 11,400 11,400Total Short-Term Securities: ............................................................... 12,925 12,987TOTAL INVESTMENTS: 101.69% ........................................................... $624,026 620,225NET UNREALIZED LOSS ON DERIVATIVES: (0.03%) ........................................... (170)OTHER ASSETS, less liabilities: (1.66%) ..................................................... (10,139)TOTAL NET ASSETS: 100.00% ................................................................ $609,916The accompanying notes are an integral part of these financial statements.146 Franklin Templeton Investments Funds

Bissett Canadian Short Term Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCounterpartyCreditRatingSettlement DateCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)(000s) (000s) (000s) (000s) (000s)CREDIT SUISSE INTERNATIONAL .... A+ July 22, 2013 1,000 USD $1,052 1,031 CAD $1,031 1.0307 $ (21)CREDIT SUISSE INTERNATIONAL .... A+ July 22, 2013 1,000 USD 1,052 1,033 CAD 1,033 1.0332 (19)CREDIT SUISSE INTERNATIONAL .... A+ July 22, 2013 1,900 USD 1,999 1,995 CAD 1,996 1.0502 (3)CREDIT SUISSE INTERNATIONAL .... A+ July 22, 2013 3,941 USD 4,146 4,019 CAD 4,019 1.0198 (127)Total Number of Contracts .......4 $(170)Net Unrealized Loss ............... $(170)Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................. 22.54 31.17AA .................................. 24.69 22.86A ................................... 35.71 33.03BBB................................. 15.74 12.54BB .................................. 0.89 0.20Not Rated ............................ 0.25 —* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’sand Fitch ratings.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 147

Bissett Canadian Short Term Bond FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 620,225 $ 422,668CashCanadian 16 429Foreign 1,000 5ReceivablesInvestment securities sold 1,338 2,042Capital units sold 1,135 94Interest 4,166 2,393Unrealized gain on derivatives — 4Total assets 627,880 427,635LiabilitiesPayablesInvestment securities purchased 10,585 4,326Capital units redeemed 6,134 110Management fees 108 120Distributions to unitholders 967 —Unrealized loss on derivatives 170 2Total liabilities 17,964 4,558Net assets $ 609,916 $ 423,077Total net assets per series (000s)Series A $88,107 $100,610Series F 6,867 5,868Series O 514,942 316,599Number of units outstanding (Note 3)Series A 9,307,538 10,476,755Series F 689,916 582,772Series O 47,889,683 29,226,110Net assets per unit — CADSeries A $9.47 $9.60Series F 9.95 10.07Series O 10.75 10.83Cost of investments held (000s) $624,026 $420,118STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeInterest (net of foreign taxes withheld (000s) —2013 — $10; 2012 — $0) $ 9,319 $ 6,850Total investment income 9,319 6,850ExpensesManagement fees (Note 4(a)) 683 774Transfer agent fees (Note 4(c)) 181 195Custodian fees 8 9Legal fees 2 3Audit fees 10 10Unitholder reporting costs 8 9Independent review committee fees 1 1Registration fees 20 24Other expenses (Note 7) 60 78Total expenses 973 1,103Expenses waived/paid by Manager (Note 6) (289) (329)Net expenses 684 774Net investment income (loss) 8,635 6,076Realized and unrealized gain (loss) oninvestmentsNet realized gain (loss) on investments (389) 306Net realized and/or unrealized foreign exchangegain (loss) (57) (23)Net change in unrealized appreciation(depreciation) in value of investments andderivatives (6,523) (1,368)Net gain (loss) on investments (6,969) (1,085)Increase (decrease) in net assets from operations $ 1,666 $ 4,991Increase (decrease) in net assets from operationsper series (000s)Series A $(13) $836Series F 2 74Series O 1,677 4,081Increase (decrease) in net assets from operationsper unitSeries A $(0.01) $0.07Series F —** 0.11Series O 0.04 0.16** Amount rounded to zero in two decimal places.The accompanying notes are an integral part of these financial statements.148 Franklin Templeton Investments Funds

Bissett Canadian Short Term Bond FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 1,666 $ 4,991 $ (13) $ 836 $ 2 $ 74Distributions to unitholdersFrom net investment income (7,532) (5,895) (1,279) (1,665) (82) (109)From capital gains — — — — — —From return of capital — — — — — —(7,532) (5,895) (1,279) (1,665) (82) (109)Capital unit transactionsSubscriptions 249,610 117,747 13,184 16,404 2,220 1,194Reinvestments 6,432 4,692 1,016 1,217 60 82Redemptions (63,337) (107,530) (25,411) (24,083) (1,201) (2,122)192,705 14,909 (11,211) (6,462) 1,079 (846)Increase (decrease) in net assets for the period 186,839 14,005 (12,503) (7,291) 999 (881)Net assets — beginning of period 423,077 378,895 100,610 112,920 5,868 7,546Net assets — end of period $ 609,916 $ 392,900 $ 88,107 $ 105,629 $ 6,867 $ 6,665Series O2013 2012Increase (decrease) in net assets from operations $ 1,677 $ 4,081Distributions to unitholdersFrom net investment income (6,171) (4,121)From capital gains — —From return of capital — —(6,171) (4,121)Capital unit transactionsSubscriptions 234,206 100,149Reinvestments 5,356 3,393Redemptions (36,725) (81,325)202,837 22,217Increase (decrease) in net assets for the period 198,343 22,177Net assets — beginning of period 316,599 258,429Net assets — end of period $ 514,942 $ 280,606The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 149

Bissett Corporate Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)LONG-TERM INVESTMENTS: 99.56%BONDS: 99.56%Canada: 68.76%407 International Inc.Senior Secured Bond, 6.47%, 7/27/2029 ............................................... 3,325,000 CAD $ 4,134 $ 4,244Subordinated Secured Note, 06-D1, 5.75%, 2/14/2036 .................................... 875,000 CAD 862 1,016Agrium Inc.Senior Bond, 3.50%, 6/1/2023 ....................................................... 190,000 USD 197 191Senior Note, 3.15%, 10/1/2022 ....................................................... 1,000,000 USD 1,007 996Air Canada 2013-1 Class A Pass Through Trust, First Lien, 4.125%, 11/15/2026 ................. 720,000 USD 736 752AltaLink Investments LPSenior Bond, 12-1, 3.674%, 6/5/2019 ................................................. 1,309,000 CAD 1,313 1,304Senior Note, 13-1, 3.265%, 6/5/2020 .................................................. 1,500,000 CAD 1,500 1,444Bank of Montreal, Senior Note, 4.609%, 9/10/2025 ......................................... 1,250,000 CAD 1,333 1,341Bank of Nova Scotia2.898% to 8/3/2017, Floating Rate Note thereafter, 8/3/2022 ............................... 1,100,000 CAD 1,100 1,1043.036% to 10/17/2019, Floating Rate Note thereafter, 10/18/2024 ........................... 702,000 CAD 702 692Baytex Energy Corp., Senior Note, 6.625%, 7/19/2022 ...................................... 285,000 CAD 285 296Bell Aliant Regional Communications LPSenior Note, 3.54%, 6/12/2020 ....................................................... 1,500,000 CAD 1,500 1,475Senior Note, 5.41%, 9/26/2016 ....................................................... 1,610,000 CAD 1,594 1,746Bow Centre Street LP, Secured Note, 3.797%, 6/13/2023 .................................... 770,000 CAD 770 747Calloway Real Estate Investment TrustSenior Bond, 5.37%, 10/12/2016 ..................................................... 1,333,000 CAD 1,450 1,436Senior Note, 5.00%, 2/1/2019 ........................................................ 700,000 CAD 756 747Cameco Corp.Senior Bond, 5.09%, 11/14/2042 ..................................................... 1,000,000 CAD 1,000 941Senior Bond, D, 5.67%, 9/2/2019 ..................................................... 1,508,000 CAD 1,544 1,658Canadian Natural Resources Ltd., 2.89%, 8/14/2020 ....................................... 1,000,000 CAD 1,000 972Capital Desjardins Inc.Senior Note, 3.797% to 11/23/2015, Floating Rate Note thereafter, 11/23/2020 ................ 1,096,000 CAD 1,096 1,132Senior Secured Note, G, 5.187%, 5/5/2020 ............................................. 1,269,000 CAD 1,294 1,395Centre Street Trust, Secured Note, A, 3.69%, 6/14/2021 ..................................... 639,000 CAD 639 615City of Toronto Canada3.50%, 12/6/2021 ................................................................. 995,000 CAD 1,011 1,0003.80%, 12/13/2042 ................................................................ 417,000 CAD 416 385Cogeco Cable Inc.Secured Note, 4.175%, 5/26/2023 .................................................... 585,000 CAD 585 561Senior Secured Note, 5.95%, 6/9/2014 ................................................. 787,000 CAD 823 815CU Inc.4.543%, 10/24/2041 ............................................................... 698,000 CAD 698 719Senior Bond, 3.805%, 9/10/2042 ..................................................... 490,000 CAD 490 455Senior Note, 5.183%, 11/21/2035 ..................................................... 1,200,000 CAD 1,178 1,340Senior Note, 5.563%, 5/26/2028 ...................................................... 702,000 CAD 644 808Enbridge Inc., Senior Bond, 4.24%, 8/27/2042 ............................................ 1,000,000 CAD 999 932Enbridge Income Fund Holdings Inc.3.94%, 1/13/2023 ................................................................. 878,000 CAD 878 863Senior Note, 2.92%, 12/14/2017 ...................................................... 1,207,000 CAD 1,207 1,201Senior Note, Floating Rate Note, 11/28/2014 ............................................ 1,442,000 CAD 1,442 1,441The accompanying notes are an integral part of these financial statements.150 Franklin Templeton Investments Funds

Bissett Corporate Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 68.76% (Continued)Fairfax Financial Holdings Ltd.5.84%, 10/14/2022 ..................................................................... 214,000 CAD $ 222 $ 221Senior Note, 6.40%, 5/25/2021 ............................................................ 1,400,000 CAD 1,451 1,526Fifth Avenue LP, Secured Bond, 4.71%, 8/5/2021 ............................................... 483,579 CAD 484 496Financement Quebec, Floating Rate Note, 6/1/2018 ............................................. 320,000 CAD 322 322Finning International Inc, 3.232%, 7/3/2020 ................................................... 595,000 CAD 595 585First Capital Realty Inc.Senior Bond, Q, 3.90%, 10/30/2023 ........................................................ 500,000 CAD 506 478Senior Note, 3.95%, 12/5/2022 ............................................................ 500,000 CAD 497 481Senior Note, 5.48%, 7/30/2019 ............................................................ 1,000,000 CAD 1,140 1,097Flint Energy Services Ltd., 7.50%, 6/15/2019 ................................................... 490,000 CAD 542 534Gaz Metropolitan Inc., 9.00%, 5/16/2025 ...................................................... 650,000 CAD 800 959Gibson Energy Inc., Senior Note, 7.00%, 7/15/2020 ............................................. 600,000 CAD 592 597Government of Canada, 5.00%, 6/1/2037* .................................................... 265,000 CAD 381 360Great-West Lifeco Finance Delaware, 5.691% to 6/21/2017, Floating Rate Note thereafter, 6/21/2067 ...... 2,000,000 CAD 2,108 2,195Great-West Lifeco Finance Delaware LP II, Subordinated Bond, 7.127% to 6/26/2018, Floating Rate Notethereafter, 6/26/2068 .................................................................... 1,600,000 CAD 1,696 1,885Great-West Lifeco Inc., Senior Bond, 6.67%, 3/21/2033 .......................................... 1,390,000 CAD 1,703 1,771Greater Toronto Airports Authority, Senior Secured Bond, First Lien, 7.05%, 6/12/2030 ................. 500,000 CAD 710 664Home Capital Group Inc., 5.20%, 5/4/2016 .................................................... 800,000 CAD 800 826HSBC Bank Canada3.558%, 10/4/2017 ..................................................................... 1,572,000 CAD 1,584 1,625Subordinated Note, 4.94% to 3/16/2016, Floating Rate Note thereafter, 3/16/2021 ................... 1,500,000 CAD 1,545 1,588Hydro One Inc., 6.35%, 1/31/2034 ........................................................... 1,000,000 CAD 1,130 1,273Inter Pipeline FundSenior Note, 3.839%, 7/30/2018 .......................................................... 830,000 CAD 830 866Senior Note, 4.967%, 2/2/2021 ............................................................ 1,200,000 CAD 1,202 1,311Manitoba Telecom Services Inc.Senior Note, 4.59%, 10/1/2018 ............................................................ 490,000 CAD 490 520Senior Note, 6.65%, 5/11/2016 ............................................................ 500,000 CAD 568 555Manufacturers Life Insurance Co.Subordinated Note, 2.819% to 2/26/18, Floating Rate Note thereafter, 2/26/2023 .................... 1,500,000 CAD 1,500 1,473Subordinated Note, 4.165% to 6/1/17, Floating Rate Note thereafter, 6/1/2022 ...................... 1,498,000 CAD 1,521 1,562Manulife Finance Delaware, Senior Note, 4.448% to 12/15/2016, Floating Rate Notethereafter, 12/15/2026 ................................................................... 835,000 CAD 886 875Manulife Financial Corp., Senior Note, 5.505%, 6/26/2018 ........................................ 413,000 CAD 394 458Maritimes and Northeast Pipeline LP, Senior Secured Note, 4.34%, 11/30/2019 ....................... 1,188,160 CAD 1,191 1,230Master Credit Card Trust, Secured Note, 3.876%, 1/21/2017 ...................................... 685,000 CAD 673 691Merrill Lynch Financial Asset Inc., 2006-CA20, A2, 4.659%, 10/12/2039 ............................ 18,614 CAD 19 20NAV Canada, 7.40%, 6/1/2027 .............................................................. 457,000 CAD 525 625NBC Asset Trust, Junior Subordinated Bond, 7.235%, Perpetual ................................... 895,000 CAD 1,091 1,057Noranda Operating Trust, Senior Secured Note, 6.875%, 12/28/2016 ............................... 500,000 CAD 500 508NOVA Gas Transmission Ltd., Senior Note, 7.00%, 7/16/2027 ..................................... 750,000 CAD 772 965OPB Finance Trust, Senior Bond, A, 3.89%, 7/4/2042 ........................................... 573,000 CAD 573 530Petro-Canada, Senior Bond, 5.95%, 5/15/2035 ................................................. 400,000 USD 498 454Precision Drilling Corp., Senior Note, 6.50%, 3/15/2019 .......................................... 1,000,000 CAD 1,000 1,020* Principal amount of USD $292,254 pledged as collateral as at June 30, 2013The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 151

Bissett Corporate Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 68.76% (Continued)Province of Ontario4.65%, 6/2/2041 ....................................................................... 900,000 CAD $ 1,083 $ 1,0095.85%, 3/8/2033 ....................................................................... 1,000,000 CAD 1,365 1,265RBC Capital Trust, 4.87% to 12/31/2015, Floating Rate Note thereafter, Perpetual ..................... 518,000 CAD 541 550Rogers Communications Inc.Senior Note, 5.34%, 3/22/2021 ........................................................... 2,465,000 CAD 2,577 2,702Senior Note, 5.38%, 11/4/2019 ........................................................... 2,037,000 CAD 2,138 2,248Royal Bank of Canada, Senior Note, 4.93%, 7/16/2025 .......................................... 1,311,000 CAD 1,335 1,445Russel Metals Inc., Senior Note, 6.00%, 4/19/2022 .............................................. 880,000 CAD 903 880Sherritt International Corp., Senior Note, 7.50%, 9/24/2020 ....................................... 615,000 CAD 618 609Spy Hill Power LP, Secured Note, 4.14%, 3/31/2036 ............................................ 745,325 CAD 745 706Sun Life Capital Trust, Senior Bond, 5.863%, 12/31/2108 ........................................ 1,500,000 CAD 1,710 1,687Sun Life Financial Inc., Senior Bond, 4.95% to 6/1/2016, Floating Rate Note thereafter, 6/1/2036 ......... 2,873,000 CAD 2,971 3,040Terasen Gas Inc., Senior Bond, 6.05%, 2/15/2038 .............................................. 1,029,000 CAD 1,032 1,262The Toronto-Dominion Bank4.97% to 10/30/2015, Floating Rate Note thereafter, 10/30/2104 ................................. 900,000 CAD 855 957Subordinated Note, 9.15%, 5/26/2025 ...................................................... 1,794,000 CAD 2,521 2,671Subordinated Note, 4.779% to 12/14/2016, Floating Rate Note thereafter, 12/14/2015 ............... 1,900,000 CAD 1,781 2,041Subordinated Note, 5.763% to 12/18/2017, Floating Rate Note thereafter, 12/18/2106 ............... 1,500,000 CAD 1,452 1,679Toromont Industries Ltd., 4.92%, 10/13/2015 .................................................. 1,000,000 CAD 922 1,057TransCanada PipeLines Ltd.Senior Bond, 8.05%, 2/17/2039 ........................................................... 1,107,000 CAD 1,352 1,660Senior Bond, 9.45%, 3/20/2018 ........................................................... 400,000 CAD 531 512Senior Note, 7.90%, 4/15/2027 ........................................................... 1,000,000 CAD 1,248 1,370Union Gas Ltd., Senior Bond, 3.79%, 7/10/2023 ................................................ 810,000 CAD 810 815Valeant Pharmaceuticals International Inc.Series C-1 Tranche B Term Loan, Floating Rate Note, 12/11/2019 ................................ 22,388 USD 23 23Series E Tranche B Term Loan, Floating Rate Note, 6/30/2020 ................................... 150,000 USD 155 157Westcoast Energy Inc., Senior Bond, 5.60%, 1/16/2019 .......................................... 900,000 CAD 1,051 1,01498,943 102,326United States: 24.67%American Express Canada Credit Corp., Senior Note, Floating Rate Note, 6/6/2014 ..................... 950,000 CAD 960 957American Rock Salt Co. LLC, Initial Loan, Floating Rate Note, 4/25/2017 ............................. 64,784 USD 65 68Aon Finance NS1 ULC, Senior Note, 4.76%, 3/8/2018 ........................................... 2,150,000 CAD 2,257 2,277ARAMARK Corp., U.S. Term D Loan, Floating Rate Note, 8/22/2019 ................................ 50,000 USD 51 53Arch Coal Inc., Term Loans, Floating Rate Note, 5/16/2018 ....................................... 154,724 USD 162 161Arysta Lifescience SPC LLC, Initial Term Loan, Floating Rate Note, 5/29/2020 ......................... 145,000 USD 150 151Ashland Inc., Senior Note, 3.875%, 4/15/2018 ................................................. 650,000 USD 664 677Asurion LLC, Incremental Tranche B-1 Term Loan, Floating Rate Note, 5/24/2019 ..................... 174,374 USD 180 181Avis Budget Car Rental LLC, Tranche B Term Loan, Floating Rate Note, 3/15/2019 .................... 129,675 USD 133 136Axalta Coating Systems U.S. Holdings Inc., Initial Term B Loans, Floating Rate Note, 2/1/2020 ........... 160,000 USD 166 168BAC Canada Finance Co., Senior Note, Floating Rate Note, 2/21/2014 .............................. 1,750,000 CAD 1,750 1,752Bank of America Corp.4.36%, 9/21/2015 ...................................................................... 692,000 CAD 675 724Subordinated Note, Floating Rate Note, 6/1/2016 ............................................. 500,000 CAD 480 483Bausch & Lomb Inc., Parent Term Loans, Floating Rate Note, 5/18/2019 ............................ 159,600 USD 163 168Berry Plastics Corp., Term D Loan, Floating Rate Note, 2/8/2020 ................................... 40,898 USD 41 42BJ’s Wholesale Club Inc., 2013 Replacement Loans, Floating Rate Note, 9/26/2019 .................... 150,124 USD 154 157The accompanying notes are an integral part of these financial statements.152 Franklin Templeton Investments Funds

Bissett Corporate Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 24.67% (Continued)Citigroup Inc., Junior Subordinated Bond, 5.95% to 1/30/2023, Floating Rate Note thereafter, Perpetual . . . 1,250,000 USD $ 1,356 $ 1,308Community Health Systems Inc., New Extended Term Loan, Floating Rate Note, 1/25/2017 .............. 242,000 USD 250 254Constellation Brands Inc., Senior Note, 4.25%, 5/1/2023 ......................................... 895,000 USD 906 888CSC Holdings LLC (Cablevision), Term B Loan, Floating Rate Note, 4/17/2020 ........................ 135,000 USD 137 140DaVita HealthCare Partners Inc., Tranche B-2 Term Loan, Floating Rate Note, 8/24/2019 ............... 159,599 USD 167 168Del Monte Foods Co., Initial Term Loans, Floating Rate Note, 3/8/2018 .............................. 43,641 USD 44 46Dunkin’ Brands Inc., Term B-3 Loan, Floating Rate Note, 2/14/2020 ................................ 40,889 USD 41 43El Paso Corp., Senior Note, 7.25%, 6/1/2018 ................................................... 1,490,000 USD 1,726 1,735Energy Transfer Partners LP, Senior Bond, 3.60%, 2/1/2023 ...................................... 359,000 USD 361 353Federal-Mogul Corp.Tranche B Term Loan, Floating Rate Note, 12/27/2014 ......................................... 59,551 USD 58 60Tranche C Term Loan, Floating Rate Note, 12/27/2015 ......................................... 30,383 USD 29 30FMG America Finance Inc. (Fortescue Metals Group), Loans, Floating Rate Note, 10/18/2017 ............ 135,820 USD 142 142Ford Credit Canada Ltd.Senior Note, 3.32%, 12/19/2017 .......................................................... 1,060,000 CAD 1,060 1,046Senior Note, 7.50%, 8/18/2015 ............................................................ 750,000 CAD 836 821FoxCo Acquisition Sub LLC, Initial Term Loan, Floating Rate Note, 7/14/2017 ......................... 64,674 USD 66 69GE Capital Canada Funding Co.5.68%, 9/10/2019 ...................................................................... 570,000 CAD 577 649Senior Note, 4.60%, 1/26/2022 ............................................................ 710,000 CAD 710 756General Electric Capital Corp., B, 6.25% to 12/15/2049, Floating Rate Note thereafter, Perpetual ......... 225,000 USD 230 251Genpact International Inc., Domestic Term B-1 Loan, Floating Rate Note, 8/30/2019 ................... 220,000 USD 223 232HCA Inc.Senior Secured Note, 6.50%, 2/15/2020 .................................................... 558,000 USD 620 635Tranche B-5 Term Loan, Floating Rate Note, 3/31/2017 ........................................ 60,000 USD 60 63Hologic Inc., Tranche B Term Loan, Floating Rate Note, 8/1/2019 .................................. 59,849 USD 62 63Ineos U.S. Finance LLC, Dollar Term Loan, Floating Rate Note, 5/4/2018 ............................. 189,858 USD 193 196Interactive Data Corp., Term B Loan, Floating Rate Note, 2/11/2018 ................................ 45,000 USD 45 47JPMorgan Chase & Co., Senior Note, 2.92%, 9/19/2017 .......................................... 1,177,000 CAD 1,177 1,164KAR Auction Services Inc. (Adesa), Term Loan, Floating Rate Note, 5/19/2017 ........................ 39,965 USD 41 42Liberty Mutual Group Inc., Junior Subordinated Note, 10.75% to 6/15/2038, Floating Rate Notethereafter, 6/15/2058 .................................................................... 525,000 USD 833 842Macdermid Holdings LLC, First Lien Tranche B Term Loan, Floating Rate Note, 6/7/2020 ............... 220,000 USD 225 230MetLife Capital Trust IV, Preferred, Junior Subordinated Bond, 7.875% to 12/15/2037, Floating Rate Notethereafter, 12/15/2067 ................................................................... 1,100,000 USD 1,419 1,377Metropolitan Life Global Funding I2.624%, 4/10/2015 ..................................................................... 666,000 CAD 666 672Floating Rate Note, 6/17/2014 ............................................................ 3,000,000 CAD 3,000 3,015Floating Rate Note, 9/25/2017 ............................................................ 2,000,000 CAD 2,000 1,996MoneyGram International Inc., Term Loan, Floating Rate Note, 3/28/2020 ............................ 189,525 USD 195 199Morgan Stanley, Senior Note, 4.85%, 2/3/2016 ................................................. 653,000 CAD 650 682Pact Group LLC, Term Loans, Floating Rate Note, 5/29/2020 ...................................... 180,000 USD 185 188Par Pharmaceutical Companies Inc., Term B-1 Loan, Floating Rate Note, 9/30/2019 ................... 70,211 USD 71 73Party City Holdings Inc., 2013 Replacement Term Loan, Floating Rate Note, 7/27/2019 ................. 65,670 USD 66 69Pinnacle Foods Finance LLC, Tranche G Term Loan, Floating Rate Note, 4/29/2020 .................... 112,219 USD 114 117Reynolds Group Issuer Inc./LLC/SAFirst Lien, 5.75%, 10/15/2020 ............................................................ 300,000 USD 296 318Senior Secured Note, 6.875%, 2/15/2021 ................................................... 200,000 USD 208 221Safeway Inc., Senior Bond, 3.95%, 8/15/2020 .................................................. 766,000 USD 735 789The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 153

Bissett Corporate Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 24.67% (Continued)Sinclair Television Group Inc., Tranche B Term Loans, Floating Rate Note, 4/9/2020 ................... 29,925 USD $ 31 $ 31The Goldman Sachs Group Inc., Senior Note, 3.375%, 2/1/2018 ................................... 833,000 CAD 832 831Trans Union LLC, 2013 Replacement Term Loan, Floating Rate Note, 2/10/2019 ...................... 204,769 USD 213 216TransDigm Inc.Term Loan C, Floating Rate Note, 2/28/2020 ................................................. 50,000 USD 51 52Tranche C Term Loan, Floating Rate Note, 2/28/2020 .......................................... 204,775 USD 211 212Virgin Media Investment Holdings Ltd., B Facility, Floating Rate Note, 2/15/2020 ...................... 112,500 USD 114 117Walter Energy Inc., B Term Loan, Floating Rate Note, 4/1/2018 .................................... 39,031 USD 39 40Warner Chilcott Corp.Additional Term B-1 Loan, Floating Rate Note, 3/15/2018 ....................................... 9,540 USD 10 10Term B-1 Loan, Floating Rate Note, 3/15/2018 ............................................... 21,915 USD 23 23Weight Watchers International Inc., Initial Tranche B-2 Term Loan, Floating Rate Note, 4/2/2020 ......... 240,000 USD 244 251Wells Fargo Financial Canada Corp.Senior Note, 2.774%, 2/9/2017 ............................................................ 595,000 CAD 595 600Senior Note, 3.46%, 1/24/2023 ............................................................ 1,473,000 CAD 1,473 1,423WMG Acquisition Corp.Tranche B Delayed Draw Term Loan, Floating Rate Note, 7/1/2020 ............................... 20,122 USD 20 21Tranche B Initial Term Loan, Floating Rate Note, 7/1/2020 ...................................... 129,878 USD 130 135Tranche B Refinancing Term Loan, Floating Rate Note, 7/1/2020 ................................. 45,000 USD 45 47WTH Car Rental ULC2.619%, 12/20/2016 .................................................................... 1,000,000 CAD 1,000 1,0034.143%, 3/20/2015 ..................................................................... 1,500,000 CAD 1,500 1,54836,362 36,704United Kingdom: 2.56%BP Capital Markets PLC, 2.744%, 2/24/2017 ................................................... 500,000 CAD 500 504British Airways PLC, Senior Secured Bond, 4.625%, 6/20/2024 .................................... 905,000 USD 951 945Heathrow Funding Ltd., Secured Note, 4.00%, 7/3/2019 ......................................... 539,000 CAD 536 551HSBC Bank Canada, 2.901%, 1/13/2017 ..................................................... 981,000 CAD 985 997Lynx I Corp., First Lien, 5.375%, 4/15/2021 .................................................... 550,000 USD 578 581Lynx II Corp., Senior Bond, 6.375%, 4/15/2023 ................................................. 215,000 USD 228 2283,778 3,806Mexico: 0.79%Cemex Finance LLC, Senior Secured Note, 9.50%, 12/14/2016 .................................... 1,050,000 USD 1,167 1,167South Korea: 0.73%Korea Gas Corp., Senior Note, 4.58%, 5/12/2016 ............................................... 1,050,000 CAD 1,081 1,089France: 0.63%EDF SASubordinated Note, 5.25% to 1/29/2023, Floating Rate Note thereafter, Perpetual ................... 109,000 USD 108 110Subordinated Note, Regs, 5.25% to 1/29/2023, Floating Rate Note thereafter, Perpetual .............. 829,000 USD 814 833922 943Australia: 0.51%BHP Billiton Finance Ltd., 3.23%, 5/15/2023 .................................................. 700,000 CAD 699 656Nine Entertainment Group Pty. Ltd., Term B Loan, Floating Rate Note, 2/5/2020 ....................... 98,000 USD 100 102799 758Japan: 0.37%Nippon Life Insurance Co., 5.00% to 10/17/2022, Floating Rate Note thereafter, 10/18/2042 ............ 539,000 USD 530 557The accompanying notes are an integral part of these financial statements.154 Franklin Templeton Investments Funds

Bissett Corporate Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Netherlands: 0.28%Tronox Pigments (Netherlands) BV, Term Loan, Floating Rate Note, 3/19/2020 ......................... 180,000 USD $ 186 $ 190UPC Financing Partnership, Term Loan AH, Floating Rate Note, 6/30/2021 ............................ 210,000 USD 216 219402 409Luxembourg: 0.26%Accudyne Industries LLC (Silver II U.S. Holdings/Hamilton), 2013 Specified Refinancing Term Loan, FloatingRate Note, 12/13/2019 ................................................................... 44,775 USD 45 47Intelsat Jackson Holdings SA, Tranche B-1 Term Loan, Floating Rate Note, 4/2/2018 .................... 159,875 USD 166 168Pacific Drilling SA, Term Loan, Floating Rate Note, 6/3/2018 ........................................ 150,000 USD 153 157WC Luxco S.A.R.L., Term B-3 Loan, Floating Rate Note, 3/15/2018 .................................. 17,270 USD 18 18382 390Puerto Rico: 0.00%Warner Chilcott Co. LLC, Term B-2 Loan, Floating Rate Note, 3/15/2018 .............................. 2,947 USD 3 3Total Bonds: .............................................................................. 144,369 148,152Total Long-Term Investments: ................................................................. 144,369 148,152SHORT-TERM SECURITIES: 0.87%Mexico Treasury Bill, 3.94%, 4/3/2014 ......................................................... 504,255 MXN 381 397Royal Bank of Canada, Term Deposit, 0.97%, 7/2/2013 ........................................... 900,000 CAD 900 900Total Short-Term Securities: .................................................................. 1,281 1,297TOTAL INVESTMENTS: 100.43% .......................................................................... $145,650 149,449NET UNREALIZED LOSS ON DERIVATIVES: (0.27%) .......................................................... (400)OTHER ASSETS, less liabilities: (0.16%) .................................................................... (236)TOTAL NET ASSETS: 100.00% ............................................................................ $148,813SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCounterpartyCreditRatingSettlementDateCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)(000s) (000s) (000s) (000s) (000s)CREDIT SUISSE INTERNATIONAL ........ A+ July 22, 2013 2,355 USD $2,477 2,433 CAD $2,433 1.0332 $ (44)CREDIT SUISSE INTERNATIONAL ........ A+ July 22, 2013 2,355 USD 2,477 2,427 CAD 2,427 1.0307 (50)CREDIT SUISSE INTERNATIONAL ........ A+ July 22, 2013 3,900 USD 4,103 4,096 CAD 4,096 1.0502 (7)CREDIT SUISSE INTERNATIONAL ........ A+ July 22, 2013 9,290 USD 9,773 9,474 CAD 9,474 1.0198 (299)Total Number of Contracts ...........4 $(400)Net Unrealized Loss .................. $(400)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 155

Bissett Corporate Bond FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................. 2.32 3.35AA .................................. 10.55 20.17A ................................... 42.89 46.81BBB................................. 29.90 23.63BB .................................. 10.72 4.41B ................................... 2.68 0.65Not Rated ............................ 0.50 —* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’sand Fitch ratings.The accompanying notes are an integral part of these financial statements.156 Franklin Templeton Investments Funds

Bissett Corporate Bond FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 149,449 $ 134,899CashCanadian 706 131Foreign 1,588 2ReceivablesInvestment securities sold 2,370 —Capital units sold 5 14Interest 1,423 1,245Unrealized gain on derivatives — 6Total assets 155,541 136,297LiabilitiesPayablesInvestment securities purchased 5,647 507Capital units redeemed 75 18Management fees 80 79Distributions to unitholders 526 —Unrealized loss on derivatives 400 3Total liabilities 6,728 607Net assets $ 148,813 $ 135,690Total net assets per series (000s)Series A $55,934 $58,138Series F 2,998 2,913Series I 448 68Series O 89,433 74,571Number of units outstanding (Note 3)Series A 5,654,235 5,723,671Series F 292,666 277,753Series I 43,245 6,360Series O 8,175,996 6,693,509Net assets per unit — CADSeries A $9.89 $10.15Series F 10.24 10.49Series I 10.36 10.62Series O 10.94 11.14Cost of investments held (000s) $145,650 $127,023STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeInterest (net of foreign taxes withheld (000s) —2013 — $4; 2012 — $0) $ 3,140 $ 2,674Total investment income 3,140 2,674ExpensesManagement fees (Note 4(a)) 487 387Transfer agent fees (Note 4(c)) 110 93Custodian fees 4 3Legal fees 2 2Audit fees 9 9Unitholder reporting costs 5 5Independent review committee fees 1 1Registration fees 20 18Other expenses (Note 7) 29 33Total expenses 667 551Expenses waived/paid by Manager (Note 6) (180) (164)Net expenses 487 387Net investment income (loss) 2,653 2,287Realized and unrealized gain (loss) on investmentsNet realized gain (loss) on investments 939 332Net realized and/or unrealized foreign exchange gain(loss) (50) (16)Net change in unrealized appreciation (depreciation)in value of investments and derivatives (4,480) 1,007Net gain (loss) on investments (3,591) 1,323Increase (decrease) in net assets from operations $ (938) $ 3,610Increase (decrease) in net assets from operationsper series (000s)Series A $(606) $1,236Series F (24) 56Series I (7) 1Series O (301) 2,317Increase (decrease) in net assets from operationsper unitSeries A $(0.11) $0.26Series F (0.09) 0.30Series I (0.25) 0.35Series O (0.04) 0.38The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 157

Bissett Corporate Bond FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ (938) $ 3,610 $ (606) $ 1,236 $ (24) $ 56Distributions to unitholdersFrom net investment income (2,354) (2,474) (909) (1,003) (46) (42)From capital gains — — — — — —From return of capital — — — — — —(2,354) (2,474) (909) (1,003) (46) (42)Capital unit transactionsSubscriptions 32,200 23,609 8,256 11,404 657 760Reinvestments 1,735 1,936 629 738 25 23Redemptions (17,520) (8,056) (9,574) (4,930) (527) (85)16,415 17,489 (689) 7,212 155 698Increase (decrease) in net assets for the period 13,123 18,625 (2,204) 7,445 85 712Net assets — beginning of period 135,690 107,885 58,138 43,932 2,913 1,893Net assets — end of period $ 148,813 $ 126,510 $ 55,934 $ 51,377 $ 2,998 $ 2,605Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ (7) $ 1 $ (301) $ 2,317Distributions to unitholdersFrom net investment income (5) (1) (1,394) (1,428)From capital gains — — — —From return of capital — — — —(5) (1) (1,394) (1,428)Capital unit transactionsSubscriptions 392 38 22,895 11,407Reinvestments 3 1 1,078 1,174Redemptions (3) (2) (7,416) (3,039)392 37 16,557 9,542Increase (decrease) in net assets for the period 380 37 14,862 10,431Net assets — beginning of period 68 30 74,571 62,030Net assets — end of period $ 448 $ 67 $ 89,433 $ 72,461The accompanying notes are an integral part of these financial statements.158 Franklin Templeton Investments Funds

Bissett Dividend Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 97.61%COMMON STOCKS: 80.82%Financials: 22.65%AllianceBernstein Holding LP . . ............ 12,300 $ 495 $ 269Bank of Montreal ...................... 258,300 15,281 15,774Bank of Nova Scotia .................... 351,700 15,011 19,766Canadian Imperial Bank of Commerce ....... 262,500 15,415 19,593IGM Financial Inc. ..................... 378,800 14,069 17,016National Bank of Canada ................. 194,300 14,825 14,553Power Financial Corp. ................... 718,500 19,678 21,850Royal Bank of Canada ................... 304,000 10,725 18,626Sun Life Financial Inc. ................... 112,700 3,928 3,494The Toronto-Dominion Bank . . ............ 250,400 15,179 21,146124,606 152,087Energy: 20.26%ARC Resources Ltd. .................... 579,100 13,778 15,867Baytex Energy Corp. .................... 288,900 11,704 10,889Bonavista Energy Corp. .................. 550,600 8,872 7,516Bonterra Energy Corp. ................... 118,700 5,555 5,849Cenovus Energy Inc. .................... 144,300 4,307 4,323Chevron Corp. ........................ 73,000 4,621 9,072ConocoPhillips ........................ 90,800 3,654 5,773Crescent Point Energy Corp. . . ............ 470,300 14,792 16,766Enbridge Inc. . ........................ 255,800 4,203 11,263Exxon Mobil Corp. ...................... 33,000 2,600 3,120Freehold Royalties Ltd. .................. 222,500 4,750 5,231Keyera Corp. . ........................ 104,900 4,526 5,849Longview Oil Corp. ..................... 372,650 2,706 1,856Mullen Group Ltd. ...................... 532,900 8,800 12,086TransCanada Corp. ..................... 398,800 13,084 18,046Zargon Oil & Gas Ltd. ................... 401,000 6,719 2,522114,671 136,028Consumer Staples: 9.17%Altria Group Inc. . ...................... 174,500 3,315 6,417Diageo PLC, American Depositary Receipt ..... 54,700 5,041 6,611General Mills Inc. ...................... 192,100 6,102 9,795Kraft Foods Group Inc. .................. 99,166 4,119 5,820North West Company Inc. ................ 723,400 12,221 16,906Philip Morris International Inc. . . . .......... 93,200 3,850 8,482The Procter & Gamble Co. ................ 93,200 6,086 7,54440,734 61,575Industrials: 6.84%3MCo............................... 65,800 6,025 7,565Bird Construction Inc. ................... 579,840 7,166 7,520General Electric Co. ..................... 209,900 5,984 5,117Horizon North Logistics Inc. . . . ............ 393,800 2,302 2,497Morneau Shepell Inc. ................... 331,000 4,264 4,607Russel Metals Inc. ..................... 552,500 9,063 13,122Wajax Corp. . . ........................ 174,400 4,100 5,50838,904 45,936SharesAverageCost Fair Value(000s) (000s)Consumer Discretionary: 5.38%Genuine Parts Co. ...................... 100,100 $ 4,780 $ 8,212McDonald’s Corp. ...................... 83,700 6,171 8,708Thomson Reuters Corp. .................. 560,100 16,083 19,17827,034 36,098Telecommunication Services: 4.79%BCE Inc. ............................ 312,200 9,943 13,462Rogers Communications Inc., B ............ 222,500 7,354 9,163Telus Corp. ........................... 311,300 5,542 9,55722,839 32,182Utilities: 4.26%Canadian Utilities Ltd., A ................. 332,200 5,734 12,205Caribbean Utilities Co. Ltd., A .............. 92,900 1,640 1,029Fortis Inc. ............................ 478,300 10,279 15,39217,653 28,626Health Care: 3.80%AbbVie Inc. .......................... 215,600 7,769 9,375Johnson & Johnson ..................... 125,300 9,121 11,311Pfizer Inc. ........................... 163,500 3,441 4,82120,331 25,507Materials: 2.26%Canexus Corp. ........................ 917,700 8,129 8,434Labrador Iron Ore Royalty Corp. ............ 229,500 7,505 6,71315,634 15,147Information Technology: 1.41%Calian Technologies Ltd. ................. 27,300 285 536Intel Corp. ........................... 173,500 3,941 4,418Microsoft Corp. ........................ 125,400 3,111 4,5527,337 9,506Total Common Stocks: ................... 429,743 542,692PREFERRED STOCKS: 2.43%Financials: 0.91%Brookfield Asset Management Inc.,Preferred, 4, A ...................... 85,800 1,686 1,521Brookfield Asset Management Inc.,4.75%, Preferred, 17 ................. 103,200 2,333 2,224Great West Lifeco Inc., 5.90%, Preferred ..... 41,300 1,054 1,038Power Financial Corp., 5.75%, Preferred, H . . . 51,600 1,296 1,3036,369 6,086Energy: 0.59%Enbridge Inc., 4.00%, Preferred, F .......... 105,500 2,676 2,638Husky Energy Inc., 4.45%, Preferred, 1 ...... 54,000 1,349 1,3264,025 3,964Telecommunication Services: 0.56%BCE Inc., 3.165%, Preferred, AJ ........... 87,700 2,232 2,060BCE Inc., 4.00%, Preferred, AA ............ 75,700 1,918 1,6924,150 3,752The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 159

Bissett Dividend Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (continued)SharesAverageCost Fair Value(000s) (000s)Consumer Staples: 0.37%George Weston Ltd., 5.20%, Preferred, IV ...... 103,200 $ 1,736 $ 2,497Total Preferred Stocks: .................... 16,280 16,299Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)BONDS: 14.36%Canada: 14.36%407 International Inc., Senior Secured Bond, 6.47%, 7/27/2029 ................................... 5,000,000 CAD $ 6,206 $ 6,382Cameco Corp., Senior Bond, D, 5.67%, 9/2/2019 ............................................... 5,000,000 CAD 5,252 5,497Canada Housing Trust, 3.75%, 3/15/2020 ..................................................... 3,140,000 CAD 3,411 3,387Canada Post Corp., 4.08%, 7/16/2025 ........................................................ 5,000,000 CAD 5,910 5,448Canadian Natural Resources Ltd., 2.89%, 8/14/2020 ............................................ 5,628,000 CAD 5,638 5,470Capital Desjardins Inc., Senior Secured Note, G, 5.187%, 5/5/2020 ................................. 8,000,000 CAD 8,000 8,796EnCana Corp., 5.80%, 1/18/2018 ............................................................ 5,000,000 CAD 4,581 5,569Fairfax Financial Holdings Ltd., Senior Note, 6.40%, 5/25/2021 .................................... 4,500,000 CAD 4,536 4,905First Capital Realty Inc., Senior Bond, Q, 3.90%, 10/30/2023 ...................................... 5,000,000 CAD 5,000 4,777NAV Canada, 4.713%, 2/24/2016 ........................................................... 5,140,000 CAD 5,219 5,502Pembina Pipeline Corp., Senior Bond, 4.75%, 4/30/2043 ......................................... 3,000,000 CAD 3,043 2,876Province of Manitoba, 3.85%, 12/1/2021 ...................................................... 5,000,000 CAD 5,523 5,292Province of New Brunswick, 5.50%, 1/27/2034 ................................................. 5,000,000 CAD 6,326 6,039Rogers Communications Inc., Senior Note, 5.38%, 11/4/2019 ..................................... 3,500,000 CAD 3,613 3,862Sun Life Financial Inc., Senior Note, 4.80% to 11/23/2015, Floating Rate Note thereafter, 11/23/2035 ..... 9,500,000 CAD 9,520 9,954Terasen Gas Inc., Senior Bond, 6.05%, 2/15/2038 .............................................. 3,500,000 CAD 3,947 4,293Thomson Corp., 5.20%, 12/1/2014 .......................................................... 8,000,000 CAD 8,230 8,37993,955 96,428Total Bonds: ............................................................................. 93,955 96,428Total Long-Term Investments: ................................................................ 539,978 655,419SHORT-TERM SECURITIES: 2.28%Royal Bank of Canada, Term Deposit, 0.97%, 7/2/2013 .......................................... 15,300,000 CAD 15,300 15,300Total Short-Term Securities: ................................................................. 15,300 15,300Transaction costs (Note 2) ................................................................... (461) —TOTAL INVESTMENTS: 99.89% ............................................................. $554,817 670,719OTHER ASSETS, less liabilities: 0.11% ........................................................ 730TOTAL NET ASSETS: 100.00% .............................................................. $671,449Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................. 1.31 2.00AA .................................. 1.61 1.99A ................................... 6.53 7.43BBB................................. 4.91 4.20* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’sand Fitch ratings.The accompanying notes are an integral part of these financial statements.160 Franklin Templeton Investments Funds

Bissett Dividend Income FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 670,719 $ 609,476CashCanadian 130 88Foreign 3 —ReceivablesInvestment securities sold 45 474Capital units sold 686 485Dividends, interest and withholding tax 4,285 3,508Other assets (Note 8) 121 119Total assets 675,989 614,150LiabilitiesPayablesInvestment securities purchased 1,423 1,047Capital units redeemed 444 269Management fees 754 707Accrued expenses 271 293Distributions to unitholders 1,648 —Total liabilities 4,540 2,316Net assets $ 671,449 $ 611,834Total net assets per series (000s)Series A $358,793 $341,411Series F 42,930 39,391Series I 1,350 1,442Series O 242,232 204,240Series T 26,144 25,350Number of units outstanding (Note 3)Series A 12,600,268 12,343,509Series F 1,295,996 1,231,818Series I 43,646 48,123Series O 6,202,350 5,448,486Series T 2,521,505 2,450,289Net assets per unit — CADSeries A $28.47 $27.66Series F 33.12 31.97Series I 30.94 29.97Series O 39.05 37.48Series T 10.37 10.34Cost of investments held (000s) $554,817 $483,931STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $255; 2012 — $183) $ 15,479 $ 11,007Interest 2,278 2,154Total investment income 17,757 13,161ExpensesManagement fees (Note 4(a)) 4,529 3,887Transfer agent fees (Note 4(c)) 823 768Custodian fees 21 25Legal fees — 1Audit fees 11 11Unitholder reporting costs 29 24Independent review committee fees 1 1Registration fees 17 15Other expenses (Note 7) 256 243Total expenses 5,687 4,975Expenses waived/paid by Manager (Note 6) (800) (759)Net expenses 4,887 4,216Net investment income (loss) 12,870 8,945Realized and unrealized gain (loss) on investmentsand transaction costsNet realized gain (loss) on investments 25,129 8,455Net realized and/or unrealized foreign exchange gain(loss) 20 2Net change in unrealized appreciation (depreciation)in value of investments (9,643) (748)Transaction costs (Note 11) (246) (44)Net gain (loss) on investments 15,260 7,665Increase (decrease) in net assets from operations $ 28,130 $ 16,610Increase (decrease) in net assets from operationsper series (000s)Series A $14,153 $8,025Series F 1,919 1,109Series I 60 31Series O 10,923 6,788Series T 1,075 657Increase (decrease) in net assets from operationsper unitSeries A $1.14 $0.69Series F 1.51 0.98Series I 1.20 0.80Series O 1.86 1.35Series T 0.43 0.27The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 161

Bissett Dividend Income FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 28,130 $ 16,610 $ 14,153 $ 8,025 $ 1,919 $ 1,109Distributions to unitholdersFrom net investment income (7,829) (7,235) (4,250) (4,071) (505) (456)From capital gains — — — — — —From return of capital (727) (781) — — — —(8,556) (8,016) (4,250) (4,071) (505) (456)Capital unit transactionsSubscriptions 83,867 67,319 42,264 43,190 4,040 3,331Reinvestments 5,941 5,362 3,118 2,917 348 310Redemptions (49,767) (45,620) (37,903) (31,452) (2,263) (1,362)40,041 27,061 7,479 14,655 2,125 2,279Increase (decrease) in net assets for the period 59,615 35,655 17,382 18,609 3,539 2,932Net assets — beginning of period 611,834 527,417 341,411 296,828 39,391 32,802Net assets — end of period $ 671,449 $ 563,072 $ 358,793 $ 315,437 $ 42,930 $ 35,734Series I Series O Series T2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 60 $ 31 $ 10,923 $ 6,788 $ 1,075 $ 657Distributions to unitholdersFrom net investment income (18) (15) (2,739) (2,366) (317) (327)From capital gains — — — — — —From return of capital — — — — (727) (781)(18) (15) (2,739) (2,366) (1,044) (1,108)Capital unit transactionsSubscriptions 156 209 34,287 17,925 3,120 2,664Reinvestments 15 11 2,175 1,832 285 292Redemptions (305) (3) (6,654) (10,577) (2,642) (2,226)(134) 217 29,808 9,180 763 730Increase (decrease) in net assets for the period (92) 233 37,992 13,602 794 279Net assets — beginning of period 1,442 925 204,240 172,192 25,350 24,670Net assets — end of period $ 1,350 $ 1,158 $ 242,232 $ 185,794 $ 26,144 $ 24,949The accompanying notes are an integral part of these financial statements.162 Franklin Templeton Investments Funds

Bissett Microcap FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 91.09%COMMON STOCKS: 90.80%Consumer Discretionary: 24.33%Automodular Corp. . . . .................. 1,086,547 $ 2,153 $ 1,869Danier Leather Inc. . . . .................. 232,212 2,415 2,624easyhome Ltd. . . ...................... 692,800 5,364 7,357Glacier Media Inc. . . . .................. 3,622,100 9,565 5,868Indigo Books & Music Inc. ............... 723,500 8,863 7,987Le Chateau Inc., A . . . .................. 1,858,400 10,227 7,248Mega Brands Inc. ...................... 451,967 4,080 6,581Rainmaker Entertainment Inc. ............. 1,679,400 3,031 218Sportscene Group Inc. . . ................ 94,500 1,324 709Transat A.T. Inc., B . . .................. 1,044,500 4,925 7,83451,947 48,295Energy: 20.90%AKITA Drilling Ltd., A . . . ................ 175,000 2,032 2,193Angle Energy Inc. ...................... 1,090,500 4,258 3,511Cathedral Energy Services Ltd. ............ 168,300 647 776Chinook Energy Inc. . . .................. 286,400 418 318Delphi Energy Corp. . . .................. 2,535,000 4,141 3,245Essential Energy Services Ltd. ............. 2,645,676 2,552 6,879Logan International Inc. . ................ 170,500 888 1,142Rock Energy Inc. ...................... 2,700,000 5,591 3,510Surge Energy Inc. ...................... 330,000 962 1,696Torc Oil & Gas Ltd. . . . .................. 643,300 1,443 920Twin Butte Energy Ltd. . . ................ 1,453,441 4,319 3,299Wenzel Downhole Tools Ltd. .............. 1,125,325 1,687 2,487Xtreme Drilling and Coil Services Corp. ....... 2,029,900 2,382 4,994ZCL Composites Inc. . . .................. 1,326,200 5,462 6,52536,782 41,495Industrials: 12.58%Cervus Equipment Corp. . ................ 97,050 699 1,931Clarke Inc. . . . ........................ 507,659 2,634 2,533Contrans Group Inc., A . . ................ 707,600 4,053 7,812SharesAverageCost Fair Value(000s) (000s)Industrials: 12.58% (Continued)Exco Technologies Ltd. ................. 776,300 $ 1,646 $ 4,549Foremost Income Fund ................ 3,204 19 26Horizon North Logistics Inc. ............. 1,119,689 2,407 7,099INSCAPE Corp., B .................... 550,000 1,135 1,01812,593 24,968Financials: 10.09%Equitable Group Inc. .................. 300,200 5,878 10,732Equity Financial Holdings Inc. ............ 561,300 3,467 5,866Sprott Resource Lending Corp. ........... 2,650,000 4,411 3,44513,756 20,043Information Technology: 9.44%Aastra Technologies Ltd. ............... 166,122 2,720 3,249Blackline GPS Corp., Warrants, 7/31/2015 . . . 495,000 — —Blackline GPS Corp. ................... 1,670,000 2,288 1,854Calian Technologies Ltd. ................ 266,700 2,148 5,233Critical Control Solutions Corp. ........... 4,318,182 2,500 1,079Enghouse Systems Ltd. ................ 151,100 1,189 3,622Smart Technologies Inc. ................ 2,699,150 3,823 3,69814,668 18,735Materials: 9.19%ADF Group Inc. ...................... 1,584,500 2,772 2,266Brampton Brick Ltd., A ................. 819,400 4,598 4,212Canam Group Inc., A .................. 725,400 2,871 6,565Fortress Paper Ltd. ................... 356,500 4,796 2,121Norbord Inc. ........................ 35,000 256 1,065Orbit Garant Drilling Inc. ................ 1,731,300 3,268 2,00818,561 18,237Consumer Staples: 4.27%Corby Distilleries Ltd., B ................ 228,100 3,550 4,252Sun-Rype Products Ltd. ................ 741,600 5,542 4,2199,092 8,471Total Common Stocks: .................. 157,399 180,244Principal Amountin Currencyof IssueBONDS: 0.29%Canada: 0.29%Rainmaker Entertainment Inc., Convertible, 8.00%, 3/31/2016 ....................................... 560,000 CAD 560 586Total Bonds: ............................................................................... 560 586Total Long-Term Investments: .................................................................. 157,959 180,830SHORT-TERM SECURITIES: 8.92%Royal Bank of Canada, Term Deposit, 0.97%, 7/2/2013 ............................................ 17,700,000 CAD 17,700 17,700Total Short-Term Securities: ................................................................... 17,700 17,700Transaction costs (Note 2) ..................................................................... (711) —TOTAL INVESTMENTS: 100.01% ............................................................... $174,948 198,530OTHER ASSETS, less liabilities: (0.01%) ......................................................... (18)TOTAL NET ASSETS: 100.00% ................................................................ $198,512The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 163

Bissett Microcap FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 198,530 $ 176,825CashCanadian 21 5ReceivablesCapital units sold 140 101Dividends and interest 414 417Other assets (Note 8) 20 13Total assets 199,125 177,361LiabilitiesPayablesInvestment securities purchased 36 —Capital units redeemed 213 47Management fees 292 262Accrued expenses 72 80Total liabilities 613 389Net assets $ 198,512 $ 176,972Total net assets per series (000s)Series A $54,071 $48,589Series F 80,201 71,824Series O 64,240 56,559Number of units outstanding (Note 3)Series A 2,219,167 2,186,393Series F 2,803,437 2,771,734Series O 1,659,055 1,632,027Net assets per unit — CADSeries A $24.36 $22.22Series F 28.61 25.91Series O 38.72 34.66Cost of investments held (000s) $174,948 $163,898STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends $ 1,922 $ 1,804Interest 67 43Total investment income 1,989 1,847ExpensesManagement fees (Note 4(a)) 1,742 1,429Transfer agent fees (Note 4(c)) 200 150Custodian fees 5 6Legal fees — —Audit fees 10 10Unitholder reporting costs 9 10Independent review committee fees 1 1Registration fees 11 11Other expenses (Note 7) 57 54Total expenses 2,035 1,671Expenses waived/paid by Manager (Note 6) (69) (44)Net expenses 1,966 1,627Net investment income (loss) 23 220Realized and unrealized gain (loss) on investmentsand transaction costsNet realized gain (loss) on investments 8,430 10,877Net change in unrealized appreciation (depreciation)in value of investments 10,655 (237)Transaction costs (Note 11) (67) (131)Net gain (loss) on investments 19,018 10,509Increase (decrease) in net assets from operations $ 19,041 $ 10,729Increase (decrease) in net assets from operationsper series (000s)Series A $4,815 $2,386Series F 7,506 4,195Series O 6,720 4,148Increase (decrease) in net assets from operationsper unitSeries A $2.09 $1.17Series F 2.68 1.67Series O 4.05 2.73The accompanying notes are an integral part of these financial statements.164 Franklin Templeton Investments Funds

Bissett Microcap FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 19,041 $ 10,729 $ 4,815 $ 2,386 $ 7,506 $ 4,195Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 26,344 10,932 17,342 7,308 3,886 1,839Reinvestments — — — — — —Redemptions (23,845) (15,020) (16,675) (5,420) (3,015) (3,810)2,499 (4,088) 667 1,888 871 (1,971)Increase (decrease) in net assets for the period 21,540 6,641 5,482 4,274 8,377 2,224Net assets — beginning of period 176,972 147,031 48,589 39,542 71,824 58,691Net assets — end of period $ 198,512 $ 153,672 $ 54,071 $ 43,816 $ 80,201 $ 60,915Series O2013 2012Increase (decrease) in net assets from operations $ 6,720 $ 4,148Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 5,116 1,785Reinvestments — —Redemptions (4,155) (5,790)961 (4,005)Increase (decrease) in net assets for the period 7,681 143Net assets — beginning of period 56,559 48,798Net assets — end of period $ 64,240 $ 48,941The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 165

Bissett Small Cap FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 94.39%COMMON STOCKS: 94.39%Consumer Discretionary: 23.24%Automodular Corp. ................... 2,000,000 $ 700 $ 3,440Danier Leather Inc. ................... 206,100 1,995 2,329Glacier Media Inc. ................... 5,887,100 13,702 9,537GVIC Communications Corp., C ........... 2,272,900 2,372 864Indigo Books & Music Inc. .............. 2,026,800 28,714 22,376Le Chateau Inc., A .................... 1,857,900 15,596 7,246Leon’s Furniture Ltd. . . ................ 2,336,400 24,643 29,696Reitmans (Canada) Ltd. ................ 700,000 8,149 5,705Reitmans (Canada) Ltd., A .............. 725,300 7,424 6,455RONA Inc. . ........................ 2,293,400 27,736 24,906Sears Canada Inc. ................... 1,058,200 22,082 11,450Transat A.T. Inc., B ................... 2,535,800 13,460 19,018166,573 143,022Energy: 20.48%Advantage Oil & Gas Ltd. ............... 2,485,000 9,072 10,313Angle Energy Inc. .................... 3,409,700 13,644 10,979BlackPearl Resources Inc. .............. 5,170,000 11,426 8,065Canyon Services Group Inc. ............. 454,100 4,253 5,413Chinook Energy Inc. . . ................ 3,856,785 7,387 4,281Delphi Energy Corp. . . ................ 7,364,400 11,407 9,426Nuvista Energy Ltd .................... 3,381,336 32,529 24,143Savanna Energy Services Corp ........... 4,812,000 53,842 32,481Xtreme Drilling and Coil Services Corp. ..... 3,597,700 12,078 8,850ZCL Composites Inc. . . ................ 2,458,500 22,696 12,096178,334 126,047Industrials: 15.50%Contrans Group Inc., A . ................ 5,200 44 57Exco Technologies Ltd. ................ 1,906,100 9,589 11,170HNZ Group Inc. ..................... 210,000 4,734 4,450Horizon North Logistics Inc. ............. 2,946,018 9,458 18,678Richelieu Hardware Ltd. ............... 919,000 18,399 37,219Transcontinental Inc., A ................ 1,873,800 27,830 23,81670,054 95,390Materials: 13.08%Canam Group Inc., A . . ................ 3,203,000 14,972 28,987Capstone Mining Corp. ................ 1,340,500 2,433 2,386Fortress Paper Ltd. ................... 519,500 8,025 3,091Major Drilling Group International Inc. ..... 1,760,000 14,685 12,567Norbord Inc. . ...................... 203,060 2,249 6,179Winpak Ltd. ........................ 1,514,464 12,447 27,26054,811 80,470SharesAverageCost Fair Value(000s) (000s)Financials: 12.40%AGF Management Ltd. ........... 1,348,700 $ 12,427 $ 15,078Equitable Group Inc. ............. 1,110,400 27,052 39,697Granite Real Estate InvestmentTrust ...................... 439,600 16,968 15,852Home Capital Group Inc. .......... 96,032 1,186 5,320Westaim Corp. ................. 12,700,000 — 38157,633 76,328Information Technology: 5.55%Aastra Technologies Ltd. .......... 1,095,361 20,364 21,425Enghouse Systems Ltd. ........... 530,600 2,334 12,71922,698 34,144Consumer Staples: 4.14%Corby Distilleries Ltd., A ........... 364,600 5,542 7,219Corby Distilleries Ltd., B ........... 368,900 5,477 6,877Maple Leaf Foods Inc. ............ 783,400 8,135 11,36719,154 25,463Total Common Stocks: ........ 569,257 580,864Total Long-Term Investments: . . 569,257 580,864Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 5.93%Royal Bank of Canada, Term Deposit,0.97%, 7/2/2013 .............. 36,500,000 CAD 36,500 36,500Total Short-Term Securities: ........ 36,500 36,500Transaction costs (Note 2) ........... (2,799) —TOTAL INVESTMENTS: 100.32% ..... $ 602,958 617,364OTHER ASSETS, less liabilities:(0.32%) ...................... (1,958)TOTAL NET ASSETS: 100.00% ...... $ 615,406The accompanying notes are an integral part of these financial statements.166 Franklin Templeton Investments Funds

Bissett Small Cap FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 617,364 $ 567,270CashCanadian 88 3ReceivablesInvestment securities sold — 2,480Capital units sold 190 335Dividends and interest 1,335 1,473Other assets (Note 8) 71 61Total assets 619,048 571,622LiabilitiesPayablesInvestment securities purchased 1,563 —Capital units redeemed 1,773 830Management fees 172 166Accrued expenses 134 153Total liabilities 3,642 1,149Net assets $ 615,406 $ 570,473Total net assets per series (000s)Series A $46,622 $46,892Series F 47,509 44,630Series O 521,275 478,951Number of units outstanding (Note 3)Series A 862,795 941,265Series F 769,666 788,664Series O 6,742,309 6,817,994Net assets per unit — CADSeries A $54.04 $49.82Series F 61.73 56.59Series O 77.32 70.25Cost of investments held (000s) $602,958 $575,992STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends $ 9,100 $ 5,812Interest 197 112Total investment income 9,297 5,924ExpensesManagement fees (Note 4(a)) 1,051 1,011Transfer agent fees (Note 4(c)) 207 233Custodian fees 17 21Legal fees — 1Audit fees 10 10Unitholder reporting costs 13 8Independent review committee fees 1 1Registration fees 11 11Other expenses (Note 7) 181 175Total expenses 1,491 1,471Expenses waived/paid by Manager (Note 6) (368) (386)Net expenses 1,123 1,085Net investment income (loss) 8,174 4,839Realized and unrealized gain (loss) on investmentsand transaction costsNet realized gain (loss) on investments 25,285 34,873Net change in unrealized appreciation (depreciation)in value of investments 23,128 (1,765)Transaction costs (Note 11) (202) (288)Net gain (loss) on investments 48,211 32,820Increase (decrease) in net assets from operations $ 56,385 $ 37,659Increase (decrease) in net assets from operationsper series (000s)Series A $3,909 $2,748Series F 4,026 2,543Series O 48,450 32,368Increase (decrease) in net assets from operationsper unitSeries A $4.32 $2.88Series F 5.16 3.41Series O 7.10 4.83The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 167

Bissett Small Cap FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 56,385 $ 37,659 $ 3,909 $ 2,748 $ 4,026 $ 2,543Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — — —— — — — — —Capital unit transactionsSubscriptions 45,180 54,268 2,668 2,108 1,093 293Reinvestments — — — — — —Redemptions (56,632) (70,466) (6,847) (7,039) (2,240) (2,560)(11,452) (16,198) (4,179) (4,931) (1,147) (2,267)Increase (decrease) in net assets for the period 44,933 21,461 (270) (2,183) 2,879 276Net assets — beginning of period 570,473 511,566 46,892 46,731 44,630 40,194Net assets — end of period $ 615,406 $ 533,027 $ 46,622 $ 44,548 $ 47,509 $ 40,470Series O2013 2012Increase (decrease) in net assets from operations $ 48,450 $ 32,368Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 41,419 51,867Reinvestments — —Redemptions (47,545) (60,867)(6,126) (9,000)Increase (decrease) in net assets for the period 42,324 23,368Net assets — beginning of period 478,951 424,641Net assets — end of period $ 521,275 $ 448,009The accompanying notes are an integral part of these financial statements.168 Franklin Templeton Investments Funds

Bissett Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 98.96%COMMON STOCKS: 54.21%Canada: 54.21%A&W Revenue Royalties IncomeFund ......................... 15,800 $ 348 $ 333Argent Energy Trust ............... 212,200 2,077 2,169Bank of Montreal ................. 27,500 1,652 1,679Baytex Energy Corp. .............. 60,800 2,648 2,292Bell Aliant Inc. ................... 28,300 785 798Bird Construction Inc. ............. 44,300 570 575Bonavista Energy Corp. ............ 133,500 2,171 1,822Bonterra Energy Corp. ............. 37,300 1,715 1,838Boston Pizza Royalties IncomeFund ......................... 64,800 1,200 1,433Calloway Real Estate InvestmentTrust ......................... 18,900 527 483Canadian Energy Services &Technology Corp., A ............ 44,400 452 722Canadian Imperial Bank ofCommerce .................... 29,200 2,247 2,179Canexus Corp. ................... 273,300 2,241 2,512Canyon Services Group Inc. ........ 73,600 759 877Cathedral Energy Services Ltd. ...... 115,800 469 534Choice Properties Real EstateInvestment Trust ............... 72,900 729 729CML Healthcare Inc. .............. 237,100 1,982 2,501Cominar Real Estate InvestmentTrust ......................... 109,100 2,472 2,264Crescent Point Energy Corp. ........ 87,400 3,360 3,116SharesAverageCost Fair Value(000s) (000s)Canada: 54.21% (Continued)Crombie Real Estate InvestmentTrust ....................... 105,400 $ 1,569 $ 1,437Davis & Henderson Income Corp. . . 99,400 1,964 2,239DirectCash Payments Inc. ........ 35,100 819 842Eagle Energy Trust .............. 217,100 1,924 1,650Freehold Royalties Ltd. ........... 96,400 1,993 2,266Genivar Inc. ................... 99,700 2,181 2,385Labrador Iron Ore Royalty Corp. .... 22,700 728 664Medical Facilities Corp. .......... 179,200 2,466 2,715Morneau Shepell Inc. ............ 188,600 2,304 2,625New Flyer Industries Inc. ......... 292,100 2,370 3,201North West Co. Inc. ............. 13,900 305 325Northern Property Real EstateInvestment Trust .............. 29,600 916 810Parallel Energy Trust ............ 301,300 1,396 1,118Pembina Pipeline Corp. .......... 44,898 1,290 1,443PHX Energy Services Corp. ....... 172,100 1,586 1,824Power Corp. of Canada ........... 6,100 146 172Power Financial Corp. ........... 82,600 2,278 2,512RioCan Real Estate InvestmentTrust ....................... 13,000 349 328The Churchill Corp., A ........... 2,100 17 17The Keg Royalties Income Fund . . . 42,500 621 603Twin Butte Energy Ltd. ........... 1,137,544 2,690 2,582Veresen Inc. ................... 194,900 2,500 2,430Vicwest Inc. ................... 69,800 763 826Wajax Corp. ................... 67,400 2,707 2,129Zargon Oil & Gas Ltd. ............ 75,600 871 47665,157 66,475Total Common Stocks: ................. 65,157 66,475Principal Amountin Currencyof IssueBONDS: 13.14%Canada: 11.34%407 International Inc., Senior Secured Bond, 6.47%, 7/27/2029 ........................................ 163,000 CAD 219 208AltaLink Investments LPSenior Bond, 12-1, 3.674%, 6/5/2019 ........................................................... 21,000 CAD 21 21Senior Note, 13-1, 3.265%, 6/5/2020 ........................................................... 105,000 CAD 105 101Bank of Montreal, Senior Note, 4.609%, 9/10/2025 .................................................. 102,000 CAD 115 109Bank of Nova Scotia2.898% to 8/3/2017, Floating Rate Note thereafter, 8/3/2022 ......................................... 81,000 CAD 82 813.036% to 10/17/2019, Floating Rate Note thereafter, 10/18/2024 .................................... 113,000 CAD 114 111Senior Note, 2.242%, 3/22/2018 ............................................................... 55,000 CAD 55 54Baytex Energy Corp., Senior Note, 6.625%, 7/19/2022 ................................................ 15,000 CAD 15 16bcIMC Realty Corp., 5.65%, 1/5/2018 ............................................................. 75,000 CAD 86 84The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 169

Bissett Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 11.34% (Continued)Bell Aliant Regional Communications LPSenior Note, 5.41%, 9/26/2016 ............................................................. 97,000 CAD $ 105 $ 105Senior Note, 3.54%, 6/12/2020 ............................................................. 35,000 CAD 35 34Bow Centre Street LP, Secured Note, 3.797%, 6/13/2023 .......................................... 40,000 CAD 40 39British Columbia Municipal Finance Authority, 4.875%, 6/3/2019 .................................... 240,000 CAD 273 267Caisse Centrale Desjardins du Quebec, Senior Note, 2.281%, 10/17/2016 ............................. 95,000 CAD 95 95Calloway Real Estate Investment TrustSenior Bond, 5.37%, 10/12/2016 ............................................................ 98,000 CAD 107 106Senior Note, I, 3.985%, 5/30/2023 ........................................................... 10,000 CAD 10 10Cameco Corp.Senior Bond, D, 5.67%, 9/2/2019 ........................................................... 93,000 CAD 105 102Senior Bond, E, 3.75%, 11/14/2022 ......................................................... 84,000 CAD 84 79Canada Housing TrustSecured Bond, 4.10%, 12/15/2018 .......................................................... 56,000 CAD 63 61Senior Secured Bond, Floating Rate Note, 3/15/2017 ............................................ 100,000 CAD 101 101Canadian Imperial Bank of Commerce, 2.35%, 10/18/2017 ......................................... 18,000 CAD 18 18Canadian Natural Resources Ltd., 2.89%, 8/14/2020 .............................................. 55,000 CAD 55 53Capital Desjardins Inc.Senior Note, 3.797% to 11/23/2015, Floating Rate Note thereafter, 11/23/2020 ....................... 95,000 CAD 99 98Senior Note, 5.756% to 4/1/2014, Floating Rate Note thereafter, 4/1/2019 ........................... 92,000 CAD 96 95Senior Secured Note, G, 5.187%, 5/5/2020 .................................................... 143,000 CAD 161 157CDP Financial Inc., Senior Note, 4.60%, 7/15/2020 ............................................... 105,000 CAD 117 115Centre Street Trust, Secured Note, A, 3.69%, 6/14/2021 ........................................... 29,000 CAD 29 28City of Montreal, 5.00%, 12/1/2018 ............................................................ 108,000 CAD 121 120City of Toronto Canada4.95%, 6/27/2018 ........................................................................ 180,000 CAD 205 2003.50%, 12/6/2021 ........................................................................ 85,000 CAD 88 854.70%, 6/10/2041 ........................................................................ 56,000 CAD 62 603.80%, 12/13/2042 ....................................................................... 191,000 CAD 189 176CU Inc.Senior Bond, 3.805%, 9/10/2042 ............................................................ 52,000 CAD 52 48Senior Note, 5.563%, 5/26/2028 ............................................................ 54,000 CAD 66 62Eagle Credit Card Trust, 102A, Senior Secured Note, 3.474%, 12/17/2015 ............................. 50,000 CAD 52 52Enbridge Inc., Floating Rate Note, 8/19/2015 .................................................... 157,000 CAD 158 158Enbridge Income Fund Holdings Inc.3.94%, 1/13/2023 ........................................................................ 27,000 CAD 27 27Senior Note, 2.92%, 12/14/2017 ............................................................ 21,000 CAD 21 21Senior Note, Floating Rate Note, 11/28/2014 ................................................... 45,000 CAD 45 45Fairfax Financial Holdings Ltd., 5.84%, 10/14/2022 ............................................... 74,000 CAD 77 76Financement Quebec, Floating Rate Note, 6/1/2018 ............................................... 245,000 CAD 247 247Finning International Inc., 3.232%, 7/3/2020 .................................................... 30,000 CAD 30 30First Capital Realty Inc., Senior Bond, Q, 3.90%, 10/30/2023 ........................................ 120,000 CAD 121 115Flint Energy Services Ltd., Reg S, 7.50%, 6/15/2019 .............................................. 65,000 CAD 72 71Government of Canada2.75%, 6/1/2022 ......................................................................... 274,000 CAD 298 2835.75%, 6/1/2029 ......................................................................... 120,000 CAD 178 1665.75%, 6/1/2033 ......................................................................... 200,000 CAD 310 2875.00%, 6/1/2037 ......................................................................... 90,000 CAD 129 1224.00%, 6/1/2041 ......................................................................... 221,000 CAD 292 267The accompanying notes are an integral part of these financial statements.170 Franklin Templeton Investments Funds

Bissett Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 11.34% (Continued)Great-West Lifeco Finance Delaware, 5.691% to 6/21/2017, Floating Rate Note thereafter, 6/21/2067 ...... 129,000 CAD $ 139 $ 142Great-West Lifeco Inc., Senior Bond, 6.67%, 3/21/2033 .......................................... 110,000 CAD 144 140Greater Toronto Airports Authority, Senior Secured Bond, First Lien, 7.05%, 6/12/2030 ................. 50,000 CAD 70 66Home Capital Group Inc., 5.20%, 5/4/2016 .................................................... 101,000 CAD 104 104HSBC Bank Canada3.86%, 5/21/2015 ...................................................................... 85,000 CAD 89 882.572%, 11/23/2015 .................................................................... 120,000 CAD 120 1213.558%, 10/4/2017 ..................................................................... 80,000 CAD 84 83Senior Note, 2.938%, 1/14/2020 ........................................................... 27,000 CAD 27 27Senior Note, Floating Rate Note, 1/21/2016 .................................................. 37,000 CAD 37 37Hydro One Inc., 6.93%, 6/1/2032 ............................................................ 52,000 CAD 73 69Hydro-Quebec, HL, 11.00%, 8/15/2020 ....................................................... 200,000 CAD 317 303Inter Pipeline Fund, Senior Note, 3.839%, 7/30/2018 ............................................ 75,000 CAD 80 78Manulife Bank of Canada, Senior Note, Floating Rate Note, 12/3/2014 ............................... 18,000 CAD 18 18Manulife Financial Corp., Senior Note, 5.505%, 6/26/2018 ........................................ 97,000 CAD 107 108Master Credit Card Trust, Secured Note, 12-1, 2.626%, 1/21/2017 ................................. 71,000 CAD 71 72National Housing Association1.70%, 8/1/2017 ....................................................................... 22,855 CAD 22 221.70%, 12/1/2017 ...................................................................... 78,791 CAD 78 76Floating Rate Note, 3/1/2016 .............................................................. 95,378 CAD 97 97NBC Asset Trust, Perpetual, Junior Subordinated Bond, 7.235% ................................... 55,000 CAD 67 65OMERS Realty Corp., 4.74%, 6/4/2018 ....................................................... 81,000 CAD 90 89Ontario School Boards Finance, 06A1, 5.07%, 4/18/2031 ......................................... 189,667 CAD 206 200Ontario Strategic Infrastructure Finance, 4.60%, 6/1/2015 ........................................ 380,000 CAD 406 400OPB Finance TrustSenior Bond, A, 3.89%, 7/4/2042 .......................................................... 30,000 CAD 30 28Senior Note, 2.90%, 5/24/2023 ............................................................ 100,000 CAD 100 96Province of British Columbia5.70%, 6/18/2029 ...................................................................... 145,000 CAD 189 1806.35%, 6/18/2031 ...................................................................... 120,000 CAD 164 160Province of Manitoba4.40%, 9/5/2025 ....................................................................... 400,000 CAD 454 4366.30%, 3/5/2031 ....................................................................... 140,000 CAD 196 185Province of New Brunswick3.35%, 12/3/2021 ...................................................................... 118,000 CAD 121 1205.50%, 1/27/2034 ...................................................................... 365,000 CAD 467 4413.55%, 6/3/2043 ....................................................................... 81,000 CAD 81 74Province of Nova Scotia, 4.40%, 6/1/2042 ..................................................... 107,000 CAD 122 115Province of Ontario4.20%, 3/8/2018 ....................................................................... 171,000 CAD 189 1862.85%, 6/2/2023 ....................................................................... 260,000 CAD 262 2494.70%, 6/2/2037 ....................................................................... 241,000 CAD 288 2694.65%, 6/2/2041 ....................................................................... 315,000 CAD 379 353Floating Rate Note, 9/22/2017 ............................................................. 235,000 CAD 235 235Floating Rate Note, 11/23/2017 ........................................................... 1,244,000 CAD 1,246 1,251Province of Quebec, 6.25%, 6/1/2032 ........................................................ 346,000 CAD 476 450PSP Capital Inc., Senior Note, 2.26%, 2/16/2017 ............................................... 92,000 CAD 93 92The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 171

Bissett Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Canada: 11.34% (Continued)Rogers Communications Inc.Senior Note, 5.38%, 11/4/2019 ............................................................. 111,000 CAD $ 127 $ 123Senior Note, 5.34%, 3/22/2021 ............................................................. 125,000 CAD 141 137Royal Bank of Canada5.95%, 6/18/2014 ........................................................................ 59,000 CAD 63 61Senior Note, 2.68%, 12/8/2016 ............................................................. 70,000 CAD 71 71Senior Note, 3.66%, 1/25/2017 ............................................................. 91,000 CAD 96 95Senior Note, 2.58%, 4/13/2017 ............................................................. 80,000 CAD 81 80Senior Note, 4.93%, 7/16/2025 ............................................................. 107,000 CAD 124 118Spy Hill Power LP, Secured Note, 4.14%, 3/31/2036 .............................................. 38,757 CAD 39 37Sun Life Capital Trust, Senior Bond, Reg S, 5.863%, 12/31/2108 .................................... 65,000 CAD 74 73Sun Life Financial Inc., Senior Bond, 4.95% to 6/1/2016, Floating Rate Note thereafter, 6/1/2036 .......... 140,000 CAD 143 148Suncor Energy Inc., 5.80%, 5/22/2018 ......................................................... 68,000 CAD 78 77The Toronto-Dominion BankSubordinated Note, 5.48% to 4/2/2015, Floating Rate Note thereafter, 4/2/2020 ...................... 110,000 CAD 119 117Subordinated Note, 5.763% to 12/18/2017, Floating Rate Note thereafter, 12/18/2106 ................. 193,000 CAD 219 216TransCanada PipeLines Ltd., Senior Bond, 8.05%, 2/17/2039 ....................................... 45,000 CAD 72 68Union Gas Ltd., Senior Bond, 3.79%, 7/10/2023 ................................................. 45,000 CAD 45 45Westcoast Energy Inc., Senior Note, 4.57%, 7/2/2020 ............................................. 47,000 CAD 52 5114,327 13,908United States: 0.99%American International Group Inc., Senior Note, 4.90%, 6/2/2014 .................................... 102,000 CAD 104 105Aon Finance NS1 ULC, Senior Note, 4.76%, 3/8/2018 ............................................. 101,000 CAD 106 107Bank of America Corp., 4.36%, 9/21/2015 ...................................................... 145,000 CAD 147 152GE Capital Canada Funding Co.4.40%, 2/8/2018 ......................................................................... 75,000 CAD 82 805.73%, 10/22/2037 ...................................................................... 129,000 CAD 153 150Senior Note, Floating Rate Note, 6/11/2014 .................................................... 34,000 CAD 34 34General Electric Capital Corp., B, 6.25% to 12/15/2049, Floating Rate Note thereafter, Perpetual ........... 13,000 USD 13 15JPMorgan Chase & Co., Senior Note, 2.92%, 9/19/2017 ........................................... 81,000 CAD 82 80Metropolitan Life Global Funding I4.45%, 11/8/2013 ........................................................................ 112,000 CAD 115 1132.624%, 4/10/2015 ...................................................................... 130,000 CAD 131 131Morgan Stanley, Senior Note, 4.85%, 2/3/2016 ................................................... 14,000 CAD 14 15Safeway Inc., Senior Bond, 3.95%, 8/15/2020 ................................................... 37,000 USD 35 38The Goldman Sachs Group Inc., Senior Note, 3.375%, 2/1/2018 ..................................... 75,000 CAD 75 75Wells Fargo Financial Canada Corp.Senior Note, 2.774%, 2/9/2017 ............................................................. 49,000 CAD 50 49Senior Note, 3.46%, 1/24/2023 ............................................................. 78,000 CAD 78 751,219 1,219United Kingdom: 0.25%BP Capital Markets PLC, 2.744%, 2/24/2017 .................................................... 72,000 CAD 72 73Heathrow Funding Ltd., Secured Note, 4.00%, 7/3/2019 ........................................... 14,000 CAD 14 14HSBC Bank Canada, 2.901%, 1/13/2017 ....................................................... 90,000 CAD 92 91Network Rail Infrastructure Finance PLC, 4.40%, 3/6/2016 ......................................... 125,000 CAD 135 131313 309The accompanying notes are an integral part of these financial statements.172 Franklin Templeton Investments Funds

Bissett Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)Supranational: 0.21%Inter-American Development Bank, 4.40%, 1/26/2026 ........................................... 238,000 CAD $ 266 $ 251France: 0.17%Government of France, 4.45%, 10/26/2018 .................................................... 192,000 CAD 203 205South Korea: 0.13%Korea Gas Corp., Senior Note, 4.58%, 5/12/2016 ............................................... 151,000 CAD 156 157Australia: 0.05%BHP Billiton Finance Ltd., 3.23%, 5/15/2023 .................................................. 67,000 CAD 67 63Total Bonds: ............................................................................. 16,551 16,112INVESTMENTS IN UNDERLYING FUNDS: 31.61%Bissett Bond Fund ........................................................................ 247,341 3,771 3,683Bissett Corporate Bond Fund ............................................................... 61,239 670 671Franklin Strategic Income Fund ............................................................. 4,053,660 34,569 34,416Total Investments In Underlying Funds: ........................................................ 39,010 38,770Total Long-Term Investments: ................................................................ 120,718 121,357UnitsPrincipal Amountin Currencyof IssueSHORT-TERM SECURITIES: 1.71%Royal Bank of Canada, Term Deposit, 0.97%, 7/2/2013 .......................................... 2,100,000 CAD 2,100 2,100Total Short-Term Securities: ................................................................. 2,100 2,100Transaction costs (Note 2) .................................................................... (63) —TOTAL INVESTMENTS: 100.67% ............................................................ $122,755 123,457NET UNREALIZED LOSS ON DERIVATIVES: .................................................... (1)OTHER ASSETS, less liabilities: (0.67%) ...................................................... (822)TOTAL NET ASSETS: 100.00% .............................................................. $122,634SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)CREDIT SUISSE INTERNATIONAL ....... A+ July 22, 2013 6 USD $ 6 6 CAD $ 6 1.0307 $ —CREDIT SUISSE INTERNATIONAL ....... A+ July 22, 2013 7 USD 7 7 CAD 7 1.0333 —CREDIT SUISSE INTERNATIONAL ....... A+ July 22, 2013 11 USD 12 12 CAD 12 1.0502 —CREDIT SUISSE INTERNATIONAL ....... A+ July 22, 2013 25 USD 26 25 CAD 25 1.0198 $ (1)Total Number of Contracts ..........4 $(1)Net Unrealized Loss ................. $(1)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 173

Bissett Strategic Income FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Bond Ratings*2013 2012%ofNet Assets%ofNet AssetsAAA ................................ 2.47 2.89AA ................................. 4.86 4.98A .................................. 4.30 5.74BBB ............................... 1.47 1.70BB ................................. 0.01 0.02Not Rated ........................... 0.03 —* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’s andFitch ratings.The accompanying notes are an integral part of these financial statements.174 Franklin Templeton Investments Funds

Bissett Strategic Income FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 123,457 $ 80,370CashCanadian 25 2ReceivablesInvestment securities sold 439 —Capital units sold 187 180Dividends and interest 735 387Other assets (Note 8) 33 26Total assets 124,876 80,965LiabilitiesPayablesInvestment securities purchased 1,583 41Capital units redeemed 84 1Management fees 201 129Accrued expenses 61 57Distributions to unitholders 312 —Unrealized loss on derivatives 1 —Total liabilities 2,242 228Net assets $ 122,634 $ 80,737Total net assets per series (000s)Series A $ 116,334 $ 76,640Series F 3,022 2,324Series I 2,165 904Series O 1,113 869Number of units outstanding (Note 3)Series A 10,752,877 7,202,478Series F 274,653 215,915Series I 198,374 84,564Series O 99,445 79,849Net assets per unit — CADSeries A $10.82 $10.64Series F 11.00 10.76Series I 10.91 10.70Series O 11.20 10.89Net assets per unit — USDSeries A $10.29 $10.71Series F 10.46 10.83Series I 10.38 10.77Series O 10.65 10.96Cost of investments held (000s) $122,755 $79,985STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDistributions received from underlying funds(Note 4(d)) $ 813 $ 222Dividends 1,660 428Interest 310 40Total investment income 2,783 690ExpensesManagement fees (Note 4(a)) 1,045 201Transfer agent fees (Note 4(c)) 167 34Custodian fees 6 1Legal fees 1 —Audit fees 9 10Unitholder reporting costs 6 4Independent review committee fees 1 1Registration fees 11 5Other expenses (Note 7) 47 14Total expenses 1,293 270Expenses waived/paid by Manager (Note 6) (124) (45)Net expenses 1,169 225Net investment income (loss) 1,614 465Realized and unrealized gain (loss) on investmentsand transaction costsNet realized gain (loss) on investments 875 (103)Net realized and/or unrealized foreign exchange gain(loss) (1) (1)Net change in unrealized appreciation (depreciation)in value of investments and derivatives 316 (1,127)Transaction costs (Note 11) (45) (21)Net gain (loss) on investments 1,145 (1,252)Increase (decrease) in net assets from operations $ 2,759 $ (787)Increase (decrease) in net assets from operationsper series (000s)Series A $2,593 $(694)Series F 89 (27)Series I 36 (64)Series O 41 (2)Increase (decrease) in net assets from operationsper unitSeries A $0.29 $(0.38)Series F 0.37 (0.38)Series I 0.27 (0.96)Series O 0.49 (0.26)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 175

Bissett Strategic Income FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 2,759 $ (787) $ 2,593 $ (694) $ 89 $ (27)Distributions to unitholdersFrom net investment income (1,336) (376) (1,274) (350) (33) (13)From capital gains — — — — — —From return of capital (300) — (285) — (7) —(1,636) (376) (1,559) (350) (40) (13)Capital unit transactionsSubscriptions 51,443 41,682 48,581 37,986 1,018 1,440Reinvestments 1,162 213 1,104 194 29 8Redemptions (11,831) (2,444) (11,025) (960) (398) (50)40,774 39,451 38,660 37,220 649 1,398Increase (decrease) in net assets for the period 41,897 38,288 39,694 36,176 698 1,358Net assets — beginning of period 80,737 2,030 76,640 2,015 2,324 5Net assets — end of period $ 122,634 $ 40,318 $ 116,334 $ 38,191 $ 3,022 $ 1,363Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ 36 $ (64) $ 41 $ (2)Distributions to unitholdersFrom net investment income (17) (11) (12) (2)From capital gains — — — —From return of capital (5) — (3) —(22) (11) (15) (2)Capital unit transactionsSubscriptions 1,627 2,106 217 150Reinvestments 17 10 12 1Redemptions (397) (1,434) (11) —1,247 682 218 151Increase (decrease) in net assets for the period 1,261 607 244 147Net assets — beginning of period 904 5 869 5Net assets — end of period $ 2,165 $ 612 $ 1,113 $ 152The accompanying notes are an integral part of these financial statements.176 Franklin Templeton Investments Funds

Bissett U.S. Focus FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 97.45%COMMON STOCKS: 97.45%Health Care: 20.46%Abbott Laboratories ....................... 42,800 $ 1,860 $ 1,569Actavis Inc. . . ........................... 11,900 921 1,580Amgen Inc. . . ........................... 13,800 915 1,431Cigna Corp. . . ........................... 23,800 1,267 1,814Eli Lilly & Co. . ........................... 29,200 1,310 1,507Johnson & Johnson ....................... 17,000 1,116 1,535Merck & Co. Inc. ......................... 31,200 1,138 1,524Pfizer Inc. . ............................. 57,000 1,136 1,6819,663 12,641Financials: 15.85%ACE Ltd. . . ............................. 15,300 1,138 1,439Discover Financial Services ................. 31,600 1,227 1,582M&T Bank Corp. ......................... 12,200 1,260 1,432The Allstate Corp. ........................ 36,900 1,209 1,866The Travelers Companies Inc. ................ 18,500 1,216 1,555Torchmark Corp. ......................... 28,100 1,176 1,9247,226 9,798Information Technology: 15.24%Apple Inc. . ............................. 3,150 1,357 1,312Hewlett-Packard Co. ...................... 67,000 1,415 1,745International Business Machines Corp. ......... 6,925 1,161 1,390Microsoft Corp. .......................... 43,100 1,132 1,565Visa Inc., A . . ........................... 9,900 1,306 1,900Western Digital Corp. ...................... 23,100 902 1,5087,273 9,420Consumer Staples: 15.15%CVS Caremark Corp. ...................... 26,900 1,170 1,617Kimberly-Clark Corp. ...................... 16,800 1,191 1,711PepsiCo Inc. . ........................... 15,900 1,062 1,367Reynolds American Inc. .................... 28,800 1,030 1,462The Kroger Co. .......................... 52,100 1,216 1,892Wal-Mart Stores Inc. ...................... 16,800 976 1,3166,645 9,365Industrials: 9.22%General Dynamics Corp. .................... 17,300 1,117 1,424L-3 Communications Holdings Inc. . . .......... 13,900 1,016 1,254Northrop Grumman Corp. ................... 19,200 1,172 1,672Raytheon Co. ........................... 19,400 950 1,3494,255 5,699Energy: 6.57%Chevron Corp. ........................... 12,000 1,167 1,491Exxon Mobil Corp. ........................ 13,400 1,080 1,267Valero Energy Corp. ....................... 35,700 898 1,3043,145 4,062SharesAverageCost Fair Value(000s) (000s)Consumer Discretionary: 6.50%Darden Restaurants Inc. ................... 23,100 $ 1,192 $ 1,226McDonald’s Corp. ........................ 13,000 1,130 1,352Target Corp. ............................ 19,900 1,263 1,4393,585 4,017Utilities: 4.67%NextEra Energy Inc. ....................... 18,400 1,080 1,576PG&E Corp. ............................ 27,200 1,181 1,3082,261 2,884Telecommunication Services: 2.02%AT&T Inc. .............................. 33,500 1,235 1,246Materials: 1.77%CF Industries Holdings Inc. ................. 6,050 963 1,092Total Common Stocks: ..................... 46,251 60,224Transaction costs (Note 2) ................... (21) —TOTAL INVESTMENTS: 97.45% ............... $46,230 60,224OTHER ASSETS, less liabilities: 2.55% .......... 1,574TOTAL NET ASSETS: 100.00% ............... $61,798The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 177

Bissett U.S. Focus FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 60,224 $ 146,033CashForeign 1,501 2,501ReceivablesDividends 73 221Total assets 61,798 148,755Net assets $ 61,798 $ 148,755Total net assets per series (000s)Series O $61,798 $148,755Number of units outstanding (Note 3)Series O 5,238,369 15,658,274Net assets per unit — CADSeries O $11.80 $9.50Net assets per unit — USDSeries O $11.22 $9.56Cost of investments held (000s) $46,230 $133,881STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $118; 2012 — $259) $ 2,928 $ 1,929Interest — —Total investment income 2,928 1,929ExpensesManagement fees (Note 4(a)) — —Transfer agent fees (Note 4(c)) — —Custodian fees — —Legal fees — —Audit fees 9 9Unitholder reporting costs 3 3Independent review committee fees 1 1Registration fees 15 14Other expenses (Note 7) 4 5Total expenses 32 32Expenses waived/paid by Manager (Note 6) (32) (32)Net expenses — —Net investment income (loss) 2,928 1,929Realized and unrealized gain (loss) on investmentsand transaction costsNet realized gain (loss) on investments 13,636 5,682Net realized and/or unrealized foreign exchange gain(loss) (370) (591)Net change in unrealized appreciation (depreciation)in value of investments 1,842 2,186Transaction costs (Note 11) (27) (63)Net gain (loss) on investments 15,081 7,214Increase (decrease) in net assets from operations $ 18,009 $ 9,143Increase (decrease) in net assets from operationsper series (000s)Series O $18,009 $9,143Increase (decrease) in net assets from operationsper unitSeries O $1.31 $0.67The accompanying notes are an integral part of these financial statements.178 Franklin Templeton Investments Funds

Bissett U.S. Focus FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)Series O2013 2012Increase (decrease) in net assets from operations $ 18,009 $ 9,143Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 2,140 19,275Reinvestments — 2,554Redemptions (107,106) (63,806)(104,966) (41,977)Increase (decrease) in net assets for the period (86,957) (32,834)Net assets — beginning of period 148,755 159,240Net assets — end of period $ 61,798 $ 126,406The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 179

Mutual Beacon FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 99.02%COMMON STOCKS: 90.69%United States: 62.53%ACE Ltd. . ...................... 26,294 $ 1,444 $ 2,473Adelphia Recovery Trust, ACC-1,Contingent Distribution ........... 4,363,220 297 6Adelphia Recovery Trust, Arahova,Contingent Distribution ........... 273,503 111 4Altria Group Inc. .................. 68,712 1,768 2,527American International Group Inc. ..... 65,676 2,016 3,089Apache Corp. . . .................. 42,182 4,075 3,716Apple Inc. ...................... 9,055 4,014 3,771Avon Products Inc. ................ 92,748 1,453 2,051CB FIM Coinvestors LLC ............. 1,743,420 — —Century Communications Corp.,Contingent Distribution ........... 10,000 — —Century Communications Corp.,Contingent Distribution ........... 154,000 — —Century Communications Corp.,Contingent Distribution ........... 19,000 — —Century Communications Corp.,Contingent Distribution ........... 34,000 — —Century Communications Corp.,Contingent Distribution ........... 240,000 — —Century Communications Corp.,Contingent Distribution ........... 310,000 — —Cigna Corp. . . . .................. 45,300 2,088 3,452Cisco Systems Inc. ................ 100,958 1,846 2,580Comcast Corp., Special A ............ 36,402 871 1,519Comdisco Holding Co. Inc. .......... 52 — —CONSOL Energy Inc. ............... 84,980 2,819 2,420CVS Caremark Corp. ............... 35,364 1,299 2,125Dell Inc. . . ...................... 129,850 1,761 1,818FIM Coinvestor Holdings I, LLC ........ 2,180,996 — —Freeport-McMoRan Copper & GoldInc., B . ...................... 104,779 3,340 3,040Global Crossing Holdings Ltd., ContingentDistribution . . .................. 25,000 — —Global Crossing Holdings Ltd., ContingentDistribution . . .................. 20,000 — —Global Crossing Holdings Ltd., ContingentDistribution . . .................. 135,000 — —Global Crossing Holdings Ltd., ContingentDistribution . . .................. 112,000 — —Global Crossing Holdings Ltd., ContingentDistribution . . .................. 70,000 — —Global Crossing Holdings Ltd., ContingentDistribution . . .................. 779,871 — —Google Inc., A . . .................. 1,126 623 1,041Hospira Inc. . . . .................. 63,504 1,958 2,558SharesAverageCost Fair Value(000s) (000s)United States: 62.53% (Continued)International Automotive ComponentsGroup North America, LLC ......... 1,712,964 $ 2,209 $ 808JPMorgan Chase & Co. ............. 44,920 1,556 2,492Lehman Brothers Holdings Inc. ....... 7,770,249 3,529 3,595Lorillard Inc. .................... 85,449 2,707 3,918Marathon Oil Corp. . . . ............. 57,108 1,491 2,075Medtronic Inc. ................... 98,458 3,429 5,329Merck & Co. Inc. ................. 100,650 3,382 4,915Microsoft Corp. ................... 187,869 5,197 6,820Morgan Stanley ................... 90,971 2,163 2,336News Corp., B .................... 169,634 3,341 5,852Olympus Re Holdings Ltd. ........... 1,880 278 —ON Semiconductor Corp. ........... 237,786 1,503 2,015Raytheon Co. .................... 13,754 574 956Rowan Companies PLC ............. 50,520 1,670 1,809SanDisk Corp. ................... 18,629 670 1,196SunTrust Banks Inc. . . ............. 24,147 780 801Symantec Corp. . ................. 80,310 1,330 1,896The Bankshares Inc. . . ............. 449,097 5,198 2,265The Blackstone Group LP ............ 96,565 1,190 2,139Time Warner Cable Inc. ............ 20,910 1,517 2,473Transocean Ltd. . ................. 77,542 5,348 3,909Tribune Co., 1C ................... 34,881 — —Tribune Co., A .................... 12,308 522 735Tribune Co., B .................... 7,547 320 448Tribune Co., Warrants, 12/31/2032 . . . . . 23,488 996 1,403TRW Automotive Holdings Corp. ...... 19,258 803 1,345UnitedHealth Group Inc. ............ 21,216 1,318 1,461Walgreen Co. .................... 47,733 1,437 2,216Wells Fargo & Co. ................. 104,812 2,981 4,547White Mountains Insurance GroupLtd. ......................... 7,228 3,817 4,373WPX Energy Inc. ................. 226,758 3,702 4,515Xerox Corp. ..................... 390,708 3,524 3,718100,265 120,550United Kingdom: 13.17%BG Group PLC ................... 52,090 855 932BPPLC ........................ 117,782 808 857British American Tobacco PLC ........ 83,491 2,404 4,496British Sky Broadcasting Group PLC . . . . 62,700 708 794Canary Wharf Group PLC ............ 953,128 4,790 4,276Coca-Cola Enterprises Inc. .......... 40,971 1,014 1,514Imperial Tobacco Group PLC ......... 76,460 2,321 2,787Kingfisher PLC ................... 153,439 777 841Marconi Corp., Contingent Distribution . . 147,700 — —Marconi Corp., Contingent Distribution . . 547,500 — —Marconi Corp., Contingent Distribution . . 140,000 — —Marconi Corp., Contingent Distribution . . 15,000 — —Marconi Corp., Contingent Distribution . . 247,000 — —The accompanying notes are an integral part of these financial statements.180 Franklin Templeton Investments Funds

Mutual Beacon FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)United Kingdom: 13.17% (Continued)Marconi Corp., Contingent Distribution . . 212,000 $ — $ —Reed Elsevier PLC ................. 148,750 1,242 1,777RSA Insurance Group PLC ........... 1,348,041 2,373 2,565Vodafone Group PLC ............... 1,512,275 3,637 4,54220,929 25,381Israel: 2.86%Check Point Software TechnologiesLtd. . . . ...................... 63,959 2,887 3,339Teva Pharmaceutical Industries Ltd.,American Depositary Receipt ....... 52,723 2,051 2,1724,938 5,511Switzerland: 2.24%Dufry AG . . ...................... 6,840 877 855Novartis AG, American DepositaryReceipt ...................... 29,264 1,571 2,176Swatch Group AG ................. 2,250 882 1,2893,330 4,320Netherlands: 1.76%Fugro NV, International DepositoryReceipt ...................... 25,632 1,447 1,461ING Groep NV, International DepositoryReceipt ...................... 201,243 1,435 1,9272,882 3,388Canada: 1.49%Open Text Corp. .................. 39,805 1,952 2,865Norway: 1.10%Telenor ASA . . . .................. 101,900 1,584 2,124Luxembourg: 1.03%RTL Group SA . . .................. 23,006 1,690 1,979SharesAverageCost Fair Value(000s) (000s)Denmark: 0.99%TDCAS .......................... 223,110 $ 1,658 $ 1,900France: 0.74%GDF Suez ........................ 46,019 1,222 948Pernod Ricard SA ................... 4,144 348 4831,570 1,431Germany: 0.69%ThyssenKrupp AG ................... 64,674 2,009 1,340Belgium: 0.65%Ageas ........................... 34,077 801 1,258Italy: 0.47%Fiat Industrial SpA . ................. 77,995 913 910Brazil: 0.39%International Automotive Components GroupBrazil LLC ...................... 250,482 192 58Petroleo Brasileiro SA, American DepositaryReceipt ........................ 48,957 878 6901,070 748India: 0.33%Polaris Financial Technology Ltd. ....... 320,185 1,097 646Australia: 0.25%AET&D Holdings No. 1 Pty. Ltd. ........ 493,842 — —Boart Longyear Ltd. ................. 730,655 1,479 4741,479 474Total Common Stocks: ................ 148,167 174,825PREFERRED STOCKS: 0.93%Porsche Automobile Holding SE,Preferred ....................... 21,883 1,390 1,786Total Preferred Stocks: ............... 1,390 1,786Principal Amountin Currencyof IssueBONDS: 7.40%United States: 7.25%American Airlines Inc.First Lien, 13.00%, 8/1/2016 .............................................................. 14,960 USD 16 17Senior Secured Note, 7.50%, 3/15/2016 ..................................................... 2,726,000 USD 2,451 3,332American Airlines Pass Through Trust2009-1A, 10.375%, 7/2/2019 .............................................................. 38,419 USD 39 432011-2A, 8.625%, 4/15/2023 .............................................................. 161,978 USD 168 181Broadband Ventures III LLC, Secured Promissory Note, 5.00%, 2/20/2049 ............................ 325USD — —Caesars Entertainment Operating Co. Inc.First Lien, Senior Tranche Term Loan, B5, Floating Rate Note, 1/28/2018 ........................... 108,000 USD 97 97First Lien, Senior Tranche Term Loan, B6, Floating Rate Note, 1/28/2018 ........................... 595,000 USD 551 554Cengage Learning Acquisitions Inc., Floating Rate Note, 7/3/2014 ................................... 802,311 USD 638 627The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 181

Mutual Beacon FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)United States: 7.25% (Continued)Clear Channel Communications Inc. ..........................................................9.00%, 12/15/2019 ....................................................................... 1,145,000 USD $ 997 $ 1,168Tranche B Term Loan, Floating Rate Note, 1/29/2016 ............................................ 359,194 USD 307 346Tranche C Term Loan, Floating Rate Note, 1/29/2016 ............................................ 71,972 USD 60 69Tranche D Term Loan, Floating Rate Note, 1/30/2019 ............................................ 1,271,753 USD 1,080 1,222Energy Future Intermediate Holding Co. LLC/EFIH Finance Inc., Second Lien, 11.00%, 10/1/2021 ........ 303,000 USD 306 342KIK Custom Products Inc., Second Lien Term Loan, Floating Rate Note, 11/17/2019 ................... 1,031,000 USD 1,040 1,073Texas Competitive Electric Holdings Co. LLC, Extended Term Loan, Floating Rate Note, 10/10/2017 ....... 2,520,354 USD 1,972 1,863Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc.Senior Note, A, 10.25%, 11/1/2015 ........................................................ 1,403,000 USD 229 136Senior Secured Note, 11.50%, 10/1/2020 Please capitalize Secured .............................. 2,377,000 USD 2,012 1,868The Great Atlantic & Pacific Tea Co. Inc., Senior Secured, First Lien Exit Term Loan, Floating Rate Note,3/13/2017 ............................................................................ 964,255 USD 920 1,03412,883 13,972Italy: 0.15%Wind Acquisition Finance SASenior Note, 11.75%, 7/15/2017 .......................................................... 133,000 EUR 138 189Senior Note, 11.75%, 7/15/2017 .......................................................... 100,000 USD 85 109223 298Total Bonds: ............................................................................. 13,106 14,270Total Long-Term Investments: ................................................................ 162,663 190,881SHORT-TERM SECURITIES: 1.99% ..........................................................U.S. Treasury Bill0.103%, 9/26/2013* .................................................................... 500,000 USD 508 5260.105%, 7/5/2013 ...................................................................... 1,000,000 USD 1,026 1,0510.11%, 9/5/2013** ..................................................................... 1,650,000 USD 1,697 1,7350.125%, 8/22/2013 ..................................................................... 300,000 USD 306 3150.125%, 8/29/2013*** .................................................................. 200,000 USD 205 210Total Short-Term Securities: ................................................................. 3,742 3,837Transaction costs (Note 2) ................................................................... (186) —TOTAL INVESTMENTS: 101.01% ............................................................ $166,219 194,718NET UNREALIZED LOSS ON DERIVATIVES: (2.11%) ............................................ (4,066)OTHER ASSETS, less liabilities: 1.10% ........................................................ 2,128TOTAL NET ASSETS: 100.00% ................................................................. $192,780* Principal amount of USD $326,667 Pledged as collateral as at June 30, 2013** Principal amount of USD $415,758 Pledged as collateral as at June 30, 2013*** Principal amount of USD $14,850 Pledged as collateral as at June 30, 2013The accompanying notes are an integral part of these financial statements.182 Franklin Templeton Investments Funds

Mutual Beacon FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 21,498 KRW $ 20 19 USD $ 20 0.0009 $ —CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 31,351 KRW 29 28 USD 30 0.0009 1CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 41,075 KRW 38 37 USD 39 0.0009 1CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 42,267 KRW 39 38 USD 40 0.0009 1CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 59,028 KRW 54 53 USD 56 0.0009 2CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 62,010 KRW 57 55 USD 58 0.0009 1CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 97,800 KRW 90 87 USD 92 0.0009 2CREDIT SUISSE INTERNATIONAL ... A+ September 20, 2013 1,528 CAD 1,528 1,500 USD 1,580 0.9814 52CREDIT SUISSE INTERNATIONAL ... A+ September 20, 2013 3,089 CAD 3,089 3,000 USD 3,161 0.9713 72CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 2 EUR 3 2 CHF 3 1.2349 —CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 61 CAD 62 46 EUR 63 0.7453 1CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 106 CAD 106 68 GBP 108 0.6382 2CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 122 CAD 122 92 EUR 127 0.7595 5CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 139 CAD 140 90 GBP 145 0.6480 5CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 146 CAD 145 109 EUR 150 0.7512 5CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 387 NOK 67 50 EUR 69 0.1294 2CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 427 CHF 477 349 EUR 478 0.8156 1CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 879 DKK 162 118 EUR 162 0.1343 —CREDIT SUISSE INTERNATIONAL ... A+ September 24, 2013 3 CAD 3 257 JPY 3 100.0039 —CREDIT SUISSE INTERNATIONAL ... A+ September 24, 2013 4 CAD 5 446 JPY 5 100.3870 —CREDIT SUISSE INTERNATIONAL ... A+ September 24, 2013 6 CAD 7 612 JPY 7 95.8522 —CREDIT SUISSE INTERNATIONAL ... A+ September 24, 2013 29 CAD 29 2,814 JPY 30 97.0189 1CREDIT SUISSE INTERNATIONAL ... A+ September 24, 2013 31 CAD 31 3,098 JPY 33 100.1014 2CREDIT SUISSE INTERNATIONAL ... A+ September 24, 2013 38 CAD 38 3,631 JPY 39 96.5074 1CREDIT SUISSE INTERNATIONAL ... A+ September 24, 2013 16,368 JPY 174 178 CAD 178 0.0109 4DEUTSCHE BANK AG ............. A+ August 12, 2013 41,020 KRW 38 37 USD 39 0.0009 1DEUTSCHE BANK AG ............. A+ August 12, 2013 42,921 KRW 39 38 USD 40 0.0009 1DEUTSCHE BANK AG ............. A+ August 12, 2013 47,286 KRW 44 42 USD 45 0.0009 1DEUTSCHE BANK AG ............. A+ September 20, 2013 3,115 CAD 3,115 3,003 USD 3,164 0.9640 49DEUTSCHE BANK AG ............. A+ September 23, 2013 6 AUD 6 6 CAD 7 1.0444 1DEUTSCHE BANK AG ............. A+ September 23, 2013 14 EUR 20 18 CHF 20 1.2435 —DEUTSCHE BANK AG ............. A+ September 23, 2013 17 AUD 16 16 CAD 16 0.9608 —DEUTSCHE BANK AG ............. A+ September 23, 2013 19 AUD 18 19 CAD 19 0.9934 1DEUTSCHE BANK AG ............. A+ September 23, 2013 24 EUR 33 30 CHF 33 1.2420 —DEUTSCHE BANK AG ............. A+ September 23, 2013 26 AUD 25 25 CAD 25 0.9739 —DEUTSCHE BANK AG ............. A+ September 23, 2013 28 CHF 32 23 EUR 32 0.8207 —DEUTSCHE BANK AG ............. A+ September 23, 2013 31 AUD 29 32 CAD 32 1.0596 3DEUTSCHE BANK AG ............. A+ September 23, 2013 32 CHF 36 26 EUR 36 0.8156 —DEUTSCHE BANK AG ............. A+ September 23, 2013 41 EUR 57 308 DKK 57 7.4549 —DEUTSCHE BANK AG ............. A+ September 23, 2013 54 CAD 54 40 EUR 55 0.7450 1DEUTSCHE BANK AG ............. A+ September 23, 2013 71 CAD 72 46 GBP 74 0.6457 2DEUTSCHE BANK AG ............. A+ September 23, 2013 139 CAD 139 105 EUR 145 0.7586 6DEUTSCHE BANK AG ............. A+ September 23, 2013 169 CAD 169 125 EUR 172 0.7423 3DEUTSCHE BANK AG ............. A+ September 23, 2013 209 CAD 209 136 GBP 218 0.6500 9DEUTSCHE BANK AG ............. A+ September 23, 2013 393 AUD 377 415 CAD 415 1.0538 38DEUTSCHE BANK AG ............. A+ September 23, 2013 523 CAD 523 327 GBP 524 0.6250 1DEUTSCHE BANK AG ............. A+ September 24, 2013 4 CAD 5 428 JPY 5 97.9488 —DEUTSCHE BANK AG ............. A+ September 24, 2013 7 CAD 8 712 JPY 8 98.6181 —The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 183

Mutual Beacon FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)DEUTSCHE BANK AG ............. A+ September 24, 2013 27 CAD $ 27 2,645 JPY $ 28 97.1608 $ 1HSBC BANK PLC ................ AA- September 23, 2013 309 CAD 309 230 EUR 316 0.7444 7HSBC BANK PLC ................ AA- September 24, 2013 11 CAD 11 1,088 JPY 12 100.2525 1SVENSKA HANDELSBANKEN ...... NA September 23, 2013 583 CHF 651 478 EUR 656 0.8200 5SVENSKA HANDELSBANKEN ...... NA September 23, 2013 5,181 DKK 954 696 EUR 955 0.1343 1SVENSKA HANDELSBANKEN ...... NA September 23, 2013 5,497 DKK 1,012 738 EUR 1,013 0.1343 1SVENSKA HANDELSBANKEN ...... NA September 23, 2013 12,827 NOK 2,218 1,691 EUR 2,319 0.1318 101Total Number of Contracts ............55 $395CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 6 USD 6 6,649 KRW 6 1,125.5019 —CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 19 USD 20 22,028 KRW 20 1,135.0128 —CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 38 USD 40 42,910 KRW 40 1,131.7421 —CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 53 USD 55 59,698 KRW 55 1,135.0039 —CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 72 USD 76 81,218 KRW 75 1,133.9970 (1)CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 126 USD 133 142,527 KRW 131 1,130.7987 (2)CREDIT SUISSE INTERNATIONAL ... A+ September 20, 2013 703 USD 740 715 CAD 715 1.0176 (25)CREDIT SUISSE INTERNATIONAL ... A+ September 20, 2013 880 USD 927 914 CAD 914 1.0389 (13)CREDIT SUISSE INTERNATIONAL ... A+ September 20, 2013 1,723 USD 1,815 1,774 CAD 1,774 1.0299 (41)CREDIT SUISSE INTERNATIONAL ... A+ September 20, 2013 2,726 USD 2,872 2,808 CAD 2,808 1.0300 (64)CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 52 CHF 58 41 EUR 57 0.8010 (1)CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 116 GBP 186 182 CAD 183 1.5720 (3)CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 175 GBP 281 275 CAD 275 1.5698 (6)CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 243 GBP 390 382 CAD 383 1.5715 (7)CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 432 GBP 692 680 CAD 680 1.5745 (12)CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 434 EUR 595 567 CAD 567 1.3084 (28)CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 800 EUR 1,098 1,048 CAD 1,049 1.3102 (49)CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 911 CAD 911 568 GBP 909 0.6233 (2)CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 1,403 EUR 1,925 1,877 CAD 1,877 1.3374 (48)DEUTSCHE BANK AG ............. A+ August 12, 2013 116 USD 122 131,228 KRW 121 1,135.4022 (1)DEUTSCHE BANK AG ............. A+ September 20, 2013 600 USD 632 610 CAD 610 1.0171 (22)DEUTSCHE BANK AG ............. A+ September 20, 2013 861 USD 908 889 CAD 889 1.0319 (19)DEUTSCHE BANK AG ............. A+ September 23, 2013 7 CAD 7 7 AUD 7 1.0053 —DEUTSCHE BANK AG ............. A+ September 23, 2013 9 EUR 12 11 CHF 12 1.2284 —DEUTSCHE BANK AG ............. A+ September 23, 2013 10 CAD 10 11 AUD 10 1.0011 —DEUTSCHE BANK AG ............. A+ September 23, 2013 13 CAD 13 12 AUD 12 0.9441 (1)DEUTSCHE BANK AG ............. A+ September 23, 2013 13 CAD 13 13 AUD 12 0.9560 (1)DEUTSCHE BANK AG ............. A+ September 23, 2013 17 CAD 17 17 AUD 16 0.9999 (1)DEUTSCHE BANK AG ............. A+ September 23, 2013 17 CAD 17 17 AUD 16 1.0050 (1)DEUTSCHE BANK AG ............. A+ September 23, 2013 21 CAD 21 20 AUD 19 0.9545 (2)DEUTSCHE BANK AG ............. A+ September 23, 2013 21 CAD 21 20 AUD 19 0.9445 (2)DEUTSCHE BANK AG ............. A+ September 23, 2013 22 EUR 30 26 CHF 30 1.2190 —DEUTSCHE BANK AG ............. A+ September 23, 2013 30 CAD 30 28 AUD 27 0.9505 (3)DEUTSCHE BANK AG ............. A+ September 23, 2013 31 CAD 31 29 AUD 28 0.9505 (3)DEUTSCHE BANK AG ............. A+ September 23, 2013 31 CAD 31 31 AUD 30 0.9982 (1)DEUTSCHE BANK AG ............. A+ September 23, 2013 36 CAD 36 35 AUD 33 0.9520 (3)DEUTSCHE BANK AG ............. A+ September 23, 2013 44 EUR 61 55 CHF 61 1.2267 —DEUTSCHE BANK AG ............. A+ September 23, 2013 48 EUR 66 64 CAD 64 1.3268 (2)DEUTSCHE BANK AG ............. A+ September 23, 2013 96 EUR 131 734 NOK 127 7.6671 (4)The accompanying notes are an integral part of these financial statements.184 Franklin Templeton Investments Funds

Mutual Beacon FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)DEUTSCHE BANK AG ................. A+ September 23, 2013 105 EUR $ 144 781 DKK $ 144 7.4506 $ —DEUTSCHE BANK AG ................. A+ September 23, 2013 148 EUR 204 1,126 NOK 195 7.5841 (9)DEUTSCHE BANK AG ................. A+ September 23, 2013 150 CHF 168 122 EUR 168 0.8122 —DEUTSCHE BANK AG ................. A+ September 23, 2013 172 GBP 276 271 CAD 271 1.5723 (5)DEUTSCHE BANK AG ................. A+ September 23, 2013 310 EUR 426 411 CAD 411 1.3245 (15)DEUTSCHE BANK AG ................. A+ September 23, 2013 325 CAD 325 236 EUR 324 0.7265 (1)DEUTSCHE BANK AG ................. A+ September 23, 2013 349 EUR 478 476 CAD 476 1.3662 (2)DEUTSCHE BANK AG ................. A+ September 23, 2013 14,587 GBP 23,360 22,669 CAD 22,669 1.5541 (691)DEUTSCHE BANK AG ................. A+ September 24, 2013 7 CAD 7 636 JPY 7 91.9416 —HSBC BANK PLC ..................... AA- September 20, 2013 455 USD 479 465 CAD 465 1.0224 (14)HSBC BANK PLC ..................... AA- September 20, 2013 875 USD 922 892 CAD 892 1.0195 (30)HSBC BANK PLC ..................... AA- September 20, 2013 880 USD 927 913 CAD 913 1.0376 (14)HSBC BANK PLC ..................... AA- September 20, 2013 939 USD 989 947 CAD 947 1.0090 (42)HSBC BANK PLC ..................... AA- September 20, 2013 1,350 USD 1,422 1,395 CAD 1,395 1.0335 (27)HSBC BANK PLC ..................... AA- September 20, 2013 58,134 USD 61,246 59,821 CAD 59,821 1.0290 (1,425)HSBC BANK PLC ..................... AA- September 23, 2013 216 EUR 297 290 CAD 290 1.3409 (7)SVENSKA HANDELSBANKEN ........... NA September 20, 2013 57,363 USD 60,435 59,029 CAD 59,029 1.0290 (1,406)SVENSKA HANDELSBANKEN ........... NA September 23, 2013 10,708 EUR 14,692 14,287 CAD 14,287 1.3342 (405)Total Number of Contracts ...........57 $ (4,461)Net Unrealized Loss ................. $(4,066)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 185

Mutual Beacon FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 194,718 $ 181,980CashCanadian 1,737 2,427Foreign 1,398 5,576ReceivablesInvestment securities sold 5,624 2,659Capital units sold 40 8Dividends, interest and withholding tax 851 706Unrealized gain on derivatives 395 347Other assets (Note 8) 27 5Total assets 204,790 193,708LiabilitiesPayablesInvestment securities purchased 1,436 58Capital units redeemed 5,925 130Management fees 115 109Accrued expenses 71 110Distributions to unitholders 2 —Unrealized loss on derivatives 4,461 3,491Other liabilities (Note 9) — 1Total liabilities 12,010 3,899Net assets $ 192,780 $ 189,809Total net assets per series (000s)Series A $58,498 $56,207Series F 3,723 4,107Series I 179 134Series O 130,122 129,128Series T 258 233Number of units outstanding (Note 3)Series A 11,661,528 12,746,205Series F 645,051 813,920Series I 32,148 27,634Series O 18,561,917 21,241,929Series T 45,708 45,190Net assets per unit — CADSeries A $5.02 $4.41Series F 5.78 5.05Series I 5.57 4.87Series O 7.01 6.08Series T 5.65 5.15Net assets per unit — USDSeries A $4.77 $4.44Series F 5.50 5.08Series I 5.30 4.90Series O 6.68 6.12Cost of investments held (000s) $166,219 $174,955STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld(000s) — 2013 — $269; 2012 — $313) $ 2,158 $ 2,955Interest 486 598Total investment income 2,644 3,553ExpensesManagement fees (Note 4(a)) 679 705Transfer agent fees (Note 4(c)) 269 339Custodian fees 1 4Legal fees 2 2Audit fees 12 16Unitholder reporting costs 11 5Independent review committee fees 1 1Registration fees 12 12Other expenses (Note 7) 22 66Total expenses 1,009 1,150Expenses waived/paid by Manager (Note 6) (168) (274)Net expenses 841 876Net investment income (loss) 1,803 2,677Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 11,037 7,186Net realized and/or unrealized foreign exchangegain (loss) (5,408) 7,050Net change in unrealized appreciation(depreciation) in value of investments andderivatives 20,552 2,149Transaction costs (Note 11) (71) (111)Net gain (loss) on investments 26,110 16,274Increase (decrease) in net assets from operations $ 27,913 $ 18,951Increase (decrease) in net assets from operationsper series (000s)Series A $7,519 $3,693Series F 559 314Series I 20 8Series O 19,783 14,923Series T 32 13Increase (decrease) in net assets from operationsper unitSeries A $0.61 $0.24Series F 0.77 0.30Series I 0.67 0.29Series O 0.95 0.43Series T 0.72 0.30The accompanying notes are an integral part of these financial statements.186 Franklin Templeton Investments Funds

Mutual Beacon FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 27,913 $ 18,951 $ 7,519 $ 3,693 $ 559 $ 314Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital (9) (8) — — — —(9) (8) — — — —Capital unit transactionsSubscriptions 21,256 31,238 3,481 1,959 77 96Reinvestments 4 3 — — — —Redemptions (46,193) (85,444) (8,709) (8,600) (1,020) (1,278)(24,933) (54,203) (5,228) (6,641) (943) (1,182)Increase (decrease) in net assets for the period 2,971 (35,260) 2,291 (2,948) (384) (868)Net assets — beginning of period 189,809 284,682 56,207 61,392 4,107 4,976Net assets — end of period $ 192,780 $ 249,422 $ 58,498 $ 58,444 $ 3,723 $ 4,108Series I Series O Series T2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 20 $ 8 $ 19,783 $ 14,923 $ 32 $ 13Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — (9) (8)— — — — (9) (8)Capital unit transactionsSubscriptions 28 5 17,623 29,178 47 —Reinvestments — — — — 4 3Redemptions (3) (5) (36,412) (75,561) (49) —25 — (18,789) (46,383) 2 3Increase (decrease) in net assets for the period 45 8 994 (31,460) 25 8Net assets — beginning of period 134 117 129,128 217,985 233 212Net assets — end of period $ 179 $ 125 $ 130,122 $ 186,525 $ 258 $ 220The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 187

Mutual Global Discovery FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 95.62%COMMON STOCKS: 88.78%United States: 49.04%ACE Ltd. ........................ 243,760 $ 12,740 $ 22,929Adelphia Recovery Trust, ACC-1,Contingent Distribution ............ 496,717 35 1Adelphia Recovery Trust, Arahova,Contingent Distribution ............ 41,197 17 1Alleghany Corp. ................... 2,084 758 839Altria Group Inc. .................. 166,768 3,299 6,133American International Group Inc. ..... 462,192 13,394 21,735Apache Corp. .................... 168,022 15,122 14,803Apple Inc. ....................... 44,880 20,336 18,691Avon Products Inc. ................ 354,210 5,493 7,832Baker Hughes Inc. ................ 207,448 8,967 10,059Caterpillar Inc. .................... 65,602 5,583 5,689Century Communications Corp.,Contingent Distribution ............ 29,000 — —Century Communications Corp.,Contingent Distribution ............ 3,000 — —Century Communications Corp.,Contingent Distribution ............ 33,000 — —Century Communications Corp.,Contingent Distribution ............ 48,000 — —Cigna Corp. ...................... 198,545 8,997 15,130Cisco Systems Inc. ................ 430,570 8,562 11,005CIT Group Inc. ................... 132,116 5,273 6,469Citigroup Inc. .................... 318,781 8,607 16,070Comcast Corp., Special A ............ 59,591 1,513 2,486CONSOL Energy Inc. ............... 311,500 10,275 8,872CVS Caremark Corp. ............... 192,409 6,396 11,563Dell Inc. ........................ 606,240 8,210 8,490Ensco PLC, A ..................... 71,746 3,724 4,382Exelon Corp. ..................... 270,350 13,610 8,774FIM Coinvestor Holdings I, LLC . . . ..... 941,517 — —Freeport-McMoRan Copper & GoldInc., B ........................ 178,170 5,548 5,170General Motors Co. ................ 232,750 6,854 8,158Google Inc., A .................... 5,645 2,855 5,220Hewlett-Packard Co. ............... 404,830 7,701 10,547Hospira Inc. ..................... 118,623 3,594 4,778International Automotive ComponentsGroup North America, LLC . . ....... 1,201,447 1,229 567JPMorgan Chase & Co. ............. 147,430 5,189 8,179Kohl’s Corp. ..................... 125,520 6,203 6,666Lehman Brothers Holdings Inc. . . ..... 28,962,636 13,117 13,398Lorillard Inc. ..................... 257,415 6,297 11,802Marathon Oil Corp. ................ 317,704 8,208 11,544Medtronic Inc. .................... 359,230 13,201 19,443Merck & Co. Inc. .................. 244,900 8,135 11,960MetLife Inc. ..................... 234,900 9,650 11,301SharesAverageCost Fair Value(000s) (000s)United States: 49.04% (Continued)Microsoft Corp. .................... 585,220 $ 16,729 $ 21,245Morgan Stanley .................... 402,870 12,141 10,343Murphy Oil Corp. ................... 81,660 5,438 5,228NewPage Holdings Inc. . ............. 33,116 3,151 2,959News Corp., B ..................... 243,700 4,845 8,406NRG Energy Inc. ................... 380,043 8,353 10,664NYSE Euronext ..................... 77,745 2,904 3,382Philip Morris International Inc. ......... 78,730 3,507 7,165PNC Financial Services Group Inc. ...... 171,390 9,359 13,136Raytheon Co. ..................... 44,898 1,868 3,121Stryker Corp. ...................... 57,569 3,060 3,917SunTrust Banks Inc. . . . ............. 122,667 3,964 4,070Symantec Corp. .................... 384,130 6,167 9,071The Bankshares Inc. . . . ............. 300,000 3,473 1,513Time Warner Cable Inc. . ............. 81,023 4,867 9,581Transocean Ltd. ................... 164,525 13,172 8,294Tribune Co., B ..................... 15,723 667 934Tribune Co., A ..................... 25,644 1,088 1,531Tribune Co., Warrants . . . ............. 48,934 2,076 2,922Tribune Co., 1C .................... 72,670 — —UnitedHealth Group Inc. ............. 11,221 630 772Walgreen Co. ...................... 228,500 7,188 10,606WellPoint Inc. ..................... 83,130 4,759 7,151Wells Fargo & Co. . ................. 408,560 12,003 17,723White Mountains Insurance Group Ltd. . . . 9,280 5,344 5,614WPX Energy Inc. ................... 72,958 1,016 1,453Xerox Corp. ....................... 1,055,267 9,975 10,041406,436 511,528United Kingdom: 14.95%Anglo American PLC ................. 320,444 7,651 6,487Barclays PLC ...................... 1,049,968 3,120 4,674BG Group PLC ..................... 534,681 9,310 9,562BPPLC .......................... 1,756,044 13,338 12,782British American Tobacco PLC .......... 292,618 8,803 15,756Canary Wharf Group PLC . ............. 391,460 1,967 1,756Coca-Cola Enterprises Inc. ............. 123,040 2,826 4,547Direct Line Insurance Group PLC ........ 1,591,210 4,961 5,928HSBC Holdings PLC ................. 1,263,455 11,109 13,776Imperial Tobacco Group PLC ........... 353,560 12,185 12,889International Consolidated AirlinesGroup SA ....................... 1,089,460 4,231 4,594Kingfisher PLC ..................... 1,592,742 7,282 8,735Marconi Corp., Contingent Distribution .... 13,000 — —Marconi Corp., Contingent Distribution .... 17,000 — —Marconi Corp., Contingent Distribution .... 9,000 — —Reed Elsevier PLC . ................. 994,686 8,278 11,881Rexam PLC ....................... 113,429 650 866Royal Dutch Shell PLC, A ............. 587,240 16,437 19,725Vodafone Group PLC ................. 7,317,090 17,579 21,978129,727 155,936The accompanying notes are an integral part of these financial statements.188 Franklin Templeton Investments Funds

Mutual Global Discovery FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)France: 6.44%Accor SA ......................... 300,109 $ 15,543 $ 11,083Alstom SA ........................ 100,870 3,563 3,472BNP Paribas SA .................... 173,984 10,731 9,994GDF Suez ........................ 397,002 14,273 8,174Pernod Ricard SA ................... 34,963 3,111 4,075Safran SA ......................... 136,092 5,640 7,473Societe Generale ................... 129,000 5,223 4,660Vinci SA .......................... 190,415 10,878 10,047Vivendi SA ........................ 409,760 10,120 8,14879,082 67,126Netherlands: 2.76%Delta Lloyd NV ..................... 381,699 7,275 8,034ING Groep NV, International DepositoryReceipt ........................ 1,464,934 13,074 14,031Koninklijke Ahold NV ................ 430,726 5,675 6,74026,024 28,805Germany: 2.72%Continental AG ..................... 37,419 3,165 5,259Metro AG ......................... 409,937 12,910 13,632ThyssenKrupp AG ................... 457,995 14,682 9,48930,757 28,380Switzerland: 2.57%Novartis AG, American DepositaryReceipt ........................ 159,275 8,452 11,841Schindler Holding AG, ParticipationCertificate ...................... 5,825 333 839UBSAG.......................... 460,330 7,504 8,236Zurich Insurance Group AG ............ 21,490 3,698 5,85819,987 26,774Hong Kong: 2.44%Great Eagle Holdings Ltd. ............. 223,916 769 898Jardine Matheson Holdings Ltd. ........ 137,198 2,961 8,675Jardine Strategic Holdings Ltd. ......... 404,218 5,620 15,427Swire Pacific Ltd., B . ................ 197,694 396 4899,746 25,489Israel: 2.23%Check Point Software Technologies Ltd. . . . 234,055 10,944 12,220Teva Pharmaceutical Industries Ltd.,American Depositary Receipt ......... 266,910 10,868 10,99521,812 23,215Denmark: 1.16%A.P. Moller - Maersk AS, B ............ 1,600 13,073 12,048SharesAverageCost Fair Value(000s) (000s)China: 1.08%China Pacific Insurance (Group) Co.Ltd., H ........................ 1,496,288 $ 4,943 $ 5,010China Resources Enterprise Ltd. ....... 1,638,000 5,305 5,384PICC Property and Casualty Co. Ltd., H . . 766,767 877 91011,125 11,304Bermuda: 1.04%Imagine Group Holdings Ltd. ......... 11,740 159 108PartnerRe Ltd. .................... 112,374 8,825 10,7018,984 10,809South Korea: 0.90%Daekyo Co. Ltd. ................... 87,718 866 585KB Financial Group Inc. ............. 280,327 12,074 8,81012,940 9,395Brazil: 0.64%International Automotive ComponentsGroup Brazil LLC ................ 95,533 73 22Petroleo Brasileiro SA, AmericanDepositary Receipt . . . ............ 473,470 8,485 6,6708,558 6,692Norway: 0.58%Storebrand ASA ................... 1,194,120 5,038 6,048Virgin Islands: 0.14%Dolphin Capital Investors Ltd. ......... 2,541,304 9,233 1,504Japan: 0.06%Hoya Corp. ...................... 27,216 605 591Canada: 0.03%E-L Financial Corp. Ltd. . . ............ 518 138 324Australia: 0.00%AET&D Holdings No. 1 Pty. Ltd. ........ 1,069,486 — —Total Common Stocks: ............... 793,265 925,968PREFERRED STOCKS: 1.62%United States: 1.62%Hightower Holding LLC, Preferred, A .... 14,580,000 16,975 16,859Total Preferred Stocks: .............. 16,975 16,859The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 189

Mutual Global Discovery FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)BONDS: 5.22%United States: 5.13%American Airlines Inc.First Lien, 13.00%, 8/1/2016 ............................................................ 57,539 USD $ 61 $ 64Senior Secured Note, 7.50%, 3/15/2016 ................................................... 6,718,000 USD 6,864 8,211American Airlines Pass Through Trust2009-1A, 10.375%, 7/2/2019 ............................................................ 149,588 USD 154 1682011-2A, 8.625%, 4/15/2023 ............................................................ 631,530 USD 655 705Avaya Inc.Senior Note, 10.50%, 3/1/2021 .......................................................... 3,696,000 USD 3,105 2,943Senior Secured Note, 7.00%, 4/1/2019 .................................................... 2,343,000 USD 2,241 2,223Tranche B3, Floating Rate Note, 10/26/2017 ................................................ 2,880,000 USD 2,619 2,659Tranche B5, Floating Rate Note, 3/31/2018 ................................................. 970,000 USD 956 958Caesars Entertainment Operating Co. Inc.First Lien, Senior Tranche Term Loan, B5, Floating Rate Note, 1/28/2018 ......................... 272,000 USD 245 245First Lien, Senior Tranche Term Loan, B6, Floating Rate Note, 1/28/2018 ......................... 1,722,000 USD 1,595 1,604Cengage Learning Acquisitions Inc., Floating Rate Note, 7/3/2014 ................................. 3,744,773 USD 2,979 2,928Clear Channel Communications Inc.9.00%, 12/15/2019 .................................................................... 5,005,000 USD 4,374 5,104Tranche B Term Loan, Floating Rate Note, 1/29/2016 ......................................... 1,954,324 USD 1,662 1,884Tranche C Term Loan, Floating Rate Note, 1/29/2016 ......................................... 242,275 USD 201 231Tranche D Term Loan, Floating Rate Note, 1/30/2019 ......................................... 6,479,024 USD 5,495 6,226Energy Future Intermediate Holding Co. LLC/EFIH Finance Inc., Second Lien, 11.00%, 10/1/2021 ....... 822,000 USD 829 927Hilton Worldwide Inc.Mezzanine F Loan, Floating Rate Note, 11/12/2015 .......................................... 902,976 USD 734 934Mezzanine G Loan, Floating Rate Note, 11/12/2015 .......................................... 1,625,176 USD 1,322 1,681NewPage Corp., Escrow Account, 11.375%, 12/31/2014 ........................................ 8,279,000 USD — —Texas Competitive Electric Holdings Co. LLC, Extended Term Loan, Floating Rate Note, 10/10/2017 ...... 10,378,332 USD 8,079 7,671Texas Competitive Electric Holdings Co. LLC/Texas Competitive Electric Holdings Finance Inc.Senior Note, A, 10.25%, 11/1/2015 ....................................................... 5,699,000 USD 918 554Senior Secured Note, 11.50%, 10/1/2020 .................................................. 7,061,000 USD 5,932 5,54951,020 53,469Italy: 0.09%Wind Acquisition Finance SASenior Note, 11.75%, 7/15/2017 ......................................................... 512,000 EUR 530 729Senior Note, 11.75%, 7/15/2017 ......................................................... 247,000 USD 210 270740 999Total Bonds: ............................................................................ 51,760 54,468Total Long-Term Investments: ............................................................... 862,000 997,295The accompanying notes are an integral part of these financial statements.190 Franklin Templeton Investments Funds

Mutual Global Discovery FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)Principal Amountin Currencyof IssueAverageCost(000s)Fair Value(000s)SHORT-TERM SECURITIES: 0.49%U.S. Treasury Bill0.105%, 7/5/2013* ................................................................... 1,000,000 USD $ 1,027 $ 1,0510.125%, 8/22/2013** ................................................................. 2,000,000 USD 2,044 2,1030.11%, 9/5/2013*** .................................................................. 1,900,000 USD 1,954 1,997Total Short-Term Securities: ............................................................... 5,025 5,151Transaction costs (Note 2) ................................................................. (1,444) —TOTAL INVESTMENTS: 96.11% ............................................................ $865,581 1,002,446NET UNREALIZED LOSS ON DERIVATIVES: (1.94%) .......................................... (20,186)OTHER ASSETS, less liabilities: 5.83% ...................................................... 60,769TOTAL NET ASSETS: 100.00% ............................................................... $1,043,029SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013)FORWARD FOREIGN EXCHANGE CONTRACTSCounterpartyCreditRatingSettlement DateCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)(000s) (000s) (000s) (000s) (000s)CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 203,520 KRW $ 187 181 USD $ 190 $ 0.0009 $ 3CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 293,500 KRW 270 260 USD 273 0.0009 3CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 331,204 KRW 304 296 USD 311 0.0009 7CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 504,459 KRW 464 452 USD 476 0.0009 12CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 672,053 KRW 618 600 USD 631 0.0009 13CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 676,301 KRW 622 605 USD 638 0.0009 16CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 866,405 KRW 796 777 USD 818 0.0009 22CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 1,005,263 KRW 924 898 USD 945 0.0009 21CREDIT SUISSE INTERNATIONAL ... A+ August 12, 2013 1,700,000 KRW 1,563 1,514 USD 1,594 0.0009 31CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 106 EUR 145 132 CHF 147 1.2435 2CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 171 EUR 235 214 CHF 239 1.2499 4CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 179 EUR 246 223 CHF 249 1.2435 3CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 194 EUR 267 240 CHF 268 1.2349 1CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 268 CAD 268 196 EUR 270 0.7336 2CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 423 CAD 423 309 EUR 424 0.7301 1CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 745 EUR 1,022 921 CHF 1,027 1.2355 5CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 790 CAD 790 576 EUR 790 0.7291 —CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 862 CAD 862 642 EUR 881 0.7453 19CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 1,072 CAD 1,072 790 EUR 1,083 0.7363 11CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 1,100 NOK 191 146 EUR 200 0.1323 9CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 1,360 CAD 1,360 1,000 EUR 1,372 0.7356 12CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 1,400 CHF 1,562 1,152 EUR 1,581 0.8232 19CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 2,000 NOK 346 265 EUR 364 0.1325 18CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 3,491 CAD 3,491 2,675 EUR 3,670 0.7663 179CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 4,466 CAD 4,466 3,292 EUR 4,516 0.7371 50CREDIT SUISSE INTERNATIONAL ... A+ September 23, 2013 7,100 NOK 1,228 919 EUR 1,261 0.1294 33* Principal amount of USD $990,000 pledged as collateral as at June 30, 2013** Principal amount of USD $1,980,000 pledged as collateral as at June 30, 2013*** Principal amount of USD $866,163 pledged as collateral as at June 30, 2013The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 191

Mutual Global Discovery FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)CREDIT SUISSE INTERNATIONAL .... A+ September 23, 2013 7,720 CAD $ 7,720 5,900 EUR $ 8,095 $ 0.7643 $ 375CREDIT SUISSE INTERNATIONAL .... A+ September 24, 2013 15 CAD 15 1,472 JPY 16 97.3802 1CREDIT SUISSE INTERNATIONAL .... A+ September 24, 2013 224 CAD 224 21,332 JPY 227 95.3372 3CREDIT SUISSE INTERNATIONAL .... A+ September 24, 2013 902 CAD 903 86,164 JPY 916 95.5075 13CREDIT SUISSE INTERNATIONAL .... A+ September 24, 2013 1,300 JPY 14 14 CAD 14 0.0107 —CREDIT SUISSE INTERNATIONAL .... A+ September 24, 2013 2,408 CAD 2,409 236,064 JPY 2,509 98.0279 100CREDIT SUISSE INTERNATIONAL .... A+ September 24, 2013 626,963 JPY 6,663 6,805 CAD 6,806 0.0109 143DEUTSCHE BANK AG .............. A+ August 12, 2013 661,240 KRW 608 591 USD 622 0.0009 14DEUTSCHE BANK AG .............. A+ August 12, 2013 671,154 KRW 617 600 USD 631 0.0009 14DEUTSCHE BANK AG .............. A+ August 12, 2013 694,057 KRW 638 622 USD 655 0.0009 17DEUTSCHE BANK AG .............. A+ September 23, 2013 77 EUR 106 96 CHF 107 1.2399 1DEUTSCHE BANK AG .............. A+ September 23, 2013 100 EUR 137 124 CHF 139 1.2435 2DEUTSCHE BANK AG .............. A+ September 23, 2013 134 CAD 134 99 EUR 136 0.7377 2DEUTSCHE BANK AG .............. A+ September 23, 2013 166 EUR 228 206 CHF 230 1.2421 2DEUTSCHE BANK AG .............. A+ September 23, 2013 202 EUR 278 253 CHF 283 1.2496 5DEUTSCHE BANK AG .............. A+ September 23, 2013 212 CAD 212 155 EUR 213 0.7329 1DEUTSCHE BANK AG .............. A+ September 23, 2013 584 CHF 651 476 EUR 653 0.8156 2DEUTSCHE BANK AG .............. A+ September 23, 2013 644 CAD 644 473 EUR 649 0.7345 5DEUTSCHE BANK AG .............. A+ September 23, 2013 760 CAD 760 566 EUR 777 0.7450 17DEUTSCHE BANK AG .............. A+ September 23, 2013 952 CAD 953 697 EUR 957 0.7323 4DEUTSCHE BANK AG .............. A+ September 23, 2013 1,162 CAD 1,163 861 EUR 1,182 0.7410 19DEUTSCHE BANK AG .............. A+ September 23, 2013 1,168 CAD 1,168 855 EUR 1,173 0.7319 5DEUTSCHE BANK AG .............. A+ September 23, 2013 1,176 CHF 1,312 965 EUR 1,324 0.8207 12DEUTSCHE BANK AG .............. A+ September 23, 2013 1,181 EUR 1,620 1,468 CHF 1,638 1.2433 18DEUTSCHE BANK AG .............. A+ September 23, 2013 1,290 NOK 223 168 EUR 231 0.1306 8DEUTSCHE BANK AG .............. A+ September 23, 2013 1,900 NOK 329 248 EUR 340 0.1304 11DEUTSCHE BANK AG .............. A+ September 23, 2013 2,880 NOK 498 382 EUR 524 0.1327 26DEUTSCHE BANK AG .............. A+ September 23, 2013 3,056 CAD 3,056 1,910 GBP 3,059 0.6250 3DEUTSCHE BANK AG .............. A+ September 23, 2013 3,187 NOK 551 423 EUR 581 0.1329 30DEUTSCHE BANK AG .............. A+ September 23, 2013 11,000 NOK 1,902 1,438 EUR 1,972 0.1307 70DEUTSCHE BANK AG .............. A+ September 24, 2013 44 CAD 45 4,224 JPY 45 95.1086 —DEUTSCHE BANK AG .............. A+ September 24, 2013 3,668 CAD 3,668 357,485 JPY 3,799 97.4500 131HSBC BANK PLC ................. AA- September 20, 2013 4,052 CAD 4,052 3,930 USD 4,140 0.9699 88HSBC BANK PLC ................. AA- September 23, 2013 110 CAD 110 82 EUR 112 0.7432 2HSBC BANK PLC ................. AA- September 23, 2013 493 CAD 493 360 EUR 494 0.7299 1HSBC BANK PLC ................. AA- September 23, 2013 867 CAD 867 639 EUR 877 0.7372 10SVENSKA HANDELSBANKEN ....... NA September 23, 2013 1,086 NOK 188 145 EUR 199 0.1332 11SVENSKA HANDELSBANKEN ....... NA September 23, 2013 1,720 NOK 297 228 EUR 313 0.1327 16SVENSKA HANDELSBANKEN ....... NA September 23, 2013 4,145 CAD 4,145 3,169 EUR 4,349 0.7647 204SVENSKA HANDELSBANKEN ....... NA September 23, 2013 12,096 CHF 13,499 9,919 EUR 13,608 0.8200 109Total Number of Contracts .......66 $1,991CREDIT SUISSE INTERNATIONAL .... A+ August 12, 2013 253,649 KRW 233 221 USD 233 0.0009 —CREDIT SUISSE INTERNATIONAL .... A+ August 12, 2013 301,433 KRW 277 261 USD 274 0.0009 (3)CREDIT SUISSE INTERNATIONAL .... A+ September 20, 2013 2,274 USD 2,396 2,342 CAD 2,342 1.0300 (54)CREDIT SUISSE INTERNATIONAL .... A+ September 20, 2013 2,655 USD 2,797 2,758 CAD 2,758 1.0389 (39)CREDIT SUISSE INTERNATIONAL .... A+ September 20, 2013 4,297 USD 4,527 4,373 CAD 4,373 1.0176 (154)CREDIT SUISSE INTERNATIONAL .... A+ September 20, 2013 8,277 USD 8,721 8,525 CAD 8,525 1.0299 (196)The accompanying notes are an integral part of these financial statements.192 Franklin Templeton Investments Funds

Mutual Global Discovery FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 82 EUR $ 113 100 CHF $ 112 $1.2183 $ (1)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 86 EUR 118 105 CHF 117 1.2160 (1)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 126 EUR 173 153 CHF 171 1.2154 (2)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 127 EUR 174 154 CHF 172 1.2175 (2)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 127 GBP 204 200 CAD 200 1.5725 (4)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 127 GBP 204 200 CAD 200 1.5723 (4)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 148 GBP 237 232 CAD 232 1.5688 (5)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 211 GBP 338 331 CAD 331 1.5698 (7)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 239 EUR 328 292 CHF 326 1.2205 (2)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 242 EUR 332 295 CHF 329 1.2196 (3)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 279 GBP 447 438 CAD 439 1.5711 (8)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 312 GBP 499 481 CAD 481 1.5432 (18)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 355 GBP 568 557 CAD 557 1.5706 (11)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 414 GBP 663 651 CAD 651 1.5730 (12)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 489 EUR 671 594 CHF 663 1.2152 (8)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 592 GBP 948 930 CAD 930 1.5717 (18)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 705 GBP 1,130 1,089 CAD 1,089 1.5432 (41)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 735 EUR 1,009 978 CAD 978 1.3305 (31)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 933 GBP 1,494 1,462 CAD 1,462 1.5670 (32)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 1,000 EUR 1,372 1,326 CAD 1,326 1.3263 (46)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 1,197 GBP 1,918 1,864 CAD 1,864 1.5565 (54)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 1,500 GBP 2,402 2,343 CAD 2,343 1.5620 (59)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 2,000 CAD 2,000 1,231 GBP 1,972 0.6156 (28)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 2,035 CAD 2,035 1,270 GBP 2,034 0.6243 (1)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 2,888 CAD 2,888 2,100 EUR 2,882 0.7273 (6)CREDIT SUISSE INTERNATIONAL ....... A+ September 23, 2013 5,056 CAD 5,056 3,146 GBP 5,038 0.6222 (18)CREDIT SUISSE INTERNATIONAL ....... A+ September 24, 2013 67,600 JPY 719 680 CAD 680 0.0101 (39)DEUTSCHE BANK AG ................. A+ August 12, 2013 150,977 KRW 139 130 USD 137 0.0009 (2)DEUTSCHE BANK AG ................. A+ August 12, 2013 253,836 KRW 234 221 USD 233 0.0009 (1)DEUTSCHE BANK AG ................. A+ September 20, 2013 1,900 USD 2,002 1,933 CAD 1,933 1.0171 (69)DEUTSCHE BANK AG ................. A+ September 20, 2013 4,139 USD 4,361 4,271 CAD 4,271 1.0319 (90)DEUTSCHE BANK AG ................. A+ September 23, 2013 100 GBP 161 156 CAD 156 1.5527 (5)DEUTSCHE BANK AG ................. A+ September 23, 2013 181 EUR 248 222 CHF 248 1.2279 —DEUTSCHE BANK AG ................. A+ September 23, 2013 211 EUR 289 258 CHF 288 1.2267 (1)DEUTSCHE BANK AG ................. A+ September 23, 2013 294 EUR 404 390 CAD 391 1.3269 (13)DEUTSCHE BANK AG ................. A+ September 23, 2013 316 GBP 505 493 CAD 493 1.5622 (12)DEUTSCHE BANK AG ................. A+ September 23, 2013 342 EUR 469 420 CHF 469 1.2284 —DEUTSCHE BANK AG ................. A+ September 23, 2013 381 GBP 610 594 CAD 594 1.5586 (16)DEUTSCHE BANK AG ................. A+ September 23, 2013 436 EUR 598 531 CHF 593 1.2190 (5)DEUTSCHE BANK AG ................. A+ September 23, 2013 477 GBP 765 749 CAD 749 1.5689 (16)DEUTSCHE BANK AG ................. A+ September 23, 2013 575 GBP 921 898 CAD 898 1.5613 (23)DEUTSCHE BANK AG ................. A+ September 23, 2013 669 GBP 1,071 1,050 CAD 1,050 1.5702 (21)DEUTSCHE BANK AG ................. A+ September 23, 2013 685 GBP 1,096 1,053 CAD 1,053 1.5385 (43)DEUTSCHE BANK AG ................. A+ September 23, 2013 730 EUR 1,002 973 CAD 974 1.3330 (28)DEUTSCHE BANK AG ................. A+ September 23, 2013 870 GBP 1,393 1,358 CAD 1,359 1.5622 (34)DEUTSCHE BANK AG ................. A+ September 23, 2013 1,940 EUR 2,662 2,569 CAD 2,570 1.3245 (92)DEUTSCHE BANK AG ................. A+ September 23, 2013 2,400 GBP 3,843 3,773 CAD 3,773 1.5723 (70)DEUTSCHE BANK AG ................. A+ September 23, 2013 2,891 CAD 2,891 2,100 EUR 2,882 0.7265 (9)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 193

Mutual Global Discovery FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SCHEDULE OF DERIVATIVE INSTRUMENTS (As at June 30, 2013) (Continued)FORWARD FOREIGN EXCHANGE CONTRACTS (Continued)CreditRatingCurrencyto be DeliveredPar Valuein Canadian DollarsCurrencyto be ReceivedPar Valuein Canadian DollarsContractPriceUnrealizedGain (Loss)CounterpartySettlement Date(000s) (000s) (000s) (000s) (000s)DEUTSCHE BANK AG .............. A+ September 23, 2013 2,952 EUR $ 4,050 3,916 CAD $ 3,917 $ 1.3268 $ (133)DEUTSCHE BANK AG .............. A+ September 23, 2013 69,532 GBP 111,353 108,061 CAD 108,061 1.5541 (3,292)DEUTSCHE BANK AG .............. A+ September 24, 2013 108 CAD 108 9,920 JPY 106 91.9368 (2)DEUTSCHE BANK AG .............. A+ September 24, 2013 18,630 JPY 198 190 CAD 190 0.0102 (8)DEUTSCHE BANK AG .............. A+ September 24, 2013 55,000 JPY 584 566 CAD 566 0.0103 (18)HSBC BANK PLC ................. AA- September 20, 2013 2,045 USD 2,155 2,091 CAD 2,091 1.0224 (64)HSBC BANK PLC ................. AA- September 20, 2013 2,500 USD 2,634 2,561 CAD 2,562 1.0246 (72)HSBC BANK PLC ................. AA- September 20, 2013 2,655 USD 2,797 2,755 CAD 2,755 1.0376 (42)HSBC BANK PLC ................. AA- September 20, 2013 3,650 USD 3,845 3,772 CAD 3,772 1.0335 (73)HSBC BANK PLC ................. AA- September 20, 2013 4,125 USD 4,346 4,206 CAD 4,206 1.0195 (140)HSBC BANK PLC ................. AA- September 20, 2013 4,367 USD 4,601 4,406 CAD 4,406 1.0090 (195)HSBC BANK PLC ................. AA- September 20, 2013 241,866 USD 254,815 248,888 CAD 248,888 1.0290 (5,927)HSBC BANK PLC ................. AA- September 23, 2013 2,784 EUR 3,820 3,733 CAD 3,733 1.3409 (87)SVENSKA HANDELSBANKEN ....... NA September 20, 2013 238,661 USD 251,438 245,589 CAD 245,589 1.0290 (5,849)SVENSKA HANDELSBANKEN ....... NA September 23, 2013 1,024 EUR 1,405 1,342 CAD 1,342 1.3107 (63)SVENSKA HANDELSBANKEN ....... NA September 23, 2013 125,785 EUR 172,575 167,819 CAD 167,820 1.3342 (4,755)Total Number of Contracts .......70 $ (22,177)Net Unrealized Loss .............. $(20,186)The accompanying notes are an integral part of these financial statements.194 Franklin Templeton Investments Funds

Mutual Global Discovery FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 1,002,446 $ 882,208CashCanadian 53,542 13,146Foreign 5,545 14,826ReceivablesInvestment securities sold 7,907 604Capital units sold 1,490 325Dividends, interest and withholding tax 4,995 3,637Unrealized gain on derivatives 1,991 1,731Other assets (Note 8) 66 89Total assets 1,077,982 916,566LiabilitiesPayablesInvestment securities purchased 10,045 355Capital units redeemed 1,155 353Management fees 1,130 959Accrued expenses 417 487Distributions to unitholders 29 —Unrealized loss on derivatives 22,177 14,625Total liabilities 34,953 16,779Net assets $ 1,043,029 $ 899,787Total net assets per series (000s)Series A $573,094 $497,322Series F 50,969 40,425Series I 1,319 516Series O 412,988 357,725Series T 3,825 3,173Series T USD 834 626Number of units outstanding (Note 3)Series A 37,944,246 36,959,200Series F 3,016,748 2,701,412Series I 117,683 51,921Series O 20,866,457 20,555,940Series T 461,711 414,271Series T USD 72,756 59,153Net assets per unit — CADSeries A $15.10 $13.45Series F 16.90 14.96Series I 11.21 9.94Series O 19.79 17.40Series T 8.28 7.66Net assets per unit — USDSeries A $14.36 $13.54Series F 16.07 15.06Series I 10.66 10.01Series O 18.82 17.52Series T USD (Note 13 (b)) 10.89 10.65Cost of investments held (000s) $865,581 $833,097STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends (net of foreign taxes withheld (000s) —2013 — $1,404; 2012 — $1,718) $ 11,863 $ 13,930Interest 1,793 2,539Total investment income 13,656 16,469ExpensesManagement fees (Note 4(a)) 6,485 5,763Transfer agent fees (Note 4(c)) 1,594 1,657Custodian fees 17 34Legal fees 3 3Audit fees 14 13Unitholder reporting costs 53 44Independent review committee fees 1 1Registration fees 20 19Other expenses (Note 7) 257 314Total expenses 8,444 7,848Expenses waived/paid by Manager (Note 6) (769) (1,012)Net expenses 7,675 6,836Net investment income (loss) 5,981 9,633Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 54,330 19,649Net realized and/or unrealized foreign exchangegain (loss) (24,037) 22,929Net change in unrealized appreciation(depreciation) in value of investments 80,462 (2,291)Transaction costs (Note 11) (437) (188)Net gain (loss) on investments 110,318 40,099Increase (decrease) in net assets from operations $ 116,299 $ 49,732Increase (decrease) in net assets from operationsper series (000s)Series A $61,391 $21,928Series F 5,452 1,731Series I 78 16Series O 48,899 25,880Series T 399 151Series T USD 80 26Increase (decrease) in net assets from operationsper unitSeries A $1.64 $0.55Series F 1.87 0.69Series I 1.06 0.42Series O 2.38 0.91Series T 0.90 0.35Series T USD 1.25 0.46The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 195

Mutual Global Discovery FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 116,299 $ 49,732 $ 61,391 $ 21,928 $ 5,452 $ 1,731Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital (165) (154) — — — —(165) (154) — — — —Capital unit transactionsSubscriptions 121,045 52,146 70,082 25,709 12,405 3,966Reinvestments 44 30 — — — —Redemptions (93,981) (113,739) (55,701) (57,724) (7,313) (4,959)27,108 (61,563) 14,381 (32,015) 5,092 (993)Increase (decrease) in net assets for the period 143,242 (11,985) 75,772 (10,087) 10,544 738Net assets — beginning of period 899,787 978,164 497,322 493,728 40,425 33,957Net assets — end of period $ 1,043,029 $ 966,179 $ 573,094 $ 483,641 $ 50,969 $ 34,695Series I Series O Series T2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 78 $ 16 $ 48,899 $ 25,880 $ 399 $ 151Distributions to unitholdersFrom net investment income — — — — — —From capital gains — — — — — —From return of capital — — — — (136) (131)— — — — (136) (131)Capital unit transactionsSubscriptions 744 47 36,942 22,222 718 169Reinvestments — — — — 41 29Redemptions (19) — (30,578) (50,662) (370) (394)725 47 6,364 (28,440) 389 (196)Increase (decrease) in net assets for the period 803 63 55,263 (2,560) 652 (176)Net assets — beginning of period 516 334 357,725 446,205 3,173 3,363Net assets — end of period $ 1,319 $ 397 $ 412,988 $ 443,645 $ 3,825 $ 3,187Series T USD2013 2012Increase (decrease) in net assets from operations $ 80 $ 26Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital (29) (23)(29) (23)Capital unit transactionsSubscriptions 154 33Reinvestments 3 1Redemptions — —157 34Increase (decrease) in net assets for the period 208 37Net assets — beginning of period 626 577Net assets — end of period $ 834 $ 614The accompanying notes are an integral part of these financial statements.196 Franklin Templeton Investments Funds

Franklin Templeton Canadian Core Equity FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 97.47%COMMON STOCKS: 97.47%Commercial Banks: 23.46%Bank of Montreal .................. 50,300 $ 2,960 $ 3,072Bank of Nova Scotia ............... 118,200 6,314 6,643Canadian Imperial Bank of Commerce . . 42,500 3,298 3,172Royal Bank of Canada .............. 137,400 7,565 8,419The Toronto-Dominion Bank .......... 94,900 7,172 8,01427,309 29,320Oil, Gas & Consumable Fuels: 17.68%Altagas Ltd. ...................... 4,900 196 180Bankers Petroleum Ltd. ............. 559,400 1,960 1,460Cenovus Energy Inc. ............... 45,800 1,530 1,372DeeThree Exploration Ltd. ........... 135,700 883 1,026Enbridge Inc. . . .................. 11,700 554 515Paramount Resources Ltd., A ......... 71,000 2,250 2,525Pinecrest Energy Inc. ............... 2,719,100 3,413 1,768Raging River Exploration Inc. ......... 139,000 514 577Renegade Petroleum Ltd. ............ 1,505,600 4,880 1,551RMP Energy Inc. .................. 138,600 537 582Strategic Oil & Gas Ltd. ............. 2,013,300 2,069 2,315Suncor Energy Inc. ................ 102,084 3,481 3,164Tourmaline Oil Corp. ............... 17,500 613 735Trilogy Energy Corp. ................ 43,900 1,276 1,361TriOil Resources Ltd., A ............. 1,373,800 3,809 2,96727,965 22,098Metals & Mining: 9.13%B2Gold Corp. . . .................. 85,300 304 189Banro Corp. . . . .................. 1,443,000 3,889 1,140Capstone Mining Corp. .............. 230,200 548 410Colossus Minerals Inc. .............. 1,906,200 7,570 2,306Colossus Minerals Inc., Warrants,11/8/2016 . . .................. 47,700 83 15First Quantum Minerals Ltd. .......... 136,300 2,576 2,126Lundin Mining Corp. ............... 285,700 1,377 1,140Nevada Copper Corp. .............. 2,053,029 8,397 4,08624,744 11,412Food & Staples Retailing: 5.57%Alimentation Couche-Tard Inc., B ...... 72,200 2,510 4,447Loblaw Cos. Ltd. .................. 19,600 904 931Metro Inc., A . . . .................. 22,500 1,132 1,5844,546 6,962Multiline Retail: 4.66%Canadian Tire Corp. Ltd., A .......... 27,900 1,993 2,196Dollarama Inc. . . .................. 46,100 2,915 3,388Hudson’s Bay Co. ................. 14,600 246 2365,154 5,820SharesAverageCost Fair Value(000s) (000s)Biotechnology: 4.60%Oncolytics Biotech Inc. ............. 1,916,202 $ 8,744 $ 5,749Energy Equipment & Services: 4.55%Calfrac Well Services Ltd. ............ 17,300 489 524Canadian Energy Services & TechnologyCorp., A ...................... 41,547 454 675Canyon Services Group Inc. .......... 41,400 490 494Precision Drilling Corp. . ............. 174,700 1,565 1,564Secure Energy Services Inc. .......... 74,300 631 999Trican Well Service Ltd. ............. 68,000 1,034 949Trinidad Drilling Ltd. . . ............. 62,600 466 4805,129 5,685Road & Rail: 3.74%Canadian National Railway Co. ........ 31,350 2,188 3,198Canadian Pacific Railway Ltd. ......... 11,600 1,002 1,4793,190 4,677Software: 3.66%Absolute Software Corp. ............. 73,400 445 488Guestlogix Inc. ................... 1,155,400 1,181 913Redknee Solutions Inc., Warrants,8/19/2013 .................... 342,400 1,061 1,120The Descartes Systems Group Inc. . . . . . 170,900 1,451 2,0524,138 4,573Hotels, Restaurants & Leisure: 2.74%Amaya Gaming Group Inc. ........... 444,300 2,715 2,772Tim Hortons Inc. . ................. 11,400 542 6473,257 3,419Real Estate Investment Trust (REIT): 2.66%Chartwell Retirement . . ............. 122,100 1,396 1,190Dundee International Real EstateInvestment Trust . . . ............. 48,900 540 480Northern Property Real Estate InvestmentTrust ........................ 43,013 1,387 1,178RioCan Real Estate Investment Trust . . . . 18,700 535 4723,858 3,320Communications Equipment: 2.17%Enablence Technologies Inc. ......... 2,095,715 8,510 314Enablence Technologies Inc.,Restricted ..................... 88,450 389 16Research In Motion Ltd. ............. 197,500 2,983 2,169Wi-LAN Inc. ..................... 45,000 212 21812,094 2,717Food Products: 2.16%Saputo Inc. ...................... 56,000 2,796 2,706Wireless Telecommunication Services: 1.73%Rogers Communications Inc., B ....... 52,500 2,619 2,162The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 197

Franklin Templeton Canadian Core Equity FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)SharesAverageCost Fair Value(000s) (000s)Auto Components: 1.61%Magna International Inc. .............. 27,000 $ 1,451 $ 2,019Health Care Providers & Services: 1.59%Catamaran Corp. ................... 38,800 1,931 1,983Insurance: 1.52%Manulife Financial Corp. .............. 113,200 1,544 1,903Aerospace & Defense: 1.37%Bombardier Inc., B . . ................ 240,700 1,376 1,124CAE Inc. ......................... 54,500 571 5931,947 1,717Semiconductors & Semiconductor Equipment: 1.27%Spectra7 Microsystems Inc. ............ 211,600 127 128ViXS Systems Inc. ................... 383,900 1,344 1,4641,471 1,592Chemicals: 0.70%Potash Corp. of Saskatchewan Inc. ...... 21,800 949 874Pharmaceuticals: 0.53%Valeant Pharmaceuticals InternationalInc. ........................... 7,300 365 660Internet Software & Services: 0.22%Halogen Software Inc. ................ 17,500 201 272Specialty Retail: 0.15%Glentel Inc. ....................... 11,000 218 185Total Common Stocks: ................ 145,620 121,825Total Long-Term Investments: ........... 145,620 121,825Transaction costs (Note 2) ............... (385) —TOTAL INVESTMENTS: 97.47% ......... $ 145,235 121,825OTHER ASSETS, less liabilities: 2.53% .... 3,164TOTAL NET ASSETS: 100.00% .......... $ 124,989The accompanying notes are an integral part of these financial statements.198 Franklin Templeton Investments Funds

Franklin Templeton Canadian Core Equity FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 2012STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 121,825 $ 195,996CashCanadian 2,108 449ReceivablesInvestment securities sold 1,834 1,073Capital units sold 891 —Dividends 219 304Total assets 126,877 197,822LiabilitiesPayablesInvestment securities purchased 1,237 1,360Capital units redeemed 651 —Total liabilities 1,888 1,360Net assets $ 124,989 $ 196,462Total net assets per series (000s)Series O $124,989 $196,462Number of units outstanding (Note 3)Series O 20,106,927 27,554,867Net assets per unit — CADSeries O $6.21 $7.13Cost of investments held (000s) $145,235 $203,2772013 2012(000s) (000s)Investment incomeDividends $ 1,529 $ 2,936Interest — —Total investment income 1,529 2,936ExpensesManagement fees (Note 4(a)) — —Transfer agent fees (Note 4(c)) — —Custodian fees — —Legal fees — —Audit fees 10 10Unitholder reporting costs 3 4Independent review committee fees 1 1Registration fees 15 14Other expenses (Note 7) 5 7Total expenses 34 36Expenses waived/paid by Manager (Note 6) (34) (36)Net expenses — —Net investment income (loss) 1,529 2,936Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments (6,164) (47,552)Net change in unrealized appreciation(depreciation) in value of investments (16,129) (42,831)Transaction costs (Note 11) (671) (1,533)Net gain (loss) on investments (22,964) (91,916)Increase (decrease) in net assets from operations $ (21,435) $ (88,980)Increase (decrease) in net assets from operationsper series (000s)Series O $(21,435) $(88,980)Increase (decrease) in net assets from operationsper unitSeries O $(0.89) $(1.65)The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 199

Franklin Templeton Canadian Core Equity FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)Series O2013 2012Increase (decrease) in net assets from operations $ (21,435) $ (88,980)Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 15,081 162,410Reinvestments — —Redemptions (65,119) (91,949)(50,038) 70,461Increase (decrease) in net assets for the period (71,473) (18,519)Net assets — beginning of period 196,462 303,339Net assets — end of period $ 124,989 $ 284,820The accompanying notes are an integral part of these financial statements.200 Franklin Templeton Investments Funds

Franklin Templeton Canadian Large Cap FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)SharesAverageCost Fair Value(000s) (000s)LONG-TERM INVESTMENTS: 98.64%COMMON STOCKS: 98.64%Commercial Banks: 26.24%Bank of Nova Scotia ..................... 307,731 $15,364 $17,294Canadian Imperial Bank of Commerce ........ 154,144 10,819 11,505Royal Bank of Canada .................... 255,909 13,620 15,680The Toronto-Dominion Bank ................ 215,045 14,644 18,16154,447 62,640Oil, Gas & Consumable Fuels: 19.14%Canadian Natural Resources Ltd. ............ 401,722 13,663 11,911EnCana Corp. . . ........................ 187,453 4,986 3,333Husky Energy Inc. ....................... 204,575 6,299 5,728Imperial Oil Ltd. . ........................ 297,156 12,823 11,916Suncor Energy Inc. ...................... 413,603 14,042 12,81851,813 45,706Insurance: 9.13%Fairfax Financial Holdings Ltd. .............. 3,843 1,359 1,562Great-West Lifeco Inc. .................... 1,626 42 46Great-West Lifeco Inc. .................... 206,027 5,061 5,851Power Corp. of Canada ................... 250,257 6,638 7,060Sun Life Financial Inc. .................... 234,774 6,787 7,27819,887 21,797Energy Equipment & Services: 7.18%Ensign Energy Services Inc. ................ 204,791 3,300 3,328Precision Drilling Corp. .................... 524,335 4,133 4,693Shawcor Ltd., A . ........................ 114,917 3,462 4,730Trican Well Service Ltd. ................... 315,087 4,436 4,39815,331 17,149Media: 6.98%Corus Entertainment Inc., B ................ 136,872 2,926 3,290Shaw Communications Inc. ................ 208,540 4,246 5,214Thomson Reuters Corp. ................... 238,228 7,117 8,15714,289 16,661Metals & Mining: 4.01%Sherritt International Corp. ................. 951,507 5,388 3,701Teck Resources Ltd., B ................... 261,417 6,524 5,86911,912 9,570Food & Staples Retailing: 3.93%Empire Co. Ltd., A ....................... 30,412 1,712 2,425Loblaw Cos. Ltd. ........................ 146,316 5,267 6,9506,979 9,375Auto Components: 3.15%Magna International Inc. .................. 100,772 3,807 7,535Chemicals: 2.87%Agrium Inc. ............................ 50,810 2,772 4,630Methanex Corp. . ........................ 49,556 1,364 2,2184,136 6,848SharesAverageCost Fair Value(000s) (000s)Multiline Retail: 2.84%Canadian Tire Corp. Ltd., A ......... 86,220 $ 4,966 $ 6,786Construction & Engineering: 2.41%SNC-Lavalin Group Inc., A .......... 129,852 4,901 5,763Wireless Telecommunication Services: 2.37%Rogers Communications Inc., B ...... 137,356 4,679 5,656Software: 2.04%Open Text Corp. ................. 67,915 3,249 4,876Capital Markets: 1.39%IGM Financial Inc. . . ............. 73,811 2,870 3,316Trading Companies & Distributors: 1.36%Finning International Inc. ........... 149,741 3,355 3,242Diversified Telecommunication Services: 1.23%Manitoba Telecom Services Inc. ...... 82,269 2,656 2,927IT Services: 1.19%CGI Group Inc., A . . . ............. 92,229 1,527 2,831Paper & Forest Products: 1.18%Resolute Forest Products ........... 213,877 5,011 2,825Total Common Stocks: ........ 215,815 235,503Total Long-Term Investments: . . . 215,815 235,503Principal Amountin Currencyof IssueSHORT-TERM SECURITIES: 1.54%Canada Treasury Bill,1.039%, 11/21/2013 ........... 3,680,000 CAD 3,665 3,662Total Short-Term Securities: ......... 3,665 3,662Transaction costs (Note 2) .......... (199) —TOTAL INVESTMENTS: 100.18% ..... $ 219,281 239,165OTHER ASSETS, less liabilities:(0.18%) ...................... (421)TOTAL NET ASSETS: 100.00% ....... $ 238,7442013 2012%of %ofBond Ratings*Net Assets Net AssetsAAA .................................. 1.54 —* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’s and Fitchratings.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 201

Franklin Templeton Canadian Large Cap FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(000s) (000s)AssetsInvestment in securities — at fair value $ 239,165 $ 239,115CashCanadian 38 161ReceivablesInvestment securities sold 433 —Capital units sold 216 —Dividends 877 812Total assets 240,729 240,088LiabilitiesPayablesCapital units redeemed 1,985 —Total liabilities 1,985 —Net assets $ 238,744 $ 240,088Total net assets per series (000s)Series O $238,744 $240,088Number of units outstanding (Note 3)Series O 25,983,760 27,846,422Net assets per unit — CADSeries O $9.19 $8.62Cost of investments held (000s) $219,281 $222,451STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(000s) (000s)Investment incomeDividends $ 3,769 $ 3,597Interest 13 23Total investment income 3,782 3,620ExpensesManagement fees (Note 4(a)) — —Transfer agent fees (Note 4(c)) — —Custodian fees — —Legal fees — —Audit fees 10 10Unitholder reporting costs 3 3Independent review committee fees 1 1Registration fees 15 14Other expenses (Note 7) 6 5Total expenses 35 33Expenses waived/paid by Manager (Note 6) (35) (33)Net expenses — —Net investment income (loss) 3,782 3,620Realized and unrealized gain (loss) oninvestments and transaction costsNet realized gain (loss) on investments 8,146 3,223Net realized and/or unrealized foreign exchangegain (loss) (1) 1Net change in unrealized appreciation(depreciation) in value of investments 3,220 (12,237)Transaction costs (Note 11) (65) (117)Net gain (loss) on investments 11,300 (9,130)Increase (decrease) in net assets from operations $ 15,082 $ (5,510)Increase (decrease) in net assets from operationsper series (000s)Series O $15,082 $(5,510)Increase (decrease) in net assets from operationsper unitSeries O $0.56 $(0.17)The accompanying notes are an integral part of these financial statements.202 Franklin Templeton Investments Funds

Franklin Templeton Canadian Large Cap FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in 000s)Series O2013 2012Increase (decrease) in net assets from operations $ 15,082 $ (5,510)Distributions to unitholdersFrom net investment income — —From capital gains — —From return of capital — —— —Capital unit transactionsSubscriptions 31,305 115,152Reinvestments — —Redemptions (47,731) (54,137)(16,426) 61,015Increase (decrease) in net assets for the period (1,344) 55,505Net assets — beginning of period 240,088 219,881Net assets — end of period $ 238,744 $ 275,386The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 203

Franklin Templeton Money Market FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)PrincipalAmountCost andValue(CAD) (CAD 000s)TREASURY BILLS: 11.02%Canada Treasury Bill: 11.02%1.021%, July 4, 2013 . . . ................... $ 250,000 $ 2500.988%, August 1, 2013 . . . ................. 2,015,000 2,0130.989%, August 15, 2013 . . ................. 3,000,000 2,9961.172%, August 29, 2013 . . ................. 300,000 2991.005%, September 12, 2013 ................ 650,000 6491.061%, September 26, 2013 ................ 2,250,000 2,2441.01%, October 10, 2013 . . ................. 2,000,000 1,9941.02%, November 7, 2013 . ................. 2,000,000 1,9931.072%, November 21, 2013 ................ 1,000,000 9961.042%, December 5, 2013 ................. 4,490,000 4,4701.122%, December 19, 2013 ................ 3,000,000 2,9841.11%, January 16, 2014 . . ................. 1,500,000 1,4911.04%, February 13, 2014 . ................. 1,000,000 9931.065%, April 10, 2014 . . . ................. 500,000 4961.16%, June 5, 2014 . . . ................... 1,000,000 989Total Treasury Bills ........................ 24,955,000 24,857BANKER’S ACCEPTANCES: 32.58%Bank of Montreal: 1.56%1.13%, August 26, 2013 . . . ................. 500,000 4991.249%, September 3, 2013 ................. 2,011,000 2,0061.13%, September 5, 2013 . ................. 520,000 5191.25%, March 4, 2014 . . ................... 500,000 4963,531,000 3,520Bank of Nova Scotia: 2.93%1.13%, July 3, 2013 ....................... 500,000 5001.118%, July 17, 2013 . . ................... 500,000 5001.15%, July 30, 2013 . . . ................... 497,000 4961.18%, August 2, 2013 . . ................... 205,000 2051.151%, August 9, 2013 . . . ................. 459,000 4581.149%, August 26, 2013 . . ................. 477,000 4761.16%, September 6, 2013 . ................. 1,737,000 1,7331.13%, September 12, 2013 ................. 500,000 4991.165%, September 20, 2013 ................ 966,000 9631.168%, September 23, 2013 ................ 298,000 2971.17%, September 30, 2013 ................. 500,000 4986,639,000 6,625Canadian Imperial Bank of Commerce: 4.49%1.112%, July 4, 2013 . . . ................... 500,000 5001.097%, July 29, 2013 . . ................... 500,000 5001.112%, August 14, 2013 . . ................. 500,000 4991.102%, August 19, 2013 . . ................. 675,000 6741.20%, August 30, 2013 . . . ................. 1,000,000 9981.111%, September 3, 2013 ................. 500,000 4991.112%, September 4, 2013 ................. 625,000 6241.11%, September 5, 2013 . ................. 720,000 7181.11%, September 9, 2013 . ................. 500,000 4991.111%, September 11, 2013 ................ 1,145,000 1,142PrincipalAmountCost andValue(CAD) (CAD 000s)Canadian Imperial Bank of Commerce: 4.49% (Continued)1.11%, September 13, 2013 . ................ $ 500,000 $ 4991.122%, September 16, 2013 ................ 500,000 4991.118%, September 27, 2013 ................ 498,610 4991.21%, October 30, 2013 ................... 1,000,000 9961.221%, December 5, 2013 . ................ 500,000 4971.219%, December 12, 2013 ................ 500,000 49710,163,610 10,140HSBC Bank Canada: 4.55%1.169%, July 11, 2013 ..................... 1,000,000 1,0001.179%, July 15, 2013 ..................... 500,000 5001.171%, July 22, 2013 ..................... 750,000 7491.196%, July 25, 2013 ..................... 690,000 6891.247%, July 31, 2013 ..................... 2,175,000 2,1731.191%, August 1, 2013 .................... 500,000 4991.168%, August 2, 2013 .................... 500,000 4991.191%, August 8, 2013 .................... 500,000 4991.201%, August 15, 2013 ................... 195,000 1951.22%, August 26, 2013 .................... 500,000 4991.25%, August 30, 2013 .................... 500,000 4991.178%, September 12, 2013 ................ 500,000 4991.18%, September 23, 2013 . ................ 500,000 4991.21%, October 30, 2013 ................... 500,000 4981.24%, December 23, 2013 . ................ 1,000,000 99410,310,000 10,291JPMorgan Chase Bank NA: 0.66%1.131%, July 11, 2013 ..................... 500,000 5001.109%, July 25, 2013 ..................... 1,000,000 9991,500,000 1,499Manulife Bank of Canada: 5.08%1.22%, July 29, 2013 ...................... 3,000,000 2,9971.189%, August 16, 2013 ................... 1,100,000 1,0981.261%, September 16, 2013 ................ 500,000 4991.25%, September 18, 2013 . ................ 500,000 4991.231%, October 3, 2013 ................... 500,000 4981.249%, October 16, 2013 . . ................ 1,000,000 9961.23%, October 21, 2013 ................... 1,500,000 1,4941.23%, October 23, 2013 ................... 500,000 4981.209%, November 1, 2013 . ................ 1,000,000 9961.219%, November 4, 2013 . ................ 500,000 4981.30%, January 23, 2014 ................... 1,400,000 1,39011,500,000 11,463National Bank of Canada: 5.57%1.118%, July 2, 2013 ...................... 500,000 5001.118%, July 15, 2013 ..................... 1,000,000 9991.11%, July 19, 2013 ...................... 2,250,000 2,2491.111%, July 22, 2013 ..................... 610,000 6101.112%, July 24, 2013 ..................... 500,000 5001.12%, July 31, 2013 ...................... 750,000 749The accompanying notes are an integral part of these financial statements.204 Franklin Templeton Investments Funds

Franklin Templeton Money Market FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)PrincipalAmountCost andValue(CAD) (CAD 000s)National Bank of Canada: 5.57% (Continued)1.11%, August 6, 2013 . . ................... $ 500,000 $ 4991.112%, August 12, 2013 . . ................. 500,000 4991.112%, August 19, 2013 . . ................. 1,500,000 1,4981.108%, August 23, 2013 . . ................. 500,000 4991.21%, August 26, 2013 . . . ................. 500,000 4991.111%, August 30, 2013 . . ................. 500,000 4991.16%, September 4, 2013 . ................. 1,000,000 9981.121%, September 12, 2013 ................ 500,000 4991.119%, September 17, 2013 ................ 1,000,000 9971.24%, December 19, 2013 ................. 500,000 49712,610,000 12,591Royal Bank of Canada: 0.69%1.189%, July 16, 2013 . . ................... 500,000 5001.121%, August 21, 2013 . . ................. 642,000 6411.189%, September 3, 2013 ................. 400,000 3991,542,000 1,540The Toronto-Dominion Bank: 7.05%1.155%, July 5, 2013 . . . ................... 736,000 7361.11%, July 9, 2013 ....................... 280,000 2801.096%, July 15, 2013 . . ................... 1,000,000 9991.11%, July 29, 2013 . . . ................... 500,000 5001.11%, August 1, 2013 . . ................... 500,000 4991.209%, August 6, 2013 . . . ................. 2,500,000 2,4971.11%, August 13, 2013 . . . ................. 1,100,000 1,0981.11%, September 13, 2013 ................. 1,000,000 9981.11%, September 23, 2013 ................. 2,065,000 2,0601.11%, September 25, 2013 ................. 2,000,000 1,9951.16%, October 1, 2013 . . . ................. 1,100,000 1,0971.11%, October 3, 2013 . . . ................. 1,994,120 1,9941.219%, December 31, 2013 ................ 1,100,000 1,09315,875,120 15,846Total Banker’s Acceptances .................... 73,670,730 73,515COMMERCIAL PAPER: 9.15%Altalink LP: 1.11%1.20%, July 5, 2013 ....................... 2,499,425 2,499Glacier Credit Card Trust: 1.14%1.208%, August 14, 2013 . . ................. 1,000,000 9981.21%, September 10, 2013 ................. 1,575,000 1,5712,575,000 2,569Honda Canada Finance Inc.: 2.78%1.131%, July 8, 2013 . . . ................... 1,000,000 1,0001.128%, July 23, 2013 . . ................... 500,000 5001.13%, August 1, 2013 . . ................... 500,000 4991.15%, August 12, 2013 . . . ................. 250,000 2501.121%, August 16, 2013 . . ................. 500,000 4991.131%, September 4, 2013 ................. 1,000,000 9981.13%, September 9, 2013 . ................. 500,000 499PrincipalAmountCost andValue(CAD) (CAD 000s)Honda Canada Finance Inc.: 2.78% (Continued)1.128%, September 16, 2013 ................ $ 550,000 $ 5491.249%, September 23, 2013 ................ 1,000,000 9971.24%, December 2, 2013 . . ................ 500,000 4976,300,000 6,288Inter Pipeline Corridor Inc.: 0.91%1.23%, July 22, 2013 ...................... 500,000 5001.19%, August 26, 2013 .................... 550,000 5491.202%, September 12, 2013 ................ 500,000 4991.189%, September 17, 2013 ................ 500,000 4992,050,000 2,047Omers Financial Trust: 1.69%1.121%, July 8, 2013 ...................... 1,107,000 1,1071.129%, July 15, 2013 ..................... 855,000 8551.13%, August 6, 2013 ..................... 750,000 7491.129%, August 8, 2013 .................... 250,000 2501.131%, August 12, 2013 ................... 500,000 4991.132%, August 28, 2013 ................... 363,000 3623,825,000 3,822Ontario Infrastructure Projects Corp.: 1.30%1.111%, July 15, 2013 ..................... 2,920,000 2,918Paccar Financial Ltd.: 0.22%1.138%, September 16, 2013 ................ 500,000 499Total Commercial Paper ..................... 20,669,425 20,642CORPORATE BONDS: 46.08%Bank of Montreal, Floating Rate Note: 2.66%October 15, 2013 ......................... 3,000,000 3,000June 20, 2014 ........................... 3,000,000 3,0006,000,000 6,000Bank of Montreal, Senior Note: 0.89%1.377%, September 3, 2013 . ................ 2,000,000 2,013Bank of Montreal, Senior Note, Floating Rate Note: 2.21%March 23, 2015 .......................... 5,000,000 5,000Bank of Nova Scotia, Floating Rate Note: 0.44%November 8, 2013 ........................ 1,000,000 1,000Bank of Nova Scotia, Senior Note: 0.53%1.249%, October 30, 2013 . . ................ 1,193,000 1,206Bank of Nova Scotia, Senior Note, Floating Rate Note: 4.91%September 5, 2013 ........................ 2,550,000 2,550September 19, 2013 ....................... 5,000,000 5,001October 17, 2013 ......................... 3,500,000 3,52311,050,000 11,074BMW Canada Inc., Senior Note, H, Floating Rate Note: 2.22%November 24, 2014 ....................... 5,000,000 5,000Caisse Centrale Desjardins du Quebec, Senior Note, Floating Rate Note: 0.89%May 23, 2014 ........................... 2,000,000 2,000The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 205

Franklin Templeton Money Market FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)PrincipalAmountCost andValue(CAD) (CAD 000s)Canadian Imperial Bank of Commerce, Floating Rate Note: 3.33%November 28, 2013 .................. $ 3,000,000 $ 3,001July 11, 2014 . . . ......................... 2,000,000 2,008August 8, 2014 .......................... 2,500,000 2,5027,500,000 7,511Canadian Imperial Bank of Commerce, Senior Note, Floating Rate Note: 0.89%July 19, 2013 . . . ......................... 2,000,000 2,001Eagle Credit Card Trust, Secured Note, 101A: 1.78%1.366%, December 17, 2013 ................ 4,000,000 4,026GE Capital Canada Funding Co., Senior Note, Floating Rate Note: 3.87%June 11, 2014 . . ......................... 5,000,000 5,000January 26, 2015 ......................... 2,000,000 2,025June 1, 2015 . . . ......................... 1,700,000 1,7008,700,000 8,725Gloucester Credit Card Trust, Floating Rate Note: 2.21%November 15, 2013 ....................... 5,000,000 4,997HSBC Bank Canada, Senior Note, Floating Rate Note: 0.89%January 21, 2016 ......................... 2,000,000 2,000Hydro One Inc., Senior Note: 0.90%1.422%, November 12, 2013 ................ 2,000,000 2,027Manulife Bank of Canada, Senior Note, Floating Rate Note: 4.50%November 18, 2013 ....................... 5,000,000 5,003December 3, 2014 ........................ 4,150,000 4,154March 14, 2016 .......................... 1,000,000 1,00010,150,000 10,157Metropolitan Life Global Funding I: 0.89%1.598%, November 8, 2013 . ................ 2,000,000 2,021Metropolitan Life Global Funding I, Floating Rate Note: 3.37%June 17, 2014 . . ......................... 7,571,000 7,608New York Life Global Funding: 2.26%1.407%, March 19, 2014 . . . ................ 5,000,000 5,104Royal Bank of Canada, Senior Note, Floating Rate Note: 6.44%September 19, 2013 ....................... 5,000,000 5,000September 26, 2013 ....................... 1,100,000 1,101January 21, 2014 ......................... 3,400,000 3,405April 10, 2014 . . ......................... 5,000,000 5,00014,500,000 14,506Total Corporate Bonds ........................ 103,664,000 103,976GOVERNMENT BONDS: 1.17%Province of British Columbia, Strip: 1.17%September 5, 2013 ....................... 1,624,000 1,620November 15, 2013 ....................... 1,016,000 1,011Total Government Bonds ..................... 2,640,000 2,631TOTAL INVESTMENTS: 100.00% ................. $225,599,155 225,621OTHER ASSETS, less liabilities: — ............... 8TOTAL NET ASSETS: 100.00% .................. $225,6292013 2012Bond Ratings*%ofNet Assets%ofNet AssetsAAA .................................. 38.66 50.60AA ................................... 23.41 15.88A..................................... 36.82 29.70BBB .................................. 1.11 —* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’sand Fitch ratings.The accompanying notes are an integral part of these financial statements.206 Franklin Templeton Investments Funds

Franklin Templeton Money Market FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(CAD 000s) (CAD 000s)AssetsInvestment in securities — at fair value $ 225,621 $ 234,914CashCanadian 12 —ReceivablesInvestment securities sold — 11,000Capital units sold — 8,647Interest 241 690Total assets 225,874 255,251LiabilitiesPayablesInvestment securities purchased — 10,619Capital units redeemed 9 6Management fees 81 116Distributions to unitholders 155 260Total liabilities 245 11,001Net assets $ 225,629 $ 244,250Total net assets per series (CAD 000s)Series A $86,381 $96,295Series F 19,238 21,590Series I 5 172Series O 120,005 126,193Number of units outstanding (Note 3)Series A 8,638,047 9,629,469Series F 1,923,746 2,159,009Series I 486 17,216Series O 12,000,523 12,619,249Net assets per unit — CADSeries A $10.00 $10.00Series F 10.00 10.00Series I 10.00 10.00Series O 10.00 10.00Cost of investments held (CAD 000s) $225,621 $234,914STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(CAD 000s) (CAD 000s)Investment incomeInterest $ 1,524 $ 1,817Total investment income 1,524 1,817ExpensesManagement fees (Note 4(a)) 534 694Transfer agent fees (Note 4(c)) 312 389Custodian fees 8 10Legal fees — 2Audit fees 11 11Unitholder reporting costs 9 11Independent review committee fees 1 1Registration fees 26 24Other expenses (Note 7) 69 91Total expenses 970 1,233Expenses waived/paid by Manager (Note 6) (436) (539)Net expenses 534 694Net investment income (loss) 990 1,123Increase (decrease) in net assets from operations $ 990 $ 1,123Increase (decrease) in net assets from operationsper series (CAD 000s)Series A $123 $214Series F 83 115Series I —* —*Series O 784 794Increase (decrease) in net assets from operationsper unitSeries A $0.02 $0.02Series F 0.04 0.04Series I 0.02 0.02Series O 0.07 0.07* Amount rounded to zero in the nearest thousand.The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 207

Franklin Templeton Money Market FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in CAD 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 990 $ 1,123 $ 123 $ 214 $ 83 $ 115Distributions to unitholdersFrom net investment income (990) (1,123) (123) (214) (83) (115)From capital gains — — — — — —From return of capital — — — — — —(990) (1,123) (123) (214) (83) (115)Capital unit transactionsSubscriptions 72,215 124,802 29,709 47,399 4,916 6,899Reinvestments 1,089 1,098 159 216 92 114Redemptions (91,925) (123,502) (39,782) (67,869) (7,360) (10,083)(18,621) 2,398 (9,914) (20,254) (2,352) (3,070)Increase (decrease) in net assets for the period (18,621) 2,398 (9,914) (20,254) (2,352) (3,070)Net assets — beginning of period 244,250 260,259 96,295 126,507 21,590 25,546Net assets — end of period $ 225,629 $ 262,657 $ 86,381 $ 106,253 $ 19,238 $ 22,476Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ —* $ —* $ 784 $ 794Distributions to unitholdersFrom net investment income — — (784) (794)From capital gains — — — —From return of capital — — — —— — (784) (794)Capital unit transactionsSubscriptions — — 37,590 70,504Reinvestments — — 838 768Redemptions (167) (12) (44,616) (45,538)(167) (12) (6,188) 25,734Increase (decrease) in net assets for the period (167) (12) (6,188) 25,734Net assets — beginning of period 172 47 126,193 108,159Net assets — end of period $ 5 $ 35 $ 120,005 $ 133,893* Amount rounded to zero in the nearest thousand.The accompanying notes are an integral part of these financial statements.208 Franklin Templeton Investments Funds

Franklin Templeton Treasury Bill FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited)PrincipalAmountCost andValue(CAD) (CAD 000s)TREASURY BILLS: 60.95%Canada Treasury Bill: 47.86%0.982%, July 4, 2013 . . ....................... $ 1,755,000 $ 1,7551.03%, July 5, 2013 . ......................... 2,485,000 2,4850.989%, July 18, 2013 . ....................... 3,790,000 3,7881.035%, August 1, 2013 ....................... 4,275,000 4,2710.995%, August 15, 2013 ...................... 4,000,000 3,9951.045%, August 29, 2013 ...................... 4,085,000 4,0781.005%, September 12, 2013 ................... 2,650,000 2,6451.082%, September 26, 2013 ................... 1,000,000 9971.005%, October 10, 2013 ..................... 2,500,000 2,4931.08%, October 24, 2013 ...................... 750,000 7471.018%, November 7, 2013 .................... 2,000,000 1,9931.072%, November 21, 2013 ................... 500,000 4981.042%, December 5, 2013 .................... 2,000,000 1,9911.126%, December 19, 2013 ................... 1,000,000 9951.11%, January 16, 2014 ...................... 1,000,000 9941.04%, February 13, 2014 ..................... 1,000,000 9941.065%, April 10, 2014 . ....................... 1,000,000 9921.16%, June 5, 2014 . . ....................... 500,000 49536,290,000 36,206Province of Alberta: 0.66%1.018%, July 9, 2013 . . ....................... 500,000 500Province of British Columbia: 8.78%1.19%, July 3, 2013 . ......................... 1,000,000 1,0001.149%, July 8, 2013 . . ....................... 1,000,000 1,0001.099%, July 10, 2013 . ....................... 500,000 5001.129%, August 26, 2013 ...................... 500,000 4991.049%, September 4, 2013 .................... 250,000 2501.089%, September 9, 2013 .................... 160,000 1591.081%, October 16, 2013 ..................... 250,000 2491.17%, October 18, 2013 ...................... 500,000 4981.18%, October 21, 2013 ...................... 1,000,000 9961.17%, February 24, 2014 ..................... 500,000 4961.17%, February 25, 2014 ..................... 1,000,000 9926,660,000 6,639Province of New Brunswick: 2.46%1.022%, July 11, 2013 . ....................... 500,000 5001.071%, September 5, 2013 .................... 1,365,000 1,3611,865,000 1,861Province of Ontario: 1.19%1.061%, August 14, 2013 ...................... 400,000 3991.081%, October 9, 2013 ...................... 500,000 498900,000 897Total Treasury Bills ........................... 46,215,000 46,103GOVERNMENT BONDS: 39.04%Canada Housing Trust: 5.32%1.099%, September 15, 2013 ................... 4,000,000 4,020PrincipalAmountCost andValue(CAD) (CAD 000s)Canada Housing Trust, Floating Rate Note, Secured Note: 2.66%March 15, 2014 ............................ $ 2,000,000 $ 2,009Canada Housing Trust, Secured Note: 1.33%1.072%, December 15, 2013 .................. 1,000,000 1,007Financement Quebec, Floating Rate Note: 1.32%October 14, 2015 ........................... 1,000,000 997Hydro-Quebec, Floating Rate Note: 2.65%February 20, 2014 . ......................... 2,000,000 2,007National Housing Association, Floating Rate Note: 3.16%October 1, 2014 ............................ 1,650,842 1,651April 1, 2016 .............................. 739,570 7422,390,412 2,393Province of Alberta: 1.32%June 28, 2013 ............................. 997,660 998Province of British Columbia, Strip: 2.62%February 23, 2014 . ......................... 1,000,000 993March 8, 2014 ............................. 1,000,000 9922,000,000 1,985Province of Manitoba: 0.66%September 11, 2013 ......................... 498,905 499Province of Manitoba, Floating Rate Note: 1.32%April 17, 2014 ............................. 1,000,000 1,002Province of Nova Scotia, Floating Rate Note: 1.73%December 3, 2014 . ......................... 1,300,000 1,307Province of Ontario, Floating Rate Note: 6.36%July 8, 2014 ............................... 2,800,000 2,801October 28, 2014 ........................... 1,000,000 1,004October 5, 2015 ............................ 1,000,000 1,0064,800,000 4,811Province of Ontario, Senior Note, Floating Rate Note: 1.32%June 27, 2016 ............................. 1,000,000 1,002Province of Ontario, Strip: 1.32%December 2, 2013 . ......................... 1,000,000 995Province of Quebec, Floating Rate Note: 5.95%December 10, 2013 ......................... 4,500,000 4,500Total Government Bonds ....................... 29,486,977 29,532TOTAL INVESTMENTS: 99.99% ........... $75,701,977 75,635OTHER ASSETS, less liabilities: 0.01% ............ 10TOTAL NET ASSETS: 100.00% .............. $75,645The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 209

Franklin Templeton Treasury Bill FundSTATEMENT OF INVESTMENTSAs at June 30, 2013 (Unaudited) (Continued)2013 2012Bond Ratings*%ofNet Assets%ofNet AssetsAAA .................................. 80.41 76.45AA ................................... 9.66 10.00A..................................... 9.92 11.15* Excluding cash and overnight term deposits.Source: Standard & Poor’s, and/or composite of Moody’s, Standard & Poor’sand Fitch ratings.The accompanying notes are an integral part of these financial statements.210 Franklin Templeton Investments Funds

Franklin Templeton Treasury Bill FundSTATEMENTS OF NET ASSETSAs at June 30, 2013 (Unaudited) and December 31, 20122013 2012(CAD 000s) (CAD 000s)AssetsInvestment in securities — at fair value $ 75,635 $ 90,032CashCanadian 7 6ReceivablesInterest 74 157Total assets 75,716 90,195LiabilitiesPayablesCapital units redeemed 1 —Management fees 41 52Distributions to unitholders 29 47Total liabilities 71 99Net assets $ 75,645 $ 90,096Total net assets per series (CAD 000s)Series A $61,624 $70,882Series F 2,074 4,607Series I 171 417Series O 11,776 14,190Number of units outstanding (Note 3)Series A 6,162,369 7,088,126Series F 207,387 460,715Series I 17,087 41,732Series O 1,177,608 1,419,026Net assets per unit — CADSeries A $10.00 $10.00Series F 10.00 10.00Series I 10.00 10.00Series O 10.00 10.00Cost of investments held (CAD 000s) $75,635 $90,032STATEMENTS OF OPERATIONSFor the six months ended June 30, 2013 and 2012 (Unaudited)2013 2012(CAD 000s) (CAD 000s)Investment incomeInterest $ 495 $ 609Total investment income 495 609ExpensesManagement fees (Note 4(a)) 277 369Transfer agent fees (Note 4(c)) 200 248Custodian fees 4 5Legal fees — 1Audit fees 10 11Unitholder reporting costs 6 8Independent review committee fees 1 1Registration fees 25 23Other expenses (Note 7) 34 48Total expenses 557 714Expenses waived/paid by Manager (Note 6) (280) (345)Net expenses 277 369Net investment income (loss) 218 240Increase (decrease) in net assets from operations $ 218 $ 240Increase (decrease) in net assets from operationsper series (CAD 000s)Series A $126 $180Series F 14 16Series I 1 1Series O 77 43Increase (decrease) in net assets from operationsper unitSeries A $0.02 $0.02Series F 0.03 0.03Series I 0.03 0.03Series O 0.06 0.06The accompanying notes are an integral part of these financial statements.Franklin Templeton Investments Funds 211

Franklin Templeton Treasury Bill FundSTATEMENTS OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013 and 2012 (Unaudited)(in CAD 000s)All Series Series A Series F2013 2012 2013 2012 2013 2012Increase (decrease) in net assets from operations $ 218 $ 240 $ 126 $ 180 $ 14 $ 16Distributions to unitholdersFrom net investment income (219) (240) (127) (180) (14) (16)From capital gains — — — — — —From return of capital — — — — — —(219) (240) (127) (180) (14) (16)Capital unit transactionsSubscriptions 11,373 28,967 8,550 9,932 236 350Reinvestments 234 226 134 178 16 16Redemptions (26,057) (31,171) (17,941) (25,969) (2,785) (568)(14,450) (1,978) (9,257) (15,859) (2,533) (202)Increase (decrease) in net assets for the period (14,451) (1,978) (9,258) (15,859) (2,533) (202)Net assets — beginning of period 90,096 103,986 70,882 95,377 4,607 4,993Net assets — end of period $ 75,645 $ 102,008 $ 61,624 $ 79,518 $ 2,074 $ 4,791Series ISeries O2013 2012 2013 2012Increase (decrease) in net assets from operations $ 1 $ 1 $ 77 $ 43Distributions to unitholdersFrom net investment income (1) (1) (77) (43)From capital gains — — — —From return of capital — — — —(1) (1) (77) (43)Capital unit transactionsSubscriptions 295 — 2,292 18,685Reinvestments 1 1 83 31Redemptions (542) (57) (4,789) (4,577)(246) (56) (2,414) 14,139Increase (decrease) in net assets for the period (246) (56) (2,414) 14,139Net assets — beginning of period 417 222 14,190 3,394Net assets — end of period $ 171 $ 166 $ 11,776 $ 17,533The accompanying notes are an integral part of these financial statements.212 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTS For the periods ended June 30, 2013 (Unaudited) and December 31, 20121. Organization(a) Inception and Financial Reporting DatesThe Franklin Templeton Investments Funds (the “Funds”) are open-ended mutual fund trusts and unit trusts governed by the laws ofOntario pursuant to a Master Declaration of Trust, with inception dates as follows:Templeton Asian Growth Fund ............................................................................... December 23, 2010Templeton Canadian Balanced Fund .......................................................................... September 14, 1994Templeton Canadian Stock Fund ............................................................................. January 3, 1989Templeton EAFE Developed Markets Fund ..................................................................... January 2, 1994Templeton Emerging Markets Fund ........................................................................... September 20, 1991Templeton Frontier Markets Fund ............................................................................ July 11, 2011Templeton Global Balanced Fund ............................................................................ December 1, 2005Templeton Global Bond Fund ................................................................................ June 7, 1988Templeton Global Smaller Companies Fund .................................................................... January 3, 1989Templeton International Stock Fund ........................................................................... January 3, 1989Franklin Bissett Canadian All Cap Balanced Fund (formerly Bissett Focus Balanced Fund) ............................... January 5, 2009Franklin Flex Cap Growth Fund .............................................................................. March 27, 1997Franklin High Income Fund ................................................................................. February 7, 2003Franklin Income Fund ...................................................................................... June 19, 2013Franklin Strategic Income Fund .............................................................................. February 7, 2003Franklin U.S. Core Equity Fund .............................................................................. July 25, 2007Franklin U.S. Rising Dividends Fund .......................................................................... December 1, 1984Franklin World Growth Fund ................................................................................. February 27, 2008Bissett All Canadian Focus Fund ............................................................................. September 3, 2004Bissett Bond Fund ........................................................................................ August 1, 1986Bissett Canadian Balanced Fund ............................................................................. August 1, 1991Bissett Canadian Dividend Fund .............................................................................. December 12, 2003Bissett Canadian Equity Fund ................................................................................ March 1, 1983Bissett Canadian High Dividend Fund ......................................................................... June 30, 1996Bissett Canadian Short Term Bond Fund ....................................................................... December 12, 2003Bissett Corporate Bond Fund ................................................................................ December 11, 2006Bissett Dividend Income Fund ............................................................................... May 31, 1988Bissett Microcap Fund ..................................................................................... August 19, 1997Bissett Small Cap Fund ..................................................................................... January 2, 1992Bissett Strategic Income Fund ............................................................................... December 19, 2011Bissett U.S. Focus Fund .................................................................................... February 27, 2008Mutual Beacon Fund ...................................................................................... December 31, 1996Mutual Global Discovery Fund ............................................................................... February 7, 2003Franklin Templeton Canadian Core Equity Fund ................................................................. June 23, 2008Franklin Templeton Canadian Large Cap Fund .................................................................. June 23, 2008Franklin Templeton Money Market Fund ....................................................................... August 1, 1991Franklin Templeton Treasury Bill Fund ........................................................................ February 29, 1988Each of the Funds may offer one or more series of units designated as Series A, F, I, O, R, S, T and T USD. Each Series differs by its initialsales load, contingent deferred sales charges, management fees and initial minimum investment amount. Series T and T USD have thesame features except that the latter is offered in USD only.Bissett Canadian Balanced Fund and Bissett Strategic Income Fund invest in mutual funds (“Underlying Funds”) managed by FranklinTempleton Investments Corp. (the “Manager”), an indirectly wholly owned subsidiary of Franklin Resources Inc. (“FRI”), a United StatesSecurities and Exchange Commission (SEC) registered company listed on the New York Stock Exchange.Effective February 11, 2010, each of Templeton International Stock Fund, Templeton Global Balanced Fund and Templeton Global SmallerCompanies Fund may invest up to 7.5% of its net assets in Templeton China Opportunities Fund (“TCOF”), a sub-fund of Franklin TempletonSelected Markets Funds (“FTSMF”), an open-end investment company organized under the laws of Luxembourg as a Société d’Investissementà Capital Variable. TCOF is managed by Templeton Investment Counsel, LLC, an affiliate of the Manager. TCOF’s portfolio will bemanaged in accordance with the investment restrictions applicable to a UCITS, an undertaking for collective investment in transferablesecurities, which are substantially similar to those that govern each Fund in Canada. The principal distributor and administrator agent ofFTSMF is an affiliate of the Manager.Franklin Templeton Investments Funds 213

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)1. Organization (Continued)The financial statements of each Fund include the Statement of Investments as at June 30, 2013, and the Statements of Net Assets as atJune 30, 2013 and December 31, 2012, if the Fund was in existence at the time. The Statements of Operations and Changes in Net Assetsfor each Fund are for the six months ended June 30, 2013 and 2012, except for Funds established during either period, in which case theperiod is from commencement of operations (inception date) to June 30.(b) Fund EventsFranklin Income Fund was launched on June 19, 2013 and commenced offering of Series A, F, I, O, R, S, T and T-USD units on June 28,2013. National Instrument 81-106, (the “Instrument”) Section 1.1 (a) defines an interim period as a period of at least three months thatends six months before the end of a financial year of an investment fund. Financial statements for Franklin Income Fund, for the interimperiod ending June 30, 2013 have not been included in these financial statements, as its interim period is less than three months sincecommencement of operations.Effective April 16, 2013 Franklin Templeton U.S. Money Market Fund was liquidated.Effective April 16, 2013 Franklin Templeton Global Blend Fund was liquidated.Effective May 13, 2013, Bissett Focus Balanced Fund was renamed Franklin Bissett Canadian All Cap Balanced Fund. The fund wasrepositioned as a Canadian balanced fund focusing on capital appreciation through an allocation tilted toward equities.Effective June 18, 2012, Templeton Global Income Fund was renamed Templeton Global Balanced Fund.Effective June 18, 2012, Mutual Discovery Fund was renamed Mutual Global Discovery Fund.2. Summary of Significant Accounting PoliciesThese financial statements are prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). The significantaccounting policies are as follows:(a)(b)Designation of financial assets and liabilities — For the purpose of measuring and recognizing financial assets and liabilities, thefollowing designations have been made: All investments, including derivatives, if any, are initially recognized at fair value and aredesignated as held for trading. Accrued interest, distributions and dividends receivable, amounts receivable for capital units sold andsecurities sold, and other assets are designated as loans and receivables and reported at cost or amortized cost. Amounts payable forsecurities purchased and capital units redeemed, management fees payable, distributions payable, accrued expenses and otherliabilities, are designated as other financial liabilities and reported at amortized cost.Valuation of investments — The Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3855, “FinancialInstruments — Recognition and Measurement”, requires that the fair value of financial instruments traded in active markets bemeasured at closing bid price for long positions and closing ask price for short positions for financial statement reporting purposes(“net assets”). The Canadian Securities Administrators allow investment funds to calculate the daily net asset value for the purpose ofprocessing unitholder transactions using the last traded price for the day as fair value of financial instruments traded in an activemarket, which is referred to as a “trading net asset value”. As a result, the net assets per unit for financial reporting purposes maydiffer from the trading net asset value. This measurement difference does not affect the Funds’ unitholder transactions. The Funds’trading net asset values are disclosed in Note 13.Securities listed on a securities exchange and those traded on the over-the-counter market are valued at the closing bid price for longpositions and closing ask price for short positions on the valuation day. The Funds have procedures to determine the fair value ofsecurities and other financial instruments for which market prices are not readily available or which may not be reliably priced. Underthese fair valuation procedures, the Funds primarily employ a market-based approach which may use related or comparable assets orliabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine its fairvalue. The Funds may also use an income-based valuation approach in which the anticipated future cash flows of the investment arediscounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition ofthe investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from thevalues that would have been used had an active market existed.214 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)2. Summary of Significant Accounting Policies (Continued)(c)Investments in Underlying Funds are made in Series O units of the Underlying Fund and valued at the respective closing net assetvalue.Investments in TCOF are made in Series F1, denominated in USD, and valued at the CAD equivalent of the closing net asset value onvaluation day.Warrants not traded in an active market are valued using a recognized option pricing model which include factors such as the terms ofthe warrant, time value of money and volatility inputs that are significant to such valuation.All security valuation techniques are periodically reviewed by the Valuation Committee of Franklin Templeton Investments Corp., the“Manager” and are approved by the Manager.Derivatives — Certain Funds may invest in derivatives in order to manage risk or gain exposure to various other investments ormarkets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initialinvestment that is smaller than would normally be required to have similar response to changes in market factors, and require orpermit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligationsunder the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements whichexpose the applicable Funds to gains and losses in excess of the amounts shown on the Statement of Net Assets. Realized gain andloss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.The applicable Funds investments in over-the-counter (OTC) derivatives are subject to the terms of International Swaps andDerivatives Association Master Agreements and other related agreements between the Fund and certain derivative counterparties.These agreements contain various provisions, including but not limited to collateral requirements, events of default, requirements forthe Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. Collateral pledged maybe in the form of cash and/or securities. Cash pledged by a Fund is shown as an amount Due from Broker on the Statement of NetAssets. Cash collateral entitled to by a Fund is disclosed in note 14(b). Securities pledged as collateral are indicated on the respectiveFunds’ Statement of Investments. Should a Fund fail to meet any of these provisions, the derivative counterparty has the right toterminate the derivative contract and require immediate payment by the Fund for those OTC derivatives with that particular counterpartythat are in a net liability position.(i) Foreign/Forward exchange contracts — When a Fund purchases or sells foreign securities, it may enter into foreign exchangecontracts to minimize foreign exchange risk from the trade date to the settlement date of the transactions. A foreign exchangecontract is an agreement between two parties to exchange different currencies at an agreed upon exchange rate at a future date.A Fund may also enter into forward exchange contracts to hedge against fluctuations in foreign exchange rates. These contractsare valued as the difference between the contractual forward foreign exchange rates and the forward bid rate for currency heldand forward ask rate for currency sold short at the reporting date. The unrealized gains or losses on the contracts are included inthe Statement of Net Assets. Realized gains and losses and changes in unrealized gains and losses are included in the Statementof Operations.(ii) Options — Options are contracts entitling the holder to purchase or sell a specified item at a specified price, during a specifiedperiod or on a specified date. Options purchased are recorded as investments; options written (sold) are recorded as liabilities onthe Statement of Net Assets. Any gain or loss resulting from revaluation is included in unrealized appreciation (depreciation) invalue of investments on the Statement of Operations. Upon closing of an option other than by exercise, which results in a cashsettlement, the difference between the premium (original option value) and the settlement proceeds is included in income (loss)from derivatives on the Statement of Operations. When securities are acquired or delivered upon exercise, the acquisition cost orsale proceeds are adjusted by the amount of the premium. When an option is closed, the difference between the premium andthe cost to close the position is included in income (loss) from derivatives on the Statement of Operations, as is the premium foroptions written or purchased when an option expires.(iii) Equity-linked notes — Certain Funds may invest in equity-linked securities. Equity-linked notes are hybrid financial instrumentsthat generally combine both debt and equity characteristics into a single security. Income received from equity-linked notes isrecorded in dividends received in the Statement of Operations and may be based on the performance of an underlying security,an equity index, or an option position.Franklin Templeton Investments Funds 215

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)2. Summary of Significant Accounting Policies (Continued)(iv) Credit default swaps — Certain Funds may enter into credit default swap contracts, primarily to manage and/or gain exposure tocredit risk. A credit default swap is an agreement between the fund and a counterparty whereby the buyer of the contractreceives credit protection and the seller of the contract guarantees the credit worthiness of a referenced debt obligation. Theunderlying referenced debt obligation may be a single issuer of corporate or sovereign debt, a credit index, or a tranche of a creditindex. In the event of a default of the underlying referenced debt obligation, the buyer is entitled to receive the notional amount ofthe credit default swap contract from the seller in exchange for the referenced debt obligation, a net settlement amount equal tothe notional amount of the credit default swap less the recovery value of the referenced debt obligation, or other agreed uponamount.Over the term of the contract, the buyer pays the seller a periodic stream of payments, provided that no event of default hasoccurred. Such periodic payments paid or received are accrued daily and are included in the Statement of Operations in Income(loss) from derivatives. The change in value of a credit default swap contract is included in the Statement of Net Assets as unrealizedgain (loss) on derivatives. When the credit default swap contracts are closed out, gains or losses are realized and included inthe Statements of Operations in Net Realized Gain (Loss) on investments and derivatives. Pursuant to the terms of the creditdefault swap contract, cash or securities may be required to be deposited as collateral, as discussed in note 2(c).(d)(e)(f)(g)Payment-in-kind bonds — Certain Funds may invest in Payment-in-kind (PIK) bonds. PIK securities are bonds or preferred shareswhere income may be received in the form of additional bonds or preferred shares. The coupon rate shown represents the rate atperiod end. These bonds typically have interest receivable included in the price quotation obtained each day. Accordingly, that portionof the quote representing interest income has been identified and reclassified as interest income on the Statement of Operations. Inthe event that interest income from the additional bonds is not expected to be realized, a reserve against income is established.Participatory notes — Certain Funds may invest in Participatory Notes (P-Notes). P-Notes are promissory notes that are designed tooffer a return linked to the performance of a particular underlying equity security or index. P-Notes are issued by banks or brokerdealersand allow the fund to gain exposure to common stocks in markets where direct investment is not allowed. P-Notes are notlisted and are valued utilizing the price of the underlying equity security based upon the terms of the P-Notes. Income received fromP-Notes is recorded in dividend income in the Statement of Operations.Valuation of series — A separate net assets per unit is calculated for each series of units in each Fund. The net assets of a series iscomputed by calculating the series’ proportionate share of the assets and liabilities of the Fund common to all series, adjusted for theassets and liabilities of the Fund attributable only to that series. Expenses directly attributable to a series are charged to that series.Other expenses, investment income, realized and unrealized capital and foreign exchange gains and losses are allocatedproportionately to each series based upon the relative net assets of each series, except for items that can be specifically attributed toone or more series.Transaction costs — Transaction costs, such as brokerage commissions, incurred on the purchase and sale of a security are chargedas an expense for the period and shown as transaction costs on the Statements of Operations.The Funds that invest in Underlying Funds do not incur transaction costs on those transactions.(h)(i)Security transactions, investment income, expenses and distributions — Security transactions are recorded on the trade date. Realizedand unrealized gains or losses on security transactions are determined on an average cost basis. Interest income and estimatedexpenses are accrued daily. Dividend income, distributions received from Underlying Funds and distributions to unitholders arerecorded on the ex-dividend date.Taxes — Certain Funds qualify as mutual fund trusts within the meaning of the Income Tax Act (Canada) (the “Act”). Accordingly,these Funds are entitled to a capital gains refund and, as a result, income taxes payable on net realized capital gains are refundableon a formula basis when units of the Fund are redeemed. In addition, such Funds are not subject to alternative minimum tax or taxeson prescribed investments and certain designated income as defined under Part X.2 and Part XII.2, respectively of the Act.Each year, each Fund distributes sufficient net taxable income and net capital gains for the tax calendar year so that the Fund doesnot pay tax under Part 1 of the Act.216 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)2. Summary of Significant Accounting Policies (Continued)Templeton Asian Growth Fund, Templeton Frontier Markets Fund and Bissett U.S. Focus Fund are not expected to qualify as mutualfund trusts at the time of filing the financial statements.Certain Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreigncurrency transactions in the foreign jurisdictions in which they invest. Foreign taxes, if any, are recorded based on the tax regulationsand rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund recordsan estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.(j)Foreign currency translation — The functional currency of the Funds is CAD. Portfolio securities and other assets and liabilitiesdenominated in foreign currencies are translated into the functional currency based on the exchange rate on the valuation date.Purchases and sales of securities and income items denominated in foreign currencies are translated into the functional currency atthe exchange rate in effect on the transaction date. When an exchange rate is unavailable or unreliable, it will be determined usingprocedures established and accepted by the Board of Directors of the Manager.Realized foreign exchange gains or losses arise from sales of foreign currencies, changes between the trade date and settlement datevalues on security and capital transactions, and the difference between the recorded amounts of foreign currency denominated dividends,interest, withholding taxes, and U.S. short-term holdings, and the functional currency equivalent of the amounts actuallyreceived or paid. These gains or losses are reported on the Statements of Operations as net realized and/or unrealized foreignexchange gain (loss).(k)(l)Related party transactions — All related party transactions occur in the normal course of operations and are recorded at an amount ofconsideration agreed to by the parties.Increase (decrease) in net assets from operations per unit — This calculation is based on the increase (decrease) in net assets fromoperations attributable to each series divided by the weighted average number of units of that series outstanding during the period.(m) Accounting estimates — The preparation of financial statements in accordance with Canadian GAAP may require the Manager tomake estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements andthe amounts of income and expense reported during the periods. Actual results may differ from those estimates.The key area where estimates and/or assumptions are applied is in the determination of fair values of financial instruments not tradedon an active market as discussed in note 2(b).3. Unitholders’ CapitalThe authorized capital of the Funds consists of an unlimited number of units without par value. The issued capital of each Fund is comprisedof its net assets attributable to unitholders. Each Fund’s capital is managed in accordance with its respective investment objectivesand policies, and there are no externally imposed restrictions in relation to each Fund’s units. Changes in capital during the period arereflected in the Statements of Changes in Net Assets for each Fund. The Funds have no specific restrictions or capital requirements on thesubscriptions and redemption of units, other than minimum subscription requirements. The Funds endeavour to manage capital by maintaininga strong capital base to support the investment activities of each of the Funds while maintaining sufficient liquidity to meetredemptions. Unitholders are entitled to distributions when declared, which are then reinvested in additional units of the Fund or, at theoption of the unitholder, paid in cash. Units of the Funds are redeemable at the option of the unitholders in accordance with the provisionsin the Declarations of Trust.Franklin Templeton Investments Funds 217

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Changes in issued capital stock are summarized as follows:Templeton Asian Growth FundSeries OJune 30, 2013 December 31, 2012Outstanding units — beginning 33,003,719 22,023,946Subscriptions 613,641 21,134,498Reinvestments — 1,314,767Redemptions (15,556,192) (11,469,492)Outstanding units — ending 18,061,168 33,003,719Templeton Canadian Balanced FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 8,820,278 10,732,626 1,587,241 1,886,338 592,338 683,249Subscriptions 238,894 629,491 8,870 19,638 3,855 32,182Reinvestments (8) 79,598 — 14,904 — 5,563Redemptions (1,202,691) (2,621,437) (146,493) (333,639) (42,571) (128,656)Outstanding units — ending 7,856,473 8,820,278 1,449,618 1,587,241 553,622 592,338Series TJune 30, 2013 December 31, 2012Outstanding units — beginning 213,913 352,034Subscriptions 1,378 12,764Reinvestments 2,842 10,706Redemptions (31,822) (161,591)Outstanding units — ending 186,311 213,913Templeton Canadian Stock FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 6,618,217 8,246,266 85,483 93,238 451,887 541,400Subscriptions 83,016 204,584 1,201 5,416 27,395 30,721Reinvestments — — — — — —Redemptions (719,277) (1,832,633) (20,229) (13,171) (65,441) (120,234)Outstanding units — ending 5,981,956 6,618,217 66,455 85,483 413,841 451,887Templeton EAFE Developed Markets FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 641,431 854,742 287,322 314,814 34,037,926 30,978,929Subscriptions 76,644 38,046 32,836 2,451 1,198,330 9,169,306Reinvestments — 16,569 — 7,419 — 894,025Redemptions (138,268) (267,926) (21,296) (37,362) (5,171,163) (7,004,334)Outstanding units — ending 579,807 641,431 298,862 287,322 30,065,093 34,037,926218 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Templeton Emerging Markets FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 19,414,729 22,003,371 699,910 760,843 36,835 53,090Subscriptions 702,211 1,095,055 101,691 168,710 21,221 3,763Reinvestments — 218,609 — 7,733 — 56Redemptions (1,835,291) (3,902,306) (88,115) (237,376) — (20,074)Outstanding units — ending 18,281,649 19,414,729 713,486 699,910 58,056 36,835Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 12,011,332 12,138,450Subscriptions 1,086,360 7,397,677Reinvestments — 138,689Redemptions (3,396,170) (7,663,484)Outstanding units — ending 9,701,522 12,011,332Templeton Frontier Markets FundSeries OJune 30, 2013 December 31, 2012Outstanding units — beginning 8,615,523 654,315Subscriptions 3,014,631 8,735,578Reinvestments — 245,201Redemptions (3,252,401) (1,019,571)Outstanding units — ending 8,377,753 8,615,523Templeton Global Bond FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 43,534,962 35,874,074 8,704,250 6,574,815 1,969,995 767,228Subscriptions 13,281,506 14,902,745 8,048,845 5,073,779 1,094,090 1,451,718Reinvestments 529,018 1,424,888 107,401 241,577 26,381 46,476Redemptions (5,189,920) (8,666,745) (1,353,608) (3,185,921) (462,327) (295,427)Outstanding units — ending 52,155,566 43,534,962 15,506,888 8,704,250 2,628,139 1,969,995Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 103,405,268 86,990,340Subscriptions 15,280,801 35,041,919Reinvestments 1,369,224 3,820,073Redemptions (11,090,683) (22,447,064)Outstanding units — ending 108,964,610 103,405,268Franklin Templeton Investments Funds 219

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Templeton Global Balanced FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 703,355 623,331 123,267 156,944 358,441 277,921Subscriptions 958,805 178,815 53,805 8,754 148,737 98,632Reinvestments — 10,420 — 1,463 — 5,978Redemptions (140,817) (109,211) (49,859) (43,894) (11,428) (24,090)Outstanding units — ending 1,521,343 703,355 127,213 123,267 495,750 358,441Series S Series T Series T USDJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 63,000 73,167 8,088,579 8,879,078 1,551,368 1,847,554Subscriptions 17,221 826 423,897 510,847 84,899 67,451Reinvestments 89 1,085 140,172 505,347 24,646 87,510Redemptions (2,625) (12,078) (882,143) (1,806,693) (121,838) (451,147)Outstanding units — ending 77,685 63,000 7,770,505 8,088,579 1,539,075 1,551,368Templeton Global Smaller Companies FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 19,526,917 25,268,861 1,402,393 1,926,382 106,827 102,830Subscriptions 506,617 972,669 105,173 274,542 2,758 8,491Reinvestments — 272,019 — 18,805 — 1,508Redemptions (2,767,222) (6,986,632) (193,347) (817,336) (18,573) (6,002)Outstanding units — ending 17,266,312 19,526,917 1,314,219 1,402,393 91,012 106,827Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 16,464,039 21,503,923Subscriptions 616,190 2,641,795Reinvestments — 225,211Redemptions (2,099,636) (7,906,890)Outstanding units — ending 14,980,593 16,464,039Templeton International Stock FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 38,049,786 47,207,429 1,129,495 1,531,967 213,787 199,649Subscriptions 571,570 1,394,846 99,690 124,181 1,738 9,091Reinvestments — 1,161,428 — 34,234 — 5,047Redemptions (4,182,907) (11,713,917) (216,248) (560,887) — —Outstanding units — ending 34,438,449 38,049,786 1,012,937 1,129,495 215,525 213,787Series OSeries TJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 11,213,339 31,938,334 352,299 509,138Subscriptions 918,817 2,725,090 19,376 12,639Reinvestments — 350,208 4,526 22,560Redemptions (1,357,912) (23,800,293) (63,830) (192,038)Outstanding units — ending 10,774,244 11,213,339 312,371 352,299220 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Franklin Bissett Canadian All Cap Balanced Fund (formerly Bissett Focus Balanced Fund)Series A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 310,475 292,080 4,551 2,498 500 500Subscriptions 81,293 116,990 795 1,997 — —Reinvestments — 3,064 — 56 — —Redemptions (33,631) (101,659) — — — —Outstanding units — ending 358,137 310,475 5,346 4,551 500 500Series OSeries TJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 191,639 141,938 51,552 3,170Subscriptions 76,466 141,607 26,065 47,607Reinvestments — 2,367 231 1,103Redemptions (44,364) (94,273) (380) (328)Outstanding units — ending 223,741 191,639 77,468 51,552Franklin Flex Cap Growth FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 584,711 645,623 105,484 78,112 19,096,858 14,101,284Subscriptions 24,379 69,540 25,778 42,994 5,447,056 9,375,328Reinvestments — 1,244 — 225 — 41,103Redemptions (57,960) (131,696) (36,038) (15,847) (1,738,469) (4,420,857)Outstanding units — ending 551,130 584,711 95,224 105,484 22,805,445 19,096,858Franklin High Income FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 9,496,633 7,589,415 658,125 511,184 77,933 68,777Subscriptions 1,304,278 3,224,551 160,952 260,661 22,645 24,911Reinvestments 181,363 659,897 13,515 47,752 2,232 7,844Redemptions (2,034,239) (1,977,230) (281,619) (161,472) (3,263) (23,599)Outstanding units — ending 8,948,035 9,496,633 550,973 658,125 99,547 77,933Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 14,739,605 14,189,533Subscriptions 896,361 1,037,710Reinvestments 328,487 1,550,845Redemptions (3,721,567) (2,038,483)Outstanding units — ending 12,242,886 14,739,605Franklin Templeton Investments Funds 221

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Franklin Strategic Income FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 6,397,540 4,410,425 683,748 346,028 93,549 13,280Subscriptions 1,823,457 3,004,462 732,299 431,525 42,590 79,862Reinvestments 107,690 197,714 17,629 19,872 2,424 1,438Redemptions (945,507) (1,215,061) (186,765) (113,677) (21,698) (1,031)Outstanding units — ending 7,383,180 6,397,540 1,246,911 683,748 116,865 93,549Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 57,311,747 67,732,822Subscriptions 5,563,850 12,598,047Reinvestments 1,088,472 3,236,242Redemptions (9,741,767) (26,255,364)Outstanding units — ending 54,222,302 57,311,747Franklin U.S. Core Equity FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 333,465 358,127 27,490 11,793 17,573,063 15,490,002Subscriptions 123,871 126,343 3,923 15,959 4,301,422 15,167,691Reinvestments — 2,802 — 242 — 162,952Redemptions (40,081) (153,807) (1,671) (504) (2,382,738) (13,247,582)Outstanding units — ending 417,255 333,465 29,742 27,490 19,491,747 17,573,063Franklin U.S. Rising Dividends FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 1,307,667 444,315 138,730 88,339 18,506,385 17,955,289Subscriptions 1,371,254 995,314 119,627 76,062 3,575,182 5,237,744Reinvestments — 15,746 — 1,689 — 245,509Redemptions (84,424) (147,708) (13,585) (27,360) (3,012,696) (4,932,157)Outstanding units — ending 2,594,497 1,307,667 244,772 138,730 19,068,871 18,506,385Series TJune 30, 2013 December 31, 2012Outstanding units — beginning 394,179 277,065Subscriptions 230,616 222,440Reinvestments 3,741 18,007Redemptions (91,418) (123,333)Outstanding units — ending 537,118 394,179222 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Franklin World Growth FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 1,017,436 1,363,444 423,901 501,377 23,672,985 23,275,782Subscriptions 26,485 45,719 2,819 3,007 1,524,935 7,619,089Reinvestments — 16,895 — 6,976 — 397,595Redemptions (106,780) (408,622) (20,809) (87,459) (5,315,571) (7,619,481)Outstanding units — ending 937,141 1,017,436 405,911 423,901 19,882,349 23,672,985Series TJune 30, 2013 December 31, 2012Outstanding units — beginning 30,281 48,731Subscriptions 477 42Reinvestments 168 1,008Redemptions (3,456) (19,500)Outstanding units — ending 27,470 30,281Bissett All Canadian Focus FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 1,779,168 2,119,809 185,421 203,650 500 500Subscriptions 67,740 242,315 3,642 13,584 — 2,588Reinvestments — 35,495 — 3,607 — —Redemptions (273,710) (618,451) (32,706) (35,420) — (2,588)Outstanding units — ending 1,573,198 1,779,168 156,357 185,421 500 500Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 13,739,085 19,199,895Subscriptions 3,417,043 3,478,589Reinvestments — 279,613Redemptions (2,306,163) (9,219,012)Outstanding units — ending 14,849,965 13,739,085Bissett Bond FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 14,414,030 14,477,746 2,451,774 2,381,924 53,152 39,683Subscriptions 966,929 3,431,089 170,064 403,336 11,587 15,117Reinvestments 159,129 513,681 28,447 88,191 777 1,805Redemptions (2,849,008) (4,008,486) (299,332) (421,677) (4,104) (3,453)Outstanding units — ending 12,691,080 14,414,030 2,350,953 2,451,774 61,412 53,152Franklin Templeton Investments Funds 223

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Bissett Bond Fund (Continued)Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 156,583,380 166,833,171Subscriptions 13,301,875 27,153,797Reinvestments 1,966,238 6,049,690Redemptions (20,474,443) (43,453,278)Outstanding units — ending 151,377,050 156,583,380Bissett Canadian Balanced FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 11,520,631 13,381,968 2,838,477 3,070,519 2,807 2,367Subscriptions 726,742 1,029,702 53,300 67,957 8,978 2,595Reinvestments — 135,766 — 33,515 — 28Redemptions (1,241,147) (3,026,805) (159,222) (333,514) (189) (2,183)Outstanding units — ending 11,006,226 11,520,631 2,732,555 2,838,477 11,596 2,807Series OSeries TJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 9,370,840 8,647,621 1,322,961 1,454,897Subscriptions 1,580,719 2,159,201 63,319 93,593Reinvestments — 111,530 15,130 54,410Redemptions (817,415) (1,547,512) (178,783) (279,939)Outstanding units — ending 10,134,144 9,370,840 1,222,627 1,322,961Bissett Canadian Dividend FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 20,859,407 19,224,175 1,255,470 1,067,151 21,874,950 22,852,220Subscriptions 2,331,518 5,080,905 179,926 383,041 3,189,935 15,107,145Reinvestments 162,257 520,807 8,915 28,916 159,035 578,253Redemptions (2,145,396) (3,966,480) (114,900) (223,638) (4,650,316) (16,662,668)Outstanding units — ending 21,207,786 20,859,407 1,329,411 1,255,470 20,573,604 21,874,950Bissett Canadian Equity FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 5,568,276 6,493,278 2,705,621 2,900,232 13,269 11,896Subscriptions 365,376 462,861 78,253 109,781 3,781 2,160Reinvestments — 105,672 — 50,536 — 245Redemptions (585,086) (1,493,535) (173,845) (354,928) (2,838) (1,032)Outstanding units — ending 5,348,566 5,568,276 2,610,029 2,705,621 14,212 13,269224 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Bissett Canadian Equity Fund (Continued)Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 11,948,525 14,029,456Subscriptions 1,572,124 2,720,346Reinvestments — 228,148Redemptions (1,690,312) (5,029,425)Outstanding units — ending 11,830,337 11,948,525Bissett Canadian High Dividend FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 30,078,889 22,853,486 4,043,314 3,370,031 143,610 92,127Subscriptions 4,606,546 10,316,215 382,822 757,476 39,687 219,875Reinvestments 467,139 1,576,297 58,136 208,479 1,938 7,788Redemptions (2,761,776) (4,667,109) (280,086) (292,672) (102,187) (176,180)Outstanding units — ending 32,390,798 30,078,889 4,204,186 4,043,314 83,048 143,610Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 10,202,434 9,586,215Subscriptions 1,975,561 4,208,305Reinvestments 169,631 718,615Redemptions (2,476,548) (4,310,701)Outstanding units — ending 9,871,078 10,202,434Bissett Canadian Short Term Bond FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 10,476,755 11,615,013 582,772 744,400 29,226,110 23,891,038Subscriptions 1,374,643 2,992,226 220,453 211,298 21,555,184 15,615,551Reinvestments 105,966 296,408 5,994 18,218 493,114 824,173Redemptions (2,649,826) (4,426,892) (119,303) (391,144) (3,384,725) (11,104,652)Outstanding units — ending 9,307,538 10,476,755 689,916 582,772 47,889,683 29,226,110Bissett Corporate Bond FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 5,723,671 4,393,049 277,753 184,094 6,360 2,861Subscriptions 810,503 2,120,003 62,642 106,489 36,786 3,956Reinvestments 61,663 171,511 2,398 6,348 346 188Redemptions (941,602) (960,892) (50,127) (19,178) (247) (645)Outstanding units — ending 5,654,235 5,723,671 292,666 277,753 43,245 6,360Franklin Templeton Investments Funds 225

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Bissett Corporate Bond Fund (Continued)Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 6,693,509 5,745,748Subscriptions 2,044,349 1,490,799Reinvestments 95,934 247,787Redemptions (657,796) (790,825)Outstanding units — ending 8,175,996 6,693,509Bissett Dividend Income FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 12,343,509 11,273,495 1,231,818 1,090,894 48,123 32,576Subscriptions 1,462,947 3,055,762 121,391 215,721 5,000 17,075Reinvestments 107,157 263,603 10,311 24,516 478 1,008Redemptions (1,313,345) (2,249,351) (67,524) (99,313) (9,955) (2,536)Outstanding units — ending 12,600,268 12,343,509 1,295,996 1,231,818 43,646 48,123Series OSeries TJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 5,448,486 4,942,208 2,450,289 2,355,065Subscriptions 868,288 1,248,143 291,643 484,279Reinvestments 54,783 124,789 26,553 67,176Redemptions (169,207) (866,654) (246,980) (456,231)Outstanding units — ending 6,202,350 5,448,486 2,521,505 2,450,289Bissett Microcap FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 2,186,393 1,964,985 2,771,734 2,535,783 1,632,027 1,615,151Subscriptions 736,385 734,885 140,019 149,335 138,977 116,912Reinvestments — 258,998 — 309,207 — 187,932Redemptions (703,611) (772,475) (108,316) (222,591) (111,949) (287,968)Outstanding units — ending 2,219,167 2,186,393 2,803,437 2,771,734 1,659,055 1,632,027Bissett Small Cap FundSeries A Series F Series OJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 941,265 1,005,374 788,664 769,822 6,817,994 6,670,729Subscriptions 50,462 71,917 18,040 11,299 550,916 1,172,550Reinvestments — 100,708 — 84,849 — 738,909Redemptions (128,932) (236,734) (37,038) (77,306) (626,601) (1,764,194)Outstanding units — ending 862,795 941,265 769,666 788,664 6,742,309 6,817,994226 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Bissett Strategic Income FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 7,202,478 198,500 215,915 500 84,564 500Subscriptions 4,463,582 7,212,665 92,400 229,326 148,743 223,012Reinvestments 100,872 114,623 2,623 4,163 1,528 2,329Redemptions (1,014,055) (323,310) (36,285) (18,074) (36,461) (141,277)Outstanding units — ending 10,752,877 7,202,478 274,653 215,915 198,374 84,564Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 79,849 500Subscriptions 19,560 78,182Reinvestments 1,061 1,546Redemptions (1,025) (379)Outstanding units — ending 99,445 79,849Bissett U.S. Focus FundSeries OJune 30, 2013 December 31, 2012Outstanding units — beginning 15,658,274 17,541,041Subscriptions 203,263 4,989,771Reinvestments — 595,443Redemptions (10,623,168) (7,467,981)Outstanding units — ending 5,238,369 15,658,274Mutual Beacon FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 12,746,205 15,588,691 813,920 1,116,434 27,634 27,198Subscriptions 722,645 825,259 13,960 84,467 5,094 1,085Reinvestments — 258,513 — 15,949 — 436Redemptions (1,807,322) (3,926,258) (182,829) (402,930) (580) (1,085)Outstanding units — ending 11,661,528 12,746,205 645,051 813,920 32,148 27,634Series OSeries TJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 21,241,929 41,250,630 45,190 42,809Subscriptions 2,673,545 6,845,776 8,350 10Reinvestments — 439,058 640 2,408Redemptions (5,353,557) (27,293,535) (8,472) (37)Outstanding units — ending 18,561,917 21,241,929 45,708 45,190Franklin Templeton Investments Funds 227

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Mutual Global Discovery FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 36,959,200 40,773,176 2,701,412 2,551,159 51,921 37,656Subscriptions 4,782,262 3,817,100 755,953 720,755 67,574 13,767Reinvestments (29) 513,794 — 36,135 — 498Redemptions (3,797,187) (8,144,870) (440,617) (606,637) (1,812) —Outstanding units — ending 37,944,246 36,959,200 3,016,748 2,701,412 117,683 51,921Series O Series T Series T USDJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 20,555,940 29,248,279 414,271 451,078 59,153 56,266Subscriptions 1,923,975 2,462,377 87,333 41,539 13,346 11,798Reinvestments — 288,752 5,024 15,108 257 1,089Redemptions (1,613,458) (11,443,468) (44,917) (93,454) — (10,000)Outstanding units — ending 20,866,457 20,555,940 461,711 414,271 72,756 59,153Franklin Templeton Canadian Core Equity FundSeries OJune 30, 2013 December 31, 2012Outstanding units — beginning 27,554,867 39,880,934Subscriptions 2,140,151 21,233,019Reinvestments — 713,410Redemptions (9,588,091) (34,272,496)Outstanding units — ending 20,106,927 27,554,867Franklin Templeton Canadian Large Cap FundSeries OJune 30, 2013 December 31, 2012Outstanding units — beginning 27,846,422 28,158,413Subscriptions 3,431,049 17,424,179Reinvestments — 813,910Redemptions (5,293,711) (18,550,080)Outstanding units — ending 25,983,760 27,846,422Franklin Templeton Money Market FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 9,629,469 12,650,650 2,159,009 2,554,638 17,216 4,704Subscriptions 2,970,849 7,566,081 491,569 1,065,666 — 16,702Reinvestments 15,901 41,828 9,222 22,197 23 37Redemptions (3,978,172) (10,629,090) (736,054) (1,483,492) (16,753) (4,227)Outstanding units — ending 8,638,047 9,629,469 1,923,746 2,159,009 486 17,216228 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)3. Unitholders’ Capital (Continued)Franklin Templeton Money Market Fund (Continued)Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 12,619,249 10,815,937Subscriptions 3,759,029 10,726,972Reinvestments 83,823 170,703Redemptions (4,461,578) (9,094,363)Outstanding units — ending 12,000,523 12,619,249Franklin Templeton Treasury Bill FundSeries A Series F Series IJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Outstanding units — beginning 7,088,126 9,537,675 460,715 499,331 41,732 22,205Subscriptions 854,951 2,076,904 23,616 125,321 29,516 25,000Reinvestments 13,439 33,687 1,544 3,237 117 137Redemptions (1,794,147) (4,560,140) (278,488) (167,174) (54,278) (5,610)Outstanding units — ending 6,162,369 7,088,126 207,387 460,715 17,087 41,732Series OJune 30, 2013 December 31, 2012Outstanding units — beginning 1,419,026 339,378Subscriptions 229,179 2,230,598Reinvestments 8,293 14,081Redemptions (478,890) (1,165,031)Outstanding units — ending 1,177,608 1,419,0264. Related Party Transactions(a) Investment advisory and management feesEach Fund pays an aggregate monthly fee for management and investment advisory services to various wholly-owned subsidiaries of FRI.The monthly fee is calculated as 1/12 of the annual rate applied against the monthly average net assets of each series. The annual rates areset out below.Series A Series F Series I Series S Series T †Templeton Canadian Balanced Fund ............. 2.00% 1.00% — — 2.00%Templeton Canadian Stock Fund ................ 2.00% 1.00% — — —Templeton EAFE Developed Markets Fund ........ 2.00% 1.00% — — —Templeton Emerging Markets Fund .............. 2.50% 1.50% 2.00% — —Templeton Global Balanced Fund ............... 2.00% 1.00% — 1.00% 2.00%Templeton Global Bond Fund ................... 1.75% 1.25% 1.50% — —Templeton Global Smaller Companies Fund ....... 2.00% 1.00% 1.50% — —Templeton International Stock Fund ............. 2.00% 1.00% 1.50% — 2.00%Franklin Bissett Canadian All Cap Balanced Fund . . . 2.00% 1.00% 1.55% — 2.00%Franklin Flex Cap Growth Fund ................. 2.00% 1.00% — — —Franklin High Income Fund .................... 1.75% 0.75% 1.50% — —Franklin Income Fund ........................ 1.90% 0.90% 1.40% — 1.90%Franklin Strategic Income Fund ................. 1.75% 0.75% 1.50% — —Franklin U.S. Core Equity Fund ................. 2.00% 1.00% — — —Franklin U.S. Rising Dividends Fund ............. 2.00% 1.00% — — 2.00%Franklin World Growth Fund .................... 2.00% 1.00% — — 2.00%Bissett All Canadian Focus Fund ................ 2.00% 1.00% 1.50% — —Bissett Bond Fund ........................... 1.35% 0.75% 1.10% — —Bissett Canadian Balanced Fund ................ 1.75% 0.75% 1.25% — 1.75%Franklin Templeton Investments Funds 229

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)4. Related Party Transactions (Continued)Series A Series F Series I Series S Series T †Bissett Canadian Dividend Fund ................ 2.00% 1.00% — — —Bissett Canadian Equity Fund ................... 2.00% 1.00% 1.50% — —Bissett Canadian High Dividend Fund ............ 2.00% 1.25% 1.75% — —Bissett Canadian Short Term Bond Fund .......... 1.25% 0.75% — — —Bissett Corporate Bond Fund ................... 1.45% 0.95% 1.10% — —Bissett Dividend Income Fund .................. 2.00% 1.00% 1.50% — 2.00%Bissett Microcap Fund ........................ 3.00% 2.00% — — —Bissett Small Cap Fund ........................ 2.50% 1.50% — — —Bissett Strategic Income Fund .................. 1.85% 0.85% 1.35% — —Mutual Beacon Fund ......................... 2.00% 1.00% 1.50% — 2.00%Mutual Global Discovery Fund .................. 2.00% 1.00% 1.50% — 2.00%Franklin Templeton Money Market Fund .......... 1.00% 0.50% 0.875% — —Franklin Templeton Treasury Bill Fund ........... 0.75% 0.50% 0.625% — —† Where a Fund offers Series T USD, the management fee is the same as that of Series TSeries O and R management and administration fees for the Funds are negotiated with and paid by the individual unitholder directly to theManager. Consequently, those Funds only offering Series O and R units have not been included in the table above.To avoid duplication of fees charged to Funds which invest in Underlying Funds managed by the Manager, the fees of those Funds thatwould otherwise be payable will be reduced to reflect the management fees paid indirectly through investments by the Funds in suchUnderlying Fund.(b) Manager Holdings and Funds Managed by the Manager(i) The Manager held the following units in the specified Funds as at June 30, 2013 and December 31, 2012.Templeton Global Balanced FundFranklin Bissett Canadian All Cap Balanced FundJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Series S — 348 Series A 58,715 58,715Series I 500 500Franklin World Growth FundBissett All Canadian Focus FundJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Series A — 500 Series I 500 500Series F — 500Series T — 345Bissett Canadian Balanced FundBissett Strategic Income FundJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Series I — 184 Series A — 198,500Series F — 500Series I — 500Series O — 500Franklin Templeton Global Blend FundFranklin Templeton U.S. Money Market FundJune 30, 2013 December 31, 2012 June 30, 2013 December 31, 2012Series F — 500Series I — 500230 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)4. Related Party Transactions (Continued)The Manager’s holdings represent less than 1% of the net assets of each of the Funds, with the exception of the following Funds where itaccounts for the percentage indicated:June 30, 2013 December 31, 2012Franklin Bissett Canadian All Cap Balanced Fund 9% 11%(ii)The following Funds managed by the Manager or its affiliates owned units exceeding 10% of the total outstanding units of Series O ofthe specified Fund as at June 30, 2013 and December 31, 2012. Where a holding exceeds 10% in one year only, the comparativeamount shown may be less than 10%.% of Total Series OOutstanding Units% of Total Series OOutstanding Units2013 2012 2013 2012Templeton Asian Growth FundTempleton Canadian Stock FundQuotential Balanced Growth Portfolio 44.9% 45.2% Templeton Canadian Stock Corporate Class 27.8% 30.7%Quotential Balanced Income Portfolio 13.5% 14.9%Quotential Growth Portfolio 10.6% 10.5%Templeton EAFE Developed Markets FundTempleton Emerging Markets FundFranklin Templeton Institutional Balanced Trust 20.0% 18.8% Templeton Emerging Markets Corporate Class 25.2% 19.8%Bissett Canadian Balanced Fund 12.8% 12.0% Quotential Diversified Income Portfolio 15.5% 26.7%Quotential Diversified Income Portfolio 12.4% 12.8% Bissett Canadian Balanced Fund 14.3% 11.9%Quotential Diversified Income Corporate Class Portfolio 10.5% 17.3%Templeton Frontier Markets FundTempleton Global Bond FundQuotential Balanced Growth Portfolio 39.7% 43.8% Quotential Diversified Income Portfolio 16.6% 15.4%Templeton Frontier Markets Corporate Class 13.6% 4.1% Quotential Diversified Income Corporate Class Portfolio 11.3% 10.0%Quotential Balanced Income Portfolio 11.9% 14.4% Quotential Balanced Growth Portfolio 11.1% 11.5%Quotential Growth Portfolio — 10.2%Templeton Global Smaller Companies FundTempleton International Stock FundTempleton Global Smaller Companies Corporate Class 12.8% 13.1% Templeton International Stock Corporate Class 31.6% 28.8%Quotential Balanced Growth Portfolio — 10.2%Franklin Bissett Canadian All Cap Balanced FundFranklin Flex Cap Growth FundFranklin Bissett Canadian All Cap Balanced Corporate Class 98.8% 98.6% Quotential Balanced Growth Portfolio 41.0% 37.9%Quotential Balanced Income Portfolio 12.4% 11.6%Franklin Flex Cap Growth Corporate Class 8.6% 12.4%Franklin High Income FundFranklin Strategic Income FundQuotential Diversified Income Portfolio 59.2% 60.2% Quotential Balanced Growth Portfolio 21.5% 22.7%Quotential Diversified Income Corporate Class Portfolio 39.8% 38.8% Quotential Diversified Income Portfolio 19.4% 23.2%Quotential Balanced Income Portfolio 15.9% 15.0%Quotential Diversified Income Corporate Class Portfolio 13.2% 15.0%Franklin U.S. Core Equity FundFranklin U.S. Rising Dividends FundQuotential Balanced Growth Portfolio 46.1% 44.6% Quotential Balanced Growth Portfolio 15.9% 12.4%Quotential Balanced Income Portfolio 13.9% 13.7% Quotential Diversified Income Portfolio 10.7% 11.2%Franklin U.S. Rising Dividends Corporate Class 10.6% 7.2%Franklin World Growth FundBissett All Canadian Focus FundQuotential Balanced Growth Portfolio 21.8% 27.3% Quotential Balanced Growth Portfolio 41.8% 40.6%Franklin World Growth Corporate Class 21.5% 17.2% Quotential Balanced Income Portfolio 12.7% 11.1%Quotential Global Growth Portfolio 13.5% 10.8% Bissett Canadian Balanced Fund 10.5% 11.2%Quotential Growth Portfolio 13.3% 12.9%Bissett Bond FundBissett Canadian Dividend FundQuotential Balanced Growth Portfolio 20.3% 21.7% Quotential Diversified Income Portfolio 18.5% 17.5%Quotential Diversified Income Portfolio 19.2% 17.2% Bissett Canadian Dividend Corporate Class 14.2% 12.7%Quotential Balanced Income Portfolio 14.9% 17.5% Quotential Diversified Income Corporate Class Portfolio 12.6% 11.3%Quotential Diversified Income Corporate Class Portfolio 13.1% 11.2%Franklin Templeton Investments Funds 231

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)4. Related Party Transactions (Continued)% of Total Series OOutstanding Units% of Total Series OOutstanding Units2013 2012 2013 2012Bissett Canadian Equity FundBissett Canadian High Dividend FundQuotential Balanced Growth Portfolio 13.8% 16.3% Quotential Diversified Income Portfolio 20.4% 21.2%Bissett Canadian Balanced Fund 13.4% 13.2% Quotential Diversified Income Corporate Class Portfolio 13.9% 13.7%Bissett Canadian High Dividend Corporate Class 13.2% 7.2%Bissett Canadian Balanced Fund 10.1% 9.0%Bissett Canadian Short Term Bond FundBissett Corporate Bond FundQuotential Diversified Income Portfolio 27.7% 31.8% Bissett Canadian Balanced Fund 59.6% 49.7%Quotential Diversified Income Corporate Class Portfolio 18.9% 20.6%Bissett Canadian Balanced Fund — 11.3%Bissett Microcap FundBissett U.S. Focus FundBissett Canadian Balanced Fund 57.9% 59.0% Bissett Canadian Balanced Fund 64.8% 24.3%Franklin Templeton Institutional Balanced Trust 17.7% 17.9% Bissett Institutional Balanced Trust 19.1% 11.1%Quotential Balanced Growth Portfolio — 26.2%Mutual Beacon FundMutual Global Discovery FundQuotential Balanced Growth Portfolio 41.3% 40.3% Mutual Discovery Corporate Class 61.7% 59.6%Quotential Balanced Income Portfolio 12.5% 12.3% Bissett Canadian Balanced Fund — 10.1%Franklin Templeton Canadian Core Equity FundFranklin Templeton Canadian Large Cap FundQuotential Balanced Growth Portfolio 47.7% 48.9% Quotential Balanced Growth Portfolio 39.9% 39.3%Quotential Balanced Income Portfolio 14.5% 13.4% Quotential Balanced Income Portfolio 12.1% 10.7%Quotential Balanced Growth Corporate Class Portfolio — 10.0% Quotential Diversified Income Portfolio — 10.6%Quotential Growth Portfolio — 10.3%Franklin Templeton Money Market FundFranklin Templeton Money Market Corporate Class 14.5% 10.2%(c) Other servicesIn addition to providing management services, the Manager acts as trustee, registrar and transfer agent for each of the Funds.(d) Distributions from Underlying FundsCapital gains and income distributions received from Underlying Funds are included in distributions from Underlying Funds on the Statementsof Operations.(e) Expenses absorbed or paid by the ManagerOperating expenses of the Funds may be absorbed or paid by the Manager as discussed in Note 6.5. Sales ChargesThe sales charge incurred by unitholders of Series A and I units and T and T USD (collectively “Series T”) units is dependent on the purchaseoption selected at the time of purchase.Under the front-load sales option, a negotiable fee of up to 6% of the purchase price is payable by the Series A and Series T investors totheir dealers. Series I unitholders negotiate a fee of up to 2% with their dealers. Under the low-load option, the Series A and Series Tinvestors will pay a redemption fee to the Manager if they redeem their units within three years of purchasing them. This redemption fee isbased on a declining percentage of the original cost of the investor’s units and how long the investor has held them, ranging from 3% to0%. Up to 10% of an investor’s investment in Series A and T units may be redeemed in each calendar year without a redemption charge.Under the deferred sales charge option, the Series A and Series T investors will pay a redemption fee to the Manager if they redeem theirunits within six years of purchasing them. This redemption fee is based on a declining percentage, ranging from 6% to 0%, of the originalcost of the investor’s units and how long the investor has held them. Up to 10% of an investor’s investment in Series A and Series T unitsmay be redeemed in each calendar year without a redemption charge.232 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)5. Sales Charges (Continued)No sales charges are paid in respect of the sale of Series F, O, R and S units of a Fund.6. Operating ExpensesThe operating expenses of the Funds, which include, but are not limited to, legal, audit, custodial, registrar, fund administration and thecost of financial statements and other reports, are the direct responsibility of the Funds. Brokerage commissions and taxes paid by theFunds are not included in operating expenses, but are borne by the Funds, as applicable, and are reflected separately in the Statements ofOperations. The Manager pays the operating expenses on behalf of the Funds and is then reimbursed by the Funds. The Manager maywaive or absorb operating expenses of the Funds. The decision to do so is reviewed regularly and determined at the sole discretion of theManager.The portion of the operating expenses allocated to Series O and R investors may be absorbed by the Manager as part of its agreement withthe investors in those series.Operating expenses for Series F units of Templeton EAFE Developed Markets Fund are capped at 1.00% of the average net asset value ofthe Fund on an annual basis. For Series F units of all Bissett Funds in existence prior to October 2, 2000, operating expenses are cappedat 0.50% of the average net asset value of such Fund on an annual basis. In addition, the Manager pays all operating expenses for all seriesof Bissett Canadian Short Term Bond Fund, Bissett Corporate Bond Fund, Franklin Templeton Money Market Fund, Franklin TempletonTreasury Bill Fund.7. Other ExpensesThe principal items in other expenses are fund administration expenses (including pricing fees, technology and overhead costs) charged bythe Manager.8. Other AssetsThe principal items in other assets are recoverable expenses from the Manager and prepaid registration fees.9. Other LiabilitiesThe principal items in other liabilities are amounts owing to the Manager relating to expenses paid for or incurred on behalf of the Funds.10. Financial Risk ManagementRisks arising from holding financial instruments are inherent in the Funds’ activities and are managed through a process of ongoing measurementand monitoring. These financial risks may include, among others, market risk (including currency risk, interest rate risk and otherprice risk), liquidity risk and credit risk. These risks are moderated through careful selection of securities and other financial instrumentswithin the Funds’ investment guidelines by the respective portfolio advisors. The risks are measured using a method that reflects theexpected impact on the results and net assets attributable to unitholders of the Funds from reasonably possible changes in the relevant riskvariables. Information about these risk exposures at the reporting date and risk management policies employed are disclosed in Notes 10(a) to (e).(a) Currency riskCertain Funds hold assets and liabilities denominated in currencies other than their functional currency, and are therefore exposed to currencyrisk as the values of such assets and liabilities will fluctuate due to changes in exchange rates.The portfolio advisors monitor the Funds’ currency risk position, and may enter into forward exchange contracts to manage foreignexchange exposure as described in Note 2 and disclosed in the respective Funds’ Statement of Investments, as applicable.The tables below summarize the Funds’ exposure to currency risk, where applicable. Amounts shown are based on the carrying value ofmonetary and non-monetary assets, less liabilities. The tables below do not include a Fund when it holds less than 5% of its net assets inFranklin Templeton Investments Funds 233

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)10. Financial Risk Management (Continued)foreign currencies. For those Funds included below, when individual currencies held are less than 5% of net assets, that currency hasbeen included in “other”. The tables also illustrate, for each respective Fund, the expected decrease or increase in net assets had the functionalcurrency strengthened or weakened by 5% in relation to all foreign currencies, with all other variables held constant. Actual resultsmay differ from this sensitivity analysis and the difference could be material.Templeton Asian Growth FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsHKD .................................................... $ 55,004 31.31% $120,816 38.33%IDR ..................................................... 11,839 6.74% 28,414 9.01%INR ..................................................... 25,298 14.40% 22,785 7.23%KRW .................................................... 13,832 7.87% 12,774 4.05%PKR..................................................... 30,344 17.27% 24,196 7.68%THB .................................................... 29,489 16.79% 39,380 12.49%USD .................................................... 28,923 16.47% 41,211 13.07%Other .................................................... 4,598 2.62% 23,552 7.47%$199,327 113.47% $313,128 99.33%Impact on net assets from 5% currency movement ............... $ 9,966 $ 15,656Templeton EAFE Developed Markets FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsCHF..................................................... $ 25,979 8.38% $ 23,075 7.35%EUR .................................................... 129,242 41.70% 145,017 46.17%GBP .................................................... 49,971 16.12% 54,280 17.28%HKD .................................................... 24,455 7.89% 22,939 7.30%JPY ..................................................... 35,586 11.48% 29,653 9.44%Other .................................................... 34,775 11.22% 31,426 10.00%$300,008 96.79% $306,390 97.54%Impact on net assets from 5% currency movement ............... $ 15,000 $ 15,320Templeton Emerging Markets FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsHKD .................................................... $ 69,163 22.75% $ 73,192 20.08%IDR ..................................................... 29,976 9.86% 32,621 8.95%INR ..................................................... 26,105 8.59% 32,212 8.84%KRW .................................................... 26,663 8.77% 39,740 10.90%SGD..................................................... 22,232 7.31% 13,582 3.73%THB .................................................... 11,667 3.84% 18,884 5.18%TWD .................................................... 15,623 5.14% 27,431 7.53%USD .................................................... 64,755 21.30% 79,841 21.90%Other .................................................... 34,191 11.25% 33,267 9.12%$300,375 98.81% $350,770 96.23%Impact on net assets from 5% currency movement ............... $ 15,019 $ 17,539234 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)10. Financial Risk Management (Continued)Templeton Frontier Markets FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsAED..................................................... $ 6,750 6.80% $ 4,003 4.34%GBP .................................................... 10,042 10.11% 10,355 11.22%KES ..................................................... 4,885 4.92% 4,780 5.18%NGN .................................................... 11,647 11.73% 9,472 10.27%QAR .................................................... 11,169 11.25% 8,358 9.06%RON .................................................... 6,282 6.33% 5,997 6.50%USD .................................................... 32,424 32.65% 23,048 24.98%VND .................................................... 5,013 5.05% 2,495 3.19%Other .................................................... 19,473 19.61% 16,169 17.04%$ 107,685 108.45% $ 84,677 91.78%Impact on net assets from 5% currency movement ............... $ 5,384 $ 4,234Templeton Global Balanced FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsBRL..................................................... $ 5,207 5.36% $ 5,948 7.07%CHF..................................................... 5,331 5.49% 3,679 4.37%GBP .................................................... 7,279 7.50% 7,949 9.44%HKD .................................................... 5,558 5.73% 4,885 5.80%KRW .................................................... 4,942 5.09% 4,446 5.28%USD .................................................... 30,167 31.08% 25,261 30.01%Other .................................................... 29,754 30.66% 23,441 27.86%$ 88,238 90.91% $ 75,609 89.83%Impact on net assets from 5% currency movement ............... $ 4,412 $ 3,780Templeton Global Bond FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsEUR .................................................... $ (372,767) (18.22%) $ (390,941) (21.50%)KRW .................................................... 205,648 10.05% 168,752 9.28%MXN .................................................... 205,576 10.05% 173,192 9.52%MYR .................................................... 216,756 10.59% 197,241 10.85%PLN..................................................... 185,641 9.07% 187,005 10.28%SEK ..................................................... 236,446 11.56% 229,456 12.62%SGD..................................................... 184,098 9.00% 172,172 9.47%USD .................................................... 387,757 18.95% 375,704 20.66%Other .................................................... 440,190 21.51% 455,991 25.07%$1,689,345 82.56% $1,568,572 86.25%Impact on net assets from 5% currency movement ............... $ 84,467 $ 78,429Franklin Templeton Investments Funds 235

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)10. Financial Risk Management (Continued)Templeton Global Smaller Companies FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsEUR .................................................... $ 84,100 11.29% $ 90,576 12.70%GBP .................................................... 89,949 12.07% 115,476 16.19%HKD .................................................... 77,846 10.45% 56,780 7.96%JPY ..................................................... 62,150 8.34% 51,858 7.27%KRW .................................................... 15,121 2.03% 38,764 5.44%SGD..................................................... 45,260 6.08% 41,769 5.86%USD .................................................... 226,695 30.43% 186,992 26.22%Other .................................................... 39,977 5.37% 56,421 7.91%$641,098 86.06% $638,636 89.55%Impact on net assets from 5% currency movement ............... $ 32,055 $ 31,932Templeton International Stock FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsCHF..................................................... $ 79,935 10.89% $ 76,034 9.90%EUR .................................................... 205,264 27.98% 194,825 25.36%GBP .................................................... 106,839 14.56% 123,543 16.08%HKD .................................................... 110,104 15.01% 113,750 14.81%JPY ..................................................... 65,412 8.92% 83,551 10.87%USD .................................................... 43,256 5.90% 55,738 7.25%Other .................................................... 117,925 16.07% 115,170 14.99%$728,735 99.33% $762,611 99.26%Impact on net assets from 5% currency movement ............... $ 36,437 $ 38,131Franklin Bissett Canadian All Cap Balanced FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsUSD .................................................... $ — — $ 1,018 14.81%Other .................................................... 1 0.02% 699 10.17%$ 1 0.02% $ 1,717 24.98%Impact on net assets from 5% currency movement ............... $ — $ 86Franklin Flex Cap Growth FundJune 30, 2013 December 31, 2012As % ofAs % ofCurrencyAmount net assets Amount net assets(000s)(000s)USD .................................................... $372,849 95.59% $279,633 100.02%$372,849 95.59% $279,633 100.02%Impact on net assets from 5% currency movement ............... $ 18,642 $ 13,982236 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)10. Financial Risk Management (Continued)Franklin Strategic Income FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsEUR .................................................... $(27,179) (5.23%) $(34,160) (6.25%)USD .................................................... (57,891) (11.15%) (76,923) (14.08%)Other .................................................... 124,616 24.00% 145,530 26.63%$ 39,546 7.62% $ 34,447 6.30%Impact on net assets from 5% currency movement ............... $ 1,977 $ 1,722Franklin U.S. Core Equity FundJune 30, 2013 December 31, 2012As % ofAs % ofCurrencyAmount net assets Amount net assets(000s)(000s)USD .................................................... $224,152 92.36% $170,966 96.73%$224,152 92.36% $170,966 96.73%Impact on net assets from 5% currency movement ............... $ 11,208 $ 8,548Franklin U.S. Rising Dividends FundJune 30, 2013 December 31, 2012As % ofAs % ofCurrencyAmount net assets Amount net assets(000s)(000s)USD .................................................... $794,246 99.61% $612,790 100.01%$794,246 99.61% $612,790 100.01%Impact on net assets from 5% currency movement ............... $ 39,712 $ 30,640Franklin World Growth FundCurrencyAmount(000s)June 30, 2013 December 31, 2012As % ofnet assets Amount(000s)As % ofnet assetsAUD .................................................... $ 17,481 7.30% $ 19,992 7.46%CHF..................................................... 20,974 8.76% 13,439 5.01%EUR .................................................... 40,624 16.97% 49,204 18.36%GBP .................................................... 28,660 11.97% 21,155 7.89%HKD .................................................... 9,151 3.82% 21,708 8.10%SGD..................................................... 11,828 4.94% 15,308 5.71%USD .................................................... 82,567 34.49% 95,688 35.70%Other .................................................... 18,666 7.80% 19,319 7.21%$229,951 96.05% $255,813 95.44%Impact on net assets from 5% currency movement ............... $ 11,498 $ 12,791Bissett Corporate Bond FundJune 30, 2013 December 31, 2012As % ofAs % ofCurrencyAmount net assets Amount net assets(000s)(000s)USD .................................................... $ 2,436 1.64% $ 8,272 6.10%$ 2,436 1.64% $ 8,272 6.10%Impact on net assets from 5% currency movement ............... $ 122 $ 414Franklin Templeton Investments Funds 237

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)10. Financial Risk Management (Continued)Bissett Dividend Income FundJune 30, 2013 December 31, 2012As % ofAs % ofCurrencyAmount net assets Amount net assets(000s)(000s)USD .................................................... $128,465 19.13% $ 96,290 15.74%$128,465 19.13% $ 96,290 15.74%Impact on net assets from 5% currency movement ............... $ 6,423 $ 4,815Bissett U.S. Focus FundJune 30, 2013 December 31, 2012As % ofAs % ofCurrencyAmount net assets Amount net assets(000s)(000s)USD .................................................... $ 61,798 100.00% $148,755 100.00%$ 61,798 100.00% $148,755 100.00%Impact on net assets from 5% currency movement ............... $ 3,090 $ 7,438Mutual Beacon FundJune 30, 2013 December 31, 2012As % ofAs % ofCurrencyAmount net assets Amount net assets(000s)(000s)USD .................................................... $ 27,386 14.21% $ 38,287 20.17%$ 27,386 14.21% $ 38,287 20.17%Impact on net assets from 5% currency movement ............... $ 1,369 $ 1,914Mutual Global Discovery FundJune 30, 2013 December 31, 2012As % ofAs % ofCurrencyAmount net assets Amount net assets(000s)(000s)USD .................................................... $124,262 11.91% $121,666 13.52%Other .................................................... 66,226 6.35% 78,877 8.77%$190,488 18.26% $200,543 22.29%Impact on net assets from 5% currency movement ............... $ 9,524 $ 10,027(b) Interest rate riskInterest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of interest bearingfinancial instruments. The portfolio advisors monitor overall interest rate sensitivity on a periodic basis.The tables below summarize all interest bearing financial instruments (excluding overnight term deposits) held by the respective Fundwhich is subject to interest rate risk, categorized by the earlier of contractual re-pricing or maturity dates of the instrument. The tables illustratethe increase or decrease expected in net assets for the Fund had the interest rates lowered or risen by 25 basis points, assuming allother variables remain constant. Actual results may differ from this sensitivity analysis and the difference could be material.238 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)10. Financial Risk Management (Continued)June 30, 2013Less Than1 year1-3years3-5years>5years TotalInterest RateSensitivity$(000s) $(000s) $(000s) $(000s) $(000s) $(000s)Templeton Canadian Balanced Fund ............................... 459 2,090 5,796 12,254 20,599 327Templeton Global Balanced Fund .................................. 4,389 5,131 4,859 9,557 23,936 282Templeton Global Bond Fund ..................................... 785,814 357,712 130,573 424,659 1,698,758 8,506Franklin Bissett Canadian All Cap Balanced Fund ..................... — — 554 2,535 3,089 50Franklin High Income Fund ....................................... — 5,204 35,623 112,539 153,366 1,522Franklin Strategic Income Fund .................................... 71,795 44,735 80,759 275,857 473,146 3,364Bissett Bond Fund .............................................. 42,345 212,004 575,044 1,574,402 2,403,794 39,002Bissett Canadian Short Term Bond Fund ............................ 61,678 155,640 215,327 176,181 608,825 3,805Bissett Corporate Bond Fund ...................................... 6,935 9,988 24,003 107,622 148,549 2,206Bissett Dividend Income Fund ..................................... — 13,880 5,569 76,979 96,428 1,613Bissett Strategic Income Fund ..................................... 313 1,707 4,121 9,971 16,112 174Franklin Templeton Money Market Fund ............................. 200,232 25,389 — — 225,621 118Franklin Templeton Treasury Bill Fund .............................. 65,125 10,510 — — 75,635 59December 31, 2012Less Than1 year1-3years3-5years>5years TotalInterest RateSensitivity$(000s) $(000s) $(000s) $(000s) $(000s) $(000s)Templeton Canadian Balanced Fund ............................... 231 3,112 6,411 15,723 25,476 424Templeton Global Balanced Fund .................................. 4,019 3,698 4,165 9,645 21,527 288Templeton Global Bond Fund ..................................... 621,061 370,584 136,978 390,025 1,518,648 8,320Franklin Bissett Canadian All Cap Balanced Fund ..................... — 11 451 2,253 2,715 44Franklin High Income Fund ....................................... — 6,040 30,510 142,316 178,866 1,744Franklin Strategic Income Fund .................................... 64,464 52,805 77,628 295,520 490,417 3,333Bissett Bond Fund .............................................. 21,676 320,508 561,904 1,673,315 2,577,403 43,525Bissett Canadian Short Term Bond Fund ............................ 23,489 131,275 129,929 137,536 422,229 2,818Bissett Corporate Bond Fund ...................................... 507 21,510 20,565 91,782 134,364 2,019Bissett Dividend Income Fund ..................................... — 13,860 6,684 75,020 95,564 1,531Bissett Strategic Income Fund ..................................... 154 2,101 2,143 7,985 12,383 206Franklin Templeton Canadian Large Cap Fund ........................ 1,625 — — — 1,625 2Franklin Templeton Money Market Fund ............................. 222,716 10,185 — 2,013 234,914 117Franklin Templeton Treasury Bill Fund .............................. 84,826 4,851 — — 89,677 46(c) Other price riskOther price risk is the risk that the fair value or future cash flow of a financial instrument will fluctuate as a result of changes in marketprices (other than those arising from currency risk or interest rate risk). Those changes may be caused by factors specific to the individualfinancial instrument or its issuer, or factors affecting a market or market segment. Other assets and liabilities are monetary items that areshort-term in nature, and as such they are not subject to other price risk.The table below illustrates the expected increase or decrease in net assets if the value of the Funds’ investments had increased ordecreased by 5%, with all other variables held constant. Actual results may differ from this sensitivity analysis and the difference could bematerial.Sensitivity onNet Assets(000s)June 30, 2013 December 31, 2012% Impact onNet AssetsSensitivity onNet Assets(000s)% Impact onNet AssetsTempleton Asian Growth Fund ................................ $ 9,920 5.65% $15,599 4.95%Templeton Canadian Balanced Fund ........................... 3,240 3.71% 3,548 3.63%Templeton Canadian Stock Fund .............................. 3,924 4.95% 4,386 4.97%Templeton EAFE Developed Markets Fund ...................... 14,930 4.82% 15,266 4.86%Templeton Emerging Markets Fund ............................ 14,930 4.91% 17,706 4.86%Templeton Frontier Markets Fund ............................. 5,466 5.50% 4,344 4.71%Franklin Templeton Investments Funds 239

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)10. Financial Risk Management (Continued)Sensitivity onNet Assets(000s)June 30, 2013 December 31, 2012% Impact onNet AssetsSensitivity onNet Assets(000s)% Impact onNet AssetsTempleton Global Balanced Fund ............................. $ 3,340 3.44% $ 2,645 3.14%Templeton Global Smaller Companies Fund ..................... 33,307 4.47% 34,545 4.84%Templeton International Stock Fund ........................... 36,164 4.93% 37,959 4.94%Franklin Bissett Canadian All Cap Balanced Fund ................ 269 3.14% 199 2.89%Franklin Flex Cap Growth Fund ............................... 17,869 4.58% 13,531 4.84%Franklin High Income Fund .................................. 69 0.04% 69 0.04%Franklin Strategic Income Fund ............................... 83 0.02% 154 0.03%Franklin U.S. Core Equity Fund ............................... 11,023 4.54% 8,713 4.93%Franklin U.S. Rising Dividends Fund ........................... 36,881 4.63% 29,462 4.81%Franklin World Growth Fund ................................. 11,496 4.80% 13,119 4.89%Bissett All Canadian Focus Fund .............................. 14,204 4.92% 12,607 4.88%Bissett Canadian Balanced Fund .............................. 38,752 4.95% 36,011 4.92%Bissett Canadian Dividend Fund .............................. 33,039 4.75% 34,412 4.90%Bissett Canadian Equity Fund ................................ 94,016 4.86% 90,415 4.86%Bissett Canadian High Dividend Fund .......................... 38,265 4.96% 34,501 4.89%Bissett Dividend Income Fund ................................ 27,950 4.16% 24,371 3.98%Bissett Microcap Fund ...................................... 9,012 4.54% 8,227 4.65%Bissett Small Cap Fund ..................................... 29,043 4.72% 26,268 4.60%Bissett Strategic Income Fund ................................ 5,262 4.29% 3,348 4.15%Bissett U.S. Focus Fund ..................................... 3,011 4.87% 7,302 4.91%Mutual Beacon Fund ....................................... 8,831 4.58% 8,101 4.27%Mutual Global Discovery Fund ................................ 47,141 4.52% 41,396 4.60%Franklin Templeton Canadian Core Equity Fund .................. 6,091 4.87% 9,800 4.99%Franklin Templeton Canadian Large Cap Fund ................... 11,775 4.93% 11,874 4.95%(d) Liquidity riskLiquidity risk is the risk that a Fund will not be able to meet its liabilities as they fall due. As the Funds are exposed to daily cash redemptionof units, the assets of the Funds are invested mainly in securities which are traded in active markets and can be readily disposed of. Inaddition, sufficient cash and cash equivalents are maintained to meet normal operating requirements. Each Fund has the ability to borrowup to 5% of its net assets for the purposes of funding redemptions. The Funds have a non-committed redemption line of credit agreementwith a Schedule 1 bank in Canada from which these amounts can be borrowed, if necessary. The loans are issued at prime rate and arepayable on demand. There were no loans issued or outstanding as at June 30, 2013 and December 31, 2012. All liabilities held are payableupon demand or due within three months.The Funds also have a policy that restricts them from holding illiquid assets that account for more than 10% of their respective net assets.Equity-linked notes, PIK bonds and P-Notes may be more volatile and less liquid than other investments held by the Funds. The Funds’holdings of equity-linked notes, PIK bonds and P-Notes represents less than 10% of their net asset value as at June 30, 2013 andDecember 31, 2012. All liabilities held are payable upon demand or due within three months.(e) Credit riskCredit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered intowith a Fund. This risk is generally lower if the issuer has a high credit rating from an independent credit rating agency, while the risk isgenerally higher if the issuer has a low credit rating or no credit rating. Where applicable, credit ratings have been disclosed at the end ofeach Statement of Investments.All cash and trading transactions are carried out by banks rated A or higher by Standard & Poor’s as at June 30, 2013 andDecember 31, 2012.In addition to the above, Mutual Beacon Fund and Mutual Global Discovery Fund are further exposed to credit risk, liquidity risk and interestrate risk as these Funds may purchase the pre-default or defaulted debt of distressed companies and securities which are subject tolegal, contractual or other agreed upon restrictions on resale. Distressed companies are financially troubled and are about to be or are240 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)10. Financial Risk Management (Continued)already involved in financial restructuring, bankruptcy or reorganization. The distressed bonds are purchased with the expectation that theywill be converted into equity equivalents of the newly organized company in the near future. Risks associated with purchasing these securitiesinclude the possibility that the bankruptcy or other restructuring process takes longer than expected. It is probable that income ondebt securities may not be collected. As at June 30, 2013, Mutual Beacon Fund and Mutual Global Discovery Fund held 3.36% and1.69% (December 31, 2012: 4.01% and 2.78%), respectively, of their portfolios in distressed securities, securities with restrictions onresale and securities for which fair value as market price are not readily available.(f) Fair value estimationThe Funds classify fair value measurements of investments held using a fair value hierarchy that reflects the significance of the inputs usedin making the measurements. The fair value hierarchy has the following levels:• Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities• Level 2 — inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (prices) orindirectly (derived from prices)• Level 3 — inputs for the asset or liability that are not based on observable market data (unobservable inputs)The determination of what constitutes “observable” requires significant judgment by the Manager. The Manager considers observable datato be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided byindependent sources that are actively involved in the relevant market. Financial instruments that trade in markets that are not considered tobe active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputsare classified within Level 2. Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently. Thesemay include private equity and corporate debt securities. As observable prices are not available for these securities, the Manager has usedvaluation techniques to derive the fair value.In accordance with the Fund’s valuation policy, the Funds may apply fair value adjustment factors when quoted market prices are deemedto have been affected by significant market events which exceed pre-determined thresholds. During the year, market level fair valuationwas applied to the Funds where the pre-determined tolerances were exceeded, at which time the securities were classified as Level 2 andsubsequently reclassified as Level 1, when the fair value adjustment factors were no longer required.As at June 30, 2013, there were no significant market events to cause the pre-determined tolerances to be breached; hence there were notransfers between Level 1 and Level 2 as at that date.As at December 31, 2012, due to market events, the decision was made to apply market level fair valuation policy which utilizes adjustmentfactors from third party vendors and other accepted methodologies in accordance with the current Board approved procedures. The marketsaffected by these events included, Australia, China, Singapore, Vietnam, Austria, Belgium, Finland, France, Germany, Ireland, Italy,Netherlands, Norway, South Africa, Spain, United Kingdom and Brazil. Due to the events, securities within these markets were transferredfrom Level 1 to Level 2 as at December 31, 2012. These securities were subsequently transferred back to Level 1 after year end.As the risk and strategy of the Funds has not changed significantly since December 31, 2012, the fair value hierarchy of the Funds is notsignificantly different from the classifications shown in audited financial statements at that time. Please refer to the audited financial statementsof the Funds as at December 31, 2012 for the respective Fund’s fair value hierarchy.11. Broker CommissionsCommissions paid to brokers for portfolio transactions during the periods ended June 30, 2013 and 2012 are shown below.A portion of commissions paid may include payment for goods and services that are used to assist with investment or trading decisionssuch as investment research, analysis and reports (“research services”). Where ascertainable, the value of the research services includedin the commissions paid is listed in the table below.Franklin Templeton Investments Funds 241

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)11. Broker Commissions (Continued)June 30, 2013 December 31, 2012Commissions Research Costs Commissions Research Costs(000s) (000s) (000s) (000s)Templeton Asian Growth Fund ................................ $342 $ 57 $ 448 $124Templeton Canadian Balanced Fund ........................... 17 5 32 14Templeton Canadian Stock Fund .............................. 24 7 37 16Templeton EAFE Developed Markets Fund ...................... 119 47 312 104Templeton Emerging Markets Fund ............................ 507 136 409 109Templeton Frontier Markets Fund ............................. 230 46 444 88Templeton Global Bond Fund ................................ — — — —Templeton Global Balanced Fund ............................. 43 14 56 14Templeton Global Smaller Companies Fund ..................... 796 246 2,150 747Templeton International Stock Fund ........................... 320 120 939 376Franklin Bissett Canadian All Cap Balanced Fund ................ 7 1 2 1Franklin Flex Cap Growth Fund ............................... 276 72 232 73Franklin High Income Fund .................................. 345 — 899 —Franklin Strategic Income Fund ............................... 242 — 570 —Franklin U.S. Core Equity Fund ............................... 101 35 521 215Franklin U.S. Rising Dividends Fund ........................... 28 16 54 26Franklin World Growth Fund ................................. 265 80 296 115Bissett All Canadian Focus Fund .............................. 24 — 164 39Bissett Bond Fund ......................................... — — — —Bissett Canadian Balanced Fund .............................. — — — —Bissett Canadian Dividend Fund .............................. 271 100 406 123Bissett Canadian Equity Fund ................................ 440 156 820 318Bissett Canadian High Dividend Fund .......................... 452 140 1,245 432Bissett Canadian Short Term Bond Fund ....................... — — — —Bissett Corporate Bond Fund ................................. — — — —Bissett Dividend Income Fund ................................ 246 91 120 42Bissett Microcap Fund ...................................... 67 9 205 21Bissett Small Cap Fund ..................................... 202 40 466 111Bissett Strategic Income Fund ................................ 44 — 52 10Bissett U.S. Focus Fund ..................................... 27 — 105 8Mutual Beacon Fund ....................................... 71 17 228 50Mutual Global Discovery Fund ................................ 437 105 602 155Franklin Templeton Canadian Core Equity Fund .................. 671 5 2,548 7Franklin Templeton Canadian Large Cap Fund ................... 65 — 228 —Franklin Templeton Money Market Fund ........................ — — — —Franklin Templeton Treasury Bill Fund ......................... — — — —12. TaxesAs at December 31, 2012, the following Funds had unused capital losses for income tax purposes. Capital losses can be carried forwardindefinitely to reduce future net realized capital gains. Non-capital losses may be carried forward to reduce future taxable income. Therewere no non-capital losses available to the Funds as at December 31, 2012.TotalFundCapital Losses(000s)Templeton Canadian Balanced Fund ........................................................................... $ 520Templeton Canadian Stock Fund .............................................................................. 3,645Templeton EAFE Developed Markets Fund ....................................................................... 30,451Templeton Frontier Markets Fund .............................................................................. 103Templeton Global Balanced Fund .............................................................................. 3,974Templeton Global Smaller Companies Fund ...................................................................... 56,416Templeton International Stock Fund ............................................................................ 212,049Franklin Flex Cap Growth Fund ................................................................................ 37,367Franklin Strategic Income Fund ............................................................................... 43,269Franklin U.S. Core Equity Fund ................................................................................ 23,865Franklin US Rising Dividend Fund ............................................................................. 69,603Franklin World Growth Fund .................................................................................. 11,052Bissett All Canadian Focus Fund .............................................................................. 27,480242 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)12. Taxes (Continued)TotalFundCapital Losses(000s)Bissett Bond Fund .......................................................................................... $ 21,154Bissett Canadian Dividend Fund ............................................................................... 1,466Bissett Canadian Short Term Bond Fund ........................................................................ 1,348Bissett Dividend Income Fund ................................................................................ 4,285Bissett U.S. Focus Fund ..................................................................................... 19,692Mutual Beacon Fund ........................................................................................ 164,811Mutual Global Discovery Fund ................................................................................. 63,054Franklin Templeton Canadian Core Equity Fund .................................................................. 27,563Franklin Templeton Canadian Large Cap Fund ................................................................... 1,91613. Trading Net Asset Value(a) Trading net asset valueAs discussed in Note 2, the trading net asset value per unit may differ from the GAAP net asset value per unit as shown in the Statementsof Net Assets. The trading net asset value per unit for each series is shown below, as at June 30, 2013 and December 31, 2012. All tradingnet asset values per unit are reported in CAD, with the exception of Series T USD, which is reported in USD, the currency in which thatseries is offered.Templeton Asian Growth FundTempleton Canadian Balanced Fund2013 2012 2013 2012Series O $ 9.78 $ 9.57 Series A $ 8.41 $ 8.47Series F $ 9.65 $ 9.67Series O $10.86 $10.80Series T $ 6.78 $ 7.12Templeton Canadian Stock FundTempleton EAFE Developed Markets Fund2013 2012 2013 2012Series A $11.97 $12.06 Series A $ 7.16 $ 6.51Series F $13.89 $13.92 Series F $ 8.26 $ 7.45Series O $16.66 $16.56 Series O $10.10 $ 9.05Templeton Emerging Markets FundTempleton Frontier Markets Fund2013 2012 2013 2012Series A $ 8.97 $ 9.51 Series O $11.98 $10.77Series F $10.40 $10.95Series I $ 9.90 $10.47Series O $13.76 $14.37Templeton Global Balanced FundTempleton Global Bond Fund2013 2012 2013 2012Series A $11.84 $11.03 Series A $ 9.58 $ 9.66Series F $11.20 $10.37 Series F $10.24 $10.30Series O $12.41 $11.41 Series I $10.08 $10.13Series S $16.26 $15.50 Series O $12.51 $12.48Series T $ 7.59 $ 7.27Series T USD $ 7.26 $ 7.37Templeton Global Smaller Companies FundTempleton International Stock Fund2013 2012 2013 2012Series A $18.66 $16.16 Series A $14.35 $13.88Series F $21.48 $18.49 Series F $16.69 $16.05Series I $20.74 $17.88 Series I $16.04 $15.45Series O $26.38 $22.54 Series O $20.30 $19.38Series T $ 5.76 $ 5.79Franklin Templeton Investments Funds 243

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)13. Trading Net Asset Value (Continued)Franklin Bissett Canadian All Cap Balanced FundFranklin Flex Cap Growth Fund2013 2012 2013 2012Series A $12.26 $11.71 Series A $ 11.85 $ 10.21Series F $12.88 $12.24 Series F $ 13.58 $ 11.63Series I $12.66 $12.04 Series O $ 16.77 $ 14.26Series O $13.65 $12.89Series T $14.09 $13.86Franklin High Income FundFranklin Strategic Income Fund2013 2012 2013 2012Series A $ 6.45 $ 6.57 Series A $ 6.76 $ 6.98Series F $ 7.19 $ 7.28 Series F $ 7.48 $ 7.69Series I $10.89 $11.06 Series I $ 11.09 $ 11.42Series O $ 8.21 $ 8.26 Series O $ 8.49 $ 8.67Franklin U.S Core Equity FundFranklin U.S. Rising Dividends Fund2013 2012 2013 2012Series A $10.45 $ 8.57 Series A $ 27.01 $ 22.72Series F $11.12 $ 9.08 Series F $ 31.01 $ 25.93Series O $12.21 $ 9.88 Series O $ 37.51 $ 31.14Series T $ 9.02 $ 7.87Franklin World Growth FundBissett All Canadian Focus Fund2013 2012 2013 2012Series A $10.70 $10.25 Series A $ 14.18 $ 13.61Series F $10.95 $10.42 Series F $ 15.62 $ 14.91Series O $11.30 $10.68 Series I $ 16.75 $ 16.01Series T $13.61 $13.55 Series O $ 17.81 $ 16.87Bissett Bond FundBissett Canadian Balanced Fund2013 2012 2013 2012Series A $12.37 $12.82 Series A $ 27.84 $ 26.48Series F $13.47 $13.91 Series F $ 32.68 $ 30.87Series I $12.80 $13.25 Series I $ 29.25 $ 27.72Series O $14.89 $15.32 Series O $ 37.28 $ 35.02Series T $ 7.83 $ 7.74Bissett Canadian Dividend FundBissett Canadian Equity Fund2013 2012 2013 2012Series A $14.39 $14.26 Series A $ 78.70 $ 74.86Series F $15.95 $15.72 Series F $ 91.81 $ 86.78Series O $18.06 $17.69 Series I $ 85.27 $ 80.86Series O $107.89 $101.38Bissett Canadian High Dividend FundBissett Canadian Short Term Bond Fund2013 2012 2013 2012Series A $15.28 $14.59 Series A $ 9.48 $ 9.61Series F $17.50 $16.62 Series F $ 9.96 $ 10.08Series I $16.39 $15.60 Series O $ 10.76 $ 10.84Series O $20.72 $19.54244 Franklin Templeton Investments Funds

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)13. Trading Net Asset Value (Continued)Bissett Corporate Bond FundBissett Dividend Income Fund2013 2012 2013 2012Series A $ 9.91 $10.17 Series A $28.53 $27.71Series F $10.26 $10.51 Series F $33.19 $32.03Series I $10.38 $10.64 Series I $31.00 $30.02Series O $10.96 $11.16 Series O $39.13 $37.55Series T $10.39 $10.36Bissett Microcap FundBissett Small Cap Fund2013 2012 2013 2012Series A $24.54 $22.45 Series A $54.40 $50.35Series F $28.82 $26.18 Series F $62.14 $57.19Series O $39.00 $35.01 Series O $77.83 $71.00Bissett Strategic Income FundBissett U.S. Focus Fund2013 2012 2013 2012Series A $10.84 $10.66 Series O $11.80 $ 9.50Series F $11.02 $10.78Series I $10.93 $10.72Series O $11.22 $10.91Mutual Beacon FundMutual Global Discovery Fund2013 2012 2013 2012Series A $ 5.02 $ 4.41 Series A $15.11 $13.46Series F $ 5.78 $ 5.05 Series F $16.91 $14.97Series I $ 5.57 $ 4.87 Series I $11.22 $ 9.95Series O $ 7.02 $ 6.08 Series O $19.80 $17.41Series T $ 5.65 $ 5.15 Series T $ 8.29 $ 7.66Series T USD $10.90 $10.66Franklin Templeton Canadian Core Equity FundFranklin Templeton Canadian Large Cap Fund2013 2012 2013 2012Series O $ 6.24 $ 7.15 Series O $ 9.21 $ 8.63(b) Series T USDSeries T USD units are only offered in USD. Below is the CAD equivalent of the Series T USD GAAP net assets for the Funds, where applicable,as at June 30, 2013 and December 31, 2012.2013 2012Templeton Global Balanced Fund ............................................................. $ 7.63 $ 7.32Mutual Global Discovery Fund ................................................................ $11.46 $10.5914. Other Information(a) Unfunded credit agreementsCertain Funds may enter into credit agreements, all or a portion of which may be unfunded. The Fund is obligated to fund these creditagreements at the issuer’s discretion. Unfunded credit agreements, and funded portions of the agreements are marked to market daily andany unrealized gain or loss is included in the Statement of Net Assets and the Statement of Operations. Funded portions of credit agreementsare presented on the Statement of Investments. Unfunded commitments, as at June 30, 2013 and December 31, 2012, are listedbelow.Franklin Templeton Investments Funds 245

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)14. Other Information (Continued)Issuer June 30, 2013 December 31, 2012Franklin Strategic Income FundEntravision Communications Corporation, Tranche B Term Loan, 5/31/2020 .......................... $649 $ —Patriot Coal Corporation Reimbursement Obligation, 12/31/2013 ................................... 114 —CEVA Group PLC, 12/01/2013 .............................................................. 131 —Bissett Bond FundEntravision Communications Corporation, Tranche B Term Loan, 5/31/2020 .......................... 906 —Bissett Corporate Bond FundEntravision Communications Corporation, Tranche B Term Loan, 5/31/2020 .......................... 124 —(b) Other Derivative InformationCertain Funds may enter into OTC derivatives which are subject to the terms of the ISDA Master Agreements. These agreements containvarious provisions, including collateral requirements.As at June 30, 2013, the following Funds held collateral in the following amounts:June 30, 2013 December 31, 2012(000s)(000s)Templeton Global Bond Fund ............................................................... $ — $14,585Templeton Global Balanced Fund ........................................................... — 620Franklin High Income Fund ................................................................ — 37015. Financial Statements PresentationThe amounts shown on the Statements of Net Assets and the Statements of Operations and Changes in Net Assets are rounded to thenearest thousand. As a result, balances reported may include amounts rounded to zero. Per unit amounts and number of units outstandingshown are actual amounts.16. Currency LegendBelow is a list of currency abbreviations that may be used throughout the financial statements.AED Utd. Arab Emir. Dirham MUR Mauritius RupeeAUD Australian Dollar MXN Mexican PesoBRL Brazilian Real MYR Malaysian RinggitBWP Botswana Pula NGN Nigerian NairaCAD Canadian Dollar NOK Norwegian KronerCHF Swiss Franc OMR Omani RialCLP Chilean Peso PEN Peruvian Nuevo SolDKK Danish Krone PHP Philippine PesoEGP Egyptian Pound PKR Pakistan RupeeEUR Euro PLN Polish ZlotyGBP British Pound QAR Qatari RialGHS Ghanaian New Cedi RON Romanian New LeiHKD Hong Kong Dollar RUB Russian RoubleHUF Hungarian Forint SEK Swedish KronaIDR Indonesian Rupiah SGD Singapore DollarILS Israeli New Shekel THB Thai BahtINR Indian Rupee TRY Turkish LiraJOD Jordanian Dinar TWD Taiwan DollarJPY Japanese Yen USD US DollarKES Kenyan Shilling UYU Uruguayan PesoKRW South-Korean Won VND Vietnamese DongLKR Sri Lanka Rupee ZAR South African RandLVL Latvian Lats246 Franklin Templeton Investments Funds(000s)(000s)

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)17. Subsequent EventsFund EventsTempleton Global Bond Fund (Hedged) was launched on August 12, 2013 and commenced offering Series A, F, I and O onAugust 19, 2013.Effective July 29, 2013 the following Funds were renamed as follows:Bissett All Canadian Focus Fund ..................................Bissett Bond Fund .............................................Bissett Canadian Balanced Fund ..................................Bissett Canadian Dividend Fund ..................................Bissett Canadian Equity Fund ....................................Bissett Canadian High Dividend Fund ..............................Bissett Canadian Short Term Bond Fund ............................Bissett Corporate Bond Fund .....................................Bissett Dividend Income Fund ....................................Bissett Microcap Fund ..........................................Bissett Small Cap Fund .........................................Bissett Strategic Income Fund ....................................Bissett U.S. Focus Fund .........................................Franklin Templeton Money Market Fund ............................Franklin Templeton Treasury Bill Fund .............................Mutual Beacon Fund ...........................................Mutual Global Discovery Fund ....................................Franklin Bissett All Canadian Focus FundFranklin Bissett Bond FundFranklin Bissett Canadian Balanced FundFranklin Bissett Canadian Dividend FundFranklin Bissett Canadian Equity FundFranklin Bissett Canadian High Dividend FundFranklin Bissett Canadian Short Term Bond FundFranklin Bissett Corporate Bond FundFranklin Bissett Dividend Income FundFranklin Bissett Microcap FundFranklin Bissett Small Cap FundFranklin Bissett Strategic Income FundFranklin Bissett U.S. Focus FundFranklin Bissett Money Market FundFranklin Bissett Treasury Bill FundFranklin Mutual Beacon FundFranklin Mutual Global Discovery Fund18. Regulatory DevelopmentsInternational Financial Reporting Standards (IFRS)The Canadian Accounting Standards Board (“AcSB”) confirmed that effective January 1, 2011, IFRS replaced current Canadian standardsand interpretations as Canadian GAAP for publicly accountable enterprises, which includes investment companies. The adoption of IFRSfor investment companies will now not be mandatory until periods beginning on or after January 1, 2014. The deferral of the mandatorychangeover was intended to allow the International Accounting Standard Board’s (“IASB”) proposed exemption from consolidation forinvestment companies to be in place prior to the adoption of IFRS by investment companies in Canada.In October 2012, the IASB approved the proposed amendments to IFRS 10, “Consolidated Financial Statements”, which define criteria foran entity to qualify as an investment entity and exempts such entity from consolidation requirements. These amendments require aninvestment entity to measure those subsidiaries at fair value through profit or loss in accordance with IFRS 9, “Financial Instruments” andexpand disclosures to help users evaluate the nature and financial effect of its investment activities. The amendment will be effective January1, 2014. Based on the Manager’s assessment, each of the Funds currently meet the proposed criteria for an investment entity and assuch will be exempt from consolidation requirements.The Manager has developed a plan to meet the timetable published by the CICA for the changeover to IFRS. The key elements of the planinclude an assessment of differences between Canadian GAAP and IFRS, changes required to financial statement disclosure and impacton the current process for financial reporting purposes.Franklin Templeton Investments Funds 247

Franklin Templeton Investments FundsNOTES TO FINANCIAL STATEMENTSFor the periods ended June 30, 2013 (Unaudited) and December 31, 2012 (Continued)18. Regulatory Developments (Continued)Based on the Manager’s assessment of the accounting differences between Canadian GAAP and IFRS, the following areas of differenceswere identified:(a)(b)IAS 32, “Financial Instruments: Presentation”, requires puttable instruments to be classified as a liability unless certain conditions aremet. The Funds’ unitholders’ equity meets the definition of a puttable instrument. The Manager has assessed each of the Funds’unitholder structure and has determined the liability treatment is the most appropriate classification.IFRS 13, “Fair Value Measurements”, was published in May 2011. The standard provides guidance on the measurement of fair valueand allows for the use of closing market prices to value investments. Under Canadian GAAP the fair value of investments for financialstatement reporting purposes, was required to be measured at closing bid price for long positions and closing ask price for shortpositions. The Manager has assessed the guidance that will apply under IFRS and has determined that the use of closing marketprices is appropriate in valuing investments.A Statement of Cash Flow will be required for IFRS reporting purposes. The Manager has presently determined that the impact of IFRS willalso include additional note disclosure and modifications to existing presentation. The Manager does not expect that the trading net assetvalue or trading net asset value per unit will be impacted by the changeover to IFRS.248 Franklin Templeton Investments Funds

Franklin Templeton Investments5000 Yonge Street, Suite 900Toronto, ON, M2N 0A7Client Services: (416) 364-4672 Fax: (416) 364-1163Client Services Toll-free: (800) 387-0830 Toll-free Fax: (866) 850-8241TTY: (800) 908-8145www.franklintempleton.ca201306240378Commissions, trailing commissions, management fees and expenses all may be associated with mutual fundinvestments. Please read the Franklin Templeton Investments Funds’ prospectus before investing. Mutualfund securities are not covered by the Canada Deposit Insurance Corporation or by any other governmentdeposit insurer. There can be no assurances that the money market funds will be able to maintain their netasset value per security at a constant amount or that the full amount of your investment in the fund(s) willbe returned to you. Unit/share values change frequently and past performance may not be repeated. FiduciaryTrust Company of Canada is a wholly owned subsidiary of Franklin Templeton Investments Corp.UTF SARE 06/13