UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05387
Franklin Mutual Series Funds
(Exact name of registrant as specified in charter)
101 John F. Kennedy Parkway, Short Hills, NJ 07078-2705
(Address of principal executive offices) (Zip code)
Alison Baur, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrant's telephone number, including area code:(210)912-2100
Date of fiscal year end: 12/31
Date of reporting period: 12/31/22
Item 1. Reports to Stockholders.
a.)
The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1.)
b.)
Include a copy of each notice transmitted to stockholders in reliance on Rule 30e-3 under the Act (17 CFR 270.30e-3) that contains disclosures specified by paragraph (c)(3) of that rule.
Not Applicable
.
Annual
Report
and
Shareholder
Letter
Franklin
Mutual
Series
Funds
December
31,
2022
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up
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Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Not
FDIC
Insured
May
Lose
Value
No
Bank
Guarantee
franklintempleton.com
Annual
Report
1
SHAREHOLDER
LETTER
Dear
Shareholder:
The
past
12
months
were
eventful
and
volatile.
Equity
markets
generally
declined
during
the
year.
Several
themes
carried
over
from
the
winter
of
2021
into
2022,
but
with
increased
intensity.
Mounting
inflation,
more
hawkish
central
banks,
continuing
supply
chain
difficulties
and
renewed
COVID-lockdowns,
mainly
in
China,
remained
a
part
of
the
economic
landscape,
joined
by
new
elements,
like
the
war
in
Ukraine.
Corporate
earnings
and
other
economic
indicators
generally
remained
strong
for
much
of
the
12
months.
However,
some
elements
such
as
consumer
spending
patterns
and
corporate
inventories
showed
strain
as
inflationary
pressures
and
concern
over
the
possibility
of
a
recession
took
their
toll
on
the
general
population,
companies
and
investors.
High
consumer
demand
coupled
with
supply-chain
disruptions
helped
drive
inflation
in
many
countries
to
reach
the
highest
levels
in
decades.
In
response,
several
of
the
world’s
central
banks
tightened
monetary
policy,
including
the
U.S.
Federal
Reserve,
which
hiked
rates
for
the
first
time
in
over
three
years
in
March,
followed
by
additional
increases
throughout
the
remainder
of
the
period.
The
European
Central
Bank
followed
suit
and
began
a
tightening
cycle
later
in
the
year.
The
Bank
of
Japan
raised
the
rate
on
its
10-year
government
bond
near
the
conclusion
of
the
period.
Rising
rates
can
cool
economic
growth
and
a
mild
recession
may
still
be
on
the
horizon
in
some
parts
of
the
world.
Some
U.S.
large-cap
valuations
reflect
this
recession
risk.
Furthermore,
many
U.S.
small-cap
value
stocks
are
trading
well
below
their
52-week
highs
and
valuations
of
profitable
companies
are
near
20-year
lows
relative
to
large-cap
value
stocks.
Higher
interest
rates
also
continue
to
work
against
long-duration
growth
stocks
by
increasing
the
discount
rate
of
a
company’s
projected
future
cash
flows.
This
downward
pressure
on
technology
and
other
long-duration
growth
names
is
helping
to
support
investor
interest
in
value
stocks,
which
handily
outperformed
their
growth
counterparts
over
the
past
12
months.
Even
though
the
initial
shock
of
Russia’s
invasion
of
Ukraine
has
receded,
the
conflict
continues
to
affect
markets
by
stoking
inflationary
pressure
and
causing
many
European
countries
and
companies
to
explore
alternate
ways
to
fulfil
their
need
for
energy.
Thankfully,
European
energy
security
became
less
of
an
issue
near
the
end
of
the
year.
The
parties
in
power
have
been
subsidizing
energy
bill
payments
for
low-income
households
and
weather
remained
favorable.
In
our
opinion,
the
current
governments’
efforts
to
help
offset
high
energy
costs
in
lower
income
households
may
help
combat
the
rise
of
populism
in
these
countries,
which
is
good
for
political
stability.
Based
on
recent
events,
especially
after
period-end,
we
think
the
conflict
may
be
entering
a
new
phase,
with
Russia
poised
to
ramp
up
its
activities
in
Ukraine.
Aside
from
energy
shocks,
other
supply-chain
disruptions
peppered
the
landscape
in
2022.
China
remained
in
lockdown
under
its
zero-COVID
policy
for
much
of
the
12
months,
straining
the
world’s
supply
lines
and
economic
growth
rates.
The
country
began
to
emerge
from
lockdown
in
the
fourth
quarter
and
was
quickly
overtaken
by
COVID
outbreaks.
We
will
monitor
China’s
emergence
from
COVID,
and
their
relations
with
neighboring
Taiwan,
throughout
the
coming
year.
Despite
recent
Sino/American
trade
tensions,
we
expect
the
countries
to
continue
to
work
together
to
supply
semiconductors
and
other
necessary
components
to
the
world’s
manufacturers,
barring
any
military
aggression
from
China.
Not
all
progress
is
evidenced
by
a
steady
march
forward.
In
the
near-term,
market
activity
will
likely
be
influenced
by
developments
around
geopolitical
events,
inflation
concerns,
supply
chain
constraints
and
central
bank
activity.
We
remain
focused
on
identifying
opportunities
to
acquire
stocks
at
attractive
valuations
based
upon
our
assessment
of
fundamental
value,
while
taking
advantage
of
volatility.
Our
process
of
finding
underappreciated
and
misunderstood
companies
with
identifiable
catalysts
to
unlock
shareholder
value
may
provide
meaningful
upside
potential
and
possible
downside
risk
management
during
turbulent
periods.
In
addition,
we
continue
to
focus
on
event-driven
situations
across
equity
and
fixed
income
with
catalysts
less
correlated
to
the
overall
markets.
While
unnerving,
volatility
remains
an
inherent
part
of
investing
in
risk
assets,
and
the
market
historically
rewards
investors
who
take
an
opportunistic
long-
term
perspective.
On
the
following
pages,
the
portfolio
management
team
of
each
Fund
reviews
investment
decisions
made
during
this
period.
Please
remember
all
securities
markets
fluctuate,
as
do
mutual
fund
share
prices.
franklintempleton.com
Annual
Report
2
We
thank
you
for
investing
with
Franklin
Templeton,
welcome
your
questions
and
comments,
and
look
forward
to
continuing
to
serve
your
investment
needs
in
the
years
ahead.
Sincerely,
Christian
Correa,
CFA
President
and
Chief
Investment
Officer
Franklin
Mutual
Advisers,
LLC
This
letter
reflects
our
analysis
and
opinions
as
of
December
31,
2022,
unless
otherwise
indicated.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
fund.
Statements
of
fact
are
from
sources
considered
reliable.
CFA
®
is
a
trademark
owned
by
CFA
Institute.
franklintempleton.com
Annual
Report
3
Contents
Annual
Report
Economic
and
Market
Overview
4
Franklin
Mutual
Beacon
Fund
5
Franklin
Mutual
European
Fund
12
Franklin
Mutual
Financial
Services
Fund
19
Franklin
Mutual
Global
Discovery
Fund
26
Franklin
Mutual
Quest
Fund
33
Franklin
Mutual
Shares
Fund
40
Financial
Highlights
and
Schedules
of
Investments
47
Financial
Statements
105
Notes
to
Financial
Statements
116
Report
of
Independent
Registered
Public
Accounting
Firm
152
Tax
Information
153
Board
Members
and
Officers
154
Shareholder
Information
159
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
4
franklintempleton.com
Annual
Report
ANNUAL
REPORT
Economic
and
Market
Overview
Global
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
World
Index-NR
(USD,
net
of
tax
withholding
when
dividends
are
paid),
posted
a
-18.36%
total
return
for
the
12
months
ended
December
31,
2022.
1
The
combination
of
resilient
consumer
demand
and
persistent
supply-chain
disruptions
as
well
as
a
strong
job
market
contributed
to
higher
inflation
in
many
countries.
This
inflationary
pressure
led
many
of
the
world’s
central
banks
to
adopt
less
accommodative
monetary
policy
in
2022,
which
hindered
stocks
and
the
outlook
for
economic
growth.
Russia’s
invasion
of
Ukraine
and
the
subsequent
escalation
of
the
war
also
increased
investor
uncertainty,
as
international
sanctions
on
Russia
disrupted
global
trade
and
commodity
markets.
Meanwhile,
shifting
public
health
policy
in
China
added
volatility
to
the
global
economy,
as
lockdowns
early
in
the
period
to
quell
the
spread
of
the
Omicron
variant
of
COVID-19
slowed
economic
activity,
while
widespread
protests
late
in
the
period
led
the
government
to
relax
its
strict
“zero-COVID”
policy.
In
the
U.S.,
gross
domestic
product
(GDP)
expanded
in
the
second
half
of
the
calendar
year,
recovering
from
a
slight
contraction
in
the
first
half
of
the
year
when
high
inflation,
supply
constraints
and
record
trade
deficits
weighed
on
economic
output.
Rising
prices
precipitated
a
notable
decline
in
consumer
confidence
despite
high
spending
levels,
robust
job
growth
and
low
unemployment.
In
an
effort
to
control
inflation,
the
U.S.
Federal
Reserve
(Fed)
raised
the
federal
funds
target
rate
in
March
2022
for
the
first
time
since
2018.
The
Fed
raised
the
federal
funds
rate
again
at
its
subsequent
six
meetings
to
end
the
period
at
a
range
of
4.25%–4.50%.
Furthermore,
the
Fed
said
it
would
continue
to
reduce
its
bond
holdings
and
anticipated
additional
interest-rate
increases
at
future
meetings
to
curtail
inflation.
Economic
growth
in
the
eurozone
decelerated
to
a
slightly
positive
growth
rate
during
the
year.
The
lifting
of
COVID-
related
restrictions
in
some
European
countries
and
the
summer
tourism
season
strengthened
economies.
However,
the
war
in
Ukraine
disrupted
supply
chains,
weakened
the
economic
outlook
and
contributed
to
record
high
inflation
across
the
eurozone,
as
energy
prices
soared.
Electricity
prices
hit
record
highs
in
Germany
and
France
as
coal
futures
and
natural
gas
prices
climbed.
Consequently,
the
European
Central
Bank
raised
interest
rates
in
July
2022
for
the
first
time
in
11
years
to
curtail
growing
inflation
and
raised
rates
in
three
subsequent
meetings.
In
this
environment,
European
developed
market
equities,
as
measured
by
the
MSCI
Europe
Index-NR
(USD),
posted
a
-15.06%
total
return
for
the
12
months
under
review.
1
Asian
developed
and
emerging
market
equities,
as
measured
by
the
MSCI
All
Country
Asia
Index-NR
(USD),
posted
a
-18.61%
total
return
for
the
12-month
period.
1
Growth
in
Japan
remained
slow,
alternating
between
positive
quarterly
GDP
growth
and
contraction.
China’s
economy
contracted
sharply
in
2022's
second
quarter
as
COVID-
related
restrictions
in
many
major
cities,
including
Shanghai,
weakened
consumer
demand.
Investor
concerns
about
the
solvency
of
several
large
property
developers
in
China
further
pressured
stocks
in
that
country.
Global
emerging
market
stocks,
as
measured
by
the
MSCI
Emerging
Markets
Index-NR
(USD),
posted
a
-20.09%
total
return
for
the
12
months
under
review.
1
Central
bank
tightening,
the
threat
of
recession,
and
weakening
demand
for
semiconductors
in
technology-heavy
countries
contributed
to
the
downturn.
Following
Russia’s
invasion
of
Ukraine,
climbing
food
and
energy
prices
kindled
inflationary
pressures
and
raised
concerns
over
the
possibility
of
government
debt
defaults
in
some
countries.
However,
some
emerging
economies,
particularly
in
Latin
America,
as
well
as
South
Africa
and
Saudi
Arabia,
benefited
from
rising
commodity
prices.
The
foregoing
information
reflects
our
analysis
and
opinions
as
of
December
31,
2022.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
fund.
Statements
of
fact
are
from
sources
considered
reliable.
1.
Source:
Morningstar.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
5
franklintempleton.com
Annual
Report
Franklin
Mutual
Beacon
Fund
This
annual
report
for
Franklin
Mutual
Beacon
Fund
covers
the
fiscal
year
ended
December
31
,
2022
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
appreciation,
which
may
occasionally
be
short
term.
The
secondary
goal
is
income.
Under
normal
market
conditions,
the
Fund
invests
primarily
to
predominantly
in
equity
securities
of
U.S.
and
foreign
companies
that
we
believe
are
available
at
market
prices
less
than
their
fundamental
value.
The
equity
securities
in
which
the
Fund
invests
are
primarily
common
stock,
with
a
current
focus
on
mid-
and
large-cap
companies.
To
a
lesser
extent,
the
Fund
also
invests
in
merger
arbitrage
securities
and
the
debt
and
equity
of
distressed
companies.
The
Fund
may
invest
a
substantial
portion,
potentially
up
to
100%
of
its
assets,
in
foreign
securities
and
participations
in
foreign
government
debt.
The
Geographic
Composition
table
on
this
page
lists
the
leading
countries
where
the
Fund
invests.
Performance
Overview
The
Fund’s
Class
Z
shares
posted
a
-11.67%
cumulative
total
return
for
the
12
months
ended
December
31,
2022.
In
comparison,
the
Fund’s
benchmark,
the
MSCI
World
Value
Index-NR
(USD),
which
measures
the
performance
of
stocks
exhibiting
overall
value
style
characteristics
in
global
developed
markets,
posted
a
-6.52%
cumulative
total
return.
1
You
can
find
more
of
the
Fund’s
performance
data
in
the
Performance
Summary
beginning
on
page
8
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Investment
Strategy
At
Franklin
Mutual
Series,
we
are
committed
to
our
distinctive
value
approach
to
investing,
which
we
believe
can
generate
above-average
risk-adjusted
returns
over
time
for
our
shareholders.
Our
major
investment
strategy
is
investing
in
undervalued
stocks.
When
selecting
undervalued
equities,
we
are
attracted
to
what
we
believe
are
fundamentally
strong
companies
with
healthy
balance
sheets,
high-quality
assets,
substantial
free
cash
flow
and
shareholder-oriented
management
teams
and
whose
stocks
are
trading
at
discounts
to
our
assessment
of
the
companies’
intrinsic
or
business
value.
We
also
look
for
asset-rich
companies
whose
shares
may
be
trading
at
depressed
levels
due
to
concerns
over
short-term
earnings
disappointments,
litigation,
management
strategy
or
other
perceived
negatives.
This
strict
value
approach
is
not
only
intended
to
improve
the
likelihood
of
capital
appreciation,
but
also
reduces
the
risk
of
substantial
declines,
in
our
opinion.
While
the
vast
majority
of
our
undervalued
equity
and
debt
investments
are
made
in
publicly
traded
companies
globally,
we
may
invest
occasionally
in
privately
held
companies
as
well.
To
a
lesser
extent,
we
complement
this
more
traditional
investment
strategy
with
two
others.
One
is
distressed
investing,
a
highly
specialized
field
that
has
proven
quite
profitable
during
certain
periods
over
the
years.
Distressed
investing
is
complex
and
can
take
many
forms.
The
most
common
distressed
investment
the
Fund
undertakes
is
the
purchase
of
financially
troubled
or
bankrupt
companies’
debt
at
a
substantial
discount
to
face
value.
After
the
financially
distressed
company
is
reorganized,
often
in
bankruptcy
court,
the
old
debt
is
typically
replaced
with
new
securities
issued
by
the
financially
stronger
company.
The
other
piece
of
our
investment
strategy
is
participating
in
arbitrage
situations,
another
highly
specialized
field.
When
companies
announce
proposed
mergers
or
takeovers,
commonly
referred
to
as
deals,
the
target
company
may
trade
at
a
discount
to
the
bid
it
ultimately
accepts.
One
Geographic
Composition
12/31/22
%
of
Total
Net
Assets
United
States
62.2%
United
Kingdom
7.0%
Switzerland
6.3%
Netherlands
6.1%
France
5.4%
Germany
5.2%
Australia
2.8%
Canada
2.0%
Other*
0.0%
Short-Term
Investments
&
Other
Net
Assets
3.0%
*
Rounds
to
less
than
0.1%
1.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
52
.
Franklin
Mutual
Beacon
Fund
6
franklintempleton.com
Annual
Report
form
of
arbitrage
involves
purchasing
the
target
company’s
stock
when
it
is
trading
below
the
value
we
believe
it
would
receive
in
a
deal.
In
keeping
with
our
commitment
to
a
relatively
conservative
investment
approach,
we
typically
focus
our
arbitrage
efforts
on
announced
deals,
and
avoid
rumored
deals
or
other
situations
we
consider
relatively
risky.
In
addition,
it
is
our
practice
to
hedge
the
Fund’s
currency
exposure
when
we
deem
it
advantageous
for
our
shareholders.
Manager’s
Discussion
In
2022,
security
selection
and
an
overweight
in
communication
services,
an
underweight
in
energy
and
stock
selection
in
the
health
care
sector
curbed
relative
performance.
Stock
selection
and
an
underweight
in
real
estate,
security
selection
in
consumer
staples
as
well
as
stock
selection
and
an
underweight
in
financials,
bolstered
relative
results.
The
Top
10
Industries
table
on
this
page
lists
the
industries
in
which
the
Fund
primarily
invests,
some
of
which
are
within
the
sectors
listed
above.
Investments
that
detracted
from
Fund
performance
included
Elanco
Animal
Health,
Charter
Communications
and
Western
Digital.
Elanco
Animal
Health,
a
U.S.-based
animal
health
care
company,
detracted
from
relative
returns
as
the
company
faced
several
headwinds
that
affected
its
business,
including
general
economic
weakness,
currency
headwinds,
a
slower
recovery
from
COVID-19
lockdowns
in
China,
supply-chain
problems,
and
negative
safety
publicity
with
its
Seresto
collar.
These
concerns,
along
with
higher
interest
rates,
harmed
the
company’s
performance
metrics
and
equity
value
due
to
its
high
financial
leverage.
We
expect
business
performance
to
improve
over
the
medium
term
with
better
execution,
increased
pricing,
and
a
focus
on
innovation
and
pipeline
progress.
In
addition,
management
is
committed
to
bringing
down
leverage
by
using
most
of
its
free
cash
flow
to
pay
down
debt.
Charter
Communications,
a
U.S.-based
cable
company,
hampered
relative
results
for
the
year.
Its
financial
results
showed
weak
broadband
subscriber
growth
and
the
company
announced
in
December
2022
that
capital
spending
would
be
higher
than
previous
forecasts
over
the
next
three
years,
reducing
free
cash
flow.
The
company
is
unlikely
to
see
revenue
growth
or
operating
expense
savings
to
offset
the
higher
capital
spending,
in
our
view.
Over
the
longer
term,
we
expect
to
see
improved
subscriber
growth
trends
driving
higher
revenue
and
free
cash
flow
growth.
We
anticipate
Charter’s
share
price
appreciation
will
depend
on
growth
in
subscribers,
revenue,
and
earnings
before
interest,
taxes,
depreciation
and
amortization
(EBITDA)
over
the
next
few
years.
Western
Digital,
a
U.S.-based
hard
drive
and
data
storage
company,
was
a
relative
detractor.
The
company’s
near-
term
outlook
was
much
weaker
than
analysts’
expectations
in
its
latest
quarter,
and
order
cuts
in
its
consumer-
focused
businesses
as
well
as
weaker
pricing
negatively
affected
revenues
and
margins.
We
believe
the
tougher
macroeconomic
conditions
will
hinder
results
over
the
next
few
quarters.
Top
positive
contributors
to
performance
during
the
12-month
period
included
Merck,
Eli
Lilly
and
Deutsche
Telekom.
Given
the
recent
volatility
in
the
markets,
pharmaceutical
stocks
outperformed
on
a
relative
basis
as
investors
sought
out
companies
perceived
to
have
stable
earnings
profiles.
U.S.-based
Merck
was
a
relative
outperformer
as
the
stock
started
the
year
with
low
expectations
and
a
low
valuation
against
which
they
delivered
strong
and
steady
financial
results
throughout
the
year.
Merck’s
core
franchises
in
oncology
and
vaccines
recovered
from
the
impact
of
the
pandemic
and
delivered
strong
operating
leverage
to
earnings.
Additionally,
the
company
remained
disciplined
on
the
capital
allocation
front,
in
our
view,
and
did
not
engage
in
overpaying
for
a
potential
acquisition.
U.S.-based
pharmaceutical
company
Eli
Lilly
was
a
contributor.
The
stock
performed
well
on
the
back
of
strong
performance
of
the
company’s
core
diabetes
and
oncology
franchises
as
well
as
solid
progress
on
its
key
pipeline
assets,
especially
Tirzepatide.
The
U.S.
Food
and
Drug
Administration
approved
Tirzepatide
for
diabetes
and
all
during
the
year
scripts
have
been
strong.
Lilly
also
released
positive
data
for
Tirzepatide
from
a
late-
stage
trial
in
obesity,
which
showed
solid
results.
Later
Top
10
Industries
12/31/22
%
of
Total
Net
Assets
a
Pharmaceuticals
13.4%
Banks
12.1%
Textiles,
Apparel
&
Luxury
Goods
8.0%
Oil,
Gas
&
Consumable
Fuels
5.9%
Capital
Markets
3.7%
Personal
Products
3.7%
Health
Care
Equipment
&
Supplies
3.6%
Building
Products
3.4%
Beverages
3.3%
Insurance
3.3%
Franklin
Mutual
Beacon
Fund
7
franklintempleton.com
Annual
Report
in
the
year,
Lilly
also
benefited
from
positive
news
on
a
rival’s
Alzheimer’s
treatment,
which
bodes
well
for
Lilly’s
compound, Donanemab,
that
is
in
late-stage
testing
for
Alzheimer’s
disease
and
should
have
results
in
2023.
We
believe
Lilly
remains
well
positioned
to
bring
value
to
patients
from
multiple
new
products
that
will
lead
to
differentiated
revenue
and
earnings
growth.
Deutsche
Telekom
(DT)
supported
relative
returns,
following
the
sale
of
its
German
tower
business
and
a
solid
earnings
report
whereby
the
company
raised
its
outlook
for
the
year. We
believe
a
significant
improvement
in
free
cash
flow
generation
and
an
aggressive
share
buyback
program
at
T-Mobile,
DT’s
U.S.
subsidiary,
will
support
DT’s
shares.
These
developments,
in
our
view,
should
highlight
the
value
creation
in
T-Mobile
after
years
of
investment
by
DT
and
allow
DT
to
increase
its
position
to
above
50%,
after
which
we
believe
capital
could
be
extracted
in
a
tax-efficient
manner.
During
the
period,
the
Fund
held
currency
forwards
and
futures,
seeking
to
hedge
a
significant
portion
of
the
currency
risk
in
the
portfolio.
The
hedges
had
a
positive
overall
impact
on
the
Fund’s
performance
as
the
U.S.
dollar
rose
against
most
currencies
during
the
period.
Although
the
Fund
performed
better
than
many
global
stock
indexes,
as
fellow
shareholders,
we
were
disappointed
by
recent
absolute
performance
as
well
as
performance
relative
to
a
number
of
global
value
indexes.
Our
strategy
of
seeking
undervalued
stocks
and
focusing
on
special
situation
investments,
including
distressed
investments
and
merger
arbitrage,
can
lag
the
value
equity
markets
at
times.
We
remain
committed
to
our
disciplined,
value
investment
approach
as
we
seek
to
generate
attractive,
long-term,
risk-
adjusted
returns
for
shareholders.
Thank
you
for
your
participation
in
Franklin
Mutual
Beacon
Fund.
We
look
forward
to
continuing
to
serve
your
investment
needs.
Christian
Correa,
CFA
Mandana
Hormozi
Aman
Gupta,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
December
31,
2022,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
Top
10
Holdings
12/31/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
JPMorgan
Chase
&
Co.
4.5%
Banks,
United
States
BP
plc
3.9%
Oil,
Gas
&
Consumable
Fuels,
United
Kingdom
BlackRock,
Inc.
3.7%
Capital
Markets,
United
States
Haleon
plc
3.7%
Personal
Products,
United
States
Novartis
AG
3.6%
Pharmaceuticals,
Switzerland
Medtronic
plc
3.6%
Health
Care
Equipment
&
Supplies,
United
States
Johnson
Controls
International
plc
3.4%
Building
Products,
United
States
Heineken
NV
3.3%
Beverages,
Netherlands
Hartford
Financial
Services
Group,
Inc.
(The)
3.2%
Insurance,
United
States
Global
Payments,
Inc.
3.2%
IT
Services,
United
States
Performance
Summary
as
of
December
31,
2022
Franklin
Mutual
Beacon
Fund
8
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
12/31/22
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A:
5.50%
maximum
initial
sales
charge;
For
other
share
classes,
visit
franklintempleton.com
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
Z
1-Year
-11.67%
-11.67%
5-Year
+23.00%
+4.23%
10-Year
+115.99%
+8.00%
A
4
1-Year
-11.91%
-16.74%
5-Year
+21.45%
+2.79%
10-Year
+110.35%
+7.11%
See
page
10
for
Performance
Summary
footnotes.
Franklin
Mutual
Beacon
Fund
Performance
Summary
9
franklintempleton.com
Annual
Report
See
page
10
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
Z
(
12/31/12–12/31/22)
Class
A
(12/31/12–12/31/22)
Franklin
Mutual
Beacon
Fund
Performance
Summary
10
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Value
securities
may
not
increase
in
price
as
anticipated
or
may
decline
further
in
value.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
fund
that
is
more
broadly
diversified
geographically.
Smaller-company
stocks
have
exhibited
greater
price
volatility
than
larger-company
stocks,
particularly
over
the
short
term.
The
Fund’s
investments
in
companies
engaged
in
mergers,
reorganizations
or
liquidations
also
involve
special
risks
as
pending
deals
may
not
be
completed
on
time
or
on
favorable
terms.
The
Fund
may
invest
in
lower-rated
bonds,
which
entail
higher
credit
risk.
The
manager’s
portfolio
se-
lection
strategy
is
not
solely
based
on
ESG
considerations,
and
therefore
the
issuers
in
which
the
Fund
invests
may
not
be
considered
ESG-focused
companies.
Integrating
ESG
considerations
into
the
investment
process
is
not
a
guarantee
that
better
performance
will
be
achieved.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
Russia’s
military
invasion
of
Ukraine
in
February
2022,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
im-
posed
broad-ranging
economic
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
invasion
of
Ukraine.
The
United
States
and
other
countries
have
also
imposed
economic
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
military
invasion.
These
sanctions,
as
well
as
any
other
economic
consequences
related
to
the
invasion,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
economic
sanctions
related
to
the
invasion.
1.
The
total
annual
operating
expenses
are
as
of
the
Fund’s
prospectus
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Prior
to
9/10/18,
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
5.
Source:
FactSet.
MSCI
World
Value
Index-NR
(USD)
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
the
performance
of
stocks
exhibit-
ing
overall
value
style
characteristics
in
global
developed
markets.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(1/1/22–12/31/22)
Share
Class
Net
Investment
Income
Short-Term
Capital
Gain
Long-Term
Capital
Gain
Total
Z
$0.2321
$0.0231
$1.1687
$1.4239
A
$0.1933
$0.0231
$1.1687
$1.3851
C
$0.0593
$0.0231
$1.1687
$1.2511
R
$0.1640
$0.0231
$1.1687
$1.3558
R6
$0.2424
$0.0231
$1.1687
$1.4342
Total
Annual
Operating
Expenses
6
Share
Class
Z
0.81%
A
1.06%
Your
Fund’s
Expenses
Franklin
Mutual
Beacon
Fund
11
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements,
for
Class
R6.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
7/1/22
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
a
Net
Annualized
Expense
Ratio
2
Z
$1,000
$1,022.20
$3.77
$1,021.48
$3.77
0.74%
A
$1,000
$1,020.50
$5.04
$1,020.22
$5.04
0.99%
C
$1,000
$1,016.70
$8.85
$1,016.43
$8.84
1.74%
R
$1,000
$1,019.50
$6.30
$1,018.96
$6.30
1.24%
R6
$1,000
$1,022.90
$3.42
$1,021.82
$3.42
0.67%
12
franklintempleton.com
Annual
Report
Franklin
Mutual
European
Fund
This
annual
report
for
Franklin
Mutual
European
Fund
covers
the
fiscal
year
ended
December
31,
2022.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
appreciation,
which
may
occasionally
be
short
term.
Its
secondary
goal
is
income.
The
Fund
normally
invests
at
least
80%
of
its
net
assets
in
securities
of
European
companies
that
we
believe
are
available
at
market
prices
less
than
their
fundamental
value.
The
Fund
invests
primarily
in
equity
securities,
mainly
common
stocks,
with
a
current
focus
on
mid-
and
large
cap
companies,
and
normally
invests
in
securities
from
at
least
five
different
countries.
To
a
lesser
extent,
the
Fund
also
invests
in
merger
arbitrage
securities
and
the
debt
and
equity
of
distressed
companies.
The
Fund
also
may
invest
up
to
20%
of
its
total
assets
in
securities
of
U.S.
issuers
and
in
securities
of
issuers
from
the
Middle
East
and
the
remaining
regions
of
the
world.
The
Geographic
Composition
table
on
this
page
lists
the
leading
countries
where
the
Fund
invests.
Performance
Overview
The
Fund’s
Class
Z
shares
posted
a
-0.70%
cumulative
total
return
for
the
12
months
ended
December
31,
2022.
For
comparison,
the
Fund’s
primary
benchmark,
the
MSCI
Europe
Value
Index-NR
(Local
Currency),
which
measures
the
performance
of
stocks
exhibiting
overall
value
style
characteristics
in
European
developed
markets,
posted
a
+0.57%
cumulative
total
return,
and
the
Fund’s
secondary
benchmark,
the
MSCI
Europe
Value
Index-NR
(USD),
posted
a
-7.17%
cumulative
total
return.
1
You
can
find
more
of
the
Fund’s
performance
data
in
the
Performance
Summary
beginning
on
page
15
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236.
Investment
Strategy
We
follow
a
distinctive
value
investment
approach
that
combines
investments
in
what
we
believe
are
undervalued
common
stocks
with,
to
a
lesser
extent,
distressed
debt
investing
and
merger
arbitrage.
Our
style
aims
to
provide
our
shareholders
with
superior
risk-adjusted
results
over
time.
We
employ
rigorous,
fundamental
analysis
to
find
compelling
situations.
In
our
opinion,
successful
investing
is
as
much
about
assessing
risk
and
containing
losses
as
it
is
about
achieving
profits.
In
choosing
investments,
we
look
at
the
market
price
of
an
individual
company’s
securities
relative
to
our
evaluation
of
its
fundamental
value
based
on
factors
including
book
value,
cash
flow
generation,
long-term
earnings
potential
and
earnings
multiples.
We
may
invest
in
bankrupt
or
distressed
companies
if
we
believe
the
market
overreacted
to
adverse
developments
or
failed
to
appreciate
positive
changes,
including
restructuring.
In
addition,
it
is
our
practice
to
hedge
the
Fund’s
currency
exposure
when
we
deem
it
advantageous
for
our
shareholders.
Manager’s
Discussion
In
2022,
stock
selection
in
industrials
and
communication
services,
and
stock
selection
combined
with
an
underweight
in
utilities
contributed
positively
to
relative
returns.
Stock
selection
in
consumer
discretionary
and
materials
and
an
underweight
in
energy
detracted
from
relative
returns.
The
Top
10
Industries
table
on
page
13
lists
the
industries
in
which
the
Fund
primarily
invests,
some
of
which
are
within
the
sectors
listed
above.
Geographic
Composition
12/31/22
%
of
Total
Net
Assets
Germany
21.0%
France
17.9%
Netherlands
17.8%
United
Kingdom
14.5%
United
States
7.1%
Switzerland
4.7%
Australia
3.0%
Ireland
2.8%
Greece
2.5%
Belgium
2.0%
Italy
1.3%
Other
0.8%
Short-Term
Investments
&
Other
Net
Assets
4.6%
1.
Source:
FactSet.
The
indexes
are
unmanaged
and
include
reinvestment
of
any
income
or
distributions.
They
do
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
60
.
Franklin
Mutual
European
Fund
13
franklintempleton.com
Annual
Report
Top
positive
contributors
to
performance
during
the
12-month
period
included
CaixaBank,
BP
and
BAE
Systems.
BP
is
listed
among
the
Fund’s
largest
positions
in
the
Top
10
Holdings
table
on
this
page.
CaixaBank,
the
largest
bank
in
Spain
following
the
2021
acquisition
of
Bankia,
supported
relative
results.
During
2022,
Caixa
returned
EUR
1.8
billion
of
excess
capital
to
shareholders
via
a
share
repurchase
program
on
top
of
the
normal
dividend
payout.
In
addition,
the
company
recently
said
that
it
sees
a
higher-than-expected
return
on
tangible
equity
by
2024,
given
the
rise
in
interest
rates
in
Europe,
continued
momentum
in
its
wealth
and
insurance
businesses,
controlled
expenses
and
more
normal
credit
costs.
U.K.-based
global
integrated
oil
company
BP
contributed
to
relative
returns,
as
it
delivered
repeated,
strong
earnings
reports
driven
by
positive
results
in
its
refining,
trading,
and
retail
businesses,
along
with
the
benefit
of
higher
commodity
prices.
Results
at
its
gas
business
were
also
ahead
of
expectations.
BP
continues
to
pay
down
debt
and
use
its
excess
cash
to
buy
back
shares,
while
also
raising
its
dividend
by
10%,
and
it
continues
to
execute
on
transforming
the
company
into
an
integrated
energy
company.
U.K.-based
defense
contractor
BAE
Systems
contributed
to
relative
returns,
as
the
Russian
invasion
of
Ukraine
prompted
Germany,
and
several
other
European
countries,
to
commit
to
increasing
their
defense
spending.
Germany
said
it
would
spend
2%
of
its
gross
domestic
product
on
defense,
marking
a
significant
increase
and
BAE
is
a
likely
recipient
of
some
of
that
additional
spending,
in
our
view.
During
the
12-month
period,
investments
that
detracted
from
Fund
performance
included
adidas,
Capgemini
and
Fresenius.
Adidas,
a
Germany-based,
athletic
apparel
maker,
detracted
from
relative
returns.
In
addition
to
dealing
with
lockdowns
and
a
loss
of
market
share
in
China,
the
Russia
business
falling
away,
ongoing
supply-chain
issues
and
a
lack
of
a
new
chief
executive
officer,
adidas
announced
during
the
month
that
it
was
ending
its
relationship
with
Kanye
West.
The
Kanye
business
accounts
for
about
7-8%
of
adidas’s
revenue
and
around
a
third
of
normalized
earnings
before
interest
and
taxes
and
represented
one
of
the
strongest
parts
of
the
adidas
brand.
Capgemini,
a
multinational
information
technology
(IT)
services
and
consulting
firm,
detracted
from
relative
performance
despite
strong
recent
earnings
which
showed
organic
sales
up
strongly
and
robust
demand
for
digital
services
across
the
industries
it
serves.
The
market
is
concerned
about
full-year
2023
guidance
in
the
face
of
rising
recession
risks
which
could
impact
IT
services
spending.
We
believe
the
company
is
strongly
positioned
in
the
industry
and
can
withstand
any
potential
downturn
in
the
economy.
German
health
care
services
company
Fresenius
hindered
relative
performance
during
the
period.
There
were
concerns
about
the
dialysis
industry
after
rival
DaVita
(not
a
Fund
holding)
lost
a
U.S.
Supreme
Court
case.
Also,
Fresenius
cut
guidance
due
to
labor
shortages
and
cost
inflation
in
its
dialysis
business.
We
believe
the
company’s
current
valuation
is
too
low,
and
that
a
recent
change
in
its
chief
executive
may
bring
positive
changes.
Top
10
Industries
12/31/22
%
of
Total
Net
Assets
a
Insurance
9.0%
Banks
8.9%
Diversified
Telecommunication
Services
8.7%
Oil,
Gas
&
Consumable
Fuels
6.3%
Pharmaceuticals
6.1%
Beverages
5.1%
Trading
Companies
&
Distributors
4.9%
Machinery
4.3%
Textiles,
Apparel
&
Luxury
Goods
3.5%
Metals
&
Mining
3.0%
Top
10
Holdings
12/31/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
BNP
Paribas
SA
4.1%
Banks,
France
ING
Groep
NV
4.1%
Banks,
Netherlands
BP
plc
3.5%
Oil,
Gas
&
Consumable
Fuels,
United
Kingdom
ASR
Nederland
NV
3.4%
Insurance,
Netherlands
Novartis
AG
3.2%
Pharmaceuticals,
Switzerland
Deutsche
Telekom
AG
3.1%
Diversified
Telecommunication
Services,
Germany
Rio
Tinto
plc
3.0%
Metals
&
Mining,
Australia
Koninklijke
KPN
NV
3.0%
Diversified
Telecommunication
Services,
Netherlands
Covestro
AG
2.9%
Chemicals,
Germany
GSK
plc
2.9%
Pharmaceuticals,
United
States
Franklin
Mutual
European
Fund
14
franklintempleton.com
Annual
Report
During
the
period,
the
Fund
held
currency
forwards
and
futures,
seeking
to
hedge
a
significant
portion
of
the
currency
risk
in
the
portfolio.
The
hedges
had
a
positive
overall
impact
on
the
Fund’s
performance
as
the
U.S.
dollar
substantially
rose
against
a
number
of
European
currencies
during
the
period.
Although
the
Fund
performed
better
than
its
secondary
benchmark
and
only
modestly
underperformed
its
primary
benchmark,
as
fellow
shareholders,
we
found
recent
absolute
and
relative
performance
against
its
primary
benchmark
disappointing.
Our
strategy
of
seeking
undervalued
stocks
can
lag
the
European
value
equity
markets
at
times,
but
we
remain
committed
to
our
disciplined,
value
investment
approach
as
we
seek
to
generate
attractive,
long-term,
risk-adjusted
returns
for
shareholders.
Thank
you
for
your
participation
in
Franklin
Mutual
European
Fund.
We
look
forward
to
continuing
to
serve
your
investment
needs.
Katrina
Dudley,
CFA
Co-Lead
Portfolio
Manager
Mandana
Hormozi
Co-Lead
Portfolio
Manager
Todd
Ostrow
Assistant
Portfolio
Manager
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
December
31,
2022,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
Performance
Summary
as
of
December
31,
2022
Franklin
Mutual
European
Fund
15
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
12/31/2
2
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A:
5.50%
maximum
initial
sales
charge;
For
other
share
classes,
visit
franklintempleton.com
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
Z
1-Year
-0.70%
4
-0.70%
4
5-Year
+17.90%
+3.35%
10-Year
+63.49%
+5.04%
A
5
1-Year
-0.97%
4
-6.43%
5-Year
+16.45%
+1.94%
10-Year
+59.22%
+4.17%
See
page
17
for
Performance
Summary
footnotes.
Franklin
Mutual
European
Fund
Performance
Summary
16
franklintempleton.com
Annual
Report
See
page
17
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
indexes
include
reinvestment
of
any
income
or
distributions.
They
differ
from
the
Fund
in
composition
and
do
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
Z
(
12/31/12–12/31/22)
Class
A
(12/31/12–12/31/22)
Franklin
Mutual
European
Fund
Performance
Summary
17
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Value
securities
may
not
increase
in
price
as
anticipated
or
may
decline
further
in
value.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surround-
ing
regions
than
a
fund
that
is
more
broadly
diversified
geographically.
The
Fund’s
investments
in
smaller-company
stocks
carry
an
increased
risk
of
price
fluctuation,
especially
over
the
short
term.
The
Fund’s
investments
in
companies
engaged
in
mergers,
reorganizations
or
liquidations
also
involve
special
risks
as
pending
deals
may
not
be
completed
on
time
or
on
favorable
terms.
The
manager’s
portfolio
selection
strategy
is
not
solely
based
on
ESG
considerations,
and
therefore
the
issuers
in
which
the
Fund
invests
may
not
be
considered
ESG-focused
companies.
Integrating
ESG
considerations
into
the
investment
process
is
not
a
guarantee
that
better
performance
will
be
achieved.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
Russia’s
military
invasion
of
Ukraine
in
February
2022,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
im-
posed
broad-ranging
economic
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
invasion
of
Ukraine.
The
United
States
and
other
countries
have
also
imposed
economic
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
military
invasion.
These
sanctions,
as
well
as
any
other
economic
consequences
related
to
the
invasion,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
economic
sanctions
related
to
the
invasion.
1.
The
total
annual
operating
expenses
are
as
of
the
Fund's
prospectus
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Total
return
information
is
based
on
net
asset
values
calculated
for
shareholder
transactions.
Certain
adjustments
were
made
to
the
net
assets
of
the
Fund
at
12/31/22
for
financial
reporting
purposes.
Accordingly,
adjusted
total
returns
have
been
disclosed
in
the
Financial
Highlights
and
differ
from
those
reported
here.
5.
Prior
to
9/10/18,
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
6.
Source:
FactSet.
The
MSCI
Europe
Value
Index-NR
(Local
Currency
and
USD)
is
a
market
capitalization-weighted
index
designed
to
measure
the
performance
of
stocks
exhibiting
overall
value
style
characteristics
in
European
developed
markets.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
7.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(1/1/22–12/31/22)
Share
Class
Net
Investment
Income
Z
$0.6961
A
$0.6448
C
$0.4346
R
$0.6058
R6
$0.7158
Total
Annual
Operating
Expenses
7
Share
Class
Z
1.07%
A
1.32%
Your
Fund’s
Expenses
Franklin
Mutual
European
Fund
18
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
7/1/22
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
a
Net
Annualized
Expense
Ratio
2
Z
$1,000
$1,081.30
$4.85
$1,020.55
$4.71
0.92%
A
$1,000
$1,079.80
$6.15
$1,019.29
$5.97
1.17%
C
$1,000
$1,075.60
$10.09
$1,015.48
$9.80
1.93%
R
$1,000
$1,078.10
$7.40
$1,018.09
$7.18
1.41%
R6
$1,000
$1,081.30
$4.40
$1,020.98
$4.27
0.84%
19
franklintempleton.com
Annual
Report
Franklin
Mutual
Financial
Services
Fund
This
annual
report
for
Franklin
Mutual
Financial
Services
Fund
covers
the
fiscal
year
ended
December
31
,
2022
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
appreciation,
which
may
occasionally
be
short
term.
Its
secondary
goal
is
income.
Under
normal
market
conditions,
the
Fund
invests
at
least
80%
of
its
net
assets
in
securities
of
financial
services
companies
that
we
believe
are
available
at
market
prices
less
than
their
fundamental
value.
The
Fund
invests
primarily
in
undervalued
equity
securities,
mainly
common
stocks
with
a
substantial
focus
on
mid-
and
large
cap
companies
and
may
invest
a
significant
portion
of
its
equity
portfolio
in
small-cap
companies.
To
a
significantly
lesser
extent,
the
Fund
also
invests
in
merger
arbitrage
securities
and
the
debt
and
equity
of
distressed
companies.
The
Fund
may
invest
in
foreign
securities
without
limit.
The
Geographic
Composition
table
on
this
page
lists
the
leading
countries
where
the
Fund
invests.
Performance
Overview
The
Fund’s
Class
Z
shares
posted
a
-4.76%
cumulative
total
return
for
the
12
months
ended
December
31,
2022.
For
comparison,
the
Fund’s
primary
benchmark,
the
MSCI
World
Financials
Index-NR
(USD),
which
captures
large-
and
mid-cap
financials
sector
representation
across
developed
market
countries,
posted
a
-10.19%
cumulative
total
return.
1
Also
for
comparison,
the
Standard
&
Poor’s
®
500
(S&P
500
®
)
Financials
Index,
which
consists
of
all
financial
stocks
in
the
S&P
500
®
,
posted
a
-10.53%
cumulative
total
return.
1
You
can
find
more
of
the
Fund’s
performance
data
in
the
Performance
Summary
beginning
on
page
22
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236.
Investment
Strategy
We
strive
to
provide
investors
with
superior
risk-adjusted
returns
over
time
through
our
distinctive,
value
investment
style,
which
includes
investments
in
undervalued
common
stocks,
and
to
a
significantly
lesser
extent,
distressed
debt
and
merger
arbitrage.
Rigorous
fundamental
analysis
drives
our
investment
process.
We
attempt
to
determine
each
investment’s
intrinsic
value
as
well
as
the
price
at
which
we
would
be
willing
to
commit
shareholder
funds.
While
valuation
remains
our
key
consideration,
we
utilize
numerous
fundamental
factors
such
as
return
on
equity,
financial
leverage
and
long-term
earnings
power.
We
also
consider
factors
such
as
management
quality
and
competitive
position.
As
always,
our
approach
to
investing
is
as
much
about
assessing
risk
and
containing
losses
as
it
is
about
achieving
profits.
In
addition,
it
is
our
practice
to
hedge
the
Fund’s
currency
exposure
when
we
deem
it
advantageous
for
our
shareholders.
Manager’s
Discussion
During
2022,
an
underweight
in
the
capital
markets
industry,
stock
selection
in
banks
and
an
overweight
in
insurance
boosted
relative
returns.
Meanwhile,
outside
the
benchmark
exposure
to
media,
real
estate
investment
trusts
and
information
technology
(IT)
services
curbed
relative
performance.
The
Portfolio
Composition
table
on
page
20
lists
the
industries
in
which
the
Fund
primarily
invests,
some
of
which
are
listed
above.
Geographic
Composition
12/31/22
%
of
Total
Net
Assets
United
States
57.0%
Netherlands
11.2%
United
Kingdom
5.9%
Italy
4.1%
France
4.0%
Germany
3.6%
Ireland
3.5%
Jordan
2.9%
China
1.9%
Spain
1.2%
Other
0.9%
Short-Term
Investments
&
Other
Net
Assets
3.8%
1.
Source:
Morningstar.
The
indexes
are
unmanaged
and
include
reinvestment
of
any
income
or
distributions.
They
do
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
68
.
Franklin
Mutual
Financial
Services
Fund
20
franklintempleton.com
Annual
Report
Top
positive
contributors
to
performance
during
the
12-month
period
included
CaixaBank,
Everest
Re
Group
and
Alleghany.
Everest
Re
Group
is
listed
among
the
Fund’s
largest
positions
in
the
Top
10
Holdings
table
on
this
page.
CaixaBank,
the
largest
bank
in
Spain
following
the
2021
acquisition
of
Bankia,
supported
relative
results.
During
2022,
Caixa
returned
EUR
1.8
billion
of
excess
capital
to
shareholders
via
a
share
repurchase
program
on
top
of
the
normal
dividend
payout.
In
addition,
the
company
recently
said
that
it
sees
higher-than-expected
return
on
tangible
equity
by
2024,
given
the
rise
in
interest
rates
in
Europe,
continued
momentum
in
its
wealth
and
insurance
businesses,
controlled
expenses
and
more
normal
credit
costs.
Everest
Re,
a
Bermuda-based
reinsurer
that
has
operations
in
the
U.S.,
contributed
to
relative
performance
in
the
period,
after
the
company’s
management
sounded
confident
after
its
latest
earnings
report
that
the
company
would
be
able
to
benefit
from
a
hardening
pricing
market,
following
Hurricane
Ian
and
the
conservatism
of
its
catastrophe
loss
estimate
in
the
third
quarter.
New
York-based
property
and
casualty
insurer
and
reinsurer
Alleghany
was
a
relative
contributor
after
it
agreed
to
be
acquired
by
Berkshire
Hathaway
(not
a
Fund
holding)
for
$11.6
billion
in
cash.
During
the
12-month
period,
investments
that
detracted
from
Fund
performance
included
Loyalty
Ventures,
Vornado
Realty
Trust
and
Bread
Financial.
Texas-based
Loyalty
Ventures
detracted
from
relative
returns,
due
to
weak
earnings
and
a
cut
in
guidance
related
to
the
loss
of
a
major
contract
in
its
AIR
MILES
®
reward
program
business
and
weak
consumer
sentiment
in
Europe. The
company
is
catching
up
on
years
of
underinvestment,
which
should
help
strengthen
business
over
the
long
run.
We
believe
that
the
stock
is
currently
thinly
covered
and
poorly
understood,
but
we
expect
that
once
the
stockholder
base
settles
down
and
the
current
earnings
volatility
passes,
Loyalty
Ventures
should
begin
to
perform
better.
The
company
also
recently
announced
contract
extensions
with
some
large
customers,
which
should
help
alleviate
concerns
about
market
share
loss.
U.S.-based
property
operator
Vornado
Realty
Trust
detracted
from
relative
results
amid
continued
uncertainty
surrounding
the
environment
for
office
leasing,
particularly
in
parts
of
New
York
City,
its
exposure
to
retail
space
as
well
as
higher
interest
rates
affecting
borrowing
costs
for
its
variable
rate
debt. We
believe
the
current
price
assigns
an
overly
punitive
valuation
of
Vornado’s
current
property
portfolio.
Bread
Financial,
a
U.S.-based
leading
provider
of
private
label/co-branded
credit
card
and
loyalty
solutions
to
retailers,
hindered
relative
performance
following
recent
poor
quarterly
earnings
and
concerns
about
the
loss
of
a
major
credit
card
customer.
Additionally,
concern
regarding
a
potential
downturn
in
the
U.S.
economy,
which
could
lead
to
elevated
credit
losses,
has
depressed
the
stock
price.
We
expect
Bread
Financial
to
continue
to
make
progress
in
building
its
platform
through
new
customer
and
program
acquisitions.
Additionally,
we
expect
that
Bread
Financial
should
be
able
to
withstand
a
rise
in
credit
losses
due
to
a
more
difficult
macroeconomic
backdrop.
Portfolio
Composition
12/31/22
%
of
Total
Net
Assets
Banks
36.7%
Insurance
34.2%
Capital
Markets
6.5%
Diversified
Financial
Services
4.4%
IT
Services
3.8%
Consumer
Finance
2.9%
Household
Durables
2.8%
Real
Estate
Management
&
Development
2.4%
Trading
Companies
&
Distributors
1.3%
Equity
Real
Estate
Investment
Trusts
(REITs)
1.1%
Other
0.1%
Short-Term
Investments
&
Other
Net
Assets
3.8%
Top
10
Holdings
12/31/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Willis
Towers
Watson
plc
4.1%
Insurance,
United
States
UniCredit
SpA
4.1%
Banks,
Italy
ING
Groep
NV
4.1%
Banks,
Netherlands
BNP
Paribas
SA
4.0%
Banks,
France
Everest
Re
Group
Ltd.
3.9%
Insurance,
United
States
ASR
Nederland
NV
3.8%
Insurance,
Netherlands
Direct
Line
Insurance
Group
plc
3.7%
Insurance,
United
Kingdom
Citizens
Financial
Group,
Inc.
3.7%
Banks,
United
States
Hartford
Financial
Services
Group,
Inc.
(The)
3.6%
Insurance,
United
States
Deutsche
Bank
AG
3.6%
Capital
Markets,
Germany
Franklin
Mutual
Financial
Services
Fund
21
franklintempleton.com
Annual
Report
During
the
period,
the
Fund
held
currency
forwards
and
futures,
seeking
to
hedge
a
significant
portion
of
the
currency
risk
in
the
portfolio.
The
hedges
had
a
positive
overall
impact
on
the
Fund’s
performance
as
the
U.S.
dollar
rose
against
most
currencies
during
the
period.
Although
the
Fund
performed
better
than
its
benchmarks,
as
fellow
shareholders,
we
found
recent
absolute
performance
disappointing.
However,
we
remain
committed
to
our
disciplined,
value
investment
approach
as
we
seek
to
generate
attractive,
long-term,
risk-adjusted
returns
for
shareholders.
Thank
you
for
your
participation
in
Franklin
Mutual
Financial
Services
Fund.
We
look
forward
to
continuing
to
serve
your
investment
needs.
Andrew
Dinnhaupt,
CFA
Lead
Portfolio
Manager
Luis
Hernandez
Portfolio
Manager
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
December
31,
2022,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
Performance
Summary
as
of
December
31,
2022
Franklin
Mutual
Financial
Services
Fund
22
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
12/31/2
2
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A:
5.50%
maximum
initial
sales
charge;
For
other
share
classes,
visit
franklintempleton.com
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
Z
1-Year
-4.76%
-4.76%
5-Year
+9.77%
+1.88%
10-Year
+111.13%
+7.76%
A
4
1-Year
-4.99%
-10.22%
5-Year
+8.44%
+0.49%
10-Year
+105.65%
+6.87%
See
page
24
for
Performance
Summary
footnotes.
Franklin
Mutual
Financial
Services
Fund
Performance
Summary
23
franklintempleton.com
Annual
Report
See
page
24
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
indexes
include
reinvestment
of
any
income
or
distributions.
They
differ
from
the
Fund
in
composition
and
do
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
Z
(
12/31/12–12/31/22)
Class
A
(12/31/12–12/31/22)
Franklin
Mutual
Financial
Services
Fund
Performance
Summary
24
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Value
securities
may
not
increase
in
price
as
anticipated
or
may
decline
further
in
value.
The
Fund
concentrates
its
investments
in
companies
operating
in
the
financial
services
industry,
and
is
particularly
sensitive
to
associated
risks,
including
interest
rate
risks,
economic
risks,
competition
and
political
risks.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instabili-
ty
and
political
developments.
Investing
in
a
single-sector
fund
involves
special
risks,
including
greater
sensitivity
to
economic,
political
or
regulatory
develop-
ments
impacting
the
sector.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
fund
that
is
more
broadly
diversified
geographically.
Smaller-company
stocks
have
exhibited
greater
price
volatility
than
larger-company
stocks,
particularly
over
the
short
term.
The
manager’s
portfolio
selection
strategy
is
not
solely
based
on
ESG
considerations,
and
therefore
the
issuers
in
which
the
Fund
invests
may
not
be
considered
ESG-focused
companies.
Integrating
ESG
considerations
into
the
investment
process
is
not
a
guarantee
that
better
performance
will
be
achieved.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
Russia’s
military
invasion
of
Ukraine
in
February
2022,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
im-
posed
broad-ranging
economic
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
invasion
of
Ukraine.
The
United
States
and
other
countries
have
also
imposed
economic
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
military
invasion.
These
sanctions,
as
well
as
any
other
economic
consequences
related
to
the
invasion,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
economic
sanctions
related
to
the
invasion.
1.
The
total
annual
operating
expenses
are
as
of
the
Fund's
prospectus
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Prior
to
9/10/18,
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
5.
Source:
FactSet.
The
MSCI
World
Financials
Index-NR
(USD)
captures
large-
and
mid-cap
financials
sector
representation
across
developed
market
countries.
Net
Re-
turns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
The
S&P
500
®
Financials
Index
is
market
capitalization-weighted
and
consists
of
all
financial
stocks
in
the
S&P
500
®
.
The
S&P
500
®
is
a
market
capitalization-weighted
index
of
500
stocks
designed
to
measure
total
U.S.
equity
market
performance.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(1/1/22–12/31/22)
Share
Class
Net
Investment
Income
Z
$0.5682
A
$0.5052
C
$0.2758
R6
$0.5957
Total
Annual
Operating
Expenses
6
Share
Class
Z
1.12%
A
1.37%
Your
Fund’s
Expenses
Franklin
Mutual
Financial
Services
Fund
25
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
7/1/22
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
a
Net
Annualized
Expense
Ratio
2
Z
$1,000
$1,093.50
$5.15
$1,020.29
$4.97
0.98%
A
$1,000
$1,092.20
$6.46
$1,019.03
$6.23
1.23%
C
$1,000
$1,087.60
$10.42
$1,015.22
$10.06
1.98%
R6
$1,000
$1,094.00
$4.53
$1,020.88
$4.37
0.86%
26
franklintempleton.com
Annual
Report
Franklin
Mutual
Global
Discovery
Fund
This
annual
report
for
Franklin
Mutual
Global
Discovery
Fund
covers
the
fiscal
year
ended
December
31,
2022.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
appreciation.
Under
normal
market
conditions,
the
Fund
invests
primarily
in
equity
securities
of
U.S.
and
foreign
companies
that
we
believe
are
available
at
market
prices
less
than
their
fundamental
value.
The
equity
securities
in
which
the
Fund
invests
are
primarily
common
stock,
with
a
current
focus
on
mid-
and
large
cap
companies.
To
a
lesser
extent,
the
Fund
also
invests
in
merger
arbitrage
securities
and
the
debt
and
equity
of
distressed
companies.
The
Fund
may
invest
a
substantial
portion,
potentially
up
to
100%
of
its
assets,
in
foreign
securities
and
participations
in
foreign
government
debt.
The
Geographic
Composition
table
on
this
page
lists
the
leading
countries
where
the
Fund
invests.
Performance
Overview
The
Fund’s
Class
Z
shares
posted
a
-4.74%
cumulative
total
return
for
the
12
months
ended
December
31,
2022.
In
comparison,
the
Fund’s
benchmark,
the
MSCI
World
Value
Index-NR
(USD),
which
measures
the
performance
of
stocks
exhibiting
overall
value
style
characteristics
in
global
developed
markets,
posted
a
-6.52
%
cumulative
total
return.
1
You
can
find
more
of
the
Fund’s
performance
data
in
the
Performance
Summary
beginning
on
page
29
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Investment
Strategy
At
Franklin
Mutual
Series,
we
are
committed
to
our
distinctive
value
approach
to
investing,
which
we
believe
can
generate
above-average
risk-adjusted
returns
over
time
for
our
shareholders.
Our
major
investment
strategy
is
investing
in
undervalued
stocks.
When
selecting
undervalued
equities,
we
are
attracted
to
what
we
believe
are
fundamentally
strong
companies
with
healthy
balance
sheets,
high-quality
assets,
substantial
free
cash
flow
and
shareholder-oriented
management
teams
and
whose
stocks
are
trading
at
discounts
to
our
assessment
of
the
companies’
intrinsic
or
business
value.
We
also
look
for
asset-rich
companies
whose
shares
may
be
trading
at
depressed
levels
due
to
concerns
over
short-term
earnings
disappointments,
litigation,
management
strategy
or
other
perceived
negatives.
This
strict
value
approach
is
not
only
intended
to
improve
the
likelihood
of
capital
appreciation,
but
also
reduces
the
risk
of
substantial
declines,
in
our
opinion.
While
the
vast
majority
of
our
undervalued
equity
and
debt
investments
are
made
in
publicly
traded
companies
globally,
we
may
invest
occasionally
in
privately
held
companies
as
well.
To
a
lesser
extent,
we
complement
this
more
traditional
investment
strategy
with
two
others.
One
is
distressed
investing,
a
highly
specialized
field
that
has
proven
quite
profitable
during
certain
periods
over
the
years.
Distressed
investing
is
complex
and
can
take
many
forms.
The
most
common
distressed
investment
the
Fund
undertakes
is
the
purchase
of
financially
troubled
or
bankrupt
companies’
debt
at
a
substantial
discount
to
face
value.
After
the
financially
distressed
company
is
reorganized,
often
in
bankruptcy
court,
the
old
debt
is
typically
replaced
with
new
securities
issued
by
the
financially
stronger
company.
Geographic
Composition
12/31/22
%
of
Total
Net
Assets
United
States
54.5%
Germany
10.1%
United
Kingdom
6.0%
France
5.4%
Japan
4.8%
Netherlands
3.8%
Switzerland
2.5%
Israel
2.5%
Ireland
2.4%
Australia
2.1%
South
Korea
1.6%
Canada
1.5%
Spain
1.1%
Other*
0.0%
Short-Term
Investments
&
Other
Net
Assets
1.7%
*
Rounds
to
less
than
0.1%
1.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
76
.
Franklin
Mutual
Global
Discovery
Fund
27
franklintempleton.com
Annual
Report
The
other
piece
of
our
investment
strategy
is
participating
in
arbitrage
situations,
another
highly
specialized
field.
When
companies
announce
proposed
mergers
or
takeovers,
commonly
referred
to
as
deals,
the
target
company
may
trade
at
a
discount
to
the
bid
it
ultimately
accepts.
One
form
of
arbitrage
involves
purchasing
the
target
company’s
stock
when
it
is
trading
below
the
value
we
believe
it
would
receive
in
a
deal.
In
keeping
with
our
commitment
to
a
relatively
conservative
investment
approach,
we
typically
focus
our
arbitrage
efforts
on
announced
deals,
and
avoid
rumored
deals
or
other
situations
we
consider
relatively
risky.
In
addition,
it
is
our
practice
to
hedge
the
Fund’s
currency
exposure
when
we
deem
it
advantageous
for
our
shareholders.
Manager’s
Discussion
Stock
selection
in
the
financials
and
consumer
staples
sectors,
as
well
as
an
underweight
in
real
estate,
contributed
to
relative
returns
during
2022.
Conversely,
stock
selection
and
an
overweight
in
communication
services,
as
well
as
stock
selection
in
materials
and
energy
curbed
relative
results.
The
Top
10
Industries
table
on
this
page
lists
the
industries
in
which
the
Fund
primarily
invests,
some
of
which
are
within
the
sectors
listed
above.
Top
positive
contributors
to
performance
during
the
12-month
period
included
BP,
Canadian
Natural
Resources
and
Williams.
BP
is
listed
among
the
Fund’s
largest
positions
in
the
Top
10
Holdings
table
on
this
page.
U.K.-based
global
integrated
oil
company
BP
contributed
to
relative
returns,
as
it
delivered
repeated,
strong
earnings
reports
driven
by
positive
results
in
its
refining,
trading,
and
retail
businesses,
along
with
the
benefit
of
higher
commodity
prices.
Results
at
its
natural
gas
business
were
also
ahead
of
expectations.
BP
continues
to
pay
down
debt
and
use
its
excess
cash
to
buy
back
shares,
while
also
hiking
its
dividend
10%,
and
it
continues
to
execute
on
transforming
the
company
into
an
integrated
energy
company.
Canadian
Natural
Resources,
an
oil
and
gas
company,
bolstered
relative
performance
during
the
period
as
rising
oil
prices
supported
the
sector.
The
company
further
benefited
from
robust
earnings
and
news
it
was
significantly
raising
its
dividend.
Canadian
Natural
Resources
generates
significant
amounts
of
excess
free
cash
flow
and
is
highly
disciplined
with
its
capital.
Its
carbon
footprint
also
is
improving
faster
than
generally
perceived.
During
the
year,
we
sold
the
position
given
the
strength
in
the
share
price.
U.S.-based
energy
infrastructure
company
Williams
was
a
significant
relative
contributor,
amid
improving
investor
sentiment
toward
the
energy
sector.
Greater
appreciation
of
both
continued
growth
prospects
and
the
strong
contribution
Williams’
assets
can
make
to
decarbonization
also
benefited
the
company’s
share
price
performance.
Additionally,
Williams
stands
to
benefit
from
an
expected
increase
in
liquid
natural
gas
exports
from
the
United
States
as
efforts
to
reduce
Europe’s
reliance
on
Russian
gas
take
hold.
Williams
generates
good
free
cash
flow,
financial
results
tend
to
be
stable,
and
it
is
our
opinion
the
reinvestment
opportunities
have
been
underappreciated.
During
the
12-month
period,
investments
that
detracted
from
Fund
performance
included
Charter
Communications,
Walt
Disney
and
Western
Digital.
Top
10
Industries
12/31/22
%
of
Total
Net
Assets
a
Health
Care
Providers
&
Services
7.6%
Banks
7.6%
Pharmaceuticals
6.4%
Insurance
6.0%
Oil,
Gas
&
Consumable
Fuels
5.8%
IT
Services
5.0%
Food
Products
4.3%
Entertainment
3.2%
Technology
Hardware,
Storage
&
Peripherals
2.8%
Automobiles
2.7%
Top
10
Holdings
12/31/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
BP
plc
2.7%
Oil,
Gas
&
Consumable
Fuels,
United
Kingdom
Deutsche
Telekom
AG
2.6%
Diversified
Telecommunication
Services,
Germany
Novartis
AG
2.5%
Pharmaceuticals,
Switzerland
AerCap
Holdings
NV
2.4%
Trading
Companies
&
Distributors,
Ireland
Parker-Hannifin
Corp.
2.3%
Machinery,
United
States
Siemens
AG
2.3%
Industrial
Conglomerates,
Germany
Kraft
Heinz
Co.
(The)
2.3%
Food
Products,
United
States
Schlumberger
Ltd.
2.2%
Energy
Equipment
&
Services,
United
States
Willis
Towers
Watson
plc
2.2%
Insurance,
United
States
DR
Horton,
Inc.
2.2%
Household
Durables,
United
States
Franklin
Mutual
Global
Discovery
Fund
28
franklintempleton.com
Annual
Report
Charter
Communications,
a
U.S.-based
cable
company,
hampered
relative
results
for
the
year.
Its
financial
results
showed
weak
broadband
subscriber
growth
and
the
company
announced
in
December
2022
that
capital
spending
would
be
higher
than
previous
forecasts
over
the
next
three
years,
reducing
free
cash
flow.
The
company
is
unlikely
to
see
revenue
growth
or
operating
expense
savings
to
offset
the
higher
capital
spending.
Over
the
longer
term,
we
expect
to
see
improved
subscriber
growth
trends
driving
higher
revenue
and
free
cash
flow
growth.
We
anticipate
Charter’s
share
price
appreciation
will
depend
on
growth
in
subscribers,
revenue,
and
earnings
before
interest,
taxes,
depreciation
and
amortization
(EBITDA)
over
the
next
few
years.
Also
in
the
communication
services
sector,
Walt
Disney,
a
media
and
entertainment
company,
was
a
detractor
in
2022,
following
disappointing
quarterly
results
late
in
the
year.
The
company
saw
higher
losses
at
its
direct-to-consumer
(DTC)
business
and
lower
operating
income
at
its
theme
parks.
Disney
believes
losses
have
peaked
in
its
DTC
business,
while
its
parks
business
saw
higher
expenses
but
also
record
high
attendance
and
guest
spending.
Forward
bookings
continued
to
be
strong.
In
November
2022,
following
the
earnings
report,
Disney
announced
that
it
would
be
bringing
back
Bob
Iger
as
chief
executive
officer.
Western
Digital,
a
hard
drive
and
data
storage
company,
was
a
relative
detractor.
The
company’s
near-term
outlook
was
much
weaker
than
analysts’
expectations
in
its
latest
quarter,
and
order
cuts
in
its
consumer-focused
businesses
as
well
as
weaker
pricing
negatively
affected
revenues
and
margins.
We
believe
the
tougher
macroeconomic
conditions
will
hinder
results
over
the
next
few
quarters.
During
the
period,
the
Fund
held
currency
forwards
and
futures,
seeking
to
hedge
a
significant
portion
of
the
currency
risk
in
the
portfolio.
The
hedges
had
a
positive
overall
impact
on
the
Fund’s
performance
as
the
U.S.
dollar
rose
against
most
currencies
during
the
period.
Although
the
Fund
performed
better
than
its
benchmark,
as
fellow
shareholders,
we
found
recent
absolute
performance
disappointing.
However,
we
remain
committed
to
our
disciplined,
value
investment
approach
as
we
seek
to
generate
attractive,
long-term,
risk-adjusted
returns
for
shareholders.
Thank
you
for
your
participation
in
Franklin
Mutual
Global
Discovery
Fund.
We
look
forward
to
continuing
to
serve
your
investment
needs.
Christian
Correa,
CFA
Katrina
Dudley,
CFA
Timothy
Rankin,
CFA
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
December
31,
2022,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
Performance
Summary
as
of
December
31,
2022
Franklin
Mutual
Global
Discovery
Fund
29
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
12/31/2
2
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A:
5.50%
maximum
initial
sales
charge;
For
other
share
classes,
visit
franklintempleton.com.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
Z
1-Year
-4.74%
4
-4.74%
4
5-Year
+21.28%
+3.93%
10-Year
+92.28%
+6.76%
A
5
1-Year
-4.99%
4
-10.21%
5-Year
+19.79%
+2.51%
10-Year
+87.27%
+5.87%
See
page
31
for
Performance
Summary
footnotes.
Franklin
Mutual
Global
Discovery
Fund
Performance
Summary
30
franklintempleton.com
Annual
Report
See
page
31
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
Z
(12/31/12–12/31/22)
Class
A
(12/31/12–12/31/22)
Franklin
Mutual
Global
Discovery
Fund
Performance
Summary
31
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Value
securities
may
not
increase
in
price
as
anticipated
or
may
decline
further
in
value.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments.
To
the
extent
that
the
Fund
focuses
on
particular
countries,
regions,
industries,
sectors
or
types
of
investment
from
time
to
time,
the
Fund
may
be
subject
to
greater
risks
of
adverse
developments
in
such
areas
of
focus
than
a
fund
that
invests
in
a
wider
variety
of
countries,
regions,
industries,
sectors
or
investments.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
fund
that
is
more
broadly
diversified
geographically.
Smaller-company
stocks
have
exhibited
greater
price
volatility
than
larger-company
stocks,
particularly
over
the
short
term.
The
Fund’s
investments
in
companies
engaged
in
mergers,
reorganizations
or
liquidations
also
involve
special
risks
as
pending
deals
may
not
be
completed
on
time
or
on
favorable
terms.
The
Fund
may
invest
in
lower-rated
bonds,
which
entail
higher
credit
risk.
The
manager’s
portfolio
se-
lection
strategy
is
not
solely
based
on
ESG
considerations,
and
therefore
the
issuers
in
which
the
Fund
invests
may
not
be
considered
ESG-focused
companies.
Integrating
ESG
considerations
into
the
investment
process
is
not
a
guarantee
that
better
performance
will
be
achieved.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
Russia’s
military
invasion
of
Ukraine
in
February
2022,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
im-
posed
broad-ranging
economic
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
invasion
of
Ukraine.
The
United
States
and
other
countries
have
also
imposed
economic
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
military
invasion.
These
sanctions,
as
well
as
any
other
economic
consequences
related
to
the
invasion,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
economic
sanctions
related
to
the
invasion.
1.
Gross
expenses
are
the
Fund’s
total
annual
operating
expenses
as
of
the
Fund's
prospectus
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
Net
expenses
reflect
contractual
fee
waivers,
expense
caps
and/or
reimbursements,
which
cannot
be
terminated
prior
to
4/30/23
without
Board
consent.
Additional
amounts
may
be
voluntarily
waived
and/or
reimbursed
and
may
be
modified
or
discontinued
at
any
time
without
notice.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Total
return
information
is
based
on
net
asset
values
calculated
for
shareholder
transactions.
Certain
adjustments
were
made
to
the
net
assets
of
the
Fund
at
12/31/22
for
financial
reporting
purposes.
Accordingly,
adjusted
total
returns
have
been
disclosed
in
the
Financial
Highlights
and
differ
from
those
reported
here.
5.
Prior
to
9/10/18,
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
6.
Source:
FactSet.
MSCI
World
Value
Index-NR
(USD)
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
the
performance
of
stocks
exhibiting
overall
value
style
characteristics
in
global
developed
markets.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
7.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(1/1/22–12/31/22)
Share
Class
Net
Investment
Income
Long-Term
Capital
Gain
Total
Z
$0.5648
$2.2319
$2.7967
A
$0.4940
$2.2319
$2.7259
C
$0.2355
$2.2319
$2.4674
R
$0.4237
$2.2319
$2.6556
R6
$0.5917
$2.2319
$2.8236
Total
Annual
Operating
Expenses
7
Share
Class
With
Fee
Waiver
Without
Fee
Waiver
Z
1.02%
1.04%
A
1.27%
1.29%
Your
Fund’s
Expenses
Franklin
Mutual
Global
Discovery
Fund
32
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements
.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
7/1/22
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
a
Net
Annualized
Expense
Ratio
2
Z
$1,000
$1,052.30
$4.61
$1,020.71
$4.54
0.89%
A
$1,000
$1,051.10
$5.90
$1,019.45
$5.81
1.14%
C
$1,000
$1,046.60
$9.78
$1,015.65
$9.63
1.90%
R
$1,000
$1,049.30
$7.19
$1,018.19
$7.08
1.39%
R6
$1,000
$1,052.50
$4.13
$1,021.18
$4.07
0.80%
33
franklintempleton.com
Annual
Report
Franklin
Mutual
Quest
Fund
This
annual
report
for
Franklin
Mutual
Quest
Fund
covers
the
fiscal
year
ended
December
31
,
2022
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
appreciation,
which
may
occasionally
be
short
term.
The
secondary
goal
is
income.
Under
normal
market
conditions,
the
Fund
invests
substantially
to
primarily
in
equity
securities
of
U.S.
and
foreign
companies
that
we
believe
are
available
at
market
prices
less
than
their
fundamental
value.
The
equity
securities
in
which
the
Fund
invests
are
primarily
common
stock,
with
a
current
focus
on
mid-
and
large-cap
companies.
To
a
lesser
extent,
the
Fund
also
invests
in
merger
arbitrage
securities
and
the
debt
and
equity
of
distressed
companies.
The
Fund
may
invest
a
substantial
portion,
potentially
up
to
100%
of
its
assets,
in
foreign
securities
and
participations
in
foreign
government
debt.
The
Geographic
Composition
table
on
this
page
lists
the
leading
countries
where
the
Fund
invests.
Performance
Overview
The
Fund’s
Class
Z
shares
posted
a
-6.86%
cumulative
total
return
for
the
12
months
ended
December
31,
2022.
In
comparison,
the
Fund’s
primary
benchmark,
the
blended
70%
MSCI
World
Value
Index-NR
(USD)
+
30%
Bloomberg
U.S.
Corporate
High
Yield
Index
(Blended
Benchmark),
posted
a
-7.82%
cumulative
total
return.
1
Also
for
comparison,
the
Fund’s
secondary
benchmark,
the
MSCI
World
Value
Index-NR
(USD),
which
is
designed
to
measure
the
performance
of
stocks
exhibiting
overall
value
style
characteristics
in
global
developed
markets,
posted
a
-6.52%
cumulative
total
return.
2
Additionally,
the
Fund’s
third
benchmark,
the
Bloomberg
U.S.
Corporate
High
Yield
Index,
which
measures
the
performance
of
the
U.S.
dollar-
denominated,
high-yield,
fixed-rate
corporate
bond
market,
defined
as
the
middle
or
lower
ratings
of
Moody’s,
Standard
&
Poor’s
and
Fitch
(Ba1/BB+/BB+
or
below),
posted
a
-11.19%
cumulative
total
return.
2
You
can
find
more
of
the
Fund’s
performance
data
in
the
Performance
Summary
beginning
on
page
36
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Investment
Strategy
At
Franklin
Mutual
Series,
we
are
committed
to
our
distinctive
value
approach
to
investing,
which
we
believe
can
generate
above-average
risk-adjusted
returns
over
time
for
our
shareholders.
Our
major
investment
strategy
is
investing
in
undervalued
stocks.
When
selecting
undervalued
equities,
we
are
attracted
to
what
we
believe
are
fundamentally
strong
companies
with
healthy
balance
sheets,
high-quality
assets,
substantial
free
cash
flow
and
shareholder-oriented
management
teams
and
whose
stocks
are
trading
at
discounts
to
our
assessment
of
the
companies’
intrinsic
or
business
value.
We
also
look
for
asset-rich
companies
whose
shares
may
be
trading
at
depressed
levels
due
to
concerns
over
short-term
earnings
disappointments,
litigation,
management
strategy
or
other
perceived
negatives.
This
strict
value
approach
is
not
only
intended
to
improve
the
likelihood
of
capital
appreciation,
but
also
reduces
the
risk
of
substantial
declines,
in
our
opinion.
While
the
vast
majority
of
our
undervalued
equity
and
debt
investments
are
made
in
publicly
traded
companies
globally,
we
may
invest
occasionally
in
privately
held
companies
as
well.
To
a
lesser
extent,
we
complement
this
more
traditional
investment
strategy
with
two
others.
One
is
distressed
investing,
a
highly
specialized
field
that
has
proven
quite
Geographic
Composition
12/31/22
%
of
Total
Net
Assets
United
States
65.4%
United
Kingdom
5.8%
Netherlands
4.0%
Israel
3.7%
Germany
3.0%
Switzerland
2.1%
France
1.5%
Canada
1.1%
China
1.1%
Other
1.3%
Short-Term
Investments
&
Other
Net
Assets
11.0%
1.
Source:
FactSet.
The
Blended
Benchmark
was
calculated
internally.
2.
Source:
Morningstar.
The
indexes
are
unmanaged
and
include
reinvestment
of
any
income
or
distributions.
They
do
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
86
.
Franklin
Mutual
Quest
Fund
34
franklintempleton.com
Annual
Report
profitable
during
certain
periods
over
the
years.
Distressed
investing
is
complex
and
can
take
many
forms.
The
most
common
distressed
investment
the
Fund
undertakes
is
the
purchase
of
financially
troubled
or
bankrupt
companies’
debt
at
a
substantial
discount
to
face
value.
After
the
financially
distressed
company
is
reorganized,
often
in
bankruptcy
court,
the
old
debt
is
typically
replaced
with
new
securities
issued
by
the
financially
stronger
company.
The
other
piece
of
our
investment
strategy
is
participating
in
arbitrage
situations,
another
highly
specialized
field.
When
companies
announce
proposed
mergers
or
takeovers,
commonly
referred
to
as
deals,
the
target
company
may
trade
at
a
discount
to
the
bid
it
ultimately
accepts.
One
form
of
arbitrage
involves
purchasing
the
target
company’s
stock
when
it
is
trading
below
the
value
we
believe
it
would
receive
in
a
deal.
In
keeping
with
our
commitment
to
a
relatively
conservative
investment
approach,
we
typically
focus
our
arbitrage
efforts
on
announced
deals,
and
avoid
rumored
deals
or
other
situations
we
consider
relatively
risky.
In
addition,
it
is
our
practice
to
hedge
the
Fund’s
currency
exposure
when
we
deem
it
advantageous
for
our
shareholders.
Manager’s
Discussion
During
the
year,
security
selection
in
the
financials,
consumer
staples
and
industrials
sectors
bolstered
relative
performance.
Conversely,
stock
selection
in
health
care,
security
selection
and
an
overweight
in
communication
services
and
an
underweight
in
energy
hindered
relative
results.
The
Top
10
Industries
table
on
this
page
lists
the
industries
in
which
the
Fund
primarily
invests,
some
of
which
are
within
the
sectors
listed
above.
Top
positive
contributors
to
performance
during
the
12-month
period
included
British
American
Tobacco,
Everest
Re
Group
and
Check
Point
Software.
British
American
Tobacco
supported
relative
returns,
following
the
release
of
a
solid
earnings
report
during
the
second
half
of
the
review
period.
Revenues
were
up
on
an
acceleration
of
sales
of
its
next
generation
tobacco
products
and
good
pricing
in
combustible
products.
Looking
ahead,
the
company
sees
2-4%
revenue
growth
on
a
foreign
exchange
neutral
basis
and
is
making
progress
in
achieving
GBP5
billion
in
sales
from
next
generation
tobacco
products
by
2025.
Everest
Re,
a
Bermuda-based
reinsurer
that
has
operations
in
the
U.S.,
contributed
to
relative
performance
in
the
period,
after
the
company’s
management
sounded
confident
subsequent
to
its
latest
earnings
report
that
the
company
would
be
able
to
benefit
from
a
hardening
pricing
market,
following
Hurricane
Ian
and
the
conservatism
of
its
catastrophe
loss
estimate
in
the
third
quarter.
Check
Point
Software,
an
Israel-based
cybersecurity
company,
contributed
to
relative
returns.
After
several
quarters
of
strong
billings
growth,
Check
Point
has
seen
a
pickup
in
sales
growth.
As
the
market
comes
to
better
appreciate
the
faster
growth
at
Check
Point,
we
expect
the
shares
to
re-rate.
During
the
12-month
period,
investments
that
detracted
from
Fund
performance
included
Elanco
Animal
Health,
Charter
Communications
and
Walt
Disney.
Top
10
Industries
12/31/22
%
of
Total
Net
Assets
a
Insurance
11.8%
Pharmaceuticals
10.5%
Software
7.3%
Banks
6.9%
Media
6.2%
Entertainment
4.5%
Communications
Equipment
4.1%
Diversified
Telecommunication
Services
3.5%
Specialty
Retail
3.3%
IT
Services
2.9%
Top
10
Holdings
12/31/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
Sorenson
Communications
LLC
3.7%
Communications
Equipment,
United
States
First
Horizon
Corp.
3.7%
Banks,
United
States
Bausch
Health
Cos.,
Inc.
3.3%
Pharmaceuticals,
United
States
Activision
Blizzard,
Inc.
2.9%
Entertainment,
United
States
Direct
Line
Insurance
Group
plc
2.8%
Insurance,
United
Kingdom
Staples,
Inc.
2.6%
Specialty
Retail,
United
States
Tower
Semiconductor
Ltd.
2.3%
Semiconductors
&
Semiconductor
Equipment,
Israel
Veritas
US,
Inc.
/
Veritas
Bermuda
Ltd.
2.2%
Software,
United
States
Bausch
Health
Americas,
Inc.
2.1%
Pharmaceuticals,
United
States
Novartis
AG
2.1%
Pharmaceuticals,
Switzerland
Franklin
Mutual
Quest
Fund
35
franklintempleton.com
Annual
Report
Elanco
Animal
Health,
a
U.S.-based
animal
health
care
company,
detracted
from
relative
returns
as
the
company
faced
several
headwinds
that
affected
its
business,
including
general
economic
weakness,
currency
headwinds,
a
slower
recovery
from
COVID-19
lockdowns
in
China,
supply-chain
problems,
and
negative
safety
publicity
with
its
Seresto
collar.
These
concerns,
along
with
higher
interest
rates,
harmed
the
company’s
equity
value
due
to
its
high
financial
leverage.
We
expect
business
performance
to
improve
over
the
medium
term
with
better
execution,
increased
pricing,
and
a
focus
on
innovation
and
pipeline
progress.
In
addition,
management
is
committed
to
bringing
down
leverage
by
using
most
of
its
free
cash
flow
to
pay
down
debt.
Charter
Communications,
a
U.S.-based
cable
company,
hampered
relative
results
for
the
year.
Its
financial
results
showed
weak
broadband
subscriber
growth
and
the
company
announced
in
December
2022
that
capital
spending
would
be
higher
than
previous
forecasts
over
the
next
three
years,
reducing
free
cash
flow.
The
company
is
unlikely
to
see
revenue
growth
or
operating
expense
savings
to
offset
the
higher
capital
spending.
Over
the
longer
term,
we
expect
to
see
improved
subscriber
growth
trends
driving
higher
revenue
and
free
cash
flow
growth.
We
anticipate
Charter’s
share
price
appreciation
will
depend
on
growing
subscribers,
revenue,
and
earnngs
before
interest,
taxes,
depreciation
and
amortization
(EBITDA)
over
the
next
few
years.
Also
in
the
communication
services
sector,
Walt
Disney,
a
media
and
entertainment
company,
was
a
detractor
in
2022,
following
disappointing
quarterly
results
late
in
the
year.
The
company
saw
higher
losses
at
its
direct-to-consumer
(DTC)
business
and
lower
operating
income
at
its
theme
parks.
Disney
believes
losses
have
peaked
in
its
DTC
business,
while
its
parks
business
saw
higher
expenses
but
also
record
high
attendance
and
guest
spending.
Forward
bookings
continued
to
be
strong.
In
November
2022,
following
its
earnings
report,
Disney
announced
that
it
would
be
bringing
back
Bob
Iger
as
chief
executive
officer.
During
the
period,
the
Fund
held
currency
forwards
and
futures,
seeking
to
substantially
hedge
a
significant
portion
of
the
currency
risk
in
the
portfolio.
The
hedges
had
a
positive
overall
impact
on
the
Fund’s
performance
as
the
U.S.
dollar
rose
against
most
currencies
during
the
period.
Although
the
Fund
performed
better
than
its
primary
and
third
benchmarks
and
only
modestly
underperformed
its
secondary
benchmark,
as
fellow
shareholders,
we
found
recent
absolute
and
relative
performance
disappointing.
Our
strategy
of
seeking
undervalued
stocks
can
lag
the
value
equity
markets
at
times,
but
we
remain
committed
to
our
disciplined,
value
investment
approach
as
we
seek
to
generate
attractive,
long-term,
risk-adjusted
returns
for
shareholders.
Thank
you
for
your
participation
in
Franklin
Mutual
Quest
Fund.
We
look
forward
to
continuing
to
serve
your
investment
needs.
Keith
Luh,
CFA
Lead
Portfolio
Manager
Andrew
Dinnhaupt,
CFA
Portfolio
Manager
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
December
31,
2022,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
Performance
Summary
as
of
December
31,
2022
Franklin
Mutual
Quest
Fund
36
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
12/31/2
2
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A:
5.50%
maximum
initial
sales
charge;
For
other
share
classes,
visit
franklintempleton.com
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
Z
1-Year
-6.86%
-6.86%
5-Year
+6.42%
+1.25%
10-Year
+63.31%
+5.03%
A
4
1-Year
-7.16%
-12.28%
5-Year
+5.04%
-0.15%
10-Year
+58.97%
+4.15%
See
page
38
for
Performance
Summary
footnotes.
Franklin
Mutual
Quest
Fund
Performance
Summary
37
franklintempleton.com
Annual
Report
See
page
38
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
indexes
include
reinvestment
of
any
income
or
distributions.
They
differ
from
the
Fund
in
composition
and
do
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
Z
(
12/31/12–12/31/22)
Class
A
(12/31/12–12/31/22)
Franklin
Mutual
Quest
Fund
Performance
Summary
38
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Value
securities
may
not
increase
in
price
as
anticipated
or
may
decline
further
in
value.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments.
Because
the
Fund
may
invest
its
assets
in
companies
in
a
specific
region,
including
Europe,
it
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
Fund
that
is
more
broadly
diversified
geographically.
Smaller-company
stocks
have
exhibited
greater
price
volatility
than
larger-company
stocks,
particularly
over
the
short
term.
The
Fund’s
investments
in
companies
engaged
in
mergers,
reorganizations
or
liquidations
also
involve
special
risks
as
pending
deals
may
not
be
completed
on
time
or
on
favorable
terms.
The
Fund
may
invest
in
lower-rated
bonds,
which
entail
higher
credit
risk.
The
manager’s
portfolio
se-
lection
strategy
is
not
solely
based
on
ESG
considerations,
and
therefore
the
issuers
in
which
the
Fund
invests
may
not
be
considered
ESG-focused
companies.
Integrating
ESG
considerations
into
the
investment
process
is
not
a
guarantee
that
better
performance
will
be
achieved.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
Russia’s
military
invasion
of
Ukraine
in
February
2022,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
im-
posed
broad-ranging
economic
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
invasion
of
Ukraine.
The
United
States
and
other
countries
have
also
imposed
economic
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
military
invasion.
These
sanctions,
as
well
as
any
other
economic
consequences
related
to
the
invasion,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
economic
sanctions
related
to
the
invasion.
1.
The
total
annual
operating
expenses
are
as
of
the
Fund's
prospectus
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Prior
to
9/10/18,
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
5.
Source:
FactSet.
The
Blended
Benchmark
(70%
MSCI
World
Value
Index-NR
(USD)
+
30%
Bloomberg
U.S.
Corporate
High
Yield
Index)
is
a
combination
of
leading
global
stock
and
U.S.
high-yield
bond
indexes.
The
MSCI
World
Value
Index-NR
(USD)
is
a
free
float-adjusted,
market
capitalization-weighted
index
designed
to
measure
the
performance
of
stocks
exhibiting
overall
value
style
characteristics
in
global
developed
markets.
The
Bloomberg
U.S.
Corporate
High
Yield
Index
measures
the
perfor¬mance
of
the
U.S.
dollar-denominated,
high-yield,
fixed-rate
corporate
bond
market.
Securities
are
classified
as
high
yield
if
the
middle
rating
of
Moody’s,
S&P
and
Fitch
is
Ba1/BB+/
BB+
or
below.
Bonds
from
issuers
with
an
emerging
markets
(EM)
country
of
risk,
based
on
Bloomberg
EM
country
definition,
are
excluded.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(1/1/22–12/31/22)
Share
Class
Net
Investment
Income
Z
$0.4928
A
$0.4574
C
$0.3401
R
$0.4159
R6
$0.5011
Total
Annual
Operating
Expenses
6
Share
Class
Z
0.87%
A
1.12%
Your
Fund’s
Expenses
Franklin
Mutual
Quest
Fund
39
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Does
not
include
acquired
fund
fees
and
expenses.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
7/1/22
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
a
Net
Annualized
Expense
Ratio
2
Z
$1,000
$1,011.10
$3.77
$1,021.46
$3.79
0.74%
A
$1,000
$1,009.30
$5.03
$1,020.20
$5.06
0.99%
C
$1,000
$1,005.70
$8.81
$1,016.42
$8.86
1.74%
R
$1,000
$1,007.80
$6.29
$1,018.94
$6.33
1.24%
R6
$1,000
$1,011.00
$3.49
$1,021.74
$3.50
0.69%
40
franklintempleton.com
Annual
Report
Franklin
Mutual
Shares
Fund
This
annual
report
for
Franklin
Mutual
Shares
Fund
covers
the
fiscal
year
ended
December
31
,
2022
.
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
capital
appreciation,
which
may
occasionally
be
short
term.
The
secondary
goal
is
income.
Under
normal
market
conditions,
the
Fund
invests
primarily
in
equity
securities
of
U.S.
and
foreign
companies
that
we
believe
are
available
at
market
prices
less
than
their
fundamental
value.
The
equity
securities
in
which
the
Fund
invests
are
primarily
common
stock,
with
a
current
focus
on
mid-
and
large-cap
companies,
and
the
remaining
portion
in
smaller
companies.
To
a
lesser
extent,
the
Fund
also
invests
in
merger
arbitrage
securities
and
the
debt
and
equity
of
distressed
companies.
The
Fund
may
invest
up
to
35%
of
its
assets
in
foreign
securities
and
participations
in
foreign
government
debt.
The
Geographic
Composition
table
on
this
page
lists
the
leading
countries
where
the
Fund
invests.
Performance
Overview
The
Fund’s
Class
Z
shares
posted
a
-7.11%
cumulative
total
return
for
the
12
months
ended
December
31,
2022.
For
comparison,
the
Fund’s
benchmark,
the
Russell
1000
®
Value
Index,
which
measures
the
performance
of
the
large-
cap
value
segment
of
the
U.S.
equity
universe,
posted
a
-7.54%
cumulative
total
return
for
the
period
under
review.
1
You
can
find
more
of
the
Fund’s
performance
data
in
the
Performance
Summary
beginning
on
page
43
.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Investment
Strategy
At
Franklin
Mutual
Series,
we
are
committed
to
our
distinctive
value
approach
to
investing,
which
we
believe
can
generate
above-average
risk-adjusted
returns
over
time
for
our
shareholders.
Our
major
investment
strategy
is
investing
in
undervalued
stocks.
When
selecting
undervalued
equities,
we
are
attracted
to
what
we
believe
are
fundamentally
strong
companies
with
healthy
balance
sheets,
high-quality
assets,
substantial
free
cash
flow
and
shareholder-oriented
management
teams
and
whose
stocks
are
trading
at
discounts
to
our
assessment
of
the
companies’
intrinsic
or
business
value.
We
also
look
for
asset-rich
companies
whose
shares
may
be
trading
at
depressed
levels
due
to
concerns
over
short-term
earnings
disappointments,
litigation,
management
strategy
or
other
perceived
negatives.
This
strict
value
approach
is
not
only
intended
to
improve
the
likelihood
of
capital
appreciation,
but
also
reduces
the
risk
of
substantial
declines,
in
our
opinion.
While
the
vast
majority
of
our
undervalued
equity
and
debt
investments
are
made
in
publicly
traded
companies
globally,
we
may
invest
occasionally
in
privately
held
companies
as
well.
To
a
lesser
extent,
we
complement
this
more
traditional
investment
strategy
with
two
others.
One
is
distressed
investing,
a
highly
specialized
field
that
has
proven
quite
profitable
during
certain
periods
over
the
years.
Distressed
investing
is
complex
and
can
take
many
forms.
The
most
common
distressed
investment
the
Fund
undertakes
is
the
purchase
of
financially
troubled
or
bankrupt
companies’
debt
at
a
substantial
discount
to
face
value.
After
the
financially
distressed
company
is
reorganized,
often
in
bankruptcy
court,
the
old
debt
is
typically
replaced
with
new
securities
issued
by
the
financially
stronger
company.
Geographic
Composition*
12/31/22
%
of
Total
Net
Assets
United
States
91.7%
United
Kingdom
3.1%
Switzerland
2.3%
Netherlands
1.5%
Other**
0.0%
Short-Term
Investments
&
Other
Net
Assets
1.4%
*
The
Fund
held
6.9%
of
total
net
assets
in
foreign
securities.
**
Rounds
to
less
than
0.1%
1.
Source:
Morningstar.
Frank
Russell
Company
is
the
source
and
owner
of
the
trademarks,
service
marks
and
copyrights
related
to
the
Russell
Indexes.
Russell
®
is
a
trademark
of
Frank
Russell
Company.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund’s
portfolio.
Net
Returns
(NR)
include
income
net
of
tax
withholding
when
dividends
are
paid.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Schedule
of
Investments
(SOI).
The
SOI
begins
on
page
99
.
Franklin
Mutual
Shares
Fund
41
franklintempleton.com
Annual
Report
The
other
piece
of
our
investment
strategy
is
participating
in
arbitrage
situations,
another
highly
specialized
field.
When
companies
announce
proposed
mergers
or
takeovers,
commonly
referred
to
as
deals,
the
target
company
may
trade
at
a
discount
to
the
bid
it
ultimately
accepts.
One
form
of
arbitrage
involves
purchasing
the
target
company’s
stock
when
it
is
trading
below
the
value
we
believe
it
would
receive
in
a
deal.
In
keeping
with
our
commitment
to
a
relatively
conservative
investment
approach,
we
typically
focus
our
arbitrage
efforts
on
announced
deals,
and
avoid
rumored
deals
or
other
situations
we
consider
relatively
risky.
In
addition,
it
is
our
practice
to
hedge
the
Fund’s
currency
exposure
when
we
deem
it
advantageous
for
our
shareholders.
Manager’s
Discussion
In
2022,
stock
selection
in
financials,
information
technology
and
consumer
staples
contributed
to
relative
returns.
Conversely,
stock
selection
in
the
energy
sector,
along
with
overweighting
in
consumer
discretionary
and
communication
services,
curbed
relative
results.
The
Top
10
Industries
table
on
this
page
lists
the
industries
in
which
the
Fund
primarily
invests,
some
of
which
are
within
the
sectors
listed
above.
Top
positive
contributors
to
performance
during
the
12-month
period
included
BP,
Williams
and
Kraft
Heinz.
Kraft
Heinz
is
listed
among
the
Fund’s
largest
positions
in
the
Top
10
Holdings
table
on
this
page.
U.K.-based
global
integrated
oil
company
BP
contributed
to
relative
returns,
as
the
company
delivered
repeated,
strong
earnings
reports
driven
by
positive
results
in
its
refining,
trading,
and
retail
businesses,
along
with
the
benefit
of
higher
commodity
prices.
Results
at
its
natural
gas
business
were
also
ahead
of
expectations.
BP
continues
to
pay
down
debt
and
use
its
excess
cash
to
buy
back
shares,
while
also
hiking
its
dividend
10%,
and
it
continues
to
execute
on
transforming
the
company
into
an
integrated
energy
company.
U.S.-based
energy
infrastructure
company
Williams
was
a
significant
relative
contributor,
amid
improving
investor
sentiment
toward
the
energy
sector.
Greater
appreciation
of
both
continued
growth
prospects
and
the
strong
contribution
Williams’
assets
can
make
to
decarbonization
also
benefited
the
company’s
share
price
performance.
Additionally,
Williams
stands
to
benefit
from
an
expected
increase
in
liquid
natural
gas
exports
from
the
United
States
as
efforts
to
reduce
Europe’s
reliance
on
Russian
gas
take
hold.
Williams
generates
good
free
cash
flow,
financial
results
tend
to
be
stable,
and
it
is
our
opinion
the
reinvestment
opportunities
have
been
underappreciated.
Kraft
Heinz
contributed
to
relative
performance
during
the
period.
Kraft’s
management
team
is
pursuing
a
strategy
to
reinvigorate
certain
categories
and
brands
and
the
company
continues
to
prune
lower
growth
brands
to
position
it
for
better
growth
prospects
in
the
future.
Moreover,
Kraft’s
balance
sheet
has
materially
improved
over
the
past
several
years,
affording
it
increasing
financial
flexibility
toward
value
creating
capital
allocation.
During
the
12-month
period,
investments
that
detracted
from
Fund
performance
included
Charter
Communications,
Elanco
Animal
Health
and
Western
Digital.
Top
10
Industries
12/31/22
%
of
Total
Net
Assets
a
Banks
11.3%
Pharmaceuticals
8.2%
Health
Care
Providers
&
Services
6.0%
IT
Services
5.8%
Software
5.7%
Oil,
Gas
&
Consumable
Fuels
5.4%
Media
4.3%
Entertainment
4.0%
Insurance
3.6%
Textiles,
Apparel
&
Luxury
Goods
2.6%
Top
10
Holdings
12/31/22
Company
Industry
,
Country
%
of
Total
Net
Assets
a
a
JPMorgan
Chase
&
Co.
2.8%
Banks,
United
States
Tapestry,
Inc.
2.6%
Textiles,
Apparel
&
Luxury
Goods,
United
States
Parker-Hannifin
Corp.
2.6%
Machinery,
United
States
Schlumberger
Ltd.
2.6%
Energy
Equipment
&
Services,
United
States
DR
Horton,
Inc.
2.6%
Household
Durables,
United
States
Kraft
Heinz
Co.
(The)
2.5%
Food
Products,
United
States
CVS
Health
Corp.
2.5%
Health
Care
Providers
&
Services,
United
States
Johnson
Controls
International
plc
2.4%
Building
Products,
United
States
Bank
of
America
Corp.
2.4%
Banks,
United
States
CBRE
Group,
Inc.
2.4%
Real
Estate
Management
&
Development,
United
States
Franklin
Mutual
Shares
Fund
42
franklintempleton.com
Annual
Report
Charter
Communications,
a
U.S.-based
cable
company,
hampered
relative
results
for
the
year.
Its
financial
results
showed
weak
broadband
subscriber
growth
and
the
company
announced
in
December
2022
that
capital
spending
would
be
higher
than
previous
forecasts
over
the
next
three
years,
reducing
free
cash
flow.
The
company
is
unlikely
to
see
revenue
growth
or
operating
expense
savings
to
offset
the
higher
capital
spending,
in
our
view.
Over
the
longer
term,
we
expect
to
see
improved
subscriber
growth
trends
driving
higher
revenue
and
free
cash
flow
growth.
We
anticipate
Charter’s
share
price
appreciation
will
depend
on
growth
in
subscribers,
revenue,
and
earnings
before
interest,
taxes,
depreciation
and
amortization
(EBITDA)
over
the
next
few
years.
Elanco
Animal
Health,
a
U.S.-based
animal
health
care
company,
detracted
from
relative
returns
as
the
company
faced
several
headwinds
that
affected
its
business,
including
general
economic
weakness,
currency
headwinds,
a
slower
recovery
from
COVID-19
lockdowns
in
China,
supply-chain
problems,
and
negative
safety
publicity
with
its
Seresto
collar.
These
concerns,
along
with
higher
interest
rates,
harmed
the
company’s
equity
value
due
to
its
high
financial
leverage.
We
expect
business
performance
to
improve
over
the
medium
term
with
better
execution,
increased
pricing,
and
a
focus
on
innovation
and
pipeline
progress.
In
addition,
management
is
committed
to
bringing
down
leverage
by
using
most
of
its
free
cash
flow
to
pay
down
debt.
Western
Digital,
a
U.S.-based
hard
drive
and
data
storage
company,
was
a
relative
detractor.
The
company’s
near-
term
outlook
was
much
weaker
than
analysts’
expectations
in
its
latest
quarter,
and
order
cuts
in
its
consumer-
focused
businesses
as
well
as
weaker
pricing
negatively
affected
revenues
and
margins.
We
believe
the
tougher
macroeconomic
conditions
will
hinder
results
over
the
next
few
During
the
period,
the
Fund
held
currency
forwards
and
futures,
seeking
to
hedge
a
significant
portion
of
the
currency
risk
in
the
portfolio.
The
hedges
had
a
positive
overall
impact
on
the
Fund’s
performance
as
the
dollar
rose
against
most
currencies
during
the
period.
Although
the
Fund
performed
better
than
its
benchmark,
as
fellow
shareholders,
we
found
recent
absolute
performance
disappointing.
However,
we
remain
committed
to
our
disciplined,
value
investment
approach
as
we
seek
to
generate
attractive,
long-term,
risk-adjusted
returns
for
shareholders.
Thank
you
for
your
participation
in
Franklin
Mutual
Shares
Fund.
We
look
forward
to
continuing
to
serve
your
investment
needs.
Christian
Correa,
CFA
Co-Lead
Portfolio
Manager
Grace
Hoefig
Co-Lead
Portfolio
Manager
Debbie
A.
Turner,
CFA
Assistant
Portfolio
Manager
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
December
31,
2022,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
Performance
Summary
as
of
December
31,
2022
Franklin
Mutual
Shares
Fund
43
franklintempleton.com
Annual
Report
The
performance
table
and
graphs
do
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses
of
each
class.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
12/31/2
2
1
Cumulative
total
return
excludes
sales
charges.
Average
annual
total
return
includes
maximum
sales
charges.
Sales
charges
will
vary
depending
on
the
size
of
the
investment
and
the
class
of
share
purchased.
The
maximum
is
5.50%
and
the
minimum
is
0%.
Class
A:
5.50%
maximum
initial
sales
charge;
For
other
share
classes,
visit
franklintempleton.com.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
For
most
recent
month-end
performance,
go
to
franklintempleton.com
or
call
(800)
342-5236
.
Share
Class
Cumulative
Total
Return
2
Average
Annual
Total
Return
3
–
Z
1-Year
-7.11%
-7.11%
5-Year
+18.90%
+3.52%
10-Year
+98.19%
+7.08%
A
4
1-Year
-7.35%
-12.46%
5-Year
+17.44%
+2.11%
10-Year
+93.12%
+6.20%
See
page
45
for
Performance
Summary
footnotes.
Franklin
Mutual
Shares
Fund
Performance
Summary
44
franklintempleton.com
Annual
Report
See
page
45
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
Class
Z
(12/31/12–12/31/22)
Class
A
(12/31/12–12/31/22)
Franklin
Mutual
Shares
Fund
Performance
Summary
45
franklintempleton.com
Annual
Report
Each
class
of
shares
is
available
to
certain
eligible
investors
and
has
different
annual
fees
and
expenses,
as
described
in
the
prospectus.
All
investments
involve
risks,
including
possible
loss
of
principal.
Value
securities
may
not
increase
in
price
as
anticipated
or
may
decline
further
in
value.
Special
risks
are
associated
with
foreign
investing,
including
currency
fluctuations,
economic
instability
and
political
developments.
The
Fund’s
investments
in
companies
engaged
in
mergers,
reorganizations
or
liquidations
also
involve
special
risks
as
pending
deals
may
not
be
completed
on
time
or
on
favorable
terms.
The
Fund
may
invest
in
lower-rated
bonds,
which
entail
higher
credit
risk.
The
manager’s
portfolio
selection
strategy
is
not
solely
based
on
ESG
considerations,
and
therefore
the
issuers
in
which
the
Fund
invests
may
not
be
considered
ESG-focused
companies.
Integrating
ESG
considerations
into
the
investment
process
is
not
a
guarantee
that
better
performance
will
be
achieved.
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund’s
prospectus
also
includes
a
description
of
the
main
investment
risks.
Russia’s
military
invasion
of
Ukraine
in
February
2022,
the
resulting
responses
by
the
United
States
and
other
countries,
and
the
potential
for
wider
conflict
could
increase
volatility
and
uncertainty
in
the
financial
markets
and
adversely
affect
regional
and
global
economies.
The
United
States
and
other
countries
have
im-
posed
broad-ranging
economic
sanctions
on
Russia
and
certain
Russian
individuals,
banking
entities
and
corporations
as
a
response
to
its
invasion
of
Ukraine.
The
United
States
and
other
countries
have
also
imposed
economic
sanctions
on
Belarus
and
may
impose
sanctions
on
other
countries
that
support
Russia’s
military
invasion.
These
sanctions,
as
well
as
any
other
economic
consequences
related
to
the
invasion,
such
as
additional
sanctions,
boycotts
or
changes
in
consumer
or
purchaser
preferences
or
cyberattacks
on
governments,
companies
or
individuals,
may
further
decrease
the
value
and
liquidity
of
certain
Russian
securities
and
securities
of
issuers
in
other
countries
that
are
subject
to
economic
sanctions
related
to
the
invasion.
1.
The
total
annual
operating
expenses
are
as
of
the
Fund's
prospectus
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
2.
Cumulative
total
return
represents
the
change
in
value
of
an
investment
over
the
periods
indicated.
3.
Average
annual
total
return
represents
the
average
annual
change
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
4.
Prior
to
9/10/18,
these
shares
were
offered
at
a
higher
initial
sales
charge
of
5.75%,
thus
actual
returns
(with
sales
charges)
would
have
differed.
Average
annual
total
returns
(with
sales
charges)
have
been
restated
to
reflect
the
current
maximum
initial
sales
charge
of
5.50%.
5.
Source:
FactSet.
The
Russell
1000
®
Value
Index
is
market
capitalization
weighted
and
measures
the
performance
of
those
Russell
1000
®
Index
companies
with
relatively
lower
price-to-book
ratios
and
lower
forecasted
growth
rates.
Russell
1000
®
Index
is
market
capitalization
weighted
and
measures
the
performance
of
the
approximately
1,000
largest
companies
in
the
Russell
3000
®
Index,
which
represents
the
majority
of
the
U.S.
market’s
total
capitalization.
6.
Figures
are
as
stated
in
the
Fund’s
current
prospectus
and
may
differ
from
the
expense
ratios
disclosed
in
the
Your
Fund’s
Expenses
and
Financial
Highlights
sections
in
this
report.
In
periods
of
market
volatility,
assets
may
decline
significantly,
causing
total
annual
Fund
operating
expenses
to
become
higher
than
the
figures
shown.
See
www.franklintempletondatasources.com
for
additional
data
provider
information.
Distributions
(1/1/22–12/31/22)
Share
Class
Net
Investment
Income
Long-Term
Capital
Gain
Total
Z
$0.3718
$1.8398
$2.2116
A
$0.3114
$1.8398
$2.1512
C
$0.1230
$1.8398
$1.9628
R
$0.2461
$1.8398
$2.0859
R6
$0.3883
$1.8398
$2.2281
Total
Annual
Operating
Expenses
6
Share
Class
Z
0.81%
A
1.06%
Your
Fund’s
Expenses
Franklin
Mutual
Shares
Fund
46
franklintempleton.com
Annual
Report
As
a
Fund
shareholder,
you
can
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
(loads)
on
Fund
purchases
and
redemptions;
and
(2)
ongoing
Fund
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
Fund
expenses.
All
mutual
funds
have
ongoing
costs,
sometimes
referred
to
as
operating
expenses.
The
table
below
shows
ongoing
costs
of
investing
in
the
Fund
and
can
help
you
understand
these
costs
and
compare
them
with
those
of
other
mutual
funds.
The
table
assumes
a
$1,000
investment
held
for
the
six
months
indicated.
Actual
Fund
Expenses
The
table
below
provides
information
about
actual
account
values
and
actual
expenses
in
the
columns
under
the
heading
“Actual.”
In
these
columns
the
Fund’s
actual
return,
which
includes
the
effect
of
Fund
expenses,
is
used
to
calculate
the
“Ending
Account
Value”
for
each
class
of
shares.
You
can
estimate
the
expenses
you
paid
during
the
period
by
following
these
steps
(
of
course,
your
account
value
and
expenses
will
differ
from
those
in
this
illustration
):
Divide
your
account
value
by
$1,000
(
if
your
account
had
an
$8,600
value,
then
$8,600
÷
$1,000
=
8.6
).
Then
multiply
the
result
by
the
number
in
the
row
for
your
class
of
shares
under
the
headings
“Actual”
and
“Expenses
Paid
During
Period”
(
if
Actual
Expenses
Paid
During
Period
were
$7.50,
then
8.6
x
$7.50
=
$64.50
).
In
this
illustration,
the
actual
expenses
paid
this
period
are
$64.50.
Hypothetical
Example
for
Comparison
with
Other
Funds
Under
the
heading
“Hypothetical”
in
the
table,
information
is
provided
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
This
information
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period,
but
it
can
help
you
compare
ongoing
costs
of
investing
in
the
Fund
with
those
of
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
for
the
class
of
shares
you
hold
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
expenses
shown
in
the
table
are
meant
to
highlight
ongoing
costs
and
do
not
reflect
any
transactional
costs.
Therefore,
information
under
the
heading
“Hypothetical”
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
compare
total
costs
of
owning
different
funds.
In
addition,
if
transactional
costs
were
included,
your
total
costs
would
have
been
higher.
1.
Expenses
are
equal
to
the
annualized
expense
ratio
for
the
six-month
period
as
indicated
above—in
the
far
right
column—multiplied
by
the
simple
average
account
value
over
the
period
indicated,
and
then
multiplied
by
184/365
to
reflect
the
one-half
year
period.
2.
Reflects
expenses
after
fee
waivers
and
expense
reimbursements.
Actual
(actual
return
after
expenses)
Hypothetical
(5%
annual
return
before
expenses)
Share
Class
Beginning
Account
Value
7/1/22
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
Ending
Account
Value
12/31/22
Expenses
Paid
During
Period
7/1/22–12/31/22
1,2
a
Net
Annualized
Expense
Ratio
2
Z
$1,000
$1,063.10
$3.70
$1,021.62
$3.63
0.71%
A
$1,000
$1,062.30
$5.00
$1,020.36
$4.90
0.96%
C
$1,000
$1,058.00
$8.88
$1,016.57
$8.70
1.71%
R
$1,000
$1,060.50
$6.30
$1,019.09
$6.17
1.21%
R6
$1,000
$1,063.50
$3.33
$1,021.98
$3.26
0.64%
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Beacon
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
47
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
Z
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$17.96
$16.48
$16.40
$13.76
$16.61
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.28
0.26
0.51
c
0.33
0.29
Net
realized
and
unrealized
gains
(losses)
...........
(2.45)
2.45
0.12
3.06
(1.68)
Total
from
investment
operations
....................
(2.17)
2.71
0.63
3.39
(1.39)
Less
distributions
from:
Net
investment
income
..........................
(0.23)
(0.37)
(0.45)
(0.36)
(0.31)
Net
realized
gains
.............................
(1.19)
(0.86)
(0.10)
(0.39)
(1.15)
Total
distributions
...............................
(1.42)
(1.23)
(0.55)
(0.75)
(1.46)
Net
asset
value,
end
of
year
.......................
$14.37
$17.96
$16.48
$16.40
$13.76
Total
return
....................................
(11.67)%
16.68%
4.08%
24.96%
(8.24)%
Ratios
to
average
net
assets
Expenses
d,e
....................................
0.77%
0.81%
0.82%
0.81%
f
0.80%
f
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
g
0.01%
0.02%
0.02%
0.01%
Net
investment
income
...........................
1.73%
1.41%
3.56%
c
2.11%
1.77%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,010,947
$2,508,213
$2,320,077
$2,600,744
$2,271,217
Portfolio
turnover
rate
............................
49.68%
40.89%
42.37%
30.72%
47.20%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.56%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Beacon
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
48
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$17.76
$16.30
$16.24
$13.63
$16.47
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.23
0.21
0.47
c
0.29
0.25
Net
realized
and
unrealized
gains
(losses)
...........
(2.42)
2.43
0.10
3.03
(1.67)
Total
from
investment
operations
....................
(2.19)
2.64
0.57
3.32
(1.42)
Less
distributions
from:
Net
investment
income
..........................
(0.19)
(0.32)
(0.41)
(0.32)
(0.27)
Net
realized
gains
.............................
(1.19)
(0.86)
(0.10)
(0.39)
(1.15)
Total
distributions
...............................
(1.38)
(1.18)
(0.51)
(0.71)
(1.42)
Net
asset
value,
end
of
year
.......................
$14.19
$17.76
$16.30
$16.24
$13.63
Total
return
d
...................................
(11.91)%
16.46%
3.75%
24.69%
(8.49)%
Ratios
to
average
net
assets
Expenses
e,f
....................................
1.02%
1.06%
1.07%
1.06%
g
1.05%
g
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
h
0.01%
0.02%
0.02%
0.01%
Net
investment
income
...........................
1.48%
1.16%
3.32%
c
1.86%
1.52%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$798,281
$987,817
$893,378
$1,028,482
$890,294
Portfolio
turnover
rate
............................
49.68%
40.89%
42.37%
30.72%
47.20%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.28
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.33%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Beacon
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
49
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$17.88
$16.37
$16.29
$13.65
$16.34
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.12
0.08
0.39
c
0.17
0.13
Net
realized
and
unrealized
gains
(losses)
...........
(2.43)
2.43
0.06
3.04
(1.65)
Total
from
investment
operations
....................
(2.31)
2.51
0.45
3.21
(1.52)
Less
distributions
from:
Net
investment
income
..........................
(0.06)
(0.14)
(0.27)
(0.18)
(0.02)
Net
realized
gains
.............................
(1.19)
(0.86)
(0.10)
(0.39)
(1.15)
Total
distributions
...............................
(1.25)
(1.00)
(0.37)
(0.57)
(1.17)
Net
asset
value,
end
of
year
.......................
$14.32
$17.88
$16.37
$16.29
$13.65
Total
return
d
...................................
(12.55)%
15.55%
2.96%
23.74%
(9.19)%
Ratios
to
average
net
assets
Expenses
e,f
....................................
1.77%
1.80%
1.82%
1.81%
g
1.80%
g
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
h
0.01%
0.02%
0.02%
0.01%
Net
investment
income
...........................
0.75%
0.43%
2.75%
c
1.11%
0.77%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$18,813
$27,853
$35,273
$52,620
$59,828
Portfolio
turnover
rate
............................
49.68%
40.89%
42.37%
30.72%
47.20%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.28
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.76%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Beacon
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
50
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$17.51
$16.09
$16.03
$13.46
$16.28
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.19
0.16
0.44
c
0.24
0.20
Net
realized
and
unrealized
gains
(losses)
...........
(2.38)
2.40
0.09
3.01
(1.64)
Total
from
investment
operations
....................
(2.19)
2.56
0.53
3.25
(1.44)
Less
distributions
from:
Net
investment
income
..........................
(0.16)
(0.28)
(0.37)
(0.29)
(0.23)
Net
realized
gains
.............................
(1.19)
(0.86)
(0.10)
(0.39)
(1.15)
Total
distributions
...............................
(1.35)
(1.14)
(0.47)
(0.68)
(1.38)
Net
asset
value,
end
of
year
.......................
$13.97
$17.51
$16.09
$16.03
$13.46
Total
return
....................................
(12.08)%
16.12%
3.49%
24.33%
(8.65)%
Ratios
to
average
net
assets
Expenses
d,e
....................................
1.27%
1.31%
1.32%
1.31%
f
1.30%
f
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
g
0.01%
0.02%
0.02%
0.01%
Net
investment
income
...........................
1.22%
0.92%
3.16%
c
1.61%
1.27%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$1,329
$1,388
$1,262
$1,769
$1,662
Portfolio
turnover
rate
............................
49.68%
40.89%
42.37%
30.72%
47.20%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.28
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.17%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Beacon
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
51
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$17.96
$16.47
$16.40
$13.75
$16.60
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.30
0.26
0.53
c
0.34
0.30
Net
realized
and
unrealized
gains
(losses)
...........
(2.46)
2.47
0.10
3.07
(1.68)
Total
from
investment
operations
....................
(2.16)
2.73
0.63
3.41
(1.38)
Less
distributions
from:
Net
investment
income
..........................
(0.24)
(0.38)
(0.46)
(0.37)
(0.32)
Net
realized
gains
.............................
(1.19)
(0.86)
(0.10)
(0.39)
(1.15)
Total
distributions
...............................
(1.43)
(1.24)
(0.56)
(0.76)
(1.47)
Net
asset
value,
end
of
year
.......................
$14.37
$17.96
$16.47
$16.40
$13.75
Total
return
....................................
(11.61)%
16.83%
4.08%
25.13%
(8.18)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
d
.....
0.71%
0.77%
0.78%
0.76%
0.75%
Expenses
net
of
waiver
and
payments
by
affiliates
d,e
.....
0.70%
0.75%
0.75%
0.74%
0.73%
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
f
0.01%
0.02%
0.02%
0.01%
Net
investment
income
...........................
1.83%
1.39%
3.67%
c
2.18%
1.84%
Supplemental
data
Net
assets,
end
of
year
(000���s)
.....................
$101,313
$151,226
$70,839
$90,220
$79,358
Portfolio
turnover
rate
............................
49.68%
40.89%
42.37%
30.72%
47.20%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.68%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Schedule
of
Investments,
December
31,
2022
Franklin
Mutual
Beacon
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
52
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
97.0%
Aerospace
&
Defense
3.0%
Airbus
SE
...........................................
France
744,047
$
88,464,915
Auto
Components
0.0%
†
a,b,c
International
Automotive
Components
Group
Brazil
LLC
........
Brazil
2,846,329
100,185
Banks
12.1%
BNP
Paribas
SA
......................................
France
1,247,577
71,032,708
ING
Groep
NV
.......................................
Netherlands
6,773,522
82,505,533
JPMorgan
Chase
&
Co.
.................................
United
States
981,594
131,631,755
b
SVB
Financial
Group
...................................
United
States
296,818
68,309,695
353,479,691
Beverages
3.3%
Heineken
NV
........................................
Netherlands
1,026,782
96,710,409
Building
Products
3.4%
Johnson
Controls
International
plc
.........................
United
States
1,574,077
100,740,928
Capital
Markets
3.7%
BlackRock,
Inc.
.......................................
United
States
154,529
109,503,885
Containers
&
Packaging
2.4%
International
Paper
Co.
.................................
United
States
2,027,054
70,196,880
Diversified
Telecommunication
Services
2.9%
Deutsche
Telekom
AG
..................................
Germany
4,316,623
85,882,049
Electrical
Equipment
2.8%
Sensata
Technologies
Holding
plc
.........................
United
States
2,051,263
82,830,000
Entertainment
2.1%
Activision
Blizzard,
Inc.
.................................
United
States
806,292
61,721,653
Equity
Real
Estate
Investment
Trusts
(REITs)
2.8%
Brixmor
Property
Group,
Inc.
.............................
United
States
3,630,812
82,310,508
Food
Products
2.2%
Kraft
Heinz
Co.
(The)
..................................
United
States
1,563,667
63,656,884
Health
Care
Equipment
&
Supplies
3.6%
Medtronic
plc
........................................
United
States
1,354,332
105,258,683
Health
Care
Providers
&
Services
2.3%
Elevance
Health,
Inc.
..................................
United
States
129,791
66,578,889
Household
Products
3.1%
Reckitt
Benckiser
Group
plc
.............................
United
Kingdom
1,317,753
91,338,072
Insurance
3.3%
Hartford
Financial
Services
Group,
Inc.
(The)
................
United
States
1,251,556
94,905,491
Interactive
Media
&
Services
2.1%
b
Meta
Platforms,
Inc.,
A
.................................
United
States
506,973
61,009,131
IT
Services
3.2%
Global
Payments,
Inc.
..................................
United
States
939,117
93,273,100
Media
3.2%
b
Charter
Communications,
Inc.,
A
..........................
United
States
273,236
92,654,328
Metals
&
Mining
2.8%
Rio
Tinto
plc
.........................................
Australia
1,164,189
81,936,936
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Beacon
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
53
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Oil,
Gas
&
Consumable
Fuels
5.9%
BP
plc
..............................................
United
Kingdom
19,901,412
$
114,825,236
Suncor
Energy,
Inc.
....................................
Canada
1,864,565
59,145,544
173,970,780
Personal
Products
3.7%
b
Haleon
plc
..........................................
United
States
27,522,070
108,889,758
Pharmaceuticals
13.4%
b
Elanco
Animal
Health,
Inc.
...............................
United
States
5,101,850
62,344,607
Eli
Lilly
&
Co.
........................................
United
States
187,083
68,442,445
GSK
plc
............................................
United
States
5,236,438
90,498,842
Merck
&
Co.,
Inc.
.....................................
United
States
603,685
66,978,851
Novartis
AG,
ADR
.....................................
Switzerland
1,161,739
105,392,962
393,657,707
Technology
Hardware,
Storage
&
Peripherals
1.7%
b
Western
Digital
Corp.
..................................
United
States
1,595,028
50,323,133
Textiles,
Apparel
&
Luxury
Goods
8.0%
adidas
AG
...........................................
Germany
481,281
65,223,249
Cie
Financiere
Richemont
SA
............................
Switzerland
602,829
78,158,559
Tapestry,
Inc.
........................................
United
States
2,368,958
90,209,921
233,591,729
Total
Common
Stocks
(Cost
$2,469,140,322)
....................................
2,842,985,724
Companies
in
Liquidation
0.0%
a,b,d
Walter
Energy,
Inc.,
Litigation
Trust,
Contingent
Distribution
......
United
States
5,229,000
—
Total
Companies
in
Liquidation
(Cost
$–)
......................................
—
Total
Long
Term
Investments
(Cost
$2,469,140,322)
.............................
2,842,985,724
a
Short
Term
Investments
2.8%
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
U.S.
Government
and
Agency
Securities
2.8%
e
FHLB,
1/03/23
.......................................
United
States
79,300,000
79,300,000
e
U.S.
Treasury
Bills
,
1/05/23
...........................................
United
States
1,500,000
1,499,698
1/19/23
...........................................
United
States
1,000,000
998,393
6/22/23
...........................................
United
States
1,500,000
1,467,941
3,966,032
Total
U.S.
Government
and
Agency
Securities
(Cost
$83,248,972)
.................
83,266,032
Total
Short
Term
Investments
(Cost
$83,248,972
)
................................
83,266,032
a
Total
Investments
(Cost
$2,552,389,294)
99.8%
..................................
$2,926,251,756
Other
Assets,
less
Liabilities
0.2%
.............................................
4,431,272
Net
Assets
100.0%
...........................................................
$2,930,683,028
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Beacon
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
54
See
A
bbreviations
on
page
151
.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
Fair
valued
using
significant
unobservable
inputs.
See
Note
16
regarding
fair
value
measurements.
b
Non-income
producing.
c
See
Note
12
regarding
restricted
securities.
d
Contingent
distributions
represent
the
right
to
receive
additional
distributions,
if
any,
during
the
reorganization
of
the
underlying
company.
Shares
represent
total
underlying
principal
of
debt
securities.
e
The
security
was
issued
on
a
discount
basis
with
no
stated
coupon
rate.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
European
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
55
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
Z
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$21.91
$19.49
$21.31
$17.89
$20.93
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.60
0.58
0.56
c
0.54
0.49
Net
realized
and
unrealized
gains
(losses)
...........
(0.74)
2.61
(1.92)
3.46
(2.80)
Total
from
investment
operations
....................
(0.14)
3.19
(1.36)
4.00
(2.31)
Less
distributions
from:
Net
investment
income
..........................
(0.70)
(0.77)
(0.46)
(0.58)
(0.73)
Net
asset
value,
end
of
year
.......................
$21.07
$21.91
$19.49
$21.31
$17.89
Total
return
....................................
(0.51)%
16.49%
(6.23)%
22.28%
(11.12)%
Ratios
to
average
net
assets
Expenses
d,e
....................................
1.00%
f
1.07%
f
1.08%
f
1.04%
1.04%
f
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
—%
—%
—%
—%
g
Net
investment
income
...........................
2.87%
2.71%
3.19%
c
2.77%
2.38%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$414,151
$457,644
$450,864
$789,012
$958,149
Portfolio
turnover
rate
............................
32.10%
32.03%
24.04%
12.16%
35.42%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.30
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.48%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
European
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
56
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$21.24
$18.91
$20.67
$17.37
$20.33
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.53
0.51
0.54
c
0.49
0.41
Net
realized
and
unrealized
gains
(losses)
...........
(0.72)
2.54
(1.91)
3.33
(2.69)
Total
from
investment
operations
....................
(0.19)
3.05
(1.37)
3.82
(2.28)
Less
distributions
from:
Net
investment
income
..........................
(0.64)
(0.72)
(0.39)
(0.52)
(0.68)
Net
asset
value,
end
of
year
.......................
$20.41
$21.24
$18.91
$20.67
$17.37
Total
return
d
...................................
(0.73)%
16.23%
(6.50)%
21.98%
(11.29)%
Ratios
to
average
net
assets
Expenses
e,f
....................................
1.25%
g
1.32%
g
1.33%
g
1.29%
1.29%
g
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
—%
—%
—%
—%
h
Net
investment
income
...........................
2.60%
2.45%
3.14%
c
2.52%
2.13%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$256,163
$281,685
$272,579
$512,218
$564,038
Portfolio
turnover
rate
............................
32.10%
32.03%
24.04%
12.16%
35.42%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.44%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
European
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
57
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$21.60
$19.17
$20.93
$17.56
$20.38
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.39
0.38
0.38
c
0.35
0.29
Net
realized
and
unrealized
gains
(losses)
...........
(0.73)
2.54
(1.90)
3.35
(2.72)
Total
from
investment
operations
....................
(0.34)
2.92
(1.52)
3.70
(2.43)
Less
distributions
from:
Net
investment
income
..........................
(0.43)
(0.49)
(0.24)
(0.33)
(0.39)
Net
asset
value,
end
of
year
.......................
$20.83
$21.60
$19.17
$20.93
$17.56
Total
return
d
...................................
(1.42)%
15.32%
(7.15)%
21.01%
(11.96)%
Ratios
to
average
net
assets
Expenses
e,f
....................................
2.00%
g
2.07%
g
2.08%
g
2.04%
2.04%
g
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
—%
—%
—%
—%
h
Net
investment
income
...........................
1.91%
1.83%
2.18%
c
1.77%
1.38%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$15,190
$24,236
$34,693
$61,743
$78,149
Portfolio
turnover
rate
............................
32.10%
32.03%
24.04%
12.16%
35.42%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.47%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
European
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
58
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$20.75
$18.49
$20.27
$17.05
$19.97
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.44
0.45
0.53
c
0.43
0.35
Net
realized
and
unrealized
gains
(losses)
...........
(0.68)
2.48
(1.92)
3.27
(2.64)
Total
from
investment
operations
....................
(0.24)
2.93
(1.39)
3.70
(2.29)
Less
distributions
from:
Net
investment
income
..........................
(0.61)
(0.67)
(0.39)
(0.48)
(0.63)
Net
asset
value,
end
of
year
.......................
$19.90
$20.75
$18.49
$20.27
$17.05
Total
return
....................................
(1.03)%
15.96%
(6.76)%
21.70%
(11.54)%
Ratios
to
average
net
assets
Expenses
d,e
....................................
1.49%
f
1.58%
f
1.58%
f
1.54%
1.54%
f
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
—%
—%
—%
—%
g
Net
investment
income
...........................
2.23%
2.21%
3.19%
c
2.27%
1.88%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$623
$639
$714
$733
$731
Portfolio
turnover
rate
............................
32.10%
32.03%
24.04%
12.16%
35.42%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.48%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
European
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
59
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$21.88
$19.47
$21.29
$17.87
$20.91
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.62
0.60
0.64
c
0.69
0.56
Net
realized
and
unrealized
gains
(losses)
...........
(0.73)
2.60
(1.97)
3.33
(2.85)
Total
from
investment
operations
....................
(0.11)
3.20
(1.33)
4.02
(2.29)
Less
distributions
from:
Net
investment
income
..........................
(0.72)
(0.79)
(0.49)
(0.60)
(0.75)
Net
asset
value,
end
of
year
.......................
$21.05
$21.88
$19.47
$21.29
$17.87
Total
return
....................................
(0.38
)%
16.56%
(6.10)%
22.35%
(10.94)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
d
.....
0.92%
1.02%
1.00%
0.94%
0.92%
Expenses
net
of
waiver
and
payments
by
affiliates
d,e
.....
0.91%
0.99%
0.97%
0.93%
0.91%
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
—%
—%
—%
—%
f
Net
investment
income
...........................
2.96%
2.78%
3.61%
c
2.88%
2.51%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$33,306
$35,798
$33,407
$44,561
$149,796
Portfolio
turnover
rate
............................
32.10%
32.03%
24.04%
12.16%
35.42%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.30
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.91%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Schedule
of
Investments,
December
31,
2022
Franklin
Mutual
European
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
60
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
95.3%
Aerospace
&
Defense
2.8%
Airbus
SE
...........................................
France
147,209
$
17,502,700
a
Babcock
International
Group
plc
..........................
United
Kingdom
690,174
2,360,285
19,862,985
Auto
Components
2.2%
Cie
Generale
des
Etablissements
Michelin
SCA
..............
France
579,268
16,136,090
Banks
8.9%
BNP
Paribas
SA
......................................
France
512,011
29,152,132
CaixaBank
SA
........................................
Spain
1,396,329
5,474,461
ING
Groep
NV
.......................................
Netherlands
2,393,140
29,149,871
63,776,464
Beverages
5.1%
Anheuser-Busch
InBev
SA/NV
...........................
Belgium
236,319
14,233,057
a
Coca-Cola
HBC
AG
...................................
Italy
385,280
9,107,181
Heineken
NV
........................................
Netherlands
142,108
13,384,849
36,725,087
Chemicals
2.9%
b
Covestro
AG,
144A,
Reg
S
..............................
Germany
542,585
21,135,982
Construction
Materials
0.7%
HeidelbergCement
AG
.................................
Germany
87,676
4,967,935
Diversified
Telecommunication
Services
8.7%
Deutsche
Telekom
AG
..................................
Germany
1,138,088
22,643,008
Hellenic
Telecommunications
Organization
SA
................
Greece
1,169,461
18,265,092
Koninklijke
KPN
NV
...................................
Netherlands
6,920,361
21,419,293
62,327,393
Energy
Equipment
&
Services
1.5%
Baker
Hughes
Co.
.....................................
United
States
376,496
11,117,927
Food
Products
2.7%
Danone
SA
..........................................
France
362,001
19,078,636
Health
Care
Providers
&
Services
2.8%
Fresenius
SE
&
Co.
KGaA
...............................
Germany
719,771
20,103,646
Household
Durables
1.7%
Berkeley
Group
Holdings
plc
.............................
United
Kingdom
168,967
7,702,782
Persimmon
plc
.......................................
United
Kingdom
322,849
4,733,619
12,436,401
Household
Products
2.0%
Reckitt
Benckiser
Group
plc
.............................
United
Kingdom
210,045
14,558,954
Independent
Power
and
Renewable
Electricity
Producers
2.7%
RWE
AG
............................................
Germany
434,288
19,197,989
Industrial
Conglomerates
2.8%
Siemens
AG
.........................................
Germany
146,584
20,205,854
Insurance
9.0%
ASR
Nederland
NV
....................................
Netherlands
507,896
24,131,059
Direct
Line
Insurance
Group
plc
..........................
United
Kingdom
7,851,136
20,925,386
NN
Group
NV
........................................
Netherlands
486,261
19,883,354
64,939,799
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
European
Fund
(continued)
franklintempleton.com
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accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
61
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
IT
Services
2.4%
Capgemini
SE
........................................
France
104,705
$
17,503,366
Machinery
4.3%
c
Alstom
SA
...........................................
France
570,966
13,968,960
Vossloh
AG
..........................................
Germany
406,437
16,906,490
30,875,450
Metals
&
Mining
3.0%
Rio
Tinto
plc
.........................................
Australia
307,654
21,653,036
Oil,
Gas
&
Consumable
Fuels
6.3%
BP
plc
..............................................
United
Kingdom
4,412,669
25,459,789
Shell
plc
............................................
Netherlands
701,355
19,770,953
45,230,742
Personal
Products
2.7%
a
Haleon
plc
..........................................
United
States
4,813,434
19,044,122
Pharmaceuticals
6.1%
GSK
plc
............................................
United
States
1,214,382
20,987,581
Novartis
AG
.........................................
Switzerland
252,265
22,828,106
43,815,687
Real
Estate
Management
&
Development
1.6%
Savills
plc
...........................................
United
Kingdom
1,177,740
11,729,677
Software
1.8%
Software
AG
.........................................
Germany
492,425
12,730,210
Textiles,
Apparel
&
Luxury
Goods
3.4%
adidas
AG
...........................................
Germany
102,644
13,910,325
Cie
Financiere
Richemont
SA
............................
Switzerland
83,856
10,872,178
24,782,503
Tobacco
2.3%
British
American
Tobacco
plc
.............................
United
Kingdom
420,416
16,630,192
Trading
Companies
&
Distributors
4.9%
a
AerCap
Holdings
NV
...................................
Ireland
340,212
19,841,164
Rexel
SA
...........................................
France
786,541
15,555,865
35,397,029
Total
Common
Stocks
(Cost
$679,092,429)
.....................................
685,963,156
Warrants
Warrants
0.1%
Textiles,
Apparel
&
Luxury
Goods
0.1%
a
Cie
Financiere
Richemont
SA,
11/22/23
.....................
Switzerland
472,886
393,773
Total
Warrants
(Cost
$–)
......................................................
393,773
Total
Long
Term
Investments
(Cost
$679,092,429)
...............................
686,356,929
a
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
European
Fund
(continued)
franklintempleton.com
Annual
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The
accompanying
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financial
statements.
62
Short
Term
Investments
3.1%
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
U.S.
Government
and
Agency
Securities
3.1%
d
FHLB,
1/03/23
.......................................
United
States
19,200,000
$
19,200,000
d
U.S.
Treasury
Bills
,
1/05/23
...........................................
United
States
1,000,000
999,798
e
6/08/23
...........................................
United
States
2,500,000
2,451,196
3,450,994
Total
U.S.
Government
and
Agency
Securities
(Cost
$22,645,586)
.................
22,650,994
Total
Short
Term
Investments
(Cost
$22,645,586
)
................................
22,650,994
a
Total
Investments
(Cost
$701,738,015)
98.5%
...................................
$709,007,923
Other
Assets,
less
Liabilities
1.5%
.............................................
10,425,050
Net
Assets
100.0%
...........................................................
$719,432,973
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Non-income
producing.
b
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
December
31,
2022,
the
value
of
this
security
was
$21,135,982,
representing
2.9%
of
net
assets.
c
A
portion
or
all
of
the
security
is
on
loan
at
December
31,
2022.
See
Note
1(f).
d
The
security
was
issued
on
a
discount
basis
with
no
stated
coupon
rate.
e
A
portion
or
all
of
the
security
has
been
segregated
as
collateral
for
open
forward
exchange
contracts.
At
December
31,
2022,
the
value
of
this
security
pledged
amounted
to
$753,007,
representing
0.1%
of
net
assets.
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
European
Fund
(continued)
franklintempleton.com
The
accompanying
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an
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part
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financial
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Annual
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63
At
December
31
,
2022,
the
Fund
had
the
following futures
contracts
outstanding.
See
Note
1
(
d
).
At
December
31
,
2022,
the
Fund
had
the
following
forward
exchange
contracts
outstanding.
See
Note
1
(
d
).
See
Note
13
regarding
other
derivative
information.
Futures
Contracts
Description
Type
Number
of
Contracts
Notional
Amount
*
Expiration
Date
Value/
Unrealized
Appreciation
(Depreciation)
Equity
contracts
MSCI
EAFE
Index
............................
Long
9
$
877,230
3/17/23
$
(41,959)
Foreign
exchange
contracts
Foreign
Exchange
EUR/USD
...................
Short
809
108,749,825
3/13/23
(1,467,451)
Foreign
Exchange
GBP/USD
...................
Short
451
34,061,775
3/13/23
619,011
Total
Futures
Contracts
......................................................................
$(890,399)
*
As
of
period
end.
Forward
Exchange
Contracts
Currency
Counter-
party
a
Type
Quantity
Contract
Amount
*
Settlement
Date
Unrealized
Appreciation
Unrealized
Depreciation
a
a
a
a
a
a
a
a
OTC
Forward
Exchange
Contracts
Euro
.............
BOFA
Sell
8,863,988
9,110,016
1/09/23
$
—
$
(381,601)
Euro
.............
HSBK
Buy
584,138
570,472
1/09/23
55,026
—
Euro
.............
HSBK
Sell
37,241,689
38,429,187
1/09/23
—
(1,449,459)
Euro
.............
SSBT
Sell
196,066
196,755
1/09/23
—
(13,194)
Euro
.............
UBSW
Sell
44,383,643
45,572,433
1/09/23
—
(1,953,868)
British
Pound
......
BNY
Buy
1,400,000
1,621,523
1/17/23
71,574
—
British
Pound
......
BOFA
Buy
11,018,262
12,158,593
1/17/23
1,178,183
(11,785)
British
Pound
......
BOFA
Sell
50,695,539
62,013,124
1/17/23
941,060
(236,837)
British
Pound
......
HSBK
Buy
4,632,853
5,046,739
1/17/23
556,026
—
British
Pound
......
UBSW
Buy
8,903,896
10,350,939
1/17/23
417,031
—
British
Pound
......
UBSW
Sell
26,422,062
32,216,031
1/17/23
301,099
(38,719)
Swiss
Franc
.......
BNY
Buy
73,346
74,648
1/20/23
4,822
—
Swiss
Franc
.......
BOFA
Buy
305,695
315,598
1/20/23
15,622
—
Swiss
Franc
.......
BOFA
Sell
29,611,527
30,807,633
1/20/23
—
(1,276,475)
Swiss
Franc
.......
HSBK
Sell
939,417
1,008,105
1/20/23
—
(9,754)
Swiss
Franc
.......
SSBT
Sell
306,688
324,794
1/20/23
—
(7,502)
Swiss
Franc
.......
UBSW
Buy
2,278,585
2,371,610
1/20/23
97,238
—
Swiss
Franc
.......
UBSW
Sell
1,710,834
1,806,228
1/20/23
—
(47,462)
Total
Forward
Exchange
Contracts
...................................................
$3,637,681
$(5,426,656)
Net
unrealized
appreciation
(depreciation)
............................................
$(1,788,975)
*
In
U.S.
dollars
unless
otherwise
indicated.
a
May
be
comprised
of
multiple
contracts
with
the
same
counterparty,
currency
and
settlement
date.
See
A
bbreviations
on
page
151
.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Financial
Services
Fund
franklintempleton.com
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The
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64
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
Z
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$25.51
$20.89
$22.78
$19.46
$24.14
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.61
0.46
0.18
0.38
0.38
c
Net
realized
and
unrealized
gains
(losses)
...........
(1.83)
4.54
(1.72)
3.38
(4.37)
Total
from
investment
operations
....................
(1.22)
5.00
(1.54)
3.76
(3.99)
Less
distributions
from:
Net
investment
income
..........................
(0.57)
(0.38)
(0.35)
(0.44)
(0.17)
Net
realized
gains
.............................
—
—
—
—
(0.52)
Total
distributions
...............................
(0.57)
(0.38)
(0.35)
(0.44)
(0.69)
Net
asset
value,
end
of
year
.......................
$23.72
$25.51
$20.89
$22.78
$19.46
Total
return
....................................
(4.76)%
23.98%
(6.70)%
19.32%
(16.49)%
Ratios
to
average
net
assets
Expenses
d
....................................
1.06%
e
1.12%
e
1.14%
e
1.10%
1.09%
e
Net
investment
income
...........................
2.54%
1.87%
0.99%
1.80%
1.61%
c
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$114,507
$128,352
$104,183
$139,189
$142,212
Portfolio
turnover
rate
............................
31.16%
28.64%
28.18%
17.06%
33.11%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.08
per
share
related
to
income
received
in
the
form
of
special
dividends
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.29%.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
e
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Financial
Services
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(continued)
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The
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part
of
these
financial
statements.
Annual
Report
65
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$25.59
$20.95
$22.85
$19.52
$24.21
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.55
0.40
0.26
0.33
0.31
c
Net
realized
and
unrealized
gains
(losses)
...........
(1.83)
4.56
(1.86)
3.38
(4.36)
Total
from
investment
operations
....................
(1.28)
4.96
(1.60)
3.71
(4.05)
Less
distributions
from:
Net
investment
income
..........................
(0.51)
(0.32)
(0.30)
(0.38)
(0.12)
Net
realized
gains
.............................
—
—
—
—
(0.52)
Total
distributions
...............................
(0.51)
(0.32)
(0.30)
(0.38)
(0.64)
Net
asset
value,
end
of
year
.......................
$23.80
$25.59
$20.95
$22.85
$19.52
Total
return
d
...................................
(4.99)%
23.70%
(6.95)%
19.06%
(16.72)%
Ratios
to
average
net
assets
Expenses
e
....................................
1.31%
f
1.37%
f
1.39%
f
1.35%
1.34%
f
Net
investment
income
...........................
2.30%
1.62%
1.42%
1.55%
1.36%
c
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$230,921
$259,203
$209,222
$278,968
$298,878
Portfolio
turnover
rate
............................
31.16%
28.64%
28.18%
17.06%
33.11%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.08
per
share
related
to
income
received
in
the
form
of
special
dividends
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.04%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Mutual
Series
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Financial
Highlights
Franklin
Mutual
Financial
Services
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Annual
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The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
66
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$25.41
$20.78
$22.65
$19.32
$24.08
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.38
0.20
0.12
0.18
0.15
c
Net
realized
and
unrealized
gains
(losses)
...........
(1.83)
4.52
(1.86)
3.32
(4.33)
Total
from
investment
operations
....................
(1.45)
4.72
(1.74)
3.50
(4.18)
Less
distributions
from:
Net
investment
income
..........................
(0.28)
(0.09)
(0.13)
(0.17)
(0.06)
Net
realized
gains
.............................
—
—
—
—
(0.52)
Total
distributions
...............................
(0.28)
(0.09)
(0.13)
(0.17)
(0.58)
Net
asset
value,
end
of
year
.......................
$23.68
$25.41
$20.78
$22.65
$19.32
Total
return
d
...................................
(5.71)%
22.74%
(7.66)%
18.15%
(17.35)%
Ratios
to
average
net
assets
Expenses
e
....................................
2.07%
f
2.12%
f
2.14%
f
2.10%
2.09%
f
Net
investment
income
...........................
1.58%
0.83%
0.69%
0.80%
0.61%
c
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$18,260
$25,503
$27,498
$46,132
$58,610
Portfolio
turnover
rate
............................
31.16%
28.64%
28.18%
17.06%
33.11%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.08
per
share
related
to
income
received
in
the
form
of
special
dividends
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.29%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Franklin
Mutual
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Mutual
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accompanying
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an
integral
part
of
these
financial
statements.
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67
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$25.68
$21.03
$22.93
$19.58
$24.30
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.62
0.47
0.33
0.42
0.41
c
Net
realized
and
unrealized
gains
(losses)
...........
(1.82)
4.58
(1.85)
3.40
(4.41)
Total
from
investment
operations
....................
(1.20)
5.05
(1.52)
3.82
(4.00)
Less
distributions
from:
Net
investment
income
..........................
(0.60)
(0.40)
(0.38)
(0.47)
(0.20)
Net
realized
gains
.............................
—
—
—
—
(0.52)
Total
distributions
...............................
(0.60)
(0.40)
(0.38)
(0.47)
(0.72)
Net
asset
value,
end
of
year
.......................
$23.88
$25.68
$21.03
$22.93
$19.58
Total
return
....................................
(4.66)%
24.09%
(6.57)%
19.51%
(16.41)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.08%
1.19%
1.16%
1.05%
1.06%
Expenses
net
of
waiver
and
payments
by
affiliates
d
......
0.95%
1.02%
1.02%
0.97%
0.97%
Net
investment
income
...........................
2.55%
1.89%
1.83%
1.93%
1.73%
c
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,086
$2,995
$2,191
$2,931
$3,371
Portfolio
turnover
rate
............................
31.16%
28.64%
28.18%
17.06%
33.11%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.08
per
share
related
to
income
received
in
the
form
of
special
dividends
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.41%.
d
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Schedule
of
Investments,
December
31,
2022
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Mutual
Financial
Services
Fund
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accompanying
notes
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an
integral
part
of
these
financial
statements.
68
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
96.2%
Banks
36.7%
a
AB&T
Financial
Corp.
..................................
United
States
226,100
$
136,791
Bank
of
America
Corp.
.................................
United
States
204,796
6,782,844
b
BAWAG
Group
AG,
144A,
Reg
S
..........................
Austria
60,094
3,202,277
BNP
Paribas
SA
......................................
France
259,382
14,768,312
CaixaBank
SA
........................................
Spain
1,079,441
4,232,067
Citizens
Financial
Group,
Inc.
............................
United
States
342,831
13,497,256
Columbia
Banking
System,
Inc.
...........................
United
States
362,449
10,920,588
First
Horizon
Corp.
....................................
United
States
331,858
8,130,521
ING
Groep
NV
.......................................
Netherlands
1,219,614
14,855,625
JPMorgan
Chase
&
Co.
.................................
United
States
81,046
10,868,269
Primis
Financial
Corp.
..................................
United
States
393,187
4,659,266
c
SVB
Financial
Group
...................................
United
States
25,381
5,841,183
Synovus
Financial
Corp.
................................
United
States
278,465
10,456,361
UniCredit
SpA
........................................
Italy
1,053,699
14,950,830
Wells
Fargo
&
Co.
.....................................
United
States
264,391
10,916,704
134,218,894
Capital
Markets
6.5%
BlackRock,
Inc.
.......................................
United
States
12,709
9,005,979
Deutsche
Bank
AG
....................................
Germany
1,162,459
13,067,252
b
Guotai
Junan
Securities
Co.
Ltd.,
H,
144A,
Reg
S
.............
China
1,567,148
1,760,382
23,833,613
Consumer
Finance
2.9%
Bread
Financial
Holdings,
Inc.
............................
United
States
53,496
2,014,659
Capital
One
Financial
Corp.
.............................
United
States
91,224
8,480,183
10,494,842
Diversified
Financial
Services
4.4%
M&G
plc
............................................
United
Kingdom
1,524,931
3,448,121
Voya
Financial,
Inc.
....................................
United
States
208,355
12,811,749
16,259,870
Equity
Real
Estate
Investment
Trusts
(REITs)
1.1%
Vornado
Realty
Trust
...................................
United
States
200,435
4,171,052
Household
Durables
2.8%
Cairn
Homes
plc
......................................
Ireland
8,521,149
8,107,058
DR
Horton,
Inc.
.......................................
United
States
22,744
2,027,400
10,134,458
Insurance
34.2%
ASR
Nederland
NV
....................................
Netherlands
288,787
13,720,794
c
BRP
Group,
Inc.,
A
....................................
United
States
360,451
9,061,738
China
Pacific
Insurance
Group
Co.
Ltd.,
H
...................
China
2,334,045
5,161,376
Conduit
Holdings
Ltd.
..................................
United
States
1,667,976
8,630,261
Direct
Line
Insurance
Group
plc
..........................
United
Kingdom
5,087,282
13,558,973
Everest
Re
Group
Ltd.
.................................
United
States
43,289
14,340,347
Hartford
Financial
Services
Group,
Inc.
(The)
................
United
States
174,745
13,250,913
d
International
General
Insurance
Holdings
Ltd.
................
Jordan
1,335,093
10,680,744
MetLife,
Inc.
.........................................
United
States
124,281
8,994,216
NN
Group
NV
........................................
Netherlands
307,559
12,576,177
Willis
Towers
Watson
plc
................................
United
States
61,959
15,153,932
125,129,471
IT
Services
3.8%
c
Fiserv,
Inc.
..........................................
United
States
69,574
7,031,844
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Financial
Services
Fund
(continued)
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accompanying
notes
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integral
part
of
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financial
statements.
Annual
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69
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
IT
Services
(continued)
Global
Payments,
Inc.
..................................
United
States
69,744
$
6,926,974
13,958,818
Media
0.1%
c
Loyalty
Ventures,
Inc.
..................................
United
States
182,982
440,987
Real
Estate
Management
&
Development
2.4%
c
Cushman
&
Wakefield
plc
...............................
United
States
333,883
4,160,182
Savills
plc
...........................................
United
Kingdom
449,657
4,478,350
8,638,532
Trading
Companies
&
Distributors
1.3%
c
AerCap
Holdings
NV
...................................
Ireland
78,905
4,601,740
Total
Common
Stocks
(Cost
$334,415,854)
.....................................
351,882,277
Short
Term
Investments
4.0%
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
U.S.
Government
and
Agency
Securities
4.0%
e
FHLB,
1/03/23
.......................................
United
States
12,000,000
12,000,000
e,f
U.S.
Treasury
Bills
,
5/11/23
...........................................
United
States
1,000,000
983,873
6/01/23
...........................................
United
States
1,500,000
1,472,078
2,455,951
Total
U.S.
Government
and
Agency
Securities
(Cost
$14,452,986)
.................
14,455,951
Shares
g
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.0%
†
Money
Market
Funds
0.0%
†
h,i
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
3.782%
....
United
States
3,000
3,000
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$3,000)
................................................................
3,000
Total
Short
Term
Investments
(Cost
$14,455,986
)
................................
14,458,951
a
Total
Investments
(Cost
$348,871,840)
100.2%
..................................
$366,341,228
Other
Assets,
less
Liabilities
(0.2)%
...........................................
(567,442)
Net
Assets
100.0%
...........................................................
$365,773,786
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
See
Note
14
regarding
holdings
of
5%
voting
securities.
b
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
December
31,
2022,
the
aggregate
value
of
these
securities
was
$4,962,659,
representing
1.4%
of
net
assets.
c
Non-income
producing.
d
A
portion
or
all
of
the
security
is
on
loan
at
December
31,
2022.
See
Note
1(f).
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Mutual
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70
At
December
31,
2022,
the
Fund
had
the
following futures
contracts
outstanding.
See
Note
1
(
d
).
At
December
31,
2022,
the
Fund
had
the
following
forward
exchange
contracts
outstanding.
See
Note
1
(
d
).
See
Note 13 regarding
other
derivative
information.
See
Abbreviations
on
page
151
.
e
The
security
was
issued
on
a
discount
basis
with
no
stated
coupon
rate.
f
A
portion
or
all
of
the
security
has
been
segregated
as
collateral
for
open
forward
exchange
contracts.
At
December
31,
2022,
the
aggregate
value
of
these
securities
pledged
amounted
to
$1,371,520,
representing
0.4%
of
net
assets.
g
See
Note
1(f)
regarding
securities
on
loan.
h
See
Note
3(f)
regarding
investments
in
affiliated
management
investment
companies.
i
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
Futures
Contracts
Description
Type
Number
of
Contracts
Notional
Amount
*
Expiration
Date
Value/
Unrealized
Appreciation
(Depreciation)
Foreign
exchange
contracts
Foreign
Exchange
EUR/USD
...................
Short
62
$
8,334,350
3/13/23
$
(114,074)
Foreign
Exchange
GBP/USD
...................
Short
56
4,229,400
3/13/23
76,862
Total
Futures
Contracts
......................................................................
$(37,212)
*
As
of
period
end.
Forward
Exchange
Contracts
Currency
Counter-
party
a
Type
Quantity
Contract
Amount
*
Settlement
Date
Unrealized
Appreciation
Unrealized
Depreciation
a
a
a
a
a
a
a
a
OTC
Forward
Exchange
Contracts
Euro
.............
BNY
Sell
343,220
346,616
1/09/23
$
—
$
(20,906)
Euro
.............
BOFA
Buy
555,000
545,332
1/09/23
48,966
—
Euro
.............
BOFA
Sell
1,162,733
1,177,872
1/09/23
—
(67,190)
Euro
.............
HSBK
Buy
36,959
36,094
1/09/23
3,482
—
Euro
.............
HSBK
Sell
11,788,426
12,056,479
1/09/23
—
(566,645)
Euro
.............
UBSW
Buy
565,000
600,513
1/09/23
4,493
—
Euro
.............
UBSW
Sell
20,392,179
20,452,724
1/09/23
—
(1,383,355)
British
Pound
......
BOFA
Buy
403,631
451,147
1/17/23
36,986
—
British
Pound
......
BOFA
Sell
17,637,018
21,608,027
1/17/23
335,368
(56,757)
British
Pound
......
HSBK
Buy
1,363,021
1,484,789
1/17/23
163,587
—
British
Pound
......
UBSW
Buy
2,319,018
2,739,726
1/17/23
64,789
—
British
Pound
......
UBSW
Sell
1,353,366
1,576,293
1/17/23
—
(60,407)
Total
Forward
Exchange
Contracts
...................................................
$657,671
$(2,155,260)
Net
unrealized
appreciation
(depreciation)
............................................
$(1,497,589)
*
In
U.S.
dollars
unless
otherwise
indicated.
a
May
be
comprised
of
multiple
contracts
with
the
same
counterparty,
currency
and
settlement
date.
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Mutual
Global
Discovery
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integral
part
of
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financial
statements.
Annual
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a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
Z
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$31.58
$28.77
$31.19
$26.86
$32.42
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.59
c
0.42
0.96
d
0.67
0.58
Net
realized
and
unrealized
gains
(losses)
...........
(2.20)
5.15
(2.38)
5.91
(4.13)
Total
from
investment
operations
....................
(1.61)
5.57
(1.42)
6.58
(3.55)
Less
distributions
from:
Net
investment
income
..........................
(0.56)
(0.81)
(0.83)
(0.70)
(0.64)
Net
realized
gains
.............................
(2.23)
(1.95)
(0.17)
(1.55)
(1.37)
Total
distributions
...............................
(2.79)
(2.76)
(1.00)
(2.25)
(2.01)
Net
asset
value,
end
of
year
.......................
$27.18
$31.58
$28.77
$31.19
$26.86
Total
return
....................................
(4.70)%
19.67%
(4.38)%
24.70%
(10.78)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
e
.....
0.95%
1.04%
1.03%
1.00%
0.97%
Expenses
net
of
waiver
and
payments
by
affiliates
e
,
f
.....
0.95%
g
1.02%
1.03%
g
1.00%
g
0.97%
g
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
h
0.02%
0.01%
0.02%
—%
h
Net
investment
income
...........................
1.98%
c
1.28%
3.66%
d
2.20%
1.82%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,857,597
$3,355,158
$3,274,956
$5,176,787
$5,114,274
Portfolio
turnover
rate
............................
53.26%
40.67%
17.25%
14.08%
14.70%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.08
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.71%.
d
Net
investment
income
per
share
includes
approximately
$0.43
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
2.02%.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Global
Discovery
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
72
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$30.81
$28.12
$30.51
$26.32
$31.80
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.50
c
0.33
0.86
d
0.58
0.49
Net
realized
and
unrealized
gains
(losses)
...........
(2.15)
5.04
(2.32)
5.78
(4.04)
Total
from
investment
operations
....................
(1.65)
5.37
(1.46)
6.36
(3.55)
Less
distributions
from:
Net
investment
income
..........................
(0.49)
(0.73)
(0.76)
(0.62)
(0.56)
Net
realized
gains
.............................
(2.23)
(1.95)
(0.17)
(1.55)
(1.37)
Total
distributions
...............................
(2.72)
(2.68)
(0.93)
(2.17)
(1.93)
Net
asset
value,
end
of
year
.......................
$26.44
$30.81
$28.12
$30.51
$26.32
Total
return
e
...................................
(4.95)%
19.40%
(4.61)%
24.37%
(10.99)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
f
......
1.20%
1.29%
1.28%
1.25%
1.22%
Expenses
net
of
waiver
and
payments
by
affiliates
f
,
g
.....
1.20%
h
1.27%
1.28%
h
1.25%
h
1.22%
h
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
i
0.02%
0.01%
0.02%
—%
i
Net
investment
income
...........................
1.72%
c
1.03%
3.39%
d
1.95%
1.57%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$4,749,259
$5,618,446
$5,358,016
$7,683,644
$7,461,444
Portfolio
turnover
rate
............................
53.26%
40.67%
17.25%
14.08%
14.70%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.08
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.45%.
d
Net
investment
income
per
share
includes
approximately
$0.42
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.75%.
e
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
f
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
h
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
i
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Global
Discovery
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
73
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$30.92
$28.12
$30.46
$26.25
$31.44
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.28
c
0.09
0.67
d
0.36
0.26
Net
realized
and
unrealized
gains
(losses)
...........
(2.13)
5.04
(2.34)
5.74
(3.98)
Total
from
investment
operations
....................
(1.85)
5.13
(1.67)
6.10
(3.72)
Less
distributions
from:
Net
investment
income
..........................
(0.24)
(0.38)
(0.50)
(0.34)
(0.10)
Net
realized
gains
.............................
(2.23)
(1.95)
(0.17)
(1.55)
(1.37)
Total
distributions
...............................
(2.47)
(2.33)
(0.67)
(1.89)
(1.47)
Net
asset
value,
end
of
year
.......................
$26.60
$30.92
$28.12
$30.46
$26.25
Total
return
e
...................................
(5.63)%
18.50%
(5.32)%
23.43%
(11.70)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
f
......
1.95%
2.04%
2.03%
2.00%
1.97%
Expenses
net
of
waiver
and
payments
by
affiliates
f
,
g
.....
1.95%
h
2.02%
2.03%
h
2.00%
h
1.97%
h
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
i
0.02%
0.01%
0.02%
—%
i
Net
investment
income
...........................
0.97%
c
0.29%
2.66%
d
1.20%
0.82%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$221,344
$335,605
$494,606
$872,717
$1,054,412
Portfolio
turnover
rate
............................
53.26%
40.67%
17.25%
14.08%
14.70%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.08
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
0.70%.
d
Net
investment
income
per
share
includes
approximately
$0.42
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.01%.
e
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
f
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
g
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
h
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
i
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Global
Discovery
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
74
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$30.34
$27.70
$30.08
$25.97
$31.37
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.42
c
0.24
0.78
d
0.50
0.41
Net
realized
and
unrealized
gains
(losses)
...........
(2.11)
4.97
(2.29)
5.69
(3.97)
Total
from
investment
operations
....................
(1.69)
5.21
(1.51)
6.19
(3.56)
Less
distributions
from:
Net
investment
income
..........................
(0.42)
(0.62)
(0.70)
(0.53)
(0.47)
Net
realized
gains
.............................
(2.23)
(1.95)
(0.17)
(1.55)
(1.37)
Total
distributions
...............................
(2.65)
(2.57)
(0.87)
(2.08)
(1.84)
Net
asset
value,
end
of
year
.......................
$26.00
$30.34
$27.70
$30.08
$25.97
Total
return
....................................
(5.17)%
19.10%
(4.87)%
24.09%
(11.24)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
e
.....
1.45%
1.54%
1.53%
1.50%
1.47%
Expenses
net
of
waiver
and
payments
by
affiliates
e
,
f
.....
1.45%
g
1.52%
1.53%
g
1.50%
g
1.47%
g
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
h
0.02%
0.01%
0.02%
—%
h
Net
investment
income
...........................
1.47%
c
0.79%
3.13%
d
1.70%
1.32%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$109,826
$136,983
$175,393
$251,089
$274,086
Portfolio
turnover
rate
............................
53.26%
40.67%
17.25%
14.08%
14.70%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.08
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.20%.
d
Net
investment
income
per
share
includes
approximately
$0.41
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.48%.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Global
Discovery
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
75
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$31.57
$28.75
$31.17
$26.85
$32.41
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.62
c
0.44
0.97
d
0.70
0.62
Net
realized
and
unrealized
gains
(losses)
...........
(2.21)
5.18
(2.35)
5.90
(4.13)
Total
from
investment
operations
....................
(1.59)
5.62
(1.38)
6.60
(3.51)
Less
distributions
from:
Net
investment
income
..........................
(0.59)
(0.85)
(0.87)
(0.73)
(0.68)
Net
realized
gains
.............................
(2.23)
(1.95)
(0.17)
(1.55)
(1.37)
Total
distributions
...............................
(2.82)
(2.80)
(1.04)
(2.28)
(2.05)
Net
asset
value,
end
of
year
.......................
$27.16
$31.57
$28.75
$31.17
$26.85
Total
return
....................................
(4.65
)%
19.84%
(4.27)%
24.80%
(10.67)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
e
.....
0.86%
0.95%
0.92%
0.90%
0.88%
Expenses
net
of
waiver
and
payments
by
affiliates
e
,
f
.....
0.86%
g
0.92%
0.92%
g
0.89%
0.87%
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
h
0.02%
0.01%
0.02%
—%
h
Net
investment
income
...........................
2.07%
c
1.35%
3.73%
d
2.31%
1.92%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$525,379
$653,091
$843,143
$1,295,457
$1,418,812
Portfolio
turnover
rate
............................
53.26%
40.67%
17.25%
14.08%
14.70%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.08
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.79%.
d
Net
investment
income
per
share
includes
approximately
$0.43
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
2.08%.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Schedule
of
Investments,
December
31,
2022
Franklin
Mutual
Global
Discovery
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
76
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
96.5%
Aerospace
&
Defense
1.8%
Airbus
SE
...........................................
France
1,262,071
$
150,056,386
Auto
Components
1.7%
Denso
Corp.
.........................................
Japan
2,878,154
141,095,793
a,b,c
International
Automotive
Components
Group
Brazil
LLC
........
Brazil
3,819,425
134,436
141,230,229
Automobiles
1.5%
General
Motors
Co.
....................................
United
States
3,702,134
124,539,788
Banks
7.6%
CaixaBank
SA
........................................
Spain
23,770,929
93,196,544
First
Horizon
Corp.
....................................
United
States
2,528,274
61,942,713
ING
Groep
NV
.......................................
Netherlands
12,641,116
153,976,322
JPMorgan
Chase
&
Co.
.................................
United
States
1,350,968
181,164,809
Wells
Fargo
&
Co.
.....................................
United
States
3,609,722
149,045,421
639,325,809
Building
Products
2.0%
Johnson
Controls
International
plc
.........................
United
States
2,662,795
170,418,880
Capital
Markets
2.1%
BlackRock,
Inc.
.......................................
United
States
248,584
176,154,080
Chemicals
1.9%
d
Covestro
AG,
144A,
Reg
S
..............................
Germany
4,171,269
162,488,580
Consumer
Finance
0.5%
Capital
One
Financial
Corp.
.............................
United
States
476,203
44,267,831
Diversified
Financial
Services
2.1%
Voya
Financial,
Inc.
....................................
United
States
2,905,386
178,652,185
Diversified
Telecommunication
Services
2.6%
Deutsche
Telekom
AG
..................................
Germany
11,095,342
220,749,115
Electrical
Equipment
1.5%
Mitsubishi
Electric
Corp.
................................
Japan
13,104,264
129,804,862
Energy
Equipment
&
Services
2.2%
Schlumberger
Ltd.
.....................................
United
States
3,538,450
189,165,537
Entertainment
3.2%
Activision
Blizzard,
Inc.
.................................
United
States
2,253,917
172,537,346
b
Walt
Disney
Co.
(The)
..................................
United
States
1,091,917
94,865,749
267,403,095
Food
Products
4.3%
Danone
SA
..........................................
France
3,219,979
169,703,415
Kraft
Heinz
Co.
(The)
..................................
United
States
4,740,348
192,979,567
362,682,982
Health
Care
Equipment
&
Supplies
1.9%
Medtronic
plc
........................................
United
States
2,040,654
158,599,629
Health
Care
Providers
&
Services
7.6%
CVS
Health
Corp.
.....................................
United
States
1,899,779
177,040,405
Elevance
Health,
Inc.
..................................
United
States
300,575
154,185,958
Fresenius
SE
&
Co.
KGaA
...............................
Germany
6,232,115
174,066,796
Franklin
Mutual
Series
Funds
Schedule
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Investments
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Mutual
Global
Discovery
Fund
(continued)
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accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
77
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Health
Care
Providers
&
Services
(continued)
Humana,
Inc.
........................................
United
States
276,089
$
141,410,025
646,703,184
Household
Durables
2.2%
DR
Horton,
Inc.
.......................................
United
States
2,075,550
185,014,527
Household
Products
1.4%
Reckitt
Benckiser
Group
plc
.............................
United
Kingdom
1,697,657
117,670,548
Industrial
Conglomerates
2.3%
Siemens
AG
.........................................
Germany
1,407,613
194,032,245
Insurance
6.0%
Everest
Re
Group
Ltd.
.................................
United
States
475,928
157,660,669
NN
Group
NV
........................................
Netherlands
4,046,232
165,451,603
Willis
Towers
Watson
plc
................................
United
States
764,202
186,908,525
510,020,797
Interactive
Media
&
Services
1.9%
b
Meta
Platforms,
Inc.,
A
.................................
United
States
1,303,381
156,848,870
IT
Services
5.0%
Capgemini
SE
........................................
France
844,890
141,238,896
b
Fiserv,
Inc.
..........................................
United
States
1,380,750
139,552,402
Global
Payments,
Inc.
..................................
United
States
1,401,913
139,237,999
420,029,297
Machinery
2.3%
Parker-Hannifin
Corp.
..................................
United
States
683,078
198,775,698
Media
2.0%
b
Charter
Communications,
Inc.,
A
..........................
United
States
510,181
173,002,377
Metals
&
Mining
2.1%
Rio
Tinto
plc
.........................................
Australia
2,567,147
180,678,703
Oil,
Gas
&
Consumable
Fuels
5.8%
BP
plc
..............................................
United
Kingdom
40,061,494
231,142,920
Suncor
Energy,
Inc.
....................................
Canada
4,070,447
129,117,946
Williams
Cos.,
Inc.
(The)
................................
United
States
4,028,487
132,537,222
492,798,088
Personal
Products
2.1%
b
Haleon
plc
..........................................
United
States
45,063,824
178,292,872
Pharmaceuticals
6.0%
GSK
plc
............................................
United
States
10,658,458
184,205,009
Merck
&
Co.,
Inc.
.....................................
United
States
979,890
108,718,796
Novartis
AG,
ADR
.....................................
Switzerland
2,335,621
211,887,537
504,811,342
Real
Estate
Management
&
Development
1.7%
b
CBRE
Group,
Inc.,
A
...................................
United
States
1,895,590
145,884,606
Semiconductors
&
Semiconductor
Equipment
2.7%
b
Renesas
Electronics
Corp.
..............................
Japan
15,502,134
136,964,993
b
Tower
Semiconductor
Ltd.
...............................
Israel
2,107,861
91,059,595
228,024,588
Franklin
Mutual
Series
Funds
Schedule
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Investments
Franklin
Mutual
Global
Discovery
Fund
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Annual
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The
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78
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Software
1.4%
b
Avaya
Holdings
Corp.
..................................
United
States
537
$
105
b
Check
Point
Software
Technologies
Ltd.
....................
Israel
933,956
117,827,889
117,827,994
Technology
Hardware,
Storage
&
Peripherals
2.8%
Samsung
Electronics
Co.
Ltd.
............................
South
Korea
3,161,628
139,357,657
b
Western
Digital
Corp.
..................................
United
States
3,177,556
100,251,892
239,609,549
Tobacco
1.9%
British
American
Tobacco
plc
.............................
United
Kingdom
3,999,945
158,223,891
Trading
Companies
&
Distributors
2.4%
b
AerCap
Holdings
NV
...................................
Ireland
3,469,331
202,331,384
Total
Common
Stocks
(Cost
$6,911,195,269)
....................................
8,166,119,548
Preferred
Stocks
1.2%
Automobiles
1.2%
e
Volkswagen
AG,
22.97%
................................
Germany
867,939
107,662,540
Total
Preferred
Stocks
(Cost
$136,994,870)
.....................................
107,662,540
Principal
Amount
*
Corporate
Bonds
0.6%
Airlines
0.1%
d
American
Airlines,
Inc.
,
Senior
Secured
Note
,
144A,
11.75
%
,
7/15/25
United
States
9,845,000
10,581,694
Pharmaceuticals
0.4%
d
Bausch
Health
Americas,
Inc.
,
Senior
Note,
144A,
9.25%,
4/01/26
......................
United
States
33,966,000
23,829,825
Senior
Note,
144A,
8.5%,
1/31/27
.......................
United
States
15,606,000
8,188,936
d
Bausch
Health
Cos.,
Inc.
,
Senior
Note
,
144A,
9
%
,
12/15/25
......
United
States
1,290,000
1,020,042
33,038,803
Software
0.1%
d
Veritas
US,
Inc.
/
Veritas
Bermuda
Ltd.
,
Senior
Secured
Note
,
144A,
7.5
%
,
9/01/25
......................................
United
States
8,153,000
5,632,654
Total
Corporate
Bonds
(Cost
$68,259,641)
......................................
49,253,151
Shares
a
Companies
in
Liquidation
0.0%
a,b,f
Walter
Energy,
Inc.,
Litigation
Trust,
Contingent
Distribution
......
United
States
30,996,000
—
Total
Companies
in
Liquidation
(Cost
$–)
......................................
—
Total
Long
Term
Investments
(Cost
$7,116,449,780)
.............................
8,323,035,239
a
Short
Term
Investments
1.5%
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
U.S.
Government
and
Agency
Securities
1.5%
g
FHLB,
1/03/23
.......................................
United
States
106,600,000
106,600,000
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Global
Discovery
Fund
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79
Short
Term
Investments
(continued)
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
U.S.
Government
and
Agency
Securities
(continued)
g,h
U.S.
Treasury
Bills
,
5/18/23
...........................................
United
States
3,000,000
$
2,949,270
5/25/23
...........................................
United
States
3,000,000
2,946,673
6/01/23
...........................................
United
States
10,000,000
9,813,853
6/15/23
...........................................
United
States
5,000,000
4,899,319
20,609,115
Total
U.S.
Government
and
Agency
Securities
(Cost
$127,178,443)
................
127,209,115
Total
Short
Term
Investments
(Cost
$127,178,443
)
...............................
127,209,115
a
Total
Investments
(Cost
$7,243,628,223)
99.8%
..................................
$8,450,244,354
Other
Assets,
less
Liabilities
0.2%
.............................................
13,162,249
Net
Assets
100.0%
...........................................................
$8,463,406,603
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
a
Fair
valued
using
significant
unobservable
inputs.
See
Note
16
regarding
fair
value
measurements.
b
Non-income
producing.
c
See
Note
12
regarding
restricted
securities.
d
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
December
31,
2022,
the
aggregate
value
of
these
securities
was
$211,741,731,
representing
2.5%
of
net
assets.
e
Variable
rate
security.
The
rate
shown
represents
the
yield
at
period
end.
f
Contingent
distributions
represent
the
right
to
receive
additional
distributions,
if
any,
during
the
reorganization
of
the
underlying
company.
Shares
represent
total
underlying
principal
of
debt
securities.
g
The
security
was
issued
on
a
discount
basis
with
no
stated
coupon
rate.
h
A
portion
or
all
of
the
security
has
been
segregated
as
collateral
for
open
forward
exchange
contracts.
At
December
31,
2022,
the
aggregate
value
of
these
securities
pledged
amounted
to
$18,221,149,
representing
0.2%
of
net
assets.
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Global
Discovery
Fund
(continued)
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Annual
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The
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notes
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part
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these
financial
statements.
80
At
December
31,
2022,
the
Fund
had
the
following futures
contracts
outstanding.
See
Note
1(d).
At
December
3
1
,
2022,
the
Fund
had
the
following
forward
exchange
contracts
outstanding.
See
Note
1
(
d
).
See
Note 13 regarding
other
derivative
information.
See
A
bbreviations
on
page
151
.
Futures
Contracts
Description
Type
Number
of
Contracts
Notional
Amount
*
Expiration
Date
Value/
Unrealized
Appreciation
(Depreciation)
Foreign
exchange
contracts
Foreign
Exchange
EUR/USD
...................
Short
1,915
$
257,423,875
3/13/23
$
(3,493,818)
Foreign
Exchange
GBP/USD
...................
Short
355
26,811,375
3/13/23
487,248
Total
Futures
Contracts
......................................................................
$(3,006,570)
*
As
of
period
end.
Forward
Exchange
Contracts
Currency
Counter-
party
a
Type
Quantity
Contract
Amount
*
Settlement
Date
Unrealized
Appreciation
Unrealized
Depreciation
a
a
a
a
a
a
a
a
OTC
Forward
Exchange
Contracts
Euro
.............
BOFA
Buy
99,831,025
99,818,717
1/09/23
$
7,081,005
$
—
Euro
.............
BOFA
Sell
10,418,884
10,654,837
1/09/23
—
(501,773)
Euro
.............
HSBK
Buy
54,052,374
53,760,354
1/09/23
4,119,286
—
Euro
.............
HSBK
Sell
191,078,544
197,092,099
1/09/23
—
(7,516,072)
Euro
.............
UBSW
Buy
42,451,258
43,142,640
1/09/23
2,314,449
—
Euro
.............
UBSW
Sell
200,804,638
206,943,770
1/09/23
—
(8,079,167)
British
Pound
......
BOFA
Buy
575,000
653,929
1/17/23
41,451
—
British
Pound
......
BOFA
Sell
13,769,075
16,921,342
1/17/23
273,298
(3,655)
British
Pound
......
HSBK
Buy
420,000
475,724
1/17/23
32,205
—
British
Pound
......
UBSW
Buy
660,941
781,809
1/17/23
17,504
—
British
Pound
......
UBSW
Sell
4,818,828
5,867,071
1/17/23
53,523
(14,127)
Japanese
Yen
......
BOFA
Buy
570,262,365
4,281,286
2/17/23
88,832
—
Japanese
Yen
......
BOFA
Sell
16,568,045,151
120,134,171
2/17/23
—
(6,832,491)
Japanese
Yen
......
UBSW
Buy
104,834,112
798,265
2/17/23
5,115
—
Japanese
Yen
......
UBSW
Sell
1,319,502,090
9,570,896
2/17/23
—
(540,905)
South
Korean
Won
..
HSBK
Buy
9,072,291,546
7,192,960
5/12/23
46,067
(3,712)
South
Korean
Won
..
HSBK
Sell
58,839,681,305
42,640,093
5/12/23
—
(4,285,612)
South
Korean
Won
..
UBSW
Sell
81,361,131,541
58,863,075
5/12/23
—
(6,023,891)
Total
Forward
Exchange
Contracts
...................................................
$14,072,735
$(33,801,405)
Net
unrealized
appreciation
(depreciation)
............................................
$(19,728,670)
*
In
U.S.
dollars
unless
otherwise
indicated.
a
May
be
comprised
of
multiple
contracts
with
the
same
counterparty,
currency
and
settlement
date.
Franklin
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Series
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Financial
Highlights
Franklin
Mutual
Quest
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
81
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
Z
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$14.46
$13.31
$14.06
$12.95
$15.83
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.50
0.23
0.40
c
0.45
0.48
Net
realized
and
unrealized
gains
(losses)
...........
(1.51)
1.29
(0.66)
1.16
(1.58)
Total
from
investment
operations
....................
(1.01)
1.52
(0.26)
1.61
(1.10)
Less
distributions
from:
Net
investment
income
..........................
(0.49)
(0.37)
(0.49)
(0.50)
(0.58)
Net
realized
gains
.............................
—
—
—
—
(1.20)
Total
distributions
...............................
(0.49)
(0.37)
(0.49)
(0.50)
(1.78)
Net
asset
value,
end
of
year
.......................
$12.96
$14.46
$13.31
$14.06
$12.95
Total
return
....................................
(6.86)%
11.51%
(1.83)%
12.40%
(6.85)%
Ratios
to
average
net
assets
Expenses
d
,
e
....................................
0.78%
f
0.87%
f
0.81%
f
0.78%
0.78%
Expenses
-
incurred
in
connection
with
securities
sold
short
0.02%
0.06%
0.02%
0.02%
—%
g
Net
investment
income
...........................
3.60%
1.59%
3.22%
c
3.22%
2.96%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,047,788
$2,397,948
$2,472,118
$3,042,387
$3,054,792
Portfolio
turnover
rate
............................
101.19%
66.95%
52.07%
60.96%
115.52%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.11
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
2.32%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
82
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$14.22
$13.09
$13.84
$12.75
$15.60
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.46
0.19
0.37
c
0.41
0.43
Net
realized
and
unrealized
gains
(losses)
...........
(1.48)
1.28
(0.67)
1.14
(1.54)
Total
from
investment
operations
....................
(1.02)
1.47
(0.30)
1.55
(1.11)
Less
distributions
from:
Net
investment
income
..........................
(0.46)
(0.34)
(0.45)
(0.46)
(0.54)
Net
realized
gains
.............................
—
—
—
—
(1.20)
Total
distributions
...............................
(0.46)
(0.34)
(0.45)
(0.46)
(1.74)
Net
asset
value,
end
of
year
.......................
$12.74
$14.22
$13.09
$13.84
$12.75
Total
return
d
...................................
(7.16)%
11.26%
(2.12)%
12.14%
(7.00)%
Ratios
to
average
net
assets
Expenses
e
,
f
....................................
1.03%
g
1.12%
g
1.06%
g
1.03%
1.03%
Expenses
-
incurred
in
connection
with
securities
sold
short
0.02%
0.06%
0.02%
0.02%
—%
h
Net
investment
income
...........................
3.35%
1.34%
2.98%
c
2.97%
2.71%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$617,190
$723,791
$760,173
$1,035,699
$1,067,382
Portfolio
turnover
rate
............................
101.19%
66.95%
52.07%
60.96%
115.52%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.11
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
2.08%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
83
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$14.17
$13.01
$13.73
$12.64
$15.35
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.35
0.08
0.27
c
0.30
0.29
Net
realized
and
unrealized
gains
(losses)
...........
(1.47)
1.27
(0.66)
1.12
(1.49)
Total
from
investment
operations
....................
(1.12)
1.35
(0.39)
1.42
(1.20)
Less
distributions
from:
Net
investment
income
..........................
(0.34)
(0.19)
(0.33)
(0.33)
(0.31)
Net
realized
gains
.............................
—
—
—
—
(1.20)
Total
distributions
...............................
(0.34)
(0.19)
(0.33)
(0.33)
(1.51)
Net
asset
value,
end
of
year
.......................
$12.71
$14.17
$13.01
$13.73
$12.64
Total
return
d
...................................
(7.88)%
10.42%
(2.83)%
11.26%
(7.77)%
Ratios
to
average
net
assets
Expenses
e
,
f
....................................
1.78%
g
1.87%
g
1.81%
g
1.78%
1.78%
Expenses
-
incurred
in
connection
with
securities
sold
short
0.02%
0.06%
0.02%
0.02%
—%
h
Net
investment
income
...........................
2.57%
0.55%
2.24%
c
2.22%
1.96%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$33,039
$44,228
$65,715
$112,751
$141,619
Portfolio
turnover
rate
............................
101.19%
66.95%
52.07%
60.96%
115.52%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.11
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.34%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable,
and
is
not
annualized
for
periods
less
than
one
year.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
84
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$13.98
$12.87
$13.61
$12.54
$15.40
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.45
0.15
0.33
c
0.37
0.39
Net
realized
and
unrealized
gains
(losses)
...........
(1.49)
1.27
(0.66)
1.12
(1.53)
Total
from
investment
operations
....................
(1.04)
1.42
(0.33)
1.49
(1.14)
Less
distributions
from:
Net
investment
income
..........................
(0.42)
(0.31)
(0.41)
(0.42)
(0.52)
Net
realized
gains
.............................
—
—
—
—
(1.20)
Total
distributions
...............................
(0.42)
(0.31)
(0.41)
(0.42)
(1.72)
Net
asset
value,
end
of
year
.......................
$12.52
$13.98
$12.87
$13.61
$12.54
Total
return
....................................
(7.44)%
11.05%
(2.38)%
11.88%
(7.31)%
Ratios
to
average
net
assets
Expenses
d
,
e
....................................
1.27%
f
1.37%
f
1.31%
f
1.28%
1.28%
Expenses
-
incurred
in
connection
with
securities
sold
short
0.02%
0.06%
0.02%
0.02%
—%
g
Net
investment
income
...........................
3.39%
1.10%
2.72%
c
2.72%
2.46%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$3,725
$2,643
$2,495
$3,415
$2,929
Portfolio
turnover
rate
............................
101.19%
66.95%
52.07%
60.96%
115.52%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.11
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.82%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
85
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$14.45
$13.29
$14.05
$12.94
$15.81
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.51
0.23
0.41
c
0.46
0.49
Net
realized
and
unrealized
gains
(losses)
...........
(1.51)
1.31
(0.68)
1.15
(1.57)
Total
from
investment
operations
....................
(1.00)
1.54
(0.27)
1.61
(1.08)
Less
distributions
from:
Net
investment
income
..........................
(0.50)
(0.38)
(0.49)
(0.50)
(0.59)
Net
realized
gains
.............................
—
—
—
—
(1.20)
Total
distributions
...............................
(0.50)
(0.38)
(0.49)
(0.50)
(1.79)
Net
asset
value,
end
of
year
.......................
$12.95
$14.45
$13.29
$14.05
$12.94
Total
return
....................................
(6.88)%
11.67%
(1.79)%
12.40%
(6.73)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
d
.....
0.76%
0.87%
0.79%
0.74%
0.74%
Expenses
net
of
waiver
and
payments
by
affiliates
d
,
e
.....
0.72%
0.82%
0.75%
0.72%
0.72%
Expenses
-
incurred
in
connection
with
securities
sold
short
0.02%
0.06%
0.02%
0.02%
—%
f
Net
investment
income
...........................
3.65%
1.63%
3.28%
c
3.28%
3.02%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$32,109
$39,292
$47,970
$107,723
$116,012
Portfolio
turnover
rate
............................
101.19%
66.95%
52.07%
60.96%
115.52%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.11
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
2.38%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Rounds
to
less
than
0.01%.
Franklin
Mutual
Series
Funds
Schedule
of
Investments,
December
31,
2022
Franklin
Mutual
Quest
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
86
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
65.2%
Airlines
0.1%
Spirit
Airlines,
Inc.
.....................................
United
States
121,860
$
2,373,833
Auto
Components
0.5%
Denso
Corp.
.........................................
Japan
251,284
12,318,700
a,b,c
International
Automotive
Components
Group
Brazil
LLC
........
Brazil
2,548,299
89,695
12,408,395
Automobiles
0.8%
General
Motors
Co.
....................................
United
States
638,311
21,472,782
Banks
6.9%
BNP
Paribas
SA
......................................
France
224,333
12,772,743
First
Horizon
Corp.
....................................
United
States
4,109,613
100,685,519
ING
Groep
NV
.......................................
Netherlands
2,028,745
24,711,323
JPMorgan
Chase
&
Co.
.................................
United
States
51,285
6,877,318
b
SVB
Financial
Group
...................................
United
States
78,283
18,016,050
Wells
Fargo
&
Co.
.....................................
United
States
647,768
26,746,341
189,809,294
Beverages
1.1%
Heineken
NV
........................................
Netherlands
303,951
28,628,497
Chemicals
2.7%
Avient
Corp.
.........................................
United
States
700,904
23,662,519
d
Covestro
AG,
144A,
Reg
S
..............................
Germany
1,281,394
49,915,719
73,578,238
Commercial
Services
&
Supplies
0.3%
b
Stericycle,
Inc.
.......................................
United
States
166,163
8,289,872
Communications
Equipment
0.4%
a,b,c,e
Sorenson
Communications
LLC,
Membership
Interests
.........
United
States
224,279
—
a,b,c,e
Sorenson
Communications
LLC,
Membership
Interests,
B
.......
United
States
106,532
9,476,129
9,476,129
Consumer
Finance
0.8%
Bread
Financial
Holdings,
Inc.
............................
United
States
559,265
21,061,920
Diversified
Financial
Services
2.2%
M&G
plc
............................................
United
Kingdom
4,233,218
9,572,006
Voya
Financial,
Inc.
....................................
United
States
835,978
51,404,287
60,976,293
Diversified
Telecommunication
Services
1.0%
Deutsche
Telekom
AG
..................................
Germany
558,741
11,116,519
a,b,c
Windstream
Holdings,
Inc.
...............................
United
States
1,623,438
15,568,639
26,685,158
Electronic
Equipment,
Instruments
&
Components
0.6%
b
Flex
Ltd.
............................................
United
States
806,364
17,304,571
Entertainment
4.5%
Activision
Blizzard,
Inc.
.................................
United
States
1,028,492
78,731,063
b,f
Walt
Disney
Co.
(The)
..................................
United
States
516,979
44,915,135
123,646,198
Equity
Real
Estate
Investment
Trusts
(REITs)
1.5%
Uniti
Group,
Inc.
......................................
United
States
2,434,828
13,464,599
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
87
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Equity
Real
Estate
Investment
Trusts
(REITs)
(continued)
Vornado
Realty
Trust
...................................
United
States
1,355,788
$
28,213,948
41,678,547
Food
Products
1.0%
Danone
SA
..........................................
France
533,582
28,121,515
Health
Care
Equipment
&
Supplies
2.1%
b
Bausch
+
Lomb
Corp.
..................................
United
States
467,514
7,251,142
Medtronic
plc
........................................
United
States
648,225
50,380,047
57,631,189
Health
Care
Providers
&
Services
0.3%
Humana,
Inc.
........................................
United
States
13,988
7,164,514
Household
Durables
0.9%
DR
Horton,
Inc.
.......................................
United
States
274,802
24,495,850
Household
Products
0.6%
Reckitt
Benckiser
Group
plc
.............................
United
Kingdom
244,399
16,940,150
Insurance
12.1%
ASR
Nederland
NV
....................................
Netherlands
404,631
19,224,752
China
Pacific
Insurance
Group
Co.
Ltd.,
H
...................
China
13,018,000
28,787,274
Conduit
Holdings
Ltd.
..................................
United
States
3,154,832
16,323,390
Direct
Line
Insurance
Group
plc
..........................
United
Kingdom
28,884,875
76,985,951
Everest
Re
Group
Ltd.
.................................
United
States
169,207
56,053,203
Hartford
Financial
Services
Group,
Inc.
(The)
................
United
States
542,054
41,103,955
NN
Group
NV
........................................
Netherlands
893,024
36,516,011
Willis
Towers
Watson
plc
................................
United
States
222,979
54,536,204
329,530,740
Interactive
Media
&
Services
0.2%
b
Meta
Platforms,
Inc.,
A
.................................
United
States
36,010
4,333,443
Internet
&
Direct
Marketing
Retail
0.4%
eBay,
Inc.
...........................................
United
States
290,949
12,065,655
IT
Services
2.9%
Cognizant
Technology
Solutions
Corp.,
A
....................
United
States
433,512
24,792,551
b
Fiserv,
Inc.
..........................................
United
States
316,289
31,967,329
Global
Payments,
Inc.
..................................
United
States
227,446
22,589,937
79,349,817
Media
3.6%
b
Charter
Communications,
Inc.,
A
..........................
United
States
132,419
44,903,283
b
Clear
Channel
Outdoor
Holdings,
Inc.
......................
United
States
7,186,793
7,546,133
Comcast
Corp.,
A
.....................................
United
States
1,252,116
43,786,496
b
Loyalty
Ventures,
Inc.
..................................
United
States
329,767
794,738
a,b,c
Tenerity,
Inc.
.........................................
United
States
1
44
97,030,694
Metals
&
Mining
0.6%
Rio
Tinto
plc
.........................................
Australia
246,997
17,383,928
Oil,
Gas
&
Consumable
Fuels
2.7%
BP
plc
..............................................
United
Kingdom
4,939,342
28,498,536
Suncor
Energy,
Inc.
....................................
Canada
914,653
29,013,550
Williams
Cos.,
Inc.
(The)
................................
United
States
516,337
16,987,487
74,499,573
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
88
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Personal
Products
1.1%
b
Haleon
plc
..........................................
United
States
7,852,289
$
31,067,207
Pharmaceuticals
5.5%
b
Bausch
Health
Cos.,
Inc.
................................
United
States
1,877,525
11,790,857
b
Elanco
Animal
Health,
Inc.
...............................
United
States
3,317,228
40,536,526
GSK
plc
............................................
United
States
2,275,516
39,326,650
Novartis
AG,
ADR
.....................................
Switzerland
633,877
57,505,321
149,159,354
Real
Estate
Management
&
Development
0.9%
b
Cushman
&
Wakefield
plc
...............................
United
States
1,233,535
15,369,846
Savills
plc
...........................................
United
Kingdom
900,406
8,967,575
24,337,421
Semiconductors
&
Semiconductor
Equipment
2.3%
b
Tower
Semiconductor
Ltd.
...............................
Israel
1,467,438
63,393,322
Software
2.9%
b
ACI
Worldwide,
Inc.
....................................
United
States
670,870
15,430,010
b
Check
Point
Software
Technologies
Ltd.
....................
Israel
295,398
37,267,412
Gen
Digital,
Inc.
......................................
United
States
256,252
5,491,480
Oracle
Corp.
.........................................
United
States
272,648
22,286,248
80,475,150
Specialty
Retail
0.3%
b,g
Carvana
Co.
.........................................
United
States
130,400
618,096
b
ODP
Corp.
(The)
......................................
United
States
170,654
7,771,583
a,b,c,e
Wayne
Services
Legacy,
Inc.
.............................
United
States
7,104
—
8,389,679
Technology
Hardware,
Storage
&
Peripherals
0.3%
b,f
Western
Digital
Corp.
..................................
United
States
239,743
7,563,892
Tobacco
0.7%
British
American
Tobacco
plc
.............................
United
Kingdom
515,046
20,373,426
Wireless
Telecommunication
Services
0.4%
b
Intelsat
SA
..........................................
Luxembourg
106,029
2,565,902
b
T-Mobile
US,
Inc.
.....................................
United
States
66,455
9,303,700
11,869,602
Total
Common
Stocks
(Cost
$1,891,338,577)
....................................
1,782,565,848
Preferred
Stocks
0.9%
Automobiles
0.8%
h
Volkswagen
AG,
22.97%
................................
Germany
170,275
21,121,575
Oil,
Gas
&
Consumable
Fuels
0.1%
b
NGL
Energy
Partners
LP,
11.98%,
B
.......................
United
States
298,684
2,759,840
b
Total
Preferred
Stocks
(Cost
$29,116,948)
......................................
23,881,415
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
89
a
a
Country
Rights
a
Value
a
a
a
a
a
a
Rights
0.0%
†
Diversified
Telecommunication
Services
0.0%
†
b
Intelsat
Jackson
Holdings
SA,
B,
12/05/25
...................
Luxembourg
128,313
$
681,663
Total
Rights
(Cost
$–)
........................................................
681,663
Warrants
Warrants
0.1%
Diversified
Telecommunication
Services
0.0%
†
a,b,c
Windstream
Holdings,
Inc.,
9/21/55
........................
United
States
91,545
877,909
Media
0.0%
†
a,b,c
Tenerity,
Inc.,
4/10/24
..................................
United
States
48,380
792,276
Wireless
Telecommunication
Services
0.1%
b
Intelsat
Emergence
SA,
2/17/27
..........................
Luxembourg
323,376
1,149,315
1,149,315
Total
Warrants
(Cost
$9,489,651)
..............................................
2,819,500
Units
Limited
Partnerships
0.6%
Hotels,
Restaurants
&
Leisure
0.6%
Cedar
Fair
LP
........................................
United
States
388,265
16,050,875
Total
Limited
Partnerships
(Cost
$18,254,023)
..................................
16,050,875
Principal
Amount
*
Corporate
Bonds
16.3%
Airlines
1.2%
d
American
Airlines,
Inc.
,
Senior
Secured
Note
,
144A,
11.75
%
,
7/15/25
United
States
30,260,000
32,524,333
Diversified
Telecommunication
Services
2.5%
Frontier
Communications
Holdings
LLC
,
Secured
Note
,
5.875
%
,
11/01/29
..........................................
United
States
34,628,717
26,836,419
d
Windstream
Escrow
LLC
/
Windstream
Escrow
Finance
Corp.
,
Senior
Secured
Note
,
144A,
7.75
%
,
8/15/28
................
United
States
49,363,000
40,338,963
67,175,382
Health
Care
Providers
&
Services
0.1%
d
Envision
Healthcare
Corp.
,
Senior
Note
,
144A,
8.75
%
,
10/15/26
..
United
States
10,000,000
2,769,678
Hotels,
Restaurants
&
Leisure
0.1%
d
Carnival
Holdings
Bermuda
Ltd.
,
Senior
Note
,
144A,
10.375
%
,
5/01/28
...........................................
United
States
3,697,300
3,802,248
Media
2.2%
d
Clear
Channel
Outdoor
Holdings,
Inc.
,
Senior
Note,
144A,
7.75%,
4/15/28
......................
United
States
31,000,000
22,670,434
Senior
Note,
144A,
7.5%,
6/01/29
.......................
United
States
19,000,000
13,986,755
d
DISH
Network
Corp.
,
Senior
Secured
Note
,
144A,
11.75
%
,
11/15/27
United
States
23,267,000
23,991,767
60,648,956
Pharmaceuticals
5.0%
d
Bausch
Health
Americas,
Inc.
,
Senior
Note,
144A,
9.25%,
4/01/26
......................
United
States
55,459,000
38,908,858
Senior
Note,
144A,
8.5%,
1/31/27
.......................
United
States
35,481,000
18,617,945
d
Bausch
Health
Cos.,
Inc.
,
Senior
Bond,
144A,
7.25%,
5/30/29
......................
United
States
80,000,000
38,754,000
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
90
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
Corporate
Bonds
(continued)
Pharmaceuticals
(continued)
d
Bausch
Health
Cos.,
Inc.,
(continued)
Senior
Note,
144A,
9%,
12/15/25
.......................
United
States
17,107,000
$
13,527,018
Senior
Secured
Note,
144A,
6.125%,
2/01/27
..............
United
States
30,000,000
20,726,400
Senior
Secured
Note,
144A,
4.875%,
6/01/28
..............
United
States
10,000,000
6,379,119
136,913,340
Software
2.2%
d
Veritas
US,
Inc.
/
Veritas
Bermuda
Ltd.
,
Senior
Secured
Note
,
144A,
7.5
%
,
9/01/25
......................................
United
States
85,772,000
59,257,199
Specialty
Retail
3.0%
d
Carvana
Co.
,
Senior
Note,
144A,
5.625%,
10/01/25
....................
United
States
15,000,000
6,763,737
Senior
Note,
144A,
10.25%,
5/01/30
.....................
United
States
11,000,000
5,189,288
d
Staples,
Inc.
,
Senior
Note,
144A,
10.75%,
4/15/27
.....................
United
States
79,226,000
57,175,820
Senior
Secured
Note,
144A,
7.5%,
4/15/26
................
United
States
16,581,000
14,305,092
83,433,937
Total
Corporate
Bonds
(Cost
$578,429,207)
.....................................
446,525,073
i
Senior
Floating
Rate
Interests
7.3%
Communications
Equipment
3.7%
a,c,e,j
Sorenson
Communications
LLC
,
Term
Loan,
A,
PIK,
10%,
4/01/30
........................
United
States
24,776,325
23,170,071
Term
Loan,
B,
PIK,
8%,
4/01/30
.........................
United
States
100,415,114
78,322,185
101,492,256
a
a
a
a
a
a
Containers
&
Packaging
0.7%
k,l
Mauser
Packaging
Solutions
Holding
Co.
,
Initial
Term
Loan
,
7.37
%
,
(
1-month
USD
LIBOR
+
3.25
%
),
4/03/24
..................
United
States
18,236,837
17,841,736
Health
Care
Providers
&
Services
0.3%
k,l
Covetrus
Midco
2
LP
,
First
Lien,
Initial
CME
Term
Loan
,
9.58
%
,
(
3-month
SOFR
+
5
%
),
10/13/29
........................
United
States
10,251,963
9,631,719
Media
0.4%
l
Loyalty
Ventures,
Inc.
,
Term
Loan,
B
,
8.571
%
,
(
1-month
USD
LIBOR
+
4.5
%
),
11/03/27
....................................
United
States
28,277,563
11,823,556
l
Software
2.2%
Quest
Software
US
Holdings,
Inc.
,
k
First
Lien,
Initial
CME
Term
Loan,
8.494%,
(3-month
SOFR
+
4.25%),
2/01/29
.....................................
United
States
18,279,773
14,184,007
Second
Lien,
Initial
CME
Term
Loan,
11.594%,
(3-month
SOFR
+
7.5%),
2/01/30
......................................
United
States
46,841,437
28,905,148
Veritas
US,
Inc.
,
2021
Dollar
Term
Loan,
B
,
9.73
%
,
(
3-month
USD
LIBOR
+
5
%
),
9/01/25
................................
United
States
22,423,380
15,932,596
59,021,751
a
a
a
a
a
a
Total
Senior
Floating
Rate
Interests
(Cost
$256,785,408)
.........................
199,811,018
Asset-Backed
Securities
0.1%
Airlines
0.1%
American
Airlines
Pass-Through
Trust
,
2013-2
,
A
,
4.95
%
,
1/15/23
.
.
United
States
2,237,602
2,234,614
Total
Asset-Backed
Securities
(Cost
$2,204,039)
................................
2,234,614
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
91
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Companies
in
Liquidation
0.0%
a,b,m
Bosgen
Liquidating
Trust
c/o
Verdolino
and
Lowey
P.C.,
Contingent
Distribution
........................................
Netherlands
159,828
$
—
a,b,m
Walter
Energy,
Inc.,
Litigation
Trust,
Contingent
Distribution
......
United
States
7,443,000
—
Total
Companies
in
Liquidation
(Cost
$–)
......................................
—
Total
Long
Term
Investments
(Cost
$2,785,617,853)
.............................
2,474,570,006
a
Number
of
Contracts
Notional
Amount
#
a
a
aa
Options
Purchased
0.0%
†
Puts
-
Exchange-Traded
Equity
Options
Carvana
Co.,
January
Strike
Price
$2.50,
Expires
1/19/24
.......
2,000
948,000
250,000
Macy's,
Inc.,
February
Strike
Price
$17.00,
Expires
2/17/23
......
3,000
6,195,000
126,000
Macy's,
Inc.,
March
Strike
Price
$17.00,
Expires
3/17/23
........
3,000
6,195,000
240,000
616,000
Total
Options
Purchased
(Cost
$758,393)
......................................
616,000
Short
Term
Investments
9.2%
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
U.S.
Government
and
Agency
Securities
9.2%
n
FHLB,
1/03/23
.......................................
United
States
234,300,000
234,300,000
n
U.S.
Treasury
Bills
,
1/05/23
...........................................
United
States
1,000,000
999,798
f
1/19/23
...........................................
United
States
1,000,000
998,393
f
5/04/23
...........................................
United
States
10,000,000
9,849,226
f
5/18/23
...........................................
United
States
1,000,000
983,090
f
6/01/23
...........................................
United
States
5,000,000
4,906,927
17,737,434
Total
U.S.
Government
and
Agency
Securities
(Cost
$251,984,623)
................
252,037,434
Total
Short
Term
Investments
(Cost
$251,984,623
)
...............................
252,037,434
a
Total
Investments
(Cost
$3,038,360,869)
99.7%
..................................
$2,727,223,440
Options
Written
(0.0)%
†
......................................................
(686,250)
Securities
Sold
Short
(1.5)%
..................................................
(40,769,071)
Other
Assets,
less
Liabilities
1.8%
.............................................
48,082,641
Net
Assets
100.0%
...........................................................
$2,733,850,760
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
92
a
a
a
Number
of
Contracts
Notional
Amount
#
a
Value
o
Options
Written
(0.0)%
†
Puts
-
Exchange-Traded
Equity
Options
Carvana
Co.,
January
Strike
Price
$7.50,
Expires
1/20/23
.......
2,250
1,066,500
$
(686,250)
(686,250)
Total
Options
Written
(Premiums
received
$401,950)
............................
$
(686,250)
Country
Shares
p
Securities
Sold
Short
(0.3)%
Common
Stocks
(0.3)%
Insurance
(0.3)%
Aon
plc,
A
...........................................
United
States
27,760
(8,331,886)
Total
Common
Stocks
(Proceeds
$6,363,852)
...................................
(8,331,886)
Principal
Amount
*
Corporate
Bonds
(1.2)%
Containers
&
Packaging
(1.2)%
d
Mauser
Packaging
Solutions
Holding
Co.,
Senior
Note,
144A,
7.25%,
4/15/25
.....................................
United
States
35,000,000
(32,437,185)
Total
Corporate
Bonds
(Proceeds
$31,821,866)
.................................
(32,437,185)
Total
Securities
Sold
Short
(Proceeds
$38,185,718)
..............................
$(40,769,071)
#
Notional
amount
is
the
number
of
contracts
multiplied
by
contract
size,
and
may
be
multiplied
by
the
underlying
price.
May
include
currency
units,
bushels,
shares,
pounds,
barrels
or
other
units.
Currency
units
are
stated
in
U.S.
dollars
unless
otherwise
indicated.
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
Fair
valued
using
significant
unobservable
inputs.
See
Note
16
regarding
fair
value
measurements.
b
Non-income
producing.
c
See
Note
12
regarding
restricted
securities.
d
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
December
31,
2022,
the
net
value
of
these
securities
was
$437,167,188,
representing
16.0%
of
net
assets.
e
See
Note
14
regarding
holdings
of
5%
voting
securities.
f
A
portion
or
all
of
the
security
has
been
segregated
as
collateral
for
securities
sold
short,
open
forward
exchange
contracts
and
open
written
options
contracts.
At
December
31,
2022,
the
aggregate
value
of
these
securities
pledged
amounted
to
$36,758,951,
representing
1.3%
of
net
assets.
g
A
portion
or
all
of
the
security
is
on
loan
at
December
31,
2022.
See
Note
1(f).
h
Variable
rate
security.
The
rate
shown
represents
the
yield
at
period
end.
i
See
Note
1(g)
regarding
senior
floating
rate
interests.
j
Income
may
be
received
in
additional
securities
and/or
cash.
k
A
portion
or
all
of
the
security
purchased
on
a
delayed
delivery
basis.
See
Note
1(c).
l
The
coupon
rate
shown
represents
the
rate
inclusive
of
any
caps
or
floors,
if
applicable,
in
effect
at
period
end.
m
Contingent
distributions
represent
the
right
to
receive
additional
distributions,
if
any,
during
the
reorganization
of
the
underlying
company.
Shares
represent
total
underlying
principal
of
debt
securities.
n
The
security
was
issued
on
a
discount
basis
with
no
stated
coupon
rate.
o
See
Note
1(d)
regarding
written
options.
p
See
Note
1(e)
regarding
securities
sold
short.
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Quest
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
93
At
December
31,
2022,
the
Fund
had
the
following futures
contracts
outstanding.
See
Note
1(d).
At
December
3
1
,
2022,
the
Fund
had
the
following
forward
exchange
contracts
outstanding.
See
Note
1
(
d
).
See
Note
13
regarding
other
derivative
information.
Futures
Contracts
Description
Type
Number
of
Contracts
Notional
Amount
*
Expiration
Date
Value/
Unrealized
Appreciation
(Depreciation)
Foreign
exchange
contracts
Foreign
Exchange
EUR/USD
...................
Short
143
$
19,222,775
3/13/23
$
(274,848)
Foreign
Exchange
GBP/USD
...................
Short
275
20,769,375
3/13/23
377,446
Total
Futures
Contracts
......................................................................
$102,598
*
As
of
period
end.
Forward
Exchange
Contracts
Currency
Counter-
party
a
Type
Quantity
Contract
Amount
*
Settlement
Date
Unrealized
Appreciation
Unrealized
Depreciation
a
a
a
a
a
a
a
a
OTC
Forward
Exchange
Contracts
Euro
.............
BOFA
Sell
2,000,000
2,108,970
1/09/23
$
—
$
(32,643)
Euro
.............
HSBK
Buy
623,256
649,755
1/09/23
17,630
—
Euro
.............
HSBK
Sell
3,000,000
2,972,949
1/09/23
—
(239,471)
Euro
.............
UBSW
Buy
2,165,000
2,299,881
1/09/23
18,415
—
Euro
.............
UBSW
Sell
33,422,350
32,915,614
1/09/23
—
(2,873,260)
British
Pound
......
BOFA
Buy
4,672,689
5,021,747
1/17/23
629,193
—
British
Pound
......
BOFA
Sell
42,198,749
51,791,867
1/17/23
805,254
(46,652)
British
Pound
......
HSBK
Buy
1,220,659
1,329,709
1/17/23
146,501
—
British
Pound
......
HSBK
Sell
3,738,825
4,504,438
1/17/23
9,521
(26,650)
British
Pound
......
SSBT
Sell
1,115,343
1,352,650
1/17/23
3,805
—
British
Pound
......
UBSW
Sell
12,844,267
15,122,832
1/17/23
39,837
(450,283)
Total
Forward
Exchange
Contracts
...................................................
$1,670,156
$(3,668,959)
Net
unrealized
appreciation
(depreciation)
............................................
$(1,998,803)
*
In
U.S.
dollars
unless
otherwise
indicated.
a
May
be
comprised
of
multiple
contracts
with
the
same
counterparty,
currency
and
settlement
date.
See
Abbreviations
on
page
151
.
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Shares
Fund
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
94
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
Z
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$27.09
$25.33
$27.56
$24.25
$28.63
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.43
0.39
0.83
c
0.63
0.51
Net
realized
and
unrealized
gains
(losses)
...........
(2.45)
4.43
(2.11)
4.90
(3.11)
Total
from
investment
operations
....................
(2.02)
4.82
(1.2
8)
5.53
(2.60)
Less
distributions
from:
Net
investment
income
..........................
(0.37)
(0.94)
(0.53)
(0.71)
(0.53)
Net
realized
gains
.............................
(1.84)
(2.12)
(0.42)
(1.51)
(1.25)
Total
distributions
...............................
(2.21)
(3.06)
(0.95)
(2.22)
(1.78)
Net
asset
value,
end
of
year
.......................
$22.86
$27.09
$25.33
$27.56
$24.25
Total
return
....................................
(7.11)%
19.34%
(4.34)%
23.13%
(8.95)%
Ratios
to
average
net
assets
Expenses
d
,
e
....................................
0.75%
0.81%
f
0.80%
f
0.78%
f
0.76%
f
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
g
0.02%
0.02%
0.02%
—%
g
Net
investment
income
...........................
1.70%
1.36%
3.56%
c
2.32%
1.77%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$3,785,598
$4,717,528
$4,376,135
$5,472,276
$5,189,476
Portfolio
turnover
rate
............................
59.69%
41.18%
h
21.35%
21.71%
20.72%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
2.30%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
h
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Shares
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
95
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
A
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$26.75
$25.04
$27.26
$24.00
$28.35
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.36
0.31
0.76
c
0.56
0.43
Net
realized
and
unrealized
gains
(losses)
...........
(2.42)
4.39
(2.10)
4.85
(3.07)
Total
from
investment
operations
....................
(2.06)
4.70
(1.34)
5.41
(2.64)
Less
distributions
from:
Net
investment
income
..........................
(0.31)
(0.87)
(0.46)
(0.64)
(0.46)
Net
realized
gains
.............................
(1.84)
(2.12)
(0.42)
(1.51)
(1.25)
Total
distributions
...............................
(2.15)
(2.99)
(0.88)
(2.15)
(1.71)
Net
asset
value,
end
of
year
.......................
$22.54
$26.75
$25.04
$27.26
$24.00
Total
return
d
...................................
(7.35)%
19.07%
(4.60)%
22.86%
(9.18)%
Ratios
to
average
net
assets
Expenses
e
,
f
....................................
1.00%
1.06%
g
1.05%
g
1.03%
g
1.01%
g
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
h
0.02%
0.02%
0.02%
—%
h
Net
investment
income
...........................
1.45%
1.11%
3.32%
c
2.07%
1.52%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$2,601,790
$3,125,320
$2,965,127
$4,042,626
$3,852,134
Portfolio
turnover
rate
............................
59.69%
41.18%
i
21.35%
21.71%
20.72%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
2.07%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges,
if
applicable.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
i
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Shares
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
96
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
C
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$26.75
$25.02
$27.22
$23.97
$28.04
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.17
0.10
0.60
c
0.36
0.21
Net
realized
and
unrealized
gains
(losses)
...........
(2.41)
4.37
(2.12)
4.82
(3.00)
Total
from
investment
operations
....................
(2.24)
4.47
(1.52)
5.18
(2.79)
Less
distributions
from:
Net
investment
income
..........................
(0.12)
(0.62)
(0.26)
(0.42)
(0.03)
Net
realized
gains
.............................
(1.84)
(2.12)
(0.42)
(1.51)
(1.25)
Total
distributions
...............................
(1.96)
(2.74)
(0.68)
(1.93)
(1.28)
Net
asset
value,
end
of
year
.......................
$22.55
$26.75
$25.02
$27.22
$23.97
Total
return
d
...................................
(8.04)%
18.13%
(5.29)%
21.93%
(9.87)%
Ratios
to
average
net
assets
Expenses
e
,
f
....................................
1.75%
1.81%
g
1.80%
g
1.78%
g
1.76%
g
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
h
0.02%
0.02%
0.02%
—%
h
Net
investment
income
...........................
0.69%
0.35%
2.63%
c
1.32%
0.77%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$158,150
$192,660
$206,196
$302,296
$309,756
Portfolio
turnover
rate
............................
59.69%
41.18%
i
21.35%
21.71%
20.72%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.37%.
d
Total
return
does
not
reflect
sales
commissions
or
contingent
deferred
sales
charges.
e
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
f
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
g
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
h
Rounds
to
less
than
0.01%.
i
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Shares
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
97
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$26.65
$24.96
$27.17
$23.91
$28.21
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.29
0.24
0.70
c
0.49
0.36
Net
realized
and
unrealized
gains
(losses)
...........
(2.40)
4.36
(2.09)
4.83
(3.05)
Total
from
investment
operations
....................
(2.11)
4.60
(1.39)
5.32
(2.69)
Less
distributions
from:
Net
investment
income
..........................
(0.25)
(0.79)
(0.40)
(0.55)
(0.36)
Net
realized
gains
.............................
(1.84)
(2.12)
(0.42)
(1.51)
(1.25)
Total
distributions
...............................
(2.09)
(2.91)
(0.82)
(2.06)
(1.61)
Net
asset
value,
end
of
year
.......................
$22.45
$26.65
$24.96
$27.17
$23.91
Total
return
....................................
(7.60)%
18.75%
(4.80)%
22.55%
(9.41)%
Ratios
to
average
net
assets
Expenses
d
,
e
....................................
1.25%
1.31%
f
1.30%
f
1.28%
f
1.26%
f
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
g
0.02%
0.02%
0.02%
—%
g
Net
investment
income
...........................
1.19%
0.86%
3.06%
c
1.82%
1.27%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$38,759
$49,843
$48,216
$66,038
$74,345
Portfolio
turnover
rate
............................
59.69%
41.18%
h
21.35%
21.71%
20.72%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
1.80%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
h
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Franklin
Mutual
Series
Funds
Financial
Highlights
Franklin
Mutual
Shares
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
98
a
Year
Ended
December
31,
2022
2021
2020
2019
2018
Class
R6
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$27.07
$25.32
$27.55
$24.23
$28.61
Income
from
investment
operations
a
:
Net
investment
income
b
.........................
0.44
0.39
0.83
c
0.64
0.53
Net
realized
and
unrealized
gains
(losses)
...........
(2.44)
4.43
(2.09)
4.92
(3.11)
Total
from
investment
operations
....................
(2.00)
4.82
(1.26)
5.56
(2.58)
Less
distributions
from:
Net
investment
income
..........................
(0.39)
(0.95)
(0.55)
(0.73)
(0.55)
Net
realized
gains
.............................
(1.84)
(2.12)
(0.42)
(1.51)
(1.25)
Total
distributions
...............................
(2.23)
(3.07)
(0.97)
(2.24)
(1.80)
Net
asset
value,
end
of
year
.......................
$22.84
$27.07
$25.32
$27.55
$24.23
Total
return
....................................
(7.05)%
19.37%
(4.27)%
23.26%
(8.88)%
Ratios
to
average
net
assets
Expenses
d
,
e
....................................
0.68%
0.74%
f
0.72%
f
0.70%
f
0.69%
f
Expenses
-
incurred
in
connection
with
securities
sold
short
—%
g
0.02%
0.02%
0.02%
—%
g
Net
investment
income
...........................
1.76%
1.40%
3.57%
c
2.40%
1.84%
Supplemental
data
Net
assets,
end
of
year
(000’s)
.....................
$286,332
$372,115
$1,449,696
$1,680,600
$3,160,186
Portfolio
turnover
rate
............................
59.69%
41.18%
h
21.35%
21.71%
20.72%
a
The
amount
shown
for
a
share
outstanding
throughout
the
period
may
not
correlate
with
the
Statement
of
Operations
for
the
period
due
to
the
timing
of
sales
and
repurchases
of
the
Fund’s
shares
in
relation
to
income
earned
and/or
fluctuating
fair
value
of
the
investments
of
the
Fund.
b
Based
on
average
daily
shares
outstanding.
c
Net
investment
income
per
share
includes
approximately
$0.29
per
share
related
to
income
received
in
the
form
of
special
dividends
and
an
adjustment
for
EU
reclaims
in
connection
with
certain
Fund
holdings.
Excluding
this
amount,
the
ratio
of
net
investment
income
to
average
net
assets
would
have
been
2.31%.
d
Includes
dividends
and/or
interest
expense
on
securities
sold
short
and
security
borrowing
fees,
if
any.
See
below
for
the
ratios
of
such
expenses
to
average
net
assets
for
the
periods
presented.
See
Note
1(e).
e
Benefit
of
expense
reduction
rounds
to
less
than
0.01%.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
g
Rounds
to
less
than
0.01%.
h
Excludes
the
value
of
portfolio
activity
as
a
result
of
in-kind
transactions.
See
Note
3(h).
Franklin
Mutual
Series
Funds
Schedule
of
Investments,
December
31,
2022
Franklin
Mutual
Shares
Fund
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
99
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
93.7%
Auto
Components
0.0%
†
a,b,c,d
International
Automotive
Components
Group
Brazil
LLC
........
Brazil
7,234,813
$
254,651
Automobiles
1.7%
General
Motors
Co.
....................................
United
States
3,557,202
119,664,275
Banks
11.3%
Bank
of
America
Corp.
.................................
United
States
4,916,834
162,845,542
First
Horizon
Corp.
....................................
United
States
2,901,455
71,085,648
ING
Groep
NV
.......................................
Netherlands
8,740,346
106,462,620
JPMorgan
Chase
&
Co.
.................................
United
States
1,417,449
190,079,911
b
SVB
Financial
Group
...................................
United
States
398,009
91,597,791
Wells
Fargo
&
Co.
.....................................
United
States
3,685,834
152,188,086
774,259,598
Building
Products
2.4%
Johnson
Controls
International
plc
.........................
United
States
2,619,886
167,672,704
Capital
Markets
2.3%
BlackRock,
Inc.
.......................................
United
States
224,093
158,799,023
Chemicals
1.5%
Ashland,
Inc.
.........................................
United
States
941,112
101,197,773
Consumer
Finance
1.5%
Bread
Financial
Holdings,
Inc.
............................
United
States
1,466,606
55,232,382
Capital
One
Financial
Corp.
.............................
United
States
528,291
49,109,931
104,342,313
Containers
&
Packaging
1.2%
International
Paper
Co.
.................................
United
States
2,318,186
80,278,781
Diversified
Financial
Services
2.0%
Voya
Financial,
Inc.
....................................
United
States
2,215,527
136,232,755
Diversified
Telecommunication
Services
0.3%
a,b,c
Windstream
Holdings,
Inc.
...............................
United
States
2,123,740
20,366,495
Electronic
Equipment,
Instruments
&
Components
2.1%
b
Flex
Ltd.
............................................
United
States
6,689,973
143,566,820
Energy
Equipment
&
Services
2.6%
Schlumberger
Ltd.
.....................................
United
States
3,289,690
175,866,827
Entertainment
4.0%
Activision
Blizzard,
Inc.
.................................
United
States
2,064,299
158,022,089
b
Walt
Disney
Co.
(The)
..................................
United
States
1,341,455
116,545,610
274,567,699
Equity
Real
Estate
Investment
Trusts
(REITs)
1.5%
Brixmor
Property
Group,
Inc.
.............................
United
States
4,578,439
103,793,212
Food
Products
2.5%
Kraft
Heinz
Co.
(The)
..................................
United
States
4,268,215
173,759,033
Health
Care
Equipment
&
Supplies
1.8%
Medtronic
plc
........................................
United
States
1,558,506
121,127,086
Health
Care
Providers
&
Services
6.0%
CVS
Health
Corp.
.....................................
United
States
1,813,877
169,035,198
Elevance
Health,
Inc.
..................................
United
States
256,962
131,813,797
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Shares
Fund
(continued)
franklintempleton.com
Annual
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The
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part
of
these
financial
statements.
100
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Health
Care
Providers
&
Services
(continued)
Humana,
Inc.
........................................
United
States
218,826
$
112,080,489
412,929,484
Household
Durables
2.5%
DR
Horton,
Inc.
.......................................
United
States
1,970,097
175,614,447
Insurance
3.6%
Everest
Re
Group
Ltd.
.................................
United
States
268,755
89,030,469
Willis
Towers
Watson
plc
................................
United
States
651,722
159,398,167
248,428,636
Interactive
Media
&
Services
1.9%
b
Meta
Platforms,
Inc.,
A
.................................
United
States
1,064,621
128,116,491
IT
Services
5.8%
b
Fiserv,
Inc.
..........................................
United
States
1,528,322
154,467,505
Global
Payments,
Inc.
..................................
United
States
1,447,075
143,723,489
SS&C
Technologies
Holdings,
Inc.
.........................
United
States
1,978,222
102,986,237
401,177,231
Machinery
2.6%
Parker-Hannifin
Corp.
..................................
United
States
622,710
181,208,610
Media
3.5%
b
Charter
Communications,
Inc.,
A
..........................
United
States
377,249
127,925,136
Comcast
Corp.,
A
.....................................
United
States
3,231,399
113,002,023
240,927,159
Metals
&
Mining
1.2%
Alcoa
Corp.
..........................................
United
States
1,777,415
80,819,060
Oil,
Gas
&
Consumable
Fuels
4.8%
BP
plc
..............................................
United
Kingdom
18,874,477
108,900,126
Chevron
Corp.
.......................................
United
States
605,751
108,726,247
Williams
Cos.,
Inc.
(The)
................................
United
States
3,437,897
113,106,811
330,733,184
Pharmaceuticals
8.1%
b
Elanco
Animal
Health,
Inc.
...............................
United
States
7,212,948
88,142,225
Eli
Lilly
&
Co.
........................................
United
States
198,597
72,654,727
GSK
plc
............................................
United
States
7,853,689
135,731,534
Merck
&
Co.,
Inc.
.....................................
United
States
935,658
103,811,255
Novartis
AG,
ADR
.....................................
Switzerland
1,721,352
156,161,053
556,500,794
Professional
Services
1.9%
KBR,
Inc.
...........................................
United
States
2,449,189
129,317,179
Real
Estate
Management
&
Development
2.4%
b
CBRE
Group,
Inc.,
A
...................................
United
States
2,111,230
162,480,261
Software
3.7%
b
Avaya
Holdings
Corp.
..................................
United
States
364
72
Gen
Digital,
Inc.
......................................
United
States
4,774,921
102,326,557
Oracle
Corp.
.........................................
United
States
1,840,076
150,407,812
252,734,441
Specialty
Retail
0.0%
a,b,c,d
Wayne
Services
Legacy,
Inc.
.............................
United
States
7,469
—
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Shares
Fund
(continued)
franklintempleton.com
The
accompanying
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financial
statements.
Annual
Report
101
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Technology
Hardware,
Storage
&
Peripherals
0.8%
b
Western
Digital
Corp.
..................................
United
States
1,777,586
$
56,082,838
Textiles,
Apparel
&
Luxury
Goods
2.6%
Tapestry,
Inc.
........................................
United
States
4,768,532
181,585,697
Tobacco
1.5%
British
American
Tobacco
plc
.............................
United
Kingdom
2,574,098
101,822,351
Wireless
Telecommunication
Services
2.1%
b
T-Mobile
US,
Inc.
.....................................
United
States
1,010,730
141,502,200
Total
Common
Stocks
(Cost
$5,434,344,562)
....................................
6,437,729,108
Warrants
Warrants
0.0%
†
Diversified
Telecommunication
Services
0.0%
†
a,b,c
Windstream
Holdings,
Inc.,
9/21/55
........................
United
States
119,757
1,148,460
Total
Warrants
(Cost
$1,519,716)
..............................................
1,148,460
Principal
Amount
*
Corporate
Bonds
3.7%
Airlines
0.1%
e
American
Airlines,
Inc.
,
Senior
Secured
Note
,
144A,
11.75
%
,
7/15/25
United
States
8,774,000
9,430,552
Diversified
Telecommunication
Services
0.1%
Frontier
Communications
Holdings
LLC
,
Secured
Note
,
5.875
%
,
11/01/29
..........................................
United
States
10,568,178
8,190,083
Hotels,
Restaurants
&
Leisure
0.1%
e
Carnival
Holdings
Bermuda
Ltd.
,
Senior
Note
,
144A,
10.375
%
,
5/01/28
...........................................
United
States
9,230,300
9,492,302
Media
0.8%
e
DISH
Network
Corp.
,
Senior
Secured
Note
,
144A,
11.75
%
,
11/15/27
United
States
50,113,000
51,674,020
Oil,
Gas
&
Consumable
Fuels
0.6%
e
Citgo
Holding,
Inc.
,
Senior
Secured
Note
,
144A,
9.25
%
,
8/01/24
..
United
States
42,922,000
42,910,491
Pharmaceuticals
0.1%
e
Bausch
Health
Americas,
Inc.
,
Senior
Note
,
144A,
8.5
%
,
1/31/27
..
United
States
12,778,000
6,705,000
e
Bausch
Health
Cos.,
Inc.
,
Senior
Note
,
144A,
9
%
,
12/15/25
......
United
States
1,057,000
835,802
7,540,802
Software
0.9%
e
Veritas
US,
Inc.
/
Veritas
Bermuda
Ltd.
,
Senior
Secured
Note
,
144A,
7.5
%
,
9/01/25
......................................
United
States
86,667,000
59,875,526
Specialty
Retail
1.0%
e
Staples,
Inc.
,
Senior
Note,
144A,
10.75%,
4/15/27
.....................
United
States
66,378,000
47,903,675
Senior
Secured
Note,
144A,
7.5%,
4/15/26
................
United
States
21,151,000
18,247,814
66,151,489
Total
Corporate
Bonds
(Cost
$294,730,103)
.....................................
255,265,265
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Shares
Fund
(continued)
franklintempleton.com
Annual
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The
accompanying
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an
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part
of
these
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statements.
102
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
f
Senior
Floating
Rate
Interests
1.1%
g
Software
1.1%
Banff
Guarantor,
Inc.
,
Second
Lien,
Initial
Term
Loan
,
9.884
%
,
(
1-month
USD
LIBOR
+
5.5
%
),
2/27/26
...................
United
States
20,487,800
$
18,944,864
Quest
Software
US
Holdings,
Inc.
,
Second
Lien,
Initial
CME
Term
Loan
,
11.594
%
,
(
3-month
SOFR
+
7.5
%
),
2/01/30
...........
United
States
40,126,436
24,761,422
Veritas
US,
Inc.
,
2021
Dollar
Term
Loan,
B
,
9.73
%
,
(
3-month
USD
LIBOR
+
5
%
),
9/01/25
................................
United
States
47,454,177
33,717,853
77,424,139
a
a
a
a
a
a
Total
Senior
Floating
Rate
Interests
(Cost
$107,208,073)
.........................
77,424,139
Asset-Backed
Securities
0.1%
Airlines
0.1%
American
Airlines
Pass-Through
Trust
,
2013-2
,
A
,
4.95
%
,
1/15/23
.
.
United
States
5,577,171
5,569,721
Total
Asset-Backed
Securities
(Cost
$5,493,513)
................................
5,569,721
Shares
a
Companies
in
Liquidation
0.0%
a,b,h
Bosgen
Liquidating
Trust
c/o
Verdolino
and
Lowey
P.C.,
Contingent
Distribution
........................................
Netherlands
555,154
—
a,b,h
Walter
Energy,
Inc.,
Litigation
Trust,
Contingent
Distribution
......
United
States
20,046,000
—
Total
Companies
in
Liquidation
(Cost
$–)
......................................
—
Total
Long
Term
Investments
(Cost
$5,843,295,967)
.............................
6,777,136,693
a
Short
Term
Investments
1.4%
a
a
Country
Principal
Amount
*
a
Value
a
a
a
a
a
a
U.S.
Government
and
Agency
Securities
1.4%
i
FHLB,
1/03/23
.......................................
United
States
87,200,000
87,200,000
i,j
U.S.
Treasury
Bills
,
4/20/23
...........................................
United
States
1,000,000
986,977
4/27/23
...........................................
United
States
1,000,000
985,925
5/11/23
...........................................
United
States
1,000,000
983,873
5/18/23
...........................................
United
States
1,000,000
983,090
6/08/23
...........................................
United
States
5,000,000
4,902,392
8,842,257
Total
U.S.
Government
and
Agency
Securities
(Cost
$96,021,630)
.................
96,042,257
Total
Short
Term
Investments
(Cost
$96,021,630
)
................................
96,042,257
a
Total
Investments
(Cost
$5,939,317,597)
100.0%
................................
$6,873,178,950
Other
Assets,
less
Liabilities
(0.0)%
†
...........................................
(2,549,216)
Net
Assets
100.0%
...........................................................
$6,870,629,734
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Shares
Fund
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
103
At
December
31,
2022,
the
Fund
had
the
following futures
contracts
outstanding.
See
Note
1(d).
At
December
3
1
,
2022,
the
Fund
had
the
following
forward
exchange
contracts
outstanding.
See
Note
1
(
d
).
*
The
principal
amount
is
stated
in
U.S.
dollars
unless
otherwise
indicated.
†
Rounds
to
less
than
0.1%
of
net
assets.
a
Fair
valued
using
significant
unobservable
inputs.
See
Note
16
regarding
fair
value
measurements.
b
Non-income
producing.
c
See
Note
12
regarding
restricted
securities.
d
See
Note
14
regarding
holdings
of
5%
voting
securities.
e
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
may
be
sold
in
transactions
exempt
from
registration
only
to
qualified
institutional
buyers
or
in
a
public
offering
registered
under
the
Securities
Act
of
1933.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
December
31,
2022,
the
aggregate
value
of
these
securities
was
$247,075,182,
representing
3.6%
of
net
assets.
f
See
Note
1(g)
regarding
senior
floating
rate
interests.
g
The
coupon
rate
shown
represents
the
rate
inclusive
of
any
caps
or
floors,
if
applicable,
in
effect
at
period
end.
h
Contingent
distributions
represent
the
right
to
receive
additional
distributions,
if
any,
during
the
reorganization
of
the
underlying
company.
Shares
represent
total
underlying
principal
of
debt
securities.
i
The
security
was
issued
on
a
discount
basis
with
no
stated
coupon
rate.
j
A
portion
or
all
of
the
security
has
been
segregated
as
collateral
for
open
forward
exchange
contracts.
At
December
31,
2022,
the
aggregate
value
of
these
securities
pledged
amounted
to
$4,462,243,
representing
0.1%
of
net
assets.
Futures
Contracts
Description
Type
Number
of
Contracts
Notional
Amount
*
Expiration
Date
Value/
Unrealized
Appreciation
(Depreciation)
Foreign
exchange
contracts
Foreign
Exchange
EUR/USD
...................
Short
52
$
6,990,100
3/13/23
$
(89,611)
Foreign
Exchange
GBP/USD
...................
Short
347
26,207,175
3/13/23
476,268
Total
Futures
Contracts
......................................................................
$386,657
*
As
of
period
end.
Forward
Exchange
Contracts
Currency
Counter-
party
a
Type
Quantity
Contract
Amount
*
Settlement
Date
Unrealized
Appreciation
Unrealized
Depreciation
a
a
a
a
a
a
a
a
OTC
Forward
Exchange
Contracts
Euro
.............
BNY
Sell
304,111
307,120
1/09/23
$
—
$
(18,524)
Euro
.............
BOFA
Buy
11,440,000
11,500,278
1/09/23
749,750
—
Euro
.............
BOFA
Sell
1,855,964
1,895,275
1/09/23
—
(92,104)
Euro
.............
HSBK
Buy
327,906
320,235
1/09/23
30,889
—
Euro
.............
HSBK
Sell
8,865,430
9,143,804
1/09/23
—
(349,357)
Euro
.............
SSBT
Sell
375,782
378,830
1/09/23
—
(23,560)
Euro
.............
UBSW
Buy
58,000
61,646
1/09/23
461
—
Euro
.............
UBSW
Sell
58,956,554
58,352,616
1/09/23
—
(4,778,452)
British
Pound
......
BOFA
Buy
2,556,461
3,037,967
1/17/23
53,702
—
British
Pound
......
BOFA
Sell
16,014,426
19,680,897
1/17/23
318,586
(4,815)
British
Pound
......
UBSW
Buy
2,081,044
2,472,455
1/17/23
44,265
—
British
Pound
......
UBSW
Sell
723,189
845,932
1/17/23
2,526
(31,186)
Total
Forward
Exchange
Contracts
...................................................
$1,200,179
$(5,297,998)
Net
unrealized
appreciation
(depreciation)
............................................
$(4,097,819)
Franklin
Mutual
Series
Funds
Schedule
of
Investments
Franklin
Mutual
Shares
Fund
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
104
See
Note
13
regarding
other
derivative
information.
See
Abbreviations
on
page
151
.
*
In
U.S.
dollars
unless
otherwise
indicated.
a
May
be
comprised
of
multiple
contracts
with
the
same
counterparty,
currency
and
settlement
date.
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
December
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
105
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
.................................
$2,552,389,294
$701,738,015
$346,642,085
Cost
-
Non-controlled
affiliates
(Note
3
f
and
14
)
.................
—
—
2,229,755
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$—,
$12,477,397
and
$3,200
,
respectively)
.......................
$2,926,251,756
$709,007,923
$366,201,437
Value
-
Non-controlled
affiliates
(Note
3
f
and
14
)
................
—
—
139,791
Cash
..................................................
3,760
63,752
35,881
Foreign
currency,
at
value
(cost
$1,143,470,
$5,491,075
and
$559,333,
respectively)
............................................
1,136,956
5,505,831
560,841
Receivables:
Investment
securities
sold
.................................
—
1,196,802
231,773
Capital
shares
sold
......................................
1,664,156
1,217,610
247,923
Dividends
.............................................
4,872,707
3,166,099
626,136
European
Union
tax
reclaims
(Note
1
h
)
.......................
2,025,717
5,749,122
107,894
Deposits
with
brokers
for:
Futures
contracts
......................................
—
3,597,049
329,155
Due
from
custodian
......................................
—
—
340
Unrealized
appreciation
on
OTC
forward
exchange
contracts
........
—
3,637,681
657,671
Total
assets
........................................
2,935,955,052
733,141,869
369,138,842
Liabilities:
Payables:
Investment
securities
purchased
............................
2,642
137,478
2,035
Capital
shares
redeemed
.................................
2,422,953
949,957
305,344
Management
fees
.......................................
1,688,703
532,935
272,572
Distribution
fees
........................................
186,543
67,990
64,952
Transfer
agent
fees
......................................
530,817
159,705
99,191
Trustees'
fees
and
expenses
...............................
167,985
102,089
18,103
IRS
closing
agreement
payments
for
European
Union
tax
reclaims
(Note
1
h
)
.............................................
—
5,965,205
316,246
Variation
margin
on
futures
contracts
.........................
—
194,908
12,813
Unrealized
depreciation
on
OTC
forward
exchange
contracts
........
—
5,426,656
2,155,260
Payable
upon
return
of
securities
loaned
(Note
1
f
)
................
—
—
3,340
Accrued
expenses
and
other
liabilities
.........................
272,381
171,973
115,200
Total
liabilities
.......................................
5,272,024
13,708,896
3,365,056
Net
assets,
at
value
...............................
$2,930,683,028
$719,432,973
$365,773,786
Net
assets
consist
of:
Paid-in
capital
...........................................
$2,529,330,568
$811,264,310
$374,604,094
Total
distributable
earnings
(losses)
...........................
401,352,460
(91,831,337)
(8,830,308)
Net
assets,
at
value
...............................
$2,930,683,028
$719,432,973
$365,773,786
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
(continued)
December
31,
2022
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
106
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Class
Z:
Net
assets,
at
value
.....................................
$2,010,946,740
$414,151,049
$114,506,944
Shares
outstanding
......................................
139,903,989
19,652,416
4,828,009
Net
asset
value
and
maximum
offering
price
per
share
...........
$14.37
$21.07
$23.72
Class
A:
Net
assets,
at
value
.....................................
$798,280,832
$256,163,132
$230,921,015
Shares
outstanding
......................................
56,247,364
12,553,539
9,703,618
Net
asset
value
per
share
a
................................
$14.19
$20.41
$23.80
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%)
..............................................
$15.02
$21.60
$25.19
Class
C:
Net
assets,
at
value
.....................................
$18,813,232
$15,190,126
$18,260,141
Shares
outstanding
......................................
1,313,673
729,387
770,991
Net
asset
value
and
maximum
offering
price
per
share
a
...........
$14.32
$20.83
$23.68
Class
R:
Net
assets,
at
value
.....................................
$1,329,447
$622,752
$—
Shares
outstanding
......................................
95,166
31,299
—
Net
asset
value
and
maximum
offering
price
per
share
...........
$13.97
$19.90
$—
Class
R6:
Net
assets,
at
value
.....................................
$101,312,777
$33,305,914
$2,085,686
Shares
outstanding
......................................
7,050,768
1,582,568
87,326
Net
asset
value
and
maximum
offering
price
per
share
...........
$14.37
$21.05
$23.88
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
(continued)
December
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
107
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
.................................
$7,243,628,223
$2,914,416,115
$5,934,512,919
Cost
-
Non-controlled
affiliates
(Note
3
f
and
14
)
.................
—
123,944,754
4,804,678
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$—,
$530,529
and
$—,
respectively)
............................
$8,450,244,354
$2,616,255,055
$6,872,924,299
Value
-
Non-controlled
affiliates
(Note
3
f
and
14
)
................
—
110,968,385
254,651
Cash
..................................................
645,954
966,544
1,210,519
Foreign
currency,
at
value
(cost
$5,344,896,
$1,354,886
and
$788,475,
respectively)
............................................
5,374,913
1,358,310
783,743
Receivables:
Investment
securities
sold
.................................
12,837,051
19,835,808
20,345,198
Capital
shares
sold
......................................
2,060,468
900,752
1,692,894
Dividends
and
interest
...................................
34,782,895
20,956,085
17,577,183
European
Union
tax
reclaims
(Note
1
h
)
.......................
6,190,972
285,619
1,410,331
Deposits
with
brokers
for:
Securities
sold
short
...................................
—
42,131,566
—
Futures
contracts
......................................
6,325,930
1,154,710
1,172,890
Variation
margin
on
futures
contracts
.........................
—
—
9,881
Due
from
custodian
......................................
—
531,649
—
Unrealized
appreciation
on
OTC
forward
exchange
contracts
........
14,072,735
1,670,156
1,200,179
Other
assets
............................................
—
1,524
—
Total
assets
........................................
8,532,535,272
2,817,016,163
6,918,581,768
Liabilities:
Payables:
Investment
securities
purchased
............................
48,870
31,606,540
27,653,463
Capital
shares
redeemed
.................................
12,930,922
3,256,068
7,836,066
Management
fees
.......................................
6,152,451
1,583,731
3,942,484
Distribution
fees
........................................
1,265,032
162,732
709,144
Transfer
agent
fees
......................................
2,243,211
400,658
1,362,493
Trustees'
fees
and
expenses
...............................
746,611
220,792
692,583
IRS
closing
agreement
payments
for
European
Union
tax
reclaims
(Note
1
h
)
.............................................
10,164,729
—
—
Variation
margin
on
futures
contracts
.........................
490,250
19,525
—
Deposits
from
brokers
for:
OTC
derivative
contracts
................................
510,000
—
—
Securities
sold
short,
at
value
(proceeds
$–,
$38,185,718
and
$–,
respectively)
............................................
—
40,769,071
—
Options
written,
at
value
(premiums
received
$–,
$401,950
and
$–,
respectively)
............................................
—
686,250
—
Unrealized
depreciation
on
OTC
forward
exchange
contracts
........
33,801,405
3,668,959
5,297,998
Payable
upon
return
of
securities
loaned
(Note
1
f
)
................
—
531,649
—
Accrued
expenses
and
other
liabilities
.........................
775,188
259,428
457,803
Total
liabilities
.......................................
69,128,669
83,165,403
47,952,034
Net
assets,
at
value
...............................
$8,463,406,603
$2,733,850,760
$6,870,629,734
Net
assets
consist
of:
Paid-in
capital
...........................................
$7,278,898,805
$3,341,507,965
$5,821,238,033
Total
distributable
earnings
(losses)
...........................
1,184,507,798
(607,657,205)
1,049,391,701
Net
assets,
at
value
...............................
$8,463,406,603
$2,733,850,760
$6,870,629,734
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Assets
and
Liabilities
(continued)
December
31,
2022
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
108
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Class
Z:
Net
assets,
at
value
.....................................
$2,857,597,425
$2,047,787,689
$3,785,598,114
Shares
outstanding
......................................
105,126,259
157,968,464
165,604,114
Net
asset
value
and
maximum
offering
price
per
share
...........
$27.18
$12.96
$22.86
Class
A:
Net
assets,
at
value
.....................................
$4,749,259,127
$617,190,073
$2,601,790,461
Shares
outstanding
......................................
179,622,915
48,439,301
115,450,678
Net
asset
value
per
share
a
................................
$26.44
$12.74
$22.54
Maximum
offering
price
per
share
(net
asset
value
per
share
÷
94.50%)
..............................................
$27.98
$13.48
$23.85
Class
C:
Net
assets,
at
value
.....................................
$221,344,370
$33,038,846
$158,149,830
Shares
outstanding
......................................
8,322,295
2,599,078
7,013,534
Net
asset
value
and
maximum
offering
price
per
share
a
...........
$26.60
$12.71
$22.55
Class
R:
Net
assets,
at
value
.....................................
$109,826,297
$3,725,256
$38,759,251
Shares
outstanding
......................................
4,224,347
297,494
1,726,526
Net
asset
value
and
maximum
offering
price
per
share
...........
$26.00
$12.52
$22.45
Class
R6:
Net
assets,
at
value
.....................................
$525,379,384
$32,108,896
$286,332,078
Shares
outstanding
......................................
19,340,752
2,480,059
12,536,328
Net
asset
value
and
maximum
offering
price
per
share
...........
$27.16
$12.95
$22.84
a
Redemption
price
is
equal
to
net
asset
value
less
contingent
deferred
sales
charges,
if
applicable.
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Operations
for
the
year
ended
December
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
109
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$5,295,624,
$2,875,842
and
$876,362,
respectively)
Unaffiliated
issuers
......................................
$78,298,451
$25,703,291
$13,195,640
Non-controlled
affiliates
(Note
3
f
and
14
)
......................
—
—
1,151
Interest:
Unaffiliated
issuers
......................................
995,808
402,173
174,865
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
...................
—
6,007
607
Non-controlled
affiliates
(Note
3
f
)
...........................
—
6,626
303
Other
income
(Note
1
h
)
....................................
620,409
2,327,661
452,381
Less:
IRS
closing
agreement
payments
for
European
Union
tax
reclaims
(Note
1
h
)
...............................................
—
—
(11,756)
Total
investment
income
.................................
79,914,668
28,445,758
13,813,191
Expenses:
Management
fees
(Note
3
a
)
.................................
21,573,687
6,443,440
3,350,945
Distribution
fees:
(Note
3c
)
Class
A
..............................................
2,166,155
644,692
600,203
Class
C
..............................................
225,184
186,463
221,547
Class
R
..............................................
6,550
2,699
—
Transfer
agent
fees:
(Note
3e
)
Class
Z
..............................................
1,917,677
464,522
166,701
Class
A
..............................................
761,702
281,027
337,548
Class
C
..............................................
19,753
20,403
31,115
Class
R
..............................................
1,154
589
—
Class
R6
.............................................
36,332
11,673
3,613
Custodian
fees
(Note
4
)
....................................
69,634
50,981
23,189
Reports
to
shareholders
fees
................................
(190,865)
(138,804)
(81,880)
Registration
and
filing
fees
..................................
91,505
64,028
70,408
Professional
fees
.........................................
—
36,178
125,571
Trustees'
fees
and
expenses
................................
(5,862)
(25,483)
(3,334)
Dividends
on
securities
sold
short
............................
26,598
—
—
Other
..................................................
179,223
115,507
41,149
Total
expenses
.......................................
26,878,427
8,157,915
4,886,775
Expense
reductions
(Note
4
)
.............................
(1,477)
(1,507)
(569)
Expenses
waived/paid
by
affiliates
(Note
3
f
and
3
g
)
............
(11,477)
(13,084)
(3,101)
Net
expenses
.......................................
26,865,473
8,143,324
4,883,105
Net
investment
income
..............................
53,049,195
20,302,434
8,930,086
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Operations
(continued)
for
the
year
ended
December
31,
2022
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
110
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
....................................
183,044,385
12,461,167
14,709,206
Foreign
currency
transactions
..............................
(922,468)
(3,129,019)
(192,794)
Forward
exchange
contracts
...............................
22,726,519
38,853,570
12,056,231
Futures
contracts
.......................................
1,900,304
24,872,403
1,111,219
Securities
sold
short
.....................................
(10,171,873)
—
—
Net
realized
gain
(loss)
................................
196,576,867
73,058,121
27,683,862
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
....................................
(693,814,153)
(102,185,574)
(57,178,302)
Non-controlled
affiliates
(Note
3
f
and
14
)
....................
—
—
(84,787)
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
...........................................
(35,333)
97,846
34,553
Forward
exchange
contracts
...............................
(6,375,509)
(5,987,793)
(3,350,349)
Futures
contracts
.......................................
167,953
1,789,905
213,845
Securities
sold
short
.....................................
17,466,222
—
—
Net
change
in
unrealized
appreciation
(depreciation)
..........
(682,590,820)
(106,285,616)
(60,365,040)
Net
realized
and
unrealized
gain
(loss)
..........................
(486,013,953)
(33,227,495)
(32,681,178)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
........
$(432,964,758)
$(12,925,061)
$(23,751,092)
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Operations
(continued)
for
the
year
ended
December
31,
2022
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
111
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$24,920,498,
$3,494,807
and
$3,570,176,
respectively)
Unaffiliated
issuers
......................................
$253,049,897
$58,911,062
$148,162,701
Interest:
Unaffiliated
issuers
......................................
6,523,886
67,441,169
33,669,434
Non-controlled
affiliates
(Note
3
f
and
14
)
......................
—
4,395,825
—
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
...................
2,297
46,811
7
Non-controlled
affiliates
(Note
3
f
)
...........................
6,265
11,289
—
Other
income
(Note
1
h
)
....................................
7,268,573
—
2,016,218
Total
investment
income
.................................
266,850,918
130,806,156
183,848,360
Expenses:
Management
fees
(Note
3
a
)
.................................
76,660,477
20,177,321
49,997,501
Distribution
fees:
(Note
3c
)
Class
A
..............................................
12,751,002
1,686,397
7,010,249
Class
C
..............................................
2,701,196
389,401
1,710,423
Class
R
..............................................
593,785
21,943
214,609
Transfer
agent
fees:
(Note
3e
)
Class
Z
..............................................
3,734,194
1,718,104
3,718,816
Class
A
..............................................
6,216,063
518,397
2,498,455
Class
C
..............................................
329,787
29,933
152,236
Class
R
..............................................
144,799
3,362
38,176
Class
R6
.............................................
170,322
21,939
76,304
Custodian
fees
(Note
4
)
....................................
324,191
25,436
84,147
Reports
to
shareholders
fees
................................
(1,736,813)
(234,819)
(922,298)
Registration
and
filing
fees
..................................
46,340
77,636
46,727
Professional
fees
.........................................
—
73,077
61,605
Trustees'
fees
and
expenses
................................
(218,892)
(54,732)
(146,327)
Dividends
and
interest
on
securities
sold
short
...................
111,905
703,498
113,314
Other
..................................................
376,945
201,120
354,098
Total
expenses
.......................................
102,205,301
25,358,013
65,008,035
Expense
reductions
(Note
4
)
.............................
(7,108)
(4,805)
(2,451)
Expenses
waived/paid
by
affiliates
(Note
3
f
and
3
g
)
............
(3,500)
(16,924)
—
Net
expenses
.......................................
102,194,693
25,336,284
65,005,584
Net
investment
income
..............................
164,656,225
105,469,872
118,842,776
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Operations
(continued)
for
the
year
ended
December
31,
2022
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
112
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
....................................
310,736,578
178,050,146
517,793,681
Non-controlled
affiliates
(Note
3
f
and
14
)
....................
—
158,469,932
424,504
Written
options
.........................................
—
3,720,193
—
Foreign
currency
transactions
..............................
(2,498,717)
(1,036,137)
669,988
Forward
exchange
contracts
...............................
185,075,114
40,909,952
24,992,660
Futures
contracts
.......................................
54,316,912
5,860,537
3,154,773
Securities
sold
short
.....................................
(41,312,084)
(37,548,090)
(43,671,345)
Net
realized
gain
(loss)
................................
506,317,803
348,426,533
503,364,261
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
....................................
(1,205,761,721)
(546,754,476)
(1,313,087,928)
Non-controlled
affiliates
(Note
3
f
and
14
)
....................
—
(181,185,542)
(19,252)
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
...........................................
457,520
(100,594)
(255,510)
Written
options
.........................................
—
(284,300)
—
Forward
exchange
contracts
...............................
(38,783,678)
(11,829,654)
(8,105,276)
Futures
contracts
.......................................
3,318,613
1,632,277
1,231,481
Securities
sold
short
.....................................
72,000,991
63,591,046
74,746,787
Net
change
in
unrealized
appreciation
(depreciation)
..........
(1,168,768,275)
(674,931,243)
(1,245,489,698)
Net
realized
and
unrealized
gain
(loss)
..........................
(662,450,472)
(326,504,710)
(742,125,437)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
........
$(497,794,247)
$(221,034,838)
$(623,282,661)
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
113
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Year
Ended
December
31,
2022
Year
Ended
December
31,
2021
Year
Ended
December
31,
2022
Year
Ended
December
31,
2021
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$53,049,195
$48,314,736
$20,302,434
$21,172,005
Net
realized
gain
(loss)
............
196,576,867
350,631,903
73,058,121
31,040,915
Net
change
in
unrealized
appreciation
(depreciation)
.................
(682,590,820)
136,456,902
(106,285,616)
70,490,319
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
(432,964,758)
535,403,541
(12,925,061)
122,703,239
Distributions
to
shareholders:
Class
Z
........................
(190,112,808)
(162,681,570)
(13,475,013)
(15,926,586)
Class
A
........................
(74,167,735)
(62,361,827)
(7,954,672)
(9,419,264)
Class
C
........................
(1,592,139)
(1,505,030)
(329,499)
(570,434)
Class
R
........................
(120,118)
(84,510)
(16,953)
(20,425)
Class
R6
.......................
(9,621,951)
(9,884,661)
(1,108,946)
(1,269,921)
Total
distributions
to
shareholders
.....
(275,614,751)
(236,517,598)
(22,885,083)
(27,206,630)
Capital
share
transactions:
(Note
2
)
Class
Z
........................
(15,446,542)
(25,340,408)
(21,426,384)
(48,044,865)
Class
A
........................
2,759,223
14,131,543
(14,180,394)
(23,274,928)
Class
C
........................
(3,987,241)
(11,186,159)
(8,053,154)
(14,611,281)
Class
R
........................
230,991
7,046
6,556
(145,394)
Class
R6
.......................
(20,790,639)
79,169,839
(1,105,043)
(1,676,181)
Total
capital
share
transactions
.......
(37,234,208)
56,781,861
(44,758,419)
(87,752,649)
Net
increase
(decrease)
in
net
assets
.....................
(745,813,717)
355,667,804
(80,568,563)
7,743,960
Net
assets:
Beginning
of
year
..................
3,676,496,745
3,320,828,941
800,001,536
792,257,576
End
of
year
......................
$2,930,683,028
$3,676,496,745
$719,432,973
$800,001,536
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
(continued)
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
114
Franklin
Mutual
Financial
Services
Fund
Franklin
Mutual
Global
Discovery
Fund
Year
Ended
December
31,
2022
Year
Ended
December
31,
2021
Year
Ended
December
31,
2022
Year
Ended
December
31,
2021
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$8,930,086
$6,586,479
$164,656,225
$113,775,017
Net
realized
gain
(loss)
............
27,683,862
4,958,286
506,317,803
1,361,758,854
Net
change
in
unrealized
appreciation
(depreciation)
.................
(60,365,040)
68,475,443
(1,168,768,275)
364,133,763
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
(23,751,092)
80,020,208
(497,794,247)
1,839,667,634
Distributions
to
shareholders:
Class
Z
........................
(2,688,217)
(1,873,457)
(281,878,228)
(276,128,825)
Class
A
........................
(4,824,183)
(3,171,283)
(468,308,648)
(457,270,411)
Class
C
........................
(212,982)
(94,563)
(20,215,814)
(24,042,977)
Class
R
........................
—
—
(10,672,271)
(10,862,941)
Class
R6
.......................
(50,005)
(45,462)
(51,982,564)
(54,549,168)
Total
distributions
to
shareholders
.....
(7,775,387)
(5,184,765)
(833,057,525)
(822,854,322)
Capital
share
transactions:
(Note
2
)
Class
Z
........................
(4,430,932)
1,153,445
(52,974,974)
(250,575,020)
Class
A
........................
(8,336,278)
4,267,198
(120,252,374)
(265,944,649)
Class
C
........................
(5,252,310)
(7,775,630)
(75,739,833)
(215,958,967)
Class
R
........................
—
—
(9,685,704)
(56,653,739)
Class
R6
.......................
(732,681)
478,344
(46,371,609)
(274,511,772)
Total
capital
share
transactions
.......
(18,752,201)
(1,876,643)
(305,024,494)
(1,063,644,147)
Net
increase
(decrease)
in
net
assets
.....................
(50,278,680)
72,958,800
(1,635,876,266)
(46,830,835)
Net
assets:
Beginning
of
year
..................
416,052,466
343,093,666
10,099,282,869
10,146,113,704
End
of
year
......................
$365,773,786
$416,052,466
$8,463,406,603
$10,099,282,869
Franklin
Mutual
Series
Funds
Financial
Statements
Statements
of
Changes
in
Net
Assets
(continued)
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Annual
Report
115
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Year
Ended
December
31,
2022
Year
Ended
December
31,
2021
Year
Ended
December
31,
2022
Year
Ended
December
31,
2021
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
............
$105,469,872
$50,326,256
$118,842,776
$107,549,947
Net
realized
gain
(loss)
............
348,426,533
(19,315,976)
503,364,261
1,341,206,360
Net
change
in
unrealized
appreciation
(depreciation)
.................
(674,931,243)
331,913,562
(1,245,489,698)
22,244,150
Net
increase
(decrease)
in
net
assets
resulting
from
operations
.
(221,034,838)
362,923,842
(623,282,661)
1,471,000,457
Distributions
to
shareholders:
Class
Z
........................
(75,629,406)
(61,256,361)
(351,898,805)
(496,840,798)
Class
A
........................
(21,616,265)
(16,953,669)
(237,824,169)
(322,688,187)
Class
C
........................
(870,932)
(596,751)
(12,939,673)
(17,613,198)
Class
R
........................
(121,099)
(57,448)
(3,434,282)
(4,992,101)
Class
R6
.......................
(1,210,033)
(1,024,107)
(26,928,459)
(38,662,402)
Total
distributions
to
shareholders
.....
(99,447,735)
(79,888,336)
(633,025,388)
(880,796,686)
Capital
share
transactions:
(Note
2
)
Class
Z
........................
(110,831,935)
(284,073,890)
(231,177,795)
19,243,353
Class
A
........................
(34,031,376)
(99,882,523)
(56,625,234)
(58,457,674)
Class
C
........................
(7,073,962)
(27,037,736)
(6,041,214)
(31,912,453)
Class
R
........................
1,714,206
(61,224)
(3,864,289)
(1,977,617)
Class
R6
.......................
(3,345,837)
(12,549,942)
(32,819,611)
(1,105,003,117)
Total
capital
share
transactions
.......
(153,568,904)
(423,605,315)
(330,528,143)
(1,178,107,508)
Net
increase
(decrease)
in
net
assets
.....................
(474,051,477)
(140,569,809)
(1,586,836,192)
(587,903,737)
Net
assets:
Beginning
of
year
..................
3,207,902,237
3,348,472,046
8,457,465,926
9,045,369,663
End
of
year
......................
$2,733,850,760
$3,207,902,237
$6,870,629,734
$8,457,465,926
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
116
franklintempleton.com
Annual
Report
1.
Organization
and
Significant
Accounting
Policies
Franklin
Mutual
Series
Funds (Trust)
is
registered
under
the
Investment
Company
Act
of
1940
(1940
Act)
as
an
open-
end
management
investment
company,
consisting
of
six
separate
funds
(Funds).
The
Funds
follow
the
accounting
and
reporting
guidance
in
Financial
Accounting
Standards
Board
(FASB)
Accounting
Standard
Codification
Topic
946,
Financial
Services
–
Investment
Companies
(ASC
946)
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP),
including,
but
not
limited
to,
ASC
946.
The
classes
of
shares
offered
within
each
of
the
Funds
are
indicated
below.
Class
C
shares
automatically
convert
to
Class
A
shares
on
a
monthly
basis,
after
they
have
been
held
for
8
years.
Each
class
of
shares
may
differ
by
its initial
sales
load,
contingent
deferred
sales
charges,
voting
rights
on
matters
affecting
a
single
class,
its
exchange
privilege
and
fees
due
to
differing
arrangements
for
distribution
and
transfer
agent
fees.
Class
Z,
Class
A,
Class
C,
Class
R,
&
Class
R6
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Class
Z,
Class
A,
Class
C,
&
Class
R6
Franklin
Mutual
Financial
Services
Fund
The
following
summarizes
the Funds'
significant
accounting
policies.
a.
Financial
Instrument
Valuation
The Funds'
investments
in
financial
instruments
are
carried
at
fair
value
daily.
Fair
value
is
the
price
that
would
be
received
to
sell
an
asset
or
paid
to
transfer
a
liability
in
an
orderly
transaction
between
market
participants
on
the
measurement
date.
The Funds calculate the
net
asset
value
(NAV)
per
share
each
business
day
as
of
4
p.m.
Eastern
time
or
the
regularly
scheduled
close
of
the
New
York
Stock
Exchange
(NYSE),
whichever
is
earlier.
Under
compliance
policies
and
procedures
approved
by
the
Trust’s
Board
of
Trustees
(the
Board),
the
Board
has
designated
the
Funds’
investment
manager
as
the
valuation
designee
and
has
responsibility
for
oversight
of
valuation.
The
investment
manager
is
assisted
by
the
Funds'
administrator
in
performing
this
responsibility,
including
leading
the
cross-
functional
Valuation
Committee
(VC).
The
Funds
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value.
Equity
securities
and
derivative
financial
instruments
listed
on
an
exchange
or
on
the
NASDAQ
National
Market
System
are
valued
at
the
last
quoted
sale
price
or
the
official
closing
price of
the
day,
respectively.
Foreign
equity
securities
are
valued
as
of
the
close
of
trading
on
the
foreign
stock
exchange
on
which
the
security
is
primarily
traded,
or
as
of
4
p.m.
Eastern
time.
The
value
is
then
converted
into
its
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
day
that
the
value
of
the
security
is
determined.
Over-the-counter
(OTC)
securities
are
valued
within
the
range
of
the
most
recent
quoted
bid
and
ask
prices.
Securities
that
trade
in
multiple
markets
or
on
multiple
exchanges
are
valued
according
to
the
broadest
and
most
representative
market.
Certain
equity
securities
are
valued
based
upon
fundamental
characteristics
or
relationships
to
similar
securities.
Debt
securities
generally
trade
in
the
OTC
market rather
than
on
a
securities
exchange.
The
Funds'
pricing
services
use
multiple
valuation
techniques
to
determine
fair
value.
In
instances
where
sufficient
market
activity
exists,
the
pricing
services
may
utilize
a
market-based
approach
through
which
quotes
from
market
makers
are
used
to
determine
fair
value.
In
instances
where
sufficient
market
activity
may
not
exist
or
is
limited,
the
pricing
services
also
utilize
proprietary
valuation
models
which
may
consider
market
characteristics
such
as
benchmark
yield
curves,
credit
spreads,
estimated
default
rates,
anticipated
market
interest
rate
volatility,
coupon
rates,
anticipated
timing
of
principal
repayments,
underlying
collateral,
and
other
unique
security
features
in
order
to
estimate
the
relevant
cash
flows,
which
are
then
discounted
to
calculate
the
fair
value.
Securities
denominated
in
a
foreign
currency
are
converted
into
their
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
date
that
the
values
of
the
foreign
debt
securities
are
determined.
Investments
in open-end mutual
funds
are
valued
at
the
closing
NAV.
Investments
in
repurchase
agreements
are
valued
at
cost,
which
approximates
fair
value.
Certain
derivative
financial
instruments
trade
in
the
OTC
market.
The
Funds' pricing
services
use
various
techniques
including
industry
standard
option
pricing
models
and
proprietary
discounted
cash
flow
models
to
determine
the
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
117
franklintempleton.com
Annual
Report
fair
value
of
those
instruments.
The
Funds' net
benefit
or
obligation
under
the
derivative
contract,
as
measured
by
the
fair
value
of
the
contract,
is
included
in
net
assets.
The
Funds
have
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the
Funds
primarily
employ
a
market-based
approach
which
may
use
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
and
other
relevant
information
for
the
investment
to
determine
the
fair
value
of
the
investment.
An
income-based
valuation
approach
may
also
be
used
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
to
calculate
fair
value.
Discounts
may
also
be
applied
due
to
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
Due
to
the
inherent
uncertainty
of
valuations
of
such
investments,
the
fair
values
may
differ
significantly
from
the
values
that
would
have
been
used
had
an
active
market
existed.
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Funds'
business
day.
Events
can occur
between
the
time
at
which
trading
in
a
foreign
security
is
completed
and
4
p.m.
Eastern
time
that
might
call
into
question
the
reliability
of
the
value
of
a
portfolio
security
held
by
the
Fund.
As
a
result,
differences
may
arise
between
the
value
of
the
Funds'
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
at
4
p.m.
Eastern
time.
In
order
to
minimize
the
potential
for
these
differences,
an
independent
pricing
service
may
be
used
to
adjust
the
value
of
the
Funds'
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
December
31,
2022,
certain
securities
may
have
been
fair
valued
using
these
procedures,
in
which
case
the
securities
were
categorized
as
Level
2
inputs
within
the
fair
value
hierarchy
(referred
to
as
“market
level
fair
value”).
See
the
Fair
Value
Measurements
note
for
more
information.
When
the
last
day
of
the
reporting
period
is
a
non-business
day,
certain
foreign
markets
may
be
open
on
those
days
that
the
Funds'
NAV
is
not
calculated,
which
could
result
in
differences
between
the
value
of
the
Funds'
portfolio
securities
on
the
last
business
day
and
the
last
calendar
day
of
the
reporting
period.
Any
security
valuation
changes
due
to
an
open
foreign
market
are
adjusted
and
reflected
by
the
Funds
for
financial
reporting
purposes.
b.
Foreign
Currency
Translation
Portfolio
securities
and
other
assets
and
liabilities
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
based
on
the
exchange
rate
of
such
currencies
against
U.S.
dollars
on
the
date
of
valuation.
The
Funds
may
enter
into
foreign
currency
exchange
contracts
to
facilitate
transactions
denominated
in
a
foreign
currency.
Purchases
and
sales
of
securities,
income
and
expense
items
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
at
the
exchange
rate
in
effect
on
the
transaction
date.
Portfolio
securities
and
assets
and
liabilities
denominated
in
foreign
currencies
contain
risks
that
those
currencies
will
decline
in
value
relative
to
the
U.S.
dollar.
Occasionally,
events
may
impact
the
availability
or
reliability
of
foreign
exchange
rates
used
to
convert
the
U.S.
dollar
equivalent
value.
If
such
an
event
occurs,
the
foreign
exchange
rate
will
be
valued
at
fair
value
using
procedures
established
and
approved
by
the
Board.
The
Funds
do
not
separately
report
the
effect
of
changes
in
foreign
exchange
rates
from
changes
in
market
prices
on
securities
held.
Such
changes
are
included
in
net
realized
and
unrealized
gain
or
loss
from
investments
in
the
Statements
of
Operations.
Realized
foreign
exchange
gains
or
losses
arise
from
sales
of
foreign
currencies,
currency
gains
or
losses
realized
between
the
trade
and
settlement
dates
on
securities
transactions
and
the
difference
between
the
recorded
amounts
of
dividends,
interest,
and
foreign
withholding
taxes
and
the
U.S.
dollar
equivalent
of
the
amounts
actually
received
or
paid.
Net
unrealized
foreign
exchange
gains
and
losses
arise
from
changes
in
foreign
exchange
rates
on
foreign
denominated
assets
and
liabilities
other
than
investments
in
securities
held
at
the
end
of
the
reporting
period.
c.
Securities
Purchased
on
a
Delayed
Delivery
Basis
Certain
or
all
Funds
purchase
securities
on
a
delayed
delivery
basis,
with
payment
and
delivery
scheduled
for
a
future
date.
These
transactions
are
subject
to
market
fluctuations
and
are
subject
to
the
risk
that
the
value
at
delivery
may
be
more
or
less
than
the
trade
date
purchase
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
118
franklintempleton.com
Annual
Report
price.
Although
the
Funds
will
generally
purchase
these
securities
with
the
intention
of
holding
the
securities,
they
may
sell
the
securities
before
the
settlement
date.
d.
Derivative
Financial
Instruments
Certain
or
all
Funds
invested
in
derivative
financial
instruments
in
order
to
manage
risk
or
gain
exposure
to
various
other
investments
or
markets.
Derivatives
are
financial
contracts
based
on
an
underlying
or
notional
amount,
require
no
initial
investment
or
an
initial
net
investment
that
is
smaller
than
would
normally
be
required
to
have
a
similar
response
to
changes
in
market
factors,
and
require
or
permit
net
settlement.
Derivatives
contain
various
risks
including
the
potential
inability
of
the
counterparty
to
fulfill
their
obligations
under
the
terms
of
the
contract,
the
potential
for
an
illiquid
secondary
market,
and/or
the
potential
for
market
movements
which
expose
the
Fund
to
gains
or
losses
in
excess
of
the
amounts
shown
in
the
Statements
of
Assets
and
Liabilities.
Realized
gain
and
loss
and
unrealized
appreciation
and
depreciation
on
these
contracts
for
the
period
are
included
in
the
Statements
of
Operations.
Derivative
counterparty
credit
risk
is
managed
through
a
formal
evaluation
of
the
creditworthiness
of
all
potential
counterparties.
Certain
or
all
Funds
attempt
to
reduce
their
exposure
to
counterparty
credit
risk
on
OTC
derivatives,
whenever
possible,
by
entering
into
International
Swaps
and
Derivatives
Association
(ISDA)
master
agreements
with
certain
counterparties.
These
agreements
contain
various
provisions,
including
but
not
limited
to
collateral
requirements,
events
of
default,
or
early
termination.
Termination
events
applicable
to
the
counterparty
include
certain
deteriorations
in
the
credit
quality
of
the
counterparty.
Termination
events
applicable
to
the
Funds
include
failure
of
the
Funds
to
maintain
certain
net
asset
levels
and/or
limit
the
decline
in
net
assets
over
various
periods
of
time.
In
the
event
of
default
or
early
termination,
the
ISDA
master
agreement
gives
the
non-defaulting
party
the
right
to
net
and
close-out
all
transactions
traded,
whether
or
not
arising
under
the
ISDA
agreement,
to
one
net
amount
payable
by
one
counterparty
to
the
other.
However,
absent
an
event
of
default
or
early
termination,
OTC
derivative
assets
and
liabilities
are
presented
gross
and
not
offset
in
the
Statements
of
Assets
and
Liabilities.
Early
termination
by
the
counterparty
may
result
in
an
immediate
payment
by
the
Funds
of
any
net
liability
owed
to
that
counterparty
under
the
ISDA
agreement.
At
December
31,
2022,
certain
or
all
Funds
had
OTC
derivatives
in
a
net
liability
position
and
the
aggregate
value
of
collateral
pledged
for
such
contracts
was
as
follows:
Collateral
requirements
differ
by
type
of
derivative.
Collateral
or
initial
margin
requirements
are
set
by
the
broker
or
exchange
clearing
house
for
exchange
traded
and
centrally
cleared
derivatives.
Initial
margin
deposited
is
held
at
the
exchange
and
can
be
in
the
form
of
cash
and/or
securities.
For
OTC
derivatives
traded
under
an
ISDA
master
agreement,
posting
of
collateral
is
required
by
either
the
Fund
or
the
applicable
counterparty
if
the
total
net
exposure
of
all
OTC
derivatives
with
the
applicable
counterparty
exceeds
the
minimum
transfer
amount,
which
typically
ranges
from
$100,000
to
$250,000,
and
can
vary
depending
on
the
counterparty
and
the
type
of
agreement.
Generally,
collateral
is
determined
at
the
close
of
Fund
business
each
day
and
any
additional
collateral
required
due
to
changes
in
derivative
values
may
be
delivered
by
the
Fund
or
the
counterparty
the
next
business
day,
or
within
a
few
business
days.
Collateral
pledged
and/or
received
by
the
Fund
for
OTC
derivatives,
if
any,
is
held
in
segregated
accounts
with
the
Fund's
custodian/counterparty
broker
and
can
be
in
the
form
of
cash
and/or
securities.
Unrestricted
cash
may
be
invested
according
to
the
Funds'
investment
objectives.
To
the
extent
that
the
amounts
due
to
the
Fund
from
its
counterparties
are
not
subject
to
collateralization
or
are
not
fully
collateralized,
the
Fund
bears
the
risk
of
loss
from
counterparty
non-performance.
At
December
31,
2022,
certain
or
all
Funds
received
U.S.
Treasury
Bonds
and
Notes
as
collateral
for
derivatives,
as
follows:
Net
Liability
Position
Aggregate
Value
of
Collateral
Pledged
Franklin
Mutual
Financial
Services
Fund
.............
$1,794,962
$1,371,520
Franklin
Mutual
Global
Discovery
Fund
....................
$19,875,337
$18,221,149
Franklin
Mutual
Quest
Fund
...
$3,357,760
$2,959,915
Franklin
Mutual
Shares
Fund
...
$5,122,938
$4,462,243
1.
Organization
and
Significant
Accounting
Policies
(continued)
c.
Securities
Purchased
on
a
Delayed
Delivery
Basis
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
119
franklintempleton.com
Annual
Report
Certain
or
all
Funds
entered
into
exchange
traded
futures
contracts
primarily
to
manage
exposure
to
certain
foreign
currencies
and
equity
price
risk.
A
futures
contract
is
an
agreement
between
the
Fund
and
a
counterparty
to
buy
or
sell
an
asset
at
a
specified
price
on
a
future
date.
Required
initial
margins
are
pledged
by
the
Fund,
and
the
daily
change
in
fair
value
is
accounted
for
as
a
variation
margin
payable
or
receivable
in
the
Statements
of
Assets
and
Liabilities.
At
December
31,
2022,
Franklin
Mutual
Beacon
Fund
had
no
futures
contracts.
Certain
or
all
Funds
entered
into
OTC
forward
exchange
contracts
primarily
to
manage
exposure
to
certain
foreign
currencies.
A
forward
exchange
contract
is
an
agreement
between
the
Fund
and
a
counterparty
to
buy
or
sell
a
foreign
currency at
a
specific
exchange
rate
on
a
future
date.
At
December
31,
2022,
Franklin
Mutual
Beacon
Fund
had
no
forward
exchange
contracts.
Certain
or
all
Funds
purchased
or
wrote
exchange
traded
option
contracts
primarily
to
manage
exposure
to
equity
price
risk.
An
option
is
a
contract
entitling
the
holder
to
purchase
or
sell
a
specific
amount
of
shares
or
units
of
an
asset
or
notional
amount
of
a
swap
(swaption),
at
a
specified
price.
When
an
option
is
purchased
or
written,
an
amount
equal
to
the
premium
paid
or
received
is
recorded
as
an
asset
or
liability,
respectively.
Upon
exercise
of
an
option,
the
acquisition
cost
or
sales
proceeds
of
the
underlying
investment
is
adjusted
by
any
premium
received
or
paid.
Upon
expiration
of
an
option,
any
premium
received
or
paid
is
recorded
as
a
realized
gain
or
loss.
Upon
closing
an
option
other
than
through
expiration
or
exercise,
the
difference
between
the
premium
received
or
paid
and
the
cost
to
close
the
position
is
recorded
as
a
realized
gain
or
loss.
At
December
31,
2022,
Franklin
Mutual
Beacon
Fund,
Franklin
Mutual
Global
Discovery
Fund,
Franklin
Mutual
European
Fund,
Franklin
Mutual
Financial
Services
Fund
and
Franklin
Mutual
Shares
Fund
had
no
options.
See
Note
13
regarding
other
derivative
information.
e.
Securities
Sold
Short
Certain
or
all
Funds
are
engaged
in
selling
securities
short,
which
obligates
the
Fund
to
replace
a
borrowed
security
with
the
same
security
at
current
fair
value.
The
Fund
incurs
a
loss
if
the
price
of
the
security
increases
between
the
date
of
the
short
sale
and
the
date
on
which
the
Fund
replaces
the
borrowed
security.
The
Fund
realizes
a
gain
if
the
price
of
the
security
declines
between
those
dates.
Gains
are
limited
to
the
price
at
which
the
Fund
sold
the
security
short,
while
losses
are
potentially
unlimited
in
size.
The
Fund
is
required
to
establish
a
margin
account
with
the
broker
lending
the
security
sold
short.
While
the
short
sale
is
outstanding,
the
broker
retains
the
proceeds
of
the
short
sale
to
the
extent
necessary
to
meet
margin
requirements
until
the
short
position
is
closed
out.
A
deposit
must
also
be
maintained
with
the
Fund's
custodian/counterparty
broker
consisting
of
cash
and/or
securities
having
a
value
equal
to
a
specified
percentage
of
the
value
of
the
securities
sold
short.
The
Fund
is
obligated
to
pay
fees
for
borrowing
the
securities
sold
short
and
is
required
to
pay
the
counterparty
any
dividends
and/or
interest
due
on
securities
sold
short.
Such
dividends
and/or
interest
and
any
security
borrowing
fees
are
recorded
as
an
expense
to
the
Fund.
At
December
31,
2022,
Franklin
Mutual
Beacon
Fund,
Franklin
Mutual
Global
Discovery
Fund,
Franklin
Mutual
European
Fund,
Franklin
Mutual
Financial
Services
Fund
and
Franklin
Mutual
Shares
Fund
had
no
securities
sold
short.
f.
Securities
Lending
Certain
or
all
Funds
participate
in
an
agency
based
securities
lending
program
to
earn
additional
income.
The
Fund
receives
collateral
in
the
form
of
cash
and/or
U.S.
Government
and
Agency
securities
against
the
loaned
securities
in
an
amount
equal
to
at
least
102%
of
the
fair
value
of
the
loaned
securities.
Collateral
is
maintained
over
the
life
of
the
loan
in
an
amount
not
less
than
100%
of
the
fair
value
of
loaned
securities,
as
determined
at
the
close
of
Fund
business
each
day;
any
additional
collateral
required
due
to
changes
in
security
values
is
delivered
to
the
Fund
on
the
next
business
day.
Any
cash
collateral
received
is
deposited
into
a
joint
cash
account
with
other
funds
and
is
used
to
invest
in
a
money
market
fund
managed
by
Franklin
Advisers,
Inc.,
an
affiliate
of
the
Funds,
and/or
uninvested
cash
as
included
in
due
from
custodian
in
the
Statements
of
Assets
and
Liabilities.
Additionally,
at
December
31,
2022,
Collateral
Received
Franklin
Mutual
Financial
Services
Fund
$421,835
Franklin
Mutual
Global
Discovery
Fund
.
$1,186,069
Franklin
Mutual
Quest
Fund
.........
$1,571,872
Franklin
Mutual
Shares
Fund
.........
$1,095,859
1.
Organization
and
Significant
Accounting
Policies
(continued)
d.
Derivative
Financial
Instruments
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
120
franklintempleton.com
Annual
Report
Franklin
Mutual
European
Fund
held
$13,398,806
in
U.S.
Government
and
Agency
securities
as
collateral.
These
securities
are
held
as
collateral
in
segregated
accounts
with
the
Fund's
custodian.
The
Fund
cannot
repledge
or
resell
these
securities
held
as
collateral.
As
such,
the
non-
cash
collateral
is
excluded
from
the
Statements
of
Assets
and
Liabilities.
The
Fund
may
receive
income
from
the
investment
of
cash
collateral,
in
addition
to
lending
fees
and
rebates
paid
by
the
borrower.
Income
from
securities
loaned,
net
of
fees
paid
to
the
securities
lending
agent
and/or
third-
party
vendor,
is
reported
separately
in
the
Statements
of
Operations.
The
Fund
bears
the
market
risk
with
respect
to any
cash collateral
investment,
securities
loaned,
and
the
risk
that
the
agent
may
default
on
its
obligations
to
the
Fund.
If
the
borrower
defaults
on
its
obligation
to
return
the
securities
loaned,
the
Fund
has
the
right
to
repurchase
the
securities
in
the
open
market
using
the
collateral
received.
The
securities
lending
agent
has
agreed
to
indemnify
the
Fund
in
the
event
of
default
by
a
third
party
borrower.
At
December
31,
2022,
Franklin
Mutual
Beacon
Fund,
Franklin
Mutual
Global
Discovery
Fund
and
Franklin
Mutual
Shares
Fund
had
no
securities
on
loan.
g.
Senior
Floating
Rate
Interests
Certain
or
all
Funds
invest
in
senior
secured
corporate
loans
that
pay
interest
at
rates
which
are
periodically
reset
by
reference
to
a
base
lending
rate
plus
a
spread.
These
base
lending
rates
are
generally
the
prime
rate
offered
by
a
designated
U.S.
bank
or
the
London
InterBank
Offered
Rate
(LIBOR).
Senior
secured
corporate
loans
often
require
prepayment
of
principal
from
excess
cash
flows
or
at
the
discretion
of
the
borrower.
As
a
result,
actual
maturity
may
be
substantially
less
than
the
stated
maturity.
Senior
secured
corporate
loans
in
which
the
Funds
invest
are
generally
readily
marketable,
but
may
be
subject
to
certain
restrictions
on
resale.
h.
Income
and
Deferred
Taxes
It
is each
Fund's
policy
to
qualify
as
a
regulated
investment
company
under
the
Internal
Revenue
Code. Each
Fund
intends
to
distribute
to
shareholders
substantially
all
of
its
taxable
income
and
net
realized
gains
to
relieve
it
from
federal
income
and
excise
taxes.
As
a
result,
no
provision
for
U.S.
federal
income
taxes
is
required.
The
Funds
may
be
subject
to
foreign
taxation
related
to
income
received,
capital
gains
on
the
sale
of
securities
and
certain
foreign
currency
transactions
in
the
foreign
jurisdictions
in
which
the
Funds
invest.
Foreign
taxes,
if
any,
are
recorded
based
on
the
tax
regulations
and
rates
that
exist
in
the
foreign
markets
in
which
the
Funds
invest.
When
a
capital
gain
tax
is
determined
to
apply,
certain
or
all
Funds
record
an
estimated
deferred
tax
liability
in
an
amount
that
would
be
payable
if
the
securities
were
disposed
of
on
the
valuation
date.
As
a
result
of
several
court
cases,
in
certain
countries
across
the
European
Union,
certain
or
all
Funds
filed
additional
tax
reclaims
for
previously
withheld
taxes
on
dividends
earned
in
those
countries
(EU
reclaims). Income
recognized,
if
any,
for
EU
reclaims
is
reflected
as
other
income
in
the
Statements of
Operations
and
any
related
receivable,
if
any,
is
reflected
as
European
Union
tax
reclaims
in
the
Statements
of
Assets
and
Liabilities.
Any
fees
associated
with
these
filings
are
reflected
in
other
expenses
in
the
Statements
of
Operations.
When
uncertainty
exists
as
to
the
ultimate
resolution
of
these
proceedings,
the
likelihood
of
receipt
of
these
EU
reclaims,
and
the
potential
timing
of
payment,
no
amounts
are
reflected
in
the
financial
statements.
For
U.S.
income
tax
purposes,
EU
reclaims
received
by
the
Funds,
if
any,
reduce
the
amount
of
foreign
taxes
Fund
shareholders
can
use
as
tax
deductions
or credits
on
their income
tax
returns.
In
the
event
that
EU
reclaims
received
by
the
Funds during a
fiscal
year
exceed
foreign
withholding
taxes
paid
by
the
Funds,
and
the Funds
previously
passed through
to
its
shareholders
foreign
taxes
incurred
by
the
Funds
to
be
used
as
a
credit
or
deduction
on
a
shareholder’s
income
tax
return,
the
Funds will
enter
into
a
closing
agreement
with
the
Internal
Revenue
Service
(IRS)
in
order
to
pay
the
associated
tax
liability
on
behalf
of
the Funds'
shareholders.
During
the
fiscal
year
ended
December
31,
2022,
certain
or
all
Funds
received
EU
reclaims
in
excess
of
the
foreign
taxes
paid
during
the
year.
Franklin
Mutual
Financial
Services
Fund
determined
to
enter
into
a
closing
agreement
with
the
IRS
and
recorded
the
estimated
payment
as
a
reduction
to
income,
as
reflected
in
the
Statements
of
Operations.
Franklin
Mutual
European
Fund
and
Franklin
Mutual
Global
Discovery
Fund
previously
determined
to
enter
into
a
closing
agreement
with
the
IRS
and
recorded
any
adjustments
to
estimated
payments
as
other
income
in
the
Statements
of
Operations.
1.
Organization
and
Significant
Accounting
Policies
(continued)
f.
Securities
Lending
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
121
franklintempleton.com
Annual
Report
Each
Fund
may
recognize
an
income
tax
liability
related
to
its
uncertain
tax
positions
under
U.S.
GAAP
when
the
uncertain
tax
position
has
a
less
than
50%
probability
that
it
will
be
sustained
upon
examination
by
the
tax
authorities
based
on
its
technical
merits.
As
of
December
31,
2022, each
Fund
has
determined
that
no
tax
liability
is
required
in
its
financial
statements
related
to
uncertain
tax
positions
for
any
open
tax
years
(or
expected
to
be
taken
in
future
tax
years).
Open
tax
years
are
those
that
remain
subject
to
examination
and
are
based
on
the
statute
of
limitations
in
each
jurisdiction
in
which
the
Fund
invests.
i.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
Security
transactions
are
accounted
for
on
trade
date.
Realized
gains
and
losses
on
security
transactions
are
determined
on
a
specific
identification
basis.
Interest
income
and
estimated
expenses
are
accrued
daily.
Amortization
of
premium
and
accretion
of
discount
on
debt
securities
are
included
in
interest
income.
Paydown
gains
and
losses
are
recorded
as
an
adjustment
to
interest
income.
Facility
fees
are
recognized
as
income
over
the
expected
term
of
the
loan.
Dividend
income
and
dividends
declared
on
securities
sold
short
are
recorded
on
the
ex-dividend
date
except
for
certain
dividends
from
securities
where
the
dividend
rate
is
not
available.
In
such
cases,
the
dividend
is
recorded
as
soon
as
the
information
is
received
by
the
Fund.
Distributions
to shareholders
are
recorded
on
the
ex-dividend
date.
Distributable
earnings
are
determined
according
to
income
tax
regulations
(tax
basis)
and
may
differ
from
earnings
recorded
in
accordance
with
U.S.
GAAP.
These
differences
may
be
permanent
or
temporary.
Permanent
differences
are
reclassified
among
capital
accounts
to
reflect
their
tax
character.
These
reclassifications
have
no
impact
on
net
assets
or
the
results
of
operations.
Temporary
differences
are
not
reclassified,
as
they
may
reverse
in
subsequent
periods.
Common
expenses
incurred
by
the
Trust
are
allocated
among
the
Funds
based
on
the
ratio
of
net
assets
of
each
Fund
to
the
combined
net
assets
of
the
Trust
or
based
on
the
ratio
of
number
of
shareholders
of
each
Fund
to
the
combined
number
of
shareholders
of
the
Trust.
Fund
specific
expenses
are
charged
directly
to
the
Fund
that
incurred
the
expense.
Realized
and
unrealized
gains
and
losses
and
net
investment
income,
excluding
class
specific
expenses,
are
allocated
daily
to
each
class
of
shares
based
upon
the
relative
proportion
of
net
assets
of
each
class.
Differences
in
per
share
distributions
by
class
are
generally
due
to
differences
in
class
specific
expenses.
j.
Accounting
Estimates
The
preparation
of
financial
statements
in
accordance
with
U.S.
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
at
the
date
of
the
financial
statements
and
the
amounts
of
income
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
those
estimates.
k.
Guarantees
and
Indemnifications
Under
the
Trust's
organizational
documents,
its
officers
and
trustees
are
indemnified
by
the
Trust
against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Trust.
Additionally,
in
the
normal
course
of
business,
the
Trust,
on
behalf
of
the
Funds,
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The
Trust's
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the
Trust
that
have
not
yet
occurred.
Currently,
the
Trust
expects
the
risk
of
loss
to
be
remote.
1.
Organization
and
Significant
Accounting
Policies
(continued)
h.
Income
and
Deferred
Taxes
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
122
franklintempleton.com
Annual
Report
2.
Shares
of
Beneficial
Interest
At
December
3
1
,
202
2
,
there
were
an
unlimited
number
of
shares
authorized
(without
par
value).
Transactions
in
the
Funds'
shares
were
as
follows:
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Shares
Amount
Shares
Amount
Class
Z
Class
Z
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
4,518,425
$72,353,692
5,006,874
$107,549,542
Shares
issued
in
reinvestment
of
distributions
..........
12,611,801
177,940,210
607,689
12,330,793
Shares
redeemed
...............................
(16,880,382)
(265,740,444)
(6,848,287)
(141,306,719)
Net
increase
(decrease)
..........................
249,844
$(15,446,542)
(1,233,724)
$(21,426,384)
Year
ended
December
31,
2021
Shares
sold
...................................
5,839,985
$106,986,048
1,924,462
$41,875,442
Shares
issued
in
reinvestment
of
distributions
..........
8,699,407
151,861,397
687,137
14,708,283
Shares
redeemed
...............................
(15,681,677)
(284,187,853)
(4,859,850)
(104,628,590)
Net
increase
(decrease)
..........................
(1,142,285)
$(25,340,408)
(2,248,251)
$(48,044,865)
Class
A
Class
A
Shares:
Year
ended
December
31,
2022
Shares
sold
a
...................................
3,950,838
$62,998,373
1,143,930
$23,416,157
Shares
issued
in
reinvestment
of
distributions
..........
5,184,904
72,072,434
385,864
7,567,616
Shares
redeemed
...............................
(8,517,905)
(132,311,584)
(2,238,008)
(45,164,167)
Net
increase
(decrease)
..........................
617,837
$2,759,223
(708,214)
$(14,180,394)
Year
ended
December
31,
2021
Shares
sold
a
...................................
5,278,156
$96,885,950
1,186,474
$25,072,584
Shares
issued
in
reinvestment
of
distributions
..........
3,513,835
60,642,108
433,686
9,001,850
Shares
redeemed
...............................
(7,955,475)
(143,396,515)
(2,770,582)
(57,349,362)
Net
increase
(decrease)
..........................
836,516
$14,131,543
(1,150,422)
$(23,274,928)
Class
C
Class
C
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
162,368
$2,643,400
57,998
$1,215,483
Shares
issued
in
reinvestment
of
distributions
..........
113,683
1,581,132
16,514
323,733
Shares
redeemed
a
..............................
(519,947)
(8,211,773)
(466,964)
(9,592,370)
Net
increase
(decrease)
..........................
(243,896)
$(3,987,241)
(392,452)
$(8,053,154)
Year
ended
December
31,
2021
Shares
sold
...................................
274,584
$5,035,296
108,558
$2,310,237
Shares
issued
in
reinvestment
of
distributions
..........
85,888
1,494,056
26,553
561,304
Shares
redeemed
a
..............................
(957,065)
(17,715,511)
(823,111)
(17,482,822)
Net
increase
(decrease)
..........................
(596,593)
$(11,186,159)
(688,000)
$(14,611,281)
Class
R
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
123
franklintempleton.com
Annual
Report
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Shares
Amount
Shares
Amount
Class
R
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
11,936
$185,508
11,242
$218,562
Shares
issued
in
reinvestment
of
distributions
..........
8,778
120,118
886
16,953
Shares
redeemed
...............................
(4,829)
(74,635)
(11,636)
(228,959)
Net
increase
(decrease)
..........................
15,885
$230,991
492
$6,556
Year
ended
December
31,
2021
Shares
sold
...................................
6,338
$114,528
9,141
$189,771
Shares
issued
in
reinvestment
of
distributions
..........
4,963
84,510
1,007
20,425
Shares
redeemed
...............................
(10,458)
(191,992)
(17,956)
(355,590)
Net
increase
(decrease)
..........................
843
$7,046
(7,808)
$(145,394)
Class
R6
Class
R6
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
844,073
$13,800,081
199,706
$4,124,439
Shares
issued
in
reinvestment
of
distributions
..........
678,737
9,575,351
11,098
225,059
Shares
redeemed
...............................
(2,894,436)
(44,166,071)
(264,096)
(5,454,541)
Net
increase
(decrease)
..........................
(1,371,626)
$(20,790,639)
(53,292)
$(1,105,043)
Year
ended
December
31,
2021
Shares
sold
...................................
5,583,463
$106,269,417
238,083
$5,116,650
Shares
issued
in
reinvestment
of
distributions
..........
564,162
9,847,608
11,304
241,602
Shares
redeemed
...............................
(2,025,526)
(36,947,186)
(329,726)
(7,034,433)
Net
increase
(decrease)
..........................
4,122,099
$79,169,839
(80,339)
$(1,676,181)
Franklin
Mutual
Financial
Services
Fund
Franklin
Mutual
Global
Discovery
Fund
Shares
Amount
Shares
Amount
Class
Z
Class
Z
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
549,487
$13,771,776
4,894,660
$146,445,586
Shares
issued
in
reinvestment
of
distributions
..........
109,208
2,552,205
9,606,859
258,820,963
Shares
redeemed
...............................
(863,058)
(20,754,913)
(15,602,455)
(458,241,523)
Net
increase
(decrease)
..........................
(204,363)
$(4,430,932)
(1,100,936)
$(52,974,974)
Year
ended
December
31,
2021
Shares
sold
...................................
784,766
$19,144,281
5,593,455
$178,799,789
Shares
issued
in
reinvestment
of
distributions
..........
70,399
1,743,108
8,188,488
252,494,886
Shares
redeemed
...............................
(810,179)
(19,733,944)
(21,392,850)
(681,869,695)
Net
increase
(decrease)
..........................
44,986
$1,153,445
(7,610,907)
$(250,575,020)
Class
A
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
124
franklintempleton.com
Annual
Report
Franklin
Mutual
Financial
Services
Fund
Franklin
Mutual
Global
Discovery
Fund
Shares
Amount
Shares
Amount
Class
A
Shares:
Year
ended
December
31,
2022
Shares
sold
a
...................................
1,404,392
$35,638,190
9,521,128
$277,104,275
Shares
issued
in
reinvestment
of
distributions
..........
199,079
4,668,407
17,470,833
457,401,627
Shares
redeemed
...............................
(2,030,320)
(48,642,875)
(29,745,785)
(854,758,276)
Net
increase
(decrease)
..........................
(426,849)
$(8,336,278)
(2,753,824)
$(120,252,374)
Year
ended
December
31,
2021
Shares
sold
a
...................................
1,796,743
$44,503,944
13,871,126
$442,848,145
Shares
issued
in
reinvestment
of
distributions
..........
123,180
3,061,930
14,845,564
446,658,739
Shares
redeemed
...............................
(1,774,053)
(43,298,676)
(36,892,543)
(1,155,451,533)
Net
increase
(decrease)
..........................
145,870
$4,267,198
(8,175,853)
$(265,944,649)
Class
C
Class
C
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
145,932
$3,719,658
657,450
$19,234,736
Shares
issued
in
reinvestment
of
distributions
..........
9,028
210,721
770,098
20,104,071
Shares
redeemed
a
..............................
(387,486)
(9,182,689)
(3,957,748)
(115,078,640)
Net
increase
(decrease)
..........................
(232,526)
$(5,252,310)
(2,530,200)
$(75,739,833)
Year
ended
December
31,
2021
Shares
sold
...................................
196,028
$4,867,182
937,475
$29,473,650
Shares
issued
in
reinvestment
of
distributions
..........
3,740
93,205
790,049
23,879,124
Shares
redeemed
a
..............................
(519,218)
(12,736,017)
(8,462,035)
(269,311,741)
Net
increase
(decrease)
..........................
(319,450)
$(7,775,630)
(6,734,511)
$(215,958,967)
Class
R
Class
R
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
—
$—
391,507
$11,216,698
Shares
issued
in
reinvestment
of
distributions
..........
—
—
414,590
10,657,235
Shares
redeemed
...............................
—
—
(1,096,319)
(31,559,637)
Net
increase
(decrease)
..........................
—
$—
(290,222)
$(9,685,704)
Year
ended
December
31,
2021
Shares
sold
...................................
—
$—
408,568
$12,784,868
Shares
issued
in
reinvestment
of
distributions
..........
—
—
366,002
10,849,071
Shares
redeemed
...............................
—
—
(2,591,277)
(80,287,678)
Net
increase
(decrease)
..........................
—
$—
(1,816,707)
$(56,653,739)
Class
R6
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
125
franklintempleton.com
Annual
Report
Franklin
Mutual
Financial
Services
Fund
Franklin
Mutual
Global
Discovery
Fund
Shares
Amount
Shares
Amount
Class
R6
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
31,598
$790,271
2,373,607
$70,078,122
Shares
issued
in
reinvestment
of
distributions
..........
2,125
50,005
1,588,180
42,784,151
Shares
redeemed
...............................
(62,999)
(1,572,957)
(5,311,125)
(159,233,882)
Net
increase
(decrease)
..........................
(29,276)
$(732,681)
(1,349,338)
$(46,371,609)
Year
ended
December
31,
2021
Shares
sold
...................................
131,569
$3,272,275
3,222,144
$104,019,457
Shares
issued
in
reinvestment
of
distributions
..........
1,824
45,462
1,491,907
45,976,392
Shares
redeemed
...............................
(120,973)
(2,839,393)
(13,347,493)
(424,507,621)
Net
increase
(decrease)
..........................
12,420
$478,344
(8,633,442)
$(274,511,772)
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Shares
Amount
Shares
Amount
Class
Z
Class
Z
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
9,784,272
$141,281,538
8,798,481
$213,065,039
Shares
issued
in
reinvestment
of
distributions
..........
5,582,185
71,608,119
13,845,004
313,006,127
Shares
redeemed
...............................
(23,183,656)
(323,721,592)
(31,157,436)
(757,248,961)
Net
increase
(decrease)
..........................
(7,817,199)
$(110,831,935)
(8,513,951)
$(231,177,795)
Year
ended
December
31,
2021
Shares
sold
...................................
8,934,947
$127,490,122
6,091,043
$174,007,370
Shares
issued
in
reinvestment
of
distributions
..........
4,090,779
58,092,057
16,483,348
441,867,539
Shares
redeemed
...............................
(33,019,969)
(469,656,069)
(21,197,536)
(596,631,556)
Net
increase
(decrease)
..........................
(19,994,243)
$(284,073,890)
1,376,855
$19,243,353
Class
A
Class
A
Shares:
Year
ended
December
31,
2022
Shares
sold
a
...................................
4,854,484
$67,636,417
5,456,941
$135,249,494
Shares
issued
in
reinvestment
of
distributions
..........
1,674,995
21,117,918
10,408,356
231,619,673
Shares
redeemed
...............................
(8,979,450)
(122,785,711)
(17,268,207)
(423,494,401)
Net
increase
(decrease)
..........................
(2,449,971)
$(34,031,376)
(1,402,910)
$(56,625,234)
Year
ended
December
31,
2021
Shares
sold
a
...................................
3,890,182
$54,984,975
6,646,689
$189,023,732
Shares
issued
in
reinvestment
of
distributions
..........
1,170,021
16,334,740
11,866,324
314,119,841
Shares
redeemed
...............................
(12,246,018)
(171,202,238)
(20,070,111)
(561,601,247)
Net
increase
(decrease)
..........................
(7,185,815)
$(99,882,523)
(1,557,098)
$(58,457,674)
Class
C
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
126
franklintempleton.com
Annual
Report
1
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Shares
Amount
Shares
Amount
Class
C
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
334,623
$4,632,285
1,322,415
$32,820,116
Shares
issued
in
reinvestment
of
distributions
..........
68,787
865,760
583,262
12,902,802
Shares
redeemed
a
..............................
(925,818)
(12,572,007)
(2,093,687)
(51,764,132)
Net
increase
(decrease)
..........................
(522,408)
$(7,073,962)
(188,010)
$(6,041,214)
Year
ended
December
31,
2021
Shares
sold
...................................
334,809
$4,649,090
1,651,127
$45,796,881
Shares
issued
in
reinvestment
of
distributions
..........
42,473
590,978
662,128
17,541,173
Shares
redeemed
a
..............................
(2,308,765)
(32,277,804)
(3,354,065)
(95,250,507)
Net
increase
(decrease)
..........................
(1,931,483)
$(27,037,736)
(1,040,810)
$(31,912,453)
Class
R
Class
R
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
278,639
$3,958,251
159,279
$3,993,747
Shares
issued
in
reinvestment
of
distributions
..........
9,769
121,099
155,234
3,434,257
Shares
redeemed
...............................
(180,023)
(2,365,144)
(458,550)
(11,292,293)
Net
increase
(decrease)
..........................
108,385
$1,714,206
(144,037)
$(3,864,289)
Year
ended
December
31,
2021
Shares
sold
...................................
59,804
$831,305
194,613
$5,492,280
Shares
issued
in
reinvestment
of
distributions
..........
4,187
57,448
189,241
4,992,082
Shares
redeemed
...............................
(68,758)
(949,977)
(445,333)
(12,461,979)
Net
increase
(decrease)
..........................
(4,767)
$(61,224)
(61,479)
$(1,977,617)
Class
R6
Class
R6
Shares:
Year
ended
December
31,
2022
Shares
sold
...................................
480,288
$6,781,496
506,509
$12,677,849
Shares
issued
in
reinvestment
of
distributions
..........
93,655
1,200,472
1,191,226
26,903,261
Shares
redeemed
...............................
(813,586)
(11,327,805)
(2,905,856)
(72,400,721)
Net
increase
(decrease)
..........................
(239,643)
$(3,345,837)
(1,208,121)
$(32,819,611)
Year
ended
December
31,
2021
Shares
sold
...................................
425,507
$6,035,726
632,661
$18,045,148
Shares
issued
in
reinvestment
of
distributions
..........
71,637
1,015,856
1,442,258
38,638,322
Shares
redeemed
in-kind
(Note
3h)
..................
—
—
(42,074,815)
(1,065,296,437)
Shares
redeemed
...............................
(1,386,459)
(19,601,524)
(3,521,096)
(96,390,150)
Net
increase
(decrease)
..........................
(889,315)
$(12,549,942)
(43,520,992)
$(1,105,003,117)
a
May
include
a
portion
of
Class
C
shares
that
were
automatically
converted
to
Class
A.
2.
Shares
of
Beneficial
Interest
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
127
franklintempleton.com
Annual
Report
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and
trustees
of
the
Trust
are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
Franklin
Mutual
Beacon
Fund
and
Franklin
Mutual
Quest
Fund
pay
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
Franklin
Mutual
based
on
the
average
daily
net
assets
of
each
of
the
Funds
as
follows:
Franklin
Mutual
European
Fund
and
Franklin
Mutual
Financial
Services
Fund
pay
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
Franklin
Mutual
based
on
the
average
daily
net
assets
of
each
of
the
Funds
as
follows:
Franklin
Mutual
Global
Discovery
Fund
pays
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
Franklin
Mutual
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
Subsidiary
Affiliation
Franklin
Mutual
Advisers,
LLC
(Franklin
Mutual)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Franklin
Distributors,
LLC
(Distributors)
Principal
underwriter
Franklin
Templeton
Investor
Services,
LLC
(Investor
Services)
Transfer
agent
Annualized
Fee
Rate
Net
Assets
0.675%
Up
to
and
including
$5
billion
0.645%
Over
$5
billion,
up
to
and
including
$7
billion
0.625%
Over
$7
billion,
up
to
and
including
$10
billion
0.615%
In
excess
of
$10
billion
Annualized
Fee
Rate
Net
Assets
0.875%
Up
to
and
including
$1
billion
0.845%
Over
$1
billion,
up
to
and
including
$2
billion
0.825%
Over
$2
billion,
up
to
and
including
$5
billion
0.805%
In
excess
of
$5
billion
Annualized
Fee
Rate
Net
Assets
0.845%
Up
to
and
including
$7
billion
0.825%
Over
$7
billion,
up
to
and
including
$10
billion
0.805%
Over
$10
billion,
up
to
and
including
$13
billion
0.785%
Over
$13
billion,
up
to
and
including
$16
billion
0.765%
Over
$16
billion,
up
to
and
including
$19
billion
0.745%
Over
$19
billion,
up
to
and
including
$22
billion
0.725%
Over
$22
billion,
up
to
and
including
$25
billion
0.705%
Over
$25
billion,
up
to
and
including
$28
billion
0.685%
In
excess
of
$28
billion
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
128
franklintempleton.com
Annual
Report
Franklin
Mutual
Shares
Fund
pays
an
investment
management
fee,
calculated
daily
and
paid
monthly,
to
Franklin
Mutual
based
on
the
average
daily
net
assets
of
the
Fund
as
follows:
For
the
year
ended
December
31,
2022,
each
Fund's
gross
effective
investment
management
fee
rate
based
on
average
daily
net
assets
was
as
follows:
b.
Administrative
Fees
Under
an
agreement
with
Franklin
Mutual,
FT
Services
provides
administrative
services
to
the
Funds.
The
fee
is
paid
by
Franklin
Mutual
based
on
the
Funds’
average
daily
net
assets,
and
is
not
an
additional
expense
of
the
Funds.
c.
Distribution
Fees
The
Board
has
adopted
distribution
plans
for
each
share
class
with
the
exception
of
Class
Z
and
Class
R6
shares,
pursuant
to
Rule
12b-1
under
the
1940
Act.
Under
the
Funds’
Class
A
reimbursement
distribution
plans,
the
Funds
reimburses
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of the
each
Fund's
shares
up
to
the
maximum
annual
plan
rate
for
each
class.
Under
the
Class
A
reimbursement
distribution
plans,
costs
exceeding
the
maximum
for
the
current
plan
year
cannot
be
reimbursed
in
subsequent
periods.
In
addition,
under
the
Funds’
Class
C
and
R
compensation
distribution
plans,
the
Funds
pay
Distributors
for
costs
incurred
in
connection
with
the
servicing,
sale
and
distribution
of
each
Fund's
shares
up
to
the
maximum
annual
plan
rate
for
each
class.
The
plan
year,
for
purposes
of
monitoring
compliance
with
the
maximum
annual
plan
rates,
is
February
1
through
January
31
for
each
Fund.
The
maximum
annual
plan
rates,
based
on
the
average
daily
net
assets,
for
each
class,
are
as
follows:
Annualized
Fee
Rate
Net
Assets
0.675%
Up
to
and
including
$5
billion
0.645%
Over
$5
billion,
up
to
and
including
$10
billion
0.625%
Over
$10
billion,
up
to
and
including
$15
billion
0.595%
Over
$15
billion,
up
to
and
including
$20
billion
0.585%
Over
$20
billion,
up
to
and
including
$25
billion
0.565%
Over
$25
billion,
up
to
and
including
$30
billion
0.555%
Over
$30
billion,
up
to
and
including
$35
billion
0.545%
In
excess
of
$35
billion
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Gross
effective
investment
management
fee
rate
...................
0.675%
0.875%
0.875%
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Gross
effective
investment
management
fee
rate
...................
0.840%
0.675%
0.665%
3.
Transactions
with
Affiliates
(continued)
a.
Management
Fees
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
129
franklintempleton.com
Annual
Report
The
Board
has
set
the
current
rate
at
0.25%
per
year
for
Class
A
shares
until
further
notice
and
approval
by
the
Board.
d.
Sales
Charges/Underwriting
Agreements
Front-end
sales
charges
and
contingent
deferred
sales
charges
(CDSC)
do
not
represent
expenses
of
the
Funds.
These
charges
are
deducted
from
the
proceeds
of
sales
of
fund
shares
prior
to
investment
or
from
redemption
proceeds
prior
to
remittance,
as
applicable.
Distributors
has
advised
the
Funds
of
the
following
commission
transactions
related
to
the
sales
and
redemptions
of
the
Funds'
shares
for
the
year:
e.
Transfer
Agent
Fees
Each
class
of
shares
pays
transfer
agent
fees
to
Investor
Services
for
its
performance
of
shareholder
servicing
obligations.
Effective
October
1,
2022,
the
fees
are
based
on
an
annualized
asset
based
fee
of
0.016%
plus
a
reduced
transaction
based
fee.
Prior
to
October
1,
2022,
the
fees
were
based
on
an
annualized
asset
based
fee
of
0.02%
plus
a
transaction
based
fee.
In
addition,
each
class
reimburses
Investor
Services
for
out
of
pocket
expenses
incurred
and,
except
for
Class
R6,
reimburses
shareholder
servicing
fees
paid
to
third
parties.
These
fees
are
allocated
daily
based
upon
their
relative
proportion
of
such
classes'
aggregate
net
assets.
Class
R6
pays
Investor
Services
transfer
agent
fees
specific
to
that
class.
For
the
year
ended
December
31,
2022,
the
Funds
paid
transfer
agent
fees
as
noted
in
the
Statements
of
Operations
of
which
the
following
amounts
were
retained
by
Investor
Services:
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Class
A
................................................
0.35%
0.35%
0.35%
Class
C
................................................
1.00%
1.00%
1.00%
Class
R
................................................
0.50%
0.50%
—%
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Class
A
................................................
0.35%
0.35%
0.35%
Class
C
................................................
1.00%
1.00%
1.00%
Class
R
................................................
0.50%
0.50%
0.50%
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Sales
charges
retained
net
of
commissions
paid
to
unaffiliated
brokers/
dealers
..................................................
$44,460
$7,341
$25,756
CDSC
retained
............................................
$25,129
$1,245
$2,754
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Sales
charges
retained
net
of
commissions
paid
to
unaffiliated
brokers/
dealers
..................................................
$230,594
$28,999
$133,194
CDSC
retained
............................................
$15,077
$4,479
$8,705
3.
Transactions
with
Affiliates
(continued)
c.
Distribution
Fees
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
130
franklintempleton.com
Annual
Report
f.
Investments
in
Affiliated
Management
Investment
Companies
Certain
or
all
Funds
invest
in
one
or
more
affiliated
management
investment
companies.
As
defined
in
the
1940
Act,
an
investment
is
deemed
to
be
a
“Controlled
Affiliate”
of
a
fund
when
a
fund
owns,
either
directly
or
indirectly,
25%
or
more
of
the
affiliated
fund’s
outstanding
shares
or
has
the
power
to
exercise
control
over
management
or
policies
of
such
fund.
The
Funds
do
not
invest
for
purposes
of
exercising
a
controlling
influence
over
the
management
or
policies.
Management
fees
paid
by
the
Funds
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Statements
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
year
ended
December
31,
2022,
investments
in
affiliated
management
investment
companies
were
as
follows:
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Transfer
agent
fees
.........................................
$1,123,530
$323,060
$218,050
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Transfer
agent
fees
.........................................
$3,994,718
$1,108,337
$2,841,435
aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
a
a
a
a
a
a
a
a
Franklin
Mutual
European
Fund
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
3.782%
$—
$14,956,000
$(14,956,000)
$—
$—
$—
—
$6,626
Total
Affiliated
Securities
...
$—
$14,956,000
$(14,956,000)
$—
$—
$—
$6,626
Franklin
Mutual
Financial
Services
Fund
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
3.782%
$—
$5,439,000
$(5,436,000)
$—
$—
$3,000
3,000
$303
Total
Affiliated
Securities
...
$—
$5,439,000
$(5,436,000)
$—
$—
$3,000
$303
3.
Transactions
with
Affiliates
(continued)
e.
Transfer
Agent
Fees
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
131
franklintempleton.com
Annual
Report
g.
Waiver
and
Expense
Reimbursements
Franklin
Mutual
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
and
to
assume
as
its
own
expense
certain
expenses
otherwise
payable
by
Franklin
Mutual
Global
Discovery
Fund
so
that
the
operating
expenses
(excluding
interest
expense,
distribution
fees,
acquired
fund
fees
and
expenses,
expenses
related
to
securities
sold
short,
and
certain
non-routine
expenses
or
costs,
including
those
relating
to
litigation,
indemnification,
reorganizations,
and
liquidations)
for
each
class
of
the
Fund
do
not
exceed
1.00%
based
on
the
average
net
assets
of
each
class
until
April
30,
2023.
Total
expenses
waived
or
paid
are
not
subject
to
recapture
subsequent
to
the
Fund's
fiscal
year
end.
For
Franklin
Mutual
Beacon
Fund,
Franklin
Mutual
European
Fund
and
Franklin
Mutual
Quest
Fund,
Investor
Services
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
so
that
the
Class
R6
transfer
agent
fees
do
not
exceed
0.02%
based
on
the
average
net
assets
of
the
class
until
April
30,
2023.
For
Franklin
Mutual
Financial
Services
Fund,
Franklin
Mutual
Global
Discovery
Fund
and
Franklin
Mutual
Shares
Fund,
Investor
Services
has
contractually
agreed
in
advance
to
waive
or
limit
its
fees
so
that
the
Class
R6
transfer
agent
fees
do
not
exceed
0.03%
based
on
the
average
net
assets
of
the
class
until
April
30,
2023.
h.
Other
Affiliated
Transactions
During
the
year
ended
December
31,
2021,
the
Franklin
Global
Allocation
Fund
(formerly
Franklin
Founding
Funds
Allocation
Fund)
(Allocation
Fund),
a
series
of
the
Franklin
Fund
Allocator
Series,
repositioned
to
a
direct
investment
fund
and
subsequently
fully
redeemed
out
of
Franklin
Mutual
Shares
Fund.
As
a
result,
on
January
29,
2021,
the
Fund
delivered
portfolio
securities
and
cash
that
were
transferred
in-kind
to
the
Allocation
Fund,
which
included
$233,383,169
of
net
realized
gains.
As
such
gains
are
not
taxable
to
the
Fund
and
are
not
distributed
to
remaining
shareholders,
they
are
reclassified
from
accumulated
net
realized
gains
to
paid-in
capital.
aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
Franklin
Mutual
Global
Discovery
Fund
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
3.782%
$—
$14,094,000
$(14,094,000)
$—
$—
$—
—
$6,265
Total
Affiliated
Securities
...
$—
$14,094,000
$(14,094,000)
$—
$—
$—
$6,265
Franklin
Mutual
Quest
Fund
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
3.782%
$—
$31,248,000
$(31,248,000)
$—
$—
$—
—
$11,289
Total
Affiliated
Securities
...
$—
$31,248,000
$(31,248,000)
$—
$—
$—
$11,289
3.
Transactions
with
Affiliates
(continued)
f.
Investments
in
Affiliated
Management
Investment
Companies
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
132
franklintempleton.com
Annual
Report
4.
Expense
Offset
Arrangement
The
Funds
have entered
into
an
arrangement
with
their
custodian
whereby
credits
realized
as
a
result
of
uninvested
cash
balances
are
used
to
reduce
a
portion
of
the
Funds'
custodian
expenses.
During
the
year
ended
December
31,
2022,
the
custodian
fees
were
reduced
as
noted
in
the
Statements
of
Operations.
5.
Independent
Trustees'
Retirement
Plan
On
January
1,
1993,
the
Trust
adopted
an
Independent
Trustees’
Retirement
Plan
(Plan).
The
Plan
is
an
unfunded
defined
benefit
plan
that
provides
benefit
payments
to
Trustees
whose
length
of
service
and
retirement
age
meets
the
eligibility
requirements
of
the
Plan.
Benefits
under
the
Plan
are
based
on
years
of
service
and
fees
paid
to
each
trustee
at
the
time
of
retirement.
Effective
in
December
1996,
the
Plan
was
closed
to
new
participants.
During
the
year
ended
December
31,
2022,
the
Funds'
projected
benefit
obligation
and
benefit
payments
under
the
Plan
were
as
follows:
6.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains.
At
December
31,
2022,
the
capital
loss
carryforwards
were
as
follows:
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
a
Projected
benefit
obligation
at
December
31,
2022
.................
$167,985
$102,089
$18,103
b
Increase
(decrease)
in
projected
benefit
obligation
.................
$(184,570)
$(43,823)
$(23,683)
Benefit
payments
made
to
retired
trustees
........................
$—
$—
$—
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
a
Projected
benefit
obligation
at
December
31,
2022
.................
$746,611
$220,792
$692,583
b
Increase
(decrease)
in
projected
benefit
obligation
.................
$(552,570)
$(178,447)
$(457,505)
Benefit
payments
made
to
retired
trustees
........................
$—
$—
$—
a
The
projected
benefit
obligation
is
included
in
trustees’
fees
and
expenses
in
the
Statements
of
Assets
and
Liabilities.
b
The
increase
(decrease)
in
projected
benefit
obligation
is
reflected
in
trustees’
fees
and
expenses
in
the
Statements
of
Operations.
The
increase
(decrease)
was
primarily
due
to
demographic
gains.
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
1
1
1
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
...............................................................
$
3,622,477
$
—
Long
term
...............................................................
101,543,973
22,550,737
Total
capital
loss
carryforwards
..............................................
$105,166,450
$22,550,737
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
133
franklintempleton.com
Annual
Report
a
Includes
$
2,936,881
from
the
acquired
Franklin
Mutual
International
Fund,
which
may
be
carried
over
to
offset
future
capital
gains,
subject
to
certain
limitations.
During
the
year
ended
December
31,
2022,
the
following Funds
utilized
capital
loss
carryforwards
as
follows:
The
tax
character
of
distributions
paid
during
the
years
ended
December
31,
2022
and
2021,
was
as
follows:
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
1
1
1
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
...............................................................
$
—
$
56,142,413
Long
term
...............................................................
2,936,881
a
229,013,112
Total
capital
loss
carryforwards
..............................................
$2,936,881
$285,155,525
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Capital
loss
carryforwards
utilized
...............................................
$74,089,475
$25,458,567
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Capital
loss
carryforwards
utilized
...............................................
$1,500,376
$317,094,218
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
2022
2021
2022
2021
Distributions
paid
from:
Ordinary
income
........................
$49,229,979
$91,448,294
$22,885,083
$27,206,630
Long
term
capital
gain
....................
226,384,772
145,069,304
—
—
$275,614,751
$236,517,598
$22,885,083
$27,206,630
Franklin
Mutual
Financial
Services
Fund
Franklin
Mutual
Global
Discovery
Fund
2022
2021
2022
2021
Distributions
paid
from:
Ordinary
income
........................
$7,775,387
$5,184,765
$161,763,944
$230,330,737
Long
term
capital
gain
....................
—
—
671,293,581
592,523,585
$7,775,387
$5,184,765
$833,057,525
$822,854,322
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
2022
2021
2022
2021
Distributions
paid
from:
Ordinary
income
........................
$99,447,735
$79,888,336
$102,921,111
$263,515,339
Long
term
capital
gain
....................
—
—
530,104,277
617,281,347
$99,447,735
$79,888,336
$633,025,388
$880,796,686
6.
Income
Taxes
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
134
franklintempleton.com
Annual
Report
At
December
31,
2022,
the
cost
of
investments,
net
unrealized
appreciation
(depreciation),
undistributed
ordinary
income
and
undistributed
long
term
capital
gains
for
income
tax
purposes
were
as
follows:
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatments
of
defaulted
securities,
foreign
currency
transactions,
EU
reclaims,
passive
foreign
investment
company
shares,
bond
discounts
and
premiums,
tax
straddles,
corporate
actions,
wash
sales
and
futures
contracts.
Franklin
Mutual
Beacon
Fund,
Franklin
Mutual
Global
Discovery
Fund
and
Franklin
Mutual
Shares
Fund
utilized
a
tax
accounting
practice
to
treat
a
portion
of
the
proceeds
from
capital
shares
redeemed
as
a
distribution
from
net
investment
income
and
realized
capital
gains.
7.
Investment
Transactions
Purchases
and
sales
of
investments
(excluding
short
term
securities
and
securities
sold
short)
for
the
year
ended
December
31,
2022,
were
as
follows:
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
a
a
a
a
Cost
of
investments
........................................
$2,555,388,765
$705,654,152
$351,375,753
Unrealized
appreciation
......................................
$599,694,226
$92,157,209
$57,246,111
Unrealized
depreciation
......................................
(228,831,235)
(91,482,812)
(43,815,437)
Net
unrealized
appreciation
(depreciation)
........................
$370,862,991
$674,397
$13,430,674
Distributable
earnings:
Undistributed
ordinary
income
.................................
$2,465,199
$8,211,132
$269,919
Undistributed
long
term
capital
gains
............................
26,132,962
—
—
Total
distributable
earnings
...................................
$28,598,161
$8,211,132
$269,919
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
a
a
a
a
Cost
of
investments
........................................
$7,243,755,400
$3,008,408,306
$5,948,909,160
Unrealized
appreciation
......................................
$1,672,805,048
$192,881,871
$1,309,222,239
Unrealized
depreciation
......................................
(489,051,334)
(517,418,263)
(388,663,611)
Net
unrealized
appreciation
(depreciation)
........................
$1,183,753,714
$(324,536,392)
$920,558,628
Distributable
earnings:
Undistributed
ordinary
income
.................................
$—
$1,974,983
$4,727,309
Undistributed
long
term
capital
gains
............................
15,102,202
—
123,359,986
Total
distributable
earnings
...................................
$15,102,202
$1,974,983
$128,087,295
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Purchases
...............................................
$1,556,817,193
$237,306,530
$115,075,238
Sales
...................................................
$1,812,430,761
$222,154,132
$126,382,270
6.
Income
Taxes
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
135
franklintempleton.com
Annual
Report
At
December
31,
2022,
in
connection
with
securities
lending
transactions,
certain
or
all
Funds
loaned
investments
and
received
cash
collateral
as
follows:
8.
Credit Risk
and
Defaulted
Securities
The
Funds
may
purchase
the
pre-default
or
defaulted
debt
of
distressed
companies.
Distressed
companies
are
financially
troubled
and
could
be
or
are
already
involved
in
financial
restructuring
or
bankruptcy.
Risks
associated
with
purchasing
these
securities
include
the
possibility
that
the
bankruptcy
or
other
restructuring
process
takes
longer
than
expected,
or
that
distributions
in
restructuring
are
less
than
anticipated,
either
or
both
of
which
may
result
in
unfavorable
consequences
to
the
Funds.
If
it
becomes
probable
that
the
income
on
debt
securities,
including
those
of
distressed
companies,
will
not
be
collected,
the
Funds
discontinue
accruing
income
and
recognize
an
adjustment
for
uncollectible
interest.
At
December
31,
2022,
the
Funds
did
not
hold
any
distressed
company
securities
for
which
interest
recognition
has
been
discontinued.
9.
Concentration
of
Risk
Investing
in
foreign
securities
may
include
certain
risks
and
considerations
not
typically
associated
with
investing
in
U.S.
securities,
such
as
fluctuating
currency
values
and
changing
local,
regional
and
global
economic,
political
and
social
conditions,
which
may
result
in
greater
market
volatility.
Political
and
financial
uncertainty
in
many
foreign
regions
may
increase
market
volatility
and
the
economic
risk
of
investing
in
foreign
securities.
In
addition,
certain
foreign
securities
may
not
be
as
liquid
as
U.S.
securities.
10.
Geopolitical
Risk
On
February
24,
2022,
Russia
engaged
in
military
actions
in
the
sovereign
territory
of
Ukraine.
The
current
political
and
financial
uncertainty
surrounding
Russia
and
Ukraine
may
increase
market
volatility
and
the
economic
risk
of
investing
in
securities
in
these
countries
and
may
also
cause
uncertainty
for
the
global
economy
and
broader
financial
markets.
The
ultimate
fallout
and
long-term
impact
from
these
events
are
not
known.
The
Funds
will
continue
to
assess
the
impact
on
valuations
and
liquidity
and
will
take
any
potential
actions
needed
in
accordance
with
procedures
approved
by
the
Board.
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Purchases
...............................................
$4,737,171,321
$2,802,966,735
$4,393,481,621
Sales
...................................................
$5,383,413,001
$2,860,966,373
$5,084,782,940
Franklin
Mutual
Financial
Services
Fund
Franklin
Mutual
Quest
Fund
Securities
lending
transactions
a
:
Equity
investments
b
..........................................................
$3,340
$531,649
a
The
agreements
can
be
terminated
at
any
time.
b
The
gross
amount
of
recognized
liability
for
such
transactions
is
included
in
payable
upon
return
of
securities
loaned
in
the
Statements
of
Assets
and
Liabilities.
7.
Investment
Transactions
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
136
franklintempleton.com
Annual
Report
11.
Novel
Coronavirus
Pandemic
The
global
outbreak
of
the
novel
coronavirus
disease,
known
as
COVID-19, has
caused
adverse
effects
on
many
companies,
sectors,
nations,
regions
and
the
markets
in
general, and
may
continue for
an unpredictable duration.
The
effects
of
this
pandemic
may
materially
impact
the
value
and
performance
of
the
Funds, their ability
to
buy
and
sell
fund
investments
at
appropriate
valuations
and their ability
to
achieve their investment
objectives.
12.
Restricted
Securities
Certain
or
all
Funds
invest
in
securities
that
are
restricted
under
the
Securities
Act
of
1933
(1933
Act).
Restricted
securities
are
often
purchased
in
private
placement
transactions,
and
cannot
be
sold
without
prior
registration
unless
the
sale
is
pursuant
to
an
exemption
under
the
1933
Act.
Disposal
of
these
securities
may
require
greater
effort
and
expense,
and
prompt
sale
at
an
acceptable
price
may
be
difficult.
The
Funds
may
have
registration
rights
for
restricted
securities.
The
issuer
generally
incurs
all
registration
costs.
At
December
31,
2022,
investments
in
restricted
securities,
excluding
securities
exempt
from
registration
under
the
1933
Act,
were
as
follows:
Shares
Issuer
Acquisition
Date
Cost
Value
Franklin
Mutual
Beacon
Fund
2,846,329
International
Automotive
Components
Group
Brazil
LLC
4/13/06
-
12/26/08
$
1,890,264
$
100,185
Total
Restricted
Securities
(Value
is
0.0%
†
of
Net
Assets)
.............
$1,890,264
$100,185
Shares
Issuer
Acquisition
Date
Cost
Value
Franklin
Mutual
Global
Discovery
Fund
3,819,425
International
Automotive
Components
Group
Brazil
LLC
4/13/06
-
12/26/08
$
2,536,499
$
134,436
Total
Restricted
Securities
(Value
is
0.0%
†
of
Net
Assets)
.............
$2,536,499
$134,436
Principal
Amount
/
Shares
/
Warrants
Issuer
Acquisition
Date
Cost
Value
Franklin
Mutual
Quest
Fund
2,548,299
International
Automotive
Components
Group
Brazil
LLC
4/13/06
-
12/26/08
$
1,692,334
$
89,695
224,279
Sorenson
Communications
LLC,
Membership
Interests
.
4/01/22
—
—
106,532
Sorenson
Communications
LLC,
Membership
Interests,
B
......................................
4/30/14
—
9,476,129
24,776,325
Sorenson
Communications
LLC,
Term
Loan,
A,
PIK,
10%,
4/01/30
.............................
4/01/22
-
12/30/22
24,629,377
23,170,071
100,415,114
Sorenson
Communications
LLC,
Term
Loan,
B,
PIK,
8%,
4/01/30
..................................
4/01/22
-
12/30/22
99,315,377
78,322,185
1
Tenerity,
Inc.
...............................
1/31/22
204
44
48,380
Tenerity,
Inc.,
4/10/24
.........................
5/11/17
6,590,959
792,276
7,104
Wayne
Services
Legacy,
Inc.
...................
1/22/19
—
—
1,623,438
Windstream
Holdings,
Inc.
.....................
9/21/20
12,859,476
15,568,639
91,545
Windstream
Holdings,
Inc.,
9/21/55
..............
9/21/20
1,161,706
877,909
Total
Restricted
Securities
(Value
is
4.7%
of
Net
Assets)
..............
$146,249,433
$128,296,948
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
137
franklintempleton.com
Annual
Report
13.
Other
Derivative
Information
At
December
31,
2022,
investments
in
derivative
contracts
are
reflected
in
the
Statements of
Assets
and
Liabilities
as
follows:
Shares
/
Warrants
Issuer
Acquisition
Date
Cost
Value
Franklin
Mutual
Shares
Fund
7,234,813
International
Automotive
Components
Group
Brazil
LLC
4/13/06
-
12/26/08
$
4,804,678
$
254,651
7,469
Wayne
Services
Legacy,
Inc.
...................
1/22/19
—
—
2,123,740
Windstream
Holdings,
Inc.
.....................
9/21/20
16,822,436
20,366,495
119,757
Windstream
Holdings,
Inc.,
9/21/55
..............
9/21/20
1,519,716
1,148,460
Total
Restricted
Securities
(Value
is
0.3%
of
Net
Assets)
..............
$23,146,830
$21,769,606
†
Rounds
to
less
than
0.1%
of
net
assets.
Asset
Derivatives
Liability
Derivatives
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Franklin
Mutual
European
Fund
Foreign
exchange
contracts
..
Variation
margin
on
futures
contracts
$619,011
a
Variation
margin
on
futures
contracts
$1,467,451
a
Unrealized
appreciation
on
OTC
forward
exchange
contracts
3,637,681
Unrealized
depreciation
on
OTC
forward
exchange
contracts
5,426,656
Equity
contracts
...........
Variation
margin
on
futures
contracts
—
Variation
margin
on
futures
contracts
41,959
a
Total
....................
$4,256,692
$6,936,066
Franklin
Mutual
Financial
Services
Fund
Foreign
exchange
contracts
..
Variation
margin
on
futures
contracts
76,862
a
Variation
margin
on
futures
contracts
114,074
a
Unrealized
appreciation
on
OTC
forward
exchange
contracts
657,671
Unrealized
depreciation
on
OTC
forward
exchange
contracts
2,155,260
Total
....................
$734,533
$2,269,334
Franklin
Mutual
Global
Discovery
Fund
Foreign
exchange
contracts
..
Variation
margin
on
futures
contracts
487,248
a
Variation
margin
on
futures
contracts
3,493,818
a
Unrealized
appreciation
on
OTC
forward
exchange
contracts
14,072,735
Unrealized
depreciation
on
OTC
forward
exchange
contracts
33,801,405
Total
....................
$14,559,983
$37,295,223
Franklin
Mutual
Quest
Fund
Foreign
exchange
contracts
..
Variation
margin
on
futures
contracts
377,446
a
Variation
margin
on
futures
contracts
274,848
a
12.
Restricted
Securities
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
138
franklintempleton.com
Annual
Report
For
the
year
ended
December
31,
2022,
the
effect
of
derivative
contracts
in
the
Statements
of
Operations
was
as
follows:
Asset
Derivatives
Liability
Derivatives
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Statement
of
Assets
and
Liabilities
Location
Fair
Value
Franklin
Mutual
Quest
Fund
(continued)
Unrealized
appreciation
on
OTC
forward
exchange
contracts
$1,670,156
Unrealized
depreciation
on
OTC
forward
exchange
contracts
$3,668,959
Equity
contracts
...........
Investments
in
securities,
at
value
616,000
b
Options
written,
at
value
686,250
Total
....................
$2,663,602
$4,630,057
Franklin
Mutual
Shares
Fund
Foreign
exchange
contracts
..
Variation
margin
on
futures
contracts
476,268
a
Variation
margin
on
futures
contracts
89,611
a
Unrealized
appreciation
on
OTC
forward
exchange
contracts
1,200,179
Unrealized
depreciation
on
OTC
forward
exchange
contracts
5,297,998
Total
....................
$1,676,447
$5,387,609
a
This
amount
reflects
the
cumulative
appreciation
(depreciation)
of
futures
contracts
as
reported
in
the
Schedules
of
Investments.
Only
the
variation
margin
receivable/
payable
at
year
end
is
separately
reported
within
the
Statements
of
Assets
and
Liabilities.
Prior
variation
margin
movements
were
recorded
to
cash
upon
receipt
or
payment.
b
Purchased
option
contracts
are
included
in
investments
in
securities,
at
value
in
the
Statements
of
Assets
and
Liabilities.
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Year
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Year
Franklin
Mutual
Beacon
Fund
Net
realized
gain
(loss)
from:
Net
change
in
unrealized
appreciation
(depreciation)
on:
Foreign
exchange
contracts
.....
Futures
contracts
$1,900,304
Futures
contracts
$167,953
Forward
exchange
contracts
22,726,519
Forward
exchange
contracts
(6,375,509)
Total
.......................
$24,626,823
$(6,207,556)
Franklin
Mutual
European
Fund
Foreign
exchange
contracts
.....
Futures
contracts
26,628,500
Futures
contracts
2,134,340
Forward
exchange
contracts
38,853,570
Forward
exchange
contracts
(5,987,793)
Equity
Contracts
..............
Futures
contracts
(1,756,097)
Futures
contracts
(344,435)
Total
.......................
$63,725,973
$(4,197,888)
13.
Other
Derivative
Information
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
139
franklintempleton.com
Annual
Report
For
the year
ended
December
31,
2022,
the
average
month
end
notional
amount
of
futures
contracts
and
options
and
the
average
month
end
contract
value
for
forward
exchange
contracts,
were
as
follows:
Derivative
Contracts
Not
Accounted
for
as
Hedging
Instruments
Statement
of
Operations
Location
Net
Realized
Gain
(Loss)
for
the
Year
Statement
of
Operations
Location
Net
Change
in
Unrealized
Appreciation
(Depreciation)
for
the
Year
Franklin
Mutual
Financial
Services
Fund
Foreign
exchange
contracts
.....
Futures
contracts
$1,111,219
Futures
contracts
$213,845
Forward
exchange
contracts
12,056,231
Forward
exchange
contracts
(3,350,349)
Total
.......................
$13,167,450
$(3,136,504)
Franklin
Mutual
Global
Discovery
Fund
Foreign
exchange
contracts
.....
Futures
contracts
54,316,912
Futures
contracts
3,318,613
Forward
exchange
contracts
185,075,114
Forward
exchange
contracts
(38,783,678)
Total
.......................
$239,392,026
$(35,465,065)
Franklin
Mutual
Quest
Fund
Foreign
exchange
contracts
.....
Futures
contracts
5,860,537
Futures
contracts
1,632,277
Forward
exchange
contracts
40,909,952
Forward
exchange
contracts
(11,829,654)
Equity
Contracts
..............
Investments
(541,548)
a
Investments
(142,393)
a
Written
options
3,720,193
Written
options
(284,300)
Total
.......................
$49,949,134
$(10,624,070)
Franklin
Mutual
Shares
Fund
Foreign
exchange
contracts
.....
Futures
contracts
3,154,773
Futures
contracts
1,231,481
Forward
exchange
contracts
24,992,660
Forward
exchange
contracts
(8,105,276)
Total
.......................
$28,147,433
$(6,873,795)
a
Purchased
option
contracts
are
included
in
net
realized
gain
(loss)
from
investments
and
net
change
in
unrealized
appreciation
(depreciation)
on
investments
in
the
Statements
of
Operations.
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Futures
contracts
..........................................
$11,808,731
$217,387,999
$13,779,109
Forward
exchange
contracts
..................................
197,302,225
312,259,960
97,494,905
13.
Other
Derivative
Information
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
140
franklintempleton.com
Annual
Report
At
December
31,
2022,
OTC
derivative
assets
and
liabilities
are
as
follows:
At
December
3
1
,
2022,
OTC
derivative
assets,
which
may
be
offset
against
OTC
derivative
liabilities
and
collateral
received
from
the
counterparty,
are
as
follows:
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Futures
contracts
..........................................
$441,036,424
$62,256,837
$37,868,582
Forward
exchange
contracts
..................................
1,460,694,961
382,623,614
249,240,048
Options
..................................................
—
141,124,915
—
Gross
Amounts
of
Assets
and
Liabilities
Presented
in
the
Statement
of
Assets
and
Liabilities
Assets
a
Liabilities
a
Franklin
Mutual
European
Fund
Derivatives
Forward
exchange
contracts
.............................
$
3,637,681
$
5,426,656
Total
.............................................
$3,637,681
$5,426,656
a
Absent
an
event
of
default
or
early
termination,
OTC
derivative
assets
and
liabilities
are
presented
gross
and
not
offset
in
the
Statements
of
Assets
and
Liabilities.
Amounts
Not
Offset
in
the
Statement
of
Assets
and
Liabilities
Gross
Amounts
of
Assets
Presented
in
the
Statement
of
Assets
and
Liabilities
Financial
Instruments
Available
for
Offset
Financial
Instruments
Collateral
Received
a,b
Cash
Collateral
Received
Net
Amount
(Not
less
than
zero)
Franklin
Mutual
European
Fund
Counterparty
BNY
....................
$76,396
$—
$(76,396)
$—
$—
BOFA
....................
2,134,865
(1,906,698)
(39,913)
—
188,254
HSBK
...................
611,052
(611,052)
—
—
—
SSBT
....................
—
—
—
—
—
UBSW
...................
815,368
(815,368)
—
—
—
Total
...................
$3,637,681
$(3,333,118)
$
(116,309)
$—
$188,254
$
1
13.
Other
Derivative
Information
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
141
franklintempleton.com
Annual
Report
At
December
3
1
,
2022,
OTC
derivative
liabilities,
which
may
be
offset
against
OTC
derivative
assets
and
collateral
pledged
to
the
counterparty,
are
as
follows:
See
Note
1(d)
regarding
derivative
financial
instruments.
See
Abbreviations
on
page
151
.
14.
Holdings
of
5%
Voting
Securities
of
Portfolio
Companies
The
1940
Act
defines
"affiliated
companies"
to
include
investments
in
portfolio
companies
in
which
a
fund
owns
5%
or
more
of
the
outstanding
voting
securities.
Additionally,
as
defined
in
the
1940
Act,
an
investment
is
deemed
to
be
a
“Controlled
Affiliate”
of
a
fund
when
a
fund
owns,
either
directly
or
indirectly,
25%
or
more
of
the
affiliated
companies’
outstanding
shares
or
has
the
power
to
exercise
control
over
management
or
policies
of
such
company.
During
the
year
ended
December
31,
2022,
investments
in
“affiliated
companies”
were
as
follows:
Amounts
Not
Offset
in
the
Statement
of
Assets
and
Liabilities
Gross
Amounts
of
Liabilities
Presented
in
the
Statement
of
Assets
and
Liabilities
Financial
Instruments
Available
for
Offset
Financial
Instruments
Collateral
Pledged
Cash
Collateral
Pledged
Net
Amount
(Not
less
than
zero)
Franklin
Mutual
European
Fund
Counterparty
BNY
....................
$—
$—
$—
$—
$—
BOFA
....................
1,906,698
(1,906,698)
—
—
—
HSBK
...................
1,459,213
(611,052)
—
—
848,161
SSBT
....................
20,696
—
—
—
20,696
UBSW
...................
2,040,049
(815,368)
(753,007)
—
471,674
Total
...................
$5,426,656
$(3,333,118)
$(753,007)
$—
$1,340,531
a
At
December
31,
2022,
the
Fund
received
U.S.
Treasury
Bonds
and
Notes
as
collateral
for
derivatives.
b
In
some
instances,
the
collateral
amounts
disclosed
in
the
table
above
were
adjusted
due
to
the
requirement
to
limit
collateral
amounts
to
avoid
the
effect
of
over
collateralization.
Actual
collateral
received
and/or
pledged
may
be
more
than
the
amounts
disclosed
herein.
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
/Principal
Amount
Held
at
End
of
Year
Investment
Income
Franklin
Mutual
Financial
Services
Fund
Non-Controlled
Affiliates
Dividends
AB&T
Financial
Corp
...
$
221,578
$
—
$
—
$
—
$
(84,787)
$
136,791
226,100
$
1,151
Total
Affiliated
Securities
(Value
is
0.0%
*
of
Net
Assets)
............
$221,578
$—
$—
$
—
$
(84,787)
$136,791
$1,151
13.
Other
Derivative
Information
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
142
franklintempleton.com
Annual
Report
15.
Credit
Facility
The
Funds,
together
with
other
U.S.
registered
and
foreign
investment
funds
(collectively,
Borrowers),
managed
by
Franklin
Templeton,
are
borrowers
in
a
joint
syndicated
senior
unsecured
credit
facility
totaling
$2.675
billion
(Global
Credit
Facility)
which
matured
on
February
3,
2023.
This
Global
Credit
Facility
provides
a
source
of
funds
to
the
Borrowers
for
temporary
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares/Principal
Amount
Held
at
End
of
Year
Investment
Income
Franklin
Mutual
Quest
Fund
Non-Controlled
Affiliates
Dividends
Sorenson
Communications
LLC,
Membership
Interests
$
168,209,173
$
—
$
(155,543,022)
a
$
155,543,022
$
(168,209,173)
$
—
b
—
$
—
Sorenson
Communications
LLC,
Membership
Interests
.
.................
—
—
a
(2,523,138)
a
2,523,138
—
—
224,279
—
Sorenson
Communications
LLC,
Membership
Interests,
B
..........
—
—
a
—
—
9,476,129
9,476,129
106,532
—
Wayne
Services
Legacy,
Inc.
...............
—
—
(403,772)
a
403,772
—
—
7,104
—
Interest
Sorenson
Communications
LLC,
Term
Loan,
A,
PIK,
10%,
4/01/30
........
—
24,629,377
a
—
—
(1,459,306)
23,170,071
24,776,325
1,104,587
Sorenson
Communications
LLC,
Term
Loan,
B,
PIK,
8%,
4/01/30
.........
—
99,315,377
a
—
—
(20,993,192)
78,322,185
100,415,114
3,291,238
Total
Affiliated
Securities
(Value
is
4.1%
of
Net
Assets)
............
$168,209,173
$123,944,754
$(158,469,932)
$158,469,932
$(181,185,542)
$110,968,385
$4,395,825
Franklin
Mutual
Shares
Fund
Non-Controlled
Affiliates
Dividends
International
Automotive
Components
Group
Brazil
LLC
...............
273,903
—
—
—
(19,252)
254,651
7,234,813
—
Wayne
Services
Legacy,
Inc.
...............
—
—
(424,504)
a
424,504
—
—
7,469
—
Total
Affiliated
Securities
(Value
is
0.0%
*
of
Net
Assets)
............
$273,903
$—
$(424,504)
$
424,504
$
(19,252)
$254,651
$—
*
Rounds
to
less
than
0.1%
of
net
assets.
a
May
include
accretion,
amortization,
partnership
adjustments,
and/or
corporate
actions.
b
As
of
December
31,
2022,
no
longer
held
by
the
fund.
14.
Holdings
of
5%
Voting
Securities
of
Portfolio
Companies
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
143
franklintempleton.com
Annual
Report
and
emergency
purposes,
including
the
ability
to
meet
future
unanticipated
or
unusually
large
redemption
requests.
Effective
February
3,
2023,
the
Borrowers
renewed
the
Global
Credit
Facility
for
a
one-year
term,
maturing
February
2,
2024,
for
a
total
of
$2.675
billion.
Under
the
terms
of
the
Global
Credit
Facility,
the
Funds
shall,
in
addition
to
interest
charged
on
any
borrowings
made
by
the
Funds
and
other
costs
incurred
by
the
Funds,
pay
their
share
of
fees
and
expenses
incurred
in
connection
with
the
implementation
and
maintenance
of
the
Global
Credit
Facility,
based
upon
their
relative
share
of
the
aggregate
net
assets
of
all
of
the
Borrowers,
including
an
annual
commitment
fee
of
0.15%
based
upon
the
unused
portion
of
the
Global
Credit
Facility.
These
fees
are
reflected
in
other
expenses
in
the
Statements
of
Operations.
During
the
year ended
December
31,
2022,
the
Funds
did
not
use
the
Global
Credit
Facility.
16.
Fair
Value
Measurements
The Funds
follow
a
fair
value
hierarchy
that
distinguishes
between
market
data
obtained
from
independent
sources
(observable
inputs)
and
the Funds'
own
market
assumptions
(unobservable
inputs).
These
inputs
are
used
in
determining
the
value
of
the Funds' financial
instruments
and
are
summarized
in
the
following
fair
value
hierarchy:
Level
1
–
quoted
prices
in
active
markets
for
identical
financial
instruments
Level
2
–
other
significant
observable
inputs
(including
quoted
prices
for
similar
financial
instruments,
interest
rates,
prepayment
speed,
credit
risk,
etc.)
Level
3
–
significant
unobservable
inputs
(including
the Funds'
own
assumptions
in
determining
the
fair
value
of
financial
instruments)
The
input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level.
A
summary
of
inputs
used
as
of
December
31,
2022,
in
valuing
the
Funds'
assets
and
liabilities
carried
at
fair
value,
is
as
follows:
Level
1
Level
2
Level
3
Total
Franklin
Mutual
Beacon
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Aerospace
&
Defense
...................
$
—
$
88,464,915
$
—
$
88,464,915
Auto
Components
......................
—
—
100,185
100,185
Banks
...............................
199,941,450
153,538,241
—
353,479,691
Beverages
...........................
—
96,710,409
—
96,710,409
Building
Products
......................
100,740,928
—
—
100,740,928
Capital
Markets
........................
109,503,885
—
—
109,503,885
Containers
&
Packaging
.................
70,196,880
—
—
70,196,880
Diversified
Telecommunication
Services
.....
—
85,882,049
—
85,882,049
Electrical
Equipment
....................
82,830,000
—
—
82,830,000
Entertainment
.........................
61,721,653
—
—
61,721,653
Equity
Real
Estate
Investment
Trusts
(REITs)
.
82,310,508
—
—
82,310,508
Food
Products
........................
63,656,884
—
—
63,656,884
Health
Care
Equipment
&
Supplies
.........
105,258,683
—
—
105,258,683
Health
Care
Providers
&
Services
..........
66,578,889
—
—
66,578,889
Household
Products
....................
—
91,338,072
—
91,338,072
Insurance
............................
94,905,491
—
—
94,905,491
Interactive
Media
&
Services
..............
61,009,131
—
—
61,009,131
IT
Services
...........................
93,273,100
—
—
93,273,100
15.
Credit
Facility
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
144
franklintempleton.com
Annual
Report
Level
1
Level
2
Level
3
Total
Franklin
Mutual
Beacon
Fund
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Media
...............................
$
92,654,328
$
—
$
—
$
92,654,328
Metals
&
Mining
.......................
—
81,936,936
—
81,936,936
Oil,
Gas
&
Consumable
Fuels
.............
59,145,544
114,825,236
—
173,970,780
Personal
Products
.....................
—
108,889,758
—
108,889,758
Pharmaceuticals
.......................
303,158,865
90,498,842
—
393,657,707
Technology
Hardware,
Storage
&
Peripherals
.
50,323,133
—
—
50,323,133
Textiles,
Apparel
&
Luxury
Goods
..........
90,209,921
143,381,808
—
233,591,729
Companies
in
Liquidation
..................
—
—
—
a
—
Short
Term
Investments
...................
—
83,266,032
—
83,266,032
Total
Investments
in
Securities
...........
$1,787,419,273
$1,138,732,298
b
$100,185
$2,926,251,756
Franklin
Mutual
European
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Aerospace
&
Defense
...................
—
19,862,985
—
19,862,985
Auto
Components
......................
—
16,136,090
—
16,136,090
Banks
...............................
—
63,776,464
—
63,776,464
Beverages
...........................
—
36,725,087
—
36,725,087
Chemicals
...........................
—
21,135,982
—
21,135,982
Construction
Materials
..................
—
4,967,935
—
4,967,935
Diversified
Telecommunication
Services
.....
—
62,327,393
—
62,327,393
Energy
Equipment
&
Services
.............
11,117,927
—
—
11,117,927
Food
Products
........................
—
19,078,636
—
19,078,636
Health
Care
Providers
&
Services
..........
—
20,103,646
—
20,103,646
Household
Durables
....................
—
12,436,401
—
12,436,401
Household
Products
....................
—
14,558,954
—
14,558,954
Independent
Power
and
Renewable
Electricity
Producers
............................
—
19,197,989
—
19,197,989
Industrial
Conglomerates
................
—
20,205,854
—
20,205,854
Insurance
............................
—
64,939,799
—
64,939,799
IT
Services
...........................
—
17,503,366
—
17,503,366
Machinery
............................
—
30,875,450
—
30,875,450
Metals
&
Mining
.......................
—
21,653,036
—
21,653,036
Oil,
Gas
&
Consumable
Fuels
.............
—
45,230,742
—
45,230,742
Personal
Products
.....................
—
19,044,122
—
19,044,122
Pharmaceuticals
.......................
—
43,815,687
—
43,815,687
Real
Estate
Management
&
Development
....
—
11,729,677
—
11,729,677
Software
.............................
—
12,730,210
—
12,730,210
Textiles,
Apparel
&
Luxury
Goods
..........
—
24,782,503
—
24,782,503
Tobacco
.............................
—
16,630,192
—
16,630,192
Trading
Companies
&
Distributors
..........
19,841,164
15,555,865
—
35,397,029
Warrants
...............................
393,773
—
—
393,773
Short
Term
Investments
...................
—
22,650,994
—
22,650,994
Total
Investments
in
Securities
...........
$31,352,864
$677,655,059
c
$—
$709,007,923
Other
Financial
Instruments:
Forward
exchange
contracts
...............
$
—
$
3,637,681
$
—
$
3,637,681
Futures
contracts
........................
619,011
—
—
619,011
Total
Other
Financial
Instruments
.........
$619,011
$3,637,681
$—
$4,256,692
16.
Fair
Value
Measurements
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
145
franklintempleton.com
Annual
Report
Level
1
Level
2
Level
3
Total
Franklin
Mutual
European
Fund
(continued)
Liabilities:
Other
Financial
Instruments:
Forward
exchange
contracts
................
$
—
$
5,426,656
$
—
$
5,426,656
Futures
contracts
........................
1,509,410
—
—
1,509,410
Total
Other
Financial
Instruments
.........
$1,509,410
$5,426,656
$—
$6,936,066
Franklin
Mutual
Financial
Services
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Banks
...............................
82,072,992
52,145,902
—
134,218,894
Capital
Markets
........................
9,005,979
14,827,634
—
23,833,613
Consumer
Finance
.....................
10,494,842
—
—
10,494,842
Diversified
Financial
Services
.............
12,811,749
3,448,121
—
16,259,870
Equity
Real
Estate
Investment
Trusts
(REITs)
.
4,171,052
—
—
4,171,052
Household
Durables
....................
10,134,458
—
—
10,134,458
Insurance
............................
80,112,151
45,017,320
—
125,129,471
IT
Services
...........................
13,958,818
—
—
13,958,818
Media
...............................
440,987
—
—
440,987
Real
Estate
Management
&
Development
....
4,160,182
4,478,350
—
8,638,532
Trading
Companies
&
Distributors
..........
4,601,740
—
—
4,601,740
Short
Term
Investments
...................
3,000
14,455,951
—
14,458,951
Total
Investments
in
Securities
...........
$231,967,950
$134,373,278
d
$—
$366,341,228
Other
Financial
Instruments:
Forward
exchange
contracts
...............
$—
$657,671
$—
$657,671
Futures
contracts
........................
76,862
—
—
76,862
Total
Other
Financial
Instruments
.........
$76,862
$657,671
$—
$734,533
Liabilities:
Other
Financial
Instruments:
Forward
exchange
contracts
................
$—
$2,155,260
$—
$2,155,260
Futures
contracts
........................
114,074
—
—
114,074
Total
Other
Financial
Instruments
.........
$114,074
$2,155,260
$—
$2,269,334
Franklin
Mutual
Global
Discovery
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Aerospace
&
Defense
...................
—
150,056,386
—
150,056,386
Auto
Components
......................
—
141,095,793
134,436
141,230,229
Automobiles
..........................
124,539,788
—
—
124,539,788
Banks
...............................
392,152,943
247,172,866
—
639,325,809
Building
Products
......................
170,418,880
—
—
170,418,880
Capital
Markets
........................
176,154,080
—
—
176,154,080
Chemicals
...........................
—
162,488,580
—
162,488,580
Consumer
Finance
.....................
44,267,831
—
—
44,267,831
Diversified
Financial
Services
.............
178,652,185
—
—
178,652,185
Diversified
Telecommunication
Services
.....
—
220,749,115
—
220,749,115
Electrical
Equipment
....................
—
129,804,862
—
129,804,862
Energy
Equipment
&
Services
.............
189,165,537
—
—
189,165,537
Entertainment
.........................
267,403,095
—
—
267,403,095
Food
Products
........................
192,979,567
169,703,415
—
362,682,982
Health
Care
Equipment
&
Supplies
.........
158,599,629
—
—
158,599,629
Health
Care
Providers
&
Services
..........
472,636,388
174,066,796
—
646,703,184
Household
Durables
....................
185,014,527
—
—
185,014,527
Household
Products
....................
—
117,670,548
—
117,670,548
Industrial
Conglomerates
................
—
194,032,245
—
194,032,245
16.
Fair
Value
Measurements
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
146
franklintempleton.com
Annual
Report
Level
1
Level
2
Level
3
Total
Franklin
Mutual
Global
Discovery
Fund
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Insurance
............................
$
344,569,194
$
165,451,603
$
—
$
510,020,797
Interactive
Media
&
Services
..............
156,848,870
—
—
156,848,870
IT
Services
...........................
278,790,401
141,238,896
—
420,029,297
Machinery
............................
198,775,698
—
—
198,775,698
Media
...............................
173,002,377
—
—
173,002,377
Metals
&
Mining
.......................
—
180,678,703
—
180,678,703
Oil,
Gas
&
Consumable
Fuels
.............
261,655,168
231,142,920
—
492,798,088
Personal
Products
.....................
—
178,292,872
—
178,292,872
Pharmaceuticals
.......................
320,606,333
184,205,009
—
504,811,342
Real
Estate
Management
&
Development
....
145,884,606
—
—
145,884,606
Semiconductors
&
Semiconductor
Equipment
.
91,059,595
136,964,993
—
228,024,588
Software
.............................
117,827,994
—
—
117,827,994
Technology
Hardware,
Storage
&
Peripherals
.
100,251,892
139,357,657
—
239,609,549
Tobacco
.............................
—
158,223,891
—
158,223,891
Trading
Companies
&
Distributors
..........
202,331,384
—
—
202,331,384
Preferred
Stocks
.........................
—
107,662,540
—
107,662,540
Corporate
Bonds
........................
—
49,253,151
—
49,253,151
Companies
in
Liquidation
..................
—
—
—
a
—
Short
Term
Investments
...................
—
127,209,115
—
127,209,115
Total
Investments
in
Securities
...........
$4,943,587,962
$3,506,521,956
e
$134,436
$8,450,244,354
Other
Financial
Instruments:
Forward
exchange
contracts
...............
$—
$14,072,735
$—
$14,072,735
Futures
contracts
........................
487,248
—
—
487,248
Total
Other
Financial
Instruments
.........
$487,248
$14,072,735
$—
$14,559,983
Liabilities:
Other
Financial
Instruments:
Forward
exchange
contracts
................
$—
$33,801,405
$—
$33,801,405
Futures
contracts
........................
3,493,818
—
—
3,493,818
Total
Other
Financial
Instruments
.........
$3,493,818
$33,801,405
$—
$37,295,223
Franklin
Mutual
Quest
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Airlines
..............................
2,373,833
—
—
2,373,833
Auto
Components
......................
—
12,318,700
89,695
12,408,395
Automobiles
..........................
21,472,782
—
—
21,472,782
Banks
...............................
152,325,228
37,484,066
—
189,809,294
Beverages
...........................
—
28,628,497
—
28,628,497
Chemicals
...........................
23,662,519
49,915,719
—
73,578,238
Commercial
Services
&
Supplies
...........
8,289,872
—
—
8,289,872
Communications
Equipment
..............
—
—
9,476,129
a
9,476,129
Consumer
Finance
.....................
21,061,920
—
—
21,061,920
Diversified
Financial
Services
.............
51,404,287
9,572,006
—
60,976,293
Diversified
Telecommunication
Services
.....
—
11,116,519
15,568,639
26,685,158
Electronic
Equipment,
Instruments
&
Components
..........................
17,304,571
—
—
17,304,571
Entertainment
.........................
123,646,198
—
—
123,646,198
Equity
Real
Estate
Investment
Trusts
(REITs)
.
41,678,547
—
—
41,678,547
Food
Products
........................
—
28,121,515
—
28,121,515
Health
Care
Equipment
&
Supplies
.........
57,631,189
—
—
57,631,189
Health
Care
Providers
&
Services
..........
7,164,514
—
—
7,164,514
Household
Durables
....................
24,495,850
—
—
24,495,850
16.
Fair
Value
Measurements
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
147
franklintempleton.com
Annual
Report
Level
1
Level
2
Level
3
Total
Franklin
Mutual
Quest
Fund
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Household
Products
....................
$
—
$
16,940,150
$
—
$
16,940,150
Insurance
............................
168,016,752
161,513,988
—
329,530,740
Interactive
Media
&
Services
..............
4,333,443
—
—
4,333,443
Internet
&
Direct
Marketing
Retail
..........
12,065,655
—
—
12,065,655
IT
Services
...........................
79,349,817
—
—
79,349,817
Media
...............................
97,030,650
—
44
97,030,694
Metals
&
Mining
.......................
—
17,383,928
—
17,383,928
Oil,
Gas
&
Consumable
Fuels
.............
46,001,037
28,498,536
—
74,499,573
Personal
Products
.....................
—
31,067,207
—
31,067,207
Pharmaceuticals
.......................
109,832,704
39,326,650
—
149,159,354
Real
Estate
Management
&
Development
....
15,369,846
8,967,575
—
24,337,421
Semiconductors
&
Semiconductor
Equipment
.
63,393,322
—
—
63,393,322
Software
.............................
80,475,150
—
—
80,475,150
Specialty
Retail
........................
8,389,679
—
—
a
8,389,679
Technology
Hardware,
Storage
&
Peripherals
.
7,563,892
—
—
7,563,892
Tobacco
.............................
—
20,373,426
—
20,373,426
Wireless
Telecommunication
Services
.......
11,869,602
—
—
11,869,602
Preferred
Stocks
:
Automobiles
..........................
—
21,121,575
—
21,121,575
Oil,
Gas
&
Consumable
Fuels
.............
2,759,840
—
—
2,759,840
Rights
.................................
—
681,663
—
681,663
Warrants
:
Diversified
Telecommunication
Services
.....
—
—
877,909
877,909
Media
...............................
—
—
792,276
792,276
Wireless
Telecommunication
Services
.......
1,149,315
—
—
1,149,315
Limited
Partnerships
......................
16,050,875
—
—
16,050,875
Corporate
Bonds
........................
—
446,525,073
—
446,525,073
Senior
Floating
Rate
Interests
...............
—
98,318,762
101,492,256
199,811,018
Asset-Backed
Securities
...................
—
2,234,614
—
2,234,614
Companies
in
Liquidation
..................
—
—
—
a
—
Options
purchased
.......................
616,000
—
—
616,000
Short
Term
Investments
...................
—
252,037,434
—
252,037,434
Total
Investments
in
Securities
...........
$1,276,778,889
$1,322,147,603
f
$128,296,948
$2,727,223,440
Other
Financial
Instruments:
Forward
exchange
contracts
...............
$—
$1,670,156
$—
$1,670,156
Futures
contracts
........................
377,446
—
—
377,446
Total
Other
Financial
Instruments
.........
$377,446
$1,670,156
$—
$2,047,602
Liabilities:
Other
Financial
Instruments:
Options
written
..........................
$
686,250
$
—
$
—
$
686,250
Securities
Sold
Short
.....................
8,331,886
32,437,185
—
40,769,071
Forward
exchange
contracts
................
—
3,668,959
—
3,668,959
Futures
contracts
........................
274,848
—
—
274,848
Total
Other
Financial
Instruments
.........
$9,292,984
$36,106,144
$—
$45,399,128
Franklin
Mutual
Shares
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Auto
Components
......................
—
—
254,651
254,651
Automobiles
..........................
119,664,275
—
—
119,664,275
Banks
...............................
667,796,978
106,462,620
—
774,259,598
Building
Products
......................
167,672,704
—
—
167,672,704
16.
Fair
Value
Measurements
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
148
franklintempleton.com
Annual
Report
Level
1
Level
2
Level
3
Total
Franklin
Mutual
Shares
Fund
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Capital
Markets
........................
$
158,799,023
$
—
$
—
$
158,799,023
Chemicals
...........................
101,197,773
—
—
101,197,773
Consumer
Finance
.....................
104,342,313
—
—
104,342,313
Containers
&
Packaging
.................
80,278,781
—
—
80,278,781
Diversified
Financial
Services
.............
136,232,755
—
—
136,232,755
Diversified
Telecommunication
Services
.....
—
—
20,366,495
20,366,495
Electronic
Equipment,
Instruments
&
Components
..........................
143,566,820
—
—
143,566,820
Energy
Equipment
&
Services
.............
175,866,827
—
—
175,866,827
Entertainment
.........................
274,567,699
—
—
274,567,699
Equity
Real
Estate
Investment
Trusts
(REITs)
.
103,793,212
—
—
103,793,212
Food
Products
........................
173,759,033
—
—
173,759,033
Health
Care
Equipment
&
Supplies
.........
121,127,086
—
—
121,127,086
Health
Care
Providers
&
Services
..........
412,929,484
—
—
412,929,484
Household
Durables
....................
175,614,447
—
—
175,614,447
Insurance
............................
248,428,636
—
—
248,428,636
Interactive
Media
&
Services
..............
128,116,491
—
—
128,116,491
IT
Services
...........................
401,177,231
—
—
401,177,231
Machinery
............................
181,208,610
—
—
181,208,610
Media
...............................
240,927,159
—
—
240,927,159
Metals
&
Mining
.......................
80,819,060
—
—
80,819,060
Oil,
Gas
&
Consumable
Fuels
.............
221,833,058
108,900,126
—
330,733,184
Pharmaceuticals
.......................
420,769,260
135,731,534
—
556,500,794
Professional
Services
...................
129,317,179
—
—
129,317,179
Real
Estate
Management
&
Development
....
162,480,261
—
—
162,480,261
Software
.............................
252,734,441
—
—
252,734,441
Specialty
Retail
........................
—
—
—
a
—
Technology
Hardware,
Storage
&
Peripherals
.
56,082,838
—
—
56,082,838
Textiles,
Apparel
&
Luxury
Goods
..........
181,585,697
—
—
181,585,697
Tobacco
.............................
—
101,822,351
—
101,822,351
Wireless
Telecommunication
Services
.......
141,502,200
—
—
141,502,200
Warrants
...............................
—
—
1,148,460
1,148,460
Corporate
Bonds
........................
—
255,265,265
—
255,265,265
Senior
Floating
Rate
Interests
...............
—
77,424,139
—
77,424,139
Asset-Backed
Securities
...................
—
5,569,721
—
5,569,721
Companies
in
Liquidation
..................
—
—
—
a
—
Short
Term
Investments
...................
—
96,042,257
—
96,042,257
Total
Investments
in
Securities
...........
$5,964,191,331
$887,218,013
g
$21,769,606
$6,873,178,950
Other
Financial
Instruments:
Forward
exchange
contracts
...............
$—
$1,200,179
$—
$1,200,179
Futures
contracts
........................
476,268
—
—
476,268
Total
Other
Financial
Instruments
.........
$476,268
$1,200,179
$—
$1,676,447
Liabilities:
Other
Financial
Instruments:
Forward
exchange
contracts
................
$—
$5,297,998
$—
$5,297,998
Futures
contracts
........................
89,611
—
—
89,611
Total
Other
Financial
Instruments
.........
$89,611
$5,297,998
$—
$5,387,609
a
Includes
financial
instruments
determined
to
have
no
value
at
December
31,
2022.
b
Includes
foreign
securities
valued
at
$1,055,466,266,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
16.
Fair
Value
Measurements
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
149
franklintempleton.com
Annual
Report
A
reconciliation
in
which
Level
3
inputs
are
used
in
determining
fair
value
is
presented
when
there
are
significant
Level
3
assets
and/or
liabilities
at
the
be
ginning
and/or
end
of
the
year
.
At
December
3
1
,
202
2
,
the
reconciliation
is
as
follows:
Significant
unobservable
valuation
inputs
for
material
Level
3 assets
and/or
liabilities and
impact
to
fair
value
as
a
result
of
changes
in
unobservable
valuation
inputs
as
of
December
31,
2022,
are
as
follows:
c
Includes
foreign
securities
valued
at
$655,004,065,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
d
Includes
foreign
securities
valued
at
$119,780,536,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
e
Includes
foreign
securities
valued
at
$3,330,059,690,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
f
Includes
foreign
securities
valued
at
$522,350,057,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
g
Includes
foreign
securities
valued
at
$452,916,631,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
Balance
at
Beginning
of
Year
Purchases
a
Sales
b
Transfer
Into
Level
3
Transfer
Out
of
Level
3
Net
Accretion
(Amortiza-
tion)
Net
Realized
Gain
(Loss)
Net
Unr
ealized
Appreciatio
n
(
Depreciation
)
Balance
at
End
of
Year
Net
Change
in
Unrealized
Appreciation
(Depreciation)
on
Assets
Held
at
Year
End
a
a
a
a
a
a
a
a
a
a
a
Franklin
Mutual
Quest
Fund
Assets:
Investments
in
Securities:
Common
Stocks
:
Auto
Components
...
$
96,476
$
—
$
—
$
—
$
—
$
—
$
—
$
(6,781)
$
89,695
$
(6,781)
Communications
Equipment
.......
168,209,173
—
c
(158,066,160)
—
—
—
158,066,160
(158,733,044)
9,476,129
c
9,476,129
Diversified
Telecommunication
Services
.........
28,576,119
—
—
—
—
—
—
(13,007,480)
15,568,639
(13,007,480)
Media
..........
—
204
—
—
—
—
—
(160)
44
(160)
Specialty
Retail
....
—
c
—
(403,772)
—
—
—
403,772
—
—
c
—
Warrants
:
Diversified
Telecommunication
Services
.........
1,611,396
—
—
—
—
—
—
(733,487)
877,909
(733,487)
Media
..........
183,988
—
(136)
—
—
—
—
608,424
792,276
608,291
Senior
Floating
Rate
Interests
:
Communications
Equipment
.......
—
123,931,046
—
—
—
13,708
—
(22,452,498)
101,492,256
(22,452,498)
Companies
in
Liquidation
—
c
—
(85,814)
—
—
—
85,814
—
—
c
—
Total
Investments
in
Securities
...........
$198,677,152
$123,931,250
$(158,555,882)
$—
$—
$13,708
$158,555,746
$(194,325,026)
$128,296,948
$(26,115,986)
a
Purchases
include
all
purchases
of
securities
and
securities
received
in
corporate
actions.
b
Sales
include
all
sales
of
securities,
maturities,
paydowns
and
securities
tendered
in
corporate
actions.
c
Includes
financial
instruments
determined
to
have
no
value.
16.
Fair
Value
Measurements
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
150
franklintempleton.com
Annual
Report
17.
New
Accounting
Pronouncements
In
March
2020,
the
FASB
issued
Accounting
Standards
Update
(ASU)
No.
2020-04,
Reference
Rate
Reform
(Topic
848)
–
Facilitation
of
the
Effects
of
Reference
Rate
Reform
on
Financial
Reporting.
In
January
2021
and
December
2022,
the
FASB
issued
ASU
No.
2021-01
and
ASU
No.
2022-06,
with
further
amendments
to
Topic
848.
The
amendments
in
the
ASUs
provide
optional
temporary
accounting
recognition
and financial
reporting
relief
from
the
effect
of
certain
types
of
contract
modifications
due
to
the
planned
discontinuation
of
the
LIBOR
and
other
interbank-offered
based
reference
rates
as
of
the
end
of
2021
for
certain
LIBOR
settings
and
2023
for
the
remainder. The
ASUs
are
effective
for
certain
reference
rate-related
contract
modifications
that
occur
during
the
period
March
12,
2020
through
December
31,
2024.
Management
has
reviewed
the
requirements
and
believes
the
adoption
of
these
ASUs
will
not
have
a
material
impact
on
the
financial
statements.
In June
2022,
the
FASB
issued
ASU
No.
2022-03,
Fair
Value
Measurement
(Topic
820)
–
Fair
Value
Measurement
of
Equity
Securities
Subject
to
Contractual
Sale
Restrictions.
The
amendments
in
the
ASU
clarify
that
a
contractual
restriction
on
the
sale
of
an
equity
security
is
not
considered
part
of
the
unit
of
account
of
the
equity
security
and,
therefore,
should
not
be
considered
in
measuring
fair
value.
The
ASU
is
effective
for
interim
and
annual
reporting
periods
beginning
after
December
15,
2023,
with
the
option
of
early
adoption.
Management
has
reviewed
the
requirements
and
believes
that
the
adoption
of
the
ASU
will
not
have
a
material
impact
on
the
financial
statements.
Description
Fair
Value
at
End
of
Year
Valuation
Technique
Unobservable
Inputs
Amount
/
Range
(Weighted
Average)
a
Impact
to
Fair
Value
if
Input
Increases
b
Franklin
Mutual
Quest
Fund
Assets:
Investments
in
Securities:
Common
Stocks:
Diversified
Telecommunication
Services.
$15,568,639
Market
comparables
Discount
for
lack
of
marketability
10.0%
Decrease
EV/EBITDA
multiple
3.6x
Increase
Senior
Floating
Rate
Interests:
Communications
Equipment.
.
.
$101,492,256
Discounted
cash
flow
Discount
rate
11.2%
-
11.7%
(11.6%)
Decrease
All
Other
Investments.
.
.
11,236,053
c,d
Total
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
$128,296,948
a
Weighted
based
on
the
relative
fair
value
of
the
financial
instruments.
b
Represents
the
directional
change
in
the
fair
value
of
the
Level
3
financial
instruments
that
would
result
from
a
significant
and
reasonable
increase
in
the
corresponding
input.
A
significant
and
reasonable
decrease
in
the
input
would
have
the
opposite
effect.
Significant
increases
and
decreases
in
these
inputs
in
isolation
could
result
in
significantly
higher
or
lower
fair
value
measurements.
c
Includes
fair
value
of
immaterial
assets
and/or
liabilities
developed
using
various
valuation
techniques
and
unobservable
inputs.
May
also
include
values
derived
using
recent
transactions,
private
transaction
prices
or
non-public
third-party
pricing
information
which
is
unobservable.
d
Includes
financial
instruments
determined
to
have
no
value
at
December
31,
2022.
Abbreviations
List
EBITDA
-
Earnings
before
interest,
taxes,
depreciation
and
amortization
EV
-
Enterprise
value
16.
Fair
Value
Measurements
(continued)
Franklin
Mutual
Series
Funds
Notes
to
Financial
Statements
151
franklintempleton.com
Annual
Report
18.
Subsequent
Events
The
Funds
have
evaluated
subsequent
events
through
the
issuance
of
the
financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure
other
than
those
already
disclosed
in
the
financial
statements.
Abbreviations
Counterparty
BNY
Bank
of
New
York
BOFA
Bank
of
America
N.A.
HSBK
HSBC
Bank
plc
SSBT
State
Street
Bank
and
Trust
Co.
UBSW
UBS
AG
Currency
EUR
Euro
GBP
British
Pound
USD
United
States
Dollar
Index
EAFE
Europe,
Australasia
and
the
Far
East
MSCI
Morgan
Stanley
Capital
International
Selected
Portfolio
ADR
American
Depositary
Receipt
CME
Chicago
Mercantile
Exchange
FHLB
Federal
Home
Loan
Banks
LIBOR
London
Inter-Bank
Offered
Rate
PIK
Payment-In-Kind
SOFR
Secured
Overnight
Financing
Rate
Franklin
Mutual
Series
Funds
Report
of
Independent
Registered
Public
Accounting
Firm
152
franklintempleton.com
Annual
Report
To
the
Board
of
Trustees
of
Franklin
Mutual
Series
Funds
and
Shareholders
of
Franklin
Mutual
Beacon
Fund,
Franklin
Mutual
European
Fund,
Franklin
Mutual
Financial
Services
Fund,
Franklin
Mutual
Global
Discovery
Fund,
Franklin
Mutual
Quest
Fund
and
Franklin
Mutual
Shares
Fund
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statements
of
assets
and
liabilities
of
Franklin
Mutual
Series
Funds
(the
“Trust”)
(compromising
the
Franklin
Mutual
Beacon
Fund,
Franklin
Mutual
European
Fund,
Franklin
Mutual
Financial
Services
Fund,
Franklin
Mutual
Global
Discovery
Fund,
Franklin
Mutual
Quest
Fund
and
Franklin
Mutual
Shares
Fund)
(collectively
referred
to
as
the
“Funds”),
including
the
schedules
of
investments,
as
of
December
31,
2022,
and
the
related
statements
of
operations
for
the
year
then
ended,
the
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
then
ended,
the
financial
highlights
for
each
of
the
five
years
in
the
period
then
ended
and
the
related
notes
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
each
of
the
Funds
comprising
Franklin
Mutual
Series
Funds
at
December
31,
2022,
the
results
of
their
operations
for
the
year
then
ended,
the
changes
in
their
net
assets
for
each
of
the
two
years
in
the
period
then
ended
and
their
financial
highlights
for
each
of
the
five
years
in
the
period
then
ended,
in
conformity
with
U.S.
generally
accepted
accounting
principles.
Basis
for
Opinion
These
financial
statements
are
the
responsibility
of
the
Trust’s
management.
Our
responsibility
is
to
express
an
opinion
on
each
of
the
Funds’
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
("PCAOB")
and
are
required
to
be
independent
with
respect
to
the
Trust
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
The
Trust
is
not
required
to
have,
nor
were
we
engaged
to
perform,
an
audit
of
the
Trust’s
internal
control
over
financial
reporting.
As
part
of
our
audits,
we
are
required
to
obtain
an
understanding
of
internal
control
over
financial
reporting,
but
not
for
the
purpose
of
expressing
an
opinion
on
the
effectiveness
of
the
Trust’s
internal
control
over
financial
reporting.
Accordingly,
we
express
no
such
opinion.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
December
31,
2022,
by
correspondence
with
the
custodian
and
brokers;
when
replies
were
not
received
from
brokers,
we
performed
other
auditing
procedures.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
financial
statements.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinion.
We
have
served
as
the
auditor
of
one
or
more
Franklin
investment
companies
since
1987.
Boston,
Massachusetts
February
17,
2023
Franklin
Mutual
Series
Funds
Tax
Information
(unaudited)
153
franklintempleton.com
Annual
Report
By
mid-February,
tax
information
related
to
a
shareholder's
proportionate
share
of
distributions
paid
during
the
preceding
calendar
year
will
be
received,
if
applicable.
Please
also
refer
to
www.franklintempleton.com
for
per
share
tax
information
related
to
any
distributions
paid
during
the
preceding
calendar
year.
Shareholders
are
advised
to
consult
with
their
tax
advisors
for
further
information
on
the
treatment
of
these
amounts
on
their
tax
returns.
The
following
tax
information
for
the
Funds
is
required
to
be
furnished
to
shareholders
with
respect
to
income
earned
and
distributions
paid
during
their
fiscal
year.
The
Funds
hereby
report
the
following
amounts,
or
if
subsequently
determined
to
be
different,
the
maximum
allowable
amounts,
for
the
fiscal
year
ended
December
31,
2022:
Note
(1)
-
The
Law
varies
in
each
state
as
to
whether
and
what
percentage
of
dividend
income
attributable
to
Federal
obligations
is
exempt
from
state
income
tax.
Shareholders
are
advised
to
consult
with
their
tax
advisors
to
determine
if
any
portion
of
the
dividends
received
is
exempt
from
state
income
taxes.
Under
Section
853
of
the
Internal
Revenue
Code,
the
Funds
below
intend
to
elect
to
pass
through
to
their
shareholders
the
following
amounts,
or
amounts
as
finally
determined,
of
foreign
taxes
paid
and
foreign
source
income
earned
by
the
Funds
during
the
fiscal
year
ended
December
31,
2022:
Pursuant
to:
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
European
Fund
Franklin
Mutual
Financial
Services
Fund
Long-Term
Capital
Gain
Dividends
Distributed
§852(b)(3)(C)
$237,959,657
—
—
Income
Eligible
for
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$21,077,279
—
$3,618,287
Qualified
Dividend
Income
Earned
(QDI)
§854(b)(1)(B)
$75,409,520
$24,940,476
$11,401,461
Short-Term
Capital
Gain
Dividends
Distributed
§871(k)(2)(C)
$4,470,161
—
—
Interest
Earned
from
Federal
Obligations
Note
(1)
$782,825
$275,409
$135,591
Pursuant
to:
Franklin
Mutual
Global
Discovery
Fund
Franklin
Mutual
Quest
Fund
Franklin
Mutual
Shares
Fund
Long-Term
Capital
Gain
Dividends
Distributed
§852(b)(3)(C)
$731,029,834
—
$595,758,408
Income
Eligible
for
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$53,414,469
$12,911,614
$88,816,764
Qualified
Dividend
Income
Earned
(QDI)
§854(b)(1)(B)
$232,010,954
$52,113,368
$143,473,183
Section
163(j)
Interest
Dividends
Earned
§163(j)
—
$58,900,748
$22,076,893
Interest
Earned
from
Federal
Obligations
Note
(1)
$1,823,413
$2,214,323
$1,365,130
Franklin
Mutual
Beacon
Fund
Franklin
Mutual
Financial
Services
Fund
Franklin
Mutual
Global
Discovery
Fund
Foreign
Taxes
Paid
$3,842,600
$274,354
$18,455,321
Foreign
Source
Income
Earned
$40,015,038
$8,058,001
$154,505,003
Franklin
Mutual
Series
Funds
Board
Members
and
Officers
154
franklintempleton.com
Annual
Report
The
name,
year
of
birth
and
address
of
the
officers
and
board
members,
as
well
as
their
affiliations,
positions
held
with
the
Trust,
principal
occupations
during
at
least
the
past
five
years
and
number
of
U.S.
registered
portfolios
overseen
in
the
Franklin
Templeton/Legg
Mason
fund
complex,
are
shown
below.
Generally,
each
board
member
serves
until
that
person’s
successor
is
elected
and
qualified.
Independent
Board
Members
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Edward
I.
Altman,
Ph.D.
(1941)
Trustee
Since
1987
11
None
c/o
Franklin
Mutual
Advisers,
LLC
101
John
F.
Kennedy
Parkway
Short
Hills,
NJ
07078-2716
Principal
Occupation
During
at
Least
the
Past
5
Years:
Max
L.
Heine
Professor
of
Finance,
Emeritus
and
Director
of
The
Credit
and
Debt
Markets
Research
Program,
Salomon
Center,
Stern
School
of
Business,
New
York
University;
editor
and
author
of
numerous
financial
publications;
financial
consultant;
an
adviser
to
numerous
financial
and
publishing
organizations;
and
formerly
,
Vice
Director,
Salomon
Center,
Stern
School
of
Business,
New
York
University.
Ann
Torre
Bates
(1958)
Trustee
and
Chairperson
Trustee
since
1995
and
Chairperson
since
2020
30
Ares
Strategic
Income
Fund
(closed-end
investment
management
company)
(September
2022-present);
Ares
Capital
Corporation
(specialty
finance
company)
(2010-present),
United
Natural
Foods,
Inc.
(food
distribution)
(2013-present),
formerly
,
Navient
Corporation
(loan
management,
servicing
and
asset
recovery)
(2014-2016).
c/o
Franklin
Mutual
Advisers,
LLC
101
John
F.
Kennedy
Parkway
Short
Hills,
NJ
07078-2716
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Executive
Vice
President
and
Chief
Financial
Officer,
NHP
Incorporated
(manager
of
multifamily
housing)
(1995-1997);
and
Vice
President
and
Treasurer,
US
Airways,
Inc.
(until
1995).
Jan
Hopkins
Trachtman
(1947)
Trustee
Since
2009
11
FTAC
Parnassus
Acquisition
Corp.
(special
purpose
fintech
acquisition
company)
(2021-present);
and
formerly
,
FTAC
Olympus
Acquisition
Corp.
(special
purpose
fintech
acquisition
company)
(2020-
2022)
and
FinTech
Acquisition
Corp.
III
(special
purpose
fintech
acquisition
company)
(2018-2021).
c/o
Franklin
Mutual
Advisers,
LLC
101
John
F.
Kennedy
Parkway
Short
Hills,
NJ
07078-2716
Principal
Occupation
During
at
Least
the
Past
5
Years:
President
and
Founder,
The
Jan
Hopkins
Group
(communications
consulting
firm);
serves
on
Alumni
Advisory
Board
of
Knight
Bagehot
Fellowship;
and
formerly
,
President,
Economic
Club
of
New
York
(2007-2015);
Anchor/Correspondent,
CNN
Financial
News
(until
2003);
Managing
Director
and
Head
of
Client
Communications,
Citigroup
Private
Bank
(until
2005);
Off-Air
reporter,
ABC
News’
World
News
Tonight;
and
Editor,
CBS
Network
News.
Franklin
Mutual
Series
Funds
155
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Keith
Mitchell
(1954)
Trustee
Since
2009
11
None
c/o
Franklin
Mutual
Advisers,
LLC
101
John
F.
Kennedy
Parkway
Short
Hills,
NJ
07078-2716
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
boards
of
asset
management
firms;
and
formerly
,
Managing
Member,
Mitchell,
Hartley
&
Bechtel
Advisers,
LLC
(
formerly
,
Mitchell
Advisers,
LLC)
(advisory
firm)
(2003-2015)
and
Managing
Director,
Putman
Lovell
NBF.
David
W.
Niemiec
(1949)
Trustee
Since
2015
30
Hess
Midstream
LP
(oil
and
gas
midstream
infrastructure)
(2017-present).
c/o
Franklin
Mutual
Advisers,
LLC
101
John
F.
Kennedy
Parkway
Short
Hills,
NJ
07078-2716
Principal
Occupation
During
at
Least
the
Past
5
Years:
Advisor,
Saratoga
Partners
(private
equity
fund);
and
formerly
,
Managing
Director,
Saratoga
Partners
(1998-2001)
and
SBC
Warburg
Dillon
Read
(investment
banking)
(1997-1998);
Vice
Chairman,
Dillon,
Read
&
Co.
Inc.
(investment
banking)
(1991-1997);
and
Chief
Financial
Officer,
Dillon,
Read
&
Co.
Inc.
(1982-1997).
Gregory
H.
Williams
(1943)
Trustee
Since
2015
11
None
c/o
Franklin
Mutual
Advisers,
LLC
101
John
F.
Kennedy
Parkway
Short
Hills,
NJ
07078-2716
Principal
Occupation
During
at
Least
the
Past
5
Years:
Private
investor;
Consultant;
and
formerly
,
President,
University
of
Cincinnati
(2009-2012);
President,
The
City
College
of
New
York
(2001-
2009);
Dean,
College
of
Law,
Ohio
State
University
(1993-2001);
and
Associate
Vice
President,
Academic
Affairs
and
Professor
of
Law,
University
of
Iowa
(1977-1993).
Valerie
M.
Williams
(1956)
Trustee
Since
January
2023
111
Omnicom
Group,
Inc.
(advertising
and
marketing
communications
services)
(2016-present),
DTE
Energy
Co.
(gas
and
electric
utility)
(2018-present),
Devon
Energy
Corporation
(exploration
and
production
of
oil
and
gas)
(2021-present);
and
formerly
,
WPX
Energy,
Inc.
(exploration
and
production
of
oil
and
gas)
(2018-
2021).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Regional
Assurance
Managing
Partner,
Ernst
&
Young
LLP
(public
accounting)
(2005-2016),
various
roles
of
increasing
responsibility
at
Ernst
&
Young
(1981-2005).
Independent
Board
Members
(continued)
Franklin
Mutual
Series
Funds
156
franklintempleton.com
Annual
Report
Interested
Board
Members
and
Officers
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
**Gregory
E.
Johnson
(1961)
Trustee
Since
2007
131
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Executive
Chairman,
Chairman
of
the
Board
and
Director,
Franklin
Resources,
Inc.;
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
Vice
Chairman,
Investment
Company
Institute;
and
formerly
,
Chief
Executive
Officer
(2013-2020)
and
President
(1994-2015)
Franklin
Resources,
Inc.
**Jennifer
M.
Johnson
(1964)
Trustee
Since
2021
70
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Executive
Officer,
President
and
Director,
Franklin
Resources,
Inc.;
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
and
formerly
,
Chief
Operating
Officer
and
Executive
Vice
President,
Franklin
Resources,
Inc.
(1994-2015);
Executive
Vice
President
of
Operations
and
Technology,
Franklin
Resources,
Inc.
(2005-2010);
and
Senior
Vice
President,
Franklin
Resources,
Inc.
(2003-2005).
Alison
E.
Baur
(1964)
Vice
President
Since
2012
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Deputy
General
Counsel,
Franklin
Templeton;
and
officer
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Breda
M.
Beckerle
(1958)
Chief
Compliance
Officer
Since
2020
Not
Applicable
Not
Applicable
280
Park
Avenue
New
York,
NY
10017
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Compliance
Officer,
Fiduciary
Investment
Management
International,
Inc.,
Franklin
Advisers,
Inc.,
Franklin
Mutual
Advisers,
LLC,
Franklin
Templeton
Institutional,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Christian
K.
Correa
(1973)
President,
and
Chief
Executive
Officer
–
Investment
Management
Since
2021
Not
Applicable
Not
Applicable
c/o
Franklin
Mutual
Advisers,
LLC
101
John
F.
Kennedy
Parkway
Short
Hills,
NJ
07078-2716
Principal
Occupation
During
at
Least
the
Past
5
Years:
President,
Franklin
Mutual
Advisers,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Steven
J.
Gray
(1955)
Vice
President
and
Secretary
Vice
President
since
2009
and
Secretary
since
2005
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Distributors,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Franklin
Mutual
Series
Funds
157
franklintempleton.com
Annual
Report
*We
base
the
number
of
portfolios
on
each
separate
series
of
the
U.S.
registered
investment
companies
within
the
Franklin
Templeton/Legg
Mason
complex.
These
portfolios
have
a
common
investment
manager
or
affiliated
investment
managers.
**Gregory
E.
Johnson
and
Jennifer
M.
Johnson
are
considered
to
be
interested
people
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
of
Franklin
Resources,
Inc.
(Resources),
which
is
the
parent
company
of
the
Fund’s
investment
manager
and
distributor.
Note
1:
Gregory
E.
Johnson
and
Jennifer
M.
Johnson
are
siblings.
Note
2:
Officer
information
is
current
as
of
the
date
of
this
report.
It
is
possible
that
after
this
date,
information
about
officers
may
change.
Note
3:
Effective
December
31
st
,
2022,
Robert
E.
Wade
ceased
to
be
a
trustee
of
the
Trust.
The
Sarbanes-Oxley
Act
of
2002
and
Rules
adopted
by
U.S.
Securities
and
Exchange
Commission
require
the
Fund
to
disclose
whether
the
Fund’s
Audit
Committee
includes
at
least
one
member
who
is
an
audit
committee
financial
expert
within
the
meaning
of
such
Act
and
Rules.
The
Fund’s
Board
has
determined
that
there
is
at
least
one
such
financial
expert
on
the
Audit
Committee
and
has
designated
each
of
Ann
Torre
Bates
and
David
W.
Niemiec
as
an
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
qualify
as
such
an
expert
in
view
of
their
extensive
business
background
and
experience.
Ms.
Bates
has
served
as
a
member
of
the
Fund
Audit
Committee
since
1995.
She
currently
serves
as
a
director
of
Ares
Capital
Corporation
(2010-present)
and
United
Natural
Foods,
Inc.
(2013-present)
and
was
formerly
a
director
of
Navient
Corporation
from
2014
to
2016,
SLM
Corporation
from
1997
to
2014
and
Allied
Capital
Corporation
from
2003
to
2010,
Executive
Vice
President
and
Chief
Financial
Officer
of
NHP
Incorporated
from
1995
to
1997
and
Vice
President
and
Treasurer
of
US
Airways,
Inc.
until
1995.
Mr.
Niemiec
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2015,
currently
serves
as
an
Advisor
to
Saratoga
Partners
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member*
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Matthew
T.
Hinkle
(1971)
Chief
Executive
Officer
–
Finance
and
Administration
Since
2017
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Vice
President,
Franklin
Templeton
Services,
LLC;
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex;
and
formerly
,
Vice
President,
Global
Tax
(2012-April
2017)
and
Treasurer/Assistant
Treasurer,
Franklin
Templeton
(2009-2017).
Susan
Kerr
(1949)
Vice
President
–
AML
Compliance
Since
2021
Not
Applicable
Not
Applicable
620
Eighth
Avenue
New
York,
NY
10018
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Compliance
Analyst,
Franklin
Templeton;
Chief
Anti-Money
Laundering
Compliance
Officer,
Legg
Mason
&
Co.,
or
its
affiliates;
Anti
Money
Laundering
Compliance
Officer;
Senior
Compliance
Officer,
LMIS;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Christopher
Kings
(1974)
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
January
2022
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Treasurer,
U.S.
Fund
Administration
&
Reporting;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Navid
J.
Tofigh
(1972)
Vice
President
Since
2015
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Lori
A.
Weber
(1964)
Vice
President
Since
2011
Not
Applicable
Not
Applicable
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
Assistant
Secretary,
Franklin
Resources,
Inc.;
Vice
President
and
Secretary,
Templeton
Investment
Counsel,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton/Legg
Mason
fund
complex.
Interested
Board
Members
and
Officers
(continued)
Franklin
Mutual
Series
Funds
158
franklintempleton.com
Annual
Report
and
was
formerly
its
Managing
Director
from
1998
to
2001
and
serves
as
a
director
of
Hess
Midstream
LP
(2017-present).
Mr.
Niemiec
was
formerly
a
director
of
Emeritus
Corporation
from
1999
to
2010
and
OSI
Pharmaceuticals,
Inc.
from
2006
to
2010,
Managing
Director
of
SBC
Warburg
Dillon
Read
from
1997
to
1998,
and
was
Vice
Chairman
from
1991
to
1997
and
Chief
Financial
Officer
from
1982
to
1997
of
Dillon,
Read
&
Co.
Inc.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
have
each
acquired
an
understanding
of
generally
accepted
accounting
principles
and
financial
statements,
the
general
application
of
such
principles
in
connection
with
the
accounting
estimates,
accruals
and
reserves,
and
analyzing
and
evaluating
financial
statements
that
present
a
breadth
and
level
of
complexity
of
accounting
issues
generally
comparable
to
those
of
the
Fund,
as
well
as
an
understanding
of
internal
controls
and
procedures
for
financial
reporting
and
an
understanding
of
audit
committee
functions.
Ms.
Bates
and
Mr.
Niemiec
are
independent
Board
members
as
that
term
is
defined
under
the
applicable
U.S.
Securities
and
Exchange
Commission
Rules
and
Releases.
The
Statement
of
Additional
Information
(SAI)
includes
additional
information
about
the
board
members
and
is
available,
without
charge,
upon
request.
Shareholders
may
call
(800)
DIAL
BEN/342-5236
to
request
the
SAI.
Interested
Board
Members
and
Officers
(continued)
Franklin
Mutual
Series
Funds
Shareholder
Information
159
franklintempleton.com
Annual
Report
Proxy
Voting
Policies
and
Procedures
The
Trust’s
investment
manager
has
established
Proxy
Voting
Policies
and
Procedures
(Policies)
that
the
Trust
uses
to
determine
how
to
vote
proxies
relating
to
portfolio
securities.
Shareholders
may
view
the
Trust’s
complete
Policies
online
at
franklintempleton.com.
Alternatively,
shareholders
may
request
copies
of
the
Policies
free
of
charge
by
calling
the
Proxy
Group
collect
at
(954)
527-
7678
or
by
sending
a
written
request
to:
Franklin
Templeton
Companies,
LLC,
300
S.E.
2nd
Street,
Fort
Lauderdale,
FL
33301,
Attention:
Proxy
Group.
Copies
of
the
Trust’s
proxy
voting
records
are
also
made
available
online
at
franklintempleton.com
and
posted
on
the
U.S.
Securities
and
Exchange
Commission’s
website
at
sec.gov
and
reflect
the
most
recent
12-month
period
ended
June
30.
Quarterly
Schedule
of
Investments
The
Trust
files
a
complete
schedule
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
by
visiting
the
Commission’s
website
at
sec.
gov.
The
filed
form
may
also
be
viewed
and
copied
at
the
Commission’s
Public
Reference
Room
in
Washington,
DC.
Information
regarding
the
operations
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
Householding
of
Reports
and
Prospectuses
You
will
receive,
or
receive
notice
of
the
availability
of,
each
Fund’s
financial
reports
every
six
months.
In
addition,
you
will
receive
an
annual
updated
summary
prospectus
(detail
prospectus
available
upon
request).
To
reduce
Fund
expenses,
we
try
to
identify
related
shareholders
in
a
household
and
send
only
one
copy
of
the
financial
reports
(to
the
extent
received
by
mail)
and
summary
prospectus.
This
process,
called
“householding,”
will
continue
indefinitely
unless
you
instruct
us
otherwise.
If
you
prefer
not
to
have
these
documents
householded,
please
call
us
at
(800)
632-2301.
At
any
time
you
may
view
current
prospectuses/
summary
prospectuses
and
financial
reports
on
our
website.
If
you
choose,
you
may
receive
these
documents
through
electronic
delivery.
MS
A
02/23
©
2023
Franklin
Templeton
Investments.
All
rights
reserved.
Authorized
for
distribution
only
when
accompanied
or
preceded
by
a
summary
prospectus
and/or
prospectus.
Investors
should
carefully
consider
a
fund’s
investment
goals,
risks,
charges
and
expenses
before
investing.
A
prospectus
contains
this
and
other
information;
please
read
it
carefully
before
investing.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Annual
Report
and
Shareholder
Letter
Franklin
Mutual
Series
Funds
Investment
Manager
Distributor
Shareholder
Services
Franklin
Mutual
Advisers,
LLC
Franklin
Distributors,
LLC
(800)
DIAL
BEN
®
/
342-5236
franklintempleton.com
(800)
632-2301
-
(Class
A,
C,
R
&
R6)
(800)
448-FUND
-
(Class
Z)
Item 2. Code of Ethics.
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 13(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
Item 3. Audit Committee Financial Expert.
(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.
(2) The audit committee financial experts are Ann Torre Bates and David W. Niemiec and they are "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $347,276 for the fiscal year ended December 31, 2022 and $340,028 for the fiscal year ended December 31, 2021.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant's investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.
(c) Tax Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning were $1,628 for the fiscal year ended December 31, 2022 and $0 for the fiscal year ended December 31, 2021. The services for which these fees were paid included identifying passive foreign investment companies to manage exposure to tax liabilities.
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning.
(d) All Other Fees
There were no fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant other than the services reported in paragraphs (a)-(c) of Item 4.
There were no fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant other than the services reported in paragraphs (a)-(c) of Item 4.
(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where the non-audit services relate directly to the operations or financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $1,628 for the fiscal year ended December 31, 2022 and $0 for the fiscal year ended December 31, 2021.
(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
(i) N/A
(j) N/A
Item 5. Audit Committee
of Listed Registrants.
N/AItem 6. Schedule of Investments.
N/A
Item 7
. Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies. N/A
Item 8
. Portfolio Managers of Closed-End Management Investment Companies. N/A
Item 9
. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. N/A
Item 10
. Submission of Matters to a Vote of Security Holders.
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
Item 11. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
(b) Changes in Internal Controls
.
There have been no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.
Item 12.
Disclosure of Securities Lending Activities for Closed-End Management Investment Company. N/A
Item 13. Exhibits.
(a)(1) Code of Ethics
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer
(a)(2)(1) There were no written solicitations to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the Registrant to 10 or more persons.
(a)(2)(2) There was no change in the Registrant’s independent public accountant during the period covered by the report.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Christopher Kings, Chief Financial Officer, Chief Accounting Officer and Treasurer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN
MUTUAL SERIES FUNDS
By S\MATTHEW T. HINKLE______________________
Matthew T. Hinkle
Chief Executive Officer - Finance and Administration
Date February 27, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By S\MATTHEW T. HINKLE______________________
Matthew T. Hinkle
Chief Executive Officer - Finance and Administration
Date February 27, 2023
By S\CHRISTOPHER KINGS______________________
Christopher Kings
Chief Financial Officer, Chief Accounting Officer and Treasurer
Date February 27, 2023