UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-01700
---------

FRANKLIN GOLD AND PRECIOUS METALS FUND
---------------------------------------
(Exact name of registrant as specified in charter)

ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
-----------------------------------------------
(Address of principal executive offices) (Zip code)

CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
-------------------------------------------------------------
(Name and address of agent for service)

Registrant's telephone number, including area code: (650) 312-2000
-------------

Date of fiscal year end: 7/31
----

Date of reporting period: 1/31/08
-------

ITEM 1. REPORTS TO STOCKHOLDERS.

[GRAPHIC OMITTED]

- --------------------------------------------------------------------------------
JANUARY 31, 2008
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
SEMIANNUAL REPORT AND SHAREHOLDER LETTER SECTOR
- --------------------------------------------------------------------------------

WANT TO RECEIVE
THIS DOCUMENT
FASTER VIA EMAIL?
FRANKLIN GOLD AND
PRECIOUS METALS FUND Eligible shareholders can
sign up for eDelivery at
franklintempleton.com.
See inside for details.
- --------------------------------------------------------------------------------

[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS

FRANKLIN o Templeton o Mutual Series

Franklin Templeton Investments

GAIN FROM OUR PERSPECTIVE(R)

Franklin Templeton's distinct multi-manager
structure combines the specialized expertise of
three world-class investment management groups--
Franklin, Templeton and Mutual Series.

SPECIALIZED EXPERTISE Each of our portfolio management groups operates
autonomously, relying on its own research and
staying true to the unique investment disciplines
that underlie its success.

FRANKLIN. Founded in 1947, Franklin is a
recognized leader in fixed income investing and
also brings expertise in growth- and value-style
U.S. equity investing.

TEMPLETON. Founded in 1940, Templeton pioneered
international investing and, in 1954, launched
what has become the industry's oldest global
fund. Today, with offices in over 25 countries,
Templeton offers investors a truly global
perspective.

MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what
it believes are undervalued stocks, as well as
arbitrage situations and distressed securities.

TRUE DIVERSIFICATION Because our management groups work independently
and adhere to different investment approaches,
Franklin, Templeton and Mutual Series funds
typically have distinct portfolios. That's why
our funds can be used to build truly diversified
allocation plans covering every major asset
class.

RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we seek to
consistently provide investors with exceptional
risk-adjusted returns over the long term, as well
as the reliable, accurate and personal service
that has helped us become one of the most trusted
names in financial services.

- --------------------------------------------------------------------------------
MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
- --------------------------------------------------------------------------------

[GRAPHIC OMITTED]

Not part of the semiannual report

Contents

SHAREHOLDER LETTER ........................................................ 1

SEMIANNUAL REPORT

Franklin Gold and Precious Metals Fund .................................... 3

Performance Summary ....................................................... 7

Your Fund's Expenses ...................................................... 10

Financial Highlights and Statement of Investments ......................... 12

Financial Statements ...................................................... 19

Notes to Financial Statements ............................................. 23

Tax Designation ........................................................... 31

Shareholder Information ................................................... 33

- --------------------------------------------------------------------------------

Shareholder Letter

Dear Shareholder:

During the six months ended January 31, 2008, the U.S. economy slowed. Tighter
credit conditions, triggered by the U.S. subprime mortgage crisis, prompted the
Federal Reserve Board (Fed) to cut the discount rate and the federal funds
target rate five times. Over the six-month reporting period, the federal funds
target rate fell from 5.25% to 3.00% as the Fed acted to help promote moderate
growth over time and mitigate risks to economic activity. In an environment of
high equity market volatility and cautious investor sentiment, gold and many
precious metals prices surged as risk-averse investors sought the safety of hard
assets. This trend contributed to the Fund's strong performance for the six
months under review.

In the enclosed semiannual report for Franklin Gold and Precious Metals Fund,
the portfolio manager discusses market conditions, investment management
decisions and Fund performance during the period under review. You will also
find other performance data and financial information. Please remember that all
securities markets fluctuate, as do mutual fund share prices.

If you would like more frequent updates, FRANKLINTEMPLETON.COM provides daily
prices, monthly performance figures, portfolio holdings and other information.
You can also access your account, buy and sell shares, read timely articles, and
find helpful financial planning tools. We hope you will take advantage of these
online services.

- --------------------------------------------------------------------------------

eDELIVERY DETAILS

Log in at franklintempleton.com and click on eDelivery. Shareholders who are
registered at franklintempleton.com can receive these reports via email. Not all
accounts are eligible for eDelivery.

- -----------------------------------------------------
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
- -----------------------------------------------------

Not part of the semiannual report | 1

As always, we recommend investors consult their financial advisors and review
their portfolios to design a long-term strategy and portfolio allocation that
meet their individual needs, goals and risk tolerance. We firmly believe that
most people benefit from professional advice, and that advice is invaluable as
investors navigate changing market environments.

We thank you for investing with Franklin Templeton, welcome your questions and
comments, and look forward to serving your investment needs in the years ahead.

Sincerely,

/s/ Rupert H. Johnson, Jr.

Rupert H. Johnson, Jr.
President and Chief Executive Officer - Investment Management
Franklin Gold and Precious Metals Fund

THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF JANUARY 31, 2008. 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.

2 | Not part of the semiannual report

Semiannual Report

Franklin Gold and Precious Metals Fund

YOUR FUND'S GOALS AND MAIN INVESTMENTS: Franklin Gold and Precious Metals Fund
seeks capital appreciation, with current income as its secondary goal, by
investing at least 80% of its net assets in securities of gold and precious
metals operation companies.

- --------------------------------------------------------------------------------
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. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
- --------------------------------------------------------------------------------

This semiannual report for Franklin Gold and Precious Metals Fund covers the
period ended January 31, 2008.

PERFORMANCE OVERVIEW

Franklin Gold and Precious Metals Fund - Class A delivered a cumulative total
return of +29.65% for the six months ended January 31, 2008. The Fund
outperformed the broad Standard & Poor's 500 Index's (S&P 500's) -4.32% total
return, but underperformed the sector-specific FTSE Gold Mines Index's +36.16%
price return during the same period. 1 You can find the Fund's long-term
performance data in the Performance Summary beginning on page 7.

ECONOMIC AND MARKET OVERVIEW

During the six months ended January 31, 2008, the U.S. economy slowed. Gross
domestic product (GDP) grew an annualized 4.9% in the third quarter of 2007
despite a struggling housing market and the abrupt unraveling of the subprime
mortgage market. Increased federal defense spending, accelerating exports,
declining imports, nonresidential construction and greater business inventory
investment supported growth. However, the housing downturn negatively affected
the overall economy by fourth quarter 2007 as credit conditions worsened and the
pace of consumer spending slowed. GDP growth fell to an estimated 0.6%
annualized rate mainly due to decelerating inventory investment, exports and
federal government spending.

1. Sources: Standard & Poor's Micropal; Financial Times. The S&P 500 consists of
500 stocks chosen for market size, liquidity and industry group representation.
Each stock's weight in the index is proportionate to its market value. The S&P
500 includes reinvested dividends and is one of the most widely used benchmarks
of U.S. equity performance. The FTSE Gold Mines Index is an unweighted index
that tracks the daily performance of gold mining companies in South Africa,
Australia and North America. This is a price-only index and does not include
dividends. The indexes are unmanaged. One cannot invest directly in an index,
nor is an index representative of the Fund's portfolio.

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 16.

Semiannual Report | 3

GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 1/31/08

[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]

Canada 42.1%
South Africa 19.8%
Australia 13.2%
U.K. 8.5%
Peru 4.9%
Papua New Guinea 3.1%
U.S. 2.8%
Bolivia 0.2%
Russia 0.1%
Short-Term Investments & Other Net Assets 5.3%

The unemployment rate increased from 4.7% at the beginning of the period to 4.9%
in January 2008. 2 Consumer confidence declined and remained fragile largely due
to rising mortgage and fuel costs, falling home prices and a weaker job market.
Volatile oil prices reached a historical high in early January, topping $100 per
barrel, before retreating to $92 by period-end. For the 12 months ended January
31, 2008, the core Consumer Price Index (CPI), which excludes food and energy
costs, rose 2.5%, which was higher than its 10-year average rate. 2

Faced with a deepening housing contraction and stressed financial markets, the
Federal Reserve Board made several expected and unexpected cuts to the federal
funds target rate during the period, including 125 basis points in January.
Overall, the federal funds target rate fell 225 basis points from 5.25% to
3.00%. As investors fled riskier, poorer-performing assets, U.S. Treasuries
rallied and the 10-year Treasury note yield fell from 4.78% at the beginning of
the period to 3.67% on January 31, 2008.

Stock markets were volatile during the period mainly due to investor concerns
about slowing economic growth. The major stock indexes recovered from a
late-summer sell-off and a November correction, but dropped to new lows in
January. The blue chip stocks of the Dow Jones Industrial Average had a
six-month total return of -3.06%, while the broader S&P 500 had a -4.32% return,
and the technology-heavy NASDAQ Composite Index had a -5.83% return. 3 The
utilities, consumer staples and materials sectors performed relatively well.
Large-capitalization stocks generally outperformed small caps, and growth stocks
fared better than their value counterparts.

Precious metals prices were up strongly in the past six months. Gold was the
best performing major metal as it began the period at $664 per ounce, moved
steadily higher, and ended the period at $926 per ounce, up 39%. Platinum's
price traded steadily higher for most of the period but accelerated in the last
week due to concerns over electric power shortages in South Africa to end the
period up 35% at $1,739 per ounce. Silver followed a similar path to gold with
prices rising from $13 to $17 per ounce, a 32% increase. Palladium had a modest
8% gain as its price started the period at $365 per ounce, fell to $322 in
August 2007, and then recovered to $393 per ounce at period-end.

2. Source: Bureau of Labor Statistics.

3. Source: Standard & Poor's Micropal. The Dow Jones Industrial Average is price
weighted based on the average market price of 30 blue chip stocks of companies
that are generally industry leaders. See footnote 1 for a description of the S&P
500. The NASDAQ Composite Index measures all NASDAQ domestic and international
based common type stocks listed on The NASDAQ Stock Market. The index is market
value weighted and includes more than 3,000 companies.

4 | Semiannual Report

PRECIOUS METALS PRICES (8/1/07-1/31/08)*

[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]

Platinum Gold Palladium

7/31/2007 $1,289.50 $664.30 $364.50
8/1/2007 $1,285.00 $666.90 $364.00
8/2/2007 $1,284.25 $665.55 $363.00
8/3/2007 $1,290.50 $673.00 $365.00
8/6/2007 $1,289.50 $672.01 $363.00
8/7/2007 $1,284.00 $672.40 $361.00
8/8/2007 $1,286.00 $674.80 $363.00
8/9/2007 $1,267.50 $662.10 $360.00
8/10/2007 $1,274.50 $672.80 $355.50
8/13/2007 $1,279.00 $669.50 $357.00
8/14/2007 $1,272.00 $669.20 $351.50
8/15/2007 $1,263.00 $667.60 $347.00
8/16/2007 $1,239.00 $652.01 $335.50
8/17/2007 $1,231.50 $657.80 $329.00
8/20/2007 $1,247.75 $657.11 $327.75
8/21/2007 $1,241.50 $657.30 $322.50
8/22/2007 $1,237.25 $660.80 $321.50
8/23/2007 $1,242.75 $660.38 $325.50
8/24/2007 $1,248.25 $668.20 $329.25
8/27/2007 $1,250.75 $667.60 $327.25
8/28/2007 $1,253.75 $662.50 $328.00
8/29/2007 $1,268.25 $667.60 $331.00
8/30/2007 $1,259.50 $665.30 $329.25
8/31/2007 $1,267.50 $673.40 $332.00
9/3/2007 $1,271.00 $672.52 $330.50
9/4/2007 $1,274.75 $681.65 $333.50
9/5/2007 $1,272.00 $681.80 $331.00
9/6/2007 $1,289.50 $695.41 $335.00
9/7/2007 $1,288.50 $701.00 $335.00
9/10/2007 $1,291.00 $703.10 $334.00
9/11/2007 $1,302.00 $712.50 $334.50
9/12/2007 $1,301.00 $711.60 $334.00
9/13/2007 $1,296.00 $708.30 $332.75
9/14/2007 $1,296.50 $707.60 $329.00
9/17/2007 $1,300.50 $717.90 $330.00
9/18/2007 $1,306.00 $723.50 $333.00
9/19/2007 $1,306.50 $721.40 $331.75
9/20/2007 $1,325.25 $733.26 $338.00
9/21/2007 $1,326.50 $731.50 $339.00
9/24/2007 $1,341.00 $730.60 $340.50
9/25/2007 $1,347.00 $731.70 $338.50
9/26/2007 $1,345.50 $728.80 $341.00
9/27/2007 $1,359.00 $734.43 $343.50
9/28/2007 $1,385.50 $743.60 $348.00
10/1/2007 $1,388.50 $747.20 $357.50
10/2/2007 $1,349.00 $731.60 $349.50
10/3/2007 $1,357.00 $727.90 $357.00
10/4/2007 $1,362.50 $738.00 $366.50
10/5/2007 $1,376.25 $742.70 $365.00
10/8/2007 $1,361.00 $733.30 $361.25
10/9/2007 $1,368.50 $737.90 $362.50
10/10/2007 $1,386.00 $741.10 $374.00
10/11/2007 $1,406.00 $747.88 $375.50
10/12/2007 $1,408.00 $749.10 $375.50
10/15/2007 $1,425.00 $759.40 $373.00
10/16/2007 $1,415.50 $760.50 $369.75
10/17/2007 $1,428.50 $754.82 $369.00
10/18/2007 $1,451.50 $768.20 $371.00
10/19/2007 $1,441.75 $765.20 $367.00
10/22/2007 $1,433.50 $754.20 $358.00
10/23/2007 $1,446.50 $759.80 $360.75
10/24/2007 $1,441.50 $763.95 $359.50
10/25/2007 $1,448.50 $769.30 $365.00
10/26/2007 $1,458.00 $785.20 $373.00
10/29/2007 $1,461.00 $791.80 $372.50
10/30/2007 $1,435.25 $782.10 $369.50
10/31/2007 $1,447.50 $796.59 $370.00
11/1/2007 $1,448.00 $787.30 $371.50
11/2/2007 $1,459.00 $807.00 $374.75
11/5/2007 $1,460.25 $806.50 $371.00
11/6/2007 $1,476.00 $825.00 $378.00
11/7/2007 $1,457.00 $831.09 $376.50
11/8/2007 $1,461.00 $833.59 $372.50
11/9/2007 $1,433.00 $832.00 $373.00
11/12/2007 $1,386.50 $793.50 $365.00
11/13/2007 $1,413.50 $802.00 $372.50
11/14/2007 $1,441.50 $811.95 $372.75
11/15/2007 $1,423.50 $788.45 $368.00
11/16/2007 $1,448.25 $786.30 $361.50
11/19/2007 $1,450.25 $781.75 $357.50
11/20/2007 $1,468.00 $803.20 $362.50
11/21/2007 $1,459.50 $800.32 $354.50
11/22/2007 $1,469.25 $804.53 $351.50
11/23/2007 $1,480.75 $823.80 $357.50
11/26/2007 $1,465.00 $824.60 $354.50
11/27/2007 $1,452.00 $812.59 $349.50
11/28/2007 $1,439.50 $804.83 $345.00
11/29/2007 $1,437.00 $793.07 $343.00
11/30/2007 $1,439.00 $783.75 $348.00
12/3/2007 $1,461.00 $794.30 $346.25
12/4/2007 $1,471.00 $801.70 $348.50
12/5/2007 $1,463.50 $795.15 $348.00
12/6/2007 $1,465.00 $802.42 $347.50
12/7/2007 $1,454.50 $794.80 $344.50
12/10/2007 $1,465.25 $808.53 $347.00
12/11/2007 $1,460.00 $796.98 $345.50
12/12/2007 $1,476.00 $813.48 $348.50
12/13/2007 $1,469.00 $797.62 $346.00
12/14/2007 $1,477.00 $794.49 $353.50
12/17/2007 $1,499.00 $793.35 $355.50
12/18/2007 $1,508.00 $802.88 $358.50
12/19/2007 $1,520.00 $802.19 $358.50
12/20/2007 $1,513.50 $796.38 $354.00
12/21/2007 $1,529.00 $811.72 $355.25
12/24/2007 $1,527.00 $811.80 $357.00
12/25/2007 $1,519.50 $807.00 $358.50
12/26/2007 $1,540.50 $824.50 $365.00
12/27/2007 $1,535.50 $825.58 $363.00
12/28/2007 $1,539.00 $840.50 $365.00
12/31/2007 $1,526.00 $833.92 $368.75
1/2/2008 $1,542.50 $857.55 $373.25
1/3/2008 $1,549.25 $864.93 $373.00
1/4/2008 $1,541.00 $859.60 $365.50
1/7/2008 $1,523.00 $858.16 $370.00
1/8/2008 $1,550.50 $878.16 $376.50
1/9/2008 $1,554.00 $878.80 $375.50
1/10/2008 $1,553.00 $893.30 $376.50
1/11/2008 $1,564.50 $895.40 $378.00
1/14/2008 $1,577.50 $904.13 $378.50
1/15/2008 $1,570.50 $888.10 $379.75
1/16/2008 $1,559.25 $877.03 $373.50
1/17/2008 $1,560.50 $877.76 $369.25
1/18/2008 $1,559.00 $883.17 $369.50
1/21/2008 $1,539.00 $865.00 $361.50
1/22/2008 $1,550.50 $892.34 $368.50
1/23/2008 $1,557.50 $890.32 $364.00
1/24/2008 $1,610.50 $912.85 $373.50
1/25/2008 $1,682.75 $913.95 $380.50
1/28/2008 $1,726.50 $928.97 $389.00
1/29/2008 $1,717.25 $923.76 $389.00
1/30/2008 $1,700.50 $929.40 $387.00
1/31/2008 $1,738.50 $925.99 $392.75

* Amounts shown are based on spot prices quoted in U.S. dollars per troy ounce.
For illustrative purposes only; not representative of the Fund's portfolio
composition or performance.

INVESTMENT STRATEGY

We believe that investing in gold and other precious metals offers an excellent
opportunity for diversification in an attractive asset class over the long term.
We like companies with multiple mines, attractive production profiles, strong
reserve bases and active exploration programs that can drive future reserve and
production growth. While the sector can be volatile, especially over the short
term, precious metals, such as gold, can be attractive because they are a hard
asset not tied to any particular country or financial system.

MANAGER'S DISCUSSION

During the six months under review, mergers and acquisitions continued to be a
major theme despite significant sector consolidation over the past few years.
Rio Narcea Gold Mines was acquired for cash by Lundin Mining. Ballarat
Goldfields merged with Lihir Gold. Newmont Mining's cash offer for Miramar
Mining was completed. Yamana Gold acquired Meridian Gold and Northern Orion
Resources in a share and cash transaction.

Among the most significant contributors to Fund performance for the reporting
period were Barrick Gold, Randgold Resources, and Australian gold and copper
mining company Newcrest Mining. Barrick Gold is the world's largest gold mining
company with operations spanning the globe, while Randgold Resources is a gold
mining and exploration company with a focus on Africa. Other notable
contributors included Goldcorp, Kinross Gold, Impala Platinum Holdings and
Peru's Compania de Minas Buenaventura.

PORTFOLIO BREAKDOWN
Based on Total Net Assets as of 1/31/08

[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]

Long Life Gold Mines 53.6%
Medium Life Gold Mines 15.8%
Platinum & Palladium 13.9%
Gold Exploration & Development 6.8%
Gold & Diversified Resources 4.6%
Short-Term Investments & Other Net Assets 5.3%

Semiannual Report | 5

TOP 10 HOLDINGS
1/31/08

- --------------------------------------------------------------------------------
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- --------------------------------------------------------------------------------
Newcrest Mining Ltd. 8.8%
LONG LIFE GOLD MINES, AUSTRALIA
- --------------------------------------------------------------------------------
Barrick Gold Corp. 8.0%
LONG LIFE GOLD MINES, CANADA
- --------------------------------------------------------------------------------
Impala Platinum Holdings Ltd.,
ord. & ADR 7.1%
PLATINUM & PALLADIUM, SOUTH AFRICA
- --------------------------------------------------------------------------------
Goldcorp Inc. 7.1%
LONG LIFE GOLD MINES, CANADA
- --------------------------------------------------------------------------------
Yamana Gold Inc., ord. & 144A 6.4%
MEDIUM LIFE GOLD MINES, CANADA
- --------------------------------------------------------------------------------
Randgold Resources Ltd., ADR 5.6%
LONG LIFE GOLD MINES, U.K.
- --------------------------------------------------------------------------------
Anglo Platinum Ltd., ord. & ADR 5.1%
PLATINUM & PALLADIUM, SOUTH AFRICA
- --------------------------------------------------------------------------------
Compania de Minas Buenaventura SA,
ord. & ADR 4.9%
LONG LIFE GOLD MINES, PERU
- --------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 4.3%
LONG LIFE GOLD MINES, CANADA
- --------------------------------------------------------------------------------
Kinross Gold Corp. 4.1%
MEDIUM LIFE GOLD MINES, CANADA
- --------------------------------------------------------------------------------

The Fund had some detractors from performance during the period, including
Gammon Gold, Ivanhoe Mines, Harmony Gold Mining, Oxiana and Gabriel Resources.
Gammon Gold is in the process of starting up a gold and silver mine in Mexico,
while Gabriel Resources is attempting to develop a gold and silver mine in
Romania. Ivanhoe Mines focuses on gold, copper and coal in Mongolia, China,
Australia and Kazakhstan. Harmony Gold produces gold from operations in South
Africa and Australia. Oxiana produces gold, silver, copper and zinc from its
operations in Australia and Laos.

Thank you for your continued participation in Franklin Gold and Precious Metals
Fund. We look forward to serving your future investment needs.

[PHOTO OMITTED] /s/ Stephen M. Land

Stephen M. Land
Portfolio Manager
Franklin Gold and Precious Metals Fund

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF JANUARY 31, 2008, 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.

6 | Semiannual Report

Performance Summary as of 1/31/08

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. The performance table does 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.

PRICE AND DISTRIBUTION INFORMATION

- --------------------------------------------------------------------------------------
CLASS A (SYMBOL: FKRCX) CHANGE 1/31/08 7/31/07
- --------------------------------------------------------------------------------------

Net Asset Value (NAV) +$5.81 $39.54 $33.73
- --------------------------------------------------------------------------------------
DISTRIBUTIONS (8/1/07-1/31/08)
- --------------------------------------------------------------------------------------
Dividend Income $1.9717
- --------------------------------------------------------------------------------------
Short-Term Capital Gain $0.0841
- --------------------------------------------------------------------------------------
Long-Term Capital Gain $1.7811
- --------------------------------------------------------------------------------------
TOTAL $3.8369
- --------------------------------------------------------------------------------------
CLASS B (SYMBOL: FAGPX) CHANGE 1/31/08 7/31/07
- --------------------------------------------------------------------------------------
Net Asset Value (NAV) +$5.63 $38.23 $32.60
- --------------------------------------------------------------------------------------
DISTRIBUTIONS (8/1/07-1/31/08)
- --------------------------------------------------------------------------------------
Dividend Income $1.6943
- --------------------------------------------------------------------------------------
Short-Term Capital Gain $0.0841
- --------------------------------------------------------------------------------------
Long-Term Capital Gain $1.7811
- --------------------------------------------------------------------------------------
TOTAL $3.5595
- --------------------------------------------------------------------------------------
CLASS C (SYMBOL: FRGOX) CHANGE 1/31/08 7/31/07
- --------------------------------------------------------------------------------------
Net Asset Value (NAV) +$5.68 $38.58 $32.90
- --------------------------------------------------------------------------------------
DISTRIBUTIONS (8/1/07-1/31/08)
- --------------------------------------------------------------------------------------
Dividend Income $1.7317
- --------------------------------------------------------------------------------------
Short-Term Capital Gain $0.0841
- --------------------------------------------------------------------------------------
Long-Term Capital Gain $1.7811
- --------------------------------------------------------------------------------------
TOTAL $3.5969
- --------------------------------------------------------------------------------------
ADVISOR CLASS (SYMBOL: FGADX) CHANGE 1/31/08 7/31/07
- --------------------------------------------------------------------------------------
Net Asset Value (NAV) +$6.06 $40.74 $34.68
- --------------------------------------------------------------------------------------
DISTRIBUTIONS (8/1/07-1/31/08)
- --------------------------------------------------------------------------------------
Dividend Income $2.0599
- --------------------------------------------------------------------------------------
Short-Term Capital Gain $0.0841
- --------------------------------------------------------------------------------------
Long-Term Capital Gain $1.7811
- --------------------------------------------------------------------------------------
TOTAL $3.9251
- --------------------------------------------------------------------------------------

Semiannual Report | 7

Performance Summary (CONTINUED)

PERFORMANCE

CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. CLASS A: 5.75%
MAXIMUM INITIAL SALES CHARGE; CLASS B: CONTINGENT DEFERRED SALES CHARGE (CDSC)
DECLINING FROM 4% TO 1% OVER SIX YEARS, AND ELIMINATED THEREAFTER; CLASS C: 1%
CDSC IN FIRST YEAR ONLY; ADVISOR CLASS: NO SALES CHARGES. THE FUND MAY CHARGE A
2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.

- -----------------------------------------------------------------------------------------------------------------------
CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- -----------------------------------------------------------------------------------------------------------------------

Cumulative Total Return 1 +29.65% +38.56% +259.78% +459.37%
- -----------------------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +22.18% +30.61% +27.67% +18.09%
- -----------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,218 $13,061 $ 33,913 $ 52,744
- -----------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (12/31/07) 4 +18.38% +25.84% +17.73%
- -----------------------------------------------------------------------------------------------------------------------
Total Annual Operating Expenses 5 0.93%
- -----------------------------------------------------------------------------------------------------------------------
CLASS B 6-MONTH 1-YEAR 5-YEAR INCEPTION (1/1/99)
- -----------------------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +29.15% +37.54% +246.48% +501.89%
- -----------------------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +25.15% +33.54% +28.07% +21.84%
- -----------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,515 $13,354 $ 34,448 $ 60,189
- -----------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (12/31/07) 4 +20.65% +26.23% +20.94%
- -----------------------------------------------------------------------------------------------------------------------
Total Annual Operating Expenses 5 1.67%
- -----------------------------------------------------------------------------------------------------------------------
CLASS C 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- -----------------------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +29.12% +37.52% +246.58% +420.90%
- -----------------------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +28.12% +36.52% +28.22% +17.94%
- -----------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,812 $13,652 $ 34,658 $ 52,090
- -----------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (12/31/07) 4 +23.68% +26.40% +17.61%
- -----------------------------------------------------------------------------------------------------------------------
Total Annual Operating Expenses 5 1.67%
- -----------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- -----------------------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +29.77% +38.90% +264.03% +485.16%
- -----------------------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +29.77% +38.90% +29.49% +19.32%
- -----------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,977 $13,890 $ 36,403 $ 58,516
- -----------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (12/31/07) 4 +25.89% +27.65% +18.99%
- -----------------------------------------------------------------------------------------------------------------------
Total Annual Operating Expenses 5 0.68%
- -----------------------------------------------------------------------------------------------------------------------

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, SEE "FUNDS AND
PERFORMANCE" AT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.

8 | Semiannual Report

Performance Summary (CONTINUED)

ENDNOTES

INVESTING IN A FUND THAT CONCENTRATES IN THE PRECIOUS METALS SECTOR INVOLVES
SPECIAL RISKS, INCLUDING THOSE RELATED TO FLUCTUATIONS IN THE PRICE OF GOLD AND
OTHER PRECIOUS METALS AND INCREASED SUSCEPTIBILITY TO ADVERSE ECONOMIC AND
REGULATORY DEVELOPMENTS AFFECTING THE SECTOR. IN ADDITION, THE FUND IS SUBJECT
TO THE RISKS OF CURRENCY FLUCTUATION AND POLITICAL UNCERTAINTY ASSOCIATED WITH
FOREIGN INVESTING. INVESTMENTS IN DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS
RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THEIR
RELATIVELY SMALL SIZE AND LESSER LIQUIDITY. THE FUND'S PROSPECTUS ALSO INCLUDES
A DESCRIPTION OF THE MAIN INVESTMENT RISKS.

CLASS A: Prior to 8/3/98, these shares were offered at a lower
initial sales charge; thus actual total returns may differ.

CLASS B: These shares have higher annual fees and expenses than Class A
shares.

CLASS C: Prior to 1/1/04, these shares were offered with an initial sales
charge; thus actual total returns would have differed. These
shares have higher annual fees and expenses than Class A shares.

ADVISOR CLASS: Shares are available to certain eligible investors as described
in the prospectus.

1. Cumulative total return represents the change in value of an investment over
the periods indicated.

2. Average annual total return represents the average annual change in value of
an investment over the periods indicated. Six-month return has not been
annualized.

3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated.

4. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.

5. Figures are as stated in the Fund's prospectus current as of the date of this
report.

Semiannual Report | 9

Your Fund's Expenses

As a Fund shareholder, you can incur two types of costs:

o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and

o 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 following table 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 first line (Actual) for each share class listed in the table provides actual
account values and expenses. The "Ending Account Value" is derived from the
Fund's actual return, which includes the effect of Fund expenses.

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:

1. Divide your account value by $1,000.
IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.

2. Multiply the result by the number under the heading "Expenses Paid During
Period."
IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.

In this illustration, the estimated expenses paid this period are $64.50.

HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS

Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.

10 | Semiannual Report

Your Fund's Expenses (CONTINUED)

PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line for each class is useful in
comparing ongoing costs only, and will not help you compare total costs of
owning different funds. In addition, if transaction costs were included, your
total costs would have been higher. Please refer to the Fund prospectus for
additional information on operating expenses.

- --------------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
CLASS A VALUE 8/1/07 VALUE 1/31/08 PERIOD* 8/1/07-1/31/08
- --------------------------------------------------------------------------------------------------------------

Actual $1,000 $1,296.50 $5.08
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,020.71 $4.47
- --------------------------------------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,291.50 $9.45
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.89 $8.31
- --------------------------------------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,291.20 $9.45
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.89 $8.31
- --------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,297.70 $3.70
- --------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,021.92 $3.25
- --------------------------------------------------------------------------------------------------------------

* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 0.88%; B: 1.64%; C: 1.64%; and Advisor: 0.64%),
multiplied by the average account value over the period, multiplied by 184/366
to reflect the one-half year period.

Semiannual Report | 11

Franklin Gold and Precious Metals Fund

FINANCIAL HIGHLIGHTS

----------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 2008 YEAR ENDED JULY 31,
CLASS A (UNAUDITED) 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $ 33.73 $ 30.67 $ 17.81 $ 15.94 $ 13.74 $ 10.28
----------------------------------------------------------------------------------
Income from investment operations a:
Net investment income b .................... 0.07 0.11 0.15 0.04 0.05 0.13
Net realized and unrealized gains
(losses) ................................ 9.58 4.71 12.87 1.84 2.25 3.44
----------------------------------------------------------------------------------
Total from investment operations .............. 9.65 4.82 13.02 1.88 2.30 3.57
----------------------------------------------------------------------------------
Less distributions from:
Net investment income ...................... (1.97) (0.76) (0.16) (0.01) (0.10) (0.11)
Net realized gains ......................... (1.87) (1.00) -- -- -- --
----------------------------------------------------------------------------------
Total distributions ........................... (3.84) (1.76) (0.16) (0.01) (0.10) (0.11)
----------------------------------------------------------------------------------
Redemption fees ............................... -- e -- e -- e -- e -- e --
----------------------------------------------------------------------------------
Net asset value, end of period ................ $ 39.54 $ 33.73 $ 30.67 $ 17.81 $ 15.94 $ 13.74
==================================================================================

Total return c ................................ 29.65% 15.94% 73.36% 11.78% 16.68% 34.97%

RATIOS TO AVERAGE NET ASSETS d
Expenses ...................................... 0.88% f 0.93% f 0.92% f 0.96% f 0.96% f 1.09%
Net investment income ......................... 0.30% 0.33% 0.57% 0.21% 0.26% 1.05%

SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $1,376,272 $1,011,344 $885,176 $439,628 $394,292 $306,283
Portfolio turnover rate ....................... 3.76% 7.20% 10.96% 11.33% 8.11% 6.59%

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 repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred sales
charges, if applicable, and is not annualized for periods less than one year.

d Ratios are annualized for periods less than one year.

e Amount rounds to less than $0.01 per share.

f Benefit of expense reduction rounds to less than 0.01%.

12 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Gold and Precious Metals Fund

FINANCIAL HIGHLIGHTS (CONTINUED)

--------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 2008 YEAR ENDED JULY 31,
CLASS B (UNAUDITED) 2007 2006 2005 2004 2003
--------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $ 32.60 $ 29.62 $ 17.24 $ 15.54 $ 13.46 $ 10.11
--------------------------------------------------------------------------------
Income from investment operations a:
Net investment income (loss) b ............... (0.06) (0.12) (0.04) (0.09) (0.08) 0.02
Net realized and unrealized gains
(losses) .................................. 9.25 4.54 12.44 1.79 2.21 3.41
--------------------------------------------------------------------------------
Total from investment operations ................ 9.19 4.42 12.40 1.70 2.13 3.43
--------------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (1.69) (0.44) (0.02) -- (0.05) (0.08)
Net realized gains ........................... (1.87) (1.00) -- -- -- --
--------------------------------------------------------------------------------
Total distributions ............................. (3.56) (1.44) (0.02) -- (0.05) (0.08)
--------------------------------------------------------------------------------
Redemption fees ................................. -- e -- e -- e -- e -- e --
--------------------------------------------------------------------------------
Net asset value, end of period .................. $ 38.23 $ 32.60 $ 29.62 $ 17.24 $ 15.54 $ 13.46
================================================================================

Total return c .................................. 29.15% 15.12% 71.95% 10.94% 15.81% 34.08%

RATIOS TO AVERAGE NET ASSETS d
Expenses ........................................ 1.64% f 1.68% f 1.67% f 1.70% f 1.71% f 1.85%
Net investment income (loss) .................... (0.45)% (0.41)% (0.19)% (0.53)% (0.49)% 0.29%

SUPPLEMENTAL DATA
Net assets, end of period (000's) ............... $ 71,119 $ 62,386 $ 60,423 $ 41,270 $ 37,738 $ 26,278
Portfolio turnover rate ......................... 3.76% 7.20% 10.96% 11.33% 8.11% 6.59%

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred sales
charges, if applicable, and is not annualized for periods less than one year.

d Ratios are annualized for periods less than one year.

e Amount rounds to less than $0.01 per share.

f Benefit of expense reduction rounds to less than 0.01%.

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 13

Franklin Gold and Precious Metals Fund

FINANCIAL HIGHLIGHTS (CONTINUED)

------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 2008 YEAR ENDED JULY 31,
CLASS C (UNAUDITED) 2007 2006 2005 2004 2003
------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $ 32.90 $ 29.90 $ 17.40 $ 15.69 $ 13.59 $ 10.18
------------------------------------------------------------------------------
Income from investment operations a:
Net investment income (loss) b ............... (0.07) (0.13) (0.05) (0.09) (0.09) 0.04
Net realized and unrealized gains (losses) ... 9.35 4.60 12.58 1.80 2.23 3.43
------------------------------------------------------------------------------
Total from investment operations ................ 9.28 4.47 12.53 1.71 2.14 3.47
------------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (1.73) (0.47) (0.03) -- (0.04) (0.06)
Net realized gains ........................... (1.87) (1.00) -- -- -- --
------------------------------------------------------------------------------
Total distributions ............................. (3.60) (1.47) (0.03) -- (0.04) (0.06)
------------------------------------------------------------------------------
Redemption fees ................................. -- e -- e -- e -- e -- e --
------------------------------------------------------------------------------
Net asset value, end of period .................. $ 38.58 $ 32.90 $ 29.90 $ 17.40 $ 15.69 $ 13.59
==============================================================================

Total return c .................................. 29.12% 15.10% 72.04% 10.96% 15.77% 34.16%

RATIOS TO AVERAGE NET ASSETS d
Expenses ........................................ 1.64% f 1.68% f 1.67% f 1.71% f 1.71% f 1.82%
Net investment income (loss) .................... (0.45)% (0.41)% (0.19)% (0.54)% (0.49)% 0.32%

SUPPLEMENTAL DATA
Net assets, end of period (000's) ............... $339,745 $240,424 $217,371 $114,315 $101,962 $65,729
Portfolio turnover rate ......................... 3.76% 7.20% 10.96% 11.33% 8.11% 6.59%

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred sales
charges, if applicable, and is not annualized for periods less than one year.

d Ratios are annualized for periods less than one year.

e Amount rounds to less than $0.01 per share.

f Benefit of expense reduction rounds to less than 0.01%.

14 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Gold and Precious Metals Fund

FINANCIAL HIGHLIGHTS (CONTINUED)

----------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 2008 YEAR ENDED JULY 31,
ADVISOR CLASS (UNAUDITED) 2007 2006 2005 2004 2003
----------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $ 34.68 $ 31.50 $ 18.28 $ 16.36 $ 14.08 $ 10.53
----------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ...................... 0.11 0.19 0.22 0.08 0.08 0.09
Net realized and unrealized gains (losses) ... 9.88 4.84 13.20 1.89 2.33 3.60
----------------------------------------------------------------------------
Total from investment operations ................ 9.99 5.03 13.42 1.97 2.41 3.69
----------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (2.06) (0.85) (0.20) (0.05) (0.13) (0.14)
Net realized gains ........................... (1.87) (1.00) -- -- -- --
----------------------------------------------------------------------------
Total distributions ............................. (3.93) (1.85) (0.20) (0.05) (0.13) (0.14)
----------------------------------------------------------------------------
Redemption fees ................................. -- e -- e -- e -- e -- e --
----------------------------------------------------------------------------
Net asset value, end of period .................. $ 40.74 $ 34.68 $ 31.50 $ 18.28 $ 16.36 $ 14.08
============================================================================

Total return c .................................. 29.77% 16.25% 73.68% 12.09% 16.91% 35.38%

RATIOS TO AVERAGE NET ASSETS d
Expenses ........................................ 0.64% f 0.68% f 0.67% f 0.71% f 0.71% f 0.85%
Net investment income ........................... 0.55% 0.58% 0.82% 0.46% 0.51% 1.29%

SUPPLEMENTAL DATA
Net assets, end of period (000's) ............... $108,662 $65,120 $60,213 $34,519 $35,351 $21,223
Portfolio turnover rate ......................... 3.76% 7.20% 10.96% 11.33% 8.11% 6.59%

b Based on average daily shares outstanding.

c Total return is not annualized for periods less than one year.

d Ratios are annualized for periods less than one year.

e Amount rounds to less than $0.01 per share.

f Benefit of expense reduction rounds to less than 0.01%.

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 15

Franklin Gold and Precious Metals Fund

STATEMENT OF INVESTMENTS, JANUARY 31, 2008 (UNAUDITED)

- ------------------------------------------------------------------------------------------------------------------------------------
COUNTRY SHARES/WARRANTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

COMMON STOCKS AND WARRANTS 94.7%
GOLD AND DIVERSIFIED RESOURCES 4.6%
Anglo American PLC ...................................................... United Kingdom 233,051 $ 12,743,140
Anglo American PLC, ADR ................................................. United Kingdom 239,571 6,628,930
a First Uranium Corp. ..................................................... Canada 25,600 250,996
a,b First Uranium Corp., 144A ............................................... Canada 544,800 5,341,496
a,b Franco-Nevada Corp., 144A ............................................... Canada 685,400 12,988,829
Freeport-McMoRan Copper & Gold Inc., B .................................. United States 77,211 6,874,095
a Mvelaphanda Resources Ltd. .............................................. South Africa 2,650,000 15,701,341
Oxiana Ltd. ............................................................. Australia 8,882,655 23,893,897
a,b Polymetal, GDR, 144A .................................................... Russia 250,000 2,030,000
----------------
86,452,724
----------------
GOLD EXPLORATION AND DEVELOPMENT 6.8%
a Apex Silver Mines Ltd. .................................................. Bolivia 200,000 2,850,000
a AXMIN Inc. .............................................................. Canada 500,000 369,040
a,b AXMIN Inc., 144A ........................................................ Canada 2,000,000 1,476,162
a Banro Corp. ............................................................. Canada 350,000 3,543,287
a Bendigo Mining Ltd. ..................................................... Australia 13,648,795 4,099,794
a,b Bendigo Mining Ltd., 144A ............................................... Australia 5,000,000 1,501,889
a Centamin Egypt Ltd. ..................................................... Australia 2,823,000 3,801,167
a,b Centamin Egypt Ltd., 144A ............................................... Australia 5,000,000 6,732,495
a,b European Minerals Corp., 144A ........................................... Canada 10,600,000 14,484,341
a,b European Minerals Corp., wts., 144A, 4/11/10 ............................ Canada 5,300,000 3,171,753
a Gabriel Resources Ltd. .................................................. Canada 1,500,000 2,603,232
a,b Gabriel Resources Ltd., 144A ............................................ Canada 1,500,000 2,603,232
a Great Basin Gold Ltd. ................................................... Canada 2,000,000 6,064,233
a International Minerals Corp. ............................................ Canada 700,000 4,398,564
a International Minerals Corp., wts., 5/19/08 ............................. Canada 350,000 108,219
a Ivanhoe Mines Ltd. ...................................................... Canada 490,000 4,813,984
a,b Ivanhoe Mines Ltd., 144A ................................................ Canada 918,600 9,024,746
a Metallica Resources Inc. ................................................ Canada 500,000 2,593,257
a,b Metallica Resources Inc., 144A .......................................... Canada 988,998 5,129,453
a,b Metallica Resources Inc., wts., 144A, 12/11/08 .......................... Canada 494,499 1,134,398
a Mineral Deposits Ltd. ................................................... Australia 4,180,828 4,311,050
a Nautilus Minerals Inc. .................................................. Canada 673,700 1,837,607
a,b Nautilus Minerals Inc., 144A ............................................ Canada 1,278,000 3,505,386
a,b Nautilus Minerals Inc., wts., 144A, 2/15/09 ............................. Canada 639,000 --
a Nevsun Resources Ltd. ................................................... Canada 877,000 1,784,440
a NovaGold Resources Inc. ................................................. Canada 200,000 2,286,000
a Orezone Resources Inc. .................................................. Canada 7,000,000 9,800,000
a Pan Australian Resources Ltd. ........................................... Australia 30,600,000 23,870,616
a Shore Gold Inc. ......................................................... Canada 375,000 1,365,200
----------------
129,263,545
----------------
LONG LIFE GOLD MINES 53.6%
a Agnico-Eagle Mines Ltd. ................................................. Canada 1,300,000 82,004,000
a Alamos Gold Inc. ........................................................ Canada 1,246,400 8,702,174
a,b Alamos Gold Inc., 144A .................................................. Canada 400,000 2,792,739
AngloGold Ashanti Ltd. .................................................. South Africa 62,530 2,608,501
AngloGold Ashanti Ltd., ADR ............................................. South Africa 1,728,527 71,854,867

16 | Semiannual Report

Franklin Gold and Precious Metals Fund

STATEMENT OF INVESTMENTS, JANUARY 31, 2008 (UNAUDITED) (CONTINUED)

COMMON STOCKS AND WARRANTS (CONTINUED)
LONG LIFE GOLD MINES (CONTINUED)
Barrick Gold Corp. ...................................................... Canada 2,946,283 $ 151,704,112
a Centerra Gold Inc. ...................................................... Canada 155,900 2,363,535
a,b Centerra Gold Inc., 144A ................................................ Canada 1,384,800 20,994,375
Compania de Minas Buenaventura SA ....................................... Peru 100,593 6,679,910
Compania de Minas Buenaventura SA, ADR .................................. Peru 1,288,986 86,362,062
a Gammon Gold Inc. ........................................................ Canada 2,114,500 14,720,935
Gold Fields Ltd. ........................................................ South Africa 697,191 10,461,478
Gold Fields Ltd., ADR ................................................... South Africa 1,504,528 22,613,056
Goldcorp Inc. ........................................................... Canada 1,260,625 46,949,669
Goldcorp Inc. (USD Traded) .............................................. Canada 2,329,865 86,717,575
a Goldcorp Inc., wts., 6/09/11 ............................................ Canada 9,125 109,216
a Harmony Gold Mining Co. Ltd. ............................................ South Africa 1,443,000 14,378,373
a Harmony Gold Mining Co. Ltd., ADR ....................................... South Africa 600,000 6,054,000
a Highland Gold Mining Ltd. ............................................... United Kingdom 524,000 1,984,811
a Lihir Gold Ltd. ......................................................... Papua New Guinea 17,447,142 58,195,603
Newcrest Mining Ltd. .................................................... Australia 5,303,618 166,109,228
Newmont Mining Corp. .................................................... United States 850,714 46,227,799
Randgold Resources Ltd., ADR ............................................ United Kingdom 2,227,600 106,278,796
----------------
1,016,866,814
----------------
MEDIUM LIFE GOLD MINES 15.8%
a Aurizon Mines Ltd. ...................................................... Canada 1,800,000 7,181,329
a Eldorado Gold Corp. ..................................................... Canada 2,895,000 19,057,451
a,b GBS Gold International Inc., 144A ....................................... Canada 2,000,000 2,613,206
a Golden Star Resources Ltd. .............................................. Canada 750,000 2,984,740
a Golden Star Resources Ltd. (USD Traded) ................................. Canada 700,000 2,793,000
b Hochschild Mining PLC, 144A ............................................. United Kingdom 1,850,000 13,573,470
IAMGOLD Corp. ........................................................... Canada 1,282,000 10,229,404
a,b Jinshan Gold Mines Inc., 144A ........................................... Canada 5,595,000 15,736,984
a Kinross Gold Corp. ...................................................... Canada 3,513,012 77,611,426
a SEMAFO Inc. ............................................................. Canada 4,725,000 5,749,551
a,b SEMAFO Inc., 144A ....................................................... Canada 3,000,000 3,650,509
a Sino Gold Mining Ltd. ................................................... Australia 1,100,000 7,545,309
Yamana Gold Inc. ........................................................ Canada 2,779,193 46,153,564
Yamana Gold Inc. (USD Traded) ........................................... Canada 2,249,527 37,072,205
b Yamana Gold Inc., 144A .................................................. Canada 2,300,000 38,195,691
----------------
298,887,338
----------------
PLATINUM & PALLADIUM 13.9%
Anglo Platinum Ltd. ..................................................... South Africa 110,000 15,668,572
Anglo Platinum Ltd., ADR ................................................ South Africa 571,138 81,901,189
a Eastern Platinum Ltd. ................................................... Canada 3,785,100 11,816,640
Impala Platinum Holdings Ltd. ........................................... South Africa 2,050,000 76,222,958
Impala Platinum Holdings Ltd., ADR ...................................... South Africa 1,542,400 58,032,800
Lonmin PLC .............................................................. United Kingdom 350,000 20,126,077
----------------
263,768,236
----------------
TOTAL COMMON STOCKS AND WARRANTS (COST $714,953,315) .................... 1,795,238,657
----------------

Semiannual Report | 17

Franklin Gold and Precious Metals Fund

STATEMENT OF INVESTMENTS, JANUARY 31, 2008 (UNAUDITED) (CONTINUED)

- ------------------------------------------------------------------------------------------------------------------------------------
COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

SHORT TERM INVESTMENT (COST $83,456,715) 4.4%
MONEY MARKET FUND 4.4%
c Franklin Institutional Fiduciary Trust Money Market Portfolio, 3.64% .... United States 83,456,715 $ 83,456,715
----------------
TOTAL INVESTMENTS (COST $798,410,030) 99.1% ............................. 1,878,695,372
OTHER ASSETS, LESS LIABILITIES 0.9% ..................................... 17,103,623
----------------
NET ASSETS 100.0% ....................................................... $ 1,895,798,995
================

CURRENCY ABBREVIATION

USD - U.S. Dollar

SELECTED PORTFOLIO ABBREVIATIONS

ADR - American Depository Receipt
GDR - Global Depository Receipt

a Non-income producing for the twelve months ended January 31, 2008.

b Security was purchased pursuant to Rule 144A under the Securities Act of 1933
and 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. These securities have been deemed liquid under guidelines approved by
the Fund's Board of Trustees. At January 31, 2008, the aggregate value of these
securities was $166,681,154, representing 8.79% of net assets.

c See Note 8 regarding investments in the Franklin Institutional Fiduciary Trust
Money Market Portfolio. The rate shown is the annualized seven-day yield at
period end.

18 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Gold and Precious Metals Fund

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
January 31, 2008 (unaudited)

Assets:
Investments in securities:
Cost - Unaffiliated issuers ..................................................... $ 714,953,315
Cost - Sweep Money Fund (Note 8) ................................................ 83,456,715
-----------------
Total cost of investments ....................................................... $ 798,410,030
=================
Value - Unaffiliated issuers .................................................... $ 1,795,238,657
Value - Sweep Money Fund (Note 8) ............................................... 83,456,715
-----------------
Total value of investments ...................................................... 1,878,695,372
Foreign currency, at value (cost $16,370,758) ...................................... 16,371,369
Receivables:
Investment securities sold ...................................................... 3,178,686
Capital shares sold ............................................................. 11,190,578
Dividends ....................................................................... 339,231
-----------------
Total assets ................................................................. 1,909,775,236
-----------------
Liabilities:
Payables:
Investment securities purchased ................................................. 8,282,299
Capital shares redeemed ......................................................... 3,816,220
Affiliates ...................................................................... 1,416,196
Funds advanced by custodian ........................................................ 113,031
Accrued expenses and other liabilities ............................................. 348,495
-----------------
Total liabilities ............................................................ 13,976,241
-----------------
Net assets, at value ...................................................... $ 1,895,798,995
=================
Net assets consist of:
Paid-in capital .................................................................... $ 914,723,996
Distributions in excess of net investment income ................................... (104,541,700)
Net unrealized appreciation (depreciation) ......................................... 1,080,497,678
Accumulated net realized gain (loss) ............................................... 5,119,021
-----------------
Net assets, at value ...................................................... $ 1,895,798,995
=================

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 19

Franklin Gold and Precious Metals Fund

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
January 31, 2008 (unaudited)

CLASS A:
Net assets, at value ............................................................... $ 1,376,272,106
=================
Shares outstanding ................................................................. 34,804,131
=================
Net asset value per share a ........................................................ $ 39.54
=================
Maximum offering price per share (net asset value per share / 94.25%) .............. $ 41.95
=================
CLASS B:
Net assets, at value ............................................................... $ 71,119,219
=================
Shares outstanding ................................................................. 1,860,105
=================
Net asset value and maximum offering price per share a ............................. $ 38.23
=================
CLASS C:
Net assets, at value ............................................................... $ 339,745,186
=================
Shares outstanding ................................................................. 8,806,550
=================
Net asset value and maximum offering price per share a ............................. $ 38.58
=================
ADVISOR CLASS:
Net assets, at value ............................................................... $ 108,662,484
=================
Shares outstanding ................................................................. 2,667,323
=================
Net asset value and maximum offering price per share a ............................. $ 40.74
=================

a Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable, and redemption fees retained by the Fund.

20 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Gold and Precious Metals Fund

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the six months ended January 31, 2008 (unaudited)

Investment income:
Dividends (net of foreign taxes of $166,033)
Unaffiliated issuers ............................................................ $ 8,727,523
Sweep Money Fund (Note 8) ....................................................... 656,681
Interest ........................................................................... 94,907
-----------------
Total investment income ...................................................... 9,479,111
-----------------
Expenses:
Management fees (Note 3a) .......................................................... 3,803,956
Distribution fees: (Note 3c)
Class A ......................................................................... 1,466,937
Class B ......................................................................... 331,231
Class C ......................................................................... 1,424,374
Transfer agent fees (Note 3e) ...................................................... 1,011,960
Custodian fees (Note 4) ............................................................ 78,154
Reports to shareholders ............................................................ 78,647
Registration and filing fees ....................................................... 76,824
Professional fees .................................................................. 23,458
Trustees' fees and expenses ........................................................ 16,311
Other .............................................................................. 17,107
-----------------
Total expenses ............................................................... 8,328,959
Expense reductions (Note 4) .................................................. (216)
-----------------
Net expenses .............................................................. 8,328,743
-----------------
Net investment income .................................................. 1,150,368
-----------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ..................................................................... 34,165,229
Foreign currency transactions ................................................... 205,653
-----------------
Net realized gain (loss) .................................................. 34,370,882
-----------------
Net change in unrealized appreciation (depreciation) on:
Investments ..................................................................... 369,972,092
Translation of assets and liabilities denominated in foreign currencies ......... (99,297)
-----------------
Net change in unrealized appreciation (depreciation) ...................... 369,872,795
-----------------
Net realized and unrealized gain (loss) ............................................... 404,243,677
-----------------
Net increase (decrease) in net assets resulting from operations ....................... $ 405,394,045
=================

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 21

Franklin Gold and Precious Metals Fund

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

-----------------------------------
SIX MONTHS ENDED
JANUARY 31, 2008 YEAR ENDED
(UNAUDITED) JULY 31, 2007
-----------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income ................................................................ $ 1,150,368 $ 2,351,891
Net realized gain (loss) from investments and foreign currency transactions .......... 34,370,882 55,126,559
Net change in unrealized appreciation (depreciation) on investments and translation of
assets and liabilities denominated in foreign currencies .......................... 369,872,795 128,955,959
-----------------------------------
Net increase (decrease) in net assets resulting from operations ................ 405,394,045 186,434,409
-----------------------------------
Distributions to shareholders from:
Net investment income:
Class A ........................................................................... (59,612,961) (21,865,871)
Class B ........................................................................... (2,968,716) (871,751)
Class C ........................................................................... (13,240,894) (3,276,068)
Advisor Class ..................................................................... (4,264,295) (1,644,592)
Net realized gains:
Class A ........................................................................... (56,393,009) (28,740,740)
Class B ........................................................................... (3,268,164) (1,976,377)
Class C ........................................................................... (14,261,659) (7,022,535)
Advisor Class ..................................................................... (3,861,237) (1,931,389)
-----------------------------------
Total distributions to shareholders ..................................................... (157,870,935) (67,329,323)
-----------------------------------
Capital share transactions: (Note 2)
Class A ........................................................................... 183,605,283 38,685,399
Class B ........................................................................... (1,496,440) (3,698,184)
Class C ........................................................................... 56,574,838 2,733,961
Advisor Class ..................................................................... 30,296,979 (744,605)
-----------------------------------
Total capital share transactions ........................................................ 268,980,660 36,976,571
-----------------------------------
Redemption fees ......................................................................... 21,266 8,785
-----------------------------------
Net increase (decrease) in net assets .......................................... 516,525,036 156,090,442
Net assets:
Beginning of period ..................................................................... 1,379,273,959 1,223,183,517
-----------------------------------
End of period ........................................................................... $ 1,895,798,995 $ 1,379,273,959
===================================
Distributions in excess of net investment income included in net assets:
End of period ........................................................................... $ (104,541,700) $ (25,605,202)
===================================

22 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Gold and Precious Metals Fund

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin Gold and Precious Metals Fund (Fund) is registered under the Investment
Company Act of 1940, as amended, (1940 Act) as a non-diversified, open-end
investment company. The Fund offers four classes of shares: Class A, Class B,
Class C, and Advisor Class. Each class of shares differs by its initial sales
load, contingent deferred sales charges, distribution fees, voting rights on
matters affecting a single class and its exchange privilege.

The following summarizes the Fund's significant accounting policies.

A. SECURITY VALUATION

Securities listed on a securities 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. Over-the-counter securities and listed securities for
which there is no reported sale 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. Investments in open-end mutual funds are valued at the closing net asset
value.

Foreign securities are valued as of the close of trading on the foreign stock
exchange on which the security is primarily traded, or the NYSE, whichever is
earlier. If no sale is reported at that time, the foreign security will be
valued within the range of the most recent quoted bid and ask prices. The value
is then converted into its U.S. dollar equivalent at the foreign exchange rate
in effect at the close of the NYSE on the day that the value of the foreign
security is determined.

The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security held by the Fund. The investment manager monitors price movements
following the close of trading in foreign stock markets through a series of
country specific market proxies (such as baskets of American Depository
Receipts, futures contracts and exchange traded funds). These price movements
are measured against established trigger thresholds for each specific market
proxy to assist in determining if an event has occurred. If such an event
occurs, the securities may be valued using fair value procedures, which may
include the use of independent pricing services. All security valuation
procedures are approved by the Fund's Board of Trustees.

Semiannual Report | 23

Franklin Gold and Precious Metals Fund

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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. 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. 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 Fund's Board of Trustees.

The Fund does 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 on the
Statement 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. FOREIGN CURRENCY CONTRACTS

When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate at a future date. Realized and unrealized gains and losses on these
contracts are included in the Statement of Operations.

The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts, which may be in
excess of the amount reflected in the Statement of Assets and Liabilities.

D. INCOME TAXES

No provision has been made for U.S. income taxes because it is the Fund's policy
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute to shareholders substantially all of its taxable income and net
realized gains.

24 | Semiannual Report

Franklin Gold and Precious Metals Fund

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. INCOME TAXES (CONTINUED)

Foreign securities held by the Fund may be subject to foreign taxation on
dividend and interest income received. Foreign taxes, if any, are recorded based
on the tax regulations and rates that exist in the foreign markets in which the
Fund invests.

E. 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. Dividend income is
recorded on the ex-dividend date except that certain dividends from foreign
securities are recognized as soon as the Fund is notified of the ex-dividend
date. Distributions to shareholders are recorded on the ex-dividend date and are
determined according to income tax regulations (tax basis). Distributable
earnings determined on a tax basis may differ from earnings recorded in
accordance with accounting principles generally accepted in the United States of
America. 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.

Realized and unrealized gains and losses and net investment income, other than
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.

F. ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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.

G. REDEMPTION FEES

A short term trading redemption fee will be imposed, with some exceptions, on
any Fund shares that are redeemed or exchanged within seven calendar days
following their purchase date. The redemption fee is 2% of the amount redeemed.
Such fees are retained by the Fund and accounted for as an addition to paid-in
capital.

Semiannual Report | 25

Franklin Gold and Precious Metals Fund

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

H. GUARANTEES AND INDEMNIFICATIONS

Under the Fund's organizational documents, its officers and directors are
indemnified by the Fund against certain liabilities arising out of the
performance of their duties to the Fund. Additionally, in the normal course of
business, the Fund, on behalf of the Fund, enters into contracts with service
providers that contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future claims
that may be made against the Fund that have not yet occurred. Currently, the
Fund expects the risk of loss to be remote.

2. SHARES OF BENEFICIAL INTEREST

At January 31, 2008, there were an unlimited number of shares authorized
(without par value). Transactions in the Fund's shares were as follows:

------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 2008 JULY 31, 2007
------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------

CLASS A SHARES:
Shares sold .................. 7,687,398 $ 292,785,630 9,952,865 $ 321,030,285
Shares issued in reinvestment
of distributions .......... 2,793,113 101,724,835 1,337,299 43,208,127
Shares redeemed .............. (5,664,498) (210,905,182) (10,163,730) (325,553,013)
------------------------------------------------------------------
Net increase (decrease) ...... 4,816,013 $ 183,605,283 1,126,434 $ 38,685,399
==================================================================
CLASS B SHARES:
Shares sold .................. 205,644 $ 7,526,828 166,415 $ 5,219,309
Shares issued in reinvestment
of distributions .......... 157,613 5,555,874 79,582 2,498,087
Shares redeemed .............. (416,643) (14,579,142) (372,167) (11,415,580)
------------------------------------------------------------------
Net increase (decrease) ...... (53,386) $ (1,496,440) (126,170) $ (3,698,184)
==================================================================
CLASS C SHARES:
Shares sold .................. 1,856,596 $ 70,040,936 1,657,798 $ 52,788,963
Shares issued in reinvestment
of distributions .......... 636,766 22,649,772 268,875 8,515,298
Shares redeemed .............. (994,250) (36,115,870) (1,887,994) (58,570,300)
------------------------------------------------------------------
Net increase (decrease) ...... 1,499,112 $ 56,574,838 38,679 $ 2,733,961
==================================================================
ADVISOR CLASS SHARES:
Shares sold .................. 717,309 $ 27,728,076 404,725 $ 13,568,522
Shares issued in reinvestment
of distributions .......... 182,310 6,836,654 92,530 3,068,310
Shares redeemed .............. (110,134) (4,267,751) (531,240) (17,381,437)
------------------------------------------------------------------
Net increase (decrease) ...... 789,485 $ 30,296,979 (33,985) $ (744,605)
==================================================================

26 | Semiannual Report

Franklin Gold and Precious Metals Fund

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

3. TRANSACTIONS WITH AFFILIATES

Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Fund are also officers and/or directors of the following
subsidiaries:

- --------------------------------------------------------------------------------------
SUBSIDIARY AFFILIATION
- --------------------------------------------------------------------------------------

Franklin Advisers, Inc. (Advisers) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent

A. MANAGEMENT FEES

Effective January 1, 2008, the Fund pays an investment management fee to
Advisers based on the month-end net assets of the Fund as follows:

- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.625% Up to and including $100 million
0.500% Over $100 million, up to and including $250 million
0.450% Over $250 million, up to and including $7.5 billion
0.440% Over $7.5 billion, up to and including $10 billion
0.430% Over $10 billion, up to and including $12.5 billion
0.420% Over $12.5 billion, up to and including $15 billion
0.400% In excess of $15 billion

Prior to January 1, 2008, the Fund paid fees to Advisers based on the month-end
net assets of the Fund as follows:

- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.625% Up to and including $100 million
0.500% Over $100 million, up to and including $250 million
0.450% Over $250 million, up to and including $10 billion
0.440% Over $10 billion, up to and including $12.5 billion
0.420% Over $12.5 billion, up to and including $15 billion
0.400% In excess of $15 billion

B. ADMINISTRATIVE FEES

Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by Advisers based on average daily net assets, and
is not an additional expense of the Fund.

Semiannual Report | 27

Franklin Gold and Precious Metals Fund

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

3. TRANSACTIONS WITH AFFILIATES (CONTINUED)

C. DISTRIBUTION FEES

The Fund's Board of Trustees has adopted distribution plans for each share
class, with the exception of Advisor Class shares, pursuant to Rule 12b-1 under
the 1940 Act. Under the Fund's Class A reimbursement distribution plan, the Fund
reimburses Distributors for costs incurred in connection with the servicing,
sale and distribution of the Fund's shares up to the maximum annual plan rate.
Under the Class A reimbursement distribution plan, costs exceeding the maximum
for the current plan year cannot be reimbursed in subsequent periods.

In addition, under the Fund's Class B and C compensation distribution plans, the
Fund pays Distributors for costs incurred in connection with the servicing, sale
and distribution of the Fund's shares up to the maximum annual plan rate for
each class.

The maximum annual plan rates, based on the average daily net assets, for each
class, are as follows:

Class A ....................................................... 0.25%
Class B ....................................................... 1.00%
Class C ....................................................... 1.00%

D. SALES CHARGES/UNDERWRITING AGREEMENTS

Distributors has advised the Fund of the following commission transactions
related to the sales and redemptions of the Fund's shares for the period:

Sales charges retained net of commissions paid to
unaffiliated broker/dealers .......................... $ 489,189
Contingent deferred sales charges retained .............. $ 40,882

E. TRANSFER AGENT FEES

For the period ended January 31, 2008, the Fund paid transfer agent fees of
$1,011,960, of which $607,683 was retained by Investor Services.

4. EXPENSE OFFSET ARRANGEMENT

The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the period ended January 31, 2008, the
custodian fees were reduced as noted in the Statement of Operations.

28 | Semiannual Report

Franklin Gold and Precious Metals Fund

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

5. INCOME TAXES

At January 31, 2008, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:

Cost of investments ..................................... $ 893,626,924
=================

Unrealized appreciation ................................. $ 1,039,719,758
Unrealized depreciation ................................. (54,651,310)
-----------------
Net unrealized appreciation (depreciation) .............. $ 985,068,448
=================

Net investment income (loss) differs for financial statement and tax purposes
primarily due to differing treatments of foreign currency transactions and
passive foreign investment company shares.

Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales and foreign currency
transactions.

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments (excluding short term securities) for the
period ended January 31, 2008, aggregated $97,230,812 and $59,317,937,
respectively.

7. 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 and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.

8. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO

The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (Sweep Money Fund), an open-end investment company managed by
Advisers. Management fees paid by the Fund are reduced on assets invested in the
Sweep Money Fund, in an amount not to exceed the management and administrative
fees paid by the Sweep Money Fund.

9. REGULATORY AND LITIGATION MATTERS

As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, including the Securities and Exchange
Commission (SEC), relating to certain practices in the mutual fund industry,
including late trading, market timing and marketing support payments to
securities dealers who sell fund shares ("marketing support"), Franklin
Resources, Inc. and certain of its subsidiaries (collectively, the "Company"),
entered into settlements with certain of those regulators and governmental
entities. Specifically, the Company entered into settlements with the SEC, among
others, concerning market timing and marketing support.

Semiannual Report | 29

Franklin Gold and Precious Metals Fund

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

9. REGULATORY AND LITIGATION MATTERS (CONTINUED)

On June 6, 2007, the SEC posted for public comment the proposed plan of
distribution for the market timing settlement. Once the SEC approves the final
plan of distribution, disbursements of settlement monies will be made promptly
to individuals who were shareholders of the designated funds during the relevant
period, in accordance with the terms and conditions of the settlement and plan.

In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, Company directors,
fund directors, and employees, have been named in private lawsuits (styled as
shareholder class actions, or as derivative actions on behalf of either the
named funds or Franklin Resources, Inc.). The lawsuits relate to the industry
practices referenced above.

The Company and fund management believe that the claims made in each of the
private lawsuits referenced above are without merit and intend to defend against
them vigorously. The Company cannot predict with certainty the eventual outcome
of these lawsuits, nor whether they will have a material negative impact on the
Company. If it is determined that the Company bears responsibility for any
unlawful or inappropriate conduct that caused losses to the Fund, it is
committed to making the Fund or its shareholders whole, as appropriate.

10. NEW ACCOUNTING PRONOUNCEMENTS

The Fund adopted Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
Interpretation of FASB Statement No. 109" (FIN 48), on January 31, 2008. FIN 48
clarifies the accounting for uncertainty in tax positions taken or expected to
be taken in a tax return. FIN 48 provides guidance on the measurement,
recognition, classification and disclosure of tax positions, along with
accounting for the related interest and penalties. The Fund has reviewed the tax
positions for each of the three open tax years as of July 31, 2007 and has
determined that the implementation of FIN 48 did not have a material impact on
the Fund's financial statements.

In September 2006, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 157, "Fair Value Measurement" (SFAS 157), which defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. SFAS 157 is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. The Fund
believes the adoption of SFAS 157 will have no material impact on its financial
statements.

30 | Semiannual Report

Franklin Gold and Precious Metals Fund

TAX DESIGNATION (UNAUDITED)

At July 31, 2007, more than 50% of the Fund's total assets were invested in
securities of foreign issuers. In most instances, foreign taxes were withheld
from income paid to the Fund on these investments. As shown in the table below,
the Fund designates to shareholders the foreign source income and foreign taxes
paid, pursuant to Section 853 of the Code. This designation will allow
shareholders of record on November 30, 2007, to treat their proportionate share
of foreign taxes paid by the Fund as having been paid directly by them. The
shareholder shall consider these amounts as foreign taxes paid in the tax year
in which they receive the Fund distribution.

The following table provides a detailed analysis by country, of foreign tax
paid, foreign source income, and foreign qualified dividends as designated by
the Funds, to Class A, Class B, Class C and Advisor Class shareholders of
record.

Record Date: 11/30/2007

- --------------------------------------------------------------------------------
CLASS A
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------
Australia ................. $ 0.0019 $ 0.0074 $ 0.0074
Canada .................... 0.0084 0.0175 0.0166
Peru ...................... 0.0011 0.0079 0.0073
South Africa .............. 0.0000 0.0890 0.0890
United Kingdom ............ 0.0000 0.0120 0.0120
--------------------------------------------------
TOTAL ..................... $ 0.0114 $ 0.1338 $ 0.1323
==================================================

- --------------------------------------------------------------------------------
CLASS B
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------
Australia ................. $ 0.0000 $ 0.0000 $ 0.0000
Canada .................... 0.0000 0.0000 0.0000
Peru ...................... 0.0000 0.0000 0.0000
South Africa .............. 0.0000 0.0000 0.0000
United Kingdom ............ 0.0000 0.0000 0.0000
--------------------------------------------------
TOTAL ..................... $ 0.0000 $ 0.0000 $ 0.0000
==================================================

- --------------------------------------------------------------------------------
CLASS C
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------
Australia ................. $ 0.0000 $ 0.0000 $ 0.0000
Canada .................... 0.0000 0.0000 0.0000
Peru ...................... 0.0000 0.0000 0.0000
South Africa .............. 0.0000 0.0000 0.0000
United Kingdom ............ 0.0000 0.0000 0.0000
--------------------------------------------------
TOTAL ..................... $ 0.0000 $ 0.0000 $ 0.0000
==================================================

Semiannual Report | 31

Franklin Gold and Precious Metals Fund

TAX DESIGNATION (UNAUDITED) (CONTINUED)

- -----------------------------------------------------------------------------------------------------
ADVISOR CLASS
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------

Australia ....................................... $0.0019 $0.0105 $0.0105
Canada .......................................... 0.0084 0.0249 0.0237
Peru ............................................ 0.0011 0.0113 0.0105
South Africa .................................... 0.0000 0.1264 0.1264
United Kingdom .................................. 0.0000 0.0171 0.0171
-------------------------------------------------
TOTAL ........................................... $0.0114 $0.1902 $0.1882
=================================================

Foreign Tax Paid Per Share (Column 1) is the amount per share available to you,
as a tax credit (assuming you held your shares in the Fund for a minimum of 16
days during the 31-day period beginning 15 days before the ex-dividend date of
the Fund's distribution to which the foreign taxes relate), or, as a tax
deduction.

Foreign Source Income Per Share (Column 2) is the amount per share of income
dividends paid to you that is attributable to foreign securities held by the
Fund, plus any foreign taxes withheld on these dividends. The amounts reported
include foreign source qualified dividends that have not been adjusted for the
rate differential applicable to such dividend income. 1

Foreign Qualified Dividends Per Share (Column 3) is the amount per share of
foreign source qualified dividends the Fund paid to you, plus any foreign taxes
withheld on these dividends. These amounts represent the portion of the Foreign
Source Income reported to you in column 2 that were derived from qualified
foreign securities held by the Fund. 1

In January 2008, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2007. The Foreign Source Income reported on Form 1099-DIV has not
been adjusted for the rate differential on foreign source qualified dividend
income. Shareholders are advised to check with their tax advisors for
information on the treatment of these amounts on their 2007 individual income
tax returns.

1 Qualified dividends are taxed at a maximum rate of 15% (5% for those in the
10% and 15% income tax bracket). In determining the amount of foreign tax credit
that may be applied against the U.S. tax liability of individuals receiving
foreign source qualified dividends, adjustments may be required to the foreign
tax credit limitation calculation to reflect the rate differential applicable to
such dividend income. The rules however permit certain individuals to elect not
to apply the rate differential adjustments for capital gains and/or dividends
for any taxable year. Please consult your tax advisor and the instructions to
Form 1116 for more information.

32 | Semiannual Report

Franklin Gold and Precious Metals Fund

SHAREHOLDER INFORMATION

PROXY VOTING POLICIES AND PROCEDURES

The Fund has established Proxy Voting Policies and Procedures (Policies) that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund'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 1-954/527-7678 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund'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 STATEMENT OF INVESTMENTS

The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q 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
1-800/SEC-0330.

Semiannual Report | 33

GOF P-5 SUPPLEMENT DATED MARCH 1, 2008
TO THE CURRENTLY EFFECTIVE PROSPECTUS
OF EACH OF THE LISTED FUNDS

FRANKLIN CALIFORNIA TAX-FREE INCOME FUND

FRANKLIN CALIFORNIA TAX-FREE TRUST

Franklin California Insured Tax-Free Income Fund
Franklin California Intermediate-Term Tax-Free Income Fund
Franklin California Limited-Term Tax-Free Income Fund
Franklin California Tax-Exempt Money Fund

FRANKLIN CAPITAL GROWTH FUND

FRANKLIN CUSTODIAN FUNDS

Franklin DynaTech Fund
Franklin Growth Fund
Franklin Income Fund
Franklin U.S. Government Securities Fund
Franklin Utilities Fund

FRANKLIN FEDERAL TAX-FREE INCOME FUND

FRANKLIN GLOBAL TRUST

Franklin Global Real Estate Fund

FRANKLIN GOLD AND PRECIOUS METALS FUND

FRANKLIN HIGH INCOME TRUST

Franklin High Income Fund

FRANKLIN INVESTORS SECURITIES TRUST

Franklin Adjustable U.S. Government Securities Fund
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Limited Maturity U.S. Government Securities Fund
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Total Return Fund

FRANKLIN MANAGED TRUST

Franklin Rising Dividends Fund

FRANKLIN MUNICIPAL SECURITIES TRUST

Franklin California High Yield Municipal Fund
Franklin Tennessee Municipal Bond Fund

FRANKLIN MUTUAL SERIES FUND INC.

Mutual Beacon Fund
Mutual Discovery Fund
Mutual European Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund

FRANKLIN NEW YORK TAX-FREE INCOME FUND

FRANKLIN NEW YORK TAX-FREE TRUST

Franklin New York Insured Tax-Free Income Fund
Franklin New York Intermediate-Term Tax-Free Income Fund
Franklin New York Limited-Term Tax-Free Income Fund
Franklin New York Tax-Exempt Money Fund

FRANKLIN REAL ESTATE SECURITIES TRUST

Franklin Real Estate Securities Fund

FRANKLIN STRATEGIC MORTGAGE PORTFOLIO

FRANKLIN STRATEGIC SERIES

Franklin Biotechnology Discovery Fund
Franklin Flex Cap Growth Fund
Franklin Focused Core Equity Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Growth Opportunities Fund
Franklin Natural Resources Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund
Franklin Strategic Income Fund
Franklin Technology Fund

FRANKLIN TAX-FREE TRUST

Franklin Alabama Tax-Free Income Fund
Franklin Arizona Tax-Free Income Fund
Franklin Colorado Tax-Free Income Fund
Franklin Connecticut Tax-Free Income Fund
Franklin Double Tax-Free Income Fund
Franklin Federal Intermediate-Term Tax-Free Income Fund
Franklin Federal Limited-Term Tax-Free Income Fund
Franklin Florida Insured Tax-Free Income Fund
Franklin Florida Tax-Free Income Fund
Franklin Georgia Tax-Free Income Fund
Franklin High Yield Tax-Free Income Fund
Franklin Insured Tax-Free Income Fund
Franklin Kentucky Tax-Free Income Fund
Franklin Louisiana Tax-Free Income Fund
Franklin Maryland Tax-Free Income Fund
Franklin Massachusetts Insured Tax-Free Income Fund
Franklin Michigan Insured Tax-Free Income Fund
Franklin Minnesota Insured Tax-Free Income Fund
Franklin Missouri Tax-Free Income Fund
Franklin New Jersey Tax-Free Income Fund
Franklin North Carolina Tax-Free Income Fund
Franklin Ohio Insured Tax-Free Income Fund
Franklin Oregon Tax-Free Income Fund
Franklin Pennsylvania Tax-Free Income Fund
Franklin Virginia Tax-Free Income Fund

FRANKLIN TEMPLETON FUND ALLOCATOR SERIES

Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Perspectives Allocation Fund

FRANKLIN TEMPLETON GLOBAL TRUST

Franklin Templeton Hard Currency Fund

FRANKLIN TEMPLETON INTERNATIONAL TRUST

Franklin India Growth Fund
Templeton Foreign Smaller Companies Fund
Templeton Global Long-Short Fund

FRANKLIN VALUE INVESTORS TRUST

Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund
Franklin MidCap Value Fund
Franklin Small Cap Value Fund

TEMPLETON CHINA WORLD FUND

TEMPLETON DEVELOPING MARKETS TRUST

TEMPLETON FUNDS

Templeton Foreign Fund
Templeton World Fund

TEMPLETON GLOBAL INVESTMENT TRUST

Templeton BRIC Fund
Templeton Emerging Markets Small Cap Fund
Templeton Income Fund

TEMPLETON GLOBAL OPPORTUNITIES TRUST

TEMPLETON GLOBAL SMALLER COMPANIES FUND

TEMPLETON GROWTH FUND, INC.

TEMPLETON INCOME TRUST

Templeton Global Bond Fund
Templeton International Bond Fund

The prospectus is revised as follows:

1. Effective October 1, 2008, for all funds that are offered with an initial
sales charge, the cumulative quantity discount and letter of intent portion of
the "Sales Charge Reductions and Waivers" section is amended to read:

1. CUMULATIVE QUANTITY DISCOUNT - lets you combine certain existing holdings
of Franklin Templeton fund shares - referred to as "cumulative quantity
discount eligible shares" - with your current purchase of Class A shares to
determine if you qualify for a sales charge breakpoint.

Cumulative quantity discount eligible shares are Franklin Templeton Fund
shares registered to (or held by a financial intermediary for):

o You, individually;

o Your spouse or domestic partner, as recognized by applicable state law,
and your children under the age of 21 (each a "Family Member");

Not part of the semiannual report

o You jointly with one or more Family Members;

o You jointly with another person(s) who is(are) not Family Members if that
other person has not included the value of the shares as cumulative
quantity discount eligible shares for purposes of that person's separate
investments in Franklin Templeton fund shares;

o A trustee/custodian of a Coverdell Education Savings account for which you
or a Family Member is the identified responsible person;

o A trustee/custodian of an IRA (which includes a Roth IRA and an employer
sponsored IRA such as a SIMPLE IRA) or your non-ERISA covered 403(b), if
the shares are registered/recorded under yours or a Family Member's Social
Security number

o A 529 college savings plan over which you or a Family Member has
investment discretion and control;

o Any entity over which you or a Family Member has (have) individual or
shared authority, as principal, has investment discretion and control (for
example, an UGMA/UTMA account for a child on which you or a Family Member
is the custodian, a trust on which you or a Family Member is the trustee,
a business account [not to include retirement plans] for your solely owned
business [or the solely owned business of a Family Member] on which you or
a Family Member is the authorized signer);

o A trust established by you or a Family Member as grantor.

Franklin Templeton fund shares held through an administrator or
trustee/custodian of an Employer Sponsored Retirement plan such as a 401(k)
plan (see definition below) do not qualify for a cumulative quantity
discount.

If you believe there are cumulative quantity discount eligible shares that
can be combined with your current purchase to achieve a sales charge
breakpoint (for example, shares held in a different broker-dealer's brokerage
account or with a bank or an investment advisor), it is your responsibility
to specifically identify those shares to your financial adviser at the time
of your purchase (including at the time of any future purchase). If you have
not designated a financial adviser associated with your Franklin Templeton
Fund shares, it is your responsibility to specifically identify any
cumulative quantity discount eligible shares to the Fund's transfer agent at
the time of any purchase.

If there are cumulative quantity discount eligible shares that would qualify
for combining with your current purchase and you do not tell your financial
adviser or the Franklin Templeton Funds' transfer agent at the time of any
purchase, you may not receive the benefit of a reduced sales charge that
might otherwise be available since your financial adviser and the Fund
generally will not have that information.

The value of cumulative quantity discount eligible shares equals the cost or
current value of those shares, whichever is higher. The current value of
shares is determined by multiplying the number of shares by their highest
current public offering price. It is your responsibility to retain any
records necessary to substantiate historical share costs because neither your
current financial adviser nor the Franklin Templeton Funds may have or
maintain this information.

An "Employer Sponsored Retirement Plan" is a Qualified Retirement Plan, ERISA
covered 403(b) and certain non-qualified deferred compensation arrangements
that operate in a similar manner to a Qualified Retirement Plan, such as 457
plans and executive deferred compensation arrangements, but not including
employer sponsored IRAs. A "Qualified Retirement Plan" is an employer
sponsored pension or profit sharing plan that qualifies under section 401(a)
of the Internal Revenue Code, including 401(k), money purchase pension,
profit sharing and defined benefit plans.

2. LETTER OF INTENT (LOI) - expresses your intent to buy a stated dollar
amount of "cumulative quantity discount eligible shares" (as defined in the
"Cumulative Quantity Discount" section above) over a 13-month period and lets
you receive the same sales charge as if all shares had been purchased at one
time. We will reserve 5% of your total intended purchase in Class A shares
registered in your name until you fulfill your LOI to cover any additional
sales charge that may apply if you do not buy the amount stated in your LOI.
It is your responsibility to tell your financial adviser when you believe you
have fulfilled your LOI with sufficient cumulative quantity discount eligible
shares. If you have not designated a financial adviser associated with your
Franklin Templeton Fund shares, it is your responsibility to tell the Funds'
transfer agent when you believe you have fulfilled your LOI with sufficient
cumulative quantity discount eligible shares. Please refer to the Statement
of Additional Information for more LOI details.

To sign up for these programs, complete the appropriate section of your
account application.

2. Effective October 1, 2008, the second sentence of the section "Investments of
$1 Million or More" is amended as follows:

However, there is a 1% Contingent Deferred Sales Charge ("CDSC") for funds
that have a maximum initial sales charge of 5.75%; for all other funds, the
maximum CDSC will be 0.75%. The CDSC is assessed on any shares you redeem
within 18 months of purchase.

3. The "Qualified Investors - Advisor Class" (and "Qualified Investors - Class
Z" for Mutual Series funds) section is revised to include the following category
of investor:

o Unaffiliated U.S. registered mutual funds, including those that operate as
"fund of funds." Minimum initial investment: $1 million in Advisor Class
or Class Z shares of any Franklin Templeton fund.

PLEASE KEEP THIS SUPPLEMENT FOR FUTURE REFERENCE.

Not part of the semiannual report

This page intentionally left blank.

Literature Request

LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS
SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES
BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE
CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. TO ENSURE THE HIGHEST QUALITY OF
SERVICE, WE MAY MONITOR, RECORD AND ACCESS TELEPHONE CALLS TO OR FROM OUR
SERVICE DEPARTMENTS. THESE CALLS CAN BE IDENTIFIED BY THE PRESENCE OF A REGULAR
BEEPING TONE.

FRANKLIN TEMPLETON FUNDS

INTERNATIONAL

Mutual European Fund
Templeton BRIC Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Emerging Markets Small Cap Fund
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund 1

GLOBAL

Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund 1
Templeton Growth Fund
Templeton World Fund

GROWTH

Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Growth Opportunities Fund 2
Franklin Small Cap Growth Fund II 3
Franklin Small-Mid Cap Growth Fund

VALUE

Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund 1
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 1
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 4
Mutual Shares Fund

BLEND

Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Focused Core Equity Fund
Franklin Growth Fund
Franklin Rising Dividends Fund

SECTOR

Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Global Real Estate Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Technology Fund
Franklin Utilities Fund
Mutual Financial Services Fund

ASSET ALLOCATION

Franklin Templeton Corefolio(R) Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund

INCOME

Franklin Adjustable U.S. Government
Securities Fund 5
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund
Franklin Income Fund
Franklin Limited Maturity
U.S. Government Securities Fund 5
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 5
Templeton Global Bond Fund
Templeton Income Fund
Templeton International Bond Fund

TAX-FREE INCOME 6

NATIONAL FUNDS

Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 7

LIMITED-TERM FUNDS

California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund

INTERMEDIATE-TERM FUNDS

California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund

STATE-SPECIFIC

Alabama
Arizona
California 8
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 7
Michigan 7
Minnesota 7
Missouri
New Jersey
New York 8
North Carolina
Ohio 7
Oregon
Pennsylvania
Tennessee
Virginia

INSURANCE FUNDS

Franklin Templeton Variable Insurance Products Trust 9

1. The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.

2. Effective 11/1/07, Franklin Aggressive Growth Fund changed its name to
Franklin Growth Opportunities Fund. The fund's investment goal and strategy
remained the same.

3. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.

4. The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.

5. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.

6. For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.

7. The fund invests primarily in insured municipal securities.

8. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).

9. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.

12/07 Not part of the semiannual report

[LOGO](R)
FRANKLIN TEMPLETON One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906

o WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?

Eligible shareholders can sign up for eDelivery at
franklintempleton.com. See inside for details.

SEMIANNUAL REPORT AND SHAREHOLDER LETTER

FRANKLIN GOLD AND
PRECIOUS METALS FUND

INVESTMENT MANAGER

Franklin Advisers, Inc.

DISTRIBUTOR

Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com

SHAREHOLDER SERVICES

1-800/632-2301

Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. The prospectus contains this and other
information; please read it carefully before investing.

To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.

132 S2008 03/08

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.

(d) N/A

(f) Pursuant to Item 12(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 expert is John B. Wilson and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A

ITEM 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 ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 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 significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.

ITEM 12. EXHIBITS.

(a)(1) Code of Ethics

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Galen G. Vetter, Chief Executive Officer - Finance and Administration, and
Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura
F. Fergerson, Chief Financial Officer and Chief Accounting Officer

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 GOLD AND PERCIOUS METALS FUND

By /S/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Executive Officer - Finance and Administration
Date March 27, 2008

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/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Executive Officer - Finance and Administration
Date March 27, 2008

By /S/LAURA F. FERGERSON
---------------------
Laura F. Fergerson
Chief Financial Officer and Chief Accounting Officer
Date March 27, 2008