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Franklin Templeton Investments Funds NOTES TO FINANCIAL STATEMENTS For the periods ended December 31, 2012 and 2011 (Continued) 17. Subsequent Events Fund Closures Subject to regulatory and unitholder approvals, Franklin Templeton U.S. Money Market Fund and Franklin Templeton Global Blend Fund will be terminated on or about April 16, 2013. The Funds and series ceased offering units for purchase on February 14, 2013. 18. Regulatory Developments International Financial Reporting Standards (IFRS) The Canadian Accounting Standards Board (“AcSB”) confirmed that effective January 1, 2011, IFRS replaced current Canadian standards and interpretations as Canadian GAAP for publicly accountable enterprises, which includes investment funds. The adoption of IFRS for investment companies will not be mandatory until periods beginning on or after January 1, 2014.The deferral of the mandatory changeover was intended to allow the International Accounting Standard Board’s (“IASB”) proposed exemption from consolidation for investment companies to be in place prior to the adoption of IFRS by investment companies in Canada. In October 2012, the IASB approved the proposed amendments to IFRS 10, “Consolidated Financial Statements”, which define criteria for an entity to qualify as an investment entity and exempts such entity from consolidation requirements. The amendments define an investment entity and introduce an exception to consolidating particular subsidiaries for investment entities. These amendments require an investment entity to measure those subsidiaries at fair value through profit or loss in accordance with IFRS 9, “Financial Instruments” and expand disclosures to help users evaluate the nature and financial effect of its investment activities. The amendment will be effective January 1, 2014. Based on the Manager’s assessment, each of the Funds currently meet the proposed criteria for an investment entity and as such will be exempt from consolidation requirements. The Manager has developed a plan to meet the timetable published by the CICA for the changeover to IFRS. The key elements of the plan include an assessment of differences between Canadian GAAP and IFRS, changes required to financial statement disclosure and impact on the current process for financial reporting purposes. Based on the Manager’s assessment of the accounting differences between Canadian GAAP and IFRS, the following areas of differences were identified: (a) IAS 32, “Financial Instruments: Presentation”, requires puttable instruments to be classified as a liability unless certain conditions are met. The Funds’ unitholders’ equity meets the definition of a puttable instrument. The Manager has assessed each of the Funds’ unitholder structure and has determined the liability treatment is the most appropriate classification. (b) IFRS 13, “Fair Value Measurements”, was published in May 2011. The standard provides guidance on the measurement of fair value and allows for the use of closing market prices to value investments. Under Canadian GAAP the fair value of investments for financial statement reporting purposes, was required to be measured at closing bid price for long positions and closing ask price for short positions. The Manager has assessed the guidance that will apply under IFRS and has determined that the use of closing market prices is appropriate in valuing investments. A Statement of Cash Flow will be required for IFRS reporting purposes. The Manager has presently determined that the impact of IFRS will also include additional note disclosure and modifications to existing presentation. The Manager does not expect that the trading net asset value or trading net asset value per unit will be impacted by the changeover to IFRS. Franklin Templeton Investments Funds 253
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying financial statements have been prepared and approved by Franklin Templeton Investments Corp., the manager and trustee (the “Manager”) of the Franklin Templeton Investments family of funds (collectively the “Funds”). The Funds’ Manager is responsible for the information and representations contained in these financial statements and the other sections of the Annual Report. The Manager maintains appropriate processes to ensure that relevant and reliable financial information is produced. The financial statements have been prepared in accordance with accounting principles generally accepted in Canada and include certain amounts that are based on estimates and judgments. The significant accounting policies which management believes are appropriate for the Funds are described in Note 2 to the financial statements. PricewaterhouseCoopers LLP are the external auditors of the Funds, appointed by the unitholders. They have audited the financial statements in accordance with Canadian generally accepted auditing standards to enable them to express to the unitholders their opinion on the financial statements. Their report is set out on the following page. D.F. REED Chief Executive Officer, Franklin Templeton Investments Corp. D.A. BUCHANAN Fund Treasurer Franklin Templeton Investments Corp. 254 Franklin Templeton Investments Funds
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FOR THE YEAR ENDED DECEMBER 31, 201
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STATEMENTS OF NET ASSETS As at Dece
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STATEMENT OF INVESTMENTS As at Dece
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Templeton Canadian Balanced Fund ST
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Templeton Global Balanced Fund (for
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Templeton Global Bond Fund STATEMEN
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Franklin High Income Fund STATEMENT
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Franklin Strategic Income Fund STAT
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Franklin U.S. Core Equity Fund STAT
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Franklin U.S. Rising Dividends Fund
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Franklin U.S. Rising Dividends Fund
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Bissett All Canadian Focus Fund STA
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Bissett Bond Fund STATEMENT OF INVE
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Bissett Bond Fund STATEMENT OF INVE
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Bissett Canadian Balanced Fund STAT
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Bissett Canadian Equity Fund STATEM
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Bissett Canadian Short Term Bond Fu
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Bissett Corporate Bond Fund STATEME
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Bissett Dividend Income Fund STATEM
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Bissett Dividend Income Fund STATEM
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Bissett Focus Balanced Fund STATEME
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Bissett Microcap Fund STATEMENTS OF
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Bissett Strategic Income Fund STATE
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Mutual Beacon Fund STATEMENT OF INV
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Mutual Beacon Fund STATEMENT OF INV
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Mutual Beacon Fund STATEMENTS OF CH
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Mutual Global Discovery Fund (forme
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Franklin Templeton Canadian Core Eq
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Franklin Templeton Canadian Core Eq
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Franklin Templeton Global Blend Fun
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Franklin Templeton Money Market Fun
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Franklin Templeton Money Market Fun
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Franklin Templeton Treasury Bill Fu
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Page 205 and 206: STATEMENTS OF NET ASSETS As at Dece
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Page 253: Franklin Templeton Investments Fund
Page 257 and 258: INDEPENDENT AUDITOR’S REPORT (Con
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