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 811-06243
---------

FRANKLIN STRATEGIC SERIES
----------------------------
(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: 4/30
----

Date of reporting period: 10/31/08
---------

ITEM 1. REPORTS TO STOCKHOLDERS.

(GRAPHIC)

OCTOBER 31, 2008

Franklin Flex Cap Growth Fund

Franklin Focused Core Equity Fund

Franklin Growth Opportunities Fund

Franklin Small Cap Growth Fund
(formerly, Franklin Small Cap Growth Fund II)

Franklin Small-Mid Cap Growth Fund

SEMIANNUAL REPORT AND SHAREHOLDER LETTER

FRANKLIN STRATEGIC SERIES

WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?

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

(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)

FRANKLIN - Templeton - 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)

Not part of the semiannual report

CONTENTS

CEO'S MESSAGE ............................................................ 1
SEMIANNUAL REPORT
Economic and Market Overview ............................................. 4
Franklin Flex Cap Growth Fund ............................................ 6
Franklin Focused Core Equity Fund ........................................ 14
Franklin Growth Opportunities Fund ....................................... 22
Franklin Small Cap Growth Fund ........................................... 30
Franklin Small-Mid Cap Growth Fund ....................................... 38
Financial Highlights and Statements of Investments ....................... 46
Financial Statements ..................................................... 85
Notes to Financial Statements ............................................ 94
Shareholder Information .................................................. 111

A Message from Gregory E. Johnson,
President and Chief Executive Officer of Franklin Resources, Inc.

October 31, 2008

Dear Shareholder:

The enclosed semiannual report for Franklin Strategic Series covers the six
months ended October 31, 2008, and I would like to add some comments on market
events during this time. Recent market volatility has been jarring to everyone,
including those of us who have worked in financial markets for many years. Bank
lending around the world seized up, and the fallout impacted venerable firms
alongside broader stock and bond indexes.

This environment is bound to provoke great concern, but it's equally important
to put the latest market developments in perspective. That's why I'd like to
offer a few thoughts on these events, our company's approach to investing and
the strong health of our organization.

A key point to recognize is that global financial turmoil is being addressed by
global action. Central banks around the world have coordinated their efforts to
cut interest rates and supply liquidity to frozen funding markets. A number of
governments have also intervened to rescue major financial institutions or find
an orderly way for them to be acquired. Here in the U.S., the Federal

Shareholders who are registered at franklintempleton.com can receive this report
via email by selecting eDelivery options under "My Profile." Not all accounts
are eligible for eDelivery.

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

Not part of the semiannual report | 1

Reserve and Treasury Department have moved rapidly to establish new programs for
easing money market pressures and handling troubled financial assets. The
outcome of all these efforts may take a while to be realized, but I believe the
latest actions here and abroad mark a significant turning point for global
capital markets.

It's also important to remember that as daunting as current market conditions
may be, we have navigated through other periods of market volatility. U.S. stock
markets recorded three bear markets during the 1960s as the nation grappled with
the Vietnam War and a turbulent economy. (1) The quintupling of oil prices in
1973 led to a deep U.S. recession and a stock market plunge of 45.1% from
January 1973 through December 1974.(1) And the "Black Monday" stock market crash
of 1987 remains the largest single-day percentage decline in the history of the
Dow Jones Industrial Average.(2)

Advice applicable throughout these upheavals remains true today. The late Sir
John Templeton, writing 15 years ago, ended a list of his core investment
principles with these thoughts: "Do not be fearful or negative too often....
For 100 years optimists have carried the day in U.S. stocks. Even in the dark
'70s, many professional money managers -- and many individual investors too --
made money in stocks....In this century or the next it's still `Buy low, sell
high.'"(3)

Sir John knew these simple concepts were difficult to execute in the face of
pessimism. Nonetheless, that is precisely how our Franklin, Templeton and Mutual
Series portfolio managers are contending with today's challenging environment.
They are using their expertise to sort through investment opportunities,
avoiding those firms that have become merely cheap and identifying those firms
best positioned to be eventual winners. This kind of rigorous, bottom-up,
security-by-security analysis is the fundamental investment discipline practiced
across our global platform.

These asset management strengths are also the core of our business. Unlike
financial firms that have dominated recent headlines, Franklin Templeton derives
its revenue primarily from investment management, not investment banking or
securities brokerage. Additionally, our assets under management are diversified
by investment objective, clientele and geographic region. Diversified
positioning helps our firm maintain healthy operating margins even when volatile
markets reduce assets under management. It is also important

(1.) Source: Ned Davis Research, Inc.

(2.) Source: NYSE Euronext. 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.

(3.) Source: "16 Rules for Investment Success" by Sir John Templeton.

2 | Not part of the semiannual report

to note that maintaining a strong balance sheet has been a pillar of our
management strategy. We have a substantial pool of cash and investments and low
levels of debt, and we are in the enviable position of not having to depend on
credit to meet our operating needs. In fact, our strong franchise, sound
capitalization and minimal leverage recently led Standard & Poor's to raise its
credit ratings on Franklin Resources, Inc. (BEN) to the highest level currently
applied to a publicly traded asset manager.(4)

Franklin Templeton's six-decade growth into a premier global asset manager has
given us the conviction that although conditions remain challenging, there are
ample reasons to be optimistic about eventual market stabilization and recovery.
Being able to take advantage of markets shaken by maximum pessimism has helped
our firm develop into an organization that stretches across 29 countries and
manages assets for more than 20 million shareholder accounts.

In the enclosed semiannual report for Franklin Strategic Series, the portfolio
managers discuss market conditions, investment decisions and Fund performance
during the six months ended October 31, 2008. The report contains additional
performance data and financial information. Our website, franklintempleton.com,
offers more timely discussions, daily prices, portfolio holdings and other
information. We encourage you to discuss your concerns with your financial
advisor, who can review your overall portfolio, reassess your goals and help you
stay focused on the long term. As times like these illustrate, all securities
markets fluctuate, as do fund share prices.

We are grateful for the trust you have placed in Franklin Templeton and remain
focused on serving your investment needs.

Sincerely,

/s/ Gregory E. Johnson

Gregory E. Johnson
President and Chief Executive Officer
Franklin Resources, Inc.

THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF OCTOBER 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.

(4.) Source: Standard & Poor's press release, 10/6/08.

Not part of the semiannual report | 3

Semiannual Report

Economic and Market Overview

For the six months ended October 31, 2008, the decelerating U.S. economy
contended with a staggering financial markets crisis amid a wave of government
interventions and emergency funding. In addition, high oil prices, the worst
housing market contraction in decades, a severe credit crunch and rising
joblessness weighed on the economy. Economic growth, as measured by gross
domestic product (GDP), rebounded from a 0.9% first quarter 2008 annualized rate
to a 2.8% annualized pace in the second quarter, based largely on strong exports
and government spending. However, GDP fell an annualized estimated 0.5% in
2008's third quarter as the subprime financial crisis deepened and spread into
all aspects of the economy. The U.S. dollar appreciated against most foreign
currencies during the period, breaking a six-year downward trend as commodity
prices fell, inflationary concerns abated and global economic growth began to
subside. Supports to the economy included an inventory buildup, expanding
government spending and a boost to household finances from a fiscal stimulus
package. Although tax rebate checks lifted spending temporarily, retail sales
remained weak and new vehicle sales hit a 15-year low.

The U.S. labor market contracted and the unemployment rate grew from 5.0% at the
beginning of the period to 6.5% in October, the highest level since June
2003.(1) In September, mass layoff (50 or more for a single employer) initial
claims reached their highest level since September 2005 when high layoff
activity resulted from Hurricane Katrina.(1) Volatile oil prices soared to an
all-time trading high of $145 per barrel in July 2008, and dropped dramatically
by period-end, settling at $68. In October, amid concerns of reduced demand due
to a slowing global economy, oil prices plummeted 33%, bringing the drop since
the peak in mid-July to 53%. Many other commodity prices -- including those for
coal, natural gas, precious metals, raw materials and agricultural commodities
- -- also neared or surpassed all-time highs due to increased worldwide demand and
investors seeking alternatives to shaky stocks and corporate bonds. These prices
fell through much of the third quarter as global demand subsided. For the 12
months ended October 31, 2008, inflation as measured by the core Consumer Price
Index (CPI), which excludes food and energy costs, rose 2.2%; this matched its
10-year average rate.(1)

(1.) Source: Bureau of Labor Statistics.

4 | Semiannual Report

Seeking to stimulate the sagging economy without stoking inflation, the Federal
Reserve Board made two cuts to its key federal funds target rate during the
period, lowering it from 2.00% to a four-year low of 1.00%. In this uncertain
environment, short-term U.S. Treasury prices generally increased (and yields
declined) as many investors sought safer alternatives to stocks and corporate
bonds. The 10-year Treasury note, however, received less investor attention, and
its yield increased from 3.77% at the beginning of the period to 4.01% on
October 31, 2008.

U.S. stock markets endured high volatility and suffered losses during this
challenging period. For the six months under review, the blue chip stocks of the
Dow Jones Industrial Average had a total return of -26.23%, the broader Standard
& Poor's 500 Index (S&P 500) a -29.28% total return, and the technology-heavy
NASDAQ Composite Index a -28.40% total return.(2) All sectors lost value, and
the materials, financials and energy sectors had the largest declines.

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS AND OPINIONS AS OF OCTOBER 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.) Source: (C) 2008 Morningstar. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use of
this information. Past performance is no guarantee of future results. 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. 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 is one of the most
widely used benchmarks of U.S. equity performance. 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.

Semiannual Report | 5

Franklin Flex Cap Growth Fund

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Flex Cap Growth Fund seeks
capital appreciation. The Fund invests predominantly in equity securities of
companies that the manager believes have the potential for capital appreciation.
The Fund has flexibility to invest in companies located, headquartered or
operating inside and outside the U.S., across the entire market capitalization
spectrum from small, emerging growth companies to well-established, large cap
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 (800) 342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.

This semiannual report for Franklin Flex Cap Growth Fund covers the period ended
October 31, 2008.

PERFORMANCE OVERVIEW

For the six months under review, Franklin Flex Cap Growth Fund - Class A had a
- -27.31% cumulative total return. The Fund performed better than its narrow
benchmark, the Russell 3000(R) Growth Index, which had a -30.29% total return,
and its broad benchmark, the Standard & Poor's 500 Index (S&P 500), which had a
- -29.28% return for the same period.(1) The Fund also performed better than the
- -32.95% total return of its peers in the Lipper Multi-Cap Growth Funds
Classification Average.(2) You can find the Fund's long-term performance data in
the Performance Summary beginning on page 9.

(1.) Source: (C) 2008 Morningstar. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use of
this information. The Russell 3000 Growth Index is market capitalization
weighted and measures performance of those Russell 3000 Index companies
with higher price-to-book ratios and higher forecasted growth values. 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 is one of the most widely
used benchmarks of U.S. equity performance. The indexes are unmanaged and
include reinvested dividends. One cannot invest directly in an index, nor
is an index representative of the Fund's portfolio.

(2.) Source: Lipper Inc. The Lipper Multi-Cap Growth Funds Classification
Average is calculated by averaging the total returns of all funds within
the Lipper Multi-Cap Growth Funds classification in the Lipper Open-End
underlying funds universe for the period indicated. Lipper Multi-Cap Growth
Funds are defined as funds that normally invest in companies, of any size,
with long-term earnings expected to grow significantly faster than the
earnings of the stocks represented in the major unmanaged stock indexes.
For the six-month period ended 10/31/08, there were 536 funds in this
category. Lipper calculations do not include sales charges or subsidization
by a fund's manager. The Fund's performance relative to the average may
have differed if these or other factors had been considered. The average
includes reinvestment of any income or distributions. One cannot invest
directly in the average, nor is the average 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 51.

6 | Semiannual Report

INVESTMENT STRATEGY

We are research-driven, fundamental investors pursuing a growth strategy. As
"bottom-up" investors we focus primarily on finding individual securities that
meet our criteria for growth potential, quality and valuation. We search for
high-quality companies that have identifiable drivers of future earnings growth.
We rely on our team of analysts to help provide in-depth industry expertise and
use both qualitative and quantitative analysis to evaluate companies. Our
analysts identify each company's market opportunity, competitive position,
management and financial strength, business and financial risks, and valuation.
We choose to invest in those companies that, in our opinion, offer the best
trade-off between growth opportunity, business and financial risk, and
valuation.

MANAGER'S DISCUSSION

During the six months under review, among the holdings that detracted most from
Fund performance relative to the Russell 3000 Growth Index were Research In
Motion (RIM),(3) a Canadian wireless equipment and services company that
produces the popular BlackBerry smart phone; Smith International, a U.S.-based
provider of drilling equipment and services to the oil and gas industries; and
Covance, a drug research, development and testing laboratory.

From a sector perspective, our underweighted allocation to the consumer staples
sector was a major detractor from the Fund's relative performance because this
sector held up relatively well as the economy decelerated throughout the
reporting period.(4) Within consumer staples, stock selection and underweighting
in the food and staples retailing industry were primary detractors. In the
information technology sector, our stock selection hurt relative returns,
particularly holdings such as graphics card manufacturer NVIDIA (sold by
period-end), payment system operator MasterCard, and customer relationship
management software provider Salesforce.com.(5) The Fund's overweighting in the
telecommunication services sector also hurt relative performance, where wireless
telecommunication industry holdings NII Holdings and America Movil(3) (sold by
period-end) were significant detractors.

During a period marred by financial crises and a broad-based sell-off for stocks
globally, the Fund's small cash position helped performance relative to the
index. Top contributors by individual security included specialized imaging

(3.) This holding is not an index component.

(4.) The consumer staples sector comprises household and personal products; food
and staples retailing; and food, beverage and tobacco in the SOI.

(5.) The information technology sector comprises technology hardware and
equipment, semiconductors and semiconductor equipment, and software and
services in the SOI.

PORTFOLIO BREAKDOWN
Franklin Flex Cap Growth Fund
Based on Total Net Assets as of 10/31/08

(BAR CHART)

Software & Services* 17.9%
Technology Hardware & Equipment* 14.3%
Pharmaceuticals, Biotechnology & Life Sciences 12.9%
Health Care Equipment & Services 7.9%
Capital Goods 5.7%
Energy 5.2%
Transportation 4.6%
Telecommunication Services 3.5%
Semiconductors & Semiconductor Equipment* 3.5%
Materials 3.4%
Household & Personal Products 3.3%
Food, Beverage & Tobacco 2.5%
Diversified Financials 2.4%
Retailing 2.3%
Other 7.7%
Short-Term Investments & Other Net Assets 2.9%

* Significant exposure to a single sector may result in greater volatility
for the Fund than a more broadly diversified portfolio. There are specific
risks to investing in technology company stocks, which can be subject to
abrupt or erratic price movements and have been volatile, especially over
the short term.

Semiannual Report | 7

TOP 10 HOLDINGS
Franklin Flex Cap Growth Fund
10/31/08

COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
- --------------- ----------

Gilead Sciences Inc. 3.0%
PHARMACEUTICALS, BIOTECHNOLOGY
& LIFE SCIENCES
FLIR Systems Inc. 2.9%
TECHNOLOGY HARDWARE & EQUIPMENT
QUALCOMM Inc. 2.7%
TECHNOLOGY HARDWARE & EQUIPMENT
Cisco Systems Inc. 2.5%
TECHNOLOGY HARDWARE & EQUIPMENT
Apple Inc. 2.4%
TECHNOLOGY HARDWARE & EQUIPMENT
American Tower Corp., A 2.3%
TELECOMMUNICATION SERVICES
Genentech Inc. 2.2%
PHARMACEUTICALS, BIOTECHNOLOGY
& LIFE SCIENCES
Praxair Inc. 2.2%
MATERIALS
Celgene Corp. 2.0%
PHARMACEUTICALS, BIOTECHNOLOGY
& LIFE SCIENCES
Activision Blizzard Inc. 2.0%
SOFTWARE & SERVICES

systems manufacturer FLIR Systems and biotechnology companies Genentech, Celgene
and Gilead Sciences.(3)

From a sector perspective, industrials was a major positive contributor to
performance relative to the benchmark index, due to our underweighted allocation
and stock selection.(6) Most notably, our significantly underweighted position
and stock selection in capital goods companies aided the Fund's relative
results, as did stock selection among commercial services and supplies
companies, where Stericycle was a notable contributor. Additionally,
underweightings and stock selection in the energy and materials sectors also
contributed to relative returns. Our decision to avoid metals and mining and to
invest only sparingly in oil, gas and consumable fuels -- two commodity-driven
industries -- was beneficial to relative results as these areas were hard hit by
the precipitous decline in commodity prices during the latter half of the
reporting period.

Thank you for your continued participation in Franklin Flex Cap Growth Fund. We
look forward to serving your future investment needs.

(PHOTO OF CONRAD B. HERRMANN)

/s/ Conrad B. Herrmann

Conrad B. Herrmann, CFA
Portfolio Manager
Franklin Flex Cap Growth Fund

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF OCTOBER 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.) The industrials sector comprises capital goods, commercial and professional
services, and transportation in the SOI.

8 | Semiannual Report

Performance Summary as of 10/31/08

FRANKLIN FLEX CAP GROWTH FUND

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 INFORMATION

CLASS A (SYMBOL: FKCGX) CHANGE 10/31/08 4/30/08
- ----------------------- ------- -------- -------

Net Asset Value (NAV) -$12.50 $33.27 $45.77

CLASS B (SYMBOL: FKCBX) CHANGE 10/31/08 4/30/08
- ----------------------- ------- -------- -------

Net Asset Value (NAV) -$11.76 $30.90 $42.66

CLASS C (SYMBOL: FCIIX) CHANGE 10/31/08 4/30/08
- ----------------------- ------- -------- -------

Net Asset Value (NAV) -$11.79 $30.97 $42.76

CLASS R (SYMBOL: FRCGX) CHANGE 10/31/08 4/30/08
- ----------------------- ------- -------- -------

Net Asset Value (NAV) -$12.35 $32.75 $45.10

ADVISOR CLASS (SYMBOL: FKCAX) CHANGE 10/31/08 4/30/08
- ----------------------------- ------- -------- -------

Net Asset Value (NAV) -$12.55 $33.60 $46.15

Semiannual Report | 9

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; CLASS R/ADVISOR CLASS: NO SALES CHARGES.

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

Cumulative Total Return(1) -27.31% -34.96% +6.29% +71.52%
Average Annual Total Return(2) -31.49% -38.70% +0.04% +4.92%
Value of $10,000 Investment(3) $ 6,851 $ 6,130 $10,018 $16,165
Avg. Ann. Total Return (9/30/08)(4) -24.69% +5.40% +7.38%
Total Annual Operating Expenses(5) 0.96%

INCEPTION
CLASS B 6-MONTH 1-YEAR 5-YEAR (1/1/99)
- ------- ------- ------- ------- ---------

Cumulative Total Return(1) -27.57% -35.44% +2.40% +39.70%
Average Annual Total Return(2) -30.46% -37.98% +0.08% +3.46%
Value of $10,000 Investment(3) $ 6,954 $ 6,202 $10,040 $13,970
Avg. Ann. Total Return (9/30/08)(4) -23.81% +5.55% +5.40%
Total Annual Operating Expenses(5) 1.71%

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

Cumulative Total Return(1) -27.57% -35.44% +2.43% +59.16%
Average Annual Total Return(2) -28.30% -36.08% +0.48% +4.76%
Value of $10,000 Investment(3) $ 7,170 $ 6,392 $10,243 $15,916
Avg. Ann. Total Return (9/30/08)(4) -21.47% +5.87% +7.22%
Total Annual Operating Expenses(5) 1.71%

INCEPTION
CLASS R 6-MONTH 1-YEAR 5-YEAR (1/1/02)
- ------- ------- ------- ------- ---------

Cumulative Total Return(1) -27.38% -35.12% +5.01% +4.55%
Average Annual Total Return(2) -27.38% -35.12% +0.98% +0.65%
Value of $10,000 Investment(3) $ 7,262 $ 6,488 $10,501 $10,455
Avg. Ann. Total Return (9/30/08)(4) -20.28% +6.39% +3.36%
Total Annual Operating Expenses(5) 1.21%

ADVISOR CLASS(6) 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ---------------- ------- ------- ------- ---------

Cumulative Total Return(1) -27.19% -34.78% +7.42% +73.34%
Average Annual Total Return(2) -27.19% -34.78% +1.44% +5.66%
Value of $10,000 Investment(3) $ 7,281 $ 6,522 $10,742 $17,334
Avg. Ann. Total Return (9/30/08)(4) -19.88% +6.88% +8.13%
Total Annual Operating Expenses(5) 0.71%

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 (800) 342-5236.

10 | Semiannual Report

Performance Summary (CONTINUED)

ENDNOTES

SMALL- AND MIDSIZED-COMPANY STOCKS CAN BE VOLATILE, ESPECIALLY OVER THE SHORT
TERM. SMALLER, MIDSIZED AND RELATIVELY NEW OR UNSEASONED COMPANIES CAN BE
PARTICULARLY SENSITIVE TO CHANGING ECONOMIC CONDITIONS, AND THEIR PROSPECTS FOR
GROWTH ARE LESS CERTAIN THAN THOSE OF LARGER, MORE ESTABLISHED COMPANIES. THE
FUND ALSO INVESTS IN TECHNOLOGY STOCKS, WHICH CAN BE HIGHLY VOLATILE. THE FUND'S
PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN INVESTMENT RISKS.

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.

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

(6.) Effective 8/2/04, the Fund began offering Advisor Class shares, which do
not have sales charges or a Rule 12b-1 plan. Performance quotations for
this class reflect the following methods of calculation: (a) For periods
prior to 8/2/04, a restated figure is used based upon the Fund's Class A
performance, excluding the effect of Class A's maximum initial sales
charge, but reflecting the effect of the Class A Rule 12b-1 fees; and (b)
for periods after 8/1/04, actual Advisor Class performance is used
reflecting all charges and fees applicable to that class. Since 8/2/04
(commencement of sales), the cumulative and average annual total returns of
Advisor Class shares were +2.56% and +0.60%.

Semiannual Report | 11

Your Fund's Expenses

FRANKLIN FLEX CAP GROWTH FUND

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

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

- - 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.

12 | 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
VALUE 5/1/08 VALUE 10/31/08 PERIOD* 5/1/08-10/31/08
----------------- -------------- -----------------------

CLASS A
Actual $1,000 $ 726.90 $4.14
Hypothetical (5% return before expenses) $1,000 $1,020.42 $4.84
CLASS B
Actual $1,000 $ 724.30 $7.39
Hypothetical (5% return before expenses) $1,000 $1,016.64 $8.64
CLASS C
Actual $1,000 $ 724.30 $7.39
Hypothetical (5% return before expenses) $1,000 $1,016.64 $8.64
CLASS R
Actual $1,000 $ 726.20 $5.22
Hypothetical (5% return before expenses) $1,000 $1,019.16 $6.11
ADVISOR CLASS
Actual $1,000 $ 728.10 $3.05
Hypothetical (5% return before expenses) $1,000 $1,021.68 $3.07

* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 0.95%; B: 1.70%; C: 1.70%; R: 1.20%; and
Advisor: 0.70%), multiplied by the average account value over the period,
multiplied by 184/365 to reflect the one-half year period.

Semiannual Report | 13

Franklin Focused Core Equity Fund

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Focused Core Equity Fund seeks
capital appreciation by investing at least 80% of its net assets in equity
securities. The Fund will invest primarily in equity securities of large
capitalization companies, which are similar in size to those in the Standard &
Poor's 500 Index (S&P 500).(1)

This semiannual report for Franklin Focused Core Equity Fund covers the period
ended October 31, 2008.

PERFORMANCE OVERVIEW

For the six months under review, Franklin Focused Core Equity Fund - Class A had
a -31.80% cumulative total return. The Fund underperformed its benchmark, the
S&P 500, which had a -29.28% total return for the same period.(2) You can find
more of the Fund's performance data in the Performance Summary beginning on page
17.

INVESTMENT STRATEGY

We are research-driven, fundamental investors pursuing a growth strategy. As
"bottom-up" investors focusing primarily on individual securities, we seek to
invest in financially strong companies with favorable growth potential and
sustainable competitive advantages and that present, in our opinion, the most
compelling trade-off between growth potential, valuation and risk. We rely on

(1.) 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 is one of the most widely
used benchmarks of U.S. equity performance.

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 58.

14 | Semiannual Report

a team of analysts to help provide in-depth industry expertise and use both
qualitative and quantitative analysis to evaluate companies. We will generally
seek to maintain a portfolio of securities representing approximately 30-40
companies, and we will apply a long-term perspective through market and business
cycles.

MANAGER'S DISCUSSION

For the six months under review, significant detractors from the Fund's absolute
performance included Petroplus Holdings, which specializes in oil refining,
storage and marketing; Celanese, a chemicals company; and Legg Mason, an asset
management company.

In a difficult environment for equities, all sectors declined in value.
Financials, energy and information technology holdings particularly weighed on
Fund performance during the period. In the financials sector, real estate
investment trust iStar Financial and American Express were significant
detractors. American Express, well known for its charge and credit cards, is one
of the world's largest travel agencies. Oil and gas company Marathon Oil in the
energy sector and computer-aided design (CAD) software provider Autodesk in the
information technology sector also underperformed.

On a more positive note, certain individual holdings had positive results for
the period. The Sherwin-Williams Company, the largest paint manufacturer in the
U.S., and Apple, a computer hardware, software and electronics device maker,
helped absolute performance. Health care holdings Genentech, a biotechnology
company, and Wyeth, a pharmaceuticals manufacturer, also appreciated in value.
We sold the Fund's position in Wyeth by period-end.

PORTFOLIO BREAKDOWN

Franklin Focused Core Equity Fund
Based on Total Net Assets as of 10/31/08

(BAR CHART)

Health Care 20.6%
Information Technology 16.0%
Consumer Discretionary 12.1%
Energy 11.4%
Consumer Staples 11.1%
Industrials 10.1%
Financials 7.2%
Materials 5.3%
Telecommunication Services 3.6%
Short-Term Investments & Other Net Assets 2.6%

Semiannual Report | 15

TOP 10 EQUITY HOLDINGS

Franklin Focused Core Equity Fund
10/31/08

COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
- --------------- ----------

Schering-Plough Corp. 5.1%
HEALTH CARE
Marathon Oil Corp. 4.9%
ENERGY
Petroplus Holdings AG (Switzerland) 4.8%
ENERGY
Celanese Corp., A 4.8%
MATERIALS
Roche Holding AG (Switzerland) 4.6%
HEALTH CARE
Bunge Ltd. 4.4%
CONSUMER STAPLES
Merck & Co. Inc. 3.8%
HEALTH CARE
NII Holdings Inc. 3.6%
TELECOMMUNICATION SERVICES
Maxim Integrated Products Inc. 3.5%
INFORMATION TECHNOLOGY
Genentech Inc. 3.5%
HEALTH CARE

Thank you for your participation in Franklin Focused Core Equity Fund. We look
forward to serving your future investment needs.

(PHOTO OF STEVEN KORNFELD)

/s/ Steven Kornfeld

Steven Kornfeld, CFA

(PHOTO OF EDWARD PERKS)

/s/ Edward Perks

Edward Perks, CFA
Portfolio Management Team
Franklin Focused Core Equity Fund

16 | Semiannual Report

Performance Summary as of 10/31/08

FRANKLIN FOCUSED CORE EQUITY FUND

PRICE INFORMATION

CLASS A (SYMBOL: N/A) CHANGE 10/31/08 4/30/08
- --------------------- ------ -------- -------

Net Asset Value (NAV) -$2.77 $5.92 $8.69

CLASS C (SYMBOL: N/A) CHANGE 10/31/08 4/30/08
- --------------------- ------ -------- -------

Net Asset Value (NAV) -$2.78 $5.89 $8.67

CLASS R (SYMBOL: N/A) CHANGE 10/31/08 4/30/08
- --------------------- ------ -------- -------

Net Asset Value (NAV) -$2.77 $5.91 $8.68

ADVISOR CLASS (SYMBOL: N/A) CHANGE 10/31/08 4/30/08
- --------------------------- ------ -------- -------

Net Asset Value (NAV) -$2.76 $5.94 $8.70

Semiannual Report | 17

Performance Summary (CONTINUED)

PERFORMANCE(1)

CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AGGREGATE TOTAL RETURNS AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. CLASS A: 5.75%
MAXIMUM INITIAL SALES CHARGE; CLASS C: 1% CONTINGENT DEFERRED SALES CHARGE IN
FIRST YEAR ONLY; CLASS R/ADVISOR CLASS: NO SALES CHARGES.

CLASS A 6-MONTH INCEPTION (12/13/07)
- ------- ------- --------------------

Cumulative Total Return(2) -31.80% -40.80%
Aggregate Total Return(3) -35.72% -44.20%
Value of $10,000 Investment(4) $ 6,428 $ 5,580
Aggregate Total Return (9/30/08)(5) -27.80%
Total Annual Operating Expenses(6)
Without Waiver 5.53%
With Waiver 1.25%

CLASS C 6-MONTH INCEPTION (12/13/07)
- ------- ------- --------------------

Cumulative Total Return(2) -32.06% -41.10%
Aggregate Total Return(3) -32.74% -41.69%
Value of $10,000 Investment(4) $ 6,726 $ 5,831
Aggregate Total Return (9/30/08)(5) -24.56%
Total Annual Operating Expenses(6)
Without Waiver 6.16%
With Waiver 1.88%

CLASS R 6-MONTH INCEPTION (12/13/07)
- ------- ------- --------------------

Cumulative Total Return(2) -31.91% -40.90%
Aggregate Total Return(3) -31.91% -40.90%
Value of $10,000 Investment(4) $ 6,809 $ 5,910
Aggregate Total Return (9/30/08)(5) -23.50%
Total Annual Operating Expenses(6)
Without Waiver 5.70%
With Waiver 1.42%

ADVISOR CLASS 6-MONTH INCEPTION (12/13/07)
- ------------- ------- --------------------

Cumulative Total Return(2) -31.72% -40.60%
Aggregate Total Return(3) -31.72% -40.60%
Value of $10,000 Investment(4) $ 6,828 $ 5,940
Aggregate Total Return (9/30/08)(5) -23.20%
Total Annual Operating Expenses(6)
Without Waiver 5.20%
With Waiver 0.92%

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 (800) 342-5236.

THE INVESTMENT MANAGER AND ADMINISTRATOR HAVE CONTRACTUALLY AGREED TO WAIVE OR
LIMIT THEIR RESPECTIVE FEES AND TO ASSUME AS THEIR OWN EXPENSE CERTAIN EXPENSES
OTHERWISE PAYABLE BY THE FUND SO THAT COMMON EXPENSES (I.E., A COMBINATION OF
INVESTMENT MANAGEMENT FEES, FUND ADMINISTRATION FEES, AND OTHER EXPENSES, BUT
EXCLUDING RULE 12B-1 FEES AND ACQUIRED FUND FEES AND EXPENSES) FOR EACH CLASS OF
THE FUND DO NOT EXCEED 0.89% (OTHER THAN CERTAIN NON-ROUTINE EXPENSES OR COSTS,
INCLUDING THOSE RELATING TO LITIGATION, INDEMNIFICATION, REORGANIZATIONS AND
LIQUIDATIONS) UNTIL 8/31/09.

18 | Semiannual Report

Performance Summary (CONTINUED)

ENDNOTES

WHILE STOCKS HAVE HISTORICALLY OUTPERFORMED OTHER ASSET CLASSES OVER THE LONG
TERM, THEY TEND TO FLUCTUATE MORE DRAMATICALLY OVER THE SHORT TERM. THERE ARE
SPECIAL RISKS INVOLVED WITH SIGNIFICANT EXPOSURE TO A PARTICULAR SECTOR,
INCLUDING INCREASED SUSCEPTIBILITY RELATED TO ECONOMIC, BUSINESS, OR OTHER
DEVELOPMENTS AFFECTING THAT SECTOR, WHICH MAY RESULT IN INCREASED VOLATILITY.
THE FUND ALSO HAS THE POTENTIAL TO INVEST IN FOREIGN COMPANY STOCKS, WHICH
INVOLVE EXPOSURE TO CURRENCY VOLATILITY AND POLITICAL UNCERTAINTY. THE FUND'S
PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN INVESTMENT RISKS.

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

CLASS R: Shares are available to certain eligible investors as described
in the prospectus. 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.) If the manager and administrator had not waived fees, the Fund's total
returns would have been lower.

(2.) Cumulative total return represents the change in value of an investment
over the periods indicated.

(3.) Aggregate total return represents the change in value of an investment over
the periods indicated. Six-month return has not been annualized. Because
the Fund has existed for less than one year, average annual total returns
are not available.

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

(5.) In accordance with SEC rules, we provide standardized total return
information through the latest calendar quarter.

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

Semiannual Report | 19

Your Fund's Expenses

FRANKLIN FOCUSED CORE EQUITY FUND

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

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

- - 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.

ACTUAL 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

20 | Semiannual Report

Your Fund's Expenses (CONTINUED)

BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
VALUE 5/1/08 VALUE 10/31/08 PERIOD* 5/1/08-10/31/08
----------------- -------------- -----------------------

CLASS A
Actual $1,000 $ 682.00 $5.00
Hypothetical (5% return before expenses) $1,000 $1,019.26 $6.01
CLASS C
Actual $1,000 $ 679.40 $8.00
Hypothetical (5% return before expenses) $1,000 $1,015.68 $9.60
CLASS R
Actual $1,000 $ 680.90 $5.89
Hypothetical (5% return before expenses) $1,000 $1,018.20 $7.07
ADVISOR CLASS
Actual $1,000 $ 682.80 $3.78
Hypothetical (5% return before expenses) $1,000 $1,020.72 $4.53

* Expenses are calculated using the most recent six-month expense ratio, net
of expense waivers, annualized for each class (A: 1.18%; C: 1.89%; R:
1.39%; and Advisor: 0.89%;), multiplied by the average account value over
the period, multiplied by 184/365 to reflect the one-half year period.

Semiannual Report | 21

Franklin Growth Opportunities Fund

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Growth Opportunities Fund seeks
capital appreciation by investing substantially in equity securities of
companies demonstrating accelerating growth, increasing profitability, or
above-average growth or growth potential, when compared with the overall
economy.

This semiannual report for Franklin Growth Opportunities Fund covers the period
ended October 31, 2008.

PERFORMANCE OVERVIEW

For the six months under review, Franklin Growth Opportunities Fund - Class A
had a -31.56% cumulative total return. The Fund performed comparably to its
narrow benchmark, the Russell 3000 Growth Index, which had a -30.29% total
return, and underperformed its broad benchmark, the Standard & Poor's 500 Index
(S&P 500), which had a -29.28% total return for the same period.(1) You can find
the Fund's long-term performance data in the Performance Summary beginning on
page 25.

INVESTMENT STRATEGY

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 65.

22 | Semiannual Report

invest in those companies that, in our opinion, offer the best trade-off between
growth opportunity, business and financial risk, and valuation.

MANAGER'S DISCUSSION

Among the most significant detractors from the Fund's absolute performance
during the six months under review were MasterCard and Google in the information
technology sector, ABB in the industrials sector, and Covance in the health care
sector. MasterCard is the world's second-largest consumer payment system
operator. Google operates the world's leading Internet search engine. ABB is a
Swiss developer and manufacturer of power and automation technologies for a
broad base of utilities, industrial and commercial customers. Covance is a
contract research organization for the pharmaceutical, biotechnology and medical
devices industries.

From a sector perspective, our investments in the information technology,
industrials and energy sectors detracted the most from the Fund's total returns.
Key information technology underperformers included computer and software maker
Apple and Visa, the world's largest consumer payment system operator. In the
industrials sector, the Fund was negatively impacted by investments in Precision
Castparts, which makes tools and parts used primarily in aerospace and power
generation applications; international engineering and construction contractor
Foster Wheeler (sold by period-end); and Terex (sold by period-end), which
manufactures heavy trucks and machinery such as cranes and construction
equipment, roadbuilding equipment, aerial platforms and mining equipment. In the
energy sector, energy equipment and services providers such as Weatherford
International, Schlumberger and FMC Technologies were notable detractors.

During a period when every sector represented in the Fund depreciated in tandem
with the overall equity market, we had some contributors. Individual securities
that aided the Fund's absolute performance included Myriad Genetics, which
produces drugs and diagnostic testing systems aimed at finding and treating
specific cancers and AIDS; Celgene, which develops and markets therapeutic and
molecular diagnostic products; and communications equipment maker F5 Networks
(sold by period-end), which specializes in network traffic management and
routing solutions.

PORTFOLIO BREAKDOWN
Franklin Growth Opportunities Fund
Based on Total Net Assets as of 10/31/08

(BAR CHART)

Information Technology* 31.7%
Health Care 23.9%
Industrials 13.1%
Telecommunication Services 8.3%
Energy 7.9%
Consumer Discretionary 7.2%
Financials 2.9%
Consumer Staples 1.3%
Materials 1.0%
Short-Term Investments & Other Net Assets 2.7%

Semiannual Report | 23

TOP 10 HOLDINGS
Franklin Growth Opportunities Fund
10/31/08

COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
- --------------- ----------

Celgene Corp. 4.5%
HEALTH CARE
SBA Communications Corp. 4.2%
TELECOMMUNICATION SERVICES
QUALCOMM Inc. 4.0%
INFORMATION TECHNOLOGY
Gilead Sciences Inc. 3.9%
HEALTH CARE
FLIR Systems Inc. 3.5%
INFORMATION TECHNOLOGY
Apple Inc. 3.4%
INFORMATION TECHNOLOGY
NII Holdings Inc. 3.0%
TELECOMMUNICATION SERVICES
Genentech Inc. 3.0%
HEALTH CARE
Strayer Education Inc. 2.9%
CONSUMER DISCRETIONARY
Activision Blizzard Inc. 2.6%
INFORMATION TECHNOLOGY

Certain industries performed well for the Fund and delivered positive results.
In diversified consumer services, our investments in education service companies
Strayer Education and ITT Educational Services boosted Fund performance. The
commercial services and supplies industry, led by financial consultancy Huron
Consulting Group, was another contributor. The Fund also benefited from
investments in health care providers and services due to our position in
Psychiatric Solutions, which owns a franchise of 90 psychiatric hospitals and
residential treatment facilities across the U.S. and the Caribbean.

Thank you for your continued participation in Franklin Growth Opportunities
Fund. We look forward to serving your future investment needs.

(PHOTO OF GRANT BOWERS)

/s/ Grant Bowers

Grant Bowers
Portfolio Manager
Franklin Growth Opportunities Fund

24 | Semiannual Report

Performance Summary as of 10/31/08

FRANKLIN GROWTH OPPORTUNITIES FUND

PRICE INFORMATION

CLASS A (SYMBOL: FGRAX) CHANGE 10/31/08 4/30/08
- ----------------------- ------ -------- -------

Net Asset Value (NAV) -$6.33 $13.73 $20.06

CLASS B (SYMBOL: FKABX) CHANGE 10/31/08 4/30/08
- ----------------------- ------ -------- -------

Net Asset Value (NAV) -$6.02 $12.93 $18.95

CLASS C (SYMBOL: FKACX) CHANGE 10/31/08 4/30/08
- ----------------------- ------ -------- -------

Net Asset Value (NAV) -$6.01 $12.90 $18.91

CLASS R (SYMBOL: FKARX) CHANGE 10/31/08 4/30/08
- ----------------------- ------ -------- -------

Net Asset Value (NAV) -$6.26 $13.54 $19.80

ADVISOR CLASS (SYMBOL: FRAAX) CHANGE 10/31/08 4/30/08
- ----------------------------- ------ -------- -------

Net Asset Value (NAV) -$6.46 $14.14 $20.60

Semiannual Report | 25

Performance Summary (CONTINUED)

PERFORMANCE

CLASS A 6-MONTH 1-YEAR 5-YEAR INCEPTION (6/23/99)
- ------- ------- ------- ------- -------------------

Cumulative Total Return(1) -31.56% -40.72% +13.56% +40.59%
Average Annual Total Return(2) -35.48% -44.12% +1.37% +3.05%
Value of $10,000 Investment(3) $ 6,452 $ 5,588 $10,701 $13,250
Avg. Ann. Total Return (9/30/08)(4) -30.19% +6.62% +4.96%
Total Annual Operating Expenses(5) 1.29%

CLASS B 6-MONTH 1-YEAR 5-YEAR INCEPTION (6/23/99)
- ------- ------- ------- ------- -------------------

Cumulative Total Return(1) -31.82% -41.14% +9.58% +33.53%
Average Annual Total Return(2) -34.55% -43.49% +1.47% +3.14%
Value of $10,000 Investment(3) $ 6,545 $ 5,651 $10,758 $13,353
Avg. Ann. Total Return (9/30/08)(4) -29.36% +6.84% +5.05%
Total Annual Operating Expenses(5) 2.01%

CLASS C 6-MONTH 1-YEAR 5-YEAR INCEPTION (6/23/99)
- ------- ------- ------- ------- -------------------

Cumulative Total Return(1) -31.83% -41.17% +9.52% +31.87%
Average Annual Total Return(2) -32.52% -41.76% +1.83% +3.00%
Value of $10,000 Investment(3) $ 6,748 $ 5,824 $10,952 $13,187
Avg. Ann. Total Return (9/30/08)(4) -27.21% +7.12% +4.91%
Total Annual Operating Expenses(5) 2.01%

CLASS R 6-MONTH 1-YEAR 5-YEAR INCEPTION (1/1/02)
- ------- ------- ------- ------- -------------------

Cumulative Total Return(1) -31.67% -40.81% +12.38% -1.60%
Average Annual Total Return(2) -31.67% -40.81% +2.36% -0.24%
Value of $10,000 Investment(3) $ 6,833 $ 5,919 $11,238 $ 9,840
Avg. Ann. Total Return (9/30/08)(4) -26.03% +7.68% +2.27%
Total Annual Operating Expenses(5) 1.51%

ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR INCEPTION (6/23/99)
- ------------- ------- ------- ------- -------------------

Cumulative Total Return(1) -31.41% -40.51% +15.25% +44.75%
Average Annual Total Return(2) -31.41% -40.51% +2.88% +4.03%
Value of $10,000 Investment(3) $ 6,859 $ 5,949 $11,525 $14,475
Avg. Ann. Total Return (9/30/08)(4) -25.69% +8.21% +5.96%
Total Annual Operating Expenses(5) 1.01%

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 (800) 342-5236.

26 | Semiannual Report

Performance Summary (CONTINUED)

ENDNOTES

THE MANAGER OF THE FUND USES AN AGGRESSIVE GROWTH STRATEGY SO AN INVESTMENT IN
THE FUND INVOLVES A GREATER DEGREE OF RISK. THE FUND MAY BE MORE VOLATILE THAN A
MORE CONSERVATIVE EQUITY FUND, AND IT MAY BE BEST SUITED FOR LONG-TERM
INVESTORS. THE FUND'S INVESTMENTS IN SMALLER- AND MIDSIZED-COMPANY STOCKS
INVOLVE SPECIAL RISKS SUCH AS RELATIVELY SMALLER REVENUES, LIMITED PRODUCT LINES
AND SMALLER MARKET SHARE. SMALLER-AND MIDSIZED-COMPANY STOCKS HISTORICALLY HAVE
EXHIBITED GREATER PRICE VOLATILITY THAN LARGER-COMPANY STOCKS, PARTICULARLY OVER
THE SHORT TERM. THE FUND'S PORTFOLIO INCLUDES TECHNOLOGY STOCKS, A SECTOR THAT
HAS BEEN ONE OF THE MOST VOLATILE AND INVOLVES SPECIAL RISKS. THE FUND'S
PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN INVESTMENT RISKS.

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.

CLASS R: Shares are available to certain eligible investors as described
in the prospectus. 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 | 27

Your Fund's Expenses

FRANKLIN GROWTH OPPORTUNITIES FUND

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

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

- - 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.

ACTUAL 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

28 | Semiannual Report

Your Fund's Expenses (CONTINUED)

BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
VALUE 5/1/08 VALUE 10/31/08 PERIOD* 5/1/08-10/31/08
----------------- -------------- -----------------------

CLASS A
Actual $1,000 $ 684.40 $ 5.43
Hypothetical (5% return before expenses) $1,000 $1,018.75 $ 6.51
CLASS B
Actual $1,000 $ 681.80 $ 8.35
Hypothetical (5% return before expenses) $1,000 $1,015.27 $10.01
CLASS C
Actual $1,000 $ 681.70 $ 8.44
Hypothetical (5% return before expenses) $1,000 $1,015.17 $10.11
CLASS R
Actual $1,000 $ 683.30 $ 6.32
Hypothetical (5% return before expenses) $1,000 $1,017.69 $ 7.58
ADVISOR CLASS
Actual $1,000 $ 685.90 $ 4.21
Hypothetical (5% return before expenses) $1,000 $1,020.21 $ 5.04

* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 1.28%; B: 1.97%; C: 1.99%; R: 1.49%; and
Advisor: 0.99%), multiplied by the average account value over the period,
multiplied by 184/365 to reflect the one-half year period.

Semiannual Report | 29

Franklin Small Cap Growth Fund

(formerly, Franklin Small Cap Growth Fund II)

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Small Cap Growth Fund seeks
long-term capital growth by investing at least 80% of its net assets in equity
securities of small-capitalization companies with market capitalizations not
exceeding that of the highest market capitalization in the Russell 2000(R) Index
or $1.5 billion, whichever is greater, at the time of purchase.(1)

This semiannual report for Franklin Small Cap Growth Fund covers the period
ended October 31, 2008.

PERFORMANCE OVERVIEW

For the six months under review, Franklin Small Cap Growth Fund - Class A had a
- -28.27% cumulative total return. The Fund performed comparably to its narrow
benchmark, the Russell 2000 Growth Index, which had a -27.63% return, and its
broad benchmark, the Standard & Poor's 500 Index (S&P 500), which had a -29.28%
return for the same period.(2) You can find the Fund's long-term performance
data in the Performance Summary beginning on page 33.

INVESTMENT STRATEGY

(1.) The Russell 2000 Index is market capitalization weighted and measures
performance of the 2,000 smallest companies in the Russell 3000 Index,
which represent approximately 8% of total market capitalization of the
Russell 3000 Index.

(2.) Source: (C) 2008 Morningstar. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use of
this information. The Russell 2000 Growth Index is market capitalization
weighted and measures performance of those Russell 2000 Index companies
with higher price-to-book ratios and higher forecasted growth values. 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 is one of the most widely
used benchmarks of U.S. equity performance. The indexes are unmanaged and
include reinvested dividends. 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 73.

30 | Semiannual Report

and financial strength, business and financial risks, and valuation. We choose
to invest in those companies that, in our opinion, offer the best trade-off
between growth opportunity, business and financial risk, and valuation.

MANAGER'S DISCUSSION

Among the most significant detractors from Fund performance relative to the
Russell 2000 Growth Index for the six months under review were iStar
Financial,(3) a real estate investment trust; Tenneco, an auto parts company;
and Helix Energy Solutions Group,(3) an operator of offshore oil and gas
properties and production facilities.

Stock selection in the health care, financials and energy sectors hurt relative
Fund performance. An underweighted position in the health care sector as well as
holdings Angiotech Pharmaceuticals,(3) a medical products company, and PAREXEL
International, a clinical and non-clinical research organization, hindered
returns. Real estate investment trust FelCor Lodging Trust in the financials
sector was another key detractor during the period. In the energy sector, oil
and gas exploration and production stocks Mariner Energy and Bill Barrett were
among holdings that declined in value.

On a more positive note, major contributors during the reporting period included
Allegiant Travel, a charter flight operator; Strayer Education, a university
that serves mostly working adults seeking college degrees; and Huron Consulting
Group, which offers financial consulting services to companies in financial
distress or under litigation.

Driven by stock selection, our investments in the industrials, consumer
discretionary and information technology sectors supported the Fund's relative
performance. Contributors in the industrials sector included Mobile Mini, which
manufactures, leases and sells portable storage containers and mobile offices,
and Force Protection, which makes military armored land vehicles. Consumer
discretionary holdings Universal Technical Institute, an automotive technician
training school, and Tractor Supply, a retail tractor parts and farm supplies
store chain operator, appreciated in value during the period. In the information
technology sector, key contributors included Quest Software, which makes
database management software, and Ixia, which designs interface cards that
transmit and analyze signals over networks.

(3.) This holding is not an index component.

PORTFOLIO BREAKDOWN
Franklin Small Cap Growth Fund
Based on Total Net Assets as of 10/31/08

(BAR CHART)

Information Technology* 39.4%
Health Care 15.0%
Consumer Discretionary 12.8%
Industrials 11.4%
Energy 7.2%
Consumer Staples 4.0%
Financials 3.2%
Telecommunication Services 2.1%
Materials 1.2%
Short-Term Investments & Other Net Assets 3.7%

Semiannual Report | 31

TOP 10 HOLDINGS
Franklin Small Cap Growth Fund
10/31/08

COMPANY % OF TOTAL
SECTOR/INDUSTRY NET ASSETS
- --------------- ----------

Psychiatric Solutions Inc. 2.7%
HEALTH CARE
Quest Software Inc. 2.4%
INFORMATION TECHNOLOGY
Microsemi Corp. 2.1%
INFORMATION TECHNOLOGY
Huron Consulting Group Inc. 2.1%
INDUSTRIALS
SBA Communications Corp. 2.1%
TELECOMMUNICATION SERVICES
Hain Celestial Group Inc. 2.0%
CONSUMER STAPLES
ViaSat Inc. 2.0%
INFORMATION TECHNOLOGY
Allegiant Travel Co. 1.9%
INDUSTRIALS
Sequenom Inc. 1.8%
HEALTH CARE
Myriad Genetics Inc. 1.8%
HEALTH CARE

Thank you for your continued participation in Franklin Small Cap Growth Fund. We
look forward to serving your future investment needs.

(PHOTO OF MICHAEL P. MCCARTHY)

/s/ Michael P. McCarthy

Michael P. McCarthy, CFA
Portfolio Manager
Franklin Small Cap Growth Fund

32 | Semiannual Report

Performance Summary as of 10/31/08

FRANKLIN SMALL CAP GROWTH FUND

PRICE INFORMATION

CLASS A (SYMBOL: FSGRX) CHANGE 10/31/08 4/30/08
- ----------------------- ------ -------- -------

Net Asset Value (NAV) -$2.57 $6.52 $9.09

CLASS B (SYMBOL: FBSGX) CHANGE 10/31/08 4/30/08
- ----------------------- ------ -------- -------

Net Asset Value (NAV) -$2.41 $6.02 $8.43

CLASS C (SYMBOL: FCSGX) CHANGE 10/31/08 4/30/08
- ----------------------- ------ -------- -------

Net Asset Value (NAV) -$2.40 $6.03 $8.43

CLASS R (SYMBOL: FSSRX) CHANGE 10/31/08 4/30/08
- ----------------------- ------ -------- -------

Net Asset Value (NAV) -$2.53 $6.38 $8.91

ADVISOR CLASS (SYMBOL: FSSAX) CHANGE 10/31/08 4/30/08
- ----------------------------- ------ -------- -------

Net Asset Value (NAV) -$2.64 $6.73 $9.37

Semiannual Report | 33

Performance Summary (CONTINUED)

PERFORMANCE

CLASS A 6-MONTH 1-YEAR 5-YEAR INCEPTION (5/1/00)
- ------- ------- ------- ------- ------------------

Cumulative Total Return(1) -28.27% -42.37% -13.13% -11.56%
Average Annual Total Return(2) -32.37% -45.67% -3.92% -2.12%
Value of $10,000 Investment(3) $ 6,763 $ 5,433 $ 8,189 $ 8,335
Avg. Ann. Total Return (9/30/08)(4) -29.36% +2.68% +0.46%
Total Annual Operating Expenses(5) 1.17%

CLASS B 6-MONTH 1-YEAR 5-YEAR INCEPTION (5/1/00)
- ------- ------- ------- ------- ------------------

Cumulative Total Return(1) -28.59% -42.78% -16.35% -16.50%
Average Annual Total Return(2) -31.44% -44.63% -3.79% -2.10%
Value of $10,000 Investment(3) $ 6,856 $ 5,537 $ 8,244 $ 8,350
Avg. Ann. Total Return (9/30/08)(4) -28.00% +2.83% +0.48%
Total Annual Operating Expenses(5) 1.92%

CLASS C 6-MONTH 1-YEAR 5-YEAR INCEPTION (5/1/00)
- ------- ------- ------- ------- ------------------

Cumulative Total Return(1) -28.59% -42.84% -16.46% -16.79%
Average Annual Total Return(2) -29.30% -43.30% -3.53% -2.14%
Value of $10,000 Investment(3) $ 7,070 $ 5,670 $ 8,354 $ 8,321
Avg. Ann. Total Return (9/30/08)(4) -26.18% +3.13% +0.46%
Total Annual Operating Expenses(5) 1.92%

CLASS R 6-MONTH 1-YEAR 5-YEAR INCEPTION (1/1/02)
- ------- ------- ------- ------- ------------------

Cumulative Total Return(1) -28.40% -42.49% -14.22% -11.97%
Average Annual Total Return(2) -28.40% -42.49% -3.02% -1.85%
Value of $10,000 Investment(3) $ 7,160 $ 5,751 $ 8,578 $ 8,803
Avg. Ann. Total Return (9/30/08)(4) -25.23% +3.65% +1.40%
Total Annual Operating Expenses(5) 1.42%

ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR INCEPTION (5/1/00)
- ------------- ------- ------- ------- ------------------

Cumulative Total Return(1) -28.18% -42.20% -12.11% -9.38%
Average Annual Total Return(2) -28.18% -42.20% -2.55% -1.15%
Value of $10,000 Investment(3) $ 7,182 $ 5,780 $ 8,789 $ 9,062
Avg. Ann. Total Return (9/30/08)(4) -24.87% +4.15% +1.46%
Total Annual Operating Expenses(5) 0.92%

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 (800) 342-5236.

34 | Semiannual Report

Performance Summary (CONTINUED)

ENDNOTES

SMALLER AND NEWER COMPANIES CAN BE PARTICULARLY SENSITIVE TO CHANGING ECONOMIC
CONDITIONS. THEIR GROWTH PROSPECTS ARE LESS CERTAIN THAN THOSE OF LARGER, MORE
ESTABLISHED COMPANIES, AND THEY CAN BE VOLATILE. THE FUND IS INTENDED FOR
LONG-TERM INVESTORS WHO ARE COMFORTABLE WITH SHORT-TERM FLUCTUATIONS IN SHARE
PRICE. THERE ARE SPECIAL RISKS INVOLVED WITH SIGNIFICANT EXPOSURE TO A
PARTICULAR SECTOR, INCLUDING INCREASED SUSCEPTIBILITY RELATED TO ECONOMIC,
BUSINESS, OR OTHER DEVELOPMENTS AFFECTING THAT SECTOR. THE FUND INCLUDES
INVESTMENTS IN THE TECHNOLOGY SECTOR, WHICH HAS BEEN HIGHLY VOLATILE AND
INVOLVES SPECIAL RISKS. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE
MAIN INVESTMENT RISKS.