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 811-10157
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FRANKLIN GLOBAL TRUST
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(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
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(Name and address of agent for service)
Registrant's telephone number, including area code:(650) 312-2000
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Date of fiscal year end: 7/31
----
Date of reporting period: 1/31/10
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ITEM 1. REPORTS TO STOCKHOLDERS.
JANUARY 31, 2010
SEMIANNUAL REPORT
AND SHAREHOLDER LETTER
Franklin International Growth Fund
Franklin International Small Cap Growth Fund
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INTERNATIONAL
FRANKLIN GLOBAL TRUST
(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
SHAREHOLDER LETTER ........................................................ 1
SEMIANNUAL REPORT
Economic and Market Overview .............................................. 3
Franklin International Growth Fund ........................................ 4
Franklin International Small Cap Growth Fund .............................. 12
Financial Highlights and Statements of Investments ........................ 20
Financial Statements ...................................................... 33
Notes to Financial Statements ............................................. 37
Shareholder Information ................................................... 48
Shareholder Letter
Dear Shareholder:
During the six months ended January 31, 2010, global economies experienced a
significant recovery driven by one of the most aggressive global policy
responses in financial history. At the end of the period, however, as investors
began to believe the global financial system was on the mend, world governments
began positioning themselves to curtail their spending programs and low interest
rate policies, and the market began to focus on the risks associated with this
transition.
Franklin Global Trust's semiannual report goes into greater detail about
prevailing conditions during the period. In addition, you will find performance
data, financial information and discussions from the portfolio managers. 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.
Although market conditions are constantly changing, we remain committed to our
disciplined strategy as we manage the Funds, keeping in mind the trust you have
placed in us. 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 conditions.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Not part of the semiannual report | 1
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 Global Trust
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF JANUARY 31, 2010. 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
Economic and Market Overview
During the reporting period, the global economy strengthened as many countries
began to show the benefits of aggressive global policy response in 2009.
Emerging market economies fueled the recovery as governments aggressively
incentivized lending and consumption. Developed economies technically recovered
during the period, with France leading the eurozone and both Japan and the U.S.
exiting their longest recessions since World War II. Policymakers remained
firmly committed to stimulus throughout the period, indicating that deflation
worries persisted despite signs of economic stabilization.
After making gains early in the period, global equity markets entered 2010
facing intense investor anxiety. Economic and confidence rallies gave way as
government stimulus measures began to unwind and the market shifted its focus
from the upside of policy-induced growth to its downside risks. During the
period, a number of actions taken by world governments fanned fears of potential
harm to the global economy's delicate recovery. The Chinese central bank's
intensifying efforts to slow credit growth raised concerns among investors about
a tightening of the country's "moderately loose" monetary policy. Likewise in
the U.S., the Federal Open Market Committee announced it would keep the
benchmark lending rate "exceptionally low" for an extended period. Still,
investors worried about a far-reaching proposal to restrict scale and risks
taken by banks and the impending closure of a number of lending facilities. In
Europe, investors were troubled by the fiscal health of heavily indebted
sovereign governments such as Spain, Greece and Portugal. These countries
announced tough budget measures, but markets there nonetheless suffered
significant losses during January.
For the six months ended January 31, 2010, equity markets outside the U.S. and
Canada, as measured by the Morgan Stanley Capital International (MSCI) Europe,
Australasia, Far East (EAFE) Index, posted a +7.02% total return in U.S. dollar
terms.(1) Emerging markets outperformed developed markets during the same
period.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS AND OPINIONS AS OF JANUARY 31,
2010. THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE.
(1.) Source: (C) 2010 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
MSCI EAFE Index is a free float-adjusted, market capitalization-weighted
index designed to measure equity market performance in global developed
markets excluding the U.S. and Canada.
Semiannual Report | 3
Franklin International Growth Fund
YOUR FUND'S GOAL AND MAIN INVESTMENTS: The Fund seeks long-term capital
appreciation by investing predominantly in equity securities of mid- and
large-capitalization companies, generally those with market capitalizations
greater than $2 billion, located outside the U.S., including developing or
emerging market countries. The Fund considers international companies to be
those organized under the laws of a country outside the U.S. or having a
principal office in a country outside the U.S., or whose securities are listed
or traded principally on a recognized stock exchange or over-the-counter market
outside the U.S.
GEOGRAPHIC BREAKDOWN
Franklin International Growth Fund
Based on Total Net Assets as of 1/31/10
(PIE CHART)
Europe....................................... 53.1%
Asia......................................... 22.2%
Australia & New Zealand...................... 14.6%
Latin America & Caribbean.................... 4.4%
Short-Term Investments & Other Net Assets.... 5.7%
We are pleased to bring you Franklin International Growth Fund's semiannual
report for the period ended January 31, 2010.
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.
PERFORMANCE OVERVIEW
For the six months under review, Franklin International Growth Fund - Class A
delivered a +10.23% cumulative total return. The Fund outperformed its
benchmark, the Morgan Stanley Capital International (MSCI) Europe, Australasia,
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 24.
4 | Semiannual Report
Far East (EAFE) Index, which had a +7.02% total return for the same period.(1)
You can find more of the Fund's performance data in the Performance Summary
beginning on page 7.
INVESTMENT STRATEGY
In choosing individual equity investments, we employ a disciplined, bottom-up
approach to identify attractive investment opportunities that have higher
expected revenue and earnings growth than their peers. We use a growth
investment style and in-depth, fundamental research to identify high-quality
companies, across all industry groups, with sustainable business models that
offer the most attractive combination of growth and quality.
MANAGER'S DISCUSSION
From a sector perspective, industrials, consumer discretionary and information
technology were major contributors to Fund performance relative to the MSCI EAFE
Index, mainly due to stock selection.(2) The Fund's holdings in the industrials
sector aided relative results largely due to holdings such as Hong Kong-based
raw materials supply chain services provider Noble Group and Germany-based
military and commercial aircraft engine designer MTU Aero Engines Holding (not
an index component). Shares of Noble Group appreciated in value after the
company entered into a strategic partnership with sovereign wealth fund China
Investment Corporation. Consumer discretionary sector holdings such as Hong
Kong's consumer products trader Li & Fung and the U.K.'s educational media
producer Pearson also boosted relative performance. Among our information
technology holdings, our investment in U.K.-based processor designer ARM
Holdings (not an index component) performed well and aided the Fund.
(1.) Source: (C) 2010 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 MSCI EAFE Index is a free float-adjusted, market
capitalization-weighted index designed to measure equity market performance
in global developed markets excluding the U.S. and Canada. The index is
unmanaged and includes reinvested distributions. One cannot invest directly
in an index, and an index is not representative of the Fund's portfolio.
(2.) The industrials sector comprises aerospace and defense, electrical
equipment, professional services, and trading companies and distributors in
the SOI. The consumer discretionary sector comprises distributors;
household durables; media; specialty retail; and textiles, apparel and
luxury goods in the SOI. The information technology sector comprises
semiconductors and semiconductor equipment and software in the SOI.
PORTFOLIO BREAKDOWN
Franklin International Growth Fund
Based on Total Net Assets as of 1/31/10
(BAR CHART)
Health Care Equipment & Supplies 9.6%
Energy Equipment & Services 8.0%
Capital Markets 6.4%
Professional Services 5.3%
Software 5.1%
Insurance 5.0%
Media 4.8%
Textiles, Apparel & Luxury Goods 4.7%
Food & Staples Retailing 4.4%
Commercial Banks 4.2%
Trading Companies & Distributors 3.0%
Chemicals 3.0%
Aerospace & Defense 2.8%
Biotechnology 2.6%
Distributors 2.6%
Other 22.8%
Short-Term Investments & Other Net Assets 5.7%
Semiannual Report | 5
TOP 10 COUNTRIES
Franklin International Growth Fund
1/31/10
% OF TOTAL
NET ASSETS
----------
U.K. 21.3%
Australia 14.5%
Switzerland 10.3%
Hong Kong 10.1%
Japan 5.5%
Italy 5.3%
Germany 4.8%
France 4.7%
China 4.5%
Mexico 4.4%
TOP 10 EQUITY HOLDINGS
Franklin International Growth Fund
1/31/10
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- ------------------------ ----------
Noble Group Ltd.
TRADING COMPANIES & DISTRIBUTORS, HONG KONG 3.0%
Syngenta AG
CHEMICALS, SWITZERLAND 3.0%
MTU Aero Engines Holding AG
AEROSPACE & DEFENSE, GERMANY 2.8%
Saipem SpA
ENERGY EQUIPMENT & SERVICES, ITALY 2.8%
Nintendo Co. Ltd.
SOFTWARE, JAPAN 2.8%
WorleyParsons Ltd.
ENERGY EQUIPMENT & SERVICES, AUSTRALIA 2.7%
Terumo Corp.
HEALTH CARE EQUIPMENT & SUPPLIES, JAPAN 2.7%
Societe Generale de Surveillance Holdings SA
PROFESSIONAL SERVICES, SWITZERLAND 2.7%
Experian PLC
PROFESSIONAL SERVICES, U.K. 2.7%
QBE Insurance Group Ltd.
INSURANCE, AUSTRALIA 2.6%
In contrast, stock selection in consumer staples and energy negatively affected
relative performance.(3) In the energy sector, U.K.-based pipeline product
producer Wellstream Holdings hampered results. The Fund's overweighting in Swiss
life sciences company Lonza Group (sold by period-end), Greek commercial bank
National Bank of Greece and German financial exchange Deutsche Boerse detracted
from performance.
From a geographic perspective, all of the regions held in the Fund posted
positive results, as did our investments in Latin America and the Caribbean, a
non-index component. Our stock selection in Asia contributed to relative
results, particularly in Hong Kong and Japan. However, our overweighted
allocation to Greece and stock selection in Switzerland detracted from
performance.
Thank you for your participation in Franklin International Growth Fund. We look
forward to serving your future investment needs.
(PHOTO OF M. PAR ROSTOM)
/s/ M. Par Rostom
M. Par Rostom, CFA
(PHOTO OF COLEEN F. BARBEAU)
/s/ Coleen F. Barbeau
Coleen F. Barbeau
Portfolio Management Team
Franklin International Growth Fund
CFA(R) and Chartered Financial Analyst(R) are trademarks owned by CFA Institute.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF JANUARY 31, 2010, 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.
(3.) The consumer staples sector comprises food and staples retailing, household
products, and personal products in the SOI. The energy sector comprises
energy equipment and services in the SOI.
6 | Semiannual Report
Performance Summary as of 1/31/10
FRANKLIN INTERNATIONAL 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 AND DISTRIBUTION INFORMATION
CLASS A (SYMBOL: N/A) CHANGE 1/31/10 7/31/09
- --------------------- ------ ------- -------
Net Asset Value (NAV) +$0.68 $8.15 $7.47
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0756
CLASS C (SYMBOL: N/A) CHANGE 1/31/10 7/31/09
- --------------------- ------ ------- -------
Net Asset Value (NAV) +$0.68 $8.10 $7.42
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0397
CLASS R (SYMBOL: N/A) CHANGE 1/31/10 7/31/09
- --------------------- ------ ------- -------
Net Asset Value (NAV) +$0.68 $8.14 $7.46
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0581
ADVISOR CLASS (SYMBOL: N/A) CHANGE 1/31/10 7/31/09
- --------------------------- ------ ------- -------
Net Asset Value (NAV) +$0.68 $8.16 $7.48
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0857
Semiannual Report | 7
Performance Summary (CONTINUED)
PERFORMANCE(1)
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 C: 1% CONTINGENT DEFERRED SALES CHARGE IN
FIRST YEAR ONLY; CLASS R/ADVISOR CLASS: NO SALES CHARGES.
CLASS A 6-MONTH 1-YEAR INCEPTION (6/3/08)
- ------- ------- ------- ------------------
Cumulative Total Return(2) +10.23% +57.53% -17.42%
Average Annual Total Return(3) +3.83% +48.43% -13.99%
Value of $10,000 Investment(4) $10,383 $14,843 $ 7,783
Avg. Ann. Total Return (12/31/09)(5) +49.26% -11.86%
Total Annual Operating Expenses(6)
Without Waiver 5.22%
With Waiver 1.48%
CLASS C 6-MONTH 1-YEAR INCEPTION (6/3/08)
- ------- ------- ------- ------------------
Cumulative Total Return(2) +9.55% +56.01% -18.50%
Average Annual Total Return(3) +8.55% +55.01% -11.58%
Value of $10,000 Investment(4) $10,855 $15,501 $ 8,150
Avg. Ann. Total Return (12/31/09)(5) +55.97% -9.16%
Total Annual Operating Expenses(6)
Without Waiver 5.92%
With Waiver 2.18%
CLASS R 6-MONTH 1-YEAR INCEPTION (6/3/08)
- ------- ------- ------- ------------------
Cumulative Total Return(2) +9.87% +57.01% -17.83%
Average Annual Total Return(3) +9.87% +57.01% -11.14%
Value of $10,000 Investment(4) $10,987 $15,701 $ 8,217
Avg. Ann. Total Return (12/31/09)(5) +57.46% -8.77%
Total Annual Operating Expenses(6)
Without Waiver 5.42%
With Waiver 1.68%
ADVISOR CLASS 6-MONTH 1-YEAR INCEPTION (6/3/08)
- ------- ------- ------- ------------------
Cumulative Total Return(2) +10.20% +57.91% -17.05%
Average Annual Total Return(3) +10.20% +57.91% -10.63%
Value of $10,000 Investment(4) $11,020 $15,791 $ 8,295
Avg. Ann. Total Return (12/31/09)(5) +58.63% -8.23%
Total Annual Operating Expenses(6)
Without Waiver 4.92%
With Waiver 1.18%
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. FOR MOST RECENT MONTH-END PERFORMANCE, GO TO
franklintempleton.com OR CALL (800) 342-5236.
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 1.15% (OTHER THAN CERTAIN NONROUTINE EXPENSES OR COSTS,
INCLUDING THOSE RELATING TO LITIGATION, INDEMNIFICATION, REORGANIZATIONS AND
LIQUIDATIONS) UNTIL 11/30/10.
8 | Semiannual Report
Performance Summary (CONTINUED)
ENDNOTES
SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
FLUCTUATIONS, ECONOMIC INSTABILITY AND POLITICAL DEVELOPMENTS. INVESTMENTS IN
DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN
ADDITION TO THOSE ASSOCIATED WITH THESE MARKETS' SMALLER SIZE AND LESSER
LIQUIDITY. 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.) 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.
(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 average annual 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. In periods of market volatility, assets may decline
significantly, causing total annual Fund operating expenses to become
higher than the figures shown.
Semiannual Report | 9
Your Fund's Expenses
FRANKLIN INTERNATIONAL GROWTH FUND
As a Fund shareholder, you can incur two types of costs:
- - Transaction costs, including sales charges (loads) on Fund purchases; 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.
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.
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 8/1/09 VALUE 1/31/10 PERIOD* 8/1/09-1/31/10
----------------- -------------- ----------------------
CLASS A
Actual $1,000 $1,102.30 $ 6.62
Hypothetical (5% return before expenses) $1,000 $1,018.90 $ 6.36
CLASS C
Actual $1,000 $1,095.50 $11.36
Hypothetical (5% return before expenses) $1,000 $1,014.37 $10.92
CLASS R
Actual $1,000 $1,098.70 $ 8.73
Hypothetical (5% return before expenses) $1,000 $1,016.89 $ 8.39
CLASS ADVISOR
Actual $1,000 $1,102.00 $ 6.09
Hypothetical (5% return before expenses) $1,000 $1,019.41 $ 5.85
* Expenses are calculated using the most recent six-month expense ratio, net
of expense waivers, annualized for each class (A: 1.25%; C: 2.15%; R:
1.65%; and Advisor: 1.15%), multiplied by the average account value over
the period, multiplied by 184/365 to reflect the one-half year period.
Semiannual Report | 11
Franklin International Small Cap Growth Fund
YOUR FUND'S GOAL AND MAIN INVESTMENTS: The Fund seeks long-term capital
appreciation by investing at least 80% of its net assets in a diversified
portfolio of marketable equity and equity-related securities of smaller
international companies with market capitalizations not exceeding $5 billion (or
the equivalent in local currencies), or the highest market capitalization of the
Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE)
Small Cap Index, whichever is greater, at the time of purchase.(1) The Fund
considers international companies to be those organized under the laws of a
country outside North America or having a principal office in a country outside
North America, or whose securities are listed or traded principally on a
recognized stock exchange or over-the-counter market outside North America.
GEOGRAPHIC BREAKDOWN
Franklin International Small Cap Growth Fund
Based on Total Net Assets as of 1/31/10
(PIE-CHART)
Europe..................... 69.6%
Asia....................... 16.7%
North America.............. 4.8%
Short-Term Investments &
Other Net Assets........ 8.9%
We are pleased to bring you Franklin International Small Cap Growth Fund's
semiannual report for the period ended January 31, 2010.
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.
PERFORMANCE OVERVIEW
For the six months under review, Franklin International Small Cap Growth Fund -
Class A delivered a +14.75% cumulative total return. The Fund out-performed its
benchmark, the MSCI EAFE Small Cap Index, which posted a
(1.) The MSCI EAFE Small Cap Index is a free float-adjusted, market
capitalization-weighted index designed to measure performance of small cap
equities in global developed markets excluding the U.S. and Canada.
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 31.
12 | Semiannual Report
total return of +11.27% for the same period.(2) You can find more of the Fund's
performance data in the Performance Summary beginning on page 15.
INVESTMENT STRATEGY
In choosing individual equity investments, we utilize a fundamental, bottom-up
approach involving in-depth analysis of individual equity securities. We employ
a quantitative and qualitative approach to identify smaller international
companies that we believe have the potential to generate attractive returns with
lower downside risk. Such companies tend to have proprietary products and
services, which can sustain a longer term competitive advantage. Additionally,
the companies we invest in tend to have a higher probability of maintaining a
strong balance sheet and/or generating cash flow. After we identify a company,
we conduct thorough analysis to establish its earning prospects and determine
its value. Overall, we seek to invest in companies with attractive valuations.
We do not select investments for the Fund that are merely representative of the
small cap asset class but instead aim to produce a portfolio of securities of
exceptional companies operating in sectors that offer attractive growth
potential. While we seek to outperform the MSCI EAFE Small Cap Index, the Fund
may take positions that are not represented in the index.
MANAGER'S DISCUSSION
During the period under review, the consumer discretionary, industrials and
health care sectors helped the Fund's performance relative to the MSCI EAFE
Small Cap Index, primarily due to stock selection.(3) U.K.-based specialty
retailers Carpetright and Signet Jewelers were key contributors in the consumer
discretionary sector, as was Paddy Power, Ireland's largest bookmaker. We sold
our Signet Jewelers position by period-end. In the industrials sector, MTU Aero
Engines Holding, Germany's leading engine manufacturer and the world's largest
independent commercial engine maintenance services provider in terms of sales,
boosted results. The Fund's sole health care holding, Genus, a U.K.-based
biotechnology company focused on animal breeding, performed well during the
reporting period.
(2.) Source: (C) 2010 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. See footnote 1 for a description of the MSCI EAFE Small
Cap Index. The index is unmanaged and includes reinvested distributions.
One cannot invest directly in an index, and an index is not representative
of the Fund's portfolio.
(3.) The consumer discretionary sector comprises diversified consumer services;
hotels, restaurants and leisure; leisure equipment and products; media; and
specialty retail in the SOI. The industrials sector comprises aerospace and
defense, commercial services and supplies, electrical equipment, machinery,
marine, and professional services in the SOI. The health care sector
comprises biotechnology in the SOI.
PORTFOLIO BREAKDOWN
Franklin International Small Cap Growth Fund
Based on Total Net Assets as of
1/31/10
(BAR CHART)
Insurance 7.6%
Diversified Financial Services 7.4%
Media 7.3%
Specialty Retail 7.1%
Real Estate Management & Development 6.8%
Machinery 5.1%
Office Electronics 4.6%
Food Products 4.4%
Electronic Equipment,
Instruments & Components 3.7%
Diversified Consumer Services 3.6%
Commercial Services & Supplies 3.5%
Capital Markets 3.2%
Chemicals 3.2%
Biotechnology 3.1%
IT Services 3.1%
Professional Services 3.0%
Other 14.4%
Short-Term Investments &
Other Net Assets 8.9%
Semiannual Report | 13
TOP 10 COUNTRIES
Franklin International Small Cap
Growth Fund
1/31/10
% OF TOTAL
NET ASSETS
----------
U.K. 33.9%
Germany 13.6%
Japan 10.1%
France 6.9%
Switzerland 5.4%
Singapore 4.9%
Belgium 4.3%
Ireland 2.8%
Greece 2.5%
Canada 2.5%
TOP 10 EQUITY HOLDINGS
Franklin International Small Cap
Growth Fund
1/31/10
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- ------------------------ ----------
Neopost SA
OFFICE ELECTRONICS, FRANCE 4.6%
Carpetright PLC
SPECIALTY RETAIL, U.K. 4.6%
RHJ International
DIVERSIFIED FINANCIAL SERVICES, BELGIUM 4.3%
Rotork PLC
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS, U.K. 3.7%
Daibiru Corp.
REAL ESTATE MANAGEMENT & DEVELOPMENT,
JAPAN 3.6%
Dignity PLC
DIVERSIFIED CONSUMER SERVICES, U.K. 3.6%
Homeserve PLC
COMMERCIAL SERVICES & SUPPLIES, U.K. 3.5%
CTS Eventim AG
MEDIA, GERMANY 3.2%
ARA Asset Management Ltd.
CAPITAL MARKETS, SINGAPORE 3.2%
Symrise AG
CHEMICALS, GERMANY 3.2%
All sectors helped the Fund's relative results; however, there were some
individual holdings that hurt performance. In the financials sector, U.K.-based
Savills and Japan's Daibiru, real estate management and development companies,
declined in value.(4) France-based global mailing and shipping services provider
Neopost(5) in the information technology sector also hurt results, as did
Japan's Asatsu-DK and the U.K.'s Dignity in the consumer discretionary
sector.(6)
From a geographic perspective, most country allocations helped relative
performance. Key contributors included an underweighted allocation to Japan, and
stock selection and overweighted positions in the U.K. and Germany. Conversely,
stock selection in France detracted from relative performance, and the Fund's
cash position also hindered results.
The market environment has been challenging and volatile, but in times like
these volatility can work in our favor. Specifically, we continue to find
quality companies at what we consider discounted prices. We believe this could
bode well for the long-term return potential of our Fund if the markets improve
over time.
Thank you for your continued participation in Franklin International Small Cap
Growth Fund. We look forward to serving your future investment needs.
(PHOTO OF EDWIN LUGO)
/s/ Edwin Lugo
Edwin Lugo, CFA
Portfolio Manager
Franklin International Small Cap Growth Fund
CFA(R) and Chartered Financial Analyst(R) are trademarks owned by CFA Institute.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF JANUARY 31, 2010, 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.
(4.) The financials sector comprises capital markets, diversified financial
services, insurance, and real estate management and development in the SOI.
(5.) This holding is not an index component.
(6.) The information technology sector comprises electronic equipment,
instruments and components; IT services; and office electronics in the SOI.
14 | Semiannual Report
Performance Summary as of 1/31/10
FRANKLIN INTERNATIONAL SMALL 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 AND DISTRIBUTION INFORMATION
CLASS A (SYMBOL: FINAX) CHANGE 1/31/10 7/31/09
- ----------------------- ------ ------- -------
Net Asset Value (NAV) +$1.80 $14.13 $12.33
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0189
CLASS C (SYMBOL: N/A) CHANGE 1/31/10 7/31/09
- --------------------- ------ ------- -------
Net Asset Value (NAV) +$1.75 $14.04 $12.29
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0114
CLASS R (SYMBOL: N/A) CHANGE 1/31/10 7/31/09
- --------------------- ------ ------- -------
Net Asset Value (NAV) +$1.79 $14.12 $12.33
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0200
ADVISOR CLASS (SYMBOL: FKSCX) CHANGE 1/31/10 7/31/09
- ----------------------------- ------ ------- -------
Net Asset Value (NAV) +$1.82 $14.14 $12.32
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0218
Semiannual Report | 15
Performance Summary (CONTINUED)
PERFORMANCE(1)
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 C: 1% CONTINGENT DEFERRED SALES CHARGE IN
FIRST YEAR ONLY; CLASS R/ADVISOR CLASS: NO SALES CHARGES.
CLASS A 6-MONTH 1-YEAR INCEPTION (5/15/08)
- ------- ------- ------- -------------------
Cumulative Total Return(2) +14.75% +62.82% -3.38%
Average Annual Total Return(3) +8.15% +53.46% -5.31%
Value of $10,000 Investment(4) $10,815 $15,346 $9,106
Avg. Ann. Total Return (12/31/09)(5) +46.25% -4.68%
Total Annual Operating Expenses(6)
Without Waiver 2.10%
With Waiver 1.25%
CLASS C 6-MONTH 1-YEAR INCEPTION (5/15/08)
- ------- ------- ------- -------------------
Cumulative Total Return(2) +14.33% +61.51% -4.34%
Average Annual Total Return(3) +13.33% +60.51% -2.55%
Value of $10,000 Investment(4) $11,333 $16,051 $9,566
Avg. Ann. Total Return (12/31/09)(5) +53.06% -1.71%
Total Annual Operating Expenses(6)
Without Waiver 2.80%
With Waiver 1.95%
CLASS R 6-MONTH 1-YEAR INCEPTION (5/15/08)
- ------- ------- ------- -------------------
Cumulative Total Return(2) +14.68% +62.53% -3.81%
Average Annual Total Return(3) +14.68% +62.53% -2.24%
Value of $10,000 Investment(4) $11,468 $16,253 $9,619
Avg. Ann. Total Return (12/31/09)(5) +54.91% -1.43%
Total Annual Operating Expenses(6)
Without Waiver 2.30%
With Waiver 1.45%
ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR INCEPTION (10/15/02)
- ------------- ------- ------- ------- --------------------
Cumulative Total Return(2) +14.95% +63.34% +83.00% +264.55%
Average Annual Total Return(3) +14.95% +63.34% +12.85% +19.40%
Value of $10,000 Investment(4) $11,495 $16,334 $18,300 $36,455
Avg. Ann. Total Return (12/31/09)(5) +55.65% +13.73% +19.90%
Total Annual Operating Expenses(6)
Without Waiver 1.80%
With Waiver 0.95%
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. FOR MOST RECENT MONTH-END PERFORMANCE, GO TO
franklintempleton.com OR CALL (800) 342-5236.
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) FOR EACH CLASS OF THE FUND DO NOT EXCEED 0.95% (OTHER
THAN CERTAIN NONROUTINE EXPENSES OR COSTS, INCLUDING THOSE RELATING TO
LITIGATION, INDEMNIFICATION, REORGANIZATIONS AND LIQUIDATIONS) UNTIL 11/30/10.
16 | Semiannual Report
Performance Summary (CONTINUED)
ENDNOTES
THE FUND IS INTENDED FOR LONG-TERM INVESTORS WHO ARE COMFORTABLE WITH
FLUCTUATION IN THE VALUE OF THEIR INVESTMENT, ESPECIALLY OVER THE SHORT TERM.
SMALLER, RELATIVELY NEW AND/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. FOREIGN INVESTING
INVOLVES ADDITIONAL RISKS SUCH AS CURRENCY AND MARKET VOLATILITY, AS WELL AS
POLITICAL AND SOCIAL INSTABILITY. EMERGING MARKETS INVOLVE HEIGHTENED RISKS
RELATED TO THE SAME FACTORS. 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 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.) 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.
(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 average annual 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. In periods of market volatility, assets may decline
significantly, causing total annual Fund operating expenses to become
higher than the figures shown.
Semiannual Report | 17
Your Fund's Expenses
FRANKLIN INTERNATIONAL SMALL CAP GROWTH FUND
As a Fund shareholder, you can incur two types of costs:
- - Transaction costs, including sales charges (loads) on Fund purchases; 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.
18 | 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.
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 8/1/09 VALUE 1/31/10 PERIOD* 8/1/09-1/31/10
----------------- -------------- ----------------------
CLASS A
Actual $1,000 $1,147.50 $ 6.77
Hypothetical (5% return before expenses) $1,000 $1,018.90 $ 6.36
CLASS C
Actual $1,000 $1,143.30 $10.53
Hypothetical (5% return before expenses) $1,000 $1,015.38 $ 9.91
CLASS R
Actual $1,000 $1,146.80 $ 7.85
Hypothetical (5% return before expenses) $1,000 $1,017.90 $ 7.37
CLASS ADVISOR
Actual $1,000 $1,149.50 $ 5.15
Hypothetical (5% return before expenses) $1,000 $1,020.42 $ 4.84
* Expenses are calculated using the most recent six-month expense ratio, net
of expense waivers, annualized for each class (A: 1.25%; C: 1.95%; R:
1.45%; and Advisor: 0.95%), multiplied by the average account value over
the period, multiplied by 184/365 to reflect the one-half year period.
Semiannual Report | 19
Franklin Global Trust
FINANCIAL HIGHLIGHTS
FRANKLIN INTERNATIONAL GROWTH FUND
YEAR ENDED
SIX MONTHS ENDED JULY 31,
JANUARY 31, 2010 --------------------
CLASS A (UNAUDITED) 2009 2008(a)
- ------- ---------------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ..................... $ 7.47 $ 8.70 $ 10.00
------ ------- -------
Income from investment operations(b):
Net investment income (loss)(c) ....................... 0.01 0.08 (--)(d)
Net realized and unrealized gains (losses) ............ 0.75 (1.29) (1.30)
------ ------- -------
Total from investment operations ......................... 0.76 (1.21) (1.30)
------ ------- -------
Less distributions from net investment income ............ (0.08) (0.02) --
------ ------- -------
Net asset value, end of period ........................... $ 8.15 $ 7.47 $ 8.70
====== ======= =======
Total return(e) .......................................... 10.23% (13.89)% (13.00)%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by affiliates ........ 2.17% 5.16% 7.43%
Expenses net of waiver and payments by affiliates ........ 1.25% 1.45%(g) 1.45%
Net investment income (loss) ............................. 0.26% 1.37% (0.16)%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ........................ $7,495 $ 5,168 $ 4,431
Portfolio turnover rate .................................. 7.00% 14.88% 5.71%
(a) For the period June 3, 2008 (commencement of operations) to July 31, 2008.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
20 | Semiannual Report
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN INTERNATIONAL GROWTH FUND
YEAR ENDED
SIX MONTHS ENDED JULY 31,
JANUARY 31, 2010 --------------------
CLASS C (UNAUDITED) 2009 2008(a)
- ------- ---------------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ..................... $ 7.42 $ 8.69 $ 10.00
------ ------- -------
Income from investment operations(b):
Net investment income (loss)(c) ....................... (0.02) 0.03 (0.01)
Net realized and unrealized gains (losses) ............ 0.74 (1.29) (1.30)
------ ------- -------
Total from investment operations ......................... 0.72 (1.26) (1.31)
------ ------- -------
Less distributions from net investment income ............ (0.04) (0.01) --
------ ------- -------
Net asset value, end of period ........................... $ 8.10 $ 7.42 $ 8.69
====== ======= =======
Total return(d) .......................................... 9.55% (14.39)% (13.10)%
RATIOS TO AVERAGE NET ASSETS(e)
Expenses before waiver and payments by affiliates ........ 3.07% 5.86% 8.13%
Expenses net of waiver and payments by affiliates ........ 2.15% 2.15%(f) 2.15%
Net investment income (loss) ............................. (0.64)% 0.67% (0.86)%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ........................ $ 907 $ 507 $ 51
Portfolio turnover rate .................................. 7.00% 14.88% 5.71%
(a) For the period June 3, 2008 (commencement of operations) to July 31, 2008.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(e) Ratios are annualized for periods less than one year.
(f) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 21
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN INTERNATIONAL GROWTH FUND
YEAR ENDED
SIX MONTHS ENDED JULY 31,
JANUARY 31, 2010 --------------------
CLASS R (UNAUDITED) 2009 2008(a)
- ------- ---------------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ..................... $ 7.46 $ 8.70 $ 10.00
------ ------- -------
Income from investment operations(b):
Net investment income (loss)(c) ....................... (--)(d) 0.09 (0.01)
Net realized and unrealized gains (losses) ............ 0.74 (1.32) (1.29)
------ ------- -------
Total from investment operations ......................... 0.74 (1.23) (1.30)
------ ------- -------
Less distributions from net investment income ............ (0.06) (0.01) --
------ ------- -------
Net asset value, end of period ........................... $ 8.14 $ 7.46 $ 8.70
====== ======= =======
Total return(e) .......................................... 9.87% (14.03)% (13.00)%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by affiliates ........ 2.57% 5.36% 7.63%
Expenses net of waiver and payments by affiliates ........ 1.65% 1.65%(g) 1.65%
Net investment income (loss) ............................. (0.14)% 1.17% (0.36)%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ........................ $ 33 $ 24 $ 9
Portfolio turnover rate .................................. 7.00% 14.88% 5.71%
(a) For the period June 3, 2008 (commencement of operations) to July 31, 2008.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
22 | Semiannual Report
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN INTERNATIONAL GROWTH FUND
YEAR ENDED
SIX MONTHS ENDED JULY 31,
JANUARY 31, 2010 --------------------
ADVISOR CLASS (UNAUDITED) 2009 2008(a)
- ------------- ---------------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ..................... $ 7.48 $ 8.71 $ 10.00
------ ------- -------
Income from investment operations(b):
Net investment income(c) .............................. 0.01 0.13 --(d)
Net realized and unrealized gains (losses) ............ 0.76 (1.33) (1.29)
------ ------- -------
Total from investment operations ......................... 0.77 (1.20) (1.29)
------ ------- -------
Less distributions from net investment income ............ (0.09) (0.03) --
------ ------- -------
Net asset value, end of period ........................... $ 8.16 $ 7.48 $ 8.71
====== ======= =======
Total return(e) .......................................... 10.20% (13.58)% (12.90)%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by affiliates ........ 2.07% 4.86% 7.13%
Expenses net of waiver and payments by affiliates ........ 1.15% 1.15%(g) 1.15%
Net investment income .................................... 0.36% 1.67% 0.14%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ........................ $5,619 $ 1,718 $ 10
Portfolio turnover rate .................................. 7.00% 14.88% 5.71%
(a) For the period June 3, 2008 (commencement of operations) to July 31, 2008.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Amount rounds to less than $0.01 per share.
(e) Total return is not annualized for periods less than one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 23
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED)
FRANKLIN INTERNATIONAL GROWTH FUND COUNTRY SHARES VALUE
---------------------------------- -------------- ----------- ------------
COMMON STOCKS 94.3%
AEROSPACE & DEFENSE 2.8%
MTU Aero Engines Holding AG .................................... Germany 7,600 $ 395,679
------------
BIOTECHNOLOGY 2.6%
CSL Ltd. ....................................................... Australia 13,250 365,315
------------
CAPITAL MARKETS 6.4%
Credit Suisse Group AG ......................................... Switzerland 6,300 276,469
Credit Suisse Group AG, ADR .................................... Switzerland 600 25,908
Macquarie Group Ltd. ........................................... Australia 7,500 332,655
Man Group PLC .................................................. United Kingdom 69,800 264,388
------------
899,420
------------
CHEMICALS 3.0%
Syngenta AG .................................................... Switzerland 1,620 418,459
------------
COMMERCIAL BANKS 4.2%
(a, b) Anglo Irish Bancorp PLC ........................................ Ireland 11,500 --
(b) National Bank of Greece SA ..................................... Greece 12,375 274,699
(b) National Bank of Greece SA, ADR ................................ Greece 1,950 8,697
United Overseas Bank Ltd. ...................................... Singapore 23,300 300,816
------------
584,212
------------
DISTRIBUTORS 2.6%
Li & Fung Ltd. ................................................. Hong Kong 79,500 364,540
------------
DIVERSIFIED FINANCIAL SERVICES 1.9%
Deutsche Boerse AG ............................................. Germany 4,150 273,601
------------
ELECTRICAL EQUIPMENT 2.5%
ABB Ltd. ....................................................... Switzerland 19,450 356,637
------------
ENERGY EQUIPMENT & SERVICES 8.0%
Saipem SpA ..................................................... Italy 12,050 393,290
Wellstream Holdings PLC ........................................ United Kingdom 43,700 348,032
WorleyParsons Ltd. ............................................. Australia 18,500 385,900
------------
1,127,222
------------
FOOD & STAPLES RETAILING 4.4%
Tesco PLC ...................................................... United Kingdom 50,200 341,607
Woolworths Ltd. ................................................ Australia 12,190 278,745
------------
620,352
------------
HEALTH CARE EQUIPMENT & SUPPLIES 9.6%
Cochlear Ltd. .................................................. Australia 5,600 308,497
Essilor International SA ....................................... France 5,750 334,489
Getinge AB, B .................................................. Sweden 15,550 334,191
Terumo Corp. ................................................... Japan 6,700 375,521
------------
1,352,698
------------
24 | Semiannual Report
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN INTERNATIONAL GROWTH FUND COUNTRY SHARES VALUE
---------------------------------- -------------- ----------- ------------
COMMON STOCKS (CONTINUED)
HOUSEHOLD DURABLES 2.3%
(b) Urbi, Desarrollos Urbanos, SAB de CV ........................... Mexico 157,500 $ 328,291
------------
HOUSEHOLD PRODUCTS 2.4%
Reckitt Benckiser Group PLC .................................... United Kingdom 6,450 335,479
------------
INSURANCE 5.0%
Admiral Group PLC .............................................. United Kingdom 18,300 331,222
QBE Insurance Group Ltd. ....................................... Australia 18,270 370,278
------------
701,500
------------
LIFE SCIENCES TOOLS & SERVICES 2.4%
(b) QIAGEN NV ...................................................... Netherlands 15,200 332,771
------------
MEDIA 4.8%
Eutelsat Communications ........................................ France 9,900 319,538
Pearson PLC .................................................... United Kingdom 24,750 352,791
------------
672,329
------------
PERSONAL PRODUCTS 2.3%
Hengan International Group Co. Ltd. ............................ China 47,700 320,099
------------
PROFESSIONAL SERVICES 5.3%
Experian PLC ................................................... United Kingdom 38,900 372,561
Societe Generale de Surveillance Holdings SA ................... Switzerland 290 374,820
------------
747,381
------------
REAL ESTATE MANAGEMENT & DEVELOPMENT 2.1%
Hang Lung Properties Ltd. ...................................... Hong Kong 83,000 288,115
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 2.3%
ARM Holdings PLC ............................................... United Kingdom 102,500 318,269
------------
SOFTWARE 5.1%
Nintendo Co. Ltd. .............................................. Japan 1,400 391,560
The Sage Group PLC ............................................. United Kingdom 87,700 331,488
------------
723,048
------------
SPECIALTY RETAIL 2.5%
Esprit Holdings Ltd. ........................................... Hong Kong 49,541 351,597
------------
TEXTILES, APPAREL & LUXURY GOODS 4.7%
Li Ning Co. Ltd. ............................................... China 102,000 311,370
Luxottica Group SpA, ADR ....................................... Italy 13,500 350,460
------------
661,830
------------
TRADING COMPANIES & DISTRIBUTORS 3.0%
Noble Group Ltd. ............................................... Hong Kong 205,500 420,759
------------
WIRELESS TELECOMMUNICATION SERVICES 2.1%
America Movil SAB de CV, L, ADR ................................ Mexico 6,700 292,455
------------
TOTAL COMMON STOCKS (COST $12,651,568) ......................... 13,252,058
------------
Semiannual Report | 25
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN INTERNATIONAL GROWTH FUND COUNTRY SHARES VALUE
---------------------------------- -------------- ----------- ------------
SHORT TERM INVESTMENTS (COST $1,424,750) 10.1%
MONEY MARKET FUNDS 10.1%
(c) Institutional Fiduciary Trust Money Market Portfolio, 0.00% .... United States 1,424,750 $ 1,424,750
------------
TOTAL INVESTMENTS (COST $14,076,318) 104.4% .................... 14,676,808
OTHER ASSETS, LESS LIABILITIES (4.4)% .......................... (623,389)
------------
NET ASSETS 100.0% .............................................. $ 14,053,419
============
See Abbreviations on page 47.
(a) Security has been deemed illiquid because it may not be able to be sold
within seven days.
(b) Non-income producing.
(c) See Note 7 regarding investments in the Institutional Fiduciary Trust Money
Market Portfolio. The rate shown is the annualized seven-day yield at
period end.
The accompanying notes are an integral part of these financial statements.
26 | Semiannual Report
Franklin Global Trust
FINANCIAL HIGHLIGHTS
FRANKLIN INTERNATIONAL SMALL CAP GROWTH FUND
YEAR ENDED
SIX MONTHS ENDED JULY 31,
JANUARY 31, 2010 -------------------
CLASS A (UNAUDITED) 2009 2008(a)
- ------- ---------------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ........................................ $ 12.33 $ 19.88 $ 22.43
------- ------- -------
Income from investment operations(b):
Net investment income(c) ................................................. 0.11 0.13 0.08
Net realized and unrealized gains (losses) ............................... 1.71 (2.88) (2.63)
------- ------- -------
Total from investment operations ............................................ 1.82 (2.75) (2.55)
------- ------- -------
Less distributions from:
Net investment income .................................................... (0.02) (0.40) --
Net realized gains ....................................................... -- (4.40) --
------- ------- -------
Total distributions ......................................................... (0.02) (4.80) --
------- ------- -------
Redemption fees(d) .......................................................... -- -- --(e)
------- ------- -------
Net asset value, end of period .............................................. $ 14.13 $ 12.33 $ 19.88
======= ======= =======
Total return(f) ............................................................. 14.75% (5.00)% (11.37)%
RATIOS TO AVERAGE NET ASSETS(g)
Expenses before waiver and payments by affiliates and expense reduction ..... 1.57% 2.10% 1.74%
Expenses net of waiver and payments by affiliates ........................... 1.25% 1.25% 1.26%
Expenses net of waiver and payments by affiliates and expense reduction ..... 1.25%(h) 1.25%(h) 1.25%
Net investment income ....................................................... 1.48% 1.57% 1.33%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ........................................... $39,999 $10,520 $ 145
Portfolio turnover rate ..................................................... 5.72% 71.98% 70.52%
(a) For the period May 15, 2008 (effective date) to July 31, 2008.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Effective September 1, 2008, the redemption fee was eliminated.
(e) Amount rounds to less than $0.01 per share.
(f) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(g) Ratios are annualized for periods less than one year.
(h) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 27
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN INTERNATIONAL SMALL CAP GROWTH FUND
YEAR ENDED
SIX MONTHS ENDED JULY 31,
JANUARY 31, 2010 -------------------
CLASS C (UNAUDITED) 2009 2008(a)
- ------- ---------------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ........................................ $12.29 $19.86 $ 22.43
------ ------ -------
Income from investment operations(b):
Net investment income(c) ................................................. 0.06 0.06 0.04
Net realized and unrealized gains (losses) ............................... 1.70 (2.87) (2.61)
------ ------ -------
Total from investment operations ............................................ 1.76 (2.81) (2.57)
------ ------ -------
Less distributions from:
Net investment income .................................................... (0.01) (0.36) --
Net realized gains ....................................................... -- (4.40) --
------ ------ -------
Total distributions ......................................................... (0.01) (4.76) --
------ ------ -------
Redemption fees(d) .......................................................... -- -- --(e)
------ ------ -------
Net asset value, end of period .............................................. $14.04 $12.29 $ 19.86
====== ====== =======
Total return(f) ............................................................. 14.33% (5.51)% (11.46)%
RATIOS TO AVERAGE NET ASSETS(g)
Expenses before waiver and payments by affiliates and expense reduction ..... 2.27% 2.80% 2.44%
Expenses net of waiver and payments by affiliates ........................... 1.95% 1.95% 1.96%
Expenses net of waiver and payments by affiliates and expense reduction ..... 1.95%(h) 1.95%(h) 1.95%
Net investment income ....................................................... 0.78% 0.87% 0.63%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ........................................... $6,418 $1,720 $ 79
Portfolio turnover rate ..................................................... 5.72% 71.98% 70.52%
(a) For the period May 15, 2008 (effective date) to July 31, 2008.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Effective September 1, 2008, the redemption fee was eliminated.
(e) Amount rounds to less than $0.01 per share.
(f) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(g) Ratios are annualized for periods less than one year.
(h) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
28 | Semiannual Report
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN INTERNATIONAL SMALL CAP GROWTH FUND
YEAR ENDED
SIX MONTHS ENDED JULY 31,
JANUARY 31, 2010 -------------------
CLASS R (UNAUDITED) 2009 2008(a)
- ------- ---------------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ........................................ $12.33 $19.87 $ 22.43
------ ------ -------
Income from investment operations(b):
Net investment income(c) ................................................. 0.10 0.14 0.07
Net realized and unrealized gains (losses) ............................... 1.71 (2.92) (2.63)
------ ------ -------
Total from investment operations ............................................ 1.81 (2.78) (2.56)
------ ------ -------
Less distributions from:
Net investment income .................................................... (0.02) (0.36) --
Net realized gains ....................................................... -- (4.40) --
------ ------ -------
Total distributions ......................................................... (0.02) (4.76) --
------ ------ -------
Redemption fees(d) .......................................................... -- -- --(e)
------ ------ -------
Net asset value, end of period .............................................. $14.12 $12.33 $ 19.87
====== ====== =======
Total return(f) ............................................................. 14.68% (5.37)% (11.37)%
RATIOS TO AVERAGE NET ASSETS(g)
Expenses before waiver and payments by affiliates and expense reduction ..... 1.77% 2.30% 1.94%
Expenses net of waiver and payments by affiliates ........................... 1.45% 1.45% 1.46%
Expenses net of waiver and payments by affiliates and expense reduction ..... 1.45%(h) 1.45%(h) 1.45%
Net investment income ....................................................... 1.28% 1.37% 1.13%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ........................................... $1,833 $ 224 $ 4
Portfolio turnover rate ..................................................... 5.72% 71.98% 70.52%
(a) For the period May 15, 2008 (effective date) to July 31, 2008.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Effective September 1, 2008, the redemption fee was eliminated.
(e) Amount rounds to less than $0.01 per share.
(f) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(g) Ratios are annualized for periods less than one year.
(h) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 29
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN INTERNATIONAL SMALL CAP GROWTH FUND
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, 2010 --------------------------------------------------
ADVISOR CLASS (UNAUDITED) 2009 2008 2007 2006 2005
- ------------- ---------------- -------- ------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............. $ 12.32 $ 19.90 $ 31.70 $ 24.45 $ 19.11 $ 15.70
------- ------- ------- ------- ------- -------
Income from investment operations(a):
Net investment income(b) ...................... 0.12 0.24 0.41 0.17 0.23 0.16
Net realized and unrealized gains (losses) .... 1.72 (3.01) (5.13) 7.58 6.94 5.12
------- ------- ------- ------- ------- -------
Total from investment operations ................. 1.84 (2.77) (4.72) 7.75 7.17 5.28
------- ------- ------- ------- ------- -------
Less distributions from:
Net investment income ......................... (0.02) (0.41) (0.20) (0.09) (0.22) (0.03)
Net realized gains ............................ -- (4.40) (6.88) (0.41) (1.61) (1.84)
------- ------- ------- ------- ------- -------
Total distributions .............................. (0.02) (4.81) (7.08) (0.50) (1.83) (1.87)
------- ------- ------- ------- ------- -------
Redemption fees(c) ............................... -- -- --(d) -- -- --
------- ------- ------- ------- ------- -------
Net asset value, end of period ................... $ 14.14 $ 12.32 $ 19.90 $ 31.70 $ 24.45 $ 19.11
======= ======= ======= ======= ======= =======
Total return(e) .................................. 14.95% (5.01)% (17.16)% 32.04% 38.39% 35.86%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by
affiliates and expense reduction .............. 1.27% 1.80% 1.44% 1.26% 1.21% 1.48%
Expenses net of waiver and payments by
affiliates .................................... 0.95% 0.95% 0.96% 0.96% 0.96% 0.95%
Expenses net of waiver and payments by
affiliates and expense reduction .............. 0.95%(g) 0.95%(g) 0.95% 0.95% 0.95% 0.95%
Net investment income ............................ 1.78% 1.87% 1.63% 0.63% 0.93% 0.95%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ................ $67,579 $13,680 $23,271 $43,518 $55,646 $16,382
Portfolio turnover rate .......................... 5.72% 71.98% 70.52% 51.78% 78.53% 113.27%
(a) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return is not annualized for periods less than one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
30 | Semiannual Report
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED)
FRANKLIN INTERNATIONAL SMALL CAP GROWTH FUND COUNTRY SHARES VALUE
-------------------------------------------- -------------- ---------------- ------------
COMMON STOCKS 91.1%
AEROSPACE & DEFENSE 2.5%
MTU Aero Engines Holding AG............................. Germany 55,200 $ 2,873,882
------------
BIOTECHNOLOGY 3.1%
Genus PLC............................................... United Kingdom 331,777 3,615,209
------------
CAPITAL MARKETS 3.2%
ARA Asset Management Ltd................................ Singapore 5,327,100 3,711,473
------------
CHEMICALS 3.2%
Symrise AG.............................................. Germany 164,900 3,686,721
------------
COMMERCIAL SERVICES & SUPPLIES 3.5%
Homeserve PLC........................................... United Kingdom 153,700 4,003,282
------------
DIVERSIFIED CONSUMER SERVICES 3.6%
Dignity PLC............................................. United Kingdom 421,920 4,206,180
------------
DIVERSIFIED FINANCIAL SERVICES 7.4%
(a) Neovia Financial PLC.................................... United Kingdom 3,842,300 3,532,486
(a) RHJ International....................................... Belgium 610,333 5,035,049
------------
8,567,535
------------
ELECTRICAL EQUIPMENT 2.3%
Nexans SA............................................... France 33,000 2,638,519
------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS 3.7%
Rotork PLC.............................................. United Kingdom 211,100 4,279,852
------------
FOOD PRODUCTS 4.4%
Aryzta AG............................................... Switzerland 31,300 1,233,790
Hsu Fu Chi International Ltd............................ Singapore 1,432,300 1,934,715
Vitasoy International Holdings Ltd...................... Hong Kong 2,894,500 1,964,774
------------
5,133,279
------------
HOTELS, RESTAURANTS & LEISURE 2.8%
Paddy Power PLC......................................... Ireland 99,700 3,303,794
------------
INSURANCE 7.6%
(a) Arch Capital Group Ltd.................................. United States 37,300 2,668,442
Fairfax Financial Holdings Ltd.......................... Canada 8,400 2,848,893
Lancashire Holdings Ltd................................. United Kingdom 465,560 3,331,118
------------
8,848,453
------------
IT SERVICES 3.1%
Wire Card AG............................................ Germany 280,400 3,572,839
------------
LEISURE EQUIPMENT & PRODUCTS 2.1%
Vitec Group PLC......................................... United Kingdom 366,181 2,412,205
------------
MACHINERY 5.1%
Pfeiffer Vacuum Technology AG........................... Germany 23,157 1,920,009
Schindler Holding AG, PC................................ Switzerland 33,100 2,457,342
Spirax-Sarco Engineering PLC............................ United Kingdom 74,309 1,491,099
------------
5,868,450
------------
Semiannual Report | 31
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN INTERNATIONAL SMALL CAP GROWTH FUND COUNTRY SHARES VALUE
-------------------------------------------- -------------- ---------------- ------------
COMMON STOCKS (CONTINUED)
MARINE 2.3%
Kuehne & Nagel International AG......................... Switzerland 26,900 $ 2,614,556
------------
MEDIA 7.3%
ASATSU-DK Inc........................................... Japan 151,300 3,098,734
CTS Eventim AG.......................................... Germany 80,030 3,750,502
Sky Perfect JSAT Holdings Inc........................... Japan 3,900 1,669,639
------------
8,518,875
------------
OFFICE ELECTRONICS 4.6%
Neopost SA.............................................. France 67,034 5,334,307
------------
PERSONAL PRODUCTS 2.4%
Aderans Co. Ltd......................................... Japan 256,700 2,766,605
------------
PROFESSIONAL SERVICES 3.0%
Experian PLC............................................ United Kingdom 363,900 3,485,220
------------
REAL ESTATE MANAGEMENT & DEVELOPMENT 6.8%
Daibiru Corp............................................ Japan 560,400 4,221,001
Savills PLC............................................. United Kingdom 725,206 3,668,759
------------
7,889,760
------------
SPECIALTY RETAIL 7.1%
Carpetright PLC......................................... United Kingdom 360,717 5,294,568
Jumbo SA................................................ Greece 275,163 2,899,503
------------
8,194,071
------------
TOTAL COMMON STOCKS (COST $100,985,699)................. 105,525,067
------------
PRINCIPAL AMOUNT
SHORT TERM INVESTMENTS 8.6%
TIME DEPOSITS 8.6%
Paribas Corp., 0.11%, 2/01/10........................... United States $5,000,000 5,000,000
Royal Bank of Canada, 0.10%, 2/01/10.................... United States 5,000,000 5,000,000
------------
TOTAL TIME DEPOSITS (COST $10,000,000).................. 10,000,000
------------
TOTAL INVESTMENTS (COST $110,985,699) 99.7%............. 115,525,067
OTHER ASSETS, LESS LIABILITIES 0.3%..................... 304,559
------------
NET ASSETS 100.0%....................................... $115,829,626
============
See Abbreviations on page 47.
(a) Non-income producing.
The accompanying notes are an integral part of these financial statements.
32 | Semiannual Report
Franklin Global Trust
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
January 31, 2010 (unaudited)
FRANKLIN
FRANKLIN INTERNATIONAL
INTERNATIONAL SMALL CAP
GROWTH FUND GROWTH FUND
------------- -------------
Assets:
Investments in securities:
Cost - Unaffiliated issuers .................................... $ 12,651,568 $ 110,985,699
Cost - Sweep Money Fund (Note 7) ............................... 1,424,750 --
------------ -------------
Total cost of investments ...................................... $ 14,076,318 $ 110,985,699
============ =============
Value - Unaffiliated issuers ................................... $ 13,252,058 $ 115,525,067
Value - Sweep Money Fund (Note 7) .............................. 1,424,750 --
------------ -------------
Total value of investments ..................................... 14,676,808 115,525,067
Cash .............................................................. 2,083 --
Receivables:
Capital shares sold ............................................ 101,159 2,249,364
Dividends ...................................................... 2,772 35,099
------------ -------------
Total assets ................................................ 14,782,822 117,809,530
------------ -------------
Liabilities:
Payables:
Investment securities purchased ................................ 700,783 1,516,395
Capital shares redeemed ........................................ -- 319,459
Affiliates ..................................................... 6,887 89,954
Funds advanced by custodian ....................................... -- 50,093
Foreign currency advanced by custodian ............................ -- 4,003
Accrued expenses and other liabilities ............................ 21,733 --
------------ -------------
Total liabilities ........................................... 729,403 1,979,904
------------ -------------
Net assets, at value ..................................... $ 14,053,419 $ 115,829,626
============ =============
Net assets consist of:
Paid-in capital ................................................... $ 14,180,551 $ 114,821,890
Undistributed net investment income (distributions in excess of net
investment income) ............................................. (18,869) 595,653
Net unrealized appreciation (depreciation) ........................ 605,091 4,551,078
Accumulated net realized gain (loss) .............................. (713,354) (4,138,995)
------------ -------------
Net assets, at value ..................................... $ 14,053,419 $ 115,829,626
============ =============
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 33
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
January 31, 2010 (unaudited)
FRANKLIN
FRANKLIN INTERNATIONAL
INTERNATIONAL SMALL CAP
GROWTH FUND GROWTH FUND
------------- -------------
CLASS A:
Net assets, at value ................................................... $7,495,201 $39,998,707
---------- -----------
Shares outstanding ..................................................... 919,756 2,830,700
---------- -----------
Net asset value per share(a) ........................................... $ 8.15 $ 14.13
---------- -----------
Maximum offering price per share (net asset value per share / 94.25%) .. $ 8.65 $ 14.99
---------- -----------
CLASS C:
Net assets, at value ................................................... $ 907,089 $ 6,418,133
---------- -----------
Shares outstanding ..................................................... 112,043 456,997
---------- -----------
Net asset value and maximum offering price per share(a) ................ $ 8.10 $ 14.04
---------- -----------
CLASS R:
Net assets, at value ................................................... $ 32,535 $ 1,833,291
---------- -----------
Shares outstanding ..................................................... 3,995 129,849
---------- -----------
Net asset value and maximum offering price per share ................... $ 8.14 $ 14.12
---------- -----------
ADVISOR CLASS:
Net assets, at value ................................................... $5,618,594 $67,579,495
---------- -----------
Shares outstanding ..................................................... 688,616 4,779,455
---------- -----------
Net asset value and maximum offering price per share ................... $ 8.16 $ 14.14
---------- -----------
(a) Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable.
The accompanying notes are an integral part of these financial statements.
34 | Semiannual Report
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF OPERATIONS
for the six months ended January 31, 2010 (unaudited)
FRANKLIN
FRANKLIN INTERNATIONAL
INTERNATIONAL SMALL CAP
GROWTH FUND GROWTH FUND
------------- -------------
Investment income:
Dividends ......................................................................... $ 75,897 $ 950,333
Interest .......................................................................... -- 3,635
--------- -----------
Total investment income ..................................................... 75,897 953,968
--------- -----------
Expenses:
Management fees (Note 3a) ......................................................... 36,970 260,101
Administrative fees (Note 3b) ..................................................... 10,006 69,360
Distribution fees: (Note 3c)
Class A ........................................................................ 3,178 37,291
Class C ........................................................................ 3,778 19,218
Class R ........................................................................ 74 2,998
Transfer agent fees (Note 3e) ..................................................... 7,335 45,063
Custodian fees (Note 4) ........................................................... 1,145 3,278
Reports to shareholders ........................................................... 4,737 16,295
Registration and filing fees ...................................................... 23,745 26,691
Professional fees ................................................................. 15,770 15,659
Trustees' fees and expenses ....................................................... -- 923
Other ............................................................................. 4,031 4,490
--------- -----------
Total expenses .............................................................. 110,769 501,367
Expense reductions (Note 4) ................................................. -- (17)
Expenses waived/paid by affiliates (Note 3f) ................................ (46,108) (112,365)
--------- -----------
Net expenses ............................................................. 64,661 388,985
--------- -----------
Net investment income ................................................. 11,236 564,983
--------- -----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments .................................................................... (240,811) 765,556
Foreign currency transactions .................................................. (4,356) 21,470
--------- -----------
Net realized gain (loss) .............................................. (245,167) 787,026
--------- -----------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................................... 768,088 3,833,704
Translation of other assets and liabilities denominated in foreign currencies .. 4,459 10,422
--------- -----------
Net change in unrealized appreciation (depreciation) .................. 772,547 3,844,126
--------- -----------
Net realized and unrealized gain (loss) .............................................. 527,380 4,631,152
--------- -----------
Net increase (decrease) in net assets resulting from operations ...................... $ 538,616 $ 5,196,135
========= ===========
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 35
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FRANKLIN INTERNATIONAL FRANKLIN INTERNATIONAL
GROWTH FUND SMALL CAP GROWTH FUND
------------------------------ ------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, 2010 YEAR ENDED JANUARY 31, 2010 YEAR ENDED
(UNAUDITED) JULY 31, 2009 (UNAUDITED) JULY 31, 2009
---------------- ------------- ---------------- -------------
Increase (decrease) in net assets:
Operations:
Net investment income .................................. $ 11,236 $ 57,566 $ 564,983 $ 281,756
Net realized gain (loss) from investments and foreign
currency transactions ............................... (245,167) (410,020) 787,026 (4,893,649)
Net change in unrealized appreciation (depreciation)
on investments and translation of other assets and
liabilities denominated in foreign currencies ....... 772,547 420,379 3,844,126 2,768,127
----------- ---------- ------------ ------------
Net increase (decrease) in net assets resulting
from operations .................................. 538,616 67,925 5,196,135 (1,843,766)
----------- ---------- ------------ ------------
Distributions to shareholders from:
Net investment income:
Class A ............................................. (64,043) (12,702) (45,099) (36,804)
Class C ............................................. (3,752) (239) (4,115) (3,892)
Class R ............................................. (219) (16) (2,431) (79)
Advisor Class ....................................... (28,974) (46) (73,612) (340,342)
Net realized gains:
Class A ............................................. -- -- -- (400,461)
Class C ............................................. -- -- -- (47,322)
Class R ............................................. -- -- -- (980)
Advisor Class ....................................... -- -- -- (3,634,009)
----------- ---------- ------------ ------------
Total distributions to shareholders ....................... (96,988) (13,003) (125,257) (4,463,889)
----------- ---------- ------------ ------------
Capital share transactions: (Note 2)
Class A ............................................. 1,915,142 1,165,314 27,603,615 9,505,478
Class C ............................................. 352,879 394,187 4,433,526 1,471,743
Class R ............................................. 6,635 11,402 1,530,116 188,129
Advisor Class ....................................... 3,920,478 1,289,930 51,048,077 (2,212,961)
----------- ---------- ------------ ------------
Total capital share transactions .......................... 6,195,134 2,860,833 84,615,334 8,952,389
----------- ---------- ------------ ------------
Net increase (decrease) in net assets ............ 6,636,762 2,915,755 89,686,212 2,644,734
Net assets:
Beginning of period ....................................... 7,416,657 4,500,902 26,143,414 23,498,680
----------- ---------- ------------ ------------
End of period ............................................. $14,053,419 $7,416,657 $115,829,626 $ 26,143,414
=========== ========== ============ ============
Undistributed net investment income (distributions in
excess of net investment income) included in net assets:
End of period ............................................. $ (18,869) $ 66,883 $ 595,653 $ 155,927
=========== ========== ============ ============
The accompanying notes are an integral part of these financial statements.
36 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Global Trust (Trust) is registered under the Investment Company Act of
1940, as amended, (1940 Act) as an open-end investment company, consisting of
five separate funds, two of which are included in this report (Funds). The
financial statements of the remaining funds in the Trust are presented
separately. The Funds offer four classes of shares: Class A, Class C, Class R,
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 Funds' significant accounting policies.
A. SECURITY VALUATION
Equity and other 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. Certain equity securities are valued based upon
fundamental characteristics or relationships to similar securities. Investments
in open-end mutual funds are valued at the closing net asset value. Time
deposits are valued at cost.
Foreign equity 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 equity 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 security is determined.
The Funds have 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 based upon the underlying investment book value,
anticipated future cash flows, market changes in comparable or similar
securities, 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
Semiannual Report | 37
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. SECURITY VALUATION (CONTINUED)
fair value procedures, which may include the use of independent pricing
services. At January 31, 2010, a market event occurred resulting in a portion of
the securities held by the Funds being fair valued. All security valuation
procedures are approved by the Funds' Board of Trustees.
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. The Funds may enter
into foreign currency exchange contracts to facilitate transactions denominated
in a foreign currency. Purchases and sales of securities, income and expense
items denominated in foreign currencies are translated into U.S. dollars at the
exchange rate in effect on the transaction date. 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
Funds' Board of Trustees.
The Funds do not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments 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. INCOME TAXES
No provision has been made for U.S. income taxes because it is each 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.
The Franklin International Growth Fund has reviewed the tax positions, taken on
federal income tax returns, for each of the two open tax years and as of January
31, 2010, and the Franklin International Small Cap Growth Fund has reviewed the
tax positions, taken on federal income tax returns, for each of the three open
tax years and as of January 31, 2010. The Funds have determined that no
provision for income tax is required in the Funds' financial statements.
38 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. 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 Funds are 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.
Common expenses incurred by the Trust are allocated among the funds based on the
ratio of net assets of each fund to the combined net assets of the Trust. Fund
specific expenses are charged directly to the fund that incurred the expense.
Realized and unrealized gains and losses and net investment income, not
including 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.
E. 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.
F. REDEMPTION FEES
A short term trading redemption fee was imposed, with some exceptions, on any
fund shares that were redeemed or exchanged within seven calendar days following
their purchase date. The redemption fee was 2% of the amount redeemed. Such fees
were retained by the funds and accounted for as an addition to paid-in capital.
Effective September 1, 2008, the redemption fee was eliminated.
G. GUARANTEES AND INDEMNIFICATIONS
Under the Trust's organizational documents, its officers and trustees are
indemnified by the Trust against certain liabilities arising out of the
performance of their duties to the Trust. Additionally,
Semiannual Report | 39
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. GUARANTEES AND INDEMNIFICATIONS (CONTINUED)
in the normal course of business, the Trust, on behalf of the Funds, enters into
contracts with service providers that contain general indemnification clauses.
The Trust's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Trust that have not yet
occurred. Currently, the Trust expects the risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
At January 31, 2010, there were an unlimited number of shares authorized
(without par value). Transactions in the Funds' shares were as follows:
FRANKLIN INTERNATIONAL FRANKLIN INTERNATIONAL
GROWTH FUND SMALL CAP GROWTH FUND
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
------- ------------ --------- -----------
CLASS A SHARES:
Six Months ended January 31, 2010
Shares sold ....................... 313,765 $ 2,612,702 2,193,135 $30,617,994
Shares issued in reinvestment of
distributions .................. 3,013 25,397 2,975 40,426
Shares redeemed ................... (89,292) (722,957) (218,782) (3,054,805)
------- ----------- --------- -----------
Net increase (decrease) ........... 227,486 $ 1,915,142 1,977,328 $27,603,615
======= =========== ========= ===========
Year ended July 31, 2009
Shares sold ....................... 260,421 $ 1,615,236 891,566 $ 9,999,784
Shares issued in reinvestment of
distributions .................. 271 1,460 48,241 435,614
Shares redeemed ................... (77,492) (451,382) (93,715) (929,920)
------- ----------- --------- -----------
Net increase (decrease) ........... 183,200 $ 1,165,314 846,092 $ 9,505,478
======= =========== ========= ===========
CLASS C SHARES:
Six Months ended January 31, 2010
Shares sold ....................... 54,355 $ 441,566 384,717 $ 5,377,113
Shares issued in reinvestment of
distributions .................. 383 3,206 257 3,586
Shares redeemed ................... (10,984) (91,893) (67,952) (947,173)
------- ----------- --------- -----------
Net increase (decrease) ........... 43,754 $ 352,879 317,022 $ 4,433,526
======= =========== ========= ===========
Year ended July 31, 2009
Shares sold ....................... 89,777 $ 542,446 135,878 $ 1,481,491
Shares issued in reinvestment of
distributions .................. 21 113 5,671 51,214
Shares redeemed ................... (27,341) (148,372) (5,533) (60,962)
------- ----------- --------- -----------
Net increase (decrease) ........... 62,457 $ 394,187 136,016 $ 1,471,743
======= =========== ========= ===========
40 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
FRANKLIN INTERNATIONAL FRANKLIN INTERNATIONAL
GROWTH FUND SMALL CAP GROWTH FUND
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
------- ------------ --------- -----------
CLASS R SHARES:
Six Months ended January 31, 2010
Shares sold ....................... 788 $ 6,515 116,717 $ 1,600,655
Shares issued in reinvestment of
distributions .................. 19 161 173 2,427
Shares redeemed ................... (5) (41) (5,179) (72,966)
------- ---------- --------- -----------
Net increase (decrease) ........... 802 $ 6,635 111,711 $ 1,530,116
======= ========== ========= ===========
Year ended July 31, 2009
Shares sold ....................... 2,194 $ 11,409 17,915 $ 188,129
Shares redeemed ................... (1) (7) -- --
------- ---------- --------- -----------
Net increase (decrease) ........... 2,193 $ 11,402 17,915 $ 188,129
======= ========== ========= ===========
ADVISOR CLASS SHARES:
Six Months ended January 31, 2010
Shares sold ....................... 465,153 $3,968,680 3,847,787 $53,564,961
Shares issued in reinvestment of
distributions .................. 104 878 2,500 35,023
Shares redeemed ................... (6,361) (49,080) (181,330) (2,551,907)
------- ---------- --------- -----------
Net increase (decrease) ........... 458,896 $3,920,478 3,668,957 $51,048,077
======= ========== ========= ===========
Year ended July 31, 2009
Shares sold ....................... 243,552 $1,391,877 451,434 $ 5,257,142
Shares issued in reinvestment of
distributions .................. 2 12 241,589 2,174,305
Shares redeemed ................... (15,019) (101,959) (751,984) (9,644,408)
------- ---------- --------- -----------
Net increase (decrease) ........... 228,535 $1,289,930 (58,961) $(2,212,961)
======= ========== ========= ===========
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 Trust are also officers and/or directors of the following
subsidiaries:
SUBSIDIARY AFFILIATION
- ---------- -----------
Franklin Advisers, Inc. (Advisers) Investment manager
Franklin Templeton Institutional, LLC (FT Institutional) 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
Semiannual Report | 41
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
A. MANAGEMENT FEES
The Franklin International Growth Fund pays an investment management fee to FT
Institutional based on the average daily net assets of the fund as follows:
ANNUALIZED FEE RATE NET ASSETS
- ------------------- -----------------------------------------------------
0.750% Up to and including $500 million
0.650% Over $500 million, up to and including $1 billion
0.600% Over $1 billion, up to and including $1.5 billion
0.550% Over $1.5 billion, up to and including $6.5 billion
0.525% Over $6.5 billion, up to and including $11.5 billion
0.500% Over $11.5 billion, up to and including $16.5 billion
0.490% Over $16.5 billion, up to and including $19 billion
0.480% Over $19 billion, up to and including $21.5 billion
0.470% In excess of $21.5 billion
The Franklin International Small Cap Growth Fund pays an investment management
fee to Advisers of 0.75% per year of the average daily net assets of the fund.
Under a subadvisory agreement, FT Institutional, an affiliate of Advisers,
provides subadvisory services to the Franklin International Small Cap Growth
Fund and receives from Advisers fees based on the average daily net assets of
the fund.
B. ADMINISTRATIVE FEES
The Funds pay an administrative fee to FT Services of 0.20% per year of the
average daily net assets of each of the Funds.
C. DISTRIBUTION FEES
The Funds' 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 Funds' Class A reimbursement distribution plans, the
Funds reimburse Distributors for costs incurred in connection with the
servicing, sale and distribution of the Funds' shares up to the maximum annual
plan rate. Under the Class A reimbursement distribution plans, costs exceeding
the maximum for the current plan year cannot be reimbursed in subsequent
periods.
In addition, under the Funds' Class C and R compensation distribution plans, the
Funds pay Distributors for costs incurred in connection with the servicing, sale
and distribution of the Funds' shares up to the maximum annual plan rate for
each class.
42 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
C. DISTRIBUTION FEES (CONTINUED)
The maximum annual plan rates, based on the average daily net assets, for each
class, are as follows:
FRANKLIN
FRANKLIN INTERNATIONAL
INTERNATIONAL SMALL CAP
GROWTH FUND GROWTH FUND
------------- -------------
Reimbursement Plans:
Class A ............ 0.35% 0.35%
Compensation Plans:
Class C ............ 1.00% 1.00%
Class R ............ 0.50% 0.50%
The Board of Trustees has set the current rate at 0.30% per year for Class A
shares until further notice and approval by the Board.
D. SALES CHARGES/UNDERWRITING AGREEMENTS
Distributors has advised the Funds of the following commission transactions
related to the sales and redemptions of the Funds' shares for the period:
FRANKLIN
FRANKLIN INTERNATIONAL
INTERNATIONAL SMALL CAP
GROWTH FUND GROWTH FUND
------------- -------------
Sales charges retained net of commissions
paid to unaffiliated broker/dealers ...... $7,369 $81,003
Contingent deferred sales charges retained .. $ 11 $ 317
E. TRANSFER AGENT FEES
For the period ended January 31, 2010, the Funds paid transfer agent fees as
noted in the Statements of Operations of which the following amounts were
retained by Investor Services:
FRANKLIN
FRANKLIN INTERNATIONAL
INTERNATIONAL SMALL CAP
GROWTH FUND GROWTH FUND
------------- -------------
Transfer agent fees .. $4,841 $25,847
Semiannual Report | 43
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
F. WAIVER AND EXPENSE REIMBURSEMENTS
Advisers, FT Institutional, and FT Services have contractually agreed in advance
to waive or limit their respective fees and to assume as their own expense
certain expenses otherwise payable by the Franklin International Growth Fund and
the Franklin International Small Cap Growth Fund so that the common expenses
(i.e. a combination of management fees, administrative fees, and other expenses,
but excluding distribution fees and acquired fund fees and expenses), for each
class of the funds do not exceed 1.15% and 0.95%, respectively (other than
certain non-routine expenses or costs, including those relating to litigation,
indemnification, reorganizations, and liquidations) until November 30, 2010.
G. OTHER AFFILIATED TRANSACTIONS
At January 31, 2010, Advisers or an affiliate owned 28.88% of the Franklin
International Growth Fund's outstanding shares.
4. EXPENSE OFFSET ARRANGEMENT
The Funds have entered into an arrangement with their custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Funds' custodian expenses. During the period ended January 31, 2010, the
custodian fees were reduced as noted in the Statements of Operations.
5. INCOME TAXES
For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At July 31, 2009, the capital loss carryforwards were as follows:
FRANKLIN
FRANKLIN INTERNATIONAL
INTERNATIONAL SMALL CAP
GROWTH FUND GROWTH FUND
------------- -------------
Capital loss carryforwards expiring in:
2016 $ 53,986 $ --
2017 61,505 697,957
-------- --------
$115,491 $697,957
======== ========
For tax purposes, realized capital losses and realized currency losses occurring
subsequent to October 31, may be deferred and treated as occurring on the first
day of the following fiscal year. At July 31, 2009, the Franklin International
Growth Fund deferred realized capital losses of $226,885 and the Franklin
International Small Cap Growth Fund deferred realized capital losses of
$4,030,740.
44 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. INCOME TAXES (CONTINUED)
At January 31, 2010, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
FRANKLIN
FRANKLIN INTERNATIONAL
INTERNATIONAL SMALL CAP
GROWTH FUND GROWTH FUND
------------- -------------
Cost of investments .......... $14,307,297 $111,127,942
=========== ============
Unrealized appreciation ...... $ 1,169,611 $ 6,854,732
Unrealized depreciation ...... (800,100) (2,457,607)
----------- ------------
Net unrealized appreciation
(depreciation) ............ $ 369,511 $ 4,397,125
=========== ============
Net investment income 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, 2010, were as follows:
FRANKLIN
FRANKLIN INTERNATIONAL
INTERNATIONAL SMALL CAP
GROWTH FUND GROWTH FUND
------------- -------------
Purchases .................... $6,349,195 $79,893,953
Sales ........................ $ 655,442 $ 3,533,511
7. INVESTMENTS IN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Franklin International Growth Fund may invest in the 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.
8. 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.
Semiannual Report | 45
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
9. CREDIT FACILITY
The Funds, together with other U.S. registered and foreign investment funds
(collectively "Borrowers"), managed by Franklin Templeton Investments, are
borrowers in a 364-day joint syndicated senior unsecured credit facility
totaling $750 million (Global Credit Facility) to provide a source of funds to
the Borrowers for temporary and emergency purposes, including the ability to
meet future unanticipated or unusually large redemption requests. On January 22,
2010, the Funds renewed the Global Credit Facility for a total of $750 million,
maturing January 21, 2011.
Under the terms of the Global Credit Facility, the Funds shall, in addition to
interest charged on any borrowings made by the Funds and other costs incurred by
the Funds, pay its share of fees and expenses incurred in connection with the
implementation and maintenance of the Global Credit Facility, based upon its
relative share of the aggregate net assets of all of the Borrowers, including an
annual commitment fee of 0.10% based upon the unused portion of the Global
Credit Facility, which is reflected in other expenses on the Statements of
Operations. During the period ended January 31, 2010, the Funds did not utilize
the Global Credit Facility.
10. FAIR VALUE MEASUREMENTS
The Funds follow a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Funds' own market
assumptions (unobservable inputs). These inputs are used in determining the
value of the Funds' investments and are summarized in the following fair value
hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Funds' own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of the inputs used as of January 31, 2010, in valuing
the Funds' assets carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- -------- ------- -----------
FRANKLIN INTERNATIONAL GROWTH FUND
ASSETS:
Investments in Securities:
Equity Investments:
Commercial Banks ..................... $ 584,212 $ -- $--(a) $ 584,212
Health Care Equipment & Supplies ..... 1,018,209 334,489 -- 1,352,698
Media ................................ 352,791 319,538 -- 672,329
Other Equity Investments(b)........... 10,642,819 -- -- 10,642,819
Short Term Investments .................. 1,424,750 -- -- 1,424,750
----------- -------- --- -----------
Total Investments in Securities ... $14,022,781 $654,027 $-- $14,676,808
=========== ======== === ===========
46 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
10. FAIR VALUE MEASUREMENTS (CONTINUED)
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- ----------- ------- ------------
FRANKLIN INTERNATIONAL SMALL CAP GROWTH FUND
ASSETS:
Investments in Securities:
Equity Investments:
Electrical Equipment ................ $ -- $ 2,638,519 $-- $ 2,638,519
Office Electronics .................. -- 5,334,307 -- 5,334,307
Other Equity Investments(b).......... 97,552,241 -- -- 97,552,241
Short Term Investments ................. -- 10,000,000 -- 10,000,000
----------- ----------- --- ------------
Total Investments in Securities .. $97,552,241 $17,972,826 $-- $115,525,067
=========== =========== === ============
(a) Includes security determined to have no value at January 31, 2010.
(b) For detailed industry descriptions, see the accompanying Statement of
Investments.
11. NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2010-6, FAIR VALUE MEASUREMENTS AND
DISCLOSURES (TOPIC 820): IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS,
which enhances and clarifies existing fair value measurement disclosure
requirements and is effective for interim and annual periods beginning after
December 15, 2009. The Funds are currently evaluating the impact, if any, of
applying this provision.
In March 2010, the FASB issued ASU No. 2010-11, DERIVATIVES AND HEDGING (TOPIC
815): SCOPE EXCEPTION RELATED TO EMBEDDED CREDIT DERIVATIVES, which clarifies
existing derivatives and hedging disclosure requirements and is effective for
fiscal quarters beginning after June 15, 2010. The Funds are currently
evaluating the impact, if any, of applying this provision.
12. SUBSEQUENT EVENTS
The Funds have evaluated subsequent events through the issuance of the financial
statements and determined that no events have occurred that require disclosure.
ABBREVIATIONS
SELECTED PORTFOLIO
ADR - American Depository Receipt
PC - Participation Certificate
Semiannual Report | 47
Franklin Global Trust
SHAREHOLDER INFORMATION
PROXY VOTING POLICIES AND PROCEDURES
The Trust's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Trust uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Trust's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL
33394, Attention: Proxy Group. Copies of the Trust's proxy voting records are
also made available online at franklintempleton.com and posted on the U.S.
Securities and Exchange Commission's website at sec.gov and reflect the most
recent 12-month period ended June 30.
QUARTERLY STATEMENT OF INVESTMENTS
The Trust 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 (800)
SEC-0330.
48 | Semiannual Report
Franklin Templeton Funds
LITERATURE REQUEST. TO RECEIVE A PROSPECTUS, PLEASE CALL US AT (800) DIAL
BEN/(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.
VALUE
Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund(1)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Quest Fund(2)
Mutual Recovery Fund(3)
Mutual Shares Fund
BLEND
Franklin Focused Core Equity Fund
Franklin Large Cap Equity Fund
Franklin Rising Dividends Fund
GROWTH
Franklin DynaTech Fund
Franklin Flex Cap Growth Fund
Franklin Growth Fund
Franklin Growth Opportunities Fund
Franklin Small Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin Global Real Estate Fund
Franklin Gold & Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Mutual Financial Services Fund
GLOBAL
Mutual Global Discovery Fund(4)
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund
INTERNATIONAL
Franklin India Growth Fund
Franklin International Growth Fund
Franklin International Small Cap Growth Fund
Mutual European Fund
Mutual International 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
Templeton Frontier Markets Fund
HYBRID
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Templeton Income 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
FIXED INCOME
Franklin Adjustable U.S. Government Securities Fund(5)
Franklin Floating Rate Daily Access Fund
Franklin High 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 Global Total Return Fund
Templeton International Bond Fund
TAX-FREE INCOME(6) NATIONAL
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(7)
LIMITED-/INTERMEDIATE-TERM
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
Federal Limited-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(9)
Michigan(9)
Minnesota(9)
Missouri
New Jersey
New York(8)
North Carolina
Ohio(9)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust(10)
(1). The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
(2). Effective 5/1/09, Mutual Qualified Fund changed its name to Mutual Quest
Fund. The fund's investment goal and strategy remained unchanged.
(3). 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.
(4). Effective 5/1/09, Mutual Discovery Fund changed its name to Mutual Global
Discovery Fund. The fund's investment goal and strategy remained unchanged.
(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 three or more variations, including long-term
portfolios, intermediate-term portfolios, portfolios of insured securities,
a high-yield portfolio (CA only) and a money market portfolio (CA only).
(9). The Board of Trustees approved the elimination of the non-fundamental
policy requiring the fund to invest at least 80% of net assets in insured
municipal securities and the removal of the word "Insured" from the fund
name. The changes became effective 2/15/09.
(10). The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
01/10 Not part of the semiannual report
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)
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San Mateo, CA 94403-1906
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SEMIANNUAL REPORT AND SHAREHOLDER LETTER
FRANKLIN GLOBAL TRUST
INVESTMENT MANAGERS
Franklin Advisers, Inc.
Franklin Templeton Institutional, LLC
DISTRIBUTOR
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(800) DIAL BEN(R)
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SHAREHOLDER SERVICES
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Authorized for distribution only when accompanied or preceded by a summary
prospectus and/or prospectus. Investors should carefully consider a fund's
investment goals, risks, charges and expenses before investing. A prospectus
contains this and other information; please read it carefully before investing.
To 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.
FGT3 S 03/10
JANUARY 31, 2010
SEMIANNUAL REPORT
AND SHAREHOLDER LETTER
A series of Franklin Global Trust
SIGN UP FOR ELECTRONIC DELIVERY on franklintempleton.com
(GRAPHIC)
BLEND
FRANKLIN
LARGE CAP EQUITY FUND
(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
SHAREHOLDER LETTER ........................................................ 1
SEMIANNUAL REPORT
Franklin Large Cap Equity Fund ............................................ 3
Performance Summary ....................................................... 8
Your Fund's Expenses ...................................................... 11
Financial Highlights and Statement of Investments ......................... 13
Financial Statements ...................................................... 20
Notes to Financial Statements ............................................. 24
Shareholder Information ................................................... 33
Shareholder Letter
Dear Shareholder:
During the six-month period ended January 31, 2010, U.S. economic activity
showed signs of expansion while interest rates remained low and inflation was
subdued. Many companies reported better-than-expected earnings after cutting
costs. U.S. equity markets enjoyed a remarkable rally until January, when
investor anxieties returned due to concerns about the global recovery's
sustainability as government stimulus measures began to unwind. At the same
time, U.S. Treasury yields rose and fell in response to wavering investor
sentiment.
Franklin Large Cap Equity Fund's semiannual report goes into greater detail
about prevailing conditions during the period. In addition, you will find
performance data, financial information and a discussion from the portfolio
managers. 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.
Although market conditions are constantly changing, we remain committed to our
disciplined strategy as we manage the Fund, keeping in mind the trust you have
placed in us. 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 conditions.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Not part of the semiannual report | 1
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 Global Trust
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF JANUARY 31, 2010. 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 Large Cap Equity Fund
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Large Cap Equity Fund seeks
long-term growth of principal and income through investing at least 80% of its
net assets in equity securities of large capitalization companies with market
capitalizations within the top 50% of companies in the Russell 1000(R) Index, or
of more than $5 billion, at the time of purchase.(1) The Fund attempts to keep
taxable capital gains distributions relatively low.
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 Large Cap Equity Fund covers the period
ended January 31, 2010.
PERFORMANCE OVERVIEW
Franklin Large Cap Equity Fund - Class A delivered a +7.74% cumulative total
return for the six months under review. The Fund underperformed its benchmark,
the Standard & Poor's 500 Index (S&P 500), which had a +9.87% total return
during the same period.(2) You can find other Fund performance data in the
Performance Summary beginning on page 8.
ECONOMIC AND MARKET OVERVIEW
The U.S. economy improved during the six-month reporting period, though
challenges remained at period-end as corporate and economic data underscored
some weak spots. Industrial output, manufacturing and exports showed steady
gains, but the economy's advance was hindered by elevated debt concerns, soft
(but slowly improving) consumer confidence and spending, and lack of job
prospects for the unemployed as federal stimulus measures began to wind down.
(1.) The Russell 1000 Index is market capitalization weighted and measures
performance of the 1,000 largest companies in the Russell 3000(R) Index,
which represents the majority of the U.S. market's total capitalization.
(2.) Source: (C) 2010 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 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 index is
unmanaged and includes reinvested dividends. One cannot invest directly in
an index, and an index is not 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 17.
Semiannual Report | 3
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 1/31/10
(BAR CHART)
U.S. 77.0%
Switzerland 6.7%
U.K. 3.8%
Israel 1.8%
Singapore 1.7%
South Korea 1.6%
Hong Kong 1.4%
Brazil 1.2%
Taiwan 1.0%
Short-Term Investments & Other Net Assets 3.8%
Third and fourth quarter 2009 corporate profit growth surpassed consensus
estimates, which allowed businesses to begin restocking depleted inventories.
The ongoing housing crisis abated slightly as home prices rose in some areas due
to lower interest rates, a first-time homebuyer tax credit program and prices
dipping to levels that lured bargain hunters.
Given few inflationary pressures and the uncertainty surrounding the economic
recovery, the Federal Open Market Committee (FOMC) kept central bank monetary
policy unchanged, as it had done throughout 2009. The FOMC announced it intended
to hold the federal funds target rate in the 0% to 0.25% range "for an extended
period" as it laid the groundwork for an eventual tightening of monetary policy.
Late in the period, the labor market improved somewhat as the economy lost fewer
jobs than expected and the unemployment rate declined, dropping from a period
high of 10.2% in October 2009 to 9.7% at period-end.(3)
By year-end 2009, the U.S. economy was expanding at its fastest pace in six
years as the recovery gained traction. Gross domestic product (GDP) grew at an
estimated annualized rate of 5.9% in the fourth quarter, following a 2.2%
annualized increase in the third quarter.(4) As economic conditions improved,
oil prices rose from $69 per barrel at the end of July 2009 to $73 at
period-end, still well below 2008's record highs. The January 2010 inflation
rate was an annualized 2.6%.(3) Core inflation, which excludes food and energy
costs, rose at a 1.6% annualized rate, and was within the Federal Reserve
Board's informal target range of 1.5% to 2.0%.(3)
As investor confidence improved amid encouraging economic data, equity markets
generally rose. They cooled off toward period-end, however, when market
participants began to question 2010 global growth prospects and the bull
market's durability. For the six months under review, the blue chip stocks of
the Dow Jones Industrial Average delivered a total return of +11.30%, while the
broader S&P 500 posted a +9.87% total return and the technology-heavy NASDAQ
Composite Index returned +9.02%.(5) With the exception of telecommunication
services, all sectors posted gains for the period, with the strongest returns
from the industrials, consumer discretionary and health care sectors.
(3.) Source: Bureau of Labor Statistics.
(4.) Source: Bureau of Economic Analysis.
(5.) Source: (C) 2010 Morningstar. 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 2 for a
description of the S&P 500. The NASDAQ Composite Index measures all NASDAQ
domestic and international 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
INVESTMENT STRATEGY
We are research-driven, fundamental investors, pursuing a blend of growth and
value strategies. We use a top-down analysis of macroeconomic trends, market
sectors (with some attention to the sector weightings in the Fund's comparative
index) and industries combined with a bottom-up analysis of individual
securities. In selecting investments for the Fund, we look for companies we
believe are positioned for growth in revenues, earnings or assets, and are
selling at reasonable prices. We also consider the level of dividends a company
has paid. We employ a thematic approach to identify sectors that may benefit
from longer term dynamic growth. Within these sectors, we consider the basic
financial and operating strength and quality of a company and company
management. The Fund, from time to time, may have significant positions in
particular sectors such as technology or industrials. We also seek to identify
companies that we believe are temporarily out of favor with investors, but have
a good intermediate-or long-term outlook.
MANAGER'S DISCUSSION
During the review period, stock selection in the consumer staples and consumer
discretionary sectors helped the Fund's performance relative to its benchmark,
the S&P 500.(6) Li & Fung(7) in the consumer discretionary sector was a
significant contributor, as the Hong Kong consumer products exporter experienced
increased demand and its stock appreciated in value. Our investments in the
consumer staples sector generally supported relative Fund performance, and in
particular, the stock price of U.K. candy maker Cadbury(7) rose due to a
takeover offer from Kraft. By period-end we no longer held a position in
Cadbury. Other consumer staples holdings that had a positive impact included
Swiss food company Nestle(7) and American beverages maker Hansen Natural.(7)
Outside of these sectors, major contributors included U.K.'s Rio Tinto,(7) an
international mining company with strong forecasts in metals and specifically
iron ore, and Agilent Technologies, a leading U.S.-based scientific instruments
and analysis equipment manufacturer.
(6.) The consumer staples sector comprises beverages, food and staples
retailing, and food products in the SOI. The consumer discretionary sector
comprises auto components; automobiles; distributors; specialty retail; and
textiles, apparel and luxury goods in the SOI.
(7.) This holding is not an index component.
PORTFOLIO BREAKDOWN
Based on Total Net Assets as of 1/31/10
(BAR CHART)
Pharmaceuticals 9.7%
Oil, Gas & Consumable Fuels 7.2%
Energy Equipment & Services 6.1%
Communications Equipment 5.2%
Computers & Peripherals 5.0%
Capital Markets 4.8%
Beverages 4.7%
Food Products 4.5%
Aerospace & Defense 4.2%
Chemicals 4.0%
Biotechnology 3.7%
Electronic Equipment, Instruments & Components 3.3%
Specialty Retail 3.1%
Software 3.0%
Other 27.7%
Short-Term Investments & Other Net Assets 3.8%
Semiannual Report | 5
TOP 10 EQUITY HOLDINGS
1/31/10
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- ------------------------ ----------
Exxon Mobil Corp. 3.5%
OIL, GAS & CONSUMABLE FUELS, U.S.
Nestle SA 2.7%
FOOD PRODUCTS, SWITZERLAND
Roche Holding AG 2.5%
PHARMACEUTICALS, SWITZERLAND
General Electric Co. 2.5%
INDUSTRIAL CONGLOMERATES, U.S.
Wells Fargo & Co. 2.4%
COMMERCIAL BANKS, U.S.
BlackRock Inc. 2.3%
CAPITAL MARKETS, U.S.
Johnson & Johnson 2.2%
PHARMACEUTICALS, U.S.
Schlumberger Ltd. 2.2%
ENERGY EQUIPMENT & SERVICES, U.S.
Celgene Corp. 2.2%
BIOTECHNOLOGY, U.S.
Cisco Systems Inc. 2.1%
COMMUNICATIONS EQUIPMENT, U.S.
In contrast, the Fund lagged its benchmark primarily due to stock selection in
the financials, information technology and industrials sectors during the
reporting period.(8) Our decision not to hold several of the best performers in
the financials sector was detrimental to relative results. In the information
technology sector, among the largest detractors were Nintendo,(7) a Japanese
maker of gaming devices, and QUALCOMM, a U.S. semiconductor company focused on
technologies for wireless communications equipment. We sold the Fund's position
in Nintendo by period-end. Our investments in the industrials sector hurt the
Fund's relative performance partly due to exposure to alternative energy
companies such as SunPower(7) in the U.S. and Vestas Wind Systems(7) in Denmark,
and we exited these positions by period-end. Also pressuring relative results
was Switzerland's ABB,(7) a power and automation technologies provider that had
yet to experience an upturn in its business. Elsewhere in the portfolio,
Singapore Telecommunications,(7) the city-state's largest telephone company,
also hurt relative Fund performance.
(8.) The financials sector comprises capital markets, commercial banks,
diversified financial services, and insurance in the SOI. The information
technology sector comprises communications equipment; computers and
peripherals; electronic equipment, instruments and components; Internet
software and services; semiconductors and semiconductor equipment; and
software in the SOI. The industrials sector comprises aerospace and
defense, electrical equipment, and industrial conglomerates in the SOI.
6 | Semiannual Report
Thank you for your continued participation in Franklin Large Cap Equity Fund. We
look forward to serving your future investment needs.
(PHOTO OF S. MACKINTOSH PULSIFER)
/s/ S. Mackintosh Pulsifer
S. Mackintosh Pulsifer
(PHOTO OF KENNETH J. SIEGEL)
/s/ Kenneth J. Siegel
Kenneth J. Siegel
(PHOTO OF LINDA KROUNER)
/s/ Linda Krouner
Linda Krouner
Portfolio Management Team
Franklin Large Cap Equity Fund
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF JANUARY 31, 2010, 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.
Semiannual Report | 7
Performance Summary as of 1/31/10
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: N/A) CHANGE 1/31/10 7/31/09
- --------------------- ------ ------- -------
Net Asset Value (NAV) +$0.35 $5.02 $4.67
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0116
CLASS C (SYMBOL: N/A) CHANGE 1/31/10 7/31/09
- --------------------- ------ ------- -------
Net Asset Value (NAV) +$0.34 $5.00 $4.66
CLASS R (SYMBOL: N/A) CHANGE 1/31/10 7/31/09
- --------------------- ------ ------- -------
Net Asset Value (NAV) +$0.35 $5.02 $4.67
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0065
ADVISOR CLASS (SYMBOL: FLCIX) CHANGE 1/31/10 7/31/09
- ----------------------------- ------ ------- -------
Net Asset Value (NAV) +$0.35 $5.02 $4.67
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.0173
8 | Semiannual Report
Performance Summary (CONTINUED)
PERFORMANCE(1)
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 C: 1% CONTINGENT DEFERRED SALES CHARGE IN
FIRST YEAR ONLY; CLASS R/ADVISOR CLASS: NO SALES CHARGES.
CLASS A 6-MONTH 1-YEAR INCEPTION (9/30/08)
- ------- ------- ------- -------------------
Cumulative Total Return(2) +7.74% +34.47% -2.80%
Average Annual Total Return(3) +1.55% +26.73% -6.34%
Value of $10,000 Investment(4) $10,155 $12,673 $9,161
Avg. Ann. Total Return (12/31/09)(5) +21.51% -3.95%
Total Annual Operating Expenses(6)
Without Waiver 1.57%
With Waiver 1.28%
CLASS C 6-MONTH 1-YEAR INCEPTION (9/30/08)
- ------- ------- ------- -------------------
Cumulative Total Return(2) +7.30% +33.36% -3.74%
Average Annual Total Return(3) +6.30% +32.36% -2.81%
Value of $10,000 Investment(4) $10,630 $13,236 $9,626
Avg. Ann. Total Return (12/31/09)(5) +27.13% +0.09%
Total Annual Operating Expenses(6)
Without Waiver 2.27%
With Waiver 1.98%
CLASS R 6-MONTH 1-YEAR INCEPTION (9/30/08)
- ------- ------- ------- -------------------
Cumulative Total Return(2) +7.63% +34.25% -3.04%
Average Annual Total Return(3) +7.63% +34.25% -2.28%
Value of $10,000 Investment(4) $10,763 $13,425 $9,696
Avg. Ann. Total Return (12/31/09)(5) +28.72% +0.51%
Total Annual Operating Expenses(6)
Without Waiver 1.77%
With Waiver 1.48%
ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------------- ------- ------- ------ -------
Cumulative Total Return(2) +7.86% +34.78% +1.74% -0.35%
Average Annual Total Return(3) +7.86% +34.78% +0.35% -0.04%
Value of $10,000 Investment(4) $10,786 $13,478 $10,174 $9,965
Avg. Ann. Total Return (12/31/09)(5) +29.23% +0.51% -0.05%
Total Annual Operating Expenses(6)
Without Waiver 1.27%
With Waiver 0.98%
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. FOR MOST RECENT MONTH-END PERFORMANCE, GO TO
franklintempleton.com OR CALL (800) 342-5236.
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 0.95% (OTHER THAN CERTAIN NONROUTINE EXPENSES OR COSTS,
INCLUDING THOSE RELATING TO LITIGATION, INDEMNIFICATION, REORGANIZATIONS AND
LIQUIDATIONS) UNTIL 11/30/10.
Semiannual Report | 9
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'S INVESTMENTS IN FOREIGN COMPANY STOCKS INVOLVE SPECIAL RISKS INCLUDING
CURRENCY FLUCTUATIONS 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 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.) 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.
(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. In periods of market volatility, assets may decline
significantly, causing total annual Fund operating expenses to become
higher than the figures shown.
10 | Semiannual Report
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
- - Transaction costs, including sales charges (loads) on Fund purchases, if
applicable; and
- - Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, if applicable, 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.
Semiannual Report | 11
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.
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 8/1/09 VALUE 1/31/10 PERIOD* 8/1/09-1/31/10
----------------- -------------- ----------------------
CLASS A
Actual $1,000 $1,077.40 $ 6.49
Hypothetical (5% return before expenses) $1,000 $1,018.95 $ 6.31
CLASS C
Actual $1,000 $1,073.00 $10.19
Hypothetical (5% return before expenses) $1,000 $1,015.38 $ 9.91
CLASS R
Actual $1,000 $1,076.30 $ 7.59
Hypothetical (5% return before expenses) $1,000 $1,017.90 $ 7.37
ADVISOR CLASS
Actual $1,000 $1,078.60 $ 4.98
Hypothetical (5% return before expenses) $1,000 $1,020.42 $ 4.84
* Expenses are calculated using the most recent six-month expense ratio, net
of expense waivers, annualized for each class (A: 1.24%; C: 1.95%; R:
1.45%; and Advisor: 0.95%), multiplied by the average account value over
the period, multiplied by 184/365 to reflect the one-half year period.
12 | Semiannual Report
Franklin Global Trust
FINANCIAL HIGHLIGHTS
FRANKLIN LARGE CAP EQUITY FUND
SIX MONTHS ENDED PERIOD ENDED
JANUARY 31, 2010 JULY 31,
CLASS A (UNAUDITED) 2009(a)
- ------- ---------------- ------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............... $ 4.67 $ 5.41
------ ------
Income from investment operations(b):
Net investment income(c) ........................ --(d) 0.04
Net realized and unrealized gains (losses) ...... 0.36 (0.60)
------ ------
Total from investment operations ................... 0.36 (0.56)
------ ------
Less distributions from:
Net investment income ........................... (0.01) (0.03)
Net realized gains .............................. -- (0.15)
------ ------
Total distributions ................................ (0.01) (0.18)
------ ------
Net asset value, end of period ..................... $ 5.02 $ 4.67
====== ======
Total return(e) .................................... 7.74% (9.78)%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by affiliates .. 1.50% 1.51%
Expenses net of waiver and payments by affiliates .. 1.24% 1.27%(g)
Net investment income .............................. 0.24% 0.74%
SUPPLEMENTAL DATA
Net assets, end of period (000's) .................. $2,552 $1,412
Portfolio turnover rate ............................ 18.87% 70.93%
(a) For the period September 30, 2008 (effective date) to July 31, 2009.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 13
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
SIX MONTHS ENDED PERIOD ENDED
JANUARY 31, 2010 JULY 31,
CLASS C (UNAUDITED) 2009(a)
- ------- ---------------- ------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................. $ 4.66 $ 5.41
------ -------
Income from investment operations(b):
Net investment income (loss)(c) ................... (0.01) 0.01
Net realized and unrealized gains (losses) ........ 0.35 (0.59)
------ -------
Total from investment operations ..................... 0.34 (0.58)
------ -------
Less distributions from:
Net investment income ............................. -- (0.02)
Net realized gains ................................ -- (0.15)
------ -------
Total distributions .................................. -- (0.17)
------ -------
Net asset value, end of period ....................... $ 5.00 $ 4.66
====== =======
Total return(d) ...................................... 7.30% (10.28)%
RATIOS TO AVERAGE NET ASSETS(e)
Expenses before waiver and payments by affiliates .... 2.21% 2.20%
Expenses net of waiver and payments by affiliates .... 1.95% 1.96%(f)
Net investment income (loss) (0.47)% 0.05%
SUPPLEMENTAL DATA
Net assets, end of period (000's) .................... $ 119 $ 76
Portfolio turnover rate .............................. 18.87% 70.93%
(a) For the period September 30, 2008 (effective date) to July 31, 2009.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(e) Ratios are annualized for periods less than one year.
(f) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
14 | Semiannual Report
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
SIX MONTHS ENDED PERIOD ENDED
JANUARY 31, 2010 JULY 31,
CLASS R (UNAUDITED) 2009(a)
- ------- ---------------- ------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................. $ 4.67 $ 5.41
------ ------
Income from investment operations(b):
Net investment income(c) .......................... --(d) 0.03
Net realized and unrealized gains (losses) ........ 0.36 (0.60)
------ ------
Total from investment operations ..................... 0.36 (0.57)
------ ------
Less distributions from:
Net investment income ............................. (0.01) (0.02)
Net realized gains ................................ -- (0.15)
------ ------
Total distributions .................................. (0.01) (0.17)
------ ------
Net asset value, end of period ....................... $ 5.02 $ 4.67
====== ======
Total return(e) ...................................... 7.63% (9.91)%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by affiliates .... 1.71% 1.71%
Expenses net of waiver and payments by affiliates .... 1.45% 1.47%(g)
Net investment income ................................ 0.03% 0.54%
SUPPLEMENTAL DATA
Net assets, end of period (000's) .................... $ 6 $ 4
Portfolio turnover rate .............................. 18.87% 70.93%
(a) For the period September 30, 2008 (effective date) to July 31, 2009.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 15
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, 2010 ---------------------------------------------------
ADVISOR CLASS (UNAUDITED) 2009 2008 2007 2006 2005
- ------------- ---------------- ------- ------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .......... $ 4.67 $ 6.20 $ 7.28 $ 6.63 $ 7.15 $ 6.77
------ ------- ------- ------- ------- -------
Income from investment operations(a):
Net investment income(b) ................... 0.01 0.05 0.05 0.04 0.04 0.08
Net realized and unrealized gains
(losses) ................................ 0.36 (1.39) (0.48) 1.14 0.13 0.74
------ ------- ------- ------- ------- -------
Total from investment operations .............. 0.37 (1.34) (0.43) 1.18 0.17 0.82
------ ------- ------- ------- ------- -------
Less distributions from:
Net investment income ...................... (0.02) (0.04) (0.06) (0.04) (0.04) (0.08)
Net realized gains ......................... -- (0.15) (0.59) (0.49) (0.65) (0.36)
------ ------- ------- ------- ------- -------
Total distributions ........................... (0.02) (0.19) (0.65) (0.53) (0.69) (0.44)
------ ------- ------- ------- ------- -------
Redemption fees(c) ............................ -- -- -- --(d) -- --
------ ------- ------- ------- ------- -------
Net asset value, end of period ................ $ 5.02 $ 4.67 $ 6.20 $ 7.28 $ 6.63 $ 7.15
====== ======== ======= ======= ======= =======
Total return(e) ............................... 7.86% (21.07)% (6.66)% 18.27% 2.22% 12.38%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by
affiliates ................................. 1.21% 1.21% 1.03% 1.03% 1.02% 1.01%
Expenses net of waiver and payments by
affiliates ................................. 0.95% 0.97%(g) 1.03%(g) 1.03%(g) 1.02%(g) 1.01%(g)
Net investment income ......................... 0.53% 1.04% 0.67% 0.63% 0.57% 1.13%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $56,781 $50,123 $75,891 $89,971 $91,915 $94,536
Portfolio turnover rate ....................... 18.87% 70.93% 51.54% 41.86% 54.63% 47.08%
(a) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return is not annualized for periods less than one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
16 | Semiannual Report
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED)
FRANKLIN LARGE CAP EQUITY FUND COUNTRY SHARES VALUE
- ------------------------------ -------------- --------- -----------
COMMON STOCKS 96.2%
AEROSPACE & DEFENSE 4.2%
General Dynamics Corp. ........................................ United States 8,900 $ 594,966
Precision Castparts Corp. ..................................... United States 6,400 673,600
United Technologies Corp. ..................................... United States 18,300 1,234,884
-----------
2,503,450
-----------
AUTO COMPONENTS 1.9%
(a) BorgWarner Inc. ............................................... United States 32,700 1,147,443
-----------
AUTOMOBILES 1.6%
(a, b) Hyundai Motor Co., GDR, Reg S ................................. South Korea 55,000 924,550
BEVERAGES 4.7%
Diageo PLC, ADR ............................................... United Kingdom 17,500 1,175,825
(a) Hansen Natural Corp. .......................................... United States 16,800 645,960
PepsiCo Inc. .................................................. United States 16,700 995,654
-----------
2,817,439
-----------
BIOTECHNOLOGY 3.7%
(a) Celgene Corp. ................................................. United States 23,100 1,311,618
(a) Gilead Sciences Inc. .......................................... United States 18,800 907,476
-----------
2,219,094
-----------
CAPITAL MARKETS 4.8%
BlackRock Inc. ................................................ United States 6,300 1,347,066
The Goldman Sachs Group Inc. .................................. United States 3,300 490,776
Invesco Ltd. .................................................. United States 53,700 1,036,410
-----------
2,874,252
-----------
CHEMICALS 4.0%
Air Products and Chemicals Inc. ............................... United States 11,400 865,944
Monsanto Co. .................................................. United States 12,900 978,852
The Mosaic Co. ................................................ United States 10,200 545,802
-----------
2,390,598
-----------
COMMERCIAL BANKS 2.4%
Wells Fargo & Co. ............................................. United States 51,000 1,449,930
-----------
COMMUNICATIONS EQUIPMENT 5.2%
(a) Cisco Systems Inc. ............................................ United States 56,200 1,262,814
(a) Polycom Inc. .................................................. United States 38,200 856,826
QUALCOMM Inc. ................................................. United States 24,400 956,236
-----------
3,075,876
-----------
COMPUTERS & PERIPHERALS 5.0%
(a) Apple Inc. .................................................... United States 4,800 922,176
(a) EMC Corp. ..................................................... United States 71,700 1,195,239
International Business Machines Corp. ......................... United States 7,200 881,208
-----------
2,998,623
-----------
DISTRIBUTORS 1.4%
Li & Fung Ltd. ................................................ Hong Kong 175,500 804,740
-----------
Semiannual Report | 17
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND COUNTRY SHARES VALUE
- ------------------------------ -------------- --------- -----------
COMMON STOCKS (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES 2.0%
JPMorgan Chase & Co. .......................................... United States 30,200 $ 1,175,988
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES 1.7%
Singapore Telecommunications Ltd. ............................. Singapore 469,000 1,003,618
-----------
ELECTRICAL EQUIPMENT 1.4%
ABB Ltd. ...................................................... Switzerland 47,000 861,796
-----------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS 3.3%
(a) Agilent Technologies Inc. ..................................... United States 42,000 1,177,260
(a) Trimble Navigation Ltd. ....................................... United States 33,700 771,393
-----------
1,948,653
-----------
ENERGY EQUIPMENT & SERVICES 6.1%
National Oilwell Varco Inc. ................................... United States 27,500 1,124,750
Schlumberger Ltd. ............................................. United States 20,800 1,319,968
(a) Transocean Ltd. ............................................... United States 13,600 1,152,464
-----------
3,597,182
-----------
FOOD & STAPLES RETAILING 2.0%
CVS Caremark Corp. ............................................ United States 36,700 1,187,979
-----------
FOOD PRODUCTS 4.5%
Kellogg Co. ................................................... United States 19,500 1,061,190
Nestle SA ..................................................... Switzerland 34,000 1,618,666
-----------
2,679,856
-----------
HEALTH CARE EQUIPMENT & SUPPLIES 1.6%
Becton Dickinson and Co. ...................................... United States 13,000 979,810
-----------
INDUSTRIAL CONGLOMERATES 2.5%
General Electric Co. .......................................... United States 90,700 1,458,456
-----------
INSURANCE 2.9%
ACE Ltd. ...................................................... United States 17,100 842,517
(a) Markel Corp. .................................................. United States 2,700 877,527
-----------
1,720,044
-----------
INTERNET SOFTWARE & SERVICES 1.3%
(a) Google Inc., A ................................................ United States 1,500 794,130
-----------
METALS & MINING 1.9%
Rio Tinto PLC ................................................. United Kingdom 22,500 1,115,053
-----------
OIL, GAS & CONSUMABLE FUELS 7.2%
Devon Energy Corp. ............................................ United States 13,400 896,594
Exxon Mobil Corp. ............................................. United States 32,000 2,061,760
Peabody Energy Corp. .......................................... United States 14,200 598,104
Petroleo Brasileiro SA, ADR ................................... Brazil 17,600 714,032
-----------
4,270,490
-----------
PHARMACEUTICALS 9.7%
Abbott Laboratories ........................................... United States 15,300 809,982
Johnson & Johnson ............................................. United States 21,000 1,320,060
18 | Semiannual Report
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND COUNTRY SHARES VALUE
- ------------------------------ -------------- --------- -----------
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS (CONTINUED)
Merck & Co. Inc. .............................................. United States 27,200 $ 1,038,496
Roche Holding AG .............................................. Switzerland 8,900 1,497,667
Teva Pharmaceutical Industries Ltd., ADR ...................... Israel 19,000 1,077,680
-----------
5,743,885
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 1.0%
Taiwan Semiconductor Manufacturing Co. Ltd., ADR .............. Taiwan 58,900 598,424
-----------
SOFTWARE 3.0%
(a) Nuance Communications Inc. .................................... United States 58,400 877,168
Oracle Corp. .................................................. United States 40,000 922,400
-----------
1,799,568
-----------
SPECIALTY RETAIL 3.1%
The Home Depot Inc. ........................................... United States 34,000 952,340
The TJX Cos. Inc. ............................................. United States 23,400 889,434
-----------
1,841,774
-----------
TEXTILES, APPAREL & LUXURY GOODS 2.1%
NIKE Inc., B .................................................. United States 19,500 1,243,125
-----------
TOTAL COMMON STOCKS (COST $49,463,173) ........................ 57,225,826
-----------
SHORT TERM INVESTMENTS (COST $2,189,650) 3.7%
MONEY MARKET FUNDS 3.7%
(c) Institutional Fiduciary Trust Money Market Portfolio, 0.00% ... United States 2,189,650 2,189,650
-----------
TOTAL INVESTMENTS (COST $51,652,823) 99.9% .................... 59,415,476
OTHER ASSETS, LESS LIABILITIES 0.1% ........................... 42,724
-----------
NET ASSETS 100.0% ............................................. $59,458,200
===========
See Abbreviations on page 32.
(a) Non-income producing.
(b) Security was purchased pursuant to Regulation S under the Securities Act of
1933, which exempts from registration securities offered and sold outside
of the United States. Such a security cannot be sold in the United States
without either an effective registration statement filed pursuant to the
Securities Act of 1933, or pursuant to an exemption from registration. This
security has been deemed liquid under guidelines approved by the Trust's
Board of Trustees. At January 31, 2010, the value of this security was
$924,550, representing 1.55% of net assets.
(c) See Note 7 regarding investments in the Institutional Fiduciary Trust Money
Market Portfolio. The rate shown is the annualized seven-day yield at
period end.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 19
Franklin Global Trust
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2010 (unaudited)
FRANKLIN
LARGE CAP
EQUITY FUND
-----------
Assets:
Investments in securities:
Cost - Unaffiliated issuers .................... $49,463,173
Cost - Sweep Money Fund (Note 7) ............... 2,189,650
-----------
Total cost of investments ...................... $51,652,823
===========
Value - Unaffiliated issuers ................... $57,225,826
Value - Sweep Money Fund (Note 7) .............. 2,189,650
-----------
Total value of investments ..................... 59,415,476
Receivables:
Capital shares sold ............................ 64,989
Dividends ...................................... 35,303
-----------
Total assets ................................ 59,515,768
-----------
Liabilities:
Payables:
Affiliates ..................................... 32,980
Reports to shareholders ........................ 7,135
Professional fees .............................. 17,108
Accrued expenses and other liabilities ............ 345
-----------
Total liabilities ........................... 57,568
-----------
Net assets, at value ..................... $59,458,200
===========
Net assets consist of:
Paid-in capital ................................... $58,516,042
Distributions in excess of net investment income .. (9,822)
Net unrealized appreciation (depreciation) ........ 7,763,993
Accumulated net realized gain (loss) .............. (6,812,013)
-----------
Net assets, at value ..................... $59,458,200
===========
The accompanying notes are an integral part of these financial statements.
20 | Semiannual Report
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
January 31, 2010 (unaudited)
FRANKLIN
LARGE CAP
EQUITY FUND
-----------
CLASS A:
Net assets, at value ................................................... $ 2,552,044
===========
Shares outstanding ..................................................... 508,842
===========
Net asset value per share(a) ........................................... $ 5.02
===========
Maximum offering price per share (net asset value per share / 94.25%) .. $ 5.33
===========
CLASS C:
Net assets, at value ................................................... $ 119,038
===========
Shares outstanding ..................................................... 23,814
===========
Net asset value and maximum offering price per share(a) ................ $ 5.00
===========
CLASS R:
Net assets, at value ................................................... $ 6,054
===========
Shares outstanding ..................................................... 1,207
===========
Net asset value and maximum offering price per share ................... $ 5.02
===========
ADVISOR CLASS:
Net assets, at value ................................................... $56,781,064
===========
Shares outstanding ..................................................... 11,312,662
===========
Net asset value and maximum offering price per share ................... $ 5.02
===========
(a) Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 21
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the six months ended January 31, 2010 (unaudited)
FRANKLIN
LARGE CAP
EQUITY FUND
-----------
Investment income:
Dividends ......................................................................... $ 432,463
----------
Expenses:
Management fees (Note 3a) ......................................................... 216,871
Administrative fees (Note 3b) ..................................................... 58,292
Distribution fees: (Note 3c)
Class A ........................................................................ 2,858
Class C ........................................................................ 546
Class R ........................................................................ 14
Transfer agent fees (Note 3e) ..................................................... 1,900
Custodian fees (Note 4) ........................................................... 1,368
Reports to shareholders ........................................................... 9,514
Registration and filing fees ...................................................... 41,072
Professional fees ................................................................. 14,855
Trustees' fees and expenses ....................................................... 3,080
Other ............................................................................. 5,761
----------
Total expenses .............................................................. 356,131
Expenses waived/paid by affiliates (Note 3f) ................................ (75,829)
----------
Net expenses ............................................................. 280,302
----------
Net investment income ................................................. 152,161
----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments .................................................................... (736,145)
Foreign currency transactions .................................................. (7,419)
----------
Net realized gain (loss) .............................................. (743,564)
----------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................................... 4,694,610
Translation of other assets and liabilities denominated in foreign currencies .. 2,331
----------
Net change in unrealized appreciation (depreciation) .................. 4,696,941
----------
Net realized and unrealized gain (loss) .............................................. 3,953,377
----------
Net increase (decrease) in net assets resulting from operations ...................... $4,105,538
==========
The accompanying notes are an integral part of these financial statements.
22 | Semiannual Report
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FRANKLIN
LARGE CAP EQUITY FUND
--------------------------------
SIX MONTHS ENDED
JANUARY 31, 2010 YEAR ENDED
(UNAUDITED) JULY 31, 2009
---------------- -------------
Increase (decrease) in net assets:
Operations:
Net investment income .............................................................. $ 152,161 $ 529,874
Net realized gain (loss) from investments and foreign currency transactions ........ (743,564) (6,043,985)
Net change in unrealized appreciation (depreciation) on investments and
translation of other assets and liabilities denominated in foreign currencies ... 4,696,941 (11,473,912)
----------- ------------
Net increase (decrease) in net assets resulting from operations .............. 4,105,538 (16,988,023)
----------- ------------
Distributions to shareholders from:
Net investment income:
Class A ......................................................................... (4,476) (6,734)
Class C ......................................................................... -- (202)
Class R ......................................................................... (7) (23)
Advisor Class ................................................................... (191,843) (479,582)
Net realized gains:
Class A ......................................................................... -- (13,539)
Class C ......................................................................... -- (1,084)
Class R ......................................................................... -- (136)
Advisor Class ................................................................... -- (1,692,513)
----------- ------------
Total distributions to shareholders ................................................... (196,326) (2,193,813)
----------- ------------
Capital share transactions: (Note 2)
Class A ......................................................................... 1,038,953 1,217,681
Class C ......................................................................... 35,701 69,424
Class R ......................................................................... 1,412 5,000
Advisor Class ................................................................... 2,858,256 (6,386,367)
----------- ------------
Total capital share transactions ...................................................... 3,934,322 (5,094,262)
----------- ------------
Net increase (decrease) in net assets ........................................ 7,843,534 (24,276,098)
----------- ------------
Net assets:
Beginning of period ................................................................... 51,614,666 75,890,764
----------- ------------
End of period ......................................................................... $59,458,200 $ 51,614,666
=========== ============
Undistributed net investment income (distributions in excess of net investment
income) included in net assets:
End of period ...................................................................... $ (9,822) $ 34,343
=========== ============
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 23
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FRANKLIN LARGE CAP EQUITY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Global Trust (Trust) is registered under the Investment Company Act of
1940, as amended, (1940 Act) as an open-end investment company, consisting of
five separate funds. The Franklin Large Cap Equity Fund (Fund) is included in
this report. The financial statements of the remaining funds in the Trust are
presented separately. The Fund offers four classes of shares: Class A, Class C,
Class R, 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
Equity and other 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. Certain equity securities are valued based upon
fundamental characteristics or relationships to similar securities. Investments
in open-end mutual funds are valued at the closing net asset value.
Foreign equity 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 equity 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 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 based upon the underlying investment book value,
anticipated future cash flows, market changes in comparable or similar
securities, 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
24 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. SECURITY VALUATION (CONTINUED)
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.
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. The Fund may enter
into foreign currency exchange contracts to facilitate transactions denominated
in a foreign currency. Purchases and sales of securities, income and expense
items denominated in foreign currencies are translated into U.S. dollars at the
exchange rate in effect on the transaction date. 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. 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.
The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of January 31, 2010, and has
determined that no provision for income tax is required in the Fund's financial
statements.
Semiannual Report | 25
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. 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.
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.
Common expenses incurred by the Trust are allocated among the funds based on the
ratio of net assets of each fund to the combined net assets of the Trust. Fund
specific expenses are charged directly to the fund that incurred the expense.
Realized and unrealized gains and losses and net investment income, not
including 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.
E. 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.
F. REDEMPTION FEES
A short term trading redemption fee was imposed, with some exceptions, on any
fund shares that were redeemed or exchanged within seven calendar days following
their purchase date. The redemption fee was 2% of the amount redeemed. Such fees
were retained by the fund and accounted for as an addition to paid-in capital.
Effective September 1, 2008, the redemption fee was eliminated.
26 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. GUARANTEES AND INDEMNIFICATIONS
Under the Trust's organizational documents, its officers and trustees are
indemnified by the Trust against certain liabilities arising out of the
performance of their duties to the Trust. Additionally, in the normal course of
business, the Trust, on behalf of the Fund, enters into contracts with service
providers that contain general indemnification clauses. The Trust's maximum
exposure under these arrangements is unknown as this would involve future claims
that may be made against the Trust that have not yet occurred. Currently, the
Trust expects the risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
At January 31, 2010, 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, 2010 JULY 31, 2009(a)
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
CLASS A SHARES:
Shares sold ........................................ 260,110 $ 1,317,615 370,387 $ 1,502,034
Shares issued in reinvestment of distributions ..... 885 4,466 4,988 19,836
Shares redeemed .................................... (54,758) (283,128) (72,770) (304,189)
--------- ----------- ---------- ------------
Net increase (decrease) ............................ 206,237 $ 1,038,953 302,605 $ 1,217,681
========= =========== ========== ============
CLASS C SHARES:
Shares sold ........................................ 17,905 $ 90,424 16,446 $ 70,098
Shares issued in reinvestment of distributions ..... -- -- 272 1,082
Shares redeemed .................................... (10,348) (54,723) (461) (1,756)
--------- ----------- ---------- ------------
Net increase (decrease) ............................ 7,557 $ 35,701 16,257 $ 69,424
========= =========== ========== ============
CLASS R SHARES:
Shares sold ........................................ 283 $ 1,412 924 $ 5,000
--------- ----------- ---------- ------------
Net increase (decrease) ............................ 283 $ 1,412 924 $ 5,000
========= =========== ========== ============
ADVISOR CLASS SHARES:
Shares sold ........................................ 1,090,298 $ 5,487,800 720,022 $ 3,088,735
Shares issued in reinvestment of distributions ..... 265 1,331 426,293 1,679,804
Shares redeemed .................................... (516,555) (2,630,875) (2,654,664) (11,154,906)
--------- ----------- ---------- ------------
Net increase (decrease) ............................ 574,008 $ 2,858,256 (1,508,349) $ (6,386,367)
========= =========== ========== ============
(a) For the period September 30, 2008 (effective date) to July 31, 2009 for
Class A, Class C, and Class R.
Semiannual Report | 27
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
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
- ---------- ----------------------
Fiduciary International, Inc. (Fiduciary) 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
The Fund pays an investment management fee to Fiduciary based on the average
daily net assets of the Fund as follows:
ANNUALIZED FEE RATE NET ASSETS
- ------------------- ----------------------------------------------------
0.750% Up to and including $500 million
0.650% Over $500 million, up to and including $1 billion
0.600% Over $1 billion, up to and including $1.5 billion
0.550% Over $1.5 billion, up to and including $6.5 billion
0.530% Over $6.5 billion, up to and including $11.5 billion
0.500% In excess of $11.5 billion
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services of 0.20% per year of the
average daily net assets of the Fund.
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 C and R 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.
28 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
C. DISTRIBUTION FEES (CONTINUED)
The maximum annual plan rates, based on the average daily net assets, for each
class, are as follows:
Reimbursement Plan:
Class A .............. 0.35%
Compensation Plans:
Class C .............. 1.00%
Class R .............. 0.50%
The Board of Trustees has set the current rate at 0.30% per year for Class A
shares until further notice and approval by the Board.
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 .. $3,585
Contingent deferred sales charges retained ..................................... $ 2
E. TRANSFER AGENT FEES
For the period ended January 31, 2010, the Fund paid transfer agent fees of
$1,900, of which $1,809 was retained by Investor Services.
F. WAIVER AND EXPENSE REIMBURSEMENTS
Fiduciary and FT Services have contractually agreed in advance to waive or limit
their respective fees and to assume as their own expense certain expenses
otherwise payable by the fund so that the common expenses (i.e. a combination of
management fees, administrative fees, and other expenses, but excluding
distribution fees and acquired fund fees and expenses), for each class of the
Fund do not exceed 0.95% (other than certain non-routine expenses or costs,
including those relating to litigation, indemnification, reorganizations, and
liquidations) until November 30, 2010.
Semiannual Report | 29
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
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, 2010, there
were no credits earned.
5. INCOME TAXES
For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At July 31, 2009, the Fund had tax basis capital losses of
$247,546 expiring in 2017.
For tax purposes, realized capital losses and realized currency losses occurring
subsequent to October 31, may be deferred and treated as occurring on the first
day of the following fiscal year. At July 31, 2009, the Fund deferred realized
capital losses and realized currency losses of $5,804,721 and $16,182,
respectively.
At January 31, 2010, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments .............................. $51,652,823
===========
Unrealized appreciation .......................... $ 9,573,296
Unrealized depreciation .......................... (1,810,643)
-----------
Net unrealized appreciation (depreciation) ....... $ 7,762,653
===========
Net investment income and net realized gains (losses) differ for financial
statement and tax purposes primarily due to differing treatment of foreign
currency transactions.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
period ended January 31, 2010, aggregated $13,306,336 and $10,388,502,
respectively.
7. INVESTMENTS IN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Fund may invest in the Institutional Fiduciary Trust Money Market Portfolio
(Sweep Money Fund), an open-end investment company managed by Franklin Advisers,
Inc. (an affiliate of the investment manager). 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.
30 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
8. CREDIT FACILITY
The Fund, together with other U.S. registered and foreign investment funds
(collectively "Borrowers"), managed by Franklin Templeton Investments, are
borrowers in a 364-day joint syndicated senior unsecured credit facility
totaling $750 million (Global Credit Facility) to provide a source of funds to
the Borrowers for temporary and emergency purposes, including the ability to
meet future unanticipated or unusually large redemption requests. On January 22,
2010, the Fund renewed the Global Credit Facility for a total of $750 million,
maturing January 21, 2011.
Under the terms of the Global Credit Facility, the Fund shall, in addition to
interest charged on any borrowings made by the Fund and other costs incurred by
the Fund, pay its share of fees and expenses incurred in connection with the
implementation and maintenance of the Global Credit Facility, based upon its
relative share of the aggregate net assets of all of the Borrowers, including an
annual commitment fee of 0.10% based upon the unused portion of the Global
Credit Facility, which is reflected in other expenses on the Statement of
Operations. During the period ended January 31, 2010, the Fund did not utilize
the Global Credit Facility.
9. FAIR VALUE MEASUREMENTS
The Fund follows a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Fund's own market
assumptions (unobservable inputs). These inputs are used in determining the
value of the Fund's investments and are summarized in the following fair value
hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
At January 31, 2010, all of the Fund's investments in securities carried at fair
value were in Level 1 inputs. For detailed industry descriptions, see the
accompanying Statement of Investments.
Semiannual Report | 31
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN LARGE CAP EQUITY FUND
10. NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2010-6, FAIR VALUE MEASUREMENTS AND
DISCLOSURES (TOPIC 820): IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS,
which enhances and clarifies existing fair value measurement disclosure
requirements and is effective for interim and annual periods beginning after
December 15, 2009. The Fund is currently evaluating the impact, if any, of
applying this provision.
In March 2010, the FASB issued ASU No. 2010-11, DERIVATIVES AND HEDGING (TOPIC
815): SCOPE EXCEPTION RELATED TO EMBEDDED CREDIT DERIVATIVES, which clarifies
existing derivatives and hedging disclosure requirements and is effective for
fiscal quarters beginning after June 15, 2010. The Fund is currently evaluating
the impact, if any, of applying this provision.
11. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through the issuance of the financial
statements and determined that no events have occurred that require disclosure.
ABBREVIATIONS
SELECTED PORTFOLIO
ADR - American Depository Receipt
GDR - Global Depository Receipt
32 | Semiannual Report
Franklin Global Trust
SHAREHOLDER INFORMATION
FRANKLIN LARGE CAP EQUITY FUND
PROXY VOTING POLICIES AND PROCEDURES
The Trust's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Trust uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Trust's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL
33394, Attention: Proxy Group. Copies of the Trust's proxy voting records are
also made available online at franklintempleton.com and posted on the U.S.
Securities and Exchange Commission's website at sec.gov and reflect the most
recent 12-month period ended June 30.
QUARTERLY STATEMENT OF INVESTMENTS
The Trust 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 (800)
SEC-0330.
Semiannual Report | 33
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Franklin Templeton Funds
LITERATURE REQUEST. TO RECEIVE A PROSPECTUS, PLEASE CALL US AT (800) DIAL
BEN/(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
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TONE.
VALUE
Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund(1)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Quest Fund(2)
Mutual Recovery Fund(3)
Mutual Shares Fund
BLEND
Franklin Focused Core Equity Fund
Franklin Large Cap Equity Fund
Franklin Rising Dividends Fund
GROWTH
Franklin DynaTech Fund
Franklin Flex Cap Growth Fund
Franklin Growth Fund
Franklin Growth Opportunities Fund
Franklin Small Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin Global Real Estate Fund
Franklin Gold & Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Mutual Financial Services Fund
GLOBAL
Mutual Global Discovery Fund(4)
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund
INTERNATIONAL
Franklin India Growth Fund
Franklin International Growth Fund
Franklin International Small Cap Growth Fund
Mutual European Fund
Mutual International 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
Templeton Frontier Markets Fund
HYBRID
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Templeton Income 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
FIXED INCOME
Franklin Adjustable U.S. Government Securities Fund(5)
Franklin Floating Rate Daily Access Fund
Franklin High 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 Global Total Return Fund
Templeton International Bond Fund
TAX-FREE INCOME(6)
NATIONAL
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(7)
LIMITED-/INTERMEDIATE-TERM
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
Federal Limited-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(9)
Michigan(9)
Minnesota(9)
Missouri
New Jersey
New York(8)
North Carolina
Ohio(9)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance
Products Trust(10)
(1.) The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
(2.) Effective 5/1/09, Mutual Qualified Fund changed its name to Mutual Quest
Fund. The fund's investment goal and strategy remained unchanged.
(3.) 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.
(4.) Effective 5/1/09, Mutual Discovery Fund changed its name to Mutual Global
Discovery Fund. The fund's investment goal and strategy remained unchanged.
(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 three or more variations, including long-term
portfolios, intermediate-term portfolios, portfolios of insured securities,
a high-yield portfolio (CA only) and a money market portfolio (CA only).
(9.) The Board of Trustees approved the elimination of the non-fundamental
policy requiring the fund to invest at least 80% of net assets in insured
municipal securities and the removal of the word "Insured" from the fund
name. The changes became effective 2/15/09.
(10.) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
01/10 Not part of the semiannual report
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) One Franklin Parkway
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SEMIANNUAL REPORT AND SHAREHOLDER LETTER
FRANKLIN LARGE CAP EQUITY FUND
INVESTMENT MANAGER
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investment goals, risks, charges and expenses before investing. A 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.
428 S 03/10
JANUARY 31, 2010
SEMIANNUAL REPORT AND SHAREHOLDER LETTER
A series of Franklin Global Trust
SIGN UP FOR ELECTRONIC DELIVERY on franklintempleton.com
(GRAPHIC)
SECTOR
FRANKLIN
GLOBAL REAL ESTATE FUND
(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
SHAREHOLDER LETTER ........................................................ 1
SEMIANNUAL REPORT
Franklin Global Real Estate 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
Shareholder Information ................................................... 35
Shareholder Letter
Dear Shareholder:
During the six months ended January 31, 2010, global economies experienced a
significant recovery driven by one of the most aggressive global policy
responses in financial history. At the end of the period, however, as investors
began to believe the global financial system was on the mend, world governments
began positioning themselves to curtail their spending programs and low interest
rate policies, and the market began to focus on the risks associated with this
transition.
Franklin Global Real Estate Fund's semiannual report goes into greater detail
about prevailing conditions during the period under review. In addition, you
will find performance data, financial information and a discussion from the
portfolio managers. 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.
Although market conditions are constantly changing, we remain committed to our
disciplined strategy as we manage the Fund, keeping in mind the trust you have
placed in us. 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 current market conditions.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Not part of the semiannual report | 1
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 Global Trust
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF JANUARY 31, 2010. 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 Global Real Estate Fund
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Global Real Estate Fund seeks
high total return. Under normal market conditions, the Fund will invest at least
80% of its net assets in securities of companies located anywhere in the world
that operate in the real estate sector, including mainly real estate investment
trusts (REITs) and REIT-like entities.(1)
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 Global Real Estate Fund covers the period
ended January 31, 2010.
PERFORMANCE OVERVIEW
Franklin Global Real Estate Fund - Class A delivered a +16.71% cumulative total
return for the six months under review. The Fund underperformed its new
benchmark, the Standard & Poor's (S&P) Global REIT Index, which posted a +21.16%
total return for the same period.(2) The Fund's previous benchmark, the S&P
Global REIT Index (hedged into U.S. dollars), had a +19.56% total return.(2) We
believe the unhedged S&P Global REIT Index better represents the Fund's
portfolio. You can find more of the Fund's performance data in the Performance
Summary beginning on page 7.
ECONOMIC AND MARKET OVERVIEW
Most global REIT markets posted positive performance in 2009's second half
largely due to improving economic conditions. A few markets, however,
experienced periodic dips due to concerns in some local markets. In early 2010,
U.S. REIT stocks lost value as concerns arose that lenders' profitability may
decline
(1.) REITs are real estate investment trust companies, usually with publicly
traded stock, that manage a portfolio of income-producing real estate
properties such as apartments, hotels, industrial properties, office
buildings or shopping centers. The Fund predominantly invests in "equity"
REITs, which also take ownership positions in real estate. Shareholders of
equity REITs generally receive income from rents received and receive
capital gains when properties are sold at a profit. REITs are generally
operated by experienced property management teams and typically concentrate
on a specific geographic region or property type.
(2.) Source: (C) 2010 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 S&P Global REIT Index measures performance of the
investible universe of publicly traded REITs. Index constituents generally
derive the majority of their revenue from real estate development,
management, rental, and/or direct investment in physical property and with
local REIT or property trust tax status. The index is unmanaged and
includes reinvested dividends. One cannot invest directly in an index, and
an index is not 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 15.
Semiannual Report | 3
PORTFOLIO BREAKDOWN
Based on Total Net Assets as of 1/31/10
(BAR CHART)
Retail REITs 30.8%
Office REITs 17.1%
Diversified REITs 14.8%
Specialized REITs 13.9%
Residential REITs 9.3%
Industrial REITs 6.3%
Real Estate Operating Companies 0.7%
Real Estate Development 0.5%
Mortgage REITs 0.4%
Diversified Real Estate Activities 0.4%
Hotels, Resorts & Cruise Lines 0.3%
Short-Term Investments & Other Net Assets 5.5%
due to proposed measures to reduce risk-taking at financial institutions. In
Europe, French REITs eked out a small gain, but Dutch, Belgian and U.K. REITs
retreated. Japanese REITs rose in January, led by large-capitalization office
REITs, while Hong Kong REITs fell, led by large-capitalization retail REITs.
Australian REITs declined as strong employment, retail sales and building
approvals data led to expectations of further interest rate hikes. For the
six-month reporting period, as measured by the S&P Global REIT Index, the best
performing real estate market was Turkey, with a +48.99% total return, followed
by Germany (+42.52%) and Canada (+31.89%).(3) The worst performing markets were
Greece (-4.55%) and Japan (-0.43%).(3)
INVESTMENT STRATEGY
We are research-driven, fundamental investors. We seek to limit price volatility
by investing across markets and property types. We also seek to provide a
consistently high level of income. We center our active investment strategy on
the belief that unsynchronized regional economic activity within the global
economy can provide consistent, attractive return opportunities in the global
real estate markets. We use a bottom-up, value-oriented stock selection process
that incorporates macro-level views in the evaluation process. We use top-down
macro overlays to provide country/regional, property type, and company size
perspectives in identifying international/local cyclical and thematic trends
that highlight investment opportunities. We may use forward currency exchange
contracts from time to time to help manage currency risk and the Fund's exposure
to various currencies.
MANAGER'S DISCUSSION
During the six months under review, significant contributors to Fund performance
relative to the S&P Global REIT Index included overweighted positions in
Westfield Group, UDR and ING Office Fund. Westfield Group, an Australian retail
REIT that is the world's biggest shopping center owner by market value, was the
Fund's largest equity holding during the reporting period. The company's share
price rose during the period and contributed to absolute and relative
performance. Westfield benefited from significant access to capital and
investors' interest in the company's substantial developments. The company is
part of the retail REIT industry, the Fund's largest allocation during the
period,
(3.) Source: (C) 2010 Morningstar. See footnote 2 for a description of the S&P
Global REIT Index. Local property returns are from country subindexes of
the index. The index is unmanaged and includes reinvested dividends. One
cannot invest directly in an index, and an index is not representative of
the Fund's portfolio.
4 | Semiannual Report
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 1/31/10
(BAR CHART)
U.S. 48.1%
Australia 15.3%
France 6.7%
Japan 6.5%
U.K. 6.3%
Singapore 3.0%
Hong Kong 3.0%
Netherlands 2.8%
Canada 2.2%
Belgium 0.4%
Norway 0.2%
Short-Term Investments & Other Net Assets 5.5%
which was a significant contributor to relative returns. Shares of UDR, a U.S.
apartment building owner, appreciated in value beginning in early September 2009
after the company announced robust second-quarter results. The company reported
strong quarterly growth in funds from operations, a commonly accepted and
reported measure of REIT operating performance, due to cost-cutting efforts such
as eliminating print advertising and focusing marketing dollars online.
Management also reported expanded occupancy rates and stabilized rents. The
average rent paid by tenants at its properties during the second quarter was
approximately $1,200 per month, matching the average rent paid a year earlier,
although with more concessions. Share prices of ING Office Fund, an Australian
REIT that owns commercial properties in Australia, the U.S. and Europe, began to
climb in late August largely due to growing positive sentiment among investors
about the financial health of Australia's entire REIT sector. At that time,
several large Australian REITs completed recapitalizations. Largely as a
result, investors seemed to perceive improvement in the sector's financial
health and appeared convinced that asset write-downs, which had been significant
earlier in 2009, were near an end. During the period under review, ING Office
Fund reduced its debt and improved its balance sheet by selling several office
buildings.
Significant detractors from relative performance included Apartment Investment &
Management Co. (AIMCO), Helical Bar(4) and St. Joe.(4) AIMCO, a new holding,
owns or manages a portfolio of 870 U.S. apartment buildings. Its share price
fell sharply in late October after the company announced disappointing
third-quarter results, but the stock price rebounded from its October lows for
the rest of 2009. The company was forced to lower rents to prevent a significant
decline in occupancy levels as the U.S. unemployment rate continued to climb.
Average monthly rent paid by tenants at AIMCO's properties was $990 in the third
quarter, compared with $1,026 a year earlier; therefore, revenues and funds from
operations fell. We initiated our AIMCO position in early January 2010; however,
the share price declined further later in the month. A new position in Helical
Bar, a U.K.-based property developer and investor, declined in value during the
period. The company reported a pre-tax loss for the six-month period ended
September 30, 2009, after a sharp decline in U.K. property prices hurt its
portfolio's value. U.S.-based St. Joe, a REIT primarily engaged in real estate
development and sales, weighed on relative and absolute returns for the time we
held it during the period. We initiated the position in August. The company's
share price fell sharply in early November after the company reported a loss for
2009's third quarter, and we liquidated our position in December.
(4.) This holding is not an index component.
Semiannual Report | 5
TOP 10 HOLDINGS
1/31/10
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- ------------------------ ----------
Westfield Group, ord. & 144A 7.4%
RETAIL REITS, AUSTRALIA
Unibail-Rodamco SE 5.2%
RETAIL REITS, FRANCE
Simon Property Group Inc. 3.8%
RETAIL REITS, U.S.
Boston Properties Inc. 3.3%
OFFICE REITS, U.S.
Equity Residential 2.7%
RESIDENTIAL REITS, U.S.
Ventas Inc. 2.7%
SPECIALIZED REITS, U.S.
Vornado Realty Trust 2.6%
DIVERSIFIED REITS, U.S.
Public Storage 2.5%
SPECIALIZED REITS, U.S.
Host Hotels & Resorts Inc. 2.4%
SPECIALIZED REITS, U.S.
Stockland, ord. & 144A 2.3%
DIVERSIFIED REITS, AUSTRALIA
Thank you for your continued participation in Franklin Global Real Estate Fund.
We look forward to serving your future investment needs.
(PHOTO OF JOHN W. FOSTER)
/s/ John W. Foster
John W. Foster
(PHOTO OF DAVID LEVY)
/s/ David Levy
David Levy
Portfolio Management Team
Franklin Global Real Estate Fund
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF JANUARY 31, 2010, 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 1/31/10
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: FAGRX) CHANGE 1/31/10 7/31/09
- ----------------------- ------ ------- -------
Net Asset Value (NAV) +$0.66 $5.73 $5.07
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.1980
CLASS C (SYMBOL: N/A) CHANGE 1/31/10 7/31/09
- --------------------- ------ ------- -------
Net Asset Value (NAV) +$0.67 $5.70 $5.03
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.1669
ADVISOR CLASS (SYMBOL: FVGRX) CHANGE 1/31/10 7/31/09
- ----------------------------- ------ ------- -------
Net Asset Value (NAV) +$0.66 $5.74 $5.08
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.2112
Semiannual Report | 7
Performance Summary (CONTINUED)
PERFORMANCE(1)
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 C: 1% CONTINGENT DEFERRED SALES CHARGE IN
FIRST YEAR ONLY; ADVISOR CLASS: NO SALES CHARGES.
COMMENCEMENT
OF OPERATIONS
CLASS A 6-MONTH 1-YEAR 3-YEAR (6/16/06)
- ------- ------- ------- ------ -------------
Cumulative Total Return(2) +16.71% +30.34% -45.33% -30.87%
Average Annual Total Return(3) +9.99% +22.77% -19.83% -11.14%
Value of $10,000 Investment(4) $10,999 $12,277 $5,153 $6,516
Avg. Ann. Total Return (12/31/09)(5) +12.06% -17.26% -10.23%
Total Annual Operating Expenses(6)
Without Waiver 1.75%
With Waiver 1.35%
COMMENCEMENT
OF OPERATIONS
CLASS C 6-MONTH 1-YEAR 3-YEAR (6/16/06)
- ------- ------- ------- ------ -------------
Cumulative Total Return(2) +16.63% +29.50% -46.38% -32.45%
Average Annual Total Return(3) +15.63% +28.50% -18.76% -10.25%
Value of $10,000 Investment(4) $11,563 $12,850 $5,362 $6,755
Avg. Ann. Total Return (12/31/09)(5) +16.96% -16.20% -9.35%
Total Annual Operating Expenses(6)
Without Waiver 2.44%
With Waiver 2.04%
COMMENCEMENT
OF OPERATIONS
ADVISOR CLASS 6-MONTH 1-YEAR 3-YEAR (6/16/06)
- ------------- ------- ------- ------ -------------
Cumulative Total Return(2) +17.15% +31.08% -44.74% -29.94%
Average Annual Total Return(3) +17.15% +31.08% -17.94% -9.34%
Value of $10,000 Investment(4) $11,715 $13,108 $5,526 $7,006
Avg. Ann. Total Return (12/31/09)(5) +19.17% -15.32% -8.42%
Total Annual Operating Expenses(6)
Without Waiver 1.45%
With Waiver 1.05%
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. FOR MOST RECENT MONTH-END PERFORMANCE, GO TO
franklintempleton.com OR CALL (800) 342-5236.
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) FOR EACH CLASS OF THE FUND DO NOT EXCEED 1.05% (OTHER
THAN CERTAIN NONROUTINE EXPENSES OR COSTS, INCLUDING THOSE RELATING TO
LITIGATION, INDEMNIFICATION, REORGANIZATIONS AND LIQUIDATIONS) UNTIL 11/30/10.
8 | Semiannual Report
Performance Summary (CONTINUED)
ENDNOTES
INVESTING IN A NONDIVERSIFIED GLOBAL FUND CONCENTRATING IN REAL ESTATE
SECURITIES INVOLVES SPECIAL RISKS, SUCH AS DECLINES IN THE VALUE OF REAL ESTATE
AS WELL AS INCREASED SUSCEPTIBILITY TO ADVERSE ECONOMIC, POLITICAL OR REGULATORY
DEVELOPMENTS AFFECTING THE INDUSTRY. FOREIGN INVESTING, ESPECIALLY IN EMERGING
MARKETS, INVOLVES ADDITIONAL RISKS SUCH AS CURRENCY AND MARKET VOLATILITY, AS
WELL AS POLITICAL AND SOCIAL INSTABILITY. 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.
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.) 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.
(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 average annual 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. In periods of market volatility, assets may decline
significantly, causing total annual Fund operating expenses to become
higher than the figures shown.
Semiannual Report | 9
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
- - Transaction costs, including sales charges (loads) on Fund purchases; 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.
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.
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 8/1/09 VALUE 1/31/10 PERIOD* 8/1/09-1/31/10
----------------- -------------- ----------------------
CLASS A
Actual $1,000 $1,167.10 $ 7.37
Hypothetical (5% return before expenses) $1,000 $1,018.40 $ 6.87
CLASS C
Actual $1,000 $1,166.30 $11.14
Hypothetical (5% return before expenses) $1,000 $1,014.92 $10.36
ADVISOR CLASS
Actual $1,000 $1,171.50 $ 5.75
Hypothetical (5% return before expenses) $1,000 $1,019.91 $ 5.35
* Expenses are calculated using the most recent six-month expense ratio, net
of expense waivers, annualized for each class (A: 1.35%; C: 2.04%; and
Advisor: 1.05%), multiplied by the average account value over the period,
multiplied by 184/365 to reflect the one-half year period.
Semiannual Report | 11
Franklin Global Trust
FINANCIAL HIGHLIGHTS
FRANKLIN GLOBAL REAL ESTATE FUND
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, 2010 -----------------------------------------
CLASS A (UNAUDITED) 2009 2008 2007 2006(a)
- ------- ---------------- ------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ....................... $ 5.07 $ 8.52 $ 10.87 $ 10.33 $10.00
------- ------- ------- ------- ------
Income from investment operations(b):
Net investment income(c) ................................ 0.04 0.18 0.26 0.35 0.03
Net realized and unrealized gains (losses) .............. 0.82 (3.17) (2.27) 0.59 0.30
------- ------- ------- ------- ------
Total from investment operations ........................... 0.86 (2.99) (2.01) 0.94 0.33
------- ------- ------- ------- ------
Less distributions from:
Net investment income and net realized foreign currency
gains ................................................ (0.20) (0.46) (0.34) (0.37) --
Net realized gains ...................................... -- -- --(d) (0.03) --
------- ------- ------- ------- ------
Total distributions ........................................ (0.20) (0.46) (0.34) (0.40) --
------- ------- ------- ------- ------
Redemption fees(e) ......................................... -- --(d) --(d) --(d) --
------- ------- ------- ------- ------
Net asset value, end of period ............................. $ 5.73 $ 5.07 $ 8.52 $ 10.87 $10.33
======= ======= ======= ======= ======
Total return(f) ............................................ 16.71% (35.12)% (18.77)% 8.81% 3.30%
RATIOS TO AVERAGE NET ASSETS(g)
Expenses before waiver and payments by affiliates and
expense reduction ....................................... 1.84% 1.75% 1.61% 1.86% 6.25%
Expenses net of waiver and payments by affiliates .......... 1.35% 1.35% 1.39% 1.41% 2.09%
Expenses net of waiver and payments by affiliates and
expense reduction ....................................... 1.35%(h) 1.35%(h) 1.38% 1.40% 1.40%
Net investment income ...................................... 1.81% 3.22% 2.69% 2.94% 2.21%
SUPPLEMENTAL DATA
Net assets, end of period (000's) .......................... $23,861 $15,606 $29,038 $33,409 $5,488
Portfolio turnover rate .................................... 71.71% 77.67% 92.64% 81.30% 13.57%
(a) For the period June 16, 2006 (commencement of operations) to July 31, 2006.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Amount rounds to less than $0.01 per share.
(e) Effective September 1, 2008, the redemption fee was eliminated.
(f) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(g) Ratios are annualized for periods less than one year.
(h) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
12 | Semiannual Report
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, 2010 ----------------------------------------
CLASS C (UNAUDITED) 2009 2008 2007 2006(a)
- ------- ---------------- ------- ------- ------ -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ....................... $ 5.03 $ 8.48 $ 10.82 $10.32 $10.00
------ ------- ------- ------ ------
Income from investment operations(b):
Net investment income(c) ................................ 0.02 0.15 0.20 0.29 0.01
Net realized and unrealized gains (losses) .............. 0.82 (3.17) (2.26) 0.58 0.31
------ ------- ------- ------ ------
Total from investment operations ........................... 0.84 (3.02) (2.06) 0.87 0.32
------ ------- ------- ------ ------
Less distributions from:
Net investment income and net realized foreign currency
gains ................................................ (0.17) (0.43) (0.28) (0.34) --
Net realized gains ...................................... -- -- --(d) (0.03) --
------ ------- ------- ------ ------
Total distributions ........................................ (0.17) (0.43) (0.28) (0.37) --
------ ------- ------- ------ ------
Redemption fees(e) ......................................... -- --(d) --(d) --(d) --
------ ------- ------- ------ ------
Net asset value, end of period ............................. $ 5.70 $ 5.03 $ 8.48 $10.82 $10.32
====== ======= ======= ====== ======
Total return(f) ............................................ 16.63% (35.68)% (19.31)% 8.13% 3.20%
RATIOS TO AVERAGE NET ASSETS(g)
Expenses before waiver and payments by affiliates and
expense reduction ....................................... 2.53% 2.44% 2.27% 2.51% 6.90%
Expenses net of waiver and payments by affiliates .......... 2.04% 2.04% 2.05% 2.06% 2.74%
Expenses net of waiver and payments by affiliates and
expense reduction ....................................... 2.04%(h) 2.04%(h) 2.04% 2.05% 2.05%
Net investment income ...................................... 1.12% 2.53% 2.03% 2.29% 1.56%
SUPPLEMENTAL DATA
Net assets, end of period (000's) .......................... $6,240 $ 3,748 $ 8,008 $9,192 $ 140
Portfolio turnover rate .................................... 71.71% 77.67% 92.64% 81.30% 13.57%
(a) For the period June 16, 2006 (commencement of operations) to July 31, 2006.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Amount rounds to less than $0.01 per share.
(e) Effective September 1, 2008, the redemption fee was eliminated.
(f) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(g) Ratios are annualized for periods less than one year.
(h) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 13
Franklin Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, 2010 -----------------------------------------
ADVISOR CLASS (UNAUDITED) 2009 2008 2007 2006(a)
- ------------- ---------------- ------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ....................... $ 5.08 $ 8.53 $ 10.89 $ 10.34 $10.00
------- ------- ------- ------- ------
Income from investment operations(b):
Net investment income(c) ................................ 0.07 0.19 0.29 0.39 0.02
Net realized and unrealized gains (losses) .............. 0.80 (3.16) (2.27) 0.59 0.32
------- ------- ------- ------- ------
Total from investment operations ........................... 0.87 (2.97) (1.98) 0.98 0.34
------- ------- ------- ------- ------
Less distributions from:
Net investment income and net realized foreign currency
gains ................................................ (0.21) (0.48) (0.38) (0.40) --
Net realized gains ...................................... -- -- --(d) (0.03) --
------- ------- ------- ------- ------
Total distributions ........................................ (0.21) (0.48) (0.38) (0.43) --
------- ------- ------- ------- ------
Redemption fees(e) ......................................... -- --(d) --(d) --(d) --
------- ------- ------- ------- ------
Net asset value, end of period ............................. $ 5.74 $ 5.08 $ 8.53 $ 10.89 $10.34
======= ======= ======= ======= ======
Total return(f) ............................................ 17.15% (34.93)% (18.55)% 9.12% 3.40%
RATIOS TO AVERAGE NET ASSETS(g)
Expenses before waiver and payments by affiliates and
expense reduction ....................................... 1.54% 1.45% 1.28% 1.51% 5.90%
Expenses net of waiver and payments by affiliates .......... 1.05% 1.05% 1.06% 1.06% 1.74%
Expenses net of waiver and payments by affiliates and
expense reduction ....................................... 1.05%(h) 1.05%(h) 1.05% 1.05% 1.05%
Net investment income ...................................... 2.11% 3.52% 3.02% 3.29% 2.56%
SUPPLEMENTAL DATA
Net assets, end of period (000's) .......................... $18,368 $34,154 $59,675 $34,631 $1,221
Portfolio turnover rate .................................... 71.71% 77.67% 92.64% 81.30% 13.57%
(a) For the period June 16, 2006 (commencement of operations) to July 31, 2006.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Amount rounds to less than $0.01 per share.
(e) Effective September 1, 2008, the redemption fee was eliminated.
(f) Total return is not annualized for periods less than one year.
(g) Ratios are annualized for periods less than one year.
(h) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
14 | Semiannual Report
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED)
FRANKLIN GLOBAL REAL ESTATE FUND COUNTRY SHARES VALUE
-------------------------------- -------------- ---------- -----------
COMMON STOCKS 94.5%
DIVERSIFIED REAL ESTATE ACTIVITIES 0.4%
Sun Hung Kai Properties Ltd. ............................................. Hong Kong 14,000 $ 182,490
-----------
DIVERSIFIED REITS 14.8%
British Land Co. PLC ..................................................... United Kingdom 51,333 359,576
Canadian REIT ............................................................ Canada 7,300 191,073
Dexus Property Group ..................................................... Australia 542,255 397,976
GPT Group ................................................................ Australia 1,418,832 715,123
H&R Real Estate Investment Trust ......................................... Canada 23,200 364,781
ICADE .................................................................... France 2,140 206,263
Kenedix Realty Investment Corp. .......................................... Japan 113 320,425
Land Securities Group PLC ................................................ United Kingdom 74,467 763,209
Liberty Property Trust ................................................... United States 12,900 392,160
Mirvac Group ............................................................. Australia 350,749 451,268
Shaftesbury PLC .......................................................... United Kingdom 26,000 158,262
Stockland ................................................................ Australia 265,099 874,363
(a) Stockland, 144A .......................................................... Australia 68,529 226,026
Tokyu REIT Inc. .......................................................... Japan 3 13,724
United Urban Investment Corp. ............................................ Japan 33 172,895
Vornado Realty Trust ..................................................... United States 19,501 1,261,325
Wereldhave NV ............................................................ Netherlands 3,720 336,339
-----------
7,204,788
-----------
HOTELS, RESORTS & CRUISE LINES 0.3%
Starwood Hotels & Resorts Worldwide Inc. ................................. United States 4,160 138,611
-----------
INDUSTRIAL REITS 6.3%
AMB Property Corp. ....................................................... United States 22,600 542,400
Ascendas REIT ............................................................ Singapore 170,000 234,466
DuPont Fabros Technology Inc. ............................................ United States 14,100 234,342
Goodman Group ............................................................ Australia 1,269,723 656,810
Japan Logistics Fund Inc. ................................................ Japan 25 175,288
Mapletree Logistics Trust ................................................ Singapore 224,000 124,215
ProLogis ................................................................. United States 44,900 565,740
Segro PLC ................................................................ United Kingdom 103,300 518,457
-----------
3,051,718
-----------
MORTGAGE REITS 0.4%
Starwood Property Trust Inc. ............................................. United States 10,400 203,944
-----------
OFFICE REITS 17.1%
Alexandria Real Estate Equities Inc. ..................................... United States 11,000 657,030
Befimmo SCA .............................................................. Belgium 2,500 204,855
Boston Properties Inc. ................................................... United States 24,900 1,615,263
CapitaCommercial Trust ................................................... Singapore 239,000 180,108
Champion REIT ............................................................ Hong Kong 541,713 230,256
Commonwealth Property Office Fund ........................................ Australia 224,397 180,565
Corporate Office Properties Trust ........................................ United States 10,600 378,314
DA Office Investment Corp. ............................................... Japan 58 112,878
Derwent London PLC ....................................................... United Kingdom 10,190 213,598
Semiannual Report | 15
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND COUNTRY SHARES VALUE
-------------------------------- -------------- ---------- -----------
COMMON STOCKS (CONTINUED)
OFFICE REITS (CONTINUED)
Digital Realty Trust Inc. ................................................ United States 11,900 $ 571,200
Douglas Emmett Inc. ...................................................... United States 14,100 195,003
Government Properties Income Trust ....................................... United States 9,000 208,890
Great Portland Estates PLC ............................................... United Kingdom 64,545 290,511
Highwoods Properties Inc. ................................................ United States 8,000 241,680
ING Office Fund .......................................................... Australia 330,129 178,069
Japan Real Estate Investment Co. ......................................... Japan 107 897,198
Kilroy Realty Corp. ...................................................... United States 7,800 225,342
Mack-Cali Realty Corp. ................................................... United States 10,400 339,248
Nippon Building Fund Inc. ................................................ Japan 58 512,672
ORIX JREIT Inc. .......................................................... Japan 53 261,243
Silic .................................................................... France 2,600 298,937
SL Green Realty Corp. .................................................... United States 6,900 313,881
-----------
8,306,741
-----------
REAL ESTATE DEVELOPMENT 0.5%
Helical Bar PLC .......................................................... United Kingdom 47,327 238,288
-----------
REAL ESTATE OPERATING COMPANIES 0.7%
Hongkong Land Holdings Ltd. .............................................. Hong Kong 53,000 248,570
(b) Norwegian Property ASA ................................................... Norway 53,710 122,536
-----------
371,106
-----------
RESIDENTIAL REITS 9.3%
Apartment Investment & Management Co., A ................................. United States 17,000 261,120
AvalonBay Communities Inc. ............................................... United States 9,184 703,586
Boardwalk REIT ........................................................... Canada 4,800 167,815
Camden Property Trust .................................................... United States 12,300 476,871
Equity Lifestyle Properties Inc. ......................................... United States 9,400 454,208
Equity Residential ....................................................... United States 41,000 1,314,050
Essex Property Trust Inc. ................................................ United States 3,500 278,915
Nippon Accommodations Fund Inc. .......................................... Japan 43 231,718
Nippon Residential Investment Corp. ...................................... Japan 53 123,283
UDR Inc. ................................................................. United States 31,747 493,984
-----------
4,505,550
-----------
RETAIL REITS 30.8%
CapitaMall Trust ......................................................... Singapore 101,000 121,349
(a, b) Capitamalls Asia Ltd., 144A .............................................. Singapore 130,000 213,494
CFS Retail Property Trust ................................................ Australia 106,932 176,817
Corio NV ................................................................. Netherlands 11,900 734,799
Developers Diversified Realty Corp. ...................................... United States 29,004 239,283
Eurocommercial ........................................................... Netherlands 7,190 282,420
Federal Realty Investment Trust .......................................... United States 6,800 437,784
Frontier Real Estate Investment Corp. .................................... Japan 27 197,386
General Growth Properties Inc. ........................................... United States 21,416 199,169
Hammerson PLC ............................................................ United Kingdom 80,704 489,182
Japan Retail Fund Investment Corp. ....................................... Japan 28 130,261
Kimco Realty Corp. ....................................................... United States 26,600 335,692
Klepierre ................................................................ France 4,870 181,420
16 | Semiannual Report
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND COUNTRY SHARES VALUE
-------------------------------- -------------- ---------- -----------
COMMON STOCKS (CONTINUED)
RETAIL REITS (CONTINUED)
The Link REIT ............................................................ Hong Kong 330,000 $ 799,098
The Macerich Co. ......................................................... United States 10,019 309,086
National Retail Properties Inc. .......................................... United States 20,700 418,140
Realty Income Corp. ...................................................... United States 12,200 340,746
Regency Centers Corp. .................................................... United States 12,700 425,323
RioCan REIT .............................................................. Canada 19,800 353,337
Simon Property Group Inc. ................................................ United States 25,764 1,855,008
Suntec REIT .............................................................. Singapore 345,000 318,854
Tanger Factory Outlet Centers Inc. ....................................... United States 3,200 122,560
Taubman Centers Inc. ..................................................... United States 3,900 123,474
Unibail-Rodamco SE ....................................................... France 11,729 2,541,464
Westfield Group .......................................................... Australia 281,074 3,141,542
(a) Westfield Group, 144A .................................................... Australia 39,000 435,900
-----------
14,923,588
-----------
SPECIALIZED REITS 13.9%
CDL Hospitality Trusts ................................................... Singapore 216,000 276,411
HCP Inc. ................................................................. United States 33,500 949,725
Health Care REIT Inc. .................................................... United States 13,400 576,200
Host Hotels & Resorts Inc. ............................................... United States 111,773 1,184,794
LaSalle Hotel Properties ................................................. United States 9,400 189,410
Nationwide Health Properties Inc. ........................................ United States 19,900 655,904
(b) Pebblebrook Hotel Trust .................................................. United States 11,160 230,119
Public Storage ........................................................... United States 15,100 1,195,618
(b) Sunstone Hotel Investors Inc. ............................................ United States 17,800 152,902
Ventas Inc. .............................................................. United States 31,100 1,312,420
-----------
6,723,503
-----------
TOTAL COMMON STOCKS (COST $39,304,527) ................................... 45,850,327
-----------
PRINCIPAL
AMOUNT
----------
SHORT TERM INVESTMENTS (COST$2,400,000) 5.0%
TIME DEPOSITS 5.0%
Paribas Corp., 0.11%, 2/01/10 ............................................ United States $2,400,000 2,400,000
-----------
TOTAL INVESTMENTS (COST $41,704,527) 99.5% ............................... 48,250,327
OTHER ASSETS, LESS LIABILITIES 0.5% ...................................... 218,835
-----------
NET ASSETS 100.0% ........................................................ $48,469,162
===========
(a) 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 Trust's Board of Trustees. At January 31, 2010,
the aggregate value of these securities was $875,420, representing 1.81% of
net assets.
(b) Non-income producing.
Semiannual Report | 17
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
At January 31, 2010, the Fund had the following forward exchange contracts
outstanding. See Note 1(c).
FORWARD EXCHANGE CONTRACTS
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY AMOUNT DATE APPRECIATION DEPRECIATION
- -------- ------------ ---- ----------- ---------- ---------- ------------ ------------
Australian Dollar ............................ UBSW Sell 3,039,481 $2,666,967 3/24/10 $ -- $ (4,707)
Australian Dollar ............................ BOFA Sell 3,387,058 2,975,801 3/24/10 -- (1,390)
Australian Dollar ............................ DBAB Buy 1,955,664 1,733,501 3/24/10 1,052 --
Australian Dollar ............................ BOFA Buy 3,387,058 2,988,571 3/24/10 15,540 --
Australian Dollar ............................ UBSW Buy 3,039,481 2,684,560 3/24/10 11,271 --
Australian Dollar ............................ DBAB Sell 1,955,664 1,732,320 3/24/10 13,309 --
British Pound ................................ CITI Buy 1,008,822 1,614,852 3/24/10 -- (4,789)
British Pound ................................ UBSW Buy 701,450 1,123,043 3/24/10 -- (3,540)
British Pound ................................ DBAB Buy 265,333 424,509 3/24/10 -- (1,042)
British Pound ................................ DBAB Sell 265,333 429,121 3/24/10 5,053 --
British Pound ................................ CITI Sell 1,008,822 1,631,223 3/24/10 18,875 --
British Pound ................................ UBSW Sell 701,450 1,133,450 3/24/10 12,358 --
Canadian Dollar .............................. BOFA Buy 953,600 893,930 3/24/10 4,305 --
Canadian Dollar .............................. BOFA Sell 953,600 894,098 3/24/10 2,735 --
Euro ......................................... DBAB Buy 503,914 699,311 3/24/10 3,003 --
Euro ......................................... BOFA Buy 1,194,889 1,656,773 3/24/10 8,567 --
Euro ......................................... UBSW Buy 1,712,605 2,377,199 3/24/10 9,692 --
Euro ......................................... DBAB Sell 503,914 723,308 3/24/10 24,725 --
Euro ......................................... BOFA Sell 1,194,889 1,712,694 3/24/10 56,203 --
Euro ......................................... UBSW Sell 1,712,605 2,437,636 3/24/10 63,428 --
Hong Kong Dollar ............................. BOFA Buy 8,964,267 1,154,862 3/24/10 -- (216)
Hong Kong Dollar ............................. BOFA Sell 8,964,267 1,156,428 3/24/10 1,348 --
Japanese Yen ................................. BOFA Sell 222,896,502 2,452,864 3/24/10 -- (16,570)
Japanese Yen ................................. BOFA Buy 222,896,502 2,466,761 3/24/10 -- (6,458)
Japanese Yen ................................. UBSW Buy 58,854,805 650,970 3/24/10 -- (1,338)
Japanese Yen ................................. UBSW Sell 34,541,845 382,222 3/24/10 -- (462)
Japanese Yen ................................. CITI Buy 8,422,196 93,185 3/24/10 -- (222)
Japanese Yen ................................. CITI Sell 8,422,196 93,204 3/24/10 -- (104)
Japanese Yen ................................. UBSW Sell 24,312,960 270,000 3/24/10 641 --
New Zealand Dollar ........................... BOFA Buy 805,439 576,758 3/24/10 -- (14,151)
New Zealand Dollar ........................... BOFA Sell 805,439 566,707 3/24/10 4,100 --
Singapore Dollar ............................. UBSW Buy 1,343,918 955,186 3/24/10 -- (2,509)
Singapore Dollar ............................. BOFA Buy 453,240 322,064 3/24/10 -- (770)
Singapore Dollar ............................. BOFA Sell 453,240 323,005 3/24/10 933 --
Singapore Dollar ............................. UBSW Sell 1,343,918 957,839 3/24/10 2,852 --
-------- --------
Unrealized appreciation (depreciation) .............................................................. 259,990 (58,268)
-------- --------
Net unrealized appreciation (depreciation) ....................................................... $201,722
========
See Abbreviations on page 34.
The accompanying notes are an integral part of these financial statements.
18 | Semiannual Report
Franklin Global Trust
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2010 (unaudited)
FRANKLIN
GLOBAL
REAL ESTATE
FUND
------------
Assets:
Investments in securities:
Cost - Unaffiliated issuers .............................. $ 41,704,527
============
Value - Unaffiliated issuers ............................. $ 48,250,327
Cash ........................................................ 124,436
Foreign currency, at value (cost $12,997) ................... 14,495
Receivables:
Investment securities sold ............................... 153,927
Capital shares sold ...................................... 261,059
Dividends ................................................ 147,838
Unrealized appreciation on forward exchange contracts ....... 259,990
------------
Total assets .......................................... 49,212,072
------------
Liabilities:
Payables:
Investment securities purchased .......................... 509,986
Capital shares redeemed .................................. 95,314
Affiliates ............................................... 40,527
Unrealized depreciation on forward exchange contracts ....... 58,268
Accrued expenses and other liabilities ...................... 38,815
------------
Total liabilities ..................................... 742,910
------------
Net assets, at value ............................... $ 48,469,162
============
Net assets consist of:
Paid-in capital ............................................. $112,364,638
Distributions in excess of net investment income ............ (4,054,576)
Net unrealized appreciation (depreciation) .................. 6,751,559
Accumulated net realized gain (loss) ........................ (66,592,459)
------------
Net assets, at value ............................... $ 48,469,162
============
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 19
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
January 31, 2010 (unaudited)
FRANKLIN
GLOBAL
REAL ESTATE
FUND
-----------
CLASS A:
Net assets, at value ........................................ $23,861,386
===========
Shares outstanding .......................................... 4,166,456
===========
Net asset value per share(a) ................................ $ 5.73
===========
Maximum offering price per share (net asset value per share /
94.25%) .................................................. $ 6.08
===========
CLASS C:
Net assets, at value ........................................ $ 6,239,945
===========
Shares outstanding .......................................... 1,094,712
===========
Net asset value and maximum offering price per share(a) ..... $ 5.70
===========
ADVISOR CLASS:
Net assets, at value ........................................ $18,367,831
===========
Shares outstanding .......................................... 3,200,525
===========
Net asset value and maximum offering price per share ........ $ 5.74
===========
(a) Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable.
The accompanying notes are an integral part of these financial statements.
20 | Semiannual Report
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the six months ended January 31, 2010 (unaudited)
FRANKLIN
GLOBAL
REAL ESTATE
FUND
-----------
Investment income:
Dividends (net of foreign taxes of $32,807) .............................. $ 716,032
Interest ................................................................. 1,185
-----------
Total investment income ............................................ 717,217
-----------
Expenses:
Management fees (Note 3a) ................................................ 181,453
Administrative fees (Note 3b) ............................................ 45,363
Distribution fees: (Note 3c)
Class A ............................................................... 33,603
Class C ............................................................... 25,987
Transfer agent fees (Note 3e) ............................................ 45,414
Special servicing agreement fees (Note 8) ................................ 3,976
Custodian fees (Note 4) .................................................. 3,024
Reports to shareholders .................................................. 17,479
Registration and filing fees ............................................. 23,855
Professional fees ........................................................ 17,894
Trustees' fees and expenses .............................................. 1,804
Other .................................................................... 7,785
-----------
Total expenses ..................................................... 407,637
Expense reductions (Note 4) ........................................ (20)
Expenses waived/paid by affiliates (Note 3f) ....................... (109,869)
-----------
Net expenses .................................................... 297,748
-----------
Net investment income ........................................ 419,469
-----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ........................................................... (2,880,878)
Foreign currency transactions ......................................... (1,083,593)
-----------
Net realized gain (loss) ..................................... (3,964,471)
-----------
Net change in unrealized appreciation (depreciation) on:
Investments ........................................................... 10,321,756
Translation of other assets and liabilities denominated in
foreign currencies ................................................. 1,067,966
-----------
Net change in unrealized appreciation (depreciation) ......... 11,389,722
-----------
Net realized and unrealized gain (loss) ..................................... 7,425,251
-----------
Net increase (decrease) in net assets resulting from operations ............. $ 7,844,720
===========
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 21
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FRANKLIN GLOBAL
REAL ESTATE FUND
--------------------------------
SIX MONTHS ENDED
JANUARY 31, 2010 YEAR ENDED
(UNAUDITED) JULY 31, 2009
---------------- -------------
Increase (decrease) in net assets:
Operations:
Net investment income ................................................................ $ 419,469 $ 1,954,528
Net realized gain (loss) from investments and foreign currency transactions .......... (3,964,471) (41,404,151)
Net change in unrealized appreciation (depreciation) on investments and translation of
other assets and liabilities denominated in foreign currencies .................... 11,389,722 8,395,310
------------ ------------
Net increase (decrease) in net assets resulting from operations ................ 7,844,720 (31,054,313)
------------ ------------
Distributions to shareholders from:
Net investment income and net foreign currency gains:
Class A ........................................................................... (756,736) (1,424,248)
Class C ........................................................................... (144,149) (315,787)
Advisor Class ..................................................................... (501,459) (3,020,978)
------------ ------------
Total distributions to shareholders ..................................................... (1,402,344) (4,761,013)
------------ ------------
Capital share transactions: (Note 2)
Class A ........................................................................... 6,111,327 (2,351,878)
Class C ........................................................................... 2,019,725 (1,646,895)
Advisor Class ..................................................................... (19,612,719) (3,398,483)
------------ ------------
Total capital share transactions ........................................................ (11,481,667) (7,397,256)
------------ ------------
Redemption fees ......................................................................... -- 84
------------ ------------
Net increase (decrease) in net assets .......................................... (5,039,291) (43,212,498)
Net assets:
Beginning of period ..................................................................... 53,508,453 96,720,951
------------ ------------
End of period ........................................................................... $ 48,469,162 $ 53,508,453
============ ============
Distributions in excess of net investment income included in net assets:
End of period ........................................................................... $ (4,054,576) $ (3,071,701)
============ ============
The accompanying notes are an integral part of these financial statements.
22 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FRANKLIN GLOBAL REAL ESTATE FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Global Trust (Trust) is registered under the Investment Company Act of
1940, as amended, (1940 Act) as an open-end investment company, consisting of
five separate funds. The Franklin Global Real Estate Fund (Fund) is included in
this report. The financial statements of the remaining funds in the Trust are
presented separately. The Fund offers three classes of shares: Class A, 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
Equity and other 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. Certain equity securities are valued based upon
fundamental characteristics or relationships to similar securities. Short term
investments are valued at cost.
Foreign equity 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 equity 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 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 based upon the underlying investment book value,
anticipated future cash flows, market changes in comparable or similar
securities, 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
Semiannual Report | 23
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. SECURITY VALUATION (CONTINUED)
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. At January 31, 2010, a market event occurred
resulting in a portion of the securities held by the Fund being fair valued. All
security valuation procedures are approved by the Fund's Board of Trustees.
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. The Fund may enter
into foreign currency exchange contracts to facilitate transactions denominated
in a foreign currency. Purchases and sales of securities, income and expense
items denominated in foreign currencies are translated into U.S. dollars at the
exchange rate in effect on the transaction date. 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. DERIVATIVE FINANCIAL INSTRUMENTS
The Fund may invest in derivative financial instruments (derivatives) in order
to manage risk or gain exposure to various other investments or markets.
Derivatives are financial contracts based on an underlying or notional amount,
require no initial investment or an initial net investment that is smaller than
would normally be required to have a similar response to changes in market
factors, and require or permit net settlement. Derivatives may contain various
risks including the potential inability of the counterparty to fulfill their
obligations under the terms of the contract, the potential for an illiquid
secondary market, and the potential for market movements which may expose the
Fund to gains or losses in excess of the amounts shown on the Statement of
Assets and Liabilities.
24 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Derivatives are marked to market daily based upon quotations from market makers
or the Fund's independent pricing services and the Fund's net benefit or
obligation under the contract, as measured by the fair market value of the
contract, is included in net assets. Realized gain and loss and unrealized
appreciation and depreciation on these contracts for the period are included in
the Statement of Operations.
The Fund generally enters into forward exchange contracts in order to hedge
against fluctuations in foreign exchange rates or to gain exposure to certain
foreign currencies. A forward exchange contract is an agreement between the Fund
and a counterparty to buy or sell a foreign currency for a specific exchange
rate on a future date. Pursuant to the terms of the forward exchange contracts,
cash or securities may be required to be deposited as collateral.
See Note 7 regarding other derivative information.
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.
The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of January 31, 2010, and has
determined that no provision for income tax is required in the Fund's financial
statements.
Foreign securities held by the Fund may be subject to foreign taxation on
dividend 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
Semiannual Report | 25
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
(CONTINUED)
have no impact on net assets or the results of operations. Temporary differences
are not reclassified, as they may reverse in subsequent periods.
Common expenses incurred by the Trust are allocated among the funds based on the
ratio of net assets of each fund to the combined net assets of the Trust. Fund
specific expenses are charged directly to the fund that incurred the expense.
Realized and unrealized gains and losses and net investment income, not
including 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.
Distributions received by the Trust from certain securities may be a return of
capital (ROC). Such distributions reduce the cost basis of the securities, and
any distributions in excess of the cost basis are recognized as capital gains.
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 was imposed, with some exceptions, on any
Fund shares that were redeemed or exchanged within seven calendar days following
their purchase date. The redemption fee was 2% of the amount redeemed. Such fees
were retained by the fund and accounted for as an addition to paid-in capital.
Effective September 1, 2008, the redemption fee was eliminated.
H. GUARANTEES AND INDEMNIFICATIONS
Under the Trust's organizational documents, its officers and trustees are
indemnified by the Trust against certain liabilities arising out of the
performance of their duties to the Trust. Additionally, in the normal course of
business, the Trust, on behalf of the Fund, enters into contracts with service
providers that contain general indemnification clauses. The Trust's maximum
exposure under these arrangements is unknown as this would involve future claims
that may be made against the Trust that have not yet occurred. Currently, the
Trust expects the risk of loss to be remote.
26 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
2. SHARES OF BENEFICIAL INTEREST
At January 31, 2010, 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, 2010 JULY 31, 2009
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
CLASS A SHARES:
Shares sold ..................................... 1,675,895 $ 9,541,498 924,722 $ 4,773,934
Shares issued in reinvestment of
distributions ................................ 109,979 636,144 208,531 1,082,889
Shares redeemed ................................. (698,925) (4,066,315) (1,463,386) (8,208,701)
---------- ------------ ---------- ------------
Net increase (decrease) ......................... 1,086,949 $ 6,111,327 (330,133) $ (2,351,878)
========== ============ ========== ============
CLASS C SHARES:
Shares sold ..................................... 458,545 $ 2,640,445 245,313 $ 1,236,320
Shares issued in reinvestment of
distributions ................................ 18,965 109,129 55,079 285,983
Shares redeemed ................................. (127,330) (729,849) (500,612) (3,169,198)
---------- ------------ ---------- ------------
Net increase (decrease) ......................... 350,180 $ 2,019,725 (200,220) $ (1,646,895)
========== ============ ========== ============
ADVISOR CLASS SHARES:
Shares sold ..................................... 1,081,214 $ 6,372,539 1,061,668 $ 5,104,669
Shares issued in reinvestment of
distributions ................................ 4,300 24,915 382,351 1,983,211
Shares redeemed ................................. (4,608,308) (26,010,173) (1,715,958) (10,486,363)
---------- ------------ ---------- ------------
Net increase (decrease) ......................... (3,522,794) $(19,612,719) (271,939) $ (3,398,483)
========== ============ ========== ============
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 Trust are also officers and/or directors of the following
subsidiaries:
SUBSIDIARY AFFILIATION
- ---------- ----------------------
Franklin Templeton Institutional, LLC (FT Institutional) 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
Semiannual Report | 27
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
A. MANAGEMENT FEES
The Fund pays an investment management fee to FT Institutional based on the
average daily net assets of the Fund as follows:
ANNUALIZED FEE RATE NET ASSETS
- ------------------- -----------------------------------------------------
0.800% Up to and including $500 million
0.700% Over $500 million, up to and including $1 billion
0.650% Over $1 billion, up to and including $1.5 billion
0.600% Over $1.5 billion, up to and including $6.5 billion
0.580% Over $6.5 billion, up to and including $11.5 billion
0.560% Over $11.5 billion, up to and including $16.5 billion
0.540% Over $16.5 billion, up to and including $19 billion
0.530% Over $19 billion, up to and including $21.5 billion
0.520% In excess of $21.5 billion
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services of 0.20% per year of the
average daily net assets of the Fund.
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 C compensation distribution plan, 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 ....... 0.35%
Class C ....... 1.00%
The Board of Trustees has set the current rate at 0.30% per year for Class A
shares until further notice and approval by the Board.
28 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
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 .................................................... $17,697
Contingent deferred sales charges retained ........................... $ 236
E. TRANSFER AGENT FEES
For the period ended January 31, 2010, the Fund paid transfer agent fees of
$45,414, of which $30,786 was retained by Investor Services.
F. WAIVER AND EXPENSE REIMBURSEMENTS
FT Services and FT Institutional have contractually agreed in advance to waive
or limit their respective fees and to assume as their own expense certain
expenses otherwise payable by the Fund so that the common expenses (i.e. a
combination of management fees, administrative fees, and other expenses, but
excluding distribution fees and acquired fund fees and expenses) for each class
of the Fund do not exceed 1.05% (other than certain non-routine expenses or
costs, including those relating to litigation, indemnification, reorganizations,
and liquidations) until November 30, 2010.
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, 2010, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At July 31, 2009, the capital loss carryforwards were as follows:
Capital loss carryforwards expiring in:
2016 ................................ $ 2,797,386
2017 ................................ 22,755,130
-----------
$25,552,516
===========
Semiannual Report | 29
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
5. INCOME TAXES (CONTINUED)
For tax purposes, realized capital losses and realized currency losses occurring
subsequent to October 31, may be deferred and treated as occurring on the first
day of the following fiscal year. At July 31, 2009, the Fund deferred realized
capital losses and realized currency losses of $31,676,306 and $2,375,720,
respectively.
At January 31, 2010, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ............................................. $50,301,748
===========
Unrealized appreciation ......................................... $ 3,327,079
Unrealized depreciation ......................................... (5,378,500)
-----------
Net unrealized appreciation (depreciation) ...................... $(2,051,421)
===========
Net investment income 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, foreign currency
transactions, and passive foreign investment company shares.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
period ended January 31, 2010, aggregated $31,307,363 and $44,340,738,
respectively.
7. OTHER DERIVATIVE INFORMATION
At January 31, 2010, the Fund has invested in derivative contracts which are
reflected on the Statement of Assets and Liabilities as follows:
ASSET DERIVATIVES LIABILITY DERIVATIVES
DERIVATIVE CONTRACTS --------------------------------------- ---------------------------------------
NOT ACCOUNTED FOR AS STATEMENT OF ASSETS AND FAIR VALUE STATEMENT OF ASSETS AND FAIR VALUE
HEDGING INSTRUMENTS LIABILITIES LOCATION AMOUNT LIABILITIES LOCATION AMOUNT
- -------------------- -------------------------- ---------- -------------------------- ----------
Foreign exchange Unrealized appreciation on Unrealized depreciation on
contracts ....... forward exchange contracts $259,990 forward exchange contracts $58,268
30 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
7. OTHER DERIVATIVE INFORMATION (CONTINUED)
For the period ended January 31, 2010, the effect of derivative contracts on the
Fund's Statement of Operations was as follows:
CHANGE IN
UNREALIZED
APPRECIATION AVERAGE
REALIZED GAIN (DEPRECIATION) NOTIONAL
(LOSS) FOR THE FOR THE AMOUNT
DERIVATIVE CONTRACTS PERIOD ENDED PERIOD ENDED OUTSTANDING
NOT ACCOUNTED FOR AS STATEMENT OF JANUARY 31, JANUARY 31, DURING THE
HEDGING INSTRUMENTS OPERATIONS LOCATIONS 2010 2010 PERIOD(a)
- -------------------- ---------------------- -------------- -------------- -----------
Foreign exchange
contracts ....... Net realized gain
(loss) from foreign
currency transactions
/ Net change in
unrealized
appreciation
(depreciation) on
translation of other
assets and liabilities
denominated in
foreign currencies $(1,112,412) $1,066,690 29,771,088
(a) Notional amount represents the U.S. dollar equivalent based on the foreign
exchange rate at the time of contract entry.
See Note 1(c) regarding derivative financial instruments.
8. SPECIAL SERVICING AGREEMENT
The Fund, which is an eligible underlying investment of one or more of the
Franklin Templeton Fund Allocator Series Funds (Allocator Funds), participates
in a Special Servicing Agreement (SSA) with the Allocator Funds and certain
service providers of the Fund and the Allocator Funds. Under the SSA the Fund
may pay a portion of the Allocator Funds' expenses (other than any asset
allocation, administrative, and distribution fees) to the extent such payments
are less than the amount of the benefits realized or expected to be realized by
the Fund (e.g., due to reduced costs associated with servicing accounts) from
the investment in the Fund by the Allocator Funds. The Allocator Funds are
either managed by Franklin Advisers, Inc. or administered by Franklin Templeton
Services, LLC/FT Services, affiliates of Advisers.
During the period, the Fund was held by one or more of the Allocator Funds and
was allocated expenses as noted in the Statement of Operations. At January 31,
2010, the Fund was no longer held by any of the Allocator Funds.
Semiannual Report | 31
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
9. CREDIT FACILITY
The Fund, together with other U.S. registered and foreign investment funds
(collectively "Borrowers"), managed by Franklin Templeton Investments, are
borrowers in a 364-day joint syndicated senior unsecured credit facility
totaling $750 million (Global Credit Facility) to provide a source of funds to
the Borrowers for temporary and emergency purposes, including the ability to
meet future unanticipated or unusually large redemption requests. On January 22,
2010, the Fund renewed the Global Credit Facility for a total of $750 million,
maturing January 21, 2011.
Under the terms of the Global Credit Facility, the Fund shall, in addition to
interest charged on any borrowings made by the Fund and other costs incurred by
the Fund, pay its share of fees and expenses incurred in connection with the
implementation and maintenance of the Global Credit Facility, based upon its
relative share of the aggregate net assets of all of the Borrowers, including an
annual commitment fee of 0.10% based upon the unused portion of the Global
Credit Facility, which is reflected in other expenses on the Statement of
Operations. During the period ended January 31, 2010, the Fund did not utilize
the Global Credit Facility.
10. FAIR VALUE MEASUREMENTS
The Fund follows a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Fund's own market
assumptions (unobservable inputs). These inputs are used in determining the
value of the Fund's investments and are summarized in the following fair value
hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
32 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
10. FAIR VALUE MEASUREMENTS (CONTINUED)
The following is a summary of the inputs used as of January 31, 2010, in valuing
the Fund's assets and liabilities carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- ---------- ------- -----------
ASSETS:
Investments in Securities
Equity Investments:
Diversified REITs ................................. $ 6,998,525 $ 206,263 $-- $ 7,204,788
Office REITs ...................................... 8,007,804 298,937 -- 8,306,741
Retail REITs ...................................... 12,200,704 2,722,884 -- 14,923,588
All Other Equity Investments(a) ................... 15,415,210 -- -- 15,415,210
Short Term Investments ............................... -- 2,400,000 -- 2,400,000
----------- ---------- --- -----------
Total Investments in Securities ................ $42,622,243 $5,628,084 $-- $48,250,327
=========== ========== === ===========
Forward Exchange Contracts .............................. -- 259,990 -- 259,990
LIABILITIES:
Forward Exchange Contracts .............................. -- 58,268 -- 58,268
(a) For detailed industry descriptions, see the accompanying Statement of
Investments.
11. NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2010-6, FAIR VALUE MEASUREMENTS AND
DISCLOSURES (TOPIC 820): IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS,
which enhances and clarifies existing fair value measurement disclosure
requirements and is effective for interim and annual periods beginning after
December 15, 2009. The Fund is currently evaluating the impact, if any, of
applying this provision.
In March 2010, the FASB issued ASU No. 2010-11, DERIVATIVES AND HEDGING (TOPIC
815): SCOPE EXCEPTION RELATED TO EMBEDDED CREDIT DERIVATIVES, which clarifies
existing derivatives and hedging disclosure requirements and is effective for
fiscal quarters beginning after June 15, 2010. The Fund is currently evaluating
the impact, if any, of applying this provision.
12. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through the issuance of the financial
statements and determined that no events have occurred that require disclosure.
Semiannual Report | 33
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN GLOBAL REAL ESTATE FUND
ABBREVIATIONS
COUNTERPARTY
BOFA - Bank of America N.A.
CITI - Citibank N.A.
DBAB - Deutsche Bank AG
UBSW - UBS AG
SELECTED PORTFOLIO
REIT - Real Estate Investment Trust
34 | Semiannual Report
Franklin Global Trust
SHAREHOLDER INFORMATION
FRANKLIN GLOBAL REAL ESTATE FUND
PROXY VOTING POLICIES AND PROCEDURES
The Trust's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Trust uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Trust's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL
33394, Attention: Proxy Group. Copies of the Trust's proxy voting records are
also made available online at franklintempleton.com and posted on the U.S.
Securities and Exchange Commission's website at sec.gov and reflect the most
recent 12-month period ended June 30.
QUARTERLY STATEMENT OF INVESTMENTS
The Trust 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 (800)
SEC-0330.
Semiannual Report | 35
This page intentionally left blank.
Franklin Templeton Funds
LITERATURE REQUEST. TO RECEIVE A PROSPECTUS, PLEASE CALL US AT (800) DIAL
BEN/(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.
VALUE
Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund(1)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Quest Fund(2)
Mutual Recovery Fund(3)
Mutual Shares Fund
BLEND
Franklin Focused Core Equity Fund
Franklin Large Cap Equity Fund
Franklin Rising Dividends Fund
GROWTH
Franklin DynaTech Fund
Franklin Flex Cap Growth Fund
Franklin Growth Fund
Franklin Growth Opportunities Fund
Franklin Small Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin Global Real Estate Fund
Franklin Gold & Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Mutual Financial Services Fund
GLOBAL
Mutual Global Discovery Fund(4)
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund
INTERNATIONAL
Franklin India Growth Fund
Franklin International Growth Fund
Franklin International Small Cap Growth Fund
Mutual European Fund
Mutual International 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
Templeton Frontier Markets Fund
HYBRID
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Templeton Income 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
FIXED INCOME
Franklin Adjustable U.S. Government Securities Fund(5)
Franklin Floating Rate Daily Access Fund
Franklin High 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 Global Total Return Fund
Templeton International Bond Fund
TAX-FREE INCOME(6)
NATIONAL
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(7)
LIMITED-/INTERMEDIATE-TERM
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
Federal Limited-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(9)
Michigan(9)
Minnesota(9)
Missouri
New Jersey
New York(8)
North Carolina
Ohio(9)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust(10)
(1.) The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
(2.) Effective 5/1/09, Mutual Qualified Fund changed its name to Mutual Quest
Fund. The fund's investment goal and strategy remained unchanged.
(3.) 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.
(4.) Effective 5/1/09, Mutual Discovery Fund changed its name to Mutual Global
Discovery Fund. The fund's investment goal and strategy remained unchanged.
(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 three or more variations, including long-term
portfolios, intermediate-term portfolios, portfolios of insured securities,
a high-yield portfolio (CA only) and a money market portfolio (CA only).
(9.) The Board of Trustees approved the elimination of the non-fundamental
policy requiring the fund to invest at least 80% of net assets in insured
municipal securities and the removal of the word "Insured" from the fund
name. The changes became effective 2/15/09.
(10.) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
01/10
Not part of the semiannual report
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) One Franklin Parkway
San Mateo, CA 94403-1906
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SEMIANNUAL REPORT AND SHAREHOLDER LETTER
FRANKLIN GLOBAL REAL ESTATE FUND
INVESTMENT MANAGER
Franklin Templeton Institutional, LLC
DISTRIBUTOR
Franklin Templeton Distributors, Inc.
(800) DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
(800) 632-2301
Authorized for distribution only when accompanied or preceded by a summary
prospectus and/or prospectus. Investors should carefully consider a fund's
investment goals, risks, charges and expenses before investing. A prospectus
contains this and other information; please read it carefully before investing.
To 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.
495 S 03/10
JANUARY 31, 2010
A series of Franklin Global Trust
SEMIANNUAL REPORT
FRANKLIN TEMPLETON EMERGING MARKET
DEBT OPPORTUNITIES FUND
(FRANKLIN TEMPLETON INSTITUTIONAL(R) LOGO)
Contents
SEMIANNUAL REPORT
Franklin Templeton Emerging Market Debt Opportunities Fund ............... 1
Performance Summary ...................................................... 6
Your Fund's Expenses ..................................................... 8
Financial Highlights and Statement of Investments ........................ 10
Financial Statements ..................................................... 16
Notes to Financial Statements ............................................ 19
Shareholder Information .................................................. 31
Semiannual Report
Franklin Templeton Emerging Market Debt Opportunities Fund
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Templeton Emerging Market Debt
Opportunities Fund seeks high total return through investing in debt securities
of emerging market countries, mainly securities issued by sovereign and
sub-sovereign government entities, but also including securities issued by
corporate entities.
PORTFOLIO BREAKDOWN
Based on Total Net Assets as of 1/31/10
(PIE CHART)
Foreign Government Securities ............... 43.8%
Quasi-Sovereign & Corporate Bonds ........... 35.2%
Credit-Linked Notes ......................... 8.3%
Warrants .................................... 5.1%
Short-Term Investments & Other Net Assets ... 7.6%
We are pleased to bring you Franklin Templeton Emerging Market Debt
Opportunities Fund's semiannual report for the period ended January 31, 2010.
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 11.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Semiannual Report | 1
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 CALL A FRANKLIN TEMPLETON INSTITUTIONAL SERVICES
REPRESENTATIVE AT (800) 321-8563 FOR MOST RECENT MONTH-END PERFORMANCE.
PERFORMANCE OVERVIEW
Franklin Templeton Emerging Market Debt Opportunities Fund posted a +20.13%
cumulative total return for the six months ended January 31, 2010. The Fund
outperformed its benchmark, the J.P. Morgan (JPM) Emerging Markets Bond Index
(EMBI) Global Diversified Index, which had a +9.14% total return.(1) The Fund
also outperformed another benchmark, the JPM Global Bond Index (GBI) Emerging
Markets (EM) Broad Diversified Index, which had a +5.75% total return for the
same period.(2) The Fund outperformed its third benchmark, the Merrill Lynch
(ML) Emerging Market Credit Plus (EMC+) Index (100% $US Hedged), which had a
+14.47% total return for the same period.(3) You can find more performance data
in the Performance Summary beginning on page 6.
ECONOMIC AND MARKET OVERVIEW
During the reporting period, the macroeconomic backdrop for emerging market debt
was favorable. Central banks in developed economies continued to maintain a very
relaxed monetary policy and expanded their balance sheets to avoid what they
perceived to be a risk of deflation. Commodity prices generally rose over the
period. Despite a decline at the end of the period, the price for oil, perhaps
the most important commodity used to gauge emerging market debt, rose from $69
per barrel at the beginning of the period to $73 at the end. In addition,
emerging markets showed signs of renewed economic growth.
(1.) Source: (C) 2010 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 JPM EMBI Global Diversified Index is a uniquely
weighted version of the JPM EMBI Global Index, which tracks total returns
for U.S. dollar-denominated debt instruments issued by emerging market
sovereign and quasi-sovereign entities: Brady bonds, loans and Eurobonds.
The index includes all countries except those that have been classified by
the World Bank as high income for the past two consecutive years. The
diversified index limits the weights of those index countries with larger
debt stocks by only including specified portions of these countries'
eligible current face amounts of debt outstanding. Both indexes cover the
same countries.
(2.) Source: (C) 2010 Morningstar. The JPM GBI EM Broad Diversified Index tracks
local currency government bonds issued by emerging markets. The index
limits the weights of those index countries with larger debt stocks and
redistributes those weights to countries with smaller weights, with a
maximum 10% country weight allowed.
(3.) Source: Merrill Lynch. The ML EMC+ Index (100% $US Hedged) tracks the
performance of U.S. dollar-denominated and euro-denominated debt of
sovereign issuers with a BBB or lower foreign currency long-term debt
rating, in addition to corporate issuers domiciled in countries with a
below-investment-grade foreign currency long-term debt rating. The index is
100% hedged to the dollar.
The indexes are unmanaged and include reinvested interest. One cannot
invest directly in an index, and an index is not representative of the
Fund's portfolio.
2 | Semiannual Report
Investor risk tolerance increased and set the stage for continued inflows into
the asset class. On the supply side, the emerging country bond market was
active. Many governments issued bonds to finance large budget deficits, and
quasi-sovereign and corporate entities sought to roll over existing maturities.
The yield on bonds in the JPM EMBI Global Diversified Index fell 80 basis points
(100 basis points equal one percentage point) from 7.45% to 6.65% over the
period.(1) The yield on bonds in the ML EMC+ Index fell 247 basis points from
10.12% to 7.65% over the period.(3)
U.S. dollar-denominated emerging market sovereign bonds, represented by the JPM
EMBI Global Diversified Index, rose 9.14% over the period.(1) Local
currency-denominated emerging market bonds, represented by the JPM GBI EM Broad
Diversified Index, underperformed their U.S. dollar-denominated counterparts
with a modest 5.75% total return.(2) This was mainly due to a fairly steady U.S.
dollar for most of the reporting period. Finally, G7 currency-denominated
quasi-sovereign and corporate debt, represented by the ML EMC+ Index, posted the
best six-month performance with a +14.47% total return.(3, 4)
INVESTMENT STRATEGY
Our portfolio construction process can be summarized in three integral steps --
country allocation, currency allocation and issue selection. The first stage of
our emerging market debt investment process is identifying the countries for
which we have a favorable outlook, which we manage with a bottom-up
research-driven perspective. Since the portfolio is constructed through
bottom-up, fundamental research and not relative to a benchmark index, there is
no requirement to hold issues in any one country. The next decision is whether
to take exposure in the form of "hard currency" or local currency instruments.
Hard currencies are typically currencies of economically and politically stable
industrialized nations, such as the G7. The last decision concerns security
selection. This depends on the shape of the sovereign spread curve and the type
of the issue's coupon (fixed or floating). We may seek to manage the Fund's
exposure to various currencies, and may from time to time seek to hedge
(protect) against currency risk, largely by using forward currency exchange
contracts.
(4.) The G7, or Group of Seven, is an informal but exclusive body that seeks to
boost cooperation over trade and finance, strengthen the global economy,
promote peace and democracy, and prevent and resolve conflicts. The G7
includes Canada, France, Germany, Italy, Japan, the U.K. and the U.S. It is
now known as the G8, or Group of Eight, after the addition of Russia in
1997.
GEOGRAPHIC BREAKDOWN*
1/31/10
% OF TOTAL
COUNTRY NET ASSETS
- ------- ----------
Russia 9.4%
Kazakhstan 7.2%
Iraq 6.7%
Ukraine 5.7%
Ivory Coast 3.9%
Venezuela 3.7%
Brazil 3.7%
Ghana 3.7%
Angola 3.5%
Mexico 3.4%
South Africa 3.1%
Ecuador 3.1%
Nigeria 2.7%
Trinidad & Tobago 2.6%
Supranational 2.6%
Turkey 2.3%
Czech Republic 2.2%
Jordan 2.2%
Bosnia & Herzegovina 2.1%
Argentina 2.0%
Georgia 1.9%
Croatia 1.8%
El Salvador 1.8%
Lithuania 1.8%
Zambia 1.8%
Dominican Republic 1.8%
Estonia 1.4%
Macedonia 1.3%
Egypt 1.1%
Grenada 1.0%
Poland 0.9%
Fiji 0.9%
North Korea 0.3%
Serbia 0.2%
Short-Term Investments & Other Net Assets 6.2%
* May differ from the SOI because percentages reflect the issuing country of
the Fund's securities and include the effect of interest receivable
balances.
Semiannual Report | 3
CURRENCY BREAKDOWN*
1/31/10
% OF TOTAL
CURRENCY NET ASSETS
- -------- ----------
U.S. Dollar 49.8%
Euro 21.7%
Japanese Yen 6.7%
Brazilian Real 3.7%
Zambian Kwacha 2.7%
Mexican Peso 2.3%
Turkish Lira 2.3%
Ghanaian Cedi 2.1%
Nigerian Naira 1.7%
West African Franc 0.8%
Short-Term Investments & Other Net Assets 6.2%
* May differ from the SOI due to the underlying currency exposure on
credit-linked notes and pass-through notes and includes the effect of
interest receivable balances but excludes the effect of forward currency
exchange contracts.
MANAGER'S DISCUSSION
During the reporting period, the Fund's major contributors to performance were
Kazakh and Russian quasi-sovereign and corporate issuers of G7 currency
securities. Contributors from Kazakhstan included state-owned railway company
Kazakhstan Temir Zholy and private sector bank HSBK (Europe). From Russia,
contributors included the country's third-largest oil producer, TNK-BP Finance,
and several banks such as RSHB Capital (Russ Agric BK), Alfa Bond Issuance and
Ak Bars Bank. Additionally, three Ukrainian securities aided the Fund's total
return.
The Fund also benefited from a pair of sovereign security selections that
recovered from depressed levels. At the beginning of 2009, concerns arose about
an Ivory Coast Brady bond default and a government of Ecuador bond's near
default. Later in the period, both experienced robust rallies, which boosted
Fund performance. The government of Ivory Coast Brady bond performed well due to
the announcement of an agreement to exchange the defaulted Brady bond for a new
U.S. dollar security with much better terms than the market had expected.
The continuing recovery in oil prices helped securities issued by oil-exporting
countries such as Nigeria, Angola, Venezuela and Iraq make significant
contributions to performance.
The Fund had no significant detractors from performance over the past six
months.
On January 31, 2010, the Fund had exposure to 33 emerging market countries and
two supranationals. The largest single country exposure was to Russia (9.4% of
total net assets), although the largest single issuer was the Government of Iraq
(6.7%). Securities denominated in G7 currencies constituted 78.2% of total net
assets; of which 49.8% were denominated in the U.S. dollar, 21.7% in the euro
and 6.7% in the Japanese yen. The Fund's exposures to the euro and yen were
fully hedged back into the U.S. dollar. In addition, 15.6% of total net assets
was denominated in seven local currencies, of which the largest was the
Brazilian real at 3.7% of total net assets.
During the reporting period, we added several new securities to the portfolio.
Among sovereign issuers were Croatia, Lithuania, Macedonia and Sri Lanka (sold
by period end). New quasi-sovereign issuers included Petroleum Export Cayman, a
special purpose entity created by the Egyptian National Petroleum Corporation,
and Sphynx Capital Markets, a Ghanaian state-owned bank. Corporate issuers added
during the period included Cemex Finance Europe, TVN Finance Corp., Alestra
(sold by period end) and Grupo Posadas. The Fund increased its positions in many
other holdings.
4 | Semiannual Report
We eliminated our exposure to Moldova, Gabon and Indonesia, and substantially
reduced our exposure to Serbia. We reduced several other holdings or switched
them into other securities from the same issuer. We no longer have exposure to
the Vietnamese dong and South African rand.
We thank you for your confidence in Franklin Templeton Emerging Market Debt
Opportunities Fund and hope to serve your investment needs at the highest level
of expectations.
(PHOTO OF WILLIAM LEDWARD)
/s/ William Ledward
William Ledward
Portfolio Manager and Research Analyst of
Franklin Templeton Investment Management Ltd.
Fixed Income Group
(PHOTO OF CLAIRE HUSSON-CITANNA)
/s/ Claire Husson-Citanna
Claire Husson-Citanna, CFA
Portfolio Manager and Research Analyst of
Franklin Templeton Investment Management Ltd.
Fixed Income Group
Portfolio Management Team
Franklin Templeton Emerging Market Debt
Opportunities Fund
CFA(R) and Chartered Financial Analyst(R) are trademarks owned by CFA Institute.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF JANUARY 31, 2010, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT
OUR MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.
TOP 10 HOLDINGS*
1/31/10
ISSUE % OF TOTAL
SECTOR, COUNTRY NET ASSETS
- --------------- ----------
Government of Iraq**
FOREIGN GOVERNMENT SECURITIES, IRAQ 6.7%
TNK-BP Finance SA, Reg S
OIL, GAS & CONSUMABLE FUELS, RUSSIA 4.2%
Kazakhstan Temir Zholy
ROAD & RAIL, KAZAKHSTAN 4.1%
Government of Ivory Coast**
FOREIGN GOVERNMENT SECURITIES, IVORY COAST 3.9%
Nota do Tesouro Nacional
FOREIGN GOVERNMENT SECURITIES, BRAZIL 3.7%
Deutsche Bank AG
CREDIT-LINKED NOTES, ANGOLA 3.5%
Government of Ghana**
FOREIGN GOVERNMENT SECURITIES, GHANA 3.5%
Government of Ecuador
FOREIGN GOVERNMENT SECURITIES, ECUADOR 3.1%
Central Bank of Nigeria, wts.
WARRANTS, NIGERIA 2.7%
Petro Co. of Trinidad and Tobago Ltd.
OIL, GAS & CONSUMABLE FUELS, TRINIDAD & TOBAGO 2.6%
* May differ from the SOI because percentages include the effect of interest
receivable balances.
** Includes credit-linked notes and/or pass-through notes.
Semiannual Report | 5
Performance Summary as of 1/31/10
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses. 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
SYMBOL: FEMDX CHANGE 1/31/10 7/31/09
- ------------- ------- ------- ---------
Net Asset Value (NAV) +$1.52 $11.30 $9.78
DISTRIBUTIONS (8/1/09-1/31/10)
Dividend Income $0.4323
PERFORMANCE(1)
INCEPTION
6-MONTH 1-YEAR 3-YEAR (5/24/06)
------- ------- ------- ---------
Cumulative Total Return(2) +20.13% +56.24% +30.41% +41.34%
Average Annual Total Return(3) +20.13% +56.24% +9.25% +9.83%
Value of $50,000 Investment(4) $60,066 $78,118 $65,205 $70,672
Avg. Ann. Total Return (12/31/09)(5) +57.69% +8.25% +9.12%
Total Annual Operating Expenses(6)
Without Waiver 1.23%
With Waiver 1.02%
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, PLEASE CALL A FRANKLIN
TEMPLETON INSTITUTIONAL SERVICES REPRESENTATIVE AT (800) 321-8563.
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 EXPENSES (I.E., A COMBINATION OF
INVESTMENT MANAGEMENT FEES, FUND ADMINISTRATION FEES, AND OTHER EXPENSES, BUT
EXCLUDING ACQUIRED FUND FEES AND EXPENSES) DO NOT EXCEED 1.0% (OTHER THAN
CERTAIN NONROUTINE EXPENSES OR COSTS, INCLUDING THOSE RELATING TO LITIGATION,
INDEMNIFICATION, REORGANIZATIONS AND LIQUIDATIONS) UNTIL 11/30/10.
6 | Semiannual Report
Performance Summary (CONTINUED)
ENDNOTES
SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
VOLATILITY, ECONOMIC INSTABILITY, AND SOCIAL AND POLITICAL DEVELOPMENTS OF
COUNTRIES WHERE THE FUND INVESTS. EMERGING MARKETS INVOLVE HEIGHTENED RISKS
RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THEIR
RELATIVELY SMALL SIZE AND LESSER LIQUIDITY. ALSO, AS A NONDIVERSIFIED INVESTMENT
COMPANY, THE FUND MAY INVEST IN A RELATIVELY SMALL NUMBER OF ISSUERS AND, AS A
RESULT, BE SUBJECT TO A GREATER RISK OF LOSS WITH RESPECT TO ITS PORTFOLIO
SECURITIES. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN
INVESTMENT RISKS.
(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.) 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.
(4.) These figures represent the value of a hypothetical $50,000 investment in
the Fund over the periods indicated.
(5.) In accordance with SEC rules, we provide standardized average annual 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. In periods of market volatility, assets may decline
significantly, causing total annual Fund operating expenses to become
higher than the figures shown.
Semiannual Report | 7
Your Fund's Expenses
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) of 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) of 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 Fund's actual expense ratio 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.
8 | 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, IF APPLICABLE. Therefore, the second line of the table 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 8/1/09 VALUE 1/31/10 PERIOD* 8/1/09-1/31/10
----------------- -------------- ----------------------
Actual $1,000 $1,201.30 $5.55
Hypothetical (5% return before expenses) $1,000 $1,020.16 $5.09
* Expenses are calculated using the most recent six-month annualized expense
ratio, net of expense waivers, of 1.00%, multiplied by the average account
value over the period, multiplied by 184/365 to reflect the one-half year
period.
Semiannual Report | 9
Franklin Global Trust
FINANCIAL HIGHLIGHTS
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, 2010 -----------------------------------------
(UNAUDITED) 2009 2008 2007 2006(a)
---------------- ------- -------- ------- ------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................ $ 9.78 $ 11.32 $ 11.25 $ 10.19 $10.00
-------- ------- -------- ------- ------
Income from investment operations(b):
Net investment income(c) ......................... 0.49 0.83 0.80 0.76 0.08
Net realized and unrealized gains (losses) ....... 1.46 (1.67) (0.02) 0.63 0.11
-------- ------- -------- ------- ------
Total from investment operations .................... 1.95 (0.84) 0.78 1.39 0.19
-------- ------- -------- ------- ------
Less distributions from:
Net investment income ............................ (0.43) (0.64) (0.65) (0.32) --
Net realized gains ............................... -- (0.06) (0.06) (0.01) --
-------- ------- -------- ------- ------
Total distributions ................................. (0.43) (0.70) (0.71) (0.33) --
-------- ------- -------- ------- ------
Net asset value, end of period ...................... $ 11.30 $ 9.78 $ 11.32 $ 11.25 $10.19
======== ======= ======== ======= ======
Total return(d) ..................................... 20.13% (5.43)% 7.33% 13.75% 1.90%
RATIOS TO AVERAGE NET ASSETS(e)
Expenses before waiver and payments by affiliates and
expense reduction ................................ 1.17% 1.19% 1.23% 1.35% 4.34%
Expenses net of waiver and payments by affiliates ... 1.00% 1.04% 1.10% 1.11% 1.10%
Expenses net of waiver and payments by affiliates and
expense reduction ................................ 1.00%(f) 1.04%(f) 1.10%(f) 1.10% 1.10%
Net investment income ............................... 8.90% 9.45% 7.11% 7.03% 4.07%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $116,200 $96,301 $102,294 $56,822 $9,377
Portfolio turnover rate ............................. 17.92% 31.91% 47.56% 65.54% 38.29%
(a) For the period May 24, 2006 (commencement of operations) to July 31, 2006.
(b) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(c) Based on average daily shares outstanding.
(d) Total return is not annualized for periods less than one year.
(e) Ratios are annualized for periods less than one year.
(f) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
10 | Semiannual Report
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND COUNTRY/ORGANIZATION WARRANTS VALUE
- ---------------------------------------------------------- -------------------- ------------- -------------
WARRANTS 5.1%
(a) Central Bank of Nigeria, wts., 11/15/20 ....................... Nigeria 20,000 $ 3,140,000
(a) Government of Venezuela, Oil Value Recovery wts., 4/15/20 ..... Venezuela 95,400 2,718,900
-------------
TOTAL WARRANTS (COST $6,845,700) .............................. 5,858,900
-------------
PRINCIPAL
AMOUNT(b)
-------------
QUASI-SOVEREIGN AND CORPORATE BONDS 35.2%
COMMERCIAL BANKS 6.8%
AK Bars Bank, senior note, 8.25% 6/28/10 ...................... Russia 1,500,000 1,518,112
Alfa Bond Issuance, 8.635%, 2/22/17 ........................... Russia 2,100,000 2,069,149
RSHB Capital (Russ Agric BK), sub. bond, 6.97%, 9/21/16 ....... Russia 2,320,000 2,348,127
(c) Sphynx Capital Markets, PTN (National Investment Bank of
Ghana), zero cpn., 2/05/09 ................................. Ghana 2,000,000 290,000
Ukrainian MTN Finance,
(d) 144A, 9.25%, 8/04/11 ....................................... Ukraine 1,000,000 990,750
(e) Reg S, 9.25%, 8/04/11 ...................................... Ukraine 730,000 723,248
-------------
7,939,386
-------------
CONSTRUCTION MATERIALS 0.1%
Cemex Finance Europe BV, 4.75%, 3/05/14 ....................... Mexico 135,000 EUR 158,396
-------------
CONSUMER FINANCE 2.4%
(e) HSBK (Europe) BV, Reg S, 7.25%, 5/03/17 ....................... Kazakhstan 3,000,000 2,805,972
-------------
DIVERSIFIED FINANCIAL SERVICES 0.9%
(d) TVN Finance Corp. PLC, senior note, 144A, 10.75%, 11/15/17 .... Poland 700,000 EUR 1,051,591
-------------
ELECTRICAL EQUIPMENT 1.7%
EGE Haina Finance Co.,
(e) Reg S, 9.50%, 4/26/17 ...................................... Dominican Republic 1,450,000 1,229,451
(d) senior note, 144A, 9.50%, 4/26/17 .......................... Dominican Republic 900,000 763,108
-------------
1,992,559
-------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS 1.4%
Eesti Energia AS, senior bond, 4.50%, 11/18/20 ................ Estonia 1,385,000 EUR 1,659,929
-------------
FOOD PRODUCTS 1.7%
(e) Foodcorp Ltd., Reg S, 8.875%, 6/15/12 ......................... South Africa 1,400,000 EUR 1,969,523
-------------
HOTELS, RESTAURANTS & LEISURE 1.0%
(d) Grupo Posadas SAB de CV, senior note, 144A, 9.25%, 1/15/15 .... Mexico 1,100,000 1,133,754
-------------
MEDIA 0.4%
(e, f) Central European Media Enterprises Ltd., senior note, Reg S,
FRN, 2.616%, 5/15/14 ....................................... Czech Republic 400,000 EUR 440,907
-------------
METALS & MINING 1.8%
(e) New World Resources BV, senior bond, Reg S, 7.375%,
5/15/15 .................................................... Czech Republic 1,600,000 EUR 2,118,572
-------------
MUNICIPAL BONDS 3.2%
City of KYIV,
(d) 144A, 8.25%, 11/26/12 ...................................... Ukraine 1,100,000 940,500
(e) secured note, Reg S, 8.25%, 11/26/12 ....................... Ukraine 1,400,000 1,207,500
Semiannual Report | 11
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
PRINCIPAL
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND COUNTRY/ORGANIZATION AMOUNT(b) VALUE
- ---------------------------------------------------------- -------------------- ------------- --------------
QUASI-SOVEREIGN AND CORPORATE BONDS (CONTINUED)
MUNICIPAL BONDS (CONTINUED)
Province Del Neuquen,
(d) senior note, 144A, 8.656%, 10/18/14 ........................ Argentina 422,400 $ 432,749
(e) senior secured note, Reg S, 8.656%, 10/18/14 ............... Argentina 1,126,400 1,153,997
--------------
3,734,746
--------------
OIL, GAS & CONSUMABLE FUELS 7.7%
Petro Co. of Trinidad and Tobago Ltd., senior note,
(d) 144A, 9.75%, 8/14/19 ....................................... Trinidad and Tobago 900,000 1,021,504
(d) 144A, 6.00%, 5/08/22 ....................................... Trinidad and Tobago 1,200,000 1,119,000
(e) Reg S, 9.75%, 8/14/19 ...................................... Trinidad and Tobago 100,000 113,500
(e) Reg S, 6.00%, 5/08/22 ...................................... Trinidad and Tobago 700,000 652,750
(e) Petroleum Export Cayman, senior note, Reg S, 5.265%,
6/15/11 .................................................... Egypt 1,313,373 1,303,129
(e) TNK-BP Finance SA, senior note, Reg S, 7.875%, 3/13/18 ........ Russia 4,500,000 4,706,010
--------------
8,915,893
--------------
ROAD & RAIL 4.0%
Kazakhstan Temir Zholy, 7.00%, 5/11/16 ........................ Kazakhstan 4,700,000 4,629,679
--------------
SPECIALTY RETAIL 1.4%
(e, f) Edcon Proprietary Ltd., senior secured note, Reg S, FRN,
3.964%, 6/15/14 ............................................ South Africa 1,700,000 EUR 1,619,765
--------------
THRIFTS & MORTGAGE FINANCE 0.7%
(c) Astana-Finance, 7.875%, 6/08/10 ............................... Kazakhstan 2,300,000 EUR 797,238
--------------
TOTAL QUASI-SOVEREIGN AND CORPORATE BONDS
(COST $36,485,816) ......................................... 40,967,910
--------------
(g) CREDIT-LINKED NOTES 8.3%
(f) Deutsche Bank AG, senior note (Angolan Government), FRN,
10.127%, 6/19/16 ........................................... Angola 3,200,000 EUR 4,081,856
(f, h) Merrill Lynch & Co. Inc. (Government of Iraq), FRN, 1.00%,
1/01/28 .................................................... Iraq 733,686,030 JPY 4,923,418
(c) Standard Bank PLC (Government of Ivory Coast), zero cpn.,
9/11/08 .................................................... Ivory Coast 200,000,000 XOF 44,287
(f) Standard Chartered Bank, cvt. (Development Bank of Zambia),
FRN, 11.341%, 3/02/12 ...................................... Zambia 625,000 606,995
--------------
TOTAL CREDIT-LINKED NOTES (COST $8,334,169) ................... 9,656,556
--------------
FOREIGN GOVERNMENT SECURITIES 42.6%
African Development Bank, senior note, 9.00%, 5/17/10 ......... Supranational(i) 280,000,000 NGN 1,855,165
Development & Investment Projects Jordan Armed Forces,
senior note, 6.14%, 12/16/19 ............................... Jordan 2,700,000 2,545,776
European Investment Bank, senior note, 12.25%, 2/26/10 Supranational(i) 4,400,000,000 ZMK 972,149
(c) Government of Argentina, 11.75%, 5/20/11 ...................... Argentina 3,000,000 DEM 792,203
(f) Government of Bosnia and Herzegovina, senior bond, FRN,
1.813%, 12/11/21 ........................................... Bosnia & Herzegovina 4,355,000 DEM 2,438,957
(d) Government of Croatia, 144A, 6.75%, 11/05/19 Croatia 2,000,000 2,110,000
Government of Ecuador,
(f) FRN, 6.688%, 2/27/15 ....................................... Ecuador 489,315 342,521
(e) Reg S, 9.375%, 12/15/15 .................................... Ecuador 3,300,000 3,168,000
12 | Semiannual Report
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
PRINCIPAL
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND COUNTRY/ORGANIZATION AMOUNT(b) VALUE
- ---------------------------------------------------------- -------------------- ------------- --------------
FOREIGN GOVERNMENT SECURITIES (CONTINUED)
Government of Georgia, 7.50%, 4/15/13 Georgia 2,100,000 $ 2,175,243
Government of Ghana,
13.95%, 12/13/10 ........................................... Ghana 500,000 GHS 336,244
13.67%, 6/15/12 ............................................ Ghana 1,130,000 GHS 724,190
(e) Reg S, 8.50%, 10/04/17 ..................................... Ghana 1,500,000 1,586,250
(e) Government of Grenada, Reg S, 2.50% to 9/15/11, 4,50% to
9/15/13, 6.00% to 9/15/15, 8.00% to thereafter, 9/15/25 .... Grenada 2,800,000 1,106,000
(f, h) Government of Iraq, Tranche A3, Sumitomo Corp. Loan, FRN,
1.35%, 1/01/28 ............................................. Iraq 419,234,647 JPY 2,813,285
(c, f) Government of Ivory Coast, FRN, 1.90%, 3/30/18 ................ Ivory Coast 33,250,000 FRF 3,514,036
(d) Government of Lithuania, 144A, 6.75%, 1/15/15 ................. Lithuania 2,000,000 2,046,300
Government of Macedonia, senior bond, 4.625%, 12/08/15 ........ Macedonia 1,200,000 EUR 1,500,581
(e) Government of Serbia, Reg S, 3.75% to 11/01/09,
6.75% thereafter, 11/01/24 ................................. Serbia 225,000 223,931
Government of Turkey,
(f) FRN, 19.28%, 2/26/14 ....................................... Turkey 1,350,000 TRY 970,373
(j) Index Linked, 10.00%, 2/15/12 .............................. Turkey 2,720,000 TRY 1,629,308
(e) Government of Ukraine, senior bond, Reg S, 4.95%, 10/13/15 .... Ukraine 2,385,000 EUR 2,579,306
(e) Government of Venezuela, Reg S, 6.00%, 12/09/20 ............... Venezuela 2,700,000 1,593,000
(f) Mexican Bondes Desarroll, FRN, 4.58%, 11/13/14 ................ Mexico 99,000(k) MXN 749,670
(j) Mexican Udibonos, Index Linked, 5.00%, 6/16/16 ................ Mexico 50,000(l) MXN 1,896,151
(c) NK Debt Corp., zero cpn., 3/12/10 ............................. North Korea 4,250,000 DEM 316,349
(j) Nota Do Tesouro Nacional, Index Linked, 6.00%, 5/15/15 ........ Brazil 4,400(m) BRL 4,258,565
(e) Republic of El Salvador, Reg S, 7.65%, 6/15/35 ................ El Salvador 2,000,000 2,035,000
Republic of Fiji, 6.875%, 9/13/11 ............................. Fiji 975,000 960,375
Sphynx Capital Markets,
cvt., PTN (Government of Ghana), 12.08%, 6/14/10 ........... Ghana 600,000 GHS 404,679
cvt., PTN (Government of Ghana), 13.00%, 8/11/10 ........... Ghana 600,000 GHS 413,380
cvt., PTN (Government of Ghana), 13.67%, 6/21/12 ........... Ghana 700,000 GHS 448,613
(c) PTN (Government of Ivory Coast), 10.25%, 1/30/10 ........... Ivory Coast 1,665,269 EUR 923,558
--------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(COST $46,586,600) ......................................... 49,429,158
--------------
TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS
(COST $98,252,285) ......................................... 105,912,524
--------------
SHORT TERM INVESTMENTS 6.3%
FOREIGN GOVERNMENT SECURITIES (COST $1,393,768) 1.2%
(n) Zambia Treasury Bill, 6/28/10 ................................. Zambia 6,900,000,000 ZMK 1,422,013
--------------
TOTAL INVESTMENTS BEFORE MONEY MARKETS FUNDS
(COST $99,646,053) ......................................... 107,334,537
--------------
SHARES
-------------
MONEY MARKET FUNDS (COST $5,940,579) 5.1%
(o) Institutional Fiduciary Trust Money Market Portfolio, 0.00% ... United States 5,940,579 5,940,579
--------------
TOTAL INVESTMENTS (COST $105,586,632) 97.5% ................... 113,275,116
OTHER ASSETS, LESS LIABILITIES 2.5% ........................... 2,924,952
--------------
NET ASSETS 100.0% ............................................. $ 116,200,068
==============
Semiannual Report | 13
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
(a) See Note 1(e) regarding investment in Alternative Strategies Ltd.
(b) The principal amount is stated in U.S. dollars unless otherwise indicated.
(c) See Note 8 regarding defaulted securities.
(d) 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 Trust's Board of Trustees. At January 31, 2010,
the aggregate value of these securities was $11,609,256, representing 9.99%
of net assets.
(e) Security was purchased pursuant to Regulation S under the Securities Act of
1933, which exempts from registration securities offered and sold outside
of the United States. Such a security cannot be sold in the United States
without either an effective registration statement filed pursuant to the
Securities Act of 1933, or pursuant to an exemption from registration.
These securities have been deemed liquid under guidelines approved by the
Trust's Board of Trustees. At January 31, 2010, the aggregate value of
these securities was $32,335,811, representing 27.83% of net assets.
(f) The coupon rate shown represents the rate at period end.
(g) See Note 1(d) regarding credit-linked notes.
(h) Security has been deemed illiquid because it may not be able to be sold
within seven days. At January 31, 2010, the aggregate value of these
securities was $7,736,703, representing 6.66% of net assets.
(i) A supranational organization is an entity formed by two or more central
governments through international treaties.
(j) Redemption price at maturity is adjusted for inflation. See Note 1(g).
(k) Principal amount is stated in 100 Mexican Peso Units.
(l) Principal amount is stated in Unidad de Inversion Units.
(m) Principal amount is stated in 1,000 Brazilian Real Units.
(n) The security is traded on a discount basis with no stated coupon rate.
(o) See Note 7 regarding investments in the Institutional Fiduciary Trust Money
Market Portfolio. The rate shown is the annualized seven-day yield at
period end.
14 | Semiannual Report
Franklin Global Trust
STATEMENT OF INVESTMENTS, JANUARY 31, 2010 (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
At January 31, 2010, the Fund had the following forward exchange contracts
outstanding. See Note 1(c).
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY AMOUNT DATE APPRECIATION DEPRECIATION
- -------- ------------ ---- ----------- ---------- ---------- ------------ ------------
Euro ..................................... NTLON Sell 5,900,000 $8,707,515 3/17/10 $ 528,108 $--
Euro ..................................... MSCO Sell 5,800,000 8,557,158 3/17/10 516,384 --
Euro ..................................... SOCLN Sell 5,800,000 8,557,030 3/17/10 516,257 --
Japanese Yen ............................. SOCLN Sell 660,000,000 7,424,907 3/17/10 113,096 --
---------- ---
Net unrealized appreciation (depreciation) ..................................................... $1,673,845
==========
See Abbreviations on page 30.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 15
Franklin Global Trust
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2010 (unaudited)
FRANKLIN
TEMPLETON
EMERGING
MARKET
DEBT
OPPORTUNITIES
FUND
-------------
Assets:
Investments in securities:
Cost - Unaffiliated issuers ............................. $ 99,646,053
Cost - Sweep Money Fund (Note 7) ........................ 5,940,579
------------
Total cost of investments ............................... $105,586,632
============
Value - Unaffiliated issuers ............................ $107,334,537
Value - Sweep Money Fund (Note 7) ....................... 5,940,579
------------
Total value of investments .............................. 113,275,116
Foreign currency, at value (cost $14,396) .................. 14,177
Receivables:
Capital shares sold ..................................... 110,000
Interest ................................................ 1,720,742
Unrealized appreciation on forward exchange contracts ...... 1,673,845
------------
Total assets ......................................... 116,793,880
------------
Liabilities:
Payables:
Investment securities purchased ......................... 442,413
Affiliates .............................................. 81,840
Allocator Funds (Note 11) ............................... 231
Professional fees ....................................... 38,014
Accrued expenses and other liabilities ..................... 31,314
------------
Total liabilities .................................... 593,812
------------
Net assets, at value .............................. $116,200,068
============
Net assets consist of:
Paid-in capital ......................................... $108,190,434
Undistributed net investment income ..................... 1,864,915
Net unrealized appreciation (depreciation) .............. 9,356,942
Accumulated net realized gain (loss) .................... (3,212,223)
------------
Net assets, at value .............................. $116,200,068
============
Shares outstanding ...................................... 10,282,147
============
Net asset value and maximum offering price per share .... $ 11.30
============
The accompanying notes are an integral part of these financial statements.
16 | Semiannual Report
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the six months ended January 31, 2010 (unaudited)
FRANKLIN
TEMPLETON
EMERGING
MARKET DEBT
OPPORTUNITIES
FUND
-------------
Investment income:
Dividends .................................................. $ 499,200
Interest ................................................... 4,633,699
-----------
Total investment income ................................. 5,132,899
-----------
Expenses:
Management fees (Note 3a) .................................. 410,154
Administrative fees (Note 3b) .............................. 103,490
Transfer agent fees (Note 3c) .............................. 680
Special servicing agreement fees (Note 11) ................. 1,782
Custodian fees (Note 4) .................................... 15,927
Reports to shareholders .................................... 11,137
Registration and filing fees ............................... 15,474
Professional fees .......................................... 37,820
Trustees' fees and expenses ................................ 4,583
Other ...................................................... 7,242
-----------
Total expenses .......................................... 608,289
Expense reductions (Note 4) ............................. (12)
Expenses waived/paid by affiliates (Note 3d) ............ (90,548)
-----------
Net expenses ......................................... 517,729
-----------
Net investment income ............................. 4,615,170
-----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ............................................. 1,071,939
Foreign currency transactions ........................... (1,599,030)
-----------
Net realized gain (loss) .......................... (527,091)
-----------
Net change in unrealized appreciation (depreciation) on:
Investments ............................................. 12,031,823
Translation of other assets and liabilities denominated
in foreign currencies ................................ 2,217,415
-----------
Net change in unrealized appreciation
(depreciation) ................................. 14,249,238
-----------
Net realized and unrealized gain (loss) ....................... 13,722,147
-----------
Net increase (decrease) in net assets resulting from operations $18,337,317
===========
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 17
Franklin Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FRANKLIN TEMPLETON
EMERGING MARKET
DEBT OPPORTUNITIES FUND
---------------------------
SIX MONTHS
ENDED YEAR
JANUARY 31, ENDED
2010 JULY 31,
(UNAUDITED) 2009
------------ ------------
Increase (decrease) in net assets:
Operations:
Net investment income ................................ $ 4,615,170 $ 7,610,630
Net realized gain (loss) from investments and
foreign currency transactions ..................... (527,091) (4,565,085)
Net change in unrealized appreciation
(depreciation) on translation of other assets and
liabilities denominated in foreign currencies ..... 14,249,238 (7,927,863)
------------ ------------
Net increase (decrease) in net assets resulting
from operations ................................ 18,337,317 (4,882,318)
------------ ------------
Distributions to shareholders from:
Net investment income ................................ (4,110,240) (5,400,673)
Net realized gains ................................... -- (546,647)
------------ ------------
Total distributions to shareholders ..................... (4,110,240) (5,947,320)
------------ ------------
Capital share transactions (Note 2) ..................... 5,671,633 4,837,138
------------ ------------
Net increase (decrease) in net assets ............. 19,898,710 (5,992,500)
Net assets:
Beginning of period .................................. 96,301,358 102,293,858
------------ ------------
End of period ........................................ $116,200,068 $ 96,301,358
------------ ------------
Undistributed net investment income included in net
assets:
End of period ........................................ $ 1,864,915 $ 1,359,985
============ ============
The accompanying notes are an integral part of these financial statements.
18 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Global Trust (Trust) is registered under the Investment Company Act of
1940, as amended, (1940 Act) as an open-end investment company, consisting of
five separate funds. The Franklin Templeton Emerging Market Debt Opportunities
Fund (Fund) is included in this report. The financial statements of the
remaining funds in the Trust are presented separately.
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Equity and other 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. Certain equity securities are valued based upon
fundamental characteristics or relationships to similar securities. Investments
in open-end mutual funds are valued at the closing net asset value.
Corporate debt securities, government securities and other debt securities
generally trade in the over-the-counter market rather than on a securities
exchange. The Fund may utilize independent pricing services, quotations from
bond dealers, and information with respect to bond and note transactions, to
assist in determining a current market value for each security. The Fund's
pricing services may use valuation models or matrix pricing which considers
information with respect to comparable bond and note transactions, quotations
from bond dealers, or by reference to other securities that are considered
comparable in such characteristics as rating, interest rate and maturity date,
option adjusted spread models, prepayment projections, interest rate spreads and
yield curves, to determine current value. Debt securities denominated in a
foreign currency are converted into their U.S. dollar equivalent at the foreign
exchange rate in effect at the close of the NYSE on the date that the values of
the foreign debt securities are determined.
Foreign equity 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 equity 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 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 based upon the underlying investment
Semiannual Report | 19
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. SECURITY VALUATION (CONTINUED)
book value, anticipated future cash flows, market changes in comparable or
similar securities, 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.
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. The Fund may enter
into foreign currency exchange contracts to facilitate transactions denominated
in a foreign currency. Purchases and sales of securities, income and expense
items denominated in foreign currencies are translated into U.S. dollars at the
exchange rate in effect on the transaction date. 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.
20 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. DERIVATIVE FINANCIAL INSTRUMENTS
The Fund may invest in derivative financial instruments (derivatives) in order
to manage risk or gain exposure to various other investments or markets.
Derivatives are financial contracts based on an underlying or notional amount,
require no initial investment or an initial net investment that is smaller than
would normally be required to have a similar response to changes in market
factors, and require or permit net settlement. Derivatives may contain various
risks including the potential inability of the counterparty to fulfill their
obligations under the terms of the contract, the potential for an illiquid
secondary market, and the potential for market movements which may expose the
Fund to gains or losses in excess of the amounts shown on the Statement of
Assets and Liabilities.
Derivatives are marked to market daily based upon quotations from market makers
or the Fund's independent pricing services and the Fund's net benefit or
obligation under the contract, as measured by the fair market value of the
contract, is included in net assets. Realized gain and loss and unrealized
appreciation and depreciation on these contracts for the period are included in
the Statement of Operations.
The Fund generally enters into forward exchange contracts in order to hedge
against fluctuations in foreign exchange rates or to gain exposure to certain
foreign currencies. A forward exchange contract is an agreement between the Fund
and a counterparty to buy or sell a foreign currency for a specific exchange
rate on a future date. Pursuant to the terms of the forward exchange contracts,
cash or securities may be required to be deposited as collateral.
See Note 10 regarding other derivative information.
D. CREDIT-LINKED NOTES
The Fund may purchase credit-linked notes. Credit-linked notes are intended to
replicate the economic effects that would apply had the Fund directly purchased
the underlying reference asset. The risks of credit-linked notes include the
potential default of the underlying reference asset, the movement in the value
of the currency of the underlying reference asset relative to the credit-linked
note, the potential inability of the Fund to dispose of the credit-linked note
in the normal course of business, and the possible inability of the
counterparties to fulfill their obligations under the contracts.
E. INVESTMENT IN ALTERNATIVE STRATEGIES LTD.
The Fund may invest in certain securities, warrants or commodities through its
investment in Alternative Strategies (FT) Ltd, a Cayman Islands exempted limited
liability company and a wholly-owned subsidiary (Subsidiary) of the Fund. The
Subsidiary has the ability to invest in
Semiannual Report | 21
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. INVESTMENT IN ALTERNATIVE STRATEGIES LTD. (CONTINUED)
commodities and securities, consistent with the investment objective of the
Fund. At January 31, 2010, all Subsidiary investments as well as any payables or
receivables are reflected in the Fund's Statement of Investments and Statement
of Assets and Liabilities. All income and expenses of the Subsidiary during the
period ended January 31, 2010, have been included in the Fund's Statement of
Operations.
F. 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.
The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of January 31, 2010, and has
determined that no provision for income tax is required in the Fund's financial
statements.
G. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Amortization of
premium and accretion of discount on debt securities are included in interest
income. 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.
Common expenses incurred by the Trust are allocated among the funds based on the
ratio of net assets of each fund to the combined net assets of the Trust. Fund
specific expenses are charged directly to the fund that incurred the expense.
Inflation-indexed bonds provide an inflation hedge through periodic increases or
decreases in the security's interest accruals and principal redemption value, by
amounts corresponding to the current rate of inflation. Any such adjustments,
including adjustments to principal redemption value, are recorded as interest
income.
22 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. 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.
I. GUARANTEES AND INDEMNIFICATIONS
Under the Trust's organizational documents, its officers and trustees are
indemnified by the Trust against certain liabilities arising out of the
performance of their duties to the Trust. Additionally, in the normal course of
business, the Trust, on behalf of the Fund, enters into contracts with service
providers that contain general indemnification clauses. The Trust's maximum
exposure under these arrangements is unknown as this would involve future claims
that may be made against the Trust that have not yet occurred. Currently, the
Trust expects the risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
At January 31, 2010, 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, 2010 JULY 31, 2009
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -------------
Shares sold .................... 1,700,195 $ 18,483,728 2,444,750 $ 20,441,488
Shares issued in reinvestment of
distributions ............... 373,786 4,066,797 760,099 5,662,738
Shares redeemed ................ (1,643,429) (16,878,892) (2,387,567) (21,267,088)
---------- ------------ ---------- ------------
Net increase (decrease) ........ 430,552 $ 5,671,633 817,282 $ 4,837,138
========== ============ ========== ============
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 Trust are also officers, and/or directors of the following
subsidiaries:
SUBSIDIARY AFFILIATION
- ---------- -----------
Franklin Templeton Investment Management Limited (Investment Management) Investment manager
Franklin Templeton Institutional, LLC (FT Institutional) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent
Semiannual Report | 23
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
A. MANAGEMENT FEES
The Fund pays an investment management fee to Investment Management based on the
average daily net assets of the Fund as follows:
ANNUALIZED
FEE RATE NET ASSETS
- ---------- -------------------------------------------------
0.800% Up to and including $500 million
0.700% Over $500 million, up to and including $1 billion
0.650% In excess of $1 billion
Under a subadvisory agreement, FT Institutional, an affiliate of Investment
Management, provides subadvisory services to the Fund and receives from
Investment Management fees based on the average daily net assets of the Fund.
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services of 0.20% per year of the
average daily net assets of the Fund.
C. TRANSFER AGENT FEES
For the period ended January 31, 2010, the Fund paid transfer agent fees of
$680, of which $338 was retained by Investor Services.
D. WAIVER AND EXPENSE REIMBURSEMENTS
FT Services has contractually agreed in advance to waive or limit its fees and
to assume as its own expense certain expenses otherwise payable by the Fund so
that the expenses (i.e. a combination of management fees, administrative fees,
and other expenses, but excluding acquired fund fees and expenses) do not exceed
1.00% (other than certain non-routine expenses or costs, including those
relating to litigation, indemnification, reorganizations and liquidations) until
November 30, 2010.
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, 2010, the
custodian fees were reduced as noted in the Statement of Operations.
24 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
5. INCOME TAXES
For tax purposes, realized capital losses occurring subsequent to October 31,
may be deferred and treated as occurring on the first day of the following
fiscal year. At July 31, 2009, the Fund deferred realized capital losses of
$2,261,399.
At January 31, 2010, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ............................. $106,951,598
============
Unrealized appreciation ......................... $ 13,915,138
Unrealized depreciation ......................... (7,591,620)
------------
Net unrealized appreciation (depreciation) ...... $ 6,323,518
============
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of defaulted securities, foreign currency
transactions, payments-in-kind, bond discounts and premiums, commodity-based
derivatives, and inflation related adjustments on foreign securities.
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions, bond discounts and premiums, commodity-based derivatives, and
inflation related adjustments on foreign securities.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
period ended January 31, 2010, aggregated $20,579,483 and $17,221,626,
respectively.
7. INVESTMENTS IN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Fund may invest in the Institutional Fiduciary Trust Money Market Portfolio
(Sweep Money Fund), an open-end investment company managed by Franklin Advisers,
Inc. (an affiliate of the investment manager). 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.
Semiannual Report | 25
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
8. CREDIT RISK AND DEFAULTED SECURITIES
At January 31, 2010, the Fund had 66.44% of its portfolio invested in high yield
or other securities rated below investment grade. These securities may be more
sensitive to economic conditions causing greater price volatility and are
potentially subject to a greater risk of loss due to default than higher rated
securities.
The Fund held defaulted securities and/or other securities for which the income
has been deemed uncollectible. At January 31, 2010, the aggregate value of these
securities was $6,677,671, representing 5.75% of the Fund's net assets. The Fund
discontinues accruing income on securities for which income has been deemed
uncollectible and provides an estimate for losses on interest receivable. The
securities have been identified on the accompanying Statement of Investments.
9. CONCENTRATION OF RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local 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.
10. OTHER DERIVATIVE INFORMATION
At January 31, 2010, the Fund has invested in derivative contracts which are
reflected on the Statement of Assets and Liabilities as follows:
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------------------ ------------------------------------------
DERIVATIVE CONTRACTS
NOT ACCOUNTED FOR AS STATEMENT OF ASSETS AND FAIR VALUE STATEMENT OF ASSETS AND FAIR VALUE
HEDGING INSTRUMENTS LIABILITIES LOCATION AMOUNT LIABILITIES LOCATION AMOUNT
- -------------------- ----------------------------- ---------- ----------------------------- ----------
Foreign exchange Unrealized appreciation $1,673,845 Unrealized depreciation
contracts ....... on forward exchange contracts on forward exchange contracts $--
26 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
10. OTHER DERIVATIVE INFORMATION (CONTINUED)
For the period ended January 31, 2010, the effect of derivative contracts on the
Fund's Statement of Operations was as follows:
CHANGE IN
UNREALIZED
APPRECIATION AVERAGE
REALIZED GAIN (DEPRECIATION) NOTIONAL
(LOSS) FOR THE FOR THE AMOUNT
DERIVATIVE CONTRACTS PERIOD ENDED PERIOD ENDED OUTSTANDING
NOT ACCOUNTED FOR AS JANUARY 31, JANUARY 31, DURING THE
HEDGING INSTRUMENTS STATEMENT OF OPERATIONS LOCATIONS 2010 2010 PERIOD(a)
- -------------------- ------------------------------------------- -------------- -------------- -----------
Foreign exchange contracts Net realized gain (loss) from foreign
currency transactions / Net change in
unrealized appreciation (depreciation) on
translation of other assets and liabilities
denominated in foreign currencies $(1,577,625) $2,232,882 30,898,833
(a) Notional amount represents the U.S. dollar equivalent based on the foreign
exchange rate at the time of contract entry.
See Note 1(c) regarding derivative financial instruments.
11. SPECIAL SERVICING AGREEMENT
The Fund, which is an eligible underlying investment of one or more of the
Franklin Templeton Fund Allocator Series Funds (Allocator Funds), participates
in a Special Servicing Agreement (SSA) with the Allocator Funds and certain
service providers of the Fund and the Allocator Funds. Under the SSA, the Fund
may pay a portion of the Allocator Funds' expenses (other than any asset
allocation, administrative, and distribution fees) to the extent such payments
are less than the amount of the benefits realized or expected to be realized by
the Fund (e.g., due to reduced costs associated with servicing accounts) from
the investment in the Fund by the Allocator Funds. The Allocator Funds are
either managed by Franklin Advisers, Inc. or administered by FT Services,
affiliates of Investment Management. For the period ended January 31, 2010, the
Fund was held by one or more of the Allocator Funds and was allocated expenses
as noted in the Statement of Operations. At January 31, 2010, 30.78% of the
Fund's outstanding shares was held by one or more of the Allocator Funds.
12. CREDIT FACILITY
The Fund, together with other U.S. registered and foreign investment funds
(collectively "Borrowers"), managed by Franklin Templeton Investments, are
borrowers in a 364-day joint syndicated senior unsecured credit facility
totaling $750 million (Global Credit Facility) to provide a source of funds to
the Borrowers for temporary and emergency purposes, including the ability
Semiannual Report | 27
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
12. CREDIT FACILITY (CONTINUED)
to meet future unanticipated or unusually large redemption requests. On January
22, 2010, the Fund renewed the Global Credit Facility for a total of $750
million, maturing January 21, 2011.
Under the terms of the Global Credit Facility, the Fund shall, in addition to
interest charged on any borrowings made by the Fund and other costs incurred by
the Fund, pay its share of fees and expenses incurred in connection with the
implementation and maintenance of the Global Credit Facility, based upon its
relative share of the aggregate net assets of all of the Borrowers, including an
annual commitment fee of 0.10% based upon the unused portion of the Global
Credit Facility, which is reflected in other expenses on the Statement of
Operations. During the period ended January 31, 2010, the Fund did not utilize
the Global Credit Facility.
13. FAIR VALUE MEASUREMENTS
The Fund follows a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Fund's own market
assumptions (unobservable inputs). These inputs are used in determining the
value of the Fund's investments and are summarized in the following fair value
hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of the inputs used as of January 31, 2010, in valuing
the Fund's assets and liabilities carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------- ----------- ---------- ------------
ASSETS:
Investments in Securities
Equity Investments - Warrants .... $ -- $ 5,858,900 $ -- $ 5,858,900
Quasi-Sovereign and Corporate
Bonds ......................... -- 40,967,910 -- 40,967,910
Credit-Linked Notes .............. -- 4,733,138 4,923,418 9,656,556
Foreign Government Securities .... -- 46,615,873 2,813,285 49,429,158
Short Term Investments ........... 5,940,579 1,422,013 -- 7,362,592
---------- ----------- ---------- ------------
Total Investments in Securities ..... $5,940,579 $99,597,834 $7,736,703 $113,275,116
========== =========== ========== ============
Forward Exchange Contracts .......... -- 1,673,845 -- 1,673,845
28 | Semiannual Report
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
13. FAIR VALUE MEASUREMENTS (CONTINUED)
At January 31, 2010, the reconciliation of assets in which significant
unobservable inputs (Level 3) were used in determining fair value, is as
follows:
NET CHANGE
NET CHANGE IN UNREALIZED
IN APPRECIATION
BALANCE AT NET UNREALIZED NET TRANSFER BALANCE (DEPRECIATION)
BEGINNING REALIZED APPRECIATION PURCHASES IN (OUT) OF AT END ON ASSETS HELD
OF PERIOD GAIN (LOSS) (DEPRECIATION) (SALES) LEVEL 3 OF PERIOD AT PERIOD END
---------- ----------- -------------- --------- ----------- ---------- --------------
ASSETS
Credit-Linked Notes ... $-- $-- $340,035 $-- $4,583,383 $4,923,418 $340,035
Foreign Government
Securities ......... -- -- 194,209 -- 2,619,076 2,813,285 194,209
--- --- -------- --- ---------- ---------- --------
$-- $-- $534,244 $-- $7,202,459 $7,736,703 $534,244
=== === ======== === ========== ========== ========
14. NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2010-6, FAIR VALUE MEASUREMENTS AND
DISCLOSURES (TOPIC 820): IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS,
which enhances and clarifies existing fair value measurement disclosure
requirements and is effective for interim and annual periods beginning after
December 15, 2009. The Fund is currently evaluating the impact, if any, of
applying this provision.
In March 2010, the FASB issued ASU No. 2010-11, DERIVATIVES AND HEDGING (TOPIC
815): SCOPE EXCEPTION RELATED TO EMBEDDED CREDIT DERIVATIVES, which clarifies
existing derivatives and hedging disclosure requirements and is effective for
fiscal quarters beginning after June 15, 2010. The Fund is currently evaluating
the impact, if any, of applying this provision.
15. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through the issuance of the financial
statements and determined that no events have occurred that require disclosure.
Semiannual Report | 29
Franklin Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
ABBREVIATIONS
COUNTERPARTY
MSCO - Morgan Stanley
NTLON - Northern Trust London
SOCLN - Societe Generale
CURRENCY
BRL - Brazilian Real
DEM - Deutsche Mark
EUR - Euro
FRF - French Franc
GHS - Ghana Cedi
JPY - Japanese Yen
MXN - Mexican Peso
NGN - Nigerian Naira
TRY - Turkish Lira
XOF - West African Franc
ZMK - Zambian Kwacha
SELECTED PORTFOLIO
FRN - Floating Rate Note
MTN - Medium Term Note
PTN - Pass-through Notes
30 | Semiannual Report
Franklin Global Trust
SHAREHOLDER INFORMATION
FRANKLIN TEMPLETON EMERGING MARKET DEBT OPPORTUNITIES FUND
PROXY VOTING POLICIES AND PROCEDURES
The Trust's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Trust uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Trust's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL
33394, Attention: Proxy Group. Copies of the Trust's proxy voting records are
also made available online at franklintempleton.com and posted on the U.S.
Securities and Exchange Commission's website at sec.gov and reflect the most
recent 12-month period ended June 30.
QUARTERLY STATEMENT OF INVESTMENTS
The Trust 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 (800)
SEC-0330.
Semiannual Report | 31
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(FRANKLIN TEMPLETON INSTITUTIONAL(R) LOGO)
600 Fifth Avenue
New York, NY 10020
SEMIANNUAL REPORT
FRANKLIN TEMPLETON EMERGING MARKET
DEBT OPPORTUNITIES FUND
INVESTMENT MANAGER
Franklin Templeton Investment Management Limited
SUBADVISOR
Franklin Templeton Institutional, LLC
DISTRIBUTOR
Franklin Templeton Distributors, Inc.
One Franklin Parkway
San Mateo, CA 94403-1906
FRANKLIN TEMPLETON INSTITUTIONAL SERVICES
(800) 321-8563
ftinstitutional.com
Authorized for distribution only when accompanied or preceded by a summary
prospectus and/or prospectus. Investors should carefully consider a fund's
investment goals, risks, charges and expenses before investing. A prospectus
contains this and other information; please read it carefully before investing.
To 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.
699 S 03/10
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 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 Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Gaston Gardey, Chief Financial Officer, Chief Accounting Officer and Treasurer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Gaston Gardey, Chief Financial Officer, Chief Accounting Officer and Treasurer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN GLOBAL TRUST
By /s/LAURA F. FERGRESON
----------------------
Laura F. Fergerson
Chief Executive Officer -
Finance and Administration
Date March 30, 2010
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/LAURA F. FERGRESON
----------------------
Laura F. Fergerson
Chief Executive Officer -
Finance and Administration
Date March 30, 2010
By /s/GASTON GARDEY
-----------------
Gaston Gardey
Chief Financial Officer and
Chief Accounting Officer
Date March 30, 2010