UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-03143
Templeton Global Smaller Companies Fund
(Exact name of registrant as specified in charter)
300 S.E. 2nd Street, Fort Lauderdale, FL 33301-1923
(Address of principal executive offices) (Zip code)
Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrants telephone number, including area code: (954) 527-7500
Date of fiscal year end: 8/31
Date of reporting period: 2/28/18
Item 1. | Reports to Stockholders. |
[Insert semiannual report]
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Semiannual Report and Shareholder Letter
February 28, 2018 |
Sign up for electronic delivery at franklintempleton.com/edelivery
Franklin Templeton Investments
Why choose Franklin Templeton Investments?
Successful investing begins with ambition. And achievement only comes when you reach for it. Thats why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, weve managed through all kinds of marketsup, down and those in between. Were always preparing for what may come next. Its because of this, combined with our strength as one of the worlds largest asset managers that weve earned the trust of millions of investors around the world.
Dear Shareholder:
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Templeton Global Smaller Companies Fund
1. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. The index does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Funds portfolio.
2. Source: US Bureau of Labor Statistics.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Funds Statement of Investments (SOI). The SOI begins on page 14.
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TEMPLETON GLOBAL SMALLER COMPANIES FUND
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TEMPLETON GLOBAL SMALLER COMPANIES FUND
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TEMPLETON GLOBAL SMALLER COMPANIES FUND
Performance Summary as of February 28, 2018
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 Funds dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Funds portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 2/28/181
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.75% and the minimum is 0%. Class A: 5.75% maximum initial sales charge; Advisor Class: no sales charges. For other share classes, visit franklintempleton.com.
Share Class | Cumulative Total Return2 |
Average Annual Total Return3 |
||||||
A |
||||||||
6-Month | +10.60% | +4.19% | ||||||
1-Year | +20.97% | +14.05% | ||||||
5-Year | +53.70% | +7.68% | ||||||
10-Year | +87.37% | +5.85% | ||||||
Advisor |
||||||||
6-Month | +10.76% | +10.76% | ||||||
1-Year | +21.23% | +21.23% | ||||||
5-Year | +55.83% | +9.28% | ||||||
10-Year | +92.13% | +6.75% |
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.
See page 8 for Performance Summary footnotes.
franklintempleton.com | Semiannual Report | 7 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
PERFORMANCE SUMMARY
Distributions (9/1/172/28/18)
Share Class | Net Investment Income |
Short-Term Capital Gain |
Long-Term Capital Gain |
Total | ||||||||||||
A | $0.0653 | $0.0231 | $0.3620 | $0.4504 | ||||||||||||
C | $ | $0.0231 | $0.3620 | $0.3851 | ||||||||||||
R6 | $0.1101 | $0.0231 | $0.3620 | $0.4952 | ||||||||||||
Advisor | $0.0747 | $0.0231 | $0.3620 | $0.4598 |
Total Annual Operating Expenses4
Share Class | With Waiver | Without Waiver | ||||||
A | 1.37% | 1.38% | ||||||
Advisor | 1.12% | 1.13% |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Smaller, midsized and relatively new or unseasoned companies can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. In addition, smaller company stocks have historically exhibited greater price volatility than larger company stocks, particularly over the short term. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in emerging markets involve heightened risks related to the same factors, in addition to those associated with these markets smaller size and lesser liquidity. The Fund is actively managed but there is no guarantee that the managers investment decisions will produce the desired results. The Funds prospectus also includes a description of the main investment risks.
1. The Fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 12/31/18. Fund investment results reflect the fee waiver; without this waiver, the results 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. Return for less than one year, if any, has not been annualized.
4. Figures are as stated in the Funds current prospectus and may differ from the expenses ratios disclosed in the Your Funds Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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TEMPLETON GLOBAL SMALLER COMPANIES FUND
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading Actual. In these columns the Funds actual return, which includes the effect of Fund expenses, is used to calculate the Ending Account Value for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings Actual and Expenses Paid During Period (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading Hypothetical in the table, information is provided about hypothetical account values and hypothetical expenses based on the Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading Hypothetical is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) |
Hypothetical (5% annual return before expenses) |
|||||||||||||||||
Share Class |
Beginning Account Value 9/1/17 |
Ending Account Value 2/28/18 |
Expenses Paid During |
Ending Account Value 2/28/18 |
Expenses Paid During 9/1/172/28/181,2 |
Net Annualized Expense Ratio2 | ||||||||||||
A |
$1,000 | $1,106.00 | $ 6.94 | $1,018.20 | $ 6.66 | 1.33% | ||||||||||||
C |
$1,000 | $1,100.50 | $10.83 | $1,014.48 | $10.39 | 2.08% | ||||||||||||
R6 |
$1,000 | $1,108.00 | $ 4.86 | $1,020.18 | $ 4.66 | 0.93% | ||||||||||||
Advisor |
$1,000 | $1,107.60 | $ 5.64 | $1,019.44 | $ 5.41 | 1.08% |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated abovein the far right columnmultiplied by the simple average account value over the period indicated, and then multiplied by 181/365 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
franklintempleton.com | Semiannual Report | 9 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
Six Months Ended February 28, 2018 |
Year Ended August 31, |
|||||||||||||||||||||||
(unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
Class A |
||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||
(for a share outstanding throughout the period) | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ 9.92 | $ 8.63 | $ 8.32 | $ 9.20 | $ 7.81 | $ 6.39 | ||||||||||||||||||
Income from investment operationsa: |
||||||||||||||||||||||||
Net investment incomeb |
0.01 | 0.06 | 0.04 | 0.05 | 0.03 | 0.05 | ||||||||||||||||||
Net realized and unrealized gains (losses) |
1.05 | 1.29 | 0.29 | (0.83 | ) | 1.38 | 1.47 | |||||||||||||||||
Total from investment operations |
1.06 | 1.35 | 0.33 | (0.78 | ) | 1.41 | 1.52 | |||||||||||||||||
Less distributions from: |
||||||||||||||||||||||||
Net investment income |
(0.07 | ) | (0.03 | ) | (0.02 | ) | (0.04 | ) | (0.02 | ) | (0.10 | ) | ||||||||||||
Net realized gains |
(0.39 | ) | (0.03 | ) | | (0.06 | ) | | | |||||||||||||||
Total distributions |
(0.46 | ) | (0.06 | ) | (0.02 | ) | (0.10 | ) | (0.02 | ) | (0.10 | ) | ||||||||||||
Net asset value, end of period |
$10.52 | $9.92 | $8.63 | $8.32 | $9.20 | $7.81 | ||||||||||||||||||
Total returnc |
10.60% | 15.73% | 3.95% | (8.44)% | 18.09% | 24.04% | ||||||||||||||||||
Ratios to average net assetsd |
||||||||||||||||||||||||
Expenses before waiver and payments by affiliates |
1.34% | 1.40% | 1.42% | 1.38% | 1.34% | 1.39% | ||||||||||||||||||
Expenses net of waiver and payments by affiliates |
1.33% | e | 1.39% | e | 1.41% | 1.38% | f | 1.34% | 1.39% | e | ||||||||||||||
Net investment income |
0.12% | 0.65% | 0.47% | 0.52% | 0.28% | 0.72% | ||||||||||||||||||
Supplemental data |
||||||||||||||||||||||||
Net assets, end of period (000s) |
$1,139,955 | $1,049,481 | $1,020,120 | $960,417 | $1,082,873 | $892,067 | ||||||||||||||||||
Portfolio turnover rate |
13.59% | 23.49% | 28.73% | 22.16% | 25.64% | 27.67% |
aThe 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 Funds shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. dRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
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Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
FINANCIAL HIGHLIGHTS
Six Months Ended February 28, 2018 |
Year Ended August 31, | |||||||||||||||||||||||
(unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
Class C |
||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||
(for a share outstanding throughout the period) | ||||||||||||||||||||||||
Net asset value, beginning of period |
$ 9.41 | $ 8.22 | $ 7.97 | $ 8.83 | $ 7.53 | $ 6.16 | ||||||||||||||||||
Income from investment operationsa: |
||||||||||||||||||||||||
Net investment income (loss)b |
(0.03 | ) | (0.01 | ) | (0.02 | ) | (0.02 | ) | (0.04 | ) | ( | )c | ||||||||||||
Net realized and unrealized gains (losses) |
0.98 | 1.23 | 0.27 | (0.78 | ) | 1.34 | 1.42 | |||||||||||||||||
Total from investment operations |
0.95 | 1.22 | 0.25 | (0.80 | ) | 1.30 | 1.42 | |||||||||||||||||
Less distributions from: |
||||||||||||||||||||||||
Net investment income |
| | | | | (0.05 | ) | |||||||||||||||||
Net realized gains |
(0.39 | ) | (0.03 | ) | | (0.06 | ) | | | |||||||||||||||
Total distributions |
(0.39 | ) | (0.03 | ) | | (0.06 | ) | | (0.05 | ) | ||||||||||||||
Net asset value, end of period |
$ 9.97 | $ 9.41 | $ 8.22 | $ 7.97 | $ 8.83 | $ 7.53 | ||||||||||||||||||
Total returnd |
10.05% | 14.88% | 3.14% | (9.06)% | 17.26% | 23.19% | ||||||||||||||||||
Ratios to average net assetse |
||||||||||||||||||||||||
Expenses before waiver and payments by affiliates |
2.09% | 2.15% | 2.17% | 2.13% | 2.09% | 2.14% | ||||||||||||||||||
Expenses net of waiver and payments by affiliates |
2.08% | f | 2.14% | f | 2.16% | 2.13% | g | 2.09% | 2.14% | f | ||||||||||||||
Net investment income (loss) |
(0.63)% | (0.10)% | (0.28)% | (0.23)% | (0.47)% | (0.03)% | ||||||||||||||||||
Supplemental data |
||||||||||||||||||||||||
Net assets, end of period (000s) |
$33,127 | $30,579 | $33,802 | $36,829 | $47,636 | $39,726 | ||||||||||||||||||
Portfolio turnover rate |
13.59% | 23.49% | 28.73% | 22.16% | 25.64% | 27.67% |
aThe 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 Funds shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cAmount rounds to less than $0.01 per share.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. eRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 11 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
FINANCIAL HIGHLIGHTS
Six Months Ended February 28, 2018 |
Year Ended August 31, | |||||||||||||||||||||||
(unaudited) | 2017 | 2016 | 2015 | 2014 | 2013a | |||||||||||||||||||
Class R6 |
||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||
(for a share outstanding throughout the period) | ||||||||||||||||||||||||
Net asset value, beginning of period |
$9.97 | $8.68 | $8.37 | $9.25 | $7.84 | $7.43 | ||||||||||||||||||
Income from investment operationsb: |
||||||||||||||||||||||||
Net investment incomec |
0.03 | 0.10 | 0.08 | 0.08 | 0.09 | 0.03 | ||||||||||||||||||
Net realized and unrealized gains (losses) |
1.05 | 1.29 | 0.28 | (0.82 | ) | 1.38 | 0.38 | |||||||||||||||||
Total from investment operations |
1.08 | 1.39 | 0.36 | (0.74 | ) | 1.47 | 0.41 | |||||||||||||||||
Less distributions from: |
||||||||||||||||||||||||
Net investment income |
(0.11 | ) | (0.07 | ) | (0.05 | ) | (0.08 | ) | (0.06 | ) | | |||||||||||||
Net realized gains |
(0.39 | ) | (0.03 | ) | | (0.06 | ) | | | |||||||||||||||
Total distributions |
(0.50 | ) | (0.10 | ) | (0.05 | ) | (0.14 | ) | (0.06 | ) | | |||||||||||||
Net asset value, end of period |
$10.55 | $9.97 | $8.68 | $8.37 | $9.25 | $7.84 | ||||||||||||||||||
Total returnd |
10.80% | 16.18% | 4.42% | (7.99)% | 18.72% | 5.52% | ||||||||||||||||||
Ratios to average net assetse |
||||||||||||||||||||||||
Expenses before waiver and payments by affiliates |
0.94% | 0.96% | 0.95% | 0.94% | 0.92% | 3.26% | ||||||||||||||||||
Expenses net of waiver and payments by affiliates |
0.93% | f | 0.93% | f | 0.94% | 0.94% | g | 0.92% | 0.95% | f | ||||||||||||||
Net investment income (loss) |
0.52% | 1.11% | 0.94% | 0.96% | 0.70% | (1.15)% | ||||||||||||||||||
Supplemental data |
||||||||||||||||||||||||
Net assets, end of period (000s) |
$99,462 | $22,318 | $20,690 | $22,148 | $26,371 | $5 | ||||||||||||||||||
Portfolio turnover rate |
13.59% | 23.49% | 28.73% | 22.16% | 25.64% | 27.67% |
aFor the period May 1, 2013 (effective date) to August 31, 2013.
bThe 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 Funds shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
fBenefit of expense reduction rounds to less than 0.01%.
gBenefit of waiver and payments by affiliates rounds to less than 0.01%.
12 |
Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
FINANCIAL HIGHLIGHTS
Six Months Ended February 28, 2018 |
Year Ended August 31, | |||||||||||||||||||||||
(unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
Advisor Class |
||||||||||||||||||||||||
Per share operating performance |
||||||||||||||||||||||||
(for a share outstanding throughout the period) |
||||||||||||||||||||||||
Net asset value, beginning of period |
$ 9.97 | $ 8.67 | $ 8.36 | $ 9.24 | $ 7.84 | $ 6.41 | ||||||||||||||||||
Income from investment operationsa: |
||||||||||||||||||||||||
Net investment incomeb |
0.02 | 0.09 | 0.06 | 0.07 | 0.03 | 0.07 | ||||||||||||||||||
Net realized and unrealized gains (losses) |
1.04 | 1.30 | 0.29 | (0.83 | ) | 1.41 | 1.48 | |||||||||||||||||
Total from investment operations |
1.06 | 1.39 | 0.35 | (0.76 | ) | 1.44 | 1.55 | |||||||||||||||||
Less distributions from: |
||||||||||||||||||||||||
Net investment income |
(0.07 | ) | (0.06 | ) | (0.04 | ) | (0.06 | ) | (0.04 | ) | (0.12 | ) | ||||||||||||
Net realized gains |
(0.39 | ) | (0.03 | ) | | (0.06 | ) | | | |||||||||||||||
Total distributions |
(0.46 | ) | (0.09 | ) | (0.04 | ) | (0.12 | ) | (0.04 | ) | (0.12 | ) | ||||||||||||
Net asset value, end of period |
$ 10.57 | $ 9.97 | $ 8.67 | $ 8.36 | $ 9.24 | $ 7.84 | ||||||||||||||||||
Total returnc |
10.76% | 16.02% | 4.18% | (8.21)% | 18.40% | 24.43% | ||||||||||||||||||
Ratios to average net assetsd |
||||||||||||||||||||||||
Expenses before waiver and payments by affiliates |
1.09% | 1.15% | 1.17% | 1.13% | 1.09% | 1.14% | ||||||||||||||||||
Expenses net of waiver and payments by affiliates |
1.08% | e | 1.14% | e | 1.16% | 1.13% | f | 1.09% | 1.14% | e | ||||||||||||||
Net investment income |
0.37% | 0.90% | 0.72% | 0.77% | 0.53% | 0.97% | ||||||||||||||||||
Supplemental data |
||||||||||||||||||||||||
Net assets, end of period (000s) |
$57,383 | $108,279 | $50,213 | $42,778 | $62,955 | $140,733 | ||||||||||||||||||
Portfolio turnover rate |
13.59% | 23.49% | 28.73% | 22.16% | 25.64% | 27.67% |
aThe 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 Funds shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cTotal return is not annualized for periods less than one year.
dRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
eBenefit of expense reduction rounds to less than 0.01%.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 13 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
Statement of Investments, February 28, 2018 (unaudited)
Industry | Shares/ Units |
Value | ||||||||
Common Stocks and Other Equity Interests 92.8% |
||||||||||
Belgium 1.8% |
||||||||||
Barco NV |
Electronic Equipment, Instruments & Components | 146,444 | $ | 17,937,633 | ||||||
Ontex Group NV |
Personal Products | 185,582 | 5,384,031 | |||||||
|
|
|||||||||
23,321,664 | ||||||||||
|
|
|||||||||
Brazil 1.8% |
||||||||||
Camil Alimentos SA |
Food Products | 4,220,700 | 10,465,781 | |||||||
M. Dias Branco SA |
Food Products | 749,500 | 13,812,806 | |||||||
|
|
|||||||||
24,278,587 | ||||||||||
|
|
|||||||||
Canada 4.0% |
||||||||||
Alamos Gold Inc., A |
Metals & Mining | 1,045,000 | 5,308,600 | |||||||
a Badger Daylighting Ltd. |
Construction & Engineering | 631,100 | 11,813,452 | |||||||
Canaccord Genuity Group Inc. |
Capital Markets | 2,723,400 | 14,219,747 | |||||||
b Canada Goose Holdings Inc. |
Textiles, Apparel & Luxury Goods | 104,100 | 3,294,499 | |||||||
Mullen Group Ltd. |
Energy Equipment & Services | 927,600 | 10,669,713 | |||||||
Shawcor Ltd. |
Energy Equipment & Services | 367,800 | 7,555,493 | |||||||
|
|
|||||||||
52,861,504 | ||||||||||
|
|
|||||||||
Colombia 0.7% |
||||||||||
b Gran Tierra Energy Inc. |
Oil, Gas & Consumable Fuels | 3,836,400 | 9,567,082 | |||||||
|
|
|||||||||
Denmark 0.5% |
||||||||||
b Nilfisk Holding AS |
Machinery | 118,961 | 6,041,894 | |||||||
|
|
|||||||||
Finland 3.6% |
||||||||||
Amer Sports OYJ |
Leisure Products | 846,073 | 25,609,108 | |||||||
Huhtamaki OYJ |
Containers & Packaging | 525,505 | 22,304,430 | |||||||
|
|
|||||||||
47,913,538 | ||||||||||
|
|
|||||||||
Germany 5.0% |
||||||||||
Gerresheimer AG |
Life Sciences Tools & Services | 204,490 | 15,742,050 | |||||||
Grand City Properties SA |
Real Estate Management & Development | 576,010 | 12,909,191 | |||||||
Jenoptik AG |
Electronic Equipment, Instruments & Components | 560,133 | 19,366,487 | |||||||
Rational AG |
Machinery | 11,450 | 7,452,462 | |||||||
b zooplus AG |
Internet & Direct Marketing Retail | 53,800 | 11,735,717 | |||||||
|
|
|||||||||
67,205,907 | ||||||||||
|
|
|||||||||
Hong Kong 2.9% |
||||||||||
Johnson Electric Holdings Ltd. |
Electrical Equipment | 2,667,000 | 10,581,507 | |||||||
Techtronic Industries Co. Ltd. |
Household Durables | 3,195,500 | 20,048,563 | |||||||
Value Partners Group Ltd. |
Capital Markets | 8,730,000 | 8,277,155 | |||||||
|
|
|||||||||
38,907,225 | ||||||||||
|
|
|||||||||
India 0.7% |
||||||||||
Dewan Housing Finance Corp. Ltd. |
Thrifts & Mortgage Finance | 1,098,035 | 9,197,159 | |||||||
|
|
|||||||||
Italy 4.6% |
||||||||||
Azimut Holding SpA |
Capital Markets | 255,833 | 5,596,245 | |||||||
Interpump Group SpA |
Machinery | 739,726 | 24,655,364 | |||||||
Technogym SpA |
Leisure Products | 2,328,513 | 23,379,669 | |||||||
a Tods SpA |
Textiles, Apparel & Luxury Goods | 101,380 | 7,458,121 | |||||||
|
|
|||||||||
61,089,399 | ||||||||||
|
|
14 |
Semiannual Report | franklintempleton.com |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
Industry | Shares/ Units |
Value | ||||||||
Common Stocks and Other Equity Interests (continued) |
||||||||||
Japan 12.5% |
||||||||||
Asics Corp. |
Textiles, Apparel & Luxury Goods | 937,600 | $ | 15,016,713 | ||||||
Bunka Shutter Co. Ltd. |
Building Products | 981,400 | 9,436,450 | |||||||
Capcom Co. Ltd. |
Software | 330,100 | 13,364,247 | |||||||
Dowa Holdings Co. Ltd. |
Metals & Mining | 404,200 | 15,057,354 | |||||||
Idec Corp. |
Electrical Equipment | 324,800 | 9,116,499 | |||||||
IDOM Inc. |
Specialty Retail | 1,528,600 | 10,257,041 | |||||||
Kobayashi Pharmaceutical Co. Ltd. |
Personal Products | 301,220 | 19,732,232 | |||||||
MEITEC Corp. |
Professional Services | 136,600 | 7,770,601 | |||||||
Morita Holdings Corp. |
Machinery | 285,400 | 5,426,893 | |||||||
Nihon Parkerizing Co. Ltd. |
Chemicals | 470,400 | 8,393,624 | |||||||
Ryohin Keikaku Co. Ltd. |
Multiline Retail | 42,700 | 14,666,182 | |||||||
Sumitomo Rubber Industries Ltd. |
Auto Components | 329,900 | 6,362,722 | |||||||
TechnoPro Holdings Inc. |
Professional Services | 180,500 | 10,792,278 | |||||||
Tsumura & Co. |
Pharmaceuticals | 603,900 | 20,317,708 | |||||||
|
|
|||||||||
165,710,544 | ||||||||||
|
|
|||||||||
Netherlands 1.5% |
||||||||||
Aalberts Industries NV |
Machinery | 134,876 | 6,790,926 | |||||||
Arcadis NV |
Construction & Engineering | 538,176 | 12,947,654 | |||||||
|
|
|||||||||
19,738,580 | ||||||||||
|
|
|||||||||
Norway 0.3% |
||||||||||
Ekornes ASA |
Household Durables | 221,994 | 3,143,826 | |||||||
XXL ASA |
Specialty Retail | 87,500 | 998,638 | |||||||
|
|
|||||||||
4,142,464 | ||||||||||
|
|
|||||||||
Poland 1.0% |
||||||||||
CCC SA |
Textiles, Apparel & Luxury Goods | 182,650 | 13,442,699 | |||||||
|
|
|||||||||
South Korea 2.0% |
||||||||||
BNK Financial Group Inc. |
Banks | 1,483,143 | 15,312,121 | |||||||
DGB Financial Group Inc. |
Banks | 979,781 | 11,199,149 | |||||||
|
|
|||||||||
26,511,270 | ||||||||||
|
|
|||||||||
Spain 1.1% |
||||||||||
Construcciones y Auxiliar de Ferrocarriles SA |
Machinery | 312,587 | 15,101,704 | |||||||
|
|
|||||||||
Sweden 2.4% |
||||||||||
Cloetta AB, B |
Food Products | 1,871,313 | 7,150,191 | |||||||
c The Thule Group AB, Reg S |
Leisure Products | 1,142,630 | 24,849,676 | |||||||
|
|
|||||||||
31,999,867 | ||||||||||
|
|
|||||||||
Switzerland 3.1% |
||||||||||
b Basilea Pharmaceutica AG |
Biotechnology | 70,700 | 5,293,889 | |||||||
Bucher Industries AG |
Machinery | 38,920 | 16,479,788 | |||||||
Logitech International SA |
Technology Hardware, Storage & Peripherals | 298,980 | 11,773,832 | |||||||
Tecan Group AG |
Life Sciences Tools & Services | 36,010 | 7,555,159 | |||||||
|
|
|||||||||
41,102,668 | ||||||||||
|
|
|||||||||
Taiwan 4.3% |
||||||||||
Chicony Electronics Co. Ltd. |
Technology Hardware, Storage & Peripherals | 5,013,480 | 12,188,151 | |||||||
Giant Manufacturing Co. Ltd. |
Leisure Products | 1,707,311 | 8,797,584 | |||||||
King Yuan Electronics Co. Ltd. |
Semiconductors & Semiconductor Equipment | 15,582,000 | 16,471,246 | |||||||
Merida Industry Co. Ltd. |
Leisure Products | 1,096,000 | 4,743,659 | |||||||
Tripod Technology Corp. |
Electronic Equipment, Instruments & Components | 4,566,000 | 14,869,753 | |||||||
|
|
|||||||||
57,070,393 | ||||||||||
|
|
franklintempleton.com | Semiannual Report | 15 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
Industry | Shares/ Units |
Value | ||||||||
Common Stocks and Other Equity Interests (continued) |
||||||||||
Turkey 0.4% |
||||||||||
b Mavi Giyim Sanayi Ve Ticaret AS, B |
Textiles, Apparel & Luxury Goods | 426,187 | $ | 5,984,701 | ||||||
|
|
|||||||||
United Kingdom 6.3% |
||||||||||
Bellway PLC |
Household Durables | 134,030 | 5,750,659 | |||||||
Bovis Homes Group PLC |
Household Durables | 322,550 | 4,665,640 | |||||||
DFS Furniture PLC |
Household Durables | 1,948,999 | 4,943,328 | |||||||
Greggs PLC |
Hotels, Restaurants & Leisure | 756,705 | 12,451,242 | |||||||
Janus Henderson Group PLC |
Capital Markets | 583,933 | 20,636,192 | |||||||
Laird PLC |
Electronic Equipment, Instruments & Components | 4,093,011 | 6,531,975 | |||||||
b LivaNova PLC |
Health Care Equipment & Supplies | 80,400 | 7,215,096 | |||||||
Man Group PLC |
Capital Markets | 2,810,041 | 6,645,499 | |||||||
Oxford Instruments PLC |
Electronic Equipment, Instruments & Components | 833,243 | 8,639,424 | |||||||
SIG PLC |
Trading Companies & Distributors | 2,932,183 | 5,854,331 | |||||||
b Vectura Group PLC |
Pharmaceuticals | 11,969 | 11,940 | |||||||
|
|
|||||||||
83,345,326 | ||||||||||
|
|
|||||||||
United States 32.3% |
||||||||||
b Agrofresh Solutions Inc. |
Chemicals | 1,092,094 | 8,452,808 | |||||||
Alamo Group Inc. |
Machinery | 220,620 | 24,521,913 | |||||||
AllianceBernstein Holding LP |
Capital Markets | 968,065 | 25,750,529 | |||||||
b Boston Beer Inc., A |
Beverages | 52,140 | 8,501,427 | |||||||
b Clarus Corp. |
Leisure Products | 730,200 | 4,892,340 | |||||||
Columbia Sportswear Co. |
Textiles, Apparel & Luxury Goods | 340,250 | 25,716,095 | |||||||
b CommScope Holding Co. Inc. |
Communications Equipment | 560,700 | 21,704,697 | |||||||
b Deckers Outdoor Corp. |
Textiles, Apparel & Luxury Goods | 90,540 | 8,563,273 | |||||||
a,b Duluth Holdings Inc. |
Internet & Direct Marketing Retail | 315,200 | 5,301,664 | |||||||
b Ferro Corp. |
Chemicals | 982,440 | 21,014,392 | |||||||
b Freshpet Inc. |
Food Products | 1,013,400 | 20,268,000 | |||||||
b Hibbett Sports Inc. |
Specialty Retail | 266,590 | 6,864,693 | |||||||
Hillenbrand Inc. |
Machinery | 570,450 | 25,042,755 | |||||||
Huntington Bancshares Inc. |
Banks | 1,296,199 | 20,350,324 | |||||||
Hyster-Yale Materials Handling Inc. |
Machinery | 178,800 | 12,728,772 | |||||||
Jones Lang LaSalle Inc. |
Real Estate Management & Development | 97,100 | 15,595,231 | |||||||
b Knowles Corp. |
Electronic Equipment, Instruments & Components | 1,303,510 | 18,822,684 | |||||||
LCI Industries |
Auto Components | 150,780 | 16,480,254 | |||||||
Mattel Inc. |
Leisure Products | 506,200 | 8,048,580 | |||||||
b Newpark Resources Inc. |
Energy Equipment & Services | 881,940 | 7,276,005 | |||||||
b Nutanix Inc., A |
Internet Software & Services | 94,300 | 3,437,235 | |||||||
b Patrick Industries Inc. |
Building Products | 190,935 | 11,732,956 | |||||||
Simpson Manufacturing Co. Inc. |
Building Products | 431,540 | 23,872,793 | |||||||
SpartanNash Co. |
Food & Staples Retailing | 441,320 | 7,400,936 | |||||||
STORE Capital Corp. |
Equity Real Estate Investment Trusts (REITs) | 452,000 | 10,775,680 | |||||||
b Texas Capital Bancshares Inc. |
Banks | 63,570 | 5,734,014 | |||||||
b Trimas Corp. |
Machinery | 404,650 | 10,480,435 | |||||||
b Tutor Perini Corp. |
Construction & Engineering | 728,650 | 17,596,898 | |||||||
United Insurance Holdings Corp. |
Insurance | 665,160 | 13,003,878 | |||||||
Winnebago Industries Inc. |
Automobiles | 457,810 | 19,937,625 | |||||||
|
|
|||||||||
429,868,886 | ||||||||||
|
|
|||||||||
Total Common Stocks and Other Equity |
1,234,403,061 | |||||||||
|
|
16 |
Semiannual Report | franklintempleton.com |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
STATEMENT OF INVESTMENTS (UNAUDITED)
Industry | Shares | Value | ||||||||
Management Investment Companies (Cost $18,934,511) 1.5% |
||||||||||
United States 1.5% |
||||||||||
iShares Russell 1000 ETF |
Diversified Financial Services | 134,500 | $ | 20,289,325 | ||||||
|
|
|||||||||
Preferred Stocks (Cost $6,172,377) 0.9% |
||||||||||
Brazil 0.9% |
||||||||||
d Alpargatas SA, 3.279%, pfd. |
Textiles, Apparel & Luxury Goods | 2,082,350 | 10,987,588 | |||||||
|
|
|||||||||
Total Investments before Short Term Investments (Cost $872,060,282) |
1,265,679,974 | |||||||||
|
|
|||||||||
Principal Amount |
||||||||||
Short Term Investments 6.3% |
||||||||||
U.S. Government and Agency Securities |
||||||||||
United States 4.6% |
||||||||||
e FHLB, 3/01/18 |
$ | 61,900,000 | 61,900,000 | |||||||
|
|
|||||||||
Shares | ||||||||||
f Investments from Cash Collateral Received for
Loaned Securities |
||||||||||
Money Market Funds 1.7% |
||||||||||
United States 1.7% |
||||||||||
g,h Institutional Fiduciary Trust Money Market Portfolio, 1.02% . |
22,384,588 | 22,384,588 | ||||||||
|
|
|||||||||
Total Investments (Cost $956,342,944) 101.5% |
1,349,964,562 | |||||||||
Other Assets, less Liabilities (1.5)% |
(20,037,438 | ) | ||||||||
|
|
|||||||||
Net Assets 100.0% |
$ | 1,329,927,124 | ||||||||
|
|
See Abbreviations on page 30.
aA portion or all of the security is on loan at February 28, 2018. See Note 1(d).
bNon-income producing.
cSecurity 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 Funds Board of Trustees. At February 28, 2018, the value of this security was $24,849,676, representing 1.9% of net assets.
dVariable rate security. The rate shown represents the yield at period end.
eThe security was issued on a discount basis with no stated coupon rate.
fSee Note 1(d) regarding securities on loan.
gSee Note 3(f) regarding investments in affiliated management investment companies.
hThe rate shown is the annualized seven-day yield at period end.
franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 17 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
Statement of Assets and Liabilities
February 28, 2018 (unaudited)
Assets: |
||||
+Investments in securities: |
||||
Cost - Unaffiliated issuers |
$ | 933,958,356 | ||
Cost - Non-controlled affiliates (Note 3f and 9) |
22,384,588 | |||
|
|
|||
Value - Unaffiliated issuers |
$ | 1,327,579,974 | ||
Value - Non-controlled affiliates (Note 3f and 9) |
22,384,588 | |||
Cash |
1,271,948 | |||
Receivables: |
||||
Investment securities sold |
1,775,771 | |||
Capital shares sold |
1,307,630 | |||
Dividends and interest |
3,176,950 | |||
European Union tax reclaims |
1,289,829 | |||
Other assets |
1,370 | |||
|
|
|||
Total assets |
1,358,788,060 | |||
|
|
|||
Liabilities: |
||||
Payables: |
||||
Investment securities purchased |
3,206,076 | |||
Capital shares redeemed |
1,647,337 | |||
Management fees |
880,997 | |||
Distribution fees |
246,007 | |||
Transfer agent fees |
233,607 | |||
Payable upon return of securities loaned |
22,384,588 | |||
Accrued expenses and other liabilities |
262,324 | |||
|
|
|||
Total liabilities |
28,860,936 | |||
|
|
|||
Net assets, at value |
$ | 1,329,927,124 | ||
|
|
|||
Net assets consist of: |
||||
Paid-in capital |
$ | 914,746,700 | ||
Distributions in excess of net investment income |
(479,299 | ) | ||
Net unrealized appreciation (depreciation) |
393,727,772 | |||
Accumulated net realized gain (loss) |
21,931,951 | |||
|
|
|||
Net assets, at value |
$ | 1,329,927,124 | ||
|
|
+Includes securities loaned |
$ | 20,705,093 |
18 |
Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (continued)
February 28, 2018 (unaudited)
Class A: |
||||
Net assets, at value |
$ | 1,139,954,917 | ||
|
|
|||
Shares outstanding |
108,388,294 | |||
|
|
|||
Net asset value per sharea |
$10.52 | |||
|
|
|||
Maximum offering price per share (net asset value per share ÷ 94.25%) |
$11.16 | |||
|
|
|||
Class C: |
||||
Net assets, at value |
$ | 33,127,150 | ||
|
|
|||
Shares outstanding |
3,321,486 | |||
|
|
|||
Net asset value and maximum offering price per sharea |
$9.97 | |||
|
|
|||
Class R6: |
||||
Net assets, at value |
$ | 99,461,561 | ||
|
|
|||
Shares outstanding |
9,430,787 | |||
|
|
|||
Net asset value and maximum offering price per share |
$10.55 | |||
|
|
|||
Advisor Class: |
||||
Net assets, at value |
$ | 57,383,496 | ||
|
|
|||
Shares outstanding |
5,431,364 | |||
|
|
|||
Net asset value and maximum offering price per share |
$10.57 | |||
|
|
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 19 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
FINANCIAL STATEMENTS
Statement of Operations
for the six months ended February 28, 2018 (unaudited)
Investment income: |
||||
Dividends: (net of foreign taxes)* |
||||
Unaffiliated issuers |
$ | 7,925,008 | ||
Interest: |
||||
Unaffiliated issuers |
345,203 | |||
Income from securities loaned (net of fees and rebates) |
948,476 | |||
Other income (Note 1e) |
171,630 | |||
|
|
|||
Total investment income |
9,390,317 | |||
|
|
|||
Expenses: |
||||
Management fees (Note 3a) |
5,584,752 | |||
Distribution fees: (Note 3c) |
||||
Class A |
1,393,940 | |||
Class C |
160,866 | |||
Transfer agent fees: (Note 3e) |
||||
Class A |
897,034 | |||
Class C |
25,865 | |||
Class R6 |
5,579 | |||
Advisor Class |
62,331 | |||
Custodian fees (Note 4) |
61,146 | |||
Reports to shareholders |
106,850 | |||
Registration and filing fees |
59,455 | |||
Professional fees |
54,127 | |||
Trustees fees and expenses |
47,017 | |||
Other |
44,909 | |||
|
|
|||
Total expenses |
8,503,871 | |||
Expense reductions (Note 4) |
(575 | ) | ||
Expenses waived/paid by affiliates (Note 3f) |
(39,118 | ) | ||
|
|
|||
Net expenses |
8,464,178 | |||
|
|
|||
Net investment income |
926,139 | |||
|
|
|||
Realized and unrealized gains (losses): |
||||
Net realized gain (loss) from: |
||||
Investments: |
||||
Unaffiliated issuers |
46,124,907 | |||
Non-controlled affiliates (Note 3f and 9) |
(18,385,553 | ) | ||
Foreign currency transactions |
100,407 | |||
|
|
|||
Net realized gain (loss) |
27,839,761 | |||
|
|
|||
Net change in unrealized appreciation (depreciation) on: |
||||
Investments: |
||||
Unaffiliated issuers |
81,534,312 | |||
Non-controlled affiliates (Note 3f and 9) |
16,892,783 | |||
Translation of other assets and liabilities denominated in foreign currencies |
(95,980 | ) | ||
|
|
|||
Net change in unrealized appreciation (depreciation) |
98,331,115 | |||
|
|
|||
Net realized and unrealized gain (loss) |
126,170,876 | |||
|
|
|||
Net increase (decrease) in net assets resulting from operations |
$ | 127,097,015 | ||
|
|
*Foreign taxes withheld on dividends |
$ | 564,878 |
20 |
Semiannual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Six Months Ended February 28, 2018 (unaudited) |
Year Ended August 31, 2017 |
|||||||
Increase (decrease) in net assets: |
||||||||
Operations: |
||||||||
Net investment income |
$ | 926,139 | $ | 7,558,565 | ||||
Net realized gain (loss) |
27,839,761 | 58,985,967 | ||||||
Net change in unrealized appreciation (depreciation) |
98,331,115 | 100,675,121 | ||||||
Net increase (decrease) in net assets resulting from operations |
127,097,015 | 167,219,653 | ||||||
Distributions to shareholders from: |
||||||||
Net investment income: |
||||||||
Class A |
(6,823,711 | ) | (3,353,090 | ) | ||||
Class R6 |
(958,371 | ) | (161,236 | ) | ||||
Advisor Class |
(376,117 | ) | (448,360 | ) | ||||
Net realized gains: |
||||||||
Class A |
(40,242,131 | ) | (3,253,159 | ) | ||||
Class C |
(1,232,674 | ) | (110,990 | ) | ||||
Class R6 |
(3,352,122 | ) | (66,593 | ) | ||||
Advisor Class |
(1,938,995 | ) | (226,507 | ) | ||||
Total distributions to shareholders |
(54,924,121 | ) | (7,619,935 | ) | ||||
Capital share transactions: (Note 2) |
||||||||
Class A |
27,716,684 | (111,116,466 | ) | |||||
Class C |
748,563 | (7,472,806 | ) | |||||
Class R6 |
76,733,963 | (1,330,905 | ) | |||||
Advisor Class |
(58,102,558 | ) | 46,153,965 | |||||
Total capital share transactions |
47,096,652 | (73,766,212 | ) | |||||
Net increase (decrease) in net assets |
119,269,546 | 85,833,506 | ||||||
Net assets: |
||||||||
Beginning of period |
1,210,657,578 | 1,124,824,072 | ||||||
End of period |
$ | 1,329,927,124 | $ | 1,210,657,578 | ||||
Undistributed net investment income included in net assets: |
||||||||
End of period |
$ | | $ | 6,752,761 | ||||
Distributions in excess of net investment income included in net assets: |
||||||||
End of period |
$ | (479,299 | ) | $ | |
franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 21 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
Notes to Financial Statements (unaudited)
22 |
Semiannual Report | franklintempleton.com |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
franklintempleton.com | Semiannual Report | 23 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
c. Derivative Financial Instruments (continued)
24 |
Semiannual Report | franklintempleton.com |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest
At February 28, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Funds shares were as follows:
Six Months Ended February 28, 2018 |
Year Ended August 31, 2017 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A Shares: |
||||||||||||||||
Shares sold |
7,505,141 | $ | 79,513,274 | 14,924,709 | $ | 136,796,821 | ||||||||||
Shares issued in reinvestment of distributions |
4,297,917 | 45,085,155 | 720,606 | 6,283,688 | ||||||||||||
Shares redeemed |
(9,161,576 | ) | (96,881,745 | ) | (28,057,800 | ) | (254,196,975 | ) | ||||||||
Net increase (decrease) |
2,641,482 | $ | 27,716,684 | (12,412,485 | ) | $ | (111,116,466 | ) | ||||||||
Class C Shares: |
||||||||||||||||
Shares sold |
334,805 | $ | 3,394,752 | 434,042 | $ | 3,802,243 | ||||||||||
Shares issued in reinvestment of distributions |
121,619 | 1,211,325 | 12,519 | 104,028 | ||||||||||||
Shares redeemed |
(385,280 | ) | (3,857,514 | ) | (1,308,905 | ) | (11,379,077 | ) | ||||||||
Net increase (decrease) |
71,144 | $ | 748,563 | (862,344 | ) | $ | (7,472,806 | ) | ||||||||
Class R6 Shares: |
||||||||||||||||
Shares sold |
7,583,674 | $ | 81,016,865 | 157,156 | $ | 1,437,538 | ||||||||||
Shares issued in reinvestment of distributions |
305,123 | 3,206,838 | | | ||||||||||||
Shares redeemed |
(695,678 | ) | (7,489,740 | ) | (303,977 | ) | (2,768,443 | ) | ||||||||
Net increase (decrease) |
7,193,119 | $ | 76,733,963 | (146,821 | ) | $ | (1,330,905 | ) |
franklintempleton.com | Semiannual Report | 25 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
Six Months Ended February 28, 2018 |
Year Ended August 31, 2017 |
|||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Advisor Class Shares: |
||||||||||||||||
Shares sold |
1,685,118 | $ | 17,713,106 | 9,842,415 | $ | 89,120,658 | ||||||||||
Shares issued in reinvestment of distributions |
172,678 | 1,818,303 | 66,899 | 584,698 | ||||||||||||
Shares redeemed |
(7,292,011 | ) | (77,633,967 | ) | (4,832,765 | ) | (43,551,391) | |||||||||
|
|
|||||||||||||||
Net increase (decrease) |
(5,434,215 | ) | $ | (58,102,558 | ) | 5,076,549 | $ | 46,153,965 | ||||||||
|
|
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 | |
Templeton Investment Counsel, LLC (TIC) |
Investment manager | |
Franklin Templeton Investments Corp. (FTIC) |
Subadvisor | |
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 TIC based on the average daily net assets of the Fund as follows:
Annualized Fee Rate | Net Assets | |
0.900% |
Up to and including $200 million | |
0.885% |
Over $200 million, up to and including $700 million | |
0.850% |
Over $700 million, up to and including $1 billion | |
0.830% |
Over $1 billion, up to and including $1.2 billion | |
0.805% |
Over $1.2 billion, up to and including $5 billion | |
0.785% |
Over $5 billion, up to and including $10 billion | |
0.765% |
Over $10 billion, up to and including $15 billion | |
0.745% |
Over $15 billion, up to and including $20 billion | |
0.725% |
In excess of $20 billion |
For the period ended February 28, 2018, the annualized gross effective investment management fee rate was 0.864% of the Funds average daily net assets.
Under a subadvisory agreement, FTIC, an affiliate of TIC, provides subadvisory services to the Fund. The subadvisory fee is paid by TIC based on the Funds average daily net assets, and is not an additional expense of the Fund.
b. Administrative Fees
Under an agreement with TIC, FT Services provides administrative services to the Fund. The fee is paid by TIC based on the Funds average daily net assets, and is not an additional expense of the Fund.
26 |
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TEMPLETON GLOBAL SMALLER COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Funds Class A reimbursement distribution plan, the Fund reimburses 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 plan, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Funds Class C compensation distribution plan, the Fund pays 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. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.
The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
Class A |
0.25 | % | ||
Class C |
1.00 | % |
d. Sales Charges/Underwriting Agreements
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Funds shares for the period:
Sales charges retained net of commissions paid to unaffiliated brokers/dealers |
$ | 141,191 | ||
CDSC retained |
$ | 3,909 |
e. Transfer Agent Fees
Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. Effective November 1, 2017, the fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. Prior to November 1, 2017, the fees were account based fees that varied based on fund or account type. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6, reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.
For the period ended February 28, 2018, the Fund paid transfer agent fees of $990,809, of which $226,132 was retained by Investor Services.
f. Investments in Affiliated Management Investment Companies
The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended February 28, 2018, the Fund held investments in affiliated management investment companies as follows:
Number of Shares Held at Beginning of Period |
Gross Additions |
Gross Reductions |
Number of Shares Held at End of Period |
Value at End of Period |
Dividend Income |
Realized Gain (Loss) |
Net Change in Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||||||
Non-Controlled Affiliates |
||||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio, 1.02% |
21,590,804 | 37,784,513 | (36,990,729 | ) | 22,384,588 | $ | 22,384,588 | $ | $ | $ |
franklintempleton.com | Semiannual Report | 27 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
g. Interfund Transactions
The Fund engaged in purchases and sales of investments with funds or other accounts that have common investment managers (or affiliated investment managers), directors, trustees or officers. During the period ended February 28, 2018, these purchase and sale transactions aggregated $0 and $ 1,615,308, respectively.
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 Funds custodian expenses. During the period ended February 28, 2018, the custodian fees were reduced as noted in the Statement of Operations.
5. Income Taxes
At February 28, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Cost of investments |
$ | 958,448,255 | ||
|
|
|||
Unrealized appreciation |
$ | 429,745,961 | ||
Unrealized depreciation |
(38,229,654) | |||
|
|
|||
Net unrealized appreciation (depreciation) |
$ | 391,516,307 | ||
|
|
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of pass-through entity income and corporate actions.
6. Investment Transactions
Purchases and sales of investments (excluding short term securities) for the period ended February 28, 2018, aggregated $168,419,835 and $177,710,445, respectively.
At February 28, 2018, in connection with securities lending transactions, the Fund loaned equity investments and received $22,384,588 of cash collateral. The gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statement of Assets and Liabilities. The agreements can be terminated at any time.
7. Concentration of Risk
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.
8. Other Derivative Information
For the period ended February 28, 2018, the average month end notional amount of options represented $37,143.
See Note 1(c) regarding derivative financial instruments.
28 |
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TEMPLETON GLOBAL SMALLER COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
9. Holdings of 5% Voting Securities of Portfolio Companies
The 1940 Act defines affiliated companies to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. During the period ended February 28, 2018, investments in affiliated companies were as follows:
Name of Issuer | Number of Shares Held at Beginning of Period |
Gross Additions |
Gross Reductions |
Number of Shares Held at End of Period |
Value at End of Period |
Dividend Income |
Realized Gain (Loss) |
Net Change in Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||||
Non-Controlled Affiliates |
||||||||||||||||||||||||||||||||
JAKKS Pacific Inc. |
1,716,653 | | (1,716,653 | ) | | $ | $ | $(18,385,553) | $16,892,783 |
10. Upcoming Acquisitions/Reorganization
On December 7, 2017, the Board approved a proposal to reorganize Templeton Foreign Smaller Companies Fund, a series of Templeton Global Investment Trust, with and into the Fund, subject to approval by the shareholders of Templeton Foreign Smaller Companies Fund.
11. 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 joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 9, 2019. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.
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 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended February 28, 2018, the Fund did not use the Global Credit Facility.
12. Fair Value Measurements
The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds financial instruments and are summarized in the following fair value hierarchy:
| Level 1 quoted prices in active markets for identical financial instruments |
| Level 2 other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
| Level 3 significant unobservable inputs (including the Funds own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
franklintempleton.com | Semiannual Report | 29 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
12. Fair Value Measurements (continued)
A summary of inputs used as of February 28, 2018, in valuing the Funds assets carried at fair value, is as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Investments in Securities:a |
||||||||||||||||
Equity Investments:b |
||||||||||||||||
Taiwan |
$ | | $ | 57,070,393 | $ | | $ | 57,070,393 | ||||||||
All Other Equity Investments |
1,188,320,256 | | | 1,188,320,256 | ||||||||||||
Management Investment Companies |
20,289,325 | | | 20,289,325 | ||||||||||||
Short Term Investments |
22,384,588 | 61,900,000 | | 84,284,588 | ||||||||||||
|
|
|||||||||||||||
Total Investments in Securities |
$ | 1,230,994,169 | $ | 118,970,393 | $ | | $ | 1,349,964,562 | ||||||||
|
|
aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common and preferred stocks as well as other equity interests.
13. 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 | ||
ETF |
Exchange Traded Fund | |
FHLB |
Federal Home Loan Bank |
30 |
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TEMPLETON GLOBAL SMALLER COMPANIES FUND
Special Meeting of Shareholders
MEETING OF SHAREHOLDERS: OCTOBER 30, 2017 AND RECONVENED ON DECEMBER 15, 2017
(UNAUDITED)
A Special Meeting of Shareholders of Templeton Global Smaller Companies Fund was held at the offices of Franklin Templeton Investments, One Franklin Parkway, San Mateo, California on October 30, 2017 and reconvened on December 15, 2017. The purpose of the meeting was to elect Trustees of Templeton Global Smaller Companies Fund and to vote to approve an amended fundamental investment restriction regarding investments in commodities for the Fund. At the meeting, (i) the following persons were elected by the shareholders to serve as Trustees of Templeton Global Smaller Companies Fund: Harris J. Ashton, Ann Torre Bates, Mary C. Choksi, Edith E. Holiday, Gregory E. Johnson, Rupert H. Johnson, Jr., J. Michael Luttig, David W. Niemiec, Larry D. Thompson, Constantine D. Tseretopoulos and Robert E. Wade; and (ii) the proposal to approve the amended fundamental investment restriction regarding investments in commodities was approved by shareholders. No other business was transacted at the meeting.
In connection with the meeting, management is aware that some shareholders received from the proxy solicitor numerous calls and mailings that may have been distracting. Management is taking steps to ensure that, in the future, for any new shareholder meeting solicitations that occur, such activity is not repeated. Management apologizes for any inconvenience that may have been caused as a result of such calls and mailings.
The results of the voting at the meeting are as follows:
Proposal 1. | To elect a Board of Trustees: |
Name | For | Withheld | ||||||
Harris J. Ashton |
61,742,942 | 2,577,547 | ||||||
Ann Torre Bates |
61,788,129 | 2,532,360 | ||||||
Mary C. Choksi |
61,745,795 | 2,574,694 | ||||||
Edith E. Holiday |
61,769,458 | 2,551,031 | ||||||
Gregory E. Johnson |
61,695,233 | 2,625,255 | ||||||
Rupert H. Johnson, Jr. |
61,742,727 | 2,577,762 | ||||||
J. Michael Luttig |
61,680,806 | 2,639,683 | ||||||
David W. Niemiec |
61,778,454 | 2,542,034 | ||||||
Larry D. Thompson |
61,680,128 | 2,640,360 | ||||||
Constantine D. Tseretopoulos |
61,832,488 | 2,488,000 | ||||||
Robert E. Wade |
61,814,171 | 2,506,318 |
Total Trust Shares Outstanding*: 122,213,417
* As of the record date.
franklintempleton.com | Semiannual Report | 31 |
TEMPLETON GLOBAL SMALLER COMPANIES FUND
SPECIAL MEETING OF SHAREHOLDERS
Proposal 2. | To approve an amended fundamental investment restriction regarding investments in commodities: |
Shares | ||||
For |
46,728,592 | |||
Against |
2,384,056 | |||
Abstain |
2,909,951 | |||
Broker Non-Votes |
12,297,890 | |||
Total Fund Shares Voted |
64,320,489 | |||
Total Fund Shares Outstanding* |
122,213,417 |
32 |
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TEMPLETON GLOBAL SMALLER COMPANIES FUND
franklintempleton.com | Semiannual Report | 33 |
|
Semiannual Report and Shareholder Letter Templeton Global Smaller Companies Fund | |
Investment Manager Templeton Investment Counsel, LLC | ||
Subadvisor Franklin Templeton Investments Corp. | ||
Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN® / 342-5236 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 funds investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
© 2018 Franklin Templeton Investments. All rights reserved. |
103 S 04/18 |
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 David W. Niemiec 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 Registrants 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 Registrants 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 Registrants management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrants 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 Registrants management, including the Registrants principal executive officer and the Registrants principal financial officer, of the effectiveness of the design and operation of the Registrants disclosure controls and procedures. Based on such evaluation, the Registrants principal executive officer and principal financial officer concluded that the Registrants disclosure controls and procedures are effective.
(b) Changes in Internal Controls. There have been no changes in the Registrants internal controls or in other factors that could materially affect the internal controls over financial reporting 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 Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer - Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TEMPLETON GLOBAL SMALLER COMPANIES FUND
By | /s/ MATTHEW T. HINKLE | |
Matthew T. Hinkle | ||
Chief Executive Officer Finance and Administration | ||
Date | April 26, 2018 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By | /s/ MATTHEW T. HINKLE | |
Matthew T. Hinkle | ||
Chief Executive Officer Finance and Administration | ||
Date | April 26, 2018 | |
By | /s/ ROBERT G. KUBILIS | |
Robert G. Kubilis | ||
Chief Financial Officer and Chief Accounting Officer | ||
Date | April 26, 2018 |
Exhibit 12(a)(1)
CODE OF ETHICS FOR PRINCIPAL EXECUTIVES & SENIOR FINANCIAL OFFICERS
PROCEDURES Revised December 18, 2009
FRANKLIN TEMPLETON FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
I. Covered Officers and Purpose of the Code
This code of ethics (the Code) applies to the Principal Executive Officers, Principal Financial Officer and Principal Accounting Officer (the Covered Officers, each of whom is set forth in Exhibit A) of each investment company advised by a Franklin Resources subsidiary and that is registered with the United States Securities & Exchange Commission (SEC) (collectively, FT Funds) for the purpose of promoting:
| Honest and ethical conduct, including the ethical resolution of actual or apparent conflicts of interest between personal and professional relationships; |
| Full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by or on behalf of the FT Funds; |
| Compliance with applicable laws and governmental rules and regulations; |
| The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and |
| Accountability for adherence to the Code. |
Each Covered Officer will be expected to adhere to a high standard of business ethics and must be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.
II. Other Policies and Procedures
This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder.
Franklin Resources, Inc. has separately adopted the CODE OF ETHICS AND BUSINESS CONDUCT (Business Conduct), which is applicable to all officers, directors and employees of Franklin Resources, Inc., including Covered Officers. It summarizes the values, principles and business practices that guide the employees business conduct and also provides a set of basic principles to guide officers, directors and employees regarding the minimum ethical requirements expected of them. It supplements the values, principles and business conduct identified in the Code and other existing employee policies.
Additionally, the Franklin Templeton Funds have separately adopted the CODE OF ETHICS AND POLICY STATEMENT ON INSIDER TRADING governing personal securities trading and other related matters. The Code for Insider Trading provides for separate requirements that apply to the Covered Officers and others, and therefore is not part of this Code.
Page 1
Insofar as other policies or procedures of Franklin Resources, Inc., the Funds, the Funds adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superceded by this Code to the extent that they overlap or conflict with the provisions of this Code. Please review these other documents or consult with the Legal Department if have questions regarding the applicability of these policies to you.
III. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest
OVERVIEW. A conflict of interest occurs when a Covered Officers private interest interferes with the interests of, or his or her service to, the FT Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of apposition with the FT Funds.
Certain conflicts of interest arise out of the relationships between Covered Officers and the FT Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (Investment Company Act) and the Investment Advisers Act of 1940 (Investment Advisers Act). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the FT Funds because of their status as affiliated persons of the FT Funds. The FT Funds and the investment advisers compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.
Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the FT Funds, the investment advisers and the fund administrator of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the FT Funds, for the adviser, the administrator, or for all three), be involved in establishing policies and implementing decisions that will have different effects on the adviser, administrator and the FT Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the FT Funds, the adviser, and the administrator and is consistent with the performance by the Covered Officers of their duties as officers of the FT Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the FT Funds Boards of Directors (Boards) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.
Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the FT Funds.
Each Covered Officer must:
| Not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the FT Funds whereby the Covered Officer would benefit personally to the detriment of the FT Funds; |
Page 2
| Not cause the FT Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the FT Funds; |
| Not retaliate against any other Covered Officer or any employee of the FT Funds or their affiliated persons for reports of potential violations that are made in good faith; |
| Report at least annually the following affiliations or other relationships:/1 |
| all directorships for public companies and all companies that are required to file reports with the SEC; |
| any direct or indirect business relationship with any independent directors of the FT Funds; |
| any direct or indirect business relationship with any independent public accounting firm (which are not related to the routine issues related to the firms service as the Covered Persons accountant); and |
| any direct or indirect interest in any transaction with any FT Fund that will benefit the officer (not including benefits derived from the advisory, sub-advisory, distribution or service agreements with affiliates of Franklin Resources). |
These reports will be reviewed by the Legal Department for compliance with the Code.
There are some conflict of interest situations that should always be approved in writing by Franklin Resources General Counsel or Deputy General Counsel, if material. Examples of these include/2:
| Service as a director on the board of any public or private Company; |
| The receipt of any gifts in excess of $100 from any person, from any corporation or association |
| The receipt of any entertainment from any Company with which the FT Funds has current or prospective business dealings unless such entertainment is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety. Notwithstanding the foregoing, the Covered Officers must obtain prior approval from the Franklin Resources General Counsel for any entertainment with a value in excess of $1000. |
| Any ownership interest in, or any consulting or employment relationship with, any of the FT Funds service providers, other than an investment adviser, principal underwriter, administrator or any affiliated person thereof; |
| A direct or indirect financial interest in commissions, transaction charges or spreads paid by the FT Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officers employment, such as compensation or equity ownership. |
Franklin Resources General Counsel or Deputy General Counsel will provide a report to the FT Funds Audit Committee of any approvals granted at the next regularly scheduled meeting.
IV. Disclosure and Compliance
| Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the FT Funds; |
Page 3
| Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the FT Funds to others, whether within or outside the FT Funds, including to the FT Funds directors and auditors, and to governmental regulators and self-regulatory organizations; |
| Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the FT Funds, the FT Funds adviser and the administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the FT Funds file with, or submit to, the SEC and in other public communications made by the FT Funds; and |
| It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. |
V. Reporting and Accountability
Each Covered Officer must:
| Upon becoming a covered officer affirm in writing to the Board that he or she has received, read, and understands the Code (see Exhibit B); |
| Annually thereafter affirm to the Board that he has complied with the requirements of the Code; and |
| Notify Franklin Resources General Counsel or Deputy General Counsel promptly if he or she knows of any violation of this Code. Failure to do so is itself is a violation of this Code. |
Franklin Resources General Counsel and Deputy General Counsel are responsible for applying this Code to specific situations in which questions are presented under it and have the authority to interpret this Code in any particular situation./3 However, the Independent Directors of the respective FT Funds will consider any approvals or waivers/4 sought by any Chief Executive Officers of the Funds.
The FT Funds will follow these procedures in investigating and enforcing this Code:
| Franklin Resources General Counsel or Deputy General Counsel will take all appropriate action to investigate any potential violations reported to the Legal Department; |
| If, after such investigation, the General Counsel or Deputy General Counsel believes that no violation has occurred, The General Counsel is not required to take any further action; |
| Any matter that the General Counsel or Deputy General Counsel believes is a violation will be reported to the Independent Directors of the appropriate FT Fund; |
| If the Independent Directors concur that a violation has occurred, it will inform and make a recommendation to the Board of the appropriate FT Fund or Funds, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; |
| The Independent Directors will be responsible for granting waivers, as appropriate; and |
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| Any changes to or waivers of this Code will, to the extent required, are disclosed as provided by SEC rules./5 |
VI. Other Policies and Procedures
This Code shall be the sole code of ethics adopted by the FT Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the FT Funds, the FT Funds advisers, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The FT Code of Ethics and Policy Statement On Insider Trading, adopted by the FT Funds, FT investment advisers and FT Funds principal underwriter pursuant to Rule 17j-1 under the Investment Company Act, the Code of Ethics and Business Conduct and more detailed policies and procedures set forth in FTs Employee Handbook are separate requirements applying to the Covered Officers and others, and are not part of this Code.
VII. Amendments
Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the FT Funds Board including a majority of independent directors.
VIII. Confidentiality
All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the FT Funds Board and their counsel.
IX. Internal Use
The Code is intended solely for the internal use by the FT Funds and does not constitute an admission, by or on behalf of any FT Funds, as to any fact, circumstance, or legal conclusion.
X. Disclosure on Form N-CSR
Item 2 of Form N-CSR requires a registered management investment company to disclose annually whether, as of the end of the period covered by the report, it has adopted a code of ethics that applies to the registrants principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these officers are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, it must explain why it has not done so.
The registrant must also: (1) file with the SEC a copy of the code as an exhibit to its annual report; (2) post the text of the code on its Internet website and disclose, in its most recent report on Form N-CSR, its Internet address and the fact that it has posted the code on its Internet website; or (3) undertake in its most recent report on Form N-CSR to provide to any person without charge, upon request, a copy of the code and explain the manner in which such request may be made. Disclosure is also required of amendments to, or waivers (including implicit waivers) from, a provision of the code in the registrants annual report on Form N-CSR or on its website. If the registrant intends to satisfy the requirement to disclose amendments and waivers by posting such information on its website, it will be required to disclose its Internet address and this intention.
The Legal Department shall be responsible for ensuring that:
Page 5
| a copy of the Code is filed with the SEC as an exhibit to each Funds annual report; and |
| any amendments to, or waivers (including implicit waivers) from, a provision of the Code is disclosed in the registrants annual report on Form N-CSR. |
In the event that the foregoing disclosure is omitted or is determined to be incorrect, the Legal Department shall promptly file such information with the SEC as an amendment to Form N-CSR.
In such an event, the Fund Chief Compliance Officer shall review the Code and propose such changes to the Code as are necessary or appropriate to prevent reoccurrences.
EXHIBIT A
Persons Covered by the Franklin Templeton Funds
Code of Ethics
December 2013
FRANKLIN GROUP OF FUNDS | ||
Edward B. Jamieson |
President and Chief Executive Officer - Investment Management | |
Rupert H. Johnson, Jr. |
President and Chief Executive Officer - Investment Management | |
William J. Lippman |
President and Chief Executive Officer - Investment Management | |
Christopher Molumphy |
President and Chief Executive Officer - Investment Management | |
Laura Fergerson |
Chief Executive Officer - Finance and Administration | |
Gaston R. Gardey |
Chief Financial Officer and Chief Accounting Officer | |
FRANKLIN MUTUAL SERIES FUNDS | ||
Peter Langerman |
Chief Executive Officer-Investment Management | |
Laura Fergerson |
Chief Executive Officer - Finance and Administration | |
Robert G. Kubilis |
Chief Financial Officer and Chief Accounting Officer | |
FRANKLIN ALTERNATIVE STRTEGIES FUNDS | ||
William Yun |
Chief Executive Officer-Investment Management | |
Laura Fergerson |
Chief Executive Officer - Finance and Administration | |
Robert G. Kubilis |
Chief Financial Officer and Chief Accounting Officer | |
TEMPLETON GROUP OF FUNDS | ||
Mark Mobius |
President and Chief Executive Officer - Investment Management | |
Christopher J. Molumphy |
President and Chief Executive Officer - Investment Management | |
Norman Boersma |
President and Chief Executive Officer - Investment Management | |
Donald F. Reed |
President and Chief Executive Officer - Investment Management | |
Laura Fergerson |
Chief Executive Officer - Finance and Administration | |
Mark H. Otani |
Chief Financial Officer and Chief Accounting Officer |
Page 6
EXHIBIT B
ACKNOWLEDGMENT FORM
DECEMBER
FRANKLIN TEMPLETON FUNDS CODE OF ETHICS
FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS
INSTRUCTIONS:
1. | Complete all sections of this form. |
2. | Print the completed form, sign, and date. |
3. | Submit completed form to FTs General Counsel c/o Code of Ethics Administration within 10 days of becoming a Covered Officer and by February 15th of each subsequent year. |
INTER-OFFICE MAIL: Code of Ethics Administration, Global Compliance SM-920/2
Fax: (650) 312-5646
E-MAIL: Preclear-Code of Ethics (internal address);
lpreclear@frk.com (external address)
COVERED OFFICERS NAME:
TITLE:
DEPARTMENT:
LOCATION:
CERTIFICATION FOR YEAR ENDING:
TO: Franklin Resources General Counsel, Legal Department
I acknowledge receiving, reading and understanding the Franklin Templeton Funds Code of Ethics for Principal Executive Officers and Senior Financial Officers (the Code). I will comply fully with all provisions of the Code to the extent they apply to me during the period of my employment. I further understand and acknowledge that any violation of the Code may subject me to disciplinary action, including termination of employment.
Signature |
Date signed |
1. Reporting of these affiliations or other relationships shall be made by completing the annual Directors and Officers Questionnaire and returning the questionnaire to Franklin Resources Inc, General Counsel or Deputy General Counsel.
Page 7
2. Any activity or relationship that would present a conflict for a Covered Officer may also present a conflict for the Covered Officer if a member of the Covered Officers immediate family engages in such an activity or has such a relationship. The Cover Person should also obtain written approval by FTs General Counsel in such situations.
3. Franklin Resources General Counsel and Deputy General Counsel are authorized to consult, as appropriate, with members of the Audit Committee, counsel to the FT Funds and counsel to the Independent Directors, and are encouraged to do so.
4. Item 2 of Form N-CSR defines waiver as the approval by the registrant of a material departure from a provision of the code of ethics and implicit waiver, which must also be disclosed, as the registrants failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer of the registrant. See Part X.
5. See Part X.
Page 8
Exhibit 12(a)(2)
I, Matthew T. Hinkle, certify that:
1. I have reviewed this report on Form N-CSR of Templeton Global Smaller Companies Fund;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
4/26/2018
/S/ MATTHEW T. HINKLE
Matthew T. Hinkle
Chief Executive Officer - Finance and Administration
Exhibit 12(a)(2)
I, Robert G. Kubilis, certify that:
1. I have reviewed this report on Form N-CSR of Templeton Global Smaller Companies Fund;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
4/26/2018
/S/ ROBERT G. KUBILIS
Robert G. Kubilis
Chief Financial Officer and Chief Accounting Officer
Exhibit 12(b)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Matthew T. Hinkle, Chief Executive Officer of the Templeton Global Smaller Companies Fund (the Registrant), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1. | The periodic report on Form N-CSR of the Registrant for the period ended 2/28/2018 (the Form N-CSR) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Dated: 4/26/2018
/S/ MATTHEW T. HINKLE |
Matthew T. Hinkle |
Chief Executive Officer - Finance and Administration |
Exhibit 12(b)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Robert G. Kubilis, Chief Financial Officer of the Templeton Global Smaller Companies Fund (the Registrant), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
3. | The periodic report on Form N-CSR of the Registrant for the period ended 2/28/2018 (the Form N-CSR) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
4. | The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Dated: 4/26/2018
/S/ ROBERT G. KUBILIS |
Robert G. Kubilis |
Chief Financial Officer and Chief Accounting Officer |
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