UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08226
Templeton Global Investment Trust
(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)
Registrant's telephone number, including area code: (954) 527-7500
Date of fiscal year end: _10/31__
Date of reporting period: 10/31/16__
Item 1. Reports to Stockholders.
Visit franklintempleton.com for fund updates, to access your account, or to find helpful financial planning tools.
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Annual Report
Templeton Foreign Smaller Companies Fund
This annual report for Templeton Foreign Smaller Companies Fund covers the fiscal year ended October 31, 2016. At the market close on December 10, 2013, the Fund closed to new investors with limited exceptions. Existing shareholders may add to their accounts. We believe this closure can help us effectively manage our current level of assets.
Your Fund’s Goal and Main Investments
The Fund seeks to provide long-term capital growth. Under normal market conditions, the Fund invests at least 80% of its net assets in investments of smaller companies located outside the U.S., including emerging markets.
Performance Overview
For the 12 months under review, the Fund’s Class A shares had a -0.62% cumulative total return. In comparison, the MSCI All Country World Index (ACWI) Ex USA Small Cap Index, which measures performance of international small capitalization stocks in developed and emerging markets, excluding the U.S., generated a +4.60% total return.1 Please note index performance information is provided for reference and we do not attempt to track an index but rather undertake investments on the basis of fundamental research. You can find the Fund’s long-term performance data in the Performance Summary beginning on page 7.
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.
Economic and Market Overview
The global economy expanded moderately during the 12 months under review despite slower growth in some countries. In this environment, global developed and emerging market stocks, as measured by the MSCI All Country World Index, rose. Global markets were aided by accommodative monetary policies of various global central banks, an improvement in commodity prices during the period’s second half, finalization of Greece’s new debt deal, generally encouraging economic data across regions and an Organization of the Petroleum Exporting Countries (OPEC) proposal to curb oil production. However, the impact of these factors was partially offset by a slowdown in the Chinese economy, and declining commodity prices during the period’s first half, geopolitical tensions in certain regions, uncertainty about the U.S. Federal Reserve’s (Fed’s) timing for raising interest rates and worries about the health of European banks. In addition, global economic concerns and the U.K.’s historic referendum to leave the European Union (also known as “Brexit”) contributed to volatility in global stock markets.
1. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an
index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provided information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).
The SOI begins on page 15.
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TEMPLETON FOREIGN SMALLER COMPANIES FUND
The U.S. economy grew during the 12-month period despite a general decline in residential fixed investments. However, personal consumption expenditures remained strong during the period. Sentiment in the manufacturing sector remained volatile, generally contracting in the initial months and expanding in the second half of the period. Similarly, the services sector was also volatile but remained in expansionary territory throughout the reporting period. Growth in services contributed to new jobs and helped the unemployment rate decrease from 5.0% in October 2015 to 4.9% at period-end. Retail sales generally rose, as did home sales and prices amid declining mortgage rates. The Fed raised its federal funds target range to 0.25%–0.50% in December 2015, and maintained it through period-end. In July, the Fed Chair signaled the possibility of a near-term increase in interest rates, citing strengthening labor market conditions and its optimism on future economic growth. However, at its September meeting, the Fed kept interest rates unchanged and lowered its forecast for 2016 U.S. economic growth, though it maintained that the case for a U.S. interest-rate increase had strengthened.
In Europe, the U.K.’s economic growth slowed in 2016’s third quarter, after it rebounded marginally in the second quarter, supported by industrial production and services. Immediate effects of the Brexit vote in June materialized as U.K. stocks declined significantly, the pound sterling hit a three-decade low amid intensified selling and the U.K.’s credit rating was downgraded. The eurozone grew slightly early in the period, benefiting from lower oil prices, a weaker euro that supported exports and the European Central Bank’s (ECB’s) accommodative policy. However, growth moderated during 2016’s second quarter and remained steady in the third quarter. After declining in the beginning of 2016, the eurozone’s annual inflation rate increased gradually to reach its highest reading since June 2014, ending at an estimated 0.50% in October. After reducing the bank deposit rate in December 2015, the ECB cut its benchmark interest rate and expanded its massive bond-buying program in March and August 2016 to boost the region’s slowing growth.
In Asia, Japan’s economy slowed in the second quarter after a higher-than-expected growth in 2016’s first quarter, led by a rise in private consumption, government spending and exports. In January 2016, the Bank of Japan (BOJ) introduced negative interest rates on excess reserves kept by financial institutions with the central bank to boost lending and help achieve its inflation target. In July 2016, Japan’s Prime Minister Shinzo Abe announced a higher-than-expected fiscal stimulus to revive the economy, followed by an additional monetary stimulus announcement by the BOJ. The BOJ kept its interest rates
unchanged toward period-end; however, it overhauled its monetary policy to focus on yield-curve control. The bank further announced that it adjusted its Japanese government bond purchases to keep the 10-year rate near the current level of 0%.
Top 10 Sectors/Industries
10/31/16
| % of Total | ||
| Net Assets | ||
| Machinery | 11.0 | % |
| Textiles, Apparel & Luxury Goods | 6.4 | % |
| Capital Markets | 5.0 | % |
| Electronic Equipment, Instruments & Components | 4.7 | % |
| Banks | 4.5 | % |
| Household Durables | 4.0 | % |
| Thrifts & Mortgage Finance | 4.0 | % |
| Leisure Products | 3.6 | % |
| Auto Components | 3.3 | % |
| Energy Equipment & Services | 3.2 | % |
In emerging markets, growth generally moderated during the review period. Brazil witnessed its longest recession since the 1930s amid political and economic turmoil. Brazil’s economy continued to contract during the period, although the pace of contraction slowed in 2016’s second quarter, as business sentiment improved near period-end with the expected impeachment of President Dilma Rousseff. Toward period-end, Brazil’s central bank cut its benchmark interest rate for the first time in four years to spur economic growth. Russia’s economic contraction eased in 2016’s first half following a rebound in oil prices and an improvement in industrial production. The Bank of Russia reduced its key interest rate in June and September 2016 to revive its economy. China’s economy grew at a stable rate in 2016’s third quarter and remained within the government’s targeted range. However, the People’s Bank of China cut its benchmark interest rate once during the review period. The bank also employed other monetary easing measures that included cutting the cash reserve requirement ratio for the country’s banks and effectively devaluing the Chinese currency against the U.S. dollar. Overall, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose during the period.
Investment Strategy
We employ a bottom-up, value-oriented, long-term approach to investing. We focus our analysis on the market price of a company’s securities relative to our evaluation of the company’s long-term earnings, asset value and cash flow potential. We also consider a company’s price/earnings ratio,
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profit margins and liquidation value. We are patient investors and may hold a security for several years as we wait for the market to recognize a company’s true worth.
Manager’s Discussion
Several Fund holdings performed well during the period under review. Minth Group, one of China’s leading suppliers of exterior auto body parts, offers exposure to the country’s growing passenger vehicle demand, with further upside potential from growing outsourcing trends and recovery in global automobile demand. The company is a high-quality operator, in our view, with a solid niche in the automotive supply chain. We believe Minth could continue to expand its market share, sustain higher profitability than many of its peers and deliver steady earnings growth over our investment horizon.
M Dias Branco has a 60-year history in Brazil, where it started as a regional bakery in the Northeast and gradually developed and acquired brands. The company is the market leader in cookies and crackers, as well as pasta. Shares increased during the period due to strong financial results. We believe the company’s market-leading brands and the significant competitive advantages it has developed by vertically integrating and slowly developing a distribution across Brazil should lead to strong performance over our long-term investment horizon.
Japanese pharmaceutical company Kobayashi’s stock price rose due to brisk sales aided by the strong success of its advertising. The company also benefited from the continuation of demand from foreign tourists despite the strengthening of the Japanese yen.
It is important to recognize the effect of currency movements on the Fund’s performance. In general, if the value of the U.S. dollar goes up compared with a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer U.S. dollars. This can have a negative effect on Fund performance. Conversely, when the U.S. dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the 12 months ended October 31, 2016, the U.S. dollar declined in value relative to many currencies in which the Fund’s investments were traded. As a result, the Fund’s performance was positively affected by the portfolio’s investment predominantly in securities with non-U.S. currency exposure. However, one cannot expect the same result in future periods.
TEMPLETON FOREIGN SMALLER COMPANIES FUND
| Top 10 Holdings | ||
| 10/31/16 | ||
| Company | % of Total | |
| Sector/Industry, Country | Net Assets | |
| VTech Holdings Ltd. | 2.1 | % |
| Communications Equipment, Hong Kong | ||
| Kobayashi Pharmaceutical Co. Ltd. | 2.0 | % |
| Personal Products, Japan | ||
| Rational AG | 2.0 | % |
| Machinery, Germany | ||
| Tsumura & Co. | 2.0 | % |
| Pharmaceuticals, Japan | ||
| Asics Corp. | 2.0 | % |
| Textiles, Apparel & Luxury Goods, Japan | ||
| Gerresheimer AG | 1.9 | % |
| Life Sciences Tools & Services, Germany | ||
| Aalberts Industries NV | 1.9 | % |
| Machinery, Netherlands | ||
| LIC Housing Finance Ltd. | 1.8 | % |
| Thrifts & Mortgage Finance, India | ||
| Amer Sports OYJ | 1.8 | % |
| Leisure Products, Finland | ||
| Huhtamaki OYJ | 1.8 | % |
| Containers & Packaging, Finland |
The Fund had some underperformers in the period under review. Shares of Dutch engineering firm Arcadis declined after posting a worse-than-expected drop in earnings and warning of Brexit-related uncertainty into 2017. The company earned a portion of its revenue in Britain last year. Looking ahead, we believe the depressed stock reflects too much pessimism. In our view, headwinds such as Brexit are real but factored into the stock price, and Arcadis continues to offer compelling long-term value.
Laird, a U.K.-based supplier of products such as “shark-fin” antennae for wireless connections and electromagnetic interference (EMI) shielding for Apple’s iPhone and iPad, was a significant detractor, also falling due to Brexit concerns. The cross-selling of EMI antennae and thermal products has been a key driver for Laird in the last few years. We believe that two recent acquisitions could bring further opportunities to cross-sell products to key customers.
Additionally, shares of Japan-based footwear company Asics declined due to weak financial results. Looking at the longer term, we still expect substantial further potential for Asics to expand its sales channels and to take full advantage of its untapped brand value. The global popularity of fitness and running and a growing recognition of Asics products’ high performance should, in our view, also remain a growth driver for the company.
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TEMPLETON FOREIGN SMALLER COMPANIES FUND
Thank you for your continued participation in Templeton Smaller Companies Fund. We look forward to serving your future investment needs.
The foregoing information reflects our analysis, opinions and portfolio holdings as of October 31, 2016, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
CFA® is a trademark owned by CFA Institute.
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TEMPLETON FOREIGN SMALLER COMPANIES FUND
Performance Summary as of October 31, 2016
The performance table and graphs do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses.
Performance as of 10/31/161
Cumulative total return excludes sales charges. Average annual total returns include 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.
| Cumulative | Average Annual | Average Annual | ||||
| Share Class | Total Return2 | Total Return3 | Total Return (9/30/16)4 | |||
| A | ||||||
| 1-Year | -0.62 | % | -6.33 | % | +0.14 | % |
| 5-Year | +24.21 | % | +3.20 | % | +5.21 | % |
| 10-Year | +26.46 | % | +1.77 | % | +2.29 | % |
| Advisor | ||||||
| 1-Year | -0.40 | % | -0.40 | % | +6.47 | % |
| 5-Year | +25.75 | % | +4.69 | % | +6.73 | % |
| 10-Year | +29.65 | % | +2.63 | % | +3.16 | % |
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 9 for Performance Summary footnotes.
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TEMPLETON FOREIGN SMALLER COMPANIES FUND
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
See page 9 for Performance Summary footnotes.
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TEMPLETON FOREIGN SMALLER COMPANIES FUND
PERFORMANCE SUMMARY
| Total Annual Operating Expenses6 | ||||
| Share Class | With Waiver | Without Waiver | ||
| A | 1.81 | % | 1.81 | % |
| Advisor | 1.57 | % | 1.57 | % |
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. 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. 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. Historically, these securities have
exhibited greater price volatility than large company stocks, particularly over the short term. The Fund is actively managed but there is no guarantee that the
manager’s investment decisions will produce the desired results. The Fund’s 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 its current fiscal year-end. 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, ifany,hasnotbeen
annualized.
4. In accordance with SEC rules, we provide standardized average annual total return information through the latest calendar quarter.
5. Source: Morningstar. The MSCI ACWI ex USA Small Cap Index is a free float-adjusted, market capitalization-weighted index designed to measure the performance of small
cap equity securities of global developed and emerging markets, excluding the U.S.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s 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.
See www.franklintempletondatasources.com for additional data provider information.
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TEMPLETON FOREIGN SMALLER COMPANIES FUND
Your Fund’s Expenses
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 Fund’s 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 Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s 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 | Hypothetical | |||||||||||
| (actual return after expenses) | (5% annual return before expenses) | |||||||||||
| Expenses | Expenses | Net | ||||||||||
| Beginning | Ending | Paid During | Ending | Paid During | Annualized | |||||||
| Share | Account | Account | Period | Account | Period | Expense | ||||||
| Class | Value 5/1/16 | Value 10/31/16 | 5/1/16–10/31/161,2 | Value 10/31/16 | 5/1/16–10/31/161,2 | Ratio2 | ||||||
| A | $ | 1,000 | $ | 1,018.40 | $ | 10.10 | $ | 1,015.13 | $ | 10.08 | 1.99 | % |
| C | $ | 1,000 | $ | 1,014.50 | $ | 13.93 | $ | 1,011.31 | $ | 13.90 | 2.75 | % |
| R6 | $ | 1,000 | $ | 1,021.00 | $ | 7.32 | $ | 1,017.90 | $ | 7.30 | 1.44 | % |
| Advisor | $ | 1,000 | $ | 1,019.10 | $ | 8.88 | $ | 1,016.34 | $ | 8.87 | 1.75 | % |
1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above–in the far right column–multiplied by the simple average account value over the period indicated, and then multiplied by 184/366 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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TEMPLETON GLOBAL INVESTMENT TRUST
| Financial Highlights | |||||||||||||||
| Templeton Foreign Smaller Companies Fund | |||||||||||||||
| Year Ended October 31, | |||||||||||||||
| 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||
| Class A | |||||||||||||||
| Per share operating performance | |||||||||||||||
| (for a share outstanding throughout the year) | |||||||||||||||
| Net asset value, beginning of year | $ | 16.41 | $ | 16.31 | $ | 18.02 | $ | 14.39 | $ | 13.92 | |||||
| Income from investment operationsa: | |||||||||||||||
| Net investment incomeb | 0.09 | 0.16 | c | 0.05 | d | 0.13 | 0.24 | ||||||||
| Net realized and unrealized gains (losses) | (0.21 | ) | 0.16 | (1.50 | ) | 3.77 | 0.38 | ||||||||
| Total from investment operations | (0.12 | ) | 0.32 | (1.45 | ) | 3.90 | 0.62 | ||||||||
| Less distributions from net investment income | (0.22 | ) | (0.22 | ) | (0.26 | ) | (0.27 | ) | (0.15 | ) | |||||
| Net asset value, end of year. | $ | 16.07 | $ | 16.41 | $ | 16.31 | $ | 18.02 | $ | 14.39 | |||||
| Total returne | (0.62 | )% | 2.03 | % | (8.11 | )% | 27.43 | % | 4.67 | % | |||||
| Ratios to average net assets | |||||||||||||||
| Expenses | 1.86 | %f | 1.80 | % | 1.67 | % | 1.65 | %g | 1.65 | % | |||||
| Net investment income | 0.55 | % | 0.95 | %c | 0.30 | %d | 0.83 | % | 1.72 | % | |||||
| Supplemental data | |||||||||||||||
| Net assets, end of year (000’s) | $ | 61,060 | $ | 79,101 | $ | 94,088 | $ | 131,844 | $ | 103,168 | |||||
| Portfolio turnover rate | 28.19 | % | 55.78 | % | 38.68 | % | 42.94 | % | 57.56 | % | |||||
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 Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cNet investment income per share includes approximately $0.08 per share related to income received in the form of special dividends and adjustments for EU reclaims in
connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.44%.
dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund
holdings. Excluding this amount, the ratio of net investment income (loss) to average net assets would have been (0.01)%.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
gBenefit of expense reduction rounds to less than 0.01%.
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TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
| Templeton Foreign Smaller Companies Fund (continued) | |||||||||||||||
| Year Ended October 31, | |||||||||||||||
| 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||
| Class C | |||||||||||||||
| Per share operating performance | |||||||||||||||
| (for a share outstanding throughout the year) | |||||||||||||||
| Net asset value, beginning of year | $ | 15.75 | $ | 15.65 | $ | 17.31 | $ | 13.83 | $ | 13.36 | |||||
| Income from investment operationsa: | |||||||||||||||
| Net investment income (loss)b | (0.03 | ) | 0.03 | c | (0.08 | )d | 0.01 | 0.13 | |||||||
| Net realized and unrealized gains (losses) | (0.20 | ) | 0.16 | (1.44 | ) | 3.63 | 0.38 | ||||||||
| Total from investment operations | (0.23 | ) | 0.19 | (1.52 | ) | 3.64 | 0.51 | ||||||||
| Less distributions from net investment income | (0.09 | ) | (0.09 | ) | (0.14 | ) | (0.16 | ) | (0.04 | ) | |||||
| Net asset value, end of year. | $ | 15.43 | $ | 15.75 | $ | 15.65 | $ | 17.31 | $ | 13.83 | |||||
| Total returne | (1.36 | )% | 1.26 | % | (8.82 | )% | 26.58 | % | 3.85 | % | |||||
| Ratios to average net assets | |||||||||||||||
| Expenses | 2.62 | %f | 2.55 | % | 2.42 | % | 2.40 | %g | 2.40 | % | |||||
| Net investment income (loss) | (0.21 | )% | 0.20 | %c | (0.45 | )%d | 0.08 | % | 0.97 | % | |||||
| Supplemental data | |||||||||||||||
| Net assets, end of year (000’s) | $ | 8,360 | $ | 10,415 | $ | 13,040 | $ | 16,027 | $ | 12,814 | |||||
| Portfolio turnover rate | 28.19 | % | 55.78 | % | 38.68 | % | 42.94 | % | 57.56 | % | |||||
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 Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cNet investment income per share includes approximately $0.08 per share related to income received in the form of special dividends and adjustments for EU reclaims in
connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been (0.31)%.
dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund
holdings. Excluding this amount, the ratio of net investment income (loss) to average net assets would have been (0.76)%.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable.
fBenefit of waiver and payments by affiliates rounds to less than 0.01%.
gBenefit of expense reduction rounds to less than 0.01%.
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TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
| Templeton Foreign Smaller Companies Fund (continued) | ||||||||||||
| Year Ended October 31, | ||||||||||||
| 2016 | 2015 | 2014 | 2013 | a | ||||||||
| Class R6 | ||||||||||||
| Per share operating performance | ||||||||||||
| (for a share outstanding throughout the year) | ||||||||||||
| Net asset value, beginning of year | $ | 16.41 | $ | 16.34 | $ | 18.03 | $ | 16.53 | ||||
| Income from investment operationsb: | ||||||||||||
| Net investment incomec | 0.19 | 0.25 | d | 0.15 | e | 0.16 | ||||||
| Net realized and unrealized gains (losses) | (0.23 | ) | 0.16 | (1.51 | ) | 1.34 | ||||||
| Total from investment operations | (0.04 | ) | 0.41 | (1.36 | ) | 1.50 | ||||||
| Less distributions from net investment income | (0.31 | ) | (0.34 | ) | (0.33 | ) | — | |||||
| Net asset value, end of year | $ | 16.06 | $ | 16.41 | $ | 16.34 | $ | 18.03 | ||||
| Total returnf | (0.10 | )% | 2.60 | % | (7.64 | )% | 9.07 | % | ||||
| Ratios to average net assetsg | ||||||||||||
| Expenses before waiver and payments by affiliates | 1.37 | % | 1.30 | % | 1.11 | % | 2.55 | % | ||||
| Expenses net of waiver and payments by affiliates | 1.34 | % | 1.29 | % | 1.10 | % | 1.12 | %h | ||||
| Net investment income | 1.07 | % | 1.46 | %d | 0.87 | %e | 1.36 | % | ||||
| Supplemental data | ||||||||||||
| Net assets, end of year (000’s) | $ | 5 | $ | 844 | $ | 835 | $ | 5 | ||||
| Portfolio turnover rate | 28.19 | % | 55.78 | % | 38.68 | % | 42.94 | % | ||||
aFor the period May 1, 2013 (effective date) to October 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 Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dNet investment income per share includes approximately $0.08 per share related to income received in the form of special dividends and adjustments for EU reclaims in
connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.95%.
eNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund
holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.56%.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hBenefit of expense reduction rounds to less than 0.01%.
franklintempleton.com The accompanying notes are an integral part of these financial statements. | Annual Report 13
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
| Templeton Foreign Smaller Companies Fund (continued) | |||||||||||||||
| Year Ended October 31, | |||||||||||||||
| 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||
| Advisor Class | |||||||||||||||
| Per share operating performance | |||||||||||||||
| (for a share outstanding throughout the year) | |||||||||||||||
| Net asset value, beginning of year | $ | 16.39 | $ | 16.30 | $ | 18.00 | $ | 14.38 | $ | 13.93 | |||||
| Income from investment operationsa: | |||||||||||||||
| Net investment incomeb | 0.12 | 0.20 | c | 0.10 | d | 0.18 | 0.26 | ||||||||
| Net realized and unrealized gains (losses) | (0.21 | ) | 0.17 | (1.50 | ) | 3.75 | 0.39 | ||||||||
| Total from investment operations | (0.09 | ) | 0.37 | (1.40 | ) | 3.93 | 0.65 | ||||||||
| Less distributions from net investment income | (0.26 | ) | (0.28 | ) | (0.30 | ) | (0.31 | ) | (0.20 | ) | |||||
| Net asset value, end of year. | $ | 16.04 | $ | 16.39 | $ | 16.30 | $ | 18.00 | $ | 14.38 | |||||
| Total return | (0.40 | )% | 2.33 | % | (7.90 | )% | 27.79 | % | 4.90 | % | |||||
| Ratios to average net assets | |||||||||||||||
| Expenses | 1.62 | %e | 1.56 | % | 1.42 | % | 1.40 | %f | 1.40 | % | |||||
| Net investment income | 0.79 | % | 1.19 | %c | 0.55 | %d | 1.08 | % | 1.97 | % | |||||
| Supplemental data | |||||||||||||||
| Net assets, end of year (000’s) | $ | 24,000 | $ | 33,064 | $ | 40,153 | $ | 40,832 | $ | 31,817 | |||||
| Portfolio turnover rate | 28.19 | % | 55.78 | % | 38.68 | % | 42.94 | % | 57.56 | % | |||||
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 Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cNet investment income per share includes approximately $0.08 per share related to income received in the form of special dividends and adjustments for EU reclaims in
connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.68%.
dNet investment income per share includes approximately $0.05 per share related to income received in the form of special dividends in connection with certain Fund
holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 0.24%.
eBenefit of waiver and payments by affiliates rounds to less than 0.01%.
fBenefit of expense reduction rounds to less than 0.01%.
14 Annual Report | The accompanying notes are an integral part of these financial statements. franklintempleton.com
TEMPLETON GLOBAL INVESTMENT TRUST
| Statement of Investments, October 31, 2016 | ||||
| Templeton Foreign Smaller Companies Fund | ||||
| Industry | Shares | Value | ||
| Common Stocks 94.4% | ||||
| Belgium 1.1% | ||||
| Ontex Group NV | Personal Products | 34,740 | $ | 1,050,356 |
| Brazil 2.1% | ||||
| Grendene SA | Textiles, Apparel & Luxury Goods | 178,100 | 1,094,438 | |
| M Dias Branco SA | Food Products | 21,300 | 909,360 | |
| 2,003,798 | ||||
| Canada 6.5% | ||||
| a Badger Daylighting Ltd | Construction & Engineering | 69,300 | 1,496,787 | |
| Dorel Industries Inc., B. | Household Durables | 21,100 | 535,461 | |
| Enerflex Ltd | Energy Equipment & Services | 57,600 | 611,738 | |
| a Genworth MI Canada Inc | Thrifts & Mortgage Finance | 20,700 | 449,406 | |
| Laurentian Bank of Canada | Banks | 12,820 | 473,626 | |
| Mullen Group Ltd | Energy Equipment & Services | 84,900 | 1,176,293 | |
| Russel Metals Inc | Trading Companies & Distributors | 52,300 | 832,201 | |
| Shawcor Ltd., A. | Energy Equipment & Services | 20,800 | 520,097 | |
| 6,095,609 | ||||
| China 4.2% | ||||
| China ZhengTong Auto Services Holdings Ltd | Specialty Retail | 1,164,500 | 373,870 | |
| Goodbaby International Holdings Ltd | Household Products | 1,623,000 | 782,658 | |
| Greatview Aseptic Packaging Co. Ltd | Containers & Packaging | 1,384,000 | 704,880 | |
| Minth Group Ltd | Auto Components | 262,000 | 932,378 | |
| Shanghai Haohai Biological Technology Co. Ltd., H. | Biotechnology | 99,100 | 472,778 | |
| Xtep International Holdings Ltd | Textiles, Apparel & Luxury Goods | 1,374,000 | 609,434 | |
| 3,875,998 | ||||
| Colombia 1.0% | ||||
| b Gran Tierra Energy Inc. (CAD Traded) | Oil, Gas & Consumable Fuels | 263,500 | 769,830 | |
| b,c Gran Tierra Energy Inc. (USD Traded) 144A | Oil, Gas & Consumable Fuels | 57,800 | 168,198 | |
| 938,028 | ||||
| Finland 3.6% | ||||
| Amer Sports OYJ | Leisure Products | 63,040 | 1,716,057 | |
| Huhtamaki OYJ | Containers & Packaging | 41,760 | 1,685,917 | |
| 3,401,974 | ||||
| Germany 6.3% | ||||
| Gerresheimer AG | Life Sciences Tools & Services | 23,200 | 1,749,733 | |
| Grand City Properties SA | Real Estate Management & Development | 62,650 | 1,100,628 | |
| Jenoptik AG | Electronic Equipment, Instruments | |||
| & Components | 66,880 | 1,146,677 | ||
| Rational AG | Machinery | 3,620 | 1,877,476 | |
| 5,874,514 | ||||
| Hong Kong 7.1% | ||||
| Luk Fook Holdings (International) Ltd | Specialty Retail | 401,000 | 1,176,271 | |
| Techtronic Industries Co. Ltd | Household Durables | 422,790 | 1,591,803 | |
| Value Partners Group Ltd | Capital Markets | 1,417,700 | 1,356,345 | |
| Vinda International Holdings Ltd | Household Products | 277,000 | 548,596 | |
| VTech Holdings Ltd | Communications Equipment | 159,600 | 1,959,078 | |
| 6,632,093 | ||||
franklintempleton.com
Annual Report
15
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
| Templeton Foreign Smaller Companies Fund (continued) | ||||
| Industry | Shares | Value | ||
| Common Stocks (continued) | ||||
| India 3.5% | ||||
| Dewan Housing Finance Corp. Ltd | Thrifts & Mortgage Finance | 311,202 | $ | 1,536,541 |
| LIC Housing Finance Ltd | Thrifts & Mortgage Finance | 195,935 | 1,728,339 | |
| 3,264,880 | ||||
| Indonesia 1.2% | ||||
| b,d Sakari Resources Ltd | Metals & Mining | 1,342,000 | 1,089,151 | |
| Italy 2.2% | ||||
| Azimut Holding SpA. | Capital Markets | 27,119 | 435,196 | |
| Interpump Group SpA | Machinery | 100,395 | 1,611,103 | |
| 2,046,299 | ||||
| Japan 21.7% | ||||
| Anritsu Corp | Electronic Equipment, Instruments | |||
| & Components | 94,300 | 500,835 | ||
| Asics Corp | Textiles, Apparel & Luxury Goods | 85,500 | 1,827,805 | |
| Bunka Shutter Co. Ltd | Building Products | 53,100 | 441,002 | |
| Capcom Co. Ltd | Software | 29,200 | 755,928 | |
| Daibiru Corp | Real Estate Management & Development | 88,000 | 765,254 | |
| Descente Ltd | Textiles, Apparel & Luxury Goods | 75,500 | 1,049,621 | |
| Dowa Holdings Co. Ltd. | Metals & Mining | 164,000 | 1,221,302 | |
| Fuji Oil Holdings Inc | Food Products | 49,600 | 958,184 | |
| a IDOM Inc | Specialty Retail | 86,600 | 452,508 | |
| Kobayashi Pharmaceutical Co. Ltd | Personal Products | 36,558 | 1,913,739 | |
| Koshidaka Holdings Co. Ltd | Hotels, Restaurants & Leisure | 14,200 | 231,262 | |
| KYB Corp | Auto Components | 111,000 | 509,092 | |
| a,b Laox Co. Ltd | Specialty Retail | 67,000 | 541,750 | |
| MEITEC Corp | Professional Services | 44,900 | 1,532,701 | |
| Nachi-Fujikoshi Corp | Machinery | 149,000 | 566,875 | |
| Nihon Parkerizing Co. Ltd | Chemicals | 70,700 | 977,497 | |
| Square Enix Holdings Co. Ltd | Software | 22,300 | 739,967 | |
| Sumitomo Rubber Industries Ltd | Auto Components | 95,600 | 1,602,525 | |
| TechnoPro Holdings Inc | Professional Services | 21,400 | 735,609 | |
| Tsugami Corp | Machinery | 106,000 | 583,189 | |
| Tsumura & Co | Pharmaceuticals | 64,400 | 1,833,597 | |
| Ushio Inc | Electrical Equipment | 45,800 | 553,312 | |
| 20,293,554 | ||||
| Luxembourg 1.1% | ||||
| b Stabilus SA | Machinery | 19,310 | 1,005,944 | |
| Netherlands 4.7% | ||||
| Aalberts Industries NV | Machinery | 54,977 | 1,736,442 | |
| Arcadis NV | Construction & Engineering | 90,620 | 1,193,629 | |
| e Refresco Group NV, Reg S | Beverages | 100,038 | 1,460,429 | |
| 4,390,500 | ||||
| Philippines 0.6% | ||||
| Vista Land & Lifescapes Inc | Real Estate Management & Development | 5,540,300 | 598,055 | |
| Poland 0.7% | ||||
| CCC SA | Textiles, Apparel & Luxury Goods | 13,010 | 660,367 | |
| South Korea 4.6% | ||||
| BNK Financial Group Inc | Banks | 117,243 | 952,328 | |
| DGB Financial Group Inc | Banks | 158,628 | 1,331,482 | |
| b Hyundai Mipo Dockyard Co. Ltd | Machinery | 9,649 | 593,091 | |
16 Annual Report
franklintempleton.com
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
| Templeton Foreign Smaller Companies Fund (continued) | ||||
| Industry | Shares | Value | ||
| Common Stocks (continued) | ||||
| South Korea (continued) | ||||
| KIWOOM Securities Co. Ltd | Capital Markets | 7,124 | $ | 414,219 |
| Korea Investment Holdings Co. Ltd | Capital Markets | 28,424 | 1,021,436 | |
| 4,312,556 | ||||
| Spain 1.9% | ||||
| Construcciones y Auxiliar de Ferrocarriles SA. | Machinery | 2,896 | 1,091,280 | |
| Tecnicas Reunidas SA | Energy Equipment & Services | 19,123 | 717,136 | |
| 1,808,416 | ||||
| Sweden 2.6% | ||||
| Cloetta AB, B | Food Products | 155,690 | 551,780 | |
| Tethys Oil AB | Oil, Gas & Consumable Fuels | 30,191 | 219,851 | |
| f The Thule Group AB, Reg S | Leisure Products | 105,420 | 1,628,744 | |
| 2,400,375 | ||||
| Switzerland 4.5% | ||||
| b Basilea Pharmaceutica AG | Biotechnology | 5,910 | 398,420 | |
| Bucher Industries AG. | Machinery | 5,330 | 1,184,624 | |
| Logitech International SA | Technology Hardware, Storage & Peripherals | 47,410 | 1,149,693 | |
| Vontobel Holding AG | Capital Markets | 29,770 | 1,457,809 | |
| 4,190,546 | ||||
| Taiwan 3.7% | ||||
| Casetek Holdings Ltd | Technology Hardware, Storage & Peripherals | 156,000 | 502,276 | |
| Chicony Electronics Co. Ltd | Technology Hardware, Storage & Peripherals | 515,938 | 1,322,394 | |
| Tripod Technology Corp | Electronic Equipment, Instruments | |||
| & Components | 670,000 | 1,587,622 | ||
| 3,412,292 | ||||
| Thailand 1.6% | ||||
| TISCO Financial Group PCL, fgn | Banks | 994,800 | 1,469,623 | |
| United Kingdom 7.9% | ||||
| Bellway PLC | Household Durables | 14,598 | 422,808 | |
| Bovis Homes Group PLC | Household Durables | 38,370 | 355,803 | |
| Devro PLC | Food Products | 168,272 | 467,598 | |
| DFS Furniture PLC | Household Durables | 263,830 | 832,287 | |
| Dignity PLC | Diversified Consumer Services | 17,216 | 559,119 | |
| Foxtons Group PLC | Real Estate Management & Development | 342,924 | 449,176 | |
| JRP Group PLC | Insurance | 595,626 | 882,254 | |
| Laird PLC | Electronic Equipment, Instruments | |||
| & Components | 230,581 | 409,285 | ||
| b LivaNova PLC | Health Care Equipment & Supplies | 18,536 | 1,050,620 | |
| Oxford Instruments PLC | Electronic Equipment, Instruments | |||
| & Components | 93,944 | 777,410 | ||
| SIG PLC. | Trading Companies & Distributors | 447,382 | 605,167 | |
| b Vectura Group PLC | Pharmaceuticals | 364,390 | 603,976 | |
| 7,415,503 | ||||
| Total Common Stocks (Cost $79,850,365) | 88,230,431 | |||
| Management Investment Companies | ||||
| (Cost $475,476) 0.5% | ||||
| United States 0.5% | ||||
| iShares MSCI EAFE Small-Cap ETF | Diversified Financial Services | 9,300 | 473,370 | |
franklintempleton.com
Annual Report
17
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
| Templeton Foreign Smaller Companies Fund (continued) | ||||||
| Industry | Shares | Value | ||||
| Preferred Stocks (Cost $643,535) 0.8% | ||||||
| Brazil 0.8% | ||||||
| g Alpargatas SA, 4.111%, pfd | Textiles, Apparel & Luxury Goods | 221,100 | $ | 734,738 | ||
| Total Investments before Short Term | ||||||
| Investments (Cost $80,969,376) | 89,438,539 | |||||
| Principal | ||||||
| Amount | ||||||
| Short Term Investments 6.8% | ||||||
| U.S. Government and Agency Securities | ||||||
| (Cost $3,599,980) 3.9% | ||||||
| United States 3.9% | ||||||
| h Farmer Mac Discount Note, 11/01/16. | $ | 3,600,000 | 3,600,000 | |||
| Shares | ||||||
| i Investments from Cash Collateral Received | ||||||
| for Loaned Securities (Cost $2,729,030) 2.9% | ||||||
| Money Market Funds 2.9% | ||||||
| United States 2.9% | ||||||
| b,j Institutional Fiduciary Trust Money Market Portfolio | 2,729,030 | 2,729,030 | ||||
| Total Investments (Cost $87,298,386) 102.5% . | 95,767,569 | |||||
| Other Assets, less Liabilities (2.5)% | (2,342,855 | ) | ||||
| Net Assets 100.0% | $ | 93,424,714 | ||||
See Abbreviations on page 31.
aA portion or all of the security is on loan at October 31, 2016. See Note 1(c).
bNon-income producing.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers
or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At
October 31, 2016, the value of this security was $168,198, representing 0.2% of net assets.
dSecurity has been deemed illiquid because it may not be able to be sold within seven days.
eAt October 31, 2016, pursuant to the Fund’s policies and the requirements of applicable securities law, the Fund is restricted from trading this security at year end.
fSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States.
Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption
from registration. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At October 31, 2016, the value of this security was
$1,628,744, representing 1.7% of net assets.
gVariable rate security. The rate shown represents the yield at period end.
hThe security was issued on a discount basis with no stated coupon rate.
iSee Note 1(c) regarding securities on loan.
jSee Note 3(f) regarding investments in affiliated management investment companies.
18 Annual Report | The accompanying notes are an integral part of these financial statements.
franklintempleton.com
TEMPLETON GLOBAL INVESTMENT TRUST
Financial Statements
Statement of Assets and Liabilities
October 31, 2016
| Templeton Foreign Smaller Companies Fund | |||
| Assets: | |||
| Investments in securities: | |||
| Cost - Unaffiliated issuers | $ | 84,569,356 | |
| Cost - Non-controlled affiliates (Note 3f) | 2,729,030 | ||
| Total cost of investments | $ | 87,298,386 | |
| Value - Unaffiliated issuers | $ | 93,038,539 | |
| Value - Non-controlled affiliates (Note 3f) | 2,729,030 | ||
| Total value of investments (includes securities loaned in the amount of $2,554,246) | 95,767,569 | ||
| Cash | 113,192 | ||
| Receivables: | |||
| Investment securities sold | 103,652 | ||
| Capital shares sold | 41,723 | ||
| Dividends | 286,548 | ||
| European Union tax reclaims | 352,808 | ||
| Other assets | 23 | ||
| Total assets | 96,665,515 | ||
| Liabilities: | |||
| Payables: | |||
| Investment securities purchased | 78,541 | ||
| Capital shares redeemed | 166,087 | ||
| Management fees | 80,673 | ||
| Distribution fees | 19,996 | ||
| Transfer agent fees | 33,699 | ||
| Payable upon return of securities loaned | 2,729,030 | ||
| Deferred tax | 31,106 | ||
| Accrued expenses and other liabilities | 101,669 | ||
| Total liabilities | 3,240,801 | ||
| Net assets, at value | $ | 93,424,714 | |
| Net assets consist of: | |||
| Paid-in capital | $ | 101,954,645 | |
| Undistributed net investment income | 107,331 | ||
| Net unrealized appreciation (depreciation) | 8,405,981 | ||
| Accumulated net realized gain (loss) | (17,043,243 | ) | |
| Net assets, at value | $ | 93,424,714 | |
franklintempleton.com
The accompanying notes are an integral part of these financial statements. | Annual Report 19
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (continued)
October 31, 2016
| Templeton Foreign Smaller Companies Fund | ||
| Class A: | ||
| Net assets, at value | $ | 61,060,113 |
| Shares outstanding | 3,800,027 | |
| Net asset value per sharea | $ | 16.07 |
| Maximum offering price per share (net asset value per share ÷ 94.25%) | $ | 17.05 |
| Class C: | ||
| Net assets, at value | $ | 8,359,773 |
| Shares outstanding | 541,820 | |
| Net asset value and maximum offering price per sharea | $ | 15.43 |
| Class R6: | ||
| Net assets, at value | $ | 5,026 |
| Shares outstanding | 313 | |
| Net asset value and maximum offering price per share | $ | 16.06 |
| Advisor Class: | ||
| Net assets, at value | $ | 23,999,802 |
| Shares outstanding | 1,496,461 | |
| Net asset value and maximum offering price per share | $ | 16.04 |
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
20 Annual Report | The accompanying notes are an integral part of these financial statements.
franklintempleton.com
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL STATEMENTS
Statement of Operations
for the year ended October 31, 2016
| Templeton Foreign Smaller Companies Fund | |||
| Investment income: | |||
| Dividends (net of foreign taxes of $238,880) | $ | 2,445,522 | |
| Interest | 29,591 | ||
| Income from securities loaned (net of fees and rebates) | 40,922 | ||
| Total investment income | 2,516,035 | ||
| Expenses: | |||
| Management fees (Note 3a) | 1,043,340 | ||
| Distribution fees: (Note 3c) | |||
| Class A | 162,263 | ||
| Class C | 90,570 | ||
| Transfer agent fees: (Note 3e) | |||
| Class A | 197,150 | ||
| Class C | 26,428 | ||
| Class R6 | 236 | ||
| Advisor Class. | 80,236 | ||
| Custodian fees (Note 4) | 18,340 | ||
| Reports to shareholders | 49,442 | ||
| Registration and filing fees | 74,709 | ||
| Professional fees | 174,324 | ||
| Trustees’ fees and expenses | 6,022 | ||
| Other | 23,727 | ||
| Total expenses. | 1,946,787 | ||
| Expenses waived/paid by affiliates (Note 3f and 3g) | (1,845 | ) | |
| Net expenses. | 1,944,942 | ||
| Net investment income | 571,093 | ||
| Realized and unrealized gains (losses): | |||
| Net realized gain (loss) from: | |||
| Investments | 310,178 | ||
| Foreign currency transactions | (35,417 | ) | |
| Net realized gain (loss) | 274,761 | ||
| Net change in unrealized appreciation (depreciation) on: | |||
| Investments | (2,530,596 | ) | |
| Translation of other assets and liabilities | |||
| denominated in foreign currencies | (11,364 | ) | |
| Change in deferred taxes on unrealized appreciation | (31,106 | ) | |
| Net change in unrealized appreciation (depreciation) | (2,573,066 | ) | |
| Net realized and unrealized gain (loss) | (2,298,305 | ) | |
| Net increase (decrease) in net assets resulting from operations | $ | (1,727,212 | ) |
franklintempleton.com
The accompanying notes are an integral part of these financial statements. | Annual Report 21
| TEMPLETON GLOBAL INVESTMENT TRUST | ||||||
| FINANCIAL STATEMENTS | ||||||
| Statements of Changes in Net Assets | ||||||
| Templeton Foreign Smaller Companies Fund | ||||||
| Year Ended October 31, | ||||||
| 2016 | 2015 | |||||
| Increase (decrease) in net assets: | ||||||
| Operations: | ||||||
| Net investment income. | $ | 571,093 | $ | 1,315,838 | ||
| Net realized gain (loss) | 274,761 | (1,509,862 | ) | |||
| Net change in unrealized appreciation (depreciation) | (2,573,066 | ) | 3,489,881 | |||
| Net increase (decrease) in net assets resulting from operations | (1,727,212 | ) | 3,295,857 | |||
| Distributions to shareholders from: | ||||||
| Net investment income: | ||||||
| Class A | (1,040,254 | ) | (1,245,197 | ) | ||
| Class C | (60,168 | ) | (75,247 | ) | ||
| Class R6 | (14,598 | ) | (17,007 | ) | ||
| Advisor Class | (518,480 | ) | (657,536 | ) | ||
| Total distributions to shareholders. | (1,633,500 | ) | (1,994,987 | ) | ||
| Capital share transactions: (Note 2) | ||||||
| Class A | (15,879,773 | ) | (15,790,271 | ) | ||
| Class C | (1,794,446 | ) | (2,783,626 | ) | ||
| Class R6 | (820,858 | ) | 959 | |||
| Advisor Class | (8,143,532 | ) | (7,420,711 | ) | ||
| Total capital share transactions | (26,638,609 | ) | (25,993,649 | ) | ||
| Net increase (decrease) in net assets | (29,999,321 | ) | (24,692,779 | ) | ||
| Net assets: | ||||||
| Beginning of year | 123,424,035 | 148,116,814 | ||||
| End of year | $ | 93,424,714 | $ | 123,424,035 | ||
| Undistributed net investment income included in net assets: | ||||||
| End of year | $ | 107,331 | $ | 962,559 | ||
22 Annual Report | The accompanying notes are an integral part of these financial statements.
franklintempleton.com
TEMPLETON GLOBAL INVESTMENT TRUST
Notes to Financial Statements
Templeton Foreign Smaller Companies Fund
1. Organization and Significant Accounting Policies
Templeton Global Investment Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of six separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Templeton Foreign Smaller Companies Fund (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. The Fund offers four classes of shares: Class A, Class C, Class R6, and Advisor Class. Each class of shares differs by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees primarily due to differing arrangements for distribution and transfer agent fees. The Fund was closed to new investors effective at the close of market December 10, 2013. Existing shareholders may add to their accounts.
Effective March 21, 2016, Templeton Foreign Smaller Companies Fund reorganized from a series of Franklin Templeton International Trust into a new series of the Trust.
The following summarizes the Fund’s significant accounting policies.
a. Financial Instrument Valuation
The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Equity securities and exchange traded funds listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of 4 p.m. Eastern time, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.
Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.
The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of
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23
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Foreign Smaller Companies Fund (continued)
1. Organization and Significant Accounting
Policies (continued)
a. Financial Instrument Valuation (continued)
such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.
When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.
b. Foreign Currency Translation
Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the
date of valuation. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.
The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statement of Operations.
Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.
c. Securities Lending
The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statement of Operations.
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TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Foreign Smaller Companies Fund (continued)
The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.
d. Income and Deferred Taxes
It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date. As a result of several court cases in certain countries across the European Union, the Fund has filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Statement of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, or the potential timing of payment, no amounts are reflected in the financial statements.
For US income tax purposes, EU reclaims received by the Fund reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns. In the event that EU reclaims received by the Fund during the fiscal year exceed foreign withholding taxes paid, the Fund must either amend historic tax reporting to shareholders or enter into a closing agreement with the Internal Revenue Service (IRS) in order to pay the associated tax liability on behalf of the Fund’s shareholders. During the fiscal year ended October 31, 2016, the Fund received EU reclaim refunds in excess of the foreign taxes paid during the year. Subsequent to October 31, 2016, the Fund determined to enter into a closing agreement with the IRS and recorded an estimated liability of $74,000.
The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of October 31, 2016, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitation.
e. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion
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Annual Report
25
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Foreign Smaller Companies Fund (continued)
1. Organization and Significant Accounting
Policies (continued)
e. Security Transactions, Investment Income, Expenses and Distributions (continued)
of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
f. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
g. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
2. Shares of Beneficial Interest
At October 31, 2016, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:
| Year Ended October 31, | ||||||||||||
| 2016 | 2015 | |||||||||||
| Shares | Amount | Shares | Amount | |||||||||
| Class A Shares: | ||||||||||||
| Shares sold | 151,332 | $ | 2,353,186 | 252,417 | $ | 4,211,156 | ||||||
| Shares issued in reinvestment of distributions | 64,203 | 995,790 | 74,023 | 1,162,901 | ||||||||
| Shares redeemed | (1,236,326 | ) | (19,228,749 | ) | (1,275,468 | ) | (21,164,328 | ) | ||||
| Net increase (decrease) | (1,020,791 | ) | $ | (15,879,773 | ) | (949,028 | ) | $ | (15,790,271 | ) | ||
| Class C Shares: | ||||||||||||
| Shares sold | 24,789 | $ | 367,734 | 28,197 | $ | 450,144 | ||||||
| Shares issued in reinvestment of distributions | 3,896 | 58,395 | 4,774 | 72,416 | ||||||||
| Shares redeemed | (148,162 | ) | (2,220,575 | ) | (205,097 | ) | (3,306,186 | ) | ||||
| Net increase (decrease) | (119,477 | ) | $ | (1,794,446 | ) | (172,126 | ) | $ | (2,783,626 | ) | ||
| Class R6 Shares: | ||||||||||||
| Shares sold | 7,692 | $ | 118,288 | 11,169 | $ | 183,227 | ||||||
| Shares issued in reinvestment of distributions | 940 | 14,501 | 1,081 | 16,905 | ||||||||
| Shares redeemed | (59,754 | ) | (953,647 | ) | (11,917 | ) | (199,173 | ) | ||||
| Net increase (decrease) | (51,122 | ) | $ | (820,858 | ) | 333 | $ | 959 | ||||
| Advisor Class Shares: | ||||||||||||
| Shares sold | 313,055 | $ | 4,845,420 | 445,587 | $ | 7,333,434 | ||||||
| Shares issued in reinvestment of distributions | 31,517 | 486,625 | 39,491 | 618,028 | ||||||||
| Shares redeemed | (866,073 | ) | (13,475,577 | ) | (930,508 | ) | (15,372,173 | ) | ||||
| Net increase (decrease) | (521,501 | ) | $ | (8,143,532 | ) | (445,430 | ) | $ | (7,420,711 | ) | ||
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TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Foreign Smaller Companies Fund (continued)
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Trust are also officers and/or directors of the following subsidiaries:
| Subsidiary | Affiliation |
| Templeton Investment Counsel, LLC (TIC) | Investment manager |
| Franklin Templeton Investments Corp. (FTIC) | Investment manager - sub-advisor |
| 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 the investment manager a fee based on the average daily net assets of the Fund as follows: | ||
| Annualized Fee Rate | Net Assets | |
| 1.000 | % | Up to and including $100 million |
| 0.900 | % | Over $100 million, up to and including $250 million |
| 0.800 | % | Over $250 million, up to and including $500 million |
| 0.750 | % | In excess of $500 million |
Effective December 1, 2015, the Fund’s investment manager is TIC. Under a sub-advisory agreement with TIC, FTIC, an affiliate of TIC, provides subadvisory services to the Fund. The subadvisory fee is paid by TIC based on the Fund’s average daily net assets, and is not an additional expense of the Fund.
Prior to December 1, 2015, FTIC served as the Fund’s investment manager and TIC served as sub-advisor. The annualized investment manager fee rates and net assets tiers remain the same.
For the year ended October 31, 2016, the annualized effective investment management fee rate was 1.000% of the Fund’s average daily net assets.
b. Administrative Fees
Under an agreement with Fund’s investment manager, FT Services provides administrative services to the Fund. The fee is paid by investment manager based on Fund’s average daily net assets, and is not an additional expense of the Fund.
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class pursuant to Rule 12b-1 under the 1940 Act. Under the Fund’s Class A reimbursement distribution plan, the Fund reimburses Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to the maximum annual plan rate. Under the Class A reimbursement distribution plan, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Fund’s Class C compensation distribution plan, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of each Fund’s shares up to the maximum annual plan rate. The plan year, for purposes of monitoring compliance with the maximum annual plan rate, 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 | % |
franklintempleton.com Annual Report 27
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Foreign Smaller Companies Fund (continued)
3. Transactions with Affiliates (continued)
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 Fund’s shares for the year:
| Sales charges retained net of commissions paid to unaffiliated | ||
| brokers/dealers | $ | 3,209 |
| CDSC retained | $ | 203 |
e. Transfer Agent Fees
Each class of shares, except for Class R6, pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations and reimburses Investor Services for out of pocket expenses incurred, including 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 year ended October 31, 2016, the Fund paid transfer agent fees of $304,050, of which $111,775 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. Prior to October 1, 2013, the waiver was accounted for as a reduction to management fees. During the year ended October 31, 2016, the Fund held investments in affiliated management investment companies as follows:
| % of | |||||||||||
| Affiliated | |||||||||||
| Number of | Number of | Fund Shares | |||||||||
| Shares Held | Shares | Value | Outstanding | ||||||||
| at Beginning | Gross | Gross | Held at End | at End | Investment | Realized | Held at End | ||||
| of Year | Additions | Reductions | of Year | of Year | Income | Gain (Loss) | of Year | ||||
| Non-Controlled Affiliates | |||||||||||
| Institutional Fiduciary Trust Money Market | |||||||||||
| Portfolio | - | 4,798,968 | (2,069,938 | ) | 2,729,030 | $ | 2,729,030 | $- | $- | 0.0 | %a |
| aRounds to less than 0.1%. | |||||||||||
g. Waiver and Expense Reimbursements
Investor Services has contractually agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.01% until March 20, 2017.
4. Expense Offset Arrangement
The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the year ended October 31, 2016, there were no credits earned.
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TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Foreign Smaller Companies Fund (continued)
5. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.
At October 31, 2016, capital loss carryforwards were as follows:
| Capital loss carryforwards subject to expiration: | ||
| 2017 | $ | 13,038,006 |
| Capital loss carryforwards not subject to expiration: | ||
| Short term | 3,401,555 | |
| Long term | 253,270 | |
| Total capital loss carryforwards | $ | 16,692,831 |
The tax character of distributions paid during the years ended October 31, 2016 and 2015, was as follows:
| 2016 | 2015 | |||
| Distributions paid from ordinary income | $ | 1,633,500 | $ | 1,994,987 |
At October 31, 2016, the cost of investments net unrealized appreciation (depreciation) and undistributed ordinary income for income tax purposes were as follows:
| Cost of investments | $ | 88,959,942 | |
| Unrealized appreciation. | $ | 18,285,122 | |
| Unrealized depreciation | (11,477,495 | ) | |
| Net unrealized appreciation (depreciation) | $ | 6,807,627 | |
| Distributable earnings - undistributed ordinary income . | $ | 1,313,993 | |
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of passive foreign investment company shares and wash sales.
6. Investment Transactions
Purchases and sales of investments (excluding short term securities) for the year ended October 31, 2016, aggregated $28,445,640 and $54,943,006, respectively.
7. Concentration of Risk
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.
8. 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 10, 2017. 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.
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Annual Report
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TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Foreign Smaller Companies Fund (continued)
8. Credit Facility (continued)
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 0.07% based upon the unused portion of the Global Credit Facility. Effective February 12, 2016, the annual commitment fee is 0.15%. These fees are reflected in other expenses in the Statement of Operations. During the year ended October 31, 2016, the Fund did not use the Global Credit Facility.
9. Fair Value Measurements
The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s 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 Fund’s 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.
A summary of inputs used as of October 31, 2016, in valuing the Fund’s assets carried at fair value, is as follows:
| Level 1 | Level 2 | Level 3 | Total | |||||
| Assets: | ||||||||
| Investments in Securities: | ||||||||
| Equity Investments: | ||||||||
| Indonesia | $ | — | $ | — | $ | 1,089,151 | $ | 1,089,151 |
| All Other Equity Investmentsa,b | 87,876,018 | — | — | 87,876,018 | ||||
| Management Investment Companies | 473,370 | — | — | 473,370 | ||||
| Short Term Investments | 2,729,030 | 3,600,000 | — | 6,329,030 | ||||
| Total Investments in Securities | $ | 91,078,418 | $ | 3,600,000 | $ | 1,089,151 | $ | 95,767,569 |
| aFor detailed categories, see the accompanying Statement of Investments. | ||||||||
| bIncludes common and preferred stocks. | ||||||||
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TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Foreign Smaller Companies Fund (continued)
A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the end of the year. At October 31, 2016, the reconciliation of assets is as follows:
| Net Change in | |||||||||||||
| Unrealized | |||||||||||||
| Appreciation | |||||||||||||
| Net | Net | (Depreciation) | |||||||||||
| Balance at | Transfers | Transfer | Realized | Unrealized | Balance | on Assets | |||||||
| Beginning of | Into | Out of | Cost Basis | Gain | Appreciation | at End | Held at | ||||||
| Year Purchases Sales | Level 3 | Level 3 | Adjustments | (Loss) | (Depreciation) | of Year | Year | ||||||
| Assets: | |||||||||||||
| Investments in Securities: | |||||||||||||
| Equity Investments: | |||||||||||||
| Indonesia | $ | 943,112 | $– $– | $– | $– | $– | $– | $ | 146,039 | $ | 1,089,151 | $ | 146,039 |
| Significant unobservable valuation inputs developed by the VC for material Level 3 financial instruments and impact to fair value as | |||||||||||||
| a result of changes in unobservable valuation inputs as of October 31, 2016, are as follows: | |||||||||||||
| Impact to Fair | |||||||
| Fair Value at | Value if a Input | ||||||
| Description | End of Year | Valuation Technique | Unobservable Input | Amount | Increasesa | ||
| Assets: | |||||||
| Investments in Securities: | |||||||
| Indonesia | $ | 1,089,151 | Market Comparables | Discount for lack of marketability | 17 | % | Decreaseb |
| aRepresents the directional change in the fair value of the Level 3 financial instruments that would result from a significant and reasonable increase in the corresponding | |||||||
| input. A significant and reasonable decrease in the input would have the opposite effect. Significant impacts, if any, to fair value and/or net assets have been indicated. | |||||||
| bRepresents a significant impact to fair value and net assets. | |||||||
10. 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 other than those already disclosed in the financial statements.
| Abbreviations | ||
| Currency | Selected Portfolio | |
| CAD | Canadian Dollar | ETF Exchange Traded Fund |
| USD | United States Dollar | |
franklintempleton.com Annual Report 31
TEMPLETON FOREIGN SMALLER COMPANIES FUND
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of Templeton Foreign Smaller Companies Fund
In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Templeton Foreign Smaller Companies Fund (the "Fund") as of October 31, 2016, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of October 31, 2016 by correspondence with the custodian, transfer agents and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2016
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TEMPLETON GLOBAL INVESTMENT TRUST
Tax Information (unaudited)
Templeton Foreign Smaller Companies Fund
Under Section 854(b)(1)(B) of the Internal Revenue Code (Code), the Fund hereby reports the maximum amount allowable but no less than $1,724,455 as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended October 31, 2016. Distributions, including qualified dividend income, paid during calendar year 2016 will be reported to shareholders on Form 1099-DIV by mid-February 2017. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns.
At October 31, 2015, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Code. This written statement will allow shareholders of record on December 14, 2015, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.
The following table provides a detailed analysis of foreign tax paid, foreign source income, and foreign source qualified dividends as reported by the Fund, to Class A, Class C, Class R6, and Advisor Class shareholders of record.
| Foreign Tax Paid | Foreign Source | Foreign Source Qualified | ||||
| Class | Per Share | Income Per Share | Dividends Per Share | |||
| Templeton Foreign Smaller Companies Fund | ||||||
| Class A | $ | 0.0336 | $ | 0.1704 | $ | 0.1097 |
| Class C | $ | 0.0336 | $ | 0.0595 | $ | 0.0382 |
| Class R6 | $ | 0.0336 | $ | 0.2504 | $ | 0.1608 |
| Advisor Class | $ | 0.0336 | $ | 0.2072 | $ | 0.1330 |
Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or, as a tax deduction.
Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends. The amounts reported include foreign source qualified dividends that have not been adjusted for the rate differential applicable to such dividend income.1
Foreign Source Qualified Dividends Per Share (Column 3) is the amount per share of foreign source qualified dividends, plus any foreign taxes withheld on these dividends. These amounts represent the portion of the Foreign Source Income reported to you in column 2 that were derived from qualified foreign securities held by the Fund.1
By mid-February 2016, shareholders received Form 1099-DIV which included their share of taxes paid and foreign source income distributed during the calendar year 2015. The Foreign Source Income reported on Form 1099-DIV has not been adjusted for the rate differential on foreign source qualified dividend income. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their 2015 individual income tax returns.
1Qualified dividends are taxed at reduced long term capital gains tax rates. In determining the amount of foreign tax credit that may be applied against the U.S. tax liability of individuals receiving foreign source qualified dividends, adjustments may be required to the foreign tax credit limitation calculation to reflect the rate differential applicable to such dividend income. The rules however permit certain individuals to elect not to apply the rate differential adjustments for capital gains and/or dividends for any taxable year. Please consult your tax advisor and the instructions to Form 1116 for more information.
franklintempleton.com
Annual Report
33
TEMPLETON GLOBAL INVESTMENT TRUST
| Board Members and Officers | ||||
| The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, | ||||
| principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton | ||||
| Investments fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and | ||||
| qualified. | ||||
| Independent Board Members | ||||
| Number of Portfolios in | ||||
| Name, Year of Birth | Length of | Fund Complex Overseen | Other Directorships Held | |
| and Address | Position | Time Served | by Board Member* | During at Least the Past 5 Years |
| Harris J. Ashton (1932) | Trustee | Since 1994 | 142 | Bar-S Foods (meat packing company) |
| 300 S.E. 2nd Street | (1981-2010). | |||
| Fort Lauderdale, FL 33301-1923 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Director of various companies; and formerly, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief Executive | ||||
| Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998). | ||||
| Ann Torre Bates (1958) | Trustee | Since 2008 | 42 | Ares Capital Corporation (specialty |
| 300 S.E. 2nd Street | finance company) (2010-present), | |||
| Fort Lauderdale, FL 33301-1923 | United Natural Foods, Inc. (distributor | |||
| of natural, organic and specialty foods) | ||||
| (2013-present), Allied Capital | ||||
| Corporation (financial services) | ||||
| (2003-2010), SLM Corporation (Sallie | ||||
| Mae) (1997-2014) and Navient | ||||
| Corporation (loan management, | ||||
| servicing and asset recovery) | ||||
| (2014-2016). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Director of various companies; and formerly, Executive Vice President and Chief Financial Officer, NHP Incorporated (manager of multifamily | ||||
| housing) (1995-1997); and Vice President and Treasurer, US Airways, Inc. (until 1995). | ||||
| Edith E. Holiday (1952) | Lead | Trustee | 142 | Hess Corporation (exploration and |
| 300 S.E. 2nd Street | Independent | since 1996 | refining of oil and gas) (1993-present), | |
| Fort Lauderdale, FL 33301-1923 | Trustee | and Lead | Canadian National Railway (railroad) | |
| Independent | (2001-present), White Mountains | |||
| Trustee | Insurance Group, Ltd. (holding | |||
| since 2007 | company) (2004-present), Santander | |||
| Consumer USA Holdings, Inc. | ||||
| (consumer finance) (November 2015), | ||||
| RTI International Metals, Inc. | ||||
| (manufacture and distribution of | ||||
| titanium (1999-2015) and H.J. Heinz | ||||
| Company (processed foods and allied | ||||
| products) (1994-2013). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Director or Trustee of various companies and trusts; and formerly, Assistant to the President of the United States and Secretary of the | ||||
| Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and Assistant | ||||
| Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989). | ||||
| J. Michael Luttig (1954) | Trustee | Since 2009 | 142 | Boeing Capital Corporation (aircraft |
| 300 S.E. 2nd Street | financing) (2006-2013). | |||
| Fort Lauderdale, FL 33301-1923 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Executive Vice President, General Counsel and member of the Executive Council, The Boeing Company (aerospace company) (2006-present); | ||||
| and formerly, Federal Appeals Court Judge, U.S. Court of Appeals for the Fourth Circuit (1991-2006). | ||||
34 Annual Report franklintempleton.com
TEMPLETON GLOBAL INVESTMENT TRUST
| Independent Board Members (continued) | |||||
| Number of Portfolios in | |||||
| Name, Year of Birth | Length of | Fund Complex Overseen | Other Directorships Held | ||
| and Address | Position | Time Served | by Board Member* | During at Least the Past 5 Years | |
| David W. Niemiec (1949) | Trustee | Since 2006 | 42 | Emeritus Corporation (assisted living) | |
| 300 S.E. 2nd Street | (1999-2010) and OSI Pharmaceuticals, | ||||
| Fort Lauderdale, FL 33301-1923 | Inc. (pharmaceutical products) | ||||
| (2006-2010). | |||||
| Principal Occupation During at Least the Past 5 Years: | |||||
| Advisor, Saratoga Partners (private equity fund); and formerly, Managing Director, Saratoga Partners (1998-2001) and SBC Warburg Dillon | |||||
| Read (investment banking) (1997-1998); Vice Chairman, Dillon, Read & Co. Inc. (investment banking) (1991-1997); and Chief Financial Officer, | |||||
| Dillon, Read & Co. Inc. (1982-1997). | |||||
| Larry D. Thompson (1945) | Trustee | Since 2006 | 142 | The Southern Company (energy | |
| 300 S.E. 2nd Street | company) (2014-present; previously | ||||
| Fort Lauderdale, FL 33301-1923 | 2010-2012), Graham Holdings | ||||
| Company (education and media | |||||
| organization) (2011-present) and | |||||
| Cbeyond, Inc. (business | |||||
| communications provider) | |||||
| (2010-2012). | |||||
| Principal Occupation During at Least the Past 5 Years: | |||||
| Director of various companies; John A. Sibley Professor of Corporate and Business Law, University of Georgia School of Law (2015-present; | |||||
| previously 2011-2012); and formerly, Executive Vice President - Government Affairs, General Counsel and Corporate Secretary, PepsiCo, Inc. | |||||
| (consumer products) (2012-2014); Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (2004-2011); | |||||
| Senior Fellow of The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney | |||||
| General, U.S. Department of Justice (2001-2003). | |||||
| Constantine D. Tseretopoulos | Trustee | Since 2001 | 26 | None | |
| (1954 | ) | ||||
| 300 S.E. 2nd Street | |||||
| Fort Lauderdale, FL 33301-1923 | |||||
| Principal Occupation During at Least the Past 5 Years: | |||||
| Physician, Chief of Staff, owner and operator of the Lyford Cay Hospital (1987-present); director of various nonprofit organizations; and | |||||
| formerly, Cardiology Fellow, University of Maryland (1985-1987); and Internal Medicine Resident, Greater Baltimore Medical Center | |||||
| (1982-1985). | |||||
| Robert E. Wade (1946) | Trustee | Since 2006 | 42 | El Oro Ltd (investments) | |
| 300 S.E. 2nd Street | (2003-present). | ||||
| Fort Lauderdale, FL 33301-1923 | |||||
| Principal Occupation During at Least the Past 5 Years: | |||||
| Attorney at law engaged in private practice (1972-2008) and member of various boards. | |||||
| Interested Board Members and Officers | |||||
| Number of Portfolios in | |||||
| Name, Year of Birth | Length of | Fund Complex Overseen | Other Directorships Held | ||
| and Address | Position | Time Served | by Board Member* | During at Least the Past 5 Years | |
| **Gregory E. Johnson (1961) | Trustee | Since 2006 | 158 | None | |
| One Franklin Parkway | |||||
| San Mateo, CA 94403-1906 | |||||
| Principal Occupation During at Least the Past 5 Years: | |||||
| Chairman of the Board, Member - Office of the Chairman, Director and Chief Executive Officer, Franklin Resources, Inc.; officer and/or director | |||||
| or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin | |||||
| Templeton Investments; Vice Chairman, Investment Company Institute; and formerly, President, Franklin Resources, Inc. (1994-2015). | |||||
| franklintempleton.com | Annual Report | 35 |
TEMPLETON GLOBAL INVESTMENT TRUST
| Interested Board Members and Officers (continued) | ||||
| Number of Portfolios in | ||||
| Name, Year of Birth | Length of | Fund Complex Overseen | Other Directorships Held | |
| and Address | Position | Time Served | by Board Member* | During at Least the Past 5 Years |
| **Rupert H. Johnson, Jr. (1940) | Chairman of | Chairman of the | 142 | None |
| One Franklin Parkway | the Board, | Board, Trustee | ||
| San Mateo, CA 94403-1906 | Trustee and | since 2013, | ||
| Vice President | and Vice President | |||
| since 1996 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc.; Senior Vice | ||||
| President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of | ||||
| Franklin Resources, Inc. and of 42 of the investment companies in Franklin Templeton Investments. | ||||
| Alison E. Baur (1964) | Vice President | Since 2012 | Not Applicable | Not Applicable |
| One Franklin Parkway | ||||
| San Mateo, CA 94403-1906 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Deputy General Counsel, Franklin Templeton Investments; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 45 | ||||
| of the investment companies in Franklin Templeton Investments. | ||||
| Norman J. Boersma (1957) | President and | Since 2012 | Not Applicable | Not Applicable |
| Lyford Cay | Chief Executive | |||
| Nassau, Bahamas | Officer – | |||
| Investment | ||||
| Management | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Director, President and Chief Executive Officer, Templeton Global Advisors Ltd.; Chief Investment Officer of Templeton Global Equity Group; | ||||
| officer of six of the investment companies in Franklin Templeton Investments; and formerly, Executive Vice President, Franklin Templeton | ||||
| Investments Corp. (1993-2014). | ||||
| Laura F. Fergerson (1962) | Chief | Since 2009 | Not Applicable | Not Applicable |
| One Franklin Parkway | Executive | |||
| San Mateo, CA 94403-1906 | Officer – | |||
| Finance and | ||||
| Administration | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Senior Vice President, Franklin Templeton Services, LLC; Vice President, Franklin Advisers, Inc. and Franklin Templeton Institutional, LLC; and | ||||
| officer of 45 of the investment companies in Franklin Templeton Investments. | ||||
| Aliya S. Gordon (1973) | Vice President | Since 2009 | Not Applicable | Not Applicable |
| One Franklin Parkway | ||||
| San Mateo, CA 94403-1906 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Senior Associate General Counsel, Franklin Templeton Investments; and officer of 45 of the investment companies in Franklin Templeton | ||||
| Investments. | ||||
| Steven J. Gray (1955) | Vice President | Since 2009 | Not Applicable | Not Applicable |
| One Franklin Parkway | ||||
| San Mateo, CA 94403-1906 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Senior Associate General Counsel, Franklin Templeton Investments; Vice President, Franklin Templeton Distributors, Inc. and Franklin | ||||
| Alternative Strategies Advisers, LLC; and officer of 45 of the investment companies in Franklin Templeton Investments. | ||||
| Robert Lim (1948) | Vice President | Since May | Not Applicable | Not Applicable |
| One Franklin Parkway | – AML | 2016 | ||
| San Mateo, CA 94403-1906 | Compliance | |||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton | ||||
| Investor Services, LLC; and officer of 45 of the investment companies in Franklin Templeton Investments. | ||||
36 Annual Report franklintempleton.com
TEMPLETON GLOBAL INVESTMENT TRUST
| Interested Board Members and Officers (continued) | ||||
| Number of Portfolios in | ||||
| Name, Year of Birth | Length of | Fund Complex Overseen | Other Directorships Held | |
| and Address | Position | Time Served | by Board Member* | During at Least the Past 5 Years |
| Kimberly H. Novotny (1972) | Vice President | Since 2013 | Not Applicable | Not Applicable |
| 300 S.E. 2nd Street | ||||
| Fort Lauderdale, FL 33301-1923 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Associate General Counsel, Franklin Templeton Investments; Vice President and Corporate Secretary, Fiduciary Trust International of the | ||||
| South; Vice President, Templeton Investment Counsel, LLC; Assistant Secretary, Franklin Resources, Inc.; and officer of 45 of the investment | ||||
| companies in Franklin Templeton Investments. | ||||
| Mark H. Otani (1968) | Treasurer, | Since 2009 | Not Applicable | Not Applicable |
| One Franklin Parkway | Chief Financial | |||
| San Mateo, CA 94403-1906 | Officer and | |||
| Chief | ||||
| Accounting | ||||
| Officer | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Treasurer, U.S. Fund Administration & Reporting, Franklin Templeton Investments; and officer of 14 of the investment companies in Franklin | ||||
| Templeton Investments. | ||||
| Robert C. Rosselot (1960) | Chief | Since 2013 | Not Applicable | Not Applicable |
| 300 S.E. 2nd Street | Compliance | |||
| Fort Lauderdale, FL 33301-1923 | Officer | |||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Director, Global Compliance, Franklin Templeton Investments; Vice President, Franklin Templeton Companies, LLC; officer of 45 of the | ||||
| investment companies in Franklin Templeton Investments; and formerly, Senior Associate General Counsel, Franklin Templeton Investments | ||||
| (2007-2013); and Secretary and Vice President, Templeton Group of Funds (2004-2013). | ||||
| Karen L. Skidmore (1952) | Vice President | Since 2009 | Not Applicable | Not Applicable |
| One Franklin Parkway | ||||
| San Mateo, CA 94403-1906 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Senior Associate General Counsel, Franklin Templeton Investments; and officer of 45 of the investment companies in Franklin Templeton | ||||
| Investments. | ||||
| Navid J. Tofigh (1972) | Vice President | Since 2015 | Not Applicable | Not Applicable |
| One Franklin Parkway | ||||
| San Mateo, CA 94403-1906 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Associate General Counsel, Franklin Templeton Investments; and officer of 45 of the investment companies in Franklin Templeton Investments. | ||||
| Craig S. Tyle (1960) | Vice President | Since 2005 | Not Applicable | Not Applicable |
| One Franklin Parkway | ||||
| San Mateo, CA 94403-1906 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, | ||||
| Inc. and of 45 of the investment companies in Franklin Templeton Investments. | ||||
| Lori A. Weber (1964) | Secretary and | Secretary since | Not Applicable | Not Applicable |
| 300 S.E. 2nd Street | Vice President | 2013 and Vice | ||
| Fort Lauderdale, FL 33301-1923 | President since | |||
| 2011 | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||
| Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President and | ||||
| Secretary, Templeton Investment Counsel, LLC; and officer of 45 of the investment companies in Franklin Templeton Investments. | ||||
| *We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton Investments fund complex. These | ||||
| portfolios have a common investment manager or affiliated investment managers. | ||||
franklintempleton.com Annual Report 37
TEMPLETON GLOBAL INVESTMENT TRUST
Interested Board Members and Officers (continued)
**Gregory E. Johnson is considered to be an interested person of the Fund under the federal securities laws due to his position as an officer and director ofFranklin
Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor. Rupert H. Johnson, Jr. is considered to be an interested person
of the Fund under the federal securities laws due to his position as officer and director and major shareholder of Resources.
Note 1: Rupert H. Johnson, Jr. is the uncle of Gregory E. Johnson.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
Note 3: Effective May 13, 2016, Frank J. Crothers ceased to be a trustee of the Trust.
Note 4: Effective November 1, 2016, Frank A. Olson ceased to be a trustee of the Trust.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the U.S. Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit
Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined
that there is at least one such financial expert on the Audit Committee and has designated each of Ann Torre Bates and David W. Niemiec as an audit committee
financial expert. The Board believes that Ms. Bates and Mr. Niemiec qualify as such an expert in view of their extensive business background and experience. Ms.
Bates has served as a member of the Fund Audit Committee since 2008. She currently serves as a director of Ares Capital Corporation (2010-present) and United
Natural Foods, Inc. (2013-present) and was formerly a director of Navient Corporation from 2014 to 2016, SLM Corporation from 1997 to 2014 and Allied Capital
Corporation from 2003 to 2010, Executive Vice President and Chief Financial Officer of NHP Incorporated from 1995 to 1997 and Vice President and Treasurer of
US Airways, Inc. until 1995. Mr. Niemiec has served as a member of the Fund Audit Committee since 2006, currently serves as an Advisor to Saratoga Partners
and was formerly its Managing Director from 1998 to 2001. Mr. Niemiec was formerly a director of Emeritus Corporation from 1999 to 2010 and OSI Pharmaceu-
ticals, Inc. from 2006 to 2010, Managing Director of SBC Warburg Dillon Read from 1997 to 1998, and was Vice Chairman from 1991 to 1997 and Chief Financial
Officer from 1982 to 1997 of Dillon, Read & Co. Inc. As a result of such background and experience, the Board believes that Ms. Bates and Mr. Niemiec have each
acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with
the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting
issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding
of audit committee functions. Ms. Bates and Mr. Niemiec are independent Board members as that term is defined under the applicable U.S. Securities and
Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request.
Shareholders may call (800) DIAL BEN/342-5236 to request the SAI.
38 Annual Report
franklintempleton.com
TEMPLETON GLOBAL INVESTMENT TRUST
TEMPLETON FOREIGN SMALLER COMPANIES FUND
Shareholder Information
Proxy Voting Policies and Procedures
The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust, on behalf of the Fund, files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
Householding of Reports and Prospectuses
You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800) 632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.
franklintempleton.com
Annual Report
39
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Annual Report and Shareholder Letter
Templeton Foreign 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 fund’s 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.
| © 2016 Franklin Templeton Investments. All rights reserved. | 191 A 12/16 |
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.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $28,134 for the fiscal year ended October 31, 2016 and $0 for the fiscal year ended October 31, 2015.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant's investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning.
(d) All Other Fees
There were no fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant, other than the services reported in paragraphs (a)-(c) of Item 4.
There were no fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant, other than the services reported in paragraphs (a)-(c) of Item 4.
(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where the non-audit services relate directly to the operations or financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) There were no non-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant.
(h) The registrant’s audit committee of the board has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants. N/A
Item 6. Schedule of Investments. N/A
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
N/A
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. N/A
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
Item 11. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940, is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
(b) Changes in Internal Controls. There have been no changes in the Registrant’s 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 Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Mark H. Otani, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Mark H. Otani, 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 INVESTMENT TRUST
By /s/LAURA F. FERGERSON
Laura F. Fergerson
Chief Executive Officer - Finance and
Administration
Date December 27, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/LAURA F. FERGERSON
Laura F. Fergerson
Chief Executive Officer - Finance and
Administration
Date December 27, 2016
By /s/MARK H. OTANI
Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date December 27, 2016