SEMI ANNUAL
REPORT
JUNE 30, 1998
TEMPLETON AMERICAN TRUST, INC.
[LOGO]
FRANKLIN(R) TEMPLETON(R)
PAGE
[50-YEAR SEAL]
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and remember that all securities markets move
both up and down, as do mutual fund share prices. We appreciate your past
support and look forward to serving your investment needs in the years ahead.
In 1992, Sir John Templeton retired after a 50-year career of helping investors
manage their money. Currently he devotes all of his time and efforts to the John
Templeton Foundation. A major portion of his assets remain invested in the
Templeton funds which are managed by many of the investment professionals he
selected and trained.
[PHOTO OF PETER A. NORI APPEARS HERE]
Peter A. Nori
Portfolio Manager
Templeton American Trust, Inc.
PAGE
CONTENTS
Shareholder Letter................ 1
Performance Summaries
Class I........................ 5
Class II....................... 7
Financial Highlights &
Statement of Investments.......... 9
Financial Statements.............. 15
Notes to Financial
Statements........................ 18
[PYRAMID GRAPHIC]
SHAREHOLDER LETTER
Your Fund's Objective: Templeton American Trust seeks long-term total return (a
combination of capital growth and income) by investing at least 65% of its total
assets in the equity and debt securities of U.S. companies and the U.S.
government, its agencies and instrumentalities.
Dear Shareholder:
We are pleased to bring you this semiannual report of Templeton American Trust
for the six months ended June 30, 1998. During this period, concerns over the
impact of recession in Asia, which hurt the U.S. stock market in January, were
quickly overwhelmed by low interest rates and significant cash flows into the
market. The Asian turmoil seemingly redirected portfolio flows from "risky"
emerging markets toward the "safer" U.S. market. In the short run, investors in
the U.S. market generally profited from the fallout in Asia as it caused a
flight to the U.S. dollar, capped inflationary pressures and allowed the Federal
Reserve Board to hold interest rates steady.
You will find a complete listing of the Fund's portfolio holdings, including the
dollar value and number of shares or principal amount, beginning on page 11 of
this report.
PAGE
GEOGRAPHIC DISTRIBUTION
This chart shows, in bar format, the geographic distribution of total net assets
for the Templeton American Trust, Inc. as of June 30, 1998.
[BAR GRAPH APPEARS HERE]
<TABLE>
<S> <C>
United States 73.5%
Europe 4.5%
Canada 3.3%
Latin America 1.3%
Australia & New Zealand 0.9%
Asia 0.9%
Short-Term Investments and Other Net Assets 15.6%
</TABLE>
However, data available at the close of the reporting period indicated that Asia
might not be recovering, and several regional stock markets and currencies were
approaching, or breaching, October 1997 lows. But many observers were not overly
concerned about the potential risk Asia presents to U.S. corporate profits, and
the Standard & Poor's(R) 500 Stock Index (S&P 500(R)) reached record highs as
investors appeared to focus on "stable growth" stocks, regardless of
valuation.(1) In such an environment, contrarian "value" investors have
difficulty performing in line with broad market indices, and Templeton American
Trust Class I shares turned in a 9.76% cumulative total return for the first six
months of the year, as discussed in the Performance Summary on page 5.
The Fund's performance was affected by its lack of exposure to the large-cap
growth names that dominate the S&P 500. With most of these shares trading above
our estimates of their true value, our underweighting will likely continue,
which may negatively affect the Fund's near-term relative performance. The Asian
financial crisis also hurt the Fund, as some of our more economically sensitive
holdings like 3Com Corp., whose near-term earnings outlook appeared weak,
underperformed the market.
Fund holdings performing well during the period included three companies subject
to merger activity: Bay Networks Inc., DSC Communications Corp., and Digital
Equipment Corporation (now a part of Compaq Computer Corp.). Spurred by low
interest rates and a strong stock market, our financial holdings, including
Morgan Stanley Dean Witter Discover & Co., American International Group Inc.,
and
1. An index is an unmanaged group of securities that is used to measure market
performance. One cannot invest directly in an index.
2
PAGE
TOP 10 INDUSTRIES
This chart shows the top ten industries of the Templeton American Trust, Inc. as
June 30, 1998, based on total net assets.
<TABLE>
<CAPTION>
% OF TOTAL
INDUSTRY NET ASSETS
- ----------------------------------------------
<S> <C>
Data Processing &
Reproduction 8.9%
Electronic Components &
Instruments 6.8%
Insurance 6.2%
Financial Services 5.7%
Energy Sources 5.5%
Industrial Components 4.9%
Electrical & Electronics 4.5%
Transportation 4.3%
Merchandising 3.9%
Telecommunications 3.7%
</TABLE>
American General Corp. also performed well. Home appliance maker
Windmere-Durable Holdings Inc., aided by its acquisition of a Black & Decker
unit, contributed positively to the Fund's performance, and American Stores Co.
(which hurt the Fund's performance last year) rebounded from an earnings
disappointment. Positions liquidated as their stock prices reached our target
levels included Fruit of the Loom Inc., Intuit Inc., Travelers Inc. and Pinnacle
West Capital Corp. During the period, the Fund purchased stock in companies hurt
by what we believed to be near-term earnings shortfalls. In doing so, we
initiated positions in ADC Telecommunications Inc. and Newbridge Networks Corp.,
and added to our position in Scholastic Corp.
We remain positive about the U.S. market on a long-term basis, but our analysis
of the Dow Jones(R) Industrial Average and the S&P 500 indicates that both
indices are trading well-above their 20-year average price-to-book,
price-to-sales, price-to-dividends and price-to-cash flow levels, and we are
concerned with short-term valuations. Please remember, this discussion reflects
our views, opinions and portfolio holdings as of June 30, 1998, the end of the
reporting period. However, market and economic conditions are changing
constantly, which may affect our strategies and the Fund's portfolio
composition. Although historic performance is no guarantee of future results,
these insights may help you understand our investment and management philosophy.
While the Fund invests primarily in securities of U.S. companies and the U.S.
government, its agencies and instrumentalities, it may also invest up to 35% of
its total assets in securities of issuers in any
3
PAGE
This chart shows the top ten holdings of the Templeton American Trust, Inc.
including company name and industry, as of June 30, 1998, based on total net
assets.
<TABLE>
<CAPTION>
% OF TOTAL
COMPANY, INDUSTRY NET ASSETS
- ----------------------------------------------
<S> <C>
ADC Telecommunications Inc.
Electronic Components &
Instruments 3.5%
Morgan Stanley Dean Witter
Discover & Co.
Financial Services 3.3%
Landstar System Inc.
Transportation 2.5%
American International Group Inc.
Insurance 2.5%
Scholastic Corp.
Broadcasting & Publishing 2.3%
Ford Motor Co.
Automobiles 2.3%
DSC Communications Corp.
Electrical & Electronics 2.1%
3Com Corp.
Data Processing & Reproduction 2.1%
American General Corp.
Insurance 2.0%
AT&T Corp.
Telecommunications 2.0%
</TABLE>
foreign country, developed or developing. There are, of course, special risks
involved with global investing related to market, currency, economic, social,
political and other factors. Emerging markets involve heightened risks related
to the same factors, in addition to those associated with their relatively small
size and lesser liquidity. These special risks and other considerations are
discussed in the Fund's prospectus. Investing in any emerging market means
accepting a certain amount of volatility and, in some cases, severe market
corrections. While short-term volatility can be disconcerting, declines of as
much as 40% to 50% are not unusual in emerging markets. For example, the Hong
Kong equity market has increased 785% in the last 15 years, but has suffered six
quarterly declines of more than 20% during that time(2).
As always, we thank you for your participation in Templeton American Trust.
Sincerely,
/s/ PETER A. NORI
Peter A. Nori
Portfolio Manager
Templeton American Trust, Inc.
2. Source: Bloomberg. Based on quarterly percentage change over 15 years ended
June 30, 1998. Market returns are measured in Hong Kong dollars.
4
PAGE
PERFORMANCE SUMMARY
CLASS I
Templeton American Trust - Class I produced a 9.76% cumulative total return for
the six-month period ended June 30, 1998. Cumulative total return measures the
change in value of an investment, assuming reinvestment of all distributions,
and does not include the sales charge. We have always maintained a long-term
perspective when managing the Fund, and we encourage you to view your
investments in a similar manner. As you can see from the table on page 6, the
Fund's Class I shares delivered a cumulative total return of more than 77% since
inception on May 1, 1995.
The Fund's share price, as measured by net asset value, increased 76 cents, from
$17.17 on December 31, 1997, to $17.93 on June 30, 1998. During the reporting
period, shareholders received per-share distributions of 33 cents ($0.33) in
short-term capital gains and 57 cents ($0.57) in long-term capital gains.
Distributions will vary depending on income earned by the Fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the Fund's operating expenses.
Past performance is not predictive of future results.
5
PAGE
CLASS I
Periods ended 6/30/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 3-YEAR (5/1/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) 18.02% 69.00% 77.33%
Average Annual Total Return(2) 11.21% 16.78% 17.61%
Value of $10,000 Investment(3) $11,121 $15,927 $16,725
6/30/96 6/30/97 6/30/98
- --------------------------------------------------------------------------------
One-Year Total Return(4) 13.81% 25.81% 18.02%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 5.75% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include the maximum 5.75% initial sales
charge.
4. One-year total return represents the change in value of an investment over
the periods ended on the dates indicated and does not include the sales charge.
All calculations assume reinvestment of distributions at net asset value. Since
markets can go down as well as up, investment return and principal value will
fluctuate with market conditions, currency volatility, and the economic, social
and political climates of countries where investments are made. Emerging markets
involve heightened risks related to the same factors, in addition to those
associated with their relatively small size and lesser liquidity. You may have a
gain or loss when you sell your shares.
Past performance is not predictive of future results.
6
PAGE
Class II
Templeton American Trust - Class II produced a 9.44% cumulative total return for
the six-month period ended June 30, 1998. Cumulative total return measures the
change in value of an investment, assuming reinvestment of all distributions,
and does not include sales charges. We have always maintained a long-term
perspective when managing the Fund, and we encourage you to view your
investments in a similar manner. As you can see from the table on page 8, the
Fund's Class II shares delivered a cumulative total return of more than 168%
since inception on February 27, 1991.
The Fund's share price, as measured by net asset value, increased 70 cents, from
$17.21 on December 31, 1997, to $17.91 on June 30, 1998. During the reporting
period, shareholders received per-share distributions of 33 cents ($0.33) in
short-term capital gains and 57 cents ($0.57) in long-term capital gains.
Distributions will vary depending on income earned by the Fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the Fund's operating expenses.
Past performance is not predictive of future results.
7
PAGE
CLASS II
Periods ended 6/30/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 5-YEAR (2/27/91)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) 17.22% 103.47% 168.67%
Average Annual Total Return(2) 15.16% 15.03% 14.26%
Value of $10,000 Investment(3) $11,516 $20,141 $26,601
<CAPTION>
6/30/94 6/30/95 6/30/96 6/30/97 6/30/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(4) 7.25% 14.57% 13.02% 24.93% 17.22%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and has been restated to include the
current maximum 1.0% initial sales charge and 1.0% contingent deferred sales
charge applicable to shares redeemed within 18 months of investment. Prior to
May 1, 1995, Class II shares were offered without an initial sales charge and
with a higher, but declining, contingent deferred sales charge; thus, actual
returns for investors who paid this higher charge would differ.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and have been restated to include the current
maximum 1.0% initial sales charge and 1.0% contingent deferred sales charge
applicable to shares redeemed within 18 months of investment. Prior to May 1,
1995, Class II shares were offered without an initial sales charge and with a
higher, but declining, contingent deferred sales charge; thus, actual returns
for investors who paid this higher charge would differ.
4. One-year total return represents the change in value of an investment over
the periods ended on the dates indicated and does not include sales charges.
All calculations assume reinvestment of distributions at net asset value. Past
expense waivers by the Fund's Manager increased the Fund's total returns to
shareholders. Without these waivers, the Fund's total returns would have been
lower. Since markets can go down as well as up, investment return and principal
value will fluctuate with market conditions, currency volatility, and the
economic, social and political climates of countries where investments are made.
Emerging markets involve heightened risks related to the same factors, in
addition to those associated with their relatively small size and lesser
liquidity. You may have a gain or loss when you sell your shares.
Past performance is not predictive of future results.
8
PAGE
TEMPLETON AMERICAN TRUST, INC.
Financial Highlights
<TABLE>
<CAPTION>
CLASS I
----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 --------------------------------
(UNAUDITED) 1997 1996 1995+
----------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period........................ $17.17 $16.02 $14.23 $13.37
----------------------------------------------------
Income from investment operations:
Net investment income...................................... .04 .13 .20 .11
Net realized and unrealized gains.......................... 1.62 3.42 2.60 1.21
----------------------------------------------------
Total from investment operations............................ 1.66 3.55 2.80 1.32
----------------------------------------------------
Less distributions from:
Net investment income...................................... -- (.15) (.26) (.20)
Net realized gains......................................... (.90) (2.25) (.75) (.26)
----------------------------------------------------
Total distributions......................................... (.90) (2.40) (1.01) (.46)
----------------------------------------------------
Net asset value, end of period.............................. $17.93 $17.17 $16.02 $14.23
====================================================
Total Return*............................................... 9.76% 22.66% 19.90% 9.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)........................... $6,703 $5,028 $2,053 $881
Ratios to average net assets:
Expenses................................................... 1.50%** 1.41% 1.57% 1.81%**
Net investment income...................................... .54%** .58% 1.53% 1.31%**
Portfolio turnover rate..................................... 17.10% 41.06% 15.93% 4.44%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
+For the period May 1, 1995 (effective date) to December 31, 1995.
9
PAGE
TEMPLETON AMERICAN TRUST, INC.
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS II
-------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 -----------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period..... $17.21 $16.04 $14.25 $12.49 $13.39 $11.77
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)............ (.01) (.03) .14 .14 .04 .04
Net realized and unrealized gains....... 1.61 3.45 2.54 2.04 .17 1.82
-------------------------------------------------------------------------------
Total from investment operations......... 1.60 3.42 2.68 2.18 .21 1.86
-------------------------------------------------------------------------------
Less distributions from:
Net investment income................... -- -- (.14) (.14) (.05) (.03)
Net realized gains...................... (.90) (2.25) (.75) (.28) (1.06) (.21)
-------------------------------------------------------------------------------
Total distributions...................... (.90) (2.25) (.89) (.42) (1.11) (.24)
-------------------------------------------------------------------------------
Net asset value, end of period........... $17.91 $17.21 $16.04 $14.25 $12.49 $13.39
===============================================================================
Total Return*............................ 9.44% 21.83% 18.91% 17.55% 1.63% 15.82%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)........ $52,672 $52,063 $44,648 $44,183 $37,959 $34,418
Ratios to average net assets:
Expenses................................ 2.15%** 2.17% 2.26% 2.40% 2.47% 2.53%
Net investment income (loss)............ (.10)%** (.16)% .85% .95% .34% .31%
Portfolio turnover rate.................. 17.10% 41.06% 15.93% 4.44% 31.92% 14.10%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
**Annualized.
See Notes to Financial Statements.
10
PAGE
TEMPLETON AMERICAN TRUST, INC.
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 84.4%
AEROSPACE & MILITARY TECHNOLOGY 1.6%
Kaman Corp., A.............................................. United States 50,200 $ 955,369
-----------
AUTOMOBILES 3.4%
*Circuit City Stores Inc., Carmax Group..................... United States 63,200 643,850
Ford Motor Co............................................... United States 23,000 1,357,000
-----------
2,000,850
-----------
BANKING .4%
Credicorp, Ltd.............................................. Peru 15,840 232,650
-----------
BROADCASTING & PUBLISHING 2.3%
*Scholastic Corp............................................ United States 34,600 1,379,675
-----------
BUILDING MATERIALS & COMPONENTS 2.5%
Owens Corning............................................... United States 26,015 1,061,737
Pioneer International Ltd................................... Australia 175,000 417,219
-----------
1,478,956
-----------
BUSINESS & PUBLIC SERVICES 1.3%
Columbia HCA Healthcare Corp................................ United States 26,000 757,250
-----------
CHEMICALS .8%
Great Lakes Chemical Corp................................... United States 11,000 433,812
*Octel Corp................................................. United States 2,750 54,656
-----------
488,468
-----------
DATA PROCESSING & REPRODUCTION 8.9%
*3com Corp.................................................. United States 40,300 1,236,706
*Bay Networks Inc........................................... United States 35,000 1,128,750
Compaq Computer Corp........................................ United States 22,869 648,908
*NCR Corp................................................... United States 18,021 585,683
*Newbridge Networks Corp.................................... Canada 41,845 1,001,665
*Quantum Corp............................................... United States 32,300 670,225
-----------
5,271,937
-----------
ELECTRICAL & ELECTRONICS 4.5%
Ametek Inc.................................................. United States 31,100 911,619
*DSC Communications Corp.................................... United States 42,100 1,263,000
Motorola Inc................................................ United States 9,000 473,063
-----------
2,647,682
-----------
ELECTRONIC COMPONENTS & INSTRUMENTS 6.8%
*ADC Telecommunications Inc................................. United States 56,200 2,053,056
Harman International Industries Inc......................... United States 20,500 789,250
Intel Corp.................................................. United States 16,000 1,186,000
-----------
4,028,306
-----------
ENERGY EQUIPMENT & SERVICES 1.5%
Sun Co. Inc................................................. United States 23,300 904,331
-----------
</TABLE>
11
PAGE
TEMPLETON AMERICAN TRUST, INC.
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
ENERGY SOURCES 5.5%
Norsk Hydro AS, ADR......................................... Norway 8,800 $ 388,300
Occidental Petroleum Corp................................... United States 32,150 868,050
Societe Elf Aquitaine SA.................................... France 4,000 562,355
Total SA, B................................................. France 7,000 910,023
YPF Sociedad Anonima, ADR................................... Argentina 18,000 541,125
-----------
3,269,853
-----------
FINANCIAL SERVICES 5.7%
Associates First Capital Corp., A........................... United States 6,027 463,326
Fannie Mae.................................................. United States 16,000 972,000
Morgan Stanley Dean Witter Discover & Co.................... United States 21,644 1,977,721
-----------
3,413,047
-----------
FOOD & HOUSEHOLD PRODUCTS .9%
IBP Inc..................................................... United States 30,000 543,750
-----------
FOREST PRODUCTS & PAPER 1.1%
Boise Cascade Corp.......................................... United States 20,300 664,825
-----------
HEALTH & PERSONAL CARE 2.4%
Aetna Inc................................................... United States 8,500 647,062
*Windmere-Durable Holdings Inc.............................. United States 21,400 766,388
-----------
1,413,450
-----------
INDUSTRIAL COMPONENTS 4.9%
Exide Corp.................................................. United States 43,000 722,937
Flowserve Corp.............................................. United States 20,904 514,761
Goodyear Tire & Rubber Co................................... United States 18,000 1,159,875
Walbro Corp................................................. United States 37,800 533,925
-----------
2,931,498
-----------
INSURANCE 6.2%
American General Corp....................................... United States 17,000 1,210,187
American International Group Inc............................ United States 10,025 1,463,650
Presidential Life Corp...................................... United States 47,100 1,006,763
-----------
3,680,600
-----------
MERCHANDISING 3.9%
American Stores Co.......................................... United States 48,888 1,182,478
*Gymboree Inc............................................... United States 73,800 1,118,531
-----------
2,301,009
-----------
METALS & MINING 3.4%
Birmingham Steel Corp....................................... United States 56,800 702,900
Oregon Steel Mills Inc...................................... United States 36,600 681,675
Reynolds Metals Co.......................................... United States 11,000 615,313
-----------
1,999,888
-----------
</TABLE>
12
PAGE
TEMPLETON AMERICAN TRUST, INC.
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
MISCELLANEOUS MATERIALS & COMMODITIES 1.6%
Agrium Inc.................................................. Canada 75,000 $ 946,875
-----------
MULTI-INDUSTRY .9%
Hutchison Whampoa Ltd....................................... Hong Kong 100,000 527,837
-----------
REAL ESTATE 1.4%
LTC Properties Inc.......................................... United States 41,720 777,035
National Health Investors Inc............................... United States 1,800 59,625
-----------
836,660
-----------
TELECOMMUNICATIONS 3.7%
AT&T Corp................................................... United States 21,150 1,208,194
U.S. West Communications Group.............................. United States 21,200 996,400
-----------
2,204,594
-----------
TEXTILES & APPAREL 1.3%
Shaw Industries Inc......................................... United States 45,000 793,125
-----------
TRANSPORTATION 4.3%
*Fritz Companies............................................ United States 79,000 1,056,625
*Landstar System Inc........................................ United States 42,400 1,481,350
-----------
2,537,975
-----------
UTILITIES ELECTRICAL & GAS 3.0%
Iberdrola SA................................................ Spain 50,000 813,247
Potomac Electric Power Co................................... United States 37,650 943,603
-----------
1,756,850
-----------
WHOLESALE & INTERNATIONAL TRADE .2%
Brierley Investments Ltd.................................... New Zealand 225,000 112,126
-----------
TOTAL COMMON STOCKS ($35,726,901)........................... 50,079,436
-----------
</TABLE>
13
PAGE
TEMPLETON AMERICAN TRUST, INC.
STATEMENT OF INVESTMENTS, JUNE 30, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT** VALUE
-------------------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS 8.1%
Federal Farm Credit Banks, 5.53%, 10/01/98................................... $1,930,000 $ 1,930,216
U.S. Treasury Bills, 5.035% to 5.130% with maturities to 11/12/98............ 2,949,000 2,894,116
-----------
TOTAL SHORT TERM INVESTMENTS (COST $4,823,102)............................... 4,824,332
-----------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $40,550,003)............ 54,903,768
-----------
(a)REPURCHASES AGREEMENTS 9.4%
Merrill Lynch & Co. Inc., 5.80%, 7/01/98 (Maturity Value $2,800,451)
Collaterized by U.S. Treasury Notes........................................ 2,800,000 2,800,000
Morgan Stanley Inc., 5.75%, 7/01/98 (Maturity Value $2,800,447) Collaterized
by U.S. Treasury Notes..................................................... 2,800,000 2,800,000
-----------
TOTAL REPURCHASE AGREEMENTS (COST $5,600,000)................................ 5,600,000
-----------
TOTAL INVESTMENTS (COST $46,150,003) 101.9%.................................. 60,503,768
OTHER ASSETS, LESS LIABILITIES (1.9%)........................................ (1,128,864)
-----------
TOTAL NET ASSETS 100.0%...................................................... $59,374,904
===========
</TABLE>
*Non-income producing.
**Securities traded in U.S. dollars.
(a)See Note 1(e) regarding repurchase agreements.
See Notes to Financial Statements.
14
PAGE
TEMPLETON AMERICAN TRUST, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $40,550,003)..... $54,903,768
Repurchase agreements, at value and cost................... 5,600,000
Cash....................................................... 999
Receivables:
Investment securities sold................................ 924,299
Capital shares sold....................................... 112,346
Dividends and interest.................................... 57,491
-----------
Total assets.......................................... 61,598,903
-----------
Liabilities:
Payables:
Investment securities purchased........................... 1,930,000
Capital shares redeemed................................... 132,526
To affiliates............................................. 139,869
Accrued liabilities........................................ 21,604
-----------
Total liabilities..................................... 2,223,999
-----------
Net assets, at value........................................ $59,374,904
===========
Net assets consist of:
Accumulated net investment loss............................ $ (9,433)
Net unrealized appreciation................................ 14,353,765
Accumulated net realized gain.............................. 5,406,569
Capital shares............................................. 39,624,003
-----------
Net assets, at value........................................ $59,374,904
===========
CLASS I:
Net asset value per share ($6,703,060 / 373,909 shares
outstanding)............................................. $17.93
===========
Maximum offering price per share ($17.93 / 94.25%)......... $19.02
===========
CLASS II:
Net asset value per share ($52,671,844 / 2,940,766 shares
outstanding)*............................................ $17.91
===========
Maximum offering price per share ($17.91 / 99.00%)......... $18.09
===========
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
15
PAGE
TEMPLETON AMERICAN TRUST, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $11,501)
Dividends.................................................. $ 376,678
Interest................................................... 224,770
----------
Total investment income............................... $ 601,448
Expenses:
Management fees (Note 3)................................... 205,236
Administrative fees (Note 3)............................... 43,979
Distribution fees (Note 3)
Class I................................................... 10,482
Class II.................................................. 263,291
Transfer agent fees (Note 3)............................... 32,000
Custodian fees............................................. 4,900
Reports to shareholders.................................... 15,500
Registration and filing fees............................... 16,493
Professional fees.......................................... 10,500
Directors' fees and expenses............................... 8,500
----------
Total expenses........................................ 610,881
----------
Net investment loss............................... (9,433)
----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... 5,427,543
Foreign currency transactions............................. (1,706)
----------
Net realized gain..................................... 5,425,837
Net unrealized depreciation on investments............ (103,698)
----------
Net realized and unrealized gain............................ 5,322,139
----------
Net increase in net assets resulting from operations........ $5,312,706
==========
</TABLE>
See Notes to Financial Statements.
16
PAGE
TEMPLETON AMERICAN TRUST, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
----------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment loss....................................... $ (9,433) $ (59,740)
Net realized gain from investments and foreign currency
transactions............................................ 5,425,837 8,772,720
Net unrealized appreciation (depreciation) on
investments............................................. (103,698) 1,234,510
----------------------------------------
Net increase in net assets resulting from operations.... 5,312,706 9,947,490
Distributions to shareholders from:
Net investment income:
Class I.................................................. -- (34,067)
Class II................................................. -- (8,714)
Net realized gains:
Class I.................................................. (293,518) (482,773)
Class II................................................. (2,672,535) (6,135,485)
Capital share transactions (Note 2):
Class I.................................................. 1,410,531 2,906,521
Class II................................................. (1,473,314) 4,196,590
----------------------------------------
Net increase in net assets.............................. 2,283,870 10,389,562
Net assets:
Beginning of period........................................ 57,091,034 46,701,472
----------------------------------------
End of period.............................................. $59,374,904 $57,091,034
========================================
Accumulated net investment loss included in net assets:
End of period.............................................. $ (9,433) $ --
========================================
</TABLE>
See Notes to Financial Statements.
17
PAGE
TEMPLETON AMERICAN TRUST, INC.
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton American Trust, Inc. (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company. The Fund
seeks long-term total return (a combination of capital growth and income) by
investing at least 65% of its total assets primarily in the equity and debt
securities of U.S. companies and the U.S. government, its agencies and
instrumentalities. The following summarizes the Fund's significant accounting
policies.
a. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.
b. FOREIGN CURRENCY TRANSLATION:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
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.
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 currency denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
c. INCOME TAXES:
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
18
PAGE
TEMPLETON AMERICAN TRUST, INC.
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONT.)
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
e. REPURCHASE AGREEMENTS:
The Fund may enter into repurchase agreements, which are accounted for as a loan
by the Fund to the seller, collateralized by securities which are delivered to
the Fund's custodian. The market value, including accrued interest, of the
initial collateralization is required to be at least 102% of the dollar amount
invested by the Fund, with the value of the underlying securities marked to
market daily to maintain coverage of at least 100%. At June 30, 1998, all
outstanding repurchase agreements held by the Fund had been entered into on that
date.
f. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles 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 expense during the reporting
period. Actual results could differ from those estimates.
2. CAPITAL STOCK
The Fund offers two classes of shares: Class I and Class II shares. The shares
differ by their initial sales load, distribution fees, voting rights on matters
affecting a single class and the exchange privilege of each class.
At June 30, 1998, there were an unlimited number of shares authorized ($0.01 par
value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-----------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I SHARES:
Shares sold................................................. 154,051 $ 2,705,086 205,470 $ 3,717,827
Shares issued on reinvestment of distributions.............. 14,989 260,929 27,495 464,649
Shares redeemed............................................. (87,859) (1,555,484) (68,378) (1,275,955)
-----------------------------------------------------
Net increase................................................ 81,181 $ 1,410,531 164,587 $ 2,906,521
=====================================================
</TABLE>
19
PAGE
TEMPLETON AMERICAN TRUST, INC.
Notes to Financial Statements (unaudited) (continued)
2. CAPITAL STOCK (CONT.)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS II SHARES:
Shares sold................................................. 354,787 $ 6,198,815 336,921 $ 6,061,966
Shares issued on reinvestment of distributions.............. 136,912 2,385,007 322,381 5,449,383
Shares redeemed............................................. (576,812) (10,057,136) (416,422) (7,314,759)
------------------------------------------------------
Net increase (decrease)..................................... (85,113) $ (1,473,314) 242,880 $ 4,196,590
======================================================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also directors or officers of Templeton
Investment Counsel, Inc. (TICI), Franklin Templeton Services, Inc. (FT
Services), Franklin/Templeton Distributors, Inc. (Distributors) and
Franklin/Templeton Investor Services, Inc. (Investor Services), the Fund's
investment manager, administrative manager, principal underwriter, and transfer
agent, respectively.
The Fund pays an investment management fee to TICI of 0.70% per year of the
average daily net assets of the Fund. The Fund pays an administrative fee to FT
Services based on the Fund's average daily net assets as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- ------------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
</TABLE>
The Fund reimburses Distributors up to 0.35% and 1.00% per year of the average
daily net assets of Class I and Class II shares, respectively, for costs
incurred in marketing the Fund's Class I and Class II shares. Under the Class I
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At June 30, 1998, there were unreimbursed costs of $622. Distributors
received net commissions from sales of fund shares and received contingent
deferred sales charges for the period of $5,839 and $3,245, respectively.
Legal fees of $21,751 were paid to a law firm in which a partner is an officer
of the Fund.
20
PAGE
TEMPLETON AMERICAN TRUST, INC.
Notes to Financial Statements (unaudited) (continued)
4. INCOME TAXES
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At June 30, 1998, the net unrealized appreciation
based on the cost of investments for income tax purposes was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $16,593,952
Unrealized depreciation..................................... (2,240,187)
-----------
Net unrealized appreciation................................. $14,353,765
===========
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 1998 aggregated $8,686,574 and $10,832,976 respectively.
6. SUBSEQUENT EVENT
The Fund's Board of Directors is considering a tax-free merger of the Fund with
another fund affiliated with Franklin Resources, Inc., the parent company of the
Fund's investment manager.
21
PAGE
This page intentionally left blank
PAGE
This page intentionally left blank
PAGE
This page intentionally left blank
PAGE
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. To ensure the highest quality of service, telephone
calls to or from our service departments may be monitored, recorded and
accessed. These calls can be determined by the presence of a regular beeping
tone.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global
Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global
Real Estate Fund
Templeton Global
Smaller Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and
Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency Fund
Franklin Templeton Hard
Currency Fund
Templeton Americas Government
Securities Fund
GROWTH
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap
Growth Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund*
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund*
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.
FUND ALLOCATOR SERIES
Franklin Templeton Conservative
Target Fund
Franklin Templeton Moderate
Target Fund
Franklin Templeton Growth
Target Fund
INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Bond Fund
Franklin Floating Rate Trust
Franklin Investment Grade
Income Fund
Franklin Short-Intermediate
U.S. Government Securities Fund
Franklin U.S. Government
Securities Fund
Franklin Money Fund
Franklin Federal Money Fund
FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Income Fund
Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
TAX-FREE INCOME
Alabama
Arizona**
Arkansas***
California**
Colorado
Connecticut
Florida**
Georgia
Hawaii***
Indiana
Kentucky
Louisiana
Maryland
Massachusetts+
Michigan**
Minnesota+
Missouri
New Jersey
New York**
North Carolina
Ohio+
Oregon
Pennsylvania
Tennessee***
Texas
Virginia
Washington***
VARIABLE ANNUITIES++
Franklin Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*These funds are now closed to new accounts, with the exception of retirement
plan accounts.
**Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and/or a high yield
portfolio (CA) and a money market portfolio (CA and NY).
***The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
+Portfolio of insured municipal securities.
++Franklin Valuemark and Franklin Templeton Valuemark Income Plus are issued by
Allianz Life Insurance Company of North America or by its wholly owned
subsidiary, Preferred Life Insurance Company of New York, and distributed by
NALAC Financial Plans, LLC. The Franklin Valuemark Funds are managed by Franklin
Advisers, Inc. and its Templeton and Franklin affiliates.
07/98
PAGE
TEMPLETON AMERICAN
TRUST, INC.
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404-1585
1-800/DIAL BEN(R)
www.franklin-templeton.com
SHAREHOLDER SERVICES
1-800-632-2301
FUND INFORMATION
1-800-342-5236
This report must be preceded or accompanied by the current prospectus of the
Templeton American Trust, Inc., which contains more complete information
including risk factors, charges and expenses. Like any investment in securities,
the Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political, and other factors, as well as investment decisions by the
Investment Manager, which will not always be profitable or wise. The Fund and
Fund investors are not protected from such losses by the Investment Manager.
Therefore, investors who cannot accept the risk of such losses should not invest
in shares of the Fund.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded, and accessed. These calls can be
determined by the presence of a regular beeping tone.
100 S98 08/98 [LOGO] Printed on recycled paper
