<PAGE> 1
TEMPLETON LATIN
AMERICA FUND
YOUR FUND'S OBJECTIVE:
The Templeton Latin America Fund seeks long-term capital appreciation through
investing at least 65% of its assets in equity and debt securities of issuers in
Latin America.
November 15, 1996
Dear Shareholder:
We are pleased to bring you this semi-annual report of the Templeton Latin
America Fund for the six months ended September 30, 1996. As discussed in the
Per-formance Summary on page 6, the Fund's Class I shares delivered a six-month
total return of 5.55%.
During the period, most Latin American economies experienced subdued inflation
and strong growth. This return to growth was especially important, given the
significant economic slowdowns after Mexico's 1994 currency devaluation.
Although the reporting period was a positive one for many investors in Latin
American stocks, it is interesting to note the sharp divergence of performance
among equity markets in the region. For example, as measured in U.S. dollars,
Brazil's stock market appreciated 25.96%, Argentina's 9.72%, Mexico's 5.67%, and
Chile's 4.83%. This shows how misleading it can be to generalize about Latin
America.
1
<PAGE> 2
TEMPLETON LATIN AMERICA FUND
Geographic Distribution on 9/30/96
Based on Total Net Assets
[PIE CHART GRAPHIC]
<TABLE>
<S> <C>
Brazil 33.2%
Argentina 13.2%
Peru 5.9%
Colombia 3.5%
Mexico 27.0%
Chile 2.5%
Ecuador 1.7%
Bolivia 1.5%
Short-Term Obligations &
Other Net Assets 11.5%
</TABLE>
Brazil's strong showing deserves mention mainly because of the unique dynamics
that drove its stock market upwards. Although many Brazilian equities,
especially those in the private sector, barely moved during the period, the
shares of state-owned companies (parastatals) generally performed very well. In
our opinion, these stocks, which were primarily in the telecommunications and
electric utility sectors, posted solid gains because many investors believed the
Brazilian government would privatize most parastatals in the near future. Many
investors seemed to think that, in order to maximize the selling prices of these
firms, the Brazilian government would have to liberalize regulated tariff
structures that historically had kept telephone and electricity rates below
international levels. During the period, we noticed the first hint of tariff
rate increases in the telecommunications industry. The main beneficiary of these
higher tariffs was the Fund's top holding, Telebras-Telecomunicacoes Brasileiras
SA, whose share price appreciated more than 64%, as measured in U.S. dollars,
during the six months under review.
Another area of strength was Argentina, whose economy improved after the
government implemented market-friendly reforms. This helped to spark investor
interest and drive equity prices higher. In our opinion, the country will
continue to restructure and has the potential to reap economic rewards.
Due to its low exposure to Chilean equities, the Fund was not materially damaged
by the lackluster performance of Chile's stock market. Accelerating economic
growth compelled the Chilean central bank to maintain high interest rates in an
effort to curb inflation. In the eyes of
2
<PAGE> 3
TEMPLETON LATIN AMERICA FUND
Portfolio Breakdown on 9/30/96
Based on Total Net Assets
[PIE CHART GRAPHIC]
<TABLE>
<S> <C>
Telecommunications 17.9%
Food & Household
Products 10.6%
Banking 9.7%
Multi-Industry 8.1%
Metals & Mining 7.5%
Energy Sources 6.7%
Utilities - Electrical & Gas 6.2%
Forest Products & Paper 4.8%
Merchandising 3.8%
Other Industries 13.2%
Short-Term Obligations &
Other Net Assets 11.5%
</TABLE>
domestic investors, bonds earning 7.5% to 8% provided stiff competition to the
general equity market. Consequently, our exposure to Chilean stocks was only
2.5% on September 30, 1996.
The Fund was hurt by the Mexican stock market's performance, which only slightly
outperformed the Chilean market. Mexico's performance disappointed us because
interest rates there declined, inflation was subdued, and the Mexican currency
strengthened. In our opinion, it is only a matter of time before investors
believe that Mexico's business sector is fundamentally sound, which may
encourage additional investments and cause stock prices to rise.
TEMPLETON LATIN AMERICA FUND
Top 10 Holdings on 9/30/96
Based on Total Net Assets
<TABLE>
<CAPTION>
Company, % of Total
Industry, Country Net Assets
- -------------------------------------------------------------------------------
<S> <C>
Telebras-Telecomunicacoes Brasileiras SA
Telecommunications, Brazil 4.2%
- -------------------------------------------------------------------------------
Telecomunicacoes de Minas Gerais SA
Telecommunications, Brazil 4.0%
- -------------------------------------------------------------------------------
Banco Bradesco SA, pfd.
Banking, Brazil 3.8%
- -------------------------------------------------------------------------------
Perez Companc SA, B
Energy Sources, Argentina 3.8%
- -------------------------------------------------------------------------------
Vale do Rio Doce, pfd., ADR
Metals & Mining, Brazil 3.6%
- -------------------------------------------------------------------------------
Coteminas Cia Tecidos Notre de Minas
Textiles & Apparel, Brazil 3.6%
- -------------------------------------------------------------------------------
Alfa SA de CV, A
Multi-Industry, Mexico 3.5%
- -------------------------------------------------------------------------------
Cpt-Telfonica del Peru SA, B
Telecommunications, Peru 3.0%
- -------------------------------------------------------------------------------
Cia Energetica de Minas Gerais, pfd., ADR
Utilities - Electrical & Gas, Brazil 3.0%
- -------------------------------------------------------------------------------
Banco Ganadero SA, ADR
Banking, Colombia 2.9%
- -------------------------------------------------------------------------------
</TABLE>
For a detailed listing of portfolio holdings, please see page 10 of this report.
During the period, cash flow into the Fund was relatively healthy, providing us
with the opportunity to augment our existing positions and purchase shares in
several new companies that we
3
<PAGE> 4
believe have strong earnings potential. In Brazil, we added to our holdings of
the financial services company Banco Bradesco SA because we believe it will
benefit from new banking technology and the wide profit margins available on
loans in emerging market countries. In Mexico, we initiated positions in the
pasta maker, Tablex SA de CV, and the Coke(R) bottler, Panamerican Beverages
Inc. We believe that these companies have the potential to prosper from an
improving Mexican economy. In Peru, we purchased shares of Cpt-Telefonica del
Peru SA, one of the largest Latin American companies ever privatized. Expecting
higher demand for oil, we added to our positions of the Argentinean oil
companies YPF Sociedad Anonima and Perez Companc SA, the latter being one of the
Fund's top ten holdings.
Looking forward, we are optimistic about potential long-term investment
opportunities in Latin America. In our view, many Latin American countries are
committed to market-oriented reforms and have successfully rejuvenated their
economies and changed their spending habits. If social security and pension
systems are established, they should provide a source of investment capital for
the region's securities markets and may, thereby, reduce dependence upon foreign
capital. Additionally, trade barriers have been lowered through treaties such as
the North American Free Trade Agreement, and the Mercosur agreement, which
integrates the economies of Argentina, Brazil, Uruguay, and Paraguay. We believe
such developments are the beginning of a long-term process that should
eventually foster closer economic ties among Latin American countries.
This discussion reflects the strategies we employed for the Fund during the six
months under review, and includes our opinions as of the close of the period.
Since economic and market conditions are constantly changing, our strategies,
evaluations, conclusions and decisions regarding portfolio holdings may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the Fund.
4
<PAGE> 5
It is important to remember that investing in emerging markets concentrated in a
single region involves special considerations, which may include risks related
to market and currency volatility, adverse economic, social and political
developments, and the relatively small size and lesser liquidity of these
markets. These special risks and other considerations are discussed in the
Fund's prospectus. While short-term volatility can be disconcerting, declines of
as much as 30% to 40% are not unusual in emerging markets. For example, the
Mexican stock market has increased more than 157% in the last five years, but
has suffered four declines of more than 10% during that time.*
We thank you for investing in the Templeton Latin America Fund and look forward
to serving your investment needs in the months and years to come.
Sincerely,
/s/ Stephen S. Oler
- ---------------------------------
Stephen S. Oler, CFA
Portfolio Manager
Templeton Latin America Fund
* Source: Bloomberg. Based on quarterly percentage price change over the
five-year period ending September 30, 1996.
Since July 1996, Stephen S. Oler has been the lead portfolio manager of
Templeton Latin America Fund. Before joining Templeton, Mr. Oler was a senior
vice president at Baring Asset Management, where he was responsible for Latin
American equity portfolio management and research. During his 11-year stay at
Barings, he followed European equities from the London office, then moved in
1989 to the Boston office where he followed Canadian equities and specialized
in the consumer and healthcare industries in the U.S. market. In 1993, he began
devoting his full time to following Latin stocks. His research responsibilities
currently include industry coverage of global non-life insurance, and
electricals and consumer electronics, as well as the markets of Mexico and
Greece.
Mr. Oler received a master of philosophy degree from King's College, Cambridge
University, UK in International Relations and a bachelor of arts degree with
honors from the University of Pennsylvania in American History. He is a
Chartered Financial Analyst and a member of the Association for Investment
Management and Research (AIMR). He also is a member of the Boston Security
Analysts Society where he formerly served as a member of the teaching faculty
responsible for instructing Equity Analysis for the CFA Level II Exam
Preparation Course.
5
<PAGE> 6
PERFORMANCE SUMMARY
CLASS I
The Templeton Latin America Fund Class I shares provided a total return of 5.55%
for the six-month period ended September 30, 1996. Total return represents the
change in value of an investment, assuming reinvestment of dividend and capital
gains distributions, and does not include the initial sales charge.
The price of the Fund's shares, as measured by net asset value, increased 56
cents ($0.56), from $10.53 on March 31, 1996, to $11.09 on September 30, 1996.
During the reporting period, shareholders received distributions of 2.5 cents
($0.025) per share in dividend income.
We believe it is important to maintain a long-term investment perspective when
managing the Fund, and we encourage our shareholders to view their investments
in a similar manner. Past performance is not predictive of future results, and
distributions will vary depending on income earned by the Fund, as well as any
profits realized from the sale of securities in the portfolio.
TEMPLETON LATIN AMERICA FUND
CLASS I
Periods Ended September 30, 1996
<TABLE>
<CAPTION>
Since
Inception
One-Year (5/8/95)
<S> <C> <C>
Cumulative
Total Return(1) 9.86% 12.28%
Average Annual
Total Return(2) 3.58% 4.12%
Value of $10,000
Investment(3) $10,358 $10,583
</TABLE>
1.Cumulative total return represents the change in value of an investment over
the indicated periods and does not include the initial sales charge.
2.Average annual total return represents the average annual change in value of
an investment over the indicated periods 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 indicated periods and include the the maximum 5.75% initial sales
charge.
All calculations reflect the deduction of a proportional share of Fund expenses
on an annual basis, and assume reinvestment of dividends and capital gains when
paid. The Fund's Investment Manager and Business Manager have agreed in advance
to reduce their respective fees and, in the case of the Business Manager, to
make certain payments to reduce expenses, which increases total return to
shareholders. If the Managers had not taken this action, the Fund's total
returns would have been lower. After December 31, 1996, the fee reduction may be
discontinued at any time.
Investment return and principal value will fluctuate with market conditions,
currencies, and the economic, social and political climates of the countries
where investments are made. Developing markets involve heightened risks related
to the same factors, in addition to those associated with the relatively small
size and lesser liquidity of those markets. Therefore, your shares, when
redeemed, may be worth more or less than their initial cost. Past performance is
not predictive of future results.
6
<PAGE> 7
PERFORMANCE SUMMARY
CLASS II
The Templeton Latin America Fund Class II shares provided a total return of
5.12% for the six-month period ended September 30, 1996. Total return represents
the change in value of an investment, assuming reinvestment of dividend and
capital gains distributions, and does not include sales charges.
The price of the Fund's shares, as measured by net asset value, increased 52
cents ($0.52), from $10.49 on March 31, 1996, to $11.01 on September 30, 1996.
During the reporting period, shareholders received distributions of 1.74 cents
($0.0174) per share in dividend income.
We believe it is important to maintain a long-term investment perspective when
managing the Fund, and we encourage our shareholders to view their investments
in a similar manner. Past performance is not predictive of future results, and
distributions will vary depending on income earned by the Fund, as well as any
profits realized from the sale of securities in the portfolio.
TEMPLETON LATIN AMERICA FUND
CLASS II
Periods Ended September 30, 1996
<TABLE>
<CAPTION>
Since
Inception
One-Year (5/8/95)
<S> <C> <C>
Cumulative
Total Return(1) 9.01% 11.08%
Average Annual
Total Return(2) 6.96% 6.34%
Value of $10,000
Investment(3) $10,696 $10,899
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the indicated periods and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods. It includes the 1.0% initial sales
charge and the 1.0% Contingent Deferred Sales Charge, applicable to shares
redeemed within the first 18 months of investment.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the indicated periods and include all sales charges.
All calculations reflect the deduction of a proportional share of Fund expenses
on an annual basis, and assume reinvestment of dividends and capital gains when
paid. The Fund's Investment Manager and Business Manager have agreed in advance
to reduce their respective fees and, in the case of the Business Manager, to
make certain payments to reduce expenses, which increases total return to
shareholders. If the Managers had not taken this action, the Fund's total
returns would have been lower. After December 31, 1996, the fee reduction may be
discontinued at any time.
Investment return and principal value will fluctuate with market conditions,
currencies, and the economic, social and political climates of the countries
where investments are made. Developing markets involve heightened risks related
to the same factors, in addition to those associated with the relatively small
size and lesser liquidity of those markets. Therefore, your shares, when
redeemed, may be worth more or less than their initial cost. Past performance is
not predictive of future results.
7
<PAGE> 8
TEMPLETON LATIN AMERICA FUND
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE -- CLASS I
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS MAY 8, 1995
ENDED (COMMENCEMENT
SEPTEMBER 30, 1996 OF OPERATIONS) TO
(UNAUDITED) MARCH 31, 1996
------------------ ----------------
<S> <C> <C>
Net asset value, beginning of period $10.53 $10.00
------- ------
Income from investment operations:
Net investment income .05 .12
Net realized and unrealized gain .54 .51
------- ------
Total from investment operations .59 .63
Distributions from net investment income (.03) (.10)
------- ------
Change in net asset value .56 .53
------- ------
Net asset value, end of period $11.09 $10.53
======= ======
TOTAL RETURN* 5.55% 6.37%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of period (000) $7,079 $5,150
Ratio of expenses to average net assets 3.61%** 4.02%**
Ratio of expenses, net of reimbursement, to average net assets 2.35%** 2.35%**
Ratio of net investment income to average net assets 5.70%** 1.71%**
Portfolio turnover rate 2.55% --
Average commission rate paid (per share) $.0006 $.0004
* TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS. NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
** ANNUALIZED.
</TABLE>
8
<PAGE> 9
TEMPLETON LATIN AMERICA FUND
Financial Highlights (cont.)
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE -- CLASS II
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS MAY 8, 1995
ENDED (COMMENCEMENT OF
SEPTEMBER 30, 1996 OPERATIONS) TO
(UNAUDITED) MARCH 31, 1996
------------------ ----------------
<S> <C> <C>
Net asset value, beginning of period $10.49 $10.00
------- ------
Income from investment operations:
Net investment income .02 .08
Net realized and unrealized gain .52 .48
------- ------
Total from investment operations .54 .56
Distributions from net investment income (.02) (.07)
------- ------
Change in net asset value .52 .49
------- ------
Net asset value, end of period $11.01 $10.49
======= ======
TOTAL RETURN* 5.12% 5.67%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of period (000) $1,977 $1,351
Ratio of expenses to average net assets 4.26%** 4.67%**
Ratio of expenses, net of reimbursement, to average net assets 3.00%** 3.00%**
Ratio of net investment income to average net assets 6.37%** 1.14%**
Portfolio turnover rate 2.55% --
Average commission rate paid (per share) $.0006 $.0004
* TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS OR THE CONTINGENT DEFERRED SALES CHARGE. NOT ANNUALIZED FOR PERIODS OF LESS
THAN ONE YEAR.
** ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
TEMPLETON LATIN AMERICA FUND
Investment Portfolio, September 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS: 58.7%
- ------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES: 1.6%
*Consorcio G Grupo Dina SA de CV, ADR Mex. 59,000 $ 147,500
- ------------------------------------------------------------------------------------------------------------------------
BANKING: 5.9%
Banco de Galicia y Buenos Aires SA, B Arg. 16,000 88,014
Banco Ganadero SA, ADR Col. 9,800 265,825
Corporacion Financiera del Valle, ADR Col. 8,104 50,650
Grupo Financiero Banamex Accival SA, B Mex. 61,000 131,660
----------
536,149
- ------------------------------------------------------------------------------------------------------------------------
BEVERAGES & TOBACCO: 0.5%
Cristalerias de Chile SA, ADR Chil. 2,000 42,250
- ------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS & COMPONENTS: 2.2%
*Comercial Industrial Financiera Inmobiliari
Agropecuaria, ADR, 144A Arg. 34,000 71,400
*Corcemar Corp. Arg. 11,626 51,163
*Internacional de Ceramica SA de CV, B Mex. 432 515
*Internacional de Ceramica SA de CV, units D shares
and L shares Mex. 57,000 73,967
----------
197,045
- ------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION & HOUSING: 2.0%
*Empresas ICA Sociedad Controladora SA, ADR Mex. 11,700 178,425
- ------------------------------------------------------------------------------------------------------------------------
ENERGY SOURCES: 6.0%
Perez Companc SA, B Arg. 54,210 343,204
Transportadora de Gas del Sur SA, ADR B Arg. 9,200 112,700
YPF Sociedad Anonima, ADR Arg. 4,000 91,500
----------
547,404
- ------------------------------------------------------------------------------------------------------------------------
FOOD & HOUSEHOLD PRODUCTS: 8.0%
*Grupo Embotellador de Mexico SA, B Mex. 43,500 61,633
Grupo Industrial Maseca SA de CV, ADR B Mex. 9,700 183,088
Herdez SA de CV, A Mex. 300,000 92,161
Panamerican Beverages Inc., A Mex. 4,800 197,400
Tablex SA de CV Mex. 75,000 188,692
----------
722,974
- ------------------------------------------------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER: 2.5%
*Empaques Ponderosa SA de CV, B Mex. 73,500 228,714
- ------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL COMPONENTS: 2.0%
Madeco Manufacturera de Cobre SA, ADR Chil. 7,900 182,688
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
TEMPLETON LATIN AMERICA FUND
Investment Portfolio, September 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------------------------------------------------
MERCHANDISING: 1.5%
* Cifra SA, C Mex. 95,000 $ 136,110
- ------------------------------------------------------------------------------------------------------------------------
METALS & MINING: 3.9%
Companhia Siderurgica Nacional Braz. 9,700,000 207,111
*Grupo Simec SA de CV, ADR Mex. 35,000 148,750
----------
355,861
- ------------------------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY: 8.1%
Alfa SA de CV, A Mex. 34,000 150,821
*Alfa SA de CV, A 144A Mex. 37,000 164,129
Banco de Credito del Peru Per. 98,897 148,937
Banco Wiese, ADR Per. 18,000 114,750
La Cemento Nacional CA, GDR Ecu. 600 112,800
La Cemento Nacional CA, GDR, 144A Ecu. 200 37,600
----------
729,037
- ------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS: 9.8%
Cpt-Telefonica del Peru SA, B Per. 122,000 275,594
Telebras-Telecomunicacoes Brasileiras SA Braz. 611,975 39,799
Telecom Argentina Stet France SA, ADR Arg. 1,900 76,713
Telecomunicacoes de Minas Gerais SA Braz. 1,635,113 156,064
Telefonica de Argentina SA, B, ADR Arg. 3,400 84,575
Telesp-Telecomunicacoes de Sao Paulo SA Braz. 16,587 2,811
Telefonos de Mexico SA, L, ADR Mex. 7,700 247,363
----------
882,919
- ------------------------------------------------------------------------------------------------------------------------
TEXTILES & APPAREL: 0.2%
Coteminas Cia Tecidos Norte de Minas Braz. 70,000 21,254
- ------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION: 1.3%
Transportacion Maritima Mexicana SA de CV, L, ADR Mex. 15,000 118,125
- ------------------------------------------------------------------------------------------------------------------------
UTILITIES-ELECTRICAL & GAS: 3.2%
Central Costanera SA, ADR, 144A Arg. 2,600 82,550
Central Puerto SA, ADR Arg. 4,700 74,037
Compania Boliviana de Energia Electricas SA Bol. 3,000 133,875
----------
290,462
----------
TOTAL COMMON STOCKS (cost $4,962,618) 5,316,917
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
TEMPLETON LATIN AMERICA FUND
Investment Portfolio, September 30, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS: 29.8%
- ------------------------------------------------------------------------------------------------------------------------
Aracruz Celulose SA, pfd., ADR Braz. 24,100 $ 210,875
Banco Bradesco SA, pfd. Braz. 40,480,730 344,939
Ceval Alimentos SA, pfd. Braz. 25,700,000 236,611
Cia de Inversiones en Telecomunicaciones SA, 7.00%,
conv., pfd. Arg. 2,350 121,613
Cia Energetica de Minas Gerais, pfd., ADR Braz. 9,200 274,829
Coteminas Cia Tecidos Norte de Minas, pfd. Braz. 831,000 301,146
Lojas Americanas SA, pfd. Braz. 12,300,000 208,413
Petrobras-Petroleo Brasileiro SA, pfd. Braz. 480,000 56,411
Telebras-Telecomunicacoes Brasileiras SA, pfd. Braz. 10,429 820
Telebras-Telecomunicacoes Brasileiras SA, pfd., ADR Braz. 4,300 337,550
Telecomunicacoes de Minas Gerais SA, pfd. Braz. 1,760,000 208,580
Telesp-Telecomunicacoes de Sao Paulo SA, pfd. Braz. 387,057 74,303
Vale do Rio Doce, pfd., ADR Braz. 16,500 327,253
----------
TOTAL PREFERRED STOCKS (cost $2,555,652) 2,703,343
- ------------------------------------------------------------------------------------------------------------------------
PRINCIPAL IN
LOCAL CURRENCY**
- ------------------------------------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 10.9% (cost $983,609)
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bills, 4.95% to 5.19% with
maturities to 12/12/96 U.S. 974,000 983,829
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 99.4% (cost $8,501,879) 9,004,089
OTHER ASSETS, LESS LIABILITIES: 0.6% 51,758
----------
TOTAL NET ASSETS: 100.0% $9,055,847
----------
----------
</TABLE>
* NON-INCOME PRODUCING.
** CURRENCY OF COUNTRY INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
TEMPLETON LATIN AMERICA FUND
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $8,501,879) $9,004,089
Cash 117
Receivables:
Fund shares sold 37,826
Dividends and interest 15,466
Unamortized organization costs 63,188
----------
Total assets 9,120,686
----------
Liabilities:
Payables:
Investment securities purchased 20,945
Fund shares redeemed 2,746
Accrued expenses 41,148
----------
Total liabilities 64,839
----------
Net assets, at value $9,055,847
==========
Net assets consist of:
Undistributed net investment income $ 31,966
Net unrealized appreciation 502,210
Accumulated net realized gain 22,703
Net capital paid in on shares of
beneficial interest 8,498,968
----------
Net assets, at value $9,055,847
==========
Class I
Net asset value per share
($7,079,352 / 638,552 shares
outstanding) $ 11.09
==========
Maximum offering price
($11.09 / 94.25%) $ 11.77
==========
Class II
Net asset value per share
($1,976,495 / 179,441 shares
outstanding) $ 11.01
==========
Maximum offering price
($11.01 / 99.00%) $ 11.12
==========
</TABLE>
STATEMENT OF OPERATIONS
for the six months ended
September 30, 1996 (unaudited)
<TABLE>
<S> <C> <C>
Investment income:
(net of $7,698 foreign
taxes withheld)
Dividends $103,238
Interest 29,948
--------
Total income $133,186
Expenses:
Management fees (Note 3) 49,554
Administrative fees (Note 3) 5,947
Distribution fees (Note 3)
Class I 10,761
Class II 8,936
Transfer agent fees (Note 3) 11,250
Custodian fees 5,250
Reports to shareholders 11,500
Audit fees 5,250
Legal fees (Note 3) 2,200
Registration and filing fees 27,000
Amortization of organization costs 9,344
Other 2,225
--------
Total expenses 149,217
Less expenses reimbursed
(Note 3) (50,090)
--------
Total expenses less
reimbursement 99,127
--------
Net investment income 34,059
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments 28,342
Foreign currency transactions (6,151)
--------
22,191
Net unrealized appreciation
on investments 309,667
--------
Net realized and
unrealized gain 331,858
--------
Net increase in net assets resulting
from operations $365,917
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 14
TEMPLETON LATIN AMERICA FUND
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS MAY 8, 1995
ENDED (COMMENCEMENT OF
SEPTEMBER 30 1996 OPERATIONS) TO
(UNAUDITED) MARCH 31, 1996
------------------ -----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 34,059 $ 56,599
Net realized gain on investment and foreign currency transactions 22,191 512
Net unrealized appreciation 309,667 192,543
---------- ----------
Net increase in net assets resulting from operations 365,917 249,654
Distributions to shareholders:
From net investment income
Class I (13,182) (35,519)
Class II (2,747) (7,244)
Fund share transactions (Note 2)
Class I 1,659,643 4,989,263
Class II 544,759 1,305,303
---------- ----------
Net increase in net assets 2,554,390 6,501,457
Net assets:
Beginning of period 6,501,457 --
---------- ----------
End of period $9,055,847 $ 6,501,457
========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
TEMPLETON LATIN AMERICA FUND
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Latin America Fund (the Fund) is a separate diversified series of
Templeton Global Investment Trust (the Trust), a Delaware business trust, which
is an open-end management investment company registered under the Investment
Company Act of 1940. The Fund seeks to achieve long-term capital appreciation by
investing primarily in equity securities and debt obligations of issuers in
Latin American countries. The following summarizes the Fund's significant
accounting policies.
A. SECURITIES VALUATIONS:
Securities listed or traded on a recognized national or foreign exchange or
NASDAQ are valued at the last reported sales prices on the principal exchange on
which the securities are traded. Over-the-counter securities and listed
securities for which no sale is reported are valued at the mean between the last
current bid and asked prices. Securities for which market quotations are not
readily available are valued at fair value as determined by management and
approved in good faith by the Board of Trustees.
B. FOREIGN CURRENCY TRANSACTIONS:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign currencies
are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customarily
enters into a foreign exchange contract to minimize foreign exchange risk
between the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net 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, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the value
of assets and liabilities other than investments in securities at the end of the
fiscal period, resulting from changes in the exchange rates.
C. INCOME TAXES:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
D. UNAMORTIZED ORGANIZATION COSTS:
Organization costs are being amortized on a straight line basis over five years.
E. SECURITY TRANSACTIONS, INVESTMENT INCOME, DISTRIBUTIONS, AND EXPENSES:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income on foreign
securities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend 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.
15
<PAGE> 16
TEMPLETON LATIN AMERICA FUND
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
The Fund offers two classes of shares: Class I shares and Class II shares.
Shares of each class are identical except for their initial sales load, a
contingent deferred sales charge on Class II shares, distribution fees, and
voting rights on matters affecting a single class. At September 30, 1996, there
was an unlimited number of shares of beneficial interest authorized ($.01 par
value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
CLASS I
--------------------------------------------
FOR THE PERIOD
MAY 8, 1995
(COMMENCEMENT OF
SIX MONTHS ENDED OPERATIONS) THROUGH
SEPTEMBER 30, 1996 MARCH 31, 1996
--------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
-------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold 226,394 $2,500,277 601,968 $6,143,719
Shares issued on reinvestment of distributions 977 10,940 3,013 29,565
Shares redeemed (78,046) (851,574) (115,755) (1,184,021)
------- ---------- -------- ----------
Net increase 149,325 $1,659,643 489,226 $4,989,263
======= ========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
CLASS II
--------------------------------------------
FOR THE PERIOD
MAY 8, 1995
(COMMENCEMENT OF
SIX MONTHS ENDED OPERATIONS) THROUGH
SEPTEMBER 30, 1996 MARCH 31, 1996
--------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
-------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold 60,139 $ 649,568 131,412 $1,332,030
Shares issued on reinvestment of distributions 242 2,701 738 7,232
Shares redeemed (9,763) (107,510) (3,326) (33,959)
------- ---------- -------- ----------
Net increase 50,618 $ 544,759 128,824 $1,305,303
======= ========== ======== ==========
</TABLE>
Templeton Global Investors, Inc., the Fund's administrative manager, is the
record owner of 50,577 Class I shares and 50,443 Class II shares as of September
30, 1996.
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton
Investment Counsel, Inc. (TICI), Templeton Global Investors, Inc. (TGII),
Franklin Templeton Distributors, Inc. (FTD), and Franklin Templeton Investor
Services, Inc. (FTIS), the Fund's investment manager, administrative manager,
principal underwriter, and transfer agent, respectively.
The Fund pays monthly an investment management fee to TICI equal, on an annual
basis, to 1.25% of the Fund's average daily net assets. The Fund pays TGII
monthly its allocated share of an administrative fee of 0.15% per annum of the
first $200 million of the Trust's aggregate average daily net assets, 0.135% of
the next $500 million, 0.10% of the next $500 million, and 0.075% per annum of
average net assets in excess of $1.2 billion. TICI and TGII have voluntarily
agreed to reduce their respective fees to the extent necessary to limit total
expenses to an annual rate of 2.35% and 3.00% of average net assets of Class I
and II shares, respectively, through December 31, 1996. The amount of the
reimbursement for the six months ended
16
<PAGE> 17
TEMPLETON LATIN AMERICA FUND
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
September 30, 1996 is set forth in the Statement of Operations. For the six
months ended September 30, 1996, FTD received net commissions of $6,739 from the
sale of the Fund's shares and FTIS received fees of $11,250.
Under the distribution plans for Class I and Class II shares, the Fund
reimburses FTD quarterly for FTD's costs and expenses in connection with any
activity that is primarily intended to result in a sale of Fund shares, subject
to a maximum of 0.35% and 1.00% per annum of the average daily net assets of
Class I and Class II shares, respectively. Under the Class I distribution plan,
costs and expenses exceeding the maximum may be reimbursed in subsequent
periods. At September 30, 1996, unreimbursed expenses amounted to $163,683.
Class II shares redeemed within 18 months are subject to a contingent deferred
sales charge. Contingent deferred sales of $487 were paid to FTD for the six
months ended September 30, 1996.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel for
the Fund, which firm received fees of $2,200 for the six months ended September
30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended September 30, 1996 aggregated $2,405,313 and $152,145,
respectively. The cost of securities for federal income tax purposes is the same
as that shown in the investment portfolio. Realized gains and losses are
reported on an identified cost basis.
At September 30, 1996, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based on cost for federal income tax
purposes, was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 886,388
Unrealized depreciation (384,178)
---------
Net unrealized appreciation $ 502,210
=========
</TABLE>
17
<PAGE> 18
TEMPLETON LATIN AMERICA FUND, A SERIES OF TEMPLETON GLOBAL INVESTMENT TRUST
Special Meeting of Shareholders, June 28, 1996
- --------------------------------------------------------------------------------
A Special Meeting of Shareholders of the Fund was held at the Fund's offices,
700 Central Avenue, St. Petersburg, Florida, on June 28, 1996. The purpose of
the meeting was to vote on the approval of a new investment management agreement
between the Trust, on behalf of the Fund, and Templeton Investment Counsel, Inc.
and in their discretion, to authorize the proxyholders to vote upon such other
matters which may legally come before the meeting or any other adjournment
thereof. No other business was transacted at the meeting.
The results of the voting at the Special Meeting are as follows:
Approval of a new investment management agreement between the Trust, on behalf
of the Fund, and Templeton Investment Counsel, Inc.:
<TABLE>
<CAPTION>
% OF
NUMBER SHARES
OF SHARES OUTSTANDING
--------- -----------
<S> <C> <C>
For 385,829 56.31%
Against 1,139 0.17%
Abstain 18,911 2.77%
--------- -----------
Total 405,879 59.25%
======== ===========
</TABLE>
18
<PAGE> 19
LITERATURE REQUEST
- --------------------------------------------------------------------------------
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Fund Information, toll free, at
1-800/DIAL BEN (1-800/342-5236). Please read the prospectus carefully before you
invest or send 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 INCOME
Franklin Global Health Franklin Adjustable Rate
Care Fund Securities Fund
Franklin Templeton Franklin Adjustable U.S.
Japan Fund Government Securities Fund
Templeton Developing Franklin's AGE High
Markets Trust Income Fund
Templeton Foreign Fund Franklin Investment Grade
Income Fund
Templeton Foreign Smaller
Companies Fund Franklin Short-Intermediate U.S.
Government Securities Fund
Templeton Global
Infrastructure Fund Franklin U.S. Government
Securities Fund
Templeton Global
Opportunities Trust Franklin Money Fund
Templeton Global Franklin Federal Money Fund
Real Estate Fund
FOR NON-U.S. INVESTORS:
Templeton Global Smaller
Companies Fund Franklin Tax-Advantaged
High Yield Securities Fund
Templeton Greater
European Fund Franklin Tax-Advantaged
International Bond Fund
Templeton Growth Fund
Franklin Tax-Advantaged U.S.
Templeton Latin America Government Securities Fund
Fund
FOR CORPORATIONS:
Templeton Pacific
Growth Fund Franklin Corporate Qualified
Dividend Fund
Templeton World Fund
FRANKLIN FUNDS SEEKING
GLOBAL GROWTH AND INCOME TAX-FREE INCOME
Franklin Global Utilities Fund Federal Intermediate-Term
Tax-Free Income Fund
Franklin Templeton German
Government Bond Fund Federal Tax-Free Income Fund
Franklin Templeton High Yield Tax-Free
Global Currency Fund Income Fund
Mutual European Fund Insured Tax-Free Income Fund
Templeton Global Bond Fund Puerto Rico Tax-Free
Income Fund
Templeton Growth and
Income Fund Tax-Exempt Money Fund
GLOBAL INCOME FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
Franklin Global Government TAX-FREE INCOME
Income Fund
Franklin Templeton Hard Alabama
Currency Fund
Arizona*
Franklin Templeton High
Income Currency Fund Arkansas**
Templeton Americas California*
Government Securities Fund
Colorado
GROWTH
Connecticut
Franklin Blue Chip Fund
Florida*
Franklin California Growth Fund
Georgia
Franklin DynaTech Fund
Hawaii**
Franklin Equity Fund
Indiana
Franklin Gold Fund
Kentucky
Franklin Growth Fund
Louisiana
Franklin MidCap Growth Fund
Maryland
Franklin Small Cap Growth Fund
Massachusetts***
Mutual Discovery Fund
Michigan*
GROWTH AND INCOME
Minnesota***
Franklin Asset Allocation Fund
Missouri
Franklin Balance Sheet
Investment Fund New Jersey
Franklin Convertible New York*
Securities Fund
North Carolina
Franklin Equity Income Fund
Ohio***
Franklin Income Fund
Oregon
Franklin MicroCap Value Fund
Pennsylvania
Franklin Natural Resources Fund
Tennessee**
Franklin Real Estate
Securities Fund Texas
Franklin Rising Dividends Fund Virginia
Franklin Strategic Income Fund Washington**
Franklin Utilities Fund VARIABLE ANNUITIES
Franklin Value Fund Franklin Valuemark(R)
Mutual Beacon Fund Franklin Templeton
Valuemark Income Plus
Mutual Qualified Fund (an immediate annuity)
Mutual Shares Fund
Templeton American Trust, Inc.
*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. 11/96.1
<PAGE> 20
TEMPLETON LATIN AMERICA FUND
Principal Underwriter:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg
Florida 33701-3628
Shareholder Services
1-800-632-2301
Fund Information
1-800-312-5236
This report must be preceded or accompanied by a current prospectus of the
Templeton Latin America Fund, which contains more complete information,
including changes and expenses. Like any investment in securities, the value of
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. Therefore, investors who cannot accept this risk 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.
TEMPLETON
LATIN
AMERICA
FUND
Semi-Annual Report
September 30, 1996
[Franklin Templeton Logo]
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TL 418596 11/96
