<PAGE> 1
TEMPLETON GROWTH
AND INCOME FUND
YOUR FUND'S OBJECTIVE:
The Templeton Growth and Income Fund seeks high total return through a flexible
policy of investing in equity and debt securities of domestic and foreign
companies.
March 31, 1997
Dear Shareholder:
We are pleased to bring you this annual report of the Templeton Growth and
Income Fund, which covers the 12 months ended March 31, 1997.
Moderate economic growth, combined with low inflation and stable interest rates,
contributed to the strong performance of U.S. equities during most of the
reporting period. However, near the close of the period, on March 25, 1997, the
Federal Reserve Board increased the federal funds rate, prompting a series of
market downturns. Although Europe struggled to generate economic growth under
constraints imposed by the Maastricht Treaty, European exporters reaped the
benefits of a strong U.S. dollar and share prices rose in many of the
continent's stock markets. Conversely, in Asia, where the currencies of many
emerging-market countries were tied to the U.S. dollar, its strength compounded
problems faced by local companies already suffering from high labor costs and
sluggish overseas markets.
1
<PAGE> 2
Within this environment, the Fund's Class I shares provided a one-year
cumulative total return of 16.19%, as shown in the Performance Summary on page
7, significantly outperforming the unmanaged Morgan Stanley Capital
International(R) (MSCI) World Index, which delivered a total return of 9.85% for
the same period. The Fund's performance was helped by its small position in
Japan, its high exposure to the U.S. financial sector (where share price
appreciation was exceptionally strong), and the rising value of many of its
holdings in emerging markets, particularly Latin America and Eastern Europe.
TEMPLETON GROWTH AND INCOME FUND
CLASS I
Total Return Index Comparison
One-Year Performance (3/31/96 - 3/31/97)(1,2)
[BAR GRAPH]
<TABLE>
<CAPTION>
<S> <C>
Templeton Growth &
Income Fund 16.19%
MSCI World Index 9.85%
</TABLE>
1. FUND PERFORMANCE DOES NOT INCLUDE THE INITIAL SALES CHARGE AND REPRESENTS THE
CHANGE IN VALUE OF AN INVESTMENT DURING THE PERIOD SHOWN. IF THE SALES CHARGE
HAD BEEN INCLUDED, THE FUND'S TOTAL RETURN WOULD HAVE BEEN 9.55%. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NET ASSET VALUE. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
2. INDEX IS UNMANAGED AND INCLUDES REINVESTED DIVIDENDS.
TEMPLETON GROWTH AND INCOME FUND
Asset Allocation on 3/31/97
Based on Total Net Assets
[PIE CHART]
<TABLE>
<CAPTION>
<S> <C>
Equity 63.0%
Fixed-Income Securities 1.1%
Short-Term Obligations &
Other Net Assets 35.9%
</TABLE>
On March 31, 1997, Europe was our largest geographic exposure. During the fiscal
year, corporate restructuring helped generate stronger-than-expected profits for
many European companies. While some are restructuring more quickly than others,
we believe that the positive underlying trend towards improving shareholder
value has grown increasingly clear. However, since not all firms are
participating in the process, it is especially important to use an investment
approach based on selection of stocks we consider
2
<PAGE> 3
undervalued. Among the companies which restructured and, in our opinion, offered
attractive value were: BICC Group, a U.K cable company; Alcatel Alsthom SA, a
French industrial firm; and Volvo AB, a Swedish automobile manufacturer.
During the year under review, we increased our U.S. exposure, from 17.7% to
19.3% of total net assets. We initiated positions in Archer-Daniels Midland Co.
and IBP Inc., two agricultural companies that we believe have growth potential,
and Summit Properties Inc., a real estate investment trust which has had a
sizable dividend yield. We also realized profits by eliminating our holdings of
Chase Manhattan Corp. when its shares reached our target prices.
TEMPLETON GROWTH AND INCOME FUND
Geographic Distribution on 3/31/97
Based on Total Net Assets
[PIE CHART]
<TABLE>
<CAPTION>
<S> <C>
European Stocks 27.4%
United States Stocks 19.3%
Asian Stocks 8.1%
Latin American Stocks 5.9%
Australian Stocks 1.4%
Middle Eastern Stocks 0.5%
Canadian Stocks 0.4%
Fixed-Income Securities 1.1%
Short-Term Obligations &
Other Net Assets 35.9%
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON GROWTH AND INCOME FUND
Top 10 Industries on 3/31/97
Based on Total Net Assets
% OF TOTAL
INDUSTRY NET ASSETS
<S> <C>
Telecommunications 6.2%
Insurance 6.2%
Utilities - Electrical & Gas 5.3%
Banking 4.9%
Health & Personal Care 4.7%
Forest Products & Paper 4.0%
Electrical & Electronics 3.8%
Real Estate 2.9%
Data Processing & Reproduction 2.7%
Industrial Components 2.6%
</TABLE>
At the end of the reporting period, our largest Asian exposure was Hong Kong.
During most of 1996, many stock prices there, especially those of many real
estate companies, rose rapidly. Taking advantage of this, we sold our shares of
Hysan Development Co. Ltd. at a profit. However, price declines in early 1997
gave us an opportunity to purchase shares of Hong Kong Electric Holdings Ltd.
and add to our holdings of China Light and Power Co. Ltd. In our opinion, both
utility companies may provide good income, while offering long-term potential.
3
<PAGE> 4
The disappointing performance of equity markets in Singapore and Japan also
provided an opportunity to discover stocks we considered undervalued. We
invested in Singapore Finance Ltd., one of the largest financial companies in
the country, and purchased shares of Hitachi Ltd., one of the few Japanese
companies that was selling near or below its book value. In general, however, it
was difficult to find stocks we view undervalued in Japan, and our Japanese
exposure was only 0.8% of total net assets on March 31, 1997.
In Latin America, many equity markets rose, helped by improved economic
conditions and renewed interest from foreign investors. The telecommunications
industry generally performed well, increasing the value of our holdings of
Telefonos de Mexico SA and Telefonica de Argentina SA. During the period, we
initiated a position in Telebras-Telecomunicacoes Brasileiras SA (Telebras) and
Cpt-Telefonica del Peru SA. In our opinion, demand for telecommunications
services in the region is likely to continue to increase, and if deregulation of
Brazil's telephone industry continues, Telebras could be in a position to
benefit.
<TABLE>
<CAPTION>
TEMPLETON GROWTH AND INCOME FUND
Top 10 Holdings on 3/31/97
Based on Total Net Assets
% OF TOTAL
COMPANY, INDUSTRY, COUNTRY NET ASSETS
<S> <C>
Thames Water Group PLC
Utilities - Electrical & Gas, United Kingdom 1.8%
Gedeon Richter Ltd.
Health & Personal Care, Hungary 1.8%
HIH Winterthur International Holdings Ltd.
Insurance, Austria 1.4%
Merita Ltd., A
Banking, Finland 1.4%
Telebras-Telecomunicacoes Brasileiras SA
Telecommunications, Brazil 1.3%
Anglian Group PLC
Building Materials &
Components, United Kingdom 1.3%
Mosenergo
Utilities - Electric & Gas, Russia 1.2%
Pharmacia & Upjohn Inc.
Health & Personal Care, U.S. 1.2%
MOL Magyar Olay-Es Gazipari RT
Energy Sources, Hungary 1.2%
Government of New Zealand, 10.00%, 7/15/97
Government Bond, New Zealand 1.1%
</TABLE>
FOR A COMPLETE LIST OF PORTFOLIO HOLDINGS, PLEASE SEE PAGE 13 OF THIS REPORT.
Looking forward, we are optimistic about long-term global investing
opportunities. In our opinion, the Fund's portfolio is well-positioned in a
diverse group of securities, which we believe have the potential to increase in
value over the long term if the global economy continues to grow.
This discussion reflects the strategies we employed for the Fund during the 12
months
4
<PAGE> 5
under review, and includes our opinions as of the close of the period. Since
economic and market conditions are constantly changing, our strategies, and our
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.
Of course, investing in foreign securities involves special risks, such as
market and currency volatility and adverse economic, social and political
developments in the countries where investments are made. Emerging markets
involve heightened risks related to the same factors, in addition to risks
associated with the relatively small size and lesser liquidity of these markets.
For example, Russia's system of share registration and custody creates certain
risks of loss not normally associated with other markets. These risks and other
considerations are discussed in the Fund's prospectus.
We appreciate your participation in the Templeton Growth and Income Fund, and
welcome any comments or suggestions you may have.
Sincerely,
/s/ Mark Holowesko
Mark Holowesko, CFA
President
Templeton Global Investment Trust
/s/ Richard Sean Farrington
Richard Sean Farrington, CFA
Portfolio Manager
Templeton Growth and Income Fund
CELEBRATING 50 YEARS
This year marks 50 years of business for Franklin Templeton. Over these years,
we have experienced profound changes in technology, regulations and customer
expectations within the mutual fund industry. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest in companies and governments around the globe.
In addition, we want to stress that all securities markets move both up and
down. Mixed in with the good years can be some bad years. Accordingly, mutual
fund share prices also move up and down. Every investor should expect such
fluctuations, which can be wide. When markets are going down, as well as up, we
encourage investors to maintain a long-term perspective. We thank you for your
past support and look forward to serving your investment needs in the years
ahead.
5
<PAGE> 6
PERFORMANCE SUMMARY
CLASS I
The Templeton Growth and Income Fund Class I shares provided a cumulative total
return of 16.19% for the one-year period ended March 31, 1997. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
dividend and capital gains, and does not include the initial sales charge. We
always maintain a long-term perspective when managing the Fund, and encourage
shareholders to view their investments in a similar manner.
The price of the Fund's shares, as measured by net asset value, increased $1.56,
from $11.39 on March 31, 1996, to $12.95 on March 31, 1997. During this time,
Class I shares paid distributions of 22 cents ($0.22) per share in dividend
income and 4.5 cents ($0.045) per share in long-term capital gains. Of course
past performance is not predictive of future results. 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.
The graph on the following page compares the performance of the Fund's Class I
shares since inception with the unmanaged Morgan Stanley Capital International
(MSCI) World Index, which includes approximately 1,500 companies representing
the stock markets of 22 countries including the U.S., Canada, the United
Kingdom, and Japan. It also shows the Fund's performance against the Consumer
Price Index (CPI), a commonly used measure of inflation. Please remember that
the Fund's performance differs from that of an index because an index is not
managed according to any investment strategy, does not contain cash (the Fund
generally carries a certain percentage of cash at any given time), and includes
no sales charges or management expenses. Of course, one cannot invest directly
in an index, and an index is not representative of the Fund's portfolio.
UNDER SECTION 854(b)(2) OF THE INTERNAL REVENUE CODE, THE TEMPLETON GROWTH AND
INCOME FUND HAS DESIGNATED 21.29% OF ORDINARY INCOME DIVIDENDS PAID (INCLUDING
SHORT-TERM CAPITAL GAIN DISTRIBUTIONS) DURING THE FISCAL YEAR, AS INCOME
QUALIFYING FOR THE DIVIDENDS RECEIVED DEDUCTION (DRD).
6
<PAGE> 7
TEMPLETON GROWTH AND INCOME FUND
CLASS I
Total Return Index Comparison
$10,000 Investment (3/14/94 - 3/31/97)
[LINE GRAPH-PLOT POINTS TO COME]
<TABLE>
<S> <C>
Templeton Growth and Income Fund Class I(1)........... $13,207
MSCI World Index(2)................................... $14,204
CPI(3)................................................ $10,914
</TABLE>
1. INCLUDES ALL SALES CHARGES AND REPRESENTS THE CHANGE IN VALUE OF AN
INVESTMENT OVER THE PERIOD SHOWN, ASSUMING REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AT NET ASSET VALUE. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE
RESULTS.
2. INDEX IS UNMANAGED AND INCLUDES REINVESTED DIVIDENDS.
3. SOURCE: U.S. BUREAU OF LABOR STATISTICS.
TEMPLETON GROWTH AND INCOME FUND
CLASS I
Periods Ended March 31, 1997
<TABLE>
<CAPTION>
Since
Inception
One-Year (3/14/94)
<S> <C> <C>
Cumulative Total Return(1) 16.19% 40.12%
Average Annual Total Return(2) 9.55% 9.56%
Value of $10,000 Investment(3) $10,955 $13,207
</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 MAXIMUM 5.75% INITIAL SALES
CHARGE.
ALL CALCULATIONS ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NET ASSET
VALUE. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH MARKET
CONDITIONS, CURRENCIES 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 THE RELATIVELY
SMALL SIZE AND LESSER LIQUIDITY OF THESE MARKETS. YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL YOUR SHARES. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
THE FUND'S INVESTMENT MANAGER AND FUND ADMINISTRATOR HAVE AGREED IN ADVANCE TO
REDUCE A PORTION OF THEIR RESPECTIVE FEES AND, IN THE CASE OF THE FUND
ADMINISTRATOR, TO MAKE CERTAIN PAYMENTS TO REDUCE EXPENSES, WHICH INCREASES
TOTAL RETURN TO SHAREHOLDERS. IF THEY HAD NOT TAKEN THIS ACTION, THE TOTAL
RETURNS FOR CLASS I SHARES WOULD HAVE BEEN LOWER. AFTER AUGUST 1, 1997, THE FEE
REDUCTION AND EXPENSE REIMBURSEMENTS MAY BE DISCONTINUED AT ANY TIME UPON NOTICE
TO THE FUND'S BOARD OF TRUSTEES.
7
<PAGE> 8
PERFORMANCE SUMMARY
CLASS II
The Templeton Growth and Income Fund Class II shares provided a cumulative total
return of 15.35% for the one-year period ended March 31, 1997. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
dividend and capital gains, and does not include sales charges. We always
maintain a long-term perspective when managing the Fund, and we encourage
shareholders to view their investments in a similar manner.
The price of the Fund's shares, as measured by net asset value, increased $1.51,
from $11.33 on March 31, 1996, to $12.84 on March 31, 1997. During this time,
Class II shares paid distributions of 16.95 cents ($0.1695) per share in
dividend income and 4.5 cents (0.045) per share in long-term capital gains. Of
course, past performance is not predictive of future results. 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.
The graph on the following page compares the performance of the Fund's Class II
shares since inception with the unmanaged Morgan Stanley Capital International
(MSCI) World Index, which includes approximately 1,500 companies representing
the stock markets of 22 countries including the U.S., Canada, the United
Kingdom, and Japan. It also shows the Fund's performance against the Consumer
Price Index (CPI), a commonly used measure of inflation. Please remember that
the Fund's performance differs from that of an index because an index is not
managed according to any investment strategy, does not contain cash (the Fund
generally carries a certain percentage of cash at any given time), and includes
no sales charges or management expenses. Of course, one cannot invest directly
in an index, and an index is not representative of the Fund's portfolio.
UNDER SECTION 854(b)(2) OF THE INTERNAL REVENUE CODE, THE TEMPLETON GROWTH AND
INCOME FUND HAS DESIGNATED 21.29% OF ORDINARY INCOME DIVIDENDS PAID (INCLUDING
SHORT-TERM CAPITAL GAIN DISTRIBUTIONS) DURING THE FISCAL YEAR, AS INCOME
QUALIFYING FOR THE DIVIDENDS RECEIVED DEDUCTION (DRD).
8
<PAGE> 9
TEMPLETON GROWTH AND INCOME FUND
CLASS II
Total Return Index Comparison
$10,000 Investment (5/1/95 - 3/31/97)
[LINE GRAPH-PLOT POINTS TO COME]
<TABLE>
<S> <C>
Templeton Growth and Income Fund Class II(1).................. $13,305
MSCI World Index(2)........................................... $12,799
CPI(3)........................................................ $10,544
</TABLE>
1. INCLUDES ALL SALES CHARGES AND REPRESENTS THE CHANGE IN VALUE OF AN
INVESTMENT OVER THE PERIOD SHOWN, ASSUMING REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AT NET ASSET VALUE. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE
RESULTS.
2. INDEX IS UNMANAGED AND INCLUDES REINVESTED DIVIDENDS.
3. SOURCE: U.S. BUREAU OF LABOR STATISTICS.
TEMPLETON GROWTH AND INCOME FUND
CLASS II
Periods Ended March 31, 1997
<TABLE>
<CAPTION>
Since
Inception
One-Year (5/1/95)
<S> <C> <C>
Cumulative Total Return(1) 15.35% 34.39%
Average Annual Total Return(2) 13.25% 16.06%
Value of $10,000 Investment(3) $11,325 $13,305
</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. THIS FIGURE INCLUDES THE DEDUCTION OF
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 ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NET ASSET
VALUE. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH MARKET
CONDITIONS, CURRENCIES 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 THE RELATIVELY
SMALL SIZE AND LESSER LIQUIDITY OF THESE MARKETS. YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL YOUR SHARES. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
THE FUND'S INVESTMENT MANAGER AND FUND ADMINISTRATOR HAVE AGREED IN ADVANCE TO
REDUCE A PORTION OF THEIR RESPECTIVE FEES AND, IN THE CASE OF THE FUND
ADMINISTRATOR, TO MAKE CERTAIN PAYMENTS TO REDUCE EXPENSES, WHICH INCREASES
TOTAL RETURN TO SHAREHOLDERS. IF THEY HAD NOT TAKEN THIS ACTION, THE TOTAL
RETURNS FOR CLASS II SHARES WOULD HAVE BEEN LOWER. AFTER AUGUST 1, 1997, THE FEE
REDUCTION AND EXPENSE REIMBURSEMENTS MAY BE DISCONTINUED AT ANY TIME UPON NOTICE
TO THE FUND'S BOARD OF TRUSTEES.
9
<PAGE> 10
Many investors have asked us about the activities of Sir John Templeton, since
his retirement from the funds. We asked Professor Robert Herrmann to update us
on Sir John's current activities and his comments follow.
THE NEW CAREER OF
SIR JOHN TEMPLETON
[PHOTO OF SIR JOHN TEMPLETON]
BY PROFESSOR
ROBERT HERRMANN
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
Templeton funds, managed by many of the investment professionals he selected and
trained. For sentimental reasons, he allows his name to be associated with the
funds, although he knows no more about their management and holdings than any
other investor.
Sir John Templeton established the Templeton Foundation in 1987, to foster the
acquisition of spiritual information through scientific research. Working with
scientists, theologians and others, he strives toward a new science that uses
empirical and statistical scientific methods to discover and test spiritual
knowledge. A crucial ingredient in his research is what Sir John calls "humility
theology," an attitude of humility toward the Creator, combined with
receptiveness to the theological significance of current scientific discoveries.
Universal spiritual laws, or "laws of life," are among the areas of
investigation. In his recent book, Worldwide Laws of Life, Sir John compiles 200
laws and proverbs from nearly all religions, and deeply embedded in human
history. For example, the Golden Rule taught by Jesus in the Sermon on the
Mount, states "Do unto others as you would have others do unto you," and is
affirmed by all major religions as an acceptable, universal law of life. Other
books which Sir John has authored or co-authored during the past few years
include: The Humble Approach, Is God the Only Reality, Evidence of Purpose,
Who's Who in Theology and Science and The God Who Would Be Known.
With an annual budget of more than $30 million, the Templeton Foundation
sponsors 60 programs focusing on spiritual progress and the benefits of freedom.
Sir John's first sizable investment in the programs was the Templeton Prize for
Progress in Religion. A panel of nine judges gives the annual award which now
exceeds $1.2 million to individuals who have shown extraordinary originality in
furthering the world's understanding of God or spirituality.
Recipients of the prize include Professor Paul Davies, author of The Mind of
God; the Right Honorable Lord Jacobovits, former Chief Rabbi of Great Britain
and The Commonwealth; the Reverend Dr. Billy Graham, world-renowned preacher and
presidential inauguration speaker; Mr. Nikkyo Nimano, founder of the World
Conference on Religion and Peace; and Sir Sarepalli Radhakrishnan, former
President of India, and Oxford professor of Eastern Religions and Ethics.
To encourage young people's and their parents' appreciation of spiritual laws of
life, Sir John established an essay contest for teenagers in his home county of
Franklin, Tennessee. Students submit essays about the spiritual life principles
they plan to follow, and prizes are offered semiannually. In 1996, more than 800
youth participated. Twenty-six similar programs have been launched in various
locations, with the support of generous local donors.
The Foundation also sponsors a worldwide program that awards college-level
faculty who teach courses integrating science and religion. During the program's
first two years, more than 200 courses were created. The Foundation maintains an
extensive program of research and education on the health benefits of
spirituality, including prizes for medical schools providing courses on
spirituality in medicine. Lastly, the Foundation publishes a newsletter with
over 2,000 subscribers. Free subscriptions are available to Templeton
shareholders by writing to the Foundation.
To contact Sir John Templeton or receive the free newsletter subscription,
please write to:
The John Templeton Foundation
2 Radnor Corporate Center #320
100 Matsonford Road
Radnor, PA 19087
10
<PAGE> 11
TEMPLETON GROWTH AND INCOME FUND
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE -- CLASS I
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
MARCH 14, 1994
YEAR ENDED MARCH 31 (COMMENCEMENT
---------------------------- OF OPERATIONS) TO
1997 1996 1995 MARCH 31, 1994
------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.39 $ 10.05 $ 10.01 $ 10.00
------- ------- ------ -------
Income from investment operations:
Net investment income .22 .29 .16 .009
Net realized and unrealized gain (loss) 1.60 1.54 (.02) .001
------- ------- ------ -------
Total from investment operations 1.82 1.83 .14 .01
------- ------- ------ -------
Distributions:
Dividends from net investment income (.22) (.29) (.10) --
Distributions from net realized gains (.04) (.20) -- --
------- ------- ------ -------
Total distributions (.26) (.49) (.10) --
------- ------- ------ -------
Change in net asset value 1.56 1.34 .04 .01
------- ------- ------ -------
Net asset value, end of period $ 12.95 $ 11.39 $ 10.05 $ 10.01
======= ======= ====== =======
TOTAL RETURN* 16.19% 18.78% 1.43% .10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $25,020 $11,732 $ 5,953 $ 100
Ratio of expenses to average net assets 2.24% 2.71% 6.11% 32.15%**
Ratio of expenses, net of reimbursement, to average net assets 1.25% 1.25% 1.25% 1.25%**
Ratio of net investment income to average net assets 2.21% 2.98% 2.51% 1.89%**
Portfolio turnover rate 20.72% 10.21% 19.33% --
Average commission rate paid (per share) $ .0050 $ .0250
</TABLE>
* TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS. NOT ANNUALIZED FOR PERIODS
OF LESS THAN ONE YEAR.
** ANNUALIZED.
11
<PAGE> 12
TEMPLETON GROWTH AND INCOME FUND
Financial Highlights (cont.)
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE -- CLASS II
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 1, 1995+
YEAR ENDED THROUGH
MARCH 31, 1997 MARCH 31, 1996
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period $ 11.33 $ 10.19
------ ------
Income from investment operations:
Net investment income .21 .22
Net realized and unrealized gain 1.52 1.41
------ ------
Total from investment operations 1.73 1.63
------ ------
Distributions:
Dividends from net investment income (.18) (.29)
Distributions from net realized gains (.04) (.20)
------ ------
Total distributions (.22) (.49)
------ ------
Change in net asset value 1.51 1.14
------ ------
Net asset value, end of period $ 12.84 $ 11.33
====== ======
TOTAL RETURN* 15.35% 16.51%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 6,017 $ 2,205
Ratio of expenses to average net assets 2.89% 3.31%**
Ratio of expenses, net of reimbursement, to average net assets 1.90% 1.90%**
Ratio of net investment income to average net assets 1.51% 1.59%**
Portfolio turnover rate 20.72% 10.21%
Average commission rate paid (per share) $ .0050 $ .0250
</TABLE>
* TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS OR THE CONTINGENT DEFERRED
SALES CHARGE. NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
** ANNUALIZED.
+ COMMENCEMENT OF SALES.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
TEMPLETON GROWTH AND INCOME FUND
Investment Portfolio, March 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS: 59.9%
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AEROSPACE & MILITARY
TECHNICAL SYSTEMS: 0.7% General Motors Corp., H U.S. 3,761 $ 204,034
- ---------------------------------------------------------------------------------------------------------------------
APPLIANCES & HOUSEHOLD
DURABLES: 1.0% Guangdong Kelon Electrical Hldgs Ltd., H, 144A Chn. 350,000 313,924
- ---------------------------------------------------------------------------------------------------------------------
AUTOMOBILES: 1.6%
Ford Motor Co. U.S. 6,000 188,250
Volvo AB, B Swe. 11,276 302,251
-----------
490,501
- ---------------------------------------------------------------------------------------------------------------------
BANKING: 4.9%
Banco Popular Espanol SA Sp. 1,160 208,722
Banque Nationale de Paris Fr. 5,100 227,181
Merita Ltd., A Fin. 123,100 428,989
National Westminster Bank PLC U.K. 25,300 285,712
PT Bank Bali, fgn. Indo. 47,500 114,249
* Singapore Finance Ltd., fgn. Sing. 5,000 7,719
Unidanmark AS, A Den. 4,883 262,134
-----------
1,534,706
- ---------------------------------------------------------------------------------------------------------------------
BROADCASTING &
PUBLISHING: 0.3% Oriental Press Group Limited H.K. 250,000 100,017
- ---------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS &
COMPONENTS: 1.5% Anglian Group PLC U.K. 98,500 394,551
* Mirgor SA Comercial Industrial Financiera
Inmobiliari,
ADR, 144A Arg. 34,520 90,615
-----------
485,166
- ---------------------------------------------------------------------------------------------------------------------
CHEMICALS: 1.1%
Courtaulds PLC U.K. 48,000 285,047
Shanghai Pechemical Co. Ltd., H Chn. 218,000 56,268
-----------
341,315
- ---------------------------------------------------------------------------------------------------------------------
CONSTRUCTION & HOUSING:
1.0% Dragados y Construcciones SA Sp. 19,200 304,428
- ---------------------------------------------------------------------------------------------------------------------
DATA PROCESSING &
REPRODUCTION: 2.7% * Bay Networks Inc U.S. 10,800 193,050
International Business Machines Corp. U.S. 1,852 254,419
* Optical Data Systems Inc. U.S. 11,074 138,425
* Quantum Corp. U.S. 6,300 243,338
-----------
829,232
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
TEMPLETON GROWTH AND INCOME FUND
Investment Portfolio, March 31, 1997 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELECTRICAL & ELECTRONICS:
3.8% ABB AB, B Swe. 2,180 $ 247,045
Alcatel Alsthom SA Fr. 1,760 212,535
Hitachi Ltd. Jpn. 28,000 249,050
Motorola Inc. U.S. 5,031 303,747
Tadiran Ltd., ADR Isr. 6,300 155,925
-----------
1,168,302
- ---------------------------------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS &
INSTRUMENTS: 0.4% BICC U.K. 30,900 136,989
- ---------------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT &
SERVICES: 0.9% Sun Co. Inc. U.S. 10,800 282,150
- ---------------------------------------------------------------------------------------------------------------------
ENERGY SOURCES: 1.9%
MOL Magyar Olay -- Es Gazipari RT, GDS 144A Hun. 22,456 386,243
Valero Energy Corp. U.S. 5,910 214,976
-----------
601,219
- ---------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: 1.1%
Banca Fideuram Spa Itl. 33,000 85,585
Dean Witter Discover & Co. U.S. 7,800 272,025
-----------
357,610
- ---------------------------------------------------------------------------------------------------------------------
FOOD & HOUSEHOLD PRODUCTS:
2.4% Archer Daniels Midland Co. U.S. 19,675 351,691
IBP Inc. U.S. 11,200 275,800
Oshawa Group Ltd. (The) Can. 7,800 115,514
-----------
743,005
- ---------------------------------------------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER:
4.0% Assidomaen AB Swe. 9,600 254,779
Boise Cascade Corp. U.S. 8,603 262,392
Georgia-Pacific Corp. U.S. 4,800 348,000
Portucel Industrial Empresa Product Celulose,
ADR, 144A Port. 18,900 123,263
* Shorewood Packaging Corp. U.S. 13,400 249,575
-----------
1,238,009
- ---------------------------------------------------------------------------------------------------------------------
HEALTH & PERSONAL CARE:
4.7% China Pharmaceutical Enterprise & Investment
Corp. Ltd. Chn. 56,000 9,684
China Pharmaceutical Enterprise & Inv. Corp.
Ltd., 144A Chn. 60,000 10,376
</TABLE>
14
<PAGE> 15
TEMPLETON GROWTH AND INCOME FUND
Investment Portfolio, March 31, 1997 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTH & PERSONAL CARE
(cont.) Gedeon Richter Ltd., GDR 144A Hun. 8,540 $ 546,560
Medeva PLC U.K. 43,300 219,029
* Novartis A.G. Swtz. 58 71,563
* Nycomed ASA, A Nor. 12,700 201,401
Pharmacia & Upjohn U.S. 10,530 385,661
-----------
1,444,274
- ---------------------------------------------------------------------------------------------------------------------
INDUSTRIAL COMPONENTS:
2.6% Gencorp Inc. U.S. 15,700 298,300
Madeco Manufacturera de Cobre SA, ADR Chil. 10,000 267,500
Walbro Corp. U.S. 13,700 241,462
-----------
807,262
- ---------------------------------------------------------------------------------------------------------------------
INSURANCE: 6.2%
HIH Winterthur International Holdings Ltd. Aus. 189,652 431,166
Reliastar Financial Corp. U.S. 5,193 307,036
Skandia Foersaekrings AB, free Swe. 9,820 309,483
* Ste Centrale Du Groupe Des Asurances Nationales Fr. 10,900 312,566
Torchmark Corp. U.S. 2,209 122,323
UNUM Corp. U.S. 2,119 154,687
Western National Corp. U.S. 12,400 289,850
-----------
1,927,111
- ---------------------------------------------------------------------------------------------------------------------
MACHINERY & ENGINEERING:
0.9% IHC Caland NV Neth. 5,100 272,479
- ---------------------------------------------------------------------------------------------------------------------
MERCHANDISING: 1.4%
Koninklijke Bijenkorf Beheer NV (KBB) Neth. 1,280 96,574
Lojas Americanas SA Ord BRL Braz. 1,819,000 22,839
Safeway PLC U.K. 22,255 130,513
Tesco PLC U.K. 29,446 169,294
-----------
419,220
- ---------------------------------------------------------------------------------------------------------------------
METALS & MINING: 1.1%
Pechiney SA, A Fr. 8,075 328,638
- ---------------------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY: 1.8%
Alfa SA de CV, A Mex. 16,793 94,347
Alfa SA de CV, A 144A Mex. 36,000 202,257
Cheung Kong Holdings Ltd. H.K. 28,000 246,622
-----------
543,226
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
TEMPLETON GROWTH AND INCOME FUND
Investment Portfolio, March 31, 1997 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REAL ESTATE: 2.9%
Hang Lung Development Co. Ltd. H.K. 68,000 $ 123,298
Hong Kong Land H.K. 68,500 158,920
New World Development Co. Ltd. H.K. 34,784 187,641
PT Jaya Properties, fgn. Indo. 100,000 154,102
Summit Properties Inc., REIT U.S. 13,200 267,300
-----------
891,261
- ---------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS: 3.6%
British Telecommunications PLC U.K. 45,790 335,572
Cpt-Telefonica del Peru SA, ADR B Per. 6,630 147,518
Telecom Italia Spa, di Risp Itl. 163,000 347,753
Telefonica de Argentina SA, B, ADR Arg. 8,000 235,000
Telefonos de Mexico SA, L, ADR Mex. 1,520 58,520
-----------
1,124,363
- ---------------------------------------------------------------------------------------------------------------------
TRANSPORTATION: 0.1%
Stena Line AB, B free Swe. 7,100 33,258
- ---------------------------------------------------------------------------------------------------------------------
UTILITIES ELECTRICAL &
GAS: 5.3% China Light & Power Co. Ltd. H.K. 68,000 299,250
Endesa-Empresa Nacional de Electricidad SA Sp. 2,200 142,177
Hong Kong Electric Holdings Ltd. H.K. 34,000 120,007
* Mosenergo, ADR, 144A Russ. 10,200 387,600
National Grid Holdings PLC U.K. 8,400 28,949
Texas Utilties Electric Co. U.S. 3,850 131,863
Thames Water Group PLC U.K. 50,143 547,292
-----------
1,657,138
-----------
TOTAL COMMON STOCKS:
(cost $15,382,273) 18,578,837
- ---------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS: 3.1%
- ---------------------------------------------------------------------------------------------------------------------
Cia de Inversiones en Telecomunicaciones SA,
7.00%, cnv., pfd. Arg. 4,148 242,658
Jardine Strategic Holdings Ltd., 7.50%, conv., pfd. H.K. 78,000 90,870
Lojas Americanas SA, pfd. Braz. 3,017,000 40,445
Lojas Americanas SA, pfd., ADR Braz. 866 11,609
Philippine Long Distance Telephone Co., 7.00%,
cnv., pfd. Series 3 Phil. 3,140 172,700
Telebras-Telecomunicacoes Brasileiras SA, pfd., ADR Braz. 3,900 399,263
-----------
TOTAL PREFERRED STOCKS
(cost $779,827) 957,545
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
TEMPLETON GROWTH AND INCOME FUND
Investment Portfolio, March 31, 1997 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY** VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BOND: 1.1% (cost $341,908)
- ---------------------------------------------------------------------------------------------------------------------
Government of New Zealand, 10.00%, 7/15/97 N.Z. 510,000 $ 356,674
- ---------------------------------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS:
36.2% (cost $11,234,246)
- ---------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bills, 4.84% to 5.23% with
maturities to 6/19/97 U.S. 11,234,108
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 100.3%
(cost $27,738,254) 31,127,164
OTHER ASSETS, LESS
LIABILITIES: (0.3%) (90,016)
-----------
TOTAL NET ASSETS: 100.0% $31,037,148
===========
</TABLE>
* NON-INCOME PRODUCING.
** CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE> 18
TEMPLETON GROWTH AND INCOME FUND
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $27,738,254) $31,127,164
Cash 164
Receivables:
Fund shares sold 300,039
Dividends and interest 44,408
Fee reimbursement 23,602
Unamortized organization costs 29,006
-----------
Total assets 31,524,383
-----------
Liabilities:
Payables:
Investment securities purchased 369,161
Fund shares redeemed 8,093
Accrued expenses 109,981
-----------
Total liabilities 487,235
-----------
Net assets, at value $31,037,148
===========
Net assets consist of:
Undistributed net investment income $ 106,689
Net unrealized appreciation 3,388,910
Accumulated net realized gain 220,917
Net capital paid in on shares of
beneficial interest 27,320,632
-----------
Net assets, at value $31,037,148
===========
Class I
Net asset value per share
($25,020,323 divided by 1,931,885
shares outstanding) $ 12.95
===========
Maximum offering price
($12.95 divided by 94.25%) $ 13.74
===========
Class II
Net asset value per share
($6,016,825 divided by 468,483 shares
outstanding) $ 12.84
===========
Maximum offering price ($12.84
divided by 99.00%) $ 12.97
===========
</TABLE>
STATEMENT OF OPERATIONS
for the year ended March 31, 1997
<TABLE>
<S> <C> <C>
Investment income:
(net of $28,593 foreign
taxes withheld)
Dividends $ 372,524
Interest 354,507
-----------
Total income $ 727,031
Expenses:
Management fees (Note 3) 157,964
Administrative fees (Note 3) 31,593
Distribution fees (Note 3)
Class I 59,718
Class II 39,707
Transfer agent fees (Note 3) 38,100
Custodian fees 17,450
Reports to shareholders 44,950
Audit fees 15,000
Legal fees 19,500
Registration and filing fees 54,500
Trustees' fees and expenses 1,500
Amortization of organization
costs 14,104
Other 3,112
-----------
Total expenses 497,198
Less expenses reimbursed
(Note 3) (208,754)
-----------
Total expenses less
reimbursement 288,444
----------
Net investment income 438,587
Realized and unrealized gain
(loss):
Net realized gain (loss) on:
Investments 358,860
Foreign currency
transactions (15,419)
-----------
343,441
Net unrealized appreciation on
investments 2,327,516
-----------
Net realized and
unrealized gain 2,670,957
----------
Net increase in net assets
resulting from operations $3,109,544
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE> 19
TEMPLETON GROWTH AND INCOME FUND
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 438,587 $ 246,356
Net realized gain (loss) on investment and foreign currency transactions 343,441 (47,494)
Net unrealized appreciation 2,327,516 1,213,077
------------ ------------
Net increase in net assets resulting from operations 3,109,544 1,411,939
Distributions to shareholders:
From net investment income
Class I (316,069) (208,786)
Class II (59,789) (23,185)
From net realized gain
Class I (66,904) (124,139)
Class II (16,728) (399)
Fund share transactions (Note 2):
Class I 11,132,253 4,802,908
Class II 3,317,674 2,125,470
------------ ------------
Net increase in net assets 17,099,981 7,983,808
Net assets:
Beginning of year 13,937,167 5,953,359
------------ ------------
End of year $31,037,148 $13,937,167
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE> 20
TEMPLETON GROWTH AND INCOME FUND
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Growth and Income 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 high total return through a flexible policy
of investing primarily in equity and debt securities of domestic and foreign
companies. 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 in good faith by
management and approved 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. 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.
E. UNAMORTIZED ORGANIZATION COSTS:
Organization costs are being amortized on a straight line basis over five years.
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.
20
<PAGE> 21
TEMPLETON GROWTH AND INCOME FUND
Notes to Financial Statements (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 March 31, 1997, there were
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
----------------------------------------------
YEAR ENDED YEAR ENDED
MARCH 31, 1997 MARCH 31, 1996
---------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares sold 1,122,620 $13,843,589 618,177 $ 6,754,453
Shares issued on reinvestment of distributions 28,601 346,726 29,106 300,763
Shares redeemed (249,794) (3,058,062) (208,997) (2,252,308)
--------- ----------- -------- -----------
Net increase 901,427 $11,132,253 438,286 $ 4,802,908
========= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
CLASS II
----------------------------------------------
FOR THE PERIOD
YEAR ENDED MAY 1, 1995 THROUGH
MARCH 31, 1997 MARCH 31, 1996
---------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares sold 291,798 $ 3,539,571 199,693 $ 2,184,545
Shares issued on reinvestment of distributions 5,525 66,562 1,785 18,660
Shares redeemed (23,460) (288,459) (6,858) (77,735)
-------- ----------- -------- -----------
Net increase 273,863 $ 3,317,674 194,620 $ 2,125,470
======== =========== ======== ===========
</TABLE>
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton Global
Advisors Ltd. (TGAL), Franklin Templeton Services, Inc. (FTSI), 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 TGAL equal, on an annual
basis, to 0.75% of the Fund's average daily net assets. The Fund pays FTSI
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. TGAL and FTSI have voluntarily
agreed to reduce their respective fees to the extent necessary to limit total
expenses to an annual rate of 1.25% and 1.90% of average net assets of Class I
and II shares, respectively through August 1, 1997. The amount of the
reimbursement for the year ended March 31, 1997 is set forth in the Statement of
Operations. For the year ended March 31, 1997, FTD received net commissions of
$39,159 from the sale of the Fund's shares and FTIS received fees of $38,100.
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,
21
<PAGE> 22
TEMPLETON GROWTH AND INCOME FUND
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
costs and expenses exceeding the maximum may be reimbursed in subsequent
periods. At March 31, 1997, these unreimbursed expenses were $920,441. Class II
shares redeemed within 18 months are subject to a contingent deferred sales
charge. Contingent deferred sales charges of $1,489 were paid to FTD for the
year ended March 31, 1997.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel for
the Fund, which firm received legal fees for the year ended March 31, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the year
ended March 31, 1997 aggregated $11,290,169 and $3,142,104, respectively. The
cost of securities for 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 March 31, 1997, 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 $4,091,974
Unrealized depreciation (703,064)
----------
Net unrealized appreciation $3,388,910
==========
</TABLE>
5. TAX LOSS CARRYOVERS
As required by the tax rules, the Fund has deferred currency losses occurring
subsequent to October 31, 1996 of $45,000 to the year ending March 31, 1998.
22
<PAGE> 23
TEMPLETON GROWTH AND INCOME FUND
Independent Auditor's Report
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders
Templeton Growth and Income Fund
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of Templeton Growth and Income Fund, as of March 31,
1997, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for the periods indicated in the
accompanying financial statements. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1997, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Templeton Growth and Income Fund as of March 31, 1997, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
April 25, 1997
23
<PAGE> 24
[WORLD GRAPH LOGO]
Templeton Growth and
Income Fund
Auditors
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416
Principal Underwriter:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
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 Growth and Income Fund, which contains more complete information
including risk factors, charges 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, which will not always be profitable or
wise. The Fund and its investors are not protected from such losses 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.
[RECYCLE LOGO]
TL414 A97 5/97
TEMPLETON
GROWTH
AND
INCOME
FUND
Annual Report
March 31, 1997
[FRANKLIN TEMPLETON 50 YEARS LOGO]
[FRANKLIN TEMPLETON LOGO]
