Annual Report
MARCH 31, 1998
TEMPLETON
GROWTH AND
INCOME FUND
[TEMPLETON LOGO]
PAGE
[LOGO] Celebrating Over 50 Years
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective, and to expect that mixed in with the good
years can be some bad years. It's important to remember that all securities
markets move both up and down, as do mutual fund share prices. We appreciate
your past support and look forward to serving your investment needs in the years
ahead.
In 1992, Sir John Templeton retired after a 50-year career of helping investors
manage their money. Currently he devotes all of his time and efforts to the John
Templeton Foundation. A major portion of his assets remain invested in the
Templeton funds, which are managed by many of the investment professionals he
selected and trained.
[PICTURE]
MARK J. HOLOWESKO, CFA
President
Templeton Global Investment Trust
PAGE
SHAREHOLDER LETTER
CONTENTS
Your Fund's Objective: Templeton Growth and Income Fund seeks high total return,
comprising a combination of income and capital appreciation, through a flexible
policy of investing primarily in equity and debt securities of domestic and
foreign companies.
Dear Shareholder:
We are pleased to bring you this annual report of Templeton Growth and Income
Fund, which covers the period ended March 31, 1998.
During the first part of the reporting period, global equity markets generally
performed well, with the U.S. market reaching record highs. Then, beginning in
July 1997, currency crises in Southeast Asia caused the Thai, Malaysian,
Philippine, and Indonesian stock markets to suffer significant price declines.
The impact of these crises soon spread throughout Asia and beyond, sparking
severe volatility in other equity markets throughout the world. In the U.S., the
Dow Jones(R) Industrial Average fell appreciably, but later rebounded and
reached new highs by the end of the reporting period. Europe's markets have
apparently weathered the Asian crises, and generally posted strong results for
the fiscal year. And in Latin
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 16 of
this report.
Shareholder Letter .................................................... 1
Performance Summary
Class I ............................................................ 6
Class II ........................................................... 10
Financial Highlights &
Statement of Investments .............................................. 14
Financial Statements .................................................. 22
Notes to Financial
Statements ............................................................ 25
Independent Auditor's Report .......................................... 29
Tax Designation ....................................................... 30
[GRAPH] Pyramid
PAGE
ASSET ALLOCATION
Based on Total Net Assets
3/31/98
[BAR CHARTS]
This chart shows in bar format the asset allocation of Templeton Growth and
Income Fund based on total net assets as of March 31, 1998.
<TABLE>
<S> <C>
Europe 33.9%
United States 17.6%
Asia 11.4%
Latin America 5.6%
Australia 3.1%
Middle East & Africa 2.0%
Canada 1.1%
Fixed-Income Securities 6.3%
Short-Term Investments
& Other Net Assets 19.0%
</TABLE>
America, although some equity markets performed well, those of Brazil and
Argentina, among others, were negatively impacted by the events in Asia. Within
this environment, Templeton Growth and Income Fund - Class I produced a 20.23%
cumulative total return for the one-year period ended March 31, 1998, as
discussed in the Performance Summary on page 6.
In our opinion, markets generally rise for two reasons: either because of growth
in underlying earnings or an increase in what investors are willing to pay for
each dollar of those earnings. So far, this decade has seen equity prices
propelled upward by rises on both fronts. In the U.S., this appears to be
because of, or perhaps in spite of, the abnormally high earnings growth that
many domestic companies have delivered during this period. Our analysis
indicates that sustaining the future growth needed to support these valuations
will be difficult for many companies to achieve and, as a result, our U.S.
weighting was less than 20% of total net assets at the end of the reporting
period.
In Europe, we continued to find stocks we believed offered value in many
markets. Investors may well wonder how we could do that in light of the rise in
prices being paid for stocks of companies in that region. The answer has three
parts. First, many companies were selling for multiples below the figures
demonstrated by equity indices. Second, the absolute level of the
price-to-earnings multiples in some of these markets was below the level being
paid on average globally. This was especially true in countries where we found
investment opportunities during the reporting period. Finally, and perhaps most
importantly, some European corporations had just begun restructuring and had yet
to experience the degree of earnings growth that many U.S. companies had
following similar restructuring moves. The increase in prices being paid for
securities impacted the
2
composition of our investments in Europe. During the period under review, equity
markets in Spain and Italy experienced substantial rises in valuations, as they
appeared prepared to participate in Europe's largest downsizing to date - the
move to a single currency. This strength in share prices allowed us to sell
stocks that we believed no longer offered value, such as Banco Popular Espanol
SA and Endesa SA. By contrast, in the United Kingdom, where the increase in
multiples was less pronounced, we initiated a position in General Electric
Company, one of Europe's largest defense companies.
As discussed previously, most Asian markets suffered declines during the period.
The region's financial problems seemed to indicate that economies there faced
years of debt restructuring and poorly performing equity markets; yet, many of
these markets rallied in early 1998. In our opinion, this rally was due more to
investors chasing a trend than to purchasing based on value. Hong Kong was one
area where we increased our holdings during the period. The prudence demanded by
the uncertainty surrounding the transition from British to Chinese rule arguably
left Hong Kong and its currency in a better position to weather the Asian
financial crises. Its government has little debt, its currency reserves are
among the largest in the world, and, in our opinion, its banks, in general, are
strongly capitalized and many of its corporations have stronger balance sheets
than their Asian counterparts. However, Hong Kong faces sizable challenges in
the future including an overvalued currency, exorbitantly high property values
and rising interest rates. Growing the bottom line will be far more challenging
without the support of ever increasing land prices, but Hong Kong's
entrepreneurs may be able to adapt to the new opportunities available in a
growing Chinese market and in other countries in
TOP 10 INDUSTRIES
3/31/98
This chart show the top 10 industries based on total net assets as of March 31,
1998 for Templeton Growth and Income Fund.
<TABLE>
<CAPTION>
% OF TOTAL
INDUSTRY NET ASSETS
<S> <C>
Utilities Electrical & Gas 8.7%
Telecommunications 7.3%
Banking 6.9%
Food & Household Products 5.9%
Insurance 4.9%
Metals & Mining 3.6%
Electrical & Electronics 3.3%
Multi-Industry 3.3%
Forest Products & Paper 3.1%
Building Materials &
Components 2.9%
</TABLE>
3
PAGE
TOP 10 HOLDINGS
3/31/98
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
<S> <C>
Telecom Italia SpA, di Risp,
Telecommunications, Italy 1.7%
Illinova Corp., Utilities
Electrical & Gas, U.S. 1.5%
Zuerich Versicherung,
Insurance, Switzerland 1.4%
Thames Water Group Plc.,
Utilities Electrical & Gas,
United Kingdom 1.3%
British Telecommunications Plc.,
Telecommunications ,
United Kingdom 1.3%
Merita Ltd., A.,
Banking, Finland 1.2%
Archer-Daniels Midland Co.,
Food & Household Products, U.S. 1.2%
Caradon Plc.,
Building Materials &
Components, United Kingdom 1.2%
SCOR SA,
Insurance, France 1.2%
Pharmacia & Upjohn,
Health & Personal Care, U.S. 1.2%
</TABLE>
Asia, which need both capital and capitalists. During the period, we initiated a
position in Hutchison Whampoa Ltd., one of Hong Kong's largest conglomerates,
and also discovered stocks, such as Television Broadcasts Ltd. and South China
Morning Post Ltd. which we believed offered attractive dividend yields.
Looking forward, we recognize that the returns for many of the world's developed
markets have been far above historic norms over the past decade, but believe
that investment opportunities may still exist. Asian emerging markets face a
difficult road to recovery, and their turnaround could take far longer than that
of South American countries following Mexico's 1994 devaluation of the peso. The
Japanese government's attempts to stimulate their economy had done little to
inspire confidence during the reporting period, and many experts expect Japan's
Gross Domestic Product to decline for the first time since 1974. In our opinion,
the challenges Japan faces, as with Asia's problems in general, could take years
to work through.
There are, of course, special risks involved with global investing, related to
market and currency volatility, and adverse economic, social and political
developments in the countries where the Fund is invested. Emerging markets are
represented in the Fund's portfolio, and they involve heightened risks related
to the same factors, in addition to risks associated with their relatively small
size and lesser liquidity. For example, Russia's system of share registration
and custody creates certain risks of loss that are not normally associated with
other markets. These risks and other considerations are discussed in the Fund's
prospectus.
4
PAGE
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of March 31, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the Fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
We appreciate your participation in Templeton Growth and Income Fund, and
welcome any comments or suggestions you may have.
Sincerely,
/s/ Mark J. Holowesko
Mark J. Holowesko, CFA
President
Templeton Global Investment Trust
/s/ Richard Sean Farrington
Richard Sean Farrington, CFA
Portfolio Manager
Templeton Growth and Income Fund
5
PAGE
PERFORMANCE SUMMARY
CLASS I
Templeton Growth and Income - Class I provided a 20.23% cumulative total return
for the one-year period ended March 31, 1998. Cumulative total return measures
the change in value of an investment, assuming reinvestment of dividends and
capital gains, if any, and does not include the initial sales charge. We have
always maintained a long-term perspective when managing the Fund, and encourage
shareholders to view their investments in a similar manner. As you can see from
the table on page 9, the Fund's Class I shares provided a 68.47% cumulative
total return since inception on March 14, 1994.
The Fund's share price, as measured by net asset value, increased $1.64, from
$12.95 on March 31, 1997, to $14.59 on March 31, 1998. During this time,
shareholders received distributions totaling 88.0 cents ($0.8800) per share,
including 48.5 cents ($0.4850) in long-term capital gains, 11.5 cents ($0.1150)
in short-term capital gains, and 28.0 cents ($0.2800) in dividend income.
Distributions will vary depending on income earned by the Fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the Fund's operating expenses.
Past performance is not predictive of future results.
6
PAGE
The graph on page 8 compares the performance of the Fund's Class I shares since
inception with the unmanaged Morgan Stanley Capital International(R) (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. The graph 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. One cannot invest directly in an index nor is an
index representative of the Fund's portfolio.
Past performance is not predictive of future results.
7
PAGE
CLASS I
Total Return Index Comparison
$10,000 Investment (3/14/94 - 3/31/98)
The following line graph compares the performance of the Templeton Growth and
Income Fund's Class I shares with the Morgan Stanley Capital International
(MSCI) World Index and the Consumer Price Index (CPI) based on the a $10,000
investment from 3/14/94 to 3/31/98.
Templeton Growth & MSCI Inflation
Income- Class I* World (CPI)
----------------------------------------
3/14/94 $9,425 $10,000 $10,000
Mar-94 $9,435 $9,760 $10,017
Apr-94 $9,435 $10,063 $10,031
May-94 $9,453 $10,091 $10,037
Jun-94 $9,416 $10,065 $10,071
Jul-94 $9,557 $10,258 $10,098
Aug-94 $9,689 $10,568 $10,139
Sep-94 $9,566 $10,293 $10,166
Oct-94 $9,614 $10,587 $10,173
Nov-94 $9,255 $10,130 $10,187
Dec-94 $9,217 $10,230 $10,187
Jan-95 $9,256 $10,078 $10,227
Feb-95 $9,398 $10,227 $10,268
Mar-95 $9,579 $10,722 $10,302
Apr-95 $9,703 $11,098 $10,336
May-95 $9,970 $11,195 $10,356
Jun-95 $9,989 $11,194 $10,377
Jul-95 $10,332 $11,756 $10,376
Aug-95 $10,351 $11,496 $10,405
Sep-95 $10,547 $11,833 $10,424
Oct-95 $10,488 $11,649 $10,458
Nov-95 $10,508 $12,056 $10,451
Dec-95 $10,718 $12,411 $10,444
Jan-96 $11,416 $12,637 $10,505
Feb-96 $11,387 $12,716 $10,539
Mar-96 $11,367 $12,931 $10,594
Apr-96 $11,626 $13,237 $10,635
May-96 $11,801 $13,250 $10,655
Jun-96 $11,751 $13,320 $10,662
Jul-96 $11,260 $12,852 $10,682
Aug-96 $11,681 $13,002 $10,702
Sep-96 $11,851 $13,514 $10,736
Oct-96 $12,091 $13,610 $10,771
Nov-96 $12,611 $14,375 $10,791
Dec-96 $12,728 $14,148 $10,791
Jan-97 $13,237 $14,320 $10,825
Feb-97 $13,350 $14,488 $10,857
Mar-97 $13,207 $14,204 $10,884
Apr-97 $13,258 $14,670 $10,897
May-97 $13,788 $15,579 $10,891
Jun-97 $14,232 $16,358 $10,904
Jul-97 $14,882 $17,114 $10,917
Aug-97 $14,552 $15,972 $10,938
Sep-97 $15,264 $16,841 $10,965
Oct-97 $14,469 $15,958 $10,992
Nov-97 $14,356 $16,243 $10,986
Dec-97 $14,606 $16,443 $10,973
Jan-98 $14,562 $16,904 $10,992
Feb-98 $15,237 $18,050 $11,014
Mar-98 $15,879 $18,815 $11,036
THE HISTORICAL PERFORMANCE SHOWN PERTAINS ONLY TO THE FUND'S CLASS I SHARES. THE
FUND OFFERS ANOTHER SHARE CLASS SUBJECT TO DIFFERENT FEES AND EXPENSES, WHICH
AFFECT PERFORMANCE. PLEASE SEE THE PROSPECTUS FOR MORE DETAILS.
1. Includes the sales charge 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. One cannot invest
directly in an index.
3. Source: U.S. Bureau of Labor Statistics.
Past performance is not predictive of future results.
8
PAGE
CLASS I
Periods ended 3/31/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 3-YEAR (3/14/94)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) 20.23% 65.76% 68.47%
Average Annual Total Return(2) 13.32% 16.05% 12.11%
Value of $10,000 Investment(3) $ 11,332 $ 15,629 $ 15,879
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 5.75% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include the maximum 5.75% initial sales
charge.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Since markets can go down as well as up, investment return and principal
value will fluctuate with market conditions, currency volatility, and the
economic, social and political climates of countries where investments are made.
Emerging markets involve heightened risks related to the same factors, in
addition to those associated with their relatively small size and lesser
liquidity. You may have a gain or loss when you sell your shares.
The Fund's Investment Manager and Fund Administrator have agreed in advance to
waive 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, total returns
for Class I shares would have been lower. After August 1, 1998, the fee waivers
and expense reimbursements may be discontinued at any time upon notice to the
Fund's Board of Trustees.
Past performance is not predictive of future results.
9
PAGE
CLASS II
Templeton Growth and Income Fund - Class II provided a 19.40% cumulative total
return for the one-year period ended March 31, 1998. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, if any, and does not include sales charges.
The Fund's share price, as measured by net asset value, increased $1.59, from
$12.84 on March 31, 1997, to $14.43 on March 31, 1998. During this time,
shareholders received distributions totaling 81.09 cents ($0.8109) per share,
including 48.5 cents ($0.4850) in long-term capital gains, 11.5 cents ($0.1150)
in short-term capital gains, and 21.09 cents ($0.2109) in dividend income.
Distributions will vary depending on income earned by the Fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the Fund's operating expenses.
Past performance is not predictive of future results.
10
PAGE
The graph on page 12 compares the performance of the Fund's Class II shares
since inception with the unmanaged Morgan Stanley Capital International(R)
(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. The graph 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. One cannot invest directly in
an index nor is an index representative of the Fund's portfolio.
Past performance is not predictive of future results.
11
PAGE
CLASS II
Total Return Index Comparison
$10,000 Investment (5/1/95 - 3/31/98)
The following line graph compares the performance of the Templeton Growth &
Income Fund's Class II shares with the Morgan Stanley Capital International
(MSCI) World Index and the Consumer Price Index (CPI) based on a $10,000
investment from 5/1/95 to 3/31/98.
Templeton Growth & MSCI Inflation
Income - Class II* World (CPI)
----------------------------------------
5/1/95 $9,903 $10,000 $10,000
May-95 $10,205 $10,088 $10,005
Jun-95 $10,225 $10,086 $10,025
Jul-95 $10,565 $10,593 $10,024
Aug-95 $10,575 $10,359 $10,051
Sep-95 $10,775 $10,663 $10,070
Oct-95 $10,705 $10,497 $10,103
Nov-95 $10,725 $10,863 $10,096
Dec-95 $10,938 $11,183 $10,090
Jan-96 $11,643 $11,387 $10,149
Feb-96 $11,612 $11,458 $10,182
Mar-96 $11,572 $11,651 $10,234
Apr-96 $11,827 $11,927 $10,274
May-96 $11,999 $11,940 $10,293
Jun-96 $11,938 $12,002 $10,300
Jul-96 $11,426 $11,581 $10,320
Aug-96 $11,856 $11,716 $10,339
Sep-96 $12,019 $12,177 $10,372
Oct-96 $12,255 $12,264 $10,405
Nov-96 $12,777 $12,953 $10,425
Dec-96 $12,891 $12,748 $10,425
Jan-97 $13,390 $12,904 $10,457
Feb-97 $13,504 $13,054 $10,489
Mar-97 $13,348 $12,799 $10,515
Apr-97 $13,400 $13,219 $10,528
May-97 $13,913 $14,038 $10,521
Jun-97 $14,354 $14,739 $10,534
Jul-97 $15,016 $15,421 $10,546
Aug-97 $14,669 $14,392 $10,566
Sep-97 $15,373 $15,175 $10,593
Oct-97 $14,564 $14,379 $10,619
Nov-97 $14,449 $14,636 $10,613
Dec-97 $14,678 $14,816 $10,600
Jan-98 $14,634 $15,232 $10,619
Feb-98 $15,297 $16,265 $10,641
Mar-98 $15,937 $16,954 $10,662
THE HISTORICAL PERFORMANCE SHOWN PERTAINS ONLY TO THE FUND'S CLASS II SHARES.
THE FUND OFFERS ANOTHER SHARE CLASS SUBJECT TO DIFFERENT FEES AND EXPENSES,
WHICH AFFECT PERFORMANCE. PLEASE SEE THE PROSPECTUS FOR MORE DETAILS.
1. Includes all sales charges and represents the change in value of an
investment over the period shown. 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. One cannot invest
directly in an index.
3. Source: Bureau of Labor Statistics.
Past performance is not predictive of future results.
12
PAGE
CLASS II
Periods ended 3/31/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR (5/1/95)
<S> <C> <C>
Cumulative Total Return(1) 19.40% 60.94%
Average Annual Total Return(2) 17.21% 17.33%
Value of $10,000 Investment(3) $ 11,721 $ 15,937
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 1.0% initial sales
charge and the 1.0% contingent deferred sales charge applicable to shares
redeemed within 18 months of investment.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include all sales charges.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Since markets can go down as well as up, investment return and principal
value will fluctuate with market conditions, currency volatility, and the
economic, social and political climates of countries where investments are made.
Emerging markets involve heightened risks related to the same factors, in
addition to those associated with their relatively small size and lesser
liquidity. You may have a gain or loss when you sell your shares.
The Fund's Investment Manager and Fund Administrator have agreed in advance to
waive 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, 1998, the fee
waivers and expense reimbursements may be discontinued at any time upon notice
to the Fund's Board of Trustees.
Past performance is not predictive of future results.
13
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------
1998 1997 1996 1995 1994+
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE - CLASS I
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $12.95 $11.39 $10.05 $10.01 $10.00
-------------------------------------------------
Income from investment operations:
Net investment income...................................... .35 .22 .29 .16 .009
Net realized and unrealized gains (losses)................. 2.17 1.60 1.54 (.02) .001
-------------------------------------------------
Total from investment operations............................ 2.52 1.82 1.83 .14 .01
-------------------------------------------------
Less distributions from:
Net investment income...................................... (.28) (.22) (.29) (.10) --
Net realized gains......................................... (.60) (.04) (.20) -- --
-------------------------------------------------
Total distributions......................................... (.88) (.26) (.49) (.10) --
-------------------------------------------------
Net asset value, end of year................................ $14.59 $12.95 $11.39 $10.05 $10.01
=================================================
Total Return*............................................... 20.23% 16.19% 18.78% 1.43% .10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $46,262 $25,020 $11,732 $5,953 $100
Ratios to average net assets:
Expenses................................................... 1.25% 1.25% 1.25% 1.25% 1.25%**
Expenses, excluding waiver and payments by affiliate....... 1.76% 2.24% 2.71% 6.11% 32.15%**
Net investment income...................................... 2.91% 2.21% 2.98% 2.51% 1.89%**
Portfolio turnover rate..................................... 18.62% 20.72% 10.21% 19.33% --
Average commission rate paid***............................. $.0015 $.0050 $.0250 -- --
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
***Relates to purchases and sales of equity securities. Prior to fiscal year
1996 disclosure of average commission rate was not required.
+For the period March 14, 1994 (commencement of operations) to March 31, 1994.
14
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------
1998 1997 1996+
---------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE - CLASS II
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $12.84 $11.33 $10.19
---------------------------
Income from investment operations:
Net investment income...................................... .29 .21 .22
Net realized and unrealized gains.......................... 2.11 1.52 1.41
---------------------------
Total from investment operations............................ 2.40 1.73 1.63
---------------------------
Less distributions from:
Net investment income...................................... (.21) (.18) (.29)
Net realized gains......................................... (.60) (.04) (.20)
---------------------------
Total distributions......................................... (.81) (.22) (.49)
---------------------------
Net asset value, end of year................................ $14.43 $12.84 $11.33
===========================
Total Return*............................................... 19.40% 15.35% 16.51%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $13,293 $6,017 $2,205
Ratios to average net assets:
Expenses................................................... 1.90% 1.90% 1.90%**
Expenses, excluding waiver and payments by affiliate....... 2.41% 2.89% 3.31%**
Net investment income...................................... 2.25% 1.51% 1.59%**
Portfolio turnover rate..................................... 18.62% 20.72% 10.21%
Average commission rate paid***............................. $.0015 $.0050 $.0250
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
**Annualized.
***Relates to purchases and sales of equity securities.
+For the period May 1, 1995 (effective date) to March 31, 1996.
See Notes to Financial Statements.
15
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1998
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
---------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 70.7%
AEROSPACE & MILITARY TECHNOLOGY .5%
*General Motors Corp., H.................................... United States 3,761 $ 170,185
Raytheon Co., A............................................. United States 2,115 120,291
-----------
290,476
-----------
APPLIANCES & HOUSEHOLD DURABLES .9%
Guangdong Kelon Electrical Hldgs Ltd., H, 144A.............. China 350,000 406,541
Sindo Ricoh Co. ............................................ South Korea 3,700 148,534
-----------
555,075
-----------
AUTOMOBILES 1.7%
Fiat SpA, di Risp........................................... Italy 105,710 277,246
Ford Motor Co............................................... United States 6,000 388,875
Volvo AB, B................................................. Sweden 11,276 358,965
-----------
1,025,086
-----------
BANKING 6.2%
*Bank Handlowy W Warszawie SA, GDR, 144A.................... Poland 16,400 271,830
Banque Nationale de Paris BNP............................... France 5,209 404,809
Credit Commercial de France CCF............................. France 4,500 369,683
*Korea Long Term Credit Bank................................ South Korea 13,230 68,777
Krung Thai Bank Public Co. Ltd., fgn. ...................... Thailand 291,707 92,900
*Merita Ltd., A............................................. Finland 123,100 741,322
National Australia Cap Sec Plc.............................. Australia 14,850 430,650
National Westminster Bank Plc............................... United Kingdom 25,962 475,609
*Shinhan Bank Co. Ltd....................................... South Korea 13,125 68,610
Singapore Finance Ltd., fgn. ............................... Singapore 146,000 122,043
Unibanco Uniao de Bancos Brasileiros SA, GDR................ Brazil 7,500 271,875
Unidanmark AS, A............................................ Denmark 4,883 387,881
-----------
3,705,989
-----------
BROADCASTING & PUBLISHING 1.6%
Oriental Press Group Limited................................ Hong Kong 522,000 134,066
South China Morning Post Ltd. .............................. Hong Kong 656,000 440,251
Television Broadcasts Ltd. ................................. Hong Kong 153,000 402,824
-----------
977,141
-----------
BUILDING MATERIALS & COMPONENTS 2.9%
Anglian Group Plc........................................... United Kingdom 98,500 389,263
Caradon Plc................................................. United Kingdom 226,200 715,895
*Mirgor SA Comercial Industrial Financiera Inmobiliari, ADR,
144A...................................................... Argentina 34,520 72,492
Hepworth Plc................................................ United Kingdom 129,400 561,214
-----------
1,738,864
-----------
CHEMICALS 1.6%
Courtaulds Plc. ............................................ United Kingdom 87,500 528,944
DSM NV...................................................... Netherlands 3,900 407,828
Shanghai Petrochemical Co. Ltd., H.......................... China 262,000 39,562
-----------
976,334
-----------
</TABLE>
16
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1998 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
---------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
CONSTRUCTION & HOUSING 1.5%
Dragados y Construcciones SA................................ Spain 19,200 $ 632,194
Hollandsche Beton Groep NV.................................. Netherlands 13,300 259,658
-----------
891,852
-----------
DATA PROCESSING & REPRODUCTION 1.7%
*Bay Networks Inc........................................... United States 10,800 292,950
International Business Machines Corp........................ United States 3,704 384,753
Rank Group Plc. ............................................ United Kingdom 50,300 340,075
-----------
1,017,778
-----------
ELECTRICAL & ELECTRONICS 3.3%
ABB AB, B................................................... Sweden 21,800 302,683
*Catic Shenzhen Holdings Ltd................................ China 500,000 83,889
Dongfang Electrical Machinery Co. Ltd., H................... China 388,000 77,116
General Electric Co. Plc. .................................. United Kingdom 77,000 610,205
Hitachi Ltd. ............................................... Japan 44,000 320,048
Motorola Inc. .............................................. United States 5,031 305,004
Tadiran Ltd., ADR........................................... Israel 6,300 262,631
-----------
1,961,576
-----------
ELECTRONIC COMPONENTS & INSTRUMENTS .4%
BICC Plc. .................................................. United Kingdom 92,926 231,856
-----------
ENERGY EQUIPMENT & SERVICES .7%
Sun Co. Inc. ............................................... United States 10,800 441,450
-----------
ENERGY SOURCES 1.7%
MOL Magyar Olay - Es Gazipari RT, GDS 144A.................. Hungary 22,456 688,276
*Ranger Oil Ltd............................................. Canada 22,400 143,332
Valero Energy Corp., new.................................... United States 5,910 197,246
-----------
1,028,854
-----------
FINANCIAL SERVICES 1.8%
Banca Fideuram SpA.......................................... Italy 33,000 230,050
Industrial Credit & Inv. Corp. of India, GDR, 144A.......... India 17,200 264,450
Morgan Stanley Dean Witter & Co............................. United States 7,800 568,425
-----------
1,062,925
-----------
FOOD & HOUSEHOLD PRODUCTS 5.9%
Archer-Daniels Midland Co................................... United States 32,858 720,822
*Express Dairies Plc........................................ United Kingdom 86,435 270,661
IBP Inc..................................................... United States 20,000 448,750
Illovo Sugar Limited........................................ South Africa 134,300 229,208
Northern Foods Plc.......................................... United Kingdom 172,870 661,455
Oshawa Group Ltd. (The)..................................... Canada 30,200 546,813
</TABLE>
17
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1998 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
---------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
FOOD & HOUSEHOLD PRODUCTS (CONT.)
Showa Sangyo Co. ........................................... Japan 6,000 $ 12,013
Tate & Lyle Plc............................................. United Kingdom 70,500 617,427
-----------
3,507,149
-----------
FOREST PRODUCTS & PAPER 3.1%
Assidomaen AB............................................... Sweden 9,600 261,780
Boise Cascade Corp.......................................... United States 8,603 310,246
Enso OY, R.................................................. Finland 30,600 282,412
Georgia-Pacific Corp........................................ United States 4,800 310,800
Georgia-Pacific Timber Group................................ United States 4,800 123,300
Portucel Industrial Empresa Product Celulose, ADR, 144A..... Portugal 18,900 172,639
*Shorewood Packaging Corp. ................................. United States 13,400 359,288
-----------
1,820,465
-----------
HEALTH & PERSONAL CARE 1.6%
China Pharmaceutical Enterprise & Invt. Corp. Ltd........... China 118,000 15,381
China Pharmaceutical Enterprise & Invt. Corp. Ltd.,144A..... China 60,000 7,821
Medeva Plc. ................................................ United Kingdom 79,000 219,599
Pharmacia & Upjohn.......................................... United States 15,930 696,938
-----------
939,739
-----------
INDUSTRIAL COMPONENTS .9%
Madeco Manufacturera de Cobre SA, ADR....................... Chile 18,700 323,744
Walbro Corp. ............................................... United States 16,100 197,225
-----------
520,969
-----------
INSURANCE 4.8%
American General Corp. ..................................... United States 4,034 260,949
HIH Winterthur International Holdings Ltd................... Australia 194,578 384,524
Reliastar Financial Corp. .................................. United States 10,386 478,405
SCOR SA..................................................... France 12,300 704,746
Torchmark Corp. ............................................ United States 4,418 202,400
Zuerich Versicherung, new................................... Switzerland 1,400 812,725
-----------
2,843,749
-----------
MACHINERY & ENGINEERING 1.6%
Laird Group Plc. ........................................... United Kingdom 72,100 577,713
Makita Corp................................................. Japan 24,000 251,959
Valmet (OY)................................................. Finland 6,260 100,380
-----------
930,052
-----------
MERCHANDISING 2.0%
Best Denki Co. Ltd.......................................... Japan 20,000 113,981
Koninklijke Bijenkorf Beheer KBB NV......................... Netherlands 1,307 91,848
*Lojas Americanas SA........................................ Brazil 1,819,000 10,878
Matsuzakaya Co. Ltd. ....................................... Japan 14,000 64,040
Safeway Plc. ............................................... United Kingdom 22,556 139,847
</TABLE>
18
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1998 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
---------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
MERCHANDISING (CONT.)
Tesco Plc. ................................................. United Kingdom 29,664 $ 297,296
Thorn Plc. ................................................. United Kingdom 179,900 459,405
-----------
1,177,295
-----------
METALS & MINING 3.6%
Anglo American Platinum Corp. Ltd........................... South Africa 25,100 386,039
*Chongqing Iron & Steel Ltd., H............................. China 502,000 68,028
*Industrias Penoles SA...................................... Mexico 16,000 66,682
Ingwe Coal Corp. Ltd........................................ South Africa 84,000 289,224
Pechiney SA, A.............................................. France 8,199 377,142
Pohang Iron & Steel Co. Ltd................................. South Korea 6,300 374,384
WMC Ltd..................................................... Australia 166,500 571,949
-----------
2,133,448
-----------
MISCELLANEOUS MATERIALS & COMMODITIES .2%
Thai Glass Industries Public Co. Ltd., fgn.................. Thailand 83,900 128,255
-----------
MULTI-INDUSTRY 2.9%
Broken Hill Proprietary Co. Ltd............................. Australia 44,409 454,707
Cheung Kong Holdings Ltd.................................... Hong Kong 28,000 198,753
*Elementis Plc. ............................................ United Kingdom 135,672 314,655
Hutchison Whampoa Ltd....................................... Hong Kong 54,000 379,825
Jardine Strategic Holdings Ltd.............................. Hong Kong 25,560 70,034
*Metro Pacific Corp. MDI.................................... Philippines 927,010 57,235
Swire Pacific Ltd., B....................................... Hong Kong 246,500 237,010
-----------
1,712,219
-----------
REAL ESTATE 2.2%
Hang Lung Development Co. Ltd. ............................. Hong Kong 15,000 21,779
Hong Kong Land Holdings Ltd. ............................... Hong Kong 69,487 119,518
LTC Properties Inc. ........................................ United States 21,400 413,288
National Health Investors Inc. ............................. United States 12,400 494,450
Summit Properties Inc., REIT................................ United States 13,200 265,650
-----------
1,314,685
-----------
TELECOMMUNICATIONS 5.5%
AT&T Corp................................................... United States 5,900 387,188
British Telecommunications Plc. ............................ United Kingdom 68,753 748,917
PT Indosat TBK, ADR......................................... Indonesia 4,000 61,750
Telecom Italia SpA, di Risp................................. Italy 168,894 1,031,378
Telefonica de Argentina SA, B, ADR.......................... Argentina 16,296 620,267
Telefonica del Peru SA, B................................... Peru 84,800 181,466
Telefonica del Peru SA, B, ADR.............................. Peru 6,630 142,959
Telefonos de Mexico SA (Telmex), ADR, L..................... Mexico 1,520 85,690
-----------
3,259,615
-----------
</TABLE>
19
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1998 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
---------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
TEXTILES & APPAREL .2%
Yizheng Chemical Fibre Co. Ltd., H.......................... China 720,000 $ 118,013
-----------
TRANSPORTATION 1.5%
Great Eastern Shipping Co. Ltd., GDR 144A................... India 44,300 295,703
Precious Shipping Public Co. Ltd., fgn...................... Thailand 61,100 36,971
Transport Development Group Plc............................. United Kingdom 159,100 539,498
-----------
872,172
-----------
UTILITIES ELECTRICAL & GAS 8.2%
CLP Holdings Ltd. .......................................... Hong Kong 101,500 510,886
Hong Kong Electric Holdings Ltd............................. Hong Kong 144,000 494,354
Illinova Corp............................................... United States 29,400 887,513
Korea Electric Power Corp................................... South Korea 11,000 142,960
Mosenergo, ADR, 144A........................................ Russia 10,200 374,850
National Grid Group Plc..................................... United Kingdom 111,520 658,274
Public Service Co. of New Mexico............................ United States 17,000 415,438
Texas Utilities Holding Co.................................. United States 15,650 615,241
Thames Water Group Plc. .................................... United Kingdom 50,143 795,162
-----------
4,894,678
-----------
TOTAL COMMON STOCKS (COST $34,330,309)...................... 42,077,759
-----------
PREFERRED STOCKS 4.0%
Banco Bradesco SA, pfd...................................... Brazil 40,750,000 421,101
Centrais Eletricas Brasileiras SA (Electrobras), ADR, pfd... Brazil 10,700 264,430
*Lojas Americanas SA, pfd. ................................. Brazil 3,017,000 18,574
*Lojas Americanas SA, pfd., ADR............................. Brazil 866 5,331
Moebel Walther AG, pfd...................................... Germany 16,400 492,173
Nacional Financiera SA, 11.25%, 05/15/98, cvt., pfd. ....... Mexico 4,200 231,000
Philippine Long Distance Telephone Co., 7.00%, cvt., pfd.,
series 3.................................................. Philippines 6,440 334,880
Sociedad Quimica y Minera de Chile SA, pfd., ADR............ Chile 2,200 96,800
Telecomunicacoes Brasileiras SA (Telebras), pfd., ADR....... Brazil 3,900 506,269
-----------
TOTAL PREFERRED STOCKS (COST $2,008,117).................... 2,370,558
-----------
</TABLE>
20
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1998 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
COUNTRY AMOUNT** VALUE
---------------------------------------------
<S> <C> <C> <C>
BONDS 6.3%
Alfa SA de CV:
8.00%, cvt., 9/15/00...................................... Mexico $ 60,000 $ 75,675
8.00%, cvt., 9/15/00, 144A................................ Mexico 180,000 227,025
U.S. Treasury Note, 6.375%, 5/15/00......................... United States 3,420,000 3,473,441
-----------
TOTAL BONDS (COST $3,848,889)............................... 3,776,141
-----------
SHORT TERM INVESTMENTS (COST $11,179,128) 18.8%
U.S. Treasury Bills, 4.85% to 5.16% with maturities to
6/25/98................................................... United States 11,259,000 11,181,336
-----------
TOTAL INVESTMENTS (COST $51,366,443) 99.8%.................. 59,405,794
OTHER ASSET, LESS LIABILITIES .2%........................... 148,783
-----------
TOTAL NET ASSETS 100.0%..................................... $59,554,577
===========
</TABLE>
*Non-income producing.
**Securities traded in U.S. dollars.
See Notes to Financial Statements.
21
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $51,366,443)..... $59,405,794
Cash....................................................... 478
Receivables:
Fund shares sold.......................................... 238,287
Dividends and interest.................................... 326,052
Organization costs......................................... 14,902
Other assets............................................... 4,011
-----------
Total assets.......................................... 59,989,524
-----------
Liabilities:
Payables:
Investment securities purchased........................... 197,463
To affiliates............................................. 159,430
Distributions to shareholders.............................. 2,150
Accrued expenses........................................... 75,904
-----------
Total liabilities..................................... 434,947
-----------
Net assets, at value........................................ $59,554,577
===========
Net assets consist of:
Undistributed net investment income........................ $ 431,617
Net unrealized appreciation................................ 8,039,351
Accumulated net realized gain.............................. 525,015
Beneficial shares.......................................... 50,558,594
-----------
Net assets, at value........................................ $59,554,577
===========
CLASS I:
Net asset value per share ($46,262,060 / 3,170,442 shares
outstanding)............................................. $14.59
===========
Maximum offering price per share ($14.59 / 94.25%)......... $15.48
===========
CLASS II:
Net asset value per share ($13,292,517 / 921,157 shares
outstanding)*............................................ $14.43
===========
Maximum offering price per share ($14.43 / 99.00%)......... $14.58
===========
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
22
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $145,580)
Dividends.................................................. $1,184,308
Interest................................................... 626,798
----------
Total investment income............................... $1,811,106
----------
Expenses:
Management fees (Note 3)................................... 326,967
Administrative fees (Note 3)............................... 65,372
Distribution fees (Note 3)
Class I................................................... 119,719
Class II.................................................. 93,601
Transfer agent fees (Note 3)............................... 72,000
Custodian fees............................................. 16,970
Reports to shareholders.................................... 37,250
Registration and filing fees............................... 51,000
Professional fees (Note 3)................................. 27,196
Trustees' fees and expenses................................ 2,800
Amortization of organization costs......................... 14,104
Other...................................................... 541
----------
Total expenses........................................ 827,520
Expenses waived/paid by affiliate (Note 3)............ (222,794)
----------
Net expenses....................................... 604,726
----------
Net investment income............................ 1,206,380
----------
Realized and unrealized gains:
Net realized gain from:
Investments............................................... 2,147,465
Foreign currency transactions............................. 34,391
----------
Net realized gain...................................... 2,181,856
Net unrealized appreciation on investments............. 4,650,441
----------
Net realized and unrealized gain............................ 6,832,297
----------
Net increase in net assets resulting from operations........ $8,038,677
==========
</TABLE>
See Notes to Financial Statements.
23
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
-----------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 1,206,380 $ 438,587
Net realized gain from investments and foreign currency
transactions............................................ 2,181,856 343,441
Net unrealized appreciation on investments................ 4,650,441 2,327,516
-----------------------------
Net increase in net assets resulting from operations.... 8,038,677 3,109,544
Distributions to shareholders from:
Net investment income:
Class I.................................................. (693,986) (316,069)
Class II................................................. (150,454) (59,789)
Net realized gains:
Class I.................................................. (1,488,247) (66,904)
Class II................................................. (426,523) (16,728)
Capital share transactions (Note 2):
Class I.................................................. 17,020,983 11,132,253
Class II................................................. 6,216,979 3,317,674
-----------------------------
Net increase in net assets.............................. 28,517,429 17,099,981
Net assets:
Beginning of year.......................................... 31,037,148 13,937,167
-----------------------------
End of year................................................ $59,554,577 $31,037,148
=============================
Undistributed net investment income included in net assets:
End of year................................................ $ 431,617 $ 106,689
=============================
</TABLE>
See Notes to Financial Statements.
24
PAGE
TEMPLETON GROWTH AND INCOME FUND
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Growth and Income Fund (the Fund), is a separate diversified series of
Templeton Global Investment Trust (the Trust), which is an open-end 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. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.
b. FOREIGN CURRENCY TRANSLATION:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
c. INCOME TAXES:
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
25
PAGE
TEMPLETON GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONT.):
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
Common expenses incurred by the Trust are allocated among the funds based on the
ratio of net assets of each fund to the combined net assets. Other expenses are
charged to each fund on a specific identification basis.
e. ORGANIZATION COSTS:
Organization costs are amortized on a straight line basis over five years.
g. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. BENEFICIAL SHARES
The Fund offers two classes of shares: Class I and Class II shares. The shares
differ by their initial sales load, distribution fees, voting rights on matters
affecting a single class and the exchange privilege of each class.
At March 31, 1998, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------------------
1998 1997
---------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I SHARES:
Shares sold................................................. 1,614,763 $22,345,226 1,122,620 $13,843,589
Shares issued on reinvestment of distributions.............. 137,810 1,822,287 28,601 346,726
Shares redeemed............................................. (514,016) (7,146,530) (249,794) (3,058,062)
---------------------------------------------------------
Net increase................................................ 1,238,557 $17,020,983 901,427 $11,132,253
=========================================================
</TABLE>
26
PAGE
TEMPLETON GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
2. BENEFICIAL SHARES (CONT.)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------------------
1998 1997
---------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS II SHARES:
Shares sold................................................. 545,744 $ 7,550,125 291,798 $3,539,571
Shares issued on reinvestment of distributions.............. 36,472 477,961 5,525 66,562
Shares redeemed............................................. (129,542) (1,811,107) (23,460) (288,459)
---------------------------------------------------------
Net increase................................................ 452,674 $ 6,216,979 273,863 $3,317,674
=========================================================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton Global
Advisors Ltd. (TGAL), Franklin Templeton Services, Inc. (FT Services),
Franklin/Templeton Distributors, Inc. (Distributors), and Franklin/Templeton
Investor Services, Inc. (Investor Services) the Fund's investment manager,
administrative manager, principal underwriter, and transfer agent, respectively.
The Fund pays monthly an investment management fee to TGAL of 0.75% per year of
the average daily net assets of the Fund. The Fund pays its allocated share of
an administrative fee to FT Services based on the Trust's aggregate average
daily net assets as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- -----------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
</TABLE>
TGAL and FT Services agreed in advance to reduce fees to the extent necessary to
limit total expenses to an annual rate of 1.25% and 1.90% of the Fund's average
daily net assets of Class I and Class II, respectively, through August 1, 1998.
The Fund reimburses Distributors up to 0.35% and 1.00% per year of the average
daily net assets of Class I and Class II shares, respectively, for costs
incurred in marketing the Fund's Class I and Class II shares. Under the Class I
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At March 31, 1998, the unreimbursed costs were $993,733. Distributors
received net commissions from sales of Fund shares, and received contingent
deferred sales charges for the period of $91,181 and $2,781, respectively.
Included in professional fees are legal fees of $10,628 that were paid to a law
firm in which a partner is an officer of the Fund.
27
PAGE
TEMPLETON GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
4. INCOME TAXES
The cost of securities for federal income tax purposes is the same as that shown
in the Statement of Investments. At March 31, 1998, the net unrealized
appreciation based on the cost of investments for income tax purposes was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $10,233,593
Unrealized depreciation..................................... (2,194,242)
-----------
Net unrealized appreciation................................. $ 8,039,351
===========
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended March 31, 1998 aggregated $28,034,022 and $6,497,743 respectively.
28
PAGE
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 statement of investments, of Templeton Growth and Income Fund, as of March
31, 1998, 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, 1998, 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, 1998, 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.
McGLADREY & PULLEN LLP
New York, New York
April 24, 1998
29
PAGE
TEMPLETON GROWTH AND INCOME FUND
Tax Designation
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Fund hereby
designates the following amounts as capital gain dividends for the fiscal year
ended March 31, 1998:
<TABLE>
<S> <C>
28% Rate Gain............................... $ 990,036
20% Rate Gain............................... 841,854
----------
Total....................................... $1,831,890
==========
</TABLE>
Under Section 854(b)(2) of the Internal Revenue Code, the Fund hereby designates
14.39% of the ordinary income dividends as income qualifying for the dividends
received deduction for the fiscal year ended March 31, 1998.
30
PAGE
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. To ensure the highest quality of service, telephone
calls to or from our service departments may be monitored, recorded and
accessed. These calls can be determined by the presence of a regular beeping
tone.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global
Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global
Real Estate Fund
Templeton Global
Smaller Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Franklin Templeton German
Government Bond Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and
Income Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency Fund
Franklin Templeton Hard
Currency Fund
Franklin Templeton High Income
Currency Fund
Templeton Americas Government
Securities Fund
GROWTH
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap
Growth Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund*
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund*
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.
FUND ALLOCATOR SERIES
Franklin Templeton Conservative
Target Fund
Franklin Templeton Moderate
Target Fund
Franklin Templeton Growth
Target Fund
INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Floating Rate Trust
Franklin Investment Grade
Income Fund
Franklin Short-Intermediate
U.S. Government Securities Fund
Franklin U.S. Government
Securities Fund
Franklin Money Fund
Franklin Federal Money Fund
FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Income Fund
Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
TAX-FREE INCOME
Alabama
Arizona**
Arkansas***
California**
Colorado
Connecticut
Florida**
Georgia
Hawaii***
Indiana
Kentucky
Louisiana
Maryland
Massachusetts+
Michigan**
Minnesota+
Missouri
New Jersey
New York**
North Carolina
Ohio+
Oregon
Pennsylvania
Tennessee***
Texas
Virginia
Washington***
VARIABLE ANNUITIES++
Franklin Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*These funds are now closed to new accounts, with the exception of retirement
plan accounts.
**Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and/or a high yield
portfolio (CA) and a money market portfolio (CA and NY).
***The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
+ Portfolio of insured municipal securities.
++ Franklin Valuemark and Franklin Templeton Valuemark Income Plus are issued by
Allianz Life Insurance Company of North America or by its wholly owned
subsidiary, Preferred Life Insurance Company of New York, and distributed by
NALAC Financial Plans, LLC. The Franklin Valuemark Funds are managed by Franklin
Advisers, Inc. and its Templeton and Franklin affiliates.
05/98
PAGE
TEMPLETON GROWTH AND
INCOME FUND
AUDITORS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404-1585
SHAREHOLDER SERVICES
1-800-632-2301
FUND INFORMATION
1-800-342-5236
This report must be preceded or accompanied by a 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.
414 A98 5/98 Printed on recycled paper
