ANNUAL REPORT
MARCH 31, 1998
TEMPLETON AMERICAS
GOVERNMENT SECURITIES FUND
[LOGO] FRANKLIN TEMPLETON
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.
PAGE
SHAREHOLDER LETTER
Your Fund's Objective: Templeton Americas Government Securities Fund seeks a
high level of current income, with total return as a secondary objective. It
seeks to achieve these objectives by investing at least 65% of its total assets
in debt securities issued or guaranteed by governments, government agencies,
political subdivisions and other government entities of countries located in the
Western Hemisphere, defined as countries located in North, South, and Central
America and the surrounding waters.
Dear Shareholder:
We are pleased to bring you this annual report of Templeton Americas Government
Securities Fund for the year ended March 31, 1998.
During the period under review, bond markets generally performed well in
countries where the Fund invests, and the unmanaged J.P. Morgan U.S. Government
Bond Index and J.P. Morgan U.S. Government Bond/Latin Eurobond Index (LEI)
returned 12.43% and 13.48%, respectively(1). Among the Latin American countries
comprising the LEI, Mexico was among the
(1) Source: J.P. Morgan. Market returns include reinvested interest. An index is
an unmanaged group of securities that is used to measure market performance. One
cannot invest directly in an index.
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 11 of
this report.
CONTENTS
Shareholder Letter.................. 1
Performance Summary................. 6
Financial Highlights &
Statement of Investments............ 10
Financial Statements................ 13
Notes to Financial
Statements.......................... 16
Independent Auditor's Report........ 19
Tax Designation..................... 20
[GRAPH] PYRAMID
PAGE
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
3/31/98
This chart shows in pie format the geographic breakdown of holdings in the
Templeton Americas Government Securities of 3/31/98.
<TABLE>
<S> <C>
United States 17.8%
Mexico 14.9%
Venezuela 14.8%
Brazil 12.1%
Argentina 9.4%
Ecuador 2.4%
Other Countries 1.1%
Short-Term Investments & Other Net Assets 27.5%
</TABLE>
CURRENT ACCOUNT* - The balance of a country's import and export of goods,
including automobiles, foodstuffs, and apparel, but not including payments
abroad for services and tourism.
FISCAL POSITIONS* - A government's taxation and spending policies.
best performers, returning 16.01%.(2) Other countries from the region that
performed well during the period included Ecuador and Venezuela. Panama and
Colombia were among the Latin American countries whose bonds recorded the
poorest performance during the period under review. Bonds from Brazil and
Argentina, which performed well during the first half of the period,
underperformed the indices during the second half of the fiscal year, reflecting
investors' concerns about imbalances under a scenario of reduced foreign
investing in emerging market countries.
In the U.S., the bond market turned in a remarkable performance. Responding to
continued strong growth in gross domestic product, the Federal Reserve (the Fed)
tightened monetary policy in March 1997. However, even though unemployment fell,
inflation remained benign and the Fed left interest rates unchanged throughout
the fiscal year. During this period, long-term interest rates fell to their
lowest level in four years, and long-term bond prices, as measured by 30-year
Treasuries, appreciated 15.30%.(3)
Towards the end of October 1997, the Asian crisis spilled over into world
financial markets, engulfing emerging markets such as Latin America, as well as
Eastern Europe and Korea. Latin American bond markets dropped precipitously and
interest rate spreads on Latin American debt widened. Because of their strong
economic policies and closer ties to the U.S., some countries, such as Mexico
and Venezuela, were perceived as "safe havens" and were able to avoid many of
the effects of the Asian crisis. However, some other countries, like Brazil and
Argentina, with weak current account and fiscal positions or currency
overvaluation, were adversely affected. Within
(2) Source: J.P. Morgan. Return measured in U.S. dollars and includes reinvested
interest. One cannot invest directly in an index.
(3) Source: Bloomberg.
2
PAGE
this environment, Templeton Americas Government Securities Fund provided a
14.21% cumulative one-year total return, as discussed in the Performance Summary
on page 6.
Volatility resulting from the situation in Asia created investment opportunities
for the Fund, as many countries' bond prices fell below what we believed to be
their underlying value. We took advantage of this situation during the latter
half of the reporting period and decreased our exposure to bonds from countries
like Brazil and Argentina, while increasing our exposure to countries with
long-term fundamentals we believe are improving, such as Mexico. We gradually
increased our holdings in Venezuela, from 3.7% of total net assets at the
beginning of the period to 14.8% at the end. By March 31, 1998, the securities
of Argentina, Brazil, Mexico, Venezuela, and the U.S. together represented 69.0%
of the Fund's total net assets. Also on that date, short-term investments and
other net assets represented 27.5% of total net assets. Most of this was cash
which came into the Fund during the reporting period. As you know, we do not
like to rush in and invest, but, instead, selectively search for buying
opportunities.
Looking forward, we intend to focus on bonds from countries that, in our
opinion, show strong repayment capacity despite temporary problems, are making
progress on structural reform, and are experiencing strong economic growth.
Although stabilization efforts in Asia are at an early stage and volatility
could affect countries facing problems such as an overvalued currency, we are
convinced of the long-term potential of these markets. We believe that the
underlying value of debt securities from these countries may increase as a
result of their economic performance and improved creditworthiness. In addition,
we also hope to take advantage of several countries' plans to reduce their debt
servicing costs and improve their balance sheets
PORTFOLIO BREAKDOWN
3/31/98
<TABLE>
<CAPTION>
% OF TOTAL
NET ASSETS
<S> <C>
Government Bonds
(U.S. and Foreign) 69.5%
Corporate Bonds
(U.S. and Foreign) 3.0%
Short-Term Investments
& Other Net Assets 27.5%
</TABLE>
DEBT SERVICING COSTS* - Amounts required for payments of interest and current
maturities of principal on outstanding debt.
3
PAGE
UNCOLLATERALIZED* - Debt not backed by another asset or security.
SOVEREIGN DEBT* - Debt obligation of a foreign government.
* Sources: Franklin Templeton; Barron's Dictionary of Finance and Investment
Terms
by trading their "Brady Bonds" for new, uncollateralized sovereign debt.(4) At
the same time, we will seek to avoid investments in countries that are failing
to make economic reforms and whose credibility is weakened due to inconsistent
policies.
Of course, investments in foreign securities concentrated in a single region
involve special risks, such as market and currency volatility, and adverse
economic, social, and political developments in the countries where the Fund is
invested. Emerging markets involve heightened risks related to the same factors,
in addition to risks associated with political instability, higher rates of
inflation, controls on foreign investment, and the relatively small size and
lesser liquidity of these markets. The Fund may also invest in lower-rated or
unrated debt securities that have high credit risk and may be predominately
speculative. These risks and other considerations are discussed in the Fund's
prospectus.
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.
(4). Brady Bonds are created through the exchange of existing commercial bank
loans to sovereign entities for new obligations in connection with debt
restructuring under a plan introduced by former U.S. Secretary of the Treasury,
Nicholas F. Brady (the "Brady Plan").
4
PAGE
We thank you for your continued investment in the Fund, and would like to
reaffirm our dedication and commitment to searching the Western Hemisphere for
the best possible securities for the Fund's portfolio.
Sincerely,
/s/ THOMAS J. DICKSON
Thomas J. Dickson
/s/ ALEXANDER C. CALVO
Alexander C. Calvo
The Portfolio Management Team
Templeton Americas Government Securities Fund
The portfolio management responsibilities for the Fund since November, 1997 are
performed by a team consisting of Alexander C. Calvo and Thomas J. Dickson. Mr.
Calvo is currently a portfolio manager for a division of Templeton Investment
Counsel, Inc. He holds a BA in political science from Binghamton University and
an MA in international affairs (MALD) from The Fletcher School of Law and
Diplomacy at Tufts University. He also spent three years in the Ph.D. program in
economics at Boston University. Mr. Calvo holds an Investment Management
Certificate from the Investment Management Regulatory Authority in the United
Kingdom. Prior to joining the Templeton organization in 1995, he was an account
executive with Fleishman-Hillard, where he served as a consultant to firms
investing in Latin America; and previously was a research analyst with Zeta
Investments.
Mr. Dickson is currently a portfolio manager for several Franklin Templeton
mutual funds. He holds a BS in managerial economics from the University of
California at Davis. Prior to joining the Templeton organization in 1994, Mr.
Dickson worked as a fixed-income analyst and trader for Franklin Advisers, Inc.
Mr. Dickson currently manages fixed income and currency trading for the
Templeton organization and has country responsibilities for Australia, Canada,
Japan and New Zealand.
5
PAGE
PERFORMANCE SUMMARY
Templeton Americas Government Securities Fund produced a 14.21% 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.
The Fund's share price, as measured by net asset value, increased 4 cents
($0.04), from 10.64 on March 31, 1997, to $10.68 on March 31, 1998. During this
time, shareholders received per-share distributions of 72.0 cents ($0.7200) in
dividend income, 52.0 cents ($0.5200) in short-term capital gains, and 13.0
cents ($0.1300) in long-term capital gains. Distributions will vary depending on
income earned by the Fund and any profits realized from the sale of securities
in the portfolio, as well as the level of the Fund's operating expenses.
Past performance is not predictive of future results.
6
PAGE
The graph on page 8 compares the Fund's performance since its inception with
that of the J.P. Morgan U.S. Government Bond Index and the J.P. Morgan U.S.
Government Bond/Latin Eurobond Index.*
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 nor is an index representative of the
Fund's portfolio.
*The J.P. Morgan U.S. Government Bond Index is a total return index that tracks
the U.S. Treasuries market. Each issue is weighted according to its traded
market capitalization in U.S. dollar terms. All issues included in the index
have remaining maturities of one year or more.
The J.P. Morgan U.S. Government Bond/Latin Eurobond Index is a proprietary index
developed by the Templeton organization that combines 60% of the J.P. Morgan
U.S. Government Bond Index and 40% of the J.P. Morgan Latin Eurobond Index. The
J.P. Morgan Latin Eurobond Index covers Eurobonds of over U.S. $100 million in
size, but only from Latin America. Past performance is not predictive of future
results.
7
PAGE
Total Return Index Comparison
$10,000 Investment (6/27/94 - 3/31/98)
The following line graph compares the performance of the Templeton Americas
Government Securities Fund since inception to that of the J.P. Morgan U.S.
Government Bond Index and the J.P. Morgan U.S. Government Bond/Latin Eurobond
Index based on a $10,000 investment from 6/27/94 to 3/31/98.
<TABLE>
<CAPTION>
Templeton Americas 60% JPM US Gov't JP Morgan
Government Securities Bond/40% Latin U.S. Gov't
Fund Eurobond Index Bond Index
---------------------------------------------------------------
<S> <C> <C> <C>
6/27/94 $9,579 $10,000 $10,000
Jun-94 $9,579 $10,000 $9,934
Jul-94 $9,607 $10,138 $10,096
Aug-94 $9,636 $10,261 $10,109
Sep-94 $9,655 $10,153 $9,989
Oct-94 $9,665 $10,111 $9,983
Nov-94 $9,670 $10,081 $9,953
Dec-94 $9,553 $9,804 $10,010
Jan-95 $9,476 $9,593 $10,184
Feb-95 $9,451 $9,628 $10,399
Mar-95 $9,451 $9,635 $10,468
Apr-95 $9,678 $10,249 $10,596
May-95 $9,955 $10,691 $10,989
Jun-95 $9,956 $10,802 $11,077
Jul-95 $10,015 $11,061 $11,047
Aug-95 $10,186 $11,190 $11,165
Sep-95 $10,347 $11,302 $11,264
Oct-95 $10,407 $11,344 $11,423
Nov-95 $10,632 $11,589 $11,592
Dec-95 $10,907 $11,849 $11,746
Jan-96 $11,307 $12,076 $11,827
Feb-96 $10,904 $11,867 $11,611
Mar-96 $10,914 $11,877 $11,523
Apr-96 $11,107 $11,951 $11,460
May-96 $11,149 $11,961 $11,445
Jun-96 $11,358 $12,100 $11,577
Jul-96 $11,391 $12,122 $11,606
Aug-96 $11,568 $12,239 $11,594
Sep-96 $11,980 $12,460 $11,767
Oct-96 $12,093 $12,629 $12,005
Nov-96 $12,476 $12,955 $12,201
Dec-96 $12,556 $12,956 $12,091
Jan-97 $12,756 $13,070 $12,113
Feb-97 $12,826 $13,159 $12,128
Mar-97 $12,671 $12,992 $12,008
Apr-97 $12,923 $13,234 $12,180
May-97 $13,200 $13,422 $12,288
Jun-97 $13,376 $13,604 $12,427
Jul-97 $13,794 $14,032 $12,793
Aug-97 $13,705 $13,889 $12,658
Sep-97 $13,884 $14,131 $12,854
Oct-97 $13,250 $13,768 $13,087
Nov-97 $13,575 $14,104 $13,154
Dec-97 $13,828 $14,330 $13,301
Jan-98 $14,163 $14,585 $13,507
Feb-98 $14,365 $14,674 $13,462
Mar-98 $14,486 $14,743 $13,500
</TABLE>
(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.
Past performance is not predictive of future results.
8
PAGE
Periods ended 3/31/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 3-YEAR (6/27/94)
<S> <C> <C> <C>
Cumulative Total Return(1) 14.21% 53.27% 51.24%
Average Annual Total Return(2) 9.38% 13.62% 10.36%
</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 4.25% 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, the Fund's
total returns 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
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------
1998 1997 1996 1995+
---------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $10.64 $10.20 $9.59 $10.00
---------------------------------------------
Income from investment operations:
Net investment income...................................... .73 .74 .75 .30
Net realized and unrealized gains (losses)................. .68 .85 .71 (.43)
---------------------------------------------
Total from investment operations............................ 1.41 1.59 1.46 (.13)
---------------------------------------------
Less distributions from:
Net investment income...................................... (.72) (.77) (.69) (.28)
Net realized gains......................................... (.65) (.38) (.16) --
---------------------------------------------
Total distributions......................................... (1.37) (1.15) (.85) (.28)
---------------------------------------------
Net asset value, end of year................................ $10.68 $10.64 $10.20 $9.59
=============================================
Total Return*............................................... 14.21% 16.23% 15.49% (1.33)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $14,973 $5,627 $3,540 $2,826
Ratios to average net assets:
Expenses................................................... 1.25% 1.25% 1.25% 1.25%**
Expenses, excluding waiver and payments by affiliate....... 1.89% 2.79% 4.98% 6.49%**
Net investment income...................................... 7.11% 7.16% 7.47% 5.07%**
Portfolio turnover rate..................................... 70.79% 275.02% 163.57% --
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
+For the period June 27, 1994 (commencement of operations) to March 31, 1995.
See Notes to Financial Statements.
10
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT* VALUE
------- -----------
<S> <C> <C>
LONG TERM SECURITIES 72.5%
ARGENTINA 9.4%
Bridas Corp., Yankee, 12.50%, 11/15/99...................... $ 50,000 $ 53,690
Republic of Argentina:
9.25%, 2/23/01............................................ 555,000 574,078
8.75%, 5/09/02............................................ 75,000 74,044
11.00%, 10/09/06.......................................... 225,000 250,453
Reg S, 11.75%, 2/12/07.................................... 80,000ARS 83,313
11.375%, 1/30/17.......................................... 200,000 226,125
9.75%, 9/19/27............................................ 150,000 148,125
-----------
1,409,828
-----------
BRAZIL 12.1%
Centrais Electricas Brasileiras SA, 144A, 10.00%,
10/30/98.................................................. 60,000 60,300
Government of Brazil:
8.875%, 11/05/01.......................................... 250,000 258,750
9.375%, 4/07/08........................................... 400,000 398,948
FRN, L, conv., 6.75%, 4/15/12............................. 310,000 249,938
8.00%, 4/15/14............................................ 285,065 244,096
10.125%, 5/15/27.......................................... 600,000 595,500
-----------
1,807,532
-----------
COLOMBIA .4%
Banco Ganadero SA, 9.75%, 8/26/99, 144A..................... 60,000 61,800
-----------
ECUADOR 2.4%
Ecuador Republic, 11.25, 4/25/02............................ 355,000 368,313
-----------
GUATEMALA .1%
Associacion Nacional del Cafe, 11.00%, 8/31/98.............. 10,000 10,000
-----------
MEXICO 14.9%
Bepensa SA, 9.75%, 9/30/04, 144A............................ 80,000 81,400
Cemex SA, 10.75%, 7/15/00, 144A............................. 65,000 69,225
Protexa Construcciones SA de CV, 12.125%, 7/24/02, 144A..... 80,000 74,400
United Mexican States:
9.75%, 2/06/01............................................ 400,000 423,000
9.875%, 1/15/07........................................... 520,000 559,650
11.375%, 9/15/16.......................................... 240,000 282,600
11.50%, 5/15/26........................................... 610,000 742,675
-----------
2,232,950
-----------
PANAMA .4%
Republic of Panama, FRN, 6.844%, 5/14/02.................... 55,386 54,693
-----------
TRINIDAD AND TOBAGO .2%
Sei Holdings IX Inc., 144A, 11.00%, 11/30/00................ 30,000 32,237
-----------
</TABLE>
11
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1998 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT* VALUE
------- -----------
<S> <C> <C>
LONG TERM SECURITIES (CONT.)
UNITED STATES 17.8%
U.S. Treasury Bond, 6.375%, 8/15/02......................... $ 210,000 $ 215,644
U.S. Treasury Notes:
5.50%, 3/31/00............................................ 400,000 399,500
6.125%, 7/31/00........................................... 260,000 262,844
6.25%, 4/30/01............................................ 325,000 330,485
8.00%, 5/15/01............................................ 225,000 239,906
6.125%, 11/15/27.......................................... 460,000 471,788
6.125%, 8/15/07........................................... 723,000 743,335
-----------
2,663,502
-----------
VENEZUELA 14.8%
Republic of Venezuela:
Reg S, 9.125%, 6/18/07.................................... 400,000 403,000
FRN, 6.813%, 12/18/07..................................... 238,095 216,518
9.25%, 9/15/27............................................ 1,755,000 1,592,661
-----------
2,212,179
-----------
TOTAL LONG TERM SECURITIES (COST $10,575,203)............... 10,853,034
-----------
SHORT TERM INVESTMENTS 27.7%
Deutsche Bank AG, 5.875%, 4/01/98........................... 588,000 588,000
Fannie Mae, 5.29% to 5.46%, with maturities to 4/29/98...... 1,103,000 1,099,043
Federal Home Loan Bank, 5.46%, 4/13/98...................... 525,000 524,051
Federal Home Loan Mortgage Corp., 5.47%, 4/07/98............ 600,000 599,458
U.S. Treasury Bills, 5.18% to 5.42%, with maturities to
4/30/98................................................... 1,350,000 1,345,717
-----------
TOTAL SHORT TERM INVESTMENTS (COST $4,155,749).............. 4,156,269
-----------
TOTAL INVESTMENTS (COST $14,730,952) 100.2%................. 15,009,303
OTHER ASSETS, LESS LIABILITIES (.2%)........................ (36,162)
-----------
TOTAL NET ASSETS 100.0%..................................... $14,973,141
===========
</TABLE>
CURRENCY ABBREVIATION:
<TABLE>
<S> <C>
ARS -- Argentina Peso
</TABLE>
*Securities traded in U.S. Dollars unless otherwise indicated.
See Notes to Financial Statements.
12
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (Cost $14,730,952)..... $15,009,303
Cash....................................................... 775
Receivables:
Fund shares sold.......................................... 164,715
Dividends and interest.................................... 202,717
From affiliates........................................... 19,636
Other assets............................................... 17,675
-----------
Total assets.......................................... 15,414,821
-----------
Liabilities:
Payables:
Investment securities purchased........................... 398,952
Fund shares redeemed...................................... 2,023
To affiliates............................................. 8,830
Accrued expenses........................................... 31,875
-----------
Total liabilities..................................... 441,680
-----------
Net assets, at value........................................ $14,973,141
===========
Net assets consist of:
Undistributed net investment income........................ $ 19,029
Net unrealized appreciation................................ 278,351
Accumulated net realized gain.............................. 43,387
Beneficial shares.......................................... 14,632,374
-----------
Net assets, at value........................................ $14,973,141
===========
Net asset value per share ($14,973,141 / 1,402,426 shares
outstanding).............................................. $10.68
===========
Maximum offering price per share ($10.68 / 95.75%).......... $11.15
===========
</TABLE>
See Notes to Financial Statements.
13
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<S> <C> <C>
Interest income............................................. $ 723,179
----------
Expenses:
Management fees (Note 3)................................... $ 51,899
Administrative fees (Note 3)............................... 12,975
Distribution fees (Note 3)................................. 28,707
Transfer agent fees (Note 3)............................... 8,800
Reports to shareholders.................................... 15,827
Registration and filing fees............................... 23,141
Professional fees.......................................... 8,500
Trustees' fees and expenses................................ 300
Amortization of organization costs......................... 13,507
--------
Total expenses........................................ 163,656
Expenses waived/paid by affiliate (Note 3)............ (55,532)
----------
Net expenses....................................... 108,124
----------
Net investment income........................... 615,055
----------
Realized and unrealized gains:
Net realized gain from:
Investments............................................... 265,158
Foreign currency transactions............................. 247
--------
Net realized gain...................................... 265,405
Net unrealized appreciation on investments............. 270,720
----------
Net realized and unrealized gain............................ 536,125
----------
Net increase in net assets resulting from operations........ $1,151,180
==========
</TABLE>
See Notes to Financial Statements.
14
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES 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..................................... $ 615,055 $ 325,723
Net realized gain from investments and foreign currency
transactions............................................ 265,405 338,392
Net unrealized appreciation (depreciation) on
investments............................................. 270,720 (12,040)
----------------------------
Net increase in net assets resulting from operations.... 1,151,180 652,075
Distributions to shareholders from:
Net investment income..................................... (596,026) (333,384)
Net realized gains........................................ (438,559) (157,434)
Fund share transactions (Note 2)........................... 9,229,467 1,925,649
----------------------------
Net increase in net assets.............................. 9,346,062 2,086,906
Net assets:
Beginning of year.......................................... 5,627,079 3,540,173
----------------------------
End of year................................................ $14,973,141 $5,627,079
============================
Undistributed net investment income included in net assets:
End of year................................................ $ 19,029 $ --
============================
</TABLE>
See Notes to Financial Statements.
15
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Americas Government Securities Fund (the Fund) is a separate,
non-diversified series of Templeton Global Investment Trust (the Trust), which
is an open-end management company registered under the Investment Company Act of
1940. The Fund seeks a high level of current income with total return as a
secondary objective by investing at least 65% of its total net assets in debt
securities issued or guaranteed by governments, government agencies, political
subdivisions and other government entities of countries located in the Western
Hemisphere, defined as countries located in North, South, or Central America and
the surrounding waters. The following summarizes the Fund's significant
accounting policies.
a. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.
b. FOREIGN CURRENCY TRANSLATION:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign currency denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
c. INCOME TAXES:
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
d. ORGANIZATION COSTS:
Organization costs are amortized on a straight line basis over five years.
16
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
e. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
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.
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.
f. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. BENEFICIAL SHARES
At March 31, 1998, there were an unlimited number of shares of beneficial
interest authorized ($0.01 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>
Shares sold................................................. 1,111,163 $11,762,737 265,772 $ 2,816,965
Shares issued on reinvestment of distributions.............. 91,732 958,993 42,982 454,556
Shares redeemed............................................. (329,474) (3,492,263) (126,942) (1,345,872)
--------------------------------------------------------
Net increase................................................ 873,421 $ 9,229,467 181,812 $ 1,925,649
========================================================
</TABLE>
Templeton Global Investors, Inc., an affiliate of the Fund, is the record owner
of 351,368 shares as of March 31, 1998.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton
Investment Counsel, Inc. (TICI), Franklin Templeton Services, Inc. (FT
Services), Franklin/Templeton Distributors, Inc. (Distributors) and
Franklin/Templeton Investor Services, Inc. (Investor Services), the Fund's
investment manager, administrative manager, principal underwriter, and transfer
agent, respectively.
17
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
The Fund pays monthly an investment management fee to TICI of 0.60% 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>
TICI and FT Services agreed in advance to reduce fees to the extent necessary to
limit total expenses to an annual rate of 1.25% of the Fund's average daily net
assets through August 1, 1998.
The Fund reimburses Distributors up to 0.35% per year of its average daily net
assets for costs incurred in marketing the Fund's shares. Under the distribution
plan, costs exceeding the maximum may be reimbursed in subsequent periods. At
March 31, 1998, unreimbursed costs were $26,480. Distributors received net
commissions from sales of Fund shares for the period of $13,743.
4. INCOME TAXES
At March 31, 1998, the net unrealized appreciation based on the cost of
investments for income tax purposes of $14,741,294 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $339,294
Unrealized depreciation..................................... (71,285)
--------
Net unrealized appreciation................................. $268,009
========
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended March 31, 1998 aggregated $12,469,477 and $7,458,223 respectively.
18
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Independent Auditor's Report
THE BOARD OF TRUSTEES AND SHAREHOLDERS
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Templeton Americas Government Securities Fund
as of March 31, 1998, and the related statement of operations for the year then
ended, the statements of changes in net assets 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 Americas Government Securities 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
19
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES 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................................. $ 6,659
20% Rate Gain................................. 17,458
-------
Total......................................... $24,117
=======
</TABLE>
20
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 AMERICAS GOVERNMENT
SECURITIES 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, California 94404-1585
SHAREHOLDER SERVICES
1-800-632-2301
FUND INFORMATION
1-800-342-5236
This report must be preceded or accompanied by the current prospectus of
Templeton Americas Government Securities 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.
416A98 5/98
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