ANNUAL REPORT
MARCH 31, 1999
TEMPLETON
GROWTH AND
INCOME FUND
[LOGO (R)]
FRANKLIN(R) TEMPLETON (R)
PAGE
[SEAL]
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.
MARK G. HOLOWESKO, CFA
President
Templeton Global Investment Trust
PAGE
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter ............... 1
Performance Summaries ............ 6
Financial Highlights &
Statement of Investments ......... 9
Financial Statements ............. 16
Notes to Financial
Statements ....................... 19
Independent Auditors' Report ..... 23
Tax Designation .................. 24
</TABLE>
[PYRAMID]
FUND CATEGORY- GLOBAL
GROWTH
GROWTH & INCOME
INCOME
TAX-FREE INCOME
SHAREHOLDER LETTER
- --------------------------------------------------------------------------------
Your Fund's Goal: Templeton Growth and Income Fund seeks high total return,
comprising a combination of capital growth and income. Under normal market
conditions, the Fund invests primarily in equity and debt securities of U.S. and
foreign companies.
- --------------------------------------------------------------------------------
Dear Shareholder:
This annual report covers the fiscal year ended March 31, 1999, a challenging
period for Templeton Growth and Income Fund. During this time, Asia's economic
problems adversely affected developing markets in Russia and Latin America, and
many investors sought refuge in relatively liquid growth stocks of large
companies in developed markets. Within this environment, Templeton Growth and
Income Fund -- Class A posted a -7.71% one-year cumulative total return, as
shown in the Performance Summary on page 7. The Morgan Stanley Capital
International(R) (MSCI) World Index, the Fund's benchmark, provided a cumulative
total return of 13.05% for the same period(1). We have always maintained a
1. Source: Standard & Poor's(R) Micropal. The unmanaged MSCI World Index tracks
the performance of approximately 1,450 securities in 22 countries, and is
designed to measure world stock market performance. It includes reinvested
dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
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.
PAGE
long-term perspective when managing the Fund, and we encourage shareholders to
view their investments in a similar manner. As you can see from the performance
summary on page 7, the Fund's Class A shares delivered a cumulative total return
of 55.49% since inception on March 14, 1994.
The Fund's underperformance relative to the MSCI World Index during the
reporting period may be explained partly by the fact that we are value investors
in a momentum-driven market, which has been significantly influenced by
enthusiasm for large-cap stocks. Our holdings of such stocks were fewer than
those of the index, which outperformed the Fund as share prices of many
large-cap companies soared.
GEOGRAPHIC DISTRIBUTION*
Based on Total Net Assets
3/31/99
[PIE CHART]
[THIS CHART SHOWS IN PIE CHART FORMAT THE GEOGRAPHIC DISTRIBUTION OF TEMPLETON
GROWTH AND INCOME FUND'S PORTFOLIO HOLDINGS ON MARCH 31, 1999, BASED ON TOTAL
NET ASSETS]
European Stocks 40.4%
North American Stocks/Bonds 25.7%
Asian Stocks 21.8%
Latin American Stocks 8.3%
Australian/New Zealand Stocks 3.9%
Mid-East/African Stocks 1.8%
* Other Net Assets represented -1.9% of Total Net Assets.
ASIA
During the year under review, Asian securities markets experienced severe
volatility. For example, South Korea's equity market appreciated 49.91% while
China's fell 50.65%(2). Although volatility was primarily on the down side, we
believe Asia's economic restructuring is beginning to progress. In our opinion,
share prices of many Asian companies have declined excessively in light of what
their future value may be. And because of the volatility in the region's
securities markets, we were able to purchase shares of several Hong Kong
companies at what we considered bargain prices. For example, we added to our
positions in Hong Kong Electric Holdings Ltd. and Hang Lung Development Co.
Ltd., and initiated a position in Hong Kong Telecommunications Ltd. In addition
to possessing what we believed to be long-term growth potential, these companies
were paying attractive dividend yields. Despite generally poor
(2.) Source: MSCI and International Finance Corporation. Market returns are
measured in U.S. dollars and include reinvested dividends.
2
PAGE
price-to-earnings ratios in Japanese stocks, our analysts did find a few
companies there that fit our value criteria. For example, we purchased shares of
Nichiha Corp., a building materials and components supplier, and Laox Co. Ltd.,
a manufacturer of appliances and household durables.
TOP 10 HOLDINGS
3/31/99
[THIS CHART LISTS THE TOP 10 HOLDINGS, INCLUDING INDUSTRY AND COUNTRY, OF
TEMPLETON GROWTH AND INCOME FUND, BASED ON TOTAL NET ASSETS AS OF 3/31/99.]
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Pharmacia & Upjohn Inc.
Health & Personal Care,
United States 2.2%
Zurich Allied AG
Insurance, Switzerland 2.0%
Archer-Daniels Midland Co.
Food & Household Products,
United States 1.8%
BTR Siebe PLC
Machinery & Engineering,
United Kingdom 1.7%
Morgan Stanley Dean Witter & Co.
Financial Services,
United States 1.7%
Swire Pacific Ltd.,B
Multi-Industry, Hong Kong* 1.7%
Hutchison Whampoa Ltd.
Multi-Industry, Hong Kong* 1.6%
General Electric Co. PLC
Electrical & Electronics,
United Kingdom 1.5%
Thames Water Group PLC
Utilities Electrical & Gas,
United Kingdom 1.5%
Merita AS
Banking, Finland 1.4%
</TABLE>
* Hong Kong reverted to the sovereignty of China on July 1, 1997.
LATIN AMERICA
Many Latin American stocks declined significantly during the reporting period,
giving us opportunities to identify bargains throughout the region, and we
increased the Fund's equity holdings there from 5.6% of total net assets on
March 31, 1998, to 8.3% on March 31, 1999. Believing that the worst may be over
for some quality Mexican companies with depressed stock prices, we added to the
Fund's holdings of Telefonos de Mexico SA (Telmex), L, ADR and Industrias
Penoles SA, one of the nation's leading mining and metallurgical groups.
EUROPE
Privatization, restructuring, and relatively low interest rates helped many
European equity markets to perform well during the year under review. Because
share prices in Europe were so generally buoyant, we were unable to discover
many new investment opportunities there. However, stocks of most industrial
companies in the United Kingdom underperformed the broader market. We believe
many investors have focused on the poor short-term earnings prospects of these
companies. Not surprisingly, we added some of these stocks to the Fund,
initiating a position in BTR Siebe PLC, and adding to our holdings of Laird
Group PLC, because of their potential long-term returns. Believing they
represented good value, we also
3
PAGE
purchased shares of BICC PLC, a manufacturer of electronic components and
instruments, and British Airways PLC.
TOP 10 INDUSTRIES
3/31/99
[THIS CHART SHOWS IN TABLE FORMAT THE TOP 10 INDUSTRIES REPRESENTED IN TEMPLETON
GROWTH AND INCOME FUND AS OF MARCH 31, 1999, BASED ON TOTAL NET ASSETS.]
% OF TOTAL
INDUSTRY NET ASSETS
- ------------------------------------------------------------------
Utilities Electrical & Gas 13.7%
Multi-Industry 7.5%
Insurance 7.5%
Food & Household Products 6.8%
Banking 6.2%
Machinery & Engineering 6.0%
Telecommunications 5.9%
Metals & Mining 4.8%
Building Materials &
Components 4.3%
Energy Sources 4.1%
NORTH AMERICA
Because share prices in the U.S. were so high, with both the Dow Jones(R)
Industrial Average(3) and the S&P 500(R) reaching record highs during the year
under review(4), we were unable to find many bargains there. However, we added
to the Fund's holdings of Raytheon Co., A, an aircraft manufacturer and provider
of commercial and defense electronics, and initiated a position in General
Growth Properties, a real estate company.
Looking forward, we are optimistic about prospects for the Fund's holdings.
Although it is easy for value investors to get discouraged during momentum
markets such as the one we have been experiencing, it is important to remember
that we have a distinct investment style - one which has not always been in
favor, but has been successful in the past. Although past performance is no
guarantee of future results, we will continue to follow our investment style,
confident of the long-term potential we believe it offers our shareholders.
Of course, investing in foreign securities involves special risks, such as
adverse economic, social and political developments in the countries where the
Fund invests, as well as market and currency volatility. Emerging market
securities involve heightened risks related to the same factors, in addition to
those associated with the relatively small size and lesser liquidity of these
markets. Investing in any emerging market means accepting a
3. Source: Standard and Poor's Micropal. The Dow's market return, calculated by
Wilshire Associates Inc., includes reinvested dividends.
4. Source: Standard and Poor's Micropal.
One cannot invest directly in an index, nor is the index representative of the
Fund's portfolio.
4
PAGE
certain amount of volatility and, in some cases, the consequences of severe
market corrections. For example, Taiwan's equity market has increased 855% in
the last 15 years, but has suffered six declines of more than 20% during that
time(5). While short-term volatility can be disconcerting, declines in excess of
50% are not unusual in such markets. The special risks associated with these
types of investments, as well as other considerations, are discussed in the
Fund's prospectus.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of March 31, 1999, 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 past performance
is not predictive of future results, these insights may help give you a better
understanding of our investment and management philosophy.
We thank you for your participation in Templeton Growth and Income Fund and
welcome your comments and suggestions.
Sincerely,
/s/ Richard Sean Farrington
Richard Sean Farrington, CFA
Portfolio Manager
Templeton Growth and Income Fund
5. Source: Bloomberg. Based on quarterly percentage price change over 15 years
ended March 31, 1999. Market returns are measured in U.S. dollars and do not
include reinvested dividends.
5
PAGE
CLASS A (formerly Class I):
Subject to the maximum 5.75% initial sales charge.
CLASS C (formerly Class II):
Subject to 1% initial sales charge and 1% contingent deferred sales charge for
shares redeemed within 18 months of investment. These shares have higher annual
fees and expenses than Class A 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
would have been lower. After July 31, 1999, the fee waiver and expense
reimbursements may be discontinued at any time upon notice to the Fund's Board
of Trustees.
PERFORMANCE SUMMARY AS OF 3/31/99
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities, as well as the
level of each class' operating expenses. Past distributions are not indicative
of future trends. All total returns include reinvested distributions at net
asset value.
PRICE AND DISTRIBUTION INFORMATION (4/1/98 - 3/31/99)
<TABLE>
<CAPTION>
CLASS A CHANGE 3/31/99 3/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value -$1.90 $12.69 $14.59
<CAPTION>
DISTRIBUTIONS
--------------------------------------
<S> <C>
Dividend Income $0.4650
Long-Term Capital Gain $0.2000
Short-Term Capital Gain $0.1150
TOTAL $0.7800
<CAPTION>
CLASS C CHANGE 3/31/99 3/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value -$1.89 $12.54 $14.43
<CAPTION>
DISTRIBUTIONS
--------------------------------------
<S> <C>
Dividend Income $0.3884
Long-Term Capital Gain $0.2000
Short-Term Capital Gain $0.1150
TOTAL $0.7034
</TABLE>
Templeton Growth and Income Fund paid distributions derived from long-term
capital gains of 20 cents ($0.2000) per share during the fiscal year ended March
31, 1999. The Fund hereby designates such distributions as capital gain
dividends per Internal Revenue Code Section 852 (b)(3).
Past performance is not predictive of future results.
6
PAGE
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR (3/14/94)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -7.71% 55.34% 55.49%
Average Annual Total Return(2) -13.01% 7.92% 7.87%
Value of $10,000 Investment(3) $8,699 $14,642 $14,655
<CAPTION>
3/31/95 3/31/96 3/31/97 3/31/98 3/31/99
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year
Total Return(4) 1.43% 18.78% 16.19% 20.23% -7.71%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 3-YEAR (5/1/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -8.26% 26.35% 47.64%
Average Annual Total Return(2) -10.07% 7.76% 10.18%
Value of $10,000 Investment(3) $8,993 $12,513 $14,620
<CAPTION>
3/31/97 3/31/98 3/31/99
---------------------------------
<S> <C> <C> <C>
One-Year
Total Return(4) 15.35% 19.40% -8.26%
</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 applicable, maximum
sales charge(s) for that class.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include the applicable, maximum sales
charge(s) for that class.
4. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
- --------------------------------------------------------------------------------
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility and the social,
economic and political climates of countries where the Fund invests. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. You may
have a gain or loss when you sell your shares.
- --------------------------------------------------------------------------------
Past performance is not predictive of future results.
7
PAGE
AVERAGE ANNUAL TOTAL RETURN
3/31/99
<TABLE>
<CAPTION>
CLASS A
- --------------------------------------------------------------------------------
<S> <C>
1-Year -13.01%
5-Year 7.92%
Since Inception (3/14/94) 7.87%
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
3/31/99
<TABLE>
<CAPTION>
CLASS C
- --------------------------------------------------------------------------------
<S> <C>
1-Year -10.07%
3-Year 7.76%
Since Inception (5/1/95) 10.18%
</TABLE>
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
The unmanaged index differs from the Fund in composition, does not pay
management fees or expenses, and includes reinvested dividends. One cannot
invest directly in an index. Total return represents the change in value of an
investment over the periods shown. It includes the applicable, maximum sales
charges, Fund expenses, account fees, and reinvested distributions.
CLASS A
Total Return Index Comparison
$10,000 Investment (3/14/94 - 3/31/99)
Templeton Growth and Income Fund $14,655
MSCI World Index* $21,271
CPI** $11,222
[THE FOLLOWING CHART SHOWS IN GRAPH FORMAT THE CUMULTIVE TOTAL RETURN OF A
$10,000 INVESTMENT IN THE FUND - CLASS A, MARCH 14, 1994 (INCEPTION) AS OF MARCH
31, 1999.]
<TABLE>
<CAPTION>
TEMPLETON GROWTH & MSCI WORLD INDEX CPI
INCOME FUND - CLASS A*
----------------------------------------------------------------------------------
<S> <C> <C> <C>
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
Apr-98 $15,922 $19,002 $11,056
May-98 $15,325 $18,767 $11,076
Jun-98 $15,269 $19,215 $11,090
Jul-98 $15,059 $19,186 $11,103
Aug-98 $13,079 $16,631 $11,116
Sep-98 $13,399 $16,928 $11,129
Oct-98 $14,395 $18,461 $11,156
Nov-98 $14,727 $19,562 $11,156
Dec-98 $14,782 $20,521 $11,149
Jan-99 $14,332 $20,973 $11,177
Feb-99 $14,078 $20,417 $11,188
</TABLE>
CLASS C
Total Return Index Comparison
$10,000 Investment (5/1/95 - 3/31/99)
<TABLE>
<S> <C>
Templeton Growth and Income Fund $14,620
MSCI World Index* $19,167
CPI** $10,841
</TABLE>
[THE FOLLOWING CHART SHOWS IN GRAPH FORMAT THE CUMULATIVE TOTAL RETURN OF A
$10,000 INVESTMENT IN THE FUND - CLASS C, MAY 1, 1995 (INCEPTION) AS OF MARCH
31, 1999.]
<TABLE>
<CAPTION>
TEMPLETON GROWTH & MSCI WORLD
INCOME FUND - CLASS A* INDEX CPI
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
May-95 $10,305.39 $10,087.52 $10,004.83
Jun-95 $10,325.59 $10,086.33 $10,024.51
Jul-95 $10,669.11 $10,593.13 $10,024.28
Aug-95 $10,679.21 $10,358.99 $10,051.39
Sep-95 $10,881.28 $10,662.69 $10,070.24
Oct-95 $10,810.55 $10,496.86 $10,103.36
Nov-95 $10,830.76 $10,863.30 $10,096.29
Dec-95 $11,046.07 $11,183.16 $10,089.69
Jan-96 $11,757.72 $11,386.87 $10,148.85
Feb-96 $11,726.78 $11,458.30 $10,181.73
Mar-96 $11,685.52 $11,651.45 $10,234.30
Apr-96 $11,943.37 $11,927.21 $10,273.66
May-96 $12,117.07 $11,939.63 $10,293.34
Jun-96 $12,055.04 $12,002.36 $10,299.94
Jul-96 $11,538.10 $11,580.65 $10,319.51
Aug-96 $11,972.33 $11,716.04 $10,339.19
Sep-96 $12,137.75 $12,176.88 $10,372.07
Oct-96 $12,375.54 $12,263.83 $10,404.95
Nov-96 $12,902.82 $12,953.18 $10,424.63
Dec-96 $13,017.51 $12,748.28 $10,424.63
Jan-97 $13,521.41 $12,903.55 $10,457.40
Feb-97 $13,636.89 $13,054.47 $10,488.75
Mar-97 $13,479.42 $12,798.58 $10,514.91
Apr-97 $13,531.91 $13,219.06 $10,527.52
May-97 $14,049.76 $14,037.64 $10,521.16
Jun-97 $14,495.45 $14,739.46 $10,533.77
Jul-97 $15,163.98 $15,420.78 $10,546.38
Aug-97 $14,813.79 $14,391.65 $10,566.41
Sep-97 $15,524.77 $15,175.46 $10,592.81
Oct-97 $14,707.68 $14,379.26 $10,619.33
Nov-97 $14,590.95 $14,635.74 $10,612.96
Dec-97 $14,822.52 $14,816.47 $10,600.24
Jan-98 $14,777.91 $15,231.97 $10,619.33
Feb-98 $15,447.10 $16,264.85 $10,640.54
Mar-98 $16,093.98 $16,954.00 $10,661.87
Apr-98 $16,127.44 $17,121.92 $10,681.08
May-98 $15,505.68 $16,910.13 $10,700.30
Jun-98 $15,437.72 $17,313.83 $10,713.14
Jul-98 $15,222.52 $17,288.37 $10,725.99
Aug-98 $13,217.77 $14,985.41 $10,738.83
Sep-98 $13,534.90 $15,253.09 $10,751.68
Oct-98 $14,531.62 $16,634.99 $10,777.49
Nov-98 $14,860.08 $17,626.86 $10,777.49
Dec-98 $14,905.42 $18,490.75 $10,771.01
Jan-99 $14,446.24 $18,898.21 $10,797.29
Feb-99 $14,187.22 $18,397.62 $10,808.13
Mar-99 $14,764.13 $19,166.51 $10,840.90
</TABLE>
* Source: Standard and Poor's(R) Micropal. The unmanaged MSCI World Index tracks
the performance of approximately 1,450 securities in 22 countries and is
designed to measure world stock market performance. It includes reinvested
dividends.
** Source: Bureau of Labor Statistics. The Consumer Price Index is a commonly
used measure of inflation.
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.
8
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Highlights
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------
YEAR ENDED MARCH 31,
----------------------------------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $14.59 $12.95 $11.39 $10.05 $10.01
----------------------------------------------------------
Income from investment operations:
Net investment income...................................... .37 .35 .22 .29 .16
Net realized and unrealized gains (losses)................. (1.49) 2.17 1.60 1.54 (.02)
----------------------------------------------------------
Total from investment operations............................ (1.12) 2.52 1.82 1.83 .14
----------------------------------------------------------
Less distributions from:
Net investment income...................................... (.47) (.28) (.22) (.29) (.10)
Net realized gains......................................... (.31) (.60) (.04) (.20) --
----------------------------------------------------------
Total distributions......................................... (.78) (.88) (.26) (.49) (.10)
----------------------------------------------------------
Net asset value, end of year................................ $12.69 $14.59 $12.95 $11.39 $10.05
==========================================================
Total Return*............................................... (7.71)% 20.23% 16.19% 18.78% 1.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $32,073 $46,262 $25,020 $11,732 $5,953
Ratios to average net assets:
Expenses................................................... 1.25% 1.25% 1.25% 1.25% 1.25%
Expenses, excluding waiver and payments by affiliate....... 1.72% 1.76% 2.24% 2.71% 6.11%
Net investment income...................................... 2.64% 2.91% 2.21% 2.98% 2.51%
Portfolio turnover rate..................................... 32.14% 18.62% 20.72% 10.21% 19.33%
</TABLE>
*Total return does not reflect sales commissions.
9
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------
YEAR ENDED MARCH 31,
--------------------------------------------
1999 1998 1997 1996+
------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $14.43 $12.84 $11.33 $10.19
--------------------------------------------
Income from investment operations:
Net investment income...................................... .25 .29 .21 .22
Net realized and unrealized gains (losses)................. (1.44) 2.11 1.52 1.41
--------------------------------------------
Total from investment operations............................ (1.19) 2.40 1.73 1.63
--------------------------------------------
Less distributions from:
Net investment income...................................... (.39) (.21) (.18) (.29)
Net realized gains......................................... (.31) (.60) (.04) (.20)
--------------------------------------------
Total distributions......................................... (.70) (.81) (.22) (.49)
--------------------------------------------
Net asset value, end of year................................ $12.54 $14.43 $12.84 $11.33
============================================
Total Return*............................................... (8.26)% 19.40% 15.35% 16.51%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $13,560 $13,293 $3,017 $2,205
Ratios to average net assets:
Expenses................................................... 1.90% 1.90% 1.90% 1.90%**
Expenses, excluding waiver and payments by affiliate....... 2.37% 2.41% 2.89% 3.31%**
Net investment income...................................... 1.93% 2.25% 1.51% 1.59%**
Portfolio turnover rate..................................... 32.14% 18.62% 20.72% 10.21%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
**Annualized.
+For the period May 1, 1995 (effective date) to March 31, 1996.
See Notes to Financial Statements.
10
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1999
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 96.4%
AEROSPACE & MILITARY TECHNOLOGY 2.8%
Boeing Co. ................................................. United States 14,300 $ 487,988
*General Motors Corp., H.................................... United States 3,761 189,695
Raytheon Co., A............................................. United States 10,515 607,241
-----------
1,284,924
-----------
APPLIANCES & HOUSEHOLD DURABLES 1.9%
Guangdong Kelon Electrical Holdings Ltd., H, 144A........... China 350,000 257,434
Laox Co. Ltd. .............................................. Japan 60,000 455,966
Sindo Ricoh Co. ............................................ South Korea 3,700 134,792
-----------
848,192
-----------
AUTOMOBILES 3.2%
Autoliv Inc., SDR........................................... Sweden 17,000 647,087
Fiat SpA, di Risp........................................... Italy 105,710 188,876
Ford Motor Co. ............................................. United States 6,000 340,500
Volvo AB, B................................................. Sweden 11,276 295,510
-----------
1,471,973
-----------
BANKING 4.7%
Bank Handlowy W Warszawie SA, GDR, 144A..................... Poland 16,400 199,260
Kookmin Bank................................................ South Korea 6,939 68,429
Merita AS................................................... Finland 123,100 659,177
National Westminster Bank PLC............................... United Kingdom 25,962 593,455
Shinhan Bank Co. Ltd. ...................................... South Korea 17,116 138,797
Unibanco Uniao de Bancos Brasileiros SA, GDR................ Brazil 7,500 144,375
Unidanmark AS, A............................................ Denmark 4,883 333,359
-----------
2,136,852
-----------
BROADCASTING & PUBLISHING 2.2%
South China Morning Post Holdings, Ltd. .................... Hong Kong 680,000 377,312
South China Morning Post Holdings, Ltd., 144A............... Hong Kong 110,000 61,036
Television Broadcasts Ltd. ................................. Hong Kong 153,000 557,742
-----------
996,090
-----------
BUILDING MATERIALS & COMPONENTS 4.3%
Anglian Group PLC........................................... United Kingdom 144,100 654,831
Caradon PLC................................................. United Kingdom 226,200 498,439
Hepworth PLC................................................ United Kingdom 129,400 349,893
Mirgor SA Comercial Ind Financiera Inmobi, C, ADR, 144A..... Argentina 34,520 20,712
Nichiha Corp. .............................................. Japan 43,700 427,295
-----------
1,951,170
-----------
CHEMICALS 1.5%
DSM NV, Br. ................................................ Netherlands 3,900 334,940
Kemira OY, ADR.............................................. Finland 51,800 324,355
</TABLE>
11
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1999 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
CHEMICALS (CONT.)
Shanghai Petrochemical Co. Ltd., H.......................... China 262,000 $ 29,413
*Sociedad Quimica y Minera de Chile SA, ADR, rts. .......... Chile 544 1,087
-----------
689,795
-----------
CONSTRUCTION & HOUSING .6%
Hollandsche Beton Groep NV.................................. Netherlands 27,693 291,499
-----------
DATA PROCESSING & REPRODUCTION .2%
*3Com Corp. ................................................ United States 3,900 90,919
-----------
ELECTRICAL & ELECTRONICS 3.0%
ABB AB, B................................................... Sweden 21,800 270,412
Catic Shenzhen Holdings Ltd., H............................. China 775,000 35,002
General Electric Co. PLC.................................... United Kingdom 77,000 692,983
Motorola Inc. .............................................. United States 5,031 368,521
-----------
1,366,918
-----------
ELECTRONIC COMPONENTS & INSTRUMENTS .3%
BICC PLC.................................................... United Kingdom 95,041 143,453
-----------
ENERGY EQUIPMENT & SERVICES .8%
Sunoco Inc. ................................................ United States 10,800 389,475
-----------
ENERGY SOURCES 4.1%
MOL Magyar Olay - Es Gazipari RT, GDS, 144A................. Hungary 22,456 482,804
Norsk Hydro AS.............................................. Norway 8,100 330,131
*Ranger Oil Ltd. ........................................... Canada 53,100 210,603
Shell Transport & Trading Co. PLC........................... United Kingdom 42,200 283,736
YPF Sociedad Anonima, ADR................................... Argentina 17,500 552,344
-----------
1,859,618
-----------
FINANCIAL SERVICES 1.7%
Morgan Stanley Dean Witter & Co. ........................... United States 7,800 779,534
-----------
FOOD & HOUSEHOLD PRODUCTS 6.8%
Archer-Daniels Midland Co. ................................. United States 57,285 841,373
Devro PLC................................................... United Kingdom 151,200 355,142
IBP Inc. ................................................... United States 20,000 372,500
Illovo Sugar Ltd. .......................................... South Africa 258,900 259,528
Northern Foods PLC.......................................... United Kingdom 172,870 309,763
Showa Sangyo Co. ........................................... Japan 255,000 499,536
Tate & Lyle PLC............................................. United Kingdom 70,500 473,445
-----------
3,111,287
-----------
FOREST PRODUCTS & PAPER 3.0%
Assidomaen AB............................................... Sweden 9,600 194,965
Georgia Pacific Corp. ...................................... United States 4,800 356,400
Georgia Pacific Timber Group................................ United States 4,800 107,700
</TABLE>
12
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1999 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
FOREST PRODUCTS & PAPER (CONT.)
*Shorewood Packaging Corp. ................................. United States 20,100 $ 394,463
Stora Enso OYJ, R........................................... Finland 30,600 303,929
-----------
1,357,457
-----------
HEALTH & PERSONAL CARE 3.4%
*Internatio-Muller NV....................................... Netherlands 20,490 419,193
Medeva PLC.................................................. United Kingdom 79,000 157,500
Pharmacia & Upjohn Inc. .................................... United States 15,930 993,634
-----------
1,570,327
-----------
INSURANCE 7.5%
Ace Ltd. ................................................... Bermuda 12,100 377,369
American General Corp. ..................................... United States 4,034 284,397
HIH Insurance Ltd. ......................................... Australia 259,837 333,753
Partnerre Ltd. ............................................. Bermuda 8,200 332,100
Reliastar Financial Corp. .................................. United States 10,386 442,703
SCOR SA..................................................... France 12,300 618,804
Torchmark Corp. ............................................ United States 4,418 139,719
Zurich Allied AG............................................ Switzerland 1,400 895,750
-----------
3,424,595
-----------
MACHINERY & ENGINEERING 6.0%
BTR Siebe PLC............................................... United Kingdom 179,390 791,307
First Tractor Company Ltd., H............................... China 494,000 93,706
KCI Konecranes International PLC............................ Finland 14,600 504,389
Laird Group PLC............................................. United Kingdom 128,500 459,477
Makita Corp. ............................................... Japan 43,000 479,634
VA Technologie AG, Br....................................... Austria 1,600 115,128
Valmet OY................................................... Finland 26,500 304,690
-----------
2,748,331
-----------
MERCHANDISING 3.0%
Best Denki Co. Ltd. ........................................ Japan 26,000 186,608
Marks & Spencer PLC......................................... United Kingdom 92,100 605,119
Matsuzakaya Co. Ltd. ....................................... Japan 14,000 62,180
Safeway PLC................................................. United Kingdom 66,556 260,547
Tesco PLC................................................... United Kingdom 88,992 235,963
-----------
1,350,417
-----------
METALS & MINING 4.8%
Anglo American Platinum Corp. Ltd. ......................... South Africa 25,100 397,704
Industrias Penoles SA....................................... Mexico 125,700 391,905
Iscor Ltd. ................................................. South Africa 689,200 171,604
Pechiney SA, A.............................................. France 8,199 296,530
Pohang Iron & Steel Co. Ltd. ............................... South Korea 6,300 399,195
WMC Ltd. ................................................... Australia 168,205 533,232
-----------
2,190,170
-----------
</TABLE>
13
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1999 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
MULTI-INDUSTRY 7.0%
Beijing Datang Power Generation Co. Ltd., H................. China 494,000 $ 132,272
Broken Hill Proprietary Co. Ltd. ........................... Australia 55,431 470,813
Cheung Kong Holdings Ltd. .................................. Hong Kong 84,000 639,521
Elementis PLC............................................... United Kingdom 135,672 203,685
Hutchison Whampoa Ltd. ..................................... Hong Kong 95,100 748,573
*Saab AB, B................................................. Sweden 30,400 242,150
Swire Pacific Ltd., A....................................... Hong Kong 126,000 585,324
Swire Pacific Ltd., B....................................... Hong Kong 246,500 168,584
-----------
3,190,922
-----------
REAL ESTATE 3.4%
General Growth Properties................................... United States 7,800 253,013
Hang Lung Development Co. Ltd............................... Hong Kong 271,000 328,716
Highwood Properties Inc. ................................... United States 9,000 212,063
LTC Properties Inc. ........................................ United States 21,400 262,150
National Health Investors Inc. ............................. United States 12,400 266,600
Summit Properties Inc. ..................................... United States 13,200 220,275
-----------
1,542,817
-----------
TELECOMMUNICATIONS 4.2%
AT&T Corp. ................................................. United States 2,200 175,588
Hong Kong Telecommunications Ltd. .......................... Hong Kong 263,642 520,511
Telefonica de Argentina SA, B, ADR.......................... Argentina 16,296 492,954
Telefonica del Peru SA, B................................... Peru 84,800 108,927
Telefonica del Peru SA, B, ADR.............................. Peru 20,230 257,933
Telefonos de Mexico SA (Telmex), L, ADR..................... Mexico 5,720 374,660
-----------
1,930,573
-----------
TEXTILES & APPAREL .2%
Yizheng Chemical Fibre Co. Ltd., H.......................... China 720,000 74,327
-----------
TRANSPORTATION 2.7%
British Airways PLC......................................... United Kingdom 81,200 563,325
Great Eastern Shipping Co. Ltd., GDR, 144A.................. India 44,300 118,503
Singapore Airlines Ltd., fgn. .............................. Singapore 77,800 562,627
-----------
1,244,455
-----------
UTILITIES ELECTRICAL & GAS 13.1%
Bses Ltd., GDR, 144A........................................ India 14,600 144,175
CLP Holdings Ltd. .......................................... Hong Kong 101,500 487,228
Hong Kong Electric Holdings Ltd. ........................... Hong Kong 204,000 617,300
Iberdrola SA, Br. .......................................... Spain 38,900 576,191
Illinova Corp. ............................................. United States 29,400 622,913
Korea Electric Power Corp. ................................. South Korea 11,000 265,363
National Grid Group PLC..................................... United Kingdom 75,020 546,791
National Power PLC.......................................... United Kingdom 54,200 416,260
Potomac Electric Power Co. ................................. United States 27,680 641,830
</TABLE>
14
PAGE
TEMPLETON GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1999 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
UTILITIES ELECTRICAL & GAS (CONT.)
Public Service Co. of New Mexico............................ United States 17,000 $ 289,000
Texas Utilties Holding Co. ................................. United States 15,650 652,409
Thames Water Group PLC...................................... United Kingdom 45,365 687,293
Veba AG..................................................... Germany 600 31,578
-----------
5,978,331
-----------
TOTAL COMMON STOCKS (COST $42,633,152)...................... 44,014,421
-----------
PREFERRED STOCKS 5.0%
Banco Bradesco SA, pfd. .................................... Brazil 40,750,000 218,601
Centrais Eletricas Brasileiras SA (Electrobras), ADR,
pfd. ..................................................... Brazil 23,800 249,449
Moebel Walther AG, pfd. .................................... Germany 16,400 283,286
National Australia Cap Sec PLC, cvt., pfd. ................. Australia 14,850 464,991
Philippine Long Distance Telephone Co., Series 3, 7.00%,
cvt., pfd. ............................................... Philippines 6,440 305,900
Sociedad Quimica y Minera de Chile SA, ADR, pfd. ........... Chile 9,400 300,800
Telecomunicacoes Brasileiras SA (Telebras), ADR, pfd. ...... Brazil 5,500 443,438
-----------
TOTAL PREFERRED STOCKS (COST $3,053,969).................... 2,266,465
-----------
PRINCIPAL
AMOUNT**
--------
BONDS .5%
Alfa SA de CV:
144A, cvt., 8.00%, 9/15/00................................ Mexico $ 180,000 177,300
Reg S, cvt., 8.00%, 9/15/00............................... Mexico 60,000 59,094
-----------
TOTAL BONDS (COST $424,347)................................. 236,394
-----------
TOTAL INVESTMENTS (COST $46,111,468) 101.9%................. 46,517,280
OTHER ASSETS, LESS LIABILITIES (1.9%)....................... (884,195)
-----------
TOTAL NET ASSETS 100.0%..................................... $45,633,085
===========
</TABLE>
*Non-income producing.
**Securities denominated in U.S. dollars.
See Notes to Financial Statements.
15
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $46,111,468)..... $46,517,280
Receivables:
Investment securities sold................................ 111,101
Fund shares sold.......................................... 4,719
Dividends and interest.................................... 280,423
Other assets............................................... 799
-----------
Total assets.......................................... 46,914,322
-----------
Liabilities:
Payables:
Investment securities purchased........................... 299,904
Fund shares redeemed...................................... 237,925
To affiliates............................................. 83,807
Funds advanced by custodian................................ 609,249
Accrued expenses........................................... 50,352
-----------
Total liabilities..................................... 1,281,237
-----------
Net assets, at value........................................ $45,633,085
===========
Net assets consist of:
Net unrealized appreciation................................ $ 405,812
Accumulated net realized gain.............................. 469,559
Beneficial shares.......................................... 44,757,714
-----------
Net assets, at value........................................ $45,633,085
===========
CLASS A:
Net asset value per share ($32,073,487 / 2,526,637 shares
outstanding)............................................. $12.69
===========
Maximum offering price per share ($12.69 / 94.25%)......... $13.46
===========
CLASS C:
Net asset value per share ($13,559,598 / 1,081,406 shares
outstanding)*............................................ $12.54
===========
Maximum offering price per share ($12.54 / 99.00%)......... $12.67
===========
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
16
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $135,481)
Dividends.................................................. $1,599,367
Interest................................................... 447,249
----------
Total investment income............................... $ 2,046,616
-----------
Expenses:
Management fees (Note 3)................................... 396,227
Administrative fees (Note 3)............................... 79,245
Distribution fees (Note 3)
Class A................................................... 137,309
Class C................................................... 135,177
Transfer agent fees (Note 3)............................... 111,800
Custodian fees............................................. 3,100
Reports to shareholders.................................... 36,900
Registration and filing fees............................... 22,000
Professional fees.......................................... 52,700
Trustees' fees and expenses................................ 8,700
Amortization of organization costs......................... 14,104
Other...................................................... 1,647
----------
Total expenses........................................ 998,909
Expenses waived/paid by affiliate (Note 3)............ (250,499)
-----------
Net expenses...................................... 748,410
-----------
Net investment income........................... 1,298,206
-----------
Realized and unrealized gains (losses):
Net realized gain from:
Investments............................................... 1,227,044
Foreign currency transactions............................. 19,638
----------
Net realized gain..................................... 1,246,682
Net unrealized depreciation on investments............ (7,633,539)
-----------
Net realized and unrealized loss............................ (6,386,857)
-----------
Net decrease in net assets resulting from operations........ $(5,088,651)
===========
</TABLE>
See Notes to Financial Statements.
17
PAGE
TEMPLETON GROWTH AND INCOME FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 1,298,206 $ 1,206,380
Net realized gain from investments and foreign currency
transactions............................................ 1,246,682 2,181,856
Net unrealized appreciation (depreciation) on
investments.............................................. (7,633,539) 4,650,441
------------------------------
Net increase (decrease) in net assets resulting from
operations............................................ (5,088,651) 8,038,677
Distributions to shareholders from:
Net investment income:
Class A.................................................. (1,356,892) (693,986)
Class C.................................................. (406,271) (150,454)
Net realized gains:
Class A.................................................. (942,757) (1,488,247)
Class C.................................................. (326,041) (426,523)
Beneficial share transactions (Note 2):
Class A.................................................. (8,078,545) 17,020,983
Class C.................................................. 2,277,665 6,216,979
------------------------------
Net increase (decrease) in net assets................... (13,921,492) 28,517,429
Net assets:
Beginning of year.......................................... 59,554,577 31,037,148
------------------------------
End of year................................................ $ 45,633,085 $59,554,577
==============================
Undistributed net investment income included in net assets:
End of year................................................ $ -- $ 431,617
==============================
</TABLE>
See Notes to Financial Statements.
18
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 (a combination of capital growth and income). Under
normal market conditions, the Fund invests primarily in the equity and debt
securities of U.S. 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. 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.
19
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:
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.
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 comprising
the Trust 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. 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 A and Class C shares. Effective
January 1, 1999, Class I and Class II shares were renamed Class A and Class C,
respectively. 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, 1999, 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,
-----------------------------------------------------------
1999 1998
-----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold................................................. 1,115,748 $ 14,905,710 1,614,763 $22,345,226
Shares issued on reinvestment of distributions.............. 144,608 1,870,864 137,810 1,822,287
Shares redeemed............................................. (1,904,161) (24,855,119) (514,016) (7,146,530)
-----------------------------------------------------------
Net increase (decrease)..................................... (643,805) $ (8,078,545) 1,238,557 $17,020,983
===========================================================
</TABLE>
20
PAGE
TEMPLETON GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
2. BENEFICIAL SHARES (CONT.)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------------
1999 1998
-------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES:
Shares sold................................................. 508,362 $ 6,629,187 545,744 $ 7,550,125
Shares issued on reinvestment of distributions.............. 47,871 611,203 36,472 477,961
Shares redeemed............................................. (395,984) (4,962,725) (129,542) (1,811,107)
-------------------------------------------------------
Net increase................................................ 160,249 $ 2,277,665 452,674 $ 6,216,979
=======================================================
</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 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 A and Class C shares, respectively, through August 1,
1999, as noted in the Statement of Operations.
The Fund reimburses Distributors up to 0.35% and 1.00% per year of the average
daily net assets of Class A and Class C shares, respectively, for costs incurred
in marketing the Fund's Class A and Class C shares. Under the Class A
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At March 31, 1999 unreimbursed costs were $1,071,141. Distributors
received net commissions from sales of Fund shares and received contingent
deferred sales charges for the period of $27,748 and $13,829, respectively.
21
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, 1999, the net unrealized
appreciation based on the cost of investments for income tax purposes was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 7,335,023
Unrealized depreciation..................................... (6,929,211)
-----------
Net unrealized appreciation................................. $ 405,812
===========
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended March 31, 1999 aggregated $19,257,206 and $14,565,743, respectively.
6. FUND MERGER
The Fund's Board of Trustees approved a proposal to merge the Fund into
Templeton World Fund, subject to shareholder approval. It is anticipated that in
June 1999, shareholders will receive a proxy and proxy statement requesting
their vote on the proposal.
22
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, 1999, and the related statement of operations for the year then ended, the
statement 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, 1999, 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, 1999, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
April 30, 1999
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TEMPLETON GROWTH AND INCOME FUND
Tax Designation
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Templeton Growth
and Income Fund hereby designates $1,012,890 as a capital gain dividend for the
fiscal year ended March 31, 1999.
Under Section 854(b)(2) of the Internal Revenue Code, the Templeton Growth and
Income Fund hereby designates 10.37% of the ordinary income dividends as income
qualifying for the dividends received deduction for the fiscal year ended March
31, 1999.
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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
Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global
Smaller Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Mutual European Fund
Templeton Global Bond Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency Fund
Franklin Templeton Hard
Currency Fund
Templeton Americas Government
Securities Fund
GROWTH
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap
Growth Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund(1)
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund(1)
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
FUND ALLOCATOR SERIES
Franklin Templeton Conservative
Target Fund
Franklin Templeton Moderate
Target Fund
Franklin Templeton Growth
Target Fund
INCOME
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Bond Fund
Franklin Floating Rate Trust
Franklin Short-Intermediate
U.S. Government Securities Fund
Franklin Strategic Income Fund
Franklin U.S. Government
Securities Fund
Franklin Federal Money Fund(2)
Franklin Money Fund(2)
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(2)
STATE-SPECIFIC
TAX-FREE INCOME
Alabama
Arizona(3)
California(3)
Colorado
Connecticut
Florida(3)
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(4)
Michigan(4)
Minnesota(4)
Missouri
New Jersey
New York(3)
North Carolina
Ohio(4)
Oregon
Pennsylvania
Tennessee(5)
Texas
Virginia
VARIABLE ANNUITIES(6)
Franklin Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
1. These funds are now closed to new accounts, with the exception of retirement
plan accounts.
2. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
3. Two or more fund options available: long-term portfolio; portfolio of insured
securities; high yield portfolio (CA); intermediate-term and money market
portfolios (CA and NY).
4. Portfolio of insured municipal securities.
5. The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
6. 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.
04/99
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Bulk Rate
U.S. Postage
PAID
Permit No. 75
Bell, CA
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[LOGO]
Templeton Growth and Income Fund
777 Mariners Island Blvd., P.O. Box 7777
San Mateo, CA 94403-7777
ANNUAL REPORT
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
1-800/DIAL BEN(R)
www.franklin-templeton.com
SHAREHOLDER SERVICES
1-800/632-2301
FUND INFORMATION
1-800/342-5236
This report must be preceded or accompanied by the current Templeton Growth and
Income Fund prospectus, 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 A99 05/99 [LOGO] Printed on recycled paper
