ANNUAL REPORT
[PHOTOGRAPH]
MARCH 31, 1999
TEMPLETON AMERICAS
GOVERNMENT SECURITIES FUND
[LOGO(R)]
FRANKLIN(R) TEMPLETON(R)
PAGE
[FRANKLIN TEMPLETON CELEBRATING OVER 50 YEARS 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.
PAGE
CONTENTS
Shareholder Letter 1
Performance Summary 5
Financial Highlights &
Statement of Investments 8
Financial Statements 11
Notes to Financial
Statements 14
Independent Auditors' Report 17
Tax Designation 18
[PYRAMID]
FUND CATEGORY - GLOBAL
GROWTH
GROWTH & INCOME
INCOME
TAX-FREE INCOME
SHAREHOLDER LETTER
- --------------------------------------------------------------------------------
Your Fund's Goal: Templeton Americas Government Securities Fund seeks a high
level of current income, with total return as a secondary goal. It seeks to
achieve this goal by investing, under normal market conditions, at least 65% of
its total assets in debt securities issued or guaranteed by Government Entities
of Western Hemisphere countries (located in North, South, and Central America
and the surrounding waters).
- --------------------------------------------------------------------------------
Dear Shareholder:
This annual report covers the fiscal year ended March 31, 1999. During this
time, the Fund's performance was significantly impacted by the relatively high
volatility of bond markets in emerging market countries. Currency and financial
crises in Russia and Brazil adversely affected many securities markets,
particularly those of Latin America. Many investors were concerned that
countries such as Brazil could follow Russia's footsteps and devalue their
currencies. The International Monetary Fund (IMF) approved a financial support
package for Brazil, temporarily preventing the Russian crisis from spreading
into that country. Severe volatility returned, however, when Brazil devalued its
currency in early 1999. Subsequently, its congress approved
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 9 of
this report.
PAGE
[GEOGRAPHIC DISTRIBUTION PIE CHART]
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
3/31/99
[THIS CHART SHOWS IN PIE CHART FORMAT THE GEOGRAPHIC DISTRIBUTION OF TEMPLETON
AMERICAS GOVERNMENT SECURITIES FUND, BASED ON TOTAL NET ASSETS AS OF 3/31/99.]
United States 38.2%
Mexico 20.9%
Argentina 12.1%
Brazil 9.8%
Venezuela 7.6%
Jamaica 5.1%
Ecuador 3.6%
Other Countries 1.9%
Short-Term Investments & Other Net Assets 0.8%
fiscal measures designed to improve the government's finances, the IMF continued
to provide support, and the Latin American debt market began to recover during
February and March. This recovery is evidenced by the J.P. Morgan Latin Eurobond
Index (LEI) posting a one-year return of -3.23%.(1)
In the U.S., the Federal Reserve lowered interest rates three times between
August and November 1998 in an effort to mitigate the impact of the Asian and
Russian currency crises on the U.S. economy and global financial markets. These
steps, together with relatively low inflation, high productivity, a strong
dollar, and the flight of investors to the safety of U.S. Treasuries, benefited
the U.S. bond market. During the year under review, the J.P. Morgan U.S.
Government Bond Index returned 6.69%, and the J.P. Morgan U.S. Government
Bond/Latin Eurobond Index returned 4.15%.(2)
Within this environment, Templeton Americas Government Securities Fund posted a
- -2.54% cumulative total return for the one-year period ended March 31, 1999, as
shown in the Performance Summary on page 6. We have always maintained a
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 table on
page 6, the Fund delivered a cumulative total return of 47.39% since inception
on June 27, 1994.
(1.) Source: J.P. Morgan. The LEI covers Eurobonds of over US$100 million from
Latin America and includes reinvested interest. One cannot invest directly in an
index, nor is an index representative of the Fund's portfolio.
(2.) Source: J.P. Morgan. 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 Franklin 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 (LEI). One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
2
PAGE
PORTFOLIO BREAKDOWN
3/31/99
% OF TOTAL
NET ASSETS
- -------------------------------------------------------------------
Government Bonds
(U.S. and Foreign) 94.5%
Corporate Bonds
(U.S. and Foreign) 4.7%
Short-Term Investments
& Other Net Assets 0.8%
At the end of the reporting period, the U.S. represented our largest exposure at
38.2% of total net assets. Debt securities of Mexico, Argentina, Brazil, and
Venezuela represented our four largest emerging market allocations. Together,
they comprised 50.4% of the Fund's total net assets. During the year, we shifted
the Fund's allocations and focused on emerging markets that we believed would
experience the least volatility, while still seeking high current income. We
emphasized bonds issued by Mexico and Argentina because both countries adopted
measures addressing low prices for commodities, their main sources of export
revenue.
Looking forward, we intend to maintain our focus on bonds from those countries
we believe are progressing on structural reform, including both fiscal and
monetary measures. In our opinion, such securities have potential to rise in
value if the countries' economic performance and creditworthiness improve.
Although volatility could continue to affect nations with weak currencies, we
are optimistic that many of those countries may be able to service their debt
obligations through responsible economic policy-making and financial reform. We
believe the direction of global commodity prices, an important issue for Latin
American economies, will be largely influenced by any recovery in Asian
industrial production. By the end of the reporting period, emerging Asian
economies had begun to recover and their focus was on structural reform programs
designed to secure their recovery over the long term. Meanwhile, we will
continue to follow a defensive credit and currency posture until we believe
credit risk sensitivity and its resultant volatility stabilize.
3
PAGE
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
invests. Emerging market securities involve heightened risks related to the same
factors, in addition to those 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, 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 give you a better
understanding of our investment and management philosophy.
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,
The Portfolio Management Team
Templeton Americas Government Securities Fund
4
PAGE
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. 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 -$1.08 $9.60 $10.68
<CAPTION>
DISTRIBUTIONS
----------------------------------------
<S> <C>
Dividend Income $0.7370
Long-Term Capital Gain $0.0150
Short-Term Capital Gain $0.0400
Total $0.7920
</TABLE>
Templeton Americas Government Securities Fund paid distributions derived from
long-term capital gains of 1.5 cents ($0.0150) per share in May, 1998. The Fund
hereby designates such distributions as capital gain dividends per Internal
Revenue Code Section 852(b)(3).
- --------------------------------------------------------------------------------
Subject to the maximum 4.25% initial sales charge. 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 July 31, 1999, the fee waiver and expense reimbursement may be
discontinued at any time upon notice to the Fund's Board of Trustees.
- --------------------------------------------------------------------------------
Past performance is not predictive of future results.
5
PAGE
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
1-YEAR 3-YEAR (6/27/94)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -2.54% 29.35% 47.39%
Average Annual Total Return(2) -6.65% 7.40% 7.52%
</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.
- --------------------------------------------------------------------------------
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. The Fund
may also invest in lower-rated or unrated debt securities that have high credit
risk and may be predominately speculative. You may have a gain or loss when you
sell your shares.
- --------------------------------------------------------------------------------
Past performance is not predictive of future results.
6
PAGE
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the applicable, maximum sales charge, Fund expenses, account
fees and reinvested distributions. The unmanaged indices differ from the Fund in
composition, do not pay management fees or expenses and include reinvested
interest. One cannot invest directly in an index.
We are replacing the J.P. Morgan U.S. Government Bond/Latin Eurobond Index with
the J.P. Morgan Latin Eurobond Index as one of the Fund's benchmarks because we
believe that it no longer provides an appropriate comparison for the Fund's
performance based on the composition of the Fund's portfolio. The J.P. Morgan
U.S. Government Bond/Latin Eurobond Index may be dropped from next year's
report.
[TOTAL RETURN INDEX COMPARISON LINE GRAPHIC]
$10,000 Investment (6/27/94 - 3/31/99)
<TABLE>
<CAPTION>
Date
<S> <C> <C>
Templeton Americas Government Securities Fund 3/99 $14,118
60% J.P. Morgan U.S. Gov't Bond/40% Latin Eurobond Index* 3/99 $15,344
J.P. Morgan Latin Eurobond Index** 3/99 $15,896
J.P. Morgan U.S. Gov't Bond Index*** 3/99 $14,403
</TABLE>
[THE FOLLOWING LINE GRAPH COMPARES THE PERFORMANCE OF TEMPLETON AMERICAS
GOVERNMENT SECURITIES FUND TO THAT OF THE J.P. MORGAN U.S. GOVERNMENT BOND/LATIN
EUROBOND INDEX, THE J.P. MORGAN LATIN EUROBOND INDEX, AND THE J.P. MORGAN U.S.
GOVERNMENT BOND INDEX, BASED ON A $10,000 INVESTMENT FROM 6/27/94 TO 3/31/99.]
<TABLE>
<CAPTION>
Templeton 60% JPM US Gov't JP Morgan JP Morgan
Americas Bond/40% Latin U.S. Gov't Latin
Government Eurobond Index Bond Index Eurobond Index
Securities Fund
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
6/27/94 $9,579 $10,000 $10,000 $10,000
Jun-94 $9,579 $9,993 $9,934 $10,046
Jul-94 $9,607 $10,131 $10,096 $10,146
Aug-94 $9,636 $10,254 $10,109 $10,434
Sep-94 $9,655 $10,146 $9,989 $10,346
Oct-94 $9,665 $10,104 $9,983 $10,247
Nov-94 $9,670 $10,074 $9,953 $10,218
Dec-94 $9,553 $9,797 $10,010 $9,427
Jan-95 $9,476 $9,587 $10,184 $8,676
Feb-95 $9,451 $9,621 $10,399 $8,480
Mar-95 $9,451 $9,629 $10,468 $8,413
Apr-95 $9,678 $10,241 $10,596 $9,598
May-95 $9,955 $10,684 $10,989 $10,099
Jun-95 $9,956 $10,795 $11,077 $10,239
Jul-95 $10,015 $11,053 $11,047 $10,893
Aug-95 $10,186 $11,182 $11,165 $11,035
Sep-95 $10,347 $11,294 $11,264 $11,165
Oct-95 $10,407 $11,336 $11,423 $11,032
Nov-95 $10,632 $11,581 $11,592 $11,383
Dec-95 $10,907 $11,841 $11,746 $11,793
Jan-96 $11,307 $12,068 $11,827 $12,237
Feb-96 $10,904 $11,859 $11,611 $12,043
Mar-96 $10,914 $11,869 $11,523 $12,204
Apr-96 $11,107 $11,943 $11,460 $12,495
May-96 $11,149 $11,953 $11,445 $12,545
Jun-96 $11,358 $12,091 $11,577 $12,691
Jul-96 $11,391 $12,113 $11,606 $12,701
Aug-96 $11,568 $12,231 $11,594 $13,026
Sep-96 $11,980 $12,452 $11,767 $13,323
Oct-96 $12,093 $12,620 $12,005 $13,372
Nov-96 $12,476 $12,946 $12,201 $13,907
Dec-96 $12,556 $12,947 $12,091 $14,097
Jan-97 $12,756 $13,061 $12,113 $14,371
Feb-97 $12,826 $13,150 $12,128 $14,590
Mar-97 $12,671 $12,983 $12,008 $14,342
Apr-97 $12,923 $13,225 $12,180 $14,704
May-97 $13,200 $13,413 $12,288 $15,030
Jun-97 $13,376 $13,595 $12,427 $15,283
Jul-97 $13,794 $14,022 $12,793 $15,811
Aug-97 $13,705 $13,879 $12,658 $15,656
Sep-97 $13,884 $14,121 $12,854 $15,976
Oct-97 $13,250 $13,758 $13,087 $14,517
Nov-97 $13,575 $14,094 $13,154 $15,288
Dec-97 $13,828 $14,320 $13,301 $15,648
Jan-98 $14,163 $14,575 $13,507 $15,980
Feb-98 $14,365 $14,664 $13,462 $16,303
Mar-98 $14,486 $14,733 $13,500 $16,427
Apr-98 $14,459 $14,758 $13,560 $16,389
May-98 $14,254 $14,740 $13,704 $16,074
Jun-98 $14,116 $14,775 $13,867 $15,883
Jul-98 $14,184 $14,882 $13,891 $16,129
Aug-98 $12,089 $13,634 $14,279 $12,074
Sep-98 $12,974 $14,472 $14,683 $13,414
Oct-98 $13,567 $14,868 $14,630 $14,404
Nov-98 $14,022 $15,311 $14,632 $15,475
Dec-98 $13,822 $15,234 $14,664 $15,230
Jan-99 $13,723 $15,073 $14,744 $14,703
Feb-99 $13,635 $14,925 $14,348 $14,934
Mar-99 $14,118 $15,344 $14,403 $15,896
</TABLE>
AVERAGE ANNUAL TOTAL RETURN 3/31/99
1-Year -6.65%
3-Year 7.40%
Since Inception (6/27/94) 7.52%
* The J.P. Morgan U.S. Government Bond/Latin Eurobond Index is a proprietary
index developed by the Franklin 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 (LEI).
** The LEI covers Eurobonds of over U.S. $100 million from Latin America.
*** 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.
Indices are unmanaged and include reinvested interest. One cannot invest
directly in an index, nor is an index representative of the Fund's portfolio.
Past performance is not predictive of future results.
7
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995+
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year........................ $10.68 $10.64 $10.20 $9.59 $10.00
-----------------------------------------------------------
Income from investment operations:
Net investment income.................................... .74 .73 .74 .75 .30
Net realized and unrealized gains (losses)............... (1.03) .68 .85 .71 (.43)
-----------------------------------------------------------
Total from investment operations.......................... (.29) 1.41 1.59 1.46 (.13)
-----------------------------------------------------------
Less distributions from:
Net investment income.................................... (.74) (.72) (.77) (.69) (.28)
Net realized gains....................................... (.05) (.65) (.38) (.16) --
-----------------------------------------------------------
Total distributions....................................... (.79) (1.37) (1.15) (.85) (.28)
-----------------------------------------------------------
Net asset value, end of year.............................. $9.60 $10.68 $10.64 $10.20 $9.59
===========================================================
Total Return*............................................. (2.54)% 14.21% 16.23% 15.49% (1.33)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)........................... $22,269 $14,973 $5,627 $3,540 $2,826
Ratios to average net assets:
Expenses................................................. 1.25% 1.25% 1.25% 1.25% 1.25%**
Expenses, excluding waiver and payments by affiliate..... 1.59% 1.89% 2.79% 4.98% 6.49%**
Net investment income.................................... 7.70% 7.11% 7.16% 7.47% 5.07%**
Portfolio turnover rate................................... 56.32% 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.
8
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT* VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM SECURITIES 99.2%
ARGENTINA 12.1%
Bridas Corp., 12.50%, 11/15/99.............................. $ 50,000 $ 51,375
Republic of Argentina:
9.25%, 2/23/01............................................ 555,000 556,804
8.75%, 5/09/02............................................ 1,625,000 1,491,344
11.00%, 10/09/06.......................................... 225,000 214,172
Reg S, 11.75%, 2/12/07.................................... 80,000ARS 73,704
11.375%, 1/30/17.......................................... 200,000 188,750
9.75%, 9/19/27............................................ 150,000 124,875
-----------
2,701,024
-----------
BRAZIL 9.8%
Companhia Paranaense De Energia-Copel, Reg S, 9.75%,
5/02/05................................................... 450,000 370,037
Government of Brazil:
8.875%, 11/05/01.......................................... 250,000 248,750
9.375%, 4/07/08........................................... 800,000 609,000
Series L, FRN, 6.188%, 4/15/12............................ 310,000 180,770
8.00%, 4/15/14............................................ 529,928 341,729
10.125%, 5/15/27.......................................... 600,000 438,000
-----------
2,188,286
-----------
ECUADOR 3.6%
Republic of Ecuador:
Reg S, 11.25%, 4/25/02.................................... 955,000 617,169
FRN, 6.625%, 2/28/25...................................... 400,000 190,000
-----------
807,169
-----------
JAMAICA 5.1%
Government of Jamaica, Reg S, 9.625%, 7/02/02............... 1,225,000 1,120,875
-----------
MEXICO 20.9%
Bepensa SA, 144A, 9.75%, 9/30/04............................ 230,000 205,850
Cemex SA, 144A, 10.75%, 7/15/00............................. 65,000 67,437
Petroleos Mexicanos, 144A, 9.375%, 12/02/08................. 250,000 256,250
Protexa Construcciones SA de CV, 144A, 12.125%, 7/24/02..... 80,000 65,200
United Mexican States:
9.75%, 2/06/01............................................ 400,000 414,200
8.625%, 3/12/08........................................... 1,140,000 1,075,875
11.375%, 9/15/16.......................................... 1,560,000 1,687,686
A, 6.25%, 12/31/19........................................ 490,000 383,425
11.50%, 5/15/26........................................... 450,000 501,750
-----------
4,657,673
-----------
PANAMA .2%
Republic of Panama, FRN, 6.191%, 5/14/02.................... 43,077 41,785
-----------
PERU 1.6%
Republic of Peru, FRN, 4.50%, 3/07/17....................... 550,000 350,971
-----------
</TABLE>
9
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1999 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT* VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM SECURITIES (CONT.)
TRINIDAD AND TOBAGO .1%
Sei Holdings IX Inc., 144A, 11.00%, 11/30/00................ $ 30,000 $ 28,800
-----------
UNITED STATES 38.2%
U.S. Treasury Bond, 5.25%, 11/15/28......................... 2,100,000 1,959,562
U.S. Treasury Notes:
5.50%, 3/31/00............................................ 400,000 402,375
5.375%, 6/30/00........................................... 1,300,000 1,306,907
5.375%, 7/31/00........................................... 3,000,000 3,015,939
6.125%, 7/31/00........................................... 260,000 263,900
6.25%, 4/30/01............................................ 325,000 332,719
8.00%, 5/15/01............................................ 225,000 238,289
6.375%, 8/15/02........................................... 210,000 217,678
6.125%, 8/15/07........................................... 723,000 756,213
-----------
8,493,582
-----------
VENEZUELA 7.6%
Republic of Venezuela:
Reg S, 9.125%, 6/18/07.................................... 400,000 306,000
FRN, 5.938%, 12/18/07..................................... 214,285 149,866
9.25%, 9/15/27............................................ 2,025,000 1,243,476
-----------
1,699,342
-----------
TOTAL LONG TERM SECURITIES (COST $23,818,311)............... 22,089,507
-----------
SHORT TERM INVESTMENT (COST $113,000) .5%
Den Danske Bank, 5.00%, 4/01/99, Time Deposit............... 113,000 113,000
-----------
TOTAL INVESTMENTS (COST $23,931,311) 99.7%.................. 22,202,507
OTHER ASSETS, LESS LIABILITIES .3%.......................... 66,421
-----------
TOTAL NET ASSETS 100.0%..................................... $22,268,928
===========
</TABLE>
CURRENCY ABBREVIATION:
<TABLE>
<S> <C>
ARS -- Argentine Peso
</TABLE>
*Securities denominated in U.S. dollars unless otherwise indicated.
See Notes to Financial Statements.
10
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $23,931,311)..... $22,202,507
Cash....................................................... 143
Receivables:
Fund shares sold.......................................... 7,080
Dividends and interest.................................... 451,954
Other assets............................................... 4,170
-----------
Total assets.......................................... 22,665,854
-----------
Liabilities:
Payables:
Fund shares redeemed...................................... 326,494
To affiliates............................................. 35,013
Accrued expenses........................................... 35,419
-----------
Total liabilities..................................... 396,926
-----------
Net assets, at value........................................ $22,268,928
===========
Net assets consist of:
Undistributed net investment income........................ $ 29,645
Net unrealized depreciation................................ (1,728,804)
Accumulated net realized loss.............................. (120,316)
Beneficial shares.......................................... 24,088,403
-----------
Net assets, at value........................................ $22,268,928
===========
Net asset value per share ($22,268,928 / 2,319,770 shares
outstanding).............................................. $9.60
===========
Maximum offering price per share ($9.60 / 95.75%)........... $10.03
===========
</TABLE>
See Notes to Financial Statements.
11
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
<TABLE>
<S> <C> <C>
Interest Income............................................. $ 1,967,448
-----------
Expenses:
Management fees (Note 3)................................... $131,960
Administrative fees (Note 3)............................... 32,989
Distribution fees (Note 3)................................. 77,033
Transfer agent fees (Note 3)............................... 33,100
Custodian fees............................................. 3,400
Reports to shareholders.................................... 18,500
Registration and filing fees............................... 18,500
Professional fees.......................................... 15,300
Trustees' fees and expenses................................ 2,900
Amortization of organization costs......................... 13,505
Other...................................................... 2,648
--------
Total expenses........................................ 349,835
Expenses waived/paid by affiliate (Note 3)............ (74,935)
-----------
Net expenses...................................... 274,900
-----------
Net investment income........................... 1,692,548
-----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... (44,071)
Foreign currency transactions............................. 29
--------
Net realized loss..................................... (44,042)
Net unrealized depreciation on investments............ (2,007,155)
-----------
Net realized and unrealized loss............................ (2,051,197)
-----------
Net decrease in net assets resulting from operations........ $ (358,649)
===========
</TABLE>
See Notes to Financial Statements.
12
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES 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..................................... $ 1,692,548 $ 615,055
Net realized gain (loss) from investments and foreign
currency transactions................................... (44,042) 265,405
Net unrealized appreciation (depreciation) on
investments.............................................. (2,007,155) 270,720
-----------------------------
Net increase (decrease) in net assets resulting from
operations............................................ (358,649) 1,151,180
Distributions to shareholders from:
Net investment income..................................... (1,681,932) (596,026)
Net realized gains........................................ (119,661) (438,559)
Fund share transactions (Note 2)........................... 9,456,029 9,229,467
-----------------------------
Net increase in net assets.............................. 7,295,787 9,346,062
Net assets:
Beginning of year.......................................... 14,973,141 5,627,079
-----------------------------
End of year................................................ $22,268,928 $14,973,141
=============================
Undistributed net investment income included in net assets:
End of year................................................ $ 29,645 $ 19,029
=============================
</TABLE>
See Notes to Financial Statements.
13
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 goal by investing, under normal market conditions, at least 65% of its
total net assets in debt securities issued or guaranteed by Government Entities
of Western Hemisphere 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.
14
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES 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.
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
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>
Shares sold................................................. 1,734,521 $17,294,112 1,111,163 $11,762,737
Shares issued on reinvestment of distributions.............. 149,473 1,452,139 91,732 958,993
Shares redeemed............................................. (966,650) (9,290,222) (329,474) (3,492,263)
---------------------------------------------------------
Net increase................................................ 917,344 $ 9,456,029 873,421 $ 9,229,467
=========================================================
</TABLE>
Templeton Global Investors, Inc., an affiliate of the Fund, is the record owner
of 300,333 shares as of March 31, 1999.
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.
15
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
The Fund pays 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 July 31, 1999, as reflected in the Statement of Operations.
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, 1999, unreimbursed costs were $78,761. Distributors received net
commissions from sales of Fund shares for the period of $7,152.
4. INCOME TAXES
At March 31, 1999, the net unrealized depreciation based on the cost of
investments for income tax purposes of $24,066,931 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 251,403
Unrealized depreciation..................................... (2,115,827)
-----------
Net unrealized depreciation................................. $(1,864,424)
===========
</TABLE>
Net realized losses differ for financial statement and tax purposes primarily
due to differing treatments of wash sales.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended March 31, 1999 aggregated $23,851,213 and $10,687,790, respectively.
6. SUBSEQUENT EVENT
The Fund's Board of Directors approved a proposal to merge the Fund into
Templeton Global Bond Fund, subject to shareholder approval. It is anticipated
that in late 1999, shareholders will receive a proxy and proxy statement
requesting their vote on the proposal.
16
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
INDEPENDENT AUDITOR'S REPORT
To 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 Securities Government Fund
as of March 31, 1999, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods indicated in the
accompanying financial statements. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements 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 Americas Government Securities Fund as of March 31, 1999, and 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 30, 1999
17
PAGE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
Tax Designation
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Templeton Americas
Government Securities Fund hereby designates $4,836 as a capital gain dividend
for the fiscal year ended March 31, 1999.
18
PAGE
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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
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
PAGE
-------------
Bulk Rate
U.S. Postage
PAID
Permit No. 75
Bell, CA
-------------
[FRANKLIN TEMPLETON(R) LOGO]
Templeton Americas Government Securities 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, California 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 Americas
Government Securities 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.
416 A99 05/99 [Printed on recycled paper LOGO]
