ANNUAL REPORT
[PHOTOGRAPH]
MARCH 31, 1999
TEMPLETON
LATIN AMERICA 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 Summaries 8
Financial Highlights &
Statement of Investments 12
Financial Statements 17
Notes to Financial
Statements 20
Independent Auditors'
Report 24
Tax Designation 25
[PYRAMID CHART]
FUND CATEGORY - GLOBAL
GROWTH
GROWTH & INCOME
INCOME
TAX-FREE INCOME
SHAREHOLDER LETTER
- --------------------------------------------------------------------------------
Your Fund's Goal: Templeton Latin America Fund seeks long-term capital
appreciation. Under normal market conditions, the Fund invests at least 65% of
its total assets in the equity and debt securities of Latin American issuers.
- --------------------------------------------------------------------------------
Dear Shareholder:
This annual report of Templeton Latin America Fund covers the fiscal year ended
March 31, 1999. During this time, emerging markets around the world experienced
increasing volatility arising from Asia's economic problems, Russia's financial
collapse, weak global commodity prices, and investors' concerns about whether
Brazil's currency would be devalued. Latin American markets performed especially
poorly, and the Fund's benchmark, the International Finance Corporation
Investable (IFCI) Latin America Index, returned -26.06% during the 12 months
under review.(1) As shown in the Performance Summary on page 9, Templeton Latin
America Fund -- Class A posted a -34.37% one-year
(1) The unmanaged IFCI Latin America Index represents the total return of
equities in seven Latin American countries (Argentina, Brazil, Chile, Colombia,
Mexico, Peru and Venezuela) as if they were in one market, and 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 15 of
this report.
PAGE
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
3/31/99
[BAR CHART APPEARS HERE]
[THIS CHART SHOWS IN BAR FORMAT THE GEOGRAPHIC DISTRIBUTION OF TEMPLETON
LATIN AMERICA FUND, BASED ON TOTAL NET ASSETS AS OF 3/31/99.]
Brazil 40.3%
Mexico 36.8%
Argentina 11.6%
Chile 6.2%
Colombia 1.8%
Peru 0.8%
Short Term Investments & Other Net Assets 2.5%
cumulative total return for the same period. However, during the latter part of
the reporting period, the Fund's Class A shares delivered a 12.48% cumulative
total return for the six months ended March 31, 1999, while the IFCI Latin
America Index returned 22.88% for the same period.
The Fund's underperformance relative to the IFCI Latin America Index was largely
due to the fact that larger capitalization (cap) stocks generally outperformed
smaller cap stocks during the period. As always, we maintained a conservative,
bottom-up approach in searching for undervalued securities, which led us to
invest in smaller cap stocks. It is easy for value investors to become
discouraged during momentum markets, such as the one we have been experiencing,
but it is important to remember that we have a distinct investment style -- one
that 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.
BRAZIL
As global commodity prices weakened and pressures on Brazil's currency
increased, we decreased our exposure to the banking and industrial sectors.
During the period, we reduced the number of our holdings by selling our
positions in Banco Bradesco SA, pfd.; Unibanco Uniao de Banco Brasileiros SA,
GDR; electric motor manufacturer WEG SA, pfd.; and steel producer Usinas
Siderurgicas De Minas Gerais SA, pfd. Pressure on Brazil's currency did not
abate, and by January 1999, the Brazilian real weakened significantly against
the U.S. dollar, short-term interest rates in Brazil surged, and in mid to late
2
PAGE
January, the government devalued the real. For the year under review, Brazil's
Bovespa Index posted a -39.37% total return, in U.S. dollar terms.(2) In the
weeks following the currency devaluation, equity valuations returned to what we
considered to be more attractive levels, and we initiated positions in companies
we believed had sound, long-term prospects. For example, we purchased shares in
Telesp Participacoes SA, ADR, pfd., the large Brazilian fixed-telephone-line
operator. Originally part of Telebras, the company had positive cash flow, as
well as the management support of Telefonica de Espana, which owns about 18% of
Telesp. We believe Telesp may benefit from its presence in the highly populated
state of Sao Paulo and also from Telefonica de Espana's efforts to increase the
company's capacity. The Fund's Brazilian exposure began the period at 46.7% of
total net assets, fell to 31.1% at the end of September 1998, then ended the
reporting period at 40.3%.
MEXICO
Although Mexico did not escape negative investor sentiment concerning Latin
America, tight fiscal policies and economic ties with the U.S. through the North
American Free Trade Agreement helped support its equity market, and the Bolsa
Index fell just 10.66% during the reporting period.(3) Believing that Mexico's
economic prospects appeared bright, we took advantage of lower equity values and
increased the Fund's Mexican exposure, from 26.7% of total net assets at the
beginning of the period to 36.8% at the end. During the period, we initiated a
position in Grupo Carso SA de CV, a diversified
(2) Source: Bloomberg.
(3) Source: Bloomberg.
Market depreciation is measured in U.S. dollar terms and includes reinvested
dividends.
INDUSTRY BREAKDOWN
Based on Total Net Assets
3/31/99
[PIE CHART APPEARS HERE]
[THIS CHARTS SHOWS IN PIE CHART FORMAT THE INDUSTRY BREAKDOWN OF TEMPLETON LATIN
AMERICA FUND, BASED ON TOTAL NET ASSETS AS OF 3/31/99.]
Services 34.3%
Materials 19.2%
Energy 18.7%
Finance 10.1%
Multi-Industry 7.5%
Consumer Goods 6.1%
Capital Equipment 1.6%
Short-Term Investments & Other Net Assets 2.5%
* The industry allocation uses MSCI'S industry definitions for convenience of
comparison.
3
PAGE
TOP 10 HOLDINGS
3/31/99
[THIS CHART LISTS THE TOP 10 HOLDINGS, INCLUDING INDUSTRY AND COUNTRY, OF
TEMPLETON LATIN AMERICA FUND, BASED ON TOTAL NET ASSETS AS OF 3/31/99.]
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Banco Itau SA, pfd.,
Banking, Brazil 7.4%
Telefonos de Mexico SA
(Telmex), ADR,
Telecommunications, Mexico 7.1%
YPF Soc Anonima Yacimientos
Petroliferos, ADR,
Energy Sources, Argentina 6.2%
Cifra SA de CV, V, ADR,
Merchandising, Mexico 6.1%
Cia Energetica de Minas
Gerais Cemig, pfd., Br.,
Energy Sources, Brazil 5.4%
Grupo Carso SA de CV,
Multi-Industry, Mexico 4.4%
Panamerican Beverages Inc., A,
Food & Household
Products, Mexico 4.4%
Tele Centro Sul
Participacoes SA, ADR, pfd.,
Telecommunications, Brazil 4.2%
Telesp Participacoes SA,
ADR, pfd.,
Telecommunications, Brazil 3.8%
Cemex SA, B,
Building Materials &
Components, Mexico 3.5%
</TABLE>
conglomerate with holdings in the restaurant, hotel, retail, telecommunications,
and mining industries, which we believe has the potential to benefit from future
expansion in Mexico.
ARGENTINA
Global economic events and concerns about Brazil's financial instability
contributed to the fall of Argentina's Merval Index by -39.36% during the
period.(4) Since nearly 30% of Argentina's exports go to Brazil, we believe the
nation's economic problems are likely to continue throughout 1999. Nevertheless,
Argentina's foreign currency reserves remained relatively high, and the country
continued to support currency stability through its 1990 Convertibility Plan,
which maintains a $US1:1peso exchange rate.
CHILE
Chile's equity market suffered from the global collapse in commodity prices, and
its Santiago IGPA Index fell -14.5% during the reporting period.(5) Copper,
which represents about 40% of Chilean exports, reached its lowest price since
the 1950s, which partially contributed to a decline in gross domestic product
growth from 7.1% in 1997 to an estimated 3.3% in 1998. However, Chile's central
bank tried to keep inflation under control and cut interest rates several times
in an effort to revive the economy. As equity prices retreated to what we
considered attractive levels, we slightly increased the Fund's Chilean exposure,
from 3.5% on March 31, 1998, to 6.2% of total net assets at the end of the
period.
(4) Source: Bloomberg.
(5) Source: Bloomberg.
Market depreciation is measured in U.S. dollar terms and includes reinvested
dividends.
4
PAGE
LOOKING FORWARD
Although we expect slower gross domestic product growth in the region throughout
1999, as most Latin American countries maintain relatively high interest rates
in an effort to stave off rapid inflation, we believe in the region's long-term
fundamentals. In our view, Mexico, Chile, and Argentina have maintained
relatively tight fiscal policies, while Brazil is slowly taking steps to get its
fiscal house in order. At the end of the reporting period, corporate debt
levels, current account deficits, or trade balances, throughout most of the
region were well below those of most Southeast Asian countries at the height of
the Asian crises, foreign investment had begun to return to the region, and it
appeared as though privatization efforts, though delayed, would continue over
the long term.
It is important to remember that investing in emerging markets concentrated in a
single region involves special considerations, including risks related to market
and currency volatility, adverse economic, social and political developments in
the region and countries where the Fund invests, and the relatively small size
and lesser liquidity of these markets. Investing in any emerging market
securities means accepting a certain amount of volatility and, in some cases,
the consequences of severe market corrections. For example, the Mexico stock
market has increased 2,096% in the last 15 years, but has suffered five declines
of more than 20% during that time.(6) While short-term volatility can be
disconcerting, declines exceeding 50% are not unusual in emerging markets. These
special risks and other considerations are discussed in the Fund's prospectus.
(6) Source: Bloomberg. Based on quarterly percentage price change over 15 years
ended March 31, 1999. Market return is measured in U.S. dollars and does not
include reinvested dividends.
5
PAGE
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 Templeton Latin America Fund, and
welcome your comments and suggestions.
Sincerely,
/s/HEIDI S. ANDERSEN
- -----------------------------
Heidi S. Andersen
Portfolio Manager
Templeton Latin America Fund
6
PAGE
The lead portfolio manager of Templeton Latin America Fund since March 1999 is
Heidi S. Andersen. Ms. Andersen is a Vice President of Templeton Investment
Counsel, Inc. ("Investment Counsel"). She holds a BA from the University of
Texas at Austin and an MBA from The Columbia Graduate School of Business. Ms.
Andersen is a Chartered Financial Analyst. She joined the Franklin Templeton
Group in 1995 as a research analyst.
Mark R. Beveridge, Howard J. Leonard and Edwin Lugo II have secondary portfolio
management responsibilities for the Fund. Mr. Beveridge is a Senior Vice
President of Investment Counsel. He holds a BBA in finance from the University
of Miami. He is a Chartered Financial Analyst and a Chartered Investment
Counselor, and also is a member of the South Florida Society of Financial
Analysts and the International Society of Financial Analysts. Mr. Beveridge
joined the Franklin Templeton Group in 1985. Mr. Leonard is an Executive Vice
President of Investment Counsel. He holds a BBA in finance and economics from
Temple University School of Business Administration. He is a Chartered Financial
Analyst and a member of the Financial Analysts of Philadelphia, the Financial
Analysts Federation and the International Society of Security Analysts. Mr.
Leonard joined the Franklin Templeton Group in 1989. Mr. Lugo is a portfolio
manager for Investment Counsel. He holds a BS in finance from Northeastern
University and an MBA from Columbia University. Mr. Lugo joined the Franklin
Templeton Group in 1996. Previously, he was a fundraiser for non-profits with
the New Boston Group.
7
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.*
ADVISOR CLASS:
No initial sales charge or Rule 12b-1 fees and are available to a limited class
of investors.*
* 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 securities in the Fund's portfolio, 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 -$4.61 $8.11 $12.72
<CAPTION>
DISTRIBUTIONS
---------------------------------------
<S> <C>
Dividend Income $0.1850
Long-Term Capital Gain $0.0050
Short-Term Capital Gain $0.0500
TOTAL $0.2400
</TABLE>
<TABLE>
<CAPTION>
CLASS C CHANGE 3/31/99 3/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value -$4.57 $8.06 $12.63
<CAPTION>
DISTRIBUTIONS
---------------------------------------
<S> <C>
Dividend Income $0.1208
Long-Term Capital Gain $0.0050
Short-Term Capital Gain $0.0500
TOTAL $0.1758
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS CHANGE 3/31/99 3/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value -$4.66 $8.09 $12.75
<CAPTION>
DISTRIBUTIONS
---------------------------------------
<S> <C>
Dividend Income $0.2256
Long-Term Capital Gain $0.0050
Short-Term Capital Gain $0.0500
TOTAL $0.2806
</TABLE>
Templeton Latin America Fund paid distributions derived from long-term capital
gains of 0.5 cents ($0.0050) per share in May, 1998. 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.
8
PAGE
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 3-YEAR (5/8/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -34.37% -18.50% -13.30%
Average Annual Total Return(2) -38.17% -8.42% -5.05%
Value of $10,000 Investment(3) $6,183 $7,682 $8,171
3/31/97 3/31/98 3/31/99
---------------------------------
<S> <C> <C> <C>
One-Year
Total Return(4) 18.34% 4.94% -34.37%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 3-YEAR (5/8/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -34.81% -20.08% -15.55%
Average Annual Total Return(2) -36.11% -7.51% -4.49%
Value of $10,000 Investment(3) $6,389 $7,912 $8,361
<CAPTION>
3/31/97 3/31/98 3/31/99
---------------------------------
<S> <C> <C> <C>
One-Year
Total Return(4) 17.62% 4.23% -34.81%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
ADVISOR CLASS(5) 1-YEAR 3-YEAR (5/8/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) -34.37% -18.05% -12.82%
Average Annual Total Return(2) -34.37% -6.42% -3.46%
Value of $10,000 Investment(3) $6,563 $8,296 $8,717
<CAPTION>
3/31/97 3/31/98 3/31/99
---------------------------------
<S> <C> <C> <C>
One-Year
Total Return(4) 13.09% 5.43% -34.37%
</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.
(5) On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A expenses; and (b) for
periods after January 1, 1997, figures reflect actual Advisor Class performance,
including the deduction of all fees and expenses applicable to that class. Since
January 2, 1997 (commencement of sales), the cumulative and average annual total
returns of Advisor Class shares were -21.74% and -10.36%, respectively.
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.
9
PAGE
AVERAGE ANNUAL TOTAL RETURN
3/31/99
CLASS A
- ---------------------------------------------------------------------
1-Year -38.17%
3-Year -8.42%
Since Inception (5/8/95) -5.05%
AVERAGE ANNUAL TOTAL RETURN
3/31/99
CLASS C
- ------------------------------------------------------------------
1-Year -36.11%
3-Year -7.51%
Since Inception (5/8/95) -4.49%
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(s), Fund expenses,
account fees and reinvested distributions. 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.
CLASS A
Total Return Index Comparison
$10,000 Investment (5/8/95 - 3/31/99)
[LINE GRAPH APPEARS HERE]
[THE FOLLOWING LINE GRAPH COMPARES THE PERFORMANCE OF TEMPLETON LATIN AMERICA
FUND- CLASS A TO THAT OF THE INTERNATIONAL FINANCE CORPORATION INVESTABLE LATIN
AMERICA INDEX, BASED ON A $10,000 INVESTMENT FROM 5/8/95 TO 3/31/99.]
Templeton Latin America Fund $ 8,171
IFCI Latin America Index* $10,903
TEMPLETON LATIN IFCI LATIN
AMERICA FUND - CLASS AMERICA INDEX
A*
--------------------------------------
5/8/95 $9,425 $10,000
5/95 $9,453 $9,579
6/95 $9,406 $9,779
7/95 $9,482 $10,303
8/95 $9,604 $10,448
9/95 $9,632 $10,319
10/95 $9,340 $9,332
11/95 $9,284 $9,655
12/95 $9,464 $9,842
1/96 $10,226 $10,802
2/96 $9,940 $10,205
3/96 $10,035 $10,369
4/96 $10,369 $10,894
5/96 $10,621 $11,192
6/96 $10,678 $11,391
7/96 $10,210 $10,889
8/96 $10,544 $11,185
9/96 $10,583 $11,401
10/96 $10,277 $11,150
11/96 $10,449 $11,237
12/96 $10,567 $11,535
1/97 $11,586 $12,598
2/97 $12,230 $13,422
3/97 $11,865 $13,280
4/97 $12,221 $13,834
5/97 $12,606 $14,953
6/97 $13,425 $16,153
7/97 $14,205 $17,039
8/97 $13,396 $15,568
9/97 $14,302 $16,879
10/97 $11,594 $13,736
11/97 $11,661 $14,145
12/97 $12,520 $14,912
1/98 $11,218 $13,186
2/98 $11,571 $13,838
3/98 $12,461 $14,748
4/98 $12,510 $14,618
5/98 $10,804 $12,795
6/98 $9,986 $12,083
7/98 $10,429 $12,562
8/98 $7,019 $8,320
9/98 $7,265 $8,884
10/98 $7,521 $9,564
11/98 $7,955 $10,446
12/98 $7,174 $9,613
1/99 $6,509 $8,509
2/99 $6,771 $8,998
3/99 $8,171 $10,903
CLASS C
Total Return Index Comparison
$10,000 Investment (5/8/95 - 3/31/99)
Templeton Latin America Fund $ 8,361
IFCI Latin America Index* $10,903
[LINE GRAPH APPEARS HERE]
[THE FOLLOWING LINE GRAPH COMPARES THE PERFORMANCE OF TEMPLETON LATIN AMERICA
FUND- CLASS C TO THAT OF THE INTERNATIONAL FINANCE CORPORATION INVESTABLE LATIN
AMERICA INDEX, BASED ON A $10,000 INVESTMENT FROM 5/8/95 TO 3/31/99.]
TEMPLETON LATIN AMERICA IFCI LATIN
FUND - CLASS C* AMERICA INDEX
------------------------------------------
5/8/95 $9,901 $10,000
5/95 $9,911 $9,579
6/95 $9,861 $9,779
7/95 $9,941 $10,303
8/95 $10,059 $10,448
9/95 $10,089 $10,319
10/95 $9,772 $9,332
11/95 $9,713 $9,655
12/95 $9,903 $9,842
1/96 $10,691 $10,802
2/96 $10,392 $10,205
3/96 $10,482 $10,369
4/96 $10,811 $10,894
5/96 $11,078 $11,192
6/96 $11,128 $11,391
7/96 $10,628 $10,889
8/96 $10,968 $11,185
9/96 $11,008 $11,401
10/96 $10,688 $11,150
11/96 $10,868 $11,237
12/96 $10,972 $11,535
1/97 $12,035 $12,598
2/97 $12,696 $13,422
3/97 $12,315 $13,280
4/97 $12,666 $13,834
5/97 $13,061 $14,953
6/97 $13,904 $16,153
7/97 $14,706 $17,039
8/97 $13,864 $15,568
9/97 $14,787 $16,879
10/97 $11,978 $13,736
11/97 $12,038 $14,145
12/97 $12,917 $14,912
1/98 $11,567 $13,186
2/98 $11,922 $13,838
3/98 $12,836 $14,748
4/98 $12,877 $14,618
5/98 $11,117 $12,795
6/98 $10,280 $12,083
7/98 $10,719 $12,562
8/98 $7,207 $8,320
9/98 $7,462 $8,884
10/98 $7,717 $9,564
11/98 $8,167 $10,446
12/98 $7,355 $9,613
1/99 $6,670 $8,509
2/99 $6,930 $8,998
3/99 $8,361 $10,903
Past performance is not predictive of future results.
10
PAGE
ADVISOR CLASS
Total Return Index Comparison
$10,000 Investment (5/8/95 - 3/31/99)
[LINE GRAPH APPEARS HERE]
[THE FOLLOWING LINE GRAPH COMPARES THE PERFORMANCE OF TEMPLETON LATIN AMERICA
FUND- ADVISOR CLASS TO THAT OF THE INTERNATIONAL FINANCE CORPORATION INVESTABLE
LATIN AMERICA INDEX, BASED ON A $10,000 INVESTMENT FROM 5/8/95 TO 3/31/99.]
Templeton Latin America Fund $ 8,717
IFCI Latin America Index* $10,903
Templeton Latin IFCI Latin
America Fund - America
Advisor Class Index
-----------------------------------------------
5/8/95 $10,000 $10,000
5/95 $10,030 $9,579
6/95 $9,980 $9,779
7/95 $10,060 $10,303
8/95 $10,190 $10,448
9/95 $10,220 $10,319
10/95 $9,910 $9,332
11/95 $9,850 $9,655
12/95 $10,041 $9,842
1/96 $10,849 $10,802
2/96 $10,546 $10,205
3/96 $10,647 $10,369
4/96 $11,001 $10,894
5/96 $11,269 $11,192
6/96 $11,329 $11,391
7/96 $10,833 $10,889
8/96 $11,188 $11,185
9/96 $11,228 $11,401
10/96 $10,904 $11,150
11/96 $11,086 $11,237
12/96 $11,212 $11,535
1/97 $12,293 $12,598
2/97 $12,987 $13,422
3/97 $12,609 $13,280
4/97 $12,997 $13,834
5/97 $13,412 $14,953
6/97 $14,282 $16,153
7/97 $15,121 $17,039
8/97 $14,261 $15,568
9/97 $15,233 $16,879
10/97 $12,358 $13,736
11/97 $12,430 $14,145
12/97 $13,345 $14,912
1/98 $11,959 $13,186
2/98 $12,334 $13,838
3/98 $13,293 $14,748
4/98 $13,345 $14,618
5/98 $11,520 $12,795
6/98 $10,670 $12,083
7/98 $11,142 $12,562
8/98 $7,498 $8,320
9/98 $7,750 $8,884
10/98 $8,013 $9,564
11/98 $8,496 $10,446
12/98 $7,662 $9,613
1/99 $6,951 $8,509
2/99 $7,231 $8,998
3/99 $8,718 $10,903
* Source: Standard and Poor's(R) Micropal. International Finance Corporation
Investable Latin America Index measures the total return of equities in seven
Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, Peru, and
Venezuela) as if they were in one market, and includes reinvested dividends. One
cannot invest directly in an index, nor is an index representative of the Fund's
portfolio.
** On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A expenses; and (b) for
periods after January 1, 1997, figures reflect actual Advisor Class performance,
including the deduction of all fees and expenses applicable to Advisor Class
shares.
AVERAGE ANNUAL TOTAL RETURN
3/31/99
ADVISOR CLASS**
- -----------------------------------------------------------------------
1-Year -34.37%
3-Year -6.42%
Since Inception (5/8/95) -3.46%
Past performance is not predictive of future results.
11
PAGE
TEMPLETON LATIN AMERICA FUND
Financial Highlights
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------
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.......................... $12.72 $12.34 $10.53 $10.00
----------------------------------------------
Income from investment operations:
Net investment income...................................... .20 .07 .06 .12
Net realized and unrealized gains (losses)................. (4.57) .53 1.86 .51
----------------------------------------------
Total from investment operations............................ (4.37) .60 1.92 .63
----------------------------------------------
Less distributions from:
Net investment income...................................... (.18) (.07) (.08) (.10)
Net realized gains......................................... (.06) (.15) (.03) --
----------------------------------------------
Total distributions......................................... (.24) (.22) (.11) (.10)
----------------------------------------------
Net asset value, end of year................................ $8.11 $12.72 $12.34 $10.53
==============================================
Total Return*............................................... (34.37)% 4.94% 18.34% 6.37%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $13,228 $28,714 $18,923 $5,150
Ratios to average net assets:
Expenses................................................... 2.35% 2.35% 2.35% 2.35%**
Expenses, excluding waiver and payments by affiliate....... 3.03% 2.57% 3.10% 4.02%**
Net investment income...................................... 2.07% .59% .50% 1.71%**
Portfolio turnover rate..................................... 48.34% 45.82% 3.72% --
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
+For the period May 8, 1995 (commencement of operations) to March 31, 1996.
12
PAGE
TEMPLETON LATIN AMERICA 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.......................... $12.63 $12.28 $10.49 $10.00
---------------------------------------------
Income from investment operations:
Net investment income (loss)............................... .12 -- (.01) .08
Net realized and unrealized gains (losses)................. (4.51) .51 1.85 .48
---------------------------------------------
Total from investment operations............................ (4.39) .51 1.84 .56
---------------------------------------------
Less distributions from:
Net investment income...................................... (.12) (.01) (.02) (.07)
Net realized gains......................................... (.06) (.15) (.03) --
---------------------------------------------
Total distributions......................................... (.18) (.16) (.05) (.07)
---------------------------------------------
Net asset value, end of year................................ $8.06 $12.63 $12.28 $10.49
=============================================
Total Return*............................................... (34.81)% 4.23% 17.62% 5.67%
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $3,312 $7,170 $3,524 $1,351
Ratios to average net assets:
Expenses................................................... 3.00% 3.00% 3.00% 3.00%**
Expenses, excluding waiver and payments by affiliate....... 3.68% 3.22% 3.84% 4.67%**
Net investment income (loss)............................... 1.45% (.01)% (.15)% 1.14%**
Portfolio turnover rate..................................... 48.34% 45.82% 3.72% --
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
**Annualized.
+For the period May 8, 1995 (commencement of operations) to March 31, 1996.
13
PAGE
TEMPLETON LATIN AMERICA FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
ADVISOR CLASS
--------------------------------
YEAR ENDED MARCH 31,
--------------------------------
1999 1998 1997+
--------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $12.75 $12.35 $10.92
--------------------------------
Income from investment operations:
Net investment income...................................... .31 .07 .02
Net realized and unrealized gains (losses)................. (4.69) .59 1.41
--------------------------------
Total from investment operations............................ (4.38) .66 1.43
--------------------------------
Less distributions from:
Net investment income...................................... (.22) (.11) --
Net realized gains......................................... (.06) (.15) --
--------------------------------
Total distributions......................................... (.28) (.26) --
--------------------------------
Net asset value, end of year................................ $8.09 $12.75 $12.35
================================
Total Return*............................................... (34.37)% 5.43% 13.09%
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $116 $139 $71
Ratios to average net assets:
Expenses................................................... 2.00% 2.00% 2.00%**
Expenses, excluding waiver and payments by affiliate....... 2.68% 2.22% 2.08%**
Net investment income...................................... 2.46% .45% .82%**
Portfolio turnover rate..................................... 48.34% 45.82% 3.72%
</TABLE>
*Total return is not annualized.
**Annualized.
+For the period January 2, 1997 (effective date) to March 31, 1997.
See Notes to Financial Statements.
14
PAGE
TEMPLETON LATIN AMERICA FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1999
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 60.2%
BANKING .8%
*Credicorp Ltd. ............................................ Peru 13,848 $ 135,018
-----------
BUILDING MATERIALS & COMPONENTS 4.0%
Cementos Diamante SA, ADR, 144A............................. Colombia 64,400 84,525
Cemex SA, B................................................. Mexico 140,800 590,485
-----------
675,010
-----------
CHEMICALS
*Sociedad Quimica Y Minera de Chile SA, A, ADR.............. Chile 526 15,517
-----------
CONSTRUCTION & HOUSING .9%
Empresas ICA Sociedad Controladora SA de CV, ADR............ Mexico 30,100 158,025
-----------
ENERGY SOURCES 9.7%
Perez Companc SA, B......................................... Argentina 123,754 581,673
YPF Soc Anonima Yacimientos Petroliferos, ADR............... Argentina 32,700 1,032,094
-----------
1,613,767
-----------
FOOD & HOUSEHOLD PRODUCTS 4.4%
Panamerican Beverages Inc., A............................... Mexico 41,300 725,331
-----------
FOREST PRODUCTS & PAPER 6.4%
Aracruz Celulose SA, ADR.................................... Brazil 24,450 354,525
*Empaques Ponderosa SA de CV, B............................. Mexico 1,042,100 536,037
Masisa SA, ADR.............................................. Chile 22,100 171,275
-----------
1,061,837
-----------
INDUSTRIAL COMPONENTS .7%
Madeco Manufacturera de Cobre SA, ADR....................... Chile 12,100 108,900
-----------
MERCHANDISING 7.4%
Carulla SA, ADR, 144A....................................... Colombia 141,600 212,446
*Cifra SA de CV, V, ADR..................................... Mexico 64,900 1,017,852
-----------
1,230,298
-----------
METALS & MINING 4.0%
Grupo Mexico SA de CV, B.................................... Mexico 49,300 168,715
Industrias Penoles SA....................................... Mexico 157,600 491,363
-----------
660,078
-----------
MULTI-INDUSTRY 7.5%
Alfa SA de CV, A............................................ Mexico 175,500 531,511
Grupo Carso SA de CV........................................ Mexico 176,800 725,685
-----------
1,257,196
-----------
REAL ESTATE 1.9%
Inversiones y Representacion SA............................. Argentina 119,596 313,358
-----------
</TABLE>
15
PAGE
TEMPLETON LATIN AMERICA FUND
STATEMENT OF INVESTMENTS, MARCH 31, 1999 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
TELECOMMUNICATIONS 9.7%
Telecomunicacoes de Sao Paulo SA (Telesp)................... Brazil 5,605,687 $ 424,888
Telefonos de Mexico SA (Telmex), ADR........................ Mexico 18,000 1,179,000
-----------
1,603,888
-----------
UTILITIES ELECTRICAL & GAS 2.8%
Centrais Eletricas Brasileiras SA (Eletrobras), ADR......... Brazil 48,000 468,525
-----------
TOTAL COMMON STOCKS (COST $12,678,581)...................... 10,026,748
-----------
PREFERRED STOCKS 37.3%
Banco Itau SA, pfd. ........................................ Brazil 2,418,834 1,234,085
Cia Energetica de Minas Gerais Cemig, pfd., Br. ............ Brazil 40,000,000 894,461
Cia Vale do Rio Doce, A, ADR, pfd. ......................... Brazil 22,300 328,324
Embotelladora Andina SA, B, ADR, pfd. ...................... Chile 23,800 294,525
*Embratel Participacoes SA, ADR, pfd. ...................... Brazil 25,050 418,022
Petroleo Brasileiro SA, pfd. ............................... Brazil 988,800 137,221
Sociedad Quimica Y Minera de Chile SA, ADR, pfd. ........... Chile 14,100 451,200
Tele Celular Sul Participacoes SA, ADR, pfd. ............... Brazil 14,355 274,554
*Tele Centro Sul Participacoes SA, ADR, pfd. ............... Brazil 15,010 693,274
Tele Sudeste Celular Participacoes SA, ADR, pfd. ........... Brazil 21,610 437,603
Telesp Celular Participacoes SA, ADR, pfd. ................. Brazil 19,820 414,981
Telesp Participacoes SA, ADR, pfd. ......................... Brazil 30,800 635,250
-----------
TOTAL PREFERRED STOCKS (COST $6,953,601).................... 6,213,500
-----------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT (COST
$19,632,182).............................................. 16,240,248
-----------
PRINCIPAL
AMOUNT**
--------
REPURCHASE AGREEMENT (COST $376,000) 2.3%
(a)Morgan Stanley Group, Inc. 4.93%, 4/01/99 (Maturity Value
$376,051)
Collateralized by U.S. Treasury Notes and Bonds........... United States $ 376,000 376,000
-----------
TOTAL INVESTMENTS (COST $20,008,182) 99.8%.................. 16,616,248
OTHER ASSETS, LESS LIABILITIES .2%.......................... 40,050
-----------
TOTAL NET ASSETS 100.0%..................................... $16,656,298
===========
</TABLE>
*Non-income producing.
**Securities denominated in U.S. dollars.
(a)At March 31, 1999, all repurchase agreements held by the Fund had been
entered into on that date.
See Notes to Financial Statements.
16
PAGE
TEMPLETON LATIN AMERICA FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $19,632,182)..... $16,240,248
Repurchase agreement, at value and cost.................... 376,000
Cash....................................................... 124
Receivables:
Fund shares sold.......................................... 116,472
Dividends and interest.................................... 116,457
From affiliates........................................... 93,023
Other assets............................................... 32,508
-----------
Total assets.......................................... 16,974,832
-----------
Liabilities:
Payables:
Investment securities purchased........................... 14,465
Fund shares redeemed...................................... 108,043
To affiliates............................................. 130,698
Accrued expenses........................................... 65,328
-----------
Total liabilities..................................... 318,534
-----------
Net assets, at value........................................ $16,656,298
===========
Net assets consist of:
Undistributed net investment income........................ $ 17,808
Net unrealized depreciation................................ (3,405,148)
Accumulated net realized loss.............................. (7,953,392)
Beneficial shares.......................................... 27,997,030
-----------
Net assets, at value........................................ $16,656,298
===========
CLASS A:
Net asset value per share ($13,228,123 / 1,631,338 shares
outstanding)............................................. $8.11
===========
Maximum offering price per share ($8.11 / 94.25%).......... $8.60
===========
CLASS C:
Net asset value per share ($3,312,329 / 410,894 shares
outstanding)*............................................ $8.06
===========
Maximum offering price per share ($8.06 / 99.00%).......... $8.14
===========
ADVISOR CLASS:
Net asset value and maximum offering price per share
($115,846 / 14,312 shares outstanding).................... $8.09
===========
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
17
PAGE
TEMPLETON LATIN AMERICA 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 $87,513)
Dividends.................................................. $ 908,915
Interest................................................... 36,685
-----------
Total investment income............................... $ 945,600
------------
Expenses:
Management fees (Note 3)................................... 266,973
Administrative fees (Note 3)............................... 32,037
Distribution fees (Note 3)
Class A................................................... 58,986
Class C................................................... 43,776
Transfer agent fees (Note 3)............................... 113,200
Custodian fees............................................. 33,700
Reports to shareholders.................................... 53,200
Registration and filing fees............................... 27,800
Professional fees.......................................... 18,900
Trustees' fees and expenses................................ 3,500
Amortization of organization costs......................... 17,488
Other...................................................... 4,911
-----------
Total expenses........................................ 674,471
Expenses waived/paid by affiliate (Note 3)............ (144,569)
------------
Net expenses....................................... 529,902
------------
Net investment income........................... 415,698
------------
Realized and unrealized losses:
Net realized loss from:
Investments............................................... (7,802,108)
Foreign currency transactions............................. (54,599)
-----------
Net realized loss..................................... (7,856,707)
Net unrealized depreciation on:
Investments............................................... (4,001,575)
Translation of assets and liabilities denominated in
foreign currencies...................................... (13,214)
-----------
Net unrealized depreciation........................... (4,014,789)
------------
Net realized and unrealized loss............................ (11,871,496)
------------
Net decrease in net assets resulting from operations........ $(11,455,798)
============
</TABLE>
See Notes to Financial Statements.
18
PAGE
TEMPLETON LATIN AMERICA 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..................................... $ 415,698 $ 174,589
Net realized gain (loss) from investments and foreign
currency transactions................................... (7,856,707) 480,947
Net unrealized depreciation on investments and translation
of assets and liabilities denominated in foreign
currencies............................................... (4,014,789) (939,995)
------------------------------
Net decrease in net assets resulting from operations.... (11,455,798) (284,459)
Distributions to shareholders from:
Net investment income:
Class A.................................................. (326,007) (162,244)
Class C.................................................. (61,552) (6,110)
Advisor Class............................................ (2,101) (1,395)
Net realized gains:
Class A.................................................. (112,359) (369,781)
Class C.................................................. (28,579) (82,777)
Advisor Class............................................ (514) (1,637)
Capital share transactions (Note 2):
Class A.................................................. (6,104,615) 10,648,892
Class C.................................................. (1,319,485) 3,764,207
Advisor Class............................................ 44,255 200
------------------------------
Net increase (decrease) in net assets................... (19,366,755) 13,504,896
Net assets:
Beginning of year.......................................... 36,023,053 22,518,157
------------------------------
End of year................................................ $ 16,656,298 $36,023,053
==============================
Undistributed net investment income included in net assets:
End of year................................................ $ 17,808 $ 10,641
==============================
</TABLE>
See Notes to Financial Statements.
19
PAGE
TEMPLETON LATIN AMERICA FUND
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Latin America 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
long-term capital appreciation. Under normal market conditions, the Fund invests
at least 65% of its total assets in the equity and debt securities of Latin
American issuers. 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.
20
PAGE
TEMPLETON LATIN AMERICA 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 three classes of shares: Class A, Class C, and Advisor Class
shares. Effective January 1, 1999, Class I and Class II shares were renamed
Class A and Class C Shares, 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 was 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................................................ 1,543,937 $ 12,540,822 2,407,845 $ 32,334,164
Shares issued on reinvestment of distributions............. 48,166 403,120 38,541 468,870
Shares redeemed............................................ (2,217,533) (19,048,557) (1,723,469) (22,154,142)
-------------------------------------------------------------
Net increase (decrease).................................... (625,430) $ (6,104,615) 722,917 $ 10,648,892
=============================================================
</TABLE>
21
PAGE
TEMPLETON LATIN AMERICA 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................................................. 324,301 $ 2,911,133 504,918 $ 6,603,184
Shares issued on reinvestment of distributions.............. 10,240 84,217 6,731 81,260
Shares redeemed............................................. (491,366) (4,314,835) (230,870) (2,920,237)
-------------------------------------------------------
Net increase (decrease)..................................... (156,825) $(1,319,485) 280,779 $ 3,764,207
=======================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------------
1999 1998
-------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------
<S> <C> <C> <C> <C>
ADVISOR CLASS SHARES:
Shares sold................................................. 406,001 $ 3,038,457 93,506 $ 1,297,364
Shares issued on reinvestment of distributions.............. 294 2,398 244 3,006
Shares redeemed............................................. (402,915) (2,996,600) (88,577) (1,300,170)
-------------------------------------------------------
Net increase................................................ 3,380 $ 44,255 5,173 $ 200
=======================================================
</TABLE>
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.
The Fund pays an investment management fee to TICI of 1.25% 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:
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- --------------------------------------------------------------------------
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
TICI and FT Services agreed in advance to reduce fees to the extent necessary to
limit total expenses to an annual rate of 2.35%, 3.00%, and 2.00% of the Fund's
average daily net assets of Class A, Class C, and Advisor Class shares,
respectively, through July 31, 1999, as noted in the Statement of Operations.
22
PAGE
TEMPLETON LATIN AMERICA FUND
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
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 $210,910. Distributors
received net commissions on sales of Fund shares and received contingent
deferred sales charges for the period of $24,218 and $6,936, respectively.
4. INCOME TAXES
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At March 31, 1999, the net unrealized depreciation
based on the cost of investments for income tax purposes was as follows:
Unrealized appreciation..................................... $ 754,148
Unrealized depreciation..................................... (4,146,082)
-----------
Net unrealized depreciation................................. $(3,391,934)
===========
At March 31, 1999, the Fund had tax basis capital losses of $3,400,000, which
may be carried over to offset future capital gains. Such losses expire March 31,
2007.
At March 31, 1999 the Fund has deferred capital and currency losses occurring
subsequent to October 31, 1998 of $4,500,000. For tax purposes, such losses will
be reflected in the year ending March 31, 2000.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended March 31, 1999 aggregated $10,240,521 and $17,291,200, respectively.
23
PAGE
TEMPLETON LATIN AMERICA FUND
INDEPENDENT AUDITOR'S REPORT
The Board of Trustees and Shareholders
Templeton Latin America Fund
We have audited the accompanying statement of assets and liabilities, including
the Statement of investments, of Templeton Latin America 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 audit.
We conducted our audit 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 audit provides 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 Latin America Fund, as of March 31, 1999, the results of its
operations, the changes in its net assets and the financial highlights for the
period indicated, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
April 30, 1999
24
PAGE
TEMPLETON LATIN AMERICA FUND
Tax Designation
At March 31, 1999, more than 50% of the Templeton Latin America Fund's total
assets were invested in securities of foreign issuers. In most instances,
foreign taxes were withheld from dividends paid to the fund on these
investments. As in prior years, the Fund intends to make an election under
Section 853 of the Internal Revenue Code. This election will allow shareholders
to treat their proportionate share of foreign taxes paid by the Fund as having
been paid directly by them.
In January 2000, shareholders will receive Form 1099-DIV, which will include
their share of taxes withheld and foreign source income distributed during the
calendar year 1999.
The following table provides a breakdown by country of foreign source income and
foreign taxes paid to Class A, Class C, and Advisor Class shareholders in May
1999.
<TABLE>
<CAPTION>
CLASS-A CLASS-C ADVISOR CLASS
-------------------------------------------------------------------------------- ----------------
FOREIGN TAXES FOREIGN SOURCE FOREIGN TAXES FOREIGN SOURCE FOREIGN TAXES
COUNTRY WITHHELD PER SHARE INCOME PER SHARE WITHHELD PER SHARE INCOME PER SHARE WITHHELD PER SHARE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina............ $0.0000 $0.0225 $0.0000 $0.0157 $0.0000
Brazil............... 0.0265 0.1311 0.0265 0.0920 0.0265
Chile................ 0.0039 0.0092 0.0039 0.0064 0.0039
Colombia............. 0.0004 0.0095 0.0004 0.0066 0.0004
Ecuador.............. 0.0000 0.0019 0.0000 0.0013 0.0000
Mexico............... 0.0000 0.0464 0.0000 0.0325 0.0000
Venezuela............ 0.0000 0.0015 0.0000 0.0010 0.0000
--------------------------------------------------------------------------------------------------
TOTAL................ $0.0308 $0.2221 $0.0308 $0.1555 $0.0308
==================================================================================================
<CAPTION>
ADVISOR CLASS
-----------------
FOREIGN SOURCE
COUNTRY INCOME PER SHARE
- ----------------------------------------
<S> <C>
Argentina............ $0.0257
Brazil............... 0.1500
Chile................ 0.0105
Colombia............. 0.0108
Ecuador.............. 0.0022
Mexico............... 0.0531
Venezuela............ 0.0017
-------
TOTAL................ $0.2540
=======
</TABLE>
25
PAGE
This page intentionally left blank
PAGE
This page intentionally left blank
PAGE
This page intentionally left blank
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 Latin America 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 Latin
America 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.
418 A99 05/99 [RECYCLE LOGO] Printed on recycled paper
