SEMI ANNUAL
REPORT
SEPTEMBER 30, 2000
TEMPLETON
LATIN AMERICA FUND
[FRANKLIN TEMPLETON LOGO]
PAGE
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and 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.
[PHOTO]
MARK R. BEVERIDGE, CFA, CIC
Portfolio Manager
Templeton Latin America Fund
[PHOTO]
HEIDI S. ANDERSEN, CFA
Portfolio Manager
Templeton Latin America Fund
WE'RE ON THE WEB--
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resource for fund literature, prices and performance, investor information and
around-the-clock account services.
PAGE
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter ........ 1
Performance Summary ....... 8
Financial Highlights &
Statement of Investments... 10
Financial Statements ...... 15
Notes to Financial
Statements ................ 18
</TABLE>
FUND CATEGORY
[PYRAMID GRAPHIC]
SHAREHOLDER LETTER
Your Fund's Goal: Templeton Latin America Fund seeks long-term capital
appreciation. Under normal market conditions, the Fund will invest at least 65%
of its total assets in the equity and debt securities of Latin American
companies.
Dear Shareholder:
During the six-month period ended September 30, 2000, the Brazilian and Mexican
economies performed well. Argentina and Chile maintained their slow economic
recoveries, but rising U.S. interest rates and turbulent global equity markets
caused many investors to decrease their exposure to emerging markets. As a
result, Latin American equities were generally volatile. Within this
environment, Templeton Latin America Fund - Class A posted a six-month
cumulative total return of -11.33%, as shown in the Performance Summary
beginning on page 8. Its benchmark, the International Finance Corporation
Investable (IFCI) Latin America Index, delivered a total return of - 12.10% for
the same period.(1)
(1.) Source: Standard and Poor's 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.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 13.
PAGE
Throughout the reporting period, we maintained a conservative bottom-up approach
in searching for undervalued equities. We did not attempt to match the
weightings of our benchmark index and the Fund's regional allocation was simply
a result of individual stock selection. Overall, our holdings in the bank,
aerospace and defense, electrical utilities, and oil and natural gas industries
contributed positively to the value of the Fund's portfolio while our
telecommunications, chemicals and industrial conglomerates exposure negatively
impacted the Fund's performance.
BRAZIL
Brazil's economy continued to rebound as inflation and interest rates declined,
exports increased and fiscal reform continued, albeit at a slow pace. In fact,
gross domestic product (GDP) growth is expected to reach 4.1% for 2000, after
declining -0.1% in 1999.(2) But rising interest rates in the U.S. and volatility
in global equity markets had an adverse effect upon Brazil's stock market and
the Brazilian Bovespa Index posted a return of -15.52% during the period.(3)
During the six months under review, Telefonica SA, a Spanish telecommunications
company, completed the tender offer for 100% of its Latin American subsidiaries,
two of which -- Telesudeste and Telesp -- were in Brazil. Consequently, the
Fund's exposure to Brazil fell from 44.3% of total net assets at the beginning
of the period, to 37.5% at the end. We did however initiate new positions in
Embraer, a Brazilian manufacturer of regional jets and the fourth largest
manufacturer of
[PIE CHART]
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
9/30/00
<TABLE>
<S> <C>
Mexico 38.4%
Brazil 37.5%
Spain 5.7%
Chile 4.9%
United States 4.6%
Argentina 3.7%
Short-Term Investments
& Other Net Assets 5.2%
</TABLE>
(2.) Source: Bear Stearns(R). Global Notes: Latin America Diverging, 7/11/00.
(3.) Source: Brazil Bovespa Index. Market return is measured in U.S. dollars and
does not include reinvested dividends.
2
PAGE
commercial jets in the world. In our opinion, Embraer holds a virtual duopoly in
the regional jet market with Canada's Bombardier, yet trades at a 50% discount
to Bombardier on a price to cash flow basis. In addition, the Fund participated
in Petrobras' ADR listing on the New York Stock Exchange. Petrobras is one of
the world's largest oil and gas producers and recently traded at a 50% discount
to major European oil companies and a 65% discount to those based in the U.S.
MEXICO
Economic news in Mexico was generally quite positive during the reporting
period. Inflation declined, direct foreign investment continued to pour in,
consumer confidence rose, the peso remained fairly stable and GDP is expected to
increase by 5.5% in 2000.(2) However, Mexican equities experienced quite a bit
of volatility as the U.S. Nasdaq market and global telecommunication, media and
technology securities came under pressure in April, and the Mexican Bolsa Index
posted a U.S.-dollar total return of -15.0% for the six months under review.(4)
On July 2, Mexico saw a change in political leadership from 70 years of rule
under the PRI (the Institutional Revolutionary Party) to the PAN (the National
Action Party). During his campaign, President-elect Vicente Fox, who takes
office on December 1, 2000, highlighted the continued pursuit of strong GDP
growth, the privatization of the petrochemical and electricity sector, increased
investment in education, housing and transportation, and ongoing fiscal reform
among other initiatives as his top priorities.
INDUSTRY BREAKDOWN*
Based on Total Net Assets
9/30/00
<TABLE>
<S> <C>
Services 43.1%
Materials 16.5%
Energy 12.9%
Finance 10.2%
Multi-Industry 8.2%
Consumer Goods 2.0%
Capital Equipment 1.9%
Short-Term Investments &
Other Net Assets 5.2%
</TABLE>
*The industry allocation uses Morgan Stanley Capital International's industry
definitions for convenience of comparison.
(4.) Source: Mexico Bolsa Index. Market return is measured in U.S. dollars and
does not include reinvested dividends.
3
PAGE
Despite these positive economic and political developments, we did not
significantly add to our positions as we felt that most of this news was already
reflected in the market. In fact, we took profits in some of the consumer goods
securities such as Walmex, Walmart's Mexican operations. The Fund's weighting in
Mexico stayed relatively the same, at 38.4% of total net assets on September 30,
2000, compared with 36.0% at the beginning of the period.
ARGENTINA
Following last year's recession, Argentina experienced a weak economic recovery
with GDP growth expected to be 2.5% for 2000.(2) Fiscal tightening, high
unemployment, high real domestic interest rates and a high domestic and external
debt burden have weighed on domestic consumer and international investor
confidence. As in Brazil, the Argentine stock market saw its market
capitalization decline as several foreign entities acquired and then
subsequently delisted a number of Argentine companies, including Telefonica SA's
purchase of Telefonica de Argentina. For the period, the Argentina Merval Index
posted a U.S.-dollar return of -14.75%(5). The Fund's exposure to Argentina
changed little during the period, standing at 3.7% of total net assets at the
end of the period versus 3.5% at the beginning. We did not add to our positions
nor did we initiate any new positions within Argentina.
CHILE
Chile's macroeconomic environment began to improve during the six months under
review, with GDP growth expected to
TOP 10 HOLDINGS
9/30/00
<TABLE>
<CAPTION>
COMPANY % OF TOTAL
SECTOR, COUNTRY NET ASSETS
--------------- ----------
<S> <C>
Telefonos de Mexico SA de CV
(Telmex), L, ADR 10.5%
Diversified Telecommunication
Services, Mexico
Petroleo Brasileiro SA
(Petrobras), ADR 6.2%
Oil & Gas, Brazil
Banco Itau SA, pfd. 6.0%
Banks, Brazil
Telefonica SA, ADR 5.7%
Diversified Telecommunication
Services, Spain
SBC Communications Inc. 4.6%
Diversified Telecommunication
Services, United States
Cemex SA, ADR 4.5%
Construction Materials, Mexico
Grupo Carso SA de CV 4.4%
Industrial Conglomerates,
Mexico
Companhia Paranaense de
Energia-Copel, ADR 4.3%
Electric Utilities, Brazil
Wal-Mart de Mexico SA de CV
(Walmex), ADR 3.7%
Multiline Retail, Mexico
Grupo Mexico SA de CV, B 3.1%
Metals & Mining, Mexico
</TABLE>
(5.) Source: Argentina Merval Index. Market return is measured in U.S. dollars
and does not include reinvested dividends.
4
PAGE
reach 6% in 2000 versus -1.1% in 1999.(2) However, due to the fact that more
than a third of Chile's exports are copper, weak global copper prices stifled
any significant economic recovery. In fact, the Chilean IPSA Index returned
-10.59% in U.S.-dollar terms during the period.(6) Nevertheless, because we
believed it to be a good value, we increased our Chilean exposure by initiating
a new position in Compania de Telecomunicaciones de Chile (CTC), the largest
telecommunications provider in Chile. The Fund's exposure to Chile increased
from 2.2% of total net assets on April 1, 2000, to 4.9% on September 30, 2000.
OTHER EXPOSURE
At the end of the period, the Fund did not have exposure to Colombia, Peru and
Venezuela due to uncertain political and economic conditions in these nations.
Peru's stock market lost a sizable amount of capitalization during the period,
as Telefonica SA completed its tender offer for 97% of Telefonica del Peru.
LOOKING FORWARD
We continue to believe in Latin America's economic fundamentals and are
optimistic about the long-term prospects for Templeton Latin America Fund.
Corporate earnings in the region could increase if interest-rate spreads
decline. We anticipate remaining heavily weighted toward Brazil and Mexico, as
the reduction in size of the other regional capital markets will likely lead to
an investment concentration in the region's two largest markets. However, it is
important to remember that
(6.) Source: Chile IPSA Index. Market return is measured in U.S. dollars and
does not include reinvested dividends.
5
PAGE
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 means accepting a certain amount
of volatility and, in some cases, the consequences of severe market corrections.
For example, the MSCI Mexico Free Index has increased 907% in the last 12 years,
but has suffered five declines of more than 15% during that time.(7) These
special risks and other considerations are discussed in the Fund's prospectus.
We thank you for your continued investment in Templeton Latin America Fund, and
welcome your comments and suggestions.
Sincerely,
/s/ Heidi S. Anderson
Heidi S. Andersen, CFA
Portfolio Manager
Templeton Latin America Fund
(7.) Source: Morgan Stanley Capital International/MSCI Mexico Free Index. Based
on a quarterly percentage price change over 12 years ended 9/30/00. Market
return is measured in U.S. dollars and does not include reinvested dividends.
The MSCI Mexico Free Index reflects actual buyable opportunities for global
investors by taking into account local market restrictions on share ownership by
foreigners. The MSCI Mexico Free Index is a capitalization weighted index of 34
companies as of 9/30/00.
This discussion reflects our views, opinions and portfolio holdings as of
September 30, 2000, the end of the reporting period. The information provided is
not a complete analysis of every aspect of any country, industry, security or
the Fund. Our strategies and the Fund's portfolio composition will change
depending on market and economic conditions. Although historical performance is
no guarantee of future results, these insights may help you understand our
investment and management philosophy.
6
PAGE
In October 2000, Mark Beveridge assumed primary responsibility for investments
in Templeton Latin America Fund.
Mark Beveridge joined the Templeton organization in 1985 with initial
responsibilities for quantitative analysis and performance measurement. Prior to
joining Templeton, he was a principal with a financial accounting software firm
based in Miami, Florida. Mr. Beveridge has a bachelor of business administration
degree with emphasis in finance from the University of Miami. Additionally, he
is a Chartered Financial Analyst (CFA), Chartered Investment Counselor (CIC) and
a member of the South Florida Society of Financial Analysts and the
International Society of Financial Analysts.
7
PAGE
PERFORMANCE SUMMARY AS OF 9/30/00
Six-month total return represents the change in value of an investment for the
period indicated and does not include sales charges. Distributions will vary
based on earnings of the Fund's portfolio and any profits realized from the sale
of the portfolio's securities, as well as the level of operating expenses for
each class. Past distributions are not indicative of future trends. All total
returns include reinvested distributions at net asset value.
<TABLE>
<S> <C> <C>
CLASS A
Six-Month Total Return -11.33%
Net Asset Value (NAV) $10.96 (9/30/00) $12.36 (3/31/00)
Change in NAV -$1.40
CLASS C
Six-Month Total Return -11.61%
Net Asset Value (NAV) $10.81 (9/30/00) $12.23 (3/31/00)
Change in NAV -$1.42
ADVISOR CLASS
Six-Month Total Return -11.24%
Net Asset Value (NAV) $10.98 (9/30/00) $12.37 (3/31/00)
Change in NAV -$1.39
</TABLE>
CLASS A: Subject to the maximum 5.75% initial sales charge.
CLASS C: 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 Administrator, Investment Manager and Transfer Agent for the Fund have
agreed in advance to waive a portion of their respective fees and, in the case
of the Fund Administrator and Investment Manager, to equally assume
responsibility for certain other payments by the Fund to reduce Fund expenses,
which increases total return to shareholders. If they had not taken this action,
total returns would have been lower. After 7/31/01, the fee waivers and expense
assumptions may be discontinued at any time upon notice to the Fund's Board of
Trustees.
Past performance does not guarantee future results.
8
PAGE
ADDITIONAL PERFORMANCE
AS OF 9/30/00
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR (5/8/95)
------- ------ ------ --------
<S> <C> <C> <C>
Cumulative Total Return(1) 28.19% 14.89% 17.42%
Average Annual Total Return(2) 20.84% 1.61% 1.90%
Value of $10,000 Investment(3) $12,084 $10,382 $11,067
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 5-YEAR (5/8/95)
------- ------ ------ --------
<S> <C> <C> <C>
Cumulative Total Return(1) 27.33% 11.27% 13.38%
Average Annual Total Return(2) 25.00% 1.96% 2.17%
Value of $10,000 Investment(3) $12,500 $11,019 $11,226
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
ADVISOR CLASS(4) 1-YEAR 5-YEAR (5/8/95)
-------------- ------ ------ --------
<S> <C> <C> <C>
Cumulative Total Return(1) 28.57% 16.84% 19.41%
Average Annual Total Return(2) 28.57% 3.16% 3.34%
Value of $10,000 Investment(3) $12,857 $11,684 $11,941
</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 current, 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 current, applicable, maximum
sales charge(s) for that class.
(4) Effective 1/2/97, the Fund began offering Advisor Class shares, which do not
have sales charges nor Rule 12b-1 plans. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 1/2/97, a
restated figure is used based upon the Fund's Class A performance, excluding the
effect of Class A's maximum initial sales charge and including the effect of the
Class A Rule 12b-1 fees; and (b) for periods after 1/1/97, an actual Advisor
Class figure is used reflecting a deduction of all charges and fees applicable
to that class. Since 1/2/97 (commencement of sales), the cumulative and average
annual total returns of Advisor Class shares were 6.50% and 1.70%, 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.
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton Investments at 1-800/342-5236.
Past performance does not guarantee future results.
9
PAGE
TEMPLETON LATIN AMERICA FUND
Financial Highlights
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, 2000 ----------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996+
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE++
(For a share outstanding throughout the
period)
Net asset value, beginning of period......... $12.36 $8.11 $12.72 $12.34 $10.53 $10.00
--------------------------------------------------------------------------
Income from investment operations:
Net investment income....................... .01 .01 .20 .07 .06 .12
Net realized and unrealized gains
(losses).................................. (1.41) 4.25 (4.57) .53 1.86 .51
--------------------------------------------------------------------------
Total from investment operations............. (1.40) 4.26 (4.37) .60 1.92 .63
--------------------------------------------------------------------------
Less distributions from:
Net investment income....................... -- (.01) (.18) (.07) (.08) (.10)
Net realized gains.......................... -- -- (.06) (.15) (.03) --
--------------------------------------------------------------------------
Total distributions.......................... -- (.01) (.24) (.22) (.11) (.10)
--------------------------------------------------------------------------
Net asset value, end of period............... $10.96 $12.36 $8.11 $12.72 $12.34 $10.53
==========================================================================
Total Return*................................ (11.33)% 52.60% (34.37)% 4.94% 18.34% 6.37%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)............ $15,265 $23,816 $13,228 $28,714 $18,923 $5,150
Ratios to average net assets:
Expenses.................................... 2.35%** 2.33% 2.35% 2.35% 2.35% 2.35%**
Expenses, excluding waiver and payments by
affiliate................................. 2.37%** 2.86% 3.03% 2.57% 3.10% 4.02%**
Net investment income....................... .24%** .14% 2.07% .59% .50% 1.71%**
Portfolio turnover rate...................... 36.47% 81.10% 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.
++Based on average weighted shares outstanding effective year ended March 31,
2000.
10
PAGE
TEMPLETON LATIN AMERICA FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, 2000 ------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996+
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE++
(For a share outstanding throughout the
period)
Net asset value, beginning of period.......... $12.23 $8.06 $12.63 $12.28 $10.49 $10.00
----------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)................. (.02) (.04) .12 -- (.01) .08
Net realized and unrealized gains (losses)... (1.40) 4.21 (4.51) .51 1.85 .48
----------------------------------------------------------------------
Total from investment operations.............. (1.42) 4.17 (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 period................ $10.81 $12.23 $8.06 $12.63 $12.28 $10.49
======================================================================
Total Return*................................. (11.61)% 51.76% (34.81)% 4.23% 17.62% 5.67%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)............. $3,228 $5,004 $3,312 $7,170 $3,524 $1,351
Ratios to average net assets:
Expenses..................................... 2.97%** 2.88% 3.00% 3.00% 3.00% 3.00%**
Expenses, excluding waiver and payments by
affiliate.................................. 3.00%** 3.41% 3.68% 3.22% 3.84% 4.67%**
Net investment income (loss)................. (.33)%** (.44)% 1.45% (.01)% (.15)% 1.14%**
Portfolio turnover rate....................... 36.47% 81.10% 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.
***The Fund paid distributions from net investment income of $0.001 per share.
+For the period May 8, 1995 (commencement of operations) to March 31, 1996.
++Based on average weighted shares outstanding effective year ended March 31,
2000.
11
PAGE
TEMPLETON LATIN AMERICA FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
ADVISOR CLASS
-------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, 2000 ---------------------------------------------
(UNAUDITED) 2000 1999 1998 1997+
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE++
(For a share outstanding throughout the period)
Net asset value, beginning of period............... $12.37 $8.09 $12.75 $12.35 $10.92
-------------------------------------------------------------------
Income from investment operations:
Net investment income............................. .03 .12 .31 .07 .02
Net realized and unrealized gains (losses)........ (1.42) 4.18 (4.69) .59 1.41
-------------------------------------------------------------------
Total from investment operations................... (1.39) 4.30 (4.38) .66 1.43
-------------------------------------------------------------------
Less distributions from:
Net investment income............................. -- (.02) (.22) (.11) --
Net realized gains................................ -- -- (.06) (.15) --
-------------------------------------------------------------------
Total distributions................................ -- (.02) (.28) (.26) --
-------------------------------------------------------------------
Net asset value, end of period..................... $10.98 $12.37 $8.09 $12.75 $12.35
===================================================================
Total Return*...................................... (11.24)% 53.19% (34.37)% 5.43% 13.09%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's).................. $13,642 $19,645 $116 $139 $71
Ratios to average net assets:
Expenses.......................................... 2.00%** 2.00% 2.00% 2.00% 2.00%**
Expenses, excluding waiver and payments by
affiliate....................................... 2.02%** 2.52% 2.68% 2.22% 2.08%**
Net investment income............................. .60%** 1.01% 2.46% .45% .82%**
Portfolio turnover rate............................ 36.47% 81.10% 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.
++Based on average weighted shares outstanding effective year ended March 31,
2000.
See Notes to Financial Statements.
12
PAGE
TEMPLETON LATIN AMERICA FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 73.9%
AEROSPACE & DEFENSE 1.9%
Embraer-Empresa Brasileira de Aeronautica SA, ADR........... Brazil 20,100 $ 623,100
-----------
AIRLINES 1.5%
*Grupo Aeroportuario del Sereste, ADR....................... Mexico 31,200 473,850
-----------
AUTO COMPONENTS .6%
Grupo Industrial Saltillo SA, B............................. Mexico 119,800 199,159
-----------
BANKS 3.0%
Unibanco Uniao de Bancos Brasileiros SA, GDR................ Brazil 28,890 953,370
-----------
BEVERAGES 1.0%
Grupo Continental SA........................................ Mexico 267,800 326,101
-----------
CONSTRUCTION MATERIALS 4.5%
Cemex SA, ADR............................................... Mexico 71,941 1,443,316
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES 27.4%
*Cia de Telecomunicaciones de Chile SA, ADR................. Chile 50,900 884,388
Embratel Participacoes SA................................... Brazil 45,000,000 661,220
*Grupo Iusacell SA de CV, ADR............................... Mexico 49,900 592,563
SBC Communications Inc. .................................... United States 29,400 1,470,000
*Telefonica SA, ADR......................................... Spain 30,640 1,821,165
Telefonos de Mexico SA de CV (Telmex), L, ADR............... Mexico 63,400 3,372,085
-----------
8,801,421
-----------
ELECTRIC UTILITIES 4.3%
Companhia Paranaense de Energia-Copel, ADR.................. Brazil 154,620 1,372,253
-----------
INDUSTRIAL CONGLOMERATES 8.2%
Alfa SA de CV, A............................................ Mexico 470,700 987,852
DESC SA de CV, C, ADR....................................... Mexico 23,400 241,313
*Grupo Carso SA de CV....................................... Mexico 470,700 1,398,045
-----------
2,627,210
-----------
METALS & MINING 4.6%
Grupo Mexico SA de CV, B.................................... Mexico 263,400 1,004,066
Industrias Penoles SA....................................... Mexico 363,000 461,245
-----------
1,465,311
-----------
MULTILINE RETAIL 3.7%
*Wal-Mart de Mexico SA de CV, ADR........................... Mexico 57,500 1,200,313
-----------
OIL & GAS 8.7%
Perez Companc SA, B, ADR.................................... Argentina 49,040 803,030
*Petroleo Brasileiro SA (Petrobras), ADR.................... Brazil 66,000 1,984,125
-----------
2,787,155
-----------
</TABLE>
13
PAGE
TEMPLETON LATIN AMERICA FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
PAPER & FOREST PRODUCTS 3.1%
Aracruz Celulose SA, ADR.................................... Brazil 22,335 $ 369,923
Kimberly-Clark de Mexico SA de CV, A........................ Mexico 241,660 634,601
-----------
1,004,524
-----------
REAL ESTATE 1.2%
Inversiones y Representacion SA............................. Argentina 173,591 399,499
-----------
WIRELESS TELECOMMUNICATION SERVICES .2%
Tele Celular Sul Participacoes SA........................... Brazil 31,868,150 74,273
-----------
TOTAL COMMON STOCKS (COST $25,184,986)...................... 23,750,855
-----------
PREFERRED STOCKS 20.9%
Banco Itau SA, pfd. ........................................ Brazil 21,691,514 1,928,135
Brasil Telecom Participacoes SA, ADR, pfd. ................. Brazil 10,270 598,228
*Celular CRT Participacoes SA, A, pfd. ..................... Brazil 1,639,000 568,542
Cia Vale do Rio Doce, A, ADR, pfd. ......................... Brazil 32,010 798,249
Companhia Brasileira de Distribuicao Pao de Acucar, ADR,
pfd. ..................................................... Brazil 18,020 670,119
Embotelladora Andina SA, B, ADR, pfd. ...................... Chile 31,400 321,850
Sociedad Quimica y Minera de Chile SA, B, ADR, pfd. ........ Chile 18,400 382,950
Tele Celular Sul Participacoes SA, ADR, pfd. ............... Brazil 14,720 441,600
Tele Norte Leste Participacoes SA, ADR, pfd. ............... Brazil 25,302 578,783
Telemig Celular Participacoes SA, ADR, pfd. ................ Brazil 8,380 443,616
-----------
TOTAL PREFERRED STOCKS (COST $6,215,253).................... 6,732,072
-----------
SHORT TERM INVESTMENTS (COST $1,725,000) 5.4%
Franklin Institutional Fiduciary Trust Money Market
Portfolio................................................. United States 1,725,000 1,725,000
-----------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT (COST
$33,125,239).............................................. 32,207,927
-----------
<CAPTION>
PRINCIPAL
AMOUNT**
-----------
<S> <C> <C> <C>
(a)REPURCHASE AGREEMENT (COST $821,000) 2.6%
Lehman Brothers Inc., 6.59%, 10/02/00 (Maturity Value
$821,451)
Collateralized by U.S. Treasury Notes and Bonds........... United States $ 821,000 821,000
-----------
TOTAL INVESTMENTS (COST $33,946,239) 102.8%................. 33,028,927
OTHER ASSETS, LESS LIABILITIES (2.8%)....................... (894,103)
-----------
TOTAL NET ASSETS 100.0%..................................... $32,134,824
===========
</TABLE>
*Non-income producing.
**Securities denominated in U.S. dollars.
(a)At September 30, 2000, all repurchase agreements held by the Fund had been
entered into on that date.
See Notes to Financial Statements.
14
PAGE
TEMPLETON LATIN AMERICA FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $33,125,239)..... $32,207,927
Repurchase agreement, at value and cost.................... 821,000
Cash....................................................... 1,314
Receivables:
Fund shares sold.......................................... 12,177
Dividends and interest.................................... 148,991
-----------
Total assets.......................................... 33,191,409
-----------
Liabilities:
Payables:
Investment securities purchased........................... 473,460
Fund shares redeemed...................................... 446,316
To affiliates............................................. 90,076
Accrued expenses........................................... 46,733
-----------
Total liabilities..................................... 1,056,585
-----------
Net assets, at value........................................ $32,134,824
===========
Net assets consist of:
Undistributed net investment income........................ $ 60,835
Net unrealized depreciation................................ (917,312)
Accumulated net realized loss.............................. (4,735,703)
Beneficial shares.......................................... 37,727,004
-----------
Net assets, at value........................................ $32,134,824
===========
CLASS A:
Net asset value per share ($15,264,108 / 1,392,575 shares
outstanding)............................................. $10.96
===========
Maximum offering price per share ($10.96 / 94.25%)......... $11.63
===========
CLASS C:
Net asset value per share ($3,228,397 / 298,765 shares
outstanding)*............................................. $10.81
===========
Maximum offering price per share ($10.81 / 99.00%)......... $10.92
===========
ADVISOR CLASS:
Net asset value and maximum offering price per share
($13,642,319 / 1,242,597 shares outstanding).............. $10.98
===========
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
15
PAGE
TEMPLETON LATIN AMERICA FUND
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $57,020)
Dividends.................................................. $ 436,831
Interest................................................... 48,870
----------
Total investment income............................... $ 485,701
-----------
Expenses:
Management fees (Note 3)................................... 233,863
Administrative fees (Note 3)............................... 28,232
Distribution fees (Note 3)
Class A................................................... 32,194
Class C................................................... 19,239
Transfer agent fees (Note 3)............................... 48,000
Custodian fees............................................. 8,447
Reports to shareholders.................................... 3,800
Registration and filing fees............................... 31,415
Professional fees.......................................... 12,962
Trustees' fees and expenses................................ 6,591
Amortization of organization costs......................... 1,598
Other...................................................... 2,922
----------
Total expenses........................................ 429,263
Expenses waived/paid by affiliate (Note 3)............ (4,397)
-----------
Net expenses...................................... 424,866
-----------
Net investment income........................... 60,835
-----------
Realized and unrealized gains (losses):
Net realized gain from:
Investments............................................... 1,653,486
Foreign currency transactions............................. 20,330
----------
Net realized gain..................................... 1,673,816
Net unrealized depreciation on investments............ (6,998,150)
-----------
Net realized and unrealized loss............................ (5,324,334)
-----------
Net decrease in net assets resulting from operations........ $(5,263,499)
===========
</TABLE>
See Notes to Financial Statements.
16
PAGE
TEMPLETON LATIN AMERICA FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 60,835 $ 59,698
Net realized gain from investments and foreign currency
transactions............................................. 1,673,816 1,489,368
Net unrealized appreciation (depreciation) on investments
and translation of assets and liabilities denominated in
foreign currencies....................................... (6,998,150) 9,485,986
---------------------------------------
Net increase (decrease) in net assets resulting from
operations............................................ (5,263,499) 11,035,052
Distributions to shareholders from:
Net investment income:
Class A.................................................. -- (22,007)
Class C.................................................. -- (623)
Advisor Class............................................ -- (371)
---------------------------------------
Total distributions to shareholders........................ -- (23,001)
Beneficial share transactions (Note 2):
Class A.................................................. (6,013,335) 3,693,548
Class C.................................................. (1,205,272) 35,444
Advisor Class............................................ (3,848,545) 17,068,134
---------------------------------------
Total beneficial share transactions........................ (11,067,152) 20,797,126
Net increase (decrease) in net assets................... (16,330,651) 31,809,177
Net assets:
Beginning of period........................................ 48,465,475 16,656,298
---------------------------------------
End of period.............................................. $ 32,134,824 $48,465,475
=======================================
Undistributed net investment income included in net assets:
End of period.............................................. $ 60,835 $ --
=======================================
</TABLE>
See Notes to Financial Statements.
17
PAGE
TEMPLETON LATIN AMERICA FUND
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Latin America Fund (the Fund) is a separate, non-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. 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.
18
PAGE
TEMPLETON LATIN AMERICA FUND
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONT.)
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
Common expenses incurred by the Trust are allocated among the funds 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.
d. 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. 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 September 30, 2000, 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>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
-------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold................................................ 1,017,516 $ 11,456,414 2,605,690 $ 26,848,046
Shares issued on reinvestment of distributions............. -- -- 2,125 20,335
Shares redeemed............................................ (1,551,214) (17,469,749) (2,312,880) (23,174,833)
-------------------------------------------------------------
Net increase (decrease).................................... (533,698) $ (6,013,335) 294,935 $ 3,693,548
=============================================================
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
-------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES:
Shares sold................................................ 20,518 $ 233,623 231,611 $ 2,458,493
Shares issued on reinvestment of distributions............. -- -- 62 590
Shares redeemed............................................ (130,921) (1,438,895) (233,399) (2,423,639)
-------------------------------------------------------------
Net increase (decrease).................................... (110,403) $ (1,205,272) (1,726) $ 35,444
=============================================================
</TABLE>
19
PAGE
TEMPLETON LATIN AMERICA FUND
Notes to Financial Statements (unaudited) (continued)
2. BENEFICIAL SHARES (CONT.)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
-------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------
<S> <C> <C> <C> <C>
ADVISOR CLASS SHARES:
Shares sold................................................ 431,632 $ 4,680,470 1,848,576 $ 19,864,438
Shares issued on reinvestment of distributions............. -- -- 38 361
Shares redeemed............................................ (777,555) (8,529,015) (274,406) (2,796,665)
-------------------------------------------------------------
Net increase (decrease).................................... (345,923) $ (3,848,545) 1,574,208 $ 17,068,134
=============================================================
</TABLE>
Certain other Franklin Templeton Funds are the record owners of 1,231,617 of the
Fund's Advisor Class Shares as of September 30, 2000.
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 may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (the Sweep Money Fund) which is managed by Franklin Advisors Inc., an
affiliate of Franklin Resources. The Fund earned dividend income from the
investment in the Sweep Money Fund of $22,936.
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:
<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>
Management fees were reduced on assets invested in the Sweep Money Fund.
TICI, FT Services, and Investor 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, 2001, as noted in the Statement of
Operations.
20
PAGE
TEMPLETON LATIN AMERICA FUND
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
The Fund reimburses Distributors for costs incurred in marketing the Fund's
shares up to 0.35% and 1.00% per year of the average daily net assets of Class A
and Class C shares, respectively. Under the Class A distribution plan, costs
exceeding the maximum may be reimbursed in subsequent periods. At September 30,
2000, unreimbursed costs were $211,888. Distributors received net commissions on
sales of Fund shares and received contingent deferred sales charges for the
period of $4,657 and $3,012, respectively.
4. 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.
At September 30, 2000, the net unrealized depreciation based on the cost of
investments for income tax purposes of $34,365,600 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 3,155,004
Unrealized depreciation..................................... (4,491,677)
-----------
Net unrealized depreciation................................. $(1,336,673)
===========
</TABLE>
At March 31, 2000, the Fund had tax basis capital losses which may be carried
over to offset future capital gains. Such losses expire as follows:
Capital loss carryovers expiring in:
<TABLE>
<S> <C>
2007........................................................ $3,439,481
2008........................................................ 2,289,749
----------
$5,729,230
==========
</TABLE>
At March 31, 2000, the Fund had deferred currency losses occurring subsequent to
October 31, 1999 of $70,245. For tax purposes, such losses will be reflected in
the year ending March 31, 2001.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the six
months ended September 30, 2000 aggregated $12,739,532 and $21,229,245,
respectively.
PAGE
[FRANKLIN TEMPLETON LOGO]
Templeton Latin America Fund
777 Mariners Island Blvd., P.O. Box 7777
San Mateo, CA 94403-7777
SEMIANNUAL REPORT
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
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. 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 S00 11/00 [RECYCLED GRAPHIC] Printed on recycled paper
