N-30D 1 0001.txt LATIN AMERICA FUND ANNUAL REPORT DTD 3/31/00 ANNUAL REPORT March 31, 2000 TEMPLETON LATIN AMERICA FUND [Franklin(R)Templeton(R) LOGO] PAGE [50 YEAR LOGO] 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 OF HEIDI S. ANDERSEN APPEARS HERE] HEIDI S. ANDERSEN, CFA PORTFOLIO MANAGER TEMPLETON LATIN AMERICA FUND ------------------------------------------------------------------------------- WE'RE ON THE WEB -- Now you can access online information about your fund, including this shareholder report. Find our Web site at WWW.FRANKLINTEMPLETON.COM, your online resource for fund literature, prices and performance, investor information and around-the-clock account services. ------------------------------------------------------------------------------- PAGE 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: We are pleased to bring you this annual report of Templeton Latin America Fund -- which covers the fiscal year ended March 31, 2000 -- a period of generally rising commodity prices and increased capital flows into Latin America. During this time, Brazil moved forward with economic stabilization plans, Argentina and Chile began to recover from recessions, Mexico's debt rating received investment grade status from Moody's Investors Service(1) and the region's equity markets generally performed well. Within this environment, Templeton Latin America Fund - Class A posted a one-year cumulative total return of 52.60%, as shown in the Performance Summary on page 8. Its benchmark, the International Finance (1.) Source: Moody's Investors Service. All portfolio holdings mentioned in the report are listed by their complete legal titles in the Fund's Statement of Investments (SOI), which is a complete listing of the Fund's portfolio holdings, including dollar value and number of shares or principal amount. The SOI begins on page 15. CONTENTS Shareholder Letter ..................... 1 Performance Summary .................... 8 Financial Highlights & Statement of Investments ............... 12 Financial Statements ................... 17 Notes to Financial Statements ............................. 20 Independent Auditors' Report ........... 24 [PYRAMID GRAPHIC] FUND CATEGORY Global Growth Growth & Income Income Tax-Free Income PAGE GEOGRAPHIC DISTRIBUTION Based on Total Net Assets 3/31/00 [PIE CHART] Brazil 44.3% Mexico 36.0% Argentina 3.5% Venezuela 2.8% United States 2.5% Chile 2.2% Short-Term Investments & Other Net Assets 8.7% Corporation Investable (IFCI) Latin America Index, delivered a total return of 51.10% for the same period.(2) The Fund's strong performance was largely due to our substantial holdings of telecommunications stocks. It also benefited from its allocation to the merchandising sector. However, utilities, chemicals and metals stocks, to which the Fund had a limited exposure, negatively impacted its performance. BRAZIL During the fiscal year, Brazil's gross domestic product grew at a rate of 0.82%, interest rates declined, inflation remained benign, the government maintained tight fiscal and monetary policies, and the Bovespa Index rose 68.58% in U.S. dollar terms.(3) During the period, we initiated and added to our holdings of companies we believed had sound long-term prospects, strong balance sheets and attractive valuations. For example, we initiated a position in Companhia Brasileira de Distribuicao Pao de Acucar, one of the country's largest retailers, because we believed that the company would benefit not only from GDP growth but also from its efforts in "e-tailing." (2.) 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. (3.) Source: Brazil Bovespa Index. Market return is measured in U.S. dollars and does not include reinvested dividends. 2 PAGE We also purchased shares in Telemig Celular Participacoes, a leading cellular operator which we believe has a strong management team. They are expecting rapid subscriber growth and are in the midst of completing a restructuring program. We initiated a position in Companhia Paranaense de Energia (Copel), an electric utility located in the high GDP per capita state of Parana which invests in fiber optic networks and telecommunications. And we added to our position in Embratel Participacoes, a long distance operator and the leading data and Internet carrier in Brazil, carrying 85% of the nation's Internet traffic. The Fund's Brazilian exposure was 40.3% of total net assets at the beginning of the reporting period and 44.3% at its close. MEXICO Mexico's economy improved significantly during the period under review. Real wages grew and, on March 7, 2000, Moody's Investors Service upgraded the country's debt rating to investment grade. Its equity market was one of Latin America's strongest and the Bolsa Index posted a U.S. dollar return of 57.37% for the reporting period.(4) Because we expect continued real wage growth to benefit retailers and other consumer-oriented sectors, we added to our holdings in Wal-Mart de Mexico (formerly (4.) Source: Mexico Bolsa Index. Market return is measured in U.S. dollars and does not include reinvested dividends. INDUSTRY BREAKDOWN* Based on Total Net Assets 3/31/00 [PIE CHART] Services 42.3% Materials 16.5% Finance 10.7% Energy 10.3% Multi-Industry 7.6% Consumer Goods 3.9% Short-Term Investments & Other Net Assets 8.7% * The industry allocation uses Morgan Stanley Capital International's industry definitions for convenience of comparison. 3 PAGE TOP 10 HOLDINGS 3/31/00 COMPANY % OF TOTAL INDUSTRY, COUNTRY NET ASSETS ----------------------------------------- Telefonos de Mexico SA (Telmex), ADR Telecommunications, Mexico 7.4% Banco Itau SA, pfd. Banking, Brazil 7.2% Embratel Participacoes SA Telecommunications, Brazil 7.2% Wal-Mart de Mexico SA de CV, ADR Merchandising, Mexico 7.0% Petroleo Brasileiro SA, pfd. Energy Sources, Brazil 4.1% Tele Sudeste Celular Participacoes SA, ADR, pfd. Telecommunications, Brazil 4.0% Grupo Carso SA de CV Multi-Industry, Mexico 3.6% Telecomunicacoes de Sao Paulo SA, ADR, pfd. Telecommunications, Brazil 3.6% Cemex SA, ADR Building Materials & Components, Mexico 3.3% Alfa SA de CV, A Multi-Industry, Mexico 3.1% known as Cifra), the country's largest retailer. We also initiated a position in Grupo Continental, the third largest soft-drink bottler in Mexico and one of the 10 largest Coca-Cola(R) bottlers in the world. Our Mexican exposure remained relatively constant, comprising 36.8% of total net assets on March 31, 1999 and 36.0% on March 31, 2000. ARGENTINA Argentina's economic picture was not as bright as Mexico's or Brazil's. Disappointing exports, inadequate labor reform, and a fiscal deficit continued to weigh heavily on the country's already stagnant economy. And although the MerVal Index posted a return of 38.07%,(5) this gain was caused primarily by the acquisition of YPF Sociedad Anonima by Repsol, a Spanish oil company. Consequently, our Argentinean exposure declined from 11.6% of total net assets on March 31, 1999, to 3.5% of total net assets at the end of the fiscal year. CHILE Chile's equity market, which had been in a recession, rebounded slightly due mainly to rising global copper prices (5.) Source: Argentina MerVal Index. Market return is measured in U.S. dollars and does not include reinvested dividends. 4 PAGE and efforts by the nation's central bank to stimulate the economy. Inflation remained benign, interest rates declined, and the IPSA Index delivered a one-year U.S. dollar total return of 31.67%.(6) However, we reduced holdings that were not meeting our expectations to pursue what we considered to be better opportunities elsewhere. The Fund's weighting in Chile decreased to 2.2% of total net assets on March 31, 2000, from 6.2% a year earlier. VENEZUELA Venezuela's IBC Index rose 15.88% in U.S. dollar terms from April 1, 1999 to March 31, 2000.(7) We purchased shares in Compania Anonima Nacional Telefonos de Venezuela (CANTV), which in our opinion were extremely undervalued at the time. The country's largest telecommunications company, CANTV represented a significant portion of the IBC Index on February 3, 2000. On March 31, 2000, Venezuela represented 2.8% of the Fund's total net assets. (6). Source: Chile IPSA Index. Market return is measured in U.S. dollars and does not include reinvested dividends. (7). Source: Venezuela IBC Index. Market return is measured in U.S. dollars and does not include reinvested dividends. 5 PAGE LOOKING FORWARD We remain confident about future prospects for Latin American equities and Templeton Latin America Fund. We expect most major Latin American countries to continue their pursuit of stable economic policies, and are optimistic about the region's long-term economic fundamentals. Believing that regional allocation should be a result of individual stock selection, we shall maintain our bottom-up approach in searching for equities we consider to be undervalued, and not attempt to match the weightings of the Fund's benchmark index. It is anticipated that the announcement by Telefonica de Espana, the Spanish telecommunications company, of a tender offer for 100% of its Latin American subsidiaries, may reduce the size of several local stock markets and lead to an even greater investment focus by the Fund and its benchmark in Brazil and Mexico. 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 means accepting a certain amount of volatility and, in some cases, the consequences of severe market corrections. For 6 PAGE example, the Mexico stock market has increased 4,412.74% in the last 15 years, but has suffered eight declines of more than 15% during that time.(8) 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. ANDERSEN Heidi S. Andersen, CFA Portfolio Manager Templeton Latin America Fund ------------------------------------------------------------------------------- This discussion reflects our views, opinions and portfolio holdings as of March 31, 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. ------------------------------------------------------------------------------- (8). Source: Mexico Bolsa Index. Based on quarterly percentage price change over 15 years ended March 31, 2000. Market return is measured in U.S. dollars and does not include reinvested dividends. 7 PAGE ------------------------------------------------------------------------------- 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 July 31, 2000, the fee waivers and expense assumptions may be discontinued at any time upon notice to the Fund's Board of Trustees. ------------------------------------------------------------------------------- ONE-YEAR PERFORMANCE SUMMARY AS OF 3/31/00 One-year total return 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 the operating expenses for each share class. Past distributions are not indicative of future trends. All total returns include reinvested distributions at net asset value. CLASS A One-Year Total Return 52.60% Net Asset Value (NAV) $12.36 (3/31/00) $8.11 (3/31/99) Change in NAV +$4.25 Distributions (4/1/99 - 3/31/00) Dividend Income $0.0121 Class C One-Year Total Return 51.76% Net Asset Value (NAV) $12.23 (3/31/00) $8.06 (3/31/99) Change in NAV +$4.17 Distributions (4/1/99 - 3/31/00) Dividend Income $0.0014 Advisor Class One-Year Total Return 53.19% Net Asset Value (NAV) $12.37 (3/31/00) $8.09 (3/31/99) Change in NAV +$4.28 Distributions (4/1/99 - 3/31/00) Dividend Income $0.0175 8 Past performance does not guarantee future results. PAGE ADDITIONAL PERFORMANCE AS OF 3/31/00
INCEPTION CLASS A 1-YEAR 3-YEAR (5/8/95) Cumulative Total Return(1) 52.60% 5.09% 32.30% Average Annual Total Return(2) 43.90% -0.31% 4.61% Value of $10,000 Investment(3) $14,390 $ 9,907 $12,469
INCEPTION CLASS C 1-YEAR 3-YEAR (5/8/95) Cumulative Total Return(1) 51.76% 3.03% 28.16% Average Annual Total Return(2) 49.28% 0.67% 4.98% Value of $10,000 Investment(3) $14,928 $10,204 $12,689
INCEPTION ADVISOR CLASS(4) 1-YEAR 3-YEAR (5/8/95) Cumulative Total Return(1) 53.19% 5.91% 34.40% Average Annual Total Return(2) 53.19% 1.93% 6.22% Value of $10,000 Investment(3) $15,319 $10,591 $13,440
For updated performance figures, see "Prices and Performance" on the Internet at www.franklintempleton.com, or call Franklin Templeton at 1-800/342-5236. (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.) 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 only to that class. Since January 2, 1997 (commencement of sales), the cumulative and average annual total returns of Advisor Class shares were 19.88% and 5.74% 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 does not guarantee future results. 9 PAGE TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT TOTAL RETURN REPRESENTS THE CHANGE IN VALUE OF AN INVESTMENT OVER THE PERIODS SHOWN. IT INCLUDES THE APPLICABLE, MAXIMUM SALES CHARGE(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. AVERAGE ANNUAL TOTAL RETURN 3/31/00
CLASS A ---------------------------------- 1-Year 43.90% 3-Year -0.31% Since Inception(5/8/95) 4.61%
CLASS A (5/8/95 - 3/31/00) This graph compares the performance of Templeton Latin America Fund - Class A, as tracked by the growth in value of a $10,000 investment, to that of the IFCI Latin America Index* from 5/8/95-3/31/00.
TEMPLETON IFCI LATIN LATIN AMERICA - AMERICA CLASS A --------------------- 5/ 8/95 $ 9,425 $10,000 5/31/95 $ 9,453 $ 9,579 6/30/95 $ 9,406 $ 9,779 7/31/95 $ 9,482 $10,303 8/31/95 $ 9,604 $10,448 9/29/95 $ 9,632 $10,319 10/31/95 $ 9,340 $ 9,332 11/30/95 $ 9,284 $ 9,655 12/29/95 $ 9,464 $ 9,842 1/31/96 $10,226 $10,802 2/29/96 $ 9,940 $10,205 3/29/96 $10,035 $10,362 4/30/96 $10,369 $10,907 5/31/96 $10,621 $11,192 6/28/96 $10,678 $11,391 7/31/96 $10,210 $10,889 8/30/96 $10,544 $11,185 9/30/96 $10,583 $11,401 10/31/96 $10,277 $11,188 11/29/96 $10,449 $11,239 12/31/96 $10,567 $11,535 1/31/97 $11,586 $12,598 2/28/97 $12,230 $13,422 3/31/97 $11,865 $13,280 4/30/97 $12,221 $13,834 5/30/97 $12,606 $14,953 6/30/97 $13,425 $16,153 7/31/97 $14,205 $17,039 8/29/97 $13,396 $15,568 9/30/97 $14,302 $16,879 10/31/97 $11,594 $13,736 11/28/97 $11,661 $14,145 12/31/97 $12,520 $14,912 1/31/98 $11,218 $13,186 2/28/98 $11,571 $13,838 3/31/98 $12,461 $14,748 4/30/98 $12,510 $14,618 5/31/98 $10,804 $12,795 6/30/98 $ 9,986 $12,083 7/31/98 $10,429 $12,562 8/31/98 $ 7,019 $ 8,322 9/30/98 $ 7,265 $ 8,885 10/31/98 $ 7,521 $ 9,564 11/30/98 $ 7,955 $10,446 12/31/98 $ 7,174 $ 9,613 1/31/99 $ 6,509 $ 8,509 2/28/99 $ 6,771 $ 8,998 3/31/99 $ 8,171 $10,903 4/30/99 $ 9,602 $12,497 5/31/99 $ 9,120 $12,076 6/30/99 $ 9,675 $12,583 7/31/99 $ 8,676 $11,711 8/31/99 $ 8,484 $11,370 9/30/99 $ 8,626 $11,588 10/31/99 $ 8,616 $11,801 11/30/99 $ 9,544 $13,312 12/31/99 $11,521 $15,556 1/31/00 $10,916 $14,994 2/29/00 $12,449 $16,292 3/31/00 $12,469 $16,475
*Sources: Standard & Poor's(R) Micropal. AVERAGE ANNUAL TOTAL RETURN 3/31/00
CLASS C --------------------------------- 1-Year 49.28% 3-Year 0.67% Since Inception(5/8/95) 4.98%
CLASS C (5/8/95 - 3/31/00) This graph compares the performance of Templeton Latin America Fund - Class C, as tracked by the growth in value of a $10,000 investment, to that of the IFCI Latin America Index* from 5/8/95-3/31/00.
TEMPLETON IFCI AMERICA - LATIN CLASS C AMERICA ----------------------- 5/ 8/95 $ 9,901 $10,000 5/31/95 $ 9,911 $ 9,579 6/30/95 $ 9,861 $ 9,779 7/31/95 $ 9,941 $10,303 8/31/95 $10,059 $10,448 9/29/95 $10,089 $10,319 10/31/95 $ 9,772 $ 9,332 11/30/95 $ 9,713 $ 9,655 12/29/95 $ 9,903 $ 9,842 1/31/96 $10,691 $10,802 2/29/96 $10,392 $10,205 3/29/96 $10,482 $10,362 4/30/96 $10,811 $10,907 5/31/96 $11,078 $11,192 6/28/96 $11,128 $11,391 7/31/96 $10,628 $10,889 8/30/96 $10,968 $11,185 9/30/96 $11,008 $11,401 10/31/96 $10,688 $11,188 11/29/96 $10,868 $11,239 12/31/96 $10,972 $11,535 1/31/97 $12,035 $12,598 2/28/97 $12,696 $13,422 3/31/97 $12,315 $13,280 4/30/97 $12,666 $13,834 5/30/97 $13,061 $14,953 6/30/97 $13,904 $16,153 7/31/97 $14,706 $17,039 8/29/97 $13,864 $15,568 9/30/97 $14,787 $16,879 10/31/97 $11,978 $13,736 11/28/97 $12,038 $14,145 12/31/97 $12,917 $14,912 1/31/98 $11,567 $13,186 2/28/98 $11,922 $13,838 3/31/98 $12,836 $14,748 4/30/98 $12,877 $14,618 5/31/98 $11,117 $12,795 6/30/98 $10,280 $12,083 7/31/98 $10,719 $12,562 8/31/98 $ 7,207 $ 8,322 9/30/98 $ 7,462 $ 8,885 10/31/98 $ 7,717 $ 9,564 11/30/98 $ 8,167 $10,446 12/31/98 $ 7,355 $ 9,613 1/31/99 $ 6,670 $ 8,509 2/28/99 $ 6,930 $ 8,998 3/31/99 $ 8,361 $10,903 4/30/99 $ 9,824 $12,497 5/31/99 $ 9,327 $12,076 6/30/99 $ 9,898 $12,583 7/31/99 $ 8,860 $11,711 8/31/99 $ 8,663 $11,370 9/30/99 $ 8,808 $11,588 10/31/99 $ 8,798 $11,801 11/30/99 $ 9,732 $13,312 12/31/99 $11,745 $15,556 1/31/00 $11,112 $14,994 2/29/00 $12,678 $16,292 3/31/00 $12,689 $16,475
*Sources: Standard & Poor's(R) Micropal. 10 Past performance does not guarantee future results. PAGE ADVISOR CLASS** (5/8/95 - 3/31/00) This graph compares the performance of Templeton Latin America Fund - Advisor Class, as tracked by the growth in value of a $10,000 investment, to that of the IFCI Latin America Index* from 5/8/95-3/31/00.
TEMPLETON IFCI LATIN LATIN AMERICA - AMERICA ADVISOR CLASS ---------------------- 5/ 8/95 $10,000 $10,000 5/31/95 $10,030 $ 9,579 6/30/95 $ 9,980 $ 9,779 7/31/95 $10,060 $10,303 8/31/95 $10,190 $10,448 9/29/95 $10,220 $10,319 10/31/95 $ 9,910 $ 9,332 11/30/95 $ 9,850 $ 9,655 12/29/95 $10,041 $ 9,842 1/31/96 $10,849 $10,802 2/29/96 $10,546 $10,205 3/29/96 $10,647 $10,362 4/30/96 $11,001 $10,907 5/31/96 $11,269 $11,192 6/28/96 $11,329 $11,391 7/31/96 $10,833 $10,889 8/30/96 $11,188 $11,185 9/30/96 $11,228 $11,401 10/31/96 $10,904 $11,188 11/29/96 $11,086 $11,239 12/31/96 $11,212 $11,535 1/31/97 $12,372 $12,598 2/28/97 $13,070 $13,422 3/31/97 $12,690 $13,280 4/30/97 $13,079 $13,834 5/30/97 $13,498 $14,953 6/30/97 $14,373 $16,153 7/31/97 $15,216 $17,039 8/29/97 $14,352 $15,568 9/30/97 $15,329 $16,879 10/31/97 $12,437 $13,736 11/28/97 $12,509 $14,145 12/31/97 $13,430 $14,912 1/31/98 $12,036 $13,186 2/28/98 $12,414 $13,838 3/31/98 $13,378 $14,748 4/30/98 $13,430 $14,618 5/31/98 $11,594 $12,795 6/30/98 $10,739 $12,083 7/31/98 $11,214 $12,562 8/31/98 $ 7,546 $ 8,322 9/30/98 $ 7,800 $ 8,885 10/31/98 $ 8,064 $ 9,564 11/30/98 $ 8,550 $10,446 12/31/98 $ 7,712 $ 9,613 1/31/99 $ 6,996 $ 8,509 2/28/99 $ 7,278 $ 8,998 3/31/99 $ 8,775 $10,903 4/30/99 $10,304 $12,497 5/31/99 $ 9,802 $12,076 6/30/99 $10,399 $12,583 7/31/99 $ 9,324 $11,711 8/31/99 $ 9,128 $11,370 9/30/99 $ 9,281 $11,588 10/31/99 $ 9,281 $11,801 11/30/99 $10,270 $13,312 12/31/99 $12,411 $15,556 1/31/00 $11,749 $14,994 2/29/00 $13,411 $16,292 3/31/00 $13,440 $16,475
AVERAGE ANNUAL TOTAL RETURN 3/31/00 ADVISOR CLASS** ---------------------------------- 1-Year 53.19% 3-Year 1.93% Since Inception (5/8/95) 6.22%
*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. **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. Past performance does not guarantee future results. 11 PAGE TEMPLETON LATIN AMERICA FUND Financial Highlights
CLASS A ---------------------------------------------------------- YEAR ENDED MARCH 31, ---------------------------------------------------------- 2000++ 1999 1998 1997 1996+ ---------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the year) Net asset value, beginning of year......................... $8.11 $12.72 $12.34 $10.53 $10.00 ---------------------------------------------------------- Income from investment operations: Net investment income..................................... .01 .20 .07 .06 .12 Net realized and unrealized gains (losses)................ 4.25 (4.57) .53 1.86 .51 ---------------------------------------------------------- Total from investment operations........................... 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 year............................... $12.36 $8.11 $12.72 $12.34 $10.53 ========================================================== Total Return*.............................................. 52.60% (34.37)% 4.94% 18.34% 6.37% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's)............................ $23,816 $13,228 $28,714 $18,923 $5,150 Ratios to average net assets: Expenses.................................................. 2.33% 2.35% 2.35% 2.35% 2.35%** Expenses, excluding waiver and payments by affiliate...... 2.86% 3.03% 2.57% 3.10% 4.02%** Net investment income..................................... .14% 2.07% .59% .50% 1.71%** Portfolio turnover rate.................................... 81.10% 48.34% 45.82% 3.72% --
*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. 12 PAGE TEMPLETON LATIN AMERICA FUND Financial Highlights (continued)
CLASS C -------------------------------------------------------- YEAR ENDED MARCH 31, -------------------------------------------------------- 2000++ 1999 1998 1997 1996+ ------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the year) Net asset value, beginning of year......................... $8.06 $12.63 $12.28 $10.49 $10.00 -------------------------------------------------------- Income from investment operations: Net investment income (loss).............................. (.04) .12 -- (.01) .08 Net realized and unrealized gains (losses)................ 4.21 (4.51) .51 1.85 .48 -------------------------------------------------------- Total from investment operations........................... 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 year............................... $12.23 $8.06 $12.63 $12.28 $10.49 ======================================================== Total Return*.............................................. 51.76% (34.81)% 4.23% 17.62% 5.67% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's)............................ $5,004 $3,312 $7,170 $3,524 $1,351 Ratios to average net assets: Expenses.................................................. 2.88% 3.00% 3.00% 3.00% 3.00%** Expenses, excluding waiver and payments by affiliate...... 3.41% 3.68% 3.22% 3.84% 4.67%** Net investment income (loss).............................. (.44)% 1.45% (.01)% (.15)% 1.14%** Portfolio turnover rate.................................... 81.10% 48.34% 45.82% 3.72% --
*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. 13 PAGE TEMPLETON LATIN AMERICA FUND Financial Highlights (continued)
ADVISOR CLASS ---------------------------------------------- YEAR ENDED MARCH 31, ---------------------------------------------- 2000++ 1999 1998 1997+ ---------------------------------------------- PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the year) Net asset value, beginning of year.......................... $8.09 $12.75 $12.35 $10.92 ---------------------------------------------- Income from investment operations: Net investment income...................................... .12 .31 .07 .02 Net realized and unrealized gains (losses)................. 4.18 (4.69) .59 1.41 ---------------------------------------------- Total from investment operations............................ 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 year................................ $12.37 $8.09 $12.75 $12.35 ============================================== Total Return*............................................... 53.19% (34.37)% 5.43% 13.09% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's)............................. $19,645 $116 $139 $71 Ratios to average net assets: Expenses................................................... 2.00% 2.00% 2.00% 2.00%** Expenses, excluding waiver and payments by affiliate....... 2.52% 2.68% 2.22% 2.08%** Net investment income...................................... 1.01% 2.46% .45% .82%** Portfolio turnover rate..................................... 81.10% 48.34% 45.82% 3.72%
*Total return is not annualized. **Annualized. +For the period January 2, 1997 (effective date) to March 31, 1997. ++Based on average weighted shares outstanding. See Notes to Financial Statements. 14 PAGE TEMPLETON LATIN AMERICA FUND STATEMENT OF INVESTMENTS, MARCH 31, 2000
COUNTRY SHARES VALUE ------------------------------------------------------------------------------------------------------------ COMMON STOCKS 58.0% BANKING 2.2% Unibanco Uniao de Bancos Brasileiros SA, GDR................ Brazil 33,300 $ 1,057,275 ----------- BEVERAGES & TOBACCO .9% Grupo Continental SA........................................ Mexico 367,900 455,861 ----------- BUILDING MATERIALS & COMPONENTS 3.3% *Cemex SA, ADR.............................................. Mexico 70,341 1,591,465 ----------- CHEMICALS .1% Sociedad Quimica y Minera de Chile SA, A, ADR............... Chile 926 28,243 ----------- ENERGY SOURCES 2.2% *PC Holdings SA, ADR........................................ Argentina 56,140 961,398 Perez Companc SA, B......................................... Argentina 22,400 89,864 ----------- 1,051,262 ----------- FOOD & HOUSEHOLD PRODUCTS 2.0% Panamerican Beverages Inc., A............................... Mexico 56,220 990,878 ----------- FOREST PRODUCTS & PAPER 5.6% *Aracruz Celulose SA, ADR................................... Brazil 51,200 1,084,800 *Empaques Ponderosa SA de CV, B............................. Mexico 2,259,300 1,251,245 Kimberly-Clark de Mexico SA de CV, A........................ Mexico 110,060 378,883 ----------- 2,714,928 ----------- MERCHANDISING 7.0% *Wal-Mart de Mexico SA de CV, ADR........................... Mexico 142,800 3,384,980 ----------- METALS & MINING 4.3% Grupo Industrial Saltillo SA, B............................. Mexico 169,400 443,532 Grupo Mexico SA de CV, B.................................... Mexico 155,000 724,814 Industrias Penoles SA....................................... Mexico 379,600 918,222 ----------- 2,086,568 ----------- MULTI-INDUSTRY 7.6% Alfa SA de CV, A............................................ Mexico 395,200 1,511,647 *DESC SA de CV, C, ADR...................................... Mexico 29,300 439,500 *Grupo Carso SA de CV....................................... Mexico 461,500 1,740,384 ----------- 3,691,531 ----------- REAL ESTATE 1.4% Inversiones y Representacion SA............................. Argentina 212,291 660,522 -----------
15 PAGE TEMPLETON LATIN AMERICA FUND STATEMENT OF INVESTMENTS, MARCH 31, 2000 (CONT.)
COUNTRY SHARES VALUE ------------------------------------------------------------------------------------------------------------ COMMON STOCKS (CONT.) TELECOMMUNICATIONS 18.4% Compania Anonima Nacional Telefonos de Venezuela, ADR....... Venezuela 46,100 $ 1,336,900 Embratel Participacoes SA................................... Brazil 150,000,000 2,638,968 SBC Communications Inc. .................................... United States 29,000 1,218,000 Tele Celular Sul Participacoes SA........................... Brazil 35,800,000 120,017 Telefonos de Mexico SA (Telmex), ADR........................ Mexico 53,800 3,604,600 ----------- 8,918,485 ----------- UTILITIES ELECTRICAL & GAS 3.0% Companhia Paranaense De Energia-Copel, ADR.................. Brazil 171,100 1,454,350 ----------- TOTAL COMMON STOCKS (COST $26,485,468)...................... 28,086,348 ----------- PREFERRED STOCKS 33.3% Banco Itau SA, pfd.......................................... Brazil 39,222,534 3,483,950 Cia Energetica de Minas Gerais Cemig, ADR, pfd.............. Brazil 29,400 511,119 Cia Vale do Rio Doce, A, ADR, pfd........................... Brazil 36,800 979,800 *Companhia Brasileira de Distribuicao Pao de Acucar, ADR, pfd....................................................... Brazil 32,500 1,161,875 Embotelladora Andina SA, B, ADR, pfd........................ Chile 39,300 464,231 Embratel Participacoes SA, ADR, pfd......................... Brazil 32,900 843,063 Petroleo Brasileiro SA, pfd................................. Brazil 7,274,000 1,967,523 Sociedad Quimica y Minera de Chile SA, B, ADR, pfd.......... Chile 21,100 574,975 Tele Celular Sul Participacoes SA, ADR, pfd................. Brazil 26,600 1,330,000 Tele Centro Sul Participacoes SA, ADR, pfd.................. Brazil 7,920 641,520 Tele Sudeste Celular Participacoes SA, ADR, pfd............. Brazil 39,000 1,947,563 Telecomunicacoes de Sao Paulo SA, ADR, pfd.................. Brazil 58,142 1,726,091 Telemig Celular Participacoes SA, ADR, pfd.................. Brazil 6,100 540,231 ----------- TOTAL PREFERRED STOCKS (COST $11,691,983)................... 16,171,941 ----------- TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT (COST $38,177,451).............................................. 44,258,289 ----------- PRINCIPAL AMOUNT** ----------- (a)REPURCHASE AGREEMENT (COST $4,604,000) 9.5% Paribas Corp., 6.10%, 04/03/00 (Maturity Value $4,606,340) Collaterized by U.S. Treasury Notes and Bonds............. United States $ 4,604,000 4,604,000 ----------- TOTAL INVESTMENTS (COST $42,781,451) 100.8%................. 48,862,289 OTHER ASSETS, LESS LIABILITIES (.8%)........................ (396,814) ----------- TOTAL NET ASSETS 100.0%..................................... $48,465,475 ===========
*Non-Income producing **Securities denominated in U.S. dollars. (a) At March 31, 2000, 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, 2000 Assets: Investments in securities, at value (cost $38,177,451)..... $44,258,289 Repurchase agreement, at value and cost.................... 4,604,000 Cash....................................................... 685 Receivables: Fund shares sold.......................................... 99,157 Dividends and interest.................................... 254,154 Other assets............................................... 1,598 ----------- Total assets.......................................... 49,217,883 ----------- Liabilities: Payables: Investment securities purchased........................... 543,647 Fund shares redeemed...................................... 64,793 To affiliates............................................. 90,112 Accrued expenses........................................... 53,856 ----------- Total liabilities..................................... 752,408 ----------- Net assets, at value........................................ $48,465,475 =========== Net assets consist of: Net unrealized appreciation................................ $ 6,080,838 Accumulated net realized loss.............................. (6,409,519) Beneficial shares.......................................... 48,794,156 ----------- Net assets, at value........................................ $48,465,475 =========== CLASS A: Net asset value per share ($23,815,693 / 1,926,273 shares outstanding)............................................. $12.36 =========== Maximum offering price per share ($12.36 / 94.25%)......... $13.11 =========== CLASS C: Net asset value per share ($5,004,361 / 409,168 shares outstanding)*............................................. $12.23 =========== Maximum offering price per share ($12.23 / 99.00%)......... $12.35 =========== ADVISOR CLASS: Net asset value and maximum offering price per share ($19,645,421 / 1,588,520 shares outstanding).............. $12.37 ===========
*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, 2000 Investment Income: (net of foreign taxes of $131,588) Dividends.................................................. $ 604,620 Interest................................................... 79,293 ---------- Total investment income............................... $ 683,913 ----------- Expenses: Management fees (Note 3)................................... 332,006 Administrative fees (Note 3)............................... 39,836 Distribution fees (Note 3) Class A................................................... 57,721 Class C................................................... 36,615 Transfer agent fees (Note 3)............................... 127,400 Custodian fees............................................. 22,000 Reports to shareholders.................................... 64,900 Registration and filing fees............................... 27,900 Professional fees.......................................... 30,300 Trustees' fees and expenses................................ 7,500 Amortization of organization costs......................... 17,344 Other...................................................... 340 ---------- Total expenses........................................ 763,862 Expenses waived/paid by affiliate (Note 3)............ (139,647) ----------- Net expenses....................................... 624,215 ----------- Net investment income........................... 59,698 ----------- Realized and unrealized gains (losses): Net realized gain (loss) from: Investments............................................... 1,584,733 Foreign currency transactions............................. (95,365) ---------- Net realized gain..................................... 1,489,368 Net unrealized appreciation on: Investments............................................... 9,472,772 Translation of assets and liabilities denominated in foreign currencies...................................... 13,214 ---------- Net unrealized appreciation........................... 9,485,986 ----------- Net realized and unrealized gain............................ 10,975,354 ----------- Net increase in net assets resulting from operations........ $11,035,052 ===========
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, 2000 AND 1999
2000 1999 ------------------------------ Increase (decrease) in net assets: Operations: Net investment income..................................... $ 59,698 $ 415,698 Net realized gain (loss) from investments and foreign currency transactions.................................... 1,489,368 (7,856,707) Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies....................................... 9,485,986 (4,014,789) ------------------------------ Net increase (decrease) in net assets resulting from operations............................................ 11,035,052 (11,455,798) Distributions to shareholders from: Net investment income: Class A.................................................. (22,007) (326,007) Class C.................................................. (623) (61,552) Advisor Class............................................ (371) (2,101) Net realized gains: Class A.................................................. -- (112,359) Class C.................................................. -- (28,579) Advisor Class............................................ -- (514) Capital share transactions (Note 2): Class A.................................................. 3,693,548 (6,104,615) Class C.................................................. 35,444 (1,319,485) Advisor Class............................................ 17,068,134 44,255 ------------------------------ Net increase (decrease) in net assets................... 31,809,177 (19,366,755) Net assets: Beginning of year.......................................... 16,656,298 36,023,053 ------------------------------ End of year................................................ $48,465,475 $ 16,656,298 ============================== Undistributed net investment income included in net assets: End of year................................................ $ -- $ 17,808 ==============================
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, 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. 20 PAGE TEMPLETON LATIN AMERICA FUND Notes to Financial Statements (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. 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, 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:
YEAR ENDED MARCH 31, ------------------------------------------------------------- 2000 1999 ------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------- CLASS A SHARES: Shares sold................................................ 2,605,690 $ 26,848,046 1,543,937 $ 12,540,822 Shares issued on reinvestment of distributions............. 2,125 20,335 48,166 403,120 Shares redeemed............................................ (2,312,880) (23,174,833) (2,217,533) (19,048,557) ------------------------------------------------------------- Net increase (decrease).................................... 294,935 $ 3,693,548 (625,430) $ (6,104,615) =============================================================
21 PAGE TEMPLETON LATIN AMERICA FUND Notes to Financial Statements (continued) 2. BENEFICIAL SHARES (CONT.)
YEAR ENDED MARCH 31, ----------------------------------------------------------- 2000 1999 ----------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------ CLASS C SHARES: Shares sold................................................. 231,611 $ 2,458,493 324,301 $ 2,911,133 Shares issued on reinvestment of distributions.............. 62 590 10,240 84,217 Shares redeemed............................................. (233,399) (2,423,639) (491,366) (4,314,835) ----------------------------------------------------------- Net increase (decrease)..................................... (1,726) $ 35,444 (156,825) $(1,319,485) ===========================================================
YEAR ENDED MARCH 31, ----------------------------------------------------------- 2000 1999 ----------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------ ADVISOR CLASS SHARES: Shares sold................................................. 1,848,576 $19,864,438 406,001 $ 3,038,457 Shares issued on reinvestment of distributions.............. 38 361 294 2,398 Shares redeemed............................................. (274,406) (2,796,665) (402,915) (2,996,600) ----------------------------------------------------------- Net increase................................................ 1,574,208 $17,068,134 3,380 $ 44,255 ===========================================================
Certain other Franklin Templeton Funds are the record owners of 1,573,173 of the Fund's Advisor Class Shares as of March 31, 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 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
22 PAGE TEMPLETON LATIN AMERICA FUND Notes to Financial Statements (continued) 3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.) 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, 2000, as noted in the Statement of Operations. 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 March 31, 2000, unreimbursed costs were $213,415. Distributors received net commissions on sales of Fund shares and received contingent deferred sales charges for the period of $13,844 and $4,247, 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 March 31, 2000, the net unrealized appreciation based on the cost of investments for income tax purposes of $43,391,495 was as follows: Unrealized appreciation..................................... $ 7,262,535 Unrealized depreciation..................................... (1,791,741) ----------- Net unrealized appreciation................................. $ 5,470,794 ===========
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: 2007........................................................ $3,439,481 2008........................................................ 2,289,749 ---------- $5,729,230 ==========
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 year ended March 31, 2000 aggregated $37,274,495 and $20,313,959 respectively. 23 PAGE TEMPLETON LATIN AMERICA FUND INDEPENDENT AUDITOR'S REPORT To the Board of Trustees and Shareholders of Templeton Latin America Fund In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Templeton Latin America Fund at March 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at March 31, 2000 by correspondence with the custodian and brokers, provides a reasonable basis for the opinion expressed above. The financial statements for the year ended March 31, 1999, including the financial highlights for each of the four years in the period then ended were audited by other independent accountants whose report dated April 30, 1999 expressed an unqualified opinion on those financial statements. PricewaterhouseCoopers LLP Ft. Lauderdale, Florida April 28, 2000 24 PAGE [FRANKLIN(R) TEMPLETON(R) LOGO] Templeton Latin America Fund 777 Mariners Island Blvd., P.O. Box 7777 San Mateo, CA 94403-7777 ANNUAL REPORT AUDITORS PricewaterhouseCoopers LLP 333 Market Street San Francisco, California 94105 PRINCIPAL UNDERWRITER Franklin/Templeton Distributors, Inc. 1-800/DIAL BEN(R) www.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 A00 05/00 [RECYCLE LOGO] Printed on recycled paper