UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number811-08226
Templeton Global Investment Trust
(Exact name of registrant as specified in charter)
300 S.E. 2nd Street,
Fort Lauderdale, FL 33301-1923
(Address of principal executive offices) (Zip code)
Craig S. Tyle,
One Franklin Parkway,
San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrant’s telephone number, including area code: (954)527-7500
Date of fiscal year end: 12/31
Date of reporting period: 12/31/18
Item 1. Reports to Stockholders.
Internet Delivery of Fund Reports Unless You Request Paper Copies:Effective January 1, 2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request them from the Fund or your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not signed up for electronic delivery, we would encourage you to join fellow shareholders who have. You may elect to receive shareholder reports and other communications electronically from the Fund by calling (800)632-2301 or by contacting your financial intermediary.
You may elect to continue to receive paper copies of all your future shareholder reports free of charge by contacting your financial intermediary or, if you invest directly with a Fund, calling (800)632-2301 to let the Fund know of your request. Your election to receive reports in paper will apply to all funds held in your account.
Franklin Templeton
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Dear Shareholder:
During the 12 months ended December 31, 2018, the global economy continued to expand, with economies in emerging markets generally growing faster than those in developed markets.
China’s economy grew at a slower pace amid lower industrial production growth and the apparent effects of U.S.-China trade tensions and tariffs. In 2018’s third quarter, economic growth slowed in India and Russia, while growth accelerated in Brazil and Poland and Mexico’s economy resumed growth. Despite growth in a number of emerging market economies, emerging market equities were hurt by investor concerns about global economic growth, rising U.S. interest rates, heightened U.S.-China trade issues and contagion concerns about economic crises in Turkey and Argentina. These concerns were mitigated by a U.S.-China trade truce nearperiod-end and signals the U.S. Federal Reserve could slow its pace of interest-rate increases. In this environment, emerging market stocks had a-14.25% total return, as measured by the MSCI Emerging Markets Index, while emerging market bonds had a-4.61% total return, as measured by the J.P. Morgan Emerging Markets Bond Index Global, for the12-month period ended December 31, 2018.1
We are committed to our long-term perspective and disciplined investment approach as we conduct a rigorous, fundamental
analysis of securities with a regular emphasis on investment risk management.
Historically, patient investors have achieved rewarding results by evaluating their goals, diversifying their assets globally and maintaining a disciplined investment program, all hallmarks of the Templeton investment philosophy developed more than 60 years ago. We continue to recommend investors consult their financial advisors and review their portfolios to design a long-term strategy and portfolio allocation that meet their individual needs, goals and risk tolerance.
Templeton Emerging Markets Balanced Fund’s annual report includes more detail about prevailing conditions and a discussion about investment decisions during the period. Please remember all securities markets fluctuate, as do mutual fund share prices.
We thank you for investing with Franklin Templeton, welcome your questions and comments, and look forward to serving your investment needs in the years ahead.
1. Source: Morningstar.
See www.franklintempletondatasources.com for additional data provider information.
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| | | Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
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Sincerely,
Norman J. Boersma, CFA
President and Chief Executive Officer –
Investment Management
Templeton Global Investment Trust
This letter reflects our analysis and opinions as of December 31, 2018, unless otherwise indicated. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
Contents
Visitfranklintempleton.comfor fund updates, to access your account, or to find helpful financial planning tools.
CFA® is a trademark owned by CFA Institute.
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Annual Report
Templeton Emerging Markets Balanced Fund
This annual report for Templeton Emerging Markets Balanced Fund covers the fiscal year ended December 31, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks both income and capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets, plus any borrowings, in a diversified portfolio of equity securities and fixed and floating rate debt obligations issued by governments, government-related entities and corporate entities that are located, incorporated or have significant business activities in or are impacted by economic developments in developing or emerging market countries. The Fund normally invests at least 25% of its net assets in equity securities and at least 25% of its net assets in fixed income senior securities.
Performance Overview
The Fund’s Class A shares had a-12.30% cumulative total return for the 12 months under review. For comparison, an equally weighted combination of the MSCI Emerging Markets (EM) Index and the J.P. Morgan (JPM) Emerging Markets Bond Index (EMBI) Global had a-9.34% total return for the same period.1 Please note, index performance information is provided for reference and we do not attempt to track any index but rather undertake investments on the basis of fundamental research. In addition, the Fund’s return reflects the effect of fees and expenses for professional management, while an index does not have such costs. You can find the Fund’s long-term performance data in the Performance Summary beginning on page 9.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recentmonth-end performance, go tofranklintempleton.comor call(800)342-5236.
Asset Allocation*
Based on Total Net Assets as of 12/31/18
*Figures represent the net Fund exposure and include certain derivatives held in the portfolio (or their underlying reference assets) or unsettled trades and may not total 100% or may be negative due to rounding, use of any derivatives or other factors.
Economic and Market Overview
Emerging market economies in general continued to grow faster than developed market economies during the 12 months under review. China’s economy continued to grow in 2018’s third quarter, though at its slowest annual rate since 2009. During 2018’s first three quarters, China saw decreased annual growth rates across sectors, including industrial production, services, fixed-asset investment, and exports and imports, amid indications that trade tensions with the U.S. negatively affected the economy. India’s annual growth rate in 2018’s third quarter moderated from the prior quarter, as high oil prices and a depreciated rupee hurt consumer spending. Growth in financial services and manufacturing also slowed. Russia’s economy grew in 2018’s third quarter, though at a slower annual growth rate than the prior quarter as the positive effects of the summer World Cup faded. Growth slowed for accommodations and food services, transportation, and information and communication. Brazil’s economy expanded at a faster annual rate in the third quarter. The country’s exports significantly rebounded following a nationwide trucker’s strike in May. Household spending growth slowed, while growth accelerated in the services, transportation and financial services sectors. Among other emerging markets, the economies of Mexico, Poland and Turkey continued to grow.
1. Source: Morningstar. The Fund’s blended benchmark is currently weighted 50% for the MSCI EM Index and 50% for the JPM EMBI Global and is rebalanced monthly. For the 12 months ended 12/31/18, the MSCI EM Index had a-14.25% total return and the JPM EMBI Global had a-4.61% total return.
The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 18.
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Monetary policies varied among emerging market central banks. Brazil’s central bank cut its benchmark interest rate twice during the12-month period, while some, including those of India, Turkey and the Czech Republic, raised their benchmark interest rates multiple times. Mexico’s central bank raised its benchmark interest rate four times to a10-year high, citing global economic and domestic political uncertainties. Russia’s central bank changed its benchmark interest rate several times, but atperiod-end the rate was the same as at the beginning of the period. South Korea’s and Chile’s central banks raised their benchmark interest rates during the period, while Taiwan’s central bank left its benchmark interest rate unchanged. The People’s Bank of China left its benchmark interest rate unchanged during the period, but it took measures to improve financial liquidity to mitigate the negative effects of the U.S.-China trade dispute and support economic growth.
Emerging market stocks declined during the 12 months under review due to concerns about global economic growth, rising U.S. interest rates, a strengthening U.S. dollar and heightened international trade tensions, particularly between the U.S. and China. Contagion concerns about economic crises in Turkey and Argentina also weighed on investor sentiment. Emerging market equities reversed some of their losses nearperiod-end, amid a trade truce between the U.S. and China and signals the U.S. Federal Reserve would slow its pace of interest rate increases. European stocks were pressured by political and economic instability in the region, particularly in Italy and Turkey. Asian equities were hurt by declines in technology stocks and increased tensions in the Korean peninsula, though tensions eased later in the year. In this environment, emerging market stocks, as measured by the MSCI EM Index, had a-14.25% total return for the 12 months ended December 31, 2018.1
The year began with sharply rising yields in the U.S. and Europe as reflation sentiments returned to markets. Deregulation efforts and tax cuts in the U.S. were expected to add stimulus to an already strong U.S. economy. The10-year U.S. Treasury (UST) yield rose 0.45% during the first two months of 2018, finishing February at 2.86%. In Europe, the10-year German Bund yield rose 0.27% during the first month of the year, reaching its peak yield for the period at 0.77% on February 2, its highest level since 2015. Markets appeared to initially anticipate upcoming rate adjustments from the European Central Bank (ECB), but those expectations would largely disappear by the summer.
In February, Jerome Powell took over as U.S. Federal Reserve (Fed) Chair, replacing Janet Yellen. Powell indicated his intentions to continue the glide path of rate hikes and balance
Geographic Composition*
Based on Total Net Assets as of 12/31/18
*Figures represent the net Fund exposure and include certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives or other factors.
sheet unwinding. However, by March, the rising yield trends in the U.S. and Europe stalled and moderately reversed. U.S. protectionist policies in the form of steel and aluminum tariffs, as well as sector-specific tariffs on China, appeared to amplify risk aversion across global financial markets. Credit spreads widened across investment-grade and high-yield credit tiers in the U.S. and Europe during the month, ultimately widening even further over the rest of the year. In April, reflation sentiments briefly resurfaced, driving the10-year UST yield above 3.00% for the first time in more than four years. However, risk aversion returned to global bond markets in the second half of May, as political turmoil in Italy raised concerns over Italian debt sustainability and the viability of the euro.
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Yields in Italy, Spain and much of peripheral Europe rose sharply, while yields in Germany, France and the U.S. declined on flights to quality. Several Latin American countries concurrently saw rising yields and sharp depreciations of their exchange rates on regional volatility.
Inmid-June, ECB President Mario Draghi announced the net asset purchase program would be reduced to 15 billion euros per month for October, November and December, and would conclude at the end of 2018. Draghi also indicated rates would likely remain unchanged until at least the summer of 2019, quelling any remaining expectations for a 2018 rate hike. In the U.S., yields briefly rose in July as economic activity continued to strengthen. Annualized second-quarter U.S. gross domestic product came in at 4.2%, its highest level since 2014.
However, a wave of broad-based risk aversion across emerging markets arrived in late August, driving exchange rates lower against the U.S. dollar. Several perceived safe-haven assets rallied, including USTs. We viewed much of the late summer selloffs as fear-driven overreactions that often exceeded the fundamental risks in individual countries. As an asset category, emerging markets showed the highest level of undervaluation across the global fixed income markets, in our assessment, and we expected select countries with healthier or improving underlying fundamentals to rebound from the heightened volatility.
Bymid-September, risk aversion across emerging markets began to diminish, as several security valuations incrementally stabilized and improved. UST yields rose sharply during the month, on expectations the Fed would hike rates at its September 26 meeting. Those trends continued through October, with the10-year UST reaching its highest yield of the year on November 8, at 3.24%. However, market volatility escalated in December as global growth uncertainties and trade policy concerns led to rallies in perceived safe-haven assets. The10-year UST yield dropped sharply to finish the year at 2.69%, despite the Fed’s fourth rate hike of the year on December 19.
On the whole, duration exposures in the U.S. and in several parts of the world faced headwinds from rising rates during much of the period, before those trends sharply reversed in December. Select local-currency bond markets fared better than others, as valuations strengthened in places like Brazil but weakened in places like Indonesia. On the currency front, the U.S. dollar started the period weaker before significantly strengthening against global currencies over the remainder of the year. On the whole, avoiding UST duration proved important to performance during much of the period, as did
long exposure to the U.S. dollar and select positioning in emerging markets.
Investment Strategy
When allocating assets between the equity portion and the fixed income portion of the Fund, we apply a bottom up, fundamental research approach, considering the opportunity set within each asset class based on both absolute and relative valuations available within each asset class. We consider the relative valuation of equities versus bonds and the volatility and near-term risk of loss in each asset class.
When choosing equity investments for the Fund, we apply a fundamental research, value-oriented, long-term approach, focusing on the market price of a company’s securities relative to our evaluation of the company’s long-term earnings, asset value and cash flow potential. We also consider a company’s profit and loss outlook, balance sheet strength, cash flow trends and asset value in relation to the current price of the company’s securities.
When choosing fixed income investments for the Fund, we allocate the Fund’s assets based upon our assessment of changing market, political and economic conditions. We consider various factors, including evaluation of interest and currency exchange rate changes and credit risks. We regularly enter into currency-related transactions involving derivative instruments, principally currency and cross currency forwards, but may also use currency and currency index futures contracts. The Fund maintains significant positions in currency-related derivative instruments as a hedging technique with respect to its fixed income securities or to implement a currency investment strategy, which could expose a large amount of the Fund’s assets to obligations under these instruments. The use of these derivative transactions may allow the Fund to obtain net long or net negative (short) exposure to selected currencies. The results of such transactions may represent, from time to time, a large component of the Fund’s fixed income investment returns. The Fund may also enter into various other transactions involving derivatives from time to time, including swap agreements (which may include credit default and interest-rate swaps). The use of these derivative transactions may allow the Fund to obtain net long or net short exposures to selected currencies, interest rates, countries, durations or credit risks, or may be used for hedging purposes.
Manager’s Discussion
We continued to allocate in favor of equities during the period as we sought to take advantage of valuation opportunities within emerging market equities. Within fixed income, we
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What is a currency forward contract?
A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.
What are swap agreements?
Swap agreements, such as interest-rate, currency and credit default swaps, are contracts between the Fund and another party (the swap counterparty). In a basic swap transaction, the Fund agrees with the swap counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular “notional amount” of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The parties typically do not actually exchange the notional amount. Instead, they agree to exchange the returns that would be earned or realized if the notional amount were invested in given instruments or at given interest rates.
What is duration?
Duration is a measure of a bond’s price sensitivity to interest-rate changes. In general, a portfolio of securities with a lower duration can be expected to be less sensitive to interest-rate changes than a portfolio with a higher duration.
sought to take advantage of valuation opportunities in emerging market countries with favorable growth prospects, low indebtedness and higher reserves.
Equity
Key contributors to the Fund’s absolute performance during the reporting period included Fila Korea, LUKOIL and Banco Bradesco.
Fila Korea is one of South Korea’s leading sportswear companies. It also licenses the Fila brand around the world and owns a stake in U.S. golf product manufacturer Acushnet.2 Shares of Fila Korea advanced as the company’s efforts to revitalize its domestic business and expand in China helped improve quarterly earnings. The company also reported significantly better-than-expected second- and third-quarter earnings growth driven by strong sales growth globally and improved sales in high-margin products. Steady financial results from Acushnet also buoyed the stock.
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| Top Five Equity Holdings | | | | |
12/31/18 | | | | |
Company
Sector/Industry, Country | | % of Total
Net Assets | |
Samsung Electronics Co. Ltd. | | | 4.2% | |
|
Technology Hardware, Storage & Peripherals, South Korea | |
Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment, Taiwan | | | 3.8% | |
Naspers Ltd. Media, South Africa | | | 3.4% | |
Alibaba Group Holding Ltd. Internet & Direct Marketing Retail, China | | | 2.4% | |
ICICI Bank Ltd. Banks, India | | | 2.0% | |
LUKOIL is a Russian energy company involved primarily in the exploration, production, marketing and refining of oil andoil-related products. The company owns some of the largest oil reserves in the world. Rebounding oil prices benefited company shares, significantly boosting sales and earnings in the second and third quarters. LUKOIL also started a large share buyback program and approved the cancellation of a portion of its treasury shares, with both moves aimed at improving shareholder value and corporate governance. A decline in oil prices late in the period, however, led the company’s share price to finish 2018 below its year-high.
Banco Bradesco is one of Brazil’s largest financial conglomerates. It operates across a wide-range of segments, including asset management, insurance, wholesale banking, full retail operations, credit card and general corporate and personal lending. Banco Bradesco announced strong quarterly results during the period, benefitting from positive loan growth trends and decliningnon-performing loan ratios. Improved sentiment in the Brazilian market in general, driven by the victory of a more market-friendly candidate in the presidential elections and improved economic growth, further lifted investor confidence in the stock.
In contrast, key performance detractors included Brilliance China Automotive Holdings, Samsung Electronics and Naspers.
Brilliance China Automotive manufactures and sells automobiles for the Chinese domestic market, predominantly through its joint venture with BMW,2 the German luxury car maker. BMW’s plans to increase its joint venture stake to a majority share was poorly received by investors, who expressed concerns about some aspects of the proposed deal terms,
2. Not a Fund holding.
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TEMPLETON EMERGING MARKETS BALANCED FUND
Brilliance China’s reduced stake and the potential impact on earnings. The stock has corrected, and we believe the increased clarity about the joint venture agreement removes an overhang that had been weighing on the stock price since China’s decision to relax foreign ownership limits earlier in the year. In our opinion, luxury vehicle sales should continue to increase due to ongoing and growing demand for premium brands.
Samsung Electronics is a South Korea-based consumer electronics and semiconductor manufacturer. It is one of the world’s largest smartphone and memory chip producers as well as a key supplier of organic light-emitting diode displays. Shares of the export-focused company were caught in the crosshairs of mounting global trade tensions. While the company reported solid third-quarter earnings, investor sentiment was hurt by a decline in memory chip prices, an increase in inventory levels and a slowdown in smartphone demand.
Naspers is an internet and media group based in South Africa. It is a leading provider ofpay-television services insub-Saharan Africa. It also has sizeable investments in some of the world’s leading technology companies, including China-based Tencent Holdings and Russia-based Mail.ru Group (also Fund holdings). Shares of Tencent retreated due to regulatory uncertainty in China’s online gaming industry, which also impacted Naspers’ share price. Naspers’ plan to spin off itspay-television business lent some support to the stock. Information technology (IT) stocks in general corrected during the period as pessimism about future global growth, the U.S.-China trade conflict, rising U.S. interest rates and a strengthening U.S. dollar led investors to switch to more defensive stocks.3 Improving market sentiment late in the year, however, led shares to recover from theiryear-low.
In the past 12 months, the portfolio increased its holdings in China, India, Mexico and Peru due to their solid fundamentals. In terms of sectors, additions were undertaken in financials and health care.4 Key purchases included a new position in China Construction Bank, one of the largest commercial banks in China, and additional holdings in Naver, a dominant Korean internet search portal, and Tata Investment in India, which has minor stakes in key businesses in the Tata Group,2 an Indian holding company.
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| Top Five Fixed Income Holdings* | | | | |
| 12/31/18 | | | | |
| Issue/Issuer | | % of Total
Net Assets | |
Government of Ghana | | | 5.7% | |
Government of India | | | 5.3% | |
Government of Indonesia | | | 4.6% | |
Nota Do Tesouro Nacional | | | 4.0% | |
Argentine Bonos del Tesoro | | | 3.7% | |
* Excludes short-term investments. | | | | |
Meanwhile, we reduced the Fund’s holdings in South Korea, Thailand and Indonesia in favor of stocks we considered more attractively valued within our investment universe. Sectors which experienced the largest sales were energy, IT and consumer discretionary.5 Key sales included reduced holdings in Naspers and LUKOIL.
It is important to recognize the effect of currency movements on the Fund’s performance. In general, if the value of the U.S. dollar goes up compared with a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer U.S. dollars. This can have a negative effect on Fund performance. Conversely, when the U.S. dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the 12 months ended December 31, 2018, the U.S. dollar rose in value relative to most currencies. As a result, the Fund’s performance was negatively affected by the portfolio’s investment predominantly in securities withnon-U.S. currency exposure.
Fixed Income
During the reporting period the strategy was positioned for rising rates in the U.S. by maintaining low portfolio duration and using interest-rate swaps to gain negative duration exposure to U.S. Treasuries. The strategy also continued to seek duration exposures in select emerging markets that offered positive real yields without undue interest-rate risk, favoring countries that have solid underlying fundamentals and prudent fiscal and monetary policies. Several emerging markets continued to offer significantly higher yields than those
3. The information technology sector comprises electronic equipment, instruments and components; IT services; semiconductors and semiconductor equipment; and technology hardware, storage and peripherals in the SOI.
4. The financials sector comprises banks, capital markets, diversified financial services and insurance in the SOI. The health care sector comprises pharmaceuticals in the SOI.
5. The energy sector comprises oil, gas and consumable fuels in the SOI. The consumer discretionary sector comprises auto components; automobiles; hotels, restaurants and leisure; household durables; internet and direct marketing retail; multiline retail; specialty retail; and textiles, apparel and luxury goods in the SOI.
See www.franklintempletondatasources.com for additional data provider information.
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available in the developed markets. The strategy also held long currency exposures in a number of emerging markets andnet-negative exposures to the Japanese yen, euro and Australian dollar, as directional views on the currencies and as hedges against a broadly strengthening U.S. dollar. During the period, we used forward currency exchange contracts to actively manage currencies. We also used interest-rate swaps to tactically manage duration exposures.
What is an interest-rate swap?
An interest-rate swap is an agreement between two parties to exchange interest-rate payment obligations, generally one based on an interest rate fixed to maturity and the other based on an interest rate that changes in accordance with changes in a designated benchmark (for example, LIBOR, prime, commercial paper or other benchmarks).
During the period, the fixed income sleeve’s negative absolute performance was primarily due to currency positions, followed by overall credit exposures. Interest-rate strategies contributed to absolute results. Among currencies, positions in Latin America (Argentine peso and Brazilian real), Asiaex-Japan (Indian rupee and Indonesian rupiah) and Africa (Ghanaian cedi) detracted from absolute return. The Fund’snet-negative positions in the euro and Australian dollar, achieved through the use of currency forward contracts, contributed to absolute results, while itsnet-negative position in the Japanese yen, also through currency forward contracts, had a largely neutral effect. The Fund maintained low overall portfolio duration while holding duration exposures in select emerging markets. Select duration exposures in Latin America (Brazil and Argentina), Africa (Ghana) and Asiaex-Japan (India) contributed to absolute performance.
On a relative basis, the Fund’s underperformance was primarily due to currency positions. Interest-rate strategies and overall credit exposures contributed to relative return. Among currencies, overweighted positions in Latin America (Argentine peso and Brazilian real), Asiaex-Japan (Indian rupee and Indonesian rupiah) and Africa (Ghanaian cedi) detracted from relative performance. However, the Fund’s underweighted positions in the euro and Australian dollar contributed to relative results, while its underweighted position in the Japanese yen had a largely neutral effect. The Fund was underweighted in U.S. dollar-denominated sovereign credits as we have largely avoided securities that are exposed to U.S. Treasury interest-rate risks, due to our expectations for rising U.S. Treasury yields. Underweighted credit exposures in Latin America and Europe notably contributed to relative performance as U.S. Treasury yields rose and credit spreads
widened during the period. The Fund maintained a defensive approach regarding U.S. interest rates. Selectoff-benchmark local-currency duration exposures in Latin America (Argentina and Brazil), Asiaex-Japan (India) and Africa (Ghana) contributed to relative performance.
Subsequent to fiscalyear-end December 31, 2018, Laura Burakreis departed the firm effective February 1, 2019. Her responsibilities have been allocated to others in the portfolio management team.
Thank you for your continued participation in Templeton Emerging Markets Balanced Fund. We look forward to serving your future investment needs.
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Chetan Sehgal, CFA |
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Michael Hasenstab Ph.D. |
| |
| | Laura Burakreis |
| |
| | Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of December 31, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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TEMPLETON EMERGING MARKETS BALANCED FUND
Performance Summary as of December 31, 2018
The performance table and graphs do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 12/31/181
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%.Class A:5.50% maximum initial sales charge;Advisor Class:no sales charges. For other share classes, visitfranklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2 | | | Average Annual
Total Return3 | |
A4 | | | | | | | | |
1-Year | | | -12.30% | | | | -17.15% | |
5-Year | | | +4.28% | | | | -0.29% | |
Since Inception (10/3/11) | | | +15.53% | | | | +1.22% | |
Advisor | | | | | | | | |
1-Year | | | -12.15% | | | | -12.15% | |
5-Year | | | +5.57% | | | | +1.09% | |
Since Inception (10/3/11) | | | +17.56% | | | | +2.26% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recentmonth-end performance, go tofranklintempleton.comor call(800)342-5236.
See page 11 for Performance Summary footnotes.
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TEMPLETON EMERGING MARKETS BALANCED FUND
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.
See page 11 for Performance Summary footnotes.
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PERFORMANCE SUMMARY
Distributions(1/1/18–12/31/18)
| | | | | | | | | | | | | | | | | | | | |
Share Class | | Net Investment
Income | | | | | | Tax Return
of Capital | | | | | | Total | |
A | | | $0.4327 | | | | | | | | $0.1346 | | | | | | | | $0.5673 | |
C | | | $0.3731 | | | | | | | | $0.1160 | | | | | | | | $0.4891 | |
R | | | $0.3879 | | | | | | | | $0.1203 | | | | | | | | $0.5082 | |
R6 | | | $0.4588 | | | | | | | | $0.1428 | | | | | | | | $0.6016 | |
Advisor | | | $0.4525 | | | | | | | | $0.1409 | | | | | | | | $0.5934 | |
Total Annual Operating Expenses6
| | | | | | | | | | | | |
Share Class | | With Fee
Waiver | | | | | | Without Fee
Waiver | |
A | | | 1.50% | | | | | | | | 2.29% | |
Advisor | | | 1.25% | | | | | | | | 2.04% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Stock prices fluctuate due to factors affecting individual companies, particular industries or sectors, or general market conditions. Investments in emerging market countries involve special risks including currency fluctuations, economic and political uncertainties, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Smaller company stocks have historically exhibited greater price volatility than large company stocks. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. The risks associated with higher yielding, lower rated securities include higher risks of default and loss of principal. Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a government entity may be unwilling or unable to pay interest and repay principal on its sovereign debt, or otherwise meet its obligations when due. The Fund’s investments in derivative securities and use of foreign currency techniques involve special risks, as such techniques may not achieve the anticipated benefits and/or may result in losses to the Fund. The markets for particular securities or types of securities are or may become relatively illiquid. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
1. The Fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 4/30/2019. Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns would have differed. Total returns with sales charges have been restated to reflect the current maximum initial sales charge of 5.50%.
5. Source: Morningstar. The MSCI EM Index is a free float-adjusted, market capitalization-weighted index designed to measure the equity market performance of global emerging markets. The JPM EMBI Global tracks total returns for U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans and Eurobonds.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
See www.franklintempletondatasources.com for additional data provider information.
| | | | | | |
franklintempleton.com | | | | Annual Report | | 11 |
TEMPLETON EMERGING MARKETS BALANCED FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service(12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 =$64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
| | | Expenses | | | | Expenses | | Net |
| | | Beginning | | Ending | | Paid During | | Ending | | Paid During | | Annualized |
| Share | | Account | | Account | | Period | | Account | | Period | | Expense |
| Class | | Value 7/1/18 | | Value 12/31/18 | | 7/1/18–12/31/181,2 | | Value 12/31/18 | | 7/1/18–12/31/181,2 | | Ratio2 |
| | | | | | |
A | | $1,000 | | $946.00 | | $ 7.26 | | $1,017.74 | | $ 7.53 | | 1.48% |
C | | $1,000 | | $942.60 | | $10.92 | | $1,013.96 | | $11.32 | | 2.23% |
R | | $1,000 | | $944.90 | | $ 8.43 | | $1,016.53 | | $ 8.74 | | 1.72% |
R6 | | $1,000 | | $947.60 | | $ 5.65 | | $1,019.41 | | $ 5.85 | | 1.15% |
Advisor | | $1,000 | | $947.20 | | $ 6.04 | | $1,019.00 | | $ 6.26 | | 1.23% |
1. Expenses are equal to the annualized expense ratio for thesix-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| | | | | | |
12 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
Financial Highlights
Templeton Emerging Markets Balanced Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | Year Ended March 31, | |
| | | | | | | | |
| | | 2018 | | | 2017 | | | 2016a | | | 2016 | | | 2015 | | | 2014 | |
| |
| | | | | | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of year | | | $11.26 | | | | $ 9.03 | | | | $ 8.33 | | | | $ 9.36 | | | | $10.10 | | | | $11.38 | |
| | | | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Net investment incomec | | | 0.50 | | | | 0.40 | | | | 0.20 | | | | 0.23 | | | | 0.30 | | | | 0.36 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (1.86 | ) | | | 2.14 | | | | 0.60 | | | | (1.22 | ) | | | (0.67 | ) | | | (1.32) | |
| | | | |
| | | | | | |
Total from investment operations | | | (1.36 | ) | | | 2.54 | | | | 0.80 | | | | (0.99 | ) | | | (0.37 | ) | | | (0.96) | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Net investment income | | | (0.43 | ) | | | (0.31 | ) | | | (0.10 | ) | | | (0.04 | ) | | | (0.37 | ) | | | (0.31) | |
| | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | (0.01) | |
| | | | | | |
Tax return of capital | | | (0.13 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.56 | ) | | | (0.31 | ) | | | (0.10 | ) | | | (0.04 | ) | | | (0.37 | ) | | | (0.32) | |
| | | | |
Net asset value, end of year | | | $ 9.34 | | | | $11.26 | | | | $ 9.03 | �� | | | $ 8.33 | | | | $ 9.36 | | | | $10.10 | |
| | | | |
| | | | | | |
Total returnd | | | (12.30)% | | | | 28.31% | | | | 9.64% | | | | (10.57)% | | | | (3.66)% | | | | (8.27)% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliates | | | 2.32% | | | | 2.33% | | | | 2.49% | | | | 2.25% | | | | 2.10% | | | | 2.04% | |
| | | | | | |
Expenses net of waiver and payments by affiliates | | | 1.48% | | | | 1.48%f | | | | 1.48% | | | | 1.50% | | | | 1.53% | | | | 1.54% | |
| | | | | | |
Net investment income | | | 4.78% | | | | 3.74% | | | | 3.00% | | | | 2.65% | | | | 3.00% | | | | 3.52% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of year (000’s) | | | $22,331 | | | | $28,572 | | | | $20,316 | | | | $23,171 | | | | $30,151 | | | | $29,971 | |
| | | | | | |
Portfolio turnover rate | | | 22.02% | | | | 23.96% | | | | 26.32% | | | | 65.41% | | | | 48.32% | | | | 69.27% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned, adjustments to interest income for the inflation-indexed bonds, and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | Annual Report | | 13 |
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
Templeton Emerging Markets Balanced Fund(continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | Year Ended March 31, | |
| | | | | | | | |
| | | 2018 | | | 2017 | | | 2016a | | | 2016 | | | 2015 | | | 2014 | |
| |
| | | | | | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of year | | | $11.17 | | | | $ 8.96 | | | | $ 8.25 | | | | $ 9.30 | | | | $10.03 | | | | $11.32 | |
| | | | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.42 | | | | 0.32 | | | | 0.14 | | | | 0.16 | | | | 0.23 | | | | 0.28 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (1.84 | ) | | | 2.13 | | | | 0.60 | | | | (1.21 | ) | | | (0.66 | ) | | | (1.31) | |
| | | | |
| | | | | | |
Total from investment operations | | | (1.42 | ) | | | 2.45 | | | | 0.74 | | | | (1.05 | ) | | | (0.43 | ) | | | (1.03) | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.37 | ) | | | (0.24 | ) | | | (0.03 | ) | | | — | | | | (0.30 | ) | | | (0.25) | |
| | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | (0.01) | |
| | | | | | |
Tax return of capital | | | (0.12 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.49 | ) | | | (0.24 | ) | | | (0.03 | ) | | | — | | | | (0.30 | ) | | | (0.26) | |
| | | | |
| | | | | | |
Net asset value, end of year | | | $ 9.26 | | | | $11.17 | | | | $ 8.96 | | | | $ 8.25 | | | | $ 9.30 | | | | $10.03 | |
| | | | |
| | | | | | |
Total returnd | | | (13.07)% | | | | 27.46% | | | | 9.02% | | | | (11.29)% | | | | (4.27)% | | | | (8.96)% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliates . | | | 3.07% | | | | 3.08% | | | | 3.24% | | | | 2.98% | | | | 2.80% | | | | 2.73% | |
| | | | | | |
Expenses net of waiver and payments by affiliates | | | 2.23% | | | | 2.23%f | | | | 2.23% | | | | 2.23% | | | | 2.23% | | | | 2.23% | |
| | | | | | |
Net investment income | | | 4.03% | | | | 2.99% | | | | 2.25% | | | | 1.92% | | | | 2.30% | | | | 2.83% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of year (000’s) | | | $3,305 | | | | $5,024 | | | | $3,143 | | | | $3,462 | | | | $4,079 | | | | $4,250 | |
| | | | | | |
Portfolio turnover rate | �� | | 22.02% | | | | 23.96% | | | | 26.32% | | | | 65.41% | | | | 48.32% | | | | 69.27% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned, adjustments to interest income for the inflation-indexed bonds, and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
| | | | | | |
14 | | Annual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
Templeton Emerging Markets Balanced Fund(continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | Year Ended March 31, | |
| | | | | | | | |
| | | 2018 | | | 2017 | | | 2016a | | | 2016 | | | 2015 | | | 2014 | |
| |
| | | | | | |
Class R | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of year | | | $11.24 | | | | $ 9.01 | | | | $ 8.32 | | | | $ 9.35 | | | | $10.09 | | | | $11.37 | |
| | | | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment incomec | | | 0.45 | | | | 0.37 | | | | 0.17 | | | | 0.16 | | | | 0.29 | | | | 0.36 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (1.82 | ) | | | 2.14 | | | | 0.61 | | | | (1.17 | ) | | | (0.68 | ) | | | (1.34) | |
| | | | |
| | | | | | |
Total from investment operations | | | (1.37 | ) | | | 2.51 | | | | 0.78 | | | | (1.01 | ) | | | (0.39 | ) | | | (0.98) | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.39 | ) | | | (0.28 | ) | | | (0.09 | ) | | | (0.02 | ) | | | (0.35 | ) | | | (0.29) | |
| | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | (0.01) | |
| | | | | | |
Tax return of capital | | | (0.12 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.51 | ) | | | (0.28 | ) | | | (0.09 | ) | | | (0.02 | ) | | | (0.35 | ) | | | (0.30) | |
| | | | |
Net asset value, end of year | | | $ 9.36 | | | | $11.24 | | | | $ 9.01 | | | | $ 8.32 | | | | $ 9.35 | | | | $10.09 | |
| | | | |
| | | | | | |
Total returnd | | | (12.55)% | | | | 28.08% | | | | 9.36% | | | | (10.79)% | | | | (3.85)% | | | | (8.45)% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliates . | | | 2.57% | | | | 2.58% | | | | 2.74% | | | | 2.48% | | | | 2.30% | | | | 2.23% | |
| | | | | | |
Expenses net of waiver and payments by affiliates | | | 1.73% | | | | 1.73%f | | | | 1.73% | | | | 1.73% | | | | 1.73% | | | | 1.73% | |
| | | | | | |
Net investment income | | | 4.53% | | | | 3.49% | | | | 2.75% | | | | 2.42% | | | | 2.80% | | | | 3.33% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of year (000’s) | | | $84 | | | | $262 | | | | $190 | | | | $149 | | | | $52 | | | | $53 | |
| | | | | | |
Portfolio turnover rate | | | 22.02% | | | | 23.96% | | | | 26.32% | | | | 65.41% | | | | 48.32% | | | | 69.27% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned, adjustments to interest income for the inflation-indexed bonds, and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | Annual Report | | 15 |
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
Templeton Emerging Markets Balanced Fund (continued)
| | | | | | | | |
| | | Year Ended December 31, | |
| | | 2018 | | | 2017a | |
Class R6 | | | | | | | | |
| | |
Per share operating performance | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | |
| | |
Net asset value, beginning of year | | | $11.27 | | | | $10.83 | |
| | |
Income from investment operationsb: | | | | | | | | |
| | |
Net investment incomec | | | 0.54 | | | | 0.19 | |
| | |
Net realized and unrealized gains (losses) | | | (1.86) | | | | 0.48 | |
| | |
Total from investment operations | | | (1.32) | | | | 0.67 | |
| | |
Less distributions from: | | | | | | | | |
| | |
Net investment income | | | (0.46) | | | | (0.23) | |
| | |
Tax return of capital | | | (0.14) | | | | — | |
| | |
Total distributions | | | (0.60) | | | | (0.23) | |
| | |
Net asset value, end of year | | | $ 9.35 | | | | $11.27 | |
| | |
Total returnd | | | (12.08)% | | | | 6.19% | |
| | |
Ratios to average net assetse | | | | | | | | |
Expenses before waiver and payments by affiliates | | | 1.95% | | | | 1.91% | |
Expenses net of waiver and payments by affiliates | | | 1.15% | | | | 1.15%f | |
| | |
Net investment income | | | 5.11% | | | | 4.07% | |
| | |
Supplemental data | | | | | | | | |
Net assets, end of year (000’s) | | | $775 | | | | $838 | |
| | |
Portfolio turnover rate | | | 22.02% | | | | 23.96% | |
aFor the period August 1, 2017 (effective date) to December 31, 2017.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned, adjustments to interest income for the inflation-indexed bonds, and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
| | | | | | |
16 | | Annual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
Templeton Emerging Markets Balanced Fund (continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | Year Ended March 31, | |
| | | 2018 | | | 2017 | | | 2016a | | | 2016 | | | 2015 | | | 2014 | |
| | | | | | |
Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of year | | | $11.27 | | | | $ 9.04 | | | | $ 8.35 | | | | $ 9.38 | | | | $10.11 | | | | $11.40 | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.53 | | | | 0.42 | | | | 0.22 | | | | 0.25 | | | | 0.34 | | | | 0.42 | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (1.86 | ) | | | 2.14 | | | | 0.59 | | | | (1.22 | ) | | | (0.67 | ) | | | (1.36) | |
| | | | | | |
Total from investment operations | | | (1.33 | ) | | | 2.56 | | | | 0.81 | | | | (0.97 | ) | | | (0.33 | ) | | | (0.94) | |
| | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.45 | ) | | | (0.33) | | | | (0.12 | ) | | | (0.06 | ) | | | (0.40 | ) | | | (0.34) | |
| | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | (0.01) | |
| | | | | | |
Tax return of capital | | | (0.14 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | |
Total distributions | | | (0.59 | ) | | | (0.33) | | | | (0.12 | ) | | | (0.06 | ) | | | (0.40 | ) | | | (0.35) | |
| | | | | | |
Net asset value, end of year | | | $ 9.35 | | | | $11.27 | | | | $ 9.04 | | | | $ 8.35 | | | | $ 9.38 | | | | $10.11 | |
| | | | | | |
Total returnd | | | (12.15)% | | | | 28.60% | | | | 9.78% | | | | (10.32)% | | | | (3.28)% | | | | (8.07)% | |
| | | | | | |
Ratios to average net assetse | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliates | | | 2.07% | | | | 2.08% | | | | 2.24% | | | | 1.98% | | | | 1.80% | | | | 1.73% | |
| | | | | | |
Expenses net of waiver and payments by affiliates | | | 1.23% | | | | 1.23%f | | | | 1.23% | | | | 1.23% | | | | 1.23% | | | | 1.23% | |
| | | | | | |
Net investment income | | | 5.03% | | | | 3.99% | | | | 3.25% | | | | 2.92% | | | | 3.30% | | | | 3.83% | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of year (000’s) | | | $6,995 | | | | $8,177 | | | | $4,060 | | | | $6,522 | | | | $8,068 | | | | $8,911 | |
| | | | | | |
Portfolio turnover rate | | | 22.02% | | | | 23.96% | | | | 26.32% | | | | 65.41% | | | | 48.32% | | | | 69.27% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned, adjustments to interest income for the inflation-indexed bonds, and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | Annual Report | | 17 |
TEMPLETON GLOBAL INVESTMENT TRUST
Statement of Investments, December 31, 2018
Templeton Emerging Markets Balanced Fund
| | | | | | | | | | |
| | | Industry | | Shares/
Warrants | | | Value | |
| |
Common Stocks and Other Equity Interests 51.4% | | | | | |
Brazil 1.5% | | | | | | | | | | |
aB2W Cia Digital | | Internet & Direct Marketing Retail | | | 7,600 | | | $ | 82,281 | |
B3 SA - Brasil Bolsa Balcao | | Capital Markets | | | 24,000 | | | | 165,781 | |
Lojas Americanas SA | | Multiline Retail | | | 42,900 | | | | 166,129 | |
M. Dias Branco SA | | Food Products | | | 8,100 | | | | 89,322 | |
| | | | | | | | | | |
| | | | | | | | | 503,513 | |
| | | | | | | | | | |
Cambodia 0.7% | | | | | | | | | | |
NagaCorp Ltd. | | Hotels, Restaurants & Leisure | | | 212,000 | | | | 227,960 | |
| | | | | | | | | | |
China 12.1% | | | | | | | | | | |
aAlibaba Group Holding Ltd., ADR | | Internet & Direct Marketing Retail | | | 5,746 | | | | 787,604 | |
BAIC Motor Corp. Ltd., H | | Automobiles | | | 307,500 | | | | 162,183 | |
aBaidu Inc., ADR | | Interactive Media & Services | | | 646 | | | | 102,456 | |
Brilliance China Automotive Holdings Ltd. | | Automobiles | | | 676,600 | | | | 503,745 | |
China Construction Bank Corp., H | | Banks | | | 519,400 | | | | 428,494 | |
China Mobile Ltd. | | Wireless Telecommunication Services | | | 27,500 | | | | 264,622 | |
China Petroleum & Chemical Corp., H | | Oil, Gas & Consumable Fuels | | | 238,000 | | | | 169,902 | |
China Resources Cement Holdings Ltd. | | Construction Materials | | | 20,800 | | | | 18,727 | |
CNOOC Ltd. | | Oil, Gas & Consumable Fuels | | | 174,900 | | | | 270,263 | |
NetEase Inc., ADR | | Entertainment | | | 454 | | | | 106,858 | |
Ping An Bank Co. Ltd., A | | Banks | | | 241,800 | | | | 329,735 | |
Ping An Insurance Group Co. of China Ltd., A | | Insurance | | | 20,173 | | | | 164,528 | |
Tencent Holdings Ltd. | | Interactive Media & Services | | | 13,800 | | | | 553,375 | |
aTencent Music Entertainment Group, ADR | | Entertainment | | | 3 | | | | 40 | |
Uni-President China Holdings Ltd. | | Food Products | | | 148,000 | | | | 128,523 | |
Weifu High-Technology Co. Ltd., B | | Auto Components | | | 28,126 | | | | 48,634 | |
| | | | | | | | | | |
| | | | | | | | | 4,039,689 | |
| | | | | | | | | | |
Czech Republic 0.2% | | | | | | | | | | |
Moneta Money Bank AS | | Banks | | | 17,170 | | | | 55,441 | |
| | | | | | | | | | |
Hong Kong 0.3% | | | | | | | | | | |
MGM China Holdings Ltd. | | Hotels, Restaurants & Leisure | | | 72,000 | | | | 120,820 | |
| | | | | | | | | | |
Hungary 0.6% | | | | | | | | | | |
Richter Gedeon Nyrt | | Pharmaceuticals | | | 11,180 | | | | 216,665 | |
| | | | | | | | | | |
India 4.1% | | | | | | | | | | |
Bajaj Holdings & Investment Ltd. | | Diversified Financial Services | | | 3,501 | | | | 148,454 | |
Glenmark Pharmaceuticals Ltd. | | Pharmaceuticals | | | 19,783 | | | | 197,077 | |
ICICI Bank Ltd., ADR | | Banks | | | 63,470 | | | | 653,106 | |
Infosys Ltd., ADR | | IT Services | | | 8,740 | | | | 83,205 | |
Tata Investment Corp. Ltd. | | Capital Markets | | | 22,500 | | | | 288,357 | |
| | | | | | | | | | |
| | | | | | | | | 1,370,199 | |
| | | | | | | | | | |
Indonesia 1.9% | | | | | | | | | | |
Astra International Tbk PT | | Automobiles | | | 484,500 | | | | 277,122 | |
Bank Danamon Indonesia Tbk PT | | Banks | | | 672,600 | | | | 355,477 | |
| | | | | | | | | | |
| | | | | | | | | 632,599 | |
| | | | | | | | | | |
Macau 0.3% | | | | | | | | | | |
Sands China Ltd. | | Hotels, Restaurants & Leisure | | | 21,600 | | | | 94,615 | |
| | | | | | | | | | |
| | | | | | |
18 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
Templeton Emerging Markets Balanced Fund(continued)
| | | | | | | | | | |
| | | Industry | | Shares/
Warrants | | | Value | |
| |
Common Stocks and Other Equity Interests(continued) | | | | | | | | |
Mexico 1.3% | | | | | | | | | | |
Banco Santander Mexico SA Institucion de Banca | | | | | | | | | | |
Multiple Grupo Financiero Santander, ADR | | Banks | | | 61,596 | | | $ | 379,431 | |
a,b Corporacion GEO SAB de CV, B | | Household Durables | | | 5,256 | | | | 98 | |
a,b Corporacion GEO SAB de CV, wts., 12/30/27 | | Household Durables | | | 8,223 | | | | — | |
Nemak SAB de CV | | Auto Components | | | 65,821 | | | | 49,172 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 428,701 | |
| | | | | | | | | | |
Nigeria 0.0%† | | | | | | | | | | |
Nigerian Breweries PLC | | Beverages | | | 12,313 | | | | 2,928 | |
| | | | | | | | | | |
Pakistan 0.4% | | | | | | | | | | |
Habib Bank Ltd. | | Banks | | | 92,300 | | | | 77,907 | |
United Bank Ltd. | | Banks | | | 61,000 | | | | 54,106 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 132,013 | |
| | | | | | | | | | |
Peru 1.1% | | | | | | | | | | |
Compania de Minas Buenaventura SA, ADR | | Metals & Mining | | | 13,566 | | | | 220,041 | |
c Intercorp Financial Services Inc., Reg S | | Banks | | | 3,260 | | | | 136,920 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 356,961 | |
| | | | | | | | | | |
Russia 3.9% | | | | | | | | | | |
Gazprom PJSC, ADR | | Oil, Gas & Consumable Fuels | | | 5,600 | | | | 24,802 | |
LUKOIL PJSC, ADR | | Oil, Gas & Consumable Fuels | | | 6,200 | | | | 443,176 | |
a,c Mail.Ru Group Ltd., GDR, Reg S | | Interactive Media & Services | | | 8,441 | | | | 198,026 | |
Sberbank of Russia PJSC, ADR | | Banks | | | 32,719 | | | | 358,600 | |
a Yandex NV, A | | Interactive Media & Services | | | 10,780 | | | | 294,833 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 1,319,437 | |
| | | | | | | | | | |
South Africa 3.9% | | | | | | | | | | |
a,b,d Edcon Holdings Ltd., F wts., 2/20/49 | | Specialty Retail | | | 84 | | | | — | |
a,b,d Edcon Holdings Ltd., F1 wts., 2/20/49 | | Specialty Retail | | | 1,503,436 | | | | — | |
a,b,d Edcon Holdings Ltd., F2 wts., 2/20/49 | | Specialty Retail | | | 121,748 | | | | — | |
a,b,d K2016470219 South Africa Ltd., A | | Specialty Retail | | | 1,390,834 | | | | 968 | |
a,b,d K2016470219 South Africa Ltd., B | | Specialty Retail | | | 437,269 | | | | 304 | |
Massmart Holdings Ltd. | | Food & Staples Retailing | | | 21,982 | | | | 158,375 | |
Naspers Ltd., N | | Media | | | 5,724 | | | | 1,152,214 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 1,311,861 | |
| | | | | | | | | | |
South Korea 9.4% | | | | | | | | | | |
Fila Korea Ltd. | | Textiles, Apparel & Luxury Goods | | | 5,265 | | | | 252,918 | |
Hankook Tire Co. Ltd. | | Auto Components | | | 1,135 | | | | 40,917 | |
Hankook Tire Worldwide Co. Ltd. | | Diversified Financial Services | | | 4,667 | | | | 69,562 | |
Hanon Systems | | Auto Components | | | 6,331 | | | | 61,394 | |
a HDC Hyundai DevelopmentCo-Engineering & Construction | | Construction & Engineering | | | 3,659 | | | | 158,357 | |
Hite Jinro Co. Ltd. | | Beverages | | | 3,640 | | | | 54,255 | |
KT Skylife Co. Ltd. | | Media | | | 11,020 | | | | 113,791 | |
LG Corp. | | Industrial Conglomerates | | | 3,633 | | | | 228,019 | |
Naver Corp. | | Interactive Media & Services | | | 3,175 | | | | 347,801 | |
POSCO | | Metals & Mining | | | 1,138 | | | | 248,300 | |
Samsung Electronics Co. Ltd. | | Technology Hardware, Storage & Peripherals | | | 40,491 | | | | 1,407,011 | |
SK Hynix Inc. | | Semiconductors & Semiconductor Equipment | | | 2,930 | | | | 159,166 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 3,141,491 | |
| | | | | | | | | | |
| | | | | | |
franklintempleton.com | | | | | Annual Report | | 19 |
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
Templeton Emerging Markets Balanced Fund (continued)
| | | | | | | | | | |
| | | Industry | |
| Shares/
Warrants |
| | | Value | |
| Common Stocks and Other Equity Interests (continued) | | | | | | | | |
Taiwan 6.0% | | | | | | | | | | |
Catcher Technology Co. Ltd. | | Technology Hardware, Storage & Peripherals | | | 16,000 | | | $ | 117,659 | |
CTBC Financial Holding Co. Ltd. | | Banks | | | 182,000 | | | | 120,155 | |
FIT Hon Teng Ltd. | | Electronic Equipment, Instruments | | | | | | | | |
| | & Components | | | 125,100 | | | | 54,159 | |
Hon Hai Precision Industry Co. Ltd. | | Electronic Equipment, Instruments | | | | | | | | |
| | & Components | | | 75,592 | | | | 174,916 | |
Largan Precision Co. Ltd. | | Electronic Equipment, Instruments | | | | | | | | |
| | & Components | | | 1,000 | | | | 105,076 | |
aPChome Online Inc. | | Internet & Direct Marketing Retail | | | 14,000 | | | | 57,881 | |
Pegatron Corp. | | Technology Hardware, Storage & Peripherals | | | 32,200 | | | | 54,093 | |
Primax Electronics Ltd. | | Technology Hardware, Storage & Peripherals | | | 43,100 | | | | 61,205 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | | Semiconductors & Semiconductor Equipment | | | 173,000 | | | | 1,275,011 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 2,020,155 | |
| | | | | | | | | | |
Thailand 1.6% | | | | | | | | | | |
Kasikornbank PCL, fgn | | Banks | | | 35,600 | | | | 203,098 | |
Kiatnakin Bank PCL, fgn | | Banks | | | 48,800 | | | | 99,969 | |
PTT Exploration and Production PCL, fgn | | Oil, Gas & Consumable Fuels | | | 7,100 | | | | 24,918 | |
Siam Commercial Bank PCL, fgn | | Banks | | | 13,200 | | | | 54,490 | |
Thai Beverage PCL, fgn | | Beverages | | | 214,100 | | | | 95,815 | |
Univanich Palm Oil PCL, fgn | | Food Products | | | 308,600 | | | | 51,529 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 529,819 | |
| | | | | | | | | | |
United Kingdom 1.6% | | | | | | | | | | |
Unilever PLC | | Personal Products | | | 10,391 | | | | 544,422 | |
| | | | | | | | | | |
United States 0.5% | | | | | | | | | | |
Cognizant Technology Solutions Corp., A | | IT Services | | | 390 | | | | 24,757 | |
aIMAX Corp. | | Entertainment | | | 8,274 | | | | 155,634 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 180,391 | |
| | | | | | | | | | |
Total Common Stocks and Other Equity Interests (Cost $15,097,837) | | | | | | | | | 17,229,680 | |
| | | | | | | | | | |
Preferred Stocks 2.6% | | | | | | | | | | |
Brazil 2.6% | | | | | | | | | | |
eBanco Bradesco SA, 3.078%, ADR, pfd. | | Banks | | | 43,956 | | | | 434,725 | |
eItau Unibanco Holding SA, 10.117%, ADR, pfd. | | Banks | | | 47,738 | | | | 436,325 | |
| | | | | | | | | | |
Total Preferred Stocks
(Cost $427,329) | | | | | | | | | 871,050 | |
| | | | | | | | | | |
| | | |
| Principal
Amount |
* | | | | |
| | | | | | | | | | |
Corporate Bonds 0.3% | | | | | | | | | | |
Bermuda 0.3% | | | | | | | | | | |
fDigicel Group Ltd., senior note, 144A, 7.125%, 4/01/22 | | Wireless Telecommunication Services | | | 200,000 | | | | 94,500 | |
| | | | | | | | | | |
| | | | | | |
20 | | | | Annual Report | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
STAT8EMENT OF INVESTMENTS
Templeton Emerging Markets Balanced Fund (continued)
| | | | | | | | | | | | | | | | |
| | | | | Industry | |
| Principal
Amount |
* | | | | | | | Value | |
| | Corporate Bonds (continued) | | | | | | | | | | | | | | |
| | South Africa 0.0%† | | | | | | | | | | | | | | |
b,d,g | | K2016470219 South Africa Ltd., | | | | | | | | | | | | | | |
| | senior secured note, 144A, PIK, 3.00%, 12/31/22 | | Multiline Retail | | | 108,602 | | | | | | | $ | 134 | |
| | senior secured note, 144A, PIK, 8.00%, 12/31/22 | | Multiline Retail | | | 42,110 | | | | EUR | | | | 928 | |
d,g | | K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22 | | Multiline Retail | | | 73,549 | | | | | | | | 5,230 | |
| | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | 6,292 | |
| | | | | | | | | | | | | | | | |
| | Total Corporate Bonds
(Cost $399,816) | | | | | | | | | | | | | 100,792 | |
| | | | | | | | | | | | | | | | |
| | Foreign Government and Agency Securities 31.7% | | | | | | | | | | | | | | |
| | Argentina 4.0% | | | | | | | | | | | | | | |
| | Argentine Bonos del Tesoro, | | | | | | | | | | | | | | |
| | 18.20%, 10/03/21 | | | | | 9,712,000 | | | | ARS | | | | 199,392 | |
| | 16.00%, 10/17/23 | | | | | 27,763,000 | | | | ARS | | | | 623,609 | |
| | senior note, 15.50%, 10/17/26 | | | | | 20,834,000 | | | | ARS | | | | 416,247 | |
| | Government of Argentina, | | | | | | | | | | | | | | |
| | h FRN, 65.509%, (ARPP7DRR), 6/21/20 | | | | | 110,000 | | | | ARS | | | | 3,167 | |
| | hFRN, 51.542%, (ARS Badlar + 2.00%), 4/03/22 | | | | | 752,000 | | | | ARS | | | | 19,223 | |
| | iIndex Linked, 3.75%, 2/08/19 | | | | | 2,236,000 | | | | ARS | | | | 84,291 | |
| | iIndex Linked, 4.00%, 3/06/20 | | | | | 42,000 | | | | ARS | | | | 1,351 | |
| | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | 1,347,280 | |
| | | | | | | | | | | | | | | | |
| | Brazil 5.4% | | | | | | | | | | | | | | |
| | Letra Tesouro Nacional, | | | | | | | | | | | | | | |
| | Strip, 7/01/20 | | | | | 1,814 | j | | | BRL | | | | 422,880 | |
| | Strip, 7/01/21 | | | | | 220 | j | | | BRL | | | | 47,048 | |
| | Nota Do Tesouro Nacional, | | | | | | | | | | | | | | |
| | 10.00%, 1/01/21 | | | | | 370 | j | | | BRL | | | | 99,731 | |
| | 10.00%, 1/01/23 | | | | | 867 | j | | | BRL | | | | 234,206 | |
| | 10.00%, 1/01/25 | | | | | 3,060 | j | | | BRL | | | | 824,263 | |
| | 10.00%, 1/01/27 | | | | | 725 | j | | | BRL | | | | 195,202 | |
| | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | 1,823,330 | |
| | | | | | | | | | | | | | | | |
| | Colombia 2.3% | | | | | | | | | | | | | | |
| | Government of Colombia, | | | | | | | | | | | | | | |
| | senior bond, 7.75%, 4/14/21 | | | | | 52,000,000 | | | | COP | | | | 16,691 | |
| | senior bond, 9.85%, 6/28/27 | | | | | 12,000,000 | | | | COP | | | | 4,542 | |
| | Titulos de Tesoreria, | | | | | | | | | | | | | | |
| | senior bond, B, 11.00%, 7/24/20 | | | | | 51,000,000 | | | | COP | | | | 17,058 | |
| | senior bond, B, 7.00%, 5/04/22 | | | | | 2,201,000,000 | | | | COP | | | | 708,006 | |
| | senior note, B, 7.00%, 9/11/19 | | | | | 56,000,000 | | | | COP | | | | 17,507 | |
| | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | 763,804 | |
| | | | | | | | | | | | | | | | |
| | Ghana 5.7% | | | | | | | | | | | | | | |
| | Ghana Treasury Note, | | | | | | | | | | | | | | |
| | 17.24%, 11/11/19 | | | | | 70,000 | | | | GHS | | | | 14,130 | |
| | 17.18%, 1/06/20 | | | | | 50,000 | | | | GHS | | | | 10,055 | |
| | 16.50%, 2/17/20 | | | | | 80,000 | | | | GHS | | | | 15,916 | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 21 |
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
Templeton Emerging Markets Balanced Fund(continued)
| | | | | | | | | | | | |
| | | Principal
Amount* | | | | | | Value | |
Foreign Government and Agency | | | | | | | | | | | | |
| Securities(continued) | | | | | | | | | | | | |
Ghana(continued) | | | | | | | | | | | | |
Government of Ghana, | | | | | | | | | | | | |
24.50%, 5/27/19 | | | 50,000 | | | | GHS | | | $ | 10,453 | |
21.00%, 3/23/20 | | | 50,000 | | | | GHS | | | | 10,394 | |
24.75%, 3/01/21 | | | 50,000 | | | | GHS | | | | 11,091 | |
16.25%, 5/17/21 | | | 360,000 | | | | GHS | | | | 68,903 | |
24.50%, 6/21/21 | | | 120,000 | | | | GHS | | | | 26,741 | |
24.75%, 7/19/21 | | | 110,000 | | | | GHS | | | | 24,619 | |
18.75%, 1/24/22 | | | 420,000 | | | | GHS | | | | 83,706 | |
17.60%, 11/28/22 | | | 50,000 | | | | GHS | | | | 9,499 | |
16.50%, 2/06/23 | | | 250,000 | | | | GHS | | | | 46,212 | |
19.75%, 3/25/24 | | | 470,000 | | | | GHS | | | | 92,530 | |
19.00%, 11/02/26 | | | 1,380,000 | | | | GHS | | | | 261,081 | |
senior bond, 19.75%, 3/15/32 | | | 1,492,000 | | | | GHS | | | | 294,384 | |
senior note, 21.50%, 3/09/20 | | | 50,000 | | | | GHS | | | | 10,393 | |
senior note, 18.25%, 9/21/20 | | | 50,000 | | | | GHS | | | | 10,015 | |
senior note, 24.00%, 11/23/20 | | | 1,470,000 | | | | GHS | | | | 319,585 | |
senior note, 16.50%, 3/22/21 | | | 2,900,000 | | | | GHS | | | | 559,792 | |
senior note, 18.25%, 7/25/22 | | | 100,000 | | | | GHS | | | | 19,547 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 1,899,046 | |
| | | | | | | | | | | | |
India 5.3% | | | | | | | | | | | | |
Government of India, | | | | | | | | | | | | |
senior bond, 8.08%, 8/02/22 | | | 80,000,000 | | | | INR | | | | 1,182,360 | |
senior bond, 8.13%, 9/21/22 | | | 40,000,000 | | | | INR | | | | 592,618 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 1,774,978 | |
| | | | | | | | | | | | |
Indonesia 4.6% | | | | | | | | | | | | |
Government of Indonesia, | | | | | | | | | | | | |
senior bond, FR31, 11.00%, 11/15/20 | | | 31,000,000 | | | | IDR | | | | 2,308 | |
senior bond, FR34, 12.80%, 6/15/21 | | | 1,775,000,000 | | | | IDR | | | | 138,198 | |
senior bond, FR35, 12.90%, 6/15/22 | | | 35,000,000 | | | | IDR | | | | 2,803 | |
senior bond, FR36, 11.50%, 9/15/19 | | | 63,000,000 | | | | IDR | | | | 4,535 | |
senior bond, FR43, 10.25%, 7/15/22 | | | 43,000,000 | | | | IDR | | | | 3,213 | |
senior bond, FR53, 8.25%, 7/15/21 | | | 10,153,000,000 | | | | IDR | | | | 717,806 | |
senior bond, FR56, 8.375%, 9/15/26 | | | 759,000,000 | | | | IDR | | | | 53,674 | |
senior bond, FR61, 7.00%, 5/15/22 | | | 24,000,000 | | | | IDR | | | | 1,633 | |
senior bond, FR63, 5.625%, 5/15/23 | | | 9,000,000 | | | | IDR | | | | 579 | |
senior bond, FR68, 8.375%, 3/15/34 | | | 890,000,000 | | | | IDR | | | | 62,303 | |
senior bond, FR70, 8.375%, 3/15/24 | | | 7,738,000,000 | | | | IDR | | | | 546,879 | |
senior note, FR69, 7.875%, 4/15/19 | | | 36,000,000 | | | | IDR | | | | 2,514 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 1,536,445 | |
| | | | | | | | | | | | |
Mexico 3.5% | | | | | | | | | | | | |
Government of Mexico, | | | | | | | | | | | | |
senior bond, M, 8.00%, 6/11/20 | | | 148,500 | k | | | MXN | | | | 750,779 | |
senior bond, M, 6.50%, 6/10/21 | | | 48,700 | k | | | MXN | | | | 236,963 | |
senior note, M, 5.00%, 12/11/19 | | | 36,500 | k | | | MXN | | | | 179,843 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 1,167,585 | |
| | | | | | | | | | | | |
Senegal 0.6% | | | | | | | | | | | | |
fGovernment of Senegal, 144A, 6.25%, 7/30/24 | | | 200,000 | | | | | | | | 195,337 | |
| | | | | | | | | | | | |
| | | | | | |
22 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
| | | | | | | | | | | | |
| Templeton Emerging Markets Balanced Fund(continued) | | | | | | | | | | | | |
| | | Principal
Amount* | | | | | | Value | |
Foreign Government and Agency | | | | | | | | | | | | |
Securities (continued) | | | | | | | | | | | | |
Ukraine 0.3% | | | | | | | | | | | | |
a,f,lGovernment of Ukraine, 144A, VRI, GDP Linked | | | | | | | | | | | | |
Security, 5/31/40 | | | 159,000 | | | | | | | $ | 91,601 | |
| | | | | | | | | | | | |
Total Foreign Government and | | | | | | | | | | | | |
Agency Securities | | | | | | | | | | | | |
(Cost $13,197,820) | | | | | | | | | | | 10,599,406 | |
| | | | | | | | | | | | |
Total Investments before Short Term | | | | | | | | | | | | |
Investments (Cost $29,122,802) | | | | | | | | | | | 28,800,928 | |
| | | | | | | | | | | | |
| | | |
Short Term Investments 11.1% | | | | | | | | | | | | |
| | | |
Foreign Government and Agency Securities 5.2% | | | | | | | | | | | | |
Argentina 2.2% | | | | | | | | | | | | |
mArgentina Treasury Bill, | | | | | | | | | | | | |
5/31/19 - 10/31/19 | | | 7,147,000 | | | | ARS | | | | 208,297 | |
9/30/19 | | | 17,844,000 | | | | ARS | | | | 538,870 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 747,167 | |
| | | | | | | | | | | | |
Egypt 2.4% | | | | | | | | | | | | |
mEgypt Treasury Bill, 1/08/19 - 3/05/19 | | | 14,900,000 | | | | EGP | | | | 819,819 | |
| | | | | | | | | | | | |
Ghana 0.1% | | | | | | | | | | | | |
Ghana Treasury Note, 21.00%, 1/07/19 | | | 100,000 | | | | GHS | | | | 20,475 | |
| | | | | | | | | | | | |
Mexico 0.5% | | | | | | | | | | | | |
mMexico Treasury Bill, 2/14/19 - 11/07/19 | | | 325,730 | n | | | MXN | | | | 159,968 | |
| | | | | | | | | | | | |
Total Foreign Government and Agency | | | | | | | | | | | | |
Securities (Cost $1,736,869) | | | | | | | | | | | 1,747,429 | |
| | | | | | | | | | | | |
Total Investments before Money | | | | | | | | | | | | |
Market Funds (Cost $30,859,671) | | | | | | | | | | | 30,548,357 | |
| | | | | | | | | | | | |
| | | |
| | | Shares | | | | | | | |
Money Market Funds (Cost $1,980,659) 5.9% | | | | | | | | | | | | |
United States 5.9% | | | | | | | | | | | | |
o,pInstitutional Fiduciary Trust Money Market | | | | | | | | | | | | |
Portfolio, 1.99% | | | 1,980,659 | | | | | | | | 1,980,659 | |
| | | | | | | | | | | | |
Total Investments (Cost $32,840,330) | | | | | | | | | | | | |
97.1%. | | | | | | | | | | | 32,529,016 | |
Other Assets, less Liabilities 2.9% | | | | | | | | | | | 960,083 | |
| | | | | | | | | | | | |
| | | |
Net Assets 100.0% | | | | | | | | | | $ | 33,489,099 | |
| | | | | | | | | | | | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 23 |
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
Templeton Emerging Markets Balanced Fund(continued)
†Rounds to less than 0.1% of net assets.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aNon-income producing.
bFair valued using significant unobservable inputs. See Note 12 regarding fair value measurements.
cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At December 31, 2018, the aggregate value of these securities was $334,946, representing 1.0% of net assets.
dSee Note 9 regarding restricted securities.
eVariable rate security. The rate shown represents the yield at period end.
fSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At December 31, 2018, the aggregate value of these securities was $381,438, representing 1.1% of net assets.
gIncome may be received in additional securities and/or cash.
hThe coupon rate shown represents the rate at period end.
iRedemption price at maturity and coupon payment are adjusted for inflation. See Note 1(e).
jPrincipal amount is stated in 1,000 Brazilian Real Units.
kPrincipal amount is stated in 100 Mexican Peso Units.
lThe principal represents the notional amount. See Note 1(c) regarding value recovery instruments.
mThe security was issued on a discount basis with no stated coupon rate.
nPrincipal amount is stated in 10 Mexican Peso Units.
oSee Note 3(f) regarding investments in affiliated management investment companies.
pThe rate shown is the annualizedseven-day effective yield at period end.
At December 31, 2018, the Fund had the following forward exchange contracts outstanding. See Note 1(c).
Forward Exchange Contracts
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Currency | | Counterpartya
| | | Type | | | Quantity | | | Contract
Amount | | | Settlement
Date | | | Unrealized
Appreciation | | | Unrealized
Depreciation | |
| | | | | | | |
OTC Forward Exchange Contracts | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mexican Peso | | | CITI | | | | Buy | | | | 3,666,807 | | | | $191,498 | | | | 1/02/19 | | | | $ — | | | | $ (4,960 | ) |
Mexican Peso | | | CITI | | | | Sell | | | | 3,666,807 | | | | 184,715 | | | | 1/02/19 | | | | — | | | | (1,824 | ) |
Euro | | | DBAB | | | | Sell | | | | 50,000 | | | | 58,198 | | | | 1/07/19 | | | | 872 | | | | — | |
Australian Dollar | | | JPHQ | | | | Sell | | | | 87,250 | | | | 61,631 | | | | 1/11/19 | | | | 144 | | | | — | |
Australian Dollar | | | JPHQ | | | | Sell | | | | 174,500 | | | | 123,949 | | | | 1/14/19 | | | | 968 | | | | — | |
Australian Dollar | | | CITI | | | | Sell | | | | 77,576 | | | | 55,180 | | | | 1/15/19 | | | | 505 | | | | — | |
Euro | | | DBAB | | | | Sell | | | | 107,375 | | | | 125,286 | | | | 1/15/19 | | | | 2,092 | | | | — | |
Euro | | | DBAB | | | | Sell | | | | 372,300 | | | | 431,500 | | | | 1/22/19 | | | | 4,085 | | | | — | |
Euro | | | GSCO | | | | Sell | | | | 20,170 | | | | 23,367 | | | | 1/22/19 | | | | 211 | | | | — | |
Euro | | | UBSW | | | | Sell | | | | 25,815 | | | | 29,929 | | | | 1/22/19 | | | | 293 | | | | — | |
Euro | | | JPHQ | | | | Sell | | | | 66,000 | | | | 76,277 | | | | 1/23/19 | | | | 500 | | | | — | |
Euro | | | DBAB | | | | Sell | | | | 154,000 | | | | 178,180 | | | | 1/24/19 | | | | 1,351 | | | | — | |
Euro | | | DBAB | | | | Sell | | | | 33,300 | | | | 38,469 | | | | 1/25/19 | | | | 229 | | | | — | |
Euro | | | JPHQ | | | | Sell | | | | 68,683 | | | | 79,374 | | | | 1/25/19 | | | | 502 | | | | — | |
Japanese Yen | | | BOFA | | | | Sell | | | | 104,410,000 | | | | 934,568 | | | | 1/28/19 | | | | — | | | | (20,269 | ) |
Euro | | | DBAB | | | | Sell | | | | 169,967 | | | | 195,054 | | | | 1/31/19 | | | | — | | | | (228 | ) |
Brazilian Real | | | HSBK | | | | Buy | | | | 300,000 | | | | 80,180 | | | | 2/01/19 | | | | — | | | | (2,851 | ) |
Australian Dollar | | | CITI | | | | Sell | | | | 77,576 | | | | 54,988 | | | | 2/13/19 | | | | 285 | | | | — | |
Australian Dollar | | | JPHQ | | | | Sell | | | | 87,250 | | | | 61,882 | | | | 2/13/19 | | | | 357 | | | | — | |
Euro | | | BOFA | | | | Sell | | | | 32,247 | | | | 36,751 | | | | 2/19/19 | | | | — | | | | (354 | ) |
Euro | | | DBAB | | | | Sell | | | | 623,000 | | | | 709,354 | | | | 2/19/19 | | | | — | | | | (7,501 | ) |
Euro | | | GSCO | | | | Sell | | | | 60,500 | | | | 68,982 | | | | 2/19/19 | | | | — | | | | (632 | ) |
| | | | | | |
24 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
Templeton Emerging Markets Balanced Fund(continued)
Forward Exchange Contracts(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Currency | | Counterpartya | | Type | | | Quantity | | | Contract
Amount | | | Settlement
Date | | | Unrealized
Appreciation | | | Unrealized
Depreciation | |
| | | | |
OTC Forward Exchange Contracts(continued) | | | | | | | | | | | | | | | | | |
Euro | | JPHQ | | | Sell | | | | 68,683 | | | | $ 78,106 | | | | 2/19/19 | | | | $ — | | | | $ (924 | ) |
Euro | | JPHQ | | | Sell | | | | 86,350 | | | | 99,344 | | | | 2/20/19 | | | | — | | | | (22) | |
Euro | | GSCO | | | Sell | | | | 20,165 | | | | 23,279 | | | | 2/21/19 | | | | 72 | | | | — | |
Euro | | JPHQ | | | Sell | | | | 95,683 | | | | 110,317 | | | | 2/21/19 | | | | 201 | | | | — | |
Euro | | UBSW | | | Sell | | | | 25,815 | | | | 29,757 | | | | 2/21/19 | | | | 48 | | | | — | |
Mexican Peso | | CITI | | | Buy | | | | 12,612,787 | | | | 649,692 | | | | 2/25/19 | | | | — | | | | (13,389) | |
Australian Dollar | | BOFA | | | Sell | | | | 696,000 | | | | 504,043 | | | | 2/28/19 | | | | 13,149 | | | | — | |
Euro | | DBAB | | | Sell | | | | 170,033 | | | | 193,764 | | | | 2/28/19 | | | | — | | | | (2,022) | |
Euro | | BOFA | | | Sell | | | | 34,000 | | | | 38,984 | | | | 3/04/19 | | | | — | | | | (179) | |
Euro | | BOFA | | | Sell | | | | 102,000 | | | | 117,083 | | | | 3/06/19 | | | | — | | | | (428) | |
Euro | | DBAB | | | Sell | | | | 50,000 | | | | 57,232 | | | | 3/06/19 | | | | — | | | | (372) | |
Euro | | DBAB | | | Sell | | | | 107,375 | | | | 123,458 | | | | 3/12/19 | | | | — | | | | (312) | |
Australian Dollar | | CITI | | | Sell | | | | 77,849 | | | | 56,245 | | | | 3/13/19 | | | | 1,327 | | | | — | |
Mexican Peso | | CITI | | | Buy | | | | 8,872,126 | | | | 445,936 | | | | 3/13/19 | | | | 507 | | | | — | |
Euro | | BOFA | | | Sell | | | | 16,123 | | | | 18,323 | | | | 3/18/19 | | | | — | | | | (272) | |
Euro | | GSCO | | | Sell | | | | 20,165 | | | | 23,227 | | | | 3/21/19 | | | | — | | | | (36) | |
Mexican Peso | | CITI | | | Buy | | | | 5,103,220 | | | | 261,235 | | | | 3/27/19 | | | | — | | | | (5,041) | |
Mexican Peso | | CITI | | | Buy | | | | 3,666,807 | | | | 182,202 | | | | 3/29/19 | | | | 1,820 | | | | — | |
Mexican Peso | | CITI | | | Buy | | | | 8,620,000 | | | | 432,883 | | | | 4/24/19 | | | | — | | | | (2,231) | |
Japanese Yen | | BOFA | | | Sell | | | | 104,410,000 | | | | 946,085 | | | | 4/30/19 | | | | — | | | | (16,160) | |
Mexican Peso | | CITI | | | Buy | | | | 503,572 | | | | 23,896 | | | | 6/06/19 | | | | 1,075 | | | | — | |
Total Forward Exchange Contracts | | | | | | | | | | | | | | | | | | | | | $ 30,593 | | | | $ (80,007) | |
Net unrealized appreciation (depreciation) | | | | | | | | | | | | | | | | | | | | | | | $ (49,414) | |
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
At December 31, 2018, the Fund had the following interest rate swap contracts outstanding. See Note 1(c).
Interest Rate Swap Contracts
| | | | | | | | | | | | | | | | |
| Description | | Payment
Frequency | | | Maturity
Date | | | Notional
Amount | | | Value/
Unrealized
Appreciation
(Depreciation) | |
Centrally Cleared Swap Contracts | | | | | | | | | | | | | | | | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.775% | | | Semi-Annual | | | | 10/04/23 | | | | $ 20,000 | | | | $ (194) | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.795% | | | Semi-Annual | | | | 10/04/23 | | | | 20,000 | | | | (212) | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.765% | | | Semi-Annual | | | | 10/07/23 | | | | 20,000 | | | | (184) | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.914% | | | Semi-Annual | | | | 1/22/25 | | | | 680,000 | | | | 23,583 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.970% | | | Semi-Annual | | | | 1/23/25 | | | | 850,000 | | | | 26,582 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.973% | | | Semi-Annual | | | | 1/27/25 | | | | 510,000 | | | | 15,806 | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 25 |
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF INVESTMENTS
Templeton Emerging Markets Balanced Fund(continued)
Interest Rate Swap Contracts(continued)
| | | | | | | | | | | | | | | | |
| Description | | Payment
Frequency | | | Maturity
Date | | | Notional
Amount | | | Value/
Unrealized
Appreciation
(Depreciation) | |
Centrally Cleared Swap Contracts(continued) | | | | | | | | | | | | | | | | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.937% | | | Semi-Annual | | | | 1/29/25 | | | | $130,000 | | | | $ 4,327 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.942% | | | Semi-Annual | | | | 1/30/25 | | | | 110,000 | | | | 3,631 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.817% | | | Semi-Annual | | | | 2/03/25 | | | | 160,000 | | | | 6,501 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.668% | | | Semi-Annual | | | | 10/04/43 | | | | 10,000 | | | | (1,542 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.687% | | | Semi-Annual | | | | 10/04/43 | | | | 10,000 | | | | (1,576 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.675% | | | Semi-Annual | | | | 10/07/43 | | | | 10,000 | | | | (1,553 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.794% | | | Semi-Annual | | | | 3/13/47 | | | | 200,000 | | | | 253 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.980% | | | Semi-Annual | | | | 2/20/48 | | | | 116,000 | | | | (4,623 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.002% | | | Semi-Annual | | | | 2/22/48 | | | | 116,000 | | | | (4,802 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.019% | | | Semi-Annual | | | | 2/23/48 | | | | 116,000 | | | | (5,205 | ) |
| | | | | | | | | | | | | | | | |
Total Interest Rate Swap Contracts | | | | | | | | | | | | | | | $60,792 | |
| | | | | | | | | | | | | | | | |
See Note 10 regarding other derivative information.
See Abbreviations on page 44.
| | | | | | |
26 | | Annual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
Financial Statements
Statement of Assets and Liabilities
December 31, 2018
Templeton Emerging Markets Balanced Fund
| | | | |
Assets: | | | | |
Investments in securities: | | | | |
Cost - Unaffiliated issuers | | $ | 30,859,671 | |
Cost -Non-controlled affiliates (Note 3f) | | | 1,980,659 | |
Value - Unaffiliated issuers | | $ | 30,548,357 | |
Value -Non-controlled affiliates (Note 3f) | | | 1,980,659 | |
Foreign currency, at value (cost $197,159) | | | 196,510 | |
Receivables: | | | | |
Investment securities sold | | | 293,423 | |
Capital shares sold | | | 71,371 | |
Dividends and interest | | | 440,262 | |
Affiliates | | | 58,596 | |
Deposits with brokers for: | | | | |
Centrally cleared swap contracts | | | 101,740 | |
Unrealized appreciation on OTC forward exchange contracts | | | 30,593 | |
| |
Total assets | | | 33,721,511 | |
Liabilities: | | | | |
Payables: | | | | |
Investment securities purchased | | | 5,060 | |
Capital shares redeemed | | | 12,747 | |
Distribution fees | | | 15,441 | |
Transfer agent fees | | | 13,445 | |
Professional fees | | | 57,864 | |
Variation margin on centrally cleared swap contracts | | | 10,276 | |
Unrealized depreciation on OTC forward exchange contracts | | | 80,007 | |
Deferred tax | | | 35,843 | |
Accrued expenses and other liabilities | | | 1,729 | |
| |
Total liabilities | | | 232,412 | |
| |
Net assets, at value | | $ | 33,489,099 | |
| |
Net assets consist of: | | | | |
Paid-in capital | | $ | 41,343,639 | |
Total distributable earnings (loss) | | | (7,854,540 | ) |
| |
Net assets, at value | | $ | 33,489,099 | |
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | Annual Report | | 27 |
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL STATEMENTS
Statement of Assets and Liabilities (continued)
December 31, 2018
Templeton Emerging Markets Balanced Fund
| | | | |
| |
Class A: | | | | |
Net assets, at value | | | $22,330,575 | |
Shares outstanding | | | 2,390,322 | |
Net asset value per sharea | | | $9.34 | |
Maximum offering price per share (net asset value per share ÷ 94.50%) | | | $9.88 | |
| |
Class C: | | | | |
Net assets, at value | | | $ 3,305,239 | |
Shares outstanding | | | 356,904 | |
Net asset value and maximum offering price per sharea | | | $9.26 | |
| |
Class R: | | | | |
Net assets, at value | | | $ 84,033 | |
Shares outstanding | | | 8,977 | |
Net asset value and maximum offering price per share | | | $9.36 | |
| |
Class R6: | | | | |
Net assets, at value | | | $ 774,653 | |
Shares outstanding | | | 82,852 | |
Net asset value and maximum offering price per share | | | $9.35 | |
| |
Advisor Class: | | | | |
Net assets, at value | | | $ 6,994,599 | |
Shares outstanding | | | 747,707 | |
Net asset value and maximum offering price per share | | | $9.35 | |
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
| | | | | | |
28 | | Annual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL STATEMENTS
Statement of Operations
for the year ended December 31, 2018
Templeton Emerging Markets Balanced Fund
| | | | |
Investment income: | | | | |
Dividends: (net of foreign taxes)* | | | | |
Unaffiliated issuers | | $ | 543,937 | |
Non-controlled affiliates (Note 3f) | | | 20,640 | |
Interest: (net of foreign taxes)~ | | | | |
Unaffiliated issuers | | | 1,920,336 | |
Unaffiliated issuers: | | | | |
Inflation principal adjustments | | | 110,291 | |
| | | | |
| |
Total investment income | | | 2,595,204 | |
| | | | |
| |
Expenses: | | | | |
Management fees (Note 3a) | | | 477,506 | |
Distribution fees: (Note 3c) | | | | |
Class A | | | 69,757 | |
Class C | | | 45,161 | |
Class R | | | 784 | |
Transfer agent fees: (Note 3e) | | | | |
Class A | | | 68,471 | |
Class C | | | 11,080 | |
Class R | | | 386 | |
Class R6 | | | 1,131 | |
Advisor Class | | | 19,672 | |
Custodian fees (Note 4) | | | 26,435 | |
Reports to shareholders | | | 29,379 | |
Registration and filing fees | | | 81,236 | |
Professional fees | | | 100,557 | |
Other | | | 41,826 | |
| | | | |
| |
Total expenses | | | 973,381 | |
Expenses waived/paid by affiliates (Note 3f and 3g) | | | (347,465 | ) |
| | | | |
| |
Net expenses | | | 625,916 | |
| | | | |
| |
Net investment income | | | 1,969,288 | |
| | | | |
| |
Realized and unrealized gains (losses): | | | | |
Net realized gain (loss) from: | | | | |
Investments:# | | | | |
Unaffiliated issuers | | | (201,722 | ) |
Foreign currency transactions | | | (104,715 | ) |
Forward exchange contracts | | | 199,870 | |
Swap contracts | | | (711 | ) |
| | | | |
| |
Net realized gain (loss) | | | (107,278 | ) |
| | | | |
| |
Net change in unrealized appreciation (depreciation) on: | | | | |
Investments: | | | | |
Unaffiliated issuers | | | (7,645,682 | ) |
Translation of other assets and liabilities denominated in foreign currencies | | | 4,114 | |
Forward exchange contracts | | | 149,419 | |
Swap contracts | | | 38,244 | |
Change in deferred taxes on unrealized appreciation | | | 1,809 | |
| | | | |
| |
Net change in unrealized appreciation (depreciation) | | | (7,452,096 | ) |
| | | | |
| |
Net realized and unrealized gain (loss) | | | (7,559,374 | ) |
| | | | |
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | Annual Report | | 29 |
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL STATEMENTS
Statement of Operations(continued)
for the year ended December 31, 2018
Templeton Emerging Markets Balanced Fund
| | | | |
| |
Net increase (decrease) in net assets resulting from operations | | $ | (5,590,086 | ) |
| | | | |
| | | | |
*Foreign taxes withheld on dividends | | | $ 75,980 | |
~Foreign taxes withheld on interest | | | $ 80,267 | |
#Net of foreign taxes | | | $ 105,194 | |
| | | | | | |
30 | | Annual Report | | | The accompanying notes are an integral part of these financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Templeton Emerging Markets Balanced Fund
| | | | | | | | |
| | | Year Ended December 31, | |
| | |
| | | 2018 | | | 2017 | |
| |
| | |
Increase (decrease) in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 1,969,288 | | | $ | 1,303,015 | |
Net realized gain (loss) | | | (107,278 | ) | | | 646,214 | |
Net change in unrealized appreciation (depreciation) | | | (7,452,096 | ) | | | 6,304,418 | |
| | | | |
| | |
Net increase (decrease) in net assets resulting from operations | | | (5,590,086 | ) | | | 8,253,647 | |
| | | | |
Distributions to shareholders: (Note 1e) | | | | | | | | |
Class A | | | (1,148,087 | ) | | | (728,722 | ) |
Class C | | | (160,341 | ) | | | (97,169 | ) |
Class R | | | (4,697 | ) | | | (6,122 | ) |
Class R6 | | | (39,498 | ) | | | (10,627 | ) |
Advisor Class | | | (340,828 | ) | | | (212,342 | ) |
| | | | |
Distributions to shareholders from tax return of capital: | | | | | | | | |
Class A | | | (356,755 | ) | | | — | |
Class C | | | (49,824 | ) | | | — | |
Class R | | | (1,459 | ) | | | — | |
Class R6 | | | (12,274 | ) | | | — | |
Advisor Class | | | (105,908 | ) | | | — | |
| | | | |
| | |
Total distributions to shareholders | | | (2,219,671 | ) | | | (1,054,982 | ) |
| | | | |
| | |
Capital share transactions: (Note 2) | | | | | | | | |
Class A | | | (990,796 | ) | | | 3,119,005 | |
Class C | | | (857,821 | ) | | | 1,067,732 | |
Class R | | | (151,784 | ) | | | 26,290 | |
Class R6 | | | 107,624 | | | | 832,036 | |
Advisor Class | | | 318,371 | | | | 2,920,637 | |
| | | | |
| | |
Total capital share transactions | | | (1,574,406 | ) | | | 7,965,700 | |
| | | | |
Net increase (decrease) in net assets | | | (9,384,163 | ) | | | 15,164,365 | |
Net assets: | | | | | | | | |
Beginning of year | | | 42,873,262 | | | | 27,708,897 | |
| | | | |
| | |
End of year (Note 1e) | | $ | 33,489,099 | | | $ | 42,873,262 | |
| | | | |
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these financial statements. | Annual Report | | 31 |
TEMPLETON GLOBAL INVESTMENT TRUST
Notes to Financial Statements
Templeton Emerging Markets Balanced Fund
1. Organization and Significant Accounting Policies
Templeton Global Investment Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting of five separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Templeton Emerging Markets Balanced Fund (Fund) is included in this report. The Fund offers five classes of shares: Class A, Class C, Class R, Class R6, and Advisor Class. Beginning on October 19, 2018, Class C shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees.
The following summarizes the Fund’s significant accounting policies.
a. Financial Instrument Valuation
The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The Fund may utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Equity securities and derivative financial instruments listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or as of 4 p.m. Eastern time. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined.Over-the-counter (OTC) securities are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.
Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the date that the values of the foreign debt securities are determined.
Investments inopen-end mutual funds are valued at the closing NAV.
Certain derivative financial instruments are centrally cleared or trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.
The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the Fund primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the
| | | | | | |
32 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed.
Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every Fund’s business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at 4 p.m. Eastern time. In order to minimize the potential for these differences, the VC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.
When the last day of the reporting period is anon-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.
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. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated
in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.
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 in the Statement of Operations.
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 denominated assets and liabilities other than investments in securities held at the end of the reporting period.
c. Derivative Financial Instruments
The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counter-parties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain
| | | | | | |
franklintempleton.com | | | | Annual Report | | 33 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
1. Organization and Significant Accounting
Policies(continued)
c. Derivative Financial Instruments(continued)
counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives thenon-defaulting party the right to net andclose-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At December 31, 2018, the Fund had OTC derivatives in a net liability position of $51,481 and the aggregate value of collateral pledged for such contracts was $0.
Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent
that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterpartynon-performance.
The Fund entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.
The Fund entered into interest rate swap contracts primarily to manage interest rate risk. An interest rate swap is an agreement between the Fund and a counterparty to exchange cash flows based on the difference between two interest rates, applied to a notional amount. These agreements may be privately negotiated in theover-the-counter market (OTC interest rate swaps) or may be executed on a registered exchange (centrally cleared interest rate swaps). For centrally cleared interest rate swaps, required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statement of Assets and Liabilities. Over the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as unrealized depreciation and appreciation until the payments are made, at which time they are realized.
The Fund invests in value recovery instruments (VRI) primarily to gain exposure to economic growth. Periodic payments from VRI are dependent on established benchmarks for underlying variables. VRI has a notional amount, which is used to calculate amounts of payments to holders. Payments are recorded upon receipt as realized gains in the Statement of Operations. The risks of investing in VRI include growth risk, liquidity, and the potential loss of investment.
See Note 10 regarding other derivative information.
d. Income and Deferred Taxes
It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in
| | | | | | |
34 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.
The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of December 31, 2018, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.
e. 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. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on theex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on theex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.*
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust or based on the ratio of number
of shareholders of each Fund to the combined number of shareholders of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
Realized and unrealized gains and losses and net investment income, excluding class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions by class are generally due to differences in class specific expenses.
Inflation-indexed bonds are adjusted for inflation through periodic increases or decreases in the security’s interest accruals, face amount, or principal redemption value, by amounts corresponding to the rate of inflation as measured by an index. Any increase or decrease in the face amount or principal redemption value will be included as inflation principal adjustments in the Statement of Operations.
f. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP 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 expenses during the reporting period. Actual results could differ from those estimates.
g. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
*Effective during the current reporting period, it is no longer required to present certain line items in the Statements of Changes in Net Assets. The below prior period amounts affected by this change are shown as they were in the prior year Statements of Changes in Net Assets.
| | | | | | |
franklintempleton.com | | | | Annual Report | | 35 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
1. Organization and Significant Accounting Policies(continued)
For the year ended December 31, 2017, distributions to shareholders were as follows:
| | | | | | | | | | | | |
Distributions from net investment income : | | | | | | | | | | | | |
Class A | | $ | (728,722 | ) | | | | | | | | |
Class C | | | (97,169 | ) | | | | | | | | |
Class R | | | (6,122 | ) | | | | | | | | |
Class R6 | | | (10,627 | ) | | | | | | | | |
Advisor Class | | | (212,342 | ) | | | | | | | | |
For the year ended December 31, 2017, undistributed net investment income included in net assets was $120,624.
2. Shares of Beneficial Interest
At December 31, 2018, there were an unlimited number of shares authorized ($0.01 par value). Transactions in the Fund’s shares were as follows:
| | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | |
| | | 2018 | | | 2017 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| | | | |
Class A Shares: | | | | | | | | | | | | | | | | |
Shares solda | | | 821,077 | | | $ | 8,887,148 | | | | 1,120,344 | | | $ | 11,790,630 | |
| | | | |
Shares issued in reinvestment of distributions | | | 146,783 | | | | 1,488,611 | | | | 67,251 | | | | 721,811 | |
| | | | |
Shares redeemed | | | (1,114,183 | ) | | | (11,366,555 | ) | | | (901,248 | ) | | | (9,393,436 | ) |
| | | | |
Net increase (decrease) | | | (146,323 | ) | | $ | (990,796 | ) | | | 286,347 | | | $ | 3,119,005 | |
| | | | |
Class C Shares: | | | | | | | | | | | | | | | | |
Shares sold | | | 122,935 | | | $ | 1,336,461 | | | | 221,248 | | | $ | 2,315,133 | |
| | | | |
Shares issued in reinvestment of distributions | | | 20,623 | | | | 208,129 | | | | 8,994 | | | | 96,023 | |
| | | | |
Shares redeemeda | | | (236,566 | ) | | | (2,402,411 | ) | | | (131,080 | ) | | | (1,343,424 | ) |
| | | | |
Net increase (decrease) | | | (93,008 | ) | | $ | (857,821 | ) | | | 99,162 | | | $ | 1,067,732 | |
| | | | |
Class R Shares: | | | | | | | | | | | | | | | | |
Shares sold | | | 2,319 | | | $ | 24,971 | | | | 3,159 | | | $ | 34,505 | |
| | | | |
Shares issued in reinvestment of distributions | | | 588 | | | | 6,156 | | | | 571 | | | | 6,122 | |
| | | | |
Shares redeemed | | | (17,222 | ) | | | (182,911 | ) | | | (1,548 | ) | | | (14,337 | ) |
| | | | |
Net increase (decrease) | | | (14,315 | ) | | $ | (151,784 | ) | | | 2,182 | | | $ | 26,290 | |
| | | | |
Class R6 Sharesb: | | | | | | | | | | | | | | | | |
Shares sold | | | 37,895 | | | $ | 416,870 | | | | 77,854 | | | $ | 871,524 | |
| | | | |
Shares issued in reinvestment of distributions | | | 5,119 | | | | 51,772 | | | | 953 | | | | 10,523 | |
| | | | |
Shares redeemed | | | (34,516 | ) | | | (361,018 | ) | | | (4,453 | ) | | | (50,011 | ) |
| | | | |
Net increase (decrease) | | | 8,498 | | | $ | 107,624 | | | | 74,354 | | | $ | 832,036 | |
| | | | |
Advisor Class Shares: | | | | | | | | | | | | | | | | |
Shares sold | | | 359,597 | | | $ | 3,793,257 | | | | 653,669 | | | $ | 6,937,088 | |
| | | | |
Shares issued in reinvestment of distributions | | | 43,391 | | | | 440,359 | | | | 18,465 | | | | 200,069 | |
| | | | |
Shares redeemed | | | (380,603 | ) | | | (3,915,245 | ) | | | (395,928 | ) | | | (4,216,520 | ) |
| | | | |
Net increase (decrease) | | | 22,385 | | | $ | 318,371 | | | | 276,206 | | | $ | 2,920,637 | |
aMay include a portion of Class C shares that were automatically converted to Class A.
bFor the period August 1, 2017 (effective date) to December 31, 2017.
| | | | | | |
36 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund (continued)
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton. Certain officers and trustees of the Trust are also officers and/or directors of the following subsidiaries:
| | | | |
Subsidiary | | Affiliation | | |
| Templeton Asset Management Ltd. (Asset Management) | | Investment manager | | |
| Franklin Advisers, Inc. (Advisers) | | Investment manager | | |
| Franklin Templeton Services, LLC (FT Services) | | Administrative manager | | |
| Franklin Templeton Distributors, Inc. (Distributors) | | Principal underwriter | | |
| Franklin Templeton Investor Services, LLC (Investor Services) | | Transfer agent | | |
a. Management Fees
The Fund pays an investment management fee to Asset Management based on the average daily net assets of the Fund as follows:
| | | | |
| Annualized Fee Rate | | Net Assets | | |
1.150% | | Up to and including $500 million | | |
1.100% | | Over $500 million, up to and including $5 billion | | |
1.050% | | Over $5 billion, up to and including $10 billion | | |
1.000% | | Over $10 billion, up to and including $15 billion | | |
0.950% | | Over $15 billion, up to and including $20 billion | | |
0.900% | | In excess of $20 billion | | |
Prior to May 1, 2018 , the Fund paid fees to Asset Management based on the average daily net assets of the Fund as follows:
| | | | |
| Annualized Fee Rate | | Net Assets | | |
1.150% | | Up to and including $1 billion | | |
1.100% | | Over $1 billion, up to and including $5 billion | | |
1.050% | | Over $5 billion, up to and including $10 billion | | |
1.000% | | Over $10 billion, up to and including $15 billion | | |
0.950% | | Over $15 billion, up to and including $20 billion | | |
0.900% | | In excess of $20 billion | | |
For the year ended December 31, 2018, the gross effective investment management fee rate was 1.150% of the Fund’s average daily net assets.
Under a subadvisory agreement, Advisers, an affiliate of Asset Management, provides subadvisory services to the Fund. The subadvisory fee is paid by Asset Management based on the Fund’s average daily net assets, and is not an additional expense of the Fund.
b. Administrative Fees
Under an agreement with Asset Management, FT Services provides administrative services to the Fund. The fee is paid by Asset Management based on the Fund’s average daily net assets, and is not an additional expense of the Fund.
| | | | | | |
franklintempleton.com | | | | Annual Report | | 37 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
3. Transactions with Affiliates(continued)
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule12b-1 under the 1940 Act. Under the Fund’s Class A reimbursement distribution plan, the Fund reimburses Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to the maximum annual plan rate. Under the Class A reimbursement distribution plan, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Fund’s Class C and R compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to the maximum annual plan rate for each class. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.
The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
| | | | |
Class A | | | 0.30 | % |
Class C | | | 1.00 | % |
Class R | | | 0.50 | % |
The Board has set the current rate at 0.25% per year for Class A shares until further notice and approval by the Board.
d. Sales Charges/Underwriting Agreements
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the year:
| | | | |
Sales charges retained net of commissions paid to unaffiliated brokers/dealers | | $ | 12,548 | |
CDSC retained | | $ | 1,502 | |
Effective September 10, 2018, the Board approved changes to certainfront-end sales charges and dealer commissions on Class A shares. Further details are disclosed in the Fund’s Prospectus
e. Transfer Agent Fees
Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. The fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6 reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.
For the year ended December 31, 2018, the Fund paid transfer agent fees of $100,740, of which $50,696 was retained by Investor Services.
| | | | | | |
38 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
f. Investments in Affiliated Management Investment Companies
The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the year ended December 31, 2018, the Fund held investments in affiliated management investment companies as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Number of
Shares Held
at Beginning
of Year | | | Gross
Additions | | | Gross
Reductions | | | Number of
Shares Held at End
of Year | | | Value at End of Year | | | Dividend
Income | | | Realized Gain (Loss) | | | Net Change in Unrealized
Appreciation (Depreciation) |
Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Institutional Fiduciary Trust Money Market Portfolio, 1.99% | | | 2,168,631 | | | | 13,056,737 | | | | (13,244,709 | ) | | | 1,980,659 | | | | $1,980,659 | | | | $20,640 | | | | $ — | | | $ — |
g. Waiver and Expense Reimbursements
Asset Management has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Fund so that the expenses (excluding distribution fees, acquired fund fees and expenses, and certainnon-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) for Class A, Class C, Class R and Advisor Class of the Fund do not exceed 1.23%, and for Class R6 does not exceed 1.15% based on the average net assets of each class until April 30, 2019. Total expenses waived or paid are not subject to recapture subsequent to the Fund’s fiscal year end.
Investor Services has contractually agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.03% based on the average net assets of the class, until April 30, 2019.
4. Expense Offset Arrangement
The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the year ended December 31, 2018, there were no credits earned.
5. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any.
At December 31, 2018, the capital loss carryforwards were as follows:
| | | | |
Capital loss carryforwards not subject to expiration: | | | | |
Short Term | | $ | 4,194,771 | |
Long Term | | | 3,085,355 | |
| |
Total capital loss carryforwards | | $ | 7,280,126 | |
During the year ended December 31, 2018, the Fund utilized $317,853 of capital loss carryforwards.
| | | | | | |
franklintempleton.com | | | | Annual Report | | 39 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
5. Income Taxes(continued)
The tax character of distributions paid during the years ended December 31, 2018 and 2017, was as follows:
| | | | | | | | |
| | | 2018 | | | 2017 | |
Distributions paid from: | | | | | | | | |
Ordinary income | | $ | 1,693,451 | | | $ | 1,054,982 | |
Return of capital | | | 526,220 | | | | — | |
| | | | |
| | $ | 2,219,671 | | | $ | 1,054,982 | |
| | | | |
At December 31, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| | | | |
Cost of investments | | $ | 33,087,584 | |
| | | | |
| |
Unrealized appreciation | | $ | 4,694,857 | |
Unrealized depreciation | | | (5,228,667 | ) |
| | | | |
| |
Net unrealized appreciation (depreciation) | | $ | (533,810 | ) |
| | | | |
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, foreign capital gains tax and bond discounts and premiums.
6. Investment Transactions
Purchases and sales of investments (excluding short term securities) for the year ended December 31, 2018, aggregated $7,858,131 and $9,478,454, respectively.
7. Credit Risk and Defaulted Securities
At December 31, 2018, the Fund had 21.7% of its portfolio invested in high yield or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.
8. Concentration of Risk
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in securities in Europe. In addition, certain foreign securities may not be as liquid as U.S. securities.
9. Restricted Securities
The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.
| | | | |
40 | | Annual Report | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
At December 31, 2018, investments in restricted securities, excluding securities exempt from registration under the 1933 Act deemed to be liquid, were as follows:
| | | | | | | | | | | | | | |
Principal
Amount*/
Shares/
Warrants | | | | Issuer | | Acquisition Date | | Cost | | | Value | |
84 | | | | Edcon Holdings Ltd., F wts., 2/20/49 | | 11/27/15 | | $ | 1 | | | $ | — | |
1,503,436 | | | | Edcon Holdings Ltd., F1 wts., 2/20/49 | | 11/27/15 | | | 15,930 | | | | — | |
121,748 | | | | Edcon Holdings Ltd., F2 wts., 2/20/49 | | 11/27/15 | | | 1,290 | | | | — | |
1,390,834 | | | | K2016470219 South Africa Ltd., A | | 10/11/11 - 2/01/17 | | | 8,179 | | | | 968 | |
437,269 | | | | K2016470219 South Africa Ltd., B | | 2/01/17 | | | 325 | | | | 304 | |
108,602 | | | | K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22 | | 10/11/11 - 12/31/18 | | | 132,242 | | | | 134 | |
42,110 | | EUR | | K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 8.00%, 12/31/22 | | 2/01/17 - 12/31/18 | | | 25,404 | | | | 928 | |
73,549 | | | | K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22 | | 2/01/17 - 12/31/18 | | | 56,099 | | | | 5,230 | |
| | | | | | | | | | |
| | | | | |
| | | | Total Restricted Securities(Value is 0.0%†of Net Assets) | | | | $ | 239,470 | | | $ | 7,564 | |
| | | | | | | | | | |
*In U.S. dollars unless otherwise indicated.
†Rounds to less than 0.1% of Net Assets.
10. Other Derivative Information
At December 31, 2018, the Fund’s investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows:
| | | | | | | | | | | | |
| | | Asset Derivatives | | | Liability Derivatives | |
Derivative Contracts Not Accounted for as
Hedging Instruments | | Statement of Assets and Liabilities
Location | | Fair Value | | | Statement of Assets and Liabilities
Location | | Fair Value | |
Interest rate contracts | | Variation margin on centrally | | $ | 80,683 | a | | Variation margin on centrally | | $ | 19,891 | a |
| | cleared swap contracts | | | | | | cleared swap contracts | | | | |
Foreign exchange contracts | | Unrealized appreciation on OTC | | | 30,593 | | | Unrealized depreciation on OTC | | | 80,007 | |
| | forward exchange contracts | | | | | | forward exchange contracts | | | | |
Value recovery instruments | | Investments in securities, at value | | | 91,601 | b | | | | | | |
| | | | | | | | | | | | |
Totals | | | | $ | 202,877 | | | | | $ | 99,898 | |
| | | | | | | | | | | | |
aThis amount reflects the cumulative appreciation (depreciation) of centrally cleared swap contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at year end is separately reported within the Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.
bVRI are included in investments in securities, at value in the Statement of Assets and Liabilities.
For the year ended December 31, 2018, the effect of derivative contracts in the Fund’s Statement of Operations was as follows:
| | | | | | | | | | | | |
Derivative Contracts Not Accounted for as Hedging Instruments | | Statement of Operations Location | | Net Realized
Gain (Loss) for
the Year | | | Statement of Operations Location | | Net Change in
Unrealized
Appreciation
(Depreciation)
for the Year | |
| | | | |
| | Net realized gain (loss) from: | | | | | | Net change in unrealized appreciation (depreciation) on: | | | | |
Interest rate contracts | | Swap contracts | | | $ (711) | | | Swap contracts | | | $ 38,244 | |
Foreign exchange contracts | | Forward exchange contracts | | | 199,870 | | | Forward exchange contracts | | | 149,419 | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 41 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
10. Other Derivative Information(continued)
| | | | | | | | | | | | |
Derivative Contracts Not Accounted for as Hedging Instruments | | Statement of Operations Location | | Net Realized
Gain (Loss) for
the Year | | | Statement of Operations Location | | Net Change in
Unrealized
Appreciation
(Depreciation)
for the Year | |
| | | | |
| | Net realized gain (loss) from: | | | | | | Net change in unrealized appreciation (depreciation) on: | | | | |
Value recovery instruments | | Investments | | $ | 12,216 | a | | Investments | | $ | (12,091 | )a |
| | | | | | | | | | | | |
Totals | | | | $ | 211,375 | | | | | $ | 175,572 | |
| | | | | | | | | | | | |
aVRI are included in net realized gain (loss) from investments and net change in unrealized appreciation (depreciation) on investments in the Statement of Operations.
For the year ended December 31, 2018, the average month end notional amount of swap contracts represented $3,024,462. The average month end contract value and fair value of forward exchange contracts and VRI, was $8,278,843 and $141,991, respectively.
See Note 1(c) regarding derivative financial instruments.
See Abbreviations on page 44.
11. Credit Facility
The Fund together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matured on February 8, 2019. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests. Effective February 8, 2019, the Borrowers renewed the Global Credit Facility for a one year term, maturing February 7, 2020, for a total of $2 billion.
Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the year ended December 31, 2018, the Fund did not use the Global Credit Facility.
12. Fair Value Measurements
The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:
| | • | | Level 1 – quoted prices in active markets for identical financial instruments |
| | • | | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
| | • | | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
| | | | |
42 | | Annual Report | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
A summary of inputs used as of December 31, 2018, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities:a | | | | | | | | | | | | | | | | |
Equity Investments:b | | | | | | | | | | | | | | | | |
Mexico | | $ | 428,603 | | | $ | — | | | $ | 98 | c | | $ | 428,701 | |
South Africa | | | 1,310,589 | | | | — | | | | 1,272 | c | | | 1,311,861 | |
All Other Equity Investments | | | 16,360,168 | | | | — | | | | — | | | | 16,360,168 | |
Corporate Bonds: | | | | | | | | | | | | | | | | |
Bermuda | | | — | | | | 94,500 | | | | — | | | | 94,500 | |
South Africa | | | — | | | | 5,230 | | | | 1,062 | | | | 6,292 | |
Foreign Government and Agency Securities | | | — | | | | 10,599,406 | | | | — | | | | 10,599,406 | |
Short Term Investments | | | 1,980,659 | | | | 1,747,429 | | | | — | | | | 3,728,088 | |
| | | | |
Total Investments in Securities | | $ | 20,080,019 | | | $ | 12,446,565 | | | $ | 2,432 | | | $ | 32,529,016 | |
Other Financial Instruments: | | | | | | | | | | | | | | | | |
Forward Exchange Contracts | | $ | — | | | $ | 30,593 | | | $ | — | | | $ | 30,593 | |
Swap Contracts | | | — | | | | 80,683 | | | | — | | | | 80,683 | |
| | | | |
Total Other Financial Instruments | | $ | — | | | $ | 111,276 | | | $ | — | | | $ | 111,276 | |
Liabilities: | | | | | | | | | | | | | | | | |
Other Financial Instruments: | | | | | | | | | | | | | | | | |
Forward Exchange Contracts | | $ | — | | | $ | 80,007 | | | $ | — | | | $ | 80,007 | |
Swap Contracts | | | — | | | | 19,891 | | | | — | | | | 19,891 | |
| | | | |
Total Other Financial Instruments | | $ | — | | | $ | 99,898 | | | $ | — | | | $ | 99,898 | |
aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common and preferred stocks as well as other equity interests.
cIncludes securities determined to have no value at December 31, 2018.
13. Subsequent Events
The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure, other than those already disclosed in the financial statements.
| | | | | | |
franklintempleton.com | | | | Annual Report | | 43 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
Templeton Emerging Markets Balanced Fund(continued)
Abbreviations
| | | | | | | | | | |
| Counterparty | | Currency | | Selected Portfolio |
| | | | | |
| BOFA | | Bank of America Corp. | | ARS | | Argentine Peso | | ADR | | American Depositary Receipt |
| CITI | | Citigroup, Inc. | | BRL | | Brazilian Real | | BADLAR | | Argentina Deposit Rates Badlar Private |
| DBAB | | Deutsche Bank AG | | COP | | Colombian Peso | | | | Banks ARS |
| GSCO | | The Goldman Sachs Group, Inc. | | EGP | | Egyptian Pound | | FRN | | Floating Rate Note |
| HSBK | | HSBC Bank PLC | | EUR | | Euro | | GDP | | Gross Domestic Product |
| JPHQ | | JPHQ JP Morgan Chase & Co. | | GHS | | Ghanaian Cedi | | GDR | | Global Depositary Receipt |
| UBSW | | UBS AG | | IDR | | Indonesian Rupiah | | LIBOR | | London InterBank Offered Rate |
| | | | INR | | Indian Rupee | | PIK | | Payment-In-Kind |
| | | | MXN | | Mexican Peso | | VRI | | Value Recovery Instruments |
| | | | USD | | United States Dollar | | | | |
| | | | | | |
44 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Templeton Global Investment Trust and Shareholders of Templeton Emerging Markets Balanced Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Templeton Emerging Markets Balanced Fund (the “Fund”) as of December 31, 2018, the related statement of operations for the year ended December 31, 2018, the statement of changes in net assets for each of the two years in the period ended December 31, 2018, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2018 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2018 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
February 15, 2019
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
| | | | | | |
franklintempleton.com | | | | Annual Report | | 45 |
TEMPLETON GLOBAL INVESTMENT TRUST
Tax Information (unaudited)
Templeton Emerging Markets Balanced Fund
Under Section 854(b)(1)(B) of the Internal Revenue Code, the Fund hereby reports the maximum amount allowable but no less than $347,508 as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Internal Revenue Code for the fiscal year ended December 31, 2018. Distributions, including qualified dividend income, paid during calendar year 2018 will be reported to shareholders on Form1099-DIV bymid-February 2019. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns.
At December 31, 2018, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. The Fund elects to treat foreign taxes paid as allowed under Section 853 of the Internal Revenue Code. This election will allow shareholders of record as of the first distribution in 2019, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.
| | | | | | |
46 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
Board Members and Officers
The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton Investments fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.
Independent Board Members
| | | | | | | | |
Name, Year of Birth and Address | | Position | | Length of
Time Served | | Number of Portfolios in
Fund Complex Overseen
by Board Member* | | Other Directorships Held During at Least the Past 5 Years |
| | | | |
Harris J. Ashton (1932) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 1994 | | 136 | | Bar-S Foods (meat packing company) (1981-2010). |
Principal Occupation During at Least the Past 5 Years: Director of various companies; andformerly, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998). |
| | | | |
Ann Torre Bates (1958) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2008 | | 38 | | Ares Capital Corporation (specialty finance company) (2010-present), United Natural Foods, Inc. (distributor of natural, organic and specialty foods) (2013-present), Allied Capital Corporation (financial services) (2003-2010), SLM Corporation (Sallie Mae) (1997-2014) and Navient Corporation (loan management, servicing and asset recovery) (2014-2016). |
Principal Occupation During at Least the Past 5 Years: Director of various companies; andformerly, Executive Vice President and Chief Financial Officer, NHP Incorporated (manager of multifamily housing) (1995-1997); and Vice President and Treasurer, US Airways, Inc. (until 1995). |
| | | | |
Mary C. Choksi (1950) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2017 | | 136 | | Avis Budget Group Inc. (car rental) (2007-present), Omnicom Group Inc. (advertising and marketing communications services) (2011-present) and White Mountains Insurance Group, Ltd. (holding company) (2017-present). |
Principal Occupation During at Least the Past 5 Years: Director of various companies; andformerly, Founder and Senior Advisor, Strategic Investment Group (investment management group) (2015-2017); Founding Partner and Senior Managing Director, Strategic Investment Group (1987-2015); Founding Partner and Managing Director, Emerging Markets Management LLC (investment management firm) (1987-2011); and Loan Officer/Senior Loan Officer/Senior Pension Investment Officer, World Bank Group (international financial institution) (1977-1987). |
| | | | |
Edith E. Holiday (1952) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Lead
Independent
Trustee | | Trustee since 1996 and Lead Independent Trustee since 2007 | | 136 | | Hess Corporation (exploration of oil and gas) (1993-present), Canadian National Railway (railroad) (2001-present), White Mountains Insurance Group, Ltd. (holding company) (2004-present), Santander Consumer USA Holdings, Inc. (consumer finance) (2016-present), RTI International Metals, Inc. (manufacture and distribution of titanium) (1999-2015) and H.J. Heinz Company (processed foods and allied products) (1994-2013). |
Principal Occupation During at Least the Past 5 Years: Director or Trustee of various companies and trusts; andformerly, Assistant to the President of the United States and Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989). |
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TEMPLETON GLOBAL INVESTMENT TRUST
Independent Board Members(continued)
| | | | | | | | |
Name, Year of Birth and Address | | Position | | Length of
Time Served | | Number of Portfolios in
Fund Complex Overseen
by Board Member* | | Other Directorships Held
During at Least the Past 5 Years |
| | | | |
J. Michael Luttig (1954) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2009 | | 136 | | Boeing Capital Corporation (aircraft financing) (2006-2013). |
Principal Occupation During at Least the Past 5 Years: Executive Vice President, General Counsel and member of the Executive Council, The Boeing Company (aerospace company) (2006-present); andformerly, Federal Appeals Court Judge, U.S. Court of Appeals for the Fourth Circuit (1991-2006). |
| | | | |
David W. Niemiec (1949) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2006 | | 38 | | Hess Midstream Partners LP (oil and gas midstream infrastructure)
(2017-present). |
Principal Occupation During at Least the Past 5 Years: Advisor, Saratoga Partners (private equity fund); andformerly, Managing Director, Saratoga Partners (1998-2001) and SBC Warburg Dillon Read (investment banking) (1997-1998); Vice Chairman, Dillon, Read & Co. Inc. (investment banking) (1991-1997); and Chief Financial Officer, Dillon, Read & Co. Inc. (1982-1997). |
| | | | |
Larry D. Thompson (1945) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2006 | | 136 | | The Southern Company (energy company) (2014-present; previously 2010-2012), Graham Holdings Company (education and media organization) (2011-present) and Cbeyond, Inc. (business communications provider) (2010-2012). |
Principal Occupation During at Least the Past 5 Years: Director of various companies; Counsel, Finch McCranie, LLP (law firm) (2015-present); Independent Compliance Monitor and Auditor, Volkswagen AG (manufacturer of automobiles and commercial vehicles) (2017-present); John A. Sibley Professor of Corporate and Business Law, University of Georgia School of Law (2015-present; previously 2011-2012); andformerly, Executive Vice President – Government Affairs, General Counsel and Corporate Secretary, PepsiCo, Inc. (consumer products) (2012-2014); Senior Vice President – Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (2004-2011); Senior Fellow of The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General, U.S. Department of Justice (2001-2003). |
| | | | |
Constantine D. Tseretopoulos
(1954) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2001 | | 24 | | None |
Principal Occupation During at Least the Past 5 Years: Physician, Chief of Staff, owner and operator of the Lyford Cay Hospital (1987-present); director of various nonprofit organizations; andformerly, Cardiology Fellow, University of Maryland (1985-1987); and Internal Medicine Resident, Greater Baltimore Medical Center (1982-1985). |
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Robert E. Wade (1946) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2006 | | 38 | | El Oro Ltd (investments) (2003-present). |
Principal Occupation During at Least the Past 5 Years: Attorney at law engaged in private practice as a sole practitioner (1972-2008) and member of various boards. |
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TEMPLETON GLOBAL INVESTMENT TRUST
Interested Board Members and Officers
| | | | | | | | |
Name, Year of Birth
and Address | | Position | | Length of
Time Served | | Number of Portfolios in
Fund Complex Overseen
by Board Member* | | Other Directorships Held
During at Least the Past 5 Years |
| | | | |
**Gregory E. Johnson (1961) One Franklin Parkway San Mateo, CA 94403-1906 | | Trustee | | Since 2006 | | 150 | | None |
Principal Occupation During at Least the Past 5 Years: Chairman of the Board, Member – Office of the Chairman, Director and Chief Executive Officer, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 42 of the investment companies in Franklin Templeton Investments; Vice Chairman, Investment Company Institute; andformerly, President, Franklin Resources, Inc. (1994-2015). |
| | | | |
**Rupert H. Johnson, Jr. (1940) One Franklin Parkway San Mateo, CA 94403-1906 | | Chairman of the Board, Trustee and Vice President | | Chairman of the Board, Trustee since 2013 and Vice President since 1996 | | 136 | | None |
Principal Occupation During at Least the Past 5 Years: Vice Chairman, Member – Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 40 of the investment companies in Franklin Templeton Investments. |
| | | | |
Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2012 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Deputy General Counsel, Franklin Templeton Investments; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Norman J. Boersma (1957) Lyford Cay Nassau, Bahamas | | President and Chief Executive Officer – Investment Management | | Since 2012 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Chairman of the Board, President and Chief Executive Officer, Templeton Global Advisors Ltd.; Chief Investment Officer of Templeton Global Equity Group; officer of five of the investment companies in Franklin Templeton Investments; andformerly, Executive Vice President, Franklin Templeton Investments Corp. (1993-2014). |
| | | | |
Aliya S. Gordon (1973) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2009 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Senior Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2009 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Senior Associate General Counsel, Franklin Templeton Investments; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906 | | Chief Executive Officer – Finance and Administration | | Since 2017 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Senior Vice President, Franklin Templeton Services, LLC; officer of 44 of the investment companies in Franklin Templeton Investments; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton Investments (2009-2017). |
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TEMPLETON GLOBAL INVESTMENT TRUST
Interested Board Members and Officers(continued)
| | | | | | | | |
Name, Year of Birth
and Address | | Position | | Length of
Time Served | | Number of Portfolios in
Fund Complex Overseen
by Board Member* | | Other Directorships Held
During at Least the Past 5 Years |
Robert G. Kubilis (1973) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Chief Financial Officer, Chief Accounting Officer and Treasurer | | Since 2017 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Treasurer, U.S. Fund Administration & Reporting, Franklin Templeton Investments; and officer of 16 of the investment companies in Franklin Templeton Investments. |
| | | | |
Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President – AML Compliance | | Since 2016 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Kimberly H. Novotny (1972) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Vice President | | Since 2013 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Associate General Counsel, Franklin Templeton Investments; Vice President and Corporate Secretary, Fiduciary Trust International of the South; Vice President, Templeton Investment Counsel, LLC; Assistant Secretary, Franklin Resources, Inc.; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Robert C. Rosselot (1960) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Chief Compliance Officer | | Since 2013 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Director, Global Compliance, Franklin Templeton Investments; Vice President, Franklin Templeton Companies, LLC; officer of 44 of the investment companies in Franklin Templeton Investments; andformerly, Senior Associate General Counsel, Franklin Templeton Investments (2007-2013); and Secretary and Vice President, Templeton Group of Funds (2004-2013). |
| | | | |
Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2015 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2005 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Vice President and Secretary | | Vice President since 2011 and Secretary since 2013 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments. |
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TEMPLETON GLOBAL INVESTMENT TRUST
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton Investments fund complex. These portfolios have a common investment manager or affiliated investment managers.
**Gregory E. Johnson is considered to be an interested person of the Fund under the federal securities laws due to his position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor. Rupert H. Johnson, Jr. is considered to be an interested person of the Fund under the federal securities laws due to his position as an officer and director and major shareholder of Resources.
Note 1: Rupert H. Johnson, Jr. is the uncle of Gregory E. Johnson.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the US Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated each of Ann Torre Bates and David W. Niemiec as an audit committee financial expert. The Board believes that Ms. Bates and Mr. Niemiec qualify as such an expert in view of their extensive business background and experience. Ms. Bates has served as a member of the Fund Audit Committee since 2008. She currently serves as a director of Ares Capital Corporation (2010-present) and United Natural Foods, Inc. (2013-present) and was formerly a director of Navient Corporation from 2014 to 2016, SLM Corporation from 1997 to 2014 and Allied Capital Corporation from 2003 to 2010, Executive Vice President and Chief Financial Officer of NHP Incorporated from 1995 to 1997 and Vice President and Treasurer of US Airways, Inc. until 1995. Mr. Niemiec has served as a member of the Fund Audit Committee since 2006, currently serves as an Advisor to Saratoga Partners and was formerly its Managing Director from 1998 to 2001 and serves as a director of Hess Midstream Partners LP (2017-present). Mr. Niemiec was formerly a director of Emeritus Corporation from 1999 to 2010 and OSI Pharmaceuticals, Inc. from 2006 to 2010, Managing Director of SBC Warburg Dillon Read from 1997 to 1998, and was Vice Chairman from 1991 to 1997 and Chief Financial Officer from 1982 to 1997 of Dillon, Read & Co. Inc. As a result of such background and experience, the Board believes that Ms. Bates and Mr. Niemiec have each acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Ms. Bates and Mr. Niemiec are independent Board members as that term is defined under the applicable US Securities and Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request. Shareholders may call (800) DIALBEN/342-5236 to request the SAI.
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TEMPLETON GLOBAL INVESTMENT TRUST
TEMPLETON EMERGING MARKETS BALANCED FUND
Shareholder Information
Proxy Voting Policies and Procedures
The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954)527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent12-month period ended June 30.
Quarterly Statement of Investments
The Trust, on behalf of the Fund, files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on FormN-Q. Shareholders may view the filed FormN-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling(800) SEC-0330.
Householding of Reports and Prospectuses
You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800)632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.
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| | |
 | | Annual Report and Shareholder Letter Templeton Emerging Markets Balanced Fund |
| | Investment Manager |
| | Templeton Asset Management Ltd. |
| | Subadvisor Franklin Advisers, Inc. Distributor |
| | Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 franklintempleton.com |
| | Shareholder Services |
| | (800)632-2301 |
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
| | |
| © 2019 Franklin Templeton Investments. All rights reserved. | | 080 A 02/19 |
Internet Delivery of Fund Reports Unless You Request Paper Copies:Effective January 1, 2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request them from the Fund or your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you have not signed up for electronic delivery, we would encourage you to join fellow shareholders who have. You may elect to receive shareholder reports and other communications electronically from the Fund by calling (800)632-2301 or by contacting your financial intermediary.
You may elect to continue to receive paper copies of all your future shareholder reports free of charge by contacting your financial intermediary or, if you invest directly with a Fund, calling (800)632-2301 to let the Fund know of your request. Your election to receive reports in paper will apply to all funds held in your account.
Franklin Templeton
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Dear Shareholder:
During the 12 months ended December 31, 2018, the global economy generally expanded amid higher crude oil prices, upbeat economic data, solid corporate earnings and hints of a slower pace of interest-rate increases from the U.S. Federal Reserve (Fed). The European Central Bank (ECB) left its benchmark interest rate unchanged but reduced its monthly bond purchases and planned to conclude the program at the end of 2018. The Fed raised its federal funds rate range by 0.25% four times in 2018 and continued reducing its balance sheet. Global markets were pressured by concerns about increased technology company regulation, U.S. and European Union political uncertainties, major central banks’ interest-rate policies, and the impact of the U.S.-China trade dispute on global growth and corporate earnings. In this environment, global developed and emerging market stocks, as measured by the MSCI All Country World Index, had a-8.93% total return.1 Global government and corporate bonds, as measured by the Bloomberg Barclays Multiverse Index, had a-1.36% total return.1
We are committed to our long-term perspective and disciplined investment approach as we conduct a rigorous, fundamental analysis of securities with a regular emphasis on investment risk management.
Historically, patient investors have achieved rewarding results by evaluating their goals, diversifying their assets globally and maintaining a disciplined investment program, all hallmarks of the Templeton investment philosophy developed more than 60 years ago. We continue to recommend investors consult
their financial advisors and review their portfolios to design a long-term strategy and portfolio allocation that meet their individual needs, goals and risk tolerance.
Templeton Global Balanced Fund’s annual report includes more detail about prevailing conditions and a discussion about investment decisions during the period. Please remember all securities markets fluctuate, as do mutual fund share prices.
We thank you for investing with Franklin Templeton, welcome your questions and comments, and look forward to serving your investment needs in the years ahead.
Sincerely,
Norman J. Boersma, CFA
President and Chief Executive Officer –
Investment Management
Templeton Global Investment Trust
This letter reflects our analysis and opinions as of December 31, 2018, unless otherwise indicated. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
CFA® is a trademark owned by CFA Institute.
1. Source: Morningstar.
See www.franklintempletondatasources.com for additional data provider information.
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| | | Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
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franklintempleton.com | | Not part of the annual report | | 1 |
Contents
Visitfranklintempleton.comfor fund updates, to access your account, or to find helpful financial planning tools.
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Annual Report
Templeton Global Balanced Fund
This annual report for Templeton Global Balanced Fund covers the fiscal year ended December 31, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks both income and capital appreciation. Under normal market conditions, the Fund invests in a diversified portfolio of debt and equity securities worldwide. The Fund normally invests at least 25% of its assets in fixed income securities and at least 25% of its assets in equity securities. The Fund’s equity component generally consists of stocks of companies from a variety of industries located anywhere in the world, including developing markets, that offer or could offer the opportunity to realize capital appreciation and/or attractive dividend yields. The Fund’s fixed income component primarily consists of developed and developing country government and agency bonds and investment-grade and below investment-grade corporate and emerging market debt securities that offer the opportunity to realize income.
Performance Overview
The Fund’s Class A shares had a-9.44% cumulative total return for the 12 months under review. In comparison, global equity and fixed income markets, as measured by the Fund’s benchmark, an equally weighted combination of the MSCI All Country World Index (ACWI) and the Bloomberg Barclays Multiverse Index, had a-5.06% cumulative total return for the same period.1 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 10.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recentmonth-end performance, go tofranklintempleton.comor call(800)342-5236.
Economic and Market Overview
The global economy expanded during the 12 months under review, despite weakness in certain regions. Global developed
Asset Allocation*
Based on Total Net Assets as of 12/31/18
*Figures represent the net Fund exposure and include certain derivatives held in the portfolio (or their underlying reference assets) or unsettled trades and may not total 100% or may be negative due to rounding, use of any derivatives or other factors.
and emerging market stocks were aided at certain points during the period by higher crude oil prices, upbeat economic data, easing trade tensions and encouraging corporate earnings reports, as well as indications of a slower pace of interest-rate increases from the U.S. Federal Reserve (Fed).
However, various factors weighed on global markets during the period, including concerns about tighter regulation of technology companies, political uncertainties in the U.S. and the European Union, and major central banks’ interest-rate path and unwinding of monetary stimulus measures. Markets were further pressured by U.S. trade disputes with its allies and China, and their impact on global growth and corporate earnings. In this environment, global stocks, as measured by the MSCI ACWI, had a-8.93% total return for the 12 months ended December 31, 2018.1
The U.S. economy grew during the12-month period. After moderating for three consecutive quarters, the economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending. However, growth moderated in the third quarter due to declines in exports and housing investment. The unemployment rate declined from 4.1% in December 2017 to 3.9% at period-end.B Annual inflation, as measured by the Consumer Price Index, decreased from 2.1% in December 2017 to 1.9% at
1. Source: Morningstar. The Fund’s benchmark is currently weighted 50% for the MSCI ACWI and 50% for the Bloomberg Barclays Multiverse Index and is rebalanced monthly. For the 12 months ended 12/31/18, the MSCI ACWI had a-8.93% total return and the Bloomberg Barclays Multiverse Index had a-1.36% total return. The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Consolidated Statement of Investments (SOI). The Consolidated SOI begins on page 21.
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TEMPLETON GLOBAL BALANCED FUND
period-end.2 The Fed raised its target range for the federal funds rate four times during the period, to 2.25%–2.50%, and continued reducing its balance sheet as part of an ongoing plan to normalize monetary policy. At its December meeting, the Fed reduced the projected 2019 rate increases to two, compared to three projected previously.
In Europe, the U.K.’s quarterly economic growth moderated in 2018’s first quarter, but accelerated in 2018’s second and third quarters. The Bank of England raised its key policy rate once during the review period. After moderating in 2018’s first quarter, the eurozone’s quarterly growth remained stable in the second quarter, but eased in the third quarter. The bloc’s annual inflation rate ended the period higher than in December 2017. The European Central Bank (ECB) kept its benchmark interest rate unchanged during the period. In December 2018, the ECB confirmed its plan to conclude its bond purchase program at the end of 2018 and reiterated it expects key interest rates to remain unchanged through the summer of 2019.
In Asia, Japan’s quarterly gross domestic product (GDP) grew in 2018’s second quarter, following a contraction in the first quarter, but contracted again in the third quarter. The Bank of Japan left its benchmark interest rate unchanged during the period and continued its monetary stimulus measures.
In emerging markets, Brazil’s quarterly GDP growth remained stable in 2018’s first and second quarters, but accelerated in the third quarter. The Central Bank of Brazil lowered its benchmark interest rate twice during the period. Russia’s annual GDP growth rate accelerated in 2018’s first and second quarters, but moderated in the third quarter. After lowering its key rate twice early in the period, the Bank of Russia raised it twice in the period’s second half to curtail inflation risks. China’s annual GDP grew at a stable rate in 2018’s first quarter, but it moderated in the second and third quarters. The People’s Bank of China left its benchmark interest rate unchanged during the period, but it took measures to improve financial liquidity to mitigate the negative effects of the U.S.-China trade dispute and support economic growth. Overall, emerging market stocks, as measured by the MSCI Emerging Markets Index, had a-14.25% total return during the period.1
The year began with sharply rising yields in the U.S. and Europe as reflation sentiments returned to markets. Deregulation efforts and tax cuts in the U.S. were expected to add stimulus to an already strong U.S. economy. The10-year
U.S. Treasury (UST) yield rose 0.45% during the first two months of 2018, finishing February at 2.86%. In Europe, the10-year German Bund yield rose 0.27% during the first month of the year, reaching its peak yield for the period at 0.77% on February 2, its highest level since 2015. Markets appeared to initially anticipate upcoming rate adjustments from the European Central Bank (ECB), but those expectations would largely disappear by the summer.
In February, Jerome Powell took over as U.S. Federal Reserve (Fed) Chair, replacing Janet Yellen. Powell indicated his intentions to continue the glide path of rate hikes and balance sheet unwinding. However, by March, the rising yield trends in the U.S. and Europe stalled and moderately reversed. U.S. protectionist policies in the form of steel and aluminum tariffs, as well as sector-specific tariffs on China, appeared to amplify risk aversion across global financial markets. Credit spreads widened across investment-grade and high-yield credit tiers in the U.S. and Europe during the month, ultimately widening even further over the rest of the year.
In April, reflation sentiments briefly resurfaced, driving the10-year UST yield above 3.00% for the first time in more than four years. However, risk aversion returned to global bond markets in the second half of May, as political turmoil in Italy raised concerns over Italian debt sustainability and the viability of the euro. Yields in Italy, Spain and much of peripheral Europe rose sharply, while yields in Germany, France and the U.S. declined on flights to quality. Several Latin American countries concurrently saw rising yields and sharp depreciations of their exchange rates on regional volatility.
Inmid-June, ECB President Mario Draghi announced the net asset purchase program would be reduced to 15 billion euros per month for October, November and December, and would conclude at the end of 2018. Draghi also indicated rates would likely remain unchanged until at least the summer of 2019, quelling any remaining expectations for a 2018 rate hike. In the U.S., yields briefly rose in July as economic activity continued to strengthen. Annualized second-quarter U.S. gross domestic product came in at 4.2%, its highest level since 2014.
However, a wave of broad-based risk aversion across emerging markets arrived in late August, driving exchange rates lower against the U.S. dollar. Several perceived safe-haven assets rallied, including USTs. We viewed much of the late summer selloffs as fear-driven overreactions that often exceeded the fundamental risks in individual countries. As an asset category,
2. Source: U.S. Bureau of Labor Statistics.
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TEMPLETON GLOBAL BALANCED FUND
emerging markets showed the highest level of undervaluation across the global fixed income markets, in our assessment, and we expected select countries with healthier or improving underlying fundamentals to rebound from the heightened volatility.
Bymid-September, risk aversion across emerging markets began to diminish, as several security valuations incrementally stabilized and improved. UST yields rose sharply during the month, on expectations the Fed would hike rates at its September 26 meeting. Those trends continued through October, with the10-year UST reaching its highest yield of the year on November 8, at 3.24%. However, market volatility escalated in December as global growth uncertainties and trade policy concerns led to rallies in perceived safe-haven assets. The10-year UST yield dropped sharply to finish the year at 2.69%, despite the Fed’s fourth rate hike of the year on December 19.
On the whole, duration exposures in the U.S. and in several parts of the world faced headwinds from rising rates during much of the period, before those trends sharply reversed in December. Select local-currency bond markets fared better than others, as valuations strengthened in places like Brazil but weakened in places like Indonesia. On the currency front, the U.S. dollar started the period weaker before significantly strengthening against global currencies over the remainder of the year. On the whole, avoiding UST duration proved important to performance during much of the period, as did long exposure to the U.S. dollar and select positioning in emerging markets.
Investment Strategy
We search for undervalued orout-of-favor debt and equity securities and for equity securities that offer or may offer current income. When choosing equity securities for the Fund, we use a fundamental research, value-oriented, long-term approach, focusing on the market price of a security relative to our evaluation of the company’s long-term earnings, asset value and cash flow potential, as reflected by various metrics. Because this is a global fund, we analyze global economic trends to identify global macro trends (for example, regions with strong economic growth), and evaluate market inefficiencies to identify investment opportunities stemming from market mispricings.
When choosing fixed income investments for the Fund, we perform an independent analysis of the securities being considered for the Fund’s portfolio, rather than relying principally on their ratings assigned by rating agencies. In our analysis of corporate debt securities, we consider a variety of
Geographic Composition*
Based on Total Net Assets as of 12/31/18
*Figures represent the net Fund exposure and include certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of any derivatives or other factors.
factors, including a company’s experience and managerial strength; responsiveness to changes in interest rates and business conditions; debt maturity schedules and borrowing requirements; a company’s changing financial condition and market recognition of the change; and a security’s relative value based on such factors as anticipated cash flow, interest or dividend coverage, asset coverage and earnings prospects. With respect to sovereign debt securities, we consider market,
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TEMPLETON EMERGING MARKETS BALANCED FUND
political and economic conditions, and evaluate interest and currency exchange rate changes and credit risks. We regularly enter into currency-related transactions involving certain derivative instruments, including currency and cross currency forwards, but we may also use other derivative instruments, to provide a hedge against risks associated with other securities held in the Fund or to implement a currency investment strategy. The use of these derivative transactions may allow the Fund to obtain net long or net short exposures to selected currencies, interest rates, countries, durations or credit risks, and may be used for hedging or investment purposes.
What is a currency forward contract?
A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.
Manager’s Discussion
We maintained the Fund’s asset allocation in favor of equities during the period given what we considered attractive valuation and yield opportunities in the equity markets. Within fixed income, we sought to take advantage of valuation opportunities in countries with favorable growth prospects, low indebtedness and higher reserves.
Equity
Global equities, as measured by the MSCI ACWI, declined during the12-month period under review. Fluctuating U.S.-China trade tensions drove alternating optimism and pessimism throughout the year. Concerns about the pace of U.S. interest-rate hikes and signs of slowing global economic growth also weighed on sentiment. In Asian emerging markets, the U.S.-China trade dispute dominated sentiment, as signs emerged the conflict had negatively affected China’s economy. Weak demand for oil from China, India and other emerging Asian countries suggested slowing growth and weighed on crude oil prices. In Europe, tensions eased between the European Union and Italy regarding the country’s budget plans, but continued Brexit uncertainty, U.S. interest-rate increases and mixed corporate earnings affected investor outlooks. Elsewhere, the Bank of Japan lowered its inflation forecast at the end of October, and stated it would likely keep the current low levels of short- and long-term interest rates for an extended
| | | | |
| Top Five Equity Holdings | | | | |
12/31/18 | | | | |
Company
Sector/Industry, Country | | % of Total
Net Assets | |
| |
Oracle Corp. Software, U.S. | | | 2.0% | |
| |
Sanofi Pharmaceuticals, France | | | 1.9% | |
| |
Eni SpA Oil, Gas & Consumable Fuels, Italy | | | 1.9% | |
| |
BP PLC Oil, Gas & Consumable Fuels, U.K. | | | 1.9% | |
| |
Royal Dutch Shell PLC Oil, Gas & Consumable Fuels, U.K. | | | 1.9% | |
period of time, given uncertainties around economic activity and prices.
In this environment, the equity portion underperformed its benchmark index for the12-month period, primarily due to stock selection in the financials, health care and information technology (IT) sectors.3
In the financials sector, holdings in U.S. and European banks hurt relative results. We continued to gradually reposition our financials portfolio during the period to consolidate and rationalize investments amid heightened uncertainty. In the U.S., we’ve been finding fewer bargains among regional banks and large universal banks as valuations expanded, focusing instead on opportunities in cheaper universal banks and consumer finance firms with distinct value catalysts. In Europe, we selectively reduced exposure to a handful of domestically focused banks with concentrated political risk. Our thesis on European banks rests largely on valuation and shareholder returns. In our analysis, lenders currently trade at the same multiples relative to trailing earnings as they did in the depths of 2011’s sovereign debt crisis, despite significant restructuring and recapitalization efforts aimed at improving asset quality and returns. Depressed valuations combined with generous shareholder returns mean that dividend yields have exceededprice-to-earnings ratios at a number of banks. We believe unresolved issues from the global financial crisis mean that banks will remain an easy target for market bears during periods of rising risk aversion. Despite depressed valuations, we still see fewer excesses and more resiliency in the European banking system today than during past crisis periods. Deep value opportunities have remained, in our opinion.
3. The financials sector comprises banks, capital markets and insurance in the SOI. The health care sector comprises biotechnology and pharmaceuticals in the SOI. The IT sector comprises electronic equipment, instruments and components; semiconductors and semiconductor equipment; software; and technology hardware, storage and peripherals in the SOI.
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TEMPLETON GLOBAL BALANCED FUND
The health care sector remains an attractive sector to us at this point in the business cycle. Unlike other defensive sectors such as consumer staples and utilities, health care appears to be less of a simple bond proxy, offering defensiveness independent of interest-rate fluctuations.4 The sector also offers growth possibilities through innovation and untapped market potential. Over the past five years, pharmaceuticals revenue growth has well exceeded that of the broader market. Atperiod-end, our analysis showed the industry generating higher profit margins than the overall global market with lower-than-average leverage ratios. Investors might expect to pay a premium for such attributes, but the industry has been trading at what we believe is a discount based onprice-to-free-cash flow, with some of that cash having been returned to shareholders through an overall dividend yield on par with that of10-year U.S. Treasuries. Concerns persist about regulation and pricing in the global pharmaceuticals industry, but history suggests companies capable of producing innovative products that address unmet medical needs can thrive and profit. It is these kinds of companies in which we seek to invest.
In the IT sector, we believe valuations in parts of the sector remain significantly divorced from underlying fundamentals, increasing the odds of poor returns over the long-term. We have largely avoided such stocks, finding opportunities instead among mature, cash-generative software firms developing new growth businesses, hardware companies with restructuring potential and semiconductor manufacturers excessively pressured by supply concerns.
In contrast, the energy, real estate and communication services sectors contributed to relative performance during the period.5 As the price of oil rose above our estimate of the marginal cost of production in late 2017 and early 2018, we began selling the higher risk, price-sensitive oil services stocks and reinvesting the proceeds in large, integrated oil producers with what we viewed as modest valuations and high dividend yields. The rise of U.S. shale as the industry’s bellwether commodity means that oil market fundamentals are increasingly driven by a highly leveraged,low-intensity production regime functioning in a market-based economy. Compared to the regime led by Saudi Arabia and Organization of the Petroleum Exporting Countries, U.S. shale could provide a more rapid supply response to prevailing imbalances and, ultimately, shorter and more volatile cycles. Going into 2019, we remain optimistic
about our more defensive positioning, but with oil prices falling back to levels on the cost curve historically associated with support, we have also begun using weakness to again search for potential bargains in more cyclical parts of the sector.
In the real estate sector, we continue to find few opportunities. As bond yields rise, we believe the late-cycle sector has already-expensive valuations and compressed capitalization rates.
In the communication services sector, we look for lowly valued telecommunication services companies with strong balance sheets, declining capital intensity and attractive dividends operating in markets with stable competitive dynamics and regulatory structures. The industry’s defensiveness and yield profile should help in alow-rate, elevated risk environment. We also continue to avoid a number of tech- and consumer-related media and entertainment companies on valuation grounds.
Regionally, stock selection in Asia, particularly China, contributed to relative performance for the year. In contrast, an underweighting and stock selection in the U.S. and an overweighting and stock selection in Europe detracted significantly from annual performance. Unlike Europe, where the risk premium is high and has room to recede, risk appears under-discounted in the U.S., where valuations may inadequately reflect tightening monetary policy, a mature profit cycle and rising trade tensions.
It is important to recognize the effect of currency movements on the Fund’s performance. In general, if the value of the U.S. dollar goes up compared with a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer U.S. dollars. This can have a negative effect on Fund performance. Conversely, when the U.S. dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the 12 months ended December 31, 2018, the U.S. dollar rose in value relative to most currencies. As a result, the Fund’s equity performance was negatively affected by the equity portfolio’s investment predominantly in securities withnon-U.S. currency exposure.
4. The consumer staples sector comprises beverages, food and staples retailing, food products and personal products in the SOI. The utilities sector comprises multi-utilities in the SOI.
5. The energy sector comprises oil, gas and consumable fuels in the SOI. The real estate sector real estate management and development in the SOI. The communication services sector comprises diversified telecommunication services, interactive media and services, media and wireless telecommunication services in the SOI.
See www.franklintempletondatasources.com for additional data provider information.
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TEMPLETON GLOBAL BALANCED FUND
| | | | |
| Top Five Fixed Income Holdings* | | | | |
12/31/18
| | | | |
Issue/Issuer | | % of Total
Net Assets | |
Government of India | | | 3.9% | |
Nota Do Tesouro Nacional | | | 3.8% | |
Government of Indonesia | | | 3.4% | |
Government of Mexico | | | 2.1% | |
Korea Treasury Bond | | | 1.7% | |
* Excludes short-term investments. | | | | |
Fixed Income
During the reporting period the strategy was positioned for rising rates in the U.S. by maintaining low portfolio duration and using interest-rate swaps to gain negative duration exposure to U.S. Treasuries. The strategy also continued to seek duration exposures in select emerging markets that offered positive real yields without undue interest-rate risk, favoring countries that have solid underlying fundamentals and prudent fiscal and monetary policies. Several emerging markets continued to offer significantly higher yields than those available in the developed markets. The strategy also held long currency exposures in a number of emerging markets andnet-negative exposures to the Japanese yen, euro and Australian dollar, as directional views on the currencies and as hedges against a broadly strengthening U.S. dollar. During the period, we used currency forward contracts to actively manage currencies. We also used interest-rate swaps to tactically manage duration exposures.
What is duration?
Duration is a measure of a bond’s price sensitivity to interest-rate changes. In general, a portfolio of securities with a lower duration can be expected to be less sensitive to interest-rate changes than a portfolio with a higher duration.
What is an interest-rate swap?
An interest-rate swap is an agreement between two parties to exchange interest-rate payment obligations, generally one based on an interest rate fixed to maturity and the other based on an interest rate that changes in accordance with changes in a designated benchmark (for example, LIBOR, prime, commercial paper or other benchmarks).
During the period, the strategy’s positive absolute performance was primarily attributable to interest-rate strategies. Currency positions and overall credit exposures had largely neutral effects on absolute results. The Fund maintained a defensive
approach regarding interest rates in developed markets, while holding duration exposures in select emerging markets. Negative duration exposure to U.S. Treasuries contributed to absolute performance, as did duration exposure in Brazil. However, duration exposures in Argentina and Indonesia detracted from absolute return. Among currencies, the Fund’snet-negative positions, achieved through the use of currency forward contracts, in the euro and the Australian dollar contributed to absolute performance, while itsnet-negative position in the Japanese yen, also through currency forward contracts, moderately detracted. Currency positions in Latin America and Asiaex-Japan detracted from absolute results (the Brazilian real, Argentine peso and Indian rupee detracted, while the Mexican peso contributed).
The strategy’s relative outperformance during the period was primarily attributable to currency positions and overall credit exposures. Interest-rate strategies detracted from relative results. Among currencies, the Fund’s underweighted positions in the euro and the Australian dollar contributed to relative performance, while its underweighted position in the Japanese yen detracted. Overweighted currency positions in Latin America and Asiaex-Japan detracted from relative results (the Brazilian real, Argentine peso and Indian rupee detracted, while the Mexican peso contributed). Underweighted exposure to corporate credit contributed to relative return. Select underweighted duration exposures in Europe detracted from relative performance, as did overweighted duration exposures in Argentina and Indonesia. However, overweighted duration exposure in Brazil contributed.
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| 8 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL BALANCED FUND
Thank you for your continued participation in Templeton Global Balanced Fund. We look forward to serving your future investment needs.
| | |
 | | 
Heather Arnold, CFA Co-lead Portfolio Manager |
| |
 | |
Michael Hasenstab Ph.D. Co-lead Portfolio Manager |
| |
| | Norman J. Boersma, CFA |
| |
| | Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of December 31, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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franklintempleton.com | | | | Annual Report | | 9 |
TEMPLETON GLOBAL BALANCED FUND
Performance Summary as of December 31, 2018
The performance table and graphs do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 12/31/181
Cumulative total return excludes sales charges. Average annual total return includes maximum sales charges. Sales charges will vary depending on the size of the investment and the class of share purchased. The maximum is 5.50% and the minimum is 0%.Class A:5.50% maximum initial sales charge;Advisor Class:no sales charges. For other share classes, visitfranklintempleton.com.
| | | | | | | | |
| Share Class | | Cumulative
Total Return2
| | | Average Annual
Total Return3 | |
A4 | | | | | | | | |
1-Year | | | -9.44% | | | | -14.55% | |
5-Year | | | +3.85% | | | | -0.38% | |
10-Year | | | +95.28% | | | | +6.33% | |
Advisor | | | | | | | | |
1-Year | | | -9.19% | | | | -9.19% | |
5-Year | | | +5.14% | | | | +1.01% | |
10-Year | | | +99.52% | | | | +7.15% | |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recentmonth-end performance, go tofranklintempleton.comor call(800)342-5236.
See page 12 for Performance Summary footnotes.
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10 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL BALANCED FUND
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the periods shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.
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TEMPLETON GLOBAL BALANCED FUND
PERFORMANCE SUMMARY
Distributions(1/1/18–12/31/18)
| | |
Share Class | | Net Investment Income |
A | | $0.1181 |
A1 | | $0.1182 |
C | | $0.0941 |
C1 | | $0.1037 |
R | | $0.1094 |
R6 | | $0.1290 |
Advisor | | $0.1260 |
Total Annual Operating Expenses6
| | | | | | | | |
| Share Class | | With Fee
Waiver | | | Without Fee
Waiver | |
A | | | 1.15% | | | | 1.18% | |
Advisor | | | 0.90% | | | | 0.93% | |
Each class of shares is available to certain eligible investors and has different annual fees and expenses, as described in the prospectus.
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. The risks associated with higher yielding, lower rated debt securities include higher risk of default and loss of principal. The markets for a particular security or instrument or type of security or instrument are or may become relatively illiquid. Reduced liquidity will have an adverse impact on the security’s value and on the Fund’s ability to sell such securities or instruments when necessary to meet the Fund’s liquidity needs or in response to a specific market event. The Fund’s investment in derivative securities, such as swaps, financial futures and option contracts, and use of foreign currency techniques involve special risks as such may not achieve the anticipated benefits and/or may result in losses to the Fund. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
1. The Fund has a fee waiver associated with any investment it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through 4/30/19. Fund investment results reflect the fee waiver; without this waiver, the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
4. Prior to 9/10/18, these shares were offered at a higher initial sales charge of 5.75%, thus actual returns would have differed. Total returns with sales charges have been restated to reflect the current maximum initial sales charge of 5.50%.
5. Source: Morningstar. The MSCI ACWI is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in global developed and emerging markets. The Bloomberg Barclays Multiverse Index provides a broad-based measure of the global fixed income bond market. The index represents the union of the Global Aggregate Index and the Global High Yield Index and captures investment-grade and high yield securities in all eligible currencies.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
See www.franklintempletondatasources.com for additional data provider information.
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TEMPLETON GLOBAL BALANCED FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including sales charges (loads) on Fund purchases and redemptions; and (2) ongoing Fund costs, including management fees, distribution and service(12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 =$64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
| | | | | | | | | | | | |
| | | | | Actual
(actual return after expenses) | | Hypothetical
(5% annual return before expenses) | | |
| | | Expenses | | | | Expenses | | Net |
| | | Beginning | | Ending | | Paid During | | Ending | | Paid During | | Annualized |
| Share | | Account | | Account | | Period | | Account | | Period | | Expense |
| Class | | Value 7/1/18 | | Value 12/31/18 | | 7/1/18–12/31/181,2 | | Value 12/31/18 | | 7/1/18–12/31/181,2 | | Ratio2 |
| | | | | | |
A | | $1,000 | | $927.40 | | $5.73 | | $1,019.26 | | $6.01 | | 1.18% |
A1 | | $1,000 | | $927.40 | | $5.73 | | $1,019.26 | | $6.01 | | 1.18% |
C | | $1,000 | | $923.10 | | $9.36 | | $1,015.48 | | $9.80 | | 1.93% |
C1 | | $1,000 | | $924.90 | | $7.67 | | $1,017.24 | | $8.03 | | 1.58% |
R | | $1,000 | | $926.40 | | $6.94 | | $1,018.00 | | $7.27 | | 1.43% |
R6 | | $1,000 | | $929.40 | | $4.04 | | $1,021.02 | | $4.23 | | 0.83% |
Advisor | | $1,000 | | $928.90 | | $4.52 | | $1,020.52 | | $4.74 | | 0.93% |
1. Expenses are equal to the annualized expense ratio for thesix-month period as indicated above—in the far right column—multiplied by the simple average account value over the period indicated, and then multiplied by 184/365 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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TEMPLETON GLOBAL INVESTMENT TRUST
Consolidated Financial Highlights
Templeton Global Balanced Fund
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | Year Ended March 31, | |
| | | 2018 | | | 2017 | | | 2016a | | | 2016 | | | 2015 | | | 2014 | |
| | | | | | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of year | | | $ 3.17 | | | | $ 2.91 | | | | $ 2.72 | | | | $ 3.13 | | | | $ 3.30 | | | | $ 2.94 | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.10 | | | | 0.09 | | | | 0.07 | | | | 0.08 | | | | 0.08 | | | | 0.09d | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (0.38 | ) | | | 0.25 | | | | 0.15 | | | | (0.32 | ) | | | (0.07 | ) | | | 0.35 | |
| | | | | | |
Total from investment operations | | | (0.28 | ) | | | 0.34 | | | | 0.22 | | | | (0.24 | ) | | | 0.01 | | | | 0.44 | |
| | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.12 | ) | | | (0.08 | ) | | | (0.03) | | | | (0.09 | ) | | | (0.18) | | | | (0.08 | ) |
| | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | (0.08 | ) | | | — | | | | — | |
| | | | | | |
Total distributions | | | (0.12 | ) | | | (0.08 | ) | | | (0.03 | ) | | | (0.17 | ) | | | (0.18 | ) | | | (0.08 | ) |
| | | | | | |
Net asset value, end of year | | | $ 2.77 | | | | $ 3.17 | | | | $ 2.91 | | | | $ 2.72 | | | | $ 3.13 | | | | $ 3.30 | |
| | | | | | |
Total returne | | | (9.44)% | | | | 12.18% | | | | 7.97% | | | | (7.74)% | | | | 0.38% | | | | 15.06% | |
| | | | | | |
Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliates and expense reduction | | | 1.19% | | | | 1.17% | | | | 1.16% | | | | 1.11% | | | | 1.11% | | | | 1.13% | |
| | | | | | |
Expenses net of waiver and payments by affiliates and expense reductiong | | | 1.16% | | | | 1.14% | | | | 1.15% | | | | 1.10% | | | | 1.11%h | | | | 1.12% | |
| | | | | | |
Net investment income | | | 3.17% | | | | 2.82% | | | | 3.28% | | | | 2.55% | | | | 2.55% | | | | 2.76%d | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of year (000’s) | | | $557,604 | | | | $745,957 | | | | $780,810 | | | | $987,949 | | | | $1,117,109 | | | | $1,055,121 | |
| | | | | | |
Portfolio turnover rate | | | 45.92% | | | | 34.25% | | | | 16.66% | | | | 44.25% | | | | 20.90% | | | | 13.33% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dNet investment income per share includes approximately $0.02 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.24%.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gBenefit of expense reduction rounds to less than 0.01%.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
14 | | Annual Report | | | The accompanying notes are an integral part of these consolidated financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL HIGHLIGHTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | Year Ended March 31, | |
| | | | | | | | |
| | | 2018 | | | 2017 | | | 2016a | | | 2016 | | | 2015 | | | 2014 | |
Class A1 | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of year | | | $ 3.18 | | | | $ 2.91 | | | | $ 2.72 | | | | $ 3.13 | | | | $ 3.30 | | | | $ 2.94 | |
| | | | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment incomec | | | 0.10 | | | | 0.09 | | | | 0.07 | | | | 0.08 | | | | 0.08 | | | | 0.09d | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (0.39 | ) | | | 0.26 | | | | 0.15 | | | | (0.32 | ) | | | (0.07 | ) | | | 0.34 | |
| | | | |
| | | | | | |
Total from investment operations | | | (0.29 | ) | | | 0.35 | | | | 0.22 | | | | (0.24 | ) | | | 0.01 | | | | 0.43 | |
| | | | |
| | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.12 | ) | | | (0.08 | ) | | | (0.03 | ) | | | (0.09 | ) | | | (0.18 | ) | | | (0.07) | |
| | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | (0.08 | ) | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.12) | | | | (0.08 | ) | | | (0.03) | | | | (0.17 | ) | | | (0.18 | ) | | | (0.07) | |
| | | | |
| | | | | | |
Net asset value, end of year | | | $ 2.77 | | | | $ 3.18 | | | | $ 2.91 | | | | $ 2.72 | | | | $ 3.13 | | | | $ 3.30 | |
| | | | |
| | | | | | |
Total returne | | | (9.45)% | | | | 12.18% | | | | 7.97% | | | | (7.76)% | | | | 0.36% | | | | 14.98% | |
| | | | | | |
Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliates and expense reduction | | | 1.19% | | | | 1.17% | | | | 1.16% | | | | 1.11% | | | | 1.11% | | | | 1.13% | |
| | | | | | |
Expenses net of waiver and payments by affiliates and expense reductiong | | | 1.16% | | | | 1.14% | | | | 1.15% | | | | 1.10% | | | | 1.11%h | | | | 1.12% | |
| | | | | | |
Net investment income | | | 3.17% | | | | 2.82% | | | | 3.28% | | | | 2.55% | | | | 2.55% | | | | 2.76%d | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of year (000’s) | | | $285,358 | | | | $293,488 | | | | $319,161 | | | | $370,212 | | | | $467,765 | | | | $538,901 | |
| | | | | | |
Portfolio turnover rate | | | 45.92% | | | | 34.25% | | | | 16.66% | | | | 44.25% | | | | 20.90% | | | | 13.33% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dNet investment income per share includes approximately $0.02 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.24%.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gBenefit of expense reduction rounds to less than 0.01%.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these consolidated financial statements. | Annual Report | | 15 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL HIGHLIGHTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | Year Ended March 31, | |
| | | | | | | | |
| | | 2018 | | | 2017 | | | 2016a | | | 2016 | | | 2015 | | | 2014 | |
| | | | | | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net asset value, beginning of year | | | $ 3.16 | | | | $ 2.90 | | | | $ 2.70 | | | | $ 3.12 | | | | $ 3.28 | | | | $ 2.93 | |
| | | | |
| | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment incomec | | | 0.08 | | | | 0.06 | | | | 0.05 | | | | 0.05 | | | | 0.06 | | | | 0.06d | |
| | | | | | |
Net realized and unrealized gains (losses) | | | (0.40 | ) | | | 0.26 | | | | 0.16 | | | | (0.31 | ) | | | (0.07 | ) | | | 0.35 | |
| | | | |
| | | | | | |
Total from investment operations | | | (0.32 | ) | | | 0.32 | | | | 0.21 | | | | (0.26 | ) | | | (0.01 | ) | | | 0.41 | |
| | | | |
| | | | | | |
| Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Net investment income | | | (0.09 | ) | | | (0.06 | ) | | | (0.01 | ) | | | (0.08 | ) | | | (0.15 | ) | | | (0.06) | |
| | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | (0.08) | | | | — | | | | — | |
| | | | |
| | | | | | |
Total distributions | | | (0.09 | ) | | | (0.06 | ) | | | (0.01 | ) | | | (0.16 | ) | | | (0.15 | ) | | | (0.06 | ) |
| | | | |
| | | | | | |
Net asset value, end of year | | | $ 2.75 | | | | $ 3.16 | | | | $ 2.90 | | | | $ 2.70 | | | | $ 3.12 | | | | $ 3.28 | |
| | | | |
| | | | | | |
Total returne | | | (10.23)% | | | | 11.03% | | | | 7.74% | | | | (8.68)% | | | | (0.04)% | | | | 14.11% | |
| | | | | | |
Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses before waiver and payments by affiliates and expense reduction | | | 1.94% | | | | 1.92% | | | | 1.89% | | | | 1.86% | | | | 1.83% | | | | 1.88% | |
| | | | | | |
Expenses net of waiver and payments by affiliates and expense reductiong | | | 1.91% | | | | 1.89% | | | | 1.88% | | | | 1.85% | | | | 1.83%h | | | | 1.87% | |
| | | | | | |
Net investment income | | | 2.42% | | | | 2.07% | | | | 2.55% | | | | 1.80% | | | | 1.83% | | | | 2.01%d | |
| | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net assets, end of year (000’s) | | | $203,587 | | | | $317,374 | | | | $340,265 | | | | $464,899 | | | | $507,888 | | | | $480,700 | |
| | | | | | |
Portfolio turnover rate | | | 45.92% | | | | 34.25% | | | | 16.66% | | | | 44.25% | | | | 20.90% | | | | 13.33% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dNet investment income per share includes approximately $0.02 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.49%.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gBenefit of expense reduction rounds to less than 0.01%.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
16 | | Annual Report | | | The accompanying notes are an integral part of these consolidated financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL HIGHLIGHTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | | | Year Ended March 31, | |
| | | 2018 | | | 2017 | | | 2016a | | | | | 2016 | | | 2015 | | | 2014 | |
| | | | | | | |
Class C1 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net asset value, beginning of year | | | $ 3.17 | | | | $ 2.91 | | | | $ 2.72 | | | | | | $ 3.13 | | | | $ 3.29 | | | | $ 2.93 | |
| | | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net investment incomec | | | 0.09 | | | | 0.08 | | | | 0.06 | | | | | | 0.06 | | | | 0.07 | | | | 0.07 | d |
| | | | | | | | |
Net realized and unrealized gains (losses) | | | (0.39 | ) | | | 0.25 | | | | 0.15 | | | | | | (0.31 | ) | | | (0.07 | ) | | | 0.35 | |
| | | | | | | |
Total from investment operations | | | (0.30 | ) | | | 0.33 | | | | 0.21 | | | | | | (0.25 | ) | | | — | | | | 0.42 | |
| | | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net investment income | | | (0.10 | ) | | | (0.07 | ) | | | (0.02 | ) | | | | | (0.08 | ) | | | (0.16 | ) | | | (0.06 | ) |
| | | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | | | (0.08 | ) | | | — | | | | — | |
| | | | | | | |
Total distributions | | | (0.10 | ) | | | (0.07 | ) | | | (0.02 | ) | | | | | (0.16 | ) | | | (0.16 | ) | | | (0.06 | ) |
| | | | | | | |
Net asset value, end of year | | | $ 2.77 | | | | $ 3.17 | | | | $ 2.91 | | | | | | $ 2.72 | | | | $ 3.13 | | | | $ 3.29 | |
| | | | | | | |
Total returne | | | (9.88)% | | | | 11.71% | | | | 7.62% | | | | | | (8.07)% | | | | 0.26% | | | | 14.57% | |
| | | | | | | |
Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Expenses before waiver and payments by affiliates and expense reduction | | | 1.59% | | | | 1.57% | | | | 1.56% | | | | | | 1.51% | | | | 1.51% | | | | 1.53% | |
| | | | | | | |
Expenses net of waiver and payments by affiliates and expense reductiong | | | 1.56% | | | | 1.54% | | | | 1.55% | | | | | | 1.50% | | | | 1.51%h | | | | 1.52% | |
| | | | | | | |
Net investment income | | | 2.77% | | | | 2.42% | | | | 2.88% | | | | | | 2.15% | | | | 2.15% | | | | 2.36%d | |
| | | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of year (000’s) | | | $62,418 | | | | $173,079 | | | | $202,929 | | | | | | $233,840 | | | | $296,672 | | | | $341,690 | |
| | | | | | | |
Portfolio turnover rate | | | 45.92% | | | | 34.25% | | | | 16.66% | | | | | | 44.25% | | | | 20.90% | | | | 13.33% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dNet investment income per share includes approximately $0.02 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.84%.
eTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gBenefit of expense reduction rounds to less than 0.01%.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these consolidated financial statements. | Annual Report | | 17 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL HIGHLIGHTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | | | | Year Ended March 31, | |
| | | 2018 | | | 2017 | | | 2016a | | | | | | 2016 | | | 2015 | | | 2014 | |
| | | | | | | |
Class R | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net asset value, beginning of year | | | $ 3.18 | | | | $ 2.92 | | | | $ 2.72 | | | | | | | | $ 3.14 | | | | $ 3.30 | | | | $ 2.94 | |
| | | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net investment incomec | | | 0.09 | | | | 0.08 | | | | 0.06 | | | | | | | | 0.07 | | | | 0.07 | | | | 0.08 | d |
| | | | | | | | |
Net realized and unrealized gains (losses) | | | (0.38 | ) | | | 0.25 | | | | 0.16 | | | | | | | | (0.32 | ) | | | (0.06 | ) | | | 0.35 | |
| | | | | | | |
Total from investment operations | | | (0.29 | ) | | | 0.33 | | | | 0.22 | | | | | | | | (0.25 | ) | | | 0.01 | | | | 0.43 | |
| | | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net investment income | | | (0.11 | ) | | | (0.07 | ) | | | (0.02 | ) | | | | | | | (0.09 | ) | | | (0.17 | ) | | | (0.07 | ) |
| | | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | | | | | (0.08 | ) | | | — | | | | — | |
| | | | | | | |
Total distributions | | | (0.11 | ) | | | (0.07 | ) | | | (0.02 | ) | | | | | | | (0.17 | ) | | | (0.17 | ) | | | (0.07 | ) |
| | | | | | | |
Net asset value, end of year | | | $ 2.78 | | | | $ 3.18 | | | | $ 2.92 | | | | | | | | $ 2.72 | | | | $ 3.14 | | | | $ 3.30 | |
| | | | | | | |
Total returne | | | (9.67)% | | | | 11.84% | | | | 8.11% | | | | | | | | (8.24)% | | | | 0.43% | | | | 14.70% | |
| | | | | | | |
Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Expenses before waiver and payments by affiliates and expense reduction | | | 1.44% | | | | 1.42% | | | | 1.41% | | | | | | | | 1.36% | | | | 1.36% | | | | 1.38% | |
| | | | | | | |
Expenses net of waiver and payments by affiliates and expense reductiong | | | 1.41% | | | | 1.39% | | | | 1.40% | | | | | | | | 1.35% | | | | 1.36%h | | | | 1.37% | |
| | | | | | | |
Net investment income | | | 2.92% | | | | 2.57% | | | | 3.03% | | | | | | | | 2.30% | | | | 2.30% | | | | 2.51%d | |
| | | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net assets, end of year (000’s) | | | $2,778 | | | | $4,944 | | | | $5,487 | | | | | | | | $6,498 | | | | $6,357 | | | | $5,757 | |
| | | | | | | |
Portfolio turnover rate | | | 45.92% | | | | 34.25% | | | | 16.66% | | | | | | | | 44.25% | | | | 20.90% | | | | 13.33% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dNet investment income per share includes approximately $0.02 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 1.99%.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gBenefit of expense reduction rounds to less than 0.01%.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
18 | | Annual Report | | | The accompanying notes are an integral part of these consolidated financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL HIGHLIGHTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | | | | Year Ended March 31, | |
| | | 2018 | | | 2017 | | | 2016a | | | | | | 2016 | | | 2015 | | | 2014b | |
| | | | | | | |
Class R6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net asset value, beginning of year | | | $ 3.18 | | | | $ 2.92 | | | | $ 2.73 | | | | | | | | $ 3.14 | | | | $ 3.30 | | | | $ 3.02 | |
| | | | | | | |
Income from investment operationsc: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net investment incomed | | | 0.11 | | | | 0.09 | | | | 0.08 | | | | | | | | 0.08 | | | | 0.07 | | | | 0.09 | e |
| | | | | | | | |
Net realized and unrealized gains (losses) | | | (0.38 | ) | | | 0.26 | | | | 0.15 | | | | | | | | (0.31 | ) | | | (0.04 | ) | | | 0.28 | |
| | | | | | | |
Total from investment operations | | | (0.27 | ) | | | 0.35 | | | | 0.23 | | | | | | | | (0.23 | ) | | | 0.03 | | | | 0.37 | |
| | | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net investment income | | | (0.13 | ) | | | (0.09 | ) | | | (0.04 | ) | | | | | | | (0.10 | ) | | | (0.19 | ) | | | (0.09 | ) |
| | | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | | | | | (0.08 | ) | | | — | | | | — | |
| | | | | | | |
Total distributions | | | (0.13 | ) | | | (0.09 | ) | | | (0.04 | ) | | | | | | | (0.18 | ) | | | (0.19 | ) | | | (0.09 | ) |
| | | | | | | |
Net asset value, end of year | | | $ 2.78 | | | | $ 3.18 | | | | $ 2.92 | | | | | | | | $ 2.73 | | | | $ 3.14 | | | | $ 3.30 | |
| | | | | | | |
Total returnf | | | (9.09)% | | | | 12.56% | | | | 8.35% | | | | | | | | (7.44)% | | | | 1.02% | | | | 12.32% | |
| | | | | | | |
Ratios to average net assetsg | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Expenses before waiver and payments by affiliates and expense reduction | | | 0.89% | | | | 0.84% | | | | 0.81% | | | | | | | | 0.81% | | | | 0.92% | | | | 2.31% | |
| | | | | | | |
Expenses net of waiver and payments by affiliates and expense reductionh | | | 0.82% | | | | 0.77% | | | | 0.79% | | | | | | | | 0.75% | | | | 0.76% | | | | 0.77% | |
| | | | | | | |
Net investment income | | | 3.51% | | | | 3.19% | | | | 3.64% | | | | | | | | 2.90% | | | | 2.90% | | | | 3.11%e | |
| | | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net assets, end of year (000’s) | | | $7,933 | | | | $11,254 | | | | $752 | | | | | | | | $1,089 | | | | $660 | | | | $5 | |
| | | | | | | |
Portfolio turnover rate | | | 45.92% | | | | 34.25% | | | | 16.66% | | | | | | | | 44.25% | | | | 20.90% | | | | 13.33% | |
aFor the period April 1, 2016 to December 31, 2016.
bFor the period May 1, 2013 (effective date) to March 31, 2014.
cThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
dBased on average daily shares outstanding.
eNet investment income per share includes approximately $0.02 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.59%.
fTotal return is not annualized for periods less than one year.
gRatios are annualized for periods less than one year.
hBenefit of expense reduction rounds to less than 0.01%.
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these consolidated financial statements. | Annual Report | | 19 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL HIGHLIGHTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | | | | Year Ended March 31, | |
| | | 2018 | | | 2017 | | | 2016a | | | | | | 2016 | | | 2015 | | | 2014 | |
| | | | | | | |
Advisor Class | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Per share operating performance | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(for a share outstanding throughout the year) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net asset value, beginning of year | | | $ 3.19 | | | | $ 2.92 | | | | $ 2.73 | | | | | | | | $ 3.14 | | | | $ 3.31 | | | | $ 2.95 | |
| | | | | | | |
Income from investment operationsb: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net investment incomec | | | 0.11 | | | | 0.10 | | | | 0.08 | | | | | | | | 0.08 | | | | 0.09 | | | | 0.09 | d |
| | | | | | | | |
Net realized and unrealized gains (losses) | | | (0.39) | | | | 0.26 | | | | 0.14 | | | | | | | | (0.31) | | | | (0.08) | | | | 0.35 | |
| | | | | | | |
Total from investment operations | | | (0.28) | | | | 0.36 | | | | 0.22 | | | | | | | | (0.23) | | | | 0.01 | | | | 0.44 | |
| | | | | | | |
Less distributions from: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net investment income | | | (0.13) | | | | (0.09) | | | | (0.03) | | | | | | | | (0.10) | | | | (0.18) | | | | (0.08) | |
| | | | | | | |
Net realized gains | | | — | | | | — | | | | — | | | | | | | | (0.08) | | | | — | | | | — | |
| | | | | | | |
Total distributions | | | (0.13) | | | | (0.09) | | | | (0.03) | | | | | | | | (0.18) | | | | (0.18) | | | | (0.08) | |
| | | | | | | |
Net asset value, end of year | | | $ 2.78 | | | | $ 3.19 | | | | $ 2.92 | | | | | | | | $ 2.73 | | | | $ 3.14 | | | | $ 3.31 | |
| | | | | | | |
Total returne | | | (9.19)% | | | | 12.42% | | | | 8.22% | | | | | | | | (7.52)% | | | | 0.62% | | | | 15.23% | |
| | | | | | | |
Ratios to average net assetsf | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Expenses before waiver and payments by affiliates and expense reduction | | | 0.94% | | | | 0.92% | | | | 0.91% | | | | | | | | 0.86% | | | | 0.86% | | | | 0.88% | |
| | | | | | | |
Expenses net of waiver and payments by affiliates and expense reductiong | | | 0.91% | | | | 0.89% | | | | 0.90% | | | | | | | | 0.85% | | | | 0.86%h | | | | 0.87% | |
| | | | | | | |
Net investment income | | | 3.42% | | | | 3.07% | | | | 3.53% | | | | | | | | 2.80% | | | | 2.80% | | | | 3.01%d | |
| | | | | | | |
Supplemental data | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Net assets, end of year (000’s) | | | $207,346 | | | | $246,044 | | | | $212,161 | | | | | | | | $299,226 | | | | $405,877 | | | | $421,583 | |
| | | | | | | |
Portfolio turnover rate | | | 45.92% | | | | 34.25% | | | | 16.66% | | | | | | | | 44.25% | | | | 20.90% | | | | 13.33% | |
aFor the period April 1, 2016 to December 31, 2016.
bThe amount shown for a share outstanding throughout the period may not correlate with the Consolidated Statement of Operations for the period due to the timing of sales and repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dNet investment income per share includes approximately $0.02 per share related to income received in the form of a special dividend in connection with certain Fund holdings. Excluding this amount, the ratio of net investment income to average net assets would have been 2.49%.
eTotal return is not annualized for periods less than one year.
fRatios are annualized for periods less than one year.
gBenefit of expense reduction rounds to less than 0.01%.
hBenefit of waiver and payments by affiliates rounds to less than 0.01%.
| | | | | | |
20 | | Annual Report | | | The accompanying notes are an integral part of these consolidated financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
Consolidated Statement of Investments, December 31, 2018
Templeton Global Balanced Fund
| | | | | | | | | | |
| | | Industry | |
| Shares/
Warrants |
| | | Value | |
Common Stocks and Other Equity Interests 60.3% | | | | | |
Canada 0.4% | | | | | | | | | | |
Husky Energy Inc. | | Oil, Gas & Consumable Fuels | | | 550,500 | | | $ | 5,690,725 | |
| | | | | | | | | | |
China 3.6% | | | | | | | | | | |
aBaidu Inc., ADR | | Interactive Media & Services | | | 55,900 | | | | 8,865,740 | |
China Mobile Ltd. | | Wireless Telecommunication Services | | | 2,087,500 | | | | 20,087,239 | |
China Telecom Corp. Ltd., H | | Diversified Telecommunication Services | | | 34,010,000 | | | | 17,373,092 | |
Kunlun Energy Co. Ltd. | | Oil, Gas & Consumable Fuels | | | 1,699,500 | | | | 1,801,399 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 48,127,470 | |
| | | | | | | | | | |
Denmark 1.6% | | | | | | | | | | |
A.P. Moeller-Maersk AS, B | | Marine | | | 5,517 | | | | 6,940,218 | |
Vestas Wind Systems AS | | Electrical Equipment | | | 184,986 | | | | 14,003,610 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 20,943,828 | |
| | | | | | | | | | |
France 5.7% | | | | | | | | | | |
AXA SA | | Insurance | | | 574,878 | | | | 12,421,674 | |
BNP Paribas SA | | Banks | | | 312,803 | | | | 14,148,221 | |
Credit Agricole SA | | Banks | | | 594,708 | | | | 6,425,757 | |
Sanofi | | Pharmaceuticals | | | 290,925 | | | | 25,220,644 | |
Veolia Environnement SA | | Multi-Utilities | | | 834,440 | | | | 17,166,799 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 75,383,095 | |
| | | | | | | | | | |
Germany 4.2% | | | | | | | | | | |
Bayer AG | | Pharmaceuticals | | | 156,319 | | | | 10,872,269 | |
E.ON SE | | Multi-Utilities | | | 1,669,822 | | | | 16,484,063 | |
Merck KGaA | | Pharmaceuticals | | | 188,611 | | | | 19,415,052 | |
Telefonica Deutschland Holding AG | | Diversified Telecommunication Services | | | 2,188,331 | | | | 8,613,469 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 55,384,853 | |
| | | | | | | | | | |
Hong Kong 2.9% | | | | | | | | | | |
CK Hutchison Holdings Ltd. | | Industrial Conglomerates | | | 1,947,352 | | | | 18,701,344 | |
Swire Pacific Ltd., A | | Real Estate Management & Development | | | 1,859,000 | | | | 19,633,395 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 38,334,739 | |
| | | | | | | | | | |
Israel 1.1% | | | | | | | | | | |
aTeva Pharmaceutical Industries Ltd., ADR | | Pharmaceuticals | | | 948,319 | | | | 14,623,079 | |
| | | | | | | | | | |
Italy 1.9% | | | | | | | | | | |
Eni SpA | | Oil, Gas & Consumable Fuels | | | 1,582,500 | | | | 25,000,158 | |
| | | | | | | | | | |
Japan 5.0% | | | | | | | | | | |
Ezaki Glico Co. Ltd. | | Food Products | | | 184,600 | | | | 9,398,431 | |
Panasonic Corp. | | Household Durables | | | 2,117,500 | | | | 19,138,645 | |
Seven & i Holdings Co. Ltd. | | Food & Staples Retailing | | | 117,600 | | | | 5,132,124 | |
Sumitomo Mitsui Financial Group Inc. | | Banks | | | 285,500 | | | | 9,494,959 | |
Suntory Beverage & Food Ltd. | | Beverages | | | 219,800 | | | | 9,947,153 | |
bTakeda Pharmaceutical Co. Ltd. | | Pharmaceuticals | | | 394,700 | | | | 13,342,733 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 66,454,045 | |
| | | | | | | | | | |
Luxembourg 0.9% | | | | | | | | | | |
SES SA, IDR | | Media | | | 630,561 | | | | 12,072,921 | |
| | | | | | | | | | |
Netherlands 2.6% | | | | | | | | | | |
Flow Traders | | Capital Markets | | | 331,721 | | | | 10,581,591 | |
ING Groep NV | | Banks | | | 1,681,919 | | | | 18,134,413 | |
NXP Semiconductors NV | | Semiconductors & Semiconductor Equipment | | | 83,300 | | | | 6,104,224 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 34,820,228 | |
| | | | | | | | | | |
Norway 0.5% | | | | | | | | | | |
Yara International ASA | | Chemicals | | | 186,429 | | | | 7,185,719 | |
| | | | | | | | | | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 21 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | |
| | | Industry | |
| Shares/
Warrants |
| | | Value | |
Common Stocks and Other Equity Interests(continued) | | | | | | | | |
Singapore 1.5% | | | | | | | | | | |
Singapore Telecommunications Ltd. | | Diversified Telecommunication Services | | | 9,123,299 | | | $ | 19,611,361 | |
| | | | | | | | | | |
South Africa 0.0%† | | | | | | | | | | |
| a,c,dEdcon Holdings Ltd., F wts., 2/20/49 | | Specialty Retail | | | 4,441 | | | | — | |
| a,c,dEdcon Holdings Ltd., F1 wts., 2/20/49 | | Specialty Retail | | | 79,464,087 | | | | — | |
| a,c,dEdcon Holdings Ltd., F2 wts., 2/20/49 | | Specialty Retail | | | 6,435,002 | | | | — | |
| a,c,dK2016470219 South Africa Ltd., A | | Specialty Retail | | | 32,900,733 | | | | 22,898 | |
| a,c,dK2016470219 South Africa Ltd., B | | Specialty Retail | | | 4,646,498 | | | | 3,234 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 26,132 | |
| | | | | | | | | | |
South Korea 2.4% | | | | | | | | | | |
Hana Financial Group Inc. | | Banks | | | 304,255 | | | | 9,903,156 | |
KB Financial Group Inc. | | Banks | | | 177,884 | | | | 7,427,073 | |
Samsung Electronics Co. Ltd. | | Technology Hardware, Storage & Peripherals | | | 408,545 | | | | 14,196,417 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 31,526,646 | |
| | | | | | | | | | |
Switzerland 2.3% | | | | | | | | | | |
aCEVA Logistics AG | | Air Freight & Logistics | | | 7,991 | | | | 242,484 | |
Landis+Gyr Group AG | | Electronic Equipment, Instruments | | | | | | | | |
| | & Components | | | 173,839 | | | | 9,801,386 | |
Roche Holding AG | | Pharmaceuticals | | | 82,754 | | | | 20,556,942 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 30,600,812 | |
| | | | | | | | | | |
Taiwan 0.9% | | | | | | | | | | |
Taiwan Semiconductor Manufacturing Co. Ltd. | | Semiconductors & Semiconductor Equipment | | | 1,516,000 | | | | 11,172,925 | |
| | | | | | | | | | |
Thailand 0.9% | | | | | | | | | | |
Bangkok Bank PCL, fgn | | Banks | | | 1,926,400 | | | | 12,330,390 | |
| | | | | | | | | | |
United Kingdom 8.7% | | | | | | | | | | |
BP PLC | | Oil, Gas & Consumable Fuels | | | 3,928,867 | | | | 24,848,521 | |
aCobham PLC | | Aerospace & Defense | | | 5,707,293 | | | | 7,112,282 | |
HSBC Holdings PLC | | Banks | | | 881,292 | | | | 7,292,985 | |
Kingfisher PLC | | Specialty Retail | | | 4,348,469 | | | | 11,506,674 | |
Man Group PLC | | Capital Markets | | | 2,986,757 | | | | 5,065,786 | |
Royal Dutch Shell PLC, B | | Oil, Gas & Consumable Fuels | | | 825,720 | | | | 24,640,186 | |
Standard Chartered PLC | | Banks | | | 1,991,076 | | | | 15,470,855 | |
Vodafone Group PLC | | Wireless Telecommunication Services | | | 9,873,649 | | | | 19,252,205 | |
| | | | | | | | | | |
| | | |
| | | | | | | | | 115,189,494 | |
| | | | | | | | | | |
United States 13.2% | | | | | | | | | | |
Allergan PLC | | Pharmaceuticals | | | 15,900 | | | | 2,125,194 | |
Amgen Inc. | | Biotechnology | | | 68,566 | | | | 13,347,743 | |
Citigroup Inc. | | Banks | | | 120,487 | | | | 6,272,553 | |
Comcast Corp., A | | Media | | | 357,424 | | | | 12,170,287 | |
Coty Inc., A | | Personal Products | | | 959,489 | | | | 6,294,248 | |
Eli Lilly & Co. | | Pharmaceuticals | | | 77,110 | | | | 8,923,169 | |
Exxon Mobil Corp. | | Oil, Gas & Consumable Fuels | | | 201,900 | | | | 13,767,561 | |
Gilead Sciences Inc. | | Biotechnology | | | 185,700 | | | | 11,615,535 | |
Kellogg Co. | | Food Products | | | 206,700 | | | | 11,783,967 | |
The Kroger Co. | | Food & Staples Retailing | | | 411,100 | | | | 11,305,250 | |
Oracle Corp. | | Software | | | 581,910 | | | | 26,273,236 | |
Perrigo Co. PLC | | Pharmaceuticals | | | 139,270 | | | | 5,396,713 | |
a,c,eTurtle Bay Resort | | Hotels, Restaurants & Leisure | | | 1,587,888 | | | | 34,934 | |
United Parcel Service Inc., B | | Air Freight & Logistics | | | 187,300 | | | | 18,267,369 | |
Walgreens Boots Alliance Inc. | | Food & Staples Retailing | | | 253,700 | | | | 17,335,321 | |
| | | | | | |
22 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | | | | | |
| | | | | Industry | |
| Shares/
Warrants |
| | | | | | | Value | |
| | Common Stocks and Other Equity Interests(continued) | | | | | | | | | |
| | United States(continued) | | | | | | | | | | | | | | |
| | Wells Fargo & Co. | | Banks | | | 219,200 | | | | | | | $ | 10,100,736 | |
| | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | 175,013,816 | |
| | | | | | | | | | | | | | | | |
| | Total Common Stocks and Other Equity Interests
(Cost $884,492,555) | | | | | | | | | | | | | 799,492,436 | |
| | | | | | | | | | | | | | | | |
f | | Equity-Linked Securities 4.7% | | | | | | | | | |
| | Japan 0.7% | | | | | | | | | | | | | | |
g | | Credit Suisse AG/London into SoftBank Group Corp., 4.00%, 144A | | Wireless Telecommunication Services | | | 145,068 | | | | | | | | 10,214,619 | |
| | | | | | | | | | | | | | | | |
| | United Kingdom 0.7% | | | | | | | | | | | | | | |
g | | Royal Bank of Canada into Standard Chartered PLC, 3.48%, 144A | | Banks | | | 12,400,000 | | | | | | | | 9,236,726 | |
| | | | | | | | | | | | | | | | |
| | United States 3.3% | | | | | | | | | | | | | | |
g | | Credit Suisse AG/London into Allergan PLC, 4.00%, 144A | | Pharmaceuticals | | | 92,332 | | | | | | | | 12,527,869 | |
g | | Credit Suisse AG/London into Coty Inc., 8.70%, A, 144A | | Personal Products | | | 873,507 | | | | | | | | 5,884,423 | |
g | | Royal Bank of Canada into Citigroup Inc., 4.50%, 144A | | Banks | | | 16,105,000 | | | | | | | | 10,733,066 | |
g | | Royal Bank of Canada into Knowles Corp., 5.00%, 144A | | Electronic Equipment, Instruments & Components | | | 16,447,000 | | | | | | | | 14,268,637 | |
| | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | 43,413,995 | |
| | | | | | | | | | | | | | | | |
| | Total Equity-Linked Securities
(Cost $82,107,538) | | | | | | | | | | | | | 62,865,340 | |
| | | | | | | | | | | | | | | | |
| | | | | |
| Principal
Amount |
* | | | | | | | | |
| | Corporate Bonds 0.0%† | | | | | | | | | | | | | | |
| | South Africa 0.0%† | | | | | | | | | | | | | | |
c,d,h | | K2016470219 South Africa Ltd., | | | | | | | | | | | | | | |
| | senior secured note, 144A, PIK, 3.00%, 12/31/22 | | Multiline Retail | | | 2,569,021 | | | | | | | | 3,164 | |
| | senior secured note, 144A, PIK, 8.00%, 12/31/22 | | Multiline Retail | | | 2,226,047 | | | | EUR | | | | 49,050 | |
d,h | | K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22 | | Multiline Retail | | | 781,543 | | | | | | | | 55,576 | |
| | | | | | | | | | | | | | | | |
| | Total Corporate Bonds
(Cost $3,605,529) | | | | | | | | | | | | | 107,790 | |
| | | | | | | | | | | | | | | | |
| | Foreign Government and Agency Securities 20.7% | | | | | | | | | | | | | | |
| | Argentina 1.6% | | | | | | | | | | | | | | |
| | Argentina Treasury Bill, Strip, 4/30/20 | | | | | 28,994,000 | | | | ARS | | | | 847,055 | |
| | Argentine Bonos del Tesoro, | | | | | | | | | | | | | | |
| | 18.20%, 10/03/21 | | | | | 193,279,000 | | | | ARS | | | | 3,968,115 | |
| | 16.00%, 10/17/23 | | | | | 298,989,000 | | | | ARS | | | | 6,715,854 | |
| | senior note, 15.50%, 10/17/26 | | | | | 243,952,000 | | | | ARS | | | | 4,873,974 | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 23 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | |
| | | Principal
Amount* | | | | | | Value |
Foreign Government and Agency | | | | | | | | | | |
Securities(continued) | | | | | | | | | | |
Argentina(continued) | | | | | | | | | | |
Government of Argentina, | | | | | | | | | | |
iFRN, 65.509%, (ARPP7DRR), 6/21/20 | | | 2,930,000 | | | | ARS | | | $ 84,343 |
iFRN, 51.542%, (ARS Badlar + 2.00%), 4/03/22 | | | 37,519,000 | | | | ARS | | | 959,075 |
jIndex Linked, 3.75%, 2/08/19 | | | 37,751,000 | | | | ARS | | | 1,423,108 |
jIndex Linked, 4.00%, 3/06/20 | | | 1,106,000 | | | | ARS | | | 35,582 |
senior note, 4.50%, 2/13/20 | | | 3,021,000 | | | | | | | 2,744,956 |
| | | |
| | | | | | | | | | 21,652,062 |
Brazil 4.5% | | | | | | | | | | |
Letra Tesouro Nacional, | | | | | | | | | | |
Strip, 7/01/19 | | | 28,060 | k | | | BRL | | | 7,013,762 |
Strip, 7/01/20 | | | 1,200 | k | | | BRL | | | 279,744 |
Strip, 7/01/21 | | | 7,960 | k | | | BRL | | | 1,702,290 |
Nota Do Tesouro Nacional, | | | | | | | | | | |
10.00%, 1/01/21 | | | 107,995 | k | | | BRL | | | 29,109,239 |
10.00%, 1/01/23 | | | 33,230 | k | | | BRL | | | 8,976,557 |
10.00%, 1/01/25 | | | 38,951 | k | | | BRL | | | 10,492,111 |
10.00%, 1/01/27 | | | 3,110 | k | | | BRL | | | 837,349 |
senior note, 10.00%, 1/01/19 | | | 2,640 | k | | | BRL | | | 680,280 |
| | | |
| | | | | | | | | | 59,091,332 |
Colombia 1.4% | | | | | | | | | | |
Government of Colombia, | | | | | | | | | | |
senior bond, 7.75%, 4/14/21 | | | 689,000,000 | | | | COP | | | 221,154 |
senior bond, 4.375%, 3/21/23 | | | 52,000,000 | | | | COP | | | 15,220 |
senior bond, 9.85%, 6/28/27 | | | 83,000,000 | | | | COP | | | 31,416 |
Titulos de Tesoreria, | | | | | | | | | | |
B, 7.75%, 9/18/30 | | | 22,949,000,000 | | | | COP | | | 7,534,629 |
B, 7.00%, 6/30/32 | | | 452,000,000 | | | | COP | | | 137,404 |
senior bond, B, 11.00%, 7/24/20 | | | 677,000,000 | | | | COP | | | 226,438 |
senior bond, B, 7.00%, 5/04/22 | | | 844,000,000 | | | | COP | | | 271,494 |
senior bond, B, 10.00%, 7/24/24 | | | 1,738,000,000 | | | | COP | | | 630,240 |
senior bond, B, 7.50%, 8/26/26 | | | 21,454,000,000 | | | | COP | | | 6,977,158 |
senior bond, B, 6.00%, 4/28/28 | | | 5,961,000,000 | | | | COP | | | 1,744,177 |
senior note, B, 7.00%, 9/11/19 | | | 481,000,000 | | | | COP | | | 150,368 |
| | | |
| | | | | | | | | | 17,939,698 |
El Salvador 0.0%† | | | | | | | | | | |
gGovernment of El Salvador, 144A, 7.65%, 6/15/35 | | | 100,000 | | | | | | | 95,078 |
Ghana 1.4% | | | | | | | | | | |
Government of Ghana, | | | | | | | | | | |
24.50%, 4/22/19 | | | 3,310,000 | | | | GHS | | | 687,933 |
24.50%, 5/27/19 | | | 270,000 | | | | GHS | | | 56,448 |
24.75%, 3/01/21 | | | 110,000 | | | | GHS | | | 24,400 |
24.50%, 6/21/21 | | | 600,000 | | | | GHS | | | 133,702 |
24.75%, 7/19/21 | | | 6,550,000 | | | | GHS | | | 1,465,930 |
18.75%, 1/24/22 | | | 7,110,000 | | | | GHS | | | 1,417,016 |
19.75%, 3/25/24 | | | 7,250,000 | | | | GHS | | | 1,427,325 |
19.00%, 11/02/26 | | | 27,470,000 | | | | GHS | | | 5,197,031 |
senior bond, 19.75%, 3/15/32 | | | 20,850,000 | | | | GHS | | | 4,113,878 |
senior note, 21.50%, 3/09/20 | | | 130,000 | | | | GHS | | | 27,023 |
senior note, 18.50%, 6/01/20 | | | 1,210,000 | | | | GHS | | | 243,930 |
senior note, 18.25%, 9/21/20 | | | 4,990,000 | | | | GHS | | | 999,469 |
senior note, 24.00%, 11/23/20 | | | 7,760,000 | | | | GHS | | | 1,687,063 |
| | | | | | |
24 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | |
| | | Principal
Amount* | | | | | | Value | |
Foreign Government and Agency Securities(continued) | | | | | | | | | | | | |
Ghana(continued) | | | | | | | | | | | | |
Government of Ghana, (continued) | | | | | | | | | | | | |
senior note, 16.50%, 3/22/21 | | | 50,000 | | | | GHS | | | | $ 9,652 | |
senior note, 18.25%, 7/25/22 | | | 7,580,000 | | | | GHS | | | | 1,481,654 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 18,972,454 | |
| | | | | | | | | | | | |
India 3.9% | | | | | | | | | | | | |
Government of India, | | | | | | | | | | | | |
senior bond, 8.20%, 2/15/22 | | | 400,000,000 | | | | INR | | | | 5,918,643 | |
senior bond, 8.35%, 5/14/22 | | | 210,100,000 | | | | INR | | | | 3,127,793 | |
senior bond, 8.08%, 8/02/22 | | | 133,000,000 | | | | INR | | | | 1,965,674 | |
senior bond, 8.13%, 9/21/22 | | | 268,000,000 | | | | INR | | | | 3,970,537 | |
senior note, 7.80%, 4/11/21 | | | 404,400,000 | | | | INR | | | | 5,900,624 | |
senior note, 6.84%, 12/19/22 | | | 44,000,000 | | | | INR | | | | 625,689 | |
senior note, 7.16%, 5/20/23 | | | 307,000,000 | | | | INR | | | | 4,397,289 | |
senior note, 8.83%, 11/25/23 | | | 756,500,000 | | | | INR | | | | 11,553,670 | |
senior note, 7.68%, 12/15/23 | | | 465,000,000 | | | | INR | | | | 6,807,434 | |
senior note, 6.79%, 5/15/27 | | | 540,500,000 | | | | INR | | | | 7,472,372 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 51,739,725 | |
| | | | | | | | | | | | |
Indonesia 3.4% | | | | | | | | | | | | |
Government of Indonesia, | | | | | | | | | | | | |
senior bond, FR35, 12.90%, 6/15/22 | | | 10,168,000,000 | | | | IDR | | | | 814,288 | |
senior bond, FR39, 11.75%, 8/15/23 | | | 1,616,000,000 | | | | IDR | | | | 128,769 | |
senior bond, FR42, 10.25%, 7/15/27 | | | 2,150,000,000 | | | | IDR | | | | 169,189 | |
senior bond, FR43, 10.25%, 7/15/22 | | | 154,000,000 | | | | IDR | | | | 11,509 | |
senior bond, FR44, 10.00%, 9/15/24 | | | 968,000,000 | | | | IDR | | | | 73,361 | |
senior bond, FR46, 9.50%, 7/15/23 | | | 73,000,000,000 | | | | IDR | | | | 5,377,027 | |
senior bond, FR56, 8.375%, 9/15/26 | | | 103,978,000,000 | | | | IDR | | | | 7,352,939 | |
senior bond, FR63, 5.625%, 5/15/23 | | | 2,150,000,000 | | | | IDR | | | | 138,300 | |
senior bond, FR70, 8.375%, 3/15/24 | | | 380,674,000,000 | | | | IDR | | | | 26,903,944 | |
senior bond, FR71, 9.00%, 3/15/29 | | | 64,873,000,000 | | | | IDR | | | | 4,762,839 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 45,732,165 | |
| | | | | | | | | | | | |
Mexico 2.1% | | | | | | | | | | | | |
Government of Mexico, | | | | | | | | | | | | |
senior bond, M, 8.00%, 6/11/20 | | | 1,003,800 | l | | | MXN | | | | 5,074,961 | |
senior bond, M, 6.50%, 6/10/21 | | | 2,105,100 | l | | | MXN | | | | 10,242,952 | |
senior note, M, 5.00%, 12/11/19 | | | 2,432,600 | l | | | MXN | | | | 11,985,939 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 27,303,852 | |
| | | | | | | | | | | | |
South Korea 1.9% | | | | | | | | | | | | |
Korea Monetary Stabilization Bond, | | | | | | | | | | | | |
senior note, 2.16%, 2/02/20 | | | 1,878,600,000 | | | | KRW | | | | 1,692,550 | |
senior note, 2.05%, 10/05/20 | | | 460,000,000 | | | | KRW | | | | 414,373 | |
Korea Treasury Bond, | | | | | | | | | | | | |
senior bond, 4.25%, 6/10/21 | | | 3,380,800,000 | | | | KRW | | | | 3,208,383 | |
senior note, 1.50%, 6/10/19 | | | 2,645,300,000 | | | | KRW | | | | 2,372,621 | |
senior note, 1.25%, 12/10/19 | | | 2,503,000,000 | | | | KRW | | | | 2,237,028 | |
senior note, 2.00%, 3/10/21 | | | 8,058,200,000 | | | | KRW | | | | 7,258,906 | |
senior note, 1.375%, 9/10/21 | | | 8,151,200,000 | | | | KRW | | | | 7,226,281 | |
senior note, 3.00%, 9/10/24 | | | 745,000,000 | | | | KRW | | | | 706,651 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | 25,116,793 | |
| | | | | | | | | | | | |
mSupranational 0.2% | | | | | | | | | | | | |
Inter-American Development Bank, | | | | | | | | | | | | |
senior bond, 7.50%, 12/05/24 | | | 60,000,000 | | | | MXN | | | | 2,857,927 | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 25 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | | | |
| | | | | Principal
Amount* | | | | | | Value | |
Foreign Government and Agency Securities(continued) | | | | | | | | | | | | | | |
Ukraine 0.3% | | | | | | | | | | | | | | |
a,g,nGovernment of Ukraine, 144A, VRI, GDP
Linked Security, 5/31/40 | | | | | 7,577,000 | | | | | | | $ | 4,365,148 | |
| | | | | | | | | | | | | | |
Total Foreign Government and
Agency Securities
(Cost $306,589,526) | | | | | | | | | | | | | 274,866,234 | |
| | | | | | | | | | | | | | |
| | | | |
| | | Industry | | Shares | | | | | | | |
Escrows and Litigation Trusts
(Cost $—) 0.0% | | | | | | | | | | | | | | |
United States 0.0% | | | | | | | | | | | | | | |
a,cNewPage Corp., Litigation Trust | | Paper & Forest Products | | | 1,100,000 | | | | | | | | — | |
| | | | | | | | | | | | | | |
Total Investments before Short Term Investments
(Cost $1,276,795,148) | | | | | | | | | | | | | 1,137,331,800 | |
| | | | | | | | | | | | | | |
| | | | |
| | | | | Principal
Amount* | | | | | | | |
Short Term Investments 13.9% | | | | | | | | | | | | | | |
| | | | |
Foreign Government and Agency Securities 5.1% | | | | | | | | | | | | | | |
Argentina 1.1% | | | | | | | | | | | | | | |
o Argentina Treasury Bill, 3/29/19 - 10/31/19 | | | | | 481,982,000 | | | | ARS | | | | 14,389,753 | |
| | | | | | | | | | | | | | |
Egypt 0.0%† | | | | | | | | | | | | | | |
o Egypt Treasury Bill, 1/22/19 | | | | | 3,100,000 | | | | EGP | | | | 171,057 | |
| | | | | | | | | | | | | | |
Mexico 3.8% | | | | | | | | | | | | | | |
o Mexico Treasury Bill, | | | | | | | | | | | | | | |
1/31/19 - 11/07/19 | | | | | 30,415,470 | p | | | MXN | | | | 15,072,952 | |
5/23/19 | | | | | 35,301,250 | p | | | MXN | | | | 17,388,612 | |
7/04/19 | | | | | 37,184,260 | p | | | MXN | | | | 18,111,207 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | 50,572,771 | |
| | | | | | | | | | | | | | |
Philippines 0.0%† | | | | | | | | | | | | | | |
Government of the Philippines, senior note,
7.875%, 2/19/19 | | | | | 80,000 | | | | PHP | | | | 1,530 | |
o Philippine Treasury Bill, 3/06/19-3/20/19 | | | | | 410,000 | | | | PHP | | | | 7,744 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | 9,274 | |
| | | | | | | | | | | | | | |
South Korea 0.2% | | | | | | | | | | | | | | |
Korea Monetary Stabilization Bond,
o3/12/19 | | | | | 450,000,000 | | | | KRW | | | | 402,713 | |
senior note, 1.80%, 9/09/19 | | | | | 908,000,000 | | | | KRW | | | | 815,662 | |
senior note, 1.87%, 11/09/19 | | | | | 680,000,000 | | | | KRW | | | | 610,747 | |
| | | | | | |
26 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | | | | | |
| | | | | | Principal
Amount* | | | | | | Value | |
Short Term Investments(continued) | | | | | | | | | | | | | | | | |
| | | | |
Foreign Government and Agency Securities(continued) | | | | | | | | | | | | | | | | |
South Korea(continued) | | | | | | | | | | | | | | | | |
Korea Monetary Stabilization Bond, (continued) | | | | | | | | | | | | | | | | |
senior note, 2.06%, 12/02/19 | | | | | | | 907,000,000 | | | | KRW | | | $ | 816,048 | |
| | | | | | | | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | 2,645,170 | |
| | | | | | | | | | | | | | | | |
Total Foreign Government and Agency | | | | | | | | | | | | | | | | |
Securities (Cost $69,091,700) | | | | | | | | | | | | | | | 67,788,025 | |
| | | | | | | | | | | | | | | | |
| | | | |
Total Investments before Money
Market Funds and Repurchase
Agreement (Cost $1,345,886,848) | | | | | | | | | | | | | | | 1,205,119,825 | |
| | | | | | | | | | | | | | | | |
| | | | |
| | | | | | Shares | | | | | | | |
Money Market Funds (Cost $105,243,850) 7.9% | | | | | | | | | | | | | | | | |
United States 7.9% | | | | | | | | | | | | | | | | |
q,r Institutional Fiduciary Trust Money Market Portfolio, 1.99% | | | | | | | 105,243,850 | | | | | | | | 105,243,850 | |
| | | | | | | | | | | | | | | | |
s Investments from Cash Collateral Received for Loaned Securities 0.9% | | | | | | | | | | | | | | | | |
Money Market Funds (Cost $9,561,000) 0.7% | | | | | | | | | | | | | | | | |
United States 0.7% | | | | | | | | | | | | | | | | |
q,r Institutional Fiduciary Trust Money Market Portfolio, 1.99% | | | | | | | 9,561,000 | | | | | | | | 9,561,000 | |
| | | | | | | | | | | | | | | | |
| | | | |
| | | | | | Principal
Amount* | | | | | | | |
Repurchase Agreement (Cost $2,391,476) 0.2% | | | | | | | | | | | | | | | | |
United States 0.2% | | | | | | | | | | | | | | | | |
| | | | |
t Joint Repurchase Agreement, 2.93%, 1/02/19
(Maturity Value $2,391,865) | | | | | | | | | | | | | | | | |
Merrill Lynch, Pierce, Fenner & Smith Inc.
Collateralized by U.S. Treasury Notes,
1.25%, 8/31/19 (valued at $2,439,309) | | | | | | | 2,391,476 | | | | | | | | 2,391,476 | |
| | | | | | | | | | | | | | | | |
| | | | |
Total Investments from Cash
Collateral Received for Loaned
Securities (Cost $11,952,476) | | | | | | | | | | | | | | | 11,952,476 | |
| | | | | | | | | | | | | | | | |
Total Investments
(Cost $1,463,083,174) 99.6% | | | | | | | | | | | | | | | 1,322,316,151 | |
Other Assets, less Liabilities 0.4% | | | | | | | | | | | | | | | 4,708,819 | |
| | | | | | | | | | | | | | | | |
Net Assets 100.0% | | | | | | | | | | | | | | $ | 1,327,024,970 | |
| | | | | | | | | | | | | | | | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 27 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
†Rounds to less than 0.1% of net assets.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aNon-income producing.
bA portion or all of the security is on loan at December 31, 2018. See Note 1(f).
cFair valued using significant unobservable inputs. See Note 12 regarding fair value measurements.
dSee Note 9 regarding restricted securities.
eThe security is owned by FT Holdings Corporation lV, a wholly-owned subsidiary of the Fund. See Note 1(g).
fSee Note 1(e) regarding equity-linked securities.
gSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At December 31, 2018, the aggregate value of these securities was $67,325,566, representing 5.1% of net assets.
hIncome may be received in additional securities and/or cash.
iThe coupon rate shown represents the rate at period end.
jRedemption price at maturity and coupon payment are adjusted for inflation. See Note 1(i).
kPrincipal amount is stated in 1,000 Brazilian Real Units.
lPrincipal amount is stated in 100 Mexican Peso Units.
mA supranational organization is an entity formed by two or more central governments through international treaties.
nThe principal represents the notional amount. See Note 1(d) regarding value recovery instruments.
oThe security was issued on a discount basis with no stated coupon rate.
pPrincipal amount is stated in 10 Mexican Peso Units.
qSee Note 3(f) regarding investments in affiliated management investment companies.
rThe rate shown is the annualizedseven-day effective yield at period end.
sSee Note 1(f) regarding securities on loan.
tSee Note 1(c) regarding joint repurchase agreement.
At December 31, 2018, the Fund had the following forward exchange contracts outstanding. See Note 1(d).
Forward Exchange Contracts
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Currency | | Counterpartya | | | Type | | | Quantity | | | Contract
Amount | | | Settlement
Date | | | Unrealized
Appreciation | | | Unrealized
Depreciation | |
| | | | | | | |
OTC Forward Exchange Contracts | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Japanese Yen | | | DBAB | | | | Sell | | | | 419,230,800 | | | $ | 3,716,915 | | | | 1/04/19 | | | $ | — | | | $ | (109,438 | ) |
Euro | | | DBAB | | | | Sell | | | | 5,532,158 | | | | 6,439,182 | | | | 1/07/19 | | | | 96,501 | | | | — | |
Japanese Yen | | | SCNY | | | | Sell | | | | 189,880,000 | | | | 1,675,513 | | | | 1/07/19 | | | | — | | | | (57,964 | ) |
Australian Dollar | | | CITI | | | | Sell | | | | 5,228,300 | | | | 3,702,002 | | | | 1/09/19 | | | | 17,681 | | | | — | |
Euro | | | UBSW | | | | Sell | | | | 943,744 | | | | 1,097,150 | | | | 1/09/19 | | | | 14,944 | | | | — | |
South Korean Won | | | HSBK | | | | Sell | | | | 4,434,966,732 | | | | 3,936,594 | | | | 1/10/19 | | | | — | | | | (46,700 | ) |
South Korean Won | | | HSBK | | | | Sell | | | | 5,024,000,000 | | | | 4,538,802 | | | | 1/10/19 | | | | 26,464 | | | | — | |
Australian Dollar | | | JPHQ | | | | Sell | | | | 2,515,750 | | | | 1,777,045 | | | | 1/11/19 | | | | 4,149 | | | | — | |
Euro | | | HSBK | | | | Sell | | | | 3,767,000 | | | | 4,358,419 | | | | 1/11/19 | | | | 37,978 | | | | — | |
Euro | | | JPHQ | | | | Sell | | | | 3,444,388 | | | | 3,971,638 | | | | 1/11/19 | | | | 21,206 | | | | — | |
Indian Rupee | | | JPHQ | | | | Buy | | | | 18,598,000 | | | | 249,571 | | | | 1/11/19 | | | | 17,518 | | | | — | |
Japanese Yen | | | BZWS | | | | Sell | | | | 86,450,000 | | | | 785,966 | | | | 1/11/19 | | | | — | | | | (3,523 | ) |
Japanese Yen | | | DBAB | | | | Sell | | | | 160,839,000 | | | | 1,434,014 | | | | 1/11/19 | | | | — | | | | (34,820 | ) |
Japanese Yen | | | GSCO | | | | Sell | | | | 228,991,000 | | | | 2,081,169 | | | | 1/11/19 | | | | — | | | | (10,051 | ) |
Japanese Yen | | | HSBK | | | | Sell | | | | 605,200,000 | | | | 5,387,289 | | | | 1/11/19 | | | | — | | | | (139,592 | ) |
Japanese Yen | | | JPHQ | | | | Buy | | | | 608,450,000 | | | | 5,447,219 | | | | 1/11/19 | | | | 109,341 | | | | — | |
Japanese Yen | | | JPHQ | | | | Sell | | | | 608,450,000 | | | | 5,528,273 | | | | 1/11/19 | | | | — | | | | (28,288 | ) |
Australian Dollar | | | JPHQ | | | | Sell | | | | 5,031,500 | | | | 3,573,925 | | | | 1/14/19 | | | | 27,899 | | | | — | |
Indian Rupee | | | JPHQ | | | | Buy | | | | 46,945,156 | | | | 627,987 | | | | 1/14/19 | | | | 46,035 | | | | — | |
Euro | | | BOFA | | | | Sell | | | | 7,619,000 | | | | 8,886,421 | | | | 1/15/19 | | | | 144,948 | | | | — | |
Euro | | | DBAB | | | | Sell | | | | 487,652 | | | | 568,997 | | | | 1/15/19 | | | | 9,502 | | | | — | |
| | | | | | |
28 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
Forward Exchange Contracts(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Currency | | Counterpartya
| | | Type | | | Quantity | | | Contract
Amount | | | Settlement
Date | | | Unrealized
Appreciation | | | Unrealized
Depreciation | |
| |
| | | | |
OTC Forward Exchange Contracts(continued) | | | | | | | | | | | | | | | | | |
Euro | | | GSCO | | | | Sell | | | | 1,651,995 | | | $ | 1,925,153 | | | | 1/15/19 | | | $ | 29,777 | | | $ | — | |
Indian Rupee | | | JPHQ | | | | Buy | | | | 46,940,844 | | | | 623,633 | | | | 1/15/19 | | | | 50,272 | | | | — | |
Japanese Yen | | | CITI | | | | Sell | | | | 63,300,000 | | | | 565,234 | | | | 1/15/19 | | | | — | | | | (13,032 | ) |
Japanese Yen | | | HSBK | | | | Sell | | | | 92,070,000 | | | | 818,284 | | | | 1/15/19 | | | | — | | | | (22,805 | ) |
Japanese Yen | | | BZWS | | | | Sell | | | | 306,400,000 | | | | 2,763,310 | | | | 1/17/19 | | | | — | | | | (36,211 | ) |
Indian Rupee | | | DBAB | | | | Buy | | | | 134,077,000 | | | | 1,912,312 | | | | 1/18/19 | | | | 12,091 | | | | — | |
Japanese Yen | | | HSBK | | | | Sell | | | | 309,325,000 | | | | 2,731,443 | | | | 1/18/19 | | | | — | | | | (95,035 | ) |
Australian Dollar | | | JPHQ | | | | Sell | | | | 29,027,000 | | | | 20,726,729 | | | | 1/22/19 | | | | 265,945 | | | | — | |
Euro | | | DBAB | | | | Sell | | | | 16,670,000 | | | | 19,320,697 | | | | 1/22/19 | | | | 182,892 | | | | — | |
Euro | | | GSCO | | | | Sell | | | | 974,786 | | | | 1,129,299 | | | | 1/22/19 | | | | 10,207 | | | | — | |
Euro | | | UBSW | | | | Sell | | | | 3,506,930 | | | | 4,065,829 | | | | 1/22/19 | | | | 39,738 | | | | — | |
Japanese Yen | | | BZWS | | | | Sell | | | | 156,230,000 | | | | 1,402,411 | | | | 1/22/19 | | | | — | | | | (25,620 | ) |
Japanese Yen | | | SCNY | | | | Sell | | | | 260,930,000 | | | | 2,411,553 | | | | 1/22/19 | | | | 26,504 | | | | — | |
Japanese Yen | | | DBAB | | | | Sell | | | | 63,500,000 | | | | 585,529 | | | | 1/24/19 | | | | 5,007 | | | | — | |
South Korean Won | | | HSBK | | | | Sell | | | | 7,077,000,000 | | | | 6,268,657 | | | | 1/24/19 | | | | — | | | | (90,142 | ) |
Euro | | | DBAB | | | | Sell | | | | 100,000 | | | | 115,522 | | | | 1/25/19 | | | | 688 | | | | — | |
Euro | | | JPHQ | | | | Sell | | | | 2,443,285 | | | | 2,823,595 | | | | 1/25/19 | | | | 17,861 | | | | — | |
Euro | | | GSCO | | | | Sell | | | | 110,159 | | | | 126,716 | | | | 1/29/19 | | | | 170 | | | | — | |
Euro | | | SCNY | | | | Sell | | | | 3,343,195 | | | | 3,823,946 | | | | 1/30/19 | | | | — | | | | (16,900 | ) |
South Korean Won | | | HSBK | | | | Sell | | | | 1,860,000,000 | | | | 1,639,995 | | | | 1/30/19 | | | | — | | | | (31,532 | ) |
Euro | | | DBAB | | | | Sell | | | | 6,229,151 | | | | 7,148,574 | | | | 1/31/19 | | | | — | | | | (8,376 | ) |
Euro | | | JPHQ | | | | Sell | | | | 103,689,150 | | | | 118,887,491 | | | | 1/31/19 | | | | — | | | | (245,596 | ) |
Japanese Yen | | | BZWS | | | | Sell | | | | 291,270,000 | | | | 2,614,332 | | | | 1/31/19 | | | | — | | | | (49,986 | ) |
Japanese Yen | | | HSBK | | | | Sell | | | | 313,645,839 | | | | 2,945,861 | | | | 1/31/19 | | | | 76,866 | | | | — | |
Australian Dollar | | | CITI | | | | Sell | | | | 5,228,300 | | | | 3,722,079 | | | | 2/01/19 | | | | 35,963 | | | | — | |
Euro | | | CITI | | | | Sell | | | | 3,767,000 | | | | 4,321,502 | | | | 2/01/19 | | | | — | | | | (6,910 | ) |
Japanese Yen | | | SCNY | | | | Sell | | | | 209,310,000 | | | | 1,870,509 | | | | 2/01/19 | | | | — | | | | (44,240 | ) |
Euro | | | JPHQ | | | | Sell | | | | 13,255,813 | | | | 15,224,168 | | | | 2/05/19 | | | | — | | | | (11,969 | ) |
British Pound | | | JPHQ | | | | Sell | | | | 50,402,816 | | | | 66,260,046 | | | | 2/08/19 | | | | 1,856,311 | | | | — | |
Euro | | | JPHQ | | | | Sell | | | | 2,214,250 | | | | 2,534,457 | | | | 2/08/19 | | | | — | | | | (11,182 | ) |
Japanese Yen | | | BZWS | | | | Sell | | | | 2,840,000,000 | | | | 25,404,890 | | | | 2/08/19 | | | | — | | | | (588,421 | ) |
Euro | | | JPHQ | | | | Sell | | | | 1,476,168 | | | | 1,690,604 | | | | 2/11/19 | | | | — | | | | (6,888 | ) |
Japanese Yen | | | JPHQ | | | | Buy | | | | 209,790,000 | | | | 1,870,984 | | | | 2/12/19 | | | | 49,694 | | | | — | |
Japanese Yen | | | JPHQ | | | | Sell | | | | 209,790,000 | | | | 1,966,240 | | | | 2/12/19 | | | | 45,562 | | | | — | |
Australian Dollar | | | JPHQ | | | | Sell | | | | 2,515,750 | | | | 1,784,296 | | | | 2/13/19 | | | | 10,304 | | | | — | |
Japanese Yen | | | CITI | | | | Sell | | | | 255,214,000 | | | | 2,273,105 | | | | 2/13/19 | | | | — | | | | (63,611 | ) |
Euro | | | JPHQ | | | | Sell | | | | 13,488,375 | | | | 15,331,831 | | | | 2/15/19 | | | | — | | | | (183,721 | ) |
Australian Dollar | | | JPHQ | | | | Sell | | | | 9,454,000 | | | | 6,877,218 | | | | 2/19/19 | | | | 210,109 | | | | — | |
Euro | | | BOFA | | | | Sell | | | | 4,110,760 | | | | 4,684,951 | | | | 2/19/19 | | | | — | | | | (45,096 | ) |
Euro | | | GSCO | | | | Sell | | | | 47,872 | | | | 54,584 | | | | 2/19/19 | | | | — | | | | (500 | ) |
Australian Dollar | | | JPHQ | | | | Sell | | | | 8,046,000 | | | | 5,896,712 | | | | 2/20/19 | | | | 222,465 | | | | — | |
Euro | | | JPHQ | | | | Sell | | | | 5,382,620 | | | | 6,192,597 | | | | 2/20/19 | | | | — | | | | (1,400 | ) |
Japanese Yen | | | BOFA | | | | Sell | | | | 270,323,625 | | | | 2,417,965 | | | | 2/20/19 | | | | — | | | | (58,357 | ) |
Euro | | | GSCO | | | | Sell | | | | 974,548 | | | | 1,125,028 | | | | 2/21/19 | | | | 3,489 | | | | — | |
Euro | | | JPHQ | | | | Sell | | | | 2,443,285 | | | | 2,816,888 | | | | 2/21/19 | | | | 5,082 | | | | — | |
Euro | | | UBSW | | | | Sell | | | | 3,506,930 | | | | 4,042,421 | | | | 2/21/19 | | | | 6,540 | | | | — | |
Japanese Yen | | | BOFA | | | | Sell | | | | 539,529,250 | | | | 4,817,225 | | | | 2/21/19 | | | | — | | | | (125,537 | ) |
Japanese Yen | | | CITI | | | | Sell | | | | 616,515,000 | | | | 5,661,347 | | | | 2/21/19 | | | | 13,299 | | | | — | |
Japanese Yen | | | DBAB | | | | Sell | | | | 451,064,000 | | | | 4,143,410 | | | | 2/21/19 | | | | 11,100 | | | | — | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 29 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
Forward Exchange Contracts(continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| Currency | | Counterpartya
| | Type | | Quantity | | | Contract
Amount | | | Settlement
Date | | | Unrealized
Appreciation | | | Unrealized
Depreciation | |
| |
| | | | |
OTC Forward Exchange Contracts(continued) | | | | | | | | | | | | | | | | | |
Euro | | DBAB | | Sell | | | 6,231,599 | | | $ | 7,101,312 | | | | 2/28/19 | | | $ | — | | | $ | (74,124 | ) |
Euro | | GSCO | | Sell | | | 182,797 | | | | 208,589 | | | | 2/28/19 | | | | — | | | | (1,895 | ) |
Euro | | SCNY | | Sell | | | 3,409,501 | | | | 3,892,968 | | | | 2/28/19 | | | | — | | | | (32,936 | ) |
Japanese Yen | | BZWS | | Sell | | | 302,200,000 | | | | 2,678,639 | | | | 2/28/19 | | | | — | | | | (91,305 | ) |
Japanese Yen | | DBAB | | Sell | | | 470,943,032 | | | | 4,169,034 | | | | 2/28/19 | | | | — | | | | (147,595 | ) |
Japanese Yen | | HSBK | | Sell | | | 296,750,000 | | | | 2,634,090 | | | | 2/28/19 | | | | — | | | | (85,899 | ) |
South Korean Won | | HSBK | | Sell | | | 4,163,000,000 | | | | 3,699,787 | | | | 2/28/19 | | | | — | | | | (45,787 | ) |
Japanese Yen | | HSBK | | Sell | | | 420,281,000 | | | | 3,733,011 | | | | 3/04/19 | | | | — | | | | (120,637 | ) |
Euro | | DBAB | | Sell | | | 5,532,158 | | | | 6,332,285 | | | | 3/06/19 | | | | — | | | | (41,135 | ) |
Euro | | UBSW | | Sell | | | 943,744 | | | | 1,084,272 | | | | 3/06/19 | | | | — | | | | (2,985 | ) |
Euro | | DBAB | | Sell | | | 10,992,562 | | | | 12,632,213 | | | | 3/11/19 | | | | — | | | | (37,658 | ) |
Japanese Yen | | BZWS | | Sell | | | 209,340,000 | | | | 1,873,121 | | | | 3/11/19 | | | | — | | | | (47,644 | ) |
Japanese Yen | | CITI | | Sell | | | 62,440,000 | | | | 557,839 | | | | 3/11/19 | | | | — | | | | (15,069 | ) |
Mexican Peso | | CITI | | Buy | | | 47,968,000 | | | | 2,423,177 | | | | 3/11/19 | | | | — | | | | (8,630 | ) |
Euro | | DBAB | | Sell | | | 487,652 | | | | 560,694 | | | | 3/12/19 | | | | — | | | | (1,416 | ) |
Japanese Yen | | DBAB | | Sell | | | 30,500,000 | | | | 272,279 | | | | 3/12/19 | | | | — | | | | (7,596 | ) |
Mexican Peso | | CITI | | Buy | | | 177,301,000 | | | | 8,923,274 | | | | 3/12/19 | | | | — | | | | (31 | ) |
Indian Rupee | | DBAB | | Buy | | | 58,856,000 | | | | 805,695 | | | | 3/13/19 | | | | 33,858 | | | | — | |
Japanese Yen | | CITI | | Sell | | | 64,869,000 | | | | 577,833 | | | | 3/13/19 | | | | — | | | | (17,475 | ) |
Euro | | JPHQ | | Sell | | | 13,255,813 | | | | 15,169,422 | | | | 3/14/19 | | | | — | | | | (113,163 | ) |
Euro | | BOFA | | Sell | | | 2,055,380 | | | | 2,335,857 | | | | 3/18/19 | | | | — | | | | (34,637 | ) |
Euro | | GSCO | | Sell | | | 1,651,995 | | | | 1,892,278 | | | | 3/18/19 | | | | — | | | | (12,988 | ) |
Japanese Yen | | BOFA | | Sell | | | 270,323,625 | | | | 2,396,550 | | | | 3/18/19 | | | | — | | | | (85,418 | ) |
Japanese Yen | | CITI | | Sell | | | 488,778,900 | | | | 4,337,395 | | | | 3/18/19 | | | | — | | | | (150,312 | ) |
Japanese Yen | | DBAB | | Sell | | | 617,700,000 | | | | 5,479,484 | | | | 3/18/19 | | | | — | | | | (191,908 | ) |
Japanese Yen | | HSBK | | Sell | | | 309,325,000 | | | | 2,743,812 | | | | 3/18/19 | | | | — | | | | (96,245 | ) |
Japanese Yen | | MSCO | | Sell | | | 100,400,000 | | | | 890,497 | | | | 3/18/19 | | | | — | | | | (31,322 | ) |
Japanese Yen | | DBAB | | Sell | | | 126,234,000 | | | | 1,126,295 | | | | 3/19/19 | | | | — | | | | (32,829 | ) |
Indian Rupee | | CITI | | Buy | | | 15,811,000 | | | | 216,663 | | | | 3/20/19 | | | | 8,678 | | | | — | |
Japanese Yen | | CITI | | Sell | | | 487,440,000 | | | | 4,403,849 | | | | 3/20/19 | | | | — | | | | (72,420 | ) |
Euro | | GSCO | | Sell | | | 974,548 | | | | 1,122,533 | | | | 3/21/19 | | | | — | | | | (1,728 | ) |
Japanese Yen | | SCNY | | Sell | | | 312,386,000 | | | | 2,815,506 | | | | 3/25/19 | | | | — | | | | (54,573 | ) |
Japanese Yen | | DBAB | | Sell | | | 618,770,000 | | | | 5,576,162 | | | | 3/26/19 | | | | — | | | | (109,394 | ) |
Japanese Yen | | HSBK | | Sell | | | 547,340,000 | | | | 4,926,109 | | | | 3/26/19 | | | | — | | | | (103,114 | ) |
Japanese Yen | | DBAB | | Sell | | | 302,200,000 | | | | 2,728,311 | | | | 4/15/19 | | | | — | | | | (53,269 | ) |
Japanese Yen | | HSBK | | Sell | | | 209,990,000 | | | | 1,908,159 | | | | 4/17/19 | | | | — | | | | (25,005 | ) |
Japanese Yen | | HSBK | | Sell | | | 541,429,400 | | | | 4,903,319 | | | | 4/22/19 | | | | — | | | | (83,159 | ) |
South Korean Won | | HSBK | | Sell | | | 2,734,897,268 | | | | 2,436,326 | | | | 4/29/19 | | | | — | | | | (30,478 | ) |
Japanese Yen | | GSCO | | Sell | | | 254,830,000 | | | | 2,304,506 | | | | 4/30/19 | | | | — | | | | (44,014 | ) |
Japanese Yen | | BZWS | | Sell | | | 156,230,000 | | | | 1,394,182 | | | | 5/20/19 | | | | — | | | | (48,059 | ) |
Japanese Yen | | BOFA | | Sell | | | 907,306,000 | | | | 8,159,006 | | | | 5/21/19 | | | | — | | | | (217,519 | ) |
South Korean Won | | GSCO | | Sell | | | 5,211,000,000 | | | | 4,707,317 | | | | 6/07/19 | | | | — | | | | (685 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Forward Exchange Contracts | | | | | | | | | | | $ | 3,804,638 | | | $ | (4,585,499 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net unrealized appreciation (depreciation) | | | | | | | | | | | | | | | $ | (780,861 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
| | | | | | |
30 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED STATEMENT OF INVESTMENTS
Templeton Global Balanced Fund(continued)
At December 31, 2018, the Fund had the following interest rate swap contracts outstanding. See Note 1(d).
Interest Rate Swap Contracts
| | | | | | | | | | | | | | | | |
| Description | | Payment
Frequency | | | Maturity
Date | | | Notional
Amount | | | Value/
Unrealized
Appreciation
(Depreciation) | |
| |
Centrally Cleared Swap Contracts | | | | | | | | | | | | | | | | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.775% | | | Semi-Annual | | | | 10/04/23 | | | $ | 1,690,000 | | | $ | (16,489 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.795% | | | Semi-Annual | | | | 10/04/23 | | | | 1,690,000 | | | | (18,084 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.765% | | | Semi-Annual | | | | 10/07/23 | | | | 1,690,000 | | | | (15,659 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.914% | | | Semi-Annual | | | | 1/22/25 | | | | 21,800,000 | | | | 755,487 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.970% | | | Semi-Annual | | | | 1/23/25 | | | | 27,250,000 | | | | 851,433 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.973% | | | Semi-Annual | | | | 1/27/25 | | | | 16,080,000 | | | | 497,811 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.937% | | | Semi-Annual | | | | 1/29/25 | | | | 4,020,000 | | | | 133,661 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.942% | | | Semi-Annual | | | | 1/30/25 | | | | 3,400,000 | | | | 112,115 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.817% | | | Semi-Annual | | | | 2/03/25 | | | | 5,360,000 | | | | 217,857 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 1.982% | | | Semi-Annual | | | | 10/20/25 | | | | 46,520,000 | | | | 1,883,504 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.668% | | | Semi-Annual | | | | 10/04/43 | | | | 820,000 | | | | (126,485 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.687% | | | Semi-Annual | | | | 10/04/43 | | | | 820,000 | | | | (129,312 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.675% | | | Semi-Annual | | | | 10/07/43 | | | | 820,000 | | | | (127,439 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.537% | | | Semi-Annual | | | | 4/13/47 | | | | 36,200,000 | | | | 2,207,051 | |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 2.980% | | | Semi-Annual | | | | 2/20/48 | | | | 4,440,000 | | | | (171,542 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.002% | | | Semi-Annual | | | | 2/22/48 | | | | 4,440,000 | | | | (178,415 | ) |
Receive Floating3-month USD LIBOR | | | Quarterly | | | | | | | | | | | | | |
Pay Fixed 3.019% | | | Semi-Annual | | | | 2/23/48 | | | | 4,440,000 | | | | (193,877 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Total Interest Rate Swap Contracts | | | | | | | | | | | | | | | $5,681,617 | |
| | | | | | | | | | | | | | | | |
See Note 10 regarding other derivative information.
See Abbreviations on page 51.
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these consolidated financial statements. | Annual Report | | 31 |
TEMPLETON GLOBAL INVESTMENT TRUST
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
December 31, 2018
Templeton Global Balanced Fund
| | | | |
Assets: | | | | |
Investments in securities: | | | | |
Cost - Unaffiliated issuers | | $ | 1,345,886,848 | |
Cost -Non-controlled affiliates (Note 3f) | | | 114,804,850 | |
Cost - Unaffiliated repurchase agreements | | | 2,391,476 | |
| | | | |
Value - Unaffiliated issuers+ | | $ | 1,205,119,825 | |
Value -Non-controlled affiliates (Note 3f) | | | 114,804,850 | |
Value - Unaffiliated repurchase agreements | | | 2,391,476 | |
Cash | | | 5,285,467 | |
Receivables: | | | | |
Capital shares sold | | | 3,183,687 | |
Dividends and interest | | | 9,955,283 | |
European Union tax reclaims | | | 93,179 | |
Deposits with brokers for: | | | | |
OTC derivative contracts | | | 1,360,000 | |
Centrally cleared swap contracts | | | 8,131,709 | |
Unrealized appreciation on OTC forward exchange contracts | | | 3,804,638 | |
FT Subsidiary deferred tax benefit (Note 1g) | | | 180,563 | |
Other assets | | | 208 | |
| | | | |
| |
Total assets | | | 1,354,310,885 | |
| | | | |
Liabilities: | | | | |
Payables: | | | | |
Capital shares redeemed | | | 7,326,390 | |
Management fees | | | 839,518 | |
Distribution fees | | | 820,521 | |
Transfer agent fees | | | 332,819 | |
Variation margin on centrally cleared swap contracts | | | 681,453 | |
Payable upon return of securities loaned | | | 11,952,476 | |
Unrealized depreciation on OTC forward exchange contracts | | | 4,585,499 | |
Deferred tax | | | 407,531 | |
Accrued expenses and other liabilities | | | 339,708 | |
| | | | |
| |
Total liabilities | | | 27,285,915 | |
| | | | |
| |
Net assets, at value | | $ | 1,327,024,970 | |
| | | | |
| |
Net assets consist of: | | | | |
Paid-in capital | | $ | 1,480,490,548 | |
Total distributable earnings (loss) | | | (153,465,578 | ) |
| | | | |
Net assets, at value | | $ | 1,327,024,970 | |
| | | | |
+Includes securities loaned | | $ | 11,461,161 | |
| | | | | | |
32 | | Annual Report | | | The accompanying notes are an integral part of these consolidated financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Assets and Liabilities(continued)
December 31, 2018
Templeton Global Balanced Fund
| | | | |
| |
Class A: | | | | |
Net assets, at value | | | $557,604,136 | |
| | | | |
Shares outstanding | | | 201,370,163 | |
| | | | |
Net asset value per sharea | | | $2.77 | |
| | | | |
Maximum offering price per share (net asset value per share ÷ 94.50%) | | | $2.93 | |
| | | | |
Class A1: | | | | |
Net assets, at value | | | $285,358,432 | |
| | | | |
Shares outstanding | | | 102,911,462 | |
| | | | |
Net asset value per sharea | | | $2.77 | |
| | | | |
Maximum offering price per share (net asset value per share ÷ 95.75%) | | | $2.89 | |
| | | | |
Class C: | | | | |
Net assets, at value | | | $203,587,252 | |
| | | | |
Shares outstanding | | | 73,914,052 | |
| | | | |
Net asset value and maximum offering price per sharea | | | $2.75 | |
| | | | |
Class C1: | | | | |
Net assets, at value | | | $ 62,417,656 | |
| | | | |
Shares outstanding | | | 22,514,056 | |
| | | | |
Net asset value and maximum offering price per sharea | | | $2.77 | |
| | | | |
Class R: | | | | |
Net assets, at value | | | $ 2,777,767 | |
| | | | |
Shares outstanding | | | 999,397 | |
| | | | |
Net asset value and maximum offering price per share | | | $2.78 | |
| | | | |
Class R6: | | | | |
Net assets, at value | | | $ 7,933,344 | |
| | | | |
Shares outstanding | | | 2,857,813 | |
| | | | |
Net asset value and maximum offering price per share | | | $2.78 | |
| | | | |
Advisor Class: | | | | |
Net assets, at value | | | $207,346,383 | |
| | | | |
Shares outstanding | | | 74,538,896 | |
| | | | |
Net asset value and maximum offering price per share | | | $2.78 | |
| | | | |
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable.
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these consolidated financial statements. | Annual Report | | 33 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Operations
for the year ended December 31, 2018
Templeton Global Balanced Fund
| | | | |
Investment income: | | | | |
Dividends: (net of foreign taxes)* | | | | |
Unaffiliated issuers | | $ | 31,229,963 | |
Non-controlled affiliates (Note 3f) | | | 1,564,916 | |
Interest: (net of foreign taxes)~ | | | | |
Unaffiliated issuers | | | 37,578,042 | |
Income from securities loaned: | | | | |
Unaffiliated issuers (net of fees and rebates) | | | 14,485 | |
Non-controlled affiliates (Note 3f) | | | 50,405 | |
Other income (Note 1g) | | | 292,579 | |
| | | | |
| |
Total investment income | | | 70,730,390 | |
| | | | |
Expenses: | | | | |
Management fees (Note 3a) | | | 11,961,503 | |
Distribution fees: (Note 3c) | | | | |
Class A | | | 1,700,059 | |
Class A1 | | | 700,490 | |
Class C | | | 2,817,351 | |
Class C1 | | | 914,662 | |
Class R | | | 20,384 | |
Transfer agent fees: (Note 3e) | | | | |
Class A | | | 819,586 | |
Class A1 | | | 339,047 | |
Class C | | | 339,828 | |
Class C1 | | | 169,496 | |
Class R | | | 4,917 | |
Class R6 | | | 6,704 | |
Advisor Class | | | 283,009 | |
Custodian fees (Note 4) | | | 480,247 | |
Reports to shareholders | | | 154,573 | |
Registration and filing fees | | | 155,766 | |
Professional fees | | | 153,660 | |
Trustees’ fees and expenses | | | 140,235 | |
Other | | | 316,836 | |
| | | | |
Total expenses | | | 21,478,353 | |
Expense reductions (Note 4) | | | (115,306 | ) |
Expenses waived/paid by affiliates (Note 3f and 3g) | | | (416,679 | ) |
| | | | |
| |
Net expenses | | | 20,946,368 | |
| | | | |
| |
Net investment income | | | 49,784,022 | |
| | | | |
| |
Realized and unrealized gains (losses): | | | | |
Net realized gain (loss) from: | | | | |
Investments:# | | | | |
Unaffiliated issuers | | | 54,745,671 | |
Written options | | | 62,197 | |
Foreign currency transactions | | | (2,266,873 | ) |
Forward exchange contracts | | | 36,906,624 | |
Swap contracts | | | (234,851 | ) |
| | | | |
| |
Net realized gain (loss) | | | 89,212,768 | |
| | | | |
| | | | | | |
34 | | Annual Report | | | The accompanying notes are an integral part of these consolidated financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Operations(continued)
for the year ended December 31, 2018
Templeton Global Balanced Fund
| | | | |
Net change in unrealized appreciation (depreciation) on: | | | | |
Investments: | | | | |
Unaffiliated issuers | | | (292,320,019 | ) |
Translation of other assets and liabilities denominated in foreign currencies | | | 36,440 | |
Forward exchange contracts | | | 4,207,726 | |
Swap contracts | | | 3,971,979 | |
Change in FT Subsidiary deferred tax benefit (Note 1g) | | | 180,563 | |
Change in deferred taxes on unrealized appreciation | | | 594,839 | |
| | | | |
| |
Net change in unrealized appreciation (depreciation) | | | (283,328,472 | ) |
| | | | |
| |
Net realized and unrealized gain (loss) | | | (194,115,704 | ) |
| | | | |
Net increase (decrease) in net assets resulting from operations | | $ | (144,331,682 | ) |
| | | | |
| | | | |
| |
*Foreign taxes withheld on dividends | | $ | 2,499,789 | |
~Foreign taxes withheld on interest | | $ | 857,321 | |
#Net of foreign taxes | | $ | 385,904 | |
| | | | | | |
franklintempleton.com | | | | The accompanying notes are an integral part of these consolidated financial statements. | Annual Report | | 35 |
TEMPLETON GLOBAL INVESTMENT TRUST
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Changes in Net Assets
Templeton Global Balanced Fund
| | | | | | | | |
| | | Year Ended December 31, | |
| | | 2018 | | | 2017 | |
| | |
Increase (decrease) in net assets: | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 49,784,022 | | | $ | 48,737,277 | |
Net realized gain (loss) | | | 89,212,768 | | | | 8,795,400 | |
Net change in unrealized appreciation (depreciation) | | | (283,328,472 | ) | | | 146,365,894 | |
| | | | |
| | |
Net increase (decrease) in net assets resulting from operations | | | (144,331,682 | ) | | | 203,898,571 | |
| | | | |
| | |
Distributions to shareholders: (Note 1i) | | | | | | | | |
Class A | | | (25,802,835 | ) | | | (19,556,305 | ) |
Class A1 | | | (10,704,077 | ) | | | (7,881,382 | ) |
Class C | | | (8,544,090 | ) | | | (6,016,527 | ) |
Class C1 | | | (4,649,410 | ) | | | (4,035,340 | ) |
Class R | | | (139,046 | ) | | | (118,333 | ) |
Class R6 | | | (407,692 | ) | | | (131,823 | ) |
Advisor Class | | | (9,464,026 | ) | | | (6,962,602 | ) |
| | | | |
| | |
Total distributions to shareholders | | | (59,711,176 | ) | | | (44,702,312 | ) |
| | | | |
| | |
Capital share transactions: (Note 2) | | | | | | | | |
Class A | | | (102,427,954 | ) | | | (100,988,932 | ) |
Class A1 | | | 30,686,781 | | | | (52,714,442 | ) |
Class C | | | (80,380,431 | ) | | | (51,576,304 | ) |
Class C1 | | | (96,785,897 | ) | | | (46,925,471 | ) |
Class R | | | (1,662,951 | ) | | | (1,000,230 | ) |
Class R6 | | | (2,090,954 | ) | | | 10,399,429 | |
Advisor Class | | | (8,411,483 | ) | | | 14,185,682 | |
| | | | |
| | |
Total capital share transactions | | | (261,072,889 | ) | | | (228,620,268 | ) |
| | | | |
| | |
Net increase (decrease) in net assets | | | (465,115,747 | ) | | | (69,424,009 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 1,792,140,717 | | | | 1,861,564,726 | |
| | | | |
| | |
End of year (Note 1i) | | $ | 1,327,024,970 | | | $ | 1,792,140,717 | |
| | | | |
| | | | | | |
36 | | Annual Report | | | The accompanying notes are an integral part of these consolidated financial statements. | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
Notes to Consolidated Financial Statements
Templeton Global Balanced Fund
1. Organization and Significant Accounting Policies
Templeton Global Investment Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting of five separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Templeton Global Balanced Fund (Fund) is included in this report. The Fund offers seven classes of shares: Class A, Class A1, Class C, Class C1, Class R, Class R6, and Advisor Class. Beginning on October 19, 2018, Class C and Class C1 shares automatically convert to Class A shares after they have been held for 10 years. Each class of shares may differ by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees due to differing arrangements for distribution and transfer agent fees.
The following summarizes the Fund’s significant accounting policies.
a. Financial Instrument Valuation
The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share each business day as of 4 p.m. Eastern time or the regularly scheduled close of the New York Stock Exchange (NYSE), whichever is earlier. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The Fund may utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Equity securities and derivative financial instruments listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or as of 4 p.m. Eastern time. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined.Over-the-counter (OTC) securities are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.
Debt securities generally trade in the OTC market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the date that the values of the foreign debt securities are determined.
Investments inopen-end mutual funds are valued at the closing NAV. Investments in repurchase agreements are valued at cost, which approximates fair value.
Certain derivative financial instruments are centrally cleared or trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.
The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the Fund primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the
| | | | | | |
franklintempleton.com | | | | Annual Report | | 37 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
1. Organization and Significant Accounting Policies(continued)
a. Financial Instrument Valuation(continued)
investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed.
Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every Fund’s business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at 4 p.m. Eastern time. In order to minimize the potential for these differences, the VC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services. At December 31, 2018, a market event occurred resulting in a portion of the securities held by the Fund being valued using fair value procedures.
When the last day of the reporting period is anon-business day, certain foreign markets may be open on those days that the Fund’s NAV is not calculated, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.
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. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.
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 in the Consolidated Statement of Operations.
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 denominated assets and liabilities other than investments in securities held at the end of the reporting period.
c. Joint Repurchase Agreement
The Fund enters into a joint repurchase agreement whereby its uninvested cash balance is deposited into a joint cash account with other funds managed by the investment manager or an affiliate of the investment manager and is used to invest in one or more repurchase agreements. The value and face amount of the joint repurchase agreement are allocated to the funds based on theirpro-rata interest. A repurchase agreement is accounted for as a loan by the Fund to the seller, collateralized by securities which are delivered to the Fund’s custodian. The fair value, including accrued interest, of the initial collateralization is required to be at least 102% of the dollar amount invested by the funds, with the value of the underlying securities marked to market daily to maintain coverage of at least 100%. Repurchase agreements are subject to the terms of Master Repurchase Agreements (MRAs) with approved counterparties (sellers). The MRAs contain various provisions, including but not limited
| | | | | | |
38 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
to events of default and maintenance of collateral for repurchase agreements. In the event of default by either the seller or the Fund, certain MRAs may permit thenon-defaulting party to net andclose-out all transactions, if any, traded under such agreements. The Fund may sell securities it holds as collateral and apply the proceeds towards the repurchase price and any other amounts owed by the seller to the Fund in the event of default by the seller. This could involve costs or delays in addition to a loss on the securities if their value falls below the repurchase price owed by the seller. The joint repurchase agreement held by the Fund at year end, as indicated in the Consolidated Statement of Investments, had been entered into on December 31, 2018.
d. Derivative Financial Instruments
The Fund invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Consolidated Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Consolidated Statement of Operations.
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counter-parties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives thenon-defaulting party the right to net andclose-out all transactions traded, whether or not arising
under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Consolidated Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement. At December 31, 2018, the Fund had OTC derivatives in a net liability position of $3,196,644 and the aggregate value of collateral pledged for such contracts was $1,360,000.
Collateral requirements differ by type of derivative. Collateral or initial margin requirements are set by the broker or exchange clearing house for exchange traded and centrally cleared derivatives. Initial margin deposited is held at the exchange and can be in the form of cash and/or securities. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty the next business day, or within a few business days. Collateral pledged and/or received by the Fund for OTC derivatives, if any, is held in segregated accounts with the Fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterpartynon-performance.
At December 31, 2018, the Fund received $3,001,008 in U.S. Treasury Bills and Notes as collateral for derivatives.
The Fund entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.
The Fund entered into interest rate swap contracts primarily to manage interest rate risk. An interest rate swap is an agreement between the Fund and a counterparty to exchange cash flows based on the difference between two interest rates, applied to a
| | | | | | |
franklintempleton.com | | | | Annual Report | | 39 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
1. Organization and Significant Accounting
Policies(continued)
d. Derivative Financial Instruments(continued)
notional amount. These agreements may be privately negotiated in theover-the-counter market (OTC interest rate swaps) or may be executed on a registered exchange (centrally cleared interest rate swaps). For centrally cleared interest rate swaps, required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Consolidated Statement of Assets and Liabilities. Over the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as unrealized depreciation and appreciation until the payments are made, at which time they are realized.
The Fund purchased or wrote OTC option contracts primarily to manage and/or gain exposure to equity price risk. An option is a contract entitling the holder to purchase or sell a specific amount of shares or units of an asset or notional amount of a swap (swaption), at a specified price. When an option is purchased or written, an amount equal to the premium paid or received is recorded as an asset or liability, respectively. Upon exercise of an option, the acquisition cost or sales proceeds of the underlying investment is adjusted by any premium received or paid. Upon expiration of an option, any premium received or paid is recorded as a realized gain or loss. Upon closing an option other than through expiration or exercise, the difference between the premium received or paid and the cost to close the position is recorded as a realized gain or loss.
The Fund invests in value recovery instruments (VRI) primarily to gain exposure to economic growth. Periodic payments from VRI are dependent on established benchmarks for underlying variables. VRI has a notional amount, which is used to calculate amounts of payments to holders. Payments are recorded upon receipt as realized gains in the Consolidated Statement of Operations. The risks of investing in VRI include growth risk, liquidity, and the potential loss of investment.
See Note 10 regarding other derivative information.
e. Equity-Linked Securities
The Fund invests in equity-linked securities. Equity-linked securities are hybrid financial instruments that generally combine both debt and equity characteristics into a single note form. Income received from equity-linked securities is recorded as realized gains in the Consolidated Statement of Operations
and may be based on the performance of an underlying equity security, an equity index, or an option position. The risks of investing in equity-linked securities include unfavorable price movements in the underlying security and the credit risk of the issuing financial institution. There may be no guarantee of a return of principal with equity-linked securities and the appreciation potential may be limited. Equity-linked securities may be more volatile and less liquid than other investments held by the Fund.
f. Securities Lending
The Fund participates in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc., an affiliate of the Fund, and/or a joint repurchase agreement. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Consolidated Statement of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.
g. Investments in FT Holdings Corporation IV (FT Subsidiary)
The Fund invests in certain financial instruments through its investment in the FT Subsidiary. The FT Subsidiary is a Delaware Corporation, is a wholly-owned subsidiary of the Fund, and is able to invest in certain financial instruments consistent with the investment objective of the Fund. At December 31, 2018, the FT Subsidiary’s investment, Turtle Bay Resort, as well as any other assets and liabilities of the FT
| | | | | | |
40 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
Subsidiary are reflected in the Fund’s Consolidated Statement of Investments and Consolidated Statement of Assets and Liabilities.
During the year ended December 31, 2018, Turtle Bay Resort paid a distribution to FT Subsidiary. The distribution received is reflected as other income in the Consolidated Statement of Operations. At December 31, 2018, the FT Subsidiary, which is a tax paying entity, recognized an unrealized loss on its Turtle Bay investment. An estimated deferred tax asset based on such unrealized loss is reflected as FT Subsidiary deferred tax benefit in the Consolidated Statement of Assets and Liabilities. The estimated benefit was calculated using a federal rate of 21%. When the Turtle Bay investment liquidates, the FT Subsidiary will recognize a capital loss which can be carried-back to offset prior year capital gains, resulting in a tax refund which will relieve the deferred tax asset.
The financial statements have been consolidated and include the accounts of the Fund and FT Subsidiary. All intercompany transactions and balances have been eliminated. At December 31, 2018, the net assets of FT subsidiary were $5,371,272, representing 0.4% of the Fund’s consolidated net assets. The Fund’s investment in FT Subsidiary is limited to 25% of consolidated assets.
h. Income and Deferred Taxes
It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.
As a result of several court cases, in certain countries across the European Union, the Fund filed additional tax reclaims for previously withheld taxes on dividends earned in those countries (EU reclaims). These additional filings are subject to
various administrative proceedings by the local jurisdictions’ tax authorities within the European Union, as well as a number of related judicial proceedings. Income recognized, if any, for EU reclaims is reflected as other income in the Consolidated Statement of Operations and any related receivable, if any, is reflected as European Union tax reclaims in the Consolidated Statement of Assets and Liabilities. When uncertainty exists as to the ultimate resolution of these proceedings, the likelihood of receipt of these EU reclaims, and the potential timing of payment, no amounts are reflected in the Consolidated financial statements. For U.S. income tax purposes, EU reclaims received by the Fund, if any, reduce the amounts of foreign taxes Fund shareholders can use as tax credits in their individual income tax returns.
The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of December 31, 2018, the Fund has determined that no tax liability is required in its Consolidated financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.
i. 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. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Facility fees are recognized as income over the expected term of the loan. Dividend income is recorded on theex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Fund. Distributions to shareholders are recorded on theex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect
| | | | | | |
franklintempleton.com | | | | Annual Report | | 41 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
1. Organization and Significant Accounting
Policies(continued)
i. Security Transactions, Investment Income, Expenses and Distributions(continued)
their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.*
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust or based on the ratio of number of shareholders of each Fund to the combined number of shareholders of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
Realized and unrealized gains and losses and net investment income, excluding class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions by class are generally due to differences in class specific expenses.
Inflation-indexed bonds are adjusted for inflation through periodic increases or decreases in the security’s interest accruals, face amount, or principal redemption value, by amounts corresponding to the rate of inflation as measured by
an index. Any increase or decrease in the face amount or principal redemption value will be included as interest income in the Consolidated Statement of Operations.
j. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
k. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
*Effective during the current reporting period, it is no longer required to present certain line items in the Consolidated Statements of Changes in Net Assets. The below prior period amounts affected by this change are shown as they were in the prior year Consolidated Statements of Changes in Net Assets.
For the year ended December 31, 2017, distributions to shareholders were as follows:
| | | | | | | | | | | | |
Distributions from net investment income : | | | | | | | | | | | | |
Class A. | | $ | (19,556,305) | | | | | | | | | |
Class A1 | | | (7,881,382) | | | | | | | | | |
Class C | | | (6,016,527) | | | | | | | | | |
Class C1. | | | (4,035,340) | | | | | | | | | |
Class R | | | (118,333) | | | | | | | | | |
Class R6. | | | (131,823) | | | | | | | | | |
Advisor Class | | | (6,962,602) | | | | | | | | | |
For the year ended December 31, 2017, distributions in excess of net investment income included in net assets was $(11,543,977).
| | | | | | |
42 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
2. Shares of Beneficial Interest
At December 31, 2018, there were an unlimited number of shares authorized ($0.01 par value). Transactions in the Fund’s shares were as follows:
| | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | |
| | | 2018 | | | 2017 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| | | | |
Class A Shares: | | | | | | | | | | | | | | | | |
Shares solda | | | 34,179,367 | | | $ | 105,672,882 | | | | 34,729,536 | | | $ | 108,430,155 | |
| | | | |
Shares issued in reinvestment of distributions | | | 8,191,278 | | | | 24,826,534 | | | | 6,047,566 | | | | 18,862,967 | |
| | | | |
Shares redeemed | | | (76,008,616 | ) | | | (232,927,370 | ) | | | (73,922,109 | ) | | | (228,282,054 | ) |
| | | | |
| | | | |
Net increase (decrease) | | | (33,637,971 | ) | | $ | (102,427,954 | ) | | | (33,145,007 | ) | | $ | (100,988,932 | ) |
| | | | |
| | | | |
Class A1 Shares: | | | | | | | | | | | | | | | | |
Shares sold | | | 26,725,090 | | | $ | 80,318,885 | | | | 1,986,661 | | | $ | 6,154,902 | |
| | | | |
Shares issued in reinvestment of distributions | | | 3,388,828 | | | | 10,255,359 | | | | 2,412,694 | | | | 7,531,521 | |
| | | | |
Shares redeemed | | | (19,564,284 | ) | | | (59,887,463 | ) | | | (21,536,335 | ) | | | (66,400,865 | ) |
| | | | |
| | | | |
Net increase (decrease) | | | 10,549,634 | | | $ | 30,686,781 | | | | (17,136,980 | ) | | $ | (52,714,442 | ) |
| | | | |
| | | | |
Class C Shares: | | | | | | | | | | | | | | | | |
Shares sold | | | 15,951,230 | | | $ | 49,456,970 | | | | 16,700,342 | | | $ | 51,826,308 | |
| | | | |
Shares issued in reinvestment of distributions | | | 2,679,582 | | | | 8,116,943 | | | | 1,825,027 | | | | 5,662,032 | |
| | | | |
Shares redeemed | | | (45,243,255 | ) | | | (137,954,344 | ) | | | (35,475,233 | ) | | | (109,064,644 | ) |
| | | | |
| | | | |
Net increase (decrease) | | | (26,612,443 | ) | | $ | (80,380,431 | ) | | | (16,949,864 | ) | | $ | (51,576,304 | ) |
| | | | |
| | | | |
Class C1 Shares: | | | | | | | | | | | | | | | | |
Shares sold | | | 1,544,449 | | | $ | 4,667,755 | | | | 1,176,262 | | | $ | 3,646,376 | |
| | | | |
Shares issued in reinvestment of distributions | | | 1,470,313 | | | | 4,501,085 | | | | 1,232,506 | | | | 3,841,363 | |
| | | | |
Shares redeemeda | | | (35,032,803 | ) | | | (105,954,737 | ) | | | (17,587,696 | ) | | | (54,413,210 | ) |
| | | | |
| | | | |
Net increase (decrease) | | | (32,018,041 | ) | | $ | (96,785,897) | | | | (15,178,928 | ) | | $ | (46,925,471 | ) |
| | | | |
| | | | |
Class R Shares: | | | | | | | | | | | | | | | | |
Shares sold | | | 132,220 | | | $ | 414,418 | | | | 312,180 | | | $ | 961,847 | |
| | | | |
Shares issued in reinvestment of distributions | | | 30,770 | | | | 93,593 | | | | 23,787 | | | | 74,304 | |
| | | | |
Shares redeemed | | | (716,748 | ) | | | (2,170,962 | ) | | | (662,610 | ) | | | (2,036,381 | ) |
| | | | |
| | | | |
Net increase (decrease) | | | (553,758 | ) | | $ | (1,662,951) | | | | (326,643 | ) | | $ | (1,000,230 | ) |
| | | | |
| | | | |
Class R6 Shares: | | | | | | | | | | | | | | | | |
Shares sold | | | 892,133 | | | $ | 2,809,748 | | | | 3,786,925 | | | $ | 11,997,394 | |
| | | | |
Shares issued in reinvestment of distributions | | | 134,072 | | | | 407,551 | | | | 41,849 | | | | 131,823 | |
| | | | |
Shares redeemed | | | (1,704,891 | ) | | | (5,308,253 | ) | | | (549,941 | ) | | | (1,729,788 | ) |
| | | | |
| | | | |
Net increase (decrease) | | | (678,686 | ) | | $ | (2,090,954 | ) | | | 3,278,833 | | | $ | 10,399,429 | |
| | | | |
| | | | |
Advisor Class Shares: | | | | | | | | | | | | | | | | |
Shares sold | | | 23,403,505 | | | $ | 71,514,992 | | | | 32,216,392 | | | $ | 99,986,656 | |
| | | | |
Shares issued in reinvestment of distributions | | | 2,672,118 | | | | 8,130,400 | | | | 1,909,153 | | | | 5,987,303 | |
| | | | |
Shares redeemed | | | (28,697,722 | ) | | | (88,056,875 | ) | | | (29,505,833 | ) | | | (91,788,277 | ) |
| | | | |
| | | | |
Net increase (decrease) | | | (2,622,099 | ) | | $ | (8,411,483) | | | | 4,619,712 | | | $ | 14,185,682 | |
| | | | |
|
aMay include a portion of Class C1 shares that were automatically converted to Class A. | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 43 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton. Certain officers and trustees of the Trust are also officers and/or directors of the following subsidiaries:
| | | | |
| Subsidiary | | Affiliation | | |
| Templeton Global Advisors Limited (Global Advisors) | | Investment manager | | |
| Franklin Advisers, Inc. (Advisers) | | Investment manager | | |
| Franklin Templeton Services, LLC (FT Services) | | Administrative manager | | |
| Franklin Templeton Distributors, Inc. (Distributors) | | Principal underwriter | | |
| Franklin Templeton Investor Services, LLC (Investor Services) | | Transfer agent | | |
a. Management Fees
The Fund pays an investment management fee to Global Advisors based on the average daily net assets of the Fund as follows:
| | | | |
| Annualized Fee Rate | | Net Assets | | |
| 0.825% | | Up to and including $500 million | | |
| 0.725% | | Over $500 million, up to and including $1 billion | | |
| 0.675% | | Over $1 billion, up to and including $1.5 billion | | |
| 0.625% | | Over $1.5 billion, up to and including $6.5 billion | | |
| 0.600% | | Over $6.5 billion, up to and including $11.5 billion | | |
| 0.578% | | Over $11.5 billion, up to and including $16.5 billion | | |
| 0.565% | | Over $16.5 billion, up to and including $19.0 billion | | |
| 0.555% | | Over $19.0 billion, up to and including $21.5 billion | | |
| 0.545% | | In excess of $21.5 billion | | |
For the year ended December 31, 2018, the gross effective investment management fee rate was 0.732% of the Fund’s average daily net assets.
Under a subadvisory agreement, Advisers, an affiliate of Global Advisors, provides subadvisory services to the Fund. The subadvisory fee is paid by Global Advisors based on the Fund’s average daily net assets, and is not an additional expense of the Fund.
b. Administrative Fees
Under an agreement with Global Advisors, FT Services provides administrative services to the Fund. The fee is paid by Global Advisors based on the Fund’s average daily net assets, and is not an additional expense of the Fund.
c. Distribution Fees
The Board has adopted distribution plans for each share class, with the exception of Class R6 and Advisor Class shares, pursuant to Rule12b-1 under the 1940 Act. Under the Fund’s Class A and A1 reimbursement distribution plans, the Fund reimburses Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to the maximum annual plan rate. Under the Class A and A1 reimbursement distribution plan, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Fund’s Class C, C1 and R compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to the maximum annual plan rate for each class. The plan year, for purposes of monitoring compliance with the maximum annual plan rates, is February 1 through January 31.
| | | | | | |
44 | | Annual Report | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
The maximum annual plan rates, based on the average daily net assets, for each class, are as follows:
| | | | |
Class A | | | 0.25 | % |
Class A1 | | | 0.25 | % |
Class C | | | 1.00 | % |
Class C1 | | | 0.65 | % |
Class R | | | 0.50 | % |
d. Sales Charges/Underwriting Agreements
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the year:
| | | | |
Sales charges retained net of commissions paid to unaffiliated brokers/dealers | | $ | 96,052 | |
CDSC retained | | $ | 21,853 | |
Effective September 10, 2018, the Board approved changes to certainfront-end sales charges and dealer commissions on Class A shares. Further details are disclosed in the Fund’s Prospectus.
Effective on or about March 1, 2019, certainfront-end sales charges on Class A1 shares will be lowered. Further details are disclosed in the Fund’s Prospectus.
e. Transfer Agent Fees
Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations. The fees are based on an annualized asset based fee of 0.02% plus a transaction based fee. In addition, each class reimburses Investor Services for out of pocket expenses incurred and, except for Class R6 reimburses shareholder servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets. Class R6 pays Investor Services transfer agent fees specific to that class.
For the year ended December 31, 2018, the Fund paid transfer agent fees of $1,962,587, of which $793,039 was retained by Investor Services.
f. Investments in Affiliated Management Investment Companies
The Fund invests in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment companies, as noted in the Consolidated Statement of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the year ended December 31, 2018, the Fund held investments in affiliated management investment companies as follows:
| | | | | | |
franklintempleton.com | | | | Annual Report | | 45 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
3. Transactions with Affiliates(continued)
f. Investments in Affiliated Management Investment Companies(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Number of
Shares Held at Beginning of Year | | | Gross
Additions | | | Gross
Reductions | | | Number of
Shares
Held at End
of Year | | | Value at End of Year | | | Investment
Income | | | Realized
Gain
(Loss) | | | Net Change in
Unrealized
Appreciation
(Depreciation) | |
Non-Controlled Affiliates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Dividends | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Institutional Fiduciary Trust Money Market Portfolio, 1.99% | | | 183,175,079 | | | | 508,288,982 | | | | (586,220,211 | ) | | | 105,243,850 | | | | $105,243,850 | | | $ | 1,564,916 | | | | $ — | | | | $ — | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from
securities
loaned |
| | | | | | | | |
Institutional Fiduciary Trust Money Market Portfolio, 1.99% | | | — | | | | 48,807,000 | | | | (39,246,000 | ) | | | 9,561,000 | | | | 9,561,000 | | | | 50,405 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total Affiliated Securities | | | | | | | | | | | | | | | | | | | $114,804,850 | | | $ | 1,615,321 | | | | $ — | | | | $ — | |
g. Waiver and Expense Reimbursements
Investor Services has voluntarily agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.03% based on the average net assets of the class. Investor Services may discontinue this waiver in the future.
Prior to May 1, 2018, Investor Services had contractually agreed in advance to waive or limit its fees so that the Class R6 transfer agent fees do not exceed 0.01% based on the average net assets of the class.
4. Expense Offset Arrangement
The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the year ended December 31, 2018, the custodian fees were reduced as noted in the Consolidated Statement of Operations.
5. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains.
At December 31, 2018, the capital loss carryforwards were as follows:
Capital loss carryforwards not subject to expiration:
| | | | |
Short Term | | $ | 1,580,384 | |
Long Term | | | 12,264,864 | |
| | | | |
Total capital loss carryforwards | | $ | 13,845,248 | |
During the year ended December 31, 2018, the Fund utilized $65,304,267 of capital loss carryforwards.
The tax character of distributions paid during the years ended December 31, 2018 and 2017, was as follows:
| | | | | | | | |
| | | 2018 | | | 2017 | |
Distributions paid from ordinary income | | $ | 59,711,176 | | | $ | 44,702,312 | |
| | | | |
46 | | Annual Report | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
At December 31, 2018, the cost of investments, net unrealized appreciation (depreciation) and undistributed ordinary income for income tax purposes were as follows:
| | | | |
Cost of investments. | | $ | 1,476,824,870 | |
Unrealized appreciation | | $ | 70,028,294 | |
Unrealized depreciation | | | (219,264,372 | ) |
Net unrealized appreciation (depreciation) | | $ | (149,236,078 | ) |
Distributable earnings: | | | | |
Undistributed ordinary income | | $ | 5,399,449 | |
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of foreign currency transactions, bond discounts and premiums, equity-linked securities and wash sales.
6. Investment Transactions
Purchases and sales of investments (excluding short term securities) for the year ended December 31, 2018, aggregated $657,979,043 and $841,206,389, respectively.
At December 31, 2018, in connection with securities lending transactions, the Fund loaned equity investments and received $11,952,476 of cash collateral. The gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statement of Assets and Liabilities. The agreements can be terminated at any time.
7. Credit Risk
At December 31, 2018, the Fund had 9.0% of its portfolio invested in high yield, senior secured floating rate loans, or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.
8. Concentration of Risk
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in securities in Europe. In addition, certain foreign securities may not be as liquid as U.S. securities.
9. Restricted Securities
The Fund invests in securities that are restricted under the Securities Act of 1933 (1933 Act). Restricted securities are often purchased in private placement transactions, and cannot be sold without prior registration unless the sale is pursuant to an exemption under the 1933 Act. Disposal of these securities may require greater effort and expense, and prompt sale at an acceptable price may be difficult. The Fund may have registration rights for restricted securities. The issuer generally incurs all registration costs.
| | | | | | |
franklintempleton.com | | | | Annual Report | | 47 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
9. Restricted Securities(continued)
At December 31, 2018, investments in restricted securities, excluding securities exempt from registration under the 1933 Act deemed to be liquid, were as follows:
| | | | | | | | | | | | | | | | |
Principal
Amount*/
Shares/
Warrants | | | | Issuer | | Acquisition Date | | | Cost | | | Value | |
| |
4,441 | | | | Edcon Holdings Ltd., F wts., 2/20/49 | | | 11/27/15 | | | $ | 47 | | | $ | — | |
79,464,087 | | | | Edcon Holdings Ltd., F1 wts., 2/20/49 | | | 11/27/15 | | | | 841,962 | | | | — | |
6,435,002 | | | | Edcon Holdings Ltd., F2 wts., 2/20/49 | | | 11/27/15 | | | | 68,182 | | | | — | |
32,900,733 | | | | K2016470219 South Africa Ltd., A | | | 2/08/13 - 2/01/17 | | | | 81,025 | | | | 22,898 | |
4,646,498 | | | | K2016470219 South Africa Ltd., B | | | 2/01/17 | | | | 3,450 | | | | 3,234 | |
2,569,021 | | | | K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 3.00%, 12/31/22 | | | 2/08/13 - 12/31/18 | | | | 1,641,989 | | | | 3,164 | |
2,226,047 | | EUR | | K2016470219 South Africa Ltd., senior secured note, 144A, PIK, 8.00%, 12/31/22 | | | 2/01/17 - 12/31/18 | | | | 1,344,063 | | | | 49,050 | |
781,543 | | | | K2016470260 South Africa Ltd., senior secured note, 144A, PIK, 25.00%, 12/31/22 | | | 2/01/17 - 12/31/18 | | | | 619,477 | | | | 55,576 | |
| | | | | | | | | | | | |
| | | | Total Restricted Securities(Value is 0.0%†of Net Assets) | | | | | | $ | 4,600,195 | | | $ | 133,922 | |
| | | | | | | | | | | | |
*In U.S. dollars unless otherwise indicated.
†Rounds to less than 0.1% of net assets.
10. Other Derivative Information
At December 31, 2018, the Fund’s investments in derivative contracts are reflected in the Consolidated Statement of Assets and Liabilities as follows:
| | | | | | | | | | | | |
| | | Asset Derivatives | | | Liability Derivatives | |
Derivative Contracts Not Accounted for as Hedging Instruments | | Consolidated Statement of Assets and Liabilities Location | | Fair Value | | | Consolidated Statement of Assets
and Liabilities Location | | Fair Value | |
| |
Interest rate contracts | | Variation margin on centrally cleared swap contracts | | $
| 6,658,919
| a
| | Variation margin on centrally cleared swap contracts | | $ | 977,302 | a |
Foreign exchange contracts | | Unrealized appreciation on OTC forward exchange contracts | | | 3,804,638 | | | Unrealized depreciation on OTC forward exchange contracts | | | 4,585,499 | |
Value recovery instruments | | Investments in securities, at value | | | 4,365,148 | b | | | | | | |
| | | | | | | | | | | | |
Totals | | | | $ | 14,828,705 | | | | | $ | 5,562,801 | |
| | | | | | | | | | | | |
aThis amount reflects the cumulative appreciation (depreciation) of centrally cleared swap contracts as reported in the Consolidated Statement of Investments. Only the variation margin receivable/payable at year end is separately reported within the Consolidated Statement of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.
bVRI are included in investments in securities, at value in the Consolidated Statement of Assets and Liabilities.
For the year ended December 31, 2018, the effect of derivative contracts in the Fund’s Consolidated Statement of Operations was as follows:
| | | | | | | | | | |
Derivative Contracts Not Accounted for as
Hedging Instruments | | Consolidated Statement of
Operations Location | | Net Realized
Gain (Loss) for
the Year | | | Consolidated Statement of Operations Location | | Net Change in
Unrealized
Appreciation
(Depreciation)
for the Year |
| | Net realized gain (loss) from: | | | | | | Net change in unrealized appreciation (depreciation) on: | | |
Interest rate contracts | | Swap contracts | | | $ (234,851) | | | Swap contracts | | $3,971,979 |
Foreign exchange contracts | | Forward exchange contracts | | | 36,906,624 | | | Forward exchange contracts | | 4,207,726 |
Equity contracts | | Written options | | | 62,197 | | | Written options | | — |
| | | | |
48 | | Annual Report | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
| | | | | | | | | | | | |
Derivative Contracts Not Accounted for as Hedging Instruments | | Consolidated Statement of
Operations Location | | Net Realized
Gain (Loss) for
the Year | | | Consolidated Statement of
Operations Location | | Net Change in
Unrealized
Appreciation
(Depreciation)
for the Year | |
| | | | |
| | Net realized gain (loss) from: | | | | | | Net change in unrealized appreciation (depreciation) on: | | | | |
Value recovery instruments | | Investments | | $ | 609,099 | a | | Investments | | $ | (580,933 | )a |
| | | | | | | | | | | | |
Totals | | | | $ | 37,343,069 | | | | | $ | 7,598,772 | |
| | | | | | | | | | | | |
aVRI are included in net realized gain (loss) from investments and net change in unrealized appreciation (depreciation) on investments in the Consolidated Statement of Operations.
For the year ended December 31, 2018, the average month end notional amount of options and swap contracts, and the average month end contract value for forward exchange contracts, and average month end fair value of VRI, were as follows:
| | | | | | | | |
Options | | | 3,492 | | | | shares | |
Swap contracts | | $ | 179,430,769 | | | | | |
Forward exchange contracts | | $ | 688,386,409 | | | | | |
VRI | | $ | 6,786,912 | | | | | |
See Note 1(d) regarding derivative financial instruments.
See Abbreviations on page 51.
11. Credit Facility
The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matured on February 8, 2019. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests. Effective February 8, 2019, the Borrowers renewed the Global Credit Facility for a one year term, maturing February 7, 2020, for a total of $2 billion.
Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.15% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Consolidated Statement of Operations. During the year ended December 31, 2018, the Fund did not use the Global Credit Facility.
12. Fair Value Measurements
The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:
| | • | | Level 1 – quoted prices in active markets for identical financial instruments |
| | • | | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 49 |
TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
12. Fair Value Measurements(continued)
| | • | | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
A summary of inputs used as of December 31, 2018, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Assets: | | | | | | | | | | | | | | | | |
Investments in Securities:a | | | | | | | | | | | | | | | | |
Equity Investments:b | | | | | | | | | | | | | | | | |
Denmark | | $ | — | | | $ | 20,943,828 | | | $ | — | | | $ | 20,943,828 | |
Germany | | | — | | | | 55,384,853 | | | | — | | | | 55,384,853 | |
Italy | | | — | | | | 25,000,158 | | | | — | | | | 25,000,158 | |
Norway | | | — | | | | 7,185,719 | | | | — | | | | 7,185,719 | |
South Africa | | | — | | | | — | | | | 26,132 | c | | | 26,132 | |
Switzerland | | | — | | | | 30,600,812 | | | | — | | | | 30,600,812 | |
United States | | | 174,978,882 | | | | — | | | | 34,934 | | | | 175,013,816 | |
All Other Equity Investments | | | 485,337,118 | | | | — | | | | — | | | | 485,337,118 | |
Equity-Linked Securities | | | — | | | | 62,865,340 | | | | — | | | | 62,865,340 | |
Corporate Bonds: | | | | | | | | | | | | | | | | |
South Africa | | | — | | | | 55,576 | | | | 52,214 | | | | 107,790 | |
Foreign Government and Agency Securities | | | — | | | | 274,866,234 | | | | — | | | | 274,866,234 | |
Escrows and Litigation Trusts | | | — | | | | — | | | | — | c | | | — | |
Short Term Investments | | | 114,804,850 | | | | 70,179,501 | | | | — | | | | 184,984,351 | |
| | | | |
Total Investments in Securities | | $ | 775,120,850 | | | $ | 547,082,021 | | | $ | 113,280 | | | $ | 1,322,316,151 | |
| | | | |
Other Financial Instruments: | | | | | | | | | | | | | | | | |
Forward Exchange Contracts | | $ | — | | | $ | 3,804,638 | | | $ | — | | | $ | 3,804,638 | |
Swap Contracts | | | — | | | | 6,658,919 | | | | — | | | | 6,658,919 | |
| | | | |
Total Other Financial Instruments | | $ | — | | | $ | 10,463,557 | | | $ | — | | | $ | 10,463,557 | |
| | | | |
Liabilities: | | | | | | | | | | | | | | | | |
Other Financial Instruments: | | | | | | | | | | | | | | | | |
Forward Exchange Contracts | | $ | — | | | $ | 4,585,499 | | | $ | — | | | $ | 4,585,499 | |
Swap Contracts | | | — | | | | 977,302 | | | | — | | | | 977,302 | |
| | | | |
Total Other Financial Instruments | | $ | — | | | $ | 5,562,801 | | | $ | — | | | $ | 5,562,801 | |
aFor detailed categories, see the accompanying Consolidated Statement of Investments.
bIncludes common and preferred stocks as well as other equity interests.
cIncludes securities determined to have no value at December 31, 2018.
A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the year.
13. Subsequent Events
The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure, other than those already disclosed in the financial statements.
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TEMPLETON GLOBAL INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Templeton Global Balanced Fund(continued)
Abbreviations
| | | | | | | | | | |
| Counterparty | | Currency | | Selected Portfolio |
| BOFA | | Bank of America Corp. | | ARS | | Argentine Peso | | ADR | | American Depositary Receipt |
| BZWS | | Barclays Bank PLC | | BRL | | Brazilian Real | | ARPP7DRR | | Argentina Central Bank 7 Day Repo Rate |
| CITI | | Citigroup, Inc. | | COP | | Colombian Peso | | BADLAR | | Argentina Deposit Rates Badlar Private |
| DBAB | | Deutsche Bank AG | | EGP | | Egyptian Pound | | | | Banks ARS |
| GSCO | | The Goldman Sachs Group, Inc. | | EUR | | Euro | | FRN | | Floating Rate Note |
| HSBK | | HSBC Bank PLC | | GHS | | Ghanaian Cedi | | GDP | | Global Depositary Receipt |
| JPHQ | | JP Morgan Chase & Co. | | IDR | | Indonesian Rupiah | | IDR | | International Depositary Receipt |
| MSCO | | Morgan Stanley | | INR | | Indian Rupee | | LIBOR | | London InterBank Offered Rate |
| SCNY | | Standard Chartered Bank | | KRW | | South Korean Won | | PIK | | Payment-In-Kind |
| UBSW | | UBS AG | | MXN | | Mexican Peso | | VRI | | Value Recovery Instrument |
| | | | PHP | | Philippine Peso | | | | |
| | | | USD | | United States Dollar | | | | |
| | | | | | |
franklintempleton.com | | | | Annual Report | | 51 |
TEMPLETON GLOBAL INVESTMENT TRUST
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Templeton Global Investment Trust and Shareholders of Templeton Global Balanced Fund
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated statement of investments, of Templeton Global Balanced Fund and its subsidiary (the “Fund”) as of December 31, 2018, the related consolidated statement of operations for the year ended December 31, 2018, the consolidated statement of changes in net assets for each of the two years in the period ended December 31, 2018, including the related notes, and the consolidated financial highlights for each of the periods indicated therein (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Fund as of December 31, 2018, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2018 and the consolidated financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our procedures included confirmation of securities owned as of December 31, 2018 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
February 15, 2019
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
| | | | |
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TEMPLETON GLOBAL INVESTMENT TRUST
Tax Information (unaudited)
Templeton Global Balanced Fund
Under Section 854(b)(1)(A) of the Internal Revenue Code, the Fund hereby reports 7.96% of the ordinary income dividends as income qualifying for the dividends received deduction for the fiscal year ended December 31, 2018.
Under Section 854(b)(1)(B) of the Internal Revenue Code, the Fund hereby reports the maximum amount allowable but no less than $26,311,074 as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Internal Revenue Code for the fiscal year ended December 31, 2018. Distributions, including qualified dividend income, paid during calendar year 2018 will be reported to shareholders on Form1099-DIV bymid-February 2019. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns.
At December 31, 2018, more than 50% of the Fund’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. The Fund elects to treat foreign taxes paid as allowed under Section 853 of the Internal Revenue Code. This election will allow shareholders of record as of the 2019 distribution date, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.
| | | | | | |
franklintempleton.com | | | | Annual Report | | 53 |
TEMPLETON GLOBAL INVESTMENT TRUST
Board Members and Officers
The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton Investments fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.
Independent Board Members
| | | | | | | | |
Name, Year of Birth and
Address | | Position | | Length of
Time Served | | Number of Portfolios in
Fund Complex Overseen
by Board Member* | | Other Directorships Held
During at Least the Past 5 Years |
| | | | |
Harris J. Ashton (1932) 300 S.E. 2nd Street
Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 1994 | | 136 | | Bar-S Foods (meat packing company) (1981-2010). |
Principal Occupation During at Least the Past 5 Years: Director of various companies; andformerly, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998). |
| | | | |
Ann Torre Bates (1958)
300 S.E. 2nd Street
Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2008 | | 38 | | Ares Capital Corporation (specialty finance company) (2010-present), United Natural Foods, Inc. (distributor of natural, organic and specialty foods) (2013-present), Allied Capital Corporation (financial services) (2003-2010), SLM Corporation (Sallie Mae) (1997-2014) and Navient Corporation (loan management, servicing and asset recovery) (2014-2016). |
Principal Occupation During at Least the Past 5 Years: Director of various companies; andformerly, Executive Vice President and Chief Financial Officer, NHP Incorporated (manager of multifamily housing) (1995-1997); and Vice President and Treasurer, US Airways, Inc. (until 1995). |
| | | | |
Mary C. Choksi (1950) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2017 | | 136 | | Avis Budget Group Inc. (car rental) (2007-present), Omnicom Group Inc. (advertising and marketing communications services) (2011-present) and White Mountains Insurance Group, Ltd. (holding company) (2017-present). |
Principal Occupation During at Least the Past 5 Years: Director of various companies; andformerly, Founder and Senior Advisor, Strategic Investment Group (investment management group) (2015-2017); Founding Partner and Senior Managing Director, Strategic Investment Group (1987-2015); Founding Partner and Managing Director, Emerging Markets Management LLC (investment management firm) (1987-2011); and Loan Officer/Senior Loan Officer/Senior Pension Investment Officer, World Bank Group (international financial institution) (1977-1987). |
| | | | |
Edith E. Holiday (1952)
300 S.E. 2nd Street
Fort Lauderdale, FL 33301-1923 | | Lead
Independent
Trustee | | Trustee since 1996 and Lead Independent Trustee since 2007 | | 136 | | Hess Corporation (exploration of oil and gas) (1993-present), Canadian National Railway (railroad) (2001-present), White Mountains Insurance Group, Ltd. (holding company) (2004-present), Santander Consumer USA Holdings, Inc. (consumer finance) (2016-present), RTI International Metals, Inc. (manufacture and distribution of titanium) (1999-2015) and H.J. Heinz Company (processed foods and allied products) (1994-2013). |
Principal Occupation During at Least the Past 5 Years: Director or Trustee of various companies and trusts; andformerly, Assistant to the President of the United States and Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989). |
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TEMPLETON GLOBAL INVESTMENT TRUST
Independent Board Members(continued)
| | | | | | | | |
Name, Year of Birth
and Address | | Position | | Length of
Time Served | | Number of Portfolios in
Fund Complex Overseen
by Board Member* | | Other Directorships Held
During at Least the Past 5 Years |
| | | | |
J. Michael Luttig (1954) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2009 | | 136 | | Boeing Capital Corporation (aircraft financing) (2006-2013). |
Principal Occupation During at Least the Past 5 Years: Executive Vice President, General Counsel and member of the Executive Council, The Boeing Company (aerospace company) (2006-present); andformerly, Federal Appeals Court Judge, U.S. Court of Appeals for the Fourth Circuit (1991-2006). |
| | | | |
David W. Niemiec (1949) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2006 | | 38 | | Hess Midstream Partners LP (oil and gas midstream infrastructure) (2017-present). |
Principal Occupation During at Least the Past 5 Years: Advisor, Saratoga Partners (private equity fund); andformerly, Managing Director, Saratoga Partners (1998-2001) and SBC Warburg Dillon Read (investment banking) (1997-1998); Vice Chairman, Dillon, Read & Co. Inc. (investment banking) (1991-1997); and Chief Financial Officer, Dillon, Read & Co. Inc. (1982-1997). |
| | | | |
Larry D. Thompson (1945) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2006 | | 136 | | The Southern Company (energy company) (2014-present; previously 2010-2012), Graham Holdings Company (education and media organization) (2011-present) and Cbeyond, Inc. (business communications provider) (2010-2012). |
Principal Occupation During at Least the Past 5 Years: Director of various companies; Counsel, Finch McCranie, LLP (law firm) (2015-present); Independent Compliance Monitor and Auditor, Volkswagen AG (manufacturer of automobiles and commercial vehicles) (2017-present); John A. Sibley Professor of Corporate and Business Law, University of Georgia School of Law (2015-present; previously 2011-2012); andformerly, Executive Vice President – Government Affairs, General Counsel and Corporate Secretary, PepsiCo, Inc. (consumer products) (2012-2014); Senior Vice President – Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (2004-2011); Senior Fellow of The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General, U.S. Department of Justice (2001-2003). |
| | | | |
Constantine D. Tseretopoulos (1954) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2001 | | 24 | | None |
Principal Occupation During at Least the Past 5 Years: Physician, Chief of Staff, owner and operator of the Lyford Cay Hospital (1987-present); director of various nonprofit organizations; andformerly, Cardiology Fellow, University of Maryland (1985-1987); and Internal Medicine Resident, Greater Baltimore Medical Center (1982-1985). |
| | | | |
Robert E. Wade (1946) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Trustee | | Since 2006 | | 38 | | El Oro Ltd (investments) (2003-present). |
Principal Occupation During at Least the Past 5 Years: Attorney at law engaged in private practice as a sole practitioner (1972-2008) and member of various boards. |
| | | | |
franklintempleton.com | | Annual Report | | 55 |
TEMPLETON GLOBAL INVESTMENT TRUST
Interested Board Members and Officers
| | | | | | | | |
Name, Year of Birth
and Address | | Position | | Length of
Time Served | | Number of Portfolios in
Fund Complex Overseen
by Board Member* | | Other Directorships Held
During at Least the Past 5 Years |
| | | | |
**Gregory E. Johnson (1961) One Franklin Parkway San Mateo, CA 94403-1906 | | Trustee | | Since 2006 | | 150 | | None |
Principal Occupation During at Least the Past 5 Years: Chairman of the Board, Member – Office of the Chairman, Director and Chief Executive Officer, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 42 of the investment companies in Franklin Templeton Investments; Vice Chairman, Investment Company Institute; andformerly, President, Franklin Resources, Inc. (1994-2015). |
| | | | |
**Rupert H. Johnson, Jr. (1940) One Franklin Parkway San Mateo, CA 94403-1906 | | Chairman of the Board, Trustee and Vice President | | Chairman of the Board, Trustee since 2013 and Vice President since 1996 | | 136 | | None |
Principal Occupation During at Least the Past 5 Years: Vice Chairman, Member – Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 40 of the investment companies in Franklin Templeton Investments. |
| | | | |
Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2012 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Deputy General Counsel, Franklin Templeton Investments; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Norman J. Boersma (1957) Lyford Cay Nassau, Bahamas | | President and Chief Executive Officer – Investment Management | | Since 2012 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Chairman of the Board, President and Chief Executive Officer, Templeton Global Advisors Ltd.; Chief Investment Officer of Templeton Global Equity Group; officer of five of the investment companies in Franklin Templeton Investments; andformerly, Executive Vice President, Franklin Templeton Investments Corp. (1993-2014). |
| | | | |
Aliya S. Gordon (1973) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2009 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Senior Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2009 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Senior Associate General Counsel, Franklin Templeton Investments; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906 | | Chief Executive Officer – Finance and Administration | | Since 2017 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Senior Vice President, Franklin Templeton Services, LLC; officer of 44 of the investment companies in Franklin Templeton Investments; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton Investments (2009-2017). |
| | | | |
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TEMPLETON GLOBAL INVESTMENT TRUST
InterestedBoardMembersandOfficers(continued)
| | | | | | | | |
Name, Year of Birth
and Address | | Position | | Length of
Time Served | | Number of Portfolios in
Fund Complex Overseen
by Board Member* | | Other Directorships Held
During at Least the Past 5 Years |
| | | | |
Robert G. Kubilis (1973) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Chief Financial Officer, Chief Accounting Officer and Treasurer | | Since 2017 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Treasurer, U.S. Fund Administration & Reporting, Franklin Templeton Investments; and officer of 16 of the investment companies in Franklin Templeton Investments. |
| | | | |
Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President –AML Compliance | | Since 2016 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Kimberly H. Novotny (1972) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Vice President | | Since 2013 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Associate General Counsel, Franklin Templeton Investments; Vice President and Corporate Secretary, Fiduciary Trust International of the South; Vice President, Templeton Investment Counsel, LLC; Assistant Secretary, Franklin Resources, Inc.; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Robert C. Rosselot (1960) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Chief Compliance Officer | | Since 2013 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Director, Global Compliance, Franklin Templeton Investments; Vice President, Franklin Templeton Companies, LLC; officer of 44 of the investment companies in Franklin Templeton Investments; andformerly, Senior Associate General Counsel, Franklin Templeton Investments (2007-2013); and Secretary and Vice President, Templeton Group of Funds (2004-2013). |
| | | | |
Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2015 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Associate General Counsel, Franklin Templeton Investments; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906 | | Vice President | | Since 2005 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | | Vice President and Secretary | | Vice President since 2011 and Secretary since 2013 | | Not Applicable | | Not Applicable |
Principal Occupation During at Least the Past 5 Years: Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 44 of the investment companies in Franklin Templeton Investments. |
| | | | |
franklintempleton.com | | Annual Report | | 57 |
TEMPLETON GLOBAL INVESTMENT TRUST
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton Investments fund complex. These portfolios have a common investment manager or affiliated investment managers.
**Gregory E. Johnson is considered to be an interested person of the Fund under the federal securities laws due to his position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor. Rupert H. Johnson, Jr. is considered to be an interested person of the Fund under the federal securities laws due to his position as an officer and director and major shareholder of Resources.
Note 1: Rupert H. Johnson, Jr. is the uncle of Gregory E. Johnson.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the US Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated each of Ann Torre Bates and David W. Niemiec as an audit committee financial expert. The Board believes that Ms. Bates and Mr. Niemiec qualify as such an expert in view of their extensive business background and experience. Ms. Bates has served as a member of the Fund Audit Committee since 2008. She currently serves as a director of Ares Capital Corporation (2010-present) and United Natural Foods, Inc. (2013-present) and was formerly a director of Navient Corporation from 2014 to 2016, SLM Corporation from 1997 to 2014 and Allied Capital Corporation from 2003 to 2010, Executive Vice President and Chief Financial Officer of NHP Incorporated from 1995 to 1997 and Vice President and Treasurer of US Airways, Inc. until 1995. Mr. Niemiec has served as a member of the Fund Audit Committee since 2006, currently serves as an Advisor to Saratoga Partners and was formerly its Managing Director from 1998 to 2001 and serves as a director of Hess Midstream Partners LP (2017-present). Mr. Niemiec was formerly a director of Emeritus Corporation from 1999 to 2010 and OSI Pharmaceuticals, Inc. from 2006 to 2010, Managing Director of SBC Warburg Dillon Read from 1997 to 1998, and was Vice Chairman from 1991 to 1997 and Chief Financial Officer from 1982 to 1997 of Dillon, Read & Co. Inc. As a result of such background and experience, the Board believes that Ms. Bates and Mr. Niemiec have each acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Ms. Bates and Mr. Niemiec are independent Board members as that term is defined under the applicable US Securities and Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request. Shareholders may call (800) DIALBEN/342-5236 to request the SAI.
| | | | | | |
58 | | Annual Report | | | | | franklintempleton.com |
TEMPLETON GLOBAL INVESTMENT TRUST
TEMPLETON GLOBAL BALANCED FUND
Shareholder Information
Proxy Voting Policies and Procedures
The Fund’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954)527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Fund’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent12-month period ended June 30.
Quarterly Consolidated Statement of Investments
The Trust, on behalf of the Fund, files a complete consolidated statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on FormN-Q. Shareholders may view the filed FormN-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling(800) SEC-0330.
Householding of Reports and Prospectuses
You will receive the Fund’s financial reports every six months as well as an annual updated summary prospectus (prospectus available upon request). To reduce Fund expenses, we try to identify related shareholders in a household and send only one copy of the financial reports and summary prospectus. This process, called “householding,” will continue indefinitely unless you instruct us otherwise. If you prefer not to have these documents householded, please call us at (800)632-2301. At any time you may view current prospectuses/summary prospectuses and financial reports on our website. If you choose, you may receive these documents through electronic delivery.
| | | | | | |
franklintempleton.com | | | | Annual Report | | 59 |
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| | |
| | Annual Report and Shareholder Letter Templeton Global Balanced Fund |
| | Investment Manager |
| | Templeton Global Advisors Limited |
| | Subadvisor Franklin Advisers, Inc. Distributor |
| | Franklin Templeton Distributors, Inc. (800) DIAL BEN® /342-5236 franklintempleton.com |
| | Shareholder Services |
| | (800)632-2301 |
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
| | |
| © 2019 Franklin Templeton Investments. All rights reserved. | | 325 A 02/19 |
Item 2. Code of Ethics.
| (a) | The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer. |
| (f) | Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer. |
Item 3. Audit Committee Financial Expert.
| (a) | (1) The Registrant has an audit committee financial expert serving on its audit committee. |
| | (2) | The audit committee financial expert is David W. Niemiec and he is “independent” as defined under the relevant Securities and Exchange Commission Rules and Releases. |
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $123,426 for the fiscal year ended December 31, 2018 and $124,647 for the fiscal year ended December 31, 2017.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning were $5,000 for the fiscal year ended December 31, 2018 and $0 for the fiscal year ended December 31, 2017. The services for which these fees were paid included tax consulting services related to the operating agreement and term sheet for the launch of a new fund.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant, other than the services reported in paragraphs (a)-(c) of Item 4 were $650 for the fiscal year ended December 31, 2018 and $0 for the fiscal year ended December 31, 2017. The services for which these fees were paid included review of materials provided to the fund Board in connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $31,500 for the fiscal year ended December 31, 2018 and $14,000 for the fiscal year ended December 31, 2017. The services for which these fees were paid included the issuance of an Auditor’s Certificate for South Korean regulatory shareholders disclosures, assets under management certification, and benchmarking services in connection with the ICI TA Survey.
(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:
(i)pre-approval of all audit and audit related services;
(ii)pre-approval of allnon-audit related services to be provided to the Fund by the auditors;
(iii)pre-approval of allnon-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where thenon-audit services relate directly to the operations or financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committeepre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to bepre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule2-01 of regulationS-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregatenon-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $37,150 for the fiscal year ended December 31, 2018 and $14,000 for the fiscal year ended December 31, 2017.
(h) The registrant’s audit committee of the board has considered whether the provision ofnon-audit services that were rendered to the registrant’s investment adviser (not including anysub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were notpre-approved pursuant to paragraph (c)(7)(ii) of Rule2-01 of RegulationS-X is compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants.N/A
Item 6. Schedule of Investments.N/A
Item 7. Disclosure of Proxy Voting Policies and Procedures forClosed-End Management Investment Companies.N/A
Item 8. Portfolio Managers ofClosed-End Management Investment Companies.N/A
Item 9. Purchases of Equity Securities byClosed-End Management Investment Company and Affiliated Purchasers.N/A
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.
Item 11. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on FormN-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures were not effective related to internal control over financial reporting specific to the monitoring of market events following the close of trading in foreign stock markets that assist in determining the reliability of the values of the foreign securities held by the Funds and which may require the use of fair valuation factors to account for changes in the values of those securities subsequent to the local close of the foreign market but prior to the net asset calculation of the Funds. As a result, a material weakness exists at period end for the Templeton Emerging Markets Balanced Fund and Templeton Global Balanced Fund. There are no misstatements to current and previously issued financial statements. However, this material weakness could result in misstatements of security values and unrealized gains or losses and associated disclosures that would result in a material misstatement of the interim or annual financial
statements that would not be prevented or detected.
Effective November 1, 2018, the Registrant’s controls were enhanced through the implementation of a daily secondary review of market events following the close of trading on foreign stock markets to ensure the appropriate application of market level fair value. Registrant’s management believes this will facilitate the remediation of the control deficiency we have identified and strengthen the internal control over financial reporting. This material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
(b) Changes in Internal Controls. As described above, there have been changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities forClosed-End Management Investment Company. N/A
Item 13. Exhibits.
(a) (1) Code of Ethics
(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer—Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer—Finance and Administration, and Robert G. Kubilis, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TEMPLETON GLOBAL INVESTMENT TRUST
| | |
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By | | /s/ MATTHEW T. HINKLE |
| | Matthew T. Hinkle |
| | Chief Executive Officer - Finance and Administration |
| |
| | Date February 26, 2019 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | |
By | | /s/ MATTHEW T. HINKLE |
| | Matthew T. Hinkle |
| | Chief Executive Officer - Finance and Administration |
| |
| | Date February 26, 2019 |
| | |
By | | /s/ ROBERT G. KUBILIS |
| | Robert G. Kubilis |
| | Chief Financial Officer and Chief Accounting Officer |
| |
| | Date February 26, 2019 |
