Table of Content Page
Message from the President 1
Fund Reports
Templeton Pacific Growth Fund 3
Franklin International Equity Fund 8
Statement of Investments 18
Financial Statements 29
Notes to Financial Statements 32
June 17, 1996
Dear Shareholder:
It's a pleasure to bring you the semi-annual report of the Franklin Templeton
International Trust, which covers the period ended April 30, 1996. The Trust
consists of the Templeton Pacific Growth Fund and the Franklin International
Equity Fund.
During the six months under review, the investment environment improved in many
international markets due largely to increased economic stability, moderate
inflation and low interest rates. As a result, growing demand for equity
securities led to higher stock prices across a variety of markets in both
developed and developing countries. The Morgan Stanley Capital International
Europe, Australia, Far East (MSCI EAFE) Index, which tracks the stock markets of
18 countries, reported a total return of +13.38% for the six-month period, while
the MSCI Pacific Basin Index, representative of equity markets in five countries
in this region, posted a total return of +18.16%.*
Of course, there can be no guarantee that these markets will continue to rise in
the months to come. That is why it is always important to remember that markets
experience both ups and downs, and volatility is a normal part of investing. We
therefore urge you to focus on the achievement of your long-term investment
goals, rather than concentrating on short-term market cycles.
On the pages that follow, you'll find specific information about the Templeton
Pacific Growth Fund and the Franklin International Equity Fund, including the
effects of market conditions and management strategies upon their performance
during the reporting period.
We thank you for your support, welcome your questions, and look forward to
serving your investment needs in the years to come.
Sincerely,
Rupert H. Johnson, Jr.
President
Franklin Templeton International Trust
*Indices are unmanaged and include price appreciation and reinvestment of
dividends.
================================================================================
TEMPLETON PACIFIC GROWTH FUND
================================================================================
Your Fund's Objective:
The Templeton Pacific Growth Fund seeks to provide long-term growth of capital
by investing in equity securities of which at least 65% trade on markets in the
Pacific Rim.
During the six months ended April 30, 1996, many equity markets
throughout the Pacific Rim region strengthened in response to improved economic
fundamentals, moderate inflation, and low interest rates. We are pleased to
report that the fund performed well within this environment, delivering a
six-month total return of +16.03%, as discussed in the Performance Summary on
page 7.
The biggest development during the reporting period was the tremendous amount of
Japanese equities purchased by foreign investors. The Gaijin (a Japanese term
for foreigners) bought an estimated $36.9 billion in stocks as market sentiment
improved following the Japanese government's intervention in the country's
crippling banking crisis. In late 1995, the ruling party introduced legislation
to allow use of government funds to assist banks in writing off some of the bad
loans that were making it difficult for financial institutions to lend to
commercial enterprises. In an attempt to boost the economy and halt deflation,
the Japanese government also lowered the discount rate to an all-time low 0.5%,
purchased government bonds to inject liquidity into the banking system, and
initiated a series of public spending measures. All of these efforts encouraged
foreign investment and caused the Nikkei 225 Index to rebound significantly,
from 17,654 on October 31, 1995 to 22,041 on April 30, 1996. Taking advantage of
this rising equity market, we sold our shares of Nintendo Co. Ltd. following
strong performance by the company's stock.
Another important development was the improvement in Chinese-British relations
as the two countries reached an agreement regarding the technical issues of Hong
Kong's upcoming reversion to China. Additionally, real estate prices in Hong
Kong became more affordable, which boosted sales and propelled property stocks
higher. We increased our exposure to Hong Kong by adding to our holdings of Hong
Kong Telecommunications Ltd., and initiating positions in Johnson Electric
Holdings Ltd. and Consolidated Electric Power Asia Ltd.
The Philippine equity market rebounded strongly during the reporting period due
to improved economic fundamentals and healthy corporate earnings. Although a
shortage of consumer goods caused inflation to spike upward during the period,
it is still significantly lower than in recent years, which has led to lower
interest rates and increased investor optimism. The majority of the Philippines'
current economic growth is being fueled by investments in infrastructure and
real estate, which the country desperately needs. This trend has benefited
stocks of real estate companies, including the fund's holding of Filinvest Land,
Inc., a residential and commercial property development company.
Indonesia's stock market rose significantly during the period even though
concerns regarding the country's overheating economy forced the central bank to
keep interest rates relatively high. Foreign direct investment in Indonesia
reached a record level of more than $11 billion in the first quarter of 1996,
and there appear to be no signs that this trend will slow in the immediate
future. We believe the government's aggressive approach to improving
infrastructure will contribute to increased spending in the country.
Singapore's equity market reached a high for the period in February 1996 as
investors sought a safe haven from regional tension in the Straits of Taiwan.
This inflow of capital was primarily directed toward stocks of blue-chip
companies despite their relatively high valuations and disappointing
performances last year. We increased our exposure to Singapore over the course
of the reporting period, from 4.8% to 5.6% of total net assets, by adding to our
holdings of Development Bank of Singapore Ltd., a worldwide provider of banking
and other financial services.
In Malaysia, concerns regarding the country's rapid economic growth prompted the
government to impose credit controls to ward off excess consumption. Despite
this economic turmoil, the Malaysian equity market performed extremely well,
rising more than 16% during the six-month reporting period. We increased our
Malaysian holdings slightly by purchasing additional shares of Commerce
Asset-Holding Bhd., an investment holding company whose subsidiaries provide
commercial banking and related services.
The Thai market did not fare as well as other Pacific Rim markets due mainly to
concerns about political leadership, economic stability, and lackluster
corporate earnings. Because the government failed to implement responsible
fiscal measures, the country's trade deficit is larger than many have expected,
and although its inflation rate appears to be declining, many investors are
watching closely to see if the government will be successful in slowing down the
economy.
Looking forward, we are optimistic about the potential prospects for equity
markets in the Pacific Rim region. Although possibilities of higher interest
rates in the U.S. and Japan could prove problematic to these markets in the near
future, the tremendous potential for growth that exists in this region may lead
to continued inflows of capital, which would be beneficial to stock prices.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
This discussion reflects the strategies we employed for the fund during the
six-month period, and includes our opinions as of the close of the period. Since
economic and market conditions are constantly changing, our strategies and our
evaluations, conclusions and decisions regarding portfolio holdings may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the fund.
There are, of course, special risks involved with investing in a portfolio of
securities concentrated in a single geographic region, which also contains
developing markets. These risks include currency fluctuations, market
volatility, economic, social, and political uncertainty, and in some cases the
relatively small size and lesser liquidity of these markets. While short-term
volatility can be disconcerting, declines of as much as 40% to 50% are not
unusual in emerging markets. For example, Hong Kong's equity market has
increased 700% in the last 15 years, but has suffered six declines of more than
20% during that time.* These risks are discussed in the fund's prospectus.
*Source: Bloomberg. Based on quarterly percentage change over 15 years ended
March 31, 1996.
Templeton Pacific Growth Fund
Top 10 Holdings on April 30, 1996
Based on Total Net Assets
- --------------------------------------------------------------------------------
Company % of Total
Industry, Country Net Assets
- --------------------------------------------------------------------------------
Cheung Kong Holdings Ltd. 3.3%
Multi-Industry, Hong Kong
- --------------------------------------------------------------------------------
Sun Hung Kai Properties Ltd 2.2%
Real Estate, Hong Kong
- --------------------------------------------------------------------------------
Brambles Industries Ltd 2.2%
Transportation, Australia
- --------------------------------------------------------------------------------
New World Development Co. Ltd. 2.1%
Real Estate, Hong Kong
- --------------------------------------------------------------------------------
Philippine National Bank 2.0%
Banking, Philippines
- --------------------------------------------------------------------------------
Nisshinbo Industries Inc 1.9%
Textiles & Apparel, Japan
- --------------------------------------------------------------------------------
Thai Farmers Bank Public Co. Ltd. 1.9%
Banking, Thailand
- --------------------------------------------------------------------------------
Filinvest Land Inc. 1.9%
Real Estate, Philippines
- --------------------------------------------------------------------------------
Bangkok Bank Public Co. Ltd. 1.9%
Banking, Thailand
- --------------------------------------------------------------------------------
Jardine Strategic Holdings Ltd. 1.9%
Multi-Industry, Hong Kong
- --------------------------------------------------------------------------------
For a complete list of portfolio holdings, please see
page 18 of this report.
Performance Summary
The Templeton Pacific Growth Fund provided a total return of +16.03% for the
six-month period ended April 30, 1996. Total return measures the change in value
of an investment, assuming reinvestment of dividends and capital gains, and does
not include the fund's maximum initial sales charge.
We have always maintained a long-term perspective when managing the fund, and we
encourage shareholders to view their investments in a similar manner. As you can
see from the table to the right, the fund has delivered a cumulative total
return of more than 81% since its inception on September 20, 1991.
As measured by net asset value, the fund's share price increased $1.36 per
share, from $14.11 on October 31, 1995 to $15.47 on April 30, 1996. During the
reporting period, shareholders received distributions totaling 14 cents ($0.14)
per share in dividend income and 65.5 cents ($0.655) per share in capital gains,
of which 56.5 cents ($0.565) represented long-term gains and 9 cents ($0.09)
represented short-term gains. Of course, past performance is not predictive of
future results, and distributions will vary depending on income earned by the
fund and any profits realized from the sale of securities in the portfolio.
- --------------------------------------------------------------------------------
Templeton Pacific Growth Fund
Periods ended April 30, 1996
Since
Inception
One-Year Three-Year (9/20/91)
- -------------------------------------------------------- -----------------------
Cumulative
Total Return1 18.40% 49.50% 81.76%
Average Annual
Total Return2 12.10% 12.59% 13.69%
Value of $10,000
Investment3 $11,210 $14,274 $18,176
- --------------------------------------------------------------------------------
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 4.5% initial sales
charge.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods and includes the maximum 4.5% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the specified periods and include the maximum 4.5% initial sales
charge.
All calculations assume reinvestment of dividends and capital gains. Past
expense reductions by the fund's manager increased the fund's total returns.
Investment return and principal value will fluctuate with market conditions,
currencies and the economic and political climates of countries where
investments are made, so that your shares, when redeemed, may be worth more or
less than their initial cost. Past performance is not predictive of future
results.
================================================================================
FRANKLIN INTERNATIONAL EQUITY FUND
================================================================================
Your Fund's Objective:
The Franklin International Equity Fund seeks to provide long-term growth of
capital by investing in an internationally diversified portfolio of equity
securities, of which at least 65% trade on markets in countries other than the
United States.
"The bulls are like the giraffe which is scared by nothing or
like the magician of the Elder of Cologne, who in his mirror made
the ladies appear much more beautiful than they were in reality.
They love everything; they praise everything; they exaggerate
everything.The bears, on the contrary, are ruled by fear,
trepidation and nervousness. Rabbits become elephants; brawls
in a tavern become rebellions; faint shadows appear to them as signs
of chaos."
Joseph de la Vega, a 17th century trader on the Dutch stock
market.
Introduction
Economist John Kenneth Galbraith once wrote that there are few fields of human
endeavor in which history counts for so little as in the world of finance.
Perhaps that is because investing requires an opinion about the future, which
rather than being rooted in reason, can often be tainted by emotion. Emotion
enables us to rationalize the belief that the present is unique in ways so
profound as to render much of the past irrelevant: business cycles have been
tamed, production constraints eliminated, inflation vanquished. We at Templeton
would argue that the problem is one of shortsightedness, not just when looking
back at the past, but also when looking ahead into the future.
We make investment decisions for the fund based on a five-year outlook,
analyzing how much a company might be able to earn five years from now.
Shareholders are often curious about how we can forecast earnings for a company
three to five years in the future. Many Wall Street analysts have found that
their estimates for one year typically are revised downward by 1.1% a month,
implying on average a 14% reduction over the course of the year. How much
accuracy can we hope to achieve with projections targeted much farther forward?
The problem with this question is that it detracts from the truly important
aspects of our approach. Hitting a long-term estimate dead-on is in some ways as
unnecessary as it is impractical. What is important is the perspective gained
from shifting the emphasis beyond the next year or two. Doing so allows us to
escape from focusing on the short-term parameters, which often channels
investors' thinking in the same direction. Instead, we are able to concentrate
on longer-term trends and identify how a company can create sustainable value
for shareholders.
The Value of History
As part of this process, we also look backward. For each company we purchase,
our analysis includes a history of its earnings progress, which we examine to
help us determine the key driving factors. By juxtaposing this with our
longer-term projections, we can highlight where our expectations for the future
differ from what has been accomplished in the past. Such a context keeps our
analysis rooted in reality by forcing us to examine our assumptions about the
major changes we think will shape a company's underlying worth. Most of our
analysis will concentrate on these central assumptions, their implications about
a company's value, and where that value is relative to the current share price.
This long-term approach has been particularly useful in the emerging markets
area. Emotion often runs high in these markets where the typical investor has
not changed much since the days of Joseph de la Vega, the Dutch stock trader
quoted at the beginning of this report. Until two years ago, the "giraffes"
pushed share prices sharply upward only to be startled in early 1994 by the
"shadow" of rising interest rates followed by the specter of Mexico. The
resulting period of underperformance left a number of these shares undervalued
in our opinion, and consequently their weighting has risen on our bargain list
of emerging market stocks.
In the first quarter of this year, inflows of capital started to drive many
emerging market share prices upward as interest in foreign markets increased
following the strong performance of the U.S. market in 1995. After falling an
average of 10.3% a year for two years, the unmanaged International Finance
Corporation's (IFC) Investable Composite Index rose 7.5% in the first quarter of
1996.* The underlying performances of the markets making up the composite have
been mixed, however, with strong performances in Eastern Europe, Mexico and
Brazil masking weaker returns in Argentina, Chile and South Africa.
The History of Value
As an example of our analytical approach and how it can work in these developing
countries, consider the recent history of China's financial markets. When the
stock exchange in Shanghai reopened to locals in April 1991, 41 years after
being closed by the communists, euphoria rocketed share prices upwards. This
market's first index, started in July 1991, increased more than tenfold in less
than one year. In Shenzhen, where the first of the new exchanges had been
started earlier, things got off to a slower start, with the market increasing
just threefold, to a level where the average price-to-earnings ratio reached 85.
The frenzy climaxed in August 1992, when tens of thousands of speculators in
southern China rioted merely to obtain rights to buy shares.
Foreigners did not behave much better. A special class of shares known as
B-shares were initially set up to allow overseas investors to participate
directly in China's markets. Eventually, Chinese companies received permission
to list these shares directly in Hong Kong. Taking advantage of foreign
enthusiasm, companies with suggestive names like China Overseas, Guangzhou
Investments, and China Travel were among the first to raise money in the colony.
Demand for these issues was overwhelming. In fact, investor interest in the
China Overseas issue exceeded the amount of equity being offered by an estimated
99 times, Guangzhou Investments by 229 times and China Travel by a surreal 411
times!
*The IFC Investable Composite Index is an emerging markets index composed of
stocks from 18 countries, and includes price appreciation and reinvested
dividends.
This house of cards tumbled soon thereafter. In Shanghai, the domestic market
spiraled downward more than 80% to its low in 1994, while the Shenzhen market
dropped an equally spectacular amount. The new share offerings that had been so
eagerly received by foreigners in 1992 and 1993 were pulled in 1994 and 1995 due
to lack of interest. This reversal of fortunes was caused in large part by the
Chinese government's introduction of an austerity program in late 1993, which
was designed to reign in the nation's runaway inflation. Other changes
introduced in 1994 and 1995 also unnerved investors, including the scrapping of
certain tax concessions, the lowering of protective tariffs, and the removal of
favorable interest rates on company loans.
While it may seem counter-intuitive given the tremendous volatility, analyzing
companies in this type of environment lends itself to the longer-term approach
we discussed at the beginning of this report. Enthusiasm for a concept or
country can push markets upward with little regard for specific prospects of the
individual companies. These upward moves are often exaggerated by liquidity
constraints. The result is that, at their peak, share prices usually discount
unrealistic growth prospects or sell at significant premiums to underlying
value. When a slowdown does occur, expectations have to be re-evaluated, often
quite significantly because cyclical changes can magnify their effects on
company profits. Consequently, short-term earnings estimates for companies in
emerging markets can fluctuate dramatically, as adjustments are made to reflect
cyclical falls in demand, increases in raw material expenses or sudden increases
in cost of capital. Also, investors fixated on the year-to-year outlook can be
blind sided by changes in the perceived ground rules, such as the removal of
protective tariffs or subsidized interest rates.
The Value of Comparison
Our emphasis on normalizing estimates forces us to question the longevity of
these ground rules themselves. Today in China, for example, we would need to
consider how a specific company's earnings potential could be affected by a
weaker currency, or the unification of tax rates for state and foreign-owned
ventures. While we do not pretend to correctly anticipate all or even most such
changes, attempting to normalize key assumptions gives us a more reliable and
stable benchmark for comparing particularly volatile share prices. Furthermore,
by focusing our analysis on secular shifts rather than cyclical trends, we often
avoid falling into the trap of buying when expectations are the highest and
selling when they are at their lowest.
Valuations appear much more reasonable today in China, where foreign shares sell
on average for about one-half their peak prices. While we have identified some
potential bargain securities in China, direct investment remains difficult, with
only $2 billion in market value open to foreigners (less than 1/30 the size of
IBM). Instead, one of the ways we have gained access to the potential inherent
in one-fifth of the world's population converting to capitalism is through our
weighting in Hong Kong. Since its low at the start of 1995, the Hong Kong market
has risen 60%, although jitters followed the March madness in the Straits of
Taiwan, which featured the Chinese firing warnings uncomfortably close to the
"renegade province." The relationship between China and Taiwan has been a source
of strain in Asia for the last 40 years and is likely to remain so for the
foreseeable future. Both countries have a vested interest in keeping the safety
triggers on: aside from the obvious implications for trade with the US, more
than 100,000 Taiwanese live in China and employ an estimated five million people
in ventures created by over $25 billion worth of investment.
This type of political uncertainty is difficult to incorporate within the
investment approach we have been describing. But it is important to remember
that the risks associated with such events often become exaggerated much like de
la Vega's brawls in a tavern. Wholesale selloffs may occur regardless of a
specific company's underlying fundamentals, creating opportunities for
longer-term investors. In the past, we have taken advantage of declines caused
by the Gulf War and by events at Tienanmen Square, and we will continue trying
to identify potentially mis-priced securities left behind by panicked investors.
The Comparison of Value
If emerging markets are an example of how our long-term analysis has led to
increased investments, financial companies demonstrate how the same approach has
resulted in a trimming of positions lately. Many companies in this sector
appeared undervalued five years ago when insurance, banking and financial
services stocks accounted for about one-fourth of our bargain list, compared
with the Morgan Stanley Capital International (MSCI) World Index's weighting of
less than 20%. After excessive lending in the late 1980s, the inevitable
hangover of unrecoverable loans was triggered by collapsing commercial real
estate prices and the 1990-1991 recession. Bank earnings suffered from declining
returns on assets and increasing provisioning levels. Share prices fell with
decreasing profits and growing investor pessimism. Relative to normalized
earnings potential, however, many of the share price declines appeared
excessive, which resulted in the higher bargain list weighting at that time.
Most banks are now in much better financial shape. Part of the turnaround was
due to a favorable interest-rate structure, which enabled even some of the
destitute to re-capitalize themselves. Economic recovery has allowed
provisioning levels for bad debt to decline to below-average levels, while at
the same time, returns on asset bases have recovered for the most part.
Innovative products and cost reduction efforts have contributed to the
improvement in profits seen throughout the industry. The general reversal has
been so successful that some banks have been left with too much capital. In the
U.S., this has encouraged consolidation, with the resulting mergers and
acquisitions pushing valuation levels even higher.
Whether these financial institutions have become more responsible in their
lending, or if the areas of excess simply have yet to surface, remains a topic
of much debate. Some see the massive build-up of consumer debt as a warning sign
and feel banks are recklessly heaping loans on individuals with little regard
for creditworthiness. Others would argue that higher credit-card debt is merely
a shift in the way people structure their spending to take advantage of perks
being offered, and that rising fee-based income will help stabilize the bottom
line.
We try to peer beyond this current debate and would note that a number of the
banks we track in North America, the United Kingdom, and Australia are selling
at or near peak levels relative to their equity value, while returns on assets
are well above their historic norms. The tension between trying to sustain
returns at above average levels, while maintaining growth in assets, has
historically been difficult to reconcile over longer periods of time: either
growth is sacrificed or, more likely, asset quality declines. For the majority
of the sector, there is no reason to believe that this time is different. As a
result, valuations have grown increasingly expensive relative to our long-term
normalized forecasts, which incorporate a reversion to the mean. A similar
statement could be made for some of the insurance and brokerage companies we
analyze. Not surprisingly, the weighting of financial stocks on our bargain list
is almost half that of five years ago, and the composition of this weighting has
shifted from North America, the United Kingdom and Australia, toward Europe,
particularly Scandinavia.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Given the long-term perspective described above, we have not made any dramatic
changes to the fund's holdings over the past six months. In the context of the
overall portfolio, neither the country or industry weightings have changed
significantly during the period.
So far, 1996 has seen emerging markets performing well after a turbulent 1995.
Volatility also appears to have increased in some markets. For those who
maintain perspective, volatility can bring with it renewal -- a chance to sell
securities that have reached full valuations, while laying the foundation for
future performance by purchasing fundamentally sound companies we believe to be
undervalued. We at Templeton continue to devote our resources to the task of
uncovering opportunity. The increased scope of our efforts are perhaps best
reflected in our bargain list, where the number of countries represented has
nearly doubled, from 20 just five years ago to 37 today. We hope to continue to
improve upon the record we have achieved in the past and look forward to working
on your behalf in the future.
================================================================================
Franklin International Equity Fund
Top 10 Holdings on April 30, 1996
Based on Total Net Assets
Company % of Total
Industry, Country Net Assets
- --------------------------------------------------------------------------------
International Nederlanden Group 2.5%
Insurance, Netherlands
- --------------------------------------------------------------------------------
Ecco SA 2.4%
Business & Public Services, France
- --------------------------------------------------------------------------------
Telefonica de Espana SA 2.4%
Telecommunications, Spain
- --------------------------------------------------------------------------------
Ace Ltd. 2.4%
Insurance, Bermuda
- --------------------------- ----------------------------------------------------
Iberdrola SA 2.1%
Utilities -- Electrical & Gas, Spain
- --------------------------------------------------------------------------------
Celsius AB, B 2.0%
Aerospace & Military Technical
Systems, Sweden
- --------------------------------------------------------------------------------
Hafslund Nycomed SA, B 2.0%
Health & Personal Care, Norway
- --------------------------------------------------------------------------------
Pechiney International SA 2.0%
Metals & Mining, France
- --------------------------------------------------------------------------------
Volvo AB, B 2.0%
Automobiles, Sweden
- --------------------------------------------------------------------------------
DSM NV 1.9%
Chemicals, Netherlands
- --------------------------------------------------------------------------------
For a complete list of portfolio holdings, please see
page 23 of this report.
This discussion reflects the strategies we employed for the fund during the
reporting period, and includes our opinions as of the close of the period. Since
economic and market conditions are constantly changing, our strategies and our
evaluations, conclusions and decisions regarding portfolio holdings may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the fund.
Please remember that investing in international markets involves special
considerations, which may include risks related to market and currency
volatility, and adverse social and political developments. Developing markets
are subject to heightened risks, as well as those associated with the relatively
small size and lesser liquidity of these markets. While short-term volatility
can be disconcerting, declines of as much as 40% to 50% are not unusual in
emerging markets. For example, the Hong Kong equity market has increased 700% in
the last 15 years, but has suffered six declines of more than 20% during that
time.*
*Source: Bloomberg. Based on quarterly percentage change over 15 years ended
March 31, 1996.
Performance Summary
The Franklin International Equity Fund provided a total return of +13.03% for
the six-month period ended April 30, 1996. Total return measures the change in
value of an investment, assuming reinvestment of dividends and capital gains,
and does not include the fund's maximum initial sales charge.
We maintain a long-term perspective when managing the fund, and we encourage
shareholders to view their investments in a similar manner. As you can see from
the table to the right, the fund delivered a cumulative total return of more
than 71% since its inception on September 20, 1991.
The fund's share price, as measured by net asset value, increased from $13.23 on
Octo-ber 31, 1995 to $13.66 on April 30, 1996. During the reporting period,
shareholders received distributions totaling 14.5 cents ($0.145) per share in
dividend income and $1.00 per share in capital gains, of which 96 cents ($0.96)
represented long-term gains and 4 cents ($0.04) represented short-term gains. Of
course, past performance is not predictive of future results, and distributions
will vary depending on income earned by the fund and any profits realized from
the sale of securities in the portfolio.
- --------------------------------------------------------------------------------
Franklin International Equity Fund
Periods ended April 30, 1996
Since
Inception
One-Year Three-Year (9/20/91)
- --------------------------------------------------------------------------------
Cumulative
Total Return1 19.26% 53.82% 71.31%
Average Annual
Total Return2 12.92% 13.69% 12.25%
Value of $10,000
Investment3 $11,292 $14,697 $17,131
- --------------------------------------------------------------------------------
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 4.5% initial sales
charge.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods and includes the maximum 4.5% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the specified periods and include the maximum 4.5% initial sales
charge.
All calculations assume reinvestment of dividends and capital gains. Past
expense reductions by the fund's manager increased the fund's total returns.
Investment return and principal value will fluctuate with market conditions,
currencies and the economic and political climates of countries where
investments are made, so that your shares, when redeemed, may be worth more or
less than their initial cost. Past performance is not predictive of future
results.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Statement of Investments in Securities and Net Assets, April 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Shares/ Value
Country* Warrants Templeton Pacific Growth Fund (Note 1)
- ---------------------------------------------------------------------------------------------------------------------------
Common Stocks & Warrants 95.3%
<S> <C> <C> <C>
Australia 9.9%
AU 210,635 Australian Gas & Light Company ...................................... $ 877,184
AU 110,000 Brambles Industries Ltd. ............................................ 1,508,246
AU 277,869 GIO Australia Holdings Ltd. ......................................... 644,090
AU 872,017 Goodman Fielder Ltd. ................................................ 863,336
AU 170,000 Mayne Nickless Ltd., A .............................................. 1,019,196
AU 569,800 National Foods Ltd. ................................................. 720,829
AU 214,884 Pacific Dunlop Ltd. ................................................. 523,420
US 35,800 b Qantas Airways Ltd., ADR, 144A ...................................... 639,925
AU 1 WMC Ltd. ........................................................... 7
----------------
6,796,233
----------------
China 2.8%
CH 1,784,000 Dongfang Electrical Machinery Co. Ltd., H ........................... 438,188
CH 600,000 a Maanshan Iron & Steel Co. Ltd., H ................................... 89,199
CH 59,500 Shandong Huaneng Power .............................................. 550,375
CH 2,899,000 Shanghai Petrochemical Co. Ltd., H .................................. 861,961
---------------
1,939,723
----------------
Hong Kong 27.1%
HK 630,000 Cathay Pacific Airways Ltd .......................................... 1,099,476
HK 317,000 Cheung Kong Holdings Ltd. .......................................... 2,264,139
HK 600,000 Consolidated Electric Power Asia Ltd. .............................. 992,825
HK 651,795 Dairy Farm International Holdings Ltd. ............................. 606,169
HK 700,000 Gold Peak Industries (Holdings) Ltd. ............................... 364,230
HK 508,000 Grand Hotel Holdings Ltd. .......................................... 208,506
HK 2,430,000 a Great Wall Electronic International Ltd. ............................ 207,330
HK 32,200 a Hang Lung Development Co. Ltd., warrants ............................ 7,909
HK 1,411,872 Hon Kwok Land Investment Co. Ltd. ................................... 492,800
HK 105,503 Hong Kong Land Holdings Co. ......................................... 225,776
HK 610,000 Hong Kong Telecommunications Ltd. ................................... 1,163,144
HK 84,600 HSBC Holdings Plc. .................................................. 1,263,176
HK 458,000 Hualing Holdings Ltd. ............................................... 60,392
HK 137,924 Jardine Matheson Holdings Ltd. ..................................... 1,103,392
HK 393,750 Jardine Strategic Holdings Ltd. .................................... 1,248,187
HK 43,750 a Jardine Strategic Holdings Ltd., warrants ........................... 16,625
HK 325,000 Johnson Electric Holdings Ltd. ...................................... 735,247
HK 850,000 Lai Sun Development Co. Ltd. ........................................ 145,045
HK 85,000 a Lai Sun Development Co. Ltd., warrants .............................. 3,791
HK 100,000 Li & Fung Ltd. ..................................................... 90,492
HK 800,000 National Mutual Asia Ltd. ........................................... 677,396
HK 320,372 New World Development Co. Ltd. ..................................... 1,437,129
Hong Kong (cont.)
HK 100,000 Peregrine Investments Holdings Ltd. ................................ $ 154,483
HK 550,000 Shun Tak Holdings. .................................................. 398,164
HK 213,400 Sing Tao Holdings Ltd. ............................................. 126,211
HK 798,000 South China Morning Post (Holdings) Ltd. ........................... 541,594
HK 160,000 Sun Hung Kai Properties Ltd. ....................................... 1,525,435
HK 62,500 Swire Pacific Ltd., A ............................................... 533,256
HK 490,000 Wheelock & Co. Ltd. ................................................ 1,000,840
HK 227,000 a Yaohan Hongkong Corp. Ltd. ......................................... 10,271
----------------
18,703,430
----------------
India .2%
IN 24,100 Great Eastern Shipping Co. Ltd., GDR ................................ 162,675
----------------
Indonesia 4.8%
ID 53,300 a Asia Pacific Resources International, A ............................. 379,763
ID 247,000 PT Bank Bali, foreign ............................................... 635,097
ID 200,000 PT Barito Pacific Timber, foreign ................................... 201,414
ID 207,400 PT Ever Shine Textile, foreign ...................................... 88,879
ID 203,851 PT Indorama Synthetics, foreign ..................................... 659,556
US 17,000 PT Indosat, ADR ..................................................... 592,875
ID 74,000 PT Inti Indorayon Utama, foreign .................................... 91,172
ID 187,655 PT Pabrik Kertas Tjiwi Kimia, foreign ............................... 197,024
ID 157,500 PT Panasia Indosyntec, foreign ...................................... 86,056
ID 379,500 PT Panin Bank, foreign .............................................. 386,249
----------------
3,318,085
----------------
Japan 21.1%
JP 149,000 Daicel Chemical Industries Ltd. .................................... 994,283
JP 61,500 Daito Trust Construction Co. Ltd. .................................. 911,329
JP 200 East Japan Railway .................................................. 1,068,834
JP 90,200 Hitachi Ltd. ........................................................ 974,436
JP 76,000 Hokuetsu Paper Mills Ltd. .......................................... 741,109
JP 49,000 Matsushita Electric Industrial Co. Ltd. ............................ 866,635
JP 132,000 Mitsubishi Heavy Industries Ltd. ................................... 1,178,662
JP 120 Nippon Telegraph & Telephone Corp. .................................. 930,401
JP 120,000 Nisshinbo Industries Inc. ........................................... 1,330,784
JP 105,000 Nittetsu Mining Co. Ltd. ........................................... 1,164,436
JP 110,000 Rengo Co. Ltd. ..................................................... 830,784
JP 8,900 Sony Corp. .......................................................... 578,585
JP 30,000 Tenma Corp. ........................................................ 739,962
JP 58,000 Toda Corp. ......................................................... 632,122
Japan (cont.)
JP 16,000 Tokyo Style Co. Ltd. ............................................... $ 284,512
JP 78,000 Toyo Engineering Corp. .............................................. 570,459
JP 53,000 Wacoal Corp. ........................................................ 719,503
----------------
14,516,836
----------------
Malaysia 4.4%
MY 118,000 a Commerce Asset-Holding Bhd., foreign ................................ 804,960
MY 317,333 Malaysian International Shipping Corp. Bhd., foreign ................ 1,018,705
MY 120,000 a Public Finance Bhd., foreign ........................................ 288,919
MY 327,600 Sime Darby Bhd., foreign............................................. 907,060
----------------
3,019,644
----------------
New Zealand 1.7%
NZ 400,900 Carter Holt Harvey Ltd. ............................................. 950,124
NZ 21,550 a Fletcher Challenge Building Ltd. ................................... 51,073
NZ 21,550 a Fletcher Challenge Energy Ltd. ..................................... 46,188
NZ 12,231 Fletcher Challenge Ltd. Forestry Division ........................... 15,796
NZ 43,100 a Fletcher Challenge Paper Ltd. ....................................... 88,823
----------------
1,152,004
----------------
Pakistan 2.4%
PK 327,100 Fauji Fertilizer Co. Ltd. .......................................... 716,099
PK 106,900 a Pakistan Telecom Corp. PTC ......................................... 810,368
US 1,500 a,b Pakistan Telecom Corp. PTC, GDR, 144A ............................... 154,500
----------------
1,680,967
----------------
Philippines 5.3%
PH 2,500,000 a Filinvest Land Inc. ................................................. 1,289,645
PH 17,250 Philippine Long Distance Telephone Co. .............................. 876,672
US 2,080 Philippine Long Distance Telephone Co., ADR ......................... 104,520
PH 90,460 a Philippine National Bank ............................................ 1,348,086
----------------
3,618,923
----------------
Singapore 5.6%
SG 140,200 City Developments Ltd., foreign ..................................... 1,226,762
SG 100,000 Development Bank of Singapore Ltd., foreign ......................... 1,266,273
SG 20,000 G.P. Batteries International Ltd. ................................... 49,400
SG 380,000 Parkway Holdings Ltd., foreign ...................................... 1,135,377
SG 24,700 Singapore Bus Service Ltd., foreign ................................. 186,256
----------------
3,864,068
----------------
South Korea 1.0%
SK 31,500 Pacific Chemical Co. Ltd. .......................................... $ 716,415
----------------
Thailand 6.6%
TH 88,800 Bangkok Bank Public Co. Ltd., foreign ............................... 1,287,441
TH 151,500 Chareon Pokphand Feedmill Public Co. Ltd., foreign .................. 882,192
TH 203,833 Industrial Finance Corp. of Thailand, foreign ....................... 823,584
TH 91,900 a MDX Public Co. Ltd., foreign ........................................ 150,166
TH 11,350 Oriental Hotel Public Co. Ltd., foreign ............................. 53,503
TH 37,140 Thai Farmers Bank Public Co. Ltd. .................................. 283,944
TH 90,860 Thai Farmers Bank Public Co. Ltd., foreign .......................... 1,043,768
----------------
4,524,598
----------------
United States 2.4%
US 35,000 American President Cos. Ltd. ....................................... 835,625
US 13,600 Motorola Inc. ....................................................... 833,000
----------------
1,668,625
----------------
Total Common Stocks & Warrants (Cost $59,637,354) ............. 65,682,226
----------------
Preferred Stocks .1%
US 6,000 Dairy Farm International Holdings Ltd., 6.50%, conv., pfd ........... 5,040
US 13,000 a Jardine Strategic Holdings Ltd., 7.50%, conv., pfd .................. 14,983
----------------
Total Preferred Stocks (Cost $19,260).......................... 20,023
----------------
Total Common Stocks, Warrants
& Preferred Stocks (Cost $59,656,614) ........................ 65,702,249
----------------
Face
Amount
Convertible Bonds .1%
US $ 192,000 MDX Public Co. Ltd., 4.75%, conv., 9/17/03 (Cost $221,564) .......... 101,760
----------------
Total Investments before Repurchase Agreements
(Cost $59,878,178) ........................................... 65,804,009
c Receivables from Repurchase Agreements 4.2% (Cost $2,898,000)
Bank of America, 5.30%, 5/01/96 (Maturity Value $2,898,427)
US 2,910,000 Collateral: U.S. Treasury Notes, 6.125%, 5/01/96 ................... 2,898,000
----------------
Total Investments (Cost $62,776,178) 99.7% ............... 68,702,009
Other Assets and Liabilities, Net 0.3% ................... 198,136
----------------
Net Assets 100.0% ....................................... $68,900,145
================
At April 30, 1996, the unrealized appreciation based on the cost
of investments for income tax purposes of $62,959,899 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost .............................................. $10,394,898
Aggregate gross unrealized depreciation for all investments
which there was an excess of tax cost over value ............................................... (4,469,067)
----------------
Net unrealized appreciation ....................................... $ 5,925,831
================
</TABLE>
CURRENCY LEGEND: AU - Australia
CN - China
HK - Hong Kong
ID - Indonesia
IN - India
JP - Japan
MY - Malaysia
NZ - New Zealand
PH - Philippine
PK - Pakistan
SG - Singapore
SK - South Korea
TH - Thailand
US - United States
*Securities traded in currency of country indicated.
aNon-income producing.
bSee Note 6 regarding Rule 144A securities.
cFace amount for repurchase agreements is for the underlying collateral.
The accompanying notes are an integral part of these financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Statement of Investments in Securities and Net Assets, April 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Shares/ Value
Country* Warrants Franklin International Equity Fund (Note 1)
- ---------------------------------------------------------------------------------------------------------------------------
Common Stocks & Warrants 80.1%
<S> <C> <C> <C>
Argentina 1.4%
AR 47,967 a Ciadea SA........................................................... $ 275,838
US 14,300 Transportadora de Gas del Sur SA, ADR B ............................ 184,113
AR 4,000 YPF Sociedad Anonima ............................................... 88,010
US 13,700 YPF Sociedad Anonima, ADR .......................................... 299,688
----------------
847,649
----------------
Australia 4.6%
AU 15,000 Australia & New Zealand Banking Group Ltd. ......................... 71,660
AU 130,735 Email Ltd. ......................................................... 366,728
AU 86,041 GIO Australia Holdings Ltd. ........................................ 199,440
AU 106,600 National Foods Ltd. ................................................ 134,855
AU 186,700 News International PLC ............................................. 937,986
AU 155,477 Pacific Dunlop Ltd. ................................................ 378,715
AU 241,300 Pioneer International Ltd. ......................................... 733,757
----------------
2,823,141
----------------
Austria .4%
US 1,670 a,b Boehler Uddeholm AG, 144A .......................................... 136,336
AT 2,300 a Mayr-Melnhof Karton AG ............................................. 105,526
----------------
241,862
----------------
Belgium .4%
BE 400 Solvay SA .......................................................... 236,023
----------------
US 32,500 Ace Ltd............................................................. 1,430,000
----------------
Brazil .2%
US 4,200 Companhia Siderurgica Nacional ADR ................................. 118,543
----------------
Canada 2.0%
CA 13,600 Bank of Montreal ................................................... 326,580
CA 10,500 Canadian Imperial Bank of Commerce ................................. 326,161
CA 1,900 Gendis Inc., A ..................................................... 13,953
CA 21,500 Hudsons Bay Co...................................................... 300,771
CA 9,100 London Insurance Group Inc. ........................................ 185,442
CA 9,300 National Bank of Canada ............................................ 75,465
----------------
1,228,372
----------------
China .5%
CH 564,000 a Maanshan Iron & Steel Co. Ltd., H . ................................ 83,847
US 16,500 Shandong Huaneng Power, ADR ........................................ 152,625
China (cont.)
CH 183,000 Shenzhen China Bicycles Co. (Holdings) Ltd., B ..................... $ 31,464
CH 60,000 Yizheng Chemical Fibre Co. Ltd., H.................................. 16,095
----------------
284,031
----------------
Colombia .3%
US 14,100 Banco Ganadero SA, ADR C............................................ 218,550
----------------
Finland 2.6%
FI 9,000 Amer Group Ltd., A ................................................. 167,371
FI 133,200 Enso Gutzeit Oy, R ................................................. 1,059,644
FI 3,400 Nokia AB, pfd. ..................................................... 121,470
FI 15,000 Outokumpu Oy, A..................................................... 262,834
FI 8,400 a Outokumpu Oy, warrants.............................................. 486
----------------
1,611,805
----------------
France 6.4%
FR 1,786 Alcatel Cable SA.................................................... 165,898
FR 6,543 Ecco SA ............................................................ 1,470,038
FR 25,525 a Pechiney SA, A...................................................... 1,202,775
FR 10,738 Societe Elf Aquitane SA ............................................ 798,571
FR 3,532 Total SA, B ........................................................ 239,704
----------------
3,876,986
----------------
Greece 1.4%
US 10,667 b Alpha Credit Bank, 144A ............................................ 533,793
GR 6,850 Ergo Bank SA ....................................................... 344,622
----------------
878,415
----------------
Hong Kong 7.9%
HK 443,000 C.P. Pokphand Co. Ltd. ............................................. 187,554
HK 33,000 Cathay Pacific Airways Ltd. ........................................ 57,592
HK 53,000 Cheung Kong Holdings Ltd. .......................................... 378,547
HK 300,000 CNT Group Ltd. ..................................................... 17,064
HK 63,000 Consolidated Electric Power Asia Ltd. .............................. 104,247
HK 635,000 Dairy Farm International Holdings Ltd. ............................. 590,550
HK 88,000 Hang Lung Development Co. Ltd. ..................................... 166,660
HK 57,200 Jardine Matheson Holdings Ltd. ..................................... 457,600
HK 202,500 Jardine Strategic Holdings Ltd. .................................... 664,200
HK 22,500 a Jardine Strategic Holdings Ltd., warrants........................... 8,550
HK 423,000 Oriental Press Group Ltd. .......................................... 196,859
HK 663,000 Peregrine Investments Holdings Ltd. ................................ 1,024,220
Hong Kong (cont.)
HK 1,045,000 Shun Tak Holdings .................................................. $ 756,512
HK 310,200 Sing Tao Holdings Ltd. ............................................. 183,461
----------------
4,793,616
----------------
India .1%
US 7,800 b Gujarat Narmada Valley Fertilizers Co. Ltd., GDR, 144A.............. 62,439
----------------
Indonesia .1%
ID 22,500 PT Barito Pacific Timber, foreign .................................. 22,659
----------------
Italy 1.6%
IT 23,300 a Banco di Sardegna SPA, di Risp...................................... 173,164
IT 42,840 Cartiere Burgo SPA ................................................. 244,415
IT 44,600 Sasib SPA, di Risp.................................................. 87,038
IT 63,700 a Sirti SPA........................................................... 400,688
IT 20,000 a Unione Cementi Marchino Emiliane (Unicem), di Risp.................. 61,442
----------------
966,747
----------------
Luxembourg .4%
LU 2,200 a Arbed SA............................................................ 239,708
----------------
Mexico 1.5%
MX 56,300 a Consorcio G Grupo Dina SA de CV..................................... 36,372
US 3,200 a Consorcio G Grupo Dina SA de CV, ADR................................ 8,800
US 18,000 Telmex-Telefonos de Mexico SA, L, ADR............................... 612,000
MX 109,200 Vitro SA............................................................ 251,322
----------------
908,494
----------------
Netherlands 9.0%
NL 8,600 a ABN AMRO NV......................................................... 445,182
NL 2,380 Akzo Nobel NV....................................................... 276,405
NL 11,400 DSM NV ............................................................. 1,164,284
NL 20,031 Ing Groep NV ....................................................... 1,546,601
NL 11,900 a Koninklijke Bijenkorf Beheer NV (KBB)............................... 795,185
NL 2,940 a NV Holdingsmij de Telegraaf......................................... 525,031
NL 21,200 Philips Electronics NV.............................................. 748,526
----------------
5,501,214
----------------
New Zealand .8%
NZ 13,600 Fisher & Paykel Ltd. ............................................... 44,657
NZ 329,000 Fletcher Challenge Ltd. Forestry Division........................... 424,892
----------------
469,549
----------------
Norway 2.9%
NO 1,100 a Elkem AS ........................................................... $ 14,563
NO 20,900 a Fokus Bank AS....................................................... 112,586
NO 43,132 a Hafslund Nycomed SA, B.............................................. 1,204,392
NO 11,000 a Helikopter Services Group ASA....................................... 124,704
NO 17,000 a Unitor AS........................................................... 287,147
----------------
1,743,392
----------------
Peru .4%
PE 114,000 Telefonica de Peru, B............................................... 254,883
----------------
Portugal .7%
PT 17,400 BPI Socieda de Gestora de Participacoes Socias SA................... 216,793
US 15,000 b Portucel Industrial Empresa Product Celulose, ADR, 144A............. 90,816
PT 20,800 a Sociedade Construcoes Soares da Costa SA............................ 141,839
----------------
449,448
----------------
KR 4,190 Byucksan Development Co. Ltd. ...................................... 67,298
KR 3,540 Daegu Bank Co. Ltd.................................................. 62,681
KR 2,280 Daehan Synthetic Fiber Co. Ltd. .................................... 294,430
KR 4,230 Pohang Iron & Steel Co. Ltd. ....................................... 401,123
----------------
825,532
----------------
Spain 7.4%
ES 15,750 Banco Bilbao Vizcaya ............................................... 598,673
ES 2,500 Banco de Andalucia ................................................. 341,981
ES 850 Banco Popular Espanol .............................................. 140,865
ES 60,600 Compania Sevillana de Electricidad ................................. 507,382
ES 6,000 Dragados y Construcciones SA ....................................... 82,547
ES 131,700 Iberdrola SA ....................................................... 1,289,045
ES 80,600 Telefonica de Espana SA ............................................ 1,435,212
ES 4,000 Unipapel SA ........................................................ 82,704
----------------
4,478,409
----------------
Sweden 9.3%
SE 1,300 Autoliv............................................................. 70,907
SE 44,600 a Celsius AB, B ...................................................... 1,209,750
SE 13,800 a Electrolux AB, B ................................................... 695,742
SE 13,100 a Esselte AB, B ...................................................... 262,635
SE 5,400 SKF AG, A .......................................................... 122,989
SE 5,000 a Stadshypotek AB, A ................................................. 109,087
US 12,000 a,b Stadsyhpotek AS, A, 144A ........................................... 261,810
SE 56,000 Stena Line AB, B.................................................... 301,317
Sweden (cont.)
SE 64,500 Stora Kopparbergs Bergslags AB, B................................... $ 865,255
SE 27,650 Svenska Handelsbanken, A............................................ 566,569
SE 52,400 Volvo AB, B......................................................... 1,201,171
----------------
5,667,232
----------------
Switzerland 5.0%
CH 180 Baloise-Holding..................................................... 386,372
CH 510 a BBC Brown Boveri Ltd................................................ 614,522
CH 740 Bucher Holding AG................................................... 554,307
CH 600 Ciba-Geigy AG ...................................................... 696,388
CH 200 Kuoni Reisen Holding AG, B ......................................... 402,722
CH 600 SMH AG ............................................................. 402,561
----------------
3,056,872
----------------
Thailand .1%
TH 1,100 Chareon Pokphand Feedmill Public Co. Ltd., foreign.................. 6,405
----------------
Turkey .4%
TR 484,800 Tofas Turk Otomobil Fabrikasi AS, GDR .............................. 254,520
----------------
United Kingdom 8.6%
GB 587,100 Albert Fisher Group Plc............................................. 451,064
GB 91,700 Anglian Group Plc................................................... 225,171
GB 101,400 Argyll Group Plc.................................................... 507,145
GB 469,200 a Cordiant Plc........................................................ 954,219
GB 198,900 Hillsdown Holdings Plc.............................................. 536,345
GB 75,400 Kwik Save Group Plc................................................. 537,265
GB 60,000 Lex Service Plc..................................................... 329,914
GB 154,800 London Pacific Group Ltd............................................ 592,326
GB 179,075 Meggitt Plc......................................................... 256,280
GB 18,694 National Westminster Bank Plc....................................... 172,490
GB 444,000 a Raine Plc .......................................................... 125,412
GB 21,300 Thames Water Group Plc.............................................. 184,182
GB 91,000 Wace Group Plc ..................................................... 368,765
----------------
5,240,578
----------------
Total Common Stocks and Warrants (Cost $43,172,779)........... 48,737,074
----------------
Preferred Stocks .1%
NL 216 ABN Amro NV, conv., pfd............................................. 10,526
US 10,000 a Jardine Strategic Holdings Ltd., 7.50%, conv., pfd.................. 11,525
----------------
Total Preferred Stocks (Cost $17,657)......................... 22,051
----------------
Total Common Stocks, Warrants and Preferred Stocks
(Cost $43,190,436)........................................... 48,759,125
----------------
Convertible Bond .4%...............................................
US $ 250,000 Amer Group Ltd., 6.25%, conv., 6/15/03 (Cost $248,654).............. $ 230,000
----------------
Total Investment before Repurchase Agreement
(Cost $43,439,090)........................................... 48,989,125
----------------
c Receivables from Repurchase Agreements 19.2%
SBC Capital Markets Inc., 5.28%, 5/01/96 (Maturity Value $11,673,712)
US 11,545,000 Collateral: U.S. Treasury Notes, 7.50%, 1/31/97 (Cost $11,672,000). 11,672,000
----------------
Total Investments (Cost $55,111,090) 99.8%............... 60,661,125
Other Assets and Liabilities, Net .2% ................... 145,237
----------------
Net Assets 100.0%........................................ $60,806,362
================
At April 30, 1996, the net unrealized appreciation based on the cost
of investments for income tax purposes of $55,203,227 was as follows:
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost ..................... $10,310,783
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value...................... (4,760,748)
----------------
Net unrealized appreciation ...................................... $ 5,550,035
================
</TABLE>
CURRENCY LEGEND:
AR - Argentina
AU - Australia
AT - Austria
BE - Belgium
CA - Canada
CH - Switzerland
CN - China
ES - Spain
FI - Finland
FR - France
GB - United Kingdom
GR - Greece
HK - Hong Kong
ID - Indonesia
IT - Italy
KR - South Korea
LU - Luxembourg
MX - Mexico
NL - Netherlands
NO - Norway
NZ - New Zealand
PE - Peru
PT - Portugal
SE - Sweden
TH - Thailand
TR - Turkey
US - United States
*Securities traded in currency of country indicated.
aNon-income producing.
bSee Note 6 regarding Rule 144A securities.
cFace amount for repurchase agreements is for the underlying collateral.
The accompanying notes are an integral part of these financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements
Statements of Assets and Liabilities
April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
Templeton Franklin
Pacific International
Growth Fund Equity Fund
---------- ----------
Assets:
Investments in securities:
<S> <C> <C>
At identified cost............................................................... $59,878,178 $43,439,090
=========== ==========
At value......................................................................... 65,804,009 48,989,125
Receivables from repurchase agreements, at value and cost......................... 2,898,000 11,672,000
Cash.............................................................................. -- 50,397
Receivables:
Dividends and interest........................................................... 372,207 280,710
Capital shares sold.............................................................. 233,620 205,968
Investments securities sold...................................................... 11,321 7,246
Unamortized organization costs (Note 2)........................................... 2,561 2,561
----------- ----------
Total assets................................................................ 69,321,718 61,208,007
----------- ----------
Liabilities:
Payables:
Capital shares repurchased ..................................................... 167,267 183,341
Distribution fees .............................................................. 90,084 83,567
Management fees................................................................. 55,879 50,824
Accrued expenses and other liabilities .......................................... 108,343 83,913
----------- ----------
Total liabilities .......................................................... 421,573 401,645
---------- ----------
Net assets, at value ............................................................. $68,900,145 $60,806,362
========== ==========
Net assets consist of:
Undistributed net investment income.............................................. $ 8,546 $ 329,946
Unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies..................... 5,925,831 5,550,035
Undistributed net realized gain (loss) from investments and
foreign currency transactions................................................... 813,241 (78,559)
Capital shares .................................................................. 44,534 44,526
Additional paid-in capital ...................................................... 62,107,993 54,960,414
---------- ----------
Net assets, at value ............................................................. $68,900,145 $60,806,362
========== ==========
Shares outstanding ............................................................... 4,453,423 4,452,614
========== ==========
Net asset value per share ........................................................ $15.47 $13.66
========== ==========
Representative computation of net asset value and offering price per share:
Net asset value and redemption price per share
(Pacific Growth) ($68,900,145 / 4,453,423)...................................... $15.47
==========
Maximum offering price (100/95.5 of $15.47)....................................... $16.20
==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST Financial Statements (cont.)
Statements of Operations
for the six months ended April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
Templeton Franklin
Pacific International
Growth Fund Equity Fund
--------- ---------
Investment Income:
<S> <C> <C>
Dividends, net of foreign taxes withheld of $43,931and $81,005, respectively....... $ 670,875 $ 652,789
Interest .......................................................................... 121,005 255,979
--------- ---------
Total income.................................................................. 791,880 908,768
--------- ---------
Expenses:
Management fees (Note 5) .......................................................... 292,177 269,524
Distribution fees (Note 5) ........................................................ 73,214 67,578
Shareholder servicing costs (Note 5) .............................................. 46,000 34,000
Registration fees ................................................................. 27,000 12,000
Custodian fees .................................................................... 14,000 12,200
Reports to shareholders ........................................................... 23,000 7,500
Professional fees.................................................................. 12,800 16,384
Amortization of organization cost (Note 2) ........................................ 3,218 3,218
Other ............................................................................. 1,020 35,231
--------- ---------
Total expenses................................................................ 492,429 457,635
--------- ---------
Net investment income ....................................................... 299,451 451,133
--------- ---------
Realized and unrealized gain (loss) from investments and foreign currency:
Net realized gain (loss) from:
Investments....................................................................... (371,090) 1,282,766
Foreign currency transactions .................................................... (14,897) (19,893)
Net unrealized appreciation on investments ........................................ 8,720,245 5,052,916
--------- ---------
Net realized and unrealized gain on investments and foreign currency................ 8,334,258 6,315,789
--------- ---------
Net increase in net assets resulting from operations ............................... $8,633,709 $6,766,922
========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST Financial Statements (cont.)
Statements of Changes in Net Assets for the six months ended April 30, 1996
(unaudited) and the year ended October 31, 1995
<TABLE>
<CAPTION>
Templeton Pacific Franklin International
Growth Fund Equity Fund
-------------------------------- ---------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
April 30, 1996 October 31, 1995 April 30, 1996 October 31, 1995
-------------- ---------------- -------------- ----------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income ............................. $ 299,451 $ 547,816 $ 451,133 $ 955,251
Net realized gain (loss) from investments and
foreign currency transactions .................... (385,987) 3,572,422 1,262,873 2,488,660
Net unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign currencies..... 8,720,245 (7,167,675) 5,052,916 (3,042,612)
---------- ----------- ---------- -----------
Net increase (decrease) in net assets
resulting from operations ................... 8,633,709 (3,047,437) 6,766,922 401,299
Distributions to shareholders from:
Undistributed net investment income................ (494,066) (584,289) (554,144) (755,317)
Net realized capital gains ........................ (2,312,455) (1,040,435) (3,821,934) (2,401,292)
Increase (decrease) in net assets from capital share
transactions (Note 3).............................. 12,826,073 (3,321,764) 7,468,096 (4,151,357)
---------- ----------- ---------- -----------
Net increase (decrease) in net assets ........ 18,653,261 (7,993,925) 9,858,940 (6,906,667)
Net assets:
Beginning of period................................ 50,246,884 58,240,809 50,947,422 57,854,089
---------- ----------- ---------- ----------
End of period ..................................... $68,900,145 $50,246,884 $60,806,362 $50,947,422
========== =========== ========== ===========
Undistributed net investment income included in net assets:
Beginning of period............................... $ 203,161 $ 231,385 $ 432,957 $ 239,703
=========== =========== =========== ==========
End of period..................................... $ 8,546 $ 203,161 $ 329,946 $ 432,957
=========== =========== =========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton International Trust (the Trust), formerly Franklin
International Trust, is an open-end management investment company (mutual fund)
registered under the Investment Company Act of 1940, as amended. The Trust
currently has two separate diversified Funds (the Funds) consisting of the
Templeton Pacific Growth Fund (the Pacific Fund), formerly Franklin Pacific
Growth Fund, and the Franklin International Equity Fund (the International
Fund). Each of the Funds issues a separate series of shares and maintains a
totally separate investment portfolio.
The Pacific Fund seeks to provide long-term growth of capital by investing in
equity securities of which at least 65% trade on markets in the Pacific Rim. The
International Equity Fund seeks to provide long-term growth of capital by
investing in an internationally diversified portfolio of equity securities, of
which at least 65% trade on markets in countries other than the United States.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Securities Valuations:
Portfolio securities listed on a securities exchange or on the NASDAQ National
Market System for which market quotations are readily available are valued at
the last quoted sale price of the day or, if there is no such reported sale,
within the range of the most recent quoted bid and ask prices. Other securities
for which market quotations are readily available are valued at current market
values, obtained from pricing services, which are based on a variety of factors,
including recent trades, institutional size trading in similar types of
securities (considering yield, risk and maturity) and/or developments related to
specific securities. Portfolio securities which are traded both on the
over-the-counter market and on a securities exchange are valued according to the
broadest and most representative market as determined by the Manager. Other
securities for which market quotations are not available, if any, are valued in
accordance with procedures established by the Board of Trustees.
The value of a foreign security is determined as of the close of trading on the
foreign exchange on which it is traded or as of the close of trading on the New
York Stock Exchange, if that is earlier, and that value is then converted into
its U.S. dollar equivalent at the foreign exchange rate in effect at noon, New
York time, on the day the value of the foreign security is determined. If no
sale is reported at that time, the mean between the current bid and asked price
is used. Occasionally, events which affect the values of foreign securities and
foreign exchange rates may occur between the times at which they are determined
and the close of the exchange and will, therefore, not be reflected in the
computation of the Fund's net asset value, unless material. If events which
materially affect the value of these foreign securities occur during such
period, then these securities will be valued in accordance with procedures
established by the Board of Trustees.
b. Income Taxes:
The Trust intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from income and excise taxes. Therefore, no income tax provision is required.
Each Fund is treated as a separate entity in the determination of compliance
with the Internal Revenue Code.
c. Security Transactions:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
d. Investment Income, Expenses and Distributions:
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income and estimated expenses are accrued daily. Bond
discount, if any, is amortized as required by the Internal Revenue Code.
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions.
e. Expense Allocation:
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. In all other
respects, expenses are charged to each Fund as incurred on a specific
identification basis.
f. Foreign Currency Translation:
The accounting records of the Trust are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies are translated into U.S.
dollars at the rate of exchange of such currencies against U.S. dollars on the
date of the valuation. Purchases and sales of securities, income and expenses
are translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are recognized when reported by the custodian
bank.
The Trust does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from fluctuations arising
from changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized between the trade date and settlement dates on securities
transactions, the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Trust's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at the end of the period,
resulting from changes in exchange rates.
g. Repurchase Agreements:
The Trust, through its custodians, receives delivery of the underlying
securities, whose market is required to be at least 102% of the resale price at
the time of purchase. The Trust's investment advisor, Franklin Advisers, Inc.,
is responsible for determining that the value of these underlying securities
remains at least equal to the resale price.
h. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. UNAMORTIZED ORGANIZATION COSTS
The organization costs of each Fund are amortized on a straight-line basis over
a period of five years from September 20, 1991 (the effective day of the
registration under the Securities Act of 1933). In the event Franklin Resources,
Inc. (which was the sole shareholder prior to September 20, 1991) redeems its
shares within the five year period, the pro-rata share of the then unamortized
deferred organization costs will be deducted from the redemption price paid to
Franklin Resources, Inc.
2. UNAMORTIZED ORGANIZATION COSTS (cont.)
New investors purchasing shares of the Funds subsequent to that date bear such
costs during the amortization period only as such charges are accrued daily
against investment income.
3. TRUST SHARES
At April 30, 1996, there were an unlimited number of $.01 par value shares of
beneficial interest authorized. Transactions in each of the Fund's shares for
the six months ended April 30, 1996 and the year ended October 31, 1995 were as
follows:
<TABLE>
<CAPTION>
Templeton Pacific Franklin International
Growth Fund Equity Fund
------------------- -------------------
Shares Amount Shares Amount
-------- ---------- --------- -----------
Six months ended April 30, 1996
<S> <C> <C> <C> <C>
Shares sold................................................. 3,633,718 $53,138,199 1,330,533 $17,234,145
Shares issued in reinvestment of distributions.............. 184,577 2,517,704 323,123 3,906,552
Shares redeemed............................................. (2,924,954) (42,829,830) (1,053,305) (13,672,601)
---------- ----------- ---------- -----------
Net increase................................................ 893,341 $12,826,073 600,351 $ 7,468,096
======== ========== ========= ===========
Year ended October 31, 1995
Shares sold................................................. 4,017,142 $56,565,202 1,733,195 $22,333,889
Shares issued in reinvestment of distributions.............. 102,552 1,423,427 221,229 2,728,090
Shares redeemed............................................. (4,341,319) (61,310,393) (2,284,213) (29,213,336)
---------- ----------- --------- -----------
Net decrease................................................ (221,625)$ (3,321,764) (329,789) $ (4,151,357)
======== ========== ========= ===========
4. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and sales of securities (excluding purchases and sales of
short-term securities) for the six months ended April 30, 1996 were as follows:
Templeton Franklin
Pacific International
Growth Fund Equity Fund
--------- ---------
<S> <C> <C>
Purchases ............................................................................ $13,951,953 $3,440,357
========== ==========
Sales ................................................................................ $ 2,851,099 $6,143,980
========== ==========
</TABLE>
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Under the terms of a management agreement, Franklin Advisers, Inc. ("Advisers"),
provides investment advice, office space and facilities to each Fund and
receives fees computed monthly on the average daily net assets of each Fund at
an annualized rate of 1% of the first $100 million of net assets; 9/10 of 1% of
net assets in excess of $100 million up to and including $250 million; 8/10 of
1% of net assets in excess of $250 million up to and including $500 million; and
3/4 of 1% of net assets in excess of $500 million. Under a subadvisory
agreement, Templeton Investment Counsel, Inc. ("TICI" or the "Subadviser"), an
indirect subsidiary of Templeton Worldwide, Inc., (Worldwide) which is a direct,
wholly-owned subsidiary of Franklin Resources, Inc.(Resources) receives from the
Advisers a fee equal to an annual rate of 1/2 of 1% of the value of each Fund's
net assets up to and including $100 million; 2/5 of 1% of net assets in excess
of $100 million up to and including $250 million; 3/10 of 1% of net assets in
excess of $250 million up to and including $500 million; and 1/4 of 1% of net
assets in excess of $500 million. The terms of these agreements provide that
aggregate annual expenses of the Funds be limited to the extent necessary to
comply with the limitations set forth in the laws, regulations, and
administrative interpretations of the states in which the Funds' shares are
registered. For the six months ended April 30, 1996, the Funds' expenses did not
exceed these limitations.
Pursuant to a shareholder service agreement with Franklin Templeton Investor
Services, Inc., (Investor Services) the Funds pay costs on a per shareholder
account basis. Such costs incurred for the six months ended April 30, 1996
aggregated $80,000.
Under the terms of distribution plans pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plans), the Funds will reimburse Distributors, in an
amount up to 0.25% per annum of the Funds' average daily net assets for cost
incurred in the promotion, offering, and marketing of the Funds' shares. Fees
incurred under the Plans aggregated $140,792 for the six months ended April 30,
1996.
In its capacity as underwriter for the shares of the Trust, Franklin Templeton
Distributors, Inc.(Distributors) receives commissions on sales of the Trust's
shares. Commissions are deducted from the gross proceeds received from the sale
of the shares of the Trust (the Plans) and as such are not expenses of the
Funds. Commissions received by Franklin Templeton Distributors, Inc. and the
amounts which were subsequently paid to other dealers for the six months ended
April 30, 1996 were as follows:
<TABLE>
<CAPTION>
Templeton Franklin
Pacific International
Growth Fund Equity Fund
--------- --------
<S> <C> <C>
Total commissions received ............................................................. $231,737 $185,799
========= ========
Paid to other dealers .................................................................. $205,868 $164,676
========= ========
</TABLE>
Certain officers and trustees of the Trust are also officers and/or directors of
Distributors, Advisers, Worldwide, TICI and Investor Services, all wholly-owned
subsidiaries of Resources.
6. RULE 144A SECURITIES
Rule 144A provided a non-exclusive safe harbor exemption from registration
requirements of the Securities Act of 1933 for specified resales of restricted
securities to qualified institutional investors. The Funds value these
securities as disclosed in Note 1. See the accompanying Statement of Investments
and Net Assets for specific information on such securities.
At April 30, 1996, 144A securities were held as follows:
<TABLE>
<CAPTION>
Templeton Franklin
Pacific International
Growth Fund Equity Fund
-------- --------
<S> <C> <C>
Value .................................................................................. $794,425 $1,085,194
======== ========
Ratio of value to net assets ........................................................... 1.15% 1.78%
======== ========
7. FINANCIAL HIGHLIGHTS
Select data for each share of beneficial interest outstanding throughout each
period, by Fund, are as follows:
Per Share Operating Performance Ratios/Supplemental Data
------------------------------------------------------ -----------------------------------
Ratio
Net Total Distri- of Net
Realized From butions Distri- Net Net Ratio of Invest-
Net Asset Net & Unreali- Invest- From Net butions Asset Assets Expenses ment
Year Value at Invest- zed Gain ment Invest- From Total Value at End to Average Income to Portfolio
Ended Beginning ment (Loss) on Opera- ment Capital Distri- At End Total of Year Net Average Turnover
Oct. 31 of Year Income Securities tions Income Gains butions of Year Return++(in 000's)Assets Net Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Fund
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991+ $10.01 $.06 $ -- $.060 $ -- $ -- $ -- $10.07 .60% $ 1,165 --%** 5.01%* --%
1992 10.07 .14 .836 .976 (.146) -- (.146 10.90 9.77 5,724 .29** 1.80 62.96
1993 10.90 .19 3.825 4.015 (.193) (.282) (.475) 14.44 38.46 22,619 .50** 2.03 47.52
1994 14.44 .21 1.008 1.218 (.198) (.060) (.258) 15.40 8.46 58,241 1.22** 1.54 9.16
1995 15.40 .15 (1.013) (.863) (.156) (.271) (.427) 14.11 (5.54) 50,247 1.72 1.04 36.21
1996+++ 14.11 .08 2.075 2.155 (.140) (.655) (.795) 15.47 16.03 68,900 1.66* 1.02* 5.15
Franklin International Equity Fund
1991+ 10.01 .06 -- .060 -- -- -- 10.07 .60 1,286 --** 4.92* --
1992 10.07 .19 (.038) .152 (.202) -- (.202) 10.02 1.46 6,944 .29** 2.36 48.78
1993 10.02 .42 2.253 2.673 (.413) -- (.413) 12.28 27.40 19,217 .50** 4.22 52.99
1994 12.28 .23 1.540 1.770 (.220) -- (.220) 13.83 14.56 57,854 1.22** 1.99 21.80
1995 13.83 .25 (.077) .173 (.190) (.588) (.778) 13.23 1.75 50,947 1.63 1.86 9.12
1996+++ 13.23 .10 1.435 1.535 (.145) (.960) 1.105) 13.66 13.03 60,806 1.69* 1.66* 7.62
</TABLE>
*Annualized
+For the period September 20, 1991 (effective date of registration) to October
31, 1991.
++Total return measures the changes in value of an investment over the periods
indicated. It does not include the maximum initial sales charge and assumes
reinvestment of dividends and capital gains, if any, at net asset value and is
not annualized.
+++For the six months ended April 30, 1996.
**During the periods indicated below, Franklin Advisers, Inc., the investment
manager, agreed to waive in advance a portion of its management fees. Had such
action not been taken, ratios of expenses to average net assets would have been
as follows:
Ratio of expenses to
average net assets
-------------------
Templeton Pacific Growth Fund
1991 .................................. 2.50%*
1992 .................................. 2.50
1993 .................................. 2.31
1994 .................................. 1.72
Ratio of expenses to
average net assets
-------------------
Franklin International Equity Fund
1991 .................................. 2.50%*
1992 .................................. 2.50
1993 .................................. 2.27
1994 .................................. 1.76
Franklin International Trust
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This chart shows in pie chart format the fund's geographic distribution on April
30, 1996 as a percentage of the fund's total net assets.
Templeton Pacific Growth Fund
Geographic Distribution on 4/30/96
Based on Total Net Assets
Hong Kong 27.2%
Japan 21.1%
Australia 9.9%
Thailand 6.7%
Singapore 5.6%
Philippines 5.3%
Indonesia 4.8%
Malaysia 4.4%
China 2.8%
Pakistan 2.4%
United States 2.4%
Other Countries 2.9%
Short-Term Obligations & Other Net Assets 4.5%
GRAPHIC MATERIAL (2)
This chart shows in pie chart format the geographic distribution on April 30,
1996 as a percentage of the fund's total net assets.
Franklin International Equity Fund
Geographic Distribution on 4/30/96
Based on Total Net Assets
Europe 56.6%
Asia 10.3%
Australia & New Zealand 5.4%
North America 4.4%
Latin America 3.9%
Short-Term Obligations & Other Net Assets 19.4%
