LETTER TO SHAREHOLDERS
CONTENTS
Shareholder Letter 1
Fund Reports
Templeton Pacific
Growth Fund 3
Templeton Foreign Smaller
Companies Fund 16
Financial Highlights
and Statement of
Investments 28
Financial Statements 43
Notes to
Financial Statements 47
Report of
Independent Accountants 52
Tax Designation 53
Dear Shareholder:
We are pleased to bring you the seventh annual report for the Franklin Templeton
International Trust, which covers the fiscal year ended October 31, 1997. The
Trust consists of the Templeton Pacific Growth Fund and the Templeton Foreign
Smaller Companies Fund.
During the reporting period, stable interest rates, strong corporate earnings,
and relatively low inflation levels characterized many economies around the
world, and several international securities markets rose. However, not all
equity markets performed well. Notably, some Asian countries suffered
significant losses. And regardless of overall performance, many markets
experienced extreme volatility along the way. For instance, during the week
beginning October 27, 1997, Hong Kong's Hang Seng Index fell nearly 6% (Monday),
tumbled by almost 14% (Tuesday), climbed approximately 19% (Wednesday), fell
nearly 4% (Thursday), and finally rose about 3% (Friday).* As always, it is
important to remember that volatility is a normal part of investing and that
markets will experience ups and downs. Over the long term, however, stocks have
historically provided impressive results. We therefore urge you to focus on
achieving your long-term investment goals, rather than concentrating on
short-term market cycles.
On the following pages, you will find detailed discussions about the Templeton
Pacific Growth Fund and the Templeton Foreign Smaller Companies Fund. Although
the funds have different investment objectives and strategies, their managers
share a dedication to the principles of careful stock selection, broad
diversification, and constant professional supervision. For information about
how market conditions and management strategies have affected the funds'
performance, please refer to the individual reports following this letter.
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
*Source: Bloomberg. Index is unmanaged. Change measured in local currency terms.
One cannot invest directly in an index.
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 12 months under review, Southeast Asian financial markets experienced
severe volatility. On July 2, 1997, the Thai government, after months of
attempting to ward off speculative attacks on its currency, devaluated the Thai
baht and delinked it from the U.S. dollar. This move prompted similar attacks on
the Philippine peso, the Malaysian ringgit, and the Indonesian rupiah. The
virulence with which the attacks spread surprised virtually the entire
investment community. It also served to highlight macroeconomic problems, such
as slowing growth in exports, rising deficits, overvalued property markets, and
weak banking systems, faced by many Southeast Asian nations.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Templeton Pacific
Growth Fund
Top 10 Industries
10/31/97
% of Total
Industry Net Assets
Transportation 10.6%
Multi-Industry 9.5%
Banking 9.3%
Real Estate 9.0%
Electrical & Electronics 4.8%
Telecommunications 4.5%
Construction & Housing 3.5%
Insurance 3.2%
Forest Products & Paper 3.2%
Chemicals 3.1%
This currency turmoil was reflected in the downward slide of many Pacific Rim
stock markets during the fiscal year. Hardest hit were those of Thailand, which
fell 59%, the Philippines, 45%, and Malaysia, 41%.1 Not even the economies of
Hong Kong, Singapore, and Taiwan were immune to volatility. Within this
environment, the Fund's Class I shares delivered a cumulative total return of
- -24.42%, as discussed in the Performance Summary on page 7.
As you can see from the chart on page 3, Hong Kong continued to be the Fund's
largest geographic exposure, representing 26.8% of total net assets on October
31, 1997. During most of the period under review, its economy remained robust,
although its stock market did experience volatility. In fact, on October 23,
1997, the Hang Seng Index suffered a decline of 9.9% in U.S. dollar terms, which
put it down nearly 30% for the month and off almost 35% since August.2 Believing
its stock was undervalued, we added to our position in Hong Kong Ferry
Holdings,3 which operates ferry and related businesses, and is involved with
other activities such as property investment and travel and hotel operations.
1. Source: Bloomberg. Price depreciation is measured in U.S. dollars and
includes reinvested dividends.
2. Source: Bloomberg. Index is unmanaged and includes reinvested dividends.
Change measured in U.S. dollar terms. One cannot invest directly in an index.
3. A complete listing of all stocks in the portfolio as of October 31, 1997,
begins on page 31.
4. Source: Bloomberg. Based on quarterly percentage price change over 15 years
ended September 30, 1997.
Despite an extremely strong 1997 for China's economy, we were seeing signs of a
slowdown by the end of the reporting period. In the coming year, restructuring
of the state-owned enterprise sector could cause further slowing, and Asian
currency devaluations may affect China's competitive position in exports. During
the period, we sold our shares of Beijing Yanhua Petrochemicals for a profit.
During the reporting period, we initiated a position in Tata Engineering &
Locomotive Co. Ltd., an Indian manufacturer of commercial automotive vehicles,
which we considered undervalued. And we sold our position in Brambles Industries
Ltd., based in Australia, because its stock reached our sell-price target.
At the end of the period, we believed that although Southeast Asian markets
could experience further declines, they could provide excellent opportunities
for purchasing shares of companies unfairly punished by generalized fear
concerning the economic circumstances of these countries. In our opinion, the
Pacific Rim continues to offer a variety of investment opportunities and the
economies of these countries are storehouses of value in the long run. However,
macroeconomic performance and varying government responses indicated that the
economic recoveries in this region may not be uniform. We believe that Thailand
and Japan probably have a long road ahead of them, while Indonesia could recover
more rapidly. Asian currency crises have prompted many emerging market
governments in the region to take steps designed to increase the rewards and
reduce the risks of investing there, and we look forward to reaping the
long-term benefits of recent declines in prices of Pacific Rim equities.
Templeton Pacific
Growth Fund
Top 10 Holdings
10/31/97
Company, % of Total
Industry, Country Net Assets
Hong Kong
Telecommunications Ltd., 2.7%
Telecommunications, Hong Kong
Cheung Kong Holdings Ltd., 2.7%
Multi-Industry, Hong Kong
Sun Hung Kai Properties Ltd., 2.6%
Real Estate, Hong Kong
New World Development Ltd., 2.3%
Real Estate, Hong Kong
East Japan Railway, C, 2.2%
Transportation, Japan
Development Bank 2.1%
of Singapore Ltd.,
Banking, Singapore
HSBC Holdings Plc., 2.0%
Banking, Hong Kong
Coles Myer Ltd., 2.0%
Merchandising, Australia
Jardine Matheson 2.0%
Holdings Ltd.,
Multi-Industry, Hong Kong
Parkway Holdings Ltd., 1.9%
Real Estate, Singapore
For a complete list of portfolio holdings, please see page 31 of this report.
"We look forward to reaping the long-term benefits of recent declines in prices
of Pacific Rim equities."
Please remember, this discussion reflects our views and opinions as of October
31, 1997, the end of the reporting period. However, market and economic
conditions are changing constantly which may affect our strategies and portfolio
holdings. Although historic performance is no guarantee of future results, these
insights may help you understand our investment and management philosophy.
There are, of course, special risks involved with investing in a portfolio of
securities concentrated in a single geographic region that also contains
emerging markets. These risks include market and currency volatility, economic,
social, and political uncertainty, and in some cases the relatively small size
and lesser liquidity of these markets. Investing in any emerging market means
accepting a certain amount of volatility and, in some cases, severe market
corrections. 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 1,523% in the last 15 years, but has suffered four
declines of more than 20% during that time.4
Class I
The Templeton Pacific Growth Fund - Class I provided a -24.42% cumulative total
return for the one-year period ended October 31, 1997. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, if any, and does not include the sales charge.
However, 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 on page 9, the Fund's Class Ishares
produced a cumulative total return of more than 31% since its inception on
September 20, 1991.
The Fund's Class Ishare price decreased $3.62, from $14.50 on October 31, 1996,
to $10.88 on October 31, 1997. During the reporting period, shareholders
received per-share distributions of 11.0 cents ($0.110) in income dividends.
Distributions will vary depending on income earned by the Fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the Fund's operating expenses.
The graph on page 8 compares the performance of the Templeton Pacific Growth
Fund - Class I and the Morgan Stanley Capital International(R) (MSCI) Pacific
Index since the Fund's inception on September 20, 1991. The MSCI Pacific Index
includes approximately 525 companies in Australia, Hong Kong, Japan, New
Zealand, Singapore, and Malaysia.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Keep in mind that an unmanaged market index has inherent performance
differentials in comparison with any fund. An index doesn't pay management fees
to cover salaries of security analysts or portfolio managers, or pay commissions
or market spreads to buy and sell securities. Unlike an index, mutual funds are
never 100% invested because they need to have cash on hand to redeem shares. In
addition, the performance shown for the Fund includes the maximum initial sales
charge, all Fund expenses and account fees. The index's performance would have
been lower if the Fund's costs had been applied to it. Please remember that an
index is simply a measure of performance, and one cannot invest in it directly.
Templeton Pacific Growth Fund - Class I
Periods ended 10/31/97
Since
Inception
One-Year Three-Year Five-Year (9/20/91)
Cumulative Total Return1-24.42% -20.56% 19.30% 31.74%
Average Annual
Total Return2 -28.74% -9.20% 2.37% 3.60%
Value of $10,000
Investment3 $7,126 $7,487 $11,249 $12,416
10/31/93 10/31/94 10/31/95 10/31/96 10/31/97
One-Year Total
Return4 38.46% 8.46% -5.54% 11.27% -24.42%
1. Cumulative total return represents the change in value of an investment over
the indicated periods and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods and includes the maximum 5.75% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the indicated periods and include the maximum 5.75% initial sales
charge.
4. One-year total return represents the change in value of an investment over
the indicated periods ended on the specified dates and does not include the
sales charge.
Note: Total returns have been restated to reflect the current maximum initial
sales charge: 5.75%. Prior to January 1, 1997, Fund shares were offered at a
lower initial sales charge. Thus, actual returns would have been higher. All
calculations assume reinvestment of dividends and capital gains at net asset
value. Past expense waivers by the Fund's manager increased the Fund's total
returns. Without these waivers, the Fund's total returns would have been lower.
Investment return and principal value will fluctuate with market conditions,
currency volatility and the social, economic and political climates of countries
where investments are made. Emerging markets involve heightened risks related to
the same factors, in addition to those associated with the relatively small size
and lesser liquidity of these markets. You may have a gain or loss when you sell
your shares.
Class II
Templeton Pacific Growth Fund - Class II produced a cumulative total return of
- -28.28% from January 2, 1997 (commencement of sales), through October 31, 1997.
Cumulative total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains, and does not include sales charges.
The Fund's Class II share price decreased $4.29, from $15.10 on January 2, 1997
(commencement sales) to $10.81 on October 31, 1997. During the reporting period,
shareholders received per-share distributions of 2.8 cents ($0.028) in income
dividends. Distributions will vary depending on income earned by the Fund and
any profits realized from the sale of securities in the portfolio, as well as
the level of the Fund's operating expenses.
The graph on page 12 compares the performance of the Templeton Pacific Growth
Fund - Class II and the Morgan Stanley Capital
International(R) (MSCI) Pacific Index since the Fund's inception on January 1,
1997. The MSCI Pacific Index includes approximately 525 companies in Australia,
Hong Kong, Japan, New Zealand, Singapore, and Malaysia.
Keep in mind that an unmanaged market index has inherent performance
differentials in comparison with any fund. An index doesn't pay management fees
to cover salaries of security analysts or portfolio managers, or pay commissions
or market spreads to buy and sell securities. Unlike an index, mutual funds are
never 100% invested because they need to have cash on hand to redeem shares. In
addition, the performance shown for the Fund includes sales charges, all Fund
expenses and account fees. The index's performance would have been lower if the
Fund's costs had been applied to it. Please remember that an index is simply a
measure of performance, and one cannot invest in it directly.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Templeton Pacific Growth Fund - Class II
Period ended 10/31/97
Since
Inception
(1/1/97)
Cumulative Total Return*** -28.28%
Aggregate Total Return*** -29.71%
***Cumulative total return represents the change in value of an investment over
the indicated period and does not include sales charges. Aggregate total return
represents the change in value of an investment over the indicated period and
includes the 1.0% contingent deferred sales charge, applicable to shares
redeemed within the first 18 months of investment. Since Class II shares have
existed for less than one year, average annual total returns are not provided.
Investment return and principal value will fluctuate with market conditions,
currency volatility and the social, economic and political climates of countries
where investments are made. Emerging markets involve heightened risks related to
the same factors, in addition to those associated with the relatively small size
and lesser liquidity of these markets. You may have a gain or loss when you sell
your shares.
Advisor Class
The Templeton Pacific Growth Fund - Advisor Class produced a cumulative total
return of -27.74% for the period from January 2, 1997 (commencement of sales),
through October 31, 1997. Cumulative total return measures the change in value
of an investment, assuming reinvestment of dividends and capital gains.
The Fund's Advisor Class share price decreased $4.22, from $15.10 to $10.88 over
the same period. During the reporting period, shareholders received per-share
distributions of 4.26 cents ($0.0426) in income dividends. Distributions will
vary depending on income earned by the Fund and any profits realized from the
sale of securities in the portfolio, as well as the level of the Fund's
operating expenses.
The graph on page 14 compares the performance of the Templeton Pacific Growth
Fund - Advisor Class and the Morgan Stanley Capital International(R) (MSCI)
Pacific Index since the Fund's inception on September 20, 1991. For periods
prior to January 2, 1997, the Fund performance is that of the Fund's Class I
shares, excluding the initial sales charge, but including Class I expenses. The
MSCI
Pacific Index includes approximately 525 companies in Australia, Hong Kong,
Japan, New Zealand, Singapore, and Malaysia.
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Keep in mind that an unmanaged market index has inherent performance
differentials in comparison with any fund. An index doesn't pay management fees
to cover salaries of security analysts or portfolio managers, or pay commissions
or market spreads to buy and sell securities. Unlike an index, mutual funds are
never 100% invested because they need to have cash on hand to redeem shares. In
addition, the performance shown for the Fund includes all Fund expenses and
account fees. The index's performance would have been lower if the Fund's costs
had been applied to it. Please remember that an index is simply a measure of
performance, and one cannot invest in it directly.
Templeton Pacific Growth Fund - Advisor Class
Periods ended 10/31/97
Since
Inception
of the Fund
One-Year* Three-Year*Five-Year*(9/20/91)*
Cumulative
Total Return1 -24.38% -20.52% 19.36% 31.81%
Average Annual
Total Return1 -24.38% -7.37% 3.60% 4.62%
Value of $10,000
Investment2 $7,562 $7,948 $11,936 $13,181
10/31/93* 10/31/94* 10/31/95*10/31/96* 10/31/97*
One-Year
Total Return3 38.46% 8.46% -5.48% 11.27% -24.38%
*On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or Rule 12b-1 plans. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the Fund's Class I performance, excluding the effect of the Class I maximum
initial sales charge, but including the effect of Class I expenses including
Rule 12b-1 fees; and (b) for periods after January 1, 1997, figures reflect
actual Advisor Class performance including the deduction of all fees and
expenses applicable only to that class. Since January 2, 1997 (commencement of
sales), the cumulative total return of Advisor Class shares was -27.74%.
1. Cumulative total return represents the change in value of an investment over
the periods indicated. Average annual total return represents the average annual
change in value of an investment over the periods indicated.
2. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated.
3. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Past expense waivers by the Fund's manager increased the Fund's total
returns. Without these waivers, the Fund's total returns would have been lower.
Investment return and principal value will fluctuate with market conditions,
currency volatility and the social, economic and political climates of countries
where investments are made. Emerging markets involve heightened risks related to
the same factors, in addition to those associated with the relatively small size
and lesser liquidity of these markets. You may have a gain or loss when you sell
your shares.
PERFORMANCE SUMMARY
Past performance is not predictive of future results.
GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
Your Fund's Objective: The Templeton Foreign Smaller Companies Fund seeks to
provide long-term growth of capital by investing primarily in equity securities
of small capitalization companies -- those with a market capitalization of $1
billion or less at the time of investment -- outside the United States.
We are pleased to bring you this annual report for the Templeton Foreign Smaller
Companies Fund, which covers the 12 months ended October 31, 1997. During this
period, many international equity markets performed well except Asian markets,
which did not. As discussed in the Performance Summary on page 20, the Fund's
Class I shares delivered a +14.25% cumulative total return, significantly
outperforming the Morgan Stanley Capital International(R) Europe, Australasia,
Far East (MSCI EAFE) Index's return of 4.92%.1
The Fund's performance benefited from its European exposure (53.2% of total net
assets on October 31, 1997) as economic recovery, subdued inflation,
consolidation, corporate restructuring, and healthy corporate profits drove many
European markets to record levels. For example, the stock markets of the U.K.,
Spain, Sweden, Switzerland, and the Netherlands all climbed more than 20% in
U.S. dollar terms during the period. On October 31, 1997, the Fund's largest
European weightings were the U.K. (14.5% of total net assets), the Netherlands
(8.7%), Sweden (5.1%), Switzerland (4.3%), and Spain (4.1%). During the
reporting period, we purchased shares in Hazlewood Foods,2 a food-processing
company based in the U.K. We considered the stock attractively valued in light
of the company's improving fundamentals.
The Fund also benefited from its relatively modest exposure to Asia, where stock
markets fell sharply due to currency crises in the region. In early July 1997,
Thailand allowed its currency, the baht, to depreciate against other currencies.
Worries over this, as well as the depth of the country's economic problems, led
to substantial declines in Thailand's stock market. Similar situations quickly
emerged in neighboring countries, and by the end of September, the equity
markets of Malaysia, Indonesia, and the Philippines had each lost more than 40%
of their value in U.S. dollar terms. Since we had viewed Southeast Asian markets
as relatively high-priced prior to these crises, and had found few companies
whose stock prices seemed attractive, we were not significantly impacted by
these market declines. Our largest Asian exposure was Hong Kong, but we steadily
reduced this weighting following the July handover of the former British colony
to China.
Although we are optimistic about the long-term growth potential of international
equity markets, their relatively high valuation levels at the end of the period
made identifying undervalued securities particularly challenging. However,
recent stock market corrections in many countries, from Hong Kong to the U.S.,
may enable our analysts to uncover investment bargains. While no one can
reliably predict the direction of the markets in the near term, we are confident
that our disciplined approach to identifying small capitalization stocks should
reward long-term investors.
Templeton Foreign
Smaller Companies Fund
Top 10 Industries
10/31/97
% of Total
Industry Net Assets
Food & Household Products 8.8%
Merchandising 7.5%
Banking 6.6%
Transportation 5.9%
Industrial Components 5.8%
Multi-Industry 5.0%
Broadcasting & Publishing 5.0%
Metals & Mining 4.9%
Building Materials
& Components 4.6%
Business & Public Services 4.1%
Of course, there are risks involved in investing in a fund seeking long-term
capital growth from small or relatively new or unseasoned companies, such as
relatively small revenues, limited production lines and small market share. In
addition, investing in international markets involves special risks related to
market and currency volatility, and adverse economic, social, and political
developments. Emerging markets are subject to heightened risks, as well as those
associated with the relatively small size and lesser liquidity of these markets.
Investing in any emerging market means accepting a certain amount of volatility
and, in some cases, severe market corrections. 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 1,523% in the
last 15 years, but has suffered four declines of more than 20% during that
time.3
Please remember, this discussion reflects our views and opinions as of October
31, 1997, the end of the reporting period. However, market and economic
conditions are changing constantly which may affect our strategies and portfolio
holdings. Although historic performance is no guarantee of future results, these
insights may help you understand our investment and management philosophy.
1. Source: AIM (Micropal). Index is unmanaged and includes reinvested dividends.
One cannot invest directly in an index.
2. A complete listing of all stocks in the portfolio as of October 31, 1997,
begins on page 37.
3. Source: Bloomberg. Based on quarterly percentage price change over the 15
years ended September 30, 1997.
Templeton Foreign
Smaller Companies Fund
Top 10 Holdings
10/31/97
Company, % of Total
Industry, Country Net Assets
Weir Group Plc., 1.5%
Industrial Components,
United Kingdom
Hazlewood Foods Plc., 1.5%
Food & Household Products,
United Kingdom
Oshawa Group Ltd. (The), 1.5%
Food & Household Products,
Canada
GTC Transcontinental Group Ltd., 1.4%
Broadcasting & Publishing,
Canada
Kardex AG, br., 1.2%
Business & Public Services,
Switzerland
Sentrachem Ltd., 1.2%
Chemicals,
South Africa
Perkins Foods Plc., 1.2%
Food & Household Products,
United Kingdom
Lex Service Plc., 1.2%
Business & Public Services,
United Kingdom
Laird Group Plc., 1.2%
Machinery & Engineering,
United Kingdom
Anangel - American 1.1%
Shipholdings Ltd., ADR,
Transportation, Greece
For a complete list of portfolio holdings, please see page 37 of this report.
The lead portfolio manager of the Fund since June 1997 is Simon Rudolph. Mr.
Rudolph is a vice president of Templeton Investment Counsel, Inc. He Holds a BA
in economic history from Durham University in England, and is a Chartered
Accountant and a member of the Institute of Chartered Accountants of England and
Wales. Mr. Rudolph has been a securities analyst since 1986. Before joining the
Franklin Templeton organization in 1997, he was an executive director with
Morgan Stanley and was responsible for analysis of continental European
insurance companies. Currently, Mr. Rudolph has research responsibilities for
the shipping industry, small-cap Asian companies and country coverage of India.
Peter A. Nori and Juan J. Benito-Martin exercise secondary portfolio management
responsibilities for the Fund. Mr. Nori is a vice president of Templeton
Investment Counsel, Inc. He holds a BS in finance and an MBA with an emphasis in
finance from the University of San Francisco. He is a Chartered Financial
Analyst and a member of the Association for Investment Management and Research.
Mr. Nori completed Franklin's management training program before moving into
portfolio research in 1990 as an equity analyst and co-portfolio manager of the
Franklin Convertible Securities Fund. He joined the Templeton organization in
1994. As a portfolio manager and research analyst, Mr. Nori currently manages
several separate accounts and a variable annuity product. He has global research
responsibilities for the steel and data processing industries, and county
coverage of Austria. Mr. Benito-Martin is currently a portfolio manager and
research analyst with Templeton Investment Counsel, Inc. He holds an MBA from
the Harvard Business School and a BS/MS in engineering from the Polytechnical
University of Valencia, Spain. Prior to joining the Templeton organization in
1996, Mr. Benito-Martin was a management consultant and case team leader with
Monitor Company, a leading global strategy consulting firm in Cambridge,
Massachusetts (1994-1996). His previous experience includes being an internal
planning consultant with Duke Power (1993-1994), a business development
consultant with IBM Consulting Group (1992), and a regional manager with
Iberdrola, a large power utility company in Spain (1987-1991). Mr.
Benito-Martin's research responsibilities include coverage of European small cap
companies.
Class I
Templeton Foreign Smaller Companies Fund - Class I provided a +14.25% cumulative
total return for the one-year period ended October 31, 1997. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, if any, and does not include the 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 on page 23, the Fund's Class I shares produced a cumulative
total return of more than +105% since its inception on September 20, 1991.
The Fund's Class I share price increased $0.88, from $14.18 on October 31, 1996,
to $15.06 on October 31, 1997. During the reporting period, shareholders
received per-share distributions of 32.0 cents ($0.32) in income dividends, 14.0
cents ($0.14) in short-term capital gains, and 57.0 cents ($0.57) in long-term
capital gains. Distributions will vary depending on income earned by the Fund
and any profits realized from the sale of securities in the portfolio, as well
as the level of the Fund's operating expenses.
The graph on page 22 compares the performance of Templeton Foreign Smaller
Companies Fund and the Morgan Stanley Capital International(R) Europe,
Australasia, Far East (MSCI EAFE) Index since the Fund's inception on September
20, 1991. The MSCI EAFE index includes approximately 1,000 companies
representing the stock markets of 20 countries including Germany, France,
Australia, New Zealand, and Japan.
Keep in mind that an unmanaged market index has inherent performance
differentials in comparison with any fund. An index does not pay management fees
to cover salaries of security analysts or portfolio managers, or pay commissions
or market spreads to buy and sell securities. Unlike an index, mutual funds are
never 100% invested because they need to have cash on hand to redeem shares. In
addition, the performance shown for the Fund includes the maximum initial sales
charge, all Fund expenses and account fees. The index's performance would have
been lower if the Fund's costs had been applied to it. Please remember that an
index is simply a measure of performance, and one cannot invest in it directly.
GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Templeton Foreign Smaller Companies Fund - Class I
Periods ended 10/31/97
Since
Inception
One-Year Three-Year Five-Year (9/20/91)
Cumulative
Total Return1 14.25% 37.74% 101.04% 105.20%
Average Annual
Total Return2 7.65% 9.09% 13.63% 11.39%
Value of $10,000
Investment3 $10,765 $12,982 $18,948 $19,340
10/31/93 10/31/94 10/31/95 10/31/96 10/31/97
One-Year
Total Return4 27.40% 14.56% 1.75% 18.49% 14.25%
1. Cumulative total return represents the change in value of an investment over
the indicated periods and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods and includes the maximum 5.75% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the indicated periods and include the maximum 5.75% initial sales
charge.
4. One-year total return represents the change in value of an investment over
the indicated periods ended on the specified dates and does not include the
sales charge.
Note: Total returns have been restated to reflect the current maximum initial
sales charge: 5.75%. Prior to January 1, 1997, Fund shares were offered at a
lower initial sales charge. Thus, actual returns would have been higher. All
calculations assume reinvestment of dividends and capital gains at net asset
value. Past expense waivers by the Fund's manager increased the Fund's total
returns. Without these waivers, the Funds total returns would have been lower.
Investment return and principal value will fluctuate with market conditions,
currency volatility and the social, economic and political climates of countries
where investments are made. Emerging markets involve heightened risks related to
the same factors, in addition to those associated with the relatively small size
and lesser liquidity of these markets. You may have a gain or loss when you sell
your shares.
The Fund's manager has agreed in advance to waive a portion of the management
fees and to make certain payments to reduce expenses, which increases yield and
total return to shareholders. The fee waiver may be discontinued at any time
upon notice to the Fund's Board.
Advisor Class
The Templeton Foreign Smaller Companies Fund - Advisor Class produced a
cumulative total return of +8.43% for the period from January 2, 1997
(commencement of sales), through October 31, 1997. Cumulative total return
measures the change in value of an investment assuming reinvestment of dividends
and capital gains.
The Fund's Advisor Class share price increased $1.09, from $14.00 on January 2,
1997 to $15.09 on October 31, 1997. During the reporting period, shareholders
received per-share distributions of 8.98 cents ($0.0898) in income dividends.
Distributions will vary depending on in-come earned by the Fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the Fund's operating expenses.
The graph on page 26 compares the performance of the Templeton Foreign Smaller
Companies Fund - Advisor Class with the performance of the Morgan Stanley
Capital International(R) Europe, Australasia, Far East (MSCI EAFE) Index since
the Fund's inception on September 20, 1991. For periods prior to January 2,
1997, the Fund performance is that of the Fund's Class I shares, excluding the
initial sales charge, but including Class I expenses. The MSCI EAFE Index
includes approximately 1,000 companies representing the stock markets of 20
countries including Germany, France, Australia, New Zealand, and Japan.
Keep in mind that an unmanaged market index has inherent performance
differentials in comparison with any fund. An index doesn't pay management fees
to cover salaries of security analysts or portfolio managers, or pay commissions
or market spreads to buy and sell securities. Unlike an index, mutual funds are
never 100% invested because they need to have cash on hand to redeem shares. In
addition, the performance shown for the Fund includes all Fund expenses and
account fees. The index's performance would have been lower if the Fund's costs
had been applied to it. Please remember that an index is simply a measure of
performance, and one cannot invest in it directly.
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Templeton Foreign Smaller Companies Fund - Advisor Class
Periods ended 10/31/97
Since
Inception
of the Fund
One-Year* Three-Year*Five-Year* (9/20/91)*
Cumulative
Total Return1 14.55% 38.11% 101.56% 105.73%
Average Annual
Total Return1 14.55% 11.36% 15.05% 12.53%
Value of $10,000
Investment2 $11,455 $13,811 $20,156 $20,573
10/31/93* 10/31/94* 10/31/95*10/31/96* 10/31/97*
One-Year Total
Return3 27.40% 14.56% 1.75% 18.49% 14.55%
*On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or Rule 12b-1 plans. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the Fund's Class I performance, excluding the effect of the Class I maximum
initial sales charge, but including the effect of Class I expenses including
Rule 12b-1 fees; and (b) for periods after January 1, 1997, figures reflect
actual Advisor Class performance including the deduction of all fees and
expenses applicable only to that class. Since January 2, 1997 (commencement of
sales), the cumulative total return of Advisor Class shares was 8.43%.
1. Cumulative total return represents the change in value of an investment over
the periods indicated. Average annual total return represents the average annual
change in value of an investment over the periods indicated.
2. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated.
3. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Past expense waivers by the Fund's manager increased the Fund's total
returns. Without these waivers, the Fund's total return would have been lower.
Investment return and principal value will fluctuate with market conditions,
currency volatility and the social, economic and political climates of countries
where investments are made. Emerging markets involve heightened risks related to
the same factors, in addition to those associated with the relatively small size
and lesser liquidity of these markets. You may have a gain or loss when you sell
your shares.
The Fund's manager has agreed in advance to waive a portion of its management
fees and to make certain payments to reduce expenses, which increases yield and
total return to shareholders. The fee waiver may be discontinued at any time
upon notice to the Fund's Board.
Past performance is not predictive of future results.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights
Templeton Pacific Growth Fund
<TABLE>
<CAPTION>
Class I
--------------------------------------------------
Year Ended October 31,
--------------------------------------------------
1997 1996 1995 1994 1993
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $ 14.50 $ 14.11 $ 15.40 $ 14.44 $ 10.90
Income from investment operations:
Net investment income .14 .12 .15 .21 .19
Net realized and unrealized gain(loss) (3.65) 1.41 (1.01) 1.01 3.83
--------------------------------------------------
Total from investment operations (3.51) 1.53 (0.86) 1.22 4.02
--------------------------------------------------
Less distributions:
Dividends from net investment income (.11) (.21) (.16) (.20) (.19)
Distributions from net realized gains -- (.93) (.27) (.06) (.28)
--------------------------------------------------
Total distributions (.11) (1.14) (.43) (.26) (.48)
--------------------------------------------------
Net asset value, end of year $ 10.88 $ 14.50 $ 14.11 $ 15.40 $ 14.44
==================================================
Total Return+ (24.42%) 11.27% (5.54%) 8.46% 38.46%
Ratios/Supplemental Data
Net assets, end of year (000's) $40,958 $59,740 $50,247 $58,241 $22,619
Ratio to average net assets:
Expenses 1.63% 1.52% 1.72% 1.22% .50%
Expenses excluding waiver and payment by affiliates 1.63% 1.52% 1.72% 1.72% 2.31%
Net investment income .97% 1.06% 1.04% 1.54% 2.03%
Portfolio turnover rate 24.79% 13.48% 36.21% 9.16% 47.52%
Average commission rate paid* $ .0061 $ .0092 -- -- --
+Total return does not reflect sales commissions and is not annualized.
*Relates to purchases and sales of equity securities. Prior to fiscal year end
1996, disclosure of average commission rate was not required.
Class II
-------------
1997++
-------------
<S> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $15.10 Income from investment operations:
Net investment income .05
Net realized and unrealized loss (4.31)
-------------
Total from investment operations (4.26)
-------------
Less distributions:
Dividends from net investment income (.03)
-------------
Total distributions (.03)
-------------
Net asset value, end of year $10.81
=============
Total Return+ (28.28%)
Ratios/Supplemental Data
Net assets, end of year (000's) $2,307
Ratio to average net assets:
Expenses 2.48%**
Net investment income .93%**
Portfolio turnover rate 24.79%
Average commission rate paid* $0.0061
+Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized. ++For the period January 2, 1997 (effective
date) to October 31, 1997.
*Relates to purchases and sales of equity securities.
**Annualized
Advisor Class
-------------
1997++
-------------
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $15.10 Income from investment operations:
Net investment income .12
Net realized and unrealized loss (4.30)
-------------
Total from investment operations (4.18)
-------------
Less distributions:
Dividends from net investment income (.04)
-------------
Total distributions (.04)
-------------
Net asset value, end of year $10.88
=============
Total Return+ (27.74%)
Ratios/Supplemental Data
Net assets, end of year (000's) $1,357
Ratio to average net assets:
Expenses 1.48%**
Net investment income 1.55%**
Portfolio turnover rate 24.79%
Average commission rate paid $0.0061
</TABLE>
+Total return is not annualized.
++For the period January 2, 1997 (effective date) to October 31, 1997.
*Relates to purchases and sales of equity securities.
**Annualized
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Statement of Investments, October 31, 1997
<TABLE>
<CAPTION>
SHARES/
Templeton Pacific Growth Fund COUNTRY WARRANTS VALUE
<S> <C> <C> <C>
Common Stocks & Warrants 85.5%
Appliances & Household Durables 1.4%
Sony Corp. Japan 7,400 $ 614,258
-------------
Banking 9.3%
Bangkok Bank Public Co. Ltd., fgn. Thailand 111,400 381,320
Development Bank of Singapore Ltd., fgn. Singapore 100,000 933,333
HSBC Holdings Plc. Hong Kong 39,840 901,766
Industrial Finance Corp. of Thailand, fgn. Thailand 320,833 266,707
Krung Thai Bank Thailand 482,600 162,243
*Philippine National Bank Philippines 124,382 289,464
PT Bank Bali, fgn. Indonesia 494,000 239,806
PT Bank Pan Indonesia TBK Indonesia 1,138,500 260,544
Singapore Finance Ltd., fgn. Singapore 275,000 256,667
Thai Farmers Bank Public Co. Ltd. Thailand 37,140 73,100
Thai Farmers Bank Public Co. Ltd., fgn. Thailand 143,060 384,758
*Thai Farmers Bank Public Co. Ltd., fgn., wts. Thailand 11,357 3,957
-------------
4,153,665
-------------
Broadcasting & Publishing 0.7%
South China Morning Post Ltd. Hong Kong 368,000 318,903
-------------
Building Materials & Components 1.1%
Gujarat Ambuja Cements Ltd., GDR India 41,300 354,148
Hi Cement Corp. Philippines 1,283,000 115,814
-------------
469,962
-------------
Chemicals 3.1%
Fauji Fertilizer Co. Ltd. Pakistan 267,100 594,823
Shanghai Petrochemical Co. Ltd., H China 2,899,000 778,041
-------------
1,372,864
-------------
Construction & Housing 3.5%
City Developments Ltd., fgn. Singapore 140,200 587,505
Daito Trust Construction Co. Ltd. Japan 61,500 546,780
Road King Infrastructure Ltd. Hong Kong 679,000 439,113
-------------
1,573,398
-------------
Electrical & Electronics 4.8%
Dongfang Electrical Machinery Co. Ltd., H China 1,784,000 403,803
*Gold Peak Industries (Holdings) Ltd., wts. Hong Kong 140,000 11,951
Great Wall Electronic International Ltd. Hong Kong 2,430,000 188,579
Hitachi Ltd. Japan 90,200 693,270
Matsushita Electric Industrial Co. Ltd. Japan 49,000 822,435
-------------
2,120,038
-------------
Electronic Components & Instruments 0.3%
Solid Group Inc . Philippines 2,322,000 142,792
-------------
Energy Sources 1.2%
*Hub Power Co. Ltd., GDR, reg.S Pakistan 16,000 518,000
-------------
Financial Services 2.4%
Commerce Asset-Holding Bhd, fgn. Malaysia 283,200 $ 220,885
*Commerce Asset-Holding Bhd, fgn., wts. Malaysia 29,500 4,948
Industrial Credit & Inv. Corp. of India, GDR, 144A India 48,600 716,850
Public Finance Bhd., fgn. Malaysia 255,000 125,454
-------------
1,068,137
-------------
Food & Household Products 0.9%
Chareon Pokphand Feedmill Public Co. Ltd., fgn. Thailand 151,500 388,936
-------------
Forest Products & Paper 3.2%
*Asia Pacific Resources International Hldgs. Ltd., A Indonesia 93,275 367,270
Carter Holt Harvey Ltd. New Zealand 400,900 698,937
Fletcher Challenge Paper Ltd. New Zealand 43,100 70,848
*P T Tjiwi Kimia TBK, wts. Indonesia 56,765 5,118
PT Barito Pacific Timber, fgn. Indonesia 200,000 116,505
PT Pabrik Kertas Tjiwi Kimia, fgn. Indonesia 408,709 150,219
-------------
1,408,897
-------------
Insurance 3.2%
GIO Australia Holdings Ltd. Australia 277,869 711,297
National Mutual Asia Ltd. Hong Kong 800,000 724,310
-------------
1,435,607
-------------
Leisure & Tourism 1.8%
Grand Hotel Holdings Ltd. Hong Kong 508,000 182,332
Toei Co. Ltd. Japan 128,000 606,232
-------------
788,564
-------------
Machinery & Engineering 2.0%
Tata Engineering & Locomotive Co., GDR India 53,400 570,045
Van Der Horst Ltd. Singapore 391,000 342,590
-------------
912,635
-------------
Merchandising 2.9%
Coles Myer Ltd., A Australia 187,000 899,513
Matsuzakaya Co. Ltd. Japan 94,500 416,161
-------------
1,315,674
-------------
Metals & Mining 2.4%
Nittetsu Mining Co. Ltd. Japan 105,000 588,035
Pohang Iron & Steel Co. Ltd. South Korea 11,100 493,858
-------------
1,081,893
-------------
Misc Materials & Commodities 1.3%
Golden Hope Plantations Bhd., fgn. Malaysia 451,000 589,879
-------------
Multi-Industry 9.5%
Cheung Kong Holdings Ltd. Hong Kong 170,300 1,183,939
Hicom Holdings BHD Malaysia 295,000 250,442
Hutchison Whampoa Ltd. Hong Kong 83,000 574,339
Jardine Matheson Holdings Ltd. (Singapore) Hong Kong 137,924 882,714
Multi-Industry (cont.)
Sime Darby Bhd., fgn. Malaysia 327,600 $ 471,720
Swire Pacific Ltd., A Hong Kong 62,500 333,861
Wheelock and Co. Ltd. Hong Kong 490,000 557,718
-------------
4,254,733
-------------
Real Estate 8.9%
Asean Resources Holdings Ltd. Hong Kong 1,900,381 366,238
*Filinvest Land Inc. Philippines 930,000 83,949
Hon Kwok Land Investment Co. Ltd. Hong Kong 1,708,364 366,796
Lai Sun Development Co. Ltd. Hong Kong 317,000 131,204
New World Development Co. Ltd. Hong Kong 285,664 1,004,987
Parkway Holdings Ltd., fgn. Singapore 340,000 859,175
Sun Hung Kai Properties Ltd. Hong Kong 160,000 1,179,590
-------------
3,991,939
-------------
Recreation & Other Consumer Goods 0.6%
Nintendo Co. Ltd. Japan 3,000 259,244
-------------
Telecommunications 4.5%
Hong Kong Telecommunications Ltd. Hong Kong 625,869 1,198,068
Pakistan Telecommunications Corp., A Pakistan 940,000 791,415
-------------
1,989,483
-------------
Textiles & Apparel 2.8%
Nisshinbo Industries Inc. Japan 120,000 792,688
PT Indorama Synthetics, fgn. Indonesia 733,862 442,760
PT Panasia Indosyntec, fgn. Indonesia 315,000 24,029
-------------
1,259,477
-------------
Transportation 10.6%
Cathay Pacific Airways Ltd. Hong Kong 630,000 664,101
East Japan Railway Co. Japan 200 972,165
Great Eastern Shipping Co. Ltd., GDR India 24,100 180,750
Guangshen Railway Co. Ltd., ADR China 31,400 459,225
GZI Transport Ltd., 144A China 174,000 56,262
GZI Transport Ltd. China 550,000 177,844
*GZI Transport Ltd., wts. 144A China 34,800 945
Hitachi Zosen Corp. Japan 88,000 193,768
Hong Kong Ferry Holdings Co. Ltd. Hong Kong 290,000 397,594
Malaysian International Shipping Corp. Bhd., fgn. Malaysia 317,333 533,093
Mayne Nickless Ltd., A Australia 102,400 468,083
Qantas Airways Ltd., ADR, 144A Australia 35,800 639,030
-------------
4,742,860
-------------
Utilities Electrical & Gas 1.8%
China Light & Power Co. Ltd. Hong Kong 69,000 363,228
Shandong Huaneng Power Development Co. Ltd., ADR China 59,500 442,531
-------------
805,759
-------------
Wholesale & International Trade 1.3%
Brierley Investments Ltd. New Zealand 746,000 $ 575,976
-------------
Total Common Stocks & Warrants (Cost $48,440,185) 38,153,573
-------------
PRINCIPAL
AMOUNT**
Convertible Bonds 0.1%
MDX Public Co. Ltd., 4.75%, conv., 9/17/03 (Cost $221,564) Thailand 192,000 37,440
Short Term Investments 0.9%
-------------
U.S. Treasury Bills, 5.30% to 5.16%,
with maturities to 1/22/98 (Cost $409,719) United States 412,000 409,911
-------------
Total Investments before Repurchase Agreements (Cost $49,071,468) 38,600,924
-------------
Repurchase Agreement 4.2%
HSBC Securities, Inc., 5.66%, 11/3/97
(Maturity Value $1,871,822) (Cost $1,871,000)
Collateralized by U.S. Treasury Notes United States 1,871,000 1,871,000
-------------
Total Investments (Cost $50,942,468) 90.7% 40,471,924
Other Assets, less Liabilities 9.3% 4,149,326
-------------
Total Net Assets 100.0% $44,621,250
=============
</TABLE>
*Non-income producing
**Securities traded in U.S. Dollars.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights
Templeton Foreign Smaller Companies Fund
<TABLE>
<CAPTION>
Class I
-------------------------------------------------
Year Ended October 31,
-------------------------------------------------
1997 1996 1995 1994 1993
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $ 14.18 $ 13.23 $ 13.83 $ 12.28 $ 10.02
Income from investment operations:
Net investment income .27 .35 .25 .23 .42
Net realized and unrealized gain(loss) 1.64 1.88 (.08) 1.54 2.25
-------------------------------------------------
Total from investment operations 1.91 2.23 0.17 1.77 2.67
-------------------------------------------------
Less distributions:
Dividends from net investment income (.32) (.25) (.19) (.22) (.41)
Distributions from net realized gains (.71) (1.03) (.59) -- --
-------------------------------------------------
Total distributions (1.03) (1.28) (.78) (.22) (.41)
-------------------------------------------------
Net asset value, end of year $ 15.06 $ 14.18 $ 13.23 $ 13.83 $ 12.28
=================================================
Total Return+ 14.25% 18.49% 1.75% 14.56% 27.40%
Ratios/Supplemental Data
Net assets, end of year (000's) $121,619 $67,967 $50,947 $57,854 $19,217
Ratio to average net assets:
Expenses 1.48% 1.53% 1.63% 1.22% .50%
Expenses excluding waiver and payment by affiliates 1.58% 1.53% 1.63% 1.76% 2.27%
Net investment income 2.01% 2.50% 1.86% 1.99% 4.22%
Portfolio turnover rate 33.62% 40.46% 9.12% 21.80% 52.99%
Average commission rate paid* $ .0029 $ .0026 -- -- --
+Total return does not reflect sales commissions and is not annualized.
*Relates to purchases and sales of equity securities. Prior to fiscal year end
1996, disclosure of average commission rate was not required.
Advisor Class
1997++
<S> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year $14.00 Income from investment operations:
Net investment income .20
Net realized and unrealized gain .98
-------------
Total from investment operations 1.18
-------------
Less distributions:
Dividends from net investment income (.09)
-------------
Total distributions (.09)
-------------
Net asset value, end of year $15.09
=============
Total Return+ 8.43%
Ratios/Supplemental Data
Net assets, end of year (000's) $3,726
Ratio to average net assets:
Expenses 1.24%**
Expenses excluding waiver and payment by affiliates 1.36%**
Net investment income 2.66%**
Portfolio turnover rate 33.62%
Average commission rate paid* $.0029
+Total return is not annualized.
++For the period January 2, 1997 (effective date) to October 31, 1997.
*Relates to purchases and sales of equity securities.
**Annualized
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Statement of Investments, October 31, 1997
<TABLE>
<CAPTION>
Templeton Foreign Smaller Companies Fund COUNTRY SHARES VALUE
<S> <C> <C> <C>
Aerospace & Military tech 0.3%
Hong Kong Aircraft Engineering Co. Ltd. Hong Kong 137,100 $ 352,880
Appliances & Household Durables 0.9%
Email Ltd. Australia 183,625 488,127
Fisher & Paykel Ltd. New Zealand 32,337 102,687
Guangdong Kelon Electrical Hldgs Ltd., H, 144A China 440,000 557,718
-------------
1,148,532
-------------
Automobiles 1.1%
Bilia AB Sweden 67,000 1,046,609
Volvo AB, B Sweden 13,900 363,743
-------------
1,410,352
-------------
Banking 5.7%
Banco de Andalucia SA Spain 2,500 395,271
Banco de Valencia SA Spain 11,066 222,507
Banco Pastor SA Spain 11,500 857,737
BPI Socieda de Gestora de Participacoes Socias SA Portugal 12,012 270,159
Commercial International Bank LTD, GDR, 144A Egypt 49,100 1,061,788
Ergo Bank SA Greece 9,472 564,766
Korea Long Term Credit Bank South Korea 42,336 340,444
PT Bank Bali, fgn. Indonesia 369,000 179,126
Singapore Finance Ltd., fgn. Singapore 465,000 434,000
Svenska Handelsbanken, A Sweden 22,650 716,705
*Unibanco Uniao de Bancos Brasileiros SA, GDR Brazil 27,500 749,375
Union Bank of Norway, Primary Capital Cert. Norway 38,700 1,345,021
-------------
7,136,899
-------------
Beverages & Tobacco 1.0%
Sinocan Holdings Ltd. Hong Kong 3,425,000 1,207,156
-------------
Broadcasting & Publishing 4.5%
*Apt Sattellite Holdings Ltd., ADR Hong Kong 78,000 1,218,750
Cordiant Plc. United Kingdom 469,200 983,994
GTC Transcontinental Group Ltd., B Canada 200,000 1,724,199
Marieberg Tidnings AB, A Sweden 44,100 1,177,586
NV Holdingsmij de Telegraaf Netherlands 23,520 484,574
Sing Tao Holdings Ltd. Hong Kong 200 65
-------------
5,589,168
-------------
Building Materials & Components 4.6%
Anglian Group Plc. United Kingdom 91,700 376,160
Cementos Diamante SA, ADR, 144A Colombia 50,714 675,150
Gujarat Ambuja Cements Ltd., GDR India 143,750 1,232,656
Pioneer International Ltd. Australia 241,300 638,050
Sarna Kunststoff Holding AG Switzerland 330 402,885
Schuttersveld NV Netherlands 41,482 961,468
Siam City Cement Public Co. Ltd., fgn. Thailand 130,200 187,819
Suez Cement Co., GDR, 144A Egypt 54,000 1,116,990
Uralita SA Spain 16,606 176,368
-------------
5,767,546
-------------
Business & Public Services 4.1%
Adecco SA Switzerland 1,855 $ 602,013
Esselte AB, B Sweden 13,100 285,092
*ISS International Service System AS, B Denmark 30,700 931,424
Kardex AG, br. Switzerland 5,110 1,541,409
Lex Service Plc. United Kingdom 208,000 1,465,673
Scribona AB, B Sweden 19,500 257,747
-------------
5,083,358
-------------
Chemicals 2.4%
Akzo Nobel NV Netherlands 2,380 419,365
DSM NV Netherlands 2,900 261,844
Energia e Industrias Aragonesas Eia SA Spain 129,000 838,008
Sentrachem Ltd. South Africa 640,000 1,502,753
-------------
3,021,970
-------------
Construction & Housing 2.6%
Dragados y Construcciones SA Spain 25,600 519,145
Hollandsche Beton Groep NV Netherlands 38,000 761,370
Kumagai Gumi Hong Kong Ltd. Hong Kong 393,000 360,900
Sirti SpA Italy 63,700 378,738
*Sociedade Construcoes Soares da Costa SA Portugal 135,800 1,042,536
Wai Kee Holdings Ltd. Hong Kong 971,361 168,353
-------------
3,231,042
-------------
Electrical & Electronics 2.1%
Philips Electronics NV Netherlands 13,200 1,033,428
Tadiran Ltd., ADR Israel 34,000 1,283,500
Techtronic Industries Co. Ltd. Hong Kong 1,978,000 363,288
-------------
2,680,216
-------------
Electronic Components & Instruments 1.0%
Swisslog Holding AG Switzerland 5,500 428,016
VTech Holdings Ltd. Hong Kong 429,000 837,858
-------------
1,265,874
-------------
Energy Sources 0.4%
Societe Elf Aquitane SA France 3,738 462,694
-------------
Financial Services 0.8%
London Pacific Group Ltd. United Kingdom 154,800 541,504
Peregrine Investments Holdings Ltd. Hong Kong 500,000 491,496
-------------
1,033,000
-------------
Food & Household Products 7.8%
Albert Fisher Group Plc. United Kingdom 693,111 433,165
C P Pokphand Co. Ltd. Hong Kong 2,608,100 624,068
Hazlewood Foods Plc. United Kingdom 832,000 1,898,396
Hillsdown Holdings Plc. United Kingdom 338,900 960,910
McBride Plc. United Kingdom 314,100 906,403
Melco International Development Ltd. Hong Kong 1,462,250 434,996
Food & Household Products (cont.)
National Foods Ltd. Australia 827,471 $ 1,192,933
Oshawa Group Ltd. (The) Canada 109,850 1,894,033
Perkins Foods Plc. United Kingdom 911,500 1,468,089
-------------
9,812,993
-------------
Forest Products & Paper 2.3%
Cartiere Burgo SpA Italy 58,788 352,728
Enso OY, R Finland 49,700 471,709
Fletcher Challenge Ltd. Forestry Division New Zealand 329,000 317,520
Primex Forest Products Ltd. Canada 225,000 1,117,536
Stora Kopparbergs Bergslags AB, B Sweden 44,500 611,957
-------------
2,871,450
-------------
Health & Personal Care 0.9%
Nycomed ASA, B Norway 43,132 1,075,611
-------------
Industrial Components 5.8%
*Granges AB Sweden 47,656 779,431
Lucas Varity Plc. United Kingdom 310,000 1,057,102
Meggitt Plc. United Kingdom 184,049 453,915
Otra NV Netherlands 84,000 1,341,231
Sylea SA France 13,540 1,197,140
Weir Group Plc. United Kingdom 414,100 1,920,989
Yamato Kogyo Co. Ltd. Japan 66,000 520,980
-------------
7,270,788
-------------
Insurance 2.0%
ACE Ltd. Bermuda 8,800 817,850
Baloise-Holding Switzerland 360 647,699
GIO Australia Holdings Ltd. Australia 89,237 228,431
Ing Groep NV Netherlands 8,469 355,510
London Insurance Group Inc. Canada 18,200 438,422
-------------
2,487,912
-------------
Leisure & Tourism 0.9%
Kuoni Reisen Holding AG, B Switzerland 200 756,791
Tourism Holdings Ltd. New Zealand 297,000 332,868
-------------
1,089,659
-------------
Machinery & Engineering 2.5%
Bucherer AG Luzern, fgn. Switzerland 740 697,919
China International Marine Containers Inc., B China 104,000 102,231
Heidemij NV Netherlands 75,300 853,258
Laird Group Plc. United Kingdom 205,000 1,463,450
-------------
3,116,858
-------------
Merchandising 6.9%
David Jones Ltd. Australia 144,500 182,915
De Boer Unigro NV Netherlands 22,750 761,653
Det Danske Traelastkompagni AS Denmark 6,800 623,073
Merchandising (cont.)
Giordano International Ltd. Hong Kong 433,000 $ 159,613
Hudsons Bay Co. Canada 21,500 491,982
Koninklijke Bijenkorf Beheer NV Netherlands 11,900 750,837
LI & Fung Ltd. Hong Kong 1,000,000 1,002,393
Moebel Walther AG Germany 7,000 296,438
Northwest Company Fund Canada 43,400 431,919
Sa des Galeries Lafayette France 2,868 1,342,452
Safeway Plc. United Kingdom 79,848 521,456
Somerfield Plc. United Kingdom 260,400 845,369
Storehouse Plc. United Kingdom 352,400 1,300,718
-------------
8,710,818
-------------
Metals & Mining 4.9%
Arbed SA Belgium 9,245 1,179,382
Boehler Uddeholm AG Austria 11,600 831,816
Boehler Uddeholm AG, 144A Austria 3,390 243,092
Companhia Siderurgica Nacional, ADR Brazil 8,500 308,404
Impala Platinum Holdings Ltd. South Africa 96,200 969,496
Pechiney SA, A France 29,591 1,216,832
Pohang Iron & Steel Co. Ltd. South Korea 4,230 188,200
PT Tambang Timah (Persero), fgn. Indonesia 709,000 845,687
Vallourec France 5,857 384,831
-------------
6,167,740
-------------
Misc Materials & Commodities 0.6%
Korea Chemical Co Ltd South Korea 15,800 558,321
Thai Glass Industries Public Co. Ltd., fgn. Thailand 100,800 166,973
-------------
725,294
-------------
Multi-Industry 4.8%
*Amer Group Ltd., A Finland 18,000 375,779
Inversiones y Representacion SA Argentina 278,000 934,641
Jardine Matheson Holdings Ltd. (Singapore) Hong Kong 31,200 199,680
Jardine Strategic Holdings Ltd. (Singapore) Hong Kong 122,000 390,400
La Cemento Nacional SA, GDR, 144A Ecuador 2,150 470,850
La Cemento Nacional SA, GDR Ecuador 200 43,800
Marine Wendel France 3,576 411,644
Murray & Roberts Hldgs. Ltd. South Africa 540,000 1,009,870
Nagron Nationaal Grondbezit NV Netherlands 30,400 822,045
Pioneer Industries International Ltd. Hong Kong 470,000 97,264
Saha Union Public Co. Ltd., fgn. Thailand 274,000 200,978
Wagon Industrial Holdings Plc. United Kingdom 175,000 758,968
Zehnder Holding AG, br. Switzerland 780 328,562
-------------
6,044,481
-------------
Telecommunications 0.6%
Cpt-Telefonica del Peru SA, B Peru 114,000 227,160
*Digital Telecommunications Philippines Inc. Philippines 5,006,000 242,886
Telefonica de Espana SA Spain 12,400 338,407
-------------
808,453
-------------
Textiles & Apparel 2.1%
Daehan Synthetic Fiber Co. Ltd. South Korea 4,280 $ 177,409
Dawson International Plc. United Kingdom 248,000 297,497
Gamma Holding NV Netherlands 16,800 899,923
Inner Mongolia Erdos Cashmere Products Co. Ltd., B China 1,535,000 881,090
Yizheng Chemical Fibre Co. Ltd., H China 1,225,000 368,379
-------------
2,624,298
-------------
Transportation 5.9%
Anangel-American Shipholdings Ltd., ADR Greece 118,000 1,357,000
Helikopter Services Group ASA Norway 61,100 761,845
Orient Overseas International Ltd. Hong Kong 550,000 337,903
Osprey Maritime Ltd. Singapore 1,375,000 1,292,063
PT Steady Safe, fgn. Indonesia 599,113 162,036
Shun Tak Holdings Hong Kong 1,045,000 354,799
Singapore Bus Service Ltd. Singapore 47,000 183,524
*Stena Line AB, B Sweden 56,000 231,779
Stolt Nielsen SA, ADR Norway 50,000 1,325,000
Tranz Rail Holdings Ltd., ADR New Zealand 83,445 1,126,508
Unitor AS Norway 17,000 270,445
-------------
7,402,902
-------------
Utilities Electrical & Gas 1.8%
Cia Sevillana de Electricidad SA Spain 20,391 181,524
Electricas Reunidas de Zaragoza Spain 13,300 507,424
Gas y Electricidad SA Spain 16,099 1,106,689
Guangdong Electric Power Development Co Ltd., B, 144A China 919,920 518,768
-------------
2,314,405
-------------
Wholesale & International Trade 1.7%
Dahl International AB Sweden 49,420 910,554
Davids Ltd. Australia 800,000 360,064
Eurodis Electron Plc. United Kingdom 200,000 528,488
Inchcape Bhd., fgn. Singapore 94,000 296,025
-------------
2,095,131
-------------
Total Common Stocks (Cost $97,216,603) 104,009,480
-------------
Preferred Stocks 5.5%
Ballast Nedam NV, ctf., conv., pfd. Netherlands 23,515 1,199,065
*Bank Austria AG, new, pfd., 144A Austria 24,250 1,107,315
Bombril SA, pfd. Brazil 143,465,200 1,208,936
Cia Brasileira de Petroleo Ipiranga, pfd. Brazil 5,380,000 78,081
Coteminas Cia Tecidos Norte de Minas, pfd. Brazil 2,006,000 745,847
Electrolux Do Brasil SA, pfd. Brazil 83,417,000 96,869
Moebel Walther AG, pfd. Germany 16,000 649,727
News Corp. Ltd., pfd. Australia 151,486 672,220
Weg SA, pfd. Brazil 1,755,900 1,194,544
-------------
Total Preferred Stocks (Cost $6,943,177) 6,952,604
-------------
Amer Group Ltd., 6.25%, conv., 6/15/03 (Cost $246,250) Finland 250,000 $ 257,500
-------------
Total Investments before Repurchase Agreements (Cost $104,406,030) 111,219,584
-------------
Repurchase Agreements 10.9%
Aubrey G. Lanston & Co., 5.66%, 11/03/97 (Maturity Value $4,444,095)
Collateralized by U.S. Treasury Notes United States 4,442,000 4,442,000
HSBC Securities Inc., 5.66%, 11/03/97 (Maturity Value $4,512,127)
Collateralized by U.S. Treasury Notes United States 4,510,000 4,510,000
Morgan Stanley & Co., Inc., 5.66%, 11/03/97 (Maturity Value $4,677,205)
Collateralized by U.S. Treasury Notes United States 4,675,000 4,675,000
-------------
Total Repurchase Agreements (Cost $13,627,000) 13,627,000
-------------
Total Investments (Cost $118,033,030) 99.6% 124,846,584
Other Assets, less Liabilities: 0.4% 497,820
-------------
Total Net Assets: 100.0% $125,344,404
=============
</TABLE>
*Non-income producing.
**Securities traded in U.S. Dollars.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
October 31, 1997
Templeton Templeton
Pacific Foreign Smaller
Growth FundCompanies Fund
=============================
<S> <C> <C>
Assets:
Investments in securities:
Cost $49,071,468 $104,406,030
=============================
Value 38,600,924 111,219,584
Repurchase agreements, at value and cost 1,871,000 13,627,000
Cash 1,920,005 12,371
Receivables:
Beneficial shares sold 2,831,016 1,287,705
Dividends and interest 161,829 228,191
-----------------------------
Total assets 45,384,774 126,374,851
-----------------------------
Liabilities:
Payables:
Investment securities purchased 362,803 570,695
Beneficial shares redeemed 252,552 168,878
Affiliates 48,322 192,878
Other liabilities 99,847 97,996
-----------------------------
Total liabilities 763,524 1,030,447
-----------------------------
Net assets, at value $44,621,250 $125,344,404
=============================
Net assets consist of:
Undistributed net investment income $ 46,074 $ 1,365,788
Net unrealized appreciation (depreciation) (10,470,544) 6,813,554
Accumulated net realized gain 275,115 5,178,374
Capital shares 54,770,605 111,986,688
-----------------------------
Net assets, at value $44,621,250 $125,344,404
=============================
Class I:
Net assets, at value $40,958,008 $121,618,800
=============================
Shares outstanding 3,765,681 8,075,535
=============================
Net asset value per share* $10.88 $15.06
=============================
Maximum offering price per share
(100 / 95.5% of net asset value per share) $11.39 $15.77
=============================
Class II:
Net assets, at value $2,306,592
==============
Shares outstanding 213,423
==============
Net asset value per share* $10.81
==============
Maximum offering price per share
(100 / 99.0% of net asset value per share) $10.92
==============
Advisor Class:
Net assets, at value $1,356,650 $3,725,604
=============================
Shares outstanding 124,697 246,892
=============================
Net asset value and offering price per share 10.88 15.09
=============================
*Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements (continued)
Statements of Operations
for the year ended October 31, 1997
<TABLE>
<CAPTION>
Templeton Templeton
Pacific Foreign Smaller
Growth FundCompanies Fund
---------------------------
<S> <C> <C>
Investment income:
Dividends* $ 1,409,661 $ 2,617,658
Interest 86,730 764,918
---------------------------
Total investment income 1,496,391 3,382,576
---------------------------
Expenses:
Management fees (Note 3) 571,117 958,913
Distribution fees (Note 3)
Class I 92,093 238,459
Class II 6,054 --
Transfer agent fees (Note 3) 127,500 157,000
Custodian fees 33,000 53,500
Reports to shareholders 48,100 34,500
Registration and filing fees 46,740 59,575
Professional fees 11,300 15,500
Other 470 3,171
---------------------------
Total expenses 936,374 1,520,618
Expenses waived/paid by affiliate(Note3) -- (92,289)
---------------------------
Net expenses 936,374 1,428,329
---------------------------
Net investment income 560,017 1,954,247
---------------------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments 310,184 5,443,682
Foreign currency transactions (107,284) 1,441
---------------------------
Net realized gain 202,900 5,445,123
Net unrealized appreciation (depreciation) on investments (13,054,143) 2,802,188
---------------------------
Net realized and unrealized gain (loss) (12,851,243) 8,247,311
---------------------------
Net increase (decrease) in net assets resulting from operations $(12,291,226) $10,201,558
===========================
*Net of foreign taxes of $105,991 and $311,234 for the Pacific Growth Fund and
Foreign Smaller Companies Fund, respectively.
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements (continued)
Statements of Changes in Net Assets
for the years ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
Templeton Templeton
Pacific Foreign Smaller
Growth Fund Companies Fund
-----------------------------------------------------
1997 1996 1997 1996
-----------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 560,017 $ 663,108 $ 1,954,247 $ 1,490,418
Net realized gain (loss)
from investments and foreign
currency transactions 202,900 (55,680) 5,445,123 4,922,724
Net unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign currencies (13,054,143) 5,378,013 2,802,188 3,514,247
-----------------------------------------------------
Net increase in net assets
resulting from operations (12,291,226) 5,985,441 10,201,558 9,927,389
Distributions to shareholders from:
Net investment income:
Class I (436,548) (809,330) (1,719,949) (991,682)
Class II (1,123) -- -- --
Advisor Class (3,363) -- -- --
Net realized gains:
Class I -- (3,513,636) (3,465,592) (4,004,586)
Capital share transactions (Note 2)
Class I (6,898,773) 7,830,484 48,596,181 12,088,092
Class II 2,795,305 -- -- --
Advisor Class 1,717,135 -- 3,765,571 --
-----------------------------------------------------
Net increase (decrease) in net assets (15,118,593) 9,492,959 57,377,769 17,019,213
Net assets:
Beginning of year 59,739,843 50,246,884 67,966,635 50,947,422
-----------------------------------------------------
End of year $44,621,250 $59,739,843 $125,344,404 $67,966,635
=====================================================
Undistributed net investment income
included in net assets:
End of year $ 153,359 $ 34,376 $ 1,134,508 $ 900,210
=====================================================
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton International Trust (the Trust) is registered under the
Investment Company Act of 1940 as an open-end, diversified investment company,
consisting of two Funds. The Funds and their investment policies are:
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. Templeton Foreign Smaller Companies 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 summarizes the Fund's significant accounting policies.
a. Security Valuation:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.
b. Foreign Currency Translation:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of securities and income items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. When the Funds purchase or sell foreign securities they will customarily
enter into a foreign exchange contract to minimize foreign exchange risk from
the trade date to the settlement date of such transactions.
The Funds do not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign currency denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
c. Income Taxes:
No provision has been made for income taxes because each Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
d. Security Transactions, Investment Income, Expenses and Distributions:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount is
amortized on an income tax basis. Dividend income and distributions to
shareholders are recorded on the ex-divident date. Certain income from foreign
securities is recorded as soon as information is available to the Fund.
e. Investment Income, Expenses and Distributions:
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. Other expenses are
charged to each Fund on a specific identification basis.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
f. Repurchase Agreements:
The Fund may enter into repurchase agreements, which are accounted for as a loan
by the Fund to the seller, collateralized by securities which are delivered to
the Funds' custodian. The market 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%. At October 31, 1997, all
outstanding repurchase agreements held by the Funds had been entered into on
that date.
g. 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. SHARES OF BENEFICIAL INTEREST
The Pacific Growth Fund offers three classes of shares: Class I, Class II and
Advisor Class shares, and the Foreign Smaller Companies Fund offers two classes
of shares: Class I and Advisor Class shares. The shares differ by their initial
sales load, distribution fees, voting rights on matters affecting a single class
and the exchange privilege of each class.
At October 31, 1997, there were an unlimited number of shares authorized ($.01
par value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
Templeton
Templeton Pacific Foreign Smaller
Growth Fund Companies Fund
-----------------------------------------------
Class I Shares Amount Shares Amount
-----------------------------------------------
<S> <C> <C> <C> <C>
Year ended October 31, 1997
Shares sold 5,435,941 $76,600,239 5,719,497 $85,126,909
Shares issued in reinvestment of distributions. 24,706 372,583 327,209 4,482,693
Shares redeemed (5,815,156) (83,871,595) (2,764,102)(41,013,421)
-----------------------------------------------
Net increase (decrease) (354,509) $(6,898,773) 3,282,604 $48,596,181
===============================================
Year ended October 31, 1996
Shares sold 6,244,033 $91,529,496 2,851,402 $38,019,671
Shares issued in reinvestment of distributions. 273,824 3,846,596 362,506 4,445,701
Shares redeemed (5,957,749)(87,545,608) (2,273,240)(30,377,280)
-----------------------------------------------
Net increase 560,108 $ 7,830,484 940,668 $12,088,092
===============================================
Class II+ Shares Amount
----------------------
Year ended October 31, 1997
Shares sold. 505,147 $ 6,723,229
Shares issued in reinvestment of distributions. 69 1,034
Shares redeemed (291,793) (3,928,958)
--------------------
Net increase 213,423 $ 2,795,305
====================
Advisor Class+ Shares Amount Shares Amount
----------------------------------------------
For the period January 2, 1997 through October 31, 1997
Shares sold. 126,880 $ 1,745,974 400,189 $ 6,248,096
Shares issued in reinvestment of distributions. 218 3,308 458 6,889
Shares redeemed. (2,401) (32,147) (153,755) (2,489,414)
----------------------------------------------
Net increase. 124,697 $ 1,717,135 246,892 $ 3,765,571
==============================================
</TABLE>
+Effective date of Class II and Advisor Class shares was January 2, 1997.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Trust are also officers and/or directors of Franklin
Advisers, Inc. (Advisers), Franklin/Templeton Distributors, Inc. (Distributors)
and Franklin/Templeton Investor Services, Inc. (Investor Services), the Funds'
investment manager, principal underwriter and transfer agent, respectively.
The Funds pay an investment management fee to Advisers based on the average
daily net assets of each Fund as follows:
Annualized
Fee Rate Average Daily Net Assets
1.00% First $100 million
0.90% Over $100 million, up to and including $250 million
0.80% Over $250 million, up to and including $500 million
0.75% Over $500 million
Under a subadvisory agreement, Templeton Investment Counsel, Inc., a
wholly-owned subsidiary of Franklin Resources, Inc., provides subadvisory
services to the Funds and receives from Advisers fees based on the average daily
net assets of the Funds as follows:
Annualized
Fee Rate Average Daily Net Assets
0.50% First $100 million
0.40% Over $100 million, up to and including $250 million
0.30% Over $250 million, up to and including $500 million
0.25% Over $500 million
Effective March 1, 1997, Advisers agreed in advance to reduce fees to the extent
necessary to limit total expenses of the Templeton Foreign Smaller Companies
Fund to an annual rate of 1.45% and 1.20% of the average daily net assets of
Class I and Advisor Class shares, respectively, as noted in the Statement of
Operations.
The Templeton Pacific Growth Fund reimburses Distributors up to 0.25% and 1.00%
per year of the average daily net assets of Class I and Class II, respectively,
and the Templeton Foreign Smaller Companies Fund reimburses Distributors up to
0.25% per year of the average daily net assets of Class I, for cost incurred in
marketing the Funds' shares.
Distributors received net commissions on sales of Fund shares and paid
commissions to other dealers for the year ended October 31, 1997 as follows:
Templeton Templeton
Pacific Foreign Smaller
Growth Fund Companies Fund
-------------------------------
Total commissions received $483,600 $1,059,592
Paid to other dealers $418,316 $ 903,150
4. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended October 31, 1997 were as follows:
Templeton Templeton
Pacific Foreign Smaller
Growth Fund Companies Fund
-------------------------------
Purchases $13,520,739 $65,346,875
Sales $22,655,182 $27,421,760
5. INCOME TAXES
The cost of securities for income tax purposes is the same as that shown in the
investment portfolio, except for the Templeton Pacific Growth Fund, whose cost
for tax purposes is $51,186,675.
At October 31, 1997, the net unrealized appreciation (depreciation) based on the
cost of investments for income tax purposes are as follows:
Templeton Templeton
Pacific Foreign Smaller
Growth Fund Companies Fund
------------------------------
Unrealized appreciation $ 2,418,839 $17,039,136
Unrealized depreciation (13,133,590) (10,225,582)
------------------------------
Net unrealized depreciation$(10,714,751) $ 6,813,554
==============================
Net Investment Income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Report of Independent Accountants
To the Shareholders and Board of Trustees
of Franklin Templeton International Trust:
We have audited the accompanying statement of assets and liabilities of each of
the funds comprising of the Franklin Templeton International Trust, including
each fund's statement of investments in securities and net assets, as of October
31, 1997, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the funds comprising the Franklin Templeton International Trust as of October
31, 1997, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended and their
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Ft. Lauderdale, Florida
November 26, 1997
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Tax Designation
Templeton Pacific Growth Fund
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Templeton Pacific
Growth Fund hereby designates $275,200 as a capital gain dividend for the fiscal
year ended October 31, 1997.
Under Section 852(b)(2) of the Internal Revenue Code, the Templeton Pacific
Growth Fund hereby designates 2.20% of the ordinary income dividends as income
qualifying for the dividends received deduction for the fiscal year ended
October 31, 1997.
At October 31, 1997, more than 50% of the Templeton Pacific Growth Fund's total
assets were invested in securities of foreign issuers. In most instances,
foreign taxes were withheld from dividends paid to the fund on these
investments. As in prior years, the Fund intends to make an election under
Section 853 of the Internal Revenue Code. This election will allow shareholders
to treat their proportionate share of foreign taxes paid by the Fund as having
been paid directly by them.
In January 1998, shareholders will receive Form 1099-DIV, which will include
his/her share of taxes withheld and foreign source income distributed during
calendar year 1997.
a. The following table provides a breakdown by country of foreign taxes paid and
foreign source income to Class I shareholders during the fiscal year ending
October 31, 1997:
<TABLE>
<CAPTION>
December 1996 June 1997
----------------------------------------------------
Foreign Tax Foreign Foreign Tax Foreign
Paid Source Income Paid Source Income
Per Share Per Share Per Share Per Share
----------------------------------------------------
<S> <C> <C> <C> <C>
Australia 0.0022 0.0141 0.0011 0.0045
China 0.0000 0.0030 0.0000 0.0015
Hong Kong 0.0000 0.0264 0.0000 0.0129
India 0.0001 0.0003 0.0000 0.0009
Indonesia 0.0025 0.0027 0.0006 0.0014
Japan 0.0031 0.0048 0.0007 0.0017
Korea (South) 0.0005 0.0007 0.0001 0.0003
Malaysia 0.0025 0.0030 0.0016 0.0024
New Zealand 0.0008 0.0013 0.0004 0.0010
Pakistan 0.0015 0.0023 0.0008 0.0020
Philippines 0.0002 0.0001 0.0000 0.0000
Singapore 0.0013 0.0012 0.0006 0.0009
Thailand 0.0019 0.0048 0.0004 0.0025
---------------------------------------------------
TOTAL $0.0166 $0.0647 $0.0063 $0.0320
===================================================
b. The following table provides a breakdown by country of foreign taxes paid and
foreign source income to Class II shareholders during the fiscal year ending
October 31, 1997:
June 1997
-----------------------------
Foreign Tax Foreign
Paid Source Income
Country Per Share Per Share
-----------------------------
<S> <C> <C>
Australia 0.0011 0.0036
China 0.0000 0.0012
Hong Kong 0.0000 0.0103
India 0.0000 0.0007
Indonesia 0.0006 0.0011
Japan 0.0007 0.0014
Korea (South) 0.0001 0.0002
Malaysia 0.0016 0.0019
New Zealand 0.0004 0.0008
Pakistan 0.0008 0.0016
Singapore 0.0006 0.0007
Thailand 0.0004 0.0020
-----------------------------
TOTAL $0.0063 $0.0255
=============================
c. The following table provides a breakdown by country of foreign taxes paid and
foreign source income to Advisor Class shareholders during the fiscal year
ending October 31, 1997:
June 1997
-----------------------------
Foreign Tax Foreign
Paid Source Income
Country Per Share Per Share
-----------------------------
<S> <C> <C>
Australia 0.0011 0.0055
China 0.0000 0.0018
Hong Kong 0.0000 0.0156
India 0.0000 0.0012
Indonesia 0.0006 0.0018
Japan 0.0007 0.0021
Korea (South) 0.0001 0.0004
Malaysia 0.0016 0.0028
New Zealand 0.0004 0.0013
Pakistan 0.0008 0.0025
Singapore 0.0006 0.0011
Thailand 0.0004 0.0029
-----------------------------
TOTAL $0.0063 $0.0390
=============================
</TABLE>
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Templeton Foreign
Smaller Companies Fund hereby designates $2,362,000 as a capital gain dividend
for the fiscal year ended October 31, 1997.
At October 31, 1997, more than 50% of the Templeton Foreign Smaller Companies
Fund's total assets were invested in securities of foreign issuers. In most
instances, foreign taxes were withheld from dividends paid to the fund on these
investments. As in prior years, the Fund intends to make an election under
Section 853 of the Internal Revenue Code. This election will allow shareholders
to treat their proportionate share of foreign taxes paid by the Fund as having
been paid directly by them.
In January 1998, shareholders will receive Form 1099-DIV, which will include
his/her share of taxes withheld and foreign source income distributed during
calendar year 1997.
a. The following table provides a breakdown by country of foreign taxes paid and
foreign source income to Class I shareholders during the fiscal year ending
October 31, 1997:
<TABLE>
<CAPTION>
December 1996 June 1997
----------------------------------------------------
Foreign Tax Foreign Foreign Tax Foreign
Paid Source Income Paid Source Income
Country Per Share Per Share Per Share Per Share
----------------------------------------------------
<S> <C> <C> <C> <C>
Argentina 0.0000 0.0030 0.0000 0.0003
Australia 0.0008 0.0124 0.0001 0.0017
Austria 0.0001 0.0004 0.0001 0.0004
Belgium 0.0003 0.0016 0.0000 0.0001
Bermuda 0.0000 0.0017 0.0000 0.0001
Brazil 0.0000 0.0006 0.0001 0.0014
Canada 0.0011 0.0052 0.0001 0.0007
China 0.0000 0.0019 0.0000 0.0005
Colombia 0.0000 0.0012 0.0000 0.0001
Denmark 0.0000 0.0000 0.0000 0.0002
Ecuador 0.0000 0.0000 0.0000 0.0003
Egypt 0.0000 0.0000 0.0000 0.0003
Finland 0.0018 0.0102 0.0001 0.0005
France 0.0029 0.0189 0.0002 0.0012
Germany 0.0000 0.0000 0.0000 0.0001
Greece 0.0000 0.0065 0.0000 0.0004
Hong Kong 0.0000 0.0199 0.0000 0.0049
Hungary 0.0000 0.0000 0.0000 0.0000
India 0.0001 0.0004 0.0000 0.0001
Indonesia 0.0000 0.0001 0.0001 0.0004
Israel 0.0000 0.0000 0.0000 0.0001
Italy 0.0012 0.0062 0.0001 0.0006
Korea (South) 0.0003 0.0013 0.0000 0.0001
Mexico 0.0000 0.0023 0.0000 0.0000
Netherlands 0.0043 0.0211 0.0006 0.0031
New Zealand 0.0006 0.0030 0.0002 0.0006
Norway 0.0013 0.0062 0.0004 0.0019
Peru 0.0000 0.0004 0.0000 0.0001
Portugal 0.0005 0.0022 0.0000 0.0001
Singapore 0.0000 0.0047 0.0000 0.0003
South Africa 0.0000 0.0000 0.0000 0.0006
Spain 0.0034 0.0220 0.0004 0.0020
Sweden 0.0034 0.0330 0.0005 0.0033
Switzerland 0.0012 0.0058 0.0001 0.0010
Thailand 0.0000 0.0000 0.0000 0.0003
Turkey 0.0000 0.0000 0.0000 0.0001
United Kingdom 0.0058 0.0348 0.0018 0.0087
----------------------------------------------
TOTAL $0.0291 $0.2270 $0.0049 $0.0366
==============================================
b. The following table provides a breakdown by country of foreign taxes paid and
foreign source income to Advisor Class shareholders during the fiscal year
ending October 31, 1997:
June 1997
--------------------------
Foreign Tax Foreign
Paid Source Income
Country Per Share Per Share
--------------------------
<S> <C> <C>
Argentina 0.0000 0.0004
Australia 0.0001 0.0019
Austria 0.0001 0.0005
Belgium 0.0000 0.0001
Bermuda 0.0000 0.0001
Brazil 0.0001 0.0016
Canada 0.0001 0.0008
China 0.0000 0.0005
Colombia 0.0000 0.0001
Denmark 0.0000 0.0002
Ecuador 0.0000 0.0003
Egypt 0.0000 0.0003
Finland 0.0001 0.0005
France 0.0002 0.0013
Germany 0.0000 0.0001
Greece 0.0000 0.0005
Hong Kong 0.0000 0.0054
Hungary 0.0000 0.0000
India 0.0000 0.0001
Indonesia 0.0001 0.0005
Israel 0.0000 0.0001
Italy 0.0001 0.0006
Japan 0.0000 0.0000
Korea (South) 0.0000 0.0001
Luxembourg 0.0000 0.0000
Mexico 0.0000 0.0000
Netherlands 0.0006 0.0035
New Zealand 0.0002 0.0007
Norway 0.0004 0.0021
Peru 0.0000 0.0001
Portugal 0.0000 0.0001
Singapore 0.0000 0.0003
South Africa 0.0000 0.0007
Spain 0.0004 0.0023
Sweden 0.0005 0.0037
Switzerland 0.0001 0.0011
Thailand 0.0000 0.0003
Turkey 0.0000 0.0001
United Kingdom 0.0018 0.0098
------------------------
TOTAL $0.0049 $0.0408
========================
Franklin Templeton International Trust Annual Report October 31, 1997.
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 bar format the geographic distribution of the Templeton
Pacific Growth Fund on October 31, 1997, based on total net assets.
Geographic Disribution on October 31, 1997
Hong Kong 26.8%
Japan 14.6%
Singapore 6.7%
Australia 6.1%
China 5.2%
Malaysia 4.9%
Pakistan 4.3%
India 4.1%
Thailand 3.8%
Indonesia 3.6%
New Zealand 3.0%
Philippines 1.4%
South Korea 1.1%
Short-Term Obligations & Other Net Assets 14.4%
GRAPHIC MATERIAL (2)
The following line graph hypothetically compares the performance of the
Templeton Pacific Growth Fund - Class I shares to that of the MSCI Pacific
Index, based on a $10,000 investment from 9/20/91 to 10/31/97.
Period Ending Fund MSCI
Templeton MSCI
Pacific Pacific
Growth Fund- Index
Class I*
9/20/91 $9,426 $10,000
Sep-91 $9,444 $10,250
Oct-91 $9,482 $10,688
Nov-91 $9,426 $10,002
Dec-91 $9,768 $10,311
Jan-92 $9,816 $9,913
Feb-92 $10,015 $9,220
Mar-92 $9,816 $8,345
Apr-92 $9,968 $7,964
May-92 $10,452 $8,587
Jun-92 $10,819 $7,914
Jul-92 $10,160 $7,806
Aug-92 $9,893 $8,877
Sep-92 $9,931 $8,675
Oct-92 $10,409 $8,371
Nov-92 $10,313 $8,530
Dec-92 $10,125 $8,434
Jan-93 $10,293 $8,420
Feb-93 $10,718 $8,831
Mar-93 $10,718 $9,899
Apr-93 $11,458 $11,478
May-93 $12,012 $11,814
Jun-93 $11,757 $11,622
Jul-93 $12,007 $12,311
Aug-93 $12,725 $12,677
Sep-93 $12,865 $12,205
Oct-93 $14,412 $12,478
Nov-93 $14,342 $10,719
Dec-93 $16,294 $11,468
Jan-94 $16,465 $12,797
Feb-94 $15,941 $13,129
Mar-94 $14,693 $12,406
Apr-94 $14,904 $12,945
May-94 $15,599 $13,255
Jun-94 $15,114 $13,690
Jul-94 $15,520 $13,398
Aug-94 $16,210 $13,633
Sep-94 $15,530 $13,294
Oct-94 $15,631 $13,632
Nov-94 $14,464 $12,874
Dec-94 $14,553 $12,962
Jan-95 $13,295 $12,146
Feb-95 $13,898 $11,847
Mar-95 $14,293 $12,759
Apr-95 $14,470 $13,304
May-95 $15,021 $12,774
Jun-95 $14,744 $12,235
Jul-95 $15,340 $13,119
Aug-95 $15,152 $12,627
Sep-95 $15,382 $12,746
Oct-95 $14,775 $12,128
Nov-95 $14,786 $12,727
Dec-95 $15,404 $13,350
Jan-96 $16,589 $13,375
Feb-96 $16,523 $13,226
Mar-96 $16,434 $13,634
Apr-96 $17,132 $14,330
May-96 $17,154 $13,710
Jun-96 $16,917 $13,715
Jul-96 $16,033 $13,087
Aug-96 $16,350 $12,745
Sep-96 $16,735 $13,163
Oct-96 $16,429 $12,554
Nov-96 $17,381 $12,896
Dec-96 $17,229 $12,228
Jan-97 $16,921 $11,201
Feb-97 $16,990 $11,436
Mar-97 $16,192 $11,019
Apr-97 $16,261 $8,527
May-97 $17,399 $12,353
Jun-97 $17,565 $13,120
Jul-97 $18,033 $12,808
Aug-97 $15,534 $11,539
Sep-97 $15,853 $11,497
Oct-97 $12,418 $10,102
GRAPHIC MATERIAL (3)
The following line graph hypothetically compares the performance of the
Templeton Pacific Growth - Class II shares to that of the MSCI Pacific Index,
based on a $10,000 investment from (1/2/97 - 10/31/97).
Period ending Fund MSCI
Templeton MSCI
Pacific Pacific
Growth Fund- Index
Class II*
1/2/97 $9,902 $10,000
Jan-97 $9,731 $9,160
Feb-97 $9,764 $9,352
Mar-97 $9,298 $9,011
Apr-97 $9,331 $6,973
May-97 $9,987 $10,102
Jun-97 $10,071 $10,729
Jul-97 $10,327 $10,474
Aug-97 $8,882 $9,436
Sep-97 $9,059 $9,402
Oct-97 $7,031 $8,261
GRAPHIC MATERIAL (4)
The following line graph hypothetically compares the performance of the
Templeton Pacific Growth Fund - Advisor Class shares to that of the MSCI Index,
based on a $10,000 investment from 9/20/91 - 10/31/97.
Period Ending Fund MSCI
Templeton MSCI
Pacific Pacific
Growth Fund- Index
Advisor Class
9/20/91 $10,000 $10,000
Sep-91 $10,020 $10,250
Oct-91 $10,060 $10,688
Nov-91 $10,000 $10,002
Dec-91 $10,364 $10,311
Jan-92 $10,414 $9,913
Feb-92 $10,626 $9,220
Mar-92 $10,414 $8,345
Apr-92 $10,575 $7,964
May-92 $11,089 $8,587
Jun-92 $11,479 $7,914
Jul-92 $10,780 $7,806
Aug-92 $10,496 $8,877
Sep-92 $10,537 $8,675
Oct-92 $11,043 $8,371
Nov-92 $10,942 $8,530
Dec-92 $10,742 $8,434
Jan-93 $10,920 $8,420
Feb-93 $11,371 $8,831
Mar-93 $11,371 $9,899
Apr-93 $12,157 $11,478
May-93 $12,744 $11,814
Jun-93 $12,474 $11,622
Jul-93 $12,738 $12,311
Aug-93 $13,501 $12,677
Sep-93 $13,649 $12,205
Oct-93 $15,290 $12,478
Nov-93 $15,216 $10,719
Dec-93 $17,287 $11,468
Jan-94 $17,468 $12,797
Feb-94 $16,913 $13,129
Mar-94 $15,588 $12,406
Apr-94 $15,812 $12,945
May-94 $16,550 $13,255
Jun-94 $16,035 $13,690
Jul-94 $16,466 $13,398
Aug-94 $17,198 $13,633
Sep-94 $16,476 $13,294
Oct-94 $16,584 $13,632
Nov-94 $15,346 $12,874
Dec-94 $15,440 $12,962
Jan-95 $14,105 $12,146
Feb-95 $14,745 $11,847
Mar-95 $15,164 $12,759
Apr-95 $15,352 $13,304
May-95 $15,936 $12,774
Jun-95 $15,643 $12,235
Jul-95 $16,275 $13,119
Aug-95 $16,075 $12,627
Sep-95 $16,320 $12,746
Oct-95 $15,676 $12,128
Nov-95 $15,687 $12,727
Dec-95 $16,343 $13,350
Jan-96 $17,600 $13,375
Feb-96 $17,529 $13,226
Mar-96 $17,435 $13,634
Apr-96 $18,176 $14,330
May-96 $18,199 $13,710
Jun-96 $17,948 $13,715
Jul-96 $17,010 $13,087
Aug-96 $17,347 $12,745
Sep-96 $17,755 $13,163
Oct-96 $17,431 $12,554
Nov-96 $18,440 $12,896
Dec-96 $18,279 $12,228
Jan-97 $17,952 $11,201
Feb-97 $18,025 $11,436
Mar-97 $17,191 $11,019
Apr-97 $17,264 $8,527
May-97 $18,484 $12,353
Jun-97 $18,645 $13,120
Jul-97 $19,130 $12,808
Aug-97 $16,476 $11,539
Sep-97 $16,828 $11,497
Oct-97 $13,181 $10,102
Franklin Templeton International Trust Annual Report October 31, 1997.
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM 304
(a) OF REGULATION S-T)
GRAPHIC MATERIAL (5)
This chart shows in bar format the geographic distribution of the Templeton
Smaller Companies Fund on October 31, 1997, based on total net assets.
Geographic Disribution on October 31, 1997
Europe 53.2%
Asia 14.6%
North America 5.6%
Mid-East and Africa 5.5%
Australia and New Zealand 5.2%
Latin America 4.6%
Short-Term Obligations & Other Net Assets 11.3%
GRAPHIC MATERIAL (6)
The following line graph hypothetically compares the performance of the
Templeton Foreign Smaller Companies Fund - Class I shares to that of the
MSCI/EAFE Index, based on a $10,000 investment from 9/20/91 to 10/31/97.
Period Ending Fund Index
Templeton MSCI/EAFE
Foreign Index
Smaller
Companies-
Class I*
9/20/91 $9,426 $10,000
Sep-91 $9,444 $10,268
Oct-91 $9,482 $10,416
Nov-91 $9,397 $9,933
Dec-91 $9,773 $10,449
Jan-92 $9,887 $10,229
Feb-92 $9,982 $9,865
Mar-92 $9,593 $9,217
Apr-92 $9,811 $9,263
May-92 $10,333 $9,886
Jun-92 $10,139 $9,420
Jul-92 $9,908 $9,182
Aug-92 $9,966 $9,761
Sep-92 $9,803 $9,571
Oct-92 $9,620 $9,072
Nov-92 $9,774 $9,160
Dec-92 $9,860 $9,210
Jan-93 $9,715 $9,212
Feb-93 $9,889 $9,493
Mar-93 $10,121 $10,323
Apr-93 $10,497 $11,306
May-93 $10,825 $11,548
Jun-93 $10,480 $11,370
Jul-93 $10,659 $11,771
Aug-93 $11,338 $12,408
Sep-93 $11,298 $12,132
Oct-93 $12,256 $12,509
Nov-93 $11,907 $11,418
Dec-93 $13,116 $12,245
Jan-94 $14,099 $13,283
Feb-94 $13,868 $13,249
Mar-94 $13,377 $12,681
Apr-94 $13,477 $13,222
May-94 $13,527 $13,149
Jun-94 $13,147 $13,338
Jul-94 $13,695 $13,469
Aug-94 $14,111 $13,791
Sep-94 $13,787 $13,359
Oct-94 $14,040 $13,807
Nov-94 $13,340 $13,147
Dec-94 $13,101 $13,232
Jan-95 $12,780 $12,727
Feb-95 $12,983 $12,694
Mar-95 $12,941 $13,489
Apr-95 $13,539 $14,000
May-95 $13,806 $13,836
Jun-95 $14,156 $13,598
Jul-95 $14,826 $14,448
Aug-95 $14,394 $13,900
Sep-95 $14,750 $14,175
Oct-95 $14,286 $13,798
Nov-95 $14,351 $14,185
Dec-95 $14,504 $14,761
Jan-96 $15,024 $14,825
Feb-96 $15,438 $14,878
Mar-96 $15,674 $15,198
Apr-96 $16,147 $15,644
May-96 $16,384 $15,360
Jun-96 $16,438 $15,450
Jul-96 $15,912 $15,002
Aug-96 $16,306 $15,039
Sep-96 $16,509 $15,442
Oct-96 $16,927 $15,288
Nov-96 $17,393 $15,900
Dec-96 $18,011 $15,699
Jan-97 $18,164 $15,154
Feb-97 $18,432 $15,405
Mar-97 $18,535 $15,465
Apr-97 $18,343 $15,551
May-97 $18,930 $16,566
Jun-97 $19,635 $17,484
Jul-97 $19,827 $17,770
Aug-97 $19,943 $16,447
Sep-97 $20,880 $17,371
Oct-97 $19,339 $16,040
GRAPHIC MATERIAL (7)
The following line graph hypothetically compares the performance of the
Templeton Pacific Growth Fund - Advisor Class shares to that of the MSCI/EAFE
Index, based on a $10,000 investment from 9/20/91 - 10/31/97.
Period Ending Fund MSCI/EAFE
Templeton MSCI EAFE
Foreign Index
Smaller
Companies-
Advisor Class
9/20/91 $10,000 $10,000
Sep-91 $10,020 $10,268
Oct-91 $10,060 $10,416
Nov-91 $9,970 $9,933
Dec-91 $10,369 $10,449
Jan-92 $10,490 $10,229
Feb-92 $10,590 $9,865
Mar-92 $10,177 $9,217
Apr-92 $10,409 $9,263
May-92 $10,963 $9,886
Jun-92 $10,757 $9,420
Jul-92 $10,512 $9,182
Aug-92 $10,573 $9,761
Sep-92 $10,400 $9,571
Oct-92 $10,207 $9,072
Nov-92 $10,370 $9,160
Dec-92 $10,461 $9,210
Jan-93 $10,307 $9,212
Feb-93 $10,492 $9,493
Mar-93 $10,737 $10,323
Apr-93 $11,136 $11,306
May-93 $11,484 $11,548
Jun-93 $11,118 $11,370
Jul-93 $11,309 $11,771
Aug-93 $12,029 $12,408
Sep-93 $11,987 $12,132
Oct-93 $13,003 $12,509
Nov-93 $12,633 $11,418
Dec-93 $13,915 $12,245
Jan-94 $14,958 $13,283
Feb-94 $14,713 $13,249
Mar-94 $14,192 $12,681
Apr-94 $14,298 $13,222
May-94 $14,351 $13,149
Jun-94 $13,948 $13,338
Jul-94 $14,530 $13,469
Aug-94 $14,971 $13,791
Sep-94 $14,627 $13,359
Oct-94 $14,896 $13,807
Nov-94 $14,153 $13,147
Dec-94 $13,899 $13,232
Jan-95 $13,559 $12,727
Feb-95 $13,775 $12,694
Mar-95 $13,729 $13,489
Apr-95 $14,364 $14,000
May-95 $14,648 $13,836
Jun-95 $15,019 $13,598
Jul-95 $15,729 $14,448
Aug-95 $15,271 $13,900
Sep-95 $15,649 $14,175
Oct-95 $15,156 $13,798
Nov-95 $15,225 $14,185
Dec-95 $15,388 $14,761
Jan-96 $15,940 $14,825
Feb-96 $16,379 $14,878
Mar-96 $16,629 $15,198
Apr-96 $17,131 $15,644
May-96 $17,382 $15,360
Jun-96 $17,439 $15,450
Jul-96 $16,882 $15,002
Aug-96 $17,300 $15,039
Sep-96 $17,515 $15,442
Oct-96 $17,959 $15,288
Nov-96 $18,453 $15,900
Dec-96 $19,108 $15,699
Jan-97 $19,271 $15,154
Feb-97 $19,556 $15,405
Mar-97 $19,678 $15,465
Apr-97 $19,461 $15,551
May-97 $20,098 $16,566
Jun-97 $20,858 $17,484
Jul-97 $21,076 $17,770
Aug-97 $21,199 $16,447
Sep-97 $22,222 $17,371
Oct-97 $20,572 $16,040
</TABLE>
