oFTIT STKP2
SUPPLEMENT DATED AUGUST 3, 1998
TO THE PROSPECTUS OF
FRANKLIN TEMPLETON INTERNATIONAL TRUST
DATED MARCH 1, 1998
The prospectus is amended as follows:
I. The first sentence of the first paragraph on the front cover is replaced with
the following:
This prospectus describes Class I and Class II shares of the Templeton Foreign
Smaller Companies Fund (the "Smaller Companies Fund") and the Templeton Pacific
Growth Fund (the "Pacific Fund").
II. The section "Expense Summary" is replaced with the following:
EXPENSE SUMMARY
This table is designed to help you understand the costs of investing in the
Fund. It is based on the historical expenses of each class for the fiscal year
ended October 31, 1997, except that for Smaller Companies Fund - Class II it is
based on the historical expenses of Smaller Companies Fund - Class I for the
same period. Pacific Fund - Class II expenses are annualized. The Fund's actual
expenses may vary.
<TABLE>
<CAPTION>
SMALLER SMALLER
COMPANIES COMPANIES PACIFIC PACIFIC
FUND FUND FUND FUND
CLASS I CLASS II CLASS I CLASS II
- ----------------------------------------------------------------------------------------
A. SHAREHOLDER TRANSACTION EXPENSES+
Maximum Sales Charge
<S> <C> <C> <C> <C>
(as a percentage of Offering Price) .. 5.75% 1.99% 5.75% 1.99%
Paid at time of purchase ............ 5.75%++ 1.00%+++ 5.75%++ 1.00%+++
Paid at redemption++++ .............. None 0.99% None 0.99%
Exchange Fee (per transaction) ....... $5.00* $5.00* None None
B. ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees ...................... 1.00%** 1.00%** 1.00% 1.00%
Rule 12b-1 Fees*** ................... 0.25% 1.00% 0.17% 1.00%
Other Expenses ....................... 0.33% 0.33% 0.46% 0.48%
-----------------------------------------
Total Fund Operating Expenses ........ 1.58%** 2.33%** 1.63% 2.48%
=========================================
</TABLE>
C. EXAMPLE
Assume the annual return for each class is 5%, operating expenses are as
described above, and you sell your shares after the number of years shown.
These are the projected expenses for each $1,000 that you invest in the Fund.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
SMALLER COMPANIES FUND - CLASS I ........ $73**** $105 $139 $235
SMALLER COMPANIES FUND - CLASS II ....... $43 $ 82 $133 $274
PACIFIC FUND - CLASS I .................. $73**** $106 $141 $240
PACIFIC FUND - CLASS II ................. $45 $ 86 $141 $289
For the same Class II investment, you would pay projected expenses of $33
(Smaller Companies Fund) or $35 (Pacific Fund) if you did not sell your
shares at the end of the first year. Your projected expenses for the
remaining periods would be the same.
THIS IS JUST AN EXAMPLE. IT DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR
RETURNS. ACTUAL EXPENSES AND RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
The Fund pays its operating expenses. The effects of these expenses are
reflected in the Net Asset Value or dividends of each class and are not
directly charged to your account.
+If your transaction is processed through your Securities Dealer, you may be
charged a fee by your Securities Dealer for this service.
++There is no front-end sales charge if you invest $1 million or more in Class I
shares.
+++Although Class II has a lower front-end sales charge than Class I, its Rule
12b-1 fees are higher. Over time you may pay more for Class II shares. Please
see "How Do I Buy Shares? - Choosing a Share Class."
++++A Contingent Deferred Sales Charge may apply to any Class II purchase if you
sell the shares within 18 months and to Class I purchases of $1 million or more
if you sell the shares within one year. A Contingent Deferred Sales Charge may
also apply to purchases by certain retirement plans that qualify to buy Class I
shares without a front-end sales charge. The charge is 1% of the value of the
shares sold or the Net Asset Value at the time of purchase, whichever is less.
The number in the table shows the charge as a percentage of Offering Price.
While the percentage is different depending on whether the charge is shown based
on the Net Asset Value or the Offering Price, the dollar amount you would pay is
the same. See "How Do I Sell Shares? - Contingent Deferred Sales Charge" for
details.
*$5.00 fee is only for Market Timers. We process all other exchanges without a
fee.
**For the period shown, Advisers had agreed in advance to limit its management
fees. With this reduction, management fees were 0.90% and total operating
expenses were 1.48% for Class I and would have been 2.23% for Class II.
***These fees may not exceed 0.25% for Class I and 1.00% for Class II. The
combination of front-end sales charges and Rule 12b-1 fees could cause long-term
shareholders to pay more than the economic equivalent of the maximum front-end
sales charge permitted under the NASD's rules.
****Assumes a Contingent Deferred Sales Charge will not apply.
III. The section "Management Team," found under "Who Manages the Fund?", is
revised to add Juan J. Benito to the Smaller Companies Fund management team,
effective July 1997, and to add the following:
Juan J. Benito
Portfolio Manager of Investment Counsel
Mr. Benito is currently a portfolio manager and research analyst with
Investment Counsel. He holds an MBA from the Harvard Business School and a
BS/MS in engineering from the Polytechnical University of Valencia, Spain.
Before joining the Templeton organization in 1996, Mr. Benito 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's research responsibilities include coverage of
European small cap companies.
IV. The third, fourth and fifth paragraphs in the section "The Rule 12b-1
Plans," found under "Who Manages the Fund?", are replaced with the following:
Under the Class II plan, the Fund may pay Distributors up to 0.75% per year of
Class II's average daily net assets to pay Distributors or others for providing
distribution and related services and bearing certain Class II expenses. All
distribution expenses over this amount will be borne by those who have incurred
them. During the first year after a purchase of Class II shares, Securities
Dealers may not be eligible to receive this portion of the Rule 12b-1 fees
associated with the purchase.
The Fund may also pay a servicing fee of up to 0.25% per year of Class II's
average daily net assets under the Class II plan. This fee may be used to pay
Securities Dealers or others for, among other things, helping to establish and
maintain customer accounts and records, helping with requests to buy and sell
shares, receiving and answering correspondence, monitoring dividend payments
from the Fund on behalf of customers, and similar servicing and account
maintenance activities.
The Rule 12b-1 fees charged to each class are based only on the fees
attributable to that particular class. For more information, please see "The
Fund's Underwriter" in the SAI.
V. The first paragraph under "How Is the Trust Organized?" is replaced with the
following paragraph:
Each Fund is a diversified series of the Trust, an open-end management
investment company, commonly called a mutual fund. It was organized as a
Delaware business trust on March 22, 1991, and is registered with the SEC. As
of January 2, 1997, each Fund began offering new classes of shares designated
Templeton Foreign Smaller Companies Fund - Advisor Class, Templeton Pacific
Growth Fund - Class II and Templeton Pacific Growth Fund - Advisor Class. As of
July 1, 1998, the Smaller Companies Fund began offering a new class of shares
designated Templeton Foreign Smaller Companies Fund - Class II. All shares
outstanding before the offering of Class II and Advisor Class shares have been
designated Class I shares. Additional series and classes of shares may be
offered in the future.
VI. The last paragraph under "How Is the Trust Organized?" is replaced with the
following paragraph:
As of June 2, 1998, Trust Company, as trustee for ValuSelect - Resources Profit
Sharing Plan, owned of record and beneficially more than 25% of the outstanding
shares of Pacific Fund's Advisor Class.
VII. The second step in the section "How Do I Buy Shares? - Opening Your
Account" is replaced with the following:
2. Determine how much you would like to invest. The Fund's minimum investments
are:
o To open a regular, non-retirement account ..................... $1,000
o To open an IRA, IRA Rollover, Roth IRA, or Education IRA ...... $ 250*
o To open a custodial account for a minor (an UGMA/UTMA account) $ 100
o To open an account with an automatic investment plan .......... $ 50**
o To add to an account .......................................... $ 50***
*For all other retirement accounts, there is no minimum investment requirement.
**$25 for an Education IRA.
***For all retirement accounts except IRAs, IRA Rollovers, Roth IRAs, or
Education IRAs, there is no minimum to add to an account.
For purchases by broker-dealers, registered investment advisors or certified
financial planners who have entered into an agreement with Distributors for
clients participating in comprehensive fee programs, the minimum initial
investment is $250. The minimum initial investment is $100 for officers,
trustees, directors and full-time employees of the Franklin Templeton Funds or
the Franklin Templeton Group, and their family members, consistent with our
then-current policies.
We reserve the right to change the amount of these minimums from time to time
or to waive or lower these minimums for certain purchases. We also reserve the
right to refuse any order to buy shares.
VIII. The following new categories 7 and 8 are added to the end of the first
list of sales charge waiver categories in the section "Sales Charge Waivers,"
found under "How Do I Buy Shares? - Sales Charge Reductions and Waivers":
7. Redemption proceeds from a repurchase of shares of Franklin Floating Rate
Trust, if the shares were continuously held for at least 12 months.
If you immediately placed your redemption proceeds in a Franklin Bank CD or
a Franklin Templeton money fund, you may reinvest them as described above.
The proceeds must be reinvested within 365 days from the date the CD
matures, including any rollover, or the date you redeem your money fund
shares.
8. Redemption proceeds from the sale of Class A shares of any of the Templeton
Global Strategy Funds if you are a qualified investor.
If you paid a contingent deferred sales charge when you redeemed your Class
A shares from a Templeton Global Strategy Fund, a Contingent Deferred Sales
Charge will apply to your purchase of Fund shares and a new Contingency
Period will begin. We will, however, credit your Fund account with
additional shares based on the contingent deferred sales charge you paid and
the amount of the redemption proceeds that you reinvest.
If you immediately placed your redemption proceeds in a Franklin Templeton
money fund, you may reinvest them as described above. The proceeds must be
reinvested within 365 days from the date they are redeemed from the money
fund.
IX. The following new category 12 is added to the end of the second list of
sales charge waiver categories in the section "Sales Charge Waivers," found
under "How Do I Buy Shares? - Sales Charge Reductions and Waivers":
12. Qualified registered investment advisors who buy through a broker-dealer or
service agent who has entered into an agreement with Distributors
X. The following paragraph is added at the end of the section "How Do I Buy
Shares?":
FOR INVESTORS OUTSIDE THE U.S.
The distribution of this prospectus and the offering of Fund shares may be
limited in many jurisdictions. An investor who wishes to buy shares of the Fund
should determine, or have a broker-dealer determine, the applicable laws and
regulations of the relevant jurisdiction. Investors are responsible for
compliance with tax, currency exchange or other regulations applicable to
redemption and purchase transactions in any jurisdiction to which they may be
subject. Investors should consult appropriate tax and legal advisors to obtain
information on the rules applicable to these transactions.
XI. The first paragraph under "May I Exchange Shares for Shares of Another Fund?
Will Sales Charges Apply to My Exchange?" is replaced with the following:
You generally will not pay a front-end sales charge on exchanges. If you have
held your shares less than six months, however, you will pay the percentage
difference between the sales charge you previously paid and the applicable
sales charge of the new fund, if the difference is more than 0.25%. If you have
never paid a sales charge on your shares because, for example, they have always
been held in a money fund, you will pay the Fund's applicable sales charge no
matter how long you have held your shares. These charges may not apply if you
qualify to buy shares without a sales charge.
XII. The following new item is added under "May I Exchange Shares for Shares of
Another Fund? Exchange Restrictions":
o You must meet the applicable minimum investment amount of the fund you are
exchanging into, or exchange 100% of your Fund shares.
XIII. The section "Keeping Your Account Open," found under "Transaction
Procedures and Special Requirements," is replaced in its entirety with the
following:
KEEPING YOUR ACCOUNT OPEN
Due to the relatively high cost of maintaining a small account, we may close
your account if the value of your shares is less than $250, or less than $50
for employee accounts and custodial accounts for minors. We will only do this
if the value of your account fell below this amount because you voluntarily
sold your shares and your account has been inactive (except for the
reinvestment of distributions) for at least six months. Before we close your
account, we will notify you and give you 30 days to increase the value of your
account to $1,000, or $100 for employee accounts and custodial accounts for
minors. These minimums do not apply to IRAs and other retirement plan accounts
or to accounts managed by the Franklin Templeton Group.
XIV. The last paragraph in the section "TeleFACTS(R)," found under "Services to
Help You Manage Your Account," is replaced with the following:
You will need the code number for each class to use TeleFACTS(R). The code
number for the Smaller Companies Fund is 191 for Class I and 291 for Class II.
The code number for the Pacific Fund is 190 for Class I and 290 for Class II.
XV. The following terms and definitions are revised in the section "Useful Terms
and Definitions":
CLASS I, CLASS II AND ADVISOR CLASS - The Fund offers three classes of shares,
designated "Class I," "Class II," and "Advisor Class." The three classes have
proportionate interests in the Fund's portfolio. They differ, however,
primarily in their sales charge and expense structures.
CONTINGENCY PERIOD - For Class I shares, the 12 month period during which a
Contingent Deferred Sales Charge may apply. For Class II shares, the
contingency period is 18 months. The holding period for Class I begins on the
first day of the month in which you buy shares. Regardless of when during the
month you buy Class I shares, they will age one month on the last day of that
month and each following month. The holding period for Class II begins on the
day you buy your shares. For example, if you buy Class II shares on the 18th of
the month, they will age one month on the 18th day of the next month and each
following month.
Please keep this supplement for future reference.
