oFTIT *P3
SUPPLEMENT DATED OCTOBER 1, 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.
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
(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) .... None* None* 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%
======================================
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.
*There is a $5.00 fee for exchanges by Market Timers.
**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. Distribution option 3 in the section "What Distributions Might I
Receive From the Fund? - Distribution Options" is replaced with the following:
3. RECEIVE DISTRIBUTIONS IN CASH - You may receive dividends, or both
dividend and capital gain distributions in cash. If you have the money
sent to another person or to a checking or savings account, you may
need a signature guarantee. If you send the money to a checking or
savings account, please see "Electronic Fund Transfers" under "Services
to Help You Manage Your Account."
XIV. 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.
XV. The second sentence in the section "Services to Help You Manage Your
Account - Automatic Investment Plan" is replaced with the following:
Under the plan, you can have money transferred automatically from your
checking or savings account to the Fund each month to buy additional shares.
XVI. The second paragraph under "Services to Help You Manage Your Account -
Systematic Withdrawal Plan" is replaced with the following:
If you would like to establish a systematic withdrawal plan, please
complete the systematic withdrawal plan section of the shareholder
application included with this prospectus and indicate how you would like
to receive your payments. You may choose to direct your payments to buy the
same class of shares of another Franklin Templeton Fund or have the money
sent directly to you, to another person, or to a checking or savings
account. If you choose to have the money sent to a checking or savings
account, please see "Electronic Fund Transfers" below. Once your plan is
established, any distributions paid by the Fund will be automatically
reinvested in your account.
XVII. The section "Services to Help You Manage Your Account - Electronic Fund
Transfers - Class I Only" is replaced with the following:
ELECTRONIC FUND TRANSFERS
You may choose to have dividend and capital gain distributions or payments
under a systematic withdrawal plan sent directly to a checking or savings
account. If the account is with a bank that is a member of the Automated
Clearing House, the payments may be made automatically by electronic funds
transfer. If you choose this option, please allow at least fifteen days for
initial processing. We will send any payments made during that time to the
address of record on your account.
XVIII. 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.
XIX. The following terms and definitions are revised in the "Useful Terms and
Definitions" section:
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 begins on the day you
buy your shares. For example, if you buy shares on the 18th of the month,
they will age one month on the 18th day of the next month and each
following month.
XX. The following paragraphs are added to the end of the section "What Are
the Risks of Investing in
the Fund?":
EURO. On January 1, 1999, the European Monetary Union (EMU) plans to
introduce a new single currency, the Euro, which will replace the national
currency for participating member countries. If the Fund holds investments
in countries with currencies replaced by the Euro, the investment process,
including trading, foreign exchange, payments, settlements, cash accounts,
custody and accounting will be impacted.
The process to establish the Euro may result in market volatility. It is
not possible to predict the impact of the Euro on the business or financial
condition of European issuers or on the Fund. The transition and the
elimination of currency risk among EMU countries may change the economic
environment and behavior of investors, particularly in European markets. To
the extent the Fund holds non-U.S. dollar (Euro or other) denominated
securities, it will still be exposed to currency risk due to fluctuations
in those currencies versus the U.S. dollar.
Resources has created an interdepartmental team to handle all Euro-related
changes to enable the Franklin Templeton Funds to process transactions
accurately and completely with minimal disruption to business activities. While
there can be no assurance that the Fund will not be adversely affected, the
Managers and their affiliated service providers are taking steps that they
believe are reasonably designed to address the Euro issue.
Please keep this supplement for future reference.
