SHAREHOLDER LETTER
We are pleased to bring you this semiannual report for Franklin Templeton
International Trust, which covers the six months ended April 30, 1999. The Trust
consists of Templeton Foreign Smaller Companies Fund and Templeton Pacific
Growth Fund.
During the six months under review, international equity markets generally
posted strong returns, as the Morgan Stanley Capital International(R)(MSCI)
Europe, Australasia, Far East Index, which tracks the equity markets of 18
nations, reported a 15.44% total return.(1) Thanks in large part to renewed
investor enthusiasm toward Japan, Asian markets performed particularly well
during the period, and the MSCI Pacific Index, representative of equity markets
in six Pacific region countries, posted a six-month return of 27.67%.
Considering the extreme volatility of Asian equity markets in recent years, this
was excellent news for investors.
CONTENTS
Shareholder Letter ........................................................ 1
Fund Reports
Templeton Foreign Smaller
Companies Fund ........................................................... 4
Templeton Pacific
Growth Fund .............................................................. 10
Financial Highlights &
Statement of Investments .................................................. 16
Financial Statements ...................................................... 32
Notes to
Financial Statements ...................................................... 36
FUND CATEGORY
[PYRAMID GRAPH]
1. Source: Standard & Poor's(R) Micropal. Market returns are measured in U.S.
dollars and include reinvested dividends. An index is an unmanaged group of
securities used to measure market performance. One cannot invest directly in an
index, nor is an index representative of the funds' portfolios.
Investors have generally preferred the perceived safety of liquid, blue chip
stocks over small-cap stocks for the last two years, but this trend reversed
itself during the period in review. Due largely to their relatively low
price/earnings ratios, many investors displayed renewed interest in small-cap
stocks, and the Salomon Brothers Global ex-U.S. less than $1 Billion Index, made
up of global small-cap stocks, delivered a return of 21.80% for the six months
under review, while the MSCI World Index, representative of large-cap companies
in 22 world markets, returned 19.78%.(2)
Of course, past performance is not predictive of future results, and we have
always recommended that shareholders view their investments with a long-term
perspective. That is why I strongly recommend that you discuss your financial
goals with your investment representative and stay focused on the long term.
On the following pages, you will find detailed discussions about Templeton
Foreign Smaller Companies Fund and Templeton Pacific Growth 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 specific information
about the funds, including the effect market conditions and management
strategies have had on their performance, please refer to the Funds' reports
following this letter.
2. Source: Standard & Poor's Micropal. The Salomon Brothers Global ex-U.S. less
than $1 Billion Index is a total-capitalization weighted index that includes all
developed and emerging countries, except the United States, and includes
companies with a total market capitalization below U.S. $1 billion. It includes
reinvested dividends. One cannot invest directly in an index, nor is an index
representative of the fund's portfolio.
We thank you for your continued support, welcome your questions, and look
forward to serving your investment needs in the years to come.
Sincerely,
/s/ Rupert H. Johnson, Jr.
- --------------------------
Rupert H. Johnson, Jr.
President
Franklin Templeton International Trust
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
Your Fund's Goal:Templeton Foreign Smaller Companies Fund seeks to provide
long-term capital growth. Under normal market conditions, the Fund invests at
least 65% of its total assets in equity securities of smaller companies -- those
with market capitalization of less than $1 billion -- located outside the United
States.
During the six month period ended April 30, 1999, international equity markets
generally performed well, particularly small-capitalization (small cap) stocks.
After lackluster performance during the past two years, small-cap stocks
dramatically returned to life in March,and Templeton Foreign Smaller Companies
Fund - Class A provided a six-month 15.25% cumulative total return, as shown in
the Performance Summary on page 9.
Responding to declining interest rates, Asian stock markets rallied sharply
during the six months under review. Confidence in the banking and property
sectors, which had been hit hard by tightening credit, rebounded as banks were
able to make financing available to corporations and homebuyers, especially in
Hong Kong, the Fund's largest Asian exposure. This helped the performance of our
holdings in companies like Dah Sing Financial, a bank we consider to have strong
capital ratios and a quality loan book, and partially offset losses in other
regions. Japanese stocks also performed well, with the Nikkei 225 Index
increasing 20.77%,(1) as foreign investors rebalanced their underweighted
positions in that market. Although we believe Japan appears to be moving in the
right direction, there are many fundamental issues that must be addressed before
economic reform can be pronounced successful. Therefore, Japanese equities
accounted for only 3.9% of the Fund's total net assets on April 30, even though
Asia was the Fund's second largest weighting at that time.
Geographic Distribution(*)
Templeton Foreign
Smaller Companies Fund
Based on Total Net Assets
4/30/99
[PIE CHART]
Europe 61.9%
Asia 20.6%
North America 7.5%
Latin America 5.3%
Australia &
New Zealand 4.9%
Mid-East & Africa 0.7%
(*)Other Net Assets represented -0.9%
of Total Net Assets.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 27 of
this report.
In Europe, the Fund's largest area of concentration, the advent of the euro and
the cross-country investment it inspired appeared to increase investors'
appetites for the perceived quality and liquidity of large-cap stocks in
general. For example, a non-German investor keen to gain a foothold in the
German market at this time might have focused on a familiar name like BMW,
rather than a less well-known one such as Moebel Walther, a German furniture
retailer whose stock was held by the Fund. However, by the end of the period,
many investors began to consider a wider range of European stocks, including
small caps as well as large caps.
TOP 10 INDUSTRIES
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
4/30/99
% OF TOTAL
INDUSTRY NET ASSETS
- ----------------------------------------------------
Merchandising 14.4%
Metals & Mining 6.1%
Building Materials &
Components 6.0%
Food & Household Products 5.4%
Industrial Components 5.3%
Banking 5.1%
Health & Personal Care 5.0%
Chemicals 4.7%
Business & Public Services 4.2%
Broadcasting & Publishing 4.1%
1. Source: Standard & Poor's Micropal. The Nikkei 225 Index measures the
performance of 225 Japanese stocks, and includes reinvested dividends. One
cannot invest directly in an index, nor is an index representative of the Fund's
portfolio.
TOP 10 HOLDINGS
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
4/30/99
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- -----------------------------------------------------
Sa des Galeries Lafayette
Merchandising, France 2.9%
Giordano International Ltd.
Merchandising,
Hong Kong(*) 2.6%
Li & Fung Ltd.
Merchandising,
Hong Kong(*) 2.2%
GTC Transcontinental
Group Ltd., B
Broadcasting & Publishing,
Canada 2.0%
Ono Pharmaceutical Co. Ltd
Health and Personal Services,
Japan 1.8%
Lex Service PLC.
Business & Public Services,
United Kingdom 1.7%
Fokus Bank AS
Banking, Norway 1.7%
Weir Group PLC.
Industrial Components,
United Kingdom 1.6%
National Foods Ltd.
Food & Household Products,
Australia 1.6%
Dah Sing Financial Holdings Ltd.
Financial Services,
Hong Kong* 1.5%
*Hong Kong reverted to the sovereignty
of China on July 1, 1997.
Despite economic problems in some Latin American countries, stocks in this
region generally performed well during the period under review, and the
relatively low valuations of Latin American stocks attracted bargain hunters.
The Fund's largest Latin American exposure continued to be Brazil, where we
hold Weg SA, an automotive manufacturer that we believe could benefit from
expanded opportunities to export its products, particularly to the United
States.
Looking forward, we are optimistic about long-term prospects for equity
securities of smaller companies outside the U.S. and for Templeton Foreign
Smaller Companies Fund. The general underperformance of small cap stocks prior
to March, along with increased merger and acquisition activity, could present
our analysts with unique opportunities to uncover bargain stocks with the
potential for solid long-term returns for our shareholders.
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 foreign markets involves special risks related to market
and currency volatility, and adverse economic, social, and political
developments. Emerging market securities are subject to heightened risks, as
well as those associated with the relatively small size and lesser liquidity of
those markets. Investing in any emerging market means accepting a certain amount
of volatility and, in some cases, the consequences of severe market corrections.
For example, Taiwan's equity market has increased 855.59% in the last 15 years,
but has suffered six declines of more than 20% during that time.(2) While
short-term volatility can be disconcerting, declines in excess of 50% are not
unusual in emerging markets.
This discussion reflects our views, opinions and portfolio holdings as of April
30, 1999. However, market and economic conditions are changing constantly, which
can be expected to affect our strategies and the Fund's portfolio composition.
And although historical performance is no guarantee of future results, these
insights may help you understand our investment and management philosophy.
We thank you for your support and look forward to serving your investment needs
in the future.
2. Source: Standard & Poor's Micropal. Based on quarterly percentage price
change over 15 years ended March 31, 1999. Market return is measured in U.S.
dollars and does not include reinvested dividends.
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
- --------------------------------------------------------------------------------
CLASS A (FORMERLY CLASS I):
Subject to the current, maximum 5.75% initial sales charge. Prior to January 2,
1997, Fund shares were offered at a lower initial sales charge. Thus, actual
total returns would have been higher. On July 1, 1993, the Fund implemented a
Rule 12b-1 plan, which affects subsequent performance. Past expense waivers and
expense reimbursements by the Fund's manager increased the Fund's total returns.
Without these fee waivers and expense reimbursements, total returns for Class A
shares would have been lower.
CLASS B:
Subject to no initial sales charge, but subject to a contingent deferred sales
charge (CDSC) declining from 4% to 0% over six years. These shares have higher
annual fees and expenses than Class A shares.
Class C (formerly Class II):
Subject to 1% initial sales charge and 1% CDSC for shares redeemed within 18
months of investment. These shares have higher annual fees and expenses than
Class A shares.
ADVISOR CLASS:
No initial sales charge or Rule 12b-1 fees and are available to a limited class
of investors. Past expense waivers and expense reimbursements by the Fund's
manager increased the Fund's total returns. Without these fee waivers and
expense reimbursements, total returns for Advisor Class shares would have been
lower.
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AS OF 4/30/99
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities, as well as the
level of each class' operating expenses. Past distributions are not indicative
of future trends. All total returns include reinvested distributions at net
asset value.
Price and Distribution Information (10/31/98 - 4/30/99)
CLASS A CHANGE 4/30/99 10/31/98
------------------------------------------------------------------
Net Asset Value +$1.65 $13.98 $12.33
DISTRIBUTIONS
-------------------------------------
Dividend Income $0.2000
CLASS B CHANGE 4/30/99 1/1/99
------------------------------------------------------------------
Net Asset Value +$1.49 $13.93 $12.44
CLASS C CHANGE 4/30/99 10/31/98
------------------------------------------------------------------
Net Asset Value +$1.62 $13.94 $12.32
DISTRIBUTIONS
-------------------------------------
Dividend Income $0.1657
ADVISOR CLASS CHANGE 4/30/99 10/31/98
------------------------------------------------------------------
Net Asset Value +$1.65 $13.99 $12.34
DISTRIBUTIONS
-------------------------------------
Dividend Income $0.2186
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
CHANGE IN
SINCE INVESTMENT
INCEPTION POLICIES
CLASS A 6-MONTH 1-YEAR 5-YEAR (9/20/91) (10/1/96)(6)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return(1) +15.25% -5.77% +44.47% +106.57% +17.68%
Avg.Annual Total Return(2) +8.64% -11.17% +6.37% +9.15% +4.09%
Value of $10,000
Investment(3) $10,864 $8,883 $13,617 $19,470 $11,768
4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
One-Year Total Return(4) +0.46% +19.26% +13.60% +12.65% -5.77%
SINCE
INCEPTION
CLASS B (1/1/99)
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return(1) +11.98%
Aggregate Total Return(2) +8.14%
Value of $10,000 Investment(3) $10,814
SINCE
INCEPTION
CLASS C 6-MONTH (7/1/98)
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return(1) +14.69% -0.70%
Average Annual Total Return(2) +12.59% +6.52%
Value of $10,000 Investment(3) $11,259 $9,736
SINCE
CHANGE IN
SINCE INVESTMENT
INCEPTION POLICIES
ADVISOR CLASS(5) 6-MONTH 1-YEAR 5-YEAR (9/20/91) (10/1/96)(6)
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return(1) +15.41% -5.57% +45.21% +107.62% +19.12%
Avg.Annual Total Return(2) +15.41% -5.57% +7.75% +10.07% +7.03%
Value of $10,000
Investment(3) $11,541 $9,443 $14,521 $20,762 $11,912
4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
One-Year Total Return(4) +0.46% +19.26% +13.60% +12.97% -5.57%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, applicable,
maximum sales charge(s) for that class. Six month return has not been
annualized. Since Class B shares have existed for less than one year, aggregate
total return for that class represents total return since inception, including
the maximum sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include the current, applicable, maximum
sales charge(s) for that class.
4. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
5. 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 a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A expenses; and (b) for
periods after January 1, 1997, figures reflect actual Advisor Class performance,
including the deduction of all fees and expenses applicable to that class. Since
January 2, 1997 (commencement of sales), the cumulative and average annual total
return of Advisor Class shares were 9.43% and 3.96%, respectively.
6. Effective October 1, 1996, the Fund's name was changed from Franklin
International Equity Fund to Templeton Foreign Smaller Companies Fund, and the
Fund, which until that date invested predominantly in large capitalization
foreign equity securities, shifted its emphasis to smaller capitalization
foreign equity securities with a market capitalization of $1 billion or less.
-------------------------------------------------------------------------
Since markets can go down as well as up, investment return and principal
value will fluctuate with market conditions, currency volatility and the
social, economic and political climates of countries where the Fund
invests. Emerging markets involve heightened risks related to the same
factors, in addition to those associated with their relatively small size
and lesser liquidity. You may have a gain or loss when you sell your
shares.
-------------------------------------------------------------------------
Past performance is not predictive of future results.
TEMPLETON PACIFIC GROWTH FUND
TOP 10 INDUSTRIES
Templeton Pacific Growth Fund
Based on Total Net Assets
4/30/99
% of Total
Industry Net Assets
- ----------------------------------------------
Telecommunications 12.2%
Banking 12.0%
Transportation 9.8%
Real Estate 9.4%
Metals & Mining 9.4%
Multi-Industry 9.1%
Forest Products & Paper 7.8%
Electrical & Electronics 6.3%
Financial Services 4.2%
Construction & Housing 3.4%
Your Fund's Goal: Templeton Pacific Growth Fund seeks to provide long-term
capital growth. Under normal market conditions, the Fund invests at least 65% of
its total assets in equity securities that trade on Pacific Rim markets, as
defined in the Fund's prospectus, and are issued by companies that have their
principal activities in the Pacific Rim.
This semiannual report for Templeton Pacific Growth Fund covers the six months
ended April 30, 1999. During this time, Japan's economic policymakers took
strong measures, such as lowering short-term interest rates (virtually to zero),
in efforts to shore up the country's floundering economy. As a result of these
measures, and reports indicating improved inventory-to-sales ratios,
substantially fewer corporate bankruptcies, and higher personal consumption and
production, Japanese stock prices began to reflect a change in investor
attitudes toward Japan. Share prices of many companies in Hong Kong, Taiwan, and
Korea's markets also rose, and the Fund's performance improved significantly.
Within this environment, Templeton Pacific Growth Fund - Class A delivered a
+30.08% cumulative total return for the six-month period ended April 30, 1999.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 19
of this report.
Although the Fund's Japanese exposure increased from 19.6% of total net assets
at the beginning of the period to 26.0% at the end, most of our buying there was
initiated late in 1998, before the rapid influx of foreign investment drove the
market higher. Positions added to the portfolio included Nomura Securities Co.
Ltd., Fuji Photo Film Co. Ltd., and Sony Corp.
On April 30, 1999, the Fund's exposure to South Korea and Thailand were 3.7% and
1.6% of total net assets. We believe that South Korean company share prices in
general have been driven higher by the country's economic restructuring,
investor speculation of accelerated growth, and enthusiasm over Asia's partial
recovery, to a level that exceeds actual fundamental improvements. In our
opinion, South Korea faces a far greater risk of labor unrest than Japan. In
Thailand, response to Asia's economic stabilization, and the Thai government's
announcement of bankruptcy law revisions designed to encourage debt
restructuring, led to strong stock market performance. However, we intend to
remain on the sidelines there until we can assess the government's ability to
implement these changes successfully.
Geographic Distribution(*)
Templeton Pacific Growth Fund
Based on Total Net Assets
4/30/99
[BAR CHART]
Japan 26.0%
Hong Kong 25.1%
Singapore 14.5%
Australia 12.1%
United States 4.7%
Malaysia 4.4%
Philippines 3.8%
South Korea 3.7%
China 2.4%
Argentina 1.8%
New Zealand 1.8%
Brazil 1.6%
India 1.6%
Thailand 1.6%
United Kingdom 1.3%
France 1.2%
Indonesia 0.7%
Pakistan 0.6%
(*)Other Net Assets represented -8.9%
of Total Net Assets.
TOP 10 HOLDINGS
Templeton Pacific Growth Fund
4/30/99
Company, % of Total
Industry, Country Net Assets
- ------------------------------------------------------
Hong Kong
Telecommunications Ltd.
Telecommunications,
Hong Kong(*) 4.0%
Development Bank of
Singapore Ltd.,fgn
Banking, Singapore 3.8%
Overseas Union Bank Ltd.,fgn
Banking, Singapore 3.3%
Fuji Heavy Industries Ltd.
Industrial Components,
Japan 3.1%
City Developments Ltd.
Real Estate, Singapore 3.0%
Johnson Electric Holdings Ltd.
Electrical & Electronics,
Hong Kong* 2.4%
Cheung Kong Holdings Ltd.
Multi-Industry, Hong Kong* 2.4%
Wheelock and Company Ltd.
Multi-Industry, Hong Kong* 2.4%
Singapore Airlines Ltd.,fgn
Transportation, Singapore 2.4%
Capral Aluminum Ltd.
Metals & Mining, Australia 2.3%
* Hong Kong reverted to the sovereignty
of China on July 1, 1997.
Looking forward, we are optimistic about future prospects for equity securities
trading in Pacific Rim markets. While we are still cautious about Japan, recent
economic reforms designed to make its financial institutions more efficient have
the potential to benefit the country's economic performance over the long term.
In our opinion, the Japanese government now understands what levels of liquidity
are necessary to revive the country's economy, and appears willing to take
action to achieve this goal. It is also encouraging that other Asian countries,
particularly those that have already taken positive strides in restructuring,
may benefit from Japan's potential economic recovery.
However, it is important to remember that investing in foreign markets
concentrated in a single region involves special considerations not associated
with more broadly diversified investments, such as market and currency
volatility and adverse economic, social and political developments in the region
and countries where the Fund invests. Emerging market securities involve
heightened risks related to the same factors, in addition to those associated
with the relatively small size and lesser liquidity of those markets. In
addition, investing in any emerging market means accepting a certain amount of
volatility and, in some cases, the consequences of severe market corrections.
These risks and other considerations are discussed in the Fund's prospectus.
This discussion reflects our views, opinions and portfolio holdings as of April
30, 1999, the end of the reporting period. However, market and economic
conditions are changing constantly, which can be expected to affect our
strategies and the Fund's portfolio composition. Although past performance is
not predictive of future results, these insights may give you a better
understanding of our investment and management philosophy.
TEMPLETON PACIFIC
GROWTH FUND
PERFORMANCE SUMMARY AS OF 4/30/99
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities, as well as the
level of each class' operating expenses. Past distributions are not indicative
of future trends. All total returns include reinvested distributions at net
asset value.
PRICE AND DISTRIBUTION INFORMATION (11/1/98 - 4/30/99)
CLASS A CHANGE 4/30/99 10/31/98
-----------------------------------------------------------------------
Net Asset Value +$2.28 $10.11 $7.83
DISTRIBUTIONS
-------------------------------------
Dividend Income $0.0600
CLASS C CHANGE 4/30/99 10/31/98
-----------------------------------------------------------------------
Net Asset Value +$2.29 $10.09 $7.80
DISTRIBUTIONS
-------------------------------------
Dividend Income $0.0299
ADVISOR CLASS CHANGE 4/30/99 10/31/98
-----------------------------------------------------------------------
Net Asset Value +$2.32 $10.20 $7.88
DISTRIBUTIONS
-------------------------------------
Dividend Income $0.0734
- --------------------------------------------------------------------------------
CLASS A (FORMERLY CLASS I):
Subject to the current,maximum 5.75% initial sales charge. Prior to January
1,1997,Fund shares were offered at a lower initial sales charge. Thus,actual
total returns would have been higher. On July 1,1993,the Fund implemented a Rule
12b-1 plan,which affects subsequent performance. Past fee waivers and expense
reimbursements by the Fund's manager increased the Fund's total returns. Without
these fee waivers and expense reimbursements,total returns for Class A shares
would have been lower.
CLASS C (FORMERLY CLASS II):
Subject to 1% initial sales charge and 1% CDSC for shares redeemed within 18
months of investment. These shares have higher annual fees and expenses than
Class A shares.
ADVISOR CLASS:
No initial sales charge or Rule 12b-1 fees and are available to a limited class
of investors. Past fee waivers and expense reimbursements by the Fund's manager
increased the Fund's total returns. Without these fee waivers and expense
reimbursements,total returns for Advisor Class shares would have been lower.
- --------------------------------------------------------------------------------
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 6-MONTH 1-YEAR 3-YEAR 5-YEAR (9/20/91)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return(1) +30.08% +14.04% -30.58% -20.20% +26.18%
Average Annual Total Return(2) +22.56% +7.45% -13.18% -5.53% +2.30%
Value of $10,000 Investment(3) $12,256 $10,745 $6,545 $7,523 $11,893
4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
One-Year Total Return(4) -2.91% +18.39% -5.08% -35.86% +14.04%
INCEPTION
CLASS C 6-MONTH 1-YEAR (1/2/97)
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return(1) +29.84% +13.62% -31.53%
Average Annual Total Return(2) +27.53% +11.50% -15.40%
Value of $10,000 Investment(3) $12,753 $11,150 $6,780
INCEPTION
ADVISOR CLASS(5) 6-MONTH 1-YEAR 3-YEAR 5-YEAR (9/20/91)
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return(1) +30.61% +14.89% -29.61% -19.09% +27.94%
Average Annual Total Return(2) +30.61% +14.89% -11.04% -4.15% +3.29%
Value of $10,000 Investment(3) $13,061 $11,489 $7,039 $8,091 $12,794
4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
One-Year Total Return(4) -2.91% +18.39% -5.02% -35.50% +14.89%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, applicable,
maximum sales charge(s) for that class. Six-month return has not been
annualized.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include the current, applicable, maximum
sales charge(s) for that class.
4. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
5. 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 a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A expenses; and (b) for
periods after January 1, 1997, figures reflect actual Advisor Class performance,
including the deduction of all fees and expenses applicable to that class. Since
January 2, 1997 (commencement of sales), the cumulative and average annual total
returns of Advisor Class shares were -29.87% and -14.17%, respectively.
------------------------------------------------------------------------------
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility and the social,
economic and political climates of countries where the Fund invests. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. You
may have a gain or loss when you sell your shares.
------------------------------------------------------------------------------
Past performance is not predictive of future results.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights
TEMPLETON PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1999 ---------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period ...... $ 7.83 $ 10.88 $ 14.50 $ 14.11 $ 15.40 $ 14.44
-------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income .................... -- .13 .14 .12 .15 .21
Net realized and unrealized gains (losses) 2.34 (2.98) (3.65) 1.41 (1.01) 1.01
-------- ------- ------- ------- ------- -------
Total from investment operations .......... 2.34 (2.85) (3.51) 1.53 (.86) 1.22
-------- ------- ------- ------- ------- -------
Less distributions from:
Net investment income .................... (.06) (.13) (.11) (.21) (.16) (.20)
Net realized gains ....................... -- (.07) -- (.93) (.27) (.06)
-------- ------- ------- ------- ------- -------
Total distributions ....................... (.06) (.20) (.11) (1.14) (.43) (.26)
-------- ------- ------- ------- ------- -------
Net asset value, end of period ............ $ 10.11 $ 7.83 $ 10.88 $ 14.50 $ 14.11 $ 15.40
======== ======= ======= ======= ======= =======
Total return* ............................. 30.08% (26.37)% (24.42)% 11.27% (5.54)% 8.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ......... $ 53,858 $42,200 $40,958 $59,740 $50,247 $58,241
Ratios to average net assets:
Expenses ................................. 2.02%** 1.90% 1.63% 1.52% 1.72% 1.22%
Expenses, excluding waiver and payments
by affiliate 2.02%** 1.90% 1.63% 1.52% 1.72% 1.72%
Net investment income (loss) ............. (.19)%** 1.43% .97% 1.06% 1.04% 1.54%
Portfolio turnover rate ................... 30.37% 19.61% 24.79% 13.48% 36.21% 9.16%
</TABLE>
* Total return does not reflect sales commissions and is not annualized.
** Annualized.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights (continued)
TEMPLETON PACIFIC GROWTH FUND (CONT.)
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1999 ------------------------
(UNAUDITED) 1998 1997+
---------------- --------- ---------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period .......... $ 7.80 $ 10.81 $ 15.10
--------- --------- ---------
Income from investment operations:
Net investment income (loss) ................. (.05) .08 .05
Net realized and unrealized gains (losses) ... 2.37 (2.92) (4.31)
--------- --------- ---------
Total from investment operations .............. 2.32 (2.84) (4.26)
--------- --------- ---------
Less distributions from:
Net investment income ........................ (.03) (.10) (.03)
Net realized gains ........................... -- (.07) --
--------- --------- ---------
Total distributions ........................... (.03) (.17) (.03)
--------- --------- ---------
Net asset value, end of period ................ $ 10.09 $ 7.80 $ 10.81
--------- --------- ---------
Total return* ................................. 29.84% (26.47)% (28.28)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $ 8,943 $ 6,183 $ 2,307
Ratios to average net assets:
Expenses ..................................... 2.81%** 2.63% 2.48%**
Net investment income (loss) ................. (1.04)%** .67% .93%**
Portfolio turnover rate ....................... 30.37% 19.61% 24.79%
</TABLE>
* Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
** Annualized.
+ For the period January 2, 1997 (effective date) to October 31, 1997.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights (continued)
TEMPLETON PACIFIC GROWTH FUND (CONT.)
<TABLE>
<CAPTION>
ADVISOR CLASS
-----------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1999 -----------------------
(UNAUDITED)++ 1998 1997+
---------------- --------- ---------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period .......... $ 7.88 $ 10.88 $ 15.10
--------- --------- ---------
Income from investment operations:
Net investment income ........................ .01 .15 .12
Net realized and unrealized gains (losses) ... 2.39 (2.93) (4.30)
--------- --------- ---------
Total from investment operations .............. 2.40 (2.78) (4.18)
--------- --------- ---------
Less distributions from:
Net investment income ........................ (.08) (.15) (.04)
Net realized gains ........................... -- (.07) --
--------- --------- ---------
Total distributions ........................... (.08) (.22) (.04)
--------- --------- ---------
Net asset value, end of period ................ $ 10.20 $ 7.88 $ 10.88
--------- --------- ---------
Total return* ................................. 30.61% (25.68)% (27.74)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............. $ 1,142 $ 1,454 $ 1,357
Ratios to average net assets:
Expenses ..................................... 1.82%** 1.62% 1.48%**
Net investment income ........................ .12%** 1.78% 1.55%**
Portfolio turnover rate ....................... 30.37% 19.61% 24.79%
</TABLE>
* Total return is not annualized.
** Annualized.
+ For the period January 2, 1997 (effective date) to October 31, 1997.
++ Based on average weighted shares outstanding.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
----------------------------- ------- -------- -----
<S> <C> <C> <C>
COMMON STOCKS 107.1%
APPLIANCES & HOUSEHOLD DURABLES 2.0%
Sony Corp. ............................... Japan 13,900 $1,298,412
----------
BANKING 12.0%
Australia & New Zealand Banking Group Ltd. Australia 127,000 1,007,509
*Bangkok Bank Public Co. Ltd., fgn. ....... Thailand 111,400 333,164
Development Bank of Singapore Ltd., fgn. . Singapore 228,250 2,426,041
HSBC Holdings PLC ........................ Hong Kong 21,440 796,692
Overseas Union Bank Ltd., fgn. ........... Singapore 415,000 2,131,975
*Philippine National Bank ................. Philippines 124,382 343,461
*PT Bank Bali, fgn. ....................... Indonesia 657,020 46,727
PT Bank Pan Indonesia TBK ................ Indonesia 1,138,500 137,296
*PT Bank Pan Indonesia TBK, wts. .......... Indonesia 165,894 2,462
*Thai Farmers Bank Public Co. Ltd. ........ Thailand 37,140 74,050
*Thai Farmers Bank Public Co. Ltd., fgn. .. Thailand 143,060 397,014
----------
7,696,391
----------
BROADCASTING & PUBLISHING .3%
South China Morning Post Ltd. ............ Hong Kong 368,000 221,974
----------
BUILDING MATERIALS & COMPONENTS 2.3%
Gujarat Ambuja Cements Ltd., GDR, Reg S .. India 79,900 609,238
*Hi Cement Corp. .......................... Philippines 3,551,000 113,931
Okumura Corp. ............................ Japan 194,000 781,753
----------
1,504,922
----------
BUSINESS & PUBLIC SERVICES 1.2%
Kurita Water Industries Ltd. ............. Japan 49,000 788,171
----------
CHEMICALS .8%
Shanghai Petrochemical Co. Ltd., H ....... China 2,899,000 542,362
----------
CONSTRUCTION & HOUSING 3.4%
Daito Trust Construction Co. Ltd. ........ Japan 61,500 723,378
Fletcher Challenge Building Ltd. ......... New Zealand 89,118 147,603
Road King Infrastructure Ltd. ............ Hong Kong 686,520 465,035
Toda Corp. ............................... Japan 148,000 828,249
----------
2,164,265
----------
ELECTRICAL & ELECTRONICS 6.3%
Alcatel SA ............................... France 6,100 749,899
Dongfang Electrical Machinery Co. Ltd., H China 1,784,000 149,617
Fuji Photo Film Co. Ltd. ................. Japan 15,000 566,749
Hitachi Ltd. ............................. Japan 200 1,461
Johnson Electric Holdings Ltd. ........... Hong Kong 521,300 1,557,083
Matsushita Electric Industrial Co. Ltd. .. Japan 49,000 931,848
Motorola Inc. ............................ United States 800 64,100
----------
4,020,757
----------
ELECTRONIC COMPONENTS & INSTRUMENTS 2.3%
VTech Holdings Ltd. ...................... Hong Kong 423,000 1,446,303
----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
----------------------------- ------- -------- -----
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
ENERGY SOURCES 2.4%
Petron Corp. .................................. Philippines 4,911,000 $ 594,099
Woodside Petroleum Ltd. ....................... Australia 137,000 935,209
----------
1,529,308
----------
FINANCIAL SERVICES 4.1%
Commerce Asset-Holding Bhd. ................... Malaysia 749,200 1,173,089
*Commerce Asset-Holding Bhd., wts. ............. Malaysia 29,500 12,033
Nomura Securities Co. Ltd. .................... Japan 116,000 1,251,690
Public Finance Bhd., fgn. ..................... Malaysia 255,000 217,421
----------
2,654,233
----------
FOOD & HOUSEHOLD PRODUCTS .3%
*Charoen Pokphand Feedmill Public Co. Ltd., fgn. Thailand 151,500 195,932
----------
FOREST PRODUCTS & PAPER 7.8%
Amcor Ltd. .................................... Australia 195,500 1,054,554
Carter Holt Harvey Ltd. ....................... New Zealand 416,248 610,228
Fletcher Challenge Paper Ltd. ................. New Zealand 43,100 40,275
Fort James Corp. .............................. United States 10,400 395,200
Mitsubishi Paper Mills Ltd. ................... Japan 360,000 675,575
*PT Tjiwi Kimia ................................ Indonesia 408,709 131,434
*PT Tjiwi Kimia TBK, wts. ...................... Indonesia 56,765 10,110
*Smurfit-Stone Container Corp. ................. United States 51,600 1,206,150
Weyerhaeuser Co. .............................. United States 13,000 872,625
----------
4,996,151
----------
INDUSTRIAL COMPONENTS 3.1%
Fuji Heavy Industries Ltd. .................... Japan 296,000 1,983,831
----------
INSURANCE 1.0%
AXA China Region Ltd. ......................... Hong Kong 800,000 614,158
----------
LEISURE & TOURISM .9%
Toei Co. Ltd. ................................. Japan 166,500 583,060
----------
MACHINERY & ENGINEERING .7%
Tata Engineering & Locomotive Co., GDR ........ India 128,400 420,510
----------
MERCHANDISING 1.8%
Matsuzakaya Co. Ltd. .......................... Japan 220,000 986,051
Takashimaya Co. Ltd. .......................... Japan 23,551 192,370
----------
1,178,421
----------
METALS & MINING 7.8%
Angang New Steel Company Ltd., H .............. China 2,435,000 245,057
Capral Aluminum Ltd. .......................... Australia 889,000 1,490,642
Nittetsu Mining Co. Ltd. ...................... Japan 235,000 787,501
Pohang Iron & Steel Co. Ltd. .................. South Korea 11,100 949,244
WMC Ltd. ...................................... Australia 343,319 1,485,806
----------
4,958,250
----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
----------------------------- ------- -------- -----
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
MISC MATERIALS & COMMODITIES .6%
Golden Hope Plantations Bhd. ............... Malaysia 451,000 $ 386,911
----------
MULTI-INDUSTRY 9.1%
Broken Hill Proprietary Co. Ltd. ........... Australia 96,800 1,096,014
Cheung Kong Holdings Ltd. .................. Hong Kong 170,300 1,549,091
*Hicom Holdings Bhd. ........................ Malaysia 295,000 132,750
Hutchison Whampoa Ltd. ..................... Hong Kong 83,000 744,279
SIME Darby Bhd. ............................ Malaysia 327,600 374,154
Swire Pacific Ltd., A ...................... Hong Kong 62,500 350,786
Wheelock and Company Ltd. .................. Hong Kong 1,329,000 1,543,265
----------
5,790,339
----------
REAL ESTATE 9.4%
City Developments Ltd. ..................... Singapore 290,200 1,936,380
*Filinvest Land Inc. ........................ Philippines 11,177,000 1,410,903
Hon Kwok Land Investment Co. Ltd. .......... Hong Kong 1,708,364 156,499
New World Development Co. Ltd. ............. Hong Kong 536,664 1,329,465
Parkway Holdings Ltd. ...................... Singapore 476,000 1,158,028
----------
5,991,275
----------
RECREATION & OTHER CONSUMER GOODS 1.5%
Nintendo Co. Ltd. .......................... Japan 10,300 969,899
----------
TELECOMMUNICATIONS 12.2%
Hong Kong Telecommunications Ltd. .......... Hong Kong 953,469 2,564,990
Nippon Telegraph & Telephone Corp. ......... Japan 126 1,372,262
Pakistan Telecommunications Corp., A ....... Pakistan 940,000 379,040
SK Telecom Co. Ltd., ADR ................... South Korea 104,226 1,446,132
Smartone Telecommunications Holdings Ltd. .. Hong Kong 252,000 873,007
Telefonica de Argentina SA, ADR ............ Argentina 30,700 1,147,413
----------
7,782,844
----------
TEXTILES & APPAREL 2.2%
*Fruit of the Loom Inc., A .................. United States 42,500 454,219
Nisshinbo Industries Inc. .................. Japan 171,000 832,329
*PT Indorama Synthetics ..................... Indonesia 733,862 129,345
----------
1,415,893
----------
TRANSPORTATION 9.7%
British Airways PLC ........................ United Kingdom 105,000 833,441
Guangshen Railway Co. Ltd., H, ADR ......... China 28,000 187,250
GZI Transport Ltd. ......................... China 550,000 95,801
GZI Transport Ltd., 144A ................... China 174,000 30,308
Hitachi Zosen Corp. ........................ Japan 385,000 525,740
Hong Kong Ferry Holdings Co. Ltd. .......... Hong Kong 1,037,000 1,451,716
Malaysian International Shipping Corp., fgn. Malaysia 317,333 501,052
Mayne Nickless Ltd., A ..................... Australia 199,000 693,729
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
- ----------------------------- ------- -------- -----
<S> <C> <C> <C>
COMMON STOCKS & (CONT.)
TRANSPORTATION (CONT.)
Singapore Airlines Ltd., fgn. .................. Singapore 165,500 $ 1,524,535
Tranz Rail Holdings Ltd., ADR .................. New Zealand 49,800 329,925
------------
6,173,497
------------
UTILITIES ELECTRICAL & GAS 1.0%
CLP Holdings Ltd. .............................. Hong Kong 69,000 370,353
Shandong Huaneng Power Development Co. Ltd., ADR China 59,500 264,031
------------
634,384
------------
WHOLESALE & INTERNATIONAL TRADE .9%
Mitsubishi Corp. ............................... Japan 86,000 569,179
------------
Total Common Stocks (Cost $70,968,157) ......... 68,511,632
------------
PREFERRED STOCKS 1.8%
Cia Vale do Rio Doce, A, ADR, pfd. ............. Brazil 53,500 1,031,624
Osprey Maritime Ltd., cvt., pfd. ............... Singapore 390,000 119,752
------------
TOTAL PREFERRED STOCKS (COST $1,132,279) ....... 1,151,376
------------
TOTAL INVESTMENTS (COST $72,100,436) 108.9% .... 69,663,008
OTHER ASSETS, LESS LIABILITIES (8.9)% .......... (5,720,381)
------------
TOTAL NET ASSETS 100.0% ........................ $ 63,942,627
============
</TABLE>
*Non-income producing.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights
TEMPLETON FOREIGN SMALLER COMPANIES FUND
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1999 ---------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
--------------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period ................ $ 12.33 $ 15.06 $ 14.18 $ 13.23 $ 13.83 $ 12.28
-------- -------- -------- ------- ------- -------
Income from investment operations:
Net investment income .............................. .12 .26 .27 .35 .25 .23
Net realized and unrealized gains (losses) ......... 1.73 (2.08) 1.64 1.88 (.08) 1.54
-------- -------- -------- ------- ------- -------
Total from investment operations .................... 1.85 (1.82) 1.91 2.23 .17 1.77
-------- -------- -------- ------- ------- -------
Less distributions from:
Net investment income .............................. (.20) (.24) (.32) (.25) (.19) (.22)
Net realized gains ................................. -- (.67) (.71) (1.03) (.58) --
-------- -------- -------- ------- ------- -------
Total distributions ................................. (.20) (.91) (1.03) (1.28) (.77) (.22)
-------- -------- -------- ------- ------- -------
Net asset value, end of period ...................... $ 13.98 $ 12.33 $ 15.06 $ 14.18 $ 13.23 $ 13.83
======== ======== ======== ======= ======= =======
Total return* ....................................... 15.25% (12.64)% 14.25% 18.49% 1.75% 14.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $103,615 $113,964 $121,619 $67,967 $50,947 $57,854
Ratios to average net assets:
Expenses ........................................... 1.63%** 1.48% 1.48% 1.53% 1.63% 1.22%
Expenses, excluding waiver and payments by affiliate 1.63%** 1.50% 1.58% 1.53% 1.63% 1.76%
Net investment income .............................. 1.57%** 1.23% 2.01% 2.50% 1.86% 1.99%
Portfolio turnover rate ............................. 4.99% 22.82% 33.62% 40.46% 9.12% 21.80%
</TABLE>
* Total return does not reflect sales commissions and is not annualized.
** Annualized.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights (continued)
TEMPLETON FOREIGN SMALLER COMPANIES FUND (CONT.)
<TABLE>
<CAPTION>
CLASS B
PERIOD ENDED
APRIL 30, 1999+
(UNAUDITED)
---------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period .......................... $ 12.44
---------
Income from investment operations:
Net investment income ........................................ .06
---------
Net realized and unrealized gains ............................ 1.43
---------
Total from investment operations .............................. 1.49
---------
Net asset value, end of period ................................ $ 13.93
---------
Total return* ................................................. 11.98%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............................. $ 38
Ratios to average net assets:
Expenses ..................................................... 2.38%**
Net investment income ........................................ 1.86%**
Portfolio turnover rate ....................................... 4.99%**
</TABLE>
* Total return does not reflect the contingent deferred sales charge and is not
annualized.
** Annualized.
+ For the period January 1, 1999 (effective date) to April 30, 1999.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights (continued)
TEMPLETON FOREIGN SMALLER COMPANIES FUND (CONT.)
<TABLE>
<CAPTION>
CLASS C
------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30,1999 OCTOBER 31,
(UNAUDITED) 1998+
---------------- ----------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period ............... $ 12.32 $ 14.23
------- -------
Income from investment operations:
Net investment income ............................. .03 .01
Net realized and unrealized gains (losses) ........ 1.76 (1.92)
------- -------
Total from investment operations ................... 1.79 (1.91)
------- -------
Less distributions from net investment income ...... (.17) --
------- -------
Net asset value, end of period ..................... $ 13.94 $ 12.32
======= =======
Total return* ...................................... 14.69% (13.42)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................. $ 443 $ 450
Ratios to average net assets:
Expenses .......................................... 2.41%** 2.54%**
Net investment income ............................. .74%** 1.08%**
Portfolio turnover rate ............................ 4.99% 22.82%
</TABLE>
* Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
** Annualized.
+ For the period July 1, 1998 (effective date) to October 31, 1998.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights (continued)
TEMPLETON FOREIGN SMALLER COMPANIES FUND (CONT.)
<TABLE>
<CAPTION>
ADVISOR CLASS
--------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1999 -------------------------
(UNAUDITED)++ 1998 1997+
---------------- ---------- ---------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period ................ $ 12.34 $ 15.09 $ 14.00
--------- ---------- ---------
Income from investment operations:
Net investment income .............................. .10 .32 .20
Net realized and unrealized gains (losses) ......... 1.77 (2.13) .98
--------- ---------- ---------
Total from investment operations .................... 1.87 (1.81) 1.18
--------- ---------- ---------
Less distributions from:
Net investment income .............................. (.22) (.27) (.09)
Net realized gains ................................. -- (.67) --
--------- ---------- ---------
Total distributions ................................. (.22) (.94) (.09)
--------- ---------- ---------
Net asset value, end of period ...................... $ 13.99 $ 12.34 $ 15.09
========= ========== =========
Total return* ....................................... 15.41% (12.55)% 8.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................... $ 8,419 $ 12,402 $ 3,726
Ratios to average net assets:
Expenses ........................................... 1.41%** 1.31% 1.24%**
Expenses, excluding waiver and payments by affiliate 1.41%** 1.33% 1.36%**
Net investment income .............................. 1.67%** 1.43% 2.66%**
Portfolio turnover rate ............................. 4.99% 22.82% 33.62%
</TABLE>
* Total return is not annualized.
** Annualized.
+ For the period January 2, 1997 (effective date) to October 31, 1997.
++ Based on average weighted shares outstanding.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
---------------------------------------- ------- ------ -----
<S> <C> <C> <C>
COMMON STOCKS 97.4%
APPLIANCES & HOUSEHOLD DURABLES 1.4%
Fisher & Paykel Ltd. ............................ New Zealand 268,571 $ 984,327
Guangdong Kelon Electrical Holdings Ltd., H, 144A China 440,000 397,396
Konka Group Co. Ltd., B ........................ China 274,800 188,271
----------
1,569,994
----------
AUTOMOBILES 2.1%
Bilia AB, A ..................................... Sweden 115,500 974,973
Volvo AB, B ..................................... Sweden 51,000 1,349,126
----------
2,324,099
----------
BANKING 5.2%
Banco de Andalucia SA ........................... Spain 10,000 370,284
Banco de Valencia SA ............................ Spain 11,066 280,976
Bank Austria AG, 144A ........................... Austria 24,250 1,506,229
BPI Socieda de Gestora de Participacoes Socias SA Portugal 12,012 324,058
Fokus Bank AS ................................... Norway 196,000 1,887,883
Unibanco Uniao de Bancos Brasileiros SA, GDR .... Brazil 27,500 682,344
Union Bank of Norway ............................ Norway 38,700 740,551
----------
5,792,325
----------
BROADCASTING & PUBLISHING 3.1%
Cordiant Communications Group Plc. .............. United Kingdom 234,600 717,662
GTC Transcontinental Group Ltd., B .............. Canada 200,000 2,224,816
NV Holdingsmig de Telegraaf ..................... Netherlands 23,520 512,592
----------
3,455,070
----------
BUILDING MATERIALS & COMPONENTS 6.0%
Caradon Plc. .................................... United Kingdom 471,000 1,205,748
Cementos Diamante SA, ADR, 144A ................. Colombia 93,100 110,556
Det Danske Traelastkompagni AS .................. Denmark 14,000 937,482
Gujarat Ambuja Cements Ltd., GDR, 144A .......... India 143,750 1,096,094
Pioneer International Ltd. ...................... Australia 241,300 590,112
Plettac AG ...................................... Germany 10,150 638,925
Sarna Kunststoff Holding AG ..................... Switzerland 330 422,660
Schuttersveld NV ................................ Netherlands 42,295 758,448
*Siam City Cement Public Co. Ltd., fgn. .......... Thailand 170,708 602,526
*Siam City Cement Public Co. Ltd., rts. .......... Thailand 113,805 217,706
Uralita SA ...................................... Spain 16,606 155,480
----------
6,735,737
----------
BUSINESS & PUBLIC SERVICES 4.2%
Adecco SA ....................................... Switzerland 1,855 930,424
Esselte AB, B ................................... Sweden 13,100 204,809
Kardex AG, Br ................................... Switzerland 5,110 1,434,828
Lex Service Plc. ................................ United Kingdom 208,000 1,967,477
Scribona AB, B .................................. Sweden 19,500 64,915
Sifo Group AB ................................... Sweden 19,500 129,830
----------
4,732,283
----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Statement of Investments, April 30, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
---------------------------------------- ------- ------ -----
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
CHEMICALS 3.9%
Cookson Group Plc. .......................... United Kingdom 500,000 $1,412,816
DSM NV, Br. ................................. Netherlands 2,900 280,575
Energia e Industrias Aragonesas Eia SA ...... Spain 196,000 1,146,696
Yule Catto & Company Plc. ................... United Kingdom 286,600 1,522,750
----------
4,362,837
----------
CONSTRUCTION & HOUSING 1.9%
Dragados y Construcciones SA, Br. ........... Spain 25,600 855,843
Hollandsche Beton Groep NV .................. Netherlands 36,120 513,969
Sirti SpA ................................... Italy 63,700 366,072
*Sociedade Construcoes Soares da Costa SA, Br. Portugal 135,800 433,884
----------
2,169,768
----------
ELECTRICAL & ELECTRONICS 3.9%
Koninklijke Philips Electronics NV .......... Netherlands 20,000 1,724,466
Techtronic Industries Co. Ltd. .............. Hong Kong 6,838,000 1,305,762
Varitronix International Ltd. ............... Hong Kong 760,000 1,304,182
----------
4,334,410
----------
ELECTRONIC COMPONENTS & INSTRUMENTS 2.9%
Swisslog Holding AG ......................... Switzerland 5,500 652,053
Twentsche Kabel Holdings NV ................. Netherlands 37,000 1,189,988
VTech Holdings Ltd. ......................... Hong Kong 429,000 1,466,818
----------
3,308,859
----------
ENERGY SOURCES 1.5%
*Ranger Oil Ltd. ............................. Canada 94,645 500,423
Societe Elf Aquitane SA, Br. ................ France 7,738 1,203,409
----------
1,703,832
----------
FINANCIAL SERVICES 2.4%
Dah Sing Financial Holdings Ltd. ............ Hong Kong 549,600 1,733,799
Housing Development Finance Corp. Ltd. ...... India 19,608 1,008,359
----------
2,742,158
----------
FOOD & HOUSEHOLD PRODUCTS 5.4%
Hazlewood Foods Plc. ........................ United Kingdom 832,000 1,674,449
Illovo Sugar Ltd. ........................... South Africa 700,000 745,352
McBride Plc. ................................ United Kingdom 314,100 513,301
National Foods Ltd. ......................... Australia 841,683 1,745,999
Perkins Foods Plc. .......................... United Kingdom 729,200 1,432,336
----------
6,111,437
----------
FOREST PRODUCTS & PAPER 3.1%
Cartiere Burgo SpA .......................... Italy 58,788 420,874
Primex Forest Products Ltd. ................. Canada 225,000 1,699,512
Stora Enso OYJ, R ........................... Finland 49,700 581,013
Stora Enso OYJ, R, fgn. ..................... Finland 64,588 741,023
----------
3,442,422
----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Statement of Investments, April 30, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
---------------------------------------- ------- ------ -----
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
HEALTH & PERSONAL CARE 5.0%
Internatio-Muller NV ............... Netherlands 62,500 $ 1,388,566
*Internatio-Muller NV, trading coupon Netherlands 62,500 49,592
Nycomed Amersham Plc. .............. United Kingdom 140,305 1,139,702
Ono Pharmaceutical Co Ltd. ......... Japan 53,000 2,060,235
*Skyepharma Plc. .................... United Kingdom 985,000 1,038,762
-----------
5,676,857
-----------
INDUSTRIAL COMPONENTS 5.3%
Granges AB ......................... Sweden 47,656 810,226
Otra NV ............................ Netherlands 84,000 1,061,975
Sylea SA ........................... France 17,240 1,012,272
Weir Group Plc. .................... United Kingdom 414,100 1,796,811
Yamato Kogyo Co. Ltd. .............. Japan 192,000 1,302,894
-----------
5,984,178
-----------
INSURANCE 3.1%
Ace Ltd. ........................... Bermuda 26,400 798,600
HIH Insurance Ltd. ................. Australia 782,135 1,005,621
Partnerre Ltd. ..................... Bermuda 22,000 907,500
XL Capital Ltd., A ................. Bermuda 13,600 825,350
-----------
3,537,071
-----------
LEISURE & TOURISM .6%
Kuoni Reisen Holding AG, B ......... Switzerland 200 709,360
-----------
MACHINERY & ENGINEERING 2.7%
Arcadis NV ......................... Netherlands 172,735 1,343,182
Bucher Holding AG, Br .............. Switzerland 740 656,158
Laird Group Plc. ................... United Kingdom 205,000 1,021,534
-----------
3,020,874
-----------
MERCHANDISING 14.1%
Best Denki Co. Ltd. ................ Japan 137,000 1,016,898
Giordano International Ltd. ........ Hong Kong 6,377,000 2,962,047
Li & Fung Ltd. ..................... Hong Kong 1,000,000 2,451,471
Makro Atacadista SA, ADR, 144A ..... Brazil 199,000 1,475,407
Moebel Walther AG .................. Germany 28,000 548,021
Northwest Company Fund ............. Canada 148,750 1,506,601
Sa des Galeries Lafayette .......... France 2,868 3,307,294
Somerfield Plc. .................... United Kingdom 260,400 1,448,530
Storehouse ......................... United Kingdom 367,461 846,030
Vendex NV .......................... Netherlands 10,692 266,390
-----------
15,828,689
-----------
METALS & MINING 6.1%
Arbed SA ........................... Luxembourg 7,172 669,990
Boehler-Uddeholm AG ................ Austria 15,350 903,572
Boehler-Uddeholm AG, 144A .......... Austria 3,390 199,551
Elkem ASA, A ....................... Norway 96,500 1,722,661
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Statement of Investments, April 30, 1999 (unaudited) (cont.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
---------------------------------------- ------- ------ -----
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
METALS & MINING (CONT.)
Pechiney SA, A ................................... France 40,441 $ 1,711,390
Pohang Iron & Steel Co. Ltd. ..................... South Korea 11,230 960,361
PT Timah ......................................... Indonesia 709,000 653,315
------------
6,820,840
------------
MULTI-INDUSTRY 3.0%
Amer Group Ltd., A ............................... Finland 18,000 222,805
*Nagron Nationaal Grondbezit NV ................... Netherlands 45,400 1,239,204
Saha Union Public Co. Ltd., fgn. ................. Thailand 634,000 269,042
Wagon Plc. ....................................... United Kingdom 175,000 767,791
Zehnder Holding AG, Br ........................... Switzerland 1,820 855,908
------------
3,354,750
------------
REAL ESTATE 1.4%
Inversiones y Representacion SA .................. Argentina 471,585 1,580,443
------------
TELECOMMUNICATIONS .4%
*Digital Telecommunications Philippines Inc. ...... Philippines 6,341,000 233,462
Telefonica del Peru SA, B ........................ Peru 114,000 170,078
------------
403,540
------------
TEXTILES & APPAREL 1.1%
Gamma Holding NV ................................. Netherlands 16,800 821,142
Inner Mongolia Erdos Cashmere Products Co. Ltd., B China 1,535,000 227,180
Yizheng Chemical Fibre Co. Ltd., H ............... China 1,225,000 177,022
------------
1,225,344
------------
TRANSPORTATION 3.7%
*Anangel-American Shipholdings Ltd., ADR .......... Greece 118,000 575,250
Great Eastern Shipping Co. Ltd. .................. India 614,000 267,674
Great Eastern Shipping Co. Ltd., GDR, 144A ....... India 2,200 6,490
Orient Overseas International Ltd. ............... Hong Kong 1,514,000 316,456
*Osprey Maritime Ltd. ............................. Singapore 1,375,000 535,872
Sea Containers Ltd., A ........................... United Kingdom 44,500 1,421,219
Stolt Nielsen SA, ADR ............................ Norway 66,800 1,018,700
------------
4,141,661
------------
UTILITIES ELECTRICAL & GAS 3.4%
Compania Sevillana De Electricidad SA, Br. ....... Spain 20,391 243,556
Electricas Reunidas de Zaragoza ERZ, Br. ......... Spain 13,300 590,974
Evn AG ........................................... Austria 8,350 1,248,057
Gas y Electricidad SA, Br. ....................... Spain 16,099 1,328,497
Guangdong Electric Power Development Co Ltd., B .. China 1,195,896 441,299
------------
3,852,383
------------
WHOLESALE & INTERNATIONAL TRADE .5%
Eurodis Electron Plc. ............................ United Kingdom 618,000 606,955
------------
TOTAL COMMON STOCKS (COST $102,843,742) .......... 109,528,176
------------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED)(CONT.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
- ---------------------------------------- ------- ------ -----
<S> <C> <C> <C>
PREFERRED STOCKS 3.3%
Ballast Nedam NV, pfd. ........................ Netherlands 10,965 $ 305,092
Fertilizantes Fosfatados SA, pfd. ............. Brazil 254,684,000 882,720
Moebel Walther AG, pfd. ....................... Germany 16,000 326,696
News Corp.Ltd., pfd. .......................... Australia 152,204 1,191,518
Tele Sudeste Celular Participacoes SA, pfd. ... Brazil 57,573,000 327,947
Weg SA, pfd. .................................. Brazil 1,755,900 730,302
-----------
TOTAL PREFERRED STOCKS (COST $4,102,963) ...... 3,764,275
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT**
---------
<S> <C> <C> <C>
BONDS (COST $246,250) .2%
Amer Group Ltd., cvt., 6.25%, 6/15/03 ......... Finland $ 250,000 238,750
-----------
TOTAL INVESTMENTS (COST $107,192,955) 100.9% .. 113,531,201
-----------
OTHER ASSETS, LESS LIABILITIES (.9%) .......... (1,016,894)
-----------
TOTAL NET ASSETS 100.0% ....................... $ 112,514,307
=============
</TABLE>
* Non income producing.
** Securities denominated in U.S. dollars.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- ---------------
<S> <C> <C>
Assets:
Investments in securities:
Cost ............................................ $ 72,100,436 $ 107,192,955
------------- -------------
Value ........................................... 69,663,008 113,531,201
Cash ............................................. -- 244,000
Receivables:
Investment securities sold ...................... 1,832,453 2,208,190
Beneficial shares sold .......................... 1,715,059 17,569,816
Dividends and interest .......................... 180,127 663,306
Other assets ..................................... 30,333 --
------------- -------------
Total assets ................................ 73,420,980 134,216,513
------------- -------------
Liabilities:
Payables:
Investment securities purchased ................. 806,633 21,297,018
Beneficial shares redeemed ...................... 3,497,633 126
To affiliates ................................... 109,653 189,053
To shareholders ................................. -- 154,968
Funds advanced by custodian ...................... 4,611,945 --
Deferred tax liability (Note 1e) ................. 214,496 --
Accrued expenses ................................. 237,993 61,041
------------- -------------
Total liabilities ........................... 9,478,353 21,702,206
------------- -------------
Net assets, at value .............................. $ 63,942,627 $ 112,514,307
============= =============
Net assets consist of:
Undistributed net investment income /
(Distributions in excess of net investment income) $ (104,555) $ 772,225
Net unrealized appreciation (depreciation) ....... (2,651,924) 6,338,246
Accumulated net realized loss .................... (5,837,779) (7,641,421)
Beneficial shares ................................ 72,536,885 113,045,257
------------- -------------
Net assets, at value .............................. $ 63,942,627 $ 112,514,307
============= =============
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements (continued)
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- ---------------
<S> <C> <C>
CLASS A:
Net assets, at value ................................ $ 53,858,202 $103,614,643
============ ============
Shares outstanding .................................. 5,327,763 7,412,943
============ ============
Net asset value per share ........................... $ 10.11 $ 13.98
============ ============
Maximum offering price per share
(Net asset value per share divided by 94.25%) ..... $ 10.73 $ 14.83
============ ============
CLASS B:
Net assets, at value ................................ $ 38,336
============
Shares outstanding .................................. 2,752
============
Net asset value and maximum offering price per share* $ 13.93
============
CLASS C:
Net assets,at value ................................. $ 8,942,769 $ 442,630
============ ============
Shares outstanding .................................. 886,747 31,757
============ ============
Net asset value per share* .......................... $ 10.09 $ 13.94
============ ============
Maximum offering price per share
(Net asset value per share divided by 99.00%) ..... $ 10.19 $ 14.08
============ ============
ADVISOR CLASS:
Net assets, at value ................................ $ 1,141,656 $ 8,418,698
============ ============
Shares outstanding .................................. 111,984 601,901
============ ============
Net asset value and maximum offering price per share $ 10.20 $ 13.99
============ ============
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- ---------------
<S> <C> <C>
Investment Income:
Dividends* ........................................ $ 425,332 $ 1,653,586
Interest .......................................... 48,273 195,531
------------ ------------
Total investment income ...................... 473,605 1,849,117
------------ ------------
Expenses:
Management fees (Note 3) .......................... 259,410 572,111
Distribution fees (Note 3)
Class A .......................................... 45,120 118,609
Class B .......................................... -- 88
Class C .......................................... 35,961 2,407
Transfer agent fees (Note 3) ...................... 123,700 132,000
Custodian fees .................................... 19,100 32,200
Reports to shareholders ........................... 19,100 30,500
Registration and filing fees ...................... 45,200 35,000
Professional fees ................................. 2,100 8,500
Trustees' fees and expenses ....................... 1,900 4,300
Other ............................................. 744 1,097
------------ ------------
Total expenses ............................... 552,335 936,812
------------ ------------
Net investment income (loss) ............... (78,730) 912,305
------------ ------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ...................................... 922,179 608,307
Foreign currency transactions .................... (9,556) (43,050)
------------ ------------
Net realized gain ............................... 912,623 565,257
Net unrealized appreciation (depreciation) on:
Investments ...................................... 14,963,852 14,626,881
Deferred taxes (Note 1e) ......................... (214,496) --
------------ ------------
Net unrealized appreciation ..................... 14,749,356 14,626,881
------------ ------------
Net realized and unrealized gain ................... 15,661,979 15,192,138
------------ ------------
Net increase in net assets resulting from operations $ 15,583,249 $ 16,104,443
============ ============
</TABLE>
*Net of foreign taxes of $41,983 and $243,654 for the Pacific Growth Fund and
Foreign Smaller Companies Fund,respectively.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
--------------------------------- ---------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
APRIL 30, 1999 YEAR ENDED APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998 (UNAUDITED) OCTOBER 31, 1998
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ........................... $ (78,730) $ 624,107 $ 912,305 $ 2,733,473
Net realized gain (loss) from investments and
foreign currency transactions ......................... 912,623 (6,483,804) 565,257 (7,737,309)
Net unrealized appreciation (depreciation) on
investments and deferred taxes ........................ 14,749,356 (6,930,736) 14,626,881 (15,102,189)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting from
operations ....................................... 15,583,249 (12,790,433) 16,104,443 (20,106,025)
Distributions to shareholders from:
Net investment income:
Class A ................................................ (300,270) (565,160) (1,771,550) (2,082,916)
Class C ................................................ (26,772) (39,362) (6,462) --
Advisor Class .......................................... (8,277) (14,529) (144,507) (128,167)
Net realized gains:
Class A ................................................ -- (255,869) -- (5,553,654)
Class C ................................................ -- (21,696) -- --
Advisor Class .......................................... -- (5,784) -- (199,828)
Beneficial share transactions (Note 2):
Class A ................................................ (1,157,536) 13,620,354 (23,461,106) 18,121,845
Class B ................................................ -- -- 34,223 --
Class C ................................................ 841,325 5,094,887 (57,698) 485,756
Advisor Class .......................................... (826,291) 193,541 (4,999,660) 10,935,209
------------- ------------- ------------- -------------
Net increase (decrease) in net assets .............. 14,105,428 5,215,949 (14,302,317) 1,472,220
Net assets:
Beginning of period ..................................... 49,837,199 44,621,250 126,816,624 125,344,404
------------- ------------- ------------- -------------
End of period ........................................... $ 63,942,627 $ 49,837,199 $ 112,514,307 $ 126,816,624
============= ============= ============= =============
Undistributed net investment income/
(Distributions in excess of net investment
income) included in net assets:
End of period .......................................... $ (104,555) $ 309,494 $ 772,225 $ 1,782,439
============= ============= ============= =============
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (unaudited)
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 achieve long-term capital growth by
investing, under normal market conditions at least 65% of its total assets in
equity securities that trade on Pacific Rim markets as defined in the Fund's
prospectus, and are issued by companies that have their principal activities in
the Pacific Rim.
Templeton Foreign Smaller Companies Fund -- Seeks to achieve long-term capital
growth by investing, under normal market conditions, at least 65% of its total
assets in equity securities of smaller capitalization companies outside the
United States.
The following summarizes the Funds' 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 exchange rate 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.
Certain countries in which the Funds invest have imposed restrictions on the
repatriation of their currencies. Other countries have previously instituted
currency exchange controls in the past during periods of serious imbalance in
their balance of payments or upon the occurrence of other destabilizing events.
Exchange control regulations may restrict the Funds' ability to convert
investment income, capital, or the proceeds of securities into U.S. dollars. As
of April 30, 1999, the Pacific Growth Fund has investments with a value of
approximately $3 million in countries with restrictions on the repatriation of
their currencies or formal exchange controls currently in place.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (unaudited) (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
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.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
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.
Common expenses incurred by the Trust are allocated among the funds comprising
the trust 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.
e. DEFERRED TAXES
Deferred taxes are recorded for estimated tax liabilities inherent in the Fund's
portfolio securities which may arise from subsequent sales of those securities
and asset repatriations from countries that impose such taxes.
f. 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. BENEFICIAL SHARES
During the period ended April 30, 1999, the Funds offered three classes of
shares; Class A, Class C, and Advisor Class. Effective January 1, 1999, Class I
and Class II were renamed Class A and Class C shares, respectively, and a fourth
class of shares, Class B, was established in Templeton Foreign Smaller Companies
Fund. 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.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (unaudited) (continued)
2. BENEFICIAL SHARES (cont.)
At April 30, 1999, there were an unlimited number of shares authorized ($.01 par
value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
----------------------------- ------------------------------
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Six months ended April 30, 1999
Shares sold .................................. 12,306,965 $ 103,232,797 3,055,284 $ 38,266,258
Shares issued on reinvestment of distributions 32,329 261,536 131,310 1,595,434
Shares redeemed .............................. (12,402,161) (104,651,869) (5,018,913) (63,322,798)
----------- ------------- ---------- -------------
Net decrease ................................. (62,867) $ (1,157,536) (1,832,319) $ (23,461,106)
=========== ============= ========== =============
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
----------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Year ended October 31, 1998
Shares sold .................................. 15,211,240 $ 118,081,920 6,229,087 $ 87,294,308
Shares issued on reinvestment of distributions 80,593 692,138 475,150 6,445,132
Shares redeemed .............................. (13,666,884) (105,153,704) (5,534,510) (75,617,595)
----------- ------------- ---------- -------------
Net increase ................................. 1,624,949 $ 13,620,354 1,169,727 $ 18,121,845
=========== ============= ========== =============
TEMPLETON
FOREIGN SMALLER COMPANIES FUND
------------------------------
CLASS B SHARES: SHARES AMOUNT(++)
<S> <C> <C>
For the period ended April 30, 1999
Shares sold ....................... 2,752 $34,223
----- -------
Net increase ...................... 2,752 $34,223
===== =======
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
------------------------ ------------------------------
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
- --------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Six months ended April 30, 1999
Shares sold .................................. 521,899 $ 4,382,918 58,341 $ 725,110
Shares issued on reinvestment of distributions 3,045 24,607 495 6,015
Shares redeemed .............................. (431,292) (3,566,200) (63,611) (788,823)
-------- ----------- ------- -----------
Net increase (decrease) ...................... 93,652 $ 841,325 (4,775) $ (57,698)
======== =========== ======= ===========
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
-------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT(+)
------ ------ ------ ---------
<S> <C> <C> <C> <C>
Year ended October 31, 1998
Shares sold .................................. 1,436,266 $ 11,856,010 36,532 $ 485,756
Shares issued on reinvestment of distributions 6,175 53,541 -- --
Shares redeemed .............................. (862,769) (6,814,664) -- --
--------- ------------ ------ ---------
Net increase ................................. 579,672 $ 5,094,887 36,532 $ 485,756
========= ============ ====== =========
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (unaudited) (continued)
2. BENEFICIAL SHARES (cont.)
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
-------------------------- ------------------------------
ADVISOR CLASS SHARES: SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Six months ended April 30, 1999
Shares sold .................................. 931,866 $ 7,703,038 23,665 $ 307,601
Shares issued on reinvestment of distributions 1,010 8,209 11,814 143,527
Shares redeemed .............................. (1,005,366) (8,537,538) (438,383) (5,450,788)
----------- ----------- -------- -----------
Net decrease ................................. (72,490) $ (826,291) (402,906) $(4,999,660)
========== =========== ======== ===========
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Year ended October 31, 1998
Shares sold .................................. 679,912 $ 5,002,253 972,516 $ 13,778,030
Shares issued on reinvestment of distributions 2,269 19,383 23,642 322,433
Shares redeemed .............................. (622,404) (4,828,095) (238,243) (3,165,254)
-------- ------------ -------- ------------
Net increase ................................. 59,777 $ 193,541 757,915 $ 10,935,209
======== ============ ======== ============
</TABLE>
+ Effective date of Class C shares was July 1, 1998.
++ Effective date of Class B shares was January 1, 1999.
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:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- ---------- ------------------------
<S> <C>
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
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)
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 each Fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- --------- ------------------------
<S> <C>
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
</TABLE>
Templeton Pacific Growth Fund reimburses Distributors up to 0.25% and 1.00% per
year of the average daily net assets of Class A and Class C shares,
respectively, for costs incurred in marketing the Fund's Class A and Class C
shares. Templeton Smaller Companies Fund reimburse Distributors up to 0.25%,
1.00%, and 1.00% per year of the average daily net assets of Class A, Class B,
and Class C shares, respectively, for costs incurred in marketing the Fund's
Class A, Class B, and Class C shares.
Distributors received net commissions on sales of Fund shares and paid
commissions to other dealers for the six months ended April 30, 1999 as follows:
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- --------------
<S> <C> <C>
Total commissions received ................. $171,863 $ 64,741
Paid to other dealers ...................... $148,198 $ 54,959
</TABLE>
4. INCOME TAXES
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At April 30, 1999, the net unrealized appreciation
(depreciation) based on the cost of investments for income tax purposes was as
follows:
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- ---------------
<S> <C> <C>
Unrealized appreciation .............. $ 10,814,745 $ 22,979,093
Unrealized depreciation .............. (13,252,173) (16,640,847)
------------ ------------
Net unrealized appreciation
(depreciation) ....................... $ (2,437,428) $ 6,338,246
============ ============
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (unaudited) (continued)
4. INCOME TAXES (cont.)
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions.
At October 31, 1998, the Funds had tax basis capital losses which may be carried
over to offset future capital gains as follows:
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- ---------------
Capital loss carryover expiring in:
2006 $6,750,400 $8,206,680
---------- ----------
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1999 were as follows:
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- ---------------
<S> <C> <C>
Purchases ........................ $23,294,930 $ 5,503,917
Sales ............................ $15,322,454 $18,076,560
</TABLE>
