SHAREHOLDER LETTER
Dear Shareholder:
The semiannual report for Franklin Templeton International Trust, which consists
of Templeton Foreign Smaller Companies Fund and Templeton Pacific Growth Fund,
covers the six months ended April 30, 2000.
During the reporting period, global economies generally experienced varying
degrees of recovery and growth fostered by rising trade levels, an increasing
supply of jobs, and government and economic reforms. Many European economies
performed relatively well, but Asia grew the fastest as many countries there
continued to recover from the devastation wrought by the financial crises of the
mid- to late-1990s.
Reflecting these positive economic developments, many international equity
markets posted strong gains until the last six weeks of the reporting period,
when foreign stock markets generally began to fall sharply in tandem with the
drop of the U.S. Nasdaq Composite(R) Index (Nasdaq(R)). Foreign
telecommunication, technology and Internet-related stocks, which had supported
global markets in 1999 and early 2000, were hardest hit by the Nasdaq's downward
spiral.
Although the Pacific Rim's economic recovery was good news for investors, rising
interest rates and ripple effects from U.S. markets upset market expansions and
key indices in the region, such as Hong Kong's Hang Seng and Japan's Nikkei 225,
both of which were in negative territory for the period from January 1 to April
30, 2000. However, both indices posted positive results for the six-month period
as a whole, and the Morgan Stanley Capital International (MSCI(R)) Europe,
Australasia Far East (EAFE(R)) Index, which tracks the equity markets of 20
nations, rose 1.51% during that time. The MSCI Pacific Index, representative of
equity markets in six Pacific Rim countries, posted a positive six-month return
of 3.65% for the same period.(1)
CONTENTS
Shareholder Letter 1
Fund Reports
Templeton Foreign Smaller
Companies Fund 3
Templeton Pacific
Growth Fund 10
Financial Highlights &
Statements of Investments 16
Financial Statements 30
Notes to
Financial Statements 34
[FUND CATEGORY GRAPHIC]
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.
We thank you for your continued support, welcome your questions and comments,
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
1. The unmanaged MSCI EAFE Index tracks the performance of approximately 1,000
securities in 20 countries. The Morgan Stanley Capital International (MSCI)
Pacific Index includes over 400 companies and the five countries of Australia,
Hong Kong, Japan, New Zealand and Singapore. The average company has a market
capitalization of about $5.1 billion. The indices include reinvested dividends.
One cannot invest directly in an index, nor is an index representative of any
Templeton Fund's portfolio.
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 a market capitalization of less than $1 billion -- located outside the
United States.
--------------------------------------------------------------------------------
This semiannual report for Templeton Foreign Smaller Companies Fund covers the
six-month period ended April 30, 2000. Spurred by strength in the global
economic environment, particularly by signs of sustained pan-Asian recovery,
international stock markets generally performed well for most of the reporting
period. During this time, share prices of many Japanese stocks rose due to the
strengthening yen and investor optimism that Japanese companies would at last
start to implement restructuring. However, technology stocks, an important part
of Japan's Nikkei 225 Index, tumbled precipitously during April.
In Latin America, Brazilian stocks generally appreciated as investors regained
confidence in the economic fundamentals of the region. European market
performance was mixed -- although the improving economic outlook pushed share
prices there higher, this was partially offset, in U.S.-dollar terms, by the
continuously falling value of the euro, which hit all-time lows toward the end
of April. Technology, media and telecom shares led many markets higher until
April when the tech-heavy U.S. Nasdaq Composite(R) Index sold off substantially,
casting a pall over much of the global technology stock market.(1)
[GEOGRPHIC DISTRIBUTION PIE CHART]
GEOGRAPHIC DISTRIBUTION
Templeton Foreign Smaller
Companies Fund
Based on Total Net Assets
4/30/00
Europe ........................... 50.1%
Asia ............................. 31.9%
North America .................... 5.4%
Latin America .................... 4.1%
Australia & New Zealand .......... 3.5%
Mid-East & Africa ................ 1.6%
Cash & Other Net Assets .......... 3.4%
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the Fund's Statement of Investments (SOI), which is a complete
listing of the Fund's portfolio holdings, including dollar value and number of
shares or principal amount. The SOI begins on page 26.
TOP 10 HOLDINGS
Templeton Foreign
Smaller Companies Fund
4/30/00
COMPANY, % OF TOTAL
SECTOR, COUNTRY NET ASSETS
---------------------------------------------------------
Giordano International Ltd., 5.7%
Merchandising, Hong Kong
Li & Fung Ltd., 4.2%
Merchandising, Hong Kong
Sa des Galleries Lafayette, 3.1%
Merchandising, France
Swisslog Holding AG, 2.2%
Electronic Components &
Instruments, Switzerland
Orient Overseas 2.1%
International Ltd.,
Transportation, Hong Kong
GTC Transcontinental 2.0%
Group Ltd., B,
Broadcasting & Publishing,
Canada
Ono Pharmaceutical Co. Ltd., 2.0%
Health & Personal Care,
Japan
Housing Development 1.9%
Finance Corp. Ltd.,
Financial Services, India
Dah Sing Financial 1.9%
Holdings Ltd.,
Financial Services, Hong Kong
Tech Holdings Ltd., 1.6%
Electronic Components &
Instruments, Hong Kong
Within this environment, Templeton Foreign Smaller Companies Fund - Class A
provided a +8.62% six-month cumulative total return as shown in the Performance
Summary beginning on page 8. The Fund's benchmark, the Salomon Brothers Global
Ex-U.S. Less Than $1 Billion Index, rose just 2.58% during the same time.(2) By
comparison, the broader Morgan Stanley Capital International(R) Europe,
Australasia, Far East Index (MSCI(R) EAFE(R)) rose 6.84%.(3)
During the reporting period, the Fund's performance was helped by the strong
performance of our Hong Kong holdings, but since we were underweight in Japan
compared to the MSCI EAFE, we did not benefit from gains in Japanese equities
during the first five months of the reporting period. Technology and
communications stocks, which we viewed as overpriced, dominated that market and,
in light of our value philosophy, we did not find them attractive at the time.
A number of the Fund's European holdings performed well, but gains from the
region were hindered by a preference by investors for larger, technology-related
companies until the last six weeks of the period. At that point, investors
shifted away from choppy high-tech and Internet stocks in exchange for those in
more traditional industries. We believe that certain companies have fallen into
a "value trap" across Europe; they are recognized as cheap, but are simply too
small to be interesting to some investors. However, we are optimistic about the
prospects surrounding the growing pace of mergers and acquisitions worldwide,
which we feel should help unlock bargains in some of these undervalued
businesses.
1. The Nasdaq Composite Index measures all Nasdaq domestic and U.S.-based common
stocks listed on the Nasdaq Market. The Index is market-weighted and includes
over 5,000 companies (as of 4/30/00).
2. Sources: Salomon Brothers. The Salomon Brothers Global Ex-U.S. < $1 Billion
Index is designed to measure the performance of global stocks with a market
capitalization of less than $1 billion and includes all developed and emerging
countries except the United States. Indices are unmanaged and include reinvested
dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
3. Source: Morgan Stanley Capital International. The Morgan Stanley Capital
International Europe, Australasia, Far East (MSCI EAFE) Index includes
approximately 1,000 companies representing the stock markets of 20 countries in
Europe, Australia, New Zealand and the Far East; the average company has a
market capitalization of over $3 billion. Indices are unmanaged and include
reinvested dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
Because of the increase in global stock markets and the prevalence of
momentum-style investing, we were particularly selective in buying shares this
past six months. In our assessment, many stock prices were based on unrealistic
prospects, and investors proved time and again their willingness to pay what we
believed to be excessive prices for stocks of companies with no earnings and
little revenue. Where appropriate, we took the opportunity to decrease positions
in some stocks, notably in Asia, when we felt business prospects were fully
reflected in their prices. But we added to or initiated positions in stocks that
we believed met our value-oriented strategy of investing, such as Orient
Overseas International, a Hong Kong-based global shipping company, the Gas
Authority of India, and Sweden's Silo Group, which specializes in monitoring
services that help companies develop and maintain their competitive edge.
A number of the Fund's holdings performed particularly well during the reporting
period. These included Li & Fung (international merchandising), Giordano
International (casual apparel merchandising), Telemig Cellular
(telecommunications), Galeries Lafayette (French department stores and
e-commerce retailing), Hugo Boss (textiles and apparel), Swisslog (an
Internet-technology driven logistics and supply chain specialist) and Geest
(prepared foods, household products).
TOP 10 SECTORS
Templeton Foreign
Smaller Companies Fund
4/30/00
% OF TOTAL
SECTOR NET ASSETS
-----------------------------------------------------------
Merchandising 16.8%
Health & Personal Care 7.6%
Transportation 6.8%
Building Materials &
Components 6.4%
Financial Services 5.3%
Electronic Components &
Instruments 5.1%
Chemicals 5.0%
Food & Household Products 4.8%
Metals & Mining 4.7%
Machinery & Engineering 3.2%
For the remainder of 2000, we plan to continue our focus on company fundamentals
as the basis for stock selection. In keeping with our value style of investing,
it is our belief that a stock's fundamental value is of the utmost importance,
and we shall continue to search for those issues that trade at a discount to
what we believe are a company's future earnings. More specifically, we
concentrate our search on companies able to avert the threat of pricing pressure
by producing value-added rather than commodity products.
Our outlook for the Fund is heavily dependent upon developments in foreign
economies. If the performance of foreign economies improves, the Fund's holdings
should do well. In our opinion, Europe has potential because of positive
earnings prospects and a renewed focus on delivering value to shareholders. In
Japan, we will focus on newer, entrepreneurial companies, although we continue
to remain cautious about the economic fundamentals in that country. We also
believe that China's agreement with the U.S. on entry into the World Trade
Organization may provide interesting investment opportunities as direct foreign
investment returns to the largest nation in Asia.
However, it must be remembered that much of what occurs globally may very well
depend on what happens in the U.S. Many of those who invest only outside the
U.S. believe that since the U.S. economy has been such a catalyst in maintaining
economic activity the world over, significant declines in U.S. securities could
jeopardize global growth. Based on the divergence in valuations between the
small- and large-cap sectors, we also believe there are tremendous opportunities
for small-cap stocks globally, and plan to continue utilizing all of our
expertise and research capabilities in maintaining our bottom-up approach of
searching for equities we consider to be undervalued.
Of course, there are risks involved when 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 fractional market share.
In addition, investment in foreign markets involves special risks related to
market and currency volatility and adverse economic, social and political
developments. Emerging markets securities are subject to heightened risks, as
well as those associated with their relatively small size and lesser liquidity.
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. For example,
Taiwan's equity market has increased 1,576.9% in the last 15 years, but has
suffered six declines of more than 20% during that time.(4) While short-term
volatility can be disconcerting, declines in excess of 50% are not unusual in
emerging markets.
We thank you for your support and look forward to serving your investment needs
in the future.
4. Source: Taiwan Weighted Index. Based on quarterly percentage price change
over 15 years ended March 31, 2000. Returns are measured in U.S. dollars and do
not include reinvested dividends. One cannot invest directly in an index, nor is
an index representative of the Fund's portfolio.
This discussion reflects our views, opinions and portfolio holdings as of April
30, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any country, industry, security or the
fund. Our strategies and the fund's portfolio composition will change depending
on market and economic conditions. Although historical performance is no
guarantee of future results, these insights may help you understand our
investment and management philosophy.
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
CLASS A: 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 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 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: 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.
SIX-MONTH PERFORMANCE SUMMARY
AS OF 4/30/00
Six-month total return does not include sales charges. 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 operating expenses for
each share class. Past distributions are not indicative of future trends. All
total returns include reinvested distributions at net asset value.
<TABLE>
<S> <C> <C>
CLASS A
Six-Month Total Return +8.62%
Net Asset Value (NAV) $15.49 (4/30/00) $14.43 (10/31/99)
Change in NAV +$1.06
Distributions (11/1/99-4/30/00) Dividend Income $0.1745
CLASS B
Six-Month Total Return +8.14%
Net Asset Value (NAV) $15.36 (4/30/00) $14.35 (10/31/99)
Change in NAV +$1.01
Distributions (11/1/99-4/30/00) Dividend Income $0.1509
CLASS C
Six-Month Total Return +8.20%
Net Asset Value (NAV) $15.42 (4/30/00) $14.36 (10/31/99)
Change in NAV +$1.06
Distributions (11/1/99-4/30/00) Dividend Income $0.1116
ADVISOR CLASS
Six-Month Total Return +8.71%
Net Asset Value (NAV) $15.50 (4/30/00) $14.45 (10/31/99)
Change in NAV +$1.05
Distributions (11/1/99-4/30/00) Dividend Income $0.1976
</TABLE>
Past performance does not guarantee future results.
ADDITIONAL PERFORMANCE
AS OF 3/31/00
<TABLE>
<CAPTION>
SINCE
CHANGES IN
INVESTMENT
INCEPTION POLICIES
CLASS A 1-YEAR 5-YEAR (9/20/91) (10/1/96)(5)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +27.51% +74.83% +140.03% +32.47%
Average Annual Total Return(2) +20.15% +10.50% +10.05% +6.39%
Value of $10,000 Investment(3) $12,015 $16,477 $22,625 $12,481
</TABLE>
INCEPTION
CLASS B 1-YEAR (1/1/99)
-------------------------------------------------------------------------
Cumulative Total Return(1) +26.37% +29.32%
Average Annual Total Return(2) +22.37% +19.85%
Value of $10,000 Investment(3) $12,237 $12,532
INCEPTION
CLASS C 1-YEAR (7/1/98)
-------------------------------------------------------------------------
Cumulative Total Return(1) +26.63% +14.64%
Average Annual Total Return(2) +24.35% +7.51%
Value of $10,000 Investment(3) $12,435 $11,352
<TABLE>
<CAPTION>
SINCE
CHANGES IN
INVESTMENT
INCEPTION POLICIES
ADVISOR CLASS(4) 1-YEAR 5-YEAR (9/20/91) (10/1/96)(5)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +27.82% +77.42% +143.58% +34.43%
Average Annual Total Return(2) +27.82% +12.15% +11.00% +8.62%
Value of $10,000 Investment(3) $12,782 $17,742 $24,358 $13,443
</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.
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. 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 only to that class.
Since January 2, 1997 (commencement of sales), the cumulative and average annual
total returns of Advisor Class shares were +27.47% and +7.76%, respectively.
5. 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.
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee future results.
TEMPLETON PACIFIC GROWTH FUND
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
The semiannual report for Templeton Pacific Growth Fund covers the six months
ended April 30, 2000. During this time, Asian economies continued to recover
from their crises of the mid- and late-1990s. Economic momentum increased across
much of the region as Japan and many Southeast Asian nations experienced rising
trade levels while enacting crucial political and economic reforms. South Korea
led the economic comeback, but Hong Kong and Thailand's economies also grew
impressively during the last few months of the period. Hong Kong's economy
expanded at its fastest pace since 1987, boasting an annualized 14.3% increase
in productivity as measured by gross domestic product (GDP) through March 31,
2000. Surging imports, increased consumer spending and corporate investment in
Hong Kong were the three major contributing factors to that region's rapid
growth.
The Thai government passed legislation opening up Thailand to more foreign
economic participation, and growing imports indicated a robust level of domestic
consumption. These developments culminated in the International Monetary Fund's
(IMF) announcement that Thailand would not need to renew its US$17 billion loan
package as scheduled in June 2000. Boosts in exports helped China's economy
expand at an impressive 8.1% annualized rate in terms of gross domestic product
(GDP) during first quarter 2000, while in Japan the rebound of the yen provided
evidence that a stronger Japanese economy may be around the corner. Singapore
also made progress, forecasting a budget surplus of US$1.7 billion. However,
South Korea encountered challenges to its political reform process, and both
Australia and New Zealand were experiencing markedly higher internal inflation
data.
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the fund's Statement of Investments (SOI), which is a complete
listing of the Fund's portfolio holdings, including dollar value and number of
shares or principal amount. The SOI begins on page 19.
Most equity markets throughout the Pacific Rim registered positive performances
during the period. As in the U.S. and other developed markets, technology and
telecommunication stocks in the region rose in price while banks, manufacturers
and other "old economy" stocks generally did not perform as well. However,
during March and April, the tech-heavy U.S. Nasdaq Composite(R) Index suffered
abrupt declines, sending ripple effects through global markets and causing
technology, Internet, computer and telecommunications-related stock prices to
fall dramatically virtually everywhere.(1)
Currencies throughout the region were generally stable relative to the U.S.
dollar, but the Japanese yen was surprisingly strong. The yen's rise was due to
several factors, chiefly that prospects of a healthier Japanese economy was
around the corner. With such expectations came a wave of new foreign investment,
putting upward pressure on the currency. An exceptionally strong yen is a
concern to many investors, because approximately 40% of Japan's exports are sent
to other Asian countries. And while a stronger Asian economy is positive for
Japanese exports, a strong yen is not.
TOP 10 SECTORS
Templeton Pacific Growth Fund
4/30/00
% OF TOTAL
SECTOR NET ASSETS
--------------------------------------------------------------------------------
Electrical & Electronics 19.1%
Banking 16.7%
Multi-Industry 13.4%
Telecommunications 10.8%
Real Estate 7.1%
Financial Services 6.2%
Transportation 6.1%
Metals & Mining 4.8%
Forest Products & Paper 4.3%
Industrial Components 3.2%
1. The Nasdaq Composite Index measures all Nasdaq domestic and U.S.-based common
stocks listed on the Nasdaq Market. The Index is market-weighted and includes
over 5,000 companies (as of 4/30/00).
TOP 10 HOLDINGS
Templeton Pacific Growth Fund
4/30/00
Company, % of Total
Sector, Country Net Assets
--------------------------------------------------------------------------------
DBS Group Holdings Ltd., 5.2%
Banking, Singapore
Johnson Electric Holdings Ltd., 5.1%
Electrical & Electronics,
Hong Kong
City Developments Ltd., 4.1%
Real Estate, Singapore
HSBC Holdings PLC, 3.7%
Banking, Hong Kong
Overseas Union Bank Ltd., 3.4%
Banking, Singapore
Fuji Heavy Industries Ltd., 3.2%
Industrial Components, Japan
Commerce Asset-Holding Bhd., 3.1%
Financial Services, Malaysia
Cheung Kong Holdings Ltd., 2.9%
Multi-Industry, Hong Kong
Matsushita Electrical 2.9%
Industrial Co. Ltd.,
Electrical & Electronics, Japan
SK Telecom Co. Ltd., ADR, 2.9%
Telecommunications,
South Korea
Within this environment, the Fund's Class A shares produced a +2.16% six-month
cumulative total return as shown in the Performance Summary beginning on page
14. The Fund's benchmark, the Morgan Stanley Capital International(R) (MSCI(R))
Pacific Index, produced a 3.65% total return for the same period.(2)
During the period under review, we increased our Japanese holdings from just
over 20% of total net assets on November 1, 1999, to nearly 30% on April 30,
2000. Because Japanese equities rallied, this exposure contributed significantly
to the Fund's performance. As with most global markets, there was an intense
focus on "New Japan" companies involved in telecommunications, Internet and
other technology-related industries. We participated in this market by adding to
our position in companies such as Nippon Telegraph and Telephone, Japan's
largest telecommunications company. Our holdings of "Old Japan" companies such
as Sony, Hitachi and Fuji Photo also performed relatively well because many
investors viewed them as a counterbalance to possible volatility in the latest
wave of high-tech issues coming to market. Of course, some companies, like Sony,
are changing with the times, transforming into hybrids of old and new Japan.
When overall market valuations hit fairly high multiples relative to historic
norms during the reporting period, we sold some of our position in SK Telecom, a
Korean telecommunications company that posted solid gains fueled by strong
revenues, at a profit. However, when Korean semiconductor stocks took a nosedive
in February, we took the opportunity to purchase LG Electronics, a Korean
consumer electronics company. We believe LG is poised to benefit from the
transition to digital television, and its home appliance division has gotten a
boost from recovering domestic consumption lately.
2. Source: Morgan Stanley Capital International. The unmanaged MSCI Pacific
Index includes over 400 companies and the five countries of Australia, Hong
Kong, Japan, New Zealand and Singapore. Indices are unmanaged and include
reinvested dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
Looking forward, we are optimistic about future prospects for equity securities
trading in Pacific Rim markets and for Templeton Pacific Growth Fund, though we
also believe there may be significant volatility along the way. Some of the
factors that we are monitoring include the possibility of rising interest rates
in Asian countries, the reactions of Asian markets to U.S. monetary tightenings
and the effect upon trade of high oil prices. Equity markets may experience
significant volatility in the near future, but we believe such volatility could
present our analysts with unique opportunities to discover undervalued stocks
with the potential to provide attractive long-term returns for the Fund's
shareholders.
Of course, 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 an 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.
We thank you for your support and look forward to serving your investment needs
in the future.
This discussion reflects our views, opinions and portfolio holdings as of April
30, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any country, industry, security or the
Fund. Our strategies and the Fund's portfolio composition will change depending
on market and economic conditions. Although historical performance is no
guarantee of future results, these insights may help you understand our
investment and management philosophy.
GEOGRAPHIC DISTRIBUTION
Templeton Pacific Growth Fund
Based on Total Investments
4/30/00
Japan ............................ 25.7%
Hong Kong ........................ 24.3%
Singapore ........................ 15.8%
South Korea ...................... 9.7%
Australia ........................ 8.7%
Malaysia ......................... 5.0%
Indonesia ........................ 3.5%
India ............................ 2.5%
New Zealand ...................... 2.4%
Philippines ...................... 1.0%
China ............................ 0.7%
Thailand ......................... 0.7%
TEMPLETON PACIFIC
GROWTH FUND
CLASS A: 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: Subject to 1% initial sales charge and 1% contingent deferred sales
charge 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.
SIX-MONTH PERFORMANCE SUMMARY AS OF 4/30/00
Six-month total return does not include sales charges. 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 operating expenses for
each share class. Past distributions are not indicative of future trends. All
total returns include reinvested distributions at net asset value.
CLASS A
Six-Month Total Return +2.16%
Net Asset Value (NAV) $10.42 (4/30/00) $10.20 (10/31/99)
Change in NAV +$0.22
CLASS C
Six-Month Total Return +1.67%
Net Asset Value (NAV) $10.32 (4/30/00) $10.15 (10/31/99)
Change in NAV +$0.17
ADVISOR CLASS
Six-Month Total Return +2.33%
Net Asset Value (NAV) $10.55 (4/30/00) $10.31 (10/31/99)
Change in NAV +$0.24
Past performance does not guarantee future results.
ADDITIONAL PERFORMANCE
AS OF 3/31/00
INCEPTION
CLASS A 1-YEAR 5-YEAR (9/20/91)
--------------------------------------------------------------------------------
Cumulative Total Return(1) +33.77% -7.41% +40.41%
Average Annual Total Return(2) +26.12% -2.69% +3.34%
Value of $10,000 Investment(3) $ 12,612 $ 8,726 $ 13,234
INCEPTION
CLASS C 1-YEAR 3-YEAR (1/2/97)
--------------------------------------------------------------------------------
Cumulative Total Return(1) +33.02% -19.35% -24.26%
Average Annual Total Return(2) +30.77% -7.22% -8.48%
Value of $10,000 Investment(3) $ 13,077 $ 7,986 $ 7,499
INCEPTION
ADVISOR CLASS(4) 1-YEAR 5-YEAR (9/20/91)
--------------------------------------------------------------------------------
Cumulative Total Return(1) +34.47% -5.60% +43.15%
Average Annual Total Return(2) +34.47% -1.15% +4.30%
Value of $10,000 Investment(3) $ 13,447 $ 9,440 $ 14,315
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.
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. 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 only to that class.
Since January 2, 1997 (commencement of sales), the cumulative and average annual
total returns of Advisor Class shares were -21.68% and -7.25%, 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.
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee 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, 2000 -----------------------------------------------------------------
(UNAUDITED)+ 1999+ 1998 1997 1996 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of period ........ $ 10.20 $ 7.83 $ 10.88 $ 14.50 $ 14.11 $ 15.40
---------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) ............... (.01) .01 .13 .14 .12 .15
Net realized and unrealized gains (losses) . .23 2.42 (2.98) (3.65) 1.41 (1.01)
---------------------------------------------------------------------------------------
Total from investment operations ............ .22 2.43 (2.85) (3.51) 1.53 (.86)
---------------------------------------------------------------------------------------
Less distributions from:
Net investment income ...................... -- (.06) (.13) (.11) (.21) (.16)
Net realized gains ......................... -- -- (.07) -- (.93) (.27)
---------------------------------------------------------------------------------------
Total distributions ......................... -- (.06) (.20) (.11) (1.14) (.43)
---------------------------------------------------------------------------------------
Net asset value, end of period .............. $ 10.42 $ 10.20 $ 7.83 $ 10.88 $ 14.50 $ 14.11
=======================================================================================
Total Return* ............................... 2.16% 31.23% 26.37% (24.42)% 11.27% (5.54)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ........... $ 57,323 $ 73,160 $ 42,200 $ 40,958 $ 59,740 $ 50,247
Ratios to average net assets:
Expenses ................................... 1.85%** 1.92% 1.90% 1.63% 1.52% 1.72%
Net investment income (loss) ............... (.16)%** .10% 1.43% .97% 1.06% 1.04%
Portfolio turnover rate ..................... 30.18% 39.33% 19.61% 24.79% 13.48% 36.21%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
+Based on average weighted shares outstanding.
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, 2000 -----------------------------------------
(UNAUDITED)++ 1999++ 1998 1997+
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of period ........ $ 10.15 $ 7.80 $ 10.81 $ 15.10
---------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) ............... (.05) (.07) .08 .05
Net realized and unrealized gains (losses) . .22 2.45 (2.92) (4.31)
---------------------------------------------------------------------
Total from investment operations ............ .17 2.38 (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 .............. $ 10.32 $ 10.15 $ 7.80 $ 10.81
=====================================================================
Total Return* ............................... 1.67% 30.61% (26.47)% (28.28)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ........... $ 11,377 $ 11,925 $ 6,183 $ 2,307
Ratios to average net assets:
Expenses ................................... 2.63%** 2.70% 2.63% 2.48%**
Net investment income (loss) ............... (.93)%** (.71)% .67% .93%**
Portfolio turnover rate ..................... 30.18% 39.33% 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.
++Based on average weighted shares outstanding.
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, 2000 ---------------------------------------
(UNAUDITED)++ 1999++ 1998 1997+
------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of period ........ $10.31 $7.88 $10.88 $15.10
------------------------------------------------------------
Income from investment operations:
Net investment income ...................... .01 .04 .15 .12
Net realized and unrealized gains (losses) . .23 2.46 (2.93) (4.30)
-------------------------------------------------------------
Total from investment operations ............ .24 2.50 (2.78) (4.18)
-------------------------------------------------------------
Less distributions from:
Net investment income ...................... -- (.07) (.15) (.04)
Net realized gains ......................... -- -- (.07) --
--------------------------------------------------------------
Total distributions ......................... -- (.07) (.22) (.04)
Net asset value, end of period .............. $10.55 $10.31 $7.88 $10.88
--------------------------------------------------------------
Total Return* ............................... 2.33% 32.15% (25.68)% (27.74)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ........... $1,554 $7,252 $1,454 $1,357
Ratios to average net assets:
Expenses ................................... 1.64%** 1.71% 1.62% 1.48%**
Net investment income ...................... .11%** .40% 1.78% 1.55%**
Portfolio turnover rate ..................... 30.18% 39.33% 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, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 107.6%
BANKING 16.7%
Australia & New Zealand Banking Group Ltd. ...... Australia 127,000 $ 877,395
* Bangkok Bank Public Co. Ltd., fgn ............... Thailand 111,400 188,665
DBS Group Holdings Ltd. ......................... Singapore 265,454 3,653,393
HSBC Holdings PLC ............................... Hong Kong 233,120 2,603,790
Overseas Union Bank Ltd. ........................ Singapore 521,323 2,381,446
* Philippine National Bank ........................ Philippines 114,573 177,611
* PT Bank Bali, fgn ............................... Indonesia 657,020 31,089
* PT Bank Pan Indonesia TBK ....................... Indonesia 2,277,000 107,744
* PT Bank Pan Indonesia TBK, wts., 6/26/00 ........ Indonesia 354,226 134
* Thai Farmers Bank Public Co. Ltd. ............... Thailand 37,140 32,669
* Thai Farmers Bank Public Co. Ltd., fgn. ......... Thailand 286,120 300,507
Westpac Banking Corp. ........................... Australia 215,600 1,375,019
-----------
11,729,462
-----------
BROADCASTING & PUBLISHING .6%
South China Morning Post Holdings Ltd. .......... Hong Kong 368,000 389,770
-----------
BUILDING MATERIALS & COMPONENTS 2.1%
Gujarat Ambuja Cements Ltd., GDR, Reg S ......... India 191,300 851,285
Okumura Corp. ................................... Japan 194,000 547,490
* Union Cement Corp. .............................. Philippines 3,551,000 81,711
-----------
1,480,486
-----------
CHEMICALS .6%
Shanghai Petrochemical Co. Ltd., H .............. China 2,899,000 390,791
-----------
CONSTRUCTION & HOUSING .5%
Road King Infrastructure Ltd. ................... Hong Kong 686,520 334,922
-----------
ELECTRICAL & ELECTRONICS 19.1%
Creative Technology Ltd. ........................ Singapore 20,900 572,138
Fuji Photo Film Co. Ltd. ........................ Japan 26,000 1,041,684
Hitachi Ltd. .................................... Japan 99,200 1,184,067
* Hyundai Electronics Industries Co. .............. South Korea 83,200 1,319,504
Johnson Electric Holdings Ltd. .................. Hong Kong 444,300 3,579,292
LG Electronics Inc. ............................. South Korea 46,700 1,245,614
Matsushita Electric Industrial Co. Ltd. ......... Japan 76,000 2,011,196
Sony Corp. ...................................... Japan 7,000 803,794
* Sony Corp. New Shrs NPV ......................... Japan 7,000 803,794
Toshiba Corp. ................................... Japan 91,000 882,424
-----------
13,443,507
-----------
ELECTRONIC COMPONENTS & INSTRUMENTS 2.5%
VTech Holdings Ltd. ............................. Hong Kong 423,000 1,754,083
-----------
ENERGY SOURCES 2.2%
* Gas Authority of India Ltd., GDR, 144A .......... India 103,500 672,750
Woodside Petroleum Ltd. ......................... Australia 137,000 846,557
-----------
1,519,307
-----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
TEMPLETON PACIFIC GROWTH FUND SHARES/
COUNTRY WARRANTS VALUE
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
FINANCIAL SERVICES 6.2%
* Commerce Asset-Holding Bhd. ..................... Malaysia 749,200 $2,109,589
* Commerce Asset-Holding Bhd., wts., 6/16/02 ...... Malaysia 29,500 33,537
Nomura Securities Co. Ltd. ...................... Japan 76,000 1,912,746
Public Finance Bhd., fgn. ....................... Malaysia 255,000 328,816
-----------
4,384,688
-----------
FOREST PRODUCTS & PAPER 4.3%
Amcor Ltd. ...................................... Australia 193,800 573,326
* Asia Pulp & Paper Co. Ltd., ADR ................. Indonesia 225,200 1,421,575
Carter Holt Harvey Ltd. ......................... New Zealand 578,548 489,444
Mitsubishi Paper Mills Ltd. ..................... Japan 282,000 339,209
* Paperlinx Ltd. .................................. Australia 64,599 116,284
* PT Tjiwi Kimia TBK .............................. Indonesia 408,709 76,069
* PT Tjiwi Kimia TBK, wts., 7/15/02 ............... Indonesia 56,765 5,121
-----------
3,021,028
-----------
HEALTH & PERSONAL CARE 2.2%
Ono Pharmaceutical Co. Ltd. ..................... Japan 37,000 1,557,715
-----------
INDUSTRIAL COMPONENTS 3.2%
Fuji Heavy Industries Ltd. ...................... Japan 296,000 2,259,542
-----------
MACHINERY & ENGINEERING 2.1%
Kurita Water Industries Ltd. .................... Japan 51,000 1,111,312
Tata Engineering & Locomotive Co. Ltd., GDR ..... India 128,400 401,250
-----------
1,512,562
-----------
MERCHANDISING .8%
Matsuzakaya Co. Ltd. ............................ Japan 220,000 574,046
Takashimaya Co. Ltd. ............................ Japan 551 4,308
-----------
578,354
-----------
METALS & MINING 4.8%
Capral Aluminum Ltd. ............................ Australia 889,000 1,115,270
Nittetsu Mining Co. Ltd. ........................ Japan 235,000 456,627
Pohang Iron & Steel Co. Ltd. .................... South Korea 11,100 892,071
WMC Ltd. ........................................ Australia 213,319 884,991
-----------
3,348,959
-----------
MISC MATERIALS & COMMODITIES .7%
Golden Hope Plantations Bhd. .................... Malaysia 451,000 477,111
-----------
MULTI-INDUSTRY 13.4%
Broken Hill Proprietary Co. Ltd. ................ Australia 72,300 777,927
Cheung Kong Holdings Ltd. ....................... Hong Kong 170,300 2,033,315
Cheung Kong Infrastructure Holdings Ltd. ........ Hong Kong 871,000 1,375,404
Hutchison Whampoa Ltd. .......................... Hong Kong 113,700 1,656,775
Samsung Corp. ................................... South Korea 164,000 1,862,041
SIME Darby Bhd. ................................. Malaysia 327,600 384,499
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
MULTI-INDUSTRY (CONT.)
Swire Pacific Ltd., A .......................... Hong Kong 62,500 $ 353,053
Wheelock and Company Ltd. ...................... Hong Kong 1,329,000 938,415
----------
9,381,429
----------
REAL ESTATE 7.1%
City Developments Ltd. ......................... Singapore 633,200 2,873,968
* Filinvest Land Inc. ............................ Philippines 11,177,000 519,797
* Hon Kwok Land Investment Co. Ltd. .............. Hong Kong 1,708,364 105,276
* Hon Kwok Land Investment Co. Ltd, wts., 10/27/00 Hong Kong 341,672 2,193
New World Development Co. Ltd. ................. Hong Kong 536,664 723,434
Parkway Holdings Ltd. .......................... Singapore 267,800 768,504
----------
4,993,172
----------
TELECOMMUNICATIONS 10.8%
Cable & Wireless HKT Ltd. ...................... Hong Kong 566,669 1,334,974
Nippon Telegraph & Telephone Corp. ............. Japan 161 1,996,206
PT Indosat TBK, ADR ............................ Indonesia 66,800 889,275
SK Telecom Co. Ltd., ADR ....................... South Korea 62,625 2,007,914
Smartone Telecommunications Holdings Ltd. ...... Hong Kong 22,000 68,916
Telecom Corp. of New Zealand Ltd. .............. New Zealand 313,000 1,323,969
----------
7,621,254
----------
TEXTILES & APPAREL .1%
* PT Indorama Synthetics ......................... Indonesia 733,862 85,656
----------
TRANSPORTATION 6.1%
East Japan Railway Co. ......................... Japan 160 947,490
Guangshen Railway Co. Ltd., H, ADR ............. China 28,000 166,250
* Hitachi Zosen Corp. ............................ Japan 385,000 267,176
Hong Kong Ferry Holdings Co. Ltd. .............. Hong Kong 1,037,000 792,142
Malaysian International Shipping Corp., fgn .... Malaysia 276,333 414,500
Singapore Airlines Ltd. ........................ Singapore 165,500 1,715,579
----------
4,303,137
----------
UTILITIES ELECTRICAL & GAS .4%
CLP Holdings Ltd. .............................. Hong Kong 69,000 309,159
----------
WHOLESALE & INTERNATIONAL TRADE 1.1%
Mitsubishi Corp. ............................... Japan 86,000 747,999
----------
TOTAL INVESTMENTS (COST $72,399,276) 107.6% .... 75,624,093
OTHER ASSETS, LESS LIABILITIES (7.6%) .......... (5,370,355)
----------
TOTAL NET ASSETS 100.0% ........................ $ 70,253,738
==========
</TABLE>
*Non-income producing securities.
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, 2000 --------------------------------------------------------
(UNAUDITED)+ 1999+ 1998 1997 1996 1995
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of period ................. $ 14.43 $ 12.33 $ 15.06 $ 14.18 $ 13.23 $ 13.83
-------------------------------------------------------------------------
Income from investment operations:
Net investment income ............................... .10 .24 .26 .27 .35 .25
Net realized and unrealized gains (losses) .......... 1.13 2.13 (2.08) 1.64 1.88 (.08)
-------------------------------------------------------------------------
Total from investment operations ..................... 1.23 2.37 (1.82) 1.91 2.23 .17
-------------------------------------------------------------------------
Less distributions from:
Net investment income ............................... (.17) (.27) (.24) (.32) (.25) (.19)
Net realized gains .................................. -- -- (.67) (.71) (1.03) (.58)
-------------------------------------------------------------------------
Total distributions .................................. (.17) (.27) (.91) (1.03) (1.28) (.77)
-------------------------------------------------------------------------
Net asset value, end of period ....................... $ 15.49 $ 14.43 $ 12.33 $ 15.06 $ 14.18 $ 13.23
=========================================================================
Total Return* ........................................ 8.62% 19.51% (12.64)% 14.25% 18.49% 1.75%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................... $99,311 $102,684 $113,964 $121,619 $67,967 $50,947
Ratios to average net assets:
Expenses ............................................ 1.60%** 1.65% 1.48% 1.48% 1.53% 1.63%
Expenses, excluding waiver and payments by affiliates 1.60%** 1.65% 1.50% 1.58% 1.53% 1.63%
Net investment income ............................... 1.33%** 1.78% 1.23% 2.01% 2.50% 1.86%
Portfolio turnover rate .............................. 20.29% 18.76% 22.82% 33.62% 40.46% 9.12%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
+Based on average weighted shares outstanding.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights (continued)
TEMPLETON FOREIGN SMALLER COMPANIES FUND (CONT.)
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------
SIX MONTHS ENDED
APRIL 30, 2000 PERIOD ENDED
(UNAUDITED) OCTOBER 31, 1999+
-----------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE++
(For a share outstanding throughout the period)
Net asset value, beginning of period $14.35 $12.44
-----------------------------------------
Income from investment operations:
Net investment income .08 .08
Net realized and unrealized gains 1.08 1.89
-----------------------------------------
Total from investment operations 1.16 1.97
-----------------------------------------
Less distributions from net investment income (.15) (.06)
-----------------------------------------
Net asset value, end of period $15.36 $14.35
=========================================
Total Return* 8.14% 15.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $469 $201
Ratios to average net assets:
Expenses 2.40%** 1.99%**
Net investment income .99%** .59%**
Portfolio turnover rate 20.29% 18.76%
</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 October 31, 1999.
++Based on average weighted shares outstanding.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights (continued)
TEMPLETON FOREIGN SMALLER COMPANIES FUND (CONT.)
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 2000 -----------------------------
(UNAUDITED)++ 1999++ 1998+
---------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of period ........ $ 14.36 $ 12.32 $ 14.23
----------------------------------------------------
Income from investment operations:
Net investment income ...................... .06 .13 .01
Net realized and unrealized gains (losses) . 1.11 2.11 (1.92)
----------------------------------------------------
Total from investment operations ............ 1.17 2.24 (1.91)
----------------------------------------------------
Less distributions from net investment income (.11) (.20) --
----------------------------------------------------
Net asset value, end of period .............. $ 15.42 $ 14.36 $ 12.32
====================================================
Total Return* ............................... 8.20% 18.46% (13.42)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ........... $ 855 $ 631 $ 450
Ratios to average net assets:
Expenses ................................... 2.40%** 2.40% 2.54%**
Net investment income ...................... .73%** .94% 1.08%**
Portfolio turnover rate ..................... 20.29% 18.76% 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.
++Based on average weighted shares outstanding.
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, 2000 -----------------------------------------
(UNAUDITED)++ 1999++ 1998 1997+
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of period ................. $ 14.45 $ 12.34 $ 15.09 $ 14.00
-------------------------------------------------------------------
Income from investment operations:
Net investment income ............................... .13 .26 .32 .20
Net realized and unrealized gains (losses) .......... 1.12 2.14 (2.13) .98
-------------------------------------------------------------------
Total from investment operations ..................... 1.25 2.40 (1.81) 1.18
-------------------------------------------------------------------
Less distributions from:
Net investment income ............................... (.20) (.29) (.27) (.09)
Net realized gains .................................. -- -- (.67) --
-------------------------------------------------------------------
Total distributions .................................. (.20) (.29) (.94) (.09)
-------------------------------------------------------------------
Net asset value, end of period ....................... $ 15.50 $ 14.45 $ 12.34 $ 15.09
===================================================================
Total Return* ........................................ 8.71% 19.81% (12.55)% 8.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................... $ 11,510 $ 9,841 $ 12,402 $ 3,726
Ratios to average net assets:
Expenses ............................................ 1.40%** 1.43% 1.31% 1.24%**
Expenses, excluding waiver and payments by affiliates 1.40%** 1.43% 1.33% 1.36%**
Net investment income ............................... 1.68%** 1.94% 1.43% 2.66%**
Portfolio turnover rate .............................. 20.29% 18.76% 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, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 91.9%
APPLIANCES & HOUSEHOLD DURABLES .5%
Guangdong Kelon Electrical Holdings Ltd., H, 144A China 440,000 $ 273,969
Konka Group Co. Ltd., B ......................... China 329,760 294,232
----------
568,201
----------
AUTOMOBILES .9%
Bilia AB, A ..................................... Sweden 115,500 954,652
----------
BANKING 2.5%
Banco de Andalucia SA ........................... Spain 10,000 265,175
Banco de Valencia SA ............................ Spain 33,198 269,241
* Banco de Valencia SA, rts., 5/11/00 ............. Spain 33,198 25,411
Bank Austria AG, 144A ........................... Austria 24,250 1,078,377
BPI Socieda de Gestora de Participacoes Socias SA Portugal 359,040 1,171,291
----------
2,809,495
----------
BROADCASTING & PUBLISHING 2.0%
GTC Transcontinental Group Ltd., B .............. Canada 200,000 2,244,044
----------
BUILDING MATERIALS & COMPONENTS 6.4%
Caradon PLC ..................................... United Kingdom 542,794 1,350,445
Danske Traelast AS .............................. Denmark 16,000 1,456,946
Gujarat Ambuja Cements Ltd. ..................... India 300,000 1,373,647
Sarna Kunststoff Holding AG ..................... Switzerland 330 342,371
Schuttersveld NV ................................ Netherlands 42,295 616,663
* Siam City Cement Public Co. Ltd., fgn. .......... Thailand 284,513 859,105
Uralita SA ...................................... Spain 149,431 1,176,504
----------
7,175,681
----------
BUSINESS & PUBLIC SERVICES 2.9%
Kardex AG, Br. .................................. Switzerland 3,905 1,339,117
Lex Service PLC ................................. United Kingdom 196,000 1,246,698
* Sifo Group AB, B ................................ Sweden 49,200 631,967
----------
3,217,782
----------
CHEMICALS 4.4%
Cookson Group PLC ............................... United Kingdom 564,000 1,670,166
DSM NV, Br. ..................................... Netherlands 43,200 1,422,298
Energia e Industrias Aragonesas Eia SA .......... Spain 196,000 968,042
Yule Catto & Company PLC ........................ United Kingdom 286,600 908,126
----------
4,968,632
----------
CONSTRUCTION & HOUSING .7%
Leighton Holdings Ltd. .......................... Australia 316,700 837,117
----------
DATA PROCESSING & REPRODUCTION 1.1%
* Stepstone ASA ................................... Norway 306,434 1,027,497
* Thiel Logistik AG, 144A ......................... Luxembourg 3,300 205,087
----------
1,232,584
----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
ELECTRICAL & ELECTRONICS 2.9%
* ST Assembly Test Services Ltd., ADR ......... Singapore 11,500 $ 479,406
Techtronic Industries Co. Ltd. .............. Hong Kong 6,266,000 1,021,648
Varitronix International Ltd. ............... Hong Kong 760,000 1,707,492
---------
3,208,546
---------
ELECTRONIC COMPONENTS & INSTRUMENTS 5.1%
Swisslog Holding AG ......................... Switzerland 5,500 2,423,133
Twentsche Kabel Holdings NV ................. Netherlands 37,711 1,501,718
VTech Holdings Ltd. ......................... Hong Kong 429,000 1,778,963
---------
5,703,814
---------
ENERGY SOURCES 2.4%
Fletcher Challenge Energy Ltd. .............. New Zealand 584,720 1,350,379
* Gas Authority of India Ltd., GDR, 144A ...... India 142,500 926,250
* Ranger Oil Ltd. ............................. Canada 94,645 437,550
---------
2,714,179
---------
FINANCIAL SERVICES 5.3%
Dah Sing Financial Holdings Ltd. ............ Hong Kong 549,600 2,152,057
Housing Development Finance Corp. Ltd. ...... India 200,000 2,166,409
Mutual Risk Management Ltd. ................. Bermuda 101,550 1,593,066
---------
5,911,532
---------
FOOD & HOUSEHOLD PRODUCTS 4.8%
Geest PLC ................................... United Kingdom 218,700 1,719,609
Hazlewood Foods PLC ......................... United Kingdom 832,000 1,074,044
Illovo Sugar Ltd. ........................... South Africa 700,000 521,425
McBride PLC ................................. United Kingdom 314,100 378,446
National Foods Ltd. ......................... Australia 381,639 578,983
Perkins Foods PLC ........................... United Kingdom 729,200 1,055,439
---------
5,327,946
---------
FOREST PRODUCTS & PAPER 1.6%
Cartiere Burgo SpA .......................... Italy 185,138 1,755,065
---------
HEALTH & PERSONAL CARE 7.6%
Apothekers Cooperatie OPG VA ................ Netherlands 54,210 1,318,954
Internatio-Muller NV ........................ Netherlands 62,500 1,156,152
* Internatio-Muller NV, trading cpn., 5/19/00 . Netherlands 62,500 53,536
* Medison Co Ltd. ............................. South Korea 157,000 1,697,680
Moulin International Holdings Ltd. .......... Hong Kong 12,285,000 962,082
Nycomed Amersham PLC ........................ United Kingdom 140,305 1,097,725
Ono Pharmaceutical Co Ltd. .................. Japan 53,000 2,231,321
---------
8,517,450
---------
INDUSTRIAL COMPONENTS 2.1%
Aalberts Industries NV ...................... Netherlands 63,650 1,162,925
* Aalberts Industries NV, trading cpn., 7/20/00 Netherlands 63,650 24,361
Weir Group PLC .............................. United Kingdom 414,100 1,214,930
---------
2,402,216
---------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
INSURANCE .6%
Ace Ltd. .......................... Bermuda 26,400 $ 631,950
----------
LEISURE & TOURISM .8%
Kuoni Reisen Holding AG, B ........ Switzerland 200 868,352
----------
MACHINERY & ENGINEERING 3.2%
Arcadis NV ........................ Netherlands 172,735 1,156,929
Laird Group PLC ................... United Kingdom 351,900 1,115,036
METSO OYJ ......................... Finland 95,970 1,268,068
----------
3,540,033
----------
MERCHANDISING 16.8%
Best Denki Co. Ltd. ............... Japan 137,000 777,062
* Dickson Concepts International Ltd. Hong Kong 1,374,000 1,331,806
Giordano International Ltd. ....... Hong Kong 3,917,000 6,411,669
Li & Fung Ltd. .................... Hong Kong 1,227,000 4,741,527
Northwest Company Fund ............ Canada 148,750 1,104,306
Sa des Galeries Lafayette ......... France 20,600 3,512,206
Samas-Groep NV .................... Netherlands 38,200 522,148
Somerfield PLC .................... United Kingdom 260,400 234,290
Vendex KBB NV ..................... Netherlands 10,692 165,146
----------
18,800,160
----------
METALS & MINING 4.7%
Arbed SA .......................... Luxembourg 7,172 632,310
Boehler-Uddeholm AG ............... Austria 15,350 599,514
Boehler-Uddeholm AG, 144A ......... Austria 3,390 132,401
Elkem ASA, A ...................... Norway 47,700 757,058
Iluka Resources Ltd. .............. Australia 520,100 1,138,041
Pechiney SA, A .................... France 40,441 1,776,266
* PT Timah TBK ...................... Indonesia 709,000 272,864
----------
5,308,454
----------
MULTI-INDUSTRY 2.7%
Elementis PLC ..................... United Kingdom 705,000 910,097
Nagron Nationaal Grondbezit NV .... Netherlands 45,400 992,901
Saha Union Public Co. Ltd., fgn. .. Thailand 634,000 191,440
Zehnder Holding AG, Br. ........... Switzerland 1,820 1,026,097
----------
3,120,535
----------
REAL ESTATE .8%
* Corporacion Geo SA, B ............. Mexico 404,000 927,009
----------
TEXTILES & APPAREL 1.8%
Gamma Holding NV .................. Netherlands 16,800 558,780
* Tefron Ltd. ....................... Israel 82,900 1,269,406
* Yizheng Chemical Fibre Co. Ltd., H China 1,225,000 237,476
----------
2,065,662
----------
TRANSPORTATION 6.8%
* Anangel-American Shipholdings Ltd., ADR Greece 77,500 377,813
* Neptune Orient Lines Ltd. ......... Singapore 1,081,000 968,627
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
TRANSPORTATION (CONT.)
* Orient Overseas International Ltd. ............................. Hong Kong 4,167,000 $ 2,407,372
Sea Containers Ltd., A ......................................... United Kingdom 44,500 1,012,375
Stagecoach Holdings PLC ........................................ United Kingdom 1,177,110 1,174,200
Stolt Nielsen SA, ADR .......................................... Norway 66,800 1,106,375
Transportes Azkar SA ........................................... Spain 45,180 617,556
-------------
7,664,318
-------------
UTILITIES ELECTRICAL & GAS .5%
Guangdong Electric Power Development Co Ltd., B ................ China 1,195,896 560,394
-------------
TOTAL COMMON STOCKS (COST $89,430,055) ......................... 103,035,803
-------------
PREFERRED STOCKS 4.7%
Confab Industrial SA, pfd. ...................................... Brazil 1,081,200 689,044
Fertilizantes Fosfatados SA, pfd. ............................... Brazil 192,884,000 641,343
Hugo Boss AG, pfd. .............................................. Germany 10,220 1,615,807
Telemig Celular Participacoes SA, ADR, pfd. ..................... Brazil 25,188 1,473,498
Weg SA, pfd. .................................................... Brazil 1,755,900 875,761
-------------
TOTAL PREFERRED STOCKS (COST $4,546,227) ....................... 5,295,453
-------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT (COST $93,976,282) 108,331,256
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT**
---------
<S> <C> <C> <C>
(a) REPURCHASE AGREEMENT (COST $4,616,000) 4.1%
Barclays Bank PLC, 5.71%, 5/01/00
(Maturity Value $4,618,196)
Collateralized by U.S. Treasury Notes and Bonds ............. United States $4,616,000 4,616,000
------------
TOTAL INVESTMENTS (COST $98,592,282) 100.7% .................. 112,947,256
OTHER ASSETS, LESS LIABILITIES (.7%) ......................... (802,549)
------------
TOTAL NET ASSETS 100.0% ...................................... $112,144,707
============
</TABLE>
*Non-income producing securities. **Securities denominated in U.S. dollars.
(a) At April 30, 2000, all repurchase agreements held by the Fund had been
entered into on the last business day of the month.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
-----------------------------------
<S> <C> <C>
Assets:
Investments in securities:
Cost .................................................................................. $ 72,399,276 $ 93,976,282
---------------------------------
Value ................................................................................. 75,624,093 108,331,256
Repurchase agreement, at value and cost ................................................ -- 4,616,000
Cash ................................................................................... -- 203,057
Receivables:
Investment securities sold ............................................................ -- 8,888
Beneficial shares sold ................................................................ 183,754 381,226
Dividends and interest ................................................................ 201,768 847,060
---------------------------------
Total assets ..................................................................... 76,009,615 114,387,487
---------------------------------
Liabilities:
Payables:
Investment securities purchased ....................................................... 175,119 1,160,131
Beneficial shares redeemed ............................................................ 2,735,416 781,755
To affiliates ......................................................................... 155,515 185,595
To shareholders ....................................................................... 22,517 --
Funds advanced by custodian ............................................................ 2,634,987 --
Accrued expenses ....................................................................... 32,323 115,299
---------------------------------
Total liabilities ................................................................ 5,755,877 2,242,780
---------------------------------
Net assets, at value .................................................................... $ 70,253,738 $ 112,144,707
=================================
Net assets consist of:
Undistributed net investment income / (Distributions in excess of net investment income) $ (109,351) $ 905,804
Net unrealized appreciation ............................................................ 3,224,817 14,354,974
Accumulated net realized loss .......................................................... (3,781,965) (2,267,228)
Beneficial shares ...................................................................... 70,920,237 99,151,157
---------------------------------
Net assets, at value .................................................................... $ 70,253,738 $ 112,144,707
=================================
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements (continued)
STATEMENT OF ASSETS AND LIABILITIES (CONT.)
APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
-----------------------------
<S> <C> <C>
CLASS A:
Net assets, at value ................................................ $57,323,542 $99,311,210
============================
Shares outstanding .................................................. 5,502,598 6,413,145
============================
Net asset value per share ........................................... $ 10.42 $ 15.49
============================
Maximum offering price per share (Net asset value per share / 94.25%) $ 11.06 $ 16.44
============================
CLASS B:
Net asset, at value ................................................. $ 468,660
===========
Shares outstanding .................................................. 30,515
===========
Net asset value and maximum offering price per share* ............... $ 15.36
===========
CLASS C:
Net assets, at value ................................................ $11,376,573 $ 854,510
============================
Shares outstanding .................................................. 1,101,891 55,433
============================
Net asset value per share* .......................................... $ 10.32 $ 15.42
============================
Maximum offering price per share (Net asset value per share / 99.00%) $ 10.42 $ 15.58
============================
ADVISOR CLASS:
Net asset, at value ................................................. $ 1,553,623 $11,510,327
============================
Shares outstanding .................................................. 147,259 742,524
============================
Net asset value and maximum offering price per share ................ $ 10.55 $ 15.50
============================
</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)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
-------------------------------
<S> <C> <C>
Investment Income:
Dividends* .......................................................... $ 653,589 $ 1,586,236
Interest ............................................................ 64,504 228,688
-------------------------------
Total investment income .............................................. 718,093 1,814,924
-------------------------------
Expenses:
Management fees (Note 3) ............................................ 424,962 557,934
Distribution fees (Note 3)
Class A ............................................................ 68,609 100,657
Class B ............................................................ -- 1,852
Class C ............................................................ 62,092 3,989
Transfer agent fees (Note 3) ........................................ 116,000 153,000
Custodian fees ...................................................... 29,000 26,000
Reports to shareholders ............................................. 28,400 32,300
Registration and filing fees ........................................ 90,000 14,000
Professional fees ................................................... 4,500 1,900
Trustees' fees and expenses ......................................... 2,500 3,100
Other ............................................................... 1,381 1,383
-------------------------------
Total expenses ....................................................... 827,444 896,115
-------------------------------
Net investment income (loss) ........................................ (109,351) 918,809
-------------------------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ...................................................... 2,818,636 11,476,713
Foreign currency transactions .................................... (7,821) (35,230)
-------------------------------
Net realized gain .................................................. 2,810,815 11,441,483
Net unrealized appreciation (depreciation) on investments .......... 2,914,106 (2,045,009)
-------------------------------
Net realized and unrealized gain ..................................... 5,724,921 9,396,474
-------------------------------
Net increase in net assets resulting from operations ................. $ 5,615,570 $ 10,315,283
===============================
</TABLE>
*Net of foreign taxes of $42,109 and $158,356 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, 2000 YEAR ENDED APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999 (UNAUDITED) OCTOBER 31, 1999
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) .................... $ (109,351) $ (3,065) $ 918,809 $ 2,114,539
Net realized gain (loss) from investments and
foreign currency transactions .................. 2,810,815 104,347 11,441,483 (5,652,897)
Net unrealized appreciation (depreciation)
on investments ................................. 2,914,106 17,711,991 (2,045,009) 24,688,618
----------------------------------------------------------------------------
Net increase in net assets
resulting from operations ....................... 5,615,570 17,813,273 10,315,283 21,150,260
Distributions to shareholders from:
Net investment income:
Class A ........................................ -- (300,300) (1,162,326) (2,246,219)
Class B ........................................ -- -- (3,092) (317)
Class C ........................................ -- (26,778) (5,422) (7,818)
Advisor Class .................................. -- (8,257) (135,868) (198,057)
Beneficial share transactions (Note 2):
Class A ........................................ (20,582,912) 15,916,675 (11,596,988) (28,393,015)
Class B ........................................ -- -- 249,339 196,595
Class C ........................................ (944,882) 3,739,284 172,340 118,168
Advisor Class .................................. (6,171,193) 5,366,059 955,166 (4,079,946)
----------------------------------------------------------------------------
Net increase (decrease) in net assets .......... (22,083,417) 42,499,956 (1,211,568) (13,460,349)
Net assets:
Beginning of period .............................. 92,337,155 49,837,199 113,356,275 126,816,624
----------------------------------------------------------------------------
End of period .................................... $ 70,253,738 $ 92,337,155 $ 112,144,707 $ 113,356,275
============================================================================
Undistributed net investment income/(Distributions
in excess of net investment income) included in
net assets:
End of period ................................... $ (109,351) $ -- $ 905,804 $ 1,293,703
============================================================================
</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, 2000, the Pacific Growth Fund had investments with a value of
approximately $3.7 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. 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.
d. 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
The classes of shares offered within each of the Funds are indicated below.
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.
FUND CLASS
-----------------------------------------------------------
Templeton Pacific Growth Fund A, C & Advisor
Templeton Foreign Smaller Companies Fund A, B, C & Advisor
At April 30, 2000, 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
--------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Six months ended April 30, 2000
Shares sold .................................. 29,302,534 $ 320,035,581 13,239,447 $ 203,659,650
Shares issued on reinvestment of distributions -- -- 70,451 1,036,343
Shares redeemed .............................. (30,969,584) (340,618,493) (14,013,448) (216,292,981)
-------------------------------------------------------------------------
Net decrease ................................. (1,667,050) $ (20,582,912) (703,550) $ (11,596,988)
=========================================================================
</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
-------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Year ended October 31, 1999
Shares sold .................................... 33,071,521 $317,841,820 11,706,921 $163,733,450
Shares issued on reinvestment of distributions . 32,336 261,576 161,671 2,027,136
Shares redeemed ................................ (31,324,839) (302,186,721) (13,997,159) (194,153,601)
------------------------------------------------------------------
Net increase (decrease) ........................ 1,779,018 $ 15,916,675 (2,128,567) $(28,393,015)
===================================================================
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON
FOREIGN SMALLER COMPANIES FUND
------------------------------
SHARES AMOUNT
-------------------------------
<S> <C> <C>
CLASS B SHARES:
Six months ended April 30, 2000
Shares sold .............................................................. 19,590 $ 295,782
Shares issued on reinvestment of distributions ........................... 180 2,646
Shares redeemed .......................................................... (3,236) (49,089)
---------------------
Net increase ............................................................. 16,534 $ 249,339
====================
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON
FOREIGN SMALLER COMPANIES FUND
------------------------------
SHARES AMOUNT+
------------------------------
<S> <C> <C>
For the period ended October 31, 1999
Shares sold .............................................................. 15,528 $ 219,412
Shares issued on reinvestment of distributions ........................... 15 218
Shares redeemed (1,562) (23,035)
----------------------
Net increase 13,981 $ 196,595
======================
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES:
Six months ended April 30, 2000
Shares sold .................................. 1,987,946 $ 21,729,455 50,156 $ 769,741
Shares issued on reinvestment of distributions -- -- 333 4,890
Shares redeemed .............................. (2,060,818) (22,674,337) (38,967) (602,291)
---------------------------------------------------------------------
Net increase (decrease) ...................... (72,872) $ (944,882) 11,522 $ 172,340
====================================================================-
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
---------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended October 31, 1999
Shares sold .................................. 1,762,300 $ 17,204,215 82,420 $ 1,070,968
Shares issued on reinvestment of distributions 3,045 24,607 579 7,207
Shares redeemed .............................. (1,383,677) (13,489,538) (75,620) (960,007)
-------------------------------------------------------------------
Net increase ................................. 381,668 $ 3,739,284 7,379 $ 118,168
===================================================================
</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
----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADVISOR CLASS SHARES:
Six months ended April 30, 2000
Shares sold .................................. 694,523 $ 7,824,910 207,879 $ 3,215,142
Shares issued on reinvestment of distributions -- -- 9,032 132,888
Shares redeemed .............................. (1,250,352) (13,996,103) (155,377) (2,392,864)
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Net increase (decrease) ...................... (555,829) $ (6,171,193) 61,534 $ 955,166
===================================================================
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
-------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended October 31, 1999
Shares sold .................................. 1,851,074 $ 17,373,701 478,789 $ 6,810,287
Shares issued on reinvestment of distributions 1,003 8,160 14,987 188,697
Shares redeemed .............................. (1,333,463) (12,015,802) (817,593) (11,078,930)
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Net increase (decrease) ...................... 518,614 $ 5,366,059 (323,817) $ (4,079,946)
===================================================================
</TABLE>
+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:
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
------------------------------------
1.00% First $100 million
0.90% Over $100 million, up to and including $250 million
0.80% Over $250 million, up to and including $500 million
0.75% Over $500 million
Under a subadvisory agreement, Templeton Investment Counsel, Inc., a
wholly-owned subsidiary of Franklin Resources, Inc., provides subadvisory
services to the Funds and receives from Advisers fees based on the average daily
net assets of each Fund as follows:
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
------------------------------------
0.50% First $100 million
0.40% Over $100 million, up to and including $250 million
0.30% Over $250 million, up to and including $500 million
0.25% Over $500 million
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
Templeton Pacific Growth Fund reimburses Distributors for costs incurred in
marketing the Fund's shares up to 0.25% and 1.00% per year of the average daily
net assets of Class A and Class C shares, respectively. Templeton Smaller
Companies Fund reimburses Distributors for costs incurred in marketing the
Fund's shares 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.
Distributors received net commissions on sales of Fund shares and paid
commissions to other dealers for the six months ended April 30, 2000 as follows:
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
-----------------------------
Total commissions received ...... $188,993 $ 80,319
Paid to other dealers ........... $200,376 $121,849
4. 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.
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments for Templeton Pacific Growth Fund and $98,624,117 for
Templeton Foreign Smaller Companies Fund. At April 30, 2000, the net unrealized
appreciation based on the cost of investments for income tax purposes was as
follows:
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
---------------------------------
Unrealized appreciation ......... $16,997,761 $26,825,749
Unrealized depreciation ......... (13,772,944) (12,502,610)
-------------------------------
Net unrealized appreciation .... $ 3,224,817 $14,323,139
===============================
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions.
At October 31, 1999, 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 ............................. $6,592,778 $ 8,206,680
2007 ............................. -- 5,481,473
-------------------------
$6,592,778 $13,688,153
=========================
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (unaudited) (continued)
5. INVESTMENT TRANSACTION
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 2000 were as follows:
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
--------------------------------
Purchases ........ $25,216,781 $21,448,731
Sales ............ $29,398,577 $34,294,502
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