SHAREHOLDER LETTER
Dear Shareholder:
This annual report for Franklin Templeton International Trust, which consists of
Templeton Foreign Smaller Companies Fund and Templeton Pacific Growth Fund,
covers the fiscal year ended October 31, 1999.
Probably the most dramatic economic news of the fiscal year was the welcome
rebound of Asian markets. Many of them, especially Japan's, experienced
significant increases, and the Morgan Stanley Capital International(R) (MSCI)
Pacific Index, representative of six equity markets in the Pacific region,
posted a one-year return of 51.9%. Other foreign markets also performed well and
the MSCI Europe, Australasia, Far East Index, which tracks the equity markets of
18 countries, produced a 31.56% total return for the same period.(1)
Although large-capitalization (cap) stocks continued to outperform their
smaller-cap counterparts during the reporting period, both provided solid
returns. The MSCI World Index, which represents large-cap stocks in 22 world
markets, posted a one-year return of 25.3%,(2) and the Salomon Brothers Global
ex-U.S. less than $1 billion Index, which measures the performance of
international small-cap equities, delivered a 29.6% return during the same
period.(3)
CONTENTS
Shareholder Letter .................................................... 1
Fund Reports
Templeton Foreign Smaller Companies Fund ............................. 3
Templeton Pacific Growth Fund ........................................ 10
Financial Highlights & Statement of Investments ....................... 18
Financial Statements .................................................. 33
Notes to Financial Statements ......................................... 37
Independent Auditors' Report .......................................... 43
Tax Designation ....................................................... 44
[PYRAMID GRAPHIC]
(1) Source: Morgan Stanley Capital International.
(2) Source: Morgan Stanley Capital International.
(3) Source: Salomon Brothers.
Indexes are unmanaged and include reinvested dividends. One cannot invest
directly in an index, nor is an index representative of the Funds' portfolios.
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 goals and strategies, their managers share a
dedication to the principles of careful stock selection, diversification, and
constant professional supervision. For specific information about the Funds,
including how market conditions and management strategies have affected their
performance, please refer to the reports following this letter.
We thank you for your continued support, welcome your questions, and look
forward to serving your investment needs in the years to come.
Sincerely,
/s/ Rupert H. Johnson, Jr.
Rupert H. Johnson, Jr.
President
Franklin Templeton International Trust
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: Templeton Foreign Smaller Companies Fund seeks to provide
long-term capital growth. Under normal market conditions, the Fund invests at
least 65% of its total assets in equity securities of smaller companies -- those
with market capitalizations of less than $1 billion -- located outside the
United States.
- --------------------------------------------------------------------------------
Dear Shareholder:
This annual report for Templeton Foreign Smaller Companies Fund covers the
fiscal year ended October 31, 1999, a period in which many global investors
preferred large-capitalization growth stocks to smaller-cap stocks. As the
fiscal year began, many investors reacted to the devaluation of the Russian
ruble, severe volatility in Latin American equity markets, and the near-collapse
of a U.S. hedge fund by selling economically sensitive stocks. Several sectors
fell to their lowest valuations in years, and, attempting to head off a global
recession, the U.S. Federal Reserve Board and many European central banks
reduced interest rates. As a result, global financial markets stabilized, and
many emerging markets began to recover from the crises of 1997 and 1998. Within
this environment, Templeton Foreign Smaller Companies Fund - Class A produced a
+19.51% one-year cumulative total return, as shown in the Performance Summary on
page 6. The Fund's benchmark, the Salomon Brothers Global ex-U.S. less than $1
billion Index provided a 29.6% return for the same period.(1)
GEOGRAPHIC DISTRIBUTION
Templeton Foreign Smaller Companies Fund
Based on Total Net Assets 10/31/99
[PIE CHART]
Europe 55.2%
Asia 27.5%
Australia & New Zealand 5.4%
North America 5.1%
Latin America 4.7%
Mid-East & Africa 0.6%
Short-Term Investments & Other Net Assets 1.5%
You will find a complete listing of the Fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 29 of
this report.
TOP 10 INDUSTRIES
Templeton Foreign
Smaller Companies Fund
10/31/99
% OF TOTAL
INDUSTRY NET ASSETS
- -----------------------------------------------
Merchandising 15.1%
Metals & Mining 7.1%
Building Materials & Components 6.7%
Food & Household Products 6.2%
Chemicals 5.8%
Transportation 4.8%
Industrial Components 4.5%
Health & Personal Care 4.3%
Electrical & Electronics 4.2%
Broadcasting & Publishing 3.8%
During the year under review, we continued to search for stocks trading at a
discount to what we believe are companies' future earnings streams or asset
values. This led us to initiate or add to positions in a number of disparate
sectors, from construction in India (Gujarat Ambuja Cements Ltd., GDR) to
financial services in Bermuda (Mutual Risk Management Ltd.) and food in the
United Kingdom (Geest PLC).
One of the most significant changes to the Fund's portfolio during the reporting
period was the increase in our Asian exposure from 13.2% of total net assets at
the beginning of the period to 27.5% on October 31, 1999. This increase was due
in part to strong performance, such as Li & Fung Ltd., a merchandising firm in
Hong Kong, and the addition of a position in another Hong Kong-based company,
Varitronix International Ltd., a leading manufacturer of liquid crystal displays
and related products.
Although Europe's improving economic outlook does give us hope that earnings
prospects of smaller European companies will improve over the next few years,
our exposure to the region remained relatively stable during the period.
We were cautious about adding to our Latin American holdings, despite relatively
inexpensive stock prices. In our opinion, uncertainty exists about the region's
macro-economic prospects.
Looking forward, our outlook for the Fund is heavily dependent upon foreign
economies. If the performance of these economies, along with that of
economically sensitive stocks, continues to improve, we believe the Fund's
holdings could do well. If the market continues to be led by large-cap growth
stocks, the outlook will not be as bright. In our opinion, the valuations of
smaller companies are extremely attractive relative to those of larger
companies, and we feel this may ultimately lead to smaller-company stocks
outperforming their larger counterparts. As value investors, it is our belief
that a stock's true value is of the utmost importance, and we shall continue to
search for stocks trading at a discount to what, in our opinion, are a company's
future earnings.
(1) Source: Salomon Brothers. The unmanaged Salomon Brothers Global ex-U.S. Less
than $1 billion Index is designed to measure the performance of global stocks
with a market capitalization less than $1 billion. It includes all developed and
emerging countries except the United States. One cannot invest directly in an
index, nor is an index representative of the Fund's portfolio.
Of course, there are risks involved in investing in a Fund seeking long-term
capital growth from small or relatively new or unseasoned companies, such as
relatively small revenues, limited production lines and small market share. In
addition, investing in foreign markets involves special risks related to market
and currency volatility, and adverse economic, social, and political
developments. Emerging market securities are subject to heightened risks, as
well as those associated with 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. For example,
Taiwan's equity market has increased 974% in the last 15 years, but has suffered
six declines of more than 20% during that time.(2) While short-term volatility
can be disconcerting, declines in excess of 50% are not unusual in emerging
markets.
We thank you for your support and look forward to serving your investment needs
in the future.
(2) Source: Taiwan Weighted Index. Based on quarterly percentage price change
over 15 years ended September 30, 1999. Returns are measured in U.S. dollars and
do not include reinvested dividends.
- --------------------------------------------------------------------------------
This discussion reflects our views, opinions and portfolio holdings as of
October 31, 1999, the end of the reporting period. 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.
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
Templeton Foreign
Smaller Companies Fund
10/31/99
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- ---------------------------------------------------------------------------------------
<S> <C>
Giordano International Ltd., Merchandising, Hong Kong 6.0%
Li & Fung Ltd., Merchandising, Hong Kong 3.0%
Sa des Galeries Lafayette, Merchandising, France 2.7%
GTC Transcontinental Group Ltd., B, Broadcasting &
Publishing, Canada 2.3%
Pechiney SA, A, Metals & Mining, France 2.0%
Dah Sing Financial Holdings Ltd., Financial Services, Hong Kong 1.9%
Endesa SA, Utilities Electrical & Gas, Spain 1.7%
Koninklijke Philips Electronics NV, Electrical & Electronics,
Netherlands 1.7%
Gujarat Ambuja Cements Ltd., GDR, Building Materials & Components, India 1.7%
Cookson Group PLC, Chemicals, United Kingdom 1.6%
</TABLE>
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
- --------------------------------------------------------------------------------
CLASS A (formerly Class I):
Subject to the current, maximum 5.75% initial sales charge. Prior to January 1,
1997, Fund shares were offered at a lower initial sales charge. Thus, actual
total returns would have been higher. On July 1, 1993, the Fund implemented a
Rule 12b-1 plan, which affects subsequent performance. Past fee waivers and
expense reimbursements by the Fund's manager increased the Fund's total returns.
Without these fee waivers and expense reimbursements, total returns for Class A
shares would have been lower.
CLASS B:
Subject to no initial sales charge, but subject to a contingent deferred sales
charge (CDSC) declining from 4% to 0% over six years. These shares have higher
annual fees and expenses than Class A shares.
CLASS C (formerly Class II):
Subject to 1% initial sales charge and 1% CDSC for shares redeemed within 18
months of investment. These shares have higher annual fees and expenses than
Class A shares.
ADVISOR CLASS:
No initial sales charge or Rule 12b-1 fees and are available to a limited class
of investors. Past 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.
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AS OF 10/31/99
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities, as well as the
level of each class's operating expenses. Past distributions are not indicative
of future trends. All total returns include reinvested distributions at net
asset value.
PRICE AND DISTRIBUTION INFORMATION
CLASS A CHANGE 10/31/99 10/31/98
- -------------------------------------------------------------------
Net Asset Value +$2.10 $14.43 $12.33
DISTRIBUTIONS (11/1/98 - 10/31/99)
-----------------------------------
Dividend Income $0.2662
CLASS B CHANGE 10/31/99 1/1/99
- -------------------------------------------------------------------
Net Asset Value +$1.91 $14.35 $12.44
DISTRIBUTIONS (1/1/99 - 10/31/99)
-----------------------------------
Dividend Income $0.0563
CLASS C CHANGE 10/31/99 10/31/98
- -------------------------------------------------------------------
Net Asset Value +$2.04 $14.36 $12.32
DISTRIBUTIONS (11/1/98 - 10/31/99)
-----------------------------------
Dividend Income $0.2039
ADVISOR CLASS CHANGE 10/31/99 10/31/98
- -------------------------------------------------------------------
Net Asset Value +$2.11 $14.45 $12.34
DISTRIBUTIONS (11/1/98 - 10/31/99)
-----------------------------------
Dividend Income $0.2906
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
SINCE
CHANGE IN
INVESTMENT
INCEPTION POLICIES
CLASS A 1-YEAR 5-YEAR (9/20/91) (10/1/96)(6)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +19.51% +43.81% +114.23% +22.03%
Average Annual Total Return(2) +12.66% +6.27% +9.04% +4.63%
Value of $10,000 Investment(3) $11,266 $13,554 $20,191 $11,498
<CAPTION>
10/31/95 10/31/96 10/31/97 10/31/98 10/31/99
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(4) +1.75% +18.49% +14.25% -12.64% +19.51%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS B (1/1/99)
- ----------------------------------------------------------------------------------
<S> <C>
Cumulative Total Return(1) +15.81%
Aggregate Total Return(2) +11.97%
Value of $10,000 Investment(3) $11,197
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR (7/1/98)
- ----------------------------------------------------------------------------------
<S> <C> <C>
Cumulative Total Return(1) +18.46% +2.56%
Average Annual Total Return(2) +16.33% +1.15%
Value of $10,000 Investment(3) $11,633 $10,154
</TABLE>
<TABLE>
<CAPTION>
SINCE
CHANGE IN
INVESTMENT
INCEPTION POLICIES
ADVISOR CLASS(5) 1-YEAR 5-YEAR (9/20/91) (10/1/96)(6)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) +19.81% +44.70% +115.55% +23.91%
Average Annual Total Return(2) +19.81% +7.67% +9.92% +7.21%
Value of $10,000 Investment(3) $11,981 $14,470 $21,555 $12,391
</TABLE>
<TABLE>
<CAPTION>
10/31/95 10/31/96 10/31/97 10/31/98 10/31/99
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(4) +1.75% +18.49% +14.55% -12.55% +19.81%
</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. Since Class B shares have existed for
less than one year, aggregate total return for that class represents total
return since inception, including the maximum sales charge.
(3) These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated and include the current, applicable, maximum
sales charge(s) for that class.
(4) One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
(5) On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A expenses; and (b) for
periods after January 1, 1997, figures reflect actual Advisor Class performance,
including the deduction of all fees and expenses applicable to that class. Since
January 2, 1997 (commencement of sales), the cumulative and average annual total
returns of Advisor Class shares were +13.60% and +4.61%, respectively.
(6) Effective October 1, 1996, the Fund's name was changed from Franklin
International Equity Fund to Templeton Foreign Smaller Companies Fund, and the
Fund, which until that date invested predominantly in large capitalization
foreign equity securities, shifted its emphasis to smaller capitalization
foreign equity securities with a market capitalization of $1 billion or less.
- --------------------------------------------------------------------------------
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility and the social,
economic and political climates of countries where the Fund invests. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. You may
have a gain or loss when you sell your shares.
- --------------------------------------------------------------------------------
Past performance is not predictive of future results.
TEMPLETON
FOREIGN SMALLER COMPANIES FUND
AVERAGE ANNUAL TOTAL RETURN
10/31/99
CLASS A
- ---------------------------------------
1-Year +12.66%
5-Year +6.27%
Since Inception (9/20/91) +9.04%
AVERAGE ANNUAL TOTAL RETURN
10/31/99
CLASS C
- ------------------------------------
1-Year +16.33%
Since Inception (7/1/98) +1.15%
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
The unmanaged indexes differ from the Fund in composition, do not pay management
fees or expenses and include reinvested dividends. One cannot invest directly in
an index. Total return represents the change in value of an investment over the
periods shown. It includes the current, applicable, maximum sales charges, Fund
expenses, account fees, and reinvested distributions.
CLASS A (9/20/91 - 10/31/99)
The following line graph compares the performance of Templeton Foreign Smaller
Companies Fund's Class A shares to that of the Morgan Stanley Capital
International Europe, Australasia, Far East (MSCI EAFE) Index and the MSCI
EAFE/Salomon Brothers Global ex-U.S. less than $1 billion Index, based on a
$10,000 investment from 9/20/91 to 10/31/99.
Templeton Foreign Eafe/Salomon
Smaller Companies MSCI Global
Fund - Class A EAFE Index xUS [less than] $1 Billion
9/20/91 $ 9,426 $10,000 $10,000
9/91 $ 9,444 $10,182 $10,182
Oct-91 $ 9,482 $10,329 $10,329
Nov-91 $ 9,397 $ 9,849 $ 9,849
Dec-91 $ 9,773 $10,361 $10,362
Jan-92 $ 9,887 $10,143 $10,143
Feb-92 $ 9,982 $ 9,783 $ 9,783
Mar-92 $ 9,593 $ 9,140 $ 9,140
Apr-92 $ 9,811 $ 9,185 $ 9,186
May-92 $10,333 $ 9,803 $ 9,804
Jun-92 $10,139 $ 9,341 $ 9,342
Jul-92 $ 9,908 $ 9,105 $ 9,106
Aug-92 $ 9,966 $ 9,679 $ 9,681
Sep-92 $ 9,803 $ 9,491 $ 9,493
Oct-92 $ 9,620 $ 8,996 $ 8,998
Nov-92 $ 9,774 $ 9,084 $ 9,085
Dec-92 $ 9,860 $ 9,133 $ 9,135
Jan-93 $ 9,715 $ 9,135 $ 9,137
Feb-93 $ 9,889 $ 9,414 $ 9,416
Mar-93 $10,121 $10,237 $10,239
Apr-93 $10,497 $11,211 $11,214
May-93 $10,825 $11,451 $11,454
Jun-93 $10,480 $11,275 $11,277
Jul-93 $10,659 $11,672 $11,674
Aug-93 $11,338 $12,305 $12,307
Sep-93 $11,298 $12,030 $12,032
Oct-93 $12,256 $12,404 $12,407
Nov-93 $11,907 $11,323 $11,325
Dec-93 $13,116 $12,142 $12,145
Jan-94 $14,099 $13,172 $13,175
Feb-94 $13,868 $13,138 $13,140
Mar-94 $13,377 $12,575 $12,577
Apr-94 $13,477 $13,111 $13,114
May-94 $13,527 $13,038 $13,042
Jun-94 $13,147 $13,226 $13,229
Jul-94 $13,695 $13,356 $13,360
Aug-94 $14,111 $13,675 $13,680
Sep-94 $13,787 $13,247 $13,251
Oct-94 $14,040 $13,692 $13,697
Nov-94 $13,340 $13,037 $13,042
Dec-94 $13,101 $13,121 $13,127
Jan-95 $12,780 $12,621 $12,627
Feb-95 $12,983 $12,588 $12,594
Mar-95 $12,941 $13,376 $13,382
Apr-95 $13,539 $13,883 $13,889
May-95 $13,806 $13,721 $13,727
Jun-95 $14,156 $13,484 $13,489
Jul-95 $14,826 $14,327 $14,334
Aug-95 $14,394 $13,784 $13,791
Sep-95 $14,750 $14,057 $14,064
Oct-95 $14,286 $13,682 $13,690
Nov-95 $14,351 $14,067 $14,074
Dec-95 $14,504 $14,637 $14,646
Jan-96 $15,024 $14,701 $14,710
Feb-96 $15,438 $14,754 $14,763
Mar-96 $15,674 $15,071 $15,080
Apr-96 $16,147 $15,513 $15,522
May-96 $16,384 $15,231 $15,240
Jun-96 $16,438 $15,320 $15,330
Jul-96 $15,912 $14,876 $14,885
Aug-96 $16,306 $14,913 $14,922
Sep-96 $16,509 $15,312 $15,322
Oct-96 $16,927 $15,160 $15,338
Nov-96 $17,393 $15,767 $15,632
Dec-96 $18,011 $15,568 $15,365
Jan-97 $18,164 $15,027 $15,475
Feb-97 $18,432 $15,276 $15,841
Mar-97 $18,535 $15,335 $15,495
Apr-97 $18,343 $15,421 $15,192
May-97 $18,930 $16,427 $16,007
Jun-97 $19,635 $17,337 $16,345
Jul-97 $19,827 $17,621 $16,103
Aug-97 $19,943 $16,309 $15,256
Sep-97 $20,880 $17,226 $15,288
Oct-97 $19,339 $15,906 $14,371
Nov-97 $18,787 $15,747 $13,319
Dec-97 $18,534 $15,889 $12,914
Jan-98 $18,057 $16,619 $13,190
Feb-98 $19,531 $17,689 $14,300
Mar-98 $20,404 $18,238 $14,802
Apr-98 $20,663 $18,386 $14,852
May-98 $20,336 $18,301 $14,551
Jun-98 $19,443 $18,443 $13,813
Jul-98 $19,182 $18,635 $13,517
Aug-98 $16,634 $16,330 $11,526
Sep-98 $16,209 $15,834 $11,523
Oct-98 $16,908 $17,489 $12,322
Nov-98 $17,470 $18,389 $12,846
Dec-98 $17,326 $19,119 $13,077
Jan-99 $16,922 $19,067 $12,873
Feb-99 $16,810 $18,617 $12,685
Mar-99 $17,743 $19,398 $13,661
Apr-99 $19,470 $20,189 $15,006
May-99 $19,192 $19,154 $14,768
Jun-99 $20,205 $19,905 $15,787
Jul-99 $20,680 $20,501 $16,126
Aug-99 $20,890 $20,580 $16,473
Sep-99 $20,289 $20,792 $16,827
OCT-99 $20,191 $21,576 $16,650
CLASS C (7/1/98 - 10/31/99)
The following line graph compares the performance of Templeton Foreign Smaller
Companies Fund's Class C shares to that of the Morgan Stanley Capital
International Europe, Australasia, Far East (MSCI EAFE) Index and the MSCI
EAFE/Salomon Brothers Global ex-U.S. less than $1 billion Index, based on a
$10,000 investment from 7/1/98 to 10/31/99.
Templeton Foreign Eafe/Salomon
Smaller Companies MSCI Global
Fund - Class C EAFE Index xUS [less than] $1 Billion
07/01/1998 $ 9,903 $10,000 $10,000
Jul-98 $ 9,743 $10,104 $ 9,786
Aug-98 $ 8,441 $ 8,854 $ 8,345
Sep-98 $ 8,225 $ 8,585 $ 8,342
Oct-98 $ 8,573 $ 9,482 $ 8,921
Nov-98 $ 8,852 $ 9,970 $ 9,300
Dec-98 $ 8,782 $10,366 $ 9,467
Jan-99 $ 8,570 $10,338 $ 9,320
Feb-99 $ 8,507 $10,093 $ 9,184
Mar-99 $ 8,965 $10,517 $ 9,890
Apr-99 $ 9,833 $10,946 $10,864
May-99 $ 9,685 $10,385 $10,692
Jun-99 $10,192 $10,792 $11,429
Jul-99 $10,425 $11,115 $11,675
Aug-99 $10,531 $11,158 $11,926
Sep-99 $10,220 $11,273 $12,182
OCT-99 $10,057 $11,698 $12,054
Past performance is not predictive of future results.
ADVISOR CLASS (9/20/91 - 10/31/99)
The following line graph compares the performance of Templeton Foreign Smaller
Companies Fund's Advisor Class shares to that of the Morgan Stanley Capital
International Europe, Australasia, Far East (MSCI EAFE) Index and the MSCI
EAFE/Salomon Brothers Global ex-U.S. less than $1 billion Index, based on a
$10,000 investment from 9/20/91 to 10/31/99.
<TABLE>
<CAPTION>
EAFE/Salomon
Templeton Foreign MSCI Global
Smaller Companies FundStation EAFE xUS [less than] $1 Billion
Fund - Advisor Perform Index
<S> <C> <C> <C> <C>
9/20/91 $10,000 $10,000 $10,000
9/91 $10,020 $10,182 $10,182
Oct-91 $10,060 $10,329 $10,329
Nov-91 $ 9,970 $ 9,849 $ 9,849
Dec-91 $10,369 $10,361 $10,362
Jan-92 $10,490 $10,143 $10,143
Feb-92 $10,590 $ 9,783 $ 9,783
Mar-92 $10,177 $ 9,140 $ 9,140
Apr-92 $10,409 $ 9,185 $ 9,186
May-92 $10,963 $ 9,803 $ 9,804
Jun-92 $10,757 $ 9,341 $ 9,342
Jul-92 $10,512 $ 9,105 $ 9,106
Aug-92 $10,573 $ 9,679 $ 9,681
Sep-92 $10,400 $ 9,491 $ 9,493
Oct-92 $10,207 $ 8,996 $ 8,998
Nov-92 $10,370 $ 9,084 $ 9,085
Dec-92 $10,461 $ 9,133 $ 9,135
Jan-93 $10,307 $ 9,135 $ 9,137
Feb-93 $10,492 $ 9,414 $ 9,416
Mar-93 $10,737 $10,237 $10,239
Apr-93 $11,136 $11,211 $11,214
May-93 $11,484 $11,451 $11,454
Jun-93 $11,118 $11,275 $11,277
Jul-93 $11,309 $11,672 $11,674
Aug-93 $12,029 $12,305 $12,307
Sep-93 $11,987 $12,030 $12,032
Oct-93 $13,003 $12,404 $12,407
Nov-93 $12,633 $11,323 $11,325
Dec-93 $13,915 $12,142 $12,145
Jan-94 $14,958 $13,172 $13,175
Feb-94 $14,713 $13,138 $13,140
Mar-94 $14,192 $12,575 $12,577
Apr-94 $14,298 $13,111 $13,114
May-94 $14,351 $13,038 $13,042
Jun-94 $13,948 $13,226 $13,229
Jul-94 $14,530 $13,356 $13,360
Aug-94 $14,971 $13,675 $13,680
Sep-94 $14,627 $13,247 $13,251
Oct-94 $14,896 $13,692 $13,697
Nov-94 $14,153 $13,037 $13,042
Dec-94 $13,899 $13,121 $13,127
Jan-95 $13,559 $12,621 $12,627
Feb-95 $13,775 $12,588 $12,594
Mar-95 $13,729 $13,376 $13,382
Apr-95 $14,364 $13,883 $13,889
May-95 $14,648 $13,721 $13,727
Jun-95 $15,019 $13,484 $13,489
Jul-95 $15,729 $14,327 $14,334
Aug-95 $15,271 $13,784 $13,791
Sep-95 $15,649 $14,057 $14,064
Oct-95 $15,156 $13,682 $13,690
Nov-95 $15,225 $14,067 $14,074
Dec-95 $15,388 $14,637 $14,646
Jan-96 $15,940 $14,701 $14,710
Feb-96 $16,379 $14,754 $14,763
Mar-96 $16,629 $15,071 $15,080
Apr-96 $17,131 $15,513 $15,522
May-96 $17,382 $15,231 $15,240
Jun-96 $17,439 $15,320 $15,330
Jul-96 $16,882 $14,876 $14,885
Aug-96 $17,300 $14,913 $14,922
Sep-96 $17,515 $15,312 $15,322
Oct-96 $17,959 $15,160 $15,338
Nov-96 $18,453 $15,767 $15,632
Dec-96 $19,108 $15,568 $15,365
Jan-97 $19,408 1.57% $15,027 $15,475
Feb-97 $19,695 1.48% $15,276 $15,841
Mar-97 $19,817 0.62% $15,335 $15,495
Apr-97 $19,599 -1.10% $15,421 $15,192
May-97 $20,240 3.27% $16,427 $16,007
Jun-97 $21,005 3.78% $17,337 $16,345
Jul-97 $21,226 1.05% $17,621 $16,103
Aug-97 $21,349 0.58% $16,309 $15,256
Sep-97 $22,378 4.82% $17,226 $15,288
Oct-97 $20,718 -7.42% $15,906 $14,371
Nov-97 $20,127 -2.85% $15,747 $13,319
Dec-97 $19,847 -1.39% $15,889 $12,914
Jan-98 $19,335 -2.58% $16,619 $13,190
Feb-98 $20,913 8.16% $17,689 $14,300
Mar-98 $21,863 4.54% $18,238 $14,802
Apr-98 $22,140 1.27% $18,386 $14,852
May-98 $21,804 -1.52% $18,301 $14,551
Jun-98 $20,831 -4.46% $18,443 $13,813
Jul-98 $20,567 -1.27% $18,635 $13,517
Aug-98 $17,835 -13.28% $16,330 $11,526
Sep-98 $17,395 -2.47% $15,834 $11,523
Oct-98 $18,129 4.22% $17,489 $12,322
Nov-98 $18,745 3.40% $18,389 $12,846
Dec-98 $18,590 -0.83% $19,119 $13,077
Jan-99 $18,171 -2.25% $19,067 $12,873
Feb-99 $18,052 -0.66% $18,617 $12,685
Mar-99 $19,053 5.55% $19,398 $13,661
Apr-99 $20,907 9.73% $20,189 $15,006
May-99 $20,608 -1.43% $19,154 $14,768
Jun-99 $21,705 5.32% $19,905 $15,787
Jul-99 $22,230 2.42% $20,501 $16,126
Aug-99 $22,454 1.01% $20,580 $16,473
Sep-99 $21,808 -2.88% $20,792 $16,827
OCT-99 $21,707 -0.48% $21,576 $16,650
</TABLE>
* 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. The MSCI EAFE/Salomon Brothers Global
ex-US less than $1 billion Index is a proprietary index developed by the
Templeton organization that represents the combined performance of the MSCI EAFE
from the Fund's inception on September 20, 1991, through October 1, 1996, and
the Salomon Brothers Global ex-U.S. less than $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. Management added the MSCI EAFE/Salomon Brothers Global ex-U.S.
Index last year because it believes the composition of this proprietary index
provides a relevant comparison to the Fund's portfolio, given the Fund's change
in emphasis from investment in large capitalization securities to smaller
capitalization securities on October 1, 1996. The proprietary index was
constructed to correspond to that change in investment policy.
**On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures
reflect Class A performance, excluding the effect of the Class A sales charge,
but including the effect of Rule 12b-1 fees and other Class A expenses; and
(b) for periods after January 1, 1997, figures reflect actual Advisor Class
performance, including the deduction of all fees and expenses applicable to
Advisor Class shares.
AVERAGE ANNUAL TOTAL RETURN
10/31/99
ADVISOR CLASS**
- -------------------------------------
1-Year +19.81%
5-Year +7.67%
Since Inception (9/20/91) +9.92%
Past performance is not predictive of 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.
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to bring you this annual report of Templeton Pacific Growth Fund,
which covers the fiscal year ended October 31, 1999. During the period, a
broad-based recovery in many Asian economies fueled a strong rebound in Asian
equity markets. Although the fragility of this recovery became apparent during
the summer of 1999, the overall performance of economies and stock markets was
resoundingly positive for the year as a whole. Our portfolio's largest
weightings at the end of the reporting period were in Japan, Hong Kong, and
Singapore, at 20.4%, 17.2%, and 10.2% of total net assets, respectively, and
Templeton Pacific Growth Fund - Class A produced a +31.23% one-year cumulative
total return for the period ended October 31, 1999, as shown in the Performance
Summary on page 14. The Fund's benchmark, the Morgan Stanley Capital
International(R) Pacific Index, produced a 51.9% return for the same period.(1)
You will find a complete listing of the Fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 21 of
this report.
In our opinion, Japan's turnaround was the most impressive. Japanese
policymakers moved to bolster the country's foundering economy, and
restructuring announcements by several Japanese corporations signaled investors
that business executives were serious about getting their houses in order. For
example, Sony Corp. announced it was trimming its headquarters staff by
two-thirds, an unprecedented move in Japanese corporate history. During the year
under review, we purchased shares in companies whose shares we believed were
undervalued, such as Sony Corp., Nomura Securities Co. Ltd., Fuji Photo Film Co.
Ltd., Kurita Water Industries Ltd., Mitsubishi Paper Mills Ltd., and Nippon
Telegraph & Telephone Corp.
During the reporting period, the yen strengthened significantly against the U.S.
dollar, but the Bank of Japan did not capitulate to pressure for an easing of
interest rates, which would pull down the yen. One of the key questions facing
investors after the huge run up of Japanese equity prices during the reporting
period is how much more upward pressure will be exerted on the yen. While we do
not know what the Bank of Japan will do, we are confident corporate Japan will
continue to restructure and we believe that the country's economy could remain
strong.
(1) 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. It includes reinvested dividends. One
cannot invest directly in an index, nor is an index representative of the Fund's
portfolio.
[BAR GRAPH]
GEOGRAPHIC DISTRIBUTION
Templeton Pacific Growth Fund
Based on Total Net Assets
10/31/99
Japan 20.4%
Hong Kong 17.2%
Singapore 10.2%
Australia 8.8%
United States 5.8%
Indonesia 4.0%
Malaysia 3.6%
South Korea 2.9%
India 1.9%
Philippines 1.9%
China 1.3%
Thailand 1.2%
New Zealand 1.0%
Short-Term Investments & Other Net Assets 19.8%
TOP 10 INDUSTRIES
Templeton Pacific Growth Fund
10/31/99
% OF TOTAL
INDUSTRY NET ASSETS
- -----------------------------------------
Banking 11.0%
Electrical & Electronics 8.0%
Telecommunications 7.7%
Multi-Industry 7.2%
Forest Products & Paper 6.2%
Metals & Mining 5.1%
Transportation 4.9%
Real Estate 4.8%
Financial Services 4.2%
Industrial Components 2.7%
Elsewhere, Hong Kong's economy also improved significantly in 1999, as evidenced
by declining interest rates, firming real estate prices and low business
inventories. Increasing consumption and exports, rising consumer confidence, and
falling unemployment were the primary contributors to this recovery. In our
opinion, China's economic development may exert considerable influence on Hong
Kong's economy. For example, there were signs during the reporting period that
China may face a currency devaluation in the future because, as the rest of the
region's economies stabilize, the central government's incentive to maintain the
Chinese renminbi's current level diminishes. While we do not believe devaluation
would destroy regional economic recovery, such an event could lead to lower
equity prices not only in China, but also in Hong Kong.
Among our smaller holdings, we added to our position in Indian cement producer
Gujarat Ambuja Cements Ltd. This stock appreciated significantly, contributing
positively to the Fund's performance, as the Indian market recovered sharply
following a conflict with Pakistan early in 1999.
Looking forward, we believe that Asian markets may experience significant
volatility in the near term. In our opinion, many investors probably will want
more details about corporate restructuring because some previous restructuring
attempts in the region were cosmetic or did not address the core problems of an
underutilization of capital assets and labor. However, we believe that, despite
uncertainty concerning future monetary and fiscal policies, Japanese
corporations may continue to improve efficiency and shareholder value, which
could lead to increasing share prices for select Japanese companies.
It is important to remember that investing in foreign markets concentrated in a
single region involves special considerations not associated with more broadly
diversified investments, such as market and currency volatility and adverse
economic, social and political developments in the region and countries where
the Fund invests. Emerging market securities involve heightened risks related to
the same factors, in addition to those associated with the relatively small size
and lesser liquidity of those markets. In addition, investing in any emerging
market means accepting a certain amount of volatility and, in some cases, the
consequences of severe market corrections. These risks and other considerations
are discussed in the Fund's prospectus.
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
October 31, 1999, the end of the reporting period. 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.
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
Templeton Pacific Growth Fund
10/31/99
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- ----------------------------------------------------------------------------------
<S> <C>
DBS Group Holdings Ltd., Banking, Singapore 3.2%
Johnson Electric Holdings Ltd., Electrical & Electronics, Hong Kong 3.1%
Fuji Heavy Industries Ltd., Industrial Components, Japan 2.7%
Overseas Union Bank Ltd., Banking, Singapore 2.4%
Sony Corp., Appliances & Household Durables, Japan 2.3%
Nippon Telegraph & Telephone Corp., Telecommunications, Japan 2.1%
Nomura Securities Co. Ltd., Financial Services, Japan 2.1%
Motorola Inc., Electrical & Electronics, U.S. 2.0%
Singapore Airlines Ltd., fgn., Transportation, Singapore 1.9%
Commerce Asset-Holding Bhd., Financial Services, Malaysia 1.8%
</TABLE>
TEMPLETON PACIFIC
GROWTH FUND
- --------------------------------------------------------------------------------
CLASS A (formerly Class I):
Subject to the current, maximum 5.75% initial sales charge. Prior to January 1,
1997, Fund shares were offered at a lower initial sales charge. Thus, actual
total returns would have been higher. On July 1, 1993, the Fund implemented a
Rule 12b-1 plan, which affects subsequent performance. Past fee waivers and
expense reimbursements by the Fund's manager increased the Fund's total returns.
Without these fee waivers and expense reimbursements, total returns for Class A
shares would have been lower.
CLASS C (formerly Class II):
Subject to 1% initial sales charge and 1% 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.
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AS OF 10/31/99
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities, as well as the
level of each class's operating expenses. Past distributions are not indicative
of future trends. All total returns include reinvested distributions at net
asset value.
PRICE AND DISTRIBUTION INFORMATION
CLASS A CHANGE 10/31/99 10/31/98
Net Asset Value +$2.37 $10.20 $7.83
DISTRIBUTIONS (11/1/98 - 10/31/99)
Dividend Income $0.0600
CLASS C CHANGE 10/31/99 10/31/98
Net Asset Value +$2.35 $10.15 $7.80
DISTRIBUTIONS (11/1/98 - 10/31/99)
Dividend Income $0.0299
ADVISOR CLASS CHANGE 10/31/99 10/31/98
Net Asset Value +$2.43 $10.31 $7.88
DISTRIBUTIONS (11/1/98 - 10/31/99)
Dividend Income $0.0734
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR (9/20/91)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) +31.23% -23.24% +27.31%
Average Annual Total Return(2) +23.65% -6.27% +2.27%
Value of $10,000 Investment(3) $12,365 $7,234 $11,999
</TABLE>
<TABLE>
<CAPTION>
10/31/95 10/31/96 10/31/97 10/31/98 10/31/99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(4) -5.54% +11.27% -24.42% -26.37% +31.23%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR (1/2/97)
- --------------------------------------------------------------------------------
<S> <C> <C>
Cumulative Total Return(1) +30.61% -31.12%
Average Annual Total Return(2) +28.29% -12.66%
Value of $10,000 Investment(3) $12,829 $6,820
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
ADVISOR CLASS(5) 1-YEAR 5-YEAR (9/20/91)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) +32.15% -21.94% +29.45%
Average Annual Total Return(2) +32.15% -4.83% +3.23%
Value of $10,000 Investment(3) $13,215 $7,806 $12,945
</TABLE>
<TABLE>
<CAPTION>
10/31/95 10/31/96 10/31/97 10/31/98 10/31/99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(4) -5.54% +11.27% -24.38% -25.68% +32.15%
</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) One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
(5) On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A expenses; and (b) for
periods after January 1, 1997, figures reflect actual Advisor Class performance,
including the deduction of all fees and expenses applicable to that class. Since
January 2, 1997 (commencement of sales), the cumulative and average annual total
returns of Advisor Class shares were -29.04% and -11.42%, respectively.
- --------------------------------------------------------------------------------
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility and the social,
economic and political climates of countries where the Fund invests. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. You may
have a gain or loss when you sell your shares.
- --------------------------------------------------------------------------------
Past performance is not predictive of future results.
TEMPLETON PACIFIC GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
10/31/99
CLASS A
- ---------------------------------------
1-Year +23.65%
5-Year -6.27%
Since Inception (9/20/91) +2.27%
AVERAGE ANNUAL TOTAL RETURN
10/31/99
CLASS C
- ---------------------------------------
1-Year +28.29%
Since Inception (1/2/97) -12.66%
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
The unmanaged index differs from the Fund in composition, does not pay
management fees or expenses and includes reinvested dividends. One cannot invest
directly in an index. Total return represents the change in value of an
investment over the periods shown. It includes the current, applicable, maximum
sales charges, Fund expenses, account fees, and reinvested distributions.
CLASS A (9/20/91 - 10/31/99)
The following line graph compares the performance of Templeton Pacific Growth
Fund's Class A shares to that of the Morgan Stanley Capital International
Pacific Index, based on a $10,000 investment from 9/20/91 to 10/31/99.
Templeton MSCI
Pacific Growth Pacific Index
Fund - A
9/20/91 $ 9,426 $10,000
9/91 $ 9,444 $10,250
Oct-91 $ 9,482 $10,688
Nov-91 $ 9,426 $10,002
Dec-91 $ 9,768 $10,311
Jan-92 $ 9,816 $ 9,913
Feb-92 $10,015 $ 9,220
Mar-92 $ 9,816 $ 8,345
Apr-92 $ 9,968 $ 7,964
May-92 $10,452 $ 8,587
Jun-92 $10,819 $ 7,914
Jul-92 $10,160 $ 7,806
Aug-92 $ 9,893 $ 8,877
Sep-92 $ 9,931 $ 8,675
Oct-92 $10,409 $ 8,371
Nov-92 $10,313 $ 8,530
Dec-92 $10,125 $ 8,434
Jan-93 $10,293 $ 8,420
Feb-93 $10,718 $ 8,831
Mar-93 $10,718 $ 9,899
Apr-93 $11,458 $11,478
May-93 $12,012 $11,814
Jun-93 $11,757 $11,622
Jul-93 $12,007 $12,311
Aug-93 $12,725 $12,677
Sep-93 $12,865 $12,205
Oct-93 $14,412 $12,478
Nov-93 $14,342 $10,719
Dec-93 $16,294 $11,468
Jan-94 $16,465 $12,797
Feb-94 $15,941 $13,129
Mar-94 $14,693 $12,406
Apr-94 $14,904 $12,945
May-94 $15,599 $13,255
Jun-94 $15,114 $13,690
Jul-94 $15,520 $13,398
Aug-94 $16,210 $13,633
Sep-94 $15,530 $13,294
Oct-94 $15,631 $13,632
Nov-94 $14,464 $12,874
Dec-94 $14,553 $12,962
Jan-95 $13,295 $12,146
Feb-95 $13,898 $11,847
Mar-95 $14,293 $12,759
Apr-95 $14,470 $13,304
May-95 $15,021 $12,774
Jun-95 $14,744 $12,235
Jul-95 $15,340 $13,119
Aug-95 $15,152 $12,627
Sep-95 $15,382 $12,746
Oct-95 $14,775 $12,128
Nov-95 $14,786 $12,727
Dec-95 $15,404 $13,350
Jan-96 $16,589 $13,375
Feb-96 $16,523 $13,226
Mar-96 $16,434 $13,634
Apr-96 $17,132 $14,330
May-96 $17,154 $13,710
Jun-96 $16,917 $13,715
Jul-96 $16,033 $13,087
Aug-96 $16,350 $12,745
Sep-96 $16,735 $13,163
Oct-96 $16,429 $12,554
Nov-96 $17,381 $12,896
Dec-96 $17,229 $12,228
Jan-97 $16,921 $11,201
Feb-97 $16,990 $11,436
Mar-97 $16,192 $11,019
Apr-97 $16,261 $11,250
May-97 $17,399 $12,353
Jun-97 $17,565 $13,120
Jul-97 $18,033 $12,808
Aug-97 $15,534 $11,539
Sep-97 $15,853 $11,497
Oct-97 $12,418 $10,102
Nov-97 $11,368 $ 9,548
Dec-97 $10,720 $ 9,130
Jan-98 $10,010 $ 9,626
Feb-98 $11,254 $ 9,973
Mar-98 $11,126 $ 9,425
Apr-98 $10,429 $ 9,240
May-98 $ 9,231 $ 8,614
Jun-98 $ 8,478 $ 8,599
Jul-98 $ 8,431 $ 8,450
Aug-98 $ 7,041 $ 7,453
Sep-98 $ 7,520 $ 7,430
Oct-98 $ 9,143 $ 8,718
Nov-98 $ 9,809 $ 9,120
Dec-98 $ 9,835 $ 9,376
Jan-99 $ 9,517 $ 9,445
Feb-99 $ 9,294 $ 9,262
Mar-99 $ 9,894 $10,431
Apr-99 $11,893 $11,130
May-99 $11,482 $10,469
Jun-99 $12,635 $11,433
Jul-99 $12,599 $12,306
Aug-99 $12,293 $12,182
Sep-99 $11,870 $12,746
OCT-99 $12,011 $13,241
CLASS C (1/2/97 - 10/31/99)
The following line graph compares the performance of Templeton Pacific Growth
Fund's Class C shares to that of the Morgan Stanley Capital International
Pacific Index, based on a $10,000 investment from 1/2/97 to 10/31/99.
Templeton MSCI
Pacific Growth Pacific
Fund - C Index
1/2/97 $ 9,902 $10,000
1/97 $ 9,731 $ 9,210
Feb-97 $ 9,764 $ 9,403
Mar-97 $ 9,298 $ 9,060
Apr-97 $ 9,331 $ 9,250
May-97 $ 9,987 $10,157
Jun-97 $10,071 $10,787
Jul-97 $10,327 $10,531
Aug-97 $ 8,882 $ 9,488
Sep-97 $ 9,059 $ 9,453
Oct-97 $ 7,102 $ 8,306
Nov-97 $ 6,504 $ 7,851
Dec-97 $ 6,128 $ 7,507
Jan-98 $ 5,734 $ 7,915
Feb-98 $ 6,442 $ 8,201
Mar-98 $ 6,375 $ 7,750
Apr-98 $ 5,967 $ 7,598
May-98 $ 5,272 $ 7,083
Jun-98 $ 4,847 $ 7,070
Jul-98 $ 4,820 $ 6,948
Aug-98 $ 4,017 $ 6,128
Sep-98 $ 4,291 $ 6,109
Oct-98 $ 5,222 $ 7,168
Nov-98 $ 5,597 $ 7,499
Dec-98 $ 5,611 $ 7,709
Jan-99 $ 5,429 $ 7,766
Feb-99 $ 5,302 $ 7,616
Mar-99 $ 5,638 $ 8,577
Apr-99 $ 6,780 $ 9,152
May-99 $ 6,545 $ 8,608
Jun-99 $ 7,190 $ 9,401
Jul-99 $ 7,170 $10,118
Aug-99 $ 6,995 $10,017
Sep-99 $ 6,747 $10,480
OCT-99 $ 6,820 $10,887
Past performance is not predictive of future results.
ADVISOR CLASS (9/20/91 - 10/31/99)
The following line graph compares the performance of Templeton Pacific Growth
Fund's Advisor Class shares to that of the Morgan Stanley Capital International
Pacific Index, based on a $10,000 investment from 9/20/91 to 10/31/99.
Templeton
Pacific Growth
Fund - Advisor FundStation MSCI Pacific
Class Perform Index
9/20/91 $10,000 $10,000
9/91 $10,020 $10,250
Oct-91 $10,060 $10,688
Nov-91 $10,000 $10,002
Dec-91 $10,364 $10,311
Jan-92 $10,414 $ 9,913
Feb-92 $10,626 $ 9,220
Mar-92 $10,414 $ 8,345
Apr-92 $10,575 $ 7,964
May-92 $11,089 $ 8,587
Jun-92 $11,479 $ 7,914
Jul-92 $10,780 $ 7,806
Aug-92 $10,496 $ 8,877
Sep-92 $10,537 $ 8,675
Oct-92 $11,043 $ 8,371
Nov-92 $10,942 $ 8,530
Dec-92 $10,742 $ 8,434
Jan-93 $10,920 $ 8,420
Feb-93 $11,371 $ 8,831
Mar-93 $11,371 $ 9,899
Apr-93 $12,157 $11,478
May-93 $12,744 $11,814
Jun-93 $12,474 $11,622
Jul-93 $12,738 $12,311
Aug-93 $13,501 $12,677
Sep-93 $13,649 $12,205
Oct-93 $15,290 $12,478
Nov-93 $15,216 $10,719
Dec-93 $17,287 $11,468
Jan-94 $17,468 $12,797
Feb-94 $16,913 $13,129
Mar-94 $15,588 $12,406
Apr-94 $15,812 $12,945
May-94 $16,550 $13,255
Jun-94 $16,035 $13,690
Jul-94 $16,466 $13,398
Aug-94 $17,198 $13,633
Sep-94 $16,476 $13,294
Oct-94 $16,584 $13,632
Nov-94 $15,346 $12,874
Dec-94 $15,440 $12,962
Jan-95 $14,105 $12,146
Feb-95 $14,745 $11,847
Mar-95 $15,164 $12,759
Apr-95 $15,352 $13,304
May-95 $15,936 $12,774
Jun-95 $15,643 $12,235
Jul-95 $16,275 $13,119
Aug-95 $16,075 $12,627
Sep-95 $16,320 $12,746
Oct-95 $15,676 $12,128
Nov-95 $15,687 $12,727
Dec-95 $16,343 $13,350
Jan-96 $17,600 $13,375
Feb-96 $17,529 $13,226
Mar-96 $17,435 $13,634
Apr-96 $18,176 $14,330
May-96 $18,199 $13,710
Jun-96 $17,948 $13,715
Jul-96 $17,010 $13,087
Aug-96 $17,347 $12,745
Sep-96 $17,755 $13,163
Oct-96 $17,431 $12,554
Nov-96 $18,440 $12,896
Dec-96 $18,279 $12,228
Jan-97 $17,988 -1.59% $11,201
Feb-97 $18,060 0.40% $11,436
Mar-97 $17,226 -4.62% $11,019
Apr-97 $17,298 0.42% $11,250
May-97 $18,521 7.07% $12,353
Jun-97 $18,682 0.87% $13,120
Jul-97 $19,168 2.60% $12,808
Aug-97 $16,510 -13.87% $11,539
Sep-97 $16,861 2.13% $11,497
Oct-97 $13,207 -21.67% $10,102
Nov-97 $12,090 -8.46% $ 9,548
Dec-97 $11,418 -5.56% $ 9,130
Jan-98 $10,675 -6.51% $ 9,626
Feb-98 $12,025 12.65% $ 9,973
Mar-98 $11,901 -1.03% $ 9,425
Apr-98 $11,158 -6.24% $ 9,240
May-98 $9,871 -11.54% $ 8,614
Jun-98 $9,081 -8.00% $ 8,599
Jul-98 $9,044 -0.41% $ 8,450
Aug-98 $7,549 -16.53% $ 7,453
Sep-98 $8,060 6.77% $ 7,430
Oct-98 $9,816 21.79% $ 8,718
Nov-98 $10,539 7.36% $ 9,120
Dec-98 $10,559 0.19% $ 9,376
Jan-99 $10,231 -3.10% $ 9,445
Feb-99 $9,993 -2.33% $ 9,262
Mar-99 $10,646 6.54% $10,431
Apr-99 $12,822 20.43% $11,130
May-99 $12,395 -3.33% $10,469
Jun-99 $13,639 10.04% $11,433
Jul-99 $13,589 -0.37% $12,306
Aug-99 $13,275 -2.31% $12,182
Sep-99 $12,810 -3.50% $12,746
OCT-99 $12,958 1.18% $13,241
*Source: Morgan Stanley Capital International. The 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.
**On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A expenses; and (b) for
periods after January 1, 1997, figures reflect actual Advisor Class performance,
including the deduction of all fees and expenses applicable to Advisor Class
shares.
AVERAGE ANNUAL TOTAL RETURN 10/31/99
ADVISOR CLASS**
- ------------------------------------------
1-Year +32.15%
5-Year -4.83%
Since Inception (9/20/91) +3.23%
Past performance is not predictive of future results.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights
TEMPLETON PACIFIC GROWTH FUND
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------
1999+ 1998 1997 1996 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 7.83 $ 10.88 $ 14.50 $ 14.11 $ 15.40
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income ...................... .01 .13 .14 .12 .15
Net realized and unrealized gains (losses) . 2.42 (2.98) (3.65) 1.41 (1.01)
-----------------------------------------------------------------------------
Total from investment operations ............ 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 year ................ $ 10.20 $ 7.83 $ 10.88 $ 14.50 $ 14.11
=============================================================================
Total return* ............................... 31.23% (26.37)% (24.42)% 11.27% (5.54)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $ 73,160 $ 42,200 $ 40,958 $ 59,740 $ 50,247
Ratios to average net assets:
Expenses ................................... 1.92% 1.90% 1.63% 1.52% 1.72%
Net investment income ...................... .10% 1.43% .97% 1.06% 1.04%
Portfolio turnover rate ..................... 39.33% 19.61% 24.79% 13.48% 36.21%
</TABLE>
*Total return does not reflect sales commissions.
+Based on average weighted shares outstanding.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights (continued)
TEMPLETON PACIFIC GROWTH FUND (CONT.)
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------
1999++ 1998 1997+
---------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 7.80 $ 10.81 $ 15.10
---------------------------------------------------
Income from investment operations:
Net investment income (loss) ............... (.07) .08 .05
Net realized and unrealized gains (losses) . 2.45 (2.92) (4.31)
---------------------------------------------------
Total from investment operations ............ 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 year ................ $ 10.15 $ 7.80 $ 10.81
===================================================
Total return* ............................... 30.61% (26.47)% (28.28)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $ 11,925 $ 6,183 $ 2,307
Ratios to average net assets:
Expenses ................................... 2.70% 2.63% 2.48%**
Net investment income (loss) ............... (.71)% .67% .93%**
Portfolio turnover rate ..................... 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
------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------
1999++ 1998 1997+
------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 7.88 $ 10.88 $ 15.10
------------------------------------------------
Income from investment operations:
Net investment income ...................... .04 .15 .12
Net realized and unrealized gains (losses) . 2.46 (2.93) (4.30)
------------------------------------------------
Total from investment operations ............ 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 year ................ $ 10.31 $ 7.88 $ 10.88
================================================
Total return* ............................... 32.15% (25.68)% (27.74)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $ 7,252 $ 1,454 $ 1,357
Ratios to average net assets:
Expenses ................................... 1.71% 1.62% 1.48%**
Net investment income ...................... .40% 1.78% 1.55%**
Portfolio turnover rate ..................... 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, OCTOBER 31, 1999
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>.
COMMON STOCKS 80.2%
APPLIANCES & HOUSEHOLD DURABLES 2.4%
Sony Corp. .............................................................. Japan 13,900 $ 2,165,715
-----------
BANKING 11.0%
Australia & New Zealand Banking Group Ltd. .............................. Australia 127,000 837,554
* Bangkok Bank Public Co. Ltd., fgn. ...................................... Thailand 111,400 259,741
DBS Group Holdings Ltd. ................................................. Singapore 265,454 2,999,480
HSBC Holdings PLC ....................................................... Hong Kong 64,320 771,972
Overseas Union Bank Ltd. ................................................ Singapore 521,323 2,255,996
* Philippine National Bank ................................................ Philippines 186,573 641,272
* PT Bank Bali, fgn. ...................................................... Indonesia 657,020 14,440
* PT Bank Pan Indonesia TBK, fgn. ......................................... Indonesia 2,277,000 266,901
* PT Bank Pan Indonesia TBK, fgn., wts., 6/26/00 .......................... Indonesia 354,226 13,754
* Thai Farmers Bank Public Co. Ltd. ....................................... Thailand 37,140 35,119
* Thai Farmers Bank Public Co. Ltd., fgn. ................................. Thailand 286,120 403,978
Westpac Banking Corp. ................................................... Australia 262,000 1,679,950
-----------
10,180,157
-----------
BROADCASTING & PUBLISHING .3%
South China Morning Post Ltd. ........................................... Hong Kong 368,000 267,611
-----------
BUILDING MATERIALS & COMPONENTS 2.0%
Gujarat Ambuja Cements Ltd., GDR, Reg S ................................. India 79,900 980,772
* Hi Cement Corp. ......................................................... Philippines 3,551,000 137,972
Okumura Corp. ........................................................... Japan 194,000 697,106
-----------
1,815,850
-----------
BUSINESS & PUBLIC SERVICES 1.0%
Kurita Water Industries Ltd. ............................................ Japan 51,000 938,291
-----------
CHEMICALS .6%
Shanghai Petrochemical Co. Ltd., H ...................................... China 2,899,000 593,270
-----------
CONSTRUCTION & HOUSING 2.0%
Daito Trust Construction Co. Ltd. ....................................... Japan 38,500 575,139
Fletcher Challenge Building Ltd. ........................................ New Zealand 89,118 110,072
Road King Infrastructure Ltd. ........................................... Hong Kong 686,520 446,223
Toda Corp. .............................................................. Japan 148,000 744,538
-----------
1,875,972
-----------
ELECTRICAL & ELECTRONICS 8.0%
Dongfang Electrical Machinery Co. Ltd., H ............................... China 1,784,000 151,546
Fuji Photo Film Co. Ltd. ................................................ Japan 15,000 481,506
Hitachi Ltd. ............................................................ Japan 99,200 1,071,276
Johnson Electric Holdings Ltd. .......................................... Hong Kong 521,300 2,818,019
Matsushita Electric Industrial Co. Ltd. ................................. Japan 49,000 1,030,615
Motorola Inc. ........................................................... United States 19,100 1,861,056
-----------
7,414,018
-----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>.
COMMON STOCKS (CONT.)
ELECTRONIC COMPONENTS & INSTRUMENTS 2.5%
Hewlett Packard Co. ..................................................... United States 16,200 $ 1,199,812
VTech Holdings Ltd. ..................................................... Hong Kong 423,000 1,088,873
-----------
2,288,685
-----------
ENERGY SOURCES .9%
Woodside Petroleum Ltd. ................................................. Australia 137,000 825,017
-----------
FINANCIAL SERVICES 4.2%
Commerce Asset-Holding Bhd. ............................................. Malaysia 749,200 1,656,126
* Commerce Asset-Holding Bhd., wts., 6/16/02 .............................. Malaysia 29,500 24,532
Nomura Securities Co. Ltd. .............................................. Japan 116,000 1,912,955
Public Finance Bhd., fgn. ............................................... Malaysia 255,000 273,789
-----------
3,867,402
-----------
FOOD & HOUSEHOLD PRODUCTS .4%
* Charoen Pokphand Feedmill Public Co. Ltd., fgn. ......................... Thailand 166,650 397,197
-----------
FOREST PRODUCTS & PAPER 6.2%
Amcor Ltd. .............................................................. Australia 195,500 853,765
* Asia Pulp & Paper Co. Ltd., ADR ......................................... Indonesia 200,000 1,387,500
Carter Holt Harvey Ltd. ................................................. New Zealand 416,248 526,763
Fletcher Challenge Paper Ltd. ........................................... New Zealand 43,100 28,144
Fort James Corp. ........................................................ United States 10,400 273,650
Mitsubishi Paper Mills Ltd. ............................................. Japan 360,000 586,432
* PT Tjiwi Kimia TBK ...................................................... Indonesia 408,709 136,236
* PT Tjiwi Kimia TBK, wts., 7/15/02 ....................................... Indonesia 56,765 10,230
* Smurfit-Stone Container Corp. ........................................... United States 51,600 1,115,850
Weyerhaeuser Co. ........................................................ United States 13,000 775,938
-----------
5,694,508
-----------
INDUSTRIAL COMPONENTS 2.7%
Fuji Heavy Industries Ltd. .............................................. Japan 296,000 2,512,993
-----------
INSURANCE .8%
AXA China Region Ltd. ................................................... Hong Kong 800,000 689,877
-----------
LEISURE & TOURISM .8%
Toei Co. Ltd. ........................................................... Japan 166,500 722,734
-----------
MACHINERY & ENGINEERING .9%
Tata Engineering & Locomotive Co., GDR .................................. India 128,400 821,760
-----------
MERCHANDISING 1.1%
Matsuzakaya Co. Ltd. .................................................... Japan 220,000 811,614
Takashimaya Co. Ltd. .................................................... Japan 23,551 211,002
-----------
1,022,616
-----------
METALS & MINING 5.1%
Angang New Steel Company Ltd., H ........................................ China 2,435,000 285,199
Capral Aluminum Ltd. .................................................... Australia 889,000 1,091,110
Nittetsu Mining Co. Ltd. ................................................ Japan 235,000 607,992
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>.
COMMON STOCKS (CONT.)
METALS & MINING (CONT.)
Pohang Iron & Steel Co. Ltd. ............................................ South Korea 11,100 $ 1,365,869
WMC Ltd. ................................................................ Australia 305,319 1,309,422
-----------
4,659,592
-----------
MISC MATERIALS & COMMODITIES .4%
Golden Hope Plantations Bhd. ............................................ Malaysia 451,000 360,800
-----------
MULTI-INDUSTRY 7.2%
Broken Hill Proprietary Co. Ltd. ........................................ Australia 96,800 999,744
Cheung Kong Holdings Ltd. ............................................... Hong Kong 170,300 1,545,292
Cheung Kong Infrastructure Holdings Ltd. ................................ Hong Kong 482,000 911,951
Hicom Holdings Bhd. ..................................................... Malaysia 295,000 184,763
Hutchison Whampoa Ltd. .................................................. Hong Kong 83,000 833,258
SIME Darby Bhd. ......................................................... Malaysia 327,600 391,396
Swire Pacific Ltd., A ................................................... Hong Kong 62,500 309,705
Wheelock and Company Ltd. ............................................... Hong Kong 1,329,000 1,505,271
-----------
6,681,380
-----------
REAL ESTATE 4.8%
City Developments Ltd. .................................................. Singapore 290,200 1,500,012
* Filinvest Land inc. ..................................................... Philippines 11,177,000 946,496
Hon Kwok Land Investment Co. Ltd. ....................................... Hong Kong 1,708,364 108,841
* Hon Kwok Land Investment Co. Ltd, wts., 10/27/00 ........................ Hong Kong 341,672 4,442
New World Development Co. Ltd. .......................................... Hong Kong 536,664 1,015,376
Parkway Holdings Ltd. ................................................... Singapore 476,000 875,442
-----------
4,450,609
-----------
TELECOMMUNICATIONS 7.7%
Cable & Wireless HKT Ltd. ............................................... Hong Kong 566,669 1,294,597
Nippon Telegraph & Telephone Corp. ...................................... Japan 126 1,931,775
PT Indosat, ADR ......................................................... Indonesia 103,000 1,641,562
SK Telecom Co. Ltd., ADR ................................................ South Korea 104,225 1,361,439
Smartone Telecommunications Holdings Ltd. ............................... Hong Kong 252,000 888,706
-----------
7,118,079
-----------
TEXTILES & APPAREL 1.3%
* Fruit of the Loom Ltd. .................................................. United States 42,500 114,219
Nisshinbo Industries Inc. ............................................... Japan 171,000 914,316
* PT Indorama Synthetics .................................................. Indonesia 733,862 182,793
-----------
1,211,328
-----------
TRANSPORTATION 4.9%
Guangshen Railway Co. Ltd., H, ADR ...................................... China 28,000 161,000
Hitachi Zosen Corp. ..................................................... Japan 385,000 320,956
Hong Kong Ferry Holdings Co. Ltd. ....................................... Hong Kong 1,037,000 1,054,418
Malaysian International Shipping Corp., fgn. ............................ Malaysia 317,333 475,999
Mayne Nickless Ltd., A .................................................. Australia 199,000 538,955
Singapore Airlines Ltd., fgn. ........................................... Singapore 165,500 1,750,691
Tranz Rail Holdings Ltd., ADR ........................................... New Zealand 49,800 261,450
-----------
4,563,469
-----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
SHARES/
TEMPLETON PACIFIC GROWTH FUND COUNTRY WARRANTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>.
COMMON STOCKS (CONT.)
UTILITIES ELECTRICAL & GAS .3%
CLP Holdings Ltd. ....................................................... Hong Kong 69,000 $ 316,159
-----------
WHOLESALE & INTERNATIONAL TRADE .7%
Mitsubishi Corp. ........................................................ Japan 86,000 618,053
-----------
TOTAL COMMON STOCKS (COST $73,762,431) .................................. 74,073,142
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT**
--------
<S> <C> <C> <C>
(a) REPURCHASE AGREEMENT (COST $17,686,000) 19.2%
Deutsche Morgan Grenfell, 5.23%, 11/01/99 (Maturity Value $17,693,708)
Collateralized by U.S. Treasury Notes and Bonds ...................... United States $17,686,000 17,686,000
-----------
TOTAL INVESTMENTS (COST $91,448,431) 99.4% ............................. 91,759,142
OTHER ASSETS, LESS LIABILITIES .6% ..................................... 578,013
-----------
TOTAL NET ASSETS 100.0% ................................................ $92,337,155
===========
</TABLE>
* Non-income producing securities.
** Securities denominated in U.S. dollars.
(a) See note 1(c) regarding repurchase agreements.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights
TEMPLETON FOREIGN SMALLER COMPANIES FUND
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------
1999+ 1998 1997 1996 1995
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 12.33 $ 15.06 $ 14.18 $ 13.23 $ 13.83
-------------------------------------------------------------------------
Income from investment operations:
Net investment income ............................... .24 .26 .27 .35 .25
Net realized and unrealized gains (losses) .......... 2.13 (2.08) 1.64 1.88 (.08)
-------------------------------------------------------------------------
Total from investment operations ..................... 2.37 (1.82) 1.91 2.23 .17
-------------------------------------------------------------------------
Less distributions from:
Net investment income ............................... (.27) (.24) (.32) (.25) (.19)
Net realized gains .................................. -- (.67) (.71) (1.03) (.58)
-------------------------------------------------------------------------
Total distributions .................................. (.27) (.91) (1.03) (1.28) (.77)
-------------------------------------------------------------------------
Net asset value, end of year ......................... $ 14.43 $ 12.33 $ 15.06 $ 14.18 $ 13.23
=========================================================================
Total return* ........................................ 19.51% (12.64)% 14.25% 18.49% 1.75%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ...................... $102,684 $113,964 $121,619 $67,967 $50,947
Ratios to average net assets:
Expenses ............................................ 1.65% 1.48% 1.48% 1.53% 1.63%
Expenses, excluding waiver and payments by affiliates 1.65% 1.50% 1.58% 1.53% 1.63%
Net investment income ............................... 1.78% 1.23% 2.01% 2.50% 1.86%
Portfolio turnover rate .............................. 18.76% 22.82% 33.62% 40.46% 9.12%
</TABLE>
*Total return does not reflect sales commissions.
+Based on average weighted shares outstanding.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Highlights (continued)
TEMPLETON FOREIGN SMALLER COMPANIES FUND (CONT.)
<TABLE>
<CAPTION>
CLASS B
-----------------
PERIOD ENDED
OCTOBER 31, 1999+
-----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE++
(For a share outstanding throughout the period)
Net asset value, beginning of period.......................................... $12.44
------
Income from investment operations:
Net investment income ....................................................... .08
Net realized and unrealized gains ........................................... 1.89
------
Total from investment operations ............................................. 1.97
------
Less distributions from net investment income ................................ (.06)
------
Net asset value, end of period ............................................... $14.35
======
Total return* ................................................................ 15.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ............................................ $201
Ratios to average net assets:
Expenses .................................................................... 1.99%**
Net investment income ....................................................... .59%**
Portfolio turnover rate ...................................................... 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.)
CLASS C
----------------------
YEAR ENDED OCTOBER 31,
----------------------
1999++ 1998+
------ -----
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year ........... $ 12.32 $ 14.23
------- -------
Income from investment operations:
Net investment income ....................... .13 .01
Net realized and unrealized gains (losses) .. 2.11 (1.92)
------- -------
Total from investment operations ............. 2.24 (1.91)
------- -------
Less distributions from net investment income (.20) --
------- -------
Net asset value, end of year ................. $ 14.36 $ 12.32
======= =======
Total return* ................................ 18.46% (13.42)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .............. $ 631 $ 450
Ratios to average net assets:
Expenses .................................... 2.40% 2.54%**
Net investment income ....................... .94% 1.08%**
Portfolio turnover rate ...................... 18.76% 22.82%
* 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
-----------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------
1999++ 1998 1997+
-----------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year ................... $ 12.34 $ 15.09 $ 14.00
---------- ---------- ----------
Income from investment operations:
Net investment income ............................... .26 .32 .20
Net realized and unrealized gains (losses) .......... 2.14 (2.13) .98
---------- ---------- ----------
Total from investment operations ..................... 2.40 (1.81) 1.18
---------- ---------- ----------
Less distributions from:
Net investment income ............................... (.29) (.27) (.09)
Net realized gains .................................. -- (.67) --
---------- ---------- ----------
Total distributions .................................. (.29) (.94) (.09)
---------- ---------- ----------
Net asset value, end of year ......................... $ 14.45 $ 12.34 $ 15.09
========== ========== ==========
Total return* ........................................ 19.81% (12.55)% 8.43%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ...................... $ 9,841 $ 12,402 $ 3,726
Ratios to average net assets:
Expenses ............................................ 1.43% 1.31% 1.24%**
Expenses, excluding waiver and payments by affiliates 1.43% 1.33% 1.36%**
Net investment income ............................... 1.94% 1.43% 2.66%**
Portfolio turnover rate .............................. 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, OCTOBER 31, 1999
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 93.4%
APPLIANCES & HOUSEHOLD DURABLES 1.2%
Fisher & Paykel Ltd. .......................................... New Zealand 268,571 $ 815,705
Guangdong Kelon Electrical Holdings Ltd., H, 144A ............. China 440,000 390,759
Konka Group Co. Ltd., B ....................................... China 329,760 186,749
----------
1,393,213
----------
AUTOMOBILES 2.0%
Bilia AB, A ................................................... Sweden 115,500 981,404
Volvo AB, B ................................................... Sweden 51,000 1,315,518
----------
2,296,922
----------
BANKING 3.1%
Banco de Andalucia SA ......................................... Spain 10,000 355,255
Banco de Valencia SA .......................................... Spain 33,198 293,099
Bank Austria AG, 144A ......................................... Austria 24,250 1,204,815
BPI Socieda de Gestora de Participacoes Socias SA ............. Portugal 60,060 239,879
Unibanco Uniao de Bancos Brasileiros SA, GDR .................. Brazil 27,500 635,938
Union Bank of Norway, Primary Capital Cert. ................... Norway 38,700 853,466
----------
3,582,452
----------
BROADCASTING & PUBLISHING 2.9%
Cordiant Communications Group PLC ............................. United Kingdom 234,600 681,372
GTC Transcontinental Group Ltd., B ............................ Canada 200,000 2,597,049
----------
3,278,421
----------
BUILDING MATERIALS & COMPONENTS 6.7%
Caradon PLC ................................................... United Kingdom 542,794 1,282,569
Danske Traelast AS ............................................ Denmark 14,000 1,257,070
Gujarat Ambuja Cements Ltd., GDR .............................. India 150,000 1,866,962
Sarna Kunststoff Holding AG ................................... Switzerland 330 360,603
Schuttersveld NV .............................................. Netherlands 42,295 637,917
*Siam City Cement Public Co. Ltd., fgn ......................... Thailand 284,513 1,046,654
Uralita SA .................................................... Spain 149,431 1,127,686
----------
7,579,461
----------
BUSINESS & PUBLIC SERVICES 3.5%
*Adecco SA .................................................... Switzerland 1,855 1,121,076
Esselte AB, B ................................................. Sweden 13,100 87,458
Kardex AG, Br. ................................................ Switzerland 3,905 1,102,021
Lex Service PLC ............................................... United Kingdom 196,000 1,482,656
Sifo Group AB ................................................. Sweden 30,750 194,096
----------
3,987,307
----------
CHEMICALS 5.1%
Cookson Group PLC ............................................. United Kingdom 564,000 1,758,393
DSM NV, Br. ................................................... Netherlands 43,200 1,634,592
Energia e Industrias Aragonesas Eia SA ........................ Spain 196,000 1,060,929
Yule Catto & Company PLC ...................................... United Kingdom 286,600 1,354,416
----------
5,808,330
----------
CONSTRUCTION & HOUSING 2.2%
Grupo Dragados SA ............................................. Spain 76,800 812,856
Leighton Holdings Ltd. ........................................ Australia 316,700 1,150,359
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
CONSTRUCTION & HOUSING (CONT.)
Sirti SpA .................................................. Italy 63,700 $ 344,400
*Sociedade Construcoes Soares da Costa SA, Br. .............. Portugal 57,487 183,078
----------
2,490,693
----------
ELECTRICAL & ELECTRONICS 4.2%
Koninklijke Philips Electronics NV ......................... Netherlands 18,400 1,885,583
*Meto AG .................................................... Germany 13,100 101,770
Techtronic Industries Co. Ltd. ............................. Hong Kong 6,498,000 1,154,159
Varitronix International Ltd. .............................. Hong Kong 760,000 1,638,458
----------
4,779,970
----------
ELECTRONIC COMPONENTS & INSTRUMENTS 2.7%
Swisslog Holding AG ........................................ Switzerland 5,500 865,410
Twentsche Kabel Holdings NV ................................ Netherlands 37,711 1,070,175
VTech Holdings Ltd. ........................................ Hong Kong 429,000 1,104,318
----------
3,039,903
----------
ENERGY SOURCES 1.7%
*Ranger Oil Ltd. ............................................ Canada 94,645 363,549
Societe Elf Aquitaine SA, Br. .............................. France 3 441
Total Fina SA, B ........................................... France 11,305 1,526,852
----------
1,890,842
----------
FINANCIAL SERVICES 3.2%
Dah Sing Financial Holdings Ltd. ........................... Hong Kong 549,600 2,192,882
Housing Development Finance Corp. Ltd. ..................... India 200,000 1,216,870
Mutual Risk Management Ltd. ................................ Bermuda 11,350 171,669
----------
3,581,421
----------
FOOD & HOUSEHOLD PRODUCTS 6.2%
Geest PLC .................................................. United Kingdom 218,700 1,641,811
Hazlewood Foods PLC ........................................ United Kingdom 832,000 1,276,492
Illovo Sugar Ltd. .......................................... South Africa 700,000 723,352
McBride PLC ................................................ United Kingdom 314,100 438,097
National Foods Ltd. ........................................ Australia 841,683 1,555,454
Perkins Foods PLC .......................................... United Kingdom 729,200 1,358,081
----------
6,993,287
----------
FOREST PRODUCTS & PAPER 2.1%
Cartiere Burgo SpA ......................................... Italy 185,138 1,360,957
Primex Forest Products Ltd. ................................ Canada 241,392 820,559
Stora Enso OYJ, R .......................................... Finland 19,352 254,249
----------
2,435,765
----------
HEALTH & PERSONAL CARE 4.3%
Internatio-Muller NV ....................................... Netherlands 62,500 1,175,862
Moulin International Holdings Ltd. ......................... Hong Kong 11,900,000 1,133,406
Nycomed Amersham PLC ....................................... United Kingdom 140,305 858,507
Ono Pharmaceutical Co Ltd. ................................. Japan 53,000 1,726,715
----------
4,894,490
----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
INDUSTRIAL COMPONENTS 4.0%
Granges AB ........................................... Sweden 47,656 $ 911,100
Sylea SA ............................................. France 17,240 942,245
Weir Group PLC ....................................... United Kingdom 414,100 1,739,516
Yamato Kogyo Co. Ltd. ................................ Japan 192,000 888,616
-----------
4,481,477
-----------
INSURANCE .8%
Ace Ltd. ............................................. Bermuda 26,400 513,150
HIH Insurance Ltd. ................................... Australia 401,107 380,853
-----------
894,003
-----------
LEISURE & TOURISM .7%
Kuoni Reisen Holding AG, B ........................... Switzerland 200 853,186
-----------
MACHINERY & ENGINEERING 2.6%
Arcadis NV ........................................... Netherlands 172,735 1,397,958
Laird Group PLC ...................................... United Kingdom 351,900 1,495,555
-----------
2,893,513
-----------
MERCHANDISING 15.1%
Best Denki Co. Ltd. .................................. Japan 137,000 1,411,221
Giordano International Ltd. .......................... Hong Kong 6,377,000 6,771,382
Li & Fung Ltd. ....................................... Hong Kong 2,000,000 3,410,773
Northwest Company Fund ............................... Canada 148,750 1,345,010
Sa des Galeries Lafayette ............................ France 20,600 3,031,227
Somerfield PLC ....................................... United Kingdom 260,400 544,797
Storehouse ........................................... United Kingdom 202,561 236,823
Vendex KBB NV ........................................ Netherlands 10,692 311,850
-----------
17,063,083
-----------
METALS & MINING 7.1%
Arbed SA ............................................. Luxembourg 7,172 659,586
Boehler-Uddeholm AG .................................. Austria 15,350 642,118
Boehler-Uddeholm AG, 144A ............................ Austria 3,390 141,810
Elkem ASA, A ......................................... Norway 96,500 1,666,847
Iluka Resources Ltd. ................................. Australia 520,100 1,226,307
Pechiney SA, A ....................................... France 40,441 2,261,292
Pohang Iron & Steel Co. Ltd. ......................... South Korea 7,250 892,122
PT Timah TBK ......................................... Indonesia 709,000 560,967
-----------
8,051,049
-----------
MULTI-INDUSTRY 3.0%
Elementis PLC ........................................ United Kingdom 705,000 1,151,053
Nagron Nationaal Grondbezit NV ....................... Netherlands 45,400 1,045,016
Saha Union Public Co. Ltd., fgn. ..................... Thailand 634,000 217,630
Zehnder Holding AG, Br ............................... Switzerland 1,820 967,513
-----------
3,381,212
-----------
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999 (CONT.)
<TABLE>
<CAPTION>
TEMPLETON FOREIGN SMALLER COMPANIES FUND COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONT.)
TEXTILES & APPAREL .9%
Gamma Holding NV ...................................................... Netherlands 16,800 $ 670,990
*Yizheng Chemical Fibre Co. Ltd., H ................................... China 1,225,000 335,044
-----------
1,006,034
-----------
TRANSPORTATION 4.8%
*Anangel-American Shipholdings Ltd., ADR .............................. Greece 118,000 678,500
*Neptune Orient Lines Ltd. ............................................ Singapore 547,000 792,325
*Orient Overseas International Ltd. ................................... Hong Kong 4,015,000 1,653,646
Sea Containers Ltd., A ................................................ United Kingdom 44,500 1,301,625
Stolt Nielsen SA, ADR ................................................. Norway 66,800 1,047,925
-----------
5,474,021
-----------
UTILITIES ELECTRICAL & GAS 3.3%
Endesa SA ............................................................. Spain 97,170 1,943,543
Evn AG ................................................................ Austria 8,350 1,197,960
Guangdong Electric Power Development Co Ltd., B ....................... China 1,195,896 554,119
-----------
3,695,622
-----------
TOTAL COMMON STOCKS (COST $89,112,600) ................................ 105,825,677
-----------
PREFERRED STOCKS 5.1%
Ballast Nedam NV, pfd. ................................................ Netherlands 5,563 137,112
Confab Industrial SA, pfd. ............................................ Brazil 1,081,200 609,283
Fertilizantes Fosfatados SA, pfd. ..................................... Brazil 254,684,000 784,145
News Corp. Ltd., pfd. ................................................. Australia 152,204 1,029,766
Telemig Celular Participacoes SA, ADR, pfd. ........................... Brazil 53,918 1,479,375
Tele Leste Celular Participacoes SA, ADR, pfd. ........................ Brazil 24,281 737,535
Tele Sudeste Celular Participacoes SA, pfd. ........................... Brazil 57,573,000 234,185
Weg SA, pfd. .......................................................... Brazil 1,755,900 809,585
-----------
TOTAL PREFERRED STOCKS (COST $6,134,080) .............................. 5,820,986
-----------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT (COST $95,246,680) ...... 111,646,663
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT**
---------
<S> <C> <C> <C>
(a)REPURCHASE AGREEMENT (COST $445,000) .4%
Paine Webber Group Inc., 5.22%, 11/01/99 (Maturity Value $445,194)
Collateralized by U.S. Treasury Notes and Bonds........................... United States $445,000 445,000
------------
TOTAL INVESTMENTS (COST $95,691,680) 98.9% ............................... 112,091,663
OTHER ASSETS, LESS LIABILITIES 1.1%....................................... 1,264,612
------------
TOTAL NET ASSETS 100.0% .................................................. $113,356,275
============
</TABLE>
* Non-income producing securities.
** Securities denominated in U.S. dollars.
(a) See note 1(c) regarding repurchase agreements.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
---------------------------------------------
<S> <C> <C>
Assets:
Investments in securities:
Cost ............................................................... $ 73,762,431 $ 95,246,680
---------------------------------------------
Value .............................................................. 74,073,142 111,646,663
Repurchase agreement, at value and cost ............................. 17,686,000 445,000
Cash ................................................................ -- 662,940
Receivables:
Investment securities sold ......................................... -- 785,915
Beneficial shares sold ............................................. 2,411,049 131,163
Dividends and interest ............................................. 86,819 413,386
---------------------------------------------
Total assets ..................................................... 94,257,010 114,085,067
---------------------------------------------
Liabilities:
Payables:
Investment securities purchased .................................... 428,448 1,223
Beneficial shares redeemed ......................................... 1,271,306 442,885
To affiliates ...................................................... 156,969 196,997
To shareholders .................................................... 7,679 --
Funds advanced by custodian ......................................... 13,797 --
Accrued expenses .................................................... 41,656 87,687
---------------------------------------------
Total liabilities ............................................... 1,919,855 728,792
---------------------------------------------
Net assets, at value ................................................. $ 92,337,155 $ 113,356,275
=============================================
Net assets consist of:
Undistributed net investment income ................................. $ -- $ 1,293,703
Net unrealized appreciation ......................................... 310,711 16,399,983
Accumulated net realized loss ....................................... (6,592,780) (13,708,711)
Beneficial shares ................................................... 98,619,224 109,371,300
---------------------------------------------
Net assets, at value ................................................. $ 92,337,155 $ 113,356,275
=============================================
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements (continued)
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
OCTOBER 31, 1999
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
---------------------------------------------
<S> <C> <C>
CLASS A:
Net assets, at value .............................................................. $ 73,159,658 $102,684,097
=============================================
Shares outstanding ................................................................ 7,169,648 7,116,695
=============================================
Net asset value per share ......................................................... $ 10.20 $ 14.43
=============================================
Maximum offering price per share (Net asset value per share / 94.25%) ............. $ 10.82 $ 15.31
=============================================
CLASS B:
Net assets, at value .............................................................. $ 200,592
==============
Shares outstanding ................................................................ 13,981
==============
Net asset value and maximum offering price per share* ............................. $ 14.35
==============
CLASS C:
Net assets, at value .............................................................. $ 11,925,284 $ 630,754
=============================================
Shares outstanding ................................................................ 1,174,763 43,911
=============================================
Net asset value per share* ........................................................ $ 10.15 $ 14.36
=============================================
Maximum offering price per share (Net asset value per share / 99.00%) ............. $ 10.25 $ 14.51
=============================================
ADVISOR CLASS:
Net assets, at value .............................................................. $ 7,252,213 $ 9,840,832
=============================================
Shares outstanding ................................................................ 703,088 680,990
=============================================
Net asset value and maximum offering price per share .............................. $ 10.31 $ 14.45
=============================================
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
-------------------------------------
<S> <C> <C>
Investment Income:
Dividends* ........................................................................ $ 1,106,168 $ 3,754,737
Interest .......................................................................... 163,582 297,874
-------------------------------------
Total investment income ............................................................ $ 1,269,750 $ 4,052,611
-------------------------------------
Expenses:
Management fees (Note 3) .......................................................... 629,459 1,166,255
Distribution fees (Note 3)
Class A .......................................................................... 110,336 236,572
Class B .......................................................................... -- 652
Class C .......................................................................... 87,886 5,164
Transfer agent fees (Note 3) ...................................................... 231,000 335,000
Custodian fees .................................................................... 46,200 61,200
Reports to shareholders ........................................................... 55,700 60,100
Registration and filing fees ...................................................... 96,600 46,300
Professional fees ................................................................. 11,200 15,500
Trustees' fees and expenses ....................................................... 3,600 7,000
Other ............................................................................. 834 4,329
-------------------------------------
Total expenses ..................................................................... 1,272,815 1,938,072
-------------------------------------
Net investment income (loss) ...................................................... $ (3,065) $ 2,114,539
-------------------------------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ..................................................................... 157,622 (5,502,033)
Foreign currency transactions ................................................... (53,275) (150,864)
-------------------------------------
Net realized gain (loss) ........................................................ 104,347 (5,652,897)
Net unrealized appreciation on investments ...................................... 17,711,991 24,688,618
-------------------------------------
Net realized and unrealized gain ................................................... 17,816,338 19,035,721
-------------------------------------
Net increase in net assets resulting from operations ............................... $ 17,813,273 $ 21,150,260
=====================================
</TABLE>
*Net of foreign taxes of $96,066 and $438,683 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
FOR THE YEARS ENDED OCTOBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
-----------------------------------------------------------------------------
1999 1998 1999 1998
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ................. $ (3,065) $ 624,107 $ 2,114,539 $ 2,733,473
Net realized gain (loss) from investments
and foreign currency transactions ............. 104,347 (6,483,804) (5,652,897) (7,737,309)
Net unrealized appreciation
(depreciation) on investments ................. 17,711,991 (6,930,736) 24,688,618 (15,102,189)
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations .............. 17,813,273 (12,790,433) 21,150,260 (20,106,025)
Distributions to shareholders from:
Net investment income:
Class A ..................................... (300,300) (565,160) (2,246,219) (2,082,916)
Class B ..................................... -- -- (317) --
Class C ..................................... (26,778) (39,362) (7,818) --
Advisor Class ............................... (8,257) (14,529) (198,057) (128,167)
Net realized gains:
Class A ..................................... -- (255,869) -- (5,553,654)
Class C ..................................... -- (21,696) -- --
Advisor Class ............................... -- (5,784) -- (199,828)
Beneficial share transactions (Note 2):
Class A ..................................... 15,916,675 13,620,354 (28,393,015) 18,121,845
Class B ..................................... -- -- 196,595 --
Class C ..................................... 3,739,284 5,094,887 118,168 485,756
Advisor Class ............................... 5,366,059 193,541 (4,079,946) 10,935,209
-----------------------------------------------------------------------------
Net increase (decrease) in net assets ..... 42,499,956 5,215,949 (13,460,349) 1,472,220
Net assets:
Beginning of year ............................. 49,837,199 44,621,250 126,816,624 125,344,404
-----------------------------------------------------------------------------
End of year ................................... $ 92,337,155 $ 49,837,199 $ 113,356,275 $ 126,816,624
-----------------------------------------------------------------------------
Undistributed net investment income/
(Distributions in excess of net investment
income) included in net assets:
End of year .................................. -- $ 309,494 $ 1,293,703 $ 1,782,439
=============================================================================
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton International Trust (the Trust) is registered under the
Investment Company Act of 1940 as an open-end, diversified investment company,
consisting of two Funds. The Funds and their investment policies are:
Templeton Pacific Growth Fund -- Seeks to 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.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONT.)
b. FOREIGN CURRENCY TRANSLATION (CONT.)
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 October 31, 1999, the Pacific Growth Fund had investments with a value of
approximately $3.4 million in countries with restrictions on the repatriation of
their currencies or formal exchange controls currently in place.
c. REPURCHASE AGREEMENTS:
The Funds may enter into repurchase agreements, which are accounted for as a
loan by the Fund to the seller, collateralized by securities which are delivered
to the Funds' custodian. The market value, including accrued interest, of the
initial collateralization is required to be at least 102% of the dollar amount
invested by the Funds, with the value of the underlying securities marked to
market daily to maintain coverage of at least 100%. At October 31, 1999, all
outstanding repurchase agreements held by the Funds had been entered into on the
last business day of the month.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
Common expenses incurred by the Trust are allocated among the funds compromising
the trust based on the ratio of net assets of each fund to the combined net
assets. Other expenses are charged to each fund on a specific identification
basis.
e. 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.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (continued)
2. BENEFICIAL SHARES
During the year ended October 31, 1999, the Funds offered three classes of
shares: Class A, Class C, and Advisor Class. Effective January 1, 1999, Class I
and Class II were renamed Class A and Class C shares, respectively, and a fourth
class of shares, Class B, was established in Templeton Foreign Smaller Companies
Fund. The shares differ by their initial sales load, distribution fees, voting
rights on matters affecting a single class and the exchange privilege of each
class.
At October 31, 1999, there were an unlimited number of shares authorized ($.01
par value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
------------------- ------------------------------
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
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 TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Year ended October 31, 1998
Shares sold .................................. 15,211,240 $ 118,081,920 6,229,087 $ 87,294,308
Shares issued on reinvestment of distributions 80,593 692,138 475,150 6,445,132
Shares redeemed .............................. (13,666,884) (105,153,704) (5,534,510) (75,617,595)
----------- ------------- ----------- -------------
Net increase ................................. 1,624,949 $ 13,620,354 1,169,727 $ 18,121,845
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON
FOREIGN SMALLER COMPANIES FUND
------------------------------
CLASS B SHARES: 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
------------------- ------------------------------
CLASS C SHARES: 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 (continued)
2. BENEFICIAL SHARES (CONT.)
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND+
------------------- -------------------------------
CLASS C SHARES: SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Year ended October 31, 1998
Shares sold .................................. 1,436,266 $ 11,856,010 36,532 $ 485,756
Shares issued on reinvestment of distributions 6,175 53,541 -- --
Shares redeemed .............................. (862,769) (6,814,664) -- --
--------- ------------ ------ ------------
Net increase ................................. 579,672 $ 5,094,887 36,532 $ 485,756
========= ============ ====== ============
</TABLE>
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC GROWTH FUND FOREIGN SMALLER COMPANIES FUND
------------------- ------------------------------
ADVISOR CLASS SHARES: 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)
---------- ------------ -------- ------------
Net increase (decrease) ...................... 518,614 $ 5,366,059 (323,817) $ (4,079,946)
========== ============ ======== ============
</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, 1998
Shares sold .................................. 679,912 $ 5,002,253 972,516 $ 13,778,030
Shares issued on reinvestment of distributions 2,269 19,383 23,642 322,433
Shares redeemed .............................. (622,404) (4,828,095) (238,243) (3,165,254)
-------- ------------ -------- ------------
Net increase ................................. 59,777 $ 193,541 757,915 $ 10,935,209
======== ============ ======== ============
</TABLE>
+Effective date of Class C shares was July 1, 1998.
++Effective date of Class B shares was January 1, 1999.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Trust are also officers and/or directors of Franklin
Advisers, Inc. (Advisers), Franklin/Templeton Distributors, Inc. (Distributors)
and Franklin/Templeton Investor Services, Inc. (Investor Services), the Funds'
investment manager, principal underwriter, and transfer agent, respectively.
The Funds pay an investment management fee to Advisers based on the average
daily net assets of each Fund as follows:
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
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
Under a subadvisory agreement, Templeton Investment Counsel, Inc., a
wholly-owned subsidiary of Franklin Resources, Inc., provides subadvisory
services to the Funds and receives from Advisers fees based on the average daily
net assets of each Fund as follows:
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
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 Foreign
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 year ended October 31, 1999 as follows:
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- ---------------
Total commissions received ........ $368,747 $107,378
Paid to other dealers ............. $558,478 $244,549
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 $95,723,515 for
Templeton Foreign Smaller Companies Fund. At October 31, 1999, 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 .......... $ 14,174,730 $ 26,681,237
Unrealized depreciation .......... (13,864,019) (10,313,089)
------------ ------------
Net unrealized
appreciation .................... $ 310,711 $ 16,368,148
============ ============
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Notes to Financial Statements (continued)
4. INCOME TAXES (CONT.)
At October 31, 1999, the Funds had tax basis capital losses which may be carried
over to offset future capital gains as follows:
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- ---------------
<S> <C> <C>
Capital loss carryover expiring in:
2006 ....................... $ 6,592,778 $ 8,206,680
2007 ....................... -- $ 5,481,473
----------- -----------
$ 6,592,778 $13,688,153
</TABLE>
5. INVESTMENT TRANSACTION
Purchases and sales of securities (excluding short-term securities) for the year
ended October 31, 1999 were as follows:
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
PACIFIC FOREIGN SMALLER
GROWTH FUND COMPANIES FUND
----------- ---------------
<S> <C> <C>
Purchases .................... $33,596,352 $21,034,293
Sales ........................ $23,197,325 $40,850,829
</TABLE>
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Independent Auditors' Report
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF FRANKLIN TEMPLETON INTERNATIONAL TRUST
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the funds constituting the
Franklin Templeton International Trust (hereafter referred to as the "Funds") at
October 31, 1999, the results of each of their operations for the year then
ended, the changes in each of their net assets for the two years in the period
then ended and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1999 by
correspondence with custodians and brokers, provide a reasonable basis for our
opinion expressed above.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
November 23, 1999
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Tax Designation
TEMPLETON PACIFIC GROWTH FUND
Under Section 854(b)(2) of the Internal Revenue Code, the Templeton Pacific
Growth Fund hereby designates 10.56% of ordinary income dividends as income
qualifying for the dividends received deduction for the fiscal year ended
October 31, 1999.
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Tax Designation
TEMPLETON FOREIGN SMALLER COMPANIES FUND
At October 31, 1999, more than 50% of the Templeton Foreign Smaller Companies
Fund's total assets were invested in securities of foreign issuers. In most
instances, foreign taxes were withheld from dividends paid to the fund on these
investments. The Fund intends to make an election under Section 853 of the
Internal Revenue Code. This election will allow shareholders to treat their
proportionate share of foreign taxes paid by the Fund as having been paid
directly by them.
The following table provides a breakdown by country of foreign source income and
foreign taxes paid, as designated by the Fund to Class A, Class B, Class C, and
Advisor Class shareholders in December 1999.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C ADVISOR CLASS
--------------------------------------------------------------------------------------------------------------
FOREIGN FOREIGN FOREIGN FOREIGN FOREIGN FOREIGN FOREIGN FOREIGN
TAX PAID SOURCE INCOME TAX PAID SOURCE INCOME TAX PAID SOURCE INCOME TAX PAID SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE PER SHARE PER SHARE PER SHARE PER SHARE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Argentina $0.0000 $0.0021 $0.0000 $0.0021 $0.0000 $0.0016 $0.0000 $0.0023
Australia 0.0009 0.0175 0.0009 0.0173 0.0009 0.0136 0.0009 0.0193
Austria . 0.0019 0.0064 0.0019 0.0064 0.0019 0.0050 0.0019 0.0071
Bermuda . 0.0000 0.0038 0.0000 0.0038 0.0000 0.0029 0.0000 0.0042
Brazil .. 0.0068 0.0268 0.0068 0.0265 0.0068 0.0209 0.0068 0.0296
Canada .. 0.0033 0.0124 0.0033 0.0122 0.0033 0.0096 0.0033 0.0137
China ... 0.0000 0.0068 0.0000 0.0067 0.0000 0.0053 0.0000 0.0075
Colombia 0.0000 0.0006 0.0000 0.0006 0.0000 0.0005 0.0000 0.0006
Denmark . 0.0006 0.0021 0.0006 0.0021 0.0006 0.0016 0.0006 0.0023
Ecuador . 0.0000 0.0004 0.0000 0.0004 0.0000 0.0003 0.0000 0.0004
Finland . 0.0014 0.0041 0.0014 0.0041 0.0014 0.0032 0.0014 0.0046
France .. 0.0019 0.0098 0.0019 0.0097 0.0019 0.0076 0.0019 0.0108
Germany . 0.0005 0.0029 0.0005 0.0028 0.0005 0.0022 0.0005 0.0032
Hong Kong 0.0000 0.0335 0.0000 0.0332 0.0000 0.0261 0.0000 0.0370
India ... 0.0000 0.0047 0.0000 0.0046 0.0000 0.0037 0.0000 0.0052
Indonesia 0.0007 0.0025 0.0007 0.0025 0.0007 0.0020 0.0007 0.0028
Italy ... 0.0007 0.0028 0.0007 0.0028 0.0007 0.0022 0.0007 0.0031
</TABLE>
(Table continued on next page.)
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Tax Designation (continued)
TEMPLETON FOREIGN SMALLER COMPANIES FUND (CONT.)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C ADVISOR CLASS
--------------------------------------------------------------------------------------------------------------
FOREIGN FOREIGN FOREIGN FOREIGN FOREIGN FOREIGN FOREIGN FOREIGN
TAX PAID SOURCE INCOME TAX PAID SOURCE INCOME TAX PAID SOURCE INCOME TAX PAID SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE PER SHARE PER SHARE PER SHARE PER SHARE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Japan $0.0010 $0.0038 $0.0010 $0.0037 $0.0010 $0.0029 $0.0010 $0.0042
Luxembourg 0.0000 0.0008 0.0000 0.0008 0.0000 0.0007 0.0000 0.0009
Netherlands 0.0085 0.0383 0.0085 0.0379 0.0085 0.0298 0.0085 0.0423
New Zealand 0.0006 0.0023 0.0006 0.0023 0.0006 0.0018 0.0006 0.0025
Norway 0.0057 0.0181 0.0057 0.0179 0.0057 0.0141 0.0057 0.0200
Peru 0.0000 0.0001 0.0000 0.0001 0.0000 0.0001 0.0000 0.0001
Portugal 0.0002 0.0005 0.0002 0.0005 0.0002 0.0004 0.0002 0.0006
South Africa 0.0000 0.0037 0.0000 0.0037 0.0000 0.0029 0.0000 0.0041
South Korea 0.0003 0.0009 0.0003 0.0009 0.0003 0.0007 0.0003 0.0010
Spain 0.0034 0.0131 0.0034 0.0130 0.0034 0.0102 0.0034 0.0144
Sweden 0.0024 0.0090 0.0024 0.0089 0.0024 0.0070 0.0024 0.0100
Switzerland 0.0026 0.0106 0.0026 0.0105 0.0026 0.0083 0.0026 0.0118
Thailand 0.0003 0.0015 0.0003 0.0015 0.0003 0.0012 0.0003 0.0017
United Kingdom 0.0133 0.0716 0.0133 0.0707 0.0133 0.0558 0.0133 0.0788
------- ------- ------- ------- ------- ------- ------- -------
Total $0.0570 $0.3135 $0.0570 $0.3102 $0.0570 $0.2442 $0.0570 $0.3461
------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
In January 2000, shareholders will receive Form 1099-DIV which will include
their share of taxes withheld and foreign source income distributed during the
calendar year 1999.
Shareholders are advised to check with their tax advisors for information on the
treatment of these amounts on their individual income tax returns.
