<PAGE>
Franklin Templeton
Japan Fund
- --------------------------------------------------------------------------------
Your Fund's Objective:
The Franklin Templeton Japan Fund seeks long-term capital growth by investing
primarily in securities of companies domiciled in Japan and traded in Japanese
securities markets.
- --------------------------------------------------------------------------------
November 16, 1995
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Franklin Templeton
Japan Fund for the six months ended September 30, 1995.
Although the long-term downtrend in Japanese stocks continued through the first
three months of this period, the market made a decisive turnaround beginning in
July. At that point, offshore investors began driving the market higher even
though Japanese investors continued selling their shares. Foreigners were
inspired by the moves of the Japanese government addressing the nation's banking
crisis and weak economy. These included cutting the overnight bank lending rate
to 0.50% from 1.00%, and a series of announced public spending measures.
Although the Fund fully participated in the rally, the gains produced by our
stocks were virtually offset by a weakening yen. Overall, the Fund provided a
total return of -1.11% during this period, as shown in the Performance Summary
on page 4. This compared with a total return
1
<PAGE>
- --------------------------------------------------------------------------------
Franklin Templeton Japan Fund
Portfolio Breakdown on 9/30/95
Based on Total Net Assets
Energy 1.2%
Materials 10.2%
Consumer Goods 13.2%
[PIE CHART APPEARS HERE] Finance 7.3%
Multi-Industry 5.1%
Services 14.3%
Capital Equipment 29.2%
Short-Term Obligations
& Other Net Assets 19.5%
of -2.74% produced by the unmanaged benchmark Nikkei 225 Index./1/ Of course, we
have always maintained a long-term perspective when managing the Fund, and we
encourage shareholders to view their investments in a similar manner.
The Fund's largest holding was Shinko Electric Industries, which performed
admirably during the six-month period under review, rising from 1660 yen on
March 31, 1995 to
1. Please remember that the Fund's performance differs from that of the index
because the index does not contain cash (the Fund generally carries a certain
percentage of cash at any given time) and includes no sales charges or
management expenses. Of course, one cannot invest directly in an index.
4290 yen on September 30, 1995. This spring we visited Shinko, a manufacturer of
lead frames for semiconductors in Nagano and were very impressed with management
and the company's in-house integrated production capability. Chudenko, our
third-largest holding, provides comprehensive electrical engineering services to
the Chubu area, and is actively winning orders related to the Hanshin earthquake
reconstruction. Bank stocks, especially the city banks, were very weak during
this period. Your Fund holds only larger, regional banks such as Hachijuni and
Akita, which are not as burdened with the vast amounts of bad loans carried by
the city banks.
In our opinion, the short-term outlook for Japan's economy is not favorable.
Deflationary pressures appear to be continuing due to deregulation, cheaper
imports, excessive manufacturing capacity and the sizable bad loans on bank
balance sheets. Compounding these pressures, wage growth has also turned
negative, causing reduced spending by Japanese consumers and stagnant retail
sales compared with last year's figures. Many economists have compared events in
Japan to the problems of the United States in the 1930s when its economy
remained mired in what appeared to be a never-ending
2
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Franklin Templeton Japan Fund
Top 10 Holdings on 9/30/95
As a Percentage of Total Net Assets
% of Total
Company, Industry Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Shinko Electric Industries Co. Ltd.;
Industrial Components 5.0%
- --------------------------------------------------------------------------------
Chofu Seisakusho Co. Ltd.;
Appliances & Household Durables 3.5%
- --------------------------------------------------------------------------------
Chudenko Corp.;
Industrial Components 3.4%
- --------------------------------------------------------------------------------
Amway Japan Ltd.; Multi-Industry 3.4%
- --------------------------------------------------------------------------------
Toda Corp.;
Construction & Housing 3.2%
- --------------------------------------------------------------------------------
Daiei, Inc.; Merchandising 3.0%
- --------------------------------------------------------------------------------
Daicel Chemical Industries Ltd.;
Chemicals 2.8%
- --------------------------------------------------------------------------------
National House Industrial Co. Ltd.;
Construction & Housing 2.7%
- --------------------------------------------------------------------------------
Tokyo Style Co. Ltd.;
Textiles & Apparel 2.7%
- --------------------------------------------------------------------------------
Nissin Corp.; Transportation 2.6%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, see page 6 of this report.
depression. Unlike the U.S. monetary authorities in the 1930s, however, the Bank
of Japan has aggressively lowered overnight interest rates to post-World War II
lows. Such action is similar to the Federal Reserve Board's response to the U.S.
banking crisis in the early 1990s.
It should be remembered that there are special risks involved with investing in
a single foreign country, including increased susceptibility to currency
fluctuations, market volatility, and economic, social, and political
uncertainty, which are further discussed in the Fund's prospectus. We believe
that, although Japan will go through much pain as it reshapes its economy, such
actions will eventually lead to a brighter day and potential investment
opportunities for shareholders of the Fund.
Thank you for your continued support of the Franklin Templeton Japan Fund.
We welcome your comments and look forward to serving you in the future.
Sincerely,
/s/ William T. Howard, Jr.
William T. Howard, Jr., CFA
Portfolio Manager
Franklin Templeton Japan Fund
3
<PAGE>
- --------------------------------------------------------------------------------
Performance Summary
The Franklin Templeton Japan Fund produced a total return of -1.11% for the six-
month period ended September 30, 1995. Total return measures the change in value
of an investment, assuming reinvestment of dividend and capital gains
distributions, and does not include sales charges.
The Fund's share price, as measured by net asset value, decreased from $9.93 on
March 31, 1995 to $9.79 on September 30, 1995. During the reporting period,
shareholders received distributions totaling 3 cents ($0.03) per share in
dividend income. Of course, past performance is not predictive of future
results, and distributions will vary depending on income earned by the Fund, as
well as any profits realized from the sale of securities in the portfolio.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Franklin Templeton Japan Fund
Periods ended September 30, 1995
Since
Inception
One-Year (7/28/94)
<S> <C> <C>
Average Annual
Total Return/1/ -6.88% -5.96%
Cumulative
Total Return/2/ -1.19% -1.29%
</TABLE>
1. Average annual total return represents the average annual change in value of
an investment over the specified periods and includes the maximum 5.75% initial
sales charge.
2. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 5.75% initial sales
charge.
All total return calculations assume reinvestment of dividend and capital gains
distributions when paid. Investment return and principal value will fluctuate
with Japan's market conditions, currency, and its economic and political
climate, so that your shares, when redeemed, may be worth more or less than
their original cost. Past performance is not predictive of future results.
All total return calculations reflect the deduction of a proportional share of
Fund expenses on an annual basis. The Fund's Investment Manager and
Administrative Manager have agreed in advance to reduce their respective fees
and to make certain payments to reduce expenses, which increases total return to
shareholders. If the Managers had not taken this action, the Fund's total return
would have been lower. The fee waiver may be discontinued at any time upon
notice to the Fund's Board of Trustees.
4
<PAGE>
Franklin Templeton Japan Fund
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS JULY 28, 1994
ENDED (COMMENCEMENT
SEPTEMBER 30, 1995 OF OPERATIONS) TO
(UNAUDITED)+ MARCH 31, 1995
------------------ -----------------
<S> <C> <C>
Net asset value, beginning of period $ 9.93 $10.00
------- ------
Income from investment operations:
Net investment income .01 .10
Net realized and unrealized loss (.12) (.12)
------- ------
Total from investment operations (.11) (.02)
Distributions to shareholders from net
investment income (.03) (.05)
------- ------
Change in net asset value (.14) (.07)
------- ------
Net asset value, end of period $ 9.79 $ 9.93
======= ======
TOTAL RETURN * (1.11)% (.19)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 3,478 $1,444
Ratio of expenses to average net assets 8.90%** 12.05%**
Ratio of expenses, net of reimbursement,
to average net assets 1.95%** 1.25%**
Ratio of net investment income to average
net assets .28%** 1.92%**
Portfolio turnover rate .22% --
</TABLE>
*TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS. NOT ANNUALIZED.
**ANNUALIZED.
+BASED ON WEIGHTED AVERAGE SHARES OUTSTANDING.
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
Franklin Templeton Japan Fund
Investment Portfolio, September 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS: 80.5%
- -------------------------------------------------------------------------------
Appliances & Household Durables: 4.6%
Chofu Seisaku Co. Ltd. Jpn. 5,000 $ 122,659
Sony Corp. Jpn. 700 36,323
----------
158,982
- -------------------------------------------------------------------------------
Banking: 3.5%
Akita Bank Ltd. Jpn. 8,000 56,292
Hachijuni Bank Ltd. Jpn. 6,000 67,235
----------
123,527
- -------------------------------------------------------------------------------
Chemicals: 2.8%
Daicel Chemical Industries Ltd. Jpn. 17,000 97,824
- -------------------------------------------------------------------------------
Construction & Housing: 9.7%
Daito Trust Construction Co. Ltd. Jpn. 6,000 69,658
Maeda Corp. Jpn. 6,000 63,601
National House Industrial Co. Ltd. Jpn. 5,000 93,382
Toda Corp. Jpn. 13,000 112,473
----------
339,114
- -------------------------------------------------------------------------------
Electrical & Electronics: 3.2%
Hitachi Ltd. Jpn. 6,000 65,418
Matsushita Electric Industrial Co. Ltd. Jpn. 3,000 46,035
----------
111,453
- -------------------------------------------------------------------------------
Financial Services: 1.3%
Yamaichi Securities Co. Ltd. Jpn. 8,000 45,308
- -------------------------------------------------------------------------------
Forest Products & Paper: 2.3%
Rengo Co. Ltd. Jpn. 12,000 80,561
- -------------------------------------------------------------------------------
Industrial Components: 16.3%
Chudenko Corp. Jpn. 3,000 118,116
*Fuji Heavy Industries Ltd. Jpn. 21,000 80,773
Mitsubishi Heavy Industries Ltd. Co.
Ltd. Jpn. 9,000 69,053
Sanyo Electric Co. Ltd. Jpn. 10,000 57,140
Shinko Electric Industries Jpn. 4,000 173,237
Toyo Engineering Corp. Jpn. 12,000 68,689
----------
567,008
- -------------------------------------------------------------------------------
Insurance: 2.5%
Tokio Marine & Fire Insurance Co. Ltd. Jpn. 8,000 86,417
- -------------------------------------------------------------------------------
Merchandising: 2.9%
Daiei Inc. Jpn. 9,000 102,670
- -------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Franklin Templeton Japan Fund
Investment Portfolio, September 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- --------------------------------------------------------------------------
Metals & Mining: 2.5%
Nittetsu Mining Co. Ltd. Jpn. 10,000 $ 87,830
- --------------------------------------------------------------------------
Miscellaneous Materials & Commodities: 2.6%
Tenma Corp. Jpn. 4,000 90,455
- --------------------------------------------------------------------------
Multi-Industry: 5.1%
Amway Japan Ltd. Jpn. 3,000 116,905
Mitsubishi Oil Co. Ltd. Jpn. 7,000 59,926
----------
176,831
- --------------------------------------------------------------------------
Recreation, Other Consumer Goods: 1.7%
Nintendo Co. Ltd. Jpn. 800 58,150
- --------------------------------------------------------------------------
Telecommunications: 2.3%
Nippon Telegraph & Telephone Corp. Jpn. 9 79,052
- --------------------------------------------------------------------------
Textiles & Apparel: 6.9%
Nisshinbo Industries Inc. Jpn. 7,000 60,774
Tokyo Style Co. Ltd. Jpn. 6,000 93,282
Wacoal Corp. Jpn. 7,000 84,801
----------
238,857
- --------------------------------------------------------------------------
Transportation: 7.8%
East Japan Railway Jpn. 15 74,201
Iino Kaiun Kaisha Ltd. Jpn. 10,000 50,477
Kyoei Tanker Co. Ltd. Jpn. 16,000 54,919
Nissin Corp. Jpn. 19,000 92,070
----------
271,667
- --------------------------------------------------------------------------
Utilities Electrical & Gas: 1.2%
Hokkaido Electric Power Co. Inc. Jpn. 1,734 41,663
- --------------------------------------------------------------------------
Wholesale & International Trade: 1.3%
Mitsubishi Corp. Jpn. 4,000 44,824
----------
TOTAL COMMON STOCKS (cost $2,792,783) 2,802,193
- --------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Franklin Templeton Japan Fund
Investment Portfolio, September 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY VALUE
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 22.4% (cost
$777,506)
- -----------------------------------------------------------------------------
U.S. Treasury Bills, 5.16% to
5.37% with
maturities to 11/24/95 U.S. 782,000 $ 777,686
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS: 102.9% (cost
$3,570,289) 3,579,879
OTHER ASSETS, LESS LIABILITIES: (2.9)% (101,610)
----------
TOTAL NET ASSETS: 100.0% $3,478,269
==========
</TABLE>
*NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
Franklin Templeton Japan Fund
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $3,570,289) $3,579,879
Cash 5,581
Receivables:
Fund shares sold 7,108
Expense reimbursement 18,963
Dividends and interest 6,487
Unamortized organization costs 87,823
----------
Total assets 3,705,841
----------
Liabilities:
Payables:
Investment securities purchased 206,148
Fund shares redeemed 874
Accrued expenses 20,550
----------
Total liabilities 227,572
----------
Net assets, at value $3,478,269
==========
Net assets consist of:
Undistributed net investment income $ 5,687
Net unrealized appreciation 9,590
Accumulated net realized loss (4,549)
Net capital paid in on shares of beneficial interest 3,467,541
----------
Net assets, at value $3,478,269
==========
Shares outstanding 355,277
==========
Net asset value per share
($3,478,269 / 355,277) $ 9.79
==========
Maximum offering price
($9.79 / 94.25%) $ 10.39
==========
</TABLE>
STATEMENT OF OPERATIONS
for the six months ended
September 30, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment income:
(net of $1,149 foreign taxes withheld)
Dividends $ 6,511
Interest 16,530
--------
$23,041
Expenses:
Management fees (Note 3) $ 7,725
Administrative fees (Note 3) 1,549
Distribution fees (Note 3) 3,632
Transfer agent fees (Note 3) 1,750
Custodian fees 1,000
Reports to shareholders 24,000
Audit fees 9,600
Legal fees (Note 3) 11,500
Registration and filing fees 19,250
Trustees' fees and expenses 250
Amortization of organization costs 11,390
Other 207
--------
Total expenses 91,853
Less expenses reimbursed (Note 3) (71,726)
--------
Total expenses less reimbursement 20,127
-------
Net investment income 2,914
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments 172
Foreign currency transactions (1,521)
--------
(1,349)
Net unrealized appreciation on investments 7,936
--------
Net realized and unrealized gain 6,587
-------
Net increase in net assets resulting from operations $ 9,501
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Franklin Templeton Japan Fund
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS JULY 28, 1994
ENDED (COMMENCEMENT OF
SEPTEMBER 30, 1995 OPERATIONS) TO
(UNAUDITED) MARCH 31, 1995
------------------ ----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 2,914 $ 12,167
Net realized loss on investment and
foreign currency transactions (1,349) (3,200)
Net unrealized appreciation 7,936 1,654
---------- ----------
Net increase in net assets resulting
from operations 9,501 10,621
Distributions to shareholders from net
investment income (4,653) (4,741)
Fund share transactions (Note 2) 2,029,906 937,635
---------- ----------
Net increase in net assets 2,034,754 943,515
Net assets:
Beginning of period 1,443,515 500,000
---------- ----------
End of period $3,478,269 $1,443,515
========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Franklin Templeton Japan Fund
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Franklin/Templeton Japan Fund (the Fund) is an open-end, diversified management
investment company registered under the Investment Company Act of 1940. The
Fund was organized as a Delaware business trust on October 29, 1993 and com-
menced operations on July 28, 1994. The following summarizes the Fund's signif-
icant accounting policies.
a. Securities Valuations:
Securities listed or traded on a recognized national or foreign stock exchange
or NASDAQ are valued at the last reported sales prices on the principal ex-
change on which the securities are traded. Over-the-counter securities and
listed securities for which no sale is reported are valued at the mean between
the last current bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
and approved in good faith by the Board of Trustees.
b. Foreign Currency Transactions:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign curren-
cies are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customar-
ily enters into foreign exchange contracts to minimize foreign exchange risk
between the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of for-
eign currencies, currency gains or losses realized between the trade and set-
tlement dates on securities transactions, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at the end
of the fiscal period, resulting from changes in the exchange rates.
c. Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
d. Security Transactions, Investment Income, Distributions and Expenses:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income from foreign secu-
rities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
e. Unamortized Organization Costs:
Organization costs are being amortized on a straight line basis over five
years.
11
<PAGE>
Franklin Templeton Japan Fund
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
At September 30, 1995, there were an unlimited number of shares of beneficial
interest authorized ($0.01 par value). Transactions in the Fund's shares were
as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JULY 28, 1994
(COMMENCEMENT OF
SIX MONTHS ENDED OPERATIONS) TO
SEPTEMBER 30, 1995 MARCH 31, 1995
--------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold 399, 183 $ 3,884,732 132,082 $1,297,159
Shares issued on reinvestment
of distributions 236 2,327 296 2,875
Shares redeemed (189,508) (1,857,153) (37,012) (362,399)
-------- ----------- ------- ----------
Net increase 209,911 $ 2,029,906 95,366 $ 937,635
======== =========== ======= ==========
</TABLE>
Templeton Global Investors, Inc., the Funds administrative manager, is record
owner of 50,410 shares as of September 30, 1995.
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton In-
vestment Counsel, Inc. (TICI), and Templeton Global Investors, Inc. (TGII),
Franklin Templeton Distributors, Inc. (FTD), and Franklin Templeton Investor
Services, Inc. (FTIS), the Fund's investment manager, administrative manager,
principal underwriter, and transfer agent, respectively.
The Fund pays monthly an investment management fee to TICI equal, on an annual
basis, to 0.75% of the average daily net assets of the Fund. The Fund pays TGII
monthly an administrative fee of 0.15% per annum on the first $200 million of
the Fund's average daily net assets, 0.135% of the next $500 million, 0.10% of
the next $500 million, and 0.075% per annum of such average net assets in ex-
cess of $1.2 billion. TICI and TGII have voluntarily agreed to reduce their re-
spective fees to the extent necessary to limit total expenses to an annual rate
of 2.00% of the Fund's average daily net assets through December 31, 1995.
Prior to April 15, 1995, this limitation was 1.25% of the Fund's average daily
net assets. The amount of reimbursement for the period ended September 30, 1995
is set forth in the Statement of Operations. For the period ended September 30,
1995, FTD received net commissions of $8,983 from the sale of Fund's shares and
FTIS received fees of $1,750.
Pursuant to a distribution plan, the Fund reimburses FTD monthly (subject to a
limit of 0.35% per annum of the Fund's average daily net assets) for FTD's cost
and expenses in connection with any activity that is primarily intended to re-
sult in sales of Fund shares. Such distribution fees are set forth in the
Statement of Operations.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $11,500 for the period ended Septem-
ber 30, 1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the pe-
riod ended September 30, 1995 aggregated $1,966,483 and $3,071, respectively.
The cost of securities for federal income tax purposes is the same as that
shown in the investment portfolio. Realized gains and losses are reported on an
identified cost basis.
At September 30, 1995, the aggregate gross unrealized appreciation and depreci-
ation of portfolio securities, based on cost for federal income taxes purposes,
was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $133,901
Unrealized depreciation (124,311)
--------
Net unrealized appreciation $ 9,590
========
</TABLE>
12
<PAGE>
Notes
-----
<PAGE>
Notes
-----
<PAGE>
Notes
-----
<PAGE>
- --------------------------
FRANKLIN TEMPLETON
JAPAN FUND
PRINCIPAL UNDERWRITER:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Account Services
1-800-354-9191
Sales Information
1-800-292-9293
This report must be
preceded or accompanied
by a current prospectus
of the Franklin
Templeton Japan Fund,
which contains more
complete information
including charges and
expenses.
Like any investment in
securities, the value
of the Fund's portfolio
will be subject to the
risk of loss from
market, currency,
economic, political,
and other factors, as
well as investment
decisions by the
investment manager
which will not always
be profitable or wise.
The Fund and its
investors are not
protected from such
losses by the
investment manager.
Therefore, investors
who cannot accept this
risk should not invest
in shares of the Fund.
To ensure the highest
quality of service,
telephone calls to or
from our service
departments may be
monitored, recorded,
and accessed. These
calls can be determined
by the presence of
a regular beeping tone.
- --------------------------
[LOGO OF RECYCLED PAPER APPEARS HERE]
TL417 S95 11/95
FRANKLIN
TEMPLETON
JAPAN
FUND
Semi-Annual Report
September 30, 1995
[LOGO FRANKLIN TEMPLETON APPEARS HERE]
