SEMI ANNUAL REPORT
SEPTEMBER 30, 1999
TEMPLETON
INTERNATIONAL FUND
[LOGO(R)]
FRANKLIN(R) TEMPLETON(R)
<PAGE>
[SEAL]
[PHOTO OF MARK HOLOWESKO APPEARS HERE]
MARK G. HOLOWESKO, CFA
President
Templeton Global Investment Trust
Thank you for investing with Franklin Templeton. We encourage our
investors to maintain a long-term perspective, and to expect that mixed in with
the good years can be some bad years. It's important to remember that all
securities markets move both up and down, as do mutual fund share prices. We
appreciate your past support and look forward to serving your investment needs
in the years ahead.
In 1992, Sir John Templeton retired after a 50-year career of helping
investors manage their money. Currently he devotes all of his time and efforts
to the John Templeton Foundation. A major portion of his assets remain invested
in the Templeton funds, which are managed by many of the investment
professionals he selected and trained.
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SHAREHOLDER LETTER
- -------------------------------------------------------------------------------
YOUR FUND'S GOAL: TEMPLETON INTERNATIONAL FUND SEEKS LONG-TERM CAPITAL
APPRECIATION. UNDER NORMAL MARKET CONDITIONS, THE FUND WILL INVEST AT LEAST 75%
OF ITS TOTAL ASSETS IN THE EQUITY SECURITIES OF COMPANIES LOCATED IN ANY
DEVELOPED COUNTRY OUTSIDE THE U.S. EFFECTIVE AUGUST 1, 1999, THE FUND'S BOARD OF
TRUSTEES APPROVED A CHANGE IN THE FUND'S NAME AND INVESTMENT FOCUS. BEFORE THAT
DATE, THE FUND'S NAME WAS TEMPLETON GREATER EUROPEAN FUND.
- -------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to bring you this semiannual report of Templeton International
Fund, which covers the six months ended September 30, 1999. Effective August 1,
1999, the Fund began investing in other areas of the world, excluding the U.S.
Many of the investments that hurt our performance last year helped it during the
six months under review and the Fund's Class A shares posted a six-month
cumulative total return of 11.70%, as shown in the Performance Summary on page
The Fund's new benchmark, the Morgan Stanley Capital International(R) Europe,
Australasia, Far East
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter............. 1
Performance Summary............ 6
Financial Highlights &
Statement of Investments....... 8
Financial Statements........... 16
Notes to Financial Statements.. 19
Change in Independent
Auditor........................ 23
</TABLE>
[PYRAMID GRAPHIC]
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 11 of
this report.
<PAGE>
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
9/30/99
[PIE CHART]
[THIS CHART SHOWS IN PIE FORMAT THE GEOGRAPHIC DISTRIBUTION OF TEMPLETON
INTERNATIONAL FUND, BASED ON TOTAL NET ASSETS AS OF 9/30/99.]
Europe 61.9%
Asia 13.0%
Australia/ 4.1%
New Zealand
North America 3.3%
Short-Tem Investments & 17.7%
Other Net Assets
(MSCI EAFE) Index provided a return of only 6.16% for the same period.(1)
In Europe, we continued to find opportunities in the U.K. market. During the
reporting period, U.K. stocks were generally priced lower than continental
European stocks as investor enthusiasm for the introduction of the euro helped
push continental European stock prices higher. On September 30, 1999, U.K.
holdings represented almost one-half of our total European exposure. In our
opinion, many of our European holdings may be well positioned to benefit from
two major trends. The first is the possibility of lower taxes. The impact of
lower taxes in the U.S. over the last 10 years has been very visible, with
almost one-half of the earnings growth the result of lower taxes and reduced
interest costs.
Although Europe has introduced a common currency, the euro, and interest rates
declined and converged, the region does not enjoy a common level of taxation. We
believe this may improve in the future. A recent report released by Bloomberg in
June of 1999 indicated that the German government was discussing a plan to cut
corporate tax rates to a unified rate of 25% in 2001, from as high as 40%. In
our opinion, these discussions may spread across Europe. Lower taxes would not
only allow more cash flow for corporations, but also boost consumer disposable
income and provide a more competitive environment for European companies.
1. Source: Morgan Stanley Capital International. The unmanaged MSCI EAFE
includes approximately 1,000 companies representing the stock markets of 20
countries in Europe, Australia, New Zealand and the Far East. The Fund's old
benchmark, the MSCI Europe Index, returned 0.15%. The unmanaged MSCI Europe
Index measures the performance of approximately 600 companies representing 15
European countries: Austria, Belgium, Denmark, Finland, France, Germany,
Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and
the United Kingdom. Both indexes include reinvested dividends. One cannot invest
directly in an index, nor is an index representative of the Fund's portfolio.
2
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We also believe the current boom in European buyouts and acquisitions may
continue to boost share prices. We estimate that in 1994 less than $20 billion
was utilized for corporate buyouts in Europe, a figure expected to exceed $150
billion in 1999. In our opinion, corporate activity of this nature helps to
increase the attractiveness of value investing.
Among the Fund's larger European holdings on September 30, 1999, were General
Electric Co. PLC in the United Kingdom, Koninklijke Philips Electronics NV in
the Netherlands, ABB Ltd. in Switzerland, Alcatel SA in France and UPM-Kymmene
Corp. in Finland. Each of these holdings contributed positively to the Fund's
performance.
Asian holdings continued to bolster Fund performance during the reporting
period. As the economic situation in the region appeared to stabilize early in
1999, investor attention was drawn to the attractive valuations of many Asian
companies. An important issue for investors in the region is the future
direction of the Japanese economy. In our opinion, recent reports from Japan are
encouraging. Many investors are anticipating an economic turnaround in the
region, which has boosted the Japanese stock market and added to the stability
of non-Japan Asia. During the reporting period, our Japanese holdings benefited
from this perception and appreciated in value. As of September 30, 1999, our
largest Asian positions were Sony Corp., Hitachi Ltd., and Fuji Photo Film Co.
Ltd.
In Hong Kong, retail sales turned around, and foreign exchange reserves began to
build. Tourism also increased after dropping for most of 1998. Hong Kong's Hang
Seng Index rose after reaching a low in August of last year, and the Fund
benefited from this rebound. At the end of the period under review, some
TOP 10 COUNTRIES
9/30/99
[THIS CHART LISTS THE TOP 10 COUNTRIES REPRESENTED IN TEMPLETON INTERNATIONAL
FUND, BASED ON TOTAL NET ASSETS AS OF 9/30/99.]
<TABLE>
<CAPTION>
% OF TOTAL
COUNTRY NET ASSETS
<S> <C>
United Kingdom 26.4%
Japan 9.8%
France 6.1%
Germany 5.8%
Sweden 5.6%
Netherlands 5.3%
Australia 3.7%
Norway 3.6%
Finland 2.8%
Switzerland 2.4%
</TABLE>
3
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TOP 10 INDUSTRIES
9/30/99
[THIS CHART LISTS THE TOP 10 INDUSTRIES REPRESENTED IN TEMPLETON INTERNATIONAL
FUND, BASED ON TOTAL NET ASSETS AS OF 9/30/99.]
<TABLE>
<CAPTION>
% OF TOTAL
INDUSTRY NET ASSETS
<S> <C>
Electrical & Electronics 9.4%
Machinery & Engineering 6.7%
Utilities Electrical & Gas 5.7%
Chemicals 5.1%
Transportation 5.0%
Automobiles 5.0%
Energy Sources 4.5%
Banking 4.4%
Industrial Components 4.0%
Merchandising 3.8%
</TABLE>
of the Fund's holdings in Hong Kong were Hong Kong & Shanghai Bank (HSBC
Holdings PLC) and Hutchison Whampoa Ltd. The economies of other Asian countries
also showed improvement during the period, and Singapore Airlines Ltd., another
important Asian holding, was a benefactor of this rebound.
In our opinion, a remaining concern for investors in Asia is the potential for
the devaluation of China's currency. We believe that the probability of this
occurring has increased. However, we believe a properly executed devaluation
could improve China's competitive position and benefit Hong Kong, which is a
major exporter of Chinese goods and has its own productive capacity in mainland
China. In our opinion, China has the financial strength to maintain an orderly
devaluation.
Looking forward, we remain optimistic about the potential for global equity
markets and Templeton International Fund. The Fund's holdings could benefit from
what appears to be a return to value-based investing. Although during most of
the 1980s and 1990s, value investing provided above-average returns for
investors, there have been a few years during this period when value investing
underperformed, as it did in 1998. However, since March 1999, investor attention
appears to be turning once again toward stocks that are cheap on the basis of
price-to-book, price-to-sales, price-to-cash-flow, or price-to-earning models.
We believe the Fund is well positioned in these types of securities.
Please remember that there are special risks associated with global investing
related to market, currency, economic, social, political, and other factors.
Investing in certain foreign markets means accepting a certain amount of
volatility and, in some cases, the consequences of severe market corrections.
For
4
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example, Hong Kong's equity market has increased 1,175% in the last 15 years,
but has suffered six declines of more than 15% during that time. (2) While
short-term volatility can be disconcerting, declines in excess of 50% are not
unusual in some markets. These risks and other considerations are discussed in
the Fund's prospectus.
This discussion reflects our views, opinions and portfolio holdings as of
September 30, 1999, the end of the reporting
period. However, market and economic conditions are changing constantly, which
can be expected to affect our investment strategies and the Fund's portfolio
composition. Although past performance is not predictive of future results,
these insights may help you understand our investment and management philosophy.
We appreciate your investment in the Fund and would like to reaffirm our
dedication to searching the world for the best possible securities for inclusion
in the Fund's portfolio.
Sincerely,
/s/MARK G. HOLOWESKO
- ---------------------
Mark G. Holowesko, CFA
/s/JEFFREY A. EVERETT
- ----------------------
Jeffrey A. Everett, CFA
/s/RICHARD SEAN FARRINGTON
- ---------------------------
Richard Sean Farrington, CFA
The Portfolio Management Team
Templeton International Fund
2. Source: Hong Kong Hang Seng Index. Based on quarterly percentage price change
over 15 years ended September 30, 1999. Returns are measured in U.S. dollar
terms and do not include reinvested dividends.
TOP 10 HOLDINGS
9/30/99
[THIS CHART LISTS THE TOP 10 HOLDINGS, INCLUDING INDUSTRY AND COUNTRY,OF
TEMPLETON INTERNATIONAL FUND, BASED ON TOTAL NET ASSETS AS OF 9/30/99.]
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- ----------------------------------------------
<S> <C>
Sony Corp.,
Appliances & Household
Durables, Japan 2.3%
ABB Ltd.,
Electrical & Electronics,
Switzerland 2.1%
Hitachi Ltd.,
Electrical & Electronics,
Japan 2.1%
Norsk Hydro ASA,
Energy Sources,
Norway 1.9%
Fuji Photo Film Co. Ltd.,
Electrical & Electronics, Japan 1.6%
Koninklijke Philips Electronics NV,
Electrical & Electronics,
Netherlands 1.6%
National Australia Bank Ltd.,
Banking, Australia 1.5%
Laird Group PLC,
Machinery & Engineering,
United Kingdom 1.5%
Sandvik AB,
Industrial Components,
Sweden 1.4%
Iberdrola SA, Br.,
Utilities Electrical &
Gas, Spain 1.3%
</TABLE>
5
<PAGE>
CLASS A (formerly Class I):
Subject to the maximum 5.75% initial sales charge.
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.
The Fund's Investment Manager and Fund Administrator had agreed in advance to
waive a portion of their respective fees through July 31, 1999 and, in the case
of the Fund Administrator, to make certain payments to reduce expenses, which
increases total return to shareholders. If they had not taken this action, total
returns would have been lower.
PERFORMANCE SUMMARY AS OF 9/30/99
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities, as well as the
level of each class'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
<TABLE>
<CAPTION>
CLASS A CHANGE 9/30/99 3/31/99
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value +$0.87 $13.48 $12.61
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS (4/1/99 - 9/30/99)
--------------------------------
<S> <C>
Dividend Income $0.0731
Short-Term Capital Gain $0.1303
TOTAL $0.2034
</TABLE>
<TABLE>
<CAPTION>
CLASS C CHANGE 9/30/99 3/31/99
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value +$0.84 $13.33 $12.49
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS (4/1/99 - 9/30/99)
--------------------------------
<S> <C>
Dividend Income $0.0524
Short-Term Capital Gain $0.1303
TOTAL $0.1827
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS CHANGE 9/30/99 3/31/99
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value +$0.89 $13.55 $12.66
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS (4/1/99 - 9/30/99)
--------------------------------
<S> <C>
Dividend Income $0.0855
Short-Term Capital Gain $0.1303
TOTAL $0.2158
</TABLE>
Past performance is not predictive of future results.
6
<PAGE>
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 6-MONTH 1-YEAR 3-YEAR (5/8/95)
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) 11.70% 26.61% 51.81% 68.24%
Average Annual Total Return(2) 5.27% 19.30% 12.70% 11.05%
Value of $10,000 Investment(3) $10,527 $11,930 $14,309 $15,857
</TABLE>
<TABLE>
<CAPTION>
9/30/96 9/30/97 9/30/98 9/30/99
----------------------------------------
<S> <C> <C> <C> <C>
One-Year
Total Return(4) 12.16% 30.18% -7.89% 26.61%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 6-MONTH 1-YEAR 3-YEAR (5/8/95)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) 11.39% 25.93% 49.21% 63.47%
Average Annual Total Return(2) 9.25% 23.64% 13.89% 11.57%
Value of $10,000 Investment(3) $10,925 $12,364 $14,773 $16,185
</TABLE>
<TABLE>
<CAPTION>
9/30/96 9/30/97 9/30/98 9/30/99
-----------------------------------------
<S> <C> <C> <C> <C>
One-Year
Total Return(4) 11.11% 29.39% -8.43% 25.93%
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
ADVISOR CLASS(5) 6-MONTH 1-YEAR 3-YEAR (5/8/95)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) 11.92% 27.12% 55.18% 71.96%
Average Annual Total Return(2) 11.92% 27.12% 15.77% 13.12%
Value of $10,000 Investment(3) $11,192 $12,712 $15,518 $17,196
</TABLE>
<TABLE>
<CAPTION>
9/30/96 9/30/97 9/30/98 9/30/99
-----------------------------------------
<S> <C> <C> <C> <C>
One-Year
Total Return(4) 12.16% 30.65% -7.53% 27.12%
</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 applicable, maximum
sales charge(s) for that class. Six-month returns have not been annualized.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include the 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 only to that class.
Since January 2, 1997 (commencement of sales), the cumulative and average annual
total returns of Advisor Class shares were 43.79% and 14.16%, 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. You may
have a gain or loss when you sell your shares.
Past performance is not predictive of future results.
7
<PAGE>
TEMPLETON INTERNATIONAL FUND
Financial Highlights
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, 1999 --------------------------------------------
(UNAUDITED)++ 1999 1998 1997 1996+
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period................ $12.61 $14.26 $12.35 $10.39 $10.00
--------------------------------------------------------------------
Income from investment operations:
Net investment income.............................. .23 .21 .23 .14 .08
Net realized and unrealized gains (losses)......... 1.23 (1.24) 2.99 2.09 .31
--------------------------------------------------------------------
Total from investment operations.................... 1.46 (1.03) 3.22 2.23 .39
--------------------------------------------------------------------
Less distributions from:
Net investment income.............................. (.08) (.22) (.23) (.13) --
Net realized gains................................. (.51) (.40) (1.08) (.14) --
--------------------------------------------------------------------
Total distributions................................. (.59) (.62) (1.31) (.27) --
--------------------------------------------------------------------
Net asset value, end of period...................... $13.48 $12.61 $14.26 $12.35 $10.39
====================================================================
Total Return*....................................... 11.70% (7.12)% 28.25% 21.70% 3.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)................... $48,413 $39,509 $19,455 $9,268 $4,308
Ratios to average net assets:
Expenses........................................... 1.92%** 1.73% 1.85% 1.85% 1.85%**
Expenses, excluding waiver and payments by
affiliate........................................ 1.92%** 1.73% 2.41% 2.63% 3.56%**
Net investment income.............................. 3.36%** 1.91% 2.04% 1.72% 1.39%**
Portfolio turnover rate............................. 37.46% 38.57% 27.59% 30.58% 9.86%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
+For the period May 8, 1995 (commencement of operations) to March 31, 1996.
++Based on average weighted shares outstanding.
8
<PAGE>
TEMPLETON INTERNATIONAL FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, 1999 ------------------------------------------
(UNAUDITED)++ 1999 1998 1997 1996+
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period............. $12.49 $14.16 $12.27 $10.32 $10.00
------------------------------------------------------------------
Income from investment operations:
Net investment income........................... .18 .11 .12 .11 .07
Net realized and unrealized gains (losses)...... 1.22 (1.22) 3.01 2.02 .25
------------------------------------------------------------------
Total from investment operations................. 1.40 (1.11) 3.13 2.13 .32
------------------------------------------------------------------
Less distributions from:
Net investment income........................... (.05) (.16) (.16) (.04) --
Net realized gains.............................. (.51) (.40) (1.08) (.14) --
------------------------------------------------------------------
Total distributions.............................. (.56) (.56) (1.24) (.18) --
------------------------------------------------------------------
Net asset value, end of period................... $13.33 $12.49 $14.16 $12.27 $10.32
==================================================================
Total Return*.................................... 11.39% (7.73)% 27.55% 20.83% 3.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)................ $15,534 $14,222 $5,929 $2,424 $1,431
Ratios to average net assets:
Expenses........................................ 2.53%** 2.37% 2.50% 2.50% 2.50%**
Expenses, excluding waiver and payments by
affiliate..................................... 2.53%** 2.37% 3.05% 3.29% 4.21%**
Net investment income........................... 2.70%** 1.26% 1.31% 1.45% 1.06%**
Portfolio turnover rate.......................... 37.46% 38.57% 27.59% 30.58% 9.86%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
**Annualized.
+For the period May 8, 1995 (commencement of operations) to March 31, 1996.
++Based on average weighted shares outstanding.
9
<PAGE>
TEMPLETON INTERNATIONAL FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
ADVISOR CLASS
------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, 1999 ------------------------------
(UNAUDITED)++ 1999 1998 1997+
------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period........................ $12.66 $14.30 $12.36 $11.56
------------------------------------------------------
Income from investment operations:
Net investment income...................................... .24 .74 .56 .07
Net realized and unrealized gains (losses)................. 1.25 (1.73) 2.73 .73
------------------------------------------------------
Total from investment operations............................ 1.49 (.99) 3.29 .80
------------------------------------------------------
Less distributions from:
Net investment income...................................... (.09) (.25) (.27) --
Net realized gains......................................... (.51) (.40) (1.08) --
------------------------------------------------------
Total distributions......................................... (.60) (.65) (1.35) --
------------------------------------------------------
Net asset value, end of period.............................. $13.55 $12.66 $14.30 $12.36
======================================================
Total Return*............................................... 11.92% (6.76)% 28.88% 6.92%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)........................... $195 $265 $83 $36
Ratios to average net assets:
Expenses................................................... 1.57%** 1.38% 1.50% 1.50%**
Expenses, excluding waiver and payments by affiliate....... 1.57%** 1.38% 2.06% 1.90%**
Net investment income...................................... 3.53%** 2.49% 2.38% 2.56%**
Portfolio turnover rate..................................... 37.46% 38.57% 27.59% 30.58%
</TABLE>
*Total return is not annualized.
**Annualized.
+For the period January 2, 1997 (effective date) to March 31, 1997.
++Based on average weighted shares outstanding.
See Notes to Financial Statements.
10
<PAGE>
TEMPLETON INTERNATIONAL FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 79.5%
AEROSPACE & MILITARY TECHNOLOGY 1.2%
British Aerospace PLC....................................... United Kingdom 30,000 $ 197,498
Rolls-Royce PLC............................................. United Kingdom 162,738 563,481
-----------
760,979
-----------
APPLIANCES & HOUSEHOLD DURABLES 2.3%
Sony Corp. ................................................. Japan 10,000 1,494,318
-----------
AUTOMOBILES 3.6%
Autoliv Inc., SDR........................................... Sweden 3,900 146,999
Bayerische Motorenwerke AG.................................. Germany 26,000 737,905
Regie Nationale des Usines Renault SA....................... France 15,000 829,065
Volvo AB, B................................................. Sweden 21,142 597,020
-----------
2,310,989
-----------
BANKING 4.0%
Australia & New Zealand Banking Group Ltd. ................. Australia 55,000 367,904
Banco Popular Espanol SA.................................... Spain 973 67,197
*Deutsche Bank AG, Br. ..................................... Germany 3,000 199,103
HSBC Holdings PLC........................................... Hong Kong 48,000 549,963
National Australia Bank Ltd. ............................... Australia 50,000 731,925
Unidanmark AS, A............................................ Denmark 4,725 320,181
Union Bank of Norway........................................ Norway 10,000 218,639
Westpac Banking Corp. Ltd. ................................. Australia 20,000 123,381
-----------
2,578,293
-----------
BUILDING MATERIALS & COMPONENTS 3.1%
Anglian Group PLC........................................... United Kingdom 70,400 308,975
Caradon PLC................................................. United Kingdom 261,800 657,496
CSR Ltd..................................................... Australia 90,000 227,360
Hepworth PLC................................................ United Kingdom 38,500 132,514
Heywood Williams Group PLC.................................. United Kingdom 175,700 674,189
-----------
2,000,534
-----------
BUSINESS & PUBLIC SERVICES 1.2%
Kardex AG, Br............................................... Switzerland 800 226,576
Lex Service PLC............................................. United Kingdom 59,700 560,406
-----------
786,982
-----------
CHEMICALS 5.1%
Akzo Nobel NV............................................... Netherlands 10,000 425,980
BASF AG..................................................... Germany 15,000 642,166
Cookson Group PLC........................................... United Kingdom 172,638 585,676
DSM NV, Br.................................................. Netherlands 15,192 605,085
Imperial Chemical Industries PLC............................ United Kingdom 67,600 746,448
Kemira OY................................................... Finland 50,000 279,550
-----------
3,284,905
-----------
</TABLE>
11
<PAGE>
TEMPLETON INTERNATIONAL FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
CONSTRUCTION & HOUSING .1%
Hollandsche Beton Groep NV.................................. Netherlands 7,233 $ 73,947
-----------
ELECTRICAL & ELECTRONICS 9.4%
*ABB Ltd.................................................... Switzerland 13,097 1,343,569
Alcatel SA.................................................. France 5,000 689,023
Fuji Photo Film Co. Ltd..................................... Japan 30,000 1,028,459
General Electric Co. PLC.................................... United Kingdom 63,000 605,909
Hitachi Ltd. ............................................... Japan 120,000 1,329,952
Koninklijke Philips Electronics NV.......................... Netherlands 10,120 1,021,689
-----------
6,018,601
-----------
ELECTRONIC COMPONENTS & INSTRUMENTS .1%
BICC PLC.................................................... United Kingdom 47,432 84,753
-----------
ENERGY EQUIPMENT & SERVICES .6%
TransCanada PipeLines Ltd. ................................. Canada 30,000 392,991
-----------
ENERGY SOURCES 4.6%
Fortum Corp................................................. Finland 10,450 50,970
Norsk Hydro ASA............................................. Norway 28,641 1,211,770
*Renaissance Energy Ltd. ................................... Canada 20,000 285,811
Shell Transport & Trading Co. PLC........................... United Kingdom 84,000 627,351
Societe Elf Aquitaine SA, Br. .............................. France 4,020 732,497
-----------
2,908,399
-----------
FINANCIAL SERVICES 1.6%
AXA SA...................................................... France 2,500 316,290
Nomura Securities Co. Ltd. ................................. Japan 45,000 697,380
-----------
1,013,670
-----------
FOOD & HOUSEHOLD PRODUCTS 1.1%
Northern Foods PLC.......................................... United Kingdom 71,019 124,267
Tate & Lyle PLC............................................. United Kingdom 97,000 597,444
-----------
721,711
-----------
FOREST PRODUCTS & PAPER 3.3%
Assidoman AB................................................ Sweden 4,800 85,484
Assidoman AB, 144A.......................................... Sweden 1,440 25,645
Carter Holt Harvey Ltd. .................................... New Zealand 200,000 240,643
Mo Och Domsjoe AB, B........................................ Sweden 18,131 540,745
Stora Enso OYJ, A........................................... Finland 27,500 364,320
Stora Enso OYJ, R........................................... Finland 12,200 161,755
Svenska Cellulosa AB, B..................................... Sweden 4,500 119,938
*Svenska Cellulosa AB, rts., 10/23/99....................... Sweden 4,500 7,182
UPM-Kymmene Corp. .......................................... Finland 16,200 552,071
-----------
2,097,783
-----------
</TABLE>
12
<PAGE>
TEMPLETON INTERNATIONAL FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
HEALTH & PERSONAL CARE .9%
Merck KGAA.................................................. Germany 3,860 $ 139,764
Rhone-Poulenc SA, A......................................... France 8,000 413,201
-----------
552,965
-----------
INDUSTRIAL COMPONENTS 4.0%
Michelin SA, B.............................................. France 16,002 755,273
Sandvik AB, A............................................... Sweden 21,900 594,383
Sandvik AB, B............................................... Sweden 11,000 300,561
SKF AB, A................................................... Sweden 26,000 551,842
SKF AB, B................................................... Sweden 8,000 179,556
Sylea SA.................................................... France 3,300 186,787
-----------
2,568,402
-----------
INSURANCE 1.0%
Ace Ltd. ................................................... Bermuda 4,000 67,750
Partnerre Ltd. ............................................. Bermuda 3,500 121,625
XL Capital Ltd., A.......................................... Bermuda 10,000 450,000
-----------
639,375
-----------
LEISURE & TOURISM .2%
Rank Group PLC.............................................. United Kingdom 36,000 127,170
-----------
MACHINERY & ENGINEERING 6.7%
Bullough PLC................................................ United Kingdom 584,800 645,262
Invensys PLC................................................ United Kingdom 129,551 631,519
Laird Group PLC............................................. United Kingdom 186,500 933,698
Mckechnie Group PLC......................................... United Kingdom 78,400 559,705
METSO OYJ................................................... Finland 32,239 364,273
VA Technologie AG, Br. ..................................... Austria 4,900 393,666
Vickers Group PLC........................................... United Kingdom 190,000 766,608
-----------
4,294,731
-----------
MERCHANDISING 3.8%
Gucci Group NV.............................................. Netherlands 5,600 467,600
House of Fraser PLC......................................... United Kingdom 231,400 297,243
Marks & Spencer PLC......................................... United Kingdom 120,000 621,027
Moebel Walther AG........................................... Germany 5,600 72,757
Safeway PLC................................................. United Kingdom 150,000 545,313
Somerfield PLC.............................................. United Kingdom 90,000 191,940
Storehouse.................................................. United Kingdom 178,312 259,149
-----------
2,455,029
-----------
METALS & MINING 2.8%
Alcan Aluminum Ltd. ........................................ Canada 16,000 501,939
Billiton PLC................................................ United Kingdom 112,450 469,452
</TABLE>
13
<PAGE>
TEMPLETON INTERNATIONAL FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
METALS & MINING (CONT.)
British Steel PLC........................................... United Kingdom 180,000 $ 456,507
Elkem ASA, A................................................ Norway 21,100 381,038
-----------
1,808,936
-----------
MISC MATERIALS & COMMODITIES .5%
Agrium Inc.................................................. Canada 30,000 298,125
-----------
MULTI-INDUSTRY 3.4%
Broken Hill Proprietary Co. Ltd. ........................... Australia 20,000 230,368
Cheung Kong Infrastructure Holdings Ltd. ................... Hong Kong 23,000 45,450
Elementis PLC............................................... United Kingdom 48,983 82,281
Hutchison Whampoa Ltd. ..................................... Hong Kong 30,000 279,037
Inchcape PLC................................................ United Kingdom 33,150 181,795
Pacific Dunlop Ltd. ........................................ Australia 130,000 195,128
Pilkington PLC.............................................. United Kingdom 424,900 713,741
Saab AB, B.................................................. Sweden 58,700 472,579
-----------
2,200,379
-----------
REAL ESTATE .8%
Wereldhave NV............................................... Netherlands 10,920 519,828
-----------
RECREATION & OTHER CONSUMER GOODS 1.3%
*Fila Holding SpA, ADR...................................... Italy 4,400 55,000
Nintendo Co. Ltd. .......................................... Japan 5,000 796,468
-----------
851,468
-----------
TELECOMMUNICATIONS 1.3%
Nippon Telegraph & Telephone Corp. ......................... Japan 65 799,756
-----------
TEXTILES & APPAREL .8%
Adidas-Salomon AG........................................... Germany 6,000 512,455
-----------
TRANSPORTATION 5.0%
British Airways PLC......................................... United Kingdom 140,000 788,512
Koninklijke Nedlloyd Groep NV............................... Netherlands 6,250 171,391
Kvaerner ASA, A............................................. Norway 25,760 515,034
Peninsular & Oriental Steam Navigation Co. ................. United Kingdom 40,300 608,595
*Seino Transportation Co. Ltd. ............................. Japan 20,000 135,249
Singapore Airlines Ltd. .................................... Singapore 55,000 536,901
Transport Development Group PLC............................. United Kingdom 22,608 88,426
Vosper Thornycroft Holdings PLC............................. United Kingdom 23,000 371,200
-----------
3,215,308
-----------
UTILITIES ELECTRICAL & GAS 5.7%
CLP Holdings Ltd. .......................................... Hong Kong 50,000 234,944
Electrabel SA............................................... Belgium 1,486 514,951
Endesa SA................................................... Spain 5,725 108,768
</TABLE>
14
<PAGE>
TEMPLETON INTERNATIONAL FUND
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 1999 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
UTILITIES ELECTRICAL & GAS (CONT.)
Hong Kong Electric Holdings Ltd. ........................... Hong Kong 147,400 $ 457,316
Iberdrola SA, Br. .......................................... Spain 58,200 862,764
National Power PLC.......................................... United Kingdom 80,000 623,827
Powergen PLC................................................ United Kingdom 50,000 510,523
Veba AG..................................................... Germany 6,000 335,460
-----------
3,648,553
-----------
TOTAL COMMON STOCKS (COST $51,740,771)...................... 51,021,335
-----------
PREFERRED STOCKS 2.8%
Ballast Nedam NV, pfd. ..................................... Netherlands 5,000 117,411
Baumax AG, pfd. ............................................ Austria 6,953 111,810
BBS Kraftfahrzeugtechnik AG, pfd. .......................... Germany 15,000 327,472
National Australia Bank Ltd., 7.875%, cvt., pfd. ........... Australia 9,000 246,375
News Corp. Ltd., ADR, pfd. ................................. Australia 9,511 253,825
Prosieben Media AG, pfd. ................................... Germany 4,000 175,504
Volkswagen AG, pfd. ........................................ Germany 18,000 569,323
-----------
TOTAL PREFERRED STOCKS (COST $2,455,438).................... 1,801,720
-----------
PRINCIPAL
AMOUNT**
-----------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (COST $4,988,222) 7.8%
U.S. Treasury Bills, 4.47% to 4.875%, with maturities to
3/09/00................................................... United States $ 5,056,000 4,990,488
-----------
TOTAL INVESTMENTS (COST $59,184,431) 90.1%.................. 57,813,543
OTHER ASSETS, LESS LIABILITIES 9.9%......................... 6,328,034
-----------
TOTAL NET ASSETS 100.0%..................................... $64,141,577
===========
</TABLE>
*Non-income producing.
**Securities denominated in U.S. dollars.
See Notes to Financial Statements.
15
<PAGE>
TEMPLETON INTERNATIONAL FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $59,184,431)..... $57,813,543
Receivables:
Investment securities sold................................ 25,906
Fund shares sold.......................................... 7,125,707
Dividends and interest.................................... 208,611
Other assets............................................... 5,385
-----------
Total assets.......................................... 65,179,152
-----------
Liabilities:
Payables:
Investment securities purchased........................... 159,402
Fund shares redeemed...................................... 97,808
To affiliates............................................. 113,220
Funds advanced by custodian................................ 616,628
Accrued expenses........................................... 50,517
-----------
Total liabilities..................................... 1,037,575
-----------
Net assets, at value........................................ $64,141,577
===========
Net assets consist of:
Undistributed net investment income........................ $ 902,748
Net unrealized depreciation................................ (1,370,888)
Accumulated net realized gain.............................. 326,915
Beneficial shares.......................................... 64,282,802
-----------
Net assets, at value........................................ $64,141,577
===========
CLASS A:
Net asset value per share ($48,412,923 divided by 3,591,833
shares outstanding)........................................ $13.48
===========
Maximum offering price per share
($13.48 divided by 94.25%)................................. $14.30
===========
CLASS C:
Net asset value per share ($15,533,828 divided by 1,165,340
shares outstanding)*....................................... $13.33
===========
Maximum offering price per share
($13.33 divided by 99.00%)................................. $13.46
===========
ADVISOR CLASS:
Net asset value and maximum offering price per share
($194,826 divided by 14,376 shares outstanding).......... $13.55
===========
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
16
<PAGE>
TEMPLETON INTERNATIONAL FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $164,347)
Dividends.................................................. $1,356,890
Interest................................................... 168,015
----------
Total investment income............................... $1,524,905
Expenses:
Management fees (Note 3)................................... 216,976
Administrative fees (Note 3)............................... 43,395
Distribution fees (Note 3)
Class A................................................... 75,550
Class C................................................... 72,462
Transfer agent fees (Note 3)............................... 75,400
Custodian fees............................................. 9,800
Reports to shareholders.................................... 31,800
Registration and filing fees............................... 46,600
Professional fees.......................................... 18,300
Trustees' fees and expenses................................ 4,200
Other...................................................... 6,999
----------
Total expenses........................................ 601,482
----------
Net investment income........................... 923,423
----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... 459,714
Foreign currency transactions............................. (54,025)
----------
Net realized gain..................................... 405,689
Net unrealized appreciation on investments............ 5,134,332
----------
Net realized and unrealized gain............................ 5,540,021
----------
Net increase in net assets resulting from operations........ $6,463,444
==========
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
TEMPLETON INTERNATIONAL FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, 1999 YEAR ENDED
(UNAUDITED) MARCH 31, 1999
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 923,423 $ 1,000,258
Net realized gain from investments and foreign currency
transactions............................................ 405,689 3,641,321
Net unrealized appreciation (depreciation) on
investments.............................................. 5,134,332 (10,473,856)
---------------------------------------
Net increase (decrease) in net assets resulting from
operations............................................ 6,463,444 (5,832,277)
Distributions to shareholders from:
Net investment income:
Class A.................................................. (221,178) (731,302)
Class C.................................................. (57,220) (182,376)
Advisor Class............................................ (1,112) (10,692)
Net realized gains:
Class A.................................................. (1,548,793) (1,305,179)
Class C.................................................. (556,063) (437,976)
Advisor Class............................................ (6,672) (17,826)
Fund share transactions (Note 2):
Class A.................................................. 5,835,876 26,750,423
Class C.................................................. 324,564 10,148,300
Advisor Class............................................ (87,377) 148,524
---------------------------------------
Net increase in net assets.............................. 10,145,469 28,529,619
Net assets:
Beginning of period........................................ 53,996,108 25,466,489
---------------------------------------
End of period.............................................. $64,141,577 $53,996,108
=======================================
Undistributed net investment income included in net assets:
End of period.............................................. $ 902,748 $ 258,835
=======================================
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
TEMPLETON INTERNATIONAL FUND
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton International Fund is a separate, diversified series of Templeton
Global Investment Trust (the Trust), which is an open-end investment company
registered under the Investment Company Act of 1940. Effective August 1, 1999,
the Fund's investment policies were modified to require, under normal market
conditions, at least 75% of the Fund's total assets to be invested in any
developed country outside the U.S. and the Fund's name changed from Templeton
Greater European Fund to Templeton International Fund. The following summarizes
the Fund's 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 Fund purchases or sells foreign securities it 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 Fund does 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.
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
19
<PAGE>
TEMPLETON INTERNATIONAL FUND
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONT.)
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
Common expenses incurred by the Trust are allocated among the funds comprising
the Trust based on the ratio of net assets of each fund to the combined net
assets. Other expenses are charged to each fund on a specific identification
basis.
d. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. BENEFICIAL SHARES
The Fund offers three classes of shares: Class A, Class C, and Advisor Class
shares. Effective January 1, 1999, Class I and Class II shares were renamed
Class A and Class C, respectively. 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 September 30, 1999, 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>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold.............................................. 9,064,637 $ 122,622,085 11,427,434 $ 148,355,385
Shares issued on reinvestment of distributions........... 122,444 1,599,117 152,278 1,853,465
Shares redeemed.......................................... (8,727,253) (118,385,326) (9,812,112) (123,458,427)
---------------------------------------------------------------
Net increase............................................. 459,828 $ 5,835,876 1,767,600 $ 26,750,423
===============================================================
</TABLE>
20
<PAGE>
TEMPLETON INTERNATIONAL FUND
Notes to Financial Statements (unaudited) (continued)
2. BENEFICIAL SHARES (CONT.)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES:
Shares sold.............................................. 530,838 $ 7,089,165 1,614,772 $ 21,466,567
Shares issued on reinvestment of distributions........... 41,267 533,991 44,862 540,863
Shares redeemed.......................................... (545,220) (7,298,592) (939,952) (11,859,130)
---------------------------------------------------------------
Net increase............................................. 26,885 $ 324,564 719,682 $ 10,148,300
===============================================================
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
ADVISOR CLASS SHARES:
Shares sold.............................................. 2,240 $ 30,803 796,091 $ 11,069,182
Shares issued on reinvestment of distributions........... 486 6,371 1,992 27,214
Shares redeemed.......................................... (9,248) (124,551) (782,998) (10,947,872)
---------------------------------------------------------------
Net increase (decrease).................................. (6,522) $ (87,377) 15,085 $ 148,524
===============================================================
</TABLE>
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton Global
Advisors Ltd. (TGAL), Franklin Templeton Services, Inc. (FT Services),
Franklin/Templeton Distributors, Inc. (Distributors) and Franklin/Templeton
Investor Services, Inc. (Investor Services), the Fund's investment manager,
administrative manager, principal underwriter and transfer agent, respectively.
The Fund pays an investment management fee to TGAL of 0.75% per year of the
average daily net assets of the Fund. The Fund pays its allocated share of an
administrative fee to FT Services based on the Trust's aggregate average daily
net assets as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- -----------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
</TABLE>
TGAL and FT Services agreed in advance to reduce fees to the extent necessary to
limit total expenses to an annual rate of 1.85%, 2.50%, and 1.50% of the Fund's
average daily net assets of Class A, Class C, and Advisor Class shares,
respectively, through July 31, 1999. For the six months ended September 30,
1999, no reimbursement was necessary under the agreement.
21
<PAGE>
TEMPLETON INTERNATIONAL FUND
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
The Fund reimburses Distributors up to 0.35% and 1.00% per year of the average
daily net assets of Class A and Class C shares, respectively, for costs incurred
in marketing the Fund's Class A and Class C shares. Under the Class A
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At September 30, 1999, the unreimbursed costs were $238,986.
Distributors received net commissions on sales of Fund shares and received
contingent deferred sales charges for the period of $5,717 and $8,794,
respectively.
4. INCOME TAXES
No provision has been made for income taxes because the 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. At September 30, 1999, the net unrealized depreciation
based on the cost of investments for income tax purposes was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 5,243,582
Unrealized depreciation..................................... (6,614,470)
-----------
Net unrealized depreciation................................. $(1,370,888)
===========
</TABLE>
At March 31, 1999, the Fund had deferred currency losses occurring subsequent to
October 31, 1998 of $37,000. For tax purposes, such losses will be reflected in
the year ending March 31, 2000.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the six
months ended September 30, 1999 aggregated $18,498,266 and $20,593,755,
respectively.
22
<PAGE>
TEMPLETON INTERNATIONAL FUND
Change in Independent Auditor
On August 13, 1999, McGladrey & Pullen, LLP (McGladrey) resigned as independent
auditors of the Fund pursuant to an agreement by PricewaterhouseCoopers LLP
(PwC) to acquire McGladrey's investment company practice. The McGladrey partners
and professionals serving the Fund at the time of the acquisition joined PwC.
The reports of McGladrey on the financial statements of the Fund during the past
two fiscal years contained no adverse opinion or disclaimer of opinion, and were
not qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with its audits for the two most recent fiscal years
and through August 13, 1999, there were no disagreements with McGladrey on any
matter of accounting principle or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of McGladrey would have caused it to make reference to the subject
matter of disagreement in connection with its report. On October 21, 1999, the
Fund, with the approval of its Board of Directors and its Audit Committee,
engaged PwC as its independent auditors.
23
<PAGE>
This page intentionally left blank.
<PAGE>
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Templeton Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully
before investing or sending money. 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.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller
Companies Fund
Templeton Global
Opportunities Trust
Templeton Global
Smaller Companies Fund
Templeton International Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund*
Mutual European Fund
Templeton Global Bond Fund
GLOBAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Global
Currency Fund
Franklin Templeton Hard
Currency Fund
GROWTH
Franklin Aggressive Growth Fund
Franklin Biotechnology
Discovery Fund
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin Large Cap Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap
Growth Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund(1)
Franklin Convertible
Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund(7)
Franklin Natural Resources Fund
Franklin Real Estate
Securities Fund
Franklin Rising Dividends Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
FUND ALLOCATOR SERIES
Franklin Templeton Conservative
Target Fund
Franklin Templeton Moderate
Target Fund
Franklin Templeton Growth
Target Fund
INCOME
Franklin Adjustable U.S.
Government Securities Fund
Franklin's AGE High Income Fund
Franklin Bond Fund
Franklin Floating Rate Trust
Franklin Short-Intermediate
U.S. Government Securities Fund
Franklin Strategic Income Fund
Franklin U.S. Government
Securities Fund
Franklin Federal Money Fund(2)
Franklin Money Fund(2)
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free
Income Fund
Tax-Exempt Money Fund(2)
STATE-SPECIFIC
TAX-FREE INCOME
Alabama
Arizona(3)
California(3)
Colorado
Connecticut
Florida(3)
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(4)
Michigan(4)
Minnesota(4)
Missouri
New Jersey
New York(3)
North Carolina
Ohio(4)
Oregon
Pennsylvania
Tennessee(5)
Texas
Virginia
VARIABLE ANNUITIES(6)
Franklin(R) Valuemark(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*Effective November 15, 1999, the fund will be renamed Franklin Global
Communications Fund.
1. This fund is closed to new accounts, with the exception of retirement plan
accounts.
2. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
3. Two or more fund options available: long-term portfolio; portfolio of insured
securities; high yield portfolio (CA); intermediate-term and money market
portfolios (CA and NY).
4. Portfolio of insured municipal securities.
5. The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
6. Franklin Valuemark and Franklin Templeton Valuemark Income Plus are issued by
Allianz Life Insurance Company of North America or by its wholly owned
subsidiary, Preferred Life Insurance Company of New York, and distributed by
USAllianz Investor Services, LLC. Franklin Templeton Variable Insurance Products
Trust, formerly Franklin Valuemark Funds, is managed by Franklin Advisers, Inc.
and its Templeton and Franklin affiliates.
7. Franklin MicroCap Value Fund has reopened to new investors.
10/99
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[FRANKLIN TEMPLETON LOGO]
Templeton International Fund
777 Mariners Island Blvd., P.O. Box 7777
San Mateo, CA 94403-7777
SEMIANNUAL REPORT
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
1-800/DIAL BEN(R)
www.franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
This report must be preceded or accompanied by the current Templeton
International Fund prospectus, which contains more complete information,
including risk factors, 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.
[RECYCLING ARROWS LOGO] Printed on recycled paper
419 S99 11/99
