UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-6336
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FRANKLIN TEMPLETON INTERNATIONAL TRUST
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(Exact name of registrant as specified in charter)

ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
(Address of principal executive offices) (Zip code)

MURRAY L. SIMPSON, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
-----------------------------------------------------------------
(Name and address of agent for service)

Registrant's telephone number, including area code: (650) 312-2000
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Date of fiscal year end: 10/31
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Date of reporting period: 10/31/03
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ITEM 1. REPORTS TO STOCKHOLDERS.

OCTOBER 31, 2003
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A series of Franklin Templeton International Trust
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[GRAPHIC OMITTED]

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ANNUAL REPORT AND SHAREHOLDER LETTER | INTERNATIONAL
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WANT TO RECEIVE
THIS DOCUMENT
TEMPLETON FOREIGN FASTER VIA EMAIL?
SMALLER COMPANIES FUND ELIGIBLE SHAREHOLDERS CAN
SIGN UP FOR EDELIVERY AT
FRANKLINTEMPLETON.COM.
SEE INSIDE FOR DETAILS.
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[LOGO OMITTED]
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS
FRANKLIN o TEMPLETON o MUTUAL SERIES

Franklin Templeton Investments

GAIN FROM OUR PERSPECTIVE

Franklin Templeton's distinct multi-manager structure combines the
specialized expertise of three world-class investment management
groups--Franklin, Templeton and Mutual Series.

SPECIALIZED EXPERTISE

Each of our portfolio management groups operates autonomously, relying on its
own research and staying true to the unique investment disciplines that underlie
its success.

FRANKLIN. Founded in 1947, Franklin is a leader in tax-free investing and
a driving force in fixed income investing around the globe. They also
bring expertise in growth- and value-style U.S. equity investing.

TEMPLETON. Founded in 1940, Templeton pioneered international investing and, in
1954, launched what has become the industry's oldest global fund. Today, with
research offices in over 25 countries, they offer investors the broadest global
reach in the industry.

MUTUAL SERIES. Established in 1949, Mutual Series is dedicated to a unique style
of value investing, searching aggressively for opportunity among undervalued
stocks, arbitrage situations and distressed companies.

TRUE DIVERSIFICATION

Because our management groups work independently and adhere to distinctly
different investment approaches, Franklin, Templeton and Mutual Series funds
typically have a low overlap of securities. That's why our funds can be used to
build truly diversified portfolios covering every major asset class.

RELIABILITY YOU CAN TRUST

At Franklin Templeton Investments, we seek to consistently provide investors
with exceptional risk-adjusted returns over the long term, as well as the
reliable account services that have helped us become one of the most trusted
names in financial services.

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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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[PHOTO OMITTED]

Not part of the annual report

Contents

SHAREHOLDER LETTER ....................... 1

ANNUAL REPORT

Templeton Foreign Smaller
Companies Fund ........................... 3

Performance Summary ...................... 6

Financial Highlights and
Statement of Investments ................. 11

Financial Statements ..................... 19

Notes to Financial Statements ............ 23

Independent Auditors' Report ............. 28

Tax Designation .......................... 29

Board Members and Officers ............... 30

Proxy Voting Policies and Procedures ..... 35

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Annual Report

Templeton Foreign Smaller
Companies Fund

YOUR FUND'S GOAL AND PRIMARY INVESTMENTS: Templeton Foreign Smaller Companies
Fund seeks to provide long-term capital growth. Under normal market conditions,
the Fund invests at least 80% of its net assets in equity securities of smaller
companies -- those with market capitalizations of less than $2 billion at the
time of purchase -- located outside the United States.

We are pleased to bring you Templeton Foreign Smaller Companies Fund's annual
report covering the fiscal year ended October 31, 2003.

PERFORMANCE OVERVIEW

Templeton Foreign Smaller Companies Fund - Class A posted a +39.99%
cumulative total return for the year ended October 31, 2003, as shown in the
Performance Summary beginning on page 6. The Fund underperformed its most
relevant benchmark, the Citigroup (formerly, Salomon Brothers) Global ex-U.S.
less than $2 Billion Index, which had a 53.65% cumulative total return over the
same period. The Fund outperformed the broader Morgan Stanley Capital
International (MSCI) Europe Australasia Far East (EAFE) Index's 27.57% return. 1

ECONOMIC AND MARKET OVERVIEW

A global equity market rally started in late March and continued through the end
of the reporting period. If sustained, 2003 will be the first calendar year of
positive

GEOGRAPHIC DISTRIBUTION
BASED ON TOTAL NET ASSETS AS OF 10/31/03

[GRAPHIC OMITTED]

EUROPE 32.9%

ASIA 31.4%

NORTH AMERICA 11.2%

AUSTRALIA & NEW ZEALAND 8.9%

LATIN AMERICA 3.6%

MIDDLE EAST & AFRICA 0.9%

SHORT-TERM INVESTMENTS
& OTHER NET ASSETS 11.1%

1. Source: Standard & Poor's Micropal. The Citigroup Global ex-U.S. less than $2
Billion Index measures the small stock component of the Citigroup Global Equity
Index, which includes developed and emerging markets countries globally
excluding the U.S. Within each country, those stocks falling under a $2 billion
market capitalization of the available market capital in each country form the
universe. The securities in the index are capitalization weighted. The MSCI EAFE
Index is market capitalization-weighted and measures total returns of equity
securities in developed markets in Europe, Australasia and the Far East. The
indexes are unmanaged and include reinvested dividends. One cannot invest
directly in an index, nor is an index representative of the Fund's portfolio.

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND COMPLETE LEGAL
TITLES OF ALL PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF
INVESTMENTS (SOI). THE SOI BEGINS ON PAGE 15.

Annual Report | 3

[SIDEBAR]
TOP 10 SECTORS/INDUSTRIES
10/31/03
- -------------------------------------------
& OF TOTAL
NET ASSETS
- -------------------------------------------
Commercial Services & Supplies 8.1%
- -------------------------------------------
Banks 6.5%
- -------------------------------------------
Electronic Equipment & Instruments 6.0%
- -------------------------------------------
Textiles & Apparel 5.2%
- -------------------------------------------
Electrical Equipment 4.3%
- -------------------------------------------
Diversified Financials 3.2%
- -------------------------------------------
Media 3.2%
- -------------------------------------------
Computers & Peripherals 3.0%
- -------------------------------------------
Health Care Providers & Services 2.9%
- -------------------------------------------
Paper & Forest Products 2.9%
- -------------------------------------------

equity returns since 1999, according to the MSCI EAFE Index. The rebound began
with investors anticipating a global economic recovery in the second half of
2003. It continued as data suggested stabilization and possible improvement in
the world's economy, led by the strengthening U.S. economy. Other supporting
factors included the end of major combat operations in Iraq, the apparent
control of severe acute respiratory syndrome in Asia, improved corporate
profits, and fewer reported corporate governance and accounting scandals. In
addition, short-term interest rates were reduced further in the U.S., the euro
zone and other areas, resulting in multi-decade low levels. This helped provide
abundant liquidity in global equity markets.

During the fiscal year ended October 31, 2003, gross domestic product growth
accelerated in many countries, including the U.S. and Japan. Numerous economic
indicators showed improvement, including U.S. consumer spending aided by new tax
cuts, mortgage refinancing and car-buying incentives spurred by historically low
financing costs. Consumer sentiment also rose in the U.S., U.K., Germany and
Sweden, as did business sentiment in the U.S., Germany and Japan. Additionally,
commodity prices for gold, silver, platinum and other metals rose anywhere from
10% to more than 30% in response to greater demand. At period-end, calendar year
2003 export projections for certain emerging market economies indicated
increases of approximately 33% in China, 27% in Brazil, 19% in Argentina, 14% in
India, and 7% in South Korea, compared with 2002. However, the global job market
remained problematic during the year, but improving U.S. job growth in August,
September and October was an encouraging sign.

In the world's stock markets, improved sentiment led many investors to gradually
rotate back into economically sensitive and financially leveraged companies,
specifically cyclicals, technology, small capitalization stocks and emerging
markets equities that had generally performed poorly in recent years.

INVESTMENT STRATEGY

We take a long-term, value-oriented approach to investing. We focus our analysis
primarily at the company level; we seek to identify when a company's value on
the stock exchange is substantially below our estimate of the company's
underlying worth -- also known as its "intrinsic value." Our analysts determine
the intrinsic value of a company first by understanding the company and the
industry in which it operates, and then by forecasting future earnings and cash
flow growth potential. We look to invest in those companies selling at the
lowest level relative to our

4 | Annual Report

expectations for future earnings and cash flow. We are patient investors; our
typical holding period is four to five years.

MANAGER'S DISCUSSION

During the 12 months under review, the Fund's performance benefited from several
holdings. In particular, retailer North West Company Fund and computer equipment
maker ATI Technologies, both located in Canada, appreciated during the period.
Hong Kong's Dah Sing Financial; Moulin International Holdings, a health care
equipment company; and household durables company Techtronic Industries also
increased in value. Housing Development Finance and Tata Engineering &
Locomotive, both in India, also benefited the Fund's performance during the
period.

Unfortunately, the Fund was not immune to the markets' volatile nature. During
the reporting period, there tended to be a sharp, negative share price reaction
for companies that reported disappointing news. For example, Tokyo
Individualized Education Institute in Japan and Switzerland's Swisslog Holding
fell in value during the period, negatively impacting Fund performance.

Thank you for your participation in Templeton Foreign Smaller Companies Fund. We
look forward to serving your future investment needs.

[PHOTO OMITTED]
/S/Simon Rudolph

Simon Rudolph, ACA
Portfolio Manager
Templeton Foreign Smaller Companies Fund

THIS DISCUSSION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF
OCTOBER 31, 2003, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR MAIN
INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE DEPEND-ING
ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY NOT BE
RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE, BUT THE ADVISOR MAKES NO REPRESENTATION OR WARRANTY AS TO THEIR
COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT
PHILOSOPHY.

TOP 10 EQUITY HOLDINGS
10/31/03
- -------------------------------------------------
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- -------------------------------------------------
ATI Technologies Inc. 2.5%
COMPUTERS & PERIPHERALS, CANADA
- -------------------------------------------------
Transcontinental Inc., A & B 2.3%
COMMERCIAL SERVICES & SUPPLIES,
CANADA
- -------------------------------------------------
North West Company Fund 2.1%
DIVERSIFIED FINANCIALS, CANADA
- -------------------------------------------------
Halla Climate Control Co. Ltd. 1.8
ELECTRICAL EQUIPMENT, SOUTH KOREA
- -------------------------------------------------
Tata Engineering & Locomotive Co. Ltd. 1.8%
AUTOMOBILES, INDIA
- -------------------------------------------------
Techtronic Industries Co. Ltd. 1.6%
HOUSEHOLD DURABLES, HONG KONG
- -------------------------------------------------
Giordano International Ltd. 1.6%
SPECIALTY RETAIL, HONG KONG
- -------------------------------------------------
Vedior NV 1.6%
COMMERCIAL SERVICES & SUPPLIES,
NETHERLANDS
- -------------------------------------------------
Sons of Gwalia Ltd. 1.5%
METALS & MINING, AUSTRALIA
- -------------------------------------------------
Promina Group Ltd. 1.5%
INSURANCE, AUSTRALIA
- -------------------------------------------------

Annual Report | 5

Performance Summary as of 10/31/03

Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table and graphs do not reflect any taxes
due on Fund dividends, capital gain distributions, if any, or any realized gains
on the sale of Fund shares. Total return reflects the Fund's dividend income,
capital gain distributions, if any, and any unrealized gains or losses.

PRICE AND DISTRIBUTION INFORMATION
- -----------------------------------------------------------------------------------------------------
CLASS A CHANGE 10/31/03 10/31/02
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Net Asset Value (NAV) +$4.74 $17.01 $12.27
- -----------------------------------------------------------------------------------------------------
DISTRIBUTIONS (11/1/02-10/31/03)
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Dividend Income $0.1272
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CLASS B CHANGE 10/31/03 10/31/02
- -----------------------------------------------------------------------------------------------------
Net Asset Value (NAV) +$4.64 $16.75 $12.11
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DISTRIBUTIONS (11/1/02-10/31/03)
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Dividend Income $0.0490
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CLASS C CHANGE 10/31/03 10/31/02
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Net Asset Value (NAV) +$4.62 $16.79 $12.17
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DISTRIBUTIONS (11/1/02-10/31/03)
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Dividend Income $0.0580
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ADVISOR CLASS CHANGE 10/31/03 10/31/02
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Net Asset Value (NAV) +$4.76 $17.05 $12.29
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DISTRIBUTIONS (11/1/02-10/31/03)
- -----------------------------------------------------------------------------------------------------
Dividend Income $0.1528
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6 | Past performance does not guarantee future results. | Annual Report

Performance Summary (CONTINUED)

PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------------
SINCE CHANGES IN
INVESTMENT POLICIES
CLASS A 1 YEAR 5-YEAR 10-YEAR (10/1/96) 5
- ---------------------------------------------------------------------------------------------------------------------------

Cumulative Total Return 1 +39.99% +53.03% +111.11% +56.39%
- ---------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +31.93% +7.60% +7.12% +5.63%
- ---------------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $13,193 $14,426 $19,896 $14,735
- ---------------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 +28.22% +7.14% +7.31% +4.74%
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B 1 YEAR 3-YEAR INCEPTION (1/1/99)
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +38.85% +22.91% +43.65%
- ---------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +34.85% +6.24% +7.47%
- --------------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $13,485 $11,991 $14,165
- ---------------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 +30.88% +1.92% +6.16%
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C 1 YEAR 5-YEAR INCEPTION (7/1/98)
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +38.60% +46.95% +27.23%
- ---------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +36.25% +7.79% +4.42%
- ---------------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $13,625 $14,553 $12,599
- ---------------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 +32.28% +7.31% +3.24%
- ---------------------------------------------------------------------------------------------------------------------------
SINCE CHANGES IN
INVESTMENT POLICIES
ADVISOR CLASS 1 YEAR 5-YEAR 10-YEAR (10/1/96) 5
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +40.37% +54.94% +116.05% +60.05%
- ---------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +40.37% +9.15% +8.01% +6.87%
- ---------------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $14,037 $15,494 $21,605 $16,005
- ---------------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 +36.31% +8.65% +8.19% +5.98%
- ---------------------------------------------------------------------------------------------------------------------------

ONGOING MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE; MORE
RECENT RETURNS MAY DIFFER FROM THOSE SHOWN. SINCE MARKETS CAN GO DOWN AS WELL AS
UP, INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH MARKET CONDITIONS,
AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.

FOR MORE CURRENT PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.

Annual Report | Past performance does not guarantee future results. | 7

Performance Summary (CONTINUED)

TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT

Total return represents the change in value of an investment over the periods
shown. It includes the current, applicable, maximum sales charge(s), Fund
expenses, account fees and reinvested distributions. The unmanaged indexes
include reinvested dividends. They differ from the Fund in composition and do
not pay management fees or expenses. One cannot invest directly in an index.

AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS A 10/31/03
- --------------------------------------
1-Year +31.93%
- --------------------------------------
5-Year +7.60%
- --------------------------------------
10-Year +7.12%
- --------------------------------------

CLASS A (11/1/93-10/31/03)

[GRAPHIC OMITTED]

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

Templeton Foreign Citigroup Global
Smaller Companies ex-U.S. less than $2 MSCI EAFE
Fund Billion Index 7 Index 7
11/1/93 $ 9,424 $10,000 $10,000
9,156 9,128 9,231
10,085 9,789 9,906
10,841 10,619 10,799
10,664 10,592 10,846
10,286 10,138 10,608
10,363 10,570 10,987
10,401 10,512 10,798
10,109 10,663 10,933
10,531 10,767 11,115
10,851 11,025 11,319
10,601 10,680 11,042
10,796 11,038 11,195
10,258 10,510 10,494
10,074 10,578 10,606
9,827 10,174 10,248
9,984 10,148 10,164
9,951 10,784 10,546
10,411 11,192 10,867
10,616 11,062 10,733
10,885 10,870 10,599
11,400 11,550 11,214
11,068 11,112 10,944
11,342 11,332 10,982
10/31/95 10,985 11,031 10,630
11,035 11,340 10,773
11,153 11,800 11,179
11,553 11,851 11,537
11,871 11,895 11,653
12,053 12,150 11,899
12,416 12,506 12,521
12,598 12,279 12,394
12,640 12,351 12,376
12,236 11,993 11,864
12,539 12,023 12,021
12,695 12,345 12,132
13,016 12,222 12,119
13,374 12,711 12,371
13,849 12,551 12,153
13,967 12,114 12,123
14,173 12,316 12,396
14,252 12,363 12,153
14,105 12,432 11,967
14,557 13,244 12,625
15,098 13,977 12,920
15,246 14,206 12,764
15,335 13,148 12,063
16,056 13,888 12,153
10/31/97 14,871 12,823 11,398
14,446 12,695 10,670
14,252 12,809 10,368
13,885 13,398 10,568
15,018 14,261 11,416
15,690 14,703 11,871
15,889 14,823 11,915
15,637 14,754 11,693
14,950 14,869 11,152
14,750 15,023 10,924
12,791 13,165 9,306
12,464 12,765 9,270
13,001 14,099 10,013
13,433 14,825 10,379
13,322 15,414 10,506
13,012 15,372 10,360
12,926 15,009 10,201
13,644 15,639 10,943
14,972 16,276 11,908
14,757 15,442 11,664
15,536 16,047 12,401
15,902 16,528 12,692
16,063 16,592 12,913
15,601 16,763 12,776
10/31/99 15,525 17,394 12,694
15,719 18,002 12,998
16,689 19,621 13,696
16,472 18,378 13,716
16,493 18,876 14,063
17,397 19,612 14,130
16,853 18,583 13,107
16,831 18,133 12,877
17,708 18,846 13,668
17,577 18,060 13,129
17,719 18,220 13,522
16,722 17,337 12,825
15,792 16,931 11,879
15,529 16,299 11,460
16,147 16,883 11,740
16,938 16,875 12,127
16,350 15,611 11,808
14,983 14,577 10,989
15,785 15,600 11,606
16,531 15,061 11,712
16,017 14,451 11,382
15,699 14,189 10,920
15,255 13,833 10,936
13,242 12,435 9,570
10/31/01 13,537 12,753 9,919
14,402 13,224 10,398
15,059 13,303 10,597
15,233 12,597 10,547
15,545 12,686 10,695
16,608 13,378 11,320
17,140 13,475 11,591
17,625 13,658 11,901
16,714 13,119 11,386
15,382 11,825 10,622
14,988 11,801 10,546
13,725 10,537 9,632
14,212 11,104 9,711
14,652 11,609 10,066
14,522 11,220 10,021
14,078 10,752 10,029
13,612 10,506 9,921
13,390 10,308 9,799
14,685 11,330 10,513
15,875 12,027 11,416
16,445 12,325 11,999
17,264 12,625 12,455
18,188 12,932 13,233
18,668 13,333 13,902
10/31/03 19,896 14,165 14,922

AVERAGE ANNUAL TOTAL RETURN
- ---------------------------------------
CLASS B 10/31/03
- ---------------------------------------
1-Year +34.85%
- ---------------------------------------
3-Year +6.24%
- ---------------------------------------
Since Inception (1/1/99) +7.47%
- ---------------------------------------

CLASS B (1/1/99-10/31/03)

[GRAPHIC OMITTED]

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

Templeton Foreign Citigroup Global
Smaller Companies ex-U.S. less than $2 MSCI EAFE
Fund Billion Index 7 Index 7
1/1/99 $10,000 $10,000 $10,000
9,767 9,973 9,861
9,703 9,737 9,710
10,233 10,146 10,416
11,198 10,560 11,335
11,037 10,018 11,102
11,613 10,411 11,804
11,880 10,723 12,081
12,001 10,764 12,292
11,646 10,875 12,161
11,581 11,285 12,084
11,718 11,679 12,372
12,426 12,730 13,037
12,263 11,923 13,056
12,271 12,246 13,387
3/31/00 12,932 12,724 13,450
12,516 12,056 12,476
12,492 11,764 12,257
13,136 12,227 13,010
13,029 11,717 12,497
13,127 11,821 12,871
12,383 11,248 12,208
11,687 10,984 11,307
11,482 10,575 10,908
11,934 10,953 11,175
12,514 10,948 11,543
12,069 10,128 11,240
11,060 9,457 10,461
11,640 10,121 11,047
5/31/01 12,178 9,771 11,148
11,789 9,375 10,835
11,552 9,206 10,395
11,206 8,974 10,409
9,720 8,067 9,109
9,939 8,274 9,442
10,556 8,579 9,898
11,025 8,630 10,087
11,153 8,172 10,039
11,375 8,230 10,180
12,143 8,679 10,775
12,519 8,742 11,033
12,877 8,861 11,329
12,199 8,512 10,838
7/31/02 11,225 7,672 10,111
10,926 7,656 10,038
9,995 6,836 9,169
10,345 7,204 9,244
10,662 7,532 9,581
10,552 7,279 9,538
10,227 6,976 9,546
9,884 6,816 9,444
9,712 6,687 9,328
10,638 7,351 10,007
11,495 7,803 10,866
11,904 7,996 11,422
12,487 8,191 11,856
13,147 8,390 12,597
13,482 8,650 13,233
10/31/03 14,165 9,190 14,204

8 | Past performance does not guarantee future results. | Annual Report

Performance Summary (CONTINUED)

AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------
CLASS C 10/31/03
- -------------------------------------
1-Year +36.25%
- -------------------------------------
5-Year +7.79%
- -------------------------------------
Since Inception (7/1/98) +4.42%
- -------------------------------------

CLASS C (7/1/98-10/31/03)

[GRAPHIC OMITTED]

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

Templeton Foreign Citigroup Global
Smaller Companies ex-U.S. less than $2 MSCI EAFE
Fund Billion Index 7 Index 7
7/1/98 $9,903 $10,000 $10,000
9,743 10,104 9,796
8,441 8,854 8,345
8,225 8,585 8,313
8,573 9,482 8,979
8,852 9,970 9,307
8,782 10,366 9,421
8,570 10,338 9,290
8,507 10,094 9,148
8,965 10,518 9,813
9,833 10,946 10,678
9,685 10,385 10,459
10,192 10,792 11,120
10,425 11,116 11,381
10,531 11,159 11,580
10,220 11,273 11,457
10/31/99 10,156 11,698 11,383
10,284 12,107 11,656
10,911 13,196 12,281
10,761 12,360 12,300
10,768 12,695 12,611
11,352 13,189 12,670
10,982 12,498 11,753
10,961 12,195 11,547
11,525 12,675 12,256
11,432 12,146 11,773
11,518 12,254 12,125
10,867 11,659 11,501
10,252 11,386 10,652
10,066 10,962 10,276
10,455 11,354 10,528
10,961 11,349 10,874
2/28/01 10,579 10,499 10,588
9,691 9,804 9,855
10,198 10,491 10,407
10,675 10,129 10,502
10,333 9,719 10,207
10,126 9,543 9,793
9,831 9,303 9,806
8,533 8,363 8,581
8,717 8,577 8,895
9,263 8,893 9,324
9,677 8,946 9,502
9,789 8,472 9,458
9,983 8,532 9,590
10,662 8,997 10,151
10,998 9,062 10,394
11,304 9,185 10,672
6/30/02 10,711 8,823 10,210
9,852 7,953 9,525
9,591 7,937 9,457
8,784 7,086 8,638
9,090 7,468 8,708
9,367 7,808 9,026
9,269 7,546 8,986
8,984 7,231 8,993
8,684 7,066 8,897
8,534 6,932 8,787
9,329 7,620 9,427
10,086 8,089 10,237
10,445 8,289 10,760
10,955 8,491 11,169
11,533 8,697 11,867
11,826 8,967 12,466
10/31/03 12,599 9,526 13,381

AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
ADVISOR CLASS 6 10/31/03
- --------------------------------------
1-Year +40.37%
- --------------------------------------
5-Year +9.15%
- --------------------------------------
10-Year +8.01%
- --------------------------------------

ADVISOR CLASS (11/1/93-10/31/03) 6

[GRAPHIC OMITTED]

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

Templeton Foreign Citigroup Global
Smaller Companies ex-U.S. less than $2 MSCI EAFE
Fund Billion Index 7 Index 7
11/1/93 $10,000 $10,000 $10,000
9,715 9,128 9,231
10,701 9,789 9,906
11,503 10,619 10,799
11,315 10,592 10,846
10,914 10,138 10,608
10,996 10,570 10,987
11,037 10,512 10,798
10,727 10,663 10,933
11,174 10,767 11,115
11,514 11,025 11,319
11,249 10,680 11,042
11,456 11,038 11,195
10,884 10,510 10,494
10,689 10,578 10,606
10,428 10,174 10,248
10,593 10,148 10,164
10,558 10,784 10,546
11,047 11,192 10,867
11,265 11,062 10,733
11,550 10,870 10,599
12,096 11,550 11,214
11,744 11,112 10,944
12,035 11,332 10,982
10/31/95 11,656 11,031 10,630
11,709 11,340 10,773
11,834 11,800 11,179
12,258 11,851 11,537
12,596 11,895 11,653
12,789 12,150 11,899
13,175 12,506 12,521
13,367 12,279 12,394
13,412 12,351 12,376
12,983 11,993 11,864
13,304 12,023 12,021
13,470 12,345 12,132
13,811 12,222 12,119
14,191 12,711 12,371
14,695 12,551 12,153
14,926 12,114 12,123
15,146 12,316 12,396
15,241 12,363 12,153
15,073 12,432 11,967
15,566 13,244 12,625
16,155 13,977 12,920
16,325 14,206 12,764
16,419 13,148 12,063
17,211 13,888 12,153
10/31/97 15,934 12,823 11,398
15,480 12,695 10,670
15,264 12,809 10,368
14,870 13,398 10,568
16,084 14,261 11,416
16,815 14,703 11,871
17,029 14,823 11,915
16,770 14,754 11,693
16,022 14,869 11,152
15,819 15,023 10,924
13,719 13,165 9,306
13,380 12,765 9,270
13,945 14,099 10,013
14,419 14,825 10,379
14,299 15,414 10,506
13,977 15,372 10,360
13,885 15,009 10,201
14,655 15,639 10,943
16,081 16,276 11,908
15,850 15,442 11,664
16,693 16,047 12,401
17,098 16,528 12,692
17,271 16,592 12,913
16,774 16,763 12,776
10/31/99 16,693 17,394 12,694
16,913 18,002 12,998
17,948 19,621 13,696
17,726 18,378 13,716
17,749 18,876 14,063
18,733 19,612 14,130
18,147 18,583 13,107
18,123 18,133 12,877
19,067 18,846 13,668
18,926 18,060 13,129
19,090 18,220 13,522
18,019 17,337 12,825
17,029 16,931 11,879
16,734 16,299 11,460
17,402 16,883 11,740
18,254 16,875 12,127
17,622 15,611 11,808
16,160 14,577 10,989
17,025 15,600 11,606
17,828 15,061 11,712
17,275 14,451 11,382
16,944 14,189 10,920
16,466 13,833 10,936
14,294 12,435 9,570
10/31/01 14,625 12,753 9,919
15,545 13,224 10,398
16,255 13,303 10,597
16,455 12,597 10,547
16,805 12,686 10,695
17,953 13,378 11,320
18,527 13,475 11,591
19,064 13,658 11,901
18,083 13,119 11,386
16,644 11,825 10,622
16,218 11,801 10,546
14,865 10,537 9,632
15,391 11,104 9,711
15,867 11,609 10,066
15,716 11,220 10,021
15,249 10,752 10,029
14,757 10,506 9,921
14,516 10,308 9,799
15,919 11,330 10,513
17,220 12,027 11,416
17,841 12,325 11,999
18,729 12,625 12,455
19,730 12,932 13,233
20,262 13,333 13,902
10/31/03 21,605 14,165 14,922

Annual Report | Past performance does not guarantee future results. | 9

Performance Summary (CONTINUED)

ENDNOTES

SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
FLUCTUATIONS, ECONOMIC INSTABILITY, REGULATORY AND POLITICAL DEVELOPMENTS.
INVESTMENTS IN EMERGING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME
FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THEIR RELATIVELY SMALL SIZE AND
LESSER LIQUIDITY. IN ADDITION, SMALL-COMPANY STOCKS HAVE HISTORICALLY EXHIBITED
GREATER PRICE VOLATILITY THAN LARGER-COMPANY STOCKS, PARTICULARLY OVER THE SHORT
TERM. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN INVESTMENT
RISKS.

CLASS A: Subject to the current, maximum 5.75% initial sales charge. Prior to
1/1/97, Fund shares were offered at a lower initial sales charge; thus actual
total returns may differ.

CLASS B: Subject to no initial sales charge, but subject to a contingent
deferred sales charge (CDSC) declining from 4% to 0% over six years. These
shares have higher annual fees and expenses than Class A shares.

CLASS C: Subject to 1% initial sales charge and 1% CDSC for shares redeemed
within 18 months of investment. These shares have higher annual fees and
expenses than Class A shares.

ADVISOR CLASS: No initial sales charge or Rule 12b-1 fees; are available to a
limited class of investors.

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 any current, applicable,
maximum sales charge(s).

3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include any current, applicable, maximum
sales charge(s).

4. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.

5. Effective 10/1/96, 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.

6. Effective 1/2/97, the Fund began offering Advisor Class shares, which do not
have sales charges or a Rule 12b-1 plan. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 1/2/97, a
restated figure is used based upon the Fund's Class A performance, excluding the
effect of Class A's maximum initial sales charge, but reflecting the effect of
the Class A Rule 12b-1 fees; and (b) for periods after 1/1/97, actual Advisor
Class performance is used reflecting all charges and fees applicable to that
class. Since 1/2/97 (commencement of sales), the cumulative and average annual
total returns of Advisor Class shares were +47.02% and +5.80%.

7. Source: Standard & Poor's Micropal. The Citigroup Global ex-U.S. less than $2
Billion Index measures the small stock component of the Citigroup Global Equity
Index, which includes developed and emerging markets countries globally
excluding the U.S. Within each country, those stocks falling under a $2 billion
market capitalization of the available market capital in each country form the
universe. The securities in the index are capitalization weighted. The MSCI EAFE
Index is market capitalization-weighted and measures total returns of equity
securities in developed markets in Europe, Australasia and the Far East.

10 | Past performance does not guarantee future results. | Annual Report

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS

TEMPLETON FOREIGN SMALLER COMPANIES FUND

---------------------------------------------------------
YEAR ENDED OCTOBER 31,
2003 2002 2001 2000 1999
---------------------------------------------------------
CLASS A
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year ............................... $12.27 $11.91 $14.42 $14.43 $12.33
---------------------------------------------------------
Income from investment operations:

Net investment income a ......................................... .13 .15 .21 .31 .24

Net realized and unrealized gains (losses) ...................... 4.74 .45 (2.18) (.05) 2.13
---------------------------------------------------------
Total from investment operations ................................. 4.87 .60 (1.97) .26 2.37
---------------------------------------------------------
Less distributions from:

Net investment income ........................................... (.13) (.24) (.45) (.27) (.27)

Net realized gains .............................................. -- -- (.09) -- --
---------------------------------------------------------
Total distributions .............................................. (.13) (.24) (.54) (.27) (.27)
---------------------------------------------------------
Redemption fees .................................................. -- c -- -- -- --
---------------------------------------------------------
Net asset value, end of year ..................................... $17.01 $12.27 $11.91 $14.42 $14.43
---------------------------------------------------------

Total return b ................................................... 39.99% 4.98% (14.28)% 1.71% 19.51%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) .................................. $350,507 $71,070 $60,579 $99,179 $102,684

Ratios to average net assets:

Expenses ........................................................ 1.52% 1.63% 1.67% 1.58% 1.65%

Net investment income ........................................... .91% 1.15% 1.50% 1.99% 1.78%

Portfolio turnover rate .......................................... 6.37% 27.23% 28.93% 37.22% 18.76%

<FN>
a Based on average shares outstanding.
b Total return does not reflect sales commissions and is not annualized for periods less than one year.
c Amount is less than $0.01 per share.
</FN>

Annual Report | 11

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS (continued)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

----------------------------------------------------------
YEAR ENDED OCTOBER 31,
2003 2002 2001 2000 1999 D
----------------------------------------------------------
CLASS B
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year ................................ $12.11 $11.77 $14.28 $14.35 $12.44
----------------------------------------------------------
Income from investment operations:

Net investment income a .......................................... .07 .03 .10 .22 .08

Net realized and unrealized gains (losses) ....................... 4.62 .46 (2.17) (.08) 1.89
----------------------------------------------------------
Total from investment operations .................................. 4.69 .49 (2.07) .14 1.97
----------------------------------------------------------

Less distributions from:

Net investment income ............................................ (.05) (.15) (.35) (.21) (.06)

Net realized gains ............................................... -- -- (.09) -- --
----------------------------------------------------------
Total distributions ............................................... (.05) (.15) (.44) (.21) (.06)
----------------------------------------------------------
Redemption fees ................................................... -- c -- -- -- --
----------------------------------------------------------
Net asset value, end of year ...................................... $16.75 $12.11 $11.77 $14.28 $14.35
----------------------------------------------------------

Total return b .................................................... 38.85% 4.09% (14.95)% .91% 15.81%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ................................... $3,352 $1,691 $550 $482 $201

Ratios to average net assets:

Expenses ......................................................... 2.27% 2.38% 2.46% 2.37% 1.99% e

Net investment income ............................................ .16% .40% .74% 1.42% .59% e

Portfolio turnover rate ........................................... 6.37% 27.23% 28.93% 37.22% 18.76%

<FN>
a Based on average shares outstanding.
b Total return does not reflect the contingent deferred sales charge, and is not annualized for periods less than one year.
c Amount is less than $0.01 per share.
d For the period January 1, 1999 (effective date) to October 31, 1999.
e Annualized.
</FN>

12 | Annual Report

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS (continued)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

---------------------------------------------------------
YEAR ENDED OCTOBER 31,
2003 2002 2001 2000 1999
---------------------------------------------------------
CLASS C
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year ............................... $12.17 $11.82 $14.33 $14.36 $12.32
---------------------------------------------------------
Income from investment operations:

Net investment income a ......................................... .06 .05 .09 .18 .13

Net realized and unrealized gains (losses) ...................... 4.62 .47 (2.17) (.04) 2.11
---------------------------------------------------------
Total from investment operations ................................. 4.68 .52 (2.08) .14 2.24
---------------------------------------------------------
Less distributions from:

Net investment income ........................................... (.06) (.17) (.34) (.17) (.20)

Net realized gains .............................................. -- -- (.09) -- --
---------------------------------------------------------
Total distributions .............................................. (.06) (.17) (.43) (.17) (.20)
---------------------------------------------------------
Redemption fees .................................................. -- c -- -- -- --
---------------------------------------------------------
Net asset value, end of year ..................................... $16.79 $12.17 $11.82 $14.33 $14.36
---------------------------------------------------------

Total return b ................................................... 38.60% 4.28% (14.97)% .94% 18.46%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) .................................. $10,673 $3,904 $1,135 $894 $631

Ratios to average net assets:

Expenses ........................................................ 2.28% 2.31% 2.46% 2.36% 2.40%

Net investment income ........................................... .15% .47% .69% 1.18% .94%

Portfolio turnover rate .......................................... 6.37% 27.23% 28.93% 37.22% 18.76%

<FN>
a Based on average shares outstanding.
b Total return does not reflect sales commission or the contingent deferred
sales charge and is not annualized for periods less than one year.
c Amount is less than $0.01 per share.
</FN>

Annual Report | 13

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS (continued)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

---------------------------------------------------------
YEAR ENDED OCTOBER 31,
2003 2002 2001 2000 1999
---------------------------------------------------------
ADVISOR CLASS
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year ................................ $12.29 $11.92 $14.45 $14.45 $12.34
---------------------------------------------------------

Income from investment operations:

Net investment income a .......................................... .20 .20 .23 .35 .26

Net realized and unrealized gains (losses) ....................... 4.70 .44 (2.19) (.05) 2.14
---------------------------------------------------------
Total from investment operations .................................. 4.90 .64 (1.96) .30 2.40
---------------------------------------------------------
Less distributions from:

Net investment income ............................................ (.15) (.27) (.48) (.30) (.29)

Net realized gains ............................................... -- -- (.09) -- --
---------------------------------------------------------
Total distributions ............................................... (.15) (.27) (.57) (.30) (.29)
---------------------------------------------------------
Redemption fees ................................................... -- c -- -- -- --
---------------------------------------------------------
Net asset value, end of year ...................................... $17.04 $12.29 $11.92 $14.45 $14.45
---------------------------------------------------------

Total return b .................................................... 40.37% 5.24% (14.11)% 2.01% 19.81%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ................................... $25,482 $16,937 $5,059 $10,708 $9,841

Ratios to average net assets:

Expenses ......................................................... 1.27% 1.35% 1.46% 1.38% 1.43%

Net investment income ............................................ 1.16% 1.43% 1.67% 2.31% 1.94%

Portfolio turnover rate ........................................... 6.37% 27.23% 28.93% 37.22% 18.76%

<FN>
a Based on average shares outstanding.
b Total return is not annualized for periods less than one year.
c Amount is less than $0.01 per share.
</FN>

14 | See notes to financial statements. | Annual Report

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, OCTOBER 31, 2003

- ---------------------------------------------------------------------------------------------------------------------------
TEMPLETON FOREIGN SMALLER COMPANIES FUND INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------

COMMON STOCKS 86.3%
AUSTRALIA 7.9%
APN News & Media Ltd. ........................... Media 1,622,755 $ 4,536,630
Iluka Resources Ltd. ............................ Metals & Mining 1,654,410 5,482,066
John Fairfax Holdings Ltd. ...................... Media 1,991,400 5,115,067
Mayne Group Ltd. ................................ Health Care Providers & Services 1,537,320 3,970,543
Promina Group Ltd. .............................. Insurance 2,424,560 5,711,567
a Sons of Gwalia Ltd. ............................. Metals & Mining 2,376,887 5,835,376
-------------
30,651,249
-------------
AUSTRIA .7%
Wienerberger AG ................................. Building Products 126,216 2,685,072
-------------
BELGIUM 1.2%
Barco NV ........................................ Electronic Equipment & Instruments 63,220 4,666,795
-------------
CANADA 11.2%
a ATI Technologies Inc. ........................... Computers & Peripherals 669,170 9,585,319
a GSI Lumonics Inc. ............................... Electronic Equipment & Instruments 434,060 4,692,808
Laurentian Bank of Canada ....................... Banks 241,800 5,090,816
Linamar Corp. ................................... Auto Components 487,035 3,990,727
North West Company Fund ......................... Diversified Financials 459,320 8,356,658
Torstar Corp., B ................................ Media 139,980 2,973,666
Transcontinental Inc., A ........................ Commercial Services & Supplies 345,200 5,722,560
Transcontinental Inc., B ........................ Commercial Services & Supplies 200,000 3,277,569
-------------
43,690,123
-------------
CHINA .4%
a Weiqiao Textile Co., 144A ....................... Textiles & Apparel 1,028,000 1,204,631
a Weiqiao Textile Co., Reg S ...................... Textiles & Apparel 348,000 407,793
-------------
1,612,424
-------------
DENMARK 2.6%
a ISS A/S ......................................... Commercial Services & Supplies 95,407 4,550,615
Vestas Wind Systems AS .......................... Electrical Equipment 271,310 5,706,609
-------------
10,257,224
-------------
FINLAND 3.0%
Amer Group Ltd., A .............................. Leisure Equipment & Products 116,965 4,453,051
KCI Konecranes International PLC ................ Machinery 24,105 720,443
METSO OYJ ....................................... Machinery 427,160 4,786,941
Orion Yhtyma OYJ, B ............................. Pharmaceuticals 91,600 1,762,317
-------------
11,722,752
-------------
FRANCE .8%
Galeries Lafayette SA ........................... Multiline Retail 22,255 3,202,866
-------------
GERMANY 1.4%
Celesio AG ...................................... Health Care Providers & Services 51,310 2,135,382
Jenoptik AG ..................................... Semiconductor Equipment & Products 283,372 3,113,000
-------------
5,248,382
-------------

Annual Report | 15

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, OCTOBER 31, 2003 (continued)

COMMON STOCKS (CONT.)
HONG KONG 13.4%
Asia Satellite Telecommunications Holdings Ltd. . Diversified Telecommunication Services 594,500 $ 1,067,936
ASM Pacific Technology Ltd. ..................... Semiconductor Equipment & Products 1,253,000 4,687,234
Bank of East Asia Ltd. .......................... Banks 508,852 1,520,193
Dah Sing Financial Holdings Ltd. ................ Banks 775,600 5,418,224
Dickson Concepts International Ltd. ............. Specialty Retail 984,000 513,180
Fountain Set Holdings Ltd. ...................... Textiles & Apparel 7,290,000 5,069,215
Giordano International Ltd. ..................... Specialty Retail 14,090,000 6,350,361
Hung Hing Printing Group Ltd. ................... Paper & Forest Products 2,816,000 2,320,769
Lerado Group Holdings Co. Ltd. .................. Textiles & Apparel 11,596,000 2,075,594
Li & Fung Ltd. .................................. Distributors 970,000 1,630,053
Moulin International Holdings Ltd. .............. Health Care Equipment & Supplies 6,489,000 4,888,246
Ngai Lik Industrial Holding Ltd. ................ Household Durables 400,000 148,087
Techtronic Industries Co. Ltd. .................. Household Durables 2,326,000 6,409,776
Texwinca Holdings Ltd. .......................... Textiles & Apparel 5,091,000 3,638,442
Wing Lung Bank Ltd. ............................. Banks 709,901 4,470,191
Yue Yuen Industrial Holdings Ltd. ............... Textiles & Apparel 746,000 2,113,396
-------------
52,320,897
-------------
INDIA 5.3%
Associated Cement Cos. Ltd. ..................... Construction Materials 827,970 3,913,309
Gujarat Ambuja Cements Ltd. ..................... Construction Materials 563,280 3,140,795
Housing Development Finance Corp. Ltd. .......... Diversified Financials 424,276 4,867,191
Satyam Computers Services Ltd. .................. IT Services 271,595 1,834,405
Tata Engineering & Locomotive Co. Ltd. .......... Automobiles 841,850 6,956,594
-------------
20,712,294
-------------
ISRAEL .9%
a Orbotech Ltd. ................................... Electronic Equipment & Instruments 148,775 3,533,406
-------------
ITALY .6%
Banca Popolare di Verona e Novara SCRL .......... Banks 134,365 2,077,439
-------------
JAPAN 4.6%
Hokuetsu Paper Mills Ltd. ....................... Paper & Forest Products 829,000 4,494,329
Japan Airport Terminal Co. Ltd. ................. Transportation Infrastructure 528,000 3,799,045
Kurita Water Industries Ltd. .................... Machinery 75,000 910,083
Meitec Corp. .................................... Commercial Services & Supplies 120,800 4,318,406
Ono Pharmaceutical Co. Ltd. ..................... Pharmaceuticals 32,000 1,111,930
Sangetsu Co. Ltd. ............................... Household Durables 137,100 2,396,927
Tokyo Individualized Educational Institute Inc. . Commercial Services & Supplies 120,500 926,206
-------------
17,956,926
-------------
LUXEMBOURG .7%
a Thiel Logistik AG ............................... Software 483,229 2,572,817
-------------
MEXICO 2.0%
Grupo Aeroportuario del Sureste SA de CV, ADR ... Transportation Infrastructure 258,110 4,460,141
Grupo Continental SA ............................ Beverages 2,506,210 3,454,732
-------------
7,914,873
-------------

16 | Annual Report

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, OCTOBER 31, 2003 (continued)

COMMON STOCKS (CONT.)
NETHERLANDS 6.5%
Aalberts Industries NV .......................... Industrial Conglomerates 90,682 $ 2,208,491
Arcadis NV ...................................... Commercial Services & Supplies 194,545 1,888,413
Athlon Holding NV ............................... Specialty Retail 208,840 3,095,382
a Draka Holding NV ................................ Electrical Equipment 64,640 909,237
IHC Caland NV ................................... Energy Equipment & Services 44,400 1,894,260
Oce NV .......................................... Office Electronics 285,900 3,795,515
OPG Groep NV .................................... Health Care Providers & Services 145,850 5,239,084
Vedior NV ....................................... Commercial Services & Supplies 435,590 6,278,994
-------------
25,309,376
-------------
NEW ZEALAND 1.0%
Fisher & Paykel Healthcare Corp. Ltd. ........... Health Care Equipment & Supplies 526,790 3,916,606
-------------
PHILIPPINES 1.0%
a Philippine Long Distance Telephone Co. ......... Diversified Telecommunication Services 290,500 4,017,481
-------------
SINGAPORE .8%
Want Want Holdings Ltd. ......................... Food Products 3,694,000 3,121,430
-------------
SOUTH KOREA 5.4%
Bank of Pusan ................................... Banks 683,605 3,696,723
Dae Duck Electronics Co. Ltd. ................... Electronic Equipment & Instruments 455,153 4,191,946
Daegu Bank Co. Ltd. ............................. Banks 708,485 3,226,645
Halla Climate Control Co. Ltd. .................. Electrical Equipment 100,650 7,152,231
Samsung Electro-Mechanics Co. ................... Electronic Equipment & Instruments 84,180 2,852,233
-------------
21,119,778
-------------

SPAIN 1.2%
Sol Melia SA .................................... Hotels Restaurants & Leisure 635,845 4,568,043
-------------
SWEDEN 2.2%
D. Carnegie & Co. AB ............................ Diversified Financials 405,080 4,206,142
Observer AB ..................................... Commercial Services & Supplies 1,127,565 4,495,314
-------------
8,701,456
-------------
SWITZERLAND 5.1%
Gurit Heberlein AG, Br. ......................... Chemicals 3,241 2,099,424
Kuoni Reisen Holding AG, B ...................... Hotels Restaurants & Leisure 15,450 4,818,905
Lindt & Spruengli Chocolate Works Ltd. .......... Food Products 4,640 3,509,492
SIG Holding AG .................................. Machinery 29,280 3,930,385
a Swisslog Holding AG ............................. Machinery 122,808 560,998
Vontobel Holding AG ............................. Diversified Financials 224,550 4,918,626
-------------
19,837,830
-------------
TAIWAN .5%
Compal Electronics Inc. ......................... Computers & Peripherals 1,367,580 2,073,006
-------------

Annual Report | 17

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, OCTOBER 31, 2003 (continued)

COMMON STOCKS (CONT.)
UNITED KINGDOM 5.9%
Avis Europe PLC ................................. Road & Rail 2,033,080 $ 3,829,555
Burberry Group PLC, 144A ........................ Textiles & Apparel 254,200 1,708,212
Debenhams PLC ................................... Multiline Retail 222,305 1,758,891
Geest PLC ....................................... Food Products 372,775 2,951,001
Kidde PLC ....................................... Electrical Equipment 1,753,535 2,997,992
Laird Group PLC ................................. Electronic Equipment & Instruments 710,060 3,319,614
Novar PLC ....................................... Building Products 1,931,003 4,341,799
Yule Catto & Company PLC ........................ Chemicals 412,280 1,909,967
-------------
22,817,031
-------------
TOTAL COMMON STOCKS (COST $256,449,516) ......... 336,307,676
-------------

PREFERRED STOCKS 2.6%
BRAZIL 1.6%
Aracruz Celulose SA, ADR, pfd. .................. Paper & Forest Products 160,565 4,511,877
Telemig Celular Participacoes SA, ADR, pfd. ..... Wireless Telecommunication Services 51,478 1,639,574
-------------
6,151,451
-------------

GERMANY 1.0%
Hugo Boss AG, pfd. .............................. Textiles & Apparel 199,210 4,075,813
-------------

TOTAL PREFERRED STOCKS (COST $7,404,933) ........ 10,227,264
-------------

---------------
PRINCIPAL AMOUNT
---------------
SHORT TERM INVESTMENTS 12.3%
Federal Home Loan Bank, 0.94%, 11/03/03 ......... $ 17,931,000 17,931,000
U.S. Treasury Bills, 0.932% to 0.942%, with maturities
to 1/29/04 ..................................... 30,075,000 30,037,453
-------------
TOTAL SHORT TERM INVESTMENTS (COST $47,963,523) . 47,968,453
-------------
TOTAL INVESTMENTS (COST $311,817,972) 101.2% .... 394,503,393
OTHER ASSETS, LESS LIABILITIES (1.2)% ........... (4,488,687)
-------------
NET ASSETS 100.0% ............................... $390,014,706
-------------

<FN>
a Non-income producing.
</FN>

18 | See notes to financial statements. | Annual Report

Franklin Templeton International Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
October 31, 2003

---------------
TEMPLETON
FOREIGN SMALLER
COMPANIES FUND
---------------
Assets:
Investments in securities:
Cost ....................................................... $311,817,972
-------------
Value ...................................................... 394,503,393
Cash ........................................................ 25,865
Receivables:
Capital shares sold ........................................ 1,503,209
Dividends and interest ..................................... 442,082
-------------
Total assets ........................................... 396,474,549
-------------
Liabilities:
Payables:
Investment securities purchased ............................ 902,499
Capital shares redeemed .................................... 3,682,126
Affiliates ................................................. 628,935
Shareholders ............................................... 20,887
Deferred tax liability (Note 1f) ........................... 1,129,159
Other liabilities ........................................... 96,237
-------------
Total liabilities ...................................... 6,459,843
-------------
Net assets, at value ......................................... $390,014,706
-------------
Net assets consist of:
Undistributed net investment income ......................... $ 45,645
Net unrealized appreciation (depreciation) .................. 81,574,928
Accumulated net realized gain (loss) ........................ (4,095,337)
Capital shares .............................................. 312,489,470
-------------
Net assets, at value ......................................... $390,014,706
-------------

Annual Report |19

Franklin Templeton International Trust

FINANCIAL STATEMENTS (continued)

STATEMENT OF ASSETS AND LIABILITIES (continued)
October 31, 2003

---------------
TEMPLETON
FOREIGN SMALLER
COMPANIES FUND
---------------
CLASS A:

Net assets, at value .................................................................... $350,507,313
---------------
Shares outstanding ...................................................................... 20,606,217
---------------
Net asset value per share a ............................................................. $17.01
---------------
Maximum offering price per share (Net asset value per share (DIVIDE) 94.25%) ............ $18.05
---------------
CLASS B:
Net assets, at value .................................................................... $3,352,328
---------------
Shares outstanding ...................................................................... 200,151
---------------
Net asset value and maximum offering price per share a .................................. $16.75
---------------
CLASS C:
Net assets, at value .................................................................... $10,673,195
---------------
Shares outstanding ...................................................................... 635,682
---------------
Net asset value per share a ............................................................. $16.79
---------------
Maximum offering price per share (Net asset value per share (DIVIDE) 99%) ............... $16.96
---------------
ADVISOR CLASS:
Net assets, at value .................................................................... $25,481,870
---------------
Shares outstanding ...................................................................... 1,494,998
---------------
Net asset value and maximum offering price per share .................................... $17.04
---------------

<FN>
a Redemption price is equal to net asset value less any applicable contingent
deferred sales charge and redemption fees retained by the Fund.
</FN>

20 | See notes to financial statements. | Annual Report

Franklin Templeton International Trust

FINANCIAL STATEMENTS (continued)

STATEMENT OF OPERATIONS
for the year ended October 31, 2003

---------------
TEMPLETON
FOREIGN SMALLER
COMPANIES FUND
---------------
Investment income:
(Net of foreign taxes $378,695)

Dividends ......................................................................... $ 4,462,890
Interest .......................................................................... 272,811
--------------
Total investment income ...................................................... 4,735,701
--------------
Expenses:
Management fees (Note 3) .......................................................... 1,812,511
Distribution fees (Note 3)
Class A .......................................................................... 419,389
Class B .......................................................................... 22,039
Class C .......................................................................... 64,838
Transfer agent fees (Note 3) ...................................................... 432,000
Custodian fees .................................................................... 86,900
Reports to shareholders ........................................................... 27,900
Registration and filing fees 68,400
Professional fees ................................................................. 29,600
Trustees' fees and expenses ....................................................... 4,200
Other ............................................................................. 5,800
--------------
Total expenses ............................................................... 2,973,577
--------------
Net investment income ...................................................... 1,762,124
--------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ...................................................................... 869,599
Foreign currency transactions .................................................... (149,288)
--------------
Net realized gain (loss) ................................................... 720,311
--------------
Net unrealized appreciation (depreciation) on:
Investments ...................................................................... 85,484,192
Translation of assets and liabilities denominated in foreign currencies .......... (8,465)
Deferred taxes (Note 1f) ......................................................... (1,008,763)
--------------
Net unrealized appreciation (depreciation) ................................. 84,466,964
--------------
Net realized and unrealized gain (loss) ............................................ 85,187,275
--------------
Net increase (decrease) in net assets resulting from operations .................... $86,949,399
--------------

Annual Report | See notes to financial statements. |21

Franklin Templeton International Trust

FINANCIAL STATEMENTS (continued)

STATEMENTS OF CHANGES IN NET ASSETS
for the years ended October 31, 2003 and 2002

-------------------------------
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
-------------------------------
2003 2002
-------------------------------
Increase (decrease) in net assets:
Operations:

Net investment income (loss) ........................................................... $ 1,762,124 $ 1,050,544
Net realized gain (loss) from investments and foreign currency transactions ............ 720,311 390,605
Net unrealized appreciation (depreciation) on investments, translation of assets and
liabilities denominated in foreign currencies, and deferred taxes ..................... 84,466,964 (1,569,705)
-------------------------------
Net increase (decrease) in net assets resulting from operations ..................... 86,949,399 (128,556)
Distributions to shareholders from:
Net investment income:
Class A .............................................................................. (1,222,824) (1,225,305)
Class B .............................................................................. (7,263) (7,650)
Class C .............................................................................. (22,250) (18,078)
Advisor Class ........................................................................ (226,876) (155,247)
------------------------------
Total distributions to shareholders ..................................................... (1,479,213) (1,406,280)
Capital share transactions (Note 2):
Class A .............................................................................. 204,282,167 9,874,589
Class B .............................................................................. 848,889 1,272,353
Class C .............................................................................. 4,305,492 3,061,383
Advisor Class ........................................................................ 1,504,744 13,605,034
-------------------------------
Total capital share transactions ........................................................ 210,941,292 27,813,359
Redemption fees (Note 1h) ............................................................... 1,008 --
Net increase (decrease) in net assets .............................................. 296,412,486 26,278,523
Net assets:
Beginning of year ....................................................................... 93,602,220 67,323,697
-------------------------------
End of year ............................................................................. $390,014,706 $93,602,220
-------------------------------
Undistributed net investment income included in net assets:
End of year ............................................................................. $ 45,645 $ (87,975)
-------------------------------

22 | See notes to financial statements. | Annual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS

TEMPLETON FOREIGN SMALLER COMPANIES FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Templeton Foreign Smaller Companies Fund (the Fund) is a separate, diversified
series of Franklin Templeton International Trust (the Trust) which is registered
under the Investment Company Act of 1940 as an open-end, diversified investment
company. The Fund seeks to achieve long-term capital growth by investing, under
normal market conditions, at least 80% of its total assets in equity securities
of smaller capitalization companies outside the United States.

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 last 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.

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 denominated assets and liabilities other than investments in securities
held at the end of the reporting period.

Annual Report | 23

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (continued)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

C. FOREIGN CURRENCY CONTRACTS

When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate on a specified date. Realized and unrealized gains and losses are included
in the Statement of Operations.

The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts.

D. 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 substantially all of its taxable income.

E. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS

Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the ex-
dividend date.

Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.

Common expenses incurred by the Trust are allocated among the funds comprising
the Trust based on the ratio of net assets of each fund to the combined net
assets. Other expenses are charged to the Fund on a specific identification
basis.

F. DEFERRED TAXES

The Fund is subject to a tax imposed on net realized gains of securities of
certain foreign countries. The Fund records an estimated deferred tax liability
for net unrealized gains on these securities as reflected in the accompanying
financial statements.

24 | Annual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (continued)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

G. ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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 expenses during the reporting period.
Actual results could differ from those estimates.

H. REDEMPTION FEES

The Fund may charge a 2% redemption fee to market timers who redeem shares held
for less than 90 days. Such fees are retained by the Fund and accounted for as
additional paid in capital.

I. GUARANTEES AND INDEMNIFICATIONS

Under the Fund's organizational documents, its officers and trustees are
indemnified against certain liability arising out of the performance of their
duties to the Fund. Additionally, in the normal course of business, the Fund
enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund
that have not yet occurred.
However, based on experience, the Fund expects the risk of loss to be remote.

2. SHARES OF BENEFICIAL INTEREST

The Fund offers four classes of shares: Class A, Class B, Class C and Advisor
Class. Each class of shares differs by its initial sales load, contingent
deferred sales charges, distribution fees, voting rights on matters affecting a
single class and its exchange privilege.

At October 31, 2003, there were an unlimited number of shares authorized ($.01
par value). Transactions in the Fund's shares were as follows:

------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
2003 2002
------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------
CLASS A SHARES:

Shares sold ...................... 28,797,214 $402,750,740 13,012,915 $ 176,286,730
Shares issued on reinvestment of
distributions ................... 85,055 1,139,539 81,832 1,074,767
Shares redeemed .................. (14,066,259) (199,608,112) (12,392,824) (167,486,908)
------------------------------------------------------------------
Net increase (decrease) .......... 14,816,010 $204,282,167 701,923 $ 9,874,589
------------------------------------------------------------------
CLASS B SHARES:
Shares sold ...................... 81,294 $ 1,118,874 138,655 $ 1,891,891
Shares issued on reinvestment of
distributions ................... 534 6,722 533 6,955
Shares redeemed .................. (21,348) (276,707) (46,286) (626,493)
------------------------------------------------------------------
Net increase (decrease) .......... 60,480 $ 848,889 92,902 $ 1,272,353
------------------------------------------------------------------

Annual Report | 25

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (continued)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

2. SHARES OF BENEFICIAL INTEREST (continued)

Shares sold ..................... 517,473 $ 6,949,546 369,880 $ 5,026,956
Shares issued on reinvestment of
distributions .................. 1,432 18,202 1,145 15,013
Shares redeemed ................. (204,111) (2,662,256) (146,172) (1,980,586)
------------------------------------------------------------------
Net increase (decrease) ......... 314,794 $ 4,305,492 224,853 $ 3,061,383
------------------------------------------------------------------
ADVISOR CLASS SHARES:
Shares sold ..................... 3,799,027 $ 53,609,032 2,315,644 $ 30,715,519
Shares issued on reinvestment of
distributions .................. 4,110 52,489 7,224 94,663
Shares redeemed ................. (3,686,406) (52,156,777) (1,369,044) (17,205,148)
------------------------------------------------------------------
Net increase (decrease) ......... 116,731 $ 1,504,744 953,824 $ 13,605,034
------------------------------------------------------------------

3. TRANSACTIONS WITH AFFILIATES

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, LLC (Investor Services), the Fund's
investment manager, principal underwriter, and transfer agent, respectively.

The Fund pays an investment management fee to Advisers based on the average
daily net assets of the 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

Under a subadvisory agreement, Templeton Investment Counsel, LLC (TIC) provides
subadvisory services to the Fund and receives from Advisers fees based on the
average daily net assets of the Fund. Under an agreement with TIC, Templeton
Asset Management Ltd. (TAML) provides subadvisory services to TIC and receives
from TIC fees based on the average daily net assets of the Fund.

The 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.

26 | Annual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (continued)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

3. TRANSACTIONS WITH AFFILIATES (continued)

Distributors paid net commissions on sales of the Fund's shares and received
contingent deferred sales charges for the period of $69,502 and $17,556,
respectively.

The Fund paid transfer agent fees of $432,000, of which $266,905 was paid to
Investor Services.

4. INCOME TAXES

At October 31, 2003, the cost of investments, net unrealized appreciation
(depreciation) and undistributed ordinary income for income tax purposes were as
follows:

Cost of investments ..................................... $314,266,212
-------------
Unrealized appreciation ................................. $ 85,497,637
Unrealized depreciation ................................. (5,260,456)
-------------
Net unrealized appreciation (depreciation) .............. $ 80,237,181
-------------
Distributable earnings - ordinary income ................ $ 2,473,324
-------------

The tax character of distributions paid during the years ended October 31, 2003
and 2002, was as follows:

--------------------------
2003 2002
--------------------------
Distributions paid from:
Ordinary income .......................... $1,479,213 $1,406,280
--------------------------
$1,479,213 $1,406,280
--------------------------

Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions and passive foreign
investment company shares.

Net realized losses differ for financial statement and tax purposes primarily
due to different treatment of wash sales and foreign currency transactions.

At October 31, 2003, the Fund had tax basis capital losses of $4,074,780 which
may be carried over to offset future capital gains. Such losses expire in 2009.

5. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the year
ended October 31, 2003 aggregated $185,264,551 and $11,044,736, repectively.

Annual Report | 27

Franklin Templeton International Trust

INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF TEMPLETON FOREIGN SMALLER COMPANIES
FUND

In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Templeton Foreign Smaller
Companies Fund (hereafter referred to as the "Fund") at October 31, 2003, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights
for each of the periods presented, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's 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 auditing standards
generally accepted in the United States of America, 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, 2003 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
December 3, 2003

28 | Annual Report

Franklin Templeton International Trust

TAX DESIGNATION

FTIT TEMPLETON FOREIGN SMALLER COMPANIES FUND

Under Section 854(b)(2) of the Internal Revenue Code (Code), the Fund hereby
designates up to maximum of $3,020,321 as qualified dividends for purposes of
the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended
October 31, 2003. In January 2004, shareholders will receive Form 1099-DIV which
will include their share of qualified dividends distributed during the calendar
year 2003. Shareholders are advised to check with their tax advisors for
information on the treatment of these amounts on their individual income tax
returns.

At October 31, 2003, 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. As shown in the table below the Fund hereby designates to
shareholders the foreign source income and foreign taxes paid, pursuant to
Section 853 of the Internal Revenue Code. This designation will allow
shareholders of record on December 11, 2003, to treat their proportionate share
of foreign taxes paid by the Fund as having been paid directly by them. The
shareholder shall consider these amounts as foreign taxes paid in the tax year
in which they receive the Fund distribution.

The following table provides a breakdown by country of foreign taxes paid and
foreign source income, as designated by the Fund to Class A, Class B, Class C,
and Advisor Class shareholders.

- -----------------------------------------------------------------------------
CLASS A CLASS B
FOREIGN TAX FOREIGN SOURCE FOREIGN TAX FOREIGN SOURCE
COUNTRY PAID PER SHARE INCOME PER SHARE PAID PER SHARE INCOME PER SHARE
- -----------------------------------------------------------------------------
Australia ... 0.0004 0.0098 0.0004 0.0016
Brazil ...... 0.0000 0.0016 0.0000 0.0003
Canada ...... 0.0035 0.0095 0.0035 0.0016
Denmark ..... 0.0001 0.0002 0.0001 0.0000
Finland ..... 0.0018 0.0051 0.0018 0.0008
France ...... 0.0001 0.0003 0.0001 0.0001
Germany ..... 0.0007 0.0034 0.0007 0.0006
Hong Kong ... 0.0000 0.0207 0.0000 0.0033
India ....... 0.0000 0.0052 0.0000 0.0009
Italy ....... 0.0006 0.0017 0.0006 0.0003
Japan ....... 0.0007 0.0032 0.0007 0.0005
Mexico ...... 0.0000 0.0022 0.0000 0.0004
Netherlands . 0.0031 0.0090 0.0031 0.0015
New Zealand . 0.0006 0.0018 0.0006 0.0003
Singapore ... 0.0000 0.0004 0.0000 0.0001
South Korea . 0.0009 0.0024 0.0009 0.0004
Spain ....... 0.0000 0.0001 0.0000 0.0000
Sweden ...... 0.0010 0.0029 0.0010 0.0005
Switzerland . 0.0003 0.0007 0.0003 0.0001
Taiwan ...... 0.0005 0.0006 0.0005 0.0001
United
Kingdom ..... 0.0022 0.0093 0.0022 0.0016
---------------------------------------------------------------
TOTAL ....... $0.0165 $ 0.0901 $0.0165 $0.0150
---------------------------------------------------------------

- --------------------------------------------------------------------------------
CLASS C ADVISOR CLASS
FOREIGN TAX FOREIGN SOURCE FOREIGN TAX FOREIGN SOURCE
COUNTRY PAID PER SHARE INCOME PER SHARE PAID PER SHARE INCOME PER SHARE
- --------------------------------------------------------------------------------
Australia ... 0.0004 0.0016 0.0004 0.0119
Brazil ...... 0.0000 0.0003 0.0000 0.0020
Canada ...... 0.0035 0.0016 0.0035 0.0116
Denmark ..... 0.0001 0.0000 0.0001 0.0003
Finland ..... 0.0018 0.0008 0.0018 0.0062
France ...... 0.0001 0.0001 0.0001 0.0004
Germany ..... 0.0007 0.0006 0.0007 0.0041
Hong Kong ... 0.0000 0.0033 0.0000 0.0248
India ....... 0.0000 0.0009 0.0000 0.0063
Italy ....... 0.0006 0.0003 0.0006 0.0021
Japan ....... 0.0007 0.0005 0.0007 0.0038
Mexico ...... 0.0000 0.0004 0.0000 0.0027
Netherlands . 0.0031 0.0015 0.0031 0.0109
New Zealand . 0.0006 0.0003 0.0006 0.0022
Singapore ... 0.0000 0.0001 0.0000 0.0005
South Korea . 0.0009 0.0004 0.0009 0.0029
Spain ....... 0.0000 0.0000 0.0000 0.0002
Sweden ...... 0.0010 0.0005 0.0010 0.0035
Switzerland . 0.0003 0.0001 0.0003 0.0009
Taiwan ...... 0.0005 0.0001 0.0005 0.0008
United
Kingdom ..... 0.0022 0.0016 0.0022 0.0113
------------------------------------------------------------------
TOTAL ....... $0.0165 $0.0150 $0.0165 $0.1094
------------------------------------------------------------------

In January 2004, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2003. Shareholders are advised to check with their tax advisors
for information on the treatment of these amounts on their 2003 individual
income tax returns.

Annual Report | 29

Board Members and Officers

The name, age and address of the officers and board members, as well as their
affiliations, positions held with the Trust, principal occupations during the
past five years and number of portfolios overseen in the Franklin Templeton
Investments fund complex are shown below. Each board member will serve until
that person's successor is elected and qualified.

INDEPENDENT BOARD MEMBERS

- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------

FRANK H. ABBOTT, III (82) Trustee Since 1991 115 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Abbott Corporation (an investment company).
- ------------------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (71) Trustee Since 1991 142 Director, Bar-S Foods (meat packing
One Franklin Parkway company).
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President,
Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
- ------------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (71) Trustee Since 1991 143 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch.
- ------------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (51) Trustee Since 1998 92 Director, Amerada Hess Corporation
One Franklin Parkway (exploration and refining of oil and
San Mateo, CA 94403-1906 gas); Beverly Enterprises, Inc.
(health care); H.J. Heinz Company
(processed foods and allied products);
RTI International Metals, Inc. (manu-
facture and distribution of titanium);
and Canadian National Railway
(railroad).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and
Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor
to the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK W.T. LAHAYE (74) Trustee Since 1991 115 Director, The California Center for
One Franklin Parkway Land Recycling (redevelopment).
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Partner, Las Olas L.P. (Asset Management); and FORMERLY, Chairman, Peregrine Venture Management Company (venture capital).
- -----------------------------------------------------------------------------------------------------------------------------------

30 | Annual Report

GORDON S. MACKLIN (75) Trustee Since 1992 142 Director, White Mountains Insurance
One Franklin Parkway Group, Ltd. (holding company); Martek
San Mateo, CA 94403-1906 Biosciences Corporation; MedImmune, Inc.
(biotechnology); Overstock.com (Internet
services); and Spacehab, Inc. (aerospace
services); and FORMERLY, Director, MCI
Communication Corporation (subsequently
known as MCI WorldCom, Inc. and
WorldCom, Inc.) (communications
services) (1988-2002).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company); and FORMERLY, Chairman, White River
Corporation (financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992); and President,
National Association of Securities Dealers, Inc. (1970-1987).
- ------------------------------------------------------------------------------------------------------------------------------------

INTERESTED BOARD MEMBERS AND OFFICERS

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Director, Franklin Investment Advisory Services,
Inc.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc.
and of 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (70) Trustee and Trustee since 142 None
One Franklin Parkway Chairman of 1991 and
San Mateo, CA 94403-1906 the Board Chairman of the
Board since 1993

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Chief Executive Officer, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice
President, Franklin Templeton Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies
in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------

Annual Report | 31

**RUPERT H. JOHNSON, JR. (63) Trustee, Trustee since 125 None
One Franklin Parkway President and 1991, President
San Mateo, CA 94403-1906 Chief since 1993 and
Executive Chief Executive
Officer - Officer -
Investment Investment
Management Management
since 2002

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc. and Franklin Investment Advisory Services, Inc.; Senior Vice
President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (43) Vice President Since 1995 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer, Franklin Mutual Advisers, LLC; Executive
Vice President, Chief Financial Officer and Director, Templeton Worldwide, Inc.; Executive Vice President and Chief Operating
Officer, Templeton Investment Counsel, LLC; President and Director, Franklin Advisers, Inc.; Executive Vice President, Franklin
Investment Advisory Services, Inc. and Franklin Templeton Investor Services, LLC; Chief Financial Officer, Franklin Advisory
Services, LLC; Chairman, Franklin Templeton Services, LLC; and officer and/or director or trustee, as the case may be, of some of
the other subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (56) Senior Vice Since 2002 Not Applicable None
500 East Broward Blvd. President and
Suite 2100 Chief
Fort Lauderdale, FL Executive
33394-3091 Officer -
Finance and
Administration

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 51 of the investment
companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (56) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources, Inc.;
officer of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY, President, Chief Executive Officer and
Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).
- ------------------------------------------------------------------------------------------------------------------------------------

32 | Annual Report

BARBARA J. GREEN (56) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice President, Templeton
Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Investment Advisory Services, Inc.,
Franklin Mutual Advisers, LLC, Franklin Templeton Alternative Strategies, Inc., Franklin Templeton Investor Services, LLC,
Franklin Templeton Services, LLC, Franklin Templeton Distributors, Inc., Templeton Investment Counsel, LLC, and Templeton/Franklin
Investment Services, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 51 of the investment
companies in Franklin Templeton Investments; and FORMERLY, Deputy Director, Division of Investment Management, Executive Assistant
and Senior Advisor to the Chairman, Counselor to the Chairman, Special Counsel and Attorney Fellow, U.S. Securities and Exchange
Commission (1986-1995); Attorney, Rogers & Wells (until 1986); and Judicial Clerk, U.S. District Court (District of Massachusetts)
(until 1979).
- ------------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (66) Vice President Since 2002 Not Applicable Director, FTI Banque, Arch
600 Fifth Avenue - AML Chemicals, Inc. and Lingnan
Rockefeller Center Compliance Foundation.
New York, NY 10048-0772

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; and officer and/or director,
as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of the investment companies
in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
KIMBERLEY H. MONASTERIO (39) Treasurer and Treasurer since Not Applicable None
One Franklin Parkway Chief 2000 and Chief
San Mateo, CA 94403-1906 Financial Financial Officer
Officer since 2002

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; and officer of 51 of the investment companies in Franklin
Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------

Annual Report | 33

MURRAY L. SIMPSON (66) Vice President Since 2000 Not Applicable None
One Franklin Parkway and Secretary
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case may be, of some of
the subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Chief Executive Officer and Managing Director, Templeton Franklin Investment Services (Asia) Limited (until 2000); and
Director, Templeton Asset Management Ltd. (until 1999).
- -----------------------------------------------------------------------------------------------------------------------------------

*We base the number of portfolios on each separate series of the U.S. registered
investment companies within the Franklin Templeton Investments fund complex.
These portfolios have a common investment adviser or affiliated investment
advisers.

**Charles B. Johnson and Rupert H. Johnson are considered interested persons of
the Trust under the federal securities laws due to their positions as officers
and directors and major shareholders of Franklin Resources, Inc. (Resources),
which is the parent company of the Trust's adviser and distributor. Harmon E.
Burns is considered an interested person of the Trust under the federal
securities laws due to his position as officer and director of Resources.

Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.

THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE
COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT COMMITTEE
INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN
THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD OF DIRECTORS HAVE DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED FRANK W.T. LAHAYE AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD
BELIEVES THAT MR. LAHAYE QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE
BUSINESS BACKGROUND AND EXPERIENCE, INCLUDING SERVICE AS PRESIDENT AND DIRECTOR
OF MCCORMICK SELPH ASSOCIATES FROM 1954 THROUGH 1965; DIRECTOR AND CHAIRMAN OF
TELEDYNE CANADA LTD. FROM 1966 THROUGH 1971; DIRECTOR AND CHAIRMAN OF
QUARTERDECK CORPORATION FROM 1982 THROUGH 1998; AND SERVICES AS A DIRECTOR OF
VARIOUS OTHER PUBLIC COMPANIES INCLUDING U.S. TELEPHONE INC. (1981-1984), FISHER
IMAGING INC. (1991-1998) AND DIGITAL TRANSMISSIONS SYSTEMS (1995-1999). IN
ADDITION, MR. LAHAYE SERVED FROM 1981 TO 2000 AS A DIRECTOR AND CHAIRMAN OF
PEREGRINE VENTURE MANAGEMENT CO., A VENTURE CAPITAL FIRM, AND HAS BEEN A MEMBER
AND CHAIRMAN OF THE FUND'S AUDIT COMMITTEE SINCE ITS INCEPTION. AS A RESULT OF
SUCH BACKGROUND AND EXPERIENCE, THE BOARD OF DIRECTORS BELIEVES THAT MR. LAHAYE
HAS ACQUIRED AN UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
FINANCIAL STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION
WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND ANALYZING AND
EVALUATING FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY
OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN
UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN
UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MR. LAHAYE IS AN INDEPENDENT
DIRECTOR AS THAT TERM IS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE
COMMISSION RULES AND RELEASES.

THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL 1-800/DIAL BEN (1-800/342-5236) TO REQUEST THE SAI.

34 | Annual Report

Franklin Templeton International Trust

PROXY VOTING POLICIES AND PROCEDURES

TEMPLETON FOREIGN SMALLER COMPANIES FUND

The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group.

Annual Report | 35

This page intentionally left blank.

Literature Request

For a brochure and prospectus, which contains more complete information,
including charges and expenses, call Franklin Templeton Investments 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, we may
monitor, record and access telephone calls to or from our service departments.
These calls can be identified by the presence of a regular beeping tone.

FRANKLIN TEMPLETON INVESTMENTS

INTERNATIONAL
Mutual European Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund

GLOBAL
Franklin Global Aggressive Growth Fund
Franklin Global Growth Fund
Mutual Discovery Fund
Templeton Capital Accumulator Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund

GROWTH
Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund II 1

VALUE
Franklin Balance Sheet Investment Fund 2
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 3
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 4
Mutual Shares Fund

BLEND
Franklin Blue Chip Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund 5

SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Franklin Technology Fund
Mutual Financial Services Fund

ASSET ALLOCATION
Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds Allocation Fund

TARGET FUNDS
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund

INCOME
Franklin Adjustable U.S. Government Securities Fund 6
Franklin's AGE High Income Fund
Franklin Federal Money Fund 6, 7
Franklin Floating Rate Daily Access Fund
Franklin Floating Rate Trust 4
Franklin Income Fund
Franklin Money Fund 6, 7
Franklin Short-Intermediate U.S. Government Securities Fund 6
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio 6
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 6
Templeton Global Bond Fund

TAX-FREE INCOME 8

NATIONAL FUND S
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 9
Tax-Exempt Money Fund 6, 7

LIMITED-TERM FUNDS
California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund

INTERMEDIATE-TERM FUNDS
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund

STATE-SPECIFIC 8
Alabama
Arizona
California 10
Colorado
Connecticut
Florida 10
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 9
Michigan 9
Minnesota 9
Missouri
New Jersey
New York 10
North Carolina
Ohio 9
Oregon
Pennsylvania
Tennessee
Virginia

INSURANCE FUNDS
Franklin Templeton Variable Insurance
Products Trust 11

1. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.

2. The fund is only open to existing shareholders as well as select retirement
plans.

3. Effective June 30, 2003, the fund reopened to all new investors.

4. The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.

5. Upon reaching approximately $350 million in assets, the fund intends to close
to all investors.

6. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.

7. No assurance exists that the fund's $1.00 per share price will be maintained.
It is possible to lose money by investing in the fund.

8. For investors subject to the alternative minimum tax, a small portion of
these dividends may be taxable. Distributions of capital gains are generally
taxable.

9. Portfolio of insured municipal securities.

10. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
money market portfolios (CA and NY).

11. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.

11/03 Not part of the annual report

[LOGO OMITTED]
FRANKLIN[R] TEMPLETON[R] One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906

WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at franklintempleton.com. See
inside for details.

ANNUAL REPORT AND SHAREHOLDER LETTER
TEMPLETON FOREIGN
SMALLER COMPANIES FUND

INVESTMENT MANAGER
Franklin Advisers, Inc.

PRINCIPAL UNDERWRITER

Franklin Templeton Distributors, Inc.
1-800/DIAL BEN [R]
franklintempleton.com

SHAREHOLDER SERVICES
1-800/632-2301

This report must be preceded or accompanied by the current Templeton Foreign
Smaller Companies Fund prospectus, which contains more complete information,
including charges, expenses and risks.

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
identified by the presence of a regular beeping tone.

191 A2003 12/03

OCTOBER 31, 2003
- --------------------------------------------------------------------------------

A series of Franklin Templeton International Trust

[GRAPHIC OMITTED]

- --------------------------------------------------------------------------------
ANNUAL REPORT AND SHAREHOLDER LETTER | GLOBAL
- --------------------------------------------------------------------------------

TEMPLETON
GLOBAL LONG-SHORT FUND

- --------------------------------------------------------------------------------
WANT TO RECEIVE
THIS DOCUMENT
FASTER
VIA EMAIL?
ELIGIBLE SHAREHOLDERS CAN
SIGN UP FOR EDELIVERY AT
FRANKLINTEMPLETON.COM.
SEE INSIDE FOR DETAILS.
- --------------------------------------------------------------------------------
[LOGO OMITTED]
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS

FRANKLIN o TEMPLETON o MUTUAL SERIES

Franklin Templeton Investments

GAIN FROM OUR PERSPECTIVE

Franklin Templeton's distinct multi-manager structure combines the
specialized expertise of three world-class investment management
groups--Franklin, Templeton and Mutual Series.

SPECIALIZED EXPERTISE

Each of our portfolio management groups operates autonomously, relying on its
own research and staying true to the unique investment disciplines that underlie
its success.

TRUE DIVERSIFICATION

RELIABILITY YOU CAN TRUST

[photo omitted]

Not part of the annual report

Contents

SHAREHOLDER LETTER ...................... 1

ANNUAL REPORT

Templeton Global Long-Short Fund ........ 3

Performance Summary ..................... 9

Financial Highlights and
Statement of Investments ................ 12

Financial Statements .................... 18

Notes to Financial Statements ........... 21

Independent Auditors' Report ............ 26

Board Members and Officers .............. 27

Proxy Voting Policies and Procedures .... 32

- --------------------------------------------------------------------------------

Shareholder Letter

Dear Shareholder:

During the fiscal year ended October 31, 2003, several Asian economies seemed to
be experiencing a cyclical recovery, largely due to improving trade and domestic
demand. Countries in the European Monetary Union experienced slower growth from
the first to second quarters of 2003, partly because of weak spending by
households and businesses and in foreign markets, hampered by the stronger euro.
On a positive note, several European governments worked on fiscal program
reforms, which could accelerate future growth in the region.

Foreign equity markets began a rally in mid-March that continued throughout the
fiscal year. Improved investor sentiment was sustained largely due to the end of
major conflict in Iraq, better control of the spread of sudden acute respiratory
syndrome in Asia and growing confidence in a global economic recovery. For the
12 months under review, the Morgan Stanley Capital International (MSCI) Europe
Australasia Far East (EAFE) Index returned 27.57%. 1

1. Source: Standard and Poor's Micropal. The MSCI EAFE Index is market
capitalization-weighted and measures total returns of equity securities in
developed markets in Europe, Australasia and the Far East.

- --------------------------------------------------------------------------------

EDELIVERY DETAILS
Log in at franklintempleton.com and click on eDelivery. Shareholders who are
registered at franklintempleton.com can receive these reports via email. Not all
accounts are eligible for eDelivery.

-----------------------------------------------------
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
-----------------------------------------------------

Not part of the annual report | 1

[SIDEBAR]
- --------------------------------------------------------------------------------
MARKET TIMING AND
LATE TRADING POLICY
- --------------------------------------------------------------------------------
Franklin Templeton Investments supports strict compliance with and vigorous
enforcement of laws and policies regarding the trading and valuation of mutual
fund shares. Our policies regarding market-timing activities are included in
Fund prospectuses, and our practice is to apply them consistently to all
shareholders given the nature of their accounts with us. We have been very
proactive in our efforts to monitor trading activity in mutual fund shares
that is inconsistent with our policies and procedures, and when detected, such
market-timing trades are rejected. Franklin Templeton prohibits late trading
activity in mutual fund shares.

Historically, patient investors have achieved rewarding results through
evaluating their goals and diversifying their assets. A long-term investment
strategy may offer investors an opportunity to take advantage of a regularly
scheduled investment plan regardless of market fluctuations and includes buying
during market downturns when prices are low and subsequently benefiting from
market rallies. Remember, however, to consider your financial ability to
continue purchases through times of low price levels or changing economic
conditions before committing to such a strategy. We suggest you contact your
financial advisor to discuss your goals and consider establishing a regular
investment plan.

In the accompanying annual report for Templeton Global Long-Short Fund, the
portfolio managers discuss market conditions and how they affected investment
management decisions and Fund performance during the year under review. You will
also find performance data and financial information. Please remember that all
securities markets move up and down, as do mutual fund share prices.

If you would like more frequent updates, franklintempleton.com provides daily
prices, monthly performance figures, portfolio holdings and other information.
You can also access your account, buy and sell shares, read timely commentary
from portfolio managers, and find helpful financial planning tools. We hope you
will take advantage of these online services.

As always, we value your support, welcome your questions and look forward to
serving your investment needs in the future.

Sincerely,

/S/Rupert H. Johnson, Jr.

Rupert H. Johnson, Jr.
President and Chief Executive Officer - Investment Management
Franklin Templeton International Trust

THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF OCTOBER 31, 2003. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE.

2 | Not part of the annual report

Annual Report

Templeton Global Long-Short Fund

YOUR FUND'S GOAL AND PRIMARY INVESTMENTS: Templeton Global Long-Short Fund seeks
capital appreciation in up and down (bull and bear) markets with less volatility
than the overall global stock market through a combination of long and short
positions of companies located throughout the world.

This annual report for Templeton Global Long-Short Fund covers the fiscal year
ended October 31, 2003.

PERFORMANCE OVERVIEW

Templeton Global Long-Short Fund - Class A posted a +5.21% one-year cumulative
total return as of October 31, 2003, as shown in the Performance Summary
beginning on page 9. In comparison, the Fund's benchmark, the Morgan Stanley
Capital International (MSCI) World Index (the Index), posted a 24.32% cumulative
total return during the same period. 1 Since its inception on August 1, 2001,
the Fund has posted a cumulative total return of 7.00% compared to -5.91% for
the Index. The Fund's relative volatility, as measured by the annualized
standard deviation of monthly returns, continued to be low, at just 7.0% for the
12 months under review, or roughly half that of the Index.

ECONOMIC AND MARKET OVERVIEW

A global equity market rally started in late March and continued through the end
of the reporting period, despite ongoing concerns about terrorism and
geopolitical upheaval, particularly in the Middle East. If sustained, 2003 will
be the first calendar year of positive equity returns since 1999, according to
the Index. The rebound began with investors anticipating a global economic
recovery in the second half of 2003. It continued as data suggested
stabilization and possible improvement in the world's economy, led by the
strengthening U.S. economy. Other supporting factors included the end of major
combat operations in Iraq, the apparent control of severe acute respiratory
syndrome in Asia, improved corporate profits, and fewer reported corporate
governance and accounting scandals. In

1. Source: Standard & Poor's Micropal. The MSCI World Index is market
capitalization-weighted and measures total returns of equity securities in
developed markets globally. The index is unmanaged and includes reinvested
dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND COMPLETE LEGAL
TITLES OF ALL PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF
INVESTMENTS (SOI). THE SOI BEGINS ON PAGE 14.

Annual Report | 3

addition, short-term interest rates were reduced further in the U.S., the euro
zone and other areas, resulting in multi-decade low levels. This helped provide
abundant liquidity in global equity markets.

During the fiscal year ended October 31, 2003, gross domestic product growth
accelerated in many countries, including the U.S. and Japan. Numerous economic
indicators showed improvement, including U.S. consumer spending aided by new tax
cuts, mortgage refinancing and car-buying incentives spurred by historically low
financing costs. Consumer sentiment also rose in the U.S., U.K., Germany and
Sweden, as did business sentiment in the U.S., Germany and Japan. Additionally,
commodity prices for gold, silver, platinum and other metals rose anywhere from
10% to more than 30% in response to greater demand. At period-end, calendar year
2003 export projections for certain emerging market economies indicated
increases of approximately 33% in China, 27% in Brazil, 19% in Argentina, 14% in
India and 7% in South Korea, compared with 2002. However, the global job market
remained problematic during the year, but improving U.S. job growth in August,
September and October was an encouraging sign.

INVESTMENT STRATEGY

Our investment philosophy is that a combination of long and short equity
positions can reduce overall volatility and has the potential to provide
positive returns in either up or down markets. We apply a bottom-up,
value-oriented, long-term approach, focusing on the market price of a company's
securities relative to our evaluation of its long-term earnings, asset value and
cash flow potential. We also consider a company's price/earnings ratio, profit
margins and liquidation value. For our long positions, we seek stocks from
companies we believe have strong fundamentals or valuable assets that we think
are overlooked by the market. Among our short positions, our strategy is to
short the stocks of companies we find overvalued by the market where we see the
potential for share price decline.

MANAGER'S DISCUSSION

At fiscal year-end, the Fund's overall exposure, as a percentage of total net
assets, was 84.3% long and 15.4% short, for a 68.9% net long exposure. Fund
performance during the period was varied across most sectors and countries. Our
emerging markets region and materials sector investments stood out because of
the portfolio's considerable net long overweighted positions in that sector
compared with the

4 | Annual Report

PORTFOLIO BREAKDOWN
Based on Total Net Assets as of 10/31/03

- -------------------------------------------------------------------------------
% OF TOTAL % OF
NET ASSETS POSITIONS
- -------------------------------------------------------------------------------
Long Equity Securities Net 84.3% 65
- -------------------------------------------------------------------------------
Short Equity Securities Net -15.4% 15
- -------------------------------------------------------------------------------
TOTAL NET 68.9% (LONG)
- -------------------------------------------------------------------------------

GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets as of 10/31/03

- ------------------------------------------------------------------------------
REGION LONG % SHORT % NET %
- ------------------------------------------------------------------------------
Asia 28.3% 0.0% 28.3%
- ------------------------------------------------------------------------------
Europe 22.7% -2.5% 20.2%
- ------------------------------------------------------------------------------
North America 24.5% -11.4% 13.1%
- ------------------------------------------------------------------------------
Australia & New Zealand 4.4% 0.0% 4.4%
- ------------------------------------------------------------------------------
Latin America 1.5% 0.0% 1.5%
- ------------------------------------------------------------------------------
Middle East & Africa 2.9% -1.5% 1.4%
- ------------------------------------------------------------------------------

Index, positively contributing to performance on absolute and relative bases. In
contrast, the relative underperformance versus the Index of our investments in
North America, Japan and the financials sector stemmed largely from our net long
underweighted exposure to these regions and this sector, compared with the
Index.

The Fund's net long emerging markets exposure, which was overweighted compared
with the Index, outperformed the Index. Related holdings were diversified across
India, Israel, Mexico, South Africa, South Korea and Taiwan. We grew more
interested in emerging markets due to their attractive growth prospects from the
standpoints of their exposure to a possible synchronized global economic
recovery, potential long-term secular growth based on demographics, and
relatively low valuations. South Korea, representing the Fund's largest emerging
markets country exposure at period-end, still had one of the most undervalued
stock markets in the world, trading at only 9.1 times Morgan Stanley's 2004
earnings estimate and benefiting from dramatic restructuring efforts over the
past five years. South Korea's Samsung Electronics remained one of our core
holdings throughout the year under review, and traded at a substantial valuation
discount to its global technology peers. On the short side, one of our core
positions in the emerging markets region was SABMiller, a South African beverage
company that continued to lose market share in the U.S. beer market, and was
exposed to risks involving the integration of the Miller acquisition.

Annual Report | 5

SECTOR/INDUSTRY BREAKDOWN
Based on Total Net Assets as of 10/31/03

- -----------------------------------------------------------------------------
LONG % SHORT % NET %
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Banks 7.8% 0.0% 7.8%
- -----------------------------------------------------------------------------
Insurance 7.2% 0.0% 7.2%
- -----------------------------------------------------------------------------
Metals & Mining 7.1% 0.0% 7.1%
- -----------------------------------------------------------------------------
Diversified Telecommunication Services 6.5% 0.0% 6.5%
- -----------------------------------------------------------------------------
Industrial Conglomerates 4.4% 0.0% 4.4%
- -----------------------------------------------------------------------------
Software 3.7% 0.0% 3.7%
- -----------------------------------------------------------------------------
IT Services 3.6% 0.0% 3.6%
- -----------------------------------------------------------------------------
Chemicals 3.1% 0.0% 3.1%
- -----------------------------------------------------------------------------
Commercial Services & Supplies 3.0% 0.0% 3.0%
- -----------------------------------------------------------------------------
Oil & Gas 3.0% 0.0% 3.0%
- -----------------------------------------------------------------------------
Semiconductor Equipment & Products 2.9% 0.0% 2.9%
- -----------------------------------------------------------------------------
Electrical Equipment 2.7% 0.0% 2.7%
- -----------------------------------------------------------------------------
Electric Utilities 1.9% 0.0% 1.9%
- -----------------------------------------------------------------------------
Automobiles 1.8% 0.0% 1.8%
- -----------------------------------------------------------------------------
Machinery 1.8% 0.0% 1.8%
- -----------------------------------------------------------------------------
Auto Components 2.4% -0.7% 1.7%
- -----------------------------------------------------------------------------
Road & Rail 1.6% 0.0% 1.6%
- -----------------------------------------------------------------------------
Food Products 1.5% 0.0% 1.5%
- -----------------------------------------------------------------------------
Pharmaceuticals 1.4% 0.0% 1.4%
- -----------------------------------------------------------------------------
Wireless Telecommunication Services 1.3% 0.0% 1.3%
- -----------------------------------------------------------------------------
Electronic Equipment & Instruments 1.8% -0.6% 1.2%
- -----------------------------------------------------------------------------
Computers & Peripherals 1.1% 0.0% 1.1%
- -----------------------------------------------------------------------------
Media 1.1% 0.0% 1.1%
- -----------------------------------------------------------------------------
Containers & Packaging 0.8% 0.0% 0.8%
- -----------------------------------------------------------------------------
Diversified Financials 5.9% -5.1% 0.8%
- -----------------------------------------------------------------------------
Leisure Equipment & Products 0.5% 0.0% 0.5%
- -----------------------------------------------------------------------------
Airlines 0.8% -0.5% 0.3%
- -----------------------------------------------------------------------------
Household Durables 1.7% -1.5% 0.2%
- -----------------------------------------------------------------------------
Specialty Retail 0.9% -1.1% -0.2%
- -----------------------------------------------------------------------------
Multiline Retail 1.0% -2.0% -1.0%
- -----------------------------------------------------------------------------
Food & Staples Retailing 0.0% -1.1% -1.1%
- -----------------------------------------------------------------------------
Communications Equipment 0.0% -1.3% -1.3%
- -----------------------------------------------------------------------------
Beverages 0.0% -1.5% -1.5%
- -----------------------------------------------------------------------------

6 | Annual Report

The Fund's net long materials sector weighting contributed positively to
performance, and was more than four times the Index's at period-end. Within the
sector, the Fund was diversified across the containers and packaging, metals and
mining, and chemicals industries. Increased demand for copper, nickel and iron
ore contributed to higher commodity prices, which had a positive impact on
related portfolio holdings.

We primarily attribute the Fund's relative underperformance to the Index to our
underweighted position in North America, and in particular the U.S., which
performed well partly because of improving economic data. At period-end the
Standard & Poor's 500 Composite Index (S&P 500) traded at 18.0 times 2004
earnings per share according to Morgan Stanley, a premium to the MSCI All
Country (AC) World Free Index's 16.9 times 2004 earnings per share. 2 In
applying our rigorous investment strategy, we remained relatively neutral about
the prospects for U.S. equities due to full valuations and poor quality
earnings. As a result, many of the Fund's short positions were in the U.S. One
of our core short positions in the region was Toll Brothers, a luxury
homebuilder that was exposed to the risk of a weakened housing market and at
period-end traded at a higher valuation compared with the sector. However,
during the period under review this was one of the larger detractors from
returns, since the U.S. housing market remained strong. Another core short
position was Walgreen, the largest U.S. retail drug store chain that operates in
a challenging environment of promotions and price competition.

In addition, the Fund's net long financial sector exposure on October 31, 2003,
which was underweighted compared with the Index, also contributed to the Fund's
relative underperformance. Our financial holdings at period-end were a mix of
insurance, diversified financial services, capital markets, commercial banks,
thrifts and mortgage finance. During the period, returns were negatively
impacted by the long position in XL Capital, which was one of our core holdings.
However, consistent with our strategy, we remained positive on the stock because
we believed it stood out as one of the better positioned insurers as its
business mix allowed it to benefit from continued price increases in casualty
lines.

Although our net long exposure to developed Asian countries drastically
increased during the reporting period, from 2.5% to 16.0% of total net assets,
our initial underweighting during the period -- especially in Japan, our largest
country exposure in the region -- contributed to the Fund's relative
underperformance. Although we remained skeptical about a sustainable Japanese
market rebound at

TOP 10 LONG HOLDINGS
10/31/03

- ------------------------------------------------------------
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- ------------------------------------------------------------
Ishares MSCI Hong Kong Index Fund 2.5%
DIVERSIFIED FINANCIALS, HONG KONG
- ------------------------------------------------------------
Denso Corp. 2.4%
AUTO COMPONENTS, JAPAN
- ------------------------------------------------------------
Smiths Group PLC 2.4%
INDUSTRIAL CONGLOMERATES, U.K.
- ------------------------------------------------------------
Samsung Electronics Co. Ltd. 2.2%
SEMICONDUCTOR EQUIPMENT & PRODUCTS,
SOUTH KOREA
- ------------------------------------------------------------
UBS AG 2.0%
BANKS, SWITZERLAND
- ------------------------------------------------------------
Hutchison Whampoa Ltd. 2.0%
INDUSTRIAL CONGLOMERATES, HONG KONG
- ------------------------------------------------------------
Iberdrola SA, Br. 1.9%
ELECTRIC UTILITIES, SPAIN
- ------------------------------------------------------------
XL Capital Ltd., A 1.9%
INSURANCE, BERMUDA
- ------------------------------------------------------------
Volkswagen AG 1.8%
AUTOMOBILES, GERMANY
- ------------------------------------------------------------
Hubbell Inc., B 1.8%
ELECTRICAL EQUIPMENT, U.S.
- ------------------------------------------------------------

2. Source: Standard & Poor's Micropal. The S&P 500 consists of 500 stocks chosen
for market size, liquidity and industry group representation. Each stock's
weight in the index is proportionate to its market value. The S&P 500 is one of
the most widely used benchmarks of U.S. equity performance. The MSCI AC World
Free Index is market capitalization-weighted and measures total returns of
equity securities available to foreign (non-local) investors in developed and
emerging markets globally.

Annual Report | 7

period-end, our analysts identified specific opportunities where Japanese
companies were trading at significant discounts to our assessment of their
potential earnings and cash flow growth profiles over a five-year period. For
example, one of our core holdings is Denso, a Japanese auto components company
with a strong balance sheet that increased market share and improved economies
of scale.

We thank you for your interest in Templeton Global Long-Short Fund, welcome your
questions and comments and look forward to serving your investment needs in the
months ahead.

[PHOTO DALE WINNER OMITTED]
/S/Dale Winner, CFA

Dale Winner, CFA

[PHOTO LISA MYERS OMITTED]
/S/Lisa Myers, CFA

Lisa Myers, CFA

[PHOTO JEFFREY A. EVERETT OMITTED]
/S/Jeffrey A. Everett

Jeffrey A. Everett, CFA
Portfolio Management Team
Templeton Global Long-Short Fund

THIS DISCUSSION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF
OCTOBER 31, 2003, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR MAIN
INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE DEPENDING
ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY NOT BE
RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE, BUT THE ADVISOR MAKES NO REPRESENTATION OR WARRANTY AS TO THEIR
COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT
PHILOSOPHY.

8 | Annual Report

Performance Summary as of 10/31/03

PRICE INFORMATION
- -----------------------------------------------------------------------------------------------------
CLASS A CHANGE 10/31/03 10/31/02
- -----------------------------------------------------------------------------------------------------

Net Asset Value (NAV) +$0.53 $10.70 $10.17
- -----------------------------------------------------------------------------------------------------
CLASS B CHANGE 10/31/03 10/31/02
- -----------------------------------------------------------------------------------------------------
Net Asset Value (NAV) +$0.46 $10.56 $10.10
- -----------------------------------------------------------------------------------------------------

PERFORMANCE
- -------------------------------------------------------------------------------------------------------
CLASS A 1-YEAR INCEPTION (7/31/01)
- -------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +5.21% +7.00%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 -0.83% +0.38%
- -------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $9,917 $10,085
- -------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 -4.92% -1.58%
- -------------------------------------------------------------------------------------------------------
CLASS B 1-YEAR INCEPTION (7/31/01)
- -------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +4.55% +5.60%
- -------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +0.55% +1.15%
- -------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $10,055 $10,260
- -------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 -3.80% -0.88%
- -------------------------------------------------------------------------------------------------------

FOR MORE CURRENT PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.

Annual Report | Past performance does not guarantee future results. | 9

Performance Summary (CONTINUED)

TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT

Total return represents the change in value of an investment over the periods
shown. It includes the applicable maximum sales charge(s), Fund expenses,
account fees and reinvested distributions. The unmanaged index includes
reinvested dividends. It differs from the Fund in composition and does not pay
management fees or expenses. One cannot invest directly in an index.

AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS A 10/31/03
- --------------------------------------
1-Year -0.83%
- --------------------------------------
Since Inception (7/31/01) +0.38%
- --------------------------------------

CLASS A (7/31/01-10/31/03)
Date Templeton Global Long-Short Fund MSCI World Index 5
7/31/01 $ 9,425 $10,000
9,397 9,522
9,604 8,684
9,557 8,851
9,623 9,376
9,595 9,436
9,538 9,152
2/28/02 9,566 9,074
10,038 9,477
10,179 9,158
10,245 9,180
9,906 8,625
9,632 7,899
9,661 7,915
9,576 7,046
9/30/02 9,585 7,568
9,661 7,977
9,482 7,592
9,255 7,363
9,199 7,237
9,057 7,217
4/30/03 8,982 7,862
9,180 8,315
9,293 8,462
9,510 8,635
9,680 8,824
9,661 8,880
10/31/03 10,085 9,409

AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS B 10/31/03
- --------------------------------------
1-Year +0.55%
- --------------------------------------
Since Inception (7/31/01) +1.15%
- --------------------------------------

CLASS B (7/31/01-10/31/03)

Date Templeton Global Long-Short Fund MSCI World Index 5
7/31/01 $10,000 $10,000
8/31/01 9,970 9,522
9/30/01 10,190 8,684
10/31/01 10,140 8,851
11/30/01 10,210 9,376
12/31/01 10,170 9,436
1/31/02 10,100 9,152
2/28/02 10,130 9,074
3/31/02 10,620 9,477
4/30/02 10,770 9,158
5/31/02 10,830 9,180
6/30/02 10,460 8,625
7/31/02 10,170 7,899
8/31/02 10,200 7,915
9/30/02 10,090 7,046
10/31/02 10,100 7,568
11/30/02 10,180 7,977
12/31/02 9,980 7,592
1/31/03 9,740 7,363
2/28/03 9,680 7,237
3/31/03 9,510 7,217
4/30/03 9,430 7,862
5/31/03 9,630 8,315
6/30/03 9,740 8,462
7/31/03 9,970 8,635
8/31/03 10,140 8,824
9/30/03 10,110 8,880
10/31/03 10,260 9,409

10 | Past performance does not guarantee future results. | Annual Report

Performance Summary (CONTINUED)

ENDNOTES

THE FUND'S INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH THE FUND'S
LONG-SHORT INVESTMENT STRATEGY, MARKET CONDITIONS, CURRENCY EXCHANGE RATES AND
THE POLITICAL, ECONOMIC AND REGULATORY CLIMATES OF THE COUNTRIES WHERE THE FUND
INVESTS. ALTHOUGH THE FUND INTENDS TO REDUCE RISK BY HAVING BOTH LONG AND SHORT
POSITIONS, IT IS POSSIBLE THE FUND'S LONG POSITIONS WILL DECLINE IN VALUE AT THE
SAME TIME THE VALUE OF STOCKS SOLD SHORT INCREASES, THEREBY INCREASING THE
POTENTIAL FOR LOSS. ALSO, THE FUND MAY NOT ALWAYS BE ABLE TO COVER A SHORT
POSITION AT A PARTICULAR TIME OR AT AN ACCEPTABLE PRICE. THE FUND'S PROSPECTUS
ALSO CONTAINS A DESCRIPTION OF THE MAIN INVESTMENT RISKS.

CLASS A: Subject to the maximum 5.75% initial sales charge.

CLASS B: Subject to no initial sales charge, but subject to a contingent
deferred sales charge declining from 4% to 0% over six years. These
shares have higher annual fees and expenses than Class A shares.

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 any applicable maximum
sales charge(s).
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include any applicable maximum sales
charge(s).
4. In accordance with SEC rules, we provide standardized average
annual total return information through the latest calendar quarter.
5. Source: Standard & Poor's Micropal. The MSCI World Index is market
capitalization-weighted and measures total returns of equity securities in
developed markets globally.

Annual Report | Past performance does not guarantee future results. | 11

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS

TEMPLETON GLOBAL LONG-SHORT FUND

-------------------------------------
YEAR ENDED OCTOBER 31,
2003 2002 2001 C
-------------------------------------
CLASS A
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year .......................................... $10.17 $10.14 $10.00
-------------------------------------

Income from investment operations:

Net investment income (loss) a ............................................. (.05) (.02) (.01)

Net realized and unrealized gains (losses) ................................. .58 .05 .15
-------------------------------------
Total from investment operations ............................................ .53 .03 .14
-------------------------------------
Net asset value, end of year ................................................ $10.70 $10.17 $10.14
-------------------------------------

Total return b .............................................................. 5.21% .30% 1.40%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) ............................................. $93,194 $109,790 $32,235

Ratios to average net assets:*

Expenses ................................................................... 2.87% 2.59% 2.38%d

Expenses, excluding waiver and payments by affiliate ....................... 2.87% 2.83% 5.26%d

Net investment income (loss) ............................................... (.50)% (.21)% (.45)%d

Portfolio turnover rate ..................................................... 175.68% 196.67% 15.76%

Portfolio turnover rate including short sales ............................... 471.22% 572.56% 249.61%

*Ratios to average net assets, excluding dividend
expense on securities sold short:

Expenses .................................................................. 2.46% 2.39% 2.37%d

Expenses, excluding waiver and payments by affiliate ...................... 2.46% 2.63% 5.25%d

<FN>
a Based on average shares outstanding.
b Total return does not reflect sales commissions and is not annualized for
periods less than one year.
c For the period July 31, 2001 (inception date) to October 31, 2001.
d Annualized.
</FN>

12 | Annual Report

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

-------------------------------------
YEAR ENDED OCTOBER 31,
2003 2002 2001 C
-------------------------------------
CLASS B
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)

Net asset value, beginning of year ....................................... $10.10 $10.13 $10.00
-------------------------------------

Income from investment operations:

Net investment income (loss) a .......................................... (.12) (.09) --d

Net realized and unrealized gains (losses) .............................. .57 .06 .13
-------------------------------------
Total from investment operations ......................................... .45 (.03) .13
-------------------------------------
Net asset value, end of year ............................................. $10.55 $10.10 $10.13
-------------------------------------

Total return b ........................................................... 4.55% (.30)% 1.30%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of year (000's) .......................................... $46,270 $50,190 $10,489

Ratios to average net assets:*

Expenses ................................................................ 3.57% 3.25% 2.67% e

Expenses, excluding waiver and payments by affiliate .................... 3.57% 3.49% 5.55% e

Net investment income (loss) ............................................ (1.20)% (.87)% (.13)% e

Portfolio turnover rate .................................................. 175.68% 196.67% 15.76%

Portfolio turnover rate including short sales ............................ 471.22% 572.56% 249.61%

*Ratios to average net assets, excluding dividend
expense on securities sold short:

Expenses ............................................................... 3.16% 3.05% 2.66% e

Expenses, excluding waiver and payments by affiliate ................... 3.16% 3.29% 5.54% e

<FN>
a Based on average shares outstanding.
b Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized for periods less than one year.
c For the period July 31, 2001 (inception date) to October 31, 2001.
d Actual net investment loss per share was $.003.
e Annualized.
</FN>

Annual Report | See notes to financial statements. | 13

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, OCTOBER 31, 2003

- ---------------------------------------------------------------------------------------------------------------------------
TEMPLETON GLOBAL LONG-SHORT FUND INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------

COMMON STOCKS AND RIGHTS 84.3%
AUSTRALIA 4.4%
Alumina Ltd. ................................... Metals & Mining 343,910 $ 1,454,371
BHP Billiton PLC ............................... Metals & Mining 264,940 2,080,486
John Fairfax Holdings Ltd. ..................... Media 574,890 1,476,650
Qantas Airways Ltd. ............................ Airlines 434,000 1,111,684
-------------
6,123,191
-------------
BERMUDA 2.9%
Ace Ltd. ....................................... Insurance 37,825 1,361,700
a XL Capital Ltd., A ............................. Insurance 37,850 2,630,575
-------------
3,992,275
-------------
CANADA 1.8%
Barrick Gold Corp. ............................. Metals & Mining 98,925 1,926,070
b Celestica Inc. ................................. Electronic Equipment & Instruments 41,690 591,998
-------------
2,518,068
-------------
GERMANY 3.4%
Muenchener Rueckversicherungs-Gesellschaft ..... Insurance 17,510 2,088,449
b Muenchener Rueckversicherungs-gesellschaft,
rts., 11/12/03 ................................ Insurance 17,510 144,726
Volkswagen AG .................................. Automobiles 50,430 2,544,305
-------------
4,777,480
-------------
HONG KONG 7.1%
Bank of East Asia Ltd. ......................... Banks 793,040 2,369,204
Giordano International Ltd. .................... Specialty Retail 2,768,000 1,247,537
Hutchison Whampoa Ltd. ......................... Industrial Conglomerates 358,000 2,777,535
Ishares MSCI Hong Kong Index Fund .............. Diversified Financials 348,270 3,500,113
-------------
9,894,389
-------------
INDIA 1.6%
Satyam Computers Services Ltd. ................. IT Services 326,620 2,206,054
-------------
ISRAEL 1.4%
b Check Point Software Technologies Ltd. ......... Software 117,526 1,996,767
-------------
ITALY 1.5%
Eni SpA ........................................ Oil & Gas 134,398 2,134,194
-------------
JAPAN 7.8%
Denso Corp. .................................... Auto Components 177,800 3,372,111
b Fujitsu Ltd. ................................... Computers & Peripherals 136,000 852,358
Hitachi Ltd. ................................... Electronic Equipment & Instruments 123,000 722,772
Ishares MSCI Japan Index Fund .................. Diversified Financials 146,000 1,349,040
Nintendo Co. Ltd. .............................. Software 13,000 1,003,957
Nippon Telegraph & Telephone Corp. ............. Diversified Telecommunication Services 427 1,907,100
Sony Corp. ..................................... Household Durables 27,700 965,034
Toshiba Corp. .................................. Computers & Peripherals 162,000 649,857
-------------
10,822,229
-------------

14 | Annual Report

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, OCTOBER 31, 2003 (CONTINUED)

COMMON STOCKS AND RIGHTS (CONT.)
MEXICO 1.5%
Telefonos de Mexico SA de CV (TELMEX), L, ADR .. Diversified Telecommunication Services 66,537 $ 2,139,165
-------------
NETHERLANDS .8%
b ASML Holding NV ................................ Semiconductor Equipment & Products 67,350 1,168,928
-------------
PORTUGAL 1.7%
Portugal Telecom SGPS SA ....................... Diversified Telecommunication Services 286,560 2,408,487
-------------
SINGAPORE 1.2%
DBS Group Holdings Ltd. ........................ Banks 202,000 1,659,209
-------------
SOUTH AFRICA 1.5%
AngloGold Ltd., ADR ............................ Metals & Mining 52,381 2,024,002
-------------
SOUTH KOREA 9.7%
Dae Duck Electronics Co. Ltd. .................. Electronic Equipment & Instruments 132,110 1,216,729
Halla Climate Control Co. Ltd. ................. Electrical Equipment 17,180 1,220,818
Kookmin Bank ................................... Banks 34,380 1,254,935
KT Corp., ADR .................................. Diversified Telecommunication Services 71,834 1,415,848
Koram Bank ..................................... Banks 107,330 1,233,366
POSCO .......................................... Metals & Mining 20,050 2,337,896
Samsung Electronics Co. Ltd. ................... Semiconductor Equipment & Products 7,570 3,006,253
SK Telecom Co. Ltd. ............................ Wireless Telecommunication Services 10,490 1,852,480
-------------
13,538,325
-------------
SPAIN 1.9%
Iberdrola SA, Br. .............................. Electric Utilities 161,542 2,694,808
-------------
SWITZERLAND 3.6%
Nestle SA ...................................... Food Products 9,620 2,118,006
UBS AG ......................................... Banks 46,386 2,848,431
-------------
4,966,437
-------------
TAIWAN .9%
Chunghwa Telecom Co Ltd, ADR ................... Diversified Telecommunication Services 77,100 1,193,508
-------------
UNITED KINGDOM 9.8%
Avis Europe PLC ................................ Road & Rail 1,203,054 2,266,100
BP PLC ......................................... Oil & Gas 307,216 2,132,250
Brambles Industries PLC ........................ Commercial Services & Supplies 715,220 2,166,451
Smiths Group PLC ............................... Industrial Conglomerates 279,410 3,326,140
Standard Chartered PLC ......................... Banks 83,489 1,335,308
Weir Group PLC ................................. Machinery 519,990 2,470,722
-------------
13,696,971
-------------
UNITED STATES 19.8%
a,b Beazer Homes USA Inc. ......................... Household Durables 14,675 1,460,162
a,b BMC Software Inc. ............................. Software 125,828 2,186,891
a Bristol-Myers Squibb Co. ....................... Pharmaceuticals 77,610 1,968,966
a Dow Chemical Co. ............................... Chemicals 58,660 2,210,895
a Eastman Chemical Co. ........................... Chemicals 64,180 2,083,283
Electronic Data Systems Corp. .................. IT Services 46,740 1,002,573

Annual Report | 15

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, OCTOBER 31, 2003 (CONTINUED)

COMMON STOCKS AND RIGHTS (CONT.)
UNITED STATES (CONT.)
a,b Gartner Inc., A ............................... IT Services 139,210 $ 1,774,928
a Hubbell Inc., B ................................ Electrical Equipment 58,690 2,514,280
a JP Morgan Chase & Co. .......................... Diversified Financials 51,620 1,853,158
Mattel Inc. .................................... Leisure Equipment & Products 35,420 685,731
a Merrill Lynch & Co. Inc. ....................... Diversified Financials 25,510 1,510,192
a R.R. Donnelley & Sons Co. ...................... Commercial Services & Supplies 81,240 2,112,240
Target Corp. ................................... Multiline Retail 34,927 1,387,999
Temple-Inland Inc. ............................. Containers & Packaging 20,660 1,116,260
a Willis Group Holdings Ltd. ..................... Insurance 71,020 2,364,966
W.R. Berkley Corp. ............................. Insurance 41,215 1,413,262
-------------
27,645,786
-------------
TOTAL COMMON STOCKS AND RIGHTS
(COST $100,463,612) ........................... 117,600,273
-------------

----------------
PRINCIPAL AMOUNT
----------------
SHORT TERM INVESTMENTS (COST $9,976,750) 7.2%
UNITED STATES
U.S. Treasury Bill, .932%, 1/29/04 ............. Government Bonds $ 10,000,000 9,977,690
-------------
TOTAL INVESTMENTS (COST $110,440,362) 91.5% .... 127,577,963
SECURITIES SOLD SHORT (15.4)% .................. (21,520,232)
OTHER ASSETS, LESS LIABILITIES 23.9% ........... 33,406,233
-------------
NET ASSETS 100.0% .............................. $139,463,964
-------------

----------------
SHARES
----------------
c SECURITIES SOLD SHORT

ISSUER

GERMANY 1.5%
Deutsche Lufthansa AG .......................... Airlines 49,680 773,886
Infineon Technologies AG ....................... Multiline Retail 90,320 1,333,454
-------------
2,107,340
-------------
SOUTH AFRICA 1.5%
SABMiller PLC .................................. Beverages 254,310 2,148,056
-------------
SWEDEN 0.5%
Hennes & Mauritz AB, B ......................... Specialty Retail 30,290 642,622
-------------
UNITED KINGDOM 0.5%
Northern Rock PLC .............................. Diversified Financials 62,360 749,751
-------------

16 | Annual Report

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, OCTOBER 31, 2003 (CONTINUED)

SECURITIES SOLD SHORT (CONT.)
UNITED STATES 11.4%
Brocade Communications Systems Inc. ............ Communications Equipment 167,700 $ 1,098,435
Dillards Inc., A ............................... Multiline Retail 89,910 1,453,845
Juniper Networks Inc. .......................... Communications Equipment 38,360 690,096
Nasdaq 100 ..................................... Diversified Financials 122,680 4,315,882
Sanmina-Sci Corp. .............................. Electronic Equipment & Instruments 71,730 756,752
S&P 500 Depository Receipt ..................... Diversified Financials 20,130 2,120,293
Tiffany & Co. .................................. Specialty Retail 17,010 807,125
Toll Brothers Inc. ............................. Household Durables 58,160 2,142,614
Visteon Corp. .................................. Auto Components 157,480 1,017,321
Walgreen Co. ................................... Food & Staples Retailing 42,220 1,470,100
-------------
15,872,463
-------------
TOTAL SECURITIES SOLD SHORT (PROCEEDS $19,121,059) $ 21,520,232
-------------

<FN>
a See Note 1(e) regarding securities segregated with broker for securities sold short.
b Non-income producing.
c See Note 1(e) regarding securities sold short.
</FN>

Annual Report | See notes to financial statements. | 17

Franklin Templeton International Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
October 31, 2003

------------------
TEMPLETON GLOBAL
LONG-SHORT FUND
------------------
Assets:
Investments in securities:

Cost ............................................................................................... $110,440,362
------------------
Value .............................................................................................. 127,577,963
Cash ................................................................................................ 5,758,629
Receivables:
Investment securities sold ......................................................................... 1,348,042
Capital shares sold ................................................................................ 560,906
Dividends and interest ............................................................................. 227,288
Deposits with broker for securities sold short ...................................................... 27,344,939
------------------
Total assets ................................................................................... 162,817,767
------------------
Liabilities:
Payables:
Investment securities purchased .................................................................... 1,173,262
Capital shares redeemed ............................................................................ 371,308
Affiliates ......................................................................................... 231,011
Securities sold short, at value (proceeds $19,121,059) .............................................. 21,520,232
Deferred tax liability (Note 1h) .................................................................... 479
Other liabilities ................................................................................... 57,511
------------------
Total liabilities .............................................................................. 23,353,803
------------------
Net assets, at value ................................................................................. $139,463,964
------------------
Net assets consist of:
Undistributed net investment income ................................................................. $ (3,534)
Net unrealized appreciation (depreciation) .......................................................... 14,742,479
Accumulated net realized gain (loss) ................................................................ (9,644,531)
Capital shares ...................................................................................... 134,369,550
------------------
Net assets, at value ................................................................................. $139,463,964
------------------
CLASS A:
Net assets, at value ................................................................................ $ 93,194,302
------------------
Shares outstanding .................................................................................. 8,708,882
------------------
Net asset value per share a ......................................................................... $10.70
------------------
Maximum offering price per share (Net asset value per share (DIVIDE) 94.25%) ....................... $11.35
------------------
CLASS B:
Net assets, at value ................................................................................ $ 46,269,662
------------------
Shares outstanding .................................................................................. 4,383,855
------------------
Net asset value and maximum offering price per share a .............................................. $10.55
------------------

<FN>
a Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
</FN>

18 | See notes to financial statements. | Annual Report

Franklin Templeton International Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the year ended October 31, 2003

------------------
TEMPLETON GLOBAL
LONG-SHORT FUND
------------------
Investment income:
(net of foreign taxes of $235,085)

Dividends .................................................................................. $ 2,622,858
Interest ................................................................................... 757,151
-------------
Total investment income ............................................................... 3,380,009
-------------
Expenses:
Management fees (Note 3) ................................................................... 2,493,635
Administrative fees (Note 3) ............................................................... 286,026
Distribution fees (Note 3)
Class A ................................................................................... 283,039
Class B ................................................................................... 461,809
Transfer agent fees (Note 3) ............................................................... 183,700
Custodian fees ............................................................................. 24,300
Reports to shareholders .................................................................... 49,300
Registration and filing fees ............................................................... 20,900
Professional fees .......................................................................... 33,200
Trustees' fees and expenses ................................................................ 5,000
Dividends on securities sold short ......................................................... 586,485
Other ...................................................................................... 3,300
-------------
Total expenses ........................................................................ 4,430,694
-------------
Net investment income (loss) ..................................................... (1,050,685)
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ............................................................................... 7,172,458
Securities sold short (Note 1e) ........................................................... (11,632,170)
Foreign currency transactions ............................................................. (293,651)
-------------
Net realized gain (loss) .............................................................. (4,753,363)
Net unrealized appreciation (depreciation) on:
Investments ............................................................................... 11,729,544
Translation of assets and liabilities denominated in foreign currencies ................... (26,835)
Deferred taxes (Note 1h) .................................................................. (479)
-------------
Net unrealized appreciation (depreciation) ............................................ 11,702,230
-------------
Net realized and unrealized gain (loss) ..................................................... 6,948,867
-------------
Net increase (decrease) in net assets resulting from operations ............................. $ 5,898,182
-------------

Annual Report | See notes to financial statements. | 19

Franklin Templeton International Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS
for the years ended October 31, 2003 and 2002

--------------------------------
TEMPLETON GLOBAL LONG-SHORT FUND
--------------------------------
2003 2002
--------------------------------
Increase (decrease) in net assets:
Operations:

Net investment income (loss) ...................................... $ (1,050,685) $ (447,914)
Net realized gain (loss) from investments,
securities sold short, and foreign
currency transactions .............................................. (4,753,363) (5,399,467)
Net unrealized appreciation (depreciation) on
investments, translation of assets and
liabilities denominated in foreign currencies,
and deferred taxes ............................................... 11,702,230 3,037,253
-------------------------------
Net increase (decrease) in net assets
resulting from operations ..................................... 5,898,182 (2,810,128)
Capital share transactions (Note 2):
Class A ........................................................... (20,656,773) 79,334,391
Class B ........................................................... (5,757,977) 40,732,428
-------------------------------
Total capital share transactions .................................... (26,414,750) 120,066,819
Net increase (decrease) in net assets ......................... (20,516,568) 117,256,691
Net assets:
Beginning of year .................................................. 159,980,532 42,723,841
-------------------------------
End of year ........................................................ $139,463,964 $159,980,532
-------------------------------
Undistributed net investment income included in net assets:
End of year ........................................................ $ (3,534) $ (4,819)
-------------------------------

20 | See notes to financial statements. | Annual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS

TEMPLETON GLOBAL LONG-SHORT FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Templeton Global Long-Short Fund (the Fund) is a separate, diversified series of
Franklin Templeton International Trust (the Trust) which is registered under the
Investment Company Act of 1940 as an open-end, diversified investment company.
The Fund seeks capital appreciation in up and down (bull and bear) markets with
less volatility than the overall global stock market through a combination of
long and short positions of companies located throughout the world. The
following summarizes the Fund's significant accounting policies.

A. SECURITY VALUATION

B. FOREIGN CURRENCY TRANSLATION

C. FOREIGN CURRENCY CONTRACTS

Annual Report | 21

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. FOREIGN CURRENCY CONTRACTS (CONTINUED)

D. OPTION CONTRACTS

The Fund may purchase or write options. Options are contracts entitling the
holder to purchase or sell a specified number of shares or units of a particular
security at a specified price. Options purchased are recorded as investments;
options written (sold) are recorded as liabilities. When the exercise of an
option results in a cash settlement, the difference between the premium
(original option value) and the settlement proceeds is realized as a gain or
loss. When securities are acquired or delivered upon exercise of an option, the
acquisition cost or sale proceeds are adjusted by the amount of the premium.
When an option is closed, the difference between the premium and the cost to
close the position is realized as a gain or loss. When an option expires, the
premium is realized as a gain for options written or as a loss for options
purchased. The risks include the possibility there may be an illiquid options
market or the inability of the counterparties to fulfill their obligations under
the contract. Writing options involves, to varying degrees, elements of market
risk in excess of the amount recognized in the Statement of Assets and
Liabilities.

E. SECURITIES SOLD SHORT

The Fund is engaged in selling securities short, which obligates the Fund to
replace a borrowed security with the same security at current market value. The
Fund would incur a loss if the price of the security increases between the date
of the short sale and the date on which the Fund replaces the borrowed security.
The Fund would realize a gain if the price of the security declines between
those dates. A gain, limited to the price at which the Fund sold the security
short or a loss, unlimited in size, will be recognized upon the termination of a
short sale.

The Fund is required to establish a margin account with the broker lending the
security sold short. While the short sale is outstanding, the broker retains the
proceeds of the short sale and the Fund must maintain a deposit for the broker
consisting of cash and securities having a value equal to a specified percentage
of the value of the securities sold short.

F. INCOME TAXES

22 | Annual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

G. 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, dividends declared on securities sold short, and distributions
to shareholders are recorded on the ex-dividend date.

H. DEFERRED TAXES

I. ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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.

J. GUARANTEES AND INDEMNIFICATIONS

Under the Fund's organizational documents, its officers and trustees are
indemnified against certain liability arising out of the performance of their
duties to the Fund. Additionally, in the normal course of business the Fund
enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund
that have not yet occurred.
However, based on experience, the Fund expects the risk of loss to be remote.

Annual Report | 23

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

2. SHARES OF BENEFICIAL INTEREST

The Fund offers two classes of shares: Class A and Class B. Each class of shares
differs by its initial sales load, contingent deferred sales charges,
distribution fees, voting rights on matters affecting a single class and its
exchange privilege.

At October 31, 2003, there were an unlimited number of shares authorized ($.01
par value). Transactions in the Fund's shares were as follows:

---------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
2003 2002
---------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------
CLASS A SHARES:

Shares sold .................... 3,128,010 $ 31,123,876 10,357,789 $107,355,343
Shares redeemed ................ (5,217,730) (51,780,649) (2,739,229) (28,020,952)
---------------------------------------------------------------------------------
Net increase (decrease) ........ (2,089,720) $(20,656,773) 7,618,560 $ 79,334,391
---------------------------------------------------------------------------------
CLASS B SHARES:
Shares sold .................... 670,058 $ 6,554,730 4,347,087 $ 44,958,919
Shares redeemed ................ (1,256,200) (12,312,707) (412,076) (4,226,491)
---------------------------------------------------------------------------------
Net increase (decrease) ........ (586,142) $ (5,757,977) 3,935,011 $ 40,732,428
---------------------------------------------------------------------------------

3. TRANSACTIONS WITH AFFILIATES

Certain officers of the Trust are also officers and/or directors of Franklin
Advisers, Inc. (Advisers), Franklin Templeton Services, LLC (FT Services),
Franklin/Templeton Distributors, Inc. (Distributors) and Franklin/Templeton
Investor Services, LLC (Investor Services), the Fund's investment manager,
administrative manager, principal underwriter, and transfer agent, respectively.

The Fund pays an investment management fee based on the annual rate of 1.50%
(the "Base Fee") of average daily net assets. The Base Fee will be adjusted, on
a monthly basis either (i) upward at the rate of 0.01% for each 0.05% that the
investment performance of the Fund exceeds the sum of 2.00% plus the investment
record of the Morgan Stanley Capital International World Index (the "Index") for
the past 12 months, or (ii) downward at the rate of 0.01% for each 0.05% that
the record of the Index less 2.00% exceeds the investment performance of the
Fund for the past 12 months. Therefore the maximum annual fee payable to
Advisers will be 2.50% of average daily net assets and the minimum annual fee
will be 0.50%. For the period, the total annualized management fee rate,
including the performance adjustment, was 1.74% of average daily net assets.

The Fund pays an administrative fee to FT Services of .20% per year of the
Fund's average daily net assets.

24 | Annual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

3. TRANSACTIONS WITH AFFILIATES (CONTINUED)

Under a subadvisory agreement, Templeton Global Advisers, Ltd. (TGAL), provides
subadvisory services to the Fund and receives from Advisers fees based on the
average daily net assets of the Fund.

The Fund reimburses Distributors for costs incurred in marketing the Fund's
shares up to .35% and 1.00% per year of the average daily net assets of Class A
and Class B shares, respectively.

Distributors paid net commissions on sales of the Fund's shares and received
contingent deferred sales charges for the year of $222,598 and $210,870,
respectively.

The Fund paid transfer agent fees of $183,700, of which $113,274 was paid to
Investor Services.

4. INCOME TAXES

At October 31, 2003, the cost of investments and securities sold short and net
unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments ....................................... $91,446,272
------------
Unrealized appreciation ................................... 17,820,118
Unrealized depreciation ................................... (3,208,659)
------------
Net unrealized appreciation (depreciation) ................ $14,611,459
------------

Net investment loss differs for financial statement and tax purposes primarily
due to differing treatments of amortization of organization costs and certain
dividend payments on short sales.

Net realized losses differ for financial statement and tax purposes primarily
due to differing treatment of wash sales and certain dividend payments on short
sales.

At October 31, 2003, the Fund had tax basis capital losses, which may be carried
over to offset future capital gains as follows:

Capital loss carryovers expiring in:
2009 .................................................... $ 2,252
2010 .................................................... 4,269,614
2011 .................................................... 5,245,696
------------
$9,517,562
------------

5. INVESTMENT TRANSACTIONS

Purchases and sales of investments and securities sold short(excluding
short-term securities) for the period ended October 31, 2003 aggregated
$304,435,675 and $257,669,802, respectively.

Annual Report | 25

Franklin Templeton International Trust

INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF TEMPLETON GLOBAL LONG-SHORT FUND

In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Templeton Global Long-Short
Fund (hereafter referred to as the "Fund") at October 31, 2003, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the periods presented, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's 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 auditing standards
generally accepted in the United States of America, 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, 2003 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California
December 3, 2003

26 | Annual Report

Board Members and Officers

FRANK H. ABBOTT, III (82) Trustee Since 1991 115 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and
President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
- ------------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (71) Trustee Since 1991 143 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch.
- ------------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (51) Trustee Since 1998 92 Director, Amerada Hess Corporation
One Franklin Parkway (exploration and refining of oil and
San Mateo, CA 94403-1906 gas); Beverly Enterprises, Inc. (health
care); H.J. Heinz Company (processed
foods and allied products); RTI
Inter-national Metals, Inc. (manufacture
and distribution of titanium); and
Canadian National Railway (railroad).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and Secretary
of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary
and Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK W.T. LAHAYE (74) Trustee Since 1991 115 Director, The California Center for
One Franklin Parkway Land Recycling (redevelopment).
San Mateo, CA 94403-1906

Annual Report | 27

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company); and FORMERLY, Chairman, White River Corporation
(financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992); and President, National Association
of Securities Dealers, Inc. (1970-1987).
- ------------------------------------------------------------------------------------------------------------------------------------

INTERESTED BOARD MEMBERS AND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------

**HARMON E. BURNS (58) Trustee and Since 1993 38 None
One Franklin Parkway Vice President
San Mateo, CA 94403-1906

28 | Annual Report

**RUPERT H. JOHNSON, JR. (63) Trustee, Trustee since 125 None
One Franklin Parkway President and 1991, President
San Mateo, CA 94403-1906 Chief since 1993 and
Executive Chief Executive
Officer- Officer-Investment
Investment Management
Management since 2002

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc. and Franklin Investment Advisory Services, Inc.; Senior Vice
President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (43) Vice President Since 1995 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

Annual Report | 29

BARBARA J. GREEN (56) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; and officer and/or director, as the case
may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
KIMBERLEY H. MONASTERIO (39) Treasurer and Treasurer since Not Applicable None
One Franklin Parkway Chief 2000
San Mateo, CA 94403-1906 Financial and Chief
Officer Financial Officer
since 2002

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; and officer of 51 of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------------------

30 | Annual Report

MURRAY L. SIMPSON (66) Vice President Since 2000 Not Applicable None
One Franklin Parkway and Secretary
San Mateo, CA 94403-1906

Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.

Annual Report | 31

Franklin Templeton International Trust

PROXY VOTING POLICIES AND PROCEDURES

TEMPLETON GLOBAL LONG-SHORT FUND

32 | Annual Report

Literature Request

For a brochure and prospectus, which contains more complete information,
including charges and expenses, call Franklin Templeton Investments 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, we may
monitor, record and access telephone calls to or from our service departments.
These calls can be identified by the presence of a regular beeping tone.

FRANKLIN TEMPLETON INVESTMENTS

INTERNATIONAL
Mutual European Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund

GROWTH
Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund II 1

BLEND
Franklin Blue Chip Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund 5

ASSET ALLOCATION
Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds Allocation Fund

TARGET FUNDS
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund

INCOME
Franklin Adjustable U.S. Government Securities Fund 6
Franklin's AGE High Income Fund
Franklin Federal Money Fund 6,7
Franklin Floating Rate Daily Access Fund
Franklin Floating Rate Trust 4
Franklin Income Fund
Franklin Money Fund 6,7
Franklin Short-Intermediate U.S. Government Securities Fund 6
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio 6
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 6
Templeton Global Bond Fund

TAX-FREE INCOME 8

NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 9
Tax-Exempt Money Fund 6,7