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

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-06336
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FRANKLIN TEMPLETON INTERNATIONAL TRUST
--------------------------------------
(Exact name of registrant as specified in charter)

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

CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(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: 4/30/07
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ITEM 1. REPORTS TO STOCKHOLDERS.

[GRAPHIC OMITTED]

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APRIL 30, 2007
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A series of Franklin Templeton
International Trust

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SEMIANNUAL 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](R)
FRANKLIN TEMPLETON
INVESTMENTS

Franklin o TEMPLETON o Mutual Series

Franklin Templeton Investments

GAIN FROM OUR PERSPECTIVE(R)

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
recognized leader in fixed income investing and
also brings 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 offices in over 25 countries,
Templeton offers investors a truly global
perspective.

MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what
it believes are undervalued stocks, as well as
arbitrage situations and distressed securities.

TRUE DIVERSIFICATION Because our management groups work independently
and adhere to different investment approaches,
Franklin, Templeton and Mutual Series funds
typically have distinct portfolios. That's why our
funds can be used to build truly diversified
allocation plans 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, accurate and personal service
that has 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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[GRAPHIC OMITTED]

Not part of the annual report

Contents

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

SEMIANNUAL REPORT

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

Performance Summary ....................................................... 8

Your Fund's Expenses ...................................................... 11

Financial Highlights and Statement of Investments ......................... 13

Financial Statements ...................................................... 21

Notes to Financial Statements ............................................. 25

Meeting of Shareholders ................................................... 34

Shareholder Information ................................................... 38

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Semiannual Report

Templeton Foreign Smaller Companies Fund

YOUR FUND'S GOAL AND MAIN 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 investments of smaller companies
located outside the U.S., including emerging markets.

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PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
- --------------------------------------------------------------------------------

We are pleased to bring you Templeton Foreign Smaller Companies Fund's
semiannual report for the period ended April 30, 2007.

PERFORMANCE OVERVIEW

For the six months under review, Templeton Foreign Smaller Companies Fund -
Class A posted a +20.32% cumulative total return. The Fund outperformed its
benchmark, the Morgan Stanley Capital International (MSCI) Europe, Australasia,
Far East (EAFE) Index, which posted a +15.68% total return for the same period.
1 The Fund performed comparably to the S&P/Citigroup Global Equity ex-U.S. less
than $2 Billion Index, another relevant measure of Fund performance, which had a
+19.43% cumulative total return for the reporting period. 2 Please note that
index performance information is provided for reference and that we do not
attempt to track an index but rather undertake investments on the basis of
fundamental research. You can find the Fund's long-term performance data in the
Performance Summary beginning on page 8.

ECONOMIC AND MARKET OVERVIEW

In spite of elevated energy prices, higher global interest rates, a weaker U.S.
housing market and restrained U.S. economic growth, the global economy remained
resilient throughout the six-month reporting period. Strong consumer

1. Source: Standard & Poor's Micropal. The MSCI EAFE Index is a free
float-adjusted, market capitalization-weighted index designed to measure
equity market performance in global developed markets excluding the U.S.
and Canada.

2. Source: Standard & Poor's Micropal. The S&P/Citigroup Global Equity
ex-U.S. less than $2 Billion Index is a free float-adjusted, market
capitalization-weighted index designed to measure the performance of
global developed market equity securities excluding the U.S., with market
capitalizations less than $2 billion.

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 NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 17.

Semiannual Report | 3

and corporate demand, reasonably low inflation, tight or improving labor
markets, and moderate, though higher, global interest rates have consistently
supported economic growth since the economic recovery began in 2002.

Overall, the mood in the global equity markets was predominantly positive, but
was interrupted in the first quarter of 2007 due to concerns of slower growth.
Investors worldwide also pondered the possibility that troubles in the U.S.
subprime mortgage market could spread into the broader economy and potentially
undermine the pace of global economic and corporate profit growth. However,
strong global liquidity and corporate share buybacks continued to support equity
prices.

During the reporting period, petrodollars, corporate cash, private equity,
household savings and central banks' reserves continued to look for an
investment home. Largely as a result, bond yield spreads over U.S. Treasuries
narrowed, and equity and commodity markets rose. Narrower corporate credit
spreads globally reflected greater risk tolerance, while abundant cash supplies
in the capital markets contributed to record global merger and acquisition (M&A)
activity.

The total value of deals announced during 2006 as a result of hostile takeovers,
private equity buyouts and broad corporate consolidation was $3.8 trillion. 3
Announced deals from private equity alone reached a record $700 billion, almost
double the record set in 2005. 4 The trend continued in the first quarter of
2007, with $1.1 trillion spent on M&A activity, 27% higher than in the same
period in 2006. 5

With this backdrop, most global equity markets -- including emerging markets
that remained a major magnet for global fund flows -- ended the six-month period
with double-digit total returns. Stock market indexes in the U.S. and most
European countries reached six-year highs, and many emerging market indexes in
Asia, Europe and Latin America neared or reached all-time highs during the
reported period.

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

3. Source: "Can M&A's 'Best of Times' Get Better?," THE WALL STREET JOURNAL,
1/2/07.

4. Sources: Thomson Financial; "TPG tops buy-out league with $101bn,"
FINANCIAL TIMES, 12/27/06.

5. Source: "Mergers Hit Record, With Few Stop Signs," THE WALL STREET
JOURNAL, 4/2/07.

4 | Semiannual Report

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

MANAGER'S DISCUSSION

Several holdings performed well during the six months under review. U.K.-based
GAME Group, Europe's largest retailer of computer software, video games,
consoles and related products, was among the most significant contributors to
Fund performance. Of the company's revenue, 73% is derived from the U.K. and
Ireland, where GAME Group has more than 400 store locations. It has a dominant
position in the U.K. market with a commanding 25% market share, and its presence
is growing in France, Spain, Portugal and Scandinavia. Shares of GAME Group
soared during the period, as concerns over transition to a new generation of
video game consoles faded after successful launches of the Microsoft Xbox 360
and the Nintendo Wii. Consistent with our strategy, we believe that GAME Group
is fundamentally strong with a solid balance sheet and an attractive 1.56%
dividend yield at period-end, and we believe its shares offer compelling value
to long-term investors who are willing to look past potential near-term industry
weakness.

The Fund also benefited from Denmark-based Vestas Wind Systems, the world's
leading wind turbine manufacturer. One of the factors that differentiates Vestas
from its competitors is its global reach. Gamesa (Spain) and General Electric
(U.S.) have dominant market share in their home countries but only about 18% and
11% global market share, respectively. In comparison, Vestas has an 80% market
share at home, a 35% market share in Scandinavia and a 28% global market share.
In our assessment, the company's success stems from its ability to develop
durable, reliable and cost effective wind turbines. Wind power is the cheapest
source of renewable energy, when costs of environmental degradation from
traditional power sources are factored in. Vestas benefited from increased
demand and a market shift as three key regions, Europe, the Americas and Asia,
began to focus on renewable energy and environmentally friendly power sources.

Another contributor to Fund performance for the period was Taiwan-based D-Link,
a global data networking vendor with focuses on home, small office and home
office (SOHO), and small and medium business (SMB) markets. The company sells
branded wireless local area network (WLAN) products, broadband access equipment,
LAN switches and other networking equipment. D-Link is the global leader in the
home, SOHO and WLAN equipment market. An important driver for growth in home and
SOHO networking is the

GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 4/30/07

[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]

Asia 43.0%
Europe 29.2%
North America 12.3%
Australia 4.1%
Latin America 0.5%
Short-Term Investments & Other Net Assets 10.9%

Semiannual Report | 5

TOP 10 SECTORS/INDUSTRIES
4/30/07

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% OF TOTAL
NET ASSETS
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Commercial Services & Supplies 8.1%
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Machinery 7.5%
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Commercial Banks 6.0%
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Electronic Equipment & Instruments 4.9%
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Textiles, Apparel & Luxury Goods 4.8%
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Health Care Providers & Services 4.7%
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Communications Equipment 4.4%
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Specialty Retail 4.2%
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Leisure Equipment & Products 3.9%
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Energy Equipment & Services 3.2%
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expected double-digit jump in worldwide broadband connections through 2009,
according to our analysis. Moreover, we think D-Link is in a relatively strong
competitive position in emerging markets, where growth should outpace that of
the overall global market. Given our assessment of D-Link's growth prospects, we
considered its valuation compelling at period-end.

It is important to recognize the effect of currency movements on the Fund's
performance. In general, if the value of the U.S. dollar goes up compared with a
foreign currency, an investment traded in that foreign currency will go down in
value because it will be worth fewer U.S. dollars. This can have a negative
effect on Fund performance. Conversely, when the U.S. dollar weakens in relation
to a foreign currency, an investment traded in that foreign currency will
increase in value, which can contribute to Fund performance. For the six months
ended April 30, 2007, the U.S. dollar declined in value relative to most
non-U.S. currencies. As a result, the Fund's performance was positively affected
by the portfolio's predominant investment in securities with non-U.S. currency
exposure. However, one cannot expect the same result in future periods.

The Fund also had some underperforming holdings in the six months under review.
Singapore-based Osim International, a dominant player in Asia's healthy
lifestyle product segment, has franchise outlets in Hong Kong, China, Taiwan,
Singapore and Malaysia. Osim's sales are driven by its flagship massage chair
product line, and it has a number of newer products that are gaining traction in
the marketplace. The company's purchase of Brookstone in 2005 widened its global
reach and gave Osim direct access to a retail network of more than 300 stores.
In our analysis, recent stock weakness appeared relatively isolated to a single
product as the company received bad publicity from imitation products spreading
to markets in Hong Kong and Taiwan. We continued to hold the stock at period-end
because we were confident in its long-term prospects.

Also hindering Fund performance during the period was ATS Automation Tooling
Systems. Based in Canada, ATS makes automated production and testing systems for
manufacturers in the automotive, electronics and health care industries.
Products include the Superbot, a materials-handling robot, and thin-film
flexible cells for solar energy panels. Although the company's high fixed costs
weighed on the bottom line, we think profitability could improve if orders pick
up. In our analysis, valuation support looked strong as shares traded near book
value at period-end.

Another detractor was Elcoteq, the largest European electronic manufacturing
services company. Based in Finland, Elcoteq focuses solely on the
telecommunications sector, with about 82% of sales from wireless handsets and
18% of sales from telecom infrastructure. The stock stumbled during the period
largely

6 | Semiannual Report

because Nokia, Elcoteq's key customer, lost market share in some mid-line
products. In our view, these issues were largely temporary, as we thought
Nokia's proven long-term track record suggests it could regain market share as
it refreshes the product lineup. We thought Elcoteq's current profitability woes
should also be temporary. In our analysis, we considered the stock attractive at
period-end based on its more than 3% dividend yield.

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

[PHOTO OMITTED] /s/ Tucker Scott

Tucker Scott, CFA

[PHOTO OMITTED] /s/ Cynthia Sweeting

Cynthia Sweeting, CFA

Portfolio Management Team
Templeton Foreign Smaller Companies Fund

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF APRIL 30, 2007, 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 INVESTMENT MANAGER OR SUBADVISORS MAKE 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
4/30/07

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COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
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D-Link Corp. 3.7%
COMMUNICATIONS EQUIPMENT, TAIWAN
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GAME Group PLC 3.2%
SPECIALTY RETAIL, U.K.
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Vedior NV 2.5%
COMMERCIAL SERVICES & SUPPLIES,
NETHERLANDS
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People's Food Holdings Ltd. 2.2%
FOOD PRODUCTS, CHINA
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Bank of Pusan 1.9%
COMMERCIAL BANKS, SOUTH KOREA
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Yule Catto & Company PLC 1.9%
CHEMICALS, U.K.
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FKI PLC 1.9%
MACHINERY, U.K.
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OPG Groep NV 1.8%
HEALTH CARE PROVIDERS & SERVICES,
NETHERLANDS
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Amer Sports OYJ 1.7%
LEISURE EQUIPMENT & PRODUCTS, FINLAND
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North West Co. Fund 1.7%
DIVERSIFIED FINANCIAL SERVICES, CANADA
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Semiannual Report | 7

Performance Summary as of 4/30/07

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 does not reflect any taxes that a
shareholder would pay on Fund dividends, capital gain distributions, if any, or
any realized gains on the sale of Fund shares. Total return reflects
reinvestment of the Fund's dividends and capital gain distributions, if any, and
any unrealized gains or losses.

PRICE AND DISTRIBUTION INFORMATION

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CLASS A (SYMBOL: FINEX) CHANGE 4/30/07 10/31/06
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Net Asset Value (NAV) +$0.04 $23.24 $23.20
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DISTRIBUTIONS (11/1/06-4/30/07)
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Dividend Income $0.4188
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Short-Term Capital Gain $0.4260
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Long-Term Capital Gain $3.2964
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TOTAL $4.1412
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CLASS B (SYMBOL: N/A) CHANGE 4/30/07 10/31/06
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Net Asset Value (NAV) -$0.03 $22.60 $22.63
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DISTRIBUTIONS (11/1/06-4/30/07)
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Dividend Income $0.2995
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Short-Term Capital Gain $0.4260
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Long-Term Capital Gain $3.2964
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TOTAL $4.0219
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CLASS C (SYMBOL: FCFSX) CHANGE 4/30/07 10/31/06
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Net Asset Value (NAV) -$0.04 $22.64 $22.68
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DISTRIBUTIONS (11/1/06-4/30/07)
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Dividend Income $0.3099
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Short-Term Capital Gain $0.4260
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Long-Term Capital Gain $3.2964
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TOTAL $4.0323
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ADVISOR CLASS (SYMBOL: FTFAX) CHANGE 4/30/07 10/31/06
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Net Asset Value (NAV) +$0.03 $23.29 $23.26
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DISTRIBUTIONS (11/1/06-4/30/07)
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Dividend Income $0.4564
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Short-Term Capital Gain $0.4260
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Long-Term Capital Gain $3.2964
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TOTAL $4.1788
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8 | Semiannual Report

Performance Summary (CONTINUED)

PERFORMANCE

CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. CLASS A: 5.75%
MAXIMUM INITIAL SALES CHARGE; CLASS B: CONTINGENT DEFERRED SALES CHARGE (CDSC)
DECLINING FROM 4% TO 1% OVER SIX YEARS, AND ELIMINATED THEREAFTER; CLASS C: 1%
CDSC IN FIRST YEAR ONLY; ADVISOR CLASS: NO SALES CHARGES. THE FUND MAY CHARGE A
2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.

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CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +20.32% +19.18% +127.62% +176.60%
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Average Annual Total Return 2 +13.38% +12.33% +16.50% +10.05%
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Value of $10,000 Investment 3 $11,338 $11,233 $21,460 $26,063
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Avg. Ann. Total Return (3/31/07) 4 +12.93% +16.30% +9.50%
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Total Annual Operating Expenses 5 1.50%
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CLASS B 6-MONTH 1-YEAR 5-YEAR INCEPTION (1/1/99)
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Cumulative Total Return 1 +19.88% +18.31% +119.22% +175.06%
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Average Annual Total Return 2 +15.89% +14.37% +16.78% +12.92%
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Value of $10,000 Investment 3 $11,589 $11,437 $21,722 $27,506
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Avg. Ann. Total Return (3/31/07) 4 +15.03% +16.59% +12.51%
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Total Annual Operating Expenses 5 2.24%
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CLASS C 6-MONTH 1-YEAR 5-YEAR INCEPTION (7/1/98)
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Cumulative Total Return 1 +19.88% +18.32% +118.84% +143.04%
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Average Annual Total Return 2 +18.88% +17.33% +16.96% +10.58%
- ------------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $11,888 $11,733 $21,884 $24,304
- ------------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (3/31/07) 4 +17.96% +16.77% +10.19%
- ------------------------------------------------------------------------------------------------------------------------
Total Annual Operating Expenses 5 2.25%
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ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------------------------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 +20.42% +19.43% +130.67% +183.53%
- ------------------------------------------------------------------------------------------------------------------------
Average Annual Total Return 2 +20.42% +19.43% +18.19% +10.98%
- ------------------------------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $12,042 $11,943 $23,067 $28,353
- ------------------------------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (3/31/07) 4 +20.13% +18.01% +10.43%
- ------------------------------------------------------------------------------------------------------------------------
Total Annual Operating Expenses 5 1.25%
- ------------------------------------------------------------------------------------------------------------------------

PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND
PERFORMANCE" AT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.

Semiannual Report | 9

Performance Summary (CONTINUED)

ENDNOTES

SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
FLUCTUATIONS, ECONOMIC INSTABILITY, AND 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, SMALLER-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: Prior to 1/1/97, these shares were offered at a lower initial
sales charge; thus actual total returns may differ.

CLASS B: These shares have higher annual fees and expenses than Class A
shares.

CLASS C: Prior to 1/1/04, these shares were offered with an initial
sales charge; thus actual total returns would have differed.
These shares have higher annual fees and expenses than Class A
shares.

ADVISOR CLASS: Shares are available to certain eligible investors as
described in the prospectus.

1. Cumulative total return represents the change in value of an investment
over the periods indicated.

2. Average annual total return represents the average annual change in value
of an investment over the periods indicated. Six-month return has not been
annualized.

3. These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated.

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

5. Figures are as stated in the Fund's prospectus current as of the date of
this report.

10 | Semiannual Report

Your Fund's Expenses

As a Fund shareholder, you can incur two types of costs:

o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and

o Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing
costs, sometimes referred to as operating expenses.

The following table shows ongoing costs of investing in the Fund and can help
you understand these costs and compare them with those of other mutual funds.
The table assumes a $1,000 investment held for the six months indicated.

ACTUAL FUND EXPENSES

The first line (Actual) for each share class listed in the table provides actual
account values and expenses. The "Ending Account Value" is derived from the
Fund's actual return, which includes the effect of Fund expenses.

You can estimate the expenses you paid during the period, by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:

1. Divide your account value by $1,000.

IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.

2. Multiply the result by the number under the heading "Expenses Paid During
Period."

IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.

In this illustration, the estimated expenses paid this period are $64.50.

HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS

Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.

Semiannual Report | 11

Your Fund's Expenses (CONTINUED)

PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line for each class is useful in
comparing ongoing costs only, and will not help you compare total costs of
owning different funds. In addition, if transaction costs were included, your
total costs would have been higher. Please refer to the Fund prospectus for
additional information on operating expenses.

- ----------------------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
CLASS A VALUE 11/1/06 VALUE 4/30/07 PERIOD* 11/1/06-4/30/07
- ----------------------------------------------------------------------------------------------------------------------

Actual $1,000 $1,203.20 $ 7.81
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,017.70 $ 7.15
- ----------------------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,198.80 $11.88
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,013.98 $10.89
- ----------------------------------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,198.80 $11.88
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,013.98 $10.89
- ----------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ----------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,204.20 $ 6.39
- ----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,018.99 $ 5.86
- ----------------------------------------------------------------------------------------------------------------------

* Expenses are equal to the annualized expense ratio for each class (A:
1.43%; B: 2.18%; C: 2.18%; and Advisor: 1.17%), multiplied by the average
account value over the period, multiplied by 181/365 to reflect the
one-half year period.

12 | Semiannual Report

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS

TEMPLETON FOREIGN SMALLER COMPANIES FUND

---------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2007 YEAR ENDED OCTOBER 31,
CLASS A (UNAUDITED) 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)

Net asset value, beginning of period ............ $ 23.20 $ 19.60 $ 19.40 $ 17.01 $ 12.27 $ 11.91
------------------------------------------------------------------------------
Income from investment operations a:

Net investment income b ........................ 0.05 0.27 0.27 0.20 0.13 0.15

Net realized and unrealized gains (losses) ..... 4.13 4.07 2.61 2.40 4.74 0.45
------------------------------------------------------------------------------
Total from investment operations ................ 4.18 4.34 2.88 2.60 4.87 0.60
------------------------------------------------------------------------------
Less distributions from:

Net investment income .......................... (0.42) (0.51) (0.24) (0.21) (0.13) (0.24)

Net realized gains from investments ............ (3.72) (0.23) (2.44) -- -- --
------------------------------------------------------------------------------
Total distributions ............................. (4.14) (0.74) (2.68) (0.21) (0.13) (0.24)
------------------------------------------------------------------------------
Redemption fees ................................. -- d -- d -- d -- d -- --
------------------------------------------------------------------------------
Net asset value, end of period .................. $ 23.24 $ 23.20 $ 19.60 $ 19.40 $ 17.01 $ 12.27
==============================================================================

Total return c .................................. 20.32% 22.80% 15.00% 15.40% 39.99% 4.98%

RATIOS TO AVERAGE NET ASSETS

Expenses ....................................... 1.43% e,f 1.50% f 1.57% f 1.63% f 1.52% 1.63%

Net investment income .......................... 0.42% e 1.24% 1.27% 1.06% 0.91% 1.15%

SUPPLEMENTAL DATA

Net assets, end of period (000's) ............... $472,021 $356,785 $288,564 $474,742 $350,507 $ 71,070

Portfolio turnover rate ......................... 10.07% 33.92% 36.91% g 14.22% 6.37% 27.23%

a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the
timing of sales and repurchase of the Fund shares in relation to income
earned and/or fluctuating market value of the investments of the Fund.

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.

d Amount rounds to less than $0.01 per share.

e Annualized.

f Benefit of expense reduction is less than 0.01%.

g Excludes the value of portfolio securities delivered as a result of
in-kind redemptions.

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 13

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

----------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2007 YEAR ENDED OCTOBER 31,
CLASS B (UNAUDITED) 2006 2005 2004 2003 2002
----------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)

Net asset value, beginning of period ............ $22.63 $19.21 $19.07 $16.75 $12.11 $11.77
-----------------------------------------------------------------------
Income from investment operations a:

Net investment income (loss) b ................. (0.03) 0.09 0.12 0.08 0.07 0.03

Net realized and unrealized gains (losses) ..... 4.02 4.00 2.56 2.35 4.62 0.46
-----------------------------------------------------------------------
Total from investment operations ................ 3.99 4.09 2.68 2.43 4.69 0.49
-----------------------------------------------------------------------
Less distributions from:

Net investment income .......................... (0.30) (0.44) (0.10) (0.11) (0.05) (0.15)

Net realized gains from investments ............ (3.72) (0.23) (2.44) -- -- --
-----------------------------------------------------------------------
Total distributions ............................. (4.02) (0.67) (2.54) (0.11) (0.05) (0.15)
-----------------------------------------------------------------------
Redemption fees ................................. -- d -- d -- d -- d -- --
-----------------------------------------------------------------------
Net asset value, end of period .................. $22.60 $22.63 $19.21 $19.07 $16.75 $12.11
=======================================================================

Total return c .................................. 19.88% 21.93% 14.10% 14.54% 38.85% 4.09%

RATIOS TO AVERAGE NET ASSETS

Expenses ....................................... 2.18% e,f 2.24% f 2.32% f 2.38% f 2.27% 2.38%

Net investment income .......................... (0.33)% e 0.50% 0.52% 0.31% 0.16% 0.40%

SUPPLEMENTAL DATA

Net assets, end of period (000's) ............... $8,872 $7,758 $7,576 $6,539 $3,352 $1,691

Portfolio turnover rate ......................... 10.07% 33.92% 36.91% g 14.22% 6.37% 27.23%

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.

d Amount rounds to less than $0.01 per share.

e Annualized.

f Benefit of expense reduction is less than 0.01%.

g Excludes the value of portfolio securities delivered as a result of
in-kind redemptions.

14 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2007 YEAR ENDED OCTOBER 31,
CLASS C (UNAUDITED) 2006 2005 2004 2003 2002
------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)

Net asset value, beginning of period ............ $ 22.68 $ 19.25 $ 19.12 $ 16.79 $ 12.17 $ 11.82
-------------------------------------------------------------------------
Income from investment operations a:

Net investment income (loss) b ................. (0.03) 0.11 0.13 0.06 0.06 0.05

Net realized and unrealized gains (losses) ..... 4.02 4.00 2.55 2.37 4.62 0.47
-------------------------------------------------------------------------
Total from investment operations ................ 3.99 4.11 2.68 2.43 4.68 0.52
-------------------------------------------------------------------------
Less distributions from:

Net investment income .......................... (0.31) (0.45) (0.11) (0.10) (0.06) (0.17)

Net realized gains from investments ............ (3.72) (0.23) (2.44) -- -- --
-------------------------------------------------------------------------
Total distributions ............................. (4.03) (0.68) (2.55) (0.10) (0.06) (0.17)
-------------------------------------------------------------------------
Redemption fees ................................. -- d -- d -- d -- d -- --
-------------------------------------------------------------------------
Net asset value, end of period .................. $ 22.64 $ 22.68 $ 19.25 $ 19.12 $ 16.79 $ 12.17
=========================================================================

Total return c .................................. 19.88% 21.91% 14.12% 14.54% 38.60% 4.28%

RATIOS TO AVERAGE NET ASSETS

Expenses ....................................... 2.18% e,f 2.25% f 2.32% f 2.38% f 2.28% 2.31%

Net investment income .......................... (0.33)% e 0.49% 0.52% 0.31% 0.15% 0.47%

SUPPLEMENTAL DATA

Net assets, end of period (000's) ............... $37,423 $30,988 $23,519 $16,579 $10,673 $ 3,904

Portfolio turnover rate ......................... 10.07% 33.92% 36.91% g 14.22% 6.37% 27.23%

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.

d Amount rounds to less than $0.01 per share.

e Annualized.

f Benefit of expense reduction is less than 0.01%.

g Excludes the value of portfolio securities delivered as a result of
in-kind redemptions.

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 15

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2007 YEAR ENDED OCTOBER 31,
ADVISOR CLASS (UNAUDITED) 2006 2005 2004 2003 2002
------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)

Net asset value, beginning of period ............. $ 23.26 $ 19.67 $ 19.46 $ 17.04 $ 12.29 $ 11.92
-------------------------------------------------------------------------
Income from investment operations a:

Net investment income b ......................... 0.08 0.32 0.36 0.21 0.20 0.20

Net realized and unrealized gains (losses) ...... 4.13 4.09 2.57 2.46 4.70 0.44
-------------------------------------------------------------------------
Total from investment operations ................. 4.21 4.41 2.93 2.67 4.90 0.64
-------------------------------------------------------------------------
Less distributions from:

Net investment income ........................... (0.46) (0.59) (0.28) (0.25) (0.15) (0.27)

Net realized gains from investments ............. (3.72) (0.23) (2.44) -- -- --
-------------------------------------------------------------------------
Total distributions .............................. (4.18) (0.82) (2.72) (0.25) (0.15) (0.27)
-------------------------------------------------------------------------
Redemption fees .................................. -- d -- d -- d -- d -- --
-------------------------------------------------------------------------
Net asset value, end of period ................... $ 23.29 $ 23.26 $ 19.67 $ 19.46 $ 17.04 $ 12.29
=========================================================================

Total return c ................................... 20.42% 23.14% 15.26% 15.73% 40.37% 5.24%

RATIOS TO AVERAGE NET ASSETS

Expenses ........................................ 1.17% e,f 1.25% f 1.32% f 1.38% f 1.27% 1.35%

Net investment income ........................... 0.67% e 1.49% 1.52% 1.31% 1.16% 1.43%

SUPPLEMENTAL DATA

Net assets, end of period (000's) ................ $54,479 $40,270 $31,695 $16,195 $25,482 $16,937

Portfolio turnover rate .......................... 10.07% 33.92% 36.91% g 14.22% 6.37% 27.23%

b Based on average daily shares outstanding.

c Total return is not annualized for periods less than one year.

d Amount rounds to less than $0.01 per share.

e Annualized.

f Benefit of expense reduction is less than 0.01%.

g Excludes the value of portfolio securities delivered as a result of
in-kind redemptions.

16 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, APRIL 30, 2007 (UNAUDITED)

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

COMMON STOCKS 89.1%
AUSTRALIA 4.1%
Billabong International Ltd. ...................... Textiles, Apparel & Luxury Goods 267,668 $ 3,667,701
Downer EDI Ltd. ................................... Commercial Services & Supplies 1,216,983 7,569,720
Iluka Resources Ltd. .............................. Metals & Mining 754,715 3,647,703
PaperlinX Ltd. .................................... Paper & Forest Products 2,647,437 8,596,385
------------
23,481,509
------------
BAHAMAS 0.8%
a Steiner Leisure Ltd. .............................. Diversified Consumer Services 88,340 4,282,723
------------
BELGIUM 1.0%
Barco NV .......................................... Electronic Equipment & Instruments 63,220 5,711,075
------------
BRAZIL 0.5%
b Companhia de Saneamento de Minas Gerais,
144A ............................................ Water Utilities 230,100 2,951,160
------------
CANADA 11.5%
Abitibi-Consolidated Inc. ......................... Paper & Forest Products 1,558,100 4,085,117
a ATS Automation Tooling Systems Inc. ............... Machinery 746,300 5,264,915
a Domtar Corp. ...................................... Paper & Forest Products 515,600 5,026,392
Dorel Industries Inc., B .......................... Household Durables 127,900 4,131,196
a GSI Group Inc. .................................... Electronic Equipment & Instruments 416,230 4,237,221
Legacy Hotels ..................................... Real Estate 276,370 3,456,181
Linamar Corp. ..................................... Auto Components 242,179 3,595,918
MDS Inc. .......................................... Health Care Providers & Services 376,719 7,168,488
Mega Brands Inc. .................................. Leisure Equipment & Products 38,600 788,815
North West Co. Fund ............................... Diversified Financial Services 515,094 9,537,059
a Open Text Corp. ................................... Internet Software & Services 292,256 6,690,896
Quebecor World Inc. ............................... Commercial Services & Supplies 329,124 4,459,884
a Saxon Energy Services Inc. ........................ Energy Equipment & Services 1,017,200 4,096,661
Transcontinental Inc., A .......................... Commercial Services & Supplies 171,652 3,325,091
------------
65,863,834
------------
CHINA 7.7%
a AAC Acoustic Technology Holdings Inc. ............. Communications Equipment 2,040,000 1,919,399
Bio-Treat Technology Ltd. ......................... Commercial Services & Supplies 6,352,000 3,491,259
a China Oilfield Services Ltd. ...................... Energy Equipment & Services 6,488,293 5,540,693
China Resources Power Holdings Co. Ltd. ........... Independent Power Producers & Energy Traders 1,544,883 2,757,009
Chitaly Holdings Ltd. ............................. Household Durables 7,713,271 1,311,437
People's Food Holdings Ltd. ....................... Food Products 9,631,101 12,425,591
Sinotrans Ltd., H ................................. Air Freight & Logistics 21,960,000 8,702,644
a Travelsky Technology Ltd., H ...................... IT Services 1,347,075 2,297,232
Weiqiao Textile Co. Ltd., H ....................... Textiles, Apparel & Luxury Goods 3,160,578 5,729,279
------------
44,174,543
------------
DENMARK 1.1%
a Vestas Wind Systems AS ............................ Electrical Equipment 97,505 6,410,926
------------
FINLAND 3.5%
Amer Sports OYJ ................................... Leisure Equipment & Products 437,336 9,733,624
Elcoteq SE, A ..................................... Communications Equipment 239,150 2,088,602
Huhtamaki OYJ ..................................... Containers & Packaging 486,064 8,310,935
------------
20,133,161
------------

Semiannual Report | 17

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, APRIL 30, 2007 (UNAUDITED) (CONTINUED)

COMMON STOCKS (CONTINUED)
GERMANY 2.3%
a Jenoptik AG ....................................... Electronic Equipment & Instruments 536,115 $ 5,786,818
Vossloh AG ........................................ Machinery 73,066 7,568,672
------------
13,355,490
------------
HONG KONG 4.7%
Asia Satellite Telecommunications Holdings
Ltd. ............................................ Diversified Telecommunication Services 1,012,902 2,149,477
Dah Sing Financial Group .......................... Commercial Banks 500,069 4,286,333
Fountain Set (Holdings) Ltd. ...................... Textiles, Apparel & Luxury Goods 8,860,566 3,092,298
Giordano International Ltd. ....................... Specialty Retail 6,611,910 3,211,942
Hung Hing Printing Group Ltd. ..................... Containers & Packaging 1,400,260 787,623
Lerado Group (Holding) Co. Ltd. ................... Leisure Equipment & Products 9,098,706 1,198,048
Ngai Lik Industrial Holding Ltd. .................. Household Durables 9,573,818 758,812
Techtronic Industries Co. Ltd. .................... Household Durables 1,221,250 1,633,027
Texwinca Holdings Ltd. ............................ Textiles, Apparel & Luxury Goods 9,894,808 7,070,927
Yue Yuen Industrial Holdings Ltd. ................. Textiles, Apparel & Luxury Goods 780,045 2,737,280
------------
26,925,767
------------
INDONESIA 0.5%
PT Astra International Tbk ........................ Automobiles 1,831,244 2,901,619
------------
JAPAN 5.8%
Descente Ltd. ..................................... Textiles, Apparel & Luxury Goods 316,900 1,520,292
MEITEC Corp. ...................................... Commercial Services & Supplies 145,248 4,754,854
Nichii Gakkan Co. ................................. Health Care Providers & Services 393,300 7,112,592
Sohgo Security Services Co. Ltd. .................. Commercial Services & Supplies 450,001 8,703,134
Takuma Co. Ltd. ................................... Machinery 1,027,000 6,723,995
Tenma Corp. ....................................... Chemicals 160,214 3,024,804
Tokyo Individualized Educational Institute Inc. ... Diversified Consumer Services 539,257 1,331,889
------------
33,171,560
------------
LUXEMBOURG 0.3%
a Thiel Logistik AG ................................. IT Services 501,627 1,800,288
------------
NETHERLANDS 6.2%
Aalberts Industries NV ............................ Machinery 36,444 3,889,499
a Draka Holding NV .................................. Electrical Equipment 96,368 3,712,351
OPG Groep NV ...................................... Health Care Providers & Services 290,100 10,553,906
SBM Offshore NV ................................... Energy Equipment & Services 88,312 3,188,709
Vedior NV ......................................... Commercial Services & Supplies 536,232 14,327,512
------------
35,671,977
------------
PHILIPPINES 0.0%c
First Gen Corp. ................................... Independent Power Producers & Energy Traders 205,000 246,415
------------
SINGAPORE 1.9%
Cerebos Pacific Ltd. .............................. Food Products 241,477 553,146
Huan Hsin Holdings Ltd. ........................... Electronic Equipment & Instruments 2,700,075 1,048,607
Osim International Ltd. ........................... Specialty Retail 5,210,223 2,623,631
Venture Corp. Ltd. ................................ Electronic Equipment & Instruments 624,862 6,457,566
------------
10,682,950
------------

18 | Semiannual Report

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, APRIL 30, 2007 (UNAUDITED) (CONTINUED)

COMMON STOCKS (CONTINUED)
SOUTH KOREA 6.5%
Bank of Pusan ..................................... Commercial Banks 752,575 $ 11,116,620
Daeduck Electronics Co. Ltd. ...................... Electronic Equipment & Instruments 599,863 4,916,963
Daegu Bank Co. Ltd. ............................... Commercial Banks 528,705 8,775,304
Halla Climate Control Corp. ....................... Auto Components 649,160 6,729,757
Sindo Ricoh Co. ................................... Office Electronics 35,020 2,042,849
Youngone Corp. .................................... Textiles, Apparel & Luxury Goods 699,989 3,774,985
------------
37,356,478
------------
SWEDEN 1.3%
D. Carnegie & Co. AB .............................. Capital Markets 355,575 7,111,288
------------
SWITZERLAND 2.4%
Kuoni Reisen Holding AG, B ........................ Hotels, Restaurants & Leisure 5,430 3,412,719
Verwaltungs-und Privat-Bank AG .................... Capital Markets 27,682 7,209,033
Vontobel Holding AG ............................... Capital Markets 51,568 2,882,325
------------
13,504,077
------------
TAIWAN 12.3%
AcBel Polytech Inc. ............................... Electrical Equipment 10,191,440 4,359,173
a BenQ Corp. ........................................ Computers & Peripherals 3,936,000 1,506,326
D-Link Corp. ...................................... Communications Equipment 11,306,460 20,973,398
Fu Sheng Industrial Co. Ltd. ...................... Leisure Equipment & Products 4,685,990 4,627,548
Giant Manufacturing Co. Ltd. ...................... Leisure Equipment & Products 3,690,000 6,014,228
KYE Systems Corp. ................................. Computers & Peripherals 4,455,664 6,078,550
Pihsiang Machinery Manufacturing Co. Ltd. ......... Health Care Equipment & Supplies 2,704,000 5,267,506
Simplo Technology Co. Ltd. ........................ Computers & Peripherals 1,781,300 8,100,342
Ta Chong Bank Ltd. ................................ Commercial Banks 15,633,000 4,762,796
Taiwan Fu Hsing ................................... Building Products 7,000,980 6,115,127
Test-Rite International Co. Ltd. .................. Distributors 5,026,757 2,829,064
------------
70,634,058
------------
THAILAND 3.6%
Bank of Ayudhya Public Co. Ltd. ................... Commercial Banks 8,663,400 5,306,410
BEC World Public Co. Ltd., fgn. ................... Media 3,858,366 2,607,379
Glow Energy Public Co. Ltd., fgn. ................. Independent Power Producers & Energy Traders 5,587,554 5,181,844
a Total Access Communication Public Co. Ltd.,
fgn. ............................................ Wireless Telecommunication Services 1,431,090 7,298,559
------------
20,394,192
------------
UNITED KINGDOM 11.1%
Bodycote International PLC ........................ Machinery 1,426,616 8,444,089
Fiberweb PLC ...................................... Personal Products 1,004,870 3,732,439
FKI PLC ........................................... Machinery 4,476,550 10,831,356
Future PLC ........................................ Media 4,273,340 3,695,792
GAME Group PLC .................................... Specialty Retail 5,890,678 18,081,217
a iSOFT Group PLC ................................... Health Care Providers & Services 2,826,820 2,359,982
John Wood Group PLC ............................... Energy Equipment & Services 950,519 5,355,237
Yule Catto & Company PLC .......................... Chemicals 2,280,539 11,047,278
------------
63,547,390
------------
TOTAL COMMON STOCKS
(COST $364,642,865) .............................. 510,312,480
------------

Semiannual Report | 19

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, APRIL 30, 2007 (UNAUDITED) (CONTINUED)

- ------------------------------------------------------------------------------------------------------------------------------------
TEMPLETON FOREIGN SMALLER COMPANIES FUND PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

SHORT TERM INVESTMENTS 12.1%
U.S. GOVERNMENT AND AGENCY SECURITIES
d FHLB, 0.00% - 5.25%, 5/01/07 - 11/01/07 ........... $59,155,000 $ 59,151,950
d FNMA, 5/08/07 ..................................... 10,000,000 9,990,210
------------
TOTAL SHORT TERM INVESTMENTS
(COST $69,138,955) ............................... 69,142,160
------------
TOTAL INVESTMENTS (COST $433,781,820)
101.2% ........................................... 579,454,640
OTHER ASSETS, LESS LIABILITIES (1.2)% ............. (6,659,471)
------------
NET ASSETS 100.0% ................................. $572,795,169
============

SELECTED PORTFOLIO ABBREVIATIONS

FHLB - Federal Home Loan Bank
FNMA - Federal National Mortgage Association

a Non-income producing for the twelve months ended April, 30, 2007.

b Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may be sold in transactions exempt from registration only to
qualified institutional buyers or in a public offering registered under
the Securities Act of 1933. The security has been deemed liquid under
guidelines approved by the Fund's Board of Trustees. At April 30, 2007,
the aggregate value of this security was $2,951,160, representing 0.52% of
net assets.

c Rounds to less than 0.1% of net assets.

d A portion of the security is traded on a discount basis with no stated
coupon rate.

20 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Templeton International Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
April 30, 2007 (unaudited)

---------------
TEMPLETON
FOREIGN SMALLER
COMPANIES FUND
---------------
Assets:
Investments in securities:
Cost ........................................................ $433,781,820
============
Value ....................................................... $579,454,640
Cash ......................................................... 32,039
Foreign currency, at value (cost $334,773) ................... 334,734
Receivables:
Investment securities sold .................................. 6,209,778
Capital shares sold ......................................... 2,687,199
Dividends and interest ...................................... 474,729
------------
Total assets .......................................... 589,193,119
------------
Liabilities:
Payables:
Investment securities purchased ............................. 14,403,728
Capital shares redeemed ..................................... 1,014,862
Affiliates .................................................. 820,049
Accrued expenses and other liabilities ....................... 159,311
------------
Total liabilities ..................................... 16,397,950
------------
Net assets, at value ............................... $572,795,169
============
Net assets consist of:
Paid-in capital .............................................. $396,978,949
Distributions in excess of net investment income ............. (494,187)
Net unrealized appreciation (depreciation) ................... 145,638,558
Accumulated net realized gain (loss) ......................... 30,671,849
------------
Net assets, at value ............................... $572,795,169
============

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 21

Franklin Templeton International Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
April 30, 2007 (unaudited)

------------
TEMPLETON
FOREIGN
SMALLER
COMPANIES
FUND
------------

CLASS A:
Net assets, at value ....................................................... $472,021,181
============
Shares outstanding ......................................................... 20,314,087
============
Net asset value per share a ................................................ $ 23.24
============
Maximum offering price per share (net asset value per share / 94.25%) ...... $ 24.66
============
CLASS B:
Net assets, at value ....................................................... $ 8,871,915
============
Shares outstanding ......................................................... 392,638
============
Net asset value and maximum offering price per share a ..................... $ 22.60
============
CLASS C:
Net assets, at value ....................................................... $ 37,423,313
============
Shares outstanding ......................................................... 1,652,618
============
Net asset value and maximum offering price per share a ..................... $ 22.64
============
ADVISOR CLASS:
Net assets, at value ....................................................... $ 54,478,760
============
Shares outstanding ......................................................... 2,339,114
============
Net asset value and maximum offering price per share a ..................... $ 23.29
============

a Redemption price is equal to net asset value less contingent deferred
sales charges, if applicable, and redemption fees retained by the Fund.

22 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Templeton International Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the six months ended April 30, 2007 (unaudited)

---------------
TEMPLETON
FOREIGN SMALLER
COMPANIES FUND
---------------

Investment income:
Dividends (net of foreign taxes of $504,692) .................................... $ 3,484,525
Interest (net of foreign taxes of $535) ......................................... 993,929
-----------
Total investment income .................................................. 4,478,454
-----------
Expenses:
Management fees (Note 3a) ....................................................... 2,085,412
Distribution fees (Note 3c)
Class A ........................................................................ 496,790
Class B ........................................................................ 40,231
Class C ........................................................................ 166,352
Transfer agent fees (Note 3e) ................................................... 574,033
Custodian fees (Note 4) ......................................................... 91,706
Reports to shareholders ......................................................... 42,664
Registration and filing fees .................................................... 41,845
Professional fees ............................................................... 28,107
Trustees' fees and expenses ..................................................... 12,941
Other ........................................................................... 18,315
-----------
Total expenses ........................................................... 3,598,396
Expense reductions (Note 4) .............................................. (13,397)
-----------
Net expenses .......................................................... 3,584,999
-----------
Net investment income .............................................. 893,455
-----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments .................................................................... 31,172,915
Foreign currency transactions .................................................. (190,235)
-----------
Net realized gain (loss) .............................................. 30,982,680
-----------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................................... 57,680,138
Translation of assets and liabilities denominated in foreign currencies ........ 153,392
-----------
Net change in unrealized appreciation (depreciation) ....... 57,833,530
-----------
Net realized and unrealized gain (loss) .......................................... 88,816,210
-----------
Net increase (decrease) in net assets resulting from operations .................. $89,709,665
-----------

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 23

Franklin Templeton International Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

-----------------------------------
TEMPLETON FOREIGN
SMALLER COMPANIES FUND
-----------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2007 OCTOBER 31, 2006
(UNAUDITED)
-----------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income
$ 893,455 $ 4,780,676
Net realized gain (loss) from investments and foreign currency transactions ............... 30,982,680 79,054,296
Net change in unrealized appreciation (depreciation) on investments and translation of
assets and liabilities denominated in foreign currencies ................................ 57,833,530 (6,856,399)
------------ ------------
Net increase (decrease) in net assets resulting from operations ..................... 89,709,665 76,978,573
------------ ------------
Distributions to shareholders from:
Net investment income:
Class A ................................................................................. (6,441,742) (7,386,523)
Class B ................................................................................. (100,225) (172,988)
Class C ................................................................................. (423,328) (542,466)
Advisor Class ........................................................................... (799,631) (1,060,963)
Net realized gains from investments:
Class A ................................................................................. (57,264,741) (3,328,450)
Class B ................................................................................. (1,245,664) (90,949)
Class C ................................................................................. (5,086,150) (282,577)
Advisor Class ........................................................................... (6,521,455) (419,267)
------------ ------------
Total distributions to shareholders ........................................................ (77,882,936) (13,284,183)
------------ ------------
Capital share transactions: (Note 2)
Class A ................................................................................. 104,972,575 16,689,417
Class B ................................................................................. 989,757 (1,131,246)
Class C ................................................................................. 5,853,938 3,146,741
Advisor Class ........................................................................... 13,349,436 2,043,307
------------ ------------
Total capital share transactions ........................................................... 125,165,706 20,748,219
------------ ------------
Redemption fees ............................................................................ 1,793 5,046
------------ ------------
Net increase (decrease) in net assets ............................................... 136,994,228 84,447,655
Net assets:
Beginning of period ........................................................................ 435,800,941 351,353,286
------------ ------------
End of period .............................................................................. $572,795,169 $435,800,941
============ ============
Distributions in excess of net investment income included in net assets:
End of period ............................................................................. $ (494,187) $ 6,377,284
============ ============

24 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin Templeton International Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, (the 1940 Act) as an open-end
investment company, consisting of two separate funds. The Templeton Foreign
Smaller Companies Fund (the Fund) included in this report is diversified. The
financial statements of the remaining fund in the Trust are presented
separately. 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.

The following summarizes the Fund's significant accounting policies.

A. SECURITY VALUATION

Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market.

Government securities generally trade in the over-the-counter market rather than
on a securities exchange. The Fund may utilize independent pricing services,
quotations from bond dealers, and information with respect to bond and note
transactions, to assist in determining a current market value for each security.
The Fund's pricing services may use valuation models or matrix pricing which
considers information with respect to comparable bond and note transactions,
quotations from bond dealers, or by reference to other securities that are
considered comparable in such characteristics as rating, interest rate and
maturity date, option adjusted spread models, prepayment projections, interest
rate spreads and yield curves, to determine current value.

Foreign securities are valued as of the close of trading on the foreign stock
exchange on which the security is primarily traded, or the NYSE, whichever is
earlier. If no sale is reported at that time, the foreign security will be
valued within the range of the most recent quoted bid and ask prices. The value
is then converted into its U.S. dollar equivalent at the foreign exchange rate
in effect at the close of the NYSE on the day that the value of the foreign
security is determined.

Semiannual Report | 25

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A. SECURITY VALUATION (CONTINUED)

the fair values may differ significantly from the values that would have been
used had a ready market for such investments existed. Occasionally, events occur
between the time at which trading in a security is completed and the close of
the NYSE that might call into question the availability (including the
reliability) of the value of a portfolio security held by the Fund. The
investment manager monitors price movements following the close of trading in
foreign stock markets through a series of country specific market proxies (such
as baskets of American Depository Receipts, futures contracts and exchange
traded funds). These price movements are measured against established trigger
thresholds for each specific market proxy to assist in determining if an event
has occurred. If such an event occurs, the securities may be valued using fair
value procedures, which may include the use of independent pricing services. All
security valuation procedures are approved by the Fund's 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, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Fund's Board of Trustees.

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 on the
Statement of Operations.

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.

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 on these
contracts are included in the Statement of Operations.

26 | Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. FOREIGN CURRENCY CONTRACTS (CONTINUED)

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, which may be in
excess of the amount reflected in the Statement of Assets and Liabilities.

D. INCOME AND DEFERRED TAXES

No provision has been made for U.S. income taxes because it is the Fund's policy
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute to shareholders substantially all of its taxable income and net
realized gains.

Foreign securities held by the Fund may be subject to foreign taxation on
dividend and interest income received. Foreign taxes, if any, are recorded based
on the tax regulations and rates that exist in the foreign markets in which the
Fund invests.

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.
Interest income and estimated expenses are accrued daily. Dividend income is
recorded on the ex-dividend date except that certain dividends from foreign
securities are recognized as soon as the Fund is notified of the ex-dividend
date. Distributions to shareholders are recorded on the ex-dividend date and are
determined according to income tax regulations (tax basis). Distributable
earnings determined on a tax basis may differ from earnings recorded in
accordance with accounting principles generally accepted in the United States.
These differences may be permanent or temporary. Permanent differences are
reclassified among capital accounts to reflect their tax character. These
reclassifications have no impact on net assets or the results of operations.
Temporary differences are not reclassified, as they may reverse in subsequent
periods.

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. Differences in per share
distributions, by class, are generally due to differences in class specific
expenses.

Common expenses incurred by the Trust are allocated among the funds based on the
ratio of net assets of each fund to the combined net assets of the Trust. Fund
specific expenses are charged directly to the fund that incurred the expense.

Semiannual Report | 27

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

F. 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.

G. REDEMPTION FEES

A short term trading redemption fee will be imposed, with some exceptions, on
any Fund shares that are redeemed or exchanged within seven calendar days
following their purchase date. The redemption fee is 2% of the amount redeemed.
Such fees are retained by the Fund and accounted for as an addition to paid-in
capital.

H. GUARANTEES AND INDEMNIFICATIONS

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

2. SHARES OF BENEFICIAL INTEREST

At April 30, 2007, there were an unlimited number of shares authorized (no par
value). Transactions in the Fund's shares were as follows:

---------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2007 OCTOBER 31, 2006
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------

CLASS A SHARES:
Shares sold ......................... 4,251,412 $ 93,798,465 5,240,690 $114,901,046
Shares issued in reinvestment of
distributions ...................... 2,769,409 57,022,136 484,680 9,831,027
Shares redeemed ..................... (2,086,041) (45,848,026) (5,068,889) (108,042,656)
---------------------------------------------------------------
Net increase (decrease) ............. 4,934,780 $104,972,575 656,481 $ 16,689,417
===============================================================

28 | Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

2. SHARES OF BENEFICIAL INTEREST (CONTINUED)

CLASS B SHARES:
Shares sold ......................... 22,795 $ 504,750 33,710 $ 722,559
Shares issued in reinvestment of
distributions ...................... 62,179 1,247,936 12,195 242,316
Shares redeemed ..................... (35,147) (762,929) (97,543) (2,096,121)
---------------------------------------------------------------
Net increase (decrease) ............. 49,827 $ 989,757 (51,638) $ (1,131,246)
===============================================================
CLASS C SHARES:
Shares sold ......................... 233,291 $ 5,028,566 489,581 $ 10,522,329
Shares issued in reinvestment of
distributions ...................... 229,276 4,613,039 34,589 688,654
Shares redeemed ..................... (176,288) (3,787,667) (379,346) (8,064,242)
---------------------------------------------------------------
Net increase (decrease) ............. 286,279 $ 5,853,938 144,824 $ 3,146,741
===============================================================
ADVISOR CLASS SHARES:
Shares sold ......................... 1,051,677 $ 23,071,206 1,505,697 $ 32,455,702
Shares issued in reinvestment of
distributions ...................... 176,032 3,629,776 27,790 565,024
Shares redeemed ..................... (620,231) (13,351,546) (1,413,001) (30,977,419)
---------------------------------------------------------------
Net increase (decrease) ............. 607,478 $ 13,349,436 120,486 $ 2,043,307
===============================================================

3. TRANSACTIONS WITH AFFILIATES

Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Trust are also officers and/or directors of the following
subsidiaries:

- ---------------------------------------------------------------------------------------------------
SUBSIDIARY AFFILIATION
- ---------------------------------------------------------------------------------------------------

Franklin Advisers, Inc. (Advisers) Investment manager
Templeton Investment Counsel, LLC (TIC) Investment manager
Franklin Templeton Investment Management Limited (FTIML) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent

Semiannual Report | 29

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

3. TRANSACTIONS WITH AFFILIATES (CONTINUED)

A. MANAGEMENT FEES

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

- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
1.000% Up to and including $100 million
0.900% Over $100 million, up to and including $250 million
0.800% Over $250 million, up to and including $500 million
0.750% In excess of $500 million

Under a subadvisory agreement, TIC, an affiliate of Advisers, provides
subadvisory services to the Fund and receives from Advisers fees based on the
average daily net assets of the fund. Under a subadvisory agreement, FTIML, an
affiliate of TIC, provides subadvisory services to the Fund and receives from
TIC fees based on the average daily net assets of the fund.

B. ADMINISTRATIVE FEES

Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by Advisers based on average daily net assets, and
is not an additional expense of the Fund.

C. DISTRIBUTION FEES

The Trust's Board of Trustees has adopted distribution plans for each share
class, with the exception of Advisor Class shares, pursuant to Rule 12b-1 under
the 1940 Act. Under the Fund's Class A reimbursement distribution plan, the Fund
reimburses Distributors for costs incurred in connection with the servicing,
sale and distribution of Fund's shares up to the maximum annual plan rate. Under
the Class A reimbursement distribution plan, costs exceeding the maximum for the
current plan year cannot be reimbursed in subsequent periods.

In addition, under the Fund's compensation distribution plans, the Fund pays
Distributors for costs incurred in connection with the servicing, sale and
distribution of the Fund's shares up to the maximum annual plan rate for each
class.

The maximum annual plan rates, based on the average daily net assets, for each
class, are as follows:

Class A ........................................ 0.25%
Class B ........................................ 1.00%
Class C ........................................ 1.00%

30 | Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

3. TRANSACTIONS WITH AFFILIATES (CONTINUED)

D. SALES CHARGES/UNDERWRITING AGREEMENTS

Distributors has advised the Fund of the following commission transactions
related to the sales and redemptions of the Fund's shares for the period:

Sales charges retained net of commissions paid to
unaffiliated broker/dealers ............................. $47,167
Contingent deferred sales charges retained ............... $16,682

E. TRANSFER AGENT FEES

For the period ended April 30, 2007, the Fund paid transfer agent fees of
$305,853, of which $232,220 was retained by Investor Services.

4. EXPENSE OFFSET ARRANGEMENT

The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the period ended April 30, 2007, the
custodian fees were reduced as noted in the Statement of Operations.

5. INCOME TAXES

At April 30, 2007, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:

Cost of investments ...................................... $435,170,026
============

Unrealized appreciation .................................. $165,091,069
Unrealized depreciation .................................. (20,806,455)
------------
Net unrealized appreciation (depreciation) ............... $144,284,614
============

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 gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions and passive foreign investment company shares.

Semiannual Report | 31

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments (excluding short term securities) for the
period ended April 30, 2007, aggregated $91,845,441 and $44,931,769,
respectively.

7. CONCENTRATION OF RISK

Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.

8. REGULATORY AND LITIGATION MATTERS

As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, including the Securities and Exchange
Commission ("SEC"), relating to certain practices in the mutual fund industry,
including late trading, market timing and marketing support payments to
securities dealers who sell fund shares ("marketing support"), Franklin
Resources, Inc. and certain of its subsidiaries (collectively, the "Company"),
entered into settlements with certain of those regulators and governmental
entities. Specifically, the Company entered into settlements with the SEC, among
others, concerning market timing and marketing support.

On June 6, 2007, the SEC posted for public comment the proposed plan of
distribution for the market timing settlement. Following the public comment
period, and once the SEC approves the final plan of distribution, disbursements
of settlement monies will be made promptly to individuals who were shareholders
of the designated funds during the relevant period, in accordance with the terms
and conditions of the settlement and plan.

In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, Company directors,
fund directors, and employees, have been named in private lawsuits (styled as
shareholder class actions, or as derivative actions on behalf of either the
named funds or Franklin Resources, Inc.). The lawsuits relate to the industry
practices referenced above, as well as to allegedly excessive commissions and
advisory and distribution fees.

The Company and fund management believe that the claims made in each of the
private lawsuits referenced above are without merit and intend to defend against
them vigorously. The Company cannot predict with certainty the eventual outcome
of these lawsuits, nor whether they will have a material negative impact on the
Company. If it is determined that the Company bears responsibility for any
unlawful or inappropriate conduct that caused losses to the Fund, it is
committed to making the Fund or its shareholders whole, as appropriate.

32 | Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

9. NEW ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
Interpretation of FASB Statement No. 109" ("FIN 48"), which clarifies the
accounting for uncertainty in tax positions taken or expected to be taken in a
tax return. FIN 48 provides guidance on the measurement, recognition,
classification and disclosure of tax positions, along with accounting for the
related interest and penalties. FIN 48 is effective for fiscal years beginning
after December 15, 2006, and is to be applied to all open tax years as of the
date of effectiveness. On December 22, 2006, the Securities and Exchange
Commission extended the implementation date to no later than the last net asset
value calculation in the first semiannual reporting period in 2007. The Fund is
currently evaluating the impact, if any, of applying the various provisions of
FIN 48.

In September 2006, FASB issued FASB Statement No. 157, "Fair Value Measurement"
("SFAS 157"), which defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements. SFAS 157 is
effective for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. The Trust believes the adoption of SFAS 157
will have no material impact on its financial statements.

Semiannual Report | 33

Franklin Templeton International Trust

MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007

TEMPLETON FOREIGN SMALLER COMPANIES FUND

A Special Meeting of Shareholders of the Trust was held at the Trust's offices,
One Franklin Parkway, San Mateo, California on March 21, 2007 and reconvened on
April 11, 2007. The purpose of the meeting was to elect Trustees of the Trust
and to vote on the following Proposals and Sub-Proposals: to approve an Amended
and Restated Agreement and Declaration of Trust; to approve amendments to
certain of Templeton Foreign Smaller Companies Fund's (the "Fund") fundamental
investment restrictions (including eight (8) Sub-Proposals); and to approve the
elimination of certain of the Fund's fundamental investment restrictions. At the
meeting, the following persons were elected by the shareholders to serve as
Independent Trustees of the Trust: Harris J. Ashton, Robert F. Carlson, Sam L.
Ginn, Edith E. Holiday, Frank W. T. LaHaye, Frank A. Olson, Larry D. Thompson
and John B. Wilson. Charles B. Johnson and Gregory E. Johnson were elected by
the shareholders to serve as Interested Trustees. Shareholders also approved the
Amended and Restated Agreement and Declaration of Trust, amendments to certain
of the Fund's fundamental investment restrictions (including eight (8)
Sub-Proposals) and the elimination of certain of the Fund's fundamental
investment restrictions. No other business was transacted at the meeting.

The results of the voting at the meeting are as follows:

Proposal 1. The election of Trustees:

- ------------------------------------------------------------------------------------------------------------
% OF % OF % OF % OF
OUTSTANDING VOTED OUTSTANDING VOTED
NAME FOR SHARES SHARES WITHHELD SHARES SHARES
- ------------------------------------------------------------------------------------------------------------

Harris J. Ashton ........ 20,148,261.135 55.028% 98.228% 363,412.703 .992% 1.772%
Robert F. Carlson ....... 20,106,082.473 54.912% 98.023% 405,591.365 1.108% 1.977%
Sam L. Ginn ............. 20,163,361.567 55.069% 98.302% 348,312.271 .951% 1.698%
Edith E. Holiday ........ 20,160,027.001 55.060% 98.286% 351,646.837 .960% 1.714%
Frank W. T. LaHaye ...... 20,135,837.617 54.994% 98.168% 375,836.221 1.026% 1.832%
Frank A. Olson .......... 20,154,638.168 55.045% 98.259% 357,035.670 .975% 1.741%
Larry D. Thompson ....... 20,164,725.335 55.073% 98.309% 346,948.503 .947% 1.691%
John B. Wilson .......... 20,177,705.808 55.108% 98.372% 333,968.030 .912% 1.628%
Charles B. Johnson ...... 20,058,879.355 54.783% 97.793% 452,794.483 1.237% 2.207%
Gregory E. Johnson ...... 20,070,775.936 54.816% 97.851% 440,897.902 1.204% 2.149%

Proposal 2. To approve an Amended and Restated Agreement and Declaration of
Trust:

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,243,509.711 42.056% 70.605%
Against ................ 222,712.579 1.013% 1.702%
Abstain ................ 239,287.555 1.089% 1.827%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

34 | Semiannual Report

Franklin Templeton International Trust

MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007
(CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

Proposal 3. To approve amendments to certain of the Fund's fundamental
investment restrictions (includes six (6) Sub-Proposals):

(a) To amend the Fund's fundamental investment restriction regarding borrowing:

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,129,787.196 41.539% 69.736%
Against ................ 332,873.427 1.514% 2.542%
Abstain ................ 242,849.222 1.105% 1.856%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

(b) To amend the Fund's fundamental investment restriction regarding
underwriting:

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,157,040.116 41.663% 69.945%
Against ................ 303,034.747 1.378% 2.315%
Abstain ................ 245,434.982 1.117% 1.874%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,134,950.579 41.562% 69.776%
Against ................ 319,940.569 1.456% 2.444%
Abstain ................ 250,618.697 1.140% 1.914%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

(d) To amend the Fund's fundamental investment restriction regarding investments
in real estate:

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,187,356.032 41.801% 70.176%
Against ................ 281,167.170 1.279% 2.147%
Abstain ................ 236,986.643 1.078% 1.811%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

Semiannual Report | 35

Franklin Templeton International Trust

MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007
(CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

(e) To amend the Fund's fundamental investment restriction regarding investments
in commodities:

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,129,160.409 41.536% 69.732%
Against ................ 334,151.253 1.520% 2.552%
Abstain ................ 242,198.183 1.102% 1.850%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

(f) To amend the Fund's fundamental investment restriction regarding issuing
senior securities:

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,163,742.780 41.693% 69.996%
Against ................ 291,291.798 1.325% 2.225%
Abstain ................ 250,475.267 1.140% 1.913%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

(g) To amend the Fund's fundamental investment restriction regarding industry
concentration:

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,186,092.502 41.795% 70.166%
Against ................ 277,629.205 1.263% 2.121%
Abstain ................ 241,788.138 1.100% 1.847%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

(h) To amend the Fund's fundamental investment restriction regarding
diversification of investments:

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,197,312.910 41.846% 70.252%
Against ................ 284,074.772 1.292% 2.169%
Abstain ................ 224,122.163 1.020% 1.713%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

36 | Semiannual Report

Franklin Templeton International Trust

MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007
(CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

Proposal 4. To approve the elimination of certain of the Fund's fundamental
investment restrictions:

- -----------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------
For .................... 9,134,052.235 41.558% 69.769%
Against ................ 326,315.465 1.485% 2.493%
Abstain ................ 245,142.145 1.115% 1.872%
Broker Non-votes ....... 3,386,268.000 15.406% 25.866%
- -----------------------------------------------------------------------
TOTAL .................. 13,091,777.845 59.564% 100.000%
- -----------------------------------------------------------------------

Semiannual Report | 37

Franklin Templeton International Trust

SHAREHOLDER INFORMATION

TEMPLETON FOREIGN SMALLER COMPANIES FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT

At a meeting held April 17, 2007, the Board of Trustees ("Board"), including a
majority of non-interested or independent Trustees, approved renewal of the
investment management agreement for Templeton Foreign Smaller Companies Fund,
one of the two separate funds within the Trust ("Fund(s)"). In reaching this
decision, the Board took into account information furnished throughout the year
at regular Board meetings, as well as information prepared specifically in
connection with the annual renewal review process. Information furnished and
discussed throughout the year included investment performance reports and
related financial information for each Fund, as well as periodic reports on
shareholder services, legal, compliance, pricing, brokerage commissions and
execution and other services provided by the Investment Manager ("Manager") and
its affiliates. Information furnished specifically in connection with the
renewal process included a report for each Fund prepared by Lipper, Inc.
("Lipper"), an independent organization, as well as a Fund profitability
analysis report prepared by management. The Lipper reports compared each Fund's
investment performance and expenses with those of other mutual funds deemed
comparable to the Fund as selected by Lipper. The Fund profitability analysis
report discussed the profitability to Franklin Templeton Investments from its
overall U.S. fund operations, as well as on an individual fund-by-fund basis.
Included with such profitability analysis report was information on a
fund-by-fund basis listing portfolio managers and other accounts they manage, as
well as information on management fees charged by the Manager and its affiliates
including management's explanation of differences where relevant and a
three-year expense analysis with an explanation for any increase in expense
ratios. Additional material accompanying such report was a memorandum prepared
by management describing project initiatives and capital investments relating to
the services provided to the Funds by the Franklin Templeton Investments
organization, as well as a memorandum relating to economies of scale and a
comparative analysis concerning transfer agent fees charged each Fund.

In considering such materials, the independent Trustees received assistance and
advice from and met separately with independent counsel. While the investment
management agreements for both Funds were considered at the same Board meeting,
the Board dealt with each Fund separately. In approving continuance of the
investment management agreement for each Fund, the Board, including a majority
of independent Trustees, determined that the existing management fee structure
was fair and reasonable and that continuance of the investment management
agreement was in the best interests of each Fund and its shareholders. While
attention was given to all information furnished, the following discusses some
primary factors relevant to the Board's decision.

38 | Semiannual Report

Franklin Templeton International Trust

SHAREHOLDER INFORMATION (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

policies and restrictions for the Fund were consistently complied with as well
as other reports periodically furnished the Board covering matters such as the
compliance of portfolio managers and other management personnel with the code of
ethics adopted throughout the Franklin Templeton fund complex, the adherence to
fair value pricing procedures established by the Board, and the accuracy of net
asset value calculations. The Board also noted the extent of benefits provided
Fund shareholders from being part of the Franklin Templeton family of funds,
including the right to exchange investments between the same class of funds
without a sales charge, the ability to reinvest Fund dividends into other funds
and the right to combine holdings in other funds to obtain a reduced sales
charge. Favorable consideration was given to management's continuous efforts and
expenditures in establishing back-up systems and recovery procedures to function
in the event of a natural disaster, it being noted that such systems and
procedures had functioned smoothly during the Florida hurricanes and blackouts
experienced in recent years. Among other factors taken into account by the Board
were the Manager's best execution trading policies, including a favorable report
by an independent portfolio trading analytical firm. Consideration was also
given to the experience of the Fund's portfolio management team, the number of
accounts managed and general method of compensation. In this latter respect, the
Board noted that a primary factor in management's determination of a portfolio
manager's bonus compensation was the relative investment performance of the
funds he or she managed and that a portion of such bonus was required to be
invested in a pre-designated list of funds within such person's fund management
area so as to be aligned with the interests of Fund shareholders. The Board also
took into account the quality of transfer agent and shareholder services
provided Fund shareholders by an affiliate of the Manager, noting continuing
expenditures by management to increase and improve the scope of such services,
periodic favorable reports on such service conducted by third parties, the high
industry ranking given to the Franklin Templeton website, and the firsthand
experience of individual Board members who deal with the shareholder services
department in their capacities as shareholders in one or more of the various
Franklin Templeton funds.

INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment
performance of the Fund in view of its importance to shareholders. While
consideration was given to performance reports and discussions with portfolio
managers at Board meetings throughout the year, particular attention in
assessing performance was given to the Lipper reports furnished for the
agreement renewals. The Lipper reports prepared for the Fund showed the
investment performance of its Class A shares in comparison to a performance
universe selected by Lipper. The following summarizes the performance results
for the Fund and the Board's view of such performance.

The performance universe for Templeton Foreign Smaller Companies Fund consisted
of the Fund and all retail and institutional international small/midcap core
funds as selected by Lipper. Comparative performance within such universe was
shown for the one-year period ended January 31, 2007, and the previous ten years
ended that date. The Lipper report showed the

Semiannual Report | 39

Franklin Templeton International Trust

SHAREHOLDER INFORMATION (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

Fund's total return for the one-year period to be in the second-lowest quintile
of such performance universe, and on an annualized basis to be in the lowest
quintile for each of the previous three-, five- and ten-year periods. In
discussing such performance, management pointed out the long-term, value
oriented philosophy followed by the Fund and the Board noted that recent changes
had been made in the Fund's portfolio management team. The Board also noted,
while in the lower quintiles, that the Fund's one-year total return as shown in
the Lipper report was approximately 19%, and on an annualized basis exceeded 17%
and 18%, respectively, for the previous three- and five-year periods, and was at
9.83% for the previous ten-year period. The Board found such investment
performance to be acceptable, noting its discussions with management and the
Fund's actual levels of return.

COMPARATIVE EXPENSES. Consideration was given to the management fee and total
expense ratios of the Fund compared with those of a group of other funds
selected by Lipper as its appropriate Lipper expense group. Prior to making such
comparison, the Board relied upon a survey showing that the scope of management
advisory services covered under the Fund's investment management agreement was
similar to those provided by fund managers to other mutual fund groups. In
reviewing comparative costs, emphasis was given to the Fund's contractual
investment management fee in comparison with the investment management fee that
would have been charged by other funds within its Lipper expense group assuming
they were similar in size to the Fund, as well as the actual total expenses of
the Fund in comparison with those of its Lipper expense group. The Lipper
contractual investment management fee analysis includes administrative charges
as being part of the investment management fee, and actual total expenses, for
comparative consistency, are shown by Lipper for fund Class A shares. The
results of such comparisons showed the contractual investment management fee
rate and total expenses of Templeton Foreign Smaller Companies Fund each to be
in the second-least expensive quintile of its expense group. The Board was
satisfied with the investment management fees and total expenses of the Fund in
comparison to its Lipper expense group as shown in the Lipper reports.

MANAGEMENT PROFITABILITY. The Board also considered the level of profits
realized by the Manager and its affiliates in connection with the operation of
each Fund. In this respect, the Board reviewed the Fund profitability analysis
that addresses the overall profitability of Franklin Templeton's U.S. fund
business, as well as its profits in providing management and other services to
each of the individual funds. Specific attention was given to the methodology
followed in allocating costs to each Fund, it being recognized that allocation
methodologies are inherently subjective and various allocation methodologies may
each be reasonable while producing different results. In this respect, the Board
noted that, while being continuously refined and reflecting changes in the
Manager's own cost accounting, the allocation methodology was consistent with
that followed in profitability report presentations for the Fund made in prior
years and that the

40 | Semiannual Report

Franklin Templeton International Trust

SHAREHOLDER INFORMATION (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

Fund's independent registered public accounting firm had been engaged by the
Manager to perform certain procedures on a biennial basis, specified and
approved by the Manager and the Fund's Board solely for their purposes and use
in reference to the profitability analysis. In reviewing and discussing such
analysis, management discussed with the Board its belief that costs incurred in
establishing the infrastructure necessary for the type of mutual fund operations
conducted by the Manager and its affiliates may not be fully reflected in the
expenses allocated to the Fund in determining its profitability, as well as the
fact that the level of profits, to a certain extent, reflected operational cost
savings and efficiencies initiated by management. The Board also took into
account management's expenditures in improving shareholder services provided the
Fund, as well as the need to meet additional regulatory and compliance
requirements resulting from the Sarbanes-Oxley Act and recent SEC requirements.
In addition, the Board considered a third-party study comparing the
profitability of the Manager's parent on an overall basis as compared to other
publicly held managers broken down to show profitability from management
operations exclusive of distribution expenses, as well as profitability
including distribution expenses. The Board also considered the extent to which
the Manager and its affiliates might derive ancillary benefits from fund
operations, including its interest in a joint venture entity that financed
up-front commissions paid to brokers/dealers who sold fund Class B shares prior
to February 2005, when the offering of such shares was discontinued, as well as
potential benefits resulting from allocation of fund brokerage and the use of
"soft" commission dollars to pay for research. Based upon its consideration of
all these factors, the Board determined that the level of profits realized by
the Manager and its affiliates from providing services to the Fund was not
excessive in view of the nature, quality and extent of services provided.

ECONOMIES OF SCALE. The Board also considered whether economies of scale are
realized by the Manager as the Fund grows larger and the extent to which this is
reflected in the level of management fees charged. While recognizing that any
precise determination is inherently subjective, the Board noted that based upon
the Fund profitability analysis, it appears that as some funds get larger, at
some point economies of scale do result in the Manager realizing a larger profit
margin on management services provided such a fund. The Board noted in funds
such as Templeton Foreign Smaller Companies Fund that economies of scale were
shared with the Fund and its shareholders through management fee breakpoints so
that as a fund grows in size, its effective management fee rate declines. The
fee schedule under the investment management agreement for Templeton Foreign
Smaller Companies Fund provides an initial fee of 1% on the first $100 million
of net assets; 0.90% on the next $150 million; 0.80% on the next $250 million;
and 0.75% on net assets in excess of $500 million. This Fund's assets were
approximately $464 million at December 31, 2006. In discussing the prospect of
adding additional breakpoints, management expressed its view that the existing
fee schedule was low and reflected anticipated economies of scale and pointed
out the favorable effective management fee comparison of this Fund within its
Lipper expense group. While intending to monitor future growth the Board

Semiannual Report | 41

Franklin Templeton International Trust

SHAREHOLDER INFORMATION (CONTINUED)

TEMPLETON FOREIGN SMALLER COMPANIES FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

believed that to the extent economies of scale may be realized by the manager
and its affiliates, the schedule of fees under the investment management
agreement provides for a sharing of benefits with this Fund and its
shareholders.

PROXY VOTING POLICIES AND PROCEDURES

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 1-954/527-7678 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the U.S. Securities and Exchange
Commission's website at sec.gov and reflect the most recent 12-month period
ended June 30.

QUARTERLY STATEMENT OF INVESTMENTS

The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800/SEC-0330.

42 | Semiannual Report

This page intentionally left blank.

Literature Request

LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS
SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES
BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE
CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. 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 FUNDS

INTERNATIONAL

Mutual European Fund
Templeton BRIC Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Emerging Markets Small Cap Fund
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund 1

GLOBAL

Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund 1
Templeton Growth Fund
Templeton World Fund

GROWTH

Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small Cap Growth Fund II 2
Franklin Small-Mid Cap Growth Fund

VALUE

Franklin Balance Sheet Investment Fund 1
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 1
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 3
Mutual Shares Fund

BLEND

Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund

SECTOR

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

ASSET ALLOCATION

Franklin Templeton Corefolio(R) Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund

INCOME

Franklin Adjustable U.S. Government
Securities Fund 4
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund 5
Franklin Income Fund
Franklin Limited Maturity
U.S. Government Securities Fund 4
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 4
Templeton Global Bond Fund
Templeton Income Fund

TAX-FREE INCOME 6

NATIONAL FUNDS

Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 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

Alabama Michigan 7
Arizona Minnesota 7
California 8 Missouri
Colorado New Jersey
Connecticut New York 8
Florida 8 North Carolina
Georgia Ohio 7
Kentucky Oregon
Louisiana Pennsylvania
Maryland Tennessee
Massachusetts 7 Virginia

INSURANCE FUNDS

Franklin Templeton Variable Insurance
Products Trust 9

1. The fund is open only to existing shareholders and select retirement
plans.

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

3. 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.

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

5. Effective 10/1/06, Franklin's AGE High Income Fund changed its name to
Franklin High Income Fund. The fund's investment goal and strategy
remained the same.

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

7. The fund invests primarily in insured municipal securities.

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

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

05/07

Not part of the semiannual report

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

o WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?

Eligible shareholders can sign up for eDelivery at franklintempleton.com.
See inside for details.

SEMIANNUAL REPORT AND SHAREHOLDER LETTER

TEMPLETON FOREIGN SMALLER COMPANIES FUND

INVESTMENT MANAGER

Franklin Advisers, Inc.

SUBADVISORS

Templeton Investment Counsel, LLC

Franklin Templeton Investment Management Limited

PRINCIPAL UNDERWRITER

Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com

SHAREHOLDER SERVICES

1-800/632-2301

Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. Like any investment in securities, the value of
the Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political and other factors. The Fund and its investors are not
protected from such losses by the investment manager or the subadvisors.
Therefore, investors who cannot accept this risk should not invest in shares of
the Fund. The prospectus contains this and other information; please read it
carefully before investing.

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 S2007 06/07

[GRAPHIC OMITTED]

- --------------------------------------------------------------------------------
APRIL 30, 2007
- --------------------------------------------------------------------------------

A series of Franklin Templeton
International Trust

- --------------------------------------------------------------------------------
SEMIANNUAL REPORT AND SHAREHOLDER LETTER GLOBAL
- --------------------------------------------------------------------------------

WANT TO RECEIVE
THIS DOCUMENT
FASTER VIA EMAIL?
TEMPLETON
GLOBAL LONG-SHORT FUND Eligible shareholders can
sign up for eDelivery at
franklintempleton.com.
See inside for details.

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

[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS

Franklin o TEMPLETON o Mutual Series

Franklin Templeton Investments

GAIN FROM OUR PERSPECTIVE(R)

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 recognized
leader in fixed income investing and also brings
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 offices in over 25 countries, Templeton offers
investors a truly global perspective.

MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what it
believes are undervalued stocks, as well as
arbitrage situations and distressed securities.

TRUE DIVERSIFICATION Because our management groups work independently and
adhere to different investment approaches, Franklin,
Templeton and Mutual Series funds typically have
distinct portfolios. That's why our funds can be
used to build truly diversified allocation plans
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, accurate and personal service that has
helped us become one of the most trusted names in
financial services.

[GRAPHIC OMITTED]

Not part of the semiannual report

Contents

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

SEMIANNUAL REPORT

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

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

Your Fund's Expenses .................................................... 12

Financial Highlights and Statement of Investments ....................... 14

Financial Statements .................................................... 21

Notes to Financial Statements ........................................... 24

Meeting of Shareholders ................................................. 34

Shareholder Information ................................................. 37

- --------------------------------------------------------------------------------
Semiannual Report

Templeton Global Long-Short Fund

YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Global Long-Short Fund seeks
long-term capital appreciation in both 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.

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

PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.

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

This semiannual report for Templeton Global Long-Short Fund covers the period
ended April 30, 2007.

PERFORMANCE OVERVIEW

Templeton Global Long-Short Fund - Class A posted a cumulative total return of
+8.09% for the six months under review. The Fund underperformed its benchmark,
the Morgan Stanley Capital International (MSCI) World Index (the Index), which
posted a +12.13% total return for the same period. 1 Since inception on July 31,
2001, the Fund's Class A shares posted a cumulative total return of +43.81%
compared with +66.50% for the Index. 2 The Fund's relative volatility, as
measured by the annualized standard deviation of monthly returns, was low at
just 6.15% since inception. 3 In comparison, the Index's standard deviation
during this time was 12.77%. You can find the Fund's long-term performance data
in the Performance Summary beginning on page 9.

ECONOMIC AND MARKET OVERVIEW

1. Source: Standard & Poor's Micropal. The MSCI World Index is a free
float-adjusted, market capitalization-weighted index designed to measure equity
market performance in global developed markets. 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.

2. Source: Standard & Poor's Micropal. As of 4/30/07, the Fund's Class A average
annual total return not including sales charges was +6.52% since inception on
7/31/01, compared with the +9.28% average annual total return for the MSCI World
Index for the same period. 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.

3. Standard deviation is a statistical measure of the range of a fund's total
return. In general, a high standard deviation means greater volatility.

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 17.

Semiannual Report | 3

The total value of deals announced during 2006 as a result of hostile takeovers,
private equity buyouts and broad corporate consolidation was $3.8 trillion. 4
Announced deals from private equity alone reached a record $700 billion, almost
double the record set in 2005. 5 The trend continued in the first quarter of
2007, with $1.1 trillion spent on M&A activity, 27% higher than in the same
period in 2006. 6

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,

4. Source: "Can M&A's 'Best of Times' Get Better?," THE WALL STREET JOURNAL,
1/2/07.

5. Sources: Thomson Financial; "TPG tops buy-out league with $101bn," FINANCIAL
TIMES, 12/27/06.

6. Source: "Mergers Hit Record, With Few Stop Signs," THE WALL STREET JOURNAL,
4/2/07.

4 | Semiannual Report

EQUITY EXPOSURE
4/30/07
- --------------------------------------------------------------------------------
% OF TOTAL # OF
NET ASSETS POSITIONS
- --------------------------------------------------------------------------------
Long Equity Securities 93.1% 58
- --------------------------------------------------------------------------------
Short Equity Securities -22.2% 19
- --------------------------------------------------------------------------------
NET EQUITY EXPOSURE 70.9% (LONG)
- --------------------------------------------------------------------------------

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 stock 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 believe are overvalued by the market where we see the potential for
share price decline.

MANAGER'S DISCUSSION

As of April 30, 2007, the Fund's overall exposure as a percent of total net
assets was 93.1% long and 22.2% short, for a 70.9% net long exposure and gross
equity exposure of 115.3%. For the period under review, the most notable
positive contributors to returns were long positions from the Fund's
industrials, information technology and consumer discretionary sectors. 7 The
main laggards for the period included two short positions in the industrials and
consumer staples sectors and one long position from the financials sector. 8

In the industrials sector, our long holding in Siemens represented the single
largest positive contributor to Fund returns for the period under review.
Siemens is a German-based industrial conglomerate, which recently reported its
largest quarterly profit in five years, aided by job reductions during the

7. The industrials sector comprises aerospace and defense, air freight and
logistics, airlines, building products, commercial services and supplies,
construction and engineering, electrical equipment, industrial conglomerates,
machinery, marine, road and rail, trading companies and distributors, and
transportation infrastructure in the SOI. The information technology sector
comprises communications equipment, computers and peripherals, electronic
equipment and instruments, Internet software and services, IT services, office
electronics, semiconductors and semiconductor equipment, and software in the
SOI. The consumer discretionary sector comprises auto components; automobiles;
distributors; diversified consumer services; hotels, restaurants and leisure;
household durables; Internet and catalog retail; leisure equipment and products;
media; multiline retail; specialty retail; and textiles, apparel and luxury
goods in the SOI.

8. The consumer staples sector comprises beverages, food and staples retailing,
food products, household products, personal products, and tobacco in the SOI.
The financials sector comprises capital markets, commercial banks, consumer
finance, diversified financial services, insurance, and thrifts and mortgage
finance in the SOI.

PORTFOLIO BREAKDOWN
4/30/07
- --------------------------------------------------------------------------------
% OF TOTAL
NET ASSETS
- --------------------------------------------------------------------------------

Long Positions 93.1%
- --------------------------------------------------------------------------------
Short Positions -22.2%
- --------------------------------------------------------------------------------
Short-Term Investments 10.2%
- --------------------------------------------------------------------------------
Other Assets, less Liabilities 18.9%
- --------------------------------------------------------------------------------

Semiannual Report | 5

SECTOR/INDUSTRY BREAKDOWN
Based on Total Net Assets as of 4/30/07
- --------------------------------------------------------------------------------
NET EQUITY
LONG % SHORT % EXPOSURE %
- --------------------------------------------------------------------------------
Commercial Banks 12.8% 0.0% 12.8%
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels 7.3% 0.0% 7.3%
- --------------------------------------------------------------------------------
Pharmaceuticals 6.4% 0.0% 6.4%
- --------------------------------------------------------------------------------
Software 6.2% 0.0% 6.2%
- --------------------------------------------------------------------------------
Industrial Conglomerates 5.4% 0.0% 5.4%
- --------------------------------------------------------------------------------
Media 5.4% -0.3% 5.1%
- --------------------------------------------------------------------------------
Leisure Equipment & Products 4.2% 0.0% 4.2%
- --------------------------------------------------------------------------------
Energy Equipment & Services 4.0% -0.1% 3.9%
- --------------------------------------------------------------------------------
Diversified Telecommunication Services 3.8% 0.0% 3.8%
- --------------------------------------------------------------------------------
Commercial Services & Supplies 3.0% 0.0% 3.0%
- --------------------------------------------------------------------------------
Semiconductors & Semiconductor Equipment 2.9% 0.0% 2.9%
- --------------------------------------------------------------------------------
Specialty Retail 2.4% 0.0% 2.4%
- --------------------------------------------------------------------------------
Insurance 4.2% -1.9% 2.3%
- --------------------------------------------------------------------------------
Office Electronics 1.9% 0.0% 1.9%
- --------------------------------------------------------------------------------
Capital Markets 2.8% -0.9% 1.9%
- --------------------------------------------------------------------------------
Communications Equipment 1.8% 0.0% 1.8%
- --------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods 1.7% 0.0% 1.7%
- --------------------------------------------------------------------------------
Health Care Equipment & Supplies 1.4% 0.0% 1.4%
- --------------------------------------------------------------------------------
Aerospace & Defense 2.4% -1.0% 1.4%
- --------------------------------------------------------------------------------
Hotels, Restaurants & Leisure 3.8% -2.7% 1.1%
- --------------------------------------------------------------------------------
Diversified Consumer Services 1.1% 0.0% 1.1%
- --------------------------------------------------------------------------------
Food & Staples Retailing 1.0% 0.0% 1.0%
- --------------------------------------------------------------------------------
Automobiles 1.5% -0.5% 1.0%
- --------------------------------------------------------------------------------
Auto Components 0.7% 0.0% 0.7%
- --------------------------------------------------------------------------------
Household Durables 0.6% 0.0% 0.6%
- --------------------------------------------------------------------------------
Computers & Peripherals 0.5% 0.0% 0.5%
- --------------------------------------------------------------------------------
IT Services 1.2% -1.5% -0.3%
- --------------------------------------------------------------------------------
Building Products 0.0% -0.6% -0.6%
- --------------------------------------------------------------------------------
Thrifts & Mortgage Finance 0.0% -0.8% -0.8%
- --------------------------------------------------------------------------------
Airlines 0.0% -0.9% -0.9%
- --------------------------------------------------------------------------------
Marine 0.0% -1.0% -1.0%
- --------------------------------------------------------------------------------
Beverages 0.0% -1.3% -1.3%
- --------------------------------------------------------------------------------
Diversified Financial Services 2.7% -8.7% -6.0%
- --------------------------------------------------------------------------------
TOTAL 93.1% -22.2% 70.9%
- --------------------------------------------------------------------------------

6 | Semiannual Report

company's fiscal second quarter. Siemens shares also made gains due to an
analyst upgrade of the stock and an increased price target.

Within information technology, the Fund's long position in Taiwanese
communication equipment company D-Link positively impacted performance during
the period. The company's stock received an analyst upgrade, and U.S.-based
software maker Microsoft chose to sell D-Link's telephone hardware in
conjunction with one of its new products.

In the consumer discretionary sector, a long exposure to U.K.-based consumer
services company Compass Group benefited the Fund. Compass shares rose on news
that, after winning more profitable contracts, its five-month sales to March
2007 exceeded forecasts. Additionally, the company's share price climbed after
an announcement of a share repurchase program start date.

It is also important to remember the effect of currency movements on the Fund's
performance. In general, if the value of the U.S. dollar increases compared with
a foreign currency, an investment traded in that foreign currency will decrease
in value because it will be worth fewer U.S. dollars. This can have a negative
effect on Fund performance. Conversely, when the U.S. dollar weakens in relation
to a foreign currency, an investment traded in that foreign currency will
increase in value, which can contribute to Fund performance. For the six months
ended April 30, 2007, the U.S. dollar declined in value relative to most
non-U.S. currencies. As a result, the Fund's performance was positively affected
by the portfolio's substantial investment in securities with non-U.S. currency
exposure. However, one cannot expect the same result in future periods.

Within the industrials sector, the Fund's short exposure to Denmark-based marine
company A.P. Moller - Maersk detracted from performance. Company shares posted
their steepest climb in more than three years after the stock was upgraded.
Analysts also raised the company's share price target due to higher valuations
for its port assets, improved hire rates for its ships and an expected demand
increase for shipments between Asia and Europe.

In the consumer staples sector, a short position in U.K.-based brewer SABMiller
negatively impacted returns as its share price appreciated for several reasons.
SABMiller announced it sold 10% more beer in its past fiscal year, excluding the
effects of acquisitions, as South American and Chinese demand rose.
Additionally, shares rose in value when management announced it would continue
to expand in China, the world's largest beer market, by acquiring two breweries
in the region. News that its rival, InBev, was holding merger talks with
Anheuser Busch also led to share price appreciation during the period.

TOP 10 LONG POSITIONS
4/30/07

- --------------------------------------------------------------------------------
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- --------------------------------------------------------------------------------
Siemens AG 2.9%
INDUSTRIAL CONGLOMERATES, GERMANY
- --------------------------------------------------------------------------------
Microsoft Corp. 2.9%
SOFTWARE, U.S.
- --------------------------------------------------------------------------------
Telenor ASA 2.8%
DIVERSIFIED TELECOMMUNICATION
SERVICES, NORWAY
- --------------------------------------------------------------------------------
UniCredito Italiano SpA 2.6%
COMMERCIAL BANKS, ITALY
- --------------------------------------------------------------------------------
ING Groep NV 2.5%
DIVERSIFIED FINANCIAL SERVICES,
NETHERLANDS
- --------------------------------------------------------------------------------
GlaxoSmithKline PLC 2.5%
PHARMACEUTICALS, U.K.
- --------------------------------------------------------------------------------
Tyco International Ltd. 2.4%
INDUSTRIAL CONGLOMERATES, U.S.
- --------------------------------------------------------------------------------
BAE Systems PLC 2.4%
AEROSPACE & DEFENSE, U.K.
- --------------------------------------------------------------------------------
News Corp., A 2.3%
MEDIA, U.S.
- --------------------------------------------------------------------------------
American International Group Inc. 2.3%
INSURANCE, U.S.
- --------------------------------------------------------------------------------

Semiannual Report | 7

GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets as of 4/30/07

- --------------------------------------------------------------------------------
NET EQUITY
REGION LONG % SHORT % EXPOSURE %
- --------------------------------------------------------------------------------
Europe 38.0% -4.9% 33.1%
- --------------------------------------------------------------------------------
North America 32.1% -12.1% 20.0%
- --------------------------------------------------------------------------------
Asia 21.5% -4.7% 16.8%
- --------------------------------------------------------------------------------
Middle East & Africa 1.5% 0.0% 1.5%
- --------------------------------------------------------------------------------
Australia & New Zealand 0.0% -0.5% -0.5%
- --------------------------------------------------------------------------------
Short-Term Investments & Other Net Assets 29.1% 0.0% 29.1%
- --------------------------------------------------------------------------------

In the financials sector, the Fund's long exposure to Japanese diversified bank
Mitsubishi UFJ Financial Group hampered performance as the company's stock price
declined following investor skepticism regarding prospects for higher loan
volumes and net interest margins.

Thank you for your continued participation in Templeton Global Long-Short Fund.
We look forward to serving your future investment needs.

[PHOTO OMITTED] /s/ Dale A. Winner

Dale A. Winner, CFA
Portfolio Manager
Templeton Global Long-Short Fund

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF APRIL 30, 2007, 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 INVESTMENT MANAGER 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 | Semiannual Report

Performance Summary as of 4/30/07

PRICE AND DISTRIBUTION INFORMATION

- --------------------------------------------------------------------------------
CLASS A (SYMBOL: TLSAX) CHANGE 4/30/07 10/31/06
- --------------------------------------------------------------------------------
Net Asset Value (NAV) +$0.74 $13.73 $12.99
- --------------------------------------------------------------------------------
DISTRIBUTIONS (11/1/06-4/30/07)
- --------------------------------------------------------------------------------
Dividend Income $0.1848
- --------------------------------------------------------------------------------
Long-Term Capital Gain $0.1236
- --------------------------------------------------------------------------------
TOTAL $0.3084
- --------------------------------------------------------------------------------
CLASS B (SYMBOL: TLSBX) CHANGE 4/30/07 10/31/06
- --------------------------------------------------------------------------------
Net Asset Value (NAV) +$0.78 $13.53 $12.75
- --------------------------------------------------------------------------------
DISTRIBUTIONS (11/1/06-4/30/07)
- --------------------------------------------------------------------------------
Dividend Income $0.0815
- --------------------------------------------------------------------------------
Long-Term Capital Gain $0.1236
- --------------------------------------------------------------------------------
TOTAL $0.2051
- --------------------------------------------------------------------------------
ADVISOR CLASS (SYMBOL: N/A) CHANGE 4/30/07 10/31/06
- --------------------------------------------------------------------------------
Net Asset Value (NAV) +$0.72 $13.72 $13.00
- --------------------------------------------------------------------------------
DISTRIBUTIONS (11/1/06-4/30/07)
- --------------------------------------------------------------------------------
Dividend Income $0.2146
- --------------------------------------------------------------------------------
Long-Term Capital Gain $0.1236
- --------------------------------------------------------------------------------
TOTAL $0.3382
- --------------------------------------------------------------------------------

Semiannual Report | 9

Performance Summary (CONTINUED)

PERFORMANCE 1

CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. CLASS A: 5.75%
MAXIMUM INITIAL SALES CHARGE; CLASS B: CONTINGENT DEFERRED SALES CHARGE
DECLINING FROM 4% TO 1% OVER SIX YEARS, AND ELIMINATED THEREAFTER; ADVISOR
CLASS: NO SALES CHARGES. THE FUND MAY CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN
SEVEN DAYS OF PURCHASE.

- -------------------------------------------------------------------------------------------------
CLASS A 6-MONTH 1-YEAR 5-YEAR INCEPTION (7/31/01)
- -------------------------------------------------------------------------------------------------

Cumulative Total Return 2 +8.09% +9.95% +33.15% +43.81%
- -------------------------------------------------------------------------------------------------
Average Annual Total Return 3 +1.90% +3.63% +4.64% +5.43%
- -------------------------------------------------------------------------------------------------
Value of $10,000 Investment 4 $10,190 $10,363 $12,548 $13,554
- -------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (3/31/07) 5 +3.04% +4.23% +4.88%
- -------------------------------------------------------------------------------------------------
Total Annual Operating Expenses 6 1.63%
- -------------------------------------------------------------------------------------------------
CLASS B 6-MONTH 1-YEAR 5-YEAR INCEPTION (7/31/01)
- -------------------------------------------------------------------------------------------------
Cumulative Total Return 2 +7.79% +9.16% +28.54% +38.43%
- -------------------------------------------------------------------------------------------------
Average Annual Total Return 3 +3.79% +5.16% +4.82% +5.69%
- -------------------------------------------------------------------------------------------------
Value of $10,000 Investment 4 $10,379 $10,516 $12,654 $13,743
- -------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (3/31/07) 5 +4.63% +4.42% +5.15%
- -------------------------------------------------------------------------------------------------
Total Annual Operating Expenses 6 2.35%
- -------------------------------------------------------------------------------------------------
ADVISOR CLASS 7 6-MONTH 1-YEAR 5-YEAR INCEPTION (7/31/01)
- -------------------------------------------------------------------------------------------------
Cumulative Total Return 2 +8.33% +10.28% +34.37% +45.12%
- -------------------------------------------------------------------------------------------------
Average Annual Total Return 3 +8.33% +10.28% +6.09% +6.69%
- -------------------------------------------------------------------------------------------------
Value of $10,000 Investment 4 $10,833 $11,028 $13,437 $14,512
- -------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (3/31/07) 5 +9.68% +5.66% +6.15%
- -------------------------------------------------------------------------------------------------
Total Annual Operating Expenses 6 1.35%
- -------------------------------------------------------------------------------------------------

10 | Semiannual 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 ECONOMIC, SOCIAL AND POLITICAL CLIMATES OF COUNTRIES WHERE THE FUND INVESTS.
INVESTMENTS IN DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME
FACTORS. IN ADDITION, HISTORICALLY, SMALL-CAP STOCKS HAVE PROVEN MORE VOLATILE
THAN LARGE-CAP SECURITIES, ESPECIALLY OVER THE SHORT TERM. 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; LOSSES FROM SHORT SALES MAY BE UNLIMITED. THE FUND'S
PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN INVESTMENT RISKS.

CLASS B: These shares have higher annual fees and expenses than Class A
shares.

ADVISOR CLASS: Shares are available to certain eligible investors as described
in the prospectus.

1. Past expense reductions by the Fund's manager increased the Fund's total
returns. If the manager had not taken this action, the Fund's total returns
would have been lower.

2. Cumulative total return represents the change in value of an investment over
the periods indicated.

3. Average annual total return represents the average annual change in value of
an investment over the periods indicated. Six-month return has not been
annualized.

4. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated.

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

6. Figures are as stated in the Fund's prospectus current as of the date of this
report.

7. Effective 8/2/04, 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 8/2/04, 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 8/1/04, actual Advisor
Class performance is used reflecting all charges and fees applicable to that
class. Since 8/2/04 (commencement of sales), the cumulative and average annual
total returns of Advisor Class shares were +33.26% and +11.04%.

Semiannual Report | 11

Your Fund's Expenses

As a Fund shareholder, you can incur two types of costs:

o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and

o Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing
costs, sometimes referred to as operating expenses.

ACTUAL FUND EXPENSES

You can estimate the expenses you paid during the period, by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:

1. Divide your account value by $1,000.

IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.

2. Multiply the result by the number under the heading "Expenses Paid During
Period."

IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.

In this illustration, the estimated expenses paid this period are $64.50.

HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS

12 | Semiannual Report

Your Fund's Expenses (CONTINUED)

- --------------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
CLASS A VALUE 11/1/06 VALUE 4/30/07 PERIOD* 11/1/06-4/30/07
- --------------------------------------------------------------------------------------------------------

Actual $1,000 $1,080.90 $ 9.60
- --------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.57 $ 9.30
- --------------------------------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------------------------------
Actual $1,000 $1,077.90 $13.19
- --------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.10 $12.77
- --------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------------------------------
Actual $1,000 $1,083.30 $ 8.06
- --------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,017.06 $ 7.80
- --------------------------------------------------------------------------------------------------------

* Expenses are equal to the annualized expense ratio for each class (A: 1.86%;
B: 2.56%; and Advisor: 1.56%), multiplied by the average account value over the
period, multiplied by 181/365 to reflect the one-half year period.

Semiannual Report | 13

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS

TEMPLETON GLOBAL LONG-SHORT FUND

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $ 12.99 $ 11.36 $ 11.21 $ 10.70 $ 10.17 $ 10.14
---------------------------------------------------------------------------------
Income from investment operations a:
Net investment income (loss) b ............... 0.07 0.22 0.12 0.11 (0.05) (0.02)
Net realized and unrealized gains (losses) ... 0.98 1.56 0.15 0.40 0.58 0.05
---------------------------------------------------------------------------------
Total from investment operations ................ 1.05 1.78 0.27 0.51 0.53 0.03
---------------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (0.19) (0.15) (0.12) -- -- --
Net realized gain ............................ (0.12) -- -- -- -- --
---------------------------------------------------------------------------------
Total distributions ............................. (0.31) (0.15) (0.12) -- -- --
---------------------------------------------------------------------------------
Redemption fees ................................. -- d -- d -- d -- d -- --
---------------------------------------------------------------------------------
Net asset value, end of period .................. $ 13.73 $ 12.99 $ 11.36 $ 11.21 $ 10.70 $ 10.17
---------------------------------------------------------------------------------

Total return c .................................. 8.09% 15.93% 2.37% 4.77% 5.21% 0.30%

RATIOS TO AVERAGE NET ASSETS
Expenses before waiver and payments by
affiliates ................................ 1.86% e 1.63% 1.58% 1.52% 2.87% 2.83%
Expenses net of waiver and payments by
affiliates ................................ 1.86% e,f 1.63% f 1.58% f 1.33% f 2.87% 2.59%
Net investment income (loss) ................. 1.10% e 1.80% 1.09% 0.98% (0.50)% (0.21)%
Ratios to average net assets, excluding
dividend expense on securities sold short:
Expenses before waiver and payments by
affiliates ................................ 1.44% e 1.36% 1.23% 1.30% 2.46% 2.63%
Expenses net of waiver and payments by
affiliates ................................ 1.44% e,f 1.36% f 1.23% f 1.11% f 2.46% 2.39%

SUPPLEMENTAL DATA
Net assets, end of period (000's) ............... $ 187,573 $ 141,335 $ 92,835 $113,850 $93,194 $109,790
Portfolio turnover rate ......................... 43.27% 133.06% 111.52% 200.64% 471.22% 572.56%
Portfolio turnover rate excluding short sales ... 18.31% 66.20% 71.34% 74.62% 175.68% 196.67%

a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing of
sales and repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.

b Based on average daily shares outstanding.

c Total return does not reflect sales commissions or contingent deferred sales
charges, if applicable, and is not annualized for periods less than one year.

d Amount rounds to less than $0.01 per share.

e Annualized.

f Benefit of expense reduction rounds to less than 0.01%.

14 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

---------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2007 YEAR ENDED OCTOBER 31,
CLASS B (UNAUDITED) 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............ $ 12.75 $ 11.14 $ 10.98 $ 10.55 $ 10.10 $ 10.13
---------------------------------------------------------------------------------
Income from investment operations a:
Net investment income (loss) b ............... 0.02 0.14 0.04 0.03 (0.12) (0.09)
Net realized and unrealized gains (losses) ... 0.96 1.53 0.14 0.40 0.57 0.06
---------------------------------------------------------------------------------
Total from investment operations ................ 0.98 1.67 0.18 0.43 0.45 (0.03)
---------------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (0.08) (0.06) (0.02) -- -- --
Net realized gain ............................ (0.12) -- -- -- -- --
---------------------------------------------------------------------------------
Total distributions ............................. (0.20) (0.06) (0.02) -- -- --
---------------------------------------------------------------------------------
Redemption fees ................................. -- d -- d -- d -- d -- --
---------------------------------------------------------------------------------
Net asset value, end of period .................. $ 13.53 $ 12.75 $ 11.14 $ 10.98 $ 10.55 $ 10.10
---------------------------------------------------------------------------------

Total return c .................................. 7.79% 14.95% 1.76% 4.08% 4.55% (0.30)%

RATIOS TO AVERAGE NET ASSETS
Expenses before waiver and payments by
affiliates ................................ 2.56% e 2.35% 2.28% 2.19% 3.57% 3.49%
Expenses net of waiver and payments by
affiliates ................................ 2.56% e,f 2.35% f 2.28% f 2.00% f 3.57% 3.25%
Net investment income (loss) ................. 0.40% e 1.08% 0.39% 0.31% (1.20)% (0.87)%
Ratios to average net assets, excluding
dividend expense on securities sold short:
Expenses before waiver and payments by
affiliates ................................ 2.14% e 2.08% 1.93% 1.97% 3.16% 3.29%
Expenses net of waiver and payments by
affiliates ................................ 2.14% e,f 2.08% f 1.93% f 1.78% f 3.16% 3.05%

SUPPLEMENTAL DATA
Net assets, end of period (000's) ............... $ 34,304 $ 34,799 $ 36,590 $ 44,202 $46,270 $ 50,190
Portfolio turnover rate ......................... 43.27% 133.06% 111.52% 200.64% 471.22% 572.56%
Portfolio turnover rate excluding short sales ... 18.31% 66.20% 71.34% 74.62% 175.68% 196.67%

a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing of
sales and repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.

b Based on average daily shares outstanding.

c Total return does not reflect contingent deferred sales charges, if
applicable, and is not annualized for periods less than one year.

d Amount rounds to less than $0.01 per share.

e Annualized.

f Benefit of expense reduction rounds to less than 0.01%.

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 15

Franklin Templeton International Trust

FINANCIAL HIGHLIGHTS (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2007 YEAR ENDED OCTOBER 31,
ADVISOR CLASS (UNAUDITED) 2006 2005 2004 g
------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .............. $ 13.00 $ 11.37 $ 11.22 $ 10.89
------------------------------------------------------------
Income from investment operations a:
Net investment income b ........................ 0.09 0.26 0.19 0.03
Net realized and unrealized gains (losses) ..... 0.97 1.56 0.12 0.30
------------------------------------------------------------
Total from investment operations .................. 1.06 1.82 0.31 0.33
------------------------------------------------------------
Less distributions from:
Net investment income .......................... (0.22) (0.19) (0.16) --
Net realized gains ............................. (0.12) -- -- --
------------------------------------------------------------
Total distributions ............................... (0.34) (0.19) (0.16) --
------------------------------------------------------------
Redemption fees ................................... -- d -- d -- d -- d
------------------------------------------------------------
Net asset value, end of period .................... $ 13.72 $ 13.00 $ 11.37 $ 11.22
============================================================

Total return c .................................... 8.33% 16.19% 2.75% 3.03%

RATIOS TO AVERAGE NET ASSETS
Expenses before waiver and payments by
affiliates .................................. 1.56% e 1.35% 1.28% 1.20% e
Expenses net of waiver and payments by
affiliates .................................. 1.56% e,f 1.35% f 1.28% f 1.01% e,f
Net investment income .......................... 1.40% e 2.08% 1.39% 1.30% e
Ratios to average net assets, excluding dividend
expense on securities sold short:
Expenses before waiver and payments by
affiliates .................................. 1.14% e 1.08% 0.93% 0.98% e
Expenses net of waiver and payments by
affiliates .................................. 1.14% e,f 1.08% f 0.93% f 0.79% e,f

SUPPLEMENTAL DATA
Net assets, end of period (000's) ................. $ 4,390 $ 3,654 $ 3,096 $ 366
Portfolio turnover rate ........................... 43.27% 133.06% 111.52% 200.64%
Portfolio turnover rate excluding short sales ..... 18.31% 66.20% 71.34% 74.62%

a The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing of
sales and repurchase of the Fund shares in relation to income earned and/or
fluctuating market value of the investments of the Fund.

b Based on average daily shares outstanding.

c Total return is not annualized for periods less than one year.

d Amount rounds to less than $0.01 per share.

e Annualized.

f Benefit of expense reduction rounds to less than 0.01%.

g For the period August 2, 2004 (effective date) to October 31, 2004.

16 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, APRIL 30, 2007 (UNAUDITED)

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

LONG TERM INVESTMENTS 93.1%
COMMON STOCKS 92.9%
FRANCE 1.0%
France Telecom SA ............................ Diversified Telecommunication Services 77,960 $ 2,296,835
-------------
GERMANY 7.2%
Bayerische Motoren Werke AG .................. Automobiles 53,860 3,341,190
Commerzbank AG ............................... Commercial Banks 78,840 3,951,599
a Infineon Technologies AG ..................... Semiconductors & Semiconductor Equipment 147,270 2,305,064
Siemens AG ................................... Industrial Conglomerates 54,720 6,663,632
-------------
16,261,485
-------------
INDIA 1.2%
Satyam Computer Services Ltd. ................ IT Services 237,780 2,740,741
-------------
ISRAEL 1.5%
Check Point Software Technologies Ltd. ....... Software 140,876 3,317,630
-------------
ITALY 4.1%
Eni SpA ...................................... Oil, Gas & Consumable Fuels 99,448 3,315,315
UniCredito Italiano SpA ...................... Commercial Banks 574,930 5,946,885
-------------
9,262,200
-------------
JAPAN 10.0%
FUJIFILM Holdings Corp. ...................... Leisure Equipment & Products 116,300 4,849,079
Konica Minolta Holdings Ltd. ................. Office Electronics 317,500 4,375,460
Mitsubishi UFJ Financial Group Inc. .......... Commercial Banks 310 3,244,307
Olympus Corp. ................................ Health Care Equipment & Supplies 93,000 3,270,261
Sohgo Security Services Co. Ltd. ............. Commercial Services & Supplies 167,700 3,243,361
Sumitomo Mitsui Financial Group Inc. ......... Commercial Banks 239 2,101,055
Takeda Pharmaceutical Co. Ltd. ............... Pharmaceuticals 23,830 1,552,222
-------------
22,635,745
-------------
NETHERLANDS 2.5%
ING Groep NV ................................. Diversified Financial Services 124,540 5,717,027
-------------
NORWAY 2.8%
Telenor ASA .................................. Diversified Telecommunication Services 340,960 6,373,379
-------------
SOUTH KOREA 6.2%
Halla Climate Control Corp. .................. Auto Components 152,390 1,579,807
Hana Financial Group Inc. .................... Commercial Banks 59,691 3,142,138
LG Electronics Inc. .......................... Household Durables 21,720 1,460,678
Samsung Electronics Co. Ltd. ................. Semiconductors & Semiconductor Equipment 6,730 4,149,992
Shinhan Financial Group Co. Ltd. ............. Commercial Banks 67,410 3,830,895
-------------
14,163,510
-------------
TAIWAN 4.0%
b Compal Electronics Inc., GDR, Reg S .......... Computers & Peripherals 235,871 1,051,985
D-Link Corp. ................................. Communications Equipment 2,197,360 4,076,086
Giant Manufacturing Co. Ltd. ................. Leisure Equipment & Products 671,000 1,093,644
Mega Financial Holding Co. Ltd. .............. Commercial Banks 4,510,000 2,876,664
-------------
9,098,379
-------------

Semiannual Report | 17

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, APRIL 30, 2007 (UNAUDITED) (CONTINUED)

LONG TERM INVESTMENTS (CONTINUED)
COMMON STOCKS (CONTINUED)
UNITED KINGDOM 20.3%
Amvescap PLC ................................. Capital Markets 231,450 $ 2,735,260
BAE Systems PLC .............................. Aerospace & Defense 582,814 5,325,988
BP PLC ....................................... Oil, Gas & Consumable Fuels 389,959 4,409,664
British Sky Broadcasting Group PLC ........... Media 215,882 2,482,209
Compass Group PLC ............................ Hotels, Restaurants & Leisure 682,390 4,973,753
GlaxoSmithKline PLC .......................... Pharmaceuticals 193,762 5,614,240
Group 4 Securicor PLC ........................ Commercial Services & Supplies 770,550 3,559,318
Kingfisher PLC ............................... Specialty Retail 408,880 2,228,006
Pearson PLC .................................. Media 263,929 4,546,701
Royal Bank of Scotland Group PLC ............. Commercial Banks 98,903 3,816,988
Royal Dutch Shell PLC, B ..................... Oil, Gas & Consumable Fuels 106,756 3,789,175
William Morrison Supermarkets PLC ............ Food & Staples Retailing 386,494 2,372,658
-------------
45,853,960
-------------
UNITED STATES 32.1%
c American International Group Inc. ............ Insurance 73,860 5,163,553
a Apollo Group Inc., A ......................... Diversified Consumer Services 50,230 2,375,879
a,c Bristow Group Inc. ........................... Energy Equipment & Services 112,940 4,246,544
c Carnival Corp. ............................... Hotels, Restaurants & Leisure 72,550 3,546,970
Chico's FAS Inc. ............................. Specialty Retail 123,730 3,261,523
c El Paso Corp. ................................ Oil, Gas & Consumable Fuels 330,410 4,956,150
a Input/Output Inc. ............................ Energy Equipment & Services 346,690 4,850,193
a Leapfrog Enterprises Inc. .................... Leisure Equipment & Products 317,360 3,478,266
Liz Claiborne Inc. ........................... Textiles, Apparel & Luxury Goods 85,370 3,817,746
c Merck & Co. Inc. ............................. Pharmaceuticals 81,410 4,187,730
c Merrill Lynch & Co. Inc. ..................... Capital Markets 40,930 3,693,114
c Microsoft Corp. .............................. Software 222,460 6,660,452
c News Corp., A ................................ Media 230,870 5,169,179
a,c Oracle Corp. ................................. Software 217,760 4,093,888
Pfizer Inc. .................................. Pharmaceuticals 121,530 3,215,684
c Torchmark Corp. .............................. Insurance 64,750 4,422,425
c Tyco International Ltd. ...................... Industrial Conglomerates 166,890 5,445,621
-------------
72,584,917
-------------
TOTAL COMMON STOCKS
(COST $163,631,848) ....................... 210,305,808
-------------

-----------------
CONTRACTS
-----------------

OPTIONS PURCHASED 0.2%
UNITED KINGDOM 0.1%
FTSE 100 Index, Jun. 6125.00 Puts, 6/15/07 ... Diversified Financial Services 405 319,894
-------------
UNITED STATES 0.1%
S & P 500 Index, Jun. 1400.00 Puts, 6/16/07 .. Diversified Financial Services 333 223,110
-------------
TOTAL OPTIONS PURCHASED
(COST $2,410,232) ......................... 543,004
-------------
TOTAL LONG TERM INVESTMENTS
(COST $166,042,080) ....................... 210,848,812
-------------

18 | Semiannual Report

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, APRIL 30, 2007 (UNAUDITED) (CONTINUED)

- -----------------------------------------------------------------------------------------------------------------------------------
TEMPLETON GLOBAL LONG-SHORT FUND INDUSTRY PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------

SHORT TERM INVESTMENT
(COST $22,995,000) 10.2%
TIME DEPOSIT 10.2%
UNITED STATES 10.2%
Royal Bank of Scotland PLC, Time Deposit,
5.28%, 5/1/07 ............................. $ 22,995,000 $ 22,995,000
-------------
TOTAL INVESTMENTS (COST $189,037,080)
103.3% .................................... 233,843,812
OPTIONS WRITTEN (0.1)% ....................... (246,205)
SECURITIES SOLD SHORT (22.1)% ................ (50,073,339)
OTHER ASSETS, LESS LIABILITIES 18.9% ......... 42,743,459
-------------
NET ASSETS 100.0% ............................ $ 226,267,727
=============

----------------
CONTRACTS
----------------

d OPTIONS WRITTEN (PREMIUM RECEIVED $90,661) 0.1%
UNITED KINGDOM 0.1%
Input/Output Inc., May 12.50 Calls, 5/19/07 .. Energy Equipment & Services 1,201 $ 246,205
-------------

----------------
SHARES
----------------

e SECURITIES SOLD SHORT 22.1%
AUSTRALIA 0.5%
Foster's Group Ltd. .......................... Beverages 209,550 1,111,993
-------------
DENMARK 1.0%
a A.P. Moller - Maersk AS ...................... Marine 200 2,282,009
-------------
HONG KONG 0.9%
Cathay Pacific Airways Ltd. .................. Airlines 791,000 2,057,776
-------------
INDIA 1.5%
Infosys Technologies Ltd., ADR ............... IT Services 63,250 3,311,138
-------------
JAPAN 2.3%
Toto Ltd. .................................... Building Products 143,000 1,358,883
iShares MSCI Japan Index Fund ................ Diversified Financial Services 274,028 3,910,380
-------------
5,269,263
-------------
SOUTH AFRICA 0.8%
SABMiller PLC ................................ Beverages 80,960 1,926,511
-------------
UNITED STATES 15.1%
The Goldman Sachs Group Inc. ................. Capital Markets 9,960 2,177,356
Northrop Grumman Corp. ....................... Aerospace & Defense 29,210 2,151,024
General Motors Corp. ......................... Automobiles 33,240 1,038,085
Washington Mutual Inc. ....................... Thrifts & Mortgage Finance 42,560 1,786,669
Chubb Corp. .................................. Insurance 82,410 4,436,130
Brinker International Inc. ................... Hotels, Restaurants & Leisure 90,750 2,822,325
a Starbucks Corp. .............................. Hotels, Restaurants & Leisure 105,560 3,274,471
a Sirius Satellite Radio Inc. .................. Media 199,560 590,698
Powershares QQQ Nasdaq 100 ................... Diversified Financial Services 42,794 1,986,925
SPDR Trust Series 1 .......................... Diversified Financial Services 46,395 6,879,915
iShares MSCI Germany Index Fund .............. Diversified Financial Services 222,008 6,971,051
-------------
34,114,649
-------------

Semiannual Report | 19

Franklin Templeton International Trust

STATEMENT OF INVESTMENTS, APRIL 30, 2007 (UNAUDITED) (CONTINUED)

- -----------------------------------------------------------------------------------------------------------------------------------
TEMPLETON GLOBAL LONG-SHORT FUND VALUE
- -----------------------------------------------------------------------------------------------------------------------------------

TOTAL SECURITIES SOLD SHORT
(PROCEEDS $47,425,076) .................... $ 50,073,339
-------------

SELECTED PORTFOLIO ABBREVIATIONS

ADR - American Depository Receipt
GDR - Global Depository Receipt

a Non-income producing for the twelve months ended April 30, 2007.

b Security was purchased pursuant to Regulation S under the Securities Act of
1933, which exempts from registration securities offered and sold outside of the
United States. Such a security cannot be sold in the United States without
either an effective registration statement filed pursuant to the Securities Act
of 1933, or pursuant to an exemption from registration. This security has been
deemed liquid under guidelines approved by the Fund's Board of Trustees. At
April 30, 2007, the value of this security was $1,051,985, representing 0.46% of
net assets.

c Security segregated with broker for securities sold short.

d See Note 1(d) regarding written options.

e See Note 1(e) regarding securities sold short.

20 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Templeton International Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
April 30, 2007 (unaudited)

----------------
TEMPLETON GLOBAL
LONG-SHORT FUND
----------------

Assets:
Investments in securities:
Cost ................................................................. $ 189,037,080
================
Value ................................................................ $ 233,843,812
Cash .................................................................... 3,776
Cash on deposit with broker for securities sold short ................... 33,975,687
Foreign currency, at value (cost $46,388) ............................... 47,795
Receivables:
Investment securities sold ........................................... 5,499,729
Capital shares sold .................................................. 3,825,484
Dividends and interest ............................................... 645,466
----------------
Total assets ...................................................... 277,841,749
----------------
Liabilities:
Payables:
Capital shares redeemed .............................................. 690,843
Affiliates ........................................................... 282,547
Options written, at value (premiums received $90,661) ................... 246,205
Securities sold short, at value (proceeds $47,425,076) .................. 50,073,339
Deferred tax ............................................................ 125,341
Accrued expenses and other liabilities .................................. 155,747
----------------
Total liabilities ................................................. 51,574,022
================
Net assets, at value ........................................... $ 226,267,727
================
Net assets consist of:
Paid-in capital ...................................................... $ 181,666,597
Undistributed net investment income .................................. 816,776
Net unrealized appreciation (depreciation) ........................... 41,816,393
Accumulated net realized gain (loss) ................................. 1,967,961
----------------
Net assets, at value ........................................... $ 226,267,727
================
CLASS A:
Net assets, at value .................................................... $ 187,573,424
================
Shares outstanding ...................................................... 13,662,609
================
Net asset value per share a ............................................. $ 13.73
================
Maximum offering price per share (net asset value per share / 94.25%) ... $ 14.57
================
CLASS B:
Net assets, at value .................................................... $ 34,304,359
================
Shares outstanding ...................................................... 2,535,700
================
Net asset value and maximum offering price per share a .................. $ 13.53
================
ADVISOR CLASS:
Net assets, at value .................................................... $ 4,389,944
================
Shares outstanding ...................................................... 319,855
================
Net asset value and maximum offering price per share a .................. $ 13.72
================

a Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable, and redemption fees retained by the Fund.

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 21

Franklin Templeton International Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the six months ended April 30, 2007 (unaudited)

----------------
TEMPLETON GLOBAL
LONG-SHORT FUND
----------------

Investment income:
Dividends (net of foreign taxes of $81,139) ................................... $ 1,588,052
Interest ...................................................................... 1,350,552
----------------
Total investment income ................................................. 2,938,604
----------------
Expenses:
Management fees (Note 3a) ..................................................... 676,403
Administrative fees (Note 3b) ................................................. 197,242
Distribution fees (Note 3c)

Class A .................................................................... 238,570
Class B .................................................................... 169,489
Transfer agent fees (Note 3e) ................................................. 164,732
Custodian fees (Note 4) ....................................................... 28,927
Reports to shareholders ....................................................... 22,947
Registration and filing fees .................................................. 32,104
Professional fees ............................................................. 27,675
Trustees' fees and expenses ................................................... 1,820
Dividends on securities sold short ............................................ 406,741
Other ......................................................................... 5,679
----------------
Total expenses .......................................................... 1,972,329
Expense reductions (Note 4) ............................................. (3,059)
----------------
Net expenses ......................................................... 1,969,270
----------------
Net investment income ............................................. 969,334
----------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ................................................................ 5,651,896
Foreign currency transactions .............................................. (62,814)
Securities sold short ...................................................... (3,424,737)
----------------
Net realized gain (loss) ............................................. 2,164,345
----------------
Net change in unrealized appreciation (depreciation) on:

Investments ................................................................ 12,548,469
Translation of assets and liabilities denominated in foreign currencies 6,636
Change in deferred taxes on unrealized appreciation (depreciation) ............ (25,076)
----------------
Net change in unrealized appreciation (depreciation) .................... 12,530,029
----------------
Net realized and unrealized gain (loss) .......................................... 14,694,374
----------------
Net increase (decrease) in net assets resulting from operations .................. $ 15,663,708
================

22| The accompanying notes are an integral part of these financial statements.
| Semiannual Report

Franklin Templeton International Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

------------------------------------
TEMPLETON GLOBAL LONG-SHORT FUND
------------------------------------
SIX MONTHS ENDED
APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006
------------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income ............................................................. $ 969,334 $ 2,416,949
Net realized gain (loss) from investments, foreign currency transactions, and
securities sold short .......................................................... 2,164,345 2,592,099
Net change in unrealized appreciation (depreciation) on investments, translation of
assets and liabilities denominated in foreign currencies and deferred taxes .... 12,530,029 15,617,753
------------------------------------
Net increase (decrease) in net assets resulting from operations ................ 15,663,708 20,626,801
------------------------------------
Distributions to shareholders from:
Net investment income:
Class A ........................................................................ (2,077,211) (1,208,160)
Class B ........................................................................ (216,164) (188,841)
Advisor Class .................................................................. (65,008) (52,496)
Net realized gains:
Class A ........................................................................ (1,396,027) --
Class B ........................................................................ (327,826) --
Advisor Class .................................................................. (37,441) --
------------------------------------
Total distributions to shareholders .................................................. (4,119,677) (1,449,497)
------------------------------------
Capital share transactions: (Note 2)
Class A ........................................................................ 36,929,698 34,618,415
Class B ........................................................................ (2,519,551) (6,644,926)
Advisor Class .................................................................. 523,269 114,055
------------------------------------
Total capital share transactions ..................................................... 34,933,416 28,087,544
------------------------------------
Redemption fees ...................................................................... 1,863 2,285
------------------------------------
Net increase (decrease) in net assets ....................................... 46,479,310 47,267,133
Net assets:
Beginning of period .................................................................. 179,788,417 132,521,284
------------------------------------
End of period ........................................................................ $ 226,267,727 $ 179,788,417
====================================
Undistributed net investment income included in net assets:
End of period ........................................................................ $ 816,776 $ 2,205,825
====================================

Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 23

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

TEMPLETON GLOBAL LONG-SHORT FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin Templeton International Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, (the 1940 Act) as an open-end
investment company, consisting of two separate funds. The Templeton Global
Long-Short Fund (the Fund) included in this report is diversified. The financial
statements of the remaining fund in the Trust are presented separately. The Fund
offers three classes of shares: Class A, Class B, 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.

The following summarizes the Fund's significant accounting policies.

A. SECURITY VALUATION

The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security held by the Fund. The investment manager monitors price movements
following the close of trading in foreign stock markets through a series of
country specific market proxies (such as baskets of American Depository
Receipts, futures contracts and exchange traded funds). These price movements
are measured against established trigger thresholds for each specific market
proxy to assist in determining if an event has occurred. If such an event
occurs, the securities may be valued using fair value procedures, which may
include the use of independent pricing services. All security valuation
procedures are approved by the Trust's Board of Trustees.

24 | Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

B. FOREIGN CURRENCY TRANSLATION

C. FOREIGN CURRENCY CONTRACTS

Semiannual Report | 25

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. OPTIONS

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. Upon closing of an option,
other than by exercise, which 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 incurs 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 realizes a gain if the price of the security declines between those
dates. Gains are limited to the price at which the Fund sold the security short,
while losses are potentially unlimited in size.

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 with broker
consisting of cash and securities having a value equal to a specified percentage
of the value of the securities sold short. The Fund is obligated to pay the
counterparty any dividends or interest due on securities sold short. Such
dividends and interest are recorded as an expense to the Fund.

F. INCOME AND DEFERRED TAXES

26 | Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

F. INCOME AND DEFERRED TAXES (CONTINUED)

The Fund may be subject to a tax imposed on net realized gains on securities of
certain foreign countries. The Fund records an estimated deferred tax liability
for net unrealized gains on these securities in an amount that would be payable
if the securities were disposed of on the valuation date.

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.
Interest income and estimated expenses are accrued daily. Dividend income and
dividends declared on securities sold short, are recorded on the ex-dividend
date except that certain dividends from foreign securities are recognized as
soon as the Fund is notified of the ex-dividend date. Distributions to
shareholders are recorded on the ex-dividend date and are determined according
to income tax regulations (tax basis). Distributable earnings determined on a
tax basis may differ from earnings recorded in accordance with accounting
principles generally accepted in the United States. These differences may be
permanent or temporary. Permanent differences are reclassified among capital
accounts to reflect their tax character. These reclassifications have no impact
on net assets or the results of operations. Temporary differences are not
reclassified, as they may reverse in subsequent periods.

Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each fund to the combined net assets of the Trust. Fund
specific expenses are charged directly to the fund that incurred the expense.

H. ACCOUNTING ESTIMATES

I. REDEMPTION FEES

Semiannual Report | 27

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

J. GUARANTEES AND INDEMNIFICATIONS

2. SHARES OF BENEFICIAL INTEREST

At April 30, 2007, there were an unlimited number of shares authorized (no par
value). Transactions in the Fund's shares were as follows:

----------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2007 OCTOBER 31, 2006
----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------

CLASS A SHARES:
Shares sold ....................... 4,501,607 $ 59,698,975 5,378,792 $ 67,498,309
Shares issued in reinvestment of
distributions ................... 189,048 2,487,870 66,467 780,994
Shares redeemed ................... (1,906,423) (25,257,147) (2,737,615) (33,660,888)
----------------------------------------------------------
Net increase (decrease) ........... 2,784,232 $ 36,929,698 2,707,644 $ 34,618,415
==========================================================
CLASS B SHARES:
Shares sold ....................... 22,063 $ 287,435 89,910 $ 1,093,114
Shares issued in reinvestment of
distributions ................... 30,618 398,040 12,728 147,770
Shares redeemed ................... (246,193) (3,205,026) (656,620) (7,885,810)
----------------------------------------------------------
Net increase (decrease) ........... (193,512) $ (2,519,551) (553,982) $ (6,644,926)
==========================================================
ADVISOR CLASS:
Shares sold ....................... 72,828 $ 972,109 47,974 $ 597,948
Shares issued in reinvestment of
distributions ................... 1,403 18,430 144 1,687
Shares redeemed ................... (35,499) (467,270) (39,299) (485,580)
----------------------------------------------------------
Net increase (decrease) ........... 38,732 $ 523,269 8,819 $ 114,055
==========================================================

28 | Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

3. TRANSACTIONS WITH AFFILIATES

- --------------------------------------------------------------------------------------
SUBSIDIARY AFFILIATION
- --------------------------------------------------------------------------------------

Franklin Advisers, Inc. (Advisers) Investment manager
Templeton Global Advisors Limited (TGAL) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent

A. MANAGEMENT FEES

The Fund pays Advisers an investment management fee comprised of a "base fee"
and a "performance adjustment". The base fee is calculated at the beginning of
each month using an annual rate of 1.50% of the prior month's average daily net
assets. The performance adjustment is calculated at the beginning of each month
based on how much the Fund's total return exceeded or lagged its benchmark, the
Morgan Stanley Capital International World Index, (the "Fund performance
differential"), over the preceding twelve-month period (the performance period).
A performance adjustment is applicable if the Fund performance differential
exceeds 2.00%, either upwards (an increase to the base fee) or downwards (a
decrease to the base fee). The performance adjustment rate is equal to 0.01% for
each additional 0.05% that the Fund performance differential exceeds 2.00%. The
performance adjustment amount is determined by multiplying the performance
adjustment rate by the average daily net assets of the performance period. The
performance adjustment rate may not exceed 1.00% annualized, either upwards or
downwards. At the end of each month, an annualized investment management fee
ratio is calculated (total investment management fees divided by fiscal year to
date average daily net assets). In accordance with the Investment Management
Agreement, the investment management fee ratio may not exceed 2.50% or fall
below 0.50% for the fiscal year. For the period, the total annualized management
fee rate, including the performance adjustment, was 0.69% of the average daily
net assets of the Fund.

Under a subadvisory agreement, TGAL, an affiliate of Advisers, provides
subadvisory services to the Fund and receives from Advisers fees based on the
average daily net assets of the Fund.

B. ADMINISTRATIVE FEES

The Fund pays an administrative fee to FT Services of 0.20% per year of the
average daily net assets of the Fund.

Semiannual Report | 29

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

3. TRANSACTIONS WITH AFFILIATES (CONTINUED)

C. DISTRIBUTION FEES

The Fund's Board of Trustees has adopted distribution plans for each share
class, with the exception of Advisor Class shares, pursuant to Rule 12b-1 under
the 1940 Act. Under the Fund's compensation distribution plans, the Fund pays
Distributors for costs incurred in connection with the servicing, sale and
distribution of the Fund's shares up to a certain percentage per year of its
average daily net assets of each class as follows:

Class A ..................................................... 0.35%
Class B ..................................................... 1.00%

D. SALES CHARGES/UNDERWRITING AGREEMENTS

Distributors has advised the Fund of the following commission transactions
related to the sales and redemptions of the Fund's shares for the period:

Sales charges retained net of commissions paid to
unaffiliated broker/dealers .............................. $ 35,716
Contingent deferred sales charges retained .................. $ 35,022

E. TRANSFER AGENT FEES

For the period ended April 30, 2007, the Fund paid transfer agent fees of
$164,732, of which $69,795 was retained by Investor Services.

4. EXPENSE OFFSET ARRANGEMENT

5. INCOME TAXES

At April 30, 2007, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:

Cost of investments ......................................... $ 189,855,844
=============
Unrealized appreciation ..................................... $ 47,874,817
Unrealized depreciation ..................................... (3,886,849)
-------------
Net unrealized appreciation (depreciation) .................. $ 43,987,968
=============

30 | Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

5. INCOME TAXES (CONTINUED)

Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions and certain
dividends on securities sold short.

Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions, and certain dividends on securities sold short.

6. INVESTMENT TRANSACTIONS

Purchases and sales of investments and securities sold short (excluding short
term securities) for the period ended April 30, 2007, aggregated $76,276,112 and
$72,654,130, respectively.

Transactions in options written during the period ended April 30, 2007, were as
follows:

--------------------
NUMBER OF
CONTRACTS PREMIUM
--------------------
Options outstanding at October 31, 2006 ............ 1,001 $ 68,762
Options written .................................... 200 21,899
Options expired .................................... -- --
Options terminated in closing transactions ......... -- --
Options exercised .................................. -- --
--------------------
Options outstanding at April 30, 2007 .............. 1,201 $ 90,661
====================

7. CONCENTRATION OF RISK

8. UPCOMING AQUISITIONS/MERGERS

On February 27, 2007, the Board of Trustees for the Trust approved a proposal to
merge Franklin U.S. Long Short Fund, a series of Franklin Strategic Series, into
the Fund, subject to approval by the shareholders of the Franklin U.S.
Long-Short Fund.

Semiannual Report | 31

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

9. REGULATORY AND LITIGATION MATTERS

The Company and fund management believe that the claims made in each of the
private lawsuits referenced above are without merit and intend to defend against
them vigorously. The Company cannot predict with certainty the eventual outcome
of these lawsuits, nor whether they will have a material negative impact on the
Company. If it is determined that the Company bears responsibility for any
unlawful or inappropriate conduct that caused losses to the Trust, it is
committed to making the Trust or its shareholders whole, as appropriate.

32 | Semiannual Report

Franklin Templeton International Trust

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

10. NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued FASB Statement No. 157, "Fair Value Measurement"
("SFAS 157"), which defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements. SFAS 157 is
effective for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. The Fund believes the adoption of SFAS 157
will have no material impact on its financial statements.

Semiannual Report | 33

Franklin Templeton International Trust

MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007 AND
MAY 18, 2007

TEMPLETON GLOBAL LONG-SHORT FUND

A Special Meeting of Shareholders of the Trust was held at the Trust's offices,
One Franklin Parkway, San Mateo, California on March 21, 2007 and reconvened on
April 11, 2007 and May 18, 2007. The purpose of the meeting was to elect
Trustees of the Trust and to vote on the following Proposals and Sub-Proposals:
to approve an Amended and Restated Agreement and Declaration of Trust; and to
approve amendments to certain of Templeton Global Long Short Fund's (the "Fund")
fundamental investment restrictions (including six (6) Sub-Proposals). At the
meeting, the following persons were elected by the shareholders to serve as
Independent Trustees of the Trust: Harris J. Ashton, Robert F. Carlson, Sam L.
Ginn, Edith E. Holiday, Frank W. T. LaHaye, Frank A. Olson, Larry D. Thompson
and John B. Wilson. Charles B. Johnson and Gregory E. Johnson were elected by
the shareholders to serve as Interested Trustees. Shareholders also approved the
Amended and Restated Agreement and Declaration of Trust and amendments to
certain of the Fund's fundamental investment restrictions (including six (6)
Sub-Proposals). No other business was transacted at the meeting.

The results of the voting at the meeting are as follows:

Proposal 1. The election of Trustees

- ---------------------------------------------------------------------------------------------------------------------------
% OF % OF % OF % OF
OUTSTANDING VOTED OUTSTANDING VOTED
NAME FOR SHARES SHARES WITHHELD SHARES SHARES
- ---------------------------------------------------------------------------------------------------------------------------

Harris J. Ashton ..................... 20,148,261.135 55.028% 98.228% 363,412.703 .992% 1.772%
Robert F. Carlson .................... 20,106,082.473 54.912% 98.023% 405,591.365 1.108% 1.977%
Sam L. Ginn .......................... 20,163,361.567 55.069% 98.302% 348,312.271 .951% 1.698%
Edith E. Holiday ..................... 20,160,027.001 55.060% 98.286% 351,646.837 .960% 1.714%
Frank W. T. LaHaye ................... 20,135,837.617 54.994% 98.168% 375,836.221 1.026% 1.832%
Frank A. Olson ....................... 20,154,638.168 55.045% 98.259% 357,035.670 .975% 1.741%
Larry D. Thompson .................... 20,164,725.335 55.073% 98.309% 346,948.503 .947% 1.691%
John B. Wilson ....................... 20,177,705.808 55.108% 98.372% 333,968.030 .912% 1.628%
Charles B. Johnson ................... 20,058,879.355 54.783% 97.793% 452,794.483 1.237% 2.207%
Gregory E. Johnson ................... 20,070,775.936 54.816% 97.851% 440,897.902 1.204% 2.149%

Proposal 2. To approve an Amended and Restated Agreement and Declaration of
Trust:

- -----------------------------------------------------------------------------------
% OF % OF
OUTSTANDING VOTED
SHARES VOTED SHARES SHARES
- -----------------------------------------------------------------------------------

For .................................. 4,383,701.258 29.954% 59.081%
Against .............................. 110,560.750 .755% 1.490%
Abstain .............................. 171,500.985 1.172% 2.311%
Broker Non-votes ..................... 2,754,133.000 18.818% 37.118%
- -----------------------------------------------------------------------------------
TOTAL ................................ 7,419,895.993 50.699% 100.000%
- -----------------------------------------------------------------------------------

34 | Semiannual Report

Franklin Templeton International Trust

MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007 AND
MAY 18, 2007 (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

Proposal 3. To approve amendments to certain of the Fund's fundamental
investment restrictions (includes six (6) Sub-Proposals):

(a) To amend the Fund's fundamental investment restriction regarding borrowing:

For .................................. 5,675,442.275 38.779% 67.798%
Against .............................. 177,588.561 1.214% 2.121%
Abstain .............................. 307,930.995 2.104% 3.679%
Broker Non-votes ..................... 2,210,149.000 15.101% 26.402%
- -----------------------------------------------------------------------------------
TOTAL ................................ 8,371,110.831 57.198% 100.000%
- -----------------------------------------------------------------------------------

(b) To amend the Fund's fundamental investment restriction regarding lending:

For .................................. 5,674,565.134 38.773% 67.788%
Against .............................. 176,270.330 1.205% 2.106%
Abstain .............................. 310,126.367 2.119% 3.704%
Broker Non-votes ..................... 2,210,149.000 15.101% 26.402%
- -----------------------------------------------------------------------------------
TOTAL ................................ 8,371,110.831 57.198% 100.000%
- -----------------------------------------------------------------------------------

For .................................. 5,712,009.520 39.029% 68.235%
Against .............................. 150,796.212 1.030% 1.801%
Abstain .............................. 298,156.099 2.038% 3.562%
Broker Non-votes ..................... 2,210,149.000 15.101% 26.402%
- -----------------------------------------------------------------------------------
TOTAL ................................ 8,371,110.831 57.198% 100.000%
- -----------------------------------------------------------------------------------

Semiannual Report | 35

Franklin Templeton International Trust

MEETING OF SHAREHOLDERS, MARCH 21, 2007 AND RECONVENED ON APRIL 11, 2007 AND
MAY 18, 2007 (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

(d) To amend the Fund's fundamental investment restriction regarding investments
in commodities:

For .................................. 5,687,078.026 38.859% 67.937%
Against .............................. 167,966.410 1.147% 2.006%
Abstain .............................. 305,917.395 2.091% 3.655%
Broker Non-votes ..................... 2,210,149.000 15.101% 26.402%
- -----------------------------------------------------------------------------------
TOTAL ................................ 8,371,110.831 57.198% 100.000%
- -----------------------------------------------------------------------------------

(e) To amend the Fund's fundamental investment restriction regarding issuing
senior securities:

For .................................. 5,677,625.664 38.794% 67.824%
Against .............................. 172,095.147 1.176% 2.056%
Abstain .............................. 311,241.020 2.127% 3.718%
Broker Non-votes ..................... 2,210,149.000 15.101% 26.402%
- -----------------------------------------------------------------------------------
TOTAL ................................ 8,371,110.831 57.198% 100.000%
- -----------------------------------------------------------------------------------

(f) To amend the Fund's fundamental investment restriction regarding
diversification of investments:

For .................................. 5,750,720.642 39.293% 68.697%
Against .............................. 123,525.620 .844% 1.476%
Abstain .............................. 286,715.569 1.960% 3.425%
Broker Non-votes ..................... 2,210,149.000 15.101% 26.402%
- -----------------------------------------------------------------------------------
TOTAL ................................ 8,371,110.831 57.198% 100.000%
- -----------------------------------------------------------------------------------

36 | Semiannual Report

Franklin Templeton International Trust

SHAREHOLDER INFORMATION

TEMPLETON GLOBAL LONG-SHORT FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT

At a meeting held April 17, 2007, the Board of Trustees ("Board"), including a
majority of non-interested or independent Trustees, approved renewal of the
investment management agreement for Templeton Global Long-Short Fund, one of the
two separate funds within the Trust ("Fund(s)"). In reaching this decision, the
Board took into account information furnished throughout the year at regular
Board meetings, as well as information prepared specifically in connection with
the annual renewal review process. Information furnished and discussed
throughout the year included investment performance reports and related
financial information for each Fund, as well as periodic reports on shareholder
services, legal, compliance, pricing, brokerage commissions and execution and
other services provided by the Investment Manager ("Manager") and its
affiliates. Information furnished specifically in connection with the renewal
process included a report for each Fund prepared by Lipper, Inc. ("Lipper"), an
independent organization, as well as a Fund profitability analysis report
prepared by management. The Lipper reports compared each Fund's investment
performance and expenses with those of other mutual funds deemed comparable to
the Fund as selected by Lipper. The Fund profitability analysis report discussed
the profitability to Franklin Templeton Investments from its overall U.S. fund
operations, as well as on an individual fund-by-fund basis. Included with such
profitability analysis report was information on a fund-by-fund basis listing
portfolio managers and other accounts they manage, as well as information on
management fees charged by the Manager and its affiliates including management's
explanation of differences where relevant and a three-year expense analysis with
an explanation for any increase in expense ratios. Additional material
accompanying such report was a memorandum prepared by management describing
project initiatives and capital investments relating to the services provided to
the Funds by the Franklin Templeton Investments organization, as well as a
memorandum relating to economies of scale and a comparative analysis concerning
transfer agent fees charged each Fund.

Semiannual Report | 37

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Franklin Templeton International Trust

SHAREHOLDER INFORMATION (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

NATURE, EXTENT AND QUALITY OF SERVICE. The Board was satisfied with the nature
and quality of the overall services provided by the Manager and its affiliates
to the Fund and its shareholders. In addition to investment performance and
expenses discussed later, the Board's opinion was based, in part, upon periodic
reports furnished them showing that the investment policies and restrictions for
the Fund were consistently complied with as well as other reports periodically
furnished the Board covering matters such as the compliance of portfolio
managers and other management personnel with the code of ethics adopted
throughout the Franklin Templeton fund complex, the adherence to fair value
pricing procedures established by the Board, and the accuracy of net asset value
calculations. The Board also noted the extent of benefits provided Fund
shareholders from being part of the Franklin Templeton family of funds,
including the right to exchange investments between the same class of funds
without a sales charge, the ability to reinvest Fund dividends into other funds
and the right to combine holdings in other funds to obtain a reduced sales
charge. Favorable consideration was given to management's continuous efforts and
expenditures in establishing back-up systems and recovery procedures to function
in the event of a natural disaster, it being noted that such systems and
procedures had functioned smoothly during the Florida hurricanes and blackouts
experienced in recent years. Among other factors taken into account by the Board
were the Manager's best execution trading policies, including a favorable report
by an independent portfolio trading analytical firm. Consideration was also
given to the experience of the Fund's portfolio management team, the number of
accounts managed and general method of compensation. In this latter respect, the
Board noted that a primary factor in management's determination of a portfolio
manager's bonus compensation was the relative investment performance of the
funds he or she managed and that a portion of such bonus was required to be
invested in a pre-designated list of funds within such person's fund management
area so as to be aligned with the interests of Fund shareholders. The Board also
took into account the quality of transfer agent and shareholder services
provided Fund shareholders by an affiliate of the Manager, noting continuing
expenditures by management to increase and improve the scope of such services,
periodic favorable reports on such service conducted by third parties, the high
industry ranking given to the Franklin Templeton website, and the firsthand
experience of individual Board members who deal with the shareholder services
department in their capacities as shareholders in one or more of the various
Franklin Templeton funds.

38 | Semiannual Report

Franklin Templeton International Trust

SHAREHOLDER INFORMATION (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

The performance universe for Templeton Global Long-Short Fund consisted of the
Fund and all retail and institutional long/short equity funds as selected by
Lipper. The Fund has been in existence for only a full five-year period and the
Lipper report showed its total return for the one-year period ended January 31,
2007, as well as for the previous five years on an annualized basis to be in the
second-highest quintile of such performance universe. The Board was satisfied
with the Fund's performance.

COMPARATIVE EXPENSES. Consideration was given to the management fee and total
expense ratios of the Fund compared with those of a group of other funds
selected by Lipper as its appropriate Lipper expense group. Prior to making such
comparison, the Board relied upon a survey showing that the scope of management
advisory services covered under the Fund's investment management agreement was
similar to those provided by fund managers to other mutual fund groups. In
reviewing comparative costs, emphasis was given to the Fund's contractual
investment management fee in comparison with the investment management fee that
would have been charged by other funds within its Lipper expense group assuming
they were similar in size to the Fund, as well as the actual total expenses of
the Fund in comparison with those of its Lipper expense group. The Lipper
contractual investment management fee analysis includes administrative charges
as being part of the investment management fee, and actual total expenses, for
comparative consistency, are shown by Lipper for fund Class A shares. The
contractual investment management fee rate for Templeton Global Long-Short Fund
excludes adjustments reflecting the performance feature of its management
agreement and was the highest in its expense group, but its total expenses were
the lowest in such expense group. The Board was satisfied with the investment
management fees and total expenses of the Fund in comparison to its Lipper
expense group as shown in the Lipper reports.

Semiannual Report | 39

Franklin Templeton International Trust

SHAREHOLDER INFORMATION (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

incurred in establishing the infrastructure necessary for the type of mutual
fund operations conducted by the Manager and its affiliates may not be fully
reflected in the expenses allocated to the Fund in determining its
profitability, as well as the fact that the level of profits, to a certain
extent, reflected operational cost savings and efficiencies initiated by
management. The Board also took into account management's expenditures in
improving shareholder services provided the Fund, as well as the need to meet
additional regulatory and compliance requirements resulting from the
Sarbanes-Oxley Act and recent SEC requirements. In addition, the Board
considered a third-party study comparing the profitability of the Manager's
parent on an overall basis as compared to other publicly held managers broken
down to show profitability from management operations exclusive of distribution
expenses, as well as profitability including distribution expenses. The Board
also considered the extent to which the Manager and its affiliates might derive
ancillary benefits from fund operations, including its interest in a joint
venture entity that financed up-front commissions paid to brokers/dealers who
sold fund Class B shares prior to February 2005, when the offering of such
shares was discontinued, as well as potential benefits resulting from allocation
of fund brokerage and the use of "soft" commission dollars to pay for research.
Based upon its consideration of all these factors, the Board determined that the
level of profits realized by the Manager and its affiliates from providing
services to the Fund was not excessive in view of the nature, quality and extent
of services provided.

40 | Semiannual Report

Franklin Templeton International Trust

SHAREHOLDER INFORMATION (CONTINUED)

TEMPLETON GLOBAL LONG-SHORT FUND

PROXY VOTING POLICIES AND PROCEDURES

The Trust has established Proxy Voting Policies and Procedures ("Policies") that
the Trust uses to determine how to vote proxies relating to portfolio
securities. Shareholders may view the Trust'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 1-954/527-7678 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Trust's proxy voting records are also made available online
at franklintempleton.com and posted on the U.S. Securities and Exchange
Commission's website at sec.gov and reflect the most recent 12-month period
ended June 30.

QUARTERLY STATEMENT OF INVESTMENTS

The Trust files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling
1-800/SEC-0330.

Semiannual Report | 41

This page intentionally left blank.

LITERATURE REQUEST

FRANKLIN TEMPLETON FUNDS

INTERNATIONAL

GLOBAL

Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund 1
Templeton Growth Fund
Templeton World Fund

GROWTH

Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small Cap Growth Fund II 2
Franklin Small-Mid Cap Growth Fund

VALUE

BLEND

Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund

SECTOR

ASSET ALLOCATION

INCOME

Franklin Adjustable U.S. Government Securities Fund 4
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund 5
Franklin Income Fund
Franklin Limited Maturity U.S. Government Securities Fund 4
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 4
Templeton Global Bond Fund
Templeton Income Fund

TAX-FREE INCOME 6

NATIONAL FUNDS

Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 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

Alabama
Arizona
California 8
Colorado
Connecticut
Florida 8
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 7
Michigan 7
Minnesota 7
Missouri
New Jersey
New York 8
North Carolina
Ohio 7
Oregon
Pennsylvania
Tennessee
Virginia

INSURANCE FUNDS

Franklin Templeton Variable Insurance Products Trust 9

1. The fund is open only to existing shareholders and select retirement plans.

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

3. 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.

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

5. Effective 10/1/06, Franklin's AGE High Income Fund changed its name to
Franklin High Income Fund. The fund's investment goal and strategy remained the
same.

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

7. The fund invests primarily in insured municipal securities.

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

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

05/07 Not part of the semiannual report

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

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

SEMIANNUAL REPORT AND SHAREHOLDER LETTER

TEMPLETON GLOBAL
LONG-SHORT FUND

INVESTMENT MANAGER

Franklin Advisers, Inc.

SUBADVISOR

Templeton Global Advisors Limited

PRINCIPAL UNDERWRITER

Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com

SHAREHOLDER SERVICES

1-800/632-2301

Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. Like any investment in securities, the value of
the Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political and other factors. The Fund and its investors are not
protected from such losses by the investment manager or the subadvisor.
Therefore, investors who cannot accept this risk should not invest in shares of
the Fund. The prospectus contains this and other information; please read it
carefully before investing.

467 S2007 06/07

ITEM 2. CODE OF ETHICS.

(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.

(d) N/A

(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy
of its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.

(2) The audit committee financial expert is John B. Wilson and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A

ITEM 6. SCHEDULE OF INVESTMENTS. N/A

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT
COMPANIES. N/A

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have
been no changes to the procedures by which shareholders may recommend nominees
to the Registrant's Board of Trustees that would require disclosure herein.

ITEM 11. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.

(b) Changes in Internal Controls. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.

ITEM 12. EXHIBITS.

(a)(1) Code of Ethics

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

FRANKLIN TEMPLETON INTERNATIONAL TRUST

By /S/JIMMY D. GAMBILL
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date June 27, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By /S/JIMMY D. GAMBILL
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date June 27, 2007

By /S/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Financial Officer
Date June 27, 2007