PRESIDENT'S LETTER
TABLE OF CONTENTS
<TABLE>
<S> <C>
President's Letter............................... 1
Economic Overview................................ 6
Franklin Templeton
German Government Bond Fund...................... 8
Franklin Templeton
Global Currency Fund............................. 11
Franklin Templeton
Hard Currency Fund............................... 14
Franklin Templeton
High Income Currency Fund........................ 16
</TABLE>
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENT PRODUCTS:
O ARE NOT FDIC INSURED;
O ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY FINANCIAL
INSTITUTION;
O ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
June 15, 1995
Dear Shareholder:
I am pleased to enclose the Franklin Templeton Global Trust semi-annual report
for the period ended April 30, 1995.
DOLLAR CONTINUES ITS DOWNWARD SPIRAL ...
After rising in the last two months of 1994, the dollar dropped precipitously
against most major currencies in the first four months of 1995. Since New
Year's Day, the dollar has depreciated a remarkable 15.31% against the Japanese
yen and 10.36% against the German mark. However, despite the significant media
coverage it was accorded, the dollar's latest tumble is hardly a new
phenomenon. As the chart on page 2 illustrates, the dollar has been in decline
for most of the past quarter-century. Since the end of the Bretton Woods
fixed-exchange rate system in the early 1970s, the dollar has lost 77.16% of
its value in yen and 62.43% in marks.
<PAGE>
BUT DOES ANYONE CARE?
Perhaps as disturbing as the decline itself has been the apparent complacency
with which much of the American press and investment community have viewed the
dollar's fall from grace. Some go so far as to suggest that a weaker dollar is
good news for Americans because it will spur exports. While no doubt it is the
case that U.S. exporters get a lift from a cheaper dollar, it is equally the
case that all holders of dollar assets are made poorer in a very real sense
when the dollar depreciates. In the global auction for goods and services, many
Americans increasingly get the feeling they are bidding with play money. So,
while one sector of the economy benefits temporarily from a weaker dollar, the
entire nation pays the consequences. As an aside, I would also note that
despite 25 years of dollar decline, U.S. trade deficits remain at near-record
levels, approaching $200 billion per year.(1)
THE MEXICAN CURRENCY CRISIS --
A DISCONCERTING LESSON
If anyone still truly believes that a weak currency is good news, the recent
demise of the Mexican peso should have dispelled any such notions. From the
initial devaluation of the peso on December 20, 1994, until March 9, 1995, its
low point for the period under review, the peso depreciated more than 53%
against the dollar and,
1. Source: U.S. Department of Commerce
2
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of course, much more against the yen and the mark. The results for Mexico: a
stock market decline in dollar terms of over 60%,(2) inflation projected at an
annual rate of 40%,(3) short-term interest rates briefly reaching the
triple-digit level,(4) unemployment up sharply, and a severe recession already
beginning. The trigger for the peso's decline was a loss of confidence on the
part of the international investors who had been financing Mexico's current
account deficits.
The U.S., of course, also depends on the kindness of foreigners to finance a
large portion of our deficit with the rest of the world. Could international
investors also lose confidence in the dollar? Many would argue that this is
already happening. Statistical evidence suggests that many foreign private
investors have been avoiding the dollar for some time now -- according to one
source, Japanese private investors have experienced $585 billion in foreign
exchange losses on their U.S. dollar investments since the early 1980s.(5)
Is it any wonder then that international investors might shy away from
dollar-denominated assets?
Certain foreign central banks may have taken the place of the private foreign
investor, surely not out of charity, but for the sake of protecting their own
export industries and preserving a semblance of currency market stability. For
example, it is estimated that Japan holds $154 billion in foreign currency
reserves,(6) mainly in dollars, and that Japan's central bank has intervened in
currency markets to purchase $31 billion between January and April 1995. But
even here, the picture is not uniformly supportive of the dollar. It is
reported that the "surplus" nations of Taiwan, Singapore and China, with over
$200 billion worth of mostly dollar reserves
2. Source: Bloomberg Business Services data shows that on the day before the
devaluation, December 19, 1994, the Bolsa closed at a peso price of 2231.11 and
the peso/dollar exchange rate was 3.4647 pesos per U.S. dollar. On March 9,
1995, the Bolsa closed at a peso price of 1540.54 and the peso/dollar exchange
rate was 7.45 pesos per U.S. dollar. This was its lowest close when measured in
dollars. Calculations of the change in dollar value of the Bolsa using these
figures do not include the value of any re-invested dividends.
3. Source: Bloomberg Business Services news article dated March 9, 1995.
4. Source: InfoSel Financiero data shows that the 28-day interbank loan rate as
of March 16, 1995 was 109.7%.
5. Calculation based on a yen/dollar exchange rate of 88 yen per U.S. dollar.
6. Source: OECD Economic Outlook, December 1994
3
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among them, are belatedly recognizing the need to diversify their reserves into
yen and marks to help protect their own positions.
The unanswered question: at what point would the foreign central banks which
have been supporting the dollar reach their limit? And what then?
With a net household savings rate of 3% to 4%, in 1994 the U.S. saved only
about enough to finance the annual budget deficit. Of course, we don't invest
100% of our incremental savings in Treasury securities, so the slack has been
picked up by foreign investors. If the foreign central banks, which have become
the foreign buyers of last resort, decide they have had their fill of
Treasuries, the deficit problem can only be solved through a combination of:
(1) reducing the deficit; (2) increasing the domestic savings rate; (3) raising
interest rates to a point sufficient to attract domestic and foreign private
investors; and (4) Federal Reserve purchase of unwanted Treasury securities,
also known as monetization of the debt. Steps (1) and (2) can only be effected
in the long run, if ever. Steps (3) and (4) would very likely hurt the bond
market and, probably, the stock market as well.
U.S. STOCK AND BOND MARKETS -- IMPLICATIONS
U.S. stock and bond markets have confounded most observers in 1995 by rallying
in the face of the weak dollar. Ironically, foreign central bank intervention
to support the dollar may have helped buoy the U.S. bond market, as much of
their dollar purchases have reportedly been funneled into the U.S. Treasury
market. But, as the Mexican case illustrates, foreign capital inflows can be
shut off as suddenly as a faucet. I find it alarming that so few Americans see
any connection between the U.S. situation and that of Mexico. Granted, the two
nations differ greatly, but the similarities are important, too.
4
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Those who ignore the similarities, who fail to learn from the adverse
consequences of Mexico's currency crisis, and who think a weak dollar is
actually good news for America and its financial markets may be deluding
themselves. How much time does the U.S. have to get its economic house in
order? The dollar's most recent decline suggests it may be later than we think.
THE FUNDS
Amidst this unsettling environment, the four funds of the Franklin Templeton
Global Trust have performed well, as detailed in the analysis of each fund by
its Subadviser, Templeton Investment Counsel, Inc., following this letter.
The funds continue to fulfill their primary mission of providing U.S.investors
with a conservative, convenient and cost-effective means to help protect
themselves against depreciation of the U.S. dollar. Though no one can predict
with certainty the dollar's future course, we believe that the fundamental
economic factors behind the dollar's long slide remain in place. Certainly
short-term exchange rate fluctuations in both directions will continue, but
it is precisely because the future is unknowable that currency diversification
makes sense.
Americans gradually are coming to understand this point. As evidence of this
trend, I am pleased to report that total assets for the four funds have grown
from approximately $117 million at this time last year to approximately $217
million today. As always, we thank you for investing with us.
Yours sincerely,
Donald P. Gould
President
Franklin Templeton Global Trust
5
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ECONOMIC OVERVIEW
Reports released from the beginning of 1995 through April 30 indicate that U.S.
economic growth is slowing. In February, Alan Greenspan, Chairman of the
Federal Reserve Board, pointed to the slower growth rate as a reason to keep
monetary policy steady for the time being. Since he made those remarks, the
economy has been showing more weakness. There is, therefore, some possibility
that the Federal Reserve will keep short-term interest rates steady for some
time. We believe that this lull may indicate that longer-term interest rates
will continue to decline gradually for the next two to three months.
In response to signs of slower economic growth and continued moderate
inflation, as of April 30, the yield on 30-year U.S. bonds declined below the
7.50% level. Although there has been isolated upward pressure on commodity
prices, the labor force appears to be concerned with job security, despite the
continued economic expansion, and wage costs, which are the key to business
costs, are still subdued. The Consumer Price Index (CPI) for 1994 was the same
as the 2.7% rate for all of 1993, and has risen only slightly to 3.4% so far
this year. As long as wage costs remain moderate, upward pressure on the CPI
should be minimal relative to that of past business cycles. With moderate price
trends likely to continue, we believe that longer-term interest rates should
remain in a relatively narrow range.
In Japan, Gross Domestic Product (GDP) is estimated to be growing at a 1.0% to
1.5% pace this year after modest growth in 1994. The earthquake will severely
disrupt economic activity in the short term but may stimulate growth as
rebuilding activity gets underway. Inflation remained very low last year, and
on April 14, the central bank, reversing interest rate increases made during
the past year, lowered the discount rate from 1.75% to 1%. The Bank of Japan
has
6
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indicated that monetary policy will take into account the disrupting effects of
the earthquake, which means that interest rates will probably not be raised for
some time, even if economic growth is somewhat stronger than expected this
year. High real interest rates are still acting as a brake but business capital
investment is now adding to GDP growth. Some newspaper articles claim that the
Japanese Consumer Price Index, which is showing modest increases on a
year-over-year basis, overstates actual inflation. Some argue that consumer
prices are actually declining. Japanese interest rates, although nominally low,
may, therefore, be high in real terms.
The strong mark is exerting pressure on the German economy by making German
exports more expensive to foreign consumers, and, at the same time, is
alleviating pressure on wholesale prices by making imports cheaper for Germans.
However, domestic demand is beginning to rise after being particularly weak in
1994. Strong exports and investments were responsible for the early stage of
the recovery, but consumer spending may contribute more to growth in 1995 than
in last year. Wholesale prices declined in 1993, but rose by 3% in 1994, and
German GDP, which increased by about 2.50% in 1994, is forecast to be rise by
about 3% for 1995.* Larger wage increases this year will probably raise warning
signs at the central bank, but are hardly large enough to have much effect on
the CPI. We believe that the Bundesbank, especially in view of the French
elections, is likely to keep monetary policy steady for the time being, but
that improvement in economic activity will probably lead to eventual tightening
of monetary policy, despite the strength of the mark.
*Source: OECD Economic Outlook, December 1994
7
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FRANKLIN TEMPLETON GERMAN GOVERNMENT BOND FUND
YOUR FUND'S OBJECTIVE
The Franklin Templeton German Government Bond Fund seeks long-term total
return, including a combination of interest income, capital appreciation and
currency gains, through investment in a managed portfolio of German government
bonds.
During the six-month period ended April 30, 1995, the fund provided a total
return of +14.14%, as shown in the Performance Summary on page 10. Because of
the rising rate of global economic growth, the fund maintained a relatively
conservative investment posture during this time. This cautious strategy
involved holding bonds with an average maturity of five years, somewhat shorter
than the German bond market average of 6.4 years.
Despite our expectation that higher growth would bring rising bond yields,
German interest rates actually fell during the period. For example, the 10-year
German government bond's yield declined from 7.60% to 7.04% between November 1,
1994 and April 30, 1995. The shorter average maturity of the fund's portfolio
reduced its risk exposure to higher rates. This, however, resulted in a modest
underperformance in comparison to the total return that a portfolio with the
bond market average maturity of 6.4 years would have delivered.
Another factor which influenced the structure of the fund's current holdings
was the surge in new shareholders during March and April of 1995. This nearly
doubled the fund's total net assets during the period. A large proportion of
the new money was allocated to bonds issued by German states. This ultimately
raised the portion of
8
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the fund allocated to this sector from 28% to roughly 40%. German state bonds
tend to be liquid, very secure issues that pay a higher yield than is available
from federal German bonds. The fund manager intends to hold state issues on a
long-term basis, and to utilize the federal bonds for raising cash or shifting
maturities.
Looking forward, we believe that German economic growth will continue to be
strong and that the most appropriate strategy is to continue holding bonds with
an average maturity shorter than the German bond market average. In our
opinion, these bonds should maintain their value better than longer-term bonds
if interest rates rise. We believe that the decline in bond yields is an
indication that interest rates will rise more (and bond prices fall more) than
if this decline had not occurred. Therefore, we intend to maintain the fund's
average maturity at just above five years.
There are, of course, special risk considerations associated with global
investing related to market, currency, economic, political, and other factors.
Because the fund's assets are largely denominated in foreign currencies, there
is potential for significant gain or loss from currency exchange rate
fluctuations. These risks, and those of investing in a non-diversified fund
concentrating its investments in a single country, such as increased
susceptibility to adverse economic or regulatory developments, are described in
the prospectus. The fund may not be appropriate for all investors and should
not be considered a complete investment program.
9
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PERFORMANCE SUMMARY
The fund provided a total return of +14.14% for the six-month period ended
April 30, 1995. Total return measures the change in value of an investment,
assuming reinvestment of dividends and capital gains, and does not include the
maximum initial sales charge.
The fund's share price, as measured by net asset value, increased from $13.26
on October 31, 1994 to $14.17 on April 30, 1995. During this same period,
shareholders received distributions of 83.6 cents ($0.836) per share, of which
33.6 cents ($0.336) represented regular dividend income and 50.0 cents ($0.50)
represented a special year-end dividend distribution. Based on the maximum
offering price of $14.61 on April 30, 1995, and an annualization of the most
recent monthly dividend of 5.8 cents ($0.058) per share, the fund's
distribution rate was 4.76%. Of course, past performance is not predictive of
future results, and distributions will vary depending on income earned by the
fund and any profits realized from the sale of securities in the fund's
portfolio.
- --------------------------------------------------------
FRANKLIN TEMPLETON
GERMAN GOVERNMENT BOND FUND
Periods Ended April 30, 1995
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR (12/31/92)
- --------------------------------------------------------
<S> <C> <C>
Cumulative Total Return 1,3 26.60% 35.23%
Average Annual Total Return 2,3 22.81% 12.33%
Distribution Rate: 4 4.76%
30-Day Standardized Yield: 5 4.61%
- --------------------------------------------------------
</TABLE>
1. Cumulative total return shows the change in value of an investment over the
specified periods and does not reflect the maximum 3.0% initial sales charge.
2. Average annual total return represents the average annual increase in the
value of an investment over the specified periods and includes the maximum 3.0%
initial sales charge.
3. All total return calculations assume reinvestment of dividends and capital
gains at net asset value. Investment return and principal value will fluctuate,
so that your shares, when redeemed, may be worth more or less than their
original cost. Past performance is not predictive of future results.
4. Distribution rate is based on the maximum offering price of $14.61 per share
on April 30, 1995, and an annualization of the most recent monthly dividend of
5.8 cents ($0.058) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1995. The fund's manager
has agreed in advance to waive all of its management fees, which reduces
operating expenses and increases distribution rate, yield and total return to
shareholders. Without this waiver, the fund's distribution rate and total
return would have been lower, and yield for the period would have been 4.48%.
The fee waiver may be discontinued at any time, upon notice to the fund's Board
of Trustees.
10
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FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
YOUR FUND'S OBJECTIVE
The Franklin Templeton Global Currency Fund seeks to maximize total return
through a combination of interest income and currency gains by investing in
interest-earning money market instruments, at least 65% of which will be
denominated in three or more Major Currencies, including the U.S. dollar.
The fund's currency allocation benchmark is one-third weightings each in the
currencies of Germany, Japan and the United States. We actively manage the fund
against this benchmark, investing primarily in up to 16 different Major
Currencies as described in the prospectus. On April 30, 1995, about 41% of the
fund's total net assets were denominated in marks, 19% in yen, and 13% in Swiss
francs. The fund also held smaller positions denominated in the currencies of
the United Kingdom (9%), Australia (8%), New Zealand (3%), Finland (3%) and the
United States (4%).
In late 1994, the U.S. economy grew rapidly with fourth quarter Gross Domestic
Product (GDP) exceeding 4%. During the first quarter of 1995, however, growth
slowed to an estimated 2.8%. While the dollar had enjoyed a period of stability
during the last three months of 1994, we believe that initial signs of slower
U.S. growth, along with the Mexican currency devaluation on December 20th,
caused the dollar to resume its long-term depreciation against the major
currencies in 1995. The fund began this reporting period overweighted in
dollars, but as the period progressed we steadily sold them and bought European
currencies and the Japanese yen. This reallocation permitted the fund to
participate in
11
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the strong appreciation of the mark, yen and Swiss franc, which rose 7.0%,
12.7% and 8.0%, respectively, against the dollar during this time.
Japanese GDP growth for 1995 was predicted to be 2.5-3.0% for the year, but
these estimates were recently revised downward to between 1.0% and 1.5%. Most
experts believe Japan will have to cope with its current recession, the
strength of the yen and uncertainty in the financial markets before its economy
begins to move in a positive direction again. In our opinion, Germany and the
rest of Europe should continue a slow recovery in 1995. We expect to continue
favoring the currencies of Germany, Japan and Switzerland over the U.S. dollar
because of these countries' sound monetary policies and low inflation rates. We
also expect to maintain our positions in the United Kingdom, Australia and New
Zealand, which help us diversify the portfolio while seeking to take advantage
of opportunities in other parts of the world.
There are, of course, special risk considerations associated with global
investing related to market, currency, economic, political, and other factors,
as discussed in the prospectus. Developing markets involve heightened risks
related to the same factors, in addition to risks associated with the
relatively small size and lesser liquidity of these markets. Because the fund's
assets are largely denominated in foreign currencies, there is potential for
significant gain or loss from currency exchange rate fluctuations. The fund may
not be appropriate for all investors and should not be considered a complete
investment program.
12
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PERFORMANCE SUMMARY
The fund reported a total return of +7.83% for the six-month period ended April
30, 1995. Total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains, and does not include the maximum
initial sales charge.
The fund's share price, as measured by net asset value, increased from $14.14
on October 31, 1994 to $14.24 on April 30, 1995. During this same period,
shareholders received distributions of 92.9 cents ($0.929) per share, of which
28.9 cents ($0.289) represented regular dividend income and 64.0 cents ($0.64)
represented a special year-end dividend distribution. Based on the maximum
offering price of $14.68 on April 30, 1995, and an annualization of the most
recent monthly dividend of 5.5 cents ($0.055) per share, the fund's
distribution rate was 4.50%. Of course, past performance is not predictive of
future results, and distributions will vary depending on income earned by the
fund and any profits realized from the sale of securities in the fund's
portfolio.
- --------------------------------------------------------
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
Periods ended April 30, 1995
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 5-YEAR (06/27/86)
- -------------------------------------------------------
<S> <C> <C> <C>
Cumulative
Total Return 1,3 12.29% 53.95% 117.08%
Average Annual
Total Return 2,3 8.91% 8.35% 8.78%
Distribution Rate: 4 4.50%
30-Day Yield: 5 5.20%
- -------------------------------------------------------
</TABLE>
1. Cumulative total return shows the change in value of an investment over the
specified periods and does not reflect the maximum 3.0% initial sales charge.
2. Average annual total return represents the average annual increase in the
value of an investment over the specified periods and includes the maximum 3.0%
initial sales charge.
3. All total return calculations assume reinvestment of dividends and capital
gains at net asset value. Investment return and principal value will fluctuate,
so that your shares, when redeemed, may be worth more or less than their
original cost. Past expense reductions by the fund's manager increased the
fund's total return. Past performance is not predictive of future results.
4. Distribution rate is based on the maximum offering price of $14.68 per share
on April 30, 1995, and an annualization of the most recent monthly dividend of
5.5 cents ($0.055) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1995.
13
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FRANKLIN TEMPLETON HARD CURRENCY FUND
YOUR FUND'S OBJECTIVE
The Franklin Templeton Hard Currency Fund seeks to protect shareholders against
depreciation of the U.S. dollar relative to other currencies by investing in
high-quality, interest-bearing money market instruments (and forward contracts)
denominated in those Major Currencies which historically have experienced low
rates of inflation and which are currently pursuing economic policies conducive
to continued low rates of inflation and currency appreciation versus the U.S.
dollar over the long term.
The fund's currency allocation benchmark is one-third weightings each in the
currencies of Germany, Japan, and Switzerland. We actively manage the fund
against this benchmark, and will consider investments in currencies of other
countries whose economic policies we consider conducive to continued low rates
of inflation.
On April 30, 1995, about 34% of the fund's total net assets were denominated in
the Swiss franc, 33% in the German mark, 27% in the Japanese yen and 6% in the
New Zealand dollar. All of these currencies have appreciated against the U.S.
dollar during the first six-month period, which has contributed to the fund's
strong performance. We expect to maintain core holdings in investments
denominated in Swiss francs, German marks and Japanese yen.
There are, of course, special risk considerations associated with global
investing related to market, currency, economic, political, and other factors,
as discussed in the prospectus. Because the fund's assets are largely
denominated in foreign currencies, there is potential for significant gain or
loss from currency exchange rate fluctuations. The fund may not be appropriate
for all investors and should not be considered a complete investment program.
Please note that although the fund's Statement of Investments on page 23 of
this report indicates that the fund held 57.7% of its portfolio investments in
U.S. dollar-denominated assets as of April 30, 1995, the fund's NET EXPOSURE to
the U.S. dollar as of that date was only -0.1%. The difference in the two
figures is explained by the fund's holdings of forward currency exchange
contracts (see Note 2 in the Notes to Financial Statements on page 34) calling
for the purchase of various foreign currencies in exchange for U.S. dollars at
various future dates. The combination of U.S. dollar instruments with "long"
forward currency exchange contracts creates a position which is essentially the
economic equivalent of a money market instrument denominated in the foreign
currency itself. Such combined positions are sometimes necessary when the money
market in a particular foreign currency is small or relatively illiquid.
14
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PERFORMANCE SUMMARY
The fund reported a total return of +10.64% for the six-month period ended
April 30, 1995. Total return measures the change in value of an investment,
assuming reinvestment of dividends and capital gains, and does not include the
maximum initial sales charge.
The fund's share price, as measured by net asset value, decreased from $13.95
on October 31, 1994 to $13.90 on April 30, 1995. During this same period,
shareholders received distributions of 136.9 cents ($1.369) per share, of which
27.9 cents ($0.279) represented regular dividend income and 109.0 cents ($1.09)
represented a special year-end dividend distribution. Based on the maximum
offering price of $14.33 on April 30, 1995, and an annualization of the most
recent monthly dividend of 4.8 cents ($0.048) per share, the fund's
distribution rate was 4.02%. Of course, past performance is not predictive of
future results, and distributions will vary depending on income earned by the
fund and any profits realized from the sale of securities in the fund's
portfolio.
- ----------------------------------------------------------
FRANKLIN TEMPLETON HARD CURRENCY FUND
Periods ended April 30, 1995
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 5-YEAR (11/17/89)
- ----------------------------------------------------------
<S> <C> <C> <C>
Cumulative
Total Return 1,3 21.42% 77.35% 93.07%
Average Annual
Total Return 2,3 17.80% 11.46% 12.19%
Distribution Rate: 4 4.02%
30-Day Yield: 5 4.26%
- ----------------------------------------------------------
</TABLE>
1. Cumulative total return shows the change in value of an investment over the
specified periods and does not reflect the maximum 3.0% initial sales charge.
2. Average annual total return represents the average annual increase in the
value of an investment over the specified periods and includes the maximum 3.0%
initial sales charge.
3. All total return calculations assume reinvestment of dividends and capital
gains at net asset value. Investment return and principal value will fluctuate,
so that your shares, when redeemed, may be worth more or less than their
original cost. Past expense reductions by the fund's manager increased the
fund's total return. Past performance is not predictive of future results.
4. Distribution rate is based on the maximum offering price of $14.33 per share
on April 30, 1995, and an annualization of the most recent monthly dividend of
4.8 cents ($0.048) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1995.
15
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FRANKLIN TEMPLETON HIGH INCOME CURRENCY FUND
YOUR FUND'S OBJECTIVE
The Franklin Templeton High Income Currency Fund seeks to achieve high current
income at a level significantly above that available on U.S. dollar money
market funds by investing in interest-bearing money market instruments
denominated in Major and Non-Major Currencies. Subject to this investment
objective, a secondary consideration of the fund is preservation of capital.
Under normal market conditions, at least 65% of the fund's assets are invested
in instruments denominated in three or more of the 10 highest-yielding Major
Currencies and in the U.S. dollar. As of April 30, 1995, the currencies of
Sweden, Italy, Spain, Denmark, France, the United Kingdom, the Netherlands,
Australia, New Zealand and Canada were the 10 highest-yielding Major
Currencies, and as such, were eligible for investment by the fund.
On that date, the four largest allocations, comprising about 69% of the fund's
total net assets, were denominated in the currencies of the United Kingdom, the
Netherlands, Denmark and New Zealand, while 9% of its assets were invested in
the developing countries of Thailand and the Czech Republic. The remaining 22%
was invested as follows: 8% in Australian dollars, 5% in German marks, and 9%
in U.S. dollars.
During the six-month period, we decreased the fund's holdings in Italy, Sweden
and Spain because their governments have allowed large fiscal deficits and, we
believe, have pursued questionable monetary policies resulting in high
16
<PAGE>
rates of inflation and unemployment. History has shown that investments in such
countries have underperformed those in countries whose governments can react to
changing economic circumstances with sound monetary and fiscal policies. The
proceeds from these sales have been reallocated to investments in the United
Kingdom, the Netherlands and Denmark.
Believing that we have invested the bulk of the portfolio cautiously within the
10 core markets listed above, we are continually looking for opportunities to
expand the scope of the portfolio's holdings. For example, through its
investments in Thailand, Indonesia and the Czech Republic, the fund
participates in economies experiencing rapid GDP growth, relatively stable
currencies and very attractive yields for short-term money market instruments.
There are, of course, special risk considerations associated with global
investing related to market, currency, economic, political, and other factors,
as discussed in the prospectus. Developing markets involve heightened risks
related to the same factors, in addition to risks associated with the
relatively small size and lesser liquidity of these markets. Because the fund's
assets are largely denominated in foreign currencies, there is potential for
significant gain or loss from currency exchange rate fluctuations. The fund may
not be appropriate for all investors and should not be considered a complete
investment program.
17
<PAGE>
PERFORMANCE SUMMARY
The fund reported a total return of +6.22% for the six-month period ended April
30, 1995. Total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains, and does not include the maximum
initial sales charge.
The fund's share price, as measured by net asset value, increased from $11.59
on October 31, 1994 to $11.60 on April 30, 1995. During this same period,
shareholders received distributions of 66.6 cents ($0.666) per share, of which
32.6 cents ($0.326) represented regular dividend income and 34.0 cents ($.340)
represented a special year-end dividend distribution. Based on the maximum
offering price of $11.96 on April 30, 1995, and an annualization of the most
recent monthly dividend of 5.5 cents ($0.055) per share, the fund's
distribution rate was 5.52%. Of course, past performance is not predictive of
future results, and distributions will vary depending on income earned by the
fund and any profits realized from the sale of securities in the fund's
portfolio.
- ---------------------------------------------------------
FRANKLIN TEMPLETON HIGH INCOME CURRENCY FUND
Periods ended April 30, 1995
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 5-YEAR (11/17/89)
- ---------------------------------------------------------
<S> <C> <C> <C>
Cumulative
Total Return 1,3 12.06% 42.16% 53.27%
Average Annual
Total Return 2,3 8.80% 6.63% 7.54%
Distribution Rate: 4 5.52%
30-Day Yield: 5 5.52%
- ---------------------------------------------------------
</TABLE>
1. Cumulative total return shows the change in value of an investment over the
specified periods and does not reflect the maximum 3.0% initial sales charge.
2. Average annual total return represents the average annual increase in the
value of an investment over the specified periods and includes the maximum 3.0%
initial sales charge.
3. All total return calculations assume reinvestment of dividends and capital
gains at net asset value. Investment return and principal value will fluctuate,
so that your shares, when redeemed, may be worth more or less than their
original cost. Past performance is not predictive of future results.
4. Distribution rate is based on the maximum offering price of $11.96 per share
on April 30, 1995, and an annualization of the most recent monthly dividend of
5.5 cents ($0.055) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1995. The fund's manager
has agreed in advance to waive all of its management fees, which reduces
operating expenses and increases distribution rate, yield and total return to
shareholders. Without this waiver, the fund's distribution rate and total
return would have been lower, and yield for the period would have been 5.36%.
The fee waiver may be discontinued at any time, upon notice to the fund's Board
of Trustees.
18
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE
COUNTRY* AMOUNT FRANKLIN TEMPLETON GERMAN GOVERNMENT BOND FUND (NOTE 1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM INVESTMENTS 80.0%
EUROBONDS 19.1%
DD 1,200,000 African Development Bank, 6.125%, 10/14/98 ............................. $ 883,117
DD 900,000 European Economic Community, 6.50%, 3/10/00 ............................ 654,513
DD 925,000 Interamerican Development Bank, 6.75%, 4/29/03 ......................... 650,136
DD 750,000 International Bank Recon/Dev., 7.15%, 4/12/05 .......................... 540,828
DD 1,225,000 Kingdom of Denmark, 6.125%, 4/15/98 .................................... 890,467
UK 800,000 United Kingdom, 7.125%, 10/28/97 ....................................... 596,537
-----------
EUROBONDS (COST $3,600,619) ...................................... 4,215,598
-----------
GERMAN BONDS 60.9%
DD 340,000 Baden Wuerttemnergische Bank AG, 6.375%, 10/15/96 ...................... 249,235
DD 750,000 Baden Wuerttemnergische Bank AG, 7.50%, 10/22/04 ....................... 550,595
DD 800,000 Baden Wurt I Finance NV, 6.50%, 9/15/08 ................................ 532,179
DD 710,000 Deutsche Bundesbahn, 9.00%, 12/1/00 .................................... 566,566
DD 1,000,000 Deutsche Bundespost, 7.50%, 12/02/02 ................................... 741,126
DD 850,000 Deutsche Bundespost, 6.75%, 4/01/04 .................................... 595,000
DD 200,000 Federal Republic of Germany, 6.50%, 12/20/96 ........................... 147,114
DD 200,000 Federal Republic of Germany, 6.75%, 8/20/98 ............................ 147,662
DD 200,000 Federal Republic of Germany, 7.375%, 1/03/05 ........................... 147,908
DD 200,000 Federal Republic of Germany, 8.75%, 5/22/00 ............................ 158,831
DD 640,000 Federal Republic of Germany, 8.75%, 7/20/00 ............................ 508,167
DD 200,000 Federal Republic of Germany, Bundesrep, 7.75%, 2/21/00 ................. 152,814
DD 800,000 Federal Republic of Germany, Bundesrep, 8.50%, 8/21/00 ................. 629,149
DD 700,000 Federal Republic of Germany, Bundesrep, 8.875%, 12/20/00 ............... 558,889
DD 500,000 Freie Hansestadt Bremen, 8.50%, 3/20/97 ................................ 382,937
DD 900,000 Freistaat Bayern, 6.00%, 3/20/97 ....................................... 656,818
DD 100,000 Freistaat Bayern, 6.50%, 10/01/96 ...................................... 73,268
DD 1,300,000 Freistaat Sachsen Saxony, 6.125%, 12/10/03 ............................. 874,170
DD 900,000 Kreditanst Wiederaufbau, 6.00%, 9/02/96 ................................ 655,844
DD 900,000 Land Berlin, 6.75%, 8/25/99 ............................................ 655,844
DD 800,000 Land Hessen, 6.00%, 6/18/97 ............................................ 582,395
DD 1,000,000 Land Niedersachsen, 6.25%, 9/15/03 ..................................... 681,169
DD 150,000 Land Niedersachsen, 7.50%, 1/20/05 ..................................... 110,292
DD 800,000 Land Sachsen Anhalt, 7.50%, 10/28/04 ................................... 584,993
DD 890,000 Landesbank, Hessen Thueringen Girozentrale, 6.25%, 4/10/02 ............. 646,952
DD 890,000 Landwirt Schaftliche Retenbank, 7.50%, 10/15/97 ........................ 664,610
DD 370,000 Nordrhein - Westfalen, 6.25%, 3/18/98 .................................. 269,224
DD 750,000 Nordrhein - Westfalen, 6.125%, 4/17/97 ................................. 548,160
DD 500,000 Rheinland-Pfalz, 6.50%, 3/19/03 ........................................ 346,861
-----------
GERMAN BONDS (COST $12,244,411) .................................. 13,418,772
-----------
TOTAL LONG TERM INVESTMENTS (COST $15,845,030) ................... 17,634,370
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
COUNTRY* AMOUNT FRANKLIN TEMPLETON GERMAN GOVERNMENT BOND FUND (NOTE 1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS 2.2%
U.S. GOVERNMENT AGENCIES
US 290,000 Federal Home Loan Mortgage Corp., 5.82%, 5/01/95 ....................... $ 290,000
US 200,000 U.S. Treasury Bill, 5.59%, 5/11/95 ..................................... 199,695
-----------
TOTAL SHORT TERM INVESTMENTS (COST $489,611) ..................... 489,695
-----------
TOTAL INVESTMENTS (COST $16,334,641) 82.2% .................. 18,124,065
OTHER ASSETS AND LIABILITIES, NET 17.8% ..................... 3,919,875
-----------
NET ASSETS 100.0% ........................................... $22,043,940
===========
At April 30,1995, the net unrealized appreciation based on the cost of
investments for income tax purposes of $16,334,641 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost ................. $ 1,793,019
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value.................. (3,595)
-----------
Net unrealized appreciation......................................... $ 1,789,424
===========
</TABLE>
* Securities traded in currency of country indicated. See page 27 for country
legend.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE
COUNTRY* AMOUNT FRANKLIN TEMPLETON GLOBAL CURRENCY FUND (NOTE 1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM INVESTMENTS 23.0%
FOREIGN GOVERNMENT SECURITIES - FLOATING RATE NOTES 11.7%
DD 2,000,000 Government of Belgium, floating rate notes, 5.00%, 3/15/00 .......... $ 1,438,167
DD 4,150,000 Government of Spain, floating rate notes, 4.9375%, 6/29/02 .......... 2,976,712
UK 1,800,000 United Kingdom, floating rate notes, 6.50625%, 3/11/99 .............. 2,904,347
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES - FLOATING RATE NOTES
(COST $6,812,679).............................................. 7,319,226
-----------
CORPORATE BONDS 11.3%
DD 4,000,000 Dresdner Finance, Euro Dem, floating rate notes, 5.09375%, 7/28/98 .. 2,885,426
DD 1,750,000 European Investment Bank, floating rate notes, 5.125%, 3/25/98 ...... 1,261,364
JP 250,000,000 Inter-American Development Bank, floating rate notes, 2.50%, 6/19/98 2,970,488
-----------
TOTAL CORPORATE BONDS (COST $5,705,738) ....................... 7,117,278
-----------
TOTAL LONG TERM INVESTMENTS (COST $12,518,417) ................ 14,436,504
-----------
a SHORT TERM INVESTMENTS 75.0%
INDEXED SECURITY 1.9%
US 1,200,000 Goldman Sachs Group LP, (principal and interest is linked to the
change in the Indonesian rupiah to U.S. dollar foreign exchange
rate between issue date (2,179.25 Rupiah/U.S. dollar) and maturity
date), 14.00%, 6/15/95
(COST $1,200,000) ................................................. 1,162,560
-----------
BONDS 9.5%
DD 2,200,000 c Credit Foncier, floating rate notes, semi-annual calls, 5.375%,
7/19/96............................................................ 1,588,175
FN 6,660,000 General Electric Capital Corp., 10.25%, 6/12/95 ..................... 1,562,280
JP 231,000,000 International Bank Recon/Dev, 7.625%, 10/30/95 ...................... 2,828,571
-----------
TOTAL BONDS (COST $4,927,474) ................................. 5,979,026
-----------
GOVERNMENT SECURITIES 63.6%
AU 6,490,000 Australia Treasury Bill, 7.85%, 5/24/95 ............................. 4,696,446
US 4,515,000 Federal Farm Credit Bank, 5.93% to 6.00% with maturities to 7/05/95 . 4,506,379
US 3,120,000 Federal Home Loan Bank, 5.95% to 6.00% with maturities to 6/16/95 ... 3,097,628
US 4,790,000 Federal Home Loan Mortgage Corp., 5.91% to 5.93% with maturities to
5/09/95 ........................................................... 4,784,892
US 3,125,000 Federal National Mortgage Assn., 5.88%, 6/30/95 ..................... 3,094,281
DD 3,900,000 Federal Republic of Germany, Schatz, 8.875%, 7/20/95 ................ 2,838,333
NZ 2,900,000 New Zealand Treasury Bill, 9.27%, 6/21/95 ........................... 1,924,043
UK 1,725,000 United Kingdom, exch. stk., 10.25%, 7/21/95 ......................... 2,795,480
US 12,255,000 U.S. Treasury Bills, 5.55% to 5.73% with maturities to 7/13/95 ...... 12,199,524
-----------
TOTAL GOVERNMENT SECURITIES (COST $39,804,377) ................ 39,937,006
-----------
TOTAL SHORT TERM INVESTMENTS (COST $45,931,851) ............... 47,078,592
-----------
TOTAL INVESTMENTS (COST $58,450,268) 98.0% ............... 61,515,096
OTHER ASSETS AND LIABILITIES, NET 2.0% ................... 1,231,279
-----------
NET ASSETS 100.0% ........................................ $62,746,375
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
VALUE
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND (NOTE 1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
At April 30, 1995, the net unrealized appreciation based on the cost
of investments for income tax purposes of $58,450,268 was as
follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost .............. $ 3,167,335
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value .............. (102,507)
-----------
Net unrealized appreciation ..................................... $ 3,064,828
===========
</TABLE>
* Securities traded in currency of country indicated. See page 27 for country
legend.
a Certain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed rates or upon maturity.
c Floating rate notes with an embedded put and/or call feature. The rate
indicated is as of April 30, 1995.
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE
COUNTRY* AMOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND (NOTE 1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM INVESTMENTS 13.5%
FOREIGN GOVERNMENT SECURITIES - FLOATING RATE NOTES 4.1%
DD 4,600,000 Government of Belgium, floating rate notes, 5.00%, 3/15/00 ......... $ 3,307,785
JP 135,000,000 Government of Italy, tranch 3, floating rate notes, 1.50%, 7/26/99 . 1,592,818
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES - FLOATING RATE NOTES
(COST $4,432,966) .......................................... 4,900,603
-----------
CORPORATE BONDS 5.2%
DD 2,750,000 Credit Foncier, floating rate notes, 5.375%, 7/19/96 ............... 1,985,218
SW 3,500,000 General Electric Credit Corp., floating rate notes, 4.3594%, 8/05/96 3,053,907
JP 100,000,000 Inter-American Development Bank, floating rate notes, 2.50%, 6/19/98 1,188,195
-----------
TOTAL CORPORATE BONDS (COST $5,410,388) ...................... 6,227,320
-----------
U.S. GOVERNMENT AGENCIES - FLOATING RATE NOTES 4.2%
US 2,500,000 Federal Farm Credit Bank, floating rate notes, 5.945%, 2/26/96 ..... 2,494,500
US 2,500,000 Federal Home Loan Mortgage Corp., floating rate notes, 6.1125%,
3/25/96 .......................................................... 2,500,000
-----------
TOTAL U.S. GOVERNMENT SECURITIES - FLOATING RATE NOTES
(COST $4,993,561) .......................................... 4,994,500
-----------
TOTAL LONG TERM INVESTMENTS (COST $14,836,915) ............... 16,122,423
-----------
a SHORT TERM INVESTMENTS 84.6%
BONDS 2.9%
JP 181,000,000 European Investment Bank, 6.125%, 3/15/96 .......................... 2,240,342
DD 1,650,000 c European Investment Bank, floating rate notes, semi-annual calls,
4.2875%, 10/23/98 ................................................ 1,178,571
JP 2,000,000 International Bank Recon/Dev, 7.625%, 10/30/95 ..................... 24,490
-----------
TOTAL BONDS (COST $3,406,126) ................................ 3,443,403
-----------
GOVERNMENT SECURITIES 81.7%
DD 6,557,000 Deutsche Bundespost, 6.50% to 6.625% with maturities to 12/01/95 ... 4,774,899
JP 103,000,000 Government of Finland, 6.75%, 3/25/96 .............................. 1,280,223
US 4,000,000 Federal Farm Credit Bank, 5.86% to 5.95% with maturities to 6/16/95 3,979,110
US 11,065,000 Federal Home Loan Bank Corp., 5.86% to 6.00% with maturities to
8/07/95 .......................................................... 10,962,789
US 19,295,000 Federal Home Loan Mortgage Corp., 5.86% to 5.95% with maturities to
6/26/95 .......................................................... 19,192,150
US 6,075,000 Federal National Mortgage Assn., 5.86% to 6.02% with maturities to
7/17/95 .......................................................... 6,022,742
DD 7,800,000 Federal Republic of Germany, 8.125%, 1/22/96 ....................... 5,757,706
DD 7,550,000 Federal Republic of Germany, Bundesobl, 8.75%, 7/20/95 ............. 5,493,088
DD 7,650,000 Federal Republic of Germany, Deutschland, 7.00%, 6/20/95 ........... 5,534,935
DD 6,900,000 Federal Republic of Germany, Schatz, 8.875%, 7/20/95 ............... 5,021,667
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
FACE VALUE
COUNTRY* AMOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND (NOTE 1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
a SHORT TERM INVESTMENTS (CONT.)
GOVERNMENT SECURITIES (CONT.)
DD 7,800,000 Federal Republic of Germany, Unity, 8.50%, 3/20/96 ................. $ 5,802,727
US 23,740,000 U.S. Treasury Bills, 5.55% to 5.73% with maturities to 7/13/95 ..... 23,651,703
------------
TOTAL GOVERNMENT SECURITIES (COST $97,814,120) ............... 97,473,739
------------
TOTAL SHORT TERM INVESTMENTS (COST $101,220,246) ............. 100,917,142
------------
TOTAL INVESTMENTS (COST $116,057,161) 98.1% ............. 117,039,565
OTHER ASSETS AND LIABILITIES, NET 1.9% .................. 2,279,519
------------
NET ASSETS 100.0% ....................................... $119,319,084
============
At April 30, 1995, the net unrealized appreciation based on the cost
of investments for income tax purposes of $116,057,161 was as
follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost ............. $ 1,421,554
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value ............. (439,150)
------------
Net unrealized appreciation .................................... $ 982,404
============
</TABLE>
* Securities traded in currency of country indicated. See page 27 for country
legend.
a Certain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed rates or upon maturity.
c Floating rate notes with an embedded put and/or call feature. The rate
indicated is as of April 30, 1995.
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE
COUNTRY* AMOUNT FRANKLIN TEMPLETON HIGH INCOME CURRENCY FUND (NOTE 1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG TERM INVESTMENTS 12.2%
FOREIGN GOVERNMENT SECURITIES - FLOATING RATE NOTES
UK 960,000 United Kingdom, floating rate notes, 6.50625%, 3/11/99 (COST
$1,494,543) ........................................................ $ 1,548,985
-----------
a SHORT TERM INVESTMENTS 93.0%
BONDS 5.3%
US 100,000 c Banque Francaise de Comercio, floating rate notes, semi-annual calls,
6.23%, 11/29/96 .................................................... 99,930
CS 15,000,000 a Unilever, 4.11%, 5/26/95 ............................................. 571,206
-----------
TOTAL BONDS (COST $670,867) .................................... 671,136
-----------
INDEXED SECURITIES 2.3%
US 300,000 Goldman Sachs Group LP, (principal and interest is linked to the
change in the Indonesian Rupiah to U.S. Dollar foreign exchange rate
between issue date (2,179.25 Rupiah/U.S. Dollar) and maturity date),
14.00%, 6/15/95 (COST $300,000) .................................... 290,640
-----------
U.S. GOVERNMENT AGENCIES 12.8%
US 875,000 Federal Home Loan Banks, 5.95% to 6.00% with maturities to 6/16/95 ... 868,554
US 760,000 Federal Home Loan Mortgage Corp., 5.96%, 6/19/95 ..................... 753,897
-----------
TOTAL U.S. GOVERNMENT AGENCIES: (COST $1,622,058) .............. 1,622,451
-----------
GOVERNMENT SECURITIES 72.6%
DK 7,000,000 Denmark Treasury Bill, 5.4085%, 1/02/96 .............................. 1,231,321
DD 835,000 Federal Republic of Germany, Schatz, 8.875%, 7/20/95 ................. 607,694
NL 4,820,000 Government of Netherlands, 6.25%, 6/01/95 ............................ 3,107,023
TH 13,000,000 Thailand Military Bank, 6.875%, 6/01/95 .............................. 525,391
UK 350,000 United Kingdom, 10.25%, 7/21/95 ...................................... 567,199
US 3,150,000 U.S. Treasury Bills, 5.63% to 5.70% with maturities to 6/15/95 ....... 3,140,782
-----------
TOTAL GOVERNMENT SECURITIES (COST $8,866,925) .................. 9,179,410
-----------
TOTAL SHORT TERM INVESTMENTS (COST $11,459,850) ................ 11,763,637
-----------
TOTAL INVESTMENTS 105.2% (COST $12,954,393) ............... 13,312,622
OTHER ASSETS AND LIABILITIES, NET (5.2%) .................. (661,400)
-----------
NET ASSETS 100.0% ......................................... $12,651,222
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
(UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
VALUE
FRANKLIN TEMPLETON HIGH INCOME CURRENCY FUND (NOTE 1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
At April 30, 1995, the net unrealized appreciation based on the cost
of investments for income tax purposes of $12,954,393 was as
follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost ............... $ 374,609
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value ............... (16,380)
---------
Net unrealized appreciation ...................................... $ 358,229
=========
</TABLE>
* Securities traded in currency of country indicated. See page 27 for country
legend.
a Certain short-term securities are traded on a discount basis; the rates shown
are the discount rates at the time of purchase by the Fund. Other securities
bear interest at the rates shown, payable at fixed rates or upon maturity.
c Floating rate notes with an embedded put and/or call feature. The rate
indicated is as of April 30, 1995.
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, APRIL 30, 1995
(UNAUDITED)
COUNTRY LEGEND:
AU - Australia
CS - Czechoslovakia
DD - Germany
DK - Denmark
FN - Finland
JP - Japan
NL - Netherlands
NZ - New Zealand
SW - Switzerland
TH - Thailand
UK - United Kingdom
US - United States
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN
TEMPLETON FRANKLIN FRANKLIN FRANKLIN
GERMAN TEMPLETON TEMPLETON TEMPLETON
GOVERNMENT GLOBAL HARD HIGH INCOME
BOND FUND CURRENCY FUND CURRENCY FUND CURRENCY FUND
---------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Assets:
Investment in Securities:
At identified cost....................................... $16,334,641 $58,450,268 $116,057,161 $12,954,393
=========== =========== ============ ===========
At value................................................. $18,124,065 $61,515,096 $117,039,565 $13,312,622
Foreign currencies (cost $883,074, and $131,658,
(respectively)........................................... 856,432 -- 132,475 --
Cash...................................................... 1,617 34,688 9,952 --
Receivables:
Investment securities sold............................... 2,105,000 485,255 32,245,519 389,592
Interest................................................. 516,969 703,185 1,541,239 293,016
Capital shares sold...................................... 527,998 741,701 2,811,504 20,244
Unrealized gain on forward foreign currency contract
(Note 2)................................................. -- -- -- 38,994
Unamortized organization cost (Note 3).................... 20,507 -- -- --
Receivable from affiliates................................ 2,192 -- -- 1,751
----------- ----------- ------------ -----------
Total assets......................................... 22,154,780 63,479,925 153,780,254 14,056,219
----------- ----------- ------------ -----------
Liabilities:
Payables:
Investment securities purchased.......................... -- -- 32,414,150 1,238,221
Capital shares (repurchased)............................. 16,700 62,249 1,057,701 56,062
Management fees.......................................... 8,957 33,009 62,154 6,775
Distribution fees........................................ 19,928 74,323 175,902 24,277
Shareholder servicing costs.............................. 1,910 7,219 2,402 1,280
Accrued expenses and other liabilities.................... 63,345 139,044 149,119 74,254
Unrealized loss on forward foreign currency contract
(Note 2) ................................................ -- 414,514 599,742 --
U.S. cash overdraft....................................... -- -- -- 4,128
Foreign currencies overdraft (cost $3,192)................ -- 3,192 -- --
----------- ----------- ------------ -----------
Total liabilities.................................... 110,840 733,550 34,461,170 1,404,997
----------- ----------- ------------ -----------
Net assets, at value....................................... $22,043,940 $62,746,375 $119,319,084 $12,651,222
=========== =========== ============ ===========
Net assets consists of:
Undistributed net investment loss......................... $ (397,582) $ (841,730) $ (4,832,358) $ (409,783)
Unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 1,791,064 2,678,354 362,057 419,717
Undistributed net realized gain from investments and
foreign currency transactions ........................... 737,834 2,902,549 11,862,257 587,709
Capital shares............................................ 15,553 44,050 85,832 10,910
Additional paid-in capital................................ 19,897,071 57,963,152 111,841,296 12,042,669
----------- ----------- ------------ -----------
Net assets, at value....................................... $22,043,940 $62,746,375 $119,319,084 $12,651,222
=========== =========== ============ ===========
Shares outstanding......................................... 1,555,273 4,405,041 8,583,169 1,090,972
=========== =========== ============ ===========
Net asset value per share.................................. $14.17 $14.24 $13.90 $11.60
=========== =========== ============ ===========
Maximum offering price..................................... $14.61 $14.68 $14.33 $11.96
=========== =========== ============ ===========
Representative computation (Franklin Templeton German
Government Bond Fund) of net asset value and offering
price per share:
Net asset value and redemption price per share
($22,043,940 / 1,555,273)................................. $14.17
===========
Maximum offering price (100/97 of $14.17)................ $14.61
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL STATEMENTS (CONT.)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN
TEMPLETON FRANKLIN FRANKLIN FRANKLIN
GERMAN TEMPLETON TEMPLETON TEMPLETON
GOVERNMENT GLOBAL HARD HIGH INCOME
BOND FUND CURRENCY FUND CURRENCY FUND CURRENCY FUND
---------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Interest.............................................. $ 450,437 $1,899,646 $2,079,026 $474,720
---------- ---------- ---------- --------
Expenses:
Management fees (Note 7).............................. 38,792 182,908 248,256 44,568
Distribution fees (Note 7)............................ 17,503 45,895 144,457 19,959
Shareholder servicing costs........................... 3,456 12,500 12,000 3,350
Custody fees.......................................... 1,000 3,000 2,500 2,000
Audit fees............................................ 8,000 8,800 5,000 14,500
Registration fees and insurance....................... 9,850 7,500 6,636 --
Reports to shareholders............................... 15,500 10,000 13,500 16,000
Amortization of organization cost (Note 3)............ 3,801 -- -- --
Professional fees..................................... 2,000 4,000 2,000 1,000
Trustees' fees and expenses........................... 9,000 10,000 8,000 8,500
Other................................................. 2,217 7,861 3,188 3,049
Payments from Manager (Note 7)........................ (23,342) -- -- (27,175)
---------- ---------- ---------- --------
Total expenses................................... 87,777 292,464 445,537 85,751
---------- ---------- ---------- --------
Net investment income............................ 362,660 1,607,182 1,633,489 388,969
---------- ---------- ---------- --------
Realized and unrealized gain:
Net realized gain on:
Investments.......................................... 226,873 2,405,745 1,185,088 229,567
Foreign currency transactions........................ 142,971 515,806 6,292,060 49,918
---------- ---------- ---------- --------
369,844 2,921,551 7,477,148 279,485
Net unrealized appreciation (depreciation) on
investments and translation of assets and liabilities
denominated in foreign currencies.................... 1,148,509 (275,981) (559,724) 47,853
---------- ---------- ---------- --------
Net realized and unrealized gain....................... 1,518,353 2,645,570 6,917,424 327,338
---------- ---------- ---------- --------
Net increase in net assets resulting from operations... $1,881,013 $4,252,752 $8,550,913 $716,307
========== ========== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL STATEMENTS (CONT.)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GERMAN GOVERNMENT BOND FUND GLOBAL CURRENCY FUND
----------------------------------- -----------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
APRIL 30, 1995 SIX MONTHS ENDED APRIL 30, 1995 SIX MONTHS ENDED
(UNAUDITED) OCTOBER 31, 1994 (UNAUDITED) OCTOBER 31, 1994
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income................................ $ 362,660 $ 416,205 $ 1,607,182 $ 946,987
Net realized gain from investments and foreign
currency transactions............................... 369,844 367,990 2,921,551 168,703
Net unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign currencies....... 1,148,509 570,451 (275,981) 1,038,648
----------- ----------- ----------- -----------
Net increase in net assets resulting from
operations...................................... 1,881,013 1,354,646 4,252,752 2,154,338
Distributions to shareholders from undistributed net
investment income..................................... (816,691) (359,756) (3,712,322) (1,051,089)
Increase (decrease) in net assets from capital share
transactions (Note 4)................................. 7,743,416 (1,099,738) 6,108,047 3,455,295
----------- ----------- ----------- -----------
Net increase (decrease) in net assets............ 8,807,738 (104,848) 6,648,477 4,558,544
Net assets:
Beginning of period................................... 13,236,202 13,341,050 56,097,898 51,539,354
----------- ----------- ----------- -----------
End of period......................................... $22,043,940 $13,236,202 $62,746,375 $56,097,898
=========== =========== =========== ===========
Undistributed net investment income (loss) included
in net assets:
Beginning of period.................................. $ 56,449 -- $ 1,263,410 --
=========== =========== =========== ===========
End of period........................................ $ (397,582) $ 56,449 $ (841,730) $ 1,263,410
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL STATEMENTS (CONT.)
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
HARD CURRENCY FUND HIGH INCOME CURRENCY FUND
----------------------------------- -----------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
APRIL 30, 1995 SIX MONTHS ENDED APRIL 30, 1995 SIX MONTHS ENDED
(UNAUDITED) OCTOBER 31, 1994 (UNAUDITED) OCTOBER 31, 1994
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income............................... $ 1,633,489 $ 1,047,942 $ 388,969 $ 474,320
Net realized gain from investments and foreign
currency transactions.............................. 7,477,148 4,083,196 279,485 308,224
Net unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign currencies...... (559,724) (81,683) 47,853 144,770
------------ ----------- ----------- -----------
Net increase in net assets resulting from
operations..................................... 8,550,913 5,049,455 716,307 927,314
Distributions to shareholders from undistributed net
investment income.................................... (6,285,763) (1,021,165) (817,713) (472,638)
Increase (decrease) in net assets from capital share
transactions (Note 4)................................ 55,825,435 21,461,411 (4,125,649) (282,293)
------------ ----------- ----------- -----------
Net increase (decrease) in net assets........... 58,090,585 25,489,701 (4,227,055) 172,383
Net assets:
Beginning of period.................................. 61,228,499 35,738,798 16,878,277 16,705,894
------------ ----------- ----------- -----------
End of period........................................ $119,319,084 $61,228,499 $12,651,222 $16,878,277
============ =========== =========== ===========
Undistributed net investment income (loss) included
in net assets:
Beginning of year................................... $ (180,084) -- $ 18,961 --
============ =========== =========== ===========
End of year......................................... $ (4,832,358) $ (180,084) $ (409,783) $ 18,961
============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton Global Trust (the Trust), (prior to November 15, 1993, the
Huntington Funds) is an open-end management investment company (mutual fund)
registered under the Investment Company Act of 1940 as amended. The Trust
currently has four separate non-diversified funds (the Funds) in operation
consisting of: Franklin Templeton German Government Bond Fund (the German Bond
Fund), Franklin Templeton Global Currency Fund (the Global Currency Fund),
Franklin Templeton Hard Currency Fund (the Hard Currency Fund), and Franklin
Templeton High Income Currency Fund (the High Income Fund). Each of the Funds
issues a separate series of the Trust's shares and maintains a totally separate
Investment portfolio.
Effective May 1, 1994 the Funds have changed their fiscal year end from April
30 to October 31.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
A. SECURITY VALUATIONS:
Portfolio securities listed on a securities exchange or on the NASDAQ National
Market System for which market quotations are readily available are valued at
the last quoted sales price of the day or, if there is no such reported sale,
within the range of the most recent quoted bid and asking prices. Other
securities for which market quotations are readily available are valued at
current market values, obtained from pricing services, which are based on a
variety of factors, including recent trades, institutional size trading in
similar types of securities (considering yield, risk and maturity) and/or
developments related to specific securities. Portfolio securities which are
traded both in the over-the-counter market and on a securities exchange are
valued according to the broadest and most representative market as determined
by the Manager. Other securities for which market quotations are not available,
if any, are valued in accordance with procedures established by the Board of
Trustees.
Securities denominated in foreign currencies and traded on foreign exchanges or
in foreign markets are valued in a similar manner and these values are
translated into U.S. dollars at current market quotations of their respective
currency against U.S. dollars last quoted by a major bank or, if no such
quotation is available, at the rate of exchange determined in accordance with
policies established by the Board of Trustees.
B. INCOME TAXES:
The Trust intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from income and excise taxes. Therefore, no income tax provision is
required. Each Fund is treated as a separate entity in the determination of
compliance with the Internal Revenue Code.
C. SECURITY TRANSACTIONS:
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on security
transactions are determined on the basis of specific identification for both
financial statement and income tax purposes.
D. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income and estimated expenses are accrued daily.
Bond discount is amortized as required by the Internal Revenue Code.
32
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
1. SIGNIFICANT ACCOUNTING POLICIES (CONT.)
D. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS: (CONT.)
Distributions from undistributed net investment income, and net realized
capital gains from security transactions, to the extent they exceed available
capital loss carryovers, are generally made during each year to avoid the 4%
excise tax imposed on regulated investment companies by the Internal Revenue
Code.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities held by the
Funds, timing differences and differing characterization of distributions made
by the Fund as a whole.
Net realized capital gains differ for financial statement and tax purposes
primarily due to losses on wash sale transactions.
E. EXPENSE ALLOCATION:
Common expenses incurred by the Trust are allocated among the Funds based on
the ratio of the net assets of each Fund to the combined net assets. In all
other respects, expenses are charged to each Fund as incurred on a specific
identification basis.
F. INDEXED SECURITIES:
The Funds may invest in debt instruments in which the principal and/or interest
is dependent on another factor such as a yield curve, currency exchange rates
or commodity prices. The Fund's objective in holding these notes, commonly
called structured notes, is to tailor the Fund's investment based on specific
risk and returns it wishes to assume while avoiding unwanted risk or change the
Fund's exposure to a particular foreign exchange rate or the spread between two
foreign exchange rates.
G. FOREIGN CURRENCY TRANSLATION:
The accounting records of the Trust are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies are translated into U.S.
dollars at the rate of exchange of such currencies against U.S. dollars on the
date of the valuation. Purchases and sales of securities, income and expenses
are translated at the rate of exchange quoted on the respective date that such
transactions are recorded.
The Trust does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from fluctuations arising
from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized between the trade date and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Trust's books, and the
U.S. dollar equivalent of the amounts of dividends, interest, and foreign
withholding taxes recorded on the Trust's books, and the U.S. dollar equivalent
of the amounts actually received or paid. Net unrealized foreign exchange gains
and losses arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in
exchange rates.
33
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
2. FORWARD FOREIGN CURRENCY CONTRACTS
A forward currency contract, which is individually negotiated and privately
traded by currency traders and their customers, is a commitment to purchase or
sell a specific currency for an agreed-upon price at a future date.
The Funds may enter into forward contracts with the goal of minimizing the risk
to the Funds from adverse changes in the relationship between currencies or to
enhance income. The Funds may also enter into a forward contract in a relation
to a security denominated in a foreign currency in order to lock in the U.S.
dollar price of that security.
The Funds segregated in their custodian bank sufficient cash, cash equivalents
or readily marketable debt securities as deposits for commitments created by
open forward contracts. The Funds could be exposed to risk if counterparties to
the contracts are unable to meet the terms of their contracts or if the value
of the foreign currency changes unfavorably.
As of April 30, 1995, the Global Currency Fund had the following forward
foreign currency contracts outstanding:
<TABLE>
<CAPTION>
IN UNREALIZED
CONTRACTS TO BUY EXCHANGE FOR SETTLEMENT DATE GAIN (LOSS)
------------------------------------------ ------------ --------------- -----------
<S> <C> <C> <C>
5,000,000 German deutschemarks........ U.S. $ 3,688,379 5/04/95 U.S. $ (59,860)
5,000,000 German deutschemarks........ 3,588,731 5/12/95 21,142
3,000,000 German deutschemarks........ 2,350,427 5/12/95 32,425
4,000,000 German deutschemarks........ 2,902,737 5/31/95 (12,315)
510,000,000 Japanese yen................ 6,103,399 5/31/95 (7,740)
9,100,000 Swiss francs................ 8,031,774 5/31/95 (66,611)
----------- ---------
U.S. $26,665,447 (92,959)
=========== ---------
CROSS CURRENCY CONTRACTS
------------------------------------------
1,654,273 Australian dollars.......... FN 6,412,625 6/12/95 (304,410)
166,747 Australian dollars.......... 588,700 6/12/95 (17,145)
--------- ---------
FN 7,001,325 (321,555)
========= ---------
Net unrealized depreciation ................................................. U.S. $(414,514)
=========
</TABLE>
As of April 30, 1995, the Hard Currency Fund had the following forward foreign
currency contracts outstanding:
<TABLE>
<CAPTION>
CONTRACTS TO SELL
-----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
13,565,000 German deutschemarks........ U.S. $ 9,859,145 5/19/95 U.S. $ 62,339
6,000,000 German deutschemarks........ 4,361,384 5/22/95 27,502
4,405,000 German deutschemarks........ 3,202,472 5/26/95 20,082
----------- --------
U.S. $17,423,001 109,923
=========== --------
</TABLE>
34
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
2. FORWARD FOREIGN CURRENCY CONTRACTS (CONT.)
<TABLE>
<CAPTION>
CONTRACTS TO BUY
------------------------------------------
<S> <C> <C> <C>
3,700,000 Swiss francs................ U.S. $ 3,297,683 5/10/95 $ (64,514)
7,000,000 Swiss francs................ 6,233,304 5/10/95 (116,497)
15,150,000 Swiss francs................ 13,497,862 5/10/95 (259,345)
6,560,000 New Zealand dollars......... 4,332,880 5/10/95 72,537
3,625,000 New Zealand dollars......... 2,402,288 5/11/95 31,929
679,000,000 Japanese yen................ 8,154,001 5/15/95 (55,768)
4,790,900 Swiss francs................ 4,158,767 5/18/95 30,376
13,565,000 German deutschemarks........ 9,747,422 5/19/95 49,384
5,000,000 Swiss francs................ 4,450,378 5/22/95 (76,981)
6,000,000 German deutschemarks........ 4,395,604 5/22/95 (61,722)
7,000,000 Swiss francs................ 6,231,916 5/22/95 (109,160)
4,405,000 German deutschemarks........ 3,192,029 5/26/95 (9,639)
300,000,000 Japanese yen................ 3,621,526 5/26/95 (38,273)
350,000,000 Japanese yen................ 4,268,293 5/26/95 (87,831)
100,000,000 Japanese yen................ 1,199,472 5/26/95 (5,055)
600,000,000 Japanese yen................ 7,180,469 5/31/95 (9,106)
----------- ---------
U.S. $86,363,894 (709,665)
=========== ---------
Net unrealized depreciation.................................................. U.S. $(599,742)
=========
</TABLE>
As of April 30, 1995, the High Income Fund had the following forward foreign
currency contracts outstanding:
<TABLE>
<CAPTION>
IN UNREALIZED
CONTRACTS TO SELL EXCHANGE FOR SETTLEMENT DATE GAIN (LOSS)
------------------------------------------ ------------ --------------- -----------
<S> <C> <C> <C>
2,370,000 Dutch guilders.............. U.S. $ 1,545,283 5/18/95 U.S. $16,973
=========== -------
CONTRACTS TO BUY
------------------------------------------
2,000,000 New Zealand dollars......... U.S. $ 1,324,000 5/11/95 19,016
740,000 Australian dollars.......... 547,748 5/11/95 (9,813)
2,370,000 Dutch guilders.............. 1,519,231 5/18/95 9,078
440,000 British pounds.............. 703,780 5/18/95 4,151
160,000 British pounds.............. 257,232 5/18/95 197
530,000 Australian dollars.......... 384,992 6/27/95 (608)
----------- -------
U.S. $ 4,736,983 22,021
=========== -------
Net unrealized appreciation.................................................. U.S. $38,994
=======
</TABLE>
35
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
3. UNAMORTIZED ORGANIZATION COSTS
The organization costs of the Funds are amortized on a straight line basis over
a period of five years from the effective date of registration under the
Securities Act of 1933 for each Fund. In the event the initial shareholder or
its transferee redeems its shares within the five-year period, the pro rata
share of the then-unamortized deferred organization costs will be deducted from
the redemption price paid to such shareholder. New investors purchasing shares
of the Funds subsequent to that date bear such costs during the amortization
period only as such charges are accrued daily against investment income.
4. TRUST SHARES
At April 30, 1995 there were an unlimited number of $.01 par value shares of
beneficial interest authorized. Transactions in each of the Fund's shares for
the six months ended April 30, 1995 and October 31, 1994 were as follows:
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON
GERMAN FRANKLIN TEMPLETON
GOVERNMENT BOND FUND GLOBAL CURRENCY FUND
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Six Months Ended April 30, 1995
Shares sold.................................................... 998,252 $13,670,881 750,368 $10,525,574
Shares issued in reinvestment of distributions................. 50,362 631,547 231,965 3,126,711
Shares redeemed................................................ (491,494) (6,559,012) (544,120) (7,544,238)
-------- ----------- -------- -----------
Net increase.............................................. 557,120 $ 7,743,416 438,213 $ 6,108,047
======== =========== ======== ===========
Six Months Ended October 31, 1994
Shares sold.................................................... 285,392 $ 3,695,651 778,474 $10,896,522
Shares issued in reinvestment of distributions................. 21,249 273,677 60,640 847,934
Shares redeemed................................................ (393,668) (5,069,066) (592,991) (8,289,161)
-------- ----------- -------- -----------
Net increase (decrease)................................... (87,027) $(1,099,738) 246,123 $ 3,455,295
======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON
FRANKLIN TEMPLETON HIGH INCOME
HARD CURRENCY FUND CURRENCY FUND
------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Six Months Ended April 30, 1995
Shares sold................................................. 6,005,656 $ 80,440,712 102,919 $ 1,160,280
Shares issued in reinvestment of distributions.............. 397,050 5,017,684 46,690 516,029
Shares redeemed............................................. (2,208,734) (29,632,961) (514,942) (5,801,958)
---------- ------------ -------- -----------
Net increase (decrease)................................ 4,193,972 $ 55,825,435 (365,333) $(4,125,649)
========== ============ ======== ===========
Six Months Ended October 31, 1994
Shares sold................................................. 3,949,459 $ 52,809,249 285,182 $ 3,231,161
Shares issued in reinvestment of distributions.............. 62,920 850,048 26,592 302,633
Shares redeemed............................................. (2,383,635) (32,197,886) (335,876) (3,816,087)
---------- ------------ -------- -----------
Net increase (decrease)................................ 1,628,744 $ 21,461,411 (24,102) $ (282,293)
========== ============ ======== ===========
</TABLE>
36
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
5. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At October 31, 1994, for tax purposes, the Funds had capital loss carryovers as
follows:
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GERMAN GOVERNMENT FRANKLIN TEMPLETON FRANKLIN TEMPLETON HIGH INCOME
BOND FUND GLOBAL CURRENCY FUND HARD CURRENCY FUND CURRENCY FUND
------------------ -------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Capital loss carryovers expiring:
2001............................ -- $35,182 $301,642 --
2002............................ $45,328 -- 271 --
------- ------- -------- ----
$45,328 $35,182 $301,913 --
======= ======= ======== ====
</TABLE>
6. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and sales of securities (excluding purchases and sales of
short-term securities) for the six months ended April 30, 1995, were as
follows:
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GERMAN GOVERNMENT FRANKLIN TEMPLETON FRANKLIN TEMPLETON HIGH INCOME
BOND FUND GLOBAL CURRENCY FUND HARD CURRENCY FUND CURRENCY FUND
------------------ -------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Purchases........................ $9,375,102 $ 6,559,590 $2,790,138 $1,494,543
========== =========== ========== ==========
Sales............................ $4,726,973 $10,113,624 $5,460,809 $ 724,225
========== =========== ========== ==========
</TABLE>
7. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Franklin Advisers, Inc. ("Manager"), under the terms of a management agreement
provides investment advice, office space and facilities to each Fund and
receives fees computed monthly based on the average daily net assets at an
annualized rate of .65 of 1% for the Global Currency Fund, the Hard Currency
Fund, and the High Income Fund, and .55 of 1% for the German Government Bond
Fund. Under a subadvisory agreement, Templeton Investment Counsel, Inc. ("TICI"
or the "Subadviser"), an indirect subsidiary of Templeton Worldwide, Inc.,
which is a direct, wholly-owned subsidiary of Franklin Resources, Inc.
("Resources") receives from the Manager a fee equal to an annual rate of .25 of
1% of the value of the average daily net assets of the Funds, payable monthly.
The terms of the agreements provide that aggregate annual expenses of the Trust
be limited to the extent necessary to comply with the limitations set forth in
the laws, regulations and administrative interpretations of the states in which
the Trust's shares are registered. The Trust's expenses did not exceed these
limitations; however, for the six months ended April 30, 1995, Franklin
Advisers, Inc. reduced total expenses by $50,517 as indicated below:
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GERMAN GOVERNMENT FRANKLIN TEMPLETON FRANKLIN TEMPLETON HIGH INCOME
BOND FUND GLOBAL CURRENCY FUND HARD CURRENCY FUND CURRENCY FUND
------------------ -------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Expense reduction................ $23,342 -- -- $27,175
======= ==== ==== =======
</TABLE>
37
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
7. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
In its capacity as underwriter for the shares of the Trust, Franklin Templeton
Distributors, Inc. receives commissions on sales of the Trust's shares.
Commissions received by Franklin Templeton Distributors, Inc. and the amounts
which were subsequently paid to other dealers for the period November 1, 1994
to April 30, 1995 were as follows:
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GERMAN GOVERNMENT FRANKLIN TEMPLETON FRANKLIN TEMPLETON HIGH INCOME
BOND FUND GLOBAL CURRENCY FUND HARD CURRENCY FUND CURRENCY FUND
------------------ -------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Total commissions received....... $137,963 $72,683 $726,352 $15,463
======== ======= ======== =======
Paid to other dealers............ $123,869 $64,120 $645,115 $13,760
======== ======= ======== =======
</TABLE>
Under the terms of a distribution agreement pursuant to Rule 12b-1 of the
Investment Company Act of 1940, the Global Currency Fund, the Hard Currency
Fund, and the High Income Fund will reimburse Franklin Templeton Distributors,
Inc., in an amount up to 0.45% per annum of the average daily net assets of
each Fund and the German Bond Fund will reimburse Franklin Templeton
Distributors, Inc., in amount up to 0.25% per annum of the average daily net
assets of the Fund for the cost incurred in the promotion, offering and
marketing of the Funds' shares. Fees incurred by the German Bond Fund, Global
Currency Fund, Hard Currency Fund, and High Income Fund under the agreement
aggregated $17,503, $45,895, $144,457, and $19,959, respectively, for the six
months ended April 30, 1995.
Under the terms of a shareholder servicing agreement with Franklin Templeton
Investor Services, Inc., the Trust pays costs on a per shareholder account
basis. Shareholder servicing costs incurred for the six months ended April 30,
1995 aggregated $31,306.
Certain officers and trustees of the Trust are also officers and/or directors
of Franklin Templeton Distributors, Inc., Franklin Advisers, Inc., Templeton
Worldwide, Inc. and Franklin Templeton Investor Services, Inc., all
wholly-owned subsidiaries of Franklin Resources, Inc.
8. CREDIT RISK
Although each of the Funds has a diversified investment portfolio, there are
certain credit risks, foreign currency exchange risks, or event risks due to
the manner in which the Funds are invested, which may subject the Funds more
significantly to economic changes occurring in certain industries or sectors,
as follows:
The Global Currency Fund has investments in excess of 10% in debt
securities denominated in German deutschmarks.
The Hard Currency Fund has investments in excess of 10% in debt
securities denominated in German deutschmarks.
The High Income Fund has investments in excess of 10% in debt securities
denominated in British pounds and Dutch guilders.
Although the German Bond Fund has a diversified investment portfolio, most of
its investments are in the securities of issuers in the country of Germany.
Such concentration may subject the Fund to economic changes occurring within
that country.
38
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
9. FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE@
-----------------------------------------------------------------------------------------------------------
DISTRI- DISTRI- DISTRI- NET
SIX NET ASSET NET BUTIONS BUTIONS BUTIONS ASSET
MONTHS VALUE AT NET REALIZED & TOTAL FROM FROM NET FROM FROM TOTAL VALUE
ENDED BEGINNING INVESTMENT UNREALIZED INVESTMENT INVESTMENT CAPITAL RETURN OF DISTRI- AT END TOTAL
APRIL 30 OF YEAR INCOME GAIN (LOSS) OPERATIONS INCOME GAINS CAPITAL+++ BUTIONS OF YEAR RETURN++
- -------- --------- ---------- ----------- ---------- ---------- ------- ---------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FRANKLIN TEMPLETON GERMAN GOVERNMENT BOND FUND
1993 1,3 $12.50 $0.27 $ 0.56 $ 0.83 $(0.25) $ -- $ -- $(0.25) $13.08 6.15%
1994 13.08 0.78 (0.72) 0.06 (0.39) (0.06) (0.40) (0.85) 12.29 0.64
1994 4 12.29 0.41 0.92 1.33 (0.36) -- -- (0.36) 13.26 10.92
1995 5 13.26 0.74 1.01 1.75 (0.84) -- -- (0.84) 14.17 14.14
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
1990 3 13.71 0.97 0.07 1.04 (0.99) (0.10) -- (1.09) 13.66 8.19
1991 3 13.66 1.07 0.57 1.64 (1.07) -- -- (1.07) 14.23 12.21
1992 3 14.23 0.80 (0.22) 0.58 (0.80) -- -- (0.80) 14.01 4.29
1993 3 14.01 0.67 1.01 1.68 (0.69) (1.04) -- (1.73) 13.96 13.28
1994 13.96 0.57 (0.11) 0.46 (0.57) -- -- (0.57) 13.85 3.41
1994 4 13.85 0.25 0.32 0.57 (0.28) -- -- (0.28) 14.14 4.14
1995 5 14.14 0.42 0.61 1.03 (0.93) -- -- (0.93) 14.24 7.83
FRANKLIN TEMPLETON HARD CURRENCY FUND
1990 2,3 12.50 0.42 0.69 1.11 (0.35) (0.08) -- (0.43) 13.18 8.88
1991 3 13.18 0.92 0.64 1.56 (0.95) (0.96) -- (1.91) 12.83 11.04
1992 3 12.83 0.77 0.28 1.05 (0.76) -- -- (0.76) 13.12 8.40
1993 3 13.12 0.71 1.20 1.91 (0.69) (1.34) -- (2.03) 13.00 17.11
1994 13.00 0.50 (0.05) 0.45 (0.13) -- (0.37) (0.50) 12.95 3.62
1994 4 12.95 0.26 0.99 1.26 (0.25) -- -- (0.25) 13.95 9.74
1995 5 13.95 0.85 0.47 1.32 (1.37) -- -- (1.37) 13.90 10.64
FRANKLIN TEMPLETON HIGH INCOME CURRENCY FUND
1990 2,3 12.50 0.73 0.24 0.97 (0.62) (0.01) -- (0.63) 12.84 7.82
1991 3 12.84 1.34 0.43 1.77 (1.38) (0.31) -- (1.69) 12.92 14.09
1992 3 12.92 1.09 (0.03) 1.06 (1.08) -- -- (1.08) 12.90 8.51
1993 3 12.90 0.90 (0.40) 0.50 (0.94) (0.33) -- (1.27) 12.13 4.49
1994 12.13 0.59 (0.85) (0.26) -- -- (0.59) (0.59) 11.28 (2.03)
1994 4 11.28 0.31 0.31 0.62 (0.31) -- -- (0.31) 11.59 5.60
1995 5 11.59 0.28 0.40 0.68 (0.67) -- -- (0.67) 11.60 6.22
</TABLE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------
RATIO
NET RATIO OF OF NET
SIX ASSETS EXPENSES INVESTMENT
MONTHS AT END TO AVERAGE INCOME TO PORTFOLI0
ENDED OF YEAR NET ASSETS AVERAGE TURNOVER
APRIL 30 (IN 000'S) (SEE NOTE 7)** NET ASSETS RATE
- -------- ---------- -------------- ---------- ----------
<S> <C> <C> <C> <C>
FRANKLIN TEMPLETON GERMAN GOVERNMENT BOND FUND
1993 1,3 $ 10,738 0.87%* 6.06%* 190.89%*
1994 13,341 1.00 4.74 185.66
1994 4 13,236 1.04* 6.37* 301.60*
1995 5 22,044 1.25* 5.14* 72.07*
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
1990 3 71,615 2.09 7.16 --
1991 3 72,186 1.82 7.36 --
1992 3 63,589 1.82 5.77 --
1993 3 62,355 1.67 4.64 10.39
1994 51,539 1.41 2.78 37.16
1994 4 56,098 1.04* 3.55* 50.82*
1995 5 62,746 1.04* 5.72* 78.80*
FRANKLIN TEMPLETON HARD CURRENCY FUND
1990 2,3 26,280 1.65* 6.21* --
1991 3 33,599 1.66 6.46 --
1992 3 31,757 1.86 5.85 --
1993 3 49,569 1.75 5.23 4.88
1994 35,739 1.47 3.83 --
1994 4 61,228 1.05* 3.80* 55.91*
1995 5 119,319 1.17* 4.28* 30.43*
FRANKLIN TEMPLETON HIGH INCOME CURRENCY FUND
1990 2,3 11,808 1.73* 11.01* --
1991 3 52,364 1.59 9.85 --
1992 3 46,575 1.83 8.38 --
1993 3 32,341 1.81 6.86 --
1994 16,706 1.59 4.80 --
1994 4 16,878 1.04* 5.44* 1,588.38*
1995 5 12,651 1.25* 5.67* 113.03*
</TABLE>
1 For the period December 31, 1992 (effective date of registration) to April
30, 1993.
2 For the period November 17, 1989 (effective date of registration) to April
30, 1990.
3 Financial Highlights for periods ended April 30, 1994 and October 31, 1994
have been audited by Coopers and Lybrand. All other periods were audited by
other independent auditors whose opinions are not included herein.
4 Six months ended October 31, 1994.
5 Six months ended April 30, 1995 (unaudited).
@ Selected data for a share of beneficial interest outstanding throughout the
period.
++ Total return measures the change in value of an investment over the periods
indicated. It does not include the maximum 3.0% initial sales charge and
assumes reinvestment of dividends and capital gains at net asset value.
+++Certain distributions have been reclassed to conform with SOP 93-2 (see
Note 1).
* Annualized
39
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT.)
9. FINANCIAL HIGHLIGHTS (CONT.)
**During the periods indicated, the investment manager reduced management fees
and reimbursed other expenses incurred by the Funds in the Trust. Had such
action not been taken, the ratios of expenses to average net assets would have
been as follows:
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO
AVERAGE NET ASSETS
--------------------
<S> <C>
FRANKLIN TEMPLETON GERMAN GOVERNMENT BOND FUND
1993 1 ............................................. 1.73%*
1994................................................ 1.83
1994 4 ............................................. 1.77*
1995 5 ............................................. 1.58*
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
1994................................................ 1.61
1994 4 ............................................. 1.12*
FRANKLIN TEMPLETON HARD CURRENCY FUND
1994................................................ 1.71
1994 4 ............................................. 1.28*
FRANKLIN TEMPLETON HIGH INCOME CURRENCY FUND
1990 2 ............................................. 2.04
1994................................................ 1.82
1994 4 ............................................. 1.45*
1995 5 ............................................. 1.65*
</TABLE>
40
<PAGE>
