PRESIDENT'S LETTER
Table of Contents
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 15
Franklin Templeton
High Income Currency Fund 20
Statement of Investments 24
Financial Statements 32
June 17, 1996
Dear Shareholder:
This semi-annual report for the Franklin Templeton Global Trust covers the
period ended April 30, 1996. During the six months under review, total returns
for the funds which comprise the Trust were:
Franklin Templeton
German Government Bond Fund -4.33%
Franklin Templeton
Global Currency Fund -0.69%
Franklin Templeton
Hard Currency Fund -5.54%
Franklin Templeton
High Income Currency Fund +1.07%
In discussing the funds' performance, I would like to address three issues which
may be on your mind. Additional information regarding each fund's total return
can be found in the Performance Summaries on pages 10, 14, 18 and 23.
Why did the funds perform below their historical averages?
The primary factor influencing the funds' short-term performance is fluctuation
of foreign currency values relative to the U.S. dollar. When foreign currencies
rise against the dollar, the funds' total returns are usually higher. And when
foreign currencies decline against the dollar, as has been the case in the
recent months, these returns tend to lag. In such instances, the value of
foreign currency investments (when expressed in terms of U.S. dollars) is
reduced because these currencies now purchase fewer dollars than before.
The other major factor affecting performance is net investment income derived
from interest paid by money market and fixed-income instruments held in the
funds' portfolios. This income is paid in the form of monthly dividends and can
cushion the impact of declining foreign currency values.
In the case of the German Government Bond Fund, changes in the level of German
bond yields also affects total return, with rising yields reducing the price (in
marks) of existing bonds, and declining yields increasing their price.
During the period under review, the dollar strengthened more than 3% and 8%
against the Japanese yen, and German mark, respectively, hurting the performance
of the funds, especially the Hard Currency and German Government Bond Funds.
Many analysts point to persistent economic weakness, combined with low interest
rates, as the root causes of the currency weakness in Japan and Germany. The
German mark was subjected to additional pressure as some investors anticipated
it weakening relative to other European currencies because of efforts to adopt a
single European currency by the end of the century. We do not believe, however,
that this factor will exert significant downward long-term pressure on the mark.
How should the funds' recent performance be viewed?
There are two primary reasons for long-term investors to own these funds, and
both relate to protecting yourself against further depreciation of the U.S.
dollar.
The first is the opportunity to protect the global purchasing power of your
dollar-denominated assets. Americans have, by necessity, become global
consumers. Consequently, the prices of many things we consume, such as home
electronics, travel abroad, foreign cars -- even domestic cars that compete with
foreign cars -- tend to rise when the dollar falls. Global consumers generally
do not wish to gamble their global purchasing power on the fortunes of any
particular currency, including their home currency. The logical answer is that
their savings and investments should be denominated in multiple currencies,
reflecting the global nature of their consumption patterns.
Since the dollar rose during most of the reporting period, protecting the global
purchasing power of our dollar-denominated assets proved, in hindsight, not to
be necessary. Rather than bemoan this fact though, we probably should celebrate
because our much beleaguered dollar at least temporarily recouped a small bit of
its purchasing power. Given that most Americans' assets are still principally
dollar-denominated, a rising dollar is good news, notwithstanding the adverse
effect on our foreign-currency positions. However, unless one wishes to gamble
on a sustained rise in the dollar, the rational approach remains an
internationally diversified portfolio which seeks to protect global purchasing
power regardless of the dollar's short-term direction.
The second reason for owning one of these funds is to seek to protect, or at
least cushion, the value of one's portfolio against the potentially adverse
impact that a weaker dollar can have on U.S. assets. More often than not, short
to intermediate (e.g., three to twelve-month) periods of significant dollar
weakness are associated with weakness in U.S. stock and/or bond markets. Because
the value of assets such as foreign currency money market instruments tends to
rise when the dollar declines, they offer a potential partial hedge in such
circumstances and can play an important role in a well diversified portfolio.
The funds' weaker-than-average performance during the reporting period coincided
with above-average U.S. stock market performance, which serves to reinforce our
view that they provide excellent portfolio diversification. The S&P 500(R) for
example, delivered a total return of 13.75% for the six-month period, well above
its long-term average.* Although foreign currency exposure reduced total
portfolio return over the last six months, it should be remembered that the
opposite can be true during periods of U.S. market weakness. Unless you believe
that U.S. stock markets will continue their recent climb indefinitely, the
diversification benefits from investing in foreign currencies should be of more
than theoretical interest.
What is your longer-term outlook for the U.S. dollar at this point?
We believe that the dollar's longer-term downtrend, which arguably began a
quarter century ago, may continue. U.S. annual budget deficits are quite large
relative to the amount of money Americans save each year, and despite all the
recent hoopla in Congress about balancing the federal budget, we see no
realistic prospect of this happening in the near future.
The combination of large deficits and low domestic savings rates means the U.S.
remains dependent on foreign investors to make up the gap between the amount of
U.S. Treasury securities that Americans are willing to buy at current interest
rates and the amount the Treasury needs to borrow in order to cover the
government's annual spending excess. Most alarming, foreign governments appear
to have become America's lender of last resort. The Federal Reserve's own data
indicate that foreign central bank holdings of U.S. Treasury securities grew by
31% from about $420 billion in March 1995 to $550 billion in March 1996. And
during the latter part of this period, these numbers grew at an even faster
pace. In other words, over the past year, foreign central banks increased their
Treasury holdings by an amount which exceeds 50% of all the net new borrowing
required by the Treasury for the same period.
*Source: Standard & Poor's 500 Stock Index(R). Index is unmanaged and does not
include reinvested dividends.
But foreign investment capital is a two-edged sword, as Mexico learned not long
ago. Although its presence helps keep the currency aloft and supports stock and
bond prices as well, its absence does just the opposite. And while temporarily
buoying the dollar and U.S. financial markets, this frenzy of foreign buying
also worsens the net debtor position of the U.S. As the difference between what
we owe to foreigners and what is owed to us grows, more dollars are "exported"
abroad in the form of rising interest payments and more dollars must, therefore,
be absorbed by world currency markets each year.
Since we do not believe that the recent rate of foreign investment in U.S.
Treasuries is sustainable, and since a rising supply of any commodity (be it
dollars or diamonds) tends to depress its price, we expect the growing supply of
dollars on world markets may cause the dollar to resume its longer-term slide
before too long. Exactly when that will happen, no one knows. In the meantime,
stay tuned -- and stay diversified.
And, as always, thank you for investing with us.
Yours sincerely,
Donald P. Gould
President
Franklin Templeton Global Trust
ECONOMIC OVERVIEW
During the six months under review, the U.S., Japan and Germany experienced
divergent rates of economic growth. In the U.S., gross domestic product (GDP)
grew by an annualized rate of only 0.5% in the fourth quarter of 1995, causing
bond yields to fall (and bond prices to rally) and spurring the Federal Reserve
Board to lower the federal funds rate, first from 5.75% to 5.50% in December
1995, and again to 5.25% in January 1996. However, during the first quarter of
1996, GDP grew by an annualized rate of 2.3%,1 commodity prices increased
sharply, and some investors began to worry about higher rates of inflation. This
significantly weakened prices in the U.S. bond market between February and
April. On March 8, in fact, they suffered their worst one-day decline in many
years, as investors drove yields up more than 30 basis points2 after the
government reported the creation of more than 700,000 new jobs in February.3
This was the largest monthly increase in new jobs since 1983. However, we
believe that the February employment report probably overstated the strength of
the economy, and that inflation should not be a major problem for the U.S.
economy in the near term.
In Japan, the banking system suffered from large amounts of bad debt at the
beginning of the fiscal year, due to the strong yen (which depressed exports)
and a four-year long economic contraction. After declining interest rates and
public works programs failed to improve the situation, the Bank of Japan (BOJ)
dropped the overnight interbank borrowing rate to the historic low level of
0.50% in September 1995. This move, coupled with aggressive intervention in the
foreign exchange markets (aided by the U.S. Treasury), succeeded in weakening
the yen from its high of approximately 80 to one U.S. dollar in April 1995, to
about 108 to one U.S. dollar on April 30, 1996. Lower exchange rates, in turn,
made Japanese products more competitive, thereby stimulating employment and
improving consumer sentiment. As a result, Japanese GDP grew by 0.9% during the
fourth quarter of 1995,4 its strongest showing since 1991. While the yen may
continue to weaken over the near term, it may strengthen over the long term as
the banking situation improves and stronger economic growth causes short-term
rates to rise to more normal levels.
1. Department of Commerce report dated May 30, 1996.
2. A basis point equals one-hundredth of one percent.
3. This number has since been revised downward.
The German economy contracted during the period under review, declining by 0.4%
in the last quarter of 1995, and, according to estimates, by a similar amount in
the first quarter of 1996. As a result of depressed consumer confidence and
spending, a high unemployment rate of 10.3% and low inflation, the Bundesbank
was able to cut its discount rate from 4.0% to an all-time low of 2.5% in an
attempt to stimulate the economy. These extremely low interest rates, along with
the effort to forge a single European currency by 1999, combined to drive down
the value of the mark to a low of 1.5338 marks per U.S. dollar on April 25,
1996. However, even with low interest rates, it is possible that slow growth
will continue through most of 1996.
4. The latest quarter for which information was available as of June 17, 1996.
FRANKLIN TEMPLETON GERMAN GOVERNMENT BOND FUND
Your Fund's Objective:
The Franklin Templeton German Government Bond Fund seeks long-term total return
through investment in a managed portfolio of German government bonds.
Below-average economic growth as experienced by Germany during the period under
review generally tends to encourage lower interest rates, and German bond yields
declined during the first half of this period. However, during the second half,
they rose due to the influence of rising U.S. Treasury yields. The weakness of
the German economy also adversely affected the value of the mark, as the
Bundesbank tried to stimulate growth by cutting the discount rate to 2.5%. Lower
short-term rates can temporarily depress the international value of a currency,
and in this case, the value of the mark dropped by approximately 8.8%, relative
to the U.S. dollar, during the period. Because the fund is 100% invested in
mark-denominated assets and does not hedge its exposure to changes in the
mark/U.S. dollar exchange rate, the decline of the mark led to a decline in the
fund's net asset value, and, as you can see in the Performance Summary on page
10, the fund posted a six-month total return of -4.33%.
During this period, we continued to emphasize two strategies in regard to our
bond holdings. The first strategy maximized our exposure to non-German issuers
of higher-yielding bonds denominated in German marks. Examples in our portfolio
included high-quality bonds issued by the International Bank for Reconstruction
and Development (World Bank), the United Kingdom, and the Kingdom of Denmark. As
part of this strategy, we also invested in bonds of non-federal German
government entities, such as German states and the agencies responsible for
postal operations and highway maintenance. The second strategy involved
increasing the sensitivity of the fund to changes in interest rates when they
appeared to be peaking in the spring. In April 1996, we lengthened the average
maturity of the portfolio from 6.1 years to 6.4 years in an effort to take
advantage of the higher yields available at that time.
Looking forward, we believe that the German government's policy of encouraging
economic growth may eventually be successful and that Germany's interest rates
may begin to rise, helping the mark stabilize versus the U.S. dollar. In our
opinion, however, any rebound in Germany's economy in 1996 may probably be
sluggish enough to pose no immediate risk of higher interest rates and, although
the factors that have led to the recent strength of the U.S. dollar may continue
in the near future, we believe the long-term trend of the U.S. dollar against
the mark may remain downward.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Shareholders should remember that investing in a non-diversified portfolio of
German government obligations involves special risks, such as increased
susceptibility to currency fluctuations, market volatility, and adverse
economic, social and political developments, as discussed in the fund's
prospectus. A non-diversified foreign fund may not be appropriate for all
investors and should not be considered a complete investment program.
This discussion reflects the strategies we employed for the fund during the past
six months, and includes our opinions as of the close of the period. Since
economic and market conditions are constantly changing, our strategies, and our
evaluations, conclusions and decisions regarding portfolio holdings, may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the fund.
Performance Summary
The Franklin Templeton German Government Bond Fund provided a total return of
- -4.33% for the six-month period ended April 30, 1996. 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. However, we
maintain a long-term perspective when managing the fund and we encourage
shareholders to view their investments in a similar manner.
The fund's share price, as measured by net asset value, decreased $1.37 from
$14.31 on October 31, 1995 to $12.94 on April 30, 1996. During this same period,
shareholders received distributions of 78.2 cents ($0.782) per share, of which
36.7 cents ($0.367) represented regular dividend income, 38.5 cents ($0.385)
represented a special year-end dividend distribution, 1.5 cents ($0.015)
represented short-term capital gains, and 1.5 cents ($0.015) represented
long-term capital gains. Based on the maximum offering price of $13.34 on April
30, 1996, and an annualization of April's monthly dividend of 6.0 cents ($0.060)
per share, the fund's distribution rate was 5.40%. 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, 1996
Since
One- Three- Inception
Year Year (12/31/92)
- --------------------------------------------------------------------------------
Cumulative
Total Return1,3 -0.87% 26.30% 34.07%
Average Annual
Total Return2,3 -3.85% 7.02% 8.19%
Value of $10,000
Investment3,4 $9,615 $12,256 $13,001
Distribution Rate:5 5.40%
30-Day Standardized Yield:6 4.30%
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 when you redeem your shares, they 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. These figures represent the value of a hypothetical $10,000 investment in the
fund over the specified periods and include the maximum 3.0% initial sales
charge.
5. Distribution rate is based on the maximum offering price of $13.34 per share
on April 30, 1996, and an annualization of the most recent monthly dividend of
6.0 cents ($0.06) per share.
6. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1996.
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.
Since the fund holds primarily short-term securities whose prices are not highly
variable, most of its total return is based on changes in the value of the
dollar versus the local currencies of countries where we invest, and on net
investment income derived from interest paid by portfolio investments. The six
months covered by this report were a period of unusual strength for the U.S.
dollar, as it gained 8.8% vs. the mark and 3.1% vs. the yen since October 31,
1995. However, through active management of the portfolio, the fund was able to
post a six-month total return for the period of -0.69% (as shown in the
Performance Summary on page 14), despite the weak mark and yen.
Although we use an internal allocation benchmark of one-third weightings each in
the local currency money markets of Germany, Japan and the United States, we
switch our investments between these money markets and others (as described in
the prospectus) when we see an opportunity to improve the fund's performance.
Over the six-month period, we consistently underweighted our exposure to the yen
(reducing its portion of the portfolio from 19.9% of total net assets on October
31, 1995 to 8.0% on April 30, 1996), and increased our Australian dollar
position (from 16.1% to 28.5%), especially toward the end of the period when the
Australian dollar's appreciation was the greatest. During the period, we also
increased the fund's weighting in the U.S. dollar from 24.2% of total net assets
to 32.4%, and reduced the weighting of the mark from 39.8% to 31.1%. At the end
of the period under review, the only material variation from our benchmark
position was the substitution of Australian dollar securities for yen positions.
Looking forward, we believe that once Japanese economic growth resumes, the
yields on Japanese securities may increase from their current record-low levels,
and we anticipate increasing the percentage of these holdings in our portfolio
at that time. We also think that Australian securities could remain attractive
for two reasons. First, the Australian dollar may continue to be supported by
that country's position as an important supplier of raw materials at a time of
heavy worldwide demand for commodities. And second, Australian short-term
interest rates could remain relatively high due to strong internal economic
growth.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Of course, there are 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. A non-diversified foreign fund may not be appropriate for all
investors and should not be considered a complete investment program.
This discussion reflects the strategies we employed for the fund during the past
six months, and includes our opinions as of the close of the period. Since
economic and market conditions are constantly changing, our strategies, and our
evaluations, conclusions and decisions regarding portfolio holdings, may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the fund.
Please note that although the fund's Statement of Investments on page 26 of this
report indicates that the fund held 83.4% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1996, the fund's net exposure to the
U.S. dollar as of that date was only 32.4%. 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 38) 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.
Performance Summary
The Franklin Templeton Global Currency Fund reported a total return of -0.69%
for the six-month period ended April 30, 1996. 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. However, we maintain a
long-term perspective when managing the fund and we encourage shareholders to
view their investments in a similar manner.
The fund's share price, as measured by net asset value, decreased $0.85 from
$13.67 on October 31, 1995 to $12.82 on April 30, 1996. During this same period,
shareholders received distributions of 75.4 cents ($0.754) per share, of which
30.4 cents ($0.304) represented regular dividend income and 45.0 cents ($0.450)
represented a special year-end dividend distribution. Based on the maximum
offering price of $13.22 on April 30, 1996, and an annualization of April's
monthly dividend of 4.7 cents ($0.047) per share, the fund's distribution rate
was 4.27%. 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, 1996
Since
One- Five- Inception
Year Year (06/27/86)
- --------------------------------------------------------------------------------
Cumulative
Total Return1,3 -2.26% 34.00% 112.03%
Average Annual
Total Return2,3 -5.19% 5.38% 7.59%
Value of $10,000
Investment3,4 $9,481 $12,998 $20,561
Distribution Rate:5 4.27%
30-Day Yield:6 3.89%
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 when you redeem your shares, they 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. These figures represent the value of a hypothetical $10,000 investment in the
fund over the specified periods and include the maximum 3.0% initial sales
charge.
5. Distribution rate is based on the maximum offering price of $13.22 per share
on April 30, 1996, and an annualization of the most recent monthly dividend of
4.7 cents ($0.047) per share.
6. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1996.
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.
Since the fund holds primarily short-term securities, whose prices are not
highly variable, most of its total return is based on changes in the value of
the dollar versus the local currencies of countries where we invest, and on net
investment income derived from interest paid by portfolio investments. Periods
of U.S. dollar strength are generally periods of weakness for the fund, and
during the six months covered by this report, the U.S. dollar gained 8.8% vs.
the mark, 9.5% vs. the Swiss franc, and 3.1% vs. the yen. Within this
environment, the fund posted a -5.54% total return for the six-month period, as
shown in the Performance Summary on page 18.
Because our objective is to seek to protect shareholders against the possible
depreciation of the U.S. dollar relative to other currencies, the fund's policy
is to seek to minimize its currency exposure to the U.S. dollar. Although we use
an internal allocation benchmark of one-third weightings each in the local
currency money markets of Germany, Japan and Switzerland, we switch our
investments between these money markets and others (as described in the
prospectus) whenever we see an opportunity to improve the fund's performance.
Over the six-month period, our allocations in German marks and Swiss francs
increased, while the fund's holdings in yen and New Zealand dollars decreased.
However, New Zealand securities remain in the portfolio because of that
government's very tight monetary policy, which has kept short-term rates above
9% even while inflation remains below 2%. At the end of the period under review,
we held 86.5% of our assets in marks, yen and the Swiss franc. The bulk of the
remainder of the fund was in New Zealand dollar-denominated instruments. The
only material variation from our benchmark position was the substitution of New
Zealand and U.S. dollar securities for yen positions.
Looking forward, we believe that once Japanese economic growth resumes, the
yields on Japanese securities may increase from their current record-low levels,
and we anticipate increasing the percentage of these holdings in our portfolio
at that time. We also believe that even though the U.S. dollar may continue to
strengthen in the near future, it should eventually resume its long-term
weakening trend.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Of course, there are 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. A non-diversified foreign fund
may not be appropriate for all investors and should not be considered a complete
investment program.
This discussion reflects the strategies we employed for the fund during the past
six months, and includes our opinions as of the close of the period. Since
economic and market conditions are constantly changing, our strategies, and our
evaluations, conclusions and decisions regarding portfolio holdings, may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the fund.
Please note that although the fund's Statement of Investments on page 28 of this
report indicates that the fund held 69.7% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1996, the fund's net exposure to the
U.S. dollar as of that date was only 4.6%. 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 38) 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.
Performance Summary
The Franklin Templeton Hard Currency Fund reported a total return of -5.54% for
the six-month period ended April 30, 1996. 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. However, we maintain a
long-term perspective when managing the fund and we encourage shareholders to
view their investments in a similar manner.
The fund's share price, as measured by net asset value, decreased $1.13 from
$13.09 on October 31, 1995 to $11.96 on April 30, 1996. During this same period,
shareholders received distributions of 41.9 cents ($0.419) per share, of which
30.9 cents ($0.309) represented regular dividend income and 11.0 cents ($0.11)
represented a special year-end dividend distribution.
During the six months ended April 30, 1996, the fund recognized net foreign
currency losses due to fluctuations in the value of its foreign
currency-denominated securities and foreign currency holdings. Under the
Internal Revenue Code, these losses reduce the fund's investment income
available for distribution to shareholders, which may cause all or a portion of
the total distributions to be characterized as a return of capital at the fund's
year end. In general, return of capital distributions are not taxable. Instead,
they reduce the cost basis of your fund shares, and affect the computation of a
capital gain or loss when you sell your shares.
Based on the maximum offering price of $12.33 on April 30, 1996, and an
annualization of April's monthly dividend of 4.8 cents ($0.048) per share, the
fund's distribution rate was 4.67%. Past performance is not indicative 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, 1996
Since
One- Five- Inception
Year Year (11/17/89)
- --------------------------------------------------------------------------------
Cumulative Total Return1,3 -8.92% 45.48% 75.88%
Average Annual Total Return2,3 -11.65% 7.13% 8.62%
Value of $10,000 Investment3,4 $8,835 $14,108 $17,056
Distribution Rate:5 4.67%
30-Day Yield:6 3.60%
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 when you redeem your shares, they 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. These figures represent the value of a hypothetical $10,000 investment in the
fund over the specified periods and include the maximum 3.0% initial sales
charge.
5. Distribution rate is based on the maximum offering price of $12.33 per share
on April 30, 1996, and an annualization of the most recent monthly dividend of
4.8 cents ($0.048) per share.
6. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1996.
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 money market instruments denominated in three or more of the 10
highest-yielding Major Currencies, as described in the prospectus, and in the
U.S. dollar. The ten countries which were eligible for investment during this
period, and on April 30, 1996, were Sweden, Italy, Spain, Germany, France,
United Kingdom, Netherlands, Australia, New Zealand and Canada. The five largest
allocations, not including the U.S., comprised about 65.9% of the fund's total
net assets and were denominated in the currencies of Australia (21.0%), Canada
(15.8%), the U.K. (10.6%), Spain (10.3%), and Italy (8.2%). 8.1% of the fund's
assets were denominated in U.S. dollars, and we also held smaller positions in
the currencies of France, Germany, the Netherlands, Sweden, and New Zealand.
Since the fund holds primarily short-term securities, whose prices are not
highly variable, most of its total return is based on changes in the value of
the dollar versus the local currencies of countries where we invest, and on net
investment income derived from interest paid by portfolio investments. Of
course, during any given time period, the dollar may strengthen against some
currencies, while weakening against others, and when we see an opportunity to
improve the fund's performance, we switch our investments between the eligible
currencies. During the six months covered by this report, the fund increased its
exposure in Spain, Sweden, Italy, the U.K., Canada, and Australia. We benefited
from the strengthening of Europe's higher-yielding currencies against the U.S.
dollar, as Spain, Italy and Sweden were slow to cut interest rates even though
they continued to experience low inflation. In fact, the Italian lira rallied by
2.0% against the U.S. dollar and continues to be one of the most attractive
markets. In March, we took advantage of a sell-off in the Spanish bond market
following a controversial national election, to increase the funds' exposure
there. The Spanish market has since recovered to pre-election levels. Within
this environment, the fund posted a +1.07% total return for the six-month
period, as shown in the Performance Summary on page 23.
Looking forward, we believe that the currencies of Spain, Sweden, Italy, the
U.K., Canada, and Australia may continue to perform well, and we will look for
opportunities to add to these positions during any periods of market weakness.
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. A non-diversified foreign
fund may not be appropriate for all investors and should not be considered a
complete investment program.
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
This discussion reflects the strategies we employed for the fund during the past
six months, and includes our opinions as of the close of the period. Since
economic and market conditions are constantly changing, our strategies, and our
evaluations, conclusions and decisions regarding portfolio holdings, may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the fund.
Please note that although the fund's Statement of Investments on page 30 of this
report indicates that the fund held 58.8% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1996, the fund's net exposure to the
U.S. dollar as of that date was only 8.1%. 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 38) 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.
Performance Summary
The Franklin Templeton High Income Currency Fund reported a total return of
+1.07% for the six-month period ended April 30, 1996. 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. Of course, we
maintain a long-term perspective when managing the fund and we encourage
shareholders to view their investments in a similar manner.
The fund's share price, as measured by net asset value, decreased $0.75 from
$11.56 on October 31, 1995 to $10.81 on April 30, 1996. During this same period,
shareholders received distributions of 85.7 cents ($0.857) per share, of which
29.2 cents ($0.292) represented regular dividend income and 56.5 cents ($0.565)
represented a special year-end dividend distribution. Based on the maximum
offering price of $11.14 on April 30, 1996, and an annualization of April's
monthly dividend of 4.6 cents ($0.046) per share, the fund's distribution rate
was 4.96%. Of course, past performance is not indicative 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, 1996
Since
One- Five- Inception
Year Year (11/17/89)
- --------------------------------------------------------------------------------
Cumulative
Total Return1,3 3.62% 29.12% 58.83%
Average Annual
Total Return2,3 0.50% 4.60% 6.92%
Value of $10,000
Investment3,4 $10,050 $12,524 $15,403
Distribution Rate:5 4.96%
30-Day Yield:6 4.13%
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 when you redeem your shares, they may be worth more or less than their
original cost. Past performance is not predictive of future results.
4. These figures represent the value of a hypothetical $10,000 investment in the
fund over the specified periods and include the maximum 3.0% initial sales
charge.
5. Distribution rate is based on the maximum offering price of $11.14 per share
on April 30, 1996, and an annualization of the most recent monthly dividend of
4.6 cents ($0.046) per share.
6. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1996. The fund's manager
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 4.02%. The fee
waiver may be discontinued at any time.
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments in Securities and Net Assets, April 30, 1996
(unaudited)
Face Value
Country* Amount Franklin Templeton German Government Bond Fund (Note 1)
- -----------------------------------------------------------------------------------------------------------------
Long Term Investments 96.5%.
Eurobonds 25.0%
<S> <C> <C> <C>
DD 900,000 Europe Economic Community, 6.50%, 3/10/00 ............................... $ 619,503
DD 500,000 European Investment Bank, 7.75%, 1/26/05 ................................ 355,766
DD 850,000 Government of Australia, 7.25%, 5/03/07 ................................. 584,531
DD 925,000 Inter-American Development Bank, 6.75%, 4/29/03 ......................... 625,833
International Bank for Reconstruction and Development:
DD 600,000 6.125%, 9/27/02 ........................................................ 398,889
DD 750,000 7.125%, 4/12/05 ........................................................ 513,656
DD 800,000 Japan Finance Corp. Muni Enterprises, 7.75%, 10/28/04 ................... 567,919
DD 1,225,000 Kingdom of Denmark, 6.125%, 4/15/98 ..................................... 833,608
DD 500,000 Osterreich Kontrollbank, 7.00%, 8/08/05 ................................. 338,451
DD 800,000 United Kingdom, 7.125%, 10/28/97 ........................................ 548,896
-------------
Eurobonds (Cost $5,227,257).............................................. 5,387,052
-------------
German Bonds 71.5%
DD 800,000 Baden-Wuerttemburg Finance NV, 6.50%, 9/15/08 ........................... 510,944
DD 750,000 Bundesland Baden-Wuerttemberg, 7.50%, 10/22/04 .......................... 524,338
DD 1,250,000 Deutsche Bundesbahn, 9.00%, 12/01/00 .................................... 937,194
DD 1,000,000 Deutsche Bundespost, 7.50%, 12/02/02 .................................... 705,390
Freie Hansestadt Bremen:
DD 800,000 6.25%, 2/13/97 ......................................................... 535,250
DD 500,000 8.50%, 4/17/98 ......................................................... 353,806
DD 1,500,000 Freie Und Hansestadt Hamburg, 6.00%, 7/28/03 ............................ 965,371
Freistaat Bayern:
DD 100,000 6.50%, 10/01/96 ........................................................ 66,057
DD 900,000 6.00%, 3/20/97 ......................................................... 602,097
DD 1,300,000 Freistaat Sachsen Saxony, 6.125%, 12/10/03 .............................. 848,546
Federal Republic of Germany:
DD 1,670,000 7.375%, 1/03/05 ........................................................ 1,171,673
DD 1,255,000 6.875%, 5/12/05 ........................................................ 852,465
DD 1,175,000 6.25%, 1/04/24 ......................................................... 690,797
DD 650,000 KFW International Finance, 7.75%, 10/06/04 .............................. 460,372
DD 700,000 Kreditanst Wiederaufbau, 6.00%, 9/02/96 ................................. 461,254
DD 1,400,000 Land Berlin, 6.75%, 8/25/99 ............................................. 970,533
DD 800,000 Land Hessen, 6.00%, 6/18/97 ............................................. 536,295
Land Niedersachsen:
DD 1,000,000 6.25%, 9/15/03 ......................................................... 658,935
DD 150,000 7.50%, 1/20/05 ......................................................... 105,309
Land Sachsen Anhalt:
DD 800,000 7.50%, 10/28/04 ......................................................... 555,635
DD 550,000 7.25%, 4/20/05 .......................................................... 376,429
German Bonds (cont.)
DD 890,000 Landesbank Hessen Thueringen Girozentrale, 6.25%, 4/01/98 ............... $ 605,933
DD 890,000 Landwirt Schaftliche Rentenbank, 7.50%, 10/15/97......................... 610,585
Nordrhein - Westfalen:
DD 750,000 6.125%, 4/17/97......................................................... 501,797
DD 370,000 6.25%, 3/18/98 ......................................................... 252,267
DD 500,000 Rheinland-Pfalz, 6.50%, 3/19/03 ......................................... 332,898
DD 290,000 Treuhandanstalt, 7.375%, 12/02/02 ....................................... 205,245
-------------
German Bonds (Cost $15,392,779).......................................... 15,397,415
-------------
Total Long Term Investments (Cost $20,620,036)........................... 20,784,467
Other Assets and Liabilities, Net3.5%.................................... 745,277
-------------
Net Assets100.0%......................................................... $21,529,744
=============
At April 30, 1996, the net unrealized appreciation based on the cost of
investments for income tax purposes of $20,620,036 was as follows:
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost............................ $ 644,806
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value............................ (480,375)
-------------
Net unrealized appreciation............................................ $ 164,431
=============
*Securities traded in currency of country indicated. See page 31 for country
legend.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments in Securities and Net Assets, April 30, 1996
(unaudited)
Face Value
Country* Amount Franklin Templeton Global Currency Fund (Note 1)
- -----------------------------------------------------------------------------------------------------------------
aLong Term Investments 5.0%
Foreign Government Securities - Floating Rate Notes
<S> <C> <C> <C>
DD 4,150,000 Government of Spain, floating rate note, 3.688%, 6/29/02
Total Long Term Investments (Cost $2,728,125).................... $ 2,710,176
-------------
a Short Term Investments 92.0%
Corporate Bonds 2.7%
DD 2,200,000 b Credit Foncier, floating rate note, semi-annual calls, 3.406%, 7/19/96
Total Corporate Bonds (Cost $1,217,749).......................... 1,437,510
-------------
Foreign Government Securities - Floating Rate Notes 2.4%
DD 2,000,000 b Government of Belgium, floating rate note, semi-annual calls,
4.063%, 3/24/00
Total Foreign Government Securities - Floating Rate Notes
(Cost $1,282,288)............................................... 1,303,496
-------------
Government Securities 12.3%
DD 1,750,000 b European Investment Bank, floating rate note, annual call, 3.625%, 3/25/98 1,141,988
DD 3,610,000 Federal Republic of Germany, Series 86, 5.75%, 6/20/96 ............... 2,366,018
US 3,180,000 U.S. Treasury Bills, 4.83% to 5.02% with maturities to 6/06/96 ....... 3,171,032
-------------
Total Government Securities (Cost $6,774,539).................... 6,679,038
-------------
U.S. Government Agencies 74.6%
US 6,610,000 Federal Farm Credit Bank, 5.17% to 5.23% with maturities to 6/03/96 .. 6,583,929
US 14,610,000 Federal Home Loan Mortgage Corp., 5.17% to 5.25% with maturities
to 3/31/96 .......................................................... 14,556,522
US 19,265,000 Federal National Mortgage Assn., 5.04% to 5.22% with maturities
to 9/09/96 .......................................................... 19,261,904
-------------
Total U.S. Government Agencies (Cost $40,399,171)............... 40,402,355
-------------
Total Short Term Investments (Cost $49,673,747)................. 49,822,399
-------------
Total Investments before Repurchase Agreements
(Cost $52,401,872)97.0%........................................ 52,532,575
-------------
c Receivables from Repurchase Agreements3.6%
Bank of America, 5.30%, 5/01/96, (Maturity Value $1,943,286)
US 2,000,000 Collateral: U.S. Treasury Bill, 5.18%, 9/20/96 ....................... 1,943,000
-------------
Total Investments (Cost $54,344,872) 100.6%.................... 54,475,575
Other Assets and Liabilities, Net (0.6)%....................... (348,494)
-------------
Net Assets 100.0%.............................................. $54,127,081
=============
At April 30, 1996, the net unrealized appreciation based on the cost of
investments for income tax purposes of $54,344,872 was as follows:
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost......................... $ 247,844
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value......................... (117,141)
-------------
Net unrealized appreciation......................................... $ 130,703
=============
*Securities traded in currency of country indicated. See page 31 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 dates or upon maturity.
bFloating rate notes with an embedded put and/or call feature.
cFace amount for repurchase agreements is for the underlying collateral.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBALTRUST
Statement of Investments in Securities and Net Assets, April 30, 1996
(unaudited)
Face Value
Country* Amount Franklin Templeton Hard Currency Fund (Note 1)
- -----------------------------------------------------------------------------------------------------------------
aLong Term Investments 4.4%
Corporate Bonds 3.2%
<S> <C> <C> <C>
SW 3,500,000 General Electric Credit Corp., floating rate note, 2.155%, 8/05/96 . $ 2,819,057
JP 100,000,000 Inter-American Development Bank, floating rate note, 1.125%, 6/19/98 957,218
-------------
Total Corporate Bonds - Floating Rate Notes
(Cost $3,616,813).................................................. 3,776,275
-------------
Foreign Government Securities - Floating Rate Notes 1.1%
JP 135,000,000 Government of Italy, Tranch 3, floating rate note, 0.578%, 7/26/99
Total Foreign Government Securities - Floating Rate Notes
(Cost $1,392,599)............................................ 1,290,631
-------------
Government Securities .1%
US 25,000 U.S. Treasury Note, 6.50%, 8/15/97
Total Government Securities (Cost $25,605).......................... 25,191
-------------
Total Long Term Investments (Cost $5,035,017)....................... 5,092,097
-------------
a Short Term Investments 91.8%
Bonds 16.7%
DD 2,750,000 b Credit Foncier, floating rate note, semi-annual calls, 3.406%, 7/19/96 1,796,888
JP 1,650,000 b European Investment Bank, floating rate note, semi-annual calls,
3.713%, 10/23/98 .................................................. 1,074,414
DD 15,025,000 Federal Republic of Germany, Series 86, 5.75%, 6/20/96 ............. 9,847,486
DD 10,340,000 Federal Republic of Germany, Bundesobl Series 97, 8.50%, 9/20/96 ... 6,887,028
-------------
Total Bonds (Cost $20,550,193)................................. 19,605,816
-------------
Foreign Government Securities - Floating Rate Notes 2.6%
DD 4,600,000 b Government of Belgium, floating rate note, semi-annual calls,
4.063%, 3/15/00
Total Foreign Government Securities - Floating Rate Notes
(Cost $3,040,367)............................................. 2,998,040
-------------
Government Securities 8.9%
NZ 11,379,000 New Zealand Treasury Bills, 8.57% to 8.70% with maturities to 6/19/96 7,771,123
US 2,640,000 U.S. Treasury Bills, 4.75% to 4.99% with maturities to 6/06/96 ..... 2,628,249
-------------
Total Government Securities (Cost $10,256,740)................. 10,399,372
-------------
U.S. Government Agencies 63.6%
US 15,680,000 Federal Farm Credit Bank, 5.18% to 5.29% with maturities to 7/01/96 15,648,388
US 25,800,000 Federal Home Loan Bank, 5.15% to 5.17% with maturities to 5/28/96 .. 25,708,498
U.S. Government Agencies (cont.)
US 8,710,000 Federal Home Loan Mortgage Corp., 5.17%, 5/13/96 ................... $ 8,694,845
US 24,380,000 Federal National Mortgage Assn., 5.04% to 5.64% with maturities
to 9/09/96 ........................................................ 24,360,332
-------------
Total U.S. Government Agencies (Cost $74,406,716).............. 74,412,063
-------------
Total Short Term Investments (Cost $108,254,016)............... 107,415,291
-------------
Total Investments before Repurchase Agreements
(Cost $113,289,033) 96.2%.................................... 112,507,388
-------------
c Receivables from Repurchase Agreements 3.9%
Bank of America, 5.30%, 5/01/96, (Maturity Value $4,597,677)
US 4,730,000 Collateral: U.S. Treasury Bill, 5.058%, 6/20/96 .................... 4,597,000
-------------
Total Investments (Cost $117,886,033) 100.1%.................. 117,104,388
Other Assets and Liabilities, Net (0.1)%...................... (115,678)
-------------
Net Assets 100.0%............................................. $116,988,710
=============
At April 30, 1996, the net unrealized depreciation based on the cost of
investments for income tax purposes of $117,886,033 was as follows:
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost....................... $ 351,976
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value....................... (1,133,621)
-------------
Net unrealized depreciation....................................... $ (781,645)
=============
*Securities traded in currency of country indicated. See page 31 for country
legend.
aCertain 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 dates or upon maturity.
bFloating rate notes with an embedded put and/or call feature.
cFace amount for repurchase agreements is for the underlying collateral.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments in Securities and Net Assets, April 30, 1996
(unaudited)
Face Value
Country* Amount Franklin Templeton High Income Currency Fund (Note 1)
- -----------------------------------------------------------------------------------------------------------------
Long Term Investments 7.1%
Foreign Government Securities - Floating Rate Notes
<S> <C> <C> <C>
UK 460,000 United Kingdom, floating rate note, 6.325%, 3/11/99
Total Long Term Investments (Cost $716,135)..................... $ 692,761
-------------
a Short Term Investments 92.8%
Time Deposit 2.7%
IT 408,370,240 JP Morgan & Co. Inc., 9.15%, 5/03/96 (Cost $261,106)................. 261,637
-------------
Government Securities 58.4%
CA 690,000 Canada Treasury Bill, 5.11%, 6/27/96 ................................ 502,958
NL 1,400,000 Government of Netherland, 6.00%, 5/15/96 ............................ 817,450
ES 65,000,000 Government of Spain, 8.30%, 7/26/96 ................................. 502,052
IT 885,000,000 Italy Treasury Bill, 7.689%, 11/29/96 ............................... 539,026
SE 5,000,000 Sweden Treasury Bills, 8.16% to 8.77% with maturities to 11/20/96 ... 714,595
US 2,651,000 U.S. Treasury Bills, 4.83% to 4.90% with maturities to 6/06/96 ...... 2,647,536
-------------
Total Government Securities (Cost $5,814,012)........................ 5,723,617
-------------
U.S. Government Agencies 31.7%
US 300,000 Federal Farm Credit Bank, 5.22%, 5/03/96 ............................ 299,913
US 500,000 Federal Home Loan Bank, 5.25%, 5/16/96 .............................. 498,905
US 300,000 Federal Home Loan Mortgage Corp., 5.17%, 5/22/96 .................... 299,082
US 2,015,000 Federal National Mortgage Assn., 5.22% to 5.64% with maturities to 9/09/96
2,011,177
-------------
Total U.S. Government Agencies (Cost $3,109,122)................ 3,109,077
-------------
Total Short Term Investments (Cost $9,184,240).................. 9,094,331
-------------
Total Investments (Cost $9,900,375) 99.9%...................... 9,787,092
Other Assets and Liabilities, Net 0.1%......................... 6,902
Net Assets 100.0%.............................................. $9,793,994
=============
At April 30, 1996, the net unrealized depreciation based on the cost of
investments for income tax purposes of $9,900,375 was as follows:
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost........................ $ 10,349
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value........................ (123,632)
-------------
Net unrealized depreciation........................................ $ (113,283)
=============
*Securities traded in currency of country indicated. See page 31 for country
legend.
aCertain 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 dates or upon maturity.
The accompanying notes are an integral part of these financial statements.
</TABLE>
FRANKLIN TEMPLETON GLOBALTRUST
Statement of Investments in Securities and Net Assets, April 30, 1996
(unaudited) (cont.)
COUNTRY LEGEND:
CA - Canada
DD - Germany
ES - Spain
IT - Italy
JP - Japan
NL - Netherlands
NZ - New Zealand
SE - Sweden
SW - Switzerland
UK - United Kingdom
US - United States
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements
Statements of Assets and Liabilities
April 30, 1996 (unaudited)
Franklin Templeton Franklin Franklin Franklin
German Templeton Templeton Templeton
Government Global Hard High Income
Bond Fund Currency FundCurrency FundCurrency Fund
---------- -------- --------- --------
Assets:
Investment in Securities:
<S> <C> <C> <C> <C>
At identified cost....................................... $20,620,036 $52,401,872 $113,289,033 $9,900,375
========== ======== ========= ========
At value................................................... $20,784,467 $52,532,575 $112,507,388 $9,787,092
Receivables from repurchase agreements, at value and cost. -- 1,943,000 4,597,000 --
Foreign currencies (cost $19,769)......................... 19,842 -- -- --
Cash...................................................... -- 92,942 -- 36,813
Receivables:
Investment securities sold................................. 289,726 -- -- --
Interest................................................... 608,922 199,789 1,009,478 65,536
Capital shares sold........................................ 184,826 44,207 988,929 20,763
Net unrealized gain on forward foreign currency contract (Note 2) 255 -- -- --
Unamortized organization cost (Note 3).................... 12,801 -- -- --
Receivable from affiliates................................ 5,833 -- -- 7,375
---------- -------- --------- --------
Total assets............................................... 21,906,672 54,812,513 119,102,795 9,917,579
---------- -------- --------- --------
Liabilities:
Payables:
Capital shares repurchased................................. 194,522 317,491 481,321 7,969
Management fees............................................ 10,074 29,208 69,412 11,914
Distribution fees.......................................... 26,127 101,493 321,064 22,589
Shareholder servicing costs................................ 1,121 3,385 6,800 1,435
Accrued expenses and other liabilities.................... 72,272 74,722 158,197 50,175
Net unrealized loss on forward foreign currency contract (Note 2) -- 159,133 1,031,067 29,503
U.S. cash overdraft....................................... 72,812 -- 46,224 --
---------- -------- --------- --------
Total liabilities.......................................... 376,928 685,432 2,114,085 123,585
---------- -------- --------- --------
Net assets, at value....................................... $21,529,744 $54,127,081 $116,988,710 $9,793,994
========== ======== ========= ========
Net assets consist of:
Undistributed net investment income (loss)................ $ 1,505 $ (567,403) $ 13,581 $ (77,221)
Unrealized appreciation (depreciation) on investments and translation
of assets and liabilities denominated in foreign currencies 160,542 (35,303) (1,850,267) (145,987)
Undistributed net realized gain (loss) from investments and foreign
currency transactions..................................... (180,753) (884,522) (10,172,396) 49,291
Capital shares............................................ 16,639 42,216 97,842 9,064
Additional paid-in capital................................ 21,531,811 55,572,093 128,899,950 9,958,847
---------- -------- --------- --------
Net assets, at value....................................... $21,529,744 $54,127,081 $116,988,710 $9,793,994
========== ======== ========= ========
Shares outstanding......................................... 1,663,851 4,221,585 9,784,181 906,397
========== ======== ========= ========
Net asset value per share.................................. $12.94 $12.82 $11.96 $10.81
========== ======== ========= ========
Maximum offering price..................................... $13.34 $13.22 $12.33 $11.14
========== ======== ========= ========
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
($21,529,744/1,663,851)................................... $12.94
==========
Maximum offering price (100/97 of $12.94).................. $13.34
==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (cont.)
Statements of Operations
for the six months ended April 30, 1996 (unaudited)
Franklin Templeton
German Franklin Franklin Franklin Templeton
Government Templeton GlobalTempleton Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
---------- ---------- --------- ----------
Investment income:
<S> <C> <C> <C> <C>
Interest........................................... $ 770,569 $1,509,483 $3,687,277 $323,342
---------- ---------- --------- ----------
Expenses:
Management fees (Note 7)........................... 66,305 181,862 405,992 33,442
Distribution fees (Note 7)......................... 20,113 84,082 250,023 17,910
Shareholder servicing costs........................ 9,900 18,000 44,000 6,500
Custody fees....................................... -- -- 5,000 --
Audit fees......................................... 4,450 2,750 5,000 3,500
Registration fees and insurance.................... 3,632 -- 23,200 3,100
Reports to shareholders............................ 4,350 8,057 17,500 500
Amortization of organization cost (Note 3)......... 3,821 -- -- --
Trustees' fees and expenses........................ 2,300 4,500 5,000 4,000
Other.............................................. 42 625 696 570
Payments from Manager (Note 7)..................... -- -- -- (5,360)
---------- ---------- --------- ----------
Total expenses...................................... 114,913 299,876 756,411 64,162
---------- ---------- --------- ----------
Net investment income............................... 655,656 1,209,607 2,930,866 259,180
---------- ---------- --------- ----------
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments......................................... (69,687) (220,967) (2,920,985) (119,090)
Foreign currency transactions....................... (101,106) (455,121) (6,367,355) 155,442
---------- ---------- --------- ----------
(170,793) (676,088) (9,288,340) 36,352
---------- ---------- --------- ----------
Net unrealized depreciation on:
Investments......................................... (1,530,678) (975,387) (1,022,104) (164,172)
Foreign currency translation of other assets
and liabilities.................................... (10,849) (3,406) (17,129) (33,307)
---------- ---------- --------- ----------
(1,541,527) (978,793) (1,039,233) (197,479)
---------- ---------- --------- ----------
Net realized and unrealized loss.................... (1,712,320) (1,654,881) (10,327,573) (161,127)
---------- ---------- --------- ----------
Net increase (decrease) in net assets resulting
from operations.................................... $(1,056,664) $ (445,274) $ (7,396,707) $ 98,053
========== ========== ========= ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended April 30, 1996 (unaudited)
and the year ended October 31, 1995
Franklin Templeton Franklin Templeton
German Government Bond Fund Global Currency Fund
--------------------- ---------------------
Six months ended Six months ended
April 30, 1996 Year ended April 30, 1996 Year ended
(unaudited) October 31, 1995 (unaudited) October 31, 1995
---------- --------- ---------- ---------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income.................................. $ 655,656 $ 920,943 $ 1,209,607 $ 3,091,916
Net realized gain (loss) from investments and
foreign currency transactions......................... (170,793) 713,330 (676,088) 2,083,056
Net unrealized appreciation (depreciation) on
investments and translation of assets and liabilities
denominated in foreign currencies .................... (1,541,527) 1,059,514 (978,793) (2,010,845)
---------- --------- ---------- ---------
Net increase (decrease) in net assets resulting
from operations....................................... (1,056,664) 2,693,787 (445,274) 3,164,127
Distributions to shareholders from:
Undistributed net investment income................... (1,314,913) (1,355,870) (3,240,223) (5,196,532)
Net realized capital gains............................ (52,040) -- -- --
Increase (decrease) in net assets from capital share
transactions (Note 4)................................. (159,930) 9,539,172 (2,129,254) 5,876,339
---------- --------- ---------- ---------
Net increase (decrease) in net assets.................. (2,583,547) 10,877,089 (5,814,751) 3,843,934
Net assets:
Beginning of period................................... 24,113,291 13,236,202 59,941,832 56,097,898
---------- --------- ---------- ---------
End of period......................................... $21,529,744 $24,113,291 $54,127,081 $59,941,832
========== ========= ========== =========
Accumulated undistributed net investment income included in net assets:
Beginning of period.................................... $ 660,762 $ 56,449 $ 1,463,213 $ 1,263,410
========== ========= ========== =========
End of period.......................................... $ 1,505 $ 660,762 $ (567,403) $ 1,463,213
========== ========= ========== =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (cont.)
Statements of Changes in Net Assets (cont.)
for the six months ended April 30, 1996 (unaudited)
and the year ended October 31, 1995
Franklin Templeton Franklin Templeton
Hard Currency Fund High Income Currency Fund
---------------------- ---------------------
Six months ended Six months ended
April 30, 1996 Year ended April 30, 1996 Year ended
(unaudited) October 31, 1995 (unaudited) October 31, 1995
---------- ---------- ---------- ----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income............................... $ 2,930,866 $ 4,578,175 $ 259,180 $ 709,372
Net realized gain (loss) from investments and
foreign currency transactions...................... (9,288,340) 1,212,480 36,352 590,112
Net unrealized depreciation on investments and
translation of assets and liabilities denominated
in foreign currencies.............................. (1,039,233) (1,732,815) (197,479) (320,372)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations.......................... (7,396,707) 4,057,840 98,053 979,112
Distributions to shareholders from undistributed
net investment income.............................. (4,166,213) (9,027,253) (802,195) (1,147,936)
Increase (decrease) in net assets from capital share
transactions (Note 4).............................. (3,537,377) 75,829,921 (404,050) (5,807,267)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets............... (15,100,297) 70,860,508 (1,108,192) (5,976,091)
Net assets:
Beginning of period................................ 132,089,007 61,228,499 10,902,186 16,878,277
---------- ---------- ---------- ----------
End of period...................................... $116,988,710 $132,089,007 $ 9,793,994 $10,902,186
========== ========== ========== ==========
Accumulated undistributed net investment income included in net assets:
Beginning of period................................. $ 1,248,928 $ (180,084) $ 465,794 $ 18,961
========== ========== ========== ==========
End of period....................................... $ 13,581 $ 1,248,928 $ (77,221) $ 465,794
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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.
The German Bond Fund seeks long-term total return through investment in a
managed portfolio of German government bonds. The 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 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 High Income 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.
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 Valuation:
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 sale price of the day or, if there is no such reported sale,
within the range of the most recent quoted bid and asked 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 on the over-the-counter market and on a securities exchange are
valued according to the broadest and most representative market as determined by
the Franklin Advisers, Inc. Other securities for which market quotations are not
available, if any, are valued in accordance with procedures established by the
Board of Trustees.
The value of a foreign security is determined as of the close of trading on the
foreign exchange on which it is traded or as of the close of trading on the New
York Stock Exchange, if that is earlier, and that value is then converted into
its U.S. dollar equivalent at the foreign exchange rate in effect at noon, New
York time, on the day the value of the foreign security is determined. If no
sale is reported at that time, the mean between the current bid and asked price
is used. Occasionally, events which affect the values of foreign securities and
foreign exchange rates may occur between the times at which they are determined
and the close of the exchange and will, therefore, not be reflected in the
computation of the Fund's net asset value, unless material. If events which
materially affect the value of these foreign securities occur during such
period, then these securities will be valued in accordance with procedures
established by the Board of Trustees.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
A. Security Valuation: (cont.)
The fair values of securities restricted as to resale, if any, are determined
following procedures 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 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.
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 and premium, if any, are amortized as required by the Internal Revenue
Code.
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.
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of realized gain/loss on foreign currency
transactions.
E. Expense Allocation:
Common expenses incurred by the Trust are allocated among the Funds based on the
ratio of net assets of each Fund to the combined net assets. In all other
respects, expenses are charged to each Fund as incurred on a specific
identification basis.
F. 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 actually received or paid. Net unrealized appreciation
(depreciation) on translation of assets and liabilities denominated in foreign
currencies arise from changes in the value of assets and liabilities other than
investments in securities at the end of the period, resulting from changes in
exchange rates.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
G. Repurchase Agreements:
The Funds, through its custodian, receives delivery of the underlying
securities, whose market is required to be at least 102% of the resale price at
the time of purchase. The Funds investment advisor, Franklin Advisers, Inc., is
responsible for determining that the value of these underlying securities
remains at least equal to the resale price.
H. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during. Actual
results could differ from those estimates.
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 objective of minimizing the
risk to the Funds from adverse changes in the relationship between currencies or
to enhance Fund value. The Funds may also enter into a forward contract in
relation to a security denominated in a foreign currency or when it anticipates
receipt in a foreign currency of dividends or interest payments in order to lock
in the U.S. dollar price of a security or the U.S. dollar equivalent of such
dividend or interest payments.
Any gain or loss realized from a foreign currency contract is recorded as a
realized gain or loss from investments. See the accompanying Statement of
Operations for the Funds' total realized gains or losses from investments for
the six months ended April 30, 1996.
The Funds segregated sufficient cash, cash equivalents or readily marketable
debt securities as collateral 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, 1996, the German Bond 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> <C> <C> <C>
153,240 Deutschemark.................... U.S. $100,000 5/29/96 U.S. $294
==========
Contracts to Sell
--------------------------------
152,850 Deutschemark.................... U.S. $100,000 5/29/96 (39)
========== ----
Net unrealized appreciation .................................................. U.S. $255
========
</TABLE>
<TABLE>
<CAPTION>
2. FORWARD FOREIGN CURRENCY CONTRACTS (cont.)
As of April 30, 1996, the Global Currency Fund had the following forward foreign
currency contracts outstanding:
In Unrealized
Contracts to Buy Exchange for Settlement Date Gain (Loss)
-------------------------------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
1,592,000,000 Japanese yen............... U.S. $14,945,550 5/09/96 U.S. $294,376
2,800,000 Australian dollar.......... 2,184,700 5/09/96 14,165
16,700,000 Australian dollar.......... 13,206,360 5/09/96 (91,699)
1,526,000 Deutschemark............... 1,003,611 5/13/96 (5,794)
1,526,000 Deutschemark............... 998,195 5/13/96 (378)
5,812,000 Deutschemark............... 3,852,834 5/13/96 (52,498)
8,250,000 Deutschemark............... 5,471,113 5/22/96 (73,786)
850,000 Deutschemark............... 559,376 5/24/96 (3,223)
5,286,000 Deutschemark............... 3,466,684 5/29/96 (7,055)
--------- --------
U.S. $45,688,423 74,108
========= --------
Contracts to Sell
-----------------------------
<S> <C> <C> <C> <C> <C>
297,000,000 Japanese yen............... U.S. $ 2,750,255 5/09/96 (92,872)
760,000 Deutschemark............... 500,741 5/09/96 3,910
760,000 Deutschemark............... 500,197 5/09/96 3,367
430,600,000 Japanese yen............... 3,993,323 5/13/96 (131,146)
415,000,000 Japanese yen............... 3,848,294 5/13/96 (126,752)
1,526,000 Deutschemark............... 1,019,168 5/13/96 21,351
1,526,000 Deutschemark............... 1,013,953 5/13/96 16,137
2,760,000 Deutschemark............... 1,830,239 5/13/96 25,537
3,052,000 Deutschemark............... 2,037,791 5/13/96 42,157
850,000 Deutschemark............... 561,223 5/24/96 5,070
--------- --------
U.S. $18,055,184 (233,241)
========= --------
Net unrealized depreciation................................................... U.S. $(159,133)
========
As of April 30, 1996, the Hard Currency Fund had the following forward foreign
currency contracts outstanding:
In Unrealized
Contracts to Buy Exchange for Settlement Date Gain (Loss)
----------------------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
2,939,000,000 Japanese yen............. U.S. $27,794,065 5/07/96 U.S. $ 332,217
1,016,500,000 Japanese yen............. 9,541,913 5/07/96 186,010
12,700,000 Deutschemark............. 8,593,274 5/09/96 (290,971)
47,000,000 Swiss francs............. 38,342,307 5/22/96 (399,670)
3,820,000 New Zealand dollars...... 2,616,700 5/22/96 264
17,630,000 Deutschemark............. 11,691,602 5/22/96 (157,680)
--------- ---------
U.S. $98,579,861 (329,830)
========= ---------
2. FORWARD FOREIGN CURRENCY CONTRACTS (cont.)
In Unrealized
Contracts to Sell Exchange for Settlement Date Gain (Loss)
----------------------------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
660,300,000 Japanese yen............. U.S. $ 6,086,275 5/07/96 U.S. $ (232,807)
500,000,000 Japanese yen............. 4,630,273 5/07/96 (154,736)
1,260,000,000 Japanese yen............. 11,744,529 5/07/96 (313,694)
--------- ---------
U.S. $22,461,077 (701,237)
========= ---------
Net unrealized depreciation................................................. U.S. $(1,031,067)
=========
As of April 30, 1996, the High Income Fund had the following forward foreign
currency contracts outstanding:
In Unrealized
Contracts to Buy Exchange for Settlement Date Gain (Loss)
-------------------------------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
230,000 British pounds................ U.S. $ 349,600 5/08/96 U.S. $ (3,168)
2,600,000 Australian dollars............ 2,056,080 5/09/96 (14,276)
1,040,000 French francs................. 206,587 5/09/96 (5,248)
62,500,000 Spanish pesos................. 505,132 5/10/96 (14,112)
1,410,000 Canadian dollars.............. 1,040,590 5/21/96 (4,780)
1,100,000 New Zealand dollars........... 753,500 5/22/96 76
730,000 Deutschemarks................. 481,213 5/28/96 (3,464)
--------- --------
U.S. $5,392,702 (44,972)
========= --------
Contracts to Sell
--------------------------------
<S> <C> <C> <C> <C> <C>
700,000 Netherland guilders........... U.S. $ 424,242 5/08/96 15,469
========= --------
Net unrealized depreciation................................................... U.S. $(29,503)
========
</TABLE>
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.
<TABLE>
<CAPTION>
4. TRUST SHARES
At April 30, 1996 there were an unlimited number of $.01 par value shares
authorized. Transactions in each of the Fund's shares for the six months ended
April 30, 1996 and the year ended October 31, 1995 were as follows:
Franklin Templeton German Franklin Templeton
Government Bond Fund Global Currency Fund
Shares Amount Shares Amount
-------- -------- -------- --------
Six Months Ended April 30, 1996
<S> <C> <C> <C> <C>
Shares sold.......................................... 505,244 $ 6,961,431 258,602 $ 3,372,197
Shares issued in reinvestment of distributions....... 78,790 1,079,972 210,153 2,728,628
Shares redeemed...................................... (605,230) (8,201,333) (631,228) (8,230,079)
-------- ---------- -------- ----------
Net decrease.......................................... (21,196) $ (159,930) (162,473) $ (2,129,254)
======== ========== ======== ==========
Year Ended October 31, 1995
Shares sold.......................................... 1,715,926 $23,740,110 1,387,801 $19,437,877
Shares issued in reinvestment of distributions....... 80,172 1,043,651 322,443 4,365,414
Shares redeemed...................................... (1,109,204) (15,244,589) (1,293,014) (17,926,952)
-------- ---------- -------- ----------
Net increase.......................................... 686,894 $ 9,539,172 417,230 $ 5,876,339
======== ========== ======== ==========
Franklin Templeton Franklin Templeton
Hard Currency Fund High Income Currency Fund
--------------------- ------------------
Shares Amount Shares Amount
-------- ---------- ------- ---------
Six Months Ended April 30, 1996
<S> <C> <C> <C> <C>
Shares sold............................................ 3,741,538 $ 46,784,703 90,951 $ 993,690
Shares issued in reinvestment of distributions......... 258,783 3,246,461 52,893 571,576
Shares redeemed........................................ (4,305,884) (53,568,541) (180,834) (1,969,316)
-------- ---------- ------- ---------
Net decrease............................................ (305,563) $ (3,537,377) (36,990) $ (404,050)
======== ========== ======= =========
Year Ended October 31, 1995
Shares sold............................................ 10,970,103 $146,986,739 158,620 $1,797,529
Shares issued in reinvestment of distributions......... 547,399 6,980,135 66,310 738,551
Shares redeemed........................................ (5,816,955) (78,136,953) (737,848) (8,343,347)
-------- ---------- ------- ---------
Net increase (decrease)................................. 5,700,547 $ 75,829,921 (512,918) $(5,807,267)
======== ========== ======= =========
</TABLE>
<TABLE>
<CAPTION>
5. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At October 31, 1995, for tax purposes, the Funds had capital loss carryovers as
follows:
Franklin Templeton Franklin Templeton
German Government Franklin Templeton Franklin Templeton High Income
Bond Fund Global Currency Fund Hard Currency Fund Currency Fund
------------- -------------- ------------- ------------
Capital loss carryovers expiring in:
<S> <C> <C> <C> <C>
2001.................................. -- $ 35,182 $301,642 --
2002.................................. -- -- 271 --
2003.................................. -- 173,253 582,143 --
------------- -------------- ------------- ------------
-- $208,435 $884,056 --
============= ============== ============= ============
</TABLE>
<TABLE>
<CAPTION>
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, 1996, were as follows:
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.............................. $5,333,587 -- $25,605 --
============= ============== ============= ============
Sales.................................. $4,169,410 -- $4,990,200 --
============= ============== ============= ============
</TABLE>
7. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Under the terms of a management agreement, Franklin Advisers, Inc. (Advisers),
provides investment advice, administrative services, 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 Bond Fund.
Under a subadvisory agreement, Templeton Investment Counsel, Inc. ("TICI" or the
"Subadviser"), an indirect subsidiary of Templeton Worldwide, Inc. (Worldwide),
which is a direct, wholly-owned subsidiary of Franklin Resources, Inc.
(Resources) receives from the Advisers 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, 1996, the Advisers
agreed in advance to reduce its managements fees 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...................... -- -- -- $5,360
============= ============== ============= ============
</TABLE>
Pursuant to a shareholder servicing agreement with Franklin Templeton Investor
Services, Inc. (Investor Services), the Trust pays costs on a per shareholder
account basis. Such costs incurred for the six months ended April 30, 1996
aggregated $78,400.
7. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)
Under the terms of a distribution plan pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plans), the Global Currency Fund, the Hard Currency
Fund, and the High Income Fund will reimburse Franklin Templeton Distributors,
Inc. (Distributors), 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 the Distributors, in
an 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 under the plans aggregated $372,128 for the six months ended April
30, 1996.
In its capacity as underwriter for the shares of the Trust, Distributors
receives commissions on sales of the Trust's shares. Commissions are deducted
from the gross proceeds received from the sale of the capital stock of the Funds
and as such are not expenses of the Funds. Commissions received by Distributors
and the amounts which were subsequently paid to other dealers for the period
November 1, 1995 to April 30, 1996 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............. $79,450 $33,495 $472,551 $8,371
============= ============== ============= ============
Paid to other dealers.................. $70,267 $29,539 $418,157 $7,328
============= ============== ============= ============
</TABLE>
Certain officers and trustees of the Trust are also officers and/or directors of
Distributors, Advisers, Worldwide and Investor Services, all wholly-owned
subsidiaries of Resources.
8. CREDIT RISK
Although each of the Funds has a diversified investment portfolio, there are
certain credit risks, foreign currency exchange risk, or event risk 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 deutschemarks.
The Hard Currency Fund has investments in excess of 10% in debt securities
denominated in German deutschemarks.
Although the German Bond Fund has a diversified investment portfolio, most of
its invesmtnes are in the securities of issuers in the country of Germany. Such
concentration may subject the Fund to economic changes occurring within that
country.
<TABLE>
<CAPTION>
9. FINANCIAL HIGHLIGHTS
Per Share Operating Performance++ Ratios/Supplemental Data
------------------------------------------------- --------------------------
Ratio
of Net
Net Distri- Invest-
Real- Total butions ment
Net Asset lized & From From Distri- Distri- Net Net Ratio of Income
Value at Net Unreal- Invest- Net butions butions Asset Assets Expenses to Portfolio
Year Begin- Invest- lized ment Invest- From From Total Value at End to Average Average Turn-
Ended ning of ment & Gain Opera- ment Capital Return of Distri- at end Total of Period Net Assets Net over
April30 Period Income (Loss) tions Income Gains Capital+++ butions of Period Return++ (In 000's) (See Note 7)** Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton German Government Bond Fund
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19931,2 $12.50 $0.27 $ 0.56 $ 0.83 $(0.25) $ -- $-- $(0.25) $13.08 6.15% $10,738 0.87%* 6.06%* 190.89%*
1994 13.08 0.78 (0.72) 0.06 (0.39) (0.06) (0.40) (0.85) 12.29 0.64 13,341 1.00 4.74 185.66
19943 12.29 0.41 0.92 1.33 (0.36) -- -- (0.36) 13.26 10.92 13,236 1.04* 6.37* 301.60*
19954 13.26 1.53 0.71 2.24 (1.19) -- -- (1.19) 14.31 18.28 24,113 1.25 5.17 67.77
19965 14.31 0.39 (0.98) (0.59) (0.75) (0.03) -- (0.78) 12.94 (4.33) 21,530 0.96* 5.45* 19.01*
9. FINANCIAL HIGHLIGHTS (cont.)
Per Share Operating Performance++ Ratios/Supplemental Data
------------------------------------------------- --------------------------
Ratio
of Net
Net Distri- Invest-
Real- Total butions ment
Net Asset lized & From From Distri- Distri- Net Net Ratio of Income
Value at Net Unreal- Invest- Net butions butions Asset Assets Expenses to Portfolio
Year Begin- Invest- lized ment Invest- From From Total Value at End to Average Average Turn-
Ended ning of ment & Gain Opera- ment Capital Return of Distri- at end Total of Period Net Assets Net over
April30 Period Income (Loss) tions Income Gains Capital+++ butions of Period Return++ (In 000's) (See Note 7)** Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton Global Currency Fund
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19912 $13.66 $1.07 $0.57 $1.64 $(1.07) $-- $-- $(1.07) $14.23 12.21% $ 72,186 1.82% 7.36% --%
19922 14.23 0.80 (0.22) 0.58 (0.80) -- -- (0.80) 14.01 4.29 63,589 1.82 5.77 --
19932 14.01 0.67 1.01 1.68 (0.69) (1.04) -- (1.73) 13.96 13.28 62,355 1.67 4.64 10.39
1994 13.96 0.57 (0.11) 0.46 (0.57) -- -- (0.57) 13.85 3.41 51,539 1.41 2.78 37.16
19943 13.85 0.25 0.32 0.57 (0.28) -- -- (0.28) 14.14 4.14 56,098 1.04* 3.55* 50.82*
19954 14.14 1.29 (0.49) 0.80 (1.27) -- -- (1.27) 13.67 6.05 59,942 0.99 5.29 46.05
19965 13.67 0.29 (0.38) (0.09) (0.76) -- -- (0.76) 12.82 (0.69) 54,127 1.07* 4.32* --
Franklin Templeton Hard Currency Fund
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19912 13.18 0.92 0.64 1.56 (0.95) (0.96) -- (1.91) 12.83 11.04 33,599 1.66 6.46 --
19922 12.83 0.77 0.28 1.05 (0.76) -- -- (0.76) 13.12 8.40 31,757 1.86 5.85 --
19932 13.12 0.71 1.20 1.91 (0.69) (1.34) -- (2.03) 13.00 17.11 49,569 1.75 5.23 4.88
1994 13.00 0.50 (0.05) 0.45 (0.13) -- (0.37) (0.50) 12.95 3.62 35,739 1.47 3.83 --
19943 12.95 0.26 0.99 1.26 (0.25) -- -- (0.25) 13.95 9.74 61,228 1.05* 3.80* 55.91*
19954 13.95 1.84 (1.02) 0.82 (1.68) -- -- (1.68) 13.09 6.68 132,089 1.15 4.68 15.72
19965 13.09 0.30 (1.01) (0.71) (0.42) -- -- (0.42) 11.96 (5.54) 116,989 1.21* 4.68* 0.18*
Franklin Templeton High Income Currency Fund
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19912 12.84 1.34 0.43 1.77 (1.38) (0.31) -- (1.69) 12.92 14.09 52,364 1.59 9.85 --
19922 12.92 1.09 (0.03) 1.06 (1.08) -- -- (1.08) 12.90 8.51 46,575 1.83 8.38 --
19932 12.90 0.90 (0.40) 0.50 (0.94) (0.33) -- (1.27) 12.13 4.49 32,341 1.81 6.86 --
1994 12.13 0.59 (0.85) (0.26) -- -- (0.59) (0.59) 11.28 (2.03) 16,706 1.59 4.80 --
19943 11.28 0.31 0.31 0.62 (0.31) -- -- (0.31) 11.59 5.60 16,878 1.04* 5.44* 1,588*
19954 11.59 1.47 (0.51) 0.96 (0.99) -- -- (0.99) 11.56 8.90 10,902 1.25 5.56 115
19965 11.56 0.28 (0.17) 0.11 (0.86) -- -- (0.35) 10.81 1.07 9,794 1.25* 5.05* --
1For the period December 31, 1992 (effective date of registration) to April 30, 1993.
2Financial Highlights for periods ended April 30, 1994, and October 31, 1995 have been audited by Coopers and Lybrand. All other
periods were audited by other independent auditors whose opinions are not included herein.
3Six months ended October 31, 1994.
4For the year ended October 31, 1995.
5Six months ended April 30, 1996 (unaudited).
++Selected data for a share of beneficial interest outstanding throughout the period indicated.
++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.
*Annualized
</TABLE>
The Advisers reduced its 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:
Ratio of Expenses
to Average
Net Assets
-----------------
Franklin Templeton German Government Bond Fund
19931.................................... 1.73%*
1994..................................... 1.83
19943.................................... 1.77*
19954.................................... 1.29
Franklin Templeton Global Currency Fund
1994..................................... 1.61
19943.................................... 1.12*
Ratio of Expenses
to Average
Net Assets
-----------------
Franklin Templeton Hard Currency Fund
1994..................................... 1.71%
19943.................................... 1.28*
Franklin Templeton High Income Currency Fund
1994..................................... 1.82
19943.................................... 1.45*
19954.................................... 1.45
19965.................................... 1.35*
Franklin Templeton Global Trust
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This chart shows in pie chart format the fund's asset allocation by asset class
on April 30, 1996 as a percentage of the fund's total net assets.
<TABLE>
<CAPTION>
Franklin Templeton German Government Bond Fund
Asset Allocation by Asset Class on 4/30/96
Based on Total Net Assets
<S> <C>
German State Government Bonds 43.2%
Foreign (Non-German) Government Euromark Bonds 25.0%
German Government Agency Bonds 14.7%
German Federal Government Bonds 13.6%
Other Net Assets & Liabilities 3.5%
</TABLE>
GRAPHIC MATERIAL (2)
This chart shows in pie chart format the fund's asset allocation by currency on
April 30, 1996 as a percentage of the fund's total net assets.
<TABLE>
<CAPTION>
Franklin Templeton Global Currency Fund
Asset Allocation by Currency on 4/30/96
Based on Total Net Assets
<S> <C>
U.S. Dollar 32.4%
German Mark 31.1%
Australian Dollar 28.5%
Japanese Yen 8.0%
</TABLE>
GRAPHIC MATERIAL (3)
This chart shows in pie chart format the fund's asset allocation by currency on
April 30, 1996 as a percentage of the fund's total net assets.
<TABLE>
<CAPTION>
Franklin Templeton Hard Currency Fund
Asset Allocation by Currency on 4/30/96
Based on Total Net Assets
<S> <C>
German Mark 35.7%
Swiss Franc 35.2%
Japanese Yen 15.6%
New Zealand Dollar 8.9%
U.S. Dollar 4.6%
</TABLE>
GRAPHIC MATERIAL (4)
This chart shows in pie chart format the fund's asset allocation by currency on
April 30, 1996 as a percentage of the fund's total net assets.
<TABLE>
<CAPTION>
Franklin Templeton High Income Currency Fund
Asset Allocation by Currency on 4/30/96
Based on Total Net Assets
<S> <C>
Canadian Dollar 15.8%
British Pound 10.6%
Spanish Peseta 10.3%
Australian Dollar 21.0%
German Mark 4.9%
Dutch Gilder 4.0%
U.S. Dollar 8.1%
Italian Lira 8.2%
New Zealand Dollar 7.7%
Swedish Krona 7.3%
French Franc 2.1%
</TABLE>
