PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
Table of Contents
President's Letter 1
Economic Overview 5
Fund Reports
Franklin Templeton German
Government Bond Fund 7
Franklin Templeton
Global Currency Fund 14
Franklin Templeton
Hard Currency Fund 19
Franklin Templeton
High Income Currency Fund 26
Statement of Investments 31
Financial Statements 39
Notes to Financial Statements 43
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
determined by the presence of a regular beeping tone.
April 30, 1997
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Franklin Templeton
Global Trust for the six months ended April 30, 1997.
If The Buck's So Strong,
Why Are You Smiling?
During the six months covered by this report, the four funds comprising the
Franklin Templeton Global Trust produced weak returns. This reflects the
continued strength of the U.S. dollar against most foreign currencies over the
period. Yet we find ourselves in the seemingly odd position of feeling quite
pleased about the funds' recent performance. Allow me to explain.
The first reason we feel good is that the funds have largely delivered the
benefits for which they are designed. Specifically, they have provided
protection against a weaker U.S. dollar. Since the dollar and U.S. stock markets
both moved strongly higher over most of the semi-annual period, protection
against a weak greenback turned out not to be needed. Likewise, most of us did
not need our fire insurance policies last year, but that did not cause us to
cancel the coming year's policy. And until we can develop 20/20 foresight for
currency markets, protection against future dollar decline, in our opinion,
remains a prudent strategy for many Americans.
Of Rip Van Winkle ... And Real Investors
Another reason we are pleased with the funds' recent returns is that they have
reinforced our view that foreign currency money market and bond investments can
provide excellent portfolio diversification for U.S.-based investors. Returns on
these funds continue to exhibit low or negative correlation with returns on such
major asset-class indexes as the Standard & Poor's 500(R) Stock Index. What does
this mean for you? If you are like most of our shareholders, the bulk of your
assets are in U.S. dollar-denominated investments. By including "out-of-sync"
assets such as the Franklin Templeton International Currency Funds or German
Government Bond Fund in your portfolio, you may tend to reduce the overall
volatility of its returns from one period to the next. In other words, we hope
to make your "ride" smoother over time.
There is, by the way, a school of thought which suggests that the smoothness of
the ride (i.e., the portfolio's volatility) is irrelevant. This viewpoint is, I
think, indicative of what one sees after a period of sustained, strong returns
in the home market. If equities are always going up in the long run (so the
argument goes), why not simply plunge into stocks, ignore the bumps along the
way, and hang on for however long that may be. Granting for the moment that
equities always go up in the long run (a proposition that can neither be proved
nor disproved), we would still dispute this line of reasoning. We call it the
Rip Van Winkle theory of investing. It works ... as long as you can make your
investment and then go to sleep for thirty years.
<TABLE>
<CAPTION>
Internal Return, excl. Return, incl. Third
Benchmark sales charges sales charges Party Index
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
German Government Bond Fund not applicable -9.6% -12.3% -9.3%*
Global Currency Fund -9.8% -3.3% -6.2% -7.0%**
Hard Currency Fund -13.8% -10.8% -13.5% -7.0%**
High Income Currency Fund -6.3% -1.3% -4.3% -7.0%**
*Salomon Brothers German Government Bond Index (unmanaged and including reinvested dividends)
**Salomon Brothers World Money Market Index (unmanaged and including reinvested dividends)
</TABLE>
However, real investors, as opposed to Mr. Van Winkle or theoretical textbook
investors, do look at the value of their portfolios from time to time. Real
investors also have emotional reactions to sharp changes in their net worth.
Some average travelers will not fly an airline whose flights are exceptionally
turbulent, even if its on-time record is 100%. Likewise, real live humans will
often abandon the best-laid financial plans if the process of getting from here
to there is excessively bumpy. So, in our view, risk matters. And if investments
like the Franklin Templeton Global Trust can contribute to improving the
investor's risk-return tradeoff, then we have added value.
Active Management Added Value, Too
Finally, we are pleased with the recent performance of the funds in relation to
their internal benchmarks. Recognizing that no fund manager controls the
direction of the markets in which he or she invests, we still hope, through
active portfolio management, to add incremental returns beyond those of a
strictly passive strategy. The table above shows the total return for each of
the four funds and their respective benchmarks for the six-month period ended
April 30, 1997. The most relevant comparisons are found in the first two
columns, which show the funds' performance (not reflecting any sales charges)
and the performance of each fund's internal benchmark.1 Note the significant
outperformance of the three currency funds relative to their internal
benchmarks.
1. Given the unique nature of the Global Currency Fund, Hard Currency Fund, and
High Income Currency Fund, no third party index accurately reflects the
composition of these portfolios. The manager has therefore constructed internal
benchmarks whose composition is described in the individual fund reports on
pages 14, 19, and 26.
Foreign Central Banks Continue To Finance The Party ... Celebrate While You Can
So where does the dollar go from here? If I knew the answer with certainty, I
would no longer have to work for a living. What we do know is that foreign
central banks have continued to gobble up U.S. Treasury securities with the
dollars they accumulate when their economies sell more to us than we buy from
them. This benevolent sponging of excess dollars has contributed to reducing
U.S. interest rates, supporting U.S. stock and bond prices, and buoying the U.S.
dollar, not to mention dampening U.S. inflation. We are reasonably certain this
trend cannot persist indefinitely, but are much less certain when changes will
occur.
In the meantime, we would suggest you celebrate the dollar's continued strength,
because it means strong home investment markets and expanded global purchasing
power for Americans like you and me. Notwithstanding, we would not bet the
entire farm on a stronger dollar, and by your presence in the Franklin Templeton
Global Trust, we imagine you wouldn't either.
As always, we thank you for investing with us.
Yours sincerely,
Donald P. Gould
President
Franklin Templeton Global Trust
- --------------------------------------------------------------------------------
-- Celebrating 50 Years --
This year marks 50 years of business for Franklin Templeton. Over these years,
the mutual fund industry has experienced profound changes in technology,
regulations and customer expectations. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest around the globe. We thank you for your past
support and look forward to serving your investment needs in the years ahead.
- --------------------------------------------------------------------------------
ECONOMIC OVERVIEW
During the six months under review, a combination of strong U.S. economic
growth, slow expansion of many foreign economies, generally low inflation
worldwide, and falling foreign interest rates caused the dollar to appreciate
sharply versus most other major currencies. While one U.S. dollar was worth only
1.5173 German marks on October 31, 1996, by April 30, 1997 it was worth 1.7298
marks, showing a 12% depreciation of the mark. At the same time, the Japanese
yen depreciated 10%, from 114.07 to 127.10 yen per U.S. dollar.
U.S. gross domestic product (GDP) in the third quarter of 1996 increased only
2.1%, although statistics released during the fourth quarter indicated that the
economy was starting to pick up speed. On December 3, 1996, yields on 10-year
U.S. Treasury bonds dipped to 6.06%, their lowest level of the reporting period,
and then started rising steadily. They peaked at 6.98% on April 14, 1997, after
statistics showed that GDP expanded at an annualized rate of 3.8% in the fourth
quarter of 1996, and another 5.8% in the first quarter of 1997.
In response, the U.S. Federal Reserve Board (the Fed) increased the federal
funds rate by 0.25%, from 5.25% to 5.50%, on March 25, 1997. According to
Chairman Alan Greenspan, this action was also taken as a precaution against an
increased risk of inflation, particularly in domestic wages. Although Greenspan
had, since December, publicly warned of the Fed's concerns about inflationary
risks in the U.S. economy, many investors appeared to believe that low inflation
in 1996 would prevent the Fed from raising rates. Therefore, other U.S. interest
rates also rose sharply in March, as the market reassessed the Fed's will to
preempt a rise in prices by raising interest rates.
In many European countries, interest rates moved somewhat lower due to spending
cuts made by governments wanting to qualify for membership in the European
Monetary Union. Slow German economic growth of only 2.2% in the fourth quarter
of 1996, and a high unemployment rate of 10.9%, helped keep yields low and the
mark weak. German government 10-year bond yields drifted between a high of 6.04%
and a low of 5.47% during the reporting period. French 10-year government bond
yields declined from 5.98% to 5.29%, and interest rates in most other European
markets also fell. However, the yield on British ten-year bonds declined the
least, as the pound was the strongest European currency against the U.S. dollar.
Japanese interest rates continued to set all-time lows because many investors
feared a sales tax increase effective April 1, 1997, would end the small, early
1997 economic recovery. Starting the reporting period at 2.61%, the rate on
10-year notes fell as low as 2.26%. With the overnight discount rate having been
pushed down to 0.50% in September 1995, the Japanese monetary authorities cannot
push short-term rates much lower.
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.
One of the most dramatic developments during the reporting period was the 12%
devaluation of the German mark relative to the U.S. dollar. This decline was
primarily due to low German interest rates and to Germany's slow economic growth
compared with that of the U.S., as spending cuts required for membership in the
European Monetary Union took their toll on the German economy. For example, in
the fourth quarter of 1996, Germany's gross domestic product increased only
2.2%, and its unemployment rate exceeded 10% in early 1997. This contrasted with
3.8% growth in the U.S., where the unemployment rate had dropped to about 5%.
In an effort to improve German economic conditions, the Bundesbank continued to
encourage low domestic interest rates. The discount rate was maintained at the
2.5% level it reached more than one year ago, and other, longer-term rates
drifted slightly lower during this period. The yields on 10-year German
government bonds ranged between 6.04% and 5.47%, which encouraged international
investors to seek higher returns in non-German markets, and contributed to the
decline of the mark. Within this environment, Franklin Templeton German
Government Bond Fund Class I shares posted a six-month total return of -9.63%,
as discussed in the Performance Summary on page 10. However, we always maintain
a long-term perspective when managing the fund, and we encourage shareholders to
view their investments in a similar manner. As shown in the Performance Summary,
the fund has delivered a cumulative total return of +26.45% for the period from
its inception on December 31, 1992, to April 30, 1997.
Few changes were made in the portfolio during this period, as we continued to
emphasize the strategy of earning the highest possible yield consistent with the
fund's holdings of primarily government-backed, mark-denominated bonds. This
enabled us to participate in the decline of German interest rates and realize
local currency price appreciation on many of our holdings. New purchases were
consistent with maintaining the fund's average maturity, which was 5.7 years as
of April 30, 1997.
In contrast to the positive effect interest rate declines had on the fund's
value, the decreased value of the mark had a significant negative impact on the
fund's performance. Because the fund remained fully invested during the period,
and operating policy keeps our currency exposure unhedged, its value declined as
the mark depreciated.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Looking forward, we believe that economic growth may accelerate during the
balance of 1997 if the mark's value makes German exports increasingly
competitive in the world market. While this could result in higher interest
rates, and even a possible tightening of German monetary policy, such rate
increases could help stabilize the mark during the remainder of 1997.
Shareholders should remember that investing in a portfolio of a single country's
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
Class I
Franklin Templeton German Government Bond Fund Class I shares provided a
cumulative total return of -9.63% for the six-month period ended April 30, 1997.
Cumulative total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains, and does not include the 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 decreased by $1.57, from $13.16 on October 31, 1996 to
$11.59 on April 30, 1997. During this same period, Class I shareholders received
regular dividend income totaling 31.9 cents ($0.319) per share. Based on the
maximum offering price of $11.95 on April 30, 1997, and an annualization of
April's monthly dividend of 5.0 cents ($0.05) per share, the fund's distribution
rate was 5.02%. Of course, past performance is not predictive of future results.
Distributions will vary depending on income earned by the fund, currency gains
and losses, and any profits realized from the sale of securities in the fund's
portfolio, as well as the level of the fund's operating expenses.
- --------------------------------------------------------------------------------
During the six months ended April 30, 1997, 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.
- --------------------------------------------------------------------------------
Franklin Templeton German Goverment Bond Fund
Class I
Periods ended April 30, 1997
Since
Inception
One-Year Three-Year (12/31/92)
- --------------------------------------------------------------------------------
Cumulative Total Return1 -5.47% 18.37% 26.45%
Average Annual Total Return2 -8.31% 5.78% 5.57%
Value of $10,000 Investment3 $9,169 $11,482 $12,262
Distribution Rate4 5.02%
30-Day Standardized Yield5 3.37%
4/30/94 4/30/95 4/30/96 4/30/97
- --------------------------------------------------------------------------------
One-Year Total Return6 0.64% 26.60% -0.87% -5.47%
- --------------------------------------------------------------------------------
1. Cumulative total return represents the change in value of an investment over
the indicated periods, and does not include the sales charge.
2. Average annual total return represents the average annual change in the value
of an investment over the indicated periods, and includes the maximum 3.0%
initial sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the indicated periods, and include the sales charge.
4. Distribution rate is based on the maximum offering price of $11.95 per share
on April 30, 1997, and an annualization of the most recent monthly dividend of
5.0 cents ($0.05) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1997.
6. One-year total return represents the change in value of an investment over
the periods ended on the dates indicated and does not include the sales charge.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Voluntary expense limitations by the fund's Investment Manager and Fund
Administrator in the past increased the fund's total return. If they had not
taken this action, the total returns for Class I shares would have been lower.
Investment return and principal value will fluctuate with market conditions,
currencies and the economic, social and political climates of countries where
investments are made. You may have a gain or loss when you sell your shares.
Past performance is not predictive of future results.
Performance Summary
Advisor Class
Franklin Templeton German Government Bond Fund Advisor Class shares provided an
aggregate total return of -8.92% for the four-month period from inception on
January 1, 1997 through April 30, 1997. Aggregate total return measures the
change in value of an investment, assuming reinvestment of dividends and capital
gains.
The fund's share price decreased by $1.37, from $12.98 on January 2, 1997 (day
of commencement of sales) to $11.61 on April 30, 1997. During this same period,
Advisor Class shareholders received regular dividend income of 21.89 cents
($0.2189) per share. Based on the maximum offering price of $11.61 on April 30,
1997, and an annualization of April's monthly dividend of 5.19 cents ($0.0519)
per share, the fund's distribution rate was 5.36%. Of course, past performance
is not predictive of future results. Distributions will vary depending on income
earned by the fund, currency gains and losses, and any profits realized from the
sale of securities in the fund's portfolio, as well as the level of the fund's
operating expenses.
- --------------------------------------------------------------------------------
During the four months ended April 30, 1997, 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.
- --------------------------------------------------------------------------------
Franklin Templeton German Government Bond Fund
Advisor Class
Period ended April 30, 1997
Since
Inception
(1/1/97)
- --------------------------------------------------------------------------------
Aggregate Total Return1 -8.92%
Value of $10,000 Investment2 $9,108
Distribution Rate3 5.36%
30-Day Standardized Yield4 3.57%
- --------------------------------------------------------------------------------
1. Aggregate total return represents the change in value of an investment over
the period indicated. Since Advisor Class shares have been in existence for less
than one year, average annual total returns are not provided.
2. This figure represents the value of a hypothetical $10,000 investment in the
fund over the period indicated.
3. Distribution rate is based on the maximum offering price of $11.61 per share
on April 30, 1997, and an annualization of the most recent monthly dividend of
5.19 cents ($0.0519) per share.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1997.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Investment return and principal value will fluctuate with market
conditions, currencies and the economic, social and political climates of
countries where investments are made. You may have a gain or loss when you sell
your shares. Past performance is not predictive of future results.
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.
During the six months covered by this report, the U.S. dollar reached a
four-year high versus the Japanese currency (127.10 yen) and a three-year high
versus the German currency (1.7326). By the end of the period, the dollar had
gained 10% against the yen and 12% against the mark. Since the Franklin
Templeton Global Currency Fund holds primarily short-term securities whose
prices have been relatively stable in local currency terms, most of its total
return is derived from interest paid by portfolio securities, and from changes
in the dollar's value relative to the currencies of countries where it is
invested. This can put your fund at a disadvantage during a period when the U.S.
dollar is strengthening, because our internal benchmark portfolio consists of
only a one-third weighting in the U.S. money markets, with one-third each in the
local currency money markets of Japan and Germany. Within this environment, the
fund posted a six-month cumulative total return of -3.34% (as discussed in the
Performance Summary on page 17). However, we always maintain a long-term
perspective when managing the fund, and we encourage shareholders to view their
investments in a similar manner. As also shown in the Performance Summary, the
fund has delivered a cumulative total return of +108.88% for the period from
inception on June 27, 1986 to April 30, 1997.
Attempting to take advantage of these fluctuating exchange rates, we moved an
unusually large proportion of our assets into U.S. dollars. This raised our
exposure to the U.S. dollar from 37.0% of total net assets on October 31, 1996,
to 61.9% on April 30, 1997. At the same time, we reduced our Australian dollar
holdings from 30.4% to just 1.7%. The fund's exposure to marks declined
slightly, from 21.9% to 15.6%, while its yen portion increased, from 5.8% to
15.5%.
Looking forward, although we believe the long-term trend toward a weakening U.S.
dollar has not changed, we feel that current economic conditions may give it
additional short-term strength, especially versus the Australian and New Zealand
dollars. However, in our view, the greatest portion of the dollar's upward surge
may be nearly over. As worldwide economic growth gains momentum, and interest
rates begin to rise, we will try to position the portfolio to take advantage of
the opportunities presented by the world's currency markets.
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, social, 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 33 of this
report indicates that the fund held 75.9% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1997, the fund's net exposure to the
U.S. dollar as of that date was only 61.9%. 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 45) 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 provided a cumulative total return
of -3.34% for the six-month period ended April 30, 1997. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, and does not include the 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 decreased by $0.69, from $12.80 on October 31, 1996 to
$12.11 on April 30, 1997. During this same period, shareholders received regular
dividend income totaling 26.6 cents ($0.266) per share. Based on the maximum
offering price of $12.48 on April 30, 1997, and an annualization of April's
monthly dividend of 4.2 cents ($0.042) per share, the fund's distribution rate
was 4.04%. Of course, past performance is not predictive of future results.
Distributions will vary depending on income earned by the fund, currency gains
and losses, and any profits realized from the sale of securities in the fund's
portfolio, as well as the level of the fund's operating expenses.
During the six months ended April 30, 1997, 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.
Franklin Templeton Global Currency Fund
Periods ended April 30, 1997
Since
Inception
One-Year Five-Year Ten-Year (6/27/86)
- --------------------------------------------------------------------------------
Cumulative Total Return1 -1.44% 26.61% 82.04% 108.88%
Average Annual Total Return2 -4.40% 4.83% 6.17% 7.03%
Value of $10,000 Investment3 $9,560 $12,284 $17,659 $20,256
Distribution Rate4 4.04%
30-Day Standardized Yield5 3.81%
4/30/93 4/30/94 4/30/95 4/30/96 4/30/97
- --------------------------------------------------------------------------------
One-Year Total Return6 13.28% 3.41% 12.30% -2.33% -1.44%
- --------------------------------------------------------------------------------
1. Cumulative total return represents the change in value of an investment over
the indicated periods and does not include the sales charge.
2. Average annual total return represents the average annual change in the value
of an investment over the indicated periods and includes the maximum 3.0%
initial sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the indicated periods and include the sales charge.
4. Distribution rate is based on the maximum offering price of $12.48 per share
on April 30, 1997, and an annualization of the most recent monthly dividend of
4.2 cents ($0.042) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1997.
6. One-year total return represents the change in value of an investment over
the periods ended on the indicated dates and does not include the sales charge.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Voluntary expense limitations by the fund's Investment Manager and Fund
Administrator in the past increased the fund's total returns. If they had not
taken this action, the fund's total returns would have been lower. Investment
return and principal value will fluctuate with market conditions, currencies and
the economic, social and political climates of countries where investments are
made. You may have a gain or loss when you sell your shares. Past performance is
not predictive of future results.
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, in the view of the Investment Manager, 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 Franklin Templeton Hard Currency Fund holds primarily short-term
securities whose prices have been relatively stable in local currency terms,
most of its total return is derived from interest paid by portfolio securities,
and from changes in the U.S. dollar's value relative to the currencies of
countries where it is invested. This can put your fund at a disadvantage during
a period when the dollar is strengthening, because our internal benchmark
portfolio consists of one- third weightings each in the local currency money
markets of Japan, Germany, and Switzerland.
During the six months covered by this report, the U.S. dollar continued to gain
value against virtually all of the world's other major currencies. Of most
importance to the fund, the dollar appreciated 10% against the Japanese yen, and
in April reached a four-year high of 127.10 yen per dollar. It rose 12% against
the German mark, reaching a three-year high of 1.7326 per dollar in April. And
it increased 14% against the Swiss franc, reaching a three-year high of 1.4868
in February. Within this environment, the fund posted a six-month total return
of -10.78%, as discussed in the Performance Summary on page 22. However, we
always maintain a long-term perspective when managing the fund, and we encourage
shareholders to view their investments in a similar manner. As you can see in
the Performance Summary, the fund has delivered a total return of +56.04%, and
an average annual return of +6.15% for the period from its inception on November
17, 1989, to April 30, 1997.
At the end of the period under review, German marks represented 49.1% of the
fund's total net assets; Swiss francs, 22.2%; Japanese yen, 20.2%; U.S. dollars,
7.5%; and Italian lire, 1.0%. Although we attempted to take advantage of
opportunities during this period of dollar strength, the only significant net
change we made was converting a 5.1% position in New Zealand dollars into
additional yen.
In our opinion, several factors contributing to the dollar's weakening since the
early 1970s are still in place. Despite progress in combating the budget
deficit, the U.S. dependence on foreign help in financing the huge debt burden
has grown over the past few years, and we believe the proportion of world trade
conducted in U.S. dollars is likely to decline as emerging market countries
develop their economies. In fact, the dollar's improvement over the past 24
months versus most currencies may be more accurately considered a weakening of
the other currencies. If the Japanese and German economies rebound and the
world's economy grows, the dollar may resume its long-term decline.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
As always, we will continue to monitor economic events, and try to position the
portfolio to take advantage of the many opportunities in the currency markets
around the world.
Of course, there are special risk considerations associated with global
investing related to market, currency, economic, social, 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 the securities we purchase or sell for the fund.
- --------------------------------------------------------------------------------
Although the fund's Statement of Investments on page 35 of this report indicates
that the fund held 69.1% of its portfolio investments in U.S. dollar-denominated
assets as of April 30, 1997, its net exposure to the U.S. dollar on that date
was only 7.5%. The difference is explained by the fund's holdings of forward
currency exchange contracts (see Note 2 in the Notes to Financial Statements on
page 45) 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 in essence creates a position
economically equivalent to 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
Class I
Franklin Templeton Hard Currency Fund Class I shares provided a cumulative total
return of -10.78% for the six-month period ended April 30, 1997. Cumulative
total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains, and does not include the 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 decreased by $1.46, from $11.64 on October 31, 1996, to
$10.18 on April 30, 1997. During this same period, Class I shareholders received
regular dividend income totaling 21.6 cents ($0.216) per share. Based on the
maximum offering price of $10.49 on April 30, 1997, and an annualization of
April's monthly dividend of 3.4 cents ($0.034) per share, the fund's
distribution rate was 3.89%. Of course, past performance is not predictive of
future results. Distributions will vary, depending on income earned by the fund,
currency gains and losses, and any profits realized from the sale of securities
in the fund's portfolio, as well as the level of the fund's operating expenses.
- --------------------------------------------------------------------------------
During the six months ended April 30, 1997, 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.
- --------------------------------------------------------------------------------
Franklin Templeton Hard Currency Fund
Class I
Periods ended April 30, 1997
Since
Inception
One-Year Five-Year (11/17/89)
- --------------------------------------------------------------------------------
Cumulative Total Return1 -11.21% 19.11% 56.04%
Average Annual Total Return2 -13.87% 3.56% 6.15%
Value of $10,000 Investment3 $8,613 $11,550 $15,132
Distribution Rate4 3.89%
30-Day Standardized Yield5 3.26%
4/30/93 4/30/94 4/30/95 4/30/96 4/30/97
- --------------------------------------------------------------------------------
One-Year Total Return6 17.11% 3.62% 21.43% -8.92% -11.21%
- --------------------------------------------------------------------------------
1. Cumulative total return represents the change in value of an investment over
the indicated periods, and does not include the sales charge.
2. Average annual total return represents the average annual change in the value
of an investment over the indicated periods, and includes the maximum 3.0%
initial sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the indicated periods, and include the sales charge.
4. Distribution rate is based on the maximum offering price of $10.49 per share
on April 30, 1997, and an annualization of the most recent monthly dividend of
3.4 cents ($0.034) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1997.
6. One-year total return represents the change in value of an investment over
the periods ended on the dates indicated, and does not include the sales charge.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Voluntary expense limitations by the fund's Investment Manager and Fund
Administrator in the past increased the fund's total return. If they had not
taken this action, the total returns for Class I shares would have been lower.
Investment return and principal value will fluctuate with market conditions,
currencies and the economic, social and political climates of countries where
investments are made. You may have a gain or loss when you sell your shares.
Past performance is not predictive of future results.
Performance Summary
Advisor Class
Franklin Templeton Hard Currency Fund Advisor Class shares provided an aggregate
total return of -8.49% for the four-month period from inception on January 1,
1997 through April 30, 1997. Aggregate total return measures the change in value
of an investment, assuming reinvestment of dividends and capital gains.
The Fund's share price decreased by $1.10, from $11.28 on January 2, 1997 (day
of commencement of sales), to $10.18 on April 30, 1997. During this same period,
shareholders received regular dividend income of 14.56 cents ($0.1456) per
share. Based on the maximum offering price of $10.18 on April 30, 1997, and an
annualization of April's monthly dividend of 3.61 cents ($0.0361) per share, the
fund's distribution rate was 4.26%. Of course, past performance is not
predictive of future results. Distributions will vary, depending on income
earned by the fund, currency gains and losses, and any profits realized from the
sale of securities in the fund's portfolio, as well as the level of the fund's
operating expenses.
- --------------------------------------------------------------------------------
During the four months ended April 30, 1997, 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.
- --------------------------------------------------------------------------------
Franklin Templeton Hard Currency Fund
Advisor Class
Period ended April 30, 1997
Since
Inception
(1/1/97)
- --------------------------------------------------------------------------------
Aggregate Total Return1 -8.49%
Value of $10,000 Investment2 $9,151
Distribution Rate3 4.26%
30-Day Standardized Yield4 3.61%
- --------------------------------------------------------------------------------
1. Aggregate total return represents the change in value of an investment over
the period indicated. Since Advisor Class shares have been in existence for less
than one year, average annual total returns are not provided.
2. This figure represents the value of a hypothetical $10,000 investment in the
Fund over the period indicated.
3. Distribution rate is based on the maximum offering price of $10.18 per share
on April 30, 1997, and an annualization of the most recent monthly dividend of
3.61 cents ($0.0361) per share.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1997.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Investment return and principal value will fluctuate with market
conditions, currencies and the economic, social and political climates of
countries where investments are made. You may have a gain or loss when you sell
your shares. Past performance is not predictive of future results.
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.
During the six months covered by this report, the U.S. dollar exhibited unusual
strength, appreciating against most other currencies. Compared with the German
mark, it reached a three-year high, rising 12%; compared with the Swedish krona,
16%; the Spanish peseta, 12%; the Italian lira, 11%; and the Canadian dollar,
4%. Since the fund holds primarily short-term securities whose prices are not
highly variable, its total return is based on changes in the U.S. dollar's value
versus the currencies of countries where it is invested, in addition to interest
paid by portfolio securities. This can put your fund at a disadvantage during a
period when the U.S. dollar is strengthening, because our internal benchmark
portfolio consists of equal investments in the local currency markets of
Australia, Canada, Denmark, Spain, France, the United Kingdom, Italy,
Netherlands, New Zealand, and Sweden. Within this environment, the fund posted a
six-month total return of -1.33%, as discussed in the Performance Summary on
page 29. However, we always maintain a long-term perspective when managing the
fund, and we encourage shareholders to view their investments in a similar
manner. As also shown in the Performance Summary, the fund has delivered a
cumulative total return of +63.60% for the period from its inception on November
17, 1989 to April 30, 1997.
Attempting to take advantage of opportunities in the currency markets, we
increased the fund's position in U.S. dollars from 15.4% of total net assets on
October 31, 1996, to 45.8% on April 30, 1997. We accommodated these changes by
eliminating our holdings denominated in New Zealand dollars, German marks, and
French francs, which had totaled 12.4% of total net assets on October 31, 1996.
We also reduced our Australian dollar holdings, from 20.3% to 7.8%, and pared
our positions in British pounds, Spanish pesetas, Italian lira, and Canadian
dollars slightly.
Looking forward, the currencies described above, as well as others in Europe,
may weaken further versus the U.S. dollar in the near term. However, we believe
that many reasons for the 25-year decline in the dollar's value persist, and
that the dollar could resume its former trend. As always, we will continue to
monitor the economic situation, attempting to earn the best possible return for
the fund. There are, of course, special risk considerations associated with
global investing related to market, currency, economic, social, 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 37 of this
report indicates that the fund held 71.3% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1997, the fund's net exposure to the
U.S. dollar as of that date was only 45.8%. 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 45) 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 provided a cumulative total
return of -1.33% for the six-month period ended April 30, 1997. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, and does not include the 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 decreased by $0.38, from $11.02 on October 31, 1996 to
$10.64 on April 30, 1997. During this same period, shareholders received regular
dividend income totaling 23.5 cents ($0.235) per share. Based on the maximum
offering price of $10.97 on April 30, 1997, and an annualization of April's
monthly dividend of 3.6 cents ($0.036) per share, the fund's distribution rate
was 3.94%. Of course, past performance is not predictive of future results.
Distributions will vary depending on income earned by the fund, currency gains
and losses, and any profits realized from the sale of securities in the fund's
portfolio, as well as the level of the fund's operating expenses.
Franklin Templeton High Income Currency Fund
Periods ended April 30, 1997
Since
Inception
One-Year Five-Year (11/17/89)
- --------------------------------------------------------------------------------
Cumulative Total Return1 3.06% 22.59% 63.60%
Average Annual Total Return2 -0.03% 4.16% 6.83%
Value of $10,000 Investment3 $9,997 $11,891 $15,865
Distribution Rate4 3.94%
30-Day Standardized Yield5 3.96%
4/30/93 4/30/94 4/30/95 4/30/96 4/30/97
- --------------------------------------------------------------------------------
One-Year Total Return6 4.49% -2.03% 12.18% 3.62% 3.06%
- --------------------------------------------------------------------------------
1. Cumulative total return represents the change in value of an investment over
the indicated periods, and does not include the sales charge.
2. Average annual total return represents the average annual change in the value
of an investment over the indicated periods, and includes the maximum 3.0%
initial sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the indicated periods, and include the sales charge.
4. Distribution rate is based on the maximum offering price of $10.97 per share
on April 30, 1997, and an annualization of the most recent monthly dividend of
3.6 cents ($0.036) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended April 30, 1997.
6. One-year total return represents the change in value of an investment over
the periods ended on the indicated dates and does not include the initial sales
charge.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Voluntary expense limitations by the fund's Investment Manager and Fund
Administrator in the past increased the fund's total return. If they had not
taken this action, the fund's total returns would have been lower. Investment
return and principal value will fluctuate with market conditions, currencies and
the economic, social and political climates of countries where investments are
made. You may have a gain or loss when you sell your shares. Past performance is
not predictive of future results.
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments in Securities and Net Assets, April 30, 1997 (unaudited)
Face Value
Country* Amount Franklin Templeton German Government Bond Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long Term Investments 84.7%
Eurobonds 22.1%
DD 900,000 Europe Economic Community, 6.50%, 3/10/00 ........................................... $ 552,787
DD 500,000 European Investment Bank, 7.75%, 1/26/05 ............................................ 326,018
AT 850,000 Government of Austria, 7.25%, 5/3/07................................................. 538,276
DD 925,000 Interamerican Development Bank, 6.75%, 4/29/03 ...................................... 573,217
DD 600,000 International Bank Recon/Dev, 6.125%, 9/27/02 ....................................... 364,713
DD 800,000 Japan Finance Corp. Muni Enterprises, 7.75%, 10/28/04 ............................... 520,243
DK 275,000 Kingdom of Denmark, 6.125%, 4/15/98 ................................................. 162,792
AT 500,000 Osterreich Kontrollbank, 7.00%, 8/8/05 .............................................. 311,868
----------
Eurobonds (Cost $3,604,986) ................................................... 3,349,914
----------
German Bonds 62.6%
DD 540,000 Allgemeine Hypotheken Bank AG, 6.00%, 9/16/02 ....................................... 325,559
DD 530,000 Bayerische Hypotheken-Und Wechselbank AG, 6.00%, 9/13/00 ............................ 321,704
DD 750,000 Bundesland Baden-Wuerttemberg, 7.50%, 10/22/04 ...................................... 480,797
DD 500,000 Deutsche Bundespost, 7.50%, 12/02/02 ................................................ 321,571
DD 900,000 Deutsche Hypothekenbank Franfurt AG, 6.00%, 3/22/02, #1083........................... 544,522
Federal Republic of Germany:
DD 950,000 5.375%, 2/22/99, Bundesobl 110..................................................... 565,666
DD 685,000 9.00%, 12/01/00 ................................................................... 454,557
DD 770,000 7.375%, 1/3/05..................................................................... 494,419
DD 755,000 6.875%, 5/12/05, Ser 95............................................................ 470,965
DD 765,000 Government of Germany, 5.25%, 2/21/01 ............................................... 455,731
DD 500,000 Freie Hansestadt Bremen, 8.50%, 4/17/98 ............................................. 302,050
DD 650,000 KFW International Finance, 7.75%, 10/6/04............................................ 423,072
DD 800,000 Land Hessen, 6.00%, 6/18/97 ......................................................... 462,489
DD 150,000 Land Niedersachsen, 7.50%, 1/20/05 .................................................. 97,216
Land Sachsen Anhalt:
DD 800,000 7.50%, 10/28/04 ................................................................... 510,540
DD 550,000 7.25%, 4/20/05 .................................................................... 345,914
DD 890,000 Landwirt Schaftliche Rentenbank, 7.50%, 10/15/97 .................................... 523,000
DD 800,000 LKB Baden-Wuerttemburg Finance NV, 6.50%, 9/15/08 ................................... 477,274
DD 530,000 Rheinhyp Rheinische Hypothekenbank AG, 5.50%, 12/20/99 .............................. 317,296
DD 900,000 Sueddeutsche Bodencreditbank AG, 6.00%, 11/06/01 .................................... 545,198
DD 290,000 Treuhandanstalt, 7.375%, 12/02/02 ................................................... 186,226
DD 530,000 Westfaelische Hypothekenbank AG, 5.50%, 9/13/99 ..................................... 316,714
DD 900,000 Wurttembergische Hypothekenbank, 5.50%, 1/22/02 ..................................... 533,867
----------
German Bonds (Cost $10,504,712) ............................................... 9,476,347
----------
Total Long Term Investments (Cost $14,109,698) ................................ 12,826,261
----------
Statement of Investments in Securities and Net Assets, April 30, 1997 (unaudited) (cont.)
Face Value
Country* Amount Franklin Templeton German Government Bond Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
Short Term Investments 6.0%
Time Deposit 3.4%
US 521,000 Deutsche Bank AG, 5.65%, 5/1/97 (Cost $521,000)...................................... $ 521,000
----------
U.S. Government Agencies2.6%
US 400,000 Federal Home Loan Mortgage, 5/1/97 (Cost $399,941) .................................. 400,000
----------
Total Short Term Investments (Cost $920,941)................................... 921,000
----------
Total Investments (Cost $15,030,639) 90.7% ............................... 13,747,261
Other Assets and Liabilities, Net 9.2% ................................... 1,388,166
Net Unrealized Gain on Forward
Foreign Currency Contracts 0.1% ......................................... 1,047
----------
Net Assets 100.0% ........................................................ $15,136,474
==========
At April 30, 1997, the net unrealized depreciation based on the cost of
investments for income tax purposes of $15,030,639 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost ................................. $ 14,045
Aggregate gross unrealized depreciation for all investments in
which there was an excess of value over tax cost ................................. (1,297,423)
----------
Net unrealized depreciation ....................................................... $ (1,283,378)
==========
*Securities traded in currency of country indicated. See page 38 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, 1997 (unaudited)
Face Value
Country* Amount Franklin Templeton Global Currency Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long Term Investments 5.3%
Foreign Government Securities - Floating Rate Notes
ES 4,150,000 Government of Spain, floating rate note, 3.188%, 6/29/02
(Cost $2,728,125) ................................................................ $ 2,398,084
----------
aShort Term Investments 90.9%
Time Deposit 3.8%
US 1,706,000 Deutsche Bank AG, 5.65%, 5/1/97 (Cost $1,706,000) ................................. 1,706,000
----------
Commercial Paper 29.8%
US 2,215,000 Abbott Laboratories, 5.47%, 5/12/97 ............................................... 2,210,912
US 2,255,000 Bank of Nova Scotia, 5.52%, 6/6/97................................................. 2,242,185
US 2,250,000 Ciesco CP, 5.32%, 5/1/97........................................................... 2,250,000
US 2,250,000 General Electric Capital Corp., 5.25%, 6/4/97...................................... 2,237,911
US 2,250,000 Merrill Lynch & Co. Inc., 5.55%, 5/8/97............................................ 2,247,228
US 2,245,000 Nestle Capital Corporation, 5.47%, 5/29/97 ........................................ 2,235,016
----------
Total Commercial Paper (Cost $13,423,685) ................................... 13,423,252
----------
Foreign Government Securities - Floating Rate Notes 2.6%
DD 2,000,000 bGovernment of Belgium, floating rate note, semi-annual calls, 3.188%,
3/24/00 (Cost $1,282,288) ........................................................ 1,153,913
----------
Government Securities 16.3%
DD 1,750,000 bEuropean Investment Bank, Floating rate note, semi-annual call,
3.063%, 3/25/98 .................................................................. 1,011,695
DD 2,000,000 Federal Republic of Germany, Bundesschatzanw, 6.375%, 5/20/97 ..................... 1,156,569
DD 6,000,000 German Treasury Bill, 2.90%, to 3.05%, with maturities to 10/17/97 ................ 3,427,172
US 1,743,000 U. S. Treasury Bills, 5.05% to 5.08%, with maturities to 6/5/97.................... 1,735,742
----------
Total Government Securities (Cost $7,797,883) ............................... 7,331,178
----------
U.S. Government Agencies 38.4%
US 1,055,000 Federal Farm Credit Banks, 5.24%, 5/6/97........................................... 1,054,213
US 2,400,000 Federal Home Loan Banks, 5.36% to 5.42%, with maturities to 6/12/97 ............... 2,390,070
US 5,025,000 Federal Home Loan Mortgage Corp., 5.37% to 5.45%, with maturities
to 5/16/97 ....................................................................... 5,014,924
US 8,905,000 Federal National Mortgage Association, 5.43% to 5.68%, with maturities
to 10/7/97........................................................................ 8,866,404
----------
Total U.S. Government Agencies (Cost $17,323,402) ....................... 17,325,611
----------
Total Short Term Investments (Cost $41,533,258) ......................... 40,939,954
----------
Total Investments (Cost $44,261,383) 96.2% ........................ 43,338,038
Other Assets and Liabilities, Net 3.9% ............................ 1,760,859
Net Unrealized Loss on Forward
Foreign Currency Contracts (0.1%)................................. (30,311)
----------
Net Assets 100.0% ................................................. $45,068,586
==========
At April 30, 1997, the net unrealized depreciation based on the cost of
investments for income tax purposes of $44,261,383 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost ............................... $ 3,649
Aggregate gross unrealized depreciation for all investments in
which there was an excess of value over tax cost ............................... (926,994)
----------
Net unrealized depreciation ..................................................... $ (923,345)
==========
*Securities traded in currency of country indicated. See page 38 for country legend.
aCertain short-term securities are traded on a discount basis; the rates shown are the discount rates at the time of the purchase by
the Fund. Other securities bear interest at the rate shown, payable at fixed dates or upon maturity.
bFloating rate notes with an embedded put and/or call feature.
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, 1997 (unaudited)
Face Value
Country* Amount Franklin Templeton Hard Currency Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long Term Investments 1.8%
Corporate Bonds - Floating Rate Notes 0.7%
JP 100,000,000 Inter-American Development Bank, floating rate note, .047%, 6/19/98
(Cost $996,562) .............................................................. $ 788,725
----------
Foreign Government Securities - Floating Rate Notes1.0%
IT 135,000,000 Government of Italy, Tranche 3, floating rate note, 0.632%, 7/26/99
(Cost $1,392,599) ............................................................ 1,069,300
----------
Government Securities 0.1%
US 25,000 U.S. Treasury Note, 6.50%, 8/15/97 (Cost $25,605) ............................. 25,078
----------
Total Long Term Investments (Cost $2,414,766) ........................... 1,883,103
----------
aShort Term Investments 98.8%
Time Deposit 5.2%
US 5,490,000 Deutsche Bank AG, 5.65%, 5/1/97 (Cost $5,490,000) ............................. 5,490,000
----------
Commercial Paper 42.0%
US 4,100,000 Abbott Laboratories, 5.47%, 5/12/97 ........................................... 4,092,437
US 4,950,000 Bank of Nova Scotia, 5.52%, 6/6/97............................................. 4,921,869
CH 7,000,000 Canadian Wheat Board, 1.70%, 5/12/97 .......................................... 4,744,405
US 4,495,000 Ciesco CP, 5.32%, 5/1/97....................................................... 4,495,000
US 4,000,000 General Electric Capital Corp., 5.25%, 6/4/97.................................. 3,978,508
US 2,700,000 Goldman Sachs & Co., 5.55%, 5/2/97............................................. 2,699,166
CH 7,000,000 Halifax Building Society Ltd., 1.72%, 5/12/97 ................................. 4,744,405
US 5,225,000 Merrill Lynch & Co. Inc., 5.55%, 5/8/97........................................ 5,218,563
US 5,120,000 Nestle Capital Corporation, 5.47%, 5/29/97 .................................... 5,097,231
CH 7,000,000 Pepsico Inc., 1.70%, 5/12/97 .................................................. 4,744,405
----------
Total Commercial Paper (Cost $44,817,705) ............................... 44,735,989
----------
Foreign Government Securities - Floating Rate Notes 2.5%
DD 4,600,000 bGovernment of Belgium, floating rate note, semi-annual calls, 3.188%,
3/24/00 (Cost $3,040,367) .................................................... 2,653,999
----------
Government Securities 19.1%
DD 1,650,000 bEuropean Investment Bank, floating rate note, semi-annual calls,
2.85%, 10/23/98 .............................................................. 951,120
DD 10,100,000 Federal Republic of Germany, Bundesschatzanw, 5.75%, 8/20/97 .................. 5,874,508
DD 14,000,000 German Treasury Bill, 2.90% to 3.05%, with maturities to 10/17/97 ............. 8,020,953
US 5,599,000 U. S. Treasury Bills, 5.00% to 5.20%, with maturities to 6/5/97................ 5,572,438
----------
Total Government Securities (Cost $22,087,944) .......................... 20,419,019
----------
Statement of Investments in Securities and Net Assets, April 30, 1997 (unaudited) (cont.)
Face Value
Country* Amount Franklin Templeton Hard Currency Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Government Agencies 30.0%
US 8,500,000 Federal Farm Credit Banks, 5.24% to 5.45%, with maturities to 6/24/97 ......... $ 8,457,330
US 6,025,000 Federal Home Loan Bank, 5.41% to 5.42%, with maturities to 6/12/97 ............ 6,380,800
US 6,100,000 Federal Home Loan Mortgage Corp., 5/13/97 ..................................... 6,089,081
US 11,100,000 Federal National Mortgage Association, 5.41% to 5.68%, with
maturities to 10/07/97........................................................ 11,096,584
----------
Total U.S. Government Agencies (Cost $32,019,658) ....................... 32,023,795
----------
Total Short Term Investments (Cost $107,455,674) ........................ 105,322,802
----------
Total Investments (Cost $109,870,440) 100.6% ....................... 107,205,905
Other Assets and Liabilities, Net 0.3% ............................. 288,443
Net Unrealized Loss on Forward Foreign
Currency Contracts (0.9%) ................................................... (932,111)
----------
Net Assets 100.0% .................................................. $106,562,237
==========
At April 30, 1997, the net unrealized depreciation based on the cost of
investments for income tax purposes of $109,870,440 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost ........................... $ 7,210
Aggregate gross unrealized depreciation for all investments in
which there was an excess of value over tax cost ........................... (2,671,746)
----------
Net unrealized depreciation ................................................. $ (2,664,536)
==========
*Securities traded in currency of country indicated. See page 38 for country legend.
aCertain short-term securities are traded on a discount basis; the rates shown are the discount rates at the time of the purchase by
the Fund. Other securities bear interest at the rate shown, payable at fixed dates or upon maturity.
bFloating rate notes with an embedded put and/or call feature.
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, 1997 (unaudited)
Face Value
Country* Amount Franklin Templeton High Income Currency Fund (Note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long Term Investment 8.0%
Foreign Government Securities - Floating Rate Notes
UK 460,000 United Kingdom, floating rate note, 5.989%, 3/11/99 (Cost $716,135) ............... $ 746,925
----------
aShort Term Investments 90.1%
Time Deposit 7.7%
US 460,000 Deutsche Bank AG, 5.65%, 5/1/97.................................................... 460,000
IT 443,234,030 JP Morgan & Co. Inc., 7.00%, 5/7/97................................................ 258,694
----------
Total Time Deposit (Cost $718,694) .......................................... 718,694
----------
Commercial Paper 26.1%
US 410,000 Abbott Laboratories, 5.47%, 5/12/97 ............................................... 409,244
US 440,000 Bank of Nova Scotia, 5.52%, 6/6/97................................................. 437,499
US 335,000 Ciesco LP, 5.32%, 5/1/97........................................................... 335,000
US 400,000 General Electric Capital Corp., 5.25%, 6/4/97...................................... 397,851
US 430,000 Merrill Lynch & Co. Inc., 5.55%, 5/8/97............................................ 429,470
US 420,000 Nestle Capital Corporation, 5.47%, 5/29/97 ........................................ 418,132
----------
Total Commercial Paper (Cost $2,427,284) ................................ 2,427,196
----------
Government Securities 21.4%
CA 390,000 Canada Treasury Bill, 6.67%, 10/02/97 ............................................. 275,405
ES 69,000,000 Government of Spain, 0.0%, 4/3/98.................................................. 447,163
IT 910,000,000 Italy Treasury Bill, 8.26%, 9/30/97 ............................................... 517,580
SE 2,000,000 Sweden Treasury Bill, 14.95%, 6/18/97 ............................................. 253,480
US 507,000 U. S. Treasury Bills, 4.97% to 5.105%, 6/5/97...................................... 504,595
----------
Total Government Securities (Cost $2,066,740) ........................... 1,998,223
----------
U.S. Government Agencies 34.9%
US 345,000 Federal Farm Credit Banks, 5.24%, 5/6/97........................................... 344,743
US 1,030,000 Federal Home Loan Bank, 5.41% to 5.46%, with maturities to 6/12/97 ................ 1,027,747
US 1,080,000 Federal Home Loan Mortgage Corp., 5.35% to 5.37%, with maturities
to 6/6/97......................................................................... 1,077,308
US 800,000 Federal National Mortgage Association., 5.42% to 5.68%, with maturities
to 10/7/97........................................................................ 797,666
----------
Total U.S. Government Agencies (Cost $3,247,192) ............................ 3,247,464
----------
Total Short Term Investments (Cost $8,459,910) .............................. 8,391,577
----------
Total Investments (Cost $9,176,045) 98.1% .............................. 9,138,502
Other Assets and Liabilities, Net 1.9% ................................. 175,885
----------
Net Assets 100.0% ..................................................... $9,314,387
==========
At April 30, 1997, the net unrealized depreciation based on the cost of
investments for income tax purposes of $9,176,045 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost ............................... $ 31,372
Aggregate gross unrealized depreciation for all investments in
which there was an excess of value over tax cost ............................... (68,915)
----------
Net unrealized depreciation ..................................................... $ (37,543)
==========
COUNTRY LEGEND:
AT - Austria
CA - Canada
CH - Switzerland
DD - Germany
ES - Spain
IT - Italy
JP - Japan
SE - Sweden
UK - United Kingdom
US - United States
*Securities traded in currency of country indicated. See page 38 for country legend.
aCertain short-term securities are traded on a discount basis; the rates shown are the discount rates at the time of the purchase by
the Fund. Other securities bear interest at the rate shown, payable at fixed dates or upon maturity.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements
Statements of Assets and Liabilities
April 30, 1997 (unaudited)
Franklin
Templeton Franklin Franklin Franklin
German Templeton Templeton Templeton
Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
---------- ----------- ----------- -----------
Assets:
Investment in Securities:
<S> <C> <C> <C> <C>
At identified cost .............................................. $15,030,639 $44,261,383 $109,870,440 $ 9,176,045
========== =========== =========== ===========
At value ........................................................ $13,747,261 $43,338,038 $107,205,905 $ 9,138,502
Foreign currencies (cost $ 1,156,759) ............................ 1,146,318 -- -- --
Cash ............................................................. -- 2,020,723 3,362,449 201,310
Receivables:
Investment securities sold ...................................... -- -- -- 2,571,563
Interest ........................................................ 358,286 111,890 266,984 12,216
Capital shares sold ............................................. 40,529 21,502 152,359 33,268
Net unrealized gain on forward foreign currency contract (Note 2) 1,047 205,287 94,406 5,323
Unamortized organization cost (Note 3) ........................... 5,135 -- -- --
---------- ----------- ----------- -----------
Total assets ................................................ 15,298,576 45,697,440 111,082,103 11,962,182
---------- ----------- ----------- -----------
Liabilities:
Payables:
Investment securities purchased ................................. -- -- -- 2,571,796
Capital shares repurchased ...................................... 5,380 155,149 3,074,789 13,521
Management fees ................................................. 6,841 24,526 58,477 5,017
Distribution fees ............................................... 7,794 23,569 92,629 6,781
Shareholder servicing costs ..................................... 5,521 4,520 10,889 1,118
Accrued expenses and other liabilities ........................... 130,784 185,492 256,565 44,231
Net unrealized loss on forward foreign currency contract (Note 2) -- 235,598 1,026,517 5,331
U.S. cash overdraft .............................................. 5,782 -- -- --
---------- ----------- ----------- -----------
Total liabilities ........................................... 162,102 628,854 4,519,866 2,647,795
---------- ----------- ----------- -----------
Net assets, at value .............................................. $15,136,474 $45,068,586 $106,562,237 $ 9,314,387
========== =========== =========== ===========
Net assets consist of:
Distributions in excess of net investment income ................. $ (39,860) $ (37,636) $ (64,963) $ (46,919)
Unrealized appreciation (depreciation) on investments and translation
of assets and liabilities denominated in foreign currencies ..... (1,320,940) (963,112) (3,617,198) (41,738)
Accumulated net realized gain (loss) from
investments and foreign currency transactions ................... (297,656) (1,875,618) (13,946,569) (208,277)
Capital shares:
Class I ......................................................... 16,010,628 47,944,952 123,969,771 9,611,321
Advisor Class ................................................... 784,302 -- 221,196 --
---------- ----------- ----------- -----------
Net assets, at value .............................................. $15,136,474 $45,068,586 $106,562,237 $ 9,314,387
========== =========== =========== ===========
CLASS I:
Net assets, at value............................................... $14,381,886 $106,347,635
Shares outstanding ................................................ 1,241,251 3,720,070 10,451,430 875,737
========== =========== =========== ===========
Net asset value per share ......................................... $ 11.59 $ 12.11 $ 10.18 $ 10.64
========== =========== =========== ===========
Maximum offering price ............................................ $ 11.95 $ 12.48 $ 10.49 $ 10.97
========== =========== =========== ===========
ADVISOR CLASS:
Net assets, at value............................................... $ 754,588 $ 214,602
Shares outstanding ................................................ 65,017 21,073
========== =========== =========== ===========
Net asset value per share ......................................... $ 11.61 $ 10.18
========== =========== =========== ===========
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 ($15,136,474/1,306,268) $ 11.59
========== =========== =========== ===========
Maximum offering price (100/97 of $11.59) ......................... $ 11.95
========== =========== =========== ===========
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, 1997 (unaudited)
Franklin
Templeton Franklin Franklin Franklin
German Templeton Templeton Templeton
Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
---------- ----------- ----------- -----------
Investment income:
<S> <C> <C> <C> <C>
Interest ............................................... $ 479,488 $ 1,221,840 $ 2,646,265 $ 267,201
---------- ----------- ----------- -----------
Expenses:
Management fees (Note 7) ............................... 43,774 154,844 365,034 31,200
Distribution fees (Note 7)
Class I................................................ 15,697 47,666 140,480 10,801
Shareholder servicing costs ............................ 14,600 19,500 55,100 6,000
Custody fees ........................................... -- 500 2,700 --
Professional fees ...................................... 6,650 2,900 13,500 6,700
Registration fees and insurance ........................ 10,500 6,850 22,400 2,525
Reports to shareholders ................................ 6,500 5,700 17,250 2,461
Amortization of organization cost (Note 3) ............. 3,801 -- -- --
Trustees' fees and expenses ............................ 3,750 4,200 5,100 3,600
Other .................................................. 1,094 3,777 1,705 --
---------- ----------- ----------- -----------
Total expenses ..................................... 106,366 245,937 623,269 63,287
---------- ----------- ----------- -----------
Net investment income .............................. 373,122 975,903 2,022,996 203,914
---------- ----------- ----------- -----------
Realized and unrealized loss:
Net realized loss on:
Investments ........................................... (229,474) (386,011) (3,603,474) (135,262)
Foreign currency transactions ......................... (68,182) (1,204,031) (8,881,727) (50,607)
---------- ----------- ----------- -----------
(297,656) (1,590,042) (12,485,201) (185,869)
---------- ----------- ----------- -----------
Net unrealized depreciation on:
Investments ........................................... (1,668,770) (981,616) (2,806,096) (111,023)
Foreign currency translation of
other assets and liabilities ......................... (34,794) (10,335) (22,797) (41,263)
---------- ----------- ----------- -----------
(1,703,564) (991,951) (2,828,893) (152,286)
---------- ----------- ----------- -----------
Net realized and unrealized loss ........................ (2,001,220) (2,581,993) (15,314,094) (338,155)
---------- ----------- ----------- -----------
Net decrease in net assets resulting from operations .... $(1,628,098) $(1,606,090) $(13,291,098) $(134,241)
========== =========== =========== ===========
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
for the six months ended April 30, 1997 (unaudited)
and the year ended October 31, 1996
Franklin Templeton Franklin Templeton
German Government Bond Fund Global Currency Fund
---------------------------------- ---------------------------------
Six months ended Six months ended
April 30, 1997 Year ended April 30, 1997 Year ended
(unaudited) October 31, 1996 (unaudited) October 31, 1996
----------- ----------- ---------- -----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income ................................. $ 373,122 $ 1,129,998 $ 975,903 $ 2,341,624
Net realized loss from investments and
foreign currency transactions ........................ (297,656) (84,969) (1,590,042) (857,075)
Net unrealized depreciation on
investments and translation of assets and
liabilities denominated in foreign currencies .......... (1,703,564) (1,319,445) (991,951) (914,651)
----------- ----------- ---------- -----------
Net increase (decrease) in net assets
resulting from operations .............................. (1,628,098) (274,416) (1,606,090) 569,898
Distributions to shareholders:
From undistributed net investment income
Class I ............................................... (367,985) (1,645,317) (988,138) (3,012,672)
Advisor Class ......................................... (5,137) -- -- --
In excess of net investment income
Class I ............................................... (38,463) -- (37,636) --
Advisor Class ......................................... (1,397) -- -- --
From net realized gains
Class I ............................................... -- (102,554) -- --
From tax return of capital
Class I ............................................... -- (102,139) -- (1,330,318)
Decrease in net assets from
capital share transactions (Note 4) .................... (374,259) (4,437,052) (3,072,955) (5,395,335)
----------- ----------- ---------- -----------
Net decrease in net assets ........................ (2,415,339) (6,561,478) (5,704,819) (9,168,427)
Net assets:
Beginning of period .................................... 17,551,813 24,113,291 50,773,405 59,941,832
----------- ----------- ---------- -----------
End of period .......................................... $15,136,474 $17,551,813 $45,068,586 $50,773,405
=========== =========== ========== ===========
Undistributed net investment income
(loss) included in net assets:
Beginning of period ................................... $ -- $ 660,762 $ 12,235 $ 1,463,213
=========== =========== ========== ===========
End of period ......................................... $ (39,860) $-- $ (37,636) $ 12,235
=========== =========== ========== ===========
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, 1997 (unaudited)
and the year ended October 31, 1996
Franklin Templeton Franklin Templeton
Hard Currency Fund High Income Currency Fund
--------------------------------- ---------------------------------
Six months ended Six months ended
April 30, 1997 Year ended April 30, 1997 Year ended
(unaudited) October 31, 1996 (unaudited) October 31, 1996
----------- ----------- ---------- -----------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income ................................. $ 2,022,996 $ 5,612,738 $ 203,914 $ 488,555
Net realized loss from investments and
foreign currency transactions .......................... (12,485,201) (13,632,229) (185,869) (12,000)
Net unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign currencies .......... (2,828,893) 22,729 (152,286) 59,056
----------- ----------- ---------- -----------
Net increase (decrease) in net assets
resulting from operations .............................. (13,291,098) (7,996,762) (134,241) 535,611
Distributions to shareholders:
From undistributed net investment income
Class I ............................................... (2,180,181) (596,892) (162,854) (1,005,818)
Advisor Class ......................................... (1,330) -- -- --
In excess of net investment income
Class I ............................................... (64,734) -- (46,918) --
Advisor Class ......................................... (229) -- -- --
From net realized gain
Class I............................................... -- -- -- (12,939)
From tax return of capital
Class I ............................................... -- (6,321,432) -- (24,976)
Increase (decrease) in net assets from
capital share transactions (Note 4) .................... (2,566,493) 7,492,381 (454,861) (280,803)
----------- ----------- ---------- -----------
Net decrease in net assets ........................ (18,104,065) (7,422,705) (798,874) (788,925)
Net assets:
Beginning of period .................................... 124,666,302 132,089,007 10,113,261 10,902,186
----------- ----------- ---------- -----------
End of period .......................................... $106,562,237 $124,666,302 $ 9,314,387 $10,113,261
=========== =========== ========== ===========
Undistributed net investment income
(loss) included in net assets:
Beginning of period ................................... $ 158,515 $ 1,248,928 $ (41,061) $ 465,794
=========== =========== ========== ===========
End of period ......................................... $ (64,963) $ 158,515 $ (46,918) $ (41,061)
=========== =========== ========== ===========
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), 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.
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 in the over-the-counter market and on a securities exchange are
valued according to the broadest and most representative market as determined by
the 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.
The fair values of securities restricted as to resale, if any, are determined
following procedures established by the Board of Trustees.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
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.
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.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
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 the reporting
period. 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, 1997, the German Government Fund had the following forward
foreign currency contracts outstanding:
<TABLE>
<CAPTION>
Contracts to Buy:
- -----------------
<S> <C> <C>
1,435,900 Deutschemark for 830,000 U.S. dollars, May 30, 1997............................................ $ 1,047
----------
Net unrealized gain on forward exchange contracts........................................ $ 1,047D
==========
As of April 30, 1997, the Global Currency Fund had the following forward foreign
currency contracts outstanding:
Contracts to Buy:
- -----------------
<S> <C> <C>
1,000,000 Australian dollars for 776,000 U.S. dollars, May 21,1997....................................... $ 3,687
----------
Contracts to Buy:
- -----------------
<S> <C> <C>
2,490,000 Deutschemark for 1,495,496 U.S. dollars, May 7, 1997........................................... (56,723)
2,900,000 Deutschemark for 1,695,906 U.S. dollars, May 12, 1997.......................................... (19,633)
3,500,000 Deutschemark for 2,026,636 U.S. dollars, May 16, 1997.......................................... (2,973)
869,400,000 Japanese yen for 6,969,138 U.S. dollars, May 27, 1997.......................................... (91,820)
2,300,000 Deutschemark for 1,380,213 U.S. dollars, July 14, 1997......................................... (44,556)
2,677,000 Deutschemark for 1,561,024 U.S. dollars, July 14, 1997......................................... (6,436)
1,100,000 Deutschemark for 646,109 U.S. dollars, July 22, 1997........................................... (6,950)
1,200,000 Deutschemark for 703,771 U.S. dollars, July 22, 1997........................................... (6,507)
----------
(235,598)
----------
2. FORWARD FOREIGN CURRENCY CONTRACTS
Contracts to Sell:
- ------------------
<S> <C> <C>
8,140,000 Deutschemark for 4,861,588 U.S. dollars, July 14,1997.......................................... $ 134,527
2,200,000 Deutschemark for 1,286,324 U.S. dollars, July 22,1997.......................................... 8,007
700,000 Deutschemark for 408,974 U.S. dollars, July 22,1997............................................ 2,237
600,000 Deutschemark for 349,956 U.S. dollars, July 22,1997............................................ 1,324
600,000 Deutschemark for 356,040 U.S. dollars, July 22,1997............................................ 7,409
2,500,000 Deutschemark for 1,459,027 U.S. dollars, July 24,1997.......................................... 6,186
1,800,000 Deutschemark for 1,051,488 U.S. dollars, July 24,1997.......................................... 5,442
----------
165,132
Unrealized gain from offsetting forward exchange contracts .............................. 36,468
----------
201,600
----------
Net unrealized loss on forward exchange contracts ....................................... $ (30,311)
==========
As of April 30, 1997, the Hard Currency Fund had the following forward foreign
currency contracts outstanding:
Contracts to Buy:
- -----------------
<S> <C> <C>
28,225,000 Deutschemark for 16,951,952 U.S dollars, May 7, 1997 .......................................... $ (642,969)
4,059,000,000 Japanese yen for 32,311,734 U.S. dollars, May 9, 1997.......................................... (288,533)
32,000,000 Deutschemark for 18,539,977 U.S. dollars, May 16, 1997......................................... (37,919)
13,853,000 Swiss francs for 9,486,082 U.S. dollars, May 21, 1997 ......................................... (57,096)
----------
(1,026,517)
----------
Contracts to Sell:
- ------------------
<S> <C> <C>
1,430,000,000 Japanese yen for 11,376,923 U.S. dollars, May 9, 1997.......................................... 94,406
----------
Net unrealized loss on forward exchange contracts ...................................... $ (932,111)
==========
As of April 30, 1997, the High Income Fund had the following forward foreign
currency contracts outstanding:
Contracts to Buy:
- -----------------
<S> <C> <C>
128,000 British Pound for 210,688 U.S. dollars, May 9, 1997............................................ $ (3,288)
62,500,000 Spanish pesetas for 429,553 U.S. dollars, May 19, 1997......................................... (2,043)
----------
(5,331)
----------
Contracts to Buy:
- -----------------
<S> <C> <C>
940,000 Australian dollars for 729,440 U.S. dollars, May 21, 1997 ..................................... 3,446
1,445,000 Canadian dollars for 1,035,842 U.S. dollars, May 27, 1997 ..................................... 604
----------
4,070
----------
Contracts to Sell:
- ------------------
<S> <C> <C>
150,000 Canadian dollars for 108,050 U.S. dollars, July 21, 1997 ...................................... 79
2,000,000 Swedish kronas for 256,377 U.S. dollars, May 30, 1997.......................................... 1,174
----------
1,253
----------
Net unrealized loss on forward exchange contracts ....................................... $ (8)
==========
</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.
4. TRUST SHARES
The Global Currency Fund and High Income Fund offer one class of shares.
Effective January 2, 1997, the German Bond Fund and the Hard Currency Fund offer
two classes of shares: Class I and Advisor Class shares. Prior to this date,
only Class I shares were offered. Shares of each class are identical except for
their initial sales load, distribution fees, and voting rights on matters
affecting a single class fund. At April 30, 1997 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, 1997 and the year ended October 31, 1996 were
as follows:
<TABLE>
<CAPTION>
Franklin Templeton
German Government Franklin Templeton
Bond Fund Global Currency Fund
------------------------- ------------------------
CLASS I Shares Amount Shares Amount
------- -------- ------- -------
Six months Ended April 30, 1997
<S> <C> <C> <C> <C>
Shares sold .................................................... 193,169 $ 2,360,958 282,334 $ 3,498,944
Shares issued in reinvestment of distributions ................. 26,883 332,747 69,869 867,025
Shares redeemed ................................................ (312,718) (3,852,265) (599,517) (7,438,924)
------- -------- ------- -------
Net decrease .............................................. (92,666) $(1,158,560) (247,314) $ (3,072,955)
======= ======== ======= =======
Year Ended October 31, 1996
Shares sold .................................................... 633,495 $ 8,633,416 534,790 $ 6,917,329
Shares issued in reinvestment of distributions ................. 109,008 1,470,996 282,686 3,656,845
Shares redeemed ................................................ (1,093,633) (14,541,464) (1,234,150) (15,969,509)
------- -------- ------- -------
Net decrease .............................................. (351,130) $ (4,437,052) (416,674) $ (5,395,335)
======= ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Franklin Templeton
German Government
Bond Fund
--------------------------
ADVISOR CLASS Shares Amount
------- -------
For the period January 2, 1997 through April 30, 1997
<S> <C> <C>
Shares sold ...................................................... 100,745 $ 1,207,375
Shares issued in reinvestment of distributions ................... 555 6,534
Shares redeemed .................................................. (36,283) (429,608)
------- -------
Net increase ................................................ 65,017 $ 784,301
======= =======
</TABLE>
<TABLE>
<CAPTION>
4. TRUST SHARES (cont.)
Franklin Templeton Franklin Templeton
Hard Currency High Income Currency Fund
------------------------- -------------------------
CLASS I Shares Amount Shares Amount
-------- -------- -------- --------
Six Months Ended April 30, 1997
<S> <C> <C> <C> <C>
Shares sold ..................................................... 3,847,646 $ 41,452,551 179,245 $ 1,935,172
Shares issued in reinvestment of distributions .................. 159,892 1,733,166 13,737 148,549
Shares redeemed ................................................. (4,264,036) (45,973,406) (234,763) (2,538,582)
-------- -------- -------- --------
Net decrease ............................................... (256,498) $ (2,787,689) (41,781) $ (454,861)
======== ======== ======== ========
Year Ended October 31, 1996
Shares sold ..................................................... 7,838,577 $ 95,388,807 246,388 $ 2,688,736
Shares issued in reinvestment of distributions .................. 440,761 5,393,631 68,646 742,520
Shares redeemed ................................................. (7,661,154) (93,290,057) (340,903) (3,712,059)
-------- -------- -------- --------
Net increase (decrease) .................................... 618,184 $ 7,492,381 (25,869) $ (280,803)
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Franklin Templeton
Hard Currency
--------------------------
ADVISOR CLASS Shares Amount
------- -------
For the period January 2, 1997 through April 30, 1997
<S> <C> <C>
Shares sold ..................................................... 31,625 $ 330,590
Shares issued in reinvestment of distributions .................. 150 1,552
Shares redeemed ................................................. (10,702) (110,946)
------- -------
Net increase................................................... 21,073 $ 221,196
======= =======
</TABLE>
<TABLE>
<CAPTION>
5. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At October 1, 1996, 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.......................................... -- 173,253 112,254 --
2004 ......................................... -- 77,143 1,047,201 22,408
------------- -------------- ------------- ------------
-- $285,578 $1,461,368 $22,408
============= ============== ============= ============
</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, 1997, 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................................ $1,044,412 -- -- --
============= ============== ============= ============
Sales.................................... $3,044,780 -- -- --
============= ============== ============= ============
</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), 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 for the six months ended April 30, 1997.
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, 1997
aggregated $95,200.
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 $214,644 for the six months ended April
30, 1997.
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. Commisions received by Distributors
and the amounts which were subsequently paid to other dealers for the six months
ended April 30, 1997 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................ $14,323 $23,201 $245,708 $4,524
============= ============== ============= ============
Paid to other dealers..................... $12,528 $20,591 $219,683 $3,943
============= ============== ============= ============
</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 non-diversified investment portfolio, most
of its investments are in the securities of issuers in the country of Germany.
Such concentration may subject the Fund to economic changes occurring within
that country.
<TABLE>
<CAPTION>
9. FINANCIAL HIGHLIGHTS
Selected data for each share of beneficial interest outstanding throughout each
period, by Fund are as follows:
Per Share Operating Performance+ Ratios/Supplemental Data
---------------------------------------------------- --------------------------------------------
Ratio
Distri- of Net
Net Net Total butions Invest-
Asset Realized From From Distri- Distri- Net Net Ratio of ment Port-
Value at Net & Unreal- Invest- Net butions butions Asset Assets Expenses Income to folio
Year Begin- Invest- ized ment Invest- From From Total Value at End to Average Average Turn-
Ended ning of ment Gain Oper- ment Capital Return of Distri- at End Total of Year Net Assets Net over
October 31 Year Income (Loss) ations Income Gains Capital+++ butions of Year Return++ (in 000's)(see Note 7) Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton German Government Bond Fund - Class I
<S> <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 0.66 (0.69) (0.03 (1.00) (0.06) (0.06) (1.12) 13.16 (0.14) 17,552 1.10 5.25 57.59
19976 13.16 0.29 (1.54) (1.25) (0.32)** -- -- (0.32) 11.59 (9.63) 14,382 1.34* 4.69 6.97
Franklin Templeton German Government Bond Fund - Advisor Class
19977 12.98 0.20 (1.35) (1.15) (0.22) -- -- (0.22) 11.61 (8.92) 754 1.19* 4.65 6.97
Franklin Templeton Global Currency Fund
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 0.69 (0.54) 0.15 (0.71) -- (0.31) (1.02) 12.80 1.27 50,773 0.99 4.30 --
19976 12.80 0.25 (0.67) (0.42) (0.27)** -- -- (0.27) 12.11 (3.34) 45,069 1.03* 4.10 --
Franklin Templeton Hard Currency Fund - Class I
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 0.57 (1.34) (0.77) (0.06) -- (0.62) (0.68) 11.64 (5.99) 124,666 1.10 4.50 --
19976 11.64 0.20 (1.44) (1.24) (0.22)** -- -- (0.22) 10.18 (10.78) 106,347 1.11* 3.60 --
Franklin Templeton Hard Currency Fund - Advisor Class
19977 11.28 0.14 (1.09) (0.95) (0.15) -- -- (0.15) 10.18 (8.49) 215 0.89* 3.77 --
9. FINANCIAL HIGHLIGHTS (cont.)
Per Share Operating Performance+ Ratios/Supplemental Data
---------------------------------------------------- --------------------------------------------
Ratio
Distri- of Net
Net Net Total butions Invest-
Asset Realized From From Distri- Distri- Net Net Ratio of ment Port-
Value at Net & Unreal- Invest- Net butions butions Asset Assets Expenses Income to folio
Year Begin- Invest- ized ment Invest- From From Total Value at End to Average Average Turn-
Ended ning of ment Gain Oper- ment Capital Return of Distri- at End Total of Year Net Assets Net over
October 31 Year Income (Loss) ations Income Gains Capital+++ butions of Year Return++ (in 000's)(see Note 7) Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Templeton High Income Currency Fund
<S> <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* 1,588.38*
19954 11.59 1.47 (0.51) 0.96 (0.99) -- -- (0.99) 11.56 8.90 10,902 1.25 5.56 115.05
19965 11.56 0.58 -- 0.58 (1.08) (0.01) (0.03) (1.12) 11.02 5.56 10,113 1.25 4.83 --
19976 11.02 0.23 (0.37) (0.14) (0.24)** -- -- (0.24) 10.64 (1.33) 9,314 1.32* 4.25 --
</TABLE>
1For the period December 31, 1992 (effective date of registration) to April 30,
1993.
2Financial Highlights for periods ended April 30, 1994, October 31, 1994, and
October 31, 1995 have been audited by Coopers & 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.
5For the year ended October 31, 1996.
6Six months ended April 30, 1997.
7For the period January 2, 1997 (commencement of sales) to April 30, 1997.
+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.
**Includes distributions in excess of Net Investment Income in the following
amounts:
Franklin Templeton German Goverment Bond Fund
Class I............................................. $0.010
Franklin Templeton Global Currency Fund
Class I............................................. $0.004
Franklin Templeton Hard Currency Fund
Class I............................................. $0.001
Franklin Templeton High Income Currency Fund
Class I............................................. $0.013
<TABLE>
<CAPTION>
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
<S> <C>
19931............................................................... 1.73%*
1994................................................................ 1.83
19943............................................................... 1.77*
19954............................................................... 1.29
Franklin Templeton Global Currency Fund
1994................................................................ 1.61
19943............................................................... 1.12*
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............................................................... 1.29
</TABLE>
Franklin Templeton Global Trust Semi-Annual Report April 30, 1997
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 format the asset allocation by asset class of the fund's
securities on April 30, 1997, based on total net assets.
<TABLE>
<CAPTION>
Asset Allocation by Asset Class on April 30, 1997
<S> <C>
Foreign (Non-German) Government Euromark Bonds 22.1%
German Pfandbriefe Bonds 19.2%
German State Government Bonds 17.7%
German Federal Government Bonds 16.1%
German Government Agency Bonds 9.6%
Other Net Assets & Liabilities 15.3%
</TABLE>
GRAPHIC MATERIAL (2)
This chart shows in pie format the asset allocation by currency of the fund's
securities on April 30, 1997, based on total net assets.
<TABLE>
<CAPTION>
Asset Allocation by Currency on April 30, 1997
<S> <C>
U.S. Dollar 61.9%
German Mark 15.6%
Japanese Yen 15.5%
Spanish Peseta 5.3%
Australian Dollar 1.7%
</TABLE>
GRAPHIC MATERIAL (3)
This chart shows in pie format the asset allocation by currency of the fund's
securities on April 30, 1997, based on total net assets.
<TABLE>
<CAPTION>
Asset Allocation by Currency on April 30, 1997
<S> <C>
German Mark 49.1%
Swiss Franc 22.2%
Japanese Yen 20.2%
U.S. Dollar 7.5%
Italian Lira 1.0%
</TABLE>
GRAPHIC MATERIAL (4)
This chart shows in pie format the asset allocation by currency of the fund's
securities on April 30, 1997, based on total net assets.
<TABLE>
<CAPTION>
Asset Allocation by Currency on April 30, 1997
<S> <C>
U.S. Dollar 45.8%
Canadian Dollar 12.9%
British Pound 10.3%
Spanish Peseta 9.4%
Italian Lira 8.3%
Australian Dollar 7.8%
Swedish Krona 5.5%
</TABLE>
