Semi
Annual
Report
April 30, 1998
Franklin Templeton Global Trust
Franklin Templeton German Government Bond Fund
Franklin Templeton Global Currency Fund
Franklin Templeton Hard Currency Fund
Franklin Templeton HighIncome Currency Fund
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective, and to expect that mixed in with the good
years can be some bad years. It's important to remember that all securities
markets move both up and down, as do mutual fund share prices. We appreciate
your past support and look forward to serving your investment needs in the years
ahead.
Donald P. Gould
President
Franklin Templeton Global Trust
CONTENTS
Shareholder Letter ............................................. 1
Economic Overview .............................................. 3
Fund Reports
Franklin Templeton
German Government
Bond Fund ...................................................... 5
Franklin Templeton
Global Currency Fund ........................................... 12
Franklin Templeton
Hard Currency Fund ............................................. 17
Franklin Templeton
High Income Currency
Fund ........................................................... 24
Financial Highlights &
Statement of Investments ....................................... 30
Financial Statements ........................................... 40
Notes to
Financial Statements ........................................... 45
SHAREHOLDER LETTER
Dear Shareholder:
We are pleased to bring you this semi-annual report of Franklin Templeton Global
Trust for the period ended April 30, 1998. During the six months under review,
the U. S. dollar continued to shadow the remarkable and seemingly relentless
climb of the U.S. stock market. Since a strong dollar, by definition, means
depreciating foreign currencies, the performance of the four funds that comprise
the Franklin Templeton Global Trust remained weak in absolute terms. The funds
did, however, perform well relative to our internal benchmarks,* though this may
be of small consolation in light of the depressed returns of the benchmarks
themselves. A detailed discussion of the funds' performance can be found in the
following individual fund reports.
*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
beginning on pages 12, 17, and 24.
The close relationship between the fortunes of the U.S. dollar and financial
markets is not hard to fathom. For a foreign investor, the total return on a
dollar-denominated investment has an extra component -- the currency gain or
loss resulting from changes in the exchange rate between the dollar and the
investor's home currency. In periods of dollar strength, the foreign investor
experiences a currency gain on U.S. investments. Conversely, U.S. investors
putting money abroad suffer currency losses. Thus, a strong dollar tends to
attract foreign investment while also discouraging U.S. investment overseas.
Both actions only serve to increase demand for U.S. dollars and thereby
reinforce the dollar's upward trend.
For U.S. investors with portfolios of mostly U.S. securities, the period under
review resembled a "virtuous" circle, with higher markets begetting a stronger
dollar, begetting yet higher markets, and so on. Of course, "virtuous" circles
have a way of becoming "vicious" circles, and the belief that individual markets
actually fall from time to time is a core assumption underlying the argument
that spreading one's investment "eggs" among multiple market "baskets" (i.e.,
asset classes) may save us from undue portfolio heartache. However, the U.S.
stock market's near monotonic climb in the 1990s has sorely tested this belief
for many. After all, why bother with diversification if the market only goes up?
The answer, of course, is, "booms go boom," at least eventually, though let's
hope no time soon. But when the U.S. market does experience a downturn, and if
the dollar follows suit as it often does, we can expect foreign
currency-denominated bonds and money market instruments to cushion the blow.
During these buoyant times, we advise you not to abandon diversification,
tempting though that may be, but rather remind yourself why you diversify. And
instead of bemoaning the recent low returns of portfolio "hedges," celebrate the
fact that, with hindsight, they proved unnecessary. After all, the best
insurance policy is the one that goes unused.
As always, we thank you for investing with us.
Yours sincerely,
Donald P. Gould
President
Franklin Templeton Global Trust
ECONOMIC OVERVIEW
During the six months under review, U.S. gross domestic product rose at a
strong, 4.0% annualized rate, the consumer price index increased just 1.1% on an
annualized basis and U.S. interest rates remained relatively stable. The U.S.
30-year Treasury bond yield moved in a narrow range between 6.25% and 5.71%, and
the Federal Reserve Board (the Fed) left the overnight Fed Funds rate
unchanged.* Many market participants, including the Fed, anticipated that the
Asian monetary crisis would slow economic growth and cause interest rates to
fall. Others believed that the Asian crisis would have little impact on rapid
U.S. economic growth and that interest rates would rise. As of the date of this
report, conditions remained balanced between the two possibilities.
*Source: Bloomberg.
The Japanese yen weakened during the period from 120.47 to 132.86 yen per U.S.
dollar. Already stagnant for several years, the Japanese economy seemed poised
on the brink of another recession during early 1998. Unemployment hit a
post-World War II high of 4.1% and business sentiment, according to the
quarterly "tankan" survey, reached multi-year lows. Even several government
"recovery plans" and historically low interest rates did not spur growth. The
only apparent factor supporting the yen was occasional intervention by the Bank
of Japan.
The German mark fared somewhat better, as Germany's economy expanded at an
annualized rate of 2.0% during the six months ended March 31, 1998. Although
unemployment remained at a historically high level above 11%, many observers
believed that the Bundesbank might raise interest rates slightly before the end
of 1998. Consequently, the mark fell from 1.7265 marks per U.S. dollar on
October 31, 1997 to 1.7947 on April 30, 1998.
Looking forward, the U.S. economic outlook remains generally supportive for the
dollar, particularly against the yen. However, due to devaluations of many Asian
currencies, the trade deficit could expand significantly later this year,
causing the market to question the sustainability of the dollar's rise. And an
increase in European economic growth, combined with a possible slowing of U.S.
economic growth later in the year, might eventually reduce the dollar's
strength.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal value, beginning on page 32 of
this report.
FRANKLIN TEMPLETON
GERMAN GOVERNMENT BOND FUND
Your Fund's Objective: Franklin Templeton German Government Bond Fund's
objective is to seek, over the long-term, total return through investment in a
managed portfolio of German government bonds.
Economic conditions in Germany improved during the six months under review, and
appeared particularly healthy as the reporting period ended. Gross domestic
product increased by an annualized 2.0% between September 30, 1997 and March 31,
1998, and, for the first time in many years, employment increased in the
domestic sector as well as in the export sector. In addition, inflation remained
modest, partly because the Asian currency crisis helped keep commodity prices
relatively low and partly due to the stabilization of the German mark versus the
U.S. dollar. This environment proved ideal for fixed income investors. During
much of the period, yields on 10-year German government bonds were below 5.0%,
and ended at 4.98%, down 0.60% from the level at the beginning of the period.*
The German mark also benefited from these conditions, and ended the period at
1.7947 marks per U.S. dollar after staging a modest rally in April.
*Source: Bloomberg.
Within this environment, Franklin Templeton German Government Bond Fund - Class
I posted a -0.78% six-month cumulative total return, as discussed in the
Performance Summary on page 8. 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 the Performance Summary shows, the fund has
delivered a cumulative total return of +27.49% for the period from its inception
on December 31, 1992 through April 30, 1998.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Attempting to earn the highest possible return for shareholders, we made two
strategic decisions during the reporting period. First, we tried to invest the
maximum possible amount of assets in mark-denominated bonds issued by non-German
issuers, because the yields on these easily tradeable bonds exceeded those of
German government bonds. These "euromark" bonds also offered excellent defensive
characteristics, which may prove valuable if increasing business activity
generates pressure for higher interest rates. Second, we emphasized intermediate
and longer-term issues, which helped the fund benefit from a bond rally.
Looking forward, the growing strength of the German economy could generate
concern that the Bundesbank might raise interest rates to help reduce inflation
pressures. However, we believe that German inflation levels are unlikely to move
significantly higher over the next year, and that interest rates could remain
stable, or even move slightly lower.
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.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
PERFORMANCE SUMMARY
Class I
Franklin Templeton German Government Bond Fund - Class I produced a -0.78%
cumulative total return for the six-month period ended April 30, 1998.
Cumulative total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains, if any, and does not include the
sales charge. However, we have always maintained a long-term perspective when
managing the fund, and we encourage shareholders to view their investments in a
similar manner.
The fund's share price, as measured by net asset value, decreased 33 cents, from
$11.51 on October 31, 1997, to $11.18 on April 30, 1998. During the reporting
period, shareholders received per-share distributions of 23.8 cents ($0.238) in
dividend income. Based on the maximum offering price of $11.53 on April 30,
1998, and an annualization of April's monthly dividend of 3.9 cents ($0.039) per
share, the fund's distribution rate was 4.06%. Distributions will vary depending
on income earned by the fund and any profits realized from the sale of
securities in the portfolio, as well as the level of the fund's operating
expenses.
During the six months ended April 30, 1998, 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 causes 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 - Class I
Periods ended 4/30/98
Since
Inception
1-Year 3-Year 5-Year (12/31/92)
Cumulative Total Return1 0.82% -5.73% 20.11% 27.49%
Average Annual Total Return2 -2.21% -2.94% 3.11% 4.06%
Value of $10,000 Investment3 $9,779 $9,143 $11,654 $12,363
Distribution Rate4 4.06%
30-Day Standardized Yield5 3.08%
4/30/94 4/30/95 4/30/96 4/30/97 4/30/98
One-Year Total Return6 0.64% 26.60% -0.87% -5.47% 0.82%
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated 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 periods indicated and include the sales charge.
4. Distribution rate is based on the maximum offering price of $11.53 per share
on April 30, 1998, and an annualization of the most recent monthly dividend of
3.9 cents ($0.039) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1998.
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. Past expense waivers by the fund's Investment Manager increased the
fund's total returns. If the fund's manager had not taken this action, total
returns for Class I shares would have been lower. Since markets can go down as
well as up, investment return and principal value will fluctuate with market
conditions, currency volatility and the economic, social and political climate
of countries where investments are made. You may have a gain or loss when you
sell your shares.
Advisor Class
Franklin Templeton German Government Bond Fund - Advisor Class produced a -0.68%
cumulative total return for the six-month period ended April 30, 1998.
Cumulative total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains, if any.
The fund's share price, as measured by net asset value, decreased 33 cents, from
$11.52 on October 31, 1997, to $11.19 on April 30, 1998. During the reporting
period, Advisor Class shareholders received per-share distributions of 24.89
cents ($0.2489) in dividend income. Based on the maximum offering price of
$11.19 on April 30, 1998, and an annualization of April's monthly dividend of
4.08 cents ($0.0408) per share, the fund's distribution rate was 4.38%.
Distributions will vary depending on income earned by the fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the fund's operating expenses.
During the six months ended April 30, 1998, 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 causes 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 Periods ended 4/30/98
Since
Inception
1-Year* 3-Year* 5-Year* (12/31/92)*
Cumulative Total Return1 0.93% -5.33% 20.62% 28.03%
Average Annual Total Return 10.93% -1.81% 3.82% 4.75%
Value of $10,000 Investment2 $10,093 $9,467 $12,062 $12,803
Distribution Rate3 4.38%
30-Day Standardized Yield 43.37%
4/30/94 4/30/95 4/30/96 4/30/97 4/30/98
One-Year Total Return5 0.64% 26.60% -0.87% -5.68% 0.93%
*On January 2, 1997, the fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the fund's Class I performance, excluding the effect of the Class I sales
charge, but including the effect of the Class I expenses, including Rule 12b-1
fees; and (b) for periods after January 1, 1997, figures reflect actual Advisor
Class performance, including the deduction of all fees and expenses applicable
only to that class. Since January 2, 1997 (commencement of sales), the
cumulative total return of Advisor Class shares was -8.07%.
1. Cumulative total return represents the change in value of an investment over
the periods indicated. Average annual total return represents the average annual
change in value of an investment over the periods indicated.
2. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated.
3. Distribution rate is based on the maximum offering price of $11.19 per share
on April 30, 1998, and an annualization of the most recent monthly dividend of
4.08 cents ($0.0408) per share.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1998.
5. One-year total return represents the change in value of an investment over
the periods ended on the dates indicated.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Past expense waivers by the fund's Investment Manager increased the
fund's total returns. If the fund's manager had not taken this action, total
returns for Advisor Class shares would have been lower. Since markets can go
down as well as up, investment return and principal value will fluctuate with
market conditions, currency volatility and the economic, social and political
climate of countries where investments are made. You may have a gain or loss
when you sell your shares.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal value, beginning on page 34 of
this report.
FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND
Your Fund's Objective: Franklin Templeton Global Currency Fund seeks to maximize
the investor's total return through a combination of interest income and changes
in the fund's net asset value due to changes in currency exchange rates. The
fund seeks to achieve its objective by investing in interest-earning money
market instruments denominated in three or more Major Currencies, as defined in
the fund's prospectus.
During the six months under review, the U.S. dollar appreciated against most
major currencies. It reached its highest level in more than six years against
the Japanese yen, as Japan's extremely weak economy undermined investor faith in
yen-denominated securities. On April 30, 1998, the U.S. dollar was worth 132.86
yen, a 10% increase in value from the beginning of the period. Because the
German economy continued its recovery, the U.S. dollar's increase in value over
the German mark was smaller than that of the yen. At the period's end, one U.S.
dollar bought 1.7947 German marks, only 4% more than six months earlier.*
*Source: Bloomberg. Changes measured in U.S. dollars.
Within this environment, the fund posted a -0.78% six-month cumulative total
return, as discussed in the Performance Summary on page 15. Since 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 U.S. dollar's value relative to the currencies of countries where it is
invested. This tends to put your fund at a disadvantage during periods of U.S.
dollar strength, because our internal benchmark portfolio is only one-third
weighted in the U.S. money markets, with one-third each in those of Japan and
Germany. 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 the Performance Summary also shows, the fund has delivered a +111.29%
cumulative total return for the period from inception on June 27, 1986 through
April 30, 1998.
Attempting to take advantage of fluctuating exchange rates, we increased our
U.S. dollar exposure to 58.7% of the fund's total net assets and eliminated our
yen positions completely because of extreme pessimism surrounding the Japanese
economy. We also eliminated our small positions in Norwegian krone, Swedish
krona and British pounds. However, our mark-denominated holdings increased, from
13.3% to 19.7% of total net assets, and we held smaller amounts of Canadian,
Australian and New Zealand dollars.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
In our opinion, the outlook remains positive for the U.S. dollar, particularly
against the yen. However, we believe the U.S. trade deficit could expand
significantly later this year, in response to devaluations of many Asian
currencies, and the market may then question the sustainability of the dollar's
rise. Increased European economic growth, combined with a possible slowing of
U.S. growth later in the year, could also cause the dollar's strength to peak.
Until this happens, we are likely to continue to hedge our positions in most
foreign currencies back into the U.S. dollar.
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 a significant amount of the
fund's assets are 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.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
Please note that although the fund's Statement of Investments on page 34 of this
report indicates that the fund held 61.5% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1998, its net exposure to the U.S.
dollar as of that date was only 58.7%. 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 47) calling for the purchase of various foreign
currencies in exchange for U.S. dollars at various future dates. The combination
of U.S. dollar-denominated instruments with "long" forward currency exchange
contracts 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
Franklin Templeton Global Currency Fund produced a -0.78% cumulative total
return for the six-month period ended April 30, 1998. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, if any, and does not include the sales charge. We
have always maintained a long-term perspective when managing the fund, and we
encourage shareholders to view their investments in a similar manner.
The fund's share price, as measured by net asset value, decreased 33 cents, from
$12.10 on October 31, 1997, to $11.77 on April 30, 1998. During the reporting
period, shareholders received per-share distributions of 23.4 cents ($0.2340) in
dividend income. Based on the maximum offering price of $12.13 on April 30,
1998, and an annualization of April's monthly dividend of 3.9 cents ($0.039) per
share, the fund's distribution rate was 3.86%. Distributions will vary depending
on income earned by the fund and any profits realized from the sale of
securities in the portfolio, as well as the level of the fund's operating
expenses.
During the six months ended April 30, 1998, 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 causes 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 4/30/98
Since
Inception
1-Year 5-Year 10-Year (6/27/86)
Cumulative Total Return1 1.16% 13.08% 65.02% 111.29%
Average Annual Total Return2 -1.84% 1.87% 4.81% 6.25%
Value of $10,000 Investment3 $9,816 $10,971 $16,003 $20,500
Distribution Rate4 3.86%
30-Day Standardized Yield5 4.14%
4/30/94 4/30/95 4/30/96 4/30/97 4/30/98
One-Year Total Return6 3.41% 12.30% -2.33% -1.44% 1.16%
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated 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 periods indicated and include the sales charge.
4. Distribution rate is based on the maximum offering price of $12.13 per share
on April 30, 1998, and an annualization of the most recent monthly dividend of
3.9 cents ($0.039) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1998.
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. Past expense waivers by the fund's Investment Manager increased the
fund's total returns. If the fund's manager had not taken this action, total
returns for the fund would have been lower. Since markets can go down as well as
up, investment return and principal value will fluctuate with market conditions,
currency volatility and the economic, social and political climate of countries
where investments are made. You may have a gain or loss when you sell your
shares.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal value, beginning on page 37 of
this report.
FRANKLIN TEMPLETON
HARD CURRENCY FUND
Your Fund's Objective: Franklin Templeton Hard Currency Fund seeks to protect
against depreciation of the U.S. dollar relative to other currencies. The fund
seeks to achieve its objective by investing in high-quality money market
instruments (and forward contracts) denominated in foreign Major Currencies (as
defined in the Fund's prospectus) which historically have experienced low rates
of inflation and which, in the view of the Investment Managers, follow economic
policies conducive to continued low rates of inflation and currency appreciation
versus the U.S. dollar over the long-term.
Since 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
periods of dollar strength, because our internal benchmark portfolio is weighted
one-third each in the money markets of Japan, Germany, and Switzerland.
During the six months under review, the U.S. dollar appreciated against most
major currencies. It reached its highest level in more than six years against
the Japanese yen, as Japan's extremely weak economy undermined investor faith in
yen-denominated securities. On April 30, 1998, the U.S. dollar was worth 132.86
yen, a 10% increase in value from the beginning of the period. Because many
European economies appeared almost as strong as the U.S. economy, the U.S.
dollar increased less versus the Swiss franc and German mark. At the period's
end, one U.S. dollar bought 1.5013 Swiss francs, 7% more than six months
earlier, and 1.7947 German marks, up just 4% from the beginning of the period.*
Within this environment, Franklin Templeton Hard Currency Fund - Class I posted
a -5.56% six-month cumulative total return, as discussed in the Performance
Summary on page 20. 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 the Performance Summary also shows, the fund has delivered a
+51.63% cumulative total return for the period from its inception on November
17, 1989 to April 30, 1998.
*Source: Bloomberg. Changes measured in U.S. dollars.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
During times of U.S. dollar strength, we try to overweight our position toward
currencies we feel should perform best in such an environment. With this goal in
mind, we increased the percentage of the fund's total net assets denominated in
Swiss francs and German marks, and decreased total net assets denominated in
Japanese yen and New Zealand dollars. On April 30, 1998, German marks
represented 32.5% of the fund's total net assets; Swiss francs, 32.1%; Japanese
yen 29.8%; and New Zealand dollars, 4.6%.
In our opinion, Europe's economic outlook remains more favorable than Japan's.
Unless this situation shows signs of change, we expect to keep the portfolio
more heavily weighted in marks and francs than in yen, although we may adjust
the actual percentages in an effort to take advantage of any temporary
opportunities that may occur.
As always, we will continue to monitor economic events, and try to position the
portfolio to take advantage of the many opportunities in the world's currency
markets. 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.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
Please note that although the fund's Statement of Investments on page 37 of this
report indicates that the fund held 57.2% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1998, its net exposure to the U.S.
dollar on that date was only 1.0%. 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 47) calling for the purchase of various foreign
currencies in exchange for U.S. dollars at various future dates. The combination
of U.S. dollar-denominated instruments with "long" forward currency exchange
contracts 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 for a particular foreign currency
is small or relatively illiquid.
PERFORMANCE SUMMARY
Class I
Franklin Templeton Hard Currency Fund - Class I produced a -5.56% cumulative
total return for the six-month period ended April 30, 1998. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, if any, and does not include the sales charge. We
have always maintained a long-term perspective when managing the fund, and we
encourage shareholders to view their investments in a similar manner.
The fund's share price, as measured by net asset value, decreased 73 cents, from
$10.28 on October 31, 1997, to $9.55 on April 30, 1998. During the reporting
period, shareholders received per-share distributions of 16.1 cents ($0.161) in
dividend income. Based on the maximum offering price of $9.85 on April 30, 1998,
and an annualization of April's monthly dividend of 2.6 cents ($0.026) per
share, the fund's distribution rate was 3.17%. Distributions will vary depending
on income earned by the fund and any profits realized from the sale of
securities in the portfolio, as well as the level of the fund's operating
expenses.
During the six months ended April 30, 1998 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 causes 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 4/30/98
Since
Inception
1-Year 5-Year (11/17/89)
Cumulative Total Return1 -2.91% -1.10% 51.63%
Average Annual Total Return2 -5.78% -0.84% 4.67%
Value of $10,000 Investment3 $9,422 $9,593 $14,704
Distribution Rate4 3.17%
30-Day Standardized Yield5 3.42%
4/30/94 4/30/95 4/30/96 4/30/97 4/30/98
One-Year Total Return6 3.62% 21.43% -8.92% -11.21% -2.91%
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated 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 periods indicated and include the sales charge.
4. Distribution rate is based on the maximum offering price of $9.85 per share
on April 30, 1998, and an annualization of the most recent monthly dividend of
2.6 cents ($0.026) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1998.
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. Past expense waivers by the fund's Investment Manager increased the
fund's total returns. If the fund's manager had not taken this action, total
returns for Class I shares would have been lower. Since markets can go down as
well as up, investment return and principal value will fluctuate with market
conditions, currency volatility and the economic, social and political climate
of countries where investments are made. You may have a gain or loss when you
sell your shares.
Advisor Class
Franklin Templeton Hard Currency Fund - Advisor Class produced a -5.35%
cumulative total return for the six-month period ended April 30, 1998.
Cumulative total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains, if any.
The fund's share price, as measured by net asset value, decreased 72 cents, from
$10.28 on October 31, 1997, to $9.56 on April 30, 1998. During the reporting
period, Advisor Class shareholders received per-share distributions of 17.28
cents ($0.1728) in dividend income. Based on the fund's maximum offering price
of $9.56 on April 30, 1998, and an annualization of April's monthly dividend of
2.77 cents ($0.0277) per share, the fund's distribution rate was 3.48%.
Distributions will vary depending on income earned by the fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the fund's operating expenses.
During the six months ended April 30, 1998, 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 causes 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
Periods ended 4/30/98
Since
Inception
1-Year* 5-Year* (11/17/89)*
Cumulative Total Return1 -2.60% -0.81% 52.23%
Average Annual Total Return1 -2.60% -0.16% 5.10%
Value of $10,000 Investment2 $9,740 $9,919 $15,223
Distribution Rate3 3.48%
30-Day Standardized Yield 43.75%
4/30/94 4/30/95 4/30/96 4/30/97 4/30/98
One-Year Total Return5 3.62% 21.43% -8.92% 8.49% -2.60%
*On January 2, 1997, the fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the fund's Class I performance, excluding the effect of the Class I sales
charge, but including the effect of the Class I expenses, including Rule 12b-1
fees; and (b) for periods after January 1, 1997, figures reflect actual Advisor
Class performance, including the deduction of all fees and expenses applicable
only to that class. Since January 2, 1997 (commencement of sales), the
cumulative total return of Advisor Class shares was -10.87%.
1. Cumulative total return represents the change in value of an investment over
the periods indicated. Average annual total return represents the average annual
change in value of an investment over the periods indicated.
2. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated.
3. Distribution rate is based on the maximum offering price of $9.56 per share
on April 30, 1998, and an annualization of the most recent monthly dividend of
2.77 cents ($0.0277) per share.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1998.
5. One-year total return represents the change in value of an investment over
the periods ended on the specified dates.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Past expense waivers by the fund's Investment Manager increased the
fund's total returns. If the fund's manager had not taken this action, total
returns for Advisor Class shares would have been lower. Since markets can go
down as well as up, investment return and principal value will fluctuate with
market conditions, currency volatility and the economic, social and political
climate of countries where investments are made. You may have a gain or loss
when you sell your shares.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal value, beginning on page 39 of
this report.
FRANKLIN TEMPLETON
HIGH INCOME CURRENCY FUND
Your Fund's Objective: 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. Subject to this investment objective, a
secondary consideration of the fund is preservation of capital. The fund seeks
to achieve its objective by investing in interest-bearing money market
instruments denominated in Major and Non-Major Currencies, as defined in the
fund's prospectus.
Since Franklin Templeton High Income Currency 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 periods of U.S. dollar strength, because our
internal benchmark portfolio consists of equal investments in the local currency
markets of Australia, Canada, Germany, Spain, France, the United Kingdom, Italy,
New Zealand, Sweden, and the U.S.
During the six months under review, the U.S. dollar appreciated against most
major currencies. It rose 12% and 8% against the currencies of New Zealand and
Australia, respectively, the countries in our investment universe most
negatively impacted by the Asian currency crisis. It also rose versus the
European and Canadian currencies, even though these economies performed nearly
as well as the U.S. economy. Compared with the German mark, the U.S. dollar
increased 4%; 2% over the Canadian dollar; 3% over the Swedish krona; 4% over
the Spanish peseta; and 5% over the Italian lira.* Within this environment, the
fund posted a -0.56% six-month cumulative total return, as discussed in the
Performance Summary on page 28. 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 the Performance Summary also shows, the fund
has delivered a +64.83% cumulative total return for the period from its
inception on November 17, 1989 through April 30, 1998.
*Source: Bloomberg. Changes measured in U.S. dollars.
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Attempting to take advantage of the strengthening U.S. dollar, we increased the
fund's position in that currency, from 23.1% of total net assets on October 31,
1997, to 27.9% on April 30, 1998. We also significantly increased our position
in the German mark, from 2.6% to 18.4% of total net assets, and added slightly
to our Canadian dollar, British pound and Italian lira exposures. However, we
eliminated our exposure to the currencies of Sweden, Spain and Norway, which had
benefited from government policies necessary to secure admission to the new
European Monetary Union. Now that the process is virtually complete, we believe
this advantage has disappeared.
In our opinion, the outlook remains positive for the U.S. dollar. However, we
believe the U.S. trade deficit could expand significantly later this year, in
response to devaluations of many Asian currencies, and the market may then
question the sustainability of the dollar's rise. Increased European economic
growth, combined with a possible slowing of U.S. growth later in the year, could
also cause the dollar's strength to peak. Until this happens, we are likely to
continue holding a relatively large position in the U.S. dollar.
As always, we will continue to monitor economic situations, 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 their relatively small size and lesser
liquidity. 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.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1998, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historic
performance is no guarantee of future results, these insights may help you
understand our investment and management philosophy.
Please note that although the fund's Statement of Investments on page 39 of this
report indicates that the fund held 46.3% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1998, its net exposure to the U.S.
dollar as of that date was only 27.9%. 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 47) calling for the purchase of various foreign
currencies in exchange for U.S. dollars at various future dates. The combination
of U.S. dollar-denominated instruments with "long" forward currency exchange
contracts 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
Franklin Templeton High Income Currency Fund produced a -0.56% cumulative total
return for the six-month period ended April 30, 1998. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, if any, and does not include the sales charge. We
have always maintained a long-term perspective when managing the fund, and we
encourage shareholders to view their investments in a similar manner.
The fund's share price, as measured by net asset value, decreased 27 cents, from
$10.57 on October 31, 1997, to $10.30 on April 30, 1998. During the reporting
period, shareholders received per-share distributions of 20.9 cents ($0.209) in
dividend income. Based on the maximum offering price of $10.62 on April 30,
1998, and an annualization of April's monthly dividend of 3.7 cents ($0.037) per
share, the fund's distribution rate was 4.18%. Distributions will vary depending
on income earned by the fund and any profits realized from the sale of
securities in the portfolio, as well as the level of the fund's operating
expenses.
During the six months ended April 30, 1998, 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 causes 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 High Income
Currency Fund Periods ended 4/30/98
Since
Inception
1-Year 5-Year (11/17/89)
Cumulative Total Return1 0.70% 18.17% 64.83%
Average Annual Total Return2 -2.33% 2.76% 5.71%
Value of $10,000 Investment3 $9,767 $11,458 $15,984
Distribution Rate4 4.18%
30-Day Standardized Yield5 4.11%
4/30/94 4/30/95 4/30/96 4/30/97 4/30/98
One-Year Total Return6 -2.03% 12.18% 3.62% 3.06% 0.70%
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated 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 periods indicated and include the sales charge.
4. Distribution rate is based on the maximum offering price of $10.62 per share
on April 30, 1998, and an annualization of the most recent monthly dividend of
3.7 cents ($0.037) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1998.
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. Past expense waivers by the fund's Investment Manager increased the
fund's total returns. If the fund's manager had not taken this action, total
returns would have been lower. Since markets can go down as well as up,
investment return and principal value will fluctuate with market conditions,
currency volatility and the economic, social and political climates of countries
where investments are made. Emerging markets involve heightened risks related to
the same factors, in addition to those associated with their relatively small
size and lesser liquidity. You may have a gain or loss when you sell your
shares.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin Templeton German Government Bond Fund
Six Months
Ended
April 30, 1998 Year Ended October 31, Year Ended April 30,
-----------------------------------------------------
(unaudited) 1997 1996 1995 1994 1994 1993a
----------------------------------------------------------------
Per Share Operating Performance - Class I
(For a share outstanding throughout
the period)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.51 $13.16 $14.31 $13.26 $12.29 $13.08 $12.50
----------------------------------------------------------------
Income from investment operations:
Net investment income ............. .25 .53 .66 1.53 .41 .78 .27
Net realized and unrealized gains(losses) (.34) (1.60) (.69) .71 .92 (.72) .56
----------------------------------------------------------------
Total from investment operations ... (.09) (1.07) (.03) 2.24 1.33 .06 .83
----------------------------------------------------------------
Less distributions from:
Net investment income ............. (.24) -- (1.00) (1.19) (.36) (.39) (.25)
Net realized gains ................ -- -- (.06) -- -- (.06) --
Tax return of capital ............. -- (.58) (.06) -- -- (.40) --
----------------------------------------------------------------
Total distributions ................ (.24) (.58) (1.12) (1.19) (.36) (.85) (.25)
----------------------------------------------------------------
Net asset value, end of period ..... $11.18 $11.51 $13.16 $14.31 $13.26 $12.29 $13.08
================================================================
Total return* ...................... (0.78)% (8.17)% (0.14)% 18.28% 10.92% 0.64% 6.15%
Ratios/Supplemental Data
Net assets, end of period (000's) .. $10,974 $12,754 $17,552 $24,113 $13,236 $13,341 $10,738
Ratios to average net assets:
Expenses .......................... 1.58%** 1.42% 1.10% 1.25% 1.04%** 1.00% .87%**
Expenses, excluding waiver and payments
by affiliate ...................... 1.58%** 1.42% 1.10% 1.29% 1.77%** 1.83% 1.73%**
Net investment income ............. 4.46%** 4.51% 5.25% 5.17% 6.37%** 4.74% 6.06%**
Portfolio turnover rate ............ 4.97% 41.63% 57.59% 67.77% 152.04% 185.66% 96.23%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
aFor the period December 31, 1992 (commencement of operations) to April 30,
1993. Six months ended October 31, 1994. Prior to this period, the Fund's fiscal
year end was April 30.
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998 Year Ended
(unaudited) October 31, 1997a
Per Share Operating Performance - Advisor Class (For a share outstanding
throughout the period)
<S> <C> <C>
Net asset value, beginning of period ..................................... $11.52 $12.98
---------------------------
Income from investment operations:
Net investment income ................................................... .10 .43
Net realized and unrealized losses ...................................... (.18) (1.40)
---------------------------
Total from investment operations ......................................... (.08) (.97)
---------------------------
Less distributions from:
Net investment income ................................................... (.25) --
Tax return of capital ................................................... -- (.49)
---------------------------
Total distributions ...................................................... (.25) (.49)
---------------------------
Net asset value, end of period ........................................... $11.19 $11.52
===========================
Total return* ............................................................ (0.68)% (7.44)%
Ratios/Supplemental Data
Net assets, end of period (000's) ........................................ $72 $28
Ratios to average net assets:
Expenses ................................................................ 1.38%** 1.27%**
Net investment income ................................................... 4.87%** 4.49%**
Portfolio turnover rate .................................................. 4.97% 41.63%
</TABLE>
*Total return is not annualized.
**Annualized.
For the period January 2, 1997 (effective date) through October 31, 1997.
aBased on average weighted shares outstanding.
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments, April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
Franklin Templeton German Government Bond Fund AMOUNT* VALUE
Long Term Investments 87.0%
Eurobonds 28.2%
<S> <C> <C>
Europe Economic Community, 6.50%, 3/10/00 ...................................... 900,000 DEM $ 520,841
European Investment Bank, 7.75%, 1/26/05 ....................................... 500,000 DEM 321,399
Government of Austria, 7.25%, 5/03/07 .......................................... 850,000 DEM 541,404
Interamerican Development Bank, 6.75%, 4/29/03 ................................. 925,000 DEM 557,216
International Bank Recon/Dev, 6.125%, 9/27/02 .................................. 600,000 DEM 352,243
Japan Finance Corp. Muni Enterprises, 7.75%, 10/28/04 .......................... 800,000 DEM 508,888
Osterreich Kontrollbank, 7.00%, 8/08/05 ........................................ 500,000 DEM 310,114
---------
Total Eurobonds (cost $3,444,032) 3,112,105
---------
German Bonds 58.8%
Allgemeine Hypotheken Bank AG, 6.00%, 9/16/02 .................................. 540,000 DEM 315,544
Bayerische Hypotheken-Und Wechselbank AG, 6.00%, 9/13/20 ....................... 530,000 DEM 305,211
Bundesland Baden-Wuerttemberg, 7.50%, 10/22/04 ................................. 750,000 DEM 474,784
Deutsche Hypothekenbank Franfurt AG, 6.00%, 3/22/02 ............................ 900,000 DEM 524,603
Federal Republic of Germany, 6.375%, 7/01/99 ................................... 805,000 DEM 460,391
Gemeinsame Bundeslaender, 6.00%, 1/29/07 ....................................... 1,570,000 DEM 925,639
KFW International Finance, 7.75%, 10/06/04 ..................................... 650,000 DEM 415,464
Land Niedersachsen, 7.50%, 1/20/05 ............................................. 150,000 DEM 95,408
Land Sachsen Anhalt:
7.25%, 4/20/05 ................................................................. 550,000 DEM 345,263
7.50%, 10/28/04 ................................................................ 800,000 DEM 505,991
LKB Baden-Wuerttemburg Finance NV, 6.50%, 9/15/08 .............................. 800,000 DEM 487,044
Rheinhyp Rheinische Hypothekenbank AG, 5.50%, 12/20/99 ......................... 530,000 DEM 301,195
Sueddeutsche Bodencreditbank AG, 6.00%, 11/06/01 ............................... 900,000 DEM 522,296
Westfaelische Hypothekenbank AG, 5.50%, 9/13/99 ................................ 530,000 DEM 300,368
Wurttembergische Hypothekenbank, 5.50%, 1/22/02 ................................ 900,000 DEM 515,076
---------
Total German Bonds (cost $7,204,642) ........................................... 6,494,277
---------
Total Long Term Investments (cost $10,648,674) ................................. 9,606,382
---------
Short Term Investments 11.2%
Deutsche Bank AG, 5.47%, 5/01/98 ............................................... 497,000 497,000
German Treasury Bill, 3.71%, 10/16/98 .......................................... 1,000,000 547,365
U S Treasury Bill, 5.035%, 8/20/98 ............................................. 200,000 196,966
---------
Total Short Term Investments (cost $1,239,368) ................................. 1,241,331
----------
Total Investments 98.2% (cost $11,888,042) ..................................... 10,847,713
Net Equity in Forward Contracts ................................................ (599)
Other Assets, less liabilities 1.8% ............................................ 198,835
----------
Total Net Assets 100.0% ........................................................ $11,045,94
==========
</TABLE>
Currency Abbreviation:
DEM - German Deutschemark
*Securities traded in U.S. Dollars unless otherwise indicated.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin Templeton Global Currency Fund
Six Months
Ended
April 30, 1998 Year Ended October 31, Year Ended April 30,
(unaudited) 1997 1996 1995 1994 1994 1993
Per Share Operating Performance
(For a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.10 $12.80 $13.67 $14.14 $13.85 $13.96 $14.01
-----------------------------------------------------------------
Income from investment operations:
Net investment income ............. .25 .49 .69 1.29 .25 .57 .67
Net realized and unrealized gains (.35) (.68) (.54) (.49) .32 (.11) 1.01
(losses)
-----------------------------------------------------------------
Total from investment operations ... (.10) (.19) .15 .80 .57 .46 1.68
-----------------------------------------------------------------
Less distributions from:
Net investment income ............. (.23) -- (.71) (1.27) (.28) (.57) (.69)
Net realized gains ................ -- -- -- -- -- -- (1.04)
Tax return of capital ............. -- (.51) (.31) -- -- -- --
-----------------------------------------------------------------
Total distributions ................ (.23) (.51) (1.02) (1.27) (.28) (.57) (1.73)
-----------------------------------------------------------------
Net asset value, end of period ..... $11.77 $12.10 $12.80 $13.67 $14.14 $13.85 $13.96
=================================================================
Total return* ...................... (0.78)% (1.46)% 1.27% 6.05% 4.14% 3.41% 13.28%
Ratios/Supplemental Data
Net assets, end of period (000's) .. $35,631 $41,795 $50,773 $59,942 $56,098 $51,539 $62,335
Ratios to average net assets:
Expenses .......................... 1.17%** 1.10% .99% .99% 1.04%** 1.41% 1.67%
Expenses, excluding waiver and payments
by affiliate ...................... 1.17%** 1.10% .99% .99% 1.12%** 1.61% 1.67%
Net investment income ............. 4.18%** 4.01% 4.30% 5.29% 3.55%** 2.78% 4.64%
Portfolio turnover rate ............ 37.43% .00% .00% 46.05% 25.62% 37.16% 10.39%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
Six months ended October 31, 1994. Prior to this period, the Fund's fiscal year
end was April 30.
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments, April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
Franklin Templeton Global Currency Fund AMOUNT* VALUE
Long Term Investments 9.6%
<S> <C> <C>
Government of Belgium, FRN, 3.37109%, 3/24/00 .................................. 2,000,000 DEM $ 1,113,736
Government of Spain, FRN, 3.09375%, 6/29/02 .................................... 4,150,000 DEM 2,316,669
---------
Total Long Term Investments (cost $4,010,413) .................................. 3,430,405
---------
Short Term Investments 82.5%
Commercial Paper 5.3% (cost $1,880,813)
JP Morgan & Co. Inc., 5.39%, 6/19/98 ........................................... 1,895,000 1,880,452
---------
Corporate Bonds 2.7% (cost $934,865)
General Electric Capital Corp., 4.75%,11/3/98 .................................. 1,700,000 DEM 953,260
---------
Government Securities 26.2%
Australia Treasury Bill, 10.24%, 6/11/98 ....................................... 3,020,000 AUD 1,957,898
Canada Treasury Bill, 12.22%, 7/09/98 .......................................... 2,760,000 CAD 1,912,183
Canada Treasury Bill, 11.15%, 7/23/98 .......................................... 2,760,000 CAD 1,908,700
German Treasury Bill, 3.71%, 10/16/98 .......................................... 3,000,000 DEM 1,642,096
New Zealand Treasury Bill, 18.01%, 6/10/98 ..................................... 3,470,000 NZD 1,909,632
---------
Total Government Securities (cost $9,474,388) .................................. 9,330,509
---------
U.S. Government Agencies 48.3%
Fannie Mae, 5.47% to 6.26%, with maturities to 3/11/99 ......................... 6,400,000 6,398,442
Federal Farm Credit Banks, 5.81%, 12/04/98 ..................................... 2,025,000 2,025,158
Federal Home Loan Bank, 5.579%, 1/27/99 ........................................ 1,800,000 1,799,802
Federal Home Loan Mortgage Corp., 5.40% to 5.42% with maturities to 7/16/98 .... 7,060,000 6,996,499
---------
Total U.S. Government Agencies (cost $17,218,374) .............................. 17,219,901
----------
Total Short Term Investments (cost $29,508,440) ................................ 29,384,122
----------
Total Investments before Repurchase Agreements (Cost $33,518,853) .............. 32,814,527
----------
aRepurchase Agreements 7.5%
Bankers Trust, 5.50%, 5/01/98 (Maturity Value $1,340,205)
Collateralized by U.S. Treasury Note .......................................... 1,340,000 1,340,000
Dresdner Bank, 5.50%, 5/01/98 (Maturity Value $1,330,203)
Collateralized by U.S. Treasury Note .......................................... 1,330,000 1,330,000
----------
Total Repurchase Agreements (cost $2,670,000) .................................. 2,670,000
----------
Total Investments 99.6% (cost $36,188,853) ..................................... 35,484,527
Net Equity in Forward Contracts .1% ............................................ 38,817
Other Assets, less liabilities .3% ............................................. 107,961
----------
Total Net Assets: 100.0% ....................................................... $35,631,305
==========
</TABLE>
Currency Abbreviations:
AUD - Australian Dollar
CAD - Canadian Dollar
DEM - German Deutschemark
NZD - New Zealand Dollar
*Securities traded in U.S. dollars unless otherwise indicated.
aAt April 30, 1998, all repurchase agreements held by the fund had been entered
into on that date.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin Templeton Hard Currency Fund
Six Months
Ended
April 30, 1998 Year Ended October 31, Year Ended April 30,
--------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1994 1993
--------------------------------------------------------------------
Per Share Operating Performance -
Class I
(For a share outstanding throughout
the period)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.28 $11.64 $13.09 $13.95 $12.95 $13.00 $13.12
--------------------------------------------------------------------
Income from investment operations:
Net investment income ............. .16 .37 .57 1.84 .26 .50 .71
Net realized and unrealized gains(losses) (.73) (1.33) (1.34) (1.02) .99 (.05) 1.20
--------------------------------------------------------------------
Total from investment operations ... (.57) (.96) (.77) .82 1.25 .45 1.91
--------------------------------------------------------------------
Less distributions from:
Net investment income ............. (.16) -- (.06) (1.68) (.25) (.13) (.69)
Net realized gains ................ -- -- -- -- -- -- (1.34)
Tax return of capital ............. -- (.40) (.62) -- -- (.37) --
--------------------------------------------------------------------
Total distributions ................ (.16) (.40) (.68) (1.68) (.25) (.50) (2.03)
--------------------------------------------------------------------
Net asset value, end of period ..... $ 9.55 $10.28 $11.64 $13.09 $13.95 $12.95 $13.00
====================================================================
Total return* ...................... (5.56)% (8.28)% (5.99)% 6.68% 9.74% 3.62% 17.11%
Ratios/Supplemental Data
Net assets, end of period (000's) .. $68,257 $91,976 $124,666 $132,089 $61,228 $35,739 $49,569
Ratios to average net assets:
Expenses .......................... 1.23%** 1.13% 1.10% 1.15% 1.05%** 1.47% 1.75%
Expenses, excluding waiver and payments
by affiliate ...................... 1.23%** 1.13% 1.10% 1.15% 1.28%** 1.71% 1.75%
Net investment income ............. 3.34%** 3.53% 4.50% 4.68% 3.80%** 3.83% 5.23%
Portfolio turnover rate ............ 50.18% 2.68% .00% 15.72% 28.18% .00% 4.88%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
Six months ended October 31, 1994. Prior to this period, the Fund's fiscal year
end was April 30.
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998 Year Ended
(unaudited) October 31, 1997
---------------------------------
Per Share Operating Performance - Advisor Class
(For a share outstanding throughout the period)
<S> <C> <C>
Net asset value, beginning of period ..................................... $10.28 $11.28
---------------------------------
Income from investment operations:
Net investment income ................................................... .24 .34
Net realized and unrealized losses ...................................... (.79) (1.00)
---------------------------------
Total from investment operations ......................................... (.55) (.66)
---------------------------------
Less distributions from:
Net investment income ................................................... (.17)
Tax return of capital ................................................... -- (.34)
---------------------------------
Total distributions ...................................................... (.17) (.34)
---------------------------------
Net asset value, end of period ........................................... $ 9.56 $10.28
=================================
Total return* ............................................................ (5.35)% (5.84)%
Ratios/Supplemental Data
Net assets, end of period (000's) ........................................ $49 $249
Ratios to average net assets:
Expenses ................................................................ .99%** .94%**
Net investment income ................................................... 4.80%** 3.67%**
Portfolio turnover rate .................................................. 50.18% 2.68%
</TABLE>
*Total return is not annualized.
**Annualized.
For the period January 2, 1997 (effective date) through October 31, 1997.
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments, April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
Franklin Templeton Hard Currency Fund AMOUNT* VALUE
Long Term Investments 8.1%
Corporate Bonds-Floating Rate Notes 2.7%
<S> <C> <C>
Commerzbank Overseas Finance, FRN, 1.28125%, 1/19/99 ................. 250,000 CHF $ 166,261
European Investment Bank, FRN, 3.35%, 10/23/98 ....................... 1,650,000 DEM 918,097
Inter-American Development Bank, FRN, 0.7578%, 6/19/98 ............... 100,000,000 JPY 757,209
----------
Total Corporate Bonds-Floating Rate Notes (cost $2,262,580) .......... 1,841,567
----------
Foreign Government Securities-Floating Rate Notes 3.9%
Government of Belgium, FRN, 3.46875%, 3/24/00 ........................ 4,600,000 DEM 2,561,594
South Australia Finance Authority, FRN, 1.00%, 3/18/99 ............... 200,000 CHF 132,809
----------
Total Foreign Government Securities-Floating Rate Notes .............. 2,694,403
----------
(cost $3,177,071)
Government Securities 1.5% (cost $1,392,599)
Government of Italy, 0.71094%, 7/26/99 ............................... 135,000,000 JPY 1,025,456
----------
Total Long Term Investments (cost $6,832,250) ........................ 5,561,426
----------
Short Term Investments 89.4%
Commercial Paper 26.3%
ANZ Inc., 2.65%, 5/14/98 ............................................. 7,000,000 CHF 4,664,428
Halifax Building Society Ltd., 2.68%, 5/14/98 ........................ 7,000,000 CHF 4,656,902
JP Morgan & Co. Inc., 5.39%, 6/19/98 ................................. 3,985,000 3,954,407
Swiss Bank Corp., 2.59%, 5/14/98 ..................................... 7,000,000 CHF 4,664,428
----------
Total Commercial Paper (cost $17,826,988) ............................ 17,940,165
----------
Government Securities 14.2%
German Treasury Bill, 3.71%, 10/16/98 ................................ 12,000,000 DEM 6,568,385
New Zealand Treasury Bill, 18.01%, 6/10/98 ........................... 5,720,000 NZD 3,147,866
----------
Total Government Securities (cost $9,851,540) ........................ 9,716,251
----------
U.S. Government Agencies 48.9%
Fannie Mae, 5.47 to 5.53%, with maturities to 3/11/99 ................ 11,700,000 11,692,040
Federal Farm Credit Banks, 5.81%, 12/4/98 ............................ 4,100,000 4,100,320
Federal Home Loan Bank, 5.579%, 1/27/99 .............................. 3,900,000 3,899,570
Federal Home Loan Mortgage Corp., 5.40% to 5.42%, with maturities to 13,830,000 13,705,406
7/16/98 ----------
Total U.S. Government Agencies (cost $33,394,198) .................... 33,397,336
----------
Total Short Term Investments (cost $61,072,726) ...................... 61,053,752
----------
Total Investments before Repurchase Agreement (cost $67,904,976) ..... 66,615,178
----------
aRepurchase Agreement 2.6%
Bankers TrustCorp., 5.50%, 5/01/98 (Maturity Value $1,791,274)
(cost $1,791,000)
Collateralized by U.S. Treasury Note ................................ 1,791,000 1,791,000
----------
Total Investments 100.1% (cost $69,695,976) .......................... 68,406,178
Net Equity in Forward Contracts (.1%) ................................ (119,206)
Other Assets, less liabilities ....................................... 19,145
----------
Total Net Assets 100.0% .............................................. $68,306,117
==========
</TABLE>
Currency Abbreviations:
CHF - Swiss Franc DEM - German Deutschemark JPY - Japanese Yen NZD - New Zealand
Dollar *Securities traded in U.S. dollars unless otherwise indicated. aAt April
30, 1998, all repurchase agreements held by the fund had been entered into on
that date.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights (continued)
<TABLE>
<CAPTION>
Franklin Templeton High Income Currency Fund
Six Months
Ended
April 30, 1998 Year Ended October 31, Year Ended April 30,
-------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1994 1993
-----------------------------------------------------------------------
Per Share Operating Performance
(For a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.57 $11.02 $11.56 $11.59 $11.28 $12.13 $12.90
-----------------------------------------------------------------------
Income from investment operations:
Net investment income ............. .25 .43 .58 1.47 .31 .59 .90
Net realized and unrealized gains (.31) (.44) -- (.51) .31 (.85) (.40)
(losses) -----------------------------------------------------------------------
Total from investment operations ... (.06) (.01) .58 .96 .62 (.26) .50
-----------------------------------------------------------------------
Less distributions from:
Net investment income ............. (.21) (.02) (1.08) (.99) (.31) -- (.94)
Net realized gains ................ -- -- (.01) -- -- -- (.33)
Tax return of capital ............. -- (.42) (.03) -- -- (.59) --
-----------------------------------------------------------------------
Total distributions ................ (.21) (.44) (1.12) (.99) (.31) (.59) (1.27)
-----------------------------------------------------------------------
Net asset value, end of period ..... $10.30 $10.57 $11.02 $11.56 $11.59 $11.28 $12.13
=======================================================================
Total return* ...................... (0.56)% (0.08)% 5.56% 8.90% 5.60% (2.03)% 4.49%
Ratios/Supplemental Data
Net assets, end of period (000's) .. $7,400 $8,376 $10,113 $10,902 $16,878 $16,706 $32,341
Ratios to average net assets:
Expenses .......................... 1.59%** 1.49% 1.25% 1.25% 1.04%** 1.59% 1.81%
Expenses, excluding waiver and payments
by affiliate ...................... 1.59%** 1.49% 1.29% 1.45% 1.45%** 1.82% 1.81%
Net investment income ............. 4.73%** 4.11% 4.83% 5.56% 5.44%** 4.80% 6.86%
Portfolio turnover rate ............ 35.69% 99.39% .00% 115.05% 800.72% -- --
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
Six months ended October 31, 1994. Prior to this period, the Fund's fiscal year
end was April 30.
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments, April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
Franklin Templeton High Income Currency Fund AMOUNT* VALUE
Foreign Government Securities-Floating Rate Notes 10.4% (cost $716,135)
<S> <C> <C>
United Kingdom, FRN, 7.2875%, 3/11/99 .................................. 460,000 GBP $ 770,038
---------
Short Term Investments 90.2%
Time Deposits 8.6% (cost $636,625)
Deutsche Bank AG, 5.47%, 5/01/98 ....................................... 370,000 370,000
JP Morgan & Co Inc., 5.40%, 5/06/98 .................................... 472,559,736 ITL 266,689
---------
636,689
---------
Commercial Paper 5.1% (cost $377,155)
JP Morgan & Co. Inc., 5.39%, 6/19/98 ................................... 380,000 377,083
---------
Government Securities 39.7%
Australia Treasury Bill, 10.24%, 6/11/98 ............................... 615,000 AUD 398,711
Canada Treasury Bill, 14.23%, 6/11/98 .................................. 895,000 CAD 622,397
Canada Treasury Bill, 12.22%, 7/09/98 .................................. 500,000 CAD 346,410
Canada Treasury Bill, 11.15%, 7/23/98 .................................. 540,000 CAD 373,441
Italy Treasury Bill, 4.93%, 7/15/98 .................................... 1,435,000,000 ITL 803,364
New Zealand Treasury Bill, 18.01%, 6/10/98 ............................. 715,000 NZD 393,483
---------
Total Government Securities (cost $2,970,075) .......................... 2,937,806
---------
U.S. Government Agencies 36.8%
Federal Farm Credit Banks, 5.81%, 12/04/98 ............................. 375,000 375,029
Federal Home Loan Bank, 5.579%, 1/27/99 ................................ 380,000 379,958
Federal Home Loan Mortgage Corp., 5.42%, 6/15/98 ....................... 950,000 943,625
Fannie Mae, 5.47% to 5.53%, with maturities to 3/11/99 ................. 1,025,000 1,024,300
---------
Total U.S. Government Agencies (cost $2,722,694) ....................... 2,722,912
---------
Total Short Term Investments (cost $6,706,549) ......................... 6,674,490
---------
Total Investment 100.6% (cost $7,422,684) .............................. 7,444,528
Net Equity in Forward Contracts .4% .................................... 26,032
Other Assets, less liabilities (1.0%) .................................. (70,700)
---------
Total Net Assets 100.0% ................................................ $7,399,860
=========
</TABLE>
Currency Abbreviations:
AUD - Australian Dollar
CAD - Canadian Dollar
GBP - British Pound
ITL - Italian Lira
NZD - New Zealand Dollar
*Securities traded in U.S. dollars unless otherwise indicated.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
April 30, 1998 (unaudited)
Franklin
Templeton Franklin Franklin Franklin
German Templeton Templeton Templeton
Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
-----------------------------------------------------
Assets:
Investments in securities:
<S> <C> <C> <C> <C>
Cost ........................................... $11,888,042 $33,518,853 $67,904,976 $7,422,684
====================================================
Value .......................................... 10,847,713 32,814,527 66,615,178 7,444,528
Repurchase agreement, at value and cost ......... -- 2,670,000 1,791,000 --
Cash ............................................ 14,080 31,754 127,770 543
Receivables:
Investment securities sold ..................... -- -- -- 801,230
Beneficial shares sold ......................... 4,155 996 50,700 478
Dividends and interest ......................... 259,071 181,396 254,508 29,890
Unrealized gain on forward exchange contracts (Note 6) -- 144,974 558,273 26,979
Other assets .................................... 230 -- -- --
----------------------------------------------------
Total assets ............................... 11,125,249 35,843,647 69,397,429 8,303,648
----------------------------------------------------
Liabilities:
Payables:
Investment securities purchased ................ -- -- -- 803,667
Beneficial shares redeemed ..................... 1,120 -- 66,983 8,030
To affiliates .................................. 12,720 50,248 109,563 9,995
To shareholders ................................ 32,162 25,315 177,911 54,354
Distributions to shareholders ................... 182 47 1,599 357
Unrealized loss on forward exchange contracts (Note 6) 599 106,157 677,479 947
Accrued expenses ................................ 32,517 30,575 57,777 26,438
----------------------------------------------------
Total liabilities .......................... 79,300 212,342 1,091,312 903,788
----------------------------------------------------
Net assets, at value ...................... $11,045,949 $35,631,305 $68,306,117 $7,399,860
====================================================
</TABLE>
<TABLE>
<CAPTION>
Franklin
Templeton Franklin Franklin Franklin
German Templeton Templeton Templeton
Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets consist of:
Undistributed net investment income (Distributions
in excess of net investment income) ............ $ 5,265 $ 298,137 $ (819,162) $ 49,630
Net unrealized appreciation (depreciation) ...... (1,040,874) (664,853) (1,408,856) 47,878
Accumulated net realized (loss) ................. (108,881) (1,612,786) (6,005,655) (301,297)
Beneficial shares ............................... 12,190,439 37,610,807 76,539,790 7,603,649
-------------------------------------------------------
Net assets, at value ....................... $11,045,949 $35,631,305 $68,306,117 $7,399,860
=======================================================
Class I:
Net asset value ................................. $10,974,191 $35,631,305 $68,256,675 $7,399,860
=======================================================
Shares outstanding .............................. 981,627 3,028,340 7,144,396 718,537
=======================================================
Net asset value per share ....................... $11.18 $11.77 $9.55 $10.30
=======================================================
Maximum offering price per share
(Net asset value per share / 97.00%) ............ $11.53 $12.13 $9.85 $10.62
=======================================================
Advisor Class:
Net asset value ................................. $ 71,758 $ 49,442
=========== ========
Shares outstanding .............................. 6,411 5,173
=========== ========
Net asset value and offering price per share .... $11.19 $9.56
=========== ========
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
<TABLE>
<CAPTION>
Statement of Operations
for the six months ended April 30, 1998 (unaudited)
Franklin
Templeton Franklin Franklin Franklin
German Templeton Templeton Templeton
Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
-----------------------------------------------------
Interest Income:
<S> <C> <C> <C> <C>
Interest ........................................... $ 339,505 $1,009,635 $1,829,580 $243,145
-----------------------------------------------------
Expenses:
Management fees (Note 3) ........................... 30,879 122,783 259,218 25,023
Distribution fees - Class I (Note 3) ............... 11,093 52,664 95,483 11,586
Transfer agent fees (Note 3) ....................... 8,890 17,000 51,000 7,000
Custodian fees ..................................... 1,175 500 3,229 1,000
Reports to shareholders ............................ 9,250 12,591 30,000 3,864
Registration and filing fees ....................... 14,000 5,000 25,000 5,613
Professional fees (Note 3) ......................... 5,000 4,500 19,500 2,000
Trustees' fees and expenses ........................ 7,000 5,700 6,000 5,100
Amortization of organization costs (Note 1) ........ 1,271 -- -- --
Other .............................................. 24 30 1,891 10
-----------------------------------------------------
Total expenses ................................ 88,582 220,768 491,321 61,196
-----------------------------------------------------
Net investment income ........................ 250,923 788,867 1,338,259 181,949
-----------------------------------------------------
Realized and unrealized losses:
Net realized loss from:
Investments ....................................... (70,549) (168,469) (790,145) (91,559)
Foreign currency transactions ..................... (36,312) (1,104,681) (3,591,833) (185,426)
-----------------------------------------------------
Net realized loss ................................ (106,861) (1,273,150) (4,381,978) (276,985)
Net unrealized appreciation (depreciation) on:
Investments ....................................... (249,252) (191,430) (1,078,853) (24,034)
Translation of assets and liabilities denominated in
foreign currencies ................................. (8,005) 296,607 (948,205) 68,394
-----------------------------------------------------
Net unrealized appreciation (depreciation) ....... (257,257) 105,177 (2,027,058) 44,360
-----------------------------------------------------
Net realized and unrealized loss .................... (364,118) (1,167,973) (6,409,036) (232,625)
-----------------------------------------------------
Net decrease in net assets resulting from operations $(113,195) $ (379,106) $(5,070,777) $ (50,676)
=====================================================
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Franklin Templeton Franklin Templeton
German Government Bond Fund Global Currency Fund
------------------------------------------------------------------
Six Months Ended Six Months Ended
April 30, 1998 Year Ended April 30, 1998 Year Ended
(unaudited) October 31, 1997 (unaudited) October 31, 1997
------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income ................. $ 250,923 $ 687,861 $ 788,867 $ 1,831,151
Net realized loss from investments and
foreign currency transactions .......... (106,861) (868,123) (1,273,150) (1,811,951)
Net unrealized appreciation (depreciation)
on investments and translation of assets
and liabilities denominated in foreign (257,257) (1,166,241) 105,177 (798,869)
currencies
------------------------------------------------------------------
Net decrease in net assets resulting
from operations ...................... (113,195) (1,346,503) (379,106) (779,669)
Distributions to shareholders from:
Net investment income:
Class I .............................. (239,902) -- (755,910) --
Advisor Class ........................ (3,461) -- -- --
Tax return of capital:
Class I .............................. -- (724,669) -- (1,895,614)
Advisor Class ........................ -- (24,821) --
Capital share transactions (Note 2):
Class I ............................... (1,450,102) (2,765,367) (5,028,197) --
Advisor Class ......................... 70,644 91,512 -- (6,303,604)
------------------------------------------------------------------
Net decrease in net assets ........ (1,736,016) (4,769,848) (6,163,213) (8,978,887)
Net assets:
Beginning of period .................... 12,781,965 17,551,813 41,794,518 50,773,405
------------------------------------------------------------------
End of period .......................... $11,045,949 $12,781,965 $35,631,305 $41,794,518
==================================================================
Undistributed net investment income
(Distributions in excess of net investment
income) included in net assets:
End of period ......................... $ 5,265 $ (2,295) $ 298,137 $ 265,180
</TABLE>
<TABLE>
<CAPTION>
Franklin Templeton Franklin Templeton
Hard Currency Fund High Income Currency Fund
-------------------------------------------------------------------
Six Months Ended Six Months Ended
April 30, 1998 Year Ended April 30, 1998 Year Ended
(unaudited) October 31, 1997 (unaudited) October 31, 1997
-------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C> <C>
Net investment income ................. $ 1,338,259 $ 3,706,100 $ 181,949 $ 377,439
Net realized loss from investments and
foreign currency transactions .......... (4,381,978) (15,811,999) (276,985) (294,100)
Net unrealized appreciation
(depreciation) on investments and
translation of assets andliabilities (2,027,058) 1,406,507 44,360 (107,030)
denominated in foreign currencies
------------------------------------------------------------------
Net decrease in net assets resulting
from operations .................... (5,070,777) (10,699,392) (50,676) (23,691)
Distributions to shareholders from:
Net investment income:
Class I .............................. (1,306,562) -- (157,338) (19,163)
Advisor Class ........................ (33,156) -- -- --
Tax return of capital:
Class I .............................. -- (3,971,925) -- (356,921)
Advisor Class ........................ -- (7,680) -- --
Capital share transactions (Note 2):
Class I ............................... (17,483,485) (18,010,343) (767,785) (1,337,827)
Advisor Class ......................... (25,243) 248,378 -- --
------------------------------------------------------------------
Net decrease in net assets ........ (23,919,223) (32,440,962) (975,799) (1,737,602)
Net assets:
Beginning of period .................... 92,225,340 124,666,302 8,375,659 10,113,261
------------------------------------------------------------------
End of period .......................... $68,306,117 $92,225,340 $7,399,860 $ 8,375,659
==================================================================
Undistributed net investment income
(Distributions in excess of net investment
income) included in net assets:
End of period ......................... $ (819,162) $ (817,703) $ 49,630 $ 25,109
==================================================================
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton Global Trust (the Trust) is registered under the Investment
Company Act of 1940 as an open-end, non-diversified investment company,
consisting of four funds (the Funds). The Funds and their investment policies
are:
Franklin Templeton German Government Bond Fund - The German Bond Fund seeks
long-term total return through investment in a managed portfolio of German
government bonds.
Franklin Templeton Global Currency Fund - 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.
Franklin Templeton Hard Currency Fund - 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.
Franklin Templeton High Income Fund - 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 summarizes the Funds' significant accounting policies.
a. Security Valuation:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.
b. Foreign Currency Translation:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Funds purchase or sell foreign securities they will customarily enter into
foreign exchange contracts to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
The Funds do not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
b. Foreign Currency Translation (cont.):
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the recorded amounts of
dividends, interest, and foreign withholding taxes, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
c. Forward Exchange Contracts:
The Funds may enter into forward exchange contracts to obtain an investment
result that is substantially equal to a direct investment in a foreign currency
denominated instrument and to hedge against foreign exchange risks. These
contracts are valued daily and the Funds' equity therein is included in the
Statement of Assets and Liabilities. Realized and unrealized gains and losses
are included in the Statement of Operations. d. Income Taxes:
No provision has been made for income taxes because each Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
e. Security Transactions, Investment Income, Expenses and Distributions:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Distributions to shareholders are recorded on the ex-dividend date.
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. Other expenses are
charged to each Fund on a specific identification basis.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
f. Organization Costs:
Organization costs are amortized on a straight line basis over five years.
g. 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. BENEFICIAL SHARES
The German Government Bond Fund and Hard Currency Fund offer two classes of
shares: Class I and Advisor Class. The shares differ by their initial sales
load, distribution fees, voting rights affecting a single class and the exchange
privilege of each class. The Global Currency Fund and High Income Currency Fund
offer one class of shares.
At April 30, 1998, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
Franklin Templeton German Franklin Templeton
Government Bond Fund Global Currency Fund
---------------------------------------------------
Class I Shares: Shares Amount Shares Amount
---------------------------------------------------
Six months ended April 30, 1998
<S> <C> <C> <C> <C>
Shares sold ........................................ 161,787 $ 1,803,159 47,342 $ 556,808
Shares issued in reinvestment of distributions ..... 17,344 193,929 55,299 650,191
Shares redeemed .................................... (306,032) (3,447,190) (528,772) (6,235,196)
---------------------------------------------------
Net decrease ....................................... (126,901)$ (1,450,102) (426,131)$ (5,028,197)
===================================================
Year ended October 31, 1997
Shares sold ........................................ 659,919 $ 7,540,435 491,508 $ 6,060,556
Shares issued in reinvestment of distributions ..... 50,426 599,890 130,486 1,604,655
Shares redeemed .................................... (935,734) (10,905,692) (1,134,907) (13,968,815)
Net decrease ....................................... (225,389)$ (2,765,367) (512,913)$ (6,303,604)
Advisor Class Shares:
Six months ended April 30, 1998
Shares sold ........................................ 67,021 $ 774,005
Shares issued in reinvestment of distributions ..... 305 3,461
Shares redeemed .................................... (63,345) (706,822)
------------------------
Net increase ....................................... 3,981 $ 70,644
========================
Year ended October 31, 1997*
Shares sold ........................................ 208,944 $ 2,430,954
Shares issued in reinvestment of distributions ..... 2,172 24,820
Shares redeemed .................................... (208,686) (2,364,262)
------------------------
Net increase ....................................... 2,430 $ 91,512
========================
Franklin Templeton Franklin Templeton
Hard Currency Fund High Income Currency Fund
Class I Shares: Shares Amount Shares Amount
Six months ended April 30, 1998
<S> <C> <C> <C> <C>
Shares sold ........................................ 811,231 $ 8,044,281 81,167 $ 839,470
Shares issued in reinvestment of distributions ..... 105,212 1,029,531 10,945 112,795
Shares redeemed .................................... (2,716,063) (26,557,297) (166,055) (1,720,050)
Net decrease ....................................... (1,799,620)$(17,483,485) (73,943) $ (767,785)
2. BENEFICIAL SHARES (cont.)
Franklin Templeton Franklin Templeton
Hard Currency Fund High Income Currency Fund
Class I Shares (cont.): Shares Amount Shares Amount
Year ended October 31, 1997
<S> <C> <C> <C> <C>
Shares sold ........................................ 6,145,940 $65,035,999 224,819 $ 2,416,754
Shares issued in reinvestment of distributions ..... 290,801 3,068,787 25,178 269,578
Shares redeemed .................................... (8,200,653) (86,115,129) (375,035) (4,024,159)
Net decrease ....................................... (1,763,912)$(18,010,343) (125,038)$ (1,337,827)
Advisor Class Shares:
Six months ended April 30, 1998
Shares sold ........................................ 502,939 $ 5,021,869
Shares issued in reinvestment of distributions ..... 3,396 33,156
Shares redeemed .................................... (525,424) (5,080,268)
Net decrease ....................................... (19,089) $ (25,243)
Year ended October 31, 1997*
Shares sold ........................................ 87,809 $ 907,672
Shares issued in reinvestment of distributions ..... 684 7,041
Shares redeemed .................................... (64,231) (666,335)
Net increase ....................................... 24,262 $ 248,378
</TABLE>
*Effective date of Advisor Class shares was January 2, 1997.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Trust are also officers or directors of Franklin
Advisers, Inc. (Advisers), Franklin/Templeton Distributors, Inc. (Distributors),
and Franklin/Templeton Investor Services, Inc. (Investor Services), the Funds'
investment manager, principal underwriter and transfer agent, respectively.
Global Currency Fund, Hard Currency Fund and High Income Currency Fund pay an
investment management fee to Advisers of 0.65% per year of the average daily net
assets of each Fund. German Government Bond Fund pays an investment management
fee to Advisers of 0.55% per year of the average daily net assets of the Fund.
Under a subadvisory agreement, Templeton Investment Counsel, Inc., a wholly
owned subsidiary of Franklin Resources, Inc. provides subadvisory services to
the Funds and receives from Advisers fees of 0.25% per year based on the
aggregate average daily net assets of the Funds.
The Global Currency Fund and High Income Currency Fund reimburse Distributors up
to .45% per year of each Funds' average daily net assets for costs incurred in
marketing each Funds' shares. The Hard Currency Fund reimburses Distributors up
to 0.45% per year of the Fund's average daily net assets of Class I shares and
the German Bond Fund reimburses Distributors up to 0.25% per year of the Fund's
average daily net assets of Class I shares for costs incurred in marketing
each Funds' Class I shares.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)
Distributors received net commissions on sales of Fund shares, and paid
commissions to other dealers for the period ended April 30, 1998 as follows:
<TABLE>
<CAPTION>
Franklin Templeton Franklin Templeton Franklin Templeton Franklin Templeton
German Government Global Currency Hard Currency High Income
Bond Fund Fund Fund Currency Fund
<S> <C> <C> <C> <C>
Total commissions received ............. $3,744 $5,275 $48,818 $2,064
Paid to other dealers .................. $ 586 $ 696 $ 6,383 $ 255
4. INCOME TAXES
At October 31, 1997, the Funds had tax basis capital losses which may be carried
over to offset future capital gains as follows:
Franklin Templeton Franklin Templeton Franklin Templeton Franklin Templeton
German Government Global Currency Hard Currency High Income
Bond Fund Fund 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
2005................................... 2,020 54,060 162,309 1,904
$2,020 $339,638 $1,623,677 $24,312
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At April 30, 1998, the net unrealized appreciation
(depreciation) based on the cost of investments for income tax purposes were as
follows:
Franklin Templeto Franklin Templeton Franklin Templeton Franklin Templeton
German Government Global Currency Hard Currency High Income
Bond Fund Fund Fund Currency Fund
<S> <C> <C> <C> <C>
Unrealized appreciation ................ $ 26,045 $ 42,225 $ 141,554 $57,336
Unrealized depreciation ................ (1,066,374) (746,551) (1,431,352) (35,492)
Net unrealized appreciation (depreciation) $(1,040,329) $(704,326) $(1,289,798) $21,844
Net Investment Income differs for financial statement and tax purposes primarily due to differing treatments of foreign
currency transactions.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended April 30, 1998 were as follows:
Franklin Templeton Franklin Templeton Franklin Templeton Franklin Templeton
German Government Global Currency Hard Currency High Income
Bond Fund Fund Fund Currency Fund
<S> <C> <C> <C> <C>
Purchases .............................. $ 521,926 $1,632,165 $3,003,984 $750,491
Sales .................................. $2,969,694 $2,586,572 $3,000,000 $370,000
</TABLE>
6. OFF-BALANCE SHEET RISK
The Funds have been parties to financial instruments with off-balance-sheet
risk, primarily forward exchange contracts in order to obtain investment results
that are substantially equal to direct investments in foreign currency
denominated instruments and to minimize the impact on the Funds from adverse
changes in the relationship between the U.S. dollar and foreign currencies and
interest rates. These instruments involve market risk in excess of the amount
recognized on the Statement of Assets and Liabilities. Some of these risks have
been minimized by offsetting contracts. Risks arise from the possible inability
of counterparties to meet the terms of their contracts, future movement in
currency values and interest rates and contract positions that are not exact
offsets. The contract amount indicates the extent of the Funds' involvement in
such contracts.
A forward exchange contract is an agreement between two parties to exchange
different currencies at a specific rate at an agreed future date. At April 30,
1998, the Funds have outstanding forward exchange contracts for the sale of
currencies as set out below. The contracts are reported in the financial
statements at the Funds' net equity, as measured by the difference between the
forward exchange rates at the reporting date and the forward exchange rates at
the day of entry into the contract.
As of April 30, 1998, the German Government Bond Fund had the following forward
foreign currency contracts outstanding:
<TABLE>
<CAPTION>
In Settlement Unrealized
Exchange for Date (Loss)
Contracts to Buy:
<S> <C> <C> <C>
1,074,000 Deutschemarks .................................. U.S. $ 600,000 5/26/98 U.S. $ (599)
Net unrealized loss on forward exchange contracts U.S. $ (599)
As of April 30, 1998, the Global Currency Fund had the following forward foreign
currency contracts outstanding:
In Settlement Unrealized
Exchange for Date Gain/(Loss)
Contracts to Buy:
9,000,000 Deutschemarks ................................. U.S. $ 4,905,488 6/9/98 U.S. $121,406
Contracts to Sell:
764,000 Deutschemarks .................................. U.S. $ 426,816 5/26/98 426
764,000 Deutschemarks .................................. 427,006 5/28/98 567
U.S. $ 5,759,310 993
Net unrealized gain on offsetting forward exchange contracts 22,575
Unrealized gain on forward exchange contracts 144,974
6. OFF-BALANCE SHEET RISK (cont.)
In Settlement Unrealized
Exchange for Date Gain/(Loss)
Contracts to Sell:
1,528,000 Deutschemarks .................................. U.S. $ 828,557 5/5/98 U.S. $ (23,181)
1,528,000 Deutschemarks .................................. 827,852 5/7/98 (23,985)
764,000 Deutschemarks .................................. 415,511 5/11/98 (10,507)
1,050,000 Deutschemarks .................................. 579,214 5/15/98 (6,418)
700,000 Deutschemarks .................................. 387,919 5/22/98 (2,661)
U.S. $ 3,039,053 (66,752)
Net unrealized loss on offsetting forward exchange contracts (39,405)
Unrealized loss on forward exchange contracts (106,157)
Net unrealized gain on forward exchange contracts
U.S. $ 38,817
As of April 30, 1998, the Hard Currency Fund had the following forward foreign
currency contracts outstanding:
In Settlement Unrealized
Exchange for Date Gain/(Loss)
Contracts to Buy:
<S> <C> <C> <C>
25,000,000 Deutschemarks .................................. U.S. $13,626,354 6/9/98 U.S. $337,240
13,853,000 Swiss Francs ................................... 9,148,121 6/2/98 124,128
U.S. $22,774,475 461,368
Contracts to Sell:
2,700,000 Deutschemarks .................................. U.S. $ 1,509,223 6/9/98 1,155
Net unrealized gain on offsetting forward contracts 95,750
Unrealized gain on forward exchange contracts 558,273
Contracts to Buy:
3,023,000,000 Japanese Yen ................................... U.S. 23,591,384 5/13/98 (666,351)
Contracts to Sell:
661,000,000 Japanese Yen ................................... U.S. $ 5,008,714 5/13/98 (4,004)
2,240,000 Swiss Francs ................................... 1,505,882 6/2/98 (7,124)
U.S. $ 6,514,596 (11,128)
Unrealized loss on forward exchange contracts . (677,479)
Net unrealized loss on forward exchange contracts
U.S. $(119,206)
As of April 30, 1998, the High Income Currency Fund had the following forward
foreign currency contracts outstanding:
In Settlement Unrealized
Exchange for Date Gain/(Loss)
Contracts to Buy:
<S> <C> <C> <C>
2,000,000 Deutschemarks .................................. U.S. $ 1,090,108 6/9/98 U.S. $ 26,979
Unrealized gain on forward exchange contracts . 26,979
6. OFF-BALANCE SHEET RISK (cont.)
In Settlement Unrealized
Exchange for Date Gain/(Loss)
Contracts to Buy:
482,000 Deutschemarks .................................. U.S. $ 269,952 5/26/98 U.S. $ (947)
Unrealized loss on forward exchange contracts . (947)
Net unrealized gain on forward exchange contracts
U.S. $ 26,032
</TABLE>
7. CREDIT RISK
The Funds have investments in excess of 10% of their total net assets in the
following:
Global Currency Fund - debt securities denominated in German deutschemarks and
Canadian dollars. Hard Currency Fund - debt securities denominated in Swiss
francs and in German deutschemarks. High Income Fund - debt securities
denominated in Italian liras, German deutschemarks, and Canadian dollars.
Such concentrations may subject the Funds more significantly to economic changes
occurring within that country.
Although the German Bond Fund has a non-diversified investment portfolio, most
of its investments are in the securities of issues in the country of Germany.
Such concentration may subject the Fund to economic changes occurring within
that country.
GRAPHIC MATERIAL (1)
This chart shows, in pie format, the asset allocation by asset class based on
total net assets for the Franklin Templeton German Government Bond Fund, as
of April 30, 1998.
German State Government Bonds 29.4
Foreign (Non-German) Government Euromark 28.2
Bonds
German Pfandbriefe Bonds 25.2
German Federal Government Bonds 4.2
Other Net Assets & Liabilities 13.0
100.0
GRAPHIC MATERIAL (2)
This chart shows, in pie format, the asset allocation by currency based on
total net assets for the Franklin Templeton Global Currency Fund, as of April
30, 1998.
U.S. Dollar 58.7
German Mark 19.7
Canadian Dollar 10.7
Australian Dollar 5.5
New Zealand Dollar 5.4
100.0
GRAPHIC MATERIAL (3)
This chart shows, in pie format, the asset allocation by currency based on
total net assets for the Franklin Templeton Hard Currency Fund, as of April
30, 1998.
German Mark 32.5
Swiss Franc 32.1
Japanese Yen 29.8
New Zealand Dollar 4.6
U.S. Dollar 1.0
100.0
GRAPHIC MATERIAL (4)
This chart shows, in pie format, the asset allocation by currency based on
total net assets for the Franklin Templeton High Income Currency Fund, as of
April 30, 1998.
U.S. Dollar 27.9
German Mark 18.4
Canadian Dollar 18.1
Italian Lira 14.5
British Pound 10.4
Australian Dollar 5.4
New Zealand Dollar 5.3
100.0
