ANNUAL
REPORT
October 31, 1997
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
CELEBRATING 50 YEARS
This year marks 50 years of business for Franklin Templeton. Over these years,
the mutual fund industry has experienced profound changes in technology,
regulations and customer expectations. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest around the globe. We thank you for your past
support and look forward to serving your investment needs in the years ahead.
Donald P. Gould
President
Franklin Templeton Global Trust
CONTENTS
Shareholder Letter 1
Economic Overview 5
Fund Reports
Franklin Templeton German
Government Bond Fund 7
Franklin Templeton
Global Currency Fund 18
Franklin Templeton
Hard Currency Fund 26
Franklin Templeton High
Income Currency Fund 38
Financial Highlights &
Statement of Investments 46
Financial Statements 57
Notes to
Financial Statements 62
Report of
Independent Accountants 70
SHAREHOLDER LETTER
October 31, 1997
Dear Shareholder:
We are pleased to bring you the annual report of the Franklin Templeton Global
Trust for the period ended October 31, 1997.
The U.S. dollar's continued strength during the year in review created a
significant drag on the funds' performance and on returns of foreign
currency-denominated assets generally. Though offset in part by both interest
income and gains from active currency allocation, given the currency mandates of
each of the four funds, there was little chance to avoid entirely the adverse
impact of an appreciating U.S. dollar.
With respect to the Franklin Templeton currency funds, I am pleased to report
that returns for each of the three funds exceeded their respective internal
benchmarks during the period. In particular, overweighting of the U.S. dollar in
the Global Currency and High Income Currency Funds significantly enhanced their
returns relative to these benchmarks.* The German Government Bond Fund largely
tracked its external benchmark, after accounting for fund expenses.
*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 18, 26, and 38.
Nonetheless, it is often remarked, and is certainly true, that one cannot "eat"
relative performance. Considering the weak absolute returns the funds have
delivered recently, it may be worthwhile to review the rationale for foreign
currency investments, regardless of the direction of currencies at any
particular juncture.
Zig vs. Zag
Over the years, our principal thesis has been that, because their returns often
"zig" when U.S. markets "zag," foreign currency-denominated money market
securities and bonds are a natural investment for those seeking to dampen the
overall volatility of a primarily U.S. portfolio. How can an occasionally
volatile asset like foreign currency actually reduce volatility? The answer lies
in the correlation between the returns on foreign currency-denominated assets
and U.S. dollar-denominated assets. The crux of portfolio diversification is the
combining of assets whose returns exhibit low correlation, lessening the chances
that all the portfolio's assets will move in the same way at the same time.
When looking to match a low correlation asset with a mainstream asset such as
U.S. stocks, foreign currency money market instruments stand out. As illustrated
in the chart on page 3, returns on foreign currency money market securities, as
represented by the Franklin Templeton Hard Currency Index, have exhibited
substantially lower correlation with returns on the S&P 500(R) than other asset
categories one might typically find in a diversified portfolio.
"The crux of portfolio diversification is the combining of assets whose returns
exhibit low correlation, lessening the chances that all the portfolio's assets
will move in the same way at the same time."
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
On the Kindness of Strangers, or Lack Thereof
We believe that this low degree of correlation has its roots in the increasing
role played in the U.S. markets by foreign investors. Strong U.S. securities
markets and a strong dollar reinforce one another. For example, a rising U.S.
stock market attracts investment from abroad, which helps support the dollar,
since foreign investors must purchase dollars to buy U.S. stocks. In turn, the
strong dollar makes U.S. investments more attractive to foreign investors, who
must always consider the element of currency gain or loss when investing abroad.
Conversely, dollar weakness is often associated with periods of market weakness
here in the U.S.
A fresh example of the connection between currencies and markets can be seen in
the recent sharp stock market declines across Southeast Asia. Foreign investors,
citing actual or expected currency declines, withdrew significant amounts of
money from the region, leading to stock market declines, which led to more
investors withdrawing from the region. Keep in mind that the U.S. is not immune
to this phenomenon, given our heavy dependence on foreign investors for the
funding of our U.S. Treasury issuance.
Objectives Achieved
Notwithstanding the recent weak returns, the funds of the Franklin Templeton
Global Trust continue to achieve their objectives. Over the years, they have
provided strong total returns during periods of U.S. dollar weakness, while
giving back some of those gains in periods of dollar strength, when other assets
within a typical balanced portfolio benefited from the stronger dollar. Absent a
crystal ball for financial markets, we believe that protection against future
dollar decline is wise and that the diversification afforded by foreign money
markets remains a prudent strategy for many Americans.
As always, thank you for investing with us.
Sincerely,
Donald P. Gould
President
Franklin Templeton Global Trust
ECONOMIC OVERVIEW
During most of the year under review, bond and currency investors were faced
with severe volatility. For example, 10-year U.S. Treasury note yields began the
period at 6.4%, rose to nearly 7.0%, then fell to 5.8% in October 1997. The U.S.
dollar was equally as volatile, increasing in value by 15%-20% against many
currencies during the period.
Perhaps the most important developments during the fiscal year were the
acceleration of the U.S. economy and the different reactions it generated from
bond investors. U.S. gross domestic product increased at a 4.0% rate for the 12
months ended September 30, 1997, and unemployment dropped from 5.2% to 4.7%.
This acceleration in growth heightened concerns about potential inflation, and
in March the U.S. Federal Reserve Board raised the federal funds rate for the
first time in three years, from 5.25% to 5.50%. Growth subsequently slowed
modestly in the second quarter before picking up again in July.
Activity in the U.S. also significantly influenced foreign bond and currency
markets. European interest rates started the period at very low levels, with
short-term interest rates in many markets considerably lower than in the U.S. As
prospects developed for higher U.S. rates, U.S. dollar assets attracted foreign
investors, and the dollar steadily appreciated against most foreign currencies.
For example, it rose from 1.5173 German marks per dollar on October 31, 1996 to
1.7265 on October 31, 1997. During the same time, it increased from 114.07 to
120.47 yen.
The decline in foreign currencies was not exclusively the result of events in
the U.S.; it also stemmed from conditions in Europe, particularly those
surrounding the formation of a common European currency. Although the process
was volatile during the period, prospects for a common currency generally
improved and this meant that higher-yielding markets like Italy and Spain were
very attractive for investors.
"Perhaps the most important developments during the fiscal year were the
acceleration of the U.S. economy and the different reactions it generated from
bond investors."
FRANKLIN TEMPLETON
GERMAN GOVERNMENT BOND FUND
Your Fund's Objective: Franklin Templeton German Government Bond Fund seeks
long-term total return through investment in a managed portfolio of German
government bonds.
Throughout the fiscal year, the yield of the 10-year German government bond was
relatively stable, drifting between 6.03% and 5.40%. The German mark, however,
declined from 1.5173 per U.S. dollar on October 31, 1996, to a four-year low of
1.8808 on August 6, 1997. This was primarily due to two factors. The first was
rapid U.S. economic growth, which caused non-U.S. investors to seek the higher
interest rates available on 10-year U.S. Treasury bonds, for which they had to
purchase dollars. The other was the perception that the European central bank
(to be created when monetary union takes place on January 1, 1999) would be
politically unable to pursue anti-inflationary policies as strongly as the
Bundesbank has for the past several decades. But, during the last half of the
fiscal year, Germany's economy enjoyed its strongest growth in over two years,
and the Bundesbank increased the 2-week repurchase rate from 3.0% to 3.3%. This
reduced the decline in the mark's value, and it closed the reporting period at
1.7265 per U.S. dollar, down 12% from the beginning of the period.* *Source:
Bloomberg. Change measured in German marks. Within this environment, Franklin
Templeton German Government Bond Fund - Class I posted a -8.17% one-year total
return, as discussed in the Performance Summary on page 10. However, we always
maintain a long-term perspective when managing the fund, and we encourage
shareholders to view their investments in a similar manner. The Performance
Summary also shows that the fund has delivered a cumulative total return of
+28.49% for the period from its inception on December 31, 1992, through October
31, 1997.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Three different strategies influenced the fund's portfolio activity during the
period. First, we increased the fund's liquidity and diversification through use
of German Pfandbriefe securities, which are issued by German banks and
effectively guaranteed by loans from German municipalities and state
governments. Second, we shortened the fund's average maturity, from 6.3 years on
October 31, 1996 to 5.3 years on October 31, 1997, in an attempt to minimize the
potential decline in the portfolio's value in case German interest rates rise
during the next fiscal year. Finally, we concentrated portfolio maturities in
one- to three-year notes and eight- to ten-year bonds. We believe this structure
will perform well if longer-term rates remain relatively stable and the
Bundesbank continues raising short-term rates.
Our short-term outlook for German interest rates is uncertain because of the
country's improving economy and the potential for more increases in short-term
rates by the central bank. In addition, the German election cycle, culminating
in national elections in September 1998, may also have a considerable impact on
fiscal policy and the value of the mark. Regardless of which party wins, the
constraints imposed by the impending European Monetary Union, and by global
financial markets in general, may help maintain the current direction of German
government economic policies. Our long-term outlook is more positive, because
slowing economies in Southeast Asia could restrain both global economic growth
and inflation. However, the mark may come under continued long-term pressure
relative to the U.S. dollar if Germany does not reform its labor regulations and
social security and pension policies.
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 and opinions as of October
31, 1997, the end of the reporting period. However, market and economic
conditions are changing constantly, which may affect our strategies and
portfolio holdings. 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 provided a -8.17%
cumulative total return for the one-year period ended October 31, 1997.
Cumulative total return measures the change in value of an investment, assuming
reinvestment of dividends and capital gains, and does not include the initial
sales charge.
The fund's share price, as measured by net asset value, decreased $1.65, from
$13.16 on October 31, 1996 to $11.51 on October 31, 1997. During this same
period, Class I shareholders received distributions from return of capital of
58.0 cents ($0.58) per share. Based on the maximum offering price of $11.87 on
October 31, 1997, and an annualization of October's monthly dividend of 3.9
cents ($0.039) per share, the fund's distribution rate was 3.94%. Distributions
will vary depending on income earned by the fund, currency gains and losses, and
any profits realized from the sale of securities in the fund's portfolio, as
well as the level of the fund's operating expenses.
The graph on page 12 compares the performance of Franklin Templeton German
Government Bond Fund - Class I since inception, and the unmanaged Salomon
Brothers German Government Bond Index, which provides an indication of the
German government bond market's performance. Of course, an unmanaged index has
an inherent performance differential over any fund. It does not pay management
fees to cover salaries of security analysts or portfolio managers, or pay
commissions or market spreads to buy and sell bonds. Unlike indices, mutual
funds are never fully invested because they need to have cash on hand to redeem
shares or pay for upcoming investments. In addition, the fund's performance
includes the maximum initial sales charge, all fund expenses and account fees.
If the fund's costs had been applied to the index, its performance would have
been lower. Please remember that an index is simply a measure of performance and
cannot be invested in directly.
The historical performance data shown pertain only to the fund's Class I shares.
The fund offers another share class subject to different fees and expenses,
which affect performance. Please see the prospectus for more details.
*Includes the sales charge and represents the change in value of an investment
over the period shown. Total return assumes reinvestment of dividends and
capital gains at net asset value. **Index is unmanaged and includes reinvested
dividends. One cannot invest directly in an index.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
During the fiscal year ended October 31, 1997, the fund recognized net foreign
currency losses due to fluctuations in the value of its foreign
currency-denominated securities and foreign currency holdings. Under the
Internal Revenue Code, these losses reduce the fund's investment income
available for distribution to shareholders, which 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 October 31, 1997
Since
One- Three- Inception
Year Year (12/31/92)
Cumulative Total Return1 -8.17% 8.46% 28.49%
Average Annual Total Return2 -10.93% 1.71% 4.66%
Value of $10,000 Investment3 $8,907 $10,521 $12,463
Distribution Rate4 3.94%
30-Day Standardized Yield5 3.82%
10/31/94 10/31/95 10/31/96 10/31/97
One-Year Total Return6 10.74% 18.27% -0.15% -8.17%
1. Cumulative total return represents the change in value of an investment over
the indicated periods and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods and includes the maximum 3.0% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the indicated periods and include the maximum 3.0% initial sales
charge.
4. Distribution rate is based on the maximum offering price of $11.87 per share
on October 31, 1997, 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 during the 30 days ended October 31, 1997.
6. One-year total return represents the change in value of an investment over
the periods ended on the dates indicated and do 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. 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 provided a -7.44%
cumulative total return for the period from January 2, 1997 (commencement of
sales), through October 31, 1997. Cumulative total return measures the change in
value of an investment, assuming reinvestment of dividends and capital gains.
The fund's share price, as measured by net asset value, decreased $1.46, from
$12.98 on January 2, 1997 (commencement of sales) to $11.52 on October 31, 1997.
During this same period, Advisor Class shareholders received distributions from
return of capital of 49.07 cents ($0.4907) per share. Based on the maximum
offering price of $11.52 on October 31, 1997, and an annualization of October's
monthly dividend of 4.09 cents ($0.0409) per share, the fund's distribution rate
was 4.26%. Distributions will vary depending on income earned by the fund,
currency gains and losses, and any profits realized from the sale of securities
in the fund's portfolio, as well as the level of the fund's operating expenses.
The graph on page 16 compares the performance of Franklin Templeton German
Government Bond Fund - Advisor Class since inception and the unmanaged Salomon
Brothers German Government Bond Index. For periods prior to January 2, 1997, the
fund performance is that of the fund's Class I shares, excluding the sales
charge, but including Class I expenses. The Salomon Brothers German Government
Bond Index provides an indication of the German government bond market's
performance. Of course, an unmanaged index has an inherent performance
differential over any fund. It does not pay management fees to cover salaries of
security analysts or portfolio managers, or pay commissions or market spreads to
buy and sell bonds. Unlike indices, mutual funds are never fully invested
because they need to have cash on hand to redeem shares or pay for upcoming
investments. In addition, the fund's performance includes all fund expenses and
account fees. If the fund's costs had been applied to the index, its performance
would have been lower. Please remember that an index is simply a measure of
performance and cannot be invested in directly.
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
The historical performance data shown pertain only to the fund's Advisor Class
shares. The fund offers another share class subject to different fees and
expenses, which affect performance. Please see the prospectus for more details.
*Represents the change in value of an investment over the period shown. Total
return assumes reinvestment of dividends and capital gains at net asset value.
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 Rule 12b-1 plans. 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. This was a period of generally rising security prices.
**Index is unmanaged and includes reinvested dividends. One cannot invest
directly in an index.
During the ten months ended October 31, 1997, the fund recognized net foreign
currency losses due to fluctuations in the value of its foreign
currency-denominated securities and foreign currency holdings. Under the
Internal Revenue Code, these losses reduce the fund's investment income
available for distribution to shareholders, which 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 October 31, 1997
Since
One- Three- Inception
Year* Year* (12/31/92)*
Cumulative Total Return1 -7.95% 8.72% 28.80%
Average Annual Total Return1 -7.95% 2.83% 5.37%
Value of $10,000 Investment2 $9,205 $10,872 $12,880
Distribution Rate3 4.26%
30-Day Standardized Yield4 4.02%
10/31/94* 10/31/95* 10/31/96* 10/31/97*
One-Year Total Return5 10.74% 18.27% -0.15% -7.95%
*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 Rule 12b-1 plans. 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 maximum
initial sales charge, but including the effect of 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 -7.44%.
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 indicated periods.
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 $11.52 per share
on October 31, 1997, and an annualization of the most recent monthly dividend of
4.09 cents ($0.0409) per share.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended October 31, 1997.
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. 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.
FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND
Your Fund's Objective: Franklin Templeton Global Currency Fund seeks to maximize
total return, through a combination of interest income and currency gains, by
investing in interest-earning money market instruments, at least 65% of which
will be denominated in three or more Major Currencies, including the U.S.
dollar.
U.S. economic strength helped push the U.S. dollar to multi-year highs versus
the Japanese yen (127.10 on May 1, 1997) and the German mark (1.8808 on August
6, 1997) during the fiscal year. Over the entire period, the U.S. dollar gained
6% against the yen and 14% against the mark.* Within this environment, the fund
posted a -1.46% one-year cumulative total return, as shown in the Performance
Summary on page 22. 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 usually puts your fund at
a disadvantage during a period when the U.S. dollar is strengthening, 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 +112.94% cumulative total return
for the period from inception on June 27, 1986 through October 31, 1997.
*Source: Bloomberg. Change measured in U.S. dollars.
Attempting to take advantage of fluctuating exchange rates, we temporarily moved
an unusually large proportion of our assets into U.S. dollar-denominated notes,
increasing our exposure from 37.0% of total net assets on October 31, 1996, to
61.9% at midyear. However, as the dollar's increase stalled during the second
half of the period, we reduced our U.S. dollar securities to close the period at
19.0% of total net assets. Our percentages of mark- and yen-denominated
securities were below the fund's benchmark all year, because we believed that
these currencies would remain weak. We reduced our mark holdings, from 21.9% of
the portfolio to 13.3%, while our yen securities started the year at just 5.8%
and increased to 17.3%. The balance of our portfolio at different times
throughout the year consisted of notes denominated in the currencies of many
countries including Australia, Canada, New Zealand, Sweden, Norway and the U.K.
GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Although we feel that economic conditions may help the U.S. dollar continue to
appreciate in the near future, we believe the long-term trend toward a weakening
U.S. dollar has not changed. In our opinion, the currencies of Australia, New
Zealand and Canada should perform particularly well under conditions of
increasing world economic growth. As always, we will continue to monitor
economic conditions, and try to position the portfolio to take advantage of
opportunities in the currency markets around the world.
Of course, there are special risk considerations associated with global
investing related to market, currency, economic, social, political, and other
factors, as discussed in the prospectus. Because the fund's assets are largely
denominated in foreign currencies, there is potential for significant gain or
loss from currency exchange rate fluctuations. A non-diversified foreign fund
may not be appropriate for all investors and should not be considered a complete
investment program.
Please remember, this discussion reflects our views and opinions as of October
31, 1997, the end of the reporting period. However, market and economic
conditions are changing constantly, which may affect our strategies and
portfolio holdings. 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 50 of this
report indicates that the fund held 84.9% of its portfolio investments in U.S.
dollar-denominated assets as of October 31, 1997, its net exposure to the U.S.
dollar as of that date was only 19.0%. 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 63) calling for the purchase of various foreign
currencies in exchange for U.S. dollars at various future dates. The combination
of U.S. dollar instruments with "long" forward currency exchange contracts
creates a position 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 provided a -1.46% cumulative total
return for the one-year period ended October 31, 1997. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, and does not include the initial sales charge.
The fund's share price, as measured by net asset value, decreased $0.70, from
$12.80 on October 31, 1996 to $12.10 on October 31, 1997. During this same
period, shareholders received distributions from return of capital of 51.1 cents
($0.511) per share. Based on the maximum offering price of $12.47 on October 31,
1997, and an annualization of October's monthly dividend of 3.9 cents ($0.039)
per share, the fund's distribution rate was 3.75%. Distributions will vary
depending on income earned by the fund, currency gains and losses, and any
profits realized from the sale of securities in the fund's portfolio, as well as
the level of the fund's operating expenses.
The graph on page 24 compares the performance of Franklin Templeton Global
Currency Fund over the past ten years, and the unmanaged Salomon Brothers World
Money Market Index, which provides an indication of the performance of the U.S.
dollar and Eurocurrency short-term sectors. It is important to note that the
fund's allocation of U.S. dollar instruments is generally higher than the
index's. Other things being equal, the fund may therefore underperform the index
during periods of dollar decline and may outperform during periods of dollar
strength.
Of course, an unmanaged index has an inherent performance differential over any
fund. It does not pay management fees to cover salaries of security analysts or
portfolio managers, or pay commissions or market spreads to buy and sell bonds.
Unlike indices, mutual funds are never fully invested because they need to have
cash on hand to redeem shares or pay for upcoming investments. In addition, the
fund's performance includes the maximum initial sales charge, all fund expenses
and account fees. If the fund's costs had been applied to the index, its
performance would have been lower. Please remember that an index is simply a
measure of performance and cannot be invested in directly.
GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT
*Includes the sales charge and represents the change in value of an investment
over the period shown. Total return assumes reinvestment of dividends and
capital gains at net asset value.
**Index is unmanaged and includes reinvested dividends. One cannot invest
directly in an index.
During the fiscal year ended October 31, 1997, the fund recognized net foreign
currency losses due to fluctuations in the value of its foreign
currency-denominated securities and foreign currency holdings. Under the
Internal Revenue Code, these losses reduce the fund's investment income
available for distribution to shareholders, which 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 October 31, 1997
Since
One- Five- Ten- Inception
Year Year Year (06/27/86)
Cumulative Total Return1 -1.46% 19.93% 80.41% 112.94%
Average Annual Total Return2 -4.42% 3.07% 5.76% 7.26%
Value of $10,000 Investment3 $9,558 $11,633 $17,500 $20,656
Distribution Rate4 3.75%
30-Day Standardized Yield5 4.16%
10/31/93 10/31/94 10/31/95 10/31/96 10/31/97
One-Year
Total Return6 5.20% 7.72% 6.05% 1.27% -1.46%
1. Cumulative total return represents the change in value of an investment over
the indicated periods and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods and includes the maximum 3.0% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the indicated periods and include the maximum 3.0% initial sales
charge.
4. Distribution rate is based on the maximum offering price of $12.47 per share
on October 31, 1997, 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 during the 30 days ended October 31, 1997.
6. One-year total return represents the change in value of an investment over
the periods ended on the indicated dates and does not include the sales charge.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Past expense waivers by the fund's Investment Manager increased the
fund's total returns. Investment return and principal value will fluctuate with
market conditions, currencies and the economic, social and political climates of
countries where investments are made. You may have a gain or loss when you sell
your shares.
FRANKLIN TEMPLETON
HARD CURRENCY FUND
Your Fund's Objective: Franklin Templeton Hard Currency Fund seeks to protect
shareholders against depreciation of the U.S. dollar relative to other
currencies by investing in high-quality, interest-bearing money market
instruments (and forward contracts), denominated in those Major Currencies which
historically have experienced low rates of inflation, and which, in the view of
the Investment Managers, are currently pursuing economic policies conducive to
continued low rates of inflation and currency appreciation versus the U.S.
dollar over the long term.
Since 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 when the dollar is strengthening, because our internal benchmark
portfolio is weighted one-third each in the money markets of Japan, Germany, and
Switzerland.
During the fiscal year, the U.S. dollar continued its recovery and gained value
versus virtually all of the world's other major currencies. Of most importance
to the fund, U.S. economic strength helped push the dollar to multi-year highs
versus the Japanese yen (127.10 in April), the German mark (1.8808 in August),
and the Swiss franc (1.5345 in August). Over the reporting period, the dollar
gained 6% against the yen, 14% against the mark, and 10% against the Swiss
franc.* Within this environment, Franklin Templeton Hard Currency Fund - Class I
posted a -8.28% one-year cumulative total return, as discussed in the
Performance Summary on page 30. 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 +60.42% cumulative total return for the period from its
inception on November 17, 1989 to October 31, 1997. *Source: Bloomberg. Change
measured in U.S. dollars.
On October 31, 1996, 6.4% of the fund's total net assets were invested in U.S.
dollar-denominated notes. Over the year, we attempted to take advantage of
fluctuating exchange rates by increasing this proportion. Then, believing the
dollar had reached its peak, we reduced this amount to just 2.1% of total net
assets by October 31, 1997. During the reporting period, we also reduced our
exposure to marks from 47.7% to 27.0%, and kept our percentages of securities
denominated in Swiss francs and yen below the fund's benchmark, because we
believed that these currencies would also remain weak. Other securities the fund
held during the year were issued in such currencies as New Zealand dollars and
Italian lire.
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
In our opinion, several factors contributing to the dollar's long-term weakening
are still in place: the growing U.S. trade deficit, the shrinking role of the
U.S. in world trade, and the increasing dependence by the U.S. on foreign help
in financing its huge accumulated debt. Rather than regarding the dollar as
strengthening, it could also be said that economic conditions in other countries
have caused their currencies to weaken, and that the U.S. just happens to be
benefiting from this environment. We believe, eventually, the market may refocus
on these economic fundamentals, and the dollar's long-term downtrend may
continue.
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 and opinions as of October
31, 1997, the end of the reporting period. However, market and economic
conditions are changing constantly, which may affect our strategies and
portfolio holdings. 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 53 of this
report indicates that the fund held 69.8% of its portfolio investments in U.S.
dollar-denominated assets as of October 31, 1997, its net exposure to the U.S.
dollar on that date was only 2.1%. 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 63) calling for the purchase of various foreign
currencies in exchange for U.S. dollars at various future dates. The combination
of U.S. dollar instruments with "long" forward currency exchange contracts
creates a position 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 provided a -8.28% cumulative
total return for the one-year period ended October 31, 1997. Cumulative total
return measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, and does not include the initial sales charge.
The fund's share price, as measured by net asset value, decreased $1.36, from
$11.64 on October 31, 1996, to $10.28 on October 31, 1997. During this same
period, Class I shareholders received distributions from return of capital of
39.9 cents ($0.399) per share. Based on the maximum offering price of $10.60 on
October 31, 1997, and an annualization of October's monthly dividend of 2.9
cents ($0.029) per share, the fund's distribution rate was 3.28%. Distributions
will vary, depending on income earned by the fund, currency gains and losses,
and any profits realized from the sale of securities in the fund's portfolio, as
well as the level of the fund's operating expenses.
The graph on page 32 compares the performance of Franklin Templeton Hard
Currency Fund - Class I since inception, and the unmanaged Salomon Brothers
World Money Market Index, which provides an indication of the performance of the
U.S. dollar and Eurocurrency short-term sectors. It is important to note that
the fund does not generally maintain a significant exposure to the U.S. dollar.
Other things being equal, the fund may therefore underperform the index during
periods of dollar decline and may outperform during periods of dollar strength.
Of course, an unmanaged index has an inherent performance differential over any
fund. It does not pay management fees to cover salaries of security analysts or
portfolio managers, or pay commissions or market spreads to buy and sell bonds.
Unlike indices, mutual funds are never fully invested because they need to have
cash on hand to redeem shares or pay for upcoming investments. In addition, the
fund's performance includes the maximum initial sales charge, all fund expenses
and account fees. If the fund's costs had been applied to the index, its
performance would have been lower. Please remember that an index is simply a
measure of performance and cannot be invested in directly.
GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT
The historical performance data shown pertain only to the fund's Class I shares.
The fund offers another share class subject to different fees and expenses,
which affect performance. Please see the prospectus for more details.
*Includes the sales charge and represents the change in value of an investment
over the period shown. Total return assumes reinvestment of dividends and
capital gains at net asset value.
**Index is unmanaged and includes reinvested dividends. One cannot invest
directly in an index.
During the fiscal year ended October 31, 1997 the fund recognized net foreign
currency losses due to fluctuations in the value of its foreign-currency
denominated securities and foreign currency holdings. Under the Internal Revenue
Code, these losses reduce the fund's investment income available for
distribution to shareholders, which 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 October 31, 1997
Since
One- Five- Inception
Year Year (11/17/89)
Cumulative Total Return1 -8.28% 8.88% 60.42%
Average Annual Total Return2 -11.03% 1.10% 5.72%
Value of $10,000 Investment3 $8,897 $10,561 $15,561
Distribution Rate4 3.28%
30-Day Standardized Yield5 3.18%
10/31/93 10/31/94 10/31/95 10/31/96 10/31/97
One-Year
Total Return6 1.07% 17.11% 6.68% -5.99% -8.28%
1. Cumulative total return represents the change in value of an investment over
the indicated periods, and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods and includes the maximum 3.0% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the indicated periods and include the maximum 3.0% initial sales
charge.
4. Distribution rate is based on the maximum offering price of $10.60 per share
on October 31, 1997, and an annualization of the most recent monthly dividend of
2.9 cents ($0.029) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended October 31, 1997.
6. One-year total return represents the change in value of an investment over
the periods ended on the dates indicated and do 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. 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. You may have a gain or loss
when you sell your shares.
Advisor Class
Franklin Templeton Hard Currency Fund - Advisor Class provided a -5.84%
cumulative total return for the period from January 2, 1997 (commencement of
sales), through October 31, 1997. Cumulative total return measures the change in
value of an investment, assuming reinvestment of dividends and capital gains.
The fund's share price, as measured by net asset value, decreased $1.00, from
$11.28 on January 2, 1997 (commencement of sales), to $10.28 on October 31,
1997. During this same period, shareholders received distributions from return
of capital of 33.77 cents ($0.3377) per share. Based on the maximum offering
price of $10.28 on October 31, 1997, and an annualization of October's monthly
dividend of 3.02 cents ($0.0302) per share, the fund's distribution rate was
3.53%. Distributions will vary, depending on income earned by the fund, currency
gains and losses, and any profits realized from the sale of securities in the
fund's portfolio, as well as the level of the fund's operating expenses.
The graph on page 36 compares the performance of Franklin Templeton Hard
Currency Fund - Advisor Class since inception, and the unmanaged Salomon
Brothers World Money Market Index. For periods prior to January 2, 1997, the
fund performance is that of the fund's Class I shares, excluding the sales
charge, but including Class I expenses. The Salomon Brothers World Money Market
Index provides an indication of the performance of the U.S. dollar and
Eurocurrency short-term sectors. It is important to note that the fund does not
generally maintain a significant exposure to the U.S. dollar. Other things being
equal, the fund may therefore underperform the index during periods of dollar
decline and may outperform during periods of dollar strength.
Of course, an unmanaged index has an inherent performance differential over any
fund. It does not pay management fees to cover salaries of security analysts or
portfolio managers, or pay commissions or market spreads to buy and sell bonds.
Unlike indices, mutual funds are never fully invested because they need to have
cash on hand to redeem shares or pay for upcoming investments. In addition, the
fund's performance includes all fund expenses and account fees. If the fund's
costs had been applied to the index, its performance would have been lower.
Please remember that an index is simply a measure of performance and cannot be
invested in directly.
GRAPHIC MATERIAL 9 OMITTED - SEE APPENDIX AT END OF DOCUMENT
The historical performance data shown pertain only to the fund's Advisor Class
shares. The fund offers another share class subject to different fees and
expenses, which affect performance. Please see the prospectus for more details.
*Represents the change in value of an investment over the period shown. Total
return assumes reinvestment of dividends and capital gains at net asset value.
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 Rule 12b-1 plans. 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. This was a period of generally rising security prices.
**Index is unmanaged and includes reinvested dividends. One cannot invest
directly in an index.
During the fiscal year ended October 31, 1997, the fund recognized net foreign
currency losses due to fluctuations in the value of its foreign
currency-denominated securities and foreign currency holdings. Under the
Internal Revenue Code, these losses reduce the fund's investment income
available for distribution to shareholders, which 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 October 31, 1997
Since
One- Five- Inception
Year* Year* (11/17/89)*
Cumulative Total Return1 -8.12% 9.07% 60.70%
Average Annual Total Return1 -8.12% 1.75% 6.15%
Value of $10,000 Investment2 $9,188 $10,907 $16,070
Distribution Rate3 3.53%
30-Day Standardized Yield4 3.42%
10/31/93* 10/31/94* 10/31/95* 10/31/96* 10/31/97*
One-Year
Total Return5 1.07% 17.11% 6.68% -5.99% -8.12%
*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 Rule 12b-1 plans. 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 maximum
initial sales charge, but including the effect of 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 -5.84%.
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 indicated periods.
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 $10.28 per share
on October 31, 1997, and an annualization of the most recent monthly dividend of
3.02 cents ($0.0302) per share.
4. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended October 31, 1997.
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. 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. You may have a gain or loss
when you sell your shares.
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 by investing in interest-bearing money market
instruments denominated in Major and Non-Major Currencies. Subject to this
investment objective, a secondary consideration of the fund is preservation of
capital.
During the fiscal year, the U.S. dollar, aided by a strong economy, appreciated
against most currencies. It rose 14% compared with the German mark; compared
with the Swedish krona, 14%; the Spanish peseta, 14%; the Italian lira, 12%; and
the Canadian dollar, 5%.* Within this environment, the fund posted a -0.08%
one-year cumulative total return, as shown in the Performance Summary on page
42. Since the fund holds primarily short-term securities whose prices are not
highly variable, its total return is based on changes in the U.S. dollar's value
versus the currencies of countries where it is invested, in addition to interest
paid by portfolio securities. This can put your fund at a disadvantage during a
period when the U.S. dollar is strengthening, because our internal benchmark
portfolio consists of equal investments in the local currency markets of
Australia, Canada, Denmark, Spain, France, the United Kingdom, Italy,
Netherlands, New Zealand, and Sweden. 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 +65.82% cumulative total return for the period from its
inception on November 17, 1989 through October 31, 1997.
*Source: Bloomberg. Change measured in U.S. dollars.
Attempting to take advantage of the strengthening U.S. dollar, we increased the
fund's position in that currency, from 15.4% of total net assets on October 31,
1996, to 23.1% on October 31, 1997. At the close of the period, other
significant positions in the portfolio were denominated in Australian, New
Zealand, and Canadian dollars, Italian lire, British pounds, Spanish pesetas,
Norwegian kroner, and Swedish kronor.
Most of the traditionally higher-yielding European countries, such as Sweden and
Spain, have taken steps to improve their fiscal and monetary situations in
anticipation of monetary union in 1999. Therefore, we believe these currencies,
along with the Australian and New Zealand dollars, have potential to outperform
those of the major European economic powers in the near term.
GRAPHIC MATERIAL 10 OMITTED - SEE APPENDIX AT END OF DOCUMENT
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 and opinions as of October
31, 1997, the end of the reporting period. However, market and economic
conditions are changing constantly, which may affect our strategies and
portfolio holdings. 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 56 of this
report indicates that the fund held 69.0% of its portfolio investments in U.S.
dollar-denominated assets as of October 31, 1997, its net exposure to the U.S.
dollar as of that date was only 23.1%. 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 63) calling for the purchase of various foreign
currencies in exchange for U.S. dollars at various future dates. The combination
of U.S. dollar instruments with "long" forward currency exchange contracts
creates a position 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 provided a -0.08% cumulative total
return for the one-year period ended October 31, 1997. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, and does not include the initial sales charge.
The fund's share price, as measured by net asset value, decreased $0.45, from
$11.02 on October 31, 1996 to $10.57 on October 31, 1997. During this same
period, shareholders received distributions totaling 43.8 cents ($0.438) per
share, of which 2.0 cents ($0.02) represented dividends from net investment
income, and 41.8 cents ($0.418) represented return of capital. Based on the
maximum offering price of $10.90 on October 31, 1997, and an annualization of
October's monthly dividend of 3.0 cents ($0.03) per share, the fund's
distribution rate was 3.30%. Distributions will vary depending on income earned
by the fund, currency gains and losses, and any profits realized from the sale
of securities in the fund's portfolio, as well as the level of the fund's
operating expenses.
The graph on page 44 compares the performance of Franklin Templeton High Income
Currency Fund since inception, and the unmanaged Salomon Brothers World Money
Market Index, which provides an indication of the performance of the U.S. dollar
and Eurocurrency short-term sectors. It is important to note that the index does
not include many of the higher-yielding currencies in which the fund invests.
Thus, the difference in performance depends, in part, on the performance of such
higher-yielding currencies relative to those in the index.
Of course, an unmanaged index has an inherent performance differential over any
fund. It does not pay management fees to cover salaries of security analysts or
portfolio managers, or pay commissions or market spreads to buy and sell bonds.
Unlike indices, mutual funds are never fully invested because they need to have
cash on hand to redeem shares or pay for upcoming investments. In addition, the
fund's performance includes the maximum initial sales charge, all fund expenses
and account fees. If the fund's costs had been applied to the index, its
performance would have been lower. Please remember that an index is simply a
measure of performance and cannot be invested in directly.
GRAPHIC MATERIAL 11 OMITTED - SEE APPENDIX AT END OF DOCUMENT
*Includes the sales charge and represents the change in value of an investment
over the period shown. Total return assumes reinvestment of dividends and
capital gains at net asset value.
**Index is unmanaged and includes reinvested dividends. One cannot invest
directly in an index.
During the fiscal year ended October 31, 1997, the fund recognized net foreign
currency losses due to fluctuations in the value of its foreign
currency-denominated securities and foreign currency holdings. Under the
Internal Revenue Code, these losses reduce the fund's investment income
available for distribution to shareholders, which 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 October 31, 1997
Since
One- Five- Inception
Year Year (11/17/89)
Cumulative Total Return1 -0.08% 20.23% 65.82%
Average Annual Total Return2 -3.08% 3.12% 6.16%
Value of $10,000 Investment3 $9,692 $11,662 $16,084
Distribution Rate4 3.30%
30-Day Standardized Yield5 3.58%
10/31/93 10/31/94 10/31/95 10/31/96 10/31/97
One-Year
Total Return6 -4.82% 9.97% 9.01% 5.66% -0.08%
1. Cumulative total return represents the change in value of an investment over
the indicated periods and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods and includes the maximum 3.0% initial
sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the indicated periods and include the maximum 3.0% initial sales
charge.
4. Distribution rate is based on the maximum offering price of $10.90 per share
on October 31, 1997, and an annualization of the most recent monthly dividend of
3.0 cents ($0.03) per share.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio during the 30 days ended October 31, 1997.
6. One-year total return represents the change in value of an
investment over the periods ended on the indicated dates and does not include
the sales charge.
All calculations assume reinvestment of dividends and capital
gains at net asset value. Past expense waivers by the fund's Investment Manager
increased the fund's total return. 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
Franklin Templeton German Government Bond Fund
<TABLE>
<CAPTION>
Class I
---------------------------------------------------------------------
Year Ended October 31, Year Ended April 30,
---------------------------------------------------------------------
1997 1996 1995 1994+ 1994 1993a,b
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year..... $13.16 $14.31 $13.26 $12.29 $13.08 $12.50
Income from investment operations:
Net investment income................. .53 .66 1.53 .41 .78 .27
Net realized and unrealized gain(loss) (1.60) (.69) .71 .92 (.72) .56
---------------------------------------------------------------------
Total from investment operations....... (1.07) (.03) 2.24 1.33 .06 .83
---------------------------------------------------------------------
Less distributions:
Dividends from net investment income.. -- (1.00) (1.19) (.36) (.39) (.25)
Distributions from net realized gains. -- (.06) -- -- (.06) --
Distributions from tax return of capital (.58) (.06) -- -- (.40) --
---------------------------------------------------------------------
Total distributions.................... -- (1.12) (1.19) (.36) (.85) (.25)
---------------------------------------------------------------------
Net asset value, end of year........... $11.51 $13.16 $14.31 $13.26 $12.29 $13.08
=====================================================================
Total Return**......................... (8.17%) (.14%) 18.28% 10.92% .64% 6.15%
Ratios/Supplemental Data
Net assets, end of year (000's)........ $12,754 $17,552 $24,113 $13,236 $13,341 $10,738
Ratio to average net assets:
Expenses.............................. 1.42% 1.10% 1.25% 1.04%* 1.00% .87%*
Expenses excluding waiver and
payments by affiliates............... 1.42% 1.10% 1.29% 1.77%* 1.83% 1.73%*
Net investment income................. 4.51% 5.25% 5.17% 6.37%* 4.74% 6.06%*
Portfolio turnover rate................ 41.63% 57.59% 67.77% 301.60%* 185.66% 190.89%*
</TABLE>
*Annualized.
**Total return does not reflect sales commissions and is not annualized.
aFor the period December 31, 1992 (effective date) to April 30, 1993.
bFinancial Highlights for periods ended prior to April 30, 1994 were audited by
other independent auditors whose opinions are not included herein.
+Six months ended October 31, 1994. Prior to this period, the Fund's fiscal year
end was April 30.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights (continued)
Franklin Templeton German Government Bond Fund (cont.)
Advisor Class
--------------
1997+,a
--------------
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year.......... $12.98
Income from investment operations:
Net investment income...................... .43
Net realized and unrealized loss........... (1.40)
--------------
Total from investment operations............ (.97)
--------------
Less distributions:
Distributions from tax return of capital... (.49)
--------------
Net asset value, end of year................ $11.52
==============
Total Return**.............................. (7.44%)
Ratios/Supplemental Data
Net assets, end of year (000's)............. $28
Ratio to average net assets:
Expenses................................... 1.27%*
Net investment income...................... 4.49%*
Portfolio turnover rate..................... 41.63%
*Annualized.
**Total return is not annualized.
+For the period January 2, 1997 (effective date) through October 31, 1997.
aBased on average weighted shares outstanding.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments, October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
Franklin Templeton German Government Bond Fund AMOUNT VALUE
<S> <C> <C>
Long Term Investments 96.8%
Eurobonds 26.2%
Europe Economic Community, 6.50%, 3/10/00....................................... 900,000 DEM $ 543,770
European Investment Bank, 7.75%, 1/26/05........................................ 500,000 DEM 327,039
Government of Austria, 7.25%, 5/3/07............................................ 850,000 DEM 546,844
Interamerican Development Bank, 6.75%, 4/29/03.................................. 925,000 DEM 572,558
International Bank Recon/Dev, 6.125%, 9/27/02................................... 600,000 DEM 362,339
Japan Finance Corp. Muni Enterprises, 7.75%, 10/28/04........................... 800,000 DEM 519,782
Kingdom of Denmark, 6.125%, 4/15/98............................................. 275,000 DEM 160,648
Osterreich Kontrollbank, 7.00%, 8/8/05.......................................... 500,000 DEM 314,132
-------------
Total Eurobonds (cost $3,604,985)............................................... 3,347,112
-------------
German Bonds 70.6%
Allgemeine Hypotheken Bank AG, 6.00%, 9/16/02................................... 540,000 DEM 322,816
Bayerische Hypotheken-Und Wechselbank AG, 6.00%, 9/13/00........................ 530,000 DEM 317,299
Bundesland Baden-Wuerttemberg, 7.50%, 10/22/04.................................. 750,000 DEM 482,292
Deutsche Hypothekenbank Franfurt AG, 6.00%, 3/22/02............................. 900,000 DEM 538,392
Federal Republic of Germany:
6.875%, 2/24/99................................................................ 1,655,000 DEM 992,443
6.375%, 7/1/99................................................................. 1,835,000 DEM 1,099,422
Freie Hansestadt Bremen, 8.50%, 4/17/98......................................... 500,000 DEM 295,568
Gemeinsame Bundeslaender, 6.00%, 1/29/07........................................ 2,390,000 DEM 1,407,823
KFW International Finance, 7.75%, 10/6/04....................................... 650,000 DEM 423,265
Land Niedersachsen, 7.50%, 1/20/05.............................................. 150,000 DEM 97,372
Land Sachsen Anhalt:
7.25%, 4/20/05................................................................. 550,000 DEM 348,576
7.50%, 10/28/04................................................................ 800,000 DEM 519,318
LKB Baden-Wuerttemburg Finance NV, 6.50%, 9/15/08............................... 800,000 DEM 487,760
Rheinhyp Rheinische Hypothekenbank AG, 5.50%, 12/20/99.......................... 530,000 DEM 312,995
Sueddeutsche Bodencreditbank AG, 6.00%, 11/06/01................................ 900,000 DEM 538,549
Westfaelische Hypothekenbank AG, 5.50%, 9/13/99................................. 530,000 DEM 313,302
Wurttembergische Hypothekenbank, 5.50%, 1/22/02................................. 900,000 DEM 529,673
-------------
Total German Bonds (cost $9,560,069)............................................ 9,026,865
-------------
Total Investments: 96.8% (cost $13,165,054)..................................... 12,373,977
Other Assets, less liabilities: 3.2%............................................ 405,693
Net Equity in Forward Contracts: 0.0%........................................... 2,295
-------------
Total Net Assets: 100.0%........................................................ $12,781,965
=============
</TABLE>
CURRENCY ABBREVIATION:
DEM - Germany
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
Franklin Templeton Global Currency Fund
<TABLE>
<CAPTION>
Class I
---------------------------------------------------------------------
Year Ended October 31, Year Ended April 30,
---------------------------------------------------------------------
1997 1996 1995 1994+ 1994 1993b
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year..... $12.80 $13.67 $14.14 $13.85 $13.96 $14.01
Income from investment operations:
Net investment income................. .49 .69 1.29 .25 .57 .67
Net realized and unrealized gain (loss) (.68) (.54) (.49) .32 (.11) 1.01
---------------------------------------------------------------------
Total from investment operations....... (.19) .15 .80 .57 .46 1.68
---------------------------------------------------------------------
Less distributions:
Dividends from net investment income.. -- (.71) (1.27) (.28) (.57) (.69)
Distributions from net realized gains. -- -- -- -- -- (1.04)
Distributions from tax return of capital (.51) (.31) -- -- -- --
---------------------------------------------------------------------
Total distributions.................... (.51) (1.02) (1.27) (.28) (.57) (1.73)
---------------------------------------------------------------------
Net asset value, end of year........... $12.10 $12.80 $13.67 $14.14 $13.85 $13.96
=====================================================================
Total Return**......................... (1.46%) 1.27% 6.05% 4.14% 3.41% 13.28%
Ratios/Supplemental Data
Net assets, end of year (000's)........ $41,795 $50,773 $59,942 $56,098 $51,539 $62,355
Ratio to average net assets:
Expenses.............................. 1.10% .99% .99% 1.04%* 1.41% 1.67%
Expenses excluding waiver and
payments by affiliates............... 1.10% .99% .99% 1.12%* 1.61% 1.67%
Net investment income................. 4.01% 4.30% 5.29% 3.55%* 2.78% 4.64%
Portfolio turnover rate................ .00% .00% 46.05% 50.82%* 37.16% 10.39%
</TABLE>
*Annualized.
**Total return does not reflect sales commissions and is not annualized.
bFinancial Highlights for periods ended prior to April 30, 1994 were audited by
other independent auditors whose opinions are not included herein. +Six months
ended October 31, 1994. Prior to this period, the Fund's fiscal year end was
April 30.
See notes to financial statements.
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments, October 31, 1997
PRINCIPAL
Franklin Templeton Global Currency Fund AMOUNT* VALUE
<S> <C> <C>
Long Term Investments 11.0%
Corporate Bonds-Floating Rate Notes 2.4% (cost $1,139,911)
European Investment Bank,FRN, 3.0625%, 3/25/98.................................. 1,750,000DEM $ 1,014,184
-------------
Foreign Government Securities-Floating Rate Notes 8.6%
Government of Belgium, FRN, 3.37109%, 3/24/00................................... 2,000,000DEM 1,158,893
Government of Spain, FRN, 3.09375%, 6/29/02..................................... 4,150,000DEM 2,411,444
-------------
Total Foreign Government Securities-Floating Rate Notes (cost $4,010,413)....... 3,570,337
-------------
Total Long Term Investments (cost $5,150,324)................................... 4,584,521
-------------
Short Term Investments 94.5%
Time Deposit 0.8% (cost $330,000)
HSBC Securities, Inc., 5.625%, 11/03/97......................................... 330,000 330,000
-------------
Commercial Paper 8.4%
Halifax Building Society Ltd., 5.50%, 11/03/97.................................. 1,400,000 1,400,000
National Australia Funding, 5.49%, 11/18/97..................................... 2,125,000 2,119,071
-------------
Total Commercial Paper (cost $3,518,525)........................................ 3,519,071
-------------
Government Securities 9.1%
German Treasury Bill, 3.52%, 4/17/98............................................ 3,000,000DEM 1,708,048
U.S. Treasury Bill, 4.80%, 12/26/97............................................. 2,086,000 2,070,737
-------------
Total Government Securities (cost $3,735,275)................................... 3,778,785
-------------
U.S. Government Agencies 63.1%
Federal Farm Credit Banks, 5.65%, 2/02/98....................................... 2,070,000 2,070,000
Federal Home Loan Banks, 5.45% to 5.47% with maturities to 1/16/98.............. 5,185,000 5,143,286
Federal Home Loan Mortgage Corp., 5.39% to 5.46% with maturities to 1/23/98..... 8,160,000 8,105,118
Federal National Mortgage Association, 5.42% to 5.46% with maturities to 2/24/98 9,048,000 8,967,706
Student Loan Marketing Association, 5.21%, 11/20/97............................. 2,100,000 2,099,777
-------------
Total U.S. Government Agencies (cost $26,377,036)............................... 26,385,887
-------------
Total Investments before Repurchase Agreements (cost $39,111,160)............... 38,598,264
-------------
Repurchase Agreements 13.1%
Deutsche Bank AG., 5.67%, 11/03/97 (Maturity Value $1,829,864) (cost $1,829,000)
Collateralized by U.S. Treasury Note........................................... 1,829,000 1,829,000
Morgan Stanley Inc., 5.66%, 11/03/97 (Maturity Value $1,831,864) (cost $1,831,000)
Collateralized by U.S. Treasury Note........................................... 1,831,000 1,831,000
UBS Securities Inc., 5.67%, 11/03/97 (Maturity Value $1,830,865) (cost $1,830,000)
Collateralized by U.S. Treasury Note........................................... 1,830,000 1,830,000
-------------
Total Repurchase Agreements (cost $5,490,000)................................... 5,490,000
-------------
Total Investments: 105.5% (cost $44,601,160).................................... 44,088,264
Other Assets, less liabilities: (4.9%).......................................... (2,034,619)
Net Equity in Forward Contracts: (0.6%)......................................... (259,127)
-------------
Total Net Assets: 100.0%........................................................ $41,794,518
=============
</TABLE>
CURRENCY ABBREVIATION:
DEM - Germany
*Securities traded in U.S. dollars unless otherwise indicated.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin Templeton Hard Currency Fund
Class I
---------------------------------------------------------------------
Year Ended October 31, Year Ended April 30,
---------------------------------------------------------------------
1997 1996 1995 1994+ 1994 1993b
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year..... $11.64 $13.09 $13.95 $12.95 $13.00 $13.12
Income from investment operations:
Net investment income................. .37 .57 1.84 .26 .50 .71
Net realized and unrealized gain(loss) (1.33) (1.34) (1.02) .99 (.05) 1.20
---------------------------------------------------------------------
Total from investment operations....... (.96) (.77) .82 1.25 .45 1.91
---------------------------------------------------------------------
Less distributions:
Dividends from net investment income.. -- (.06) (1.68) (.25) (.13) (.69)
Distributions from net realized gains. -- -- -- -- -- (1.34)
Distributions from tax return of capital (.40) (.62) -- -- (.37) --
---------------------------------------------------------------------
Total distributions.................... (.40) (.68) (1.68) (.25) (.50) (2.03)
---------------------------------------------------------------------
Net asset value, end of year........... $10.28 $11.64 $13.09 $13.95 $12.95 $13.00
=====================================================================
Total Return**......................... (8.28%) (5.99%) 6.68% 9.74% 3.62% 17.11%
Ratios/Supplemental Data
Net assets, end of year (000's)........ $91,976 $124,666 $132,089 $61,228 $35,739 $49,569
Ratio to average net assets:
Expenses.............................. 1.13% 1.10% 1.15% 1.05%* 1.47% 1.75%
Expenses excluding waiver and
payments by affiliates............... 1.13% 1.10% 1.15% 1.28%* 1.71% 1.75%
Net investment income................. 3.53% 4.50% 4.68% 3.80%* 3.83% 5.23%
Portfolio turnover rate................ 2.68% .00% 15.72% 55.91%* .00% 4.88%
</TABLE>
*Annualized.
**Total return does not reflect sales commissions and is not annualized.
bFinancial Highlights for periods ended prior to April 30, 1994 were audited by
other independent auditors whose opinions are not included herein.
+Six months ended October 31, 1994. Prior to this period, the Fund's fiscal year
end was April 30.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights (continued)
Franklin Templeton Hard Currency Fund (cont.)
Advisor Class
-------------
1997+
-------------
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year.......... $11.28
Income from investment operations:
Net investment income...................... .34
Net realized and unrealized loss........... (1.00)
-------------
Total from investment operations............ (.66)
-------------
Less distributions:
Distributions from tax return of capital... (.34)
-------------
Net asset value, end of year................ $10.28
=============
Total Return**.............................. (5.84%)
Ratios/Supplemental Data
Net assets, end of year (000's)............. $249
Ratio to average net assets:
Expenses................................... .94%*
Net investment income...................... 3.67%*
Portfolio turnover rate..................... 2.68%
*Annualized.
**Total return is not annualized.
+For the period January 2, 1997 (effective date) through October 31, 1997.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments, October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
Franklin Templeton Hard Currency Fund AMOUNT* VALUE
<S> <C> <C>
Long Term Investments 6.4%
Corporate Bonds-Floating Rate Notes 2.1%
Commerzbank Overseas Finance, FRN, 1.41016%, 1/19/99.......................... 250,000 CHF $ 177,998
European Investment Bank, FRN, 3.46328%, 10/23/98............................. 1,650,000 DEM 955,752
Inter-American Development Bank, FRN, 0.66410%, 6/19/98....................... 100,000,000 JPY 831,325
-------------
Total Corporate Bonds-Floating Rate Notes (cost $2,260,725)................... 1,965,075
-------------
Foreign Government Securities-Floating Rate Notes 3.1%
Government of Belgium, FRN, 3.37109%, 3/24/00................................. 4,600,000 DEM 2,665,454
South Australia Finance Authority, FRN, 1.50%, 3/18/99........................ 200,000 CHF 142,719
-------------
Total Foreign Government Securities-Floating Rate Notes (cost $3,177,071)..... 2,808,173
-------------
Government Securities 1.2% (cost $1,392,599)
Government of Italy, 0.59375%, 07/26/99....................................... 135,000,000 JPY 1,129,580
-------------
Total Long Term Investments (cost $6,830,395)................................. 5,902,828
-------------
Short Term Investments 97.3%
Commercial Paper 26.0%
Commerzbank AG, 1.22%, 11/10/97............................................... 7,000,000 CHF 4,995,243
Halifax Building Society Ltd., 5.00%, 11/03/97................................ 4,620,000 4,620,000
Halifax Building Society Ltd., 1.27%, 11/10/97................................ 7,000,000 CHF 4,995,243
National Australia Funding, 5.49%, 11/18/97................................... 4,411,000 4,398,693
Nestle Capital Corporation, 1.27%, 11/10/97................................... 7,000,000 CHF 4,995,243
-------------
Total Commercial Paper (cost $23,553,830)..................................... 24,004,422
-------------
Government Securities 12.5%
Federal Republic of Germany, 5.25%, 11/20/97.................................. 10,000,000 DEM 5,805,778
German Treasury Bill, 3.52%, 4/17/98.......................................... 2,000,000 DEM 1,138,699
U.S. Treasury Bill, 4.80%, 12/26/97........................................... 4,572,000 4,538,547
-------------
Total Government Securities (cost $11,236,080)................................ 11,483,024
-------------
U.S. Government Agencies 58.5%
Federal Farm Credit Banks, 5.50% to 5.65% with maturities to 3/02/98.......... 8,430,000 8,429,934
Federal Home Loan Banks, 5.47% to 5.57% with maturities to 2/04/98............ 10,070,000 9,977,578
Federal Home Loan Mortgage Corp., 5.39% to 5.46% with maturities to 1/23/98... 17,830,000 17,711,629
Federal National Mortgage Association, 5.45% to 5.46% with maturities to 2/24/9813,716,000 13,540,245
Student Loan Marketing Association, 5.21%, 11/20/97........................... 4,300,000 4,299,544
-------------
Total U.S. Government Agencies (cost $53,939,844)............................. 53,958,930
-------------
Total Investments before Repurchase Agreement (cost $95,560,149).............. 95,349,204
-------------
Repurchase Agreement 0.3%
UBS Securities Inc., 5.67%, 11/03/97 (Maturity Value $279,840) (cost $279,000)
Collateralized by U.S. Treasury Note.......................................... 279,000 279,000
-------------
Total Investments: 103.7% (cost $95,839,149).................................. 95,628,204
Other Assets, less liabilities: (4.6%)........................................ (4,220,566)
Net Equity in Forward Contracts: 0.9%......................................... 817,702
-------------
Total Net Assets: 100.0%...................................................... $92,225,340
=============
</TABLE>
CURRENCY ABBREVIATIONS:
CHF -Switzerland
DEM - Germany
JPY -Japan
*Securities traded in U.S. dollars unless otherwise indicated.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
<TABLE>
<CAPTION>
Franklin Templeton High Income Currency Fund
Class I
---------------------------------------------------------------------
Year Ended October 31, Year Ended April 30,
---------------------------------------------------------------------
1997 1996 1995 1994+ 1994 1993b
---------------------------------------------------------------------
Per Share Operating Performance
(for a share outstanding throughout the year)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $11.02 $11.56 $11.59 $11.28 $12.13 $12.90
Income from investment operations:
Net investment income................. .43 .58 1.47 .31 .59 .90
Net realized and unrealized gain (loss) (.44) -- (.51) .31 (.85) (.40)
---------------------------------------------------------------------
Total from investment operations....... (.01) .58 .96 .62 (.26) .50
---------------------------------------------------------------------
Less distributions:
Dividends from net investment income.. (.02) (1.08) (.99) (.31) -- (.94)
Distributions from net realized gains. -- (.01) -- -- -- (.33)
Distributions from tax return of capital (.42) (.03) -- -- (.59) --
---------------------------------------------------------------------
Total distributions.................... (.44) (1.12) (.99) (.31) (.59) (1.27)
---------------------------------------------------------------------
Net asset value, end of year........... $10.57 $11.02 $11.56 $11.59 $11.28 $12.13
=====================================================================
Total Return**......................... (.08%) 5.56% 8.90% 5.60% (2.03%) 4.49%
Ratios/Supplemental Data
Net assets, end of year (000's)........ $8,376 $10,113 $10,902 $16,878 $16,706 $32,341
Ratio to average net assets:
Expenses.............................. 1.49% 1.25% 1.25% 1.04%* 1.59% 1.81%
Expenses excluding waiver and payments
by affiliates........................ 1.49% 1.29% 1.45% 1.45%* 1.82% 1.81%
Net investment income................. 4.11% 4.83% 5.56% 5.44%* 4.80% 6.86%
Portfolio turnover rate................ 99.39% .00% 115.05% 1588.38%* -- --
</TABLE>
*Annualized.
**Total return does not reflect sales commissions and is not annualized.
bFinancial Highlights for periods ended prior to April 30, 1994 were audited by
other independent auditors whose opinions are not included herein. +Six months
ended October 31, 1994. Prior to this period, the Fund's fiscal year end was
April 30.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Statement of Investments, October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
Franklin Templeton High Income Currency Fund AMOUNT* VALUE
<S> <C> <C>
Foreign Government Securities-Floating Rate Notes 9.2% (cost $716,136)
United Kingdom, FRN, 7.04167%, 3/11/99....................................... 460,000 GBP $ 774,230
-------------
Short Term Investments 95.9%
Time Deposit 3.2% (cost $269,697)
JP Morgan & Co. Inc., 6.55%, 11/05/97........................................ 458,429,409 ITL 270,779
-------------
Commercial Paper 10.0%
Halifax Building Society Ltd., 5.50%, 11/03/97............................... 415,000 415,000
National Australia Funding, 5.49%, 11/18/97.................................. 422,000 420,823
-------------
Total Commercial Paper (cost $835,652)....................................... 835,823
-------------
Government Securities 23.5%
Canada Treasury Bill, 2.97%, 1/08/98......................................... 390,000 CAD 274,845
Government of Spain, 5.13%, 4/03/98.......................................... 69,000,000 ESP 464,506
Republic of Italy, 7.08%, 4/30/98............................................1,420,000,000 ITL 809,895
U.S. Treasury Bill, 4.80%, 12/26/97.......................................... 419,000 415,934
-------------
Total Government Securities (cost $1,980,485)................................ 1,965,180
-------------
U.S. Government Agencies 59.2%
Federal Farm Credit Banks, 5.54% to 5.65% with maturities to 3/02/98......... 815,000 814,963
Federal Home Loan Banks, 5.47%, with maturities to 1/16/98................... 835,000 826,494
Federal Home Loan Mortgage Corp., 5.39% to 5.46% with maturities to 1/23/98.. 1,670,000 1,658,726
Federal National Mortgage Association, 5.45% to 5.46% with maturities to 2/24/98 1,257,000 1,240,894
Student Loan Marketing Association, 5.21%, 11/20/97.......................... 420,000 419,955
-------------
Total U.S. Government Agencies (cost $4,959,196)............................. 4,961,032
-------------
Total Short Term Investments (cost $8,045,030)............................... 8,032,814
-------------
Total Investment: 105.1% (cost $8,761,166)................................... 8,807,044
Other Assets, less liabilities: (4.6%)....................................... (388,753)
Net Equity in Forward Contracts: (0.5%)...................................... (42,632)
-------------
Total Net Assets: 100.0%..................................................... $8,375,659
=============
</TABLE>
CURRENCY ABBREVIATIONS:
CAD -Canada
ESP -Spain
GBP -United Kingdom
ITL -Italy
*Securities traded in U.S. dollars unless otherwise indicated.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
October 31, 1997
Franklin
Templeton Franklin Franklin Franklin
German Templeton Templeton Templeton
Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments in securities:
Cost.............................................. $13,165,054 $39,111,160 $95,560,149 $8,761,166
==============================================================
Value............................................. 12,373,977 38,598,264 95,349,204 8,807,044
Repurchase agreements, at value and cost......... -- 5,490,000 279,000 --
Foreign currencies
(cost $339,464 and $28,890, respectively)....... 339,660 29,769 -- --
Cash............................................. -- 10,483 34 57,540
Receivables:
Beneficial shares sold............................ 85,389 529 272,205 411
Interest.......................................... 351,125 159,197 448,090 22,069
Unrealized gains on forward currency contracts (Note 6) 2,484 304,509 817,702 18,501
Unamortized organization costs................... 1,271 -- -- --
--------------------------------------------------------------
Total assets...................................... 13,153,906 44,592,751 97,166,235 8,905,565
--------------------------------------------------------------
Liabilities:
Payables:
Funds advanced by custodian....................... 265,922 -- -- --
Investment securities purchased................... -- 2,070,000 4,550,000 415,000
Beneficial shares redeemed........................ 23,974 1,185 80,160 5,567
To affiliates..................................... 9,324 32,442 64,195 6,218
To shareholders................................... 36,605 -- -- --
Distribution to shareholders..................... 6,926 30,364 63,609 4,577
Unrealized losses on forward currency contracts (Note 6) 189 563,636 -- 61,133
Other liabilities................................ 29,001 100,606 182,931 37,411
--------------------------------------------------------------
Total liabilities................................. 371,941 2,798,233 4,940,895 529,906
--------------------------------------------------------------
Net assets, at value............................. $12,781,965 $41,794,518 $92,225,340 $8,375,659
==============================================================
</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 (loss)....... $ (2,295) $ 265,180 $ (817,703) $ 25,019
Net unrealized appreciation (depreciation)....... (783,617) (770,030) 618,202 3,518
Accumulated net realized loss.................... (2,020) (339,636) (1,623,677) (24,312)
Capital shares................................... 13,569,897 42,639,004 94,048,518 8,371,434
--------------------------------------------------------------
Net assets, at value.............................. $12,781,965 $41,794,518 $ 92,225,340 $8,375,659
==============================================================
Class I:
Net assets, at value............................. $12,753,974 $41,794,518 $ 91,975,922 $8,375,659
==============================================================
Shares outstanding............................... 1,108,528 3,454,471 8,944,016 792,480
==============================================================
Net asset value per share*....................... $11.51 $12.10 $10.28 $10.57
==============================================================
Maximum offering price per share
(Net asset value per share / 97.00%)............ $11.87 $12.47 $10.60 $10.90
==============================================================
Advisor Class:
Net assets, at value............................. $ 27,991 $ 249,418
=============== ==============
Shares outstanding............................... 2,430 24,262
=============== ==============
Net asset value and offering price per share..... $11.52 $10.28
=============== ==============
</TABLE>
*Redemption price is equal to net asset value less any applicable sales charge.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
<TABLE>
<CAPTION>
Statement of Operations
for the year ended October 31, 1997
Franklin
Templeton Franklin Franklin Franklin
German Templeton Templeton Templeton
Government Global Hard High Income
Bond Fund Currency FundCurrency Fund Currency Fund
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Interest......................................... $ 903,482 $2,335,127 $ 4,892,141 $514,124
--------------------------------------------------------------
Expenses:
Management fees (Note 3)......................... 83,958 296,670 682,152 59,758
Distribution fees - Class I (Note 3)............. 28,912 108,554 227,407 18,875
Transfer agent fees (Note 3)..................... 24,120 42,000 114,100 15,000
Custodian fees................................... 1,000 1,000 18,900 2,100
Reports to shareholders.......................... 19,800 22,400 42,120 10,650
Registration and filing fees..................... 29,500 8,250 48,250 10,550
Professional fees ............................... 9,550 15,200 39,200 8,700
Trustees' fees and expenses (Note 3)............. 10,150 7,800 9,100 10,700
Amortization of organization costs (Note 1)...... 7,664 -- -- --
Other............................................ 967 2,102 4,812 352
--------------------------------------------------------------
Total expenses.................................... 215,621 503,976 1,186,041 136,685
--------------------------------------------------------------
Net investment income............................ 687,861 1,831,151 3,706,100 377,439
--------------------------------------------------------------
Realized and unrealized losses:
Net realized loss from:
Investments..................................... (659,128) (784,500) (4,414,915) (180,569)
Foreign currency transactions................... (208,995) (1,027,451) (11,397,084) (113,531)
--------------------------------------------------------------
Net realized loss................................ (868,123) (1,811,951) (15,811,999) (294,100)
Net unrealized appreciation (depreciation) on:
Investments..................................... (1,177,516) (544,020) 527,621 (27,602)
Translation of assets and liabilities denominated in
foreign currencies............................... 11,275 (254,849) 878,886 (79,428)
--------------------------------------------------------------
Net unrealized appreciation (depreciation)...... (1,166,241) (798,869) 1,406,507 (107,030)
--------------------------------------------------------------
Net realized and unrealized loss.................. (2,034,364) (2,610,820) (14,405,492) (401,130)
--------------------------------------------------------------
Net decrease in net assets resulting from operations $(1,346,503) $ (779,669) $(10,699,392) $ (23,691)
==============================================================
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
for the years ended October 31, 1997 and 1996
Franklin Templeton Franklin Templeton
German Government Bond Fund Global Currency Fund
--------------------------------------------------------
1997 1996 1997 1996
--------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income......................... $ 687,861 $ 1,129,998 $ 1,831,151 $ 2,341,624
Net realized loss from investments and foreign
currency transactions.......................... (868,123) (84,969) (1,811,951) (857,075)
Net unrealized depreciation on investments and
translation of assets and liabilities denominated in
foreign currencies............................. (1,166,241) (1,319,445) (798,869) (914,651)
--------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations................................ (1,346,503) (274,416) (779,669) 569,898
Distributions to shareholders from:
Net investment income:
Class I........................................ -- (1,645,317) -- (3,012,672)
Net realized gains:
Class I........................................ -- (102,554) -- --
Tax Return of Capital
Class I........................................ (724,669) (102,139) (1,895,614) (1,330,318)
Advisor Class................................ (24,821) -- -- --
Capital share transactions (Note 2)
Class I........................................ (2,765,367) (4,437,052) (6,303,604) (5,395,335)
Advisor Class.................................. 91,512 -- -- --
--------------------------------------------------------
Net decrease in net assets...................... (4,769,848) (6,561,478) (8,978,887) (9,168,427)
Net assets:
Beginning of year.............................. 17,551,813 24,113,291 50,773,405 59,941,832
--------------------------------------------------------
End of year.................................... $12,781,965 $17,551,813 $41,794,518 $50,773,405
========================================================
Undistributed net investment income included in net assets:
End of year.................................... $ (2,295) $-- $ 265,180 $ 12,235
========================================================
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
<TABLE>
<CAPTION>
Statements of Changes in Net Assets (cont.)
for the years ended October 31, 1997 and 1996
Franklin Templeton Franklin Templeton
Hard Currency Fund High Income Currency Fund
------------------------------------------------------------
1997 1996 1997 1996
------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income........................ $ 3,706,100 $ 5,612,738 $ 377,439 $488,555
Net realized loss from investments and
foreign currency transactions............... (15,811,999) (13,632,229) (294,100) (12,000)
Net unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign currencies 1,406,507 22,729 (107,030) 59,056
------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations............................. (10,699,392) (7,996,762) (23,691) 535,611
Distributions to shareholders from:
Net investment income:
Class I..................................... -- (596,892) (19,163) (1,005,818)
Net realized gains:
Class I..................................... -- -- -- (12,939)
Tax Return of Capital
Class I..................................... (3,971,925) (6,321,432) (356,921) (24,976)
Advisor Class............................. (7,680) -- -- --
Capital share transactions (Note 2)
Class I..................................... (18,010,343) 7,492,381 (1,337,827) (280,803)
Advisor Class............................... 248,378 -- -- --
------------------------------------------------------------
Net decrease in net assets................... (32,440,962) (7,422,705) (1,737,602) (788,925)
Net assets:
Beginning of year........................... 124,666,302 132,089,007 10,113,261 10,902,186
------------------------------------------------------------
End of year................................. $ 92,225,340 $124,666,302 $8,375,659 $10,113,261
============================================================
Undistributed net investment income included in net assets:
End of year................................. $ (817,703) $ 158,515 $ 25,019 $ (41,061)
============================================================
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements
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 Currency 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 a
foreign exchange contract 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.
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
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.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
c. 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.
d. Security Transactions, Investment Income, Expenses and Distributions:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Bond discount is
amortized on an income tax basis. 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.
e. Organization Costs:
Organization costs are amortized on a straight line basis over five years.
f. 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.
g. Repurchase Agreements:
The Funds may enter into repurchase agreements, which are accounted for as a
loan by the Funds to the seller, collateralized by securities which are
delivered to the Funds' custodian. The market value, including accrued interest,
of the initial collateralization is required to be at least 102% of the dollar
amount invested by the Funds, with the value of the underlying securities marked
to market daily to maintain coverage of at least 100%. At October 31, 1997, all
outstanding repurchase agreements held by the Funds have been entered into on
that date.
h. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. 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.
2. BENEFICIAL SHARES (cont.)
At October 31, 1997, 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
---------------------------------------------------
<S> <C> <C> <C> <C>
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 increase (decrease).............................. (225,389)$ (2,765,367) (512,913)$ (6,303,604)
===================================================
1996
Shares sold.......................................... 633,495 $ 8,633,416 534,790 $ 6,917,329
Shares issued in reinvestment of distributions....... 109,008 1,470,996 282,686 3,656,845
Shares redeemed...................................... (1,093,633)(14,541,464) (1,234,150)(15,969,509)
---------------------------------------------------
Net increase (decrease).............................. (351,130)$ (4,437,052) (416,674)$ (5,395,335)
===================================================
</TABLE>
Advisor Class Shares:
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
========================
<TABLE>
<CAPTION>
Franklin Templeton Franklin Templeton
Hard Currency Fund High Income Currency Fund
-----------------------------------------------------
Class I Shares: Shares Amount Shares Amount
-----------------------------------------------------
<S> <C> <C> <C> <C>
1997
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 increase (decrease).............................. (1,763,912)$(18,010,343) (125,038)$ (1,337,827)
=====================================================
1996
Shares sold.......................................... 7,838,577 $95,388,807 246,388 $ 2,688,736
Shares issued in reinvestment of distributions....... 440,761 5,393,631 68,646 742,520
Shares redeemed...................................... (7,661,154)(93,290,057) (340,903) (3,712,059)
-----------------------------------------------------
Net increase (decrease).............................. 618,184 $ 7,492,381 (25,869) $ (280,803)
=====================================================
Advisor Class Shares:
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, the Hard Currency Fund, and the High Income Currency
Fund reimburse Distributors up to 0.45% per year of the Funds' average daily net
assets of Class I and the German Bond Fund reimburses Distributors up to 0.25%
per year of the Fund's average daily net assets of Class I for costs incurred in
marketing the Funds' shares.
Distributors received net commissions on sales of Fund shares, and paid
commissions to other dealers for the year ended October 31, 1997 as follows:
<TABLE>
<CAPTION>
Franklin TempletonFranklin TempletonFranklin TempletonFranklin Templeton
German Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total commissions received.............. $21,795 $39,015 $337,549 $10,330
=====================================================================
Paid to other dealers................... $19,048 $34,580 $300,618 $ 9,019
=====================================================================
</TABLE>
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:
<TABLE>
<CAPTION>
Franklin TempletonFranklin TempletonFranklin TempletonFranklin Templeton
German Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
----------------------------------------------------------------------
Capital loss carryovers expiring in:
<S> <C> <C> <C> <C>
2001................................... -- $ 35,182 $ 301,642 --
2002................................... -- -- 271 --
2003................................... -- 173,253 112,254 --
2004................................... -- 77,143 1,047,201 $22,408
2005................................... $2,020 54,060 162,309 1,904
----------------------------------------------------------------------
$2,020 $339,638 $1,623,677 $24,312
======================================================================
</TABLE>
4. INCOME TAXES (cont.)
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments.
At October 31, 1997, the net unrealized appreciation/depreciation based on the
cost of investments for income tax purposes were as follows:
<TABLE>
<CAPTION>
Franklin TempletonFranklin TempletonFranklin TempletonFranklin Templeton
German Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unrealized appreciation................. $150,080 $ 53,072 $729,962 $65,341
Unrealized depreciation................. (941,157) (565,968) (940,907) (19,463)
-----------------------------------------------------------------------
Net unrealized appreciation (depreciation) $(791,077) $(512,896) $(210,945) $45,878
=======================================================================
</TABLE>
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 year
ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
Franklin TempletonFranklin TempletonFranklin TempletonFranklin Templeton
German Government Global Hard High Income
Bond Fund Currency Fund Currency Fund Currency Fund
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases............................... $5,702,774 $-- $444,645 $753,269
Sales................................... $8,224,350 $-- $156,019 $757,028
</TABLE>
6. OFF-BALANCE SHEET RISK
The Funds have been a party 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. dollars 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 October 31,
1997, the Funds have outstanding forward exchange contracts for the sale of a
currency as set out below. The contract is 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.
6. OFF-BALANCE SHEET RISK (cont.)
As of October 31, 1997, the German Government Bond Fund had the following
forward foreign currency contracts outstanding:
<TABLE>
<CAPTION>
In Settlement Unrealized
Exchange for Date Gain/(Loss)
----------------------------------------------------
Contracts to Buy:
<S> <C> <C> <C> <C> <C>
606,445 Deutschemark U.S. $350,000 12/03/97 U.S. $2,484
--------- --------
Contracts to Sell:
86,350 Deutschemark U.S. $ 50,000 12/03/97 ($189)
--------- --------
Net unrealized gain on forward exchange contracts U.S. $2,295
========
</TABLE>
As of October 31, 1997, the Global Currency Fund had the following forward
foreign currency contracts outstanding:
<TABLE>
<CAPTION>
In Settlement Unrealized
Exchange for Date Gain/(Loss)
-----------------------------------------------------
Contracts to Buy:
<S> <C> <C> <C> <C>
1,400,000 British pound U.S.$ 2,258,788 11/10/97 U.S.$ 89,037
750,000 Deutschemark 419,107 11/06/97 16,131
9,750,000 Deutschemark 5,629,829 11/10/97 29,573
870,000,000 Japanese yen 7,250,000 11/28/97 7,931
3,357,000 New Zealand dollar 2,081,004 12/30/97 1,347
16,306,000 Norwegian krone 2,323,666 11/26/97 16,680
17,432,000 Swedish krona 2,322,922 11/25/97 6,487
--------- --------
U.S.$22,285,316 167,186
---------
Net unrealized gain on offsetting forward contracts 137,323
--------
Unrealized gain on forward exchange contracts 304,509
--------
Contracts to Buy:
10,300,000 Australian dollar U.S.$ 7,596,456 11/14/97 (350,915)
6,071,000 Canadian dollar 4,431,387 12/03/97 (116,551)
--------- --------
U.S.$12,027,843 (467,466)
--------- --------
Contracts to Sell:
1,500,000 Deutschemark U.S. $ 847,458 11/06/97 (23,017)
1,500,000 Deutschemark 855,188 11/10/97 (15,490)
4,016,000 Deutschemark 2,323,402 11/25/97 (9,730)
4,766,000 Deutschemark 2,746,939 11/26/97 (22,073)
--------- --------
U.S.$ 6,772,987 (70,310)
--------- --------
Net unrealized loss on offsetting forward contracts (25,860)
--------
Unrealized loss on forward exchange contracts (563,636)
--------
Net unrealized loss on forward exchange contracts U.S. $(259,127)
========
</TABLE>
6. OFF-BALANCE SHEET RISK (cont.)
<TABLE>
<CAPTION>
As of October 31, 1997, 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> <C>
25,000,000 Deutschemark U.S.$14,255,086 11/10/97 U.S.$256,202
4,763,900,000 Japanese yen 39,311,009 11/14/97 351,986
16,000,000 New Zealand dollar 9,918,400 12/30/97 6,419
13,853,000 Swiss franc 9,824,823 11/28/97 95,664
--------- --------
U.S.$73,309,318 710,271
--------- --------
Contracts to Sell:
1,294,900,000 Japanese yen 10,877,598 11/14/97 96,597
Net unrealized gain on offsetting forward contracts 10,834
--------
Net unrealized gain on forward exchange contracts U.S.$817,702
========
As of October 31, 1997, the High Income Fund had the following forward foreign
currency contracts outstanding:
In Settlement Unrealized
Exchange for Date Gain/(Loss)
--------------------------------------------------
Contracts to Buy:
<S> <C> <C> <C> <C>
596,000 Australian dollar U.S. $ 418,273 11/14/97 U.S. $ 984
2,000,000 Deutschemark 1,156,136 11/10/97 4,767
1,333,000 New Zealand dollar 826,327 12/30/97 535
3,291,000 Norwegian krona 468,980 11/26/97 3,367
3,518,000 Swedish krona 468,795 11/25/97 1,309
--------- --------
U.S. $3,338,511 10,962
--------- --------
Net unrealized gain on offsetting forward contracts 7,539
--------
Unrealized gain on forward exchange contracts 18,501
--------
Contracts to Buy:
745,000 Australian dollar U.S. $ 549,452 11/14/97 (25,382)
620,000 Canadian dollar 449,275 11/17/97 (8,983)
615,000 Canadian dollar 448,905 12/03/97 (11,807)
--------- --------
U.S. $1,447,632 (46,172)
--------- --------
Contracts to Sell:
810,000 Deutschemark 468,614 11/25/97 (1,962)
810,000 Deutschemark 468,614 11/26/97 (1,990)
--------- --------
U.S. $ 937,228 (3,952)
--------- --------
Net unrealized loss on offsetting forward contracts (11,009)
Unrealized loss on forward exchange contracts (61,133)
--------
Net unrealized loss on forward exchange contracts U.S. $(42,632)
--------
</TABLE>
7. CREDIT AND CURRENCY 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
High Income Fund - debt securities denominated in Italian liras
Hard Currency Fund - debt securities denominated in Swiss francs and in German
deutschemarks.
Such concentrations may subject the Funds more significantly to economic changes
occurring within that country.
Most of the German Bond Fund's 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.
FRANKLIN TEMPLETON GLOBAL TRUST
Report of Independent Accountants
To the Shareholders and Board of Trustees
of Franklin Templeton Global Trust:
We have audited the accompanying statements of assets and liabilities of each of
the funds comprising the Franklin Templeton Global Trust, including each Fund's
statement of investments in securities and net assets, as of October 31, 1997,
and the related statements of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods ended April 30, 1994 and
thereafter for the periods presented. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights of the Trust for the periods
ending prior to May 1, 1993 were audited by other auditors, whose report, dated
June 11, 1993, expressed an unqualified opinion on such statements and financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the funds comprising the Franklin Templeton Global Trust as of October 31,
1997, and the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended and their
financial highlights for each of the periods ended April 30, 1994 and thereafter
for the periods presented, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
November 26, 1997
Franklin Templeton Global Trust Annual Report October 31, 1997.
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM
304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This bar chart shows the correlation with S&P 500 monthly total returns for
5-year period ended 9/30/97.
Lehman Brothers
Government/Corporate Bond Index1 0.33
Morgan Stanley Capital
International-EAFE Index2 0.19
Franklin Templeton
Hard Currency Index3 0.02
1. Represents the U.S. bond market.
2. Represents foreign equities in Europe, Australia, and the Far East.
3. Represents short-term money market securities in Germany, Switzerland,
and Japan.
All indices are unmanaged and include reinvested dividends or interests.
GRAPHIC MATERIAL (2)
This chart shows in pie format the Asset Allocation of the Franklin Templeton
German Government Bond Fund -- Class I on October 31, 1997, based on total
net assets.
Asset Allocation on October 31, 1997
Foreign (Non-German) Government Euromark Bonds 26.2%
German State Government Bonds 24.7%
German Pfandbriefe Bonds 22.5%
German Federal Government Bonds 20.1%
German Government Agency Bonds 3.3%
Other Net Assets & Liabilities 3.2%
GRAPHIC MATERIAL (3)
The following line graph hypothetically compares the performance of the
Franklin Templeton German Government Bond Index - Class I shares to that of
the Salomon Brothers German Government Index, based on a $10,000 investment
from (12/31/92 - 10/31/97).
F/T GERMAN SALOMON BROS. GERMAN GOV'T
GOV'T
BOND FUND
ADV CLASS
12/31/92 $10,000 $10,000 SB Germany$T
1/31/93 $10,136 $10,182 1.82%
2/28/93 $10,123 $10,220 0.37%
3/31/93 $10,493 $10,509 2.83%
4/30/93 $10,615 $10,679 1.62%
5/31/93 $10,624 $10,707 0.26%
6/30/93 $10,075 $10,085 -5.81%
7/31/93 $9,966 $10,009 -0.75%
8/31/93 $10,513 $10,562 5.52%
9/30/93 $10,896 $10,938 3.56%
10/31/93 $10,700 $10,827 -1.01%
11/30/93 $10,595 $10,664 -1.51%
12/31/93 $10,555 $10,672 0.08%
1/31/94 $10,567 $10,633 -0.37%
2/28/94 $10,528 $10,673 0.38%
3/31/94 $10,687 $10,925 2.36%
4/30/94 $10,682 $10,960 0.32%
5/31/94 $10,738 $10,949 -0.10%
6/30/94 $11,226 $11,296 3.17%
7/31/94 $11,323 $11,496 1.77%
8/31/94 $11,323 $11,458 -0.33%
9/30/94 $11,421 $11,557 0.86%
10/31/94 $11,849 $11,959 3.48%
11/30/94 $11,484 $11,660 -2.50%
12/31/94 $11,568 $11,738 0.67%
1/31/95 $11,932 $12,193 3.88%
2/28/95 $12,505 $12,740 4.48%
3/31/95 $13,487 $13,900 9.11%
4/30/95 $13,524 $13,941 0.29%
5/31/95 $13,532 $13,941 0.00%
6/30/95 $13,732 $14,098 1.13%
7/31/95 $13,868 $14,349 1.78%
8/31/95 $13,201 $13,632 -5.00%
9/30/95 $13,650 $14,238 4.45%
10/31/95 $14,013 $14,579 2.39%
11/30/95 $13,866 $14,498 -0.55%
12/31/95 $14,133 $14,781 1.95%
1/31/96 $13,777 $14,366 -2.81%
2/29/96 $13,746 $14,324 -0.29%
3/31/96 $13,747 $14,351 0.19%
4/30/96 $13,407 $13,952 -2.78%
5/31/96 $13,417 $14,007 0.39%
6/30/96 $13,425 $14,066 0.42%
7/31/96 $13,997 $14,686 4.41%
8/31/96 $14,023 $14,749 0.43%
9/30/96 $13,775 $14,515 -1.59%
10/31/96 $13,992 $14,735 1.52%
11/30/96 $13,964 $14,775 0.27%
12/31/96 $13,980 $14,728 -0.32%
1/31/97 $13,300 $14,010 -4.87%
2/28/97 $13,047 $13,687 -2.31%
3/31/97 $13,074 $13,747 0.44%
4/30/97 $12,675 $13,372 -2.73%
5/31/97 $12,848 $13,587 1.61%
6/30/97 $12,726 $13,473 -0.84%
7/31/97 $12,071 $12,852 -4.61%
8/31/97 $12,254 $13,078 1.76%
9/30/97 $12,633 $13,431 2.70%
10/31/97 $12,880 $13,774 2.55%
GRAPHIC MATERIAL (4)
The following line graph hypothetically compares the performance of the
Franklin Templeton German Government Bond Fund - Advisor Class shares to that
of the Soloman Brothers German Bond Index, based on a $10,000 investment from
(12/31/92 - 10/31/97).
Period ending Fund Index
F/T GERMAN SALOMON BROS. GERMAN GOV'T
GOV'T
BOND FUND
ADV CLASS
12/31/92 $10,000 $10,000 SB Germany$T
1/31/93 $10,136 $10,182 1.82%
2/28/93 $10,123 $10,220 0.37%
3/31/93 $10,493 $10,509 2.83%
4/30/93 $10,615 $10,679 1.62%
5/31/93 $10,624 $10,707 0.26%
6/30/93 $10,075 $10,085 -5.81%
7/31/93 $9,966 $10,009 -0.75%
8/31/93 $10,513 $10,562 5.52%
9/30/93 $10,896 $10,938 3.56%
10/31/93 $10,700 $10,827 -1.01%
11/30/93 $10,595 $10,664 -1.51%
12/31/93 $10,555 $10,672 0.08%
1/31/94 $10,567 $10,633 -0.37%
2/28/94 $10,528 $10,673 0.38%
3/31/94 $10,687 $10,925 2.36%
4/30/94 $10,682 $10,960 0.32%
5/31/94 $10,738 $10,949 -0.10%
6/30/94 $11,226 $11,296 3.17%
7/31/94 $11,323 $11,496 1.77%
8/31/94 $11,323 $11,458 -0.33%
9/30/94 $11,421 $11,557 0.86%
10/31/94 $11,849 $11,959 3.48%
11/30/94 $11,484 $11,660 -2.50%
12/31/94 $11,568 $11,738 0.67%
1/31/95 $11,932 $12,193 3.88%
2/28/95 $12,505 $12,740 4.48%
3/31/95 $13,487 $13,900 9.11%
4/30/95 $13,524 $13,941 0.29%
5/31/95 $13,532 $13,941 0.00%
6/30/95 $13,732 $14,098 1.13%
7/31/95 $13,868 $14,349 1.78%
8/31/95 $13,201 $13,632 -5.00%
9/30/95 $13,650 $14,238 4.45%
10/31/95 $14,013 $14,579 2.39%
11/30/95 $13,866 $14,498 -0.55%
12/31/95 $14,133 $14,781 1.95%
1/31/96 $13,777 $14,366 -2.81%
2/29/96 $13,746 $14,324 -0.29%
3/31/96 $13,747 $14,351 0.19%
4/30/96 $13,407 $13,952 -2.78%
5/31/96 $13,417 $14,007 0.39%
6/30/96 $13,425 $14,066 0.42%
7/31/96 $13,997 $14,686 4.41%
8/31/96 $14,023 $14,749 0.43%
9/30/96 $13,775 $14,515 -1.59%
10/31/96 $13,992 $14,735 1.52%
11/30/96 $13,964 $14,775 0.27%
12/31/96 $13,980 $14,728 -0.32%
1/31/97 $13,300 $14,010 -4.87%
2/28/97 $13,047 $13,687 -2.31%
3/31/97 $13,074 $13,747 0.44%
4/30/97 $12,675 $13,372 -2.73%
5/31/97 $12,848 $13,587 1.61%
6/30/97 $12,726 $13,473 -0.84%
7/31/97 $12,071 $12,852 -4.61%
8/31/97 $12,254 $13,078 1.76%
9/30/97 $12,633 $13,431 2.70%
10/31/97 $12,880 $13,774 2.55%
GRAPHIC MATERIAL (5)
This chart shows in pie format the Asset Allocation of the Franklin Templeton
Global Currency Fund -- Class I on October 31, 1997, based on total net
assets.
Asset Allocation on October 31, 1997
U.S. Dollar 19.0%
Australian Dollar 18.2%
Japanes Yen 17.3%
German Mark 13.3%
Canadian Dollar 10.6%
Norwegian Krone 5.6%
British Pound 5.4%
New Zealand Dollar 5.0%
GRAPHIC MATERIAL (6)
The following line graph hypothetically compares the performance of the
Franklin Templeton Global Currency Bond shares to that of the Salomon
Brothers German Government Index, based on a $10,000 investment from (11/1/87
- - 10/31/97).
Period ending Fund Index
FRANKLIN TEMPLETON SALOMON BROS MONEY MARKET
GLOBAL
CURRENCY FUND
11/1/87 $9,700 $10,000
11/30/87 $10,176 $10,481 4.81%
12/31/87 $10,638 $10,952 4.49%
1/31/88 $10,202 $10,515 -3.99%
2/29/88 $10,254 $10,527 0.12%
3/31/88 $10,533 $10,834 2.91%
4/30/88 $10,523 $10,800 -0.31%
5/31/88 $10,468 $10,655 -1.34%
6/30/88 $10,138 $10,307 -3.27%
7/31/88 $10,095 $10,186 -1.17%
8/31/88 $10,195 $10,140 -0.45%
9/30/88 $10,246 $10,263 1.21%
10/31/88 $10,659 $10,695 4.21%
11/30/88 $10,991 $11,095 3.74%
12/31/88 $10,870 $10,943 -1.37%
1/31/89 $10,687 $10,603 -3.11%
2/28/89 $10,691 $10,840 2.24%
3/31/89 $10,632 $10,592 -2.29%
4/30/89 $10,706 $10,689 0.91%
5/31/89 $10,478 $10,328 -3.37%
6/30/89 $10,600 $10,463 1.30%
7/31/89 $10,835 $10,962 4.77%
8/31/89 $10,648 $10,613 -3.18%
9/30/89 $10,730 $11,039 4.01%
10/31/89 $10,814 $11,146 0.97%
11/30/89 $11,029 $11,382 2.12%
12/31/89 $11,324 $11,771 3.42%
1/31/90 $11,422 $11,983 1.80%
2/28/90 $11,410 $11,971 -0.10%
3/31/90 $11,462 $12,006 0.29%
4/30/90 $11,583 $12,196 1.58%
5/31/90 $11,725 $12,358 1.33%
6/30/90 $11,874 $12,648 2.35%
7/31/90 $12,216 $13,249 4.75%
8/31/90 $12,390 $13,491 1.83%
9/30/90 $12,591 $13,701 1.55%
10/31/90 $12,999 $14,179 3.49%
11/30/90 $13,013 $14,305 0.89%
12/31/90 $12,960 $14,418 0.79%
1/31/91 $13,159 $14,690 1.89%
2/28/91 $13,183 $14,482 -1.42%
3/31/91 $12,910 $13,574 -6.27%
4/30/91 $12,997 $13,723 1.10%
5/31/91 $12,964 $13,649 -0.54%
6/30/91 $12,854 $13,428 -1.62%
7/31/91 $13,118 $13,788 2.68%
8/31/91 $13,002 $13,893 0.76%
9/30/91 $13,175 $14,489 4.29%
10/31/91 $13,189 $14,565 0.53%
11/30/91 $13,388 $14,889 2.22%
12/31/91 $13,946 $15,635 5.01%
1/31/92 $13,561 $15,197 -2.80%
2/29/92 $13,415 $15,008 -1.24%
3/31/92 $13,414 $15,001 -0.05%
4/30/92 $13,556 $15,116 0.77%
5/31/92 $13,930 $15,561 2.94%
6/30/92 $14,462 $16,211 4.18%
7/31/92 $14,687 $16,623 2.54%
8/31/92 $14,972 $17,296 4.05%
9/30/92 $15,030 $17,063 -1.35%
10/31/92 $14,593 $16,164 -5.27%
11/30/92 $14,483 $15,839 -2.01%
12/31/92 $14,453 $15,780 -0.37%
1/31/93 $14,504 $15,859 0.50%
2/28/93 $14,783 $15,819 -0.25%
3/31/93 $15,089 $16,264 2.81%
4/30/93 $15,355 $16,669 2.49%
5/31/93 $15,562 $16,837 1.01%
6/30/93 $15,316 $16,228 -3.62%
7/31/93 $15,406 $16,161 -0.41%
8/31/93 $15,511 $16,442 1.74%
9/30/93 $15,516 $16,722 1.70%
10/31/93 $15,352 $16,513 -1.25%
11/30/93 $15,324 $16,402 -0.67%
12/31/93 $15,324 $16,422 0.12%
1/31/94 $15,702 $16,558 0.83%
2/28/94 $15,819 $16,838 1.69%
3/31/94 $15,757 $17,042 1.21%
4/30/94 $15,880 $17,226 1.08%
5/31/94 $16,083 $17,281 0.32%
6/30/94 $16,264 $17,843 3.25%
7/31/94 $16,133 $17,876 0.19%
8/31/94 $16,211 $18,030 0.86%
9/30/94 $16,300 $18,441 2.28%
10/31/94 $16,537 $18,869 2.32%
11/30/94 $16,412 $18,352 -2.74%
12/31/94 $16,561 $18,482 0.71%
1/31/95 $16,632 $18,793 1.68%
2/28/95 $16,891 $19,229 2.32%
3/31/95 $17,726 $20,429 6.24%
4/30/95 $17,832 $20,488 0.29%
5/31/95 $17,793 $20,316 -0.84%
6/30/95 $17,968 $20,596 1.38%
7/31/95 $17,828 $20,670 0.36%
8/31/95 $17,306 $19,891 -3.77%
9/30/95 $17,379 $20,353 2.32%
10/31/95 $17,537 $20,422 0.34%
11/30/95 $17,334 $20,160 -1.28%
12/31/95 $17,392 $20,366 1.02%
1/31/96 $17,140 $19,830 -2.63%
2/29/96 $17,382 $20,092 1.32%
3/31/96 $17,489 $20,124 0.16%
4/30/96 $17,417 $19,826 -1.48%
5/31/96 $17,520 $19,876 0.25%
6/30/96 $17,498 $19,946 0.35%
7/31/96 $17,655 $20,420 2.38%
8/31/96 $17,800 $20,414 -0.03%
9/30/96 $17,656 $20,096 -1.56%
10/31/96 $17,760 $20,305 1.04%
11/30/96 $17,892 $20,205 -0.49%
12/31/96 $17,873 $20,139 -0.33%
1/31/97 $17,181 $19,375 -3.79%
2/28/97 $17,201 $19,141 -1.21%
3/31/97 $17,347 $19,267 0.66%
4/30/97 $17,166 $18,886 -1.98%
5/31/97 $17,495 $19,401 2.73%
6/30/97 $17,569 $19,322 -0.41%
7/31/97 $17,313 $18,788 -2.76%
8/31/97 $17,329 $18,961 0.92%
9/30/97 $17,401 $19,202 1.27%
10/31/97 $17,500 $19,609 2.12%
75.00% 96.09%
GRAPHIC MATERIAL (7)
This chart shows in pie format the Asset Allocation of the Franklin Templeton
Hard Currency Fund -- Class I on October 31, 1997, based on total net assets.
Asset Allocation on October 31, 1997
Japanes Yen 33.0%
Swiss Frank 27.2%
German Mark 27.0%
New Zealand Dollar 10.7%
U.S. Dollar 2.1%
GRAPHIC MATERIAL (8)
The following line graph hypothetically compares the performance of the
Franklin Templeton Hard Currency Fund -- Class I shares to that of the
Salomon Brothers World Money Market Index, based on a $10,000 investment from
(11/17/89 - 10/31/97).
Period ending Fund Index
FRANKLIN SALOMON BROS MONEY MARKET
TEMPLETON
HARD CURRENCY
FUND
CLASS I
11/17/89 $9,697 $10,000 SB MnyMkt $T
11/30/89 $9,922 $10,092 0.92%
12/31/89 $10,434 $10,437 3.42%
1/31/90 $10,565 $10,625 1.80%
2/28/90 $10,472 $10,614 -0.10%
3/31/90 $10,413 $10,645 0.29%
4/30/90 $10,559 $10,813 1.58%
5/31/90 $10,680 $10,957 1.33%
6/30/90 $10,889 $11,215 2.35%
7/31/90 $11,465 $11,747 4.75%
8/31/90 $11,639 $11,962 1.83%
9/30/90 $11,882 $12,148 1.55%
10/31/90 $12,454 $12,572 3.49%
11/30/90 $12,532 $12,684 0.89%
12/31/90 $12,541 $12,784 0.79%
1/31/91 $12,856 $13,025 1.89%
2/28/91 $12,634 $12,840 -1.42%
3/31/91 $11,559 $12,035 -6.27%
4/30/91 $11,724 $12,168 1.10%
5/31/91 $11,539 $12,102 -0.54%
6/30/91 $11,254 $11,906 -1.62%
7/31/91 $11,653 $12,225 2.68%
8/31/91 $11,752 $12,318 0.76%
9/30/91 $12,338 $12,846 4.29%
10/31/91 $12,377 $12,915 0.53%
11/30/91 $12,757 $13,201 2.22%
12/31/91 $13,579 $13,863 5.01%
1/31/92 $12,913 $13,474 -2.80%
2/29/92 $12,663 $13,307 -1.24%
3/31/92 $12,627 $13,301 -0.05%
4/30/92 $12,708 $13,403 0.77%
5/31/92 $13,267 $13,797 2.94%
6/30/92 $13,937 $14,374 4.18%
7/31/92 $14,253 $14,739 2.54%
8/31/92 $14,905 $15,336 4.05%
9/30/92 $15,169 $15,129 -1.35%
10/31/92 $14,297 $14,332 -5.27%
11/30/92 $14,014 $14,044 -2.01%
12/31/92 $13,884 $13,992 -0.37%
1/31/93 $14,009 $14,062 0.50%
2/28/93 $14,172 $14,026 -0.25%
3/31/93 $14,538 $14,421 2.81%
4/30/93 $14,882 $14,780 2.49%
5/31/93 $14,945 $14,929 1.01%
6/30/93 $14,494 $14,388 -3.62%
7/31/93 $14,527 $14,329 -0.41%
8/31/93 $14,552 $14,579 1.74%
9/30/93 $14,646 $14,827 1.70%
10/31/93 $14,451 $14,641 -1.25%
11/30/93 $14,387 $14,543 -0.67%
12/31/93 $14,529 $14,561 0.12%
1/31/94 $14,907 $14,681 0.83%
2/28/94 $15,204 $14,930 1.69%
3/31/94 $15,198 $15,110 1.21%
4/30/94 $15,421 $15,273 1.08%
5/31/94 $15,500 $15,322 0.32%
6/30/94 $16,058 $15,820 3.25%
7/31/94 $16,037 $15,850 0.19%
8/31/94 $16,148 $15,987 0.86%
9/30/94 $16,526 $16,351 2.28%
10/31/94 $16,923 $16,731 2.32%
11/30/94 $16,529 $16,272 -2.74%
12/31/94 $16,723 $16,388 0.71%
1/31/95 $16,932 $16,663 1.68%
2/28/95 $17,408 $17,050 2.32%
3/31/95 $18,675 $18,113 6.24%
4/30/95 $18,726 $18,166 0.29%
5/31/95 $18,538 $18,013 -0.84%
6/30/95 $18,797 $18,262 1.38%
7/31/95 $18,637 $18,328 0.36%
8/31/95 $17,523 $17,637 -3.77%
9/30/95 $17,942 $18,046 2.32%
10/31/95 $18,057 $18,107 0.34%
11/30/95 $17,714 $17,875 -1.28%
12/31/95 $17,830 $18,058 1.02%
1/31/96 $17,285 $17,583 -2.63%
2/29/96 $17,540 $17,815 1.32%
3/31/96 $17,457 $17,843 0.16%
4/30/96 $17,056 $17,579 -1.48%
5/31/96 $16,951 $17,623 0.25%
6/30/96 $16,998 $17,685 0.35%
7/31/96 $17,549 $18,106 2.38%
8/31/96 $17,484 $18,101 -0.03%
9/30/96 $17,012 $17,818 -1.56%
10/31/96 $16,975 $18,003 1.04%
11/30/96 $16,756 $17,915 -0.49%
12/31/96 $16,578 $17,856 -0.33%
1/31/97 $15,719 $17,179 -3.79%
2/28/97 $15,430 $16,971 -1.21%
3/31/97 $15,524 $17,084 0.66%
4/30/97 $15,144 $16,745 -1.98%
5/31/97 $15,713 $17,202 2.73%
6/30/97 $15,507 $17,132 -0.41%
7/31/97 $14,849 $16,659 -2.76%
8/31/97 $14,969 $16,812 0.92%
9/30/97 $15,223 $17,026 1.27%
10/31/97 $15,570 $17,387 2.12%
GRAPHIC MATERIAL (9)
The following line graph hypothetically compares the performance of the
Franklin Templeton Hard Currency Fund - Advisor Class shares to that of the
Soloman Brothers German Bond Index, based on a $10,000 investment from
(11/17/89 - 10/31/97).
Period ending Fund Index
FRANKLIN SALOMON BROS MONEY MARKET
TEMPLETON
HARD CURRENCY
FUND
ADVISOR CLASS
11/17/89 $10,000 $10,000 SB MnyMkt $T
11/30/89 $10,232 $10,092 0.92%
12/31/89 $10,760 $10,437 3.42%
1/31/90 $10,894 $10,625 1.80%
2/28/90 $10,799 $10,614 -0.10%
3/31/90 $10,738 $10,645 0.29%
4/30/90 $10,888 $10,813 1.58%
5/31/90 $11,013 $10,957 1.33%
6/30/90 $11,229 $11,215 2.35%
7/31/90 $11,823 $11,747 4.75%
8/31/90 $12,002 $11,962 1.83%
9/30/90 $12,252 $12,148 1.55%
10/31/90 $12,843 $12,572 3.49%
11/30/90 $12,923 $12,684 0.89%
12/31/90 $12,932 $12,784 0.79%
1/31/91 $13,257 $13,025 1.89%
2/28/91 $13,028 $12,840 -1.42%
3/31/91 $11,920 $12,035 -6.27%
4/30/91 $12,090 $12,168 1.10%
5/31/91 $11,899 $12,102 -0.54%
6/30/91 $11,605 $11,906 -1.62%
7/31/91 $12,017 $12,225 2.68%
8/31/91 $12,119 $12,318 0.76%
9/30/91 $12,723 $12,846 4.29%
10/31/91 $12,764 $12,915 0.53%
11/30/91 $13,155 $13,201 2.22%
12/31/91 $14,003 $13,863 5.01%
1/31/92 $13,316 $13,474 -2.80%
2/29/92 $13,058 $13,307 -1.24%
3/31/92 $13,021 $13,301 -0.05%
4/30/92 $13,105 $13,403 0.77%
5/31/92 $13,681 $13,797 2.94%
6/30/92 $14,372 $14,374 4.18%
7/31/92 $14,698 $14,739 2.54%
8/31/92 $15,370 $15,336 4.05%
9/30/92 $15,643 $15,129 -1.35%
10/31/92 $14,743 $14,332 -5.27%
11/30/92 $14,451 $14,044 -2.01%
12/31/92 $14,317 $13,992 -0.37%
1/31/93 $14,446 $14,062 0.50%
2/28/93 $14,614 $14,026 -0.25%
3/31/93 $14,991 $14,421 2.81%
4/30/93 $15,347 $14,780 2.49%
5/31/93 $15,411 $14,929 1.01%
6/30/93 $14,946 $14,388 -3.62%
7/31/93 $14,981 $14,329 -0.41%
8/31/93 $15,006 $14,579 1.74%
9/30/93 $15,103 $14,827 1.70%
10/31/93 $14,901 $14,641 -1.25%
11/30/93 $14,836 $14,543 -0.67%
12/31/93 $14,982 $14,561 0.12%
1/31/94 $15,372 $14,681 0.83%
2/28/94 $15,678 $14,930 1.69%
3/31/94 $15,672 $15,110 1.21%
4/30/94 $15,902 $15,273 1.08%
5/31/94 $15,983 $15,322 0.32%
6/30/94 $16,559 $15,820 3.25%
7/31/94 $16,537 $15,850 0.19%
8/31/94 $16,652 $15,987 0.86%
9/30/94 $17,041 $16,351 2.28%
10/31/94 $17,451 $16,731 2.32%
11/30/94 $17,045 $16,272 -2.74%
12/31/94 $17,245 $16,388 0.71%
1/31/95 $17,461 $16,663 1.68%
2/28/95 $17,952 $17,050 2.32%
3/31/95 $19,258 $18,113 6.24%
4/30/95 $19,310 $18,166 0.29%
5/31/95 $19,116 $18,013 -0.84%
6/30/95 $19,384 $18,262 1.38%
7/31/95 $19,219 $18,328 0.36%
8/31/95 $18,070 $17,637 -3.77%
9/30/95 $18,502 $18,046 2.32%
10/31/95 $18,620 $18,107 0.34%
11/30/95 $18,267 $17,875 -1.28%
12/31/95 $18,386 $18,058 1.02%
1/31/96 $17,824 $17,583 -2.63%
2/29/96 $18,088 $17,815 1.32%
3/31/96 $18,001 $17,843 0.16%
4/30/96 $17,588 $17,579 -1.48%
5/31/96 $17,479 $17,623 0.25%
6/30/96 $17,528 $17,685 0.35%
7/31/96 $18,097 $18,106 2.38%
8/31/96 $18,030 $18,101 -0.03%
9/30/96 $17,543 $17,818 -1.56%
10/31/96 $17,504 $18,003 1.04%
11/30/96 $17,279 $17,915 -0.49%
12/31/96 $17,095 $17,856 -0.33%
1/31/97 $16,228 $17,179 -3.79%
2/28/97 $15,918 $16,971 -1.21%
3/31/97 $16,033 $17,084 0.66%
4/30/97 $15,630 $16,745 -1.98%
5/31/97 $16,219 $17,202 2.73%
6/30/97 $16,026 $17,132 -0.41%
7/31/97 $15,333 $16,659 -2.76%
8/31/97 $15,458 $16,812 0.92%
9/30/97 $15,723 $17,026 1.27%
10/31/97 $16,083 $17,387 2.12%
Franklin Templeton Global Trust Annual Report October 31, 1997.
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM
304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (10)
This chart shows in pie format the Asset Allocation of the Franklin Templeton
High Income Currency Fund -- Class I on October 31, 1997, based on total net
assets.
Asset Allocation on October 31, 1997
U.S. Dollar 23.1%
Canadian Dollar 14.0%
Italian Lira 12.9%
Australian Dollar 11.6%
New Zealand Dollar 9.9%
British Pound 9.2%
Norweign Krone 5.6%
Spanish Peseta 5.6%
Swedish Krona 5.5%
German Mark 2.6%
GRAPHIC MATERIAL (11)
The following line graph hypothetically compares the performance of the
Franklin Templeton High Income Currency Fund -- Class I shares to that of the
Salomon Brothers World Money Market Index, based on a $10,000 investment from
(11/17/89 - 10/31/97).
Period ending Fund Index
FRANKLIN SALOMON BROS MONEY MARKET
TEMPLETON HIGH
INCOME CURRENCY
FUND
11/17/89 $9,697 $10,000 SB MnyMkt $T
11/30/89 $9,767 $10,092 0.92%
12/31/89 $10,039 $10,437 3.42%
1/31/90 $10,210 $10,625 1.80%
2/28/90 $10,227 $10,614 -0.10%
3/31/90 $10,314 $10,645 0.29%
4/30/90 $10,456 $10,813 1.58%
5/31/90 $10,616 $10,957 1.33%
6/30/90 $10,973 $11,215 2.35%
7/31/90 $11,342 $11,747 4.75%
8/31/90 $11,602 $11,962 1.83%
9/30/90 $11,680 $12,148 1.55%
10/31/90 $11,915 $12,572 3.49%
11/30/90 $11,983 $12,684 0.89%
12/31/90 $11,896 $12,784 0.79%
1/31/91 $12,214 $13,025 1.89%
2/28/91 $12,245 $12,840 -1.42%
3/31/91 $11,842 $12,035 -6.27%
4/30/91 $11,929 $12,168 1.10%
5/31/91 $11,883 $12,102 -0.54%
6/30/91 $11,717 $11,906 -1.62%
7/31/91 $11,996 $12,225 2.68%
8/31/91 $11,988 $12,318 0.76%
9/30/91 $12,260 $12,846 4.29%
10/31/91 $12,345 $12,915 0.53%
11/30/91 $12,559 $13,201 2.22%
12/31/91 $13,324 $13,863 5.01%
1/31/92 $12,851 $13,474 -2.80%
2/29/92 $12,750 $13,307 -1.24%
3/31/92 $12,750 $13,301 -0.05%
4/30/92 $12,945 $13,403 0.77%
5/31/92 $13,453 $13,797 2.94%
6/30/92 $14,090 $14,374 4.18%
7/31/92 $14,436 $14,739 2.54%
8/31/92 $14,864 $15,336 4.05%
9/30/92 $14,034 $15,129 -1.35%
10/31/92 $13,357 $14,332 -5.27%
11/30/92 $13,095 $14,044 -2.01%
12/31/92 $12,938 $13,992 -0.37%
1/31/93 $13,079 $14,062 0.50%
2/28/93 $12,860 $14,026 -0.25%
3/31/93 $13,175 $14,421 2.81%
4/30/93 $13,526 $14,780 2.49%
5/31/93 $13,725 $14,929 1.01%
6/30/93 $13,058 $14,388 -3.62%
7/31/93 $12,700 $14,329 -0.41%
8/31/93 $12,744 $14,579 1.74%
9/30/93 $12,918 $14,827 1.70%
10/31/93 $12,713 $14,641 -1.25%
11/30/93 $12,526 $14,543 -0.67%
12/31/93 $12,600 $14,561 0.12%
1/31/94 $12,929 $14,681 0.83%
2/28/94 $13,018 $14,930 1.69%
3/31/94 $13,127 $15,110 1.21%
4/30/94 $13,251 $15,273 1.08%
5/31/94 $13,313 $15,322 0.32%
6/30/94 $13,454 $15,820 3.25%
7/31/94 $13,454 $15,850 0.19%
8/31/94 $13,525 $15,987 0.86%
9/30/94 $13,717 $16,351 2.28%
10/31/94 $13,981 $16,731 2.32%
11/30/94 $13,739 $16,272 -2.74%
12/31/94 $13,884 $16,388 0.71%
1/31/95 $13,878 $16,663 1.68%
2/28/95 $14,165 $17,050 2.32%
3/31/95 $14,756 $18,113 6.24%
4/30/95 $14,864 $18,166 0.29%
5/31/95 $14,705 $18,013 -0.84%
6/30/95 $14,905 $18,262 1.38%
7/31/95 $15,106 $18,328 0.36%
8/31/95 $14,683 $17,637 -3.77%
9/30/95 $15,040 $18,046 2.32%
10/31/95 $15,240 $18,107 0.34%
11/30/95 $15,003 $17,875 -1.28%
12/31/95 $15,175 $18,058 1.02%
1/31/96 $15,020 $17,583 -2.63%
2/29/96 $15,257 $17,815 1.32%
3/31/96 $15,423 $17,843 0.16%
4/30/96 $15,403 $17,579 -1.48%
5/31/96 $15,553 $17,623 0.25%
6/30/96 $15,616 $17,685 0.35%
7/31/96 $15,692 $18,106 2.38%
8/31/96 $15,857 $18,101 -0.03%
9/30/96 $15,863 $17,818 -1.56%
10/31/96 $16,102 $18,003 1.04%
11/30/96 $16,222 $17,915 -0.49%
12/31/96 $16,179 $17,856 -0.33%
1/31/97 $15,795 $17,179 -3.79%
2/28/97 $15,792 $16,971 -1.21%
3/31/97 $15,998 $17,084 0.66%
4/30/97 $15,874 $16,745 -1.98%
5/31/97 $15,959 $17,202 2.73%
6/30/97 $16,025 $17,132 -0.41%
7/31/97 $15,865 $16,659 -2.76%
8/31/97 $15,902 $16,812 0.92%
9/30/97 $16,029 $17,026 1.27%
10/31/97 $16,074 $17,387 2.12%
