SHAREHOLDER LETTER
Dear Shareholder:
This semiannual report of Franklin Templeton Global Trust covers the period
ended April 30, 1999. The Trust consists of Franklin Templeton Global Currency
Fund and Franklin Templeton Hard Currency Fund.
The six months under review was another challenging period for global currency
investors. In October and November 1998, mounting evidence of an economic
slowdown in many European countries led to speculation about interest rate cuts
there, and concerns about how global economic turbulence might affect the U.S.
economy prompted the Federal Reserve to cut short-term interest rates three
different times. Then, in December, the central banks of Sweden, the United
Kingdom, and all the European Economic Union members cut their interest rates.
In January 1999, benign inflation and relatively weak economic growth in most
industrial nations contributed to many investors' positive outlook for global
currency markets. This changed in February due to the release of stronger than
expected economic data. However, in March, many investors regained their
optimism, despite the potential negative effect of higher oil prices on
inflation, and the U.S. and United Kingdom currency markets benefited from
flight-to-quality inflows as a result of the crisis in Yugoslavia.
Since the dollar was relatively strong during the period, the funds' weak
performance is not surprising. Nevertheless, the Franklin Templeton Global Trust
has provided strong total returns during periods of U.S. dollar weakness, while
giving back some of those gains in periods of dollar strength. Although no one
can predict the future, we believe the funds still offer investors a solid
opportunity to protect against future dollar decline through the diversification
afforded by foreign money markets.
CONTENTS
Shareholder Letter ................. 1
Fund Reports
Franklin Templeton
Global Currency Fund .............. 3
Franklin Templeton
Hard Currency Fund ................ 8
Financial Highlights &
Statement of Investments ........... 14
Financial Statements ............... 19
Notes to
Financial Statements ............... 23
FUND CATEGORY
[PYRAMID GRAPHIC]
As always, we thank you for investing with us and welcome your comments or
questions.
Sincerely,
/s/ Thomas J. Dickson
Thomas J. Dickson
Portfolio Manager
Franklin Templeton Global Trust
FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: Franklin Templeton Global Currency Fund seeks to maximize the
investor's total return through a combination of interest income and changes in
the fund's net asset value due to changes in currency exchange rates. The fund
seeks to achieve its goal by investing in interest-earning money market
instruments denominated in three or more Major Currencies, as defined in the
fund's prospectus.
- --------------------------------------------------------------------------------
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 changes in the U.S. dollar's value relative to the currencies of countries
where the fund invests. This tends to put the fund at a disadvantage during
periods of U.S. dollar strength because two-thirds of our internal benchmark
portfolio is invested in foreign currencies.
In November, differences in short-term money market rates and relative growth
rates between the U.S. and most other countries contributed to an appreciating
dollar relative to the euro and Japanese yen, as well as most other major
currencies. During December, the dollar weakened, but in January, with the
Federal Reserve hinting at potential interest rate increases because of
continued strong domestic economic news, the dollar began to recover. Within
this environment, Franklin Templeton Global Currency Fund provided a -0.17%
six-month cumulative total return, as shown in the Performance Summary on page
7.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal value, beginning on page 15 of
this report.
ASSET ALLOCATION BY CURRENCY
Franklin Templeton Global Currency Fund
Based on Total Net Assets
4/30/99
[PIE CHART]
U.S. Dollar 36.9%
European Monetary Unit 28.9%
Australian Dollar 12.2%
New Zealand Dollar 11.6%
Norwegian Krone 5.3%
Danish Krone 5.1%
During the reporting period, currencies of dollar-block countries performed best
versus the U.S. dollar. The Canadian dollar led the way, appreciating 5.94%,
followed by the Australian dollar (5.81%), and the New Zealand dollar (5.43%).
On the other hand, most European currencies fell versus the dollar because of
the relatively weak state of the regional economy. In March, many European
currencies depreciated further as a result of the crisis in Yugoslavia and ended
the period down versus the U.S. dollar. Meanwhile, the Japanese yen fell 2.93%
against the U.S. dollar.
Throughout the reporting period, we sought to take advantage of fluctuating
exchange rates and slowly increased the fund's exposure to U.S., Australian and
New Zealand dollars, while decreasing exposure to European and Asian currencies.
By April 30, 1999, the fund's U.S. exposure increased to 36.9% from 29.6% of
total net assets at the beginning of the period. Australian and New Zealand
exposure increased from 10.4% and 5.5%, to 12.2% and 11.6%, respectively.
Looking forward, we feel that the U.S. dollar may remain strong, inflation may
remain relatively benign, and domestic interest rates may remain fairly stable
during the next several months. Hence, we expect a relatively strong dollar in
the short term, but are optimistic about the euro in the medium to long term. In
any event, we intend to continue our search for opportunities to add currencies
to the portfolio that offer value, given our assessment of the market.
Of course, there are special risk considerations associated with global
investing related to market, currency, economic, social, political, and other
factors, as discussed in the prospectus.
Because a significant amount of the fund's assets are denominated in foreign
currencies, there is potential for significant gain or loss from currency
exchange rate fluctuations. A non-diversified foreign fund may not be
appropriate for all investors and should not be considered a complete investment
program.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1999, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historical
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 15 of
this report indicates the fund held 66.3% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1999, its NET EXPOSURE to the U.S.
dollar as of that date was only 36.9%. The difference is explained by the
fund's holdings of forward currency exchange contracts (see Note 2 in the Notes
to Financial Statements on page 24) calling for the purchase of various foreign
currencies in exchange for U.S. dollars at various future dates. The
combination of U.S. dollar-denominated instruments with "long" forward currency
exchange contracts creates a position economically equivalent to a money market
instrument denominated in the foreign currency itself. Such combined positions
are sometimes necessary when the money market in a particular foreign currency
is small or relatively illiquid.
------------------------------------------------------------------------------
FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND
- -------------------------------------------------------------------------------
CLASS A (FORMERLY CLASS I): SUBJECT TO THE CURRENT, MAXIMUM 2.25% INITIAL SALES
CHARGE. PRIOR TO AUGUST 3, 1998,FUND SHARES WERE OFFERED AT A HIGHER INITIAL
SALES CHARGE; THUS, ACTUAL TOTAL RETURNS WOULD HAVE BEEN LOWER. PAST EXPENSE
WAIVERS BY THE FUND'S INVESTMENT MANAGER INCREASED THE FUND'S TOTAL RETURN. IF
THE FUND'S MANAGER HAD NOT TAKEN THIS ACTION, TOTAL RETURN FOR THE FUND WOULD
HAVE BEEN LOWER.
- -------------------------------------------------------------------------------
During the six months ended April 30, 1999, 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
gain or loss when you sell your shares.
PERFORMANCE SUMMARY AS OF 4/30/99
Distributions will vary depending on income earned by the fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the fund's operating expenses. Past distributions are not indicative of future
trends. All total returns include reinvested distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION (11/1/98-4/30/99)
<TABLE>
<CAPTION>
CLASS A CHANGE 4/30/99 10/31/98
------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value -$0.19 $11.87 $12.06
DISTRIBUTIONS
-------------------------------------
<S> <C>
Dividend Income $0.1690
</TABLE>
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR (6/27/86)
<S> <C> <C> <C> <C> <C> <C>
Cumulative
Total Return(1) -0.17% +4.34% +14.10% +69.24% +120.57%
Average Annual
Total Return(2) -2.44% +2.00% +2.21% +5.17% +6.16%
Value of $10,000
Investment(3) $9,756 $10,200 $11,152 $16,549 $21,557
Distribution Rate(4) 9.39%
30-Day
Standardized Yield(5) 3.82%
4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
One-Year Total Return(6) +12.30% -2.33% -1.44% +1.16% +4.34%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, applicable,
maximum sales charge. Six-month return has not been annualized.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the current, applicable, maximum
sales charge.
4. Distribution rate is based on an annualization of the current monthly
dividend and the maximum offering price per share on April 30, 1999.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1999.
6. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, and you may have a gain or loss when you
sell your shares.
Past performance is not predictive of future results.
ASSET ALLOCATION BY CURRENCY
Franklin Templeton Hard Currency Fund
Based on Total Net Assets
4/30/99
European Monetary Unit 41.6%
Swiss Franc 27.5%
[PIE CHART] Japanese Yen 19.8%
U.S. Dollar 2.2%
New Zealand Dollar 8.9%
FRANKLIN TEMPLETON
HARD CURRENCY FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: Franklin Templeton Hard Currency Fund seeks to protect against
depreciation of the U.S. dollar relative to other currencies. The fund seeks to
achieve its goal by investing in high-quality money market instruments (and
forward contracts) denominated in foreign Major Currencies (as defined in the
fund's prospectus) which historically have experienced low rates of inflation
and which, in the view of the Investment Managers, follow economic policies
conducive to continual 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 changes in the U.S. dollar's value relative to the currencies of countries
where the fund invests. 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.
In November, differences in short-term money market rates and relative growth
rates between the U.S. and most other countries contributed to an appreciating
dollar relative to the euro and Japanese yen, as well as most other major
currencies. During December, the dollar weakened, but in January, with the
Federal Reserve hinting at potential interest rate increases because of
continued strong domestic economic news, the dollar began to recover. Within
this environment, Franklin Templeton Global Currency Fund- Class A provided a
- -7.42% six-month cumulative total return, as shown in the Performance Summary on
page 13.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal value, beginning on page 18 of
this report.
During the reporting period, currencies of dollar-block countries performed best
versus the U.S. dollar. The Canadian dollar led the way, appreciating 5.94%,
followed by the Australian dollar (5.81%), and the New Zealand dollar (5.43%).
On the other hand, most European currencies fell versus the dollar because of
the relatively weak state of the regional economy. In March, many European
currencies depreciated further as a result of the crisis in Yugoslavia and ended
the period down versus the U.S. dollar. Meanwhile, the Japanese yen fell 2.93%
against the U.S. dollar.
At the beginning of the reporting period, the fund's geographic exposure
consisted of 27.8% in Germany, 26.2% in Japan, 21.9% in Switzerland, 4.3% in New
Zealand, and 19.8% in the U.S. During the six months under review, we changed
the composition of the portfolio in an attempt to take advantage of some of the
trends and opportunities we were seeing at the time. By the end of the period,
the fund's exposure had changed to 41.6% in the euro, 19.8% in Japan, 27.5% in
Switzerland, 8.9% in New Zealand, and 2.2% in the U.S. The fund's U.S. exposure
is due simply to the timing of cash flows in and out of the fund. As always, we
strive to keep the fund as fully invested as possible in foreign securities at
all times.
Looking forward, we feel that the U.S. dollar may remain strong, inflation may
remain relatively benign, and domestic interest rates may remain fairly stable
during the next several months. Hence, we expect a relatively strong dollar in
the short term, but are optimistic about the euro in the medium to long term. In
any event, we intend to continue our search for opportunities to add currencies
to the portfolio that offer value, given our assessment of the market.
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 fund's prospectus. Because the fund's assets are
largely denominated in foreign currencies, there is potential for significant
gain or loss from currency exchange rate fluctuations. A non-diversified foreign
fund may not be appropriate for all investors and should not be considered a
complete investment program.
Please remember, this discussion reflects our views, opinions and portfolio
holdings as of April 30, 1999, the end of the reporting period. However, market
and economic conditions are changing constantly, which can be expected to affect
our strategies and the fund's portfolio composition. Although historical
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 18 of this
report indicates the fund held 61.0% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 1999, its NET EXPOSURE to the U.S.
dollar on that date was only 2.2%. 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 24) calling for the purchase of various foreign
currencies in exchange for U.S. dollars at various future dates. The combination
of U.S. dollar-denominated instruments with "long" forward currency exchange
contracts creates a position economically equivalent to a money market
instrument denominated in the foreign currency itself. Such combined positions
are sometimes necessary when the money market for a particular foreign currency
is small or relatively illiquid.
FRANKLIN TEMPLETON
HARD CURRENCY FUND
CLASS A (FORMERLY CLASS I):
Subject to the current, maximum 2.25% initial sales charge. Prior to
August 3,1998,fund shares were offered at a higher initial sales
charge; thus, actual total returns would have been lower.
ADVISOR CLASS:
No initial sales charge or Rule 12b-1 fees and are available to a limited class
of investors.
Past expense waivers by the fund's Investment Manager increased the fund's total
returns. If the fund's manager had not taken this action, total returns would
have been lower.
During the six months ended April 30, 1999, 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.
PERFORMANCE SUMMARY AS OF 4/30/99
Distributions will vary based on income earned by the fund and any profits
realized from the sale of securities in the portfolio, as well as the level of
the fund's operating expenses. Past distributions are not indicative of future
trends. All total returns include reinvested distributions at net asset value.
PRICE AND DISTRIBUTION INFORMATION (11/1/98-4/30/99)
<TABLE>
<CAPTION>
CLASS A CHANGE 4/30/99 10/31/98
---------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value -$0.87 $9.52 $10.39
DISTRIBUTIONS
----------------------------------------
<S> <C>
Dividend Income $0.1040
ADVISOR CLASS CHANGE 4/30/99 10/31/98
---------------------------------------------------------------------------
<S> <C>
Net Asset Value -$0.87 $9.54 $10.41
DISTRIBUTIONS
----------------------------------------
<S> <C>
Dividend Income $0.1114
</TABLE>
Past performance is not predictive of future results.
PERFORMANCE
<TABLE>
<CAPTION>
INCEPTION
CLASS A 6-MONTH 1-YEAR 5-YEAR (11/17/89)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) -7.42% +2.28% -2.48% +55.08%
Average Annual Total Return(2) -9.51% -0.03% -0.96% +4.50%
Value of $10,000 Investment(3) $9,049 $9,997 $9,431 $15,156
Distribution Rate(4) 2.46%
30-Day Standardized Yield(5) 2.61%
4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(6) +21.43% -8.92% -11.21% -2.91% +2.28%
INCEPTION
ADVISOR CLASS(7) 6-MONTH 1-YEAR 5-YEAR (11/17/89)
<S> <C> <C> <C> <C>
Cumulative Total Return(1) -7.33% +2.69% -1.70% +56.32%
Average Annual Total Return(2) -7.33% +2.69% -0.34% +4.84%
Value of $10,000 Investment(3) $9,267 $10,269 $9,830 $15,632
Distribution Rate(4) 2.52%
30-Day Standardized Yield(5) 2.37%
4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(6) +21.43% -8.92% -11.14% -2.60% +2.69%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, applicable,
maximum sales charge(s) for that class. Six-month return has not been
annualized.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the current, applicable, maximum
sales charge(s) for that class.
4. Distribution rate is based on an annualization of the respective class's
current monthly dividend and the maximum offering price (net asset value price,
for Advisor Class) per share on April 30, 1999.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1999.
6. One-year total return represents the change in value of an investment over
the one-year periods ended on the specified dates and does not include sales
charges.
7. On January 2, 1997, the fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
Class A performance, excluding the effect of the Class A sales charge, but
including the effect of Rule 12b-1 fees and other Class A expenses; 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 and average annual
total returns of Advisor Class shares were -8.48% and -3.74%, respectively.
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, and you may have a gain or loss when you
sell your shares.
Past performance is not predictive of future results.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30,1999 YEAR ENDED OCTOBER 31,
(UNAUDITED) 1998 1997
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period ................................. $ 12.06 $ 12.10 $ 12.80
---------- ---------- ----------
Income from investment operations:
Net investment income ............................................... .21 .50 .49
Net realized and unrealized gains (losses) .......................... (.23) (.07) (.68)
---------- ---------- ----------
Total from investment operations ..................................... (.02) .43 (.19)
---------- ---------- ----------
Less distributions from:
Net investment income ............................................... (.17) (.28) --
Tax return of capital ............................................... -- (.19) (.51)
---------- ---------- ----------
Total distributions .................................................. (.17) (.47) (.51)
---------- ---------- ----------
Net asset value, end of period ....................................... $ 11.87 $ 12.06 $ 12.10
========== ========== ==========
Total Return(*) ...................................................... (.17)% 3.71% (1.46)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................................... $ 30,920 $ 33,703 $ 41,795
Ratios to average net assets:
Expenses ............................................................ 1.12%(**) 1.19% 1.10%
Expenses, excluding waiver and payments
by affiliate ....................................................... 1.12%(**) 1.19% 1.10%
Net investment income ................................................ 3.47%(**) 4.08% 4.01%
Portfolio turnover rate .............................................. .00% .00% .00%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED OCTOBER 31, APRIL 30,
1996 1995 1994(+) 1994
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................................. $ 13.67 $ 14.14 $ 13.85 $ 13.96
------- ---------- ---------- ----------
Income from investment operations:
Net investment income ............................................... .69 1.29 .25 .57
Net realized and unrealized gains (losses) .......................... (.54) (.49) .32 (.11)
------- ---------- ---------- ----------
Total from investment operations ..................................... .15 .80 .57 .46
------- ---------- ---------- ----------
Less distributions from:
Net investment income ............................................... (.71) (1.27) (.28) (.57)
Tax return of capital ............................................... (.31) -- -- --
------- ---------- ---------- ----------
Total distributions .................................................. (1.02) (1.27) (.28) (.57)
------- ---------- ---------- ----------
Net asset value, end of period ....................................... $ 12.80 $ 13.67 $ 14.14 $ 13.85
======= ========== ========== ==========
Total Return(*) ...................................................... 1.27% 6.05% 4.14% 3.41%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................................... $50,773 $ 59,942 $ 56,098 $ 51,539
Ratios to average net assets:
Expenses ............................................................ .99% .99% 1.04%(**) 1.41%
Expenses, excluding waiver and payments
by affiliate ....................................................... .99% .99% 1.12%(**) 1.61%
Net investment income ................................................ 4.30% 5.29% 3.55%(**) 2.78%
Portfolio turnover rate .............................................. .00% 46.05% 25.62% 37.16%
</TABLE>
(*) Total return does not reflect sales commissions and is not annualized.
(**)Annualized.
(+) Six months ended October 31,1994. Prior to this period, the Fund's fiscal
year end was April 30.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND AMOUNT(*) VALUE
- ----------------------------------------------------------------------------- ------------- ------------
<S> <C> <C>
FOREIGN GOVERNMENT SECURITIES - FLOATING RATE NOTE (COST $2,728,124) 7.3%
Government of Spain, FRN, 3.75%, 6/29/02 .................................. 2,121,861 EUR $ 2,248,201
------------
SHORT TERM INVESTMENTS 89.2%
COMMERCIAL PAPER 20.3%
Ciesco LP, 4.80%, 5/24/99 ................................................. 1,550,000 1,545,042
Halifax PLC, 4.72%, 5/28/99 ............................................... 1,600,000 1,594,035
International Lease Finance Corp., 4.72%, 6/11/99 ......................... 1,600,000 1,591,059
Toyota Motor Credit Corp., 4.77%, 5/28/99 ................................. 1,550,000 1,544,222
------------
TOTAL COMMERCIAL PAPER (COST $6,274,606) .................................. 6,274,358
------------
GOVERNMENT SECURITIES 31.6%
Australia Treasury Bill, 5.20%, 6/24/99 ................................... 3,165,000 AUD 2,082,196
Canada Treasury Bill, 4.78%, 5/14/99 ...................................... 1,600,000 1,596,368
Federal Republic of Germany, 3.50%, 6/18/99 ............................... 869,196 EUR 920,582
German Treasury Bill, 2.42%, 7/16/99 ...................................... 3,000,000 EUR 3,158,154
New Zealand Treasury Bill, 4.64%, 10/13/99 ................................ 3,650,000 NZD 2,000,921
------------
TOTAL GOVERNMENT SECURITIES (COST $10,053,932) ............................ 9,758,221
------------
U.S. GOVERNMENT AGENCIES 37.3%
Fannie Mae, 4.73%, 5/10/99 ................................................ 2,480,000 2,477,733
Federal Farm Credit Banks, 4.65%,with maturities to 7/01/99 ............... 4,060,000 4,043,090
Federal Home Loan Bank, 5.10%, 3/09/00 .................................... 1,600,000 1,597,504
Federal Home Loan Mortgage Corp., 4.70% to 4.72%,with maturities to 9/03/99 2,150,000 2,120,513
U.S. Treasury Bill, 4.355%, 10/14/99 ...................................... 1,320,000 1,293,240
------------
TOTAL U.S. GOVERNMENT AGENCIES (COST $11,531,332) ......................... 11,532,080
------------
TOTAL SHORT TERM INVESTMENTS (COST $27,859,870) ........................... 27,564,659
------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT (COST $30,587,994) .......... 29,812,860
------------
(a)REPURCHASE AGREEMENT (COST $1,216,000) 3.9%
Deutsche Bank AG, 4.85%, 5/01/99 (Maturity Value $1,216,491)
Collateralized by U.S. Treasury Notes and Bonds .......................... 1,216,000 1,216,000
------------
TOTAL INVESTMENTS (COST $31,803,994) 100.4% ............................... 31,028,860
NET EQUITY IN FORWARD CONTRACTS (.1%) ..................................... (24,309)
OTHER ASSETS, LESS LIABILITIES (.3%) ...................................... (84,793)
------------
TOTAL NET ASSETS 100.0% ................................................... $ 30,919,758
============
</TABLE>
CURRENCY ABBREVIATION:
AUD - Australian Dollar
EUR - European Unit
NZD - New Zealand Dollar
(*) Securities denominated in U.S. dollars unless otherwise indicated.
(a) See note 1(d) regarding repurchase agreements.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
FRANKLIN TEMPLETON HARD CURRENCY FUND
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31, YEAR ENDED
APRIL 30, 1999 --------------------------------------------------- APRIL 30,
(UNAUDITED) 1998(a) 1997 1996 1995 1994(+) 1994
-------------- ------- ------- --------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period ....... $ 10.39 $ 10.28 $ 11.64 $ 13.09 $ 13.95 $ 12.95 $ 13.00
------- ------- ------- -------- -------- ------- -------
Income from investment operations:
Net investment income ..................... .12 .30 .37 .57 1.84 .26 .50
Net realized and unrealized gains (losses) (.89) .12 (1.33) (1.34) (1.02) .99 (.05)
------- ------- ------- -------- -------- ------- -------
Total from investment operations ........... (.77) .42 (.96) (.77) .82 1.25 .45
------- ------- ------- -------- -------- ------- -------
Less distributions from:
Net investment income ..................... (.10) (.25) -- (.06) (1.68) (.25) (.13)
Tax return of capital ..................... -- (.06) (.40) (.62) -- -- (.37)
------- ------- ------- -------- -------- ------- -------
Total distributions ........................ (.10) (.31) (.40) (.68) (1.68) (.25) (.50)
------- ------- ------- -------- -------- ------- -------
Net asset value, end of period ............. $ 9.52 $ 10.39 $ 10.28 $ 11.64 $ 13.09 $ 13.95 $ 12.95
======= ======= ======= ======== ======== ======= =======
Total Return(*) ............................ (7.42)% 4.33% (8.28)% (5.99)% 6.68% 9.74% 3.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .......... $55,766 $68,902 $91,976 $124,666 $132,089 $61,228 $35,739
Ratios to average net assets:
Expenses .................................. 1.11%(**) 1.35% 1.13% 1.10% 1.15% 1.05%(**) 1.47%
Expenses, excluding waiver and payments
by affiliate ............................. 1.11%(**) 1.35% 1.13% 1.10% 1.15% 1.28%(**) 1.71%
Net investment income ..................... 2.59%(**) 3.07% 3.53% 4.50% 4.68% 3.80%(**) 3.83%
Portfolio turnover rate .................... 55.19% 96.41% 2.68% .00% 15.72% 28.18% .00%
</TABLE>
(*) Total return does not reflect sales commissions and is not annualized.
(**) Annualized.
(+) Six months ended October 31, 1994. Prior to this period, the Fund's fiscal
year end was April 30.
(a) Based on average weighted shares outstanding.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights (continued)
FRANKLIN TEMPLETON HARD CURRENCY FUND (CONT.)
<TABLE>
<CAPTION>
ADVISOR CLASS
--------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1999(a) ----------------------------
(UNAUDITED) 1998 1997(+)
----------------- --------- ----------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period.............. $ 10.41 $ 10.28 $ 11.28
--------- --------- --------
Income from investment operations:
Net investment income ........................... .14 .33 .34
Net realized and unrealized gains (losses) ...... (.90) .14 (1.00)
--------- --------- --------
Total from investment operations ................. (.76) .47 (.66)
--------- --------- --------
Less distributions from:
Net investment income ........................... (.11) (.28) --
Tax return of capital ........................... -- (.06) (.34)
--------- --------- --------
Total distributions .............................. (.11) (.34) (.34)
--------- --------- --------
Net asset value, end of period ................... $ 9.54 $ 10.41 $ 10.28
========= ========= ========
Total Return(*) .................................. (7.33)% 4.89% (5.84)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................ $ 68 $ 3,343 $ 249
Ratios to average net assets:
Expenses ........................................ 1.06%(**) 1.01% .94%(**)
Net investment income ........................... 2.72%(**) 3.29% 3.67%(**)
Portfolio turnover rate .......................... 55.19% 96.41% 2.68%
</TABLE>
(*) Total return is not annualized.
(**) Annualized.
(+) For the period January 2, 1997 (effective date) through October 31, 1997.
(a) Based on average weighted shares outstanding.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30,1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON HARD CURRENCY FUND AMOUNT(*) VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN GOVERNMENT SECURITIES-FLOATING RATE NOTE (COST $1,392,600) 2.0%
Government of Italy, FRN, 0.208%,7/26/99 ................................... $135,000,000 JPY $ 1,130,899
------------
SHORT TERM INVESTMENTS 86.3%
COMMERCIAL PAPER 28.8%
Canadian Wheat Board, 1.49%, 5/12/99 ....................................... 3,500,000 CHF 2,297,992
Ciesco LP, 4.80%, 5/24/99 .................................................. 2,910,000 2,900,691
Halifax Building Society Ltd., 1.49%, 5/12/99 .............................. 3,500,000 CHF 2,297,992
Halifax PLC, 4.72%, 5/28/99 ................................................ 3,400,000 3,387,325
Rabobank International London, 1.49%, 5/12/99 .............................. 3,500,000 CHF 2,297,992
Toyota Motor Credit Corp., 4.77%, 5/28/99 .................................. 2,910,000 2,899,152
------------
TOTAL COMMERCIAL PAPER (COST $16,309,141) .................................. 16,081,144
------------
GOVERNMENT SECURITIES 30.3%
Canadian Treasury Bill, 4.78%, 5/14/99 ..................................... 3,200,000 3,192,736
Federal Republic of Germany, 3.50%, 6/18/99 ................................ 843,632 EUR 893,506
German Treasury Bill, 2.42%, 7/16/99 ....................................... 9,000,000 EUR 9,474,461
New Zealand Treasury Bill, 4.64%, 10/13/99 ................................. 6,140,000 NZD 3,365,932
------------
TOTAL GOVERNMENT SECURITIES (COST $17,917,592) ............................. 16,926,635
------------
U.S. GOVERNMENT AGENCIES 27.2%
Federal Farm Credit Banks, 4.65%, with maturities to 7/01/99 ............... 6,437,000 6,412,210
Federal Home Loan Bank, 5.10%, 3/09/00 ..................................... 3,000,000 2,995,320
Federal Home Loan Mortgage Corp., 4.71% to 4.72%, with maturities to 8/09/99 4,820,000 4,763,610
U.S. Treasury Bill,4.355%,10/14/99 ......................................... 1,000,000 979,728
------------
TOTAL U.S. GOVERNMENT AGENCIES (COST $15,151,188) .......................... 15,150,868
------------
TOTAL SHORT TERM INVESTMENTS (COST $49,377,921) ............................ 48,158,647
------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $50,770,521) .......... 49,289,546
------------
(a)REPURCHASE AGREEMENTS 13.2%
Barclays Bank PLC, 4.87%, 5/03/99 (Maturity Value $2,501,015)
Collateralized by U.S. Treasury Notes and Bonds .......................... 2,500,000 2,500,000
Deutsche Bank AG, 4.88%, 5/03/99,(Maturity Value $2,368,963)
Collateralized by U.S. Treasury Notes and Bonds .......................... 2,368,000 2,368,000
Morgan Stanley & Co. Inc., 4.87%, 5/03/99,(Maturity Value $2,501,015)
Collateralized by U.S. Treasury Notes and Bonds .......................... 2,500,000 2,500,000
------------
TOTAL REPURCHASE AGREEMENTS (COST $7,368,000) .............................. 7,368,000
------------
TOTAL INVESTMENTS (COST $58,138,521) 101.5% ................................ 56,657,546
NET EQUITY IN FORWARD CONTRACTS (.7%) ...................................... (356,479)
OTHER ASSETS, LESS LIABILITIES (.8%) ....................................... (466,273)
------------
TOTAL NET ASSETS 100.0% .................................................... $ 55,834,794
============
</TABLE>
CURRENCY ABBREVIATIONS:
CHF - Swiss Franc
EUR - European Unit
NZD - New Zealand Dollar
JPY - Japanese Yen
(*) Securities denominated in U.S. dollars unless otherwise indicated.
(a) See note 1(d) regarding repurchase agreements.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Assets:
Investments in securities:
Cost ................................................ $30,587,994 $50,770,521
----------- -----------
Value ............................................... 29,812,860 49,289,546
Repurchase agreements, at value and cost ............. 1,216,000 7,368,000
Cash ................................................. 11,153 --
Receivables:
Beneficial shares sold .............................. 18,285 554,190
Dividends and interest .............................. 63,725 49,380
Unrealized gain on forward exchange contracts (Note 6) 62,026 85,017
----------- -----------
Total assets .................................... 31,184,049 57,346,133
----------- -----------
Liabilities:
Payables:
Beneficial shares redeemed .......................... 52,032 213,716
To affiliates ....................................... 41,334 105,098
To shareholders ..................................... 54,294 412,737
Distributions to shareholders ........................ 115 1,410
Funds advanced by custodian .......................... -- 270,460
Unrealized loss on forward exchange contracts (Note 6) 86,335 441,496
Accrued expenses ..................................... 30,181 66,422
----------- -----------
Total liabilities ............................... 264,291 1,511,339
----------- -----------
Net assets, at value .......................... $30,919,758 $55,834,794
=========== ===========
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENT OF ASSETS AND LIABILITIES (CONT.)
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Net assets consist of:
Undistributed net investment income/(Distributions in excess of net investment income) $ 237,545 $ (185,346)
Net unrealized depreciation .......................................................... (805,171) (1,839,855)
Accumulated net realized loss ........................................................ (530,632) (5,795,445)
Beneficial shares .................................................................... 32,018,016 63,655,440
------------ ------------
Net assets, at value ............................................................ $ 30,919,758 $ 55,834,794
============ ============
CLASS A:
Net asset value ...................................................................... $ 30,919,758 $ 55,766,436
============ ============
Shares outstanding ................................................................... 2,605,353 5,858,029
============ ============
Net asset value per share ............................................................ $ 11.87 $ 9.52
============ ============
Maximum offering price per share (Net asset value per share divided by 97.75%) ....... $ 12.14 $ 9.74
============ ============
ADVISOR CLASS:
Net asset value ...................................................................... $ 68,358
============
Shares outstanding ................................................................... 7,168
============
Net asset value and maximum offering price per share ................................. $ 9.54
============
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Interest Income ......................................................... $ 742,146 $ 1,179,477
----------- -----------
Expenses:
Management fees (Note 3) ............................................... 105,019 207,148
Distribution fees- Class A (Note 3) .................................... 24,934 15,708
Transfer agent fees (Note 3) ........................................... 21,400 63,700
Custodian fees ......................................................... 2,200 400
Reports to shareholders ................................................ 8,800 28,600
Registration and filing fees ........................................... 7,100 17,000
Professional fees ...................................................... 7,300 11,500
Directors' fees and expenses ........................................... 4,700 8,800
Other .................................................................. 134 186
----------- -----------
Total expenses .................................................... 181,587 353,042
----------- -----------
Net investment income ........................................... 560,559 826,435
----------- -----------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ........................................................... 124,564 (2,116,825)
Foreign currency transactions ......................................... (314,211) (2,164,072)
----------- -----------
Net realized loss .................................................... (189,647) (4,280,897)
Net unrealized appreciation (depreciation) on:
Investments ........................................................... (545,623) (792,669)
Translation of assets and liabilities denominated in foreign currencies 102,941 (706,298)
----------- -----------
Net unrealized depreciation .......................................... (442,682) (1,498,967)
----------- -----------
Net realized and unrealized loss ........................................ (632,329) (5,779,864)
=========== ===========
Net decrease in net assets resulting from operations .................... $ (71,770) $(4,953,429)
=========== ===========
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND HARD CURRENCY FUND
------------------------------------ -------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
APRIL 30, 1999 YEAR ENDED APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998 (UNAUDITED) OCTOBER 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................ $ 560,559 $ 1,477,138 $ 826,435 $ 2,269,930
Net realized gain (loss) from investments and
foreign currency transactions ............... (189,647) (742,669) (4,280,897) 244,414
Net unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign currencies (442,682) 407,541 (1,498,967) (959,090)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations .............. (71,770) 1,142,010 (4,953,429) 1,555,254
Distributions to shareholders from:
Net investment income:
Class A ..................................... (460,706) (863,306) (656,567) (1,877,762)
Advisor Class ............................... -- -- (7,900) (57,064)
Tax return of capital:
Class A ..................................... -- (572,882) -- (422,559)
Advisor Class ............................... -- -- -- (12,841)
Beneficial share transactions (Note 2):
Class A ..................................... (2,251,092) (7,797,014) (7,704,254) (22,281,132)
Advisor Class ............................... -- -- (3,088,277) 3,115,985
------------ ------------ ------------ ------------
Net decrease in net assets ............... (2,783,568) (8,091,192) (16,410,427) (19,980,119)
Net assets:
Beginning of period ........................... 33,703,326 41,794,518 72,245,221 92,225,340
------------ ------------ ------------ ------------
End of period ................................. $ 30,919,758 $ 33,703,326 $ 55,834,794 $ 72,245,221
============ ============ ============ ============
Undistributed net investment income/
(Distributions in excess of net investment
income) included in net assets:
End of period ................................ $ 237,545 $ 137,692 $ (185,346) $ (347,314)
============ ============ ============ ============
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton Global Trust (the Trust) is registered under the Investment
Company Act of 1940 as an open-end, non-diversified investment company,
consisting of two funds (the Funds). The Funds and their investment policies
are:
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.
The following summarizes the Funds' significant accounting policies.
a. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Trustees.
b. FOREIGN CURRENCY TRANSLATION:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Funds purchase or sell foreign securities they will customarily enter into
foreign exchange contracts to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
The Funds do not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
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 and 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 currency
denominated assets and liabilities other than investments in securities held at
the end of the reporting period.
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited) (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
c. FORWARD EXCHANGE CONTRACTS:
The Funds may enter into forward exchange contracts to obtain an investment
result that is substantially equal to a direct investment in a foreign currency
denominated instrument and to hedge against foreign exchange risks. These
contracts are valued daily and the Funds' equity therein is included in the
Statement of Assets and Liabilities. Realized and unrealized gains and losses
are included in the Statement of Operations.
d. REPURCHASE AGREEMENTS:
The Funds may enter into repurchase agreements, which are accounted for as a
loan by the Fund 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 April 30, 1999, all
outstanding repurchase agreements held by the Funds had been entered into on
that date.
e. 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.
f. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Distributions to shareholders are recorded on the ex-dividend date.
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.
Common expenses incurred by the Trust are allocated among the funds comprising
the Trust 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.
g. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
2. BENEFICIAL SHARES
During the six months ended April 30, 1999, the Hard Currency Fund offered two
classes of shares: Class A and Advisor Class. Effective January 1, 1999, Class I
was renamed Class A. 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 offers one class of shares.
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited) (continued)
2. BENEFICIAL SHARES (cont.)
At April 30, 1999, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Funds' shares were as follows:
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND HARD CURRENCY FUND
------------------------------ ------------------------------
CLASS A SHARES: SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Six months ended April 30, 1999
Shares sold .................................. 206,352 $ 2,479,005 1,104,799 $ 11,084,549
Shares issued on reinvestment of distributions 34,672 412,288 52,719 526,364
Shares redeemed .............................. (430,728) (5,142,385) (1,928,648) (19,315,167)
---------- ------------ ---------- ------------
Net decrease ................................. (189,704) $ (2,251,092) (771,130) $ (7,704,254)
========== ============ ========== ============
Year ended October 31, 1998
Shares sold .................................. 279,185 $ 3,284,072 2,210,728 $ 21,802,773
Shares issued on reinvestment of distributions 106,675 1,253,805 187,976 1,820,909
Shares redeemed .............................. (1,045,274) (12,334,891) (4,713,561) (45,904,814)
---------- ------------ ---------- ------------
Net decrease ................................. (659,414) $ (7,797,014) (2,314,857) $(22,281,132)
========== ============ ========== ============
ADVISOR CLASS SHARES:
Six months ended April 30, 1999
Shares sold .............................................................................. 443,174 $ 4,585,637
Shares issued on reinvestment of distributions ........................................... 608 6,075
Shares redeemed .......................................................................... (757,709) (7,679,989)
---------- ------------
Net decrease ............................................................................. (313,927) $ (3,088,277)
========== ============
Year ended October 31, 1998
Shares sold .............................................................................. 1,414,038 $ 13,878,770
Shares issued on reinvestment of distributions ........................................... 7,092 69,905
Shares redeemed .......................................................................... (1,124,297) (10,832,690)
---------- ------------
Net increase ............................................................................. 296,833 $ 3,115,985
========== ============
</TABLE>
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 and Hard Currency Fund pay an investment management fee to
Advisers of 0.65% per year of the average daily net assets of each 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 each Fund.
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (cont.)
The Global Currency Fund reimburses Distributors up to 0.45% per year of the
Fund's average daily net assets for costs incurred in marketing the Fund's
shares. The Hard Currency Fund reimburses Distributors up to 0.45% per year of
the Fund's average daily net assets of Class A shares for costs incurred in
marketing the Fund's Class A shares.
Distributors received net commissions on sales of Fund shares, and paid
commissions to other dealers for the six months ended April 30, 1999 as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Total commissions received ............... $ 3,656 $17,226
------- -------
Paid to other dealers .................... $ 3,237 $15,294
------- -------
</TABLE>
4. INCOME TAXES
At October 31, 1998, the Funds had tax basis capital losses which may be carried
over to offset future capital gains as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Capital loss carryovers expiring in:
2001 ..................................... $ 35,182 $ 192,513
2002 ..................................... -- 271
2003 ..................................... 173,253 112,254
2004 ..................................... 77,143 1,047,201
2005 ..................................... 54,060 162,309
2006 ..................................... 1,347 --
-------- ----------
$340,985 $1,514,548
======== ==========
</TABLE>
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At April 30, 1999, the net unrealized depreciation
based on the cost of investments for income tax purposes were as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Unrealized appreciation ............ $ 146,222 $ 108,740
Unrealized depreciation ............ (921,356) (1,589,715)
----------- -----------
Net unrealized depreciation ........ $ (775,134) $(1,480,975)
=========== ===========
</TABLE>
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions.
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited) (continued)
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 1999 were as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Purchases .................... $2,626,857 $3,000,000
Sales ........................ $ -- $2,169,233
</TABLE>
6. OFF-BALANCE SHEET RISK
The Funds have been parties to financial instruments with off-balance-sheet
risk, primarily forward exchange contracts in order to obtain investment results
that are substantially equal to direct investments in foreign currency
denominated instruments and to minimize the impact on the Funds from adverse
changes in the relationship between the U.S. dollar and foreign currencies and
interest rates. These instruments involve market risk in excess of the amount
recognized on the Statement of Assets and Liabilities. Some of these risks have
been minimized by offsetting contracts. Risks arise from the possible inability
of counterparties to meet the terms of their contracts, future movement in
currency values and interest rates and contract positions that are not exact
offsets. The contract amount indicates the extent of the Funds' involvement in
such contracts.
A forward exchange contract is an agreement between two parties to exchange
different currencies at a specific rate at an agreed future date. The contracts
are reported in the financial statements at the Funds' net equity, as measured
by the difference between the forward exchange rates at the reporting date and
the forward exchange rates at the day of entry into the contract.
As of April 30, 1999, the Global Currency Fund had the following forward foreign
currency contracts outstanding:
<TABLE>
<CAPTION>
IN SETTLEMENT UNREALIZED
EXCHANGE FOR DATE GAIN/(LOSS)
------------ ---------- -----------
<S> <C> <C> <C>
CONTRACTS TO BUY:
2,578,000 Australian Dollars ........................................ U.S. $1,681,372 6/28/99 U.S. $ 27,580
2,879,000 New Zealand Dollars ....................................... 1,582,298 7/26/99 30,285
1,900,000 European Unit ............................................. 2,620,346 8/10/99 4,161
---------- --------
U.S. $5,884,016 62,026
========== --------
Unrealized gain on forward exchange contracts .............. 62,026
--------
CONTRACTS TO BUY:
10,887,000 Danish Krone .............................................. $1,584,716 5/17/99 (32,255)
12,687,000 Norwegian Krone ........................................... 1,640,843 5/18/99 (13,147)
---------- --------
U.S. $3,225,559 (45,402)
==========
Net unrealized loss on offsetting forward exchange contracts (40,933)
--------
Unrealized loss on forward exchange contracts ............. (86,335)
--------
Net unrealized loss on forward exchange contracts .... U.S. $(24,309)
========
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited) (continued)
6. OFF-BALANCE SHEET RISK (cont.)
As of April 30, 1999, the Hard Currency Fund had the following forward foreign
currency contracts outstanding:
<TABLE>
<CAPTION>
IN SETTLEMENT UNREALIZED
EXCHANGE FOR DATE GAIN/(LOSS)
------------ ---------- -----------
<S> <C> <C> <C>
CONTRACTS TO BUY:
5,814,000 Swiss Francs ................................................ U.S. $ 3,853,904 8/06/99 U.S. $ 6,577
1,168,211,000 Japanese Yen ................................................ 9,900,093 8/06/99 20,783
8,986,000 European Unit ............................................... 9,556,072 8/10/99 15,288
----------- ---------
U.S. $23,310,069 42,648
===========
Net unrealized gain on offsetting forward exchange contracts . 42,369
---------
Unrealized gain on forward exchange contracts ............... 85,017
---------
CONTRACTS TO BUY:
6,847,500 Swiss Francs ................................................ $ 4,626,689 5/17/99 (120,633)
2,900,000 New Zealand Dollars ......................................... 1,624,290 7/26/99 (467)
3,100,000 European Unit ............................................... 3,300,880 8/04/99 (308)
----------- ---------
U.S. $ 9,551,859 (121,408)
===========
Net unrealized loss on offsetting forward exchange contracts . (320,088)
---------
Unrealized loss on forward exchange contracts ............... (441,496)
---------
Net unrealized loss on forward exchange contracts ...... U.S. $(356,479)
=========
</TABLE>
7. CREDIT RISK
The Funds have investments in excess of 10% of their total net assets in the
following:
Global Currency Fund - debt securities denominated in the European Monetary
Unit.
Hard Currency Fund - debt securities denominated the European Monetary Unit and
in Swiss Francs.
Such concentrations may subject the Funds more significantly to economic changes
occurring within those countries.
