SHAREHOLDER LETTER
Dear Shareholder:
This annual report of Franklin Templeton Global Trust covers the fiscal year
ended October 31, 1999. The Trust consists of Franklin Templeton Global Currency
Fund and Franklin Templeton Hard Currency Fund.
The 12 months under review, a period of severe volatility for global financial
markets, proved to be a challenging time for currency investors. In October and
November 1998, evidence of an economic slowdown in Europe led to speculation
about possible interest rate cuts there, and concerns about effects of global
economic turmoil on the U.S. economy prompted the U.S. Federal Reserve Board to
cut domestic interest rates three different times. Then, in December, the
central banks of Sweden, the United Kingdom, European Economic Union nations and
Japan all cut their interest rates, further benefiting global fixed income and
currency markets.
CONTENTS
Shareholder Letter .................................................... 1
Fund Reports
Franklin Templeton
Global Currency Fund ................................................. 5
Franklin Templeton
Hard Currency Fund ................................................... 11
Financial Highlights &
Statement of Investments .............................................. 18
Financial Statements .................................................. 23
Notes to
Financial Statements .................................................. 27
Independent
Auditors' Report ...................................................... 33
[FUND CATEGORY PYRAMID]
Although relatively weak economic growth and benign inflation in several
industrial nations caused many investors to be optimistic about global currency
markets in January 1999, their outlook changed when stronger-than-expected data
about the U.S. economy was released in February. But optimism returned in March,
when the U.S. and United Kingdom currency markets benefited from
flight-to-quality inflows, resulting from fears about a possible war in
Yugoslavia.
During the second half of the fiscal year, a strong U.S. economy and the specter
of inflation led the Federal Reserve Board to raise short-term interest rates in
June and August 1999. At the same time, improving business conditions in Europe
put an end to talk about further interest rate cuts by the Bank of England and
the European Central Bank.
Within this environment, the U.S. dollar rallied against other major currencies
for the first nine months of the period, but weakened in the final three months.
However, commodity-based currencies, such as the Australian, New Zealand and
Canadian dollars performed well following their poor showing in mid-1998.
During the 12 months under review, Franklin Templeton Global Currency Fund -
Class A and Franklin Templeton Hard Currency Fund - Class A posted one-year
cumulative total returns of only +0.18% and -6.23%, respectively, as shown in
the Performance Summaries on pages 8 and 14, respectively. Since the U.S. dollar
was relatively strong during most of this period, these returns were not
surprising. Through the years, Franklin Templeton Global Currency Fund and
Franklin Templeton Hard Currency Fund have generally provided strong total
returns during times of U.S. dollar weakness, and given back some of those gains
during periods of dollar strength. Other assets within a typical balanced
investment portfolio tend to benefit from a strong dollar. A non-diversified
foreign fund, such as those of the Franklin Templeton Global Trust, may not be
appropriate for all investors and should not be considered a complete investment
program. However, since no one can predict the future performance of the dollar,
we believe it is prudent to seek protection against future dollar declines and
the diversification afforded by foreign money markets can be an intelligent
strategy for many investors.
Thank you for investing with us. We look forward to serving your investment
needs in the years to come.
Sincerely,
/s/ Thomas J. Dickson
Thomas J. Dickson
/s/ Umran Demirors
Umran Demirors
Portfolio Managers
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. Because two-thirds of the fund's target portfolio is
invested in foreign currencies, the fund tends to perform better during periods
of U.S. dollar weakness.
During the reporting period, the U.S. dollar strengthened against the euro and
the yen, while falling in value versus the currencies of several European
countries, as well as the Australian and New Zealand dollars. Within this
environment, Franklin Templeton Global Currency Fund - Class A posted a +0.18%
one-year cumulative total return, as shown in the Performance Summary on page 8.
The fund's bench-mark, the J.P. Morgan 3 Month Global Cash Index, returned
- -1.77% during the same period.*
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 19 of
this report.
ASSET ALLOCATION BY CURRENCY
Franklin Templeton Global Currency Fund
Based on Total Net Assets
10/31/99
European Monetary Unit 36.0%
U.S. Dollar 23.1%
Japanese Yen 10.1%
New Zealand Dollar 8.3%
Australian Dollar 8.0%
Swedish Krona 5.4%
German Mark 3.8%
British Pound 3.1%
Danish Krone 2.2%
During the year under review, we increased the fund's exposure to Europe and
subsequently reduced our exposure to the U.S. dollar. On October 31, 1999, the
fund held 50.5% of total net assets in European currencies, down from 43.8%
exposure to Europe at the beginning of the period; our U.S. position fell from
29.6% to 23.1%; and we had a 10.1% stake in the Japanese yen. Elsewhere, our
exposure to the Australian dollar fell from 10.4% to 8.0%, while holdings in New
Zealand dollars increased from 5.5% to 8.3%.
Looking forward, we are optimistic about prospects for global currency markets
and Franklin Templeton Global Currency Fund. As always, we will monitor economic
conditions, and we intend to look for opportunities to add currencies to the
fund's portfolio that offer long-term value given our assessment of the markets.
There are special considerations associated with global investing related to
market, currency, economic, social, and political factors, as discussed in the
fund's 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.
Source: J.P. Morgan. The J.P. Morgan 3 Month Global Cash Index is designed to
measure the performance of euro-currency deposits in 11 global markets. The
index is unmanaged and includes reinvested dividends. One cannot invest directly
in an index, nor is an index representative of the fund's portfolio.
- --------------------------------------------------------------------------------
Please note that although the fund's Statement of Investments on page 19 of this
report indicates the fund held 68.7% of its portfolio investments in U.S.
dollar-denominated assets as of October 31, 1999, 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 (please see Note 6 in the Notes
to Financial Statements on page 31 of this report) 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This discussion reflects our views, opinions and portfolio holdings as of
October 31, 1999, the end of the reporting period. Our strategies and the fund's
portfolio composition will change depending on market and economic conditions.
Although historical performance is no guarantee of future results, these
insights may help you understand our investment and management
philosophy.
- --------------------------------------------------------------------------------
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 fiscal year ended October 31, 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 10/31/99
Distributions will vary based on earnings of the fund's portfolio and any
profits realized from the sale of the portfolio's securities, 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
CLASS A CHANGE 10/31/99 10/31/98
- ------- ------ -------- --------
Net Asset Value -$0.34 $11.72 $12.06
DISTRIBUTIONS (11/1/98 - 10/31/99)
----------------------------------
Dividend Income $0.3590
Past performance is not predictive of future results.
<TABLE>
<CAPTION>
PERFORMANCE
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (6/27/86)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cumulative Total Return(1) +0.18% +9.95% +69.87% +121.25%
Average Annual Total Return(2) -2.09% +1.45% +5.20% +5.95%
Value of $10,000 Investment(3) $9,791 $10,744 $16,605 $21,627
Distribution Rate(4) 3.17%
30-Day Standardized Yield(5) 3.67%
</TABLE>
<TABLE>
<CAPTION>
10/31/95 10/31/96 10/31/97 10/31/98 10/31/99
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(6) +6.05% +1.27% -1.46% +3.71% +0.18%
</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.
(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 October 31, 1999.
(5.) Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended October 31, 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.
FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND
AVERAGE ANNUAL TOTAL RETURN
10/31/99
CLASS A
- --------------------------------------------------------------------------------
1-Year -2.09%
5-Year +1.45%
10-Year +5.20%
Since Inception (6/27/86) +5.95%
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
The unmanaged J.P. Morgan 3 Month Global Cash Index, used below as a benchmark
comparison to the fund, differs from the fund in composition, does not pay
management fees or expenses and includes reinvested dividends. The unmanaged
index is designed to measure the performance of euro-currency deposits in 11
global markets. One cannot invest directly in an index, nor is an index
representative of the fund's portfolio. Total return represents the change in
value of a $10,000 investment over the periods shown. It includes the fund's
current, applicable, maximum sales charges, expenses, account fees, and
reinvested distributions.
The following line graph compares the performance of Franklin Templeton Global
Currency Fund - Class A to that of the Salomon Brothers World Money Market
Index/J.P. Morgan 3 Month Global Cash Index and the J.P. Morgan 3 Month Global
Cash Index, based on a $10,000 investment from 11/1/89 to 10/31/99.
FRANKLIN SALOMON JP MORGAN 3
TEMPLETON BROTHERS WORLD MONTH GLOBAL
GLOBAL MONEY MARKET CASH INDEX
CURRENCY INDEX/JP
FUND MORGAN 3
MONTH GLOBAL
CASH INDEX
----------------------------------------------------------
11/1/89 $9,772 $10,000 $10,000
11/30/1989 $9,966 $10,212 $10,257
12/31/1989 $10,232 $10,561 $10,672
01/31/1990 $10,321 $10,751 $10,825
02/28/1990 $10,310 $10,741 $10,847
03/31/1990 $10,357 $10,772 $10,950
04/30/1990 $10,467 $10,942 $11,126
05/31/1990 $10,594 $11,087 $11,264
06/30/1990 $10,730 $11,348 $11,580
07/31/1990 $11,038 $11,887 $12,134
08/31/1990 $11,195 $12,105 $12,322
09/30/1990 $11,377 $12,292 $12,502
10/31/1990 $11,746 $12,721 $12,928
11/30/1990 $11,759 $12,834 $13,037
12/31/1990 $11,711 $12,936 $13,140
01/31/1991 $11,890 $13,180 $13,440
02/28/1991 $11,912 $12,993 $13,308
03/31/1991 $11,665 $12,178 $12,448
04/30/1991 $11,745 $12,312 $12,546
05/31/1991 $11,714 $12,246 $12,499
06/30/1991 $11,615 $12,048 $12,248
07/31/1991 $11,854 $12,370 $12,652
08/31/1991 $11,749 $12,464 $12,773
09/30/1991 $11,905 $12,999 $13,342
10/31/1991 $11,918 $13,068 $13,399
11/30/1991 $12,097 $13,358 $13,721
12/31/1991 $12,601 $14,027 $14,442
01/31/1992 $12,254 $13,635 $14,008
02/29/1992 $12,122 $13,466 $13,914
03/31/1992 $12,121 $13,459 $13,946
04/30/1992 $12,249 $13,562 $14,056
05/31/1992 $12,588 $13,961 $14,462
06/30/1992 $13,068 $14,545 $15,069
07/31/1992 $13,271 $14,914 $15,446
08/31/1992 $13,528 $15,518 $16,042
09/30/1992 $13,581 $15,309 $15,526
10/31/1992 $13,186 $14,502 $14,784
11/30/1992 $13,086 $14,211 $14,235
12/31/1992 $13,059 $14,158 $14,184
01/31/1993 $13,105 $14,229 $14,256
02/28/1993 $13,358 $14,193 $14,105
03/31/1993 $13,634 $14,592 $14,506
04/30/1993 $13,875 $14,955 $14,906
05/31/1993 $14,062 $15,106 $14,934
06/30/1993 $13,840 $14,560 $14,380
07/31/1993 $13,921 $14,500 $14,065
08/31/1993 $14,016 $14,752 $14,320
09/30/1993 $14,020 $15,003 $14,533
10/31/1993 $13,872 $14,815 $14,422
11/30/1993 $13,847 $14,716 $14,269
12/31/1993 $13,847 $14,734 $14,343
01/31/1994 $14,188 $14,856 $14,581
02/28/1994 $14,294 $15,107 $14,785
03/31/1994 $14,238 $15,290 $15,042
04/30/1994 $14,349 $15,455 $15,265
05/31/1994 $14,532 $15,505 $15,366
06/30/1994 $14,696 $16,008 $15,765
07/31/1994 $14,578 $16,039 $15,835
08/31/1994 $14,648 $16,177 $15,979
09/30/1994 $14,729 $16,546 $16,317
10/31/1994 $14,943 $16,929 $16,737
11/30/1994 $14,830 $16,466 $16,330
12/31/1994 $14,965 $16,582 $16,466
01/31/1995 $15,028 $16,861 $16,685
02/28/1995 $15,263 $17,252 $16,975
03/31/1995 $16,017 $18,329 $17,713
04/30/1995 $16,113 $18,382 $17,850
05/31/1995 $16,077 $18,226 $17,814
06/30/1995 $16,236 $18,477 $18,060
07/31/1995 $16,109 $18,547 $18,342
08/31/1995 $15,638 $17,846 $17,746
09/30/1995 $15,703 $18,260 $18,170
10/31/1995 $15,847 $18,322 $18,370
11/30/1995 $15,663 $18,088 $18,226
12/31/1995 $15,716 $18,272 $18,407
01/31/1996 $15,488 $17,792 $18,016
02/29/1996 $15,706 $18,027 $18,355
03/31/1996 $15,803 $18,056 $18,423
04/30/1996 $15,738 $17,788 $18,222
05/31/1996 $15,831 $17,833 $18,333
06/30/1996 $15,812 $17,895 $18,442
07/31/1996 $15,953 $18,321 $18,799
08/31/1996 $16,084 $18,316 $18,882
09/30/1996 $15,954 $18,030 $18,674
10/31/1996 $16,048 $18,217 $18,889
11/30/1996 $16,167 $18,128 $18,857
12/31/1996 $16,150 $18,068 $18,821
01/31/1997 $15,525 $17,384 $18,021
02/28/1997 $15,543 $17,173 $17,737
03/31/1997 $15,675 $17,287 $17,877
04/30/1997 $15,511 $16,944 $17,491
05/31/1997 $15,808 $17,407 $17,814
06/30/1997 $15,875 $17,335 $17,727
07/31/1997 $15,644 $16,857 $17,172
08/31/1997 $15,658 $17,012 $17,376
09/30/1997 $15,723 $17,228 $17,649
10/31/1997 $15,813 $17,593 $17,969
11/30/1997 $15,511 $17,300 $17,618
12/31/1997 $15,417 $17,078 $17,333
01/31/1998 $15,431 $17,049 $17,272
02/28/1998 $15,573 $17,180 $17,447
03/31/1998 $15,519 $16,964 $17,258
04/30/1998 $15,690 $17,251 $17,621
05/31/1998 $15,676 $17,185 $17,555
06/30/1998 $15,635 $17,132 $17,480
07/31/1998 $15,674 $17,142 $17,548
08/31/1998 $15,726 $17,337 $17,588
09/30/1998 $16,225 $18,017 $18,376
10/31/1998 $16,400 $18,502 $18,803
11/30/1998 $16,178 $18,228 $18,545
12/31/1998 $16,529 $18,634 $18,853
01/31/1999 $16,460 $18,422 $18,638
02/28/1999 $16,187 $17,987 $18,198
03/31/1999 $16,248 $17,915 $18,125
04/30/1999 $16,372 $17,853 $18,062
05/31/1999 $16,206 $17,663 $17,870
06/30/1999 $16,185 $17,626 $17,833
07/31/1999 $16,394 $18,150 $18,363
08/31/1999 $16,283 $18,093 $18,306
09/30/1999 $16,514 $18,347 $18,562
10/31/1999 $16,605 $18,255 $18,469
*Since the Salomon Brothers World Money Market Index ceased to exist on December
31, 1998, we created the Salomon Brothers World Money Market Index/J.P. Morgan 3
Month Global Cash Index. This combined index utilizes the Salomon Brothers World
Money Market Index from November 1, 1989, to December 31, 1998, along with the
J.P. Morgan 3 Month Global Cash Index from January 1, 1999, through October 31,
1999. In the future, we will no longer use the Salomon Brothers World Money
Market Index, but intend to use the J.P. Morgan 3 Month Global Cash Index for
comparison to the fund's performance. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
Past performance is not predictive of future results.
FRANKLIN TEMPLETON
HARD CURRENCY FUND
- --------------------------------------------------------------------------------
Your Fund's Goal: Franklin Templeton Hard Currency Fund seeks to protect against
depreciation of the U.S. dollar 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 Manager, 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. Because the fund's target portfolio is one-third each in
the currencies of Japan, Germany, and Switzerland, the fund tends to perform
better during periods of U.S. dollar weakness.
During the reporting period, the U.S. dollar strengthened against the euro and
the Japanese yen, while falling in value versus the Swiss franc and New Zealand
dollar. Within this environment, Franklin Templeton Hard Currency Fund - Class A
posted a -6.23% one-year cumulative total return, as shown in the Performance
Summary on page 14. The fund's benchmark, the J.P. Morgan 3 Month Global Cash
Index, returned -1.77% during the same period.*
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 22 of
this report.
[Pie Graph]
ASSET ALLOCATION BY CURRENCY*
Franklin Templeton Hard Currency Fund
Based on Total Net Assets
10/31/99
European Monetary Unit 35.1%
Swiss Franc 29.5%
Japanese Yen 29.2%
New Zealand Dollar 12.4%
* The U.S. dollar represented -6.2% of the fund's total net assets.
At the beginning of the fiscal year, the fund's currency 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 year, we shifted 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
35.1% in the European Monetary Unit, 29.5% in Switzerland, 29.2% in Japan, 12.4%
in New Zealand, and -6.2% in the U.S. The fund's U.S. exposure is due simply to
the timing of cash 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 are optimistic about prospects for foreign currency markets
and Franklin Templeton Hard Currency Fund. In our opinion, signs of a slowing
U.S. economy, deteriorating trade balances and the repatriation of foreign
capital brought back into focus many of the factors that have historically
undermined the U.S. dollar. Although the past year was largely a difficult
investment environment for the fund, we believe these factors will continue to
come to the forefront, and the long-term downtrend of the U.S. dollar may
continue.
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.
*Source: J.P. Morgan. The J.P. Morgan 3 Month Global Cash Index is designed to
measure the performance of euro-currency deposits in 11 global markets. The
index is unmanaged and includes reinvested dividends. One cannot invest directly
in an index, nor is an index representative of the fund's portfolio.
- --------------------------------------------------------------------------------
Please note that although the fund's Statement of Investments on page 22 of this
report indicates the fund held 88.7% of its portfolio investments in U.S.
dollar-denominated assets as of October 31, 1999, its NET EXPOSURE to the U.S.
dollar on that date was only -6.2%. The difference is explained by the fund's
holdings of forward currency exchange contracts (please see Note 6 in the Notes
to Financial Statements on page 31 of this report) 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This discussion reflects our views, opinions and portfolio holdings as of
October 31, 1999, the end of the reporting period. Our strategies and the fund's
portfolio composition will change depending on market and economic conditions.
Although historical performance is no guarantee of future results, these
insights may help you understand our investment and management philosophy.
- --------------------------------------------------------------------------------
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 reductions by the fund's Investment Manager increased the fund's
total return. If the fund's Manager had not taken this action, total return
would have been lower.
During the fiscal year ended October 31, 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 10/31/99
Distributions will vary based on earnings of the fund's portfolio and any
profits realized from the sale of the portfolio's securities, as well as the
level of each class'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
CLASS A CHANGE 10/31/99 10/31/98
- --------------------------------------------------------------------------------
Net Asset Value -$0.87 $9.52 $10.39
DISTRIBUTIONS (11/1/98 - 10/31/99)
-------------------------------------------------
Dividend Income $0.2240
ADVISOR CLASS CHANGE 10/31/99 10/31/98
- --------------------------------------------------------------------------------
Net Asset Value -$0.88 $9.53 $10.41
DISTRIBUTIONS (11/1/98 - 10/31/99)
-------------------------------------------------
Dividend Income $0.2388
Past performance is not predictive of future results.
PERFORMANCE
INCEPTION
CLASS A 1-YEAR 5-YEAR (11/17/89)
- --------------------------------------------------------------------------------
Cumulative Total Return(1) -6.23% -10.01% +57.09%
Average Annual Total Return(2) -8.35% -2.53% +4.40%
Value of $10,000 Investment(3) $9,165 $8,797 $15,356
Distribution Rate(4) 2.46%
30-Day Standardized Yield(5) 3.81%
10/31/95 10/31/96 10/31/97 10/31/98 10/31/99
- --------------------------------------------------------------------------------
One-Year Total Return(6) +6.68% -5.99% -8.28% +4.33% -6.23%
INCEPTION
ADVISOR CLASS(7) 1-YEAR 5-YEAR (11/17/89)
- --------------------------------------------------------------------------------
Cumulative Total Return(1) -6.17% -9.31% +58.16%
Average Annual Total Return(2) -6.17% -1.94% +4.71%
Value of $10,000 Investment(3) $9,383 $9,069 $15,816
Distribution Rate(4) 2.56%
30-Day Standardized Yield(5) 4.07%
10/31/95 10/31/96 10/31/97 10/31/98 10/31/99
- --------------------------------------------------------------------------------
One-Year Total Return(6) +6.68% -5.99% -8.12% +4.89% -6.17%
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.
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 October 31, 1999.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended October 31, 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 -7.33% and -2.66%, 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
HARD CURRENCY FUND
AVERAGE ANNUAL TOTAL RETURN
10/31/99
Class A
- --------------------------------------------------------------------------------
1-Year -8.35%
5-Year -2.53%
Since Inception (11/17/89) +4.40%
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
The unmanaged J.P. Morgan 3 Month Global Cash Index, used below as a benchmark
comparison to the fund, differs from the fund in composition, does not pay
management fees or expenses and includes reinvested dividends. The unmanaged
index is designed to measure the performance of euro-currency deposits in 11
global markets. One cannot invest directly in an index, nor is an index
representative of the fund's portfolio. Total return represents the change in
value of a $10,000 investment over the periods shown. It includes the fund's
current, applicable, maximum sales charges, expenses, account fees, and
reinvested distributions.
The following line graph compares the performance of Franklin Templeton Hard
Currency Fund - Class A with that of the Salomon Brothers World Money Market
Index/J.P. Morgan 3 Month Global Cash Index and the J.P. Morgan 3 Month Global
Cash Index, based on a $10,000 investment from 11/17/89 to 10/31/99.
FRANKLIN SALOMON JP MORGAN
TEMPLETON BROTHERS 3 MONTH
HARD WORLD MONEY GLOBAL
CURRENCY MARKET CASH INDEX
FUND- INDEX/JP
CLASS A MORGAN 3
MONTH GLOBAL
CASH INDEX
-----------------------------------------
11/17/89 $9,773 $10,000 $10,000
11/30/1989 $10,000 $10,092 $10,111
12/31/1989 $10,516 $10,437 $10,520
01/31/1990 $10,647 $10,625 $10,671
02/28/1990 $10,554 $10,614 $10,692
03/31/1990 $10,495 $10,645 $10,794
04/30/1990 $10,641 $10,813 $10,968
05/31/1990 $10,763 $10,957 $11,104
06/30/1990 $10,974 $11,215 $11,416
07/31/1990 $11,555 $11,747 $11,961
08/31/1990 $11,730 $11,962 $12,147
09/30/1990 $11,975 $12,148 $12,324
10/31/1990 $12,552 $12,572 $12,744
11/30/1990 $12,630 $12,683 $12,851
12/31/1990 $12,639 $12,784 $12,953
01/31/1991 $12,957 $13,025 $13,248
02/28/1991 $12,733 $12,840 $13,118
03/31/1991 $11,650 $12,035 $12,271
04/30/1991 $11,816 $12,168 $12,368
05/31/1991 $11,629 $12,102 $12,321
06/30/1991 $11,342 $11,906 $12,073
07/31/1991 $11,744 $12,225 $12,472
08/31/1991 $11,844 $12,318 $12,591
09/30/1991 $12,435 $12,846 $13,152
10/31/1991 $12,474 $12,914 $13,208
11/30/1991 $12,857 $13,201 $13,525
12/31/1991 $13,685 $13,862 $14,237
01/31/1992 $13,014 $13,474 $13,808
02/29/1992 $12,762 $13,307 $13,716
03/31/1992 $12,726 $13,301 $13,747
04/30/1992 $12,808 $13,403 $13,856
05/31/1992 $13,371 $13,797 $14,256
06/30/1992 $14,046 $14,374 $14,855
07/31/1992 $14,365 $14,739 $15,226
08/31/1992 $15,021 $15,336 $15,814
09/30/1992 $15,288 $15,129 $15,305
10/31/1992 $14,409 $14,331 $14,573
11/30/1992 $14,123 $14,043 $14,033
12/31/1992 $13,992 $13,991 $13,982
01/31/1993 $14,118 $14,061 $14,053
02/28/1993 $14,283 $14,026 $13,904
03/31/1993 $14,651 $14,420 $14,299
04/30/1993 $14,999 $14,779 $14,694
05/31/1993 $15,062 $14,929 $14,722
06/30/1993 $14,607 $14,388 $14,176
07/31/1993 $14,641 $14,329 $13,865
08/31/1993 $14,665 $14,579 $14,116
09/30/1993 $14,760 $14,826 $14,327
10/31/1993 $14,564 $14,641 $14,216
11/30/1993 $14,500 $14,543 $14,066
12/31/1993 $14,643 $14,560 $14,139
01/31/1994 $15,023 $14,681 $14,373
02/28/1994 $15,322 $14,929 $14,575
03/31/1994 $15,317 $15,110 $14,828
04/30/1994 $15,541 $15,273 $15,048
05/31/1994 $15,621 $15,322 $15,147
06/30/1994 $16,183 $15,820 $15,541
07/31/1994 $16,162 $15,850 $15,609
08/31/1994 $16,274 $15,986 $15,751
09/30/1994 $16,655 $16,351 $16,085
10/31/1994 $17,056 $16,730 $16,499
11/30/1994 $16,658 $16,272 $16,098
12/31/1994 $16,854 $16,387 $16,231
01/31/1995 $17,065 $16,663 $16,447
02/28/1995 $17,545 $17,049 $16,733
03/31/1995 $18,821 $18,113 $17,461
04/30/1995 $18,873 $18,166 $17,596
05/31/1995 $18,683 $18,011 $17,560
06/30/1995 $18,944 $18,260 $17,803
07/31/1995 $18,783 $18,329 $18,081
08/31/1995 $17,660 $17,636 $17,493
09/30/1995 $18,082 $18,046 $17,911
10/31/1995 $18,198 $18,107 $18,108
11/30/1995 $17,853 $17,875 $17,967
12/31/1995 $17,969 $18,057 $18,145
01/31/1996 $17,420 $17,583 $17,760
02/29/1996 $17,678 $17,815 $18,094
03/31/1996 $17,593 $17,843 $18,161
04/30/1996 $17,189 $17,579 $17,963
05/31/1996 $17,083 $17,623 $18,072
06/30/1996 $17,131 $17,685 $18,179
07/31/1996 $17,686 $18,106 $18,532
08/31/1996 $17,621 $18,100 $18,613
09/30/1996 $17,145 $17,818 $18,409
10/31/1996 $17,107 $18,003 $18,620
11/30/1996 $16,887 $17,915 $18,589
12/31/1996 $16,708 $17,856 $18,553
01/31/1997 $15,842 $17,179 $17,765
02/28/1997 $15,551 $16,971 $17,484
03/31/1997 $15,645 $17,083 $17,622
04/30/1997 $15,263 $16,745 $17,242
05/31/1997 $15,836 $17,202 $17,561
06/30/1997 $15,628 $17,132 $17,474
07/31/1997 $14,965 $16,659 $16,928
08/31/1997 $15,086 $16,812 $17,129
09/30/1997 $15,342 $17,025 $17,398
10/31/1997 $15,691 $17,386 $17,713
11/30/1997 $15,245 $17,096 $17,367
12/31/1997 $14,966 $16,877 $17,086
01/31/1998 $15,008 $16,849 $17,026
02/28/1998 $15,156 $16,978 $17,198
03/31/1998 $14,609 $16,764 $17,012
04/30/1998 $14,819 $17,048 $17,370
05/31/1998 $14,733 $16,983 $17,305
06/30/1998 $14,524 $16,930 $17,231
07/31/1998 $14,547 $16,940 $17,298
08/31/1998 $14,853 $17,134 $17,338
09/30/1998 $15,517 $17,805 $18,115
10/31/1998 $16,386 $18,284 $18,535
11/30/1998 $15,805 $18,014 $18,281
12/31/1998 $16,440 $18,415 $18,585
01/31/1999 $15,966 $18,205 $18,373
02/28/1999 $15,554 $17,776 $17,939
03/31/1999 $15,395 $17,705 $17,867
04/30/1999 $15,156 $17,643 $17,805
05/31/1999 $15,013 $17,456 $17,616
06/30/1999 $14,837 $17,419 $17,579
07/31/1999 $15,366 $17,936 $18,101
08/31/1999 $15,254 $17,881 $18,045
09/30/1999 $15,447 $18,131 $18,298
10/31/1999 $15,356 $18,040 $18,206
Past performance is not predictive of future results.
ADVISOR CLASS (11/17/89-10/31/99)
The following line graph compares the performance of Franklin Templeton Hard
Currency Fund - Advisor Class with that of the Salomon Brothers World Money
Market Index/J.P. Morgan 3 Month Global Cash Index and the J.P. Morgan 3 Month
Global Cash Index, based on a $10,000 investment from 11/17/89 to 10/31/99.
FRANKLIN SALOMON JP MORGAN
TEMPLETON BROTHERS 3 MONTH
HARD WORLD GLOBAL CASH
CURRENCY MONEY INDEX
FUND- MARKET
ADVISOR INDEX/JP
MORGAN 3
MONTH
GLOBAL CASH
INDEX
- -------------------------------------------------
$10,000 $10,000 $10,000
$10,232 $10,092 $10,111
$10,760 $10,437 $10,520
$10,894 $10,625 $10,671
$10,799 $10,614 $10,692
$10,738 $10,645 $10,794
$10,888 $10,813 $10,968
$11,013 $10,957 $11,104
$11,229 $11,215 $11,416
$11,823 $11,747 $11,961
$12,002 $11,962 $12,147
$12,252 $12,148 $12,324
$12,843 $12,572 $12,744
$12,923 $12,683 $12,851
$12,932 $12,784 $12,953
$13,257 $13,025 $13,248
$13,028 $12,840 $13,118
$11,920 $12,035 $12,271
$12,090 $12,168 $12,368
$11,899 $12,102 $12,321
$11,605 $11,906 $12,073
$12,017 $12,225 $12,472
$12,119 $12,318 $12,591
$12,723 $12,846 $13,152
$12,764 $12,914 $13,208
$13,155 $13,201 $13,525
$14,003 $13,862 $14,237
$13,316 $13,474 $13,808
$13,058 $13,307 $13,716
$13,021 $13,301 $13,747
$13,105 $13,403 $13,856
$13,681 $13,797 $14,256
$14,372 $14,374 $14,855
$14,698 $14,739 $15,226
$15,370 $15,336 $15,814
$15,643 $15,129 $15,305
$14,743 $14,331 $14,573
$14,451 $14,043 $14,033
$14,317 $13,991 $13,982
$14,446 $14,061 $14,053
$14,614 $14,026 $13,904
$14,991 $14,420 $14,299
$15,347 $14,779 $14,694
$15,411 $14,929 $14,722
$14,946 $14,388 $14,176
$14,981 $14,329 $13,865
$15,006 $14,579 $14,116
$15,103 $14,826 $14,327
$14,901 $14,641 $14,216
$14,836 $14,543 $14,066
$14,982 $14,560 $14,139
$15,372 $14,681 $14,373
$15,678 $14,929 $14,575
$15,672 $15,110 $14,828
$15,902 $15,273 $15,048
$15,983 $15,322 $15,147
$16,559 $15,820 $15,541
$16,537 $15,850 $15,609
$16,652 $15,986 $15,751
$17,041 $16,351 $16,085
$17,451 $16,730 $16,499
$17,045 $16,272 $16,098
$17,245 $16,387 $16,231
$17,461 $16,663 $16,447
$17,952 $17,049 $16,733
$19,258 $18,113 $17,461
$19,310 $18,166 $17,596
$19,116 $18,011 $17,560
$19,384 $18,260 $17,803
$19,219 $18,329 $18,081
$18,070 $17,636 $17,493
$18,502 $18,046 $17,911
$18,620 $18,107 $18,108
$18,267 $17,875 $17,967
$18,386 $18,057 $18,145
$17,824 $17,583 $17,760
$18,088 $17,815 $18,094
$18,001 $17,843 $18,161
$17,588 $17,579 $17,963
$17,479 $17,623 $18,072
$17,528 $17,685 $18,179
$18,097 $18,106 $18,532
$18,030 $18,100 $18,613
$17,543 $17,818 $18,409
$17,504 $18,003 $18,620
$17,279 $17,915 $18,589
$17,095 $17,856 $18,553
$16,242 $17,179 $17,765
$15,932 $16,971 $17,484
$16,046 $17,083 $17,622
$15,642 $16,745 $17,242
$16,232 $17,202 $17,561
$16,037 $17,132 $17,474
$15,344 $16,659 $16,928
$15,470 $16,812 $17,129
$15,735 $17,025 $17,398
$16,095 $17,386 $17,713
$15,639 $17,096 $17,367
$15,356 $16,877 $17,086
$15,402 $16,849 $17,026
$15,556 $16,978 $17,198
$14,998 $16,764 $17,012
$15,232 $17,048 $17,370
$15,131 $16,983 $17,305
$14,534 $16,930 $17,231
$14,944 $16,940 $17,298
$15,275 $17,134 $17,338
$15,987 $17,805 $18,115
$16,879 $18,284 $18,535
$16,304 $18,014 $18,281
$16,964 $18,415 $18,585
$16,475 $18,205 $18,373
$16,052 $17,776 $17,939
$15,872 $17,705 $17,867
$15,642 $17,643 $17,805
$15,495 $17,456 $17,616
$15,292 $17,419 $17,579
$15,836 $17,936 $18,101
$15,721 $17,881 $18,045
$15,939 $18,131 $18,298
$15,816 $18,040 $18,206
AVERAGE ANNUAL TOTAL RETURN
10/31/99
ADVISOR CLASS**
- --------------------------------------------------------------------------------
1-Year -6.17%
5-Year -1.94%
Since Inception (11/17/89) +4.71%
*Since the Salomon Brothers World Money Market Index ceased to exist on December
31, 1998, we created the Salomon Brothers World Money Market Index/J.P. Morgan 3
Month Global Cash Index. This combined index utilizes the Salomon Brothers World
Money Market Index from November 17, 1989, to December 31, 1998, along with the
J.P. Morgan 3 Month Global Cash Index from January 1, 1999, through October 31,
1999. In the future, we will no longer use the Salomon Brothers World Money
Market Index, but intend to use the J.P. Morgan 3 Month Global Cash Index for
comparison to the fund's performance. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
**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 to Advisor Class
shares.
Past performance is not predictive of future results.
Franklin Templeton Global Trust
Financial Highlights
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------------------------------------------
1999(a) 1998 1997 1996 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year ............ $12.06 $12.10 $12.80 $13.67 $14.14
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income ........................ .41 .50 .49 .69 1.29
Net realized and unrealized losses ........... (.39) (.07) (.68) (.54) (.49)
-------------------------------------------------------------------------------
Total from investment operations .............. .02 .43 (.19) .15 .80
-------------------------------------------------------------------------------
Less distributions from:
Net investment income ........................ (.16) (.28) -- (.71) (1.27)
Tax return of capital ........................ (.20) (.19) (.51) (.31) --
-------------------------------------------------------------------------------
Total distributions ........................... (.36) (.47) (.51) (1.02) (1.27)
-------------------------------------------------------------------------------
Net asset value, end of year .................. $11.72 $12.06 $12.10 $12.80 $13.67
===============================================================================
Total Return* ................................. .18% 3.71% (1.46)% 1.27% 6.05%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............... $27,173 $33,703 $41,795 $50,773 $59,942
Ratios to average net assets:
Expenses ..................................... 1.13% 1.19% 1.10% .99% .99%
Net investment income ........................ 3.44% 4.08% 4.01% 4.30% 5.29%
Portfolio turnover rate ....................... .00% .00% .00% .00% 46.05%
</TABLE>
*Total return does not reflect sales commissions.
(a) Based on average weighted shares outstanding.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND AMOUNT* VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN GOVERNMENT SECURITIES - FLOATING RATE TRUST (COST $2,728,124) (CONT.)
Government of Spain, FRN, 2.653%, 6/29/02 ........................................ 2,121,861 EUR $ 2,230,070
-----------
SHORT TERM INVESTMENTS 89.1%
CORPORATE BOND - FLOATING RATE NOTE (COST $1,050,922) 3.9%
Deutsche Telekom International Finance NV, FRN, 3.491%, 11/02/00 ................. 1,000,000 EUR 1,050,524
GOVERNMENT SECURITIES 19.2%
Australia Treasury Bill, 4.72%, 11/25/99 ......................................... 3,425,000 AUD 2,174,298
German Treasury Bill, 3.04%, 4/14/00 ............................................. 1,000,000 EUR 1,036,177
New Zealand Treasury Bill, 5.00%, 3/22/00 ........................................ 4,040,000 NZD 2,000,775
-----------
TOTAL GOVERNMENT SECURITIES (COST $5,319,290) 5,211,250
-----------
U.S. GOVERNMENT AGENCIES 66.0%
Fannie Mae, 5.545%, 1/20/00 ...................................................... 4,656,000 4,602,717
Federal Farm Credit Banks, 5.30% to 5.625% with maturities to 2/01/00 ............ 2,600,000 2,598,310
Federal Home Loan Bank, 4.85% to 5.75% with maturities to 8/09/00 ................ 3,000,000 2,994,637
Federal Home Loan Mortgage Corp., 5.20% to 5.64% with maturities to 4/03/00 ...... 6,503,000 6,447,457
Sallie Mae, FRN, 5.796%, 4/20/00 ................................................. 1,300,000 1,300,104
-----------
TOTAL U.S. GOVERNMENT AGENCIES (COST $17,941,153) ................................ 17,943,225
-----------
TOTAL SHORT TERM INVESTMENTS ..................................................... 24,204,999
-----------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $27,039,489) ................ 26,435,069
-----------
(a)REPURCHASE AGREEMENTS 8.5%
Deutsche Morgan Grenfell, 5.23%, 11/01/99 (Maturity Value $1,169,509)
Collateralized by U.S. Treasury Notes and Bonds ................................. 1,169,000 1,169,000
Paine Webber Group Inc., 5.22%, 11/01/99 (Maturity Value $1,150,500)
Collateralized by U.S. Treasury Notes and Bonds ................................. 1,150,000 1,150,000
-----------
TOTAL REPURCHASE AGREEMENTS (COST $2,319,000) .................................... 2,319,000
-----------
TOTAL INVESTMENTS (COST $29,358,489) 105.8% ...................................... 28,754,069
NET EQUITY IN FORWARD CONTRACTS (.6%) ............................................ (176,555)
OTHER ASSETS, LESS LIABILITIES (5.2%) ............................................ (1,404,856)
-----------
TOTAL NET ASSETS 100.0% .......................................................... $27,172,658
===========
</TABLE>
CURRENCY ABBREVIATIONS:
AUD - Australian Dollar
EUR - European Unit
NZD - New Zealand Dollar
*Securities denominated in U.S. dollars unless otherwise indicated.
(a) At October 31, 1999, all repurchase agreements held by the fund had been
entered into on the last business day of the month.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
FRANKLIN TEMPLETON HARD CURRENCY FUND
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------
1999(a) 1998(a) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 10.39 $ 10.28 $ 11.64 $ 13.09 $ 13.95
-------------------------------------------------------------------
Income from investment operations:
Net investment income ...................... .30 .30 .37 .57 1.84
Net realized and unrealized gains (losses) . (.95) .12 (1.33) (1.34) (1.02)
-------------------------------------------------------------------
Total from investment operations ............ (.65) .42 (.96) (.77) .82
-------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ...................... -- (.25) -- (.06) (1.68)
Tax return of capital ...................... (.22) (.06) (.40) (.62) --
-------------------------------------------------------------------
Total distributions ......................... (.22) (.31) (.40) (.68) (1.68)
-------------------------------------------------------------------
Net asset value, end of year ................ $ 9.52 $ 10.39 $ 10.28 $ 11.64 $ 13.09
===================================================================
Total Return* ............................... (6.23%) 4.33% (8.28)% (5.99)% 6.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $56,381 $68,902 $91,976 $124,666 $132,089
Ratios to average net assets:
Expenses ................................... 1.09% 1.35% 1.13% 1.10% 1.15%
Net investment income ...................... 3.08% 3.07% 3.53% 4.50% 4.68%
Portfolio turnover rate ..................... .00% 96.41% 2.68% .00% 15.72%
</TABLE>
* Total return does not reflect sales commissions.
(a) Based on average weighted shares outstanding.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights (continued)
FRANKLIN TEMPLETON HARD CURRENCY FUND (CONT.)
<TABLE>
<CAPTION>
ADVISOR CLASS
YEAR ENDED OCTOBER 31,
1999(a) 1998 1997+
-------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of year .......... $10.41 $10.28 $11.28
-------------------------------------
Income from investment operations:
Net investment income ...................... .35 .33 .34
Net realized and unrealized gains (losses) . (.99) .14 (1.00)
-------------------------------------
Total from investment operations ............ (.64) .47 (.66)
-------------------------------------
Less distributions from:
Net investment income ...................... -- (.28) --
Tax return of capital ...................... (.24) (.06) (.34)
-------------------------------------
Total distributions ......................... (.24) (.34) (.34)
-------------------------------------
Net asset value, end of year ................ $ 9.53 $10.41 $10.28
=====================================
Total Return* ............................... (6.17%) 4.89% (5.84)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $3,827 $3,343 $ 249
Ratios to average net assets:
Expenses ................................... .99% 1.01% .94%**
Net investment income ...................... 3.54% 3.29% 3.67%**
Portfolio turnover rate ..................... .00% 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, OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON HARD CURRENCY FUND AMOUNT* VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENTS 102.3%
CORPORATE BOND-FLOATING RATE NOTE (COST $3,152,765) 5.2%
Deutsche Telekom International Finance NV, FRN, 3.491%, 11/02/00 .............. 3,000,000 EUR $ 3,151,572
------------
GOVERNMENT SECURITIES 6.0%
German Treasury Bill, 3.04%, 4/14/00 .......................................... 1,000,000 EUR 1,036,177
New Zealand Treasury Bill, 5.00%, 3/22/00 ..................................... 5,250,000 NZD 2,600,017
------------
TOTAL GOVERNMENT SECURITIES (COST $3,692,353) ................................. 3,636,194
------------
U.S. GOVERNMENT AGENCIES 91.1%
Fannie Mae, 5.545%, 1/20/00 ................................................... 14,654,000 14,486,300
Federal Farm Credit Banks, 5.30% to 5.625%, with maturities to 2/01/00 ........ 5,700,000 5,696,400
Federal Home Loan Bank, 5.12% to 5.75%, with maturities to 8/09/00 ............ 19,100,000 19,050,307
Federal Home Loan Mortgage Corp., 5.20% to 5.50%, with maturities to 1/27/00 .. 12,500,000 12,404,270
Sallie Mae, FRN, 5.796%, 4/20/00 .............................................. 3,200,000 3,200,256
------------
TOTAL U.S. GOVERNMENT AGENCIES (COST $54,832,554) ............................. 54,837,533
------------
TOTAL SHORT TERM INVESTMENTS (COST $61,677,672) ............................... 61,625,299
------------
(a)REPURCHASE AGREEMENTS 10.0%
Deutsche Bank Securities, 5.23%, 11/01/99, (Maturity Value $3,004,309)
Collateralized by U.S. Treasury Notes and Bonds .............................. 3,003,000 3,003,000
Paine Webber Inc., 5.22%, 11/01/99, (Maturity Value $3,001,305)
Collateralized by U.S. Treasury Notes and Bonds .............................. 3,000,000 3,000,000
------------
TOTAL REPURCHASE AGREEMENTS (COST $6,003,000) ................................. 6,003,000
------------
TOTAL INVESTMENTS (COST $67,680,672) 112.3% ................................... 67,628,299
NET EQUITY IN FORWARD CONTRACTS (1.1%) ........................................ (688,550)
OTHER ASSETS, LESS LIABILITIES (11.2%) ........................................ (6,732,109)
------------
TOTAL NET ASSETS 100.0% ....................................................... $60,207,640
============
</TABLE>
CURRENCY ABBREVIATIONS:
EUR - European Unit
NZD - New Zealand Dollar
*Securities denominated in U.S. dollars unless otherwise indicated.
(a) At October 31, 1999, all repurchase agreements held by the fund had been
entered into on the last business day of the month.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON GLOBAL TEMPLETON HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Assets:
Investments in securities:
Cost ................................................ $27,039,489 $61,677,672
--------------------------------
Value ............................................... 26,435,069 61,625,299
Repurchase agreement, at value and cost .............. 2,319,000 6,003,000
Cash ................................................. 845 87
Receivables:
Investment securities sold .......................... 1,046,909 3,140,727
Beneficial shares sold .............................. 10,000 --
Interest ............................................ 69,860 129,955
Unrealized gain on forward exchange contracts (Note 6) 17,387 252,466
--------------------------------
Total assets .................................... 29,899,070 71,151,534
--------------------------------
Liabilities:
Payables:
Investment securities purchased ..................... 2,350,921 6,352,765
Beneficial shares redeemed .......................... 107,436 3,449,735
To affiliates ....................................... 36,609 82,421
To shareholders ..................................... 3,298 36,313
Unrealized loss on forward exchange contracts (Note 6) 193,942 941,016
Accrued expenses ..................................... 34,206 81,644
--------------------------------
Total liabilities ............................... 2,726,412 10,943,894
--------------------------------
Net assets, at value .................................. $27,172,658 $60,207,640
--------------------------------
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENT OF ASSETS AND LIABILITIES (cont.)
OCTOBER 31, 1999
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON GLOBAL TEMPLETON HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Net assets consist of:
Undistributed net investment income ......................................... $ 156,654 $ 565,457
Net unrealized depreciation ................................................. (781,022) (740,923)
Accumulated net realized loss ............................................... (345,400) (1,506,608)
Beneficial shares ........................................................... 28,142,426 61,889,714
----------------------------------
Net assets, at value .......................................................... $27,172,658 $60,207,640
----------------------------------
CLASS A:
Net asset value .............................................................. $27,172,658 $56,380,710
----------------------------------
Shares outstanding ........................................................... 2,319,228 5,920,839
----------------------------------
Net asset value per share .................................................... $11.72 $9.52
----------------------------------
Maximum offering price per share (Net asset value per share / 97.75%) ........ $11.99 $9.74
----------------------------------
ADVISOR CLASS:
Net asset value .............................................................. $ 3,826,930
------------
Shares outstanding ........................................................... 401,691
------------
Net asset value and maximum offering price per share ......................... $9.53
------------
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON GLOBAL TEMPLETON HARD
CURRENCY FUND CURRENCY FUND
-------------------------------------
<S> <C> <C>
Interest Income ......................................................... $ 1,388,380 $ 2,551,474
-------------------------------------
Expenses:
Management fees (Note 3) ............................................... 197,480 396,694
Distribution fees - Class A (Note 3) ................................... 57,912 57,315
Transfer agent fees (Note 3) ........................................... 39,700 109,500
Custodian fees ......................................................... 3,800 700
Reports to shareholders ................................................ 12,400 35,900
Registration and filing fees ........................................... 11,800 26,300
Professional fees ...................................................... 13,200 20,800
Trustees' fees and expenses ............................................ 7,100 14,500
Other .................................................................. 226 309
------------------------------------
Total expenses .................................................... 343,618 662,018
------------------------------------
Net investment income ............................................ 1,044,762 1,889,456
------------------------------------
Realized and unrealized gains (losses):
Net realized loss from:
Investments ........................................................... (352,659) (3,603,355)
Foreign currency transactions ......................................... (275,858) (2,287,870)
------------------------------------
Net realized loss .................................................... (628,517) (5,891,225)
Net unrealized appreciation (depreciation) on:
Investments ........................................................... (374,909) 635,933
Translation of assets and liabilities denominated in foreign
currencies........................................................... (43,624) (1,035,968)
------------------------------------
Net unrealized depreciation .......................................... (418,533) (400,035)
------------------------------------
Net realized and unrealized loss ........................................ (1,047,050) (6,291,260)
------------------------------------
Net decrease in net assets resulting from operations .................... $ (2,288) $(4,401,804)
====================================
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND HARD CURRENCY FUND
----------------------------------------------------------------------
1999 1998 1999 1998
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ........................ $ 1,044,762 $ 1,477,138 $ 1,889,456 $ 2,269,930
Net realized gain (loss) from investments and
foreign currency transactions ............... (628,517) (742,669) (5,891,225) 244,414
Net unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign
currencies .................................. (418,533) 407,541 (400,035) (959,090)
----------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations ............... (2,288) 1,142,010 (4,401,804) 1,555,254
Distributions to shareholders from:
Net investment income:
Class A ...................................... (401,698) (863,306) -- (1,877,762)
Advisor Class ................................ -- -- -- (57,064)
Tax return of capital:
Class A ...................................... (512,429) (572,882) (1,360,702) (422,559)
Advisor Class ................................ -- -- (33,846) (12,841)
Beneficial share transactions (Note 2):
Class A ...................................... (5,614,253) (7,797,014) (6,982,082) (22,281,132)
Advisor Class ................................ -- -- 740,853 3,115,985
----------------------------------------------------------------------
Net decrease in net assets ............... (6,530,668) (8,091,192) (12,037,581) (19,980,119)
Net assets:
Beginning of year ............................. 33,703,326 41,794,518 72,245,221 92,225,340
----------------------------------------------------------------------
End of year ................................... $ 27,172,658 $ 33,703,326 $ 60,207,640 $ 72,245,221
----------------------------------------------------------------------
Undistributed net investment income/
(Distributions in excess of net investment
income) included in net assets:
End of year .................................. $ 156,654 $ 137,692 $ 565,457 $ (347,314)
======================================================================
</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 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 (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. 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.
e. 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 Hard Currency Fund offers two classes of shares: Class A and Advisor Class
shares. Effective January 1, 1999, Class I shares 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.
At October 31, 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>
Year ended October 31, 1999
Shares sold .................................. 306,502 $ 3,656,450 3,830,083 $ 37,015,865
Shares issued on reinvestment of distributions 69,321 815,970 114,866 1,109,814
Shares redeemed .............................. (851,652) (10,086,673) (4,653,269) (45,107,761)
------------------------------------------------------------------
Net decrease ................................. (475,829) $ (5,614,253) (708,320) $ (6,982,082)
------------------------------------------------------------------
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (continued)
2. BENEFICIAL SHARES (CONT.)
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND HARD CURRENCY FUND
CLASS A SHARES: (cont.) SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------
<S> <C> <C> <C> <C>
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:
Year ended October 31, 1999
Shares sold ........................................ 1,079,073 $ 10,696,244
Shares issued on reinvestment of distributions ..... 3,351 31,952
Shares redeemed .................................... (1,001,828) (9,987,343)
-------------------------------
Net increase. ...................................... 80,596 $ 740,853
===============================
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.
The Global Currency Fund reimburses Distributors up to 0.45% per year of the
Funds average daily net assets for costs incurred in marketing the Funds 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 year ended October 31, 1999 as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Total commissions received ........... $ 5,465 $32,175
Paid to other dealers ................ $ 4,795 $36,088
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (continued)
4. 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.
At October 31, 1999, 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 $ 184,573
2002 ................................ -- 271
2003 ................................ 173,253 112,254
2004 ................................ 77,143 1,047,201
2005 ................................ 54,060 162,309
2006 ................................ 1,347 --
2007 ................................ 4,415 --
-----------------------------
$ 345,400 $1,506,608
=============================
</TABLE>
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At October 31, 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 ............ $ 7,981 $ 21,230
Unrealized depreciation ............ (612,401) (73,603)
-------------------------------
Net unrealized depreciation ........ $(604,420) $(52,373)
===============================
</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, 1999 were as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Purchases .................. $1,026,857 $ --
Sales ...................... $ -- $3,329,176
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (continued)
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 October 31, 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> <C>
CONTRACTS TO BUY:
286,295,000 Japanese Yen .......................................... U.S. $2,729,999 11/08/99 U.S. $ 17,387
========== --------
Unrealized gain on forward exchange contracts 17,387
--------
CONTRACTS TO BUY:
4,200,000 Danish Krone .......................................... $ 605,973 11/08/99 (11,705)
1,900,000 European Unit ......................................... 2,035,869 11/08/99 (37,475)
12,000,000 Swedish Krona ......................................... 1,466,993 11/22/99 (8,196)
500,000 British Pound Sterling ................................ 829,195 11/26/99 (8,718)
4,130,000 European Unit ......................................... 4,471,035 11/26/99 (121,667)
500,000 New Zealand Dollar .................................... 259,475 11/29/99 (6,181)
--------------- --------------
U.S. $9,668,540 (193,942)
========== --------------
Unrealized loss on forward exchange contracts ......... (193,942)
--------------
Net unrealized loss on forward exchange
contracts ......................................... U.S.$(176,555)
==========
</TABLE>
As of October 31, 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> <C>
CONTRACTS TO BUY:
942,000,000 Japanese Yen .................................. U.S. $ 8,845,070 11/08/99 U.S. $194,687
917,088,000 Japanese Yen .................................. 8,744,999 11/08/99 55,695
----------- ------
U.S. $17,590,069 250,382
=========== -------
Net unrealized gain on offsetting forward
contracts ................................... 2,084
-----
Unrealized gain on forward exchange
contracts .................................. 252,466
-------
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (continued)
6. OFF-BALANCE SHEET RISK (cont.)
<TABLE>
<CAPTION>
IN SETTLEMENT UNREALIZED
EXCHANGE FOR DATE GAIN/(LOSS)
------------ ---- -----------
<S> <C> <C> <C> <C>
CONTRACTS TO BUY:
5,814,000 Swiss Franc ..................................... $ 3,916,312 11/08/99 $ (96,162)
4,260,000 European Unit ................................... 4,564,633 11/08/99 (84,022)
10,500,000 Swiss Franc ..................................... 7,142,857 11/18/99 (235,689)
7,810,000 European Unit ................................... 8,454,911 11/26/99 (230,078)
9,400,000 New Zealand Dollar .............................. 4,878,130 11/29/99 (116,210)
16,016,000 Swiss Franc ..................................... 10,604,305 11/30/99 (53,678)
----------- ----------
U.S. $39,561,148 (815,839)
=========== ----------
Net unrealized loss on offsetting forward
contracts ..................................... (125,177)
---------
Unrealized loss on forward exchange
contracts .................................... (941,016)
---------
Net unrealized loss on forward exchange
contracts .................................. U.S.$(688,550)
==========
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Independent Auditors' Report
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF FRANKLIN TEMPLETON GLOBAL TRUST
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the funds constituting the
Franklin Templeton Global Trust (hereafter referred to as the "Funds") at
October 31, 1999, the results of each of their operations for the year then
ended, the changes in each of their net assets for the two years in the period
then ended and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1999 by
correspondence with custodians and brokers, provide a reasonable basis for our
opinion expressed above.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
November 23, 1999
