SHAREHOLDER LETTER
Dear Shareholder:
This semiannual report of Franklin Templeton Global Trust covers the six months
ended April 30, 2000. The Trust consists of Franklin Templeton Global Currency
Fund and Franklin Templeton Hard Currency Fund.
During the reporting period, many European economies improved, Japan enjoyed
better-than-expected economic growth, and the U.S. economy roared ahead at a
blistering pace. In this environment, global commodity prices rose,
manufacturers' capacity utilization rates increased and unemployment rates fell.
Realizing that such strong economic growth could lead to a tighter monetary
stance by central banks, many currency investors began to believe that the
industrial economies had reached the bottom of their interest-rate cycles, and
that rates would soon start ratcheting upward.
In the U.S., the Federal Reserve Board (the Fed), concerned about rising energy
prices, a tight labor market and the "wealth effect" of a seemingly
out-of-control stock market, attempted to head off possible future inflation by
raising the federal funds target rate three different times. Mounting
interest-rate differentials between the U.S. and other economies with lower
rates favored the U.S. dollar over other major currencies, and it remained the
currency of choice for most investors throughout the reporting period.
CONTENTS
Shareholder Letter ............... 1
Fund Reports
Franklin Templeton
Global Currency Fund ............. 4
Franklin Templeton
Hard Currency Fund ............... 10
Financial Highlights &
Statement of Investments ......... 16
Financial Statements ............. 21
Notes to
Financial Statements ............. 25
[FUND CATEGORY PYRAMID GRAPHIC]
Although 10-year Treasury note yields rose from 6.02% at the beginning of the
period to 6.21% on April 30, 2000, the announcement by the Treasury that it
would buy back 30-year Treasury bonds, limited the upward move in Treasury
rates. This, combined with a severe March/April correction in U.S. equity
markets, added to volatility in the foreign-exchange markets and weakened the
dollar slightly toward the end of the period.
Despite these developments, the U.S. dollar strengthened considerably against
most major currencies during the period. It rose 6.03% with respect to the
British pound, 15.68% compared to the euro, and 3.92% versus the Japanese yen,
despite the Bank of Japan's reluctance to ease monetary policy amid expectations
of an economic recovery in Japan. Canadian, Australian and New Zealand dollars
weakened, 0.62%, 8.62% and 4.60%, respectively, versus the U.S. dollar during
the period. Among the major emerging market currencies, the Mexican peso rose
only 2.18% while the Brazilian real climbed 7.86%, and the Korean won
appreciated 8.09%.
Since the Franklin Templeton Global Trust generally provides strong total
returns during periods of U.S. dollar weakness, while giving back some of those
gains in periods of dollar strength, its rather weak performance during the
reporting period is not surprising. Although no one can predict the future, we
believe the Franklin Templeton Global Currency Fund and Franklin Templeton Hard
Currency Fund still offer investors a solid opportunity to protect against
future dollar declines through the diversification afforded by foreign money
markets.
We thank you for investing with us and, as always, welcome your comments or
questions.
/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.
--------------------------------------------------------------------------------
As you may know, most of the total return of Franklin Templeton Global Currency
Fund is derived from interest paid by portfolio securities, and from changes in
the U.S. dollar's value relative to the currencies of countries where the fund
invests. Because a majority of the fund is invested in foreign currencies, it
tends to perform better during periods of U.S. dollar weakness.
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the fund's Statement of Investments (SOI), which is a complete
listing of the fund's portfolio holdings, including dollar value and number of
shares or principal amount. The SOI begins on page 17.
During the six months under review, the U.S. dollar strengthened against the
euro and British pound, while falling in value versus the yen as well as the
Canadian dollar. Within this environment, Franklin Templeton Global Currency
Fund - Class A posted a -6.28% six-month cumulative total return, as shown in
the Performance Summary on page 8. The fund's benchmark, the J.P. Morgan 3 Month
Global Cash Index, returned -7.54% during the same period.(1)
At the beginning of the period, the fund's exposure to Europe stood at 50.5% of
total net assets, and to Japan, 10.1%. Our U.S. exposure was 23.1%, and our
allocations to Australia, New Zealand and Canada were 8.0%, 8.3% and 0.0%,
respectively. During the six months under review, we slightly decreased our
exposure to the U.S. dollar and substantially lowered our allocation to the
euro. We reinvested the proceeds in dollar-bloc countries such as Australia and
New Zealand. At the period's end, our U.S. exposure was 10.8%, and our
allocations to Australia, New Zealand and Canada were 10.1%, 12.5% and 6.9%,
respectively.
Looking forward, we are optimistic about the long-term prospects for Franklin
Templeton Global Currency Fund. Because the U.S. economy is stronger than most
foreign economies, we expect the U.S. dollar to remain strong in the short term.
However, we believe that factors that have caused the dollar to weaken in the
past will re-emerge at some point in the economic cycle. We will continue to
monitor economic conditions and look for opportunities to add currencies that
offer our shareholders long-term value.
1. 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.
ASSET ALLOCATION BY CURRENCY
Franklin Templeton Global Currency Fund
Based on Total Net Assets
4/30/00
[PIE CHART GRAPHIC]
European Monetary
Unit (Euro) ...... 39.7%
New Zealand
Dollar ........... 12.5%
U.S. Dollar ...... 10.8%
Australian
Dollar........... 10.1%
British Pound .... 7.9%
Swedish Krona .... 7.0%
Canadian Dollar .. 6.9%
Japanese Yen ..... 5.1%
Of course, 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.
Please note that although the fund's Statement of Investments on page 17 of this
report indicates the fund held 59.6% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 2000, its net exposure to the U.S.
dollar as of that date was only 10.8%. The difference is explained by the fund's
holdings of forward currency exchange contracts (please see Note 2 in the Notes
to Financial Statements on page 26 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 an appropriate strategy when the money market in a
particular foreign currency is small or relatively illiquid.
FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND
CLASS A: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 would have been lower.
During the six months ended April 30, 2000, the fund recognized net foreign
currency losses due to fluctuations in the value of its foreign
currency-denominated securities and foreign currency holdings. Under the
Internal Revenue Code, these losses reduce the fund's investment income
available for distribution to shareholders, which may cause all or a portion of
the total distributions to be characterized as a return of capital at the fund's
year-end. In general, return-of-capital distributions are not taxable. Instead,
they reduce the cost basis of your fund shares, and affect the computation of a
gain or loss when you sell your shares.
SIX-MONTH PERFORMANCE SUMMARY
AS OF 4/30/00
Six-month total return does not include the sales charge. 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.
CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
Six-Month Total Return -6.28%
Net Asset Value (NAV) $10.80 (4/30/00) $11.72 (10/31/99)
Change in NAV -$0.92
Distributions (11/1/99-4/30/00) Dividend Income $0.19
</TABLE>
Past performance does not guarantee future results
ADDITIONAL PERFORMANCE
AS OF 3/31/00
Inception
CLASS A 1-YEAR 5-YEAR 10-YEAR (6/27/86)
--------------------------------------------------------------------------------
Cumulative Total Return(1) -2.08% -0.67% +53.63% +114.36%
Average Annual Total Return(2) -4.27% -0.59% +4.15% +5.52%
Value of $10,000 Investment(3) $ 9,573 $9,708 $15,020 $20,950
AS OF 4/30/00
Share Class A
--------------------------------------------------------------------------------
Distribution Rate(4) 3.44%
30-Day Standardized Yield(5) 4.78%
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 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 April's dividend and the
maximum offering price per share on April 30, 2000.
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, 2000.
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.
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee 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 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.
--------------------------------------------------------------------------------
As you may know, most of the total return of Franklin Templeton Hard Currency
Fund is derived from interest paid by portfolio securities, and from changes in
the U.S. dollar's value relative to the currencies of countries where the fund
invests. Because the fund attempts to maintain almost 100% foreign currency
exposure, it tends to perform better during periods of U.S. dollar weakness.
All portfolio holdings mentioned in the report are listed by their complete
legal titles in the fund's Statement of Investments (SOI), which is a complete
listing of the fund's portfolio holdings, including dollar value and number of
shares or principal amount. The SOI begins on page 20.
During the six months under review, the U.S. dollar strengthened against the
euro and British pound, while falling in value versus the yen as well as the
Canadian dollar. Within this environment, Franklin Templeton Hard Currency Fund
- Class A posted a -8.67% six-month 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 -7.54% during the same period.(1)
At the beginning of the period, the fund had 35.1% of total net assets allocated
to the euro, 29.5% in the Swiss franc, 29.2% to the Japanese yen, 12.4% to the
New Zealand dollar and -6.2% in U.S. dollars (due to timing of cash in and out
of the fund). During the course of the six months, we changed the composition of
the portfolio slightly, adding a bit to our Swiss franc holdings as that
currency performed slightly better than the euro versus the dollar for the
period. By the end of year, the portfolio had 34.3% of total net assets in the
euro, 31.4% in the Swiss franc, 26.9% in the yen, 7.0% in the New Zealand dollar
and 0.4% in U.S. dollars.
Looking forward, we are optimistic about long-term prospects for Franklin
Templeton Hard Currency Fund. Because the U.S. economy is stronger than most
foreign economies, we expect the U.S. dollar to remain strong in the short term.
However, we believe that factors that have caused the dollar to weaken in the
past will re-emerge at some point in the economic cycle, and we will continue to
monitor economic conditions and look for opportunities to add currencies that
offer our shareholders long-term value.
1. 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.
ASSET ALLOCATION BY CURRENCY
Franklin Templeton Hard Currency Fund
Based on Total Net Assets
4/30/00
[PIE CHART]
European Monetary
Unit (Euro) 34.3%
Swiss Franc 31.4%
Japanese Yen 26.9%
New Zealand
Dollar 7.0%
U.S. Dollar 0.4%
Of course, 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.
Please note that although the fund's Statement of Investments on page 20 of this
report indicates the fund held 76.1% of its portfolio investments in U.S.
dollar-denominated assets as of April 30, 2000, its NET EXPOSURE to the U.S.
dollar on that date was only 0.4%. The difference is explained by the fund's
holdings of forward currency exchange contracts (please see Note 2 in the Notes
to Financial Statements on page 26 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 an appropriate strategy when the money market for a
particular foreign currency is small or relatively illiquid.
FRANKLIN TEMPLETON
HARD CURRENCY FUND
CLASS A: 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 six months ended April 30, 2000, the fund recognized net foreign
currency losses due to fluctuations in the value of its foreign
currency-denominated securities and foreign currency holdings. Under the
Internal Revenue Code, these losses reduce the fund's investment income
available for distribution to shareholders, which may cause all or a portion of
the total distributions to be characterized as a return of capital at the fund's
year-end. In general, return-of-capital distributions are not taxable. Instead,
they reduce the cost basis of your fund shares, and affect the computation of a
gain or loss when you sell your shares.
SIX-MONTH PERFORMANCE SUMMARY
AS OF 4/30/00
Six-month total return does not include sales charges. 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 operating expenses for
each class. Past distributions are not indicative of future trends. All total
returns include reinvested distributions at net asset value.
CLASS A
Six-Month Total Return -8.67%
Net Asset Value (NAV) $8.58 (4/30/00) $9.52 (10/31/99)
Change in NAV -$0.94
Distributions (11/1/99-4/30/00) Dividend Income $0.12
ADVISOR CLASS
Six-Month Total Return -8.58%
Net Asset Value (NAV) $8.59 (4/30/00) $9.53 (10/31/99)
Change in NAV -$0.94
Distributions (11/1/99-4/30/00) Dividend Income $0.1283
Past performance does not guarantee future results.
ADDITIONAL PERFORMANCE
AS OF 3/31/00
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (11/17/89)
------- ------ ------ ------- ----------
Cumulative Total Return(1) -4.80% -22.13% +39.66% +49.96%
Average Annual Total Return(2) -6.92% -5.31% +3.16% +3.76%
Value of $10,000 Investment(3) $9,308 $7,612 $13,652 $14,656
INCEPTION
ADVISOR CLASS(4) 1-YEAR 5-YEAR 10-YEAR (11/17/89)
-------------- ------ ------ ------- ----------
Cumulative Total Return(1) -4.63% -21.38% +41.00% +51.40%
Average Annual Total Return(2) -4.63% -4.70% +3.50% +4.08%
Value of $10,000 Investment(3) $9,537 $7,862 $14,100 $15,140
AS OF 4/30/00
SHARE CLASS A ADVISOR
----------- - -------
Distribution Rate(5) 2.73% 3.03%
30-Day Standardized Yield(6) 5.19% 5.59%
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee future results.
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. Effective January 1, 1997, the fund began offering Advisor Class shares,
which do not have sales charges nor Rule 12b-1 plans. Performance quotations for
this class reflect a "blended" figure combining the following methods of
calculation: (a) For periods prior to January 1, 1997, a restated figure is used
based upon the fund's Class A performance, excluding the effect of Class A's
maximum initial sales charge and including the effect of the Class A Rule 12b-1
fees; and (b) for periods after January 1, 1997, an actual Advisor Class figure
is used reflecting a deduction of all charges and fees applicable to that class.
This blended figure assumes reinvestment of dividends and capital gains at net
asset value. Since January 2, 1997 (commencement of sales), the cumulative and
average annual total returns of Advisor Class shares were -11.43% and -3.67%,
respectively.
5. Distribution rate is based on an annualization of the respective class's
April dividend and the maximum offering price (net asset value price for Advisor
Class) per share on April 30, 2000.
6. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 2000.
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.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 2000(a) ----------------------------------------------------------
(UNAUDITED) 1999(a) 1998 1997 1996 1995
----------- ------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of period $ 11.72 $ 12.06 $ 12.10 $ 12.80 $ 13.67 $ 14.14
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income .24 .41 .50 .49 .69 1.29
Net realized and unrealized losses (.97) (.39) (.07) (.68) (.54) (.49)
-------- -------- -------- -------- -------- --------
Total from investment operations (.73) .02 .43 (.19) .15 .80
-------- -------- -------- -------- -------- --------
Less distributions from:
Net investment income (.19) (.16) (.28) -- (.71) (1.27)
Tax return of capital -- (.20) (.19) (.51) (.31) --
-------- -------- -------- -------- -------- --------
Total distributions (.19) (.36) (.47) (.51) (1.02) (1.27)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.80 $ 11.72 $ 12.06 $ 12.10 $ 12.80 $ 13.67
======== ======== ======== ======== ======== ========
Total Return* (6.28)% .18% 3.71% (1.46)% 1.27% 6.05%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $ 19,564 $ 27,173 $ 33,703 $ 41,795 $ 50,773 $ 59,942
Ratios to average net assets:
Expenses 1.19%** 1.13% 1.19% 1.10% .99% .99%
Net investment income 4.17%** 3.44% 4.08% 4.01% 4.30% 5.29%
Portfolio turnover rate 35.89% .00% .00% .00% .00% 46.05%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
(a) Based on average weighted shares outstanding.
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS, APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND AMOUNT* VALUE
--------------------------------------- ------- -----
<S> <C> <C>
FOREIGN GOVERNMENT SECURITIES - FLOATING RATE TRUST (COST $2,728,124) 9.9%
Government of Spain, FRN, 3.4875%, 6/29/02 2,121,861 EUR $1,934,036
-----------
SHORT TERM INVESTMENTS 85.9%
CORPORATE BONDS 31.8%
Abbey National Treasury Services PLC:
FRN, 6.0288%, 8/03/00 1,000,000 999,797
FRN, 3.445%, 9/01/00 250,000 EUR 227,768
Associates Corp. of North America, FRN, 6.0603%, 6/29/00 500,000 500,001
Bayerische Landesbank Girozen, 6.00%, 10/16/00 395,000 393,104
Deutsche Hypothekenbank Franfurt AG, 2.50%, 5/02/00 250,000 EUR 227,769
Deutsche Telekom International Finance NV, FRN, 3.492%, 11/02/00 1,000,000 EUR 908,167
General Electric Capital Corp.:
3.25%, 8/21/00 750,000 EUR 684,021
6.25%, 2/13/01 238,000 236,310
6.25%, 3/27/01 186,000 184,521
International Bank for Reconstruction & Development, 7.00%, 9/18/00 1,000,000 NZD 486,540
Merrill Lynch & Co. Inc., 6.00%, 1/15/01 165,000 163,830
Rabobank Nederland NV, 6.25%, 1/30/01 204,000 202,694
Transamerica Financial Corp., 6.05%, 11/22/00 313,000 311,188
Westpac Banking Corp., FRN, 6.375%, 7/30/01 700,000 699,440
-----------
TOTAL CORPORATE BONDS (COST $6,436,066) 6,225,150
-----------
U.S. GOVERNMENT AGENCIES 54.1%
Fannie Mae, 5.75% to 9.20%, with maturities to 9/26/00 8,817,000 5,845,712
Federal Farm Credit Bank, 5.54%, 1/22/01 500,000 495,565
Federal Home Loan Bank, 5.75% to 5.88%, with maturities to 8/09/00 2,000,000 1,998,948
Federal Home Loan Mortgage Corp., 5.87%, 5/12/00 1,250,000 1,247,146
Sallie Mae, 5.85%, 5/05/00 1,000,000 1,000,000
-----------
TOTAL U.S. GOVERNMENT AGENCIES (COST $10,777,327) 10,587,371
-----------
TOTAL SHORT TERM INVESTMENTS (COST $17,213,393) 16,812,521
-----------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST $19,941,517) 18,746,557
-----------
(a)REPURCHASE AGREEMENTS (COST $970,000) 5.0%
Barclays Bank PLC, 5.71%, 5/01/00 (Maturity Value $970,462)
Collaterized by U.S. Treasury Notes and Bonds 970,000 970,000
-----------
TOTAL INVESTMENTS (COST $20,911,517) 100.8% 19,716,557
NET EQUITY IN FORWARD CONTRACTS (1.2%) (236,848)
OTHER ASSETS, LESS LIABILITIES .4% 83,793
-----------
TOTAL NET ASSETS 100.0% $19,563,502
============
</TABLE>
CURRENCY ABBREVIATIONS:
EUR - European Unit
NZD - New Zealand Dollar
*Securities denominated in U.S. dollars unless otherwise indicated.
(a) At April 30, 2000, 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
----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 2000(a) -------------------------------------------------------
(UNAUDITED) 1999(a) 1998(a) 1997 1996 1995
----------- -------- -------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of period $ 9.52 $ 10.39 $ 10.28 $ 11.64 $ 13.09 $ 13.95
-------- -------- -------- -------- --------- ---------
Income from investment operations:
Net investment income .20 .30 .30 .37 .57 1.84
Net realized and unrealized gains (losses) (1.02) (.95) .12 (1.33) (1.34) (1.02)
-------- -------- -------- -------- --------- ---------
Total from investment operations (.82) (.65) .42 (.96) (.77) .82
-------- -------- -------- -------- --------- ---------
Less distributions from:
Net investment income (.12) -- (.25) -- (.06) (1.68)
Tax return of capital -- (.22) (.06) (.40) (.62) --
-------- -------- -------- -------- --------- ---------
Total distributions (.12) (.22) (.31) (.40) (.68) (1.68)
-------- -------- -------- -------- --------- ---------
Net asset value, end of period $ 8.58 $ 9.52 $ 10.39 $ 10.28 $ 11.64 $ 13.09
======== ======== ======== ======== ========= =========
Total Return* (8.67)% (6.23)% 4.33% (8.28)% (5.99)% 6.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $ 36,447 $ 56,381 $ 68,902 $ 91,976 $ 124,666 $ 132,089
Ratios to average net assets:
Expenses 1.21%** 1.09% 1.35% 1.13% 1.10% 1.15%
Net investment income 4.46%** 3.08% 3.07% 3.53% 4.50% 4.68%
Portfolio turnover rate 55.66% .00% 96.41% 2.68% .00% 15.72%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
(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, 2000(a) --------------------------------
(UNAUDITED) 1999(a) 1998 1997+
----------- -------- ---- -----
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net asset value, beginning of period $ 9.53 $ 10.41 $ 10.28 $ 11.28
------- --------- --------- -------
Income from investment operations:
Net investment income .18 .35 .33 .34
Net realized and unrealized gains (losses) (.99) (.99) .14 (1.00)
------- --------- --------- -------
Total from investment operations (.81) (.64) .47 (.66)
------- --------- --------- -------
Less distributions from:
Net investment income (.13) -- (.28) --
Tax return of capital -- (.24) (.06) (.34)
------- --------- --------- -------
Total distributions (.13) (.24) (.34) (.34)
------- --------- --------- -------
Net asset value, end of period $ 8.59 $ 9.53 $ 10.41 $ 10.28
======= ========= ========= =======
Total Return* (8.58)% (6.17)% 4.89% (5.84)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $ 32 $ 3,827 $ 3,343 $ 249
Ratios to average net assets:
Expenses .98%** .99% 1.01% .94%**
Net investment income 4.00%** 3.54% 3.29% 3.67%**
Portfolio turnover rate 55.66% .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, APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON HARD CURRENCY FUND AMOUNT* VALUE
------------------------------------- ------- -----
<S> <C> <C>
SHORT TERM INVESTMENTS 98.0%
CORPORATE BONDS 44.0%
Abbey National Treasury Services PLC:
FRN, 6.0288%, 8/03/00 $ 2,000,000 $ 1,999,594
FRN, 3.445%, 9/01/00 750,000 EUR 683,303
Associates Corp. of North America:
FRN, 6.0603%, 6/29/00 1,000,000 1,000,002
5.85%, 1/15/01 300,000 297,240
Bayerische Landesbank Girozen:
5.125%, 7/25/00 479,000 477,204
6.00%, 10/16/00 1,000,000 995,200
Bayerische Vereinsbank AG, 6.25%, 1/29/01 211,000 209,512
Deutsche Hypothekenbank Franfurt AG, 2.50%, 5/02/00 750,000 EUR 683,308
Deutsche Telekom International Finance NV, FRN, 3.492%, 11/02/00 3,000,000 EUR 2,724,501
General Electric Capital Corp.:
3.375%, 6/13/00 1,022,584 EUR 930,994
3.25%, 8/21/00 1,250,000 EUR 1,140,034
6.25%, 2/13/01 484,000 480,564
6.25%, 3/27/01 379,000 375,987
General Motors Acceptance Corp., 5.625%, 2/15/01 301,000 298,077
International Bank for Reconstruction & Development, 7.00%, 9/18/00 2,000,000 NZD 973,079
International Lease Finance Corp., 6.59%, 12/01/00 400,000 399,312
Siemens Capital Corp., 4.50%, 2/05/01 1,000,000 980,650
Walt Disney Co., 6.375%, 3/20/01 118,000 117,110
Westpac Banking Corp., FRN, 6.375%, 7/30/01 1,300,000 1,298,960
----------
TOTAL CORPORATE BONDS (COST $16,694,218) 16,064,631
----------
U.S. GOVERNMENT AGENCIES 54.0%
Fannie Mae, 5.83% to 9.20%, with maturities to 10/16/00 6,665,000 4,989,945
Federal Farm Credit Bank, 5.54% to 6.36%, with maturities to 1/22/01 1,500,000 1,486,694
Federal Home Loan Bank, 5.75% to 5.93%, with maturities to 8/09/00 9,633,000 9,611,501
Federal Home Loan Mortgage Corp., 5.87%, 5/12/00 1,800,000 1,795,891
Sallie Mae, 5.85%, 5/05/00 1,800,000 1,800,000
----------
TOTAL U.S. GOVERNMENT AGENCIES (COST $19,696,699) 19,684,031
----------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT (COST $36,390,917) 35,748,662
----------
(a)REPURCHASE AGREEMENT (COST $1,800,000) 4.9%
Barclays Bank PLC, 5.71%, 5/01/00 (Maturity Value $1,800,857)
Collaterized by U.S. Treasury Notes and Bonds 1,800,000 1,800,000
----------
TOTAL INVESTMENTS (COST $38,190,917) 102.9% 37,548,662
NET EQUITY IN FORWARD CONTRACTS (3.0%) (1,102,340)
OTHER ASSETS, LESS LIABILITIES .1% 33,235
----------
TOTAL NET ASSETS 100.0% $36,479,557
----------
</TABLE>
CURRENCY ABBREVIATIONS:
EUR - European Unit
NZD - New Zealand Dollar
*Securities denominated in U.S. dollars unless otherwise indicated.
(a) At April 30, 2000, 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
APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON GLOBAL TEMPLETON HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Assets:
Investments in securities:
Cost $19,941,517 $36,390,917
----------- -----------
Value 18,746,557 35,748,662
Repurchase agreements, at value and cost 970,000 1,800,000
Cash 75,403 22,615
Receivables:
Beneficial shares sold 4,952 81,908
Interest 171,106 363,947
Unrealized gain on forward exchange contracts (Note 6) 17,608 --
----------- -----------
Total assets 19,985,626 38,017,132
----------- -----------
Liabilities:
Payables:
Beneficial shares redeemed 48,784 220,071
To affiliates 27,540 54,604
To shareholders 70,601 110,262
Unrealized loss on forward exchange contracts (Note 6) 254,456 1,102,340
Accrued expenses 20,743 50,298
----------- -----------
Total liabilities 422,124 1,537,575
----------- -----------
Net assets, at value $19,563,502 $36,479,557
----------- -----------
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENT OF ASSETS AND LIABILITIES (CONT.)
APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON GLOBAL TEMPLETON HARD
CURRENCY FUND CURRENCY FUND
<S> <C> <C>
Net assets consist of:
Undistributed net investment income $ 254,738 $ 966,520
Net unrealized depreciation (1,435,431) (1,749,757)
Accumulated net realized loss (1,608,797) (5,459,634)
Beneficial shares 22,352,992 42,722,428
------------ ------------
Net assets, at value $ 19,563,502 $ 36,479,557
------------ ------------
CLASS A:
Net asset value $ 19,563,502 $ 36,447,513
------------ ------------
Shares outstanding 1,811,636 4,247,438
------------ ------------
Net asset value per share $ 10.80 $ 8.58
------------ ------------
Maximum offering price per share (Net asset value per share - 97.75%) $ 11.05 $ 8.78
------------ ------------
ADVISOR CLASS:
Net asset value $ 32,044
------------
Shares outstanding 3,731
------------
Net asset value and maximum offering price per share $ 8.59
------------
</TABLE>
See notes to financial statements.
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON GLOBAL TEMPLETON HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
<S> <C> <C>
Investment Income $ 612,172 $ 1,247,320
----------- -----------
Expenses:
Management fees (Note 3) 74,256 143,200
Distribution fees - Class A (Note 3) 22,587 50,628
Transfer agent fees (Note 3) 19,500 46,000
Custodian fees 1,500 2,200
Reports to shareholders 2,300 4,000
Registration and filing fees 9,400 13,500
Professional fees 1,900 --
Trustees' fees and expenses 4,700 6,000
Other 144 493
----------- -----------
Total expenses 136,287 266,021
----------- -----------
Net investment income 475,885 981,299
----------- -----------
Realized and unrealized losses:
Net realized loss from:
Investments (283,050) (242,320)
Foreign currency transactions (980,347) (3,710,706)
----------- -----------
Net realized loss (1,263,397) (3,953,026)
Net unrealized depreciation on:
Investments (590,540) (589,882)
Translation of assets and liabilities denominated in foreign currencies (63,869) (418,952)
----------- -----------
Net unrealized depreciation (654,409) (1,008,834)
----------- -----------
Net realized and unrealized loss (1,917,806) (4,961,860)
----------- -----------
Net decrease in net assets resulting from operations $(1,441,921) $(3,980,561)
----------- -----------
</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, 2000 YEAR ENDED APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999 (UNAUDITED) OCTOBER 31, 1999
----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 475,885 $ 1,044,762 $ 981,299 $ 1,889,456
Net realized loss from investments and
foreign currency transactions (1,263,397) (628,517) (3,953,026) (5,891,225)
Net unrealized depreciation on investments and
translation of assets and liabilities denominated
in foreign currencies (654,409) (418,533) (1,008,834) (400,035)
------------ ------------ ------------ ------------
Net decrease in net assets resulting
from operations (1,441,921) (2,288) (3,980,561) (4,401,804)
Distributions to shareholders from:
Net investment income:
Class A (377,801) (401,698) (579,759) --
Advisor Class -- -- (477) --
Tax return of capital:
Class A -- (512,429) -- (1,360,702)
Advisor Class -- -- -- (33,846)
Beneficial share transactions (Note 2):
Class A (5,789,434) (5,614,253) (15,445,346) (6,982,082)
Advisor Class -- -- (3,721,940) 740,853
------------ ------------ ------------ ------------
Net decrease in net assets (7,609,156) (6,530,668) (23,728,083) (12,037,581)
Net assets:
Beginning of period 27,172,658 33,703,326 60,207,640 72,245,221
------------ ------------ ------------ ------------
End of period $ 19,563,502 $ 27,172,658 $ 36,479,557 $ 60,207,640
------------ ------------ ------------ ------------
Undistributed net investment income included in net assets:
End of period $ 254,738 $ 156,654 $ 966,520 $ 565,457
------------ ------------ ------------ ------------
</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. 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 April 30, 2000, 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
-------------------- ------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Six months ended April 30, 2000
Shares sold 227,874 $ 2,590,270 1,210,911 $ 10,997,254
Shares issued on reinvestment of distributions 30,650 344,314 52,801 477,788
Shares redeemed (766,116) (8,724,018) (2,937,113) (26,920,388
-------- ----------- ---------- ------------
Net decrease (507,592) $(5,789,434) (1,673,401) $(15,445,346)
-------- ----------- ---------- ------------
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited) (continued)
2. BENEFICIAL SHARES (CONT.)
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND HARD CURRENCY FUND
-------------------- ------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
CLASS A SHARES (CONT.):
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)
------- ------------ --------- ------------
ADVISOR CLASS SHARES:
Six months ended April 30, 2000
Shares issued on reinvestment of distributions 25 $ 227
Shares redeemed (397,985) (3,722,167)
-------- ------------
Net decrease (397,960) $ (3,721,940)
-------- ------------
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
---------- ----------
</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 six months ended April 30, 2000 as follows:
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
Total commissions received $1,014 $12,504
Paid to other dealers $ 894 $11,081
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited) (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.
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At April 30, 2000, the net unrealized depreciation
based on the cost of investments for income tax purposes were as follows:
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
Unrealized appreciation $ 1,381 $ 2,701
Unrealized depreciation (1,196,341) (644,956)
------------ ------------
Net unrealized depreciation $(1,194,960) $ (642,225)
------------ ------------
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions.
At October 31, 1999, the Funds had tax basis capital losses which may be carried
over to offset future capital gains as follows:
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
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
---------- ----------
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 2000 were as follows:
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------- -------------
Purchases $3,168,071 $7,181,594
Sales $1,234,624 $2,356,919
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited) (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 April 30, 2000, the Global Currency Fund had the following forward foreign
currency contracts outstanding:
<TABLE>
<CAPTION>
IN SETTLEMENT UNREALIZED
EXCHANGE FOR DATE GAIN/(LOSS)
------------ ---- -----------
CONTRACTS TO BUY:
<S> <C> <C> <C> <C>
2,000,000 Canadian Dollars U.S. $1,355,473 5/17/00 U.S $ (5,037)
12,000,000 Swedish Krona 1,368,301 5/25/00 (25,437)
107,100,000 Japanese Yen 1,004,879 6/02/00 (15,328)
4,130,000 European Unit 3,791,237 6/05/00 (17,645)
1,000,000 British Pounds 1,554,300 6/05/00 (580)
1,000,000 New Zealand Dollars 486,500 6/06/00 (333)
------- --------
U.S. $9,560,690 (64,360)
--------
Net unrealized loss on offsetting forward exchange contracts (190,096)
--------
Unrealized loss on forward exchange contracts (254,456)
Net unrealized gain on offsetting forward exchange contracts 17,608
--------
Net unrealized loss on forward exchange contracts U.S. $(236,848)
--------
</TABLE>
As of April 30, 2000, the Hard Currency Fund had the following forward foreign
currency contracts outstanding:
<TABLE>
<CAPTION>
IN SETTLEMENT UNREALIZED
EXCHANGE FOR DATE GAIN/(LOSS)
------------ ---- -----------
CONTRACTS TO BUY:
<S> <C> <C> <C> <C>
1,018,140,000 Japanese Yen U.S. $ 9,818,129 5/18/00 U.S. $ (363,887)
10,500,000 Swiss Franc 6,310,855 5/25/00 (191,492)
6,910,000 European Unit 6,343,207 6/05/00 (29,522)
8,800,000 Swiss Franc 5,146,199 6/05/00 (12,619)
--------- -------
U.S. $27,618,390 (597,520)
--------- -------
Net unrealized loss on offsetting forward exchange contracts (504,820)
-------
Net unrealized loss on forward exchange contracts U.S. $(1,102,340)
-------
</TABLE>
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited) (continued)
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 in the European Monetary
Unit.
Such concentrations may subject the Funds more significantly to economic changes
occurring within those countries.
