SHAREHOLDER LETTER
Dear Shareholder:
This annual report of Franklin Templeton Global Trust covers the 12 months ended
October 31, 2000. The Trust consists of Franklin Templeton Global Currency Fund
and Franklin Templeton Hard Currency Fund.
The 12 months under review proved to be challenging for investors in the global
currency markets. Early in the year, investor optimism regarding the future
direction of interest rates and exchange rates waned because of upward revisions
of global economic growth forecasts and the potential negative effect of higher
oil prices on inflation. The downbeat interest-rate outlook resulted from
confirmation of an economic recovery in Europe, better-than-expected growth in
Japan and the still robust U.S. economy. The improved economic outlook was
expected to result in higher commodity prices, capacity utilization rates and
employment rates, all of which would add to inflationary pressures and tighter
monetary policy stances by central banks.
Thus, the positive trend in global growth led to the consensus view that the
industrial economies, except for perhaps Japan, had reached the bottom of their
respective interest-rate cycles. However, during the second half of the period,
CONTENTS
Shareholder Letter .................................................. 1
Fund Reports
Franklin Templeton
Global Currency Fund ............................................... 5
Franklin Templeton
Hard Currency Fund ................................................. 11
Financial Highlights &
Statements of Investments ........................................... 18
Financial Statements ................................................ 25
Notes to
Financial Statements ................................................ 29
Independent
Auditors' Report .................................................... 35
[FUND CATEGORY PYRAMID GRAPHIC]
<PAGE>
inflation expectations improved as oil prices stabilized, albeit at higher
levels, and economic data began to show growth rates slowing toward more
sustainable levels.
One of the main challenges global currency investors faced this past year was
the decoupling of currency markets' performance from fundamental economic
performance, as currencies did not seem to be valued on the basis of the
underlying economy's strength, as they have in the past. In addition, foreign
direct investment (FDI) flows played a large part in determining currency market
behavior.
In Europe, we witnessed a narrowing of economic growth and interest rates
between the Euroland, the 11 countries using the euro, and the United States
during the period under review. Historically, these have been two of the main
factors determining the U.S. dollar's strength relative to European currencies.
In 1999-2000, however, FDI flows out of Europe and into the U.S., as determined
by financial and capital investment, were the major factors behind the euro,
British pound and Swiss franc depreciating 19.3%, 11.9% and 15.1%, respectively,
relative to the U.S. dollar. This financial investment flow from Europe into the
U.S. was driven by European asset managers' needs to diversify their portfolios
and seek greater investment returns outside of their home markets. Capital flows
were driven primarily by cross-border merger and acquisition activity, as many
European companies purchased U.S. firms and had to send money to the U.S. to pay
for these transactions.
In Japan, the currency traded between 101 and 111 yen versus the U.S. dollar for
the better part of the 12 months under review. Early in the period, the yen
strengthened due to FDI flows into
2
<PAGE>
Japanese equities, improving economic growth and domestic repatriation of
foreign assets. However, the Bank of Japan reiterated its position that a strong
yen was not welcome, and it was able to establish a psychological floor at 101
yen to the U.S. dollar midway through the year. Toward the latter part of the
period, the yen gradually weakened versus the dollar as concerns surfaced over
an economic slowdown in Asia. As the yen approached the 110 level, local
exporters took the opportunity to sell dollars versus yen to hedge their foreign
currency exposure.
The dollar-bloc currencies (Canada, Australia and New Zealand) also depreciated
relative to the U.S. dollar during the year, with the three currencies returning
-3.8%, -18.8% and -22.7%, respectively, for the period. The Canadian dollar
performed comparatively better thanks to a greater percentage of high technology
companies in its equity market, namely Nortel. As for the Australian and New
Zealand currencies, due to small technology sectors and concerns about a
slowdown in the Asian region, both currencies depreciated to all-time lows
versus the U.S. dollar during the period.
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, the Funds' rather weak performances during
the reporting period are not surprising. Although no one can predict the future,
we believe 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.
3
<PAGE>
We thank you for investing with us and, as always, welcome your comments or
questions.
Sincerely,
/s/ Thomas J. Dickson
Thomas J. Dickson
/s/ Umran Demirors
Umran Demirors
Portfolio Managers
Franklin Templeton Global Trust
4
<PAGE>
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 probably 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.
The 12 months under review proved to be a difficult period for U.S.-dollar based
investors in the global currency markets, as the U.S. dollar stayed strong
relative to other currencies. Within this environment, Franklin Templeton Global
Currency Fund - Class A posted a -11.39% 12-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 -1.21% during the same period.(1)
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.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 19.
5
<PAGE>
[ASSET ALLOCATION PIE CHART]
ASSET ALLOCATION BY CURRENCY
Franklin Templeton Global Currency Fund
Based on Total Net Assets
10/31/00
<TABLE>
<S> <C>
European Monetary Unit (euro) ........ 34.2%
U.S. Dollar .......................... 15.0%
Canadian Dollar ...................... 11.4%
New Zealand Dollar ................... 9.3%
British Pound ........................ 8.1%
Swedish Krona ........................ 6.6%
Japanese Yen ......................... 5.5%
Danish Krone ......................... 5.2%
Australian Dollar .................... 4.7%
</TABLE>
During the period under review, we continued to shift the portfolio's exposure
to Europe and subsequently reduce the total exposure to the U.S. dollar. By the
end of period, the Fund's exposure to Europe stood at 54.1% of total net assets,
slightly up from 50.5% on October 31, 1999. Away from Europe, we had exposure to
Australia of 4.7% and New Zealand of 9.3%, compared with 8.0% and 8.3%,
respectively, from the previous period.
Looking forward, we expect current market trends to continue, but we will look
for opportunities to add currencies to the portfolio that offer long-term value
given our assessment of the markets. We believe that economic fundamentals will
again determine the behavior of the currency markets, and as such, the current
levels in some of the depressed developed currencies of the world may offer an
outstanding investment opportunity for long-term investors.
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.
--------------------------------------------------------------------------------
This discussion reflects our views, opinions and portfolio holdings as of
October 31, 2000, the end of the reporting period. The information provided is
not a complete analysis of every aspect of any country, industry, security or
the Fund. 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.
--------------------------------------------------------------------------------
6
<PAGE>
Please note that although the Fund's Statement of Investments on page 19 of this
report indicates the Fund held 67.9% of its portfolio investments in U.S.
dollar-denominated assets as of 10/31/00, its NET EXPOSURE to the U.S. dollar as
of that date was only 15.0%. 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 33 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.
7
<PAGE>
FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND
PERFORMANCE SUMMARY AS OF 10/31/00
One-year total return represents the change in value of an investment for the
period indicated and 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 the Fund's operating
expenses. Past distributions are not indicative of future trends. All total
returns include reinvested distributions at net asset value.
<TABLE>
<CAPTION>
CLASS A
<S> <C> <C>
One-Year Total Return -11.39%
Net Asset Value (NAV) $10.03 (10/31/00) $11.72 (10/31/99)
Change in NAV -$1.69
Distributions (11/1/99-10/31/00) Dividend Income $0.38
</TABLE>
CLASS A: Subject to the current, maximum 2.25% initial sales charge. Prior to
8/3/98, 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.
During the fiscal year ended 10/31/00, 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.
Past performance does not guarantee future results.
8
<PAGE>
ADDITIONAL PERFORMANCE
AS OF 9/30/00
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (6/27/86)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) -9.99% -5.34% +30.65% +100.26%
Average Annual Total Return(2) -12.01% -1.54% +2.48% +4.82%
Value of $10,000 Investment(3) $8,799 $9,255 $12,772 $19,572
</TABLE>
AS OF 10/31/00
<TABLE>
<CAPTION>
SHARE CLASS A
--------------------------------------------------------------------------------
<S> <C>
Distribution Rate(4) 3.70%
30-Day Standardized Yield(5) 5.92%
</TABLE>
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, 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, maximum sales charge.
4. Distribution rate is based on an annualization of September's quarterly 9.5
cent per share dividend and the maximum offering price of $10.26 on 10/31/00.
5. Yield, calculated as required by the SEC, is based on the earnings of the
Fund's portfolio for the 30 days ended 10/31/00.
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 Investments at 1-800/342-5236.
Past performance does not guarantee future results.
9
<PAGE>
FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the current, maximum sales charge, Fund expenses, account
fees and reinvested distributions. The unmanaged index differs from the Fund in
composition, does not pay management fees or expenses and includes reinvested
dividends.
AVERAGE ANNUAL TOTAL RETURN
10/31/00
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------
<S> <C>
1-Year -13.38%
5-Year -2.12%
10-Year +1.94%
Since Inception (6/27/86) +4.64%
</TABLE>
GRAPHIC MATERIAL (1)
CLASS A (11/1/90-10/31/00)
This graph compares the performance of Franklin Templeton Global Currency Fund -
Class A, as tracked by the growth in value of a $10,000 investment, to that of
the J.P. Morgan 3 Month Global Cash Index from 11/1/90-10/31/00.
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON JP MORGAN 3 MONTH
DATE GLOBAL CURRENCY FUND GLOBAL CASH INDEX*
------------------------------------------------------------------------------
<S> <C> <C>
11/01/90 $ 9,775 $10,000
11/30/90 $ 9,785 $10,084
12/31/90 $ 9,745 $10,163
01/31/91 $ 9,895 $10,395
02/28/91 $ 9,913 $10,293
03/31/91 $ 9,708 $ 9,628
04/30/91 $ 9,774 $ 9,705
05/31/91 $ 9,749 $ 9,668
06/30/91 $ 9,666 $ 9,474
07/31/91 $ 9,865 $ 9,786
08/31/91 $ 9,778 $ 9,880
09/30/91 $ 9,907 $10,320
10/31/91 $ 9,918 $10,365
11/30/91 $10,067 $10,613
12/31/91 $10,487 $11,171
01/31/92 $10,198 $10,835
02/29/92 $10,088 $10,762
03/31/92 $10,087 $10,786
04/30/92 $10,193 $10,872
05/31/92 $10,475 $11,186
06/30/92 $10,875 $11,655
07/31/92 $11,044 $11,947
08/31/92 $11,258 $12,408
09/30/92 $11,302 $12,008
10/31/92 $10,974 $11,434
11/30/92 $10,890 $11,009
12/31/92 $10,868 $10,970
01/31/93 $10,906 $11,026
02/28/93 $11,117 $10,908
03/31/93 $11,346 $11,218
04/30/93 $11,547 $11,527
05/31/93 $11,702 $11,550
06/30/93 $11,517 $11,122
07/31/93 $11,585 $10,878
08/31/93 $11,664 $11,075
09/30/93 $11,667 $11,240
10/31/93 $11,544 $11,153
11/30/93 $11,523 $11,035
12/31/93 $11,523 $11,093
01/31/94 $11,807 $11,277
02/28/94 $11,895 $11,435
03/31/94 $11,849 $11,633
04/30/94 $11,941 $11,805
05/31/94 $12,094 $11,883
06/30/94 $12,230 $12,191
07/31/94 $12,132 $12,244
08/31/94 $12,190 $12,356
09/30/94 $12,257 $12,619
10/31/94 $12,436 $12,943
11/30/94 $12,341 $12,629
12/31/94 $12,454 $12,734
01/31/95 $12,507 $12,903
02/28/95 $12,702 $13,127
03/31/95 $13,330 $13,698
04/30/95 $13,409 $13,804
05/31/95 $13,380 $13,776
06/30/95 $13,511 $13,966
07/31/95 $13,406 $14,184
08/31/95 $13,014 $13,722
09/30/95 $13,068 $14,050
10/31/95 $13,188 $14,205
11/30/95 $13,035 $14,095
12/31/95 $13,078 $14,235
01/31/96 $12,889 $13,933
02/29/96 $13,071 $14,196
03/31/96 $13,151 $14,248
04/30/96 $13,097 $14,092
05/31/96 $13,175 $14,178
06/30/96 $13,158 $14,262
07/31/96 $13,276 $14,539
08/31/96 $13,385 $14,603
09/30/96 $13,277 $14,442
10/31/96 $13,355 $14,609
11/30/96 $13,454 $14,585
12/31/96 $13,440 $14,557
01/31/97 $12,920 $13,938
02/28/97 $12,935 $13,718
03/31/97 $13,044 $13,827
04/30/97 $12,908 $13,528
05/31/97 $13,156 $13,779
06/30/97 $13,211 $13,711
07/31/97 $13,019 $13,283
08/31/97 $13,031 $13,441
09/30/97 $13,085 $13,652
10/31/97 $13,160 $13,898
11/30/97 $12,908 $13,627
12/31/97 $12,830 $13,407
01/31/98 $12,841 $13,360
02/28/98 $12,960 $13,495
03/31/98 $12,915 $13,349
04/30/98 $13,058 $13,629
05/31/98 $13,045 $13,579
06/30/98 $13,011 $13,522
07/31/98 $13,044 $13,574
08/31/98 $13,088 $13,605
09/30/98 $13,503 $14,214
10/31/98 $13,648 $14,544
11/30/98 $13,463 $14,344
12/31/98 $13,755 $14,582
01/31/99 $13,698 $14,417
02/28/99 $13,470 $14,077
03/31/99 $13,521 $14,021
04/30/99 $13,625 $13,971
05/31/99 $13,487 $13,823
06/30/99 $13,469 $13,793
07/31/99 $13,643 $14,203
08/31/99 $13,550 $14,159
09/30/99 $13,743 $14,357
10/31/99 $13,673 $14,286
11/30/99 $13,439 $13,960
12/31/99 $13,564 $14,025
01/31/00 $13,199 $13,788
02/29/00 $13,034 $13,804
03/31/00 $13,241 $13,761
04/30/00 $12,814 $13,797
05/31/00 $12,825 $13,847
06/30/00 $13,176 $13,896
07/31/00 $12,829 $13,950
08/31/00 $12,530 $14,002
09/30/00 $12,370 $14,052
10/31/00 $12,116 $14,114
</TABLE>
*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.
Past performance does not guarantee future results.
10
<PAGE>
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 probably 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.
The 12 months under review proved to be a difficult period for U.S. dollar-based
investors in the global currency markets, as the U.S. dollar stayed strong
relative to other currencies. Within this environment, Franklin Templeton Hard
Currency Fund - Class A posted a -13.42% 12-month cumulative total return, as
shown in the Performance Summary on page 14. The Fund's
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 23.
11
<PAGE>
[ASSET ALLOCATION PIE CHART]
ASSET ALLOCATION BY CURRENCY
Franklin Templeton Hard Currency Fund
Based on Total Net Assets
10/31/00
<TABLE>
<S> <C>
European Monetary Unit (euro) ........ 33.1%
Swiss Franc .......................... 28.2%
Japanese Yen ......................... 24.6%
New Zealand Dollar ................... 11.2%
U.S. Dollar .......................... 2.9%
</TABLE>
benchmark, the J.P. Morgan 3 Month Global Cash Index, returned -1.21% during the
same period.(1)
Over the course of the 12 months, we slightly changed the composition of the
portfolio, primarily to take advantage of trends and opportunities we were
seeing. On October 31, 2000, the portfolio had an exposure of 33.1% of total net
assets to the euro, 28.2% to the Swiss Franc, 24.6% to the Japanese yen, 11.2%
to the New Zealand dollar and 2.9% in cash.
Looking forward, we expect current market trends (i.e., U.S.-dollar strength) to
continue, but we will look for opportunities to add currencies to the portfolio
that offer long-term value given our assessment of the markets. We believe that
fundamentals will again determine the behavior of the currency markets, and as
such, the current levels in some of the depressed developed currencies of the
world may offer an outstanding investment opportunity for long-term investors.
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.
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.
This discussion reflects our views, opinions and portfolio holdings as of
October 31, 2000, the end of the reporting period. The information provided is
not a complete analysis of every aspect of any country, industry, security or
the Fund. 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.
12
<PAGE>
Please note that although the Fund's Statement of Investments on page 23 of this
report indicates the Fund held 80.9% of its portfolio investments in U.S.
dollar-denominated assets as of 10/31/00, its NET EXPOSURE to the U.S. dollar on
that date was only 2.9%. 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 33 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.
13
<PAGE>
FRANKLIN TEMPLETON
HARD CURRENCY FUND
PERFORMANCE SUMMARY AS OF 10/31/00
One-year total return represents the change in value of an investment for the
period indicated and 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.
<TABLE>
<S> <C> <C>
CLASS A
One-Year Total Return -13.42%
Net Asset Value (NAV) $8.02 (10/31/00) $9.52 (10/31/99)
Change in NAV -$1.50
Distributions (11/1/99-10/31/00) Dividend Income $0.2400
ADVISOR CLASS
One-year Total Return -13.22%
Net Asset Value (NAV) $8.03 (10/31/00) $9.53 (10/31/99)
Change in NAV -$1.50
Distributions (11/1/99-10/31/00) Dividend Income $0.2589
</TABLE>
CLASS A: Subject to the current, maximum 2.25% initial sales charge. Prior to
8/3/98, 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.
During the fiscal year ended 10/31/00, 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.
Past performance does not guarantee future results.
14
<PAGE>
ADDITIONAL PERFORMANCE
AS OF 9/30/00
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (11/17/89)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) -10.96% -23.93% +14.86% +40.74%
Average Annual Total Return(2) -12.96% -5.75% +1.16% +2.98%
Value of $10,000 Investment(3) $8,704 $7,436 $11,226 $13,755
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
ADVISOR CLASS(4) 1-YEAR 5-YEAR 10-YEAR (11/17/89)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) -10.75% -23.10% +16.12% +42.27%
Average Annual Total Return(2) -10.75% -5.12% +1.51% +3.30%
Value of $10,000 Investment(3) $8,925 $7,690 $11,612 $14,227
</TABLE>
AS OF 10/31/00
<TABLE>
<CAPTION>
SHARE CLASS A ADVISOR
--------------------------------------------------------------------------------
<S> <C> <C>
Distribution Rate(5) 2.93% 3.21%
30-Day Standardized Yield(6) 6.30% 6.73%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, applicable,
maximum sales charge(s) for that class.
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 1/2/97, the Fund began offering Advisor Class shares, which do not
have sales charges or Rule 12b-1 plans. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 1/2/97, 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 1/1/97, an actual Advisor
Class figure is used reflecting a deduction of all charges and fees applicable
to that class. Since 1/2/97 (commencement of sales), the cumulative and average
annual total returns of Advisor Class shares were -16.77% and -4.78%.
5. Distribution rate is based on an annualization of the respective class's
September quarterly dividend and the maximum offering price (net asset value for
Advisor Class) per share on 10/31/00.
6. Yield, calculated as required by the SEC, is based on the earnings of the
Fund's portfolio for the 30 days ended 10/31/00.
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 Investments at 1-800/342-5236.
Past performance does not guarantee future results.
15
<PAGE>
FRANKLIN TEMPLETON
HARD CURRENCY FUND
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the current, applicable, maximum sales charge, Fund expenses,
account fees and reinvested distributions. The unmanaged index differs from the
Fund in composition, does not pay management fees or expenses and includes
reinvested dividends.
AVERAGE ANNUAL TOTAL RETURN
10/31/00
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------
<S> <C>
1-Year -15.38%
5-Year -6.52%
10-Year +0.35%
Since Inception (11/17/89) +2.63%
</TABLE>
GRAPHIC MATERIAL (2)
CLASS A (11/1/90 - 10/31/00)
This graph compares the performance of Franklin Templeton Hard Currency Fund -
Class A, as tracked by the growth in value of a $10,000 investment, to that of
the J.P. Morgan 3 Month Global Cash Index from 11/1/90-10/31/00.
<TABLE>
<CAPTION>
DATE FRANKLIN TEMPLETON JP MORGAN 3 MONTH
HARD CURRENCY FUND - GLOBAL CASH INDEX*
CLASS A
--------------------------------------------------------------------------------
<S> <C> <C>
11/01/90 $ 9,776 $10,000
11/30/90 $ 9,837 $10,084
12/31/90 $ 9,844 $10,163
01/31/91 $10,092 $10,395
02/28/91 $ 9,917 $10,293
03/31/91 $ 9,074 $ 9,628
04/30/91 $ 9,203 $ 9,705
05/31/91 $ 9,057 $ 9,668
06/30/91 $ 8,834 $ 9,474
07/31/91 $ 9,147 $ 9,786
08/31/91 $ 9,225 $ 9,880
09/30/91 $ 9,685 $10,320
10/31/91 $ 9,716 $10,365
11/30/91 $10,014 $10,613
12/31/91 $10,659 $11,171
01/31/92 $10,136 $10,835
02/29/92 $ 9,940 $10,762
03/31/92 $ 9,912 $10,786
04/30/92 $ 9,976 $10,872
05/31/92 $10,414 $11,186
06/30/92 $10,940 $11,655
07/31/92 $11,188 $11,947
08/31/92 $11,699 $12,408
09/30/92 $11,907 $12,008
10/31/92 $11,222 $11,434
11/30/92 $11,000 $11,009
12/31/92 $10,898 $10,970
01/31/93 $10,996 $11,026
02/28/93 $11,124 $10,908
03/31/93 $11,411 $11,218
04/30/93 $11,682 $11,527
05/31/93 $11,731 $11,550
06/30/93 $11,377 $11,122
07/31/93 $11,403 $10,878
08/31/93 $11,422 $11,075
09/30/93 $11,496 $11,240
10/31/93 $11,343 $11,153
11/30/93 $11,293 $11,035
12/31/93 $11,405 $11,093
01/31/94 $11,701 $11,277
02/28/94 $11,934 $11,435
03/31/94 $11,930 $11,633
04/30/94 $12,105 $11,805
05/31/94 $12,166 $11,883
06/30/94 $12,605 $12,191
07/31/94 $12,588 $12,244
08/31/94 $12,676 $12,356
09/30/94 $12,972 $12,619
10/31/94 $13,284 $12,943
11/30/94 $12,974 $12,629
12/31/94 $13,127 $12,734
01/31/95 $13,291 $12,903
02/28/95 $13,665 $13,127
03/31/95 $14,659 $13,698
04/30/95 $14,699 $13,804
05/31/95 $14,552 $13,776
06/30/95 $14,755 $13,966
07/31/95 $14,629 $14,184
08/31/95 $13,755 $13,722
09/30/95 $14,084 $14,050
10/31/95 $14,174 $14,205
11/30/95 $13,905 $14,095
12/31/95 $13,995 $14,235
01/31/96 $13,568 $13,933
02/29/96 $13,768 $14,196
03/31/96 $13,703 $14,248
04/30/96 $13,388 $14,092
05/31/96 $13,305 $14,178
06/30/96 $13,343 $14,262
07/31/96 $13,775 $14,539
08/31/96 $13,724 $14,603
09/30/96 $13,354 $14,442
10/31/96 $13,324 $14,609
11/30/96 $13,153 $14,585
12/31/96 $13,013 $14,557
01/31/97 $12,339 $13,938
02/28/97 $12,112 $13,718
03/31/97 $12,186 $13,827
04/30/97 $11,888 $13,528
05/31/97 $12,334 $13,779
06/30/97 $12,172 $13,711
07/31/97 $11,655 $13,283
08/31/97 $11,750 $13,441
09/30/97 $11,949 $13,652
10/31/97 $12,222 $13,898
11/30/97 $11,874 $13,627
12/31/97 $11,657 $13,407
01/31/98 $11,689 $13,360
02/28/98 $11,805 $13,495
03/31/98 $11,378 $13,349
04/30/98 $11,542 $13,629
05/31/98 $11,475 $13,579
06/30/98 $11,312 $13,522
07/31/98 $11,330 $13,574
08/31/98 $11,569 $13,605
09/30/98 $12,086 $14,214
10/31/98 $12,762 $14,544
11/30/98 $12,310 $14,344
12/31/98 $12,805 $14,582
01/31/99 $12,435 $14,417
02/28/99 $12,115 $14,077
03/31/99 $11,991 $14,021
04/30/99 $11,805 $13,971
05/31/99 $11,693 $13,823
06/30/99 $11,556 $13,793
07/31/99 $11,968 $14,203
08/31/99 $11,880 $14,159
09/30/99 $12,031 $14,357
10/31/99 $11,956 $14,286
11/30/99 $11,717 $13,960
12/31/99 $11,731 $14,025
01/31/00 $11,301 $13,788
02/29/00 $11,137 $13,804
03/31/00 $11,415 $13,761
04/30/00 $10,919 $13,797
05/31/00 $11,046 $13,847
06/30/00 $11,391 $13,896
07/31/00 $11,032 $13,950
08/31/00 $10,776 $14,002
09/30/00 $10,713 $14,052
10/31/00 $10,352 $14,114
</TABLE>
Past performance does not guarantee future results.
16
<PAGE>
ADVISOR CLASS (11/1/90 - 10/31/00)**
GRAPHIC MATERIAL (3)
This graph compares the performance of Franklin Templeton Hard Currency Fund -
Class A, as tracked by the growth in value of a $10,000 investment, to that of
the J.P. Morgan 3 Month Global Cash Index from 11/1/90-10/31/00.
<TABLE>
<CAPTION>
DATE FRANKLIN TEMPLETON JP MORGAN 3 MONTH
HARD CURRENCY FUND - GLOBAL CASH INDEX*
ADVISOR
--------------------------------------------------------------------------------
<S> <C> <C>
11/01/90 $10,000 $10,000
11/30/90 $10,063 $10,084
12/31/90 $10,070 $10,163
01/31/91 $10,323 $10,395
02/28/91 $10,144 $10,293
03/31/91 $ 9,281 $ 9,628
04/30/91 $ 9,414 $ 9,705
05/31/91 $ 9,265 $ 9,668
06/30/91 $ 9,036 $ 9,474
07/31/91 $ 9,357 $ 9,786
08/31/91 $ 9,436 $ 9,880
09/30/91 $ 9,907 $10,320
10/31/91 $ 9,938 $10,365
11/30/91 $10,243 $10,613
12/31/91 $10,903 $11,171
01/31/92 $10,368 $10,835
02/29/92 $10,168 $10,762
03/31/92 $10,139 $10,786
04/30/92 $10,204 $10,872
05/31/92 $10,653 $11,186
06/30/92 $11,190 $11,655
07/31/92 $11,445 $11,947
08/31/92 $11,967 $12,408
09/30/92 $12,180 $12,008
10/31/92 $11,480 $11,434
11/30/92 $11,252 $11,009
12/31/92 $11,148 $10,970
01/31/93 $11,248 $11,026
02/28/93 $11,379 $10,908
03/31/93 $11,673 $11,218
04/30/93 $11,950 $11,527
05/31/93 $12,000 $11,550
06/30/93 $11,638 $11,122
07/31/93 $11,665 $10,878
08/31/93 $11,684 $11,075
09/30/93 $11,760 $11,240
10/31/93 $11,603 $11,153
11/30/93 $11,552 $11,035
12/31/93 $11,666 $11,093
01/31/94 $11,969 $11,277
02/28/94 $12,207 $11,435
03/31/94 $12,203 $11,633
04/30/94 $12,382 $11,805
05/31/94 $12,445 $11,883
06/30/94 $12,893 $12,191
07/31/94 $12,877 $12,244
08/31/94 $12,966 $12,356
09/30/94 $13,269 $12,619
10/31/94 $13,588 $12,943
11/30/94 $13,272 $12,629
12/31/94 $13,428 $12,734
01/31/95 $13,596 $12,903
02/28/95 $13,978 $13,127
03/31/95 $14,995 $13,698
04/30/95 $15,036 $13,804
05/31/95 $14,885 $13,776
06/30/95 $15,093 $13,966
07/31/95 $14,965 $14,184
08/31/95 $14,070 $13,722
09/30/95 $14,406 $14,050
10/31/95 $14,498 $14,205
11/30/95 $14,223 $14,095
12/31/95 $14,316 $14,235
01/31/96 $13,879 $13,933
02/29/96 $14,084 $14,196
03/31/96 $14,017 $14,248
04/30/96 $13,695 $14,092
05/31/96 $13,610 $14,178
06/30/96 $13,648 $14,262
07/31/96 $14,091 $14,539
08/31/96 $14,039 $14,603
09/30/96 $13,660 $14,442
10/31/96 $13,630 $14,609
11/30/96 $13,454 $14,585
12/31/96 $13,311 $14,557
01/31/97 $12,647 $13,938
02/28/97 $12,405 $13,718
03/31/97 $12,495 $13,827
04/30/97 $12,180 $13,528
05/31/97 $12,639 $13,779
06/30/97 $12,487 $13,711
07/31/97 $11,948 $13,283
08/31/97 $12,046 $13,441
09/30/97 $12,252 $13,652
10/31/97 $12,532 $13,898
11/30/97 $12,178 $13,627
12/31/97 $11,957 $13,407
01/31/98 $11,993 $13,360
02/28/98 $12,113 $13,495
03/31/98 $11,678 $13,349
04/30/98 $11,860 $13,629
05/31/98 $11,782 $13,579
06/30/98 $11,317 $13,522
07/31/98 $11,636 $13,574
08/31/98 $11,894 $13,605
09/30/98 $12,448 $14,214
10/31/98 $13,143 $14,544
11/30/98 $12,695 $14,344
12/31/98 $13,209 $14,582
01/31/99 $12,829 $14,417
02/28/99 $12,499 $14,077
03/31/99 $12,359 $14,021
04/30/99 $12,180 $13,971
05/31/99 $12,065 $13,823
06/30/99 $11,907 $13,793
07/31/99 $12,331 $14,203
08/31/99 $12,241 $14,159
09/30/99 $12,411 $14,357
10/31/99 $12,333 $14,286
11/30/99 $12,087 $13,960
12/31/99 $12,106 $14,025
01/31/00 $11,663 $13,788
02/29/00 $11,493 $13,804
03/31/00 $11,788 $13,761
04/30/00 $11,276 $13,797
05/31/00 $11,407 $13,847
06/30/00 $11,769 $13,896
07/31/00 $11,398 $13,950
08/31/00 $11,133 $14,002
09/30/00 $11,077 $14,052
10/31/00 $10,705 $14,114
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
10/31/00
<TABLE>
<CAPTION>
ADVISOR CLASS**
--------------------------------------------------------------------------------
<S> <C>
1-Year -13.22%
5-Year -5.89%
10-Year +0.68%
Since Inception (11/17/89) +2.95%
</TABLE>
*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.
**Effective 1/2/97, the Fund began offering Advisor Class shares, which do not
have sales charges or Rule 12b-1 plans. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 1/2/97, 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 1/1/97, an actual Advisor
Class figure is used reflecting a deduction of all charges and fees applicable
to that class.
Past performance does not guarantee future results.
17
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE(a)
(For a share outstanding throughout the year)
Net asset value, beginning of year ............... $ 11.72 $ 12.06 $ 12.10 $ 12.80 $ 13.67
--------------------------------------------------------------------------
Income from investment operations:
Net investment income ........................... .50 .41 .50 .49 .69
Net realized and unrealized losses .............. (1.81) (.39) (.07) (.68) (.54)
--------------------------------------------------------------------------
Total from investment operations ................. (1.31) .02 .43 (.19) .15
--------------------------------------------------------------------------
Less distributions from:
Net investment income ........................... -- (.16) (.28) -- (.71)
Tax return of capital ........................... (.38) (.20) (.19) (.51) (.31)
--------------------------------------------------------------------------
Total distributions .............................. (.38) (.36) (.47) (.51) (1.02)
--------------------------------------------------------------------------
Net asset value, end of year ..................... $ 10.03 $ 11.72 $ 12.06 $ 12.10 $ 12.80
==========================================================================
Total Return* .................................... (11.39)% .18% 3.71% (1.46)% 1.27%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .................. $ 18,117 $ 27,173 $ 33,703 $ 41,795 $ 50,773
Ratios to average net assets:
Expenses ........................................ 1.25% 1.13% 1.19% 1.10% .99%
Net investment income ........................... 4.52% 3.44% 4.08% 4.01% 4.30%
Portfolio turnover rate .......................... 37.79% .00% .00% .00% .00%
</TABLE>
*Total return does not reflect sales commissions.
(a)Based on average weighted shares outstanding effective year ended October 31,
1999.
See notes to financial statements.
18
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND AMOUNT* VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN GOVERNMENT SECURITIES - FLOATING RATE NOTE (COST $2,728,125) 9.9%
Government of Spain, FRN, 4.6513%, 6/29/02 ........................................ 2,121,861 EUR $ 1,798,313
------------
SHORT TERM INVESTMENTS 83.4%
CORPORATE BONDS 67.0%
Abbey National Treasury Services PLC, 5.00%, 12/12/00 ............................. 150,000 EUR 127,166
ABN Amro Bank NV:
5.50%, 1/08/01 ................................................................. 702,000 699,192
Series 12, 6.50%, 5/22/01 ...................................................... 200,000 199,400
Bank Nederlandse Gemeenten:
4.375%, 1/30/01 ................................................................ 66,468 EUR 56,254
Series 55, 4.50%, 7/02/01 ...................................................... 76,694 EUR 64,638
Bankers Trust Corp., Series A, 6.74%, 3/16/01 ..................................... 330,000 330,182
Bayerische Hypotheken Wechselbank AG, 6.25%, 11/30/00 ............................. 447,000 446,777
Bayerische Landesbank Girozen, 6.75%, 12/29/00 .................................... 650,000 CAD 425,907
Bayerische Vereinsbank AG, Series 220, 7.00%, 5/14/01 ............................. 300,000 299,940
CS First Boston Inc., Series 231, 7.25%, 4/30/01 .................................. 300,000 300,210
Deutsche Telekom International Finance NV, FRN, 4.641%, 11/02/00 .................. 1,000,000 EUR 847,689
Dresdner Finance BV, 5.25%, 1/11/01 ............................................... 568,000 EUR 481,775
General Electric Capital Corp.:
2.50%, 12/15/00 ................................................................ 299,495 EUR 253,027
5.50%, 1/16/01 ................................................................. 350,000 348,845
5.25%, 2/05/01 ................................................................. 1,222,000 AUD 630,679
6.25%, 2/13/01 ................................................................. 238,000 237,369
JP Morgan & Co. Inc., Series A, 6.25%, 3/15/01 .................................... 250,000 249,593
KFW International Finance Inc.:
5.75%, 12/01/00 ................................................................ 900,000 898,965
5.00%, 12/29/00 ................................................................ 108,907 EUR 92,229
Merrill Lynch & Co. Inc., 6.00%, 1/15/01 .......................................... 165,000 164,670
Minnesota Mining & Manufacturing Co., 6.625%, 4/30/01 ............................. 365,000 364,288
Morgan Guaranty & Trust Co., 6.375%, 3/26/01 ...................................... 200,000 199,510
Natexis SA, 6.00%, 11/06/00 ....................................................... 200,000 199,990
National Australia Bank Ltd., 5.50%, 12/18/00 ..................................... 502,000 NZD 198,900
Rabobank Nederland NV:
5.625%, 11/21/00 ............................................................... 383,469 EUR 325,126
Series 225, 6.25%, 1/30/01 ..................................................... 204,000 203,572
4.25% 2/14/01 .................................................................. 102,258 EUR 86,388
6.00%, 3/12/01 ................................................................. 333,000 331,785
State Bank New South Wales, 6.50%, 11/30/00 ....................................... 429,000 AUD 222,208
Toyota Credit Puerto Rico, zero cpn., 11/17/00 .................................... 1,000,000 996,931
Toyota Finance Australia, Series 10, 7.25%, 12/18/00 .............................. 135,000 NZD 53,547
Toyota Motor Credit Corp., 6.50%, 5/29/01 ......................................... 400,000 398,760
Transamerica Financial Corp., Series D, 6.05%, 11/22/00 ........................... 313,000 312,703
Unilever NV, 6.00%, 1/05/01 ....................................................... 400,000 399,160
Westpac Banking Corp., FRN, 6.7588%, 7/30/01 ...................................... 700,000 699,755
------------
TOTAL CORPORATE BONDS (COST $12,534,031) .......................................... 12,147,130
------------
</TABLE>
19
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND AMOUNT* VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES 4.9%
Asian Development Bank, 8.50%, 5/02/01 ............................................ $ 200,000 $201,553
European Bank for Reconstruction & Development, 4.875%, 2/28/01 ................... 61,355 EUR 51,903
Kingdom of Sweden, 5.75%, 3/26/01 ................................................. 250,000 248,950
New South Wales Treasury Corp., 7.25%, 11/20/00 ................................... 250,000 NZD 99,272
Republic of Argentina, Series B, zero cpn., 4/15/01 ............................... 168,000 163,044
Tennessee Valley Authority, 6.00%, 11/01/00 ....................................... 114,000 114,000
-----------
TOTAL GOVERNMENT SECURITIES (COST $891,212) ....................................... 878,722
-----------
U.S. GOVERNMENT AGENCIES 11.5%
Fannie Mae, 5.37% to 5.55%, with maturities to 4/05/01 ............................ 400,000 398,692
Federal Farm Credit Bank, 5.54%, 1/22/01 .......................................... 500,000 498,998
Federal Home Loan Bank, zero cpn. to 6.125%, with maturities to 9/17/01............ 1,050,000 1,042,018
Federal Home Loan Mortgage Corp., 5.480% to 6.745%, with maturities to 8/01/01..... 150,000 149,954
-----------
TOTAL U.S. GOVERNMENT AGENCIES (COST $2,088,342) .................................. 2,089,662
-----------
TOTAL SHORT TERM INVESTMENTS (COST $15,513,585) ................................... 15,115,514
-----------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENT (COST $18,241,710) .................. 16,913,827
-----------
(a)REPURCHASE AGREEMENT (COST $880,000) 4.9%
Lehman Brothers Inc., 6.55%, 11/01/00 (Maturity Value $880,160)
Collateralized by U.S. Treasury Notes and Bonds ................................ 880,000 880,000
-----------
TOTAL INVESTMENTS (COST $19,121,710) 98.2% ........................................ 17,793,827
NET EQUITY IN FORWARD CONTRACTS (.7%) ............................................. (121,572)
OTHER ASSETS, LESS LIABILITIES 2.5% ............................................... 444,366
-----------
TOTAL NET ASSETS 100.0% ........................................................... $18,116,621
===========
</TABLE>
CURRENCY ABBREVIATIONS:
AUD - Australian Dollar
CAD - Canadian Dollar
EUR - European Unit
NZD - New Zealand Dollar
*Securities denominated in U.S. dollars unless otherwise indicated.
(a)At October 31, 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.
20
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights
FRANKLIN TEMPLETON HARD CURRENCY FUND
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE(a)
(For a share outstanding throughout the year)
Net asset value, beginning of year ............... $ 9.52 $ 10.39 $ 10.28 $ 11.64 $ 13.09
----------------------------------------------------------------------------
Income from investment operations:
Net investment income ........................... .42 .30 .30 .37 .57
Net realized and unrealized gains (losses) ...... (1.68) (.95) .12 (1.33) (1.34)
----------------------------------------------------------------------------
Total from investment operations ................. (1.26) (.65) .42 (.96) (.77)
----------------------------------------------------------------------------
Less distributions from:
Net investment income ........................... -- -- (.25) -- (.06)
Tax return of capital ........................... (.24) (.22) (.06) (.40) (.62)
----------------------------------------------------------------------------
Total distributions .............................. (.24) (.22) (.31) (.40) (.68)
----------------------------------------------------------------------------
Net asset value, end of year ..................... $ 8.02 $ 9.52 $ 10.39 $ 10.28 $ 11.64
============================================================================
Total Return* .................................... (13.42)% (6.23)% 4.33% (8.28)% (5.99)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .................. $ 33,580 $ 56,381 $ 68,902 $ 91,976 $ 124,666
Ratios to average net assets:
Expenses ........................................ 1.29% 1.09% 1.35% 1.13% 1.10%
Net investment income ........................... 4.73% 3.08% 3.07% 3.53% 4.50%
Portfolio turnover rate .......................... 54.69% .00% 96.41% 2.68% .00%
</TABLE>
*Total return does not reflect sales commissions.
(a)Based on average weighted shares outstanding effective year ended October 31,
1998.
See notes to financial statements.
21
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Highlights (continued)
FRANKLIN TEMPLETON HARD CURRENCY FUND (CONT.)
<TABLE>
<CAPTION>
ADVISOR CLASS
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
2000 1999 1998 1997+
---------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE(a)
(For a share outstanding throughout the year)
Net asset value, beginning of year ......................... $ 9.53 $ 10.41 $ 10.28 $ 11.28
--------- --------- --------- ---------
Income from investment operations:
Net investment income ..................................... .37 .35 .33 .34
Net realized and unrealized gains (losses) ................ (1.61) (.99) .14 (1.00)
--------- --------- --------- ---------
Total from investment operations ........................... (1.24) (.64) .47 (.66)
--------- --------- --------- ---------
Less distributions from:
Net investment income ..................................... -- -- (.28) --
Tax return of capital ..................................... (.26) (.24) (.06) (.34)
--------- --------- --------- ---------
Total distributions ........................................ (.26) (.24) (.34) (.34)
--------- --------- --------- ---------
Net asset value, end of year ............................... $ 8.03 $ 9.53 $ 10.41 $ 10.28
========= ========= ========= =========
Total Return* .............................................. (13.22)% (6.17)% 4.89% (5.84)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............................ $ 75 $ 3,827 $ 3,343 $ 249
Ratios to average net assets:
Expenses .................................................. 1.06% .99% 1.01% .94%**
Net investment income ..................................... 4.13% 3.54% 3.29% 3.67%**
Portfolio turnover rate .................................... 54.69% .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 effective year ended October 31,
1999.
See notes to financial statements.
22
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON HARD CURRENCY FUND AMOUNT* VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS 79.7%
Abbey National Treasury Services PLC, 5.00%, 12/12/00 ................ 350,000 EUR $ 296,720
ABN Amro Bank NV:
5.50%, 1/08/01 .................................................... 1,000,000 996,000
Series 12, 6.50%, 5/22/01 ......................................... 366,000 364,902
American Express Co., zero cpn., 12/12/00 ............................ 295,000 292,773
Associates Corp. of North America, 5.85%, 1/15/01 .................... 300,000 299,162
AT&T Corp., 6.75%, 6/01/01 ........................................... 1,792,000 1,788,685
Bankers Trust Corp., Series A, 6.74%, 3/16/01 ........................ 670,000 670,369
Bayerische Hypotheken Wechselbank AG:
6.25%, 11/30/00 ................................................... 446,000 445,777
Series 18, 6.375%, 12/29/00 ....................................... 1,179,000 1,177,585
Bayerische Vereinsbank AG:
6.25%, 1/29/01 .................................................... 211,000 210,346
Series 220, 7.00%, 5/14/01 ........................................ 700,000 699,860
Chase Manhattan Corp., FRN, Series C, 6.94%, 11/22/00 ................ 200,000 200,010
Commerzbank Overseas Finance NV, FRN, 6.6338%, 1/30/01 ............... 88,000 87,956
Deutsche Telekom International Finance NV, FRN, 4.641%, 11/02/00 ..... 3,000,000 EUR 2,543,068
Dresdner Finance BV, 5.25%, 1/11/01 .................................. 1,161,000 EUR 984,754
General Electric Capital Corp.:
2.50%, 12/15/00 ................................................... 476,469 EUR 402,543
5.50%, 1/16/01 .................................................... 1,687,000 1,681,433
6.25%, 2/13/01 .................................................... 484,000 482,717
General Motors Acceptance Corp., 5.625%, 2/15/01 ..................... 301,000 299,851
Hypothekenbank In Essen AG, FRN, 5.0194%, 1/12/01 .................... 1,022,584 EUR 866,570
International Lease Finance Corp., 6.59%, 12/01/00 ................... 400,000 400,069
JP Morgan & Co. Inc., Series A, 6.25%, 3/15/01 ....................... 350,000 349,430
KFW International Finance Inc., 5.75%, 12/01/00 ...................... 300,000 299,655
McDonald's Corp., 5.25%, 5/21/01 ..................................... 178,952 EUR 151,506
Morgan Guaranty & Trust Co., 6.375%, 3/26/01 ......................... 250,000 249,388
Morgan Stanley Dean Witter & Co.:
FRN, 6.9375%, 2/06/01 ............................................ 180,000 180,101
9.375%, 6/15/01 ................................................... 300,000 304,427
Natexis SA, 6.00%, 11/06/00 .......................................... 400,000 399,980
Rabobank Nederland NV:
5.625%, 11/21/00 .................................................. 639,115 EUR 541,877
4.25% 2/14/01 ..................................................... 127,823 EUR 107,985
4.25%, 7/30/01 .................................................... 204,517 EUR 171,953
Rheinische Hypothekenbank Finance NV, 4.50%, 5/14/01 ................. 127,823 EUR 107,823
Siemens Capital Corp., 4.50%, 2/05/01 ................................ 1,294,000 1,285,330
Siemens Western Finance NV, zero cpn., 6/20/01 ....................... 240,000 229,956
Sudwestdeutsche Landesbank, 5.875%, 3/19/01 .......................... 470,000 468,091
Toronto Dominion Bank, 6.00%, 4/09/01 ................................ 373,000 371,452
Toyota Credit Puerto Rico, zero cpn., 11/17/00 ....................... 2,000,000 1,993,862
Toyota Motor Credit Corp., 6.50%, 5/29/01 ............................ 520,000 518,388
Travelers Group Inc., 7.25%, 5/01/01 ................................. 250,000 250,534
</TABLE>
23
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
FRANKLIN TEMPLETON HARD CURRENCY FUND AMOUNT* VALUE
------------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONT.)
<S> <C> <C>
Unilever NV:
6.00%, 1/05/01 ........................................................ $ 1,575,000 $ 1,571,693
6.625%, 5/29/01 ....................................................... 770,000 768,460
Westpac Banking Corp., FRN, 6.7588%, 7/30/01 ............................. 1,300,000 1,299,545
------------
TOTAL CORPORATE BONDS (COST $27,666,252) ................................. 26,812,586
------------
GOVERNMENT SECURITIES 6.9%
Asian Development Bank, 8.50%, 5/02/01 ................................... 360,000 362,795
European Investment Bank, 5.375%, 1/26/01 ................................ 442,000 439,933
Government of Canada, 5.50%, 1/30/01 ..................................... 348,000 346,921
Kingdom of Belgium, 5.375%, 2/28/01 ...................................... 380,000 377,782
Kingdom of Sweden:
6.25%, 12/04/00 ....................................................... 100,000 99,930
5.00%, 2/08/01 ........................................................ 143,162 EUR 121,211
New South Wales Treasury Corp., 7.25%, 11/20/00 .......................... 365,000 NZD 144,938
Government of Italy, 6.00%, 1/10/01 ...................................... 200,000 199,630
Tennessee Valley Authority, 6.00%, 11/01/00 .............................. 230,000 230,000
------------
TOTAL GOVERNMENT SECURITIES (COST $2,339,892) ............................ 2,323,140
------------
U.S. GOVERNMENT AGENCIES 11.4%
Fannie Mae, 4.95% to 5.55%, with maturities to 1/17/01 ................... 590,000 589,055
Federal Farm Credit Bank, 5.54%, 1/22/01 ................................. 1,500,000 1,496,994
Federal Home Loan Bank, 5.150% to 6.125%, with maturities to 9/24/01 ..... 1,505,000 1,495,727
Federal Home Loan Mortgage Corp., 5.865%, 7/16/01 ........................ 250,000 248,672
------------
TOTAL U.S. GOVERNMENT AGENCIES (COST $3,828,364) ......................... 3,830,448
------------
TOTAL INVESTMENTS (COST $33,834,508) 98.0% ............................... 32,966,174
NET EQUITY IN FORWARD CONTRACTS (.7%) .................................... (218,529)
OTHER ASSETS, LESS LIABILITIES 2.7% ...................................... 907,058
------------
TOTAL NET ASSETS 100.0% .................................................. $ 33,654,703
============
</TABLE>
CURRENCY ABBREVIATIONS:
EUR - European Unit
NZD - New Zealand Dollar
*Securities denominated in U.S. dollars unless otherwise indicated.
See notes to financial statements.
24
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON GLOBAL TEMPLETON HARD
CURRENCY FUND CURRENCY FUND
-----------------------------------
<S> <C> <C>
Assets:
Investments in securities:
Cost ..................................................................................... $ 18,241,710 $ 33,834,508
===================================
Value .................................................................................... 16,913,827 32,966,174
Repurchase agreement, at value and cost .................................................. 880,000 --
Cash ...................................................................................... 10,591 136,834
Receivables:
Beneficial shares sold ................................................................... 20,000 --
Interest ................................................................................. 474,126 892,754
Unrealized gain on forward exchange contracts (Note 6) .................................... 12,028 59,977
-----------------------------------
Total assets ......................................................................... 18,310,572 34,055,739
-----------------------------------
Liabilities:
Payables:
Beneficial shares redeemed ............................................................... 10,000 24,632
To affiliates ............................................................................ 24,847 53,327
To shareholders .......................................................................... 5,208 2,816
Unrealized loss on forward exchange contracts (Note 6) .................................... 133,600 278,506
Accrued expenses .......................................................................... 20,296 41,755
-----------------------------------
Total liabilities .................................................................... 193,951 401,036
-----------------------------------
Net assets, at value ....................................................................... $ 18,116,621 $ 33,654,703
===================================
Net assets consist of:
Undistributed net investment income ....................................................... $ 85,551 $ 218,528
Net unrealized depreciation ............................................................... (1,459,474) (1,092,747)
Accumulated net realized loss ............................................................. (358,340) (1,531,836)
Beneficial shares ......................................................................... 19,848,884 36,060,758
-----------------------------------
Net assets, at value ....................................................................... $ 18,116,621 $ 33,654,703
===================================
</TABLE>
See notes to financial statements.
25
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENTS OF ASSETS AND LIABILITIES (CONT.)
OCTOBER 31, 2000
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON GLOBAL TEMPLETON HARD
CURRENCY FUND CURRENCY FUND
----------------------------------
<S> <C> <C>
CLASS A:
Net asset value ............................................................... $18,116,621 $ 33,580,346
===============================
Shares outstanding ............................................................ 1,806,953 4,186,862
===============================
Net asset value per share ..................................................... $ 10.03 $ 8.02
===============================
Maximum offering price per share (Net asset value per share / 97.75%) ......... $ 10.26 $ 8.20
===============================
ADVISOR CLASS:
Net asset value ............................................................... $ 74,357
==============
Shares outstanding ............................................................ 9,263
==============
Net asset value and maximum offering price per share .......................... $ 8.03
==============
</TABLE>
See notes to financial statements.
26
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON GLOBAL TEMPLETON HARD
CURRENCY FUND CURRENCY FUND
---------------------------------
<S> <C> <C>
Interest Income ..................................................................... $ 1,184,793 $ 2,414,192
---------------------------------
Expenses:
Management fees (Note 3) ........................................................... 133,575 261,328
Distribution fees - Class A (Note 3) ............................................... 42,110 93,585
Transfer agent fees (Note 3) ....................................................... 36,500 94,700
Custodian fees ..................................................................... 2,750 4,300
Reports to shareholders ............................................................ 3,600 6,000
Registration and filing fees ....................................................... 15,300 19,900
Professional fees .................................................................. 12,200 20,160
Trustees' fees and expenses ........................................................ 9,700 17,100
Other .............................................................................. 144 831
---------------------------------
Total expenses ................................................................ 255,879 517,904
---------------------------------
Net investment income ........................................................ 928,914 1,896,288
---------------------------------
Realized and unrealized gains (losses):
Net realized loss from:
Investments ....................................................................... (959,086) (878,681)
Foreign currency transactions ..................................................... (1,708,050) (6,615,904)
---------------------------------
Net realized loss ............................................................. (2,667,136) (7,494,585)
Net unrealized appreciation (depreciation) on:
Investments ....................................................................... (668,480) (815,961)
Translation of assets and liabilities denominated in foreign currencies ........... (9,972) 464,137
---------------------------------
Net unrealized depreciation ................................................... (678,452) (351,824)
---------------------------------
Net realized and unrealized loss .................................................... (3,345,588) (7,846,409)
---------------------------------
Net decrease in net assets resulting from operations ................................ $(2,416,674) $(5,950,121)
=================================
</TABLE>
See notes to financial statements.
27
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 2000 AND 1999
<TABLE>
<CAPTION>
FRANKLIN TEMPLETON FRANKLIN TEMPLETON
GLOBAL CURRENCY FUND HARD CURRENCY FUND
--------------------------------------------------------------
2000 1999 2000 1999
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................................... $ 928,914 $ 1,044,762 $ 1,896,288 $ 1,889,456
Net realized loss from investments and foreign
currency transactions ....................................... (2,667,136) (628,517) (7,494,585) (5,891,225)
Net unrealized depreciation on investments and
translation of assets and liabilities denominated
in foreign currencies ....................................... (678,452) (418,533) (351,824) (400,035)
--------------------------------------------------------------
Net decrease in net assets resulting
from operations ......................................... (2,416,674) (2,288) (5,950,121) (4,401,804)
Distributions to shareholders from:
Net investment income:
Class A ...................................................... -- (401,698) -- --
Tax return of capital:
Class A ...................................................... (690,154) (512,429) (1,070,126) (1,360,702)
Advisor Class ................................................ -- -- (1,117) (33,846)
--------------------------------------------------------------
Total distributions to shareholders ............................ (690,154) (914,127) (1,071,243) (1,394,548)
Beneficial share transactions (Note 2):
Class A ....................................................... (5,949,209) (5,614,253) (15,855,956) (6,982,082)
Advisor Class ................................................. -- -- (3,675,617) 740,853
--------------------------------------------------------------
Total beneficial share transactions ............................ (5,949,209) (5,614,253) (19,531,573) (6,241,229)
Net decrease in net assets ................................ (9,056,037) (6,530,668) (26,552,937) (12,037,581)
Net assets:
Beginning of year .............................................. 27,172,658 33,703,326 60,207,640 72,245,221
--------------------------------------------------------------
End of year .................................................... $18,116,621 $27,172,658 $ 33,654,703 $ 60,207,640
==============================================================
Undistributed net investment income included in net assets:
End of year ................................................... $ 85,551 $ 156,654 $ 218,528 $ 565,457
==============================================================
</TABLE>
See notes to financial statements.
28
<PAGE>
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.
29
<PAGE>
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 Funds. 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 shares and Advisor
Class shares. 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, 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:
Year ended October 31, 2000
Shares sold ............................................... 660,736 $ 7,037,319 2,415,178 $ 21,265,810
Shares issued on reinvestment of distributions ............ 57,362 625,964 102,168 896,347
Shares redeemed ........................................... (1,230,373) (13,612,492) (4,251,323) (38,018,113)
--------------------------------------------------------------
Net decrease .............................................. (512,275) $ (5,949,209) (1,733,977) $(15,855,956)
==============================================================
</TABLE>
30
<PAGE>
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
------------------------------------------------------------
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:
Year ended October 31, 2000
Shares sold ............................................... 5,486 $ 45,937
Shares issued on reinvestment of distributions ............ 71 612
Shares redeemed ........................................... (397,985) (3,722,166)
----------------------------
Net decrease .............................................. (392,428) $ (3,675,617)
============================
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
Fund's average daily net assets for costs incurred in marketing the Fund's
shares. The Hard Currency Fund reimburses Distributors up to 0.45% per year of
the Fund's average daily net assets of Class A shares for costs incurred in
marketing the Fund's Class A shares.
Distributors received net commissions on sales of Fund shares, and paid
commissions to other dealers for the year ended October 31, 2000 as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
------------------------------------
<S> <C> <C>
Total commissions received .......... $4,970 $23,459
Paid to other dealers ............... $6,285 $20,631
</TABLE>
31
<PAGE>
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.
The cost of securities for income tax purposes is the same as that shown in the
Statement of Investments. At October 31, 2000, 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 ............. $ 12,517 $ 11,317
Unrealized depreciation ............. (1,340,400) (879,651)
--------------------------------
Net unrealized depreciation ......... $(1,327,883) $(868,334)
================================
</TABLE>
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions.
At October 31, 2000, 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 --
2008 .......................................... 12,940 25,228
--------------------------------
$358,340 $1,531,836
================================
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended October 31, 2000 were as follows:
<TABLE>
<CAPTION>
FRANKLIN FRANKLIN
TEMPLETON TEMPLETON
GLOBAL HARD
CURRENCY FUND CURRENCY FUND
-----------------------------------
<S> <C> <C>
Purchases ........................... $3,168,071 $6,805,045
Sales ............................... $1,419,992 $2,356,919
</TABLE>
32
<PAGE>
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, 2000, 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:
12,000,000 Swedish Krona ............................................ U.S. $1,188,590 11/30/00 U.S. $ 12,028
========== ----------
Unrealized gain on forward exchange contracts ............ 12,028
----------
CONTRACTS TO BUY:
8,000,000 Danish Krona ............................................. 947,172 11/03/00 (36,021)
2,300,000 European Unit ............................................ 2,015,743 11/10/00 (65,340)
1,000,000 British Pound Sterling ................................... 1,457,850 11/27/00 (5,075)
107,700,000 Japanese Yen ............................................. 1,000,000 11/30/00 (8,175)
3,300,000 New Zealand Dollar ....................................... 1,328,415 11/30/00 (18,678)
2,500,000 Canadian Dollar .......................................... 1,638,270 11/30/00 (311)
---------- ----------
U.S. $8,387,450 (133,600)
========== ----------
Unrealized loss on forward exchange contracts ............ (133,600)
----------
Net unrealized loss on forward exchange contracts .... U.S. $(121,572)
==========
</TABLE>
33
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (continued)
6. OFF-BALANCE SHEET RISK (CONT.)
As of October 31, 2000, 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:
17,150,000 Swiss Franc .............................................. U.S. $ 9,506,652 11/30/00 U.S. $ 59,977
=========== ---------
Unrealized gain on forward exchange contracts ............ 59,977
---------
CONTRACTS TO BUY:
945,000 European Unit ............................................ 827,253 11/06/00 (26,043)
4,585,000 European Unit ............................................ 4,018,340 11/10/00 (130,253)
642,740,000 Japanese Yen ............................................. 5,965,104 11/24/00 (52,579)
247,710,000 Japanese Yen ............................................. 2,300,000 11/30/00 (18,804)
8,980,000 New Zealand Dollar ....................................... 3,614,899 11/30/00 (50,827)
----------- ---------
U.S. $16,725,596 (278,506)
=========== ---------
Unrealized loss on forward exchange contracts ............ (278,506)
---------
Net unrealized loss on forward exchange contracts .... U.S. $(218,529)
=========
</TABLE>
7. CREDIT RISK
The Funds have investments in excess of 10% of their total net assets in the
following:
Global Currency Fund - debt securities denominated in the European Unit.
Hard Currency Fund - debt securities denominated in the European Unit.
Such concentrations may subject the Funds more significantly to economic changes
occurring within those countries.
34
<PAGE>
FRANKLIN TEMPLETON GLOBAL TRUST
Independent Auditors' Report
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the funds included in this
report constituting the Franklin Templeton Global Trust (hereafter referred to
as the "Trust") at October 31, 2000, the results of their operations for the
year then ended, the changes in their net assets for each of the two years in
the period then ended and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's 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 auditing standards generally accepted in
the United States of America, 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, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
November 21, 2000
35
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