UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04450
Franklin Templeton Global Trust_
(Exact name of registrant as specified in charter)
__One Franklin Parkway, San Mateo, CA 94403-1906_
(Address of principal executive offices) (Zip code)
Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906_
(Name and address of agent for service)
Registrant's telephone number, including area Code: (650) 312-2000
Date of fiscal year end: 10/31
Date of reporting period: 4/30/15
Item 1. Reports to Stockholders.
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Franklin Templeton Investments
Gain From Our Perspective®
At Franklin Templeton Investments, we’re dedicated to one goal: delivering exceptional asset management for our clients. By bringing together multiple, world-class investment teams in a single firm, we’re able to offer specialized expertise across styles and asset classes, all supported by the strength and resources of one of the world’s largest asset managers. This has helped us to become a trusted partner to individual and institutional investors across the globe.
Focus on Investment Excellence
At the core of our firm, you’ll find multiple independent investment teams—each with a focused area of expertise—from traditional to alternative strategies and multi-asset solutions. And because our portfolio groups operate autonomously, their strategies can be combined to deliver true style and asset class diversification.
All of our investment teams share a common commitment to excellence grounded in rigorous, fundamental research and robust, disciplined risk management. Decade after decade, our consistent, research-driven processes have helped Franklin Templeton earn an impressive record of strong, long-term results.
Global Perspective Shaped by Local Expertise
In today’s complex and interconnected world, smart investing demands a global perspective. Franklin Templeton pioneered international investing over 60 years ago, and our expertise in emerging markets spans more than a quarter of a century. Today, our investment professionals are on the ground across the globe, spotting investment ideas and potential risks firsthand. These locally based teams bring in-depth understanding of local companies, economies and cultural nuances, and share their best thinking across our global research network.
Strength and Experience
Franklin Templeton is a global leader in asset management serving clients in over 150 countries.1 We run our business with the same prudence we apply to asset management, staying focused on delivering relevant investment solutions, strong long-term results and reliable, personal service. This approach, focused on putting clients first, has helped us to become one of the most trusted names in financial services.
1. As of 12/31/14. Clients are represented by the total number of shareholder accounts.
Not FDIC Insured | May Lose Value | No Bank Guarantee
Contents | |
Shareholder Letter | 1 |
Semiannual Report | |
Templeton Hard Currency Fund | 3 |
Performance Summary | 6 |
Your Fund’s Expenses | 8 |
Financial Highlights and | |
Statement of Investments | 9 |
Financial Statements | 13 |
Notes to Financial Statements | 16 |
Shareholder Information | 25 |
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Semiannual Report
Templeton Hard Currency Fund
(formerly, Franklin Templeton Hard Currency Fund)
This semiannual report for Templeton Hard Currency Fund covers the period ended April 30, 2015.
Your Fund’s Goal and Main Investments
The Fund seeks to protect against depreciation of the U.S. dollar relative to other currencies. The Fund seeks to achieve its goal by investing at least 80% of its net assets in investments denominated in hard currencies (as defined in the prospectus). The Fund normally invests mainly in high-quality short-term money market instruments and currency forward contracts denominated in foreign hard currencies. The Fund focuses on countries and markets that historically have experienced low inflation rates and that, in the investment manager’s view, follow economic policies conducive to continued low inflation rates and currency appreciation versus the U.S. dollar over the long term.
What is a currency forward contract?
A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.
Performance Overview
The Fund’s Class A shares had a -5.24% cumulative total return for the six months under review. In comparison, the Fund’s benchmark, the J.P. Morgan (JPM) 3 Month Global Cash Index, which tracks total returns of short-term euro-currency deposits, had a -8.58% total return for the same period.1 The Fund typically does not attempt to directly match the composition of the index; thus the results are not directly comparable. The U.S. dollar appreciated 8.74% relative to its major trading partners during the period.2 In particular, the dollar gained 11.81% versus the euro and rose 6.75% versus the Japanese yen.3 You can find the Fund’s long-term performance data in the Performance Summary beginning on page 6.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. Please visit franklintempleton.com or call (800) 342-5236 for most recent month-end performance.
Economic and Market Overview
During the period, global financial markets were broadly influenced by the pickup in growth in the U.S., economic stabilization in China, the abundance of global liquidity from the Bank of Japan (BOJ) and European Central Bank (ECB) and the sharp decline in oil prices. The U.S. dollar strengthened against the euro, Japanese yen, and a vast number of developed and emerging market currencies over the six-month period.
Oil prices declined sharply during November and December 2014, leading to an increase in risk aversion across global fixed income markets. However, we believe the market misjudged the underlying forces behind the decline in oil prices, which we consider to have been driven by supply dynamics rather than a loss of demand. In our assessment, the global economy benefits from lower oil prices and we believe most observers have been too pessimistic.
As risk aversion increased during November and December, the U.S. dollar broadly strengthened against developed and emerging market currencies. Local-currency sovereign bond yields decreased across the Americas, Europe and Asia while credit spreads widened. This trend persisted through January before sharply reversing course in February; credit spreads tightened as risk appetites returned and local-currency sovereign bond yields broadly shifted higher across the Americas, Europe and Asia. During this time, currencies in certain emerging markets rebounded against the U.S. dollar.
1. Source: J.P. Morgan.
The index is unmanaged and includes reinvested distributions. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
2. Source: Federal Reserve H.10 Report.
3. Source: FactSet.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI).
The SOI begins on page 11.
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Semiannual Report | 3
TEMPLETON HARD CURRENCY FUND
Shortly before the period began, the BOJ introduced a new round of quantitative easing (QE) with an indefinite time horizon. The annual level of asset purchasing was raised to 80 trillion yen — a level that approximates the U.S. Federal Reserve Board’s (Fed’s) former QE program that ended in October 2014, the same month. Although Japan’s QE was positive for global risk assets, it contributed to further yen depreciation. The yen depreciated 6.32% against the U.S. dollar during the six-month period.3
In Europe, low inflation persisted while economic data was disappointing through much of the period. In January 2015, the ECB announced an ambitious QE program with the aim of increasing the size of its balance sheet to a level higher than its previous peak. Those QE operations began as planned in March. The ECB’s renewed commitment to pursue highly accommodative monetary policies put further pressure on the euro, contributing to the euro’s 10.56% depreciation against the U.S. dollar during the period.3
We continued to see differentiations among specific emerging market economies; some have healthy current account and fiscal balances, with large international reserves, while others struggled with deficits and economic imbalances. During the period, specific currencies in economies with healthier fundamentals generally fared better on a relative basis than those of other economies.
Investment Strategy
In making investments in foreign hard currencies, we focus on countries and markets that historically have experienced low inflation rates and, in our opinion, follow economic policies favorable to continued low inflation rates and currency appreciation against the U.S. dollar over the long term. We may invest substantially in a combination of U.S. dollar-denominated securities and currency forward contracts or currency futures contracts.
What is a currency futures contract?
A currency futures contract is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell a currency at a specific price on a future date.
Manager’s Discussion
The U.S. dollar broadly appreciated against most currencies during the period as U.S. economic growth strengthened and the Fed indicated that interest rates might be raised later in 2015. The Fund remained positioned in select emerging market currencies that we believe have the potential to outperform other currencies over the long term.
Currency Breakdown* | ||
4/30/15 | ||
% of Total | ||
Net Assets | ||
Asia Pacific | 82.0 | % |
South Korean Won | 43.0 | % |
Singapore Dollar | 22.8 | % |
Malaysian Ringgit | 8.6 | % |
Hong Kong Dollar | 7.6 | % |
Americas | 18.0 | % |
Mexican Peso | 10.8 | % |
U.S. Dollar | 6.9 | % |
Canadian Dollar | 0.3 | % |
*Percentages reflect certain derivatives held in the portfolio (or their underlying reference assets) and may not total 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.
Europe
The Fund’s lack of exposure to the euro helped absolute performance as the euro depreciated against the U.S. dollar. The Fund’s underweighted position in the euro contributed strongly to performance relative to the benchmark index during the period.
The Fund’s exposure to other European currencies had a largely neutral effect on absolute performance. The Swedish krona depreciated 11.38% against the U.S. dollar during the period.3 Underweighted exposure to other European currencies contributed notably to relative return.
Asia Pacific
The Fund’s currency positions in Asia detracted from absolute performance. Currency positions in Southeast Asia detracted from absolute performance. On a relative basis, currency positions in Asia had a largely neutral effect on relative return. Overweighted currency positions in Southeast Asia detracted from relative performance while select overweighted currency positions in East Asia contributed. The Fund’s underweighted position in the Japanese yen, resulting from no exposure to that currency, contributed to relative return.
The Japanese yen depreciated 6.32% against the U.S. dollar.3 In East Asia, the South Korean won depreciated 0.31% against the U.S. dollar.3 In Southeast Asia, the Singapore dollar depreciated 2.95% against the U.S. dollar and the Malaysian ringgit depreciated 7.64%.3 In addition, the Australian dollar depreciated 10.27%.3
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TEMPLETON HARD CURRENCY FUND
Americas
Currency positioning in the Americas detracted from absolute and relative performance. The Canadian dollar depreciated 6.92% against the U.S. dollar, the Chilean peso declined 5.49%, and the Mexican peso depreciated 12.23%.3
Thank you for your continued participation in Templeton Hard Currency Fund. We look forward to serving your future investment needs.
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Please note that although the Fund’s Statement of Investments on page 11 of this report indicates the Fund held 73.5% of its total investments in U.S. dollar-denominated assets as of 4/30/15, its net exposure to the U.S. dollar as of that date was 6.9%. The difference is explained by the Fund’s holdings of currency forward contracts (please see Statement of Investments on pages 11 and 12 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” currency forward 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.
The foregoing information reflects our analysis, opinions and portfolio holdings as of April 30, 2015, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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TEMPLETON HARD CURRENCY FUND
Performance Summary as of April 30, 2015
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities. The performance tables do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses.
Net Asset Value | ||||||
Share Class (Symbol) | 4/30/15 | 10/31/14 | Change | |||
A (ICPHX) | $ | 8.50 | $ | 8.97 | -$ | 0.47 |
Advisor (ICHHX) | $ | 8.58 | $ | 9.05 | -$ | 0.47 |
Performance1
Cumulative total return excludes sales charges. Average annual total returns and value of $10,000 investment include maximum sales charges. Class A: 2.25% maximum initial sales charge; Advisor Class: no sales charges.
Total Annual Operating Expenses6 | |||||||||||||||
Cumulative | Average Annual | Value of | Average Annual | ||||||||||||
Share Class | Total Return2 | Total Return3 | $ | 10,000 Investment4 | Total Return (3/31/15)5 | (with waiver) | (without waiver) | ||||||||
A | 1.15 | % | 1.19 | % | |||||||||||
6-Month | -5.24 | % | -7.41 | % | $ | 9,259 | |||||||||
1-Year | -8.31 | % | -10.34 | % | $ | 8,966 | -11.82 | % | |||||||
5-Year | -2.75 | % | -1.00 | % | $ | 9,509 | -1.44 | % | |||||||
10-Year | + | 20.37 | % | + | 1.64 | % | $ | 11,770 | + | 1.35 | % | ||||
Advisor | 0.87 | % | 0.91 | % | |||||||||||
6-Month | -5.19 | % | -5.19 | % | $ | 9,481 | |||||||||
1-Year | -8.04 | % | -8.04 | % | $ | 9,196 | -9.52 | % | |||||||
5-Year | -1.40 | % | -0.28 | % | $ | 9,860 | -0.72 | % | |||||||
10-Year | + | 23.84 | % | + | 2.16 | % | $ | 12,384 | + | 1.88 | % |
30-Day Standardized Yield7 | ||||
Share Class | (with waiver) | (without waiver) | ||
A | -0.91 | % | -0.97 | % |
Advisor | -0.65 | % | -0.73 | % |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.
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TEMPLETON HARD CURRENCY FUND
PERFORMANCE SUMMARY
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including economic instability and political
developments. The Fund’s assets are largely invested in foreign currencies, and therefore involve potential for significant gain or loss from currency exchange
rate fluctuations. The Fund does not seek to maintain a stable net asset value and should not be considered a substitute for a U.S. dollar money market fund.
The Fund is also nondiversified, which involves the risk of greater price fluctuation than a more diversified portfolio. Changes in the financial strength of a bond
issuer or in a bond’s credit rating may affect its value. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will
produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
Advisor Class: Shares are available to certain eligible investors as described in the prospectus.
1. The Fund has a fee waiver associated with its investments in a Franklin Templeton money fund, contractually guaranteed through at least its current fiscal year-end.
Fund investment results reflect the fee waiver, to the extent applicable; without this reduction, the results would have been lower.
2. Cumulative total return represents the change in value of an investment over the periods indicated.
3. Average annual total return represents the average annual change in value of an investment over the periods indicated. Six-month return has not been annualized.
4. These figures represent the value of a hypothetical $10,000 investment in the Fund over the periods indicated.
5. In accordance with SEC rules, we provide standardized average annual total return information through the latest calendar quarter.
6. Figures are as stated in the Fund’s current prospectus. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to
become higher than the figures shown.
7. The 30-day standardized yield for the 30 days ended 4/30/15 reflects an estimated yield to maturity (assuming all portfolio securities are held to maturity). It should be
regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate (which reflects the Fund’s past dividends
paid to shareholders) or the income reported in the Fund’s financial statements.
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Semiannual Report | 7
TEMPLETON HARD CURRENCY FUND
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs:
- Transaction costs, including sales charges (loads) on Fund purchases; and
- Ongoing Fund costs, including management fees, distribu- tion and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses.
The following table shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The first line (Actual) for each share class listed in the table provides actual account values and expenses. The “Ending Account Value” is derived from the Fund’s actual return, which includes the effect of Fund expenses.
You can estimate the expenses you paid during the period by following these steps. Of course, your account value and expenses will differ from those in this illustration:
1. | Divide your account value by $1,000. |
If an account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6. | |
2. | Multiply the result by the number under the heading “Expenses Paid During Period.” |
If Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50. |
In this illustration, the estimated expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Information in the second line (Hypothetical) for each class in the table can help you compare ongoing costs of investing in the Fund with those of other mutual funds. This information may not be used to estimate the actual ending account balance or expenses you paid during the period. The hypothetical “Ending Account Value” is based on the actual expense ratio for each class and an assumed 5% annual rate of return before expenses, which does not represent the Fund’s actual return. The figure under the heading “Expenses Paid During Period” shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transaction costs, such as sales charges. Therefore, the second line for each class is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transaction costs were included, your total costs would have been higher. Please refer to the Fund prospectus for additional information on operating expenses.
Beginning Account | Ending Account | Expenses Paid During | ||||
Share Class | Value 11/1/14 | Value 4/30/15 | Period* 11/1/14–4/30/15 | |||
A | ||||||
Actual | $ | 1,000 | $ | 947.60 | $ | 5.60 |
Hypothetical (5% return before expenses) | $ | 1,000 | $ | 1,019.04 | $ | 5.81 |
Advisor | ||||||
Actual | $ | 1,000 | $ | 948.10 | $ | 4.35 |
Hypothetical (5% return before expenses) | $ | 1,000 | $ | 1,020.33 | $ | 4.51 |
*Expenses are calculated using the most recent six-month expense ratio, net of expense waivers, annualized for each class (A: 1.16% and Advisor: 0.90%), multiplied by the average account value over the period, multiplied by 181/365 to reflect the one-half year period.
8 | Semiannual Report
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FRANKLIN TEMPLETON GLOBAL TRUST | ||||||||||||||||||
Financial Highlights | ||||||||||||||||||
Templeton Hard Currency Fund | ||||||||||||||||||
Six Months Ended | ||||||||||||||||||
April 30, 2015 | Year Ended October 31, | |||||||||||||||||
(unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||
Class A | ||||||||||||||||||
Per share operating performance | ||||||||||||||||||
(for a share outstanding throughout the period) | ||||||||||||||||||
Net asset value, beginning of period | $ | 8.97 | $ | 9.41 | $ | 9.54 | $ | 9.98 | $ | 10.21 | $ | 9.61 | ||||||
Income from investment operationsa: | ||||||||||||||||||
Net investment income (loss)b | (0.03 | ) | (0.07 | ) | (0.06 | ) | (0.02 | ) | (—)c | 0.01 | ||||||||
Net realized and unrealized gains (losses) | (0.44 | ) | (0.37 | ) | (0.07 | ) | (0.01 | ) | 0.34 | 0.59 | ||||||||
Total from investment operations | (0.47 | ) | (0.44 | ) | (0.13 | ) | (0.03 | ) | 0.34 | 0.60 | ||||||||
Less distributions from net investment income | ||||||||||||||||||
and net realized foreign currency gains | — | — | (—)c | (0.41 | ) | (0.57 | ) | — | ||||||||||
Net asset value, end of period | $ | 8.50 | $ | 8.97 | $ | 9.41 | $ | 9.54 | $ | 9.98 | $ | 10.21 | ||||||
Total returnd | (5.24 | )% | (4.68 | )% | (1.36 | )% | (0.13 | )% | 3.62 | % | 6.24 | % | ||||||
Ratios to average net assetse | ||||||||||||||||||
Expenses before waiver and payments by | ||||||||||||||||||
affiliates and expense reduction | 1.20 | % | 1.15 | % | 1.07 | % | 1.06 | % | 1.05 | % | 1.07 | % | ||||||
Expenses net of waiver and payments by | ||||||||||||||||||
affiliates and expense reduction | 1.16 | % | 1.11 | % | 1.07 | %f | 1.06 | % | 1.05 | % | 1.07 | %f | ||||||
Net investment income (loss) | (0.81 | )% | (0.73 | )% | (0.61 | )% | (0.17 | )% | (0.03 | )% | 0.07 | % | ||||||
Supplemental data | ||||||||||||||||||
Net assets, end of period (000’s) | $ | 106,024 | $ | 173,792 | $ | 265,152 | $ | 376,926 | $ | 463,128 | $ | 279,445 |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and
repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cAmount rounds to less than $0.01 per share.
dTotal return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
franklintempleton.com The accompanying notes are an integral part of these financial statements. | Semiannual Report | 9
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL HIGHLIGHTS
Templeton Hard Currency Fund (continued) | ||||||||||||||||||
Six Months Ended | ||||||||||||||||||
April 30, 2015 | Year Ended October 31, | |||||||||||||||||
(unaudited) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||
Advisor Class | ||||||||||||||||||
Per share operating performance | ||||||||||||||||||
(for a share outstanding throughout the period) | ||||||||||||||||||
Net asset value, beginning of period | $ | 9.05 | $ | 9.47 | $ | 9.56 | $ | 10.01 | $ | 10.28 | $ | 9.65 | ||||||
Income from investment operationsa: | ||||||||||||||||||
Net investment income (loss)b | (0.02 | ) | (0.04 | ) | (0.03 | ) | 0.01 | 0.03 | 0.04 | |||||||||
Net realized and unrealized gains (losses) | (0.45 | ) | (0.38 | ) | (0.06 | ) | (0.02 | ) | 0.35 | 0.59 | ||||||||
Total from investment operations | (0.47 | ) | (0.42 | ) | (0.09 | ) | (0.01 | ) | 0.38 | 0.63 | ||||||||
Less distributions from net investment income | ||||||||||||||||||
and net realized foreign currency gains | — | — | (—)c | (0.44 | ) | (0.65 | ) | — | ||||||||||
Net asset value, end of period | $ | 8.58 | $ | 9.05 | $ | 9.47 | $ | 9.56 | $ | 10.01 | $ | 10.28 | ||||||
Total returnd | (5.19 | )% | (4.44 | )% | (0.94 | )% | 0.08 | % | 4.00 | % | 6.52 | % | ||||||
Ratios to average net assetse | ||||||||||||||||||
Expenses before waiver and payments by | ||||||||||||||||||
affiliates and expense reduction | 0.94 | % | 0.87 | % | 0.79 | % | 0.78 | % | 0.75 | % | 0.76 | % | ||||||
Expenses net of waiver and payments by | ||||||||||||||||||
affiliates and expense reduction | 0.90 | % | 0.83 | % | 0.79 | %f | 0.78 | % | 0.75 | % | 0.76 | %f | ||||||
Net investment income (loss) | (0.55 | )% | (0.45 | )% | (0.33 | )% | 0.11 | % | 0.27 | % | 0.38 | % | ||||||
Supplemental data | ||||||||||||||||||
Net assets, end of period (000’s) | $ | 36,955 | $ | 59,660 | $ | 104,673 | $ | 150,025 | $ | 236,712 | $ | 70,992 |
aThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and
repurchases of the Fund’s shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
bBased on average daily shares outstanding.
cAmount rounds to less than $0.01 per share.
dTotal return is not annualized for periods less than one year.
eRatios are annualized for periods less than one year.
fBenefit of expense reduction rounds to less than 0.01%.
10 | Semiannual Report | The accompanying notes are an integral part of these financial statements. franklintempleton.com
FRANKLIN TEMPLETON GLOBAL TRUST | |||||
Statement of Investments, April 30, 2015 (unaudited) | |||||
Templeton Hard Currency Fund | |||||
Principal | |||||
Amount | Value | ||||
Foreign Government and Agency Securities 30.3% | |||||
Government of Hong Kong, 1.91%, 3/21/16 | 83,000,000 | HKD | $ | 10,883,598 | |
aMonetary Authority of Singapore Treasury Bills, | |||||
5/04/15 | 3,960,000 | SGD | 2,991,614 | ||
5/12/15 | 4,800,000 | SGD | 3,625,536 | ||
5/22/15 | 34,290,000 | SGD | 25,893,988 | ||
7/03/15 - 7/10/15 | 20,000 | SGD | 15,087 | ||
Total Foreign Government and Agency Securities (Cost $42,703,103) | 43,409,823 | ||||
Shares | |||||
Money Market Funds (Cost $105,045,591) 73.5% | |||||
b,cInstitutional Fiduciary Trust Money Market Portfolio | 105,045,591 | 105,045,591 | |||
Total Investments (Cost $147,748,694) 103.8% | 148,455,414 | ||||
Other Assets, less Liabilities (3.8)% | (5,476,446 | ) | |||
Net Assets 100.0% | $ | 142,978,968 |
aThe security is traded on a discount basis with no stated coupon rate.
bNon-income producing.
cSee Note 3(f) regarding investments in Institutional Fiduciary Trust Money Market Portfolio.
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FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Templeton Hard Currency Fund (continued)
At April 30, 2015 the Fund had the following forward exchange contracts outstanding. See Note 1(c).
Forward Exchange Contracts | |||||||||||
Contract | Settlement | Unrealized | Unrealized | ||||||||
Currency | Counterpartya Type | Quantity | Amount | Date Appreciation Depreciation | |||||||
South Korean Won | HSBC | Buy | 3,800,610,000 | $ | 3,662,533 | 6/03/15 | $ | — | $ | (138,511 | ) |
Mexican Peso | DBAB | Buy | 91,836,169 | 6,896,937 | 6/16/15 | — | (930,928 | ) | |||
Chilean Peso | JPHQ | Buy | 277,920,000 | 431,888 | 6/18/15 | 20,265 | — | ||||
Chilean Peso | JPHQ | Sell | 277,920,000 | 439,122 | 6/18/15 | — | (13,032 | ) | |||
Malaysian Ringgit | DBAB | Buy | 1,154,200 | 351,216 | 6/23/15 | — | (28,449 | ) | |||
Malaysian Ringgit | DBAB | Sell | 1,154,200 | 315,873 | 6/23/15 | — | (6,893 | ) | |||
Mexican Peso | DBAB | Buy | 36,456,000 | 2,744,664 | 7/17/15 | — | (381,504 | ) | |||
Malaysian Ringgit | HSBC | Buy | 39,116,100 | 12,042,393 | 7/31/15 | — | (1,135,687 | ) | |||
Malaysian Ringgit | HSBC | Sell | 9,200,000 | 2,451,372 | 7/31/15 | — | (113,855 | ) | |||
South Korean Won | DBAB | Buy | 10,640,940,000 | 9,770,398 | 8/04/15 | 79,370 | — | ||||
Mexican Peso | MSCO | Buy | 73,028,700 | 5,399,933 | 8/06/15 | — | (672,739 | ) | |||
Chilean Peso | JPHQ | Buy | 278,080,000 | 468,740 | 8/20/15 | — | (18,959 | ) | |||
Chilean Peso | JPHQ | Sell | 278,080,000 | 436,992 | 8/20/15 | — | (12,789 | ) | |||
Mexican Peso | JPHQ | Buy | 13,066,100 | 978,148 | 8/20/15 | — | (133,245 | ) | |||
South Korean Won | HSBC | Buy | 14,582,700,000 | 14,157,961 | 8/20/15 | — | (664,307 | ) | |||
South Korean Won | HSBC | Sell | 14,582,700,000 | 13,096,273 | 8/20/15 | — | (397,381 | ) | |||
Malaysian Ringgit | HSBC | Buy | 10,167,700 | 3,144,293 | 8/24/15 | — | (314,231 | ) | |||
South Korean Won | JPHQ | Buy | 8,828,110,000 | 7,931,815 | 9/30/15 | 229,575 | — | ||||
Malaysian Ringgit | HSBC | Buy | 4,286,900 | 1,138,256 | 10/15/15 | 50,423 | — | ||||
South Korean Won | HSBC | Buy | 39,309,200,000 | 35,500,045 | 10/15/15 | 828,339 | — | ||||
South Korean Won | JPHQ | Buy | 3,858,368,000 | 3,485,112 | 12/15/15 | 77,325 | — | ||||
Mexican Peso | DBAB | Buy | 24,075,428 | 1,534,992 | 4/18/16 | — | (6,864 | ) | |||
Unrealized appreciation (depreciation) | 1,285,297 | (4,969,374 | ) | ||||||||
Net unrealized appreciation (depreciation) | $ | (3,684,077 | ) |
See Abbreviations on page 24.
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
12 | Semiannual Report | The accompanying notes are an integral part of these financial statements. franklintempleton.com
FRANKLIN TEMPLETON GLOBAL TRUST
Financial Statements
Statement of Assets and Liabilities
April 30, 2015 (unaudited)
Templeton Hard Currency Fund | |||
Assets: | |||
Investments in securities: | |||
Cost - Unaffiliated issuers | $ | 42,703,103 | |
Cost - Sweep Money Fund (Note 3f) | 105,045,591 | ||
Total cost of investments | $ | 147,748,694 | |
Value - Unaffiliated issuers | $ | 43,409,823 | |
Value - Sweep Money Fund (Note 3f) | 105,045,591 | ||
Total value of investments | 148,455,414 | ||
Foreign currency, at value (cost $545,613) | 543,538 | ||
Receivables: | |||
Capital shares sold | 170,664 | ||
Interest | 22,348 | ||
Due from brokers | 3,330,000 | ||
Unrealized appreciation on forward exchange contracts | 1,285,297 | ||
Other assets | 90 | ||
Total assets | 153,807,351 | ||
Liabilities: | |||
Payables: | |||
Investment securities purchased | 5,125,649 | ||
Capital shares redeemed | 546,260 | ||
Management fees | 68,934 | ||
Distribution fees | 24,108 | ||
Transfer agent fees | 49,580 | ||
Trustees’ fees and expenses | 1,408 | ||
Unrealized depreciation on forward exchange contracts | 4,969,374 | ||
Accrued expenses and other liabilities | 43,070 | ||
Total liabilities | 10,828,383 | ||
Net assets, at value | $ | 142,978,968 | |
Net assets consist of: | |||
Paid-in capital | $ | 167,114,482 | |
Undistributed net investment income | 530,801 | ||
Net unrealized appreciation (depreciation) | (2,979,959 | ) | |
Accumulated net realized gain (loss) | (21,686,356 | ) | |
Net assets, at value | $ | 142,978,968 | |
Class A: | |||
Net assets, at value | $ | 106,024,110 | |
Shares outstanding | 12,480,612 | ||
Net asset value per sharea | $ | 8.50 | |
Maximum offering price per share (net asset value per share ÷ 97.75%) | $ | 8.70 | |
Advisor Class: | |||
Net assets, at value | $ | 36,954,858 | |
Shares outstanding | 4,309,086 | ||
Net asset value and maximum offering price per share | $ | 8.58 |
aRedemption price is equal to net asset value less contingent deferred sales charges, if applicable. | |||
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FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL STATEMENTS
Statement of Operations
for the six months ended April 30, 2015 (unaudited)
Templeton Hard Currency Fund | |||
Investment income: | |||
Interest | $ | 304,082 | |
Expenses: | |||
Management fees (Note 3a) | 571,129 | ||
Distribution fees: (Note 3c) | |||
Class A | 173,078 | ||
Transfer agent fees: (Note 3e) | |||
Class A | 118,165 | ||
Advisor Class | 38,303 | ||
Custodian fees (Note 4) | 7,682 | ||
Reports to shareholders | 23,304 | ||
Registration and filing fees | 29,210 | ||
Professional fees | 26,003 | ||
Trustees’ fees and expenses | 8,539 | ||
Other | 4,257 | ||
Total expenses | 999,670 | ||
Expenses waived/paid by affiliates (Note 3f) | (42,444 | ) | |
Net expenses | 957,226 | ||
Net investment income (loss) | (653,144 | ) | |
Realized and unrealized gains (losses): | |||
Net realized gain (loss) from: | |||
Investments | (10,784,801 | ) | |
Foreign currency transactions | (2,743,626 | ) | |
Net realized gain (loss) | (13,528,427 | ) | |
Net change in unrealized appreciation (depreciation) on: | |||
Investments | 3,144,275 | ||
Translation of other assets and liabilities denominated in foreign currencies | (1,028,121 | ) | |
Net change in unrealized appreciation (depreciation) | 2,116,154 | ||
Net realized and unrealized gain (loss) | (11,412,273 | ) | |
Net increase (decrease) in net assets resulting from operations | $ | (12,065,417 | ) |
14 | Semiannual Report | The accompanying notes are an integral part of these financial statements. franklintempleton.com
FRANKLIN TEMPLETON GLOBAL TRUST | ||||||
FINANCIAL STATEMENTS | ||||||
Statements of Changes in Net Assets | ||||||
Templeton Hard Currency Fund | ||||||
Six Months Ended | ||||||
April 30, 2015 | Year Ended | |||||
(unaudited) | October 31, 2014 | |||||
Increase (decrease) in net assets: | ||||||
Operations: | ||||||
Net investment income (loss) | $ | (653,144 | ) | $ | (1,891,054 | ) |
Net realized gain (loss) from investments and foreign currency transactions | (13,528,427 | ) | (3,431,319 | ) | ||
Net change in unrealized appreciation (depreciation) on investments and translation of | ||||||
other assets and liabilities denominated in foreign currencies | 2,116,154 | (8,135,056 | ) | |||
Net increase (decrease) in net assets resulting from operations | (12,065,417 | ) | (13,457,429 | ) | ||
Capital share transactions: (Note 2) | ||||||
Class A | (58,532,946 | ) | (81,287,291 | ) | ||
Advisor Class | (19,874,152 | ) | (41,628,983 | ) | ||
Total capital share transactions | (78,407,098 | ) | (122,916,274 | ) | ||
Net increase (decrease) in net assets | (90,472,515 | ) | (136,373,703 | ) | ||
Net assets: | ||||||
Beginning of period | 233,451,483 | 369,825,186 | ||||
End of period | $ | 142,978,968 | $ | 233,451,483 | ||
Undistributed net investment income included in net assets: | ||||||
End of period | $ | 530,801 | $ | 1,183,945 |
franklintempleton.com The accompanying notes are an integral part of these financial statements. | Semiannual Report | 15
FRANKLIN TEMPLETON GLOBAL TRUST
Notes to Financial Statements (unaudited)
Templeton Hard Currency Fund
1. Organization and Significant Accounting Policies
Franklin Templeton Global Trust (Trust) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company, consisting of one fund, Templeton Hard Currency Fund (Fund), and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Fund offers two classes of shares: Class A and Advisor Class. Each class of shares differs by its initial sales load, contingent deferred sales charges, voting rights on matters affecting a single class, its exchange privilege and fees primarily due to differing arrangements for distribution and transfer agent fees.
The following summarizes the Fund’s significant accounting policies.
a. Financial Instrument Valuation
The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Fund’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Debt securities generally trade in the over-the-counter (OTC) market rather than on a securities exchange. The Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not
exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the date that the values of the foreign debt securities are determined. Investments in open-end mutual funds are valued at the closing NAV.
Derivative financial instruments (derivatives) listed on an exchange are valued at the official closing price of the day. Certain derivatives trade in the OTC market. The Fund’s pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Fund’s net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.
The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
16 | Semiannual Report
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FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Templeton Hard Currency Fund (continued)
Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.
When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.
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. The Fund may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.
The Fund does 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 in the Statement of Operations.
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 dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.
c. Derivative Financial Instruments
The Fund invested in derivatives in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statement of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statement of Operations.
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. The Fund attempts to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Fund include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over
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Semiannual Report | 17
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Templeton Hard Currency Fund (continued)
1. Organization and Significant Accounting
Policies (continued)
c. Derivative Financial Instruments (continued)
various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement.
Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the fund or the applicable coun-terparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of fund business each day and any additional collateral required due to changes in derivative values may be delivered by the fund or the counterparty within a few business days. Collateral pledged and/or received by the fund, if any, is held in segregated accounts with the fund’s custodian/counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Fund’s investment objectives.
The Fund entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.
See Note 8 regarding other derivative information.
d. Income and Deferred Taxes
It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
The Fund may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which it invests. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. When a capital gain tax is determined to apply, the Fund records an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.
The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. As of April 30, 2015, and for all open tax years, the Fund has determined that no liability for unrecognized tax benefits is required in the Fund’s financial statements related to uncertain tax positions taken on a tax return (or expected to be taken on future tax returns). Open tax years are those that remain subject to examination and are based on each tax jurisdiction’s statute of limitation.
e. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.
Realized and unrealized gains and losses and net investment income, not including class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses.
18 | Semiannual Report
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FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Templeton Hard Currency Fund (continued)
f. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP 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 expenses during the reporting period. Actual results could differ from those estimates.
g. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
2. Shares of Beneficial Interest
At April 30, 2015, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:
Six Months Ended | Year Ended | |||||||||
April 30, 2015 | October 31, 2014 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Class A Shares: | ||||||||||
Shares sold | 1,218,456 | $ | 10,388,592 | 3,669,448 | $ | 33,902,979 | ||||
Shares redeemed | (8,107,890 | ) | (68,921,538 | ) | (12,465,893 | ) | (115,190,270 | ) | ||
Net increase (decrease) | (6,889,434 | ) | $ | (58,532,946 | ) | (8,796,445 | ) | $ | (81,287,291 | ) |
Advisor Class Shares: | ||||||||||
Shares sold | 643,115 | $ | 5,502,957 | 2,260,246 | $ | 21,058,032 | ||||
Shares redeemed | (2,928,961 | ) | (25,377,109 | ) | (6,723,854 | ) | (62,687,015 | ) | ||
Net increase (decrease) | (2,285,846 | ) | $ | (19,874,152 | ) | (4,463,608 | ) | $ | (41,628,983 | ) |
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Trust are also officers, and/or directors of the following subsidiaries:
Subsidiary | Affiliation |
Franklin Advisers, Inc. (Advisers) | Investment manager |
Franklin Templeton Services, LLC (FT Services) | Administrative manager |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter |
Franklin Templeton Investor Services, LLC (Investor Services) | Transfer agent |
a. Management Fees
The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:
Annualized Fee Rate | Net Assets | |
0.650 | % | Up to and including $500 million |
0.600 | % | In excess of $500 million |
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Semiannual Report | 19
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Templeton Hard Currency Fund (continued)
3. Transactions with Affiliates (continued)
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Fund. The fee is paid by Advisers based on average daily net assets, and is not an additional expense of the Fund.
c. Distribution Fees
The Fund’s Board has adopted a reimbursement distribution plan for Class A pursuant to Rule 12b-1 under the 1940 Act, under which the Fund reimburses Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund’s shares up to 0.45% per year of its average daily net assets. Distribution fees are not charged on shares held by affiliates. The Board has set the current rate at 0.30% per year for Class A shares until further notice and approval by the Board. Costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods.
d. Sales Charges/Underwriting Agreements
Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. These charges are deducted from the proceeds of sales of fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund’s shares for the period:
Sales charges retained net of commissions paid to unaffiliated | ||
broker/dealers | $ | 2,570 |
CDSC retained | $ | 307 |
e. Transfer Agent Fees
Each class of shares pays transfer agent fees to Investor Services for its performance of shareholder servicing obligations and reimburses Investor Services for out of pocket expenses incurred, including shareholding servicing fees paid to third parties. These fees are allocated daily based upon their relative proportion of such classes’ aggregate net assets.
For the period ended April 30, 2015, the Fund paid transfer agent fees of $156,468, of which $65,445 was retained by Investor Services.
f. Investments in Institutional Fiduciary Trust Money Market Portfolio
The Fund invests in Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an affiliated open-end management investment company. Management fees paid by the Fund are waived on assets invested in the Sweep Money Fund, as noted in the Statement of Operations, in an amount not to exceed the management and administrative fees paid by the Sweep Money Fund.
4. Expense Offset Arrangement
The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s custodian expenses. During the period ended April 30, 2015, there were no credits earned.
5. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains. Capital loss carryforwards with no expiration, if any, must be fully utilized before those losses with expiration dates.
20 | Semiannual Report
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FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Templeton Hard Currency Fund (continued) | |||||||||||
At October 31, 2014, capital loss carryforwards were as follows: | |||||||||||
Capital loss carryforwards subject to expiration: | |||||||||||
2017 | $ | 276,805 | |||||||||
2019 | 63,831 | ||||||||||
Capital loss carryforwards not subject to expiration: | |||||||||||
Short term | 6,354,344 | ||||||||||
Long term | 1,462,948 | ||||||||||
Total capital loss carryforwards | $ | 8,157,928 | |||||||||
At April 30, 2015, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: | |||||||||||
Cost of investments | $ | 147,753,194 | |||||||||
Unrealized appreciation | $ | 770,095 | |||||||||
Unrealized depreciation | (67,875 | ) | |||||||||
Net unrealized appreciation (depreciation) | $ | 702,220 | |||||||||
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing | |||||||||||
treatments of foreign currency transactions and bond discounts and premiums. | |||||||||||
6. Investment Transactions | |||||||||||
There were no purchase or sales of investments (other than short term securities) for the period ended April 30, 2015. | |||||||||||
7. Concentration of Risk | |||||||||||
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securi- | |||||||||||
ties, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may | |||||||||||
result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. | |||||||||||
8. Other Derivative Information | |||||||||||
At April 30, 2015, the Fund’s investments in derivative contracts are reflected in the Statement of Assets and Liabilities as follows: | |||||||||||
Asset Derivatives | Liability Derivatives | ||||||||||
Derivative Contracts | |||||||||||
Not Accounted for as | Statement of Assets and | Statement of Assets and | |||||||||
Hedging Instruments | Liabilities Location | Fair Value | Liabilities Location | Fair Value | |||||||
Foreign exchange contracts | Unrealized appreciation on | Unrealized depreciation on | |||||||||
OTC forward exchange | OTC forward exchange | ||||||||||
contracts | $ | 1,285,297 | contracts | $ | 4,969,374 | ||||||
For the period ended April 30, 2015, the effect of derivative contracts in the Fund’s Statement of Operations was as follows: | |||||||||||
Change in | |||||||||||
Unrealized | |||||||||||
Derivative Contracts | Realized | Appreciation | |||||||||
Not Accounted for as | Gain (Loss) | (Depreciation) | |||||||||
Hedging Instruments | Statement of Operations Locations | for the Period | for the Period | ||||||||
Foreign exchange contracts | Net realized gain (loss) from foreign currency | ||||||||||
transactions / Net change in unrealized appreciation | |||||||||||
(depreciation) on translation of other assets and | |||||||||||
liabilities denominated in foreign currencies | $ | (3,141,242 | ) | $ | (1,036,150 | ) | |||||
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FRANKLIN TEMPLETON GLOBAL TRUST | |||||||||||||
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) | |||||||||||||
Templeton Hard Currency Fund (continued) | |||||||||||||
8. Other Derivative Information (continued) | |||||||||||||
At April 30, 2015, the Fund’s OTC derivative assets and liabilities, are as follows: | |||||||||||||
Gross and Net Amounts of Assets and Liabilities | |||||||||||||
Presented in the Statement of Assets and Liabilities | |||||||||||||
Assetsa | Liabilitiesa | ||||||||||||
Derivatives | |||||||||||||
Forward Exchange Contracts | $ | 1,285,297 | $ | 4,969,374 | |||||||||
aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. | |||||||||||||
At April 30, 2015, the Fund’s OTC derivative assets which may be offset against the Fund’s OTC derivative liabilities and | |||||||||||||
collateral received from the counterparty, is as follows: | |||||||||||||
Amounts Not Offset in the | |||||||||||||
Statement of Assets & Liabilities | |||||||||||||
Gross and | |||||||||||||
Net Amounts of | Financial | Financial | |||||||||||
Assets Presented in | Instruments | Instruments | Cash | Net Amount | |||||||||
the Statement of | Available for | Collateral | Collateral | (Not less | |||||||||
Assets and Liabilities | Offset | Received | Received | than zero) | |||||||||
Counterparty | |||||||||||||
DBAB | $ | 79,370 | $ | (79,370 | ) | $ | — | $ | — | $ | — | ||
HSBC | 878,762 | (878,762 | ) | — | — | — | |||||||
JPHQ | 327,165 | (178,025 | ) | — | — | 149,140 | |||||||
MSCO | — | — | — | — | — | ||||||||
Total | $ | 1,285,297 | $ | (1,136,157 | ) | $ | — | $ | — | $ | 149,140 | ||
At April 30, 2015, the Fund’s OTC derivative liabilities which may be offset against the Fund’s OTC derivative assets and | |||||||||||||
collateral pledged to the counterparty, is as follows: | |||||||||||||
Amounts Not Offset in the | |||||||||||||
Statement of Assets & Liabilities | |||||||||||||
Gross and | |||||||||||||
Net Amounts of | Financial | Financial | |||||||||||
Liabilities Presented | Instruments | Instruments | Cash | Net Amount | |||||||||
in the Statement of | Available for | Collateral | Collateral | (Not less | |||||||||
Assets and Liabilities | Offset | Pledged | Pledged | than zero) | |||||||||
Counterparty | |||||||||||||
DBAB | $ | 1,354,638 | $ | (79,370 | ) | $ | — | $ | (1,240,000 | ) | $ | 35,268 | |
HSBC | 2,763,972 | (878,762 | ) | — | (1,510,000 | ) | 375,210 | ||||||
JPHQ | 178,025 | (178,025 | ) | — | — | — | |||||||
MSCO | 672,739 | — | — | (580,000 | ) | 92,739 | |||||||
Total | $ | 4,969,374 | $ | (1,136,157 | ) | $ | — | $ | (3,330,000 | ) | $ | 503,217 |
For the period ended April 30, 2015, the average month end fair value of derivatives represented 5.13% of average month end net
assets. The average month end number of open derivative contracts for the period was 28.
See Note 1(c) regarding derivative financial instruments.
See Abbreviations on page 24.
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FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Templeton Hard Currency Fund (continued)
9. Credit Facility
The Fund, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton Investments, are borrowers in a joint syndicated senior unsecured credit facility totaling $2 billion (Global Credit Facility) which matures on February 12, 2016. This Global Credit Facility provides a source of funds to the Borrowers for temporary and emergency purposes, including the ability to meet future unanticipated or unusually large redemption requests.
Under the terms of the Global Credit Facility, the Fund shall, in addition to interest charged on any borrowings made by the Fund and other costs incurred by the Fund, pay its share of fees and expenses incurred in connection with the implementation and maintenance of the Global Credit Facility, based upon its relative share of the aggregate net assets of all of the Borrowers, including an annual commitment fee of 0.07% based upon the unused portion of the Global Credit Facility. These fees are reflected in other expenses in the Statement of Operations. During the period ended April 30, 2015, the Fund did not use the Global Credit Facility.
10. Fair Value Measurements
The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:
- Level 1 – quoted prices in active markets for identical financial instruments
- Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)
- Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
A summary of inputs used as of April 30, 2015, in valuing the Fund’s assets and liabilities carried at fair value, is as follows:
Level 1 | Level 2 | Level 3 | Total | |||||
Assets: | ||||||||
Investments in Securities: | ||||||||
Foreign Government and Agency Securities | $ | — | $ | 43,409,823 | $ | — | $ | 43,409,823 |
Money Market Funds | 105,045,591 | — | — | 105,045,591 | ||||
Total Investments in Securities | $ | 105,045,591 | $ | 43,409,823 | $ | — | $ | 148,455,414 |
Other Financial Instruments | ||||||||
Forward Exchange Contracts | $ | — | $ | 1,285,297 | $ | — | $ | 1,285,297 |
Liabilities: | ||||||||
Other Financial Instruments | ||||||||
Forward Exchange Contracts | $ | — | $ | 4,969,374 | $ | — | $ | 4,969,374 |
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Semiannual Report | 23
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Templeton Hard Currency Fund (continued)
11. Subsequent Events
The Fund has evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
Abbreviations | |||
Counterparty | Currency | ||
DBAB | Deutsche Bank AG | HKD | Hong Kong Dollar |
HSBC | HSBC Bank PLC | SGD | Singapore Dollar |
JPHQ | JP Morgan Chase & Co. | ||
MSCO | Morgan Stanley |
24 | Semiannual Report
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FRANKLIN TEMPLETON GLOBAL TRUST
TEMPLETON HARD CURRENCY FUND
Shareholder Information
Board Review of Investment Management Agreement
At a meeting held February 24, 2015, the Board of Trustees (Board), including a majority of non-interested or independent Trustees, approved renewal of the investment management agreement for the Templeton Hard Currency Fund (Fund). In reaching this decision, the Board took into account information furnished throughout the year at regular Board meetings, as well as information prepared specifically in connection with the annual renewal review process. Information furnished and discussed throughout the year included investment performance reports and related financial information for the Fund, along with periodic reports on expenses, shareholder services, legal and compliance matters, pricing, brokerage commissions and execution and other services provided by the Investment Manager (Manager) and its affiliates, as well as marketing support payments made to financial intermediaries. Information furnished specifically in connection with the renewal process included a report for the Fund prepared by Lipper, Inc. (Lipper), an independent organization, as well as additional material, including a Fund profitability analysis prepared by management. The Lipper report compared the Fund’s investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper. The Fund profitability analysis discussed the profitability to Franklin Templeton Investments (FTI) from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Additional material accompanying such profitability analysis included information on a fund-by-fund basis listing portfolio managers and other accounts they manage, as well as information on management fees charged by the Manager and its affiliates to U.S. mutual funds and other accounts, including management’s explanation of differences where relevant. Such material also included a memorandum prepared by management describing project initiatives and capital investments relating to the services provided to the Fund by the FTI organization, as well as a memorandum relating to economies of scale and an analysis concerning transfer agent fees charged by an affiliate of the Manager. The Board also received a report on all marketing support payments made by FTI to financial intermediaries during the past year.
In considering such materials, the independent Trustees received assistance and advice from and met separately with independent counsel. In approving continuance of the investment management agreement for the Fund, the Board, including a majority of independent Trustees, determined that the existing management
fee structure was fair and reasonable and that continuance of the investment management agreement was in the best interests of the Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s decision.
NATURE, EXTENT AND QUALITY OF SERVICE. The Board was satisfied with the nature and quality of the overall services provided by the Manager and its affiliates to the Fund and its shareholders. In addition to investment performance and expenses discussed later, the Board’s opinion was based, in part, upon periodic reports furnished it showing that the investment policies and restrictions for the Fund were consistently complied with as well as other reports periodically furnished the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics adopted throughout the Franklin Templeton fund complex, the adherence to fair value pricing procedures established by the Board, and the accuracy of net asset value calculations. The Board also noted the extent of benefits provided Fund shareholders from being part of the Franklin Templeton family of funds, including the right to exchange investments between the same class of shares of different funds without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings in other funds to obtain a reduced sales charge. Favorable consideration was given to management’s continual efforts and expenditures in establishing effective business continuity plans and developing strategies to address persistent cybersecurity threats. Additionally, the Board noted the Manager’s continued attention to pricing and valuation issues, particularly with respect to complex securities. Among other factors taken into account by the Board were the Manager’s best execution trading policies, including a favorable report by an independent portfolio trading analytical firm that also covered FOREX transactions. Consideration was also given to the experience of the Fund’s portfolio management team, the number of accounts managed and general method of compensation. In this latter respect, the Board noted that a primary factor in management’s determination of a portfolio manager’s bonus compensation was the relative investment performance of the funds he or she managed and that a portion of such bonus was required to be invested in a predesignated list of funds within such person’s fund management area so as to be aligned with the interests of shareholders. The Board also took into account the quality of transfer agent and shareholder services provided Fund shareholders by an affiliate of the Manager and the continual enhancements to the Franklin Templeton website. Particular attention was given to management’s conservative approach and
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Semiannual Report | 25
FRANKLIN TEMPLETON GLOBAL TRUST TEMPLETON HARD CURRENCY FUND SHAREHOLDER INFORMATION
Board Review of Investment Management
Agreement (continued) diligent risk management procedures, including continual monitoring of counterparty credit risk and attention given to derivatives and other complex instruments including expanded collateralization requirements. The Board also took into account, among other things, management’s efforts in establishing a global credit facility for the benefit of the Fund and other accounts managed by FTI to provide a source of cash for temporary and emergency purposes or to meet unusual redemption requests as well as the strong financial position of the Manager’s parent company and its commitment to the mutual fund business as evidenced by its continued subsidization of money market funds.
INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment performance of the Fund in view of its importance to shareholders. While consideration was given to performance reports and discussions with portfolio managers at Board meetings during the year, particular attention in assessing performance was given to the Lipper report furnished for the agreement renewal. The Lipper report prepared for the Fund showed the investment performance of its Class A shares during 2014, as well as for the previous 10 years ended December 31, 2014, in comparison to a performance universe consisting of all retail and institutional alternative currency strategies funds as selected by Lipper. The Lipper report showed the Fund’s income return during 2014 to be in the middle quintile of its performance universe, and on an annualized basis to be in the second-lowest quintile of such universe for the previous three-year period, in the second-highest quintile for the previous five-year period, and in the lowest quintile of such universe for the previous 10-year period. The Lipper report showed the Fund’s total return during 2014 to be in the lowest performing quintile of such universe, and on an annualized basis to be in the second-lowest performing quintile for the previous three-year period, to be in the second-highest performing quintile of such universe for the previous five-year period, and in the highest performing quin-tile of such universe for the previous 10-year period. The Board took into account the Fund’s mandate to protect against the depreciation of the U.S. dollar in relation to other currencies and found the Fund’s overall comparative performance as set forth in the Lipper report to be acceptable.
COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the management fees and total expense ratio of the Fund compared with an expense group consisting of the Fund and five other alternative currency strategies funds as selected by Lipper. Lipper expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Lipper to be an appropriate measure of comparative expenses. In reviewing comparative costs, Lipper provides information on the Fund’s contractual investment management fee in comparison with the contractual investment management fee that would have been charged by other funds within its Lipper expense group assuming they were similar in size to the Fund, as well as the actual total expense ratio of the Fund in comparison with those of its peer group. The Lipper contractual investment management fee analysis includes administrative charges as being part of the contractual investment management fees, and actual total expenses, for comparative consistency, are shown by Lipper for Fund Class A shares. The results of such expense comparisons showed the contractual investment management fee rate to be within one basis point of the median for its Lipper expense group, and its actual total expense ratio to be just slightly above the median for such expense group. The Board found the level of the Fund’s contractual management fee rate and total expense ratio in comparison to its Lipper expense group to be satisfactory.
MANAGEMENT PROFITABILITY. The Board also considered the level of profits realized by the Manager and its affiliates in connection with the operation of the Fund. In this respect, the Board reviewed the Fund profitability analysis that addresses the overall profitability of Franklin Templeton’s U.S. fund business, as well as its profits in providing management and other services to each of the individual funds during the 12-month period ended September 30, 2014, being the most recent fiscal year-end for Franklin Resources, Inc., the Manager’s parent. In reviewing the analysis, the Board recognized that allocation methodologies are inherently subjective and various allocation methodologies may be reasonable while producing different results. In this respect, the Board noted that while management continually makes refinements to its
26 | Semiannual Report
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FRANKLIN TEMPLETON GLOBAL TRUST
TEMPLETON HARD CURRENCY FUND
SHAREHOLDER INFORMATION
methodologies in response to organizational and product related changes, the overall approach as defined by the primary drivers and activity measurements has remained consistent with that used in the Fund’s profitability report presentations from prior years. Additionally, the Fund’s independent registered public accounting firm had been engaged by the Manager to periodically review the reasonableness of the allocation methodologies to be used solely by the Fund’s Board in reference to the profitability analysis. In reviewing and discussing such analysis, management discussed with the Board its belief that costs incurred in establishing the infrastructure necessary for the type of mutual fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to the Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also took into account management’s expenditures in improving shareholder services provided the Fund, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from statutes such as the Sarbanes-Oxley and Dodd-Frank Acts and recent SEC and other regulatory requirements. In addition, the Board considered a third-party study comparing the profitability of the Manager’s parent on an overall basis to other publicly held managers broken down to show profitability from management operations exclusive of distribution expenses, as well as profitability including distribution expenses. The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services and potential benefits resulting from personnel and systems enhancements necessitated by fund growth, increased leverage with service providers and counterparties, allocation of fund brokerage and the use of commission dollars to pay for research. Based upon its consideration of all these factors, the Board determined that the level of profits realized by the Manager and its affiliates from providing services to the Fund was not excessive in view of the nature, quality and extent of services provided.
ECONOMIES OF SCALE. The Board also considered whether economies of scale are realized by the Manager as the Fund grows larger and the extent to which this is reflected in the level of management fees charged. While recognizing that any precise determination is inherently subjective, the Board noted that based upon the Fund profitability analysis, it appears that as some funds get larger, at some point economies of scale do result in the Manager realizing a larger profit margin on management services provided such a fund. The Board also noted that economies of scale are shared with a fund and its shareholders through management fee breakpoints so that as a fund grows in size, its effective management fee declines. The fee structure under the Fund’s investment management agreement provides for an initial management fee of 0.65% on the first $500 million of Fund assets, with a reduction in such fee to 0.60% on Fund assets in excess of $500 million. At December 31, 2014, the Fund had net assets of approximately $185 million, and to the extent economies of scale may be realized by the Manager and its affiliates, the Board believes this schedule of fees provides a sharing of benefits with the Fund and its shareholders.
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
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Item 2. Code of Ethics.
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
Item 3. Audit Committee Financial Expert.
(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.
(2) The audit committee financial expert is John B. Wilson and he is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases.
Item 4. Principal Accountant Fees and Services. N/A
Item 5. Audit Committee of Listed Registrants. N/A
Item 6. Schedule of Investments. N/A
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A
Item 8. Portfolio Managers of Closed-End Management Investment Companies. N/A
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. N/A
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.
Item 11. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
(b) Changes in Internal Controls. There have been no changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting subsequent to the date of their evaluation in connection with the preparation of this Shareholder Report on Form N-CSR.
Item 12. Exhibits.
(a)(1) Code of Ethics
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN TEMPLETON GLOBAL TRUST
By /s/ Laura F. Fergerson
Laura F. Fergerson
Chief Executive Officer – Finance and Administration
Date June 25, 2015
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/ Laura F. Fergerson
Laura F. Fergerson
Chief Executive Officer – Finance and Administration
Date June 25, 2015
By /s/ Gaston Gardey
Gaston Gardey
Chief Financial Officer and Chief Accounting Officer
Date June 25, 2015