UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04450
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FRANKLIN TEMPLETON GLOBAL TRUST
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(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
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(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
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Date of fiscal year end: 10/31
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Date of reporting period: 10/31/05
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ITEM 1. REPORTS TO STOCKHOLDERS.
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OCTOBER 31, 2005
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A series of Franklin Templeton
Global Trust
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ANNUAL REPORT AND SHAREHOLDER LETTER INCOME
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WANT TO RECEIVE
THIS DOCUMENT
FASTER VIA EMAIL?
FRANKLIN TEMPLETON
HARD CURRENCY FUND Eligible shareholders
can sign up for
eDelivery at
franklintempleton.com.
See inside for
details.
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[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS
FRANKLIN o Templeton o Mutual Series
FRANKLIN TEMPLETON INVESTMENTS
GAIN FROM OUR PERSPECTIVE(R)
Franklin Templeton's distinct multi-manager
structure combines the specialized expertise of
three world-class investment management
groups--Franklin, Templeton and Mutual Series.
SPECIALIZED EXPERTISE Each of our portfolio management groups operates
autonomously, relying on its own research and
staying true to the unique investment disciplines
that underlie its success.
FRANKLIN. Founded in 1947, Franklin is a
recognized leader in fixed income investing and
also brings expertise in growth- and value-style
U.S. equity investing.
TEMPLETON. Founded in 1940, Templeton pioneered
international investing and, in 1954, launched
what has become the industry's oldest global fund.
Today, with offices in over 25 countries,
Templeton offers investors a truly global
perspective.
MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what
it believes are undervalued stocks, as well as
arbitrage situations and distressed securities.
TRUE DIVERSIFICATION Because our management groups work independently
and adhere to different investment approaches,
Franklin, Templeton and Mutual Series funds
typically have distinct portfolios. That's why our
funds can be used to build truly diversified
allocation plans covering every major asset class.
RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we seek to
consistently provide investors with exceptional
risk-adjusted returns over the long term, as well
as the reliable, accurate and personal service
that has helped us become one of the most trusted
names in financial services.
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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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Not part of the annual report
CONTENTS
SHAREHOLDER LETTER ....................................................... 1
ANNUAL REPORT
Franklin Templeton Hard
Currency Fund ............................................................. 3
Performance Summary ....................................................... 9
Your Fund's Expenses ...................................................... 12
Financial Highlights and
Statement of Investments .................................................. 14
Financial Statements ...................................................... 17
Notes to Financial
Statements ................................................................ 20
Report of Independent
Registered Public
Accounting Firm ........................................................... 29
Board Members and Officers ................................................ 30
Shareholder Information ................................................... 35
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ANNUAL REPORT
FRANKLIN TEMPLETON HARD CURRENCY FUND
YOUR FUND'S GOAL AND MAIN INVESTMENTS: 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 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 forward currency contracts denominated in foreign hard
currencies, which historically have experienced low inflation rates and which,
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.
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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 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
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This annual report for Franklin Templeton Hard Currency Fund covers the fiscal
year ended October 31, 2005.
PERFORMANCE OVERVIEW
Franklin Templeton Hard Currency Fund - Class A posted a +0.17% cumulative total
return for the 12 months under review. The Fund outperformed its benchmark, the
J.P. Morgan 3 Month Global Cash Index, which posted a -2.48% 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. As of
October 31, 2005, the index included 7.69% in U.S. dollars. The Fund
underperformed the U.S. dollar, which rose 3.68% relative to its major trading
partners during the period.(2) Elsewhere, the Japanese yen fell 8.78% and the
euro was down 5.84% versus the dollar.(3) You can find the Fund's long-term
performance data in the Performance Summary beginning on page 9.
(1) Source: J.P. Morgan. The J.P. Morgan 3 Month Global Cash Index tracks
total returns of 3-month constant maturity euro-currency deposits, the
only short-term securities consistent across all markets in terms of
liquidity, maturity and credit quality. The index is unmanaged and
includes reinvested distributions. One cannot invest directly in an index,
nor is an index representative of the Fund's portfolio.
(2) Source: Federal Reserve Board.
(3) Source: Compustat.
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 16.
Annual Report | 3
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WHAT IS BALANCE OF PAYMENTS?
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Balance of payments is a record of all of a country's exports and imports of
goods and services, borrowing and lending with the rest of the world during a
particular time period. It helps a country evaluate its competitive strengths
and weaknesses and forecast the strength of its currency.
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WHAT IS A CURRENT ACCOUNT?
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A current account is that part of the balance of payments where all of one
country's international transactions in goods, services, income and transfers
are recorded.
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ECONOMIC AND MARKET OVERVIEW
The U.S. economy experienced solid growth during the year under review. In third
quarter 2005, the economy expanded 3.6% over the year earlier period. Continuing
productivity growth and job creation increased capital and labor utilization
and, along with higher global commodity prices, exerted inflationary pressures
in the U.S. Largely as a result of rising inflation, the Federal Reserve Board
(Fed) continued its series of measured interest rate hikes, increasing the
federal funds target rate 200 basis points (100 basis points equal one
percentage point) to 3.75% by period-end. Consistent with strong economic growth
and in particular solid consumption trends, U.S. imports exceeded exports,
driving the U.S. trade balance to a $66 billion monthly deficit level by
September 2005.(4) Although higher oil prices impacted the deficit, the
underlying trade balance (not including oil) also deteriorated, largely as a
result of a widening trade deficit with the Pacific Rim region. Furthermore, the
U.S. current account deficit widened to 6.2% of gross domestic product (GDP) in
third quarter 2005 versus 5.7% a year earlier.(4)
In contrast to the U.S., Asia generated trade and current account surpluses.
These surpluses facilitated foreign reserve accumulation, most notably in China
where foreign exchange reserves reached $769 billion in September 2005.(5) This
foreign reserve buildup combined with international political pressure prompted
the Chinese government to revalue the yuan and move from its U.S. dollar peg to
a managed float versus a basket of undisclosed global currencies. Although
global demand for Asian products remained favorable for the region's growth
prospects, there were also signs during the period of a pickup in domestic
growth drivers. For example, private consumption accelerated in South Korea. In
China, increased consumption and strong domestic growth conditions benefited the
country's regional trade partners through import demand. Overall, aggregate
demand among Asian economies rose over the Fund's fiscal year. In Singapore,
South Korea and Thailand, GDP growth rates improved. Correspondingly, regional
interest rates began to rise. Thailand raised rates 200 basis points to 3.75%
and South Korea, having reduced rates early in the period, recently hiked
interest rates back to 3.50%.(6)
(4) Source: U.S. Department of Commerce.
(5) Source: National Bureau of Statistics, China.
(6) Sources: Bank of Thailand; Bank of Korea (South Korea).
4 | Annual Report
The 12-country euro zone's economic activity was more moderate than growth in
the U.S. and Asia as strong global demand conditions propped up external growth
while domestic demand lagged. Euro-zone GDP for third quarter 2005 grew just
1.5% compared with a year earlier.(7) Although commodity prices exerted upward
pressures on headline inflation rates, core inflation generally remained stable,
consistent with subdued domestic economic growth conditions. The European
Central Bank (ECB) left interest rates unchanged at 2.0% for the 28th
consecutive month. Economic conditions in Norway and Sweden remained
characterized by significantly large current account surpluses and better
domestic growth conditions, led by labor market improvement. Inflation in Norway
and Sweden accelerated, albeit from low rates. Norway's headline inflation
registered 1.8% annual growth in October 2005, while Sweden's was 0.5%.(8)
Correspondingly, Norway's central bank raised interest rates during the period
and Sweden's paused after reducing rates earlier in the period.
During the 12 months under review, the U.S. dollar received some reprieve from
the depreciation trend that began in early 2002. This reprieve likely was due in
part to the Fed's interest rate increases, which brought U.S. rates in line with
the ECB rate at the beginning of the reporting period and 175 basis points
higher by period-end. However, while this positive interest rate differential
was increasing, the U.S. balance of payment position deteriorated, led by a
larger current account deficit and greater reliance on debt financing,
particularly from the government sector. That the U.S. current account deficit
deteriorated significantly while the country also experienced currency strength
indicated global macroeconomic imbalances. These imbalances were largely offset
by sufficient global market liquidity resulting from a large, global savings
pool. The U.S. dollar also found support from the Homeland Investment Act (HIA)
that allowed corporations to repatriate income accumulated abroad without tax
consequences. However, this tax amnesty expires by the end of the calendar year
and should not provide ongoing support to the U.S. dollar. Given the magnitude
of global economic imbalances, particularly between the U.S. and Asia, we
believe the U.S. dollar may need to weaken to help improve the U.S. current
account position over the medium term.
(7) Source: Eurostat.
(8) Sources: Statistics Norway; Statistics Sweden.
ASSET ALLOCATION BY CURRENCY*
Based on Total Net Assets as of 10/31/05
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Canadian Dollar 21.6%
Singapore Dollar 15.6%
European Monetary Unit (euro) 14.3%
Australian Dollar 9.5%
Swedish Krona 8.0%
Korean Won 7.3%
New Zealand Dollar 6.1%
Norwegian Krone 5.9%
Thai Baht 4.7%
Danish Krone 4.7%
Indonesian Rupiah 4.3%
Swiss Franc 3.0%
Polish Zloty 2.0%
* U.S. dollar = -7.0% because of the Fund's holdings in forward currency
exchange contracts.
Annual Report | 5
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 versus the U.S. dollar over the long term.
MANAGER'S DISCUSSION
Despite some U.S. dollar strengthening against other major currencies during the
Fund's fiscal year, the Fund generated a small positive cumulative total return.
The Fund's performance benefited from exposure to commodity-oriented currencies,
such as those of Canada, New Zealand and Australia, as well as several Asian
currency positions that outperformed the Japanese yen. During the period, we
reduced the Fund's euro exposure and broadened non-Japan Asian currency
exposure. We undertook such moves to position for potential Asian currency
appreciation against the U.S. dollar, largely resulting from greater flexibility
in Asian currency regimes and consequently less appreciation pressure on the
euro versus the U.S. dollar.
The Fund increased its Canadian dollar exposure during the period. The Fund's
overall Canadian dollar position contributed significantly to the Fund's
positive return relative to a negative return for the benchmark J.P. Morgan 3
Month Global Cash Index. The Canadian dollar appreciated 3.41% against the U.S.
dollar. As a net exporter of commodities, particularly oil and natural gas, the
country benefited from high oil prices. Furthermore, Canada's central bank
raised interest rates 50 basis points over the year to 3.0% as its economy
improved. Although lower than the U.S. interest rate, the differential was
narrower than for many other developed economies. For example, the ECB's main
policy interest rate was unchanged during the period at 2.0%, while the Bank of
Japan's main policy rate remained near zero.
Rising U.S. interest rates during the 12 months under review pushed short-term
rates to among the highest in developed economies. European currencies in
particular suffered in the period's latter half given many European economies'
prospects for implementing monetary tightening. Although the Fund significantly
reduced its exposure to Europe, primarily through reduced
6 | Annual Report
euro allocation, European currency volatility worked against Fund performance
during the period. However, a weaker U.S. dollar outlook over the medium term,
combined with a relatively stronger balance of payment position relative to the
U.S., made other European (non-euro) currencies attractive as we applied our
investment philosophy. For the year ended October 31, 2005, the euro declined
5.84% against the U.S. dollar, and the Swedish krona fell 10.68%. The Norwegian
krone depreciated only 1.67%, or less than the decline in the benchmark index.
European currencies came under additional pressure during the year largely due
to uncertainty raised by failed referendums on the European Union constitution
in second quarter 2005. A reduction in Sweden's official interest rates further
weighed on that country's currency during the period.
Currency positioning in non-Japan Asia benefited relative performance for the
reporting period because most such currencies outperformed the benchmark index
and the Japanese yen, which the Fund continued to avoid. For the 12-month
reporting period, the South Korean won rose 7.62% against the U.S. dollar, the
New Zealand dollar 2.30% and the Australian dollar 0.03%, while the Singapore
dollar declined 1.79% against the U.S. dollar. The yen depreciated 8.78% against
the U.S. dollar over the same period.(3) We were encouraged that many Asian
central banks responded to building inflationary pressures from rising import
prices and strong overall regional growth by using monetary policy to address
inflationary pressures and help prevent them from becoming less manageable in
the future. These interest rate developments in non-Japan Asia supported several
currencies, particularly relative to the Japanese yen. Australia and New Zealand
began their monetary tightening cycles before much of Asia, having raised rates
over the past three years. Over the past 12 months, Australia raised rates 25
basis points to 5.5% and New Zealand 50 basis points to 7.0%.(9) Although
commodity prices and terms of trade developments benefited these two economies,
we reduced the Fund's overweighted New Zealand dollar position and added a new
position in the Singapore dollar.
(9) Sources: Reserve Bank of Australia; Reserve Bank of New Zealand.
Annual Report | 7
Thank you for your continued participation in Franklin Templeton Hard Currency
Fund. We look forward to serving your future investment needs.
[PHOTO OMITTED] /s/ Alex Calvo
Alex Calvo
[PHOTO OMITTED] /s/ Michael Hasenstab
Michael Hasenstab, Ph.D.
Portfolio Managers
Franklin Templeton Hard Currency Fund
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Please note that although the Fund's Statement of Investments on page 16 of this
report indicates the Fund held 56.4% of its total investments in U.S.
dollar-denominated assets as of 10/31/05, its net exposure to the U.S. dollar as
of that date was only -7.0%. The difference is explained by the Fund's holdings
of forward currency exchange contracts (please see Note 7 in the Notes to
Financial Statements on page 26 of this report) calling for the purchase of
various foreign currencies in exchange for U.S. dollars at various future dates.
The combination of U.S. dollar-denominated instruments with "long" forward
currency exchange contracts creates a position economically equivalent to a
money market instrument denominated in the foreign currency itself. Such
combined positions are an appropriate strategy when the money market for a
particular foreign currency is small or relatively illiquid.
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THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF OCTOBER 31, 2005, 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 ADVISER 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.
8 | Annual Report
PERFORMANCE SUMMARY AS OF 10/31/05
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 table and graphs 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.
PRICE AND DISTRIBUTION INFORMATION
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CLASS A (SYMBOL: ICPHX) CHANGE 10/31/05 10/31/04
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Net Asset Value (NAV) -$0.51 $9.34 $9.85
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DISTRIBUTIONS (11/1/04-10/31/05)
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Dividend Income $0.4581
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Long-Term Capital Gain $0.0808
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TOTAL $0.5389
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ADVISOR CLASS (SYMBOL: ICHHX) CHANGE 10/31/05 10/31/04
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Net Asset Value (NAV) -$0.51 $9.36 $9.87
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DISTRIBUTIONS (11/1/04-10/31/05)
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Dividend Income $0.4903
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Long-Term Capital Gain $0.0808
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TOTAL $0.5711
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Franklin Templeton Hard Currency Fund paid distributions derived from long-term
capital gains of 8.08 cents ($0.0808) per share in December 2004. The Fund
designates such distributions as capital gain dividends per Internal Revenue
Code Section 852 (b)(3)(C).
PERFORMANCE
CLASS A: 2.25% MAXIMUM INITIAL SALES CHARGE. CUMULATIVE TOTAL RETURN EXCLUDES
SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND VALUE OF $10,000 INCLUDE MAXIMUM
SALES CHARGES.
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CLASS A 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return(1) +0.17% +47.78% +7.93%
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Average Annual Total Return(2) -2.12% +7.65% +0.54%
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Value of $10,000 Investment(3) $9,788 $14,454 $10,551
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Avg. Ann. Total Return (9/30/05)(4) +1.01% +6.99% +0.64%
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Distribution Rate(5) 4.80%
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30-Day Standardized Yield(6) 1.93%
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ADVISOR CLASS(7) 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return(1) +0.50% +50.60% +11.19%
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Average Annual Total Return(2) +0.50% +8.53% +1.07%
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Value of $10,000 Investment(3) $10,050 $15,060 $11,119
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Avg. Ann. Total Return (9/30/05)(4) +3.66% +7.86% +1.16%
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Distribution Rate(5) 5.24%
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30-Day Standardized Yield(6) 2.21%
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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, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.
Annual Report | 9
PERFORMANCE SUMMARY (CONTINUED)
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 any current, applicable, maximum sales charge, Fund expenses,
account fees and reinvested distributions. The unmanaged index includes
reinvestment of any income or distributions. It differs from the Fund in
composition and does not pay management fees or expenses. One cannot invest
directly in an index.
AVERAGE ANNUAL TOTAL RETURN
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CLASS A 10/31/05
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1-Year -2.12%
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5-Year +7.65%
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10-Year +0.54%
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CLASS A (11/1/95-10/31/05)
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
FRANKLIN TEMPLETON JP MORGAN 3 MONTH
DATE HARD CURRENCY FUND GLOBAL CASH INDEX
CLASS A
11/1/1995 $9,776 $10,000
11/30/1995 $9,591 $9,922
12/31/1995 $9,653 $10,021
1/31/1996 $9,358 $9,809
2/29/1996 $9,496 $9,993
3/31/1996 $9,451 $10,030
4/30/1996 $9,234 $9,921
5/31/1996 $9,177 $9,981
6/30/1996 $9,203 $10,040
7/31/1996 $9,501 $10,235
8/31/1996 $9,466 $10,280
9/30/1996 $9,210 $10,167
10/31/1996 $9,190 $10,284
11/30/1996 $9,072 $10,267
12/31/1996 $8,975 $10,248
1/31/1997 $8,510 $9,812
2/28/1997 $8,354 $9,657
3/31/1997 $8,405 $9,734
4/30/1997 $8,199 $9,523
5/31/1997 $8,507 $9,700
6/30/1997 $8,395 $9,652
7/31/1997 $8,039 $9,351
8/31/1997 $8,104 $9,462
9/30/1997 $8,242 $9,610
10/31/1997 $8,430 $9,784
11/30/1997 $8,190 $9,593
12/31/1997 $8,040 $9,438
1/31/1998 $8,062 $9,405
2/28/1998 $8,142 $9,500
3/31/1998 $7,848 $9,398
4/30/1998 $7,961 $9,595
5/31/1998 $7,915 $9,560
6/30/1998 $7,802 $9,519
7/31/1998 $7,815 $9,556
8/31/1998 $7,979 $9,577
9/30/1998 $8,336 $10,006
10/31/1998 $8,803 $10,238
11/30/1998 $8,491 $10,098
12/31/1998 $8,832 $10,266
1/31/1999 $8,577 $10,149
2/28/1999 $8,356 $9,910
3/31/1999 $8,270 $9,870
4/30/1999 $8,142 $9,835
5/31/1999 $8,065 $9,758
6/30/1999 $7,971 $9,710
7/31/1999 $8,255 $9,999
8/31/1999 $8,194 $9,967
9/30/1999 $8,298 $10,107
10/31/1999 $8,246 $10,057
11/30/1999 $8,082 $9,828
12/31/1999 $8,091 $9,873
1/31/2000 $7,795 $9,706
2/29/2000 $7,681 $9,587
3/31/2000 $7,873 $9,645
4/30/2000 $7,531 $9,298
5/31/2000 $7,619 $9,362
6/30/2000 $7,856 $9,653
7/31/2000 $7,609 $9,422
8/31/2000 $7,432 $9,233
9/30/2000 $7,389 $9,157
10/31/2000 $7,140 $8,915
11/30/2000 $7,273 $9,057
12/31/2000 $7,586 $9,593
1/31/2001 $7,523 $9,549
2/28/2001 $7,416 $9,438
3/31/2001 $7,110 $9,115
4/30/2001 $7,164 $9,227
5/31/2001 $7,029 $9,024
6/30/2001 $6,946 $9,014
7/31/2001 $7,147 $9,228
8/31/2001 $7,401 $9,527
9/30/2001 $7,483 $9,514
10/31/2001 $7,410 $9,475
11/30/2001 $7,364 $9,477
12/31/2001 $7,281 $9,433
1/31/2002 $7,068 $9,236
2/28/2002 $7,124 $9,297
3/31/2002 $7,225 $9,405
4/30/2002 $7,448 $9,661
5/31/2002 $7,709 $10,007
6/30/2002 $7,971 $10,442
7/31/2002 $7,924 $10,369
8/31/2002 $7,943 $10,429
9/30/2002 $8,009 $10,477
10/31/2002 $8,085 $10,542
11/30/2002 $8,160 $10,607
12/31/2002 $8,573 $11,033
1/31/2003 $8,770 $11,273
2/28/2003 $8,878 $11,365
3/31/2003 $8,918 $11,475
4/30/2003 $9,057 $11,728
5/31/2003 $9,473 $12,241
6/30/2003 $9,353 $12,121
7/31/2003 $9,204 $11,897
8/31/2003 $9,114 $11,769
9/30/2003 $9,534 $12,402
10/31/2003 $9,625 $12,507
11/30/2003 $9,866 $12,817
12/31/2003 $10,225 $13,360
1/31/2004 $10,172 $13,256
2/29/2004 $10,225 $13,268
3/31/2004 $10,148 $13,255
4/30/2004 $9,840 $12,892
5/31/2004 $9,925 $13,093
6/30/2004 $9,898 $13,077
7/31/2004 $9,855 $13,004
8/31/2004 $9,994 $13,137
9/30/2004 $10,256 $13,416
10/31/2004 $10,534 $13,764
11/30/2004 $10,972 $14,333
12/31/2004 $11,092 $14,560
1/31/2005 $10,847 $14,128
2/28/2005 $11,059 $14,366
3/31/2005 $10,896 $14,137
4/30/2005 $10,862 $14,105
5/31/2005 $10,605 $13,651
6/30/2005 $10,497 $13,463
7/31/2005 $10,509 $13,482
8/31/2005 $10,632 $13,675
9/30/2005 $10,596 $13,541
10/31/2005 $10,551 $13,423
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
ADVISOR CLASS(7) 10/31/05
- --------------------------------------
1-Year +0.50%
- --------------------------------------
5-Year +8.53%
- --------------------------------------
10-Year +1.07%
- --------------------------------------
ADVISOR CLASS (11/1/95-10/31/05)(7)
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
FRANKLIN TEMPLETON JP MORGAN 3 MONTH
DATE HARD CURRENCY FUND GLOBAL CASH INDEX
ADVISOR CLASS
11/1/1995 $10,000 $10,000
11/30/1995 $9,810 $9,922
12/31/1995 $9,874 $10,021
1/31/1996 $9,573 $9,809
2/29/1996 $9,714 $9,993
3/31/1996 $9,668 $10,030
4/30/1996 $9,446 $9,921
5/31/1996 $9,387 $9,981
6/30/1996 $9,414 $10,040
7/31/1996 $9,719 $10,235
8/31/1996 $9,683 $10,280
9/30/1996 $9,422 $10,167
10/31/1996 $9,401 $10,284
11/30/1996 $9,280 $10,267
12/31/1996 $9,181 $10,248
1/31/1997 $8,723 $9,812
2/28/1997 $8,557 $9,657
3/31/1997 $8,619 $9,734
4/30/1997 $8,402 $9,523
5/31/1997 $8,719 $9,700
6/30/1997 $8,615 $9,652
7/31/1997 $8,241 $9,351
8/31/1997 $8,309 $9,462
9/30/1997 $8,452 $9,610
10/31/1997 $8,645 $9,784
11/30/1997 $8,401 $9,593
12/31/1997 $8,249 $9,438
1/31/1998 $8,273 $9,405
2/28/1998 $8,358 $9,500
3/31/1998 $8,057 $9,398
4/30/1998 $8,182 $9,595
5/31/1998 $8,128 $9,560
6/30/1998 $7,808 $9,519
7/31/1998 $8,028 $9,556
8/31/1998 $8,206 $9,577
9/30/1998 $8,589 $10,006
10/31/1998 $9,068 $10,238
11/30/1998 $8,759 $10,098
12/31/1998 $9,113 $10,266
1/31/1999 $8,851 $10,149
2/28/1999 $8,623 $9,910
3/31/1999 $8,527 $9,870
4/30/1999 $8,403 $9,835
5/31/1999 $8,324 $9,758
6/30/1999 $8,214 $9,710
7/31/1999 $8,507 $9,999
8/31/1999 $8,445 $9,967
9/30/1999 $8,562 $10,107
10/31/1999 $8,509 $10,057
11/30/1999 $8,339 $9,828
12/31/1999 $8,352 $9,873
1/31/2000 $8,045 $9,706
2/29/2000 $7,928 $9,587
3/31/2000 $8,131 $9,645
4/30/2000 $7,778 $9,298
5/31/2000 $7,869 $9,362
6/30/2000 $8,118 $9,653
7/31/2000 $7,862 $9,422
8/31/2000 $7,680 $9,233
9/30/2000 $7,641 $9,157
10/31/2000 $7,384 $8,915
11/30/2000 $7,522 $9,057
12/31/2000 $7,841 $9,593
1/31/2001 $7,786 $9,549
2/28/2001 $7,675 $9,438
3/31/2001 $7,356 $9,115
4/30/2001 $7,412 $9,227
5/31/2001 $7,281 $9,024
6/30/2001 $7,201 $9,014
7/31/2001 $7,410 $9,228
8/31/2001 $7,664 $9,527
9/30/2001 $7,763 $9,514
10/31/2001 $7,687 $9,475
11/30/2001 $7,639 $9,477
12/31/2001 $7,562 $9,433
1/31/2002 $7,342 $9,236
2/28/2002 $7,400 $9,297
3/31/2002 $7,501 $9,405
4/30/2002 $7,743 $9,661
5/31/2002 $8,013 $10,007
6/30/2002 $8,289 $10,442
7/31/2002 $8,241 $10,369
8/31/2002 $8,260 $10,429
9/30/2002 $8,340 $10,477
10/31/2002 $8,429 $10,542
11/30/2002 $8,497 $10,607
12/31/2002 $8,936 $11,033
1/31/2003 $9,141 $11,273
2/28/2003 $9,263 $11,365
3/31/2003 $9,313 $11,475
4/30/2003 $9,448 $11,728
5/31/2003 $9,892 $12,241
6/30/2003 $9,765 $12,121
7/31/2003 $9,610 $11,897
8/31/2003 $9,526 $11,769
9/30/2003 $9,963 $12,402
10/31/2003 $10,068 $12,507
11/30/2003 $10,319 $12,817
12/31/2003 $10,702 $13,360
1/31/2004 $10,647 $13,256
2/29/2004 $10,702 $13,268
3/31/2004 $10,634 $13,255
4/30/2004 $10,311 $12,892
5/31/2004 $10,411 $13,093
6/30/2004 $10,371 $13,077
7/31/2004 $10,338 $13,004
8/31/2004 $10,494 $13,137
9/30/2004 $10,762 $13,416
10/31/2004 $11,064 $13,764
11/30/2004 $11,523 $14,333
12/31/2004 $11,646 $14,560
1/31/2005 $11,399 $14,128
2/28/2005 $11,621 $14,366
3/31/2005 $11,450 $14,137
4/30/2005 $11,427 $14,105
5/31/2005 $11,157 $13,651
6/30/2005 $11,047 $13,463
7/31/2005 $11,071 $13,482
8/31/2005 $11,201 $13,675
9/30/2005 $11,155 $13,541
10/31/2005 $11,119 $13,423
10 | Annual Report
PERFORMANCE SUMMARY (CONTINUED)
ENDNOTES
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'S PROSPECTUS ALSO INCLUDES A
DESCRIPTION OF THE MAIN INVESTMENT RISKS.
CLASS A: Prior to 8/3/98, these shares were offered at a higher initial
sales charge; thus actual total returns would have been lower.
ADVISOR CLASS: Shares are available to certain eligible investors as described
in the prospectus.
(1) Cumulative total return represents the change in value of an investment
over the periods indicated and does not include a sales charge.
(2) Average annual total return represents the average annual change in value
of an investment over the periods indicated and includes any current,
applicable, maximum sales charge.
(3) These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated and include any current, applicable,
maximum sales charge.
(4) In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.
(5) Distribution rate is based on the sum of the respective class's last four
quarterly dividends and the maximum offering price (NAV for Advisor Class)
per share on 10/31/05.
(6) Yield, calculated as required by the SEC, is based on the earnings of the
Fund's portfolio for the 30 days ended 10/31/05.
(7) Effective 1/2/97, the Fund began offering Advisor Class shares, which do
not have sales charges or a Rule 12b-1 plan. 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, but reflecting the effect of the Class A Rule 12b-1 fees; and (b)
for periods after 1/1/97, actual Advisor Class performance is used
reflecting 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 +21.11% and +2.19%.
(8) Source: J.P. Morgan. The J.P. Morgan 3 Month Global Cash Index tracks
total returns of 3-month constant maturity euro-currency deposits, the
only short-term securities consistent across all markets in terms of
liquidity, maturity and credit quality.
Annual Report | 11
YOUR FUND'S EXPENSES
As a Fund shareholder, you can incur two types of costs:
o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and
o Ongoing Fund costs, including management fees, distribution 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 below 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.
12 | Annual Report
YOUR FUND'S EXPENSES (CONTINUED)
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 OR
REDEMPTION FEES. 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
CLASS A VALUE 4/30/05 VALUE 10/31/05 PERIOD* 4/30/05 - 10/31/05
- ---------------------------------------------------------------------------------------------------------------
Actual $1,000 $ 971.40 $ 5.61
- ---------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,019.51 $ 5.75
- ---------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ---------------------------------------------------------------------------------------------------------------
Actual $1,000 $ 973.10 $ 4.18
- ---------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,020.97 $ 4.28
- ---------------------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio for each class (A:
1.13% and Advisor: 0.84%), multiplied by the average account value over
the period, multiplied by 184/365 to reflect the one-half year period.
Annual Report | 13
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL HIGHLIGHTS
FRANKLIN TEMPLETON HARD CURRENCY FUND
----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
CLASS A 2005 2004 2003 2002 2001
----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 9.85 $ 9.59 $ 8.56 $ 8.08 $ 8.02
----------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) ................... 0.15 0.09 0.11 0.09(e) 0.31
Net realized and unrealized gains (losses) . (0.12) 0.78 1.46 0.63(e) (0.01)
----------------------------------------------------------------------------
Total from investment operations ............ 0.03 0.87 1.57 0.72 0.30
----------------------------------------------------------------------------
Less distributions from:
Net investment income ...................... (0.46) (0.61) (0.54) (0.24) (0.14)
Net realized gains ......................... (0.08) -- -- -- --
Tax return of capital ...................... -- -- -- -- (0.10)
----------------------------------------------------------------------------
Total distributions ......................... (0.54) (0.61) (0.54) (0.24) (0.24
----------------------------------------------------------------------------
Redemption fees ............................. --(c) --(c) -- -- --
----------------------------------------------------------------------------
Net asset value, end of year ................ $ 9.34 $ 9.85 $ 9.59 $ 8.56 $ 8.08
============================================================================
Total return(b).............................. 0.17% 9.44% 19.05% 9.11% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $190,163 $211,098 $143,715 $50,622 $29,071
Ratios to average net assets:
Expenses ................................... 1.19% 1.24% 1.32% 1.50% 1.49%
Net investment income ...................... 1.54% 0.95% 1.19% 1.10%(e) 3.78%
Portfolio turnover rate ..................... 0.00%(d) 0.00%(d) 0.00%(d) 76.27% 25.59%
(a) Based on average daily shares outstanding.
(b) Total return does not reflect sales commissions or the contingent deferred
sales charge.
(c) Amount is less than $0.01 per share.
(d) See Note 6 regarding investment transactions.
(e) Effective November 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began recording
all paydown gains and losses as part of investment income and amortizing
all premium and discount on fixed-income securities, as required. The
effect of this change was as follows:
Net investment income per share .......................... $(0.05)
Net realized and unrealized (gains/losses) per share ..... 0.05
Ratio of net investment income to average net assets ..... (0.61)%
Per share data and ratios for prior periods have not been restated to
reflect this change in accounting policy.
14 | See notes to financial statements. | Annual Report
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND (CONTINUED)
----------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
ADVISOR CLASS 2005 2004 2003 2002 2001
----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .......... $ 9.87 $ 9.61 $ 8.58 $ 8.09 $ 8.03
----------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) ................... 0.18 0.13 0.14 0.12(d) 0.32
Net realized and unrealized gains (losses) . (0.12) 0.79 1.46 0.64(d) 0.01
----------------------------------------------------------------------------
Total from investment operations ............ 0.06 0.92 1.60 0.76 0.33
----------------------------------------------------------------------------
Less distributions from:
Net investment income ...................... (0.49) (0.66) (0.57) (0.27) (0.17)
Net realized gains ......................... (0.08) -- -- -- --
Tax return of capital ...................... -- -- -- -- (0.10)
----------------------------------------------------------------------------
Total distributions ......................... (0.57) (0.66) (0.57) (0.27) (0.27)
-----------------------------------------------------------------------------
Redemption fees ............................. --(b) --(b) -- -- --
----------------------------------------------------------------------------
Net asset value, end of year ................ $ 9.36 $ 9.87 $ 9.61 $ 8.58 $ 8.09
============================================================================
Total return ................................ 0.50% 9.89% 19.45% 9.65% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ............. $17,532 $22,442 $10,163 $ 1,724 $ 450
Ratios to average net assets:
Expenses ................................... 0.83% 0.84% 0.92% 1.09% 1.17%
Net investment income ...................... 1.89% 1.35% 1.59% 1.51%(d) 4.00%
Portfolio turnover rate ..................... 0.00%(c) 0.00%(c) 0.00%(c) 76.27% 25.59%
(a) Based on average daily shares outstanding.
(b) Amount is less than $0.01 per share.
(c) See Note 6 regarding investment transactions.
(d) Effective November 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began recording
all paydown gains and losses as part of investment income and amortizing
all premium and discount on fixed-income securities, as required. The
effect of this change was as follows:
Net investment income per share ....................... $(0.05)
Net realized and unrealized (gains/losses) per share .. 0.05
Ratio of net investment income to average net assets .. (0.61)%
Per share data and ratios for prior periods have not been restated to
reflect this change in accounting policy.
Annual Report | See notes to financial statements. | 15
FRANKLIN TEMPLETON GLOBAL TRUST
STATEMENT OF INVESTMENTS, OCTOBER 31, 2005
- -------------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON HARD CURRENCY FUND PRINCIPAL AMOUNT(b) VALUE
- -------------------------------------------------------------------------------------------------------------------
FOREIGN COMMON GOVERNMENT STOCKS (CONT.AND) AGENCY SECURITIES 56.5%
(a) Canada Treasury Bills, 12/15/05 - 2/23/06 ......................... 17,800,000 CAD $ 14,959,196
(a) Denmark Treasury Bills, 11/01/05 - 5/01/06 ........................ 61,445,000 DKK 9,786,557
(a) French Treasury Bills, 1/19/06 - 3/16/06 .......................... 7,850,000 EUR 9,349,420
(a) German Treasury Bill, 12/07/05 .................................... 6,000,000 EUR 7,176,183
Government of New Zealand, Strip, 6/21/06 ......................... 18,980,000 NZD 12,743,783
Government of Sweden, Strip, 3/15/06 .............................. 33,000,000 SEK 4,114,953
(a) Netherlands Treasury Bill, 3/31/06 ................................ 4,000,000 EUR 4,746,039
(a) Norwegian Treasury Bills, 12/21/05 - 6/21/06 ...................... 70,855,000 NOK 10,714,194
Province of Alberta, 7.50%, 12/01/05 .............................. 10,625,000 CAD 9,024,257
(a) Singapore Treasury Bills, 11/30/05 - 5/02/06 ...................... 29,400,000 SGD 17,350,442
Spain Letras Del Tesoro, Strip, 2/17/06 ........................... 4,000,000 EUR 4,763,941
(a) Sweden Treasury Bills, 11/16/05 - 12/21/05 ........................ 100,535,000 SEK 12,604,952
-------------
TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES (COST $119,888,472) 117,333,917
-------------
U.S. GOVERNMENT AND AGENCY SECURITIES 56.4%
(a) Federal Home Loan Bank, 11/01/05 .................................. $ 37,486,000 37,486,000
(a) U.S. Treasury Bills, 11/17/05 - 12/15/05 .......................... 80,000,000 79,755,565
-------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES (COST $117,241,157) ... 117,241,565
-------------
TOTAL INVESTMENTS (COST $237,129,629) 112.9% ...................... 234,575,482
NET UNREALIZED LOSS ON FORWARD EXCHANGE CONTRACTS (0.6)% .......... (1,168,708)
OTHER ASSETS, LESS LIABILITIES (12.3)% ............................ (25,712,486)
-------------
NET ASSETS 100.0% ................................................. $ 207,694,288
=============
CURRENCY ABBREVIATIONS
CAD - Canadian Dollar
DKK - Danish Krone
EUR - Euro
NOK - Norwegian Krone
NZD - New Zealand Dollar
SEK - Swedish Krona
SGD - Singapore Dollar
(a) The security is traded on a discount basis with no stated coupon rate.
(b) The principal amount is stated in U.S. Dollars unless otherwise indicated.
16 | See notes to financial statements. | Annual Report
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2005
------------------
FRANKLIN TEMPLETON
HARD CURRENCY FUND
------------------
Assets:
Investments in securities:
Cost ............................................................... $ 237,129,629
=============
Value .............................................................. $ 234,575,482
Cash ................................................................ 100,572
Foreign currency, at value (cost $11,742,177) ....................... 11,707,399
Receivables:
Investment securities sold ......................................... 4,285,382
Capital shares sold ................................................ 698,747
Interest ........................................................... 281,789
Unrealized gain on forward exchange contracts (Note 7) .............. 374,685
-------------
Total assets ................................................. 252,024,056
-------------
Liabilities:
Payables:
Investment securities purchased .................................... 41,612,866
Capital shares redeemed ............................................ 969,766
Affiliates ......................................................... 187,960
Unrealized loss on forward exchange contracts (Note 7) .............. 1,543,393
Accrued expenses and other liabilities .............................. 15,783
-------------
Total liabilities ............................................ 44,329,768
-------------
Net assets, at value ...................................... $ 207,694,288
=============
Net assets consist of:
Paid-in capital ..................................................... $ 203,209,463
Undistributed net investment income ................................. 10,369,691
Net unrealized appreciation (depreciation) .......................... (3,722,644)
Accumulated net realized gain (loss) ................................ (2,162,222)
-------------
Net assets, at value ...................................... $ 207,694,288
=============
CLASS A:
Net assets, at value ................................................ $ 190,162,529
=============
Shares outstanding .................................................. 20,358,898
=============
Net asset value per share(a) ........................................ $ 9.34
=============
Maximum offering price per share (net asset value per share / 97.75%) $ 9.55
=============
ADVISOR CLASS:
Net assets, at value ................................................ $ 17,531,759
=============
Shares outstanding .................................................. 1,873,526
=============
Net asset value and maximum offering price per share(a) ............. $ 9.36
=============
(a) Redemption price is equal to net asset value less contingent deferred
sales charges, if applicable, and redemption fees retained by the Fund.
Annual Report | See notes to financial statements. | 17
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended October 31, 2005
------------------
FRANKLIN TEMPLETON
HARD CURRENCY FUND
------------------
Investment income:
Interest ............................................................... $ 6,087,468
-------------
Expenses:
Management fees (Note 3a) .............................................. 1,448,421
Distribution fees (Note 3c)
Class A ............................................................... 732,250
Transfer agent fees (Note 3e) .......................................... 226,680
Custodian fees (Note 4) ................................................ 40,553
Reports to shareholders ................................................ 42,925
Registration and filing fees ........................................... 45,574
Professional fees ...................................................... 32,018
Trustees' fees and expenses ............................................ 10,750
Other .................................................................. 6,500
-------------
Total expenses .................................................. 2,585,671
Expense reductions (Note 4) ..................................... (9,464)
-------------
Net expenses ................................................. 2,576,207
-------------
Net investment income ..................................... 3,511,261
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ............................................................ 6,581,819
Foreign currency transactions .......................................... 3,520,603
-------------
Net realized gain (loss) ..................................... 10,102,422
-------------
Net change in unrealized appreciation (depreciation) on:
Investments ............................................................ (12,771,987)
Translation of assets and liabilities denominated in foreign currencies (32,006)
-------------
Net change in unrealized appreciation (depreciation) ......... (12,803,993)
-------------
Net realized and unrealized gain (loss) ................................. (2,701,571)
-------------
Net increase (decrease) in net assets resulting from operations ......... $ 809,690
=============
18 | See notes to financial statements. | Annual Report
FRANKLIN TEMPLETON GLOBAL TRUST
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
---------------------------------
FRANKLIN TEMPLETON
HARD CURRENCY FUND
---------------------------------
YEAR ENDED OCTOBER 31,
2005 2004
---------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income ................................................................ $ 3,511,261 $ 1,992,462
Net realized gain (loss) from investments and foreign currency transactions .......... 10,102,422 9,829,286
Net change in unrealized appreciation (depreciation) on investments and translation of
assets and liabilities denominated in foreign currencies ........................... (12,803,993) 5,183,666
--------------------------------
Net increase (decrease) in net assets resulting from operations ................ 809,690 17,005,414
--------------------------------
Distributions to shareholders from:
Net investment income:
Class A ............................................................................ (9,731,396) (10,713,947
Advisor Class ...................................................................... (1,084,586) (1,153,864
Net realized gains:
Class A ............................................................................ (1,735,869) --
Advisor Class ...................................................................... (188,101) --
--------------------------------
Total distributions to shareholders ................................................... (12,739,952) (11,867,811)
---------------------------------
Capital share transactions: (Note 2)
Class A ............................................................................ (9,971,213) 62,608,466
Advisor Class ...................................................................... (3,953,900) 11,915,116
--------------------------------
Total capital share transactions ...................................................... (13,925,113) 74,523,582
--------------------------------
Redemption fees ....................................................................... 9,614 1,155
--------------------------------
Net decrease in net assets ..................................................... (25,845,761) 79,662,340
Net assets:
Beginning of year ..................................................................... 233,540,049 153,877,709
--------------------------------
End of year ........................................................................... $ 207,694,288 $ 233,540,049
================================
Undistributed net investment income included in net assets:
End of year ........................................................................... $ 10,369,691 $ 7,409,846
================================
Annual Report | See notes to financial statements. | 19
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton Global Trust (the Trust) is registered under the Investment
Company Act of 1940 as a non-diversified, open-end investment company,
consisting of one fund, the Franklin Templeton Hard Currency Fund (the Fund).
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market.
Government securities generally trade in the over-the-counter market rather than
on a securities exchange. The Fund may utilize independent pricing services,
quotations from bond dealers, and information with respect to bond and note
transactions, to assist in determining a current market value for each security.
The Fund's pricing services may use valuation models or matrix pricing which
considers information with respect to comparable bond and note transactions,
quotations from bond dealers, or by reference to other securities that are
considered comparable in such characteristics as rating, interest rate and
maturity date, option adjusted spread models, prepayment projections, interest
rate spreads and yield curves, to determine current value.
Foreign securities are valued as of the close of trading on the foreign stock
exchange on which the security is primarily traded, or the NYSE, whichever is
earlier. If no sale is reported at that time, the foreign security will be
valued within the range of the most recent quoted bid and ask prices. The value
is then converted into its U.S. dollar equivalent at the foreign exchange rate
in effect at the close of the NYSE on the day that the value of the foreign
security is determined.
The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security 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. All security valuation procedures are approved by the Fund's Board of
Trustees.
20 | Annual Report
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. 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 Fund's Board of Trustees.
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 on 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. FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward exchange contracts to hedge against fluctuations
in foreign exchange rates and to gain exposure to foreign currencies. A forward
exchange contract is an agreement between two parties to exchange different
currencies at an agreed upon exchange rate at a future date. These contracts are
valued daily by the Fund and the net unrealized gain or loss on the contracts,
as measured by the difference between the contractual forward foreign exchange
rates and the forward rates at the reporting date, is included in the Statement
of Assets and Liabilities. Realized and unrealized gains and losses on these
contracts are included in the Statement of Operations.
When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. Realized and unrealized gains and losses on
these contracts are included in the Statement of Operations.
The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts, which may be in
excess of the amount reflected in the Statement of Assets and Liabilities.
Annual Report | 21
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME TAXES
No provision has been made for U.S. income taxes because the Fund's policy is to
continue to qualify as a regulated investment company under the Internal Revenue
Code and to distribute to shareholders substantially all of its taxable income
and net realized gains.
Foreign securities held by the Fund may be subject to foreign taxation. Foreign
taxes, if any, are recorded based on the tax regulations and rates that exist in
the foreign markets in which the Fund invests.
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. Dividend income is
recorded on the ex-dividend date. 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 generally accepted accounting principles.
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 will reverse in subsequent
periods.
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.
F. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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. REDEMPTION FEES
A short term trading redemption fee will be imposed, with some exceptions, on
any Fund shares that are redeemed or exchanged within seven calendar days
following their purchase date. The redemption fee is 2% of the amount redeemed.
Such fees are retained by the Fund and accounted for as an addition to paid-in
capital.
22 | Annual Report
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. 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 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. However, based on experience, the
Trust expects the risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
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,
distribution fees, voting rights on matters affecting a single class and its
exchange privilege.
At October 31, 2005, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Fund's shares were as follows:
-------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
2005 2004
-------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------
CLASS A SHARES:
Shares sold ................. 13,278,417 $ 129,231,930 17,321,281 $ 165,767,959
Shares issued in reinvestment
of distributions ........... 981,974 9,491,397 939,352 8,882,912
Shares redeemed ............. (15,326,537) (148,694,540) (11,818,045) (112,042,405)
-------------------------------------------------------------------
Net increase (decrease) ..... (1,066,146) $ (9,971,213) 6,442,588 $ 62,608,466
===================================================================
ADVISOR CLASS SHARES:
Shares sold ................. 1,390,003 $ 13,693,142 2,441,424 $ 23,604,422
Shares issued in reinvestment
of distributions ........... 98,902 957,665 83,017 785,127
Shares redeemed ............. (1,889,275) (18,604,707) (1,308,073) (12,474,433)
-------------------------------------------------------------------
Net increase (decrease) ..... (400,370) $ (3,953,900) 1,216,368 $ 11,915,116
===================================================================
Annual Report | 23
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
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 Fund 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 of 0.65% per year of the
average daily net assets of the Fund.
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 of Trustees has adopted distribution plans for each share
class, with the exception of Advisor class shares, pursuant to Rule 12b-1 under
the 1940 Act. Under the Fund's Class A reimbursement distribution plan, the Fund
reimburses Distributors up to 0.45% per year of Class A's average daily net
assets for costs incurred in connection with the sale and distribution of the
Fund's shares. Under the Class A reimbursement distribution plan, costs
exceeding the maximum for the current plan year cannot be reimbursed in
subsequent periods.
D. SALES CHARGES/UNDERWRITING AGREEMENTS
Distributors has advised the Fund of the following commission transactions
related to the sales and redemptions of the Fund's shares for the year:
Net sales charges received(a) ............... $738,342
Contingent deferred sales charges retained .. $ 26,462
(a) Net of commissions paid to unaffiliated broker/dealers.
E. TRANSFER AGENT FEES
The Fund paid transfer agent fees of $226,680, of which $151,593 was retained by
Investor Services.
24 | Annual Report
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY 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 year ended October 31, 2005, custodian
fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
At October 31, 2005, the fund had tax basis capital losses of $2,143,875
expiring on October 31, 2013 which may be carried over to offset future capital
gains, if any.
The tax character of distributions paid during the years ended October 31, 2005
and 2004, was as follows:
-----------------------------
2005 2004
-----------------------------
Distributions paid from:
Ordinary income .......... $10,815,964 $ 11,867,811
Long term capital gain ... 1,923,988 --
-----------------------------
$12,739,952 $ 11,867,811
=============================
Net investment income and net realized gains (losses) differ for financial
statement and tax purposes primarily due to differing treatments of foreign
currency transactions and bond discounts and premiums.
At October 31, 2005, the cost of investments, net unrealized appreciation
(depreciation) and undistributed ordinary income for income tax purposes were as
follows:
Cost of investments .................................. $ 237,232,136
==============
Unrealized appreciation .............................. $ 395,226
Unrealized depreciation .............................. (3,051,880)
--------------
Net unrealized appreciation (depreciation) ........... $ (2,656,654)
==============
Distributable earnings - undistributed ordinary income $ 10,004,061
==============
6. INVESTMENT TRANSACTIONS
There were no purchases or sales of investments (other than short term
securities) for the year ended October 31, 2005.
Annual Report | 25
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
7. FORWARD CURRENCY CONTRACTS
As of October 31, 2005, the Fund had outstanding forward contracts as set out
below.
- ----------------------------------------------------------------------------------------------------------
CONTRACT SETTLEMENT UNREALIZED
CONTRACTS TO BUY AMOUNT(a) DATE GAIN (LOSS)
- ----------------------------------------------------------------------------------------------------------
7,000,000 Polish Zloty ........................... 2,066,299 1/17/06 $ 47,993
1,400,000 Canadian Dollar ........................ 1,157,503 1/19/06 30,441
840,000 Polish Zloty ........................... 250,373 2/24/06 3,354
235,000,000 Thailand Bhat .......................... 5,726,121 3/22/06 25,726
320,000 Canadian Dollar ........................ 258,858 4/05/06 13,244
3,250,000 Norwegian Krone ........................ 498,504 4/05/06 5,103
6,800,000 Canadian Dollar ........................ 5,710,926 5/12/06 77,140
41,420,000,000 Indonesian Rupiah ...................... 3,689,978 5/31/06 157,260
7,250,000 Norwegian Krone ........................ 1,128,212 6/29/06 104
2,500,000,000 Indonesian Rupiah ...................... 211,864 9/01/06 14,320
----------
Unrealized gain on forward exchange contracts ........................... $ 374,685
----------
- ----------------------------------------------------------------------------------------------------------
CONTRACT SETTLEMENT UNREALIZED
CONTRACTS TO BUY AMOUNT(a) DATE GAIN (LOSS)
- ----------------------------------------------------------------------------------------------------------
1,400,000 Swiss Franc ............................ 1,189,566 11/02/05 $ (103,210)
11,000,000,000 Indonesian Rupiah ...................... 1,142,264 11/16/05 (60,846)
4,000,000 Polish Zloty ........................... 1,210,910 11/16/05 (2,221)
20,000,000 Thailand Bhat .......................... 508,647 11/16/05 (18,194)
8,350,000 Singapore Dollar ....................... 5,078,149 11/28/05 (142,884)
24,900,000 Australian Dollar ...................... 18,952,635 12/19/05 (361,615)
252,650,000 Korean Won ............................. 250,000 12/27/05 (7,802)
6,250,000 Singapore Dollar ....................... 3,786,043 1/09/06 (85,081)
975,000 Australian Dollar ...................... 744,998 1/30/06 (18,088)
5,300,000 Canadian Dollar ........................ 4,516,404 1/31/06 (17,654)
850,000 Singapore Dollar ....................... 505,351 2/01/06 (1,457)
31,500,000,000 Indonesian Rupiah ...................... 3,231,010 2/23/06 (228,311)
1,000,000,000 Korean Won ............................. 1,004,520 2/23/06 (45,237)
140,000,000 Thailand Bhat .......................... 3,508,772 2/24/06 (79,351)
1,300,000 Canadian Dollar ........................ 1,115,210 3/27/06 (10,069)
2,700,000 Singapore Dollar ....................... 1,618,026 3/27/06 (12,541)
475,000,000 Korean Won ............................. 461,613 4/03/06 (5,745)
1,400,000,000 Korean Won ............................. 1,378,631 4/26/06 (34,657)
26 | Annual Report
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
7. FORWARD CURRENCY CONTRACTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------
CONTRACT SETTLEMENT UNREALIZED
CONTRACTS TO BUY AMOUNT(a) DATE GAIN (LOSS)
- ---------------------------------------------------------------------------------------------------------
6,000,000,000 Indonesian Rupiah ...................... 588,235 4/27/06 (25,492)
3,450,000,000 Korean Won ............................. 3,379,040 4/27/06 (67,065)
465,840,000 Korean Won ............................. 453,152 5/31/06 (5,721)
6,200,000 Swiss Franc ............................ 5,027,367 6/19/06 (110,217)
8,380,000,000 Korean Won ............................. 8,145,808 6/20/06 (94,515)
6,800,000 Singapore Dollar ....................... 4,071,369 7/17/06 (1,325)
1,991,865 Polish Zloty ........................... 606,056 7/28/06 (4,095)
-----------
Unrealized loss on forward exchange contracts .................................. (1,543,393)
-----------
Net unrealized gain (loss) on forward exchange contracts ..................... $(1,168,708)
===========
(a) In U.S. Dollar unless otherwise indicated.
8. RISK OF INVESTING IN FOREIGN SECURITIES
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, 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.
9. REGULATORY MATTERS
As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, relating to certain practices in the
mutual fund industry, including late trading, market timing and marketing
support payments to securities dealers who sell fund shares, Franklin Resources,
Inc. and certain of its subsidiaries (collectively, the "Company"), entered into
settlements with certain of those regulators.
Specifically, the Company entered into settlements with the Securities and
Exchange Commission ("SEC") concerning market timing (the "August 2, 2004 SEC
Order") and marketing support payments to securities dealers who sell fund
shares (the "December 13, 2004 SEC Order") and with the California Attorney
General's Office ("CAGO") concerning marketing support payments to securities
dealers who sell fund shares (the "CAGO Settlement"). Under the terms of the
settlements with the SEC and the CAGO, the Company retained an Independent
Distribution Consultant ("IDC") to develop a plan for distribution of the
respective settlement monies. The CAGO approved the distribution plan under the
CAGO Settlement and, in accordance with the terms and conditions of that
settlement, the monies were disbursed
Annual Report | 27
FRANKLIN TEMPLETON GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
9. REGULATORY MATTERS (CONTINUED)
to the relevant funds. The Fund did not participate in the CAGO Settlement. The
SEC has not yet approved the distribution plan pertaining to the December 13,
2004 SEC Order. When approved, disbursements of settlement monies will be made
promptly to the relevant funds, in accordance with the terms and conditions of
that order. The IDC continues to develop the plan of distribution under the
August 2, 2004 SEC Order that resolved the SEC's market timing investigation.
In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, directors, and/or
employees, have been named in private lawsuits (styled as shareholder class
actions, or as derivative actions on behalf of either the named funds or
Franklin Resources, Inc.) relating to the industry practices referenced above,
as well as to allegedly excessive advisory fees, commissions, and/or 12b-1 fees.
The lawsuits were filed in different courts throughout the country. Many of
those suits are now pending in a multi-district litigation in the United States
District Court for the District of Maryland.
The Company and fund management strongly believe that the claims made in each of
the private lawsuits referenced above are without merit and intend to defend
against them vigorously. The Company cannot predict with certainty the eventual
outcome of these lawsuits, nor whether they will have a material negative impact
on the Company. If it is determined that the Company bears responsibility for
any unlawful or inappropriate conduct that caused losses to the Fund, it is
committed to making the Fund or its shareholders whole, as appropriate.
28 | Annual Report
FRANKLIN TEMPLETON GLOBAL TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FRANKLIN TEMPLETON HARD CURRENCY
FUND
In our opinion, the accompanying statement of assets and liabilities, including
the statement 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 the Franklin Templeton Hard
Currency Fund (the "Fund") at October 31, 2005, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, 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 Fund'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 the standards of the
Public Company Accounting Oversight Board (United States). Those standards
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, 2005 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 12, 2005
Annual Report | 29
FRANKLIN TEMPLETON GLOBAL TRUST
BOARD MEMBERS AND OFFICERS
The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Trust, principal occupations
during the past five years and number of portfolios overseen in the Franklin
Templeton Investments fund complex are shown below. Each board member will serve
until that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (1932) Trustee Since 1993 140 Director, Bar-S Foods (meat packing
One Franklin Parkway company).
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief
Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
- ------------------------------------------------------------------------------------------------------------------------------------
ROBERT F. CARLSON (1928) Trustee Since 2003 56 None
One Franklin Parkway
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, senior member and past President, Board of Administration, California Public Employees Retirement Systems
(CALPERS); and FORMERLY, member and Chairman of the Board, Sutter Community Hospitals; member, Corporate Board, Blue Shield of
California; and Chief Counsel, California Department of Transportation.
- ------------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (1932) Trustee Since 1993 141 None
One Franklin Parkway
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch (until 2002) (Consultant (2003)).
- ------------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (1952) Trustee Since September 136 Director, Amerada Hess Corporation
One Franklin Parkway 2005 (exploration and refining of oil and gas),
San Mateo, CA 94403-1906 H.J. Heinz Company (processed foods
and allied products), RTI International
Metals, Inc. (manufacture and
distribution of titanium), Canadian
National Railway (railroad), and White
Mountains Insurance Group, Ltd.
(holding company).
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and Secretary of
the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and
Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
- ------------------------------------------------------------------------------------------------------------------------------------
30 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK W.T. LAHAYE (1929) Trustee Since 1993 114 Director, The California Center for
One Franklin Parkway Land Recycling (redevelopment).
San Mateo, CA 94403-1906
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Partner, Las Olas L.P. (Asset Management); and FORMERLY, Chairman, Peregrine Venture Management Company (venture capital).
- ------------------------------------------------------------------------------------------------------------------------------------
GORDON S. MACKLIN (1928) Trustee Since 1993 140 Director, Martek Biosciences
One Franklin Parkway Corporation, MedImmune, Inc.
San Mateo, CA 94403-1906 (biotechnology), and Overstock.com
(Internet services); and FORMERLY,
Director, MCI Communication
Corporation (subsequently known as
MCI WorldCom, Inc. and WorldCom,
Inc.) (communications services)
(1988-2002), White Mountains
Insurance Group, Ltd. (holding
company) (1987-2004) and Spacehab,
Inc. (aerospace services) (1994-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company) (2001-2004);
Chairman, White River Corporation (financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992);
and President, National Association of Securities Dealers, Inc. (1970-1987).
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED BOARD MEMBERS AND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (1933) Trustee and Since 1993 140 None
One Franklin Parkway Chairman of
San Mateo, CA 94403-1906 the Board
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President, Franklin Templeton
Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or director or trustee, as the case may be, of
some of the other subsidiaries of Franklin Resources, Inc. and of 42 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 31
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- -----------------------------------------------------------------------------------------------------------------------------------
**RUPERT H. JOHNSON, JR. (1940) Trustee, Trustee since 1993 124 None
One Franklin Parkway President and and President and
San Mateo, CA 94403-1906 Chief Executive Chief Executive
Officer- Officer-Investment
Investment Management since
Management 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and
officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 45 of
the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (1945) Vice President Since 1993 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; and officer and/or director or trustee, as the
case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 45 of the investment companies in Franklin
Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Since 2004 Not Applicable Not Applicable
One Franklin Parkway Compliance
San Mateo, CA 94403-1906 Officer
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin Templeton Investments;
and FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001).
- -----------------------------------------------------------------------------------------------------------------------------------
LAURA FERGERSON (1962) Treasurer Since 2004 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 31 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Director and member of Audit and Valuation Committees, Runkel Funds, Inc. (2003-2004); Assistant Treasurer of most of the
investment companies in Franklin Templeton Investments (1997-2003); and Vice President, Franklin Templeton Services, LLC
(1997-2003).
- -----------------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (1947) Senior Vice Since 2002 Not Applicable Not Applicable
500 East Broward Blvd. President and
Suite 2100 Chief Executive
Fort Lauderdale, FL 33394-3091 Officer-
Finance and
Administration
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 47 of the investment
companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
32 | Annual Report
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- -----------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources,
Inc.; officer of 47 of the investment companies in Franklin Templeton Investments; and FORMERLY, President, Chief Executive Officer
and Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).
- -----------------------------------------------------------------------------------------------------------------------------------
STEVEN J. GRAY (1955) Secretary Since October Not Applicable Not Applicable
One Franklin Parkway 2005
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Resources, Inc.; officer of 33 of the investment companies in Franklin Templeton Investments;
and FORMERLY, Chief Legal Counsel, Atlas Advisers, Inc. (until 2000).
- -----------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice President, Templeton
Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Investment Advisory Services, LLC,
Franklin Mutual Advisers, LLC, Franklin Templeton Alternative Strategies, Inc., Franklin Templeton Investor Services, LLC, Franklin
Templeton Services, LLC, Franklin Templeton Distributors, Inc., Templeton Investment Counsel, LLC, and Templeton/Franklin
Investment Services, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of the investment
companies in Franklin Templeton Investments; and FORMERLY, Deputy Director, Division of Investment Management, Executive Assistant
and Senior Advisor to the Chairman, Counselor to the Chairman, Special Counsel and Attorney Fellow, U.S. Securities and Exchange
Commission (1986-1995); Attorney, Rogers & Wells (until 1986); and Judicial Clerk, U.S. District Court (District of Massachusetts)
(until 1979).
- -----------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (1937) Vice President - Since 2002 Not Applicable Not Applicable
600 Fifth Avenue AML
Rockefeller Center Compliance
New York, NY 10020-2302
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; Director, Franklin Templeton
Institutional Suisse S.A., Arch Chemicals, Inc. and Lingnan Foundation; and officer and/or director, as the case may be, of some of
the other subsidiaries of Franklin Resources, Inc. and of 45 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Report | 33
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- -----------------------------------------------------------------------------------------------------------------------------------
CRAIG S. TYLE (1960) Vice President Since October Not Applicable Not Applicable
One Franklin Parkway 2005
San Mateo, CA 94403-1906
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin
Templeton Investments; and FORMERLY, Partner, Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company
Institute (ICI) (1997-2004).
- -----------------------------------------------------------------------------------------------------------------------------------
GALEN G. VETTER (1951) Chief Financial Since 2004 Not Applicable Not Applicable
500 East Broward Blvd. Officer and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Accounting
Officer
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of 47 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987
and 1991-2004).
- -----------------------------------------------------------------------------------------------------------------------------------
** We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments
fund complex. These portfolios have a common investment adviser or
affiliated investment advisers.
Charles B. Johnson and Rupert H. Johnson, Jr. are considered to be interested
persons of the Fund under the federal securities laws due to their positions as
officers and directors and major shareholders of Franklin Resources, Inc., which
is the parent company of the Fund's adviser and distributor.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers
THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE
COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT COMMITTEE
INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN
THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD OF TRUSTEES HAS DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED FRANK W.T. LAHAYE AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD
BELIEVES THAT MR. LAHAYE QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE
BUSINESS BACKGROUND AND EXPERIENCE, INCLUDING SERVICE AS PRESIDENT AND DIRECTOR
OF MCCORMICK SELPH ASSOCIATES FROM 1954 THROUGH 1965; DIRECTOR AND CHAIRMAN OF
TELEDYNE CANADA LTD. FROM 1966 THROUGH 1971; DIRECTOR AND CHAIRMAN OF
QUARTERDECK CORPORATION FROM 1982 THROUGH 1998; AND SERVICES AS A DIRECTOR OF
VARIOUS OTHER PUBLIC COMPANIES INCLUDING U.S. TELEPHONE INC. (1981-1984), FISHER
IMAGING INC. (1991-1998) AND DIGITAL TRANSMISSIONS SYSTEMS (1995-1999). IN
ADDITION, MR. LAHAYE SERVED FROM 1981 TO 2000 AS A DIRECTOR AND CHAIRMAN OF
PEREGRINE VENTURE MANAGEMENT CO., A VENTURE CAPITAL FIRM, AND HAS BEEN A MEMBER
AND CHAIRMAN OF THE FUND'S AUDIT COMMITTEE SINCE ITS INCEPTION. AS A RESULT OF
SUCH BACKGROUND AND EXPERIENCE, THE BOARD OF TRUSTEES BELIEVES THAT MR. LAHAYE
HAS ACQUIRED AN UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
FINANCIAL STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION
WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND ANALYZING AND
EVALUATING FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY
OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN
UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN
UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MR. LAHAYE IS AN INDEPENDENT TRUSTEE
AS THAT TERM IS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE COMMISSION
RULES AND RELEASES.
THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL 1-800/DIAL BEN (1-800/342-5236) TO REQUEST THE SAI.
34 | Annual Report
FRANKLIN TEMPLETON GLOBAL TRUST
SHAREHOLDER INFORMATION
PROXY VOTING POLICIES AND PROCEDURES
The Trust 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 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, 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
1-800/SEC-0330.
Annual Report | 35
This page intentionally left blank.
LITERATURE REQUEST
LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS
SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES
BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE
CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. To ensure the highest quality of
service, we may monitor, record and access telephone calls to or from our
service departments. These calls can be identified by the presence of a regular
beeping tone.
FRANKLIN TEMPLETON INVESTMENTS
INTERNATIONAL
Mutual European Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund
GLOBAL
Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund
GROWTH
Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund II(1)
VALUE
Franklin Balance Sheet Investment Fund(2)
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund(2)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund(3)
Mutual Shares Fund
BLEND
Franklin Blue Chip Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Technology Fund
Franklin Utilities Fund
Mutual Financial Services Fund
ASSET ALLOCATION
Franklin Templeton Corefolio
Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
TARGET FUNDS
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
INCOME
Franklin Adjustable U.S. Government
Securities Fund(4)
Franklin's AGE High Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Income Fund
Franklin Limited Maturity
U.S. Government Securities Fund(4)
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund(4)
Templeton Global Bond Fund
Templeton Income Fund
TAX-FREE INCOME(5)
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(6)
LIMITED-TERM FUNDS
California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund
INTERMEDIATE-TERM FUNDS
California Intermediate-Term
Tax-Free Income Fund
Federal Intermediate-Term
Tax-Free Income Fund
New York Intermediate-Term
Tax-Free Income Fund
STATE-SPECIFIC
Alabama
Arizona
California(7)
Colorado
Connecticut
Florida(7)
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(6)
Michigan(6)
Minnesota(6)
Missouri
New Jersey
New York(7)
North Carolina
Ohio(7)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust(8)
(1) The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.
(2) The fund is only open to existing shareholders and select retirement
plans.
(3) The fund is a continuously offered, closed-end fund. Shares may be
purchased daily; there is no daily redemption. However, each quarter,
pending board approval, the fund will authorize the repurchase of 5%-25%
of the outstanding number of shares. Investors may tender all or a portion
of their shares during the tender period.
(4) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
(5) For investors subject to the alternative minimum tax, a small portion of
fund dividends may be taxable. Distributions of capital gains are
generally taxable.
(6) Portfolio of insured municipal securities.
(7) These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA)
and limited-term, intermediate-term and money market portfolios (CA and
NY).
(8) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
09/05 Not part of the annual report
[LOGO](R)
FRANKLIN TEMPLETON One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906
|_| WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at franklintempleton.com.
See inside for details.
ANNUAL REPORT AND SHAREHOLDER LETTER
FRANKLIN TEMPLETON
HARD CURRENCY FUND
INVESTMENT MANAGER
Franklin Advisers, Inc.
DISTRIBUTOR
Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. The prospectus contains this and other
information; please read it carefully before investing.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.
412 A2005 12/05
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 Frank W. T. LaHaye and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the
principal accountant in connection with statutory and regulatory filings or
engagements were $21,905 for the fiscal year ended October 31, 2005 and
$21,534 for the fiscal year ended October 31, 2004.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of Item 4.
The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control
with the investment adviser that provides ongoing services to the registrant
that are reasonably related to the performance of the audit of their
financial statements were $0 for the fiscal year ended October 31, 2005 and
$48,579 for the fiscal year ended October 31, 2004. The services for which
these fees were paid included attestation services.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance,
tax advice and tax planning.
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser
and any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning were $19,591 for the fiscal year
ended October 31, 2005 and $0 for the fiscal year ended October 31, 2004.
The services for which these fees were paid included tax compliance and
advice.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended October 31,
2005 and $127 for the fiscal year ended October 31, 2004. The services for
which these fees were paid included review of materials provided to the fund
Board in connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser
and any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not
reported in paragraphs (a)-(c) of Item 4 were $4,500 for the fiscal year
ended October 31, 2005 and $159,873 for the fiscal year ended October 31,
2004. The services for which these fees were paid included review of
materials provided to the fund Board in connection with the investment
management contract renewal process and the review of the ICI transfer agent
survey.
(e) (1) The registrant's audit committee is directly responsible for
approving the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to
the Fund by the auditors;
(iii)pre-approval of all non-audit related services to be provided to
the registrant by the auditors to the registrant's investment adviser or to
any entity that controls, is controlled by or is under common control with
the registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a
designated member or members of the committee; provided the policies and
procedures are detailed as to the particular service and the committee is
informed of each service and such policies and procedures do not include
delegation of audit committee responsibilities, as contemplated under the
Securities Exchange Act of 1934, to management; subject, in the case of (ii)
through (iv), to any waivers, exceptions or exemptions that may be available
under applicable law or rules.
(e) (2) None of the services provided to the registrant described in
paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for
services rendered by the principal accountant to the registrant and the
registrant's investment adviser and any entity controlling, controlled by or
under common control with the investment adviser that provides ongoing
services to the registrant were $24,091 for the fiscal year ended October 31,
2005 and $208,579 for the fiscal year ended October 31, 2004.
(h) The registrant's audit committee of the board of trustees has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by, or
under common control with the investment adviser that provides ongoing
services to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the
principal accountant's independence.
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 significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls 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 Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial 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/JIMMY D. GAMBILL
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date December 19, 2005
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/JIMMY D. GAMBILL
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date December 19, 2005
By /s/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Financial Officer
Date December 19, 2005