UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
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
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(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: 4/30/06
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ITEM 1. REPORTS TO STOCKHOLDERS.
[GRAPHIC OMITTED]
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APRIL 30, 2006
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A series of Franklin Templeton
Global Trust
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SEMIANNUAL 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 semiannual report
Contents
SHAREHOLDER LETTER ........................................................ 1
SEMIANNUAL REPORT
Franklin Templeton Hard Currency Fund ..................................... 3
Performance Summary ....................................................... 8
Your Fund's Expenses ...................................................... 10
Financial Highlights and Statement of Investments ......................... 12
Financial Statements ...................................................... 15
Notes to Financial Statements ............................................. 18
Shareholder Information ................................................... 27
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Semiannual 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
continual 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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We are pleased to bring you Franklin Templeton Hard Currency Fund's semi-annual
report for the period ended April 30, 2006.
PERFORMANCE OVERVIEW
Franklin Templeton Hard Currency Fund - Class A posted a +7.52% cumulative total
return for the six months under review. The Fund outperformed its benchmark, the
J.P. Morgan (JPM) 3 Month Global Cash Index, which posted a +5.58% total return
for the same period. 1 The Fund typically does not attempt to directly match the
composition of the index; thus the results are not directly comparable. As of
April 30, 2006, the index included 4.2% in U.S. dollars. The Fund achieved its
goal to hedge against the depreciation of the U.S. dollar relative to other
currencies and outperformed the U.S. dollar, which fell 4.24% relative to its
major U.S. trading partners during the period. 2 The dollar fell 1.89% versus
the Japanese yen and 4.91% versus the euro. 3 You can find the Fund's long-term
performance data in the Performance Summary beginning on page 8.
1. Source: J.P. Morgan. The JPM 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 (H10 Report). The Federal Reserve Board U.S.
Trade Weighted Major Currency Dollar Index is a weighted average of the foreign
exchange values of the U.S. dollar against a subset of currencies in the broad
index that circulates widely outside the country of issue.
3. Source: Exshare.
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 14.
Semiannual Report | 3
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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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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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ECONOMIC AND MARKET OVERVIEW
Global economic growth remained robust over the reporting period, accompanied by
moderate inflationary trends. U.S. and Asian growth rates were strong, while
Europe's recovery appeared firmer than six months ago. The U.S. Federal Reserve
Board (Fed) continued to shift away from its accommodative monetary policy by
tightening interest rates 100 basis points (100 basis points equal one
percentage point), to 4.75%, by period-end. Despite a surge in commodity prices,
especially for oil and natural gas, private consumption expanded as hiring and
wages improved. Although overall investment trends remained robust, particularly
for business investment, the housing market softened. Economic growth was
hampered by the large and growing U.S. trade deficit, which pushed the country's
current account deficit to a record level of 7.0% of gross domestic product
(GDP) in 2005. 4 Highlighting the magnitude of global imbalances, the 12-country
euro zone recorded a current account deficit of less than 1% of GDP in 2005
while Japan's current account surplus rose to 3.7% of GDP over the same
period. 5
In the past, the accumulation of current account surpluses in Asia was partly a
function of policies designed to alleviate appreciation pressures on the
currencies during times of tepid domestic growth conditions. Economic trends
over the past six months, however, showed evidence of growth resulting more from
domestic drivers, particularly private consumption. For example, in South Korea
private consumption accelerated to 4.7% in first quarter 2006 from averages of
3.2% in 2005 and -0.4% in 2004. 6 Investment growth rose in South Korea and
other Asian countries. This growth theme extended to Japan as well, where the
corporate and banking sectors have implemented significant restructuring in the
past two years, enabling property markets to revive amid improved domestic
growth prospects. This prompted the Bank of Japan to end its deflation-fighting
policy in March 2006 and adopt an inflation target. Tighter monetary policy
extended across other Asian countries as well, including China, South Korea and
Thailand. Real GDP growth accelerated in first quarter 2006 with growth rates of
10.6% in Singapore, 10.3% in China and 6.2% in South Korea compared with the
same quarter of 2005. 7
European growth trends exhibited notable improvements over the six-month period,
having previously lagged the U.S. and Asia through much of the current economic
cycle. Euro-zone growth was led by the export sector, but domestic confidence
also rose broadly. An improved outlook for the durability of euro-zone recovery,
along with sustained monetary and lending growth,
4. Source: U.S. Bureau of Economic Analysis.
5. Sources: Eurostat; Ministry of Finance, Japan.
6. Source: Bank of Korea.
7. Sources: Singapore Department of Statistics; National Bureau of Statistics,
China; Bank of Korea.
4 | Semiannual Report
prompted the European Central Bank (ECB) to begin normalizing interest rates.
The ECB increased rates 50 basis points to 2.50% over the period. Growth trends
were again stronger among the non-euro European countries, including Norway and
Sweden. In addition to strong external demand, strengthening labor markets
bolstered private consumption in both countries. While the Norwegian and Swedish
central banks tightened monetary policy over the period, the Polish central bank
eased its interest rates 50 basis points despite Poland's improved growth
conditions and low inflation.
INVESTMENT STRATEGY
In making investments in foreign hard currencies, we focus on countries and
markets that historically have experienced low inflation rates and, in our
opinion, follow economic policies favorable to continued low inflation rates and
currency appreciation against the U.S. dollar over the long term.
MANAGER'S DISCUSSION
AMERICAS
During the six months ended April 30, 2006, the Fund continued to act as a hedge
against U.S. dollar depreciation. The Fund's positive return contrasted with
U.S. dollar depreciation and exceeded the return of the benchmark JPM 3 Month
Global Cash Index. Factors behind weaker U.S. dollar trends included the fading
impact of the Homeland Investment Act, which allowed U.S. corporations to
repatriate foreign profits at a lower tax rate, as well as growing market
expectations that the Fed was nearing the end of its interest rate tightening
cycle. Notably, higher U.S. bond yields relative to other developed bond markets
provided a key source of funding for the U.S. current account deficit. We sought
to position the Fund for the unwinding of large global imbalances over the
medium term which, in our view, will likely be facilitated by a weaker U.S.
dollar. These imbalances were characterized by a large U.S. current account
deficit and current account surpluses in Asia and other parts of the world. The
associated capital flows between regions and the magnitude and questionable
sustainability of foreign investment inflows into U.S. bonds, added to the
imbalances.
With Canada as the U.S.'s largest trading partner, Canadian dollar strength
played an important role in U.S. dollar weakness this reporting period. The
Canadian dollar rose 5.27% against the U.S. dollar. 3 Given Canada's rich
natural resource endowments, its currency benefited from the recent surge in
commodity prices. Additionally, the currency benefited as Canada's balance of
ASSET ALLOCATION BY CURRENCY
Based on Total Net Assets as of 4/30/06
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Canadian Dollar 19.1%
Singapore Dollar 17.0%
Swedish Krona 10.7%
Euro 9.3%
South Korean Won 7.7%
Norwegian Krone 5.5%
U.S. Dollar 5.1%
Thai Baht 4.3%
Australian Dollar 4.2%
Indonesian Rupiah 4.2%
Danish Krone 4.1%
Polish Zloty 3.1%
Japanese Yen 2.9%
Swiss Franc 2.8%
Semiannual Report | 5
payment position strengthened largely on an improved trade surplus and foreign
investment inflows into the country's energy sector.
ASIA
During the period, we reinitiated a position in the Japanese yen. On a
cumulative basis, the yen has underperformed the euro since the end of 2000.
During the last period of U.S. dollar weakness in 2002-2004, the euro and other
European currencies felt the impact of weaker currency while many Asian
countries were less affected by currency appreciation and instead built up
substantial foreign exchange reserves. Since then, the U.S. current account
deficit continued to deteriorate, the euro zone's current account became less
supportive and moved into a deficit, and the Japanese current account surplus
continued to grow. According to our analysis, the Japanese economy's significant
improvement -- evidenced by its emergence from deflation and the central bank's
subsequent fundamental shift in monetary policy -- indicated that another
potential period of U.S. dollar depreciation will likely affect the Japanese
yen. During the six months under review, the Japanese yen appreciated 1.89%
versus the U.S. dollar. 3 The Fund's basket of non-Japan Asian currencies
benefited its performance versus the benchmark index over the reporting period,
supported by strong growth and an increased tolerance in several countries to
use interest rates and exchange rates to manage monetary policy. Versus the U.S.
dollar, the South Korean won appreciated 10.28%, the Thai baht rose 8.58%, the
Singapore dollar increased 7.20%, and the Indonesian rupiah was up 15.04% during
the six-month period. 3
EUROPE
The Fund also benefited from exposure to other European (non-euro) currencies
including the Swedish krona and Polish zloty, which rose 7.82% and 7.74% against
the U.S. dollar over the six months ended April 30, 2006. 3 The Norwegian krone
and the euro also performed well, rising 5.23% and 5.17% against the U.S.
dollar, but slightly lagged the benchmark index. 3 While inflation remained
relatively low in Norway and Sweden, currency fundamentals remained attractive
in our view and were supported by solid current account and fiscal surpluses and
tightening capacity trends driven by strong economic growth. The euro benefited
relative to the U.S. dollar due in part to euro-zone interest rates moving
closer to those in the U.S. Euro-zone economic indicators continued to point
toward better growth prospects there. Improved business and consumer confidence,
rising orders for goods and marginal labor market improvements led to a shift in
growth expectations. Recently, the ECB forecast euro-zone growth to return to
its trend growth rate of around 2%, which has not been met since 2001. The Swiss
franc, however, underperformed other European currencies, appreciating 3.81%
against the U.S. dollar over the period. 3
6 | Semiannual Report
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 14 of this
report indicates the Fund held 47.9% of its total net assets in U.S.
dollar-denominated assets as of 4/30/06, its net exposure to the U.S. dollar as
of that date was only 5.1%. 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 pages 24-25 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 APRIL 30, 2006, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR
MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.
Semiannual Report | 7
Performance Summary as of 4/30/06
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 does 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 4/30/06 10/31/05
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Net Asset Value (NAV) +$0.11 $9.45 $9.34
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DISTRIBUTIONS (11/1/05-4/30/06)
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Dividend Income $0.5568
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ADVISOR CLASS (SYMBOL: ICHHX) CHANGE 4/30/06 10/31/05
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Net Asset Value (NAV) +$0.11 $9.47 $9.36
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DISTRIBUTIONS (11/1/05-4/30/06)
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Dividend Income $0.5675
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PERFORMANCE
CLASS A: 2.25% MAXIMUM INITIAL SALES CHARGE; ADVISOR CLASS: NO SALES CHARGES.
CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGE. THE FUND MAY CHARGE A
2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.
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CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +7.52% +4.44% +58.35% +22.85%
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Average Annual Total Return 2 +5.15% +2.13% +9.14% +1.84%
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Value of $10,000 Investment 3 $10,515 $10,213 $15,484 $12,004
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Avg. Ann. Total Return (3/31/06) 4 -2.27% +6.06% +1.20%
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Distribution Rate 5 1.79%
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30-Day Standardized Yield 6 2.30%
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ADVISOR CLASS(7) 6-MONTH 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +7.63% +4.74% +61.48% +26.70%
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Average Annual Total Return 2 +7.63% +4.74% +10.06% +2.39%
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Value of $10,000 Investment 3 $10,763 $10,474 $16,148 $12,670
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Avg. Ann. Total Return (3/31/06) 4 +0.22% +9.30% +1.73%
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Distribution Rate 5 2.02%
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30-Day Standardized Yield 6 2.56%
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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.
8 | Semiannual 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.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated. Six-month return has not been
annualized.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated.
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 4/30/06.
6. Yield, calculated as required by the SEC, is based on the earnings of the
Fund's portfolio for the 30 days ended 4/30/06.
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 +30.36% and +2.88%.
Semiannual Report | 9
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.
10 | Semiannual 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
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BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
CLASS A VALUE 11/1/05 VALUE 4/30/06 PERIOD* 11/1/05 - 4/30/06
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Actual $1,000 $1,075.20 $5.61
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Hypothetical (5% return before expenses) $1,000 $1,019.39 $5.46
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ADVISOR CLASS
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Actual $1,000 $1,076.30 $4.32
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Hypothetical (5% return before expenses) $1,000 $1,020.63 $4.21
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*Expenses are equal to the annualized expense ratio for each class (A: 1.09% and
Advisor: 0.84%), multiplied by the average account value over the period,
multiplied by 181/365 to reflect the one-half year period.
Semiannual Report | 11
Franklin Templeton Global Trust
FINANCIAL HIGHLIGHTS
FRANKLIN TEMPLETON HARD CURRENCY FUND
--------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2006 YEAR ENDED OCTOBER 31,
CLASS A (UNAUDITED) 2005 2004 2003 2002 2001
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PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period .............. $ 9.34 $ 9.85 $ 9.59 $ 8.56 $ 8.08 $ 8.02
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Income from investment operations:
Net investment income a .......................... 0.10 0.15 0.09 0.11 0.09g 0.31
Net realized and unrealized gains (losses) ....... 0.57 (0.12) 0.78 1.46 0.63g (0.01)
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Total from investment operations .................. 0.67 0.03 0.87 1.57 0.72 0.30
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Less distributions from:
Net investment income ............................ (0.56) (0.46) (0.61) (0.54) (0.24) (0.14)
Net realized gains ............................... -- (0.08) -- -- -- --
Tax return of capital ............................ -- -- -- -- -- (0.10)
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Total distributions ............................... (0.56) (0.54) (0.61) (0.54) (0.24) (0.24)
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Redemption fees ................................... -- c -- c -- c -- -- --
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Net asset value, end of period .................... $ 9.45 $ 9.34 $ 9.85 $ 9.59 $ 8.56 $ 8.08
=============================================================================
Total return b .................................... 7.52% 0.17% 9.44% 19.05% 9.11% 3.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) ................. $ 222,713 $190,163 $211,098 $143,715 $50,622 $29,071
Ratios to average net assets:
Expenses ......................................... 1.09% d,e 1.19% e 1.24% e 1.32% 1.50% 1.49%
Net investment income ............................ 2.20% d 1.54% 0.95% 1.19% 1.10% g 3.78%
Portfolio turnover rate ........................... 0.00% f 0.00% f 0.00% f 0.00% f 76.27% 25.59%
a Based on average daily shares outstanding.
b Total return does not reflect sales commissions or the contingent deferred
sales charges, and is not annualized for periods less than one year.
c Amount is less than $0.01 per share.
d Annualized.
e Benefit of expense reduction is less than 0.01%.
f See Note 6 regarding investment transactions.
g 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.
12 | See notes to financial statements. | Semiannual Report
Franklin Templeton Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
----------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 2006 YEAR ENDED OCTOBER 31,
ADVISOR CLASS (UNAUDITED) 2005 2004 2003 2002 2001
----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ................. $ 9.36 $ 9.87 $ 9.61 $ 8.58 $ 8.09 $ 8.03
------------------------------------------------------------------------
Income from investment operations:
Net investment income a ............................. 0.11 0.18 0.13 0.14 0.12 g 0.32
Net realized and unrealized gains (losses) .......... 0.57 (0.12) 0.79 1.46 0.64 g 0.01
------------------------------------------------------------------------
Total from investment operations ..................... 0.68 0.06 0.92 1.60 0.76 0.33
------------------------------------------------------------------------
Less distributions from:
Net investment income ............................... (0.57) (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) (0.57) (0.66) (0.57) (0.27) (0.27)
------------------------------------------------------------------------
Redemption fees ...................................... -- c -- c -- c -- -- --
------------------------------------------------------------------------
Net asset value, end of period ....................... $ 9.47 $ 9.36 $ 9.87 $ 9.61 $ 8.58 $ 8.09
========================================================================
Total return b ....................................... 7.63% 0.50% 9.89% 19.45% 9.65% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) .................... $ 16,678 $17,532 $22,442 $10,163 $1,724 $ 450
Ratios to average net assets:
Expenses ............................................ 0.84% d,e 0.83% e 0.84% e 0.92% 1.09% 1.17%
Net investment income ............................... 2.45% d 1.89% 1.35% 1.59% 1.51% g 4.00%
Portfolio turnover rate .............................. 0.00% f 0.00% f 0.00% f 0.00% f 76.27% 25.59%
a Based on average daily shares outstanding.
b Total return is not annualized for periods less than one year.
c Amount is less than $0.01 per share.
d Annualized.
e Benefit of expense reduction is less than 0.01%.
f See Note 6 regarding investment transactions.
g 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.
Semiannual Report | See notes to financial statements. | 13
Franklin Templeton Global Trust
STATEMENT OF INVESTMENTS, APRIL 30, 2006 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON HARD CURRENCY FUND PRINCIPAL AMOUNT b VALUE
- ---------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT AND AGENCY SECURITIES 47.5%
a Canada Treasury Bills, 8/24/06 - 3/22/07 ..................................... 33,320,000 CAD $ 29,049,109
a Denmark Treasury Bills, 5/01/06 - 11/01/06 ................................... 58,580,000 DKK 9,818,280
a France Treasury Bill, 7/20/06 ................................................ 1,050,000 EUR 1,317,773
a German Treasury Bills, 5/17/06 - 8/16/06 ..................................... 11,000,000 EUR 13,809,565
a Government of Sweden, Strip, 6/21/06 - 3/21/07 ............................... 170,280,000 SEK 22,885,007
a Netherlands Treasury Bill, 9/29/06 ........................................... 800,000 EUR 996,952
a Norwegian Treasury Bills, 6/21/06 - 12/20/06 ................................. 70,925,000 NOK 11,457,245
a Singapore Treasury Bills, 5/02/06 - 11/30/06 ................................. 31,250,000 SGD 19,399,530
a Spain Letras Del Tesoro, Strip, 10/20/06 ..................................... 4,000,000 EUR 4,982,431
------------
TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES (COST $108,101,581) ........... 113,715,892
------------
U.S. GOVERNMENT AND AGENCY SECURITIES 47.9%
a Federal Home Loan Bank, 5/01/06 .............................................. 24,615,000 24,615,000
a U.S. Treasury Bills, 5/04/06 - 8/10/06 ....................................... 90,415,000 89,924,781
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES (COST $114,509,293) .............. 114,539,781
------------
TOTAL INVESTMENTS (COST $222,610,874) 95.4% .................................. 228,255,673
NET UNREALIZED GAIN ON FORWARD EXCHANGE CONTRACTS 2.2% ....................... 5,368,008
OTHER ASSETS, LESS LIABILITIES 2.4% .......................................... 5,767,673
------------
NET ASSETS 100.0% ............................................................ $239,391,354
============
CURRENCY ABBREVIATIONS
CAD - Canadian Dollar
DKK - Danish Krone
EUR - Euro
NOK - Norwegian Krone
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.
14 | See notes to financial statements. | Semiannual Report
Franklin Templeton Global Trust
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2006 (unaudited)
------------------
FRANKLIN TEMPLETON
HARD CURRENCY FUND
------------------
Assets:
Investments in securities:
Cost .......................................................................... $ 222,610,874
=============
Value ......................................................................... $ 228,255,673
Cash ........................................................................... 6,809
Foreign currency, at value (cost $1,126,776) ................................... 1,134,202
Receivables:
Investment securities sold .................................................... 365,952
Capital shares sold ........................................................... 5,153,698
Unrealized gain on forward exchange contracts (Note 7) ......................... 5,426,975
-------------
Total assets ............................................................ 240,343,309
-------------
Liabilities:
Payables:
Capital shares redeemed ....................................................... 660,264
Affiliates .................................................................... 185,947
Unrealized loss on forward exchange contracts (Note 7) ......................... 58,967
Accrued expenses and other liabilities ......................................... 46,777
-------------
Total liabilities ....................................................... 951,958
-------------
Net assets, at value ................................................. $ 239,391,354
=============
Net assets consist of:
Paid-in capital ................................................................ $ 231,392,607
Undistributed net investment income ............................................ 983,943
Net unrealized appreciation (depreciation) ..................................... 11,020,233
Accumulated net realized gain (loss) ........................................... (4,005,429)
-------------
Net assets, at value .................................................. $ 239,391,354
=============
CLASS A:
Net assets, at value ........................................................... $ 222,713,038
=============
Shares outstanding ............................................................. 23,566,830
=============
Net asset value per share a .................................................... $9.45
=============
Maximum offering price per share (net asset value per share / 97.75%) .......... $9.67
=============
ADVISOR CLASS:
Net assets, at value ........................................................... $ 16,678,316
=============
Shares outstanding ............................................................. 1,761,494
=============
Net asset value and maximum offering price per sharea .......................... $9.47
=============
a Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable, and redemption fees retained by the Fund.
Semiannual Report | See notes to financial statements. | 15
Franklin Templeton Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the six months ended April 30, 2006 (unaudited)
------------------
FRANKLIN TEMPLETON
HARD CURRENCY FUND
------------------
Investment income:
Interest (net of foreign taxes of $15,243) ........................................... $ 3,336,717
------------
Expenses:
Management fees (Note 3a) ............................................................ 655,715
Distribution fees (Note 3c)
Class A ............................................................................. 229,492
Transfer agent fees (Note 3e) ........................................................ 104,002
Custodian fees (Note 4) .............................................................. 17,467
Reports to shareholders .............................................................. 21,167
Registration and filing fees ......................................................... 36,789
Professional fees .................................................................... 10,473
Trustees' fees and expenses .......................................................... 8,296
Other ................................................................................ 2,646
------------
Total expenses ................................................................ 1,086,047
Expense reductions (Note 4) ................................................... (3,543)
------------
Net expenses ............................................................... 1,082,504
------------
Net investment income ................................................... 2,254,213
------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ......................................................................... (2,490,715)
Foreign currency transactions ....................................................... 647,508
------------
Net realized gain (loss) ................................................... (1,843,207)
------------
Net change in unrealized appreciation (depreciation) on:
Investments ......................................................................... 14,735,662
Translation of assets and liabilities denominated in foreign currencies ............. 7,215
------------
Net change in unrealized appreciation (depreciation) ....................... 14,742,877
------------
Net realized and unrealized gain (loss) ............................................... 12,899,670
------------
Net increase (decrease) in net assets resulting from operations ....................... $ 15,153,883
============
16 | See notes to financial statements. | Semiannual Report
Franklin Templeton Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------
FRANKLIN TEMPLETON
HARD CURRENCY FUND
-----------------------------------
SIX MONTHS ENDED
APRIL 30, 2006 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2005
-----------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income .................................................................... $ 2,254,213 $ 3,511,261
Net realized gain (loss) from investments and foreign currency transactions .............. (1,843,207) 10,102,422
Net change in unrealized appreciation (depreciation) on investments and translation of
assets and liabilities denominated in foreign currencies ............................... 14,742,877 (12,803,993)
----------------------------------
Net increase (decrease) in net assets resulting from operations .................... 15,153,883 809,690
----------------------------------
Distributions to shareholders from:
Net investment income:
Class A ................................................................................ (10,649,131) (9,731,396)
Advisor Class .......................................................................... (990,830) (1,084,586)
Net realized gains:
Class A ................................................................................ -- (1,735,869)
Advisor Class .......................................................................... -- (188,101)
----------------------------------
Total distributions to shareholders ....................................................... (11,639,961) (12,739,952)
----------------------------------
Capital share transactions: (Note 2)
Class A ................................................................................ 29,177,773 (9,971,213)
Advisor Class .......................................................................... (995,856) (3,953,900)
----------------------------------
Total capital share transactions .......................................................... 28,181,917 (13,925,113)
----------------------------------
Redemption fees ........................................................................... 1,227 9,614
----------------------------------
Net increase (decrease) in net assets .............................................. 31,697,066 (25,845,761)
Net assets:
Beginning of period ....................................................................... 207,694,288 233,540,049
----------------------------------
End of period ............................................................................. $ 239,391,354 $ 207,694,288
==================================
Undistributed net investment income included in net assets:
End of period ............................................................................. $ 983,943 $ 10,369,691
==================================
Semiannual Report | See notes to financial statements. | 17
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 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.
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
18 | Semiannual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. SECURITY VALUATION (CONTINUED)
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 Trust's Board of
Trustees.
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities, 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 Trust'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. 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 unrealized
gains or losses on the contracts, as measured by the difference between the
contractual forward foreign exchange rates and the forward rates at the
reporting date, are included in the Statement of Assets and Liabilities.
Realized and unrealized gains and losses on these contracts are included in the
Statement of Operations.
Semiannual Report | 19
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. FOREIGN CURRENCY CONTRACTS (CONTINUED)
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.
D. INCOME TAXES
No provision has been made for U.S. income taxes because the Fund intends 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. Amortization of
premium and accretion of discount on debt securities are included in interest
income. Distributions to shareholders are recorded on the ex-dividend date and
are determined according to income tax regulations (tax basis). Distributable
earnings determined on a tax basis may differ from earnings recorded in
accordance with accounting principles generally accepted in the United States.
These differences may be permanent or temporary. Permanent differences are
reclassified among capital accounts to reflect their tax character. These
reclassifications have no impact on net assets or the results of operations.
Temporary differences are not reclassified, as they may reverse in subsequent
periods.
Realized and unrealized gains and losses and net investment income, other than
class-specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class. Differences in class-level
expenses may result in payment of different per share distributions by class.
20 | Semiannual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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
At April 30, 2006, there were an unlimited number of shares authorized ($0.01
par value). Transactions in the Fund's shares were as follows:
---------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2006 OCTOBER 31, 2005
---------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------
CLASS A SHARES:
Shares sold ............................... 8,440,828 $ 76,983,044 13,278,417 $ 129,231,930
Shares issued in reinvestment
of distributions ......................... 900,047 8,031,952 981,974 9,491,397
Shares redeemed ........................... (6,132,943) (55,837,223) (15,326,537) (148,694,540)
---------------------------------------------------------------------
Net increase (decrease) ................... 3,207,932 $ 29,177,773 (1,066,146) $ (9,971,213)
=====================================================================
Semiannual Report | 21
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
--------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2006 OCTOBER 31, 2005
--------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------
ADVISOR CLASS SHARES:
Shares sold ......................... 345,422 $ 3,169,084 1,390,003 $ 13,693,142
Shares issued in reinvestment
of distributions ................... 67,630 604,305 98,902 957,665
Shares redeemed ..................... (525,084) (4,769,245) (1,889,275) (18,604,707)
--------------------------------------------------------------
Net increase (decrease) ............. (112,032) $ (995,856) (400,370) $ (3,953,900)
==============================================================
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 Trust'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.
22 | Semiannual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
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 period:
Net sales charges received a ......................... $35,289
a Net of commissions paid to unaffiliated broker/dealers.
E. TRANSFER AGENT FEES
The Fund paid transfer agent fees of $104,002, of which $71,464 was retained by
Investor Services.
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the period ended April 30, 2006, the
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.
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 April 30, 2006, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ....................................... $222,610,937
============
Unrealized appreciation ................................... $ 5,644,736
Unrealized depreciation ................................... --
------------
Net unrealized appreciation (depreciation) ................ $ 5,644,736
============
Semiannual Report | 23
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
6. INVESTMENT TRANSACTIONS
There were no purchases or sales of investments (other than short term
securities) for the period ended April 30, 2006.
7. FORWARD EXCHANGE CONTRACTS
At April 30, 2006, the Fund had the following forward exchange contracts
outstanding:
- -------------------------------------------------------------------------------------------------------------
CONTRACT SETTLEMENT UNREALIZED
CONTRACTS TO BUY: AMOUNT a DATE GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------
6,800,000 Canadian Dollar ....................... 5,710,926 5/12/06 $375,054
4,000,000 Polish Zloty .......................... 1,173,606 5/16/06 130,851
20,000,000 Thailand Baht ......................... 484,144 5/16/06 48,716
8,350,000 Singapore Dollar ...................... 4,970,238 5/25/06 318,505
41,420,000,000 Indonesian Rupiah ..................... 3,689,978 5/31/06 992,153
465,840,000 Korean Won ............................ 453,152 5/31/06 41,222
8,380,000,000 Korean Won ............................ 8,145,808 6/20/06 751,740
14,200,000 Australian Dollar ..................... 10,488,546 6/21/06 298,872
252,650,000 Korean Won ............................ 248,671 6/23/06 19,602
7,250,000 Norwegian Krone ....................... 1,128,211 6/29/06 53,483
6,800,000 Singapore Dollar ...................... 4,071,369 7/17/06 245,955
5,000,000 Singapore Dollar ...................... 3,104,626 7/17/06 74,741
1,400,000 Canadian Dollar ....................... 1,207,521 7/19/06 47,741
1,991,865 Polish Zloty .......................... 606,056 7/28/06 44,965
11,000,000,000 Indonesian Rupiah ..................... 1,047,619 8/16/06 177,022
3,500,000 Canadian Dollar ....................... 3,045,597 8/17/06 95,032
20,000,000 Swedish Krone ......................... 2,627,741 8/17/06 115,195
2,500,000,000 Indonesian Rupiah ..................... 211,864 9/01/06 65,667
1,620,000 Canadian Dollar ....................... 1,397,638 9/27/06 57,711
3,250,000 Norwegian Krone ....................... 493,621 9/27/06 39,120
2,700,000 Singapore Dollar ...................... 1,680,672 9/27/06 39,624
850,000 Singapore Dollar ...................... 531,350 9/27/06 11,125
6,250,000 Singapore Dollar ...................... 3,858,025 10/11/06 126,869
255,000,000 Japanese Yen .......................... 2,208,251 10/16/06 85,041
7,000,000 Polish Zloty .......................... 2,245,821 10/17/06 48,270
5,300,000 Canadian Dollar ....................... 4,686,533 10/26/06 78,695
31,500,000,000 Indonesian Rupiah ..................... 3,252,452 11/24/06 196,453
1,000,000,000 Korean Won ............................ 1,031,992 11/24/06 34,277
840,000 Polish Zloty .......................... 265,152 11/24/06 10,478
132,000,000 Thailand Baht ......................... 3,331,651 11/24/06 181,791
235,000,000 Thailand Baht ......................... 6,052,022 12/22/06 201,804
2,575,000,000 Korean Won ............................ 2,660,449 12/27/06 87,772
24 | Semiannual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
7. FORWARD EXCHANGE CONTRACTS (CONTINUED)
- -------------------------------------------------------------------------------------------------------------
CONTRACT SETTLEMENT UNREALIZED
CONTRACTS TO BUY: AMOUNT a DATE GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------
6,900,000 Polish Zloty .................... 2,155,711 12/27/06 $ 110,790
3,500,000 Singapore Dollar ................ 2,202,643 12/27/06 37,278
2,750,000 Swiss Franc ..................... 2,166,378 12/27/06 105,977
1,800,000 Polish Zloty .................... 560,957 1/16/07 30,684
4,650,000,000 Korean Won ...................... 4,956,035 1/29/07 11,365
512,800,000 Japanese Yen .................... 4,642,825 2/01/07 35,335
-------------
Unrealized gain on forward exchange contracts .......................... $ 5,426,975
-------------
- -------------------------------------------------------------------------------------------------------------
CONTRACT SETTLEMENT UNREALIZED
CONTRACTS TO BUY: AMOUNT a DATE GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------
6,200,000 Swiss Franc ..................... 5,027,367 6/19/06 $ (266)
6,000,000,000 Indonesian Rupiah ............... 661,521 1/29/07 (10,598)
-------------
(10,864)
-------------
- -------------------------------------------------------------------------------------------------------------
CONTRACT SETTLEMENT UNREALIZED
CONTRACTS TO SELL: AMOUNT a DATE GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------
1,900,000,000 Indonesian Rupiah ............... 191,532 5/31/06 $ (23,244)
700,000 Swiss Franc ..................... 554,719 6/19/06 (12,857)
780,000 Australian Dollar ............... 580,546 6/21/06 (12,002)
-------------
(48,103)
-------------
Unrealized loss on forward exchange contracts .......................... $ (58,967)
=============
Net unrealized gain on forward exchange contracts ............. $ 5,368,008
=============
a In U.S. Dollar unless otherwise indicated.
8. CONCENTRATION OF RISK
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.
Semiannual Report | 25
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
9. REGULATORY MATTERS (CONTINUED)
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 to the relevant funds in March 2005. The
Fund did not participate in the CAGO Settlement. The SEC has not yet approved
the distribution plans pertaining to the August 2, 2004 SEC Order or the
December 13, 2004 SEC Order. However, subsequent to April 30, 2006, the SEC
published the IDC's distribution plan pertaining to the December 13, 2004 SEC
Order for public comment. When approved, disbursements of settlement monies will
be made promptly to the relevant funds, in accordance with the terms and
conditions of those orders.
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 multidistrict 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.
26 | Semiannual Report
Franklin Templeton Global Trust
SHAREHOLDER INFORMATION
FRANKLIN TEMPLETON HARD CURRENCY FUND
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT
At a meeting held February 28, 2006, the Board of Trustees ("Board"), including
a majority of non-interested or independent Trustees, approved renewal of the
investment management agreement for Franklin Templeton Hard Currency Fund
("Fund"). In reaching this decision, the Board took into account information
furnished throughout the year at regular Board meetings, as well as information
prepared specifically in connection with the annual renewal review process.
Information furnished and discussed throughout the year included investment
performance reports and related financial information for the Fund, as well as
periodic reports on shareholder services, legal, compliance, pricing, brokerage
commissions and execution and other services provided by the Investment Manager
("Manager") and its affiliates. Information furnished specifically in connection
with the renewal process included a report for the Fund prepared by Lipper, Inc.
("Lipper"), an independent organization, as well as a Fund profitability
analysis report prepared by management. The Lipper reports compared the Fund's
investment performance and expenses with those of other mutual funds deemed
comparable to the Fund as selected by Lipper. The Fund profitability analysis
report discussed the profitability to Franklin Templeton Investments from its
overall U.S. fund operations, as well as on an individual fund-by-fund basis.
Included with such profitability analysis report was information on a
fund-by-fund basis listing portfolio managers and other accounts they manage, as
well as information on management fees charged by the Manager and its affiliates
including management's explanation of differences where relevant and a
three-year expense analysis with an explanation for any increase in expense
ratios. Additional information accompanying such report was a memorandum
prepared by management describing enhancements to the services provided to the
Fund by the Franklin Templeton Investments organization, as well as a memorandum
relating to economies of scale.
In considering such materials, the independent Trustees received assistance and
advice from and met separately with independent counsel. In approving
continuance of the investment management agreement for the Fund, the Board,
including a majority of independent Trustees, determined that the existing
management fee structure was fair and reasonable and that continuance of the
investment management agreement was in the best interests of the Fund and its
shareholders. While attention was given to all information furnished, the
following discusses some primary factors relevant to the Board's decision.
NATURE, EXTENT AND QUALITY OF SERVICE. The Board was satisfied with the nature
and quality of the overall services provided by the Manager and its affiliates
to the Fund and its shareholders. In addition to investment performance and
expenses discussed later, the Board's opinion was based, in part, upon periodic
reports furnished them showing that the investment policies and restrictions for
the Fund were consistently complied with as well as other reports periodically
furnished the Board covering matters such as the compliance of portfolio
managers and other management personnel with the code of ethics adopted
throughout the Franklin Templeton fund
Semiannual Report | 27
Franklin Templeton Global Trust
SHAREHOLDER INFORMATION (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
complex, the adherence to fair value pricing procedures established by the
Board, and the accuracy of net asset value calculations. The Board also noted
the extent of benefits provided Fund shareholders from being part of the
Franklin Templeton family of funds, including the right to exchange investments
between the same class of funds without a sales charge, the ability to reinvest
Fund dividends into other funds and the right to combine holdings in other funds
to obtain a reduced sales charge. Favorable consideration was given to
management's efforts and expenditures in establishing back-up systems and
recovery procedures to function in the event of a natural disaster, it being
noted by the Board that such systems and procedures had functioned smoothly
during the hurricanes and blackout experienced last year in Florida.
Consideration was also given to the experience of each Fund's portfolio
management team, the number of accounts managed and general method of
compensation. In this latter respect, the Board noted that a primary factor in
management's determination of a portfolio manager's bonus compensation was the
relative investment performance of the funds he or she managed so as to be
aligned with the interests of Fund shareholders. The Board also took into
account the transfer agent and shareholder services provided Fund shareholders
by an affiliate of the Manager, noting continuing expenditures by management to
increase and improve the scope of such services, periodic favorable reports on
such service conducted by third parties and the firsthand experience of the
individual Trustees who deal with the shareholder services department in their
capacities as shareholders in one or more of the various Franklin Templeton
Funds.
INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment
performance of the Fund in view of its importance to shareholders. In assessing
such performance, consideration was given to the Fund's performance as set forth
in the Lipper report furnished for the agreement renewal. The Lipper report
prepared for the Fund showed the investment performance of its Class A shares
during 2005, as well as for the previous ten years ended December 31, 2005, in
comparison to a performance universe consisting of all retail and institutional
international income funds as selected by Lipper. The Lipper report showed the
Fund's income return during 2005 was in the highest quintile of its performance
universe and on an annualized basis was in the second-highest, highest and
middle quintile of such universe for the previous three-, five- and ten-year
periods, respectively. The Fund's total return during 2005 placed it in the
second-highest quintile of such universe as shown in the Lipper report and its
total return on an annualized basis during the previous three and five years was
also in the second-highest quintile of such universe, and during the previous
ten-year period was in the lowest quintile of such universe. The investment
objective of this Fund is to provide a hedge against the U.S. dollar and the
Fund's prospectus restriction requires it keep the weighted maturity of its
investments to less than 120 days, which differs from many of the international
funds in its performance universe. In expressing its satisfaction, the Board
took into account the Fund's performance in view of such objective and
restrictions as set forth in reports furnished at Board meetings throughout the
year, as well as its comparative performance as shown in the Lipper report.
28 | Semiannual Report
Franklin Templeton Global Trust
SHAREHOLDER INFORMATION (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the
management fees and total expense ratios of the Fund compared with those of a
group of other funds selected by Lipper as its appropriate Lipper expense group
under the Lipper report. Prior to making such comparison, the Board relied upon
a survey showing that the scope of services covered under the Fund's investment
management agreement was similar to those provided by fund managers to other
mutual fund groups that would be used as a basis of comparison in the Lipper
reports. In reviewing comparative costs, emphasis was given to the Fund's
management fee in comparison with the effective management fee that would have
been charged by other funds within its Lipper expense group assuming they were
the same size as the Fund, as well as the actual total expenses of the Fund in
comparison with those of its peer group. The Lipper effective management fee
analysis considers administrative charges to be part of management fees, and
total expenses, for comparative consistency, are shown by Lipper for fund Class
A shares. The results of such expense comparisons showed that the effective
management fee rate for the Fund was below the median for its Lipper expense
group, and its actual total expenses in the second least expensive quintile of
such group. The Board was satisfied with the management fee and total expenses
of the Fund in comparison to its Lipper expense group.
MANAGEMENT PROFITABILITY. The Board also considered the level of profits
realized by the Manager and its affiliates in connection with the operation of
the Fund. In this respect, the Board reviewed the Fund profitability analysis
that addresses the overall profitability of Franklin Templeton's U.S. fund
business, as well as its profits in providing management and other services to
each of the individual funds. The Board also considered the extent to which the
Manager and its affiliates might derive ancillary benefits from fund operations,
including its interest in a joint venture entity which financed up-front
commissions paid to brokers/dealers who sold fund Class B shares. Specific
attention was given to the methodology followed in allocating costs to the Fund,
it being recognized that allocation methodologies are inherently subjective and
various allocation methodologies may each be reasonable while producing
different results. In this respect, the Board noted that the cost allocation
methodology was consistent with that followed in profitability report
presentations for the Fund made in prior years and that the Fund's independent
registered public accounting firm had been engaged by the Manager to perform
certain procedures on a biennial basis, specified and approved by the Manager
and the Fund's Board solely for their purposes and use in reference to the
profitability analysis. Included in the analysis were the revenue and related
costs involved in providing services to the Fund, as well as the Fund's relative
contribution to the profitability of the Manager's parent. In reviewing and
discussing such analysis, management discussed with the Board its belief that
costs incurred in establishing the infrastructure necessary to the type of
mutual fund operations conducted by the Manager and its affiliates may not be
fully reflected in the expenses allocated to the Fund in determining its
profitability, as well as the fact that the level of profits, to a certain
extent, reflected operational cost savings and efficiencies initiated by
management. The Board also took into account management's expenditures in
Semiannual Report | 29
Franklin Templeton Global Trust
SHAREHOLDER INFORMATION (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
improving shareholder services provided the Fund, as well as the need to meet
additional regulatory and compliance requirements resulting from the
Sarbanes-Oxley Act and recent SEC requirements. In addition, the Board
considered a third-party study comparing the profitability of the Manager's
parent on an overall basis as compared to other publicly held managers broken
down to show profitability from management operations exclusive of distribution
expenses, as well as profitability including distribution expenses. Based upon
its consideration of all these factors, the Board determined that the level of
profits realized by the Manager and its affiliates from providing services to
each Fund was not excessive in view of the nature, quality and extent of
services provided.
ECONOMIES OF SCALE. The Board also considered whether economies of scale are
realized by the Manager as the Fund grows larger and the extent to which this is
reflected in the level of management fees charged. While recognizing that any
precise determination is inherently subjective, the Board noted that based upon
the Fund profitability analysis, it appears that as some funds get larger, at
some point economies of scale do result in the Manager realizing a larger profit
margin on management services provided such a fund. The fee structure under the
Fund's investment management agreement provides for a management fee of 0.65% at
all asset levels. In considering the need for breakpoints, management expressed
the view that such fee schedule is low for this type of fund and anticipates
economies of scale that may exist as the Fund grows to a larger size. In support
of this position, management pointed out the Fund's favorable fee and expense
comparison within its Lipper expense group. The Board took management's views
into account and believed it reasonable to conclude that at the Fund's asset
level of approximately $189 million at December 31, 2005, no meaningful
economies of scale existed. The Board intends to monitor future growth in Fund
assets and the appropriateness of adding investment management fee breakpoints.
30 | Semiannual Report
Franklin Templeton Global Trust
SHAREHOLDER INFORMATION (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
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.
Semiannual Report | 31
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 semiannual report
[LOGO](R)
FRANKLIN TEMPLETON One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906
o WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at
franklintempleton.com. See inside for details.
SEMIANNUAL 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 S2006 06/06
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. N/A
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES
FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT
INVESTMENT COMPANIES. N/A
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END
MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY Holders. There have
been no changes to the procedures by which shareholders may recommend nominees
to the Registrant's Board of Trustees that would require disclosure herein.
ITEM 11. CONTROLS AND PROCEDURES. (A) EVALUATION OF DISCLOSURE CONTROLS
AND PROCEDURES. The Registrant maintains disclosure controls and procedures that
are designed to ensure that information required to be disclosed in the
Registrant's filings under the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 is recorded, processed, summarized and reported
within the periods specified in the rules and forms of the Securities and
Exchange Commission. Such information is accumulated and communicated to the
Registrant's management, including its principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure. The Registrant's management, including the principal executive
officer and the principal financial officer, recognizes that any set of controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no 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 June 28, 2006
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 June 28, 2006
By /s/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Financial Officer
Date June 28, 2006