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: 10/31/08
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ITEM 1. REPORTS TO STOCKHOLDERS.
(GRAPHIC)
OCTOBER 31, 2008
A series of Franklin Templeton Global Trust
ANNUAL REPORT AND SHAREHOLDER LETTER
FIXED INCOME
FRANKLIN TEMPLETON
HARD CURRENCY FUND
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(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)
FRANKLIN - TEMPLETON - 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.
MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
(GRAPHIC)
Not part of the annual report
Contents
CEO'S MESSAGE ............................................................. 1
ANNUAL REPORT
Franklin Templeton Hard Currency Fund ..................................... 4
Performance Summary ....................................................... 9
Your Fund's Expenses ...................................................... 12
Financial Highlights and Statement of Investments ......................... 14
Financial Statements ...................................................... 17
Notes to Financial Statements ............................................. 20
Report of Independent Registered Public Accounting Firm ................... 29
Tax Designation ........................................................... 30
Board Members and Officers ................................................ 31
Shareholder Information ................................................... 36
A Message from Gregory E. Johnson,
President and Chief Executive Officer of Franklin Resources, Inc.
October 31, 2008
Dear Shareholder:
The enclosed annual report for Franklin Templeton Hard Currency Fund covers the
12 months ended October 31, 2008, and I would like to add some comments on
market events during this time. Recent market volatility has been jarring to
everyone, including those of us who have worked in financial markets for many
years. Bank lending around the world seized up, and the fallout impacted
venerable firms alongside broader stock and bond indexes.
This environment is bound to provoke great concern, but it's equally important
to put the latest market developments in perspective. That's why I'd like to
offer a few thoughts on these events, our company's approach to investing and
the strong health of our organization.
A key point to recognize is that global financial turmoil is being addressed by
global action. Central banks around the world have coordinated their efforts to
cut interest rates and supply liquidity to frozen funding markets. A number of
governments have also intervened to rescue major financial institutions or find
an orderly way for them to be acquired. Here in the U.S., the Federal Reserve
and Treasury Department have moved rapidly to establish new
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NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Not part of the annual report | 1
programs for easing money market pressures and handling troubled financial
assets. The outcome of all these efforts may take a while to be realized, but I
believe the latest actions here and abroad mark a significant turning point for
global capital markets.
It's also important to remember that as daunting as current market conditions
may be, we have navigated through other periods of market volatility. U.S. stock
markets recorded three bear markets during the 1960s as the nation grappled with
the Vietnam War and a turbulent economy.(1) The quintupling of oil prices in
1973 led to a deep U.S. recession and a stock market plunge of 45.1% from
January 1973 through December 1974.(1) And the "Black Monday" stock market crash
of 1987 remains the largest single-day percentage decline in the history of the
Dow Jones Industrial Average.(2)
Advice applicable throughout these upheavals remains true today. The late Sir
John Templeton, writing 15 years ago, ended a list of his core investment
principles with these thoughts: "Do not be fearful or negative too often.... For
100 years optimists have carried the day in U.S. stocks. Even in the dark '70s,
many professional money managers -- and many individual investors too -- made
money in stocks.... In this century or the next it's still 'Buy low, sell
high.'"(3)
Sir John knew these simple concepts were difficult to execute in the face of
pessimism. Nonetheless, that is precisely how our Franklin, Templeton and Mutual
Series portfolio managers are contending with today's challenging environment.
They are using their expertise to sort through investment opportunities,
avoiding those firms that have become merely cheap and identifying those firms
best positioned to be eventual winners. This kind of rigorous, bottom-up,
security-by-security analysis is the fundamental investment discipline practiced
across our global platform.
These asset management strengths are also the core of our business. Unlike
financial firms that have dominated recent headlines, Franklin Templeton derives
its revenue primarily from investment management, not investment banking or
securities brokerage. Additionally, our assets under management are diversified
by investment objective, clientele and geographic region. Diversified
positioning helps our firm maintain healthy operating margins even when volatile
markets reduce assets under management. It is also important to note that
maintaining a strong balance sheet has been a pillar of our management strategy.
We have a substantial pool of cash and investments and low levels of
(1.) Source: Ned Davis Research, Inc.
(2.) Source: NYSE Euronext. The Dow Jones Industrial Average is price weighted
based on the average market price of 30 blue chip stocks of companies that
are generally industry leaders.
(3.) Source: "16 Rules for Investment Success" by Sir John Templeton.
2 | Not part of the annual report
debt, and we are in the enviable position of not having to depend on credit to
meet our operating needs. In fact, our strong franchise, sound capitalization
and minimal leverage recently led Standard & Poor's to raise its credit ratings
on Franklin Resources, Inc. (BEN) to the highest level currently applied to a
publicly traded asset manager.(4)
Franklin Templeton's six-decade growth into a premier global asset manager has
given us the conviction that although conditions remain challenging, there are
ample reasons to be optimistic about eventual market stabilization and recovery.
Being able to take advantage of markets shaken by maximum pessimism has helped
our firm develop into an organization that stretches across 29 countries and
manages assets for more than 20 million shareholder accounts.
In the enclosed annual report for Franklin Templeton Hard Currency Fund, the
portfolio manager discusses market conditions, investment decisions and Fund
performance during the 12 months ended October 31, 2008. The report contains
additional performance data and financial information. Our website,
franklintempleton.com, offers more timely discussions, daily prices, portfolio
holdings and other information. We encourage you to discuss your concerns with
your financial advisor, who can review your overall portfolio, reassess your
goals and help you stay focused on the long term. As times like these
illustrate, all securities markets fluctuate, as do fund share prices.
We are grateful for the trust you have placed in Franklin Templeton and remain
focused on serving your investment needs.
Sincerely,
/s/ Gregory E. Johnson
Gregory E. Johnson
President and Chief Executive Officer
Franklin Resources, Inc.
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF OCTOBER 31, 2008. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE.
(4.) Source: Standard & Poor's press release, 10/6/08.
Not part of the annual report | 3
Annual Report
Franklin Templeton Hard Currency Fund
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Franklin Templeton Hard Currency Fund
seeks to protect against depreciation of the U.S. dollar relative to other
currencies. The Fund seeks to achieve its goal by investing at least 80% of its
net assets in investments denominated in hard currencies (as defined in the
prospectus). The Fund normally invests mainly in high-quality short-term money
market instruments and forward currency contracts denominated in foreign hard
currencies. The Fund focuses on countries and markets that historically have
experienced low inflation rates and that, in the investment manager's view,
follow economic policies conducive to continual low inflation rates and currency
appreciation versus the U.S. dollar over the long term.
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL (800) 342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
This annual report for Franklin Templeton Hard Currency Fund covers the fiscal
year ended October 31, 2008.
PERFORMANCE OVERVIEW
Franklin Templeton Hard Currency Fund - Class A had a -3.57% cumulative total
return for the 12 months under review. The Fund performed better than its
benchmark, the J.P. Morgan (JPM) 3 Month Global Cash Index, which had a -8.47%
total return for the same period.(1) The Fund typically does not attempt to
directly match the composition of the index; thus the results are not directly
comparable. The Fund underperformed the U.S. dollar, which rose 13.70% relative
to its major U.S. trading partners during the period.(2) The dollar appreciated
14.09% versus the euro but declined 14.69% versus the Japanese yen.(3) You can
find the Fund's long-term performance data in the Performance Summary beginning
on page 9.
(1.) Source: J.P. Morgan. The 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 H10 Report.
(3.) Source: Exshare (via Compustat via Factset).
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 16.
4 | Annual Report
ECONOMIC AND MARKET OVERVIEW
During the Fund's fiscal year, the global economy faced several economic shocks
including a global housing market correction starting in the U.S., a commodity
price hike and a credit crunch. With multiple detractors to growth, the global
economy began to slow, led by the U.S. and later followed by Europe and other
industrialized countries. Given these conditions, international bond, equity and
currency markets experienced considerable volatility over the 12-month period.
Additionally, global inflation rates rose sharply during the reporting period as
food and energy prices surged. However, inflation began to moderate toward
period-end as commodity prices declined rapidly and global growth waned.
Increased recession risk and instability in global financial markets prompted
significant monetary policy easing globally.
Domestic economic momentum cooled rapidly as credit conditions tightened, job
losses mounted and business and consumer confidence plunged. In third quarter
2008, U.S. real gross domestic product (GDP) growth contracted an estimated
annualized 0.5%. Continued economic weakness helped moderately reduce the U.S.'s
large current account deficit, which stood at -5.1% of GDP at period-end.(4)
Rising U.S. mortgage delinquencies triggered a period of substantial risk
aversion in the banking sector and financial markets. Deteriorating asset
quality and capital positions of major U.S. financial institutions led to
further distress in credit markets, prompting U.S. policymakers to provide
liquidity and capital to the banking system to prevent a system-wide melt-down.
For example, the U.S. Federal Reserve Board (Fed) reduced interest rates 350
basis points (bps; 100 bps equal one percentage point) to 1.00% during the
period.
The eurozone economy entered a technical recession in third quarter 2008 after
the economy shrank 0.2% from the second quarter.(5) After raising interest rates
in July to counteract inflation risks from surging commodity prices, the
European Central Bank (ECB) cut rates 50 bps to 3.75% in October following a
string of bank failures. Furthermore, eurozone and other European countries
stepped up measures to protect depositors, establish bank-rescue plans and
consider fiscal spending plans to mitigate the economic downturn. In a
coordinated effort with the Fed, ECB and other central banks, Sweden, Norway,
Switzerland and the U.K. also reduced interest rates in October.
Asia's economic growth also moderated, but not to the same extent as in the U.S.
or Europe. China's third quarter GDP registered 9.0% annual growth,
WHAT IS A CURRENT ACCOUNT?
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.
WHAT IS BALANCE OF PAYMENTS?
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.
(4.) Source: Bureau of Economic Analysis.
(5.) Source: Eurostat.
Annual Report | 5
CURRENCY BREAKDOWN
10/31/08
% OF TOTAL
NET ASSETS
----------
ASIA PACIFIC 76.7%
Japanese Yen 29.4%
Singapore Dollar 25.0%
Malaysian Ringgit 9.4%
Indonesian Rupiah 4.0%
Taiwanese Dollar 3.3%
Chinese Yuan 2.9%
Australian Dollar 1.9%
Kazakhstani Tenge 0.8%
EUROPE 26.8%
Swiss Franc 16.7%
Swedish Krona 7.5%
Polish Zloty 1.9%
Norwegian Krone 1.6%
Euro* -0.9%
AMERICAS* -3.5%
Canadian Dollar 0.4%
U.S. Dollar* -3.9%
* Holding is a negative percentage because of the Fund's holdings of forward
currency exchange contracts.
although that was below 2007's 12.0% average quarterly rate.(6) Outside of
China, economic growth was more modest. Indonesia's economy grew 6.1% in the
third quarter, Malaysia's 4.7% and South Korea's 3.9% while Singapore and Japan
slid into recessions.(7) Weakening external demand prompted monetary policy
responses across Asia. Many central banks -- including those of China, Japan,
South Korea and Australia -- cut interest rates in October and announced fiscal
stimulus packages to help offset the economic downdraft. As in other regions,
increasing oil prices that reached $145 in July, contributed to Asia's rising
inflation rates. Conversely, the rapid oil price decline to $68 by period-end,
along with moderating food prices, gradually reduced inflation rates. For
example, China's consumer price inflation peaked at 8.7% in February before
falling to 4.0% in October.(6)
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
Moderate U.S. dollar weakness in the first half of the reporting period followed
by more intense U.S. dollar strength in the last three months of the period
characterized the year under review. Against this backdrop of U.S. dollar
strength, most currencies underperformed the U.S. dollar. With the escalation of
the credit crisis, the U.S. dollar benefited from a dollar liquidity shortage
resulting from a reluctance of financial institutions to lend or invest so as to
preserve cash and reduce risk while deleveraging gathered pace when banks and
borrowers paid back U.S.-dollar borrowing. The primary exceptions (to U.S.
dollar strength) were the currencies of large creditor countries such as Japan
and Switzerland, which benefited greatly from the deleveraging trend and
represented 46.1% of the Fund. While the U.S. dollar benefited from the
deepening credit crisis in the near-term, we believe prior challenges facing the
U.S. dollar could return if investor focus shifts from the credit crunch to
recessionary dynamics. In particular, the U.S. still faces a large current
account deficit that requires funding to prevent currency depreciation as well
as longer-term trends of international reserve diversification toward multiple
reserve currencies. The Fund's currency positioning reflected our
fundamentals-based investment strategy, including
(6.) Source: National Bureau of Statistics (China).
(7.) Source: Bank of Indonesia; Department of Statistics Malaysia; Bank of
Korea.
6 | Annual Report
countries that in our analysis have strong balance of payment positions,
credible macroeconomic policy management or attractive relative growth
prospects. While some peripheral non-U.S. dollar currencies beyond the Swiss
franc and Japanese yen weakened following broad-based and generally
indiscriminate selling in many markets, we believe the markets should once again
revert to differentiating currencies based on fundamentals. If that inflection
point is reached, we believe the Fund should be well positioned to benefit from
market revaluations.
ASIA
Our Asia positioning benefited performance relative to the JPM 3 Month Global
Cash Index. Representing the Fund's largest currency position and an
overweighted position relative to the benchmark index, the Japanese yen rose
17.22% against the U.S. dollar over the 12-month period and benefited relative
performance.(3) The yen benefited from Japan's current account surplus and from
the unwinding of the carry trade, where the yen was used as a funding currency
to invest in assets of other currencies. Although a Japanese economic slowdown
became increasingly apparent, the Japanese yen benefited from increased global
risk aversion given its perception as a safe haven currency as well as from
Japanese investors repatriating funds invested abroad. The Singapore dollar and
Malaysian ringgit depreciated 2.37% and 6.08% against the U.S. dollar, but our
exposure to these non-index currencies benefited relative performance given the
benchmark index's steeper decline.(3) The Fund's Indonesian rupiah exposure,
however, detracted from relative performance as that currency weakened 16.54%
versus the U.S. dollar as contagion effects in emerging markets more than offset
the positive yield differential of short-term Indonesian cash rates.(3) As
global financial turmoil spilled into emerging markets -- raising investor
concern over current account deficits and sufficiency of international reserves
- -- it was notable that much of Asia continued to generate current account
surpluses while Asia's large foreign exchange reserves could limit external
risks from other regions. Additionally, low leverage in banking sector loans may
help keep domestic credit conditions at manageable levels, and could enable
Asian emerging markets to take relatively wider economic stimulus policy
measures.
EUROPE
The Fund's European portfolio generated mixed relative performance. Our
underweighted euro positioning boosted relative performance as that currency
fell 12.35% versus the U.S. dollar during the period.(3) We largely avoided
holding euro exposure due to relative valuation concerns, particularly against
Asia, and increased our Swiss franc exposure. The Swiss franc benefited from
global deleveraging given the use of the franc as a funding currency, especially
within the European region. Against the U.S. dollar, the Swiss franc fell only
WHAT IS A CARRY TRADE?
Carry trade is a strategy in which an investor sells a certain currency with a
relatively low interest rate and uses the funds to purchase a different currency
yielding a higher interest rate. A trader using this strategy attempts to
capture the difference between the rates.
Annual Report | 7
Please note that although the Fund's Statement of Investments on page 16 of this
report indicates the Fund held 57.7% of its total investments in U.S.
dollar-denominated assets as of 10/31/08, its net exposure to the U.S. dollar as
of that date was only -3.9%. The difference is explained by the Fund's holdings
of forward currency exchange contracts (please see Note 8 in the Notes to
Financial Statements on page 26 of this report) calling for the purchase of
various foreign currencies in exchange for U.S. dollars at various future dates.
The combination of U.S. dollar-denominated instruments with "long" forward
currency exchange contracts creates a position economically equivalent to a
money market instrument denominated in the foreign currency itself. Such
combined positions are an appropriate strategy when the money market for a
particular foreign currency is small or relatively illiquid.
0.77% during the reporting period.(3) Exposure to non-euro European currencies,
however, detracted from relative performance. The Norwegian krone had a 19.92%
decline, the Swedish krona fell 18.39% and the Polish zloty lost 9.69% versus
the U.S. dollar.(3) Despite large, positive current account and fiscal balances
in Norway and Sweden, these currencies suffered due to declining oil prices that
negatively impacted oil producer Norway and increased signs of cyclical slowing
in Sweden. Although Poland benefited throughout most of the Fund's fiscal year
from its credible monetary policy and relative growth outperformance compared
with western Europe, investor concerns over sustained current account deficits,
sufficiency of international reserve coverage and banking system leverage in
other parts of central and eastern Europe weighed on the zloty as the financial
crisis intensified.
AMERICAS
We significantly reduced our position in the Canadian dollar during the
reporting period given the country's close economic link to the U.S. and the
possibility of rising U.S. recessionary risks spilling over into the Canadian
economy. The Canadian dollar fell 21.88% against the U.S. dollar during the
12-month period due to interest rate reductions, lower commodity prices and
deteriorating growth prospects.(3) Over the period, the Bank of Canada reduced
interest rates 225 bps to 2.25%.
Thank you for your continued participation in Franklin Templeton Hard Currency
Fund. We look forward to serving your future investment needs.
(PHOTO OF MICHAEL HASENSTAB)
/s/ Michael Hasenstab
Michael Hasenstab, Ph.D.
Portfolio Manager
Franklin Templeton Hard Currency Fund
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF OCTOBER 31, 2008, 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.
8 | Annual Report
Performance Summary as of 10/31/08
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table and graphs do not reflect any taxes
that a shareholder would pay on Fund dividends, capital gain distributions, if
any, or any realized gains on the sale of Fund shares. Total return reflects
reinvestment of the Fund's dividends and capital gain distributions, if any, and
any unrealized gains or losses.
PRICE AND DISTRIBUTION INFORMATION
CLASS A (SYMBOL: ICPHX) CHANGE 10/31/08 10/31/07
- -------------------------------- ------ -------- --------
Net Asset Value (NAV) -$1.03 $9.13 $10.16
DISTRIBUTIONS (11/1/07-10/31/08)
Dividend Income $0.6849
ADVISOR CLASS (SYMBOL: ICHHX) CHANGE 10/31/08 10/31/07
- -------------------------------- ------ -------- --------
Net Asset Value (NAV) -$1.03 $9.15 $10.18
DISTRIBUTIONS (11/1/07-10/31/08)
Dividend Income $0.7140
PERFORMANCE
CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. CLASS A: 2.25%
MAXIMUM INITIAL SALES CHARGE; ADVISOR CLASS: NO SALES CHARGES.
CLASS A 1-YEAR 5-YEAR 10-YEAR
- ------------------------------------- ------ ------- -------
Cumulative Total Return(1) -3.57% +28.29% +40.27%
Average Annual Total Return(2) -5.71% +4.63% +3.21%
Value of $10,000 Investment(3) $9,429 $12,541 $13,711
Avg. Ann. Total Return (9/30/08)(4) -1.74% +5.30% +4.00%
Distribution Rate(5) 0.94%
30-Day Standardized Yield(6) 0.04%
Total Annual Operating Expenses(7) 1.09%
ADVISOR CLASS 1-YEAR 5-YEAR 10-YEAR
- ------------------------------------- ------ ------- -------
Cumulative Total Return(1) -3.28% +30.32% +44.69%
Average Annual Total Return(2) -3.28% +5.44% +3.76%
Value of $10,000 Investment(3) $9,672 $13,032 $14,469
Avg. Ann. Total Return (9/30/08)(4) +0.82% +6.14% +4.57%
Distribution Rate(5) 1.35%
30-Day Standardized Yield(6) 0.34%
Total Annual Operating Expenses(7) 0.84%
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 (800) 342-5236.
Annual Report | 9
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes any applicable maximum sales charge, Fund expenses, account
fees and reinvested distributions. The unmanaged index includes reinvestment of
any income or distributions. It differs from the Fund in composition and does
not pay management fees or expenses. One cannot invest directly in an index.
AVERAGE ANNUAL TOTAL RETURN
CLASS A 10/31/08
- ------- --------
1-Year -5.71%
5-Year +4.63%
10-Year +3.21%
CLASS A (11/1/98-10/31/08)
(PERFORMANCE GRAPH)
FRANKLIN TEMPLETON HARD JP MORGAN 3 MONTH
DATE CURRENCY FUND - CLASS A GLOBAL CASH INDEX(8)
- ---------- ----------------------- --------------------
11/1/1998 $ 9,774 $10,000
11/30/1998 $ 9,428 $ 9,863
12/31/1998 $ 9,807 $10,026
1/31/1999 $ 9,524 $ 9,912
2/28/1999 $ 9,278 $ 9,679
3/31/1999 $ 9,183 $ 9,640
4/30/1999 $ 9,041 $ 9,606
5/31/1999 $ 8,955 $ 9,531
6/30/1999 $ 8,850 $ 9,484
7/31/1999 $ 9,166 $ 9,766
8/31/1999 $ 9,099 $ 9,735
9/30/1999 $ 9,215 $ 9,872
10/31/1999 $ 9,157 $ 9,823
11/30/1999 $ 8,974 $ 9,599
12/31/1999 $ 8,984 $ 9,643
1/31/2000 $ 8,655 $ 9,480
2/29/2000 $ 8,529 $ 9,363
3/31/2000 $ 8,743 $ 9,420
4/30/2000 $ 8,363 $ 9,082
5/31/2000 $ 8,460 $ 9,144
6/30/2000 $ 8,724 $ 9,428
7/31/2000 $ 8,449 $ 9,202
8/31/2000 $ 8,253 $ 9,018
9/30/2000 $ 8,205 $ 8,943
10/31/2000 $ 7,928 $ 8,707
11/30/2000 $ 8,076 $ 8,846
12/31/2000 $ 8,424 $ 9,370
1/31/2001 $ 8,354 $ 9,327
2/28/2001 $ 8,235 $ 9,218
3/31/2001 $ 7,895 $ 8,903
4/30/2001 $ 7,955 $ 9,013
5/31/2001 $ 7,805 $ 8,814
6/30/2001 $ 7,713 $ 8,804
7/31/2001 $ 7,936 $ 9,013
8/31/2001 $ 8,219 $ 9,306
9/30/2001 $ 8,309 $ 9,292
10/31/2001 $ 8,228 $ 9,254
11/30/2001 $ 8,177 $ 9,256
12/31/2001 $ 8,085 $ 9,214
1/31/2002 $ 7,849 $ 9,020
2/28/2002 $ 7,910 $ 9,081
3/31/2002 $ 8,022 $ 9,186
4/30/2002 $ 8,270 $ 9,436
5/31/2002 $ 8,560 $ 9,774
6/30/2002 $ 8,851 $10,199
7/31/2002 $ 8,799 $10,127
8/31/2002 $ 8,820 $10,186
9/30/2002 $ 8,893 $10,233
10/31/2002 $ 8,977 $10,297
11/30/2002 $ 9,061 $10,360
12/31/2002 $ 9,520 $10,776
1/31/2003 $ 9,738 $11,010
2/28/2003 $ 9,859 $11,101
3/31/2003 $ 9,903 $11,208
4/30/2003 $10,057 $11,455
5/31/2003 $10,519 $11,956
6/30/2003 $10,386 $11,838
7/31/2003 $10,220 $11,620
8/31/2003 $10,120 $11,495
9/30/2003 $10,587 $12,114
10/31/2003 $10,687 $12,216
11/30/2003 $10,955 $12,518
12/31/2003 $11,354 $13,049
1/31/2004 $11,295 $12,947
2/29/2004 $11,354 $12,959
3/31/2004 $11,269 $12,947
4/30/2004 $10,927 $12,591
5/31/2004 $11,021 $12,789
6/30/2004 $10,990 $12,773
7/31/2004 $10,943 $12,701
8/31/2004 $11,097 $12,831
9/30/2004 $11,388 $13,104
10/31/2004 $11,697 $13,443
11/30/2004 $12,184 $13,999
12/31/2004 $12,317 $14,220
1/31/2005 $12,044 $13,799
2/28/2005 $12,279 $14,032
3/31/2005 $12,098 $13,808
4/30/2005 $12,061 $13,776
5/31/2005 $11,775 $13,333
6/30/2005 $11,656 $13,150
7/31/2005 $11,669 $13,168
8/31/2005 $11,806 $13,357
9/30/2005 $11,766 $13,225
10/31/2005 $11,716 $13,110
11/30/2005 $11,691 $12,959
12/31/2005 $11,794 $13,001
1/31/2006 $12,179 $13,379
2/28/2006 $12,073 $13,215
3/31/2006 $12,091 $13,273
4/30/2006 $12,597 $13,842
5/31/2006 $12,664 $14,113
6/30/2006 $12,581 $14,054
7/31/2006 $12,621 $14,099
8/31/2006 $12,594 $14,169
9/30/2006 $12,499 $14,054
10/31/2006 $12,661 $14,235
11/30/2006 $12,931 $14,682
12/31/2006 $12,792 $14,620
1/31/2007 $12,696 $14,481
2/28/2007 $12,846 $14,695
3/31/2007 $12,987 $14,852
4/30/2007 $13,180 $15,249
5/31/2007 $13,111 $15,146
6/30/2007 $13,158 $15,269
7/31/2007 $13,366 $15,521
8/31/2007 $13,366 $15,477
9/30/2007 $13,953 $16,176
10/31/2007 $14,219 $16,564
11/30/2007 $14,177 $16,654
12/31/2007 $14,203 $16,635
1/31/2008 $14,501 $16,897
2/29/2008 $14,799 $17,359
3/31/2008 $15,057 $17,849
4/30/2008 $14,878 $17,728
5/31/2008 $14,818 $17,795
6/30/2008 $14,847 $17,980
7/31/2008 $14,698 $17,877
8/31/2008 $14,203 $17,045
9/30/2008 $14,026 $16,457
10/31/2008 $13,711 $15,161
AVERAGE ANNUAL TOTAL RETURN
ADVISOR CLASS 10/31/08
- ------------- --------
1-Year -3.28%
5-Year +5.44%
10-Year +3.76%
ADVISOR CLASS (11/1/98-10/31/08)
(PERFORMANCE GRAPH)
FRANKLIN TEMPLETON HARD JP MORGAN 3 MONTH
DATE CURRENCY FUND - ADVISOR CLASS GLOBAL CASH INDEX(8)
- ---------- ----------------------------- --------------------
11/1/1998 $10,000 $10,000
11/30/1998 $ 9,659 $ 9,863
12/31/1998 $10,050 $10,026
1/31/1999 $ 9,760 $ 9,912
2/28/1999 $ 9,509 $ 9,679
3/31/1999 $ 9,403 $ 9,640
4/30/1999 $ 9,267 $ 9,606
5/31/1999 $ 9,179 $ 9,531
6/30/1999 $ 9,059 $ 9,484
7/31/1999 $ 9,381 $ 9,766
8/31/1999 $ 9,313 $ 9,735
9/30/1999 $ 9,442 $ 9,872
10/31/1999 $ 9,383 $ 9,823
11/30/1999 $ 9,196 $ 9,599
12/31/1999 $ 9,209 $ 9,643
1/31/2000 $ 8,872 $ 9,480
2/29/2000 $ 8,743 $ 9,363
3/31/2000 $ 8,967 $ 9,420
4/30/2000 $ 8,578 $ 9,082
5/31/2000 $ 8,678 $ 9,144
6/30/2000 $ 8,952 $ 9,428
7/31/2000 $ 8,671 $ 9,202
8/31/2000 $ 8,469 $ 9,018
9/30/2000 $ 8,426 $ 8,943
10/31/2000 $ 8,143 $ 8,707
11/30/2000 $ 8,295 $ 8,846
12/31/2000 $ 8,647 $ 9,370
1/31/2001 $ 8,586 $ 9,327
2/28/2001 $ 8,463 $ 9,218
3/31/2001 $ 8,111 $ 8,903
4/30/2001 $ 8,173 $ 9,013
5/31/2001 $ 8,029 $ 8,814
6/30/2001 $ 7,942 $ 8,804
7/31/2001 $ 8,171 $ 9,013
8/31/2001 $ 8,452 $ 9,306
9/30/2001 $ 8,560 $ 9,292
10/31/2001 $ 8,477 $ 9,254
11/30/2001 $ 8,424 $ 9,256
12/31/2001 $ 8,339 $ 9,214
1/31/2002 $ 8,096 $ 9,020
2/28/2002 $ 8,160 $ 9,081
3/31/2002 $ 8,272 $ 9,186
4/30/2002 $ 8,538 $ 9,436
5/31/2002 $ 8,837 $ 9,774
6/30/2002 $ 9,142 $10,199
7/31/2002 $ 9,088 $10,127
8/31/2002 $ 9,109 $10,186
9/30/2002 $ 9,197 $10,233
10/31/2002 $ 9,295 $10,297
11/30/2002 $ 9,370 $10,360
12/31/2002 $ 9,854 $10,776
1/31/2003 $10,080 $11,010
2/28/2003 $10,216 $11,101
3/31/2003 $10,271 $11,208
4/30/2003 $10,419 $11,455
5/31/2003 $10,909 $11,956
6/30/2003 $10,769 $11,838
7/31/2003 $10,597 $11,620
8/31/2003 $10,505 $11,495
9/30/2003 $10,987 $12,114
10/31/2003 $11,103 $12,216
11/30/2003 $11,380 $12,518
12/31/2003 $11,801 $13,049
1/31/2004 $11,740 $12,947
2/29/2004 $11,801 $12,959
3/31/2004 $11,726 $12,947
4/30/2004 $11,371 $12,591
5/31/2004 $11,481 $12,789
6/30/2004 $11,437 $12,773
7/31/2004 $11,400 $12,701
8/31/2004 $11,573 $12,831
9/30/2004 $11,868 $13,104
10/31/2004 $12,201 $13,443
11/30/2004 $12,708 $13,999
12/31/2004 $12,842 $14,220
1/31/2005 $12,571 $13,799
2/28/2005 $12,816 $14,032
3/31/2005 $12,627 $13,808
4/30/2005 $12,601 $13,776
5/31/2005 $12,303 $13,333
6/30/2005 $12,182 $13,150
7/31/2005 $12,209 $13,168
8/31/2005 $12,352 $13,357
9/30/2005 $12,302 $13,225
10/31/2005 $12,263 $13,110
11/30/2005 $12,223 $12,959
12/31/2005 $12,353 $13,001
1/31/2006 $12,755 $13,379
2/28/2006 $12,644 $13,215
3/31/2006 $12,655 $13,273
4/30/2006 $13,199 $13,842
5/31/2006 $13,268 $14,113
6/30/2006 $13,191 $14,054
7/31/2006 $13,233 $14,099
8/31/2006 $13,205 $14,169
9/30/2006 $13,117 $14,054
10/31/2006 $13,286 $14,235
11/30/2006 $13,568 $14,682
12/31/2006 $13,433 $14,620
1/31/2007 $13,333 $14,481
2/28/2007 $13,491 $14,695
3/31/2007 $13,648 $14,852
4/30/2007 $13,850 $15,249
5/31/2007 $13,778 $15,146
6/30/2007 $13,824 $15,269
7/31/2007 $14,057 $15,521
8/31/2007 $14,057 $15,477
9/30/2007 $14,681 $16,176
10/31/2007 $14,960 $16,564
11/30/2007 $14,931 $16,654
12/31/2007 $14,952 $16,635
1/31/2008 $15,265 $16,897
2/29/2008 $15,594 $17,359
3/31/2008 $15,862 $17,849
4/30/2008 $15,673 $17,728
5/31/2008 $15,610 $17,795
6/30/2008 $15,652 $17,980
7/31/2008 $15,494 $17,877
8/31/2008 $14,990 $17,045
9/30/2008 $14,801 $16,457
10/31/2008 $14,469 $15,161
10 | Annual Report
Performance Summary (CONTINUED)
ENDNOTES
SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING ECONOMIC
INSTABILITY AND POLITICAL DEVELOPMENTS. THE FUND'S ASSETS ARE LARGELY INVESTED
IN FOREIGN CURRENCIES AND THEREFORE INVOLVE POTENTIAL FOR SIGNIFICANT GAIN OR
LOSS FROM CURRENCY EXCHANGE RATE FLUCTUATIONS. THE FUND DOES NOT SEEK TO
MAINTAIN A STABLE NET ASSET VALUE AND SHOULD NOT BE CONSIDERED A SUBSTITUTE FOR
A U.S. DOLLAR MONEY MARKET FUND. THE FUND'S PROSPECTUS ALSO INCLUDES A
DESCRIPTION OF THE MAIN INVESTMENT RISKS.
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.
(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 10/31/08.
(6.) Yield, calculated as required by the SEC, is based on the earnings of the
Fund's portfolio for the 30 days ended 10/31/08.
(7.) Figures are as stated in the Fund's prospectus current as of the date of
this report.
(8.) Source: J.P. Morgan. The JP Morgan 3 Month Global Cash Index tracks total
returns of 3-month constant maturity euro-currency deposits, the only
short-term securities consistent across all markets in terms of liquidity,
maturity and credit quality.
Annual Report | 11
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
- - Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and
- - 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 provides actual
account values and expenses. The "Ending Account Value" is derived from the
Fund's actual return, which includes the effect of Fund expenses.
You can estimate the expenses you paid during the period by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:
1. Divide your account value by $1,000.
IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.
2. Multiply the result by the number under the heading "Expenses Paid During
Period."
IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.
In this illustration, the estimated expenses paid this period are $64.50.
HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS
Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.
12 | Annual Report
Your Fund's Expenses (CONTINUED)
PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line for each class is useful in
comparing ongoing costs only, and will not help you compare total costs of
owning different funds. In addition, if transaction costs were included, your
total costs would have been higher. Please refer to the Fund prospectus for
additional information on operating expenses.
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
VALUE 5/1/08 VALUE 10/31/08 PERIOD* 5/1/08-10/31/08
----------------- -------------- -----------------------
CLASS A
Actual $1,000 $ 921.60 $5.31
Hypothetical (5% return before expenses) $1,000 $1,019.61 $5.58
ADVISOR CLASS
Actual $1,000 $ 923.20 $3.77
Hypothetical (5% return before expenses) $1,000 $1,021.22 $3.96
* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 1.10% and Advisor: 0.78%), multiplied by the
average account value over the period, multiplied by 184/366 to reflect the
one-half year period.
Annual Report | 13
Franklin Templeton Global Trust
FINANCIAL HIGHLIGHTS
FRANKLIN TEMPLETON HARD CURRENCY FUND
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
CLASS A 2008 2007 2006 2005 2004
- ---------------------------------------------------------------------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................................... $ 10.16 $ 9.39 $ 9.34 $ 9.85 $ 9.59
-------- -------- -------- -------- --------
Income from investment operations(a):
Net investment income(b) .......................................... 0.10 0.28 0.24 0.15 0.09
Net realized and unrealized gains (losses) ........................ (0.45) 0.84 0.47 (0.12) 0.78
-------- -------- -------- -------- --------
Total from investment operations ..................................... (0.35) 1.12 0.71 0.03 0.87
-------- -------- -------- -------- --------
Less distributions from:
Net investment income and net realized foreign currency gains ..... (0.68) (0.35) (0.66) (0.46) (0.61)
Net realized gains ................................................ -- -- -- (0.08) --
-------- -------- -------- -------- --------
Total distributions .................................................. (0.68) (0.35) (0.66) (0.54) (0.61)
-------- -------- -------- -------- --------
Redemption fees(c,d) ................................................. -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of year ......................................... $ 9.13 $ 10.16 $ 9.39 $ 9.34 $ 9.85
======== ======== ======== ======== ========
Total return(e) ...................................................... (3.57)% 12.31% 8.06% 0.17% 9.44%
RATIOS TO AVERAGE NET ASSETS
Expenses(f) .......................................................... 1.09% 1.09% 1.13% 1.19% 1.24%
Net investment income ................................................ 1.07% 2.97% 2.58% 1.54% 0.95%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ...................................... $479,764 $323,255 $322,449 $190,163 $211,098
(a) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(b) Based on average daily shares outstanding.
(c) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
(f) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
14 | Annual Report
Franklin Templeton Global Trust
FINANCIAL HIGHLIGHTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
ADVISOR CLASS 2008 2007 2006 2005 2004
- ---------------------------------------------------------------------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................................... $ 10.18 $ 9.41 $ 9.36 $ 9.87 $ 9.61
-------- -------- -------- -------- --------
Income from investment operations(a):
Net investment income(b) .......................................... 0.14 0.31 0.27 0.18 0.13
Net realized and unrealized gains (losses) ........................ (0.46) 0.84 0.47 (0.12) 0.79
-------- -------- -------- -------- --------
Total from investment operations ..................................... (0.32) 1.15 0.74 0.06 0.92
-------- -------- -------- -------- --------
Less distributions from:
Net investment income and net realized foreign currency gains ..... (0.71) (0.38) (0.69) (0.49) (0.66)
Net realized gains ................................................ -- -- -- (0.08) --
-------- -------- -------- -------- --------
Total distributions .................................................. (0.71) (0.38) (0.69) (0.57) (0.66)
-------- -------- -------- -------- --------
Redemption fees(c,d) ................................................. -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of year ......................................... $ 9.15 $ 10.18 $ 9.41 $ 9.36 $ 9.87
======== ======== ======== ======== ========
Total return ......................................................... (3.28)% 12.60% 8.35% 0.50% 9.89%
RATIOS TO AVERAGE NET ASSETS
Expenses(e) .......................................................... 0.78% 0.84% 0.83% 0.83% 0.84%
Net investment income ................................................ 1.38% 3.22% 2.88% 1.89% 1.35%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ...................................... $110,247 $ 89,942 $ 40,912 $ 17,532 $ 22,442
(a) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(b) Based on average daily shares outstanding.
(c) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Annual Report | 15
Franklin Templeton Global Trust
STATEMENT OF INVESTMENTS, OCTOBER 31, 2008
FRANKLIN TEMPLETON HARD CURRENCY FUND PRINCIPAL AMOUNT(a) VALUE
- --------------------------------------------------------------------------- ------------------- ------------
CORPORATE BONDS (COST $4,322,821) 0.7%
General Electric Capital Corp., senior bond, 2.25%, 2/09/09 ........... 5,000,000 CHF $ 4,209,523
------------
FOREIGN GOVERNMENT AND AGENCY SECURITIES 45.6%
Government of Austria, 1, 3.00%, 8/21/09 .............................. 10,000,000 CHF 8,638,092
Government of Norway, 5.50%, 5/15/09 .................................. 52,350,000 NOK 7,804,437
Government of Singapore, 4.375%, 1/15/09 .............................. 155,845,000 SGD 105,745,428
Government of Sweden, 5.00%, 1/28/09 .................................. 177,990,000 SEK 23,021,642
Inter-American Development Bank, 1.90%, 7/08/09 ....................... 1,973,000,000 JPY 20,169,991
KfW Bankengruppe, 2.05%, 9/21/09 ...................................... 4,570,000,000 JPY 46,905,729
Queensland Treasury Corp., 6.00%, 7/14/09 ............................. 13,500,000 AUD 9,025,034
(b) Singapore Treasury Bill, 5/04/09 ...................................... 50,000,000 SGD 33,478,733
(b) Sweden Treasury Bill,
12/17/08 ........................................................... 82,100,000 SEK 10,535,328
3/18/09 ............................................................ 27,500,000 SEK 3,479,428
------------
TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES (COST $295,383,676) .... 268,803,842
------------
U.S. GOVERNMENT AND AGENCY SECURITIES 33.9%
(b) U.S. Treasury Bill,
12/04/08 ........................................................... 50,000,000 49,989,950
12/11/08 ........................................................... 50,000,000 49,987,850
12/18/08 ........................................................... 50,000,000 49,973,900
12/26/08 ........................................................... 50,000,000 49,982,200
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES (COST $199,712,413) ....... 199,933,900
------------
SHARES
-------------------
MONEY MARKET FUNDS (COST $140,715,223) 23.8%
(c) Franklin Institutional Fiduciary Trust Money Market Portfolio, 1.56% .. 140,715,223 140,715,223
------------
TOTAL INVESTMENTS (COST $640,134,133) 104.0% .......................... 613,662,488
NET UNREALIZED DEPRECIATION ON FORWARD EXCHANGE CONTRACTS (4.3)% ...... (25,262,599)
OTHER ASSETS, LESS LIABILITIES 0.3% ................................... 1,611,449
------------
NET ASSETS 100.0% ..................................................... $590,011,338
============
CURRENCY ABBREVIATIONS
AUD - Australian Dollar
CHF - Swiss Francs
JPY - Japanese Yen
NOK - Norwegian Krone
SEK - Swedish Krona
SGD - Singapore Dollar
(a) The principal amount is stated in U.S. dollars unless otherwise indicated.
(b) The security is traded on a discount basis with no stated coupon rate.
(c) See Note 7 regarding investments in the Franklin Institutional Fiduciary
Trust Money Market Portfolio. The rate shown is the annualized seven-day
yield at period end.
The accompanying notes are an integral part of these financial statements.
16 | Annual Report
Franklin Templeton Global Trust
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2008
FRANKLIN TEMPLETON
HARD CURRENCY FUND
------------------
Assets:
Investments in securities:
Cost - Unaffiliated issuers .......................................... $499,418,910
Cost - Sweep Money Fund (Note 7) ..................................... 140,715,223
------------
Total cost of investments ............................................ $640,134,133
============
Value - Unaffiliated issuers ......................................... $472,947,265
Value - Sweep Money Fund (Note 7) .................................... 140,715,223
------------
Total value of investments ........................................... 613,662,488
Cash .................................................................... 4,082
Foreign currency, at value (cost $9,128) ................................ 8,937
Receivables:
Capital shares sold .................................................. 2,422,442
Interest ............................................................. 2,954,972
Unrealized appreciation on forward exchange contracts (Note 8) .......... 9,515,529
------------
Total assets ...................................................... 628,568,450
------------
Liabilities:
Payables:
Capital shares redeemed .............................................. 3,215,183
Affiliates ........................................................... 478,109
Unrealized depreciation on forward exchange contracts (Note 8) .......... 34,778,128
Accrued expenses and other liabilities .................................. 85,692
------------
Total liabilities ................................................. 38,557,112
------------
Net assets, at value ........................................... $590,011,338
------------
Net assets consist of:
Paid-in capital ...................................................... $620,201,202
Undistributed net investment income .................................. 24,176,695
Net unrealized appreciation (depreciation) ........................... (52,043,209)
Accumulated net realized gain (loss) ................................. (2,323,350)
------------
Net assets, at value ........................................... $590,011,338
============
CLASS A:
Net assets, at value .................................................... $479,764,228
============
Shares outstanding ...................................................... 52,575,772
============
Net asset value per share(a) ............................................ $ 9.13
============
Maximum offering price per share (net asset value per share / 97.75%) ... $ 9.34
============
ADVISOR CLASS:
Net assets, at value .................................................... $110,247,110
============
Shares outstanding ...................................................... 12,054,089
============
Net asset value and maximum offering price per share .................... $ 9.15
============
(a) Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable.
The accompanying notes are an integral part of these financial statements.
Annual Report | 17
Franklin Templeton Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended October 31, 2008
FRANKLIN TEMPLETON
HARD CURRENCY FUND
------------------
Investment income:
Dividends from Sweep Money Fund (Note 7) ................................ $ 60,320
Interest ................................................................ 12,757,716
------------
Total investment income ........................................ 12,818,036
------------
Expenses:
Management fees (Note 3a) ............................................... 3,843,615
Distribution fees: (Note 3c)
Class A .............................................................. 1,478,757
Transfer agent fees (Note 3e) ........................................... 479,958
Custodian fees (Note 4) ................................................. 46,150
Reports to shareholders ................................................. 70,045
Registration and filing fees ............................................ 91,258
Professional fees ....................................................... 51,225
Trustees' fees and expenses ............................................. 34,771
Other ................................................................... 14,905
------------
Total expenses ................................................. 6,110,684
Expense reductions (Note 4) .................................... (13,942)
------------
Net expenses ................................................ 6,096,742
------------
Net investment income .................................... 6,721,294
------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments .......................................................... 17,848,571
Foreign currency transactions ........................................ 15,823,053
------------
Net realized gain (loss) ................................. 33,671,624
------------
Net change in unrealized appreciation (depreciation) on:
Investments .......................................................... (71,674,709)
Translation of other assets and liabilities denominated in
foreign currencies ................................................ (660,558)
------------
Net change in unrealized appreciation (depreciation) ..... (72,335,267)
------------
Net realized and unrealized gain (loss) .................................... (38,663,643)
------------
Net increase (decrease) in net assets resulting from operations ............ $(31,942,349)
============
The accompanying notes are an integral part of these financial statements.
18 | Annual Report
Franklin Templeton Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FRANKLIN TEMPLETON
HARD CURRENCY FUND
---------------------------
YEAR ENDED OCTOBER 31,
---------------------------
2008 2007
------------ ------------
Increase (decrease) in net assets:
Operations:
Net investment income ................................................ $ 6,721,294 $ 10,939,596
Net realized gain (loss) from investments and foreign currency
transactions ...................................................... 33,671,624 13,540,841
Net change in unrealized appreciation (depreciation) on investments
and translation of other assets and liabilities denominated in
foreign currencies ................................................ (72,335,267) 17,654,981
------------ ------------
Net increase (decrease) in net assets resulting from
operations .................................................. (31,942,349) 42,135,418
------------ ------------
Distributions to shareholders from:
Net investment income and net realized foreign currency gains:
Class A ........................................................... (24,946,669) (11,331,337)
Advisor Class ..................................................... (7,360,551) (2,385,571)
------------ ------------
Total distributions to shareholders ..................................... (32,307,220) (13,716,908)
------------ ------------
Capital share transactions: (Note 2)
Class A ........................................................... 207,656,432 (21,691,994)
Advisor Class ..................................................... 33,402,153 43,108,617
------------ ------------
Total capital share transactions ........................................ 241,058,585 21,416,623
------------ ------------
Redemption fees ......................................................... 4,548 1,838
------------ ------------
Net increase (decrease) in net assets .......................... 176,813,564 49,836,971
Net assets:
Beginning of year ....................................................... 413,197,774 363,360,803
------------ ------------
End of year ............................................................. $590,011,338 $413,197,774
============ ============
Undistributed net investment income included in net assets:
End of year ............................................................. $ 24,176,695 $ 16,101,604
============ ============
The accompanying notes are an integral part of these financial statements.
Annual Report | 19
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Templeton Global Trust (Trust) is registered under the Investment
Company Act of 1940, as amended, (1940 Act) as a non-diversified, open-end
investment company, consisting of one fund, the Franklin Templeton Hard Currency
Fund (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. Investments in open-end mutual funds are valued at the closing net asset
value.
Corporate debt securities and government securities, generally trade in the
over-the-counter market rather than on a securities exchange. The Trust 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 Trust'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 Trust 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
20 | Annual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. SECURITY VALUATION (CONTINUED)
time at which trading in a security is completed and the close of the NYSE that
might call into question the availability (including the reliability) of the
value of a portfolio security held by the Fund. If such an event occurs, the
securities may be valued using fair value procedures, which may include the use
of independent pricing services. All security valuation procedures are approved
by the 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
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. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate at a future date. Realized and unrealized gains and losses on these
contracts are included in the Statement of Operations.
The Fund may also enter into forward exchange contracts to hedge against
fluctuations in foreign exchange rates or to gain exposure to certain foreign
currencies. 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
Annual Report | 21
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. FOREIGN CURRENCY CONTRACTS (CONTINUED)
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.
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 it is the Fund's policy
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.
The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of October 31, 2008, and has
determined that no provision for income tax is required in the Fund's financial
statements.
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. Dividend income is recorded on the ex-dividend date. Distributions to
shareholders are recorded on the ex-dividend date and are determined according
to income tax regulations (tax basis). Distributable earnings determined on a
tax basis may differ from earnings recorded in accordance with accounting
principles generally accepted in the United States of America. 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 per share
distributions, by class, are generally due to differences in class specific
expenses.
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
22 | Annual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. ACCOUNTING ESTIMATES (CONTINUED)
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 was imposed, with some exceptions, on any
fund shares that were redeemed or exchanged within seven calendar days following
their purchase date. The redemption fee was 2% of the amount redeemed. Such fees
were retained by the fund and accounted for as an addition to paid-in capital.
Effective September 1, 2008, the redemption fee was eliminated.
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. Currently, the Trust expects the
risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
At October 31, 2008, there were an unlimited number of shares authorized
(without par value). Transactions in the Fund's shares were as follows:
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
2008 2007
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
CLASS A SHARES:
Shares sold ........................................ 49,620,090 $ 485,804,936 15,120,203 $ 145,232,340
Shares issued in reinvestment of distributions ..... 1,803,679 17,049,806 835,035 7,890,170
Shares redeemed .................................... (30,657,256) (295,198,310) (18,489,325) (174,814,504)
----------- ------------- ----------- -------------
Net increase (decrease) ............................ 20,766,513 $ 207,656,432 (2,534,087) $ (21,691,994)
=========== ============= =========== =============
ADVISOR CLASS SHARES:
Shares sold ........................................ 10,017,916 $ 98,876,758 6,133,043 $ 58,846,188
Shares issued in reinvestment of distributions ..... 601,584 5,709,332 166,518 1,583,623
Shares redeemed .................................... (7,399,133) (71,183,937) (1,814,162) (17,321,194)
----------- ------------- ----------- -------------
Net increase (decrease) ............................ 3,220,367 $ 33,402,153 4,485,399 $ 43,108,617
=========== ============= =========== =============
Annual Report | 23
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
3. TRANSACTIONS WITH AFFILIATES
Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Trust are also officers and/or directors of the following
subsidiaries:
SUBSIDIARY AFFILIATION
- ------------------------------------------------------------- ----------------------
Franklin Advisers, Inc. (Advisers) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent
A. MANAGEMENT FEES
The Fund pays an investment management fee to Advisers 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 a reimbursement distribution plan for
Class A pursuant to Rule 12b-1 under the 1940 Act, under which the Fund
reimburses Distributors for costs incurred in connection with the servicing,
sale and distribution of the Fund's shares up to 0.45% per year of its average
daily net assets. Distributors has agreed to limit the current rate to 0.30% per
year for the period of February 1, 2008 through January 31, 2009. Costs
exceeding the maximum for the current plan year cannot be reimbursed in
subsequent periods.
D. SALES CHARGES/UNDERWRITING AGREEMENTS
Distributors has advised the Fund of the following commission transactions
related to the sales and redemptions of the Fund's shares for the year:
Sales charges retained net of commissions
paid to unaffiliated broker/dealers ........... $95,594
Contingent deferred sales charges retained ....... $56,332
E. TRANSFER AGENT FEES
For the year ended October 31, 2008, the Fund paid transfer agent fees of
$479,958, of which $282,911 was retained by Investor Services.
24 | Annual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended October 31, 2008, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At October 31, 2008, the capital loss carryforwards were as
follows:
Capital loss carryforwards expiring in:
2013 .......................................................... $2,133,269
2014 .......................................................... 190,081
----------
$2,323,350
==========
During the year ended October 31, 2008, the Fund utilized $10,606 of capital
loss carryforwards.
The tax character of distributions paid during the years ended October 31, 2008
and 2007, was as follows:
2008 2007
----------- -----------
Distribution paid from ordinary income ............ $32,307,220 $13,716,908
At October 31, 2008, the cost of investments, net unrealized appreciation
(depreciation), and undistributed ordinary income for income tax purposes were
as follows:
Cost of investments ............................................ $641,942,953
============
Unrealized appreciation ........................................ $ 2,400,871
Unrealized depreciation ........................................ (30,681,336)
------------
Net unrealized appreciation (depreciation) ..................... $(28,280,465)
------------
Distributable earnings - undistributed ordinary income ......... $ 14,698,291
============
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of tax straddles, foreign currency transactions, and
bond discounts and premiums.
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.
Annual Report | 25
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
6. INVESTMENT TRANSACTIONS
There were no purchases or sales of investments (other than short term
securities) for the year ended October 31, 2008.
7. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (Sweep Money Fund), an open-end investment company managed by
Advisers. Management fees paid by the Fund are reduced on assets invested in the
Sweep Money Fund, in an amount not to exceed the management and administrative
fees paid by the Sweep Money Fund.
8. FORWARD EXCHANGE CONTRACTS
At October 31, 2008, the Fund had the following forward exchange contracts
outstanding:
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
AMOUNT(a) DATE APPRECIATION DEPRECIATION
-------------- ---------- ------------ ------------
CONTRACTS TO BUY
1,991,865 Polish Zloty .................. 799,528 11/03/08 $ -- $ (80,284)
24,287,655 Swedish Krona ................. 3,687,490 11/12/08 -- (559,138)
2,200,000 Australian Dollar ............. 1,895,300 11/17/08 -- (433,825)
2,724,300 Polish Zloty .................. 1,090,418 11/21/08 -- (108,266)
4,537,463 Swiss Franc ................... 4,169,312 11/21/08 -- (254,231)
9,782,100 Swiss Franc ................... 9,000,000 11/28/08 -- (558,862)
7,250,000 Norwegian Krone ............... 1,313,406 12/08/08 -- (239,473)
2,514,355 Polish Zloty .................. 1,006,225 12/08/08 -- (100,842)
6,179,000 Malaysian Ringit .............. 1,955,380 12/10/08 -- (216,074)
1,822,389 Canadian Dollar ............... 1,809,721 12/12/08 -- (302,357)
155,368,800 Kazakhstani Tenge ............. 1,200,000 12/12/08 80,194 --
3,250,000 Norwegian Krone ............... 623,310 12/31/08 -- (142,597)
1,400,000 Canadian Dollar ............... 1,355,407 1/20/09 -- (196,561)
277,687,500 Japanese Yen .................. 2,664,001 1/20/09 166,205 --
10,146,672 Swiss Franc ................... 9,300,000 1/20/09 -- (534,310)
742,401,000 Japanese Yen .................. 7,114,392 1/22/09 452,811 --
7,000,000 Polish Zloty .................. 2,781,641 1/22/09 -- (265,179)
185,559,000 Japanese Yen .................. 1,777,811 1/28/09 114,028 --
135,564,000 Japanese Yen .................. 1,294,044 1/30/09 88,201 --
95,200,000 Japanese Yen .................. 911,965 2/04/09 58,953 --
774,539,750 Japanese Yen .................. 7,395,575 2/12/09 506,791 --
845,000 Australian Dollar ............. 729,235 2/17/09 -- (171,684)
97,475,000 Japanese Yen .................. 925,425 2/17/09 69,320 --
27,820,000 Swedish Krona ................. 4,245,708 2/17/09 -- (667,745)
56,140,000 Japanese Yen .................. 542,520 2/27/09 30,673 --
3,539,870 Swedish Krona ................. 564,798 2/27/09 -- (109,598)
5,000,000 Swiss Franc ................... 4,796,623 3/04/09 -- (474,199)
26 | Annual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
8. FORWARD EXCHANGE CONTRACTS (CONTINUED)
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
AMOUNT(a) DATE APPRECIATION DEPRECIATION
-------------- ---------- ------------ ------------
CONTRACTS TO BUY (CONTINUED)
4,800,000 Polish Zloty .................. 2,134,282 3/16/09 $ -- $ (412,554)
6,285,440,000 Japanese Yen .................. 64,000,000 4/02/09 280,495 --
20,243,200 Malaysian Ringit .............. 6,400,000 4/02/09 -- (680,693)
63,783,040 Swiss Franc ................... 64,000,000 4/02/09 -- (8,837,482)
5,671,200 Malaysian Ringit .............. 1,823,537 4/30/09 -- (219,628)
650,000,000 Japanese Yen .................. 6,332,505 5/15/09 329,258 --
13,700,000 Malaysian Ringit .............. 2,816,033 EUR 5/15/09 299,412 --
168,570,000 Japanese Yen .................. 1,649,494 5/27/09 79,244 --
4,568,615 Swiss Franc ................... 4,415,827 6/05/09 -- (461,538)
436,320,000 Kazakhstani Tenge ............. 3,511,630 6/26/09 -- (146,463)
6,900,000 Polish Zloty .................. 3,166,590 6/30/09 -- (698,762)
3,500,000 Singapore Dollar .............. 2,606,494 6/30/09 -- (223,760)
2,750,000 Swiss Franc ................... 2,684,446 6/30/09 -- (303,577)
34,550,000 Malaysian Ringit .............. 10,818,851 7/17/09 -- (1,017,510)
1,800,000 Polish Zloty .................. 861,038 7/20/09 -- (217,449)
255,000,000 Japanese Yen .................. 1,571,668 EUR 7/22/09 626,087 --
208,055,500,000 Indonesian Rupiah ............. 21,500,000 7/29/09 -- (3,682,368)
115,616,100 Malaysian Ringit .............. 35,800,000 7/29/09 -- (2,986,367)
636,335,500 Taiwanese Dollar .............. 21,500,000 7/29/09 -- (2,208,303)
67,360,000,000 Indonesian Rupiah ............. 6,926,478 9/04/09 -- (1,193,170)
4,402,925 Polish Zloty .................. 1,852,966 9/04/09 -- (279,069)
8,350,000 Singapore Dollar .............. 5,915,273 9/04/09 -- (216,116)
700,000,000 Japanese Yen .................. 6,659,690 9/17/09 561,143 --
121,407,000 Chinese Yuan .................. 17,697,813 9/23/09 -- (373,220)
CONTRACTS TO SELL
1,650,000 Swiss Franc ................... 1,473,741 11/28/08 49,928 --
Unrealized appreciation (depreciation) on offsetting forward exchange
contracts ................................................................ 5,722,786 (5,204,874)
---------- ------------
Unrealized appreciation (depreciation) on forward exchange contracts ........ 9,515,529 (34,778,128)
---------- ------------
Net unrealized depreciation on forward exchange contracts ............. $(25,262,599)
============
(a) In U.S. Dollar unless otherwise indicated.
CURRENCY ABBREVIATION
EUR - Euro
9. 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.
Annual Report | 27
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
10. NEW ACCOUNTING PRONOUNCEMENTS
In September 2006, Financial Accounting Standards Board (FASB) issued FASB
Statement No. 157, "Fair Value Measurement" (SFAS 157), which defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. SFAS 157 is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. The
Trust believes the adoption of SFAS 157 will not have a material impact on its
financial statements.
In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS 161), which expands disclosures about derivative investments and hedging
activities. SFAS 161 is effective for fiscal years beginning after November 15,
2008, and interim periods within those fiscal years. The Fund is currently
evaluating the impact, if any, of applying the various provisions of SFAS 161.
28 | Annual Report
Franklin Templeton Global Trust
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FRANKLIN TEMPLETON HARD CURRENCY
FUND
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Franklin Templeton Hard Currency
Fund (the "Fund") at October 31, 2008, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2008 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 17, 2008
Annual Report | 29
Franklin Templeton Global Trust
TAX DESIGNATION (UNAUDITED)
Under Section 871(k)(1)(C) of the Internal Revenue Code (Code), the Fund
designates the maximum amount allowable but no less than $5,936,945 as interest
related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of
the Code for the fiscal year ended October 31, 2008.
30 | Annual Report
Franklin Templeton Global Trust
BOARD MEMBERS AND OFFICERS
The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Trust, principal occupations
during the past five years and number of portfolios overseen in the Franklin
Templeton Investments fund complex are shown below. Generally, each board member
serves until that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
NUMBER OF
PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------- --------------------- -----------------------------------
HARRIS J. ASHTON (1932) Trustee Since 1993 143 Bar-S Foods (meat packing company).
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank
holding company) (until 2002); and President, Chief Executive Officer and
Chairman of the Board, General Host Corporation (nursery and craft centers)
(until 1998).
ROBERT F. CARLSON (1928) Trustee Since 2003 120 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Retired; and FORMERLY, Vice President, senior member and President, Board of
Administration, California Public Employees Retirement Systems (CALPERS)
(1971-January 2008); member and Chairman of the Board, Sutter Community
Hospitals; member, Corporate Board, Blue Shield of California; and Chief
Counsel, California Department of Transportation.
SAM GINN (1937) Trustee Since 2007 120 Chevron Corporation (global energy
One Franklin Parkway company) and ICO Global
San Mateo, CA 94403-1906 Communications (Holdings) Limited
(satellite company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Private investor; and FORMERLY, Chairman of the Board, Vodafone AirTouch, PLC
(wireless company); Chairman of the Board and Chief Executive Officer, AirTouch
Communications (cellular communications) (1993-1998) and Pacific Telesis Groups
(telephone holding company) (1988-1994).
EDITH E. HOLIDAY (1952) Trustee Since 2005 143 Hess Corporation (exploration and
One Franklin Parkway refining of oil and gas), H.J.
San Mateo, CA 94403-1906 Heinz Company (processed foods and
allied products), RTI International
Metals, Inc. (manufacture and
distribution of titanium), Canadian
National Railway (rail-road) and
White Mountains Insurance Group,
Ltd. (holding company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to
the President of the United States and Secretary of the Cabinet (1990-1993);
General Counsel to the United States Treasury Department (1989-1990); and
Counselor to the Secretary and Assistant Secretary for Public Affairs and Public
Liaison-United States Treasury Department (1988-1989).
Annual Report | 31
NUMBER OF
PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------- --------------------- -----------------------------------
FRANK W.T. LAHAYE (1929) Trustee Since 1993 120 Center for Creative Land Recycling
One Franklin Parkway (brownfield redevelopment).
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Partner, Las Olas L.P. (Asset Management); and FORMERLY, Chairman,
Peregrine Venture Management Company (venture capital).
FRANK A. OLSON (1932) Trustee Since 2007 143 Hess Corporation (exploration and
One Franklin Parkway refining of oil and gas) and
San Mateo, CA 94403-1906 Sentient Jet (private jet service).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of
the Board (1980-2000) and Chief Executive Officer (1977-1999)); and FORMERLY,
Chairman of the Board, President and Chief Executive Officer, UAL Corporation
(airlines).
LARRY D. THOMPSON (1945) Trustee Since 2007 143 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary,
PepsiCo, Inc. (consumer products); and FORMERLY, Director, Delta Airlines
(aviation) (2003-2005) and Providian Financial Corp. (credit card provider)
(1997-2001); Senior Fellow of The Brookings Institution (2003-2004); Visiting
Professor, University of Georgia School of Law (2004); and Deputy Attorney
General, U.S. Department of Justice (2001-2003).
JOHN B. WILSON (1959) Lead Trustee since 120 None
One Franklin Parkway Independent 2006 and Lead
San Mateo, CA 94403-1906 Trustee Independent
Trustee since
January 2008
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Founder, Hyannis Port Capital, Inc. (real estate and private
equity investing); serves on private and non-profit boards; and FORMERLY, Chief
Operating Officer and Executive Vice President, Gap, Inc. (retail) (1996-2000);
Chief Financial Officer and Executive Vice President - Finance and Strategy,
Staples, Inc. (office supplies) (1992-1996); Senior Vice President - Corporate
Planning, Northwest Airlines, Inc. (airlines) (1990-1992); and Vice President
and Partner, Bain & Company (consulting firm) (1986-1990).
32 | Annual Report
INTERESTED BOARD MEMBERS AND OFFICERS
NUMBER OF
PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------- --------------------- -----------------------------------
**CHARLES B. JOHNSON (1933) Trustee and Since 1993 143 None
One Franklin Parkway Chairman of
San Mateo, CA 94403-1906 the Board
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin
Resources, Inc.; Director, Templeton Worldwide, Inc.; and officer and/or
director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 42 of the investment companies in Franklin
Templeton Investments.
**GREGORY E. JOHNSON (1961) Trustee Since 2007 94 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, President and Chief Executive Officer, Franklin Resources, Inc.;
President, Templeton Worldwide, Inc.; Director, Templeton Asset Management Ltd.;
and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 33 of the investment companies
in Franklin Templeton Investments.
JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since
San Mateo, CA 94403-1906 Officer and 2004 and Vice
Vice President President -
- AML AML Compliance
Compliance since 2006
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of some of the
other subsidiaries of Franklin Resources, Inc. and of 46 of the investment
companies in Franklin Templeton Investments; and FORMERLY, Director of
Compliance, Franklin Resources, Inc. (1994-2001).
LAURA F. FERGERSON (1962) Treasurer, Treasurer since Not Applicable Not Applicable
One Franklin Parkway Chief Financial 2004, Chief
San Mateo, CA 94403-1906 Officer and Financial Officer
Chief and Chief
Accounting Accounting Officer
Officer since February 2008
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 46 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Director
and member of Audit and Valuation Committees, Runkel Funds, Inc. (2003-2004);
Assistant Treasurer of most of the investment companies in Franklin Templeton
Investments (1997-2003); and Vice President, Franklin Templeton Services, LLC
(1997-2003).
Annual Report | 33
NUMBER OF
PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------- --------------------- -----------------------------------
JIMMY D. GAMBILL (1947) Vice President Since February 2008 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton
Worldwide, Inc.; and officer and/or director, as the case may be, of some of the
other subsidiaries of Franklin Resources, Inc. and of 46 of the investment
companies in Franklin Templeton Investments.
DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; officer and/or
director, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 46 of the investment companies in Franklin Templeton
Investments.
RUPERT H. JOHNSON, JR. (1940) President and Since 2002 Not Applicable Not Applicable
One Franklin Parkway Chief Executive
San Mateo, CA 94403-1906 Officer -
Investment
Management
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources,
Inc.; Director, Franklin Advisers, Inc. and Templeton Worldwide, Inc.; Senior
Vice President, Franklin Advisory Services, LLC; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 44 of the investment companies in Franklin Templeton
Investments.
KAREN L. SKIDMORE (1952) Vice President Since 2006 Not Applicable Not Applicable
One Franklin Parkway and Secretary
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of
30 of the investment companies in Franklin Templeton Investments.
34 | Annual Report
NUMBER OF
PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------- --------------------- -----------------------------------
CRAIG S. TYLE (1960) Vice President Since 2005 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer
of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Partner,
Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company
Institute (ICI) (1997-2004).
GALEN G. VETTER (1951) Senior Vice Since Not Applicable Not Applicable
500 East Broward Blvd. President February 2008
Suite 2100 and Chief
Fort Lauderdale, FL 33394-3091 Executive
Officer -
Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of some of the
other subsidiaries of Franklin Resources, Inc. and of 46 of the investment
companies in Franklin Templeton Investments; and FORMERLY, Managing Director,
RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987
and 1991-2004).
* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments
fund complex. These portfolios have a common investment manager or
affiliated investment managers.
** Charles B. Johnson is considered to be an interested person of the Fund
under the federal securities laws due to his position as officer and
director and major shareholder of Franklin Resources, Inc. (Resources),
which is the parent company of the Fund's investment manager and
distributor. Gregory E. Johnson is considered to be an interested person of
the Fund under the federal securities laws due to his position as an
officer and director of Resources.
Note 1: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the
father and uncle, respectively, of Gregory E. Johnson.
Note 2: Officer information is current as of the date of this report. It is
possible that after this date, information about officers may change.
THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE
COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT COMMITTEE
INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN
THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD HAS DETERMINED THAT THERE IS
AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS DESIGNATED
JOHN B. WILSON AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD BELIEVES THAT
MR. WILSON QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE BUSINESS
BACKGROUND AND EXPERIENCE, INCLUDING SERVICE AS CHIEF FINANCIAL OFFICER OF
STAPLES, INC. FROM 1992 TO 1996. MR. WILSON HAS BEEN A MEMBER AND CHAIRMAN OF
THE FUND'S AUDIT COMMITTEE SINCE 2006. AS A RESULT OF SUCH BACKGROUND AND
EXPERIENCE, THE BOARD BELIEVES THAT MR. WILSON HAS ACQUIRED AN UNDERSTANDING OF
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND FINANCIAL STATEMENTS, THE GENERAL
APPLICATION OF SUCH PRINCIPLES IN CONNECTION WITH THE ACCOUNTING ESTIMATES,
ACCRUALS AND RESERVES, AND ANALYZING AND EVALUATING FINANCIAL STATEMENTS THAT
PRESENT A BREADTH AND LEVEL OF COMPLEXITY OF ACCOUNTING ISSUES GENERALLY
COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN UNDERSTANDING OF INTERNAL
CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN UNDERSTANDING OF AUDIT
COMMITTEE FUNCTIONS. MR. WILSON IS AN INDEPENDENT BOARD MEMBER AS THAT TERM IS
DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE COMMISSION RULES AND
RELEASES.
THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL (800) DIAL BEN/(800) 342-5236 TO REQUEST THE SAI.
Annual Report | 35
Franklin Templeton Global Trust
SHAREHOLDER INFORMATION
FRANKLIN TEMPLETON HARD CURRENCY FUND
PROXY VOTING POLICIES AND PROCEDURES
The Trust's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Trust uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Trust's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 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 (800)
SEC-0330.
36 | Annual Report
Literature Request
LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
(800) DIAL BEN/(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 FUNDS
VALUE
Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund(1)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund(2)
Mutual Shares Fund
BLEND
Franklin Focused Core Equity Fund
Franklin Large Cap Equity Fund
Franklin Rising Dividends Fund
GROWTH
Franklin Capital Growth Fund(1)
Franklin Flex Cap Growth Fund
Franklin Growth Fund
Franklin Growth Opportunities Fund(3)
Franklin Small Cap Growth Fund(4)
Franklin Small-Mid Cap Growth Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Real Estate Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Mutual Financial Services 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
INTERNATIONAL
Franklin India Growth Fund
Franklin International Growth Fund
Franklin International Small Cap Growth Fund
Mutual European Fund
Templeton BRIC Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Emerging Markets Small Cap Fund
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton Frontier Markets Fund
HYBRID
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Templeton Income Fund
ASSET ALLOCATION
Franklin Templeton Corefolio(R) Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund
FIXED INCOME
Franklin Adjustable U.S. Government Securities Fund(5)
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund
Franklin Limited Maturity U.S. Government Securities Fund(5)
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(5)
Templeton Global Bond Fund
Templeton Global Total Return Fund
Templeton International Bond Fund
TAX-FREE INCOME(6)
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(7)
LIMITED-/INTERMEDIATE-TERM FUNDS
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund
STATE-SPECIFIC
Alabama
Arizona
California(8)
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(7)
Michigan(7)
Minnesota(7)
Missouri
New Jersey
New York(8)
North Carolina
Ohio(7)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust(9)
(1.) The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
(2.) 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.
(3.) Effective 11/1/07, Franklin Aggressive Growth Fund changed its name to
Franklin Growth Opportunities Fund. The fund's investment goal and strategy
remained the same.
(4.) Effective 3/31/08, Franklin Small Cap Growth Fund II changed its name to
Franklin Small Cap Growth Fund. The fund's investment goal and strategy
remained the same.
(5.) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
(6.) For investors subject to the alternative minimum tax, a small portion of
fund dividends may be taxable. Distributions of capital gains are generally
taxable.
(7.) The fund invests primarily in insured municipal securities.
(8.) These funds are available in four or more variations, including long-term
portfolios, intermediate-term portfolios, portfolios of insured securities,
a high-yield portfolio (CA only) and money market portfolios.
(9.) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
Not part of the annual report
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)
One Franklin Parkway
San Mateo, CA 94403-1906
- - WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at franklintempleton.com.
See inside for details.
ANNUAL REPORT AND SHAREHOLDER LETTER
FRANKLIN TEMPLETON
HARD CURRENCY FUND
INVESTMENT MANAGER
Franklin Advisers, Inc.
DISTRIBUTOR
Franklin Templeton Distributors, Inc.
(800) DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
(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 A2008 12/08
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy
of its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial expert is John B. Wilson and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $42,277 for the fiscal year ended October 31, 2008 and $37,013 for the
fiscal year ended October 31, 2007.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of their financial
statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning were $4,000 for the fiscal year ended
October 31, 2008 and $46,000 for the fiscal year ended October 31, 2007. The
services for which these fees were paid included tax compliance and advice.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $499 for the fiscal year ended October 31,
2008 and $0 for the fiscal year ended October 31, 2007. The services for which
these fees were paid include review of materials provided to the fund Board in
connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not reported
in paragraphs (a)-(c) of Item 4 were $283,578 for the fiscal year ended October
31, 2008 and $0 for the fiscal year ended October 31, 2007. The services for
which these fees were paid include review of materials provided to the fund
Board in connection with the investment management contract renewal process.
(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to
the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to
the registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $288,077 for the fiscal year ended October 31, 2008 and $46,000
for the fiscal year ended October 31, 2007.
(h) The registrant's audit committee of the board has considered whether the
provision of non-audit services that were rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
N/A
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no changes to the procedures by which shareholders may recommend
nominees to the Registrant's Board of Trustees that would require disclosure
herein.
ITEM 11. CONTROLS AND PROCEDURES.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(b) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jennifer J. Bolt, Chief Executive Officer - Finance and Administration, and
Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Jennifer J. Bolt, Chief Executive Officer - Finance and Administration, and
Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN TEMPLETON GLOBAL TRUST
By /s/Jennifer J. Bolt
------------------
Jennifer J. Bolt
Chief Executive Officer - Finance and Administration
Date December 26, 2008
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/Jennifer J. Bolt
-------------------
Jennifer J. Bolt
Chief Executive Officer - Finance and Administration
Date December 26, 2008
By /s/LAURA F. FERGERSON
---------------------
Laura F. Fergerson
Chief Financial Officer and Chief Accounting Officer
Date December 26, 2008