UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04450
----------
Franklin Templeton Global Trust
--------------------------------------------------
(Exact name of registrant as specified in charter)
One Franklin Parkway, San Mateo, CA 94403-1906
---------------------------------------------------
(Address of principal executive offices) (Zip code)
Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
--------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 650 312-2000
------------
Date of fiscal year end: 10/31
-----
Date of reporting period: 10/31/09
--------
Item 1. Reports to Stockholders.
OCTOBER 31, 2009
ANNUAL REPORT
AND SHAREHOLDER LETTER
A series of Franklin Templeton Global Trust
SIGN UP FOR ELECTRONIC DELIVERY on
franklintempleton.com
(GRAPHIC)
FIXED INCOME
FRANKLIN TEMPLETON
HARD CURRENCY FUND
(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
SHAREHOLDER LETTER ....................................................... 1
ANNUAL REPORT
Franklin Templeton Hard Currency Fund .................................... 3
Performance Summary ...................................................... 8
Your Fund's Expenses ..................................................... 11
Important Notice to Shareholders ......................................... 13
Financial Highlights and Statement of Investments ........................ 14
Financial Statements ..................................................... 18
Notes to Financial Statements ............................................ 21
Report of Independent Registered Public Accounting Firm .................. 31
Board Members and Officers ............................................... 32
Shareholder Information .................................................. 37
Shareholder Letter
Dear Shareholder:
The one-year period ended October 31, 2009, offered a vivid reminder of the
changeable nature of financial markets. Global economies began the year in a
recession that eased later due to coordinated efforts by many governments to
address spreading liquidity and credit problems. Economic growth within several
key countries returned to positive territory near period-end. Global equity
markets experienced record-high volatility until March then had an exceptionally
strong rally from mid-March through September. In October, the markets cooled
when investors began to question the durability of the nascent global recovery
amid increasingly mixed economic signals, especially within the U.S.
Given recent events, we think it is important to put short-term market
developments in perspective. Keep in mind we have navigated through past periods
of market volatility by remaining committed to our long-term perspective and
disciplined investment philosophy. During such times, we search for bargains we
believe may be well positioned to become eventual winners. Although conditions
remain challenging, our experience gives us reasons to be optimistic about
future market stabilization and economic recovery.
Franklin Templeton Hard Currency Fund's annual report goes into greater detail
about prevailing conditions during the period under review. In addition, you
will find performance data, financial information and a discussion from the
portfolio manager. Please remember that all securities markets fluctuate, as do
mutual fund share prices.
If you would like more frequent updates, franklintempleton.com provides daily
prices, monthly performance figures, portfolio holdings and other information.
You can also access your account, buy and sell shares, read timely articles, and
find helpful financial planning tools. We hope you will take advantage of these
online services.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Not part of the annual report | 1
Although market conditions are constantly changing, we remain committed to our
disciplined strategy as we manage the Fund, keeping in mind the trust you have
placed in us. As always, we recommend investors consult their financial advisors
and review their portfolios to design a long-term strategy and portfolio
allocation that meet their individual needs, goals and risk tolerance. We firmly
believe that most people benefit from professional advice, and that advice is
invaluable as investors navigate current market conditions.
We thank you for investing with Franklin Templeton, welcome your questions and
comments, and look forward to serving your investment needs in the years ahead.
Sincerely,
/s/ Rupert H. Johnson, Jr.
Rupert H. Johnson, Jr.
President and Chief Executive Officer - Investment Management
Franklin Templeton Global Trust
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF OCTOBER 31, 2009. 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.
2 | Not part of the annual report
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 continued 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 period
ended October 31, 2009.
PERFORMANCE OVERVIEW
Franklin Templeton Hard Currency Fund - Class A posted a cumulative total return
of +8.09% for the 12 months under review. The Fund underperformed its benchmark,
the J.P. Morgan (JPM) 3 Month Global Cash Index, which had a +17.63% total
return for the same period.(1) The Fund typically does not attempt to directly
match the composition of the index; thus the results are not directly
comparable. The U.S. dollar fell 10.28% relative to major U.S. trading partners
during the period.(2) In particular, the dollar depreciated 7.96% versus the
Japanese yen and 14.06% versus the euro.(3) You can find the Fund's long-term
performance data in the Performance Summary beginning on page 8.
(1.) Source: J.P. Morgan. The JPM 3 Month Global Cash Index tracks total returns
of 3-month constant maturity euro-currency deposits, the only short-term
securities consistent across all markets in terms of liquidity, maturity
and credit quality. The index is unmanaged and includes reinvested
distributions. One cannot invest directly in an index, and an index is not
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.
Annual Report | 3
ECONOMIC AND MARKET OVERVIEW
The year under review consisted of two distinct halves. In the first half, the
U.S. recession spread throughout the world as the financial crisis intensified,
with economic activity and security prices falling sharply. Frozen credit
markets and depressed consumer sentiment levels caused a steep drop in economic
activity despite policymakers' best efforts. In addition to continued global
interest rate easing, the U.S., eurozone and the U.K. implemented quantitative
and credit easing policies, and governments worldwide boosted fiscal stimuli to
counter the deepening global recession. Partially as a result of this
coordinated global response, investor confidence began to improve in March,
which gradually benefited economic activity through the increased flow of
credit, especially in interbank lending and trade financing. Strong economic
activity in China, the thawing of credit markets and the G20 meeting in April
also boosted investor confidence.(4) The turnaround led to a more favorable
outlook that benefited the global economy through a shift in the inventory
adjustment cycle and better corporate bond and equity market performance. Many
observers believed the worst of the financial crisis was over, and by the end of
the period there was substantial evidence that an economic recovery was
underway. Greater risk appetite in the second half of the year benefited
non-U.S. dollar currencies as investors' economic outlook improved. Although
financial markets and economic activity rebounded significantly from very low
levels, economic activity remained weak as deleveraging continued, global trade
contracted and unemployment rose.
Inflation fell during the period as weak global growth led to lower prices for
commodities, and slackening labor and capital markets pushed most other prices
down gradually. Monetary easing in the eurozone continued, although at a slower
pace than many economists would have preferred, given the recession's depth and
lesser fiscal policy action compared with that of the U.S. In the first half of
2009 compared with the first half of 2008 (year-over-year), the eurozone's
average gross domestic product (GDP) contracted 4.9%, which was greater than the
U.S. economy's 3.6% contraction.(5) Outside the eurozone, the economic slowdown
was more severe in many emerging European countries. Central and eastern Europe
was one of the regions most damaged by the financial crisis as it exposed those
countries' external imbalances, which were characterized by large foreign
borrowing to finance substantial current account deficits. Several countries
including Ukraine, Hungary and Latvia sought help from the International
Monetary Fund (IMF). Even Poland, which was in a comparatively strong position
relative to its regional peers, took advantage of the IMF's new, prequalified
loan facility, though it did not draw on these resources.
(4.) The G20 is an informal forum that promotes open and constructive discussion
between industrial and emerging market countries on key issues related to
global economic stability. It is made up of the finance ministers and
central bank governors of 19 countries and the European Union.
(5.) Source: Eurostat.
4 | Annual Report
In Asia, growth differed significantly between large economies with higher
domestic demand and small economies more dependent on exports. The large
economies, particularly China, India, and Indonesia, were more resistant to the
global recession as aggressive fiscal and monetary responses helped offset
declining exports. Within these three countries, domestic demand was resilient
and accounted for a bigger share of these economies. In contrast, the smaller
economies suffered quick, severe recessions as their reliance on export demand
made them more vulnerable to the global downturn. In addition, production
dropped more than export demand, allowing inventories to fall to levels more in
line with reduced global consumption. However, even some of these very badly
affected economies showed signs of improvement toward period-end. The Japanese
economy was the weakest among large, developed economies. GDP contracted an
average of 6.7% year-over-year during the past three calendar quarters due to
subdued domestic consumption, weak external demand and lackluster government
spending.(6) Japan's trade balance worsened as the global recession and
difficulties in obtaining credit negatively impacted machinery exports, an
important sector for the economy.
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
The Fund continued to act as a hedge against U.S. dollar depreciation, as the
dollar fell 10.28% relative to its major trading partners during the period.(3)
The dollar traded for much of the year in line with broad risk appetite as the
financial crisis led to increased correlation between many risk assets. In the
beginning of the Fund's fiscal year, as equity markets fell and deleveraging
intensified, the dollar strengthened against most currencies as loans were
repaid and investors sought to reduce risk. However, in the second half of the
year, this appreciation more than reversed due to increased risk appetite and
historically low U.S. interest rates. The U.S. current account continued to
reflect a large deficit despite some improvement as the savings rate rose.
Financing for this deficit continued to rely on foreigners' purchases of
Treasury bonds as the U.S. government increased issuance to help compensate for
lost revenue and fiscal stimulus measures.
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.
(6.) Source: Economic and Social Research Institute.
Annual Report | 5
CURRENCY BREAKDOWN
10/31/09
% OF TOTAL
NET ASSETS
----------
ASIA PACIFIC 49.0%
Japanese Yen 24.7%
Australian Dollar 11.0%
Indonesian Rupiah 5.4%
Malaysian Ringgit 3.7%
South Korean Won 2.5%
Indian Rupee 1.7%
EUROPE 48.0%
Swedish Krona 21.8%
Norwegian Krone 16.8%
Swiss Franc 7.2%
Polish Zloty 2.1%
Euro 0.1%
AMERICAS 2.0%
Canadian Dollar 6.8%
Brazilian Real 1.7%
Chilean Peso 1.0%
U.S. Dollar* -7.5%
MIDDLE EAST & AFRICA 1.0%
Israeli New Shekel 1.0%
* Holding is a negative percentage because of the Fund's holdings of forward
currency exchange contracts.
ASIA
The Fund continued to favor the currencies of developing Asian economies due to
their strong relative growth and healthy external balances. We added significant
exposure to the Australian dollar during the year as it benefited from stronger
growth in developing Asian economies and the financial crisis had a more modest
impact there than in other developed economies. The country's more moderate
downturn led the Reserve Bank of Australia to be one of the first in the world
to start raising interest rates. The Fund's exposures to Asian currencies
generated mixed results during the year. The Australian dollar and Indonesian
rupiah, which the Fund also added exposure to during the year, appreciated
36.96% and 14.14% against the U.S. dollar.(3) The Fund eliminated its exposure
to the Singapore dollar and reduced its exposure to the Malaysian ringgit during
the period, and these currencies appreciated 6.10% and 4.06% against the U.S.
dollar.(3) The Japanese yen continued to be a large exposure for the Fund and it
appreciated 8.65%.(3)
AMERICAS
In the Americas, the Fund added exposure to the Canadian dollar. The currency
appreciated 12.87% against the U.S. dollar during the year as it benefited from
a commodity price rebound and the relatively lower financing requirement of its
fiscal and external accounts.(3) The Fund also added exposures to the Brazilian
real and Chilean peso in the second half of the year. These currencies benefited
from early rebounds in economic activity as both countries suffered brief severe
recessions that local policymakers confronted with aggressive monetary and
fiscal responses. Such countercyclical policies have so far been more effective
in stimulating domestic demand in traditional emerging markets in this cycle
than in the past.
EUROPE
In Europe, we continued to favor non-euro European currencies. These developed
economies also suffered significant downturns during the year, but the outlook
for countries like Norway and Sweden, where the Fund increased exposures, was
for stronger growth than in the U.K. or eurozone. The Norwegian krone, which
appreciated 18.15% against the dollar during the year, benefited from the
country's commodity exports and an interest rate hike at the end of the year.(3)
The Swedish krona, which appreciated 10.51% during the year, lagged other
regional currencies due to investors' fears regarding an economic spillover from
the faltering Baltics that we think could be overstated.(3) The Fund also had a
large position in the Swiss franc, which it reduced during the year after it
appeared to us the worst of the deleveraging had passed. The Swiss franc
appreciated 14.04% versus the U.S. dollar.(3) The Fund maintained little
exposure to the euro throughout the year, which hampered relative returns.
6 | Annual Report
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, 2009, 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.
Please note that although the Fund's Statement of Investments on page 16 of this
report indicates the Fund held 38.0% of its net assets in U.S.
dollar-denominated assets as of 10/31/09, its net exposure to the U.S. dollar as
of that date was only -7.5%. The difference is explained by the Fund's holdings
of forward currency exchange contracts (please see Statement of Investments in
the Financial Statements on page 16 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.
Annual Report | 7
Performance Summary as of 10/31/09
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 10/31/09 10/31/08
- ----------------------- ------ -------- --------
Net Asset Value (NAV) +$0.48 $9.61 $9.13
DISTRIBUTIONS (11/1/08-10/31/09)
Dividend Income $0.2260
Tax Return of Capital $0.0176
TOTAL $0.2436
ADVISOR CLASS (SYMBOL: ICHHX) CHANGE 10/31/09 10/31/08
- ----------------------------- ------ -------- --------
Net Asset Value (NAV) +$0.50 $9.65 $9.15
DISTRIBUTIONS (11/1/08-10/31/09)
Dividend Income $0.2332
Tax Return of Capital $0.0176
TOTAL $0.2508
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) +8.09% +26.70% +61.84%
Average Annual Total Return(2) +5.66% +4.36% +4.69%
Value of $10,000 Investment(3) $10,566 $12,381 $15,819
Avg. Ann. Total Return (9/30/09)(4) +3.76% +5.02% +4.67%
30-Day Standardized Yield(5) -0.50%
Total Annual Operating
Expenses(6) 1.09%
ADVISOR CLASS 1-YEAR 5-YEAR 10-YEAR
- ------------- ------- ------- -------
Cumulative Total Return(1) +8.49% +28.66% +67.30%
Average Annual Total Return(2) +8.49% +5.17% +5.28%
Value of $10,000 Investment(3) $10,849 $12,866 $16,730
Avg. Ann. Total Return (9/30/09)(4) +6.39% +5.82% +5.25%
30-Day Standardized Yield(5) -0.21%
Total Annual Operating
Expenses(6) 0.79%
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.
8 | Annual Report
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR A 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.
CLASS A (11/1/99-10/31/09)
FRANKLIN JP MORGAN
TEMPLETON HARD 3 MONTH
CURRENCY FUND GLOBAL CASH
DATE - CLASS A INDEX
- ---------- -------------- -----------
11/1/1999 $ 9,774 $10,000
11/30/1999 $ 9,579 $ 9,772
12/31/1999 $ 9,590 $ 9,817
1/31/2000 $ 9,239 $ 9,651
2/29/2000 $ 9,104 $ 9,533
3/31/2000 $ 9,332 $ 9,590
4/30/2000 $ 8,926 $ 9,246
5/31/2000 $ 9,030 $ 9,309
6/30/2000 $ 9,312 $ 9,599
7/31/2000 $ 9,019 $ 9,368
8/31/2000 $ 8,809 $ 9,181
9/30/2000 $ 8,758 $ 9,105
10/31/2000 $ 8,462 $ 8,864
11/30/2000 $ 8,621 $ 9,006
12/31/2000 $ 8,992 $ 9,539
1/31/2001 $ 8,917 $ 9,495
2/28/2001 $ 8,790 $ 9,384
3/31/2001 $ 8,427 $ 9,063
4/30/2001 $ 8,491 $ 9,175
5/31/2001 $ 8,331 $ 8,973
6/30/2001 $ 8,233 $ 8,963
7/31/2001 $ 8,471 $ 9,175
8/31/2001 $ 8,773 $ 9,474
9/30/2001 $ 8,869 $ 9,460
10/31/2001 $ 8,782 $ 9,421
11/30/2001 $ 8,728 $ 9,423
12/31/2001 $ 8,630 $ 9,380
1/31/2002 $ 8,378 $ 9,183
2/28/2002 $ 8,443 $ 9,245
3/31/2002 $ 8,563 $ 9,352
4/30/2002 $ 8,828 $ 9,607
5/31/2002 $ 9,137 $ 9,950
6/30/2002 $ 9,448 $10,383
7/31/2002 $ 9,392 $10,310
8/31/2002 $ 9,414 $10,370
9/30/2002 $ 9,493 $10,418
10/31/2002 $ 9,582 $10,483
11/30/2002 $ 9,672 $10,548
12/31/2002 $10,162 $10,970
1/31/2003 $10,395 $11,209
2/28/2003 $10,523 $11,301
3/31/2003 $10,571 $11,410
4/30/2003 $10,735 $11,662
5/31/2003 $11,228 $12,172
6/30/2003 $11,086 $12,052
7/31/2003 $10,909 $11,829
8/31/2003 $10,802 $11,702
9/30/2003 $11,301 $12,332
10/31/2003 $11,408 $12,437
11/30/2003 $11,693 $12,744
12/31/2003 $12,120 $13,285
1/31/2004 $12,057 $13,181
2/29/2004 $12,120 $13,193
3/31/2004 $12,029 $13,181
4/30/2004 $11,663 $12,819
5/31/2004 $11,764 $13,020
6/30/2004 $11,731 $13,004
7/31/2004 $11,681 $12,930
8/31/2004 $11,845 $13,063
9/30/2004 $12,156 $13,341
10/31/2004 $12,485 $13,686
11/30/2004 $13,005 $14,252
12/31/2004 $13,147 $14,477
1/31/2005 $12,856 $14,048
2/28/2005 $13,107 $14,285
3/31/2005 $12,914 $14,057
4/30/2005 $12,874 $14,025
5/31/2005 $12,569 $13,574
6/30/2005 $12,442 $13,387
7/31/2005 $12,455 $13,406
8/31/2005 $12,602 $13,598
9/30/2005 $12,559 $13,464
10/31/2005 $12,506 $13,347
11/30/2005 $12,479 $13,193
12/31/2005 $12,590 $13,236
1/31/2006 $13,000 $13,620
2/28/2006 $12,887 $13,454
3/31/2006 $12,906 $13,513
4/30/2006 $13,446 $14,092
5/31/2006 $13,517 $14,368
6/30/2006 $13,429 $14,307
7/31/2006 $13,472 $14,354
8/31/2006 $13,443 $14,425
9/30/2006 $13,342 $14,307
10/31/2006 $13,514 $14,493
11/30/2006 $13,802 $14,947
12/31/2006 $13,654 $14,884
1/31/2007 $13,552 $14,742
2/28/2007 $13,712 $14,960
3/31/2007 $13,863 $15,121
4/30/2007 $14,068 $15,525
5/31/2007 $13,995 $15,420
6/30/2007 $14,045 $15,545
7/31/2007 $14,267 $15,802
8/31/2007 $14,267 $15,756
9/30/2007 $14,894 $16,468
10/31/2007 $15,178 $16,863
11/30/2007 $15,133 $16,955
12/31/2007 $15,160 $16,936
1/31/2008 $15,478 $17,203
2/29/2008 $15,797 $17,673
3/31/2008 $16,072 $18,171
4/30/2008 $15,881 $18,048
5/31/2008 $15,817 $18,116
6/30/2008 $15,848 $18,305
7/31/2008 $15,688 $18,200
8/31/2008 $15,161 $17,353
9/30/2008 $14,972 $16,754
10/31/2008 $14,635 $15,435
11/30/2008 $14,427 $15,408
12/31/2008 $15,325 $16,390
1/31/2009 $14,732 $15,596
2/28/2009 $14,090 $15,327
3/31/2009 $14,354 $15,955
4/30/2009 $14,568 $16,189
5/31/2009 $15,028 $17,253
6/30/2009 $14,930 $17,123
7/31/2009 $15,407 $17,493
8/31/2009 $15,506 $17,675
9/30/2009 $15,884 $18,009
10/31/2009 $15,819 $18,157
AVERAGE ANNUAL TOTAL RETURN
CLASS A 10/31/09
- ------- --------
1-Year +5.66%
5-Year +4.36%
10-Year +4.69%
ADVISOR CLASS (11/1/99-10/31/09)
FRANKLIN JP MORGAN
TEMPLETON HARD 3 MONTH
CURRENCY FUND- GLOBAL CASH
DATE ADVISOR CLASS INDEX
- ---------- -------------- -----------
11/1/1999 $10,000 $10,000
11/30/1999 $ 9,801 $ 9,772
12/31/1999 $ 9,815 $ 9,817
1/31/2000 $ 9,456 $ 9,651
2/29/2000 $ 9,319 $ 9,533
3/31/2000 $ 9,557 $ 9,590
4/30/2000 $ 9,142 $ 9,246
5/31/2000 $ 9,248 $ 9,309
6/30/2000 $ 9,541 $ 9,599
7/31/2000 $ 9,241 $ 9,368
8/31/2000 $ 9,027 $ 9,181
9/30/2000 $ 8,981 $ 9,105
10/31/2000 $ 8,678 $ 8,864
11/30/2000 $ 8,840 $ 9,006
12/31/2000 $ 9,216 $ 9,539
1/31/2001 $ 9,151 $ 9,495
2/28/2001 $ 9,020 $ 9,384
3/31/2001 $ 8,645 $ 9,063
4/30/2001 $ 8,711 $ 9,175
5/31/2001 $ 8,557 $ 8,973
6/30/2001 $ 8,465 $ 8,963
7/31/2001 $ 8,708 $ 9,175
8/31/2001 $ 9,007 $ 9,474
9/30/2001 $ 9,123 $ 9,460
10/31/2001 $ 9,034 $ 9,421
11/30/2001 $ 8,978 $ 9,423
12/31/2001 $ 8,888 $ 9,380
1/31/2002 $ 8,629 $ 9,183
2/28/2002 $ 8,697 $ 9,245
3/31/2002 $ 8,816 $ 9,352
4/30/2002 $ 9,100 $ 9,607
5/31/2002 $ 9,418 $ 9,950
6/30/2002 $ 9,743 $10,383
7/31/2002 $ 9,686 $10,310
8/31/2002 $ 9,709 $10,370
9/30/2002 $ 9,802 $10,418
10/31/2002 $ 9,906 $10,483
11/30/2002 $ 9,987 $10,548
12/31/2002 $10,503 $10,970
1/31/2003 $10,743 $11,209
2/28/2003 $10,888 $11,301
3/31/2003 $10,947 $11,410
4/30/2003 $11,104 $11,662
5/31/2003 $11,626 $12,172
6/30/2003 $11,477 $12,052
7/31/2003 $11,294 $11,829
8/31/2003 $11,196 $11,702
9/30/2003 $11,710 $12,332
10/31/2003 $11,833 $12,437
11/30/2003 $12,129 $12,744
12/31/2003 $12,578 $13,285
1/31/2004 $12,513 $13,181
2/29/2004 $12,578 $13,193
3/31/2004 $12,498 $13,181
4/30/2004 $12,119 $12,819
5/31/2004 $12,237 $13,020
6/30/2004 $12,190 $13,004
7/31/2004 $12,150 $12,930
8/31/2004 $12,334 $13,063
9/30/2004 $12,648 $13,341
10/31/2004 $13,004 $13,686
11/30/2004 $13,544 $14,252
12/31/2004 $13,687 $14,477
1/31/2005 $13,398 $14,048
2/28/2005 $13,659 $14,285
3/31/2005 $13,458 $14,057
4/30/2005 $13,430 $14,025
5/31/2005 $13,113 $13,574
6/30/2005 $12,984 $13,387
7/31/2005 $13,012 $13,406
8/31/2005 $13,164 $13,598
9/30/2005 $13,111 $13,464
10/31/2005 $13,069 $13,347
11/30/2005 $13,027 $13,193
12/31/2005 $13,166 $13,236
1/31/2006 $13,594 $13,620
2/28/2006 $13,476 $13,454
3/31/2006 $13,487 $13,513
4/30/2006 $14,067 $14,092
5/31/2006 $14,141 $14,368
6/30/2006 $14,059 $14,307
7/31/2006 $14,103 $14,354
8/31/2006 $14,073 $14,425
9/30/2006 $13,980 $14,307
10/31/2006 $14,160 $14,493
11/30/2006 $14,461 $14,947
12/31/2006 $14,317 $14,884
1/31/2007 $14,210 $14,742
2/28/2007 $14,378 $14,960
3/31/2007 $14,546 $15,121
4/30/2007 $14,761 $15,525
5/31/2007 $14,684 $15,420
6/30/2007 $14,733 $15,545
7/31/2007 $14,982 $15,802
8/31/2007 $14,982 $15,756
9/30/2007 $15,647 $16,468
10/31/2007 $15,944 $16,863
11/30/2007 $15,913 $16,955
12/31/2007 $15,935 $16,936
1/31/2008 $16,269 $17,203
2/29/2008 $16,619 $17,673
3/31/2008 $16,905 $18,171
4/30/2008 $16,704 $18,048
5/31/2008 $16,637 $18,116
6/30/2008 $16,681 $18,305
7/31/2008 $16,513 $18,200
8/31/2008 $15,976 $17,353
9/30/2008 $15,775 $16,754
10/31/2008 $15,421 $15,435
11/30/2008 $15,202 $15,408
12/31/2008 $16,159 $16,390
1/31/2009 $15,535 $15,596
2/28/2009 $14,860 $15,327
3/31/2009 $15,154 $15,955
4/30/2009 $15,380 $16,189
5/31/2009 $15,864 $17,253
6/30/2009 $15,761 $17,123
7/31/2009 $16,263 $17,493
8/31/2009 $16,384 $17,675
9/30/2009 $16,782 $18,009
10/31/2009 $16,730 $18,157
AVERAGE ANNUAL TOTAL RETURN
ADVISOR CLASS 10/31/09
- ------------- --------
1-Year +8.49%
5-Year +5.17%
10-Year +5.28%
Annual Report | 9
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.) The 30-day standardized yield for the 30 days ended 10/31/09 reflects an
estimated yield to maturity (assuming all portfolio securities are held to
maturity). It should be regarded as an estimate of the Fund's rate of
investment income, and it may not equal the Fund's actual income
distribution rate (which reflects the Fund's past dividends paid to
shareholders) or the income reported in the Fund's financial statements.
(6.) Figures are as stated in the Fund's prospectus current as of the date of
this report. In periods of market volatility, assets may decline
significantly, causing total annual Fund operating expenses to become
higher than the figures shown.
(7.) Source: J.P. Morgan. The J.P. Morgan 3 Month Global Cash Index tracks total
returns of 3-month constant maturity euro-currency deposits, the only
short-term securities consistent across all markets in terms of liquidity,
maturity and credit quality.
10 | Annual Report
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
- - Transaction costs, including sales charges (loads) on Fund purchases; and
- - Ongoing Fund costs, including management fees, 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.
Annual Report | 11
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.
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 5/1/09 VALUE 10/31/09 PERIOD* 5/1/09-10/31/09
----------------- -------------- -----------------------
CLASS A
Actual $1,000 $1,085.90 $5.15
Hypothetical (5% return before expenses) $1,000 $1,020.27 $4.99
ADVISOR CLASS
Actual $1,000 $1,087.80 $3.74
Hypothetical (5% return before expenses) $1,000 $1,021.63 $3.62
* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 0.98% and Advisor: 0.71%), multiplied by the
average account value over the period, multiplied by 184/365 to reflect the
one-half year period.
12 | Annual Report
Important Notice to Shareholders
REVISED SECTION 19(A) NOTICE
The Fund's previous estimate of the sources from which its dividends of $0.2436
per share for Class A and $0.2508 per share for Advisor Class, which were paid
on December 17, 2008 (ex-dividend date December 15, 2008), have been revised to
reflect that $0.2260 and $0.2332 of such amounts represented a distribution of
net investment income for Class A and Advisor Class, respectively; $0.0000 and
$0.0000 of such amounts represented gain from the sale of securities for Class A
and Advisor Class, respectively; and $0.0176 and $0.0176 of such amounts
represented a return of capital for tax purposes for Class A and Advisor Class,
respectively.
Annual Report | 13
Franklin Templeton Global Trust
FINANCIAL HIGHLIGHTS
FRANKLIN TEMPLETON HARD CURRENCY FUND
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
CLASS A 2009 2008 2007 2006 2005
- ------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............................. $ 9.13 $ 10.16 $ 9.39 $ 9.34 $ 9.85
-------- -------- -------- -------- --------
Income from investment operations(a):
Net investment income (loss)(b) .............................. (0.02) 0.10 0.28 0.24 0.15
Net realized and unrealized gains (losses) ................... 0.74 (0.45) 0.84 0.47 (0.12)
-------- -------- -------- -------- --------
Total from investment operations ................................ 0.72 (0.35) 1.12 0.71 0.03
-------- -------- -------- -------- --------
Less distributions from:
Net investment income and net realized foreign
currency gains ............................................ (0.22) (0.68) (0.35) (0.66) (0.46)
Net realized gains ........................................... -- -- -- -- (0.08)
Tax return of capital ........................................ (0.02) -- -- -- --
-------- -------- -------- -------- --------
Total distributions ............................................. (0.24) (0.68) (0.35) (0.66) (0.54)
-------- -------- -------- -------- --------
Redemption fees(c) .............................................. -- --(d) --(d) --(d) --(d)
-------- -------- -------- -------- --------
Net asset value, end of year .................................... $ 9.61 $ 9.13 $ 10.16 $ 9.39 $ 9.34
======== ======== ======== ======== ========
Total return(e) ................................................. 8.09% (3.57)% 12.31% 8.06% 0.17%
RATIOS TO AVERAGE NET ASSETS
Expenses before expense reduction ............................... 0.95% 1.09% 1.09% 1.13% 1.19%
Expenses net of expense reduction ............................... 0.94% 1.09%(f) 1.09%(f) 1.13%(f) 1.19%(f)
Net investment income (loss) .................................... (0.28)% 1.07% 2.97% 2.58% 1.54%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................................. $422,665 $479,764 $323,255 $322,449 $190,163
(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 2009 2008 2007 2006 2005
- ------------- ------- -------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............................. $ 9.15 $ 10.18 $ 9.41 $ 9.36 $ 9.87
------- -------- ------- ------- -------
Income from investment operations(a):
Net investment income (loss)(b) .............................. --(c) 0.14 0.31 0.27 0.18
Net realized and unrealized gains (losses) ................... 0.75 (0.46) 0.84 0.47 (0.12)
------- -------- ------- ------- -------
Total from investment operations ................................ 0.75 (0.32) 1.15 0.74 0.06
------- -------- ------- ------- -------
Less distributions from:
Net investment income and net realized foreign
currency gains ............................................ (0.23) (0.71) (0.38) (0.69) (0.49)
Net realized gains ........................................... -- -- -- -- (0.08)
Tax return of capital ........................................ (0.02) -- -- -- --
------- -------- ------- ------- -------
Total distributions ............................................. (0.25) (0.71) (0.38) (0.69) (0.57)
------- -------- ------- ------- -------
Redemption fees(d) .............................................. -- --(c) --(c) --(c) --(c)
------- -------- ------- ------- -------
Net asset value, end of year .................................... $ 9.65 $ 9.15 $ 10.18 $ 9.41 $ 9.36
======= ======== ======= ======= =======
Total return .................................................... 8.49% (3.28)% 12.60% 8.35% 0.50%
RATIOS TO AVERAGE NET ASSETS
Expenses before expense reduction ............................... 0.67% 0.78% 0.84% 0.83% 0.83%
Expenses net of expense reduction ............................... 0.66% 0.78%(e) 0.84%(e) 0.83%(e) 0.83%(e)
Net investment income ........................................... --%(f) 1.38% 3.22% 2.88% 1.89%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................................. $78,551 $110,247 $89,942 $40,912 $17,532
(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) Amount rounds to less than $0.01 per share.
(d) Effective September 1, 2008, the redemption fee was eliminated.
(e) Benefit of expense reduction rounds to less than 0.01%.
(f) 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, 2009
FRANKLIN TEMPLETON HARD CURRENCY FUND PRINCIPAL AMOUNT(a) VALUE
------------------------------------- ------------------- ------------
FOREIGN GOVERNMENT AND AGENCY SECURITIES 60.1%
(b) Canada Treasury Bill, 12/10/09 .......................................... 24,500,000 CAD $ 22,645,597
Government of Australia, 5.25%, 8/15/10 ................................. 9,000,000 AUD 8,153,117
Government of Japan,
0.50%, 2/15/10 ....................................................... 2,300,000,000 JPY 25,583,775
0.60%, 9/20/10 ....................................................... 3,000,000,000 JPY 33,453,717
Government of Sweden, 4.00%, 12/01/09 ................................... 592,500,000 SEK 83,744,220
(b) Norway Treasury Bill,
3/17/10 .............................................................. 231,850,000 NOK 40,197,922
6/16/10 .............................................................. 100,000,000 NOK 17,228,379
Queensland Treasury Corp., 10, 5.50%, 5/14/10 ........................... 24,500,000 AUD 22,285,896
(b) Sweden Treasury Bill, 12/16/09 .......................................... 180,000,000 SEK 25,363,638
Treasury Corp. Victoria, 5.50%, 9/15/10 ................................. 25,000,000 AUD 22,736,820
------------
TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES (COST $281,715,659) ...... 301,393,081
------------
SHARES
-------------------
MONEY MARKET FUNDS (COST $190,310,369) 38.0%
(c) Institutional Fiduciary Trust Money Market Portfolio, 0.00% ............. 190,310,369 190,310,369
------------
TOTAL INVESTMENTS (COST $472,026,028) 98.1% ............................. 491,703,450
OTHER ASSETS, LESS LIABILITIES 1.9% ..................................... 9,513,422
------------
NET ASSETS 100.0% ....................................................... $501,216,872
============
(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 Institutional Fiduciary Trust Money
Market Portfolio. The rate shown is the annualized seven-day yield at
period end.
At October 31, 2009, the Fund had the following forward exchange contracts
outstanding. See Note 1(c).
FORWARD EXCHANGE CONTRACTS
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY AMOUNT DATE APPRECIATION DEPRECIATION
- -------- ------------ ---- --------------- ----------- ---------- ------------ ------------
Swedish Krona ............ DBAB Sell 24,287,655 $ 2,947,173 11/16/09 $ -- $ (476,111)
Swedish Krona ............ DBAB Buy 24,287,655 2,983,741 11/16/09 439,543 --
Australian Dollar ........ BOFA Buy 2,200,000 1,439,900 11/17/09 535,682 --
Poland Zloty ............. DBAB Buy 2,700,000 872,657 11/24/09 58,568 --
Swiss Franc .............. DBAB Buy 4,537,463 4,133,609 11/27/09 289,684 --
Malaysian Ringgit ........ JPHQ Buy 6,000,000 1,635,992 12/14/09 118,882 --
Swiss Franc .............. DBAB Buy 2,750,000 2,513,711 12/29/09 167,676 --
Swiss Franc .............. UBSW Buy 10,146,672 8,893,568 1/22/10 1,001,607 --
Poland Zloty ............. DBAB Buy 7,000,000 2,046,963 1/25/10 356,666 --
South Korean Won ......... HSBC Buy 3,297,000,000 2,424,265 2/12/10 352,059 --
Japanese Yen ............. DBAB Sell 774,539,750 7,858,561 2/16/10 -- (754,807)
Japanese Yen ............. DBAB Buy 774,539,750 8,636,898 2/16/10 -- (23,531)
16 | Annual Report
Franklin Templeton Global Trust
STATEMENT OF INVESTMENTS, OCTOBER 31, 2009 (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
FORWARD EXCHANGE CONTRACTS (CONTINUED)
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY AMOUNT DATE APPRECIATION DEPRECIATION
- -------- ------------ ---- --------------- ----------- ---------- ------------ ------------
Swedish Krona ............ DBAB Sell 27,820,000 $ 3,380,439 2/17/10 $ -- $ (542,846)
Swedish Krona ............ DBAB Buy 27,820,000 3,357,268 2/17/10 566,017 --
Swiss Franc .............. DBAB Buy 5,000,000 4,324,885 3/04/10 552,719 --
Poland Zloty ............. DBAB Buy 4,800,000 1,371,429 3/17/10 271,164 --
South Korean Won ......... JPHQ Buy 11,778,110,000 8,770,000 4/01/10 1,145,611 --
Mexican Peso ............. DBAB Sell 165,419,010 12,164,504 4/05/10 -- (90,025)
Mexican Peso ............. DBAB Buy 165,419,010 11,070,000 4/05/10 1,184,529 --
Japanese Yen ............. BZWS Buy 5,856,456,029 63,657,131 4/28/10 1,515,584 --
Swiss Franc .............. DBAB Buy 4,568,615 4,293,004 6/07/10 168,055 --
Poland Zloty ............. DBAB Buy 2,514,355 774,124 6/14/10 81,225 --
Poland Zloty ............. DBAB Buy 6,900,000 2,099,051 6/29/10 245,902 --
Poland Zloty ............. DBAB Buy 1,800,000 579,579 7/20/10 31,297 --
Indonesian Rupiah ........ HSBC Buy 208,055,500,000 19,779,019 7/30/10 838,227 --
Malaysian Ringgit ........ HSBC Buy 57,816,100 16,373,860 7/30/10 410,336 --
Indonesian Rupiah ........ HSBC Buy 67,360,000,000 6,180,384 9/07/10 440,632 --
Poland Zloty ............. DBAB Buy 4,402,925 1,473,289 9/07/10 16,433 --
Brazilian Real ........... DBAB Buy 16,214,000 8,800,000 10/21/10 -- (256,228)
Canadian Dollar .......... UBSW Buy 12,166,830 11,700,000 10/21/10 -- (464,807)
Chilean Peso ............. DBAB Buy 2,761,650,000 5,100,000 10/21/10 154,607 --
Indian Rupee ............. DBAB Buy 412,544,000 8,800,000 10/21/10 -- (259,600)
Israeli Shekel ........... DBAB Buy 18,889,380 5,100,000 10/21/10 -- (64,148)
Norwegian Krone .......... UBSW Buy 157,066,250 27,500,000 10/21/10 -- (558,382)
Swiss Franc .............. UBSW Buy 10,000,000 9,890,219 10/21/10 -- (103,941)
----------- ------------
Unrealized appreciation (depreciation) ................................................... 10,942,705 (3,594,426)
----------- ------------
Net unrealized appreciation (depreciation) ............................................ $ 7,348,279
===========
See Abbreviations on page 30.
The accompanying notes are an integral part of these financial statements.
Annual Report | 17
Franklin Templeton Global Trust
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2009
FRANKLIN
TEMPLETON
HARD CURRENCY
FUND
-------------
Assets:
Investments in securities:
Cost - Unaffiliated issuers .............................. $281,715,659
Cost - Sweep Money Fund (Note 7) ......................... 190,310,369
------------
Total cost of investments ................................ $472,026,028
------------
Value - Unaffiliated issuers ............................. $301,393,081
Value - Sweep Money Fund (Note 7) ........................ 190,310,369
------------
Total value of investments ............................... 491,703,450
Cash on deposit from brokers ................................ 2,180,000
Receivables:
Capital shares sold ...................................... 1,972,461
Interest ................................................. 3,907,924
Unrealized appreciation on forward exchange contracts ....... 10,942,705
Other assets ................................................ 363
------------
Total assets .......................................... 510,706,903
============
Liabilities:
Payables:
Capital shares redeemed .................................. 3,255,985
Affiliates ............................................... 390,095
Due to brokers .............................................. 2,180,000
Unrealized depreciation on forward exchange contracts ....... 3,594,426
Accrued expenses and other liabilities ...................... 69,525
------------
Total liabilities ..................................... 9,490,031
------------
Net assets, at value ............................... $501,216,872
============
Net assets consist of:
Paid-in capital ............................................. $486,548,509
Distributions in excess of net investment income ............ (7,752,860)
Net unrealized appreciation (depreciation) .................. 27,261,493
Accumulated net realized gain (loss) ........................ (4,840,270)
------------
Net assets, at value ............................... $501,216,872
============
CLASS A:
Net assets, at value ........................................ $422,665,419
============
Shares outstanding .......................................... 43,967,192
============
Net asset value per share(a) ................................ $ 9.61
============
Maximum offering price per share (net asset value per
share / 97.75%) .......................................... $ 9.83
============
ADVISOR CLASS:
Net assets, at value ........................................ $ 78,551,453
============
Shares outstanding .......................................... 8,136,870
============
Net asset value and maximum offering price per share ........ $ 9.65
============
(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.
18 | Annual Report
Franklin Templeton Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended October 31, 2009
FRANKLIN
TEMPLETON
HARD CURRENCY
FUND
-------------
Investment income:
Dividends from Sweep Money Fund (Note 7) ............................ $ 481,556
Interest ............................................................ 2,924,838
------------
Total investment income ....................................... 3,406,394
------------
Expenses:
Management fees (Note 3a) ........................................... 2,718,711
Distribution fees: (Note 3c)
Class A .......................................................... 1,113,186
Transfer agent fees (Note 3e) ....................................... 362,190
Custodian fees (Note 4) ............................................. 32,717
Reports to shareholders ............................................. 54,983
Registration and filing fees ........................................ 113,118
Professional fees ................................................... 63,483
Trustees' fees and expenses ......................................... 44,965
Other ............................................................... 24,886
------------
Total expenses ................................................ 4,528,239
Expense reductions (Note 4) ................................... (20,308)
------------
Net expenses ............................................... 4,507,931
------------
Net investment income (loss) ............................ (1,101,537)
------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ...................................................... (13,453,403)
Foreign currency transactions .................................... (24,456,455)
------------
Net realized gain (loss) ................................ (37,909,858)
------------
Net change in unrealized appreciation (depreciation) on:
Investments ...................................................... 46,149,066
Translation of other assets and liabilities denominated in
foreign currencies ............................................ 33,155,636
------------
Net change in unrealized appreciation (depreciation) .... 79,304,702
------------
Net realized and unrealized gain (loss) ................................ 41,394,844
------------
Net increase (decrease) in net assets resulting from operations ........ $ 40,293,307
============
The accompanying notes are an integral part of these financial statements.
Annual Report | 19
Franklin Templeton Global Trust
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FRANKLIN TEMPLETON
HARD CURRENCY FUND
----------------------------
YEAR ENDED OCTOBER 31,
----------------------------
2009 2008
------------- ------------
Increase (decrease) in net assets:
Operations:
Net investment income (loss) .............................................. $ (1,101,537) $ 6,721,294
Net realized gain (loss) from investments and foreign currency
transactions ........................................................... (37,909,858) 33,671,624
Net change in unrealized appreciation (depreciation) on investments and
translation of other assets and liabilities denominated in foreign
currencies ............................................................. 79,304,702 (72,335,267)
------------- ------------
Net increase (decrease) in net assets resulting from operations ..... 40,293,307 (31,942,349)
------------- ------------
Distributions to shareholders from:
Net investment income and net realized foreign currency gains:
Class A ................................................................ (11,863,542) (24,946,669)
Advisor Class .......................................................... (2,834,750) (7,360,551)
Tax return of capital
Class A ................................................................ (921,968) --
Advisor Class .......................................................... (213,501) --
------------- ------------
Total distributions to shareholders .......................................... (15,833,761) (32,307,220)
------------- ------------
Capital share transactions: (Note 2)
Class A ................................................................ (74,843,177) 207,656,432
Advisor Class .......................................................... (38,410,835) 33,402,153
------------- ------------
Total capital share transactions ............................................. (113,254,012) 241,058,585
------------- ------------
Redemption fees .............................................................. -- 4,548
------------- ------------
Net increase (decrease) in net assets ............................... (88,794,466) 176,813,564
Net assets:
Beginning of year ............................................................ 590,011,338 413,197,774
------------- ------------
End of year .................................................................. $ 501,216,872 $590,011,338
============= ============
Undistributed net investment income (distributions in excess of net
investment income) included in net assets:
End of year ............................................................... $ (7,752,860) $ 24,176,695
============= ============
The accompanying notes are an integral part of these financial statements.
20 | Annual Report
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 an 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
Government securities generally trade in the over-the-counter market rather than
on a securities exchange. The Fund may utilize independent pricing services,
quotations from bond dealers, and information with respect to bond and note
transactions, to assist in determining a current market value for each security.
The Fund's pricing services may use valuation models or matrix pricing which
considers information with respect to comparable bond and note transactions,
quotations from bond dealers, or by reference to other securities that are
considered comparable in such characteristics as rating, interest rate and
maturity date, option adjusted spread models, prepayment projections, interest
rate spreads and yield curves, to determine current value. Debt securities
denominated in a foreign currency are converted into their U.S. dollar
equivalent at the foreign exchange rate in effect at the close of the NYSE on
the date that the values of the foreign debt securities are determined.
Investments in open-end mutual funds are valued at the closing net asset value.
The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis based upon the underlying investment book value,
anticipated future cash flows, market changes in comparable or similar
securities, matrix pricing, discounts from market prices of similar securities,
or discounts applied due to the nature and duration of restrictions on the
disposition of the securities. Due to the inherent uncertainty of valuations of
such securities, the fair values may differ significantly from the values that
would have been used had a ready market for such investments existed.
Occasionally, events occur between the time at which trading in a security is
completed and the close of the NYSE that might call into question the
availability (including the reliability) of the value of a portfolio security
held by the Fund. If such an event occurs, the securities may be valued using
fair value procedures, which may include the use of independent pricing
services. All security valuation procedures are approved by the Fund's Board of
Trustees.
Annual Report | 21
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Fund's Board of Trustees.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments on the
Statement of Operations.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
C. DERIVATIVE FINANCIAL INSTRUMENTS
The Fund may invest in derivative financial instruments (derivatives) in order
to manage risk or gain exposure to various other investments or markets.
Derivatives are financial contracts based on an underlying or notional amount,
require no initial investment or an initial net investment that is smaller than
would normally be required to have a similar response to changes in market
factors, and require or permit net settlement. Derivatives may contain various
risks including the potential inability of the counterparty to fulfill their
obligations under the terms of the contract, the potential for an illiquid
secondary market, and the potential for market movements which may expose the
Fund to gains or losses in excess of the amounts shown on the Statement of
Assets and Liabilities.
Derivatives are marked to market daily based upon quotations from market makers
or the Fund's independent pricing services and the Fund's net benefit or
obligation under the contract, as measured by the fair market value of the
contract, is included in net assets. Realized gain and loss and unrealized
appreciation and depreciation on these contracts for the period are included in
the Statement of Operations.
22 | Annual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
The Fund enters into forward exchange contracts generally in order to hedge
against fluctuations in foreign exchange rates or to gain exposure to certain
foreign currencies. A forward exchange contract is an agreement between the Fund
and a counterparty to buy or sell a foreign currency for a specific exchange
rate on a future date. Pursuant to the terms of the forward exchange contacts,
cash or securities may be required to be deposited as collateral.
See Note 9 regarding other derivative information.
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, 2009, 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. 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, not
including class specific expenses, are allocated daily to each class of shares
based upon the relative proportion of net assets of each class. Differences in
per share distributions, by class, are generally due to differences in class
specific expenses.
Annual Report | 23
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.
G. REDEMPTION FEES
A short term trading redemption fee 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, 2009, there were an unlimited number of shares authorized
(without par value). Transactions in the Fund's shares were as follows:
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
2009 2008
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ----------- -------------
CLASS A SHARES:
Shares sold 30,384,530 $ 278,622,262 49,620,090 $ 485,804,936
Shares issued in reinvestment of
distributions 669,338 6,064,199 1,803,679 17,049,806
Shares redeemed (39,662,448) (359,529,638) (30,657,256) (295,198,310)
------------ ------------- ----------- -------------
Net increase (decrease) (8,608,580) $ (74,843,177) 20,766,513 $ 207,656,432
============ ============= =========== =============
ADVISOR CLASS SHARES:
Shares sold 8,433,106 $ 78,129,400 10,017,916 $ 98,876,758
Shares issued in reinvestment of
distributions 283,675 2,575,771 601,584 5,709,332
Shares redeemed (12,634,000) (119,116,006) (7,399,133) (71,183,937)
------------ ------------- ----------- -------------
Net increase (decrease) (3,917,219) $ (38,410,835) 3,220,367 $ 33,402,153
============ ============= =========== =============
24 | Annual Report
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 Fund'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. Effective February 1, 2009, the Board of Trustees has set the
current rate at 0.30% per year for Class A shares until further notice and
approval by the Board. Costs exceeding the maximum for the current plan year
cannot be reimbursed in subsequent periods.
D. SALES CHARGES/UNDERWRITING AGREEMENTS
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 .................................................. $54,486
Contingent deferred sales charges retained ......................... $21,319
E. TRANSFER AGENT FEES
For the year ended October 31, 2009, the Fund paid transfer agent fees of
$362,190, of which $237,039 was retained by Investor Services.
Annual Report | 25
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, 2009, 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, 2009, the capital loss carryforwards were as
follows:
Capital loss carryforwards expiring in:
2013 ............................... $2,133,269
2014 ............................... 190,081
2017 ............................... 276,805
----------
$2,600,155
==========
The tax character of distributions paid during the years ended October 31, 2009
and 2008, was as follows:
2009 2008
----------- -----------
Distributions paid from:
Ordinary income ..... $14,698,292 $32,307,220
Return of capital ... 1,135,469 --
----------- -----------
$15,833,761 $32,307,220
=========== ===========
The return of capital at fiscal year end resulted from distributions made in
December 2008 in compliance with the requirements of the excise tax rules. The
excise tax distribution requirements differ from the fiscal year distribution
requirements under Subchapter M of the Internal Revenue Code.
At October 31, 2009, the cost of investments, net unrealized appreciation
(depreciation), undistributed ordinary income for income tax purposes were as
follows:
Cost of investments ......................... $473,318,497
============
Unrealized appreciation ..................... $ 18,749,099
Unrealized depreciation ..................... (364,146)
------------
Net unrealized appreciation (depreciation) .. $ 18,384,953
============
Net investment income (loss) differs for financial statement and tax purposes
primarily due to differing treatments of foreign currency transactions, bond
discounts and premiums, and tax straddles.
26 | Annual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
5. INCOME TAXES (CONTINUED)
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.
6. INVESTMENT TRANSACTIONS
There were no purchases or sales of investments (other than short term
securities) for the year ended October 31, 2009.
7. INVESTMENTS IN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Fund may invest in the 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. CONCENTRATION OF RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.
9. OTHER DERIVATIVE INFORMATION
At October 31, 2009, the Fund has invested in derivative contracts which are
reflected on the Statement of Assets and Liabilities as follows:
ASSET DERIVATIVES LIABILITY DERIVATIVES
DERIVATIVE CONTRACTS ------------------------------------------- ---------------------------------------
NOT ACCOUNTED FOR AS STATEMENT OF ASSETS AND FAIR VALUE STATEMENT OF ASSETS AND FAIR VALUE
HEDGING INSTRUMENTS LIABILITIES LOCATION AMOUNT LIABILITIES LOCATION AMOUNT
- -------------------- ----------------------------- ----------- -------------------------- ----------
Foreign exchange
contracts ....... Unrealized appreciation on on Unrealized depreciation on
forward exchange contracts $10,942,705 forward exchange contracts $3,594,426
Annual Report | 27
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
9. OTHER DERIVATIVE INFORMATION (CONTINUED)
The effect of derivative contracts on the Fund's Statement of Operations was as
follows:
AVERAGE
NOTIONAL
CHANGE IN AMOUNT
DERIVATIVE CONTRACTS UNREALIZED OUTSTANDING
NOT ACCOUNTED FOR AS STATEMENT OF REALIZED GAIN APPRECIATION DURING THE
HEDGING INSTRUMENTS OPERATIONS LOCATIONS (LOSS)(a) (DEPRECIATION)(a) PERIOD(a, b)
- -------------------- ------------------------------------- ------------- ----------------- ------------
Foreign exchange
contracts ....... Net realized gain (loss) from foreign
currency transactions / Net change
in unrealized appreciation
(depreciation) on translations of
other assets and liabilities
denominated in foreign currencies $(10,109,495) $19,931,833 $218,775,261
(a) For the six months ended October 31, 2009.
(b) Notional amount represents the U.S. dollar equivalent based on the foreign
exchange rate at the time of contract entry.
See Note 1(c) regarding derivative financial instruments.
10. CREDIT FACILITY
Effective January 23, 2009, the Fund, together with other U.S. registered and
foreign investment funds managed by Franklin Templeton Investments
(individually, "Borrower"; collectively "Borrowers"), entered into a joint
syndicated senior unsecured credit facility totaling $725 million (Global Credit
Facility) to provide a source of funds to the Borrowers for temporary and
emergency purposes, including the ability to meet future unanticipated or
unusually large redemption requests.
Under the terms of the Global Credit Facility, the Fund shall, in addition to
interest charged on any borrowings made by the Fund and other costs incurred by
the Fund, pay its share of fees and expenses incurred in connection with the
implementation and maintenance of the Global Credit Facility, based upon its
relative share of the aggregate net assets of all of the Borrowers, including an
annual commitment fee based upon the unused portion of the Global Credit
Facility. During the period, the Fund incurred commitment fees of $2,333 of its
pro rata portion of the Global Credit Facility, which is reflected in other
expenses on the Statement of Operations. During the year ended October 31, 2009,
the Fund did not utilize the Global Credit Facility.
28 | Annual Report
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
11. FAIR VALUE MEASUREMENTS
The Fund follows a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Fund's own market
assumptions (unobservable inputs). These inputs are used in determining the
value of the Fund's investments and are summarized in the following fair value
hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of the inputs used as of October 31, 2009, in valuing
the Fund's assets and liabilities carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
------------ ------------ --- ------------
ASSETS:
Investments in Securities:
Foreign Government and
Agency Securities $ -- $301,393,081 $-- $301,393,081
Short Term Investments 190,310,369 -- -- 190,310,369
------------ ------------ --- ------------
Total Investments in Securities $190,310,369 $301,393,081 $-- $491,703,450
============ ============ === ============
Forward Exchange Contracts -- 10,942,705 -- 10,942,705
LIABILITIES:
Forward Exchange Contracts -- 3,594,426 -- 3,594,426
12. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through December 16, 2009, the issuance
date of the financial statements and determined that no events have occurred
that require disclosure.
Annual Report | 29
Franklin Templeton Global Trust
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FRANKLIN TEMPLETON HARD CURRENCY FUND
ABBREVIATIONS
COUNTERPARTY
BOFA - Bank of America N.A
BZWS - Barclays Bank PLC
DBAB - Deutsche Bank AG
HSBC - HSBC Bank USA
JPHQ - JP Morgan Chase Bank, N.A.
UBSW - UBS AG
CURRENCY
AUD - Australian Dollar
CAD - Canadian Dollar
JPY - Japanese Yen
NOK - Norwegian Krone
SEK - Swedish Krona
30 | Annual Report
Franklin Templeton Global Trust
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FRANKLIN TEMPLETON HARD CURRENCY
FUND
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Franklin Templeton Hard
Currency Fund (the "Fund") at October 31, 2009, 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, 2009 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 16, 2009
Annual Report | 31
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 133 Bar-S Foods (meat packing
One Franklin Parkway company).
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief
Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
ROBERT F. CARLSON (1928) Trustee Since 2003 110 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) (1971-2008); 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 110 ICO Global Communications
One Franklin Parkway (Holdings) Limited (satellite
San Mateo, CA 94403-1906 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 133 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 (railroad) and White
Mountains Insurance Group, Ltd.
(holding company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and Secretary of
the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and
Assistant Secretary for Public Affairs and Public Liaison - United States Treasury Department (1988-1989).
32 | Annual Report
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ----------------- ------------------------ ----------------------------------
FRANK W.T. LAHAYE (1929) Trustee Since 1993 110 None
One Franklin Parkway
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 133 Hess Corporation (exploration and
One Franklin Parkway refining of oil and gas).
San Mateo, CA 94403-1906
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 141 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 110 None
One Franklin Parkway Independent 2006 and Lead
San Mateo, CA 94403-1906 Trustee Independent
Trustee since
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).
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 133 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 41
of the investment companies in Franklin Templeton Investments.
Annual Report | 33
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ----------------- ------------------------ ----------------------------------
**GREGORY E. JOHNSON (1961) Trustee Since 2007 89 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; and officer and/or
director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 32 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 2004
San Mateo, CA 94403-1906 Officer and and Vice
Vice President President - AML
- AML Compliance since
Compliance 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
45 of the investment companies in Franklin Templeton Investments; and FORMERLY,Director of Compliance, Franklin Resources, Inc.
(1994-2001).
LAURA F. FERGERSON (1962) Chief Since March 2009 Not Applicable Not Applicable
One Franklin Parkway Executive
San Mateo, CA 94403-1906 Officer -
Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of 45 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).
GASTON GARDEY (1967) Treasurer, Since March 2009 Not Applicable Not Applicable
One Franklin Parkway Chief Financial
San Mateo, CA 94403-1906 Officer and
Chief
Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Fund Accounting, Franklin Templeton Investments; and officer of 27 of the investment companies in Franklin Templeton
Investments.
ALIYA S. GORDON (1973) Vice President Since March 2009 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Templeton Investments; officer of 45 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Litigation Associate, Steefel, Levitt & Weiss, LLP (2000-2004).
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
- ------------------------------ --------------- ----------------- ------------------------ ----------------------------------
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 45 of the investment companies in Franklin Templeton Investments.
STEVEN J. GRAY (1955) Vice President Since August Not Applicable Not Applicable
One Franklin Parkway 2009
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; Vice President, Franklin Templeton Distributors, Inc.; and officer
of 45 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
San Mateo, CA 94403-1906 Executive
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 43 of the investment companies in Franklin
Templeton Investments.
ROBERT C. ROSSELOT (1960) Vice President Since August Not Applicable Not Applicable
500 East Broward Blvd., 2009
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President and
Secretary, Templeton Investment Counsel, LLC; Vice President, Secretary and Trust Officer, Fiduciary Trust International of the
South; and officer of 45 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 45 of the investment companies in Franklin
Templeton Investments.
Annual Report | 35
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 45 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).
* 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 2007. 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.
36 | Annual Report
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.
Annual Report | 37
This page intentionally left blank.
This page intentionally left blank.
This page intentionally left blank.
Franklin Templeton Funds
LITERATURE REQUEST. TO RECEIVE A 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.
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 Quest 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 Flex Cap Growth Fund
Franklin Growth Fund
Franklin Growth Opportunities Fund
Franklin Small Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Real Estate Fund
Franklin Gold & Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Mutual Financial Services Fund
GLOBAL
Mutual Global 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
Mutual International 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(3)
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund
Franklin Limited Maturity U.S. Government Securities Fund(3)
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(3)
Templeton Global Bond Fund
Templeton Global Total Return Fund
Templeton International Bond Fund
TAX-FREE INCOME(4)
NATIONAL
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(5)
LIMITED-/INTERMEDIATE-TERM
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(6)
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(7)
Michigan(7)
Minnesota(7)
Missouri
New Jersey
New York(6)
North Carolina
Ohio(7)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable
Insurance Products Trust(8)
(1.) The fund is closed to new investors. Existing shareholders 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.) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
(4.) For investors subject to the alternative minimum tax, a small portion of
fund dividends may be taxable. Distributions of capital gains are generally
taxable.
(5.) The fund invests primarily in insured municipal securities.
(6.) 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.
(7.) The Board of Trustees approved the elimination of the non-fundamental
policy requiring the fund to invest at least 80% of net assets in insured
municipal securities and the removal of the word "Insured" from the fund
name. The changes became effective 2/17/09.
(8.) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
04/09 Not part of the annual report
(FRANKLIN TEMPLETON INVESTMENTS (R) LOGO)
One Franklin Parkway
San Mateo, CA 94403-1906
SIGN UP FOR ELECTRONIC DELIVERY
on franklintempleton.com
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 A2009 12/09
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 $46,241 for the fiscal year ended October 31, 2009 and $42,277 for the
fiscal year ended October 31, 2008.
(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 $2,762 for the fiscal year ended
October 31, 2009 and $4,000 for the fiscal year ended October 31, 2008. The
services for which these fees were paid included tax compliance and advice.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended October 31, 2009
and $499 for the fiscal year ended October 31, 2008. 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 $0 for the fiscal year ended October 31,
2009 and $283,578 for the fiscal year ended October 31, 2008. 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 $2,762 for the fiscal year ended October 31, 2009 and $288,077
for the fiscal year ended October 31, 2008.
(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 Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN TEMPLETON GLOBAL TRUST
By /s/LAURA F. FERGERSON
---------------------------
Laura F. Fergerson
Chief Executive Officer -
Finance and Administration
Date December 28, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/LAURA F. FERGERSON
---------------------------
Laura F. Fergerson
Chief Executive Officer -
Finance and Administration
Date December 28, 2009
By /s/GASTON GARDEY
----------------------
Gaston Gardey
Chief Financial Officer and
Chief Accounting Officer
Date December 28, 2009