<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>tlgim-s01.txt
<DESCRIPTION>GLOBAL INCOME FUND SEMIANNUAL REPORT
<TEXT>
SEMI ANNUAL REPORT
TEMPLETON GLOBAL
INCOME FUND, INC.
February 28, 2001
[FRANKLIN TEMPLETON INVESTMENTS LOGO]
PAGE
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
Your Fund's Goal: Templeton Global Income Fund seeks high current income, with a
secondary objective of capital appreciation. Under normal market conditions, the
Fund invests primarily in a portfolio of debt securities of U.S. and foreign
issuers, including emerging markets.
--------------------------------------------------------------------------------
This semiannual report of Templeton Global Income Fund covers the period ended
February 28, 2001. During the six months under review, many bond investors grew
confident that U.S. inflation and interest rates would decline as clear signs of
slowing economic growth appeared. The reduction in U.S. growth was expected to
have a similar impact on global economies, leading to lower commodity prices and
wages, thus easing inflationary pressures and allowing for lower interest rates
worldwide. The U.S. slowdown was expected to reduce Europe's, Asia's and Latin
America's growth rates as export demand declined. Of these, Europe's industrial
sector, Asia's high-tech sector and Latin America as a whole are considered to
be the most vulnerable to waning U.S. imports.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 11.
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter .......... 1
Performance Summary ......... 8
Important Notice to
Shareholders ................ 9
Financial Highlights &
Statement of Investments .... 10
Financial Statements ........ 14
Notes to Financial
Statements .................. 17
</TABLE>
FUND CATEGORY
[PYRAMID GRAPHIC]
PAGE
The decelerating U.S. economic growth rate was generally due to the Federal
Reserve Board's (the Fed's) tight monetary policy stance, as well as
historically high oil prices that reduced personal income and consumption.
Business investment, particularly in capital goods, declined as corporate
profits fell. Furthermore, yield spreads, or differences, on corporate loans
widened due to deteriorating corporate financial conditions coupled with credit
quality downgrades from the national credit rating agencies. Consumer spending
also declined as stock market corrections further eroded wealth and resultant
weak demand led to rising inventories. Manufacturing sector declines, coupled
with the possibility of flagging consumption resulting from a rapid increase in
household savings, created concern among investors about a potential recession.
The Fed's Open Market Committee responded to these economic events by reducing
the federal funds target rate 100 basis points, from 6.50% to 5.50%, in January
2001.
With the Fed's new credit-easing stance toward monetary policy, the U.S.
Treasury yield curve steepened as rates fell more on the short end of the curve
than the long end. Short-term rates fell because investors expected the Fed to
reduce the federal funds target rate further, but long-term Treasury bond yields
did not fall as far despite expectations of lower inflation, due to possible
reductions in the U.S. government's fiscal surplus. Slower economic growth
combined with proposed tax cuts could result in lower tax revenues and less of a
reduction in outstanding government debt than previously expected. As a result,
an excess supply of government debt could drive Treasury bond prices down and
yields up.
2
PAGE
European bond markets generally offered positive returns in local currency
terms. The U.K. and European Monetary Union (EMU) Bond indexes rose 5.47% and
5.58% over the six-month period despite tighter monetary policy across the
European continent early in the period. German, Italian, French and Spanish
bonds rose 5.33%, 5.26%, 5.49% and 5.50%, respectively. Sweden trended with the
Euroland countries, rising 5.27%, while Denmark outperformed with a 6.01% gain
as investors signaled relief following the country's decision not to join the
EMU at the current time.(1) The Euroland benchmark yield curve also steepened as
short-term rates fell based on investor expectations of interest rate cuts by
European Central Bank (ECB) monetary authorities. But unlike in the U.S., the
long end of the Euroland curve remained relatively unchanged.
The Japanese debt market performed well, rising 4.52% despite the Bank of
Japan's 0.25% short-term interest rate hike early in the period and subsequent
0.10% rate cut in February. The Australian and New Zealand markets, where rising
commodity prices supported the local currencies and helped contain inflation,
kept pace with the global bond markets in general, but underperformed that of
the U.S. in local currency terms.(1)
Emerging market bonds provided generally positive returns during the period as
commodity prices remained historically high, particularly for oil, and many
issuer governments adhered to sound economic policies. Rising commodity prices
improve export revenues and, hence, the external debt repayment
1. Source: J.P. Morgan Securities, Inc., Government Bond Index Monitor,
2/28/01. Figures are based on J.P. Morgan's unmanaged Government Bond
Local Currency Return Indexes, with each country's or region's returns
based on the gross price (net price plus accrued interest) of bonds in
each index. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
"Emerging Market bonds provided generally positive returns during the period.
..."
3
PAGE
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
2/28/01
[PIE CHART}
<TABLE>
<CAPTION>
<S> <C>
Europe ................................................. 40.0%
Latin America .......................................... 18.7%
U.S. ................................................... 15.5%
Asia ................................................... 9.4%
Canada ................................................. 5.8%
Australia & New Zealand ................................ 5.4%
Short-Term Investments & Other Net Assets .............. 5.2%
</TABLE>
capacity of issuer countries. The market experienced some volatility during the
fourth quarter due to investor uncertainty regarding the U.S. equity market and
negative developments in Argentina and Turkey, but ended on a positive trend due
in part to the Fed's interest rate reductions. Historically, emerging market
bonds have rallied behind falling U.S. interest rates, and this was the case as
the total return for the J.P. Morgan Emerging Markets Bond Index Global (EMBIG)
rose 20.63% in U.S.-dollar terms during the six months ended February 28, 2001.
Within the J.P. Morgan EMBIG, Nigeria was among the best performers, with a
price appreciation of 43.51% in local currency terms. Other countries that
generated solid price appreciation included Poland, which rose 25.92%; Ecuador,
19.83%; and Colombia, up 16.79%, in local currency terms. The only exceptions to
this positive performance were Bulgaria and Ivory Coast.(2)
The relatively attractive yields offered by emerging market bonds, compared to
high yield bonds in the U.S. and other countries, heightened demand for such
instruments by global high yield investors as yields-to-maturity for
dollar-denominated instruments reached an average of 11.34% during the reporting
period. Hence, many investors reallocated their portfolios away from U.S. high
yield bonds toward emerging market debt (so-called "crossover investments") to
obtain more attractive yields and benefit from potential capital gains as their
associated risk premium decreased. The latter occurred as emerging market bonds'
credit ratings were upgraded, while
2. Source: J.P. Morgan Securities, Inc. The unmanaged J.P. Morgan EMBIG
tracks and measures the total returns for U.S. dollar-denominated debt
instruments of sovereign and quasi-sovereign entities in 27 emerging
markets. It includes reinvested interest. One cannot invest directly in
an index, nor is an index representative of the Fund's portfolio.
4
PAGE
those of other high yield bonds, particularly in the U.S., were downgraded by
the leading rating agencies. U.S. high yield bonds were downgraded largely
because of the Fed's previous tightening of monetary policy and the expected
resultant reduction in economic growth.
Within this environment, Templeton Global Income Fund posted a 10.17% cumulative
total return based on market price and a 4.97% cumulative total return based on
net asset value for the six months ended February 28, 2001, as shown in the
Performance Summary on page 8. The J.P. Morgan U.S. Government Bond Index, which
measures U.S. Treasury securities, and the J.P. Morgan Global Government Bond
Index, which measures and tracks bonds from around the world, posted returns of
7.36% and 5.77% for the same period.(3)
Throughout the reporting period, in efforts to maximize the Fund's return, we
allocated approximately 70%-75% of total net assets to intermediate- and
long-term bonds in the developed industrial markets. The remaining 25%-30% of
total net assets were invested in what we believed to be the highest quality,
most liquid emerging market bonds available. In our opinion, this combination of
investments offered the potential for higher long-term returns at the cost of
modestly higher short-term volatility. Because emerging market bonds generally
outperformed high-quality industrial market debt during this reporting period,
our allocation to emerging market debt added positively to the Fund's
performance.
3. Source: J.P. Morgan Securities, Inc. The unmanaged J.P. Morgan U.S.
Government Bond Index measures and tracks U.S. Treasury securities. The
unmanaged J.P. Morgan Global Government Bond Index measures and tracks
bonds from around the world. It includes reinvested interest. One
cannot invest directly in an index, nor is an index representative of
the Fund's portfolio.
PORTFOLIO BREAKDOWN
BASED ON TOTAL NET ASSETS
2/28/01
<TABLE>
<CAPTION>
------------------------------------
<S> <C>
Government Bonds 91.6%
Corporate Bonds 3.2%
Short-Term Investments &
Other Net Assets 5.2%
</TABLE>
5
PAGE
The Fund's geographic allocation, as a percentage of total net assets, changed
slightly during the period. Exposure to European countries increased from 38.0%
at the beginning of the period to 40.1% at the end, including additions from
France and Germany and a significant reduction in U.K. bonds. Exposure to North
America dropped slightly, from 21.5% to 21.3%, mostly a result of decreased U.S.
exposure. We also shifted our Latin American exposure, which decreased from
22.1% to 18.7%, by eliminating nearly all Argentinean bonds (from 4.3% to 0.3%).
At period end, the Fund's Asian allocation stood at 9.3%, down from 10.1% at the
beginning, most of which was invested in Turkey. Finally, the dollar-bloc
countries of Australia and New Zealand were relatively unchanged at 5.4%. At the
end of the period, emerging market debt represented 28.1% of the Fund's total
net assets, down from 32.2% at the beginning.
Looking forward, we are optimistic about prospects for global bond markets and
Templeton Global Income Fund. We believe inflation will likely decline if oil
prices and wages come down with the slowing economies. We generally expect
growth to remain positive in response to monetary stimulus, as most major
central banks may seek to reduce market interest rates. Fiscal stimulus could
also support economic growth in the longer term as tax cuts come into effect in
the U.S. and Europe, potentially resulting in a positive environment for high
quality bonds.
6
PAGE
It is important to note that special risks are involved with global investing
related to market, currency, economic, social, political and other factors, in
addition to the heightened risks associated with the relatively small size and
lesser liquidity of emerging markets. Investing in any emerging market security
means accepting a certain amount of volatility that can arise from such factors
as high levels of inflation, deflation or currency devaluation. In fact,
short-term volatility in these markets, and declines exceeding 50%, are not
uncommon.
We look forward to continuing to serve your investment needs, and we welcome
your comments or suggestions.
Portfolio Management Team
Templeton Global Income Fund, Inc.
This discussion reflects our views, opinions and portfolio holdings as of
February 28, 2001, the end of the reporting period. The information provided is
not a complete analysis of every aspect of any country, industry, security or
the Fund. Our strategies and the Fund's portfolio composition will change
depending on market and economic conditions. Although historical performance is
no guarantee of future results, these insights may help you understand our
investment and management philosophy.
7
PAGE
PERFORMANCE SUMMARY AS OF 2/28/01
Distributions and returns will vary based on earnings of the Fund's portfolio
and any profits realized from the sale of the portfolio's securities, as well as
the level of the Fund's operating expenses. All total returns include reinvested
distributions according to the terms specified in the Fund's dividend
reinvestment and cash purchase plan and do not reflect any sales charges paid at
inception or brokerage commissions paid on secondary market purchases.
PRICE AND DISTRIBUTION INFORMATION
<TABLE>
<CAPTION>
CHANGE 2/28/01 8/31/00
<S> <C> <C> <C>
Net Asset Value +$0.02 $7.08 $7.06
Market Price (NYSE) +$0.3325 $6.5200 $6.1875
DISTRIBUTIONS (9/1/00 - 2/28/01)
Dividend Income $0.28
</TABLE>
PERFORMANCE
<TABLE>
<CAPTION>
6-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
Cumulative Total Return(1)
Based on change in
net asset value 4.97% 6.37% 32.56% 95.37%
Based on change in
market price 10.17% 18.10% 38.58% 85.16%
Average Annual Total Return(1)
Based on change in
net asset value 4.97% 6.37% 5.80% 6.93%
Based on change in
market price 10.17% 18.10% 6.74% 6.35%
</TABLE>
1. Total return calculations represent the cumulative and average annual
changes in value of an investment over the periods indicated. Six-month
return has not been annualized.
--------------------------------------------------------------------------------
Ongoing market volatility can dramatically change the Fund's short-term
performance; current results may differ. Since markets can go down as well as
up, investment return and principal value will fluctuate with market conditions,
currency volatility, and the economic, social and political climates of
countries where the Fund invests. Emerging markets involve heightened risks
related to the same factors, in addition to those associated with their
relatively small size and lesser liquidity. Also, as a non-diversified
investment company, the Fund may invest in a relatively small number of issuers
and, as a result, be subject to greater risk of loss with respect to its
portfolio securities. You may have a gain or loss when you sell your shares.
--------------------------------------------------------------------------------
For updated performance figures, please call Franklin Templeton Investments at
1-800/342-5236.
Past performance does not guarantee future results.
8
PAGE
IMPORTANT NOTICE TO SHAREHOLDERS
SHARE REPURCHASE PROGRAM. In May 2000, the Board of Directors of the Fund
approved expansion of the Fund's open-market share repurchase program. Under the
Fund's previously announced open-market share repurchase program, the Fund was
authorized to purchase, from time to time, up to a maximum of 12 million shares
of the Fund's common stock in open-market transactions, at the discretion of
management (approximately 10% of the shares outstanding at the time the program
was initially implemented).
The Board's action removed the 10% limitation on share repurchases to give
management greater flexibility to engage in an aggressive share repurchase
program in efforts to address the Fund's discount to net asset value. The amount
and timing of additional purchases, and the extent to which they may exceed the
previous limitation, will be in the discretion of the Fund's management, taking
into account various factors, including market conditions, cash on hand and the
availability of other attractive investments.
9
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 2001 ------------------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE+
(For a share outstanding throughout the
period)
Net asset value, beginning of period.... $7.06 $7.50 $7.67 $8.35 $8.34 $8.00
---------------------------------------------------------------------------------
Income from investment operations:
Net investment income.................. .28 .60 .61 .60 .60 .63
Net realized and unrealized gains
(losses)............................. (.01) (.46) (.18) (.71) .01 .31
---------------------------------------------------------------------------------
Total from investment operations........ .27 .14 .43 (.11) .61 .94
---------------------------------------------------------------------------------
Capital share repurchases............... .03 .02 .01 .03 -- --
---------------------------------------------------------------------------------
Less distributions from:
Net investment income.................. (.28) (.60) (.60) (.60) (.60) (.41)
Net realized gains..................... -- -- (.01) -- -- --
Tax return of capital.................. -- -- -- -- -- (.19)
---------------------------------------------------------------------------------
Total distributions..................... (.28) (.60) (.61) (.60) (.60) (.60)
---------------------------------------------------------------------------------
Net asset value, end of period.......... $7.08 $7.06 $7.50 $7.67 $8.35 $8.34
=================================================================================
Total Return*
Based on market value per share........ 10.17% 3.97% 11.29% (7.69)% 17.12% 12.75%
Based on net asset value per share..... 4.97% 3.72% 6.75% (.46)% 8.53% 13.34%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)....... $773,504 $797,122 $862,788 $891,785 $1,002,756 $1,004,606
Ratios to average net assets:
Expenses............................... .73%** .75% .76% .74% .75% .72%
Net investment income.................. 8.07%** 8.12% 7.70% 7.26% 7.05% 7.67%
Portfolio turnover rate................. 42.57% 110.36% 66.07% 74.55% 191.83% 112.59%
</TABLE>
*Total return is not annualized.
**Annualized.
+Based on average weighted shares outstanding effective year ended August 31,
1999.
See Notes to Financial Statements.
10
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT* VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 94.8%
ARGENTINA .3%
Republic of Argentina, 11.75%, 6/15/15...................... $ 2,990,000 $ 2,715,668
------------
AUSTRALIA 3.6%
Government of Australia, 10.00%, 10/15/07................... 20,704,000AUD 13,807,496
Queensland Treasury Corp., 6.50%, 6/14/05................... 25,315,000AUD 13,923,150
------------
27,730,646
------------
BELGIUM 4.8%
Kingdom of Belgium:
6.50%, 3/25/02............................................ 16,490,000 16,721,783
8.50%, 10/01/07........................................... 18,604,000EUR 20,492,235
------------
37,214,018
------------
BRAZIL 5.7%
Government of Brazil:
FRN, 7.6875%, 4/15/09..................................... 11,000,000 9,542,500
14.50%, 10/15/09.......................................... 16,625,000 18,682,344
Series L, cvt., FRN, 7.6875%, 4/15/12..................... 10,300,000 7,622,000
12.75%, 1/15/20........................................... 4,500,000 4,410,000
10.125%, 5/15/27.......................................... 4,550,000 3,608,150
------------
43,864,994
------------
CANADA 5.8%
Government of Canada:
10.50%, 3/01/01........................................... 39,793,000CAD 25,994,905
10.00%, 5/01/02........................................... 25,710,000CAD 17,790,252
10.25%, 2/01/04........................................... 1,130,000CAD 842,185
------------
44,627,342
------------
DENMARK 1.3%
Kingdom of Denmark, 8.00%, 3/15/06.......................... 73,189,000DKK 10,266,177
------------
FRANCE 7.2%
Government of France:
8.25%, 2/27/04............................................ 39,000,000EUR 39,601,446
8.50%, 10/25/08........................................... 14,377,000EUR 16,329,357
------------
55,930,803
------------
GERMANY 5.7%
Federal Republic of Germany:
8.00%, 7/22/02............................................ 13,643,824EUR 13,132,791
6.00%, 7/04/07............................................ 31,298,000EUR 30,940,244
------------
44,073,035
------------
INDIA .1%
Essar Steel Ltd., 144A, FRN, 8.8763%, 7/31/05............... 1,240,000 452,600
------------
</TABLE>
11
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT* VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ITALY 7.3%
Buoni Poliennali del Tesoro:
8.75%, 7/01/06............................................ 11,372,000EUR $ 12,376,670
6.75%, 7/01/07............................................ 6,231,000EUR 6,303,599
Government of Italy, 10.50%, 4/01/05........................ 33,730,000EUR 37,547,396
------------
56,227,665
------------
MEXICO 5.5%
Nacional Financiera SNC, 10.625%, 11/22/01.................. 2,500,000 2,595,698
United Mexican States:
9.875%, 1/15/07........................................... 12,580,000 13,470,034
8.625%, 3/12/08........................................... 6,960,000 7,040,040
11.375%, 9/15/16.......................................... 16,490,000 19,330,403
------------
42,436,175
------------
NETHERLANDS 4.2%
Cellco Finance NV, 15.00%, 8/01/05.......................... 11,460,000 10,136,943
Government of Netherlands:
7.75%, 3/01/05............................................ 14,853,000EUR 15,217,280
5.75%, 2/15/07............................................ 7,833,000EUR 7,603,721
------------
32,957,944
------------
NEW ZEALAND 1.8%
Government of New Zealand, 8.00%, 11/15/06.................. 29,503,000NZD 13,947,057
------------
PANAMA .7%
Republic of Panama, 8.875%, 9/30/27......................... 6,070,000 5,284,694
------------
SOUTH KOREA 2.9%
Hanvit Bank, 144A, 12.75%, 3/01/10.......................... 7,720,000 7,893,700
Republic of Korea, 8.875%, 4/15/08.......................... 12,980,000 14,342,900
------------
22,236,600
------------
SPAIN 3.4%
Government of Spain:
10.15%, 1/31/06........................................... 12,536,000EUR 14,208,958
8.80%, 4/30/06............................................ 11,229,000EUR 12,190,058
------------
26,399,016
------------
SWEDEN 3.4%
Kingdom of Sweden, 10.25%, 5/05/03.......................... 234,800,000SEK 26,462,733
------------
TURKEY 6.4%
Republic of Turkey:
Reg S, 10.00%, 9/19/07.................................... 3,938,000 3,416,412
12.375%, 6/15/09.......................................... 26,310,000 23,021,250
11.875%, 1/15/30.......................................... 28,650,000 23,170,688
------------
49,608,350
------------
</TABLE>
12
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2001 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT* VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
UNITED KINGDOM 2.7%
United Kingdom, 8.50%, 7/16/07.............................. 12,227,000GBP $ 20,902,076
------------
UNITED STATES 15.5%
BP America Inc., 10.875%, 8/01/01........................... 10,000,000CAD 6,676,901
Fannie Mae, 5.25%, 1/15/09.................................. 15,844,000 15,492,263
Federal Home Loan Mortgage Corp., 5.375%, 3/01/01........... 1,700,000 1,700,000
U.S. Treasury Bonds:
6.375%, 8/15/27........................................... 16,910,000 18,875,872
5.25%, 11/15/28........................................... 37,276,000 35,843,073
5.25%, 2/15/29............................................ 3,010,000 2,895,933
U.S. Treasury Note, 7.875%, 11/15/04........................ 34,449,000 38,152,302
------------
119,636,344
------------
VENEZUELA 6.5%
Republic of Venezuela, 9.25%, 9/15/27....................... 61,505,000 42,842,075
Venezuela Front Load Interest Reduction Bond, A, FRN,
7.625%, 3/31/07........................................... 8,976,080 7,612,838
------------
50,454,913
------------
TOTAL LONG TERM INVESTMENTS (COST $823,973,463)............. 733,428,850
------------
SHORT TERM INVESTMENTS (COST $16,255,778) 2.1%
Franklin Institutional Fiduciary Trust Money Market
Portfolio................................................. 16,255,778 16,255,778
------------
TOTAL INVESTMENTS (COST $840,229,241) 96.9%................. 749,684,628
OTHER ASSETS, LESS LIABILITIES 3.1%......................... 23,819,581
------------
TOTAL NET ASSETS 100.0%..................................... $773,504,209
============
</TABLE>
CURRENCY ABBREVIATIONS:
AUD -- Australian Dollar
CAD -- Canadian Dollar
DKK -- Danish Krone
EUR -- European Unit
GBP -- British Pound
NZD -- New Zealand Dollar
SEK -- Swedish Krona
*Securities denominated in U.S. dollars unless otherwise indicated.
See Notes to Financial Statements.
13
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 2001 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $840,229,241).... $749,684,628
Interest receivable........................................ 24,939,192
------------
Total assets.......................................... 774,623,820
------------
Liabilities:
Payable to affiliates...................................... 386,180
Distributions to shareholders.............................. 345,045
Accrued expenses........................................... 388,386
------------
Total liabilities..................................... 1,119,611
------------
Net assets, at value........................................ $773,504,209
============
Net assets consist of:
Undistributed net investment income........................ $ (30,448)
Net unrealized depreciation................................ (90,386,410)
Accumulated net realized loss.............................. (90,306,571)
Capital shares............................................. 954,227,638
------------
Net assets, at value........................................ $773,504,209
============
Net asset value per share ($773,504,209 / 109,243,000 shares
outstanding).............................................. $7.08
============
</TABLE>
See Notes to Financial Statements.
14
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
Dividends.................................................. $ 19,681
Interest................................................... 33,779,919
------------
Total investment income............................... $ 33,799,600
Expenses:
Management fees (Note 3)................................... 1,969,569
Administrative fees (Note 3)............................... 520,576
Transfer agent fees........................................ 140,376
Custodian fees............................................. 61,000
Registration and filing fees............................... 51,200
Professional fees.......................................... 26,000
Directors' fees and expenses............................... 29,000
Other...................................................... 2,400
------------
Total expenses........................................ 2,800,121
------------
Net investment income........................... 30,999,479
------------
Realized and unrealized gains (losses):
Net realized loss from:
Investments............................................... (21,206,654)
Foreign currency transactions............................. (776,542)
------------
Net realized loss..................................... (21,983,196)
Net unrealized appreciation on:
Investments............................................... 19,983,253
Translation of assets and liabilities denominated in
foreign currencies...................................... 775,079
------------
Net unrealized appreciation........................... 20,758,332
------------
Net realized and unrealized loss............................ (1,224,864)
------------
Net increase in net assets resulting from operations........ $ 29,774,615
============
</TABLE>
See Notes to Financial Statements.
15
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 2001 YEAR ENDED
(UNAUDITED) AUGUST 31, 2000
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 30,999,479 $ 67,987,266
Net realized loss from investments and foreign currency
transactions............................................. (21,983,196) (51,566,893)
Net unrealized appreciation (depreciation) on investments
and translation of assets and liabilities denominated in
foreign currencies....................................... 20,758,332 (17,392)
---------------------------------------
Net increase in net assets resulting from operations.... 29,774,615 16,402,981
Distributions to shareholders from net investment income... (31,029,927) (68,751,105)
Capital share transactions (Note 2):....................... (22,362,140) (13,318,551)
---------------------------------------
Net decrease in net assets.............................. (23,617,452) (65,666,675)
Net assets:
Beginning of period........................................ 797,121,661 862,788,336
---------------------------------------
End of period.............................................. $773,504,209 $797,121,661
=======================================
Undistributed net investment income included in net assets:
End of period.............................................. $ (30,448) $ --
=======================================
</TABLE>
See Notes to Financial Statements.
16
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Global Income Fund, Inc. (the Fund) is registered under the Investment
Company Act of 1940 as a closed-end, non-diversified investment company. The
Fund seeks high current income, with a secondary objective of capital
appreciation. Under normal market conditions, the Fund invests primarily in a
portfolio of debt securities of U.S. and foreign issuers including emerging
markets. The following summarizes the Fund's significant accounting policies.
a. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Directors.
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 and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
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.
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 currency denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
c. INCOME TAXES:
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
17
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
d. 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.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Distributions to shareholders are recorded on the ex-dividend date.
e. FORWARD EXCHANGE CONTRACTS:
The Fund may enter into forward exchange contracts to hedge against foreign
exchange risks. These contracts are valued daily and the Fund's equity therein
is included in the Statement of Assets and Liabilities. Realized and unrealized
gains and losses are included in the Statement of Operations.
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 expense during the reporting period. Actual results could differ from those
estimates.
g. AUDIT GUIDE:
In November 2000, a revised AICPA Audit and Accounting Guide, Audits of
Investment Companies, was issued, and is effective for fiscal years beginning
after December 15, 2000. The revised Guide will require the Fund to amortize all
premium and discount on fixed-income securities. Such amortization will be
included in net investment income but will not impact the net assets or the
distributions of the Fund. The Fund estimates that the initial adjustment
required upon adoption of premium and discount amortization will decrease the
recorded cost of its investments by approximately $25,684,829.
2. CAPITAL STOCK
On February 21, 1997, the Board of Directors of the Fund authorized management
to implement an open-market share repurchase program pursuant to which the Fund
may purchase, from time to time, up to 12 million shares of the Fund's common
stock in open-market transactions, at the discretion of management
(approximately 10% of the shares outstanding at the time the program was
initially implemented). In May 2000, the Board of Directors removed the 10%
limitation on share repurchases in order to give management greater flexibility
to engage in an aggressive share repurchase program.
At February 28, 2001, there were 200,000,000 shares authorized ($0.01 par
value). During the period ended February 28, 2001, 3,683,700 shares were
repurchased for $22,362,140. The weighted average discount of market
18
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Notes to Financial Statements (unaudited) (continued)
2. CAPITAL STOCK (CONT.)
price to net asset value of shares repurchased during the period ended February
28, 2001 was 11%. During the year ended August 31, 2000, 2,128,700 shares were
repurchased for $13,318,551. Through February 28, 2001 the Fund had repurchased
a total of 11,210,400 shares.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton
Investment Counsel, LLC (TIC) and Franklin Templeton Services, LLC (FT
Services), the Fund's investment manager and administrative manager,
respectively.
The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (the Sweep Money Fund) which is managed by Franklin Advisers Inc. The
Fund earned $19,681 of dividend income from its investment in the Sweep Money
Fund.
The Fund pays an investment management fee to TIC based on the average daily net
assets of the Fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
-----------------------------------------------------------------
<S> <C>
0.55% First $200 million
0.50% Over $200 million
</TABLE>
Management fees were reduced on assets invested in the Sweep Money Fund.
The Fund pays an administrative fee to FT Services based on the average daily
net assets of the Fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
-----------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million
</TABLE>
4. INCOME TAXES
At February 28, 2001, the net unrealized depreciation based on the cost of
investments for income tax purposes of $850,640,214 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 4,787,953
Unrealized depreciation..................................... (105,743,539)
-------------
Net unrealized depreciation................................. $(100,955,586)
=============
</TABLE>
19
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Notes to Financial Statements (unaudited) (continued)
4. INCOME TAXES (CONT.)
Net investment income and net realized capital gains differ for financial
statement and tax purposes primarily due to differing treatments of wash sales,
losses realized subsequent to October 31 on the sale of securities and foreign
currencies, and foreign currency gains/losses on the sale of debt instruments.
At August 31, 2000, the Fund had tax basis capital losses of $7,992,348, which
may be carried over to offset future capital gains. Such losses expire as August
31, 2008.
At August 31, 2000, the Fund had deferred capital and currency losses occurring
subsequent to October 31, 1999 of $16,880,978 and $27,575,276, respectively. For
tax purposes, such losses will be reflected in the year ending August 31, 2001.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended February 28, 2001 aggregated $317,369,143 and $356,576,277,
respectively.
20
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Annual Meeting of Shareholders, February 26, 2001
An Annual Meeting of Shareholders of the Fund was held at the Tower Club, Bank
of America Building, One Financial Plaza, Ft. Lauderdale, Florida, on February
26, 2001. The purpose of the meeting was to elect four Directors of the Fund; to
ratify the selection of PricewaterhouseCoopers LLP as the Fund's independent
auditors for the fiscal year ending August 31, 2001; and to authorize the
proxyholders, in their discretion, to vote upon such other matters that may
properly come before the meeting or any adjournments of the meeting. At the
meeting, the following persons were elected by the shareholders to serve as
Directors of the Fund: Frank J. Crothers, Charles B. Johnson, Betty P. Krahmer
and Fred R. Millsaps.* Shareholders also ratified the selection of
PricewaterhouseCoopers LLP to serve as the Fund's independent auditors for the
fiscal year ending August 31, 2001. No other business was transacted at the
meeting.
The results of the voting at the Annual Meeting are as follows:
1. The election of four (4) Directors:
<TABLE>
<CAPTION>
% OF % OF % OF % OF
TERM EXPIRING 2004: FOR OUTSTANDING SHARES VOTED SHARES WITHHELD OUTSTANDING SHARES VOTED SHARES
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frank J. Crothers....... 101,328,868 91.97% 97.79% 2,294,475 2.08% 2.21%
Charles B. Johnson...... 101,457,838 92.08% 97.91% 2,165,505 1.97% 2.09%
Betty P. Krahmer........ 101,461,093 92.09% 97.91% 2,162,250 1.96% 2.09%
Fred R. Millsaps........ 101,182,674 91.83% 97.64% 2,440,669 2.22% 2.36%
</TABLE>
2. The ratification of the selection of PricewaterhouseCoopers LLP as
independent auditors of the Fund for the fiscal year ending August 31, 2001:
<TABLE>
<CAPTION>
SHARES % OF % OF
VOTED OUTSTANDING SHARES VOTED SHARES
-----------------------------------------------------------------------
<S> <C> <C> <C>
For..................... 102,193,611 92.75% 98.62%
Against................. 516,192 0.47% 0.50%
Abstain................. 913,540 0.83% 0.88%
-----------------------------------------------------------------------
Total................... 103,623,343 94.05% 100.00%
</TABLE>
3. The transaction of any other business that may properly come before the
meeting or any adjournments thereof:
<TABLE>
<CAPTION>
SHARES % OF % OF
VOTED OUTSTANDING SHARES VOTED SHARES
-----------------------------------------------------------------------
<S> <C> <C> <C>
For..................... 93,120,019 84.52% 89.86%
Against................. 7,837,564 7.11% 7.57%
Abstain................. 2,665,760 2.42% 2.57%
-----------------------------------------------------------------------
Total................... 103,623,343 94.05% 100.00%
</TABLE>
*Harris J. Ashton, Nicholas F. Brady, S. Joseph Fortunato, Andrew H. Hines, Jr.,
Edith E. Holiday, Gordon S. Macklin and Constantine D. Tseretopoulos are
Directors of the Fund who are currently serving and whose terms of office
continued after the Annual Meeting of Shareholders.
21
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
Dividend Reinvestment and Cash Purchase Plan
The Fund offers a Dividend Reinvestment and Cash Purchase Plan (the "Plan") with
the following features:
Shareholders must affirmatively elect to participate in the Plan; Stock
dividends and capital gains distributions will be reinvested automatically;
Mellon Investor Services LLC, P.O. Box 3338, South Hackensack, NJ 07606-1938,
will provide additional Plan information upon request.
Whenever the Fund declares dividends in either cash or common stock of the Fund,
if the market price is equal to or exceeds net asset value at the valuation
date, the participant will receive the dividends entirely in stock at a price
equal to the net asset value, but not less than 95% of the then current market
price of the Fund's shares. If the market price is lower than net asset value or
if dividends and/or capital gains distributions are payable only in cash, the
participant will receive shares purchased on the New York Stock Exchange or
otherwise on the open market.
A participant has the option of submitting additional payments to Mellon
Securities Trust Company (the "Plan Agent"), in any amounts of at least $100, up
to a maximum of $5,000 per month, for the purchase of Fund shares for his or her
account. These payments shall be made by check or money order payable to "Mellon
Securities Trust Co." and sent to Mellon Investor Services LLC, P.O. Box 382009,
Pittsburgh, PA 15250-8009, Attn: Templeton Global Income Fund, Inc. The Plan
Agent shall apply such payments (less a $5.00 service charge and less a pro rata
share of trading fees) to purchases of Fund shares on the open market.
The automatic reinvestment of dividends and/or capital gains does not relieve
the participant of any income tax that may be payable on dividends or
distributions.
The participant may withdraw from the Plan without penalty at any time by
written notice to the Plan Agent sent to Mellon Investor Services LLC, P.O. Box
3338, South Hackensack, NJ 07606-1938. Upon withdrawal, the participant will
receive, without charge, stock certificates issued in the participant's name for
all full shares held by the Plan Agent; or, if the participant wishes, the Plan
Agent will sell the participant's shares and send the proceeds, less a service
charge of $5.00 and less trading fees.
Whenever shares are purchased on the New York Stock Exchange or otherwise on the
open market, each participant will pay a pro rata portion of trading fees.
Trading fees will be deducted from amounts to be invested.
22
PAGE
TEMPLETON GLOBAL INCOME FUND, INC.
SHAREHOLDER INFORMATION
Shares of Templeton Global Income Fund, Inc. are traded on the New York Stock
Exchange under the symbol "GIM." The Fund's shares are also listed and traded on
the Pacific Exchange. Information about the net asset value and the market price
is published each Monday in the Wall Street Journal, weekly in Barron's and each
Saturday in The New York Times and other newspapers. Daily market prices for the
Fund's shares are published in the New York Stock Exchange Composite
Transactions section of newspapers.
For current information about dividends and shareholder accounts, call
1-800/416-5585. Registered shareholders can now access their Fund account
on-line with Investor ServiceDirect(SM). For information go to Mellon Investor
Services' web site at https://vault.mellon-investor.com/isd and follow the
instructions.
The daily closing net asset value as of the previous business day may be
obtained when available by calling Franklin Templeton Fund Information after 7
a.m. pacific time any business day at 1-800/DIAL BEN(R) (1-800/342-5236). The
Fund's net asset value and dividends are also listed on the NASDAQ Stock Market,
Inc.'s Mutual Fund Quotation Service ("NASDAQ MFQS").
Shareholders not receiving copies of the Reports to Shareholders because their
shares are registered in the name of a broker or a custodian can request that
they be added to the Fund's mailing list, by writing Templeton Global Income
Fund, Inc., 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, FL 33733-8030.
23
PAGE
SEMIANNUAL REPORT
TEMPLETON GLOBAL INCOME FUND, INC.
100 Fountain Parkway
P.O. Box 33030
St. Petersburg, FL 33733-8030
TRANSFER AGENT
Mellon Investor Services LLC
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
1-800/416-5585
www.mellon-investor.com
FUND INFORMATION
1-800/342-5236
Investors should be aware that the value of investments made for the Fund may go
down as well as up. Like any investment in securities, the value of the Fund's
portfolio will be subject to the risk of loss from market, currency, economic,
political and other factors. The Fund and its investors are not protected from
such losses by the Investment Manager. Therefore, investors who cannot accept
this risk should not invest in shares of the Fund.
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
determined by the presence of a regular beeping tone.
TLGIM S01 04/01 [RECYCLED LOGO] Printed on recycled paper
</TEXT>
</DOCUMENT>