-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wopg1NUMqUQ8ZYr4l0qYKAF02GKuh1vyPd97jhU+ElSOQ7Xs04AQgCzLlEjQZAGX 5PihzEFRFAP4qW7FvcE8ug== 0000828803-09-000011.txt : 20090430 0000828803-09-000011.hdr.sgml : 20090430 20090430104450 ACCESSION NUMBER: 0000828803-09-000011 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20090228 FILED AS OF DATE: 20090430 DATE AS OF CHANGE: 20090430 EFFECTIVENESS DATE: 20090430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLETON GLOBAL INCOME FUND CENTRAL INDEX KEY: 0000828803 IRS NUMBER: 222864496 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05459 FILM NUMBER: 09781659 BUSINESS ADDRESS: STREET 1: BROWARD FINANCIAL CENTRE STREET 2: 500 EAST BROWARD BLVD., SUITE 2100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33394-3091 BUSINESS PHONE: 9545277500 MAIL ADDRESS: STREET 1: BROWARD FINANCIAL CENTRE STREET 2: 500 EAST BROWARD BLVD., SUITE 2100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33394-3091 FORMER COMPANY: FORMER CONFORMED NAME: TEMPLETON GLOBAL INCOME FUND INC DATE OF NAME CHANGE: 19920703 N-CSRS 1 gim_ncsrs022809.txt GIM NCSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSRS CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-05459 ------------ TEMPLETON GLOBAL INCOME FUND --------------------------------- (Exact name of registrant as specified in charter) 500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091 --------------------------------------------------------------------- (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: (954) 527-7500 --------------- Date of fiscal year end: 8/31 ------ Date of reporting period: 2/28/09 --------- ITEM 1. REPORTS TO STOCKHOLDERS. FEBRUARY 28, 2009 SEMIANNUAL REPORT (GRAPHIC) FIXED INCOME TEMPLETON GLOBAL INCOME 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 semiannual report Contents SEMIANNUAL REPORT Templeton Global Income Fund ....................... 1 Performance Summary ................................ 7 Important Notice to Shareholders ................... 8 Financial Highlights and Statement of Investments .. 9 Financial Statements ............................... 16 Notes to Financial Statements ...................... 19 Semiannual Meeting of Shareholders ................. 32 Dividend Reinvestment and Cash Purchase Plan ....... 33 Shareholder Information ............................ 35
Semiannual Report Templeton Global Income Fund YOUR FUND'S GOALS AND MAIN INVESTMENTS: Templeton Global Income Fund seeks high, current income, with a secondary goal of capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets in income-producing securities, including debt securities of U.S. and foreign issuers, including emerging markets. PORTFOLIO BREAKDOWN Based on Total Net Assets as of 2/28/09 (PIE CHART) Government Bonds ........................... 75.0% Municipal Bonds ............................ 4.0% Short-Term Investments & Other Net Assets .. 21.0%
Dear Shareholder: This semiannual report for Templeton Global Income Fund covers the period ended February 28, 2009. 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 10. Semiannual Report | 1 PERFORMANCE OVERVIEW For the six months under review, Templeton Global Income Fund had cumulative total returns of -12.61% based on market price and -1.90% based on net asset value. The Fund underperformed the J.P. Morgan (JPM) Global Government Bond Index (GGBI), which had cumulative total returns of +5.03% in local currency terms and +1.14% in U.S. dollar terms for the same period.(1) You can find the Fund's long-term performance data in the Performance Summary on page 7. ECONOMIC AND MARKET OVERVIEW The period under review encompassed one of the most challenging periods in decades for the global economy and financial markets. The series of economic and financial shocks culminated in a systemic failure of U.S. financial institutions and led to an intensified worldwide financial crisis. Rising uncertainty and risk aversion negatively impacted global capital flows with severe effects for global demand and trade and contributed to a series of bank bailouts in the U.S. and Europe. Global central banks reacted with aggressive interest rate reductions, and in some cases, moved toward unconventional monetary easing measures to increase liquidity by expanding central bank balance sheets. The commodity price-driven inflation shock from early 2008 unwound as global economic growth and asset prices deteriorated sharply. Lower inflation provided central banks worldwide with significant scope for reducing interest rates. During the period, the U.S. Federal Reserve Board (Fed) cut the federal funds target rate 175 basis points (bps; 100 bps equal one percentage point) to 0.25% and initiated an asset purchase program. While U.S. economic growth slowed in the fourth quarter of 2008 at a -0.8% rate year-over-year, job shedding and business spending retrenchment further weakened economic activity into 2009. The unemployment rate rose from 6.2% to 8.1% over the six-month period.(2) Eurozone economic activity weakened even more abruptly than in the U.S., contracting 1.2% year-over-year in fourth quarter 2008, as deleveraging's impact on investment activity contributed to a deepening recession.(3) The European Central Bank cut interest rates 225 bps to 2.00% in the six-month period and significantly stepped up liquidity operations to aid the (1.) Source: (C) 2009 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The JPM GGBI tracks total returns for liquid, fixed-rate, domestic government bonds with maturities greater than one year issued by developed countries globally. The index is unmanaged and includes reinvested interest. One cannot invest directly in an index, nor is an index representative of the Fund's portfolio. (2.) Source: Bureau of Labor Statistics. (3.) Source: Eurostat. 2 | Semiannual Report banking sector. In Asia, the Bank of Japan cut interest rates 40 bps to 0.10%, and the central bank of China cut 216 bps to 5.31%. Although Asia's economic growth slowed during the period, hampered by declining global trade, it was notably less severe than in the U.S. or Europe. For instance, China registered 6.8% economic growth year-over-year in the fourth quarter of 2008.(4) The world's largest economies also complemented central bank measures with large fiscal stimulus packages to address the crisis. In particular, China proposed fiscal measures for the next two years worth about 12% of 2009 gross domestic product to cushion the declines in investment activity and labor demand.(5) GEOGRAPHIC BREAKDOWN Based on Total Net Assets as of 2/28/09 (BAR CHART) Americas 28.1% Asia Pacific 28.0% Other Europe 15.0% Supranationals* 7.6% Middle East & Africa 4.4% EMU** 3.1% Other Net Assets 13.8%
* The Fund's supranational investments were denominated in the Japanese yen, Mexican peso, New Zealand dollar, Norwegian krone and Polish zloty. ** The Fund's EMU investment was in France. INVESTMENT STRATEGY We invest selectively in bonds around the world to generate income for the Fund, seeking opportunities while monitoring changes in interest rates, currency exchange rates and credit risks. MANAGER'S DISCUSSION The Fund's total return was influenced by various factors, including interest rate developments, currency movements and exposure to sovereign debt markets. INTEREST RATE STRATEGY The global backdrop of weak economic growth, disinflation and monetary easing was positive for developed global bond markets. However, increased risk aversion accompanied this environment, negatively impacting government bond yields in some non-developed markets. The Fund's performance during the six-month period reflected this divergence in the government bond market as our overall interest rate strategy contributed to the Fund's return but detracted from performance relative to the JPM GGBI. Although the Fund held exposure to eurozone government bonds, its underweighted position hampered performance relative to the JPM GGBI as German long-term bond yields fell during the period. Additionally, our lack of exposure to U.S. government bonds hurt the Fund as their long-term yields also fell. We continued to find other global bond markets more attractive than the U.S. given our assessment of prospects for economic recoupling of these economies to translate into increased monetary easing. We began to see examples of this in Chile and South Korea during the period under review. While the U.S. cut interest rates 175 bps during the period, effectively reaching the limits of using interest rates as a monetary tool, Chile cut 300 bps to 4.75% and South Korea 325 bps to 2.00%. Other countries such as Mexico and Indonesia each cut 75 bps to (4.) Source: National Bureau of Statistics (China). (5.) Source: International Monetary Fund. Semiannual Report | 3 7.50% and 8.25%. Although our Chilean and South Korean interest rate exposures benefited relative Fund performance, our exposures to Mexico and Indonesia detracted. We used this period of heightened volatility and forced selling to add to positions where we believed yields were dislocated from fundamentals. Despite the weak global growth environment and significant financial sector deleveraging that reduced inflation risk over the near term, we remained cautious toward the U.S. government bond market. We considered it a less attractive interest rate opportunity, and we remained concerned about the magnitude of fiscal easing, monetary measures and unwinding of global imbalances that could potentially reduce foreign participation in the U.S. market over the medium term. 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 and services 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. CURRENCY STRATEGY Heightened uncertainty during the reporting period benefited the U.S. dollar, which appreciated 13.15% against its major trading partners.(6) We viewed the U.S. dollar's recent strength as largely due to the global deleveraging process, which increased demand for the dollar, rather than fundamental U.S. economic strength. Although the Fund benefited from its U.S. dollar position, we actively managed the position and scaled down exposure to increase room for currencies that weakened sharply and, in our assessment, overshot fundamental value. We believed recent developments were not conducive to the U.S. dollar's longer-term strength given the Fed's aggressive money supply expansion, the largest planned fiscal deficits since World War II, the trend toward nationalizing many U.S. financial institutions, and foreigners' decreased interest in holding as many U.S. assets as they had in the past. Although recent fiscal and monetary actions prevented a collapse of the U.S. banking system and are crucial policy steps in dealing with the crisis, we believed they could have longer-term consequences such as higher taxes, lower growth, potential longer-term inflationary risks and a weaker U.S. dollar. Although a recessionary environment and financial distress were broadly felt across most countries, we sought to position the Fund for relative instead of absolute conditions as drivers of currency valuations. As a result, we positioned for Asian currencies' appreciation against those of highly leveraged developed countries that may have benefited from increased risk aversion but whose fundamentals were weak, specifically the U.S. dollar and the euro. Asian economic growth slowed, but less so than in the U.S. or Europe. We also believed that Asia's more limited financial and economic vulnerabilities could support currency performance over the medium term. The region has demonstrated its ability to generate positive current account surpluses despite declining exports. Additionally, Asian corporate and banking systems were less leveraged going into this crisis, partly a legacy of the late 1990s' financial (6.) Source: Federal Reserve H10 report. 4 | Semiannual Report crisis. Our strategy benefited performance relative to the JPM GGBI. For example, the Chinese yuan rose 15.84% against the euro and the Malaysian ringgit 6.10%.(7) In addition to relative fundamentals, we held significant exposure to the Japanese yen, which benefited from deleveraging and helped offset volatility realized in other parts of the portfolio. During the six-month period, the Japanese yen rose 28.57% against the euro and 10.92% against the U.S. dollar.(7) The deepening European recession was complicated by the scale of leverage in the banking and corporate sectors. Additionally, the European Monetary Union's constraints limited policy response. Overall, the Fund benefited from its net negative position in the euro, which declined 13.73% against the U.S. dollar.(7) Exposure to other European currencies detracted, however, due to increased concerns of a hard landing in eastern Europe given the region's dependence on capital flows amid deleveraging. There was insufficient differentiation among currencies during the period given vast fundamental differences among countries across the region. Against the euro, the Polish zloty fell 28.70% and the Swedish krona fell 17.24%.(7) Other currencies that hampered Fund performance included the Brazilian real and the Indonesian rupiah, which fell 31.25% and 23.62% against the U.S. dollar.(7) Our currency hedging strategies on underlying bond positions helped protect the Fund from downside risk to some degree. For example, the Fund largely avoided the negative impact of the Mexican peso's 31.79% and South Korean won's 28.99% depreciation against the U.S. dollar over the period.(7) We began to unwind these currency hedges later in the reporting period after significant weakening in the exchange rates, although we were exposed to some currency weakness in the process. GLOBAL SOVEREIGN DEBT AND CREDIT STRATEGY In the credit sector, the Fund invested in emerging market sovereign debt and U.S. municipal debt. These investments typically compensate for greater credit risk by offering higher yields relative to U.S. and European benchmark treasury yields. U.S. dollar-denominated emerging market debt had a six-month return of -12.75% as measured by the JPM Emerging Markets Bond Index Global (EMBIG).(8) Sovereign interest rate spreads rose from 323 bps at the beginning of the reporting period to 672 bps by period-end, as emerging market credit yields climbed sharply while the U.S. Treasury yield curve shifted downward due to Fed rate cuts.(8) The Fund held limited exposure to sovereign CURRENCY BREAKDOWN 2/28/09
% OF TOTAL NET ASSETS ---------- AMERICAS 42.8% U.S. Dollar 35.6% Brazilian Real 6.3% Peruvian Nuevo Sol 3.4% Mexican Peso 1.9% Chilean Peso* -4.4% EUROPE 39.6% Euro 41.7% Polish Zloty 5.8% Norwegian Krone 1.7% British Pound Sterling 0.4% Swedish Krona* -0.1% Swiss Franc* -3.1% Russian Ruble* -6.8% ASIA PACIFIC 14.1% South Korean Won 11.3% Singaporean Dollar 10.3% Australian Dollar 9.1% New Zealand Dollar 9.1% Indonesian Rupiah 5.1% Taiwanese Dollar 0.1% Kazakhstani Tenge* -1.0% Vietnamese Dong* -1.1% Indian Rupee* -1.5% Japanese Yen* -4.1% Chinese Yuan* -9.8% Malaysian Ringgit* -13.4% MIDDLE EAST & AFRICA 3.5% Egyptian Pound 3.5%
* Holding is a negative percentage because of the Fund's holdings of forward currency exchange contracts. (7.) Source: Exshare (via Compustat via Factset). (8.) Source: (C) 2009 Morningstar. The JPM EMBIG tracks total returns for U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans and Eurobonds. Semiannual Report | 5 credit risk at the beginning of the reporting period and used market volatility to build positions in high-quality, emerging market sovereign credit where we believed default risk offered value because of increased uncertainty and forced selling during this global deleveraging period. Several positions detracted from relative performance as sovereign spreads continued to widen as we built positions. The financial market turbulence also negatively impacted U.S. municipal bond yields during the period. Municipal bonds historically traded at yields near or at a premium to U.S. government bond yields given the asset class's tax advantage. By period-end, the Barclays Capital (BC) Municipal Bond Index yielded 125 bps over U.S. 10-year Treasury bond yields.9 Spread widening in the period reflected increased investor concern over municipal governments' access to financing. We sought to take advantage of the dislocation in municipal bond valuations relative to fundamentals, particularly given prospects for higher taxes. Fund exposure to this sector contributed positively to performance relative to the index for the period. Thank you for your continued participation in Templeton Global Income Fund. We look forward to serving your future investment needs. Sincerely, (PHOTO OF MICHAEL HASENSTAB) /s/ Michael Hasenstab Michael Hasenstab, Ph.D. Portfolio Manager Templeton Global Income Fund THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF FEBRUARY 28, 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. (9.) Source: (C) 2009 Morningstar. The BC Municipal Bond Index is a market-value-weighted index engineered for the long term tax-exempt bond market. To be included in the index, bonds must be fixed rate, have at least one year to final maturity, and rated investment-grade (Baa3/BBB- or higher) by at least two of the following ratings agencies: Moody's, S&P or Fitch. 6 | Semiannual Report Performance Summary as of 2/28/09 Your dividend income will vary depending on dividends or interest paid by securities in the Fund's portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities. Total return reflects reinvestment of the Fund's dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not reflect any sales charges paid at inception or brokerage commissions paid on secondary market purchases. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gains distributions, if any, or any realized gains on the sale of Fund shares. PRICE AND DISTRIBUTION INFORMATION
SYMBOL: GIM CHANGE 2/28/09 8/31/08 - ----------- ------ ------- ------- Net Asset Value (NAV) -$1.23 $7.58 $8.81 Market Price (NYSE) -$2.13 $6.84 $8.97 DISTRIBUTIONS (9/1/08-2/28/09) Dividend Income $1.0907
PERFORMANCE
6-MONTH 1-YEAR 5-YEAR 10-YEAR ------- ------- ------- -------- Cumulative Total Return(1) Based on change in NAV(2) -1.90% -4.85% +43.68% +142.31% Based on change in market price(3) -12.61% -14.88% +31.68% +156.84% Average Annual Total Return(1) Based on change in NAV(2) -1.90% -4.85% +7.52% +9.25% Based on change in market price(3) -12.61% -14.88% +5.66% +9.89%
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. ENDNOTES CHANGES IN INTEREST RATES WILL AFFECT THE VALUE OF THE FUND'S PORTFOLIO AND ITS SHARE PRICE AND YIELD. BOND PRICES GENERALLY MOVE IN THE OPPOSITE DIRECTION OF INTEREST RATES. THUS, AS PRICES OF BONDS IN THE FUND ADJUST TO A RISE IN INTEREST RATES, THE FUND'S SHARE PRICE MAY DECLINE. SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY FLUCTUATIONS, ECONOMIC INSTABILITY AND POLITICAL DEVELOPMENTS. INVESTMENTS IN DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THEIR RELATIVELY SMALL SIZE AND LESSER LIQUIDITY. THE FUND'S USE OF FOREIGN CURRENCY TECHNIQUES INVOLVES SPECIAL RISKS AS SUCH TECHNIQUES MAY NOT ACHIEVE THE ANTICIPATED BENEFITS AND/OR MAY RESULT IN LOSSES TO THE FUND. ALSO, AS A NONDIVERSIFIED INVESTMENT COMPANY, THE FUND MAY INVEST IN A RELATIVELY SMALL NUMBER OF ISSUERS AND, AS A RESULT, BE SUBJECT TO A GREATER RISK OF LOSS WITH RESPECT TO ITS PORTFOLIO SECURITIES. (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. (2.) Assumes reinvestment of distributions based on net asset value. (3.) Assumes reinvestment of distributions based on the dividend reinvestment and cash purchase plan. Semiannual Report | 7 Important Notice to Shareholders SHARE REPURCHASE PROGRAM The Fund's Board previously authorized management to implement an open-market share repurchase program pursuant to which the Fund may purchase Fund shares, from time to time, in open-market transactions, at the discretion of management. This authorization remains in effect. 8 | Semiannual Report Templeton Global Income Fund FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED AUGUST 31, FEBRUARY 28, 2009 -------------------------------------------------------------- (UNAUDITED) 2008 2007 2006 2005 2004 ----------------- ---------- ---------- ---------- ---------- ---------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ...... $ 8.81 $ 8.95 $ 8.93 $ 9.02 $ 8.77 $ 8.18 -------- ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment income(a) ............... 0.21 0.44 0.40 0.37 0.39 0.41 Net realized and unrealized gains (losses) ............................. (0.35) 0.49 0.52 0.33 0.49 0.72 -------- ---------- ---------- ---------- ---------- ---------- Total from investment operations .......... (0.14) 0.93 0.92 0.70 0.88 1.13 -------- ---------- ---------- ---------- ---------- ---------- Less distributions from net investment income and net foreign currency gains .. (1.09) (1.07) (0.90) (0.79) (0.63) (0.54) -------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ............ $ 7.58 $ 8.81 $ 8.95 $ 8.93 $ 9.02 $ 8.77 ======== ========== ========== ========== ========== ========== Market value, end of period(b) ............ $ 6.84 $ 8.97 $ 9.01 $ 9.15 $ 8.85 $ 8.56 ======== ========== ========== ========== ========== ========== Total return (based on market value per share)(c) .......................... (12.61)% 12.25% 8.63% 13.39% 10.61% 14.69% RATIOS TO AVERAGE NET ASSETS(d) Expenses(e) ............................... 0.74% 0.74% 0.75% 0.80% 0.76% 0.77% Net investment income ..................... 5.05% 4.82% 4.45% 4.16% 4.22% 4.66% SUPPLEMENTAL DATA Net assets, end of period (000's) ......... $993,785 $1,155,981 $1,170,414 $1,161,850 $1,172,240 $1,136,976 Portfolio turnover rate ................... 42.77% 64.44% 49.24% 49.20% 41.81% 48.85%
(a) Based on average daily shares outstanding. (b) Based on the last sale on the New York Stock Exchange. (c) Total return is not annualized for periods less than one year. (d) Ratios are annualized for periods less than one year. (e) Benefit of expense reduction rounds to less than 0.01%. The accompanying notes are an integral part of these financial statements. Semiannual Report | 9 Templeton Global Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED)
PRINCIPAL AMOUNT(a) VALUE ------------------- ------------ BONDS 75.0% ARGENTINA 2.7% (b, c) Government of Argentina, senior bond, FRN, 1.683%, 8/03/12 ............. 98,977,000 $ 26,761,541 ------------ AUSTRALIA 6.8% New South Wales Treasury Corp., senior note, 5.50%, 3/01/17 ............ 36,971,000 AUD 23,707,798 Queensland Treasury Corp., 13, 6.00%, 8/14/13 .................................................. 38,901,000 AUD 26,110,727 17, 6.00%, 9/14/17 .................................................. 12,395,000 AUD 8,175,536 (d) 144A, 7.125%, 9/18/17 ............................................... 16,480,000 NZD 9,525,650 ------------ 67,519,711 ------------ BRAZIL 6.3% Nota Do Tesouro Nacional, 10.082%, 1/01/12 .................................................... 36,035(e) BRL 14,504,716 10.082%, 1/01/14 .................................................... 15,000(e) BRL 5,718,940 10.082%, 1/01/17 .................................................... 54,900(e) BRL 19,885,746 (f) Index Linked, 6.00%, 5/15/15 ........................................... 9,400(e) BRL 6,682,958 (f) Index Linked, 6.00%, 5/15/45 ........................................... 23,625(e) BRL 15,687,923 ------------ 62,480,283 ------------ CANADA 1.2% Province of Manitoba, 6.375%, 9/01/15 .................................. 14,800,000 NZD 7,849,574 Province of Ontario, 6.25%, 6/16/15 .................................... 8,460,000 NZD 4,414,907 ------------ 12,264,481 ------------ FRANCE 3.1% Government of France, 4.00%, 4/25/18 ................................... 23,500,000 EUR 30,696,630 ------------ HUNGARY 1.8% Government of Hungary, 3.50%, 7/18/16 ...................................................... 635,000 EUR 618,275 4.375%, 7/04/17 ..................................................... 3,415,000 EUR 3,457,107 5.75%, 6/11/18 ...................................................... 10,810,000 EUR 11,996,884 senior note, 3.875%, 2/24/20 ........................................ 2,150,000 EUR 1,960,778 ------------ 18,033,044 ------------ INDONESIA 8.4% Government of Indonesia, 11.00%, 10/15/14 .................................................... 3,500,000,000 IDR 266,590 9.50%, 6/15/15 ...................................................... 34,890,000,000 IDR 2,431,816 10.75%, 5/15/16 ..................................................... 87,035,000,000 IDR 6,338,733 FR19, 14.25%, 6/15/13 ............................................... 84,050,000,000 IDR 7,349,113 FR20, 14.275%, 12/15/13 ............................................. 81,836,000,000 IDR 7,189,685 FR31, 11.00%, 11/15/20 .............................................. 335,739,000,000 IDR 22,980,462 FR34, 12.80%, 6/15/21 ............................................... 59,666,000,000 IDR 4,569,580 FR35, 12.90%, 6/15/22 ............................................... 32,530,000,000 IDR 2,498,132 FR36, 11.50%, 9/15/19 ............................................... 23,000,000,000 IDR 1,651,085 FR42, 10.25%, 7/15/27 ............................................... 25,430,000,000 IDR 1,549,575 FR43, 10.25%, 7/15/22 ............................................... 8,450,000,000 IDR 537,471
10 | Semiannual Report Templeton Global Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE ------------------- ------------ BONDS (CONTINUED) INDONESIA (CONTINUED) Government of Indonesia, (continued) FR46, 9.50%, 7/15/23 ................................................ 41,250,000,000 IDR $ 2,436,093 FR47, 10.00%, 2/15/28 ............................................... 52,895,000,000 IDR 3,134,843 FR48, 9.00%, 9/15/18 ................................................ 18,520,000,000 IDR 1,155,568 (d) senior bond, 144A, 6.875%, 1/17/18 .................................. 2,530,000 1,973,400 (d) senior bond, 144A, 8.50%, 10/12/35 .................................. 2,952,000 2,287,800 (d) senior bond, 144A, 6.625%, 2/17/37 .................................. 2,090,000 1,340,994 (d) senior bond, 144A, 7.75%, 1/17/38 ................................... 7,050,000 4,975,286 (g) senior bond, Reg S, 6.875%, 1/17/18 ................................. 2,240,000 1,747,200 (g) senior bond, Reg S, 8.50%, 10/12/35 ................................. 5,510,000 4,270,250 (g) senior bond, Reg S, 7.75%, 1/17/38 .................................. 3,310,000 2,335,914 ------------ 83,019,590 ------------ MALAYSIA 1.4% Government of Malaysia, 3.869%, 4/13/10 ..................................................... 7,500,000 MYR 2,062,909 3.702%, 2/25/13 ..................................................... 3,370,000 MYR 917,537 3.70%, 5/15/13 ...................................................... 1,290,000 MYR 350,535 3.461%, 7/31/13 ..................................................... 20,100,000 MYR 5,405,526 3.814%, 2/15/17 ..................................................... 19,530,000 MYR 5,130,706 ------------ 13,867,213 ------------ MEXICO 4.8% Government of Mexico, 8.00%, 12/07/23 ..................................................... 2,727,000(h) MXN 16,868,104 10.00%, 12/05/24 .................................................... 15,000(h) MXN 108,218 M 20, 7.50%, 6/03/27 ................................................ 3,058,000(h) MXN 17,731,682 senior bond, 5.95%, 3/19/19 ......................................... 13,260,000 12,832,365 ------------ 47,540,369 ------------ NEW ZEALAND 1.0% Government of New Zealand, 6.00%, 11/15/11 ............................. 18,273,000 NZD 9,741,601 ------------ PERU 3.4% Government of Peru, 9.91%, 5/05/15 ...................................................... 6,500,000 PEN 2,312,576 7.84%, 8/12/20 ...................................................... 32,200,000 PEN 10,266,758 Series 7, 8.60%, 8/12/17 ............................................ 61,545,000 PEN 20,742,341 ------------ 33,321,675 ------------ PHILIPPINES 0.1% (g) Government of the Philippines, Reg S, 9.125%, 2/22/10 .................. 770,000 EUR 1,000,883 ------------ POLAND 2.3% Government of Poland, 6.00%, 5/24/09 ...................................................... 27,500,000 PLN 7,533,485 5.75%, 9/23/22 ...................................................... 60,500,000 PLN 15,830,265 ------------ 23,363,750 ------------
Semiannual Report | 11 Templeton Global Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE ------------------- ------------ BONDS (CONTINUED) RUSSIA 6.4% Government of Russia, (d) 144A, 7.50%, 3/31/30 ................................................ 66,084,340 $ 58,319,430 (g) senior bond, Reg S, 7.50%, 3/31/30 .................................. 6,541,500 5,772,874 ------------ 64,092,304 ------------ SOUTH AFRICA 0.9% Government of South Africa, 5.25%, 5/16/13 ...................................................... 3,330,000 EUR 4,006,889 4.50%, 4/05/16 ...................................................... 1,829,000 EUR 1,909,225 senior note, 6.50%, 6/02/14 ......................................... 775,000 770,412 senior note, 5.875%, 5/30/22 ........................................ 2,500,000 2,175,000 ------------ 8,861,526 ------------ SOUTH KOREA 10.4% The Export-Import Bank of Korea, 5.125%, 3/16/15 ..................................................... 300,000 250,410 4.625%, 2/20/17 ..................................................... 205,000 EUR 191,917 (g) Reg S, 5.25%, 2/10/14 ............................................... 295,000 262,197 senior note, 8.125%, 1/21/14 ........................................ 995,000 1,020,139 Government of Korea, senior bond, 5.625%, 11/03/25 620,000 510,732 Korea Deposit Insurance Corp., 07-1, 5.57%, 9/14/12 ................................................ 7,200,000,000 KRW 4,812,065 08-1, 5.28%, 2/15/13 ................................................ 1,232,000,000 KRW 813,165 Korea Development Bank, 5.30%, 1/17/13 ...................................................... 800,000 736,238 senior note, 8.00%, 1/23/14 ......................................... 2,585,000 2,616,382 Korea Treasury Bond, 0475-1112, 4.75%, 12/10/11 .......................................... 19,300,000,000 KRW 12,890,127 0475-1203, 4.75%, 3/10/12 ........................................... 15,946,000,000 KRW 10,579,991 0525-1509, 5.25%, 9/10/15 ........................................... 4,000,000,000 KRW 2,669,102 0525-2703, 5.25%, 3/10/27 ........................................... 25,257,000,000 KRW 16,262,492 0550-1709, 5.50%, 9/10/17 ........................................... 57,067,000,000 KRW 38,258,133 0575-1809, 5.75%, 9/10/18 ........................................... 17,343,000,000 KRW 11,893,392 ------------ 103,766,482 ------------ (i) SUPRANATIONAL 7.6% European Bank for Reconstruction & Development, senior note, 5.10%, 6/12/09 ............................................................. 125,000,000 PLN 34,313,156 European Investment Bank, senior note, 4.50%, 5/15/13 .................. 113,650,000 NOK 16,954,432 Inter-American Development Bank, 1.90%, 7/08/09 ...................................................... 640,000,000 JPY 6,585,987 7.50%, 4/15/15 ...................................................... 8,000,000 NZD 4,613,898 6.00%, 12/15/17 ..................................................... 6,000,000 NZD 3,254,835 senior note, 7.50%, 12/05/24 ........................................ 185,000,000 MXN 9,914,032 ------------ 75,636,340 ------------ SWEDEN 4.4% Government of Sweden, 5.25%, 3/15/11 ................................... 366,355,000 SEK 44,013,075 ------------
12 | Semiannual Report Templeton Global Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE ------------------- ------------ BONDS (CONTINUED) VENEZUELA 2.0% Government of Venezuela, 10.75%, 9/19/13 ..................................................... 3,880,000 $ 2,696,600 (g) senior bond, Reg S, 5.375%, 8/07/10 ................................. 19,905,000 16,969,012 ------------ 19,665,612 ------------ TOTAL BONDS (COST $854,638,620)......................................... 745,646,110 ------------ MUNICIPAL BONDS 4.0% UNITED STATES AND U.S. TERRITORIES 4.0% Alabama Public Housing Authorities Capital Program Revenue, Series B, FSA Insured, 4.45%, 1/01/24 ......................................... 65,000 61,861 Bay Area Toll Authority Toll Bridge Revenue, San Francisco Bay Area, Refunding, Series F1, 5.00%, 4/01/39 ................................ 605,000 578,707 5.50%, 4/01/43 ...................................................... 295,000 298,770 Bexar County Hospital District GO, Certificates of Obligation, 5.00%, 2/15/32 ............................................................. 805,000 773,130 Bexar County Revenue, Venue Project, Refunding, Series A, BHAC Insured, 5.25%, 8/15/47 ............................................. 730,000 694,215 California State GO, Refunding, 5.125%, 4/01/33 ..................................................... 500,000 470,675 5.00%, 4/01/38 ...................................................... 205,000 184,953 Chicago Board of Education GO, Refunding, Series C, Assured Guaranty, 5.25%, 12/01/26 ..................................................... 1,810,000 1,862,707 Chicago GO, Project and Refunding, Series A, FSA Insured, 5.00%, 1/01/25 ............................................................. 475,000 483,764 District of Columbia University Revenue, Georgetown University, Refunding, Series D, BHAC Insured, 5.50%, 4/01/36 ................... 1,545,000 1,566,738 Energy Northwest Electric Revenue, Columbia Generating Station, Refunding, Series A, 5.00%, 7/01/24 ................................. 1,545,000 1,582,003 Florida State Hurricane Catastrophe Fund Finance Corp. Revenue, Series A, 4.25%, 7/01/14 ................................................... 2,375,000 2,317,382 Hamilton County Sales Tax Revenue, sub. bond, Refunding, Series A, FSA Insured, 5.00%, 12/01/32 ............................................ 1,825,000 1,741,908 Illinois Municipal Electricity Agency Power Supply Revenue, Series A, BHAC Insured, 5.00%, 2/01/35 ........................................ 1,085,000 1,049,759 Kentucky State Municipal Power Agency Power System Revenue, Prairie State Project, Series A, BHAC Insured, 5.25%, 9/01/42 ............... 2,395,000 2,404,748 Las Vegas Valley Water District GO, Refunding, Series A, MBIA Insured, 5.00%, 6/01/26 ...................................................... 395,000 395,600 Lewisville ISD, GO, School Building, 5.00%, 8/15/26 .................... 545,000 560,914 Los Angeles USD, GO, Series I, 5.00%, 7/01/26 ............................................................. 180,000 177,120 7/01/27 ............................................................. 195,000 191,090 Matanuska-Susitna Borough Lease Revenue, Goose Greek Correctional Center, Assured Guaranty, 5.50%, 9/01/23 ...................................................... 1,605,000 1,740,847 6.00%, 9/01/28 ...................................................... 2,005,000 2,150,202
Semiannual Report | 13 Templeton Global Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE ------------------- ------------ MUNICIPAL BONDS (CONTINUED) UNITED STATES AND U.S. TERRITORIES (CONTINUED) Metropolitan Atlanta Rapid Transit Authority Sales Tax Revenue, Refunding, Third Indenture Series A, FGIC Insured, 5.00%, 7/01/19 ........................................................ 150,000 $ 169,488 Metropolitan Water District of Southern California Waterworks Revenue, Series A, 5.00%, 7/01/37 ..................................... 775,000 771,458 Minneapolis Health Care System Revenue, Fairview Health Services, Series B, Assured Guaranty, 6.50%, 11/15/38 ........................... 1,670,000 1,787,568 MTA Revenue, Series B, Assured Guaranty, 5.25%, 11/15/20 ........................... 430,000 463,518 Transportation, Series A, FSA Insured, 5.50%, 11/15/21 ................ 410,000 453,489 New Jersey State Transportation Trust Fund Authority Revenue, Transportation System, Series A, Assured Guaranty, 5.50%, 12/15/38 ....................................................... 2,810,000 2,856,505 New York City GO, Series L, Sub Series L-1, 5.00%, 4/01/26 ............... 100,000 97,419 North Carolina Eastern Municipal Power Agency Power System Revenue, Refunding, Series A, Assured Guaranty, 5.25%, 1/01/19 ................. 250,000 259,823 Palomar Pomerado Health GO, Election of 2004, Series A, MBIA Insured, 5.125%, 8/01/37 ....................................................... 2,080,000 2,032,722 Philadelphia GO, Series B, Assured Guaranty, 7.125%, 7/15/38 ............. 885,000 937,003 Placentia-Yorba Linda USD, GO, 2008 Election, Series A, 5.25%, 8/01/32 ... 2,400,000 2,387,064 Poway USD, GO, Election of 2008, ID 07-1-A, zero cpn., 8/01/27 ............................................................... 705,000 245,650 8/01/30 ............................................................... 705,000 196,801 8/01/32 ............................................................... 885,000 212,904 8/01/33 ............................................................... 470,000 105,637 Puerto Rico Commonwealth GO, Public Improvement, Refunding, Series A, MBIA Insured, 5.50%, 7/01/21 .......................................... 100,000 93,910 Regional Transportation District Sales Tax Revenue, Fastracks Project, Series A, AMBAC Insured, 5.00%, 11/01/27 ..................... 590,000 600,101 San Bernardino Community College District GO, Election of 2002, Series A, 6.375%, 8/01/26 ....................................................... 400,000 446,264 6.50%, 8/01/27 ........................................................ 580,000 648,324 6.50%, 8/01/28 ........................................................ 240,000 266,554 6.25%, 8/01/33 ........................................................ 600,000 640,848 San Mateo County Community College District GO, Election of 2001, Series C, MBIA Insured, zero cpn., 9/01/30 ............................................................... 1,705,000 465,448 3/01/31 ............................................................... 465,000 121,314 Seattle Water System Revenue, BHAC Insured, 5.00%, 9/01/34 ............... 935,000 919,124 Tarrant County Cultural Education Facilities Finance Corp. Revenue, Christus Health, Refunding, Series A, Assured Guaranty, 6.25%, 7/01/28 ........................................................ 1,400,000 1,429,722 Wisconsin State GO, Series A, FGIC Insured, 5.00%, 5/01/21 ............... 50,000 53,308 ------------ TOTAL MUNICIPAL BONDS (COST $38,522,742) ................................. 39,949,059 ------------ TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS (COST $893,161,362) ................................................... 785,595,169 ------------
14 | Semiannual Report Templeton Global Income Fund STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE ------------------- ------------ SHORT TERM INVESTMENTS 7.2% FOREIGN GOVERNMENT AND AGENCY SECURITIES 3.5% EGYPT 3.5% (j) Egypt Treasury Bills, 3/03/09 - 9/22/09 .................................................. 139,600,000 EGP $ 24,113,990 7/07/09 ............................................................ 59,775,000 EGP 10,341,459 ------------ TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES (COST $35,747,047) ..... 34,455,449 ------------ TOTAL INVESTMENTS BEFORE MONEY MARKET FUNDS (COST $928,908,409) ................................................ 820,050,618 ------------
SHARES ------------------- MONEY MARKET FUNDS (COST $36,956,960) 3.7% UNITED STATES 3.7% (k) Franklin Institutional Fiduciary Trust Money Market Portfolio, 0.25% ............................................................... 36,956,960 36,956,960 ------------ TOTAL INVESTMENTS (COST $965,865,369) 86.2% ............................ 857,007,578 NET UNREALIZED APPRECIATION ON FORWARD EXCHANGE CONTRACTS 5.9% ......... 58,949,658 OTHER ASSETS, LESS LIABILITIES 7.9% .................................... 77,827,492 ------------ NET ASSETS 100.0% ...................................................... $993,784,728 ============
See Abbreviations on page 31. (a) The principal amount is stated in U.S. dollars unless otherwise indicated. (b) The coupon rate shown represents the rate at period end. (c) The principal amount is stated in original face, and scheduled paydowns are reflected in the market price on ex-date. (d) Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Fund's Board of Trustees. At February 28, 2009, the aggregate value of these securities was $78,422,560, representing 7.89% of net assets. (e) Principal amount is stated in 1,000 Brazilian Real Units. (f) Redemption price at maturity is adjusted for inflation. See Note 1(f). (g) Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund's Board of Trustees. At February 28, 2009, the aggregate value of these securities was $32,358,330, representing 3.26% of net assets. (h) Principal amount is stated in 100 Mexican Peso Units. (i) A supranational organization is an entity formed by two or more central governments through international treaties. (j) The security is traded on a discount basis with no stated coupon rate. (k) See Note 7 regarding investments in the Franklin Institutional Fiduciary Trust Money Market Portfolio. The rate shown is the annualized seven-day yield at period end. The accompanying notes are an integral part of these financial statements. Semiannual Report | 15 Templeton Global Income Fund FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES February 28, 2009 (unaudited) Assets: Investments in securities: Cost - Unaffiliated issuers ..................................... $ 928,908,409 Cost - Sweep Money Fund (Note 7) ................................ 36,956,960 -------------- Total cost of investments ....................................... $ 965,865,369 ============== Value - Unaffiliated issuers .................................... $ 820,050,618 Value - Sweep Money Fund (Note 7) ............................... 36,956,960 -------------- Total value of investments ...................................... 857,007,578 Cash ............................................................... 2,906,808 Cash on deposit from brokers ....................................... 15,025,000 Foreign currency, at value (cost $45,679,580) ...................... 45,932,831 Receivables: Investment securities sold ...................................... 36,657 Interest ........................................................ 18,552,783 Unrealized appreciation on forward exchange contracts (Note 8) ..... 87,020,659 Unrealized appreciation on swap contracts (Note 9) ................. 14,952,280 -------------- Total assets ................................................. 1,041,434,596 -------------- Liabilities: Payables: Investment securities purchased ................................. 1,358,397 Affiliates ...................................................... 492,580 Payable due to brokers .......................................... 15,025,000 Unrealized depreciation on forward exchange contracts (Note 8) ..... 28,071,001 Unrealized depreciation on swap contracts (Note 9) ................. 2,160,990 Accrued expenses and other liabilities ............................. 541,900 -------------- Total liabilities ............................................ 47,649,868 -------------- Net assets, at value ...................................... $ 993,784,728 ============== Net assets consist of: Paid-in capital .................................................... $1,086,209,746 Distributions in excess of net investment income ................... (63,499,948) Net unrealized appreciation (depreciation) ......................... (38,684,258) Accumulated net realized gain (loss) ............................... 9,759,188 -------------- Net assets, at value ...................................... $ 993,784,728 ============== Shares outstanding ................................................. 131,144,349 ============== Net asset value per share .......................................... $ 7.58 ==============
The accompanying notes are an integral part of these financial statements. 16 | Semiannual Report Templeton Global Income Fund FINANCIAL STATEMENTS (CONTINUED) STATEMENT OF OPERATIONS for the period ended February 28, 2009 (unaudited) Investment income: Dividends: Sweep Money Fund (Note 7) ...................................................... $ 378,383 Interest (net of foreign taxes withheld of $882,540) .............................. 30,980,925 ------------- Total investment income ..................................................... 31,359,308 ------------- Expenses: Management fees (Note 3a) ......................................................... 2,640,054 Administrative fees (Note 3b) ..................................................... 678,981 Transfer agent fees ............................................................... 123,782 Custodian fees (Note 4) ........................................................... 333,254 Reports to shareholders ........................................................... 64,998 Registration and filing fees ...................................................... 58,695 Professional fees ................................................................. 41,881 Trustees' fees and expenses ....................................................... 56,583 Other ............................................................................. 12,677 ------------- Total expenses .............................................................. 4,010,905 Expense reductions (Note 4) ................................................. (5,358) ------------- Net expenses ............................................................. 4,005,547 ------------- Net investment income ................................................. 27,353,761 ------------- Realized and unrealized gains (losses): Net realized gain (loss) from: Investments: ................................................................... (79,313,811) Foreign currency transactions .................................................. 112,426,584 Swap contracts ................................................................. (2,875,728) ------------- Net realized gain (loss) ................................................. 30,237,045 ------------- Net change in unrealized appreciation (depreciation) on: Investments .................................................................... (111,606,840) Translation of other assets and liabilities denominated in foreign currencies .. 34,857,469 ------------- Net change in unrealized appreciation (depreciation) ..................... (76,749,371) ------------- Net realized and unrealized gain (loss) .............................................. (46,512,326) ------------- Net increase (decrease) in net assets resulting from operations ...................... $ (19,158,565) =============
The accompanying notes are an integral part of these financial statements. Semiannual Report | 17 Templeton Global Income Fund FINANCIAL STATEMENTS (CONTINUED) STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED FEBRUARY 28, 2009 YEAR ENDED (UNAUDITED) AUGUST 31, 2008 -------------- --------------- Increase (decrease) in net assets: Operations: Net investment income .................................................. $ 27,353,761 $ 57,531,836 Net realized gain (loss) from investments, foreign currency transactions, and swap contracts .................................... 30,237,045 87,360,024 Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies .................................................. (76,749,371) (22,245,123) -------------- -------------- Net increase (decrease) in net assets resulting from operations .. (19,158,565) 122,646,737 -------------- -------------- Distributions to shareholders from net investment income and net foreign currency gains .............................................. (143,037,535) (140,177,810) Capital share transactions: (Note 2) ................................... -- 3,098,161 -------------- -------------- Net increase (decrease) in net assets ............................ (162,196,100) (14,432,912) Net assets: Beginning of period ....................................................... 1,155,980,828 1,170,413,740 -------------- -------------- End of period ............................................................. $ 993,784,728 $1,155,980,828 -------------- -------------- Undistributed net investment income (distributions in excess of net investment income) included in net assets: End of period ............................................................. $ (63,499,948) $ 52,183,826 ============== ==============
The accompanying notes are an integral part of these financial statements. 18 | Semiannual Report Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Templeton Global Income Fund (Fund) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as a closed-end investment company. The following summarizes the Fund's significant accounting policies. A. SECURITY VALUATION Securities listed on a securities exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Over-the-counter securities and listed securities for which there is no reported sale are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Investments in open-end mutual funds are valued at the closing net asset value. Corporate debt securities and government securities generally trade in the over-the-counter market rather than on a securities exchange. The 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. The Fund has procedures to determine the fair value of individual securities and other assets for which market prices are not readily available or which may not be reliably priced. Methods for valuing these securities may include: fundamental analysis, matrix pricing, discounts from market prices of similar securities, or discounts applied due to the nature and duration of restrictions on the disposition of the securities. Due to the inherent uncertainty of valuations of such securities, the fair values may differ significantly from the values that would have been used had a ready market for such investments existed. Occasionally, events occur between the time at which trading in a security is completed and the close of the NYSE that might call into question the availability (including the reliability) of the value of a portfolio security held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services. All security valuation procedures are approved by the Fund's Board of Trustees. Semiannual Report | 19 Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. FOREIGN CURRENCY TRANSLATION Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Fund's Board of Trustees. The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments on the Statement of Operations. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. C. FOREIGN CURRENCY CONTRACTS When the Fund purchases or sells foreign securities it may enter into foreign exchange contracts to minimize foreign exchange risk from the trade date to the settlement date of the transactions. A foreign exchange contract is an agreement between two parties to exchange different currencies at an agreed upon exchange rate at a future date. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. The Fund may also enter into forward exchange contracts to hedge against fluctuations in foreign exchange rates or to gain exposure to certain foreign currencies. These contracts are valued daily by the Fund and the unrealized appreciation or depreciation on the contracts, as measured by the difference between the contractual forward foreign exchange rates and the forward rates at the reporting date, are included in the Statement of Assets and Liabilities. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. The risks of these contracts include movement in the values of the foreign currencies relative to the U.S. dollar and the possible inability of the counterparties to fulfill their obligations under the contracts, which may be in excess of the amount reflected in the Statement of Assets and Liabilities. 20 | Semiannual Report Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. INTEREST RATE SWAPS The Fund may enter into interest rate swap contracts to hedge the risk of changes in interest rates. Interest rate swaps are agreements between two parties to exchange cash flows based on a notional principal amount. The interest receivable or payable is recorded as unrealized appreciation or depreciation in the Statement of Assets and Liabilities. Payments received or made are recorded as realized gains or losses in the Statement of Operations. Interest rate swaps are marked to market daily based upon quotations from the market makers and the change, if any, is recorded as unrealized appreciation or depreciation in the Statement of Operations. When the swap contract is terminated early, the Fund records a realized gain or loss equal to the difference between the current realized value and the expected cash flows. The risks of interest rate swaps include changes in the market conditions and the possible inability of the counterparty to fulfill its obligations under the agreement. E. 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 February 28, 2009, and has determined that no provision for income tax is required in the Fund's financial statements. Foreign securities held by the Fund may be subject to foreign taxation on interest income received. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. F. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods. Semiannual Report | 21 Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONTINUED) Inflation-indexed bonds provide an inflation hedge through periodic increases or decreases in the security's interest accruals and principal redemption value, by amounts corresponding to the current rate of inflation. Any such adjustments, including adjustments to principal redemption value, are recorded as interest income. G. 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. H. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and trustees are indemnified by the Fund against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. Currently, the Fund expects the risk of loss to be remote. 2. SHARES OF BENEFICIAL INTEREST At February 28, 2009, there were an unlimited number of shares authorized (without par value). During the period ended February 28, 2009 there were no shares issued; all reinvested distributions were satisfied with previously issued shares purchased in the open market. Transactions in the Fund's shares were as follows:
SIX MONTHS ENDED YEAR ENDED FEBRUARY 28, 2009 AUGUST 31, 2008 ----------------- -------------------- SHARES AMOUNT SHARES AMOUNT ------ -------- ------- ---------- Shares issued in reinvestment of distributions ................. -- $-- 339,409 $3,098,161
The Fund's Board of Trustees previously authorized an open-market share repurchase program pursuant to which the Fund may purchase, from time to time, Fund shares in open-market transactions, at the discretion of management. This authorization remains in effect. Through February 28, 2009, the Fund had repurchased a total of 11,210,400 shares. During the periods ended February 28, 2009 and August 31, 2008, there were no shares repurchased. 22 | Semiannual Report Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 3. TRANSACTIONS WITH AFFILIATES Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Fund are also officers and/or directors of the following subsidiaries:
SUBSIDIARY AFFILIATION - ---------- ----------- Franklin Advisers, Inc. (Advisers) Investment manager Franklin Templeton Services, LLC (FT Services) Administrative manager
A. MANAGEMENT FEES The Fund pays an investment management fee to Advisers based on the average daily net assets of the Fund as follows:
ANNUALIZED FEE RATE NET ASSETS - ------------------- ---------- 0.550% Up to and including $200 million 0.500% Over $200 million, up to and including $1 billion 0.480% Over $1 billion, up to and including $5 billion 0.460% Over $5 billion, up to and including $10 billion 0.440% Over $10 billion, up to and including $15 billion 0.420% Over $15 billion, up to and including $20 billion 0.400% In excess of $20 billion
B. ADMINISTRATIVE FEES The Funds pays an administrative fee to FT Services based on the average daily net assets of the Fund as follows:
ANNUALIZED FEE RATE NET ASSETS - ------------------- ---------- 0.150% Up to and including $200 million 0.135% Over $200 million, up to and including $700 million 0.100% In excess of $700 million
4. EXPENSE OFFSET ARRANGEMENT The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund's custodian expenses. During the period ended February 28, 2009, the custodian fees were reduced as noted in the Statement of Operations. Semiannual Report | 23 Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 5. INCOME TAXES For tax purposes, capital losses may be carried over to offset future capital gains, if any. At August 31, 2008, the capital loss carryforwards were as follows: Capital loss carryforwards expiring in: 2010 .................................... $ 17,156,631 2011 .................................... 4,209,282 ------------- $ 21,365,913 =============
At February 28, 2009, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Cost of investments.......................... $ 969,622,405 ============= Unrealized appreciation...................... $ 31,225,004 Unrealized depreciation...................... (143,839,831) ------------- Net unrealized appreciation (depreciation) .. $(112,614,827) =============
Net investment income differs for financial statement and tax purposes primarily due to differing treatments of foreign currency transactions, interest rate swaps, bond discounts and premiums and inflation related adjustments on foreign securities. Net realized gains (losses) differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, interest rate swaps, and bond discounts and premiums. 6. INVESTMENT TRANSACTIONS Purchases and sales of investments (excluding short term securities) for the period ended February 28, 2009, aggregated $503,819,203 and $423,176,300, respectively. 7. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market Portfolio (Sweep Money Fund), an open-end investment company managed by Advisers. Management fees paid by the Fund are reduced on assets invested in the Sweep Money Fund, in an amount not to exceed the management and administrative fees paid by the Sweep Money Fund. 24 | Semiannual Report Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 8. FORWARD EXCHANGE CONTRACTS At February 28, 2009, the Fund had the following forward exchange contracts outstanding:
CONTRACT SETTLEMENT UNREALIZED UNREALIZED AMOUNT(a) DATE APPRECIATION DEPRECIATION ------------------ ---------- ------------ ------------ CONTRACTS TO BUY 27,130,000 Russian Ruble ............. 635,214 EUR 3/20/09 $ -- $ (57,395) 57,120,147,000 Vietnamese Dong ........... 4,102,787 AUD 3/23/09 634,676 -- 23,070,241 Euro ...................... 44,698,941 SGD 4/14/09 356,626 -- 11,737,491 Euro ...................... 15,093,005 4/14/09 -- (229,892) 19,670,698 Malaysian Ringgit ......... 4,036,257 EUR 4/21/09 188,749 -- 29,978,900 Swedish Krona ............. 3,199,422 EUR 4/29/09 -- (725,645) 28,052,000,000 Indonesian Rupiah ......... 2,034,228 5/18/09 234,740 -- 7,356,000,000 Indonesian Rupiah ......... 508,187 5/22/09 85,998 -- 760,290,277 Kazakhstani Tenge ......... 66,628,423 MXN 5/27/09 122,565 -- 16,007,245,000 Vietnamese Dong ........... 1,123,931 AUD 5/29/09 187,451 -- 13,927,793,000 Vietnamese Dong ........... 978,338 AUD 6/02/09 162,531 -- 4,318,461,667 Japanese Yen .............. 46,688,596 6/03/09 -- (2,342,446) 21,404,532 Swiss Franc ............... 13,885,522 EUR 6/11/09 749,920 -- 205,190,790 Russian Ruble ............. 92,527,712 MXN 6/16/09 -- (572,292) 40,346,638 Malaysian Ringgit ......... 8,150,836 EUR 6/16/09 554,120 -- 58,966,389,000 Vietnamese Dong ........... 4,137,940 AUD 6/22/09 684,233 -- 9,423,957 Malaysian Ringgit ......... 1,891,981 EUR 7/14/09 145,467 -- 23,285,042 Malaysian Ringgit ......... 4,654,272 EUR 7/15/09 385,482 -- 6,055,551 Malaysian Ringgit ......... 1,210,868 EUR 7/16/09 99,678 -- 6,152,870 Malaysian Ringgit ......... 1,229,787 EUR 7/17/09 101,990 -- 4,283,433 Malaysian Ringgit ......... 851,391 EUR 7/24/09 77,133 -- 1,687,374 Malaysian Ringgit ......... 336,331 EUR 7/31/09 29,238 -- 3,370,207 Malaysian Ringgit ......... 680,053 EUR 8/05/09 47,954 -- 151,667,902 Russian Ruble ............. 9,038,612 NZD 8/12/09 -- (656,606) 73,838,479 Russian Ruble ............. 4,411,955 NZD 8/14/09 -- (327,502) 647,291,600 Japanese Yen .............. 4,154,187 EUR 8/21/09 1,401,640 -- 321,024,200 Japanese Yen .............. 2,058,375 EUR 8/26/09 698,022 -- 223,340,000 Japanese Yen .............. 1,472,617 EUR 9/04/09 434,758 -- 13,341,000 Chinese Yuan Renminbi ..... 1,389,688 EUR 9/18/09 167,886 -- 91,000,000 Swedish Krona ............. 9,461,328 EUR 9/23/09 -- (1,855,270) 83,126,800 Chinese Yuan Renminbi ..... 8,685,911 EUR 9/23/09 1,008,038 -- 441,513,514 Russian Ruble ............. 21,004,870 AUD 9/24/09 -- (2,405,418) 37,088,000 Chinese Yuan Renminbi ..... 3,821,732 EUR 9/24/09 517,295 -- 225,000,000 Indian Rupee .............. 7,364,975 NZD 9/25/09 714,502 -- 243,166,459 Russian Ruble ............. 11,688,183 AUD 9/28/09 -- (1,412,403) 1,342,000,000 Japanese Yen .............. 8,982,338 EUR 9/28/09 2,451,724 -- 42,313,777,933 Vietnamese Dong ........... 3,436,066 AUD 10/07/09 171,498 -- 779,666,250 Kazakhstani Tenge ......... 6,032,234 10/13/09 -- (1,873,116) 13,969,953 Chinese Yuan Renminbi ..... 3,018,377 AUD 10/13/09 108,878 -- 32,663,916 Chinese Yuan Renminbi ..... 3,466,035 EUR 10/15/09 322,037 --
Semiannual Report | 25 Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 8. FORWARD EXCHANGE CONTRACTS (CONTINUED)
CONTRACT SETTLEMENT UNREALIZED UNREALIZED AMOUNT(a) DATE APPRECIATION DEPRECIATION ------------------ ---------- ------------ ------------ CONTRACTS TO BUY (CONTINUED) 32,823,215 Chinese Yuan Renminbi ..... 3,510,373 EUR 10/16/09 $ 288,524 $ -- 23,662,387 Chinese Yuan Renminbi ..... 5,024,598 AUD 10/19/09 239,579 -- 43,995,179 Chinese Yuan Renminbi ..... 4,724,375 EUR 10/19/09 361,145 -- 27,185,000 Chinese Yuan Renminbi ..... 3,927,049 10/21/09 -- (4,722) 219,208,545 Chilean Peso .............. 332,134 10/26/09 32,011 -- 3,571,898 Swiss Franc ............... 2,453,058 EUR 10/28/09 -- (35,922) 142,244,757 Chilean Peso .............. 207,584 10/28/09 28,698 -- 1,950,000,000 Japanese Yen .............. 20,828,883 11/16/09 -- (696,006) 7,181,000,000 Indonesian Rupiah ......... 508,569 11/17/09 38,682 -- 35,001,000,000 Indonesian Rupiah ......... 2,540,907 11/18/09 125,497 -- 651,910,500 Japanese Yen .............. 6,731,118 11/18/09 -- (123,882) 28,391,000 Russian Ruble ............. 635,216 EUR 11/20/09 -- (126,853) 38,962,000,000 Indonesian Rupiah ......... 2,540,890 11/23/09 421,938 -- 150,288,486 Swedish Krona ............. 14,654,428 EUR 11/30/09 -- (1,808,499) 24,661,000 Chinese Yuan Renminbi ..... 3,373,598 12/04/09 174,889 -- 31,071,000 Chinese Yuan Renminbi ..... 3,373,564 EUR 12/04/09 194,009 -- 20,258,000,000 Indonesian Rupiah ......... 1,447,000 12/07/09 85,794 -- 49,119,762 Chinese Yuan Renminbi ..... 6,954,190 12/14/09 108,885 -- 65,695,397 Chinese Yuan Renminbi ..... 9,302,464 12/15/09 143,429 -- 16,656,368 Malaysian Ringgit ......... 4,688,633 12/16/09 -- (180,386) 32,996,252 Chinese Yuan Renminbi ..... 4,688,633 12/16/09 55,351 -- 5,137,469 Malaysian Ringgit ......... 1,435,047 12/17/09 -- (44,515) 10,145,784 Chinese Yuan Renminbi ..... 1,435,047 12/17/09 23,548 -- 30,514,414 Chinese Yuan Renminbi ..... 4,305,142 12/18/09 81,424 -- 9,301,365 Malaysian Ringgit ......... 2,609,484 12/21/09 -- (91,825) 8,294,486 Chinese Yuan Renminbi ..... 1,183,236 12/21/09 8,886 -- 208,565,232 Mexican Peso .............. 14,731,784 12/22/09 -- (1,776,929) 5,021,942 Malaysian Ringgit ......... 1,435,579 12/22/09 -- (76,244) 9,755,745 Chinese Yuan Renminbi ..... 1,401,688 12/22/09 358 -- 86,616,747 Mexican Peso .............. 6,138,243 12/23/09 -- (758,915) 3,991,727 Malaysian Ringgit ......... 1,148,038 12/23/09 -- (67,549) 138,880,454 Mexican Peso .............. 9,821,189 12/24/09 -- (1,197,306) 4,516,266 Malaysian Ringgit ......... 1,291,543 12/28/09 -- (69,006) 15,947,491 Mexican Peso .............. 1,074,991 1/20/10 -- (88,670) 237,185,960 Mexican Peso .............. 16,124,865 1/21/10 -- (1,457,550)
26 | Semiannual Report Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 8. FORWARD EXCHANGE CONTRACTS (CONTINUED)
CONTRACT SETTLEMENT UNREALIZED UNREALIZED AMOUNT(a) DATE APPRECIATION DEPRECIATION ------------------ ---------- ------------ ------------ CONTRACTS TO BUY (CONTINUED) 48,000,000 Malaysian Ringgit ......... 13,111,172 1/28/10 $ -- $ (113,511) 1,968,980,000 Chilean Peso .............. 3,117,448 1/28/10 146,573 -- 89,650,000 Swedish Krona ............. 8,549,902 EUR 1/29/10 -- (823,045) 5,128,790,000 Chilean Peso .............. 8,173,807 1/29/10 328,125 -- 950,440,000 Chilean Peso .............. 1,520,704 2/02/10 54,698 -- 173,615,100 Mexican Peso .............. 11,571,817 2/03/10 -- (856,232) 135,288,000 Chinese Yuan Renminbi ..... 19,180,966 2/03/10 205,358 -- 1,783,500,000 Chilean Peso .............. 2,851,319 2/03/10 104,860 -- 262,700,000 Mexican Peso .............. 17,357,756 2/04/10 -- (1,146,210) 7,084,000,000 South Korean Won .......... 5,208,824 2/12/10 -- (486,174) 24,260,103 Malaysian Ringgit ......... 6,683,224 2/12/10 -- (112,924) 935,230,000 Chilean Peso .............. 1,520,699 2/12/10 29,170 -- 2,301,970,000 Chilean Peso .............. 3,801,767 2/16/10 12,757 -- 6,108,000 Malaysian Ringgit ......... 1,675,031 2/17/10 -- (20,730) 2,298,030,000 Chilean Peso .............. 3,823,677 2/17/10 -- (15,761) 5,097,330,000 Chilean Peso .............. 8,412,060 2/26/10 32,820 -- 1,153,220,000 Chilean Peso .............. 1,911,837 3/03/10 -- (34,902) CONTRACTS TO SELL 4,183,368,000 South Korean Won .......... 4,440,000 3/04/09 1,711,776 -- 3,903,240 Euro ...................... 598,347,176 JPY 3/10/09 1,188,675 -- 8,880,000,000 South Korean Won .......... 9,168,452 CHF 3/27/09 2,044,178 -- 3,474,633,000 South Korean Won .......... 3,594,075 CHF 4/01/09 805,665 -- 4,440,000,000 South Korean Won .......... 4,606,494 CHF 4/06/09 1,041,630 -- 5,204,321 Euro ...................... 805,576,848 JPY 4/06/09 1,670,052 -- 23,070,241 Euro ...................... 48,638,600 SGD 4/14/09 2,186,769 -- 11,737,491 Euro ...................... 18,142,709 4/14/09 3,279,595 -- 16,563,648 New Zealand Dollar ........ 507,510,181 INR 4/28/09 1,642,206 -- 52,217,395 Mexican Peso .............. 2,279,289,302 CLP 5/15/09 427,199 -- 36,225,716 Mexican Peso .............. 1,576,615,600 CLP 5/20/09 290,320 -- 50,000,000 Mexican Peso .............. 196,105,000 INR 5/20/09 595,822 -- 2,200,000,000 Japanese Yen .............. 24,570,025 6/03/09 1,978,292 -- 92,945,816 Mexican Peso .............. 206,423,363 RUB 6/10/09 -- (553,249) 7,566,528 Euro ...................... 11,663,992 6/10/09 2,081,826 -- 2,470,410 Euro ...................... 294,077,606 JPY 6/10/09 -- (107,933) 29,507,162 Mexican Peso .............. 1,334,726,977 CLP 6/12/09 327,674 -- 194,757,301 Mexican Peso .............. 432,760,932 RUB 6/16/09 -- (1,181,977) 30,565,636 Euro ...................... 151,322,822 MYR 6/16/09 2,084,129 -- 37,054,099 Euro ...................... 183,084,303 MYR 6/17/09 2,429,869 -- 106,279,890 Mexican Peso .............. 237,713,212 RUB 6/19/09 -- (612,178) 61,955,606 Mexican Peso .............. 136,619,484 RUB 7/10/09 -- (438,531) 30,888,068 Mexican Peso .............. 68,008,329 RUB 7/13/09 -- (223,430) 4,919,150 Euro ...................... 7,604,637 7/13/09 1,374,098 -- 4,919,150 Euro ...................... 7,613,103 7/14/09 1,382,535 --
Semiannual Report | 27 Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 8. FORWARD EXCHANGE CONTRACTS (CONTINUED)
CONTRACT SETTLEMENT UNREALIZED UNREALIZED AMOUNT(a) DATE APPRECIATION DEPRECIATION ------------------ ---------- ------------ ------------ CONTRACTS TO SELL (CONTINUED) 4,919,150 Euro 7,691,583 7/15/09 $ 1,460,985 $ -- 2,459,575 Euro 3,861,041 7/17/09 745,712 -- 14,610,919 Mexican Peso 32,786,902 RUB 7/24/09 -- (93,574) 4,351,556 Euro 6,807,139 7/24/09 1,295,218 -- 8,457,907 New Zealand Dollar 56,133,438,372 IDR 8/05/09 235,588 -- 4,168,252 New Zealand Dollar 50,512,959,923 VND 8/14/09 748,489 -- 6,050,000 Euro 732,322,250 JPY 11/18/09 -- (107,603) 257,757 Euro 326,269 11/19/09 -- (467) 2,796,556 Euro 3,520,585 11/20/09 -- (24,385) 1,870,413 Euro 2,330,628 11/24/09 -- (40,410) 655,522 Euro 820,386 11/25/09 -- (10,596) 1,274,797 Euro 1,663,610 11/30/09 47,539 -- 1,325,806 Euro 1,676,415 12/08/09 -- (4,415) 70,391,000 Singapore Dollar 46,888,153 1/29/10 1,380,162 -- 16,454,000 Singapore Dollar 10,949,156 2/02/10 311,443 -- 10,258,681 New Zealand Dollar 5,186,174 2/02/10 126,817 -- 14,723,000 Singapore Dollar 9,776,293 2/03/10 257,659 -- 14,805,000 Singapore Dollar 9,776,407 2/04/10 204,725 -- 11,809,000 Singapore Dollar 7,821,307 2/05/10 186,561 -- 9,302,000 Singapore Dollar 6,178,678 2/08/10 164,692 -- 11,787,000 Singapore Dollar 7,827,733 2/09/10 207,101 -- 4,670,600 Singapore Dollar 3,131,205 2/11/10 111,508 -- 1,456,071 New Zealand Dollar 756,283 2/12/10 38,414 -- 1,943,304 New Zealand Dollar 972,041 2/22/10 14,267 -- 26,988,728 New Zealand Dollar 13,534,847 2/26/10 234,947 -- Unrealized appreciation (depreciation) on offsetting forward exchange contracts ................................................................... 34,534,685 -- ----------- ------------ Unrealized appreciation (depreciation) on forward exchange contracts ........ 87,020,659 (28,071,001) ----------- ------------ NET UNREALIZED APPRECIATION (DEPRECIATION) ON FORWARD EXCHANGE CONTRACTS ............................................................. $58,949,658 ===========
See Abbreviations on page 31. (a) In U.S. Dollar unless otherwise indicated. 28 | Semiannual Report Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 9. INTEREST RATE SWAPS At February 28, 2009, the Fund had the following interest rate swap contracts outstanding:
RECEIVE - PAY - NOTIONAL PRINCIPAL EXPIRATION UNREALIZED UNREALIZED COUNTER PARTY FIXED RATE FLOATING RATE AMOUNT(a) DATE APPRECIATION DEPRECIATION - ------------- ---------- ------------------------- ------------------ ---------- ------------ ------------ JPMorgan 7.16% NZD Bank Bill Rate 5,740,000 NZD 7/31/13 $ 377,835 $ -- JPMorgan 7.12% NZD Bank Bill Rate 5,750,000 NZD 8/01/13 373,588 -- JPMorgan 7.055% NZD Bank Bill Rate 5,750,000 NZD 8/04/13 365,848 -- JPMorgan 7.035% NZD Bank Bill Rate 11,500,000 NZD 8/05/13 726,227 -- JPMorgan 7.05% NZD Bank Bill Rate 2,875,000 NZD 8/06/13 182,639 -- JPMorgan 7.05% NZD Bank Bill Rate 2,875,000 NZD 8/07/13 181,453 -- JPMorgan 7.00% NZD Bank Bill Rate 3,045,600 NZD 8/14/13 189,339 -- Merrill Lynch 7.053% Tasa Nominal Annual Rate 7,900,000,000 CLP 6/13/18 2,993,398 -- JPMorgan 7.06% Tasa Nominal Annual Rate 2,646,000,000 CLP 6/13/18 1,005,100 -- Merrill Lynch 7.094% Tasa Nominal Annual Rate 8,650,000,000 CLP 6/16/18 3,319,405 -- JPMorgan 7.15% Tasa Nominal Annual Rate 2,700,000,000 CLP 6/18/18 1,055,682 -- JPMorgan 7.85% Tasa Nominal Annual Rate 702,800,000 CLP 7/11/18 340,347 -- JPMorgan 7.855% Tasa Nominal Annual Rate 705,600,000 CLP 7/17/18 345,138 -- Merrill Lynch 7.40% Tasa Nominal Annual Rate 580,000,000 CLP 7/30/18 247,680 -- Merrill Lynch 7.40% Tasa Nominal Annual Rate 580,000,000 CLP 8/06/18 247,686 -- JPMorgan 7.50% Tasa Nominal Annual Rate 1,210,680,000 CLP 8/07/18 533,975 -- Merrill Lynch 7.51% Tasa Nominal Annual Rate 580,000,000 CLP 8/07/18 256,591 -- JPMorgan 7.50% Tasa Nominal Annual Rate 1,208,320,000 CLP 8/13/18 530,325 -- Merrill Lynch 9.03% MXN Interbank Equilibrium Interest Rate 723,000,000 MXN 8/17/18 1,041,989 -- JPMorgan 7.67% Tasa Nominal Annual Rate 415,200,000 CLP 8/29/18 153,342 -- JPMorgan 8.6748% MXN Interbank Equilibrium Interest Rate 37,800,000 MXN 11/29/18 -- (7,470) JPMorgan 5.59% NZD Bank Bill Rate 8,500,000 NZD 12/05/18 270,890 -- CITIGroup 7.6973% MXN Interbank Equilibrium Interest Rate 51,400,000 MXN 1/11/19 -- (237,307) CITIGroup 7.666% MXN Interbank Equilibrium Interest Rate 67,000,000 MXN 1/12/19 -- (317,778) CITIGroup 7.835% MXN Interbank Equilibrium Interest Rate 44,700,000 MXN 1/15/19 -- (178,561) CITIGroup 7.869% MXN Interbank Equilibrium Interest Rate 58,100,000 MXN 1/16/19 -- (224,328) CITIGroup 8.00% MXN Interbank Equilibrium Interest Rate 35,060,000 MXN 1/18/19 -- (114,603) JPMorgan 8.06% MXN Interbank Equilibrium Interest Rate 55,780,000 MXN 1/22/19 -- (167,427) CITIGroup 8.07% MXN Interbank Equilibrium Interest Rate 175,300,000 MXN 1/22/19 -- (518,318) JPMorgan 5.23% NZD Bank Bill Rate 7,000,000 NZD 12/05/19 180,500 -- Merrill Lynch 9.10% MXN Interbank Equilibrium Interest Rate 240,000,000 MXN 8/04/28 33,303 -- JPMorgan 8.3167% MXN Interbank Equilibrium Interest Rate 83,670,000 MXN 1/09/29 -- (395,198) ----------- ----------- Unrealized appreciation (depreciation) on interest rate swap contracts................ $14,952,280 $(2,160,990) ----------- ----------- NET UNREALIZED APPRECIATION (DEPRECIATION) ON INTEREST RATE SWAP CONTRACTS......... $12,791,290 ===========
See Abbreviations on page 31. (a) In U.S. Dollar unless otherwise indicated. Semiannual Report | 29 Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 10. CREDIT RISK The Fund has 19.28% of its portfolio invested in high yield, senior secured floating rate notes, or other securities rated below investment grade. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities. 11. 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. 12. FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board (FASB) issued FASB Statement No. 157, "Fair Value Measurement" (SFAS 157), on September 1, 2008. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Fund has determined that the implementation of SFAS 157 did not have a material impact on the Fund's financial statements. SFAS 157 establishes 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. 30 | Semiannual Report Templeton Global Income Fund NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 12. FAIR VALUE MEASUREMENTS (CONTINUED) The following is a summary of the inputs used as of February 28, 2009, in valuing the Fund's assets and liabilities carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL ----------- ------------ ------- ------------ ASSETS: Investments in Securities ......... $71,412,409 $785,595,169 $-- $857,007,578 Other Financial Instruments(a) .... -- 101,972,939 -- 101,972,939 LIABILITIES: Other Financial Instruments(a) .... -- 30,231,991 -- 30,231,991
(a) Other financial instruments includes net unrealized appreciation (depreciation) on forward exchange contracts and swaps. 13. NEW ACCOUNTING PRONOUNCEMENT In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (SFAS 161), which expands disclosures about derivative investments and hedging activities. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. The Fund believes applying the various provisions of SFAS 161 will not have a material impact on its financial statements. ABBREVIATIONS CURRENCY AUD - Australian Dollar BRL - Brazilian Real CHF - Swiss Franc CLP - Chilean Peso EGP - Egyptian Pound EUR - Euro IDR - Indonesian Rupiah INR - Indian Rupee JPY - Japanese Yen KRW - South Korean Won MXN - Mexican Peso MYR - Malaysian Ringgit NOK - Norwegian Krone NZD - New Zealand Dollar PEN - Peruvian Nuevo Sol PLN - Polish Zloty RUB - Russian Ruble SEK - Swedish Krona SGD - Singapore Dollar VND - Vietnamese Dong SELECTED PORTFOLIO AMBAC - American Municipal Bond Assurance Corp. BHAC - Berkshire Hathaway Assurance Corp. FGIC - Financial Guaranty Insurance Co. FRN - Floating Rate Note FSA - Financial Security Assurance Inc. GO - General Obligation ID - Improvement District ISD - Independent School District MBIA - Municipal Bond Investors Assurance Corp. MTA - Metropolitan Transit Authority USD - Unified/Union School District Semiannual Report | 31 Templeton Global Income Fund SEMIANNUAL MEETING OF SHAREHOLDERS, FEBRUARY 28, 2009 (UNAUDITED) The Annual Meeting of Shareholders of the Fund was held at the Fund's offices, 500 E. Broward Blvd., Fort Lauderdale, Florida, on February 20, 2009. The purpose of the meeting was to elect four Trustees of the Fund. At the meeting, the following persons were elected by the shareholders to serve as Trustees of the Fund: Harris J. Ashton, Ann Torre Bates, David W. Niemiec and Robert E. Wade.* No other business was transacted at the meeting. The results of the voting at the Annual Meeting are as follows: The election of four Trustees:
% OF % OF SHARES SHARES % OF PRESENT % OF PRESENT OUTSTANDING AND OUTSTANDING AND TERM EXPIRING 2012 FOR SHARES VOTING WITHHELD SHARES VOTING - ------------------ ----------- ----------- ------- --------- ----------- ------- Harris J. Ashton.. 112,481,335 85.77% 96.60% 3,962,882 3.02% 3.40% Ann Torre Bates... 112,598,313 85.86% 96.70% 3,845,904 2.93% 3.30% David W. Niemiec.. 112,742,511 85.97% 96.82% 3,701,706 2.82% 3.18% Robert E. Wade.... 112,656,702 85.90% 96.75% 3,787,515 2.89% 3.25%
* Frank J. Crothers, Edith E. Holiday, Charles B. Johnson, Gregory E. Johnson, Frank A. Olson, Larry D. Thompson and Constantine D. Tseretopoulos are Trustees of the Fund who are currently serving and whose terms of office continued after the Annual Meeting of Shareholders. 32 | Semiannual Report Templeton Global Income Fund 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. If you decide to use this service, share dividends and capital gains distributions will be reinvested automatically in shares of the Fund for your account. BNY Mellon Shareowner Services, P.O. Box 358035, Pittsburgh, PA, 15252-8035, will provide additional Plan information upon request. Whenever the Fund declares dividends in either cash or shares 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 shares 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 cash payments to the Plan Administrator, 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 The Bank of New York Mellon and sent to BNY Mellon Shareowner Services, P.O. Box 382009, Pittsburgh, PA, 15252-8009, Attention: Templeton Global Income Fund. The Plan Administrator will 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. 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. The Plan Administrator's fee for a sale of shares through the Plan is $15.00 per transaction plus a $0.12 per share trading fee. A participant may withdraw from the Plan without penalty at any time by written notice to the Plan Administrator sent to BNY Mellon Shareowner Services, P. O. Box 358035, Pittsburgh, PA, 15252-8035. Upon withdrawal, the participant will receive, without charge, share certificates issued in the participant's name for all full shares held by the Plan Administrator; or, if the participant wishes, the Plan Administrator will sell the shares and send the proceeds to the participant, less a service charge of $15.00 and less trading fees of $0.12 per share. DIRECT DEPOSIT SERVICE FOR REGISTERED SHAREHOLDERS Cash distributions can now be electronically credited to a checking or savings account at any financial institution that participates in the Automated Clearing House ("ACH") system. The Direct Deposit service is provided for registered shareholders at no charge. To enroll in the service, access your account online by going to http://vault.bnymellon.com/isd or dial 1-800-416-5585 (toll free) and follow the instructions. Direct Deposit will begin with the next scheduled distribution payment date following enrollment in the service. Semiannual Report | 33 Templeton Global Income Fund TRANSFER AGENT BNY Mellon Shareowner Services P.O. Box 358035 Pittsburgh, PA 15252-8035 1-800-416-5585 www.bnymellon.com DIRECT REGISTRATION If you are a registered shareholder of the Fund, purchases of shares of the Fund can be electronically credited to your Fund account at BNY Mellon Shareowner Services through Direct Registration. This service provides shareholders with a convenient way to keep track of shares through book-entry transactions, to electronically move book-entry shares between broker-dealers, transfer agents and DRS eligible issuers, and eliminates the possibility of lost certificates. For additional information, please contact BNY Mellon Shareowner Services at 1-800-416-5585. SHAREHOLDER INFORMATION Shares of Templeton Global Income Fund are traded on the New York Stock Exchange under the symbol "GIM." 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 "the New York Stock Exchange Composite Transactions" section of newspapers. For current information about distributions and shareholder accounts, call 1-800-416-5585. Registered shareholders can access their Fund account on-line with INVESTOR SERVICEDIRECT(R). For information go to BNY Mellon Shareowner Services' web site at https://vault.bnymellon.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 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, 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, FL 33733-8030. 34 | Semiannual Report Templeton Global Income Fund SHAREHOLDER INFORMATION PROXY VOTING POLICIES AND PROCEDURES The Fund's investment manager has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund'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 Fund'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 Fund files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each period 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. CERTIFICATIONS The Fund's Chief Executive Officer - Finance and Administration is required by the New York Stock Exchange's Listing Standards to file semiannually with the Exchange a certification that she is not aware of any violation by the Fund of the Exchange's Corporate Governance Standards applicable to the Fund. The Fund has filed such certification. In addition, the Fund's Chief Executive Officer - Finance and Administration and Chief Financial Officer and Chief Accounting Officer are required by the rules of the U.S. Securities and Exchange Commission to provide certain certifications with respect to the Fund's Form N-CSR and Form N-CSRS (which include the Fund's annual and semiannual reports to shareholders) that are filed semiannually with the Commission. The Fund has filed such certifications with its Form N-CSR for the year ended August 31, 2008. Additionally, the Fund expects to file, on or about April 30, 2009, such certifications with its Form N-CSRS for the six months ended February 28, 2009. Semiannual Report | 35 This page intentionally left blank. Literature Request LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT (800) DIAL BEN/(800) 342-5236 OR VISIT FRANKLINTEMPLETON.COM. INVESTORS SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. TO ENSURE THE HIGHEST QUALITY OF SERVICE, WE MAY MONITOR, RECORD AND ACCESS TELEPHONE CALLS TO OR FROM OUR SERVICE DEPARTMENTS. THESE CALLS CAN BE IDENTIFIED BY THE PRESENCE OF A REGULAR BEEPING TONE. FRANKLIN TEMPLETON FUNDS VALUE Franklin All Cap Value Fund Franklin Balance Sheet Investment Fund Franklin Large Cap Value Fund Franklin MicroCap Value Fund(1) Franklin MidCap Value Fund Franklin Small Cap Value Fund Mutual Beacon Fund Mutual Qualified Fund Mutual Recovery Fund(2) Mutual Shares Fund BLEND Franklin Focused Core Equity Fund Franklin Large Cap Equity Fund Franklin Rising Dividends Fund GROWTH Franklin Capital Growth Fund(1) Franklin Flex Cap Growth Fund Franklin Growth Fund Franklin Growth Opportunities Fund(3) Franklin Small Cap Growth Fund(4) Franklin Small-Mid Cap Growth Fund SECTOR Franklin Biotechnology Discovery Fund Franklin DynaTech Fund Franklin Global Real Estate Fund Franklin Gold and Precious Metals Fund Franklin Natural Resources Fund Franklin Real Estate Securities Fund Franklin Utilities Fund Mutual Financial Services Fund GLOBAL Mutual Discovery Fund Templeton Global Long-Short Fund Templeton Global Opportunities Trust Templeton Global Smaller Companies Fund Templeton Growth Fund Templeton World Fund INTERNATIONAL Franklin India Growth Fund Franklin International Growth Fund Franklin International Small Cap Growth Fund Mutual European Fund Templeton BRIC Fund Templeton China World Fund Templeton Developing Markets Trust Templeton Emerging Markets Small Cap Fund Templeton Foreign Fund Templeton Foreign Smaller Companies Fund Templeton Frontier Markets Fund HYBRID Franklin Balanced Fund Franklin Convertible Securities Fund Franklin Equity Income Fund Franklin Income Fund Templeton Income Fund ASSET ALLOCATION Franklin Templeton Corefolio(R) Allocation Fund Franklin Templeton Founding Funds Allocation Fund Franklin Templeton Perspectives Allocation Fund Franklin Templeton Conservative Target Fund Franklin Templeton Growth Target Fund Franklin Templeton Moderate Target Fund Franklin Templeton 2015 Retirement Target Fund Franklin Templeton 2025 Retirement Target Fund Franklin Templeton 2035 Retirement Target Fund Franklin Templeton 2045 Retirement Target Fund FIXED INCOME Franklin Adjustable U.S. Government Securities Fund(5) Franklin Floating Rate Daily Access Fund Franklin High Income Fund Franklin Limited Maturity U.S. Government Securities Fund(5) Franklin Low Duration Total Return Fund Franklin Real Return Fund Franklin Strategic Income Fund Franklin Strategic Mortgage Portfolio Franklin Templeton Hard Currency Fund Franklin Total Return Fund Franklin U.S. Government Securities Fund(5) Templeton Global Bond Fund Templeton Global Total Return Fund Templeton International Bond Fund TAX-FREE INCOME(6) NATIONAL FUNDS Double Tax-Free Income Fund Federal Tax-Free Income Fund High Yield Tax-Free Income Fund Insured Tax-Free Income Fund(7) LIMITED-/INTERMEDIATE-TERM FUNDS California Intermediate-Term Tax-Free Income Fund Federal Intermediate-Term Tax-Free Income Fund Federal Limited-Term Tax-Free Income Fund New York Intermediate-Term Tax-Free Income Fund STATE-SPECIFIC Alabama Arizona California(8) Colorado Connecticut Florida Georgia Kentucky Louisiana Maryland Massachusetts(7) Michigan(7) Minnesota(7) Missouri New Jersey New York(8) North Carolina Ohio(7) Oregon Pennsylvania Tennessee Virginia INSURANCE FUNDS Franklin Templeton Variable Insurance Products Trust(9) (1.) The fund is closed to new investors. Existing shareholders and select retirement plans can continue adding to their accounts. (2.) The fund is a continuously offered, closed-end fund. Shares may be purchased daily; there is no daily redemption. However, each quarter, pending board approval, the fund will authorize the repurchase of 5%-25% of the outstanding number of shares. Investors may tender all or a portion of their shares during the tender period. (3.) Effective 11/1/07, Franklin Aggressive Growth Fund changed its name to Franklin Growth Opportunities Fund. The fund's investment goal and strategy remained the same. (4.) Effective 3/31/08, Franklin Small Cap Growth Fund II changed its name to Franklin Small Cap Growth Fund. The fund's investment goal and strategy remained the same. (5.) An investment in the fund is neither insured nor guaranteed by the U.S. government or by any other entity or institution. (6.) For investors subject to the alternative minimum tax, a small portion of fund dividends may be taxable. Distributions of capital gains are generally taxable. (7.) The fund invests primarily in insured municipal securities. (8.) These funds are available in four or more variations, including long-term portfolios, intermediate-term portfolios, portfolios of insured securities, a high-yield portfolio (CA only) and money market portfolios. (9.) The funds of the Franklin Templeton Variable Insurance Products Trust are generally available only through insurance company variable contracts. 12/08 Not part of the semiannual report (FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) 100 Fountain Parkway P.O. Box 33030 St. Petersburg, FL 33733-8030 SEMIANNUAL REPORT TEMPLETON GLOBAL INCOME FUND INVESTMENT MANAGER Franklin Advisers, Inc. TRANSFER AGENT BNY Mellon Shareowner Services P.O. Box 358035 Pittsburgh, PA 15252-8035 Toll free number: (800) 416-5585 Hearing Impaired phone number: (800) 231-5469 Foreign Shareholders phone number: (201) 680-6578 www.melloninvestor.com/isd FUND INFORMATION (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 identified by the presence of a regular beeping tone. TLGIM S2009 04/09 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 David W. Niemiec and he is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Members of the Audit Committee are: Frank J. Crothers, David W. Niemiec, Ann Torre Bates and Constantine D. Tseretopoulos. ITEM 6. SCHEDULE OF INVESTMENTS. N/A ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The board of trustees of the Fund has delegated the authority to vote proxies related to the portfolio securities held by the Fund to the Fund's manager Franklin Advisers, Inc. in accordance with the Proxy Voting Policies and Procedures (Policies) adopted by the manager. The manager has delegated its administrative duties with respect to the voting of proxies to the Proxy Group within Franklin Templeton Companies, LLC (Proxy Group), an affiliate and wholly owned subsidiary of Franklin Resources, Inc. All proxies received by the Proxy Group will be voted based upon the manager's instructions and/or policies. The manager votes proxies solely in the interests of the Fund and its shareholders. To assist it in analyzing proxies, the manager subscribes to RiskMetrics Group (RiskMetrics), an unaffiliated third party corporate governance research service that provides in-depth analyses of shareholder meeting agendas, vote recommendations, recordkeeping and vote disclosure services. In addition, the manager subscribes to Glass, Lewis & Co., LLC (Glass Lewis), an unaffiliated third party analytical research firm, to receive analyses and vote recommendations on the shareholder meetings of publicly held U.S. companies. Although RiskMetrics' and/or Glass Lewis' analyses are thoroughly reviewed and considered in making a final voting decision, the manager does not consider recommendations from RiskMetrics, Glass Lewis or any other third party to be determinative of the manager's ultimate decision. As a matter of policy, the officers, directors/trustees and employees of the manager and the Proxy Group will not be influenced by outside sources whose interests conflict with the interests of the Fund and its shareholders. Efforts are made to resolve all conflicts in the interests of the manager's clients. Material conflicts of interest are identified by the Proxy Group based upon analyses of client, distributor, broker dealer and vendor lists, information periodically gathered from directors and officers, and information derived from other sources, including public filings. In situations where a material conflict of interest is identified, the Proxy Group may defer to the voting recommendation of RiskMetrics, Glass Lewis or those of another independent third party provider of proxy services; or send the proxy directly to the Fund with the manager's recommendation regarding the vote for approval. If the conflict is not resolved by the Fund, the Proxy Group may refer the matter, along with the recommended course of action by the manager, if any, to an interdepartmental Proxy Review Committee (which may include portfolio managers and/or research analysts employed by the manager), for evaluation and voting instructions. The Proxy Review Committee may defer to the voting recommendation of RiskMetrics, Glass Lewis or those of another independent third party provider of proxy services; or send the proxy directly to the Fund. Where the Proxy Group or the Proxy Review Committee refers a matter to the Fund, it may rely upon the instructions of a representative of the Fund, such as the board of directors or a committee of the board. Where a material conflict of interest has been identified, but the items on which the manager's vote recommendations differ from Glass Lewis, RiskMetrics, or another independent third party provider of proxy services relate specifically to (1) shareholder proposals regarding social or environmental issues or political contributions, (2) "Other Business" without describing the matters that might be considered, or (3) items the manager wishes to vote in opposition to the recommendations of an issuer's management, the Proxy Group may defer to the vote recommendations of the manager rather than sending the proxy directly to the Fund for approval. To avoid certain potential conflicts of interest, the manager will employ echo voting, if possible, in the following instances: (1) when the Fund invests in an underlying fund in reliance on any one of Sections 12(d)(1)(E), (F), or (G) of the 1940 Act, or pursuant to an SEC exemptive order; (2) when the Fund invests uninvested cash in affiliated money market funds pursuant to an SEC exemptive order ("cash sweep arrangement"); or (3) when required pursuant to the Fund's governing documents or applicable law. Echo voting means that the investment manager will vote the shares in the same proportion as the vote of all of the other holders of the Fund's shares. The recommendation of management on any issue is a factor that the manager considers in determining how proxies should be voted. However, the manager does not consider recommendations from management to be determinative of the manager's ultimate decision. As a matter of practice, the votes with respect to most issues are cast in accordance with the position of the company's management. Each issue, however, is considered on its own merits, and the manager will not support the position of the company's management in any situation where it deems that the ratification of management's position would adversely affect the investment merits of owning that company's shares. MANAGER'S PROXY VOTING POLICIES AND PRINCIPLES The manager has adopted general proxy voting guidelines, which are summarized below. These guidelines are not an exhaustive list of all the issues that may arise and the manager cannot anticipate all future situations. In all cases, each proxy will be considered based on the relevant facts and circumstances. BOARD OF DIRECTORS. The manager supports an independent board of directors, and prefers that key committees such as audit, nominating, and compensation committees be comprised of independent directors. The manager will generally vote against management efforts to classify a board and will generally support proposals to declassify the board of directors. The manager will consider withholding votes from directors who have attended less than 75% of meetings without a valid reason. While generally in favor of separating Chairman and CEO positions, the manager will review this issue as well as proposals to restore or provide for cumulative voting on a case-by-case basis, taking into consideration factors such as the company's corporate governance guidelines or provisions and performance. RATIFICATION OF AUDITORS OF PORTFOLIO COMPANIES. The manager will closely scrutinize the role and performance of auditors. On a case-by-case basis, the manager will examine proposals relating to non-audit relationships and non-audit fees. The manager will also consider, on a case-by-case basis, proposals to rotate auditors, and will vote against the ratification of auditors when there is clear and compelling evidence of accounting irregularities or negligence. MANAGEMENT AND DIRECTOR COMPENSATION. A company's equity-based compensation plan should be in alignment with the shareholders' long-term interests. The manager believes that executive compensation should be directly linked to the performance of the company. The manager evaluates plans on a case-by-case basis by considering several factors to determine whether the plan is fair and reasonable, including the RiskMetrics quantitative model utilized to assess such plans and/or the Glass Lewis evaluation of the plans. The manager will generally oppose plans that have the potential to be excessively dilutive, and will almost always oppose plans that are structured to allow the repricing of underwater options, or plans that have an automatic share replenishment "evergreen" feature. The manager will generally support employee stock option plans in which the purchase price is at least 85% of fair market value, and when potential dilution is 10% or less. Severance compensation arrangements will be reviewed on a case-by-case basis, although the manager will generally oppose "golden parachutes" that are considered to be excessive. The manager will normally support proposals that require a percentage of directors' compensation to be in the form of common stock, as it aligns their interests with those of shareholders. ANTI-TAKEOVER MECHANISMS AND RELATED ISSUES. The manager generally opposes anti-takeover measures since they tend to reduce shareholder rights. However, as with all proxy issues, the manager conducts an independent review of each anti-takeover proposal. On occasion, the manager may vote with management when the research analyst has concluded that the proposal is not onerous and would not harm the Fund or its shareholders' interests. The manager generally supports proposals that require shareholder rights' plans ("poison pills") to be subject to a shareholder vote and will closely evaluate such plans on a case-by-case basis to determine whether or not they warrant support. In addition, the manager will generally vote against any proposal to issue stock that has unequal or subordinate voting rights. The manager generally opposes any supermajority voting requirements as well as the payment of "greenmail." The manager generally supports "fair price" provisions and confidential voting. CHANGES TO CAPITAL STRUCTURE. The manager realizes that a company's financing decisions have a significant impact on its shareholders, particularly when they involve the issuance of additional shares of common or preferred stock or the assumption of additional debt. The manager will review, on a case-by-case basis, proposals by companies to increase authorized shares and the purpose for the increase. The manager will generally not vote in favor of dual-class capital structures to increase the number of authorized shares where that class of stock would have superior voting rights. The manager will generally vote in favor of the issuance of preferred stock in cases where the company specifies the voting, dividend, conversion and other rights of such stock and the terms of the preferred stock issuance are deemed reasonable. MERGERS AND CORPORATE RESTRUCTURING. Mergers and acquisitions will be subject to careful review by the research analyst to determine whether they would be beneficial to shareholders. The manager will analyze various economic and strategic factors in making the final decision on a merger or acquisition. Corporate restructuring proposals are also subject to a thorough examination on a case-by-case basis. SOCIAL AND CORPORATE POLICY ISSUES. The manager will generally give management discretion with regard to social, environmental and ethical issues, although the manager may vote in favor of those that are believed to have significant economic benefits or implications for the Fund and its shareholders. GLOBAL CORPORATE GOVERNANCE. Many of the tenets discussed above are applied to the manager's proxy voting decisions for international investments. However, the manager must be flexible in these instances and must be mindful of the varied market practices of each region. The manager will attempt to process every proxy it receives for all domestic and foreign issuers. However, there may be situations in which the manager cannot process proxies, for example, where a meeting notice was received too late, or sell orders preclude the ability to vote. If a security is on loan, the manager may determine that it is not in the best interests of the Fund to recall the security for voting purposes. Also, the manager may abstain from voting under certain circumstances or vote against items such as "Other Business" when the manager is not given adequate information from the company. Shareholders may view the 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 Fund's proxy voting records are available online at franklintempleton.com and posted on the SEC website at www.sec.gov. The proxy voting records are updated each year by August 31 to reflect the most recent 12-month period ended June 30. 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 Mark H. Otani, 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 Mark H. Otani, 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. TEMPLETON GLOBAL INCOME FUND By /s/LAURA F. FERGERSON --------------------------------- Laura F. Fergerson Chief Executive Officer - Finance and Administration Date: April 27, 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: April 27, 2009 By /s/MARK H. OTANI --------------------------------- Mark H. Otani Chief Financial Officer and Chief Accounting Officer Date: April 27, 2009 EX-99.CODE ETH 2 ncsr_code308.txt CODE OF ETHICS Exhibit 12(a)(1) CODE OF ETHICS FOR PRINCIPAL EXECUTIVES & SENIOR FINANCIAL OFFICERS - ------------------------------------------------------------------------------ PROCEDURES Revised March 06, 2008 - ------------------------------------------------------------------------------- FRANKLIN TEMPLETON FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers and Purpose of the Code This code of ethics (the "Code") applies to the Principal Executive Officers, Principal Financial Officer and Principal Accounting Officer (the "Covered Officers," each of whom is set forth in Exhibit A) of each investment company advised by a Franklin Resources subsidiary and that is registered with the United States Securities & Exchange Commission ("SEC") (collectively, "FT Funds") for the purpose of promoting: o Honest and ethical conduct, including the ethical resolution of actual or apparent conflicts of interest between personal and professional relationships; o Full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by or on behalf of the FT Funds; o Compliance with applicable laws and governmental rules and regulations; o The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o Accountability for adherence to the Code. Each Covered Officer will be expected to adhere to a high standard of business ethics and must be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Franklin Resources, Inc. has separately adopted the CODE OF ETHICS AND BUSINESS CONDUCT ("Business Conduct"), which is applicable to all officers, directors and employees of Franklin Resources, Inc., including Covered Officers. It summarizes the values, principles and business practices that guide the employee's business conduct and also provides a set of basic principles to guide officers, directors and employees regarding the minimum ethical requirements expected of them. It supplements the values, principles and business conduct identified in the Code and other existing employee policies. Additionally, the Franklin Templeton Funds have separately adopted the CODE OF ETHICS AND POLICY STATEMENT ON INSIDER TRADING governing personal securities trading and other related matters. The Code for Insider Trading provides for separate requirements that apply to the Covered Officers and others, and therefore is not part of this Code. Insofar as other policies or procedures of Franklin Resources, Inc., the Funds, the Funds' adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superceded by this Code to the extent that they overlap or conflict with the provisions of this Code. Please review these other documents or consult with the Legal Department if have questions regarding the applicability of these policies to you. III. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his or her service to, the FT Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of apposition with the FT Funds. Certain conflicts of interest arise out of the relationships between Covered Officers and the FT Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the FT Funds because of their status as "affiliated persons" of the FT Funds. The FT Funds' and the investment advisers' compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the FT Funds, the investment advisers and the fund administrator of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the FT Funds, for the adviser, the administrator, or for all three), be involved in establishing policies and implementing decisions that will have different effects on the adviser, administrator and the FT Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the FT Funds, the adviser, and the administrator and is consistent with the performance by the Covered Officers of their duties as officers of the FT Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the FT Funds' Boards of Directors ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the FT Funds. Each Covered Officer must: o Not use his or her personal influence or personal relationships improperly to influence investment decisions orfinancial reporting by the FT Funds whereby the Covered Officer would benefit personally to the detriment of the FT Funds; o Not cause the FT Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the FT Funds; o Not retaliate against any other Covered Officer or any employee of the FT Funds or their affiliated persons for reports of potential violations that are made in good faith; o Report at least annually the following affiliations or other relationships:/ 1 o all directorships for public companies and all companies that are required to file reports with the SEC; o any direct or indirect business relationship with any independent directors of the FT Funds; o any direct or indirect business relationship with any independent public accounting firm (which are not related to the routine issues related to the firm's service as the Covered Persons accountant); and o any direct or indirect interest in any transaction with any FT Fund that will benefit the officer (not including benefits derived from the advisory, sub-advisory, distribution or service agreements with affiliates of Franklin Resources). These reports will be reviewed by the Legal Department for compliance with the Code. There are some conflict of interest situations that should always be approved in writing by Franklin Resources General Counsel or Deputy General Counsel, if material. Examples of these include/2: o Service as a director on the board of any public or private Company; o The receipt of any gifts in excess of $100 from any person, from any corporation or association o The receipt of any entertainment from any Company with which the FT Funds has current or prospective business dealings unless such entertainment is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety. Notwithstanding the foregoing, the Covered Officers must obtain prior approval from the Franklin Resources General Counsel for any entertainment with a value in excess of $1000. o Any ownership interest in, or any consulting or employment relationship with, any of the FT Fund's service providers, other than an investment adviser, principal underwriter, administrator or any affiliated person thereof; o A direct or indirect financial interest in commissions, transaction charges or spreads paid by the FT Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. Franklin Resources General Counsel or Deputy General Counsel will provide a report to the FT Funds Audit Committee of any approvals granted at the next regularly scheduled meeting. IV. Disclosure and Compliance o Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the FT Funds; o Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the FT Funds to others, whether within or outside the FT Funds, including to the FT Funds' directors and auditors, and to governmental regulators and self-regulatory organizations; o Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the FT Funds, the FT Fund's adviser and the administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the FT Funds file with, or submit to, the SEC and in other public communications made by the FT Funds; and o It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. V. Reporting and Accountability Each Covered Officer must: o Upon becoming a covered officer affirm in writing to the Board that he or she has received, read, and understands the Code (see Exhibit B); o Annually thereafter affirm to the Board that he has complied with the requirements of the Code; and o Notify Franklin Resources' General Counsel or Deputy General Counsel promptly if he or she knows of any violation of this Code. Failure to do so is itself is a violation of this Code. Franklin Resources' General Counsel and Deputy General Counsel are responsible for applying this Code to specific situations in which questions are presented under it and have the authority to interpret this Code in any particular situation./3 However, the Independent Directors of the respective FT Funds will consider any approvals or waivers/4 sought by any Chief Executive Officers of the Funds. The FT Funds will follow these procedures in investigating and enforcing this Code: o Franklin Resources General Counsel or Deputy General Counsel will take all appropriate action to investigate any potential violations reported to the Legal Department; o If, after such investigation, the General Counsel or Deputy General Counsel believes that no violation has occurred, The General Counsel is not required to take any further action; o Any matter that the General Counsel or Deputy General Counsel believes is a violation will be reported to the Independent Directors of the appropriate FT Fund; o If the Independent Directors concur that a violation has occurred, it will inform and make a recommendation to the Board of the appropriate FT Fund or Funds, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; o The Independent Directors will be responsible for granting waivers, as appropriate; and o Any changes to or waivers of this Code will, to the extent required, are disclosed as provided by SEC rules./5 VI. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the FT Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the FT Funds, the FT Funds' advisers, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The FT Code of Ethics and Policy Statement On Insider Trading, adopted by the FT Funds, FT investment advisers and FT Fund's principal underwriter pursuant to Rule 17j-1 under the Investment Company Act, the Code of Ethics and Business Conduct and more detailed policies and procedures set forth in FT's Employee Handbook are separate requirements applying to the Covered Officers and others, and are not part of this Code. VII. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the FT Funds' Board including a majority of independent directors. VIII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the FT Funds' Board and their counsel. IX. Internal Use The Code is intended solely for the internal use by the FT Funds and does not constitute an admission, by or on behalf of any FT Funds, as to any fact, circumstance, or legal conclusion. X. Disclosure on Form N-CSR Item 2 of Form N-CSR requires a registered management investment company to disclose annually whether, as of the end of the period covered by the report, it has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these officers are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, it must explain why it has not done so. The registrant must also: (1) file with the SEC a copy of the code as an exhibit to its annual report; (2) post the text of the code on its Internet website and disclose, in its most recent report on Form N-CSR, its Internet address and the fact that it has posted the code on its Internet website; or (3) undertake in its most recent report on Form N-CSR to provide to any person without charge, upon request, a copy of the code and explain the manner in which such request may be made. Disclosure is also required of amendments to, or waivers (including implicit waivers) from, a provision of the code in the registrant's annual report on Form N-CSR or on its website. If the registrant intends to satisfy the requirement to disclose amendments and waivers by posting such information on its website, it will be required to disclose its Internet address and this intention. The Legal Department shall be responsible for ensuring that: o a copy of the Code is filed with the SEC as an exhibit to each Fund's annual report; and o any amendments to, or waivers (including implicit waivers) from, a provision of the Code is disclosed in the registrant's annual report on Form N-CSR. In the event that the foregoing disclosure is omitted or is determined to be incorrect, the Legal Department shall promptly file such information with the SEC as an amendment to Form N-CSR. In such an event, the Fund Chief Compliance Officer shall review the Code and propose such changes to the Code as are necessary or appropriate to prevent reoccurrences. EXHIBIT A Persons Covered by the Franklin Templeton Funds Code of Ethics March 2008 FRANKLIN GROUP OF FUNDS Edward B. Jamieson President and Chief Executive Officer - Investment Management Charles B. Johnson President and Chief Executive Officer - Investment Management Rupert H. Johnson, Jr. President and Chief Executive Officer - Investment Management William J. Lippman President and Chief Executive Officer - Investment Management Christopher Molumphy President and Chief Executive Officer - Investment Management Galen G. Vetter Senior Vice President and Chief Executive Officer - Finance and Administration Jimmy D. Gambill Vice President Laura Fergerson Chief Financial Officer and Chief Accounting Officer FRANKLIN MUTUAL SERIES FUNDS Peter Langerman Chief Executive Officer-Investment Management Galen G. Vetter Senior Vice President and Chief Executive Officer - Finance and Administration Jimmy D. Gambill Vice President Laura Fergerson Chief Financial Officer and Chief Accounting Officer TEMPLETON GROUP OF FUNDS Mark Mobius President and Chief Executive Officer - Investment Management Christopher J. Molumphy President and Chief Executive Officer - Investment Management Gary P. Motyl President and Chief Executive Officer - Investment Management Donald F. Reed President and Chief Executive Officer - Investment Management Galen G. Vetter Senior Vice President and Chief Executive Officer - Finance and Administration Jimmy D. Gambill Vice President Laura Fergerson Chief Financial Officer and Chief Accounting Officer EXHIBIT B ACKNOWLEDGMENT FORM DECEMBER FRANKLIN TEMPLETON FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS INSTRUCTIONS: 1. Complete all sections of this form. 2. Print the completed form, sign, and date. 3. Submit completed form to FT's General Counsel c/o Maria Abbott within 10 days of becoming a Covered Officer and by January 30th of each subsequent year. INTER-OFFICE MAIL: Maria Abbott, Manager, Code of Ethics, Global Compliance SM-920/2 TELEPHONE: (650) 312-5698 Fax: (650) 312-5646 E-MAIL: Abbott, Maria (internal address); mabbott@frk.com (external address) - ---------------------------------------------------------------------------- COVERED OFFICER'S NAME: - ---------------------------------------------------------------------------- TITLE: - ---------------------------------------------------------------------------- DEPARTMENT: - ---------------------------------------------------------------------------- LOCATION: - ---------------------------------------------------------------------------- CERTIFICATION FOR YEAR ENDING: - ---------------------------------------------------------------------------- TO: Franklin Resources General Counsel, Legal Department I hereby acknowledge receipt of a copy of Franklin Templeton Fund's code of ethics for Principal Executive Officers and Senior Financial Officers (the "Code") that I have read and understand. I will comply fully with all provisions of the Code to the extent they apply to me during the period of my employment. I further understand and acknowledge that any violation of the Code may subject me to disciplinary action, including termination of employment. - ---------------------------- ---------------------- Signature Date signed - ----------------------------- 1. Reporting of these affiliations or other relationships shall be made by completing the annual Directors and Officers Questionnaire and returning the questionnaire to Franklin Resources Inc, General Counsel or Deputy General Counsel. 2. Any activity or relationship that would present a conflict for a Covered Officer may also present a conflict for the Covered Officer if a member of the Covered Officer's immediate family engages in such an activity or has such a relationship. The Cover Person should also obtain written approval by FT's General Counsel in such situations. 3. Franklin Resources General Counsel and Deputy General Counsel are authorized to consult, as appropriate, with members of the Audit Committee, counsel to the FT Funds and counsel to the Independent Directors, and are encouraged to do so. 4. Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of a material departure from a provision of the code of ethics" and "implicit waiver," which must also be disclosed, as "the registrant's failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer" of the registrant. See Part X. 5. See Part X. EX-99.CERT 3 gim302certs0209.txt 302 CERTS Exhibit 12(a)(2) I, Laura F. Fergerson, certify that: 1. I have reviewed this report on Form N-CSR of TEMPLETON GLOBAL INCOME FUND; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 4/27/2009 S\ LAURA F. FERGERSON Laura F. Fergerson Chief Executive Officer - Finance and Administration I, Mark H. Otani, certify that: 1. I have reviewed this report on Form N-CSR of TEMPLETON GLOBAL INCOME FUND; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 4/27/2009 S\ MARK H. OTANI Mark H. Otani Chief Financial Officer and Chief Accounting Officer EX-99.906CERT 4 gim906certs0209.txt 906 CERTS Exhibit 12(b) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Laura F. Fergerson, Chief Executive Officer of the TEMPLETON GLOBAL INCOME FUND (the "Registrant"), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The periodic report on Form N-CSR of the Registrant for the period ended 2/28/2009 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: 4/27/2009 S\ LAURA F. FERGERSON Laura F. Fergerson Chief Executive Officer - Finance and Administration CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Mark H. Otani, Chief Financial Officer of the TEMPLETON GLOBAL INCOME FUND (the "Registrant"), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The periodic report on Form N-CSR of the Registrant for the period ended 2/28/2009 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: 4/27/2009 S\ MARK H. OTANI Mark H. Otani Chief Financial Officer and Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----