-----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, T7WK8lPCIpXOc0qz3dVjKdTybQRVP1AvC0KmRmpJLl7aixKDd+9v/8PoVJDBildN 3E/mEGKPP1bB1Mp4IMRUuA== 0000928385-96-000413.txt : 19960501 0000928385-96-000413.hdr.sgml : 19960501 ACCESSION NUMBER: 0000928385-96-000413 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960228 FILED AS OF DATE: 19960430 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLETON GLOBAL INCOME FUND INC CENTRAL INDEX KEY: 0000828803 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05459 FILM NUMBER: 96553571 BUSINESS ADDRESS: STREET 1: 700 CENTRAL AVE STREET 2: P O BOX 33030 CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 8138238712 N-30D 1 FORM N-30D Templeton Global Income Fund Your Fund's Objective: The Templeton Global Income Fund seeks current income, with capital appreciation and growth of income, by investing primarily in a portfolio of debt securities of companies, governments, and government agencies of various nations throughout the world. April 16, 1996 Dear Shareholder: We are pleased to bring you the semi-annual report of the Templeton Global Income Fund for the period ended February 29, 1996. The six months under review were marked by slow global economic growth, as central banks eased monetary policy and cut benchmark interest rates. Consequently, global bond prices rose, although the pace and magnitude of the increases were different in each country. In Europe, slower economic growth and lower interest rates were most beneficial to the higher-yielding bond markets such as Italy, Spain and Sweden. Declining interest rates reduced pressure on these countries' currencies and diminished the carrying costs of their large debt burdens. Perhaps the most important factor affecting the performance of their bonds was the countries' efforts to meet fiscal deficit and inflation standards required by the European Monetary Union (EMU). Targeted to take effect in 1999, the EMU will result in a common currency for all qualifying nations. 1 In North America, the decline in short-term interest rates was particularly pronounced in the United States. Believing that U.S. interest rates, which had risen dramatically in 1994 and the early part of 1995, were too high, the Federal Reserve Board lowered short-term rates twice during 1995 and again in January 1996. Long-term yields followed suit, and bond prices increased during the period. In Canada, however, the bond market rally was not as significant due to the September referendum on the possible secession of Quebec. Although the province did not secede, this referendum alerted international investors to the country's political uncertainty. Underlying economic conditions in Pacific Rim countries were different from conditions in the rest of the world. Despite the fact that Japan's short-term interest rates declined during the period, its economic growth continued to falter. In Australia and New Zealand, economic growth was among the highest of any developed markets during the period, which led to modest currency appreciation and tended to dampen any reduction in interest rates. Even though interest rates were the most volatile factor in global bond markets during the period, currency markets - -------------------------------------------------------------------------------- Templeton Global Income Fund Geographic Distribution of Issuer of Securities Based on Total Net Assets 2/29/96 [PIE GRAPH APPEARS HERE] Europe 33.8% United States 26.4% Australia & New Zealand 16.4% Latin America 12.3% Canada 7.3% Asia 3.8%
were also important, especially in January when the U.S. dollar began to appreciate against most European currencies. This lessened the benefit of rising European bond prices to U.S. investors. The main factor behind the dollar's strength was the belief of international investors that European economic growth would remain low because governments were cutting budget deficits in an effort to meet EMU entry requirements. Within this environment, we stressed two different strategies. First, we positioned the Fund's average maturity for 2 lower interest rates. Because bonds with longer maturities tend to appreciate more than short-term bonds when interest rates decline, we maintained an average portfolio maturity of approximately 7.5 years during the period, an average maturity which the Fund manager believed was warranted. Second, we emphasized investments in Sweden, Ireland, Spain, and the United Kingdom, which were well- positioned to profit from reform in domestic finance. As of February 29, 1996, the Fund had established positions in Sweden (3% of total net assets) and Ireland (1%). We also added 4.7% to the Fund's Spanish position and 7.7% to its position in the United Kingdom. In markets where domestic conditions became less attractive over the six-month period, including Germany and France, we reduced our holdings. At the end of the period, our position in Germany had declined from 13.8% to zero; in France from 4.7% to zero; and in the U.S. from 28.4% to 26.4%. Credit quality remains an important factor in selecting the Fund's investments, which on February 29, 1996, consisted primarily of investment-grade securities as rated by one of the nationally recognized rating services, or of non-rated securities we judged to be of Templeton Global Income Fund Portfolio Breakdown on 2/29/96 Based on Total Net Assets Government Bonds 85.1% Corporate Bonds 6.4% Common Stock 0.9% Preferred Stock 0.3% Short-Term Obligations & Other Net Assets 7.3% For a complete list of portfolio holdings, please see page 7 of this report. equal quality. At the end of the period, about 75% of the debt securities in the Fund's portfolio were rated AA or higher, 11% were rated A or BBB, and 14% were rated below investment grade. The lower-rated bonds represented obligations of Argentina, Columbia, Russia, Hungary, the Philippines, Mexico, Brazil and Venezuela. Approximately 91.5% of the Fund's portfolio was held in bonds, 1.2% in equities, and the remaining 7.3% in short-term obligations and other net assets. Looking forward, we believe that the major fundamental trends in the global macroeconomic environment are subdued economic activity and low inflation. In our opinion, interest rates in this environment may decline over the long term. Although relative economic weakness in 3 Europe may cause the U.S. dollar to rise in the short term, we continue to believe that the underlying fundamentals in the U.S. economy (inadequate savings and dependence on foreign capital) may lead to a lower value for the currency relative to the currencies of its major partners. As always, we remind you that there are special risks involved with global investing related to market, currency, economic, political, and other factors, in addition to the heightened risks associated with the relatively small size and lesser liquidity of developing markets. We thank you for your participation in the Templeton Global Income Fund and welcome any comments or suggestions you may have. Sincerely, /s/ Neil S. Devlin Neil S. Devlin Portfolio Manager Templeton Global Income Fund, Inc. 4 Performance Summary During the reporting period, Templeton Global Income Fund shareholders received income distributions of 30 cents ($0.30) per share. The Fund's closing price on the New York Stock Exchange (NYSE) increased from $6.75 on August 31, 1995 to $7.25 on February 29, 1996, and the Fund produced a total return of 11.95% in market-price terms for this six-month period. The Fund's net asset value per share increased from $8.00 on August 31, 1995 to $8.23 on February 29, 1996. Based on the change in net asset value (in contrast to market price), the Fund delivered a total return of 7.22% for this same period. Both total return figures assume reinvestment of dividends and capital gains in accordance with the dividend reinvestment plan. Of course, past performance is not indicative of future results, and distributions will vary depending on income earned by the Fund. Templeton Global Income Fund Cumulative Total Returns* Periods Ended February 29, 1996
Since Inception One-Year Five-Year (3/17/88) Based on change in net asset value 15.45% 44.78% 85.51% Based on change in market price 14.84% 33.29% 56.82%
*Total return calculations assume reinvestment of distributions at net asset value or at market price in accordance with the dividend reinvestment plan. Past performance is not predictive of future results. 5 Templeton Global Income Fund, Inc. Financial Highlights - -------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE(For a share outstanding throughout the period)
SIX MONTHS ENDED YEAR ENDED AUGUST 31 FEBRUARY 29, 1996 ---------------------------------------------------- (UNAUDITED) 1995 1994+ 1993 1992 1991 ----------------- -------- -------- ---------- ---------- -------- Net asset value, begin- ning of period $ 8.00 $ 7.89 $ 8.57 $ 8.86 $ 8.48 $ 8.51 -------- -------- -------- ---------- ---------- -------- Income from investment operations: Net investment income .31 .64 .67 .79 .84 .86 Net realized and unrealized gain (loss) .22 .11 (.75) (.36) .38 .06 -------- -------- -------- ---------- ---------- -------- Total from investment operations .53 .75 (.08) .43 1.22 .92 -------- -------- -------- ---------- ---------- -------- Distributions: Dividends from net in- vestment income (.30) (.64) (.06) (.64) (.84) (.86) Distributions from net realized gains -- -- (.12) (.06) -- (.09) Tax basis return of capital -- -- (.42) (.02) -- -- -------- -------- -------- ---------- ---------- -------- Total distributions (.30) (.64) (.60) (.72) (.84) (.95) -------- -------- -------- ---------- ---------- -------- Change in net asset value .23 .11 (.68) (.29) .38 (.03) -------- -------- -------- ---------- ---------- -------- Net asset value, end of period $ 8.23 $ 8.00 $ 7.89 $ 8.57 $ 8.86 $ 8.48 ======== ======== ======== ========== ========== ======== TOTAL RETURN * Based on market value per share 11.95% 8.80% (7.64)% (7.07)% 21.30% 24.96% Based on net asset value per share 7.22% 11.30% (.15)% 5.34% 14.90% 11.70% RATIOS/SUPPLEMENTAL DATA Net assets, end of pe- riod (000) $990,870 $964,013 $949,850 $1,032,770 $1,055,456 $991,402 Ratio of expenses to average net assets .72%** .78% .79% .79% .81% .82% Ratio of net investment income to average net assets 7.47%** 8.19% 8.17% 9.40% 9.68% 10.12% Portfolio turnover rate 37.58% 104.37% 138.34% 264.61% 189.94% 257.11%
*NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR. **ANNUALIZED. +BASED ON WEIGHTED AVERAGE SHARES OUTSTANDING. SEE NOTES TO FINANCIAL STATEMENTS. 6 Templeton Global Income Fund, Inc. Investment Portfolio, February 29, 1996 (unaudited) - --------------------------------------------------------------------------------
PRINCIPAL IN LOCAL CURRENCY* VALUE - ------------------------------------------------------------------------------ BONDS--CORPORATE: 6.4% - ------------------------------------------------------------------------------ British Petroleum Co. PLC, 10.875%, 10,000,000 Can. 8/01/01 $ 8,444,801 5,750,000 U.S. Companhia Suzano Papel, 10.25%, 10/06/01 5,548,750 5,101,180 U.S. Electricidad de Caracas, FRN, 9/30/03 2,563,343 Empresa Colombiana de Petroleos, 7.25%, 4,750,000 U.S. 7/08/98 4,803,438 7,700,000 U.S. Essar Gujarat Ltd., 8.40%, 7/15/99, 144A 7,574,875 Hidroelectrica Alicura SA, 8.375%, 2,000,000 U.S. 3/15/99, 144A 1,890,000 Klabin Fabricadora de Papel Celulose SA, 4,750,000 U.S. 11.00%, 4/15/98, 144A 4,809,375 5,000,000 U.S. Pohang Iron & Steel, 6.625%, 7/01/03 4,915,050 5,000,000 U.S. Quantas Airways Ltd., 7.50%, 6/30/03 5,077,050 Telecom Argentina Stet-France SA, 8.375%, 8,000,000 U.S. 10/18/00, 144A 7,972,000 3,000,000 U.S. Telecom Brasileiras, 10.375%, 9/09/97 3,082,500 Telefonica de Argentina SA, 8.375%, 7,500,000 U.S. 10/01/00, 144A 6,975,000 ------------ TOTAL BONDS--CORPORATE (cost $66,331,547) 63,656,182 - ------------------------------------------------------------------------------ BONDS--GOVERNMENT & GOVERNMENT AGENCIES: 85.1% - ------------------------------------------------------------------------------ Bank Foreign Economic Affairs Russia, 9,000,000 Ger. 7.50%, 9/27/96 6,105,328 3,000,000 U.S. Bocon Previsionales II, FRN, 4/01/01 3,019,500 Buoni Poliennali del Tes: 19,775,000,000 Itl. 8.50%, 8/01/99 12,289,577 12,730,000,000 Itl. 10.50%, 9/01/05 8,255,644 14,300,000 Aus. Eurofima, 9.875%, 1/17/07 11,423,559 1,078,800 U.S. Government of Brazil, 6.375, FRN, 1/01/01 941,927 Government of Denmark: 49,000,000 Den. 9.00%, 11/15/98 9,351,978 100,150,000 Den. 8.00%, 5/15/03 18,500,891 Government of Italy: 13,990,000,000 Itl. 12.00%, 1/01/97 9,108,731 20,750,000,000 Itl. 12.00%, 1/20/98 13,811,381 12,860,000,000 Itl. FRN, 8/01/99 8,371,348 31,460,000,000 Itl. 10.50%, 7/15/00 20,784,415 16,630,000 N.Z. Government of New Zealand, 6.50%, 2/15/00 10,652,693 Government of Spain: 3,342,000,000 Sp. 11.90%, 7/15/96 27,254,910 2,156,680,000 Sp. 12.25%, 3/25/00 19,250,440 1,872,700,000 Sp. 11.30%, 1/15/02 16,452,407 1,358,400,000 Sp. 10.00%, 2/28/05 11,196,635 94,078,000 Den. Kingdom of Denmark, 8.00%, 11/15/01 17,534,844 Kingdom of Sweden: 80,800,000 Swe. 10.25%, 5/05/03 13,092,784 37,200,000 Swe. 9.00%, 4/20/09 5,516,292 10,000,000 U.S. Korea Development Bank, 7.90%, 2/01/02 10,655,500
7 Templeton Global Income Fund, Inc. Investment Portfolio, February 29, 1996 (unaudited) (cont.) - --------------------------------------------------------------------------------
PRINCIPAL IN LOCAL CURRENCY* VALUE - ------------------------------------------------------------------------------- BONDS--GOVERNMENT & GOVERNMENT AGENCIES (CONT.) - ------------------------------------------------------------------------------- Nacional Financiera SNC, 10.625%, 2,500,000 U.S. 11/22/01 $ 2,462,500 10,000,000 U.S. National Bank of Hungary, 7.95%, 11/01/03 9,875,000 New South Wales Treasury Corp: 10,100,000 Aus. 12.00%, 12/01/01, 144A 8,924,722 30,100,000 Aus. 7.00%, 4/01/04 20,640,183 NHA Manulife: 3,643,798 Can. #96405089, 9.125%, 6/01/02 2,783,587 2,037,309 Can. #96405378, 9.25%, 8/01/02 1,548,717 4,615,380 Can. #96405386, 9.25%, 8/01/02 3,502,958 Philippines Development Bank, 8.00%, 5,000,000 U.S. 7/22/98 5,162,500 77,000,000 Can. Providence of Ontario, 7.75%, 12/08/03 56,818,967 Province of British Columbia, 10.60%, 8,000,000 Can. 9/05/20 7,244,524 46,700,000 Aus. Queensland Treasury Corp., 8.00%, 5/14/03 34,441,040 Republic of Argentina: 7,030,000 U.S. 10.95%, 11/01/99 7,399,075 30,485,000 U.S. 8.375%, 12/20/03 26,064,705 6,710,000 Irl. Republic of Ireland, 6.25%, 10/18/04 9,590,100 Thailand Military Bank: 90,000,000 Thai. 11.125%, 6/03/96 3,570,012 58,000,000 Thai. 11.00%, 6/05/96 2,289,171 Treasury Corp. of Victoria, 8.25%, 66,600,000 Aus. 10/15/03 49,675,200 United Kingdom: 11,815,000 U.K. 9.50%, 1/15/99 19,297,984 27,090,000 U.K. 6.75%, 11/26/04 38,422,919 12,015,000 U.K. 8.50%, 7/16/07 18,963,010 U.S. Treasury Bonds: 21,030,000 U.S. 10.75%, 5/15/03 26,783,598 5,425,000 U.S. 6.25%, 8/15/23 5,163,081 12,374,000 U.S. 7.625%, 2/15/25 14,007,739 U.S. Treasury Notes: 10,000 U.S. 5.125%, 4/30/98 9,936 16,800,000 U.S. 9.125%, 5/15/99 18,501,000 19,265,000 U.S. 8.00%, 8/15/99 20,667,685 3,827,000 U.S. 7.75%, 12/31/99 4,093,704 17,948,000 U.S. 5.75%, 8/15/03 17,650,781 11,500,000 U.S. 7.25%, 5/15/04 12,337,315 17,950,000 U.S. 11.625%, 11/15/04 24,555,062 29,980,000 U.S. 6.50%, 5/15/05 30,682,731 22,300,000 U.S. 6.50%, 8/15/05 22,812,231 19,900,000 U.S. 5.875%, 11/15/05 19,492,647
8 Templeton Global Income Fund, Inc. Investment Portfolio, February 29, 1996 (unaudited) (cont.) - --------------------------------------------------------------------------------
PRINCIPAL IN LOCAL CURRENCY* VALUE - ------------------------------------------------------------------------------- BONDS--GOVERNMENT & GOVERNMENT AGENCIES (CONT.) - ------------------------------------------------------------------------------- United Mexican States: 21,000,000 U.S. 10.805%, FRN, 7/21/97, 144A $ 21,525,000 14,936,000 U.S. 9.75%, 2/06/01 14,375,900 Venezuela Front Load Interest Reduction 14,500,000 U.S. Bond, 6.00%, 3/31/07 8,101,875 ------------ TOTAL BONDS--GOVERNMENT & GOVERNMENT AGENCIES (cost $864,624,421) 843,007,943 - ------------------------------------------------------------------------------- NUMBER OF SHARES** - ------------------------------------------------------------------------------- COMMON STOCK: 0.9% (cost $8,267,959) - ------------------------------------------------------------------------------- 355,000 U.S. American Health Properties Inc. 8,253,750 - ------------------------------------------------------------------------------- PREFERRED STOCKS: 0.3% - ------------------------------------------------------------------------------- American Health Properties Psychiatric 35,500 U.S. Group, pfd. 541,375 91,500 Sp. Santander Finance Ltd., B, pfd. 2,207,438 ------------ TOTAL PREFERRED STOCK (cost $2,837,903) 2,748,813 - ------------------------------------------------------------------------------- PRINCIPAL IN LOCAL CURRENCY* - ------------------------------------------------------------------------------- SHORT TERM OBLIGATIONS: 4.7% - ------------------------------------------------------------------------------- 100,000,000 Thai. Bangkok Bank, 11.50%, 5/16/96 3,972,959 2,780,000 U.S. Federal Home Loan Bank, 5.26%, 4/10/96 2,764,154 Federal Home Loan Mortgage Corp., 5.14%, 2,750,000 U.S. 3/04/96 2,748,818 New Zealand Treasury Bills, 8.05% to 34,382,000 N.Z. 8.36% with maturities to 12/18/96 21,970,250 77,000,000 Swe. Sweden Treasury Bill, 8.68%, 11/20/96 10,810,515 U.S. Treasury Bills, 4.70% to 5.04% with 4,441,000 U.S. maturities to 5/02/96 4,415,469 ------------ TOTAL SHORT TERM OBLIGATIONS (cost $46,768,100) 46,682,165 - ------------------------------------------------------------------------------- TOTAL INVESTMENTS: 97.4% (cost $988,829,930) 964,348,853 UNREALIZED GAIN IN FORWARD EXCHANGE CONTRACTS: (0.1)% (45,158) OTHER ASSETS, LESS LIABILITIES: 2.7% 26,566,115 ------------ TOTAL NET ASSETS: 100.0% $990,869,810 ============
*CURRENCY OF COUNTRIES INDICATED. **COUNTRY OF ORIGIN. SEE NOTES TO FINANCIAL STATEMENTS. 9 Templeton Global Income Fund, Inc. Financial Statements - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES February 29, 1996 (unaudited) Assets: Investments in securities, at value (identified cost $988,829,930) $ 964,348,853 Cash 25,913 Receivables: Investment securities sold 46,382,204 Interest 24,195,721 Unrealized gains on forward exchange contracts (Note 6) 369,799 -------------- Total assets 1,035,322,490 -------------- Liabilities: Payable for investment securities purchased 43,154,294 Unrealized loss on forward exchange contracts (Note 6) 414,957 Accrued expenses 883,429 -------------- Total liabilities 44,452,680 -------------- Net assets, at value $ 990,869,810 ============== Net assets consist of: Undistributed net investment income $ 678,435 Net unrealized depreciation (24,517,768) Accumulated net realized loss (37,649,802) Net capital paid in on shares of capital stock 1,052,358,945 -------------- Net assets, at value $ 990,869,810 ============== Shares outstanding 120,453,400 ============== Net asset value per share ($990,869,810 / 120,453,400) $ 8.23 ==============
STATEMENT OF OPERATIONS for the six months ended February 29, 1996 (unaudited) Investment income: (net of $897,646 foreign taxes withheld) Dividends $ 274,328 Interest 40,071,647 ----------- Total income $40,345,975 Expenses: Management fees (Note 3) 2,513,682 Administrative fees (Note 3) 629,491 Transfer agent fees 87,000 Custodian fees 5,000 Reports to shareholders 158,000 Audit fees 22,000 Registration and filing fees 88,000 Directors' fees and expenses 26,500 Other 1,847 ----------- Total expenses 3,531,520 ----------- Net investment income 36,814,455 Realized and unrealized gain (loss): Net realized loss on: Investments (371,684) Foreign currency transactions (2,208,205) ----------- (2,579,889) ----------- Net unrealized appreciation on: Investments 28,739,637 Foreign currency translation of other assets and liabilities 18,872 ----------- 28,758,509 ----------- Net realized and unrealized gain 26,178,620 ----------- Net increase in net assets resulting from operations $62,993,075 ===========
SEE NOTES TO FINANCIAL STATEMENTS. 10 Templeton Global Income Fund, Inc. Financial Statements (cont.) - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED FEBRUARY 29, 1996 YEAR ENDED (UNAUDITED) AUGUST 31, 1995 ----------------- --------------- Increase (decrease) in net assets: Operations: Net investment income $ 36,814,455 $ 77,160,130 Net realized loss on investment and for- eign currency transactions (2,579,889) (34,583,736) Net unrealized appreciation 28,758,509 48,074,128 ------------ ------------ Net increase in net assets resulting from operations 62,993,075 90,650,522 Distributions to shareholders from net investment income (36,136,020) (76,487,909) ------------ ------------ Net increase in net assets 26,857,055 14,162,613 Net assets: Beginning of period 964,012,755 949,850,142 ------------ ------------ End of period $990,869,810 $964,012,755 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 11 Templeton Global Income Fund, Inc. Financial Statements (unaudited) - -------------------------------------------------------------------------------- 1. SUMMARY OF ACCOUNTING POLICIES Templeton Global Income Fund, Inc. (the Fund) is a closed-end, non-diversified management investment company registered under the Investment Company Act of 1940. The Fund seeks current income, with capital appreciation and growth of income, by investing primarily in a portfolio of debt securities of companies, governments, and government agencies of various nations throughout the world. The following summarizes the Fund's significant accounting policies. a. Securities Valuations: Securities, including options, listed or traded on a recognized national or foreign exchange or NASDAQ are valued at the last reported sales prices on the principal exchange on which the securities are traded. Over-the-counter securi- ties and listed securities for which no sale is reported are valued at the mean between the last current bid and asked prices. Securities for which market quo- tations are not readily available are valued at fair value as determined by management and approved in good faith by the Board of Directors. b. Foreign Exchange Contracts: The Fund enters into forward exchange contracts and currency option contracts in order to hedge against foreign exchange risks. (i) Forward Exchange Contracts: These contracts are valued daily and the Fund's equity therein, representing unrealized gain or loss on the contracts, is in- cluded in the Statement of Assets and Liabilities. Realized and unrealized gains and losses are included in the Statement of Operations. (ii) Currency Option Contracts: Options purchased are recorded as investments; options written (sold) are accounted for as liabilities. When an option ex- pires, the premium (original option value) is realized as a gain if the option was written or realized as a loss if the option was purchased. When the exer- cise of an option results in a cash settlement, the difference between the pre- mium and the settlement proceeds is realized as a gain or loss. When securities are acquired or delivered upon exercise of an option, the acquisition cost or sale proceeds are adjusted by the amount of the premium. When an option is closed, the difference between the premium and the cost to close the position is realized as a gain or loss. c. Indexed Securities: The Fund may invest in debt instruments in which the principal and/or interest is dependent on another factor such as a yield curve, currency exchange rates or commodity prices. The Fund's objective in holding these securities, commonly called structured notes, is to tailor the Fund's investments to the specific risk and returns it wishes to assume while avoiding unwanted risk or change the Fund's exposure to a particular foreign exchange rate or the spread between two foreign exchange rates. d. Foreign Currency Transactions: Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign curren- cies are translated into U.S. dollar amounts on the respective dates of such transactions. When the Fund purchases or sells foreign securities it customar- ily enters into a foreign exchange contract to minimize foreign exchange risk between the trade date and the settlement date of such transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of for- eign currencies, currency gains or losses realized between the trade and set- tlement dates on securities transactions, the differences between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at the end of the fiscal period, resulting from changes in the exchange rates. 12 Templeton Global Income Fund, Inc. Financial Statements (unaudited) (cont.) - -------------------------------------------------------------------------------- e. Futures Contracts: The Fund may enter into futures contracts and options written on futures con- tracts in order to hedge against risks from changes in currency exchange rates or interest rates. These futures contracts and options written on futures con- tracts are valued daily and the Fund's equity therein, representing unrealized gain or loss on the contract, is included in the Statement of Assets and Lia- bilities. Realized and unrealized gains and losses are included in the State- ment of Operations. Margin deposits of cash or securities required with respect to contracts traded on exchanges are maintained by the Fund's custodian in seg- regated accounts. Variation margin payments are made or received on futures on a weekly basis as appreciation or depreciation in the contracts occurs. f. Income Taxes: It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no provision has been made for income taxes. g. Security Transactions, Investment Income, Distributions and Expenses: Security transactions are accounted for on a trade date basis. Dividend income is recorded on the ex-dividend date. Certain dividend income on foreign securi- ties is recorded as soon as information is available to the Fund. Interest in- come and estimated expenses are accrued daily. Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. h. Accounting Estimates: The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expense during the reporting period. Actual results could differ from those estimates. 2. TRANSACTIONS IN SHARES OF CAPITAL STOCK As of February 29, 1996, there were 200,000,000 shares of capital stock autho- rized ($0.01 par value). During the six months ended February 29, 1996 and the year ended August 31, 1995, there were no share transactions. 3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Certain officers of the Fund are also directors or officers of Templeton In- vestment Counsel, Inc. (TICI) and Templeton Global Investors, Inc. (TGII), the Fund's investment manager and administrative manager, respectively. The Fund pays monthly an investment management fee to TICI equal, on an annual basis, to 0.55% of the average daily net assets of the Fund up to $200 million and 0.50% of the average daily net assets in excess of $200 million. The Fund pays TGII monthly a fee of 0.15% per annum on the first $200 million of the Fund's aver- age daily net assets, 0.135% of the next $500 million, and 0.10% per annum of average net assets in excess of $700 million. 4. PURCHASES AND SALES OF SECURITIES Purchases and sales of securities (excluding short-term securities) for the six months ended February 29, 1996 aggregated $350,101,134 and $377,704,065, re- spectively. The cost of securities for federal income tax purposes is $988,795,910. Realized gains and losses are reported on an identified cost ba- sis. At February 29, 1996, the aggregate gross unrealized appreciation and deprecia- tion of portfolio securities, based on cost for federal income tax purposes, was as follows: Unrealized appreciation $ 12,296,800 Unrealized depreciation (36,777,877) ------------ Net unrealized depreciation $(24,481,077) ============
13 Templeton Global Income Fund, Inc. Financial Statements (unaudited) (cont.) - -------------------------------------------------------------------------------- 5. TAX LOSS CARRYOVERS At August 31, 1995, the Fund had tax basis losses of $19,800,000 which may be carried over to offset future capital gains. Such losses expire in 2003. In ad- dition, as required by the tax rules, the Fund has deferred currency losses oc- curring subsequent to October 31, 1994 of $14,400,000 to the year ending August 31, 1996. 6. FINANCIAL INSTRUMENTS During the six months ended February 29, 1996, the Fund has been a party to fi- nancial instruments with off-balance-sheet risks, primarily forward exchange contracts, in order to minimize the risk to the Fund, with respect to its port- folio transactions, from adverse changes in the relationship between the U.S. dollar and foreign currencies and interest rates. These instruments involve market risk in excess of the amount recognized on the Statement of Assets and Liabilities; some of these risks have been minimized by offsetting contracts. Risks arise from the possible inability of counterparties to meet the terms of their contracts, future movement in currency values and interest rates and con- tract positions that are not exact offsets. The contract amount indicates the extent of the Fund's involvement in such contracts. Forwards: A forward exchange contract is an agreement between two parties to exchange different currencies at a specific rate at an agreed future date. At February 29, 1996, the Fund had outstanding forward exchange contracts for the purchase and sale of currencies as set out below. These contracts are re- ported in the financial statements at the Fund's net equity, as measured by the difference between the forward exchange rates at the reporting date and the forward exchange rates at the date of entry into the contract: Contracts to sell: 30,000,000,000 Italian lira for 18,891,926 U.S. dollars, March 18, 1996 $(414,957) 57,081,875 Deutchemarks for 39,366,810 U.S. dollars, March 25, 1996 369,799 --------- Net unrealized loss in forward exchange contracts $ (45,158) =========
14 Templeton Global Income Fund, Inc. Annual Meeting of Shareholders, February 20, 1996 - -------------------------------------------------------------------------------- An Annual Meeting of Shareholders of the Fund was held at the Fund's offices, 700 Central Avenue, St. Petersburg, Florida, on February 20, 1996. The purpose of the meeting was to elect two directors of the Fund and to ratify selection of McGladrey & Pullen, LLP, as the Fund's independent public accountants for the fiscal year ending August 31, 1996. At the meeting, the following persons were elected by the shareholders to serve as directors of the Fund: John Wm. Galbraith and Gordon S. Macklin. In addition, the shareholders ratified the se- lection of McGladrey & Pullen, LLP, to serve as the Fund's independent public accountants for the fiscal year ending August 31, 1996. No other business was transacted at the Annual meeting. The results of the voting at the Annual Meeting are as follows: 1. Election of two (2) Directors:
% OF % OF % OF OUTSTANDING SHARES OUTSTANDING FOR SHARES VOTED WITHHELD SHARES ---------- ----------- ------ --------- ----------- Term expiring 1999: John Wm. Galbraith 92,201,224 76.55% 97.57% 2,294,325 1.90% Gordon S. Macklin 92,545,211 76.83% 97.94% 1,950,338 1.62%
2. Ratification of the selection of McGladrey & Pullen, LLP as independent public accountants of the Fund for the fiscal year ending August 31, 1996:
% OF % OF % OF % OF OUTSTANDING SHARES OUTSTANDING OUTSTANDING FOR SHARES VOTED AGAINST SHARES ABSTAIN SHARES ---------- ----------- ------ ------- ----------- --------- ----------- 92,314,263 76.64% 97.69% 806,243 .67% 1,375,043 1.14%
15 Templeton Global Income Fund, Inc. - -------------------------------------------------------------------------------- DIVIDEND REINVESTMENT PLAN The Fund offers a Dividend Reinvestment Plan (the "Plan") with the following features: .To participate in the Plan, contact Chemical Mellon Shareholder Services, Shareholder Investment Services, P.O. Box 750, Pittsburgh, PA 15230, for a Plan brochure and enrollment information. .As a participant, all divi- dends and capital gains distributions will be reinvested in shares of the Fund. .Whenever the Fund declares dividends in either cash or common stock of the Fund, if the market price is equal to or exceeds net asset value at the valua- tion date (payable date), participants will receive the dividends entirely in stock at a price equal to the net asset value but not less than 95% of the then current market price of the Fund's shares. If the market price is lower than net asset value and if dividends and/or capital gains distributions are payable only in cash, the participant will receive shares purchased on the New York Stock Exchange. .The automatic reinvestment of dividends and/or capital gains does not relieve the participant of any income tax which may be payable on div- idends or distributions. .The participant may withdraw from the Plan without penalty at any time by written notice to Mellon Securities Trust Company. Upon withdrawal, the participant will receive, without charge, stock certificates issued in the participant's name for all full shares; or, if the participant's wishes, Mellon Securities Trust Company will sell the participant's shares and send the proceeds, less a service fee of $2.50 and less brokerage commissions. .Whenever shares are purchased on the New York Stock Exchange, each participant will pay a pro rata portion of brokerage commissions. Brokerage commissions will be deducted from amounts to be invested. SHAREHOLDER INFORMATION Weekly comparative net asset value and market price information about Templeton Global Income Fund shares is published each Monday in The Wall Street Journal, weekly in Barron's and each Saturday in The New York Times and other newspapers in a table called "Closed-End Bond Funds." Daily market prices for the Fund's shares are published in the New York Stock Exchange Composite Transactions section of newspapers under the designation "TemplGlob." The Fund's New York Stock Exchange trading symbol is GIM. The Fund's shares are also listed and traded on the Pacific Stock Exchange. For current information about the net asset value or copies of reports, call 1- 800-292-9293. For information about dividends and shareholder accounts, call 1-800-526-0801. 16 Notes ----- Notes ----- THE FRANKLIN TEMPLETON GROUP Literature Request - Call today for a free descriptive brochure and prospectus on any of the funds listed below. The prospectus contains more complete information, including fees, charges and expenses, and should be read carefully before investing or sending money. Templeton Funds Americas Government Securities Fund Developing Markets Trust Foreign Fund Global Infrastructure Fund Global Opportunities Trust Greater European Fund Growth Fund Growth and Income Fund Income Fund Latin America Fund Real Estate Securities Fund Smaller Companies Growth Fund World Fund Franklin Funds Seeking Tax-Free Income Federal Tax-Free Income Fund Federal Intermediate-Term Tax-Free Income Fund High Yield Tax-Free Income Fund Insured Tax-Free Income Fund*** Puerto Rico Tax-Free Income Fund Franklin State-Specific Funds Seeking Tax-Free Income Alabama Arizona* Arkansas** California* Colorado Connecticut Florida* Georgia Hawaii** Indiana Kentucky Louisiana Maryland Massachusetts*** Michigan*** Minnesota*** Missouri New Jersey New York* North Carolina Ohio*** Oregon Pennsylvania Tennessee Texas Virginia Washington** Franklin Funds Seeking Capital Growth California Growth Fund DynaTech Fund Equity Fund Global Health Care Fund Gold Fund Growth Fund International Equity Fund Japan Fund Pacific Growth Fund Small Cap Growth Fund Franklin Funds Seeking Growth and Income Balance Sheet Investment Fund Convertible Securities Fund Equity Income Fund Global Utilities Fund Income Fund Natural Resources Fund Premier Return Fund Real Estate Securities Fund Rising Dividends Fund Strategic Income Fund Utilities Fund Franklin Funds Seeking High Current Income AGE High Income Fund Global Government Income Fund Investment Grade Income Fund U.S. Government Securities Fund Franklin Funds Seeking High Current Income and Stability of Principal Adjustable Rate Securities Fund Adjustable U.S. Government Securities Fund Short-Intermediate U.S. Government Securities Fund Franklin Funds for Non-U.S. Investors Tax-Advantaged High Yield Securities Fund Tax-Advantaged International Bond Fund Tax-Advantaged U.S. Government Securities Fund Franklin Templeton Global Currency Funds German Government Bond Fund Global Currency Fund High Income Currency Fund Hard Currency Fund Franklin Money Market Funds Money Fund Federal Money Fund Tax-Exempt Money Fund California Tax-Exempt Money Fund New York Tax-Exempt Money Fund IFT U.S. Treasury Money Market Portfolio Franklin Fund for Corporations Corporate Qualified Dividend Fund Franklin Tax-Deferred Annuity Franklin Valuemark Franklin Templeton Valuemark Income Plus (an immediate annuity) Fund Information: 1-800/342-5236 Shareholder Services: 1-800/632-2301 To ensure the highest quality of service, telephone calls to or from our service departments may be monitored, recorded and accessed. These calls can be determined by the presence of a regular beeping tone. *Two or more fund options available: long-term portfolio, intermediate-term portfolio, a portfolio of insured municipal securities, and a high yield portfolio (CA). **The fund may invest up to 100% of its assets in bonds that pay interest subject to the federal alternative minimum tax. ***Portfolio of insured municipal securities. - -------------------------- TEMPLETON GLOBAL INCOME FUND, INC. 700 Central Avenue St. Petersburg, Florida 33701-3628 Investors should be aware that the value of investments made for the Fund may go up as well as down and that the Investment Manager may make errors in selecting securities for the Fund's portfolio. Like any investment in securities, the Fund's portfolio will be subject to the risk of loss from market, currency, economic, political, and other factors. The Fund and Fund investors are not protected from such losses by the Investment Manager. Therefore, investors who cannot accept the risk of such losses should not invest in shares of the Fund. To ensure the highest quality of service, telephone calls to or from our service departments may be monitored, recorded, and accessed. These calls can be determined by the presence of a regular beeping tone. - -------------------------- TLGIM S96 04/96 [RECYCLED PAPER LOGO APPEARS HERE] TEMPLETON GLOBAL INCOME FUND, INC. Semi-Annual Report February 29, 1996 [LOGO OF FRANKLIN TEMPLETON APPEARS HERE] -----END PRIVACY-ENHANCED MESSAGE-----