<PAGE>
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 14, 1995
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Templeton Global
Income Fund for the period ended February 28, 1995.
During the six months under review, global bond markets continued to experience
the volatility they exhibited in the first half of 1994. Although inflation
remained relatively subdued in the U.S., the Federal Reserve Board continued to
raise short-term interest rates. In many other countries, interest rates rose by
as much as those in the U.S., which resulted in capital losses on many
outstanding fixed-income positions. Mexico's financial crisis following the
devaluation of its peso in the latter part of 1994 caused further declines in
the value of bonds of emerging market countries. Even U.S. dollar-denominated
bonds of developing countries were negatively affected.
Despite higher interest rates, economic growth strengthened in most
industrialized countries, as recovery from the recession became more widespread.
The U.S. led the way with a Gross Domestic Product (GDP) that increased at an
annualized rate of 5.1% in the fourth quarter of 1994.* Although domestic demand
in Germany was still relatively weak, strong exports resulted in unexpectedly
robust business activity. Japan, which experienced only modest economic growth
in the past six months, was an exception to this growth trend. It may also face
several months of weaker growth as it continues to recover from the devastating
January earthquake in Kobe.
*Source: U.S. Commerce Dept.
1
<PAGE>
The Fund's portfolio turnover during the six-month period was relatively low,
due in part to actions already taken in the Spring of 1994 that shortened the
portfolio's average bond maturity and raised cash reserves. This reduced the
Fund's risk to rising interest rates, while allowing it to earn stable short-
term returns as bond yields rose worldwide. Although our turnover was low, we
did make two primary strategic changes to the portfolio. One was a general
reduction of European holdings in favor of bonds in the U.S., and the second was
a reduction in holdings of Australian and New Zealand assets.
The general reduction in European bonds was due to the advancing business cycle
in Europe and the possibility that interest rates would soon have to be raised
to fend off inflation. We reduced our holdings in Denmark (from 5.5% to zero),
Germany (from 7.5% to 6.1%), Greece (from 2.2% to zero), and Spain (from 5.4% to
3.2%), with all the proceeds reinvested into U.S. securities.
The Fund reduced its combined Australia and New Zealand position, from 20.7% on
August 31, 1994 to 17.0% on February 28, 1995, as growth in these markets
accelerated and interest rate hikes appeared more likely. The proceeds from
these sales were also invested in the U.S.
Credit quality remains an important factor in our investment process. The Fund's
portfolio consists primarily of investment-grade securities, as rated by one of
the nationally recognized rating services, or of non-rated securities we judge
to be of equal quality. At the end of the reporting period, about 69% of the
securities in the Fund's portfolio were rated AA or better, 17% were rated A or
BBB, and 9% were rated less than investment grade. The lower-rated bonds
represented obligations of Venezuela, Argentina, Brazil, Mexico, Colombia,
Russia and Hungary. The average maturity of the Fund's portfolio on February 28,
1995, was 6.2 years. Approximately 1% of the Fund's Portfolio was held in
equities, and the remaining 4% in other net assets.
- --------------------------------------------------------------------------------
Templeton Global
Income Fund
Geographic Distribution on 2/28/95
Based on Total Net Assets
[PIE CHART APPEARS HERE SHOWING
GEOGRAPHIC DISTRIBUTION OF THE FUND]
<TABLE>
<CAPTION>
Description Amount
------------------------ -----------------
<S> <C>
Europe 30.9%
Asia 6.9%
Canada 8.2%
Latin America 7.4%
Australia &
New Zealand 17.0%
United States 29.6%
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
Templeton Global
Income Fund
Portfolio Breakdown on 2/28/95
Based on Total Net Assets
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Government Bonds 66.6%
- --------------------------------------------------------------------------------
Corporate Bonds 12.7%
- --------------------------------------------------------------------------------
Indexed Securities 4.6%
- --------------------------------------------------------------------------------
Common Stock 0.8%
- --------------------------------------------------------------------------------
Preferred Stock 0.2%
- --------------------------------------------------------------------------------
Short-Term Obligations & Other Net Assets 15.1%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, please see page 6 of this report.
We believe the series of events global bond markets experienced during 1994 were
unusual. Continued growth in the world economy could result in increased
investment and borrowing, which may lead to higher inflation. However, it
appears that bond markets in developed countries have already adjusted to any
likely rise in inflation or further central bank tightening of monetary policy.
Since the beginning of 1995, longer-term interest rates in the industrialized
countries have become more stable and, in some cases, have even declined.
Looking forward, we are hopeful that the major bond markets will have greater
stability this year, which may result in favorable investment opportunities for
the Fund. As always, we remind you that there are special risks involved with
global investing related to market, currency, economic, political, and other
factors.
We thank you for your participation in the Templeton Global Income Fund and look
forward to serving your investment needs in the months and years to come.
Sincerely,
/s/ Neil S. Devlin
Neil S. Devlin
Portfolio Manager
Templeton Global Income Fund, Inc.
3
<PAGE>
Performance Summary
During the reporting period, Templeton Global Income Fund shareholders received
income distributions of 33.5 cents ($0.335) per share. The Fund's closing price
on the New York Stock Exchange (NYSE) increased from $6.81 on August 31, 1994 to
$6.88 on February 28, 1995, and the Fund produced a total return of 7.03% in
market-price terms for this six-month period. The Fund's net asset value price
decreased from $7.89 on August 31, 1994 to $7.68 on February 28, 1995. Based on
the change in actual net asset value (in contrast to market price), the Fund
delivered a total return of 1.72% 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 2/28/95
<TABLE>
<CAPTION>
Since
Inception
One-Year Five-Year (3/17/88)
<S> <C> <C> <C>
Based on change
in net asset value -1.22% 47.86% 60.68%
Based on change
in market price 0.51% 32.99% 36.61%
</TABLE>
*Total return calculations assume reinvestment of all distributions at net asset
value or at market price in accordance with the dividend reinvestment plan. Past
performance is not predictive of future results.
4
<PAGE>
Templeton Global Income Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31
FEBRUARY 28, 1995 ----------------------------------------------------
(UNAUDITED) 1994+ 1993 1992 1991 1990
----------------- -------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 7.89 $ 8.57 $ 8.86 $ 8.48 $ 8.51 $ 8.62
-------- -------- ---------- ---------- -------- --------
Income from investment
operations:
Net investment income .33 .67 .79 .84 .86 .97
Net realized and
unrealized gain (loss) (.20) (.75) (.36) .38 .06 (.12)
-------- -------- ---------- ---------- -------- --------
Total from investment
operations .13 (.08) .43 1.22 .92 .85
-------- -------- ---------- ---------- -------- --------
Distributions:
Dividends from net
investment income (.34) (.06) (.64) (.84) (.86) (.96)
Distributions from net
realized gains -- (.12) (.06) -- (.09) --
Tax basis return of
capital -- (.42) (.02) -- -- --
-------- -------- ---------- ---------- -------- --------
Total distributions (.34) (.60) (.72) (.84) (.95) (.96)
-------- -------- ---------- ---------- -------- --------
Change in net asset
value (.21) (.68) (.29) .38 (.03) (.11)
-------- -------- ---------- ---------- -------- --------
Net asset value, end of
period $ 7.68 $ 7.89 $ 8.57 $ 8.86 $ 8.48 $ 8.51
======== ======== ========== ========== ======== ========
TOTAL RETURN*
Based on market value
per share 7.03% (7.64)% (7.07)% 21.30% 24.96% (3.39)%
Based on net asset value
per share 1.72% (0.15)% 5.34% 14.90% 11.70% 11.01%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of pe-
riod (000) $924,601 $949,850 $1,032,770 $1,055,456 $991,042 $992,555
Ratio of expenses to av-
erage net assets 0.78%** 0.79% 0.79% 0.81% 0.82% 0.81%
Ratio of net investment
income to
average net assets 8.42%** 8.17% 9.40% 9.68% 10.12% 11.60%
Portfolio turnover rate 18.29% 138.34% 264.61% 189.94% 257.11% 130.40%
</TABLE>
* NOT ANNUALIZED IN PERIODS OF LESS THAN A YEAR.
** ANNUALIZED.
+ BASED ON WEIGHTED AVERAGE SHARES OUTSTANDING.
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
Templeton Global Income Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY* VALUE
<C> <C> <S> <C>
- -------------------------------------------------------------------------------
BONDS--CORPORATE: 12.7%
- -------------------------------------------------------------------------------
1,600,000 U.K. Ash Capital Finance Ltd., 9.50%, 7/15/06 $ 1,393,706
3,500,000 U.S. AXA SA, 8.50%, 10/01/98 2,310,000
5,700,000 U.S. Bombril SA, 8.00%, 8/26/98 4,588,500
10,000,000 Can. British Petroleum Co. PLC, 10.875%,
8/01/01 7,732,606
7,250,000 U.S. Cemex SA, 8.50%, 8/31/00 4,422,500
5,750,000 U.S. Companhia Suzano Papel, 10.25%, 10/06/01 5,045,625
5,246,006 U.S. Electricidad de Caracas, FRN, 9/30/03 2,131,190
4,750,000 U.S. Empresa Colombiana de Petroleos, 7.25%,
7/08/98 4,417,500
7,700,000 U.S. Essar Gujarat Ltd., 9.40%, 7/15/99 7,642,250
2,500,000 U.S. Henderson Capital International Ltd.,
4.25%, 10/27/96 2,456,250
2,000,000 U.S. Hidroelectrica Alicura SA, 8.375%, 3/15/99 1,540,000
4,750,000 U.S. Klabin Fabricadora de Paprl Celulose SA,
11.00%, 4/15/98 4,381,875
News America Holdings Inc:
23,030,000 U.S. 8.625%, 02/01/03 23,398,480
10,700,000 Aus. 8.625%, 02/07/14 6,024,019
4,000,000 U.S. Petroliam Nasional Bhd., 6.875%, 7/01/03 3,735,920
5,000,000 U.S. Pohang Iron & Steel, 6.625%, 7/01/03 4,530,600
5,000,000 U.S. Quantas Airways Ltd., 7.50%, 6/30/03 4,718,950
5,000,000 Can. Rogers Cablesystems Ltd., 9.65%, 1/15/14 2,924,396
8,000,000 U.S. Telecom Argentina Stet-France SA, 8.375%,
10/18/00 6,000,000
3,000,000 U.S. Telecom Brasileiras, 10.375%, 9/09/97 2,865,000
7,500,000 U.S. Telefonica de Argentina SA, 8.375%,
10/01/00 5,512,500
10,920,000 U.S. Time Warner Entertainment Co., 7.25%,
9/01/08 9,461,743
------------
TOTAL BONDS--CORPORATE (cost $134,745,152) 117,233,610
- -------------------------------------------------------------------------------
BONDS--GOVERNMENT & GOVERNMENT AGENCIES: 66.6%
- -------------------------------------------------------------------------------
9,000,000 Ger. Bank for Foreign Economic Affairs, 7.50%,
9/27/96 5,682,910
3,000,000 U.S. Bocon Previsionales II, FRN, 4/01/01 1,702,500
14,300,000 Aus. Eurofima, 9.875%, 1/17/07 10,155,875
3,330,000 U.S. Federal Home Loan Bank, 7.735%, 2/09/98 3,380,616
4,720,000 U.S. Federal Home Loan Mortgage Corp., 7.82%,
1/27/98 4,801,137
Federal National Mortgage Association:
8,400,000 U.S. 7.74%, 2/3/98 8,538,852
4,000,000 U.S. 6.50%, 10/25/10 3,502,500
5,980,015 U.S. Government National Mortgage Assn., 8.50%,
3/15/22 6,079,044
26,000,000 Aus. Government of Australia, 7.50%, 7/15/05 16,291,634
Government of Italy:
9,500,000,000 Itl. 12.00%, 1/01/96 5,709,118
3,000,000,000 Itl. 12.00%, 11/01/96 1,804,499
13,990,000,000 Itl. 12.00%, 1/01/97 8,413,302
20,750,000,000 Itl. 12.00%, 1/20/98 12,391,497
5,000,000,000 Itl. 12.00%, 5/19/98 3,008,398
</TABLE>
6
<PAGE>
Templeton Global Income Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY* VALUE
<C> <C> <S> <C>
- -------------------------------------------------------------------------------
BONDS--GOVERNMENT & GOVERNMENT AGENCIES (CONT.)
- -------------------------------------------------------------------------------
70,380,000 Ger. FRN, 7/26/99 $ 48,135,669
12,860,000,000 Itl. FRN, 8/01/99 7,709,057
88,000,000 Neth. Government of Netherlands, zero, 1/15/23 6,222,984
3,342,000,000 Sp. Government of Spain, 11.90%, 7/15/96 26,513,766
194,000,000 Swe. Government of Sweden, 6.00%, 2/09/05 19,066,300
10,000,000 U.S. Korea Development Bank, 7.90%, 2/01/02 9,817,600
2,500,000 U.S. Nacional Financiera SNC, 10.625%,
11/22/01 1,825,000
10,000,000 U.S. National Bank of Hungary, 7.95%, 11/01/03 7,999,500
18,900,000 Aus. New South Wales Treasury Corp., 7.00%,
4/01/04 11,354,865
NHA Manulife:
4,338,069 Can. #96405089, 9.125%, 6/01/02 3,132,364
2,370,402 Can. #96405378, 9.25%, 8/01/02 1,712,263
5,490,687 Can. #96405386, 9.25%, 8/01/02 3,964,864
5,000,000 U.S. Philippines Development Bank, 8.00%,
7/22/98 4,768,750
8,000,000 Can. Province of British Columbia, 10.60%,
9/05/20 6,656,285
77,000,000 Can. Providence of Ontario, 7.75%, 12/08/03 50,909,685
10,000,000 Aus. Province of Quebec, 9.50%, 10/02/02 6,765,138
46,700,000 Aus. Queensland Treasury Corp., 8.00%, 5/14/03 30,498,424
18,300,000 U.S. Republic of Argentina, 8.375%, 12/20/03 10,980,000
240,000 Ger. Republic of Portugal, 5.125%, 7/15/99 164,442
4,000,000 U.S. Republic of Venezuela, 9.00%, 5/27/96 3,680,000
57,000,000 Aus. Treasury Corp. of Victoria, 8.25%,
10/15/03 36,943,081
U.K. Treasury Bonds:
18,620,000 U.K. 7.00%, 8/06/97 28,789,178
35,500,000 U.K. 9.00%, 7/12/11 58,331,750
5,425,000 U.S. U.S. Treasury Bond, 6.25%, 8/15/23 4,616,350
U.S. Treasury Notes:
27,400,000 U.S. 8.875%, 2/15/96 27,999,238
29,790,000 U.S. 8.50%, 5/15/97 30,790,646
28,850,000 U.S. 8.75%, 10/15/97 30,134,691
31,350,000 U.S. 8.125%, 2/15/98 32,359,154
10,000 U.S. 5.125%, 4/30/98 9,489
6,048,000 U.S. 5.75%, 8/15/03 5,487,592
14,500,000 U.S. Venezuela Front Load Interest Reduction
Bond, 6.00%, 3/31/07 6,570,313
------------
TOTAL BONDS--GOVERNMENT & GOVERNMENT AGENCIES (cost
$694,715,752) 615,370,320
- -------------------------------------------------------------------------------
INDEXED SECURITIES: 4.6%
- -------------------------------------------------------------------------------
12,000,000 U.S. Bayerishe Landesbank AG, (principal and
interest is linked to the change in the
Portuguese Escudos to U.S. Dollar
foreign exchange rate between issue date
(139.75 Escudos/U.S. Dollar) and
maturity date), 11.90%, 4/10/95 11,007,600
</TABLE>
7
<PAGE>
Templeton Global Income Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY* VALUE
<C> <C> <S> <C>
- -------------------------------------------------------------------------------
INDEXED SECURITIES (CONT.)
- -------------------------------------------------------------------------------
16,700,000 U.S. Caisse Nationale de Credit Agricole,
(principal is linked to the difference
in the one year Deutschemark swap rate
and the one year Sterling swap rate
plus 85 basis points times 15), 6.65%,
CD, 10/06/95 $ 13,261,470
18,850,000 U.S. Goldman Sachs Group LP, (principal and
interest is linked to the change in the
Indonesian Rupiah to U.S. Dollar
foreign exchange rate between issue
date (2,179.25 Rupiah/U.S. Dollar) and
maturity date), 14.00%, 6/15/95 18,450,380
------------
TOTAL INDEXED SECURITIES (cost $47,550,000) 42,719,450
- -------------------------------------------------------------------------------
<CAPTION>
NUMBER OF
SHARES**
- -------------------------------------------------------------------------------
<C> <C> <S> <C>
COMMON STOCK: 0.8% (cost $9,335,330)
- -------------------------------------------------------------------------------
355,000 U.S. American Health Properties Inc. 7,721,250
- -------------------------------------------------------------------------------
PREFERRED STOCK: 0.2% (cost $1,998,360)
- -------------------------------------------------------------------------------
91,500 Sp. Santander Finance Ltd., B, pfd. 1,955,813
- -------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY*
- -------------------------------------------------------------------------------
<C> <C> <S> <C>
SHORT TERM OBLIGATIONS: 10.9%
- -------------------------------------------------------------------------------
4,590,000 Aus. Australia Treasury Bill, 7.84%, 3/08/95 3,382,573
10,135,000 U.S. Federal Home Loan Bank, 5.85%, 3/23/95 10,098,717
39,500,000,000 Itl. Government of Italy, 12.00%, 10/01/95 23,659,718
71,275,000 N.Z. New Zealand Treasury Bills, 8.68% to
9.25% with maturities to 7/05/95 44,101,066
325,000,000 Thai. Thailand Military Bank, 6.875% to 8.50%
with maturities to 10/02/95 12,779,170
6,550,000 U.S. U.S. Treasury Bills, 5.18% to 5.50% with
maturities to 4/06/95 6,532,203
------------
TOTAL SHORT TERM OBLIGATIONS (cost $105,373,530) 100,553,447
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS: 95.8% (cost $993,718,124) 885,553,890
UNREALIZED LOSS IN FORWARD EXCHANGE CONTRACTS: (0.3)% (3,001,317)
OTHER ASSETS, LESS LIABILITIES: 4.5% 42,048,510
------------
TOTAL NET ASSETS: 100.0% $924,601,083
============
</TABLE>
* CURRENCY OF COUNTRIES INDICATED.
** COUNTRY OF ORIGIN.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
Templeton Global Income Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (identified cost
$993,718,124) $ 885,553,890
Receivables:
Investment securities sold 22,996,338
Interest and dividends 20,162,790
Unrealized gains in forward exchange contracts (Note 5) 520,254
--------------
Total assets 929,233,272
--------------
Liabilities:
Unrealized loss in forward exchange contracts (Note 5) 3,521,571
Accrued expenses 1,110,618
--------------
Total liabilities 4,632,189
--------------
Net assets, at value $ 924,601,083
==============
Net assets consists of:
Distributions in excess of net investment income $ (1,314,718)
Net unrealized depreciation (111,165,551)
Accumulated net realized loss (15,277,592)
Net capital paid in on shares of capital stock 1,052,358,944
--------------
Net assets, at value $ 924,601,083
==============
Shares outstanding 120,453,400
==============
Net asset value per share
($924,601,083 / 120,453,400) $ 7.68
==============
</TABLE>
STATEMENT OF OPERATIONS
for the six months endedFebruary 28, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment Income:
(net of $552,464 foreign taxes withheld)
Interest $42,170,034
Dividends 498,949
-----------
Total income $ 42,668,983
Expenses:
Management fees (Note 3) 2,366,677
Administrative fees (Note 3) 599,787
Transfer agent fees (Note 3) 92,000
Custodian fees 281,000
Reports to shareholders 204,000
Audit fees 24,000
Legal fees 1,000
Registration and filing fees 26,000
Directors' fees and expenses 12,000
Other 25,348
-----------
Total expenses 3,631,812
------------
Net investment income 39,037,171
Realized and unrealized loss:
Net realized loss on:
Investments (11,978,192)
Foreign currency transactions (2,141,003)
-----------
(14,119,195)
-----------
Net unrealized depreciation on:
Investments (928,958)
Foreign currency transactions of other assets and
liabilities (8,886,188)
-----------
(9,815,146)
-----------
Net realized and unrealized loss (23,934,341)
------------
Net increase in net assets resulting from
operations $ 15,102,830
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Templeton Global Income Fund, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 39,037,171 $ 81,133,045
Net realized loss on investment and for-
eign currency transactions (14,119,195) (36,392,426)
Unrealized depreciation (9,815,146) (55,388,766)
------------ --------------
Net increase (decrease) in net assets re-
sulting from operations 15,102,830 (10,648,147)
Distributions to shareholders:
From net investment income (40,351,889) (7,105,618)
From net realized gain -- (14,852,074)
Tax basis return of capital -- (50,314,348)
------------ --------------
Net decrease in net assets (25,249,059) (82,920,187)
Net assets:
Beginning of period 949,850,142 1,032,770,329
------------ --------------
End of period $924,601,083 $ 949,850,142
============ ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Templeton GLOBAL Income Fund, Inc.
Notes to 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 following summarizes the Fund's significant accounting policies.
A. Securities Valuations:
Securities, including options, listed or traded on a recognized national or
foreign stock exchange or NASDAQ are valued at the last reported sales prices
on the principal exchange on which the securities are traded. Over-the-counter
securities 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 quotations are not readily available are valued at fair value as deter-
mined 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 aquisition 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 investment based on 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 Translations:
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 will cus-
tomarily enter 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.
11
<PAGE>
Templeton Global Income Fund, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
E. Futures Contracts:
The Fund enters into futures contracts and options written on futures contracts
in order to hedge against risks from changes in interest rates. These futures
contracts and options written on futures contracts 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 Liabilities. Realized and unrealized
gains and losses are included in the Statement of Operations. Margin deposits
of cash or securities required with respect to contracts traded on exchanges
are maintained by the Fund's custodian in segregated accounts. Variation margin
payments are made or received on futures as appreciation or depreciation in the
contracts occurs each week.
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
federal 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.
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
As of February 28, 1995, there were 200,000,000 shares of capital stock autho-
rized ($0.01 par value). During the six months ended February 28, 1995 and the
year ended August 31, 1994 there were no capital 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.
An officer of the Fund is a partner of Dechert Price & Roads, legal counsel for
the Fund, which firm received fees of $1,000 for the period ending February 28,
1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 28, 1995 were $146,665,500 and $223,358,148, respective-
ly. The cost of securities for federal income tax purposes is $993,752,144. Re-
alized gains and losses are reported on an identified cost basis.
At February 28, 1995, the aggregate gross unrealized appreciation and deprecia-
tion of portfolio securities, based on cost for federal income taxes purposes,
was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 5,720,579
Unrealized depreciation (113,918,833)
-------------
Net unrealized depreciation $(108,198,254)
=============
</TABLE>
12
<PAGE>
Templeton Global Income Fund, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
During the six months ended February 28, 1995, 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 risks 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 amounts 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 28, 1995, 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:
<TABLE>
<S> <C>
Contracts to sell:
61,012,800 Australian dollars for 45,495,720 U.S. dollars,
March 2, 1995 $ 451,157
61,385,000 Canadian dollars for 44,054,112 U.S. dollars,
March 10, 1995 24,226
22,133,000 New Zealand dollars for 14,059,988 U.S. dollars,
March 10, 1995 44,871
-----------
520,254
-----------
Contracts to sell:
75,686,500 Deutschemarks for 50,525,033 U.S. dollars, March
7, 1995 (1,433,341)
19,393,500 Deutschemarks for 13,205,973 U.S. dollars, March
7, 1995 (107,560)
18,228,000 Deutschemarks for 18,811,820 U.S. dollars, Au-
gust 29, 1995 (769,445)
Net unrealized loss from offsetting forward exchange con-
tracts (876,215)
-----------
(3,186,561)
-----------
Contracts to buy:
37,561,400 Australian dollars for 27,971,599 U.S. dollars,
March 2, 1995 (240,748)
23,451,400 Australian dollars for 17,407,974 U.S. dollars,
March 2, 1995 (94,262)
-----------
(335,010)
-----------
(3,521,571)
-----------
Net unrealized loss in forward exchange contracts $(3,001,317)
===========
</TABLE>
13
<PAGE>
Templeton Global Income Fund, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
6. UNAUDITED QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET INCREASE
NET GAIN (LOSS) (DECREASE)
ON SECURITY AND IN NET ASSETS
INVESTMENT NET INVESTMENT FOREIGN CURRENCY RESULTING FROM
INCOME INCOME TRANSACTIONS OPERATIONS
----------------- ----------------- ------------------- -------------------
PER PER PER PER
TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
----------- ----- ----------- ----- ------------ ----- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995
For the quarter ended:
November 30, 1994 $22,053,820 $.18 $20,263,289 $.17 $(13,328,875) $(.11) $ 6,934,414 $ .06
February 28, 1995 20,615,163 .17 18,773,882 .16 (10,605,466) (.09) 8,168,416 .07
----------- ---- ----------- ---- ------------ ----- ------------ -----
$42,668,983 $.35 $39,037,171 $.33 $(23,934,341) $(.20) $ 15,102,830 $ .13
=========== ==== =========== ==== ============ ===== ============ =====
1994
For the quarter ended:
November 30, 1993 $23,389,720 $.19 $21,422,063 $.18 $(24,147,294) $(.20) $ (2,725,231) $(.02)
February 28, 1994 20,883,430 .18 18,905,623 .15 3,114,837 .03 22,020,460 .18
May 31, 1994 22,868,559 .19 20,189,012 .17 (63,721,705) (.53) (43,532,693) (.36)
August 31, 1994 21,814,152 .18 20,616,347 .17 (7,027,030) (.05) 13,589,317 .12
----------- ---- ----------- ---- ------------ ----- ------------ -----
$88,955,861 $.74 $81,133,045 $.67 $(91,781,192) $(.75) $(10,648,147) $(.08)
=========== ==== =========== ==== ============ ===== ============ =====
</TABLE>
14
<PAGE>
Templeton Global Income Fund, Inc.
Annual Meeting of Shareholders, February 21, 1995
- --------------------------------------------------------------------------------
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
700 Central Avenue, St. Petersburg, Florida, on February 21, 1995. The purpose
of the meeting was to elect four directors of the Fund and to ratify the selec-
tion of McGladrey & Pullen, LLP, as the Fund's independent public accountants
for the fiscal year ending August 31, 1995. At the meeting, the following per-
sons were elected by the shareholders to serve as directors of the Fund:
Charles B. Johnson, John M. Templeton, Betty P. Krahmer and Fred R. Millsaps.
In addition to the directors elected at the Annual Meeting, the following per-
sons also serve as directors of the Fund: Nicholas F. Brady, Hasso-G von
Diergardt-Naglo, F. Bruce Clarke, Andrew H. Hines, Jr., John G. Bennett, Jr.,
Harris J. Ashton, S. Joseph Fortunato and Gordon S. Macklin. In addition, the
shareholders ratified the selection of McGladrey & Pullen, LLP, to serve as the
Fund's independent public accountants for the fiscal year ending August 31,
1995. No other business was transacted at the Annual Meeting.
The results of the voting at the Annual Meeting are as follows:
1. Election of four (4) Directors:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING SHARES OUTSTANDING
FOR SHARES VOTED AGAINST % ABSTAIN SHARES
---------- ----------- ------ ------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles
B. John-
son 68,502,602 56.87% 97.18% -0- -0- 1,991,047 1.65%
John M.
Templeton 68,495,749 56.86% 97.17% -0- -0- 1,997,900 1.66%
Betty P.
Krahmer 68,576,132 56.93% 97.28% -0- -0- 1,917,517 1.59%
Fred R.
Millsaps 68,562,429 56.92% 97.26% -0- -0- 1,931,220 1.60%
2. Ratification of the selection of McGladrey & Pullen, LLP, as independent
public accountants of the Fund for the fiscal year ending August 31, 1995:
<CAPTION>
% OF % OF % OF % OF
OUTSTANDING SHARES OUTSTANDING OUTSTANDING
FOR SHARES VOTED AGAINST SHARES ABSTAIN SHARES
---------- ----------- ------ ------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
68,041,130 56.49% 96.52% 892,596 0.74% 1,559,923 1.29%
</TABLE>
15
<PAGE>
- --------------------------
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 de-
partments may be moni-
tored, recorded and ac-
cessed. These calls can
be determined by the
presence of a regular
beeping tone.
- --------------------------
[RECYCLING LOGO APPEARS HERE] TLGIM S95 04/95
TEMPLETON
GLOBAL
INCOME
FUND, INC.
Semi-Annual Report
February 28, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
