<PAGE> 1
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 15, 1997
Dear Shareholder:
We are pleased to bring you this semi-annual report of the Templeton Global
Income Fund, which covers the six months ended February 28, 1997.
During the period under review, interest rates fell in almost all global bond
markets, increasing the value of these fixed-income securities. However, at the
same time, the U.S. dollar rose against most foreign currencies, reducing
returns for U.S. holders of foreign bonds. Since these events affected markets
differently, market selection and currency management were two key factors
affecting the Fund's performance. As discussed in the Performance Summary on
page 5, the Fund provided a six-month total return of 9.75% in market-price
terms and 5.79% in terms of net asset value.
During the summer of 1996, many bond investors feared that strong economic
growth, especially in the U.S., would lead to higher interest rates.
1
<PAGE> 2
However, the U.S. Federal Reserve did not raise interest rates at its September
meeting, signaling confidence in the economy's ability to expand without
significant inflation. Reports released later indicated that U.S. economic
growth had, in fact, "slowed" during the third quarter of 1996. This boosted
investors' expectations for bonds, and from September 1 to the end of the
reporting period, bond prices rose, and the yield on the U.S. ten-year Treasury
fell, from nearly 7.00% to approximately 6.5%.(1)
Interest rates in most foreign markets also fell during the period. Attempting
to meet requirements for membership in the European Monetary Union, the French,
Italian, and Spanish governments cut their budgets aggressively, leading to an
even greater interest-rate drop in Europe than in the United States. Italian
ten-year government bond yields declined from 8.32% to 6.38%, while the
equivalent bond yields in France fell from 6.49% to 5.41%. Rates in most other
European countries decreased by a comparable amount. Japan was the only
industrial country where yields fell less than in the U.S. With short-term rates
at approximately 0.3%, Japanese monetary authorities could do little to lower
interest rates in an effort to stimulate their moribund economy.
While the interest-rate environment was generally beneficial for U.S. investors
in global bonds, the foreign exchange market was decidedly less so. Because
interest rates fell by a greater amount in almost all of the industrial world
than in the
Templeton Global Income Fund
Geographic Distribution of Issuers of Securities on 2/28/97
Based on Total Net Assets
[ PIE GRAPH ]
<TABLE>
<S> <C>
Europe 40.5%
United States 24.8%
Latin America 14.6%
Australia &
New Zealand 11.9%
Canada 7.0%
Asia 1.2%
</TABLE>
1. SOURCE: FEDERAL RESERVE BOARD.
2
<PAGE> 3
United States, the value of the dollar rose. The strength of the U.S. economy
also enhanced the appeal of the dollar, and only two major currencies
appreciated against it -- the British pound by 4.39% and the Canadian dollar by
0.04%. The currencies of all other major industrial countries declined,
sometimes significantly, versus the dollar. For example, the German mark fell
12.26%, the Japanese yen 9.31%, and the Italian lira 10.79%.
The above factors had a significant impact on the debt securities of emerging
market nations. Their higher yields were extremely attractive to investors, and
in an environment of foreign currency depreciation, their denomination in U.S.
dollars made these securities even more appealing. As a result, bond markets in
emerging market countries performed extremely well.
Responding to these conditions, we maintained our holdings of emerging market
debt, while reducing the Fund's exposure to depreciating foreign currencies. We
decreased our holdings in Spain, from 7.7% to 1.8%; in Denmark, from 6.8% to
3.3%; in Italy, from 10.5% to 8.9%; and in the U.K., from 8.9% to 4.5%. But,
believing that Germany's economy represented a better prospect for meeting
investors' expectations than many of Europe's other economies, we increased our
investment in German bonds, from 2.9% at the beginning of the period, to 26.1%
at the end.
During the six months under review, we made extensive use of currency hedges to
increase our exposure to the U.S. dollar. By the end of the period, our total
exposure to the U.S. dollar represented 62.9% of the Fund, up from 43.3% at the
end of August 1996. We perceive further currency depreciation as a very real
risk in Europe, and will continue hedging the Fund's currency holdings, seeking
to protect the dollar value of the
TEMPLETON GLOBAL INCOME FUND
Portfolio Breakdown on 2/28/97
Based on Total Net Assets
<TABLE>
<S> <C>
Government Bonds 83.8%
Corporate Bonds 5.4%
Preferred Stock 0.2%
Short-Term Obligations & Other Net Assets 10.6%
</TABLE>
For a complete list of portfolio holdings, please see page 9 of this report.
3
<PAGE> 4
portfolio. Our exposure to interest-rate risk has remained roughly constant over
the period, with the Fund's average bond maturity remaining at 5.9 years.
This discussion reflects the strategies we employed for the Fund during the six
months under review, and includes our opinions as of the close of the period.
Since economic and market conditions are constantly changing, our strategies,
and our evaluations, conclusions and decisions regarding portfolio holdings may
change as new circumstances arise. Although past performance of a specific
investment or sector cannot guarantee future performance, such information can
be useful in analyzing securities we purchase or sell 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,
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, CFA
Portfolio Manager
Templeton Global Income Fund
On February 21, 1997, the Board of Directors of the Fund authorized management
to implement an open-market share repurchase program pursuant to which the Fund
from time to time at the discretion of management may purchase up to an
aggregate of 12 million shares of the Fund's Common Stock (approximately 10% of
the shares outstanding on February 18, 1997) in open-market transactions.
4
<PAGE> 5
PERFORMANCE SUMMARY
In market-price terms, the Templeton Global Income Fund produced a total return
of 9.75% for the six-month period ended February 28, 1997. Based on the change
in actual net asset value (in contrast to market price), the Fund delivered a
total return of 5.79% for the same period. Both total return figures assume
reinvestment of dividends and capital gains in accordance with the dividend
reinvestment plan.
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 50 cents ($0.50), from $7.00 on
August 31, 1996 to $7.50 on February 28, 1997. The Fund's net asset value per
share increased 13 cents ($0.13), from $8.34 on August 31, 1996 to $8.47 on
February 28, 1997. Of course, past performance is not predictive of future
results, and distributions will vary depending on income earned by the Fund, and
any profits realized from sales of securities in the portfolio.
TEMPLETON GLOBAL INCOME FUND
Periods Ended 2/28/97
<TABLE>
<CAPTION>
SINCE
INCEPTION
ONE-YEAR FIVE-YEAR (3/17/88)
<S> <C> <C> <C>
Cumulative Total Return(1)
Based on change
in net asset value 10.55% 45.88% 105.08%
Based on change
in market price 12.40% 26.43% 76.34%
Average Annual Total Return(2)
Based on change
in net asset value 10.55% 7.85% 8.35%
Based on change
in market price 12.40% 4.80% 6.54%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated.
All total return calculations assume reinvestment of distributions at net asset
value or at market price on the reinvestment date, in accordance with the
dividend reinvestment plan. Investment return and principal value will fluctuate
with market conditions, currencies and the political and economic climates of
the countries where investments are made. Emerging markets involve heightened
risks related to the same factors, in addition to those associated with the
relatively small size and lesser liquidity of these markets. You may have a gain
or loss when you sell your shares. Past performance is not predictive of future
results.
5
<PAGE> 6
Many investors have asked us about the activities of Sir John Templeton, since
his retirement from the funds. We asked Professor Robert Herrmann to update us
on Sir John's current activities and his comments follow.
[PHOTO OF SIR JOHN TEMPLETON]
THE NEW CAREER OF SIR JOHN TEMPLETON
BY PROFESSOR ROBERT HERRMANN
In 1992, Sir John Templeton retired after a 50-year career of helping investors
manage their money. Currently, he devotes all of his time and efforts to the
John Templeton Foundation. A major portion of his assets remain invested in
Templeton funds, managed by many of the investment professionals he selected and
trained. For sentimental reasons, he allows his name to be associated with the
funds, although he knows no more about their management and holdings than any
other investor.
Sir John Templeton established the Templeton Foundation in 1987, to foster the
acquisition of spiritual information through scientific research. Working with
scientists, theologians and others, he strives toward a new science that uses
empirical and statistical scientific methods to discover and test spiritual
knowledge. A crucial ingredient in his research is what Sir John calls "humility
theology," an attitude of humility toward the Creator, combined with
receptiveness to the theological significance of current scientific discoveries.
Universal spiritual laws, or "laws of life," are among the areas of
investigation. In his recent book, Worldwide Laws of Life, Sir John compiles 200
laws and proverbs from nearly all religions, and deeply embedded in human
history. For example, the Golden Rule taught by Jesus in the Sermon on the
Mount, states "Do unto others as you would have others do unto you," and is
affirmed by all major religions as an acceptable, universal law of life. Other
books which Sir John has authored or co-authored during the past few years
include: The Humble Approach, Is God the Only Reality, Evidence of Purpose,
Who's Who in Theology and Science and The God Who Would Be Known.
With an annual budget of more than $30 million, the Templeton Foundation
sponsors 60 programs focusing on spiritual progress and the benefits of freedom.
Sir John's first sizable investment in the programs was the Templeton Prize for
Progress in Religion. A panel of nine judges gives the annual award which now
exceeds $1.2 million to individuals who have shown extraordinary originality in
furthering the world's understanding of God or spirituality.
Recipients of the prize include Professor Paul Davies, author of The Mind of
God; the Right Honorable Lord Jacobovits, former Chief Rabbi of Great Britain
and The Commonwealth; the Reverend Dr. Billy Graham, world-renowned preacher and
presidential inauguration speaker; Mr. Nikkyo Nimano, founder of the World
Conference on Religion and Peace; and Sir Sarepalli Radhakrishnan, former
President of India, and Oxford professor of Eastern Religions and Ethics.
To encourage young people's and their parents' appreciation of spiritual laws of
life, Sir John established an essay contest for teenagers in his home county of
Franklin, Tennessee. Students submit essays about the spiritual life principles
they plan to follow, and prizes are offered semiannually. In 1996, more than 800
youth participated. Twenty-six similar programs
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<PAGE> 7
have been launched in various locations, with the support of generous local
donors.
The Foundation also sponsors a worldwide program that awards college-level
faculty who teach courses integrating science and religion. During the program's
first two years, more than 200 courses were created. The Foundation maintains an
extensive program of research and education on the health benefits of
spirituality, including prizes for medical schools providing courses on
spirituality in medicine. Lastly, the Foundation publishes a newsletter with
over 2,000 subscribers. Free subscriptions are available to Templeton
shareholders by writing to the Foundation.
To contact Sir John Templeton or receive the free newsletter subscription,
please write to:
The John Templeton Foundation
2 Radnor Corporate Center #320
100 Matsonford Road
Radnor, PA 19087
7
<PAGE> 8
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, 1997 ------------------------------------------------------
(UNAUDITED) 1996 1995 1994+ 1993 1992
----------------- ---------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.34 $ 8.00 $ 7.89 $ 8.57 $ 8.86 $ 8.48
---------- ---------- --------- --------- ----------
Income from investment operations:
Net investment income .30 .63 .64 .67 .79 .84
Net realized and unrealized gain (loss) .13 .31 .11 (.75) (.36) .38
---------- ---------- --------- --------- ----------
Total from investment operations .43 .94 .75 (.08) .43 1.22
---------- ---------- --------- --------- ----------
Distributions:
Dividends from net investment income (.30) (.41) (.64) (.06) (.64) (.84)
Distributions from net realized gains -- -- -- (.12) (.06) --
Tax basis return of capital -- (.19) -- (.42) (.02) --
---------- ---------- --------- --------- ----------
Total distributions (.30) (.60) (.64) (.60) (.72) (.84)
---------- ---------- --------- --------- ----------
Change in net asset value .13 .34 .11 (.68) (.29) .38
---------- ---------- --------- --------- ----------
Net asset value, end of period $ 8.47 $ 8.34 $ 8.00 $ 7.89 $ 8.57 $ 8.86
========== ========== ========= ========= ==========
TOTAL RETURN*
Based on market value per share 9.75% 12.75% 8.80% (7.64)% (7.07)% 21.30%
Based on net asset value per share 5.79% 13.34% 11.30% (.15)% 5.34% 14.90%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of period (000) $ 1,020,132 $1,004,606 $964,013 $949,850 $1,032,770 $1,055,456
Ratio of expenses to average net assets .74%** .72% .78% .79% .79% .81%
Ratio of net investment income to average
net assets 7.08%** 7.67% 8.19% 8.17% 9.40% 9.68%
Portfolio turnover rate 94.06% 112.59% 104.37% 138.34% 264.61% 189.94%
</TABLE>
* NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
** ANNUALIZED.
+ BASED ON WEIGHTED AVERAGE SHARES OUTSTANDING.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
TEMPLETON GLOBAL INCOME FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY* VALUE
<C> <C> <S> <C>
- ---------------------------------------------------------------------------------------------------------------------
BONDS--CORPORATE: 5.4%
---------------------------------------------------------------------------------------------------------------------
10,000,000 Can. British Petroleum Co. PLC, 10.875%, 8/01/01 $ 8,629,430
5,750,000 U.S. Companhia Suzano Papel, 10.25%, 10/06/01 5,814,687
4,942,764 U.S. Electricidad de Caracas, 6.5625%, FRN, SER A1, 9/30/03 4,436,130
4,750,000 U.S. Empresa Colombiana de Petroleos, 7.25%, 7/08/98, 144A 4,797,500
7,700,000 U.S. Essar Gujarat Ltd., 8.33750%, FRN, 7/15/99, 144A 7,449,750
5,000,000 U.S. Philippines Development Bank, 8.00%, 7/22/98 5,087,500
8,000,000 U.S. Telecom Argentina Stet-France SA, 8.375%, 10/18/00, 144A 8,030,000
7,500,000 U.S. Telefonica de Argentina SA, 8.375%, 10/01/00, 144A 7,603,125
3,000,000 U.S. Telecom Brasileiras, 10.375%, 9/09/97 3,052,500
-------------
TOTAL BONDS--CORPORATE (cost $54,789,390) 54,900,622
- ----------------------------------------------------------------------------------------------------------------------
BONDS--GOVERNMENT & GOVERNMENT AGENCIES: 83.8%
- ---------------------------------------------------------------------------------------------------------------------
4,785,000 U.S. Argentina Republic of, 9.25%, 2/23/01 4,898,644
16,325,000 U.S. Brazil Govt., 8.875%, 11/05/01 16,471,925
Buoni Poliennali Del Tes:
14,535,000,000 Itl. 12.00%, 1/17/99 9,278,839
29,225,000,000 Itl. 10.50%, 11/01/00 19,069,548
32,785,000,000 Itl. 10.50%, 9/01/05 22,908,120
110,445,000 Dem. Federal Republic of Germany, 8.00%, 7/22/02 75,594,689
147,205,000 Dem. Federal Republic of Germany, Bundes, 8.00%, 1/21/02 100,065,707
103,605,000 Dem. Government of Australia, 10.00%, 10/15/02 90,087,630
6,045,000 U.S. Government of Brazil, 5.00%, 4/15/24 3,970,809
Government of Canada:
37,100,000 Can. 7.25%, 6/01/03 28,997,140
1,130,000 Can. 10.25%, 2/01/04 1,019,517
45,600,000 Can. 9.00%, 12/01/04 39,090,003
100,150,000 Den. Government of Denmark, 8.00%, 5/15/03 17,491,104
60,255,000,000 Itl. Government of Italy, 10.50%, 7/15/00 39,218,915
40,470,000 Nzd. Government of New Zealand, 10.00%, 3/15/02 30,766,306
2,216,090,000 Sp. Government of Spain, 12.25%, 3/25/00 18,095,736
94,078,000 Den. Kingdom of Denmark, 8.00%, 11/15/01 16,377,987
170,700,000 Swe. Kingdom of Sweden, 10.25%, 5/05/03 27,597,310
2,500,000 U.S. Nacional Financiera SNC, 10.625%, 11/22/01 2,678,125
NHA Manulife Pool:
1,359,713 Can. #96405089, 9.125%, 6/01/02 1,055,343
854,856 Can. #96405378, 9.25%, 8/01/02 663,372
1,330,779 Can. #96405386, 9.25%, 8/01/02 1,022,966
Republic of Argentina:
7,030,000 U.S. 10.95%, 11/01/99 7,469,375
20,690,000 U.S. 8.375%, 12/20/03 19,991,713
21,565,000 U.S. 5.25%, 3/31/23 14,367,681
5,500,000 U.S. Republic of Venezuela, 6.75%, 3/31/20, PAR BOND, B 4,235,000
</TABLE>
9
<PAGE> 10
TEMPLETON GLOBAL INCOME FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY* VALUE
<C> <C> <S> <C>
- ---------------------------------------------------------------------------------------------------------------------
BONDS--GOVERNMENT & GOVERNMENT AGENCIES (CONT.)
- ---------------------------------------------------------------------------------------------------------------------
58,900,000 Swe. Sweden Kingdom, 13.00%, 6/15/01 $ 10,055,226
39,540,000 U.S. U.S. Treasury Bonds, 6.375%, 8/15/02 39,502,911
U.S. Treasury Notes:
10,000 U.S. 5.125%, 4/30/98 9,922
53,159,000 U.S. 6.25%, 8/31/00 53,109,137
50,022,000 U.S. 7.25%, 8/15/04 52,194,806
25,220,000 U.K. United Kingdom, stk., 9.75%, 8/27/02 46,057,503
United Mexican States:
16,325,000 U.S. 9.75%, 2/06/01 17,039,219
14,500,000 U.S. 6.25%, A, 12/31/19 11,101,563
14,500,000 U.S. Venezuela Front Load Interest Reduction Bond, A, 3/31/07 13,185,938
-------------
TOTAL BONDS--GOVERNMENT & GOVERNMENT AGENCIES (cost $871,440,014) 854,739,729
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES**
<C> <C> <S> <C>
---------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS: (cost $1,998,360) 0.2%
---------------------------------------------------------------------------------------------------------------------
91,500 U.S. Santander Finance Ltd., B, pfd. 2,276,063
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY*
<C> <C> <S> <C>
---------------------------------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 1.1%
---------------------------------------------------------------------------------------------------------------------
933,000 U.S. Deutsche Bank AG, 5.28%, 3/05/97 933,000
5,075,000 U.S. Federal National Mortgage Assoc., 5.68%, 10/07/97 5,075,634
5,075,000 U.S. U. S. Treasury Bills, 4.95% to 5.05%, with maturities to 6/05/97 5,009,670
-------------
TOTAL SHORT TERM OBLIGATIONS (cost $11,015,352) 11,018,304
---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 90.5% (cost $939,243,116) 922,934,718
UNREALIZED GAIN IN FORWARD EXCHANGE CONTRACTS: 0.2% 2,603,275
OTHER ASSETS, LESS LIABILITIES: 9.3% 94,594,450
-------------
TOTAL NET ASSETS: 100.0% $1,020,132,443
=============
</TABLE>
* CURRENCY OF COUNTRIES INDICATED.
** COUNTRY OF ORIGIN.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $939,243,116) $ 922,934,718
Receivables:
Investment securities sold 131,785,053
Interests and dividends 22,163,124
Unrealized gains on forward exchange
contracts (Note 6) 4,252,889
--------------
Total assets 1,081,135,784
--------------
Liabilities:
Payables:
Investment securities purchased 56,063,002
Dividend payable 758,728
Funds advanced by custodian 1,698,044
Unrealized loss on forward exchange
contracts (Note 6) 1,649,614
Accrued expenses 833,953
--------------
Total liabilities 61,003,341
--------------
Net assets, at value $1,020,132,443
==============
Net assets consist of:
Undistributed net investment income $ 63,874
Net unrealized depreciation (14,543,178)
Accumulated net realized gain 5,656,425
Net capital paid in on shares of
capital stock 1,028,955,322
--------------
Net assets, at value $1,020,132,443
==============
Shares outstanding 120,453,400
==============
Net asset value per share
($1,020,132,443 / 120,453,400) $ 8.47
==============
</TABLE>
STATEMENT OF OPERATIONS
for the six months ended February 28, 1997 (unaudited)
<TABLE>
<S> <C> <C>
Investment income: (net of
$670,427 foreign taxes
withheld)
Dividends $ 168,120
Interest 39,829,249
-----------
Total income $39,997,369
Expenses:
Management fees (Note 3) 2,607,189
Administrative fees (Note 3) 647,834
Transfer agent fees 72,000
Custodian fees 97,952
Reports to shareholders 261,000
Audit fees 19,500
Legal fees 9,000
Registration and filing fees 47,000
Directors' fees and expenses 36,000
-----------
Total expenses 3,797,475
------------
Net investment income 36,199,894
Realized and unrealized gain
(loss):
Net realized gain on:
Investments 14,449,306
Foreign currency
transactions 13,492,342
-----------
27,941,648
-----------
Net unrealized appreciation
(depreciation) on:
Investments (14,000,617)
Foreign currency
translation of other
assets and liabilities 1,521,509
-----------
(12,479,108)
-----------
Net realized and
unrealized gain 15,462,540
------------
Net increase in net assets
resulting from operations $51,662,434
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 28, 1997 YEAR ENDED
(UNAUDITED) AUGUST 31, 1996
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 36,199,894 $ 76,074,466
Net realized gain (loss) on investment and foreign currency
transactions 27,941,648 (14,421,359)
Net unrealized appreciation (depreciation) (12,479,108) 51,212,207
-------------- --------------
Net increase in net assets resulting from operations 51,662,434 112,865,314
Distributions to shareholders:
From net investment income (36,136,020) (48,868,417)
Tax basis return of capital -- (23,403,623)
-------------- --------------
Net increase in net assets 15,526,414 40,593,274
Net assets:
Beginning of period 1,004,606,029 964,012,755
-------------- --------------
End of period $ 1,020,132,443 $1,004,606,029
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
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 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
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 determined in
good faith by management and approved 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
included 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 expires,
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 exercise of
an option results in a cash settlement, the difference between the premium 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 currencies
are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customarily
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.
13
<PAGE> 14
TEMPLETON GLOBAL INCOME FUND, INC.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
Reported net 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, 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.
E. FUTURES CONTRACTS:
The Fund may enter 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.
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
securities is recorded as soon as information is available to the Fund. Interest
income 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 28, 1997, there were 200,000,000 shares of capital stock
authorized ($0.01 par value). During the six months ended February 28, 1997 and
the year ended August 31, 1996, 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
Investment Counsel, Inc. (TICI), and Franklin Templeton Services, Inc. (FTSI),
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 FTSI monthly a fee of 0.15% per annum on the first $200 million of the
Fund's average daily net assets, 0.135% of the next $500 million, and 0.10% of
average net assets in excess of $700 million.
14
<PAGE> 15
TEMPLETON GLOBAL INCOME FUND, INC.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 28, 1997 aggregated $912,718,565 and $968,882,516,
respectively. The cost of securities for federal income tax purposes is the same
as that shown on the Investment Portfolio. Realized gains and losses are
reported on an identified cost basis.
At February 28, 1997, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based on cost for federal income tax
purposes, was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 5,215,098
Unrealized depreciation (21,523,496)
--------------
Net unrealized depreciation $(16,308,398)
==============
</TABLE>
5. TAX LOSS CARRYOVERS
At August 31, 1996, the Fund had tax basis losses of $15,300,000 which may be
carried over to offset future capital gains. Such losses expire in 2004.
6. FINANCIAL INSTRUMENTS
During the six months ended February 28, 1997, the Fund has been a party to
financial instruments with off-balance-sheet risks, primarily forward exchange
contracts, in order to minimize the risk to the Fund, with respect to its
portfolio 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
contract 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 28, 1997, the Fund had outstanding forward exchange contracts for
the purchase and sale of currencies as set out below. These contracts are
reported 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> <C>
Contracts to sell:
53,690,000 Deutschemarks for 32,625,010 U.S. dollars, March 7, 1997 $ 775,288
41,610,000 Deutschemarks for 24,764,172 U.S. dollars, March 7, 1997 80,489
47,022,000 Deutschemarks for 27,932,755 U.S. dollars, March 24, 1997 9,588
865,365
Unrealized gain from offsetting forward exchange contracts 3,387,524
4,252,889
Contracts to buy:
45,700,000 Deutschemarks for 27,348,893 U.S. dollars, March 7, 1997 (238,960)
100,310,000 Deutschemarks for 59,676,364 U.S. dollars, March 7, 1997 (170,951)
(409,911)
Contracts to sell:
86,976,000 Deutschemarks for 51,404,255 U.S. dollars, March 7, 1997 (191,196)
149,763,000 Deutschemarks for 88,152,144 U.S. dollars, March 7, 1997 (689,538)
56,575,000 Australian dollars for 43,576,045 U.S. dollars, March 13,1997 (358,969)
(1,239,703)
(1,649,614)
Net unrealized gain in forward exchange contracts $ 2,603,275
</TABLE>
15
<PAGE> 16
TEMPLETON GLOBAL INCOME FUND, INC.
Annual Meeting of Shareholders, March 25, 1997
- --------------------------------------------------------------------------------
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 E. Broward Blvd., Ft. Lauderdale, Florida, on March 25, 1997. The purpose of
the meeting was to elect five Directors of the Fund, to ratify the selection of
McGladrey & Pullen, LLP, as the Fund's independent public accountants for the
fiscal year ending August 31, 1997, to consider a shareholder proposal
requesting that the Board of Directors consider, and submit to shareholders for
approval, a proposal to amend the Fund's Articles of Incorporation to convert
the Fund to an open-end investment company and in their discretion, to authorize
the proxyholders to vote upon such other matters which may legally come before
the meeting or any other adjournment thereof. At the meeting, the following
persons were elected by the shareholders to serve as Directors of the Fund:
Harris J. Ashton, Nicholas F. Brady, S. Joseph Fortunato, Andrew H. Hines, Jr.
and Edith E. Holiday. 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, 1997. The proposal requesting that the Board of
Directors consider, and submit to shareholders for approval, a proposal to amend
the Fund's Articles of Incorporation to convert the Fund to an open-end
investment company was rejected by shareholders. No other business was
transacted at the meeting.
The results of the voting at the Annual Meeting are as follows:
1. Election of five (5) Directors for the terms set forth below:
<TABLE>
<CAPTION>
% OF OUTSTANDING % OF OUTSTANDING
TERM EXPIRING 2000: FOR SHARES WITHHELD SHARES
- ---------------------- ------------ ----------------- ---------- -----------------
<S> <C> <C> <C> <C>
Harris J. Ashton 92,520,905 76.81% 4,210,876 3.50%
Nicholas F. Brady 92,372,504 76.69% 4,359,277 3.62%
S. Joseph Fortunato 92,476,377 76.77% 4,255,404 3.54%
Andrew H. Hines, Jr. 92,388,224 76.70% 4,343,557 3.61%
</TABLE>
<TABLE>
<CAPTION>
TERM EXPIRING 1999:
- ----------------------
<S> <C> <C> <C> <C>
Edith E. Holiday 92,206,578 76.55% 4,525,203 3.76%
</TABLE>
2. Ratification of the selection of McGladrey & Pullen, LLP, as independent
public accountants of the Fund for the fiscal year ending August 31, 1997:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING OUTSTANDING OUTSTANDING
FOR SHARES AGAINST SHARES ABSTAIN SHARES
- ------------ ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
93,713,601 77.80% 1,228,178 1.02% 1,790,002 1.49%
</TABLE>
3. Rejection of the proposal requesting that the Board of Directors consider,
and submit to shareholders for approval, a proposal to amend the Fund's
Articles of Incorporation to convert the Fund to an open-end investment
company.
<TABLE>
<CAPTION>
% OF % OF % OF % OF
OUTSTANDING OUTSTANDING OUTSTANDING BROKER OUTSTANDING
FOR SHARES AGAINST SHARES ABSTAIN SHARES NON-VOTES SHARES
- ------------ ----------- ------------ ----------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
21,417,997 17.78% 39,726,838 32.99% 3,734,294 3.10% 31,852,652 26.44%
</TABLE>
16
<PAGE> 17
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
dividends 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
valuation 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
dividends 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 and 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 form 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 GLM. 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.
17
<PAGE> 18
NOTES
--------
<PAGE> 19
FRANKLIN TEMPLETON GROUP OF FUNDS
LITERATURE REQUEST - Call 1-800/DIAL BEN (1-800/342-5236) 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.
GLOBAL GROWTH INCOME FRANKLIN STATE-SPECIFIC
FUNDS SEEKING
Franklin Global Health Care Fund Franklin Adjustable Rate
TAX-FREE INCOME
Securities Fund
Franklin Templeton Japan Fund
Franklin Adjustable U.S.
Alabama
Templeton Developing Markets Trust
Government Securities Fund
Arizona*
Templeton Foreign Fund
Franklin's AGE High Income Fund
Arkansas**
Templeton Foreign Smaller
Franklin Investment
Companies Fund California*
Grade Income Fund
Templeton Global Infrastructure Fund
Colorado
Franklin Short-Intermediate U.S.
Templeton Global
Government Securities Fund
Connecticut
Opportunities Trust
Franklin U.S. Government
Florida*
Templeton Global Real Estate Fund
Securities Fund
Georgia
Templeton Global Smaller
Franklin Money Fund
Companies Fund Hawaii**
Franklin Federal Money Fund
Templeton Greater European Fund Indiana
Templeton Growth Fund Kentucky
FOR NON-U.S. INVESTORS:
Templeton Latin America Fund Louisiana
Franklin Tax-Advantaged
High Yield Securities Fund
Templeton Pacific Growth Fund Maryland
Franklin Tax-Advantaged
Templeton World Fund Massachusetts***
International Bond Fund
Michigan*
Franklin Tax-Advantaged U.S.
GLOBAL GROWTH AND INCOME
Minnesota***
Government Securities Fund
Franklin Global Utilities Fund
Missouri
FOR CORPORATIONS:
Franklin Templeton German
New Jersey
Franklin Corporate Qualified
Government Bond Fund
New York*
Dividend Fund
Franklin Templeton
North Carolina
Global Currency Fund
Ohio***
Mutual European Fund
FRANKLIN FUNDS SEEKING
Oregon
Templeton Global Bond Fund
TAX-FREE INCOME
Pennsylvania
Templeton Growth and Income Fund
Federal Intermediate-Term
Tennessee**
Tax-Free Income Fund
Texas
GLOBAL INCOME Federal Tax-Free Income Fund
Virginia
High Yield Tax-Free Income Fund
Franklin Global Government
Income Fund
Washington**
Insured Tax-Free Income Fund
Franklin Templeton Hard
Puerto Rico Tax-Free Income Fund
VARIABLE ANNUITIES+
Currency Fund
Tax-Exempt Money Fund
Franklin Valuemark(R)
Franklin Templeton High
Income Currency Fund
Franklin Templeton
Valuemark Income Plus
Templeton Americas
(an immediate annuity)
Government Securities Fund
*TWO OR MORE FUND OPTIONS AVAILABLE: LONG-TERM PORTFOLIO, INTERMEDIATE-TERM
PORTFOLIO, A PORTFOLIO OF INSURED MUNICIPAL SECURITIES,
AND/OR A HIGH YIELD PORTFOLIO (CA) AND A MONEY MARKET PORTFOLIO (CA AND NY).
**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.
+FRANKLIN VALUEMARK AND FRANKLIN TEMPLETON VALUEMARK INCOME PLUS ARE ISSUED BY
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA OR BY ITS WHOLLY OWNED
SUBSIDIARY, PREFERRED LIFE INSURANCE COMPANY OF NEW YORK, AND DISTRIBUTED BY
NALAC FINANCIAL PLANS, LLC.
FGF 02/97 GROWTH
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap Growth Fund
Mutual Discovery Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.
FUND ALLOCATOR SERIES:
Franklin Templeton
Conservative Target Fund
Franklin Templeton
Moderate Target Fund
Franklin Templeton
Growth Target Fund
<PAGE> 20
Templeton Global Income Fund
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Investors should be aware that the value of an investment 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.
[GRAPHIC]
TEMPLETON
GLOBAL
INCOME
FUND
Semi-Annual Report
February 28, 1997
[FRANKLIN TEMPLETON LOGO]
TLGIM S97 4/97
