ANNUAL REPORT
TEMPLETON GLOBAL
INCOME FUND, INC.
AUGUST 31, 2000
[FRANKLIN TEMPLETON INVESTMENTS LOGO]
<PAGE>
[INSIDE FRONT COVER]
<PAGE>
SHAREHOLDER LETTER
Your Fund's Goal: Templeton Global Income Fund seeks high current income, with a
secondary objective of capital appreciation. Under normal market conditions, the
Fund invests primarily in a portfolio of debt securities of U.S. and foreign
issuers, including emerging markets.
This report of Templeton Global Income Fund covers the fiscal year ended August
31, 2000. During the first half of the reporting period, upward revisions in
global economic growth forecasts, and inflationary fears stemming from higher
oil prices led many investors to be cautious about the possibility of rising
interest rates. Continuing U.S. economic growth, European economic recovery,
better-than-expected growth in Japan, and the possibility of a tighter monetary
policy stance by central banks all appeared to justify this cautious approach.
Most European countries experienced rising interest rates, the U.S. Federal
Reserve Board increased interest rates by 125 basis points, and many analysts
believed that with the possible exception of Japan, industrial economies had
reached the bottom of their interest rate cycles.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 9.
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter 1
Performance Summary 6
Important Notice to
Shareholders 7
Financial Highlights &
Statement of Investments 8
Financial Statements 13
Notes to Financial
Statements 16
Report of Independent
Accountants 19
</TABLE>
[PYRAMID GRAPHIC]
<PAGE>
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
8/31/00
[PIE GRAPH]
<TABLE>
<S> <C>
Europe 38.0%
Latin America 22.1%
United States 15.6%
Asia 10.1%
Canada 5.9%
Australia & New Zealand 5.3%
Short-Term Investments & Other Net Assets 3.0%
</TABLE>
However, during the second half of the period, a bond buyback program
implemented by the U.S. Treasury reduced the supply of U.S. bonds, and concerns
about inflation seemed to diminish due to the release of economic data showing
growth rates converging toward more sustainable levels. Bonds began to appear
more attractive to many investors who put money back into the global fixed
income markets.
European bond markets offered positive returns in local currency terms. The U.K.
and EMU bond indexes rose 4.33% and 2.45%, respectively. Although the Swedish
bond market outperformed the EMU countries, Denmark did not do as well. The
Japanese debt market performed well despite a 25 basis point increase in
short-term interest rates by the Bank of Japan in August 2000. And
Australia/Canada/New Zealand dollar-bloc bond markets, where rising commodity
prices supported the local currency and helped contain inflation, outperformed
the global bond markets in general, but underperformed that of the U.S. in local
currency terms.(1)
Due largely to higher commodity prices, the J.P. Morgan Emerging Markets Bond
Index Global (EMBI Global) increased 30.23% during the 12-month period.(2) These
higher commodity prices contributed to improved export revenues of emerging
market countries, and coupled with continued strength in the U.S. equity market,
helped to increase investor appetite for emerging market bonds. Most countries
covered by the index
1. Source: J.P. Morgan Securities, Inc.
2. Sources for all indexes: J.P. Morgan Securities, Inc. The J.P. Morgan
Emerging Markets Bond Index Global tracks total returns for U.S. dollar
denominated debt instruments issued by emerging market sovereign and
quasi-sovereign entities. The J.P. Morgan Global Government Bond Index measures
and tracks bonds from around the world. The J.P. Morgan U.S. Government Bond
Index measures and tracks U.S. Treasury securities. Indexes are measured in U.S.
dollars (unless otherwise specified) and include reinvested interest. One cannot
invest directly in an index, nor is an index representative of the Fund's
portfolio.
2
<PAGE>
experienced rising bond prices, with the exceptions of Nigeria and Cote d'Ivoire
(the "Ivory Coast"). Russian bonds were among the best performers, increasing
127.20%, followed by those of Ecuador, Algeria and Brazil, up 55.45%, 42.70% and
38.86%, respectively.
Within this environment, Templeton Global Income Fund posted cumulative total
returns (in U.S. dollar terms) of 3.97% in market-price terms and 3.72% in net
asset value terms for the 12 months ended August 31, 2000, as shown in the
Performance Summary on page 6. The J.P. Morgan Global Government Bond Index,
which measures and tracks bonds from around the world, delivered a 4.40% return
in local currency terms for the same 12-month period. However, a stronger dollar
versus the euro and the Japanese yen resulted in a lower return of - 2.04% in
U.S. dollar terms for the index. The J.P. Morgan U.S. Government Bond Index,
which measures and tracks U.S. Treasury securities, was up 8.28%.(2)
Throughout the reporting period, we attempted to meet the Fund's objective by
allocating approximately 60% - 65% of total net assets to intermediate- and
long-term bonds in developed markets, with the remaining assets invested in what
we believed were the highest-quality and most-liquid bonds in emerging markets.
In our opinion, this combination of investments offered the potential for higher
long-term returns at the cost of modestly higher short-term volatility. Because
emerging market bonds generally outperformed higher-quality industrial market
debt during this period, our allocation to emerging market debt added positively
to the Fund's performance.
PORTFOLIO BREAKDOWN
Based on Total Net Assets
8/31/00
<TABLE>
<S> <C>
Government Bonds 93.3%
Corporate Bonds 3.7%
Short-Term Investments
& Other Net Assets 3.0%
</TABLE>
3
<PAGE>
The Fund's geographic allocation changed slightly during the period. Our
allocation to North America decreased from 27.7% to 21.5% of total net assets,
with U.S. and Canadian exposure decreasing by 3.5% and 2.7%, respectively. We
increased our European allocation slightly from 37.5% to 38.0%, adjusting the
underlying country mix to reduce our exposure to Germany and Spain, add to
positions in Italy, and initiate new positions in Belgium, France and the
Netherlands. The Fund's Australia and New Zealand allocation decreased by 2.3%,
while we added to our position in Turkey and initiated a position in South
Korea. We also increased our holdings in Latin America by approximately 1.5%,
leaving our exposure to that region at 22.1% on August 31, 2000.
Looking forward, we are optimistic about prospects for global bond markets and
Templeton Global Income Fund. In our opinion, global economic growth should
remain strong in the short term, and inflation could be relatively tame. This
could prove to be an attractive environment for high-quality bonds and
contributes to our positive outlook for the Fund. We also believe that the
Fund's emerging market positions may continue to offer attractive return
opportunities for its portfolio.
It is important to note that there are special risks involved with global
investing related to market, currency, economic, social, political, and other
factors, in addition to the heightened risks associated with the relatively
small size and lesser liquidity of emerging markets. These special risks and
other considerations are discussed in the Fund's prospectus.
4
<PAGE>
We look forward to serving your future investment needs, and welcome your
comments or suggestions.
Portfolio Management Team
Templeton Global Income Fund, Inc.
This discussion reflects our views, opinions and portfolio holdings as of August
31, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any country, industry, security or the
Fund. Our strategies and the Fund's portfolio composition will change depending
on market and economic conditions. Although historical performance is no
guarantee of future results, these insights may help you understand our
investment and management philosophy.
5
<PAGE>
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.
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility, and the economic,
social and political climates of countries where the Fund invests. Emerging
markets involve heightened risks related to the same factors, in addition to
those associated with their relatively small size and lesser liquidity. Also, as
a non-diversified investment company, the Fund may invest in a relatively small
number of issuers and, as a result, be subject to greater risk of loss with
respect to its portfolio securities. You may have a gain or loss when you sell
your shares.
ONE-YEAR PERFORMANCE SUMMARY
AS OF 8/31/00
Distributions will vary based on earnings of the Fund's portfolio and any
profits realized from the sale of the portfolio's securities, as well as the
level of the Fund's operating expenses. Past distributions are not indicative of
future trends. All total returns include reinvested distributions according to
the terms specified in the Fund's dividend reinvestment and cash purchase plan,
and do not reflect any sales charges paid at inception or brokerage commissions
paid on secondary market purchases.
<TABLE>
<S> <C>
One-Year Total Return 3.72% Based on change in Net Asset Value
3.97% Based on change in Market Price on
the New York Stock Exchange (NYSE)
</TABLE>
<TABLE>
<S> <C> <C>
Net Asset Value (NAV) $7.06 (8/31/00) $7.50 (8/31/99)
Change in NAV -$0.44
Market Price (NYSE) $6.1875 (8/31/00) $6.5625 (8/31/99)
Change in Market Price -$0.3750
Distributions (9/1/99 - 8/31/00) Dividend Income $0.6000
</TABLE>
ADDITIONAL PERFORMANCE AS OF 9/30/00
<TABLE>
<CAPTION>
Inception
1-Year 5-Year 10-Year (3/17/88)
------ ------ ------- ---------
<S> <C> <C> <C> <C>
Cumulative Total Return (1)
Based on change in
NAV 0.01% 25.38% 87.83% 122.35%
Based on change in
market price 0.99% 35.81% 101.64% 95.25%
Average Annual Total Return (2)
Based on change in
NAV 0.01% 4.62% 6.51% 6.58%
Based on change in
market price 0.99% 6.31% 7.26% 5.48%
</TABLE>
For updated performance figures, please call Franklin Templeton at
1-800/342-5236.
Past performance does not guarantee future results.
6
<PAGE>
IMPORTANT NOTICE TO SHAREHOLDERS
EURO RISK. On January 1, 1999, the European Economic and Monetary Union (EMU)
introduced a new single currency called the euro. By July 1, 2002, the euro,
which will be implemented in stages, will have replaced the national currencies
of most of the member countries.
It is not possible to predict the long-term impact of the euro on currency
values or on the business or financial condition of European countries and
issuers, and issuers in other regions, whose securities the Fund may hold, or
the impact, if any, on Fund performance. In the first year and a half of the
euro's existence, the exchange rates of the euro versus many of the world's
major currencies steadily declined. In this environment, U.S. and other foreign
investors experienced erosion of their investment returns on their
euro-denominated securities. The transition and the elimination of currency risk
among EMU countries may change the economic environment and behavior of
investors, particularly in European markets, but the full impact of those
changes cannot be assessed at this time.
SHARE REPURCHASE PROGRAM. In May 2000, the Board of Directors of the Fund
approved expansion of the Fund's open-market share repurchase program. Under the
Fund's previously announced open-market share repurchase program, the Fund was
authorized to purchase, from time to time, up to a maximum of 12 million shares
of the Fund's common stock in open-market transactions, at the discretion of
management (approximately 10% of the shares outstanding at the time the program
was initially implemented).
The Board's action removed the 10% limitation on share repurchases in order to
give management greater flexibility to engage in an aggressive share repurchase
program in efforts to address the Fund's discount to net asset value. The amount
and timing of additional purchases, and the extent to which they may exceed the
previous limitation, will be at the discretion of the Fund's management, taking
into account various factors, including market conditions, cash on hand and the
availability of other attractive investments.
INVESTMENT OF CASH BALANCES. The U.S. Securities and Exchange Commission granted
the Franklin Templeton Funds an order that allows the funds, including Templeton
Global Income Fund, Inc., to invest their uninvested cash balances in affiliated
Franklin Templeton money market funds. Among the conditions of the SEC order are
that there will be no layering of investment advisory fees, with regard to their
investments in the Franklin Templeton money market funds. At a shareholder
meeting held on March 7, 2000, shareholders approved an amendment to the Fund's
fundamental investment restriction regarding diversification of its investments
to permit, among other things, the Fund to invest its cash balances to the full
extent permitted by the SEC's exemptive order. Subject to the conditions of the
SEC order, the Fund may invest cash balances in Franklin Templeton money market
funds.
7
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE+
(For a share outstanding throughout the year)
Net asset value, beginning of year...................... $7.50 $7.67 $8.35 $8.34 $8.00
------------------------------------------------------------
Income from investment operations:
Net investment income.................................. .60 .61 .60 .60 .63
Net realized and unrealized gains (losses)............. (.46) (.18) (.71) .01 .31
------------------------------------------------------------
Total from investment operations........................ .14 .43 (.11) .61 .94
------------------------------------------------------------
Capital share repurchases............................... .02 .01 .03 -- --
------------------------------------------------------------
Less distributions from:
Net investment income.................................. (.60) (.60) (.60) (.60) (.41)
Net realized gains..................................... -- (.01) -- -- --
Tax return of capital.................................. -- -- -- -- (.19)
------------------------------------------------------------
Total distributions..................................... (.60) (.61) (.60) (.60) (.60)
------------------------------------------------------------
Net asset value, end of year............................ $7.06 $7.50 $7.67 $8.35 $8.34
============================================================
Total Return
Based on market value per share........................ 3.97% 11.29% (7.69)% 17.12% 12.75%
Based on net asset value per share..................... 3.72% 6.75% (.46)% 8.53% 13.34%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)......................... $797,122 $862,788 $891,785 $1,002,756 $1,004,606
Ratios to average net assets:
Expenses............................................... .75% .76% .74% .75% .72%
Net investment income.................................. 8.12% 7.70% 7.26% 7.05% 7.67%
Portfolio turnover rate................................. 110.36% 66.07% 74.55% 191.83% 112.59%
</TABLE>
+Based on average weighted shares outstanding effective year ended August 31,
1999.
See Notes to Financial Statements.
8
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT** VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS 97.0%
ARGENTINA 4.3%
Republic of Argentina:
8.875%, 5/09/02........................................... $ 10,050,000 $ 9,698,250
8.375%, 12/20/03.......................................... 5,510,000 5,124,300
11.00%, 10/09/06.......................................... 11,680,000 11,096,000
11.75%, 4/07/09........................................... 5,750,000 5,374,813
11.375%, 1/30/17.......................................... 3,035,000 2,682,181
------------
33,975,544
------------
AUSTRALIA 3.6%
Government of Australia, 10.00%, 10/15/07................... 20,704,000AUD 14,477,966
Queensland Treasury Corp., 6.50%, 6/14/05................... 25,315,000AUD 14,581,393
------------
29,059,359
------------
BELGIUM 2.4%
Kingdom of Belgium, 8.50%, 10/01/07......................... 18,604,000EUR 19,245,745
------------
BRAZIL 5.5%
Government of Brazil:
FRN, 7.4375%, 4/15/09..................................... 11,000,000 9,728,125
14.50%, 10/15/09.......................................... 16,625,000 18,466,219
Series L, cvt., FRN, 7.4375%, 4/15/12..................... 10,300,000 7,976,114
12.75%, 1/15/20........................................... 4,500,000 4,404,375
10.125%, 5/15/27.......................................... 4,550,000 3,618,388
------------
44,193,221
------------
CANADA 5.9%
Government of Canada:
10.50%, 3/01/01........................................... 39,793,000CAD 27,593,348
10.00%, 5/01/02........................................... 25,710,000CAD 18,549,591
10.25%, 2/01/04........................................... 1,130,000CAD 867,287
------------
47,010,226
------------
DENMARK 1.2%
Kingdom of Denmark, 8.00%, 3/15/06.......................... 73,189,000DKK 9,641,649
------------
FRANCE 5.7%
Government of France:
8.25%, 2/27/04............................................ 39,000,000EUR 37,838,460
8.50%, 10/25/08........................................... 7,469,000EUR 7,958,389
------------
45,796,849
------------
GERMANY 1.6%
Federal Republic of Germany, 8.00%, 7/22/02................. 13,643,824EUR 12,704,962
------------
INDIA .1%
+*Essar Steel Ltd., 144A, FRN, 7.635%, 7/20/99.............. 1,240,000 651,000
------------
</TABLE>
9
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT** VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
ITALY 7.7%
Buoni Poliennali del Tesoro:
8.75%, 7/01/06............................................ 11,372,000EUR $ 11,691,484
6.75%, 7/01/07............................................ 6,231,000EUR 5,899,729
Government of Italy:
10.50%, 11/01/00.......................................... 8,790,081EUR 7,873,406
10.50%, 4/01/05........................................... 33,730,000EUR 35,850,120
------------
61,314,739
------------
MEXICO 5.3%
Nacional Financiera SNC, 10.625%, 11/22/01.................. 2,500,000 2,586,900
United Mexican States:
9.875%, 1/15/07........................................... 12,580,000 13,337,945
8.625%, 3/12/08........................................... 6,960,000 6,935,640
11.375%, 9/15/16.......................................... 16,490,000 19,375,750
------------
42,236,235
------------
NETHERLANDS 3.4%
Cellco Finance NV, 15.00%, 8/01/05.......................... 11,460,000 12,505,725
Government of Netherlands, 7.75%, 3/01/05................... 14,853,000EUR 14,417,235
------------
26,922,960
------------
NEW ZEALAND 1.7%
Government of New Zealand, 8.00%, 11/15/06.................. 29,503,000NZD 13,395,928
------------
PANAMA .7%
Republic of Panama, 8.875%, 9/30/27......................... 6,070,000 5,334,013
------------
SOUTH KOREA 2.9%
Hanvit Bank, 144A, 12.75%, 3/01/10.......................... 8,800,000 9,031,440
Republic of Korea, 8.875%, 4/15/08.......................... 12,980,000 13,701,688
------------
22,733,128
------------
SPAIN 4.8%
Bonos y Oblig del Estado, 8.80%, 4/30/06.................... 11,229,000EUR 11,525,498
Government of Spain:
10.10%, 2/28/01........................................... 15,028,909EUR 13,665,377
10.15%, 1/31/06........................................... 12,536,000EUR 13,469,401
------------
38,660,276
------------
SWEDEN 3.5%
Kingdom of Sweden, 10.25%, 5/05/03.......................... 234,800,000SEK 28,119,886
------------
</TABLE>
10
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT** VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
TURKEY 7.1%
Republic of Turkey:
Reg S, 9.875%, 2/23/05.................................... $ 4,690,000 $ 4,725,175
Reg S, 10.00%, 9/19/07.................................... 11,100,000 11,086,125
12.375%, 6/15/09.......................................... 37,210,000 40,410,060
------------
56,221,360
------------
UNITED KINGDOM 7.7%
United Kingdom:
8.00%, 12/07/00........................................... 27,645,000GBP 40,429,168
8.50%, 7/16/07............................................ 12,227,000GBP 20,625,313
------------
61,054,481
------------
UNITED STATES 15.6%
BP America Inc., 10.875%, 8/01/01........................... 10,000,000CAD 7,053,877
Fannie Mae, 5.25%, 1/15/09.................................. 15,844,000 14,228,245
Federal Home Loan Mortgage Corp., 5.375%, 3/01/01........... 1,700,000 1,688,726
U.S. Treasury Bonds:
6.375%, 8/15/27........................................... 16,910,000 18,030,288
5.25%, 11/15/28........................................... 28,626,000 26,353,811
5.25%, 2/15/29............................................ 3,010,000 2,774,844
U.S. Treasury Notes:
6.125%, 8/31/02........................................... 17,850,000 17,838,844
7.875%, 11/15/04.......................................... 34,449,000 36,731,246
------------
124,699,881
------------
</TABLE>
11
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000 (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT** VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
LONG TERM INVESTMENTS (CONT.)
VENEZUELA 6.3%
Republic of Venezuela, 9.25%, 9/15/27....................... $ 61,505,000 $ 41,727,298
Venezuela Front Load Interest Reduction Bond, A, FRN,
7.4375%, 3/31/07.......................................... 9,666,570 8,379,708
------------
50,107,006
------------
TOTAL LONG TERM INVESTMENTS (COST $883,606,314)............. 773,078,448
------------
SHORT TERM INVESTMENTS (COST $537,000) .1%
Danske Bank, 6.625%, 9/01/00, Time Deposit.................. 537,000 537,000
------------
TOTAL INVESTMENTS (COST $884,143,314) 97.1%................. 773,615,448
OTHER ASSETS, LESS LIABILITIES 2.9%......................... 23,506,213
------------
TOTAL NET ASSETS 100.0%..................................... $797,121,661
============
</TABLE>
CURRENCY ABBREVIATIONS:
AUD -- Australian Dollar
CAD -- Canadian Dollar
DKK -- Danish Krone
EUR -- European Unit
GBP -- British Pound
NZD -- New Zealand Dollar
SEK -- Swedish Krona
*Non-income producing.
**Securities denominated in U.S. dollars unless otherwise indicated.
+Represents defaulted bonds.
See Notes to Financial Statements.
12
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $884,143,314).... $ 773,615,448
Cash....................................................... 747
Receivables:
Investment securities sold................................ 18,350,268
Interest.................................................. 24,210,264
-------------
Total assets.......................................... 816,176,727
-------------
Liabilities:
Payables:
Investment securities purchased........................... 17,813,973
To affiliates............................................. 440,197
Distributions to shareholders.............................. 411,785
Accrued expenses........................................... 389,111
-------------
Total liabilities..................................... 19,055,066
-------------
Net assets, at value........................................ $ 797,121,661
=============
Net assets consist of:
Net unrealized depreciation................................ (111,144,742)
Accumulated net realized loss.............................. (68,323,375)
Capital shares............................................. 976,589,778
-------------
Net assets, at value........................................ $ 797,121,661
=============
Net asset value per share ($797,121,661 / 112,926,700 shares
outstanding).............................................. $7.06
=============
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
<TABLE>
<S> <C> <C>
Interest Income (net of foreign taxes of $117,686).......... $ 74,280,712
Expenses:
Management fees (Note 3)................................... $ 4,288,011
Administrative fees (Note 3)............................... 1,112,603
Transfer agent fees........................................ 442,000
Custodian fees............................................. 167,400
Reports to shareholders.................................... 143,900
Registration and filing fees............................... 34,000
Professional fees.......................................... 43,600
Directors' fees and expenses............................... 53,600
Other...................................................... 8,332
------------
Total expenses........................................ 6,293,446
------------
Net investment income........................... 67,987,266
------------
Realized and unrealized gains (losses):
Net realized loss from:
Investments............................................... (51,359,792)
Foreign currency transactions............................. (207,101)
------------
Net realized loss..................................... (51,566,893)
Net unrealized appreciation (depreciation) on:
Investments............................................... 580,781
Translation of assets and liabilities denominated in
foreign currencies...................................... (598,173)
------------
Net unrealized depreciation........................... (17,392)
------------
Net realized and unrealized loss............................ (51,584,285)
------------
Net increase in net assets resulting from operations........ $ 16,402,981
============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
-------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 67,987,266 $ 70,250,878
Net realized loss from investments and foreign currency
transactions............................................. (51,566,893) (17,478,719)
Net unrealized depreciation on investments and translation
of assets and liabilities denominated in foreign
currencies............................................... (17,392) (2,966,762)
-------------------------------
Net increase in net assets resulting from operations.... 16,402,981 49,805,397
Distributions to shareholders from:
Net investment income..................................... (68,751,105) (69,619,275)
Net realized gains........................................ -- (581,414)
-------------------------------
Total distributions to shareholders........................ (68,751,105) (70,200,689)
Capital share transactions (Note 2)........................ (13,318,551) (8,601,362)
Net decrease in net assets.............................. (65,666,675) (28,996,654)
Net assets:
Beginning of year.......................................... 862,788,336 891,784,990
-------------------------------
End of year................................................ $797,121,661 $862,788,336
===============================
Undistributed net investment income included in net assets:
End of year................................................ $ -- $ 468,172
===============================
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Global Income Fund, Inc. (the Fund) is registered under the Investment
Company Act of 1940 as a closed-end, non-diversified investment company. The
Fund seeks high current income, with a secondary objective of capital
appreciation. Under normal market conditions, the Fund invests primarily in a
portfolio of debt securities of U.S. and foreign issuers including emerging
markets. The following summarizes the Fund's significant accounting policies.
a. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Directors.
b. FOREIGN CURRENCY TRANSLATION:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions, and the difference between the recorded
amounts of dividends, interest, and foreign withholding taxes and the U.S.
dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in foreign exchange rates
on foreign currency denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Distributions to shareholders are recorded on the ex-dividend date.
16
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
d. FORWARD EXCHANGE CONTRACTS:
The Fund may enter into forward exchange contracts to hedge against foreign
exchange risks. These contracts are valued daily and the Fund's equity therein
is included in the Statement of Assets and Liabilities. Realized and unrealized
gains and losses are included in the Statement of Operations.
e. 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. CAPITAL STOCK
On February 21, 1997, the Board of Directors of the Fund authorized management
to implement an open-market share repurchase program pursuant to which the Fund
may purchase, from time to time, up to 12 million shares of the Fund's common
stock in open-market transactions, at the discretion of management
(approximately 10% of the shares outstanding at the time the program was
initially implemented). Recent action by the Board of Directors has removed the
10% limitation on share repurchases in order to give management greater
flexibility to engage in an aggressive share repurchase program.
At August 31, 2000, there were 200,000,000 shares authorized ($0.01 par value).
During the years ended August 31, 2000 and 1999, 2,128,700 and 1,277,400 shares
were repurchased for $13,318,551 and $8,601,362, respectively. The weighted
average discount of market price to net asset value of shares repurchased during
the year ending August 31, 2000 was 13%. Through August 31, 2000 the Fund had
repurchased a total of 7,526,700 shares.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton
Investment Counsel, Inc. (TICI) and Franklin Templeton Services, Inc. (FT
Services), the Fund's investment manager and administrative manager,
respectively.
The Fund pays an investment management fee to TICI based on the average daily
net assets of the Fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
-----------------------------------------------------------------
<S> <C>
0.55% First $200 million
0.50% Over $200 million
</TABLE>
17
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
Notes to Financial Statements (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
The Fund pays an administrative fee to FT Services based on the average daily
net assets of the Fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
-----------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million
</TABLE>
4. INCOME TAXES
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
At August 31, 2000, the net unrealized depreciation based on the cost of
investments for income tax purposes of $900,018,087 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 3,992,859
Unrealized depreciation..................................... (130,395,498)
-------------
Net unrealized depreciation................................. $(126,402,639)
=============
</TABLE>
Net investment income and net realized capital gains differ for financial
statement and tax purposes primarily due to differing treatments of wash sales,
losses realized subsequent to October 31 on the sale of securities and foreign
currencies, and foreign currency gains/losses on the sale of debt instruments.
At August 31, 2000, the Fund had tax basis capital losses of $7,992,348, which
may be carried over to offset future capital gains. Such losses expire August
31, 2008.
At August 31, 2000, the Fund had deferred capital and currency losses occurring
subsequent to October 31, 1999 of $16,880,978 and $27,575,276, respectively. For
tax purposes, such losses will be reflected in the year ending August 31, 2001.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended August 31, 2000 aggregated $885,501,831 and $903,370,385, respectively.
18
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Templeton Global Income Fund,
Inc. (the "Fund") at August 31, 2000, the results of its operations for the year
then ended, the changes in its net assets and the financial highlights for each
of the two years in the period then ended, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at August 31,
2000 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above. The financial highlights for each of the
three years ending August 31, 1998 were audited by other independent accountants
whose report dated September 29, 1998 expressed an unqualified opinion on those
financial statements.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
September 29, 2000
19
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
Annual Meeting of Shareholders, March 7, 2000
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 E. Broward Blvd., Ft. Lauderdale, Florida, on March 7, 2000. The purpose of
the meeting was to elect four Directors of the Fund; to ratify the selection of
PricewaterhouseCoopers LLP as the Fund's independent auditors for the fiscal
year ending August 31, 2000; to approve the amendment of the Fund's fundamental
investment restriction regarding diversification of its investments; and to
authorize the proxyholders, in their discretion, to vote upon such other matters
that may properly come before the meeting or any adjournments of the meeting. At
the meeting, the following persons were elected by the shareholders to serve as
Directors of the Fund: Harris J. Ashton, Nicholas F. Brady, S. Joseph Fortunato
and Andrew H. Hines, Jr.* Shareholders also ratified the selection of
PricewaterhouseCoopers LLP to serve as the Fund's independent auditors for the
fiscal year ending August 31, 2000 and approved the amendment of the Fund's
fundamental investment restriction regarding diversification of its investments.
No other business was transacted at the meeting.
The results of the voting at the Annual Meeting are as follows:
1. The election of four (4) Directors:
<TABLE>
<CAPTION>
% OF % OF % OF
TERM EXPIRING 2003: FOR OUTSTANDING SHARES VOTED SHARES WITHHELD OUTSTANDING SHARES
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Harris J. Ashton......... 65,376,294 56.93% 96.51% 2,367,003 2.06%
Nicholas F. Brady........ 65,410,152 56.96% 96.56% 2,333,145 2.03%
S. Joseph Fortunato...... 65,310,107 56.88% 96.41% 2,433,190 2.12%
Andrew H. Hines, Jr...... 65,175,031 56.76% 96.21% 2,568,266 2.24%
<CAPTION>
% OF
TERM EXPIRING 2003: VOTED SHARES
-------------------------
<S> <C>
Harris J. Ashton......... 3.49%
Nicholas F. Brady........ 3.44%
S. Joseph Fortunato...... 3.59%
Andrew H. Hines, Jr...... 3.79%
</TABLE>
2. The ratification of the selection of PricewaterhouseCoopers LLP as
independent auditors of the Fund for the fiscal year ending August 31, 2000:
<TABLE>
<CAPTION>
SHARES % OF % OF
VOTED OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 65,790,687 57.29% 97.12%
Against.................. 614,719 0.53% 0.91%
Abstain.................. 1,337,891 1.17% 1.97%
</TABLE>
3. The amendment of the Fund's fundamental investment restriction regarding
diversification of its investments:
<TABLE>
<CAPTION>
SHARES % OF % OF
VOTED OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 54,790,521 47.71% 80.88%
Against.................. 2,269,326 1.98% 3.35%
Abstain.................. 2,077,403 1.80% 3.07%
Broker Non-Votes......... 8,606,047 7.50% 12.70%
</TABLE>
4. The transaction of any other business that may properly come before the
meeting or any adjournments thereof:
<TABLE>
<CAPTION>
SHARES % OF % OF
VOTED OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 60,806,426 52.95% 89.76%
Against.................. 4,461,932 3.88% 6.59%
Abstain.................. 2,474,939 2.16% 3.65%
</TABLE>
*Frank J. Crothers, John Wm. Galbraith, Edith E. Holiday, Charles B. Johnson,
Betty P. Krahmer, Gordon S. Macklin, Fred R. Millsaps and Constantine D.
Tseretopoulos are Directors of the Fund who are currently serving and whose
terms of office continued after the Annual Meeting of Shareholders.
20
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
Dividend Reinvestment and Cash Purchase Plan
The Fund offers a Dividend Reinvestment and Cash Purchase Plan (the "Plan") with
the following features:
Shareholders must affirmatively elect to participate in the Plan; Stock
dividends and capital gains distributions will be reinvested automatically;
ChaseMellon Shareholder Services, Investor Services, P.O. Box 3338, South
Hackensack, NJ 07606-1938, will provide additional Plan information upon
request.
Whenever the Fund declares dividends in either cash or common stock of the Fund,
if the market price is equal to or exceeds net asset value at the valuation
date, the participant will receive the dividends entirely in stock at a price
equal to the net asset value, but not less than 95% of the then current market
price of the Fund's shares. If the market price is lower than net asset value or
if dividends and/or capital gains distributions are payable only in cash, the
participant will receive shares purchased on the New York Stock Exchange or
otherwise on the open market.
A participant has the option of submitting additional payments to Mellon
Securities Trust Company (the "Plan Agent"), in any amounts of at least $100, up
to a maximum of $5,000 per month, for the purchase of Fund shares for his or her
account. These payments shall be made by check or money order payable to "Mellon
Securities Trust Co." and sent to ChaseMellon Shareholder Services, Investor
Services, P.O. Box 382009, Pittsburgh, PA 15250-8009, Attn: Templeton Global
Income Fund, Inc. The Plan Agent shall apply such payments (less a $5.00 service
charge and less a pro rata share of trading fees) to purchases of Fund shares in
the open market.
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 the Plan Agent sent to ChaseMellon Shareholder Services,
Investor Services, P.O. Box 3338, South Hackensack, NJ 07606-1938. Upon
withdrawal, the participant will receive, without charge, stock certificates
issued in the participant's name for all full shares held by the Plan Agent; or,
if the participant wishes, the Plan Agent will sell the participant's shares and
send the proceeds, less a service charge of $5.00 and less trading fees.
Whenever shares are purchased on the New York Stock Exchange or otherwise on the
open market, each participant will pay a pro rata portion of trading fees.
Trading fees will be deducted from amounts to be invested.
21
<PAGE>
TEMPLETON GLOBAL INCOME FUND, INC.
SHAREHOLDER INFORMATION
Shares of Templeton Global Income Fund, Inc. are traded daily on the New York
Stock Exchange under the symbol "GIM." The Fund's shares are also listed and
traded on the Pacific Exchange. Information about the net asset value and the
market price is published each Monday in the Wall Street Journal, weekly in
Barron's and each Saturday in The New York Times and other newspapers. Daily
market prices for the Fund's shares are published in the New York Stock Exchange
Composite Transactions section of newspapers.
For current information about dividends and shareholder accounts, call
1-800/416-5585.
The daily closing net asset value as of the previous business day may be
obtained when available by calling Franklin Templeton Fund Information after 7
a.m. pacific time any business day at 1-800/DIAL BEN(R) (1-800/342-5236). The
Fund's net asset value and dividends are also listed on the NASDAQ Stock Market,
Inc.'s Mutual Fund Quotation Service ("NASDAQ MFQS").
Shareholders not receiving copies of the Reports to Shareholders because their
shares are registered in the name of a broker or a custodian can request that
they be added to the Fund's mailing list, by writing Templeton Global Income
Fund, Inc., 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, FL 33733-8030.
22
<PAGE>
ANNUAL REPORT
AUDITORS
PricewaterhouseCoopers L.L.P.
333 Market Street
San Francisco, CA 94105
TEMPLETON GLOBAL INCOME FUND, INC.
100 Fountain Parkway
P.O. Box 33030
St. Petersburg, FL 33733-8030
TRANSFER AGENT
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
1-800/416-5585
chasemellon.com
FUND INFORMATION
1-800/342-5236
Investors should be aware that the value of investments made for the Fund may go
down as well as up. Like any investment in securities, the value of the Fund's
portfolio will be subject to the risk of loss from market, currency, economic,
political and other factors. The Fund and its investors are not protected from
such losses by the Investment Manager. Therefore, investors who cannot accept
this risk should not invest in shares of the Fund.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
determined by the presence of a regular beeping tone.
TLGIM A00 10/00 [RECYCLE LOGO] Printed on recycled paper
