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Templeton Global
Governments Income Trust
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Your Fund's Objective:
Seeks high current income, with capital appreciation and growth of income, by
investing primarily in a portfolio of debt securities of governments and
government agencies of various nations throughout the world.
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July 21, 1995
Dear shareholder:
This update for the quarter ended May 31, 1995, includes your Fund's long-term
performance, a listing of its investments, and a brief update regarding the
global investment environment.
This update is one of four reports you will receive during the Fund's fiscal
year. Next quarter, you will receive the annual report covering the 12-months
ended August 31, 1995. The annual provides a more comprehensive discussion of
the financial markets that impact the Fund, a summary of the Fund's performance,
and insight into the manager's investment decisions and outlook. Also included
are the Fund's audited financial statements and investment portfolio.
If you have any questions about this quarterly update, you may call the Franklin
Templeton Fund Information Department at 1-800/342-5236.
1
<PAGE>
Manager's Discussion
A slower rate of U.S. gross domestic product (GDP) growth in the first calendar
quarter of 1995 than posted in the second half of 1994 and signs that the
economy may be slowing further in the second quarter resulted in a strong surge
in prices in the global bond markets. Longer-term interest rates in the U.S.
declined from over 8% in November of last year to under 7% this month. Rates in
most of the other industrialized countries followed suit and declined by similar
amounts.
While the global economy continues to expand, inflation remains subdued. Some
upward pressure on inflation is likely the longer the expansion continues.
Indeed, as in the U.S., consumer prices are increasing moderately in other
industrialized countries. However, that upward movement is muted compared with
the experience in recent business cycles. It is for that reason that signs of
slower economic growth in the U.S. in the last two months have resulted in a
surge in prices in global bond markets. This may foreshadow a potential global
trend for 1996.
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TEMPLETON GLOBAL GOVERNMENTS
INCOME TRUST
Cumulative Total Returns*
Periods Ended 5/31/95
<TABLE>
<CAPTION>
Since
Inception
One-Year Five-Year (11/22/88)
-------- --------- ----------
<S> <C> <C> <C>
Based on change 10.00% 42.72% 56.17%
in net asset value
Based on change 7.04% 40.10% 29.50%
in market price
</TABLE>
*Total return calculations assume reinvestment of all distributions at net asset
value or at market price in accordance with the dividend reinvestment plan.
Past performance is not predictive of future results.
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Since our last report on February 28, 1995, we have taken advantage of higher
bond values in the U.S. and reduced the fund's U.S. weighting slightly, from
29.2% to 23.6% of total net assets as of May 31, 1995. We also increased the
fund's exposure to Asian securities from 3.5% to 10.1% as of May 31, 1995.
Specifically, we increased the fund's exposure to Japan, as we believe the
growth prospects there appear favorable, given sustained
2
<PAGE>
low interest rates and good GDP growth thus far in 1995. While the Kobe
earthquake has certainly disrupted economic activity in the short-term, it could
also stimulate rapid growth as rebuilding gets underway. Furthermore, the Bank
of Japan has indicated that its monetary policy will take into account the
effects of the earthquake -- meaning that the current low level of interest
rates is likely to be maintained despite the prospects of somewhat stronger
growth this year.
As a result of the better performance of the global bond markets, the net asset
value per share of the Templeton Global Governments Income Trust increased in
the three months ended May 31, 1995 to $7.71 from $7.36 on February 28, 1995.
Over the same time period, the market price per share on the New York Stock
Exchange increased from $6.75 to $6.88.
/s/ Thomas W. Wilkinson
Thomas W. Wilkinson, CFA
Portfolio Manager,
Templeton Global Governments Income Trust
3
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Templeton Global Governments Income Trust
Investment Portfolio, May 31, 1995 (unaudited)
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<TABLE>
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY* VALUE
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BONDS--GOVERNMENT & GOVERNMENT AGENCIES: 85.6%
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<C> <C> <S> <C>
4,360,000 Ger. Deutsche Bundespost, 7.75%, 10/01/04 $ 3,263,334
2,800,000 Aus. Eurofima, 9.875%, 1/17/07 2,102,121
European Investment Bank:
177,000,000 Jpn. 5.875%, 11/26/99 2,443,165
244,000,000 Jpn. 6.625%, 3/15/00 3,470,366
2,715,000 U.S. Federal Home Loan Mortgage Corp., 5.87%, 7/05/95 2,699,986
3,740,000 Ger. Federal Republic of Germany, Bundes, 8.00%, 1/21/02 2,873,058
11,330,000 Ger. Federal Republic Germany, Bundeschatweis, 6.875%, 12/02/98 8,372,833
3,160,000 Ger. Federal Republic Germany, Bundesobl, 5.375%, 2/22/99 2,232,678
3,450,000 Aus. Government of Australia, 7.50%, 7/15/05 2,243,308
Government of Canada:
1,104,000 Can. 10.50%, 3/01/01 913,719
2,550,000 Can. 9.75%, 6/01/21 2,157,041
3,250,000 Can. 8.00%, 6/01/23 2,304,224
Government of Denmark:
9,020,000 Den. 9.00%, 11/15/98 1,717,916
18,096,000 Den. 8.00%, 5/15/03 3,275,435
Government of Italy:
7,000,000,000 Itl. 12.00%, 10/01/95 4,238,160
3,515,000,000 Itl. 12.00%, 1/01/97 2,150,643
4,000,000,000 Itl. 12.00%, 1/20/98 2,454,698
3,230,000,000 Itl. FRN, 8/01/99 1,970,954
19,000,000 Neth. Government of Netherlands, zero, 1/15/23 1,565,116
Government of Spain:
390,000,000 Sp. 13.45%, 4/15/96 3,272,304
296,000,000 Sp. 11.90%, 7/15/96 2,442,967
International Bank Recon/Dev.:
254,000,000 Jpn. 6.75%, 3/15/00 3,632,110
4,675,000 Ger. 7.125%, 4/12/05 3,369,034
18,918,000 Den. Kingdom of Denmark, 8.00%, 11/15/01 3,467,044
4,000,000 Aus. New South Wales Treasury Corp., 7.00%, 4/01/04 2,502,341
8,350,000 Can. Province of British Columbia, 9.85%, 5/01/98 6,495,020
2,100,000 U.S. Province of Nova Scotia, 8.75%, 4/01/22 2,363,634
3,000,000 Can. Province of Ontario, 8.00%, 3/11/03 2,155,453
6,000,000 Aus. Queensland Treasury Corp., 8.00%, 5/14/03 4,062,222
5,000,000 U.S. Republic of Argentina, 8.375%, 12/20/03 3,875,000
9,500,000 Aus. Treasury Corp. of Victoria, 8.25%, 10/15/03 6,537,235
U.K. Treasury Bonds:
3,520,000 U.K. 7.00%, 8/06/97 5,563,523
95,000 U.K. 7.75%, 9/08/06 148,221
7,000,000 U.K. 9.00%, 8/06/12 12,167,431
</TABLE>
4
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Templeton Global Governments Income Trust
Investment Portfolio, May 31, 1995 (unaudited) (cont.)
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<TABLE>
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY* VALUE
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BONDS--GOVERNMENT & GOVERNMENT AGENCIES (CONT.)
- ----------------------------------------------------------------------------------------------------------
<C> <C> <S> <C>
U.S. Treasury Bonds:
2,455,000 U.S. 6.25%, 8/15/23 $ 2,303,085
5,436,000 U.S. 7.625%, 2/15/25 6,110,390
U.S. Treasury Notes:
1,600,000 U.S. 9.125%, 5/15/99 1,772,496
9,500,000 U.S. 7.75%, 11/30/99 10,121,965
4,900,000 U.S. 7.25%, 5/15/04 5,203,947
2,290,000 U.S. 11.625%, 11/15/04 3,138,010
6,110,000 U.S. 6.50%, 5/15/05 6,203,544
3,000,000 U.S. Venezuela Front Load Interest Reduction Bond, 6.00%, 3/31/07 1,479,375
------------
TOTAL BONDS--GOVERNMENT & GOVERNMENT AGENCIES 150,835,106
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BONDS--CORPORATE: 10.4%
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2,350,000 U.S. Bombril SA, 8.00%, 8/26/98 1,974,000
2,000,000 U.S. Compania Naviera Perez Companc SA, 8.375%, 7/30/98 1,880,000
4,749,500 N.Z. Corporate Investments Ltd., 13.50%, conv., 6/19/95 2,854,795
1,500,000 U.S. Dine SA, 8.125%, 10/15/98 1,215,000
1,900,351 U.S. Electricidad de Caracas, FRN, 9/30/03 826,653
1,525,000 U.S. Essar Gujarat Ltd., FRN, 7/15/99 1,525,000
2,000,000 Aus. News America Holdings Inc., 8.625%, 02/07/14 1,191,261
3,000,000 U.S. Quantas Airways Ltd., 7.50%, 6/30/03 3,019,140
Thailand Military Bank:
25,000,000 Thai. 7.50%, 10/02/95 998,227
20,000,000 Thai. 11.125%, 6/03/96 810,373
21,000,000 Thai. 11.00%, 6/05/96 850,891
1,650,000 Aus. TNT Pacific Finance Ltd., 9.00%, conv., 7/27/98 1,137,310
------------
TOTAL BONDS--CORPORATE 18,282,650
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INDEXED SECURITIES: 3.4%
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3,500,000 U.S. Caisse Nationale de Credit Agricole, (principal is linked to
the difference in the one year Deutschemark swap rate and the
one year Sterling swap rate plus 85 basis points times 15),
6.65%, CD, 10/06/95 2,493,400
3,400,000 U.S. Goldman Sachs Group LP, (principal and interest is linked to the
change in the Indonesian Rupiah to U.S. Dollar foreign
exchange rate between issue date (2,179.25 Rupiah/U.S. Dollar)
and maturity date), 14.00%, 6/15/95 3,313,980
3,000,000 U.S. IBM Credit Corp., (principal is linked to the change in the
Japanese Yen to U.S. Dollar foreign exchange rate between
issue date (169 Yen/U.S. Dollar) and maturity date), 10.75%, 12/04/95 150,000
------------
TOTAL INDEXED SECURITIES 5,957,380
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</TABLE>
5
<PAGE>
Templeton Global Governments Income Trust
Investment Portfolio, May 31, 1995 (unaudited) (cont.)
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<TABLE>
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY* VALUE
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<C> <C> <S> <C>
SHORT TERM OBLIGATIONS: 1.0%
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20,000,000 Thai. Bangkok Bank, 11.50%, 5/16/96 $ 811,966
335,000 U.S. Federal Farm Credit Bank, 5.89%, 6/02/95 334,946
655,000 U.S. U.S. Treasury Bills, 5.64% to 5.74% with
maturities to 9/21/95 643,803
------------
TOTAL SHORT TERM OBLIGATIONS 1,790,715
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TOTAL INVESTMENTS: 100.4% 176,865,851
UNREALIZED LOSS IN FORWARDS EXCHANGE CONTRACTS: (0.7)% (1,156,016)
OTHER ASSETS, LESS LIABILITIES: 0.3% 449,401
------------
TOTAL NET ASSETS: 100.0% $176,159,236
============
</TABLE>
*CURRENCY OF COUNTRIES INDICATED.
6
<PAGE>
Templeton Global Governments Income Trust
Financial Highlights, May 31, 1995 (unaudited)
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<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS PER SHARE
------------------------- -----------------
<S> <C> <C> <C> <C>
Net Asset Value:
Beginning of period, March 1,
1995 $168,016,702 $7.36
Net investment income $ 3,800,921 $ 0.16
Distribution from net investment
income (3,426,423) (0.15)
Net realized and unrealized gain
from security transactions 7,768,036 0.34
----------- --------
Net increase in net asset value 8,142,534 0.35
------------ -------
End of period, May 31, 1995 $176,159,236 $ 7.71
============ =======
</TABLE>
- ---
This report is sent to the shareholders of Templeton Global Governments Income
Trust for their information. It is not a prospectus, circular, or representa-
tion intended for use in the purchase or sale of shares of the Fund or of any
securities mentioned in the report.
7
<PAGE>
Templeton Global Governments Income Trust
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TRANSFER AGENT
Dean Witter Trust Company
2 Montgomery Street
Jersey City, NJ 07302
SHAREHOLDER INFORMATION
Shares of Templeton Global Governments Income Trust are traded daily on the New
York Stock Exchange under the symbol "TGG." Information about the net asset
value and the market price is published weekly in Barron's and in the Monday
edition of the Wall Street Journal in a section called "Closed-End Bond Funds."
If any shareholder is not receiving copies of the Reports to Shareholders be-
cause shares are registered in a broker's name or in a custodian's name he or
she can request that his or her name be added to the Trust's mailing list, by
writing the Templeton Global Governments Income Trust, 700 Central Avenue, St.
Petersburg, Florida 33701.
For information about dividends and shareholders accounts, call 1-800-526-3143.
8
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Notes
-----
<PAGE>
Notes
-----
<PAGE>
Notes
-----
<PAGE>
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TEMPLETON GLOBAL
GOVERNMENTS INCOME
TRUST
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Investors should be
aware that the value of
investments made for
the Fund may go up as
well as down and that
the Investment Manager
may make errors in
selecting securities
for the Fund's
portfolio. Like any
investment in
securities, the Fund's
portfolio will be
subject to the risk of
loss from market,
currency, economic,
political, and other
factors. The Fund and
Fund investors are not
protected from such
losses by the
Investment Manager.
Therefore, investors
who cannot accept the
risk of such losses
should not invest in
shares of the Fund.
To ensure the highest
quality of service,
telephone calls to or
from our service
departments may be
monitored, recorded,
and accessed. These
calls can be determined
by the presence of a
regular beeping tone.
- --------------------------
[LOGO OF RECYCLED PAPER APPEARS HERE]
TLTGG Q95 5/95
TEMPLETON
GLOBAL
GOVERNMENTS
INCOME
TRUST
Third Quarter Report
May 31, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
