TEMPLETON EMERGING MARKETS INCOME FUND INC, DEF 14A, 2001-01-10

TEMPLETON EMERGING MARKETS INCOME FUND INC
DEF 14A, 2001-01-10

Previous: OPTICAL SENSORS INC, SC 13G/A, 2001-01-10

Next: TEMPLETON CHINA WORLD FUND INC, DEF 14A, 2001-01-10

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______________)

Filed by the Registrant /X/
Filed by a party other than the Registrant / /

Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12

TEMPLETON EMERGING MARKETS INCOME FUND, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)

------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

/X/ No fee required.

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transactions applies:

(2) Aggregate number of securities to which transactions applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing party:

(4) Date filed:

<PAGE>

[FRANKLIN(R) TEMPLETON(R) INVESTMENTS LOGO]

TEMPLETON EMERGING MARKETS INCOME FUND, INC.

IMPORTANT SHAREHOLDER INFORMATION

These materials are for the Annual Meeting of Shareholders scheduled for Monday,
February 26, 2001 at 10:00 a.m. Eastern time. They discuss the proposals to be
voted on at the meeting, and contain your proxy statement and proxy card. A
proxy card is, in essence, a ballot. When you vote your proxy, it tells us how
you wish to vote on important issues relating to your Fund. If you complete and
sign the proxy, we'll vote it exactly as you tell us. If you simply sign the
proxy, we'll vote it in accordance with the Directors' recommendations on page 1
of the proxy statement.

We urge you to spend a few minutes reviewing the proposals in the proxy
statement. Then, fill out the proxy card and return it to us so that we know how
you would like to vote. When shareholders return their proxies promptly, the
Fund may be able to save money by not having to conduct additional mailings.

We welcome your comments. If you have any questions, call Fund Information at
1-800/DIAL BEN(R) (1-800/342-5236).

TELEPHONE AND INTERNET VOTING

For your convenience, you may be able to vote by telephone or through the
internet, 24 hours a day. If your account is eligible, a control number and
separate instructions are enclosed.

<PAGE>

[FRANKLIN(R) TEMPLETON(R) INVESTMENTS LOGO]

TEMPLETON EMERGING MARKETS INCOME FUND, INC.

NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting ("Meeting") of shareholders of Templeton Emerging Markets
Income Fund, Inc. (the "Fund") will be held at the Tower Club, Bank of America
Building, One Financial Plaza, 28th Floor, Ft. Lauderdale, Florida 33394 on
Monday, February 26, 2001 at 10:00 a.m. Eastern time.

During the Meeting, shareholders of the Fund will vote on three proposals:

1. The election of four Directors of the Fund to hold office for the terms
specified;

2. The ratification or rejection of the selection of PricewaterhouseCoopers
LLP as independent auditors of the Fund for the fiscal year ending August
31, 2001; and

3. The transaction of any other business that may properly come before the
Meeting.

By order of the Board of Directors,

Barbara J. Green
Secretary

January 10, 2001

Many shareholders hold shares in more than one Templeton fund and will receive
proxy material for each fund owned. Please sign and promptly return each proxy
card in the self-addressed envelope regardless of the number of shares you
own.
<PAGE>

TEMPLETON EMERGING MARKETS INCOME FUND, INC.

PROXY STATEMENT

- INFORMATION ABOUT VOTING

Who is eligible to vote?

Shareholders of record at the close of business on Monday, December 4, 2000
are entitled to be present and to vote at the Meeting or any adjourned
Meeting. Each share of record is entitled to one vote on each matter
presented at the Meeting. The Notice of Meeting, the proxy card, and the
proxy statement were first mailed to shareholders of record on or about
January 10, 2001.

On what issues am I being asked to vote?

You are being asked to vote on three proposals:

1. The election of four nominees to the position of Director;

2. The ratification or rejection of the selection of PricewaterhouseCoopers
LLP as independent auditors of the Fund for the fiscal year ending
August 31, 2001; and

3. The transaction of any other business that may properly come before the
Meeting.

How do the Fund's Directors recommend that I vote?

The Directors unanimously recommend that you vote:

1. FOR the election of the four nominees;

2. FOR the ratification of the selection of PricewaterhouseCoopers LLP as
independent auditors of the Fund; and

3. FOR the proxyholders to have discretion to vote on any other business
that may properly come before the Meeting.

How do I ensure that my vote is accurately recorded?

You may attend the Meeting and vote in person or you may complete and return
the enclosed proxy card. If you are eligible to vote by telephone or through
the internet, a control number and separate instructions are enclosed.

1
<PAGE>

Proxy cards that are properly signed, dated and received at or prior to the
Meeting will be voted as specified. If you specify a vote for any of the
Proposals 1 through 3, your proxy will be voted as you indicated. If you
simply sign and date the proxy card, but don't specify a vote for any of the
Proposals 1 through 3, your shares will be voted IN FAVOR of the nominees for
Director (Proposal 1), IN FAVOR of ratifying the selection of
PricewaterhouseCoopers LLP as independent auditors (Proposal 2), and IN
ACCORDANCE with the discretion of the persons named in the proxy card as to
any other matters that may properly come before the Meeting (Proposal 3).

Can I revoke my proxy?

You may revoke your proxy at any time before it is voted by forwarding a
written revocation or a later-dated proxy to the Fund that is received at or
prior to the Meeting, or by attending the Meeting and voting in person.

- THE PROPOSALS

PROPOSAL 1: ELECTION OF DIRECTORS

How are nominees selected?

The Board of Directors of the Fund (the "Board") has a Nominating and
Compensation Committee (the "Committee") consisting of Andrew H. Hines, Jr.,
Edith E. Holiday and Gordon S. Macklin, all of whom are independent
directors. The Committee is responsible for the selection and nomination for
appointment of candidates to serve as Directors of the Fund. The Committee
will review shareholders' nominations to fill vacancies on the Board, if
these nominations are submitted in writing and addressed to the Committee at
the Fund's offices. However, the Committee expects to be able to identify
from its own resources an ample number of qualified candidates.

Who are the nominees and Directors?

The Board is divided into three classes, each class having a term of three
years. Each year the term of office of one class expires. This year, the
terms of four Directors are expiring. Harmon E. Burns, Frank J. Crothers
(who was elected to a two-year term at the 1999 Annual Meeting of
Shareholders), Andrew H. Hines, Jr. and Charles B. Johnson have been
nominated for three-year terms, set to expire at the 2004 Annual Meeting of
Shareholders. These terms continue, however, until successors are duly
elected and qualified. All of the nominees are currently members of the
Board. In addition, all of the current nominees and

2
<PAGE>

Directors are also directors or trustees of other investment companies in the
Franklin(R) funds and/or the Templeton(R) funds (collectively, the "Franklin
Templeton funds").

Certain Directors of the Fund hold director and/or officer positions with
Franklin Resources, Inc. ("Resources") and its affiliates. Resources is a
publicly owned holding company, the principal shareholders of which are
Charles B. Johnson and Rupert H. Johnson, Jr., who own approximately 19%
and 16%, respectively, of its outstanding shares. Resources, a global
investment organization operating as Franklin Templeton Investments, is
primarily engaged, through various subsidiaries, in providing investment
management, share distribution, transfer agent and administrative services
to a family of investment companies. Resources is a New York Stock
Exchange, Inc. ("NYSE") listed holding company (NYSE: BEN). Charles E.
Johnson, Vice President of the Fund, is the son and nephew, respectively,
of brothers Charles B. Johnson, the Chairman of the Board and Vice
President of the Fund, and Rupert H. Johnson, Jr., Vice President of the
Fund. There are no family relationships among any of the Directors or
nominees for Director.

Each nominee is currently available and has consented to serve if elected. If
any of the nominees should become unavailable, the persons named in the proxy
card will vote in their discretion for another person or persons who may be
nominated as Directors.

3
<PAGE>

Listed below, for each nominee and Director, is a brief description of recent
professional experience, and ownership of shares of the Fund and shares of
the Franklin Templeton funds.

Shares
Beneficially
Fund Shares Owned in
Beneficially Owned Franklin
and % of Total Templeton
Outstanding funds (including
Name, Principal Occupation Shares as of the Fund) as of
During Past Five Years and Age November 30, 2000 November 30, 2000
------------------------------------ ------------------- ------------------
<S> <C> <C>
Nominees to serve until 2004 Annual Meeting of Shareholders:
Harmon E. Burns*
Director since 1993 and Vice President since 1996

Vice Chairman, Member--Office of the Chairman and 0 623,736
Director, Franklin Resources, Inc.; Vice President
and Director, Franklin Templeton Distributors, Inc.;
Executive Vice President, Franklin Advisers, Inc.;
Director, Franklin Investment Advisory Services,
Inc., Franklin/Templeton Investor Services, LLC and
Franklin Templeton Services, LLC; and officer and/or
director or trustee, as the case may be, of most of
the other subsidiaries of Franklin Resources, Inc.
and of 52 of the investment companies in Franklin
Templeton Investments. Age 55.

Frank J. Crothers
Director since 1999

Chairman, Caribbean Electric Utility Services 0 10,243
Corporation and Atlantic Equipment & Power Ltd.; Vice
Chairman, Caribbean Utilities Co., Ltd.; President,
Provo Power Corporation; director of various other
business and non-profit organizations; and director
or trustee, as the case may be, of 13 of the
investment companies in Franklin Templeton
Investments. Age 56.

Andrew H. Hines, Jr.
Director since 1993

Consultant, Triangle Consulting Group; 1,476(**) 60,793
Executive-in-Residence, Eckerd College
(1991-present); director or trustee, as the case
may be, of 19 of the investment companies in
Franklin Templeton Investments; and FORMERLY,
Chairman and Director, Precise Power Corporation
(1990-1997), Director, Checkers Drive-In
Restaurant, Inc. (1994-1997), and Chairman of the
Board and Chief Executive Officer, Florida
Progress Corporation (holding company in the
energy area) (1982-1990) and former director of
various of its subsidiaries. Age 77.
</TABLE>

4
<PAGE>

Shares
Beneficially
Fund Shares Owned in
Beneficially Owned Franklin
and % of Total Templeton
Outstanding funds (including
Name, Principal Occupation Shares as of the Fund) as of
During Past Five Years and Age November 30, 2000 November 30, 2000
------------------------------------ ------------------- ------------------
<S> <C> <C>
Charles B. Johnson*
Chairman since 1995 and Vice President since 1993

Chairman of the Board, Chief Executive Officer, 1,000(**) 3,887,563
Member--Office of the Chairman and Director,
Franklin Resources, Inc.; Vice President, Franklin
Templeton Distributors, Inc.; Director,
Franklin/Templeton Investor Services, LLC and
Franklin Templeton Services, LLC; officer and/or
director or trustee, as the case may be, of most of
the other subsidiaries of Franklin Resources, Inc.
and of 49 of the investment companies in Franklin
Templeton Investments. Age 67.

Directors serving until 2003 Annual Meeting of Shareholders:

Betty P. Krahmer
Director since 1993

Director or trustee of various civic associations; 1,720(**) 146,786
director or trustee, as the case may be, of 18 of the
investment companies in Franklin Templeton
Investments; and FORMERLY, Economic Analyst, U.S.
government. Age 71.

Gordon S. Macklin
Director since 1993

Director, Martek Biosciences Corporation, WorldCom, 5,000(**) 350,850
Inc. (communications services), MedImmune, Inc.
(biotechnology), Overstock.com (internet services),
White Mountains Insurance Group, Ltd. (holding
company) and Spacehab, Inc. (aerospace services);
director or trustee, as the case may be, of 48 of the
investment companies in Franklin Templeton
Investments; and FORMERLY, Chairman, White River
Corporation (financial services) (until 1998) and
Hambrecht & Quist Group (investment banking) (until
1992), and President, National Association of
Securities Dealers, Inc. (until 1987). Age 72.
</TABLE>

5
<PAGE>

Manager of personal investments (1978-present); 0 2,150,689
director of various business and nonprofit
organizations; director or trustee, as the case may
be, of 19 of the investment companies in Franklin
Templeton Investments; and FORMERLY, Chairman and
Chief Executive Officer, Landmark Banking Corporation
(1969-1978), Financial Vice President, Florida Power
and Light (1965-1969), and Vice President, Federal
Reserve Bank of Atlanta (1958-1965). Age 71.

Directors serving until 2002 Annual Meeting of Shareholders:

Harris J. Ashton
Director since 1993

Director, RBC Holdings, Inc. (bank holding company) 500(**) 1,263,212
and Bar-S Foods (meat packing company); director or
trustee, as the case may be, of 48 of the investment
companies in Franklin Templeton Investments; and
FORMERLY, President, Chief Executive Officer and
Chairman of the Board, General Host Corporation
(nursery and craft centers) (until 1998). Age 68.

Nicholas F. Brady*
Director since 1993

Chairman, Templeton Emerging Markets Investment Trust 1,000(**) 67,303
PLC, Templeton Latin America Investment Trust PLC,
Darby Overseas Investments, Ltd. and Darby Emerging
Markets Investments LDC (investment firms)
(1994-present); Director, Templeton Global Strategy
Funds, Amerada Hess Corporation (exploration and
refining of oil and gas), C2, Inc. (operating and
investment business), and H.J. Heinz Company
(processed foods and allied products); director or
trustee, as the case may be, of 18 of the investment
companies in Franklin Templeton Investments; and
FORMERLY, Secretary of the United States Department
of the Treasury (1988-1993), Chairman of the Board,
Dillon, Read & Co., Inc. (investment banking) (until
1988) and U.S. Senator, New Jersey (April
1982-December 1982). Age 70.
</TABLE>

6
<PAGE>

Member of the law firm of Pitney, Hardin, Kipp & 100(**) 716,598
Szuch; and director or trustee, as the case may be,
of 50 of the investment companies in Franklin
Templeton Investments. Age 68.

Edith E. Holiday
Director since 1996

Director, Amerada Hess Corporation (exploration and 100(**) 11,978
refining of oil and gas) (1993-present), Hercules
Incorporated (chemicals, fibers and resins) (1993-
present), Beverly Enterprises, Inc. (health care)
(1995-present), H.J. Heinz Company (processed foods
and allied products) (1994-present) and RTI Inter-
national Metals, Inc. (manufacture and distribution
of titanium) (1999-present); director or trustee, as
the case may be, of 27 of the investment companies in
Franklin Templeton Investments; and FORMERLY, Assistant
to the President of the United States and Secretary of
the Cabinet (1990-1993), General Counsel to the United
States Treasury Department (1989-1990), and Counselor to
the Secretary and Assistant Secretary for Public Affairs
and Public Liaison--United States Treasury Department
(1988-1989). Age 48.

Constantine D. Tseretopoulos
Director since 1999

Physician, Lyford Cay Hospital (1987-present); director 0 72,608
of various nonprofit organizations; director or trustee,
as, the case may be, of 13 of the investment companies in
Franklin Templeton Investments; and FORMERLY, Cardiology
Fellow, University of Maryland (1985-1987) and Internal
Medicine Resident, Greater Baltimore Medical Center
(1982-1985). Age 46.

------------------------
* Nicholas F. Brady, Harmon E. Burns and Charles B. Johnson are "interested
persons" as defined by the Investment Company Act of 1940, as amended (the "1940
Act"). The 1940 Act limits the percentage of interested persons that can
comprise a fund's board of directors. Mr. Johnson is an interested person due to
his ownership interest in Resources, his employment affiliation with Resources
and his position with the Fund. Mr. Burns is an interested person due to his
employment affiliation with Resources and his position with the Fund. Mr.
Brady's status as an interested person results from his business affiliations
with Resources and Templeton Global Advisors Limited. Mr. Brady and Resources
are both limited partners of Darby Overseas Partners, L.P. ("Darby Overseas").
Mr. Brady is Chairman and shareholder of Darby Overseas Investments, Ltd., which
is the corporate general partner of Darby Overseas. In addition, Darby Overseas
and Templeton Global Advisors Limited are limited partners of Darby Emerging
Markets Fund, L.P. ("DEMF"). Mr. Brady serves as Chairman of the corporate
general partner of DEMF, and Darby Overseas and its general partner own 100
percent of the stock of the general partner of DEMF. Mr. Brady is also a
director of Templeton Capital Advisors Ltd. ("TCAL"), which serves as investment
manager to certain unregistered funds. TCAL and Templeton Global Advisors
Limited are both indirect subsidiaries of Resources. The remaining nominees and
Directors of the Fund are not interested persons of the Fund (the "Independent
Directors").
** Less than 1%.
</TABLE>
7

<PAGE>

How often do the Directors meet and what are they paid?

The role of the Directors is to provide general oversight of the Fund's
business, and to ensure that the Fund is operated for the benefit of
shareholders. The Directors anticipate meeting at least five times during the
current fiscal year to review the operations of the Fund and the Fund's
investment performance. The Directors also oversee the services furnished to
the Fund by Templeton Investment Counsel, LLC, the Fund's investment manager
(the "Investment Manager"), through its Templeton Global Bond Managers
division, and various other service providers. The Fund currently pays the
Independent Directors and Mr. Brady an annual retainer of $2,000 and a fee of
$400 per Board meeting attended. Directors serving on the Audit Committee of
the Fund and other investment companies in the Franklin Templeton Investments
receive a flat fee of $2,000 per Audit Committee meeting attended, a portion
of which is allocated to the Fund. Members of a committee are not compensated
for any committee meeting held on the day of a Board meeting.

During the fiscal year ended August 31, 2000, there were five meetings of the
Board, three meetings of the Audit Committee, and five meetings of the
Nominating and Compensation Committee. Each of the Directors then in office
attended at least 75% of the total number of meetings of the Board and the
total number of meetings held by all committees of the Board on which the
Director served. There was 100% attendance at the meetings of the Audit
Committee and the Nominating and Compensation Committee.

Certain Directors and Officers of the Fund are shareholders of Resources and
may receive indirect remuneration due to their participation in management
fees and other fees received from Franklin Templeton funds by the Investment
Manager and its affiliates. The Investment Manager or its affiliates pay the
salaries and expenses of the Officers. No pension or retirement benefits are
accrued as part of Fund expenses.

<TABLE>
<CAPTION>
Aggregate Number of Boards within
Compensation Franklin Templeton funds Total Compensation from
Name of Director from the Fund* on which Director Serves** Franklin Templeton funds***
---------------------------------- ---------------- ---------------------------- ---------------------------
<S> <C> <C> <C>
Harris J. Ashton $4,000 48 $359,404
Nicholas F. Brady 4,000 18 128,400
Frank J. Crothers 4,000 13 82,000
S. Joseph Fortunato 4,000 50 359,629
Andrew H. Hines, Jr. 4,075 19 199,100
Edith E. Holiday 4,000 27 248,305
Betty P. Krahmer 4,000 18 136,000
Gordon S. Macklin 4,000 48 359,404
Fred R. Millsaps 4,062 19 199,100
Constantine D. Tseretopoulos 4,000 13 84,000

------------------------
* Compensation received for the fiscal year ended August 31, 2000.

8
<PAGE>

** We base the number of boards on the number of registered investment
companies in Franklin Templeton Investments. This number does not
include the total number of series or funds within each investment
company for which the Board members are responsible. Franklin Templeton
Investments currently includes 53 registered investment companies, with
approximately 158 U.S. based funds or series.

*** For the calendar year ended December 31, 2000.
</TABLE>

The table above indicates the total fees paid to Directors by the Fund
individually and by all of the Franklin Templeton funds. These Directors also
serve as directors or trustees of other investment companies in Franklin
Templeton Investments, many of which hold meetings at different dates and
times. The Directors and the Fund's management believe that having the same
individuals serving on the boards of many of the Franklin Templeton funds
enhances the ability of each fund to obtain, at a relatively modest cost to
each separate fund, the services of high caliber, experienced and
knowledgeable Independent Directors who can more effectively oversee the
management of the funds.

Board members historically have followed a policy of having substantial
investments in one or more of the funds in the Franklin Templeton funds, as
is consistent with their individual financial goals. In February 1998, this
policy was formalized through adoption of a requirement that each board
member invest one-third of fees received for serving as a director or trustee
of a Templeton fund in shares of one or more Templeton funds and one-third of
fees received for serving as a director or trustee of a Franklin fund in
shares of one or more Franklin funds until the value of such investments
equals or exceeds five times the annual fees paid to such board member.
Investments in the name of family members or entities controlled by a board
member constitute fund holdings of such board member for purposes of this
policy, and a three year phase-in period applies to such investment
requirements for newly elected board members. In implementing such policy, a
board member's fund holdings existing on February 27, 1998, are valued as of
such date with subsequent investments valued at cost.

Who are the Executive Officers of the Fund?

Officers of the Fund are appointed by the Directors and serve at the pleasure
of the Board. Listed below, for each Executive Officer, is a brief
description of recent professional experience:

9
<PAGE>

<TABLE>
<CAPTION>
Name and Offices Principal Occupation
with the Fund During Past Five Years and Age
----------------------------- ----------------------------------------------------------------
<S> <C>
Gregory E. McGowan Executive Vice President and Director, Templeton Investment
President since 1996 Counsel, LLC; Executive Vice President--International
Development, Chief International General Counsel and
Director, Templeton Worldwide, Inc.; Executive Vice
President, General Counsel and Director, Templeton
International, Inc.; Executive Vice President and Secretary,
Templeton Global Advisors Limited; officer of certain
off-shore Templeton funds; officer of four of the investment
companies in Franklin Templeton Investments; director of
one of the subsidiaries of Franklin Resources, Inc.; and
FORMERLY, Senior Attorney, U.S. Securities and Exchange
Commission. Age 51.

Samuel J. Forester, Jr. Managing Director, Templeton Worldwide, Inc.; Vice
Vice President since 1996 President and Director, Templeton Global Income Portfolio
Ltd.; Director, Closed Joint-Stock Company Templeton and
Templeton Trust Services Pvt. Ltd.; officer of 9 of the
investment companies in Franklin Templeton Investments;
and FORMERLY, President, Templeton Global Bond Managers, a
division of Templeton Investment Counsel, LLC, Founder
and Partner, Forester, Hairston Investment Management, Inc.
(1989-1990), Managing Director (Mid-East Region), Merrill
Lynch, Pierce, Fenner & Smith Inc. (1987-1988), and Advisor
for Saudi Arabian Monetary Agency (1982-1987). Age 52.

Rupert H. Johnson, Jr. Vice Chairman, Member--Office of the Chairman and
Vice President since 1996 Director, Franklin Resources, Inc.; Vice President and
Director, Franklin Templeton Distributors, Inc.; Director,
Franklin Advisers, Inc., Franklin Investment Advisory
Services, Inc. and Franklin/Templeton Investor Services, LLC;
Senior Vice President, Franklin Advisory Services, LLC; and
officer and/or director or trustee, as the case may be, of most
of the other subsidiaries of Franklin Resources, Inc. and of 52
of the investment companies in Franklin Templeton
Investments. Age 60.

Harmon E. Burns See Proposal 1, "Election of Directors."
Director since 1993 and
Vice President since 1996
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
Name and Offices Principal Occupation
with the Fund During Past Five Years and Age
------------------------------------- ---------------------------------------------------------------
<S> <C>
Charles E. Johnson President, Member--Office of the President and Director,
Vice President since 1996 Franklin Resources, Inc.; Senior Vice President, Franklin
Templeton Distributors, Inc.; President and Director,
Templeton Worldwide, Inc. and Franklin Advisers, Inc.;
Director, Templeton Investment Counsel, LLC; Chairman of
the Board and President, Franklin Investment Advisory
Services, Inc.; officer and/or director of some of the other
subsidiaries of Franklin Resources, Inc.; and officer and/or
director or trustee, as the case may be, of 33 of the
investment companies in Franklin Templeton Investments.
Age 44.

Jeffrey A. Everett Executive Vice President, Portfolio Management, Templeton
Vice President since January 2001 Global Advisors Limited; officer of some of the other
investment companies in Franklin Templeton Investments;
and FORMERLY, Investment Officer, First Pennsylvania
Investment Research (until 1989). Age 36.

Martin L. Flanagan President, Member--Office of the President, Chief Financial
Vice President since 1993 Officer and Chief Operating Officer, Franklin Resources, Inc.;
Executive Vice President and Director, Franklin/Templeton
Investor Services, LLC; President and Chief Financial Officer,
Franklin Mutual Advisers, LLC; Executive Vice President, Chief
Financial Officer and Director, Templeton Worldwide, Inc.;
Executive Vice President, Chief Operating Officer and
Director, Templeton Investment Counsel, LLC; Executive Vice
President, Franklin Advisers, Inc. and Franklin Investment
Advisory Services, Inc.; Chief Financial Officer, Franklin
Advisory Services, LLC; Chairman and Director, Franklin
Templeton Services, LLC; officer and/or director of some of
the other subsidiaries of Franklin Resources, Inc.; and
officer and/or director or trustee, as the case may be, of 52
of the investment companies in Franklin Templeton Investments.
Age 40.

John R. Kay Vice President, Templeton Worldwide, Inc.; Assistant Vice
Vice President since 1994 President, Franklin Templeton Distributors, Inc.; Senior Vice
President, Franklin Templeton Services, LLC; officer of 23 of
the investment companies in Franklin Templeton Investments;
and FORMERLY, Vice President and Controller, Keystone Group,
Inc. Age 60.
</TABLE>

11
<PAGE>

<TABLE>
<CAPTION>
Name and Offices Principal Occupation
with the Fund During Past Five Years and Age
-------------------------------- ----------------------------------------------------------------
<S> <C>
Murray L. Simpson Executive Vice President and General Counsel, Franklin
Vice President and Assistant Resources, Inc.; officer and/or director of some of the
Secretary since 2000 subsidiaries of Franklin Resources, Inc.; officer of 53 of the
investment companies in Franklin Templeton Investments;
and FORMERLY, Chief Executive Officer and Managing Director,
Templeton Franklin Investment Services (Asia) Limited (until
January 2000) and Director, Templeton Asset Management
Ltd. (until 1999). Age 63.

Barbara J. Green Vice President and Deputy General Counsel, Franklin Resources,
Vice President since 2000 and Inc.; Senior Vice President, Templeton Worldwide, Inc.;
Secretary since 1996 officer of 53 of the investment companies in Franklin
Templeton Investments; and FORMERLY, Deputy Director, Division
of Investment Management, Executive Assistant and Senior
Advisor to the Chairman, Counselor to the Chairman, Special
Counsel and Attorney Fellow, U.S. Securities and Exchange
Commission (1986-1995), Attorney, Rogers & Wells (until 1986),
and Judicial Clerk, U.S. District Court (District of
Massachusetts) (until 1979). Age 53.

David P. Goss Associate General Counsel, Franklin Templeton Investments;
Vice President and Assistant President, Chief Executive Officer and Director, Franklin
Secretary since 2000 Select Realty Trust, Property Resources, Inc., Property
Resources Equity Trust, Franklin Real Estate Management,
Inc. and Franklin Properties, Inc.; officer and director of
some of the other subsidiaries of Franklin Resources, Inc.;
officer of 53 of the investment companies in Franklin
Templeton Investments; and FORMERLY, President, Chief
Executive Officer and Director, Franklin Real Estate Income
Fund and Franklin Advantage Real Estate Income Fund
(until 1996). Age 53.

Bruce S. Rosenberg Vice President, Franklin Templeton Services, LLC, and officer
Treasurer since 2000 of 19 of the investment companies in Franklin Templeton
Investments, and FORMERLY, Senior Manager-Fund Accounting,
Templeton Global Investors, Inc. (1995-1996). Age 38.
</TABLE>

PROPOSAL 2: RATIFICATION OR REJECTION OF INDEPENDENT AUDITORS

How are independent auditors selected?

The Board has a standing Audit Committee consisting of Messrs. Millsaps
(Chairman), Crothers, Hines and Tseretopoulos, all of whom are Independent
Directors and considered to be "independent" as that term is defined by the
NYSE's listing standards. Messrs. Crothers and Tseretopoulos were appointed
to the Audit Committee by the Board on

12
<PAGE>

October 27, 2000 when the Board approved a recommendation from the Audit
Committee to increase the size of the Committee. The Audit Committee reviews
the maintenance of the Fund's records and the safekeeping arrangements of the
Fund's custodian, reviews both the audit and non-audit work of the Fund's
independent auditors, and submits a recommendation to the Board as to the
selection of independent auditors.

Which independent auditors did the Board select?

Upon the recommendation of the Audit Committee, the Board selected the firm
of PricewaterhouseCoopers LLP, as auditors of the Fund for the current fiscal
year. PricewaterhouseCoopers LLP has examined and reported on the fiscal
year-end financial statements, dated August 31, 2000, and certain related
U.S. Securities and Exchange Commission filings. You are being asked to
ratify the Board's selection of PricewaterhouseCoopers LLP for the current
fiscal year. Services to be performed by the auditors include examining and
reporting on the fiscal year-end financial statements of the Fund and certain
related filings with the U.S. Securities and Exchange Commission.

McGladrey & Pullen, LLP resigned as auditors of the Fund on August 13, 1999.
McGladrey & Pullen, LLP served as the Fund's auditors from the Fund's
inception through the fiscal year ended August 31, 1998. There have not been
any disputes or disagreements with McGladrey & Pullen, LLP on any matter of
accounting principles or practices, financial statement disclosure or
auditing scope or procedures, nor have McGladrey & Pullen, LLP's reports on
the financial statements for which it served as auditors of the Fund
contained an adverse opinion or a disclaimer of opinion, or been qualified or
modified as to uncertainty, audit scope, or accounting principles. H&R Block,
a public company, acquired certain assets of McGladrey & Pullen, LLP on
August 2, 1999. Following the acquisition by a public company, McGladrey &
Pullen, LLP elected to not continue servicing clients in the mutual fund
business. As a result, the partners and professional staff who were
previously responsible for auditing the Fund's financial statements became
associated with PricewaterhouseCoopers LLP. The selection of
PricewaterhouseCoopers LLP as auditors of the Fund for the fiscal year ended
August 31, 1999 was recommended by the Audit Committee and approved by the
Board on July 21, 1999. PricewaterhouseCoopers LLP's reports on the financial
statements of the Fund for the fiscal years for which it has served as
auditors did not contain an adverse opinion or a disclaimer of opinion, nor
were qualified or modified as to uncertainty, audit scope or accounting
principles.

Neither the firm of PricewaterhouseCoopers LLP nor any of its members have
any material direct or indirect financial interest in the Fund.
Representatives of PricewaterhouseCoopers

13
<PAGE>

LLP are not expected to be present at the Meeting, but will have the
opportunity to make a statement if they wish, and will be available should
any matter arise requiring their presence.

PROPOSAL 3: OTHER BUSINESS

The Directors know of no other business to be presented at the Meeting.
However, if any additional matters should be properly presented, proxies will
be voted or not voted as specified. Proxies reflecting no specification will
be voted in accordance with the judgment of the persons named in the proxy.
Because the Fund did not have notice of any such matters before December 14,
2000, the persons named as proxies may exercise their discretionary voting
power with respect to any matter presented at the Meeting.

- INFORMATION ABOUT THE FUND

The Investment Manager. The Investment Manager of the Fund is Templeton
Investment Counsel, LLC, a Florida limited liability company with offices at
Broward Financial Centre, 500 East Broward Boulevard, Suite 2100, Ft.
Lauderdale, Florida 33394-3091, through its Templeton Global Bond Managers
division. Pursuant to an investment management agreement, the Investment
Manager manages the investment and reinvestment of Fund assets. The
Investment Manager is a wholly owned subsidiary of Resources.

The Administrator. The administrator of the Fund is Franklin Templeton
Services, LLC, ("FT Services") with offices at 777 Mariners Island Boulevard,
San Mateo, California 94404. FT Services is a wholly owned subsidiary of
Resources. Pursuant to an administration agreement, FT Services performs
certain administrative functions for the Fund.

The Transfer Agent. The transfer agent, registrar and dividend disbursement
agent for the Fund is Mellon Investor Services LLC, 85 Challenger Road,
Overpeck Centre, Ridgefield Park, New Jersey 07660.

The Custodian. The custodian for the Fund is The Chase Manhattan Bank,
MetroTech Center, Brooklyn, New York 11245.

The Shareholder Servicing Agent. The shareholder servicing agent for the Fund
is UBS Warburg LLC ("Warburg"), 1285 Avenue of the Americas, 12th Floor, New
York, New York 10019, an affiliate of the initial underwriter of the Fund's
shares. Pursuant to a shareholder servicing agreement, Warburg provides
certain services to the Fund including statistical information and analysis,
ongoing efforts to publicize the Fund's shares and making information
available to investors.

14
<PAGE>

Other Matters. The Fund's last audited financial statements and annual
report, dated August 31, 2000, are available free of charge. To obtain a
copy, please call 1-800/DIAL BEN(R) (1-800/342-5236) or forward a written
request to Franklin/Templeton Investor Services, LLC, P.O. Box 33030, St.
Petersburg, Florida 33733-8030.

As of December 4, 2000, the Fund had 47,085,257 shares outstanding and total
net assets of $546,424,887. The Fund's shares are listed on the NYSE (symbol:
TEI). From time to time, the number of shares held in "street name" accounts
of various securities dealers for the benefit of their clients may exceed 5%
of the total shares outstanding. To the knowledge of the Fund's management,
as of December 4, 2000, there were no other entities holding beneficially or
of record more than 5% of the Fund's outstanding shares.

In addition, to the knowledge of the Fund's management, as of December 4,
2000, no nominee or Director of the Fund owned 1% or more of the outstanding
shares of the Fund, and the Directors and Officers of the Fund owned, as a
group, less than 1% of the outstanding shares of the Fund.

- AUDIT COMMITTEE REPORT

The Fund's Board of Directors has adopted and approved a formal written
charter for the Audit Committee, which sets forth the Audit Committee's
responsibilities. A copy of the charter is attached as Exhibit "A" to this
proxy statement.

As required by the charter, the Audit Committee reviewed the Fund's audited
financial statements and met with management, as well as with
PricewaterhouseCoopers LLP, the Fund's independent auditors, to discuss the
financial statements.

The Audit Committee received the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independence Standards Board No. 1.
The Audit Committee also received the report of PricewaterhouseCoopers LLP
regarding the results of their audit. In connection with its review of the
financial statements and the auditors' report, the members of the Audit
Committee discussed with a representative of PricewaterhouseCoopers LLP,
their independence, as well as the following: the auditors' responsibilities
in accordance with generally accepted auditing standards; the auditors'
responsibilities for information prepared by management that accompanies the
Fund's audited financial statements and any procedures performed and the
results; the initial selection of, and whether there were any changes in,
significant accounting policies or their application; management's judgments
and accounting estimates; whether there were any

15
<PAGE>

significant audit adjustments; whether there were any disagreements with
management; whether there was any consultation with other accountants;
whether there were any major issues discussed with management prior to the
auditors' retention; whether the auditors encountered any difficulties in
dealing with management in performing the audit; and the auditors' judgments
about the quality of the company's accounting principles.

Based on its discussions with management and the Fund's auditors, the Audit
Committee did not become aware of any material misstatements or omissions in
the financial statements. Accordingly, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Fund's Annual Report to Shareholders for the fiscal year ended August 31,
2000 for filing with the U.S. Securities and Exchange Commission.

THE AUDIT COMMITTEE

Fred R. Millsaps (Chairman)
Frank J. Crothers
(Appointed to the Committee on October 27, 2000)
Andrew H. Hines, Jr.
Constantine D. Tseretopoulos
(Appointed to the Committee on October 27, 2000)

- FURTHER INFORMATION ABOUT VOTING AND
THE SHAREHOLDERS' MEETING

Solicitation of Proxies. Your vote is being solicited by the Board of
Directors of the Fund. The cost of soliciting proxies, including the fees of
a proxy soliciting agent, is borne by the Fund. The Fund reimburses brokerage
firms and others for their expenses in forwarding proxy material to the
beneficial owners and soliciting them to execute proxies. In addition, the
Fund may retain a professional proxy solicitation firm to assist with any
necessary solicitation of proxies. The Fund expects that the solicitation
would be primarily by mail, but also may include telephone, telecopy or oral
solicitations. If the Fund does not receive your proxy by a certain time you
may receive a telephone call from a professional proxy solicitation firm
asking you to vote. If professional proxy solicitors are retained, it is
expected that soliciting fees would be approximately $3,500, plus expenses.
The Fund does not reimburse Directors and Officers of the Fund, or regular
employees and agents of the Investment Manager involved in the solicitation
of proxies. The Fund intends to pay all costs associated with the
solicitation and the Meeting.

16
<PAGE>

Voting by Broker-Dealers. The Fund expects that, before the Meeting,
broker-dealer firms holding shares of the Fund in "street name" for their
customers will request voting instructions from their customers and
beneficial owners. If these instructions are not received by the date
specified in the broker-dealer firms' proxy solicitation materials, the Fund
understands that NYSE Rules permit the broker-dealers to vote on the
proposals to be considered at the Meeting on behalf of their customers and
beneficial owners. Certain broker-dealers may exercise discretion over shares
held in their name for which no instructions are received by voting these
shares in the same proportion as they vote shares for which they received
instructions.

Quorum. A majority of the shares entitled to vote--present in person or
represented by proxy--constitutes a quorum at the Meeting. The shares over
which broker-dealers have discretionary voting power, the shares that
represent "broker non-votes" (i.e., shares held by brokers or nominees as to
which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter), and the shares whose
proxies reflect an abstention on any item are all counted as shares present
and entitled to vote for purposes of determining whether the required quorum
of shares exists.

Methods of Tabulation. Proposal 1, the election of Directors, requires the
affirmative vote of the holders of a plurality of the Fund's shares present
and voting on the Proposal at the Meeting. Proposal 2, ratification of the
selection of the independent auditors, requires the affirmative vote of a
majority of the Fund's shares present and voting on the Proposal at the
Meeting. Proposal 3, for the proxyholders to have discretion to vote on any
other business that may properly come before the Meeting or any adjournments
thereof, requires the affirmative vote of a majority of the Fund's shares
present and voting on the Proposal at the Meeting. Abstentions and broker
non-votes will be treated as votes not cast and, therefore, will not be
counted for purposes of obtaining approval of each Proposal.

Simultaneous Meetings. The Meeting is to be held at the same time as the
meetings of shareholders of Templeton Global Income Fund, Inc., Templeton
Global Governments Income Trust and Templeton Emerging Markets Fund, Inc. It
is anticipated that all meetings will be held simultaneously. If any
shareholder at the Meeting objects to the holding of a simultaneous meeting
and moves for an adjournment of the Meeting to a time promptly after the
simultaneous meeting, the persons named as proxies will vote in favor of such
adjournment.

17
<PAGE>

Adjournment. In the event that a quorum is not present at the Meeting, the
Meeting will be adjourned to permit further solicitation of proxies. In the
event that a quorum is present, but sufficient votes have not been received
to approve one or more of the Proposals, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further
solicitation of proxies with respect to those Proposals. The persons named as
proxies will vote in their discretion on questions of adjournment those
shares for which proxies have been received that grant discretionary
authority to vote on matters that may properly come before the Meeting.

Shareholder Proposals. The Fund anticipates that its next annual meeting will
be held in February 2002. Shareholder proposals to be presented at the next
annual meeting must be received at the Fund's offices, 500 East Broward
Boulevard, Ft. Lauderdale, Florida 33394-3091, Attn: Secretary, no later than
September 12, 2001 in order to be included in the Fund's proxy statement and
proxy card relating to that meeting and presented at the meeting. Submission
of a proposal by a shareholder does not guarantee that the proposal will be
included in the proxy statement. A shareholder who wishes to make a proposal
at the 2002 Annual Meeting of Shareholders without including the proposal in
the Fund's proxy statement should notify the Fund, at the Fund's offices, of
such proposal by November 26, 2001. If a shareholder fails to give notice by
this date, then the persons named as proxies in the proxies solicited by the
Board for the 2002 Annual Meeting of Shareholders may exercise discretionary
voting power with respect to any such proposal.

By order of the Board of Directors,

Barbara J. Green
Secretary

January 10, 2001

18
<PAGE>

EXHIBIT A
AUDIT COMMITTEE CHARTER
OF TEMPLETON FUNDS

PURPOSE AND COMPOSITION

The primary purpose of the Audit Committee is to oversee for the above-listed
Templeton Funds (each, a "Fund" and collectively, the "Funds") the Fund's
accounting and financial reporting policies and practices and internal
controls, assure the quality and objectivity of the independent audit and the
Fund's financial statements, act as a liaison between the Board of
Directors/Trustees and the Fund's external and internal auditors, and
periodically report to the Board of Directors/Trustees. The function of the
Audit Committee is oversight with respect to the integrity of the financial
statements. The maintenance of adequate systems of internal control is the
responsibility of Fund management. This Charter affirms and recognizes that
the independent auditors for the Fund is ultimately accountable to the Board
of Directors/Trustees and the Audit Committee.

The Committee shall consist of not fewer than three Directors/Trustees of the
Board of Directors/Trustees that are non-interested Directors/Trustees as
defined in the Investment Company Act of 1940, as amended (the "1940 Act")
("Independent Directors/Trustees") and satisfy the qualification requirements
of Independence provided in Section 303 of Section 3 of the New York Stock
Exchange ("NYSE") Listed Company Manual as described in Attachment A hereto.
Audit Committee members shall be selected by a majority of the Independent
Directors/Trustees of the Fund. One member shall be designated by the Audit
Committee members as Chairman of the Audit Committee.

DUTIES AND RESPONSIBILITIES

The Audit Committee shall have the following duties and responsibilities:

o The Audit Committee and the Board of Directors/Trustees shall have the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the independent auditors (or to nominate the
independent auditors to be proposed for shareholder approval in any proxy
statement).

o Review audits of the financial records of the Fund and the audit report of
the independent auditors.

o Confer with management of the Fund and the independent auditors regarding
accounting and financial statement matters.

A-1
<PAGE>

o Review the annual audit plan of the independent auditors to provide
reasonable assurance that the major risk exposure areas of the Fund are
adequately audited. Discuss the extent of reliance by independent auditors
on work of the internal auditors.

o Review fee arrangements of the independent auditors as negotiated by
management.

o Review Statement on Auditing Standards No. 61 issues with the independent
auditors. This Statement governs the required communication of independent
auditors with audit committees and includes such items as independence,
disagreements with management, management judgments and accounting
estimates, and significant accounting policies. The Audit Committee will
request that the independent auditors provide a written statement on a
periodic basis delineating all relationships between the independent
auditors and the Fund and its manager, and actively engage in a dialogue
with the independent auditors with respect to any disclosed relationships
or services that may impact the objectivity and independence of the
independent auditors. It will recommend, when necessary, that the Board of
Directors/Trustees take appropriate action in response to the independent
auditors' report to satisfy itself of the auditors' independence.

o Review with management and the independent auditors the Fund's financial
disclosure documents filed with the U. S. Securities and Exchange
Commission ("SEC") (e.g., annual financial statements) and to assure that
independent auditors have been engaged to review such financial statements
of the Fund as may from time to time be required to be reviewed by
independent auditors by rule of the SEC or of the NYSE.

o Following completion of the annual audit, review with management and the
independent auditors the findings and recommendations on internal control
and accounting procedures as presented in the independent auditors'
management letter required by Independence Standards Board No. 1, as may be
modified or supplemented, together with applicable management responses.

o As necessary, consult with the Fund's Treasurer regarding the adequacy of
internal accounting controls and the ongoing findings of the internal
auditors.

o Confer with counsel regarding Legal Department investigations and any
material pending litigation. Review with management and the independent
auditors the expected impact of any such matters on the financial
statements.

o Obtain guidance from the independent auditors on new pronouncements by the
FASB, AICPA, SEC or others having an effective date subsequent to the
year-end which will require accounting policy changes or additional
disclosures in future financial statements

A-2
<PAGE>

and the anticipated effect. Review the independent auditors' views as to
desirability and means of early adoption.

o Review bases of accounting and valuation for marketable securities, changes
in the market value since year-end, method of determining market value of
securities not publicly traded and marketability of all items included in
this classification, including any material pricing errors for the Fund for
the period.

o Review the cooperation of management in promptly furnishing all information
requested by the independent auditors.

o Review whether all reports of the internal auditors were made available for
the independent auditors' review. The extent to which the independent
auditors have read such reports and reviewed working papers and work
programs in support thereof should be made known to the Audit Committee,
along with reliance on such work and impact upon audit scope.

o As necessary, review inspection reports from regulatory authorities.

o Approve, and recommend approval by the Board of Directors/Trustees of, the
Fund's dividends and distributions (including declaration, record and
payment dates).

MEETINGS

The Audit Committee shall hold meetings at such times as deemed necessary by
the Chairman of the Audit Committee or the President of the Fund. Reasonable
notice of all meetings shall be given at the direction of the Chairman of the
Audit Committee. The agenda shall be established by the Chairman of the Audit
Committee.

A majority of the members shall constitute a quorum of the Audit Committee
for the transaction of its business.

The Treasurer will have an independent reporting relationship and
accountability to the Audit Committee and serve as a liaison between the Fund
and the Audit Committee.

The Secretary shall give notice of and shall customarily attend all meetings
of the Audit Committee. The Chairman of the Audit Committee may invite other
Fund officers to participate in Audit Committee meetings. The Audit Committee
may, at its discretion, meet in executive session without the presence of
Fund officers.

A-3
<PAGE>

REPORTING

At the close of the Fund's fiscal year, the Chairman of the Audit Committee
shall report to the Board of Directors/Trustees on the results of its reviews
and make such recommendations as deemed appropriate and at such other times
as the Board of Directors/ Trustees requests or as the Audit Committee deems
appropriate. The Committee will keep minutes of its meetings and will make
such minutes available as requested to the full Board for its review.

ANNUAL CHARTER REVIEW

The Audit Committee shall review and reassess the adequacy of this Charter at
least annually and recommend any changes as may be deemed necessary to the
full Board of Directors/Trustees.

Approved by Audit Committees May 10, 2000 Adopted by Boards of
Directors/Trustees May 17, 2000

A-4
<PAGE>

ATTACHMENT A
to
AUDIT COMMITTEE CHARTER
of
TEMPLETON FUNDS

1. Independence Defined. Independence for purposes of the Audit Committee
Charter means that Directors/Trustees may have no relationship to the
Fund, the Fund's investment manager ("Investment Manager") or their
affiliates that may interfere with the exercise of their independence from
management and the Fund.

2. Membership Qualifications. In addition to the definition of Independence
provided in paragraph 1 above, the following restrictions shall apply to
Audit Committee members:

(a) Financial Literacy. Each member of the Audit Committee shall be
financially literate, as such qualification is interpreted by the
Fund's Board in its business judgment, or must become financially
literate within a reasonable period of time after his or her
appointment to the Audit Committee. Additionally, at least one member
of the Audit Committee must have accounting or related financial
management expertise, as the Board interprets such qualification in
its business judgment.

(b) Employees. A Director/Trustee who is an employee (including
non-employee executive officers) of the Fund, the Investment Manager
or any of their affiliates may not serve on the Audit Committee until
three years following termination of his or her employment. In the
event the employment relationship is with a former parent or
predecessor of the Fund, the Investment Manager or their affiliates,
the Director/Trustee could serve on the Audit Committee after three
years following the termination of the relationship between the Fund
and the former parent or predecessor of the Fund, the Investment
Manager or their affiliates.

(c) Business Relationship. A Director/Trustee (i) who is a partner,
controlling shareholder, or executive officer of an organization that
has a business relationship with the Fund or (ii) who has a direct
business relationship with the Fund (e.g., a consultant) may serve on
the Audit Committee only if the Fund's Board of Directors/Trustees
determines in its business judgment that the relationship does not
interfere with the Director/Trustee's exercise of independent
judgment. In making a determination regarding the independence of a
Director/Trustee pursuant

A-5
<PAGE>

to this paragraph, the Board of Directors/Trustees should consider,
among other things, the materiality of the relationship to the Fund,
the Investment Manager or their affiliates, to the Director/Trustee
and, if applicable, to the organization with which the
Director/Trustee is affiliated. "Business relationships" can include
commercial, industrial, banking, consulting, legal, accounting and
other relationships. A Director/Trustee can have this relationship
directly with the Fund, or the Director/Trustee can be a partner,
officer or employee of an organization that has such a relationship.
The Director/Trustee may serve on the Audit Committee without the
above-referenced Board of Directors'/Trustees' determination after
three years following the termination of, as applicable, either (1)
the relationship between the organization with which the
Director/Trustee is affiliated and the Fund, (2) the relationship
between the Director/Trustee and his or her partnership status,
shareholder interest or executive officer position, or (3) the direct
business relationship between the Director/Trustee and the Fund.

(d) Cross Compensation Committee Link. A Director/Trustee who is employed
as an executive of a corporation where any of the Fund's executives
serves on that corporation's compensation committee may not serve on
the Audit Committee.

(e) Immediate Family. A Director/Trustee who is an Immediate Family member
of an individual who is an executive officer of the Fund, the
Investment Manager or any of their affiliates cannot serve on the
Audit Committee until three years following the termination of such
employment relationship.

(f) Independence Requirement of Audit Committee Members. Notwithstanding
the requirements of subparagraphs 2(b) and 2(e) hereof, one
Director/Trustee who is no longer an employee or who is an Immediate
Family member of a former executive officer of the Fund, the
Investment Manager or their affiliates, but is not considered
independent pursuant to these provisions due to the three-year
restriction period, may be appointed, under exceptional and limited
circumstances, to the Audit Committee if the Fund's Board of
Directors/Trustees determines in its business judgment that membership
on the Audit Committee by the individual is required by the best
interests of the Fund and its shareholders, and the Fund discloses, in
the next annual proxy statement subsequent to such determination, the
nature of the relationship and the reasons for that determination.

A-6
<PAGE>

3. Definitions.

-- "Immediate Family" shall have the meaning specified in Section
303.02(A) of the NYSE Listed Company Manual.

-- "Affiliate" includes a subsidiary, sibling company, predecessor,
parent company, or former parent company.

-- "Officer" shall have the meaning specified in Rule 16a-1(f) under the
Securities Exchange Act of 1934, or any successor rule.

4. Written Affirmation. With respect to any subsequent changes to the
composition of the Audit Committee, and otherwise approximately once each
year, the Fund, if such Fund is listed on the New York Stock Exchange
("NYSE"), should provide the NYSE a written confirmation in the form
attached as Attachment B hereto, which form may be amended from time to
time by the SEC, NYSE or other regulatory body regarding:

(a) Any determination that the Fund's Board of Directors/Trustees has
made regarding the independence of Director/Trustees;

(b) The financial literacy of the Audit Committee members;

(c) The determination that at least one of the Audit Committee members
has accounting or related financial expertise; and

(d) The annual review and reassessment of the adequacy of the Audit
Committee Charter.

A-7

<PAGE>

ATTACHMENT B TO AUDIT COMMITTEE CHARTER

WRITTEN AFFIRMATION*

The company named below (the "Company") hereby confirms to the New York Stock
Exchange the following:

In making all representations in this Affirmation, the Company has reviewed and
utilized the definitions of "Officer", "Independence", "Immediate Family",
"Affiliates" and "Business Relationships" as specified in Section 303 of the
Exchange's Listed Company Manual (the "Listed Company Manual").

A. AUDIT COMMITTEE MEMBERSHIP

Attached is a list of those individuals who currently comprise the full
membership of the Audit Committee of the Board of Directors./1/

The Company understands that any Audit Committee members who were fully
qualified pursuant to the Exchange's previous audit committee rule, but are not
qualified pursuant to current Section 303 of the Listed Company Manual, are
eligible to serve on the Audit Committee only until they are next subject to
re-election to the Board of Directors after December 14,1999. At that time, they
must either be fully qualified pursuant to Section 303 of the Listed Company
Manual or resign from the Audit Committee.

The Company acknowledges that Section 303 of the Listed Company Manual requires
an Audit Committee consisting of at least three directors, all of whom must meet
the requirements set forth therein. If the Company's Audit Committee currently
has fewer than three members, the Company will be required to appoint the
requisite number of qualified members no later than June 14, 2001.

B. INDEPENDENCE OF AUDIT COMMITTEE MEMBERS

Subject to any matter noted pursuant to subparagraph (1) below, the Board of
Directors of the Company has determined that all members of the Audit Committee
have no relationship to the Company that may interfere with the exercise of
their independence from management and the Company. In this regard, the Company
is familiar with the restrictions stated in Section 303.01 (B)(3) of the Listed
Company Manual.

(1) If any member of the Audit Committee has been appointed
pursuant to the "override" provision of Section 303.02(D) of the
Manual, such member is identified with an asterisk next to
his/her name on the attached list./2/ With respect to any such
appointment, the

/1/ Briefly describe each member's current occupation and any relationship to
the Company and/or its Affiliates. Designate which members are first time
appointees and attach their biographies, and indicate their shareholdings in the
Company. You may satisfy this requirement by attaching information from a proxy
statement or other public filing if your current audit committee is accurately
represented therein.

/2/ Note that this "override" is available only to former officers and their
immediate family members, and to just one member of the audit committee.

<PAGE>

Company's Board of Directors has determined in its business
judgment that membership on the Audit Committee by such person
is required by the best interests of the corporation and its
shareholders.

C. FINANCIAL LITERACY

The Board of Directors has determined that each Audit Committee member is
financially literate, or will become so in a reasonable period of time, as such
qualification is interpreted in the Board's business judgment.

D. FINANCIAL MANAGEMENT EXPERTISE

The Board of Directors has determined that one or more members of the Audit
Committee possess accounting or related financial management expertise, as such
qualification is interpreted in the Board's business judgment (or if no member
satisfies this requirement, one such qualifying member will be appointed by June
14, 2001).

E. AUDIT COMMITTEE CHARTER

The Company's Board of Directors has adopted and approved a formal written
charter for the Audit Committee. If applicable, the Audit Committee has
completed its annual review and reassessment of the adequacy of the charter. In
this regard, the Company and the Audit Committee are familiar with the
requirements for the charter as provided in Sections 303.01(B)(1)(a), (b) and
(c) of the Listed Company Manual.

This Affirmation is signed by a duly authorized officer of the Company.
Name of Company:

By
Print Name:
Title:
Date:

PLEASE SUBMIT TO:

Corporate Governance Department
New York Stock Exchange
20 Broad Street, 17th Floor

New York, NY 10005

<PAGE>

TEMPLETON EMERGING MARKETS INCOME FUND, INC.
ANNUAL MEETING OF SHAREHOLDERS, FEBRUARY 26, 2001

The undersigned hereby revokes all previous proxies for his/her shares and
appoints BARBARA J. GREEN, SAMUEL J. FORESTER, JR. and BRUCE S. ROSENBERG, and
each of them, proxies of the undersigned with full power of substitution to vote
all shares of Templeton Emerging Markets Income Fund, Inc.(the "Fund") that the
undersigned is entitled to vote at the Fund's Annual Meeting to be held at the
Tower Club, Bank of America Building, One Financial Plaza, 28th Floor, Ft.
Lauderdale, Florida at 10:00 a.m., Eastern time, on the 26th day of February
2001, including any adjournments thereof, upon matters set forth below.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY SHALL BE VOTED FOR PROPOSALS
1 (INCLUDING ALL NOMINEES FOR DIRECTORS) AND 2, AND WITHIN THE DISCRETION OF THE
PROXYHOLDERS AS TO ANY OTHER MATTER PURSUANT TO PROPOSAL 3.

(CONTINUED, AND TO BE SIGNED ON THE OTHER SIDE)

FOLD AND DETACH HERE

<PAGE>

Please mark your votes as
indicated in this example [X]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 THROUGH 3.

Proposal 1 - Election of Directors.

FOR all nominees WITHHOLD Nominees: Harmon E. Burns, Frank J. Crothers,
listed (except as AUTHORITY Andrew H. Hines, Jr. and Charles B. Johnson
marked to the right) to vote for all
nominees listed

[ ] [ ] To withhold authority to vote for any individual
nominee, write that nominee's name on the line
below.

--------------------------------------------------
</TABLE>

Proposal 2 - Ratification of the selection of PricewaterhouseCoopers LLP as
independent auditors for the Fund for the fiscal year ending August 31, 2001.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

Proposal 3 - In their discretion, the Proxyholders are authorized to vote upon
such other matters that may properly come before the Meeting or any adjournments
thereof.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

I PLAN TO ATTEND THE MEETING. YES NO
[ ] [ ]

SIGNATURE(S): DATED , 2001
-------------------------------------------- ---------
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY. IF SIGNING FOR ESTATES,
TRUSTS OR CORPORATIONS, TITLE OR CAPACITY SHOULD BE STATED. IF SHARES ARE HELD
JOINTLY, EACH HOLDER SHOULD SIGN.

FOLD AND DETACH HERE