UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05459
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TEMPLETON GLOBAL INCOME FUND
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
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(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
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Date of fiscal year end: 8/31
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Date of reporting period: 8/31/09
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ITEM 1. REPORTS TO STOCKHOLDERS.
AUGUST 31, 2009
ANNUAL REPORT
(GRAPHIC)
FIXED INCOME
TEMPLETON GLOBAL INCOME FUND
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)
Franklin - TEMPLETON - Mutual Series
Franklin Templeton Investments
GAIN FROM OUR PERSPECTIVE(R)
Franklin Templeton's distinct multi-manager
structure combines the specialized expertise of
three world-class investment management
groups--Franklin, Templeton and Mutual Series.
SPECIALIZED EXPERTISE Each of our portfolio management groups operates
autonomously, relying on its own research and
staying true to the unique investment disciplines
that underlie its success.
FRANKLIN. Founded in 1947, Franklin is a recognized
leader in fixed income investing and also brings
expertise in growth- and value-style U.S. equity
investing.
TEMPLETON. Founded in 1940, Templeton pioneered
international investing and, in 1954, launched what
has become the industry's oldest global fund. Today,
with offices in over 25 countries, Templeton offers
investors a truly global perspective.
MUTUAL SERIES. Founded in 1949, Mutual Series is
dedicated to a unique style of value investing,
searching aggressively for opportunity among what it
believes are undervalued stocks, as well as
arbitrage situations and distressed securities.
TRUE DIVERSIFICATION Because our management groups work independently and
adhere to different investment approaches, Franklin,
Templeton and Mutual Series funds typically have
distinct portfolios. That's why our funds can be
used to build truly diversified allocation plans
covering every major asset class.
RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we seek to
consistently provide investors with exceptional
risk-adjusted returns over the long term, as well as
the reliable, accurate and personal service that has
helped us become one of the most trusted names in
financial services.
MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
(GRAPHIC)
Not part of the annual report
Contents
ANNUAL REPORT
Templeton Global Income Fund ............................................. 1
Performance Summary ...................................................... 8
Important Notice to Shareholders ......................................... 9
Financial Highlights and Statement of Investments ........................ 12
Financial Statements ..................................................... 26
Notes to Financial Statements ............................................ 29
Report of Independent Registered Public Accounting Firm .................. 38
Tax Designation .......................................................... 39
Annual Meeting of Shareholders ........................................... 41
Dividend Reinvestment and Cash Purchase Plan ............................. 42
Board Members and Officers ............................................... 45
Shareholder Information .................................................. 50
Annual Report
Templeton Global Income Fund
YOUR FUND'S GOALS AND MAIN INVESTMENTS: Templeton Global Income Fund seeks high,
current income, with a secondary goal of capital appreciation. Under normal
market conditions, the Fund invests at least 80% of its net assets in
income-producing securities, including debt securities of U.S. and foreign
issuers, including emerging markets.
PORTFOLIO BREAKDOWN
Based on Total Net Assets as of 8/31/09
(PIE CHART)
Bonds....................................... 90.3%
Municipal Bonds............................. 5.4%
Short-Term Investments & Other Net Assets... 4.3%
Dear Shareholder:
We are pleased to bring you Templeton Global Income Fund's annual report for the
fiscal year ended August 31, 2009.
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 13.
Annual Report | 1
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 8/31/09
(BAR CHART)
Asia Pacific 35.7%
Americas 29.6%
Other Europe 21.0%
Middle East & Africa 4.8%
Supranationals* 4.3%
EMU** 3.1%
Other Net Assets 1.5%
* The Fund's supranational investments were denominated in the Mexican peso,
Norwegian krone, New Zealand dollar and U.S. dollar.
** The Fund's EMU investment was in France.
PERFORMANCE OVERVIEW
For the 12 months under review, Templeton Global Income Fund had cumulative
total returns of +20.48% based on market price and +17.55% based on net asset
value. The Fund outperformed the J.P. Morgan (JPM) Global Government Bond Index
(GGBI), which had cumulative total returns of +6.81% in local currency terms and
+10.39% in U.S. dollar terms for the same period.(1) You can find the Fund's
long-term performance data in the Performance Summary on page 8.
ECONOMIC AND MARKET OVERVIEW
The year under review consisted of two distinct halves. In the first half, the
U.S. recession spread throughout the world as the financial crisis intensified,
with economic activity and security prices falling sharply. Frozen credit
markets and depressed consumer sentiment levels caused a steep drop in economic
activity despite policymakers' best efforts. In addition to continued global
interest rate easing, the U.S., eurozone and the U.K. implemented quantitative
and credit easing policies, and governments worldwide boosted fiscal stimuli to
counter the deepening global recession. Partially as a result of this
coordinated global response, investor confidence began to improve in March,
which gradually benefited economic activity through the increased flow of
credit, especially in interbank lending and trade financing. Strong economic
activity in China, the unfreezing of credit markets and the G20 meeting in April
also gave investors confidence.(2) The turnaround led to a more favorable
outlook that benefited the global economy through a shift in the inventory
adjustment cycle and better corporate bond and equity market performance. Many
investors appeared to believe the worst of the financial crisis was over, and by
the end of the period there was substantial evidence that an economic recovery
was under way. Greater risk appetite in the second half of the year benefited
currency and developing bond markets as investors' outlook on the economy
improved. Although financial markets and economic activity improved
significantly from their very low levels, relative to the prior year, economic
activity remained weak as deleveraging continued, global trade contracted and
unemployment rose.
(1.) Source: (C) 2009 Morningstar. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use of
this information. Past performance is no guarantee of future results. The
JPM GGBI tracks total returns for liquid, fixed-rate, domestic government
bonds with maturities greater than one year issued by developed countries
globally. The index is unmanaged and includes reinvested interest. One
cannot invest directly in an index, and an index is not representative of
the Fund's portfolio.
(2.) The G20 is an informal forum that promotes open and constructive discussion
between industrial and emerging market countries on key issues related to
global economic stability. It is made up of the finance ministers and
central bank governors of 19 countries and the European Union.
2 | Annual Report
Inflation fell during the period as weak global growth led to lower prices for
commodities, and slackening labor and capital markets pushed most other prices
down gradually. Monetary easing in the eurozone continued, although at a slower
pace than many economists would have preferred, given the recession's depth and
lesser fiscal policy action compared with those of the U.S. In the first half of
2009 compared with the first half of 2008 (year-over-year), the eurozone's gross
domestic product (GDP) contracted 4.8%, which was greater than the U.S.
economy's 3.7% contraction.(3) Outside the eurozone, the economic slowdown was
more severe in many emerging European countries. Central and eastern Europe was
one of the regions most damaged by the financial crisis as it exposed those
countries' external imbalances characterized by large foreign borrowing to
finance substantial current account deficits. Several countries including
Ukraine, Hungary and Latvia sought help from the International Monetary Fund
(IMF). Even Poland, which was in a comparatively strong position relative to its
regional peers, took advantage of the IMF's new, prequalified loan facility,
though it did not draw on these resources.
In Asia, growth differed significantly between large economies with higher
domestic demand and small economies more dependent on exports. The large
economies, particularly China, India and Indonesia, were more resistant to the
global recession as aggressive fiscal and monetary responses outweighed
declining exports. Within these three countries, domestic demand was resilient
and accounts for a bigger share of these economies. In contrast, the smaller
economies suffered quick, severe downturns as their reliance on demand for
exports made them very vulnerable to the global downturn. Exemplifying this
dependence, production dropped more than export demand, allowing inventories to
fall to levels more in line with reduced global consumption. However, even some
of these very badly affected economies showed signs of improvement toward
period-end. On the other hand, the Japanese economy was the weakest among the
large, developed economies. GDP contracted an average of 6.5% year-over-year
during the past three quarters due to subdued consumption, weak external demand
and lackluster government spending.(4) Japan's trade balance worsened as the
global recession and difficulties in obtaining credit negatively impacted
machinery exports, an important sector for the economy.
INVESTMENT STRATEGY
We invest selectively in bonds around the world to generate income for the Fund,
seeking opportunities while monitoring changes in interest rates, currency
exchange rates and credit risks.
(3.) Source: Eurostat.
(4.) Source: Economic and Social Research Institute.
WHAT IS A CURRENT ACCOUNT?
A current account is that part of the balance of payments where all of one
country's international transactions in goods and services are recorded.
WHAT IS BALANCE OF PAYMENTS?
Balance of payments is a record of all of a country's exports and imports of
goods and services, borrowing and lending with the rest of the world during a
particular time period. It helps a country evaluate its competitive strengths
and weaknesses and forecast the strength of its currency.
Annual Report | 3
WHAT IS DURATION?
Duration is a measure of a bond's price sensitivity to interest rate changes. In
general, a portfolio of securities with a lower duration can be expected to be
less sensitive to interest rate changes than a portfolio with a higher duration.
WHAT IS A CARRY TRADE?
Carry trade is a strategy in which an investor sells a certain currency with a
relatively low interest rate and uses the funds to purchase a different currency
yielding a higher interest rate. A trader using this strategy attempts to
capture the difference between the rates.
MANAGER'S DISCUSSION
The Fund's total return was influenced by various factors, including interest
rate developments, currency movements and exposure to sovereign debt markets.
INTEREST RATE STRATEGY
The Fund added duration exposure early in the period in countries where yields
lagged the rally in developed government bond markets. Although deteriorating
growth outlooks caused U.S. and eurozone treasuries to rally, delayed central
bank rate cuts and investor risk aversion kept yields higher in developing
government bond markets. In our view, this created an opportunity for the Fund
to benefit if developing countries lowered interest rates similar to developed
markets later in the period. Overall, the Fund's interest rate exposure was
marginally positive for relative performance as the negative effect from being
underweighted in U.K. and eurozone bonds was outweighed by select duration
positioning. Among key interest rate positions that benefited performance, South
Korea and Indonesia stood out in Asia as our large positions benefited from
central bank easing. Another similar example was Chile where policymakers made
aggressive interest rate cuts to counteract the severe decline in economic
activity, which benefited the Fund's duration exposure. The Fund marginally
benefited from its underweighted U.S. Treasury allocation as yields rose toward
the end of the Fund's fiscal year after an initial rally. Toward period-end, the
Fund reduced duration exposure in select economies where yields fell to
historically low levels.
CURRENCY STRATEGY
The Fund's diversified currency exposure benefited relative performance.
Currency markets performed very differently between the first and second halves
of the year. Deleveraging, hedging currency risk and risk aversion led the U.S.
dollar to strengthen against most currencies during the beginning of the year,
but in the second half it lost those gains. For the period as a whole, the
trade-weighted dollar rose 4.35% despite falling 10.23% from its peak in early
March.(5) Weak U.S. domestic demand helped the current account deficit moderate
during the year. This was enhanced by better terms of trade due to the
significant drop in commodity prices. Despite this improvement, the dollar
remained weak as investors focused on challenges the economy would likely face
in financing the growing fiscal deficit, the weaker outlook for growth and loose
monetary policy. Outside the U.S., the Fund benefited from exposure to the
Mexican peso. The contrast between the first and second halves of the year was
evident in the behavior of the peso. It fell 33.13% against the dollar to reach
its all-time low.(6) However, the Fund's
(5.) Source: Federal Reserve H10 Report.
(6.) Source: IDC/Exshare.
4 | Annual Report
local market bond position was hedged during the period and so the poor
performance did not adversely affect the Fund. As this occurred, and the peso
was trading at distressed levels, we unhedged the bond position. Although the
Mexican economy faced significant challenges, we viewed valuations at the height
of the crisis as reflecting a more dire outlook than we believed would likely
unfold. The Fund benefited from its focus on underlying fundamentals as the
Mexican peso appreciated 13.2% during the second half of the year.(6)
Among Asian currencies, the Fund benefited from its overweighted exposures to
the Indonesian rupiah and the South Korean won. We added to both positions
significantly following a sell-off that occurred early in the year and therefore
benefited significantly as these currencies appreciated 18.9% and 22.8% in the
second half of the year.(6) Although the Japanese yen was one of the Fund's
largest currency exposures, our underweighted exposure to the yen detracted from
relative performance, as it was one of the few currencies that appreciated
strongly against the dollar for the period as a whole. Once again, differences
between the first and second halves of the year were evident as the Fund held a
large exposure to the yen that helped absolute performance throughout the first
half of the year, benefiting from the rise in risk aversion as carry trades
unwound and domestic investors repatriated international investments. However,
in the second half of the year, we became wary of the yen's more expensive
valuation as the economic outlook for Japan remained quite challenging. We
reduced our exposure and even put on a net negative position at the very end of
the period as a way to hedge against the risk of rising yields in the U.S. since
such an increase would likely cause the interest rate differential to shift in
the U.S.'s favor, which historically has a high correlation with the dollar
strengthening against the yen. The Fund's underweighted New Zealand dollar and
Singapore dollar exposures also detracted from relative performance while the
Fund's Chinese yuan position helped the Fund. The net negative positions in the
New Zealand and Singapore dollars were added because of expensive valuations
relative to underlying fundamentals and as a hedge for the broader portfolio
against a possible return of risk aversion. We continued to find several of the
region's currencies attractive as relative growth and healthier fiscal and
external balances should benefit them relative to the currencies of the
leveraged developed world.
The euro ended the period close to the level where it began, depreciating 2.5%
for the 12 months under review.(6) However, it was still one of the largest
contributors to the Fund's relative performance because we positioned the Fund
correctly for the weakness in the first half of the year followed by strength in
the second. The Fund started its fiscal year very underweighted in the euro and
CURRENCY BREAKDOWN
8/31/09
% OF TOTAL
NET ASSETS
----------
AMERICAS 63.1%
U.S. Dollar 45.5%
Brazilian Real 8.4%
Chilean Peso 4.9%
Peruvian Nuevo Sol 3.5%
Mexican Peso 0.8%
ASIA PACIFIC 24.6%
Malaysian Ringgit 15.1%
South Korean Won 13.2%
Indian Rupee 12.8%
Chinese Yuan 8.9%
Australian Dollar 2.9%
Sri Lankan Rupee 2.0%
Indonesian Rupiah 0.9%
Kazakhstani Tenge 0.4%
Vietnamese Dong 0.2%
Japanese Yen* -5.8%
New Zealand Dollar* -11.9%
Singaporean Dollar* -14.1%
EUROPE 11.3%
Swedish Krona 11.2%
Polish Zloty 8.6%
Norwegian Krone 2.9%
Russian Ruble 1.9%
Swiss Franc 0.3%
Euro* -13.6%
MIDDLE EAST & AFRICA 1.0%
Israeli New Shekel 0.9%
Egyptian Pound 0.1%
* Holding is a negative percentage because of the Fund's holdings of forward
currency exchange contracts.
Annual Report | 5
benefited from the currency's continued fall from its all-time high in April
2008. However, we significantly reduced our net negative position toward the
middle of the period when we viewed the euro as being at fair value against the
dollar. We continued to prefer exposure to non-euro European currencies given
what we believed were better valuations and better growth dynamics. However, the
Swedish krona and Norwegian krone fell 9.6% and 9.8% against the U.S. dollar
over the period and detracted from relative performance.(6) The Fund's
overweighted exposure to the Egyptian pound and underweighted allocation to the
British pound benefited relative performance, while the Fund's exposure to the
Russian ruble detracted after the currency was allowed to weaken against its
dual currency basket (45% euros and 55% U.S. dollars).
GLOBAL SOVEREIGN DEBT AND CREDIT STRATEGY
The Fund purchased investment-grade and lower-rated sovereign debt that
typically compensates for greater credit risk by offering higher yields relative
to U.S. and European benchmark Treasury securities. Improved risk appetite
benefited high yield products during the second half of the period, particularly
sovereign bonds, following the G20 summit in April 2009. It was decided at the
summit that the IMF would receive additional resources, and the IMF eased
conditions to help countries in need of balance of payments support or access to
liquidity. U.S. dollar-denominated emerging market debt posted a +5.37% total
return during the period as measured by the J.P. Morgan (JPM) Emerging Markets
Bond Index Global (EMBIG), but the Fund's return was even stronger as it added
exposure to sovereign bonds following the initial sell-off.(7) The index fell
28.83% from the beginning of the period to its low in late October, and rose
48.05% from that point to the end of the period.(7) Our analysis indicated that
sovereign spreads were at distressed levels, reflecting a higher probability of
default than we thought was appropriate. In our opinion, most emerging market
sovereign bonds were in much better positions than in previous crises and
unlikely to suffer to the same extent as they have in the past. Despite these
fundamentals, forced and panicked selling hit sovereign bonds, and so we sought
to capitalize on this market inefficiency by adding exposure. Sovereign interest
rate credit spreads fell 325 basis points from their peak in mid-March as most
emerging economies were fairly well positioned entering the crisis.(8)
Regionally, Latin American sovereign debt had a +2.19% total return, Asian debt
a +11.77% total return and central and eastern European debt a +5.70% total
return.(7)
(7.) Source: (C) 2009 Morningstar. The JPM EMBIG tracks total returns for U.S.
dollar-denominated debt instruments issued by emerging market sovereign and
quasi-sovereign entities: Brady bonds, loans and Eurobonds. Local and
regional bond market returns are based on subindexes of the JPM EMBIG.
(8.) Source: J.P. Morgan.
6 | Annual Report
Thank you for your continued participation in Templeton Global Income Fund. We
look forward to serving your future investment needs.
Sincerely,
(PHOTO OF MICHAEL HASENSTAB)
/s/ Michael Hasenstab
Michael Hasenstab, Ph.D.
Portfolio Manager
Templeton Global Income Fund
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF AUGUST 31, 2009, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR
MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.
Annual Report | 7
Performance Summary as of 8/31/09
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses. Capital
gain distributions are net profits realized from the sale of portfolio
securities. Total return reflects reinvestment of the Fund's dividends and
capital gain distributions, if any, and any unrealized gains or losses. Total
returns do not reflect any sales charges paid at inception or brokerage
commissions paid on secondary market purchases. The performance table does not
reflect any taxes that a shareholder would pay on Fund dividends, capital gains
distributions, if any, or any realized gains on the sale of Fund shares.
PRICE AND DISTRIBUTION INFORMATION
SYMBOL: GIM CHANGE 8/31/09 8/31/08
----------- ------ ------- -------
Net Asset Value (NAV) +$0.03 $8.84 $8.81
Market Price (NYSE) +$0.18 $9.15 $8.97
DISTRIBUTIONS (9/1/08-8/31/09)
Dividend Income $1.3427
PERFORMANCE
1-YEAR 5-YEAR 10-YEAR
------ ------ -------
Cumulative Total Return(1)
Based on change in NAV(2) +17.55% +71.49% +188.04%
Based on change in market price(3) +20.48% +84.60% +256.51%
Average Annual Total Return(1)
Based on change in NAV(2) +17.55% +11.39% +11.16%
Based on change in market price(3) +20.48% +13.05% +13.55%
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN.
ENDNOTES
CHANGES IN INTEREST RATES WILL AFFECT THE VALUE OF THE FUND'S PORTFOLIO AND ITS
SHARE PRICE AND YIELD. BOND PRICES GENERALLY MOVE IN THE OPPOSITE DIRECTION OF
INTEREST RATES. THUS, AS PRICES OF BONDS IN THE FUND ADJUST TO A RISE IN
INTERESTS RATES, THE FUND'S SHARE PRICE MAY DECLINE. SPECIAL RISKS ARE
ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY FLUCTUATIONS, ECONOMIC
INSTABILITY AND POLITICAL DEVELOPMENTS. INVESTMENTS IN DEVELOPING MARKETS
INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE
ASSOCIATED WITH THEIR RELATIVELY SMALL SIZE AND LESSER LIQUIDITY. THE FUND'S USE
OF FOREIGN CURRENCY TECHNIQUES INVOLVES SPECIAL RISKS AS SUCH TECHNIQUES MAY NOT
ACHIEVE THE ANTICIPATED BENEFITS AND/OR MAY RESULT IN LOSSES TO THE FUND. ALSO,
AS A NONDIVERSIFIED INVESTMENT COMPANY, THE FUND MAY INVEST IN A RELATIVELY
SMALL NUMBER OF ISSUERS AND, AS A RESULT, BE SUBJECT TO A GREATER RISK OF LOSS
WITH RESPECT TO ITS PORTFOLIO SECURITIES.
(1.) Total return calculations represent the cumulative and average annual
changes in value of an investment over the periods indicated.
(2.) Assumes reinvestment of distributions based on net asset value.
(3.) Assumes reinvestment of distributions based on the dividend reinvestment
and cash purchase plan.
8 | Annual Report
Important Notice to Shareholders
SHARE REPURCHASE PROGRAM
The Fund's Board previously authorized management to implement an open-market
share repurchase program pursuant to which the Fund may purchase Fund shares,
from time to time, in open-market transactions, at the discretion of management.
This authorization remains in effect.
OPTIONS ON SWAP AGREEMENTS (SWAPTIONS)
Generally, the Fund may purchase and write (sell) both put and call options on
swap agreements, commonly known as swaptions, although currently the Fund only
intends to purchase options on interest rate swaps. The Fund may buy options on
interest rate swaps to help hedge the Fund's risk of potentially rising interest
rates. A swaption is an over-the-counter (OTC) option that gives the buyer of
the option the right, but not the obligation, to enter into a previously
negotiated swap agreement, or to extend, terminate, or otherwise modify the
terms of an existing swap agreement, in exchange for the payment of a premium to
the writer (seller) of the option. The writer (seller) of a swaption receives
premium payments from the buyer and, in exchange, becomes obligated to enter
into or modify an underlying swap agreement upon the exercise of the option by
the buyer.
The Fund generally assumes a greater risk when it writes (sells) a swaption than
when it purchases a swaption. When the Fund purchases a swaption, it risks
losing the amount of premium it has paid, should it elect not to exercise the
option, plus any related transaction costs. When the Fund writes (sells) a
swaption, however, the Fund is bound by the terms of the underlying swap
agreement upon exercise of the option by the buyer, which may result in losses
to the Fund in excess of the premium it received. Swaptions also involve other
risks associated with both OTC options and swap agreements, such as
counterparty risk (the risk that the counterparty defaults on its obligation),
market risk, credit risk, and interest rate risk. With respect to the Fund's
purchase of options on interest rate swaps, depending on the movement of
interest rates between the time of purchase and expiration of the swaption, the
value of the underlying interest rate swap and therefore the value of the
swaption will change.
Annual Report | 9
Important Notice to Shareholders (CONTINUED)
CREDIT LINKED NOTES (CLNS)
In trying to achieve its investment goals, the Fund may invest in CLNs. A
typical CLN is set-up as a pass-through note structure created by a broker or
bank as an alternative investment for funds or other purchasers to directly
buying a bond or group of bonds. CLNs are typically issued at par, with a
one-to-one relationship with the notional value to the underlying bond(s). The
performance of the CLN, however, including maturity value, is linked to the
performance of the specified underlying bond(s) as well as that of the issuing
entity. CLNs are generally considered to be liquid instruments; however, the
liquidity of the CLN may be impacted by the liquidity of the underlying
reference asset.
In addition to the risk of loss of its principal investment, the Fund bears the
risk that the issuer of the CLN will default or become bankrupt. In such an
event, the Fund may have difficulty being repaid, or fail to be repaid, the
principal amount of its investment. A downgrade or impairment to the credit
rating of the issuer will also likely impact negatively the price of the CLN,
regardless of the price of the bond(s) underlying the CLNs. A CLN is typically
structured as limited recourse, unsecured obligation of the issuer of such
security such that the security will usually be the obligation solely of the
issuer and will not be an obligation or responsibility of any other person,
including the issuer of the underlying bond(s).
Most CLNs are structured as Rule 144A securities so that they may be freely
traded among institutional buyers. However, the market for CLNs may be, or
suddenly can become, illiquid. The other parties to the transaction may be the
only investors with sufficient understanding of the CLN to be interested in
bidding for it. Changes in liquidity may result in significant, rapid and
unpredictable changes in the prices of CLNs. In certain cases, a market price
for a CLN may not be available or may not be reliable, and the Fund could
experience difficulty in selling such security at a price the manager believes
is fair.
DIVIDEND AND MUNICIPAL SECURITIES INVESTMENT POLICY
The Fund may invest up to 10% of its assets in municipal securities when the
investment manager believes it is advisable to do so. Municipal securities are
issued by state and local governments, their agencies and authorities, as well
as by the District of Columbia and U.S. territories and possessions, to borrow
money for various public or private projects. The issuer pays a fixed, floating
or variable rate of interest, and must repay the amount borrowed (the principal)
at maturity. Municipal securities generally pay interest free from federal
income tax.
10 | Annual Report
Important Notice to Shareholders (CONTINUED)
DIVIDEND AND MUNICIPAL SECURITIES INVESTMENT POLICY (CONTINUED)
Investing in municipal securities involves risks, such as the issuer's inability
to make interest payments and repay principal. Changes in an issuer's financial
strength or in a security's credit rating may affect a security's value and,
thus, impact Fund performance. In addition, these securities can be impacted by
events in the states and territories that issue them, which may include economic
or political policy changes, tax base erosion, state constitutional limits on
tax increases, budget deficits and other financial difficulties, and changes in
the credit ratings assigned to the state's municipal issuers.
Annual Report | 11
Templeton Global Income Fund
FINANCIAL HIGHLIGHTS
YEAR ENDED AUGUST 31,
--------------------------------------------------------------
2009 2008 2007 2006 2005
---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............... $ 8.81 $ 8.95 $ 8.93 $ 9.02 $ 8.77
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income(a) ...................... 0.46 0.44 0.40 0.37 0.39
Net realized and unrealized gains (losses) .... 0.91 0.49 0.52 0.33 0.49
---------- ---------- ---------- ---------- ----------
Total from investment operations ................. 1.37 0.93 0.92 0.70 0.88
---------- ---------- ---------- ---------- ----------
Less distributions from net investment income
and net foreign currency gains ................ (1.34) (1.07) (0.90) (0.79) (0.63)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ..................... $ 8.84 $ 8.81 $ 8.95 $ 8.93 $ 9.02
========== ========== ========== ========== ==========
Market value, end of year(b) ..................... $ 9.15 $ 8.97 $ 9.01 $ 9.15 $ 8.85
========== ========== ========== ========== ==========
Total return (based on market value per share) ... 20.48% 12.25% 8.63% 13.39% 10.61%
RATIOS TO AVERAGE NET ASSETS
Expenses(c) ...................................... 0.74% 0.74% 0.75% 0.80% 0.76%
Net investment income ............................ 5.52% 4.82% 4.45% 4.16% 4.22%
SUPPLEMENTAL DATA
Net assets, end of year (000's) .................. $1,160,282 $1,155,981 $1,170,414 $1,161,850 $1,172,240
Portfolio turnover rate .......................... 57.11% 64.44% 49.24% 49.20% 41.81%
(a) Based on average daily shares outstanding.
(b) Based on the last sale on the New York Stock Exchange.
(c) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
12 | Annual Report
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009
PRINCIPAL AMOUNT(a) VALUE
---------------------- --------------
BONDS 90.3%
ARGENTINA 2.2%
(b, c) Government of Argentina, senior bond, FRN, 0.943%, 8/03/12 ... 98,977,000 $ 25,931,974
--------------
AUSTRALIA 7.4%
New South Wales Treasury Corp., senior note, 5.50%, 3/01/17 .. 36,971,000 AUD 30,350,905
Queensland Treasury Corp.,
13, 6.00%, 8/14/13 ........................................ 38,901,000 AUD 33,311,529
17, 6.00%, 9/14/17 ........................................ 12,395,000 AUD 10,476,022
(d) 144A, 7.125%, 9/18/17 ........................................ 16,480,000 NZD 11,669,357
--------------
85,807,813
--------------
BRAZIL 7.5%
Nota Do Tesouro Nacional,
9.609%, 1/01/12 ........................................... 23,075(e) BRL 11,973,792
9.609%, 1/01/14 ........................................... 15,000(e) BRL 7,398,558
9.609%, 1/01/17 ........................................... 54,900(e) BRL 25,412,950
(f) Index Linked, 6.00%, 5/15/15 ................................. 20,140(e) BRL 19,397,046
(f) Index Linked, 6.00%, 5/15/45 ................................. 23,625(e) BRL 22,241,302
--------------
86,423,648
--------------
CANADA 1.4%
Province of Manitoba, 6.375%, 9/01/15 ........................ 14,800,000 NZD 10,063,313
Province of Ontario, 6.25%, 6/16/15 .......................... 8,460,000 NZD 5,821,333
--------------
15,884,646
--------------
FRANCE 3.1%
Government of France, 4.00%, 4/25/18 ......................... 23,500,000 EUR 35,350,377
--------------
HUNGARY 2.4%
Government of Hungary,
3.50%, 7/18/16 ............................................ 905,000 EUR 1,133,768
4.375%, 7/04/17 ........................................... 4,435,000 EUR 5,726,320
5.75%, 6/11/18 ............................................ 12,690,000 EUR 18,035,718
senior note, 3.875%, 2/24/20 .............................. 2,700,000 EUR 3,147,327
--------------
28,043,133
--------------
INDONESIA 9.8%
Government of Indonesia,
FR19, 14.25%, 6/15/13 ..................................... 84,050,000,000 IDR 9,609,882
FR20, 14.275%, 12/15/13 ................................... 81,836,000,000 IDR 9,437,933
FR26, 11.00%, 10/15/14 .................................... 3,500,000,000 IDR 364,583
FR27, 9.50%, 6/15/15 ...................................... 34,890,000,000 IDR 3,409,392
FR30, 10.75%, 5/15/16 ..................................... 87,035,000,000 IDR 8,936,632
FR31, 11.00%, 11/15/20 .................................... 335,739,000,000 IDR 33,807,037
FR34, 12.80%, 6/15/21 ..................................... 59,666,000,000 IDR 6,629,555
FR35, 12.90%, 6/15/22 ..................................... 32,530,000,000 IDR 3,638,650
FR36, 11.50%, 9/15/19 ..................................... 23,000,000,000 IDR 2,424,354
FR42, 10.25%, 7/15/27 ..................................... 25,430,000,000 IDR 2,327,300
FR43, 10.25%, 7/15/22 ..................................... 8,450,000,000 IDR 798,055
FR46, 9.50%, 7/15/23 ...................................... 41,250,000,000 IDR 3,652,345
Annual Report | 13
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE
---------------------- --------------
BONDS (CONTINUED)
INDONESIA (CONTINUED)
Government of Indonesia, (continued)
FR47, 10.00%, 2/15/28 ..................................... 52,895,000,000 IDR $ 4,722,767
FR48, 9.00%, 9/15/18 ...................................... 18,520,000,000 IDR 1,699,504
(d) senior bond, 144A, 8.50%, 10/12/35 ........................ 2,952,000 3,365,280
(d) senior bond, 144A, 6.625%, 2/17/37 ........................ 2,090,000 1,942,829
(d) senior bond, 144A, 7.75%, 1/17/38 ......................... 7,050,000 7,287,938
(g) senior bond, Reg S, 8.50%, 10/12/35 ....................... 5,510,000 6,281,400
(g) senior bond, Reg S, 7.75%, 1/17/38 ........................ 3,310,000 3,421,713
--------------
113,757,149
--------------
MALAYSIA 0.6%
Government of Malaysia,
3.869%, 4/13/10 ........................................... 7,500,000 MYR 2,154,167
3.702%, 2/25/13 ........................................... 3,370,000 MYR 976,397
3.70%, 5/15/13 ............................................ 1,290,000 MYR 373,029
3.461%, 7/31/13 ........................................... 13,900,000 MYR 3,976,422
--------------
7,480,015
--------------
MEXICO 4.6%
Government of Mexico,
8.00%, 12/07/23 ........................................... 2,727,000(h) MXN 19,636,845
10.00%, 12/05/24 .......................................... 15,000(h) MXN 127,150
M 20, 7.50%, 6/03/27 ...................................... 3,058,000(h) MXN 20,544,703
senior bond, 5.95%, 3/19/19 ............................... 13,260,000 13,478,790
--------------
53,787,488
--------------
NEW ZEALAND 1.1%
Government of New Zealand, 6.00%, 11/15/11 ................... 18,273,000 NZD 13,037,183
--------------
PERU 3.6%
Government of Peru,
9.91%, 5/05/15 ............................................ 6,500,000 PEN 2,791,019
7.84%, 8/12/20 ............................................ 32,200,000 PEN 12,754,421
Series 7, 8.60%, 8/12/17 .................................. 61,545,000 PEN 25,603,084
--------------
41,148,524
--------------
PHILIPPINES 0.1%
(g) Government of the Philippines, Reg S, 9.125%, 2/22/10 ........ 770,000 EUR 1,144,769
--------------
POLAND 9.2%
Government of Poland,
4.75%, 4/25/12 ............................................ 27,930,000 PLN 9,649,289
5.75%, 4/25/14 ............................................ 147,355,000 PLN 51,819,296
6.25%, 10/24/15 ........................................... 19,335,000 PLN 6,946,176
5.75%, 9/23/22 ............................................ 60,500,000 PLN 20,439,404
senior note, 6.375%, 7/15/19 .............................. 17,000,000 18,238,586
--------------
107,092,751
--------------
14 | Annual Report
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE
---------------------- --------------
BONDS (CONTINUED)
QATAR 1.0%
(d) Government of Qatar, senior note, 144A, 6.55%, 4/09/19 ....... 10,450,000 $ 11,234,273
--------------
RUSSIA 4.7%
(d) Government of Russia, 144A, 7.50%, 3/31/30 ................... 52,639,680 54,053,055
--------------
SOUTH AFRICA 2.7%
Government of South Africa,
5.25%, 5/16/13 ............................................ 3,330,000 EUR 4,948,825
4.50%, 4/05/16 ............................................ 1,829,000 EUR 2,548,872
6.875%, 5/27/19 ........................................... 18,620,000 20,085,394
senior note, 6.50%, 6/02/14 ............................... 775,000 843,882
senior note, 5.875%, 5/30/22 .............................. 3,355,000 3,359,194
--------------
31,786,167
--------------
SOUTH KOREA 14.7%
The Export-Import Bank of Korea,
5.125%, 3/16/15 ........................................... 300,000 300,201
4.625%, 2/20/17 ........................................... 205,000 EUR 275,789
(g) Reg S, 5.25%, 2/10/14 ........................................ 295,000 295,192
senior note, 8.125%, 1/21/14 ................................. 995,000 1,113,260
Government of Korea, senior bond, 5.625%, 11/03/25 ........... 620,000 588,108
Korea Deposit Insurance Corp.,
07-1, 5.57%, 9/14/12 ...................................... 7,200,000,000 KRW 5,877,852
08-1, 5.28%, 2/15/13 ...................................... 1,232,000,000 KRW 995,996
Korea Development Bank, senior note, 8.00%, 1/23/14 .......... 3,325,000 3,698,953
Korea Treasury Bond,
0400-1206, 4.00%, 6/10/12 ................................. 17,175,280,000 KRW 13,625,235
0475-1112, 4.75%, 12/10/11 ................................ 69,639,880,000 KRW 56,227,525
0475-1203, 4.75%, 3/10/12 ................................. 15,946,000,000 KRW 12,851,157
0525-1303, 5.25%, 3/10/13 ................................. 1,866,530,000 KRW 1,519,335
0525-1509, 5.25%, 9/10/15 ................................. 4,000,000,000 KRW 3,225,462
0525-2703, 5.25%, 3/10/27 ................................. 2,348,930,000 KRW 1,807,695
0550-1106, 5.50%, 6/10/11 ................................. 19,068,600,000 KRW 15,595,682
0550-1709, 5.50%, 9/10/17 ................................. 25,608,210,000 KRW 20,594,622
0575-1809, 5.75%, 9/10/18 ................................. 17,343,000,000 KRW 14,198,728
senior note, 7.125%, 4/16/19 .............................. 15,880,000 18,011,271
--------------
170,802,063
--------------
SRI LANKA 2.0%
Government of Sri Lanka, A,
8.50%, 1/15/13 ............................................ 567,300,000 LKR 4,386,806
13.50%, 2/01/13 ........................................... 550,800,000 LKR 4,904,288
11.25%, 7/15/14 ........................................... 585,500,000 LKR 4,819,434
11.00%, 8/01/15 ........................................... 1,103,400,000 LKR 8,893,194
--------------
23,003,722
--------------
Annual Report | 15
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE
---------------------- --------------
BONDS (CONTINUED)
(i) SUPRANATIONAL 4.3%
Corporacion Andina De Fomento, 8.125%, 6/04/19 ............... 8,640,000 $ 10,026,288
European Investment Bank, senior note, 4.50%, 5/15/13 ........ 113,650,000 NOK 19,330,387
Inter-American Development Bank,
7.50%, 4/15/15 ............................................ 8,000,000 NZD 5,890,063
6.00%, 12/15/17 ........................................... 6,000,000 NZD 4,123,447
senior note, 7.50%, 12/05/24 ................................. 185,000,000 MXN 11,043,328
--------------
50,413,513
--------------
SWEDEN 4.7%
Government of Sweden, 5.25%, 3/15/11 ......................... 366,355,000 SEK 54,820,446
--------------
UNITED ARAB EMIRATES 1.0%
(d) Emirate of Abu Dhabi, 144A, 6.75%, 4/08/19 ................... 10,260,000 11,340,368
--------------
VENEZUELA 2.2%
Government of Venezuela,
10.75%, 9/19/13 ........................................... 6,155,000 5,908,800
(g) senior bond, Reg S, 5.375%, 8/07/10 .......................... 19,905,000 19,307,850
--------------
25,216,650
--------------
TOTAL BONDS (COST $951,393,445) .............................. 1,047,559,727
--------------
MUNICIPAL BONDS 5.4%
UNITED STATES AND U.S. TERRITORIES 5.4%
Alabama Public Housing Authorities Capital Program
Revenue, Series B, FSA Insured, 4.45%, 1/01/24 ............ 55,000 54,709
Alabama State University Revenue, General Tuition and Fee,
Assured Guaranty,
5.00%, 9/01/29 ............................................ 5,000 5,091
5.75%, 9/01/39 ............................................ 5,000 5,264
Bay Area Toll Authority Toll Bridge Revenue, San Francisco
Bay Area, Refunding, Series F1,
5.00%, 4/01/39 ............................................ 605,000 612,980
5.50%, 4/01/43 ............................................ 295,000 309,579
Bexar County Hospital District GO, Certificates of
Obligation, 5.00%, 2/15/32 ................................ 805,000 800,677
Bexar County Revenue, Venue Project, Refunding, Series A,
BHAC Insured, 5.25%, 8/15/47 .............................. 730,000 732,044
California State GO,
6.00%, 4/01/38 ............................................ 20,130,000 21,331,761
Refunding, 5.125%, 4/01/33 ................................ 500,000 491,580
Refunding, 5.00%, 4/01/38 ................................. 205,000 194,547
Chicago Board of Education GO, Refunding, Series C,
Assured Guaranty, 5.25%, 12/01/26 ......................... 1,810,000 1,954,239
Chicago GO, Project and Refunding, Series A, FSA
Insured, 5.00%, 1/01/25 ................................... 475,000 490,034
District of Columbia University Revenue, Georgetown
University, Refunding, Series D, BHAC
Insured, 5.50%, 4/01/36 ................................... 1,545,000 1,616,812
Energy Northwest Electric Revenue, Columbia Generating
Station, Refunding, Series A, 5.00%, 7/01/24 .............. 1,545,000 1,626,051
Florida State Hurricane Catastrophe Fund Finance Corp. .......
Revenue, Series A, 4.25%, 7/01/14 ......................... 2,375,000 2,423,735
16 | Annual Report
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE
---------------------- --------------
MUNICIPAL BONDS (CONTINUED)
UNITED STATES AND U.S. TERRITORIES (CONTINUED)
Hamilton County Sales Tax Revenue, sub. bond, Refunding,
Series A, FSA Insured, 5.00%, 12/01/32 .................... 1,825,000 $ 1,843,633
Illinois Municipal Electricity Agency Power Supply
Revenue, Series A, BHAC Insured, 5.00%, 2/01/35 ........... 1,085,000 1,098,356
Kentucky State Municipal Power Agency Power System
Revenue, Prairie State Project, Series A, BHAC Insured,
5.25%, 9/01/42 ............................................ 2,395,000 2,454,659
Las Vegas Valley Water District GO, Refunding, Series A,
MBIA Insured, 5.00%, 6/01/26 .............................. 395,000 403,868
Lewisville ISD, GO, School Building, 5.00%, 8/15/26 .......... 545,000 582,654
Los Angeles USD, GO, Series I, 5.00%,
7/01/26 ................................................... 180,000 186,350
7/01/27 ................................................... 195,000 200,634
Matanuska-Susitna Borough Lease Revenue, Goose Creek
Correctional Center, Assured Guaranty,
5.50%, 9/01/23 ............................................ 1,605,000 1,800,328
6.00%, 9/01/28 ............................................ 2,005,000 2,243,234
Metropolitan Atlanta Rapid Transit Authority Sales Tax
Revenue, Refunding, Third Indenture Series A, FGIC
Insured, 5.00%, 7/01/19 ................................... 150,000 171,247
Metropolitan Water District of Southern California
Waterworks Revenue, Series A, 5.00%, 7/01/37 .............. 775,000 787,997
Minneapolis Health Care System Revenue, Fairview Health
Services, Series B, Assured Guaranty, 6.50%, 11/15/38 ..... 1,670,000 1,880,320
MTA Revenue,
Series B, Assured Guaranty, 5.25%, 11/15/20 ............... 430,000 474,840
Transportation, Series A, FSA Insured, 5.50%, 11/15/21 410,000 466,338
New Jersey State Transportation Trust Fund Authority
Revenue, Transportation System, Series A, Assured
Guaranty, 5.50%, 12/15/38 ................................. 2,810,000 2,981,691
New York City GO, Series L, Sub Series L-1, 5.00%, 4/01/26 100,000 103,522
North Carolina Eastern Municipal Power Agency Power
System Revenue, Refunding, Series A, Assured
Guaranty, 5.25%, 1/01/19 .................................. 250,000 271,935
Palomar Pomerado Health GO, Election of 2004, Series A,
MBIA Insured, 5.125%, 8/01/37 ............................. 2,080,000 2,006,618
Philadelphia GO,
Refunding, Series A, Assured Guaranty, 5.00%, 8/01/24 ..... 50,000 50,387
Series B, Assured Guaranty, 7.125%, 7/15/38 ............... 885,000 964,659
Placentia-Yorba Linda USD, GO, 2008 Election,
Series A, 5.25%, 8/01/32 .................................. 2,400,000 2,459,952
Poway USD, GO, Election of 2008, ID 07-1-A, zero cpn.,
8/01/27 ................................................... 705,000 232,509
8/01/30 ................................................... 705,000 184,294
8/01/32 ................................................... 885,000 198,143
8/01/33 ................................................... 470,000 96,768
Puerto Rico Commonwealth GO, Public Improvement,
Refunding, Series A, MBIA Insured, 5.50%, 7/01/21 ......... 100,000 100,337
Regional Transportation District Sales Tax Revenue,
Fastracks Project, Series A, AMBAC Insured,
5.00%, 11/01/27 ........................................... 590,000 621,134
San Bernardino Community College District GO, Election
of 2002, Series A,
6.375%, 8/01/26 ........................................... 400,000 459,288
6.50%, 8/01/27 ............................................ 580,000 667,574
6.50%, 8/01/28 ............................................ 240,000 275,666
6.25%, 8/01/33 ............................................ 600,000 658,794
Annual Report | 17
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE
---------------------- --------------
MUNICIPAL BONDS (CONTINUED)
UNITED STATES AND U.S. TERRITORIES (CONTINUED)
San Mateo County Community College District GO, Election
of 2001, Series C, MBIA Insured, zero cpn.,
9/01/30 ................................................... 1,705,000 $ 525,004
3/01/31 ................................................... 465,000 136,631
Seattle Water System Revenue, BHAC Insured, 5.00%,
9/01/34 ................................................... 935,000 949,848
Tarrant County Cultural Education Facilities Finance Corp.
Revenue, Christus Health, Refunding, Series A,
Assured Guaranty, 6.25%, 7/01/28 .......................... 1,400,000 1,544,452
--------------
TOTAL MUNICIPAL BONDS (COST $58,424,512) ..................... 62,732,767
--------------
(j) U.S. GOVERNMENT AND AGENCY SECURITIES 0.6%
U.S. Treasury Note,
4.125%, 5/15/15 ........................................... 520,000 560,991
(f) Index Linked, 3.00%, 7/15/12 ................................. 6,458,891 6,793,946
(f) Index Linked, 2.00%, 7/15/14 ................................. 611,058 624,425
--------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(COST $7,979,362) ......................................... 7,979,362
--------------
TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS
(COST $1,017,797,319) ..................................... 1,118,271,856
--------------
SHORT TERM INVESTMENTS 2.2%
FOREIGN GOVERNMENT AND AGENCY SECURITIES
(COST $1,428,160) 0.1%
EGYPT 0.1%
(k) Egypt Treasury Bill, 9/22/09 ................................. 7,900,000 EGP 1,418,617
--------------
TOTAL INVESTMENTS BEFORE MONEY MARKET FUNDS
(COST $1,019,225,479) ..................................... 1,119,690,473
--------------
SHARES
----------------------
MONEY MARKET FUNDS (COST $23,762,396) 2.1%
UNITED STATES 2.1%
(l) Institutional Fiduciary Trust Money Market Portfolio, 0.00% .. 23,762,396 23,762,396
--------------
TOTAL INVESTMENTS (COST $1,042,987,875) 98.5% ................ 1,143,452,869
OTHER ASSETS, LESS LIABILITIES 1.5% .......................... 16,829,198
--------------
NET ASSETS 100.0% ............................................ $1,160,282,067
==============
18 | Annual Report
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
(a) The principal amount is stated in U.S. dollars unless otherwise indicated.
(b) The coupon rate shown represents the rate at period end.
(c) The principal amount is stated in original face, and scheduled paydowns are
reflected in the market price on ex-date.
(d) Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may be sold in transactions exempt from registration only to
qualified institutional buyers or in a public offering registered under the
Securities Act of 1933. These securities have been deemed liquid under
guidelines approved by the Fund's Board of Trustees. At August 31, 2009,
the aggregate value of these securities was $100,893,100, representing
8.69% of net assets.
(e) Principal amount is stated in 1,000 Brazilian Real Units.
(f) Redemption price at maturity is adjusted for inflation. See Note 1(e).
(g) Security was purchased pursuant to Regulation S under the Securities Act of
1933, which exempts from registration securities offered and sold outside
of the United States. Such a security cannot be sold in the United States
without either an effective registration statement filed pursuant to the
Securities Act of 1933, or pursuant to an exemption from registration.
These securities have been deemed liquid under guidelines approved by the
Fund's Board of Trustees. At August 31, 2009, the aggregate value of these
securities was $30,450,924, representing 2.62% of net assets.
(h) Principal amount is stated in 100 Mexican Peso Units.
(i) A supranational organization is an entity formed by two or more central
governments through international treaties.
(j) Securities received as collateral, see Note 1(c) regarding interest rate
swaps.
(k) The security is traded on a discount basis with no stated coupon rate.
(l) See Note 7 regarding investments in the Institutional Fiduciary Trust Money
Market Portfolio. The rate shown is the annualized seven-day yield at
period end.
At August 31, 2009, the Fund had the following forward exchange contracts
outstanding. See Note 1(c).
SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY CONTRACT AMOUNT(a) DATE APPRECIATION DEPRECIATION
-------- ------------ ---- -------------- ------------------ ---------- ------------ ------------
Japanese Yen ........ DBAB Buy 223,340,000 1,472,617 EUR 9/04/09 $ 288,320 $ --
Japanese Yen ........ DBAB Sell 223,340,000 1,734,545 EUR 9/04/09 87,235 --
Chinese Yuan ........ JPHQ Buy 13,341,000 1,389,688 EUR 9/18/09 -- (39,792)
Chinese Yuan ........ HSBC Buy 49,903,800 5,211,520 EUR 9/23/09 -- (168,136)
Chinese Yuan ........ DBAB Buy 33,223,000 3,474,391 EUR 9/23/09 -- (118,916)
Swedish Krona ....... UBSW Buy 91,000,000 9,461,328 EUR 9/23/09 -- (778,956)
Chinese Yuan ........ JPHQ Buy 37,088,000 3,821,732 EUR 9/24/09 -- (51,285)
Russian Ruble ....... BZWS Buy 441,513,514 21,004,870 AUD 9/24/09 -- (3,896,192)
Indian Rupee ........ DBAB Buy 225,000,000 7,364,975 NZD 9/25/09 -- (427,435)
Japanese Yen ........ UBSW Buy 804,000,000 5,387,043 EUR 9/28/09 916,188 --
Japanese Yen ........ CITI Buy 538,000,000 3,595,295 EUR 9/28/09 626,646 --
Japanese Yen ........ UBSW Sell 804,000,000 6,273,164 EUR 9/28/09 354,369 --
Japanese Yen ........ CITI Sell 538,000,000 4,153,542 EUR 9/28/09 173,792 --
Russian Ruble ....... BZWS Buy 243,166,459 11,688,183 AUD 9/28/09 -- (2,250,543)
Vietnamese Dong ..... HSBC Buy 42,313,777,933 3,436,066 AUD 10/07/09 -- (536,351)
Chinese Yuan ........ HSBC Buy 13,969,953 3,018,377 AUD 10/13/09 -- (496,311)
Kazakhstan Tenge .... CITI Buy 779,666,250 6,032,234 10/13/09 -- (870,813)
Chinese Yuan ........ HSBC Buy 32,663,916 3,466,035 EUR 10/15/09 -- (189,590)
Chinese Yuan ........ HSBC Buy 32,823,215 3,510,373 EUR 10/16/09 -- (229,884)
Chinese Yuan ........ HSBC Buy 23,662,387 5,024,598 AUD 10/19/09 -- (764,625)
Chinese Yuan ........ HSBC Buy 43,995,179 4,724,375 EUR 10/19/09 -- (335,772)
Chinese Yuan ........ HSBC Buy 27,185,000 3,927,049 10/21/09 51,117 --
Chilean Peso ........ CITI Buy 219,208,545 332,134 10/26/09 65,067 --
Chilean Peso ........ CITI Buy 142,244,757 207,584 10/28/09 50,192 --
Swiss Franc ......... CITI Buy 3,571,898 2,453,058 EUR 10/28/09 -- (142,105)
Japanese Yen ........ DBAB Sell 1,950,000,000 19,787,914 11/16/09 -- (1,174,835)
Japanese Yen ........ DBAB Buy 1,950,000,000 20,828,883 11/16/09 133,867 --
Indonesian Rupiah ... JPHQ Buy 7,181,000,000 508,569 11/17/09 192,563 --
Annual Report | 19
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY CONTRACT AMOUNT(a) DATE APPRECIATION DEPRECIATION
-------- ------------ ---- -------------- ------------------ ---------- ------------ ------------
Euro ................ DBAB Sell 6,050,000 732,322,250 JPY 11/18/09 $ -- $ (801,929)
Euro ................ DBAB Buy 6,050,000 778,483,750 JPY 11/18/09 305,681 --
Indonesian Rupiah ... JPHQ Buy 35,001,000,000 2,540,907 11/18/09 875,713 --
Japanese Yen ........ JPHQ Sell 687,110,925 6,855,000 11/18/09 -- (531,616)
Japanese Yen ........ JPHQ Buy 651,910,500 6,855,000 11/18/09 153,202 --
Euro ................ DBAB Sell 257,757 326,269 11/19/09 -- (43,307)
Euro ................ UBSW Sell 2,796,556 3,520,585 11/20/09 -- (489,154)
Russian Ruble ....... JPHQ Buy 28,391,000 635,216 EUR 11/20/09 -- (35,122)
Indonesian Rupiah ... HSBC Buy 38,962,000,000 2,540,890 11/23/09 1,258,057 --
Euro ................ UBSW Sell 1,870,413 2,330,628 11/24/09 -- (351,188)
Euro ................ DBAB Sell 655,522 820,386 11/25/09 -- (119,507)
Euro ................ DBAB Sell 1,274,797 1,663,610 11/30/09 -- (164,197)
New Zealand Dollar .. UBSW Sell 10,684,383 6,556,471 11/30/09 -- (725,033)
New Zealand Dollar .. DBAB Sell 10,620,020 6,535,029 11/30/09 -- (702,612)
New Zealand Dollar .. CITI Sell 6,044,416 3,715,134 11/30/09 -- (404,191)
Swedish Krona ....... BZWS Buy 150,288,486 14,654,428 EUR 11/30/09 113,135 --
Mexican Peso ........ CITI Sell 39,049,000 2,882,377 12/01/09 -- (7,588)
New Zealand Dollar .. BZWS Sell 17,712,736 10,946,471 12/02/09 -- (1,123,263)
New Zealand Dollar .. DBAB Sell 4,580,779 2,786,350 12/02/09 -- (335,064)
New Zealand Dollar .. FBCO Sell 1,511,663 934,918 12/02/09 -- (95,152)
Chinese Yuan ........ HSBC Buy 31,071,000 3,373,564 EUR 12/04/09 -- (287,829)
Chinese Yuan ........ HSBC Buy 24,661,000 3,373,598 12/04/09 237,061 --
Indonesian Rupiah ... JPHQ Buy 20,258,000,000 1,447,000 12/07/09 522,388 --
Euro ................ UBSW Sell 1,325,806 1,676,415 12/08/09 -- (224,498)
Chinese Yuan ........ HSBC Buy 32,777,418 4,636,127 12/14/09 163,495 --
Chinese Yuan ........ JPHQ Buy 16,342,344 2,318,063 12/14/09 74,959 --
Chinese Yuan ........ JPHQ Buy 32,791,186 4,651,232 12/15/09 150,468 --
Chinese Yuan ........ HSBC Buy 32,904,211 4,651,232 12/15/09 167,019 --
Chinese Yuan ........ HSBC Buy 32,996,252 4,688,633 12/16/09 143,159 --
Malaysian Ringgit ... JPHQ Buy 16,656,368 4,688,633 12/16/09 20,709 --
Chinese Yuan ........ HSBC Buy 10,145,784 1,435,047 12/17/09 50,666 --
Malaysian Ringgit ... JPHQ Buy 5,137,469 1,435,047 12/17/09 17,446 --
Mexican Peso ........ DBAB Sell 287,285,013 20,814,889 12/17/09 -- (400,501)
Chinese Yuan ........ HSBC Buy 30,514,414 4,305,142 12/18/09 163,339 --
Chinese Yuan ........ HSBC Buy 8,294,486 1,183,236 12/21/09 31,442 --
Malaysian Ringgit ... JPHQ Buy 6,147,742 1,722,057 12/21/09 15,826 --
Malaysian Ringgit ... HSBC Buy 3,153,623 887,427 12/21/09 4,059 --
Chinese Yuan ........ HSBC Buy 9,755,745 1,401,688 12/22/09 27,002 --
Malaysian Ringgit ... HSBC Buy 5,021,942 1,435,579 12/22/09 -- (15,993)
Mexican Peso ........ DBAB Sell 208,565,232 15,381,824 12/22/09 -- (9,825)
Mexican Peso ........ DBAB Buy 208,565,232 14,731,784 12/22/09 659,866 --
Malaysian Ringgit ... HSBC Buy 3,991,727 1,148,038 12/23/09 -- (19,709)
Mexican Peso ........ DBAB Buy 86,616,747 6,138,243 12/23/09 253,013 --
Mexican Peso ........ DBAB Sell 86,616,747 6,393,276 12/23/09 2,021 --
Mexican Peso ........ HSBC Sell 106,280,000 7,762,650 12/24/09 -- (78,449)
Mexican Peso ........ DBAB Sell 138,880,454 10,214,051 12/24/09 -- (32,236)
Mexican Peso ........ DBAB Buy 138,880,454 9,821,189 12/24/09 425,098 --
Malaysian Ringgit ... HSBC Buy 4,516,266 1,291,543 12/28/09 -- (15,164)
20 | Annual Report
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY CONTRACT AMOUNT(a) DATE APPRECIATION DEPRECIATION
-------- ------------ ---- ------------- ------------------ ---------- ------------ ------------
Euro ................ DBAB Sell 12,240,000 16,976,880 1/11/10 $ -- $ (571,420)
Euro ................ UBSW Sell 6,354,000 8,783,643 1/11/10 -- (325,990)
Euro ................ CITI Sell 3,597,000 4,999,075 1/11/10 -- (157,889)
Euro ................ JPHQ Sell 2,090,000 2,907,399 1/13/10 -- (88,990)
Euro ................ UBSW Sell 2,459,575 3,456,170 1/13/10 -- (70,071)
Euro ................ CITI Sell 2,459,575 3,457,818 1/13/10 -- (68,423)
Mexican Peso ........ DBAB Sell 92,844,000 6,676,302 1/13/10 -- (154,983)
Euro ................ BZWS Sell 3,027,169 4,253,172 1/14/10 -- (86,808)
Euro ................ UBSW Sell 3,216,367 4,494,551 1/15/10 -- (116,669)
Euro ................ JPHQ Sell 1,702,783 2,374,548 1/15/10 -- (66,687)
Euro ................ BZWS Sell 2,459,575 3,464,311 1/19/10 -- (61,888)
Mexican Peso ........ DBAB Sell 15,947,491 1,170,673 1/20/10 -- (1,603)
Mexican Peso ........ DBAB Buy 15,947,491 1,074,991 1/20/10 97,285 --
Mexican Peso ........ HSBC Sell 237,185,960 17,406,483 1/21/10 -- (26,340)
Mexican Peso ........ HSBC Buy 237,185,960 16,124,865 1/21/10 1,307,959 --
Euro ................ UBSW Sell 4,351,556 6,189,566 1/25/10 -- (49,022)
Mexican Peso ........ DBAB Sell 14,600,000 1,079,187 1/27/10 6,978 --
Chilean Peso ........ DBAB Buy 1,968,980,000 3,117,448 1/28/10 464,491 --
Malaysian Ringgit ... JPHQ Buy 48,000,000 13,111,172 1/28/10 439,984 --
Chilean Peso ........ JPHQ Buy 596,880,000 950,446 1/29/10 135,425 --
Chilean Peso ........ DBAB Buy 4,531,910,000 7,223,361 1/29/10 1,021,296 --
Euro ................ UBSW Sell 338,000 474,299 1/29/10 -- (10,270)
Mexican Peso ........ CITI Sell 39,424,000 2,892,019 1/29/10 -- (2,458)
New Zealand Dollar .. UBSW Sell 7,150,005 4,653,938 1/29/10 -- (198,852)
Singapore Dollar .... HSBC Sell 46,921,000 31,290,281 1/29/10 -- (1,240,545)
Singapore Dollar .... BZWS Sell 11,732,000 7,796,411 1/29/10 -- (337,509)
Singapore Dollar .... UBSW Sell 11,738,000 7,801,461 1/29/10 -- (336,619)
Swedish Krona ....... DBAB Buy 89,650,000 8,549,902 EUR 1/29/10 345,087 --
Chilean Peso ........ DBAB Buy 950,440,000 1,520,704 2/02/10 208,609 --
New Zealand Dollar .. DBAB Sell 10,258,681 5,186,174 2/02/10 -- (1,774,606)
Singapore Dollar .... HSBC Sell 11,752,000 7,820,746 2/02/10 -- (326,927)
Singapore Dollar .... BZWS Sell 4,702,000 3,128,410 2/02/10 -- (131,491)
Chilean Peso ........ DBAB Buy 1,783,500,000 2,851,319 2/03/10 393,843 --
Chinese Yuan ........ DBAB Buy 135,288,000 19,180,966 2/03/10 642,517 --
Mexican Peso ........ CITI Buy 173,615,100 11,571,817 2/03/10 1,166,259 --
Mexican Peso ........ CITI Sell 173,615,100 12,784,146 2/03/10 46,070 --
Singapore Dollar .... HSBC Sell 14,723,000 9,776,293 2/03/10 -- (431,142)
Mexican Peso ........ HSBC Buy 146,040,000 9,643,423 2/04/10 1,070,033 --
Mexican Peso ........ UBSW Buy 116,660,000 7,714,333 2/04/10 843,814 --
Mexican Peso ........ HSBC Sell 146,040,000 10,715,229 2/04/10 1,773 --
Mexican Peso ........ UBSW Sell 116,660,000 8,558,929 2/04/10 782 --
Singapore Dollar .... HSBC Sell 14,805,000 9,776,407 2/04/10 -- (487,843)
Singapore Dollar .... HSBC Sell 11,809,000 7,821,307 2/05/10 -- (365,799)
Euro ................ HSBC Sell 675,000 972,446 2/08/10 4,761 --
Singapore Dollar .... JPHQ Sell 9,302,000 6,178,678 2/08/10 -- (270,273)
Singapore Dollar .... JPHQ Sell 11,787,000 7,827,733 2/09/10 -- (344,008)
Singapore Dollar .... BZWS Sell 4,670,600 3,131,205 2/11/10 -- (106,825)
Chilean Peso ........ DBAB Buy 935,230,000 1,520,699 2/12/10 181,504 --
Annual Report | 21
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY CONTRACT AMOUNT(a) DATE APPRECIATION DEPRECIATION
-------- ------------ ---- -------------- ------------------ ---------- ------------ ------------
Malaysian Ringgit ... DBAB Buy 24,260,103 6,683,224 2/12/10 $ 162,242 $ --
New Zealand Dollar .. HSBC Sell 1,456,071 756,283 2/12/10 -- (231,023)
South Korean Won .... HSBC Buy 7,084,000,000 5,208,824 2/12/10 454,525 --
Chilean Peso ........ DBAB Buy 2,301,970,000 3,801,767 2/16/10 388,582 --
Chilean Peso ........ DBAB Buy 2,298,030,000 3,823,677 2/17/10 359,638 --
Malaysian Ringgit ... HSBC Buy 6,108,000 1,675,031 2/17/10 48,165 --
New Zealand Dollar .. HSBC Sell 1,943,304 972,041 2/22/10 -- (344,740)
Chilean Peso ........ CITI Buy 3,938,380,000 6,500,233 2/26/10 671,304 --
Chilean Peso ........ DBAB Buy 1,158,950,000 1,911,828 2/26/10 198,546 --
New Zealand Dollar .. DBAB Sell 26,988,728 13,534,847 2/26/10 -- (4,747,688)
Chilean Peso ........ DBAB Buy 1,153,220,000 1,911,837 3/03/10 188,313 --
Chilean Peso ........ DBAB Buy 1,873,290,000 3,058,932 3/04/10 352,608 --
Chilean Peso ........ DBAB Buy 1,173,870,000 1,911,840 3/05/10 225,988 --
Chilean Peso ........ DBAB Buy 1,107,150,000 1,799,571 3/08/10 216,850 --
Chilean Peso ........ DBAB Buy 1,176,260,000 1,911,841 3/09/10 230,484 --
Mexican Peso ........ CITI Buy 395,410,000 24,590,174 3/16/10 4,255,194 --
Mexican Peso ........ CITI Sell 395,410,000 29,204,612 3/16/10 359,244 --
Singapore Dollar .... JPHQ Sell 7,659,000 4,977,255 3/17/10 -- (332,167)
Singapore Dollar .... DBAB Sell 7,651,000 4,977,328 3/17/10 -- (326,547)
Singapore Dollar .... DBAB Sell 9,714,000 6,316,405 3/18/10 -- (417,589)
Singapore Dollar .... DBAB Sell 14,546,000 9,475,193 3/19/10 -- (608,456)
Singapore Dollar .... DBAB Sell 19,370,000 12,633,089 3/22/10 -- (794,630)
Singapore Dollar .... UBSW Sell 17,593,000 11,583,106 3/23/10 -- (612,743)
Australian Dollar ... BZWS Sell 4,102,790 2,790,513 3/24/10 -- (609,016)
Singapore Dollar .... JPHQ Sell 4,766,000 3,158,592 3/31/10 -- (145,272)
Indian Rupee ........ DBAB Buy 110,524,000 2,135,977 4/09/10 99,908 --
Indian Rupee ........ DBAB Buy 237,003,000 4,577,115 4/12/10 216,468 --
Indian Rupee ........ JPHQ Buy 159,192,000 3,051,409 4/13/10 168,168 --
Indian Rupee ........ JPHQ Buy 156,262,000 3,051,396 4/15/10 108,504 --
Indian Rupee ........ DBAB Buy 54,789,000 1,068,012 4/19/10 39,627 --
Indian Rupee ........ JPHQ Buy 78,058,000 1,529,949 4/19/10 48,107 --
Malaysian Ringgit ... JPHQ Buy 5,072,841 1,401,221 4/19/10 27,796 --
Malaysian Ringgit ... JPHQ Buy 14,535,000 4,047,957 4/20/10 46,455 --
Indian Rupee ........ DBAB Buy 110,998,000 2,141,934 4/26/10 101,012 --
Indian Rupee ........ JPHQ Buy 15,835,000 305,990 4/27/10 13,968 --
Indian Rupee ........ JPHQ Buy 78,563,000 1,529,951 4/28/10 57,367 --
Indian Rupee ........ DBAB Buy 507,510,181 9,912,308 4/28/10 341,631 --
New Zealand Dollar .. DBAB Sell 16,563,648 9,065,285 4/28/10 -- (2,106,670)
Swedish Krona ....... BOFA Buy 29,978,900 2,820,747 EUR 4/29/10 170,122 --
Indian Rupee ........ JPHQ Buy 78,640,000 1,529,961 4/30/10 58,703 --
Chilean Peso ........ DBAB Buy 2,278,980,000 3,974,919 5/18/10 180,678 --
Chilean Peso ........ CITI Buy 103,407,000 185,317 5/26/10 3,265 --
Chilean Peso ........ DBAB Buy 362,056,000 648,613 5/26/10 11,665 --
Chilean Peso ........ DBAB Buy 466,410,000 825,504 5/28/10 25,112 --
Chilean Peso ........ CITI Buy 466,580,000 825,513 5/28/10 25,413 --
Chilean Peso ........ CITI Buy 186,070,000 330,204 6/01/10 9,143 --
Indian Rupee ........ DBAB Buy 150,389,000 3,064,223 6/01/10 -- (32,414)
Indian Rupee ........ HSBC Buy 4,458,000 91,918 6/02/10 -- (2,050)
22 | Annual Report
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY CONTRACT AMOUNT(a) DATE APPRECIATION DEPRECIATION
-------- ------------ ---- -------------- ------------------ ---------- ------------ ------------
Indian Rupee ........ HSBC Buy 22,062,000 459,625 6/03/10 $ -- $ (14,910)
Indian Rupee ........ HSBC Buy 147,266,000 3,064,211 6/04/10 -- (95,865)
Poland Zloty ........ DBAB Buy 13,705,000 3,012,684 EUR 6/04/10 375,624 --
Indian Rupee ........ DBAB Buy 73,633,000 1,532,106 6/07/10 -- (48,184)
Poland Zloty ........ DBAB Buy 12,965,000 2,824,434 EUR 6/07/10 391,061 --
Indian Rupee ........ DBAB Buy 37,141,000 770,560 6/08/10 -- (22,102)
Indian Rupee ........ HSBC Buy 29,570,000 612,850 6/08/10 -- (16,961)
Poland Zloty ........ CITI Buy 5,203,000 1,129,672 EUR 6/08/10 162,264 --
Indian Rupee ........ DBAB Buy 29,990,000 616,444 6/10/10 -- (12,160)
Indian Rupee ........ BZWS Buy 44,847,000 924,680 6/11/10 -- (21,086)
Indian Rupee ........ HSBC Buy 30,052,000 616,451 6/11/10 -- (10,952)
Indian Rupee ........ DBAB Buy 75,068,000 1,541,121 6/16/10 -- (29,050)
Indian Rupee ........ DBAB Buy 68,380,000 1,387,018 6/21/10 -- (10,050)
Swedish Krona ....... UBSW Buy 50,589,000 4,548,225 EUR 6/28/10 589,787 --
Swedish Krona ....... UBSW Buy 36,736,000 3,315,224 EUR 6/29/10 410,420 --
Swedish Krona ....... UBSW Buy 45,098,000 4,100,526 EUR 7/15/10 459,751 --
Malaysian Ringgit ... DBAB Buy 9,759,000 1,943,056 EUR 7/16/10 -- (40,272)
Malaysian Ringgit ... DBAB Buy 61,396,000 17,063,924 7/16/10 202,891 --
Indian Rupee ........ CITI Buy 16,598,000 331,960 7/19/10 1,746 --
Indian Rupee ........ JPHQ Buy 16,598,000 331,960 7/20/10 1,727 --
Malaysian Ringgit ... DBAB Buy 11,019,000 2,189,655 EUR 7/20/10 -- (39,524)
Malaysian Ringgit ... DBAB Buy 96,842,000 27,120,533 7/20/10 113,301 --
Malaysian Ringgit ... DBAB Buy 117,760,000 33,256,142 7/23/10 -- (141,317)
Malaysian Ringgit ... DBAB Buy 14,167,000 2,815,158 EUR 7/23/10 -- (50,905)
Malaysian Ringgit ... JPHQ Buy 123,816,000 34,877,746 7/27/10 -- (62,112)
Malaysian Ringgit ... JPHQ Buy 14,167,000 2,806,402 EUR 7/27/10 -- (38,583)
Swedish Krona ....... DBAB Buy 45,098,000 4,230,780 EUR 7/27/10 272,979 --
Malaysian Ringgit ... HSBC Buy 1,687,000 478,405 7/30/10 -- (4,062)
New Zealand Dollar .. DBAB Sell 17,733,735 11,411,658 7/30/10 -- (460,399)
New Zealand Dollar .. DBAB Sell 17,666,270 11,347,929 8/03/10 -- (474,956)
New Zealand Dollar .. BZWS Sell 6,915,607 4,439,820 8/03/10 -- (188,346)
New Zealand Dollar .. DBAB Sell 6,999,201 4,471,789 8/04/10 -- (211,923)
New Zealand Dollar .. BZWS Sell 3,484,510 2,237,056 8/04/10 -- (94,703)
New Zealand Dollar .. CITI Sell 17,544,053 11,456,705 8/05/10 -- (282,399)
New Zealand Dollar .. DBAB Sell 5,204,459 3,392,267 8/05/10 -- (90,149)
Malaysian Ringgit ... HSBC Buy 3,400,000 971,984 8/06/10 -- (16,092)
New Zealand Dollar .. CITI Sell 6,870,623 4,490,055 8/06/10 -- (106,837)
New Zealand Dollar .. FBCO Sell 3,428,957 2,233,108 8/06/10 -- (61,086)
New Zealand Dollar .. FBCO Sell 15,302,017 10,059,786 8/09/10 -- (175,655)
New Zealand Dollar .. CITI Sell 6,779,343 4,457,147 8/09/10 -- (77,521)
New Zealand Dollar .. DBAB Sell 6,809,934 4,479,575 8/09/10 -- (75,556)
New Zealand Dollar .. FBCO Sell 6,713,771 4,458,817 8/11/10 -- (31,230)
New Zealand Dollar .. DBAB Sell 15,333,885 9,990,809 8/12/10 -- (263,345)
New Zealand Dollar .. DBAB Sell 4,178,000 2,711,940 8/13/10 -- (81,757)
New Zealand Dollar .. DBAB Sell 4,407,000 2,909,061 8/16/10 -- (37,013)
Brazilian Real ...... DBAB Buy 4,460,000 216,608,820 JPY 8/17/10 -- (118,201)
Israeli Shekel ...... CITI Buy 12,073,000 3,185,993 8/17/10 -- (3,821)
Japanese Yen ........ UBSW Sell 619,237,000 6,528,180 8/17/10 -- (156,037)
Annual Report | 23
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
SETTLEMENT UNREALIZED UNREALIZED
CURRENCY COUNTERPARTY TYPE QUANTITY CONTRACT AMOUNT(a) DATE APPRECIATION DEPRECIATION
-------- ------------ ---- -------------- ------------------ ---------- ------------ ------------
Brazilian Real ...... DBAB Buy 3,295,000 158,654,250 JPY 8/18/10 $ -- $ (72,859)
Japanese Yen ........ JPHQ Sell 307,706,000 3,264,093 8/18/10 -- (57,458)
Brazilian Real ...... DBAB Buy 4,942,000 232,303,652 JPY 8/19/10 -- (48,795)
Israeli Shekel ...... CITI Buy 12,079,000 3,182,248 8/19/10 1,486 --
Israeli Shekel ...... DBAB Buy 1,209,000 318,493 8/19/10 170 --
Japanese Yen ........ HSBC Sell 306,279,000 3,255,517 8/19/10 -- (50,716)
Indian Rupee ........ DBAB Buy 115,936,000 2,321,506 8/20/10 5,210 --
Israeli Shekel ...... CITI Buy 4,634,100 1,212,449 8/20/10 8,985 --
Japanese Yen ........ DBAB Sell 307,444,000 3,255,512 8/20/10 -- (63,383)
Japanese Yen ........ BZWS Sell 307,053,000 3,260,347 8/20/10 -- (54,327)
Norwegian Krone ..... UBSW Buy 44,332,000 5,049,318 EUR 8/20/10 18,124 --
Indian Rupee ........ DBAB Buy 100,473,000 2,011,967 8/23/10 4,082 --
Israeli Shekel ...... CITI Buy 7,908,300 2,073,927 8/23/10 10,486 --
Japanese Yen ........ CITI Sell 613,483,000 6,520,692 8/23/10 -- (102,447)
Japanese Yen ........ FBCO Sell 608,984,000 6,520,695 8/23/10 -- (53,873)
Norwegian Krone ..... UBSW Buy 44,332,000 5,054,557 EUR 8/23/10 9,545 --
Japanese Yen ........ JPHQ Sell 612,179,000 6,520,693 8/24/10 -- (88,540)
Japanese Yen ........ BZWS Sell 610,141,000 6,520,690 8/24/10 -- (66,540)
New Zealand Dollar .. FBCO Sell 6,159,450 4,061,418 8/24/10 -- (53,381)
Japanese Yen ........ DBAB Sell 303,441,000 3,260,352 8/25/10 -- (15,755)
New Zealand Dollar .. DBAB Sell 6,130,000 4,097,905 8/27/10 3,819 --
Brazilian Real ...... DBAB Buy 3,300,000 154,185,900 JPY 8/31/10 -- (26,859)
Indian Rupee ........ DBAB Buy 71,050,000 1,423,848 9/01/10 1,090 --
Japanese Yen ........ JPHQ Sell 304,127,000 3,260,349 9/01/10 -- (23,763)
Brazilian Real ...... DBAB Buy 4,949,000 228,826,913 JPY 9/02/10 -- (52,864)
Japanese Yen ........ HSBC Sell 300,940,000 3,260,349 EUR 9/02/10 5,037 --
----------- ------------
Unrealized appreciation (depreciation) ............................................... 30,067,030 (43,504,304)
----------- ------------
Net unrealized appreciation (depreciation) ........................................ $(13,437,274)
============
(a) In U.S. dollars unless otherwise indicated.
At August 31, 2009, the Fund had the following interest rate swap contracts
outstanding. See Note 1(c).
PAY/RECEIVE FIXED EXPIRATION UNREALIZED UNREALIZED
COUNTERPARTY FLOATING RATE RATE FLOATING RATE NOTIONAL AMOUNT(a) DATE APPRECIATION DEPRECIATION
------------ ------------- ----- ------------------------- ------------------ ---------- ------------ ------------
JPHQ ................ Pay 7.16% NZD Bank Bill Rate 5,740,000 NZD 7/31/13 $ 290,202 $ --
JPHQ ................ Pay 7.12% NZD Bank Bill Rate 5,750,000 NZD 8/1/13 283,913 --
JPHQ ................ Pay 7.06% NZD Bank Bill Rate 5,750,000 NZD 8/4/13 274,295 --
JPHQ ................ Pay 7.04% NZD Bank Bill Rate 11,500,000 NZD 8/5/13 541,988 --
JPHQ ................ Pay 7.05% NZD Bank Bill Rate 2,875,000 NZD 8/6/13 136,374 --
JPHQ ................ Pay 7.05% NZD Bank Bill Rate 2,875,000 NZD 8/7/13 136,248 --
JPHQ ................ Pay 7.00% NZD Bank Bill Rate 3,045,600 NZD 8/14/13 138,869 --
JPHQ ................ Pay 5.23% NZD Bank Bill Rate 7,000,000 NZD 12/5/13 19,616 --
MLCO ................ Pay 7.05% Tasa Nominal Annual Rate 7,900,000,000 CLP 6/13/18 2,175,810 --
JPHQ ................ Pay 7.06% Tasa Nominal Annual Rate 2,646,000,000 CLP 6/13/18 729,770 --
MLCO ................ Pay 7.09% Tasa Nominal Annual Rate 8,650,000,000 CLP 6/16/18 2,408,424 --
JPHQ ................ Pay 7.15% Tasa Nominal Annual Rate 2,700,000,000 CLP 6/18/18 773,493 --
JPHQ ................ Pay 7.85% Tasa Nominal Annual Rate 702,800,000 CLP 7/11/18 263,331 --
24 | Annual Report
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2009 (CONTINUED)
PAY/RECEIVE FIXED EXPIRATION UNREALIZED UNREALIZED
COUNTERPARTY FLOATING RATE RATE FLOATING RATE NOTIONAL AMOUNT(a) DATE APPRECIATION DEPRECIATION
------------ ------------- ----- ------------------------- ------------------ ---------- ------------ ------------
JPHQ ................ Pay 7.86% Tasa Nominal Annual Rate 705,600,000 CLP 7/17/18 $ 263,305 $ --
MLCO ................ Pay 7.40% Tasa Nominal Annual Rate 580,000,000 CLP 7/30/18 178,712 --
MLCO ................ Pay 7.40% Tasa Nominal Annual Rate 580,000,000 CLP 8/06/18 167,030 --
MLCO ................ Pay 7.51% Tasa Nominal Annual Rate 580,000,000 CLP 8/07/18 176,208 --
MLCO ................ Pay 9.03% MXN Interbank Equilibrium
Interest Rate 723,000,000 MXN 8/17/18 2,869,070 --
JPHQ ................ Pay 8.67% MXN Interbank Equilibrium
Interest Rate 37,800,000 MXN 11/29/18 81,077 --
JPHQ ................ Pay 5.59% NZD Bank Bill Rate 8,500,000 NZD 12/05/18 -- (101,163)
CITI ................ Pay 7.70% MXN Interbank Equilibrium
Interest Rate 51,400,000 MXN 1/11/19 -- (143,948)
CITI ................ Pay 7.67% MXN Interbank Equilibrium
.................... Interest Rate 67,000,000 MXN 1/12/19 -- (198,506)
CITI ................ Pay 7.84% MXN Interbank Equilibrium
Interest Rate 44,700,000 MXN 1/15/19 -- (94,437)
CITI ................ Pay 7.87% MXN Interbank Equilibrium
.................... Interest Rate 58,100,000 MXN 1/16/19 -- (113,205)
CITI ................ Pay 8.00% MXN Interbank Equilibrium
Interest Rate 35,060,000 MXN 1/18/19 -- (45,564)
JPHQ ................ Pay 8.06% MXN Interbank Equilibrium
Interest Rate 55,780,000 MXN 1/22/19 -- (57,564)
CITI ................ Pay 8.07% MXN Interbank Equilibrium
Interest Rate 175,300,000 MXN 1/22/19 -- (172,021)
MLCO ................ Pay 9.10% MXN Interbank Equilibrium
Interest Rate 240,000,000 MXN 8/04/28 221,921 --
JPHQ ................ Pay 8.32% MXN Interbank Equilibrium
Interest Rate 83,670,000 MXN 1/09/29 -- (388,370)
------------ ------------
Unrealized appreciation (depreciation) ............................................................ 12,129,656 (1,314,778)
------------ ------------
Net unrealized appreciation (depreciation) ..................................................... $ 10,814,878
============
(a) In U.S. dollars unless otherwise indicated.
See Abbreviations on page 37.
The accompanying notes are an integral part of these financial statements.
Annual Report | 25
Templeton Global Income Fund
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2009
Assets:
Investments in securities:
Cost - Unaffiliated issuers .............................. $1,019,225,479
Cost - Sweep Money Fund (Note 7) ......................... 23,762,396
--------------
Total cost of investments ................................ $1,042,987,875
==============
Value - Unaffiliated issuers ............................. $1,119,690,473
Value - Sweep Money Fund (Note 7) ........................ 23,762,396
--------------
Total value of investments ............................... 1,143,452,869
Cash ........................................................ 3,250,000
Cash on deposit with brokers ................................ 2,255,000
Foreign currency, at value (cost $3,667,926) ................ 3,675,248
Receivables:
Investment securities sold ............................... 2,452,472
Capital shares issued for reinvestment of distributions .. 343,735
Interest ................................................. 21,439,894
Unrealized appreciation on forward exchange contracts ....... 30,067,030
Unrealized appreciation on swap contracts ................... 12,129,656
--------------
Total assets .......................................... 1,219,065,904
--------------
Liabilities:
Payables:
Investment securities purchased .......................... 1,517,713
Affiliates ............................................... 617,690
Due to brokers .............................................. 11,229,362
Unrealized depreciation on forward exchange contracts ....... 43,504,304
Unrealized depreciation on swap contracts ................... 1,314,778
Accrued expenses and other liabilities ...................... 599,990
--------------
Total liabilities ..................................... 58,783,837
--------------
Net assets, at value ............................... $1,160,282,067
--------------
Net assets consist of:
Paid-in capital ............................................. $1,086,892,798
Undistributed net investment income ......................... 15,371,506
Net unrealized appreciation (depreciation) .................. 98,528,764
Accumulated net realized gain (loss) ........................ (40,511,001)
--------------
Net assets, at value ............................... $1,160,282,067
==============
Shares outstanding .......................................... 131,222,879
==============
Net asset value per share ................................... $ 8.84
==============
The accompanying notes are an integral part of these financial statements.
26 | Annual Report
Templeton Global Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended August 31, 2009
Investment income:
Dividends:
Sweep Money Fund (Note 7) ............................................ $ 388,088
Interest (net of foreign taxes withheld of $2,103,820) .................. 68,606,520
------------
Total investment income .......................................... 68,994,608
------------
Expenses:
Management fees (Note 3a) ............................................... 5,424,295
Administrative fees (Note 3b) ........................................... 1,376,993
Transfer agent fees ..................................................... 254,381
Custodian fees (Note 4) ................................................. 591,961
Reports to shareholders ................................................. 124,866
Registration and filing fees ............................................ 117,374
Professional fees ....................................................... 96,200
Trustees' fees and expenses ............................................. 114,208
Other ................................................................... 43,887
------------
Total expenses .................................................... 8,144,165
Expense reductions (Note 4) ....................................... (8,716)
------------
Net expenses ................................................... 8,135,449
------------
Net investment income ....................................... 60,859,159
------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments .......................................................... (87,408,760)
Foreign currency transactions ........................................ 143,133,248
Swap contracts ....................................................... 2,660,145
------------
Net realized gain (loss) ....................................... 58,384,633
------------
Net change in unrealized appreciation (depreciation) on:
Investments .......................................................... 95,739,532
Translation of other assets and liabilities
denominated in foreign currencies ................................. (35,275,881)
------------
Net change in unrealized appreciation (depreciation) ........... 60,463,651
------------
Net realized and unrealized gain (loss) .................................... 118,848,284
------------
Net increase (decrease) in net assets resulting from operations ............ $179,707,443
============
The accompanying notes are an integral part of these financial statements.
Annual Report | 27
Templeton Global Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
-------------------------------
2009 2008
-------------- --------------
Increase (decrease) in net assets:
Operations:
Net investment income ......................................... $ 60,859,159 $ 57,531,836
Net realized gain (loss) from investments, foreign
currency transactions, and swap contracts .................. 58,384,633 87,360,024
Net change in unrealized appreciation (depreciation)
on investments and translation of other assets
and liabilities denominated in foreign currencies .......... 60,463,651 (22,245,123)
-------------- --------------
Net increase (decrease) in net assets resulting
from operations ......................................... 179,707,443 122,646,737
-------------- --------------
Distributions to shareholders from net investment
income and net foreign currency gains ......................... (176,089,256) (140,177,810)
Capital share transactions: (Note 2) ............................. 683,052 3,098,161
-------------- --------------
Net increase (decrease) in net assets ...................... 4,301,239 (14,432,912)
Net assets:
Beginning of year ................................................ 1,155,980,828 1,170,413,740
-------------- --------------
End of year ...................................................... $1,160,282,067 $1,155,980,828
-------------- --------------
Undistributed net investment income included in net assets:
End of year ...................................................... $ 15,371,506 $ 52,183,826
============== ==============
The accompanying notes are an integral part of these financial statements.
28 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Global Income Fund (Fund) is registered under the Investment Company
Act of 1940, as amended, (1940 Act) as a closed-end investment company.
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Corporate debt securities, government securities and municipal securities
generally trade in the over-the-counter market rather than on a securities
exchange. The Fund may utilize independent pricing services, quotations from
bond dealers, and information with respect to bond and note transactions, to
assist in determining a current market value for each security. The Fund's
pricing services may use valuation models or matrix pricing which considers
information with respect to comparable bond and note transactions, quotations
from bond dealers, or by reference to other securities that are considered
comparable in such characteristics as rating, interest rate and maturity date,
option adjusted spread models, prepayment projections, interest rate spreads and
yield curves, to determine current value. Debt securities denominated in a
foreign currency are converted into their U.S. dollar equivalent at the foreign
exchange rate in effect at the close of the NYSE on the date that the values of
the foreign debt securities are determined. Investments in open-end mutual funds
are valued at the closing net asset value.
The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis based upon the underlying investment book value,
anticipated future cash flows, market changes in comparable or similar
securities, matrix pricing, discounts from market prices of similar securities,
or discounts applied due to the nature and duration of restrictions on the
disposition of the securities. Due to the inherent uncertainty of valuations of
such securities, the fair values may differ significantly from the values that
would have been used had a ready market for such investments existed.
Occasionally, events occur between the time at which trading in a security is
completed and the close of the NYSE that might call into question the
availability (including the reliability) of the value of a portfolio security
held by the Fund. If such an event occurs, the securities may be valued using
fair value procedures, which may include the use of independent pricing
services. All security valuation procedures are approved by the Fund's Board of
Trustees.
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, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Fund's Board of Trustees.
Annual Report | 29
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. FOREIGN CURRENCY TRANSLATION (CONTINUED)
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 on the
Statement of Operations.
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 denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
C. DERIVATIVE FINANCIAL INSTRUMENTS
The Fund may invest in derivative financial instruments (derivatives) in order
to manage risk or gain exposure to various other investments or markets.
Derivatives are financial contracts based on an underlying or notional amount,
require no initial investment or an initial net investment that is smaller than
would normally be required to have a similar response to changes in market
factors, and require or permit net settlement. Derivatives may contain various
risks including the potential inability of the counterparty to fulfill their
obligations under the terms of the contract, the potential for an illiquid
secondary market, and the potential for market movements which may expose the
Fund to gains or losses in excess of the amounts shown on the Statement of
Assets and Liabilities.
Derivatives are marked to market daily based upon quotations from market makers
or the Fund's independent pricing services and the Fund's net benefit or
obligation under the contract, as measured by the fair market value of the
contract, is included in net assets. Realized gain and loss and unrealized
appreciation and depreciation on these contracts for the period are included in
the Statement of Operations.
The Fund enters into forward exchange contracts in order to hedge against
fluctuations in foreign exchange rates or to gain exposure to certain foreign
currencies. A forward exchange contract is an agreement between the Fund and a
counterparty to buy or sell a foreign currency for a specific exchange rate on a
future date. Pursuant to the terms of the forward exchange contacts, cash or
securities may be required to be deposited as collateral.
The Fund enters into interest rate swap contracts generally in order to manage
interest rate risk. An interest rate swap is an agreement between the Fund and a
counterparty to exchange cash flows based on the difference between two interest
rates, applied to a notional principal amount. Over the term of the contract,
contractually required payments to be paid and to be received are accrued daily
and recorded as unrealized depreciation and appreciation until the payments are
made, at which time they are realized. Pursuant to the terms of the interest
rate swap contract,
30 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
cash or securities may be required to be deposited as collateral. Any cash
received may be invested according to the Fund's investment objectives.
See Note 10 regarding other derivative information.
D. INCOME TAXES
No provision has been made for U.S. income taxes because it is the Fund's policy
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute to shareholders substantially all of its taxable income and net
realized gains.
The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of August 31, 2009, and has
determined that no provision for income tax is required in the Fund's financial
statements.
Foreign securities held by the Fund may be subject to foreign taxation on
interest income received. Foreign taxes, if any, are recorded based on the tax
regulations and rates that exist in the foreign markets in which the Fund
invests.
E. 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.
Interest income and estimated expenses are accrued daily. Amortization of
premium and accretion of discount on debt securities are included in interest
income. Dividend income is recorded on the ex-dividend date. Distributions to
shareholders are recorded on the ex-dividend date and are determined according
to income tax regulations (tax basis). Distributable earnings determined on a
tax basis may differ from earnings recorded in accordance with accounting
principles generally accepted in the United States of America. These differences
may be permanent or temporary. Permanent differences are reclassified among
capital accounts to reflect their tax character. These reclassifications have no
impact on net assets or the results of operations. Temporary differences are not
reclassified, as they may reverse in subsequent periods.
Inflation-indexed bonds provide an inflation hedge through periodic increases or
decreases in the security's interest accruals and principal redemption value, by
amounts corresponding to the current rate of inflation. Any such adjustments,
including adjustments to principal redemption value, are recorded as interest
income.
Annual Report | 31
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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 expenses during the reporting period. Actual results could differ from those
estimates.
G. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and trustees are
indemnified by the Fund against certain liabilities arising out of the
performance of their duties to the Fund. Additionally, in the normal course of
business, the Fund enters into contracts with service providers that contain
general indemnification clauses. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Fund that have not yet occurred. Currently, the Fund expects the
risk of loss to be remote.
2. SHARES OF BENEFICIAL INTEREST
At August 31, 2009, there were an unlimited number of shares authorized (without
par value). Transactions in the Fund's shares were as follows:
YEAR ENDED AUGUST 31,
-----------------------------------------
2009 2008
----------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ -------- -------- ----------
Shares issued in reinvestment of
distributions .............. 78,530 $683,052 339,409 $3,098,161
The Fund's Board of Trustees previously authorized an open-market share
repurchase program pursuant to which the Fund may purchase, from time to time,
Fund shares in open-market transactions, at the discretion of management. This
authorization remains in effect. Through August 31, 2009, the Fund had
repurchased a total of 11,210,400 shares. During the years ended August 31, 2009
and August 31, 2008, there were no shares repurchased.
3. TRANSACTIONS WITH AFFILIATES
Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Fund are also officers and/or directors of the following
subsidiaries:
SUBSIDIARY AFFILIATION
---------- -----------
Franklin Advisers, Inc. (Advisers) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
32 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
A. MANAGEMENT FEES
The Fund pays an investment management fee to Advisers based on the average
daily net assets of the Fund as follows:
ANNUALIZED FEE RATE NET ASSETS
------------------- ----------
0.550% Up to and including $200 million
0.500% Over $200 million, up to and including $1 billion
0.480% Over $1 billion, up to and including $5 billion
0.460% Over $5 billion, up to and including $10 billion
0.440% Over $10 billion, up to and including $15 billion
0.420% Over $15 billion, up to and including $20 billion
0.400% In excess of $20 billion
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services based on the average daily
net assets of the Fund as follows:
ANNUALIZED FEE RATE NET ASSETS
------------------- ----------
0.150% Up to and including $200 million
0.135% Over $200 million, up to and including $700 million
0.100% In excess of $700 million
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended August 31, 2009, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At August 31, 2009, capital loss carryforwards expire as follows:
Capital loss carryforwards expiring in:
2010 ........... $17,156,631
2011 ........... 4,209,282
2017 ........... 1,836,347
-----------
$23,202,260
===========
For tax purposes, realized capital losses and realized currency losses occurring
subsequent to October 31, may be deferred and treated as occurring on the first
day of the following fiscal year. At August 31, 2009, the Fund deferred realized
capital losses and realized currency losses of $220,393 and $13,565,968,
respectively.
Annual Report | 33
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
The tax character of distributions paid during the years ended August 31, 2009
and August 31, 2008, was as follows:
2009 2008
------------ ------------
Distributions paid from:
Ordinary income ..... $176,089,256 $140,177,810
At August 31, 2009, the cost of investments, net unrealized appreciation
(depreciation), and undistributed ordinary income for income tax purposes were
as follows:
Cost of investments ..................................... $1,047,839,150
==============
Unrealized appreciation ................................. $ 115,434,171
Unrealized depreciation ................................. (19,820,452)
--------------
Net unrealized appreciation (depreciation) .............. $ 95,613,719
==============
Distributable earnings - undistributed ordinary income .. $ 12,141,058
==============
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions, swaps, bond
discounts and premiums, tax straddles, and inflation related adjustments on
foreign securities.
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions, swaps, bond discounts and premiums, and tax straddles.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended August 31, 2009, aggregated $772,939,444 and $575,245,343,
respectively.
7. INVESTMENTS IN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Fund may invest in the Institutional Fiduciary Trust Money Market Portfolio
(Sweep Money Fund), an open-end investment company managed by Advisers.
Management fees paid by the Fund are reduced on assets invested in the Sweep
Money Fund, in an amount not to exceed the management and administrative fees
paid by the Sweep Money Fund.
8. CREDIT RISK
At August 31, 2009, the Fund had 17.55% of its portfolio invested in high yield
or other securities rated below investment grade. These securities may be more
sensitive to economic conditions causing greater price volatility and are
potentially subject to a greater risk of loss due to default than higher rated
securities.
34 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. CONCENTRATION OF RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.
10. OTHER DERIVATIVE INFORMATION
At August 31, 2009, the Fund has invested in derivative contracts which are
reflected on the Statement of Assets and Liabilities as follows:
DERIVATIVE CONTRACTS
NOT ACCOUNTED FOR AS ASSET DERIVATIVES LIABILITY DERIVATIVES
HEDGING INSTRUMENTS ---------------------------------------- ----------------------------------------
UNDER FASB STATEMENT STATEMENT OF ASSETS AND FAIR VALUE STATEMENT OF ASSETS AND FAIR VALUE
NO. 133 LIABILITIES LOCATION AMOUNT LIABILITIES LOCATION AMOUNT
-------------------- -------------------------- ----------- -------------------------- -----------
Interest rate contracts .... Unrealized appreciation on Unrealized depreciation on
swap contracts $12,129,656 swap contracts $ 1,314,778
Foreign exchange
contracts ............... Unrealized appreciation on Unrealized depreciation on
forward exchange contracts 30,067,030 forward exchange contracts 43,504,304
The effect of derivative contracts on the Fund's Statement of Operations was as
follows:
AVERAGE
DERIVATIVE CONTRACTS NOTIONAL
NOT ACCOUNTED FOR AS AMOUNT
HEDGING INSTRUMENTS UNREALIZED OUTSTANDING
UNDER FASB STATEMENT STATEMENT OF REALIZED GAIN APPRECIATION DURING THE
NO. 133 OPERATIONS LOCATIONS (LOSS)(a) (DEPRECIATION)(a) PERIOD(a, b)
-------------------- -------------------------------------------- ------------- ----------------- -------------
Interest rate contracts .... Net realized gain (loss) from swap contracts
/ Net change in unrealized appreciation
(depreciation) on investments $ 5,535,873 $ (1,976,412) 213,170,415
Foreign exchange
contracts ............... Net realized gain (loss) from foreign
currency transactions / Net change in
unrealized appreciation (depreciation) on
investments 30,804,925 (72,386,932) 1,375,258,381
(a) For the six months ended August 31, 2009.
(b) Represents the average notional amount outstanding during the period. For
derivative contracts denominated in foreign currencies, notional amounts
are converted to U.S. dollars.
See Note 1(c) regarding derivative financial instruments.
Annual Report | 35
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. FAIR VALUE MEASUREMENTS
The Fund adopted Financial Accounting Standards Board (FASB) issued FASB
Statement No. 157, "Fair Value Measurement" (SFAS 157), on September 1, 2008.
SFAS 157 defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements. The Fund has determined
that the implementation of SFAS 157 did not have a material impact on the Fund's
financial statements.
SFAS 157 establishes a fair value hierarchy that distinguishes between market
data obtained from independent sources (observable inputs) and the Fund's own
market assumptions (unobservable inputs). These inputs are used in determining
the value of the Fund's investments and are summarized in the following fair
value hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of the inputs used as of August 31, 2009, in valuing
the Fund's assets and liabilities carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------- -------------- ------- --------------
ASSETS:
Investments in Securities:
Bonds ............................ $ -- $1,055,539,089 $-- $1,055,539,089
Municipal Bonds .................. -- 62,732,767 -- 62,732,767
Short Term Investments ........... 23,762,396 1,418,617 -- 25,181,013
----------- -------------- --- --------------
Total Investments in
Securities ................. $23,762,396 $1,119,690,473 $-- $1,143,452,869
=========== ============== === ==============
Swaps ............................ -- 12,129,656 -- 12,129,656
Forward Exchange Contracts ....... -- 30,067,030 -- 30,067,030
LIABILITIES:
Swaps ............................ -- 1,314,778 -- 1,314,778
Forward Exchange Contracts ....... -- 43,504,304 -- 43,504,304
12. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through October 20, 2009, the issuance
date of the financial statements and determined that no events have occurred
that require disclosure.
36 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ABBREVIATIONS
CURRENCY
AUD - Australian Dollar
BRL - Brazilian Real
CLP - Chilean Peso
EGP - Egyptian Pound
EUR - Euro
JPY - Japanese Yen
IDR - Indonesian Rupiah
KRW - South Korean Won
LKR - Sri Lankan Rupee
MXN - Mexican Peso
MYR - Malaysian Ringgit
NOK - Norwegian Krone
NZD - New Zealand Dollar
PEN - Peruvian Nuevo Sol
PLN - Polish Zloty
SEK - Swedish Krona
SELECTED PORTFOLIO
AMBAC - American Municipal Bond Assurance Corp.
BHAC - Berkshire Hathaway Assurance Corp.
FGIC - Financial Guaranty Insurance Co.
FRN - Floating Rate Note
FSA - Financial Security Assurance Inc.
GO - General Obligation
ID - Improvement District
ISD - Independent School District
MBIA - Municipal Bond Investors Assurance Corp. (effective
February 18, 2009, MBIA spun-off and established National Public
Financial Guarantee Corp. as a subsidiary under MBIA)
MTA - Metropolitan Transit Authority
USD - Unified/Union School District
COUNTERPARTY
BOFA - Bank of America Corp.
BZWS - Barclays Bank PLC
CITI - Citigroup Inc.
DBAB - Deutsche Bank AG
FBCO - Credit Suisse Group AG
HSBC - HSBC Bank USA, N.A.
JPHQ - JPMorgan Chase Bank & Co.
MLCO - Merrill Lynch & Co., Inc.
UBSW - UBS AG
Annual Report | 37
Templeton Global Income Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF TEMPLETON GLOBAL INCOME FUND
In our opinion, the accompanying statement of assets and liabilities, including
the statement 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 Templeton Global Income Fund (the
"Fund") at August 31, 2009, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards 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, 2009 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 20, 2009
38 | Annual Report
Templeton Global Income Fund
TAX DESIGNATION (UNAUDITED)
Under Section 871(k)(1)(C) of the Internal Revenue Code (Code), the Fund
designates the maximum amount allowable but no less than $370,161 as interest
related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of
the Code for the fiscal year ended August 31, 2009.
At August 31, 2009, more than 50% of the Templeton Global Income Fund's total
assets were invested in securities of foreign issuers. In most instances,
foreign taxes were withheld from income paid to the Fund on these investments.
As shown in the table below, the Fund designates to shareholders the foreign
source income and foreign taxes paid, pursuant to Section 853 of the Code. This
designation will allow shareholders of record on August 18, 2009, to treat their
proportionate share of foreign taxes paid by the Fund as having been paid
directly by them. The shareholder shall consider these amounts as foreign taxes
paid in the tax year in which they receive the Fund distribution.
The following table provides a detailed analysis of foreign tax paid, foreign
source income, and foreign qualified dividends as designated by the Fund, to
shareholders of record.
RECORD DATE: 8/18/2009
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
PER SHARE PER SHARE PER SHARE
----------- ------------- -------------------
Total .. $0.0160 $0.4779 $--
Foreign Tax Paid Per Share (Column 1) is the amount per share available to you,
as a tax credit (assuming you held your shares in the Fund for a minimum of 16
days during the 31-day period beginning 15 days before the ex-dividend date of
the Fund's distribution to which the foreign taxes relate), or, as a tax
deduction.
Foreign Source Income Per Share (Column 2) is the amount per share of income
dividends paid to you that is attributable to foreign securities held by the
Fund, plus any foreign taxes withheld on these dividends. The amounts reported
include foreign source qualified dividends that have not been adjusted for the
rate differential applicable to such dividend income.(1)
Foreign Qualified Dividends Per Share (Column 3) is the amount per share of
foreign source qualified dividends the Fund paid to you, plus any foreign taxes
withheld on these dividends. These amounts represent the portion of the Foreign
Source Income reported to you in column 2 that were derived from qualified
foreign securities held by the Fund.(1)
(1) Qualified dividends are taxed at a maximum rate of 15% (5% for those in the
10% and 15% income tax bracket). In determining the amount of foreign tax
credit that may be applied against the U.S. tax liability of individuals
receiving foreign source qualified dividends, adjustments may be required
to the foreign tax credit limitation calculation to reflect the rate
differential applicable to such dividend income. The rules however permit
certain individuals to elect not to apply the rate differential adjustments
for capital gains and/or dividends for any taxable year. Please consult
your tax advisor and the instructions to Form 1116 for more information.
Annual Report | 39
Templeton Global Income Fund
TAX DESIGNATION (UNAUDITED) (CONTINUED)
In January 2010, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2009. The Foreign Source Income reported on Form 1099-DIV has not
been adjusted for the rate differential on foreign source qualified dividend
income. Shareholders are advised to check with their tax advisors for
information on the treatment of these amounts on their 2009 individual income
tax returns.
40 | Annual Report
Templeton Global Income Fund
ANNUAL MEETING OF SHAREHOLDERS, FEBRUARY 20, 2009 (UNAUDITED)
The Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 E. Broward Boulevard, Fort Lauderdale, Florida, on February 20, 2009. The
purpose of the meeting was to elect four Trustees of the Fund. At the meeting,
the following persons were elected by the shareholders to serve as Trustees of
the Fund: Harris J. Ashton, Ann Torre Bates, David W. Niemiec and Robert E.
Wade.* No other business was transacted at the meeting.
The results of the voting at the Annual Meeting are as follows:
The election of four Trustees:
% OF % OF
SHARES SHARES
% OF PRESENT % OF PRESENT
OUTSTANDING AND OUTSTANDING AND
TERM EXPIRING 2012 FOR SHARES VOTING WITHHELD SHARES VOTING
----------------- ----------- ----------- ------- --------- ----------- -------
Harris J. Ashton .......... 112,481,335 85.77% 96.60% 3,962,882 3.02% 3.40%
Ann Torre Bates ........... 112,598,313 85.86% 96.70% 3,845,904 2.93% 3.30%
David W. Niemiec .......... 112,742,511 85.97% 96.82% 3,701,706 2.82% 3.18%
Robert E. Wade ............ 112,656,702 85.90% 96.75% 3,787,515 2.89% 3.25%
* Frank J. Crothers, Edith E. Holiday, Charles B. Johnson, Gregory E.
Johnson, Frank A. Olson, Larry D. Thompson and Constantine D. Tseretopoulos
are Trustees of the Fund who are currently serving and whose terms of
office continued after the Annual Meeting of Shareholders.
Annual Report | 41
Templeton Global Income Fund
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. If you decide
to use this service, share dividends and capital gains distributions will be
reinvested automatically in shares of the Fund for your account. BNY Mellon
Shareowner Services, P.O. Box 358035, Pittsburgh, PA, 15252-8035, will provide
additional Plan information upon request.
Whenever the Fund declares dividends in either cash or shares 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 new shares 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 cash payments to the Plan
Administrator, 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
can be made by check or money order payable to The Bank of New York Mellon (the
"Plan Administrator") and sent to BNY Mellon Shareowner Services, P.O. Box
382009, Pittsburgh, PA, 15252-8009, Attention: Templeton Global Income Fund. The
Plan Administrator will apply such payments (less a $5.00 service charge and
less a pro rata share of trading fees) to purchases of Fund shares on the open
market.
The automatic reinvestment of dividends and/or capital gains does not relieve
the participant of any income tax that may be payable on dividends or
distributions.
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. The Plan
Administrator's fee for a sale of shares through the Plan is $15.00 per
transaction plus a $0.12 per share trading fee.
A participant may withdraw from the Plan without penalty at any time by written
notice to the Plan Administrator sent to BNY Mellon Shareowner Services, P. O.
Box 358035, Pittsburgh, PA, 15252-8035. Upon withdrawal, the participant will
receive, without charge, share certificates issued in the participant's name for
all full shares held by the Plan Administrator; or, if the participant wishes,
the Plan Administrator will sell the shares and send the proceeds to the
participant, less a service charge of $15.00 and less trading fees of $0.12 per
share. The Plan Administrator will convert any fractional shares you hold at the
time of your withdrawal to cash at current market value and send you a check for
the net proceeds.
42 | Annual Report
Templeton Global Income Fund
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (CONTINUED)
DIRECT DEPOSIT SERVICE FOR REGISTERED SHAREHOLDERS
Cash distributions can now be electronically credited to a checking or savings
account at any financial institution that participates in the Automated Clearing
House ("ACH") system. The Direct Deposit service is provided for registered
shareholders at no charge. To enroll in the service, access your account online
by going to http://vault.bnymellon.com/isd or dial 1-800-416-5585 (toll free)
and follow the instructions. Direct Deposit will begin with the next scheduled
distribution payment date following enrollment in the service.
Annual Report | 43
Templeton Global Income Fund
TRANSFER AGENT
BNY Mellon Shareowner Services
P.O. Box 358035
Pittsburgh, PA 15252-8035
1-800-416-5585
www.bnymellon.com
DIRECT REGISTRATION
If you are a registered shareholder of the Fund, purchases of shares of the Fund
can be electronically credited to your Fund account at BNY Mellon Shareowner
Services through Direct Registration. This service provides shareholders with a
convenient way to keep track of shares through book-entry transactions,
electronically move book-entry shares between broker-dealers, transfer agents
and DRS eligible issuers, and eliminate the possibility of lost certificates.
For additional information, please contact BNY Mellon Shareowner Services at
1-800-416-5585.
SHAREHOLDER INFORMATION
Shares of Templeton Global Income Fund are traded on the New York Stock Exchange
under the symbol "GIM." 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 distributions and shareholder accounts, call
1-800-416-5585. Registered shareholders can access their Fund account on-line
with INVESTOR SERVICEDIRECT(R). For information go to BNY Mellon Shareowner
Services' web site at https://vault.bnymellon.com/isd and follow the
instructions.
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 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, 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, FL 33733-8030.
44 | Annual Report
Templeton Global Income Fund
BOARD MEMBERS AND OFFICERS
The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Fund, principal occupations
during the past five years and number of U.S. registered portfolios overseen in
the Franklin Templeton Investments fund complex are shown below. Generally, each
board member serves a three-year term that continues until that person's
successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------------------ --------------- ------------------ ----------------------- --------------------------------
HARRIS J. ASHTON (1932) Trustee Since 1993 134 Bar-S Foods (meat packing
500 East Broward Blvd. company).
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President,
Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
ANN TORRE BATES (1958) Trustee Since 2008 31 SLM Corporation (Sallie Mae) and
500 East Broward Blvd. Allied Capital Corporation
Suite 2100 (financial services).
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Independent strategic and financial consultant; and FORMERLY, Executive Vice President and Chief Financial Officer, NHP
Incorporated (manager of multifamily housing) (1995-1997); and Vice President and Treasurer, US Airways, Inc. (until 1995).
FRANK J. CROTHERS (1944) Trustee Since 1999 23 Fortis, Inc. (utility holding
500 East Broward Blvd. company), Victory Nickel Inc.
Suite 2100 (mineral exploration) and ABACO
Fort Lauderdale, FL 33394-3091 Markets Limited (retail
distributors).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director and Vice Chairman, Caribbean Utilities Company, Ltd.; and director of various other private business and nonprofit
organizations.
EDITH E. HOLIDAY (1952) Lead Trustee since 134 Hess Corporation (exploration
500 East Broward Blvd. Independent 1996 and Lead and refining of oil and gas),
Suite 2100 Trustee Independent H.J. Heinz Company (processed
Fort Lauderdale, FL 33394-3091 Trustee since foods and allied products), RTI
2007 International Metals, Inc.
(manufacture and distribution of
titanium), Canadian National
Railway (rail-road) and White
Mountains Insurance Group, Ltd.
(holding company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; 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).
Annual Report | 45
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------------------ --------------- ------------------ ----------------------- --------------------------------
DAVID W. NIEMIEC (1949) Trustee Since 2005 23 Emeritus Corporation (assisted
500 East Broward Blvd. living) and OSI Pharmaceuticals,
Suite 2100 Inc. (pharmaceutical products).
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Advisor, Saratoga Partners (private equity fund); and FORMERLY, Managing Director, Saratoga Partners (1998-2001) and SBC Warburg
Dillon Read (investment banking) (1997-1998); Vice Chairman, Dillon, Read & Co. Inc. (investment banking) (1991-1997); and Chief
Financial Officer, Dillon, Read & Co. Inc. (1982-1997).
FRANK A. OLSON (1932) Trustee Since 2003 134 Hess Corporation (exploration
500 East Broward Blvd. and refining of oil and gas).
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of the Board (1980-2000) and Chief Executive Officer
(1977-1999)); and FORMERLY, Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines).
LARRY D. THOMPSON (1945) Trustee Since 2005 142 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (consumer products); and FORMERLY,
Director, Delta Airlines (aviation) (2003-2005) and Providian Financial Corp. (credit card provider) (1997-2001); Senior Fellow of
The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney
General, U.S. Department of Justice (2001-2003).
CONSTANTINE D. TSERETOPOULOS Trustee Since 1999 23 None
(1954)
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Physician, Lyford Cay Hospital (1987-present); director of various nonprofit organizations; and FORMERLY, Cardiology Fellow,
University of Maryland (1985-1987) and Internal Medicine Resident, Greater Baltimore Medical Center (1982-1985).
ROBERT E. WADE (1946) Trustee Since 2006 38 El Oro Ltd (investments).
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney at law.
46 | Annual Report
INTERESTED BOARD MEMBERS AND OFFICERS
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------------------ --------------- ------------------ ----------------------- --------------------------------
**CHARLES B. JOHNSON (1933) Trustee, Trustee, Chairman 134 None
One Franklin Parkway Chairman of of the Board
San Mateo, CA 94403-1906 the Board and since 1995 and
Vice President Vice President
since 1993
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Templeton Worldwide,
Inc.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc.
and of 41 of the investment companies in Franklin Templeton Investments.
**GREGORY E. JOHNSON (1961) Trustee Since 2007 90 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, President and Chief Executive Officer, Franklin Resources, Inc.; President, Templeton Worldwide, Inc.; Director,
Templeton Asset Management Ltd.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 32 of the investment companies in Franklin Templeton Investments.
JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since 2004
San Mateo, CA 94403-1906 Officer and and Vice President
Vice President - AML Compliance
- AML since 2006
Compliance
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin Resources, Inc. and
of 45 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director of Compliance, Franklin Resources,
Inc. (1994-2001).
LAURA F. FERGERSON (1962) Chief Executive Since Not Applicable Not Applicable
One Franklin Parkway Officer - March 2009
San Mateo, CA 94403-1906 Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 45 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Director and member of Audit and Valuation Committees, Runkel Funds, Inc. (2003-2004); Assistant Treasurer of most of
the investment companies in Franklin Templeton Investments (1997-2003); and Vice President, Franklin Templeton Services, LLC
(1997-2003).
ALIYA S. GORDON (1973) Vice President Since March 2009 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Templeton Investments; officer of 45 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Litigation Associate, Steefel, Levitt & Weiss, LLP (2000-2004).
Annual Report | 47
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------------------ --------------- ------------------ ----------------------- --------------------------------
DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; officer and/or director, as the case may be, of some of the
other subsidiaries of Franklin Resources, Inc. and of 45 of the investment companies in Franklin Templeton Investments.
STEVEN J. GRAY (1955) Vice President Since Not Applicable Not Applicable
One Franklin Parkway August 2009
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; Vice President, Franklin Templeton Distributors, Inc.; and
officer of 45 of the investment companies in Franklin Templeton Investments.
RUPERT H. JOHNSON, JR. (1940) Vice President Since 1996 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc. and
Templeton Worldwide, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the
case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 43 of the investment companies in Franklin
Templeton Investments.
CHRISTOPHER J. MOLUMPHY (1962) President and Since 2002 Not Applicable Not Applicable
One Franklin Parkway Chief Executive
San Mateo, CA 94403-1906 Officer -
Investment
Management
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director and Executive Vice President, Franklin Advisers, Inc.; Executive Vice President, Franklin Templeton Institutional, LLC;
and officer of some of the other subsidiaries of Franklin Resources, Inc. and of six of the investment companies in Franklin
Templeton Investments.
MARK H. OTANI (1968) Treasurer, Since March 2009 Not Applicable Not Applicable
One Franklin Parkway Chief Financial
San Mateo, CA 94403-1906 Officer and
Chief
Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Fund Accounting Operations, Franklin Templeton Investments; and officer of 14 of the investment companies in
Franklin Templeton Investments.
ROBERT C. ROSSELOT (1960) Secretary and Secretary since Not Applicable Not Applicable
500 East Broward Blvd. Vice President 2004 and Vice
Suite 2100 President since
Fort Lauderdale, FL 33394-3091 August 2009
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President
and Secretary, Templeton Investment Counsel, LLC; Vice President, Secretary and Trust Officer, Fiduciary Trust International of
the South; and officer of 45 of the investment companies in Franklin Templeton Investments.
48 | Annual Report
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------------------ --------------- ------------------ ----------------------- --------------------------------
KAREN L. SKIDMORE (1952) Vice President Since Not Applicable Not Applicable
One Franklin Parkway August 2009
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; and officer of 45 of the investment companies in Franklin
Templeton Investments.
CRAIG S. TYLE (1960) Vice President Since 2005 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin
Resources, Inc. and of 45 of the investment companies in Franklin Templeton Investments; and FORMERLY, Partner, Shearman &
Sterling, LLP (2004-2005); and General Counsel, Investment Company Institute (ICI) (1997-2004).
* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments
fund complex. These portfolios have a common investment manager or
affiliated investment managers.
** Charles B. Johnson is considered to be interested person of the Fund under
the federal securities laws due to his position as officer and director and
major shareholder of Franklin Resources, Inc. (Resources), which is the
parent company of the Fund's investment manager. Gregory E. Johnson is
considered to be interested person of the Fund under the federal securities
laws due to his position as officer and director Resources.
Note 1: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the
father and uncle, respectively, of Gregory E. Johnson.
Note 2: Officer information is current as of the date of this report. It is
possible that after this date, information about officers may change.
THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE U.S. SECURITIES AND
EXCHANGE COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT
COMMITTEE INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL
EXPERT WITHIN THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD HAS DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED EACH OF ANN TORRE BATES AND DAVID W. NIEMIEC AS AN AUDIT COMMITTEE
FINANCIAL EXPERT. THE BOARD BELIEVES THAT MS. BATES AND MR. NIEMIEC QUALIFY AS
SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND AND EXPERIENCE.
MS. BATES HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE SINCE 2008. SHE
CURRENTLY SERVES AS A DIRECTOR OF SLM CORPORATION AND ALLIED CAPITAL CORPORATION
AND WAS FORMERLY THE EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER OF NHP
INCORPORATED AND VICE PRESIDENT AND TREASURER OF US AIRWAYS, INC. MR. NIEMIEC
HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE SINCE 2005, CURRENTLY SERVES
AS AN ADVISOR TO SARATOGA PARTNERS AND WAS FORMERLY ITS MANAGING DIRECTOR FROM
1998 TO 2001. MR. NIEMIEC IS A DIRECTOR OF EMERITUS CORPORATION AND OSI
PHARMACEUTICALS, INC. AND VARIOUS PRIVATE COMPANIES, AND WAS FORMERLY MANAGING
DIRECTOR OF SBC WARBURG DILLON READ FROM 1997 TO 1998, AND WAS VICE CHAIRMAN
FROM 1991 TO 1997 AND CHIEF FINANCIAL OFFICER FROM 1982 TO 1997 OF DILLON, READ
& CO. INC. AS A RESULT OF SUCH BACKGROUND AND EXPERIENCE, THE BOARD BELIEVES
THAT MS. BATES AND MR. NIEMIEC HAVE EACH ACQUIRED AN UNDERSTANDING OF GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND FINANCIAL STATEMENTS, THE GENERAL APPLICATION
OF SUCH PRINCIPLES IN CONNECTION WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND
RESERVES, AND ANALYZING AND EVALUATING FINANCIAL STATEMENTS THAT PRESENT A
BREADTH AND LEVEL OF COMPLEXITY OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO
THOSE OF THE FUND, AS WELL AS AN UNDERSTANDING OF INTERNAL CONTROLS AND
PROCEDURES FOR FINANCIAL REPORTING AND AN UNDERSTANDING OF AUDIT COMMITTEE
FUNCTIONS. MS. BATES AND MR. NIEMIEC ARE INDEPENDENT BOARD MEMBERS AS THAT TERM
IS DEFINED UNDER THE APPLICABLE U.S. SECURITIES AND EXCHANGE COMMISSION RULES
AND RELEASES OR THE LISTING STANDARDS APPLICABLE TO THE FUND.
Annual Report | 49
TEMPLETON GLOBAL INCOME FUND
SHAREHOLDER INFORMATION
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT
At a meeting held May 19, 2009, the Board of Trustees (Board), including a
majority of non-interested or independent Trustees, approved renewal of the
investment management agreement for the Fund. In reaching this decision, the
Board took into account information furnished throughout the year at regular
Board meetings, as well as information prepared specifically in connection with
the annual renewal review process. Information furnished and discussed
throughout the year included investment performance reports and related
financial information for the Fund, as well as periodic reports on shareholder
services, legal, compliance, pricing, brokerage commissions and execution and
other services provided by the Investment Manager (Manager) and its affiliates.
Information furnished specifically in connection with the renewal process
included a report for the Fund prepared by Lipper, Inc. (Lipper), an independent
organization, as well as additional material, including a Fund profitability
analysis report prepared by management. The Lipper report compared the Fund's
investment performance and expenses with those of other funds deemed comparable
to the Fund as selected by Lipper. The Fund profitability analysis report
discussed the profitability to Franklin Templeton Investments from its overall
U.S. fund operations, as well as on an individual fund-by-fund basis. Included
with such profitability analysis report was information on a fund-by-fund basis
listing portfolio managers and other accounts they manage, as well as
information on management fees charged by the Manager and its affiliates
including management's explanation of differences where relevant and a
three-year expense analysis with an explanation for any increase in expense
ratios. Additional material accompanying such report was a memorandum prepared
by management describing project initiatives and capital investments relating to
the services provided to the Fund by the Franklin Templeton Investments
organization, as well as a memorandum relating to economies of scale. Such
material also discussed some of the actions taken by management in coping with
problems arising out of the past year's financial upheaval.
In considering such materials, the independent Trustees received assistance and
advice from and met separately with independent counsel. In approving
continuance of the investment management agreement for the Fund, the Board,
including a majority of independent Trustees, determined that the existing
management fee structure was fair and reasonable and that continuance of the
investment management agreement was in the best interests of the Fund and its
shareholders. While attention was given to all information furnished, the
following discusses some primary factors relevant to the Board's decision.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board was satisfied with the nature
and quality of the overall services provided by the Manager and its affiliates
to the Fund and its shareholders. In addition to investment performance and
expenses discussed later, the Board's opinion was based, in part, upon periodic
reports furnished it showing that the investment policies and restrictions for
the Fund were consistently complied with as well as other reports periodically
furnished the Board covering matters such as the compliance of portfolio
managers and other management personnel with the code of ethics adopted
throughout the Franklin Templeton fund complex, the adherence to fair value
pricing procedures established by the Board, and the accuracy of net asset value
calculations. Favorable consideration was given to management's continuous
efforts and expenditures in establishing back-up systems and recovery procedures
to function in the
50 | Annual Report
Templeton Global Income Fund
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
event of a natural disaster, it being noted that such systems and procedures had
functioned smoothly during the Florida hurricanes and blackouts experienced in
recent years. Consideration was also given to the experience of the Fund's
portfolio management team, the number of accounts managed and general method of
compensation. In this latter respect, the Board noted that a primary factor in
management's determination of a portfolio manager's bonus compensation was the
relative investment performance of the funds he or she managed and that a
portion of such bonus was required to be invested in a predesignated list of
funds within such person's fund management area so as to be aligned with the
interests of Fund shareholders. Particular attention was given to the overall
performance and actions taken by the Manager and its affiliates in response to
problems arising out of the market turmoil and financial crisis experienced
during the past year. In this respect, the Board noted that management's
independent credit analysis and diligent risk management procedures had
prevented any structured investment products or other volatile instruments from
being held in the portfolios of any of the money market funds within the
Franklin Templeton complex, including the sweep money fund utilized by the Fund
as part of its cash management. The Board also took into account, among other
things, the strong financial position of the Manager's parent company and its
commitment to the fund business. The Board also noted that during the past year
Franklin Templeton Investments, like many other fund managers, had announced a
hiring freeze and implemented employee reductions, and the Board discussed with
management the nature of such reductions and steps being taken to minimize any
negative impact on the nature and quality of services being provided the Fund.
INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment
performance of the Fund in view of its importance to shareholders. While
consideration was given to performance reports and discussions with portfolio
managers at Board meetings during the year, particular attention in assessing
performance was given to the Lipper reports furnished for the agreement renewal.
The Lipper report for the Fund showed its investment performance for the
one-year period ended February 28, 2009, as well as the previous 10 years ended
that date in respect to a performance universe consisting of the Fund and all
closed-end non-leveraged global income funds as selected by Lipper. Such report
considered both the Fund's income return and total return on a net asset value
basis without regard to market discounts or premiums to accurately reflect
investment performance. The Lipper report showed that the Fund's income return
for the one-year period was in the highest or best performing quintile of the
Lipper performance universe, and on an annualized basis was also in the highest
quintile of such universe for the previous three- and five-year periods, and in
the middle quintile of such universe for the previous 10-year period. Consistent
with the market sell-off that occurred in 2008, the Fund, along with most funds
within its performance universe, experienced losses for the one-year period. On
a comparative basis, however, the Lipper report showed the Fund's total return
to be in the highest quintile of such performance universe for the one-year
period, and, on an annualized basis, to also be in the highest quintile of such
universe for each of the previous three-, five- and 10-year periods. The Board
noted such favorable comparative performance.
Annual Report | 51
Templeton Global Income Fund
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the
management fees and total expense ratios of the Fund compared with an expense
group consisting of the Fund and three other closed-end funds as selected by
Lipper. Lipper expense data is based upon historical information taken from each
fund's most recent annual report and, as a result of the severe decline in fund
industry assets during the last quarter of 2008, is based on asset levels that
are higher than the level currently existing for most funds. While recognizing
the limitations inherent in Lipper's methodology and recognizing that current
expense ratios may increase as assets decline, the Board believed that the
independent analysis conducted by Lipper remained an appropriate measure of
comparative expenses. In reviewing comparative costs, Lipper provides
information on the Fund's contractual investment management fee rate in
comparison with the contractual investment management fee rate that would have
been charged by the other funds within the Lipper expense group assuming they
were similar in size to the Fund, as well as the actual total expense rate of
the Fund in comparison with those of the other funds. The Lipper contractual
investment management fee analysis considers administrative fees to be part of
management fees and the results of such expense comparison showed both the
Fund's contractual investment management fee rate and total actual expense rate
to be the lowest in its Lipper expense group. The Board was satisfied with the
Fund's comparative management fee and expenses.
MANAGEMENT PROFITABILITY. The Board also considered the level of profits
realized by the Manager and its affiliates in connection with the operation of
the Fund. In this respect, the Board reviewed the Fund profitability analysis
that addresses the overall profitability of Franklin Templeton's U.S. fund
business, as well as its profits in providing management and other services to
the Fund during the 12-month period ended September 30, 2008, being the most
recent fiscal year end for Franklin Resources, Inc., the Manager's parent.
During such period, the assets of the Franklin Templeton U.S. fund business were
significantly higher than currently existing, and to such extent the
profitability analysis does not reflect current fund operations. While taking
this into account in assessing the significance of the Fund profitability
analysis, the Board recognized such analysis was made at a given point in time
and that the decline in assets and effect on profitability would be reflected in
the profitability analysis covering Franklin Resources' 2009 fiscal year period.
In reviewing the analysis, attention was given to the methodology followed in
allocating costs to the Fund, it being recognized that allocation methodologies
are inherently subjective and various allocation methodologies may each be
reasonable while producing different results. In this respect, the Board noted
that, while being continuously refined and reflecting changes in the Manager's
own cost accounting, the allocation methodology was consistent with that
followed in profitability report presentations for the Fund made in prior years
and that the Fund's independent registered public accounting firm had been
engaged by the Manager to perform certain procedures on a biennial basis,
specified and approved by the Manager and the Fund's Board solely for their
purposes and use in reference to the profitability analysis. In reviewing and
discussing such analysis, management discussed with the Board its belief that
costs incurred in establishing the infrastructure necessary for the type of fund
operations conducted by the Manager and its affiliates may not be fully
reflected in the expenses allocated to the Fund in determining its
profitability, as well as the
52 | Annual Report
Templeton Global Income Fund
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
fact that the level of profits, to a certain extent, reflected operational cost
savings and efficiencies initiated by management. The Board also took into
account management's expenditures in improving shareholder services provided the
Fund, as well as the need to meet additional regulatory and compliance
requirements resulting from the Sarbanes-Oxley Act and recent SEC and other
regulatory requirements. In addition, the Board considered a third-party study
comparing the profitability of the Manager's parent on an overall basis as
compared to other publicly held managers broken down to show profitability from
management operations exclusive of distribution expenses, as well as
profitability including distribution expenses. The Board also considered the
extent to which the Manager and its affiliates might derive ancillary benefits
from fund operations. Based upon its consideration of all these factors, the
Board determined that the level of profits realized by the Manager and its
affiliates from providing services to the Fund was not excessive in view of the
nature, quality and extent of services provided.
ECONOMIES OF SCALE. The Board also considered whether the Manager realizes
economies of scale as the Fund grows larger and the extent to which any such
benefit is shared with the Fund and its shareholders. The Board believed that a
manager's ability to realize economies of scale and the sharing of such benefit
is a more relevant consideration in the case of an open-end fund whose size
increases as a result of the continuous sale of its shares. A closed-end
investment company such as the Fund does not continuously offer shares, and
growth following its initial public offering will primarily result from market
appreciation, which benefits its shareholders. While believing economies of
scale to be less of a factor in the context of a closed-end fund, the Board
believes at some point an increase in size may lead to economies of scale that
should be shared with the Fund and its shareholders. In this respect, the Board
noted the Fund is charged a management advisory fee and administrative fee at
the combined rate of 0.70% on its first $200 million of net assets; 0.635% on
the next $500 million of net assets; 0.60% on the next $300 million of net
assets; and 0.58% on the next $4 billion of net assets with decreasing
breakpoints continuing through the $20 billion net asset level. The Fund's asset
size was approximately $1 billion on December 31, 2008, and the Board believed
such fee schedule provides a sharing of benefits with the Fund and its
shareholders.
PROXY VOTING POLICIES AND PROCEDURES
The Fund's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Fund uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Fund's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL
33394, Attention: Proxy Group. Copies of the Fund's proxy voting records are
also made available online at franklintempleton.com and posted on the U.S.
Securities and Exchange Commission's website at sec.gov and reflect the most
recent 12-month period ended June 30.
Annual Report | 53
Templeton Global Income Fund
SHAREHOLDER INFORMATION (CONTINUED)
QUARTERLY STATEMENT OF INVESTMENTS
The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each period on Form
N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling (800)
SEC-0330.
CERTIFICATIONS
The Fund's Chief Executive Officer - Finance and Administration is required by
the New York Stock Exchange's Listing Standards to file semiannually with the
Exchange a certification that she is not aware of any violation by the Fund of
the Exchange's Corporate Governance Standards applicable to the Fund. The Fund
has filed such certification.
In addition, the Fund's Chief Executive Officer - Finance and Administration and
Chief Financial Officer and Chief Accounting Officer are required by the rules
of the U.S. Securities and Exchange Commission to provide certain certifications
with respect to the Fund's Form N-CSR and Form N-CSRS (which include the Fund's
annual and annual reports to shareholders) that are filed annually with the
Commission. The Fund has filed such certifications with its Form N-CSRS for the
six months ended February 28, 2009. Additionally, the Fund expects to file, on
or about October 30, 2009, such certifications with its Form N-CSR for the year
ended August 31, 2009.
54 | Annual Report
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Franklin Templeton Funds
LITERATURE REQUEST. TO RECEIVE A PROSPECTUS, PLEASE CALL US AT (800) DIAL
BEN/(800) 342-5236 OR VISIT franklintempleton.com. INVESTORS SHOULD CAREFULLY
CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES BEFORE
INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE CAREFULLY
READ THE PROSPECTUS BEFORE INVESTING. TO ENSURE THE HIGHEST QUALITY OF SERVICE,
WE MAY MONITOR, RECORD AND ACCESS TELEPHONE CALLS TO OR FROM OUR SERVICE
DEPARTMENTS. THESE CALLS CAN BE IDENTIFIED BY THE PRESENCE OF A REGULAR BEEPING
TONE.
VALUE
Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund(1)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Quest Fund
Mutual Recovery Fund(2)
Mutual Shares Fund
BLEND
Franklin Focused Core Equity Fund
Franklin Large Cap Equity Fund
Franklin Rising Dividends Fund
GROWTH
Franklin Flex Cap Growth Fund
Franklin Growth Fund
Franklin Growth Opportunities Fund
Franklin Small Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Real Estate Fund
Franklin Gold & Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Mutual Financial Services Fund
GLOBAL
Mutual Global Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund
INTERNATIONAL
Franklin India Growth Fund
Franklin International Growth Fund
Franklin International Small Cap Growth Fund
Mutual European Fund
Mutual International Fund
Templeton BRIC Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Emerging Markets Small Cap Fund
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton Frontier Markets Fund
HYBRID
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Templeton Income Fund
ASSET ALLOCATION
Franklin Templeton Corefolio(R) Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund
FIXED INCOME
Franklin Adjustable U.S. Government Securities Fund(3)
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund
Franklin Limited Maturity U.S. Government Securities Fund(3)
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund(3)
Templeton Global Bond Fund
Templeton Global Total Return Fund
Templeton International Bond Fund
TAX-FREE INCOME(4)
NATIONAL
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(5)
LIMITED-/INTERMEDIATE-TERM
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund
STATE-SPECIFIC
Alabama
Arizona
California(6)
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(7)
Michigan(7)
Minnesota(7)
Missouri
New Jersey
New York(6)
North Carolina
Ohio(7)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust(8)
(1.) The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
(2.) The fund is a continuously offered, closed-end fund. Shares may be
purchased daily; there is no daily redemption. However, each quarter,
pending board approval, the fund will authorize the repurchase of 5%-25% of
the outstanding number of shares. Investors may tender all or a portion of
their shares during the tender period.
(3.) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
(4.) For investors subject to the alternative minimum tax, a small portion of
fund dividends may be taxable. Distributions of capital gains are generally
taxable.
(5.) The fund invests primarily in insured municipal securities.
(6.) These funds are available in four or more variations, including long-term
portfolios, intermediate-term portfolios, portfolios of insured securities,
a high-yield portfolio (CA only) and money market portfolios.
(7.) The Board of Trustees approved the elimination of the non-fundamental
policy requiring the fund to invest at least 80% of net assets in insured
municipal securities and the removal of the word "Insured" from the fund
name. The changes became effective 2/17/09.
(8.) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
04/09 Not part of the annual report
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) 100 Fountain Parkway
P.O. Box 33030
St. Petersburg, FL 33733-8030
ANNUAL REPORT
TEMPLETON GLOBAL INCOME FUND
INVESTMENT MANAGER
Franklin Advisers, Inc.
TRANSFER AGENT
BNY Mellon Shareowner Services
P.O. Box 358035
Pittsburgh, PA 15252-8035
Toll free number: (800)416-5585
Hearing Impaired phone number: (800) 231-5469
Foreign Shareholders phone number: (201) 680-6578
www.melloninvestor.com/isd
FUND INFORMATION
(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
identified by the presence of a regular beeping tone.
TLGIM A2009 10/09
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a
copy of its code of ethics that applies to its principal executive
officers and principal financial and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial expert is David W. Niemiec and he is
"independent" as defined under the relevant Securities and Exchange
Commission Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $63,469 for the fiscal year ended August 31, 2009 and $80,313 for the
fiscal year ended August 31, 2008.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of their financial
statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning were $6,000 for the fiscal year ended
August 31, 2009 and $0 for the fiscal year ended August 31, 2008. The services
for which these fees were paid included tax compliance and advice.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended August 31, 2009
and $898 for the fiscal year ended August 31, 2008. The services for which these
fees were paid include review of materials provided to the fund Board in
connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not reported
in paragraphs (a)-(c) of Item 4 were $0 for the fiscal year ended August 31,
2009 and $283,179 for the fiscal year ended August 31, 2008. The services for
which these fees were paid include review of materials provided to the fund
Board in connection with the investment management contract renewal process.
(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided
to the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided
to the registrant by the auditors to the registrant's investment adviser or to
any entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $6,000 for the fiscal year ended August 31, 2009 and $284,077
for the fiscal year ended August 31, 2008.
(h) The registrant's audit committee of the board has considered whether the
provision of non-audit services that were rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Members of the Audit Committee are: Frank J. Crothers, David W. Niemiec, Ann
Torre Bates and Constantine D. Tseretopoulos.
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The board of trustees of the Fund has delegated the authority to vote proxies
related to the portfolio securities held by the Fund to the Fund's manager
Franklin Advisers, Inc. in accordance with the Proxy Voting Policies and
Procedures (Policies) adopted by the manager.
The manager has delegated its administrative duties with respect to the voting
of proxies to the Proxy Group within Franklin Templeton Companies, LLC (Proxy
Group), an affiliate and wholly owned subsidiary of Franklin Resources, Inc. All
proxies received by the Proxy Group will be voted based upon the manager's
instructions and/or policies.
To assist it in analyzing proxies, the manager subscribes to RiskMetrics Group
(RiskMetrics), an unaffiliated third-party corporate governance research service
that provides in-depth analyses of shareholder meeting agendas, vote
recommendations, recordkeeping and vote disclosure services. In addition, the
manager subscribes to Glass, Lewis & Co., LLC (Glass Lewis), an unaffiliated
third-party analytical research firm, to receive analyses and vote
recommendations on the shareholder meetings of publicly held U.S. companies.
Although RiskMetrics' and/or Glass Lewis' analyses are thoroughly reviewed and
considered in making a final voting decision, the manager does not consider
recommendations from RiskMetrics, Glass Lewis or any other third party to be
determinative of the manager's ultimate decision. As a matter of policy, the
officers, directors/trustees and employees of the manager and the Proxy Group
will not be influenced by outside sources whose interests conflict with the
interests of the Fund and its shareholders. Efforts are made to resolve all
conflicts in the interests of the manager's clients. Material conflicts of
interest are identified by the Proxy Group based upon analyses of client,
distributor, broker dealer and vendor lists, information periodically gathered
from directors and officers, and information derived from other sources,
including public filings. In situations where a material conflict of interest is
identified, the Proxy Group may defer to the voting recommendation of
RiskMetrics, Glass Lewis or those of another independent third-party provider of
proxy services; or send the proxy directly to the Fund with the manager's
recommendation regarding the vote for approval. If the conflict is not resolved
by the Fund, the Proxy Group may refer the matter, along with the recommended
course of action by the manager, if any, to an interdepartmental Proxy Review
Committee (which may include portfolio managers and/or research analysts
employed by the manager), for evaluation and voting instructions. The Proxy
Review Committee may defer to the voting recommendation of RiskMetrics, Glass
Lewis or those of another independent third-party provider of proxy services; or
send the proxy directly to the Fund. Where the Proxy Group or the Proxy Review
Committee refers a matter to the Fund, it may rely upon the instructions of a
representative of the Fund, such as the board or a committee of the board.
Where a material conflict of interest has been identified, but the items on
which the manager's vote recommendations differ from Glass Lewis, RiskMetrics,
or another independent third-party provider of proxy services relate
specifically to (1) shareholder proposals regarding social or environmental
issues or political contributions, (2) "Other Business" without describing the
matters that might be considered, or (3) items the manager wishes to vote in
opposition to the recommendations of an issuer's management, the Proxy Group may
defer to the vote recommendations of the manager rather than sending the proxy
directly to the Fund for approval.
To avoid certain potential conflicts of interest, the manager will employ echo
voting, if possible, in the following instances: (1) when the Fund invests in an
underlying fund in reliance on any one of Sections 12(d)(1)(E), (F), or (G) of
the 1940 Act, or pursuant to an SEC exemptive order; (2) when the Fund invests
uninvested cash in affiliated money market funds pursuant to an SEC exemptive
order ("cash sweep arrangement"); or (3) when required pursuant to the Fund's
governing documents or applicable law. Echo voting means that the investment
manager will vote the shares in the same proportion as the vote of all of the
other holders of the Fund's shares.
The recommendation of management on any issue is a factor that the manager
considers in determining how proxies should be voted. However, the manager does
not consider recommendations from management to be determinative of the
manager's ultimate decision. As a matter of practice, the votes with respect to
most issues are cast in accordance with the position of the company's
management. Each issue, however, is considered on its own merits, and the
manager will not support the position of the company's management in any
situation where it deems that the ratification of management's position would
adversely affect the investment merits of owning that company's shares.
MANAGER'S PROXY VOTING POLICIES AND PRINCIPLES The manager has adopted general
proxy voting guidelines, which are summarized below. These guidelines are not an
exhaustive list of all the issues that may arise and the manager cannot
anticipate all future situations. In all cases, each proxy will be considered
based on the relevant facts and circumstances.
BOARD OF DIRECTORS. The manager supports an independent board of directors, and
prefers that key committees such as audit, nominating, and compensation
committees be comprised of independent directors. The manager will generally
vote against management efforts to classify a board and will generally support
proposals to declassify the board of directors. The manager may withhold votes
from directors who have attended less than 75% of meetings without a valid
reason. While generally in favor of separating Chairman and CEO positions, the
manager will review this issue as well as proposals to restore or provide for
cumulative voting on a case-by-case basis, taking into consideration factors
such as the company's corporate governance guidelines or provisions and
performance.
RATIFICATION OF AUDITORS OF PORTFOLIO COMPANIES. The manager will closely
scrutinize the role and performance of auditors. On a case-by-case basis, the
manager will examine proposals relating to non-audit relationships and non-audit
fees. The manager will also consider, on a case-by-case basis, proposals to
rotate auditors, and will vote against the ratification of auditors when there
is clear and compelling evidence of accounting irregularities or negligence.
MANAGEMENT AND DIRECTOR COMPENSATION. A company's equity-based compensation plan
should be in alignment with the shareholders' long-term interests. The manager
believes that executive compensation should be directly linked to the
performance of the company. The manager evaluates plans on a case-by-case basis
by considering several factors to determine whether the plan is fair and
reasonable, including the RiskMetrics quantitative model utilized to assess such
plans and/or the Glass Lewis evaluation of the plans. The manager will generally
oppose plans that have the potential to be excessively dilutive, and will almost
always oppose plans that are structured to allow the repricing of underwater
options, or plans that have an automatic share replenishment "evergreen"
feature. The manager will generally support employee stock option plans in which
the purchase price is at least 85% of fair market value, and when potential
dilution is 10% or less.
Severance compensation arrangements will be reviewed on a case-by-case basis,
although the manager will generally oppose "golden parachutes" that are
considered to be excessive. The manager will normally support proposals that
require a percentage of directors' compensation to be in the form of common
stock, as it aligns their interests with those of shareholders.
ANTI-TAKEOVER MECHANISMS AND RELATED ISSUES. The manager generally opposes
anti-takeover measures since they tend to reduce shareholder rights. However, as
with all proxy issues, the manager conducts an independent review of each
anti-takeover proposal. On occasion, the manager may vote with management when
the research analyst has concluded that the proposal is not onerous and would
not harm the Fund or its shareholders' interests. The manager generally supports
proposals that require shareholder rights' plans ("poison pills") to be subject
to a shareholder vote and will closely evaluate such plans on a case-by-case
basis to determine whether or not they warrant support. In addition, the manager
will generally vote against any proposal to issue stock that has unequal or
subordinate voting rights. The manager generally opposes any supermajority
voting requirements as well as the payment of "greenmail." The manager generally
supports "fair price" provisions and confidential voting.
CHANGES TO CAPITAL STRUCTURE. The manager realizes that a company's financing
decisions have a significant impact on its shareholders, particularly when they
involve the issuance of additional shares of common or preferred stock or the
assumption of additional debt. The manager will review, on a case-by-case basis,
proposals by companies to increase authorized shares and the purpose for the
increase. The manager will generally not vote in favor of dual-class capital
structures to increase the number of authorized shares where that class of stock
would have superior voting rights. The manager will generally vote in favor of
the issuance of preferred stock in cases where the company specifies the voting,
dividend, conversion and other rights of such stock and the terms of the
preferred stock issuance are deemed reasonable.
MERGERS AND CORPORATE RESTRUCTURING. Mergers and acquisitions will be subject to
careful review by the research analyst to determine whether they would be
beneficial to shareholders. The manager will analyze various economic and
strategic factors in making the final decision on a merger or acquisition.
Corporate restructuring proposals are also subject to a thorough examination on
a case-by-case basis.
SOCIAL AND CORPORATE POLICY ISSUES. The manager will generally give management
discretion with regard to social, environmental and ethical issues, although the
manager may vote in favor of those that are believed to have significant
economic benefits or implications for the Fund and its shareholders.
GLOBAL CORPORATE GOVERNANCE. Many of the tenets discussed above are applied to
the manager's proxy voting decisions for international investments. However, the
manager must be flexible in these instances and must be mindful of the varied
market practices of each region.
The manager will attempt to process every proxy it receives for all domestic and
foreign issuers. However, there may be situations in which the manager cannot
process proxies, for example, where a meeting notice was received too late, or
sell orders preclude the ability to vote. If a security is on loan, the manager
may determine that it is not in the best interests of the Fund to recall the
security for voting purposes. Also, the manager may abstain from voting under
certain circumstances or vote against items such as "Other Business" when the
manager is not given adequate information from the company.
Shareholders may view the complete Policies online at franklintempleton.com.
Alternatively, shareholders may request copies of the Policies free of charge by
calling the Proxy Group collect at (954)527-7678 or by sending a written request
to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite 1500,
Fort Lauderdale, FL 33394, Attention: Proxy Group. Copies of the Fund's proxy
voting records are available online at franklintempleton.com and posted on the
SEC website at www.sec.gov. The proxy voting records are updated each year by
August 31 to reflect the most recent 12-month period ended June 30.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANY AND
AFFILIATED PURCHASERS.
(a)(1) As of October 30, 2009, the portfolio manager of the Fund is as follows:
MICHAEL HASENSTAB PH.D, SENIOR VICE PRESIDENT OF FRANKLIN ADVISERS, INC.
Dr. Hasenstab has been a portfolio manager of the Fund since 2002. He has final
authority over all aspects of the Fund's investment portfolio, including but not
limited to, purchases and sales of individual securities, portfolio risk
assessment, and the management of daily cash balances in accordance with
anticipated management requirements. The degree to which he may perform these
functions, and the nature of these functions, may change from time to time. He
first joined Franklin Templeton Investments in 1995, rejoining again in 2001
after a three-year leave to obtain his PH.D.
(a)(2) This section reflects information about the portfolio managers as of the
fiscal year ended August 31, 2009.
The following table shows the number of other accounts managed by each portfolio
manager and the total assets in the accounts managed within each category:
-------------------------------------------------------------------------------
NAME NUMBER ASSETS NUMBER ASSETS NUMBER ASSETS
OF OTHER OF OTHER OF OTHER OF OTHER OF OF
REGISTERED REGISTERED POOLED POOLED OTHER OTHER
INVESTMENT INVESTMENT INVESTMENT INVESTMENT ACCOUNTS ACCOUNTS
COMPANIES COMPANIES VEHICLES VEHICLES MANAGED/1 MANAGED
MANAGED MANAGED MANAGED/1 MANAGED (X $1
(X $1 (X $1 MILLION)/1
MILLION) MILLION)/1
-------------------------------------------------------------------------------
Michael
Hasenstab 13 21,934.5 24 18,227.4 12 987.9
-------------------------------------------------------------------------------
1. The various pooled investment vehicles and accounts listed are managed by a
team of investment professionals. Accordingly, the individual managers listed
would not be solely responsible for managing such listed amounts.
Portfolio managers that provide investment services to the Fund may also provide
services to a variety of other investment products, including other funds,
institutional accounts and private accounts. The advisory fees for some of such
other products and accounts may be different than that charged to the Fund and
may include performance based compensation. This may result in fees that are
higher (or lower) than the advisory fees paid by the Fund. As a matter of
policy, each fund or account is managed solely for the benefit of the beneficial
owners thereof. As discussed below, the separation of the trading execution
function from the portfolio management function and the application of
objectively based trade allocation procedures helps to mitigate potential
conflicts of interest that may arise as a result of the portfolio managers
managing accounts with different advisory fees.
CONFLICTS. The management of multiple funds, including the Fund, and accounts
may also give rise to potential conflicts of interest if the funds and other
accounts have different objectives, benchmarks, time horizons, and fees as the
portfolio manager must allocate his or her time and investment ideas across
multiple funds and accounts. The manager seeks to manage such competing
interests for the time and attention of portfolio managers by having portfolio
managers focus on a particular investment discipline. Most other accounts
managed by a portfolio manager are managed using the same investment strategies
that are used in connection with the management of the Fund. Accordingly,
portfolio holdings, position sizes, and industry and sector exposures tend to be
similar across similar portfolios, which may minimize the potential for
conflicts of interest. As noted above, the separate management of the trade
execution and valuation functions from the portfolio management process also
helps to reduce potential conflicts of interest. However, securities selected
for funds or accounts other than the Fund may outperform the securities selected
for the Fund. Moreover, if a portfolio manager identifies a limited investment
opportunity that may be suitable for more than one fund or other account, the
Fund may not be able to take full advantage of that opportunity due to an
allocation of that opportunity across all eligible funds and other accounts. The
manager seeks to manage such potential conflicts by using procedures intended to
provide a fair allocation of buy and sell opportunities among funds and other
accounts.
The structure of a portfolio manager's compensation may give rise to potential
conflicts of interest. A portfolio manager's base pay and bonus tend to increase
with additional and more complex responsibilities that include increased assets
under management. As such, there may be an indirect relationship between a
portfolio manager's marketing or sales efforts and his or her bonus.
Finally, the management of personal accounts by a portfolio manager may give
rise to potential conflicts of interest. While the funds and the manager have
adopted a code of ethics which they believe contains provisions reasonably
necessary to prevent a wide range of prohibited activities by portfolio managers
and others with respect to their personal trading activities, there can be no
assurance that the code of ethics addresses all individual conduct that could
result in conflicts of interest.
The manager and the Fund have adopted certain compliance procedures that are
designed to address these, and other, types of conflicts. However, there is no
guarantee that such procedures will detect each and every situation where a
conflict arises.
COMPENSATION. The manager seeks to maintain a compensation program that is
competitively positioned to attract, retain and motivate top-quality investment
professionals. Portfolio managers receive a base salary, a cash incentive bonus
opportunity, an equity compensation opportunity, and a benefits package.
Portfolio manager compensation is reviewed annually and the level of
compensation is based on individual performance, the salary range for a
portfolio manager's level of responsibility and Franklin Templeton guidelines.
Portfolio managers are provided no financial incentive to favor one fund or
account over another. Each portfolio manager's compensation consists of the
following three elements:
BASE SALARY Each portfolio manager is paid a base salary.
ANNUAL BONUS Annual bonuses are structured to align the interests of
the portfolio manager with those of the Fund's shareholders. Each
portfolio manager is eligible to receive an annual bonus. Bonuses
generally are split between cash (50% to 65%) and restricted shares of
Franklin Resources stock (17.5% to 25%) and mutual fund shares (17.5%
to 25%). The deferred equity-based compensation is intended to build a
vested interest of the portfolio manager in the financial performance
of both Franklin Resources and mutual funds advised by the manager. The
bonus plan is intended to provide a competitive level of annual bonus
compensation that is tied to the portfolio manager achieving
consistently strong investment performance, which aligns the financial
incentives of the portfolio manager and Fund shareholders. The Chief
Investment Officer of the manager and/or other officers of the manager,
with responsibility for the Fund, have discretion in the granting of
annual bonuses to portfolio managers in accordance with Franklin
Templeton guidelines. The following factors are generally used in
determining bonuses under the plan:
|X| INVESTMENT PERFORMANCE. Primary consideration is given to the
historic investment performance over the 1, 3 and 5 preceding
years of all accounts managed by the portfolio manager. The
pre-tax performance of each fund managed is measured relative to a
relevant peer group and/or applicable benchmark as appropriate.
|X| NON-INVESTMENT PERFORMANCE. The more qualitative contributions of
a portfolio manager to the manager's business and the investment
management team, including professional knowledge, productivity,
responsiveness to client needs and communication, are evaluated in
determining the amount of any bonus award.
|X| RESPONSIBILITIES. The characteristics and complexity of funds
managed by the portfolio manager are factored in the manager's
appraisal.
ADDITIONAL LONG-TERM EQUITY-BASED COMPENSATION Portfolio managers may
also be awarded restricted shares or units of Franklin Resources stock
or restricted shares or units of one or more mutual funds, and options
to purchase common shares of Franklin Resources stock. Awards of such
deferred equity-based compensation typically vest over time, so as to
create incentives to retain key talent.
Portfolio managers also participate in benefit plans and programs available
generally to all employees of the manager.
OWNERSHIP OF FUND SHARES. The manager has a policy of encouraging portfolio
managers to invest in the funds they manage. Exceptions arise when, for example,
a fund is closed to new investors or when tax considerations or jurisdictional
constraints cause such an investment to be inappropriate for the portfolio
manager. The following is the dollar range of Fund shares beneficially owned by
each portfolio manager (such amounts may change from time to time):
Dollar Range of Fund
Shares Beneficially
Portfolio Manager Owned
---------------------------------------------------------------------
Michael Hasenstab None
---------------------------------------------------------------------
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no changes to the procedures by which shareholders may recommend
nominees to the Registrant's Board of Trustees that would require disclosure
herein.
ITEM 11. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.
ITEM 12. EXHIBITS.
(A)(1) Code of Ethics
(A)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, Chief Financial Officer and Chief Accounting Officer
(B) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TEMPLETON GLOBAL INCOME FUND
By /s/LAURA F. FERGERSON
------------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance and
Administration
Date: October 28, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/LAURA F. FERGERSON
------------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance and
Administration
Date: October 28, 2009
By /s/MARK H. OTANI
--------------------------
Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date: October 28, 2009