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
TEMPLETON GLOBAL INCOME FUND
----------------------------
(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_
---------------
Date of fiscal year end: 8/31
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Date of reporting period: 8/31/08
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ITEM 1. REPORTS TO STOCKHOLDERS.
AUGUST 31, 2008
ANNUAL REPORT
INCOME
TEMPLETON
GLOBAL INCOME FUND
(GRAPHIC)
(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
CEO'S MESSAGE ............................................................. 1
ANNUAL REPORT
Templeton Global Income Fund .............................................. 4
Performance Summary ....................................................... 10
Important Notice to Shareholders .......................................... 11
Financial Highlights and Statement of Investments ......................... 12
Financial Statements ...................................................... 18
Notes to Financial Statements ............................................. 21
Report of Independent Registered Public Accounting Firm ................... 33
Tax Designation ........................................................... 34
Annual Meeting of Shareholders ............................................ 36
Dividend Reinvestment and Cash Purchase Plan .............................. 37
Board Members and Officers ................................................ 39
Shareholder Information ................................................... 45
A Message from Gregory E. Johnson,
President and Chief Executive Officer of Franklin Resources, Inc.
October 12, 2008
Dear Shareholder:
The enclosed annual report for Templeton Global Income Fund covers the 12 months
ended August 31, 2008, but I would like to add some comments on market events
that occurred in September and early October. Recent market volatility has been
jarring to everyone, including those of us who have worked in financial markets
for many years. Bank lending around the world has seized up, and the fallout has
impacted venerable firms alongside broader stock and bond indexes.
This environment is bound to provoke great concern, but it's equally important
to put the latest market developments in perspective. That's why I'd like to
offer a few thoughts on these events, our company's approach to investing and
the strong health of our organization.
A key point to recognize is that global financial turmoil is being addressed by
global action. Central banks around the world have coordinated their efforts to
cut interest rates and supply liquidity to frozen funding markets. A number of
governments have also intervened to rescue major financial institutions or find
an orderly way for them to be acquired. Here in the U.S., the Federal Reserve
and Treasury Department have moved rapidly to establish new programs for easing
money-market pressures and handling troubled financial assets. The outcome of
all of these efforts may take a while to be realized, but I believe that the
latest actions here and abroad mark a significant turning point.
Not part of the annual report | 1
It's also important to remember that as daunting as current market conditions
may be, we have navigated through other periods of market volatility. U.S. stock
markets recorded three bear markets during the 1960s as the nation grappled with
the Vietnam War and a turbulent economy.(1) The quintupling of oil prices in
1973 led to a deep U.S. recession and a stock market plunge of 45.1% from
January 1973 through December 1974.(1) And the "Black Monday" stock market crash
of 1987 remains the largest single day percentage decline in the history of the
Dow Jones Industrial Average.(2)
Advice applicable throughout these upheavals remains true today. The late Sir
John Templeton, writing 15 years ago, ended a list of his core investment
principles with these thoughts: "Do not be fearful or negative too often. . . .
For 100 years optimists have carried the day in U.S. stocks. Even in the dark
'70s, many professional money managers -- and many individual investors too --
made money in stocks . . . . In this century or the next it's still 'Buy low,
sell high.'"(3)
Sir John knew that these simple concepts were difficult to execute in the face
of pessimism. Nonetheless, that is precisely how our Franklin, Templeton and
Mutual Series portfolio managers are contending with today's challenging
environment. They are using their expertise to sort through investment
opportunities, avoiding those firms that have become merely cheap and
identifying those firms best positioned to be eventual winners. This kind of
rigorous, bottom-up, security-by-security analysis is the fundamental investment
discipline practiced across our global platform.
These asset management strengths are also the core of our business. Unlike
financial firms that have dominated recent headlines, Franklin Templeton derives
its revenue primarily from investment management, not investment banking or
securities brokerage. Additionally, our assets under management are diversified
by fund objective, investment clientele, management brand and geographic region.
Diversified positioning helps our firm maintain healthy operating margins even
when volatile markets reduce assets under management. It is also important to
note that maintaining a strong balance sheet has been a pillar of our management
strategy. We have a substantial pool of cash and investments and low levels of
debt, and we are in the enviable position of
(1.) Source: Ned Davis Research, Inc.
(2.) Source: NYSE Euronext. The Dow Jones Industrial Average is price weighted
based on the average market price of 30 blue chip stocks of companies that
are generally industry leaders.
(3.) Source: "16 Rules for Investment Success" by Sir John Templeton.
2 | Not part of the annual report
not having to depend on credit to meet our operating needs. In fact, our strong
franchise, sound capitalization and minimal leverage led Standard & Poor's to
recently raise its credit ratings on Franklin Resources, Inc. (BEN) to the
highest level currently applied to a publicly traded asset manager.(4)
Franklin Templeton's six-decade growth into a premier global asset manager has
given us the conviction that although conditions on the ground remain
challenging, there are ample reasons to be optimistic about eventual market
stabilization and recovery. Being able to take advantage of markets shaken by
maximum pessimism has helped our firm develop into an organization that
stretches across 29 countries and manages assets for more than 20 million
shareholder accounts.
In the enclosed annual report for Templeton Global Income Fund, the portfolio
manager discusses market conditions, investment decisions and Fund performance
during the 12 months ended August 31, 2008. The report contains additional
performance data and financial information. Our website, FRANKLINTEMPLETON.COM,
offers more timely discussions, daily prices, portfolio holdings and other
information. We encourage you to discuss your concerns with your financial
advisor, who can review your overall portfolio, reassess your goals and help you
stay focused on the long term. As times like these illustrate, all securities
markets fluctuate, as do fund share prices.
We are grateful for the trust you have placed in Franklin Templeton and remain
focused on serving your investment needs.
Sincerely,
/s/ Gregory E. Johnson
Gregory E. Johnson
President and Chief Executive Officer
Franklin Resources, Inc.
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF OCTOBER 12, 2008. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE.
(4.) Source: Standard & Poor's press release, October 6, 2008.
Not part of the annual report | 3
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 8/31/08
(PERFORMANCE GRAPH)
Government Bonds 80.0%
Municipal Bonds 0.4%
Short-Term Investments & Other Net Assets 15.6%
Dear Shareholder:
We are pleased to bring you Templeton Global Income Fund's annual report for the
fiscal year ended August 31, 2008.
PERFORMANCE OVERVIEW
For the 12 months under review, Templeton Global Income Fund posted cumulative
total returns of +12.25% based on market price and +10.68% based on net asset
value. The Fund outperformed the J.P. Morgan (JPM) Global Government Bond Index
(GGBI), which posted cumulative total returns of +4.87% in local currency terms
and +1.10% 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 10.
ECONOMIC AND MARKET OVERVIEW
During the Fund's fiscal year, the global economy faced several economic shocks
including a U.S. housing market correction that spread globally, a commodity
price upsurge and a credit crunch. Given the diverse nature of these shocks,
global bond and currency markets experienced considerable volatility over the
12-month period. With multiple headwinds to growth, the global economy began to
slow, led by the U.S. and later followed by Europe and other industrialized
countries. Global inflation rates rose sharply as food and energy prices soared
but began to moderate toward period-end as commodity prices softened and global
growth waned.
(1.) Source: (C) 2008 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, nor is an index representative of the
Fund's portfolio.
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.
4 | Annual Report
U.S. economic growth remained sluggish due to continued weakness in the housing
market and lower confidence among households and businesses. In second quarter
2008, real gross domestic product (GDP) growth registered 2.1% compared with
second quarter 2007 (year-over-year). Continued demand weakness helped
moderately reduce the U.S.'s large current account deficit. Additionally, the
U.S. dollar's more than 30% decline versus major trading partners from 2001
through 2007 increased the competitiveness of U.S. producers, leading to a
recovery in exports.(2) However, rising U.S. mortgage delinquencies triggered a
period of significant risk reduction in the banking sector and financial
markets. Deterioration in asset quality and capital positions of major U.S.
financial institutions led to further distress in credit markets, which prompted
U.S. policy makers to provide liquidity measures to avert a system-wide
meltdown. The U.S. Federal Reserve Board (Fed) also reduced interest rates a
cumulative 325 basis points (bps) from 5.25% to 2.00% during the reporting
period.
European economic growth came under increased pressure and eurozone second
quarter 2008 GDP growth slowed to 1.4% year-over-year.(3) However, the European
Central Bank (ECB) increased interest rates 25 bps to 4.25% in July due to
concerns that the significant commodity price-based inflation increase would
influence households' expectations of future price developments and wage
demands. Consumer price inflation surged to 3.8%, or nearly twice the rate the
ECB defines as consistent with price stability.(3) While European labor markets
remained stable, consumer confidence dropped sharply because of higher inflation
and a less favorable economic outlook. Headwinds to growth continued to build,
including pockets of housing market weakness, the effects of past interest rate
tightening, the impact to European exporters of slowing global growth, and the
euro's rapid strengthening throughout most of the reporting period. Non-euro
European countries, excluding the U.K., continued to tighten interest rates as
these nations' inflation rates deviated from their central banks' targets. For
example, Poland hiked interest rates 125 bps and Norway and Sweden raised them
100 bps.
Asia's economic growth also moderated, but not to the extent seen in the U.S. or
Europe. China's second quarter GDP registered 10.1% year-over-year growth,
although that was below 2007's 12.0% average quarterly rate.(4)
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.
(2.) Source: Federal Reserve H10 Report.
(3.) Source: Eurostat.
(4.) Source: National Bureau of Statistics (China).
Annual Report | 5
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 8/31/08
(PERFORMANCE GRAPH)
Americas 24.6%
Asia Pacific 22.3%
Other Europe 13.9%
EMU* 12.6%
Supranationals** 10.8%
Middle East & Africa 5.9%
Other Net Assets 9.9%
* The Fund's EMU investments were in Germany, France and Austria.
** The Fund's supranational investments were denominated in the Japanese yen,
Mexican peso, New Zealand dollar, Norwegian krone and Polish zloty.
Outside of China, economic growth was more modest. In second quarter 2008,
Indonesia's economy grew 6.4%, Malaysia's 6.3%, South Korea's 4.8% and Japan's
0.7%.(5) Asia also experienced rising inflation as food and energy prices
surged. With oil reaching a peak price level of $145 per barrel, some Asian
governments reduced the amount of their energy subsidies. However, Asian
interest rates generally did not tighten as significantly as in Europe or Latin
America. During the 12-month period, Indonesia hiked interest rates 75 bps,
China 45 bps and South Korea 25 bps. By period-end, however, China began
relaxing restrictions on lending and discussed strategies for supporting
investment growth through government spending. Asia broadly continued to
generate trade and current account surpluses, with the exception of South Korea.
Singapore registered a current account surplus of 18.7% of GDP, Malaysia 16.5%,
China 11.0% and Indonesia 2.3%.(4, 6) South Korea, on the other hand,
experienced a 0.8% deficit.(7)
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.
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's positioning during the year under review reflected our analysis that
given trade and financial linkages, global economic growth could slow due to
weak U.S. demand and continued financial and credit market stresses. Although
global inflation rates generally increased during the reporting period, we
increased our exposure to bond markets where we identified certain
characteristics. These included countries with inflation resulting from a supply
shock from commodity prices rather than driven by domestic demand, central banks
that demonstrated credibility and, in our view, prospects for weaker economic
growth. We believed market volatility could present attractive buying
opportunities because these markets' central banks would be well positioned to
reduce interest rates if the supply shock fades.
(5.) Sources: EcoWin, Bank of Korea and Economic & Social Research Institute
Japan.
(6.) Sources: Singapore Department of Statistics; Department of Statistics
Malaysia; Bank of Indonesia.
(7.) Source: Bank of Korea.
6 | Annual Report
Compared with the JPM GGBI, our interest rate positioning detracted from
relative performance. Developed markets' long-term bond yields fell at the onset
of the credit crisis a year ago. For example, significant monetary easing and
flight to quality benefited U.S. long-term Treasury yields, which fell 71 bps
during the 12-month period to 3.83% on August 31, 2008. As a result, our
underweighted positioning in developed markets, including the U.S., worked
against the Fund's relative performance. On the other hand, emerging bond market
yields rose due mostly to risk aversion. Thus, the Fund's key duration positions
including Indonesia, Brazil, Mexico and South Korea negatively impacted relative
performance. Nevertheless, we saw value in these markets whose yields were
attractive relative to U.S. Treasuries and have lagged the U.S.'s rally. For
example, Mexico's long-term bond yields rose 64 bps to 8.44% at period-end.(8
)Mexico's central bank fought to keep rising food prices from boosting inflation
expectations by hiking interest rates 100 bps during the period. However,
Mexico's economic growth faced increased uncertainty given that the nation has
strong economic links to the weakening U.S. economy.
CURRENCY STRATEGY
Sluggish domestic economic growth, concerns over spreading financial sector
weakness, and Fed interest rate cuts led to the U.S. dollar's decline during the
12-month period. The dollar fell 7.40% against the euro and 6.38% against the
Japanese yen.(9) Countries with strong balance of payment fundamentals and large
commodity exports also benefited. For instance, the Brazilian real gained 20.05%
versus the U.S. dollar, which boosted Fund performance.(9)
During the reporting period, we favored exposure to the Japanese yen and Swiss
franc, which we believed could benefit from global deleveraging. Additionally,
given their positive correlation to increasing risk aversion, we believed these
currencies may help minimize Fund volatility. The Fund's relative performance
gained from exposure to the Swiss franc and the Japanese yen during the period.
We increasingly positioned the Fund during the period under review toward Asia,
where we perceived greater relative value than in Europe. This was largely based
on our outlook for a more moderate economic growth slowdown in Asia compared
with Europe and the U.S., and our assessment that the euro was significantly
overvalued and Asian currencies broadly undervalued. Additionally, we remained
cautious with regard to the U.S. dollar versus Asian
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.
(8.) Source: Proveedor Valor de Mercado.
(9.) Source: Exshare (via Compustat via Factset).
Annual Report | 7
CURRENCY BREAKDOWN
8/31/08
% OF TOTAL
NET ASSETS
----------
ASIA PACIFIC 80.9%
Japanese Yen 37.0%
Malaysian Ringgit 14.8%
Singapore Dollar 9.5%
Indonesian Rupiah 6.7%
Kazakhstani Tenge 4.8%
Indian Rupee 3.6%
Australian Dollar 3.1%
Taiwanese Dollar 1.4%
Vietnamese Dong 0.5%
New Zealand Dollar* -0.4%
South Korean Won* -0.1%
AMERICAS 42.4%
U.S. Dollar 32.0%
Brazilian Real 7.5%
Peruvian Nuevo Sol 3.1%
Chilean Peso 0.8%
Mexican Peso* -1.0%
MIDDLE EAST & AFRICA 5.9%
Egyptian Pound 5.9%
EUROPE* -29.2%
Swiss Franc 14.0%
Swedish Krona 12.6%
Polish Zloty 8.0%
Russian Ruble 5.3%
Norwegian Krone 3.2%
Czech Koruna 1.4%
Romanian Leu-New* -4.5%
British Pound Sterling* -2.4%
Euro* -66.8%
* Holding is a negative percentage because of the Fund's holdings of forward
currency exchange contracts.
currencies given the U.S.'s large bilateral trade deficit with Asia, which at
$352 billion is more than three times the deficit the U.S. has with Europe.(5)
Over the past seven years, the euro appreciated 62% against the U.S. dollar
while the Chinese yuan appreciated 21%.(9) In addition to our Japanese yen
allocation, we continued to hold exposure to a basket of Asian currencies
including the Singapore dollar and Malaysian ringgit. The Fund benefited from
the 7.75% and 3.18% appreciation of the Singapore dollar and Malaysian ringgit
against the U.S. dollar during the 12-month period.(9)
Reflecting our cautious view of the euro and the high correlation of many
non-euro European currencies to the euro, we hedged out this implicit euro risk
from our portfolio. Additionally, we added exposure to Asian currencies versus
the euro to reflect our medium-term view of their relative value. Although the
euro's strength provided an opportunity to build positions at what we deemed
attractive valuations, it also worked against the Fund's relative performance.
Additionally, our non-euro European currency holdings generated mixed
performance. For example, the Polish zloty and Swiss franc appreciated 14.91%
and 1.87% against the euro, benefiting Fund performance.(9) Conversely, the
Swedish krona fell 0.69% against the euro and detracted from relative
performance.(9)
GLOBAL SOVEREIGN DEBT STRATEGY
The Fund also has the ability to invest in investment-grade and
subinvest-ment-grade sovereign debt. As an asset class, these investments
typically compensate for greater credit risk by offering higher yields relative
to U.S. and European benchmark treasury yield curves. U.S. dollar-denominated
emerging market debt generated a 12-month total return of +6.80% as measured by
the JPM Emerging Markets Bond Index Global (EMBIG).(10)Sovereign interest rate
spreads rose from 235 bps at the beginning of the reporting period to 323 bps by
period-end, as emerging market credit yields rose and U.S. Treasury yields
fell.(10) The Fund had limited exposure to U.S. dollar-denominated emerging
market debt given valuations, but we noted that credit fundamentals have
improved over the past few years, as shown by reserve accumulation, more
supportive economic policies and improved debt ratios.
(10.) Source: (C) 2008 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.
8 | 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, 2008, 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 | 9
Performance Summary as of 8/31/08
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 8/31/08 8/31/07
----------- ------ ------- -------
Net Asset Value (NAV) -$0.14 $8.81 $8.95
Market Price (NYSE) -$0.04 $8.97 $9.01
DISTRIBUTIONS (9/1/07-8/31/08)
Dividend Income $1.0708
PERFORMANCE
1-YEAR 5-YEAR 10-YEAR
------ ------ -------
Cumulative Total Return(1)
Based on change in NAV(2) +10.68% +66.65% +159.28%
Based on change in market price(3) +12.25% +75.40% +227.68%
Average Annual Total Return(1)
Based on change in NAV(2) +10.68% +10.75% +9.99%
Based on change in market price(3) +12.25% +11.89% +12.60%
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
SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
VOLATILITY, ECONOMIC INSTABILITY; AND SOCIAL AND POLITICAL DEVELOPMENTS OF
COUNTRIES WHERE THE FUND INVESTS. EMERGING MARKETS INVOLVE HEIGHTENED RISKS
RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THEIR
RELATIVELY SMALL SIZE AND LESSER LIQUIDITY. ALSO, AS A 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.
10 | Annual Report
Important Notice to Shareholders
FOREIGN CURRENCY TRANSACTIONS
For the purposes of hedging currency exchange rates, efficient portfolio
management and/or purposes of total returns, the Fund may also, from time to
time, enter into forward contracts including currency forwards, cross currency
forwards (which may result in net short currency exposure), options on
currencies or financial and index futures contracts, including interest rate
swaps. Such transactions could be effected with respect to hedges on non-U.S.
dollar denominated securities owned by the Fund or sold by the Fund but not yet
delivered, or committed or anticipated to be purchased by the Fund. The
successful use of these transactions will usually depend on the manager's
ability to accurately forecast currency exchange rate movements. Should exchange
rates move in an unexpected manner, the Fund may not achieve the anticipated
benefits of the transaction, or it may realize losses. In addition, these
techniques could result in a loss if the counterparty to the transaction does
not perform as promised. Moreover, investors should bear in mind that the Fund
is not obligated to actively engage in these transactions.
The Board of Trustees of the Fund has approved the removal of the Fund's
previous policy of limiting investments in derivative securities to 5% of the
Fund's assets.
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.
Annual Report | 11
Templeton Global Income Fund
FINANCIAL HIGHLIGHTS
YEAR ENDED AUGUST 31,
--------------------------------------------------------------
2008 2007 2006 2005 2004
---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 8.95 $ 8.93 $ 9.02 $ 8.77 $ 8.18
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income(a) ..................... 0.44 0.40 0.37 0.39 0.41
Net realized and unrealized gains (losses) ... 0.49 0.52 0.33 0.49 0.72
---------- ---------- ---------- ---------- ----------
Total from investment operations ................ 0.93 0.92 0.70 0.88 1.13
---------- ---------- ---------- ---------- ----------
Less distributions from net investment income and
net foreign currency gains ................... (1.07) (0.90) (0.79) (0.63) (0.54)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .................... $ 8.81 $ 8.95 $ 8.93 $ 9.02 $ 8.77
========== ========== ========== ========== ==========
Market value, end of year(b) .................... $ 8.97 $ 9.01 $ 9.15 $ 8.85 $ 8.56
========== ========== ========== ========== ==========
Total return (based on market value per share) .. 12.25% 8.63% 13.39% 10.61% 14.69%
RATIOS TO AVERAGE NET ASSETS
Expenses(c) ..................................... 0.74% 0.75% 0.80% 0.76% 0.77%
Net investment income ........................... 4.82% 4.45% 4.16% 4.22% 4.66%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $1,155,981 $1,170,414 $1,161,850 $1,172,240 $1,136,976
Portfolio turnover rate ......................... 64.44% 49.24% 49.20% 41.81% 48.85%
(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, 2008
PRINCIPAL AMOUNT(a) VALUE
----------------------- ------------
BONDS 84.0%
ARGENTINA 1.7%
(b,c) Government of Argentina, senior bond, FRN, 3.127%, 8/03/12 ..... 50,200,000 $ 19,955,250
------------
AUSTRALIA 3.5%
Queensland Treasury Corp.,
6.00%, 7/14/09 .............................................. 33,055,000 AUD 28,271,599
(d) 144A, 7.125%, 9/18/17 ....................................... 16,480,000 NZD 11,872,882
------------
40,144,481
------------
AUSTRIA 4.7%
Oesterreichische Kontrollbank AG, senior bond, 2.75%, 6/14/11 .. 60,000,000 CHF 54,431,747
------------
BRAZIL 7.6%
Nota Do Tesouro Nacional,
9.762%, 1/01/12 ............................................. 36,035(e) BRL 19,922,276
9.762%, 1/01/14 ............................................. 15,000(e) BRL 7,992,279
9.762%, 1/01/17 ............................................. 54,900(e) BRL 28,015,241
(f) Index Linked, 6.00%, 5/15/15 ................................ 9,400(e) BRL 9,227,536
(f) Index Linked, 6.00%, 5/15/45 ................................ 23,625(e) BRL 22,358,132
------------
87,515,464
------------
CANADA 1.4%
Province of Manitoba, 6.375%, 9/01/15 .......................... 14,800,000 NZD 10,080,529
Province of Ontario, 6.25%, 6/16/15 ............................ 8,460,000 NZD 5,686,248
------------
15,766,777
------------
EGYPT 5.9%
(g) Egypt Treasury Bills, 9/16/08 - 8/18/09 ........................ 308,900,000 EGP 54,435,368
(g) Egypt Treasury Bill, 12/16/08 .................................. 75,050,000 EGP 13,629,634
------------
68,065,002
------------
FRANCE 3.0%
Government of France, 4.25%, 10/25/17 .......................... 23,500,000 EUR 34,271,753
------------
GERMANY 4.9%
(b) KfW Bankengruppe, FRN, 0.688%, 8/08/11 ......................... 6,180,000,000 JPY 56,701,103
------------
INDONESIA 6.2%
Government of Indonesia,
14.25%, 6/15/13 ............................................. 84,050,000,000 IDR 9,949,494
14.275%, 12/15/13 ........................................... 81,836,000,000 IDR 9,735,055
9.50%, 6/15/15 .............................................. 33,050,000,000 IDR 3,187,349
10.75%, 5/15/16 ............................................. 82,245,000,000 IDR 8,371,159
9.00%, 9/15/18 .............................................. 18,520,000,000 IDR 1,650,575
11.50%, 9/15/19 ............................................. 23,000,000,000 IDR 2,401,504
11.00%, 11/15/20 ............................................ 319,000,000,000 IDR 32,024,028
9.50%, 7/15/23 .............................................. 11,000,000,000 IDR 965,751
10.00%, 2/15/28 ............................................. 41,470,000,000 IDR 3,711,917
------------
71,996,832
------------
Annual Report | 13
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE
----------------------- ------------
BONDS (CONTINUED)
MALAYSIA 1.3%
Government of Malaysia,
3.461%, 7/31/13 ............................................ 9,100,000 MYR $ 2,607,330
3.814%, 2/15/17 ............................................ 19,530,000 MYR 5,371,003
4.24%, 2/07/18 ............................................. 24,875,000 MYR 7,047,117
------------
15,025,450
------------
MEXICO 4.8%
Government of Mexico, 10.00%, 12/05/24 ........................ 5,044,900(g) MXN 55,623,885
------------
NEW ZEALAND 1.1%
Government of New Zealand, 6.00%, 11/15/11 .................... 18,273,000 NZD 12,778,541
------------
NORWAY 0.4%
Government of Norway, 6.50%, 5/15/13 .......................... 23,500,000 NOK 4,640,844
------------
PERU 3.0%
Government of Peru,
9.91%, 5/05/15 ............................................. 6,500,000 PEN 2,445,856
7.84%, 8/12/20 ............................................. 32,200,000 PEN 10,794,844
Series 7, 8.60%, 8/12/17 ................................... 61,545,000 PEN 21,755,871
------------
34,996,571
------------
PHILIPPINES 0.1%
(i) Government of the Philippines, Reg S, 9.125%, 2/22/10 ......... 770,000 EUR 1,159,806
------------
POLAND 3.3%
Government of Poland,
6.00%, 5/24/09 ............................................. 27,500,000 PLN 12,049,815
5.75%, 9/23/22 ............................................. 60,500,000 PLN 25,843,716
------------
37,893,531
------------
SOUTH KOREA 10.1%
Korea Deposit Insurance Corp.,
5.57%, 9/14/12 ............................................. 7,200,000,000 KRW 6,413,073
5.28%, 2/15/13 ............................................. 1,232,000,000 KRW 1,065,850
Korea Treasury Bond,
5.25%, 9/10/12 ............................................. 15,946,000,000 KRW 14,350,917
5.00%, 9/10/16 ............................................. 4,656,000,000 KRW 4,028,672
5.50%, 9/10/17 ............................................. 83,352,600,000 KRW 74,246,295
5.25%, 3/10/27 ............................................. 19,170,000,000 KRW 16,243,418
------------
116,348,225
------------
(j) SUPRANATIONAL 10.8%
European Bank For Reconstruction & Development, senior note,
5.10%, 6/12/09 ............................................. 125,000,000 PLN 54,793,405
European Investment Bank, senior note,
4.50%, 5/15/13 ............................................. 113,650,000 NOK 20,189,082
(b) FRN, 0.709%, 9/21/11 .......................................... 2,000,000,000 JPY 18,378,721
14 | Annual Report
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (CONTINUED)
PRINCIPAL AMOUNT(a) VALUE
------------------- --------------
BONDS (CONTINUED)
(j) SUPRANATIONAL (CONTINUED)
Inter-American Development Bank,
1.90%, 7/08/09 ..................... 640,000,000 JPY $ 5,933,107
7.50%, 4/15/15 ..................... 8,000,000 NZD 5,819,003
6.00%, 12/15/17 .................... 6,000,000 NZD 3,966,375
senior note, 7.50%, 12/05/24 ....... 185,000,000 MXN 15,866,651
--------------
124,946,344
--------------
SWEDEN 10.2%
Government of Sweden,
5.00%, 1/28/09 ..................... 518,600,000 SEK 80,480,394
4.00%, 12/01/09 .................... 151,720,000 SEK 23,370,419
(g) Strip, 9/17/08 ..................... 91,000,000 SEK 14,075,603
--------------
117,926,416
--------------
TOTAL BONDS (COST $953,261,730) 970,188,022
--------------
MUNICIPAL BONDS 0.4%
UNITED STATES AND U.S. TERRITORIES 0.4%
Alabama Public Housing Authorities
Capital Program Revenue, Series B,
FSA Insured, 4.45%, 1/01/24 ........ 65,000 62,685
California State GO, Refunding,
5.125%, 4/01/33 .................... 500,000 496,870
5.00%, 4/01/38 ..................... 525,000 512,542
Florida State Hurricane Catastrophe
Fund Finance Corp. Revenue, Series
A, 4.25%, 7/01/14 .................. 3,055,000 3,070,519
Metropolitan Atlanta Rapid Transit
Authority Sales Tax Revenue,
Refunding, Third Indenture Series A,
FGIC Insured, 5.00%, 7/01/19 ....... 150,000 162,792
New York City GO, Sub Series L-1,
5.00%, 4/01/26 ..................... 100,000 102,056
North Carolina Eastern Municipal Power
Agency Power System Revenue,
Refunding, Series A, Assured
Guaranty, 5.25%, 1/01/19 ........... 250,000 269,465
Puerto Rico Commonwealth GO, Public
Improvement, Refunding, Series A,
MBIA Insured, 5.50%, 7/01/21 ....... 100,000 104,395
Wisconsin State GO, Series A, FGIC
Insured, 5.00%, 5/01/21 ............ 50,000 52,593
--------------
TOTAL MUNICIPAL BONDS (COST
$4,875,110) ........................ 4,833,917
--------------
NOTIONAL AMOUNT
-------------------
OPTIONS PURCHASED (COST $3,750) 0.0%(k)
PUTS
BRAZIL 0.0%(k)
(l) Brazilian Real Put, strike price 2.05
BRL, expiration date 1/20/09 ....... $ 100,000 140
--------------
TOTAL INVESTMENTS BEFORE SHORT TERM
INVESTMENTS (COST $958,140,590) .... 975,022,079
--------------
Annual Report | 15
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (CONTINUED)
SHARES VALUE
------------------- --------------
SHORT TERM INVESTMENTS (COST
$66,102,258) 5.7%
MONEY MARKET FUND 5.7%
UNITED STATES 5.7%
(m) Franklin Institutional Fiduciary Trust
Money Market Portfolio, 2.15% ...... 66,102,258 $ 66,102,258
--------------
TOTAL INVESTMENTS (COST $1,024,242,848)
90.1% .............................. 1,041,124,337
NET UNREALIZED APPRECIATION ON FORWARD
EXCHANGE CONTRACTS 2.1% ............ 23,950,196
OTHER ASSETS, LESS LIABILITIES 7.8% ... 90,906,295
--------------
NET ASSETS 100.0% ..................... $1,155,980,828
==============
CURRENCY ABBREVIATIONS
AUD - Australian Dollar
BRL - Brazilian Real
CHF - Swiss Franc
EGP - Egyptian Pound
EUR - Euro
IDR - Indonesian Rupiah
JPY - Japanese Yen
KRW - South Korean Won
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 ABBREVIATIONS
FGIC - Financial Guaranty Insurance Co.
FRN - Floating Rate Note
FSA - Financial Security Assurance Inc.
GO - General Obligation
MBIA - Municipal Bond Investors Assurance Corp.
16 | Annual Report
Templeton Global Income Fund
STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (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. This security has been deemed liquid under
guidelines approved by the Fund's Board of Trustees. At August 31, 2008,
the value of this security was $11,872,882, representing 1.03% 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(h).
(g) The security is traded on a discount basis with no stated coupon rate.
(h) Principal amount is stated in 100 Mexican Peso Units.
(i) 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. This
security has been deemed liquid under guidelines approved by the Fund's
Board of Trustees. At August 31, 2008, the value of this security was
$1,159,806, representing 0.1% of net assets.
(j) A supranational organization is an entity formed by two or more central
governments through international treaties.
(k) Rounds to less than 0.1% of net assets.
(l) Non-income producing for the twelve months ended August 31, 2008.
(m) See Note 7 regarding investments in the Franklin Institutional Fiduciary
Trust Money Market Portfolio. The rate shown is the annualized seven-day
yield at period end.
The accompanying notes are an integral part of these financial statements.
Annual Report | 17
Templeton Global Income Fund
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2008
Assets:
Investments in securities:
Cost - Unaffiliated issuers ................................... $ 958,140,590
Cost - Sweep Money Fund (Note 7) .............................. 66,102,258
--------------
Total cost of investments ..................................... $1,024,242,848
==============
Value - Unaffiliated issuers .................................. $ 975,022,079
Value - Sweep Money Fund (Note 7) ............................. 66,102,258
--------------
Total value of investments .................................... 1,041,124,337
Cash on deposit with brokers for swap contracts .................. 1,400,000
Foreign currency, at value (cost $106,554) ....................... 108,716
Receivables:
Investment securities sold .................................... 73,314,090
Capital shares issued for reinvestment of distributions ....... 336,741
Interest ...................................................... 17,935,100
Unrealized appreciation on forward exchange contracts (Note 8) ... 39,391,027
Unrealized appreciation on swap contracts (Note 9) ............... 1,104,477
--------------
Total assets ............................................... 1,174,714,488
--------------
Liabilities:
Payables - Affiliates ............................................ 596,424
Unrealized depreciation on forward exchange contracts (Note 8) ... 15,440,831
Unrealized depreciation on swap contracts (Note 9) ............... 2,445,626
Accrued expenses and other liabilities ........................... 250,779
--------------
Total liabilities .......................................... 18,733,660
--------------
Net assets, at value .................................... $1,155,980,828
==============
Net assets consist of:
Paid-in capital .................................................. $1,086,209,746
Undistributed net investment income .............................. 52,183,826
Net unrealized appreciation (depreciation) ....................... 38,065,113
Accumulated net realized gain (loss) ............................. (20,477,857)
==============
Net assets, at value ..................................... $1,155,980,828
==============
Shares outstanding ............................................... 131,144,349
==============
Net asset value per share ........................................ $ 8.81
==============
The accompanying notes are an integral part of these financial statements.
18 | Annual Report
Templeton Global Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended August 31, 2008
Investment income:
Dividends - Sweep Money Fund (Note 7) ............................ $ 1,213,173
Interest (net of foreign taxes of $1,708,800) .................... 65,157,617
--------------
Total investment income .................................... 66,370,790
--------------
Expenses:
Management fees (Note 3a) ........................................ 5,896,519
Administrative fees (Note 3b) .................................... 1,469,168
Transfer agent fees .............................................. 258,695
Custodian fees (Note 4) .......................................... 733,644
Reports to shareholders .......................................... 160,649
Registration and filing fees ..................................... 117,437
Professional fees ................................................ 72,989
Trustees' fees and expenses ...................................... 98,650
Other ............................................................ 49,565
--------------
Total expenses ............................................. 8,857,316
Expense reductions (Note 4) ................................ (18,362)
--------------
Net expenses ............................................ 8,838,954
--------------
Net investment income ................................ 57,531,836
--------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ................................................... 79,451,013
Foreign currency transactions ................................. 7,909,011
--------------
Net realized gain (loss) ................................ 87,360,024
--------------
Net change in unrealized appreciation (depreciation) on:
Investments ................................................... (42,041,688)
Translation of other assets and liabilities denominated in
foreign currencies ......................................... 19,796,565
--------------
Net change in unrealized appreciation (depreciation) .... (22,245,123)
--------------
Net realized and unrealized gain (loss) ............................. 65,114,901
--------------
Net increase (decrease) in net assets resulting from operations ..... $ 122,646,737
==============
The accompanying notes are an integral part of these financial statements.
Annual Report | 19
Templeton Global Income Fund
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
-------------------------------
2008 2007
-------------- --------------
Increase (decrease) in net assets:
Operations:
Net investment income ......................................... $ 57,531,836 $ 52,159,912
Net realized gain (loss) from investments and foreign
currency transactions ...................................... 87,360,024 86,430,721
Net change in unrealized appreciation (depreciation) on
investments and translation of assets and liabilities
denominated in foreign currencies .......................... (22,245,123) (19,770,670)
-------------- --------------
Net increase (decrease) in net assets resulting from
operations ........................................... 122,646,737 118,819,963
-------------- --------------
Distributions to shareholders from net investment income and
net foreign currency gains .................................... (140,177,810) (117,111,037)
Capital share transactions: (Note 2) ............................. 3,098,161 6,855,066
-------------- --------------
Net increase (decrease) in net assets ................... (14,432,912) 8,563,992
Net assets:
Beginning of year ................................................ 1,170,413,740 1,161,849,748
-------------- --------------
End of year ...................................................... $1,155,980,828 $1,170,413,740
-------------- --------------
Undistributed net investment income included in net assets:
End of year ...................................................... $ 52,183,826 $ 52,791,775
============== ==============
The accompanying notes are an integral part of these financial statements.
20 | 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 non-diversified, closed-end investment
company.
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market. Investments in open-end mutual funds are valued at the closing net asset
value.
Corporate debt securities and government 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.
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, 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.
Annual Report | 21
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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. FOREIGN CURRENCY CONTRACTS
When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate at a future date. Realized and unrealized gains and losses on these
contracts are included in the Statement of Operations.
The Fund may also enter into forward exchange contracts to hedge against
fluctuations in foreign exchange rates or to gain exposure to certain foreign
currencies. These contracts are valued daily by the Fund and the unrealized
gains or losses on the contracts, as measured by the difference between the
contractual forward foreign exchange rates and the forward rates at the
reporting date, are included in the Statement of Assets and Liabilities.
Realized and unrealized gains and losses on these contracts are included in the
Statement of Operations.
The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts, which may be in
excess of the amount reflected in the Statement of Assets and Liabilities.
22 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INTEREST RATE SWAPS
The Fund may enter into interest rate swap contracts to hedge the risk of
changes in interest rates. Interest rate swaps are agreements between two
parties to exchange cash flows based on a notional principal amount. The net
interest receivable or payable is recorded as unrealized appreciation or
depreciation. Payments received or made are recorded as realized gain or loss on
the Statement of Operations. Interest rate swaps are marked to market daily
based upon quotations from the market makers and the change, if any, is recorded
as an unrealized gain or loss in the Statement of Operations. When the swap
contract is terminated early, the fund records a realized gain or loss equal to
the difference between the current realized value and the expected cash flows.
The risks of interest rate swaps include changes in the market conditions and
the possible inability of the counterparty to fulfill its obligations under the
agreement.
E. OPTIONS
The Fund may purchase or write options. Options are contracts entitling the
holder to purchase or sell securities, currencies, or other financial
instruments at a specified price or exchange rate, or, in the case of index
options, to receive or pay the difference between the index value and the strike
price of the index option. Options purchased are recorded as investments;
options written (sold) are recorded as liabilities. Upon closing of an option
which results in a cash settlement, the difference between the premium (original
option value) and the settlement proceeds is realized as a gain or loss. When
securities are acquired or delivered upon exercise of an option, the acquisition
cost or sale proceeds are adjusted by the amount of the premium. When an option
expires, the premium is realized as a gain for options written or as a loss for
options purchased. The risks include the possibility there may be an illiquid
options market or the inability of the counterparties to fulfill their
obligations under the contract. Writing options involves, to varying degrees,
elements of market risk in excess of the amount recognized in the Statement of
Assets and Liabilities.
F. 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, 2008, 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.
Annual Report | 23
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. 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.
H. 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.
I. 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.
24 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST
At August 31, 2008, there were an unlimited number of shares authorized (without
par value). Transactions in the Fund's shares were as follows:
YEAR ENDED AUGUST 31,
-------------------------------------------
2008 2007
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- ------- ----------
Shares issued in reinvestment of
distributions .................. 339,409 $3,098,161 759,079 $6,855,066
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, 2008, the Fund had
repurchased a total of 11,210,400 shares. During the years ended August 31, 2007
and 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
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
Annual Report | 25
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
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, 2008, 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, 2008, the capital loss carryforwards were as
follows:
Capital loss carryforwards expiring in:
2010 ...................................... $14,475,211
2011 ...................................... 4,209,282
-----------
$18,684,493
===========
During the year ended August 31, 2008, the Fund utilized $6,018,510 of capital
loss carryforwards.
The tax character of distributions paid during the years ended August 31, 2008
and August 31, 2007, was as follows:
2008 2007
------------ ------------
Distributions paid from:
Ordinary income ......................... $140,177,810 $117,111,037
At August 31, 2008, the cost of investments, net unrealized appreciation
(depreciation) and undistributed ordinary income for income tax purposes were as
follows:
Cost of investments ......................................... $1,028,028,321
--------------
Unrealized appreciation ..................................... $ 50,808,935
Unrealized depreciation ..................................... (37,712,919)
--------------
Net unrealized appreciation (depreciation) .................. $ 13,096,016
==============
Distributable earnings - undistributed ordinary income ...... $ 75,601,158
==============
26 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions, interest rate
swaps, and bond discounts and premiums 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, and bond discounts and premiums.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended August 31, 2008, aggregated $673,955,761 and $781,263,273,
respectively.
7. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO
The Fund may invest in the Franklin 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. FORWARD EXCHANGE CONTRACTS
At August 31, 2008, the Fund had the following forward exchange contracts
outstanding:
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
AMOUNT(a) DATE APPRECIATION DEPRECIATION
------------------ ---------- ------------ ------------
CONTRACTS TO BUY
223,340,000 Japanese Yen .............. 2,010,261 9/04/08 $ 42,406 $ --
225,000,000 Indian Rupee .............. 7,816,843 NZD 9/24/08 -- (338,034)
538,227,400 Japanese Yen .............. 4,880,000 9/25/08 72,348 --
803,615,400 Japanese Yen .............. 7,245,000 9/26/08 149,641 --
779,666,250 Kazakhstani Tenge ......... 6,150,000 10/10/08 359,966 --
314,875,000 Chilean Peso .............. 625,000 10/20/08 -- (13,492)
141,373,750 Chilean Peso .............. 280,000 10/22/08 -- (5,488)
252,100,000 Chilean Peso .............. 500,000 10/23/08 -- (10,525)
3,571,898 Swiss Franc ............... 3,100,000 10/27/08 145,610 --
412,800,000 Kazakhstani Tenge ......... 3,225,000 11/03/08 221,462 --
1,730,664,000 Japanese Yen .............. 15,600,000 11/04/08 362,865 --
10,600,000 Swiss Franc ............... 9,591,241 11/06/08 41,335 --
1,950,000,000 Japanese Yen .............. 17,934,333 11/13/08 60,268 --
1,508,082,050 Japanese Yen .............. 14,224,505 11/14/08 -- (307,178)
4,318,461,667 Japanese Yen .............. 40,427,464 12/02/08 -- (534,155)
5,170,000 Euro ...................... 19,103,150 RON 12/03/08 -- (215,276)
4,310,000 Euro ...................... 15,630,215 RON 12/04/08 -- (58,640)
543,250,000 Japanese Yen .............. 5,082,708 12/05/08 -- (63,293)
Annual Report | 27
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. FORWARD EXCHANGE CONTRACTS (CONTINUED)
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
AMOUNT(a) DATE APPRECIATION DEPRECIATION
------------------ ---------- ------------ ------------
CONTRACTS TO BUY (CONTINUED)
1,664,019,000 Kazakhstani Tenge ......... 12,810,000 12/22/08 $ 1,050,408 $ --
1,056,356,000 Kazakhstani Tenge ......... 8,236,694 1/16/09 548,986 --
1,946,000,000 Kazakhstani Tenge ......... 15,203,125 1/20/09 977,809 --
128,800,000 Japanese Yen .............. 1,234,284 1/22/09 -- (40,599)
3,024,013 Peruvian Nuevo Sol ........ 11,778,504 MXN 1/22/09 -- (102,382)
47,978,579 Malaysian Ringgit ......... 14,941,943 1/23/09 -- (768,930)
28,641,145 Singapore Dollar .......... 20,469,658 1/23/09 -- (141,552)
9,301,302 Australian Dollar ......... 7,905,177 1/30/09 -- (55,120)
89,650,000 Swedish Krona ............. 13,858,616 1/30/09 -- (89,732)
832,775,000 Indian Rupee .............. 26,988,728 NZD 2/27/09 222,525 --
29,978,900 Swedish Krona ............. 3,199,422 EUR 4/29/09 -- (55,470)
760,290,277 Kazakhstani Tenge ......... 66,628,423 MXN 5/27/09 34,554 --
205,190,790 Russian Ruble ............. 92,527,712 MXN 6/16/09 -- (513,566)
1,350,000,000 Japanese Yen .............. 8,320,596 EUR 7/22/09 635,954 --
3,370,207 Malaysian Ringgit ......... 680,053 EUR 8/05/09 16,921 --
647,291,600 Japanese Yen .............. 4,154,187 EUR 8/21/09 85,496 --
321,024,200 Japanese Yen .............. 2,058,375 EUR 8/26/09 46,658 --
CONTRACTS TO SELL
3,844,304,900 South Korean Won .......... 4,665,135 CHF 11/13/08 713,289 --
29,900,000 Romanian Leu-New .......... 66,311,821 NOK 11/17/08 -- (56,226)
5,536,655,000 South Korean Won .......... 6,832,087 CHF 11/17/08 1,130,755 --
23,799,300,000 South Korean Won .......... 28,063,107 CHF 11/25/08 3,679,415 --
4,455,360,000 South Korean Won .......... 5,302,801 CHF 11/26/08 733,660 --
11,930,418,000 South Korean Won .......... 14,207,831 CHF 11/28/08 1,972,633 --
4,542,277,200 South Korean Won .......... 5,492,675 CHF 12/02/08 827,317 --
14,416,140,000 South Korean Won .......... 17,258,431 CHF 12/03/08 2,467,941 --
2,470,410 Euro ...................... 387,701,205 JPY 12/08/08 -- (22,259)
22,879,675 Romanian Leu-New .......... 59,057,475 SEK 12/15/08 -- (182,930)
30,997,821 Mexican Peso .............. 107,782,523 INR 1/22/09 -- (526,582)
6,992,355 Euro ...................... 10,194,504 1/28/09 16,485 --
6,992,355 Euro ...................... 10,203,594 1/29/09 26,086 --
2,796,098 Euro ...................... 4,060,969 1/29/09 -- (8,806)
26,940,885,209 South Korean Won .......... 28,307,277 1/30/09 3,629,709 --
3,964,380,685 South Korean Won .......... 4,513,338 CHF 1/30/09 473,945 --
2,795,469 Euro ...................... 4,099,835 2/04/09 32,201 --
1,456,071 New Zealand Dollar ........ 17,220,786,465 VND 2/12/09 -- (22,225)
25,511,568 Romanian Leu-New .......... 168,025,426 CZK 2/12/09 -- (318,742)
9,325,755 Romanian Leu-New .......... 61,718,779 CZK 2/17/09 -- (95,708)
4,433,751 Euro ...................... 6,404,776 2/19/09 -- (41,836)
1,943,304 New Zealand Dollar ........ 23,013,322,033 VND 2/20/09 -- (30,443)
15,612,964 Euro ...................... 22,708,562 2/23/09 12,087 --
31,225,928 Euro ...................... 4,803,984,119 JPY 2/23/09 -- (780,314)
15,612,964 Euro ...................... 22,679,548 2/23/09 -- (16,927)
10,408,643 Euro ...................... 15,212,232 2/25/09 82,766 --
20,817,285 Euro ...................... 3,205,789,029 JPY 2/25/09 -- (484,294)
28 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. FORWARD EXCHANGE CONTRACTS (CONTINUED)
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
AMOUNT(a) DATE APPRECIATION DEPRECIATION
------------------ ---------- ------------ ------------
CONTRACTS TO SELL (CONTINUED)
4,213,560,000 South Korean Won .......... 4,440,000 2/25/09 $ 582,312 $ --
20,817,286 Euro ...................... 30,435,288 2/26/09 177,752 --
10,408,643 Euro ...................... 1,596,342,351 JPY 2/26/09 -- (301,390)
46,838,891 Euro ...................... 7,282,833,439 JPY 2/27/09 -- (426,668)
67,656,178 Euro ...................... 99,795,984 2/27/09 1,463,531 --
6,663,669 Romanian Leu-New .......... 43,173,911 CZK 2/27/09 -- (118,433)
4,206,056,400 South Korean Won .......... 4,440,000 2/27/09 589,283 --
10,408,642 Euro ...................... 15,602,138 3/03/09 476,861 --
15,612,963 Euro ...................... 23,355,848 3/04/09 668,978 --
4,183,368,000 South Korean Won .......... 4,440,000 3/04/09 610,308 --
5,204,321 Euro ...................... 7,838,228 3/09/09 277,682 --
5,204,321 Euro ...................... 800,414,161 JPY 3/09/09 -- (120,973)
5,204,321 Euro ...................... 7,863,469 3/10/09 303,271 --
3,903,240 Euro ...................... 598,347,176 JPY 3/10/09 -- (108,374)
5,204,321 Euro ...................... 7,952,801 3/17/09 395,043 --
8,880,000,000 South Korean Won .......... 9,168,452 CHF 3/27/09 217,859 --
3,474,633,000 South Korean Won .......... 3,594,075 CHF 4/01/09 91,609 --
22,118,365 Euro ...................... 3,425,226,585 JPY 4/06/09 -- (199,448)
4,440,000,000 South Korean Won .......... 4,606,494 CHF 4/06/09 130,168 --
6,070,000 British Pound Sterling .... 11,795,345 4/07/09 887,748 --
4,042,329 British Pound Sterling .... 10,573,682 SGD 4/14/09 266,060 --
23,070,241 Euro ...................... 48,638,601 SGD 4/14/09 1,165,183 --
15,784,902 Euro ...................... 24,420,769 4/14/09 1,527,352 --
7,690,080 Euro ...................... 1,196,288,070 JPY 4/14/09 -- (9,345)
4,047,411 Euro ...................... 8,428,572 SGD 4/17/09 131,431 --
12,142,233 Euro ...................... 25,418,551 SGD 4/20/09 493,121 --
4,036,257 Euro ...................... 19,670,698 MYR 4/21/09 -- (32,416)
2,018,128 Euro ...................... 4,226,767 SGD 4/24/09 84,341 --
3,023,402 British Pound Sterling .... 18,167,744 MYR 4/27/09 -- (51,406)
2,018,128 Euro ...................... 4,212,842 SGD 4/27/09 75,131 --
16,563,648 New Zealand Dollar ........ 507,510,181 INR 4/28/09 88,908 --
1,007,801 British Pound Sterling .... 6,092,359 MYR 4/30/09 -- (5,958)
1,311,783 Euro ...................... 2,680,104 SGD 5/06/09 8,720 --
1,007,801 British Pound Sterling .... 6,073,714 MYR 5/07/09 -- (10,556)
52,217,395 Mexican Peso .............. 2,279,289,302 CLP 5/15/09 -- (540,745)
36,225,716 Mexican Peso .............. 1,576,615,600 CLP 5/20/09 -- (383,347)
50,000,000 Mexican Peso .............. 196,105,000 INR 5/20/09 -- (305,279)
7,566,528 Euro ...................... 11,663,992 6/10/09 717,239 --
92,945,816 Mexican Peso .............. 206,423,363 RUB 6/10/09 -- (507,409)
29,507,162 Mexican Peso .............. 1,334,726,977 CLP 6/12/09 -- (213,271)
38,716,472 Euro ...................... 191,669,461 MYR 6/16/09 758,155 --
194,757,301 Mexican Peso .............. 432,760,932 RUB 6/16/09 -- (1,046,835)
37,054,099 Euro ...................... 183,084,303 MYR 6/17/09 623,136 --
106,279,890 Mexican Peso .............. 237,713,212 RUB 6/19/09 -- (507,850)
Annual Report | 29
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. FORWARD EXCHANGE CONTRACTS (CONTINUED)
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
AMOUNT(a) DATE APPRECIATION DEPRECIATION
------------------ ---------- ------------ ------------
CONTRACTS TO SELL (CONTINUED)
61,955,606 Mexican Peso .............. 136,619,484 RUB 7/10/09 $ -- $ (364,887)
4,919,150 Euro ...................... 7,604,637 7/13/09 496,615 --
2,459,575 Euro ...................... 5,084,310 SGD 7/13/09 77,493 --
30,888,068 Mexican Peso .............. 68,008,329 RUB 7/13/09 -- (185,403)
2,459,575 Euro ...................... 5,091,984 SGD 7/14/09 83,251 --
2,837,971 Euro ...................... 130,059,916 TWD 7/14/09 21,066 --
1,891,981 Euro ...................... 9,423,957 MYR 7/14/09 58,075 --
4,919,150 Euro ...................... 7,613,104 7/14/09 505,345 --
3,897,480 Euro ...................... 179,843,784 TWD 7/15/09 68,060 --
4,919,150 Euro ...................... 7,691,583 7/15/09 584,087 --
4,654,272 Euro ...................... 23,285,043 MYR 7/15/09 173,466 --
2,459,575 Euro ...................... 5,134,650 SGD 7/15/09 114,005 --
1,210,868 Euro ...................... 6,055,551 MYR 7/16/09 44,525 --
529,755 Euro ...................... 24,527,657 TWD 7/16/09 11,905 --
2,459,575 Euro ...................... 3,861,041 7/17/09 307,555 --
1,229,787 Euro ...................... 57,023,379 TWD 7/17/09 30,371 --
1,229,787 Euro ...................... 6,152,870 MYR 7/17/09 46,115 --
1,229,787 Euro ...................... 2,555,251 SGD 7/17/09 48,656 --
1,891,981 Euro ...................... 2,946,287 7/22/09 213,342 --
4,351,556 Euro ...................... 6,807,139 7/24/09 521,829 --
1,229,787 Euro ...................... 2,558,154 SGD 7/24/09 51,702 --
851,391 Euro ...................... 4,283,433 MYR 7/24/09 39,413 --
1,343,306 Euro ...................... 61,951,258 TWD 7/24/09 23,034 --
14,610,919 Mexican Peso .............. 32,786,902 RUB 7/24/09 -- (62,369)
14,610,919 Mexican Peso .............. 40,787,841 TWD 7/24/09 -- (61,169)
336,331 Euro ...................... 1,687,374 MYR 7/31/09 14,342 --
8,457,907 New Zealand Dollar ........ 56,133,438,372 IDR 8/05/09 96,321 --
9,038,612 New Zealand Dollar ........ 151,667,902 RUB 8/12/09 -- (93,460)
4,411,955 New Zealand Dollar ........ 73,838,479 RUB 8/14/09 -- (53,029)
4,168,252 New Zealand Dollar ........ 50,512,959,923 VND 8/14/09 -- (58,790)
Unrealized appreciation (depreciation) on
offsetting forward exchange contracts ... 2,075,771 (3,771,297)
----------- ------------
Unrealized appreciation (depreciation)on
forward exchange contracts ........... 39,391,027 (15,440,831)
----------- ------------
NET UNREALIZED APPRECIATION
(DEPRECIATION)ON FORWARD EXCHANGE
CONTRACTS ......................... $23,950,196
===========
(a) In U.S. Dollar unless otherwise indicated.
30 | Annual Report
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. FORWARD EXCHANGE CONTRACTS (CONTINUED)
CURRENCY ABBREVIATIONS
CHF - Swiss Franc
CLP - Chilean Peso
CZK - Czech Koruna
EUR - Euro
IDR - Indonesian Rupiah
INR - Indian Rupee
JPY - Japanese Yen
MXN - Mexican Peso
MYR - Malaysian Ringgit
NOK - Norwegian Krone
NZD - New Zealand Dollar
RON - Romanian Leu-New
RUB - Russian Ruble
SEK - Swedish Krona
SGD - Singapore Dollar
TWD - Taiwanese Dollar
VND - Vietnamese Dong
9. INTEREST RATE SWAPS
At August 31, 2008, the Fund had the following interest rate swap contracts
outstanding:
RECEIVE-
COUNTER- FIXED PAY - NOTIONAL PRINCIPAL EXPIRATION UNREALIZED UNREALIZED
PARTY RATE FLOATING RATE AMOUNT(a) DATE APPRECIATION DEPRECIATION
-------- ------- ------------------------- ------------------ ---------- ------------ ------------
JPMorgan 7.16% NZD Bank Bill Rate 5,740,000 NZD 7/31/13 $ 13,622 $ --
JPMorgan 7.12% NZD Bank Bill Rate 5,750,000 NZD 8/01/13 7,042 --
JPMorgan 7.06% NZD Bank Bill Rate 5,750,000 NZD 8/04/13 -- (4,139)
JPMorgan 7.04% NZD Bank Bill Rate 11,500,000 NZD 8/05/13 -- (16,687)
JPMorgan 7.05% NZD Bank Bill Rate 2,875,000 NZD 8/06/13 -- (4,011)
JPMorgan 7.05% NZD Bank Bill Rate 2,875,000 NZD 8/07/13 -- (2,354)
JPMorgan 7.00% NZD Bank Bill Rate 3,045,600 NZD 8/14/13 -- (6,058)
JPMorgan 7.06% Tasa Nominal Annual Rate 2,646,000,000 CLP 6/13/18 -- (268,889)
Merrill Lynch 7.05% Tasa Nominal Annual Rate 7,900,000,000 CLP 6/13/18 -- (810,274)
Merrill Lynch 7.09% Tasa Nominal Annual Rate 8,650,000,000 CLP 6/16/18 -- (866,898)
JPMorgan 7.15% Tasa Nominal Annual Rate 2,700,000,000 CLP 6/18/18 -- (250,076)
JPMorgan 7.85% Tasa Nominal Annual Rate 702,800,000 CLP 7/11/18 3,484 --
JPMorgan 7.86% Tasa Nominal Annual Rate 705,600,000 CLP 7/17/18 1,799 --
Merrill Lynch 7.40% Tasa Nominal Annual Rate 580,000,000 CLP 7/30/18 -- (34,771)
Merrill Lynch 7.40% Tasa Nominal Annual Rate 580,000,000 CLP 8/06/18 -- (33,661)
JPMorgan 7.50% Tasa Nominal Annual Rate 1,210,680,000 CLP 8/07/18 -- (54,013)
Merrill Lynch 7.51% Tasa Nominal Annual Rate 580,000,000 CLP 8/07/18 -- (25,102)
JPMorgan 7.50% Tasa Nominal Annual Rate 1,208,320,000 CLP 8/13/18 -- (55,484)
Merrill Lynch 9.03% MXN Interbank Equilibrium
Interest Rate 723,000,000 MXN 8/17/18 742,190 --
JPMorgan 7.67% Tasa Nominal Annual Rate 415,200,000 CLP 8/29/18 -- (13,209)
Merrill Lynch 9.10% MXN Interbank Equilibrium
Interest Rate 240,000,000 MXN 8/04/28 336,340 --
---------- -----------
Unrealized appreciation (depreciation) on interest rate swap contracts ........... $1,104,477 $(2,445,626)
---------- -----------
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INTEREST RATE SWAP CONTRACTS .... $(1,341,149)
===========
(a) In U.S. Dollar unless otherwise indicated.
Annual Report | 31
Templeton Global Income Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. INTEREST RATE SWAPS (CONTINUED)
CURRENCY ABBREVIATIONS
CLP - Chilean Peso
MXN - Mexican Peso
NZD - New Zealand Dollar
10. CREDIT RISK
The Fund has 10.42% of its portfolio invested in high yield, senior secured
floating rate notes, 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.
11. 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.
12. NEW ACCOUNTING PRONOUNCEMENTS
In September 2006, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 157, "Fair Value Measurement" (SFAS 157), which defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. SFAS 157 is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. The Fund
believes the adoption of SFAS 157 will have no material impact on its financial
statements.
In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS 161), which expands disclosures about derivative investments and hedging
activities. SFAS 161 is effective for fiscal years and interim periods beginning
after November 15, 2008. The Fund is currently evaluating the impact, if any, of
applying the various provisions of SFAS 161.
32 | Annual Report
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, 2008, 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, 2008 by correspondence with the custodian, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 21, 2008
Annual Report | 33
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 $1,255,909 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, 2008.
At August 31, 2008, 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, 2008, 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 Class
A shareholders of record.
RECORD DATE: 8/18/2008
FOREIGN TAX FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS
CLASS PER SHARE PER SHARE PER SHARE
----- ----------- ------------- -------------------
Class A .. $0.0130 $0.4464 $0.0000
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)
34 | Annual Report
Templeton Global Income Fund
TAX DESIGNATION (UNAUDITED) (CONTINUED)
In January 2009, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2008. 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 2008 individual income
tax returns.
(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 | 35
Templeton Global Income Fund
ANNUAL MEETING OF SHAREHOLDERS, FEBRUARY 22, 2008
The Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
500 E. Broward Blvd., Fort Lauderdale, Florida, on February 22, 2008. 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: Ann Torre Bates, Edith E. Holiday, Frank A. Olson and Constantine D.
Tseretopoulos.* 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
FOR SHARES VOTING WITHHELD SHARES VOTING
----------- ----------- -------- --------- ----------- --------
TERM EXPIRING 2011
Edith E. Holiday . 109,538,943 83.70% 98.09% 2,136,742 1.63% 1.91%
Frank A. Olson ... 109,421,633 83.61% 97.98% 2,254,052 1.72% 2.02%
Constantine D.
Tseretopoulos . 109,378,721 83.57% 97.94% 2,296,964 1.76% 2.06%
TERM EXPIRING 2009
Ann Torre Bates .. 109,569,992 83.72% 98.11% 2,105,693 1.61% 1.89%
* Harris J. Ashton, Frank J. Crothers, Charles B. Johnson, Gregory E.
Johnson, David W. Niemiec, Larry D. Thompson and Robert E. Wade are
Trustees of the Fund who are currently serving and whose terms of office
continued after the Annual Meeting of Shareholders.
36 | Annual Report
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 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
shall be made by check or money order payable to "BNY Mellon" 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.
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 | 37
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, to
electronically move book-entry shares between broker-dealers, transfer agents
and DRS eligible issuers, and eliminates 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 "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.
38 | 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
FUND COMPLEX
NAME, YEAR OF BIRTH LENGTH OF OVERSEEN BY
AND ADDRESS POSITION TIME SERVED BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------- --------------- ------------------ -------------- ---------------------------------
HARRIS J. ASHTON (1932) Trustee Since 1993 143 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 28 SLM Corporation (Sallie Mae) and
500 East Broward Blvd. January 2008 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 21 Fortis, Inc. (utility holding
500 East Broward Blvd. company), Nuinsco Resources
Suite 2100 Limited (mineral exploration),
Fort Lauderdale, FL 33394-3091 Royal Fidelity Merchant Bank &
Trust Limited (financial
services), C.A. Bancorp Inc.
(financial services), Victory
Nickel Inc. (mineral
exploration), ABACO Markets
Limited (retail distributors) and
Belize Electricity Limited
(electric utility).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Island Corporate Holdings Ltd.; Director and Vice Chairman, Caribbean Utilities Company Ltd.; Director, Provo
Power Company Ltd.; director of various other business and nonprofit organizations; and FORMERLY, Chairman, Atlantic
Equipment & Power Ltd. (1977-2003).
Annual Report | 39
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, YEAR OF BIRTH LENGTH OF OVERSEEN BY
AND ADDRESS POSITION TIME SERVED BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------- --------------- ------------------ -------------- ---------------------------------
EDITH E. HOLIDAY (1952) Lead Trustee since 143 Hess Corporation (exploration and
500 East Broward Blvd. Independent 1996 and Lead refining of oil and gas), H.J.
Suite 2100 Trustee Independent Heinz Company (processed foods
Fort Lauderdale, FL 33394-3091 Trustee since and allied products), RTI
2007 International Metals, Inc.
(manufacture and distribution of
titani um), 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).
DAVID W. NIEMIEC (1949) Trustee Since 2005 21 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 143 Hess Corporation (exploration and
500 East Broward Blvd. refining of oil and gas) and
Suite 2100 Sentient Jet (private jet
Fort Lauderdale, FL 33394-3091 service).
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 143 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 21 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).
40 | Annual Report
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, YEAR OF BIRTH LENGTH OF OVERSEEN BY
AND ADDRESS POSITION TIME SERVED BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------- --------------- ------------------ -------------- ---------------------------------
ROBERT E. WADE (1946) Trustee Since 2006 35 El Oro and Exploration Co.,
500 East Broward Blvd. p.l.c. (investments) and ARC
Suite 2100 Wireless Solutions, Inc.
Fort Lauderdale, FL 33394-3091 (wireless components and network
products).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Practicing attorney.
INTERESTED BOARD MEMBERS AND OFFICERS
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, YEAR OF BIRTH LENGTH OF OVERSEEN BY
AND ADDRESS POSITION TIME SERVED BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------- --------------- ------------------ -------------- ---------------------------------
**CHARLES B. JOHNSON (1933) Trustee, Trustee, Chairman 143 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 42 of the investment companies in Franklin Templeton Investments.
**GREGORY E. JOHNSON (1961) Trustee Since 2007 94 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 33 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 46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director of Compliance,
Franklin Resources, Inc. (1994-2001).
Annual Report | 41
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, YEAR OF BIRTH LENGTH OF OVERSEEN BY
AND ADDRESS POSITION TIME SERVED BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------- --------------- ------------------ -------------- ---------------------------------
LAURA F. FERGERSON (1962) Chief Financial Since Not Applicable Not Applicable
One Franklin Parkway Officer and February 2008
San Mateo, CA 94403-1906 Chief
Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 46 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).
JIMMY D. GAMBILL (1947) Vice President Since Not Applicable Not Applicable
500 East Broward Blvd. February 2008
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of some of the
other subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies in Franklin Templeton Investments.
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 director of one of the subsidiaries of
Franklin Resources, Inc.; and officer of 46 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 44 of the investment
companies in Franklin Templeton Investments.
JOHN R. KAY (1940) Vice President Since 1994 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Templeton Worldwide, Inc.; Senior Vice President, Franklin Templeton Services, LLC; and officer of some of
the other subsidiaries of Franklin Resources, Inc. and of 32 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Vice President and Controller, Keystone Group, Inc.
42 | Annual Report
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, YEAR OF BIRTH LENGTH OF OVERSEEN BY
AND ADDRESS POSITION TIME SERVED BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------- --------------- ------------------ -------------- ---------------------------------
CHRISTOPHER J. MOLUMPHY (1962) President and Since 2002 Not Applicable Not Applicable
One Franklin Parkway Chief
San Mateo, CA 94403-1906 Executive
Officer -
Investment
Management
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director and Executive Vice President, Franklin Advisers, Inc.; and officer of some of the other subsidiaries of Franklin
Resources, Inc. and of six of the investment companies in Franklin Templeton Investments.
ROBERT C. ROSSELOT (1960) Secretary Since 2004 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
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 14 of the investment companies in Franklin Templeton Investments.
GREGORY R. SEWARD (1956) Treasurer Since 2004 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 18 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Vice President, JPMorgan Chase (2000-2004) and American General Financial Group (1991-2000).
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 46 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).
Annual Report | 43
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
NAME, YEAR OF BIRTH LENGTH OF OVERSEEN BY
AND ADDRESS POSITION TIME SERVED BOARD MEMBER* OTHER DIRECTORSHIPS HELD
------------------- --------------- ------------------ -------------- ---------------------------------
GALEN VETTER (1951) Senior Vice Since Not Applicable Not Applicable
500 East Broward Blvd. President and February 2008
Suite 2100 Chief Executive
Fort Lauderdale, FL 33394-3091 Officer -
Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of some of the other subsidiaries of Franklin Resources,
Inc. and of 46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Managing Director, RSM
McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987 and 1991-2004).
* 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 JANUARY 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.
44 | Annual Report
Templeton Global Income Fund
SHAREHOLDER INFORMATION
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT
At a meeting held May 20, 2008, 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 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.
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 them 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 event of a natural disaster, it being noted that such systems
and procedures had
Annual Report | 45
Templeton Global Income Fund
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
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.
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 29, 2008, as well as the previous 10 years ended
that date in respect to a performance universe selected by Lipper. Such
performance universe consisted of the Fund and all other closed-end nonleveraged
global income funds and amounted to a total of five funds for the one-year
period, three funds for the previous three-year period and two funds for the
previous five- and 10-year periods. 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
the highest in such universe, and on an annualized basis was also the highest in
such universe for the previous three-year period, but was lower than the only
other fund existing in such universe for the previous five- and 10-year periods.
The Lipper report showed the Fund's total return to be the highest in such
universe for the one-year period, and on an annualized basis, was the highest in
such universe for each of the previous three-, five- and 10-year periods as
well. The Board was satisfied with such comparative performance.
COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the
management fees and total expense ratios of the Fund compared with a Lipper
selected expense group consisting of the Fund and the four other closed-end
funds comprising the closed-end fund group referred to in the discussion of
investment performance. Prior to making such comparison, the Board relied upon a
survey showing that the scope of management advisory services covered under the
Fund's investment management agreement was similar to those provided by fund
managers to other fund groups. In reviewing comparative costs, emphasis was
given to the Fund's contractual investment management fee in comparison with the
contractual investment management fee 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 expenses 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.
46 | Annual Report
Templeton Global Income Fund
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
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. Specific 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 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;
Annual Report | 47
Templeton Global Income Fund
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
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 $1.2 billion on December 31, 2007, 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.
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 fiscal year 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 annually with the
Exchange a certification that he 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.
48 | Annual Report
Templeton Global Income Fund
SHAREHOLDER INFORMATION (CONTINUED)
CERTIFICATIONS (CONTINUED)
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 semiannual 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 29, 2008. Additionally, the Fund expects to file, on
or about October 31, 2008, such certifications with its Form N-CSR for the year
ended August 31, 2008.
Annual Report | 49
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Literature Request
LITERATURE REQUEST. TO RECEIVE A BROCHURE AND 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.
FRANKLIN TEMPLETON FUNDS
INTERNATIONAL
Franklin India Growth Fund
Franklin International Growth Fund
Franklin International Small Cap Growth Fund
Mutual European 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(1)
GLOBAL
Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund(1)
Templeton Growth Fund
Templeton World Fund
GROWTH
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Growth Opportunities Fund(2)
Franklin Small Cap Growth Fund(3)
Franklin Small-Mid Cap Growth Fund
VALUE
Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund(1)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund(4)
Mutual Shares Fund
BLEND
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Focused Core Equity Fund
Franklin Growth Fund
Franklin Large Cap Equity Fund
Franklin Rising Dividends Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Real Estate Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Mutual Financial Services 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
INCOME
Franklin Adjustable U.S. Government Securities Fund(5)
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund
Franklin Income Fund
Franklin Limited Maturity U.S. Government Securities Fund(5)
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(5)
Templeton Global Bond Fund
Templeton Global Total Return Fund
Templeton Income Fund
Templeton International Bond Fund
TAX-FREE INCOME(6)
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(7)
LIMITED-/INTERMEDIATE-TERM FUNDS
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(8)
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(7)
Michigan(7)
Minnesota(7)
Missouri
New Jersey
New York(8)
North Carolina
Ohio(7)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust(9)
(1.) The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
(2.) Effective 11/1/07, Franklin Aggressive Growth Fund changed its name to
Franklin Growth Opportunities Fund. The fund's investment goal and strategy
remained the same.
(3.) Effective 3/31/08, Franklin Small Cap Growth Fund II changed its name to
Franklin Small Cap Growth Fund. The fund's investment goal and strategy
remained the same.
(4.) 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.
(5.) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
(6.) For investors subject to the alternative minimum tax, a small portion of
fund dividends may be taxable. Distributions of capital gains are generally
taxable.
(7.) The fund invests primarily in insured municipal securities.
(8.) 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.
(9.) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
10/08 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 A2008 10/08
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 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 $74,291 for the fiscal year ended August 31, 2008 and $68,082 for the
fiscal year ended August 31, 2007.
(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 $0 for the fiscal year ended August
31, 2008 and $46,000 for the fiscal year ended August 31, 2007. 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 $898 for the fiscal year ended August 31, 2008
and $0 for the fiscal year ended August 31, 2007. 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 $283,179 for the fiscal year ended August
31, 2008 and $0 for the fiscal year ended August 31, 2007. 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 $284,077 for the fiscal year ended August 31, 2008 and $46,000
for the fiscal year ended August 31, 2007.
(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. The manager votes proxies
solely in the interests of the Fund and its shareholders. As a matter of policy,
the officers, directors/trustees and employees of the Fund, 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, broker
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
will refer the matter, along with the recommended course of action by the
manager 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 with a recommendation regarding the vote for approval. Where 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 of trustees 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 Section 12(d)(1) 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 which the manager
considers in determining how proxies should be voted, but is not 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. In light of several high
profile accounting scandals, 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 its 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. The manager will
review on a case-by-case basis any shareholder proposals to adopt policies on
expensing stock option plans.
ANTI-TAKEOVER MECHANISMS AND RELATED ISSUES. The manager generally opposes
anti-takeover measures since they tend to reduce shareholder rights. 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. 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 will review, on a case-by-case basis,
proposals by companies to increase authorized shares and the purpose for the
increase and proposals seeking preemptive rights. 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 each will 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 and reincorporation 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
proxy voting decisions for international companies. However, the manager must be
more 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 31, 2008, 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 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 joined Franklin Templeton
Investments in 1995.
(a)(2) This section reflects information about the portfolio managers as of the
fiscal year ended August 31, 2008.
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 11 15,549.0 24 18,737.9 12 1,712.1
-------------------------------------------------------------------------------
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 help 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 Galen G. Vetter, Chief Executive Officer - Finance and Administration, and
Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura
F. Fergerson, 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/GALEN G. VETTER
-----------------------------------
Galen G. Vetter
Chief Executive Officer - Finance and
Administration
Date: October 28, 2008
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/GALEN G. VETTER
-----------------------------------
Galen G. Vetter
Chief Executive Officer - Finance and
Administration
Date: October 28, 2008
By /s/LAURA F. FERGERSON
------------------------------------
Laura F. Fergerson
Chief Financial Officer and
Chief Accounting Officer
Date: October 28, 2008