<PAGE>
Templeton World Fund
[PHOTO APPEARS HERE]
Mark Holowesko
Director of Global
Equity Research
- --------------------------------------------------------------------------------
Mark G. Holowesko is the president and primary portfolio manager of Templeton
World Fund, as well as several other Templeton funds. He joined the Templeton
organization in 1985 in Nassau, Bahamas, and serves as director of equity
research worldwide, as well as an officer and director of Templeton Worldwide,
Inc. Mr. Holowesko received a B.A. in Economics from Holy Cross College and an
M.B.A. from Babson College. He is a Chartered Financial Analyst, Chartered
Investment Counselor, and a founding member and director of the International
Society of Financial Analysts.
- --------------------------------------------------------------------------------
Your Fund's Objective
The Templeton World Fund seeks long-term capital growth through a flexible
policy of investing in stocks and debt obligations of companies and governments
of any nation.
- --------------------------------------------------------------------------------
April 17, 1995
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Templeton World Fund
for the period ended February 28, 1995.
International economic and securities market conditions remained volatile during
the six months under review. Most of the economic volatility was centered around
the currency crisis in Mexico, with emerging markets in general experiencing the
majority of the stock price fluctuations.
As we search the world in pursuit of value, we are cognizant that conditions
have deteriorated in certain countries or industries. For example, land prices
in Hong Kong are down sharply, and Mexico has seen its financial condition
hindered by a massive devaluation of its currency,
1
<PAGE>
excessive interest rate levels and added political instability. Even in the
U.S., the once stable utility industry has been challenged by greater
competition. Yet, in most cases, we believe the magnitude of the decline in
stock prices has more than compensated for these concerns.
Our style of investing has always attempted to capitalize on these volatile and
uncertain periods by adding to or initiating positions in securities which we
feel are cheap or undervalued. That means we are buying securities where we
believe the problems are temporary or the reaction of the market is too dramatic
relative to the present environment. As a result, our cash levels today are
declining. Just as we had allowed our cash balances to rise in 1993 and 1994
taking advantage of the optimism in the markets to sell overvalued securities,
today we are buying. This is particularly true in Hong Kong, China, and Latin
America.
Three significant events have led to the decline of stock prices in Hong Kong
and China. The first is the natural follow-through after a period of excessive
optimism. Any market or class of security tends to experience a period of
"cooling off" after excessive speculation.
A second event, of even greater influence on stock prices, was the increase in
U.S. interest rates. Since the Hong Kong dollar is linked to the U.S. dollar,
the low level of interest rates and rapid economic growth in Hong Kong led to
speculation in most asset classes, particularly in real estate. When interest
rates began to rise, the cost of borrowing money to finance real estate
purchases became more expensive, causing property demand to fall. Weaker demand
put pressure on land prices. Since a large part of Hong Kong equity market
earnings is derived from or associated with real estate, the impact had a
substantial effect on stock prices.
A third significant event is the anticipated death of Deng Xiaoping. Many
investors feel that the political and social transition at Deng's death will
have a greater impact on Hong Kong's future than the Chinese takeover of Hong
Kong in 1997. The attitude that China takes when it assumes control of Hong Kong
in 1997 may well depend on who assumes control in China after Deng's death.
These concerns, as well as others, we feel are reflected in current stock
prices, so we are buying both Hong Kong and Chinese securities for your Fund.
Examples of such purchases are Dairy Farm International Ltd., a Hong Kong-based
food retailer and wholesaler with operations throughout the Pacific Rim, and
Shun Tak Holdings Ltd., a Hong Kong-based conglomerate involved in shipping and
real estate.
2
<PAGE>
- --------------------------------------------------------------------------------
Templeton World Fund
Geographic Distribution on 2/28/95
Based on Total Net Assets
<TABLE>
<CAPTION>
Description Amount
--------------------- --------------
<S> <C>
United States Stocks 35.9%
Latin American Stocks 3.7%
Australian &
New Zealand Stocks 5.9%
Asian Stocks 9.7%
European Stocks 32.9%
Other Stocks 2.5%
Fixed-Income Securities 3.6%
Short-Term Obligations
& Other Net Assets 5.8%
</TABLE>
In Latin America, the deterioration of Mexico's financial condition and the
massive devaluation of its currency have put pressure on prices throughout the
region. There are certainly many negative implications from a currency
devaluation. Few investors realize, however, that there are benefits for
companies that incur costs in local currency but which produce goods that can be
sold overseas generating revenue in foreign currencies. A currency devaluation
for these companies has the effect of lowering the local cost of production
relative to foreign revenue. We feel that several stocks in Mexico and South
America are now selling at attractive prices, and we are buying these securities
for your Fund. We are concentrating our efforts on those companies that are not
overly burdened by the high level of interest rates, and which also benefit from
currency devaluation.
An example of such an attractive security is YPF Sociedad Anonima, a major
integrated oil company in Argentina. Although YPF is financially sound, its
price declined with the Latin American market in part due to its regional
proximity to Mexico and the general uncertainty that has been endemic as of
late. Besides its emerging market locale, YPF also affords us the ability to
gain some commodity exposure. YPF controls half the oil sector in Argentina,
producing oil and natural gas while earning revenues in U.S. dollars.
3
<PAGE>
- --------------------------------------------------------------------------------
Templeton World Fund
Top 10 Holdings on 2/28/95
Based on Total Net Assets
<TABLE>
<CAPTION>
% of Total
Company, Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Merrill Lynch & Co. Inc.; Financial Services
United States 2.1%
- --------------------------------------------------------------------------------
Federal National Mortgage Assn.; Financial
Services, United States 1.4%
- --------------------------------------------------------------------------------
Jardine Strategic Holdings Ltd.; Multi-Industry,
Hong Kong 1.3%
- --------------------------------------------------------------------------------
Philips Electronics NV; Electrical & Electronics,
Netherlands 1.3%
- --------------------------------------------------------------------------------
HSBC Holdings PLC; Banking, Hong Kong 1.3%
- --------------------------------------------------------------------------------
Asea AB; Electrical & Electronics, Sweden 1.2%
- --------------------------------------------------------------------------------
Reynolds Metals Co.; Metals & Mining,
United States 1.2%
- --------------------------------------------------------------------------------
Boeing Co.; Aerospace & Military Technical
Systems, United States 1.2%
- --------------------------------------------------------------------------------
Georgia-Pacific Corp.; Forest Products & Paper,
United States 1.2%
- --------------------------------------------------------------------------------
DSM NV; Chemicals, Netherlands 1.1%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, see page 10 of this report.
One particular area where we feel we can capitalize on price volatility and
inefficiencies is in hard assets, or commodities as they are commonly known.
Commodities now account for almost one-quarter of the $3.6 trillion in total
world trade and for just under one-half of all exports from developing
countries. There are huge differences in the values placed on commodity-related
companies in different regions of the world. For example, U.S. cement companies
have a value per unit of production of $144 per ton, which is significantly
larger than the $46 per ton in Eastern Europe and $1 per ton in Russia.
Similarly, the value per unit of oil production ranges from $7.06 per barrel in
North America to $0.04 per barrel in Russia. While the lower valuations in
certain countries reflect the difficult economic environments, political risks
and relative company inefficiencies, a large degree of fundamental growth and
opportunity still remains. Beyond regional differences in market valuations,
general commodity prices have been under pressure for quite some time and,
despite recent uptrends, many prices are still at levels where their production
cost is higher than current market prices. Under such an environment, we don't
expect many of the producers of certain commodities to be increasing supply
significantly in the near future.
The question then is why might the price levels of these commodities, or hard
assets, change in the future? In order to answer this question, we only have to
look as far as the developing markets of the world. These markets are huge
sources of potential demand with rapid population growth and increasing
standards of living acting as a catalyst for long-term demand. As per capita
income rises, the demand for raw materials increases. People have more money, so
they consume more. Even with strong economic growth, developing economies are
cur-
4
<PAGE>
rently at per capita consumption levels far below developed market levels. For
example, China's demand for steel from 1987 to 1992 grew from 40 million tons
per year to 70 million tons per year, yet per capita consumption is still only
129 pounds per capita versus 1,115 pounds in Korea. If demand for steel in China
continues to grow at 8% per year for 10 years, as it has been, it alone will
account for 25% of the current total gross demand for steel today. Using energy
as a further example, we see that China consumes 0.36 liters of oil per capita
per day. If this were to rise to 4.36 liters per day, equal to the consumption
level of Taiwan, approximately 4 billion extra liters of oil per day would be
required. This extra amount is roughly equal to 29 billion barrels per day, or 2
million barrels above the 27 million barrels per day produced by OPEC in 1993.
Commodities are thus a key component in global economics and will continue to
play an integral role in the transition of a market from an emerging economy to
the industrialized, developed stage.
Many investors believe that the recent volatility in overseas markets indicates
that the risk of investing overseas has increased. Volatility is often equated
with risk. The greater the price fluctuation of an asset, the more risky that
asset class is often perceived. We believe that the risk of investing overseas
may, in some instances, have actually declined. The main reason for this
argument is that, in general, the price declines experienced in many equity
markets have been greater or more significant than the decline in valuations.
In many respects, the market declines and the volatility experienced overseas
are consistent with what we have seen historically, whereas the market
volatility in the U.S. has been abnormally low. Hong Kong, for example, has
experienced eight corrections of more than 30% over the last 10 years, three of
which were more than 40%, yet one dollar invested in Hong Kong at the beginning
of the last 10-year period has grown to over $4.00. In the U.S., however, we
have not experienced a normal price correction for many years. A "normal" or
"average" correction means that stock prices decline 15 to 20% over a 13-month
period, and it takes 21 months from the beginning of price declines until you
return to the point at which you started. A "normal" price correction in an
emerging market may be much shorter, normally lasting only six months but
showing a more significant decline in pricing.
While the global markets continue a pattern of volatility, we actually welcome
this environment because volatility
5
<PAGE>
creates uncertainty, which rewards us with opportunity. An investor's first
instinct is to shun uncertainty for it is equated with risk. We try to look
beyond the uncertainty and speculation that easily overshadow a market and
instead focus on the core fundamentals that influence value. Many of the key
fundamentals haven't changed significantly, and instead of finding ourselves in
an uncertain and volatile period, we are actually in a period of opportunity.
There are, of course, special risks involved with global investing related to
market, currency, economic, political, and other factors. These risks are
discussed in the Fund's prospectus.
We thank you for your participation in the Templeton World Fund and look forward
to serving your investment needs in the months and years to come.
Sincerely,
/s/ Mark Holowesko
Mark Holowesko, CFA
President
Templeton World Fund
6
<PAGE>
Performance Summary
The Templeton World Fund reported a total return of -5.01% for the six-month
period and -0.15% for the one-year period ended February 28, 1995. While these
short-term returns are disappointing, they are reflective of the declines
experienced in global equity markets during this time. According to Lipper
Analytical Services, Inc., a nationally recognized mutual fund research
organization, the average global equity fund reported a total return of -7.26%
for the year ended February 28, 1995. Total return measures the change in value
of an investment, assuming reinvestment of dividends and capital gains
distributions, and does not include the maximum initial sales charge.
Although we expect some short-term volatility, we have always maintained a long-
term perspective when managing the Fund, and we encourage shareholders to view
their investments in a similar manner. As you can see from the chart to the
right, the Fund delivered a cumulative total return of 65.90% for the 5-year
period ended February 28, 1995. This 5-year total return earned the Fund a #6
ranking out of 28 global equity funds, as measured by Lipper Analytical
Services, Inc./1/
The Fund's share price, as measured by net asset value, decreased from $17.06 on
August 31, 1994 to $14.49 on February 28, 1995. During the reporting period,
shareholders received distributions totaling 28 cents ($0.28) per share in
dividend income and $1.455 per share in capital gains, of which $1.175
represented long-term gains and 28 cents ($0.28) represented short-term gains.
Of course, past performance is not predictive of future results, and
distributions will vary depending on income earned by the Fund, as well as any
profits realized from the sales of securities in the portfolio.
- --------------------------------------------------------------------------------
TEMPLETON WORLD FUND
Periods Ended 2/28/95
<TABLE>
<CAPTION>
Since
Inception
One-Year Five-Year Ten-Year (01/17/78)
<S> <C> <C> <C> <C>
Average Annual
Total Return/2/ -5.89% 9.35% 12.23% 15.33%
Cumulative
Total Return/3/ -0.15% 65.90% 236.41% 1,118.49%
</TABLE>
1. The Fund ranked #13 out of 100 funds for the one-year period ended February
28, 1995, and #8 out of 12 for the 10-year period ended December 31, 1994.
Lipper rankings do not include sales charges, and may have been different if
these charges had been considered.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods, assuming reinvestment of dividends and
capital gains, and includes the maximum 5.75% initial sales charge.
3. Cumulative total return represents the change in value of an investment over
the specified periods, assuming reinvestment of dividends and capital gains. It
does not include the maximum 5.75% initial sales charge.
Prior to July 1, 1992, Fund shares were offered at a higher sales charge. Thus,
actual total return to purchasers of shares during that period would have been
somewhat lower than noted above. Investment return and principal value will
fluctuate with market conditions, currencies and the economic and political
climates of the countries where investments are made, so that your shares, when
redeemed, may be worth more or less than their initial cost. Past performance is
not indicative of future results.
7
<PAGE>
Templeton World Fund
If you had invested $10,000 in the Templeton World Fund at its inception, it
would be worth over $114,000 today. The chart below illustrates the cumulative
total return of an assumed $10,000 investment in the Fund on January 17, 1978,
with income dividends and capital gains distributions reinvested through
February 28, 1995*
[MOUNTAIN GRAPH APPEARS HERE SHOWING AN INITIAL INVESTMENT OF $10,000 MADE ON
1/17/78 (INITIAL NET ASSET VALUE OF $9,425) WOULD BE VALUED AT $114,844 ON
2/28/95]
*The amount of capital gains distributions accepted in shares was $56,690. The
total amount of dividends reinvested was $23,391. The performance information
shown represents past performance and is not an indication of future results.
For standardized performance figures, please refer to the Performance Summary on
page 7.
8
<PAGE>
Templeton World Fund
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31
FEBRUARY 28, 1995 ----------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
----------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 17.06 $ 15.94 $ 14.42 $ 15.05 $ 14.70 $ 17.30
---------- ---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income .10 .26 .30 .41 .46 .53
Net realized and
unrealized gain (loss) (.93) 2.50 2.81 .67 1.16 (2.04)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations (.83) 2.76 3.11 1.08 1.62 (1.51)
---------- ---------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net
investment income (.28) (.26) (.38) (.42) (.52) (.56)
Distributions from net
realized gains (1.46) (1.38) (1.21) (1.29) (.75) (.53)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (1.74) (1.64) (1.59) (1.71) (1.27) (1.09)
---------- ---------- ---------- ---------- ---------- ----------
Change in net asset
value (2.57) 1.12 1.52 (.63) .35 (2.60)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period $ 14.49 $ 17.06 $ 15.94 $ 14.42 $ 15.05 $ 14.70
========== ========== ========== ========== ========== ==========
TOTAL RETURN * (5.01)% 18.87% 24.71% 8.13% 12.95% (9.39)%
RATIO/SUPPLEMENTAL DATA
Net assets, end of
period (000) $5,123,245 $5,421,691 $4,621,124 $4,046,706 $4,129,635 $4,072,639
Ratio of expenses to
average net assets 1.07%** 1.04% 1.02% 0.86% 0.72% 0.69%
Ratio of net investment
income to average net
assets 1.34%** 1.67% 2.13% 2.76% 3.23% 3.28%
Portfolio turnover rate 14.62% 30.77% 23.86% 26.60% 22.90% 19.90%
</TABLE>
* TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS. NOT ANNUALIZED IN PERIODS
OF LESS THAN ONE YEAR.
** ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Templeton World Fund
Investment Portfolio, February 28, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS: 89.0%
- -------------------------------------------------------------------------------
Aerospace & Military Technical Sys-
tems: 2.4%
Boeing Co. U.S. 1,300,000 $ 59,962,500
British Aerospace PLC U.K. 6,600,000 49,232,670
Celsius Industrier AB, B Swe. 492,500 10,921,221
Rolls-Royce PLC U.K. 1,480,081 3,492,692
--------------
123,609,083
- -------------------------------------------------------------------------------
Appliances & Household Durables: 1.3%
Electrolux AB, B Swe. 400,000 20,169,076
Email Ltd. Aus. 3,200,900 8,437,290
Sony Corp. Jpn. 850,000 36,966,089
--------------
65,572,455
- -------------------------------------------------------------------------------
Automobiles: 3.8%
Bayerische Motorenwerke AG
(BMW) Ger. 63,500 33,318,977
Ciadea SA Arg. 1,000,000 5,499,725
Consorcio G Grupo Dina SA
de CV Mex. 397,500 341,950
Consorcio G Grupo Dina SA
de CV, ADR Mex. 28,400 92,300
Ford Motor Co. U.S. 2,113,400 55,212,575
General Motors Corp. U.S. 243,000 10,357,875
*Peugeot SA Fr. 196,625 26,837,769
Regie Nationale des Usines
Renault SA Fr. 119,400 3,971,851
Volvo AB, B Swe. 2,841,000 56,990,195
--------------
192,623,217
- -------------------------------------------------------------------------------
Banking: 13.3%
ABN AMRO Holding NV Neth. 756,100 27,544,205
Argentaria Corporacion
Bancaria de Espana SA Sp. 400,000 12,939,566
Australia & New Zealand
Banking Group Ltd. Aus. 12,213,776 42,925,917
Banco Bilbao Vizcaya Sp. 1,145,000 30,545,277
Banco Central Hispano Sp. 800,000 18,619,206
Banco Popular Espanol Sp. 111,500 14,174,653
Banco Portugues de
Investimento SA Port. 357,880 5,984,378
Bank of Ireland Irl. 1,727,000 8,424,257
BankAmerica Corp. U.S. 300,000 14,437,500
Bankinter SA Sp. 350,000 28,695,482
Barclays PLC U.K. 1,200,000 11,517,081
C.S. Holdings, br. Swtz. 50,000 20,786,062
Canadian Imperial Bank of
Commerce Can. 500,000 12,199,935
Chase Manhattan Corp. U.S. 800,000 28,700,000
Chemical Banking Corp. U.S. 600,000 24,075,000
Citicorp U.S. 1,000,000 45,000,000
CoreStates Financial Corp. U.S. 200,000 6,025,000
Ergo Bank SA Gr. 147,500 5,713,363
</TABLE>
10
<PAGE>
Templeton World Fund
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Banking (cont.)
HSBC Holdings PLC H.K. 6,112,303 $ 64,233,929
National Australia Bank
Ltd. Aus. 6,784,488 54,701,898
National Bank of Canada Can. 2,982,000 20,865,119
National Bank of Greece SA Gr. 93,055 4,397,434
National Westminster Bank
PLC U.K. 2,542,962 19,371,957
Philippine National Bank Phil. 535,535 5,938,812
Royal Bank of Canada Can. 1,217,958 25,129,206
Royal Bank of Scotland
Group PLC U.K. 428,700 2,681,879
Shinhan Bank Co. Ltd. Kor. 3,580 69,818
*Shinhan Bank Co. Ltd.,
new Kor. 657 12,397
Standard Chartered PLC U.K. 8,400,000 33,524,968
Svenska Handelsbanken, A Swe. 1,250,000 15,863,702
Toronto Dominion Bank Can. 632,890 9,537,974
Wells Fargo & Co. U.S. 152,500 24,495,313
Westpac Banking Corp. Aus. 11,049,582 40,873,916
--------------
680,005,204
- -------------------------------------------------------------------------------
Broadcasting & Publishing: 0.9%
News Corp. Ltd. Aus. 3,406,121 15,190,067
News International PLC Aus. 2,884,000 11,190,510
Oriental Press Group
Limited H.K. 14,650,000 7,247,785
Sing Tao Holdings Ltd. H.K. 3,564,000 2,304,857
South China Morning Post
(Holdings) Ltd. H.K. 18,958,000 10,482,500
--------------
46,415,719
- -------------------------------------------------------------------------------
Building Materials & Components: 0.9%
*Owens Corning Fiberglas
Corp. U.S. 983,000 33,053,375
Pioneer International Ltd. Aus. 5,576,256 13,422,178
--------------
46,475,553
- -------------------------------------------------------------------------------
Business & Public Services: 0.1%
*Continental Medical
Systems Inc. U.S. 1,000,000 6,250,000
Laidlaw Inc., B Can. 58,000 473,465
--------------
6,723,465
- -------------------------------------------------------------------------------
Chemicals: 4.4%
Akzo Nobel NV Neth. 431,573 50,600,765
Arco Chemical Co. U.S. 312,300 13,272,750
BASF AG Ger. 25,000 5,538,778
Bayer AG Ger. 214,225 52,857,850
DSM NV Neth. 720,000 58,629,768
Lyondell Petrochemical Co. U.S. 724,600 17,480,975
</TABLE>
11
<PAGE>
Templeton World Fund
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Chemicals (cont.)
Rhone-Poulenc SA, A Fr. 666,000 $ 15,908,160
Vigoro Corp. U.S. 259,600 9,150,900
--------------
223,439,946
- -------------------------------------------------------------------------------
Construction & Housing: 0.8%
Kaufman & Broad Home Corp. U.S. 500,000 7,312,500
*National Gypsum Co. U.S. 500,000 24,625,000
Sirti SPA Itl. 991,000 6,696,830
*U.S. Home Corp. U.S. 99,700 1,819,525
--------------
40,453,855
- -------------------------------------------------------------------------------
Data Processing & Reproduction: 0.5%
*Conner Peripherals Inc. U.S. 1,000,000 9,875,000
*Data General Corp. U.S. 183,100 1,441,913
*Quantum Corp. U.S. 800,000 11,800,000
--------------
23,116,913
- -------------------------------------------------------------------------------
Electrical & Electronics: 2.5%
Asea AB, A Swe. 836,000 62,973,369
Philips Electronics NV Neth. 1,979,360 65,683,776
--------------
128,657,145
- -------------------------------------------------------------------------------
Energy Equipment & Services: 0.4%
Koninklijke Pakhoed NV Neth. 270,000 7,686,892
Sun Co. Inc. U.S. 372,900 10,860,713
--------------
18,547,605
- -------------------------------------------------------------------------------
Energy Sources: 6.4%
Norsk Hydro AS Nor. 401,400 15,240,951
Repsol SA Sp. 800,000 22,718,561
Royal Dutch Petroleum Co.
NV Neth. 300,000 33,870,079
Saga Petroleum AS, A Nor. 1,238,500 16,026,958
Saga Petroleum AS, B Nor. 691,930 8,578,686
*Saga Petroleum AS, new
converted A Nor. 100,250 1,266,223
*Saga Petroleum AS, new
converted B Nor. 33,417 403,948
Shell Transport & Trading
Co. PLC U.K. 794,900 8,843,972
Societe Elf Aquitane SA Fr. 634,000 45,530,311
Texaco Inc. U.S. 700,000 44,625,000
Total SA, B Fr. 858,540 47,492,990
USX-Marathon Group Inc. U.S. 1,400,000 22,750,000
Valero Energy Corp. U.S. 1,599,550 28,591,956
YPF Sociedad Anonima Arg. 1,400,000 26,108,695
YPF Sociedad Anonima, ADR Arg. 300,000 5,700,000
--------------
327,748,330
- -------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Templeton World Fund
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Financial Services: 4.4%
Alex Brown Inc. U.S. 122,500 $ 4,655,000
Axa SA Fr. 225,500 9,739,349
Dean Witter Discover & Co. U.S. 484,186 19,549,010
Federal National Mortgage
Assn. U.S. 960,000 74,040,000
Merrill Lynch & Co. Inc. U.S. 2,621,800 107,493,800
Peregrine Investments
Holdings Ltd. H.K. 8,000,000 9,778,180
--------------
225,255,339
- -------------------------------------------------------------------------------
Food & Household Products: 1.9%
C.P. Pokphand Co. Ltd. H.K. 12,162,000 3,004,517
Dairy Farm International
Holdings Ltd. H.K. 19,081,539 22,952,637
Embotelladora Andina SA,
ADR Chil. 572,600 13,742,400
Goodman Fielder Ltd. Aus. 3,770,600 3,452,191
*Grupo Embotellador de
Mexico SA de CV, GDR Mex. 833,900 5,628,825
Grupo Embotellador de
Mexico SA, B Mex. 187,500 618,201
Hillsdown Holdings PLC U.K. 13,423,076 37,840,825
Vitro SA Mex. 2,953,000 9,380,408
Vitro SA, ADR Mex. 195,100 1,731,513
--------------
98,351,517
- -------------------------------------------------------------------------------
Forest Products & Paper: 5.6%
*Assidomaen AB Swe. 500,000 11,292,226
Boise Cascade Corp. U.S. 1,110,000 35,658,750
Bowater Inc. U.S. 1,060,000 35,245,000
Fletcher Challenge Ltd.,
Aus. N.Z. 1,228,926 3,076,013
Fletcher Challenge Ltd.,
N.Z. N.Z. 13,379,152 33,322,602
Fletcher Forestry, Aus. N.Z. 307,231 376,561
Fletcher Forestry, N.Z. N.Z. 8,719,788 11,052,326
Georgia-Pacific Corp. U.S. 800,000 59,900,000
International Paper Co. U.S. 526,350 40,199,981
James River Corp. U.S. 1,365,900 33,635,288
Saint Joe Paper Co. U.S. 400,000 23,900,000
--------------
287,658,747
- -------------------------------------------------------------------------------
Health & Personal Care: 2.3%
Ciba-Geigy AG Swtz. 60,000 38,071,313
Medeva PLC U.K. 1,628,000 4,589,474
*Pharmacia AB, A Swe. 668,600 12,317,192
*Pharmacia AB, B Swe. 231,400 4,247,146
Rhone-Poulenc Rorer U.S. 600,000 24,450,000
Wellcome PLC U.K. 2,000,000 32,102,754
--------------
115,777,879
- -------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Templeton World Fund
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Industrial Components: 0.4%
Goodyear Tire & Rubber Co. U.S. 600,000 $ 22,125,000
- -------------------------------------------------------------------------------
Insurance: 7.8%
Ace Limited Bmu. 800,000 19,800,000
Aetna Life & Casualty Co. U.S. 850,000 45,687,500
Aflac Inc. U.S. 963,800 36,383,450
Allstate Corp. U.S. 318,200 8,750,500
American Bankers Insurance
Group Inc. U.S. 530,000 14,376,250
American International
Group Inc. U.S. 499,000 51,771,250
Baloise-Holding Swtz. 11,000 20,502,431
Chubb Corp. U.S. 125,000 9,828,125
Cigna Corp. U.S. 485,646 36,787,685
International Nederlanden
Group Neth. 410,000 20,107,145
Kemper Corp. U.S. 1,176,299 47,346,035
London Insurance Group
Inc. Can. 300,000 5,274,678
National Mutual Asia Ltd. H.K. 7,322,000 4,735,174
Swiss Reinsurance Co. Swtz. 4,580 2,750,227
Travelers Inc. U.S. 743,384 28,899,053
W.R. Berkley Corp. U.S. 800,000 28,600,000
+*Zurich Reinsurance
Centre Holdings, Inc. U.S. 594,600 17,986,650
--------------
399,586,153
- -------------------------------------------------------------------------------
Leisure & Tourism: 0.1%
Grand Hotel Holdings Ltd. H.K. 1,020,000 343,012
*Queens Moat Houses PLC U.K. 5,608,300 0
--------------
343,012
- -------------------------------------------------------------------------------
Machinery & Engineering: 0.1%
Saurer AG Swtz. 20,000 6,410,049
- -------------------------------------------------------------------------------
Merchandising: 2.1%
Argyll Group PLC U.K. 5,079,983 21,682,511
K Mart Corp. U.S. 1,250,000 15,937,500
Limited Inc. U.S. 1,900,000 33,250,000
Sears Roebuck & Co. U.S. 700,000 34,475,000
Ventures Stores Inc. U.S. 200,000 2,775,000
--------------
108,120,011
- -------------------------------------------------------------------------------
Metals & Mining: 6.1%
Alcan Aluminum Ltd. Can. 1,105,628 26,878,000
*Alcan Australia Ltd. Aus. 1,000,000 1,882,794
*Alumax Inc. U.S. 838,200 23,993,475
Aluminum Co. of America U.S. 1,418,000 55,302,000
</TABLE>
14
<PAGE>
Templeton World Fund
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Metals & Mining (cont.)
*ARBED SA Lux. 131,200 $ 20,535,842
British Steel PLC U.K. 11,000,000 27,787,016
Comalco Ltd. Aus. 2,000,000 6,940,496
*Elkem AS, A Nor. 273,900 3,438,315
Maanshan Iron & Steel Co.
Ltd. Chn. 8,012,000 1,606,234
*Outokumpu OY Fin. 1,697,732 27,572,019
*Outokumpu OY, wts. Fin. 824,300 539,505
Pechiney SA Fr. 600,000 14,682,656
+Pechiney SA, invt. ctf. Fr. 450,000 30,272,009
Renison Goldfields
Consolidated Ltd. Aus. 1,042,700 3,202,694
Reynolds Metals Co. U.S. 1,060,352 53,017,600
*Union Miniere NPV Bel. 220,050 14,400,075
--------------
312,050,730
- -------------------------------------------------------------------------------
Multi-Industry: 3.9%
BTR Nylex Ltd. Aus. 9,441,800 17,149,544
Canadian Pacific Ltd. Can. 899,500 12,593,000
Cheung Kong Holdings Ltd. H.K. 5,798,000 25,272,276
CNT Group Ltd. H.K. 5,000,000 258,682
+*DESC Sociedad de
Formento Industrial SA, B Mex. 2,678,900 5,227,778
Jardine Matheson Holdings
Ltd. H.K. 2,844,797 26,172,132
Jardine Strategic Holdings
Ltd. H.K. 14,861,294 55,284,014
Pacific Dunlop Ltd. Aus. 7,000,000 15,453,680
Swire Pacific Ltd., A H.K. 5,769,500 40,483,137
Swire Pacific Ltd., B H.K. 4,175,500 4,536,532
--------------
202,430,775
- -------------------------------------------------------------------------------
Real Estate: 2.2%
American Health Properties
Inc. U.S. 443,400 9,643,950
Federal Realty Investment
Trust U.S. 217,300 4,590,463
General Growth Properties U.S. 143,300 2,973,475
Hang Lung Development Co.
Ltd. H.K. 14,345,000 21,244,293
*Hang Lung Development Co.
Ltd., wts. H.K. 854,500 150,310
IRT Property Co. U.S. 537,600 5,376,000
Meditrust Inc. U.S. 650,000 20,800,000
National Health Investors
Inc. U.S. 130,000 3,250,000
Nationwide Health
Properties Inc. U.S. 100,000 3,600,000
New World Development Co.
Ltd. H.K. 6,000,000 16,374,572
Rouse Co. U.S. 1,017,400 20,093,650
Tai Cheung Holdings Ltd. H.K. 5,465,618 5,195,925
Universal Health Realty
Income Trust U.S. 100,000 1,675,000
--------------
114,967,638
- -------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Templeton World Fund
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Recreation, Other Consumer Goods: 0.3%
Gibson Greetings Inc. U.S. 383,400 $ 3,594,375
Nintendo Co. Ltd. Jpn. 256,000 13,306,963
--------------
16,901,338
- -------------------------------------------------------------------------------
Telecommunications: 4.3%
Alcatel Alsthom SA Fr. 250,000 20,132,592
Compania de Telefonos de
Chile SA, ADR Chil. 63,500 3,873,500
SIP (Sta Italiana per
I'Esercizio delle
Telecommunicazioni) SPA Itl. 2,510,982 6,064,315
SIP (Sta Italiana per
I'Esercizio delle
Telecommunicazioni) SPA,
di Risp Itl. 14,742,450 28,582,842
STET (Sta Finanziaria
Telefonica Torino) SPA Itl. 7,278,650 20,233,512
STET (Sta Finanziaria
Telefonica Torino) SPA,
di Risp Itl. 1,682,000 3,850,337
Telecom Argentina Stet
France SA, ADR Arg. 300,000 10,725,000
Telefonica de Argentina
SA, B, ADR Arg. 1,000,000 18,625,000
Telefonica de Espana SA Sp. 4,411,500 55,046,685
Telefonos de Mexico SA, L Mex. 13,007,000 18,111,839
Telefonos de Mexico SA, L,
ADR Mex. 1,250,000 34,531,250
--------------
219,776,872
- -------------------------------------------------------------------------------
Textiles & Apparel: 1.2%
Daehan Synthetic Fiber Co.
Ltd. Kor. 15,580 2,466,283
*Fruit of the Loom Inc., A U.S. 700,000 16,362,500
Liz Claiborne Inc. U.S. 315,500 5,087,438
Nike Inc., B U.S. 550,000 39,531,250
--------------
63,447,471
- -------------------------------------------------------------------------------
Transportation: 5.5%
Airborne Freight Corp. U.S. 217,000 5,180,875
American President Cos.
Ltd. U.S. 811,400 18,459,350
*AMR Corp. U.S. 264,700 16,179,788
Anangel-American
Shipholdings Ltd., ADR Gr. 91,000 1,342,250
Atlantic Southeast
Airlines Inc. U.S. 186,500 3,753,313
+*Bremer Vulkan Verbund AG Ger. 350,000 21,091,283
British Airways PLC U.K. 9,366,800 57,855,466
Cathay Pacific Airways
Ltd. H.K. 15,376,000 24,859,342
IMC Holdings Ltd. H.K. 7,214,000 5,785,009
Malaysian International
Shipping Corp. Bhd., fgn. Mal. 6,123,000 16,777,596
OMI Corp. U.S. 648,800 3,406,200
Peninsular & Oriental
Steam Navigation Co. U.K. 1,800,000 16,078,301
Shun Tak Holdings H.K. 8,706,000 5,179,797
Singapore Airlines Ltd.,
fgn. Sing. 4,131,000 41,338,509
</TABLE>
16
<PAGE>
Templeton World Fund
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Transportation (cont.)
Singapore Bus Service
Ltd., fgn. Sing. 679,100 $ 4,405,480
*Stolt Nielsen SA U.S. 521,500 10,038,875
*Swissair Schweizerische
Luftverkehr AG Swtz. 33,875 20,588,533
Transportacion Maritima
Mexicana SA de CV,
L, ADR Mex. 44,500 189,125
*USAir Group Inc. U.S. 1,900,000 11,162,500
--------------
283,671,592
- -------------------------------------------------------------------------------
Utilities-Electrical & Gas: 3.0%
British Gas PLC U.K. 3,450,000 15,900,128
Centerior Energy Corp. U.S. 300,050 2,925,488
Compania Sevillana de
Electricidad Sp. 3,450,283 14,845,732
Cukurova Elektrik AS Tur. 2,908,000 623,944
Electricidad de Caracas Venz. 9,662,654 8,427,578
Entergy Corp. U.S. 1,100,000 24,612,500
Iberdrola SA Sp. 3,459,860 21,653,730
Long Island Lighting Co. U.S. 1,450,000 23,200,000
Texas Utilities Electric
Co. U.S. 750,000 24,656,250
VEBA AG Ger. 40,000 14,495,539
--------------
151,340,889
- -------------------------------------------------------------------------------
Wholesale & International Trade: 0.1%
Sime Darby Hongkong Ltd. H.K. 5,380,000 5,914,764
--------------
TOTAL COMMON STOCKS (cost
$3,775,179,680) 4,557,518,266
- -------------------------------------------------------------------------------
PREFERRED STOCKS: 1.6%
- -------------------------------------------------------------------------------
AMR Corp., A, ADR, conv.,
pfd. U.S. 106,500 4,739,250
Bayerische Motorenwerke AG
(BMW), pfd. Ger. 20,000 7,741,935
Bear Stearns Cos. Inc., A,
pfd. U.S. 75,000 3,112,500
Jardine Strategic Holdings
Ltd., 7.50%, conv., pfd. U.S. 9,050,000 11,312,500
News Corp. Ltd. Aus. 4,703,060 18,682,090
Reynolds Metals Co.,
conv., pfd. U.S. 179,415 8,567,066
Telebras-Telecomunicacoes
Brasileiras SA, ADR Braz. 200,000 5,837,500
Telebras-Telecomunicacoes
Brasileiras SA, pfd. Braz. 545,400,000 16,095,873
USAir Group Inc., B,
conv., pfd. U.S. 200,000 5,450,000
--------------
TOTAL PREFERRED STOCKS (cost $77,948,597) 81,538,714
- -------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
Templeton World Fund
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BONDS: 3.6%
- -------------------------------------------------------------------------------
ARBED SA, 2.50%, conv.,
7/15/03 Ger. 2,250,000 $ 1,513,384
Government of Australia:
7.00%, 8/15/98 Aud. 20,000,000 13,722,247
6.25%, 3/15/99 Aud. 20,000,000 13,163,316
7.00%, 4/15/00 Aud. 20,000,000 13,211,309
Softe SA, 4.25%, conv.,
7/30/98 Itl. 5,400,000,000 3,328,434
U.S. Treasury Notes:
6.00%, 10/15/99 U.S. 48,000,000 46,049,758
6.375%, 1/15/99 U.S. 48,000,000 46,957,440
6.375%, 1/15/00 U.S. 48,000,000 46,649,760
--------------
TOTAL BONDS (cost $191,267,155) 184,595,648
- -------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 4.6% (cost
$235,636,709)
- -------------------------------------------------------------------------------
U.S. Treasury Bills,
5.15% to 5.70% with
maturities to 4/20/95 U.S. 237,019,000 235,693,394
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS: 98.8% (cost
$4,280,032,141) 5,059,346,022
OTHER ASSETS, LESS LIABILITIES: 1.2% 63,899,237
--------------
TOTAL NET ASSETS: 100.0% $5,123,245,259
==============
</TABLE>
* NON-INCOME PRODUCING.
** CURRENCY OF COUNTRIES INDICATED.
+ SEE NOTE 5.
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
Templeton World Fund
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995 (unaudited)
<TABLE>
<S> <C>
Assets:
Investment in securities, at value (identified cost
$4,280,032,141) $5,059,346,022
Cash 769,671
Receivables:
Investment securities sold 126,071,443
Capital shares sold 4,626,579
Dividends and interest 16,171,967
--------------
Total assets 5,206,985,682
--------------
Liabilities:
Payables:
Investment securities purchased 73,648,749
Capital shares redeemed 4,680,190
Accrued expenses 5,411,484
--------------
Total liabilities 83,740,423
--------------
Net assets, at value $5,123,245,259
==============
Net assets consists of:
Undistributed net investment income $ 21,920,607
Net unrealized appreciation 779,313,881
Accumulated net realized gain 145,188,986
Net capital paid in on shares of capital stock 4,176,821,785
--------------
Net assets, at value $5,123,245,259
==============
Shares outstanding 353,619,074
==============
Net asset value per share ($5,123,245,259 / 353,619,074) $ 14.49
==============
Maximum offering price ($14.49 / 94.25%) $ 15.37
==============
</TABLE>
STATEMENT OF OPERATIONS
for the six months ended February 28, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment income: (net of $2,469,546
foreign taxes withheld)
Dividends $ 47,827,046
Interest 13,919,556
-------------
Total income $ 61,746,602
Expenses:
Management fees (Note 3) 15,877,202
Administrative fees (Note 3) 2,056,249
Distribution fees (Note 3) 4,849,866
Transfer agent fees (Note 3) 2,150,000
Custodian fees 1,329,948
Reports to shareholders 919,623
Audit fees 30,000
Legal fees 11,000
Registration and filing fees 76,000
Directors' fees and expenses 13,000
Other 2,704
-------------
Total expenses 27,315,592
-------------
Net investment income 34,431,010
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments 190,494,573
Foreign currency transactions (3,522,938)
-------------
186,971,635
-------------
Net unrealized depreciation
on investments (494,080,723)
-------------
Net realized and unrealized loss (307,109,088)
-------------
Net decrease in net assets resulting from
operations $(272,678,078)
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
Templeton World Fund
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 34,431,010 $ 83,368,825
Net realized gain on investment and
foreign currency transactions 186,971,635 479,395,263
Net unrealized appreciation
(depreciation) (494,080,723) 300,256,449
-------------- --------------
Net increase (decrease) in net assets
from operations (272,678,078) 863,020,537
Distributions to shareholders:
From net investment income (90,201,924) (75,645,206)
From net realized gain (466,541,299) (398,442,723)
Capital share transactions (Note 2) 530,975,069 411,635,037
-------------- --------------
Net increase (decrease) in net assets (298,446,232) 800,567,645
Net assets:
Beginning of period 5,421,691,491 4,621,123,846
-------------- --------------
End of period $5,123,245,259 $5,421,691,491
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
Templeton World Fund
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton World Fund (the Fund) is a series of Templeton Funds, Inc. (the Com-
pany) which is an open-end, diversified management investment company regis-
tered under the Investment Company Act of 1940. The following summarizes the
Fund's significant accounting policies.
A. Securities Valuations:
Securities listed or traded on a recognized national or foreign exchange or
NASDAQ are valued at the last reported sales prices on the principal exchange
on which the securities are traded. Over-the-counter securities for which no
sale is reported are valued at the mean between the last current bid and asked
prices. Securities for which market quotations are not readily available are
valued at fair value as determined by management and approved in good faith by
the Board of Directors.
B. Foreign Currency Transactions:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign curren-
cies are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customar-
ily enters into a foreign exchange contract to minimize foreign exchange risk
between the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of for-
eign currencies, currency gains or losses realized between the trade and set-
tlement dates on securities transactions, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at the end
of the fiscal period, resulting from changes in the exchange rate.
C. Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all its
taxable income to its shareholders. Therefore, no provision has been made for
federal income taxes.
D. Security Transactions, Investment Income, Distributions and Expenses:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income on foreign securi-
ties is recorded as soon as information is available to the Fund. Interest in-
come and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
21
<PAGE>
Templeton World Fund
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
At February 28, 1995, there were 1.35 billion shares of capital stock autho-
rized ($1 par value) of which 600 million shares have been classified as Fund
shares. Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 14,831,792 $ 223,053,365 27,805,398 $ 442,853,907
Shares issued on
reinvestment
of
distributions 33,987,344 502,690,278 28,659,050 425,220,395
Shares redeemed (12,981,866) (194,768,574) (28,680,400) (456,439,265)
----------- ------------- ----------- -------------
Net increase 35,837,270 $ 530,975,069 27,784,048 $ 411,635,037
=========== ============= =========== =============
</TABLE>
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton,
Galbraith & Hansberger Ltd. (TGH), Templeton Global Investors, Inc. (TGII),
Franklin Templeton Distributors, Inc. (FTD) and Franklin Templeton Investor
Services, Inc. (FTIS), the Fund's investment manager, administrative manager,
principal underwriter, and transfer agent, respectively. The fund pays monthly
an investment management fee to TGH equal, on an annual basis, to 0.75% of the
average daily net assets of the Fund up to $200 million, reduced to 0.675% of
such average daily net assets in excess of $200 million, and further reduced to
0.60% of such net assets in excess of $1.3 billion. The fee is subject to re-
duction in any year to the extent that expenses (exclusive of certain expenses)
of the Fund exceed 2 1/2% of the first $30 million of net assets, 2% of the
next $70 million of net assets and 1 1/2% of the remainder. For the six months
ended February 28, 1995, no reduction in fee was required as a result of this
limitation. The Fund pays TGII monthly its allocated share of an administrative
fee of 0.15% per annum on the first $200 million of the Company's aggregate av-
erage daily net asset, 0.135% of the next $500 million, 0.10% of the next $500
million, and 0.075% per annum of such average net assets in excess of $1.2 bil-
lion. For the six months ended February 28, 1995, FTD received net commissions
of $966,557 from the sale of the Fund's shares and FTIS received fees of
$2,150,000.
Pursuant to a distribution plan, the Fund reimburses FTD monthly (subject to a
limit of 0.25% per annum of the Fund's average daily net asset) for FTD's costs
and expenses in connection with any activity which is primarily intended to re-
sult in sales of Fund shares. Such distribution fees are set forth in the
Statement of Operations.
An officer of the Company is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $11,000 for the six months ended Feb-
ruary 28, 1995.
22
<PAGE>
Templeton World Fund
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 28, 1995 were $855,255,613 and $704,326,798, respective-
ly. The cost of securities for federal income tax purposes is $4,279,957,403.
Realized gains and losses are reported on an identified cost basis.
At February 28, 1995, the aggregate gross unrealized appreciation and deprecia-
tion of portfolio securities, based on cost for federal income tax purposes,
was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $1,018,364,397
Unrealized depreciation (238,975,778)
--------------
Net unrealized appreciation $ 779,388,619
==============
</TABLE>
5. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated companies" as invest-
ments in portfolio companies in which the Company owns 5% or more of the out-
standing voting securities. Investments in "affiliated companies" at February
28, 1995 amounted to $74,577,720. For the six months ended February 28, 1995,
net realized gains from disposition of affiliated companies were $4,155,429.
23
<PAGE>
- --------------------------
TEMPLETON WORLD
FUND
PRINCIPAL UNDERWRITER:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Account Services
1-800-354-9191
Sales Information
1-800-292-9293
This report must be preceded or accompanied by the prospectus of Templeton
World Fund. 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, as well as investment decisions by the investment
manager which will not always be profitable or wise. The Fund and its investors
are not protected from such losses by the investment manager. Therefore,
investors who cannot accept this risk should not invest in shares of the Fund.
To ensure the highest quality of service, telephone calls to or from our
service departments may be monitored, recorded and accessed. These calls can be
determined by the presence of a regular beeping tone.
- --------------------------
TL02 S95 04/95
[RECYCLING LOGO APPEARS HERE]
TEMPLETON
WORLD
FUND
Semi-Annual Report
February 28, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
