[GRAPHIC]
SEMI ANNUAL
REPORT
February 29, 2000
TEMPLETON WORLD FUND
[FRANKLIN TEMPLETON LOGO]
[FRANKLIN TEMPLETON CELEBRATING FIFTY YEARS GRAPHIC]
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective, and remember that all securities markets move
both up and down, as do mutual fund share prices. We appreciate your past
support and look forward to serving your investment needs in the years ahead.
[PHOTO OF JEFFREY A. EVERETT]
JEFFREY A. EVERETT, CFA
Portfolio Manager
Templeton World Fund
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SHAREHOLDER LETTER
- --------------------------------------------------------------------------------
Your Fund's Goal: Templeton World Fund seeks long-term capital growth. Under
normal market conditions, the Fund invests primarily in the equity securities of
companies located anywhere in the world, including emerging markets.
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to bring you this semiannual report of Templeton World Fund,
which covers the six months ended February 29, 2000. During this period, many
global economies and equity markets registered strong gains. However, most
investors focused their attention upon the U.S., where employment, Gross
Domestic Product, and the technology-laden Nasdaq(R) Composite Index reached new
highs despite rising interest rates. Within this environment, Templeton World
Fund - Class A posted a 5.41% six-month cumulative total return as shown in the
Performance Summary on page 6. The Fund's benchmark, the Morgan Stanley Capital
International(R) (MSCI) World Index, provided a 9.53% cumulative total return
for the same period.(1)
1. Source: Standard & Poor's(R) Micropal, Inc. The unmanaged MSCI World Index
tracks the performance of approximately 1,450 securities in 22 countries and is
designed to measure world stock performance. It includes reinvested dividends.
One cannot invest directly in an index, nor is an index representative of the
Fund's portfolio.
All portfolio holdings mentioned in the report are listed by
their complete legal titles in the Fund's Statement of Investments (SOI), a
complete listing of the Fund's portfolio holdings, including dollar value and
number of shares or principal amount. The SOI begins on page 12.
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter .................................................... 1
Performance Summary ................................................... 6
Financial Highlights & Statement of Investments ....................... 9
Financial Statements .................................................. 20
Notes to Financial Statements ......................................... 23
</TABLE>
[PYRAMID GRAPHIC]
PORTFOLIO BREAKDOWN*
Based on Total Net Assets
2/29/00
<TABLE>
<S> <C>
North American Stocks ..................................... 27.8%
European Stocks ........................................... 26.4%
Asian Stocks .............................................. 16.2%
Latin American Stocks ..................................... 8.9%
Australian & New Zealand Stocks ........................... 5.1%
Middle Eastern & African Stocks ........................... 1.0%
Fixed-Income Securities ................................... 3.3%
</TABLE>
*Short-term investments and other net assets represented 11.3% of total net
assets
The Fund's underperformance relative to the MSCI was due largely to the fact
that many indices were driven higher by investors' pursuit of a few very
expensive stocks. However, Templeton World Fund includes many stocks of what we
believe are very attractive companies whose share prices do not reflect their
future potential -- or as we define them -- bargain stocks. Adhering to our
time-tested philosophy of purchasing and holding undervalued securities meant
the Fund underperformed its benchmark index. Nonetheless, we believe that our
holdings' growth and profit potential should eventually be recognized by
investors as they become aware of the opportunities outside of the relatively
few current market favorites.
The Fund's 8.8% weighting in the financial services sector impacted its
performance in diverse ways. Some financial service stock prices, such as Morgan
Stanley Dean Witter & Co., rose on the heels of stronger than expected earnings
results, while others, primarily real estate investment trusts (REITs), declined
as investors shied away from the group, despite its generally defensive nature
and high dividend-paying capability. During the six months under review, renewed
global economic growth revived the specter of inflation, leading to fears that
many governments would adopt higher interest rates.
Historically, interest-rate increases have registered the greatest negative
reactions among banking and insurance stocks, and this reporting period was no
exception. Nevertheless, we continued to find, what we consider to be,
opportunities among interest-sensitive companies, relative to more expensive
stocks in the market. The financial services industry is undergoing
revolutionary global changes with what we believe are significant opportunities
for its best companies. In our opinion,
2
the Fund's holdings may benefit accordingly with this global restructuring and
we believe the higher interest rates experienced during this period have already
been factored into the sector's stock prices.
The Fund's performance was aided by our positions in "new economy" global
communications stocks. Embratel Participacoes SA, Brazil's primary long-distance
provider, was our largest holding in that category. Its share price rose 124.6%
during the reporting period. Several other Fund holdings, purchased some time
ago when we believed they were underpriced, also benefited from the "new
economy" label. Li & Fung Ltd., a Hong Kong-based manufacturer and logistics
expert, and Japan's Sony Corp., in whose cutting edge technologies investors
took a renewed interest, performed well during the period. As did Hong
Kong-based Hutchison Whampoa Ltd., whose strategic stake in Mannesman SA
garnered a $60 billion windfall when Vodaphone Airtouch PLC acquired that
company. At the period's close, our combined holdings of Hutchison Whampoa and
Cheung Kong Holdings Ltd., which owns 49% of Hutchison, represented the Fund's
largest position. In our opinion, both of these companies are undervalued
relative to their history, current business prospects and long-term potential.
Although a number of holdings performed very well, some did not do as well as
expected. As always, we reviewed these disappointments to determine whether the
stock's decline stemmed from deteriorated long-term prospects, or simply a
short-term event or market "noise." In the latter category, the share price of
Unumprovident Corp., a long-term disability insurer fell more than 50% during
the reporting period despite
TOP 10 COUNTRIES REPRESENTED IN THE FUND*
Equity Investments
(85.4% of Total Net Assets)
2/29/00
<TABLE>
<CAPTION>
% OF TOTAL
COUNTRY NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
United States 24.5%
Hong Kong** 8.4%
Netherlands 6.6%
Brazil 5.3%
Australia 5.1%
United Kingdom 4.9%
Japan 4.1%
France 3.3%
Germany 3.2%
Canada 2.2%
</TABLE>
*Does not include fixed-income securities and short-term investments and other
net assets.
**Hong Kong reverted to the sovereignty of China on July 1, 1997.
3
TOP 10 INDUSTRIES*
2/29/00
<TABLE>
<CAPTION>
% OF TOTAL
INDUSTRY NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Telecommunications 12.1%
Financial Services 8.8%
Multi-Industry 8.3%
Insurance 5.0%
Utilities Electrical & Gas 4.6%
Merchandising 4.3%
Banking 4.1%
Appliances &
Household Durables 3.6%
Broadcasting & Publishing 3.5%
Metals & Mining 3.4%
</TABLE>
*Does not include fixed-income securities and short-term investments and other
net assets.
the fact that it was the leader in its business category. This was due primarily
to problems involved with pricing and with Unum's merger with the Provident
Cos., both of which we believe can be rectified. Some of our retailing holdings
also delivered substandard returns. In our opinion, investors undervalued
retailers such as Japan's Takeshimaya Co. Ltd., which traded at book value,
U.K.'s Marks & Spencer PLC., which paid a 5.43% dividend yield, and Australia's
Coles Myer Ltd., whose management supported a 5.99% dividend yield and 15%
return on equity. We believe these securities possess unique traits, which in
our opinion, makes them appealing investments.
Looking forward, we are optimistic about the outlook for global equities, and
shall continue to scour the globe for stocks we believe are being improperly
valued or analyzed by other investors. There are, of course, special risks
associated with global investing related to market currency, economic, social,
political and other factors. Emerging markets involve similar but heightened
risks, in addition to those associated with their relatively small size and
lesser liquidity. Investing in any emerging market means accepting a certain
amount of volatility and, in some cases, severe market corrections. For example,
Mexico's equity market has increased 4,121% in the last 15 years, but has
suffered eight declines of more than 15% during that time.(2) While short-term
volatility can be disconcerting,
2. Source: Mexico Bolsa Index. Based on quarterly percentage price change over
15 years ended December 31, 1999. Market returns are measured in U.S. dollars
and do not include reinvested dividends.
4
declines in excess of 50% are not unusual in such markets. These risks and other
considerations are discussed in the Fund's prospectus.
We thank you for your continued investment in Templeton World Fund and welcome
your comments or suggestions.
Sincerely,
/s/ Jeffrey A. Everett
Jeffrey A. Everett, CFA
Portfolio Manager
Templeton World Fund
- --------------------------------------------------------------------------------
This discussion reflects our views, opinions and portfolio holdings as of
February 29, 2000, the end of the reporting period. The information provided is
not a complete analysis of every aspect of any country, industry, security or
the Fund. Our strategies and the Fund's portfolio composition will change
depending on market and economic conditions. Although historical performance is
no guarantee of future results, these insights may help you understand our
investment and management philosophy.
- --------------------------------------------------------------------------------
TOP 10 EQUITY HOLDINGS
2/29/00
<TABLE>
<CAPTION>
COMPANY, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Cheung Kong Holdings Ltd. 4.2%
Multi-Industry, Hong Kong*
Morgan Stanley 2.8%
Dean Witter & Co.
Financial Services, U.S.
Hutchison Whampoa Ltd. 2.3%
Multi-Industry, Hong Kong
News Corp. Ltd., pfd. 2.2%
Broadcasting & Publishing,
Australia
Hewlett-Packard Co. 1.8%
Electronic Components
& Instruments, U.S.
Nomura Securities Co. Ltd. 1.8%
Financial Services, Japan
Embratel Participacoes SA, 1.6%
ADR, pfd.
Telecommunications, Brazil
Nortel Networks Corp. 1.6%
Telecommunications, Canada
Alcatel SA 1.6%
Telecommunications, France
Broken Hill Proprietary Co. Ltd. 1.5%
Multi-Industry, Australia
</TABLE>
5
- --------------------------------------------------------------------------------
CLASS A:
Subject to the current, maximum 5.75% initial sales charge. Prior
to July 1, 1992, Fund shares were offered at a higher initial sales charge; thus
actual total returns may be slightly lower. Effective January 1, 1993, the Fund
implemented a Rule 12b-1 plan, which affects subsequent performance.
CLASS B:
Subject to no initial sales charge, but subject to a contingent deferred sales
charge (CDSC) declining from 4% to 0% over six years. These shares have higher
annual fees and expenses than Class A shares.
CLASS C:
Subject to 1% initial sales charge and 1% CDSC for shares redeemed within 18
months of investment. These shares have higher annual fees and expenses than
Class A shares.
- --------------------------------------------------------------------------------
SIX-MONTH PERFORMANCE SUMMARY
AS OF 2/29/00
Six-month total return does not include sales charges. Distributions will vary
based on earnings of the Fund's portfolio and any profits realized from the sale
of the portfolio's securities, as well as the level of each class's operating
expenses. Past distributions are not indicative of future trends. All total
returns include reinvested distributions at net asset value.
<TABLE>
<S> <C> <C>
CLASS A
Six-Month Total Return 5.41%
Net Asset Value (NAV) $17.51 (2/29/00) $18.14 (8/31/99)
Change in NAV - $0.63
Distributions (9/1/99 - 2/29/00) Dividend Income $0.3810
Long-Term Capital Gain $1.0871
----------------------------------
Total $1.4681
CLASS B
Six-Month Total Return 5.02%
Net Asset Value (NAV) $17.38 (2/29/00) $18.05 (8/31/99)
Change in NAV - $0.67
Distributions (9/1/99 - 2/29/00) Dividend Income $0.3502
Long-Term Capital Gain $1.0871
----------------------------------
Total $1.4373
CLASS C
Six-Month Total Return 5.00%
Net Asset Value (NAV) $17.16 (2/29/00) $17.71 (8/31/99)
Change in NAV - $0.55
Distributions (9/1/99-2/29/00) Dividend Income $0.2215
Long-Term Capital Gain $1.0871
----------------------------------
Total $1.3086
</TABLE>
6 Past performance does not guarantee future results.
ADDITIONAL PERFORMANCE
AS OF QUARTER ENDED 3/31/00
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (1/17/78)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) 21.96% 126.29% 281.41% 2,710.61%
Average Annual Total Return(2) 14.93% 16.36% 13.65% 15.91%
Value of $10,000 Investment(3) $11,493 $21,329 $35,954 $264,902
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS B 1-YEAR (1/1/99)
- --------------------------------------------------------------------------------
<S> <C> <C>
Cumulative Total Return(1) 20.91% 25.23%
Average Annual Total Return(2) 16.91% 16.70%
Value of $10,000 Investment(3) $11,691 $12,123
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 3-YEAR (5/1/95)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cumulative Total Return(1) 20.96% 50.36% 109.29%
Average Annual Total Return(2) 18.78% 14.18% 15.95%
Value of $10,000 Investment(3) $11,878 $14,887 $20,713
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, applicable,
maximum sales charge(s) for that class.
3. These figures represent the value of a hypothetical $10,000 investment in the
fund over the periods indicated and include the current, applicable, maximum
sales charge(s) for that class.
- --------------------------------------------------------------------------------
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, and you may have a gain or loss when you
sell your shares.
- --------------------------------------------------------------------------------
For updated performance figures, see "Prices and Performance" on the Internet at
www.franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee future results.
7
TEMPLETON WORLD FUND
CLASS A
If you had invested $10,000 in Templeton World Fund - Class A at inception, it
would be worth more than $251,000 today. The chart below illustrates the
cumulative total return of a hypothetical $10,000 investment in the Fund on
January 17, 1978 (inception), with income dividends and capital gains reinvested
as shown through February 29, 2000.*
[CUMULATIVE TOTAL RETURN LINE GRAPH]
This logarithmic mountain chart shows the value of a $10,000 investment in
Templeton World Fund, from inception on January 17, 1978, through February 29,
2000.*
<TABLE>
<CAPTION>
PERIOD END TOTAL VALUE PRINCIPAL PRINCIPAL INFLATION PRINCIPAL INCOME CAP CPI
+ CAP + DIVIDENDS GAINS
GAINS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/17/1978 9,425 9,425 9,425 10,000 9,425 0 0
12/31/1978 11,452 11,405 11,395 10,865 11,348 47 57 8.65%
12/31/1979 14,675 14,388 14,406 12,309 14,119 287 269 13.29%
12/31/1980 17,734 16,973 17,349 13,850 16,588 761 385 12.52%
12/31/1981 18,837 17,405 17,785 15,085 16,353 1,432 1,052 8.92%
12/31/1982 22,487 20,021 21,080 15,663 18,614 2,466 1,407 3.83%
12/31/1983 30,130 26,233 27,121 16,257 23,224 3,897 3,009 3.79%
12/31/1984 31,561 27,017 26,241 16,899 21,697 4,544 5,320 3.95%
12/31/1985 41,519 34,640 33,383 17,541 26,504 6,879 8,136 3.80%
12/31/1986 48,726 40,184 36,327 17,734 27,785 8,542 12,399 1.10%
12/31/1987 50,394 41,022 33,237 18,520 23,865 9,372 17,157 4.43%
12/31/1988 60,317 48,297 38,712 19,338 26,692 12,020 21,605 4.42%
12/31/1989 73,950 57,755 46,883 20,238 30,688 16,195 27,067 4.65%
12/31/1990 62,190 47,435 38,148 21,474 23,393 14,755 24,042 6.11%
12/31/1991 80,706 61,438 46,167 22,131 26,899 19,268 34,539 3.06%
12/31/1992 83,330 63,289 44,660 22,773 24,619 20,041 38,670 2.90%
12/31/1993 111,333 85,391 55,556 23,399 29,614 25,942 55,777 2.75%
12/31/1994 112,307 86,977 52,040 24,024 26,710 25,330 60,267 2.67%
12/31/1995 136,510 106,848 57,767 24,634 28,105 29,662 78,743 2.54%
12/31/1996 165,794 128,697 68,294 25,452 31,197 37,097 97,500 3.32%
12/31/1997 197,679 155,737 73,648 25,885 31,706 41,942 124,031 1.70%
12/31/1998 209,566 165,233 74,362 26,302 30,029 44,333 135,204 1.61%
12/31/1999 268,493 210,618 93,106 27,006 35,231 57,875 175,387 2.68%
02/29/2000 251,542 197,321 87,228 27,231 33,007 54,221 164,314 0.83%
</TABLE>
*Cumulative total return represents the change in value of an investment over
the indicated period. All figures have been restated to reflect the current,
maximum 5.75% initial sales charge; thus actual total return for purchasers of
shares during the periods shown may differ. Prior to July 1, 1992, these shares
were offered at a higher initial sales charge. On January 1, 1993, the Fund's
Class A shares implemented a plan of distribution under Rule 12b-1, which will
affect subsequent performance.
Except as noted, all figures assume reinvestment of dividends and capital gains
at net asset value. Since markets can go down as well as up, investment return
and principal value will fluctuate with market conditions, and you may have a
gain or loss when you sell your shares. The historical data shown above pertain
only to Class A shares of the Fund. The Fund offers other share classes, subject
to different fees and expenses, which will affect their performance. Please see
the prospectus for more details.
8 Past performance does not guarantee future results.
SEMIANNUAL REPORT
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
1-800/DIAL BEN(R)
www.franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
This report must be preceded or accompanied by the current Templeton World Fund
prospectus, which contains more complete information, including risk factors,
charges and expenses. 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
determined by the presence of a regular beeping tone.
102 S00 04/00 [RECYCLE LOGO] Printed on recycled paper
TEMPLETON WORLD FUND
Financial Highlights
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 --------------------------------------------------------------
(UNAUDITED)+ 1999+ 1998 1997 1996 1995
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period..... $18.14 $15.45 $19.66 $16.21 $16.76 $17.06
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income................... .09 .33 .42 .45 .41 .33
Net realized and unrealized gains
(losses)............................... .75 4.10 (1.59) 4.47 1.29 1.11
----------------------------------------------------------------------------------
Total from investment operations......... .84 4.43 (1.17) 4.92 1.70 1.44
----------------------------------------------------------------------------------
Less distributions from:
Net investment income................... (.38) (.36) (.44) (.43) (.37) (.28)
Net realized gains...................... (1.09) (1.38) (2.60) (1.04) (1.88) (1.46)
----------------------------------------------------------------------------------
Total distributions...................... (1.47) (1.74) (3.04) (1.47) (2.25) (1.74)
----------------------------------------------------------------------------------
Net asset value, end of period........... $17.51 $18.14 $15.45 $19.66 $16.21 $16.76
==================================================================================
Total Return*............................ 5.41% 31.42% (7.80)% 32.70% 11.73% 9.87%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)........ $9,317,251 $9,115,995 $7,852,041 $8,649,994 $6,483,146 $5,868,967
Ratios to average net assets:
Expenses................................ 1.06%** 1.04% 1.04% 1.03% 1.03% 1.05%
Net investment income................... 1.03%** 1.99% 2.34% 2.58% 2.66% 2.18%
Portfolio turnover rate.................. 21.18% 35.81% 43.36% 39.16% 22.05% 34.05%
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
+Based on average weighted shares outstanding.
9
TEMPLETON WORLD FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS B
-------------------------------------
SIX MONTHS ENDED
FEBRUARY 29, 2000 PERIOD ENDED
(UNAUDITED) AUGUST 31, 1999+
----------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE++
(For a share outstanding throughout the period)
Net asset value, beginning of period........................ $18.05 $15.93
-------------------------------------
Income from investment operations:
Net investment income...................................... .02 .15
Net realized and unrealized gains.......................... .75 1.97
-------------------------------------
Total from investment operations............................ .77 2.12
-------------------------------------
Less distributions from:
Net investment income...................................... (.35) --
Net realized gains......................................... (1.09) --
-------------------------------------
Total distributions......................................... (1.44) --
-------------------------------------
Net asset value, end of period.............................. $17.38 $18.05
=====================================
Total Return*............................................... 5.02% 13.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)........................... $17,954 $9,261
Ratios to average net assets:
Expenses................................................... 1.81%** 1.85%**
Net investment income...................................... .22%** 1.27%**
Portfolio turnover rate..................................... 21.18% 35.81%
</TABLE>
*Total return does not reflect the contingent deferred sales charge and is not
annualized.
**Annualized.
+Effective date of Class B shares was January 1, 1999.
++Based on average weighted shares outstanding.
10
TEMPLETON WORLD FUND
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 -----------------------------------------------------
(UNAUDITED)++ 1999++ 1998 1997 1996 1995+
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period......... $17.71 $15.16 $19.39 $16.04 $16.71 $15.36
--------------------------------------------------------------------------
Income from investment operations:
Net investment income....................... .02 .20 .33 .34 .45 .03
Net realized and unrealized gains
(losses)................................... .74 4.02 (1.61) 4.39 1.11 1.32
--------------------------------------------------------------------------
Total from investment operations............. .76 4.22 (1.28) 4.73 1.56 1.35
--------------------------------------------------------------------------
Less distributions from:
Net investment income....................... (.22) (.29) (.35) (.34) (.35) --
Net realized gains.......................... (1.09) (1.38) (2.60) (1.04) (1.88) --
--------------------------------------------------------------------------
Total distributions.......................... (1.31) (1.67) (2.95) (1.38) (2.23) --
--------------------------------------------------------------------------
Net asset value, end of period............... $17.16 $17.71 $15.16 $19.39 $16.04 $16.71
==========================================================================
Total Return*................................ 5.00% 30.39% (8.51)% 31.61% 10.88% 8.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)............ $432,659 $417,439 $325,319 $207,679 $58,619 $7,623
Ratios to average net assets:
Expenses.................................... 1.81%** 1.81% 1.80% 1.83% 1.84% 1.82%**
Net investment income....................... .28%** 1.22% 1.66% 1.92% 2.14% 1.37%**
Portfolio turnover rate...................... 21.18% 35.81% 43.36% 39.16% 22.05% 34.05%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
**Annualized.
+For the period May 1, 1995 (effective date) to August 31, 1995.
++Based on average weighted shares outstanding.
See Notes to Financial Statements.
11
TEMPLETON WORLD FUND
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 78.1%
AEROSPACE & MILITARY TECHNOLOGY .6%
BAE Systems PLC............................................. United Kingdom 3,098,668 $ 15,298,894
Hong Kong Aircraft Engineering Co. Ltd. .................... Hong Kong 125,000 171,050
Raytheon Co., A............................................. United States 992,015 19,654,297
Rolls-Royce PLC............................................. United Kingdom 8,104,716 26,356,800
--------------
61,481,041
--------------
APPLIANCES & HOUSEHOLD DURABLES 1.2%
Guangdong Kelon Electrical Holdings. Ltd., H................ China 618,700 302,084
Laox Co. Ltd. .............................................. Japan 60,000 297,665
Sony Corp. ................................................. Japan 393,700 116,473,988
--------------
117,073,737
--------------
AUTOMOBILES 1.7%
Autoliv Inc., SDR........................................... Sweden 17,000 453,747
Fiat SpA, di Risp........................................... Italy 10,571 152,659
Ford Motor Co. ............................................. United States 1,569,400 65,326,275
General Motors Corp. ....................................... United States 187,300 14,246,506
Volkswagen AG............................................... Germany 771,365 31,413,357
Volvo AB, B................................................. Sweden 2,333,326 54,959,715
--------------
166,552,259
--------------
BANKING 3.4%
*Banca Nazionale Del Lavoro SpA............................. Italy 8,468,850 30,224,636
Banco Popular Espanol SA.................................... Spain 844,432 23,495,061
Credit Suisse Group......................................... Switzerland 537,730 85,571,395
DBS Group Holdings Ltd. .................................... Singapore 9,980,657 123,332,363
HSBC Holdings PLC........................................... Hong Kong 4,559,713 52,288,943
Kookmin Bank, GDR, 144A..................................... South Korea 6,939 78,411
National Australia Bank Ltd. ............................... Australia 47,164 619,866
*Nordic Baltic Holding AB, cvt. ............................ Finland 125,562 670,912
Unibanco Uniao de Bancos Brasileiros SA, GDR................ Brazil 475,400 13,846,025
--------------
330,127,612
--------------
BROADCASTING & PUBLISHING 1.3%
*Scholastic Corp. .......................................... United States 337,900 17,507,444
South China Morning Post Ltd. .............................. Hong Kong 5,391,700 5,368,977
Television Broadcasts Ltd. ................................. Hong Kong 2,697,000 22,178,136
Wolters Kluwer NV........................................... Netherlands 2,242,740 79,912,012
--------------
124,966,569
--------------
BUILDING MATERIALS & COMPONENTS 1.6%
Anglian Group PLC........................................... United Kingdom 148,240 351,030
Caradon PLC................................................. United Kingdom 10,617,611 22,209,069
*Cementos Diamante SA, ADR, 144A............................ Colombia 22,430 22,430
*Cemex SA, ADR.............................................. Mexico 2,909,619 62,193,106
CSR Ltd. ................................................... Australia 14,260,546 31,091,243
</TABLE>
12
TEMPLETON WORLD FUND
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
BUILDING MATERIALS & COMPONENTS (CONT.)
Danske Traelast AS.......................................... Denmark 4,300 $ 376,288
Gujarat Ambuja Cements Ltd. ................................ India 3,911,172 25,169,433
Gujarat Ambuja Cements Ltd., GDR, Reg S..................... India 1,152,000 7,574,400
Gujarat Ambuja Cements Ltd., GDR, 144A...................... India 1,294,000 8,508,050
Nichiha Corp. .............................................. Japan 30,100 217,554
Pioneer International Ltd. ................................. Australia 322,014 858,298
Svedala Industri, A......................................... Sweden 28,500 416,106
--------------
158,987,007
--------------
BUSINESS & PUBLIC SERVICES 1.3%
Columbia HCA Healthcare Corp. .............................. United States 6,490,200 125,341,988
Koninklijke Ahrend NV....................................... Netherlands 10,000 122,751
--------------
125,464,739
--------------
CHEMICALS 3.3%
Akzo Nobel NV............................................... Netherlands 1,999,444 77,017,931
BASF AG..................................................... Germany 1,647,210 73,187,131
*Celanese AG................................................ Germany 61,795 1,225,560
Cookson Group PLC........................................... United Kingdom 13,226,917 44,789,229
DSM NV, Br. ................................................ Netherlands 1,501,080 49,236,823
Imperial Chemical Industries PLC............................ United Kingdom 5,119,600 39,440,600
Kemira OY................................................... Finland 5,423,800 33,941,503
--------------
318,838,777
--------------
DATA PROCESSING & REPRODUCTION 3.4%
*3Com Corp. ................................................ United States 1,003,900 98,382,200
Compaq Computer Corp. ...................................... United States 1,969,400 48,988,825
International Business Machines Corp. ...................... United States 1,238,300 126,306,600
*Intuit Inc. ............................................... United States 838,300 44,010,750
*Newbridge Networks Corp. .................................. Canada 286,400 9,988,200
--------------
327,676,575
--------------
ELECTRICAL & ELECTRONICS 2.5%
*ABB Ltd. .................................................. Switzerland 220,292 23,436,724
*ABB Ltd. (SEK)............................................. Switzerland 918,924 97,479,106
Koninklijke Philips Electronics NV.......................... Netherlands 577,723 106,930,120
Marconi PLC................................................. United Kingdom 1,020,700 12,713,431
*Solectron Corp. ........................................... United States 61,200 4,008,600
--------------
244,567,981
--------------
ELECTRONIC COMPONENTS & INSTRUMENTS 3.2%
*Agilent Technologies Inc. ................................. United States 1,245,100 129,101,306
Hewlett-Packard Co. ........................................ United States 1,341,000 180,364,500
Twentsche Kabel Holdings NV................................. Netherlands 13,500 558,877
--------------
310,024,683
--------------
</TABLE>
13
TEMPLETON WORLD FUND
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
ENERGY SOURCES 2.7%
Burlington Resources Inc. .................................. United States 1,603,900 $ 44,307,738
Occidental Petroleum Corp. ................................. United States 2,927,800 47,027,788
Royal Dutch Petroleum Co., Br. ............................. Netherlands 1,518,000 79,342,460
Shell Transport & Trading Co. PLC........................... United Kingdom 6,041,795 41,633,018
Valero Energy Corp. ........................................ United States 1,899,550 48,438,525
--------------
260,749,529
--------------
FINANCIAL SERVICES 8.8%
AXA SA...................................................... France 406,063 51,017,360
Golden West Financial Corp. ................................ United States 950,100 27,077,850
Housing Development Finance Corp. Ltd. ..................... India 68,000 611,374
ING Groep NV................................................ Netherlands 1,497,371 75,712,604
Lend Lease Corp. Ltd. ...................................... Australia 3,840,175 50,470,588
Merrill Lynch & Co. Inc. ................................... United States 1,221,700 125,224,250
Morgan Stanley Dean Witter & Co. ........................... United States 3,880,744 273,349,906
Nomura Securities Co. Ltd. ................................. Japan 6,170,000 174,111,329
*PC Holdings SA, ADR........................................ Argentina 2,797,015 58,387,688
*Royal Bank of Scotland Group PLC........................... United Kingdom 1,933,447 25,547,325
--------------
861,510,274
--------------
FOOD & HOUSEHOLD PRODUCTS
McBride PLC................................................. United Kingdom 949,400 1,199,021
Showa Sangyo Co. ........................................... Japan 255,000 389,969
--------------
1,588,990
--------------
FOREST PRODUCTS & PAPER 1.3%
Stora Enso OYJ, R (EUR/FIM Traded).......................... Finland 2,638,100 26,668,255
*Stora Enso OYJ, R (EUR Traded)............................. Finland 2,757,696 29,735,720
UPM-Kymmene Corp. .......................................... Finland 2,802,290 77,699,749
--------------
134,103,724
--------------
HEALTH & PERSONAL CARE 2.3%
Abbott Laboratories......................................... United States 750,000 24,562,500
Aetna Inc. ................................................. United States 1,264,900 52,019,013
*Aventis SA................................................. France 463,586 23,967,279
*CellTech Group PLC......................................... United Kingdom 26,860 566,500
China Pharmaceutical Enterprise & Inv. Corp. Ltd. .......... China 578,000 62,384
*China Pharmaceutical Enterprise & Inv. Corp. Ltd, wts.,
10/20/01.................................................. China 57,800 1,225
Mylan Laboratories Inc. .................................... United States 750,000 17,250,000
Ono Pharmaceutical Co Ltd. ................................. Japan 265,500 7,492,149
Pharmacia & Upjohn Inc. .................................... United States 2,152,830 102,528,529
--------------
228,449,579
--------------
INDUSTRIAL COMPONENTS
Sylea SA.................................................... France 4,000 133,245
--------------
</TABLE>
14
TEMPLETON WORLD FUND
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
INSURANCE 5.0%
Ace Ltd..................................................... Bermuda 4,507,500 $ 80,571,563
Allstate Corp............................................... United States 4,072,400 79,411,800
American International Group Inc. .......................... United States 937,587 82,917,850
*Assicurazioni Generali SpA................................. Italy 1,875,567 51,480,635
*Muenchener Rueckversicherungs-Gesellschaft, wts.,
6/03/02................................................... Germany 1,040 71,090
Partnerre Ltd. ............................................. Bermuda 53,500 1,658,500
SCOR SA..................................................... France 1,242,833 49,776,019
Torchmark Corp. ............................................ United States 4,418 87,532
Unumprovident Corp. ........................................ United States 3,312,900 44,310,038
+W. R. Berkley Corp. ....................................... United States 1,863,100 29,926,044
XL Capital Ltd., A.......................................... Bermuda 722,875 29,231,243
Zurich Allied PLC........................................... United Kingdom 4,015,000 34,226,853
--------------
483,669,167
--------------
LEISURE & TOURISM .5%
*Amadeus Global Travel Distribution SA, 144A................ Spain 3,179,000 45,786,366
--------------
MACHINERY & ENGINEERING .4%
Arcadis NV.................................................. Netherlands 78,000 563,209
First Tractor Company Ltd., H............................... China 3,308,000 335,781
Invensys PLC................................................ United Kingdom 7,388,994 33,944,230
Makita Corp. ............................................... Japan 148,000 1,219,244
Mckechnie Group PLC......................................... United Kingdom 394,000 1,542,537
METSO OYJ................................................... Finland 26,500 346,976
SNC-Lavalin Group Inc., A................................... Canada 31,800 266,278
VA Technologie AG, Br. ..................................... Austria 1,600 94,581
--------------
38,312,836
--------------
MERCHANDISING 4.3%
Best Denki Co. Ltd. ........................................ Japan 26,000 182,477
Coles Myer Ltd. ............................................ Australia 13,931,778 58,353,176
Dairy Farm International Holdings Ltd. ..................... Hong Kong 16,916,768 9,557,974
David Jones Ltd. ........................................... Australia 3,487,440 2,698,677
Gucci Group NV.............................................. Netherlands 1,210,800 105,869,325
J.Sainsbury PLC............................................. United Kingdom 7,489,700 30,327,698
*Kroger Co. ................................................ United States 3,463,200 51,515,100
Li & Fung Ltd. ............................................. Hong Kong 11,376,000 44,289,048
Marks & Spencer PLC......................................... United Kingdom 17,923,580 64,866,694
Safeway PLC................................................. United Kingdom 4,426,689 10,726,920
Sears, Roebuck & Co. ....................................... United States 831,700 22,923,731
Takashimaya Co. Ltd. ....................................... Japan 2,182,000 14,698,284
--------------
416,009,104
--------------
METALS & MINING 2.5%
Alcan Aluminum Ltd. ........................................ Canada 1,123,391 36,891,510
Anglo American Platinum Corp. Ltd. ......................... South Africa 3,599,172 102,108,998
</TABLE>
15
TEMPLETON WORLD FUND
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
METALS & MINING (CONT.)
Barrick Gold Corp........................................... Canada 627,700 $ 10,230,948
Companhia Siderurgica Nacional CSN, ADR..................... Brazil 691,280 21,213,655
Goldfields Ltd. ............................................ Australia 572,995 429,323
*Pohang Iron & Steel Co. Ltd. .............................. South Korea 700,685 74,711,860
Union Miniere............................................... Belgium 4,927 161,278
--------------
245,747,572
--------------
MULTI-INDUSTRY 8.3%
*Alfa SA de CV, A........................................... Mexico 83,200 293,083
Broken Hill Proprietary Co. Ltd. ........................... Australia 14,415,444 142,466,130
Cheung Kong Holdings Ltd. .................................. Hong Kong 31,083,200 413,361,669
Elementis PLC............................................... United Kingdom 10,882,318 12,369,199
First Pacific Co. Ltd. ..................................... Hong Kong 30,535,244 16,380,306
Hutchison Whampoa Ltd. ..................................... Hong Kong 14,102,100 221,058,771
*Sanitec OYJ................................................ Finland 1,917 25,285
--------------
805,954,443
--------------
REAL ESTATE 3.0%
Crescent Real Estate Equities Co. .......................... United States 2,715,846 46,339,122
General Growth Properties Inc. ............................. United States 907,800 26,269,463
Highwoods Properties Inc. .................................. United States 1,231,900 25,792,906
*Hon Kwok Land Investment Co Ltd, wts., 10/28/00............ Hong Kong 2,096,948 43,109
Inversiones y Representacion SA............................. Argentina 10,258,613 33,448,096
Inversiones y Representacion SA, GDR........................ Argentina 759,412 24,775,817
National Health Investors Inc. ............................. United States 1,091,800 14,534,588
Nationwide Health Properties Inc. .......................... United States 400,000 4,575,000
New World Development Co. Ltd. ............................. Hong Kong 25,201,102 36,266,169
Rouse Co. .................................................. United States 2,322,100 50,795,938
Union du Credit Bail Immobilier............................. France 300,936 37,983,142
--------------
300,823,350
--------------
RECREATION & OTHER CONSUMER GOODS 1.2%
Eastman Kodak Co. .......................................... United States 1,306,400 74,873,050
Mattel Inc. ................................................ United States 4,950,100 47,644,713
--------------
122,517,763
--------------
TELECOMMUNICATIONS 8.0%
Alcatel SA.................................................. France 671,255 157,168,372
AT&T Corp. ................................................. United States 901,100 44,548,131
Embratel Participacoes SA................................... Brazil 20,000,000 293,868
*Latitude Communications Inc. .............................. United States 792,900 16,750,014
*Mastec Inc. ............................................... United States 23,000 1,325,375
*Millicom International Cellular SA......................... Luxembourg 388,650 27,594,150
Nippon Telegraph & Telephone Corp. ......................... Japan 6,630 91,735,469
Nortel Networks Corp. ...................................... Canada 1,421,034 158,445,291
*Tele Leste Celular Participacoes SA, rts., 3/16/00......... Brazil 41,856,670 710
</TABLE>
16
TEMPLETON WORLD FUND
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
TELECOMMUNICATIONS (CONT.)
Tele Sudeste Celular Participacoes SA....................... Brazil 39,665,900 $ 233,131
Telecom Argentina Stet-France Telecom SA, ADR............... Argentina 1,810,900 75,491,894
Telecom Italia SpA, di Risp................................. Italy 10,883,800 85,713,239
Telecomunicacoes Brasileiras SA............................. Brazil 147,744,000 13,016,835
Telecomunicacoes de Sao Paulo SA............................ Brazil 253,764,465 5,177,112
Telefonica de Argentina SA, ADR............................. Argentina 28,896 1,320,186
Telefonica del Peru SA, ADR................................. Peru 20,230 397,014
Telefonos de Mexico SA (Telmex), ADR........................ Mexico 1,503,342 98,844,737
Telesp Celular Participacoes SA............................. Brazil 203,391,384 2,356,329
*Terra Networks SA.......................................... Spain 1,000 129,971
--------------
780,541,828
--------------
TEXTILES & APPAREL 1.3%
+Adidas-Salomon AG.......................................... Germany 2,324,460 123,195,104
--------------
TRANSPORTATION 1.0%
British Airways PLC......................................... United Kingdom 83,697 397,377
*Expedia Inc., A............................................ United States 500,000 10,000,000
Peninsular & Oriental Steam Navigation Co. ................. United Kingdom 6,592,086 74,043,243
Singapore Airlines Ltd., fgn. .............................. Singapore 55,800 517,956
United Parcel Service Inc., B............................... United States 258,500 14,120,563
--------------
99,079,139
--------------
UTILITIES ELECTRICAL & GAS 4.0%
Entergy Corp. .............................................. United States 4,247,300 86,007,825
Iberdrola SA, Br............................................ Spain 7,587,317 95,180,218
*Korea Electric Power Corp. ................................ South Korea 4,780,150 119,598,309
National Power PLC.......................................... United Kingdom 54,200 320,434
Thames Water Group PLC...................................... United Kingdom 45,364 491,273
Veba AG..................................................... Germany 2,028,900 90,048,320
--------------
391,646,379
--------------
TOTAL COMMON STOCKS (COST $6,183,235,002)................... 7,625,579,372
--------------
PREFERRED STOCKS 7.3%
Banco Itau SA, pfd. ........................................ Brazil 883,400,000 70,142,809
Cia Vale do Rio Doce, A, pfd. .............................. Brazil 1,583,500 42,059,621
Cia Vale do Rio Doce, A, ADR, pfd. ......................... Brazil 1,566,800 41,616,050
Embratel Participacoes SA, ADR, pfd. ....................... Brazil 6,682,650 160,383,600
Fiat SpA, pfd. ............................................. Italy 1,775,070 29,949,361
National Australia Bank Ltd., cvt, pfd. .................... Australia 196,700 4,794,562
News Corp. Ltd., pfd. ...................................... Australia 17,076,677 213,706,233
Philippine Long Distance Telephone Co., GDR, cvt., pfd. .... Philippines 6,440 276,115
Tele Celular Sul Participacoes SA, ADR, pfd. ............... Brazil 62,365 3,024,703
Tele Centro Oeste Celular Participacoes SA, ADR, pfd. ...... Brazil 207,881 1,870,929
Tele Centro Sul Participacoes SA, ADR, pfd. ................ Brazil 124,730 8,996,151
Tele Leste Celular Participacoes SA, ADR, pfd. ............. Brazil 12,473 505,156
</TABLE>
17
TEMPLETON WORLD FUND
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCKS (CONT.)
Tele Sudeste Celular Participacoes SA, ADR, pfd. ........... Brazil 124,730 $ 7,140,792
Telecomunicacoes Brasileiras SA, ADR, pfd. ................. Brazil 139,000 20,467,750
Telecomunicacoes de Sao Paulo SA, ADR, pfd. ................ Brazil 2,594,650 88,704,597
Telecomunicacoes de Sao Paulo SA, pfd. ..................... Brazil 630,920 21,386
Telemig Celular Participacoes SA, ADR, pfd. ................ Brazil 31,182 2,295,775
Telesp Celular Participacoes SA, ADR, pfd. ................. Brazil 249,460 13,439,657
--------------
TOTAL PREFERRED STOCKS (COST $447,645,124).................. 709,395,247
--------------
<CAPTION>
PRINCIPAL
AMOUNT**
--------------
<S> <C> <C> <C>
BONDS 3.3%
BAE Systems PLC:, 7.45%, 11/30/03........................... United Kingdom 138,232GBP 219,312
National Grid Group PLC:
cvt., Reg. S, 4.25%, 2/17/08.............................. United Kingdom 15,000,000GBP 29,836,609
cvt., 144A, 4.25%, 2/17/08................................ United Kingdom 16,000,000GBP 31,825,716
Sony Corp., cvt., 1.40%, 3/31/05............................ Japan 4,628,000,000JPY 170,366,684
Telefonica Europe BV, 144A, 2.00%, 7/15/02.................. Netherlands 23,471,000 68,902,054
Telefonos de Mexico SA (Telemex), 4.25%, 6/15/04............ Mexico 20,000,000 29,650,000
--------------
TOTAL BONDS (COST $180,370,796)............................. 330,800,375
--------------
SHORT TERM INVESTMENTS 7.1%
Fannie Mae, 5.51%, with maturities to 2/26/00............... United States 43,140,000 42,766,299
Federal Farm Credit Bank, 5.60%, 3/01/00.................... United States 57,000,000 57,000,000
Federal Home Loan Bank, 5.50% to 5.69% with maturities to
5/03/00................................................... United States 151,770,000 151,376,163
Federal Home Loan Mortgage Corp., 5.640% to 6.382%, with
maturities to 4/04/00..................................... United States 415,116,000 413,791,341
Sallie Mae, 5.882%, 7/20/00................................. United States 30,000,000 30,021,600
--------------
TOTAL SHORT TERM INVESTMENTS (COST $694,906,096)............ 694,955,403
--------------
TOTAL INVESTMENTS BEFORE REPURCHASE AGREEMENTS (COST
$7,506,157,018)........................................... 9,360,730,397
--------------
</TABLE>
18
TEMPLETON WORLD FUND
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2000 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
COUNTRY AMOUNT** VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a)REPURCHASE AGREEMENTS 4.3%
Barclays Bank PLC, 5.77%, 3/01/00, (Maturity Value
$128,020,516) Collateralized by U.S. Treasury Notes and
Bonds..................................................... United States $ 128,000,000 $ 128,000,000
Deutsche Bank AG, 5.76%, 3/01/00 (Maturity Value
$180,028,800) Collateralized by U.S. Treasury Notes and
Bonds..................................................... United States 180,000,000 180,000,000
Paribas Corp., 5.75%, 3/01/00 (Maturity Value $112,017,889)
Collateralized by U.S. Treasury Notes and Bonds........... United States 112,000,000 112,000,000
--------------
TOTAL REPURCHASE AGREEMENTS (COST $420,000,000)............. 420,000,000
--------------
TOTAL INVESTMENTS (COST $7,926,157,018) 100.1%.............. 9,780,730,397
OTHER ASSETS, LESS LIABILITIES (.1%)........................ (12,866,142)
--------------
TOTAL NET ASSETS 100.0%..................................... $9,767,864,255
==============
</TABLE>
CURRENCY ABBREVIATIONS:
GBP -- British Pound
JPY -- Japanese Yen
*Non-income producing.
**Securities denominated in U.S. dollars unless otherwise indicated.
+The Investment Company Act of 1940 defines "affiliated persons" to include any
persons, such as the Fund, that owns 5% or more of the outstanding voting
securities of another person. Investments in "affiliated persons" at February
29, 2000, were $153,121,148.
(a)At February 29, 2000, all repurchase agreements held by the Fund had been
entered into on that date.
See Notes to Financial Statements.
19
TEMPLETON WORLD FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$7,506,157,018)........................................... $9,360,730,397
Repurchase agreement, at value and cost.................... 420,000,000
Cash....................................................... 1,013,854
Receivables:
Investment securities sold................................ 17,018,212
Capital shares sold....................................... 77,478,701
Dividends and interest.................................... 25,704,107
--------------
Total assets.......................................... 9,901,945,271
--------------
Liabilities:
Payables:
Investment securities purchased........................... 99,344,000
Capital shares redeemed................................... 24,521,547
To affiliates............................................. 8,453,280
Accrued expenses........................................... 1,762,189
--------------
Total liabilities..................................... 134,081,016
--------------
Net assets, at value........................................ $9,767,864,255
==============
Net assets consist of:
Undistributed net investment income........................ $ 19,384,406
Net unrealized appreciation................................ 1,854,573,379
Accumulated net realized gain.............................. 445,697,690
Capital shares............................................. 7,448,208,780
==============
Net assets, at value........................................ $9,767,864,255
==============
CLASS A:
Net asset value per share ($9,317,251,511 / 532,233,383
shares outstanding)...................................... $17.51
==============
Maximum offering price per share ($17.51 / 94.25%)......... $18.58
==============
CLASS B:
Net asset value and maximum offering price per share
($17,953,977 / 1,033,318 shares outstanding)*............. $17.38
==============
CLASS C:
Net asset value per share ($432,658,767 / 25,217,170 shares
outstanding)*............................................. $17.16
==============
Maximum offering price per share ($17.16 / 99.00%)......... $17.33
==============
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
20
TEMPLETON WORLD FUND
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $3,169,986)
Dividends.................................................. $ 64,536,186
Interest................................................... 36,401,075
------------
Total investment income............................... $100,937,261
Expenses:
Management fees (Note 4)................................... 29,560,785
Administrative fees (Note 4)............................... 3,744,242
Distribution fees (Note 4)
Class A................................................... 11,553,357
Class B................................................... 69,369
Class C................................................... 2,132,525
Transfer agent fees (Note 4)............................... 3,542,600
Custodian fees............................................. 1,201,100
Reports to shareholders.................................... 610,000
Registration and filing fees............................... 232,500
Professional fees.......................................... 94,700
Directors' fees and expenses............................... 97,000
Other...................................................... 17,152
------------
Total expenses........................................ 52,855,330
------------
Net investment income........................... 48,081,931
------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... 458,611,991
Foreign currency transactions............................. (7,369,821)
------------
Net realized gain..................................... 451,242,170
Net unrealized appreciation........................... 24,068,612
------------
Net realized and unrealized gain............................ 475,310,782
------------
Net increase in net assets resulting from operations........ $523,392,713
============
</TABLE>
See Notes to Financial Statements.
21
TEMPLETON WORLD FUND
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 29, 2000 YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 48,081,931 $ 178,721,339
Net realized gain from investments and foreign currency
transactions............................................. 451,242,170 562,718,597
Net unrealized appreciation on investments................ 24,068,612 1,697,687,609
---------------------------------------
Net increase in net assets resulting from operations.... 523,392,713 2,439,127,545
Distributions to shareholders from:
Net investment income:
Class A.................................................. (192,677,187) (180,149,378)
Class B.................................................. (231,669) --
Class C.................................................. (5,276,097) (6,049,599)
Net realized gains:
Class A.................................................. (545,585,766) (693,063,687)
Class B.................................................. (711,956) --
Class C.................................................. (25,885,463) (29,487,922)
Capital share transactions (Note 3):
Class A.................................................. 437,505,485 (205,209,640)
Class B.................................................. 9,020,155 9,040,599
Class C.................................................. 25,619,350 31,127,157
---------------------------------------
Net increase in net assets.............................. 225,169,565 1,365,335,075
Net assets:
Beginning of period........................................ 9,542,694,690 8,177,359,615
---------------------------------------
End of period.............................................. $9,767,864,255 $9,542,694,690
=======================================
Undistributed net investment income included in net assets:
End of period.............................................. $ 19,384,406 $ 169,487,428
=======================================
</TABLE>
See Notes to Financial Statements.
22
TEMPLETON WORLD FUND
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton World Fund (the Fund) is a separate, diversified series of Templeton
Funds, Inc. (the Company), which is an open-end investment company registered
under the Investment Company Act of 1940. The Fund seeks long-term capital
growth. Under normal market conditions, the Fund invests primarily in the equity
securities of companies located anywhere in the world, including emerging
markets. The following summarizes the Fund's significant accounting policies.
a. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Directors.
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 and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
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.
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 currency denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
c. 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.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
23
TEMPLETON WORLD FUND
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
c. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONT.)
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
Common expenses incurred by the Company are allocated among the funds comprising
the Company based on the ratio of net assets of each fund to the combined net
assets. Other expenses are charged to each fund on a specific identification
basis.
d. ACCOUNTING ESTIMATES:
The preparation of financial statements in accordance with generally accepted
accounting principles 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 expense during the reporting
period. Actual results could differ from those estimates.
2. MERGER WITH TEMPLETON GLOBAL INFRASTRUCTURE FUND AND TEMPLETON GROWTH AND
INCOME FUND
On July 22, 1999, the Fund acquired all of the net assets of the Templeton
Global Infrastructure Fund pursuant to a plan of reorganization approved by the
Global Infrastructure Fund's shareholders. The merger was accomplished by a
tax-free exchange of 926,808 Class A shares and 179,108 Class C shares (valued
at $18.29 per share and $17.87 per share, respectively) for the net assets of
the Global Infrastructure Fund which aggregated $20,151,975, including
$1,330,042 of unrealized appreciation. The combined net assets of the Fund
immediately after the merger were $9,638,473,098.
On July 29, 1999, the Fund acquired all of the net assets of the Templeton
Growth and Income Fund pursuant to a plan of reorganization approved by the
Growth and Income Fund's shareholders. The merger was accomplished by a tax-free
exchange of 1,755,844 Class A shares and 792,151 Class C shares (valued at
$18.16 per share and $17.74 per share, respectively) for the net assets of the
Growth and Income Fund which aggregated $45,938,881, including $2,680,383 of
unrealized appreciation. The combined net assets of the Fund immediately after
the merger were $9,653,130,530.
3. CAPITAL STOCK
The Fund offers three classes of shares: Class A, Class B, and Class C shares.
Effective January 1, 1999, Class I and Class II shares were renamed Class A and
Class C, respectively, and a third class of shares, Class B, was established.
The shares differ by their initial sales load, distribution fees, voting rights
on matters affecting a single class, and the exchange privilege of each class.
24
TEMPLETON WORLD FUND
Notes to Financial Statements (unaudited) (continued)
3. CAPITAL STOCK (CONT.)
At February 29, 2000, there were 3.7 billion shares of capital stock authorized
($1.00 par value) of which 1.2 billion shares have been classified as Fund
shares as follows: 800 million Class A shares, 200 million Class B shares, and
200 million Class C shares. Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold....................................... 209,064,107 $ 3,667,841,300 239,655,133 $ 4,032,873,847
Shares issued on reinvestment of distributions.... 40,892,716 654,310,651 53,401,120 780,738,937
Shares issued on mergers.......................... -- -- 2,682,652 48,837,445
Shares redeemed................................... (220,361,177) (3,884,646,466) (301,379,988) (5,067,659,869)
-----------------------------------------------------------------------
Net increase (decrease)........................... 29,595,646 $ 437,505,485 (5,641,083) $ (205,209,640)
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999*
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS B SHARES:
Shares sold....................................... 494,910 $ 8,673,709 523,243 $ 9,223,801
Shares issued on reinvestment of distributions.... 54,473 863,804 -- --
Shares redeemed................................... (29,193) (517,358) (10,115) (183,202)
-----------------------------------------------------------------------
Net increase...................................... 520,190 $ 9,020,155 513,128 $ 9,040,599
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES:
Shares sold....................................... 7,360,799 $ 126,660,025 13,729,928 $ 220,404,100
Shares issued on reinvestment of distributions.... 1,719,425 26,899,562 2,101,303 30,196,067
Shares issued on mergers.......................... -- -- 971,259 17,253,411
Shares redeemed................................... (7,438,044) (127,940,237) (14,693,533) (236,726,421)
-----------------------------------------------------------------------
Net increase...................................... 1,642,180 $ 25,619,350 2,108,957 $ 31,127,157
=======================================================================
</TABLE>
*Effective date of Class B shares was January 1, 1999.
4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton Global
Advisors Ltd. (TGAL), Franklin Templeton Services, Inc. (FT Services),
Franklin/Templeton Distributors, Inc. (Distributors), and Franklin/Templeton
Investor Services, Inc. (Investor Services), the Fund's investment manager,
administrative manager, principal underwriter, and transfer agent, respectively.
25
TEMPLETON WORLD FUND
Notes to Financial Statements (unaudited) (continued)
4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
The Fund pays an investment management fee to TGAL based on the average daily
net assets of the Fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- -----------------------------------------------------------------
<S> <C>
0.75% First $200 million
0.675% Over $200 million, up to and including $1.3 billion
0.60% Over $1.3 billion
</TABLE>
The Fund pays its allocated share of an administrative fee to FT Services based
on the Company's aggregate average daily net assets as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- -----------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
</TABLE>
The Fund reimburses Distributors for costs incurred in marketing the Fund's
shares up to 0.25%, 1.00%, and 1.00% per year of the average daily net assets of
Class A, Class B, and Class C shares, respectively. Under the Class A
distribution plan, costs and expenses exceeding the maximum may be reimbursed in
subsequent periods. At February 29, 2000, there were unreimbursed costs of
$108,150. Distributors received net commissions from sales of the Fund's shares
and received contingent deferred sales charges for the period of $573,986 and
$76,003, respectively.
5. INCOME TAXES
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
At February 29, 2000, the net unrealized appreciation based on the cost of
investments for income tax purposes of $7,931,009,540 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $2,708,116,434
Unrealized depreciation..................................... (858,395,577)
--------------
Net unrealized appreciation................................. $1,849,720,857
==============
</TABLE>
26
TEMPLETON WORLD FUND
Notes to Financial Statements (unaudited) (continued)
5. INCOME TAXES (CONT.)
At August 31, 1999, the Fund had deferred currency losses occurring subsequent
to October 31, 1998 of $4,500,000. For tax purposes, such losses will be
reflected in the year ending August 31, 2000.
6. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended February 29, 2000 aggregated $2,360,330,182 and $1,777,083,852,
respectively.
27
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SEMIANNUAL REPORT
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
1-800/DIAL BEN(R)
www.franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
This report must be preceded or accompanied by the current Templeton World Fund
prospectus, which contains more complete information, including risk factors,
charges and expenses. 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
determined by the presence of a regular beeping tone.
102 S00 04/00 [RECYCLE LOGO] Printed on recycled paper
