TEMPLETON FUNDS INC, 485BPOS, 2000-12-29

TEMPLETON FUNDS INC
485BPOS, 2000-12-29

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File Nos. 2-60067 and 811-2781

As filed with the Securities and Exchange Commission on December 29, 2000

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _______

Post-Effective Amendment No. 34 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 35 [X]

TEMPLETON FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)

500 EAST BROWARD BLVD., FT. LAUDERDALE, FLORIDA 33394
(Address of Principal Executive Offices) (Zip Code)

(954) 527-7500
(Registrant's Telephone Number, Including Area Code)

MURRAY L. SIMPSON, 777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404
(Name and Address of Agent for Service of Process)

It is proposed that this filing will become effective (check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b) of rule 485

[X] on JANUARY 1, 2001 (pursuant to paragraph (b) of rule 485
----------------

[ ] 60 days after filing pursuant to paragraph (a)(1) of rule 485

[ ] on (date) pursuant to paragraph (a)(1) of rule 485

[ ] 75 days after filing pursuant to paragraph (a)(2) of rule 485

[ ] on (date) pursuant to paragraph (a)(2) of rule 485

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.

PART A
TEMPLETON WORLD FUND
CLASS A, B & C PROSPECTUS

Prospectus

TEMPLETON WORLD FUND

TEMPLETON FUNDS, INC.

CLASS A, B & C

INVESTMENT STRATEGY
GLOBAL GROWTH

JANUARY 1, 2001

[Insert Franklin Templeton Ben Head]

The SEC has not approved or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

CONTENTS

THE FUND

[Begin callout]
INFORMATION ABOUT THE FUND YOU SHOULD KNOW BEFORE INVESTING
[End callout]

2 Goal and Strategies

4 Main Risks

7 Performance

9 Fees and Expenses

11 Management

12 Distributions and Taxes

13 Financial Highlights

YOUR ACCOUNT

[Begin callout]
INFORMATION ABOUT SALES CHARGES, ACCOUNT TRANSACTIONS AND SERVICES
[End callout]

15 Choosing a Share Class

20 Buying Shares

23 Investor Services

27 Selling Shares

29 Account Policies

32 Questions

FOR MORE INFORMATION

[Begin callout]
WHERE TO LEARN MORE ABOUT THE FUND
[End callout]

Back Cover

THE FUND

[Insert graphic of bullseye and arrows] GOAL AND STRATEGIES
-------------------

GOAL The Fund's investment goal is long-term capital growth.

MAIN INVESTMENT STRATEGIES Under normal market conditions, the Fund invests
mainly in the equity securities of companies located anywhere in the world,
including emerging markets. At least 65% of its total assets will be invested
in issuers located in at least three different countries (including the U.S.).

An equity security, or stock, represents a proportionate share of the
ownership of a company; its value is based on the success of the company's
business, any income paid to stockholders, the value of its assets, and
general market conditions. Common stocks and preferred stocks are examples
of equity securities. The Fund also invests in American, European and Global
Depositary Receipts. These are certificates issued typically by a bank or
trust company that give their holders the right to receive securities issued
by a foreign or domestic company.

Depending upon current market conditions, the Fund generally invests a
portion of its total assets in debt securities of companies and governments
located anywhere in the world. Debt securities represent the obligation of
the issuer to repay a loan of money to it, and generally pay interest to the
holder. Bonds, notes and debentures are examples of debt securities.

[Begin callout]
The Fund invests primarily in a globally diversified portfolio of equity
securities.
[End callout]

When choosing equity investments for this Fund, the manager applies a
"bottom-up," value-oriented, long-term approach, focusing on the market price
of a company's securities relative to the manager's evaluation of the
company's long-term earnings, asset value and cash flow potential. The
manager also considers and analyzes various measures related to stock
valuation, such as a company's price/cash flow ratio, price/earnings ratio,
profit margins and liquidation value.

TEMPORARY INVESTMENTS When the manager believes market or economic conditions
are unfavorable for investors, the manager may invest up to 100% of the
Fund's assets in a temporary defensive manner or hold a substantial portion
of its assets in cash, cash equivalents or other high quality short-term
investments. Temporary defensive investments generally may include money
market securities or short-term debt securities. The manager also may invest
in these types of securities or hold cash while looking for suitable
investment opportunities or to maintain liquidity. In these circumstances,
the Fund may be unable to achieve its investment goal.

[Insert graphic of chart with line going up and down] MAIN RISKS
----------

[Begin callout]
Because the securities the Fund holds fluctuate in price, the value of your
investment in the Fund will go up and down. This means you could lose money
over short or even extended periods.
[Begin callout]

STOCKS While this may not be the case in foreign markets, in the U.S.,
stocks historically have outperformed other asset classes over the long term
(over the short term they tend to go up and down more dramatically). These
price movements may result from factors affecting individual companies,
industries or the securities market as a whole. Value stock prices are
considered "cheap" relative to the company's perceived value. They may not
increase in value, as anticipated by the manager, if other investors fail to
recognize the company's value and bid up the price or in markets favoring
faster-growing companies.

FOREIGN SECURITIES Investing in foreign securities, including securities of
foreign governments and depositary receipts, typically involves more risks
than investing in U.S. securities. Certain of these risks also may apply to
securities of U.S. companies with significant foreign operations. These risks
can increase the potential for losses in the Fund and affect its share price.

CURRENCY EXCHANGE RATES. Foreign securities may be issued and traded in
foreign currencies. As a result, their values may be affected by changes in
exchange rates between foreign currencies and the U.S. dollar, as well as
between currencies of countries other than the U.S. For example, if the value
of the U.S. dollar goes up compared to a foreign currency, an investment
traded in that foreign currency will go down in value because it will be
worth less U.S. dollars. The impact of the euro, a relatively new currency
adopted by certain European countries to replace their national currencies,
is unclear at this time.

POLITICAL AND ECONOMIC DEVELOPMENTS. The political, economic and social
structures of some foreign countries may be less stable and more volatile
than those in the U.S. Investments in these countries may be subject to the
risks of internal and external conflicts, currency devaluations, foreign
ownership limitations and tax increases. It is possible that a government may
take over the assets or operations of a company or impose restrictions on the
exchange or export of currency or other assets. Some countries also may have
different legal systems that may make it difficult for the Fund to vote
proxies, exercise shareholder rights, and pursue legal remedies with respect
to its foreign investments.

TRADING PRACTICES. Brokerage commissions and other fees generally are higher
for foreign securities. Government supervision and regulation of foreign
stock exchanges, currency markets, trading systems and brokers may be less
than in the U.S. The procedures and rules governing foreign transactions and
custody (holding of the Fund's assets) also may involve delays in payment,
delivery or recovery of money or investments.

AVAILABILITY OF INFORMATION. Foreign companies may not be subject to the same
disclosure, accounting, auditing and financial reporting standards and
practices as U.S. companies. Thus, there may be less information publicly
available about foreign companies than about most U.S. companies.

LIMITED MARKETS. Certain foreign securities may be less liquid (harder to
sell) and more volatile than many U.S. securities. This means the Fund may at
times be unable to sell foreign securities at favorable prices.

EMERGING MARKETS. The risks of foreign investments typically are greater in
less developed countries, sometimes referred to as emerging markets. For
example, political and economic structures in these countries may be less
established and may change rapidly. These countries also are more likely to
experience high levels of inflation, deflation or currency devaluation, which
can harm their economies and securities markets and increase volatility. In
fact, short-term volatility in these markets, and declines of 50% or more,
are not uncommon.

LIQUIDITY The Fund may invest up to 10% of its total assets in securities
with a limited trading market. Such a market can result from political or
economic conditions affecting previously established securities markets,
particularly in emerging market countries. Reduced liquidity may have an
adverse impact on market price and the Fund's ability to sell particular
securities when necessary to meet the Fund's liquidity needs or in response
to a specific economic event.

INTEREST RATE When interest rates rise, debt security prices fall. The
opposite is also true: debt security prices rise when interest rates fall. In
general, securities with longer maturities are more sensitive to these price
changes.

CREDIT An issuer of securities may be unable to make interest payments and
repay principal. Changes in an issuer's financial strength or in a security's
credit rating may affect a security's value and, thus, impact Fund
performance.

More detailed information about the Fund, its policies and risks can be found
in the Fund's Statement of Additional Information (SAI).

[Begin callout]
Mutual fund shares are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency of the U.S.
government. Mutual fund shares involve investment risks, including the
possible loss of principal.
[End callout]

[Insert graphic of a bull and a bear] PERFORMANCE

This bar chart and table show the volatility of the Fund's returns, which is
one indicator of the risks of investing in the Fund. The bar chart shows
changes in the Fund's returns from year to year over the past 10 calendar
years. The table shows how the Fund's average annual total returns compare to
those of a broad-based securities market index. Of course, past performance
cannot predict or guarantee future results.

CLASS A ANNUAL TOTAL RETURNS/1

[Insert bar graph]

-15.90% 29.77% 3.25% 33.60% 0.88% 21.55% 21.45% 19.23% 6.01% 28.12%
90 91 92 93 94 95 96 97 98 99

YEAR

[Begin callout]
BEST
QUARTER:
Q4 '98
15.26%

WORST
QUARTER:
Q3 '90
-17.80%
[End callout]

1. Figures do not reflect sales charges. If they did, returns would be lower.
As of September 30, 2000, the Fund's year-to-date return was -2.73% for Class
A.

AVERAGE ANNUAL TOTAL RETURNS

For the periods ended December 31, 1999

1 YEAR 5 YEARS 10 YEARS
----------------------------------------------------------------
Templeton World Fund - Class 20.77% 17.65% 13.09%
A/2
MSCI World Index/3 25.34% 20.25% 11.96%

SINCE
INCEPTION
1 YEAR (1/1/99)
----------------------------------------------------------------
Templeton World Fund - Class 23.15% 23.15%
B/2
MSCI World Index/3 25.34% 25.34%

SINCE
INCEPTION
1 YEAR (5/1/95)
----------------------------------------------------------------
Templeton World Fund - Class 24.88% 17.25%
C/2
MSCI World Index/3 25.34% 19.74%

2. Figures reflect sales charges.
All Fund performance assumes reinvestment of dividends and capital gains.
January 1, 1993, Class A implemented a Rule 12b-1 plan, which affects
subsequent performance.
3. Source: Standard & Poor's Micropal. The unmanaged Morgan Stanley Capital
International(MSCI) World Index tracks the performance of approximately 1,500
securities in 22 countries and is designed to measure world stock market
performance. It includes reinvested dividends. One cannot invest directly in
an index, nor is an index representative of the Fund's portfolio.

[Insert graphic of percentage sign] FEES AND EXPENSES
-----------------

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

CLASS A CLASS B CLASS C
--------------------------------------------------------------------
Maximum sales charge (load) as a
percentage of offering price 5.75% 4.00% 1.99%
Load imposed on purchases 5.75% None 1.00%
Maximum deferred sales charge None/1 4.00%2 0.99%3
(load)

Please see "Choosing a Share Class" on page 15 for an explanation of how and
when these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS A CLASS B CLASS C
--------------------------------------------------------------------
Management fees 0.61% 0.61% 0.61%
Distribution and service
(12b-1) fees 0.25% 1.00% 1.00%
Other expenses 0.21% 0.21% 0.21%
---------------------------
Total annual Fund operating expenses 1.07% 1.82% 1.82%
---------------------------

1. Except for investments of $1 million or more (see page 15) and purchases
by certain retirement plans without an initial sales charge.
2. Declines to zero after six years.
3. This is equivalent to a charge of 1% based on net asset value.

EXAMPLE

This example can help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds. It assumes:

o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------------------
If you sell your shares at
the end of the period:
CLASS A $678/1 $896 $1,131 $1,806
CLASS B $585 $873 $1,185 $1,940/2
CLASS C $382 $667 $1,075 $2,216
If you do not sell your
shares:
CLASS B $185 $573 $ 985 $1,940/2
CLASS C $283 $667 $1,075 $2,216

1. Assumes a contingent deferred sales charge (CDSC) will not apply.
2. Assumes conversion of Class B shares to Class A shares after eight years,
lowering your annual expenses from that time on.

[Insert graphic of briefcase] MANAGEMENT

Templeton Global Advisors Limited (Global Advisors), Lyford Cay, Nassau,
Bahamas, is the Fund's investment manager. Together, Global Advisors and its
affiliates manage over $229 billion in assets.

The Fund's lead portfolio manager is:

JEFFREY A. EVERETT CFA, EXECUTIVE VICE PRESIDENT OF GLOBAL ADVISORS
Mr. Everett has been a manager of the Fund since 1993. He joined Franklin
Templeton Investments in 1989.

The following individuals have secondary portfolio management
responsibilities:

JOHN CRONE, PORTFOLIO MANAGER OF GLOBAL ADVISORS
Mr. Crone has been a manager of the Fund since 1999. He joined Franklin
Templeton Investments in 1995.

MURDO MURCHISON CFA, PORTFOLIO MANAGER OF GLOBAL ADVISORS
Mr. Murchison has been a manager of the Fund since January 2001. He joined
Franklin Templeton Investments in 1993.

The Fund pays Global Advisors a fee for managing the Fund's assets and making
its investment decisions. For the fiscal year ended August 31, 2000, the Fund
paid 0.61% of its average daily net assets to the manager for its services.

[Insert graphic of dollar
signs and stacks of coins] DISTRIBUTIONS AND TAXES
-----------------------

INCOME AND CAPITAL GAIN DISTRIBUTIONS

The Fund intends to make a distribution at least annually from its net
investment income and any net realized capital gains. The amount of any
distributions will vary, and there is no guarantee the Fund will pay either
income dividends or capital gain distributions.

AVOID "BUYING A DIVIDEND" If you invest in the Fund shortly before it makes
a distribution, you may receive some of your investment back in the form of a
taxable distribution.

TAX CONSIDERATIONS In general, if you are a taxable investor, Fund
distributions are taxable to you as either ordinary income or capital gains.
This is true whether you reinvest your distributions in additional Fund
shares or receive them in cash. Any capital gains the Fund distributes are
taxable as long-term capital gains no matter how long you have owned your
shares. Every January, you will receive a statement that shows the tax status
of distributions you received for the previous year.

[Begin callout]
BACKUP WITHHOLDING

By law, the Fund must withhold 31% of your taxable distributions and
redemption proceeds unless you:

o provide your correct social security or taxpayer identification number,
o certify that this number is correct, and
o certify that you are not subject to backup withholding.

The Fund must also withhold if the IRS instructs it to do so.
[End callout]

When you sell your shares of the Fund, you may realize a capital gain or
loss. For tax purposes, an exchange of your Fund shares for shares of a
different Franklin Templeton fund is the same as a sale.

Fund distributions and gains from the sale or exchange of your shares
generally are subject to state and local taxes. Any foreign taxes the Fund
pays on its investments may be passed through to you as a foreign tax credit.
Non-U.S. investors may be subject to U.S. withholding or estate tax, and are
subject to special U.S. tax certification requirements. You should consult
your tax advisor about the federal, state, local or foreign tax consequences
of your investment in the Fund.

[Insert graphic of a dollar bill] FINANCIAL HIGHLIGHTS
--------------------

This table presents the Fund's financial performance for the past five years.
The information has been audited by PricewaterhouseCoopers LLP for the fiscal
years ended August 31, 1999 and 2000, and by other auditors for the fiscal
years before 1999.

CLASS A YEAR ENDED AUGUST 31,
----------------------------------------------------------------------
2000 1999/1 1998 1997 1996
----------------------------------------------------------------------
PER SHARE DATA ($)2
Net asset value, beginning of 18.14 15.45 19.66 16.21 16.76
year
--------------------------------------
Net investment income .27 .33 .42 .45 .41
Net realized and unrealized 1.93 4.10 (1.59) 4.47 1.29
gains (losses)
--------------------------------------
Total from investment 2.20 4.43 (1.17) 4.92 1.70
operations
--------------------------------------
Distributions from net (.38) (.36) (.44) (.43) (.37)
investment
income
Distributions from net (1.09) (1.38) (2.60) (1.04) (1.88)
realized
gains
--------------------------------------
Total distributions (1.47) (1.74) (3.04) (1.47) (2.25)
--------------------------------------
Net asset value, end of year 18.87 18.14 15.45 19.66 16.21
======================================
Total return (%)/3 13.59 31.42 (7.80) 32.70 11.73

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1 9,515 9,116 7,852 8,650 6,483
million)
Ratios to average net assets:
(%)
Expenses 1.07 1.04 1.04 1.03 1.03
Net investment income 1.52 1.99 2.34 2.58 2.66
Portfolio turnover rate (%) 46.92 35.81 43.36 39.16 22.05

CLASS B/2
----------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of 18.05 15.93
year
--------------------------------------
Net investment income .15 .15
Net realized and unrealized 1.90 1.97
gains
--------------------------------------
Total from investment 2.05 2.12
operations
--------------------------------------
Distributions from net (.35) -
investment
income
Distributions from net (1.09) -
realized
gains
Total distributions (1.44) -
--------------------------------------
Net asset value, end of year 18.66 18.05
======================================
Total return (%)/3 12.76 13.31

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 23,816 9,261
1,000)
Ratios to average net assets:
(%)
Expenses 1.82 1.85/4
Net investment income .83 1.27/4
Portfolio turnover rate (%) 46.92 35.81

CLASS C YEAR ENDED AUGUST 31,
----------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------
PER SHARE DATA ($)2
Net asset value, beginning of 17.71 15.16 19.39 16.04 16.71
year
--------------------------------------
Net investment income .14 .20 .33 .34 .45
Net realized and unrealized 1.89 4.02 (1.61) 4.39 1.11
gains (losses)
--------------------------------------
Total from investment 2.03 4.22 (1.28) 4.73 1.56
operations
--------------------------------------
Distributions from net (.22) (.29) (.35) (.34) (.35)
investment income
Distributions from net (1.09) (1.38) (2.60) (1.04) (1.88)
realized
gains
--------------------------------------
Total distributions (1.31) (1.67) (2.95) (1.38) (2.23)
--------------------------------------
Net asset value, end of year 18.43 17.71 15.16 19.39 16.04
======================================
Total return (%)/3 12.77 30.39 (8.51) 31.61 10.88
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 423,614 417,439325,319 207,679 58,619
1,000)
Ratios to average net assets:
(%)
Expenses 1.82 1.81 1.80 1.83 1.84
Net investment income .78 1.22 1.66 1.92 2.14
Portfolio turnover rate (%) 46.92 35.81 43.36 39.16 22.05

1. Effective date of Class B shares was January 1, 1999.
2. Based on average weighted shares outstanding effective year ended August
31, 1999.
3. Total return does not include sales charges and is not annualized.
4. Annualized.

YOUR ACCOUNT

[Insert graphic of pencil marking an "X"] CHOOSING A SHARE CLASS
----------------------

Each class has its own sales charge and expense structure, allowing you to
choose the class that best meets your situation. Your investment
representative can help you decide.

CLASS A CLASS B CLASS C
-----------------------------------------------------------------------
o Initial sales charge o No initial sales o Initial sales charge
of 5.75% or less charge of 1%

o Deferred sales o Deferred sales o Deferred sales
charge of 1% on charge of 4% on charge of 1% on shares
purchases of $1 shares you sell you sell within 18
million or more sold within the first months
within 12 months year, declining to 1%
within six years and
eliminated after that

o Lower annual o Higher annual o Higher annual
expenses than Class B expenses than Class A expenses than Class A
or C due to lower (same as Class C) due (same as Class B) due
distribution fees to higher to higher distribution
distribution fees. fees. No conversion to
Automatic conversion Class A shares, so
to Class A shares annual expenses do not
after eight years, decrease.
reducing future
annual expenses.

SALES CHARGES - CLASS A

THE SALES CHARGE
MAKES UP THIS % WHICH EQUALS THIS %
WHEN YOU INVEST THIS AMOUNT OF THE OFFERING PRICE OF YOUR NET INVESTMENT
-----------------------------------------------------------------------------
Under $50,000 5.75 6.10

$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 2.50 2.56
$500,000 but under $1 2.00 2.04
million

INVESTMENTS OF $1 MILLION OR MORE If you invest $1 million or more, either
as a lump sum or through our cumulative quantity discount or letter of intent
programs (see page 18), you can buy Class A shares without an initial sales
charge. However, there is a 1% contingent deferred sales charge (CDSC) on any
shares you sell within 12 months of purchase. The way we calculate the CDSC
is the same for each class (please see page 17).

DISTRIBUTION AND SERVICE (12B-1) FEES Class A has a distribution plan,
sometimes known as a Rule 12b-1 plan, that allows the Fund to pay
distribution fees of up to 0.25% per year to those who sell and distribute
Class A shares and provide other services to shareholders. Because these fees
are paid out of Class A's assets on an on-going basis, over time these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.

SALES CHARGES - CLASS B

IF YOU SELL YOUR SHARES
WITHIN THIS MANY YEARS AFTER THIS % IS DEDUCTED FROM
BUYING THEM YOUR PROCEEDS AS A CDSC
------------------------------------------------------
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0

With Class B shares, there is no initial sales charge. However, there is a
CDSC if you sell your shares within six years, as described in the table
above. The way we calculate the CDSC is the same for each class (please see
page 17). After 8 years, your Class B shares automatically convert to Class A
shares, lowering your annual expenses from that time on.

MAXIMUM PURCHASE AMOUNT The maximum amount you may invest in Class B shares
at one time is $249,999. We place any investment of $250,000 or more in Class
A shares, since a reduced initial sales charge is available and Class A's
annual expenses are lower.

RETIREMENT PLANS Class B shares are available to certain retirement plans,
including IRAs (of any type), Franklin Templeton Bank & Trust 403(b) plans,
and Franklin Templeton Bank & Trust qualified plans with participant or
earmarked accounts.

DISTRIBUTION AND SERVICE (12B-1) FEES Class B has a distribution plan,
sometimes known as a Rule 12b-1 plan, that allows the Fund to pay
distribution and other fees of up to 1% per year for the sale of Class B
shares and for services provided to shareholders. Because these fees are paid
out of Class B's assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.

SALES CHARGES - CLASS C

WE PLACE ANY INVESTMENT OF $1 MILLION OR MORE IN CLASS A SHARES, SINCE THERE
IS NO INITIAL SALES CHARGE AND CLASS A'S ANNUAL EXPENSES ARE LOWER.

CDSC There is a 1% contingent deferred sales charge (CDSC) on any Class C
shares you sell within 18 months of purchase. The way we calculate the CDSC
is the same for each class (please see below).

DISTRIBUTION AND SERVICE (12B-1) FEES Class C has a distribution plan,
sometimes known as a Rule 12b-1 plan, that allows the Fund to pay
distribution and other fees of up to 1% per year for the sale of Class C
shares and for services provided to shareholders. Because these fees are paid
out of Class C's assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.

CONTINGENT DEFERRED SALES CHARGE (CDSC) - CLASS A, B & C

The CDSC for each class is based on the current value of the shares being
sold or their net asset value when purchased, whichever is less. There is no
CDSC on shares you acquire by reinvesting your dividends or capital gains
distributions.

[Begin callout]
The HOLDING PERIOD FOR THE CDSC begins on the day you buy your shares. Your
shares will age one month on that same date the next month and each following
month.

For example, if you buy shares on the 18th of the month, they will age one
month on the 18th day of the next month and each following month.
[End callout]

To keep your CDSC as low as possible, each time you place a request to sell
shares we will first sell any shares in your account that are not subject to
a CDSC. If there are not enough of these to meet your request, we will sell
the shares in the order they were purchased. We will use this same method if
you exchange your shares into another Franklin Templeton fund (please see
page 25 for exchange information).

SALES CHARGE REDUCTIONS AND WAIVERS

If you qualify for any of the sales charge reductions or waivers below,
please let us know at the time you make your investment to help ensure you
receive the lower sales charge.

QUANTITY DISCOUNTS We offer several ways for you to combine your purchases
in Franklin Templeton funds to take advantage of the lower sales charges for
large purchases of Class A shares.

[Begin callout]
FRANKLIN TEMPLETON FUNDS include all of the U.S. registered mutual funds of
Franklin Templeton Investments, except Franklin Templeton Variable Insurance
Products Trust and Templeton Capital Accumulator Fund, Inc.
[End callout]

o CUMULATIVE QUANTITY DISCOUNT - lets you combine all of your shares in
Franklin Templeton funds for purposes of calculating the sales charge. You
also may combine the shares of your spouse, and your children or
grandchildren, if they are under the age of 21. Certain company and
retirement plan accounts also may be included.

o LETTER OF INTENT (LOI) - expresses your intent to buy a stated dollar
amount of shares over a 13-month period and lets you receive the same sales
charge as if all shares had been purchased at one time. We will reserve a
portion of your shares to cover any additional sales charge that may apply
if you do not buy the amount stated in your LOI.

TO SIGN UP FOR THESE PROGRAMS, COMPLETE THE APPROPRIATE
SECTION OF YOUR ACCOUNT APPLICATION.

REINSTATEMENT PRIVILEGE If you sell shares of a Franklin Templeton fund, you
may reinvest some or all of the proceeds within 365 days without an initial
sales charge. The proceeds must be reinvested within the same share class,
except proceeds from the sale of Class B shares will be reinvested in Class A
shares.

If you paid a CDSC when you sold your Class A or C shares, we will credit
your account with the amount of the CDSC paid but a new CDSC will apply. For
Class B shares reinvested in Class A, a new CDSC will not apply, although
your account will not be credited with the amount of any CDSC paid when you
sold your Class B shares.

Proceeds immediately placed in a Franklin Bank Certificate of Deposit (CD)
also may be reinvested without an initial sales charge if you reinvest them
within 365 days from the date the CD matures, including any rollover.

This privilege does not apply to shares you buy and sell under our exchange
program. Shares purchased with the proceeds from a money fund may be subject
to a sales charge.

SALES CHARGE WAIVERS Class A shares may be purchased without an initial
sales charge or CDSC by various individuals, institutions and retirement
plans or by investors who reinvest certain distributions and proceeds within
365 days. Certain investors also may buy Class C shares without an initial
sales charge. The CDSC for each class may be waived for certain redemptions
and distributions. If you would like information about available sales charge
waivers, call your investment representative or call Shareholder Services at
1-800/632-2301. For information about retirement plans, you may call
Retirement Services at 1-800/527-2020. A list of available sales charge
waivers also may be found in the Statement of Additional Information (SAI).

GROUP INVESTMENT PROGRAM Allows established groups of 11 or more investors
to invest as a group. For sales charge purposes, the group's investments are
added together. There are certain other requirements and the group must have
a purpose other than buying Fund shares at a discount.

[Insert graphic of a paper with lines
and someone writing] BUYING SHARES
-------------

MINIMUM INVESTMENTS
------------------------------------------------------------------
INITIAL ADDITIONAL
------------------------------------------------------------------
Regular accounts $1,000 $50
------------------------------------------------------------------
Automatic investment plans $50 ($25 $50 ($25
for an for an
Education Education
IRA) IRA)
------------------------------------------------------------------
UGMA/UTMA accounts $100 $50
------------------------------------------------------------------
Retirement accounts no minimum no minimum
(other than IRAs, IRA rollovers,
Education IRAs or Roth IRAs)
------------------------------------------------------------------
IRAs, IRA rollovers, Education IRAs or
Roth IRAs $250 $50
------------------------------------------------------------------
Broker-dealer sponsored wrap account
programs $250 $50
------------------------------------------------------------------
Full-time employees, officers,
trustees and directors of Franklin
Templeton entities, and their
immediate family members $100 $50
------------------------------------------------------------------

PLEASE NOTE THAT YOU MAY ONLY BUY SHARES OF A FUND ELIGIBLE FOR SALE IN YOUR
STATE OR JURISDICTION.

ACCOUNT APPLICATION If you are opening a new account, please complete and
sign the enclosed account application. Make sure you indicate the share class
you have chosen. If you do not indicate a class, we will place your purchase
in Class A shares. To save time, you can sign up now for services you may
want on your account by completing the appropriate sections of the
application (see "Investor Services" on page 23). For example, if you would
like to link one of your bank accounts to your Fund account so that you may
use electronic fund transfers to and from your bank account to buy and sell
shares, please complete the bank information section of the application. We
will keep your bank information on file for future purchases and redemptions.

BUYING SHARES
----------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------
[Insert graphic
of hands shaking]
Contact your investment Contact your investment
THROUGH YOUR representative representative
INVESTMENT
REPRESENTATIVE
----------------------------------------------------------------------
[Insert graphic If you have another Before requesting a
of phone and Franklin Templeton fund telephone or online
computer] account with your bank purchase into an
account information on existing account,
BY PHONE/ONLINE file, you may open a new please make sure we
account by phone. At have your bank account
(Up to $100,000 this time, a new account information on file. If
per shareholder may not be opened online. we do not have this
per day) information, you will
To make a same day need to send written
1-800/632-2301 investment, your phone instructions with your
order must be received bank's name and
franklintempleton.cand accepted by us by address, a voided check
1:00 p.m. Pacific time or savings account
NOTE: CERTAIN or the close of the New deposit slip, and a
ACCOUNTS ARE NOT York Stock Exchange, signature guarantee if
AVAILABLE FOR whichever is earlier. the bank and Fund
ONLINE ACCOUNT accounts do not have at
ACCESS least one common owner.

To make a same day
investment, your phone
or online order must be
received and accepted
by us by 1:00 p.m.
Pacific time or the
close of the New York
Stock Exchange,
whichever is earlier.

----------------------------------------------------------------------
Make your check payable Make your check payable
[Insert graphic to Templeton World Fund. to Templeton World
of envelope] Fund. Include your
Mail the check and your account number on the
BY MAIL signed application to check.
Investor Services.
Fill out the deposit
slip from your account
statement. If you do
not have a slip,
include a note with
your name, the Fund
name, and your account
number.

Mail the check and
deposit slip or note to
Investor Services.
----------------------------------------------------------------------
[Insert graphic Call to receive a wire Call to receive a wire
of three control number and wire control number and wire
lightning bolts] instructions. instructions.

Wire the funds and mail To make a same day wire
your signed application investment, please call
BY WIRE to Investor Services. us by 1:00 p.m. Pacific
Please include the wire time and make sure your
1-800/632-2301 control number or your wire arrives by 3:00
(or new account number on p.m.
1-650/312-2000 the application.
collect)
To make a same day wire
investment, please call
us by 1:00 p.m. Pacific
time and make sure your
wire arrives by 3:00
p.m.
----------------------------------------------------------------------
[Insert graphic Call Shareholder Call Shareholder
of two Services at the number Services at the number
arrows pointing in below, or send signed below or our automated
opposite written instructions. TeleFACTS system, or
directions] You also may place an send signed written
online exchange order. instructions. You also
BY EXCHANGE The TeleFACTS system may place an online
cannot be used to open a exchange order.
TeleFACTS(R) new account.
1-800/247-1753 (Please see page 25 for
(around-the-clock (Please see page 25 for information on
access) information on exchanges.)
exchanges.)
Our Website
franklintempleton.com
---------------------------------------------------------------------------

FRANKLIN TEMPLETON INVESTOR SERVICES P.O. BOX 33030
ST. PETERSBURG, FL 33733-8030
CALL TOLL-FREE: 1-800/632-2301
(MONDAY THROUGH FRIDAY 5:30 A.M. TO 5:00 P.M., PACIFIC TIME
SATURDAY 6:30 A.M. TO 2:30 P.M., PACIFIC TIME)

[Insert graphic of person with a headset] INVESTOR SERVICES
-----------------

AUTOMATIC INVESTMENT PLAN This plan offers a convenient way for you to
invest in the Fund by automatically transferring money from your checking or
savings account each month to buy shares. To sign up, complete the
appropriate section of your account application and mail it to Investor
Services. If you are opening a new account, please include the minimum
initial investment of $50 ($25 for an Education IRA) with your application.

AUTOMATIC PAYROLL DEDUCTION You may invest in the Fund automatically by
transferring money from your paycheck to the Fund by electronic funds
transfer. If you are interested, indicate on your application that you would
like to receive an Automatic Payroll Deduction Program kit.

DISTRIBUTION OPTIONS You may reinvest distributions you receive from the
Fund in an existing account in the same share class* of the Fund or another
Franklin Templeton fund. Initial sales charges and CDSCs will not apply if
you reinvest your distributions within 365 days. You can also have your
distributions deposited in a bank account, or mailed by check. Deposits to a
bank account may be made by electronic funds transfer.

[Begin callout]
For Franklin Templeton Bank & Trust retirement plans, special forms may be
needed to receive distributions in cash. Please call 1-800/527-2020 for
information.
[End callout]

Please indicate on your application the distribution option you have chosen,
otherwise we will reinvest your distributions in the same share class of the
Fund.

*Class B and C shareholders may reinvest their distributions in Class A
shares of any Franklin Templeton money fund.

RETIREMENT PLANS Franklin Templeton Investments offers a variety of
retirement plans for individuals and businesses. These plans require separate
applications and their policies and procedures may be different than those
described in this prospectus. For more information, including a free
retirement plan brochure or application, please call Retirement Services at
1-800/527-2020.

TELEFACTS(R) Our TeleFACTS system offers around-the-clock access to
information about your account or any Franklin Templeton fund. This service
is available from touch-tone phones at 1-800/247-1753. For a free TeleFACTS
brochure, call 1-800/DIAL BEN.

FRANKLIN TEMPLETON ONLINE You can visit us online at franklintempleton.com
for around-the-clock viewing of information about most Franklin Templeton
Funds or to register to view your accounts online. You may also register for
online transactions that will allow you to buy, sell, or exchange your shares
and make certain changes to your account. Some account types may not be able
to process any or all transactions online.

TELEPHONE/ONLINE PRIVILEGES You will automatically receive telephone/online
privileges when you open your account, allowing you to obtain or view your
account information, and conduct the following transactions by phone or
online: buy, sell, or exchange shares of most funds; change your address;
request a year-end statement; add or change account services (including
distribution options, systematic withdrawals, automatic investment plans,
money fund check orders).

To view your account information or request online transactions, you will
first need to register for these services at the shareholder section of our
website at franklintempleton.com. You will be asked to accept the terms of an
online agreement(s) and establish a password for online services. Using our
shareholder website means you are consenting to sending and receiving
personal financial information over the Internet so you should be sure you
are comfortable with the risks.

For accounts with more than one registered owner, telephone/online privileges
allow the Fund to accept online registration or telephone/online instructions
for transactions from only one owner. As long as you have telephone/online
exchange privileges on your account, you may exchange shares by phone or
online from a fund account requiring two or more signatures into an
identically registered money fund account requiring only one signature for
all transactions.

Additionally, if you have telephone privileges on an account with more than
one owner, the Fund will accept written instructions signed by only ONE OWNER
for transactions that could otherwise be made by phone. For all other
transactions and changes, all registered owners must sign the instructions.

As long as we follow reasonable security procedures and act on instructions
we reasonably believe are genuine, we will not be responsible for any losses
that may occur from unauthorized requests. We will request passwords or
other information, and may also record calls. To help safeguard your
account, keep your password confidential, and verify the accuracy of your
confirmation statements immediately after you receive them. Contact us
immediately if you believe someone has obtained unauthorized access to your
account or password. For transactions done over the Internet, we recommend
the use of an Internet browser with 128-bit encryption. Certain methods of
contacting us (such as by phone or by Internet) may be unavailable or delayed
during periods of unusual market activity. OF COURSE, YOU CAN DECLINE
TELEPHONE PRIVILEGES ON YOUR ACCOUNT APPLICATION, OR CHOOSE NOT TO REGISTER
FOR ONLINE PRIVILEGES. IF YOU HAVE TELEPHONE/ONLINE PRIVILEGES ON YOUR
ACCOUNT AND WANT TO DISCONTINUE THEM, PLEASE CONTACT US FOR INSTRUCTIONS.
You may reinstate these privileges at any time in writing, including online
registration with respect to online privileges.

NOTE: We discourage you from including confidential or sensitive information
in any Internet communication to us. If you do choose to send email
(encrypted or not) to us over the Internet, you are accepting the associated
risks of lack of confidentiality.

EXCHANGE PRIVILEGE You can exchange shares between most Franklin Templeton
funds within the same class*, generally without paying any additional sales
charges. If you exchange shares held for less than six months, however, you
may be charged the difference between the initial sales charge of the two
funds if the difference is more than 0.25%. If you exchange shares from a
money fund, a sales charge may apply no matter how long you have held the
shares.

[Begin callout]
An EXCHANGE is really two transactions: a sale of one fund and the purchase
of another. In general, the same policies that apply to purchases and sales
apply to exchanges, including minimum investment amounts. Exchanges also have
the same tax consequences as ordinary sales and purchases.
[End callout]

Generally exchanges may only be made between identically registered accounts,
unless you send written instructions with a signature guarantee. Any CDSC
will continue to be calculated from the date of your initial investment and
will not be charged at the time of the exchange. The purchase price for
determining a CDSC on exchanged shares will be the price you paid for the
original shares. If you exchange shares subject to a CDSC into a Class A
money fund, the time your shares are held in the money fund will not count
towards the CDSC holding period.

If you exchange your Class B shares for the same class of shares of another
Franklin Templeton fund, the time your shares are held in that fund will
count towards the eight year period for automatic conversion to Class A
shares.

Because excessive trading can hurt fund performance, operations and
shareholders, the Fund reserves the right to revise or terminate the exchange
privilege, limit the amount or number of exchanges, reject any exchange, or
restrict or refuse purchases if (i) the Fund or its manager believes the Fund
would be harmed or unable to invest effectively, or (ii) the Fund receives or
anticipates simultaneous orders that may significantly affect the Fund
(please see "Market Timers" on page 30).

*Class Z shareholders of Franklin Mutual Series Fund Inc. may exchange into
Class A without any sales charge. Advisor Class shareholders of another
Franklin Templeton fund also may exchange into Class A without any sales
charge. Advisor Class shareholders who exchange their shares for Class A
shares and later decide they would like to exchange into another fund that
offers Advisor Class may do so.

SYSTEMATIC WITHDRAWAL PLAN This plan allows you to automatically sell your
shares and receive regular payments from your account. A CDSC may apply to
withdrawals that exceed certain amounts. Certain terms and minimums apply. To
sign up, complete the appropriate section of your application.

[Insert graphic of a certificate] SELLING SHARES
--------------

You can sell your shares at any time. Please keep in mind that a contingent
deferred sales charge (CDSC) may apply.

SELLING SHARES IN WRITING Generally, requests to sell $100,000 or less can
be made over the phone, online, or with a simple letter. Sometimes, however,
to protect you and the Fund we will need written instructions signed by all
registered owners, with a signature guarantee for each owner, if:

[Begin callout]
A SIGNATURE GUARANTEE helps protect your account against fraud. You can
obtain a signature guarantee at most banks and securities dealers.

A notary public CANNOT provide a signature guarantee.
[End callout]

o you are selling more than $100,000 worth of shares
o you want your proceeds paid to someone who is not a registered owner
o you want to send your proceeds somewhere other than the address of record,
or preauthorized bank or brokerage firm account

We also may require a signature guarantee on instructions we receive from an
agent, not the registered owners, or when we believe it would protect the
Fund against potential claims based on the instructions received.

SELLING RECENTLY PURCHASED SHARES If you sell shares recently purchased, we
may delay sending you the proceeds until your check, draft or wire/electronic
funds transfer has cleared, which may take seven business days or more. A
certified or cashier's check may clear in less time.

REDEMPTION PROCEEDS Your redemption check will be sent within seven days
after we receive your request in proper form. We are not able to receive or
pay out cash in the form of currency. Redemption proceeds may be delayed if
we have not yet received your signed account application.

RETIREMENT PLANS You may need to complete additional forms to sell shares in
a Franklin Templeton Bank & Trust retirement plan. For participants under age
591/2, tax penalties may apply. Call Retirement Services at 1-800/527-2020
for details.

THROUGH YOUR
INVESTMENT
REPRESENTATIVE
----------------------------------------------------------------------
[Insert graphic of Send written instructions and endorsed share
envelope] certificates (if you hold share certificates)
to Investor Services. Corporate, partnership
BY MAIL or trust accounts may need to send additional
documents.

Specify the Fund, the account number and the
dollar value or number of shares you wish to
sell. If you own both Class A and B shares,
also specify the class of shares, otherwise we
will sell your Class A shares first. Be sure
to include all necessary signatures and any
additional documents, as well as signature
guarantees if required.

A check will be mailed to the name(s) and
address on the account, or otherwise according
to your written instructions.
----------------------------------------------------------------------
[Insert graphic of As long as your transaction is for $100,000 or
phone and computer] less, you do not hold share certificates and
you have not changed your address by phone or
BY PHONE/ONLINE online within the last 15 days, you can sell
your shares by phone or online.
1-800/632-2301
A check will be mailed to the name(s) and
franklintempleton.com address on the account. Written instructions,
with a signature guarantee, are required to
send the check to another address or to make
it payable to another person.

(Please see page 24 for more information.)
----------------------------------------------------------------------
[Insert graphic of You can call, write, or visit us online to
three have redemption proceeds sent to a bank
lightning bolts] account. See the policies above for selling
shares by mail, phone, or online.
BY ELECTRONIC FUNDS
TRANSFER (ACH) Before requesting to have redemption proceeds
sent to a bank account, please make sure we
have your bank account information on file. If
we do not have this information, you will need
to send written instructions with your bank's
name and address, a voided check or savings
account deposit slip, and a signature
guarantee if the bank and Fund accounts do not
have at least one common owner.

If we receive your request in proper form by
1:00 p.m. Pacific time, proceeds sent by ACH
generally will be available within two to
three business days.
----------------------------------------------------------------------
[Insert graphic of Obtain a current prospectus for the fund you
two are considering. Prospectuses are available
arrows pointing in online at franklintempleton.com.
opposite directions]
Call Shareholder Services at the number below
BY EXCHANGE or our automated TeleFACTS system, or send
signed written instructions. You also may
TeleFACTS(R) place an exchange order online. See the
1-800/247-1753 policies above for selling shares by mail,
(around-the-clock phone, or online.
access)
If you hold share certificates, you will need
to return them to the Fund before your
exchange can be processed. (Please see page 25
for information on exchanges.)
----------------------------------------------------------------------

[Insert graphic of paper and pen] ACCOUNT POLICIES

CALCULATING SHARE PRICE The Fund calculates the net asset value per share
(NAV) each business day at the close of trading on the New York Stock
Exchange (normally 1:00 p.m. Pacific time). Each class's NAV is calculated by
dividing its net assets by the number of its shares outstanding.

[Begin callout]
When you buy shares, you pay the offering price. The offering price is the
NAV plus any applicable sales charge.

When you sell shares, you receive the NAV minus any applicable contingent
deferred sales charge (CDSC).
[End callout]

The Fund's assets are generally valued at their market value. If market
prices are unavailable, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued at their fair
value. If the Fund holds securities listed primarily on a foreign exchange
that trades on days when the Fund is not open for business, the value of your
shares may change on days that you cannot buy or sell shares.

Requests to buy and sell shares are processed at the NAV next calculated
after we receive your request in proper form.

ACCOUNTS WITH LOW BALANCES If the value of your account falls below $250
($50 for employee and UGMA/UTMA accounts) because you sell some of your
shares, we may mail you a notice asking you to bring the account back up to
its applicable minimum investment amount. If you choose not to do so within
30 days, we may close your account and mail the proceeds to the address of
record. You will not be charged a CDSC if your account is closed for this
reason.

STATEMENTS AND REPORTS You will receive quarterly account statements that
show all your account transactions during the quarter. You also will receive
written notification after each transaction affecting your account (except
for distributions and transactions made through automatic investment or
withdrawal programs, which will be reported on your quarterly statement). You
also will receive the Fund's financial reports every six months. To reduce
Fund expenses, we try to identify related shareholders in a household and
send only one copy of the financial reports. If you need additional copies,
please call 1-800/DIAL BEN. You can also review these documents online at
franklintempleton.com.

INVESTMENT REPRESENTATIVE ACCOUNT ACCESS If there is a dealer or other
investment representative of record on your account, he or she will be able
to obtain your account information, conduct transactions for your account,
and will also receive copies of all notifications and statements and other
information about your account directly from the Fund.

STREET OR NOMINEE ACCOUNTS You may transfer your shares from the street or
nominee name account of one dealer to another, as long as both dealers have
an agreement with Franklin Templeton Distributors, Inc. We will process the
transfer after we receive authorization in proper form from your delivering
securities dealer.

JOINT ACCOUNTS Unless you specify a different registration, accounts with
two or more owners are registered as "joint tenants with rights of
survivorship" (shown as "Jt Ten" on your account statement). To make any
ownership changes to a joint account, all owners must agree in writing,
regardless of the law in your state.

MARKET TIMERS The Fund may restrict or refuse purchases or exchanges by
Market Timers. You may be considered a Market Timer if you have (i) requested
an exchange out of any of the Franklin Templeton funds within two weeks of an
earlier exchange request out of any fund, or (ii) exchanged shares out of any
of the Franklin Templeton funds more than twice within a rolling 90 day
period, or (iii) otherwise seem to follow a market timing pattern that may
adversely affect the Fund. Accounts under common ownership or control with an
account that is covered by (i), (ii), or (iii) are also subject to these
limits.

Anyone, including the shareholder or the shareholder's agent, who is
considered to be a Market Timer by the Fund, its manager or shareholder
services agent, will be issued a written notice of their status and the
Fund's policies. Identified Market Timers will be required to register with
the market timing desk of Franklin Templeton Investor Services, Inc., and to
place all purchase and exchange trade requests through the desk. Some funds
do not allow investments by Market Timers.

ADDITIONAL POLICIES Please note that the Fund maintains additional policies
and reserves certain rights, including:

o The Fund may restrict or refuse any order to buy shares, including any
purchase under the exchange privilege.
o The Fund may modify, suspend, or terminate telephone/online privileges
at any time.
o At any time, the Fund may change its investment minimums or waive or
lower its minimums for certain purchases.
o The Fund may modify or discontinue the exchange privilege on 60 days'
notice.
o In unusual circumstances, we may temporarily suspend redemptions, or
postpone the payment of proceeds, as allowed by federal securities laws.
o For redemptions over a certain amount, the Fund reserves the right, in
the case of an emergency, to make payments in securities or other assets of
the Fund, if the payment of cash proceeds by check, wire or electronic
funds transfer would be harmful to existing shareholders.
o To permit investors to obtain the current price, dealers are responsible
for transmitting all orders to the Fund promptly.

DEALER COMPENSATION Qualifying dealers who sell Fund shares may receive
sales commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and
service (12b-1) fees and its other resources.

CLASS A CLASS B CLASS C
--------------------------------------------------------------
COMMISSION (%) - 4.00 2.00

Investment under $50,000 5.00 - -
$50,000 but under $100,000 3.75 - -
$100,000 but under $250,000 2.80 - -
$250,000 but under $500,000 2.00 - -
$500,000 but under $1 1.60 - -
million
$1 million or more up to 1.00/1 - -
12B-1 FEE TO DEALER 0.25 0.25/2 1.00/3

A dealer commission of up to 1% may be paid on Class A NAV purchases by
certain retirement plans1 and on Class C NAV purchases. A dealer commission
of up to 0.25% may be paid on Class A NAV purchases by certain trust
companies and bank trust departments, eligible governmental authorities, and
broker-dealers or others on behalf of clients participating in comprehensive
fee programs. For certain retirement plans that do not qualify to buy Class A
shares at NAV but that qualify to buy Class A shares with a maximum initial
sales charge of 4%, a dealer commission of 3.2% may be paid.

MARKET TIMERS. Please note that for Class A NAV purchases by market timers,
including purchases of $1 million or more, dealers are not eligible to
receive the dealer commission. Dealers, however, may be eligible to receive
the 12b-1 fee from the date of purchase.

1. During the first year after purchase, dealers may not be eligible to
receive the 12b-1 fee.
2. Dealers may be eligible to receive up to 0.25% from the date of purchase.
After 8 years, Class B shares convert to Class A shares and dealers may then
receive the 12b-1 fee applicable to Class A.
3. Dealers may be eligible to receive up to 0.25% during the first year after
purchase and may be eligible to receive the full 12b-1 fee starting in the
13th month.

[Insert graphic of question mark] QUESTIONS
---------

If you have any questions about the Fund or your account, you can write to us
at P.O. Box 33030, St. Petersburg, FL 33733-8030. You also can call us at one
of the following numbers. For your protection and to help ensure we provide
you with quality service, all calls may be monitored or recorded.

HOURS (PACIFIC TIME,
DEPARTMENT NAME TELEPHONE NUMBER MONDAY THROUGH FRIDAY)
-----------------------------------------------------------------
Shareholder Services 1-800/632-2301 5:30 a.m. to 5:00 p.m.
6:30 a.m. to 2:30 p.m.
(Saturday)
Fund Information 1-800/DIAL BEN 5:30 a.m. to 5:00 p.m.
(1-800/342-5236) 6:30 a.m. to 2:30 p.m.
(Saturday)
Retirement Services 1-800/527-2020 5:30 a.m. to 5:00 p.m.
Advisor Services 1-800/524-4040 5:30 a.m. to 5:00 p.m.
Institutional 1-800/321-8563 6:00 a.m. to 5:00 p.m.
Services
TDD (hearing 1-800/851-0637 5:30 a.m. to 5:00 p.m.
impaired)
TeleFACTS(R) 1-800/247-1753 (around-the-clock
(automated) access)

FOR MORE INFORMATION

You can learn more about the Fund in the following documents:

ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS

Includes a discussion of recent market conditions and Fund strategies,
financial statements, detailed performance information, portfolio holdings
and the auditor's report.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

Contains more information about the Fund, its investments and policies. It is
incorporated by reference (is legally a part of this prospectus).

For a free copy of the current annual/semiannual report or the SAI, please
contact your investment representative or call us at the number below. You
can also view the current annual/semiannual report online at
franklintempleton.com.

FRANKLIN(R)TEMPLETON(R)
1-800/DIAL BEN(R) (1-800/342-5236)
TDD (Hearing Impaired) 1-800/851-0637
franklintempleton.com

You also can obtain information about the Fund by visiting the SEC's Public
Reference Room in Washington, D.C. (phone 1-202/942-8090) or the EDGAR
Database on the SEC's Internet site at http://www.sec.gov. You can obtain
copies of this information, after paying a duplicating fee, by writing to the
SEC's Public Reference Section, Washington, D.C. 20549-0102 or by electronic
request at the following E-mail address: [email protected].

Investment Company Act file #811-2781 102 P 01/01

PART A
TEMPLETON FORIEGN FUND
CLASS A, B & C PROSPECTUS

Prospectus

TEMPLETON FOREIGN FUND

TEMPLETON FUNDS, INC.

CLASS A, B & C

INVESTMENT STRATEGY
GLOBAL GROWTH

January 1, 2001

[Insert Franklin Templeton Ben Head]

The SEC has not approved or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

CONTENTS

THE FUND

[Begin callout]
INFORMATION ABOUT THE FUND YOU SHOULD KNOW BEFORE INVESTING
[End callout]

2 Goal and Strategies

4 Main Risks

7 Performance

9 Fees and Expenses

11 Management

12 Distributions and Taxes

13 Financial Highlights

YOUR ACCOUNT

[Begin callout]
INFORMATION ABOUT SALES CHARGES, ACCOUNT TRANSACTIONS AND SERVICES
[End callout]

15 Choosing a Share Class

19 Buying Shares

22 Investor Services

26 Selling Shares

28 Account Policies

29 Questions

FOR MORE INFORMATION

[Begin callout]
WHERE TO LEARN MORE ABOUT THE FUND
[End callout]

Back Cover

THE FUND

[Insert graphic of bullseye and arrows] GOAL AND STRATEGIES
-------------------

GOAL The Fund's investment goal is long-term capital growth.

MAIN INVESTMENT STRATEGIES Under normal market conditions, the Fund invests
mainly in the equity securities of companies located outside the U.S.,
including emerging markets.

An equity security, or stock, represents a proportionate share of the
ownership of a company; its value is based on the success of the company's
business, any income paid to stockholders, the value of its assets, and
general market conditions. Common stocks and preferred stocks are examples of
equity securities. The Fund also invests in American, European and Global
Depositary Receipts. These are certificates issued typically by a bank or
trust company that give their holders the right to receive securities issued
by a foreign or domestic company.

Depending upon current market conditions, the Fund generally invests up to
25% of its total assets in debt securities of companies and governments
located anywhere in the world. Debt securities represent the obligation of
the issuer to repay a loan of money to it, and generally pay interest to the
holder. Bonds, notes and debentures are examples of debt securities.

[Begin callout]
The Fund invests primarily in an internationally diversified portfolio of
equity securities.
[End callout]

When choosing equity investments for this Fund, the manager applies a
"bottom-up," value-oriented, long-term approach, focusing on the market price
of a company's securities relative to the manager's evaluation of the
company's long-term earnings, asset value and cash flow potential. The
manager also considers and analyzes various measures relevant to stock
valuation, such as a company's price/cash flow ratio, price/earnings ratio,
profit margins and liquidation value.

[Insert graphic of chart with line going up and down] MAIN RISKS
----------

INCOME Since the Fund can only distribute what it earns, the Fund's
distributions to shareholders may decline when interest rates fall.

More detailed information about the Fund, its policies and risks can be found
in the Fund's Statement of Additional Information (SAI).

[Insert graphic of a bull and a bear] PERFORMANCE
-----------

CLASS A ANNUAL TOTAL RETURNS/1

[Insert bar graph]

-3.01% 18.25% 0.10% 36.82% 0.35% 11.15% 18.00% 6.65% -4.89% 39.21%
90 91 92 93 94 95 96 97 98 99

YEAR

[Begin callout]
BEST
QUARTER:
Q2 '99
15.60%

WORST
QUARTER:
Q3 '98
-17.24%
[End callout]

1. Figures do not reflect sales charges. If they did, returns would be lower.
As of September 30, 2000, the Fund's year-to-date return was -8.82% for Class
A.

AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999

1 YEAR 5 YEARS 10 YEARS
--------------------------------------------------------------------
Templeton Foreign Fund - Class A/2 31.23% 11.78% 10.65%
MSCI EAFE(R)Index/3 27.30% 13.15% 7.33%

SINCE
INCEPTION
1 YEAR (1/1/99)
--------------------------------------------------------------------
Templeton Foreign Fund - Class B/2 34.08% 34.08%
MSCI EAFE(R)Index/3 27.30% 27.30%

SINCE
INCEPTION
1 YEAR (5/1/95)
--------------------------------------------------------------------
Templeton Foreign Fund - Class C/2 35.78% 12.12%
MSCI EAFE(R)Index/3 27.30% 12.78%

2. Figures reflect sales charges.
All Fund performance assumes reinvestment of dividends and capital gains.
January 1, 1993, Class A implemented a Rule 12b-1 plan, which affects
subsequent performance.
3. Source: Standard & Poor's Micropal. The unmanaged Morgan Stanley Capital
International (MSCI) Europe Australasia Far East (EAFE(R)) Index tracks the
performance of approximately 1,000 securities in 20 countries. It includes
reinvested dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.

[Insert graphic of percentage sign] FEES AND EXPENSES
-----------------

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

Please see "Choosing a Share Class" on page 15 for an explanation of how and
when these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS A CLASS B CLASS C
--------------------------------------------------------------------
Management fees 0.61% 0.61% 0.61%
Distribution and service
(12b-1) fees 0.25% 1.00% 1.00%
Other expenses 0.29% 0.29% 0.29%
---------------------------
Total annual Fund operating expenses 1.15% 1.90% 1.90%
---------------------------

EXAMPLE

This example can help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds. It assumes:

o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------------------
If you sell your shares at
the end of the period:
CLASS A $685/1 $919 $1,172 $1,892
CLASS B $593 $897 $1,226 $2,027/2
CLASS C $390 $691 $1,116 $2,300
If you do not sell your
shares:
CLASS B $193 $597 $1,026 $2,027/2
CLASS C $291 $691 $1,116 $2,300

1. Assumes a contingent deferred sales charge (CDSC) will not apply.
2. Assumes conversion of Class B shares to Class A shares after eight years,
lowering your annual expenses from that time on.

[Insert graphic of briefcase] MANAGEMENT
----------

Templeton Global Advisors Limited (Global Advisors), Lyford Cay, Nassau,
Bahamas, is the Fund's investment manager. Together, Global Advisors and its
affiliates manage over $229 billion in assets.

The Fund's lead portfolio manager is:

JEFFREY A. EVERETT CFA, EXECUTIVE VICE PRESIDENT OF GLOBAL ADVISORS
Mr. Everett has been a manager of the Fund since January 2001. He joined
Franklin Templeton Investments in 1989.

The following individuals have secondary portfolio management
responsibilities:

DALE A. WINNER CFA, Portfolio Manager of Global Advisors
Mr. Winner has been a manager of the Fund since January 2001. He joined
Franklin Templeton Investments in 1995.

MURDO MURCHISON CFA, PORTFOLIO MANAGER OF GLOBAL ADVISORS
Mr. Murchison has been a manager of the Fund since January 2001. He joined
Franklin Templeton Investments in 1993.

[Insert graphic of dollar
signs and stacks of coins] DISTRIBUTIONS AND TAXES
-----------------------

INCOME AND CAPITAL GAIN DISTRIBUTIONS

AVOID "BUYING A DIVIDEND" If you invest in the Fund shortly before it makes
a distribution, you may receive some of your investment back in the form of a
taxable distribution.

By law, the Fund must withhold 31% of your taxable distributions and
redemption proceeds unless you:

o provide your correct social security or taxpayer identification number,
o certify that this number is correct, and
o certify that you are not subject to backup withholding.

The Fund must also withhold if the IRS instructs it to do so.
[End callout]

[Insert graphic of a dollar bill] FINANCIAL HIGHLIGHTS
--------------------

CLASS A YEAR ENDED AUGUST 31,
----------------------------------------------------------------------
2000 1999/1 1998 1997 1996
----------------------------------------------------------------------
PER SHARE DATA ($)/2
Net asset value, beginning of 10.49 8.43 11.40 9.97 9.62
year
-------------------------------------
Net investment income .23 .27 .30 .32 .27
Net realized and unrealized .25 2.82 (2.11) 1.56 .69
gains (losses)
-------------------------------------
Total from investment operations .48 3.09 (1.81) 1.88 .96
-------------------------------------
Distributions from net (.32) (.26) (.32) (.28) (.25)
investment
income
Distributions from net realized (.09) (.77) (.84) (.17) (.36)
gains
-------------------------------------
Total distributions (.41) (1.03) (1.16) (.45) (.61)
-------------------------------------
Net asset value, end of year 10.56 10.49 8.43 11.40 9.97
-------------------------------------
Total return (%)/3 4.79 40.36 (17.89) 19.55 10.68

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1 11,489 11,941 10,746 14,368 9,602
million)
Ratios to average net assets:
(%)
Expenses 1.15 1.13 1.12 1.08 1.12
Net investment income 2.14 2.92 2.79 3.28 3.09
Portfolio turnover rate (%) 44.77 26.11 38.27 37.28 15.91

CLASS B
PER SHARE DATA ($)/2
Net asset value, beginning of 10.43 8.39
year
---------------
Net investment income .16 .14
Net realized and unrealized .23 1.90
gains
---------------
Total from investment operations .39 2.04
---------------
Distributions from net (.30) -
investment
income
Distributions from net realized (.09) -
gains
---------------
Total distributions (.39) -
---------------
Net asset value, end of year 10.43 10.43
---------------
Total return (%)/3 3.99 24.31

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 53,313 16,765
1,000)
Ratios to average net assets:
(%)
Expenses 1.90 1.91/4
Net investment income 1.54 2.14/4
Portfolio turnover rate (%) 44.77 26.11

CLASS C YEAR ENDED AUGUST 31,
----------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------
PER SHARE DATA ($)/2
Net asset value, beginning of 10.31 8.30 11.25 9.87 9.59
year
-------------------------------------
Net investment income .14 .19 .22 .26 .30
Net realized and unrealized .25 2.79 (2.07) 1.52 .58
gains (losses)
-------------------------------------
Total from investment operations .39 2.98 (1.85) 1.78 .88
-------------------------------------
Distributions from net (.22) (.20) (.26) (.23) (.24)
investment
income
Distributions from net realized (.09) (.77) (.84) (.17) (.36)
gains
-------------------------------------
Total distributions (.31) (.97) (1.10) (.40) (.60)
-------------------------------------
Net asset value, end of year 10.39 10.31 8.30 11.25 9.87
-------------------------------------
Total return (%)/3 3.94 39.45 (18.46) 18.65 9.78

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1 1,128 1,196 1,160 1,304 527
million)
Ratios to average net assets:
(%)
Expenses 1.90 1.88 1.87 1.83 1.87
Net investment income 1.39 2.15 2.07 2.62 2.63
Portfolio turnover rate (%) 44.77 26.11 38.27 37.28 15.91

YOUR ACCOUNT

[Insert graphic of pencil marking an "X"] CHOOSING A SHARE CLASS
----------------------

Each class has its own sales charge and expense structure, allowing you to
choose the class that best meets your situation. Your investment
representative can help you decide.

CLASS A CLASS B CLASS C
-----------------------------------------------------------------------
o Initial sales charge o No initial sales o Initial sales charge
of 5.75% or less charge of 1%

SALES CHARGES - CLASS A

THE SALES CHARGE
MAKES UP THIS % WHICH EQUALS THIS %
WHEN YOU INVEST THIS AMOUNT OF THE OFFERING PRICE OF YOUR NET INVESTMENT

---------------------------------------------------------------------------
Under $50,000 5.75 6.10
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 2.50 2.56
$500,000 but under $1 2.00 2.04
million

SALES CHARGES - CLASS B

IF YOU SELL YOUR SHARES
WITHIN THIS MANY YEARS AFTER THIS % IS DEDUCTED
BUYING THEM FROM YOUR PROCEEDS
AS A CDSC
------------------------------------------------------
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0

SALES CHARGES - CLASS C

Under $1 million 1.00 1.01

WE PLACE ANY INVESTMENT OF $1 MILLION OR MORE IN CLASS A SHARES, SINCE THERE
IS NO INITIAL SALES CHARGE AND CLASS A'S ANNUAL EXPENSES ARE LOWER.

CDSC There is a 1% contingent deferred sales charge (CDSC) on any Class C
shares you sell within 18 months of purchase. The way we calculate the CDSC
is the same for each class (please see below).

CONTINGENT DEFERRED SALES CHARGE (CDSC) - CLASS A, B & C

[Begin callout]
The HOLDING PERIOD FOR THE CDSC begins on the day you buy your shares. Your
shares will age one month on that same date the next month and each following
month.

For example, if you buy shares on the 18th of the month, they will age one
month on the 18th day of the next month and each following month.
[End callout]

SALES CHARGE REDUCTIONS AND WAIVERS

If you qualify for any of the sales charge reductions or waivers below,
please let us know at the time you make your investment to help ensure you
receive the lower sales charge.

QUANTITY DISCOUNTS We offer several ways for you to combine your purchases
in Franklin Templeton funds to take advantage of the lower sales charges for
large purchases of Class A shares.

To sign up for these programs, complete the appropriate
section of your account application.

This privilege does not apply to shares you buy and sell under our exchange
program. Shares purchased with the proceeds from a money fund may be subject
to a sales charge.

[Insert graphic of a paper with lines
and someone writing] BUYING SHARES
-------------

PLEASE NOTE THAT YOU MAY ONLY BUY SHARES OF A FUND ELIGIBLE FOR SALE IN YOUR
STATE OR JURISDICTION.

APPLICATION If you are opening a new account, please complete and sign the
enclosed account application. Make sure you indicate the share class you have
chosen. If you do not indicate a class, we will place your purchase in Class
A shares. To save time, you can sign up now for services you may want on your
account by completing the appropriate sections of the application (see
"Investor Services" on page 22). For example, if you would like to link one
of your bank accounts to your Fund account so that you may use electronic
fund transfers to and from your bank account to buy and sell shares, please
complete the bank information section of the application. We will keep your
bank information on file for future purchases and redemptions.

BUYING SHARES
----------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
----------------------------------------------------------------------
[Insert graphic of
hands shaking]
Contact your Contact your
THROUGH YOUR investment investment
INVESTMENT representative representative
REPRESENTATIVE
----------------------------------------------------------------------
[Insert graphic of If you have another Before requesting a
phone and computer] Franklin Templeton telephone or online
fund account with purchase into an
BY PHONE/ONLINE your bank account existing account,
information on file, please make sure we
(Up to $100,000 per you may open a new have your bank account
shareholder per day) account by phone. At information on file.
this time, a new If we do not have this
1-800/632-2301 account may not be information, you will
opened online. need to send written
franklintempleton.com instructions with your
To make a same day bank's name and
NOTE: CERTAIN investment, your address, a voided
ACCOUNTS ARE NOT phone order must be check or savings
AVAILABLE FOR ONLINE received and accepted account deposit slip,
ACCOUNT ACCESS by us by 1:00 p.m. and a signature
Pacific time or the guarantee if the bank
close of the New York and Fund accounts do
Stock Exchange, not have at least one
whichever is earlier. common owner.

To make a same day
investment, your phone
or online order must
be received and
accepted by us by 1:00
p.m. Pacific time or
the close of the New
York Stock Exchange,
whichever is earlier.

----------------------------------------------------------------------
Make your check Make your check
[Insert graphic of payable to the payable to the
envelope] Templeton Foreign Templeton Foreign
Fund. Fund. Include your
BY MAIL account number on the
Mail the check and check.
your signed
application to Fill out the deposit
Investor Services. slip from your account
statement. If you do
not have a slip,
include a note with
your name, the Fund
name, and your
account number.

Mail the check and
deposit slip or note
to Investor Services.
----------------------------------------------------------------------
[Insert graphic of Call to receive a Call to receive a wire
three lightning bolts] wire control number control number and
and wire wire instructions.
instructions.
To make a same day
BY WIRE Wire the funds and wire investment,
mail your signed please call us by 1:00
1-800/632-2301 application to p.m. Pacific time and
(or 1-650/312-2000 Investor Services. make sure your wire
collect) Please include the arrives by 3:00 p.m.
wire control number
or your new account
number on the
application.

To make a same day
wire investment,
please call us by
1:00 p.m. Pacific
time and make sure
your wire arrives by
3:00 p.m.
----------------------------------------------------------------------
[Insert graphic of two Call Shareholder Call Shareholder
arrows pointing in Services at the Services at the number
opposite directions] number below, or send below or our automated
signed written TeleFACTS system, or
BY EXCHANGE instructions. You send signed written
also may place an instructions. You also
TeleFACTS(R) online exchange may place an online
1-800/247-1753 order. The TeleFACTS exchange order.
(around-the-clock system cannot be used
access) to open a new account. (Please see page 24
for information on
Our Website (Please see page 24 exchanges.)
franklintempleton.com for information on
exchanges.)

[Insert graphic of person with headset] INVESTOR SERVICES
-----------------

[Begin callout]
For Franklin Templeton Bank & Trust retirement plans, special forms may be
needed to receive distributions in cash. Please call 1-800/527-2020 for
information.
[End callout]

Please indicate on your application the distribution option you have chosen,
otherwise we will reinvest your distributions in the same share class of the
Fund.

*Class B and C shareholders may reinvest their distributions in Class A
shares of any Franklin Templeton money fund.

*Class Z shareholders of Franklin Mutual Series Fund Inc. may exchange into
Class A without any sales charge. Advisor Class shareholders of another
Franklin Templeton fund who do not qualify to buy the Fund's Advisor Class
also may exchange into Class A without any sales charge. Advisor Class
shareholders who exchange their shares for Class A shares and later decide
they would like to exchange into another fund that offers Advisor Class may
do so.

[Insert graphic of a certificate] SELLING SHARES
--------------

You can sell your shares at any time. Please keep in mind that a contingent
deferred sales charge (CDSC) may apply.

[Begin callout]
A SIGNATURE GUARANTEE helps protect your account against fraud. You can
obtain a signature guarantee at most banks and securities dealers.

A notary public CANNOT provide a signature guarantee.
[End callout]

THROUGH YOUR
INVESTMENT
REPRESENTATIVE
----------------------------------------------------------------------

[Insert graphic of Send written instructions and endorsed share
envelope] certificates (if you hold share certificates)
to Investor Services. Corporate, partnership
BY MAIL or trust accounts may need to send additional
documents.

(Please see page 23 for more information.)
----------------------------------------------------------------------
[Insert graphic of You can call, write, or visit us online to
three have redemption proceeds sent to a bank
lightning bolts] account. See the policies above for selling
shares by mail, phone, or online.
BY ELECTRONIC FUNDS
TRANSFER (ACH) Before requesting to have redemption proceeds
sent to a bank account, please make sure we
have your bank account information on file. If
we do not have this information, you will need
to send written instructions with your bank's
name and address, a voided check or savings
account deposit slip, and a signature
guarantee if the bank and Fund accounts do not
have at least one common owner.

If we receive your request in proper form by
1:00 p.m. Pacific time, proceeds sent by ACH
generally will be available within two to
three business days.
----------------------------------------------------------------------
[Insert graphic of Obtain a current prospectus for the fund you
two are considering. Prospectuses are available
arrows pointing in online at franklintempleton.com.
opposite directions]
Call Shareholder Services at the number below
BY EXCHANGE or our automated TeleFACTS system, or send
signed written instructions. You also may
TeleFACTS(R) place an exchange order online. See the
1-800/247-1753 policies above for selling shares by mail,
(around-the-clock phone, or online.
access)
If you hold share certificates, you will need
to return them to the Fund before your
exchange can be processed. (Please see page 24
for information on exchanges.)
----------------------------------------------------------------------

[Insert graphic of paper and pen] ACCOUNT POLICIES

[Begin callout]
When you buy shares, you pay the offering price. The offering price is the
NAV plus any applicable sales charge.

When you sell shares, you receive the NAV minus any applicable contingent
deferred sales charge (CDSC).
[End callout]

Requests to buy and sell shares are processed at the NAV next calculated
after we receive your request in proper form.

ADDITIONAL POLICIES Please note that the Fund maintains additional policies
and reserves certain rights, including:

CLASS A CLASS B CLASS C
--------------------------------------------------------------
COMMISSION (%) - 4.00 2.00
Investment under $50,000 5.00 - -
$50,000 but under $100,000 3.75 - -
$100,000 but under $250,000 2.80 - -
$250,000 but under $500,000 2.00 - -
$500,000 but under $1 1.60 - -
million
$1 million or more up to 1.00/1 - -
12B-1 FEE TO DEALER 0.25 0.25/2 1.00/3

[Insert graphic of question mark] QUESTIONS
---------

FOR MORE INFORMATION

You can learn more about the Fund in the following documents:

ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS

Includes a discussion of recent market conditions and Fund strategies,
financial statements, detailed performance information, portfolio holdings
and the auditor's report.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

Contains more information about the Fund, its investments and policies. It is
incorporated by reference (is legally a part of this prospectus).

FRANKLIN(R)TEMPLETON(R)
1-800/DIAL BEN(R) (1-800/342-5236)
TDD (Hearing Impaired) 1-800/851-0637
franklintempleton.com

Investment Company Act file #811-2781 104 P 01/01

PART A
TEMPLETON FOREIGN FUND
ADVISOR CLASS PROSPECTUS

Prospectus

TEMPLETON FOREIGN FUND

Templeton Funds, Inc.

ADVISOR CLASS

INVESTMENT STRATEGY
GLOBAL GROWTH

JANUARY 1, 2001

[Insert Franklin Templeton Ben Head]

The SEC has not approved or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

CONTENTS

THE FUND

[Begin callout]
INFORMATION ABOUT THE FUND YOU SHOULD KNOW BEFORE INVESTING
[End callout]

2 Goal and Strategies

4 Main Risks

7 Performance

8 Fees and Expenses

9 Management

10 Distributions and Taxes

11 Financial Highlights

YOUR ACCOUNT

[Begin callout]
INFORMATION ABOUT QUALIFIED INVESTORS, ACCOUNT TRANSACTIONS AND SERVICES
[End callout]

12 Qualified Investors

13 Buying Shares

15 Investor Services

19 Selling Shares

21 Account Policies

23 Questions