<PAGE>
Templeton
Global Utilities, Inc.
- --------------------------------------------------------------------------------
Your Fund's Objective:
Templeton Global Utilities, Inc. seeks to provide a high level of total return
(income plus capital appreciation), without incurring undue risk, through
investment in equity and debt securities of domestic and foreign companies in
the utility industries.
- --------------------------------------------------------------------------------
April 14, 1995
Dear Shareholder:
This semi-annual report for Templeton Global Utilities covers the six months
ended February 28, 1995. In the U.S., rising interest rates caused a steep
decline in the prices of utility stocks. Furthermore, Latin American phone
company stocks were hit hard by the Mexican peso crisis beginning in December
1994, and some European utility stocks were affected by political concerns and
currency weakness.
These factors contributed to the disappointing short-term returns posted by the
Fund. The Performance Summary on page 6 details these returns, along with the
more favorable long-term results. Of course, sector funds have always been prone
to shifts in investor sentiment, and we are maintaining a long-term perspective
on the market. In keeping with the Templeton philosophy, we see recent price
weakness as an opportunity to search for bargain-priced stocks that should
increase in value when investor sentiment improves. This search has led to
purchases of shares from all over the globe, as you can see from the pie chart
below.
- --------------------------------------------------------------------------------
Templeton
Global Utilities, Inc.
Geographic Distribution on 2/28/95
Based on Total Net Assets
[PIE CHART APPEARS HERE]
United States 39.5%
Asia 14.1%
Latin America 8.6%
Australia/New Zealand 6.2%
Europe 27.9%
Other Countries 1.9%
Other Net Assets 1.8%
1
<PAGE>
The Fund remained heavily invested in U.S. securities, which were 39.5% of net
asset value on February 28, 1995. Strong U.S. economic growth continued
throughout 1994, convincing the U.S. Federal Reserve Board to continue raising
the federal funds rate, from 3% to 6%, between February 1994 and February 1995.
With higher rates available on U.S. Treasury securities, investors demanded
higher yields on utility stocks. This caused steep declines in utility stock
prices through most of the year.
Now, with U.S. economic growth prospects less certain, and further interest rate
increases less likely in 1995, the defensive characteristics of utility
companies have once more become appealling to investors. Many of our holdings in
the U.S. have recently benefited from the early effects of this reversal of
investor sentiment. Four such holdings include Illinova Corp. and MCI
Telecommunications Corp. (these rank among the portfolio's top ten holdings),
Pinnacle West Capital Corp., and American Electric Power Co.
Our European holdings remained stable during the period at 25% to 30% of your
Fund's portfolio. Two countries with significant representation are the United
Kingdom (9.9%) and Spain (4.7%). In the United Kingdom, share prices of electric
companies had performed extremely well since privatization in December 1990.
However, profit-taking in January and February 1995 has caused some prices to
fall. Fortunately, we trimmed our positions toward the end of last year, but we
remain long-term holders because strong balance sheets and significant cash flow
should allow for dividend growth that may not be fully reflected in current
share prices.
Utility stocks in Spain have been hurt by political concerns, currency weakness
and fears of higher interest rates. However, we feel that the market has ignored
some positive fundamental developments. For example, Iberdrola generates
significant cash flow which it is using to reduce its debt burden. Relative to
many of its global counterparts, the company now appears very cheap, based on
their long term prospects.
2
<PAGE>
- --------------------------------------------------------------------------------
Templeton Global Utilities, Inc.
Top 10 Holdings on 2/28/95
As a Percentage of Total Net Assets
<TABLE>
<CAPTION>
% of Total
Company, Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Electric Company of New Zealand, Ltd., 10.00%,
6/15/96; Utilities-Electric & Gas, New Zealand 3.2%
- --------------------------------------------------------------------------------
Hong Kong Electric Holdings Ltd.;
Utilities-Electric & Gas, Hong Kong 2.9%
- --------------------------------------------------------------------------------
Illinova Corp.; Utilities-Electric & Gas,
United States 2.6%
- --------------------------------------------------------------------------------
MCI Communications Corp.;
Telecommunications, United States 2.3%
- --------------------------------------------------------------------------------
Southern Electric PLC;
Utilities-Electric & Gas, United Kingdom 2.3%
- --------------------------------------------------------------------------------
VEBA, AG; Utilities-Electric & Gas,
United Kingdom 2.3%
- --------------------------------------------------------------------------------
National Power Corp., 7.625%, 11/15/00;
Utilities-Electric & Gas, United Kingdom 2.2%
- --------------------------------------------------------------------------------
Telecom Italia SPA;
Telecommunications, Italy 2.2%
- --------------------------------------------------------------------------------
Endesa-Empresa Nacional de Electricidad SA,
ADR; Utilities-Electric & Gas, Spain 2.2%
- --------------------------------------------------------------------------------
Australian Gas Light Company;
Utilities-Electric & Gas, Australia 2.1%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, see page 8 of this report.
The Mexican peso's devaluation in December hurt the stock market in Mexico and
impacted other Latin American markets as well. Because telecommunication stocks
represent a major portion of Latin America's markets, these stocks became the
focus of most of the selling. (Telmex represents roughly 15% of the Mexican
Bolsa; Telebras is nearly 8% of the Brazilian market.) While this has hurt the
Fund's performance since the crisis began, Templeton has always adhered to its
philosophy that the time to find undervalued stocks is when others are
pessimistically selling. Although recent events may have delayed the realization
of their potential, we are comfortable with our holdings in this region and are
judiciously adding new purchases to your Fund's portfolio where we see value.
3
<PAGE>
Recent privatization of many utility companies in Asia has also offered some
exciting, long-term opportunities. The performance of some of these companies
was poor initially due to the overall market climate. While short-term
volatility can be disconcerting, declines of as much as 40% to 50% are not
unusual in emerging markets. For example, the Hong Kong market has increased
1000% in the last 15 years, but has suffered nine declines of more than 20%
during that time. We feel that the investments we have chosen in Asia are
undervalued relative to their long-term potential and should perform well in the
future, while helping us further the geographical diversification of the Fund's
exposure.
The diagram on this page explains why we are optimistic about our investments in
developing markets, such as Latin America and Asia. As you can see, there are
major imbalances in the global consumption of electricity services. The same can
be said of telephone services. Continued economic growth in these regions would
make these disparities unsustainable. In order to finance needed improvements,
governments are increasingly eager to put in place favorable market structures
and reg-
1992 Per Capita Electricity Consumption
Per Capita Kilowatt Consumption (KWH)
(Thousands)
[BAR CHART APPEARS HERE]
24,592
Norway
15,206
Canada
10,811
United States
5,140
United Kingdom
3,567
Spain
3,285
Hungary
2,639
South Korea
1,683
Brazil
1,498
Argentina
1,316
Mexico
576
China
347
India
212
Indonesia
ulatory systems which offer competitive rates of return and encourage outside
investment. Our job is to discern which companies offer the strongest prospects
for long-term growth and to buy shares of those companies at bargain prices.
4
<PAGE>
Of course, investments in foreign securities involve special risks, such as
market and currency volatility and adverse economic, social and political
developments in the countries where the Fund is invested. Developing markets
involve heightened risks related to the same factors, in addition to risks
associated with the relatively small size and lesser liquidity of these markets.
We are continuing to work diligently, seeking to uncover the best investment
opportunities we can find around the world. The nature of the Fund will mean
that at times its holdings will fall out of favor, possibly for longer than
investors might suspect. The Templeton organization has always seen such periods
as opportunities to position ourselves for long-term performance. It requires
patience and fortitude, but over time we have found it is one of the best ways
to seek superior returns.
We thank you for your participation in Templeton Global Utilities and welcome
your comments and suggestions.
Sincerely,
/s/ Gary P. Motyl
Gary P. Motyl, CFA
President
Templeton Global Utilities, Inc.
/s/ Sean Farrington
Sean Farrington, CFA
Portfolio Manager
Templeton Global Utilities, Inc.
5
<PAGE>
Performance Summary
During the reporting period, Templeton Global Utilities shareholders received
combined distributions totaling $1.465 per share, including long-term capital
gains of $1.225 and income distributions totaling 24 cents ($0.24) per share.
The Fund's closing price on the American Stock Exchange decreased from $15.38 on
August 31, 1994 to $11.63 on February 28, 1995, and the Fund produced a total
return of -16.13% in market-price terms for this six-month period.
Between August 31, 1994 and February 28, 1995, the Fund's net asset value
declined from $15.03 to $12.65. Based on the change in actual net asset value
(in contrast to market price), the Fund produced a total return of -6.42% for
the same period. Both total return figures assume reinvestment of dividends and
capital gains in accordance with the dividend reinvestment plan.
We have always maintained a long-term perspective when managing the Fund, and we
encourage shareholders to view their investments in a similar manner. As you can
see from the chart below, based on the change in market price, the Fund
delivered a total return of 40.59% for the period between its inception on May
23, 1990 and February 28, 1995.
Past distributions and total returns are not predictive of future performance,
and distributions will vary depending on income earned by the Fund, as well as
any profits realized from the sale of securities in the portfolio.
- --------------------------------------------------------------------------------
Templeton Global Utilities
Cumulative Total Returns*
Periods ended 2/28/95
<TABLE>
<CAPTION>
Since
Inception
One Year Three Year (5/23/90)
<S> <C> <C> <C>
Based on change
in net asset value -6.81% 30.58% 63.21%
Based on change in
market price -20.80% 24.23% 40.59%
</TABLE>
*Cumulative total return calculations show the change in value of an investment
over the periods indicated. These calculations assume reinvestment of all
distributions and capital gains, either at net asset value or at market price on
the reinvestment date in accordance with the dividend reinvestment plan. Past
performance is not predictive of future results.
6
<PAGE>
Templeton Global Utilities, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31
FEBRUARY 28, 1995 ---------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990+
----------------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 15.03 $ 15.01 $ 13.38 $ 11.85 $ 10.60 $ 11.25
--------- ------- ------- ------- ------- ---------
Income from investment
operations:
Net investment income .23 .60 .60 .67 .61 .16
Net realized and
unrealized gain (loss) (1.15) .73 1.90 1.47 1.32 (.52)
--------- ------- ------- ------- ------- ---------
Total from investment
operations (.92) 1.33 2.50 2.14 1.93 (.36)
--------- ------- ------- ------- ------- ---------
Underwriting expenses
deducted from capital -- -- -- -- -- (.23)
--------- ------- ------- ------- ------- ---------
Distributions:
Dividends from net
investment income (.24) (.64) (.64) (.61) (.68) (.06)
Distributions from net
realized gains (1.22) (.67) (.23) -- -- --
--------- ------- ------- ------- ------- ---------
Total distributions (1.46) (1.31) (.87) (.61) (.68) (.06)
--------- ------- ------- ------- ------- ---------
Change in net asset
value (2.38) .02 1.63 1.53 1.25 (.65)
--------- ------- ------- ------- ------- ---------
Net asset value, end of
period $ 12.65 $ 15.03 $ 15.01 $ 13.38 $ 11.85 $ 10.60
========= ======= ======= ======= ======= =========
TOTAL RETURN*
Based on market value
per share (16.13)% 3.78% 27.31% 25.97% 13.96% (12.01)%
Based on net asset value
per share (6.42)% 8.98% 19.57% 18.53% 18.91% (5.25)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000) $39,884 $47,317 $46,429 $40,702 $35,855 $ 31,889
Ratio of expenses to
average net assets 1.42%** 1.21% 1.31% 1.44% 1.55% 1.29%**
Ratio of net investment
income to average
net assets 3.39%** 4.00% 4.41% 5.28% 5.46% 4.52%**
Portfolio turnover rate 12.53% 40.34% 42.90% 15.21% 19.85% .47%
</TABLE>
+ PERIOD FROM MAY 23, 1990 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1990.
* NOT ANNUALIZED IN PERIODS OF LESS THAN ONE YEAR.
**ANNUALIZED
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
Templeton Global Utilities, Inc.
Investment Portfolio, February 28, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------
COMMON STOCKS: 64.6%
- ------------------------------------------------------------------------------
Electrical & Electronics: 1.1%
BBC Brown Boveri Ltd., br. Swtz. 500 $ 436,386
- ------------------------------------------------------------------------------
Energy Sources: 1.3%
Coastal Corp. U.S. 18,000 515,250
- ------------------------------------------------------------------------------
Multi-Industry: 1.1%
Hutchison Whampoa Ltd. H.K. 100,000 424,238
- ------------------------------------------------------------------------------
Telecommunications: 15.7%
BCE Inc. Can. 24,000 744,914
Cable & Wireless PLC U.K. 49,000 289,463
Compania de Telefonos de
Chile SA, ADR Chil. 6,000 366,000
MCI Communications Corp. U.S. 46,000 925,750
*Pakistan Telecom Corp. PTC Pak. 3,127 308,010
PT Indosat, ADR Indo. 21,200 755,250
STET (Sta Finanziaria
Telefonica Torino) SPA, di
Risp Itl. 160,000 366,263
Telecom Corp. of New Zealand
Ltd. N.Z. 105,000 363,994
Telecom Italia Spa, di Risp Itl. 265,000 513,785
*Teledanmark AS, ADS Den. 13,540 340,193
Teledanmark AS, B Den. 7,830 399,838
Telefonica de Espana SA, ADR Sp. 15,000 562,500
Telmex-Telefonos de Mexico
SA, L, ADR Mex. 12,400 342,550
-----------
6,278,510
- ------------------------------------------------------------------------------
Utilities Electrical & Gas: 45.4%
American Electric Power Co.
Inc. U.S. 24,000 813,000
Australian Gas & Light
Company Aus. 270,000 849,251
British Gas PLC U.K. 150,000 691,310
Central Costanera SA, ADR Arg. 17,000 420,750
*Chilectra SA, ADS Chil. 11,700 536,737
Consolidated Electric Power
Asia Ltd., ADR H.K. 15,000 316,875
Electrabel SA Bel. 3,200 628,757
Electricidad de Caracas . Venz. 318,971 278,200
Endesa- Empresa Nacional de
Electricidad SA, ADR Sp. 20,000 872,500
Entergy Corp. U.S. 34,000 760,750
Evn Energie-Versorgung
Niederoesterreich AG Aust. 1,400 168,840
Hongkong Electric Holdings
Ltd. H.K. 390,000 1,167,755
Iberdrola SA Sp. 73,000 456,875
Illinova CP Holdings Co. U.S. 44,000 1,028,500
Iowa Illinois Gas & Electric U.S. 19,000 413,250
Kansas City Power and Light
Co. U.S. 14,600 348,575
Korea Electric Power Corp. Kor. 8,000 259,355
Long Island Lighting Co. U.S. 32,000 512,000
</TABLE>
8
<PAGE>
Templeton Global Utilities, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Utilities Electrical & Gas (cont.)
New York State Electric
& Gas Corp. U.S. 24,000 $ 516,000
Nipsco Industries Inc. U.S. 16,800 531,300
Pinnacle West Capital
Corp. U.S. 38,000 817,000
Powergen PLC U.K. 102,000 802,870
Public Service
Enterprise Group Inc. U.S. 9,000 262,125
Shandong Huaneng Power Chn. 27,000 246,375
*Sithe Energies Inc. U.S. 50,000 475,000
South Wales Electricity U.K. 50,000 644,589
Southern Co. U.S. 20,000 412,500
Southern Electric PLC U.K. 79,300 923,101
Texas Utilties Electric
Co. U.S. 22,000 723,250
Unicom Corp. U.S. 11,000 280,500
VEBA AG Ger. 2,500 905,971
Wing Shan International
Ltd. H.K. 340,000 44,416
-----------
18,108,277
-----------
TOTAL COMMON STOCKS (cost $22,419,313) 25,762,661
- -------------------------------------------------------------------------------
PREFERRED STOCKS: 4.8%
- -------------------------------------------------------------------------------
Cia de Inversiones en
Telecomunicaciones SA,
pfd., conv. Arg. 6,900 255,300
Concessioni e
Costruzioni Autostrade
SPA, B, pfd. Itl. 457,000 569,948
Nacional Financiera SA,
conv., pfd. Mex. 12,400 359,600
Philippine Long Distance
Telephone Co., conv.,
Pfd. Phil. 9,400 321,950
Telebras-
Telecomunicacoes
Brasileiras SA, pfd. Braz. 13,216,481 390,045
-----------
TOTAL PREFERRED STOCKS (cost $1,845,473) 1,896,843
- -------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY**
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BONDS: 23.9%
- -------------------------------------------------------------------------------
Cleveland Electric
Illuminating Corp.,
10.00%, 6/01/20 U.S. 500,000 455,055
Electricity Corp. of New
Zealand Ltd., 10.00%,
6/15/96 N.Z. 2,000,000 1,277,205
GTE Corp., 10.25%,
11/01/20 U.S. 500,000 547,685
Korea Electric Power
Co., 7.75%, 4/01/13 Kor. 500,000 435,385
Korea Telecom, 7.40%,
12/01/99 Kor. 500,000 487,785
National Power Corp.,
7.625%, 11/15/00 Phil. 1,000,000 875,000
National Power PLC,
6.25%, 9/23/2008 U.K. 333,000 581,449
New York State Electric
& Gas, 9.875%, 5/01/20 U.S. 400,000 425,516
Pennsylvania Power &
Light Co., 9.25%,
10/01/19 U.S. 500,000 522,460
RGS I&M Funding Corp.,
9.81%, 12/07/22 U.S. 500,000 554,570
San Diego Gas & Electric
Co., 9.625%, 4/15/20 U.S. 500,000 536,450
</TABLE>
9
<PAGE>
Templeton Global Utilities, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY** VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
BONDS (CONT.)
- -------------------------------------------------------------------------------
Softe SA, 4.25%, conv.,
7/30/98 Itl. 725,000,000 $ 446,873
Telebras-
Telecomunicacoes
Brasileiras,
10.00%, 6/16/97 Braz. 500,000 490,000
U.S. West
Communications, 6.875%,
9/15/33 U.S. 1,000,000 828,880
United Telecom, 9.75%,
4/01/00 U.S. 500,000 538,545
Veba International,
6.00%, 4/06/00 Ger. 330,000 539,550
-----------
TOTAL BONDS (cost $9,066,274) 9,542,408
- -------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 4.9% (cost $1,951,393 )
- -------------------------------------------------------------------------------
U.S. Treasury Bills,
5.18% to 5.59% with
maturities to 4/27/95 U.S. 1,955,000 1,951,707
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS: 98.2% (cost $35,282,453) 39,153,619
OTHER ASSETS, LESS LIABILITIES: 1.8% 729,928
-----------
TOTAL NET ASSETS: 100.0% $39,883,547
===========
</TABLE>
*NON INCOME PRODUCING.
**CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Templeton Global Utilities, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (identified cost $35,282,453) $39,153,619
Receivables:
Investment securities sold 2,569,290
Dividends and interest 449,922
Unamortized organization cost 3,244
-----------
Total assets 42,176,075
-----------
Liabilities:
Payable for investment securities purchased 2,154,865
Accrued expenses 137,663
-----------
Total liabilities 2,292,528
-----------
Net assets, at value $39,883,547
===========
Net assets consists of:
Distributions in excess of net investment income $ (44,097)
Net unrealized appreciation 3,871,166
Accumulated net realized gain 859,530
Net capital paid in on shares of capital stock 35,196,948
-----------
Net assets, at value $39,883,547
===========
Shares outstanding 3,153,664
===========
Net asset value per share ($39,883,547 / 3,153,664) $ 12.65
===========
</TABLE>
STATEMENT OF OPERATIONS
for the six months ended
February 28, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment income:
(net of $31,429 foreign taxes withheld)
Interest $ 542,566
Dividends 465,265
-----------
Total income $ 1,007,831
Expenses:
Management fees (Note 3) 125,569
Administrative fees (Note 3) 31,391
Transfer agent fees 20,000
Custodian fees 6,000
Reports to shareholders 68,500
Audit fees 9,000
Legal Fees 6,000
Amortization of organization costs 4,707
Registration and filing fees 14,000
Directors' fees and expenses 11,500
Other 1,217
-----------
Total expenses 297,884
-----------
Net investment income 709,947
Realized and unrealized
gain (loss):
Net realized gain (loss) on:
Investments 873,559
Foreign currency transactions (1,996)
-----------
871,563
-----------
Net unrealized depreciation on investments (4,458,353)
-----------
Net realized and unrealized loss (3,586,790)
-----------
Net decrease in net assets resulting from operations $(2,876,843)
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
Templeton Global Utilities, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 709,947 $ 1,866,930
Net realized gain from security and for-
eign currency transactions 871,563 4,573,413
Unrealized depreciation (4,458,353) (2,347,310)
----------- -----------
Net increase (decrease) in net assets re-
sulting from operations (2,876,843) 4,093,033
Distributions to shareholders:
From net investment income (756,251) (1,997,282)
From net realized gain (3,857,774) (2,072,126)
Fund share transactions (Note 2): 57,495 864,762
----------- -----------
Net increase (decrease) in net assets (7,433,373) 888,387
Net assets:
Beginning of period 47,316,920 46,428,533
----------- -----------
End of period $39,883,547 $47,316,920
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
Templeton Global Utilities, Inc.
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Global Utilities, Inc. (the Fund), is a closed-end, non-diversified
management investment company registered under the Investment Company Act of
1940. The following summarizes the Fund's significant accounting policies.
a. Securities Valuations:
Securities listed or traded on a recognized national or foreign stock exchange
or NASDAQ are valued at the last reported sales prices on the principal ex-
change on which the securities are traded. Over-the-counter securities and
listed securities for which no sale is reported are valued at the mean between
the last current bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
and approved in good faith by the Board of Directors.
b. Foreign Currency Translations:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign curren-
cies are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it will cus-
tomarily enter into a foreign exchange contract to minimize foreign exchange
risk from the trade date to the settlement date of such transaction.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of for-
eign currencies, currency gains or losses realized between the trade and set-
tlement dates on security transactions, the differences between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at the end
of the fiscal period, resulting from changes in the exchange rates.
c. Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
d. Unamortized Organization Costs:
Organization costs are being amortized on a straight line basis over five
years.
e. Security Transactions, Investment Income, Distributions and Other Expenses:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income from foreign secu-
rities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
13
<PAGE>
Templeton Global Utilities, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
At February 28, 1995, there were 100,000,000 shares of capital stock authorized
($0.01 par value). Commencing August 31, 1991, and at August 31 each year
thereafter until 1995 the Fund will determine if the Fund's shares have traded
on the American Stock Exchange at an average discount from net asset value of
2% or more for the previous fiscal quarter. If such occurs the Fund will submit
to shareholders, at its next annual meeting, a proposal to convert the Fund to
an open-end investment company. For the six months ended February 28, 1995, the
shares have not traded at such a discount. For the six months ended February
28, 1995 and the year ended August 31, 1994, 4,460 shares were issued for
$57,495 and 55,714 shares were issued for $864,762 from reinvested distribu-
tions, respectively.
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton In-
vestment Counsel, Inc. (TICI) and Templeton Global Investors, Inc. (TGII), the
Fund's investment manager and business manager, respectively. The Fund pays
monthly an investment management fee to TICI equal, on an annual basis, to
0.60% of the average daily net assets of the Fund. The Fund pays TGII monthly a
fee of 0.15% per annum of the Fund's average net assets.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $6,000 for the six months ended Feb-
ruary 28, 1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 28, 1995 aggregated $4,552,119 and $9,000,251, respec-
tively. The cost of securities for federal income tax purposes is the same as
that shown in the investment portfolio. Realized gains and losses are reported
on an identified cost basis.
At February 28, 1995, the aggregate gross unrealized appreciation and deprecia-
tion of portfolio securities, based on cost for federal income tax purposes,
was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 5,985,879
Unrealized depreciation (2,114,713)
-----------
Net unrealized appreciation $ 3,871,166
===========
</TABLE>
14
<PAGE>
Templeton Global Utilities, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
5. UNAUDITED QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET INCREASE
NET GAIN (LOSS) (DECREASE)
ON SECURITY AND IN NET ASSETS
INVESTMENT NET INVESTMENT FOREIGN CURRENCY RESULTING FROM
INCOME INCOME TRANSACTIONS OPERATIONS
---------------- ---------------- ------------------- ------------------
PER PER PER PER
TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
---------- ----- ---------- ----- ----------- ------ ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995
For the quarter ended:
November 30, 1994 $ 556,938 $.18 $ 403,071 $.13 $(2,583,287) $ (.82) $(2,180,216) $(.69)
February 28, 1995 450,893 .14 306,876 .10 (1,003,503) (.33) (696,627) (.23)
---------- ---- ---------- ---- ----------- ------ ----------- -----
$1,007,831 $.32 $ 709,947 $.23 $(3,586,790) $(1.15) $(2,876,843) $(.92)
========== ==== ========== ==== =========== ====== =========== =====
1994
For the quarter ended:
November 30, 1993 $ 575,091 $.19 $ 440,791 $.14 $ 574,562 $ .19 $ 1,015,353 .33
February 28, 1994 524,716 .16 429,180 .14 2,887,787 .93 3,316,967 1.07
May 31, 1994 634,744 .20 446,065 .14 (3,012,942) (.96) (2,566,877) (.82)
August 31, 1994 696,572 .22 550,894 .18 1,776,696 .57 2,327,590 .75
---------- ---- ---------- ---- ----------- ------ ----------- -----
$2,431,123 $.77 $1,866,930 $.60 $ 2,226,103 $ .73 $ 4,093,033 $1.33
========== ==== ========== ==== =========== ====== =========== =====
</TABLE>
15
<PAGE>
Templeton Global Utilities, Inc.
Annual Meeting of Shareholders, February 21, 1995
- --------------------------------------------------------------------------------
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
700 Central Avenue, St. Petersburg, Florida, on February 21, 1995. The purpose
of the meeting was to elect four directors of the Fund and to ratify the selec-
tion of McGladrey & Pullen, LLP, as the Fund's independent public accountants
for the fiscal year ending August 31, 1995. At the meeting, the following per-
sons were elected by the shareholders to serve as directors of the Fund:
Charles E. Johnson, Nicholas F. Brady, F. Bruce Clarke and Andrew H. Hines, Jr.
In addition to the directors elected at the Annual Meeting, the following per-
sons also serve as directors of the Fund: John M. Templeton, Hasso-G von
Diergardt-Naglo, Fred R. Millsaps, Betty P. Krahmer, John G. Bennett, Jr., Har-
ris J. Ashton, S. Joseph Fortunato and Gordon S. Macklin. In addition, the
shareholders ratified the selection of McGladrey & Pullen, LLP, to serve as the
Fund's independent public accountants for the fiscal year ending August 31,
1995. No other business was transacted at the Annual Meeting.
The results of the voting at the Annual Meeting are as follows:
1. Election of four (4) Directors:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING SHARES OUTSTANDING
FOR SHARES VOTED AGAINST % ABSTAIN SHARES
--------- ----------- ------ ------- ------------------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles
E.
Johnson 2,740,571 86.96% 98.54% -0- -0- 40,676 1.29%
Nicholas
F.
Brady 2,738,203 86.89% 98.45% -0- -0- 43,044 1.37%
F. Bruce
Clarke 2,745,493 87.12% 98.71% -0- -0- 35,754 1.13%
Andrew
H.
Hines,
Jr. 2,738,029 86.88% 98.44% -0- -0- 43,218 1.37%
2. Ratification of the selection of McGladrey & Pullen, LLP, as independent
public accountants of the Fund for the fiscal year ending August 31, 1995:
<CAPTION>
% OF % OF % OF
OUTSTANDING SHARES % OF OUTSTANDING
FOR SHARES VOTED AGAINST OUTSTANDING SHARES ABSTAIN SHARES
--------- ----------- ------ ------- ------------------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
2,718,123 88.25% 97.73% 11,171 0.35% 51,953 1.65%
</TABLE>
16
<PAGE>
NOTES
-----
<PAGE>
NOTES
-----
<PAGE>
The Franklin Templeton Group
- --------------------------------------------------------------------------------
To receive a free brochure and prospectus, which contain more complete informa-
tion, including charges and expenses on each of the funds listed below, call
Franklin Fund Information, toll free, at 1-800-DIAL-BEN (1-800-342-5236) or
Templeton Fund Information at 1-800-292-9293. Please read the prospectus care-
fully before you invest or send money.
TEMPLETON
FAMILY OF FUNDS
Franklin Templeton Japan Fund
Templeton American Trust
Templeton Americas
Government Securities Fund
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Global
Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global Rising
Dividends Fund
Templeton Growth Fund
Templeton Income Fund
Templeton Money Fund
Templeton Real Estate
Securities Fund
Templeton Smaller
Companies Growth Fund
Templeton World Fund
FRANKLIN GROUP OF FUNDS(R)
FRANKLIN GLOBAL/
INTERNATIONAL FUNDS
Franklin Global Health Care
Fund
Franklin Global Government
Income Fund
Franklin Global Utilities Fund
Franklin International Equity
Fund
Franklin Pacific Growth Fund
FUNDS SEEKING CAPITAL GROWTH
Franklin California Growth
Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin Small Cap Growth
Fund
FUNDS SEEKING GROWTH AND
INCOME
Franklin Balance Sheet
Investment Fund
Franklin Convertible
Securities Fund
Franklin Income Fund
Franklin Equity Income Fund
Franklin Utilities Fund
FUNDS SEEKING HIGH CURRENT
INCOME
Franklin's AGE High Income
Fund
Franklin Investment Grade Income
Fund
Franklin Premier Return Fund
Franklin U.S. Government
Securities Fund
FUNDS SEEKING TAX-FREE
INCOME
Franklin Federal Tax-Free
Income Fund
Franklin High Yield Tax-Free
Income Fund
Franklin California High Yield
Municipal Fund
Franklin Alabama Tax-Free
Income Fund
Franklin Arizona Tax-Free
Income Fund
Franklin California Tax-Free
Income Fund
Franklin Colorado Tax-Free
Income Fund
Franklin Connecticut Tax-Free
Income Fund
Franklin Florida Tax-Free
Income Fund
Franklin Georgia Tax-Free
Income Fund
Franklin Hawaii Municipal
Bond Fund
Franklin Indiana Tax-Free
Income Fund
Franklin Kentucky Tax-Free
Income Fund
Franklin Louisiana Tax-
Free Income Fund
Franklin Maryland Tax-
Free Income Fund
Franklin Missouri Tax-Free
Income Fund
Franklin New Jersey Tax-
Free Income Fund
Franklin New York Tax-
Free Income Fund
Franklin North Carolina
Tax-Free Income Fund
Franklin Oregon Tax-Free
Income Fund
Franklin Pennsylvania Tax-
Free Income Fund
Franklin Puerto Rico Tax-
Free Income Fund
Franklin Texas Tax-Free
Income Fund
Franklin Virginia Tax-Free
Income Fund
Franklin Washington
Municipal Bond Fund
FUNDS SEEKING TAX-FREE
INCOME THROUGH INSURED
PORTFOLIOS
Franklin Insured Tax-Free
Income Fund
Franklin Arizona Insured
Tax-Free Income Fund
Franklin California Insured
Tax-Free Income Fund
Franklin Florida Insured
Tax-Free Income Fund
Franklin Massachusetts
Insured Tax-Free Income
Fund
Franklin Michigan Insured
Tax-Free Income Fund
Franklin Minnesota Insured
Tax-Free Income Fund
Franklin New York Insured
Tax-Free Income Fund
Franklin Ohio Insured Tax-
Free Income Fund
FUNDS SEEKING HIGH CURRENT
INCOME AND STABILITY OF
PRINCIPAL
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities
Fund
Franklin Short-
Intermediate U.S.
Government Securities
Fund
FUND SEEKING HIGH AFTER-TAX
INCOME FOR CORPORATIONS
Franklin Corporate
Qualified Dividend Fund
MONEY MARKET FUNDS SEEKING
SAFETY OF PRINCIPAL AND
INCOME
Franklin Money Fund
Franklin Federal Money
Fund
Franklin Tax-Exempt
Money Fund
Franklin California Tax-
Exempt Money Fund
Franklin New York Tax-
Exempt Money Fund
IFT Franklin U.S. Treasury
Money Market Portfolio
FUNDS FOR
NON-U.S. INVESTORS
FRANKLIN PARTNERS FUNDS(R)
Franklin Tax-Advantaged
High Yield Securities Fund
Franklin Tax-Advantaged
International Bond Fund
Franklin Tax-Advantaged
U.S. Government
Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
TEMPLETON GLOBAL
UTILITIES, INC.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Investors should be aware that the value of investments made for the Fund may
go up as well as down and that the Investment Manager may make errors in
selecting securities for the Fund's portfolio. Like any investment in
securities, the Fund's portfolio will be subject to the risk of loss from
market, currency, economic, political and other factors. The Fund and Fund
investors are not protected from such losses by the Investment Manager.
Therefore, investors who cannot accept the risk of such losses 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 bythe presence of a regular beeping tone.
- --------------------------------------------------------------------------------
TEMPLETON
GLOBAL
UTILITIES, INC.
Semi-Annual Report
February 28, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
[RECYCLING LOGO APPEARS HERE]
TLTGU S95 04/95
