<PAGE>
Templeton Global
Utilities, Inc.
Your Fund's Objective:
Templeton Global Utilities 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 15, 1996
Dear Shareholder:
We are pleased to bring you this semi-annual report for Templeton Global
Utilities, Inc., which covers the six months ended February 29, 1996. As you
know, a merger of your fund and the Franklin Global Utilities Fund was approved
by shareholders on February 20, 1996. The next report you will receive will be
the Franklin Global Utilities Fund annual report dated April 30, 1996. For more
information regarding this merger, please refer to the box on page 4.
During the reporting period, declining interest rates, moderate growth, mild
inflation and healthy corporate earnings contributed to strong performances of
domestic and foreign utility stocks. In the U.S., the price of the S&P Utility
Index(R) rose 6% to $195.58 on February 29, 1996, from $184.46 on September 29,
1995, as U.S. utility stocks rose in value due primarily to declining interest
rates.* Earnings for U.S. utility companies also increased as the specter of
competition caused these companies to reduce their cost structures and use cash
flow to lower their debt levels. Preparation for the changing regulatory
* Source: Bloomberg.
1
<PAGE>
environment also encouraged consolidation within the sector. Six companies
within the U.S. announced mergers in 1995, a rapid acceleration compared with
such activity in previous years. While we did not purchase new stocks in the
U.S. during this reporting period, the Fund's existing holdings benefited from
all of these developments and increased in value.
Within the U.K., consolidation was a driving force behind the strong performance
of our holdings in distributing companies such as Southern Electric PLC and
South Wales Electricity. Bids for both of these companies pushed up their share
prices and gave us an opportunity to sell our positions at favorable prices.
This resulted in a decline in the Fund's U.K. weighting to 6.1% of total net
assets on February 29, 1996, from 9.7% on August 31, 1995. We continue to hold
stakes in National Power and PowerGen, whose performance has been disappointing
so far. Relative to their long-term underlying earnings potential, however,
these companies appear undervalued. We also initiated a position in Thames
Water, a privatized water company, whose share price has suffered because of the
potential levy of a windfall tax promised by the Labour party if it wins the
U.K. parliamentary election. Although these election fears had lowered the
share
- -------------------------------------------------------------------------------
Templeton Global Utilities, Inc.
Geographic Distribution on 2/29/96
Based on Total Net Assets
[PIE CHART APPEARS HERE]
United States 46.4%
Europe 25.4%
Asia 11.4%
Latin America 8.5%
Australia & New Zealand 6.5%
Canada 1.8%
price, we felt the company's strong balance sheet and sizable yield made it an
attractive addition to the Fund.
Most of the cash raised from our security sales was put to work in emerging
markets, a sector that previously hurt the Fund's performance. For the two
years ended December 31, 1995, the IFC Investable Composite emerging markets
index lost 10.2% on average annually. Specific markets have shown even more
substantial declines. Brazil had declined more than 30% from its all-time high;
Pakistan, Venezuela, Argentina and Indonesia are all 40% or more below their
peak; Mexico has fallen
2
<PAGE>
more than 50% below its peak in dollar terms.** We have continued to add to
positions we own in these markets which we felt were bargains. We also added
new positions over the last six months such as Guangdong Electric Power, which
increased our holdings in China to 2.0% of total net assets on February 29,
1996, from 0.9% on August 31, 1995. Although many of the Chinese-listed
utilities suffered from the austerity program the government has followed for
the last couple of years, we have seen signs of this program easing. This should
benefit China's utilities, enabling them to restart their ambitious expansion
programs and help fund investment through higher tariffs.
Of course, investments in foreign securities involve special risks such as
adverse economic, social and political developments in the countries where the
Fund is invested, as well as market and currency volatility. While short-term
price 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
700% in the last 15 years, but has suffered six declines of more than 20% during
that time.+ Developing markets are represented in the Fund's portfolio and
involve heightened risks related to the same factors affecting all foreign
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Templeton Global Utilities, Inc.
Top 10 Holdings on 2/29/96
Based on Total Net Assets
% of Total
Company, Industry, Country Net Assets
- -------------------------------------------------------------------------------
<S> <C>
Electricity Corp. of New Zealand, Ltd.
Utilities - Electrical & Gas, New Zealand 3.0%
- -------------------------------------------------------------------------------
VEBA, AG;
Utilities - Electrical & Gas, Germany 2.6%
- -------------------------------------------------------------------------------
Illinova Corp.;
Utilities - Electrical & Gas, United States 2.6%
- -------------------------------------------------------------------------------
Australian Gas & Light Company;
Utilities - Electrical & Gas, Australia 2.5%
- -------------------------------------------------------------------------------
Endesa-Empresa Nacional de Electricidad,
SA, ADR; Utilities - Electrical & Gas, Spain 2.5%
- -------------------------------------------------------------------------------
MCI Communications Corp.;
Telecommunications, United States 2.5%
- -------------------------------------------------------------------------------
Pinnacle West Capital Corp.;
Utilities - Electrical & Gas, United States 2.4%
- -------------------------------------------------------------------------------
New York State Electric & Gas Corp.;
Utilities - Electrical & Gas, United States 2.3%
- -------------------------------------------------------------------------------
National Power Corp.
Utilities - Electrical & Gas, Philippines 2.3%
- -------------------------------------------------------------------------------
Texas Utilities Electric Co.;
Utilities - Electrical & Gas, United States 2.3%
- -------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, please see page 7 of this report.
investing, in addition to risks associated with the relatively small size and
lesser liquidity of emerging markets.
This discussion reflects the strategies we employed for the Fund and includes
our opinions as of the close of the reporting period. Since economic and market
conditions are constantly changing, our strategies, evaluations, conclusions and
decisions regarding portfolio holdings may change in light of new circumstances.
Although past performance of a specific investment or sector cannot
** Source: Morgan Stanley Capital International (MSCI) World Index
+ Source: Bloomberg. Based on quarterly percentage change over 15 years ended
March 31, 1996.
3
<PAGE>
guarantee future performance, such information can be useful in analyzing the
securities we purchase or sell for the Fund.
Perhaps the most significant change impacting the Fund was the recent
shareholder approval to merge with Franklin Global Utilities Fund, effective
March 29, 1996. We believe this is a positive step for all shareholders as it
eliminates the market price's discount to the Fund's underlying net asset value.
If you have any questions regarding the merger of Templeton Global Utilities,
Inc. with the Franklin Global Utilities Fund, please call Franklin Templeton
Shareholder Services at 1-800/632-2301.
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.
- -------------------------------------------------------------------------------
Important Fund Merger Information
On February 20, 1996, shareholders of Templeton Global Utilities, Inc. approved
a merger with the Franklin Global Utilities Fund -- Class I, an open-end
utilities fund. As a shareholder in the Franklin Global Utilities Fund, you
will receive easy-to-read quarterly account statements, a quarterly newsletter,
semi-annual and annual financial reports as well as continuous access to fund
share prices, performance and account information through TeleFACTS(R), our
automated voice response system. If your investment objectives should change,
you may also exchange your shares between most Franklin and Templeton funds
within the same class, generally without any additional fees or charges.
However, complete or partial redemptions or exchanges out of the Franklin Global
Utilities Fund will be subject to a 1% redemption fee for a period of six months
from the closing date of the merger on March 29, 1996.*
In addition, you will receive two 1996 year-end statements and corresponding tax
information. The statement from Templeton Global Utilities, Inc. will include
all account transactions and tax information prior to the merger. The Franklin
Global Utilities Fund statement will reflect all subsequent transactions and tax
information. Notably, the merger qualifies as a tax-free reorganization for
federal income tax purposes.
Please note that it is important for you to return your Templeton Global
Utilities, Inc. share certificates to the address above. No redemptions or
exchanges of Franklin Global Utilities Fund -- Class I shares will be allowed
until your Templeton Global Utilities, Inc. share certificates are returned for
cancellation.
If you have any questions about the Franklin Global Utilities Fund or services
available to you, please do not hesitate to call our Shareholder Services
Department at 1-800/632-2301. We look forward to serving your investment needs
in the months and years ahead
*The redemption fee may be amended or terminated at any time.
- -------------------------------------------------------------------------------
4
<PAGE>
Performance Summary
During the reporting period, Templeton Global Utilities shareholders received
combined distributions totaling $1.05 per share, including long-term capital
gains of 30 cents ($0.30) and income distributions of 75 cents ($0.75) per
share.
The Fund's closing price on the American Stock Exchange increased from $12.25 on
August 31, 1995, to $13.875 on February 29, 1996, and the Fund produced a total
return of 22.37% in market-price terms for the six-month period. Between
August 31, 1995, and February 29, 1996, the Fund's net asset value price
increased from $13.77 to $14.21. Based on the change in actual net asset value
(in contrast to market price), the Fund produced a total return of 11.49% for
the same period. Both total return figures assume reinvestment of dividends and
capital gains in accordance with the dividend reinvestment plan.
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.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Templeton Global Utilities, Inc.
Cumulative Total Returns*
Periods ended February 29, 1996
Since
Inception
One-Year Five-Year (5/23/90)
<S> <C> <C> <C>
Based on change in net asset value 23.41% 40.96% 101.41%
Based on change in market price 35.75% 95.54% 90.96%
</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.
5
<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 29, 1996 -------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
----------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 13.77 $ 15.03 $ 15.01 $ 13.38 $ 11.85 $ 10.60
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income .23 .54 .60 .60 .67 .61
Net realized and
unrealized gain (loss) 1.26 (.10) .73 1.90 1.47 1.32
------- ------- ------- ------- ------- -------
Total from investment
operations 1.49 .44 1.33 2.50 2.14 1.93
------- ------- ------- ------- ------- -------
Distributions:
Dividends from net in-
vestment income (.31) (.48) (.64) (.64) (.61) (.68)
Distributions from net
realized gains (.74) (1.22) (.67) (.23) -- --
------- ------- ------- ------- ------- -------
Total distributions (1.05) (1.70) (1.31) (.87) (.61) (.68)
------- ------- ------- ------- ------- -------
Change in net asset
value .44 (1.26) .02 1.63 1.53 1.25
------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 14.21 $ 13.77 $ 15.03 $ 15.01 $ 13.38 $ 11.85
======= ======= ======= ======= ======= =======
TOTAL RETURN*
Based on market value
per share 22.37% (9.88)% 3.78% 27.31% 25.97% 13.96%
Based on net asset value
per share 11.49% 3.66% 8.98% 19.57% 18.53% 18.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of pe-
riod (000) $44,809 $43,438 $47,317 $46,429 $40,702 $35,855
Ratio of expenses to av-
erage net assets 1.01%** 1.25% 1.21% 1.31% 1.44% 1.55%
Ratio of net investment
income to average
net assets 3.39%** 4.08% 4.00% 4.41% 5.28% 5.46%
Portfolio turnover rate 3.98% 24.76% 40.34% 42.90% 15.21% 19.85%
Average commission rate
paid (per share) $ .0015
</TABLE>
*NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
**ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
Templeton Global Utilities, Inc.
Investment Portfolio, February 29, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS: 66.5%
- -------------------------------------------------------------------------------
Electrical & Electronics: 2.3%
Alcatel Alsthom SA Fr. 5,000 $ 443,459
BBC Brown Boveri Ltd., br. Swtz. 500 598,832
-----------
1,042,291
- -------------------------------------------------------------------------------
Energy Sources: 3.9%
Coastal Corp. U.S. 18,000 661,500
Enron Global Power & Pipeline U.S. 28,000 728,000
Transportadora de Gas del Sur SA,
ADR B Arg. 30,000 371,250
-----------
1,760,750
- -------------------------------------------------------------------------------
Telecommunications: 16.6%
BCE Inc. Can. 24,000 835,368
Cable & Wireless PLC U.K. 49,332 336,006
Compania de Telecomunicaciones de
Chile SA, ADR Chil. 6,000 496,500
MCI Communications Corp. U.S. 38,500 1,126,125
*Pakistan Telecom Corp. PTC Pan. 3,127 339,280
Philippine Long Distance Telephone
Co., GDR, 144A Phil. 9,400 325,475
PT Indosat, ADR Indo. 21,200 792,350
STET (Sta Finanziaria Telefonica
Torino) SPA, di Risp Itl. 160,000 360,816
Telecom Corp. of New Zealand Ltd. N.Z. 105,000 470,735
Telecom Italia Spa, di Risp Itl. 265,000 365,542
Teledanmark AS, ADS Den. 13,540 399,430
Teledanmark AS, B Den. 7,830 460,284
Telefonica de Espana SA, ADR Sp. 15,000 736,875
Telmex-Telefonos de Mexico SA, L,
ADR Mex. 12,400 378,200
-----------
7,422,986
- -------------------------------------------------------------------------------
Utilities Electrical & Gas: 43.7%
American Electric Power Co. Inc. U.S. 18,000 771,750
Australian Gas & Light Company Aus. 278,873 1,129,878
British Gas PLC U.K. 150,000 544,736
Central Costanera SA, ADR, 144A Arg. 17,000 527,000
Cia Energetica de Minas Gerais,
ADR Braz. 20,000 507,743
Compania Boliviana de Energia
Electricas SA Bol. 14,900 531,744
Electrabel SA Bel. 3,200 736,752
Endesa- Empresa Nacional de
Electricidad SA, ADR Sp. 20,000 1,127,500
Entergy Corp. U.S. 24,000 681,000
Evn Energie-Versorgung
Niederoesterreich AG Aust. 3,360 445,487
*Guangdong Electric Power
Development Co Ltd, B, 144A Chn. 815,000 453,311
Hongkong Electric Holdings Ltd. H.K. 195,000 660,854
Illinova CP Holdings Co. U.S. 40,500 1,154,250
Kansas City Power and Light Co. U.S. 14,600 370,475
Long Island Lighting Co. U.S. 54,000 945,000
</TABLE>
7
<PAGE>
Templeton Global Utilities, Inc.
Investment Portfolio, February 29, 1996 (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. 43,000 $ 1,015,875
Nipsco Industries Inc. U.S. 16,800 634,200
Peco Energy Co. U.S. 21,600 610,200
Pinnacle West Capital Corp. U.S. 38,000 1,078,250
Powergen PLC U.K. 102,000 843,996
Shandong Huaneng Power Chn. 45,600 438,900
*Sithe Energies Inc. U.S. 50,000 725,000
Southern Co. U.S. 27,900 666,113
Texas Utilties Electric Co. U.S. 25,000 1,009,375
Thames Water Group PLC U.K. 50,500 411,670
Unicom Corp. U.S. 11,000 352,000
VEBA AG Ger. 25,000 1,178,812
Wing Shan International Ltd. H.K. 340,000 37,822
-----------
19,589,693
-----------
TOTAL COMMON STOCKS (cost $22,632,600) 29,815,720
- -------------------------------------------------------------------------------
PREFERRED STOCKS: 2.9%
- -------------------------------------------------------------------------------
Cia Inversiones
Telecomunicaciones SA,
pfd., conv., 144A Arg. 6,900 393,300
Concessioni e Costruzioni
Autostrade SPA, B, pfd. Itl. 457,000 515,878
Nacional Financiera SA,
11.25%, conv., pfd., 5/15/98 Mex. 12,400 403,000
-----------
TOTAL PREFERRED STOCKS (cost
$1,261,437) 1,312,178
- -------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY **
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BONDS: 22.9%
- -------------------------------------------------------------------------------
Bellsouth, 6.75%, 10/15/33 U.S. 570,000 537,225
Electricity Corp. of New
Zealand Ltd., 10.00%,
6/15/96 N.Z. 2,000,000 1,348,726
GTE Corp., 10.25%, 11/01/20 U.S. 500,000 585,810
Korea Electric Power Co.,
7.75%, 4/01/13 U.S. 500,000 509,680
Korea Telecom, 7.40%,
12/01/99 U.S. 500,000 507,920
National Power Corp.,
7.625%, 11/15/00, 144A U.S. 1,000,000 1,012,500
National Power PLC, 6.25%,
9/23/08 U.K. 333,000 577,868
New York State Electric &
Gas, 9.875%, 5/01/20 U.S. 400,000 473,704
Pennsylvania Power & Light
Co., 9.25%, 10/01/19 U.S. 500,000 537,410
RGS I&M Funding Corp.,
9.81%, 12/07/22 U.S. 500,000 613,045
San Diego Gas & Electric
Co., 9.625%, 4/15/20 U.S. 500,000 573,950
Softe SA, 4.25%, conv.,
7/30/98, 144A Itl. 725,000,000 579,918
Telebras-Telecomunicacoes
Brasileiras,
10.00%, 6/16/97 Braz. 200,000 204,500
</TABLE>
8
<PAGE>
Templeton Global Utilities, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY ** VALUE
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------
BONDS (CONT.)
- -----------------------------------------------------------------------------
U.S. West Communications,
6.875%, 9/15/33 U.S. 1,000,000 $ 915,470
Veba International Finance
BV, 6.00%, 4/06/00 Ger. 330,000 696,300
Virginia Electric Power,
7.00%, 1/01/24 U.S. 600,000 566,271
-----------
TOTAL BONDS (cost $9,377,008) 10,240,297
- -----------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 1.4% (cost
$629,128)
- -----------------------------------------------------------------------------
U.S. Treasury Bills, 4.59%
to 4.83% with
maturities to 5/07/96 U.S. 631,000 629,162
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS: 93.7% (cost
$33,900,173) 41,997,357
OTHER ASSETS, LESS LIABILITIES: 6.3% 2,811,919
-----------
TOTAL NET ASSETS: 100.0% $44,809,276
===========
</TABLE>
*NON-INCOME PRODUCING.
**CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Templeton Global Utilities, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (identified cost $33,900,173) $41,997,357
Cash 138,203
Receivables:
Investment securities sold 2,436,684
Dividends and interest 336,532
-----------
Total assets 44,908,776
-----------
Liabilities:
Accrued expenses 99,500
-----------
Total liabilities 99,500
-----------
Net assets, at value $44,809,276
===========
Net assets consist of:
Distributions in excess of net investment income $ (18,597)
Net unrealized appreciation 8,097,184
Accumulated net realized gain 1,533,741
Net capital paid in on shares of capital stock 35,196,948
-----------
Net assets, at value $44,809,276
===========
Shares outstanding 3,153,664
-----------
Net asset value per share ($44,809,275 / 3,153,664) $ 14.21
===========
</TABLE>
STATEMENT OF OPERATIONS
for the six months endedFebruary 29, 1996 (unaudited)
<TABLE>
<S> <C> <C>
Investment income:
(net of $38,138 foreign taxes withheld)
Dividends $ 548,349
Interest 410,428
---------
Total income $ 958,777
Expenses:
Management fees (Note 4) 131,646
Administrative fees (Note 4) 32,915
Transfer agent fees 12,500
Custodian fees 5,500
Reports to shareholders 22,500
Audit fees 9,000
Registration and filing fees 3,000
Other 2,568
---------
Total expenses 219,629
----------
Net investment income 739,148
Realized and unrealized gain:
Net realized gain on:
Investments 2,495,741
Foreign currency transactions 9,278
---------
2,505,019
Net unrealized appreciation on investments 1,438,912
---------
Net realized and unrealized gain 3,943,931
----------
Net increase in net assets resulting from operations $4,683,079
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Templeton Global Utilities, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 29, 1996 YEAR ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 739,148 $ 1,715,047
Net realized gain on investment and for-
eign currency transactions 2,505,019 1,390,235
Net unrealized appreciation (deprecia-
tion) 1,438,912 (1,671,247)
----------- -----------
Net increase in net assets resulting
from operations 4,683,079 1,434,035
Distributions to shareholders:
From net investment income (961,868) (1,513,131)
From net realized gain (2,349,479) (3,857,775)
Capital share transactions (Note 3) -- 57,495
----------- -----------
Net increase (decrease) in net assets 1,371,732 (3,879,376)
Net assets:
Beginning of period 43,437,544 47,316,920
----------- -----------
End of period $44,809,276 $43,437,544
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<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 Fund seeks to provide a high level of total return (income plus capi-
tal appreciation), without incurring undue risk, through investment in equity
and debt securities of domestic and foreign companies in the utility indus-
tries. The following summarizes the Fund's significant accounting policies.
A. Securities Valuations:
Securities listed or traded on a recognized national or foreign exchange or
NASDAQ are valued at the last reported sales prices on the principal exchange
on which the securities are traded. Over-the-counter securities and listed se-
curities 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 ap-
proved in good faith by the Board of Directors.
B. Foreign Currency Transactions:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign curren-
cies are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customar-
ily enters into a foreign exchange contract to minimize foreign exchange risk
between the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of for-
eign currencies, currency gains or losses realized between the trade and set-
tlement dates on securities transactions, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at the end
of the fiscal period, resulting from changes in the exchange 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. Security Transactions, Investment Income, Distributions and Expenses:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income on foreign securi-
ties is recorded as soon as information is available to the Fund. Interest in-
come and estimate expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
E. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
12
<PAGE>
Templeton Global Utilities, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
2. MERGER OF TEMPLETON GLOBAL UTILITIES, INC.
On March 29, 1996, the net assets of the Fund were acquired by Franklin Global
Utilities, Inc., pursuant to a plan of reorganization approved by the Fund's
shareholders. The merger was accomplished by a tax free exchange of shares of
the Fund for shares of Franklin Global Utilities Fund.
3. TRANSACTIONS IN SHARES OF CAPITAL STOCK
As of February 29, 1996, there were 100,000,000 shares of capital stock autho-
rized ($0.01 par value). During the six months ended February 29, 1996, there
were no share transactions. During the year ended August 31, 1995, 4,460 shares
were issued for $57,495 from reinvested distributions.
4. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton Global
Advisors Ltd. (TGAL) and Templeton Global Investors, Inc. (TGII), the Fund's
investment manager and administrative manager, respectively. The Fund pays
monthly an investment management fee to TGAL equal, on an annual basis, to
0.60% of the average daily net assets of the Fund. The Fund pays TGII monthly a
fee computed at an annual rate of 0.15% of the Fund's average daily net assets.
5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 29, 1996 aggregated $1,632,720 and $6,388,876, 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 29, 1996, the aggregate gross unrealized appreciation and deprecia-
tion of portfolio securities, based on cost for federal income tax purposes,
was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation $9,022,736
Unrealized depreciation (925,552)
----------
Net unrealized appreciation $8,097,184
==========
</TABLE>
13
<PAGE>
Templeton Global Utilities, Inc.
Annual Meeting of Shareholders, February 20, 1996
- --------------------------------------------------------------------------------
An Annual Meeting of Shareholders of the Fund was held at the Fund's offices,
700 Central Avenue, St. Petersburg, Florida, on February 20, 1996. The purpose
of the meeting was to approve an Agreement and Plan of Reorganization providing
for the transfer of the assets and certain liabilities of the Fund in exchange
for Class I shares of Franklin Global Utilities Fund, the distribution of such
shares to shareholders of the Fund in liquidation of the Fund and the subse-
quent dissolution of the Fund (the "Transaction"), to elect six directors of
the Fund, and to ratify the selection of McGladrey & Pullen, LLP, as the Fund's
independent public accountants for the fiscal year ending August 31, 1996. At
the meeting, the Shareholders approved the Transaction. The following persons
were elected by the Shareholders to serve as directors of the Fund: Harris J.
Ashton, S. Joseph Fortunato, John Wm. Galbraith, Charles B. Johnson, Betty P.
Krahmer, and Gordon S. Macklin. 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, 1996. No other business was transacted at
the meeting.
The results of the voting at the Annual Meeting are as follows:
1. Approval of an Agreement and Plan of Reorganization providing for the trans-
fer of the assets and certain liabilities of the Fund in exchange for Class
I shares of Franklin Global Utilities Fund, the distribution of such shares
to shareholders of the Fund in liquidation of the Fund and the subsequent
dissolution of the Fund:
<TABLE>
<CAPTION>
% OF % OF % OF % OF
OUTSTANDING SHARES OUTSTANDING OUTSTANDING
FOR SHARES VOTED AGAINST SHARES ABSTAIN SHARES
--------- ----------- ------ ------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
1,608,881 51.02% 52.39% 81,327 2.58% 113,349 3.59%
</TABLE>
2. Election of six (6) Directors:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING SHARES OUTSTANDING
FOR SHARES VOTED WITHHOLD SHARES
--------- ----------- ------ -------- -----------
<S> <C> <C> <C> <C> <C>
Term expiring 1999:
Harris J. Ashton 3,023,747 95.88% 98.46% 47,430 1.50%
S. Joseph Fortunato 3,025,447 95.93% 98.51% 45,730 1.45%
Betty P. Krahmer 3,023,347 95.87% 98.44% 47,830 1.52%
Gordon S. Macklin 3,024,647 95.91% 98.48% 46,530 1.48%
Term expiring 1997:
John Wm. Galbraith 3,025,247 95.93% 98.50% 45,930 1.46%
Charles B. Johnson 3,025,247 95.93% 98.50% 45,930 1.46%
</TABLE>
3. Ratification of the selection of McGladrey & Pullen, LLP as independent pub-
lic accountants of the Fund for the fiscal year ending August 31, 1996:
<TABLE>
<CAPTION>
% OF % OF % OF % OF
OUTSTANDING SHARES OUTSTANDING OUTSTANDING
FOR SHARES VOTED AGAINST SHARES ABSTAIN SHARES
--------- ----------- ------ ------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
3,017,391 95.68% 98.25% 9,680 .31% 44,106 1.40%
</TABLE>
14
<PAGE>
Templeton Global Utilities, Inc.
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
The Fund offers a Dividend Reinvestment Plan (the "Plan") with the following
features: .If shares of the Fund are held in the shareholder's name, the share-
holder will automatically be a participant in the Plan unless he elects to
withdraw. If the shares are registered in the name of a broker-dealer or other
nominee (i.e., in "street name"), the broker-dealer or nominee will elect to
participate in the Plan on the shareholder's behalf unless the shareholder in-
structs them otherwise, or unless the reinvestment service is not provided by
the broker-dealer or nominee. .Participants should contact Chemical Mellon
Shareholder Services, Shareholder Investment Services, P.O. Box 750, Pitts-
burgh, PA 15230, to receive the Plan brochure. .To receive dividends or distri-
butions in cash, the shareholder must notify Mellon Securities Trust Company
("Mellon") or the institution in whose name the shares are held. Mellon must
receive written notice within 10 business days before the record date for the
distribution. .Whenever the Fund declares dividends in either cash or common
stock of the Fund, if the market price is equal to or exceeds net asset value
at the valuation date, participants will receive the dividends entirely in
stock at a price equal to the net asset value but not less than 95% of the then
current market price of the Fund's shares. If the market price is lower than
net asset value and if dividends and/or capital gains distributions are payable
only in cash, the participant will receive shares purchased on the American
Stock Exchange. .The automatic reinvestment of dividends and/or capital gains
does not relieve the participant of any income tax which may be payable on div-
idends or distributions. .The participant may withdraw from the Plan without
penalty at any time by written notice to Mellon. Upon withdrawal, the partici-
pant will receive, without charge, stock certificates issued and in the partic-
ipant's name for all full shares; or, if the participant's wishes, Mellon will
sell the participant's shares and send the proceeds, net of any brokerage com-
missions. A $2.50 fee is charged by Mellon upon any cash withdrawal or termina-
tion. .Whenever shares are purchased on the American Stock Exchange, each par-
ticipant will pay a pro rata portion of brokerage commissions. Brokerage com-
missions will be deducted from amounts to be invested.
SHAREHOLDER INFORMATION
Shares of Templeton Global Utilities, Inc. are traded daily on the American
Stock Exchange under the symbol "TGU." Information about the net asset value
and the market price is published weekly in Barron's and in the Monday edition
of the Wall Street Journal in a table called "Publicly Traded Funds."
For current information about the net asset value, call 1-800-354-9191.
If any shareholder is not receiving copies of the Reports to Shareholders be-
cause shares are registered in a broker's name or in a custodian's name, he or
she can write and request that his or her name be added to the Fund's mailing
list, by writing Templeton Global Utilities, Inc., 700 Central Avenue, St. Pe-
tersburg, FL 33701.
For information about dividends and shareholder accounts, call 1-800-526-0801.
15
<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 by the presence of a regular beeping tone.
- -------------------------------------------------------------------------------
TLTGU S96 04/96
[RECYCLED PAPER LOGO APPEARS HERE]
TEMPLETON
GLOBAL
UTILITIES, INC.
Semi-Annual Report
February 29, 1996
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
