<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
TIFI ------------------------------------------------------------------
SEMI-ANNUAL REPORT
June 30, 1995
[LOGO OF TEMPLETON
APPEARS HERE]
<PAGE>
- ----------------------------------------------------------------------
Mutual funds, annuities, and other investment products:
. are not FDIC insured;
. are not deposits or obligations of, or guaranteed by, any financial
institution;
. are subject to investment risks, including possible 1oss of the
principal amount invested.
- --------------------------------------------------------------------------------
<PAGE>
June 30, 1995
Dear Shareholder...
While problems in Latin America cast a bearish pall over the
world's equity markets in early 1995, second quarter results had a much more
bullish feel to them. The combination of falling interest rates, better than
anticipated earnings performance and improving flows of assets into mutual funds
proved potent for most of the world's stock markets, but most notably for US
stocks. Of the various categories of mutual funds tracked by Lipper, only
emerging market and Japanese oriented funds turned in a negative performance in
1995's first half while many other categories were able to attain double digit
advances. Within this environment, the Templeton Institutional Funds, Inc.
Foreign Equity Series (the "Fund") returned 7.7%, 6.7% and 9.0% for the quarter,
six month and one year periods ending June 30, 1995, compared to the MSCI EAFE
(Europe, Australia and Far East) Index returns of 0.8%, 2.8% and 2.0%,
respectively. The Fund has returned 11.5% annualized since its inception on
October 18, 1990, compared to the MSCI EAFE Index annualized return of 7.1%.
European stocks generally moved higher with returns to dollar
based investors being even better due to the positive impact of the rather sharp
decline in the US currency's value. Asian stock markets outside of Japan also
mostly improved with Hong Kong leading the rebound from last year's dismal
returns. Overall, however, US stocks have been the equity of choice so far in
1995 as the US market achieved the best returns when measured in local currency
terms and the third best, after Finland and Switzerland, when measured in
dollars. The MSCI EAFE Index, however, rose just 2.8% due largely to Japan's
negative influence on the index while the MSCI World Index rose 9.4% due to the
large positive impact of the US weighting in that index.
- --------------------------------------------------------------------------------
Total Returns as of 6/30/95
<TABLE>
<CAPTION>
One-Year Three-Year Cumulative
Average Average Since
Annual/1/ Annual/1/ Inception/2/
<S> <C> <C> <C>
TIFI Foreign Equity Series 9.01 8.23 66.92
MSCI EAFE Index 1.95 13.02 38.27
</TABLE>
/1/ Average annual total return figures represent the average annual increase
in value of an investment over the specified periods. The calculations
assume reinvestment of dividends and capital gains distributions.
/2/ The cumulative return shows the change in value of an investment over the
period(s) indicated. The calculations assume reinvestment of dividends and
capital gains distributions.
Investment return and principal value fluctuate, so that your shares, when
redeemed, may be worth more or less than their original cost. Past
performance cannot guarantee future results.
- --------------------------------------------------------------------------------
continued...
[PHOTO APPEARS HERE]
James Chaney is a portfolio manager and research analyst. He currently manages
the Templeton Institutional Growth and Foreign Equity Mutual Funds, two variable
annuity products and several corporate and public fund separate accounts. Mr.
Chaney's global research responsibilities include merchandising, regional banks
and environmental companies.
Prior to joining the Templeton organization in 1991, Mr. Chaney spent six years
with GE Investments, where he was vice president of international equities. In
that capacity, he had numerous research responsibilities and also managed
several separate accounts and a start-up mutual fund which was a Lipper-listed
top quartile performer. He also has another seven years experience as an
international consulting engineer and project manager for Camp, Dresser & McKee,
Inc. and American British Consultants.
Mr. Chaney received a M.B.A. with Honors from Columbia University, where he was
a member of the Beta Gamma Sigma Honor Society. He received his M.S. in
Engineering from Northeastern University and his B.S. in Engineering from the
University of Massachusetts-Amherst. Mr. Chaney is a licensed and registered
engineer.
<PAGE>
Templeton Institutional Funds, Inc. Foreign Equity Series
letter continued................................................................
One of the most intriguing aspects of the markets' behavior lately
has been the extreme divergence in the performance of the world's two largest
stock markets and their associated currencies. During the first half of 1995,
the US market, as measured by the S&P 500, rose 20.1% while Japan's Nikkei 500
Index declined 26.4% in local currency. Conversely, the two nation's currencies
have moved in the opposite direction with the yen rising 17.3% versus the dollar
for the six months ended June 30th. The major European markets seem to be taking
the middle ground with token appreciation in the equity markets and slightly
more subdued currency strength versus the dollar. These short-term trends in
equity prices and exchange rate values at least partly, and perhaps largely,
reflect the consequences of the fundamental economic policy differences that
have been in place for many years in these nations.
These policies can be briefly summarized as follows: The US's
primary goal has been maintaining economic growth and employment as close to
potential as possible without igniting serious bouts of inflation and with an
unhealthy emphasis on domestic consumption versus savings. Japan has tried to
successfully achieve economic growth and employment via encouraging savings,
investment and unusually rapid export growth while discouraging imports and
domestic demand. Germany's (and therefore much of central Europe's) most
prominent goal has long been to limit inflation at the expense of optimal
economic growth and employment as well as to encourage savings, investment and
growth in the export sector. The incompatibility of the policies of the three
most influential economic regions in the world has thus far worked itself out in
each nation's respective current account and ultimately in their exchange rates
as we have seen so clearly again recently. Japan and Germany, as of the end of
1993, had built their net foreign asset positions to 14% and 12% of their
respective GNP's and the US, after thirteen years of current account deficits,
is a net debtor to the rest of the world to the tune of over 10% of its GNP.
These different models of capitalism have been clashing for over
twenty years and given the increasingly integrated world economy, the emergence
of the world's developing economies as an economic force and the current state
of each nation's economy, it is unlikely that the current policies can remain
unaltered over the next twenty years. The changes that ultimately occur will
undoubtedly have a material impact on the magnitude, and perhaps direction, of
equity price movements both inside and outside the nation's involved. The US
will have the least impetus for change given the small share of international
trade in its economy. The high value of the deutschemark will crimp Germany's
export ability, thereby reducing its economic growth somewhat and leading to
greater investment overseas, but major changes in the German model of capitalism
do not appear imminent.
Japan, on the other hand, will remain a victim of its own enormous
export success as its major customer, the US, continues to badger them to change
their economic model to incorporate greater imports and
- --------------------------------------------------------------------------------
Industry Diversification on 6/30/95
(% of Total Portfolio)
<TABLE>
<S> <C>
Banking 12.5%
Utilities Electrical & Gas 7.6%
Telecommunications 6.3%
Insurance 5.6%
Multi-Industry 5.2%
Forest Products & Paper 4.9%
Chemicals 4.6%
Metals & Mining 4.1%
Financial Services 3.5%
Health & Personal Care 3.4%
</TABLE>
- --------------------------------------------------------------------------------
Geographic Distribution on 6/30/95
(% of Equity Assets)
Europe 66.1%
Latin America/Caribbean 4.6%
[PIE CHART APPEARS HERE] North America 4.6%
Asia 15.6%
Australia/New Zealand 9.1%
2
<PAGE>
................................................................................
fewer exports. While Japan has largely resisted such changes in the past, Adam
Smith's proverbial "invisible hand" has become somewhat more visible in the
strength of the yen which has begun to bring about some alterations in the
Japanese model of capitalism, primarily low economic growth, reduced
productivity, increased offshore investments, reductions in cross holdings and
less stable employment prospects. The value of the yen versus the dollar will
greatly influence the future pace of change in the Japanese economy. In the
absence of additional significant yen strength, the transition of the Japanese
economy to one that is at least somewhat more complementary with its major
trading partners will likely be slow due to the potentially heavy costs of
changes such as unemployment, greater fiscal deficits and lower corporate
earnings. Entering this period with an over built manufacturing base, a weakened
financial sector and an equity market that is unable to attract or allocate
capital in an efficient manner will not ease this transition. Japan's strong
national balance sheet, however, should help the country weather whatever
difficult times may arise.
It is also worth noting that we have often found that, as the
difficulties that Japanese companies are facing multiply, this often translates
into greater opportunities for US, European and emerging market firms. While we
at Templeton are often attracted to markets like Japan's that have declined
greatly in value, in this case we still find it very difficult to identify many
stocks that are selling at extremely low multiples of what we believe could be
earned five years from now. Given the changes that could occur and the market's
expected negative reaction to such changes, Templeton's team of 34 analysts
located in 7 offices worldwide will be diligently and continuously reviewing the
long term earnings potential of Japanese companies in their assigned industries
in relation to share prices so as to identify bargains as they arise.
Weaker share prices in the emerging markets is also attracting our
analysts' attention. Many of these nations embraced capitalism with such an
initial vigor that substantial flows of portfolio investment were attracted from
developed world investors leading to stunning advances in equity prices. Lately,
these nations and investors alike have found that the transition to capitalism
was more complicated than initially anticipated and this reality has been
reflected in sharply declining share prices in places like Mexico, Argentina,
Brazil, Eastern Europe, Russia, India and China. The recent volatility of these
markets is, in large measure, a reflection of the increased reliance on fast
moving foreign portfolio investments to finance growth versus the historic use
of more stable bank loans and a likely increased future focus on foreign direct
investments. Nevertheless, portfolio investment will remain a very important
source of capital for the emerging markets and, in most of these nations, the
needed economic adaptations to return economic growth to a more balanced and
sustainable level will be forthcoming with greater rapidity then we expect in
Japan. As a result of this and much lower current valuation levels, we have been
able to increasingly
- --------------------------------------------------------------------------------
10 Largest Positions on 6/30/95
(% of Total Portfolio)
<TABLE>
<S> <C>
Svenska Handelsbanken 1.6%
Iberdrola SA 1.5%
Banco Bilbao Vizcaya SA 1.4%
Repsol SA 1.4%
Volvo AB 1.4%
BBC Brown Boveri & Cie 1.4%
Telefonica de Espana SA 1.3%
Hafslund Nycomed AS 1.3%
Zuerich Versicherung 1.3%
Stet (Sta Finanziaria Telefonica
Torino) Spa, di Risp 1.3%
</TABLE>
- --------------------------------------------------------------------------------
Fund Asset Allocation on 6/30/95
Equity* 86.1%
[PIE CHART APPEARS HERE] Short Term & Other 13.9%
*Equity includes convertible and preferred stocks
3
<PAGE>
Templeton Institutional Funds, Inc. Foreign Equity Series
letter continued................................................................
identify shares selling at inordinately low multiples of long-term earnings
power. While the road to western levels of prosperity will, in all probability,
remain long and quite bumpy for these developing markets, the course seems to
have been set firmly in the direction towards greater corporate and individual
earnings power. Only the speed at which these nations proceed down the path to
the benefits of capitalism seems in doubt at this time and this will vary from
nation to nation with spectacular accidents occurring from time to time. Our
analysts will strive to apply our time-tested investment disciplines in order to
identify those emerging market equities that may provide the most worthwhile
returns for your portfolio.
Turning briefly to those markets that have performed better in
1995, we are finding fewer bargains - particularly in the US. While we at
Templeton have never claimed any expertise in the area of short-term economic
prognostication, it is readily apparent to us that we are not at the bottom of a
recession with only upside surprises awaiting us. Economic activity has clearly
begun to slow but, with no obvious imbalances in the economy, a long period of
decline does not seem likely. Because of the good performance of both the US
bond and equity markets, however, risk has clearly increased. Still, valuations
are not yet so extended as to cause a dramatic increase in the number of stocks
qualifying for our Source of Funds List. With the financial system in good
health, corporate balance sheets improving, stock prices relatively high,
interest rates low and the dollar weak, investment bankers have begun to stir.
New issuance activity is strong and mergers and acquisition activity is
prevalent with US companies potentially the target of European based firms. This
coupled with continued healthy inflows into mutual funds could support the US
market for some time.
It is also becoming more difficult to identify bargains in Europe,
particularly in the hard currency countries (i.e. Germany, France, Switzerland
and the Netherlands). Again, however, valuations have not become so extended
that our Source of Funds List has become cluttered with European names.
Moreover, consensus expectations appear to be less optimistic in Europe
suggesting that there is still the possibility of favorable developments
surprising these markets.
Partly because many Asian currencies are indirectly tied to the
value of the depressed dollar, we are still able to find many bargain-priced
stocks in this region. Earnings continue to expand and valuations generally
remain reasonable. Due to Japan's and China's economic problems, interest in the
area remains somewhat subdued and expectations relatively low. Economic growth
remains at very high levels and could continue unabated in most countries for
the foreseeable future. The long-term outlook for share prices in this region
remains favorable.
The long-term outlook for global equity investment remains
positive in our view. The acceptance of capitalism by almost all nations,
increasingly free trade, technological advancements and the reduced probability
of warfare on a large scale all point towards better economic growth
Total Return Index Comparison/1/
$5,000,000 Investment: 10/18/90 - 06/30/95
[Graph appears here showing comparison between TIFI Foreign Equity Series,
MSCI EAFE Index and CPI Index]
Period ended June 30, 1995
<TABLE>
<CAPTION>
Since
Inception
One-Year (10/18/90)
<S> <C> <C>
Average Annual Total Return/2/ 9.01% 11.52%
Cumulative Total Return/3/ 9.01% 66.92%
</TABLE>
/1/ The Fund's manager is waiving a portion of its management fees, which
reduces operating expenses. Without these reductions, the Fund's total
return would have been lower. The fee waiver may be discontinued at any
time.
/2/ Average annual total return figures represent the average annual increase
in value of an investment over the specified periods. The calculations
assume reinvestment of dividends and capital gains distributions.
/3/ The cumulative return shows the change in value of an investment over the
period(s) indicated. The calculations assume reinvestment of dividends and
capital gains distributions.
Investment return and principal value fluctuate, so that your shares, when
redeemed, may be worth more or less than their original cost. Past
performance cannot guarantee future results.
- --------------------------------------------------------------------------------
4
<PAGE>
................................................................................
and thus corporate earnings. While the supply of equities is growing, due partly
to privatizations in both developed and developing countries, savings should
also rise dramatically over the longer term due to demographic changes and the
pressing need for governments and individuals to address the issue of pensions
and health care. A study using 1993 data by the Investment Company Institute
indicates that mutual fund assets outside the US already equal those in the US
and that the total is over $4 trillion. This number should grow rapidly,
particularly outside the US where demand for mutual funds and pension management
has only just begun to catch on. As
<TABLE>
<CAPTION>
Regional Fund Management (US$b)
Total Total Funds
Pension Mutual Funds as % of per
Country Funds Funds Insurance Per Capita Capita GDP
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hong Kong 13 27 4 7,251 30%
India 40 13 17 75 27%
Indonesia 7 0.67 1 42 5%
Korea 26* 173** 75 6,073 62%
Malaysia 35 N/A 7 2,086 50%
Philippines 3 0.19 0.32 51 4%
Singapore 35 20 10 22,772 85%
Taiwan 6 9 27 1,998 21%
Thailand 4 10 2 321 12%
US 5,000 1,600 2,000 28,667 106%
</TABLE>
*End-1993
**Investments Trust Cos and Bank Trust Accounts
Source: Peregrine regional estimates
we noted this time last year, if the top five most populous emerging market
nations (China, India, Indonesia, Brazil and Pakistan) can accumulate an
additional $400 per capita in mutual fund and pension assets over the next ten
years, this alone will create a new pool of $1 trillion in savings. Also, most
observers believe that the developed countries will increase the level of
foreign assets held over the next five to ten years. The Regional Fund
Management table above, produced by Peregrine, compares the size of pension,
mutual fund and insurance assets in various Asian countries with
5
<PAGE>
Templeton Institutional Funds, Inc. Foreign Equity Series
letter continued................................................................
that of the US and highlights the potential for growth in this area alone. With
long-term earnings growth at least as good as that experienced in the past and
the potential for rapid growth in savings, global equities should remain the
asset class of choice for long-term investors.
Current market conditions present a challenge to our analytical
team to uncover unusually inexpensive shares. Nevertheless, you can be confident
that we will continue to implement, in a disciplined fashion, the investment
methodologies that have served our clients so well for so long. Finding
outstanding values by carefully studying the fundamental position of individual
companies, translating our observations into long-term earnings projections,
determining which shares are valued most attractively based on these projections
and patiently waiting until other investors come to admire the positive traits
we have already identified will remain the hallmark of the Templeton research
team. Our investment style requires fortitude and resolve to remain focused on
long-term opportunities in the face of short-term problems that depress share
prices to the level that qualify them as true Templeton bargains. Our staff of
investment professionals continues to grow and the resources dedicated to
helping them produce the highest quality investment research have also expanded.
While we are generally pleased with our results thus far in 1995, we intend to
intensify our bargain-hunting efforts with the goal of producing even better
long-term investment returns for our clients. It has been our pleasure to serve
as your investment counselor and we highly value your continued relationship
with the Templeton organization. Please feel free to contact us with any
questions or comments you might have.
Sincerely,
/s/ Donald F. Reed
Donald F. Reed, C.F.A., C.I.C.
President
Templeton Institutional Funds, Inc.
/s/ James E. Chaney
James E. Chaney, P.E.
Senior Vice President
Templeton Investment Counsel, Inc.
For more complete portfolio information, call Templeton Fund Information,
toll-free, at 1-800-362-6243.
6
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS OCTOBER 18, 1990
ENDED YEAR ENDED DECEMBER 31 (COMMENCEMENT OF
JUNE 30, 1995 ------------------------------------- OPERATIONS) TO
(UNAUDITED) 1994 1993+ 1992+ 1991 DECEMBER 31, 1990
------------- ---------- -------- ------ ------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 12.86 $ 13.32 $ 10.05 $10.63 $10.16 $10.00
---------- ---------- -------- ------ ------ ------
Income from investment
operations:
Net investment income .21 .20 .23 .27 .31 .12
Net realized and
unrealized gain (loss) .66 (.16) 3.19 (.41) 1.30 .04
---------- ---------- -------- ------ ------ ------
Total from investment
operations .87 .04 3.42 (.14) 1.61 .16
---------- ---------- -------- ------ ------ ------
Distributions:
Dividends from net
investment income (.01) (.19) (.09) (.24) (.44) --
Distributions from net
realized gains -- (.31) (.06) (.20) (.70) --
---------- ---------- -------- ------ ------ ------
Total distributions (.01) (.50) (.15) (.44) (1.14) --
---------- ---------- -------- ------ ------ ------
Change in net asset
value .86 (.46) 3.27 (.58) .47 .16
---------- ---------- -------- ------ ------ ------
Net asset value, end of
period $ 13.72 $ 12.86 $ 13.32 $10.05 $10.63 $10.16
========== ========== ======== ====== ====== ======
TOTAL RETURN* 6.73% 0.24% 34.03% (1.33)% 16.13% 1.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000) $1,446,494 $1,093,227 $407,970 $ 566 $1,181 $1,015
Ratio of expenses to
average net assets 0.91%** 0.95% 1.03% 8.82% 9.15% 9.24%**
Ratio of expenses, net
of reimbursement, to
average net assets 0.91%** 0.95% 1.00% 1.00% 1.00% 1.00%**
Ratio of net investment
income to average net
assets 3.53%** 2.03% 1.73% 2.38% 2.47% 5.77%**
Portfolio turnover rate 11.49% 7.90% 42.79% 8.45% 76.16% 0.00%
</TABLE>
*NOT ANNUALIZED IN PERIODS OF LESS THAN ONE YEAR.
**ANNUALIZED.
+BASED ON AVERAGE WEIGHTED SHARES OUTSTANDING.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Investment Portfolio, June 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COMMON STOCKS: 78.7%
- -------------------------------------------------------------------------------
Appliances & Household Durables: 1.2%
Sony Corp. Jpn. 368,700 $ 17,698,992
- -------------------------------------------------------------------------------
Automobiles: 2.4%
Bayerische Motorenwerke (BMW) Ger. 15,662 8,595,414
Regie Nationale des Usines Renault
SA Fr. 192,100 6,018,902
Volvo AB, B Swe. 1,024,000 19,495,780
--------------
34,110,096
- -------------------------------------------------------------------------------
Banking: 10.8%
ABN AMRO NV Neth. 408 15,746
Australia & New Zealand Banking
Group Ltd. Aus. 3,005,161 10,679,625
Banco Bilbao Vizcaya Sp. 689,900 19,906,712
Banco di Sardegna SPA, di Risp Itl. 391,650 2,537,198
Banco Portugues de Investimento SA Port. 74,112 1,294,300
Banque Nationale de Paris, ADR Fr. 343,400 16,563,896
Barclays Bank PLC U.K. 1,143,188 12,278,370
Canadian Imperial Bank of Commerce Can. 462,800 11,117,307
Daegu Bank Co. Ltd. Kor. 11,600 139,062
*Daegu Bank Co. Ltd., new Kor. 2,530 28,662
Deutsche Bank AG Ger. 349,900 17,026,949
HSBC Holdings PLC H.K. 887,806 11,387,571
National Bank of Canada Can. 753,500 6,170,610
National Bank of Greece SA Gr. 47,210 2,578,450
National Westminster Bank PLC U.K. 322,948 2,803,644
*PT Panin Bank Ord. rts. Indo. 801,400 269,892
Philippine National Bank Phil. 341,604 3,979,138
PT Panin Bank, fgn. Indo. 3,205,600 3,814,477
Sparbanken Sverige AB Ord., A Swe. 13,100 109,848
Stadshypotek AB, A Swe. 490,000 7,274,627
Svenska Handelsbanken, A Swe. 1,508,150 22,493,921
Westpac Banking Corp. Aus. 974,370 3,531,932
--------------
156,001,937
- -------------------------------------------------------------------------------
Broadcasting & Publishing: 0.8%
News Corp. Ltd. Aus. 1,669,915 9,329,001
Sing Tao Holdings Ltd. H.K. 4,701,400 2,582,252
--------------
11,911,253
- -------------------------------------------------------------------------------
Building Materials & Components: 1.3%
Byucksan Development Co. Ltd. Kor. 74,197 1,389,512
Pioneer International Ltd. Aus. 6,182,612 15,380,069
Unione Cementi Marchino Emiliane,
di Risp Itl. 893,200 2,567,285
--------------
19,336,866
- -------------------------------------------------------------------------------
Business & Public Services: 2.7%
Ecco SA Fr. 86,774 13,611,959
Esselte AB, B Swe. 569,400 7,083,647
Societe Generale de Surveillance
Holdings Ltd., br. Swtz. 10,150 17,629,179
--------------
38,324,785
- -------------------------------------------------------------------------------
Chemicals: 4.6%
Akzo Nobel NV Neth. 121,564 14,529,624
Bayer AG Ger. 58,375 14,507,222
*European Vinyls Corp. EVC
International NV Neth. 162,965 7,593,464
Rhone-Poulenc SA, A Fr. 734,520 16,548,938
Solvay SA Bel. 23,212 12,729,635
--------------
65,908,883
- -------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COMMON STOCKS (CONT.)
- -----------------------------------------------------------------------------------
Data Processing & Reproduction: 0.6%
*Newbridge Networks
Corp. Can. 233,400 $ 8,197,671
- -----------------------------------------------------------------------------------
Electrical & Electronics: 2.6%
BBC Brown Boveri Ltd.,
br. Swtz. 18,806 19,467,436
Gold Peak Industries
(Holdings) Ltd. H.K. 6,080,000 2,592,985
Hitachi Ltd. Jpn. 1,527,000 15,218,671
--------------
37,279,092
- -----------------------------------------------------------------------------------
Electronic Components & Instruments: 1.0%
BICC U.K. 2,965,000 14,001,638
- -----------------------------------------------------------------------------------
Energy Equipment & Services: 0.5%
Koninklijke Pakhoed NV Neth. 223,599 6,840,008
- -----------------------------------------------------------------------------------
Energy Sources: 3.2%
Repsol SA Sp. 620,000 19,502,167
Saga Petroleum AS, A Nor. 681,500 9,677,256
Societe Nationale Elf
Aquitane Fr. 222,872 16,469,902
--------------
45,649,325
- -----------------------------------------------------------------------------------
Financial Services: 3.1%
*Capital Portugal Fund Port. 29,550 2,884,306
Chile Fund Inc. Chil. 154,000 8,277,500
Govett & Co. Ltd. U.K. 1,192,500 5,214,213
*India Fund, B Ind. 5,407,698 10,188,927
Korea International
Trust Kor. 73 3,686,500
*Singapore Fund Sing. 78,000 1,228,500
Thai Fund Inc. Thai. 501,774 13,297,011
--------------
44,776,957
- -----------------------------------------------------------------------------------
Food & Household Products: 2.7%
Albert Fisher Group PLC U.K. 14,859,845 10,750,368
Hellenic Bottling Co. SA Gr. 184,545 5,482,835
Hillsdown Holdings PLC U.K. 4,944,018 14,149,798
Vetropack AG Swtz. 565 1,889,058
Vitro SA Mex. 2,484,240 7,067,166
--------------
39,339,225
- -----------------------------------------------------------------------------------
Forest Products & Paper: 4.8%
Cartiere Burgo SPA Itl. 2,218,760 14,643,477
Fletcher Challenge Ltd.,
N.Z. N.Z. 5,465,000 15,345,274
Fletcher Forestry, N.Z. N.Z. 2,975,000 3,918,216
Metsa Serla OY, B Fin. 242,000 10,764,368
PT Barito Pacific
Timber, fgn. Indo. 3,185,000 4,576,560
PT Inti Indorayon Utama,
fgn. Indo. 334,500 690,930
Stora Kopparbergs
Bergslags AB, B Swe. 1,145,000 15,503,602
Unipapel SA Sp. 180,000 4,844,582
--------------
70,287,009
- -----------------------------------------------------------------------------------
Health & Personal Care: 3.3%
Ares-Serono SA, B Swtz. 3,265 1,913,916
Astra AB, A Swe. 572,000 17,652,380
Hafslund Nycomed SA, B Nor. 822,600 19,023,126
Medeva PLC U.K. 2,499,171 9,934,218
--------------
48,523,640
- -----------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------------
Insurance: 5.6%
Ace Ltd. Bmu. 311,500 $ 9,033,500
Aegon NV Neth. 485,265 16,786,192
GIO Austrailia Holdings
Ltd. Aus. 5,881,000 10,909,628
International
Nederlanden Group Neth. 310,491 17,172,687
London Insurance Group
Inc. Can. 470,900 8,783,848
Zuerich Versicherung,
br. Swtz. 14,855 18,667,117
--------------
81,352,972
- ------------------------------------------------------------------------------------
Leisure & Tourism: 0.1%
Kuoni Reisen Holding AG,
B Swtz. 1,375 2,209,075
- ------------------------------------------------------------------------------------
Machinery & Engineering: 1.0%
VA Technologie AG, br. Aust. 114,900 14,380,195
- ------------------------------------------------------------------------------------
Merchandising: 2.3%
Burton Group PLC U.K. 6,734,500 8,860,762
Koninklijke Bijenkorf
Beheer (KBB) NV Neth. 116,726 8,376,851
Kwik Save Group PLC U.K. 1,581,910 16,323,909
--------------
33,561,522
- ------------------------------------------------------------------------------------
Metals & Mining: 4.1%
Alcan Aluminum Ltd. Can. 327,000 9,878,435
Arbed SA Lux. 21,775 3,138,490
Bohler Uddeholm AG Aust. 80,000 5,535,934
Comalco Ltd. Aus. 3,004,800 10,870,552
*Elkem AS, A Nor. 810,100 11,306,167
*Inmet Mining Corp. Can. 445,500 3,242,948
*Union Miniere NPV Bel. 239,170 15,596,581
--------------
59,569,107
- ------------------------------------------------------------------------------------
Multi-Industry: 4.8%
Amer Group Ltd., A Fin. 502,200 9,135,184
BTR Nylex Ltd. Aus. 5,474,400 10,466,634
Dairy Farm International
Holdings Ltd. H.K. 5,054,157 4,346,575
Fotex First Hungarian-
American Photo-Service Hun. 2,000,000 2,926,078
Hutchison Whampoa Ltd. H.K. 3,027,500 14,633,164
Jardine Matheson
Holdings Ltd. H.K. 1,382,866 10,164,065
Jardine Strategic
Holdings Ltd. H.K. 345,688 1,113,114
*Jardine Strategic
Holdings Ltd., wts. H.K. 345,688 152,103
Swire Pacific Ltd., A H.K. 2,132,500 16,260,113
--------------
69,197,030
- ------------------------------------------------------------------------------------
Real Estate: 2.4%
Bail Investissement Fr. 42,226 7,746,692
*Hang Lung Development
Co. Ltd. H.K. 4,121,000 6,550,738
New World Development
Co. Ltd. H.K. 1,815,177 6,040,581
Taylor Woodrow PLC U.K. 7,652,560 13,992,724
--------------
34,330,735
- ------------------------------------------------------------------------------------
Telecommunications: 3.5%
Alcatel Alsthom SA Fr. 84,000 7,563,246
*Compania de
Telecomunicaciones de
Chile SA, ADR Chil. 71,650 5,830,519
STET (Sta Finanziaria
Telefonica Torino)
SPA, di Risp Itl. 8,376,000 18,561,574
Telefonica de Espana SA Sp. 1,480,000 19,061,300
--------------
51,016,639
- ------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Investment Portfolio, June 30, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Transportation: 0.8%
Brambles Industries Ltd. Aus. 345,000 $ 3,271,095
Cathay Pacific Airways Ltd. H.K. 2,839,000 4,145,972
Singapore Airlines Ltd.,
fgn. Sing. 417,200 3,851,077
--------------
11,268,144
- -------------------------------------------------------------------------------
Utilities Electrical & Gas: 7.5%
*CEZ Csk. 217,337 7,903,164
Electricidad de Caracas Venz. 7,020,522 6,241,051
Endesa-Empresa Nacional de
Electricidad SA Sp. 296,000 14,613,664
Evn Energie-Versorgung
Niederoesterreich AG Aust. 67,600 9,445,955
Iberdrola SA Sp. 2,808,142 21,143,656
Shandong Huaneng Power Chn. 585,000 4,460,625
South Wales Electricity U.K. 1,311,000 14,528,914
Thames Water Group PLC U.K. 1,765,000 13,358,243
VEBA AG Ger. 44,950 17,648,482
--------------
109,343,754
- -------------------------------------------------------------------------------
Wholesale & International Trade: 1.0%
Brierley Investments Ltd. N.Z. 19,467,819 14,707,231
--------------
TOTAL COMMON STOCKS (cost
$1,071,152,827) 1,139,123,781
- -------------------------------------------------------------------------------
PREFERRED STOCKS: 5.0%
- -------------------------------------------------------------------------------
ABN Amro NV, conv., pfd. Neth. 366,788 13,350,657
Cia de Inversiones en
Telecomunicaciones SA,
pfd. Arg. 183,975 9,290,738
Concessioni e Costruzioni
Autostrade SPA, B, pfd. Itl. 2,130,000 2,375,707
Jardine Strategic Holdings
Ltd., conv., pfd. H.K. 9,938,000 10,981,490
Nacional Financiera SA, reg
S conv., pfd. Mex. 146,522 4,597,128
Nacional Financiera SA,
reg. 42 conv., pfd. Mex. 165,400 5,189,425
News Corp. Ltd., conv.,
pfd. Aus. 955,957 4,728,962
Philippine Long Distance
Telephone Co., conv.,
pfd. Phil. 279,200 11,517,000
Telebras-Telecomunicacoes
Brasileiras SA, pfd. Braz. 294,500 9,700,094
--------------
TOTAL PREFERRED STOCKS (cost
$69,387,576) 71,731,201
- -------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY**
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BONDS: 2.4%
- -------------------------------------------------------------------------------
British Airways, DEB,
9.75%, 6/15/05 U.K. 2,387,800 6,991,596
C.S. Holding Finance BV,
4.875%, conv., 11/19/02 U.S. 7,615,000 10,775,225
PIV Investment Finance
(Cayman) Ltd.,
4.5%, conv., 12/1/00 U.S. 6,710,000 5,401,550
U.S. Treasury Note, 8.875%,
2/15/96 U.S. 11,000,000 11,202,840
--------------
TOTAL BONDS (cost $33,213,206) 34,371,211
- -------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 13.7% (cost
$197,457,029)
- -------------------------------------------------------------------------------
U S Treasury Bills, 5.26%
to 5.63% with
maturities to 8/24/95 U.S. 198,381,000 197,588,791
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS: 99.8% (cost
$1,371,210,637) 1,442,814,984
OTHER ASSETS, LESS LIABILITIES: 0.2% 3,679,416
--------------
TOTAL NET ASSETS: 100.0% $1,446,494,400
==============
</TABLE>
*NON-INCOME PRODUCING.
**PRINCIPAL AMOUNT IN CURRENCY OF COUNTRY INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (unaudited)
<TABLE>
<S> <C>
Assets:
Investment in securities, at value (identified cost
$1,371,210,637) $1,442,814,984
Cash 39,930
Receivables:
Investment securities sold 5,139,302
Capital shares sold 2,989,236
Dividends and interest 8,873,819
--------------
Total assets 1,459,857,271
--------------
Liabilities:
Payables:
Investment securities purchased 10,711,856
Capital shares redeemed 749,124
Accrued expenses 1,901,891
--------------
Total liabilities 13,362,871
--------------
Net assets, at value $1,446,494,400
==============
Net assets consist of:
Undistributed net investment income $ 23,467,123
Unrealized appreciation on investments 71,604,347
Accumulated net realized loss (8,474,289)
Net capital paid in on shares of capital stock 1,359,897,219
--------------
Net assets, at value $1,446,494,400
==============
Shares outstanding 105,459,635
==============
Net asset value per share ($1,446,494,400 / 105,459,635) $ 13.72
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
for the six months ended June 30, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment income: (net of $3,059,478 foreign taxes
withheld)
Dividends $22,289,632
Interest 5,460,789
-----------
Total income $27,750,421
Expenses:
Management fees (Note 3) 4,372,216
Administrative fees (Note 3) 658,813
Transfer agent fees (Note 3) 9,500
Custodian fees 360,000
Reports to shareholders 51,000
Audit fees 12,500
Legal fees 6,000
Registration and filing fees 90,000
Directors' fees and expenses 35,000
Other 92,839
-----------
Total expenses 5,687,868
-----------
Net investment income 22,062,553
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments (5,001,085)
Foreign currency transactions (406,066)
-----------
(5,407,151)
Net unrealized appreciation on investments 71,467,133
-----------
Net realized and unrealized gain 66,059,982
-----------
Net increase in net assets resulting from operations $88,122,535
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
-------------- -----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 22,062,553 $ 16,632,271
Net realized gain (loss) from security and
foreign currency transactions (5,407,151) 9,358,727
Net unrealized appreciation (depreciation) 71,467,133 (41,946,256)
-------------- --------------
Net increase (decrease) in net assets
resulting from operations 88,122,535 (15,955,258)
Distributions to shareholders:
From net investment income (461,544) (15,267,921)
From net realized gain -- (19,111,004)
Capital share transactions (Note 2) 265,606,602 735,590,480
-------------- --------------
Net increase in net assets 353,267,593 685,256,297
Net assets:
Beginning of period 1,093,226,807 407,970,510
-------------- --------------
End of period $1,446,494,400 $1,093,226,807
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Foreign Equity Series (the Fund) is a separate series of Templeton Institu-
tional Funds, Inc. (the Company) which is registered under the Investment Com-
pany Act of 1940 as an open-end, diversified management investment company. 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 Trustees.
b. Foreign Currency TranslAtions:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at date of valuation. Pur-
chases and sales of portfolio securities and income items denominated in for-
eign currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. When the Fund purchases or sells foreign securities it
customarily enters into foreign exchange contracts 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 and ma-
turities of short-term securities, sales of foreign currencies, currency gains
or losses realized between the trade and settlement dates on securities trans-
actions, the differences between the amounts of dividends, interest, and for-
eign withholding taxes recorded on the Fund's books, and the U.S. dollar equiv-
alent of the amounts actually received or paid. Net unrealized foreign exchange
gains and losses arise from changes in the value of assets and liabilities
other than investments in securities at the end of the fiscal period, resulting
from changes in the exchange rate.
c. Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all its
taxable income to its shareholders. Therefore, no provision has been made for
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 ex-dividend date. Certain dividend income on foreign securities
is recorded as soon as information is available to the Fund. Interest income
and estimated expenses are accrued daily. Distribution to shareholders, which
are determined in accordance with income tax regulations, are recorded on the
ex-dividend date.
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
At June 30, 1995, there were 520 million shares of $.01 par value capital stock
authorized of which 160 million have been classified as Fund shares. Transac-
tions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 25,832,024 $335,935,373 55,873,309 $756,177,777
Shares issued in
reinvestment of
distributions 64,335 820,895 2,173,387 28,197,368
Shares redeemed (5,460,153) (71,149,666) (3,642,203) (48,784,665)
---------- ------------ ---------- ------------
Net increase 20,436,206 $265,606,602 54,404,493 $735,590,480
========== ============ ========== ============
</TABLE>
15
<PAGE>
Templeton Institutional Funds, Inc.
Foreign Equity Series
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Company are also directors or officers of Templeton In-
vestment Counsel, Inc. (TICI), Templeton Global Investors, Inc. (TGII), Frank-
lin Templeton Distributors, Inc. (FTD), and Franklin Templeton Investor Servic-
es, Inc. (FTIS), the Company's investment manager, administrative manager,
principal underwriter and transfer agent, respectively. The Fund pays monthly
an investment management fee to TICI equal, on an annual basis, to 0.70% of the
average daily net assets of the Fund. The Fund pays TGII monthly its allocated
share of an administrative fee of 0.15% per annum on the first $200 million of
the Company's aggregate average daily net assets, 0.135% of the next $500 mil-
lion, 0.10% of the next $500 million and 0.075% per annum of such average net
assets in excess of $1.2 billion. TGII has voluntarily agreed to limit the to-
tal expenses of the Fund to an annual rate of 1% of the Fund's average net as-
sets through December 31, 1995. For the six months ended June 30, 1995, no such
reimbursement was necessary. For the six months ended June 30, 1995, FTD did
not receive any commissions from the sale of the Fund's shares and FTIS re-
ceived fees of $9,500.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Funds, which firm received fees of $6,000 for the six months ended June
30, 1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended June 30, 1995 were $336,966,196 and $126,264,086, respectively.
The cost of securities for federal income tax purposes is $1,372,631,704. Real-
ized gains and losses are reported on an identified cost basis.
At June 30, 1995, the aggregate gross unrealized appreciation and depreciation
of portfolio securities, based on cost for federal income tax purposes, was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation $122,548,216
Unrealized depreciation (52,364,936)
------------
Net unrealized appreciation $ 70,183,280
============
</TABLE>
5. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated companies" as invest-
ments in portfolio companies in which the Fund owns 5% or more of the outstand-
ing voting securities. There were no investments in "affiliated companies" as
of June 30, 1995. For the six months ended June 30, 1995, net realized loss
from disposition of "affiliated companies" were $2,194,853.
16
<PAGE>
Templeton Institutional Funds, Inc.
Special Meeting of Shareholders, May 4, 1995
- --------------------------------------------------------------------------------
A Special Meeting of Shareholders of the Fund was held at the Fund's offices,
700 Central Avenue, St. Petersburg, Florida, on May 4, 1995. The purpose of the
meeting was to elect twelve directors of the Fund. At the meeting, the follow-
ing persons were elected by the shareholders to serve as directors of the Fund:
John Wm. Galbraith, Charles B. Johnson, Nicholas F. Brady, Betty P. Krahmer,
Constantine D. Tseretopoulos, Frank J. Crothers, Fred R. Millsaps, S. Joseph
Fortunato, Harris J. Ashton, Andrew H. Hines, Jr., John G. Bennett, Jr., and
Gordon S. Macklin.
The results of the voting at the Special Meeting are as follows:
1. Election of twelve (12) Directors:
<TABLE>
<CAPTION>
% OF % OF % OF
OUTSTANDING SHARES OUTSTANDING
FOR SHARES VOTED AGAINST % ABSTAIN SHARES
---------- ----------- ------ ------- --- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
John Wm. Galbraith* 92,515,630 53.41% 99.98% 0 0 15,858 0.01%
Charles B. Johnson 92,515,630 53.41 99.98 0 0 15,858 0.01
Nicholas F. Brady 92,515,630 53.41 99.98 0 0 15,858 0.01
Betty P. Krahmer 92,515,630 53.41 99.98 0 0 15,858 0.01
Constantine D.
Tseretopoulos 92,515,630 53.41 99.98 0 0 15,858 0.01
Frank J. Crothers 92,515,630 53.41 99.98 0 0 15,858 0.01
Fred R. Millsaps 92,515,630 53.41 99.98 0 0 15,858 0.01
S. Joseph Fortunato 92,515,630 53.41 99.98 0 0 15,858 0.01
Harris J. Ashton 92,515,630 53.41 99.98 0 0 15,858 0.01
Andrew H. Hines Jr. 92,515,630 53.41 99.98 0 0 15,858 0.01
John G. Bennett Jr.** 92,515,630 53.41 99.98 0 0 15,858 0.01
Gordon S. Macklin 92,515,630 53.41 99.98 0 0 15,858 0.01
</TABLE>
* AFTER HIS NOMINATION AND THE MAILING OF THE PROXY FOR THE SPECIAL MEETING,
SIR JOHN TEMPLETON STEPPED DOWN AS CHAIRMAN AND DIRECTOR OF THE U.S.
REGISTERED TEMPLETON FUNDS, EFFECTIVE APRIL 16, 1995, AND DECLINED TO STAND
FOR RE-ELECTION. CONSEQUENTLY, PURSUANT TO DISCRETIONARY AUTHORITY GRANTED
IN THE PROXIES, THE PROXY HOLDERS CAST THE PROXIES FOR JOHN WM. GALBRAITH,
FORMER VICE CHARIMAN OF TEMPLETON, GALBRAITH & HANSBERGER LTD.
** SUBSEQUENT TO THE SPECIAL MEETING, MR. JOHN G. BENNETT, JR., RESIGNED FROM
ALL OF THE TEMPLETON FUNDS, EFFECTIVE MAY 19, 1995.
17
<PAGE>
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by the prospectus of the Templeton
Institutional Funds, Inc.
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
the 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.
Principal Underwriter:
FRANKLIN TEMPLETON
DISTRIBUTORS, INC.
700 Central Avenue
St. Petersburg, Florida 33701-3628
Account Service: 1-800-684-4001
Fund Information: 1-800-362-6243
ZT454 S 08/95
- --------------------------------------------------------------------------------
